CSG HOLDING CO., LTD.
ANNUAL REPORT 2018
Chairman of the Board:
CHEN LIN
April 2019
CSG Annual Report 2018 Section I Important Notice, Content and Paraphrase
Board of Directors and the Supervisory Committee of CSG Holding Co., Ltd. (hereinafter referred to as the Company) and its directors, supervisors and senior executives hereby confirm that there are no any fictitious statements, misleading statements, or important omissions carried in this report, and shall take all responsibilities, individual and/or joint, for the facticity, accuracy and completeness of the whole contents.
Ms. Chen Lin, Chairman of the Board, Mr. Wang Jian, responsible person in charge of accounting and Ms.Wang Wenxin, principal of the financial department (accounting officer) confirm that the Financial Report enclosed in this 2018 Annual Report is true, accurate and complete.
All directors were present at the meeting of the Board for deliberating the annual report of the Company in person.
This report involves future plans and some other forward-looking statements, which shall not be considered as virtual promises to investors. Investors are kindly reminded to pay attention to possible risks.
Details of the risk factors and countermeasures of future development have been well-described in this report, please find in Section IV Business Discussion and Analysis.
The deliberated and approved plan of profit distribution and capital reserve converted into share capital in the Board Meeting is distributing cash dividend of RMB 0.50 yuan (tax included) for every 10 shares to all shareholders based on 2,863,277,201 shares of the total currently share capital. Meanwhile the Company will transfer capital reserve into capital with 1 shares for every 10 shares to all shareholders based on 2,863,277,201 shares of the total currently share capital. (The actual amount of the cash dividend distributed and capital reserve transferred will be determined according to the total share capital on the capital reserved registration date for profit distribution implementation.)
This report is prepared both in Chinese and English. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail.
CSG Annual Report 2018 Content
Section I Important Notice, Content and Paraphrase .................................................................................... 1 Section II Company Profile& Financial Highlights .......................................................................................... 4 Section III Overview of theCompany’s Business ............................................................................................... 9 Section IV. Business Discussion and Analysis .................................................................................................. 13 Section V. Important Events ............................................................................................................................ 37 Section VI. Changes in Shares and Particulars about Shareholders ................................................................ 59 Section VII. Particulars about Directors, Supervisors, Senior Executives and Employees .............................. 70 Section VIII. Corporate Governance ................................................................................................................ 81 Section IX. Financial Report .......................................................................................................................... 88 Section X. Documents Available for Reference .......................................................................................... 173
CSG Annual Report 2018 Paraphrase
||||
|-|-|-|
|Items|Refers to|Contents|
|Company, the Company, CSG or the Group|Refers to|CSG Holding Co., Ltd.|
|Foresea Life|Refers to|Foresea Life Insurance Co., Ltd.|
|Ultra-thin electronic glass|Refers to|The electronic glass with thickness between 0.1~1.1mm|
|Second-generation energy-saving glass|Refers to|Double silver coated glass|
|Third-generation energy-saving glass|Refers to|Triple silver coated glass|
|AG glass|Refers to|Anti-glare glass|
|AF glass|Refers to|Anti-fingerprint galss|

CSG Annual Report 2018 Section II Company Profile& Financial Highlights
I. Company information
|||||
|-|-|-|-|
|Code for A-share|000012|Code for B-share|200012|
|Short form for A-share|Southern Glass A|Short form for B-share|Southern Glass B|
|Listing stock exchange|Shenzhen Stock Exchange|||
|Legal Chinese name of the Company|中国南玻集团股份有限公司|||
|Abbr. of legal Chinese name of the||||
||南玻集团|||
|Company||||
|Legal English name of the Company|CSG Holding Co., Ltd.|||
|Abbr. of legal English name of the||||
||CSG|||
|Company||||
|Legal Representative|Chen Lin|||
|Registered Add.|CSG Building, No.1, the 6th Industrial Road, Shekou, Shenzhen, P. R.C.|||
|Post Code|518067|||
|Office Add.|CSG Building, No.1, the 6th Industrial Road, Shekou, Shenzhen, P. R.C.|||
|Post Code|518067|||
|Internet website|www.csgholding.com|||
|E-mail|securities@csgholding.com|||

II. Person/Way to contact
||||
|-|-|-|
||Secretary of the Board|Representative of security affairs|
|Name|Yang Xinyu|Chen Chunyan|
||CSG Building, No.1 of the 6th Industrial|CSG Building, No.1 of the 6th Industrial|
|Contacts add.|||
||Road, Shekou, Shenzhen, P. R.C.|Road, Shekou, Shenzhen, P. R.C.|
|Tel.|(86)755-26860666|(86)755-26860666|
|Fax.|(86)755-26860685|(86)755-26860685|
|E-mail|securities@csgholding.com|securities@csgholding.com|

III. Information disclosure and preparation place
|||
|-|-|
||Securities Times, China Securities Journal, Shanghai Securities News, Securities|
|Newspapers for information disclosure||
||Daily and Hong Kong Commercial Daily|
|Website assigned by CSRC to release the||
||www.cninfo.com.cn|
|annual report||
|The place for preparation of the annual||
||Office of the Board of Directors|
|report||

IV. Registration changes of the Company
|||
|-|-|
|Organization code|Unified social credit code: 914403006188385775|

CSG Annual Report 2018
|||
|-|-|
|Changes of main business since listing (if||
||No changes|
|applicable)||
|Previous changes for controlling||
||No changes|
|shareholders (if applicable)||

V. Other relevant information
CPA firm engaged by the Company
|||
|-|-|
|Name of CPA firm|Asia Pacific (Group) CPAs (special general partnership)|
|Offices add. for CPA firm|Room 301, building 1, No. 9, Che Gong Zhuang Street, Xicheng District, Beijing,|
||China|
|Signing Accountants|Zhao Qingjun, Zhou Xianhong|

Sponsor institute engaged by the Company for performing continuous supervision duties in the report period
□ Applicable√ Not applicable
Financial consultant engaged by the Company for performing continuous supervision duties in the report period
□ Applicable√ Not applicable
VI. Main accounting data and financial indexes
Whether it has retroactive adjustment or re-statement on previous accounting data for accounting policy changed and accounting error correction or not
□Yes
√No
||||||
|-|-|-|-|-|
||2018|2017|Changes over last year|2016|
|Operating income (RMB)|10,609,963,011|10,879,400,746|-2.48%|8,974,083,407|
|Net profit attributable to shareholders of|452,965,935||||
|||825,388,312|-45.12%|797,721,576|
|the listed company (RMB)* note1|||||
|Net profit attributable to shareholders of|||||
|the listed company after deducting|||||
||367,579,835|745,373,108|-50.69%|776,950,973|
|non-recurring gains and losses (RMB)|||||
|*note2|||||
|Net cash flow arising from operating|2,130,378,100||||
|||2,463,446,156|-13.52%|2,240,852,120|
|activities (RMB)|||||
|Basic earnings per share (RMB/Share)|0.16||||
|||0.30|-46.67%|0.33|
|*note3|||||
|Diluted earnings per share (RMB/Share)|0.16||||
|||0.29|-44.83%|0.33|
|*note4|||||
|Weighted average ROE (%) *note5|5.16%|10.15%|-4.99%|10.33%|
||||Changes over the end|As at 31 Dec.|
||As at 31 Dec. 2018|As at 31 Dec. 2017|||
||||of last year|2016|
|Total assets (RMB)|19,114,234,184|19,535,002,368|-2.15%|17,146,815,630|
|Net assets attributable to shareholders of|9,103,154,571||||
|||8,458,587,873|7.62%|7,808,915,004|
|the listed company (RMB)|||||

CSG Annual Report 2018 Influence of equity incentive expense:
Note (1): Data in aforesaid table has contained the equity incentive expense RMB 141.49 million yuan shared and included into loss and gain in2018，and the effect on the net profit attributable to shareholder of listed company was RMB 124.63 million yuan. Excluding the effect of equity incentive expense share, the net profit attributable to shareholder of listed company in 2018 was RMB 577.59 million yuan, a year-on-year decrease of RMB 247.8 million yuan, or30.02%
Note (2): Excluding the effect of equity incentive expense share, the net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses in 2018 was RMB 492.21 million yuan, a year-on-year decrease of RMB 253.16 million yuan, or33.96%
Note (3): Excluding the effect of equity incentive expense share, the basic earnings per share in 2018 was RMB 0.21yuan, declined30% year on year.
Note (4): After excluding the effect of equity incentive expense share, the diluted earnings per share in 2018 was RMB 0.20 yuan, declined31.03% year on year.
Note (5): After excluding the effect of equity incentive expense share, the weighted average ROE 2018 was6.58%, declined3.57% year on year.
|||
|-|-|
|The total share capital of the company as of the previous trading day of disclosure (share)|2,863,277,201|
|Fully diluted earnings per share calculated with latest equity (RMB/share)|0.16|

 Whether there is corporate bonds
□Yes
√No
Whether there is continuous loss in recent two years
□Yes
√No
VII. Accounting Data Differences under Chinese Accounting Standards (CAS) and International Financial Reporting Standards (IFRS) and Foreign Accounting Standards 1. Net Income and Equity Differences under CAS and IFRS
□ Applicable√ Not applicable
No such differences for the Report Period.
2. Net Income and Equity Differences under CAS and Foreign Accounting Standards
□ Applicable√ Not applicable
No such differences for the Report Period.
3. Reason of the difference between domestic and overseas accounting data
□ Applicable√ Not applicable
CSG Annual Report 2018 VIII. Main financial indexes by quarter
Unit: RMB
||||||
|-|-|-|-|-|
||Q1|Q2|Q3|Q4|
|Operating income|2,629,471,994|2,841,085,983|2,680,693,459|2,458,711,575|
|Net profit attributable to shareholders of the listed|||||
||159,382,821|193,454,332|116,279,185|-16,150,403|
|company|||||
|Net profit attributable to shareholders of the listed|||||
||152,948,714|180,489,383|86,201,062|-52,059,324|
|company after deducting non-recurring gains and losses|||||
|Net cash flow arising from operating activities|60,223,706|704,340,382|646,261,934|719,552,078|

 Whether there are significant differences between the above-mentioned financial index or its total number and the relevant financial index disclosed in theCompany’s quarterly report and semi-annual report or not
□Yes√ No
IX. Items and amounts of extraordinary gains/losses
√Applicable□ Not applicable
Unit: RMB
||||||
|-|-|-|-|-|
|Item|2018|2017|2016|Note|
|Gains/losses from the disposal of non-current asset (including|-454,368||||
|||-1,768,993|-1,759,358||
|the write-off that accrued for impairment of assets)|||||
|Governmental subsidy reckoned into current gains/losses (not|94,835,539||||
|including the subsidy enjoyed in quota or ration according to|||||
|||87,875,417|91,627,439||
|national standards, which are closely relevant to enterprise’s|||||
|business)|||||
|Gains on disposal of available-for-sale financial assets, gains|||||
|and losses from change of fair values of held-for-transaction|||||
|financial assets and financial liabilities except for the|||||
|effective hedge business related to normal business of the||427,636|-9,850,256||
|Company, and investment income from disposal of|||||
|transactional financial assets and liabilities and financial|||||
|assets available for sale|||||
|Loss and profit on external entrusted loan|534,591||||
|Other non-operating income and expenditure except for the|12,099,680||||
|||12,076,848|1,306,284||
|aforementioned items|||||
|Other gains/losses satisfied definition of extraordinary profit|||||
||||-45,909,181||
|(gains)/loss|||||
|Less: Impact on income tax|16,483,870|16,209,135|14,327,585||
|Impact on minority shareholders’ equity (post-tax)|5,145,472|2,386,569|316,740||
|Total|85,386,100|80,015,204|20,770,603||

CSG Annual Report 2018 Reason shall be provided for the non-recurring profit and loss items defined by the company according to the definition in the No. 1 of Explanatory Announcement on Information Disclosure for Companies Offering their Securities to the Public: Non-recurring Profit and Loss and the listed non-recurring profit and loss items defined into recurring profit and loss items.
□ Applicable√ Not applicable
CSG Annual Report 2018 Section III Overview of theCompany’s Business
I. Main business of the Company in the report period
CSG is a leading domestic brand of energy-saving glass and a renowned brand of solar PV products and display devices. Its products and technologies are very popular at home and abroad. Its main business coversR&D, manufacturing and sales of high quality float glass and architectural glass, solar glass, silicon material, renewable energy products such as PV battery and modules, and new materials and information display products such as ultra-thin electronic glass and display devices. It also provides one-stop services such as project development, construction, operation and maintenance of solar photovoltaic power plants.
Flat glass industry
CSG now has 10 float glass production lines representing the most advanced technology in domestic market and 2 solar glass production lines. The annual capacity of various high-grade float glass has reached more than 2.32 million tons and the annual capacity of solar processed glass has reached over 0.43 million tons. The Company owns quartz sand raw material bases in Jiangyou, Sichuan Province and Qingyuan, Guangdong Province. The production bases for flat glass, solar glass of the Company located in Dongguan, Chengdu, Langfang, Wujiang, and Xianning, which can produce various colors of high-grade float glass and ultra-clear float glass with thickness from 1.3mm to 25mm. Those products are widely used in high-grade buildings, decoration and furniture, mirror, automotive windshield, scanner, copier light trans missive plate, home appliance panel, display devices protection and solar energy field, each performance indicator of which has reached domestic advanced level.
The Company always adheres to innovation, transformation and upgrading, and further enhances the profitability of flat glass industry by the implementation of differentiated competitive strategy. In 2018, after the Production Line II of the subsidiary Hebei CSG entered commercial operation, it greatly increased the proportion of CSG Group in the ultra-clear float glass market. After the subsidiary ChengduCSG’s Production Line I resumed production, the high-quality automotive glass is used as the main product to further expand the automotive glass substrate market. The expansion of high value-added markets such as ultra-clear and automotive glass will further enhance the market competitiveness of CSG's flat glass.
Architectural glass industry
As the nation's largest supplier of high-grade engineering and architectural glass, CSG has five architectural and energy-saving glass processing centers which are located in Tianjin, Dongguan, Xianning, Wujiang and Chengdu. The Company possesses the international advanced glass deep-processing equipment and testing instruments, and its products cover all kinds of architectural glass.R&D and use of coating technology of the Company keep pace with the world and its technology of high-end product is even of theworld’s top level. Following the second generation of energy-saving glass products, the Company has successively developed the third generation and multi-function energy-saving glass products with continuous improving energy-saving and heat-preservation effect. Its high-quality energy-saving LOW-E insulating glass has always led the domestic high-end building energy-saving glass market. At present, theCompany’s LOW-E coated glass and LOW-E coated insulating glass have reached annual capacity of more than 36.00 million square meters and 16.00 million square meters respectively.
TheCompany’s quality management system for engineering and architectural glass has been respectively approved by organizations of UK AOQC and Australia QAS. The product quality which meets the national standards of the US, the UK and Australia enables CSG has an advantage in the international tendering and bidding. Since 1988, CSG's engineers and technicians have been continuously participating in the formulation and compilation of various national standards and industry standards. Various high-quality architectural glass of the Company has been used in many landmark buildings at home and abroad, such as Beijing Capital International Airport, CCTV, China Resources Headquarters Building, Shenzhen KingKey100 Building, Shenzhen Shen Nine Pioneer Park, Shenzhen Trade Qianhai Center, Ping An International Finance Centre, Hangzhou International Airport, Hangzhou
CSG Annual Report 2018 Europe finance City, Shanghai Qiantan Iron Lion Gate Center, Chengdu Zhongjiao International Center, Changsha World Trade Center, Hefei Evergrande Center, Beijing subsidiary administrative center, Beijing Daxing International Airport, Qingdao Jiaodong International Airport, Chengdu International Finance Center, Hangzhou Hampton and other more than ten Hilton Hotels, Hong Kong Four Seasons Hotel, Melbourne Airport, Midtown, International Centre of Abu Dhabi and Korea LCT.
Furthermore, the new investment of Jade Glass project construction has been just completed, and will be transferred into operation shortly after. Meanwhile, the company tries to enhance the technology that will open the high level interior decoration glass market for CSG in future, which that will improved the comprehensive the advantage of competitive in architectural glass industry. Solar Energy industry
CSG has entered solar photovoltaic industry since 2005 and is one of enterprises which firstly enter the field in China. After more than ten years of construction, operation and technological upgrading, CSG has built an industry chain in the field, covering high- purity polycrystalline silicon materials, high-efficiency silicon wafer, silicon solar cell and modules, and the design and construction of solar photovoltaic power plants, by which the Company ensures the stable quality and best cost-efficiency of its PV products to customers.
The Company now produces 9,000 ton/year of high purity polycrystalline silicon, 2.2 GW/year of silicon wafer, 0.85GW/year of solar cell, and 0.4GW/year of modules. The quality and performance indicators of the Company's polysilicon have reached the advanced level in the industry and it has reserved electronic-grade polysilicon production technology. Meanwhile, the Company is also promoting silicon wafer project of Yichang CSG, technological innovation, expansion and reconstruction projects of solar cell module in Dongguan in order to enhance the anti-risk capacity of its PV industry chain and drive the balanced, stable development of its PV industry chain. When the projects are completed, the quality and performance indicators of the Company's polysilicon, silicon wafers and silicon solar cells will be greatly increased cut down the manufacturing costs and the general competitiveness of the chain will be further improved.
To build the whole solar industry chain, the Company established Shenzhen CSG PV Energy Co., Ltd., a wholly-owned subsidiary, in 2015, of which the mainline business is to invest and develop solar power plants and extend CSG's solar energy industry to cover highly value-added terminal applications. The Company newly established New Energy Application Department to generally manage the investment, operation and maintenance of the Company's PV power plants and effectively integrate internal assets, so as to enlarge and strengthen its solar energy business.
Electronic glass and display industry
The company currently owns four electronic glass production bases, Hebei Shichuang, Yichang Photoelectric, Qingyuan CSG and Xianning Photoelectric. When Xianning Photoelectric has done the trial in the end 2018, the company industrial scale of window protection electronic glass and the competitiveness has been improved. CSG electronic glass industry is divided into high and medium aluminum, with 0.20-8.0mm products categorized into high aluminum glass series products and 0.20-1.1mm products into medium aluminum glass series products respectively. The products are widely applied in mobile intelligent terminal display and body protection, ITO conductive component, and extend to military security, new type vehicle display screen, special vehicle, smart home appliance, etc. Through efficient productR&D and market development, CSG electronic glass are at the main of options of domestic and foreign famous consumer electronic brands for protective glass base material.
In Dec. 2018, the approval works of phase II project of subsidiary Qingyuan CSG were completed and the construction was commenced. In this project, unique one-kiln and two-line process is adopted to produce 0.33-1.1mm ultra-white and ultra-thin electronic glass, 3-4mm or 15-22mm ultra-white special glass at the same time. The project will optimize product structure and combination of the company in the field of electronic glass product, efficiently cutting down manufacturing costs and improved the comprehensive competitiveness of the company in electronic glass industry.
Since the establishment of Shenzhen CSG Display Technology Co., Ltd. in 2000, with nearly 20 years of experience, the company's main products and core technologies cover three major businesses, namely vacuum magnetron sputtering coating, yellow light pattern forming and TP module processing, forming two complete touch industrial chains. On electronic glass substrate with the
CSG Annual Report 2018 "coating to yellow light pattern glass forming, glass touch module processing" industrial chain, the main business products are: high, middle-grade ITO conductive glass, glass Sensor/G - TP prevent and reduce the reverse (AR), module, fingerprint (AF), and a semipermeable (RT), super-hard film (DLC) and so on glass substrate composite coating of differentiated products. Another industry chain of "substrate coating flexible yellow light pattern processing flexible touch module processing" is based on flexible optical film. The main products are: high and medium ITO conductive film, ITO copper film, thin film, film Sensor/ F-TP module, etc. The manufacturing line of AG glass mainly for the market of vehicle central control has been established by the end of 2018 and will commercialized in 2019, which will offer a new profit growth for CSG Electronic display device industry. In addition, since 2013, the company has been developing high-end AG glass substrate, and has been able to successfully produce high-quality sodium-calcium AG glass and high-alumina AG glass in mass production. With years of development, the CSG glass display device has become a high-quality supplier of electronic application materials in the display touch-control industry, as well as a supplier of touch-sensors and TP modules, which can provide customers with a full range of one-stop TP solutions.
II. Major changes in main assets
1. Details of major changes in main assets
|||
|-|-|
|Main assets|Note of major changes|
|Equity assets|There was no significant change in equity in the report period.|
||Some of subsidiaries fixed assets turned into construction in progress for technical innovation|
|Fixed assets||
||/renovation in the report period.|
|Intangible assets|There was no significant change in intangible assets in the report period.|
||Some of subsidiaries fixed assets turned into construction in progress for technical innovation|
|Construction in progress||
||/renovation in the report period.|
|Short term Loans|The company has repaid part of the loan in the report period.|
|Long term Loans|The company issued new medium-term notes during the report period.|

