GF Securities : 2020 INTERIM REPORT

September 09, 2020 at 04:20 am EDT

(A joint stock company incorporated in

the People's Republic of China with limited liability) Stock code: 1776.HK 000776.SZ

IMPORTANT NOTICE

The Board of Directors, Supervisory Committee and the Directors, Supervisors and senior management of the Company confirm the truthfulness, accuracy and completeness of the contents of this interim report and there is no misrepresentation, misleading statement or material omission from this interim report, and they accept joint and several responsibilities for the truthfulness, accuracy and completeness of the contents herein.

Mr. Sun Shuming (the Chairman), Ms. Sun Xiaoyan (the Chief Financial Officer) and Ms. Wang Ying (the head of the accounting department of the Company) hereby declare that they confirm the truthfulness, accuracy and completeness of the financial statements contained in this interim report.

All Directors attended the board meeting in person in respect of considering and approving this interim report.

The 2020 interim financial report of the Company prepared in accordance with the International Accounting Standards has been reviewed by Ernst & Young. Unless otherwise stated, the financial data stated in this report is denominated in RMB.

The Company has no plan to distribute cash dividends and bonus shares or convert capital reserves into share capital for the first half of 2020.

Forward-looking statements included in this interim report, including future plans, do not constitute a substantive commitment to investors by the Company. Investors should be aware of investment risks.

The Company has prepared this interim report in both Chinese and English languages. In case any discrepancy arises in the interpretation between the Chinese and the English versions of this interim report, the Chinese version shall prevail.

WARNING ABOUT MATERIAL RISK FACTORS

The Company faces various risks in its operations, which mainly include policy risk that may cause adverse effects to the operations of securities companies as a result of macroeconomic adjustment and control measures promulgated by the State or changes in laws and regulations, regulatory systems and trading rules relevant to the securities industry; liquidity risk that may arise from the failure of the Company to obtain sufficient funds timely at reasonable cost to settle debts on due dates, perform other payment obligations and satisfy the capital requirements for ordinary business operations; market risk that may cause losses to be incurred by various operations of the Company due to adverse changes in market prices (such as prices of securities, interest rates, exchange rates or commodity prices) as a result of various factors; credit risk that may cause losses to be incurred by the Company as a result of the issuer or counterparty failing to perform their obligations as stipulated in the contracts or due to changes in the market value of debts arising from changes in credit ratings or contractual performance capabilities; compliance risk that may cause the imposition of sanctions by laws or punishment by regulatory authorities, material financial losses to be incurred or harm to reputation as a result of non-compliance with the relevant standards stipulated by laws and regulations, regulatory requirements, rules or relevant standards established by self-disciplinary bodies and the code of conduct applicable to the business activities conducted by securities companies as principals; operation risk that may cause direct or indirect losses to the Company as a result of deficiency or problems involving internal rules and processes, misoperation by staff members, system failure and external events; and information technology risk that may cause adverse impact to the Company due to the defective design and unstable operation of the information system.

In response to the risks mentioned above, the Company has established and maintained a comprehensive internal control system, compliance and a comprehensive risk management system to ensure that the Company operates healthily within an extent of controllable, predictable and tolerable risks. Investors are advised to read the "Discussion and Analysis of Operations" as set out in Section 4 of this report carefully and to pay particular attention to the above risk factors.

Contents

	Definitions	2
Section 1	Company Profile	5
Section 2	Accounting Data and Financial	8
	Indicators Summary
Section 3	Summary of the Company's Business	12
Section 4	Discussion and Analysis of	17
	Operations
Section 5	Significant Events	53
Section 6	Changes in Shareholdings and	79
	Particulars about Shareholders
Section 7	Preference Shares	87
Section 8	Convertible Corporate Bonds	89
Section 9	Particulars about Directors,	91
	Supervisors and Senior Management
Section 10	Corporate Bonds	95
Section 11	Financial Report	110
Section 12	Documents Available for	199
	Inspection

INTERIM REPORT 2020

Definitions

2020 REPORT INTERIM

Denitions

Term	Definition
Reporting Period	first half of 2020 (January 1, 2020 to June 30, 2020)
the Company, Company,	GF Securities Co., Ltd.
parent company,
GF Securities
the Group, Group	the Company and its subsidiaries which fall within the scope of the
	consolidated financial statements
Jilin Aodong	Jilin Aodong Pharmaceutical Group Co., Ltd. (吉林敖東藥業集團股份
	有限公司)
Liaoning Cheng Da	Liaoning Cheng Da Co., Ltd. (遼寧成大股份有限公司)
Zhongshan Public Utilities	Zhongshan Public Utilities Group Co., Ltd. (中山公用事業集團股份有
	限公司)
HKSCC Nominees	HKSCC Nominees Limited
GFHK	GF Holdings (Hong Kong) Corporation Limited (廣發控股（香港）有限
	公司)
GF Brokerage (Hong Kong)	GF Securities (Hong Kong) Brokerage Limited (廣發証券（香港）經紀
	有限公司)
GF Asset Management	GF Asset Management (Hong Kong) Limited (廣發資產管理（香港）有
(Hong Kong)	限公司)
GF Investments	GF Investments (Hong Kong) Company Limited (廣發投資（香港）有
(Hong Kong)	限公司)
GF Capital (Hong Kong)	GF Capital (Hong Kong) Limited (廣發融資（香港）有限公司)
GF Global Capital	GF Global Capital Limited (廣發全球資本有限公司)
GF Futures	GF Futures Co., Ltd. (廣發期貨有限公司)
GF Futures (Hong Kong)	GF Futures (Hong Kong) Co., Limited (廣發期貨（香港）有限公司)
GF Xinde	GF Xinde Investment Management Co., Ltd. (廣發信德投資管理有限
	公司)
GF Qianhe	GF Qianhe Investment Co., Ltd. (廣發乾和投資有限公司)
GF Asset Management	GF Securities Asset Management (Guangdong) Co., Ltd. (廣發証券
	資產管理（廣東）有限公司)

Denitions

Term	Definition
GF Fund	GF Fund Management Co., Ltd. (廣發基金管理有限公司)
GFFL	Guangfa Financial Leasing (Guangdong) Co., Ltd. (廣發融資租賃（廣
	東）有限公司)
GF Hexin	GF Hexin Industry Investment Management Co., Ltd. (廣發合信產業
	投資管理有限公司)
E Fund	E Fund Management Co., Ltd. (易方達基金管理有限公司)
China, PRC, domestic	Mainland China
CSRC	China Securities Regulatory Commission
Guangdong Bureau of	Guangdong Bureau of China Securities Regulatory Commission
the CSRC
SSE	the Shanghai Stock Exchange
SZSE	the Shenzhen Stock Exchange
SZSE Listing Rules	the Rules Governing the Listing of Stocks on the Shenzhen Stock
	Exchange
Company Law	Company Law of the PRC (中華人民共和國公司法)
Securities Law	Securities Law of the PRC (中華人民共和國證券法)
Hong Kong Stock	The Stock Exchange of Hong Kong Limited
Exchange
Hong Kong Listing Rules	the Rules Governing the Listing of Securities on The Stock
	Exchange of Hong Kong Limited
SFC	the Securities and Futures Commission of Hong Kong
SFO	the Securities and Futures Ordinance of Hong Kong (Chapter 571 of
	the Laws of Hong Kong)
Margin financing and	the operating activities engaged by the Company in which loans
securities lending	are provided to customers for purchasing listed securities (margin
	financing) or listed securities are borrowed by customers for sale
	(securities lending) with collaterals provided by customers

Definitions

2020 REPORT INTERIM

Definitions

2020 REPORT INTERIM

Denitions

Term	Definition
Stock Pledged Repo	a transaction in which a qualified borrower pledges his shares or
Transaction	other securities held as collaterals to obtain financing funds from a
	qualified lender, and agrees to repay the funds on a future date to
	release the pledge
NEEQ	National Equities Exchange and Quotations (全國中小企業股份轉讓
	系統), also known as new third board (新三板)
QDII	Qualified Domestic Institutional Investors
RQFII	RMB Qualified Foreign Institutional Investors
ETF	Exchange Traded Funds, an open index fund available for trading,
	commonly known as Exchange Traded Funds, which is an open
	fund listed for trading on a stock exchange with variable portions of
	the fund components
FICC	Fixed Income, Currencies & Commodities
ISDA Agreements	the standard agreement text and ancillary documents for
	international OTC derivatives transactions provided by International
	Swaps and Derivatives Association
GMRA Agreements	Global Master Repurchase Agreement
A Share(s)	domestic shares of RMB1.00 per share of the Company, listed on
	the SZSE and traded in RMB
H Share(s)	foreign shares of RMB1.00 per share of the Company, listed on the
	Hong Kong Stock Exchange and traded in Hong Kong dollar
WIND	Wind Information Co., Ltd, a financial terminal which provides the
	customers with financial data and analytic tools

In this 2020 interim report, some total figures may be slightly deviated in the last digit from the sum of direct aggregation of all amounts. Such discrepancy is due to the rounding up calculation of decimal places.

Profile Company

1 Section

INTERIM REPORT 2020

Profile Company

2020 REPORT INTERIM

Section 1 Company Prole

I. COMPANY PROFILE

Stock Name	廣發証券	Stock Code	000776 (SZSE);
			1776 (Hong Kong Stock
			Exchange)
Listing Venues of the Shares	SZSE and Hong Kong
	Stock Exchange
Name in Chinese	廣發証券股份有限公司
Short Name in Chinese	廣發証券
Name in English	GF Securities Co., Ltd.
Short Name in English	GF SECURITIES
Legal Representative	Sun Shuming
of the Company

CONTACT PERSONS AND CONTACT INFORMATION

	Secretary to the Board and Securities Affairs Representative
Name	Xu Youjun
Address	59th Floor, GF Securities Tower, 26 Machang Road, Tianhe District,
	Guangzhou, Guangdong
Tel	020-87550265/87550565
Fax	020-87554163
E-mail	xuyj@gf.com.cn

OTHER INFORMATION
1. Company Contact Channels
There was no change in the registered address of the Company, the business address of the Company and its postal code, the Company website and E-mail during the Reporting Period. Please refer to the 2019 Annual Report for details.

Section 1 Company Prole

Information Disclosure and Place of Inspection
There was no change in the name of newspapers designated by the Company for information disclosure, the website designated by the CSRC for publication of the interim reports and the place where the interim report of the Company was maintained during the Reporting Period. Please refer to the 2019 Annual Report for details.
Other Relevant Information
Class Rating from Regulatory Authorities:
According to the Regulatory Requirements for Classification of Securities Companies issued by the CSRC, the Class Ratings of the Company in the latest three years are as follows:
The Company was rated as Class A Grade AA Securities Company in 2018; The Company was rated as Class B Grade BBB Securities Company in 2019; The Company was rated as Class B Grade BBB Securities Company in 2020.

Profile Company

2020 REPORT INTERIM

Data Accounting	2 Section
Summary Indicators Financial and

INTERIM REPORT 2020

Section 2 Accounting Data and Financial Indicators Summary

KEY ACCOUNTING DATA (CONSOLIDATED STATEMENTS)
(Accounting data and financial indicators set out in this report have been prepared in accordance with the International Accounting Standards)

		Unit: RMB million

Item	January to	January to
	June 2020	June 2019	Change
Total revenue and other income	17,678	15,655	12.92%
Profit before income tax	7,854	5,648	39.07%
Net profit attributable to owners of the Company	5,752	4,140	38.93%
Net cash used in operating activities	(23,514)	(5,743)	-
Basic earnings per share (RMB/share)	0.75	0.54	38.89%
Return on weighted average net assets (%)	6.12	4.73	Increased by
			1.39
			percentage
			points
Item	June 30,	December 31,
	2020	2019	Change
Total assets	421,654	394,391	6.91%
Total liabilities	324,796	300,254	8.17%
Equity attributable to owners of the Company	93,951	91,234	2.98%
Total share capital (shares in million)	7,621	7,621	-
Equity per share attributable to owners of the Company	12.33	11.97	3.01%
(RMB/share)
Gearing ratio (%) (Note 1)	69.69	70.09	Decreased by
			0.40

percentage point

Note 1: Gearing ratio = (Total liabilities - Accounts payable to brokerage clients) ／ (Total assets - Accounts payable to brokerage clients)

ACCOUNTING DATA DIFFERENCE UNDER DOMESTIC AND FOREIGN ACCOUNTING STANDARDS
The net profits from January to June 2020 and January to June 2019 and the net assets as at June 30, 2020 and December 31, 2019 as disclosed in the consolidated financial statements of the Company prepared in accordance with the International Accounting Standards are consistent with those in accordance with China's Accounting Standards.

Summary Indicators Financial and Data Accounting

2020 REPORT INTERIM

Summary Indicators Financial and Data Accounting

2020 REPORT INTERIM

Section 2 Accounting Data and Financial Indicators Summary

NET CAPITAL OF THE PARENT COMPANY AND THE RELEVANT RISK CONTROL INDICATORS

			Unit: RMB

Item	June 30,	December 31,
	2020	2019	Change
Core net capital	56,981,132,414.19	55,763,537,942.04	2.18%
Supplementary net capital	8,200,000,000.00	5,100,000,000.00	60.78%
Net capital	65,181,132,414.19	60,863,537,942.04	7.09%
Net assets	81,679,129,937.62	80,830,878,464.88	1.05%
Total risk capital reserves	28,592,562,988.53	26,081,558,023.48	9.63%
Total on- and off-balance sheet assets	288,208,766,178.43	287,683,392,171.01	0.18%
Risk coverage ratio	227.97%	233.36%	Decreased by
			5.39
			percentage
			points
Capital leverage ratio	20.14%	19.73%	Increased by
			0.41
			percentage
			point
Liquidity coverage ratio	261.32%	322.27%	Decreased by
			60.95
			percentage
			points
Net stable funding ratio	186.89%	159.77%	Increased by
			27.12
			percentage
			points
Net capital/net assets	79.80%	75.30%	Increased by
			4.50
			percentage
			points
Net capital/liabilities	32.67%	30.46%	Increased by
			2.21
			percentage
			points
Net assets/liabilities	40.94%	40.46%	Increased by
			0.48
			percentage
			point
Proprietary equity securities and	26.44%	27.59%	Decreased by
its derivatives/net capital			1.15
			percentage
			points
Proprietary non-equity securities	231.66%	250.55%	Decreased by
and its derivatives/net capital			18.89
			percentage
			points

Section 2 Accounting Data and Financial Indicators Summary

Note: The above relevant data were based on the Administrative Measures for Risk Control Indicators of Securities Companies issued by the CSRC and China's Accounting Standards for Business Enterprises, and expressed on a non-consolidated basis.

IV. REVIEW OF THE AUDIT COMMITTEE

The Audit Committee under the Board has reviewed and confirmed the report on review of interim financial information of the Group for the six months ended June 30, 2020 disclosed in accordance with the International Accounting Standards, and has no objection against matters including the accounting policies and practices adopted by the Group.

Summary Indicators Financial and Data Accounting

2020 REPORT INTERIM

Section 3

Summary of the Company's Business

INTERIM REPORT 2020

Section 3 Summary of the Company's Business

MAIN BUSINESSES OF THE COMPANY DURING THE REPORTING PERIOD

The Group is a provider of comprehensive capital market services with industry-leading innovation capabilities focused on serving China's quality enterprises and affluent individuals. The Group has built a diversified business serving the various needs of corporations, individuals (especially affluent individuals), institutional investors, financial institutions and government clients. The main business of the Group can be classified into four segments, namely investment banking, wealth management, trading and institution and investment management, and the respective main operating indicator has ranked among forefront in the industry.

Products and services of the four business segments are set out in the table below:

Investment Banking	Wealth Management	Trading and Institution	Investment Management
◆ Equity finance	◆ Retail brokerage and	◆ Equity and derivatives	◆ Asset management
	wealth management	trading
◆ Debt finance	◆ Margin financing and	◆ Fixed income sales	◆ Public fund
	securities lending	and trading	management
◆ Financial advisory	◆ Repurchase	◆ OTC sales and trading ◆ Private fund
	transactions		management
	◆ Financial leasing	◆ Alternative investment
		◆ Investment research
		◆ Asset custody

Investment Banking: the Group earns its commissions, sponsor fees and consulting fees through underwriting stocks and bonds and providing sponsoring and financial advisory services;

Wealth Management: the Group earns its fees, consulting fees and commissions through providing brokerage and investment advisory services, obtaining interest income from its business of margin financing and securities lending, repurchase transactions, financial leasing and cash management of settlement funds on behalf of clients, and earning its fees through acting as agent for the sales of financial products developed by the Group and other financial institutions;

Trading and Institution: the Group earns its investment income and interest income through investment transactions, alternative investment and market making services for equities, fixed income products and derivatives, earning its fees and commissions through providing transaction consultation and execution, investment research services and the main broker services to institutional customers;

Investment Management: the Group earns its management fees, advisory fees and performance fees through providing services for asset management, public fund management and private fund management.

During the Reporting Period, the main businesses and the operating model of the Group have had no significant changes.

Business s'Company the of Summary

2020 REPORT INTERIM

Business s'Company the of Summary

2020 REPORT INTERIM

Section 3 Summary of the Company's Business

ANALYSIS ON CORE COMPETITIVENESS
1. Market-orientedmechanism, balanced and diversified ownership structure, and perfect corporate governance
  The Company has no controlling shareholder and de facto Controller. Over the past 21 years, Jilin Aodong, Liaoning Cheng Da and Zhongshan Public Utilities (all publicly listed companies) have been ranked the top three shareholders of the Company (excluding HKSCC Nominees, as the shares held by HKSCC Nominees are owned by non-registered shareholders of H Shares). As of June 30, 2020, the shareholding percentages of Jilin Aodong and its parties acting in concert, Liaoning Cheng Da and its parties acting in concert and Zhongshan Public Utilities and its parties acting in concert were 17.80%, 16.42% and 10.34%, respectively, forming a stable equity structure. A sustainable, balanced and diversified shareholding structure provides strong support for the Company to form a sound governance structure, and ensures that the Company maintains its market operation mechanism in the long run, which facilitates the Company to achieve sustained and healthy development.
2. Excellent corporate culture and stable management team
  With the core value of "inquisitiveness, integrity, client focus and teamwork", the Company has carried out the management philosophy of "stable growth, continual innovations, performance driven culture and business strategies" to seek sustained, healthy and stable development. Sound corporate culture will boost the Company's cohesion and momentum. The Company has a stable management team and a core business team with low turnover rate of talents. The management team members have an average of approximately 27 years of managerial experience in securities and finance related sectors and have served an average term of more than 19 years. Over the past 3 years, the voluntary turnover rates of the middle and high-levelmanagement team and the employees are not exceeding 2% and 3% respectively, thus greatly boosting client confidence, the continuity and stability of the operation of various business lines.
3. Stable operation philosophy and continuously improving compliance and risk control mechanism
  The Company is one of the first batch of pilot compliance management brokerages selected by the CSRC, one of the first brokerages to implement a comprehensive risk management strategy in the industry, and also one of four major brokerages which have not received investment and restructuring due to operating losses among the first batch of brokers established from the end of the 80's to the early 90's. The Company upholds the philosophy of "stable operation", firmly conforms to the compliance base line and continues to solidify the risk control life-line. The Company has set up and continued to improve the comprehensive risk management system with effective coverage of compliance and risk culture, governance structure, mechanism and practice, and infrastructure facilities to cover various risks, businesses, departments, sub-branches and controlling subsidiaries of the Company. Over the years, the Company's asset quality has been excellent, the main risk control indicators have continuously complied with the regulatory indicators, and the safety margin of leverage regulatory indicators is relatively huge, with a strong ability to resist risks.

Section 3 Summary of the Company's Business

4. The main operating indicators have ranked in the forefront of the industry for many years with continuous enhancement in brand value

The total assets, net assets, net capital, operating revenue, net profit and other main operating indicators of the Company have top rankings in the industry for consecutive years. The details of the operating performance indicators are as follows:

Rankings of the Main Operating Indicators of the Company

from 2017 to January - June 2020

	January-June
	2020/End of	2019/	2018/	2017/
Items	June	Year End	Year End	Year End
Total assets	6	5	4	5
Net assets	6	5	5	4
Net capital	5	6	6	4
Operating revenue	4	5	5	4
Net profit	6	5	6	5

Note 1: Source: the Securities Association of China, 2020;

Note 2: The indicative data of net capital represents the data for parent company. The indicators of January to June 2020 are based on unaudited statistical data for parent company. The indicators of 2019, 2018 and 2017 are based on audited statistical data in the consolidated statements.

While seeking economic benefits and market position, the Company has both reputation and brand being enhanced persistently. From 2015 to 2019, the Company ranked forefront among securities firms in China in "Hurun Brand List" (胡潤品牌榜) for 5 consecutive years. The Company actively fulfilled the social responsibility, focusing on the two areas of helping the poor and providing student loans to promote education through "GF Securities Social Charity Foundation in Guangdong Province". The Company took initiative to fulfill its social responsibility, the reputation and brand influence of the Company have continued to improve.

