PDF《Central China Securities Co., Ltd.》

2016 prepared by the Company in accordance with the International Financial Reporting Standards and China'

s Accounting Standard for Business Enterprises has been audited by PricewaterhouseCoopers and ShineWing Certified Public Accountants (Special General Partnership) respectively with respective standard unqualified auditing reports produced for the Company. All amounts set out in this report are stated in RMB unless otherwise stated. The person in charge of the Company Mr. Jian Mingjun, the chief financial officer Mr. Zhou Xiaoquan, Chief Accountant Ms. Zhu Junhong and Officer-in-charge of the accounting institution (the head of financial division) Mr. Guo Liangyong declare that they undertake the financial reports in this report are true, accurate and complete. The Company'

s profit distribution plan approved by the Board for

2016 shall be a cash dividend of RMB1.21 for every

10 shares (tax inclusive) which is subject to approval of the general meeting of the Company. The forward-looking statements in this report such as future plans and development strategies do not constitute an actual commitment of the Company to investors. Investors and related persons should understand the difference between plans, forecasts and commitments and be aware of the investment risks. There is no appropriation of fund by the controlling shareholder and its related (connected) parties for non-operating purpose during the Reporting Period. There is no provision of external guarantee in violation of the stipulated decision making procedure during the Reporting Period. This report has been prepared by the Company in both Chinese and English languages. When there are any discrepancies in interpretation between the Chinese version and English version of this report, the Chinese version shall prevail.

3 The Company'

s business is largely dependent on the Chinese economy and market condition as most assets of the Company are located in China and the income is mainly derived from domestic security market. The operating results of the Company and the performance of the security market are strongly correlated. The security market is relatively cyclical and volatile as it may be affected by a number of factors, including macroeconomic performance and policies, the level of market development, fluctuations in financial market and investors'

actions. In the face of intense competition in China'

s securities industry, the Company'

s business may be materially and adversely affected if it fails to compete effectively. The challenges from internet finance in recent years have already led to a declining commission rate of the Company'

s brokerage business. The commission rates of securities brokerage business may continue to go downward, the trading volume in and the activity of the market can hardly remain at a high level continuously, and the spreads of capital-based intermediary business may further narrow down, all of which may adversely affect the Company'

s profit growth. As the capital market reform continues to develop, the Company'

s investment banking business will be challenging in terms of customer base expansion, pricing and ability in distribution, which may cause adverse impact on the income of the Company'

s investment banking business. Besides, along with the intensified mixed business competition in the asset management industry and deleveraging of the financial sector, the asset under management of the Company may be reduced, which may result in a negative impact on the asset management fees or performance rewards charged by the Company. Since the performance of the Company'