PDF《Central China Securities Co., Ltd.》

s investment and trading business and that of domestic security market are closely related, it may be difficult for the Company to effectively defend itself from market risks in the event of extreme security market condition and inadequate hedging strategies. Against the backdrop of continuous industry innovation, the Company has been committed to providing its customers with new products and services in order to strengthen its competitive position in the industry. However, business innovation also leads to increasing risks following the Company'

s entrance into new markets with new product offerings driven by business innovation, resulting in new risk exposures to the Company. Moreover, the Company'

s operation relies on the management and professionals. Due to keen market competition for this kind of talents, failure in attracting or retaining these talents may have adverse impact on the Company'

s business. The Company has received a Class A regulatory rating from CSRC for two consecutive years. However, the Company does not rule out the possibility of the risks of downward adjustment of regulatory rating in the future, which would result in the limitations of the Company'

s ability to commence pilot programs and new businesses. The Company manages risks according to internal risk management framework and procedures, but certain risk management measures are based on historical market data or past experience which may fail to predict future risks accurately, especially those on extreme market events lacking effectiveness. The Company has further exposure to various risks, such as failure of information technologies, which would result in adverse impact on business operation. Any force majeure may have material adverse impact on the Company'

s business, financial conditions and operating results. For the risks in the Company'

s operation, investors are advised to carefully read the relevant parts in Section

4 III. (IV) Potential risks and policies in this report.

4 1. DEFINITIONS In this report, unless the context otherwise requires, the following terms and expressions have the meaning set forth below: DEFINITIONS OF COMMON TERMS The Company, Company, ? Parent Company or ? Central China Securities Central China Securities Co., Ltd. The Group or Group the Company and its subsidiaries Board the board of Directors of the Company Director(s) director(s) of the Company Supervisory Committee the Supervisory Committee of the Company Supervisor(s) supervisor(s) of the Company Listing Rules the Rules Governing the Listing of Securities on the Hong Kong Stock Exchange Model Code the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix

10 to the Listing Rules Corporate Governance Code Corporate Governance Code and Corporate Governance Report as set out in Appendix

14 to the Listing Rules SFC the Securities and Futures Commission of Hong Kong SFO the Securities and Futures Ordinance (Chapter

571 of the Laws of H........