2. Main overseas assets
□ Applicable√ Not applicable
III. Core Competitiveness Analysis
① The Company currently has built complete industrial chains in the involved industries, which has complementary advantage. In glass industry, the Company has set up the industry chain as quartz sand→ high quality float glass→ architectural energy-saving glass. In the solar energy industry, the Company has finished the comprehensive construction of industry chain from high purity polycrystalline silicon materials, silicon wafer processing to cell and its module, photovoltaic rolled glass, etc. and extended to terminal application of PV power plant. With the improvement of technology in the chains, the industrial advantages emerged.② The Company possesses a complete industry layout. At present, the Company has established large production bases in East
China, West China, South China, North China and Central China, which enables the Company to be closer to the market and serve
the market better.
③ The Company has capability of technology innovation and product innovation. It owns independent intellectual property rights of
CSG Annual Report 2018 high-end float glass production process. The technology level of ultra-thin electronic glass is in the leading position in China. The Company also keeps itsR&D and production of energy-saving glass in line with theworld’s advanced level, and its technique and technology in the field of solar energy keep leading position in domestic market.
④ The Company possesses high anti-risk capability. It has established an effective internal control system. Meanwhile, the management and control ability of account receivable and inventory stand in a high level within the industry.CSG’s new management team has an international perspective and a more open management philosophy. It aims to achieve the transfer of capacity and continues to expand new business fields along with the national policies of the Belt and Road based on the intensive development of CSG's main business, making the Company be bigger and stronger, so as to be a comprehensive industrial group.
CSG Annual Report 2018 Section IV. Business Discussion and Analysis
I. Introduction
The past 2018 is a year of changing and turbulence. The global economic growth rate is slowing down and the growth momentum is weakening. The domestic economy is also facing multiple pressures: macroeconomic investment drives and scale-driven economic growth met bottlenecks. The transformation of economic restructuring and economic growth momentum is on the way. The pace of de-leveraging and de-capacity is accelerating, energy costs, raw material costs, environmental safety and compliance costs, and labor costs are constantly increasing with policy changes. International trade protectionism has risen, and Sino-US trade dispute results and impact has not yet clear, the overall economic growth pattern has shifted to the path of “innovation-driven” and “high-quality development”. Seeing in the medium and long term, under the “new normal”, the macro-economic growth has maintained a certain growth rate, and the national strategy to achieve a “soft landing” while completing economic restructuring has been clarified. Under the strong decision-making leadership of the country, although the overall growth rate has slowed down slightly, the quality of economic growth has improved significantly. Especially with the supply-side reform and the regulation of financial markets, China's economic development is moving forward toward a more stable, healthy and high-quality direction.
In 2018, facing the complex and changing economic environment and increasingly fierce market competition, all the staff of the CSG Group united as one, rising to the challenge, forged ahead, and calmly responded to the policy and market pressure faced by the photovoltaic new industries, while promoting the development of traditional core industries and new technology industries. Through the promotion of innovative products, the adjustment of operating mode and the transformation of resource allocation methods, CSG strives to resolve the problems in the Group's industrial structure, strengthens the competitive advantages of the energy-saving glass industry, and consolidates the foundation and kinetic energy of the rapid and healthy development of growth business such as electronic glass and display devices, actively achieves the overall breakthrough of the photovoltaic industry through technological innovation and capacity upgrade. CSG strived to obtain operating results in a complicated environment.
During the reporting period, although some income loss compare to last year happened due to the photovoltaic industry's polysilicon and wafer manufacturing pending production and taking initiative technology upgrades, the company still achieved operating revenue of over 10 billion yuan, reaching 10.61 billion yuan, a year-on-year reduction of 269 million yuan, or2.48%. Although the glass business segment, electronic glass and display device business segment of the company performance profit increased significantly compared with the previous year, but due to market factors such as photovoltaic policy changes, the overall performance of the photovoltaic business sector fell sharply, dragging the company the overall profit level, the company achieved a net profit of 472 million yuan, a year-on-year reduction of 356 million yuan or43.01%, net profit attributable to shareholders of listed companies was 453 million yuan, a year-on-year reduction of 372 million yuan, or45.12%, excluding the impact of equity incentive fees allocation, the net profit attributable to shareholders of listed companies in 2018 was 578 million yuan, a year-on-year reduction of 248 million yuan, or30.02%.
(I) Glass industry
The glass business is the Group's traditional core business and profit support. In 2018, despite the slowdown in the growth of the real estate market and the adverse market conditions such as negative growth in the automotive industry. The glass business, which is the CSG'S core industry still, bucking the trend growth. In 2018, the glass industry achieved operating revenue of 7.454 billion yuan, an increase of 402 million yuan or5.7% year-on-year. The net profit was 802 million yuan, a year-on-year increase of 93 million yuan, or13.17%. The performance of the energy-saving glass industry has once again made a breakthrough, benefiting from the tremendous management benefits that the company has made from hard work in management, operation, research and development, market and other aspects.
CSG Annual Report 2018 Flat glass: In 2018, the flat glass overall maintained a good market. The company vigorously promotes technological innovation and continuously promotes product differentiation. Through the full play of production capacity, continuous optimization of product structure, and continuous improvement of production cost control and production efficiency management, the company achieved increase in both revenue and profit although without significant increase in production capacity. Revenue grew up5.45% year-on-year; net profit grew up2.5% year-on-year. The market share and profit contribution of ultra-white, super-long, ultra-thick, ultra-thin and other differentiating advantageous products continued to rise.
Architectural glass: CSG Group is a leading enterprise in the domestic architectural energy-saving glass industry. The architectural glass business is the brand support of CSG, and has formed the quality, service and continuousR&D capabilities that match the brand. In 2018, architectural glass faces the pressure of the big environment and withstands the test of the market. On the one hand, it strengthens the brand maintenance work, leads the whole industry to purify the market, forms an industry atmosphere that respecting the brand, respecting technology and quality, which firmly strengthened the CSG brand influence; on the other hand, through rational optimization of sales strategies, strengthening industry synergies, and through continuous internal production optimization and improvement, quality management, order management, promoting factory automation production process improvement and optimizing cost reduction and efficiency, as well as energy saving, the business performance has been greatly improved, with a revenue increase of2.53% year-on-year; a net profit increase of55.38% year-on-year. The introduction of a new national urbanization strategy, and the confirmation of the national strategy of the integration of Beijing-Tianjin-Hebei, Greater Bay District, the integration of the Yangtze River Delta, will bring new market opportunities to the company's architectural glass business. In addition, in 2018, the company invested in the construction of Dongguan CSG JingYu New Materials Co., Ltd. to expand the company's new business growth point in the field of special decorative glass materials.
(II) Electronic glass and display industry
The electronic glass and display device business is the company's high-growth business segment. In 2018, it achieved revenue of 960 million yuan, a year-on-year increase of9.86%; net profit of 142 million yuan, a year-on-year increase of140.26%. The company's electronic glass keeps pace with the development trend of the industry, continuously increasesR&D investment and technology update, and its competitive ability and brand influence continues to improve. In 2018, its operating income and net profit both reached record highs. The company's ultra-thin electronic glass products, especially the high-aluminum ultra-thin electronic glass products, have further increased their domestic market share. The domestically produced electronic glass products led by CSG will actively expand downstream applications to replace imported products through quality and technology benchmarking international brands. CSG Electronic Glass has gradually grown into another Celebrity brand business card. In place with Xianning Photoelectric will be transferred to commercial operation in 2019, and the construction of Qingyuan ultra-white special glass and ultra-thin electronic glass “one kiln two lines” project will further raise the threshold of electronic glass business and enhance the company's competitive advantage in the field.
The company's display device industry has long-term technology accumulation and complete industrial chain advantages. In 2018, it seized the opportunity of the automotive touch-control market, and the shipment volume and profitability of TP module and glass yellow light business increased significantly. The AG glass production line, which is mainly for the automotive central control panel market, was completed at the end of 2018 and will be transferred to commercial operation in 2019, which will provide a new profit growth point for CSG's display device industry.
(III) Solar Energy industry
Affected by the policy change, the whole solar industry experienced a decline in the operating performance in 2018. The profits of all segments in the industrial chain were severely squeezed further by the expansion of new procuction capacity with new technology of low-energy-priced regions. The trend of new production capacity, new technology replacing the old has been speeded up. CSG solar energy industry, especially in the manufacturing base of upstream materials such as polysilicon production and ingots, due to the relatively high electricity price in the located area, and the prolonged process of introducing new wafer production technology, is seriously affected by the sudden shrinkage of the downstream market. Facing such difficulties, the company has decided to lead the
CSG Annual Report 2018 industry to breakthrough the difficulties by developing the capacity upgrade project of the “large-scale chip applied electronic grade polysilicon”. At the same time, the company will continuously improve its sustainable operational capability through improving production efficiency, reducing costs, and improving theindustry’s competitiveness.
In 2018, the installed capacity of the company's photovoltaic power plants reached 132 MW, with the annual cumulative power generation of 131.54 million KWH, an increase of 25.99 million KWH year-on-year. The operation of the company's photovoltaic power station is stable. Affected by the changes in the solar industry, especially in the material production end market environment, the solar industry achieved a total operating income of 2.342 billion yuan in 2018, a decrease of 784 million yuan or25.08% compared with the same period of last year; net profit reached -237 million yuan, a decrease of 432 million yuan year-on-year, a drop of222%.
II. Main business analysis
1. Overview
Unit: RMB
||||||
|-|-|-|-|-|
|Items|2018|2017|Range of Change|Analysis of reasons|
|Operating income|10,609,963,011|10,879,400,746|-2.48%||
|Operating costs|8,120,481,894|8,216,358,372|-1.17%||
||354,983,459|336,131,723|5.61%|Mainly due to the increase intransportation costs and employeecompensation|
|Sales expenses|||||
||731,215,251|588,652,397|24.22%|Mainly due to the amortization ofexpenses in equity incentives|
|Administration expenses|||||
|R&D expenses|338,791,891|330,677,375|2.45%||
||349,403,487|315,961,080|10.58%|Mainly due to the increase in interestexpenses|
|Financial expenses|||||
||2,130,378,100|2,463,446,156|-13.52%|Mainly due to the decrease in cashreceived from sales of goods andprovision of labor services.|
|Net cash flow arising from|||||
|operating activities|||||
||-778,807,979|-1,220,130,334|-36.17%|Mainly due to the decrease in cashpaid for purchasing fix asset,intangible assets and other long termassets.|
|Net cash flow arising from|||||
|investment activities|||||
||-1,588,458,276|634,295,928|-350.43%|Mainly due to in previous termfund received through financinglease which is no longer carrying outin this reporting period.|
|Net cash flow arising from|||||
|financing activities|||||

CSG Annual Report 2018 2. Revenue and cost
(1) Constitution of operation revenue
Unit: RMB
|||||||
|-|-|-|-|-|-|
||2018||2017|||
||||||Increase/decrease|
|||Ratio in operation||Ratio in operation||
||Amount||Amount||y-o-y|
|||revenue||revenue||
|total of operating|10,609,963,011||10,879,400,746|||
|||100%||100%|-2.48%|
|income||||||
|According to industry||||||
|Glass industry|7,453,555,124|70.25%|7,051,910,295|64.82%|5.70%|
|Solar energy||||||
||2,341,776,474|22.07%|3,125,611,234|28.73%|-25.08%|
|industry||||||
|Electronic glass &||||||
||960,075,428|9.05%|873,868,480|8.03%|9.86%|
|Display industry||||||
|Others|58,900,937|0.56%|58,687,566|0.54%|0.36%|
|Amount of||||||
||-204,344,952|-1.93%|-230,676,829|-2.12%|-11.42%|
|unutilized||||||
|According to product||||||
|Glass products|7,453,555,124|70.25%|7,051,910,295|64.82%|5.70%|
|Solar energy||||||
||2,341,776,474|22.07%|3,125,611,234|28.73%|-25.08%|
|products||||||
|Electronic glass &||||||
||960,075,428|9.05%|873,868,480|8.03%|9.86%|
|Display products||||||
|Others|58,900,937|0.56%|58,687,566|0.54%|0.36%|
|Amount of||||||
||-204,344,952|-1.93%|-230,676,829|-2.12%|-11.42%|
|unutilized||||||
|According to region||||||
|Mainland China|9,151,411,893|86.25%|9,506,249,433|87.38%|-3.73%|
|H.K. China|196,186,618|1.85%|434,551,436|3.99%|-54.85%|
|Europe|53,541,882|0.51%|26,534,686|0.24%|101.78%|
|Asia (excluding||||||
|Mainland China and|1,125,389,041|10.61%|848,958,711|7.80%|32.56%|
|H.K.)||||||
|Australia|39,605,066|0.37%|37,937,222|0.35%|4.40%|
|North America|31,189,420|0.29%|6,030,936|0.06%|417.16%|
|Other regions|12,639,091|0.12%|19,138,322|0.18%|-33.96%|

CSG Annual Report 2018 (2) List of the industries, products or regions exceed10% of the operating income or operating profits of the Company
√Applicable
□
Not applicable
Unit: RMB
||||||||
|-|-|-|-|-|-|-|
|||||Increase/decrease|Increase/decrease|Increase/decrease|
||Operating||||||
|||Operating cost|Gross profit ratio|of operating|of operating cost|of gross profit|
||revenue||||||
|||||revenue y-o-y|y-o-y|ratio y-o-y|
|According to industry|||||||
|Glass industry|7,453,555,124|5,400,796,739|27.54%|5.70%|3.50%|1.53%|
|Solar energy|||||||
||2,341,776,474|2,196,725,216|6.19%|-25.08%|-12.60%|-13.39%|
|industry|||||||
|Electronic glass|||||||
|and display|960,075,428|667,840,703|30.44%|9.86%|2.43%|5.05%|
|device industry|||||||
|According to product|||||||
|Glass products|7,453,555,124|5,400,796,739|27.54%|5.70%|3.50%|1.53%|
|Solar energy|||||||
||2,341,776,474|2,196,725,216|6.19%|-25.08%|-12.60%|-13.39%|
|products|||||||
|Electronic glass|||||||
|& Display device|960,075,428|667,840,703|30.44%|9.86%|2.43%|5.05%|
|products|||||||
|According to region|||||||
|Mainland China|9,151,411,893|6,959,210,746|23.95%|-3.73%|-2.61%|-0.88%|
|Asia (other than|||||||
|Mainland China|1,125,389,041|934,918,533|16.92%|32.56%|34.41%|-1.15%|
|and Hongkong)|||||||

Under the circumstances that the statistical standards for theCompany’s main business data adjusted in the report period, the Company's main business data in the recent year is calculated based on adjusted statistical standards at the end of the report period□ Applicable√ Not applicable
(3) Whether theCompany’s goods selling revenue higher than the service revenue
Whether theCompany’s goods selling revenue higher than the service revenue
√Yes□ No
CSG Annual Report 2018
|||||||
|-|-|-|-|-|-|
||||||Increase/decrease|
|Industry|Item|Unit|2018|2017||
||||||y-o-y (%)|
||Sales volume|10,000-ton|274|264|3.79%|
|Flat glass|Output|10,000-ton|272|270|0.74%|
||Inventory|10,000-ton|6|9|-33.33%|
||Sales volume|10,000-M2|2,471|3,027|-18.37%|
|Architectural glass|Output|10,000-M2|2,500|3,045|-17.90%|
||Inventory|10,000-M2|72|49|46.94%|
||Sales volume|ton|39,931|34,315|16.37%|
|Electronic glass|Output|ton|43,275|32,073|34.93%|
||Inventory|ton|5,742|2,212|159.58%|
||Sales volume|ton|4,753|2,434|95.28%|
|Polysilicon|Output|ton|7,692|8,101|-5.05%|
||Inventory|ton|38|122|-68.85%|
||Sales volume|10,000-piece|26,346|34,779|-24.25%|
|Silicon wafer|Output|10,000-piece|25,715|34,840|-26.19%|
||Inventory|10,000-piece|421|156|169.87%|
||Sales volume|MW|836|540|54.81%|
|Solar cell|Output|MW|917|733|25.10%|
||Inventory|MW|19|15|26.67%|

 Reasons for y-o-y relevant data with over30% changes
√Applicable□ Not applicable
1. Flat glass: The decrease of inventory is mainly caused by reasonable control of delivery pace and appropriate reduction of inventory level.
2. Architectural glass: Although, because of the sales strategy adjustment and the products composition optimization, sales volume and output in architectural glass slightly decreases, the profit level of architectural glass significantly improved. Meanwhile, in order to fit with the adjustment of the sales strategy, inventory reserve is reasonably increased.
3. Electronic glass: The production and inventory increase is mainly due to production capacity increased after the completion of technical renovation of some subsidiaries taken in the second half of 2017.
4. Polysilicon: The increase in sales volume is mainly due to the increase of the external sales volume of polysilicon, which is caused by the technological renovation in part of silicon wafers production in this year. The decrease of inventory is mainly due to the production capacity of polysilicon cut down caused by the technological renovation in polysilicon production.
5. Silicon wafer: The decrease in sales volume and output is mainly due to the technological renovation in part of silicon wafers production in this year. The increase in inventory is mainly due to the sudden reduction in system installment in downstream industry caused by new government policy issued on solar industry in 31st May.
6. Solar cell: The increase in sales volume is mainly due to the increase in production capacity.
CSG Annual Report 2018 (4) Fulfillment of significant sales contracts signed by the Company up to the report period
□ Applicable√ Not applicable
(5) Constitution of operation cost
Constitution of operation cost of main business
Industry classification
Unit: RMB
||||||||
|-|-|-|-|-|-|-|
|||2018||2017|||
|||||||Increase/decrease|
|Industry|Item||Ratio in operationcost||Ratio in operationcost||
|||Amount||Amount||y-o-y|
||Raw material|4,250,705,139|79.08%|3,950,753,501|76.28%|7.59%|
||Labor wages|506,600,563|9.42%|483,035,118|9.33%|4.88%|
|Glass industry|||||||
||Manufacturing||||||
|||618,127,419|11.50%|745,385,164|14.39%|-17.07%|
||costs||||||
||Raw material|437,942,818|65.75%|407,632,245|62.46%|7.44%|
|Electronic glass|||||||
||Labor wages|86,736,184|13.02%|76,167,671|11.67%|13.88%|
|& Display|||||||
||Manufacturing||||||
|industry||141,429,615|21.23%|168,846,577|25.87%|-16.24%|
||costs||||||
||Raw material|1,758,180,912|80.99%|2,045,079,539|82.01%|-14.03%|
|Solar energy|Labor wages|164,144,458|7.56%|193,384,939|7.75%|-15.12%|
|industry|Manufacturing||||||
|||248,666,105|11.45%|255,426,988|10.24%|-2.65%|
||costs||||||

Product classification
Unit: RMB
||||||||
|-|-|-|-|-|-|-|
|||2018||2017|||
|||||||Increase/decreasey-o-y|
|Product|Item||Ratio in operation||Ratio in operationcost||
|||Amount||Amount|||
||||cost||||
||Raw material|4,250,705,139|79.08%|3,950,753,501|76.28%|7.59%|
||Labor wages|506,600,563|9.42%|483,035,118|9.33%|4.88%|
|Glass products|||||||
||Manufacturing||||||
|||618,127,419|11.50%|745,385,164|14.39%|-17.07%|
||costs||||||
||Raw material|437,942,818|65.75%|407,632,245|62.46%|7.44%|
|Electronic glass|||||||
||Labor wages|86,736,184|13.02%|76,167,671|11.67%|13.88%|
|& Display|||||||
||Manufacturing||||||
|products||141,429,615|21.23%|168,846,577|25.87%|-16.24%|
||costs||||||
|Solar energy|Raw material|1,758,180,912|80.99%|2,045,079,539|82.01%|-14.03%|

CSG Annual Report 2018
||||||||
|-|-|-|-|-|-|-|
|products|Labor wages|164,144,458|7.56%|193,384,939|7.75%|-15.12%|
||Manufacturing||||||
|||248,666,105|11.45%|255,426,988|10.24%|-2.65%|
||costs||||||

(6) Whether the consolidated scope changed during the report period
√ Yes□No
On February 11, 2018, the group established Qingyuan CSG quartz material co., Ltd. As of December 31, 2018, the group has made a monetary capital contribution of 6 million yuan, and the group holds100% of its shares.
On March 30, 2018, the group established Dongguan CSG Jingyu new material co., Ltd. As of December 31, 2018, the group has made a monetary capital contribution of 24 million yuan, and the group holds80% of its shares.
On May 22, 2018, the group set up Changshu CSG new energy co., Ltd. As of December 31, 2018, the group has not invested, and the group holds100% of its shares.
(7) Major changes or adjustment in business, product or service of the Company in the report period□ Applicable√ Not applicable
(8) Major customers and major suppliers
Major customers of the Company
|||
|-|-|
|Total sales to the top five customers (RMB)|863,669,956|
|Proportion in total annual sales volume for top five customers|8.14%|

 Information of the top five customers of the Company
|||||
|-|-|-|-|
|Serial|Name of customer|Sales volume (RMB)|Proportion in total annual sales|
|1|Customer A|274,833,538|2.59%|
|2|Customer B|259,752,265|2.45%|
|3|Customer C|118,336,100|1.12%|
|4|Customer D|108,440,154|1.02%|
|5|Customer E|102,307,899|0.96%|
|Total||863,669,956|8.14%|

 Other statement of main customers
□ Applicable√ Not applicable
Major suppliers of the Company
|||
|-|-|
|Total purchase amount from the top five suppliers (RMB)|1,493,214,098|
|Proportion in total annual purchase amount from the top five suppliers|18.06%|

Information of the top five suppliers of the Company
CSG Annual Report 2018
|||||
|-|-|-|-|
||||Proportion in total annual|
|Serial|Name of supplier|Purchase amount (RMB)||
||||purchase|
|1|Supplier A|463,537,163|5.61%|
|2|Supplier B|368,331,899|4.46%|
|3|Supplier C|255,739,892|3.09%|
|4|Supplier D|226,760,639|2.74%|
|5|Supplier E|178,844,505|2.16%|
|Total||1,493,214,098|18.06%|

 Other statement of main suppliers
□ Applicable√ Not applicable
3. Expenses
Unit: RMB
||||||
|-|-|-|-|-|
||2018|2017|Increase/decrease y-o-y|Note of major changes|
|Sales expense|354,983,459|336,131,723|5.61%||
||731,215,251|588,652,397||Mainly due to the amortization|
|Management expense|||24.22%||
|||||of expenses in equity incentives|
||349,403,487|315,961,080||Mainly due to the increasing of|
|Financial expense|||10.58%||
|||||interest costs.|
|R&D expenses|338,791,891|330,677,375|2.45%||

4.R&D expenses
√Applicable□ Not applicable
The Company always emphasizesR&D of new products, new technology and new craft, andR&D aims to stay close to the market, production and industry.
R&D investment of the Company
|||||
|-|-|-|-|
||2018|2017|Ratio of change|
|Number of R & D personnel (person)|146|134|8.96%|
|Ratio of number of R&D personnel|1.35%|1.11%|0.24%|
|Amount of R & D investment (RMB)|381,711,070|368,237,629|3.66%|
|Ratio of the R&D investment to the operating income|3.60%|3.38%|0.22%|
|Amount of the capitalized R&D investment (RMB)|29,735,459|43,122,431|-31.04%|
|Ratio of the capitalized R&D investment to the R&D||||
||7.79%|11.71%|-3.92%|
|investment||||

Reason of remarkable changes over the last year of the ratio of the totalR&D investment amount to the operating income
CSG Annual Report 2018□ Applicable√ Not applicable
Reason of substantial change of the ratio of theR&D investment capitalization and its reasonable explanation
□ Applicable√ Not applicable
5. Cash flow
Unit: RMB
|||||
|-|-|-|-|
|Item|2018|2017|Increase/decrease y-o-y|
|Subtotal of cash in-flow from operation activity|12,086,856,666|12,256,615,740|-1.39%|
|Subtotal of cash out-flow from operation activity|9,956,478,566|9,793,169,584|1.67%|
|Net cash flow from operation activity|2,130,378,100|2,463,446,156|-13.52%|
|Subtotal of cash in-flow from investment activity (i)|35,327,557|192,127,040|-81.61%|
|Subtotal of cash out-flow from investment activity (ii)|814,135,536|1,412,257,374|-42.35%|
|Net cash flow from investment activity (iii)|-778,807,979|-1,220,130,334|-36.17%|
|Subtotal of cash in-flow from financing activity (iv)|4,672,680,876|8,129,917,929|-42.52%|
|Subtotal of cash out-flow from financing activity|6,261,139,152|7,495,622,001|-16.47%|
|Net cash flow from financing activity (v)|-1,588,458,276|634,295,928|-350.43%|
|Net increased amount of cash and cash equivalent (vi)|-234,626,252|1,875,186,175|-112.51%|

 Relevant data year-on-year major changes in the main influencing factors
√Applicable□ Not applicable
(i) It is mainly caused by the decrease of cash received in connection with other investment activities.
(ii) It is mainly caused by the decrease of cash paid for purchasing/constructing fixed assets, intangible assets and other long-term assets.
(iii) It is mainly caused by the decrease of cash paid for purchasing/constructing fixed assets, intangible assets and other long-term assets.
(iv) It is mainly due to the decrease in cash received in connection with leverage lease and interest free loans.
(v) Mainly due to in previous term fund received through financing lease which is no longer carrying out in this reporting period. (vi) It is mainly caused by the decrease of cash inflow of financing activities.
Notes to the reason of the significant differences between the net cash flow from the operating activities and the net profits of the year during the report period
√Applicable□ Not applicable
Adjustment for the difference between net profit and amount of cash flow from operation activity for the year as follows:
Unit: RMB
|||
|-|-|
|Net profit|472,208,588|
|Plus: impairment of assets|136,546,150|
|Depreciation of fixed assets|965,935,450|

CSG Annual Report 2018
|||
|-|-|
|Amortization of intangible assets|50,567,703|
|Net change in safe production costs|2,843,662|
|Amortization of long-term deferred expenses|1,647,906|
|Share-based pay for employees|141,486,074|
|Net loss/ (gains) on disposal of fixed assets and intangible assets|454,368|
|Financial expenses|401,627,067|
|Deferred income tax assets increase|-58,656,656|
|Increase in deferred income tax liabilities|1,202,886|
|Decrease in inventories|85,267,118|
|Increase in operating receivables|-63,345,244|
|Decrease in operating payables|-7,406,972|
|Net cash flow from operating activities|2,130,378,100|

 III. Analysis of the non-core business
√Applicable□ Not applicable
Unit: RMB
||||||
|-|-|-|-|-|
||Amount|Ratio in total profit|Note for the reason|Sustainable or not|
||||Mainly due to decrease in value of long term||
|Asset impairment|136,546,150|25.07%||No|
||||assets and goodwill||
|Non-operating|||Mainly due to the penalty of the contracts andthe un-payable accounts||
||13,858,651|2.54%||No|
|income|||||
|Non-operating|||Mainly due to the appraisals of the deviation||
||1,541,471|0.28%||No|
|expense|||electric quantity||
|Other Income|94,618,039|17.37%|Mainly due to government subsidy|No|

 IV. Assets and liabilities
1. Major changes of assets and liabilities composition
Unit: RMB
||||||||
|-|-|-|-|-|-|-|
||As at 31 Dec. 2018||As at 31 Dec. 2017||||
|||Proportion||Proportion|Change of||
|||||||Notes of major changes|
||Amount|in total|Amount|in total|proportion||
|||assets||assets|||
|Monetary funds|2,226,447,720|11.65%|2,462,605,764|12.61%|-0.96%||
|Accounts receivable|592,233,312|3.10%|638,238,290|3.27%|-0.17%||