Business s'Company the of Summary

2020 REPORT INTERIM

Business s'Company the of Summary

2020 REPORT INTERIM

Section 3 Summary of the Company's Business

Full licenses, balanced business structure and industry-leading ability to provide comprehensive financial services
Our Group possesses licenses for a full range of services including investment banking, wealth management, transaction and institution and investment management. The various main businesses of the Company have achieved balanced development and top rankings in the industry for years in terms of main operating indicators. At present, the Company has built a financial group structure, enabling the Company to boost its customer service continuously.
Leading scientific and technological financial model in the industry
The Group attaches high importance to technological innovation in the long-term and sustainable development of the Company, and empowers each aspect of management, business and service by applying financial technology to promote its business development and enhance its core competitiveness. In 2020, the Company continued to improve the quick trading system for the brokerage business by optimizing the full chain quick passage from day trading to day-end clearing, and vigorously developed "GF Touyitong" (廣發投易通) investment and trading system and "GF Zhihui" (廣發智匯) comprehensive service application to create a service platform for enterprise institutions with a view to providing integrated and diversified comprehensive services for institutional customers. The Company also continued to explore the application of blockchain technology in the securities industry, and during the outbreak of COVID-19, the Company actively used various financial technologies to create contactless services. In addition, the Company self-developed 5G HD video interactive service platform, promoted the technology strategy of data center and intelligent center in order to continuously optimize the big data and artificial intelligence open platform (GF-SMART) and develop the technical application of intelligent warning, intelligent recommendation, intelligent calling and knowledge map. The Company also established a technological system with real-time, penetrating and continuous risk tracking and measurement to provide integrated compliance and risk control capability for the entire group and business, constantly pushed forward the cloud evolution of the Company's IT infrastructure, thereby laying a solid foundation for our business development. As of the end of the Reporting Period, the Company has in aggregate applied for 35 invention patents, 3 utility model patents and 14 software copyrights; among them, the Company has obtained 1 utility model patent, 1 invention patent and 14 software copyrights.

and Discussion	4 Section
Operations of Analysis

INTERIM REPORT 2020

Operations of Analysis and Discussion

2020 REPORT INTERIM

Section 4 Discussion and Analysis of Operations

OVERVIEW
Since 2020, despite the great challenge posed by the outbreak of COVID-19, the capital market has remained stable as a whole. The reform of the capital market has been deepening comprehensively and progressing steadily, the new Securities Law has been fully implemented, the ChiNext Market reform and the pilot registration-based IPO system have been officially launched, and the NEEQ reform has been implemented steadily. Under the guidance of the Board of Directors, the operation management of the Company led all staff to forge ahead with the spirit of "remaining true to our original aspiration and keeping our mission firmly in mind", gave full play to the advantages of the market-oriented mechanism, accelerated business transformation and endeavored to overcome various challenges, eventually achieving good operating performance even in the increasingly competitive market environment.

ANALYSIS ON PRINCIPAL BUSINESS
1. Overview
  In the first half of 2020, facing the tough challenge brought about by the outbreak of COVID-19 and the complicated and changeable international and domestic situations, the whole country has coordinated efforts to promote pandemic prevention and control as well as the economic and social development. As a result, there saw sustained improvement in pandemic prevention and control and the gradual resumption of work, production, business and market, and the basic livelihood was safeguarded. In the first half of 2020, the national economy first plummeted and then rebounded. Thanks to a steady recovery in economic growth, the GDP decreased slightly by 1.6% as compared to the same period of the last year (source: National Bureau of Statistics, 2020).
  Based on the statistics published by the Securities Association of China (the unaudited financial statements), the total assets, net assets, net capital, customers' transaction settlement fund amount (including margin trading fund) and the total principal sum of funds under management of 134 securities firms in the whole industry were RMB8.03 trillion, RMB2.09 trillion, RMB1.67 trillion, RMB1.64 trillion and RMB11.83 trillion as of June 30, 2020, representing an increase of 10.61%, 3.47%, 3.09% and 26.15% and a decrease of 3.74% as compared to the end of 2019, respectively. In the first half of 2020, 124 of 134 securities firms in the whole industry were profitable with total operating revenue of RMB213.404 billion, representing a year-on-year increase of 19.26%. Specifically, net income from the securities trading agency service business (including seat leasing) was RMB52.310 billion, representing a year-on-year increase of 17.82 %; net income from the securities underwriting and sponsorship business was RMB22.110 billion, representing a year-on-year increase of 49.37%; net income from the financial advisory services business was RMB3.207 billion, representing a year-on-year decrease of 35.37%; net income from the investment advisory service business was RMB1.990 billion, representing a year-on-year increase of 17.47%; net income from the asset management business was RMB14.291 billion, representing a year-on-year increase of 12.24%; income from the securities investment (including changes in fair value) business was RMB70.274 billion, representing a year-on-year increase of 13.24%; net interest income was RMB27.566 billion, representing a year-on-year increase of 20.21%; net profit for the period was RMB83.147 billion, representing a year-on-year increase of 24.73% (Source: the Securities Association of China, 2020).

Section 4 Discussion and Analysis of Operations

As of June 30, 2020, total assets of the Group amounted to RMB421,654 million, representing an increase of 6.91% as compared to the end of 2019 and equity attributable to owners of the Company was RMB93,951 million, representing an increase of 2.98% as compared to the end of 2019. During the Reporting Period, total revenue and other income of the Group was RMB17,678 million, representing a year-on-year increase of 12.92%; the total expenses were RMB10,040 million, representing a year-on-year decrease of 2.13%; the net profit attributable to owners of the Company was RMB5,752 million, representing a year-on-year increase of 38.93%.

Analysis of Principal Businesses
The principal businesses of the Group can be divided into four segments, namely investment banking business, wealth management business, trading and institution business and investment management business.
1. Investment banking business segment
The Group's investment banking business segment mainly comprises of equity financing business, debt financing business and financial advisory services.
1. Equity financing business
  In the first half of 2020, the reform of the registration-based IPO system of the ChiNext Market was launched comprehensively and implemented rapidly, and the new refinancing policy was adopted to fully release market vitality, ushering in a new round of the golden development period for the equity financing business. In the first half of 2020, the total number of equity financing projects (including IPO, new issuance, rights issue, preference shares, convertible bonds (of which new issuance included assets acquired by issuing shares)) in the A-share market and the total amount were 351 and RMB391.487 billion, respectively, representing a year-on-year increase of 43.85% and 3.13% respectively. Specifically, the number and financing size of IPOs in the first half of 2020 were 142 and RMB143.628 billion, respectively, representing an increase of 102.86% and 134.49%, respectively; while the number and financing size of refinancing in the first half of 2020 were 209 and RMB247.859 billion, respectively, representing an increase of 20.11 % in number and a decrease of 22.14% in financing size (Source: WIND, 2020).

Operations of Analysis and Discussion

2020 REPORT INTERIM

Operations of Analysis and Discussion

Section 4 Discussion and Analysis of Operations

In the first half of 2020, the Company continuously improved the internal control system of investment banks by enhancing project management and strictly controlling project risks, focused on retaining key customers and endeavored to develop and cultivate projects by adhering to the customer-centric concept and the IPO-based main business line, and fully optimized the operation mechanism of investment banks to promote the transformation and upgrading of investment banking business. During the Reporting Period, the Company acted as a lead underwriter for 8 IPOs, ranking 4th in the industry and the lead underwritten amount was RMB4.394 billion, ranking 8th in the industry. Details of the Company's equity underwriting and sponsorship business in the first half of 2020 are shown in the table below:

		January to June 2020		January to June 2019
		Lead				Lead
	underwritten				underwritten
		amount				amount
		(RMB100	Number of		(RMB100	Number of
Items		million)	offerings		million)	offerings
Initial Public
Offerings (IPOs)	43.94	8	10.43	3
Refinancing offerings		-	-	111.91	11

Total		43.94	8		122.34	14

Source: Statistics of the Company, 2020.

2020 REPORT INTERIM

Section 4 Discussion and Analysis of Operations

Debt financing business
In the first half of 2020, with the stable currency policy being more flexible and moderate and the continuous decrease in finance cost, the offering size of credit bonds increased significantly. In January to June 2020, the offering size of corporate bonds throughout the market was RMB1,629.745 billion, representing a year-on-year increase of 55.41%; the offering size of enterprise bonds was RMB190.070 billion, representing a year-on-year increase of 19.94% (Source: WIND, 2020).
During the Reporting Period, the Company strengthened internal management to improve quality control and subsequent supervision and management by putting the risk prevention in a more important place. In January to June 2020, the Company acted as the lead underwriter for 84 tranches of bond offerings, with a total lead underwritten amount of RMB46.103 billion, representing a year-on-year decrease of 38.27%. Details of bond deals underwritten by the Company as the lead underwriter in the first half of
2020 are shown in the table below:

			January to June 2020		January to June 2019
			Lead				Lead
		underwritten				underwritten
			amount				amount
			(RMB100	Number of		(RMB100	Number of
Items			million)	offerings		million)	offerings
Enterprise bonds	77.50		14		118.29	13
Corporate bonds	165.47		46		193.90	35
Debt financing
instruments of
non-financial
enterprises	58.36		10		80.60		16
Financial bonds	159.70		14		391.50		14
Exchangeable bonds		-	-		-	-

Total			461.03	84		784.29	78


Source:	Statistics of the Company, 2020.

Operations of Analysis and Discussion

2020 REPORT INTERIM

Operations of Analysis and Discussion

Section 4 Discussion and Analysis of Operations

Financial advisory business
The Company's financial advisory business mainly comprises of M&A and restructuring of listed companies and NEEQ listings.
In the first half of 2020, the M&A activities decreased in the market in line with a slowdown in economic growth. The number and size of trading in the M&A market experienced a year-on-year decrease. The number and size of trading as reported in the M&A market in the first half of 2020 were 4,122 and RMB832.360 billion, representing a year-on-year decrease of 22.34% and 39.70%, respectively (Source: WIND, 2020). During the Reporting Period, guided by the industrial policies, finance policies and regional development policies of the PRC, the Company actively participated in the M&A and restructuring activities of high-quality enterprises.
In the first half of 2020, as the CSRC fully deepened the NEEQ reform and introduced a series of innovative measures such as establishing the selective layer (精選層) and the public issuance system, the market activity of the NEEQ rose significantly. As of the end of June 2020, the number of enterprises listed on the NEEQ was 8,547, representing a decrease of 406 compared to the beginning of the year. During the Reporting Period, the Company adhered to the core principle of discovering value. Leveraging on its outstanding research capabilities, the Company strengthened business synergy and provided high-quality integrated services for valued customers. As of the end of June 2020, the Company sponsored a total of 56 companies listed on the NEEQ as the lead brokerage (Source: NEEQ, Statistics of the Company, 2020).

In addition, in respect of the overseas investment banking business, the Company carried out such business primarily through GF Capital (Hong Kong), its indirectly wholly-owned subsidiary. During the Reporting Period, GFHK completed 15 deals in lead underwriting (including IPO, refinancing and bond offering) and financial advisory.

2020 REPORT INTERIM

Section 4 Discussion and Analysis of Operations

2. Wealth management business segment

The Group's wealth management business segment mainly comprises of retail brokerage and wealth management business, margin financing and securities lending business, repurchase transaction business and financial leasing business.

Retail brokerage and wealth management business
The Group provides brokerage services for its customers to buy and sell stocks, bonds, funds, warrants, futures and other tradable securities.
At the end of June 2020, the SSE Composite Index, the SZSE Component Index and the ChiNext Index decreased by 2.15%, increased by 14.97% and 35.60%, respectively as compared to the end of last year, while the trading volume of market stocks and funds was RMB94.70 trillion, representing a year-on-year increase of 28.36% (Source: WIND, 2020).
During the Reporting Period, taking wealth management, institutional brokerage, technological finance and integration as the four driving forces, the Company firmly promoted the change and transformation of retail business, comprehensively deepened compliance risk control, and strived to create new competitive advantages in retail business. In 2020, the Company made good progress in promoting the transformation of its business model to digitalization and intelligence and the transformation of its business lines from brokerage to wealth management, expanding institutional brokerage business and comprehensive business and other aspects.
In the first half of 2020, the Company achieved good results by continuing to go deep in its scientific and technological financial model and consistently enhancing its scientific and technological financial capability. As of the end of the Reporting Period, the number of the Company's mobile-phone securities users exceeded 29.50 million, representing an increase of approximately 8% as compared to the end of last year; the number of subscribers of the Company's WeChat account was over 3.05 million; during the Reporting Period, the sales and transfer amount of financial products of the Yitaojin (易淘金) E-commerce platform amounted to RMB181.0 billion.
From January to June 2020, the trading volume of stocks and funds of the Company was RMB7.57 trillion (bilateral statistics), representing a year-on-year increase of 22.81%.

Operations of Analysis and Discussion

2020 REPORT INTERIM

Operations of Analysis and Discussion

2020 REPORT INTERIM

Section 4 Discussion and Analysis of Operations

The trading volume and market share of the Company's securities trading agency business are shown in the table below:

		January to June 2020		January to June 2019
		Trading					Trading
		volume					volume
		as agent					as agent
		(RMB100		Market share		(RMB100	Market share
Item		million)	(%)		million)	(%)
Stocks	71,696.35	4.03	59,062.13	4.25
Funds	4,003.96	3.48	2,577.56	3.04
Bonds		114,415.85	4.20	102,403.47	4.31

Total		190,116.17		4.12	164,043.16	4.26

Note 1: The data is from the statistics of SSE, SZSE and WIND, 2020;

Note 2: The data in the above table is the data of the parent company;

Note 3: The market share refers to the ratio of trading volume of this type of securities to the total trading volume of such type of securities traded on the SSE and SZSE in the same period.

The financial products agency sales of the Company in the first half of 2020 are shown in the table below:

				Total redeemed
	Total sales amount	amount for the
		for the period	period
Type		(RMB100 million)	(RMB100 million)
Fund products	275.38		190.06
Trust products	55.77		45.88
Other financial products	2,873.47		2,856.13

Total	3,204.62		3,092.07

Note: The total sales and redeemed amount in this table include the subscription, application, redemption and targeted investment of OTC products and on-market products, as well as the sales of asset management products issued by GF Asset Management.

Section 4 Discussion and Analysis of Operations

In respect of the futures brokerage business, the Group carried out the futures brokerage business through GF Futures, its wholly-owned subsidiary, and provides trading and settlement services for customers in major international commodity markets through GF Futures (Hong Kong), the wholly-owned subsidiary of GF Futures, and GF Financial Markets (UK) Limited, the wholly-owned subsidiary of GF Futures (Hong Kong).

In regions outside of the PRC, the Group provides brokerage services for high-net-worth individuals and retail customers primarily through GF Brokerage (Hong Kong), its indirectly wholly-owned subsidiary, covering financial products such as stocks and bonds listed on the Hong Kong Stock Exchange and other overseas exchanges, and used the self-developed Yitaojin international trading system to develop overseas wealth management business.

Margin financing and securities lending business
In the first half of 2020, there saw wide-ranged fluctuations in the secondary market, the market risk appetite remained high, and the scale of margin financing and securities lending business increased steadily. As of the end of June 2020, the balance of margin financing and securities lending in SSE and SZSE was RMB1,163.768 billion, representing an increase of 14.17% as compared to the end of 2019 (Source: WIND, 2020).
In 2020, the Company continuously strengthened refined management of margin financing, securities lending and other businesses and, relying on the tiered service system, took multiple measures to promote the steady development of the business. As of the end of June 2020, the closing balance of the Company's margin financing and securities lending business was RMB56.965 billion, representing a year-on-year increase of 13.92% as compared to the end of 2019; and the market share was 4.89%.
Repurchase transaction business
In the first half of 2020, the market stock pledged business showed a contraction as a whole. The scale of the stock pledged business of the Company remained stable as a result of the constant strengthening of risk control access of stock pledged business and the optimizing of project structure. As of the end of June 2020, the balance of the exchange traded Stock Pledged Repo Transaction business carried out by the Company through its owned funds was RMB11.997 billion, representing a decrease of 1.62% as compared to the end of 2019.

Operations of Analysis and Discussion

2020 REPORT INTERIM

Operations of Analysis and Discussion

2020 REPORT INTERIM

Section 4 Discussion and Analysis of Operations

Financial leasing business
To increase the stickiness of the Group's customers and enhance its comprehensive financial service capability, the Company conducted financial leasing business through GFFL, its subsidiary.
In the first half of 2020, the financial leasing industry was put under great pressure. During the Reporting Period, GFFL continued to strengthen the construction and optimization of its comprehensive risk management system. As of the end of June 2020, the net financial leasing and sale and leaseback receivables amounted to RMB2.792 billion.

3. Trading and institution business segment

The Group's trading and institution business segment mainly includes the equity and derivatives trading business, fixed income sales and trading business, OTC sales and trading business, alternative investment business, investment research business and asset custody business.

Equity and derivatives trading business
The equity and derivatives trading business of the Company mainly engages in market-making and trading of shares, equity-linked financial products and equity derivative products.
In the first half of 2020, the A shares market fluctuated significantly with obvious structural differentiation. As of the end of June 2020, the SSE Composite Index dropped slightly by 2.15%, while SZSE Component Index, SSESME Composite Index and the ChiNext Index rose by 14.97%, 20.85% and 35.60%, respectively, as compared to the end of 2019. In the derivatives market, the liquidity and volatility of derivatives increased gradually in line with increased market volatility.
During the Reporting Period, in adherence to the idea of value investment, the Company's equity investment focused on investments in blue chip stocks, technology stocks and other stocks and better controlled its positions based on market fluctuations, coupled with derivatives investment better seized the trading opportunities arising from the market fluctuations, which together contributes to higher yields. Meanwhile, the average daily scale of the Company's market-making business increased substantially as compared to the previous year. A variety of option market making products received a monthly rating of AA (the highest one) in 2020, and obtained the "2019 Outstanding Option Market Maker" award from the SSE.

Section 4 Discussion and Analysis of Operations

Fixed income sales and trading business
The fixed income sales and trading of the Company consists mainly of the sales of underwritten bonds to institutional clients, and the market-making and trading of financial products and interest rate derivatives with fixed income. The institutional clients of the Company mainly include commercial banks, insurance companies, fund companies, financial companies, trust companies and qualified foreign investors who have been approved to invest in China's capital market by the CSRC.
The Company conducts trading in various types of fixed income and related derivative products on the interbank bond market and exchanges in the PRC and provides market making services, such as government bonds, policy-based financial bonds, medium-term notes, short-term financing bonds, enterprise bonds, company bonds, government bond futures, interest rate swaps and standard bond forward. The Company executes fixed-income derivative instruments (such as interest rate swaps and government bond futures) to hedge the risk arising from transactions and market-making business. In addition, the Company carries out the overseas FICC business mainly through GF Global Capital, its indirect wholly-owned subsidiary. In the first half of 2020, the Company ranked No. 6 among securities firms in terms of the trading volume of bonds in China (Source: www.chinabond.com.cn, 2020).
During the Reporting Period, the Company properly managed the duration, leverage and investment scale of the bond investment portfolio, seized the staged market opportunities, and achieved better investment return.
OTC sales and trading business
The Company designs and sells a variety of OTC products, including non-standard products, structured notes and OTC derivatives. Meanwhile, the Company provides liquidity support to non-standard products and structured notes products through OTC.
As of the end of June 2020, the Company has issued 16,665 OTC products in aggregate with an aggregate amount of approximately RMB761.192 billion. The market value of the products as at the end of the Reporting Period was approximately RMB49.390 billion. Specifically, the Company issued 1,585 new OTC products with an aggregate amount of RMB33.244 billion in the first half of 2020. As of the end of June 2020, the Company provided market-making services for 96 NEEQ enterprises.

Operations of Analysis and Discussion

2020 REPORT INTERIM

Operations of Analysis and Discussion

2020 REPORT INTERIM

Section 4 Discussion and Analysis of Operations

Alternative investment business
The Group actively carried out alternative investment business with its own funds through GF Qianhe, its wholly-owned subsidiary. Currently, the Group mainly focuses on equity investment business.
In the first half of 2020, GF Qianhe focused on such industries as consumer, artificial intelligence, technology and pharmaceuticals. During the Reporting Period, GF Qianhe completed 8 new equity investment projects with a total investment of RMB180 million. As of the end of June 2020, GF Qianhe completed 125 equity investment projects.
Investment research business
The investment research business of the Group mainly comprises investment research services provided in various areas such as macro economy, strategy, fixed income, financial engineering, industry and listed companies for institutional clients. The Company earned commission fee for sub-position transactions from institutional clients. Specifically, our investment research services cover the provision of research reports and customized investment research services for the National Social Security Fund, insurance companies, fund companies, private equity funds, financial companies, securities companies and other institutional investors in Hong Kong and the PRC. The Group's equity research covers 28 industries and nearly 700 A-share listed companies in China, and nearly 170 companies listed on the Hong Kong Stock Exchange.
The outstanding research capacity of the Company enjoys a high reputation in the industry. The Company received numerous honors in 2019: the first place in the "New Fortune's Domestic Best Research Teams (新財富本土最佳研究團隊)" in 2019, "Top 5 Golden Bull Research Team (五大金牛研究團隊)" award by "China Securities Industry Analyst Golden Bull Award (中國證券業分析師金牛獎)" for the sixth consecutive year, and the second place in the "Best Analyst Team (最佳分析師團隊)" by "Institutional Investors • Caixin Capital Market Analyst Achievement Award (機構投資者 • 財新資本市場分析師成就獎)" in 2019. Currently, the Company is continuously promoting the internationalization of its research brands so far as permitted by and in compliance with laws and regulations.
Asset custody business
The Company provides high-quality asset custody and fund services for various asset management products. The targets of provision of such services include commercial banks and their wealth management subsidiaries, securities companies and their subsidiaries, fund companies and their subsidiaries, futures companies and their subsidiaries, private equity fund managers and various other asset management institutions.

