The predecessor of Haitong Securities Co., Ltd. (“Haitong Securities” or “Haitong”) was founded in 1988 as one of the earliest securities companies in mainland China. Haitong was transformed to a limited liability company in 1994 and gradually developed itself into a national securities firm. It was wholly transformed to a joint-stock company at the end of 2001. It was recapitalized into a full-service securities company with the largest registered capital of RMB 8.734bn upon the approval from the China Securities Regulatory Commission (CSRC) in Nov.2002 and embarked on the road to set up a financial holding group with international presence after acquiring Yellow Sea Futures Co., Ltd. (now renamed Haitong Futures). The company initiated the establishment of Fullgoal Fund Management Company Ltd. and Fortis-Haitong Investment Management Co., Ltd. In 2004, Haitong-Fortis Private Equity Fund Management Co., Ltd. started operation. Haitong (HK) Financial Holdings Limited was set up in January 2008 and obtained all business licenses. Haitong Capital Investment Co., Ltd. was also set up in October 2008, and its primary focus is direct equiy investment business.

Haitong has managed to take the lead in various businesses during past years and was granted the “innovative status” by the Securities Association of China in May 2005, signaling the beginning of a new era. In 2006, with the completion of Nontradable (NTS) reform and comprehensive governance reform  of securities houses, the capital market has entered to a real transformational phase. During the year, Haitong seized the opportunity, deepened its internal reform and speeded up its development, pushing itself to a new stage in terms of business, management, risk control, system and process building. On July 31, 2007, Haitong officially went public in Shanghai Stock Exchanges, and in Oct. Haitong was approved by CSRC for its non-public offering of no more than 1bn shares. The shareholders structure has been optimized after the offering by integrating strategic investors such as Citic Group, Ping'an Insurance (Group), Pacific Insurance (Group) etc. Currently, Haitong has net capital of RMB34bn and net asset of RMB39bn. In 2008, with the accomplishment of listing and non-public offering, Haitong's governance structure, brand name and capital sufficiency have been further eahanced. This save Haitong a good start for its 3-year plan by grabbing the development and innovation opportunities.

Haitong Securities has achieved outstanding economic and social accomplishment during past years by following the business philosophy of "Practicability, Innovation, Prudence and Excellence" and the management principle of "Standardized Management, Proactive Innovation, Prudent Operation and Earning Focus", by sticking to the corporate risk coutrol brand of "Prudent, even Conservative", and by living up to the operating & managerial objective of "First-class Management, High-caliber Staff, Value-added Services and Outstanding Profitability". Haitong has set up a network comprising 126 branches in 65 cities across China serving a client base of 3 million accounts. Haitong was awarded "Best Local Broker in China" by FinanceAsia in 2003. In 2005, Haitong carried out cost-effective expansion by taking over Gansu Securities and Xing'an Securities, resulting in a network of 126 branches and 55 sub-branches. In 2006, Haitong was awarded as "2006' Strongest Securities Company with Comprehensive Strength", "Best Broker", "Best Research Team in Economic Policies" in the 21st Century Annual Conference of Chinese Capital Market. In 2008, Haitong successfully completed its compliance pilots project and consolidation of securities accounts for investors. Its brokerage business has developed through the standardization process, and achieved steady growth in market share. In the mean while, series of innovative businesses has been carried out in an orderly manner. Department of margin trading and securities financing was established and well prepared for carrying out innovative business.

Haitong has set up a unique favorable brand image as a leading investment bank after nearly 10 years' efforts, especially for its expertise in underwriting securities for commercial banks and hi-tech enterprises. The company has been the lead underwriter of the IPO, rights issue, seasoned offering and CB issuance of 600000.CH Shanghai Pudong Development Bank, 600016.CH Minsheng Bank, 000001.CH Shenzhen Development Bank. Meanwhile, the IPOs of 600289.CH Bright Oceans Inter-telecom, 600588.CH UFIDA Software and 600171.CH Shanghai Belling has helped Haitong win the honor of investment bank for hi-tech firms. By Dec.31, 2008, Haitong has provided financial services for 182 companies, totally raising RMB 125.046bn, of which RMB 71.46bn for 118 IPOs, RMB 14.17bn for 45 rights issues, RMB 28.027bn for 15 seasoned offerings, RMB 5.39bn for 3 convertible bonds and RMB 6bn for 1 warrant. Since 2005, Haitong finished NTS reforms for 134 companies, ranking No.1 with market share of 10% and taking the far lead in sponsoring the NTS reforms. High quality services, superb technical skills and innovative spirit has made Haitong investment banking widely recognized by clients. In April 2006, Haitong was awarded “2005’ Best Investment Banking Team” and “2005’ Best NTS Reform Team”. In Jan. 2007, it was awarded “2006’ Best Investment Banking Team” by HEXUN.COM, a major financial website. In January 2008, Haitong was recognized as “2007 Excellent Sponsor for SMEs” by Securities Times and “Most Respectful Investment Banking” by New Fortune in March. In 2008, Haitong implemented rigid management over investment banking business, and significantly improved the quality of relevant projects. The listing of Shanghai Electric (601727.CH) in A-share market, sponsored by Haitong, gained good repercussions in the market. Haitong M&A business also presents fast development and has built up an expertise image in culture and media industry. Haitong M&A team was awarded “Best M&A Team” in rating organized by Shanghai Securities News.