CSG Annual Report 2018
||||||||
|-|-|-|-|-|-|-|
||91,176,675||143,848,023|||Mainly due to the decrease in|
|Advance payment||0.48%||0.74%|-0.26%||
|||||||prepayment for materials|
|Inventory|600,139,750|3.14%|685,895,317|3.51%|-0.37%||
|Other Current|445,327,449||200,847,989|||Mainly due to new entrusted loans in|
|||2.33%||1.03%|1.30%||
|Assets||||||the current period|
||9,930,843,775||11,540,769,697|||Mainly due to some subsidiaries|
|Fix assets||51.96%||59.08%|-7.12%|transferred the fixed assets to|
|||||||technical projects under construction|
||2,559,179,442||1,417,624,618|||Mainly due to some subsidiaries|
|Construction in|||||||
|||13.39%||7.26%|6.13%|transferred the fixed assets to|
|process|||||||
|||||||technical projects under construction|
|Long-term deferred|12,746,609||2,223,397|||Mainly due to amortization of land|
|||0.07%||0.01%|0.06%||
|expenses||||||lease payments|
|Deferred income tax|139,529,518||80,872,862|||Mainly due to the increase in share|
|||0.73%||0.41%|0.32%||
|assets||||||payment and tax losses|
||2,922,679,590||3,704,630,909|||Mainly due to repayment of part of|
|Short-term loans||15.29%||18.96%|-3.67%||
|||||||the loan|
||2,315,700,000||1,554,120,000|||Mainly due to the new issuance of|
|Long-term loans||12.12%||7.96%|4.16%||
|||||||medium-term notes|
|Long term Accounts|529,910,796||1,161,794,247|||Mainly due to the repayment of|
|||2.77%||5.95%|-3.18%||
|payable||||||leverage leases in the current period|
|Other|5,080,234||1,948,943|||Mainly due to changes in foreign|
|Comprehensive||0.03%||0.01%|0.02%|currency statement translation|
|Income||||||differences|
||6,068,600||3,224,938|||Mainly due to increased investment in|
|Special Reserve||0.03%||0.02%|0.01%||
|||||||safety production|
||277,180,983||417,349,879|||Mainly due to the first phase of the|
|Treasury stock||1.45%||2.14%|-0.69%|restricted equity incentive stock|
|||||||unlocked|

2. Assets and liabilities measured at fair value
□ Applicable√ Not applicable
3. Limited asset rights as of the end of the report period
|||||||
|-|-|-|-|-|-|
||Item||Limited amount||Limited reason|
|Monetary funds||1,320,807||Limited margin transfer||
|Fix assets||2,381,348,551||Limited of Leveraged lease and Mortgage loan||

CSG Annual Report 2018
|||
|-|-|
|Total|2,382,669,358|

V. Investment
1. Overall situation
√Applicable□ Not applicable
||||
|-|-|-|
|Investment in the report period|Investment in the same period of last||
|||Changes|
|(RMB)|year ( RMB)||
|814,135,536|1,412,257,374|-42.35%|

 Reasons for largefluctuation：Mainly due to the decrease in cash paid for the purchase and construction of fixed assets, intangible assets and other long-term assets.
2. The major equity investment obtained in the report period
□ Applicable√ Not applicable
CSG Annual Report 2018 3. The major ongoing non-equity investment in the report period
√Applicable□ Not applicable
Unit: RMB 0,000
||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|
||||||Accumulativ||||||||
||||||e amount||||Accumulative||Date of||
|||Fixed||Amount||||||Reasons for not||Index of|
||||||actually||||revenue||disclosure||
||Way of|asset|Industry|invested in||||Expected||achieving the planned||disclosure|
|Project|||||invested by|Source of funds|Progress of project (ongoing projects)||achieved by||(if||
||investment|investme|involved|the report||||return||progress and the||(if|
||||||the end of||||the end of the||applicable||
|||nt or not||period||||||expected return||applicable)|
||||||the report||||report period||)||
||||||period||||||||
||||||||CSG plans to construct PV power||||||
||||||||plants within two years from 2016 to||||||
||||||||2017. Its wholly-owned subsidiary,||||||
||||||||Shenzhen CSG PV Energy Co., Ltd.||||||
||||||||will self-build 200MW and the||||||
|||||||Own funds and|remaining 140MW will be||||||
|PV power|||Manufac|||||||||Notice|
|||||||loans from|constructed by CSG with Qibin|||Part of the project has|January||
|plant|Self-built|Yes|turing|1,306|26,214|||4,344|2,399|||number:|
|||||||financial|Group. During 2016 to 2018,|||been completed.|22, 2016||
|investment|||industry|||||||||2016-006|
|||||||institutions|Shenzhen CSG PV developed and||||||
||||||||built a total of 78MW of photovoltaic||||||
||||||||power stations, including 58MW of||||||
||||||||distributed photovoltaic power plants||||||
||||||||and 20MW of centralized||||||
||||||||photovoltaic power plants.||||||
|4 million ㎡|||Manufac|||Own funds and|The Company plans to construct a 4|||The project was|May 21,|Notice|
||Self-built|Yes||9,318|60,776|||10,543|||||
|light guide|||turing|||loans from|million square meters PV glass|||transferred to|2016|number:|

CSG Annual Report 2018
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|plate and PV|||industry|||financial|production line for new type ultra-thin||commercial operation||2016-025|
|glass||||||institutions|LCD display. The line is also||in January 2019.|||
|production|||||||provided with a capacity of higher|||||
|line|||||||strength ultra-thin electronic glass|||||
||||||||than CSG Qingyuan. The equity of|||||
||||||||Xianning Feng Wei Technology Co.,|||||
||||||||Ltd. has been acquired at 2016 and|||||
||||||||the project has been done at|||||
||||||||December.|||||
|Cold repair|||||||The former 600T line of float glass of|||||
|||||||Own funds and|||The project was|||
|upgrading of|||Manufac||||Hebei CSG was upgraded to produce||||Notice|
|||||||loans from|||transferred to|April 9,||
|the first line|Self-built|Yes|turing|12,405|12,405||2mm~19mm glass. The project was|3,887|||number:|
|||||||financial|||commercial operation|2018||
|(600T) of|||industry||||started on September 26, 2018 and||||2018-012|
|||||||institutions|||in January 2019.|||
|Hebei CSG|||||||was completed in December 2018.|||||
||||||||It is planned to fully implement the|||||
||||||||diamond wire cutting technology in|||||
||||||||the production of silicon wafers,|||||
||||||||introduce the casting single crystal|||||
|Yichang CSG||||||||||||
||||||||technology and the wet black silicon|||||
|Polysilicon||||||Own funds and||||||
||||Manufac||||technology, and upgrade the||No gains as the||Notice|
|wafer capacity||||||loans from||||July 28,||
||Self-built|Yes|turing|595|595||production capacity of the 1.3 GW|12,599|project is in the||number：|
|technology||||||financial||||2018||
||||industry||||polysilicon wafers in the early stage||construction period||2018-040|
|upgrade||||||institutions||||||
||||||||of the company to form an annual|||||
|project||||||||||||
||||||||output of about 1.2 GW of cast single|||||
||||||||wafer. And annual production|||||
||||||||capacity of about 0.8GW wet black|||||
||||||||silicon wafer.|||||
|Qingyuan|Self-built|Yes|Manufac|34|34|Own funds and|The company plans to adopt an|16,420|No gains as the|December|Notice|

CSG Annual Report 2018
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|CSG|||turing|||loans from|advanced design concept of one kiln||project is in the|22, 2018|number：|
|Ultra-clean|||industry|||financial|and two lines to build a kiln two-line||construction period||2018-072|
|electronic||||||institutions|(80+620T/D) ultra-white electronic|||||
|glass and|||||||and ultra-white special glass|||||
|ultra-white|||||||production line with a daily melting|||||
|special glass|||||||capacity of 700 tons in Qingyuan|||||
|production|||||||CSG. The first line plan is 80T/ D|||||
|line|||||||design, will produce 0.33-1.1mm, and|||||
|construction|||||||consider 2mm production capacity,|||||
|project|||||||mainly produces electronic display|||||
||||||||tempered protective glass for mobile|||||
||||||||phones. The second-line plan is|||||
||||||||designed according to 620T/D, with|||||
||||||||two series of 3-4mm and 15-22mm,|||||
||||||||5-12mm as the transition, mainly|||||
||||||||producing AG anti-glare, "exposure|||||
||||||||glass" for scanning and copying|||||
||||||||machine, TCO and battery for thin|||||
||||||||film battery. Ultra-white special glass|||||
||||||||such as front plate and back plate.|||||
||||||||CSG has added 1GW capacity of||Project revenue|||
||||||||high-efficient polysilicon wafer to||cannot be accounted|||
||||||||achieve 2.2GW capacity of||for separately. The|January|Notice|
|Yichang CSG||||||Own funds and||||||
||||Manufac||||polysilicon wafer. Construction of the||company has decided|06, 2016,|number:|
|to add a 1GW||||||loans from||||||
||Self-built|Yes|turing|951|46,625||first 500 MW capacity of polysilicon|14,853|to stop the|April 16,|2016-001、|
|silicon wafer||||||financial||||||
||||industry||||wafer was completed in September||implementation of the|2016, July|2016-018、|
|project||||||institutions||||||
||||||||2017. The company has decided to||post-500MW capacity|28, 2018|2018-040|
||||||||stop the implementation of the other||project. For details,|||
||||||||500MW capacity project. For details,||please refer to the|||

CSG Annual Report 2018
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|||||||please refer to the announcement of|announcement of the|||
|||||||the resolution of the extraordinary|resolution of the|||
|||||||meeting of the 8th Board of Directors|extraordinary meeting|||
|||||||in 2018.|of the 8th Board of|||
||||||||Directors in 2018.|||
|||||||Plan to establish a production line for||||
|Hebei Panel||||||||||
|||||||medium-alumina ultra-thin electronic||||
|Glass project||||||||||
|||||||glass in Hebei Panel Glass, using||||
|of|||Manufac||||||Notice|
|||||||clean natural gas as the fuel, and|The project has no|October||
|medium-alumi|Self-built|Yes|turing|1,266|Own funds||||number:|
|||||||produce 0.33mm～1.1mm|income at present|29, 2014||
|na ultra-thin|||industry||||||2014-030|
|||||||medium-alumina ultra-thin glass with||||
|electronic||||||||||
|||||||float process. The project was still in||||
|glass||||||||||
|||||||preparation.||||
|Yichang CSG||||||Plan to build a crystalline silicon solar||||
|700MW|||Manufac|||cell production line with annual|||Notice|
||||||||The project was|December||
|crystalline|Self-built|Yes|turing|||capacity of 700MW. The project was|||number:|
||||||||suspended.|25, 2010||
|silicon solar|||industry|||suspended and further investment will|||2010-046|
|cell project||||||be based on actual industry situations.||||
|Expanding||||||Plan to expand the solar module|The project wassuspended.|January19, 2011||
|500MW solar|||Manufac|||production line with annual capacity|||Notice|
|module|Self-built|Yes|turing|||of 500MW. The project was|||number:|
|project in|||industry|||suspended and further investment will|||2011-003|
|Dongguan||||||be based on actual industry situations.||||
|Relocation||||||The Company plans to construct a||||
|and equipment|||Manufac|||module workshop in Xianning, Hubei|||Notice|
||||||||The project was|April 16,||
|upgrading of|Self-built|Yes|turing|||Province, of which the final capacity|||number:|
||||||||suspended.|2016||
|the solar|||industry|||will be 500MW. By relocation of|||2016-018|
|module||||||some of the module equipment of its||||

CSG Annual Report 2018
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|production||||||subsidiary, Dongguan CSG PV||||||
|line in||||||Technology Co., Ltd. and purchase of||||||
|Dongguan||||||some new equipment, the first stage||||||
|||||||capacity of the Xianning workshop||||||
|||||||will be 300MW and, afterwards, it||||||
|||||||will be expanded to 500MW as||||||
|||||||required upon the market conditions.||||||
|Solar online||||||||||||
|self-cleaning||||||||||||
||||Manufac|||The Company plans to construct an|||||Notice|
|coated glass|||||||||The project was|April 16,||
||Self-built|Yes|turing|||online self-cleaning coated glass line|||||number:|
|project of|||||||||suspended.|2016||
||||industry|||in Dongguan.|||||2016-018|
|Dongguan||||||||||||
|CSG||||||||||||
|||||||The Company plans to construct an||||||
|||||||architectural glass plant in Negeri||||||
|Malaysia-inve||||||||||||
||||Manufac|||Sembilan, Malaysia. The Phase I|||||Notice|
|sted|||||||||The project was|April 16,||
||Self-built|Yes|turing|||capacity of the newly-built plant will|||||number:|
|architectural|||||||||suspended.|2016||
||||industry|||be 1,200,000 square meters insulating|||||2016-018|
|glass plant||||||||||||
|||||||glass and 1,000,000 square meters||||||
|||||||single coated glass.||||||
|Total||||24,609|147,915||62,646|2,399||||

CSG Annual Report 2018 4. Financial assets investment
(1) Securities investment
□ Applicable√ Not applicable
There was no securities investment during the report period.
(2) Derivative investment
□ Applicable√ Not applicable
There was no derivative investment during the report period.
5. Use of raised fund
□ Applicable√ Not applicable
There was no such case during the report period.
VI. Sales of major assets and equity
1. Sales of major assets
□ Applicable√ Not applicable
2. Sales of major equity
□ Applicable√ Not applicable
VII. Analysis of main holding companies and joint -stock companies
√Applicable□ Not applicable
Particular about main subsidiaries and joint -stock companies which have influence on the Company's net profit by over10% Unit: RMB
||||||||||
|-|-|-|-|-|-|-|-|-|
|Name of|||Registered||||||
||Type|Main business||Total assets|Net Assets|Operating revenue|Operating profit|Net profit|
|company|||capital||||||
|||Development,|||||||
|Chengdu CSG||manufacture and|||||||
||Subsidiary||260 million|994,562,363|592,149,512|1,102,892,837|216,021,025|183,649,322|
|Glass Co., Ltd.||sales of various|||||||
|||special glass|||||||
|||Development and|||||||
|Xianning CSG||manufacture and|||||||
||Subsidiary||235 million|824,479,862|465,476,562|776,293,550|112,165,322|103,106,758|
|Glass Co., Ltd.||sales of various|||||||
|||special glass|||||||

CSG Annual Report 2018
||||||||||
|-|-|-|-|-|-|-|-|-|
|||Manufacture and|USD||||||
|Hebei CSG|||||||||
||Subsidiary|sales of various|48.06millio|956,061,521|481,558,217|636,903,408|84,180,369|73,133,864|
|Glass Co., Ltd.|||||||||
|||special glass|n||||||
|||Manufacture and|||||||
|Wujiang CSG|||565.04||||||
||Subsidiary|sales of various||1,656,890,538|911,692,573|1,570,122,631|171,004,045|151,077,690|
|Glass Co., Ltd.|||million||||||
|||special glass|||||||
|Dongguan|||||||||
|CSG||Deep processing of|||||||
||Subsidiary||240 million|1,049,779,965|539,555,636|909,090,550|74,320,886|65,406,546|
|Architectural||glass|||||||
|Glass Co., Ltd.|||||||||
|Wujiang CSG|||||||||
|East China||Deep processing of|||||||
||Subsidiary||320 million|724,443,891|471,000,692|627,082,830|35,318,141|32,781,305|
|Architectural||glass|||||||
|Glass Co., Ltd.|||||||||
|Qingyuan|||||||||
|CSG New||Manufacture|||||||
|energy||and sales of|||||||
||Subsidiary||300 million|750,127,923|357,842,238|262,402,765|88,694,820|75,051,790|
|saving||Ultra-thin|||||||
|materials||electronic glass|||||||
|Co., Ltd.|||||||||
|Tianjin CSG||Development,|||||||
|Energy||producing and sales|||||||
||Subsidiary||336 million|792,189,031|566,048,091|764,301,802|56,349,550|51,796,569|
|Conservation||of energy-saving|||||||
|Glass Co., Ltd||special glass|||||||
|||Manufacture and|||||||
|Dongguan|||||||||
|||sales of|||||||
|CSG Solar|Subsidiary||480 million|1,212,160,906|683,523,571|998,448,249|96,598,422|84,609,919|
|||Solar-Energy Glass|||||||
|Glass Co., Ltd.|||||||||
|||products|||||||
|||Manufacture and|||||||
|Yichang CSG|||||||||
|||sales of high purity|1,467.98||||||
|Polysilicon|Subsidiary|||3,682,288,014|1,141,662,766|1,296,883,246|-345,412,548|-290,103,454|
|||silicon material|million||||||
|Co., Ltd.|||||||||
|||products|||||||
|Shenzhen|||||||||
|||Manufacture and|||||||
|Nanbo Display|||||||||
||Subsidiary|sales of display|143 million|1,639,483,612|847,511,566|564,971,827|50,839,765|49,063,159|
|Technology|||||||||
|||device products|||||||
|Co., Ltd.|||||||||
|CSG|||||||||
|(Hongkong)||Investment and|HKD 1||||||
||Subsidiary|||100,963,234|58,745,922|391,387,906|8,599,176|6,384,852|
|Investment||trading|million||||||
|Co., Ltd.|||||||||

Particular about subsidiaries obtained or disposed in report period
□ Applicable√ Not applicable
CSG Annual Report 2018 Description of the major holding company:
Among the company's major holding companies, the related subsidiaries of the glass business subsidiaries achieved steady growth in 2018 and achieved constantly growth. The electronic glass and display device business segment closely follows the development trend of the industry and enhance theR&D and technology updates, the profitability, competitiveness and brand influence
continuously increased. The solar energy industry is facing the adjustment of government policies, and the operation has been under pressure. However, the company responds energetically and explores better, faster and more stable development of the solar energy industry from the strategic layout of the industry's development trend.
VIII. Structured main bodies controlled by the Company
□ Applicable√ Not applicable
IX. Outlook of theCompany’s future development
1. Tendency of development of the industries the Company involved
Flat glass industry
In 2018, under the policy of supply-side reform and other policies, the regulation and control of production capacity of the flat glass industry was further strengthened. With the stricter enforcement of comprehensive standards such as environmental protection and energy consumption, the elimination of backward production capacity was accelerated. At the end of 2018, some production lines completed cold repair, and the total production capacity of the industry increased slightly compared with 2017. In 2019, the real estate control policy is expected to be appropriately loosened. Although the demand in the real estate sector has declined slightly but the overall demand for glass is basically the same as that in 2018, with the increase in the degree of composite processing of deep processing glass and the expansion of the use of the field applied; As the de-capacity policy continues to be implemented, more stringent emission standards may be implemented, and the supply-demand relationship is expected to shift to tighter supply. In addition, the increase in environmental protection costs in the glass industry will push up the market price, and benefit the CSG Group, which has always been environmentally friendly and has various environmental protection facilities.
Architectural glass industry
With the domestic economic development entering “New Normal", the growth rate of fixed asset investment has slowed down obviously, and the price of upstream float glass has risen all the way, resulting in the decline of the overall profitability of the engineering glass industry since 2017. However, in 2018, CSG further strengthened brand protection and marketing, restructuring the production framework and promotion trend, vigorously developing equipment automation and informationization, cutting down costs and increasing efficiency, and the performance of engineering glass recovered and achieved substantial growth in 2018.
In the long run, Low-E energy-saving glass is the key of construction energy-saving whose permeability has been over80% in developed countries but less than15% in China so far. In recent years, Chinese government has expanded more efforts to promote green building. According to Action Plan of Promoting Production and Application of Green Building Material jointly issued by Ministry of Industry and Information Technology and Ministry of Housing and Urban-Rural Development, the ratio of green building material applied will be significantly increased and its quality will be improved dramatically. The proportion of green building material will take up30% in new building,50% in green building,70% in pilot project, and80% in renovating existing building. High-end energy saving glass as an important part in green building has a huge market demand and the prospects for its development are worth looking forward to. At the same time, the introduction of a new urbanization strategy, Beijing-Tianjin-Hebei integration, Greater Bay District, and the integration of the Yangtze River Delta was upgraded to a national strategy, which will bring new opportunities to thecompany’s engineering glass.
CSG Annual Report 2018 Solar energy industry
China's PV market ranks the first in the world for last six years, with component production ranking first in the world for last 12 years. China has become the number one in the world of photovoltaic power production and application. By the end of 2018, China's PV installed capacity exceeded 170 GW, which has exceeded the basic goal of “Energy Development “13th Five-Year Plan” as “110 million KWH of solar power generation by 2020”. The scale of China's PV industry will continue to expand due to the country's policy guidance for promoting clean energy and the rapid growth of the PV market.
According to the "13th Five-Year Plan for Solar Energy Development", by 2020, photovoltaic will have to achieve the connection to grid at an equal price on the electricity user-side. Therefore, technological innovation will become the main theme of the
development of the photovoltaic industry in the future. The drive power of the development of the industry will be turned from government policy to the technology and the market. The influence of single market policy change to the development of the industry will be weakened, but the competition on products will become more intense, and the reshuffle of the manufacturing chain will be intensified. The resources and advantages of the development of the industry will continue to flow to enterprises with strong technological innovation capabilities, “the stronger will be stronger”
Electronic glass and display industry
Although the smartphone and touch screen industries have entered a stable period in the market, brand manufacturers and supply chain enterprises are rapidly diverging, and the “T pattern” is becoming more and more obvious. The concentration of orders to high-quality customers is a positive factor for upstream material manufacturers. With the intensification of market competition, domestic and foreign consumer electronics brand manufacturers have started the work of cost-cutting of key components, which will bring a promising market prospect to domestic electronic glass manufacturers represented by CSG.
In addition, with the commercialization of 5G technology in the future, the Internet of Things will penetrate into every corner of human activities. The concept of things interconnection will greatly promote the industry equipped with human-computer interaction equipment such as smart homes, smart cars and smart home appliances. Performance electronic glass is one of the important components of human-computer interaction equipment. In summary, ultra-thin electronics industry and ultra-thin electronic glass manufacturers including CSG will face new market opportunities and rapid development opportunities.
According to the display industry forecast given by the authoritative research institute Touch Display Research, the global touch display industry revenue will continue to grow in the next decade, but the growth rate will gradually slow down. In this process, OLED display technology, as the most competitive display technology, will gradually occupy the dominant position in the market, especially flexible OLED technology, for its foldable character, becoming a revolutionary technology upgrade. The peripheral material to flexible OLED is expected to occupy a larger market advantage in the future. In addition, in the field of automotive electronics, with the rapid development of new energy vehicles, as well as the development of technologies such as vehicle
networking technology, and multi-screen, large-screen or curved surfaces technology integrated automotive touch-control display products will become the standard layout for automobiles, which has a broad market prospect.
2. Company Development Strategy
2019 is the 35th anniversary of the establishment of CSG Group. The company will firmly stick to the strategy of working hard to make the glass industry, as our main business, bigger and stronger, and coordinate the development of electronic glass and display device business, and make efforts to achieve breakthrough in the solar energy industry. On the basis of the high quality endogenous development, the company aims to realize leap-forward extension development by means of making full use of various resources such as market and capital, and through domestic and international domestic and international mergers& acquisition.
Taking‘industrial optimization, technological innovation, structural readjustment, and systemized leanmanagement’ as the main path, the Group's scientific development capability and level shall be continuously improved. By accelerating the development of strategic supporting industries; promoting the focusing cultivated of business to grow into a strategic support industry as soon as
CSG Annual Report 2018 possible; strengthening the work of industries and enterprises under operating pressure; strengthening party building work, building up a strong cadre team and workforce, the company tries its best to build up a solid base for the "Hundred years CSG “.
CSG will focus on sharing China's economic development achievements, firmly grasp China's “Belt and Road” strategic opportunity, and actively promote and strengthen its main business through proactive mergers and acquisitions and overseas investment strategies, and continue to enhance the industry position of each business segment. CSG will be made into an internationally influential multinational group with full reach to upstream and downstream of the glass industry.
3. Business Plan of 2019
①Improve functions of headquarters, realize general planning management, promote centralized purchase, lean management, exploit its potential and increase efficiency, and ensure the completion of operation construction objective of the Company in 2019;② ImproveR&D capacity, build upR&D talent team, and maintain the technical innovation advantage of the Company in the industry;
③ Create open, equal, fair and initiative enterprise culture, and strengthen core cohesion of the Company;
④ Strengthen talent management, establish remuneration incentive system related to the performance, improve company incentive mechanism, strengthen employee training, and introduce high-quality talents;
⑤ Rationally plan asset-liability ratio level and ensure controllable financial risk;
⑥ Vigorously conduct potential exploiting and efficiency increase activity, realize energy saving and consumption reduction, and strengthen competitiveness of the Company;
⑦ Improve information level of the Company, and create the world first-class information management platform.
4. Capital Requirements, Plan and Sources
In 2019, the company's budget capital expenditure was about 950 million yuan, mainly for the construction of ultra-clean electronic glass and ultra-clean special glass production line, photovoltaic power station investment, PV cellar production line technology upgrade, engineering glass workshop automation and production capacity expansion. The sources of funds are mainly self-owned funds, loans from financial institutions, and public issuance of corporate bonds.
5. Risks and Countermeasures
In 2019, in the face of “New Normal” of domestic economic development and the task of building a“Hundred years CSG”, the Company will face the following risks and challenges:
① In 2018, under the efforts of the Board of Directors and all employees, daily operation of the Company entered normal and stable operation. However, the Company still faces the risk of insufficient reserves of senior talents for the long-term development of the Company. To cope with aforesaid risks, the Company will take the following measures:
A. Construct new corporate culture of CSG as soon as possible, establish an kind of open, equal, fair and enterprising corporate culture, and reinforce internal core cohesion of employees;
B. Establish remuneration incentive system which related to performance and improve employee incentive mechanism;
C. Strengthen internal employee training, introduce external high-quality talent, and rapidly establish a high-quality talent team; D. Establish sustainable talent recruitment, cultivation, utilization, retaining, and development management system; create a future-oriented human resource production, development, supply system that can support the future development of CSG.
②The glass industry continue to face the pressure of downward demand and horizontal competition, the solar energy and PV industry will face the risk of industrial integration and price fluctuation, display devices and electronic glass industry will encounter the risk of accelerated technical upgrading and slow demand on electronic product. To cope with aforesaid risks, the Company will
CSG Annual Report 2018 take the following measures:
A. In the flat glass industry, the Company will accelerate the technical upgrading and reform of existing production line to realize differential operation, expand industrial scale and strengthen industrial competitiveness through industrialM&A;
B. In architectural glass industry, the Company will strengthen the development of high-end market and overseas market, actively develop traditional residence market, and at the same time, maintain the industrial advantageous position of the Company through market-oriented extension of industrial chain;
C. In the solar photovoltaic industry, the company continues to improve the level of polysilicon production technology, enhance wafer technology and capacity, upgrade the cell PERC technology, and accelerate the layout of solar power plants.
D. In electronic glass and display devices industry, the Company will strengthen research and development of new technology, new product, maintain its technical leading advantage in the industry, and further improve the product quality of ultra-thin electronic glass, so as to rapidly develop terminal market and improve industrial profitability.
③ Since 2018, the market price of glass and solar energy PV industrial has fluctuated greatly. At the same time, the prices of upstream raw materials have fluctuated, and the current rising labor costs have brought risks to the Company's operations.
To cope with risk, the Company will take the following measures:
A. Vigorously exploit potential and increase efficiency, and effectively implement energy saving and consumption reduction; B. Focus on the market change, and lock the price of bulk commodity at proper time;
C. Utilize bulk purchase advantage to reduce purchase cost;
D. Improve automatic production level, raise labor productivity.
④ Risk of fluctuation of foreign exchange rate: At present, nearly13.84% of the sales revenue of the Company is from overseas, in the future, the Company will further develop overseas business, and therefore, the fluctuation of exchange rate will bring certain risk to the operation of the Company. To cope with such risk, the Company will settle exchange in time and use safe and effective risk evading instrument and product to relatively lock exchange rate and reduce the risk caused by fluctuation of exchange rate.
X. Reception of research, communication and interview
1. Particulars about research, communication and interview in the report period
√Applicable□ Not applicable
|||||
|-|-|-|-|
|Reception time|Way|Type|Basic information index of investigation|
||||Details can be found in the Record Chart of the Investor Relation Activity|
|2018-1-16|Field research|Institute||
||||disclosed on Juchao website (www.cninfo.com.cn) on 18 January 2018.|

|||
|-|-|
|Reception times|1|
|Number of reception institutions|15|
|Number of reception person|-|
|Number of other reception|-|
|Disclosed, released or let out major undisclosed||
||No|
|information||