Section 4 Discussion and Analysis of Operations

In 2020, the private equity fund industry continued to develop in a standardized manner with market resources gradually aggregated in medium and large high-quality private equity fund managers. The brokerage settlement model was adopted for new publicly-offered funds which provided service opportunities for the asset custody business of brokerages. The custody outsourcing services in respect of bank wealth management products was gradually deregulated for brokerages.

During the Reporting Period, the Company actively expanded the market, strengthened infrastructural construction, improved comprehensive service capabilities and enhanced risk control system to consistently improve customer satisfaction. As of the end June 2020, the total asset scale of the asset custody and fund services provided by the Company was RMB227.690 billion, representing a year-on-year increase of 8.7%, of which the scale of trust products was RMB98.744 billion, and the scale of fund service products provided was RMB128.947 billion.

4. Investment management business segment

The Group's investment management business segment mainly covers asset management business, public fund management business and private fund management business.

Asset management business
Asset management services provided by the Group aim to preserve and increase the value of financial assets for its clients. The Group's asset management clients include individuals and institutional investors. The Group carries out asset management business through its subsidiaries, namely GF Asset Management, GF Futures and GF Asset Management (Hong Kong).
In the first half of 2020, the asset management institutions of various brokerages relied on their own resources to actively promote the issuance of various products. Net income from the overall asset management for customers in the industry showed a year-on-year growth trend. However, with the increase in market participants such as the wealth management subsidiaries of banks, the industry competition intensified further, and the market structure was further differentiated.

Operations of Analysis and Discussion

2020 REPORT INTERIM

Operations of Analysis and Discussion

2020 REPORT INTERIM

Section 4 Discussion and Analysis of Operations

GF Asset Management manages the investments of client assets under various asset categories and investment strategies, including fixed-income investment, equity investment, quantitative investment and cross-border products. The clients of GF Asset Management mainly include commercial banks, trust companies, other institutional investors and affluent population including the high-net-worth individuals. During the Reporting Period, GF Asset Management consistently improved its operating mechanism, strengthened infrastructural construction and raised the internal control level, achieving overall good operating results. It has continuously enhanced its core capabilities in active management, assets allocation, products design and innovation and channel marketing. To comply with the requirements of the new asset management regulations, the Company's asset management scale decreased year-on-year; the Company conducted an orderly rectification of the large collective products and successfully completed the public offerings of four large collective products as of the end of June 2020. GF Asset Management continued to develop new businesses and new products, further improving the layout of its product lines.

As of the end of June 2020, the net value of collective asset management schemes and single asset management schemes of GF Asset Management increased by 11.28% and 4.71%, respectively, and that of its specific asset management schemes decreased by 15.40% as compared with the end of 2019, and its total scale increased by 5.24% as compared with the end of 2019. The asset management scale of GF Asset Management as of the end of June 2020 is as follows:

		Net value of asset management
		(RMB100 million)

		June 30,		December 31,
	2020		2019
Collective asset management business	1,369.87	1,230.97
Single asset management business	1,483.56	1,416.85
Specific asset management business	274.37	324.32

Total	3,127.80		2,972.14

Source: Statistics of the Company, 2020; the sum of the sub-items may be different from the aggregated data, which is caused by rounding.

Section 4 Discussion and Analysis of Operations

As of the end of June 2020, the scale of regulatory entrusted fund of GF Asset Management ranked 9th (source: the Securities Association of China, 2020), and the average monthly scale of active asset management ranked 5th (source: the Asset Management Association of China, 2020) in the securities industry as of the end of June 2020.

The Group carries out futures asset management business mainly through GF Futures. In the field of overseas asset management business, the Group provides securities advising and asset management services to its customers mainly through GF Asset Management (Hong Kong), its indirectly wholly-owned subsidiary. GFHK is one of the first Chinese financial institutions in Hong Kong granted with the RQFII qualification.

Public fund management service
The Group primarily carries out public fund management services through its controlled subsidiary, GF Fund, and associate company, E Fund.
In the first half of 2020, the fund industry developed rapidly, and the public fund industry continued its good growth momentum. The main players in the industry exerted their active management capabilities and achieved good returns for holders. The scale of the industry also further concentrated on high-quality products. Meanwhile, the fund industry actively served the reform of the capital market and the real economy by exploring to take various innovative methods such as Shanghai Gold ETF (上海金ETF), NEEQ funds and publicly offered REITs.
As at June 30, 2020, the Company held 60.59% interest in GF Fund. GF Fund is one of the investment managers of the National Social Security Fund and the Basic Pension Insurance Fund. It also provides asset management services for insurance companies, financial companies, other institutional investors and high-net-worth individuals. In addition, GF Fund can invest the capital raised domestically in overseas capital market through the Qualified Domestic Institutional Investors Program (QDII), and invest the capital raised from overseas markets in China's capital market in the form of RQFII through GF International Investment Management Limited, its wholly-owned subsidiary. As at June 30, 2020, the publicly offered funds managed by GF Fund in aggregate reached RMB639.481 billion, representing an increase of 27.24% as compared to the end of 2019, and the total fund size excluding money market funds and short-term wealth management bond funds amounted to RMB416.591 billion, ranking third in the industry (Source: Statistics of the Company, China Galaxy Securities Fund Research Center, 2020).

Operations of Analysis and Discussion

2020 REPORT INTERIM

Operations of Analysis and Discussion

Section 4 Discussion and Analysis of Operations

As at June 30, 2020, the Company held 22.65% interest in E Fund, and was one of its three parallel largest shareholders. E Fund is one of the investment managers of the National Social Security Fund and the Basic Pension Insurance Fund. It also provides asset management services for insurance companies, financial companies, enterprise annuity, other institutional investors and high-net-worth individuals. In addition, E Fund can invest the capital raised domestically in overseas capital market through the Qualified Domestic Institutional Investors Program (QDII), and invest the capital raised from overseas markets in China's capital market in the form of RQFII. As at June 30, 2020, the publicly offered funds managed by E Fund in aggregate reached RMB898.595 billion, representing an increase of 22.95% as compared to the end of 2019, and the total fund size excluding money market funds and short-term wealth management bond funds amounted to RMB547.834 billion, ranking first in the industry (Source: Statistics of the Company, China Galaxy Securities Fund Research Center, 2020).

Private fund management services
The Group mainly engages in private fund management business through GF Xinde, its wholly-owned subsidiary.
In the first half of 2020, GF Xinde focused on such industries as biomedicine, intelligent manufacturing and corporate services.
During the Reporting Period, the funds under the management of GF Xinde completed a number of equity investment deals, with the investment amount up to approximately RMB1 billion. As of the end of June 2020, GF Xinde set up and managed nearly 40 private funds, the total size of customers' assets under management was near to RMB10 billion, and GF Xinde and the funds under its management completed approximately 280 equity investment projects.
In the overseas market, the Group is engaged in overseas investments and private equity management services mainly through its indirectly wholly-owned subsidiary GF Investments (Hong Kong) and subsidiaries thereunder. Several investment projects have exited by way of mergers and acquisitions or been listed on the stock exchanges in Hong Kong, the United States and other regions.

2020 REPORT INTERIM

Section 4 Discussion and Analysis of Operations

ANALYSIS ON FINANCIAL STATEMENTS
1. Analysis on Consolidated Statement of Profit or Loss Revenue composition

									Unit: RMB' 000
							Amount of	Percentage

		January to		January to	increase/	of increase/
Item		June 2020		June 2019	decrease	decrease
Commission and fee income	6,426,107	5,096,123	1,329,984	26.10%
Interest income	5,438,136	5,481,575	-43,439	-0.79%
Net investment gains	5,392,343	4,191,487	1,200,856	28.65%
Other income and gains
or losses	421,486	885,925	-464,439	-52.42%
Total revenue and
other income	17,678,072	15,655,110	2,022,962	12.92%

Operations of Analysis and Discussion

During the period from January to June 2020, due to favorable market conditions, total revenue and other income of the Group was RMB17,678 million, representing an increase of 12.92% as compared with RMB15,655 million for the corresponding period of 2019.

The increase in total revenue and other income was mainly reflected by commission and fee income of RMB6,426 million in the period from January to June 2020, an increase of RMB1,330 million or 26.10% as compared with the corresponding period of 2019, mainly attributable to the increase in commission and fee income from the securities brokerage business and fund management fee income as a result of the increase in stock and fund trading volume and the scale of fund management business. The increase in total revenue and other income was also reflected by net investment gains of RMB5,392 million in the period from January to June 2020, an increase of RMB1,201 million or 28.65% as compared with the corresponding period of 2019, mainly attributable to the increase in unrealised fair value changes of financial assets at fair value through profit or loss and the increase in net realised gains from disposal of financial instruments.

2020 REPORT INTERIM

Operations of Analysis and Discussion

Section 4 Discussion and Analysis of Operations

Expenses composition
									Unit: RMB' 000
							Amount of	Percentage

		January to		January to	increase/	of increase/
Item		June 2020		June 2019	decrease	decrease
Depreciation and amortization	356,291		310,572	45,719	14.72%
Staff costs	4,216,362		3,131,974	1,084,388	34.62%
Commission and fee expenses	148,215		152,185	-3,970	-2.61%
Interest expenses	3,531,544		3,801,143	-269,599	-7.09%
Other operating expenses	1,427,796	2,397,293	-969,497	-40.44%
Credit loss expense	358,306	464,435	-106,129	-22.85%
Impairment losses	1,002	178	824	462.92%

Total expenses	10,039,516		10,257,780	-218,264	-2.13%

For the period from January to June 2020, total expenses of the Group were RMB10,040 million, representing a decrease of 2.13% from RMB10,258 million for the corresponding period in 2019. The change in total expenses was mainly reflected in the increase in staff costs and the decrease in other operating expenses. The increase in staff costs was mainly attributable to the increase in the provision on salaries, bonuses and allowances. The decrease in other operating expenses was mainly attributable to the decrease in trading business costs.

For the period from January to June 2020, the Group realized net profit attributable to owners of the Company of RMB5,752 million, representing a year-on-year increase of 38.93%; basic earnings per share were RMB0.75, representing a year-on-year increase of 38.89%; and return on weighted average net assets was 6.12%, representing a year-on-year increase of 1.39 percentage points.

2020 REPORT INTERIM

Section 4 Discussion and Analysis of Operations

2. Analysis on Consolidated Statement of Financial Position

														Unit: RMB' 000
														Amount of	Percentage

		June 30,					December 31,				increase/	of increase/
	2020			Composition	2019			Composition	decrease	decrease
Non-current assets	32,384,264		7.68%	32,766,922	8.31%	-382,658	-1.17%
Of which: Equity instruments at fair value through
other comprehensive income	11,037,733		2.62%	11,386,054	2.89%	-348,321	-3.06%
Investments in associates	4,012,555		0.95%	4,173,537	1.06%	-160,982	-3.86%
Property and equipment	1,924,579	0.46%	2,044,528	0.52%	-119,949	-5.87%
Financial assets held under resale agreements	937,674	0.22%	382,617	0.10%	555,057	145.07%
Investments in joint ventures	2,400,016	0.57%	2,745,489	0.70%	-345,473	-12.58%
Financial assets at fair
value through prot or loss	7,027,818	1.67%	6,821,485	1.73%	206,333	3.02%
Financial leasing receivables	988,799	0.23%	1,537,281	0.39%	-548,482	-35.68%
Debt instruments at amortized cost		175,551	0.04%	332,004	0.08%	-156,453	-47.12%
Current assets		389,269,925			92.32%			361,624,142		91.69%		27,645,783	7.64%
Of which: Bank balances	98,484,270		23.36%	80,707,188	20.46%	17,777,082	22.03%
Advances to customers	61,952,593	14.69%	54,786,938	13.89%	7,165,655	13.08%
Financial assets at fair
value through prot or loss	83,008,815	19.69%	74,091,687	18.79%	8,917,128	12.04%
Debt instruments at fair value through other
comprehensive income	94,882,040	22.50%	98,597,038	25.00%	-3,714,998	-3.77%
Clearing settlement funds	18,892,113	4.48%	19,548,482	4.96%	-656,369	-3.36%
Financial assets held under resale agreements	15,327,051	3.63%	20,305,993	5.15%	-4,978,942	-24.52%
Deposits with exchanges and non-bank
financial institutions	7,829,243	1.86%	6,646,320	1.69%	1,182,923	17.80%
Debt instruments at amortized cost	1,413,408	0.34%	1,948,128	0.49%	-534,720	-27.45%

Total assets	421,654,189		100.00%	394,391,064	100.00%	27,263,125	6.91%

Operations of Analysis and Discussion

2020 REPORT INTERIM

Section 4 Discussion and Analysis of Operations

Operations of Analysis and Discussion

2020 REPORT INTERIM

												Amount of	Percentage
		June 30,				December 31,			increase/	of increase/
	2020			Composition	2019		Composition	decrease	decrease
Current liabilities	257,295,514		79.22%	243,187,534	80.99%	14,107,980	5.80%
Of which: Accounts payable to brokerage clients	102,084,108	31.43%	79,680,645	26.54%	22,403,463	28.12%
Financial assets sold under repurchase
agreements	72,862,847	22.43%	95,396,421	31.77%	-22,533,574	-23.62%
Short-term financing payables	20,752,573		6.39%	14,880,673	4.96%	5,871,900	39.46%
Other liabilities	5,977,058		1.84%	5,704,495	1.90%	272,563	4.78%
Due to banks and other financial institutions	5,327,317		1.64%	2,984,030	0.99%	2,343,287	78.53%
Bonds payable	30,526,114		9.40%	32,353,680	10.78%	-1,827,566	-5.65%

Net current assets		131,974,411					118,436,608			13,537,803	11.43%

Non-current liabilities		67,500,191			20.78%			57,066,934		19.01%		10,433,257	18.28%
Of which: Bonds payable	61,093,130		18.81%	50,325,973	16.76%	10,767,157	21.39%
Long-term loans	1,702,312		0.52%	2,025,776	0.67%	-323,464	-15.97%

Total liabilities	324,795,705		100.00%	300,254,468	100.00%	24,541,237	8.17%

Total equity	96,858,484					94,136,596			2,721,888	2.89%

As of June 30, 2020, total assets of the Group were RMB421,654 million, representing an increase of RMB27,263 million or 6.91% as compared with that at the end of 2019; and total liabilities were RMB324,796 million, representing an increase of RMB24,541 million or 8.17% as compared with that at the end of 2019. In the Group's assets, the proportion of bank balances and clearing settlement funds to total assets was 27.84%; the proportion of financial assets at fair value through profit or loss and equity instruments and debt instruments at fair value through other comprehensive income to total assets was 46.48%; the proportion of advances to customers to total assets was 14.69%; and the proportion of financial assets held under resale agreements to total assets was 3.85%.

As of June 30, 2020, non-current assets were RMB32,384 million, representing a decrease of 1.17% as compared with that at the end of 2019, substantially flat with that at the end of last year; current assets were RMB389,270 million, representing an increase of 7.64% as compared with that at the end of 2019, which was mainly attributable to the increase in bank balances, financial assets at fair value through profit or loss and advances to customers; current liabilities were RMB257,296 million, representing an increase of 5.80% as compared with that at the end of 2019, which was mainly attributable to the increase in accounts payable to brokerage clients and short- term financing payables, partly offset by the decrease in financial assets sold under repurchase agreements; and non-current liabilities were RMB67,500 million, representing an increase of 18.28% as compared with that at the end of 2019, which was mainly attributable to the newly issued bonds.

Section 4 Discussion and Analysis of Operations

The Group's equity attributable to owners of the Company as of June 30, 2020 was RMB93,951 million, representing an increase of RMB2,717 million or 2.98% as compared with that as of the end of 2019. Excluding the effect of accounts payable to brokerage clients, the Group's gearing ratio as of June 30, 2020 was 69.69%, representing a decrease of 0.40 percentage point as compared with that of 70.09% as of the end of 2019, while the Group's assets and liabilities structure remained relatively stable.

Borrowings and debt financing

As of June 30, 2020, total borrowings and bonds financing of the Group amounted to RMB119,438 million. The following table sets forth details of the Group's borrowings and bonds financing:

					Unit: RMB' 000

		June 30,		December 31,
	2020		2019
Short-term borrowings	4,035,163		1,038,013
Short-term financing payables	20,752,573		14,880,673
Bonds payable	91,619,244		82,679,653
Long-term loans	3,031,306		3,533,362

Total	119,438,286		102,131,701

Operations of Analysis and Discussion

For details of the interest rates and maturities of short-term borrowings, short-term financing payables, bonds payable and long-term loans, please refer to Notes 35, 36, 44 and 45 to the financial report attached below.

Apart from borrowings and bonds financing instruments, the Group also raised funds through inter-bank lending, brokers lending as well as on-market and OTC repurchase. As at the end of the Reporting Period, the balance due to banks and other financial institutions amounted to RMB5,327 million and the balance of financial assets sold under repurchase agreements amounted to RMB72,863 million.

The aforesaid debts totaled RMB197,628 million.

Save as disclosed in this report, as of June 30, 2020, the Group did not have any outstanding mortgages, pledges, debentures, loan capital, bank overdrafts, borrowings or other similar debts or liabilities under acceptances or letter of credits, any guarantees or other material contingent

liabilities. INTERIMREPORT

2020

Operations of Analysis and Discussion

2020 REPORT INTERIM

Section 4 Discussion and Analysis of Operations

Analysis on the Consolidated Statement of Cash Flows
As of June 30, 2020, cash and cash equivalents of the Group amounted to RMB18,044 million, representing a decrease of 28.66% as compared with that of RMB25,293 million for the corresponding period of 2019, of which, net cash used in operating activities from January to June 2020 was RMB23,514 million, representing an increase of 309.45% as compared with that of RMB5,743 million for the same period of 2019, which was mainly attributable to the increase in net cash outflow from financial assets sold under repurchase agreements and financial assets at fair value through profit or loss, which was partially offset by the increase in net cash inflow from the amounts due to banks and other financial institutions; net cash from investing activities from January to June 2020 was RMB5,456 million, as compared with net cash used in investing activities of RMB4,106 million for the same period in 2019, which was mainly attributable to the increase in net cash inflow from the disposal of financial instruments at fair value through other comprehensive income; and net cash from financing activities from January to June 2020 was RMB14,774 million, representing an increase of 6.65% as compared with RMB13,853 million for the same period of 2019, which was mainly attributable to the increase in net cash inflow from borrowings and long-term loans, which was partially offset by the increase in net cash outflow from short-term financing payables and bonds payable.
Explanation of changes in the consolidation scope of financial statements
The changes in the Group's consolidation scope of financial statements during the Reporting Period are detailed in the notes to the condensed consolidated financial statements "51. Change of scope of consolidation".
Change in principal accounting policies and accounting estimates
The changes in the Group's major accounting policies and accounting estimates during the Reporting Period are detailed in the notes to the condensed consolidated financial statements "2. Basis of preparation and changes on accounting policies"; there were no significant accounting errors requiring rectification occurred in the Group.