In Oct. 2002, Haitong set up a post-doctoral workstation, the first among securities firms in Shanghai, with the approval from the Ministry of Personnel. Haitong has been awarded the first prize in the research contest sponsored by Shenzhen Stock Exchange among securities and fund management companies for 7 consecutive years from 1999 to 2005. Presently, Haitong Securities builds a team comprising operational and management experts with hands-on experience, most of whom are master- or doctor-degree holders. The Company has established long-term partnership with Xi'ning City of Qinghai Province, Baoji City of Shanxi Province, Huangshan City of Anhui Province, Yinchuang City of Ningxia Hui Autonomous Region and Guiyang City of Guizhou Province and been acting as financial advisors for the local governments.

During past years, Haitong has been always active in initiating and strengthening the cooperation among leading financial institutions from abroad and has been continuously expanding the overseas business network. Haitong has established Fullgoal Mutual Fund Management Co., Ltd. and Fortis-Haitong Investment Management Co., Ltd. consecutively. Fortis-Haitong Investment Management Co., Ltd. (Fortis-Haitong) is a 51%-owned subsidiary of Haitong Securities, which was the only domestic manager assigned “M2 (China)” by the well-known global rating agency Fitch Ratings in 2005 and 2006. This indicates that Fortis-Haitong has reached a high international standard in terms of organizational structure, independence, internal control, client relationship, investment management and risk management. In 2008, the rating has been upgraded to “M2+ (China)”. By Dec. 31, 2008, Fortis-Haitong totally manages 9 open-end funds with a total AUM of RMB 38.497bn. At the end of 2004, Haitong-Fortis Private Equity Fund Management Co., Ltd. (Haitong-Fortis) started its official operation. Haitong-Fortis is the first private equity fund management company in China and the manager of China-Belgium Direct Investment Fund (China-Belgium Fund), which was initiated by Belgian and Chinese governments and business corporations with the total size of RMB 1bn approved by the State Council of China. Currently, Haitong-Fortis has invested in 19 companies, and is actively initiating establishment of new funds.

Haitong has accumulated abundant experience in the operation and management of securities business during past years, establishing fairly comprehensive organizational structure of risk control. Compliance and risk management has been strengthened, and internal control system has been greatly improved. In 2008, Haitong was awarded AA rating from CSRC. As the first batch of compliance pilot companies, Haitong completed the compliance project first and put compliance into every aspect of business by setting up compliance management rules and organizational system, and by carrying out compliance advisory, training, auditing and real-time monitoring. And the self-developed Chinese Wall system has received high praise from supervisory authorities. By strengthening monitoring and identification of suspicious trading and clients, Haitong's capability in anti-money laundering has been enhanced.  Haitong has further improved the risk monitoring system based on net capital, and gained scientific evaluation of and efficient monitoring over the risk of the whole company and every individual business. In the long run of securities market, Haitong has set up scientific, standardized and rigorous operation, management and risk control systems and created a unique corporate brand featuring prudence and innovation.

In 2008, Haitong always adhered to compliance operation and scientific development, and made a big step forward in capital operation, internal control and business development; Haitong effectively avoided market risks and passed the rigorous test from the market. In view of outlook of 2009, Haitong will adhere to the guidance of scientific outlook on development, enhance innovation and overcome difficulties with the spirit of zealousness, more rigorous management, effective and pragmatic efforts. Haitong will try to achieve outstanding performance to welcome the 60th anniversary of the People's Republic of China and 2010 Shanghai World Expo.