CITIC Securities : ANNOUNCEMENT IN RELATION TO PROVISION FOR EXPECTED CREDIT LOSSES

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(A joint stock limited company incorporated in the People's Republic of China with limited liability)

(Stock Code: 6030)

ANNOUNCEMENT IN RELATION TO PROVISION FOR

EXPECTED CREDIT LOSSES

This announcement is made by CITIC Securities Company Limited (the "Company") pursuant to Inside Information Provisions (as defined under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules")) under Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) and Rules 13.09 and 13.10B of the Listing Rules.

I.

SUMMARY OF THE PROVISION FOR EXPECTED CREDIT LOSSES

According to the Accounting Standards for Business Enterprises and the accounting policies of the Company, and in order to truly and fairly reflect the financial position of the Company as of 31 December 2020 and the operating results of the Company for the year of 2020, the Company and its subsidiaries made prudent assessment on the expected credit losses of various financial assets which is required to make provision for impairment as at 31 December 2020. The Company made provision for various expected credit losses for the year of 2020 with a total amount of RMB6,581 million (being more than 10% of the audited net profit of the Company for the year of 2020), of which, provision for expected credit losses with a total amount of RMB1,553 million was made in the fourth quarter of 2020 (for details of the provision made by the Company in the first three quarters of 2020, please refer to the announcement of the Company dated 30 October 2020 in relation to provision for impairment of assets). The details are set out as follows:

In RMB ten thousand Provision amount in the fourth quarter of 2020

Provision amount	(negative figures
Items	for 2020	are reverses)
Reverse repurchase agreements	487,927.23	136,140.12
Margin accounts	71,086.93	16,783.85
Other debt instruments investments	55,522.38	-6,790.47
Accounts receivable and other receivables	33,434.06	-896.29
Others	10,095.06	10,095.06
Total	658,065.66	155,332.27

• II. THE IMPACT OF PROVISION FOR EXPECTED CREDIT LOSSES ON THE COMPANY

  The Company made provision for expected credit losses of RMB6,581 million in the consolidated financial statements for the year of 2020, resulting in a reduction of RMB6,581 million in profit before income tax and a reduction of RMB4,932 million in net profit, respectively; of which, provision for expected credit losses of RMB1,553 million was made for the fourth quarter of 2020, resulting in a reduction of RMB1,553 million in profit before income tax for the fourth quarter of 2020 and a reduction of RMB1,160 million in net profit for the fourth quarter of 2020, respectively.

• III. EXPLANATION FOR PROVISION FOR EXPECTED CREDIT LOSSES

  (I) Methods of Provision

The Company has established a model to measure the expected credit losses of financing business after taking into consideration the credit status of the financing entity, contract terms, sector of the guaranteed securities, liquidity, restrictions on sales, concentration, volatility, performance guarantee, operation of the issuer and other factors. The Company predicted the future cash flows and potential losses of debt securities investment business after taking into consideration the rating of the issuer of debt securities, the rating of debt securities and their future changes, and made provision for impairment accordingly. The Company had taken into full consideration the impact of forward-looking macroeconomic information in measuring the expected credit losses.

(II)Details of Provision

• 1. Reverse repurchase agreements

  The Company made provision for impairment of reverse repurchase agreements of RMB4,879 million in 2020, of which the provision made in the fourth quarter of 2020 was RMB1,361 million.

• 2. Margin accounts

  The Company made provision for impairment of margin accounts of RMB711 million in 2020, of which the provision made in the fourth quarter of 2020 was RMB168 million.

• 3. Other debt instruments investments

  The Company made provision for impairment of other debt instruments investments of RMB555

• million in 2020, of which RMB68 million was the reversal in the fourth quarter of 2020.

• 4. Accounts receivable and other receivables

  The Company made provision for impairment of accounts receivable and other receivables of RMB334 million in 2020, of which RMB9 million was the reversal in the fourth quarter of 2020.

IV. OPINIONS OF INDEPENDENT DIRECTORS ON THE COMPANY'S

PROVISION FOR EXPECTED CREDIT LOSSES

The independent directors of the Company have given independent opinions of consent in relation to the impairment. The independent directors of the Company are of the view that the provision for expected credit losses was made by the Company on a prudent basis, which is in compliance with the relevant requirements of the Accounting Standards for Business Enterprises and the accounting policies of the Company. It truly and fairly reflects the financial position and the operating results of the Company, which helps to provide investors with more authentic, reliable and accurate accounting information and does not prejudice the interests of the Company and all of its shareholders, especially the minority shareholders.

V.

OPINIONS OF THE AUDIT COMMITTEE ON THE COMPANY'S PROVISION FOR EXPECTED CREDIT LOSSES

The audit committee under the board of directors of the Company (the "Board") agrees with the provision for expected credit losses of the Company, and is of the view that the provision for expected credit losses is in compliance with relevant requirements of the Accounting Standards for Business Enterprises and the accounting policies of the Company. It truly and fairly reflects the operating results for 2020 of the Company and could fairly reflect the actual condition of assets and financial position of the Company.

VI. OPINIONS OF THE BOARD ON THE COMPANY'S PROVISION FOR

EXPECTED CREDIT LOSSES

The Board of the Company is of the view that the Company's provision for expected credit losses is based on and in compliance with the relevant requirements of the Accounting Standards for Business Enterprises and the accounting policies of the Company with sufficient basis. The actual condition of assets and financial position of the Company can be fairly reflected.

VII. OPINIONS OF THE SUPERVISORY COMMITTEE ON THE COMPANY'S PROVISION FOR EXPECTED CREDIT LOSSES

The supervisory committee of the Company agrees with the provision for expected credit losses, and is of the view that the Company's provision for expected credit losses is in compliance with the relevant requirements of the Accounting Standards for Business Enterprises and the accounting policies of the Company, which could fairly reflect the actual condition of assets and financial position of the Company, and the decision-making process of the Board of the Company in relation to the provision for expected credit losses is in compliance with the requirements of relevant laws and regulations.

By order of the Board CITIC Securities Company Limited

ZHANG Youjun

Chairman

Beijing, the PRC

18 March 2021

As at the date of this announcement, the executive directors of the Company are Mr. ZHANG Youjun and Mr. YANG Minghui; the non-executive director is Mr. WANG Shuhui; and the independent non-executive directors are Mr. LIU Ke, Mr. HE Jia and Mr. ZHOU Zhonghui.