Section 4 Discussion and Analysis of Operations

6. Restricted asset rights as of the end of the Reporting Period

		June 30,		December 31,
	2020		2019
		RMB		RMB
Financial assets at fair value through profit or loss (FVTPL)
pledged for pledge-style repo business	5,506,847,046.49	9,441,607,346.03
Of which: Financial assets at FVTPL pledged for bond pledged
quoted-repo business	444,456,042.49	203,810,430.29
Financial assets at fair value through other comprehensive
income (FVTOCI) pledged for pledge-style repo business	57,399,301,404.36	71,814,113,880.04
Of which: Financial assets at FVTOCI pledged for bond pledged
quoted-repo business	24,062,689.00	28,714,804.80
Debt instruments at amortized cost pledged for pledge-style repo
business	729,906,851.93	800,521,966.12
Financial assets held under resale agreements pledged for
pledge-style repo business		-	102,938,300.00
Financial assets at FVTPL transferred for buyout repo business	1,735,847,940.56	497,913,207.00
Financial assets at FVTOCI transferred for buyout repo business	2,703,409,914.66	3,594,147,939.75
Financial assets held under resale agreements transferred for
buyout repo business		-	1,392,511,046.41
Financial assets at FVTPL transferred for margin financing and
securities lending business	342,993,511.02	276,959,909.74
Financial assets at FVTOCI transferred for margin financing and
securities lending business	39,325.00		42,978.00
Financial assets at FVTOCI pledged for refinancing business	666,578,192.28		700,479,181.08
Financial assets at FVTPL pledged for bond lending business	1,436,004,244.24		4,181,260,040.26
Financial assets at FVTOCI pledged for bond lending business	2,083,052,071.21		4,060,664,522.40
Debt instruments at amortized cost pledged for bond lending
business	111,106,915.63		112,309,479.71
Financial assets held under resale agreements pledged for bond
lending business		-	237,252,334.45
Rights and interests in financial leasing and sale and leaseback
receivables restricted for bank borrowings	2,441,508,445.98		2,963,606,315.17
Financial assets held under resale agreements pledged for due
to banks and other financial institutions business		-	129,594,468.81
Financial assets at FVTPL pledged for due to banks and other
financial institutions business	1,656,314,766.05		383,056,709.85
Financial assets at FVTOCI pledged for due to banks and other
financial institutions business	158,710,176.53		293,306,397.26

Total	76,971,620,805.94	100,982,286,022.08

Operations of Analysis and Discussion

2020 REPORT INTERIM

Operations of Analysis and Discussion

Section 4 Discussion and Analysis of Operations

IV. ANALYSIS ON INVESTMENT CONDITIONS

1. General

Investment in the Reporting	Investment of the same period
Period (RMB)	of last year (RMB)	Change
-	500,000,000.00	-100.00%

Material equity investments made during the Reporting Period N/A
Material non-equity investments in progress during the Reporting Period N/A

2020 REPORT INTERIM

Section 4 Discussion and Analysis of Operations

4. Financial asset investment

Securities investment

Unit: RMB' 0,000

							Accumulative
						Profit or loss	fair value			Profit or loss
				Accounting	Book value at	from the fair	change	Purchase		in the	Book value
Type of			Investment	measurement	the beginning	value change	accounted	amount of	Sales amount	Reporting	at the end of	Accounting	Source of
securities	Stock code	Short name	cost	mode	of the period	of the period	into equity	the period	of the period	Period	the period	subject	capital
Fund	003281	Guangfa Huoqibao B	544,276.92	Measured at	351,267.48	-	-	459,896.25	267,900.00	2,727.76	544,295.23	Financial assets	Self-owned
				fair value								held for trading
Fund	002183	GF Tiantianhong B	291,638.61	Same as above	333,839.89	-	-	231,549.99	275,044.58	1,703.65	291,649.56	Financial assets	Self-owned
												held for trading
Fund	002758	CCB Fund Cash	151,579.41	Same as above	85,008.52	-	-	66,577.54	-	1,579.01	151,587.52	Financial assets	Self-owned
		Return Monetary Fund										held for trading
Fund	000917	Jiashi Kuaixian A	130,847.99	Same as above	20,008.50	-	-	130,847.99	20,000.00	969.89	130,978.40	Financial assets	Self-owned
												held for trading
Fund	000662	Yinhua Live Money F	107,692.35	Same as above	106,469.31	-	-	1,191.63	-	1,235.98	107,705.29	Financial assets	Self-owned
												held for trading
Fund	003164	CCB Fund Cash	101,073.28	Same as above	50,030.80	-	-	101,046.30	50,000.00	1,049.59	101,080.38	Financial assets	Self-owned
		Return Fund B										held for trading
Bond	019613	19 Treasury Bond 03	98,277.58	Same as above	-	-	225.92	97,000.00	-	42.88	99,332.76	Other debt	Self-owned
												investments
Bond	019628	20 Treasury Bond 02	90,926.35	Same as above	-	-	-1,079.35	90,000.00	-	29.04	90,595.60	Other debt	Self-owned
												investments
Fund	003474	Southern Tiantianli B	87,902.52	Same as above	86,822.08	-	-	1,078.22	-	1,085.66	87,907.74	Financial assets	Self-owned
												held for trading
Bond	170209	17 CDB 09	82,941.91	Same as above	85,032.17	-	443.46	-	-	1,851.29	86,136.21	Other debt	Self-owned
												investments
Other securities investments held		17,606,001.12	-	18,225,603.08	224,709.35	24,525.42	N/A	N/A	665,594.70	18,092,123.28	-	-
at the end of the period
Total			19,293,158.04	-	19,344,081.83	224,709.35	24,115.45	N/A	N/A	677,869.45	19,783,391.97	-	-

Note: Other securities investments include the investment by the Company in the special account of the CSF. Pursuant to the relevant contract entered into between the Company and CSF, the special account will be under the united operation of CSF, with the investment risks and investment income shared by us based on the investment ratio. As at the end of the Reporting Period, the balance of the Company's investment in such special account was RMB10,310 million and the

Company has determined the book value of the investment in such special account based on the asset report provided by CSF to be RMB10,260 million.

1. Derivative investment conditions N/A
SALE OF MAJOR ASSETS AND EQUITY
1. Sale of major assets
  The Company has not sold any of its material assets in the Reporting Period.
2. Sale of major equity
  The Company has not sold any of its major shares in the Reporting Period.

Operations of Analysis and Discussion

2020 REPORT INTERIM

Operations of Analysis and Discussion

2020 REPORT INTERIM

Section 4 Discussion and Analysis of Operations

VI. ANALYSIS ON PRINCIPAL SUBSIDIARIES AND PARTICIPATING STOCK COMPANIES

Company	Company		Registered	Total assets	Net assets	Net profit
name	type	Main business	capital	(RMB)	(RMB)	(RMB)
GF Futures	Subsidiary	Commodity futures brokerage, financial futures brokerage,	RMB1,400,000,000	19,887,247,962.74	2,495,165,516.38	133,276,416.80
		futures investment consultancy, asset management and fund
		sale.
GF Xinde	Subsidiary	Equity investment; providing financial advisory services on	RMB2,800,000,000	7,631,045,681.72	5,900,219,609.74	781,433,088.10
		equity investment to clients and other businesses approved by
		CSRC.
GFHK	Subsidiary	Investment holding, undertaking investment banking, sale	HKD5,600,000,000	20,074,499,848.38	4,678,539,864.47	-29,529,240.34
		and transactions, asset management, equity investment and
		other businesses approved by the SFC through professional
		subsidiaries.
GF Qianhe	Subsidiary	Project investment; investment management.	RMB3,603,500,000	5,543,984,242.42	5,267,000,799.41	476,133,565.64
GF Asset	Subsidiary	Securities asset management.	RMB1,000,000,000	11,811,158,929.53	5,947,743,228.82	466,295,489.03
Management
GFFL	Subsidiary	Medical equipment leasing services; commercial factoring	RMB800,000,000	3,342,190,872.38	873,919,818.62	-44,380,036.52
		business related to main business (only for financial leasing
		enterprises); financial leasing services (limited to foreign-
		invested enterprises); leasing business (foreign-invested
		enterprises shall operate with approval letter or certificate);
		leasing transaction consultation and guarantee (foreign-
		invested enterprises shall operate with approval letter or
		certificate); purchase of leased property at home and abroad
		(foreign-invested enterprises shall operate with approval letter
		or certificate); residual value disposal and maintenance of the
		leased property (foreign-invested enterprises shall operate
		with approval letter or certificate); financial leasing of class III
		medical devices (limited to foreign-invested enterprises).
GF Hexin	Subsidiary	Investment management, asset management, fund	RMB100,000,000	126,339,104.31	115,863,543.16	4,106,885.32
		management, equity investment, investment consulting.
GF Fund	Subsidiary	Fund raising, fund sale, asset management, other businesses	RMB126,880,000	10,408,778,641.27	7,056,945,558.82	910,279,041.06
		approved by the CSRC.
E Fund	Participating stock	Publicly offered securities investment fund management, fund	RMB132,442,000	13,441,828,286.38	9,348,351,962.12	1,048,396,464.45
	company	sale, asset management for specific customers.

Explanation on the status of principal subsidiaries and participating stock companies

GF Xinde recorded net profit of RMB781 million, representing a year-on-year increase of 298.77%, which was mainly due to the increase in gain on financial assets at fair value through profit or loss. GF Fund recorded net profit of RMB910 million, representing a year-on-year increase of 53.01%, which was mainly due to the increase in fund management fee income.

Section 4 Discussion and Analysis of Operations

VII. STRUCTURED ENTITIES CONTROLLED BY THE COMPANY

The consolidated structured entities of the Group are primarily those structured entities of which the Group acts as a manager or investment advisor and in which the Group invests. The variable returns enjoyed by the Group through participating in the relevant activities of these structured entities have significant impact and the Group is able to impose influence on the amount of variable returns by applying its power over these structured entities. As at June 30, 2020, there were a total of 23 (as at the beginning of the period: 19) products consolidated into the consolidated financial statements of the Group.

As at June 30, 2020, the net assets of the consolidated structured entities were RMB12,881,438,763.82 (as at the beginning of the period: RMB11,568,043,861.71). The book value of the Group's interests was RMB6,168,423,530.02 (as at the beginning of the period: RMB5,066,657,735.58). The book value of the interests in the aforesaid structured entities held by various parties outside the Group was RMB6,713,015,233.80 (as at the beginning of the period: RMB6,501,386,126.13).

VIII. ESTIMATE OF THE OPERATING RESULTS FOR JANUARY TO SEPTEMBER 2020

N/A

IX. RISKS EXPOSED TO THE COMPANY AND COUNTER-MEASURES

1. During the Reporting Period, the major risks affecting the Company's business operations included policy risk, liquidity risk, market risk, credit risk, compliance risk, operational risk, information technology risk, etc. and were mainly reflected in the following aspects:

Policy risk
Policy risk refers to the adverse effects on the operation of security companies due to changes in national macro-control measures, laws and regulations, regulatory policies and trading on rules relating to the securities industry. On the one hand, the influence of the national macro-control measures on the securities market is larger, and the changes and adjustments strength in macro policies, interest rates and exchange rates are closely related to the tendency of the financial market, which directly affects the operation performance of securities companies; on the other hand, securities industry is a highly regulated industry and the regulatory policies issued by the regulatory authorities directly relate to the changes in the operation performance of the securities companies. In case the Company fails to timely adapt to or even violates the change in the policies and regulations in its daily operations, it may be subject to penalty, suspension or cancellation of business qualification or other administrative penalties from the regulatory authorities, leading to economic loss, damage to reputation or even risk of being managed or bankruptcy of the Company.

Operations of Analysis and Discussion

2020 REPORT INTERIM

Operations of Analysis and Discussion

2020 REPORT INTERIM

Section 4 Discussion and Analysis of Operations

Liquidity risk
Liquidity risk refers to the risk of our failure to obtain sufficient funds at a reasonable cost and in a timely manner to pay our debts as they fall due, perform other payment obligations and satisfy the capital requirements to carry out our businesses in the ordinary course. Liquidity risk and incidents include but are not limited to: mismatch of asset and liability structures, difficulty in asset realization, operating loss, deferred payment or breach of contract by counterparties, as well as liquidity risks transformed from credit risk, market risk, reputation risk and other categories of risks. As the Company's capital strength increases and the product portfolio is increasingly enriched, the products represent a diversified, complicated and international developing tendency and the risk type and the term structure faced by the asset end becomes increasingly complicated, the Company needs to actively expand the financing channels to meet the demand for internal liquidity, and ensure that its asset and liability term structures reasonably match with each other through reasonable arrangement of the liability. In addition, the liquidity risk management of a security company also needs to satisfy the supervision requirements for external liquidity risks as the bottom line and prevent the liquidity crisis that may be caused by various risk incidents.
Market risk
Market risk refers to the risk of loss in the Company's businesses resulting from adverse changes in the market price (price of equity securities, interest rates, exchange rates or commodity price, etc.) and can be classified into equity price risk, interest rate risk, exchange rate risk, commodity price risk, etc. according to different types of underlying assets. The market risks faced by the Company mainly concentrate on equity price risk and interest rate risk, which are mainly reflected in the Company and subsidiaries' proprietary investment in equity securities, proprietary investment in fixed-income securities, transactions of derivatives in exchange-traded and OTC markets and market making on the New Third Board, etc. with their own fund. With the promotion of the Company's course of internalization, as well as the acceleration to open the capital markets of China, various market risks to be borne by the Company are increasing due to the rapid expansion of its business scope and the cross-border flow of capital. As a result, it becomes more challenging for the Company to manage its market risks. In particular, domestic derivative market is still at the stage of rapid development, so corresponding market mechanisms are not perfect and the risk hedging instruments are insufficient. Hence, as a major market maker and risk hedger in the derivative market, the structure of market risk exposure to be borne by the Company has become increasingly complex. Although overseas derivative markets have been well developed, related products have the characteristics of complex structure, highly fluctuating income and uneven liquidity, which makes it more difficult for the Company to manage market risks.

Section 4 Discussion and Analysis of Operations

Credit risk
Credit risk refers to the potential losses resulting from the failure of an issuer or counterparty to perform its obligations under a contract, or arising from variations in the market value of debts due to changes in credit ratings or inability to perform contractual obligations. The credit risk faced by the Company at present mainly concentrates on transactions of bond investment, OTC transactions of derivatives, margin trading, agreed repurchase business, Stock Pledged Repo Transaction business, investment in non-standardized debt assets as well as other businesses that the Company shall bear or have payment commitment. With the promotion of leverage and continuous development of innovative businesses by securities companies, the credit risks to be borne by the Company become more and more complicated and the credit risk exposure increases day by day. In addition, the default rate in the credit market significantly rose and risk events occurred frequently due to the downturn of the prosperity in certain industries, which brought about greater challenges to the credit risk management of the Company in the future.
Compliance risk
Compliance risk refers to the risk of legal sanctions, regulatory measures, loss of property or damage to our reputation because of the violation of laws, regulations, industry standards and relative criteria formulated by self-regulatory organizations and standards of behavior suitable for business activities of the securities companies.
Operational risk
Operational risk is the risk of direct or indirect loss caused by imperfect or problematic internal procedures, personnel, systems and external events. Each department and business line of securities firms (including front business department and the middle and back office supporting department) face operational risk, characterized by wide coverage and diversity, frequent occurrence but difficult to control, including daily business process flaws with high occurring frequency but relatively low loss, and unexpected events with low frequency of occurrence and significant loss. Meanwhile, as the Company's innovative businesses constantly increase, the business process becomes increasingly complicated. If the Company fails to timely identify the operational risks in each of its business lines and daily operations and to take effective mitigation measures, it may materialize operational risks and suffer financial and reputation losses due to unclear setting and ineffective design or implementation of risk control measures. Therefore, the management of operational risk is a vital stage for securities firms to realize comprehensive risk management objectives.

Operations of Analysis and Discussion

2020 REPORT INTERIM

Operations of Analysis and Discussion

Section 4 Discussion and Analysis of Operations

Risk of information technology
Securities firms rely on the information technology represented by financial technology, which has enhanced their operational efficiency and core competitiveness. With the continuous development of its business, the Company's investment business, asset management business, brokerage business and many other business and middle- and back-stage management are highly dependent on the support of online information system; information technology is playing an increasingly important role in promoting the Company's business. In promoting business development, the information technology has been exposed to certain risks. Information technology risks have the characteristics of complexity, extensiveness, and variability. The types of risks include: information security risks, supplier risks, data protection risks, business continuity risks, information technology compliance risks, IT operational risks, force majeure risks, etc., which have a significant impact on the stable, safe, and smooth operation of the system.

2. Counter-measures that the Company has adopted or plans to adopt for the above risks

Establish overall risk management system of GF Securities
In recent year, based on external regulatory requirements and internal risk management requirements, the Company has established and continuously optimized overall risk management system and conducted risk management work by focusing on some key factors, such as "risk management culture, risk management governance framework, risk management mechanism and implementation and risk management infrastructure". At present, the Company's risk management has covered each type of risks, each business line, each department and each subsidiary. Relevant mechanism and process for the identification and analysis, assessment and measurement, monitoring and reporting, response and address of risks are in effective operation.

2020 REPORT INTERIM

Section 4 Discussion and Analysis of Operations

Specific management for various risks
- Policy risk management
- 1. The Company pays close attention to the change of various policies and makes timely response and corresponding adjustments according to the latest policies to minimize the influence of policy risks on operating activities of all businesses of the Company. The Company's measures to manage policy risks include: 1) The Company regularly tracks various external policies and prepares corresponding reports that are announced across the Company so that information relating to changes in policies can be timely transmitted; 2) Implementation of various businesses of the Company will always be policy-oriented, front office, middle office and back office of the Company will continuously be highly sensitive to policy changes; as for major policy changes, each department of the Company provides basis for management at all levels to make operational decisions on the basis of elaborated analysis and monographic study;
  2. The Company regularly conducts perspective discussions about macroscopic and supervision policy change and formulates specific countermeasures.

Liquidity risk management
The Company implements stable liquidity risk preference management strategy to guarantee that the Company will have adequate liquidity reserve and fundraising capability under normal situation and pressure state through scientific asset-liability management and fund management, multi-level liquidity reserve, effective liquidity emergency disposal and monitoring and pre-warning about liquidity risk index to prevent liquidity risk. Specific measures for liquidity risk management include: 1) The Company formulates, implements and continues to improve its financing strategy to implement centralized management for financing and liabilities in accordance with the asset-liability structure and business development planning of the Company; 2) The Company implements daytime liquidity management reasonably and guarantees that the Company has sufficient daytime liquidity cash; 3) The Company implements multilevel liquidity reserve management, sets corresponding risk limit for the liquidity reserve of the Company and conducts daily monitoring for relevant indexes; 4) The Company establishes liquidity risk limit system and conducts daily calculation and supervision for the relevant monitoring indexes based on regulatory requirements and needs of internal liquidity risk management; 5) The Company regularly or irregularly evaluates cash gap and liquidity risk index of the Company under circumstances of internal and external liquidity pressure and formulates corresponding liquidity management strategies; 6) The Company regularly or from time to time carries out liquidity risk drill and optimizes and perfects liquidity risk emergency disposal processes and mechanism of the Company based on the drill condition.

Operations of Analysis and Discussion

2020 REPORT INTERIM

Operations of Analysis and Discussion

2020 REPORT INTERIM

Section 4 Discussion and Analysis of Operations

Market risk management
The Company follows the principles of active management and quantitation orientation based on its own risk preference and market risk tolerance, as well as the actual needs of each business line, and adopts a top-down and bottom-up method to formulate and refine the market risk limits of the Company and each business unit, to guarantee that the market risk exposure of the Company is within the risk tolerance range set by the Company through various measures such as risk identification, evaluation, measurement, monitoring, reporting and disposal. With the development of the FICC business, derivative products business and overseas business of the Company, the Company has enhanced effectiveness and efficiency of risk management through the following measures to cope with more complicated market risk: 1) The Company establishes multi-dimensional sensitivity index limit and stress test index limit for key investment business and complex derivatives business based on traditional risk index limit and continues to improve the scientificity and effectiveness of the market risk limit management; 2) The Company actively studies the advanced and mature market risk measurement models, gradually explores the application of indicators such as ES and SVaR and establishes a multi-level risk quantification indicators system; 3) The Company continues to independently research and develop industry-leading risk management system to achieve centralized management of full-position market risk covering various investment businesses and investment types of the Company; 4) The Company continues to improve the risk management framework for pricing and risk measurement model through policy revision and process optimization, covering rating, development, verification, realization, examination, utilization, monitoring and review of the model, and realizes the online management of the entire process through the model base.

Credit risk management
The Company implements the full-process credit risk management by means of effective risk identification, prudent risk evaluation and decision-making, dynamic risk measurement and monitoring, timely risk reporting and settlement to effectively prevent or avoid risk events, reduce the losses caused by risk event to the Company and achieve maximized risk-adjusted income to the extent that credit risk is acceptable. The Company adheres to the following basic principles for credit risk management: 1) The Company shall identify and manage credit risk exposed to all products and business including new product and new business; 2) The Company controls risk at the front end by formulating risk policy about credit business (including due diligence request of clients, business access requirement); 3) The Company improves credit management of counterparties by consistently optimizing internal rating system; 4) The Company establishes limit for single customer and its identifiable related parties and industries and strictly controls concentration risk; 5) The Company reduces net exposure of risk and estimated loss undertaken by the Company through various risk mitigation measures; 6) The Company establishes a set of information system and analysis tools to measure credit risk exposure and classify and evaluate risk asset portfolio.

Section 4 Discussion and Analysis of Operations

Operational risk management
The Company manages its operational risks mainly through the combination of sound authorization mechanism and segregation of duties, optimized system and process, well-established IT system, strict operation discipline and subsequent supervision and inspection etc. The Company has improved the level and effectiveness of operational risk management mainly through the following measures: 1) The Company has improved the operational risk management system and operational mechanism, strengthened the joint coordination between the three lines of defense of the operational risk management and enhanced the in-depth analysis and rectification tracking of the operational risk related issues; 2) The Company has improved tool system for operational risk management and further improved the operational risk identification, evaluation, monitoring and reporting mechanism through continuous improvement and further promotion of risk and control self-assessment, key risk indicators and loss data collection, with new business assessment and IT system construction process embedded; 3) The Company has gradually achieved the systematization and standardization of the operational risk management through continuous optimization of the operational risk management system; 4) The Company continues to enhance the management of operational risks of its subsidiaries through traditional tools for operational risk management and new business assessment and system construction; 5) Considering requirements for the construction of operational risk management system, the Company has been continuing to improve the assessment system, review scope and assessment process for new products and new business and enhance the tracking management mechanism for new business through reducing entry barrier by lowering criteria for new business, promoting online inspection and acceptance of new business and reviewing the status of business operation.

