Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental protection
• Corporate Social Responsibility

Environmental Achievements

• Cooperated with Shell Energy (China) Limited to provide price hedging for National Carbon Allowances, supporting China’s national emissions scheme.

Social Achievements

• Acquired 17,377 new investors during the quarter, increasing the cumulative number of investors to approximately 253,000.
• Maintained a strong cash position of US$53.1 million as of September 30, 2018.

Governance Achievements

• Successfully completed submission of P2P Compliance Self-Inspection Report to the Beijing Municipal Bureau of Financial Work.
• Nearing completion of step 2 with the Beijing Internet Finance Association for compliance with industry reforms.
• Custodian bank, Jiang Xi Bank, successfully completed compliance inspection conducted by the National Internet Finance Association (NIFA).

Climate Goals & Targets

Environmental Challenges

• Challenging market environment and industry shifts in the P2P sector.
• Cautious investor approach due to unclear regulations.
• Decreased investor participation in the P2P sector.
• Industry volatility impacting loan volumes and investor confidence.

Mitigation Strategies

• Reduced new loan offerings and prioritized loan transfer services to increase liquidity.
• Focused on medium-sized loans targeting borrowers with stable employment and income to better control risks.
• Enhanced credit assessment capabilities by joining Baihang Credit and sharing credit data.
• Cost control measures to align with lower income targets.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• Rapid growth and changes in recent years making past financial performance not a sound basis for evaluating future performance.
• Navigating an opaque regulatory and competitive environment.
• Attracting new and retaining repeat borrowers and investors.
• Increasing loan volume and associated service fees.
• Increasing market share and introducing new products and services.
• Maintaining and scaling online marketplace and mobile application.
• Maintaining relationships with third-party service providers.
• Enhancing technology infrastructure to support growth.
• Optimizing use of human and technology resources.
• Maintaining and scaling financial and risk management controls.
• Managing expenses of a growing public company.
• Maintaining system security and protecting confidential information.
• Minimizing risks of litigation and other claims.
• Attracting, utilizing, and retaining qualified management and employees.
• Regulatory uncertainties related to online microlending.
• Potential inadequacy of risk management system.
• Potential insufficiency of third-party guarantee arrangements.
• Insufficient attractiveness of loan and investment products.
• Potential smaller-than-estimated total addressable market.
• Potential interest rate increases.
• Inability to effectively promote and maintain brand and reputation.
• Reliance on third-party service providers.
• Potential misconduct and errors by employees and third-party service providers.
• Risk of negative publicity.
• Significant variation in interim period results.
• Use of investor cash incentives resulting in revenue reductions.
• Potential lack of liquidity for capital and financing needs.
• Potential insufficiency or ineffectiveness of internal controls over financial reporting.
• Broader macro, political, and socio-economic factors affecting market conditions.
• Reliance on core senior management team.
• Inability to protect proprietary intellectual property rights.
• Competition for skilled employees.
• Potential substantial increase in labor costs in the PRC.
• Potential negative impact of changes in corporate culture.
• Lack of business insurance coverage.
• Risks related to natural disasters, health epidemics, and other outbreaks.
• Reliance on external third-party data and information.
• Limited PCAOB inspection of independent registered public accounting firm.
• Adverse effects from Hexin Group's business performance.
• Non-compliance of contractual arrangements under variable interest entity structure with PRC regulations.
• Ineffectiveness of contractual arrangements with variable interest entities.
• Potential conflicts of interest between shareholders of variable interest entities and the company.
• Potential additional taxes on contractual arrangements with variable interest entities.
• Potential inability to recover assets of bankrupt variable interest entities.
• Potential compromise of corporate governance due to loss of company chop.
• Changes in China's macroeconomic, socio-political conditions, or government policies.
• Uncertainties in the interpretation and enforcement of Chinese laws and regulations.
• Substantial uncertainties related to the interpretation and implementation of the PRC Foreign Investment Law.
• Complexity, uncertainties, and changes in PRC regulation of Internet-related businesses.
• Lack of requisite approvals, licenses, or permits.
• Volatility in the trading price of ADSs.
• Short-selling techniques driving down ADS market price.
• Lack of or unfavorable research by securities or industry analysts.
• Potential changes to dividend policy.
• Potential decline in ADS price due to future sales.
• Potential classification as a passive foreign investment company (PFIC).
• Anti-takeover provisions in amended and restated memorandum and articles of association.
• Substantial influence of certain existing shareholders.
• Exemptions from corporate governance requirements as a “controlled company.”
• Difficulties in protecting shareholder interests due to Cayman Islands incorporation.
• Non-enforceability of certain judgments against the company.
• Reduced reporting requirements as an emerging growth company.
• Exemptions from certain provisions applicable to U.S. domestic public companies as a foreign private issuer.
• Limitations on voting rights of ADS holders.
• Increased costs and management time as a public company.
• Potential securities class action lawsuits.