CSG Annual Report 2018 Section V. Important Events
I. Profit distribution plan of common shares and capitalization of capital reserve plan of the Company
Implementation or adjustment of profit distribution plan in the report period, cash dividend plan and converting capital reserve into share capital in particular
√ Applicable□Not applicable
The profit distribution plan for 2017 was approved by Annual GeneralShareholders’ Meeting of 2017 held on 14 May 2018 which distributed distributing cash dividend of RMB 0.5 (tax included) for every 10 shares to all shareholders and transferred capital reserve into capital with 1.5 shares for every 10 shares to all shareholders. Notice of the distribution was published on China Securities Journal, Securities Times, Shanghai Securities News and Hong Kong Commercial Daily on 20 June 2018, and the profit has been distributed.
|||
|-|-|
|Special explanation on cash dividend policy||
|Satisfy regulations of General Meeting or requirement of Article of Association (Yes/No)|Yes|
|Well-defined and clearly dividend standards and proportion (Yes/No)|Yes|
|Completed relevant decision-making process and mechanism (Yes/No)|Yes|
|Independent directors perform duties completely and play a proper role (Yes/No)|Yes|
|Minority shareholders have ample opportunities and their legitimate rights and interests are effectively||
||Yes|
|protected (Yes/No)||
|Condition and procedures are compliance and transparent while the cash bonus policy adjusted or changed||
||Yes|
|(Yes/No)||

Statement on profit distribution plan and capitalization of capital reserve plan of the Company in nearly three years (including the report period)
Statement on profit distribution plan and capitalization of capital reserve proposal of the Company in 2018: based on currently 2,863,277,201 shares of the total share capital, distributing cash dividend of RMB 0.5 (tax included) for every 10 shares to all shareholders. Meanwhile the Company will transfer capital reserve into capital with 1 share for every 10 shares to all shareholders based on 2,863,277,201 shares of the total share capital.
Statement on profit distribution plan and capitalization of capital reserve plan of the Company in 2017: based on 2,484,147,547 shares of the total share capital while dividends will be distributed, distributing cash dividend of RMB 0.5 (tax included) for every 10 shares to all shareholders. Meanwhile the Company will transfer capital reserve into capital with 1.5 shares for every 10 shares to all shareholders based on 2,484,147,547 shares of the total share capital.
Statement on profit distribution plan and capitalization of capital reserve plan of the Company in 2016: based on 2,075,335,560 shares of the total share capital while dividends will be distributed, distributing cash dividend of RMB 1.00 (tax included) for every 10 shares to all shareholders. Meanwhile the Company will transfer capital reserve into capital with 1.5 shares for every 10 shares to all shareholders based on 2,075,335,560 shares of the total share capital.
Cash dividend in latest three years (including the report period)
CSG Annual Report 2018 Unit: RMB
|||||||||
|-|-|-|-|-|-|-|-|
||||||proportion for|||
||||||cash dividends in||Net profit|
|||Net profit|Ratio in net profit|cash||||
||||||other ways to the||attributable to|
|||attributable to|attributable to|dividend||||
|Year|||||net profit|Amount for|shareholders of|
||Amount for|shareholders of|shareholders of|by other||||
|for|||||attributable to|cash dividend|listed company in|
||cash dividend|listed company in|listed company|ways||||
|bonus|||||ordinary|(including|consolidation|
||(tax included)|consolidation|contained in|(such as||||
|shares|||||shareholders of|other ways)|statement for bonus|
|||statement for|consolidation|repurchase||||
||||||listed companies||year (including|
|||bonus year|statement|shares)||||
||||||in the consolidated||other ways)|
||||||statements|||
|2018|143,163,860|452,965,935|31.61%||0%|143,163,860|31.61%|
|2017|124,207,377|825,388,312|15.05%||0%|124,207,377|15.05%|
|2016|207,533,556|797,721,576|26.02%||0%|207,533,556|26.02%|

 Note:
1. The actual amount of the cash dividend distributed and capital reserve transferred will be determined according to the total share capital on the capital reserved registration date for profit distribution implementation.
2. Dividends from equity incentives for restricted shares are distributed by the company itself.
The Company gains profits in the report period and the retained profit of parent company is positive but no plan of cash dividend proposed
□ Applicable√ Not applicable
II. Proposal of profit distribution preplan or share conversion from capital public reserve in the report period
√Applicable□ Not applicable
|||
|-|-|
|Distributing bonus shares for every 10 shares (share)|-|
|Distributing cash dividend for every 10 shares (tax included) (RMB)|0.5|
|Shares added for every 10-share base (Share)|1|
|Equity base for distribution preplan (share)|2,863,277,201|
|Total amount distribution in cash (RMB) (tax included)|143,163,860|
|Cash dividend amount in other ways (such as repurchasing shares) (RMB)|-|
|Total cash dividends (including other methods) (RMB)|143,163,860|
|Profit available for distribution (RMB)|440,114,948|
|Cash distributing accounted for the proportion of the total amount of profit distribution||
||100%|
|(including other methods)||
|Particular about cash dividend in the period||
|If the Company's development stage is not easy to distinguish but there are major capital expenditure arrangements, when the profit||
|is distributed, the proportion of cash dividends in this profit distribution should be at least 20%.||

CSG Annual Report 2018
||
|-|
|Details of proposal of profit distribution preplan or share conversion from capital public reserve|
|According to the financial report audited by Asia Pacific (Group) CPAs (special general partnership), the net profit attributable to|
|equity holders of the Company in consolidated statement was RMB 452,965,935 and combined capital reserve was 1,095,339,421|
|in 2018.|
|Since cash dividend distribution bases on the distributable profit of parent company, the Company took 10% of the net profit as|
|stationary surplus reserve which was RMB 3,713,043 based on the net profit RMB 37,130,433 of parent company statement 2018.|
|The allocation for Shareholders in 2018 was RMB 440,114,948.|
|The Board of Directors proposed to distribute every shareholder RMB 0.5 (including tax) for each 10 shares based on the amount|
|2,863,277,201 shares, and the total amount distribution is RMB 143,163,860 (including tax), and transfer capital reserve into|
|capital with 1 share for every 10 shares to all shareholders based on 2,863,277,201 shares of the total share capital. With total|
|transferred amount of 286,327,720 shares, the total share capital of the Company will be changed from 2,863,277,201 shares to|
|3,149,604,921 shares. Board of directors consider that this proposal of profit distribution meet the specification of Corporation|
|Law, Accounting Standard for Enterprises and Articles of Association. The actual amount of the cash dividend distributed and|
|capital reserve transferred will be determined according to the total share capital on the capital reserved registration date for profit|
|distribution implementation when the company implements the profit distribution plan. The above profit distribution proposal must|
|be submitted to the 2018 Annual General Meeting of shareholders.|

III. Implementation of commitment
1. Commitments completed by the actual controllers, the shareholders, the related parties, the purchasers, the Company or the other related parties during the report period and thosehadn’t been completed execution by the end of the report period
√Applicable□ Not applicable
||||||||
|-|-|-|-|-|-|-|
|||Type of|||||
|||||Commitment|Commitme|Implementatio|
|Commitments|Promisee||Content of commitments||||
|||commitments||date|nt term|n|
||||The Company has||||
||||implemented share merger||||
||||reform in May 2006. Till||||
||||June 2009, the share of the|||By the end of|
||||original non-tradable|||the report|
||The original||||||
||||shareholders which holding|||period, the|
||non-tradable||||||
||||over 5% total shares of the|||above|
|Commitments|shareholder Shenzhen||||||
||||Company had all released.|||shareholders|
|for|International Holdings|Commitment of|||||
||||Therein, the original|2006-5-22|N/A|of the|
|Share Merger|(SZ) Limited and Xin|share reduction|||||
||||non-tradable shareholder|||Company had|
|Reform|Tong Chan Industrial||||||
||||Shenzhen International|||strictly carried|
||Development||||||
||||Holdings (SZ) Limited and|||out their|
||(Shenzhen) Co., Ltd.||||||
||||Xin Tong Chan Industrial|||promises.|
||||Development (Shenzhen)||||
||||Co., Ltd. both are||||
||||wholly-funded subsidiaries||||
||||to Shenzhen International||||

CSG Annual Report 2018
||||||||
|-|-|-|-|-|-|-|
||||Holdings Limited||||
||||(hereinafter Shenzhen||||
||||International for short)||||
||||listed in Hong Kong united||||
||||stock exchange main board.||||
||||Shenzhen International||||
||||made commitment that it||||
||||would strictly carry out||||
||||related regulations of||||
||||Securities Law,||||
||||Administration of the||||
||||Takeover of Listed||||
||||Companies Procedures and||||
||||Guiding Opinions on the||||
||||Listed Companies’ Transfer||||
||||of Original Shares Released||||
||||from Trading Restrictions||||
||||issued by CSRC during||||
||||implementing share||||
||||decreasingly-held plan and||||
||||take information disclosure||||
||||responsibility timely.||||
||||Foresea Life Insurance Co.,||||
||||Ltd., Shenzhen Jushenghua||||
||||Co., Ltd. and Chengtai||||
||||Group Co., Ltd. issued||||
|||||||By the end of|
||||detailed report of equity||||
||||||During the|the report|
||||change on 29 June 2015, in||||
||||||period|period, the|
|||Commitment of|which, they undertook to||||
||||||when|above|
||Foresea Life|horizontal|keep independent from CSG||||
|Commitments in|||||Foresea|shareholders|
||Insurance Co., Ltd,|competition,|in aspects of personnel,||||
|report of|||||Life|of the|
||Shenzhen Jushenghua|affiliate|assets, finance, organization|2015-6-29|||
|acquisition or|||||remains the|Company had|
||Co., Ltd. and Chengtai|Transaction and|set-up and business as long||||
|equity change|||||largest|strictly carried|
||Group Co., Ltd.|capital|as Foresea Life Insurance||||
||||||shareholder|out their|
|||occupation|remained the largest||||
||||||of the|promises.|
||||shareholder of CSG.||||
||||||Company||
||||Meanwhile, they made||||
||||commitment on regularizing||||
||||related transaction and||||
||||avoiding industry||||
||||competition.||||
|Commitments in|||||||
||Not applicable||||||
|assets|||||||

CSG Annual Report 2018
|||||||
|-|-|-|-|-|-|
|reorganization||||||
|Commitments in||||||
|initial public||||||
||Not applicable|||||
|offering or||||||
|re-financing||||||
|||CSG has promised not to||||
|||||During the||
|||provide loans and other||||
|||||implementa|The|
|||forms of financial assistance||||
|Equity incentive||||tion of the|commitment|
||The listed company|for restricted stocks for the|2017-10-10|||
|commitment||||equity|is in normal|
|||incentive targets under this||||
|||||incentive|performance.|
|||plan, including providing||||
|||||plan||
|||guarantees for their loans.||||
|Other||||||
|commitments||||||
||Not applicable|||||
|for medium and||||||
|small||||||
|shareholders||||||
|Completed on||||||
||Yes|||||
|time(Yes/No)||||||
|If the||||||
|commitments is||||||
|not fulfilled on||||||
||Not applicable|||||
|time, explain the||||||
|reasons and the||||||
|next work plan||||||

2. If there are assets or projects of the Company, which has profit forecast and the report period is still in forecasting period, the Company should explain reasons why they reach the original profit forecast
□ Applicable√ Not applicable
IV. Particular about non-operating fund of listed company which is occupied by controlling shareholder and its affiliated enterprises
□ Applicable√ Not applicable
There was no non-operating fund of listed company which is occupied by controlling shareholder and its affiliated enterprises in the report period.
V. Explanation from Board of Directors, Supervisory Committee and Independent Directors (if applicable) for “Non-standard audit report” of the period that issued by CPA
□ Applicable√ Not applicable
CSG Annual Report 2018 VI. Particulars about the changes in aspects of accounting policy, accounting estimate and calculation method compared with the financial report of last year
√Applicable□ Not applicable
On October 29, 2018, the 7th meeting of the 8th Board of Directors reviewed and approved the “Proposal on Changes in Accounting Policies”. This accounting policy change was issued on June 15, 2018, according to the Ministry of Finance. Notice of the Financial Statement Format of the Enterprise (Accounting (2018) No. 15), the revision of the financial statement format of the general enterprise. According to the notification requirements, the company adjusted the relevant content of the accounting policy accordingly. The company's “Accounts receivable”, “Notes receivable”, “Accounts payable”, “Notes payable”, “Dividends receivable”, “Interest receivable” and “Interest payable” "Dividends payable", "Fixed assets", "Fixed assets", "Engineering materials", "Construction in progress", "Special payables", "long-term payables", "management expenses", "financial expenses", etc. on the original balance sheet and income statement,. Subjects are subject to adjustments and will be implemented in accordance with the relevant provisions of the Ministry of Finance's Notice on Amending the 2018 Annual General Financial Statement Format. Others are still implemented in accordance with the Enterprise Accounting Standards - Basic Standards promulgated by the Ministry of Finance and the specific accounting standards, application guidelines for business accounting standards, corporate accounting standards interpretation announcements and other relevant regulations.
The Company has conducted necessary communication with the accounting firm on this matter.
VII. Description of major accounting errors within report period that need retrospective restatement
□ Applicable√ Not applicable
There were no major accounting errors within report period that need retrospective restatement.
VIII. Description of changes in consolidationstatement’s scope compared with the financial report of last year
√Applicable□ Not applicable
On February 11, 2018, the group established Qingyuan CSG quartz material Co., Ltd. As of December 31, 2018, the group has made a monetary capital contribution of 6 million yuan, and the group holds100% of its shares.
On March 30, 2018, the group established Dongguan CSG Jingyu new material Co., Ltd. As of December 31, 2018, the group has made a monetary capital contribution of 24 million yuan, and the group holds80% of its shares.
On May 22, 2018, the group set up Changshu CSG new energy Co., Ltd. As of December 31, 2018, the group has not invested, and the group holds100% of its shares.
IX. Engaging and dismissing of CPA firm
CPA firm engaged
|||
|-|-|
|Name of domestic CPA firm|Asia Pacific (Group) CPAs (special general partnership)|
|Remuneration for domestic CPA firm (RMB 0,000)|300|
|Continuous life of auditing service for domestic CPA firm|1|
|Name of domestic CPA|Zhao Qingjun, Zhou Xianhong|
|Continuous life of auditing service for domestic CPA|1|

CSG Annual Report 2018 Whether changed accounting firms in this period or not
□ Yes√No
Whether changed the accounting firm during the audit period or not
□ Yes√No
Appointment of internal control auditing accounting firm, financial consultant or sponsor
√Applicable□ Not applicable
Asia Pacific (Group) CPAs (special general partnership) was engaged as audit institute of internal control for the Company in the report period, and contracted charges was RMB 0.30 million (not including traveling and accommodation expenses).
X. Particular about the Company suspended from the stock market listing and delisting after the disclosure of the annual report
□ Applicable√ Not applicable
XI. Issues related to bankruptcy and reorganization
□ Applicable√ Not applicable
XII. Significant lawsuits and arbitrations
□ Applicable√ Not applicable
XIII. Penalty and rectification
□ Applicable√ Not applicable
XIV. Integrity of the Company and its controlling shareholders and actual controllers
□ Applicable√ Not applicable
XV. Implementation of theCompany’s stock incentive plan, employee stock ownership plan or other employee incentives
√Applicable□ Not applicable
On Oct. 10, 2017, the 3rd Meeting of the 8th Board of Directors of the Company deliberated and approved 2017 Restricted A- shares Incentive Plan of CSG Holding Co., Ltd (Draft )and its summary, the Management Method of the Implementation and Review of 2017 Restricted A-shares Incentive Plan of CSG Holding Co., Ltd and the Resolution on Applying the General Meeting of Shareholders to Authorize the Board of Directors to Deal With the Related Matters on theCompany’s 2017 Restricted A-shares Incentive Plan. The above contents are detailed in the Announcement of the Resolution on the Third Meeting of the Eighth Session of the Board of Directors published in www.cninfo.com.cn Oct.11, 2017. (Announcement No.: 2017-063). TheCompany’s independent directors issued independent opinions on the issues involved with restricted A- shares incentive plan.
On Oct. 26, 2017, the Company convened the 5th Extraordinary General Meeting in 2017, which deliberated and approved the above three proposals. The Resolution on Adjusting the Object and Quantity Granted of 2017 Restricted A-share Incentive Plan and the
CSG Annual Report 2018 Resolution on Firstly Granted Restricted Shares to the Object of 2017 Restricted A-share were deliberated and approved on the 21stprovisional meeting of the eighth session board of directors convened on Dec. 11th, 2017. It determined to grant 97,511,654 restricted shares to 454 objects on Dec. 11, 2017, with price at RMB4.28/share. The reserved restricted shares was 17,046,869 shares. The granting of shares was completed on Dec. 25, 2017 and the specific content was detailed in the Announcement on Completing the First Granting of 2017 Restricted Shares disclosed in www.cninfo.com.cn on Dec. 22, 2017 (Announcement No.:2017-079). On July 20, 2018, the company held the extraordinary meeting of the 8th Board of Directors and the extraordinary meeting of the 8th Board of Supervisors, and reviewed and approved the Proposal on Repurchase and Restricting Partially Restricted Stocks of Restricted Stock Incentive Plan. The independent director of the company issued a consent. Opinions; and on August 6, 2018, the second extraordinary shareholders meeting in 2018 was approved. As of September 10, 2018, the company has completed the cancellation procedures for the above-mentioned restricted stocks at China Securities Depository and Clearing Co., Ltd. Shenzhen Branch. The total number of shares of the company was changed from 2,856,769,678 shares to 2,853,450,621 shares.
On September 13, 2018, the company convened an extraordinary meeting of the 8th Board of Directors and an ad hoc meeting of the 8th Board of Supervisors, and reviewed and approved the Proposal on Granting Restricted Stocks to the 2017 Restricted Stock Incentive Plan for Incentive Objects. The grant date for the second reserved restricted stock was September 13, 2018, and the company agreed to grant a total of 9,826,580 reserved restricted stocks to 75 incentive targets at a price of 3.68 yuan/share. The independent directors have issued independent opinions on the above proposal, and the company's supervisory board has once again verified the list of incentive targets on the grant date. The shares granted have been registered in the Shenzhen Branch of China Registration and Clearing Corporation and listed on September 28, 2018. The total number of shares of the company has changed from 2,853,450,621 shares to 2,863,277,201 shares.
On December 12, 2018, the company held the extraordinary meeting of the 8th Board of Directors and the extraordinary meeting of the 8th Board of Supervisors, and reviewed and approved the Proposal on Repurchase and Restricting Partially Restricted Stocks of Restricted Stock Incentive Plan, and reviewed and agreed to repurchase 8 people who have not achieve the requirment and write off. The total number of all restricted stocks that were not eligible for the original incentives but not yet released was limited to 436,719 shares, and was approved by the third extraordinary general meeting of 2018 on December 28, 2018. The above restricted stock has not completed the cancellation procedure.
On December 12, 018, the company held the extraordinary meeting of the 8th Board of Directors and the 8th Extraordinary Meeting of the Board of Supervisors, and reviewed and approved the first release of the company's 2017 A-share restricted stock incentive plan for the first time. In addition to the fact that the eight incentive targets have not been able to lift the restrictions on sales, the total number of incentives for the conditions for lifting the restrictions is 431, and the number of restricted stocks that can be unlocked is 43,353,050 shares, accounting for the current company.1.51% of the total share capital. The board of supervisors, independent directors, and law firms issued separate opinions. The date of the restricted stock release date is December 21, 2018.
According to the relevant provisions of the "Accounting Standards for Business Enterprises", the implementation of the Company's restricted stock will have a certain impact on the Company's financial status and operating results in the next few years. The results are based on the annual audit report issued by the accounting firm.
XVI. Major related transaction
1. Related transaction with routine operation concerned
□ Applicable√ Not applicable
There was no related transaction with routine operation concerned in the report period.
CSG Annual Report 2018 2. Related transaction with acquisition of assets or equity, sales of assets or equity concerned
□ Applicable√ Not applicable
There was no related transaction with acquisition of assets or equity, sales of assets or equity concerned in the report period. 3. Related transaction with jointly external investment concerned
□ Applicable√ Not applicable
There was no related transaction with jointly external investment concerned in the report period.
4. Credits and liabilities with related parties
□ Applicable√ Not applicable
There were no credits and liabilities with related parties in the report period.
5. Other major related transaction
□ Applicable√ Not applicable
There was no other major related transaction in the report period.
XVII. Significant contracts and their implementation
1. Trusteeship, contracting and leasing
(1) Trusteeship
□ Applicable√ Not applicable
No trusteeship for the Company in the report period.
(2) Contract
□ Applicable√ Not applicable
No contract for the Company in the report period.
(3) Leasing
□ Applicable√ Not applicable
No leasing for the Company in the report period.
2. Major guarantees
√Applicable□ Not applicable
CSG Annual Report 2018 (1) Guarantee
Unit: RMB 0,000
||||||||||
|-|-|-|-|-|-|-|-|-|
|Particulars about the external guarantee of the Company (Barring the guarantee for subsidiaries)|||||||||
|||||||||Guarante|
||Related||||||||
||||Actual date of||||Complete|e for|
||Announce|||Actual|||||
|Name of the Company||Guarantee|happening (Date||Guarantee|Guarantee|implemen|related|
||ment|||guarantee|||||
|guaranteed||limit|of signing||type|term|tation or|party|
||disclosure|||limit|||||
||||agreement)||||not|(Yes or|
||date||||||||
|||||||||no)|
|Guarantee of the Company for the subsidiaries|||||||||
|||||||||Guarante|
||Related||||||||
||||Actual date of||||Complete|e for|
||Announce|||Actual|||||
|Name of the Company||Guarantee|happening (Date||Guarantee|Guarantee|implemen|related|
||ment|||guarantee|||||
|guaranteed||limit|of signing||type|term|tation or|party|
||disclosure|||limit|||||
||||agreement)||||not|(Yes or|
||date||||||||
|||||||||no)|
|Chengdu CSG Glass|||||Joint liability||||
||2017-7-31|5,000|2017-8-16|5,000||1 year|Yes|No|
|Co.,Ltd.|||||guarantee||||
|Dongguan CSG|||||||||
||||||Joint liability||||
|Architectural Glass|2017-7-31|11,200|2017-8-11|10,000||1 year|Yes|No|
||||||guarantee||||
|Co., Ltd.|||||||||
|Dongguan CSG|||||||||
||||||Joint liability||||
|Architectural Glass|2017-1-13|18,000|2017-2-9|13,000||1 year|Yes|No|
||||||guarantee||||
|Co., Ltd.|||||||||
|Xianning CSG Glass|||||Joint liability||||
||2017-7-31|7,000|2017-8-11|2,000||1 year|Yes|No|
|Co., Ltd.|||||guarantee||||
|Xianning CSG Glass|||||Joint liability||||
||2017-7-31|10,000|2017-9-12|1,000||1 year|Yes|No|
|Co., Ltd.|||||guarantee||||
|Sichuan CSG Energy|||||||||
||||||Joint liability||||
|Conservation Glass|2017-7-31|7,000|2017-8-11|2,000||1 year|Yes|No|
||||||guarantee||||
|Co., Ltd.|||||||||
|Sichuan CSG Energy|||||||||
||||||Joint liability||||
|Conservation Glass|2017-1-23|5,000|2017-4-11|2,000||1 year|Yes|No|
||||||guarantee||||
|Co., Ltd.|||||||||
|Wujiang CSG Glass|||||Joint liability||||
||2016-8-12|10,000|2017-3-7|5,000||1 year|Yes|No|
|Co., Ltd.|||||guarantee||||
|Wujiang CSG Glass|||||Joint liability||||
||2017-11-27|10,000|2017-11-30|3,000||1 year|Yes|No|
|Co., Ltd.|||||guarantee||||
|Wujiang CSG East|||||||||
||||||Joint liability||||
|China Architectural|2016-8-12|10,000|2017-4-28|6,000||1 year|Yes|No|
||||||guarantee||||
|Glass Co., Ltd.|||||||||
|Wujiang CSG East|||||Joint liability||||
||2017-11-27|10,000|2017-11-30|3,000||1 year|Yes|No|
|China Architectural|||||guarantee||||