Operations of Analysis and Discussion

2020 REPORT INTERIM

Operations of Analysis and Discussion

2020 REPORT INTERIM

Section 4 Discussion and Analysis of Operations

Compliance risk management
The Company strictly complies with external legal provisions and regulatory requirements to implement various aspects of compliance management such as continuously strengthening system construction, compliance review and consulting, compliance control and examination, staff practice, anti-money laundering management and segregation wall management. The Company has adopted the following measures to enhance the quality of compliance management: 1) effectively implementing various relevant requirements, optimizing the organizational structure of compliance management, organizing the compliance management personnel in place, strengthening the first-line compliance management and establishing the compliance management system with three departments cooperating with each other to satisfy the needs for management and control of compliance risk pre-event and during the process of the event in accordance with the "Measures for the Compliance Management of Securities Companies and Securities Investment Fund Management Companies" 《( 證券公司和證券投資基金管理公司合規管理辦法》) and the "Guidelines on Implementation of Compliance Management of Securities Companies" 《( 證券公司合規管理實施指引》); 2) in accordance with changes in external laws and regulations and internal management requirements, initiating the streamline of "formulation, modification and repealing" of the internal rules and regulations of the Company when appropriate, and realizing comprehensive compliance management coverage and effective management and control of the Company's business through management measures such as compliance review and consulting, examination and control, and assessment accountability, etc., to promote the standardized development of business; 3) gradually improving the compliance management information system construction, and improving the effectiveness of compliance management through high-tech and intelligent means.
Information technology risk management
By adhering to "taking information security as the bottom line and business continuity as the lifeline", the Company strictly implements the clear requirements for management and control of information technology risk under the "Measures for Information Technology Management of Securities Fund Trading Institutions" 《( 證券基金經營機構信息技術管理辦法》) and builds three lines of defense for management and control of information technology risk. The Company has achieved the effective close-cyclebefore-event, event and after-event information technology risk management through the establishment of a multi-level technology assurance system of "assurance of on-going business, safety assurance, quality assurance, information platform, cloud platform and three centers in two areas" equipped with the construction of an online assurance system. The Company has increased its IT investment, strengthened technology management and regulated operation, enhanced digital operation and maintenance management and compliance risk control and management, and continuously improved the security management level for the construction, operation and maintenance of information system, thereby ensuring the stable, safe and smooth operation of the Company's information system and effectively supporting the development of the Company's business.

Section 4 Discussion and Analysis of Operations

REGISTRATION FORM FOR RECEPTION OF ACTIVITIES SUCH AS RESEARCH, COMMUNICATION AND INTERVIEW DURING THE REPORTING PERIOD
From January to June 2020, apart from daily telephone communications with public investors, the Company organized and participated in a total of 13 research receptions and results roadshows, receiving a total of about 100 investors, details of which are shown in the table below:

	Reception	Type of		Index of basic particulars of
Reception time	method	participants	Participants	the research
From January 1, 2020 to	Telephone	Individuals	Public investors	Operation and development of
June 30, 2020	communication			the Company
March 30, 2020	Results	Institutions	Analysts and investors invited to	Strategic and business
	roadshow		GF Securities' 2019 Annual Results	development of the Company
			Presentation
March 31, 2020	Telephone	Institutions	UBS, Allianz Global Investors,	Operation and development of
	communication		FIL Ltd, Pacific Alliance Group,	the Company
			Eastspring Investments
March 31, 2020	Telephone	Institutions	Wellington (London)	Operation and development of
	communication			the Company
April 2, 2020	Results	Institutions,	Investors participating in GF	Strategic and business
	roadshow	individuals	Securities' 2019 Annual Results	development of the Company
			Webcast Presentation
April 15, 2020	Telephone	Institutions	DBS, Point72 Asia (Hong Kong)	Operation and development of
	communication		Limited, Santa Lucia Asset	the Company
			Management, Fuchs Capital Partners
			Pte. Ltd.
May 8, 2020	Telephone	Institutions	M&G	Operation and development of
	communication			the Company
May 12, 2020	Telephone	Institutions	Investors invited to the 2020	Strategic and business
	communication		Summer Listed Companies Online	development of the Company
			Communications sponsored by
			Northeast Securities
May 20, 2020	Telephone	Institutions	Investors invited to the 1st Pan-Asia	Strategic and business
	communication		Regional Investor Conference 2020	development of the Company
			organised by Citigroup
May 26, 2020	Telephone	Institutions	Huatai Securities	Operation and development of
	communication			the Company
June 3, 2020	Telephone	Institutions	Investors invited to the 2020	Strategic and business
	communication		Summer Capital Market Conference	development of the Company
			sponsored by Shenwan Hongyuan
June 11, 2020	Telephone	Institutions	Investors invited to the 2020 Capital	Strategic and business
	communication		Market Forum sponsored by CITIC	development of the Company
			Securities

Operations of Analysis and Discussion

2020 REPORT INTERIM

Section 4 Discussion and Analysis of Operations

Operations of Analysis and Discussion

	Reception	Type of		Index of basic particulars of
Reception time	method	participants	Participants	the research
June 16, 2020	Telephone	Institutions	Investors invited to Guotai Junan	Strategic and business
	communication		Interim Investment Strategy	development of the Company
			Conference
June 23, 2020	Telephone	Institutions	Investors invited to the Mid- 2020	Strategic and business
	communication		Strategy Conference sponsored by	development of the Company
			TF Securities

Note: The record chart of investor relations activities regarding the reception of the above institutional investors by the Company is disclosed on the website of SZSE (www.szse.cn) and the website of CNINFO (www.cninfo. com.cn).

2020 REPORT INTERIM

Events Significant

5 Section

INTERIM REPORT 2020

Events Significant

2020 REPORT INTERIM

Section 5 Signicant Events

ANNUAL GENERAL MEETINGS AND EXTRAORDINARY GENERAL MEETINGS HELD DURING THE REPORTING PERIOD
1. Corporate governance
The Company is committed to becoming a modern investment bank with international competitiveness, brand influence and systemic significance. As a public company listed in both Mainland China and Hong Kong, the Company carries out standardized operations in strict compliance with the requirements of laws and regulations and normative documents of the place where the Company is listed, continuously improving its social recognition and public reputation. The Company continues to enhance corporate governance pursuant to stipulations under the relevant laws and regulations including the Company Law, the Securities Law, the Regulations on Supervision and Administration of Securities Firms, the Rules on Governance of Securities Firms, the Standardized Operational Guidelines for Companies Listed on the Shenzhen Stock Exchange and the Hong Kong Listing Rules. The Company constantly improves its internal control management system so as to gradually reinforce the integrity, rationality and effectiveness of its internal control. The Company further establishes and improves its rules and regulations. The general meeting of shareholders, the Board of Directors, the Supervisory Committee and the management of the Company perform their respective duties and act with due diligence, which establishes a sound structure of corporate governance. Through this corporate governance structure, the Company ensures its standard operation in accordance with the Corporate Governance Code.
To satisfy the requirements of both corporate governance and specific operation for an A+H dual listed company, the Company approved at the Board meeting on March 19, 2015, the adoption of the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Hong Kong Listing Rules as the code of conduct for securities transactions of the Company by all Directors, and the adoption of the Corporate Governance Code as set out in Appendix 14 to the Hong Kong Listing Rules as the guidelines for standardizing the Company's governance. As at the end of the Reporting Period, after special enquiry of the Directors and Supervisors of the Company, all Directors and Supervisors have strictly complied with the standards in the Model Code for Securities Transactions by Directors of Listed Issuers during the Reporting Period. On April 10, 2015, the Company's H Shares were issued and listed on the Main Board of Hong Kong Stock Exchange. Since then, the Company has strictly complied with the Corporate Governance Code and Corporate Governance Report as set out in Appendix 14 to the Hong Kong Listing Rules (hereinafter referred to as the "Code"), and met most of the recommended best practice provisions as set out in the Code. According to the Corporate Governance Code provision A.2.1, the roles of chairman and chief executive should be separate and should not be performed by the same individual. Since April 21, 2020, the Chairman of the Company, Mr. Sun Shuming, has also served as the General Manager of the Company, which has improved the implementation of the Company's development strategy and promoted communication between the Board of Directors and senior management. Meanwhile, as all decisions of the Board of Directors of the Company are required to be reviewed and approved by the Board of Directors, there are 7 non-executive Directors among the 10 members of the Board of Directors of the Company, including four independent non-executive Directors who comply with the listing rules of the two places, which are sufficient to ensure a balance of power and authority in the operation of the Board of Directors.

Section 5 Signicant Events

2. General meeting of shareholders during the Reporting Period

		Participation
Session of	Type of	ratio of
meeting	meeting	investors	Convening date	Disclosure date	Disclosure index
2019 Annual	Annual general	49.0811%	June 9, 2020	June 10, 2020	It was published on the China
General	meeting				Securities Journal, Securities
Meeting					Times,	Shanghai Securities
					News	and Securities Daily
					a n d d i s c l o s e d o n t h e
					website of CNINFO (www.
					cninfo . com . cn) and the
					HKExnews website of the
					Hong Kong Stock Exchange
					(www.hkexnews.hk) by the
					Company

3. Holders of preferred shares whose voting rights have been restored request the convening of extraordinary general meeting

N/A

Events Significant

2020 REPORT INTERIM

Events Significant

Section 5 Signicant Events

PROFIT DISTRIBUTION AND CONVERSION OF CAPITAL RESERVES INTO SHARE CAPITAL DURING THE REPORTING PERIOD
The Company has no plan to distribute cash dividends and bonus shares or convert capital reserves into share capital for the first half of 2020.

2020 REPORT INTERIM

Section 5 Signicant Events

COMMITMENTS PERFORMED DURING THE REPORTING PERIOD OR OVERDUE COMMITMENTS NOT YET PERFORMED AS OF THE END OF THE REPORTING PERIOD BY THE DE FACTO CONTROLLER OF THE COMPANY, SHAREHOLDERS, RELATED PARTIES, PURCHASERS AND THE COMPANY

Cause of	Undertaking	Type of	Details of commitment	Date of	Term of	Performance
commitment	party	commitment		Commitment	Commitment
Share conversion	The Company and	Others	1. GF Securities and its Directors, Supervisors and senior	February 6,	Nil	All undertaking parties
undertakings/	its shareholders,		management have made undertakings that upon completion of this	2010		have strictly performed
undertakings	directors,		transaction, GF Securities, as a public company, will strictly perform			their commitments.
made in	supervisors and		its obligations in information disclosure and investor education.
acquisition	senior management		After listing, in addition to meeting the requirements for information
report or equity			disclosure by listed companies in general, GF Securities will make
changes report/			sufficient disclosure in regular reports on information regarding
undertakings			customer asset protection, risk control, compliance inspection,
made in asset			commencement of innovative business and risk management
restructuring			according to its own characteristics to enhance the unveiling of
			risks for investors. 2. GF Securities and its Directors, Supervisors
			and senior management have made undertakings that they will
			strictly comply with the requirements of the Administrative Measures
			for Risk Indicators of Securities Companies, enhance the risk
			management system, improve the risk monitoring mechanism,
			establish a real-time risk monitoring system, strengthen dynamic
			monitoring of risks and enhance capabilities in identifying, measuring
			and controlling risks to enhance the level of risk management. 3.
			To avoid peer competition with the surviving company after share
			conversion and merger by absorption and regulate possible related
			transactions, Liaoning Cheng Da and Jilin Aodong have made the
			following undertakings: ① Being the largest and second largest
			shareholders of the surviving company after share conversion and
			merger by absorption, they have undertaken not to operate the
			same business as that operated by the surviving company, and not
			to indirectly operate or participate in the investment of enterprises
			which compete or may compete with the business of the surviving
			company. At the same time, they have also warranted that they will
			not use their capacity as shareholders to harm the proper interest of
			the surviving company and other shareholders. In addition, they will
			procure their wholly-owned subsidiaries or subsidiaries in which they
			have more than 50% equity interest or relative controlling interest
			to comply with the above undertakings. ② With respect to related
			transactions conducted by Liaoning Cheng Da and Jilin Aodong
			and their respective related parties with the surviving company in
			future, the decision-making procedure for related transactions of
			listed companies will be strictly performed and the market pricing
			principles will be observed to ensure fairness, impartiality and
			equity and the legitimate interest of minority shareholders will not
			be prejudiced. 4. Liaoning Cheng Da and Jilin Aodong have issued
			the Undertakings on Maintaining the Independence of the Yan Bian
			Road Construction Co., Ltd. respectively and warrant to realize
			staff independence, asset independence, business independence,
			financial independence and organization independence with the
			Company.

Events Significant

2020 REPORT INTERIM

Section 5 Signicant Events

Events Significant

2020 REPORT INTERIM

Cause of	Undertaking	Type of	Details of commitment	Date of	Term of	Performance
commitment	party	commitment		Commitment	Commitment
Net capital	GF Securities	Others	In order to support GF Asset Management for its continuous	July 18,	Net capital	GF Securities strictly
guarantee			compliance with the regulatory requirements of risk indicators, the	2016	guarantee	performed the
undertakings			Company has provided GF Asset Management with additional net		undertakings of	undertakings.
provided			capital guarantee undertakings of up to RMB3 billion (RMB3 billion		RMB2.5 billion
to GF Asset			inclusive), among which, net capital guarantee undertakings of		were provided
Management			RMB2.5 billion were provided for a term from the date on which the		for a term from
			same was considered and approved by the Board of Directors until		the date on
			September 30, 2016; and net capital guarantee undertakings of		which the same
			RMB0.5 billion were provided for a term until its net capital was able		was considered
			to satisfy the requirements of the regulatory authority on an ongoing		and approved
			basis.		by the Board of
					Directors until
					September 30,
					2016; and net
					capital guarantee
					undertakings of
					RMB0.5 billion
					were provided for
					a term until its
					net capital was
					able to satisfy
					the requirements
					of the regulatory
					authority on an
					ongoing basis.
Whether the						Yes
undertakings were
performed timely

IV. APPOINTMENT AND REMOVAL OF ACCOUNTING FIRM

The Group has not engaged any accounting firm to audit the interim financial information. Ernst & Young has reviewed the interim financial information in accordance with the International Standard on Review Engagements 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity .

STATEMENT ON ACCOUNTING FIRM'S "NON-STANDARD AUDIT REPORT" FOR THE REPORTING PERIOD BY THE BOARD OF DIRECTORS AND THE SUPERVISORY COMMITTEE
N/A

VI. STATEMENT ON THE "NON-STANDARD AUDIT REPORT" FOR THE PREVIOUS YEAR BY THE BOARD OF DIRECTORS

N/A

VII. BANKRUPTCY REORGANIZATION

No matter relating to bankruptcy reorganization occurred during the Reporting Period.

Section 5 Signicant Events

VIII. LITIGATIONS

During the Reporting Period and as of the end of the Reporting Period, the Group was not involved in any material litigation or arbitration.

As of June 30, 2020, the Company (including its wholly-owned and holding subsidiaries) was involved in 74 litigation and arbitration cases (including those initiated by and against the Company) pending for final judgment or ruling and completed execution, involving a total amount of claims at approximately RMB2.429 billion.

IX. QUESTIONING BY THE MEDIA

The Company was not involved in any matter commonly questioned by the media during the Reporting Period.

PENALTY AND RECTIFICATION
1. On April 30, 2020, the Company received the Decision on Adopting Regulatory Measures for Issuing Warning Letters to GF Securities Co., Ltd. (Letter of Decision of Administrative Regulatory Measures from Guangdong Bureau of the CSRC [2020] No. 58) 《( 關於對廣發証券股份有限公司採取出具警示函措施的決定》(中國證券監督管理委員會廣東監管局行政監管措施決定書[2020]58號)) from Guangdong Bureau of the CSRC, which states that in the process of serving as the financial advisor for the asset management scheme specific for NEEQ of China Railway Baoying (中鐵寶盈), there were deficiency in prudence relating to the due diligence, investment decision-makingand post-investmentmanagement of the relevant projects, and insufficient internal business authorization control.

In this regard, the Company earnestly implemented the rectification requirements, continuously improved its internal control, effectively strengthened the management of employees' practice behavior, and conducted internal accountability to responsible personnel.

Events Significant

2020 REPORT INTERIM

Section 5 Signicant Events

Events Significant

2. On July 20, 2020, the Company received the Decision Regarding Implementation of Regulatory Measures including Ordering for Rectification, Limiting Business Activities and Ordering for Limiting Rights of Senior Management against GF Securities Co., Ltd. (Decision of Administrative Regulatory Measures of Guangdong Bureau of the CSRC [2020] No. 97)《關於對廣發証券股份有限公司採取責令改正、限制業務活動、責令限制高級管理人員權利監管措施的決定》( 中國證券監督管理委員會廣東監管局行政監管措施決定書[2020]97號)) from Guangdong Bureau of the CSRC, which states that the Company did not exercise proper due diligence, was deficient in terms of basic procedures of due diligence review, failed to have necessary professional cautiousness, implemented perfunctory internal quality control and failed to continuously perform the obligation of supervision and trustee management as required for various projects of Kangmei Pharmaceutical Co., Ltd., including the 2014 non-publicissuance of preference shares, the 2015 corporate bond project, the 2016 non-publicissuance of shares and the 2018 corporate bond project, as well as the 2017 exchangeable corporate bond project of Kangmei Industrial Investment Holding Co., Ltd. (康美實業投資控股有限公司). Guangdong Bureau of the CSRC took administrative regulatory measures on the Company, including ordering the Company to make rectifications, suspending the Company's sponsorship qualification for 6 months, not accepting the documents regarding the Company's bond underwriting business for 12 months and limiting the rights of senior management of the Company. Moreover, Qin Li and Ouyang Xi, senior executives of the Company, received the decision on administrative regulatory measures of public censure and regulatory interview from Guangdong Bureau of the CSRC; Zhang Wei, a senior executive of the Company, received the decision on administrative regulatory measures of regulatory interview from Guangdong Bureau of the CSRC; relevant staff of investment banking business received the decision on administrative regulatory measures of identification as not fit and proper person from Guangdong Bureau of the CSRC; three core persons in charge of projects received the decision on administrative regulatory measures of regulatory interview from Guangdong Bureau of the CSRC.

In this regard, the Company will learn the lessons seriously, and carefully reflect, strictly effect the rectification requirements, and internally hold relevant personnel accountable in accordance with the internal accountability system. The Company will continuously establish, perfect and strictly implement the internal control system, work flow and operation standards of investment banking business to effectively improve the quality of investment banking business. The Company will comprehensively strengthen the development of responsibilities, capabilities and professional conducts, and comprehensively improve compliance management and risk control. The Company will strictly follow the philosophy of robust operation and further strengthen the cultural construction of "compliance, honesty, professionalism and robustness", and strictly abide by the bottom line requirements of honesty and faithfulness, diligence and responsibility.

2020 REPORT INTERIM

XI. INTEGRITY OF THE COMPANY AND ITS CONTROLLING SHAREHOLDER AND DE FACTO CONTROLLER

During the Reporting Period, the Company did not have any valid court judgments pending for execution or relatively large amount of outstanding debt pending for payment.

The Company did not have a controlling shareholder or de facto controller. Jilin Aodong, the largest shareholder of the Company, and its de facto controller did not have any effective court judgment pending for execution or relatively large amount of outstanding debt pending for payment during the Reporting Period.

Section 5 Signicant Events

XII. IMPLEMENTATION OF EQUITY INCENTIVE SCHEME, EMPLOYEE STOCK OWNERSHIP PLAN OR OTHER EMPLOYEE INCENTIVE SCHEME OF THE COMPANY

During the Reporting Period, the Company did not have and implement any equity incentive scheme, employee stock ownership plan or other employee incentive scheme.

XIII. MAJOR RELATED TRANSACTIONS

1. Related Transactions Relating to Day-to-day Operations

The related/connected transactions of the Group are conducted pursuant to the SZSE Listing Rules, Hong Kong Listing Rules, GF Connected Transaction Management System and GF Rules Regarding the Management of Information Disclosure, the related/connected transactions of the Group comply with the fair and reasonable principles, and the agreements on related/connected transactions are entered into under the principles of equality, willingness, pricing equality and compensation.

The Group's continuing related/connected transactions relating to day-to-day operations are transactions in which the Group provides investment banking, wealth management, trading, institutional and investment management services to the related/connected parties.

In year 2020, our day-to-day related transactions were executed subject to the Proposals on Estimates of Annual Day-to-day Related/Connected Transactions in Year 2020 of the Company passed by the Annual General Meeting of 2019 upon deliberation.

The investment banking, wealth management, trading, institutional and investment management services in respect of day-to-day operations provided by the Group to related/connected persons were conducted in the ordinary and usual course of business and on normal commercial terms, they were exempt continuing connected transactions under the Hong Kong Listing Rules, namely the de minimis transactions, and such transactions were exempt from the requirements of reporting, announcement and approval by independent shareholders under Chapter 14A of the Hong Kong Listing Rules.

Events Significant

2020 REPORT INTERIM

Events Significant

2020 REPORT INTERIM

Section 5 Signicant Events

2. Related Transactions in respect of Acquisition and Sale of Assets or Equity Interest

On January 22, 2020, at the 25th Meeting of the Ninth Session of the Board of Directors of the Company, the Board of Directors considered and approved the connected transaction contemplated between GF Fund (a non-wholly-owned subsidiary of the Company) and Kangmei Healthcare Industry Investment Co., Ltd. ("Kangmei Healthcare") (a wholly-owned subsidiary of Kangmei Pharmaceutical Co., Ltd. ("Kangmei Pharmaceutical")) (the "Transaction"). GF Fund proposed to acquire two parcels of land situated at Pazhou, Haizhu District, Guangzhou and the buildings on ground and underground and the construction in progress on the aforesaid two parcels of land, held by Kangmei Healthcare (the "Transaction Target") at a consideration of no more than RMB1.13 billion.