Mitigation Strategies

• Implementing stricter internal control, including heightened due diligence and cooperation with third-party credit reporting agencies.
• Establishing specific thresholds for borrower qualification.
• Shifting focus from secured loans to credit loans.
• Developing and upgrading credit assessment technology.
• Diversifying funding sources.
• Expanding online acquisition channels.
• Investing in marketing and brand promotion.
• Strengthening risk management protocols.
• Implementing digital certification and authentication of loan agreements.
• Closely monitoring borrower repayments.
• Assisting Zhengxuan Guarantee in collections.
• Transitioning from risk reserve liability policy to third-party guarantee arrangements.
• Adopting various policies and procedures to comply with regulations.
• Implementing disaster recovery plans.
• Utilizing the GBG Instinct Anti-Fraud Solution and the FICO Decision Engine.
• Establishing a fraud detection protocol.
• Developing tailored loan products.
• Expanding investor service offerings.
• Enhancing online marketplace platform capabilities.
• Implementing a VIP investor loyalty program.
• Entering into cooperation agreements with financial service providers and a consumer credit reporting agency.
• Acquiring equity stakes in Musketeer Group Inc. and Phoenix Intelligent Credit Group Ltd.
• Using Jiangxi Bank as a third-party payment agent.
• Adopting policies and procedures for anti-money laundering purposes.
• Conducting internal investigations into allegations of fraud.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Environmental Protection
• Social Responsibility
• Corporate Governance

Environmental Achievements

• Reached an agreement with Shell Energy (China) Limited to support liquidity and market developments of China's national emissions trading scheme (ETS), providing price hedging for National Carbon Allowances (NCA) for three years.

Social Achievements

• Established Hexin Caring Foundation, carrying out 17 public welfare programs in the past 4 years.

Governance Achievements

• Established Independent Directors Committee, Nominating and Corporate Governance Committee, Compensation Committee, and Audit Committee; implemented Code of Business Conduct and Ethics, Corporate Governance Guidelines, Policy on Disclosure Controls and Procedures, Anti-Money Laundering Policy, Whistleblower Policy, Insider Trading Policy, and Anti-corruption Policy and Procedures.

Climate Goals & Targets

Environmental Challenges

• Not disclosed

Mitigation Strategies

• Not disclosed

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Not disclosed

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: Null

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• constraints on the Company and its personnel resulting from the COVID-19 pandemic

Mitigation Strategies

• The Company is in the process of compiling the information to be included in the Form 20-F, as well as the completion of the required review of the Company’s financial information

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• Unable to file its Annual Report on Form 20-F for the period ended March 31, 2022 on a timely basis without incurring undue hardship and expense.

Mitigation Strategies

• Endeavors to file its Annual Report on Form 20-F no later than the fifteenth calendar day following the prescribed filing date.

Supply Chain Management

Climate-Related Risks & Opportunities