CSG Annual Report 2018
||||||||||
|-|-|-|-|-|-|-|-|-|
|Glass Co., Ltd.|||||||||
|Wujiang CSG East|||||||||
||||||Joint liability||||
|China Architectural|2017-7-31|10,000|2017-9-14|10,000||1 year|Yes|No|
||||||guarantee||||
|Glass Co., Ltd.|||||||||
|Dongguan CSG Solar|||||Joint liability||||
||2017-7-31|15,000|2017-8-11|2,800||1 year|Yes|No|
|Glass Co., Ltd.|||||guarantee||||
|Yichang Nanbo|||||Joint liability||||
||2017-5-31|3,648|2017-6-2|3,600||1 year|Yes|No|
|Display Co., Ltd.|||||guarantee||||
|Tianjin CSG|||||||||
||||||Joint liability||||
|Energy-Saving Glass|2016-8-12|10,000|2017-2-14|2,000||1 year|Yes|No|
||||||guarantee||||
|Co., Ltd.|||||||||
|Dongguan CSG|||||Joint liability||||
||2017-5-22|15,000|2017-6-15|4,680||1 year|Yes|No|
|PV-tech Co., Ltd.|||||guarantee||||
|Yichang CSG|||||Joint liability||||
||2017-8-7|6,600|2017-8-25|4,000||1 year|Yes|No|
|Polysilicon Co., Ltd.|||||guarantee||||
|Yichang CSG|||||Joint liability||||
||2017-6-23|30,000|2017-7-10|5,000||1 year|Yes|No|
|Polysilicon Co., Ltd.|||||guarantee||||
|Qingyuan CSG New|||||||||
||||||Joint liability||||
|Energy-Saving|2017-9-15|5,000|2017-9-22|2,495||1 year|Yes|No|
||||||guarantee||||
|Materials Co., Ltd.|||||||||
|Zhanjiang CSG New|||||Joint liability||||
||2017-7-31|9,000|2017-9-26|7,650||3 years|No|No|
|Energy Co., Ltd.|||||guarantee||||
|Xianning CSG|||||||||
||||||Joint liability||||
|Photovoltaic Glass|2016-8-12|30,000|2017-1-3|19,000||3 years|No|No|
||||||guarantee||||
|Co., Ltd.|||||||||
|Xianning CSG|||||||||
||||||Joint liability||||
|Photovoltaic Glass|2017-7-31|20,000|2017-9-7|8,300||3 years|No|No|
||||||guarantee||||
|Co., Ltd.|||||||||
|Yichang Nanbo|||||||||
||||||Joint liability||||
|Photoelectric Glass|2017-5-22|5,472|2017-5-26|5,400||3 years|No|No|
||||||guarantee||||
|Co., Ltd.|||||||||
|Yichang Nanbo|||||||||
||||||Joint liability||||
|Photoelectric Glass|2016-12-14|2,432|2017-5-23|2,400||1 year|Yes|No|
||||||guarantee||||
|Co., Ltd.|||||||||
|Yichang Nanbo|||||||||
||||||Joint liability||||
|Photoelectric Glass|2017-5-22|10,032|2017-5-31|5,549||3 years|No|No|
||||||guarantee||||
|Co., Ltd.|||||||||
|Yichang CSG|||||Joint liability||||
||2017-5-22|20,000|2017-6-22|9,928||3 years|No|No|
|Polysilicon Co., Ltd.|||||guarantee||||

CSG Annual Report 2018
||||||||||
|-|-|-|-|-|-|-|-|-|
|Dongguan CSG|||||Joint liability||||
||2017-11-27|20,000|2017-12-20|13,681||3 years|No|No|
|PV-tech Co., Ltd.|||||guarantee||||
|Wujiang CSG Glass|||||Joint liability||||
||2017-8-28|30,000|2017-9-13|20,000||3 years|No|No|
|Co., Ltd.|||||guarantee||||
|Xianning CSG Glass|||||Joint liability||||
||2017-8-28|25,000|2017-9-18|14,583||3 years|No|No|
|Co., Ltd.|||||guarantee||||
|Dongguan CSG Solar|||||Joint liability||||
||2017-8-7|20,000|2017-9-22|16,500||3 years|No|No|
|Glass Co., Ltd.|||||guarantee||||
|Yichang CSG|||||Joint liability||||
||2017-6-23|20,000|2017-6-28|11,214||3 years|No|No|
|Polysilicon Co., Ltd.|||||guarantee||||
|Sichuan CSG Energy|||||||||
||||||Joint liability||||
|Conservation Glass|2017-9-25|15,000|2017-9-30|8,750||3 years|No|No|
||||||guarantee||||
|Co., Ltd.|||||||||
|Hebei CSG Glass Co.,|||||Joint liability||||
||2017-10-10|20,000|2017-10-30|13,679||3 years|No|No|
|Ltd.|||||guarantee||||
|Chengdu CSG Glass|||||Joint liability||||
||2017-9-25|20,000|2017-9-28|12,828||3 years|No|No|
|Co.,Ltd.|||||guarantee||||
|Wujiang CSG Glass|||||Joint liability||||
||2017-11-27|10,000|2017-11-30|3,000||1 year|Yes|No|
|Co., Ltd.|||||guarantee||||
|Dongguan CSG|||||||||
||||||Joint liability||||
|Architectural Glass|2017-1-13|18,000|2017-2-9|13,000||1 year|Yes|No|
||||||guarantee||||
|Co., Ltd.|||||||||
|Wujiang CSG Glass|||||Joint liability||||
||2017-8-28|10,000|2017-9-20|2,000||1 year|Yes|No|
|Co., Ltd.|||||guarantee||||
|Wujiang CSG Glass|||||Joint liability||||
||2017-11-27|10,000|2017-11-30|1,000||1 year|Yes|No|
|Co., Ltd.|||||guarantee||||
|Wujiang CSG East|||||||||
||||||Joint liability||||
|China Architectural|2017-11-27|10,000|2017-11-30|1,000||1 year|Yes|No|
||||||guarantee||||
|Glass Co., Ltd.|||||||||
|Yichang CSG|||||Joint liability||||
||2017-6-23|30,000|2017-7-10|5,000||1 year|Yes|No|
|Polysilicon Co., Ltd.|||||guarantee||||
|Wujiang CSG Glass|||||Joint liability||||
||2017-8-28|10,000|2017-9-20|5,000||1 year|Yes|No|
|Co., Ltd.|||||guarantee||||
|Wujiang CSG East|||||Joint liability||||
|China Architectural|2017-11-27|10,000|2017-11-30|2,000|guarantee|1 year|Yes|No|
|Glass Co., Ltd.|||||||||
|Chengdu CSG Glass|||||Joint liability||||
||2017-5-22|5,000|2018-4-2|4,500||1 year|No|No|
|Co.,Ltd.|||||guarantee||||
|Sichuan CSG Energy|2017-5-2|5,000|2018-4-8|2,700|Joint liability|1 year|No|No|

CSG Annual Report 2018
||||||||||
|-|-|-|-|-|-|-|-|-|
|Conservation Glass|||||guarantee||||
|Co., Ltd.|||||||||
|Wujiang CSG Glass|||||Joint liability||||
||2017-11-27|10,000|2018-3-7|2,000||1 year|Yes|No|
|Co., Ltd.|||||guarantee||||
|Chengdu CSG Glass|||||Joint liability||||
||2018-7-21|6,500|2018-8-10|4,500||1 year|No|No|
|Co.,Ltd.|||||guarantee||||
|Xianning CSG Glass|||||Joint liability||||
||2017-7-31|7,000|2017-8-11|2,000||1 year|Yes|No|
|Co., Ltd.|||||guarantee||||
|Wujiang CSG Glass|||||Joint liability||||
||2018-3-9|10,000|2018-6-28|3,500||1 year|No|No|
|Co., Ltd.|||||guarantee||||
|Wujiang CSG Glass|||||Joint liability||||
||2017-8-28|10,000|2017-9-20|1,000||1 year|Yes|No|
|Co., Ltd.|||||guarantee||||
|Wujiang CSG Glass|||||Joint liability||||
||2018-8-11|10,000|2018-9-11|8,000||1 year|No|No|
|Co., Ltd.|||||guarantee||||
|Wujiang CSG Glass|||||Joint liability||||
||2018-8-11|5,000|2018-11-30|2,551||1 year|No|No|
|Co., Ltd.|||||guarantee||||
|Dongguan CSG Solar|||||Joint liability||||
||2017-11-27|3,200|2018-6-14|3,000||1 year|No|No|
|Glass Co., Ltd.|||||guarantee||||
|Tianjin CSG|||||||||
||||||Joint liability||||
|Energy-Saving Glass|2018-4-9|5,000|2018-6-22|2,000||1 year|No|No|
||||||guarantee||||
|Co., Ltd.|||||||||
|Wujiang CSG East|||||||||
||||||Joint liability||||
|China Architectural|2017-11-27|10,000|2017-11-30|1,000||1 year|Yes|No|
||||||guarantee||||
|Glass Co., Ltd.|||||||||
|Xianning CSG|||||||||
||||||Joint liability||||
|Energy-Saving Glass|2017-7-31|7,000|2017-8-11|3,000||1 year|Yes|No|
||||||guarantee||||
|Co., Ltd.|||||||||
|Dongguan CSG|||||||||
||||||Joint liability||||
|Architectural Glass|2018-7-21|11,200|2018-8-10|4,000||1 year|No|No|
||||||guarantee||||
|Co., Ltd.|||||||||
|Dongguan CSG|||||||||
||||||Joint liability||||
|Architectural Glass|2018-8-11|18,000|2018-10-30|18,000||1 year|No|No|
||||||guarantee||||
|Co., Ltd.|||||||||
|Dongguan CSG|||||||||
||||||Joint liability||||
|Architectural Glass|2018-7-21|11,200|2018-8-10|2,145||1 year|No|No|
||||||guarantee||||
|Co., Ltd.|||||||||
|Xianning CSG Glass|||||Joint liability||||
||2018-7-21|5,000|2018-8-10|3,000||1 year|No|No|
|Co., Ltd.|||||guarantee||||
|Hebei Shichuang|2018-7-21|1,500|2018-8-10|638|Joint liability|1 year|No|No|

CSG Annual Report 2018
||||||||||
|-|-|-|-|-|-|-|-|-|
|Glass Co., Ltd.|||||guarantee||||
|China Southern Glass|||||Joint liability||||
||2018-7-21|6,572|2018-8-10|6,572||1 year|No|No|
|(Hong Kong) Ltd.|||||guarantee||||
|Sichuan CSG Energy|||||||||
||||||Joint liability||||
|Conservation Glass|2018-7-21|6,500|2018-8-10|2,000||1 year|No|No|
||||||guarantee||||
|Co., Ltd.|||||||||
|Sichuan CSG Energy|||||||||
||||||Joint liability||||
|Conservation Glass|2018-7-21|6,500|2018-8-10|1,932||1 year|No|No|
||||||guarantee||||
|Co., Ltd.|||||||||
|Wujiang CSG East|||||||||
||||||Joint liability||||
|China Architectural|2018-8-11|10,000|2018-09-11|6,000||1 year|No|No|
||||||guarantee||||
|Glass Co., Ltd.|||||||||
|Dongguan CSG Solar|||||Joint liability||||
||2018-7-21|15,000|2018-8-10|3,200||1 year|No|No|
|Glass Co., Ltd.|||||guarantee||||
|Dongguan CSG Solar|||||Joint liability||||
||2018-7-21|15,000|2018-8-10|693||1 year|No|No|
|Glass Co., Ltd.|||||guarantee||||
|Tianjin CSG|||||||||
||||||Joint liability||||
|Energy-Saving Glass|2018-7-21|2,000|2018-8-10|2,000||1 year|No|No|
||||||guarantee||||
|Co., Ltd.|||||||||
|Dongguan CSG|||||Joint liability||||
||2018-7-3|20,000|2018-8-21|5,527||1 year|No|No|
|PV-tech Co., Ltd.|||||guarantee||||
|Qingyuan CSG New|||||||||
||||||Joint liability||||
|Energy-Saving|2018-8-11|4,330|2018-10-23|1,910||1 year|No|No|
||||||guarantee||||
|Materials Co., Ltd.|||||||||
|Yichang Nanbo|||||||||
||||||Joint liability||||
|Photoelectric Glass|2018-7-21|1,520|2018-09-26|100||1 year|No|No|
||||||guarantee||||
|Co., Ltd.|||||||||
|Xianning CSG|||||||||
||||||Joint liability||||
|Energy-Saving Glass|2018-7-21|5,000|2018-8-10|2,000||1 year|No|No|
||||||guarantee||||
|Co., Ltd.|||||||||
|Dongguan CSG|||||Joint liability||||
||2017-5-22|10,500|2017-6-15|5||3 years|Yes|No|
|PV-tech Co., Ltd.|||||guarantee||||
|||||Total amount of actual|||||
|Total amount of approving|||||||||
|||||occurred guarantee for|||||
|guarantee for subsidiaries in report||312,621||||387,510|||
|||||subsidiaries in report period|||||
|period (B1)|||||||||
|||||(B2)|||||
|||||Total balance of actual|||||
|Total amount of approved|||||||||
|||||guarantee for subsidiaries at|||||
|guarantee for subsidiaries at the||453,526||||257,530|||
|||||the end of reporting period|||||
|end of reporting period (B3)|||||||||
|||||(B4)|||||

CSG Annual Report 2018
|||||
|-|-|-|-|
|Total amount of guarantee of the Company( total of three abovementioned guarantee)||||
|Total amount of approving||Total amount of actual||
|guarantee in report period|312,621|occurred guarantee in report|387,510|
|(A1+B1+C1)||period (A2+B2+C2)||
|Total amount of approved||Total balance of actual||
|guarantee at the end of report|453,526|guarantee at the end of|257,530|
|period (A3+B3+C3)||report period (A4+B4+C4)||
|The proportion of the total amount of actual guarantee in the net||||
|||28.29%||
|assets of the Company(that is A4+ B4+C4)||||
|Including:||||
|Total amount of the aforesaid three guarantees(D+E+F)||||
|Amount of guarantee for shareholders, actual controller and its||||
|related parties(D)||||
|The debts guarantee amount provided for the guaranteed parties||||
|whose assets-liability ratio exceed 70% directly or indirectly(E)||||
|Proportion of total amount of guarantee in net assets of the||||
|Company exceed 50%(F)||||
|Total amount of the aforesaid three guarantees(D+E+F)||||
|Explanations on possibly bearing joint and several liquidating||||
|||Nil||
|responsibilities for undue guarantees (if any)||||
|Explanations on external guarantee against regulated procedures||||
|||Nil||
|（if any）||||
|||The total Guarantee limit was 3,126.21million in the reporting||
|||period, and the new Guarantee limit was 1,758.22million, the||
|Explanations on Guarantee of the Company for the subsidiaries||||
|||Company and one of subsidiary Yichang CSG Polysilicon Co.,||
|||Ltd. jointly guaranteed for Dongguan CSG PV-tech Co., Ltd.||

 (2) Illegal external guarantee
□ Applicable√ Not applicable
No Illegal external guarantee in the report period.
3. Entrust others to manage cash assets
(1) Entrusted Financing
√Applicable□ Not applicable
Overview of Entrusted Financing in the report period
Unit: RMB 0,000
||||||
|-|-|-|-|-|
|||||Overdue outstanding|
|Type|Sources of funds|Amount of occurrence|Unexpired balance||
|||||amount|

CSG Annual Report 2018
||||||
|-|-|-|-|-|
|||||Overdue outstanding|
|Type|Sources of funds|Amount of occurrence|Unexpired balance||
|||||amount|
|Bank financial products|Own funds|117,000|||
|Brokerage financial|||||
||Own funds|65,000|||
|products|||||
|Total||182,000|||

The specific circumstances of high-risk entrusted financing with large individual amount or low security, poor liquidity, and no cost protection
□ Applicable√ Not applicable
Entrusted financing appears to be unable to recover the principal or there may be other circumstances that may result in impairment□ Applicable√ Not applicable
(2) Entrusted loans
√ Applicable□ Not applicable
Unit: RMB 0,000
|||||
|-|-|-|-|
|Accrued of loan|Amount of loan|Unexpired balance|Overdue outstanding amount|
|30,000|Own funds|30,000||

Note：Mar.22.2019，Above loans capital and income has been withdrew.
The specific circumstances of high-risk entrusted loan with large individual amount or low security, poor liquidity, and no cost protection
□ Applicable√ Not applicable
Entrusted loan appears to be unable to recover the principal or there may be other circumstances that may result in impairment□ Applicable√ Not applicable
4. Other material contracts
□ Applicable√ Not applicable
No other material contracts for the Company in the report period.
XVIII. Social responsibilities
1. Performance of social responsibilities
2018 Annual Social Responsibilities Report of CSG was the 11th year the Company consecutively released social responsibilities report. The report emphasized the year of 2018, systemically formulated the Company concrete actions of how to positively perform the social responsibilities, and the efforts to implement the scientific development perspective, build a harmonious society, and
advance the sustainable development of economic and society. See the full report on www.cninfo.com.cn.
CSG Annual Report 2018 2. Circumstances related to environmental protection
Whether the listed company and its subsidiaries belong to the key pollutant discharge units announced by the environmental protection department
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
||Name of||||||||||
||major||||||||||
|Name of|pollutants||Number|||Implementation|||||
||||||||||Approved||
|Company|and|Way of|of|Exhaust vent|Emission|of pollutant||||Excessive|
|||||||||Total emission|total||
|or|characteris|emission|Exhaust|distribution|concentration|emission||||emissions|
||||||||||emission||
|subsidiary|tic||vent|||standards|||||
||contamina||||||||||
||nts||||||||||
|||Dischargeafter thetreatment ofdenitrificationand dustremoval|16|Chimney,Exhaust vent|Dust≤30mg/m³；Soot≤40 mg/m³；SO ≤300 mg/m³；2NOx≤350 mg/m³；|《Emission|||||
||||||||||Particulates：||
|||||||standard of air|||||
||Dust\Soot\|||||||Particulates:39.8|96.82t/a；||
|Xianning||||||pollutants for||||Reach the|
||SO\2|||||||1t；SO:636.5t；2|SO:636.5t/a2||
|CSG Glass||||||flat glass||||discharge|
||Nitrogen|||||||NOx:1113.89t/a|Nitrogen||
|Co., Ltd.||||||industry》||||standard|
||oxide|||||||；|oxides：||
|||||||(GB26453-2011|||||
||||||||||1113.89t/a||
|||||||)|||||
|||||||《Emission|||||
|||Discharge|||||||Particulates：||
|||||||standard of air|||||
||dust＼soot|after the|||dust≤30mg/m³；||||129.395t/a；||
|Chengdu||||||pollutants for||Particulates:72.4||Reach the|
||＼SO2＼|treatment of||chimney,|soot≤30mg/m³；||||SO2:1035.1||
|CSG Glass|||15|||flat glass||t；SO2: 791.3t；||discharge|
||Nitrogen|denitrification||exhaust vent|SO2≤304mg/m³；||||62t/a；NOx：||
|Co., Ltd||||||industry》||NOx :920.7t。||standard|
||oxide|and dust|||NOx≤350mg/m³。||||1811.536t/a||
|||||||(GB26453-2011|||||
|||removal|||||||。||
|||||||)|||||
|||||||《Emission|||||
|||Discharge|||||||||
|||||||standard of air|||||
|||after|||||||Particulates：||
||Particulate||||dust≤30mg/m³；|pollutants for|||||
|Hebei||denitrification,||||||Particulates:7.4t|59.78t/a；|Reach the|
||s＼SO2＼|||chimney,|soot≤30mg/m³；|flat glass|||||
|CSG Glass||desulfurizatio|10|||||；SO2:37.4t；|SO2:498.18t|discharge|
||Nitrogen|||exhaust vent|SO2≤304mg/m³；|industry》|||||
|Co., Ltd.||n and dust||||||NOx :176.6t。|/a；NOx：|standard|
||oxide||||NOx≤350mg/m³。|DB13/2168-201|||||
|||removal|||||||982.2t/a。||
|||||||5|Hebei local||||
|||treatment|||||||||
|||||||standard|||||
|||||||《Emission|||||
|Qingyuan||Discharge|||||||||
|||||||standard of air|||||
|CSG New||after the|||||||SO2:15.228t||
||SO2＼|||||pollutants for||||Reach the|
|Energy-Sa||treatment of||chimney,|SO2≤20mg/m³；|||SO2: 5t；|/a；||
||Nitrogen||4|||flat glass||||discharge|
|ving||denitrification||exhaust vent|NOx≤200mg/m³。|||NOx :34.6t。。|NOx :110.28||
||oxide|||||industry》||||standard|
|Materials||and dust|||||||t/a。||
|||||||(GB26453-2011|||||
|Co., Ltd||removal|||||||||
|||||||)|||||
|Yichang|PH\COD\|Discharged to|3|Sewage vent|PH:6-9；|《Sewage||COD：37.5t；|COD：|Reach the|