According to the Hong Kong Listing Rules, GF Fund is a significant subsidiary of the Company. Ms. Xu Dongjin was a director of GF Fund, who resigned as a director of GF Fund on October 25, 2019. In view of the fact that Ms. Xu Dongjin had been a director of GF Fund in the past twelve months, Ms. Xu Dongjin is a connected person of the Company pursuant to Rule 14A.07 of the Hong Kong Listing Rules. Kangmei Healthcare is a wholly-owned subsidiary of Kangmei Pharmaceutical. Mr. Ma Xingtian is the de facto controller of Kangmei Pharmaceutical, and Ms. Xu Dongjin is the spouse of Mr. Ma Xingtian. Therefore, Kangmei Healthcare is an associate of Ms. Xu Dongjin, and thus a connected person of the Company at the subsidiary level. Therefore, the Transaction constitutes a connected transaction of the Company under Chapter 14A of the Hong Kong Listing Rules.

At the board meeting which considered the Transaction, the relevant personnel present at the meeting explained the Transaction and the pricing of the Transaction. Based on (1) the relevant proposal in respect of the Transaction; (2) the explanations made by the relevant personnel at the board meeting; and (3) the pricing mechanism of the Transaction, namely, GF Fund still needs to engage an intermediary party to issue the valuation report, and the final price of the Transaction will be adjusted and determined by reference to the report value, and the transaction price shall not exceed RMB1.13 billion, 10 of the 11 Directors of the Company's Board of Directors (including three of the four independent non-executive Directors) voted in favor of the proposal on the Transaction, and were of the view that the terms of the Transaction were reached through fair negotiation between the parties to the Transaction, and were entered into on normal commercial terms, which were fair and reasonable and in the interests of the Company and its Shareholders as a whole. In addition, the three independent non-executive Directors (including Mr. Yang Xiong, Mr. Chan Kalok and Mr. Fan Lifu) who voted in favor of the Transaction also issued specific independent opinions in respect of the Transaction in accordance with the relevant regulatory requirements. They were of the view that:

Section 5 Signicant Events

The Transaction is a relatively feasible solution for GF Fund to meet its need of future long-term and centralized office space. GF Fund can obtain the naming rights of its own properties, thereby enhancing its social image and influence and strengthening its employees' sense of belonging. The subject plots of the Transaction are located in the core business district of Guangzhou, which has a good potential of value preservation and appreciation.
The terms and conditions of the Transaction are reasonable and the pricing is fair, which will not affect the Company's ability to carry out its business independently.
The procedures for the review and decision-making of the Transaction are in compliance with the laws, administrative regulations, departmental regulations and other regulatory requirements.

Therefore, the three then independent non-executive Directors of the Company, namely Mr. Yang Xiong, Mr. Chan Kalok and Mr. Fan Lifu, were of the view that the Transaction is in compliance with the relevant provisions of laws and regulations and the internal rules and regulations of the Company, and does not jeopardize the interests of the Company and other Shareholders, especially the interests of the non-connected Shareholders and small and medium shareholders.

Despite the aforementioned pricing mechanism (namely, the transaction price will not exceed RMB1.13 billion, the final price of the Transaction will be adjusted and determined by making reference to the report value issued by an intermediary party, while such report and report value were not available on the date of the Board meeting), Mr. Tang Xin, an independent non-executive Director of the Company, was of the view that the relevant meeting materials were not adequate for him to make an informed decision and he was not able to form an accurate judgment on the Transaction, thus Mr. Tang Xin, a then independent non-executive Director, abstained from voting on the Transaction.

For details, please refer to the relevant announcements of the Company disclosed on the website of CNINFO (www.cninfo.com.cn) and the HKEXnews website of the Hong Kong Stock Exchange (www.hkexnews.hk) on January 22, 2020.

At present, in respect of the Transaction, GF Fund will engage a qualified independent third party intermediary to conduct an appraisal of the Transaction Target, and the final price of the Transaction will be referred to and adjusted based on the report values as stated in the relevant appraisal report.

3. Related Transactions in respect of Joint External Investment

No related transactions in respect of joint external investment occurred during the Reporting Period.

Events Significant

2020 REPORT INTERIM

Events Significant

2020 REPORT INTERIM

Section 5 Signicant Events

4. Amount due to or from Related Parties

Amount due to or from Related Parties under the SZSE Listing Rules

			Unit: RMB
Item Name	Related Party	Amount as of	Amount as of
		the end of the	the beginning of
		period	period
Seats commission, trailing	E Fund Management	13,895,975.85	6,784,065.85
commission and custodian	Co., Ltd.
fee receivables
Seats commission and	Harvest Fund	4,037,891.90	5,056,413.98
trailing commission	Management
receivables	Co., Ltd.
Seats commission	Hang Seng Qianhai	65,940.92	-
receivables	Fund Management
	Company Limited

During the Reporting Period, the amounts due to or from related parties mentioned above facilitated the Company to expand its operations in the ordinary course of business and increase profit opportunities, and were implemented at fair prices and would not harm the interests of the Company and its small and medium shareholders.

During the Reporting Period, the Company did not have any non-operational amount due to or from related parties.

Section 5 Signicant Events

5. Other Material Related Transactions

No other material related transactions occurred during the Reporting Period.

XIV. USE OF THE LISTED COMPANY'S FUNDS BY THE CONTROLLING SHAREHOLDER AND ITS RELATED PARTIES FOR NON-OPERATING PURPOSES

During the Reporting Period, the Company did not have a controlling shareholder and a de facto controller.

XV. MAJOR CONTRACTS AND THEIR PERFORMANCE

1. Custody, Contracting and Leases

Custody
There was no custody of the Company during the Reporting Period.
Contracting
From May 2013, the Company and Guangzhou Construction Co., Ltd. successively entered into the "Construction General Contract for GF Securities Tower" and the relevant supplementary agreements. Guangzhou Construction Co., Ltd. is the main contractor for the construction of GF Securities Tower. The tentative contract price is RMB1,062 million.
In December 2018, GF Securities Tower passed the acceptance inspection. In March 2019, the principal business address of the Company's headquarter changed to GF Securities Tower, No. 26 Machang Road, Tianhe District, Guangzhou, Guangdong Province.
Leases
During the Reporting Period, the Company had no leasing project with profit or loss representing more than 10% of the total profit for the Reporting Period of the Company.

Events Significant

2020 REPORT INTERIM

Events Significant

Section 5 Signicant Events

2. Material Guarantees

Guarantees

	External Guarantees Provided by the Company (Excluding Guarantees Provided to Subsidiaries) during the Reporting Period
	Date of
	Disclosure							Guarantee
	of Guarantee		Actual Date of					Provided
	Amount on		Occurrence				Performance	to Related
	the Relevant	Amount of	(Date of	Actual Amount	Type of		Fulfilled or	Parties or
Name of the Guaranteed Party	Announcement	Guarantee	Agreement)	of Guarantee	Guarantee	Term of Guarantee	Not	Not
Nil	-	-	-	-	-	-	-	-

Total amount of external guarantees approved during	0	Total actual amount of external	0
the Reporting Period (A1)	0	guarantees provided during the	0
		Reporting Period (A2)
Total amount of external guarantees approved as at the		Total actual balance of external
end of the Reporting Period (A3)		guarantees as at the end of the
		Reporting Period (A4)

	Guarantees Provided to Subsidiaries by the Company during the Reporting Period
	Date of
	Disclosure							Guarantee
	of Guarantee		Actual Date of					Provided
	Amount on		Occurrence				Performance	to Related
	the Relevant	Amount of	(Date of	Actual Amount	Type of		Fulfilled or	Parties or
Name of the Guaranteed Party	Announcement	Guarantee	Agreement)	of Guarantee	Guarantee	Term of Guarantee	Not	Not
GF Financial Markets (UK) Limited	August 26,	US$70 million	February 2, 2018	US$30 million	Joint and	Until January 28,	Yes	No
(Industrial and Commercial Bank of	2017	and relevant			several	2020
China Limited Guangzhou		interest and			guarantee
No. 1 Sub-branch issued		expenses			liabilities
a financing letter of guarantee or		(if any)
standby letter of credit, the
Company undertook guarantee
liabilities to the extent of the
amount of the letter of guarantee
ultimately and actually signed).

GF Financial Markets (UK) Limited (Industrial and Commercial Bank of China Limited Guangzhou No. 1 Sub- branch issued a financing letter of guarantee or standby letter of credit, the Company undertook guarantee liabilities to the extent of the amount of the letter of guarantee ultimately and actually signed).

April 30, 2019 US$70 million and relevant interest and expenses (if any)

August 30,	2019	US$40 million	Joint and	Until September 3, 2021	No	No
			several
January 29,	2020	US$30 million	guarantee	Until January 28, 2022	No	No
			liabilities

2020 REPORT INTERIM

Total amount of guarantees provided to	0	Total actual amount of guarantees	RMB707.9500 million
subsidiaries approved during the Reporting		provided to subsidiaries during the
Period (B1)		Reporting Period (B2)
Total amount of guarantees provided to	RMB495.5650 million	Total actual balance of guarantees	RMB495.5650 million
subsidiaries approved as at the end of the		provided to subsidiaries as at the
Reporting Period (B3)		end of the Reporting Period (B4)

Section 5 Signicant Events

Guarantees among Subsidiaries during the Reporting Period

Date of

Disclosure

Guarantee

of Guarantee

Actual Date of

Provided

Amount on

Occurrence

Performance

to Related

the Relevant

Amount of

(Date of

Actual Amount

Type of

Fulfilled or

Parties or

Name of the Guaranteed Party

Announcement

Guarantee

Agreement)

of Guarantee

Guarantee

Term of Guarantee

Not

GF Brokerage (Hong Kong)

December 19,

HK$50 million

December 16,

HK$50 million

Joint and several

F r o m

t h e

d a t e

o f

(GFHK provided guarantee to it)

2013

and relevant

2013

guarantee

agreement

up to

one

interest and

liabilities

month after the bank has

expenses (if

received

termination

any)

notice

writing from

the guarantor or

the

liquidator

receiver of

the guarantor.

Total amount of guarantees provided to subsidiaries

Total actual amount of guarantees

RMB45.6720 million

approved during the Reporting Period (C1)

provided to subsidiaries during

the Reporting Period (C2)

Total amount of guarantees provided to subsidiaries

RMB45.6720 million

Total actual balance of guarantee

RMB45.6720 million

approved as at the end of the Reporting Period (C3)

provided to subsidiaries as at the end

of the Reporting Period (C4)

Total Amount of Guarantees Provided by the Company during the Reporting Period (i.e. the total of the first three major items)

Total amount of guarantees approved during

Total actual amount of guarantees provided

RMB753.6220 million

the Reporting Period (A1+B1+C1)

during the Reporting Period (A2+B2+C2)

Total amount of guarantees approved as at the end of

RMB541.2370 million

Total actual balance of guarantees provided

RMB541.2370 million

the Reporting Period (A3+B3+C3)

as at the end of the Reporting

Period (A4+B4+C4)

Total actual amount of guarantees (i.e. A4+B4+C4) as a percentage of the net assets of the Company

0.58%

Including:

Balance of guarantees provided to shareholders, de facto controller and their related parties (D)

Balance of debt guarantees provided directly or indirectly to guaranteed parties with gearing ratio over 70% (on

RMB495.5650

the date of resolution) (E)

million

Amount of total guarantees above 50% of net assets (F)

Total of the above 3 amounts of guarantees (D+E+F)

RMB495.5650

million

For outstanding guarantees, description on the guarantee liabilities or possible joint and several liabilities of

repayment occurred during the Reporting Period (if any)

Description on the provision of external guarantee with non-compliance in required procedures (if any)

Other description

In February 2018, the board of directors of GFHK resolved that it agreed to

provide guarantees to its wholly-owned subsidiary, GF Global Capital Limited,

under the agreements such as ISDA and GMRA.

Note: Calculated by the central parity exchange rates of Hong Kong dollar to Renminbi at 1:0.91344 and US dollar to Renminbi at 1:7.0795 published by the People's Bank of China on June 30, 2020.

1. Non-compliancein external guarantees
  During the Reporting Period, there was no issue of non-compliance in external guarantees of the Company.
Entrusted Wealth Management
There was no any entrusted wealth management during the Reporting Period.
Other Major Contracts
There was no any other major contracts during the Reporting Period.

Events Significant

2020 REPORT INTERIM

Events Significant

2020 REPORT INTERIM

Section 5 Signicant Events

XVI. SOCIAL RESPONSIBILITIES

Fulfillment of Social Responsibilities
During the Reporting Period, while striving to gain economic benefits, the Group insisted on serving customers, nurturing staff and creating return for shareholders, as well as rewarding the community and the public actively to fulfill the social responsibilities of corporate citizen.
Since the outbreak of COVID-19, the Company has been continuously monitoring the development of such pandemic. The Company donated RMB10 million to jointly establish the GF Securities Fund for Prevention and Treatment of COVID-19 with China Foundation for Poverty Alleviation and such donations have been used to purchase hospital anti-pandemic equipment and relevant urgently needed medical and pandemic prevention materials under the direction of the relevant departments of the National Health Commission to support the prevention of COVID-19. The aggregate amount of donations made by the Company and its subsidiaries to combat COVID-19 is RMB16.82 million. The aggregate amount of donations made by E Fund, an investee of the Company, and its employees is RMB10.34 million. Currently, the capital endowment made and materials purchased by the Company, its subsidiaries and investee company have been received by the recipient organizations successively.
Material environment protection events
Whether the listed company and its subsidiaries are key pollutant discharging enterprises promulgated by environmental protection authorities
No
Fulfillment of the social responsibility of targeted poverty alleviation
1. Planning for targeted poverty alleviation
  The Group has been supporting and responding to the national poverty alleviation strategy, helping the impoverished areas and people actively through a variety of ways. In order to respond to the proposal of the CSRC, the Securities Association of China, China Futures Association and Asset Management Association of China, the Group actively advanced the implementation of targeted poverty alleviation work based on the three-year plan of action to win the battle against property by the Guangdong Province Party Committee and the People's Government of Guangdong Province.
2. Summary of semi-annual targeted poverty alleviation
  During the Reporting Period, the Group contributed a total of over RMB1,800,000 in poverty alleviation to assist Wuzhishan city, Baisha County and Lingao County in Hainan Province and Tianjinggang village in Lechang city to implement targeted poverty alleviation work and actively performed the social responsibilities, thereby enjoying wide recognition from the society.

Section 5 Signicant Events

During the Reporting Period, the Company earnestly carried out the assignments of regulatory authorities and local governments, put active efforts on targeted poverty relief and alleviation and made contributions to ensure fully successful fight against poverty as scheduled. The Company implemented multi-dimensional supporting measures of "poverty- alleviation through party construction, poverty-alleviation through finance, poverty-alleviation through industries, poverty-alleviation through education and poverty-alleviation through charity" and continued to promote poverty alleviation in Wuzhishan City, Baisha County and Lingao County, Hainan Province and Tianjinggang Village, Lechang City, Guangdong Province. The "one company for one county" supporting initiative in Hainan Province has achieved initial results, and has successfully support Wuzhishan City, Lingao County, and Baisha Li Autonomous County in Hainan Province to get rid of poverty. Focusing on its professional origins, the Company successfully applied for the pilot project of natural rubber "insurance + futures" to give full play to the effectiveness of financial poverty alleviation. The Company steadily promoted the construction of industrial bases such as Wuzhi Downy Peach and passion fruit to ensure the income growth of poverty-stricken areas and poor families. The Company continued to carry out "GF Inspirational Class" education program to promote the block of the intergenerational transmission of poverty, and donated approximately RMB300,000 to 2019-grade students in respect for the 2019-2020 academic year tuition of the "GF Inspirational Class" of Hainan Health Management College to help 34 students from poor families in Hainan Province finish their studies. The Company promoted the effective connection between poverty alleviation and rural revitalization in Tianjinggang Village. The Company provided assistances to Tianjinggang Village to prevent and control the epidemic, and assisted Tianjinggang Village to donate 12 tons of fresh vegetables to support Jingzhou, Hubei. The Company promoted the resumption of work and production and school in Tianjinggang Village, and solved the issue of slow-moving agricultural products of poor families affected by the epidemic by combining poverty alleviation with consumption and care for epidemic areas. The Company received a full score in the Special Assessment on Fulfillment of Social Responsibilities for Poverty Alleviation in 2019 and was awarded the bronze cup of the Guangdong Poverty Alleviation Red Cotton Cup (廣東省扶貧濟困紅棉杯銅

杯).

The Group's subsidiaries also participated actively in poverty alleviation work to establish combined forces for targeted poverty alleviation. During the Reporting Period, GF Futures purchased insurance products such as agricultural product price insurance for farmers in Jiangcheng County, Donggang City, Yunnan Province and Baisha Town, Hainan Province, respectively. Moreover, GF Futures carried out poverty alleviation through education, poverty alleviation through industrial development and poverty alleviation through charity in Tongbai County, Henan Province, Jiangcheng County, Yunnan Province and Changshan Farm, Guangdong Province, and purchased agricultural products of poverty-stricken farmers in poverty-stricken areas. In addition to regular financial instruments and financial methods, GFFL creatively researched and adopted convenient and flexible instruments such as financial leasing to support the construction and enterprise development of poverty-stricken areas. The model of poverty alleviation through financial leasing pioneered by it in the industry has contributed to wisdom and innovative solution for poverty alleviation.

Events Significant

2020 REPORT INTERIM

Events Significant

2020 REPORT INTERIM

Section 5 Signicant Events

Results of targeted poverty alleviation

							Quantity/
						Unit of	development
Indicators					measurement	status
I.	General Information			-	-
	Including:	1.	Funds		RMB' 0,000	187.28
			2.	Cash converted from materials	RMB' 0,000	0
			3.	Number of registered poor people who were
				helped to be lifted out of poverty	person	0
II.	Sub-segments of Investments	-	-
	1.	Poverty alleviation through industrial development	-	-
		Including:	1.1	Type of industrial development project for		Poverty alleviation
					poverty alleviation		through assets
						-	income
				1.2	Number of industrial development
					projects for poverty alleviation	piece	1
				1.3	Invested amount in industrial
					development projects for poverty
					alleviation	RMB' 0,000	58.04
				1.4	Number of registered poor people who
					were helped to be lifted out of poverty	person	166
	2.	Poverty alleviation by education	-	-
		Including:	2.1	Invested amount to endow poor students	RMB' 0,000	29.24
				2.2	Number of endowed poor students	person	34
	3.	Social poverty alleviation	-	-
		Including:	3.1	Invested amount in cooperation with
					poverty alleviation in western and eastern
					China	RMB' 0,000	0
				3.2	Invested amount in targeted poverty
					alleviation work	RMB' 0,000	187.28
	4.	Others				-	-
		Including:	4.1.	Number of projects	piece	1
				4.2.	Invested amount	RMB' 0,000	100
III.	Awards received (details and grade)	-	-
Bronze cup of the Guangdong Poverty Alleviation Red Cotton Cup	Provincial level

Note: The Company's total investment in targeted poverty alleviation in the first half of 2020 was RMB1,872,800, which was all used for the targeted poverty alleviation work mentioned in item 3.2.

Targeted poverty alleviation follow-up programs
The Company's subsequent plan on targeted poverty alleviation is mainly to complete the paired assistance to Wuzhishan City, Lingao County, Baisha Li Autonomous County in Hainan Province and Tianjinggang Village in Guangdong Province to win the combat of targeted poverty alleviation. The Company will continue to strengthen the refining, sharing and communication of poverty alleviation experience and actively fulfill its social responsibilities.

Section 5 Signicant Events

XVII. CHANGES OF QUALIFICATIONS FOR INDIVIDUAL BUSINESSES

There was no newly added qualification for individual business obtained during the Reporting Period.

XVIII. PARTICULARS OF OTHER SIGNIFICANT ISSUES

As of June 30, 2020, the Company had a total of 20 branches and 283 securities brokerage branches that cover 31 provinces, municipalities directly under the central government and autonomous regions. During the Reporting Period, a total of 3 branches of the Company and 8 brokerage branches completed relocation within the same city.

XIX. SIGNIFICANT MATTERS FOR THE SUBSIDIARIES OF THE COMPANY

During the Reporting Period, the subsidiaries of the Company did not have other significant matters.