CSG Annual Report 2018
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|CSG|Ammonia|the sewage|||COD≤500mg/L；|Integrated|Ammonia|198.47t/a；|discharge|
|Polysilico|nitrogen\F|treatment|||Fluoride≤10|Emission|nitrogen：0.29t。|Ammonia|standard|
|n Co., Ltd|luoride|plant after|||mg/L。|Standards》Level||nitrogen：||
|||being treated||||3 Standard||2.49t/a。||
|||by the||||(GB8978-1996)||||
|||Company's||||，Fluoride||||
|||sewage||||implementation||||
|||treatment||||of primary||||
|||station.||||standards||||
|WujiangCSG GlassCo., Ltd||||||《Emission||||
|||Discharge||||||||
|||||||standard of air||Particulates：||
||Particulate|after the|||Particulates≤40mg||Particulates：|||
|||||||pollutants for||76.91t/a；|Reach the|
||s＼SO2＼|treatment of||chimney,|/m³；SO2≤200||69.8t；|||
||||39|||flat glass||SO2:238.28t|discharge|
||Nitrogen|denitrification||exhaust vent|mg/m³；NOx≤300||SO2:66.5t；|||
|||||||industry》||/a；NOx：|standard|
||oxide|and dust|||mg/m³。||NOx :339t。|||
|||||||(GB26453-2011||818.04t/a。||
|||removal||||||||
|||||||)||||
|||||||《Emission||||
|||Discharge||||||||
|||||||standard of air||Particulates：||
|Dongguan||after the|||dust≤5mg/m³；|||||
||dust\soot\|||||pollutants for|Particulates8.8t；|34.85t/a；|Reach the|
|CSG Solar||treatment of||chimney,|soot≤10 mg/m³；|||||
||SO2\Nitro||22|||flat glass|SO2: 264.9t；|SO2:300.99t|discharge|
|Glass Co.,||denitrification||exhaust vent|SO2≤400 mg/m³；|||||
||gen oxide|||||industry》|NOx :511t。|/a；NOx：|standard|
|Ltd.||and dust|||NOx≤650 mg/m³。|||||
|||||||(GB26453-2011||535.67t/a。||
|||removal||||||||
|||||||)||||
|||Discharged to||||||||
|||||||《Guangdong||||
|||the sewage||||||||
|||||||Province water||||
|||treatment||||||||
|Dongguan|||||pH：6~9COD≤16|pollutant||||
||pH＼COD|plant after||||||COD:5.4t/a；||
|CSG|||||mg/L；mg/L；|emission limit》|COD:1.33t；||Reach the|
||＼|being treated||||||Ammonia||
|Architectu|||1|Sewage vent|Ammonia|（DB44/26-200|Ammonia||discharge|
||Ammonia|by the||||||nitrogen:0.6t||
|ral Glass|||||nitrogen≤0.784|1）Second period|nitrogen:0.02t。||standard|
||nitrogen|Company's||||||/a。||
|Co., Ltd.|||||mg/L。|first-level||||
|||sewage||||||||
|||||||emission||||
|||treatment||||||||
|||||||standard||||
|||station.||||||||
||waste|The|||waste water：|《Guangdong|waste water：|waste||
||water：|wastewater is|||SS≤50mg/L；|Province water|COD：4.39t；|water：||
||Fluoride＼|discharged|||COD≤70 mg/L；|pollutant|Ammonia|COD：||
|Dongguan|COD＼|after being|sewage：||Ammonia|emission limit》|nitrogen：0.58t；|14.04t/a；||
|||||Sewage|||||Reach the|
|CSG|Ammonia|treated by the|2，||nitrogen≤10mg/L；|（DB44/26-200|Fluoride：0.44t;|Ammonia||
|||||vent，|||||discharge|
|PV-tech|nitrogen：|sewage|exhaust:||Fluoride≤8mg/L；|1）Second period|exhuast：|nitrogen：||
|||||exhaust vent|||||standard|
|Co., Ltd.|HF＼NOx|station, and|18||exhaust：|first level|Nitrogen oxide：|1.56t/a；||
||＼HCI＼|the exhaust|||NOx≤30mg/m3；|standard；|17.62t；|Fluoride：||
||CL2＼|gas is|||HF≤3 mg/m3；|《Battery|Fluoride：1.02t；|1.56t/a；||
||NH3＼|discharged|||CL2≤5mg/m3；|industry|Hydrogen|exhaust：||

CSG Annual Report 2018
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
||VOC|after being|||HCI≤5mg/m3；|pollutant|fluoride：0.72t；|Nitrogen||
|||treated by the|||VOC≤30mg/m³。|discharge|chlorine：0.16t；|oxide：||
|||exhaust gas||||standards》|VOC：0.25t。|20.825t/a；：||
|||treatment||||（GB30484-201||1.5156t/a；||
|||tower.||||3）；VOCs refer||Hydrogen||
|||||||to《Volatile||fluoride：||
|||||||Organic||1.0829t/a；||
|||||||Compound||chlorine：||
|||||||Emission||0.2363t/a；||
|||||||Standards for||VOC：||
|||||||the Furniture||1.0986t/a。||
|||||||Manufacturing||||
|||||||Industry》||||
|||||||（DB44/814-20||||
|||||||10）Second time||||
|||||||period standard；||||
|||||||NH3 implement||||
|||||||discharge||||
|||||||standards for||||
|||||||odor pollutants||||
|||||||（GB14554-93||||
|||||||）.||||
|||||||《Electrical||||
|||Discharge||||||||
|||||||Glass Industry||||
|Hebei|dust＼soot|after the|||dust≤30mg/m³；|||Particulates：||
|||||||Air Pollutant|Particulates:1.81||Reach the|
|Shichuang|＼SO2＼|treatment of||chimney,|soot≤20 mg/m³；|||8.2125t/a；||
||||5|||Emission|t；SO2: 0.5t；||discharge|
|Glass Co.,|Nitrogen|denitrification||exhaust vent|SO2≤30 mg/m³；|||SO2:22t/aN||
|||||||Standards》|NOx :12t。||standard|
|Ltd.|oxide|and dust|||NOx≤300mg/m³。|||Ox：39.4t/a。||
|||||||(GB29495-2013||||
|||removal||||||||
|||||||)||||

Construction and operation of pollution prevention and control facilities
The Company has built flue gas dust removal and denitrification system on production lines. The system runs normally, and the emission of exhaust gas meets regulations standard. Hebei CSG Glass Co., Ltd., Chengdu CSG Glass Co., Ltd. and Wujiang CSG Glass Co., Ltd. have added flue gas desulfurization facilities, and pollutant emissions have been further reduced.
The environmental impact assessment of construction projects and other environmental protection license
In 2017, the project for the construction of a photoconductive material production line for light guide plates of Xianning CSG Photovoltaic Glass Co., Ltd. was newly launched, and environmental impact assessments have been carried out and approved. In 2018, the new jade glass plates project of Dongguan CSG Jingyu new material co., Ltd. had been approved and obtained the environmental influence appraise. The project construction had been completed and had been turned into production commissioning. The operation project of 120 million cellsAG&AF glass plate by Yichang Display Co., Ltd. , in 2018, had been approved and obtained the
environmental influence appraise which is during the construction period. The subsidiaries have effectively carrying out the “Three
Simultaneous” procedures for all other new and old projects, and have been rewarded with the pollutant discharge license within the
validity period. They timely declared the pollutant discharge, carried out the monitoring and reporting of pollutant discharge and paid
CSG Annual Report 2018 the pollutant discharge fee according to the relevant regulations of the state.
Emergency response plan system of environment incident
In accordance with the national requirements, all subsidiaries prepared emergency environmental response plan for environment incident, organized and carried out expert evaluation and filed with the local environmental protection department as required, conducted the emergency drill against environmental incidents. And there were no major environmental incidents occurred in 2018. Environmental self-monitoring scheme
In accordance with provisions of national laws and regulations and the requirements put forward in the assessment documents of the environment impact of construction project and reply, the subsidiaries built on-line monitoring equipment for waste water and waste gas which are put into operation normally. They compared and reviewed the effectiveness of the on-line monitoring facilities on a regular basis. Besides, they also entrusted the third party units to carry out the manual monitoring of the environment and fully monitor the discharge of the pollutants.
Other environmental information to be disclosed
Those subsidiaries which were on key monitoring list of the government above municipal level all disclosed their environment protection status and made regular updating through websites, local government environmental information platform, display pads and other ways.
Other information related to environment protection
CSG always attaches great importance to environmental protection work, actively fulfills its social responsibility, adheres to the development road of energy saving, emission reduction, low-carbon and environmental protection. Many subsidiaries have been honored by the local government for their outstanding environmental protection work. For example, CSG (Xianning) won the award of “Outstanding Unit for Environmental Protection” in 2018, CSG (Hebei) won the award of “Environmental Social Responsible Enterprise” and “Environmental Protection Star Enterprise” in 2018, and Hebei Shichuang won the award of “Environmental Social Responsible Enterprise” and “Environmental Protection Star Enterprise” in 2018. Yichang Display Co., Ltd. won title of “Yichang Eco-environmental Protection Award” in 2018.
XIX. Statement on other important matters
√Applicable□ Not applicable
1. Short-term Financing Bills
On Dec.14, 2016, the second extraordinaryshareholders’ general meeting of 2016 of CSG deliberated and approved the proposal of the offering and registration of short-term financing bills, and agreed theCompany’s registration and issuance of short-term financing bills with a total amount of RMB 2.7 billion, which could be issued by stages within period of validity of the registration according to theCompany’s actual demands for funds and the status of inter-bank funds. However, the term of each issue shall not be longer than one year and the registered quota shall not exceed 40 percent of theCompany’s net assets.
2. Ultra-short-term financing bills
On May 14, 2018, thecompany’s 2017 annualshareholders’ meeting deliberated and approved the resolution on the application for registration and issuance of ultra-short-term financing bills. It agreed that the company should register and issue ultra-short-term financing bills with a registered amount not exceeding 4 billion yuan (not subject to the restriction that the amount of ultra-short-erm issued shall not exceed40% of net assets). With the period of validity of the quota not longer than two years, such ultra-short-term financing bills will be issued by installments in accordance with the actual capital needs of the company and the situation of
CSG Annual Report 2018 inter-bank market funds. On Sep. 17, 2018, the Chinese Association of Interbank Market Traders held its 63rd registration meeting in 2018, and decided to approve the registration of the ultra-short-term financing bills with a total amount of 1.5 billion yuan and a validity period of two years. The ultra-short-term financing bills are underwritten jointly by Minsheng Bank of China Limited and Industrial Bank Co., Ltd, and can be issued by installments within the validity period of registration.
3. Perpetual bonds
On April 15, 2016, theShareholders’ General Meeting 2015 of CSG deliberated and approved the proposal of application for registration and issuance of perpetual bonds, and agreed the Company to register and issue perpetual bonds with total amount of RMB 3.1 billion which could be issued by stages within period of validity of the registration according to theCompany’s actual demand for funds and the capital status of inter-bank market.
4. Medium-term notes
On 10 December 2014, the First ExtraordinaryShareholders’ General Meeting 2014 of CSG Holding Co., Ltd deliberated and approved the proposal of application for registration and issuance of medium-term notes with total amount of RMB 1.2 billion at most. On 21 May 2015, National Association of Financial Market Institutional Investors (NAFMII) held the 32nd registration meeting of 2015, in which NAFMII decided to accept the registration of theCompany’s medium-term notes, amounting to RMB 1.2 billion and valid for two years. China Merchants Bank Co., Ltd. and Shanghai Pudong Development Bank Co., Ltd. were joint lead underwriters of these medium term notes which could be issued by stages within period of validity of the registration on Jul.14, 2015, the Company issued the first batch of medium term notes with total amount of RMB 1.2 billion and valid term of 5 years at the issuance rate of4.94%, which will be redeemed on 14 July 2020.
On April 15, 2016, theShareholders’ General Meeting of 2015 of CSG deliberated and approved the proposal of application for registration and issuance of medium-term notes with total amount of RMB 0.8 billion, which could be issued by stages within period of validity of the registration according to theCompany’s actual demands for funds and the status of inter-bank funds. On 2 March 2018, National Association of Financial Market Institutional Investors (NAFMII) held the 14th registration meeting of 2018, in which NAFMII decided to accept the registration of theCompany’s medium-term notes, amounting to RMB 0.8 billion and valid for two years. Shanghai Pudong Development Bank Co., Ltd. and China CITIC Bank Corporation Limited were joint lead underwriters of these medium-term notes which could be issued by stages within period of validity of the registration. On May 4, 2018, the company issued the first medium-term notes with a total amount of 800 million yuan and a term of three years. The issue rate was7%, and the redemption date was May 4, 2021.
On May 22, 2017, theShareholders’ General Meeting of 2016 of CSG deliberated and approved the proposal of application for registration and issuance of medium-term notes with total amount of RMB 1 billion, which could be issued by stages within period of validity of the registration according to theCompany’s actual demands for funds and the status of inter-bank funds.
For details, please refer to www.chinabond.com.cn and www.chinamoney.com.cn.
5. Public issuance of corporate bonds
On March 2, 2017, the 2nd Extraordinary General Meeting of Shareholders in 2017 reviewed and approved “the Proposal on the Public Issuance of Corporate Bonds for Qualified Investors". On February 27, 2019, the First Extraordinary General Meeting of Shareholders in 2019 The “Proposal on Extending the Validity Period of the Shareholders' Meeting for the Public Offering of Corporate Bonds to Qualified Investors” agreed to issue corporate bonds with a total issue of no more than RMB 2 billion and a term of no more than 10 years.
6. The holding of the bondholders' meeting during the reporting period
CSG Annual Report 2018 On August 17, 2018, the company issued the announcement of "Conference on Holding the First Phase Mid-term Noteholders' Meeting of China CSG Holding Co., Ltd. in 2015” and “Announcement on Holding the Meeting of the First Phase Mid-term Notes Holders of China CSG Holding Co., Ltd. in 2018” due to the repurchase and cancellation of the restricted shares of the restricted equity incentive plan. On August 31, 2018, the company's 2015 first-term medium-term noteholders meeting, 2018 first-phase medium-term noteholders meeting was held off-site and voted. The 2015 first mid-term note holders meeting and the 2018 first mid-term noteholders' meeting is not effective as the total voting rights held by the holders attending the meeting did not reach two-thirds of the total voting rights as required.
7. Payments and interests of other debenture and financial instruments during the reporting period
14 Jul.2018, the company had paid the 3rd times interest of issued the 1st phase medium bill in Jul.14, 2015, total amount as 1.2 billion, interest rate4.94% per year.
8. Bank credit status, usage and repayment of bank loans during the reporting period
During the reporting period, the company obtained bank credit of 11.012 billion yuan, a quota of 3.958 billion yuan being used, and a quota of 7.054 billion yuan available.
XX. Significant events of subsidiaries of the Company
□ Applicable√ Not applicable
CSG Annual Report 2018 Section VI. Changes in Shares and Particulars about Shareholders I. Changes in Share Capital
1. Changes in Share Capital
Unit: Share
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
||Before the Change||Increase/Decrease in the Change (+, -)|||||After the Change||
||||||Capitalization|||||
|||Proportion|New shares|Bonus|||||Proportion|
||Amount||||of public|Others|Subtotal|Amount||
|||(%)|issued|shares|||||(%)|
||||||reserve|||||
||97,772,560|3.94%|9,826,580||14,665,883|-44,636,523|-20,144,060|77,628,500|2.71%|
|I. Restricted shares||||||||||
|1. State-owned shares||||||||||
|2. State-owned legal||||||||||
|person’s shares||||||||||
||97,772,560|3.94%|9,826,580||14,665,883|-44,636,523|-20,144,060|77,628,500|2.71%|
|3. Other domestic shares||||||||||
|Including: Domestic||||||||||
|legal person’s shares||||||||||
|Domestic natural||||||||||
||97,772,560|3.94%|9,826,580||14,665,883|-44,636,523|-20,144,060|77,628,500|2.71%|
|person’s shares||||||||||
|4. Foreign shares||||||||||
|Including: Foreign legal||||||||||
|person’s shares||||||||||
|Foreign natural||||||||||
|person’s shares||||||||||
||2,386,374,987|96.06%|||357,956,248|41,317,466|399,273,714|2,785,648,701|97.29%|
|II. Unrestricted shares||||||||||
||1,509,517,397|60.76%|||226,427,610|41,317,466|267,745,076|1,777,262,473|62.07%|
|1. RMB Ordinary shares||||||||||
|2. Domestically listed|876,857,590|35.30%|||131,528,638||131,528,638|1,008,386,228|35.22%|
|foreign shares||||||||||
|3. Overseas listed||||||||||
|foreign shares||||||||||
|4. Others||||||||||
|III.Total shares|2,484,147,547|100%|9,826,580||372,622,131|-3,319,057|379,129,654|2,863,277,201|100%|

 Reason for equity changes
√Applicable□Not applicable
1. The company's total share capital increased by 372,622,131 shares due to the implementation of the 2017 annual profit distribution and capital accumulation fund to increase share capital.
2. The company's total shares fell by 3,319,057 because of the cancellation of some restricted stock of equity incentive plan which
were bought back.
3. The company's total share capital increased by 9,826,580 shares due to restricted stock reserved in the 2017 restricted stock
incentive plan granted to incentive targets.
CSG Annual Report 2018 4. As condition of unlock the first restriction period stock of the company's 2017 a-share restricted stock incentive plan has been met, 43,353,050 restricted shares were unlocked.
5. Due to the change of the company's senior management and the lockup of their shareholding, the Shenzhen branch of China securities registration and clearing Co., Ltd. shall adjust the restricted shares held by the senior management in accordance with relevant regulations, and thecompany’s restricted shares and unrestricted shares changed accordingly.
Approval on equity changes
√Applicable□Not applicable
1. The company's 2017 annual profit distribution and capital accumulation fund to increase the share capital plan was approved by the fifth meeting of the eighth board of directors held on April 20, 2018 and the 2017 annual general meeting of shareholders held on May 14, 2018.
2. The company's buyback and cancellation of some restricted stock incentive plans was deliberated and passed at the extraordinary meeting of the 8th board of directors and extraordinary meeting of the 8th board of supervisors on July 20, 2018, and was deliberated and passed at the 2nd interim general meeting of shareholders on August 6, 2018.
3. The company's proposal to grant reserve stock of restricted stock incentive plan 2017 to incentive targets was deliberated and approved at the extraordinary meeting of the 8th the board of directors and the extraordinary meeting of the 8thboard of supervisors on September 13, 2018.
4. The company's proposal to confirm the condition of unlock first restriction period stock has been met was deliberated and approved at the extraordinary meeting of the 8th board of directors, and the extraordinary meeting of the 8th board of supervisors on December 12, 2018.
Transfer of ownership of changes in shares
√Applicable□Not applicable
1. The A-share registration date for 2017 annual profit distribution and the capitalization of capital reserve was on June 26, 2018 and the ex-dividend date was June 27, 2018. A-shares bonus (or capitalized) were directly recorded in thestockholders’ A-share accounts on June 27, 2018. The registration date and ex-dividend date of B shares were June 29, 2018 and June 27, 2018 respectively. B-shares bonus (or capitalized) were directly recorded inshareholders’ B-share accounts on June 29, 2018.
2. On September 10, 2018, the company has completed the cancellation procedures of the buyback restricted stock in the Shenzhen branch of China securities registration and clearing co., Ltd.
3. On September 28, 2018, the company has completed the registration and approval procedures of newly granted restricted stock in the Shenzhen branch of China securities registration and clearing co., Ltd.
4. Because the condition of unlock the first restriction period stock of the company's 2017 a-share restricted stock incentive plan has been met, and as the change of senior management and lockup of their shareholdings, the Shenzhen branch of China securities registration and clearing Co., Ltd. Adjusted thecompany’s restricted shares and unrestricted shares accordingly in accordance with relevant regulations.
Implementation progress of share repurchase
□Applicable√Not applicable
Implementation progress of share buyback reduction through centralized bidding
□Applicable√Not applicable
CSG Annual Report 2018 Influence on the basic EPS and diluted EPS as well as other financial indexes of net assets per share attributable to common shareholders of Company in the latest year and period
√Applicable□ Not applicable
Please refer to the main accounting data and financial indicators in this report for the details of the impact of stock changes. Other information necessary to be disclosed or need to be disclosed under requirement from security regulators
□Applicable√ Not applicable
2. Changes of restricted shares
√Applicable□ Not applicable
Unit: Share
||||||||
|-|-|-|-|-|-|-|
||Number of|Number of|Number of|Number of|||
|Shareholder|shares|shares|new shares|shares|||
||||||Restriction reasons|Released date|
|s’ name|restricted at|released in|restricted in|restricted at|||
||Period-begin|the Year|the Year|Period-end|||
|||||||Unlock period in accordance with|
||||||Executive lockup stocks|the requirement of implementation|
||||||of 553,317 shares,|of the Company's restricted stock|
|Chen Lin|3,207,639|1,475,514|1,034,463|2,766,588|equity incentives|equity incentive plan, once|
||||||restricted stocks of|unlocked executive lockup will be|
||||||2,213,271 shares.|implemented according to relevant|
|||||||policies.|
|||||||Unlock period in accordance with|
|||||||the requirement of implementation|
||||||Equity incentives|of the Company's restricted stock|
|Wang Jian|||2,300,000|2,300,000|restricted stocks of|equity incentive plan, once|
||||||2,300,000 shares.|unlocked executive lockup will be|
|||||||implemented according to relevant|
|||||||policies.|
|||||||Unlock period in accordance with|
||||||Executive lockup stocks|the requirement of implementation|
||||||of 414,988 shares,|of the Company's restricted stock|
|Lu Wenhui|2,405,729|1,106,635|775,847|2,074,941|equity incentives|equity incentive plan, once|
||||||restricted stocks of|unlocked executive lockup will be|
||||||1,659,953 shares.|implemented according to relevant|
|||||||policies.|
|||||||Unlock period in accordance with|
||||||Equity incentives|the requirement of implementation|
|Li Cuixu|||800,000|800,000|restricted stocks of|of the Company's restricted stock|
||||||800,000 shares.|equity incentive plan, once|
|||||||unlocked executive lockup will be|

CSG Annual Report 2018
||||||||
|-|-|-|-|-|-|-|
|||||||implemented according to relevant|
|||||||policies.|
|||||||Unlock period in accordance with|
||||||Executive lockup stocks|the requirement of implementation|
||||||of 276,000 shares,|of the Company's restricted stock|
|He Jin|1,600,000|736,000|716,000|1,580,000|equity incentives|equity incentive plan, once|
||||||restricted stocks of|unlocked executive lockup will be|
||||||1,304,000 shares.|implemented according to relevant|
|||||||policies.|
|||||||Unlock period in accordance with|
||||||Executive lockup stocks|the requirement of implementation|
||||||of 395,226 shares,|of the Company's restricted stock|
|Yang Xinyu|2,291,170|1,053,938|738,901|1,976,133|equity incentives|equity incentive plan, once|
||||||restricted stocks of|unlocked executive lockup will be|
||||||1,580,907 shares.|implemented according to relevant|
|||||||policies.|
|||||||Unlock period in accordance with|
|Core|||||||
|||||||the requirement of implementation|
|Managemen|62,410,653|30,256,887|11,673,417|43,827,183|Equity incentives||
|||||||of the Company's restricted stock|
|t Team|||||||
|||||||equity incentive plan.|
|Technology||||||Unlock period in accordance with|
|and||||||the requirement of implementation|
||23,305,293|10,989,195|6,690,656|19,006,754|Equity incentives||
|Business||||||of the Company's restricted stock|
|Backbone||||||equity incentive plan.|
|||||||Unlock period in accordance with|
||||||Supervisor’s departure|the requirement of implementation|
||||||lockup stocks of 3,306|of the Company's restricted stock|
|Zhao Peng|2,156||1,021,050|1,023,206|shares, equity incentives|equity incentive plan, once|
||||||restricted stocks of|unlocked executive lockup will be|
||||||1,019,900 shares.|implemented according to relevant|
|||||||policies.|
||||||Executive’s departure||
||||||lockup stocks of|Unlock period in accordance with|
||||||692,788 shares, equity|the requirement of implementation|
|Li Weinan|2,549,920|1,053,938|777,713|2,273,695|||
||||||incentives restricted|of the Company's restricted stock|
||||||stocks of 1,580,907|equity incentive plan.|
||||||shares.||
|Total|97,772,560|46,672,107|26,528,047|77,628,500|||

Note: In case the unlocking conditions of the restricted stock incentive plan is satisfied, the restricted shares Unlock in three phases
after 12 months from the date of grant:40% of the restricted stocks will be available for circulation within the period (from the first
trading day following the lock-up period of 12 months to the last trading day of lock-up period of 24 months),30% of the restricted
stocks will be available for circulation within the period (from the first trading day following the lock-up period of 24 months to the
CSG Annual Report 2018 last trading day of the lock-up period of 36 months), and30% of the restricted stocks will be available for circulation within the period (from the first trading day following the lock-up period of 36 months to the last trading day of the lock-up period of 48 months).
II. Issuance and listing of Securities
1. Security issued (excluding preferred stock) in the report period
√Applicable□ Not applicable
||||||||
|-|-|-|-|-|-|-|
||||||Number of||
|Name of stock and||Issue price|||||
||||||permitted|Transaction|
|its derivative|Issue date|(or interest|Issue volume|Listing date|||
||||||trading|termination date|
|securities||rate)|||||
||||||transactions||
|Stock class|||||||
|||||September 28,|||
|Southern Glass A|September 13, 2018|3.68|9,826,580||9,826,580||
|||||2018|||

Explanation of the issuance of securities (excluding preferred shares) during the reporting period
On September 13, 2018, the company convened an extraordinary meeting of the 8th board of Directors and an extraordinary meeting of the 8th board of supervisors, deliberated and approved proposal to grant restricted stocks to the incentive target for the 2017 restricted stock incentive plan, the grant date of the reserved restricted stock is determined to be September 13, 2018, the company issued 9,826,580 reserved restrict stock to 75 incentive targets as the grant price at 3.68 yuan/share. The shares granted have been registered in the Shenzhen branch of China registration and clearing corporation and listed on September 28, 2018. The total number of shares of the company has changed from 2,853,450,621 shares to 2,863,277,201 shares.
2. Particulars about changes of total shares and shareholder structure as well as changes of assets and liability structure
√Applicable□ Not applicable
1. Statement on profit distribution plan and capitalization of capital reserve plan of the Company in 2017: based on 2,484,147,547 shares of the total share capital while dividends will be distributed, distributing cash dividend of RMB 0.5 (tax included) for every 10 shares to all shareholders. Meanwhile the Company will transfer capital reserve into capital with 1.5 shares for every 10 shares to all shareholders based on 2,484,147,547 shares of the total share capital. The program was completed on June 29, 2018, and the total share capital was increased to 2,856,769,678 shares after the plan was completed
2. The company repurchased a total of 3,319,057 restricted shares held by the 15 original incentive targets but not yet unlocked. The share capital was 2,853,450,621 shares after the repurchase. The cancellation of restricted stock repurchase has been completed on September 10, 2018; the total number of shares of the company was changed from 2,856,769,678 shares to 2,853,450,621 shares. 3. The company grant reserved 9,826,580 restricted shares to 75 incentive targets, the restricted stock grant date is September 13, 2018. Upon completion of the grant, the share capital increased to 2,863,277,201 shares, and the listing date of this grant is
September 28, 2018. The total number of shares of the company was changed from 2,853,450,621 to 2,863,277,201.
CSG Annual Report 2018 4. On December 12, 2018, the company convened an extraordinary meeting of the 8th Board of Directors and an extraordinary meeting of the 8th Board of Supervisors, and reviewed and approved the “Proposal on Repurchase and Cancel part of Restricted Stocks of Restricted Stock Incentive Plan”, considered and agreed to repurchase and cancel the total of 436,719 shares of 8 incentive targets of all restricted stocks that have been granted to them who have not been eligible with stock still under restriction. It was approved by the third extraordinary general meeting of shareholders in 2018, held on December 28, 2018. The above restricted stock has not completed the cancellation procedures at the end of the reporting period, which does not affect the changes in the company's share capital during the reporting period.
5. On December 12, 2018, the company convened an extraordinary meeting of the 8th Board of Directors and an extraordinary meeting of the 8th Board of Supervisors, and reviewed and approved the "proposal on the achievement of condition for unlock the first restriction period stock of the 2017 a-share restricted stock incentive plan of the company". Except the 8 incentive objects who have left the company and are no longer qualified for unlocking, the total number of incentive objects who meet the condition for unlocking is 431, and the number of restricted shares that can be unlocked is 43,353,050, accounting for1.51% of the total share capital of the company at present. The board of supervisors, the independent directors and the law firm have expressed their express consents. The unlock date/ listing date of these restricted stock is December 21, 2018.
3. Existing internal staff shares
□ Applicable√ Not applicable
III. Particulars about shareholder and actual controller of the Company
1. Amount of shareholders of the Company and particulars about shares holding
Unit: Share
||||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
||||||||||||Total preference||||
|||||||Total preference|||||shareholders with||||
|||Total shareholders at|||||||||||||
|Total shareholders at||||||shareholders with voting|||||voting rights recovered||||
|||the end of the month|||||||||||||
|the end of the report|151,514|||149,447||rights recovered at end of|||0||at end of the month|||0|
|||before this annual|||||||||||||
|period||||||report period (if|||||before this annual||||
|||report disclosed|||||||||||||
|||||||applicable)|||||report disclosed (if||||
||||||||||||applicable)||||
|Shareholder with above 5% shares hold or top 10 shareholders|||||||||||||||
|Full name of Shareholders||Nature of|Proportion||Total shares||Changes in|Amou||Amount of||Number of share|||
|||shareholder|of shares||held at the||report period|n t of||un-restricted||pledged/frozen|||
||||held (%)||end of report|||restrict||shares held||Share|Amount||
||||||period|||ed||||status|||
|||||||||shares|||||||
|||||||||held|||||||
|Foresea Life Insurance Co., Ltd.– Haili Niannian||Domestic nonstate-ownedlegal person|14.81%||423,988,067||55,302,791|||423,988,067|||||

CSG Annual Report 2018
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|Foresea Life Insurance Co., Ltd.– Universal Insurance Products|Domestic nonstate-ownedlegal person||3.76%|107,659,097||14,042,491||107,659,097||||
|Shenzhen Jushenghua Co., Ltd.|Domestic nonstate-ownedlegal person||2.75%|78,757,679||10,272,741||78,757,679||||
||||||||||pledge||63,000,000|
|Foresea Life Insurance Co., Ltd.– Own Fund|Domestic nonstate-ownedlegal person||2.06%|58,877,419||7,679,663||58,877,419||||
|Central Huijin AssetManagement Ltd.|State-ownedlegal person||1.84%|52,650,444||6,867,449||52,650,444||||
|China Galaxy InternationalSecurities (Hong Kong) Co.,Limited|Foreign legalperson||1.30%|37,313,064||4,917,019||37,313,064||||
|China Merchants Securities(HK) Co., Limited|State-ownedlegal person||1.02%|29,078,493||3,021,785||29,078,493||||
|Shenzhen International Holdings(SZ) Limited|Domestic nonstate-ownedlegal person||0.92%|26,450,000||3,450,000||26,450,000||||
|VANGUARD EMERGINGMARKETS STOCK INDEXFUND|Foreign legalperson||0.61%|17,563,848||2,290,937||17,563,848||||
|NORGES BANK|Foreign legalperson||0.49%|14,166,909||1,847,858||14,166,909||||
|Strategic investors or general legal||N/A||||||||||
|person becomes top 10 shareholders||||||||||||
|due to shares issued (if applicable)||||||||||||
|Explanation on associated||Among shareholders as listed above, Foresea Life Insurance Co., Ltd.-Haili Niannian, ForeseaLife Insurance Co., Ltd.-Universal Insurance Products, Foresea Life Insurance Co., Ltd.-OwnFund are all held by Foresea Life Insurance Co., Ltd. Shenzhen Jushenghua Co., Ltd. is arelated legal person of Foresea Life Insurance Co., Ltd. and Chengtai Group Co., Ltd., anotherrelated legal person of Foresea Life Insurance Co., Ltd, which held 36,534,458 shares viaChina Galaxy International Securities (Hong Kong) Co., Limited.Except for the above-mentioned shareholders, it is unknown whether other shareholdersbelong to related party or have associated relationship regulated by the ManagementRegulation of Information Disclosure on Change of Shareholding for Listed Companies.||||||||||
|relationship among the aforesaid||||||||||||
|shareholders||||||||||||
|Particular about top ten shareholders with un-restrict shares held||||||||||||
||||||||Type of shares|||||
||||||Amount of un-restrict|||||||
|Shareholders’ name||||||||||||
||||||shares held at||Type|||Amount||

CSG Annual Report 2018
||||||
|-|-|-|-|-|
|||year-end|||
|Foresea Life Insurance Co., Ltd. – Haili Niannian||423,988,067|RMB ordinary shares|423,988,067|
|Foresea Life Insurance Co., Ltd. – Universal InsuranceProducts||107,659,097|||
||||RMB ordinary shares|107,659,097|
|Shenzhen Jushenghua Co., Ltd.||78,757,679|RMB ordinary shares|78,757,679|
|Foresea Life Insurance Co., Ltd. – Own Fund||58,877,419|RMB ordinary shares|58,877,419|
|Central Huijin Asset Management Ltd.||52,650,444|RMB ordinary shares|52,650,444|
|China Galaxy International Securities (Hong Kong) Co.,Limited||37,313,064|Domestically listed||
|||||37,313,064|
||||foreign shares||
|China Merchants Securities (HK) Co., Limited||29,078,493|Domestically listed||
|||||29,078,493|
||||foreign shares||
|Shenzhen International Holdings (SZ) Limited||26,450,000|RMB ordinary shares|26,450,000|
|VANGUARD EMERGING MARKETS STOCK INDEXFUND||17,563,848|Domestically listed||
|||||17,563,848|
||||foreign shares||
|NORGES BANK||14,166,909|Domestically listed||
|||||14,166,909|
||||foreign shares||
||Among shareholders as listed above, Foresea Life Insurance Co., Ltd.-Haili Niannian, ForeseaLife Insurance Co., Ltd.-Universal Insurance Products, Foresea Life Insurance Co., Ltd.-OwnFund are all held by Foresea Life Insurance Co., Ltd. Shenzhen Jushenghua Co., Ltd. is a relatedlegal person of Foresea Life Insurance Co., Ltd. and Chengtai Group Co., Ltd., another relatedlegal person of Foresea Life Insurance Co., Ltd, which held 36,534,458 shares via China GalaxyInternational Securities (Hong Kong) Co., Limited.Except for the above-mentioned shareholders, it is unknown whether other shareholders belongto related party or have associated relationship regulated by the Management Regulation ofInformation Disclosure on Change of Shareholding for Listed Companies.||||
|Statement on associated|||||
|relationship or consistent action|||||
|among the above shareholders:|||||
|Explanation on shareholders|N/A||||
|involving margin business (if|||||
|applicable)|||||

Whether thecompany’s top 10 common shareholders and the top 10 shareholders of ordinary shares subject to unlimited sales have agreed to buy back transactions during the reporting period
□Yes√ No
2. Controlling shareholder of the Company
The nature of controlling shareholders: No holding body
The type of controlling shareholder: Not exist
Explanation on the Company without controlling shareholder
Currently the Company has no controlling shareholder. Foresea Life Insurance Co., Ltd. is the Company's largest shareholder that has
totally held 597,798,139 shares of the Company via Foresea Life Insurance Co.,Ltd.–Haili Niannian, Foresea Life Insurance Co.,
CSG Annual Report 2018Ltd.–universal insurance products, Foresea Life Insurance Co.,Ltd.–own fund, Foresea Life Insurance Co.,Ltd.–a combination of its own funds together with Huatai till the end of the report period, which accounts for20.88% of theCompany’s total shares; its related legal person Shenzhen Jushenghua Co., Ltd. held 78,757,679 shares, which accounts for2.75% of theCompany’s total shares; its related legal person Chengtai Group Co., Ltd. held 47,008,262 shares of B-share via China Galaxy International Securities (Hong Kong) Co., Ltd and Guosen Securities (Hong Kong) Brokerage Co., Limited, which accounts for1.64% of theCompany’s total shares. Foresea Life Insurance and its related legal persons totally held25.27% of theCompany’s total shares, which is less than30%, meanwhile, the number of directors recommended by Foresea Life Insurance and its related legal persons was no more than half of total number of theCompany’s board of directors.
Other shareholders of the Company hold less than5% of the shares.
Changes of controlling shareholders in the report period
□ Applicable√ Not applicable
3. Actual controller of the Company
The nature of actual controller: no actual controller
The type of actual controller: Not exist
Explanation on the Company without actual controller
Currently the Company has no actual controller. Foresea Life Insurance Co., Ltd. is the Company's largest shareholder that has totally held 597,798,139 shares of the Company via Foresea Life Insurance Co.,Ltd.–Haili Niannian, Foresea Life Insurance Co.,Ltd.–universal insurance products, Foresea Life Insurance Co.,Ltd.–own fund, Foresea Life Insurance Co.,Ltd.–a combination of its own funds together with Huatai till the end of the report period, which accounts for20.88% of theCompany’s total shares; its related legal person Shenzhen Jushenghua Co., Ltd. held 78,757,679 shares, which accounts for2.75% of theCompany’s total shares; its related legal person Chengtai Group Co., Ltd. held 47,008,262 shares of B-share via China Galaxy International Securities (Hong Kong) Co., Ltd and Guosen Securities (Hong Kong) Brokerage Co., Limited, which accounts for1.64% of theCompany’s total shares. Foresea Life Insurance and its related legal persons totally held25.27% of theCompany’s total shares, which is less than30%, meanwhile, the number of directors recommended by Foresea Life Insurance and its related legal persons was no more than half of total number of theCompany’s board of directors.
Shareholders with over10% shares held in ultimate controlling level
√Yes□No
Natural person
Shares held in ultimate controlling level
||||
|-|-|-|
|||Whether to obtain the right of abode in other countries|
|Shareholders|Nationality||
|||or regions|
|Yao Zhenhua|China|No|
|Major occupations and duties|Chairman of Shenzhen Baoneng Investment Group Co., Ltd.||
|Situation of holding domestic and abroad|||
||N/A||
|listed companies over the past 10 years|||

Changes of actual controller in the report period
□ Applicable√ Not applicable
CSG Annual Report 2018 Property right and controlling relationship between the largest shareholder and the Company is as follow: Shenzhen Zheshang Baoneng Industry Investment partnership Enterprise Limited
Yao Zhenhua
Shenzhen Baoneng Investment Group
Co., Ltd.
Shenzhen Zheshang Baoneng Shenzhen Baoneng Shenzhen Baoyuan Logistics
Industry Investment partnership Chua ngying Investment Co., Ltd
Enterprise Limited partenership Co., Ltd.
|||
|-|-|
|67.4|0%|

|||
|-|-|
|0.6|8%|

|||
|-|-|
|3|0%|

|||
|-|-|
|1.|92%|

Shenzhen Shenzhen Shenyue
Shenzhen
Jinfeng Tongyuan100%
Jushenghua Co., Holding
Yueshang
Kaixinheng Co., Ltd.
Co., Ltd. Ltd. Co., Ltd.
Logisitics Co., Ltd.
|||
|-|-|
|51|%|

|||
|-|-|
|20|%|

|||
|-|-|
|4.6|%|

|||
|-|-|
|4.6|%|

Hualitong
Investment
Co., Ltd.
100%
|||
|-|-|
|2.7|5%|

Co., Ltd.
CSG Holding
||
|-|
|20.88%|

Actual controller controlling of the Company by entrust or other assets management
□Applicable√Not applicable
4. Particulars about other legal person shareholders holding over10% shares
□ Applicable√ Not applicable
CSG Annual Report 2018 5. Limitation on share reduction of controlling shareholders, actual controllers, Recombination party and other commitment subjects
□ Applicable√ Not applicable
CSG Annual Report 2018 Section VII. Particulars about Directors, Supervisors, Senior Executives and Employees
I. Changes of shares held by directors, supervisors and senior executives
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|||||||||Amount of|Amount|||
||||||||Shares held|shares|of shares|||
|||||||||||Other||
|||||||End date of||||||
|||Working|||||at|increased|decrease||Shares held at|
||Title||Sex|Age|Start dated|office term||||changes|period-end|
|Name||status|||of office||period-begi|in this|d in this|||
|||||||||||(share)|(Share)|
||||||term|||||||
||||||||n (Share)|period|period|||
|||||||||(Share)|(Share)|||
|Chen Lin|Chairman of|Currently|Female|47|2016-11-19|2020-05-02|3,207,639|||481,146|3,688,785|
||the Board|in office||||||||||
||Secretary of|||||||||||
||the Party|||||||||||
|Wang|Committee,Deputy|Currently|Male|55|2016-01-21|2020-05-02||||2,300,000|2,300,000|
|Jian||in office||||||||||
||Chairman of|||||||||||
||the Board,|||||||||||
||CEO|||||||||||
|Zhan|Independent|Currently|Male|55|2016-12-14|2020-05-02||||||
|Weizai|Director|in office||||||||||
|Zhu|Independent|Currently|Male|55|2017-05-02|2020-05-02||||||
|Guilong|Director|in office||||||||||
|Zhu|Independent|Currently|Female|44|2019-4-10|2020-05-02||||||
|Qianyu|Director|in office||||||||||
|Zhang|Director|Currently|Male|54|2017-05-02|2020-05-02||||||
|Jinshun||in office||||||||||
|Ye|Director|Currently|Female|47|2016-01-21|2020-05-02||||||
|Weiqing||in office||||||||||
|Cheng|Director|Currently|Female|37|2016-01-21|2020-05-02||||||
|Xibao||in office||||||||||
||Chairman of|||||||||||
||the|||||||||||
|Li|supervisory|Currently|Male|42|2019-03-27|2020-05-02||||||
|Jianghua|board,|in office||||||||||
||employee|||||||||||
||supervisory|||||||||||
|Li Xinjun|Supervisor|Currently|Male|51|2017-01-13|2020-05-02||||||
|||in office||||||||||
|Gao|Employee|Currently|Male|50|2018-08-30|2020-05-02||||||
|Changkun|Supervisor|in office||||||||||
|Lu|Executive|Currently|Male|56|2017-02-23|2020-05-02|2,405,729|||360,859|2,766,588|
|Wenhui|Vice President|in office||||||||||
|Li Cuixu|Vice president|Currently|Male|44|2018-04-08|2020-05-02||||800,000|800,000|
|||in office||||||||||
|He Jin|Vice president|Currently|Male|47|2018-04-08|2020-05-02|1,600,000|||440,000|2,040,000|
|||in office||||||||||
|Yang|Secretary of|Currently|Male|39|2017-05-02|2020-05-02|2,291,170|||343,675|2,634,845|
|Xinyu|the Board|in office||||||||||

CSG Annual Report 2018
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
|Pan|Director &|Post|Male|50|2017-02-23|2018-06-29||||
|Yonghong|CEO|Leaving||||||||
|Jin|Independent|Post|Male|62|2016-12-14|2019-4-10||||
|Qingjun|Director|Leaving||||||||
|Zhang|Chairman ofthe board of|PostLeaving|Femal|50|2017-1-13|2019-3-27||||
|Wandong||||||||||
||supervisors|||||||||
|Zhao|Employee|Post|Male|57|2017-01-11|2018-08-30|2,875|1,019,900|1,022,775|
|Peng|Supervisor|Leaving||||||||
|Li|Vice president|PostLeaving|Male|57|2017-02-23|2019-02-18|2,636,170|395,425|3,031,595|
|Weinan||||||||||
|Total|||||||12,143,583|6,141,005|18,284,588|

 II. Changes of directors, supervisors and senior executives
√Applicable□ Not applicable
||||||
|-|-|-|-|-|
|Name|Title|Type|Date|Reason|
|||||Senior management employed by the Board|
|Wang Jian|CEO|Be employed|2018-07-02||
|||||of Directors|
|||||Senior management employed by the Board|
|Li Cuixu|Vice president|Be employed|2018-04-08||
|||||of Directors|
|||||Senior management employed by the Board|
|He Jin|Vice president|Be employed|2018-04-08||
|||||of Directors|
||Independent||||
|Zhu Qianyu||Be employed|2019-04-10|Election by the independent director|
||Director||||
||Chairman of the||||
||supervisory||2019-04-01|Election by the supervisory board|
|Li Jianghua||Be employed|||
||board, employee||2019-03-27|Election by the employees meeting|
||supervisory||||
||Employee||||
|Gao Changkun||Be employed|2018-08-30|Election the employee supervisory board|
||Supervisor||||
|Pan Yonghong|CEO|Post leaving|2018-06-29|Resigned|
||Employee||||
|Zhao Peng||Post leaving|2018-08-30|Resigned|
||Supervisor||||
|Li Weinan|Vice president|Be employed|2019-02-18|Removed|
||Chairman of the||||
|Zhang Wandong|board of|Post leaving|2019-03-27|Resigned|
||supervisors||||
||Independent||||
|Jin Qingjun||Post leaving|2019-04-10|Resigned|
||Director||||