ADMINISTRATIVE LICENSE DECISIONS MADE BY REGULATORY AUTHORITIES OR BUSINESS LICENSE NOTICES BY SELF-REGULATORY ORGANISATIONS DURING THE REPORTING PERIOD

No.	Regulatory authority	Administrative license decisions or business license notices by
		self-regulatory organisations
1	Dalian Bureau	Reply on Approval for Deregistration of Dalian Branch by GF
	of the CSRC	Securities Co., Ltd.
2	SZSE	No-objection Letter to GF Securities Co., Ltd. for the Subordinated
		Bonds of Securities Firms in 2020 Meeting Transfer Conditions of the
		SZSE
3	Guangdong	Approval and Filing Registration Notice (filing registration of change
	Administration for	of directors, supervisors and senior management and the Articles of
	Market Regulation	Association)

Events Significant

2020 REPORT INTERIM

Events Significant

2020 REPORT INTERIM

Section 5 Signicant Events

XXI. INDEX OF INFORMATION DISCLOSURE

During the Reporting Period, the Company published the following information in respect of A Shares (excluding the "H-share Announcements") in the China Securities Journal, Securities Times, Shanghai Securities News and Securities Daily and disclosed the same on the website of CNINFO (www.cninfo. com.cn):

No.	Matters of Announcement	Date of
		Publication
1	Announcement on the Key Financial Information for December 2019	January 10, 2020
2	Announcement on the Results of the Issuance of the 2020 First Tranche of	January 11, 2020
	Short-term Financing Bills of the Company
3	Announcement on the Results of the Issuance of the Non-Public Issuance	January 21, 2020
	of Corporate Bonds
4	Estimated Results for the Year 2019	January 21, 2020
5	Announcement on the Resolutions of the 25th Meeting of the 9th Session of	January 23, 2020
	the Board of Directors
6	Announcement on Connected Transaction between GF Fund Management	January 23, 2020
	Co., Ltd. and Kangmei Healthcare Industry Investment Co., Ltd
7	Announcement on the Key Financial Information for January 2020	February 12, 2020
8	Announcement on the Interest Payment in 2020 for the 2019 Public	February 25, 2020
	Issuance of Corporate Bonds (First Tranche) to Qualified Investors
9	Announcement on the Results of the Issuance of the 2020 Second Tranche	February 25, 2020
	of Short-term Financing Bills of the Company
10	Announcement on the Approval for Cancellation of Dalian Branch	February 29, 2020
11	Announcement on the Result of Issuance of Non-public Issuance of	March 4, 2020
	Subordinated Bonds
12	Announcement on the Key Financial Information for February 2020	March 6, 2020

Section 5 Signicant Events

No.	Matters of Announcement	Date of
		Publication
13	Announcement on the Results of the Issuance of the 2020 Third Tranche of	March 14, 2020
	Short-term Financing Bills of the Company
14	Announcement on the Result of Issuance of Non-public Issuance of	March 17, 2020
	Corporate Bonds
15	Announcement on the Resolutions of the 26th Meeting of the 9th Session of	March 28, 2020
	the Board of Directors
16	Announcement on the Resolutions of the 14th Meeting of the 9th Session of	March 28, 2020
	the Supervisory Committee
17	Highlights of the 2019 Annual Report	March 28, 2020
18	Announcement in Relation to the Provision for Assets Impairment for 2019	March 28, 2020
19	Announcement on the Estimates of Daily Related/Connected Transactions	March 28, 2020
	for 2020
20	Announcement on the Re-appointment of Accounting Firm	March 28, 2020
21	Announcement in Relation to 2019 Annual Results Presentation	March 31, 2020
22	Announcement on the Cumulative Amount of New Borrowings for the Year	April 9, 2020
	Representing More Than 20% of net assets as at the End of Last Year
23	Announcement on the Key Financial Information for March 2020	April 10, 2020
24	Announcement on the Results of the Issuance of the 2020 Fourth Tranche	April 17, 2020
	of Short-term Financing Bills of the Company
25	Announcement on the Interest Payment in 2020 for the 2018 Public	April 21, 2020
	Issuance of Corporate Bonds (First Tranche) to Qualified Investors
26	Announcement on the Resignation of Mr. Lin Zhihai as Executive Director	April 22, 2020
	and General Manager of the Company

Events Significant

2020 REPORT INTERIM

Section 5 Signicant Events

Events Significant

2020 REPORT INTERIM

No.	Matters of Announcement	Date of
		Publication
27	Announcement on the Resolutions of the 27th Meeting of the 9th Session of	April 22, 2020
	the Board of Directors
28	Announcement on the Resolutions of the 15th Meeting of the 9th Session of	April 22, 2020
	the Supervisory Committee
29	Statement of Nominator and Candidate of Independent Director (Fan Lifu)	April 22, 2020
30	Statement of Nominator and Candidate of Independent Director (Hu Bin)	April 22, 2020
31	Statement of Nominator and Candidate of Independent Director (Leung	April 22, 2020
	Shek Ling Olivia)
32	Statement of Nominator and Candidate of Independent Director (Li Wenjing)	April 22, 2020
33	Notice of the 2019 Annual General Meeting	April 25, 2020
34	Announcement on the Resolutions of the 28th Meeting of the 9th Session of	April 29, 2020
	the Board of Directors
35	2020 First Quarterly Report	April 29, 2020
36	Announcement on the Resolutions of the 16th Meeting of the 9th Session of	April 29, 2020
	the Supervisory Committee
37	Announcement on the Interest Payment in 2020 for the 2017 Public	April 30, 2020
	Issuance of Corporate Bonds (First Tranche) to Qualified Investors and
	delisting thereof
38	Announcement on the Key Financial Information for April 2020	May 12, 2020
39	Announcement on the Results of the Issuance of the 2020 Fifth Tranche of	May 19, 2020
	Short-term Financing Bills (Bond Connect) of the Company

Section 5 Signicant Events

No.	Matters of Announcement	Date of
		Publication
40	Announcement on the Results of the Issuance of the 2020 Sixth Tranche of	June 2, 2020
	Short-term Financing Bills (Bond Connect) of the Company
41	Announcement on the Key Financial Information for May 2020	June 5, 2020
42	Announcement on Reminder Notice of the 2019 Annual General Meeting	June 5, 2020
43	Announcement on the Results of the Election of Employee Representative	June 10, 2020
	Supervisors
44	Announcement on the Resolutions of the 2019 Annual General Meeting	June 10, 2020
45	Announcement on the Resolutions of the 1st Meeting of the 10th Session of	June 10, 2020
	the Board of Directors
46	Announcement on the Resolutions of the 1st Meeting of the 10th Session of	June 10, 2020
	the Supervisory Committee
47	Announcement on the Interest Payment in 2020 for "13 GF 03" Corporate	June 11, 2020
	Bonds
48	Announcement on the Results of the Issuance of the 2020 Seventh Tranche of	June 20, 2020
	Short-term Financing Bills (Bond Connect) of the Company

Events Significant

2020 REPORT INTERIM

Events Significant

2020 REPORT INTERIM

Section 5 Signicant Events

During the Reporting Period, the Company disclosed the following information on H Shares (excluding "Overseas Regulatory Announcements") on the HKExnews website of the Hong Kong Stock Exchange (www.hkexnews.hk):

No.	Matters of Announcement	Date of
		Publication
1	Monthly Return of Equity Issuer on Movements in Securities for the month	January 7, 2020
	ended December 31, 2019
2	Announcement on the Key Financial Information for December 2019	January 9, 2020
3	Estimated Results for the Year 2019	January 20, 2020
4	Announcement on Connected Transaction between GF Fund Management	January 22, 2020
	Co., Ltd. and Kangmei Healthcare Industry Investment Co., Ltd.
5	Monthly Return of Equity Issuer on Movements in Securities for the month	February 6, 2020
	ended January 31, 2020
6	Announcement on the Key Financial Information for January 2020	February 11, 2020
7	Announcement on the Key Financial Information for February 2020	March 5, 2020
8	Monthly Return of Equity Issuer on Movements in Securities for the month	March 5, 2020
	ended February 29, 2020
9	Date of Board Meeting	March 12, 2020
10	2019 Annual Results Announcement	March 27, 2020
11	2019 Corporate Social Responsibility Report	March 27, 2020
12	Proposed Amendments to the Articles of Association, Proposed Amendments	March 27, 2020
	to the Rules of Procedure for the General Meeting, Proposed Amendments to
	the Rules of Procedure for the Board Of Directors, Proposed Amendments to
	the Rules of Procedure for the Supervisory Committee
13	Announcement in Relation to the Provision for Assets Impairment for 2019	March 27, 2020
14	Announcement in Relation to 2019 Annual Results Presentation	March 30, 2020

Section 5 Signicant Events

No.	Matters of Announcement	Date of
		Publication
15	Monthly Return of Equity Issuer on Movements in Securities for the month	April 3, 2020
	ended March 31, 2020
16	Date of Board Meeting	April 9, 2020
17	Announcement on the Key Financial Information for March 2020	April 9, 2020
18	2019 Annual Report	April 16, 2020
19	Notification Letter and Request Form to Registered Shareholders	April 16, 2020
20	Notification Letter and Request Form to Non-Registered Shareholders	April 16, 2020
21	Resignation of Executive Director and General Manager Appointment of	April 21, 2020
	General Manager Change of Authorized Representative
22	List of Directors and their Roles and Functions	April 21, 2020
23	Nomination of Candidates for the Directors of The Tenth Session of the	April 21, 2020
	Board of Directors and Nomination of Candidates for the Supervisors of the
	Tenth Session of the Supervisory Committee
24	Notice of AGM	April 24, 2020
25	2019 AGM Circular	April 24, 2020
26	Proxy Form for the 2019 Annual General Meeting	April 24, 2020
27	Reply Slip for the 2019 Annual General Meeting	April 24, 2020
28	Notification Letter and Request Form to Registered Shareholders	April 24, 2020
29	Notification Letter and Request Form to Non-Registered Shareholders	April 24, 2020
30	2020 First Quarterly Report	April 28, 2020
31	Monthly Return of Equity Issuer on Movements in Securities for the month	May 7, 2020
	ended April 30, 2020
32	Announcement on the Key Financial Information for April 2020	May 11, 2020

Events Significant

2020 REPORT INTERIM

Section 5 Signicant Events

Events Significant

No.	Matters of Announcement	Date of
		Publication
33	Announcement on the Key Financial Information for May 2020	June 4, 2020
34	Monthly Return of Equity Issuer on Movements in Securities for the month	June 4, 2020
	ended May 31, 2020
35	Poll Results of the 2019 Annual General Meeting and Final Dividend for the	June 9, 2020
	Year Ended December 31, 2019
36	List of Directors and their Roles and Functions	June 9, 2020
37	Retirement of Independent Non-Executive Directors Appointment of	June 9, 2020
	Employee Representative Supervisors Appointment of Chairman of the
	Board of Directors, Chairman of The Supervisory Committee and the
	General Manager
38	Articles of Association	June 9, 2020

2020 REPORT INTERIM

Section 6

Changes in Shareholdings and Particulars about Shareholders

INTERIM REPORT 2020

Shareholders about Particulars and Shareholdings in Changes

Section 6 Changes in Shareholdings and Particulars about Shareholders

CHANGES IN SHAREHOLDINGS
1. Changes in Shareholdings
During the Reporting Period, there were no changes in the total number of ordinary shares and the shareholding structure of the Company.
Set out below is the share capital of the Company:

					Unit: Share
		Number of shares	Percentage (%)
I. Shares with selling restrictions	0		0
II. Shares without selling restrictions	7,621,087,664		100.00%
1.	RMB-denominated ordinary shares	5,919,291,464		77.67%
2.	Domestic listed foreign shares	0		0
3.	Listed foreign shares	1,701,796,200		22.33%
4.	Others	0		0
III. Total number of shares	7,621,087,664		100.00%

2. Changes in restricted shares N/A
SECURITIES ISSUANCE AND THE LISTING
For details about the issuance of corporate bonds, subordinated bonds, short-term corporate bonds, short-term financing bills by the Company, please refer to Section 10 "Corporate Bonds" of this report.

2020 REPORT INTERIM

Section 6 Changes in Shareholdings and Particulars about Shareholders

NUMBER OF SHAREHOLDERS AND THEIR SHAREHOLDINGS IN THE COMPANY

							Unit: Share
Total number of ordinary shareholders at the	182,876 (of which, 181,173 were A shareholders, 1,703 were registered	Total number of preferred shareholders whose		0
end of the Reporting Period	H shareholders)				voting rights were resumed at the end of the
					Reporting Period
Shareholdings of ordinary shareholders who hold more than 5% of the ordinary shares or shareholdings of the top ten ordinary shareholders
			Number of
			ordinary shares	Increase or	Number of	Number of
			held as at the	decrease during	ordinary shares	ordinary shares	Pledge or freeze
	Capacity of	Percentage of	end of the	the Reporting	with selling	without selling	Status of	Number of
Name of shareholder	shareholder	shareholding (%)	Reporting Period	Period	restrictions held	restrictions held	shares	shares
HKSCC Nominees Limited	Overseas legal	22.31%	1,700,070,460	-28,000	0	1,700,070,460
	entity
Jilin Aodong Pharmaceutical Group Co., Ltd	Domestic general	16.43%	1,252,297,867	0	0	1,252,297,867
	legal entity
Liaoning Cheng Da Co., Ltd.	State-owned legal	16.40%	1,250,154,088	40,000	0	1,250,154,088
	entity
Zhongshan Public Utilities Group Co., Ltd.	State-owned legal	9.01%	686,754,216	0	0	686,754,216
	entity
China Securities Finance Corporation Limited	Domestic general	2.99%	227,870,638	0	0	227,870,638
	legal entity
Huaxia Life Insurance Co., Ltd.- Universal	Fund and wealth	2.83%	215,824,683	0	0	215,824,683
Life Insurance Product	management
	products, etc.
Puning Xinhong Industrial Investment Co., Ltd.	Domestic general	1.91%	145,936,358	0	0	145,936,358	Pledged	144,000,000
	legal entity
Central Huijin Asset Management Ltd.	State-owned legal	1.29%	98,149,700	0	0	98,149,700
	entity
Hong Kong Securities Clearing	Overseas legal	0.85%	64,745,149	5,054,600	0	64,745,149
Company Limited	entity
China Construction Bank Corporation	Fund, wealth	0.56%	42,630,554	11,757,654	0	42,630,554
- Guotai CSI All Share Investment Banking &	management
Brokerage Index Exchange-traded Fund	product, etc.

Shareholders about Particulars and Shareholdings in Changes

2020 REPORT INTERIM

Section 6 Changes in Shareholdings and Particulars about Shareholders

Shareholders about Particulars and Shareholdings in Changes

2020 REPORT INTERIM

Shareholdings of the top ten ordinary shareholders without selling restrictions

	Number of
	ordinary shares
	without selling
	restrictions
	held as at
	the end of the	Type of Shares
	Reporting		Number of
Name of shareholder	Period	Type of shares	shares
HKSCC Nominees Limited	1,700,070,460	Listed foreign shares	1,700,070,460
Jilin Aodong Pharmaceutical Group Co., Ltd	1,252,297,867	RMB-denominated	1,252,297,867
		ordinary shares
Liaoning Cheng Da Co., Ltd.	1,250,154,088	RMB-denominated	1,250,154,088
		ordinary shares
Zhongshan Public Utilities Group Co., Ltd.	686,754,216	RMB-denominated	686,754,216
		ordinary shares
China Securities Finance Corporation Limited	227,870,638	RMB-denominated	227,870,638
		ordinary shares
Huaxia Life Insurance Co., Ltd.- Universal Life	215,824,683	RMB-denominated	215,824,683
Insurance Product		ordinary shares
Puning Xinhong Industrial Investment Co., Ltd.	145,936,358	RMB-denominated	145,936,358
		ordinary shares
Central Huijin Asset Management Ltd.	98,149,700	RMB-denominated	98,149,700
		ordinary shares
Hong Kong Securities Clearing Company Limited	64,745,149	RMB-denominated	64,745,149
		ordinary shares
China Construction Bank Corporation	42,630,554	RMB-denominated	42,630,554
- Guotai CSI All Share Investment Banking &		ordinary shares
Brokerage Index Exchange-traded Fund

Note 1: Among the H shareholders of the Company, shares of non-registered shareholders are held by HKSCC Nominees Limited on their behalf;

Note 2: In the table above, shares held by HKSCC Nominees Limited are listed foreign shares (H Shares) and shares held by other shareholders are RMB-denominated ordinary shares (A Shares);

Section 6 Changes in Shareholdings and Particulars about Shareholders

Note 3: According to the public information disclosed on July 9, 2020 by Jilin Aodong Pharmaceutical Group Co., Ltd ("Jilin Aodong"), Liaoning Cheng Da Co., Ltd. ("Liaoning Cheng Da") and Zhongshan Public Utilities Group Co., Ltd. ("Zhongshan Public Utilities"), as at June 30, 2020, Jilin Aodong held 67,280,000 H Shares of the Company and through its wholly-owned subsidiary, namely Aodong International (Hong Kong) Industrials Co., Limited (敖東國際(香港)實業有限公司), held 36,868,800 H Shares of the Company, totaling 104,148,800 H Shares and representing 1.37% of the total share capital of the Company. Liaoning Cheng Da, through Chengda Steel Hongkong Co., Limited (成大鋼鐵香港有限公司), which is a wholly-owned subsidiary of its wholly-owned subsidiary, Chengda Steel Co., Ltd. (遼寧成大鋼鐵貿易有限公司), held 1,473,600 H Shares of the Company, representing 0.019% of the total share capital of the Company. Zhongshan Public Utilities held 100,904,000 H Shares of the Company through its wholly-owned subsidiary, Public Utilities International (Hong Kong) Investment Company Ltd. (公用國際(香港)投資有限公司), representing 1.32% of the total share capital of the Company. As at June 30, 2020, the shareholding percentages of A Shares and H Shares in the Company of Jilin Aodong and its concert parties, Liaoning Cheng Da and its concert parties and Zhongshan Public Utilities and its concert parties were 17.80%, 16.42% and 10.34%, respectively;

Note 4: The number of shares held by Liaoning Chengda at the end of the Reporting Period increased by 40,000 shares compared with the end of December 2019, mainly due to the participation of Liaoning Chengda in the margin refinancing and securities refinancing;

Note 5: According to the public information disclosed on the HKExnews website of the Hong Kong Stock Exchange (www.hkexnews.hk), as at June 30, 2020, other than Public Utilities International (Hong Kong) Investment Company Ltd. as set out in Note 3, shareholders holding 5% or more of the H Shares of the Company are as follows: on January 31, 2020, the labor union committee of GF Securities Co., Ltd. held a total of 272,500,600 long-position H Shares of the Company, representing 16.01% of the H Share capital of the Company. The above shares are held by HKSCC Nominees Limited on their behalf;

Note 6: At the end of the Reporting Period, no shares of the Company were held by A shareholders mentioned above through credit-based securities accounts;

Note 7: At the end of the Reporting Period, no A shareholders mentioned above conducted agreed repurchase type securities trading.

IV. CHANGES IN CONTROLLING SHAREHOLDERS OR DE FACTO CONTROLLERS

There was no controlling shareholder or de facto controller in the Company.

Shareholders about Particulars and Shareholdings in Changes

2020 REPORT INTERIM

Shareholders about Particulars and Shareholdings in Changes

2020 REPORT INTERIM

Section 6 Changes in Shareholdings and Particulars about Shareholders

SUBSTANTIAL SHAREHOLDERS' AND OTHER PERSONS' INTERESTS AND SHORT POSITIONS IN SHARES AND UNDERLYING SHARES
As of June 30, 2020, as far as the Directors of the Company are aware after having made all reasonable enquiries, the following persons (other than the Directors, Supervisors and chief executive of the Company) held interests or short positions in the shares or underlying shares which shall be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO and were recorded in the register required to be kept by the Company under section 336 of the SFO:

							Percentage
							of total
					Long	Percentage	issued
					position	of total	A Shares/
					(Note 1) /	issued	H Shares
					short	shares of the	of the
	Name of substantial	Class of		Number of shares	position	Company	Company
No.	shareholders	Shares	Nature of interests	held (share)	(Note 2)	(%) (Note 8)	(%) (Note 8)
1	Jilin Aodong	A Shares	Beneficial owner	1,252,297,867	Long	16.43	21.16
					position
		H Shares	Interest in a	104,148,800	Long	1.37	6.12
			controlled corporation	(Note 3)	position
2	Liaoning Cheng Da	A Shares	Beneficial owner	1,250,154,088	Long	16.40	21.12
					position
		H Shares	Interest in a	1,473,600	Long	0.02	0.09
			controlled corporation	(Note 4)	position
3	Zhongshan Zhonghui	A Shares	Interest in a	686,754,216	Long	9.01	11.60
	Investment Group		controlled corporation		position
	Company Limited	H Shares	Interest in a	100,904,000	Long	1.32	5.93
			controlled corporation	(Note 5)	position
4	Zhongshan Public Utilities	A Shares	Beneficial owner	686,754,216	Long	9.01	11.60
					position
		H Shares	Interest in a	100,904,000	Long	1.32	5.93
			controlled corporation	(Note 5)	position
5	Public Utilities International	H Shares	Beneficial owner	100,904,000	Long	1.32	5.93
	(Hong Kong) Investment			(Note 5)	position
	Company Ltd.
6	The labor union committee	H Shares	Trustee of a trust	272,500,600	Long	3.58	16.01
	of GF Securities Co., Ltd.			(Note 6)	position

Section 6 Changes in Shareholdings and Particulars about Shareholders

Note 1: A shareholder has a "long position" if such shareholder has an interest in shares, including interests through holding, writing or issuing financial instruments (including derivatives) under which: (i) such shareholder has a right to take the underlying shares; (ii) such shareholder is under an obligation to take the underlying shares; (iii) such shareholder has a right to receive money if the price of the underlying shares increases; or (iv) such shareholder has a right to avoid or reduce a loss if the price of the underlying shares increases.

Note 2: A shareholder has a "short position" if such shareholder borrows shares under a securities borrowing and lending agreement, or holds, writes or issues financial instruments (including derivatives) under which: (i) such shareholder has a right to require another person to take the underlying shares; (ii) such shareholder is under an obligation to deliver the underlying shares; (iii) such shareholder has a right to receive money if the price of the underlying shares declines; or (iv) such shareholder has a right to avoid or reduce a loss if the price of the underlying shares declines.

Note 3: Jilin Aodong held 67,280,000 H Shares of the Company and held 36,868,800 H Shares of the Company through its wholly-owned subsidiary, namely Aodong International (Hong Kong) Industrials Co., Limited (敖東國際（香港）實業有限公司), a total of 104,148,800 H shares, representing 1.37% of the total share capital

of the Company.

Note 4: Liaoning Cheng Da, through Chengda Steel Hongkong Co., Limited (成大鋼鐵香港有限公司), which is

wholly-ownedsubsidiary of Chengda Steel Co., Ltd. (遼寧成大鋼鐵貿易有限公司) (a wholly-owned subsidiary of Liaoning Cheng Da), held 1,473,600 H Shares of the Company, representing 0.019% of the total share capital of the Company. Therefore, Liaoning Cheng Da and Chengda Steel Co., Ltd. were deemed to have interests in the shares held by Chengda Steel Hongkong Co., Limited.

Note 5: Zhongshan Public Utilities held 100,904,000 H Shares of the Company through its wholly-owned subsidiary, Public Utilities International (Hong Kong) Investment Company Ltd. (公用國際（香港）投資有限公司), representing 1.32% of the total share capital of the Company. Zhongshan Zhonghui Investment Group Company Limited held 47.98% of the issued shares of Zhongshan Public Utilities. Therefore, Zhongshan Zhonghui Investment Group Company Limited and Zhongshan Public Utilities were deemed to have interests in the shares held by Public Utilities International (Hong Kong) Investment Company Ltd..

Note 6: The labor union committee of GF Securities Co., Ltd. held a total of 272,500,600 H Shares of the Company, representing 16.01% of the H Share capital of the Company.

Note 7: Under Part XV of the SFO, forms disclosing of interests shall be submitted by shareholders of the Company upon satisfaction of certain conditions. Changes of Shareholders' shareholdings in the Company are not required to inform the Company and the Hong Kong Stock Exchange, except for the satisfaction of certain conditions. Therefore, there could be differences between substantial Shareholders' latest shareholdings in the Company and the shareholding information as reported to the Hong Kong Stock Exchange.

Note 8: The relevant percentages are calculated based on 1,701,796,200 H Shares and/or 5,919,291,464 A Shares of the Company in issue as at June 30, 2020.

Save as disclosed above, the Company is not aware of any other person (other than the Directors, Supervisors and chief executive of the Company) having any interests or short positions in the shares or underlying shares of the Company as at June 30, 2020 required to be recorded in the register pursuant to section 336 of the SFO.

Shareholders about Particulars and Shareholdings in Changes

2020 REPORT INTERIM

Shareholders about Particulars and Shareholdings in Changes

Section 6 Changes in Shareholdings and Particulars about Shareholders

VI. DIRECTORS, SUPERVISORS AND CHIEF EXECUTIVE'S INTERESTS AND SHORT POSITIONS IN THE SHARES, UNDERLYING SHARES OR DEBENTURES OF THE COMPANY AND ITS ASSOCIATED CORPORATIONS

As of June 30, 2020, none of the Directors, Supervisors or chief executives of the Company had or was deemed to have any interests or short positions in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO), which would be required, pursuant to section 352 of the SFO, to be entered into the register maintained by the Company; or which would be required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers, to be notified to the Company and the Hong Kong Stock Exchange.

As of June 30, 2020, none of the Company, its subsidiaries or fellow subsidiaries was a party to any arrangements during the year to enable the Directors, Supervisors or chief executives of the Company, including their spouses and children under 18 years of age, to acquire any interests by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.

VII. REPURCHASE, SALE OR REDEMPTION OF THE LISTED SECURITIES OF THE COMPANY

During the Reporting Period, neither the Company nor any of its subsidiaries has repurchased, sold or redeemed any of the listed securities of the Company.

2020 REPORT INTERIM

Shares Preference

7 Section

INTERIM REPORT 2020

Section 7 Preference Shares

During the Reporting Period, the Company did not have any preference shares.

Shares Preference

2020 REPORT INTERIM

Corporate Convertible	8 Section
Bonds

INTERIM REPORT 2020

Section 8 Convertible Corporate Bonds

During the Reporting Period, the Company did not have any convertible corporate bonds.

Bonds Corporate Convertible

2020 REPORT INTERIM

Section 9

Particulars about Directors, Supervisors and Senior Management

INTERIM REPORT 2020

Management Senior and Supervisors Directors, about Particulars

2020 REPORT INTERIM

Section 9 Particulars about Directors, Supervisors and Senior Management

CHANGES IN SHAREHOLDING OF DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
During the Reporting Period, the Directors, Supervisors and senior management did not directly hold shares, share options and restrictive shares of the Company.

CHANGES IN THE DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT

Name	Position	Type	Date	Reason
Lin Zhihai	Executive director	Resigned	April 20, 2020	Health reason
	and general
	manager
Yang Xiong	Independent	Expiry of term of	June 9, 2020	Expiry of term of
	non-executive	office		office
	director
Tang Xin	Independent	Expiry of term of	June 9, 2020	Expiry of term of
	non-executive	office		office
	director
Chan Kalok	Independent	Expiry of term of	June 9, 2020	Expiry of term of
	non-executive	office		office
	director
Tan Yue	Supervisor	Expiry of term of	June 9, 2020	Expiry of term of
		office		office
Gu Naikang	Supervisor	Expiry of term of	June 9, 2020	Expiry of term of
		office		office
Lan Hailin	Supervisor	Expiry of term of	June 9, 2020	Expiry of term of
		office		office
Hu Bin	Independent	Elected	June 9, 2020	Election at the
	non-executive			general meeting
	director
Leung Shek Ling	Independent	Elected	June 9, 2020	Election at the
Olivia	non-executive			general meeting
	director
Li Wenjing	Independent	Elected	June 9, 2020	Election at the
	non-executive			general meeting
	director
Lai Jianhuang	Supervisor	Elected	June 9, 2020	Election at the
				general meeting
Xie Shisong	Supervisor	Elected	June 9, 2020	Election at the
				general meeting
Lu Xin	Supervisor	Elected	June 9, 2020	Election at the
				general meeting

Section 9 Particulars about Directors, Supervisors and Senior Management

Mr. Lin Zhihai, an executive director and the general manager, tendered his written resignation letter to the Company for health reason, applying for resignation from his positions as an executive director, a member of the strategy committee, nomination committee and risk management committee of the board of directors of the Company and the general manager of the Company and has ceased to hold any position in the Company.
During the Reporting Period, the Company conducted the re-election of members of the board of directors and the supervisory committee. The Company convened the 2019 annual general meeting on June 9, 2020, at which Mr. Li Xiulin, Mr. Shang Shuzhi and Ms. Liu Xuetao were elected as the non-executive directors of the tenth session of the board of directors of the Company; Mr. Fan Lifu, Mr. Hu Bin, Ms. Leung Shek Ling Olivia and Mr. Li Wenjing were elected as the independent non-executive director of the tenth session of the board of directors of the Company; Mr. Sun Shuming, Mr. Qin Li and Ms. Sun Xiaoyan were elected as the executive directors of the tenth session of the board of directors of the Company; and Mr. Lai Jianhuang, Mr. Xie Shisong and Ms. Lu Xin were elected as the supervisors of the tenth session of the supervisory committee of the Company.
A resolution was passed at the ninth meeting of the 5th session of the employee representatives meeting of the Company on June 8, 2020, pursuant to which Mr. Zhang Shaohua and Mr. Cheng Huaiyuan were elected as the employee representative supervisors of the tenth session of the supervisory committee of the Company. Mr. Zhang Shaohua was elected as the chairman of the tenth session of the supervisory committee at the first meeting of the tenth session of the supervisory committee of the Company.
The Company convened the first meeting of the tenth session of the board of directors on June 9, 2020, at which Mr. Sun Shuming was elected as the chairman of the tenth session of the board of directors of the Company and appointed as the general manager of the Company; Mr. Qin Li was appointed as the standing deputy general manager of the Company; Ms. Sun Xiaoyan was appointed as the deputy general manager and the chief financial officer of the Company; Mr. Ouyang Xi was appointed as the deputy general manager of the Company; Mr. Luo Binhua was appointed as the deputy general manager of the Company; Mr. Yang Long was appointed as the deputy general manager of the Company; Mr. Wu Jifu was appointed as the deputy general manager and the chief compliance officer of the Company; Mr. Zhang Wei was appointed as the deputy general manager of the Company; Mr. Xin Zhiyun was appointed as the chief risk officer and chief information officer of the Company; and Mr. Xu Youjun was appointed as secretary to the board of directors of the Company.

Management Senior and Supervisors Directors, about Particulars

2020 REPORT INTERIM

Management Senior and Supervisors Directors, about Particulars

2020 REPORT INTERIM

Section 9 Particulars about Directors, Supervisors and Senior Management

STAFF AND REMUNERATION POLICIES
As of June 30, 2020, the Group had 11,809 employees, of whom a total of 9,936 were from the parent company and 1,873 were from the subsidiaries.
The Company stringently abided by and strictly enforced the Labor Law, Labor Contract Law and other external laws and regulations, and established sound human resources management systems and processes, including the Administrative Measures on the Remuneration for GF Securities Employees, the Administrative Measures on the Labor Contract for GF Securities Employees, the Administrative Measures on the Benefits Leave for GF Securities Employee and the Administrative Measures on the Welfare of GF Securities Employees at Designated Levels, which effectively protected the rights and interests for employees in labor protection, working conditions, salary payment, social insurance, working hours management, rest and vacation, and the interests of female employees.
The Company is committed to establish effective salary motivation and constraint mechanism to fully motivate the initiative and innovation of all the employees and introduce and retain the core talents. The basic principles of the remuneration management of the Company include performance orientation, prosperity by cooperation, external competitiveness, risk matching and multiple incentives.
The remuneration of the Company's employees primarily comprises of fixed salary, performance-based bonus and benefits. The Company established a comprehensive welfare and security system, including social insurance, housing fund, supplementary medical insurance, annuity, benefits leave, corporate benefits, union welfare, and welfare of female employees, etc.
The Company attached great importance to employee training, carried out training and learning activities as common measures for the development of talents and was committed to building a team of highly qualified personnel. The Company took the training center as the carrier and built a hierarchical and targeted employee training course system of "business + leadership" to meet the development needs of employees in different professional stages of professional channels and management channels and to improve the organization ability of the implementation of strategy; through the operation of four learning platforms such as Guangfa Aixue APP, we can flexibly accommodate the learning needs of employees in various scenarios, help employees effectively use personal fragmentation time, and guide employees to learn independently, actively share and precipitate in time. By establishing an effective training management mechanism and extracting and disseminating organizational wisdom, we created an atmosphere that was conducive to guiding employees to learn and share independently, and built a learning organization. The employee training that met the strategic needs, supported the sustainable and stable development of the Company, and achieved a "win-win" for the Company's business development and employee career development. During the Reporting Period, the Company focused on "multi-pronged approach to comprehensively enhance the training on compliance and risk control culture; online and offline integration to consolidate the professional capabilities and leadership of the staff team; platform construction to constantly promote the extraction and dissemination of organizational wisdom" and organized talent cultivation and training activities.

Bonds Corporate

10 Section

INTERIM REPORT 2020

Bonds Corporate

Section 10 Corporate Bonds

BASIC INFORMATION ON BONDS OF THE COMPANY

Authorization for the Issuance of Corporate Bonds at the General Meeting
On December 26, 2012 and January 10, 2013, upon consideration and approval by the 3rd extraordinary general meeting of shareholders in 2012 and the 1st extraordinary general meeting of shareholders in 2013, the Company was approved to publicly issue corporate bonds of not more than RMB12 billion (inclusive) with a term of not more than 10 years (inclusive).
On July 21, 2015, the Company convened the first extraordinary general meeting of 2015 at which the Resolution on the Authorization Granted to the Company for the Issuance of Corporate Onshore and Offshore Debt Financing Instruments 《( 關於授權公司發行公司境內外債務融資工具的議案》) was considered and approved. Pursuant to the resolution, the Company may issue debt financing instruments such as corporate bonds, subordinated bonds and asset securitization products (collectively, the "Onshore and Offshore Debt Financing Instruments") on a one-off or multiple issuances or multi- tranche issuances basis. The total balance of the Onshore and Offshore Debt Financing Instruments issued by the Company does not exceed RMB200 billion and is able to meet the requirements of the relevant laws and regulations on the maximum amount of issuance in respect of the Onshore and Offshore Debt Financing Instruments issued by the Company.
On June 29, 2018, the Resolution on Authorization to the Company for the Issuance of Onshore and Offshore Debt Financing Instruments 《( 關於授權公司發行境內外債務融資工具的議案》) by the Company was considered and approved at the 2017 annual general meeting of the Company. Pursuant to the resolution, the Company is authorized to issue corporate bonds on a one-off or multiple issuances or multi-tranche issuances basis, including corporate bonds (including onshore public and non-public corporate bonds; offshore debt financing instruments such as US dollar, Euro and other foreign currency denominated corporate bonds and offshore RMB-denominated corporate bonds, medium term note programme, foreign currency notes and commercial papers), subordinated bonds (including perpetual subordinated bonds), asset securitization products and other debt financing instruments (collectively, the "Corporate Onshore and Offshore Debt Financing Instruments"); and to implement the subsequent issuance and authorization of above mentioned Corporate Onshore and Offshore Debt Financing Instruments in accordance with this resolution; and the outstanding balance of the Corporate Onshore and Offshore Debt Financing Instruments totalled not more than RMB200 billion. The resolution is valid for 60 months from the date of approval by the shareholders general meeting.

2020 REPORT INTERIM

Section 10 Corporate Bonds

Issuance of Corporate Bonds
On May 31, 2013, the Company has obtained the "Reply on Approval for GF Securities Co., Ltd. to Publicly Issue Corporate Bonds (Zheng Jian Xu Ke [2013] No. 725)" 《( 關於核准廣發証券股份有限公司公開發行公司債券的批覆》(證監許可[2013]725號)文件) from the CSRC and was approved to publicly issue corporate bonds with a nominal value of not more than RMB12 billion to the public. On June 19, 2013, the Company completed the issuance of corporate bonds. There were three types of such bonds, the details of which are as follows:

Corporate

Name of Bond

Corporate bonds of GF Securities Co., Ltd. in 2013 (Type I)

Corporate bonds of GF Securities Co., Ltd. in 2013 (Type II)

Corporate bonds of GF Securities Co., Ltd. in 2013 (Type III)

Trading places for the listing or transfer of corporate bonds

Arrangement to ensure the suitability of investors

Interest payment of corporate bonds during the Reporting Period

Implementation of the special terms including the embedded options attached to the bonds given to the issuer or investors or exchangeable terms of the bonds during the Reporting Period

				Value of
Abbreviation				Bond
of Bond	Code of Bond	Issue Date	Maturity Date	(RMB'0,000)	Coupon	Debt Service
13 GF 01	112181	June 17, 2013	June 17, 2018	150,000	4.50%	Interest shall be
						paid annually, while
13 GF 02	112182	June 17, 2013	June 17, 2018	150,000	4.75%	the principal shall
						be fully repaid upon
13 GF 03	112183	June 17, 2013	June 17, 2023	900,000	5.10%	maturity. Principal
						will be repaid upon

maturity together w i t h i n t e r e s t payable for the last period.

SZSE

Target investors are social public investors who hold security accounts with the initial letters of A, B, D, F opened in the registered companies (excluding purchasers prohibited by laws and regulations) and institutional investors opening eligible securities accounts in the registered companies (excluding purchasers prohibited by laws and regulations).

On June 17, 2020, the Company paid the interest for "13 GF 03" corporate bonds from June 17, 2019 to June 16, 2020. The interest for "13 GF 03" is RMB51.00 (tax inclusive)/10 pieces.

"13 GF 01" includes special articles for redemption and redenomination interest rate.

Redemption: after the issuer has issued the announcement for whether increase the nominal interest rate of 3+2-year type of bonds of the term or increase the range, investors have the right to choose to sell back their all or part 3+2-year type of bonds of the term to the issuer at par on the 3rd annual payment date within the duration for such 3+2-year type of bonds of the term.

Redenomination interest rate: the issuer has the right to decide if to increase the nominal interest rate of 2 years after increasing bonds of the term as at the 3rd year during the duration for such 3+2-year type of bonds of the term. The issuer will publish on the information disclosure media designated by the CSRC for the announcement that if to increase the nominal interest rate of 3+2-year type of bonds of the term or increase the range on the 30th trading day prior to the 3rd annual payment date within the duration for such 3+2-year type of bonds of the term. If the issuer has not executed its right to increase the interest rate, the original nominal interest rate for that for the duration of 3+2-year type of bonds of the term will remain the same.

On June 19, 2016, the Company chose not to increase the nominal interest rate of "13 GF 01" (i.e. the redenomination interest rate of "13 GF 01" for the 2 years after the annual payment date remain unchanged at 4.50%). Pursuant to the requirement of Prospectus of GF Securities Co., Ltd. to Publicly Issue 2013 Corporate Bonds 《( 廣發証券股份有限公司公開發行2013年公司債券募集說明書》), the Company released an Announcement Regarding Non-Redenomination Interest Rate of "13 GF 01" and Implementation Measures on Redemption by Investors《( 關於「13 廣發01」票面利率不調整和投資者回售實施辦法的公告》). Following the announcement, none of the bondholders has chosen to sell back, all or part of, the "13 GF 01" at par to the issuer.

During the Reporting Period, there is no special articles for redemption and redenomination interest rate.

Bonds

2020 REPORT INTERIM

Bonds Corporate

Section 10 Corporate Bonds

On November 18, 2016, the Company obtained the "Reply on Approval for GF Securities Co., Ltd. to Publicly Issue Corporate Bonds to Qualified Investors" (Zheng Jian Xu Ke [2016] No. 2741) 《( 關於核准廣發証券股份有限公司向合格投資者公開發行公司債券的批覆》(證監許可[2016]2741號)文件) from the CSRC and was approved to publicly issue corporate bonds with a total nominal value of not more than RMB19 billion to qualified investors. On May 11 and July 26, 2017, the Company completed the issuance of the 2017 first and second tranches of corporate bonds. The details of such bonds are as follows:

					Value
	Abbreviation				of Bond
Name of Bond	of Bond	Code of Bond	Issue Date	Maturity Date	(RMB'0,000)	Coupon	Debt Service
Corporate Bonds Publicly Issued by	17 GF 01	112520	May 9, 2017	May 11, 2020	600,000	4.60%	Interest	shall be
GF Securities Co., Ltd. to Qualified							accrued	and paid
Investors in 2017 (the First Tranche)							annually, while the
Corporate Bonds Publicly Issued by	17 GF 02	112556	July 24, 2017	July 26, 2020	600,000	4.50%	principal	shall be
GF Securities Co., Ltd. to Qualified							fully repaid upon
Investors in 2017							maturity. Principal
(the Second Tranche)							will be repaid upon
							maturity	together
							w i t h i n t e r e s t
							payable	for the
							last period.

2020 REPORT INTERIM

Trading places for the listing or transfer of corporate bonds

Arrangement to ensure the suitability of investors

Interest payment of corporate bonds during the Reporting Period

Implementation of the special terms including the embedded options attached to the bonds given to the issuer or investors or exchangeable terms of the bonds during the Reporting Period

SZSE

Target investors are qualified investors who comply with the Administrative Measures for Bonds and open a legal A-share securities account with China Securities Depository and Clearing Corporation Limited, Shenzhen Branch (excluding purchasers prohibited by laws and regulations).

On May 11, 2020, the Company paid the principal and its interest for "17 GF 01" corporate bonds from May 11, 2019 to May 10, 2020 (the last interest-bearing year). The interest for "17 GF 01" is RMB46.00 (tax inclusive)/10 pieces.

No special terms such as issuer or investor option terms and interchangeable terms.

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GF Securities Co. Ltd. published this content on 09 September 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 09 September 2020 08:19:00 UTC

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Quarterly earnings - Rate of surprise

Sector Other Investment Management & Fund Operators

	1st Jan change	Capi.
GF SECURITIES CO., LTD.	-9.73%	12.18B
BLACKROCK, INC.	-6.04%	114B
UBS GROUP AG	-4.14%	90.81B
APOLLO GLOBAL MANAGEMENT, INC.	+20.96%	64.64B
BROOKFIELD CORPORATION	+4.46%	61.06B
BANK OF NEW YORK MELLON CORPORATION (THE)	+11.34%	42.95B
AMERIPRISE FINANCIAL, INC.	+8.70%	40.61B
3I GROUP PLC	+17.72%	34.3B
T. ROWE PRICE GROUP INC.	+3.13%	25.03B
STATE STREET CORPORATION	-4.09%	22.43B