III. Post-holding
Major professional background, working experience of directors, supervisors and senior executive and their major responsibility in the Company at present
Chen Lin: took posts of Department Manager, General Manager Assistant in Shenzhen Shum Yip Logistics Group Co., Ltd. At present, she is the Senior Vice President of Shenzhen Baoneng Investment Group Co., Ltd., Deputy General Manager in Shenzhen Shum Yip Logistics Group Co., Ltd. Chairman of Board of Supervisors of Foresea Life Insurance Co., Ltd., Director of Guangdong Shaoneng Group Co., Ltd., Director of Nanning department store Co., Ltd. Chairman of the Board of Jonjee Hi-tech Industrial& Commercial Holding Co., Ltd. Chairman of the Board of Baoneng Automobile Co., Ltd., and Chairman of the Board of the Company.
Wang Jian: took posts of General Manager and Executive Director of China North Industries Tianjin Corporation, General Manager
CSG Annual Report 2018 of China North Vehicle Co., Ltd., and Deputy Chairman and Chairman of Shanghai Nonferrous Metals E-Commerce Co., Ltd., General Manager of investment management department of China North Industries Corporation, Chairman of the Board of Chengdu Yinhe Dynasty Hotel Co., Ltd., Deputy Chairman of the Board of Shenzhen Baoyin Electricity Co., Ltd., Chairman of the Board of North Property Development Company Limited. At present he is Secretary of the Party Committee, Deputy Chairman and CEO of the Company.
Zhan Weizai: took posts of Vice Manager of the financial department of Donghui Industrial Co., Ltd, General Manager Assistant of Shenzhen Xili Hotel, Director and Chief Financial Officer of Shenzhen Qiaoshe Industry Co.,Ltd.., the Leader of the audit& law department of Shenzhe Truism (Group) Company and Vice General Manager of Sinosafe General Insurance Company Limited. He currently holds the post of Supervisor of Shenzhen Dewo Industrial Development Co., Ltd, Supervisor of Shenzhen Dewo Investment Development Co., Ltd., Visiting Professor of Jiangxi University of Finance and Economics, Visiting Professor at Social Security Center of Wuhan University, Chairman of Shenzhen Jiangcairen Education Management Co., Ltd., Vice President, of Shenzhen Research Institute, Jiangxi University of Finance and Economics. Independent Director of Shenzhen Longood Intelligent Electric Co., Ltd., Independent Director of Shenzhen Neptunus Bioengineering Co., Ltd., Independent Director of Shenzhen Liantronics Co., Ltd, Independent Director of Shenzhen Weiye Decoration Group Co., Ltd., and Independent Director of the Company.
Zhu Guilong: took posts of the researcher of the Institute of Forecasting and Development at Hefei University of Technology, the Independent Director of Jiangsu Saifutian Steel Cable Co., Ltd. Currently, he is a professor and doctoral tutor of the School of Business Administration, South China University of Technology, and holds a concurrent post of the Vice Chairman of Systems Engineering Society of China, Executive Director of Chinese Association For Science of Science andS&T Policy, the Vice Chairman of Guangdong Institute of Technical Economy and Management Modernization, and Guangdong Economic Society, the Independent Director of GRG BANKING EQUIPMENT CO., LTD., , Independent Director of Guangzhou Kingmed Diagnostics Group Co., Ltd., and the Independent Director of the Company.
Zhu Qianyu: took posts of lecturer and associate professor of Central South University for Nationalities, a postdoctoral fellow at Peking University, and an independent director of Jilin Shixian Paper Co., Ltd., At present, he is associate professor at Renmin University of China and independent director of the Company.
Zhang Jinshun: took posts of member of the Party Committee and Deputy President of the head office of Ping An Bank, as well as Chairman of Board of Ping An Trust Co., Ltd., President and CEO of Shenzhen jushenghua Co., Ltd., and the Secretary of the Party Committee. He currently serves as Deputy Chairman of the Board of Shenzhen Baoneng Investment Group Co., Ltd. Chairman of Board of Foresea Life Insurance Co., Ltd., General Manager ofChang’an International Trust Co.,Ltd.，and Director of the Company. Ye Weiqing: took posts of the Financial Administrator, Senior Vice President and Director of Shenzhen Baoneng Investment Group Co., Ltd., Director of Foresea Life Insurance Co., Ltd., Chairman of Board of Qinglan Industry (Shenzhen) Co., Ltd., Director of Jonjee Hi-tech Industrial& Commercial Holding Co., Ltd. At present, she is the Chairman of Board and General Manager of Shenzhen Jushenghua Co., Ltd., Chairman of Board and General Manager of Baoneng Real Estate Co., Ltd., Deputy Chairman of Baoneng holdings (China) co., Ltd., Chairman of Board of Baoneng South China Investment Co., Ltd, Executive Director and General Manager of Shenzhen Shining Asset Management Co., Ltd, the Executive Director and General Manager of Qianhai E-payment Co., Ltd, Chairman of Board and General Manager of Shenzhen Laihua Property Development Co., Ltd, Chairman of Board and General Manager of Shenzhen Liujin Plaza Investment Co., Ltd, the Chairman of Board and General Manager of Shenzhen Shum Yip Logistics Center Investment Development Co., Ltd., Chairman of Board and the Director of Shenzhen Baoneng
CSG Annual Report 2018 Jianye Property Co., Ltd, Chairman of Board and General Manager of Shenzhen Baoneng Century Property Development Co., Ltd. Chairman of Board and General Manager of All City Co., Ltd, Chairman of Board and General Manager of Shenzhen Hualitong Investment Co., Ltd, Director of Shenzhen Baoyuan Logistics Co., Ltd, Chairman of Board of Baoneng Hotel Investment Co., Ltd, Chairman of Board and General Manager of Shenzhen Zhonglin Industry Development Co., Ltd, Director of Shenzhen Baoneng Investment Group Co., Ltd., Director of Shenzhen Shum Yip Logistics Group Co., Ltd. and Director of the Company.
Cheng Xibao: took posts of Deputy Manager and Manager of financial department of Huizhou Olympic Garden Co., Ltd., which is a subsidiary of China Sports Group Industry, Manager of financial department of Shenzhen Xuansheng Investment Co., Ltd., which is a subsidiary of Foxconn, and Manager, Vice President, Executive Vice President of financial department, President Assistant and Vice President of Shenzhen Baoneng Investment Group Co., Ltd. At present, she is Vice President of Shenzhen Baoneng Investment Group Co., Ltd. and Vice President of Shenzhen Jushenghua Co., Ltd., Vice President of Baoneng City Development and Construction Group Co., Ltd., the Supervisor of Xinjiang Qianhai United Property& Casualty Insurance Co., Ltd., Director of Foresea Life Insurance Co., Ltd. Director of Baoneng Automobile Co., Ltd., Director of Qoros Automobile Co., Ltd., Supervisor of Guizhou Baoneng Automobile Co., Ltd. and Director of the Company.
Li Jianghua: took post of group manager ofPing’an Technology (Shenzhen) Co., Ltd., IT engineer of Shenzhen One Card Club Technology Services Co., Ltd., the assistant of general manager and deputy general manager of the Operation Service Department of the Information Management Center of Foresea Life Insurance, the deputy general manager of IT Department of Xinjiang Qianhai United Property& Casualty Insurance Co., Ltd., the general manager of Integrated Financial Development Department of Foresea Life Insurance, and chairman of the supervisory board of the Company.
Li Xinjun: took the post of the Chief Financial Officer of Shenzhen Zhongshanglong Industrial Co., Ltd. He currently serves as the General Manager of Shenzhen Zhongzhun Certified Tax Agent Co., Ltd., Chairman of Board of Zhongzhun Certified Public Accountants (Shenzhen) Office and Supervisor of the Company.
Gao Changkun: took the post of the operation director of Beijing lianxing ketong microelectronics Co., LTD., and the investment specialist of Pintree (Shanghai) Equity investment and management Co., Ltd. At present, he is the President of the solar energy business division and the supervisor of the employees of the Company.
Lu Wenhui: took posts of Vice General Manager of the Company and General manager of Float Glass Business Department of the company, the vice president of the company and the general manager of the Engineering and Automotive Glass Business Department of the company, the chief economy expert of the company, the director of Enterprise Operation Department, the vice president of the Solar Business Department, the vice president of the company and the president of the Fine Glass Business Department, and the president of Shenzhen Monitor Company, a subsidiary company. At present, he is the vice president and the president of the Overseas business unit of the Company.
Li Cuixu: took posts of the director of the Safety Production Department of Hebei Shijiazhuang New Cast Pipe Co., Ltd., the project manager, assistant general manager and deputy general manager of the Investment and Management Department of China North Industrial Company. He is present the vice president of the company.
He Jin: took posts of a the general manager of CSG (Shenzhen) Float Glass Co., Ltd., the vice president of Float Glass Department, the general manager of CSG (Dongguan) Solar Glass Co., Ltd., the general manager of CSG (Chengdu) Co., Ltd. and the general manager of CSG (Qingyuan) Energy Saving New Material Co., Ltd. He is currently the assistant president of the company, the president of the Flat Panel and Electronic Glass Department and the vice president of the company.
CSG Annual Report 2018 Yang Xinyu: took posts of the Securities Department of Beijing KWM Law Firm, the risk control director, the assistant of the chairman of the board of the Law Department of Honghua International Medical Holding Co., Ltd., and the director of the Audit and Supervision Department, the director of the Stock affairs Department of the company. He is currently the secretary of the board of directors,
Post-holding inshareholder’s unit
√Applicable□ Not applicable
|||||||
|-|-|-|-|-|-|
||||||Received remuneration|
|||Position in shareholder’s||||
|Name|Name of shareholder’s unit||Start dated of|End date of|from shareholder’s unit|
|||unit|office term|office term||
||||||or not|
|||Chairman of Supervisory||||
|Chen Lin|Foresea Life Insurance Co., Ltd.||Apr. 2012||Yes|
|||Committee||||
||Shenzhen Juhua Investment andDevelopment Co., Ltd.|||||
|Zhang||President & CEO|Jan. 2016|Aug. 2018|Yes|
|Jinshun||||||
||Foresea Life Insurance Co., Ltd.|Chairman of Board|Sep. 2017||No|
|||Chairman of Board and||||
||Shenzhen Jushenghua Co., Ltd.||Nov. 2009||No|
|Ye Weiqing||General Manager||||
||Foresea Life Insurance Co., Ltd.|Director|Feb. 2012|Dec. 2018|No|
||Shenzhen Jushenghua Co., Ltd.|Vice President|Mar. 2016||No|
|Chen Xibao||||||
||Foresea Life Insurance Co., Ltd.|Director|Oct. 2017||No|
|Note of|N/A|||||
|post-holding||||||
|in||||||
|shareholder’||||||
|s unit||||||

Post-holding in other unit
√Applicable□Not applicable
|||||||
|-|-|-|-|-|-|
||||Start dated of||Received remuneration|
|Name|Name of other units|Position in other unit n|office term|End date of||
|||||office term|from other unit or not|
|Chen Lin|Shenzhen Shum Yip Logistics GroupCo., Ltd.|Deputy GeneralManager|May 2003||No|
||Shenzhen Baoneng Investment Group|Senior Vice Present|Oct. 2014|||
||||||No|
||Co., Ltd.|||||
||Guangdong Shaoneng Group Co., Ltd.|Director|Nov. 2015||Yes|
||Nanning department store co., Ltd.|Director|Apr. 2018||Yes|
||Jonjee Hi-tech Industrial &|Chairman of the Board|Nov. 2018|||
||||||Yes|
||Commercial Holding Co., Ltd.|||||
||Baoneng Automobile Co., Ltd.|Chairman of the Board|Dec. 2017||No|

CSG Annual Report 2018
|||||||
|-|-|-|-|-|-|
|Zhu||||||
||Renmin University of China|Associate Professor|Mar. 2010||Yes|
|Qianyu||||||
||Shenzhen Dewo Industrial||June 2010|||
|||Supervisor|||No|
||Development Co., Ltd,|||||
||Shenzhen Dewo Investment||Sep. 2011|||
|||Supervisor|||No|
||Development Co., Ltd.|||||
||Shenzhen Longood Intelligent Electric||Oct. 2012|||
|||Independent director|||Yes|
||Co., Ltd.|||||
||Shenzhen Neptunus Bioengineering||Aug. 2013|||
|Zhan||Independent director|||Yes|
||Co., Ltd.|||||
|Weizai||||||
||Shenzhen Liantronics Co., Ltd.|Independent director|Nov. 2016||Yes|
||Shenzhen Jiangcairen Education|||||
|||Chairman of the Board|Jul. 2017||No|
||Management Co., Ltd.|||||
||Jiangxi University of Finance and|||||
|||Subdecanal|Jul. 2017||No|
||Economics Shenzhen Research Institute|||||
||Shenzhen Weiye Decoration Group Co.,|||||
|||Independent director|Sep. 2018||Yes|
||Ltd.|||||
|||Professor and Doctoral||||
||South China University of Technology||Aug. 2000||Yes|
|||tutor||||
||GRG BANKING EQUIPMENT CO.,|||||
|Zhu||Independent director|Jan. 2018||Yes|
||LTD.|||||
|Guilong||||||
||Jiangsu Saifutian Steel Cable Co., Ltd.|Independent director|Aug. 2017|Dec. 2018|Yes|
||Guangzhou Kingmed Diagnostics|||||
|||Independent director|Nov. 2015||Yes|
||Group Co., Ltd.|||||
||Shenzhen Baoneng Investment Group|Deputy Chairman of the||||
|Zhang|||Mar. 2017||No|
||Co., Ltd.|Board||||
|Jinshun||||||
||Changan International Trust Co., Ltd.|General Manager|Sep. 2018||Yes|
||Baoneng South China Investment Co.,|||||
|||Chairman of the Board|Aug. 2017||No|
||Ltd.|||||
||Shenzhen Shining Asset Management||Jun. 2015|||
|||Executive Director and|||No|
||Co., Ltd.|General Manager||||
|||Executive Director and|Jun. 2014|||
||Qianhai E-payment Co., Ltd.||||No|
|Ye||||||
|||General Manager||||
|Weiqing||||||
||Shenzhen Laihua Property||Nov. 2016|||
|||Chairman of Board and|||No|
||Development Co., Ltd.|General Manager||||
||Shenzhen Liujin Plaza Investment Co.,||Feb. 2014|||
|||Chairman of Board and|||No|
||Ltd.|General Manager||||
||Shenzhen Shum Yip Logistics Center|Chairman of Board and|Feb. 2014||No|
|||General Manager||||

CSG Annual Report 2018
|||||||
|-|-|-|-|-|-|
||Investment Development Co., Ltd.|||||
||Shenzhen Baoneng Jianye Property||Aug. 2013|||
|||Director|||No|
||Co., Ltd.|||||
||Shenzhen Baoneng Century Property||Jul. 2013|||
|||Chairman of Board and|||No|
||Development Co., Ltd.|General Manager||||
||All City Co., Ltd.|Chairman of Board and|Apr. 2013||No|
|||General Manager||||
||Shenzhen Hualitong Investment Co.,||Mar. 2012|||
|||Chairman of Board and|||No|
||Ltd.|General Manager||||
||Shenzhen Baoyuan Logistics Co., Ltd.|Director|Jun. 2010||No|
||Baoneng Hotel Investment Co., Ltd.|Chairman of Board|Mar. 2010||No|
||Qinglan Industry (Shenzhen) Co., Ltd.|Chairman of Board|Jul. 2012|May 2018|No|
||Baoning Property Co., Ltd.|Chairman of Board and|May 2012||No|
|||General Manager||||
||Shenzhen Zhonglin Industry||May 2012|||
|||Chairman of Board and|||No|
||Development Co., Ltd.|General Manager||||
||Shenzhen Baoneng Investment Group||Oct. 2013|||
|||Director|||Yes|
||Co., Ltd.|||||
||Jonjee Hi-tech Industrial &||May 2016|||
|||Director||Nov. 2018|No|
||Commercial Holding Co., Ltd.|||||
||Shenzhen Shum Yip Logistics Group||Oct. 2003|||
|||Director|||No|
||Co., Ltd.|||||
||Baoneng Holdings (China) Co., Ltd.|Deputy Chairman|May 2018||No|
||Shenzhen Baoneng Investment Group|Vice President|Dec. 2017||Yes|
||Co., Ltd.|||||
||Baoneng City Development and|Vice President|Oct. 2018||No|
||Construction Group Co., Ltd.|||||
||Xinjiang Qianhai United Property &|Supervisor|Sep. 2016||No|
|Chen|Casualty Insurance Co., Ltd.|||||
|Xibao|Baoneng Automobile Co., Ltd.|Director|Mar. 2017||No|
||Qoros Automobile Co., Ltd.|Director|Dec. 2017||No|
||Guizhou Baoneng Automobile Co., Ltd.|Supervisor|Jan. 2018||No|
||Shenzhen Renda Certified Tax Agent|General Manager|Dec. 2004||Yes|
|Li Xinjun|Co., Ltd.|||||
||Zhongzhun Certified Public|Chairman of Board|Nov. 2010||Yes|
||Accountants (Shenzhen) Office|||||

Punishment of securities regulatory authority in the last three years to theCompany’s current and retired directors, supervisors and senior management during the report period
□ Applicable√ Not applicable
CSG Annual Report 2018 IV. Remuneration for directors, supervisors and senior executives
Decision-making procedures, recognition basis and payment for directors, supervisors and senior executives
1. Decision-making procedures: The allowances for independent directors, external directors fromnon-shareholder’s unit and external supervisors are planned and proposed by the Remuneration&Assessment Committee of the Board and approved by theShareholders’ General Meeting after deliberation of the Board. Remuneration for senior executives is proposed by the Remuneration&Assessment Committee of the Board and decided by the Board after discussion.
2. Confirmation basis of remuneration: The allowances for independent directors and external supervisors are confirmed based on industry standards and real situation of the Company. The remuneration for senior executives implements floating reward mechanism with reference to basic salary and business performance. Bonus for performance rewards is withdrawal by proportion quarterly according to return on equity and based on the total net profit after taxation.
3. Actual remuneration payment: The allowances for each of theCompany’s independent directors, external director fromnon-shareholder’s unit and each external supervisor are RMB 0.10 million per year, paid by actual month of service. The total remuneration for directors, supervisor and senior executives in the report period was RMB 23.846 million.
Remuneration for directors, supervisors and senior executives of the Company within the report period
Unit: RMB0,000
||||||||
|-|-|-|-|-|-|-|
||||||Total|Received|
||||||remuneration|remuneration|
|||||Post-holding|||
|Name|Title|Sex|Age||obtained from the|from related party|
|||||status|||
||||||Company before|of the Company|
||||||taxation|or not|
|Chen Lin||Female|47|Currently in||Yes|
||Chairman of the Board||||||
|||||office|||
||Secretary of the Party||||||
|Wang Jian||Male|55|Currently in|408.94|No|
||Committee, Deputy Chairman||||||
|||||office|||
||of the Board, CEO||||||
|Zhan Weizai||Male|55|Currently in|10|No|
||Independent Director||||||
|||||office|||
|Zhu Guilong||Male|55|Currently in|10|No|
||Independent Director||||||
|||||office|||
|Zhu Qianyu||Female|44|Currently in||No|
||Independent Director||||||
|||||office|||
|Zhang Jinshun||Male|54|Currently in||Yes|
||Director||||||
|||||office|||
|Ye Weiqing||Female|47|Currently in||Yes|
||Director||||||
|||||office|||
|Cheng Xibao||Female|37|Currently in||Yes|
||Director||||||
|||||office|||
||Chairman of the supervisory||||||
|Li Jianghua||Male|42|Currently in||No|
||board||||||
|||||office|||
||Employee Supervisor||||||
|Li Xinjun||Male|51|Currently in|10|No|
||Supervisor||||||
|||||office|||
|Gao Changkun||Male|50|Currently in|27.93|No|
||Employee Supervisor||||||
|||||office|||
|Lu Wenhui||Male|56|Currently in|506.10|No|
||Executive Vice President||||||
|||||office|||
|Li Cuixu||Male|44|Currently in|144.95|No|
||Vice president||||||
|||||office|||
|He Jin||Male|47|Currently in|128.57|No|
||Vice president||||||
|||||office|||
|Yang Xinyu||Male|39|Currently in|185.47|No|
||Secretary of the Board||||||
|||||office|||

CSG Annual Report 2018
||||||||
|-|-|-|-|-|-|-|
|Zhao Peng||Male|57|Post leaving|103.53|No|
||Employee Supervisor||||||
|Pan Yonghong||Male|50|Post leaving|423.01|No|
||CEO||||||
|Li Weinan||Male|57|Post leaving|406.10|No|
||Vice president||||||
|Jin Qingjun||Male|62|Post leaving|10|No|
||Independent Director||||||
|Zhang Wandong|Chairman of the supervisory|Female|50|Post leaving|10|No|
||board||||||
|Total|||||2,384.60||

Directors and senior management of the company were granted equity incentives during the reporting period
√Applicable□Not applicable
Unit: Share
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
|||||The|||||||
|||||exercise|||||||
|||||||The||Number ofrestrictedsharesnewlygrantedduring thereportperiod|||
||||Number of|price of|Market||||The|The|
|||Number||||number of|||||
||||shares|the|price at the||Number of||granting|number of|
|||of shares||||restricted|||||
||||already|exercised|end of the||shares||price of|restricted|
|||outstandi||||stocks held|||||
|Name|Title||exercised|shares|report||unlocked||restricted|stocks held|
|||ng during||||at the|||||
||||during the|during the|period||in this||stock|at the end|
|||the report||||beginning|||||
||||report|report|(RMB /||period||(RMB /|of the|
|||period||||of the|||||
||||period|period|share)||||share)|period|
|||||||period|||||
|||||(RMB /|||||||
|||||share)|||||||
||Chairman of||||||||||
|Chen Lin||||||3,207,639|1,475,514||4.28|2,213,271|
||the Board||||||||||
||Secretary of||||||||||
||the Party||||||||||
||Committee,||||||||||
|Wang Jian|Deputy|||||||2,300,000|3.68|2,300,000|
||Chairman of||||||||||
||the Board,||||||||||
||CEO||||||||||
||Executive||||||||||
|Lu Wenhui|Vice|||||2,405,729|1,106,635||4.28|1,659,953|
||President||||||||||
||Vice||||||||||
|Li Cuixu||||||||800,000|3.68|800,000|
||president||||||||||
||||||||||First||
||Vice||||||||grant：4.28||
|He Jin||||||1,600,000|736,000|200,000||1,304,000|
||president||||||||Reserved||
||||||||||grant：3.68||
|Yang|Secretary of|||||2,291,170|1,053,938||4.28|1,580,907|

CSG Annual Report 2018
|||||||||
|-|-|-|-|-|-|-|-|
|Xinyu|the Board|||||||
||Vice|||||||
|Li Weinan|||2,291,170|1,053,938||4.28|1,580,907|
||president|||||||
|Total|||11,795,708|5,426,025|3,300,000||11,439,038|
|||①In case the unlocking conditions of the restricted stock incentive plan is satisfied, the restricted shares||||||
|||Unlock in three phases after 12 months from the date of grant: 40% of the restricted stocks will be||||||
|||available for circulation within the period (from the first trading day following the lock-up period of 12||||||
|||months to the last trading day of lock-up period of 24 months), 30% of the restricted stocks will be||||||
|||available for circulation within the period (from the first trading day following the lock-up period of 24||||||
|||months to the last trading day of the lock-up period of 36 months), and 30% of the restricted stocks will||||||
|||be available for circulation within the period (from the first trading day following the lock-up period of 36||||||
|||months to the last trading day of the lock-up period of 48 months).||||||
|Remarks (if any)||②In the above directors and senior managers, Mr. Wang Jian, Mr. Li Cuixu and Mr. He Jin (200,000||||||
|||shares) were granted reservations for restricted shares at a price of 3.68 yuan per share on Sep. 13, 2018.||||||
|||③ In the above-mentioned directors and senior managers, Ms. Chen Lin, Mr. Lu Wenhui, Mr. He Jin||||||
|||(with the exception of 200,000 shares reserved), Mr. Yang Xinyu and Mr. Li Weinan, are awarded||||||
|||restricted shares on Dec. 11, 2017. The conditions to unlock restricted shares in the first restriction periods||||||
|||have been satisfied after 12 months from the date of award, and therefore, the conditions on restricted||||||
|||shares were lifted on Dec. 21, 2018 in the first restriction periods. The amount of restricted shares||||||
|||involved accounts for 40% of the total number of restricted shares granted.||||||

V. Particulars of workforce
1. Number, professional composition and educational background of employees
|||
|-|-|
|Number of employees in the parent company (person)|162|
|Number of employees in major subsidiaries of the Company (person)|10,638|
|Total number of employees (person)|10,800|
|Total number of employees received salaries in the period (person)|10,800|
|Number of retired employees whose costs bore by the parent company and its||
|main subsidiaries (person)||
|Professional composition||
|Category of professional composition|Number of professional composition (person)|
|Production personnel|7,593|
|Salesman|599|
|Technician|1,435|
|Financial personnel|118|
|Administrative personnel|1,055|

CSG Annual Report 2018
|||
|-|-|
|Total|10,800|
|Educational background||
|Category of educational background|Number (person)|
|Doctor|7|
|Master|164|
|Undergraduate|2,227|
|Junior college|1,989|
|Degree below junior college|6,413|
|Total|10,800|

 2. Staff remuneration policy
In 2018, the company strengthened the application of performance results in salary management. By introducing the concept of organizational performance, the company advocated to provide favorable remuneration to high-performance organizations.
Meanwhile, employees have been encouraged to improve their personal performance by working hard and make more contributions to the company, with accordingly rising performance incentives. The effective salary incentive has improved the enthusiasm of employees, enhanced the overall performance of the organization and thus help to achieve business objectives.
3. Staff training plan
The company has always attached great importance to the construction of talent team and the education and development of employees. Every year, the company sets up special funds for the training ofemployees’ skills, ability development and quality improvement. The company has established all kinds of staff learning and development system and tailored learning and development system for high-, middle- and basic-level employees to stimulateemployees’ internal driving force, enhance enterprise competitiveness, and provide strong guarantee for the development of CSG. Based on the sustainable development strategy ofH&R, the company will continuously deepen the scientific and systematic operation of learning and development work in order to promote management and increase efficiency.
4. Labor outsourcing
□ Applicable√ Not applicable
CSG Annual Report 2018 Section VIII. Corporate Governance
I. Corporate governance of the Company
In strict compliance with the requirements of the relevant laws and regulation including The Company Law, Securities Law and Rule of Governance for Listed Company, the Company has been putting efforts in improving the corporate governance, strengthening management of information disclosure, regulating operation activities and establishing a modern corporate system. At present, the system for corporate governance of the Company is basically perfect, operation is regulated, corporate governance is consummated, which accord with the requirements of relevant documents on corporate governance of listed company issued by CSRS.
The Company has established the Information Disclosure Management System and promptly improved it in accordance with newly issued laws and regulations, clarified the standards of insider information, and established inside information insider registration system and record management system. In order to further strengthen the Company's internal information disclosure control, enhance the disclosure consciousness of relevant personnel, and improve the quality of corporate information disclosure, in 2016, the Company set up information Disclosure Committee, and formulate Rules for the implementation of the information disclosure Committee. During the report period, the Company disclosed information with facticity, completeness, timeliness and fairness, strictly fulfilled the responsibilities and obligations of information disclosure of listed companies to ensure that investors are able to keep abreast of the Company's operation and development strategies. There was no regulatory punishment caused by information disclosure in the report period. Meanwhile, the Company delivered the Inside Information Insider Table to Shenzhen Stock Exchange when submitting periodic reports. Itdidn’t exist that insiders used the inside information to trade theCompany’s shares before the major sensitive information which could affect theCompany’s share price was disclosed.
The Company has seriously implemented the requirements of the relevant regulatory to cash dividends. The Company formulated the Return plan for Shareholders of CSG Holding Co., Ltd. in the Next Three Years (2018- 2020) according to relevant regulations of the Notice of Further Implementation of Cash Dividends of the Listed Companies (ZJF No.:[2012] 37) and the Regulatory Guidelines of Listed Companies No. 3 - Cash Dividends of Listed Companies (ZGZJHGG No.[2013] 43) issued by China Securities Regulatory Commission, further improved theCompany’s decision-making and supervision mechanism for distribution of profits, and protected the interests of investors.
During the report period, it did not exist that the Company provided the undisclosed information to the largest shareholder and actual controller. And it did not exist that non-operating fund of listed company was occupied by the largest shareholder and its affiliated enterprises.
Is there any difference between the actual condition of corporate governance and relevant regulations about corporate governance for listed company from CSRC?
□Yes√ No
There are no differences between the actual condition of corporate governance and relevant regulations about corporate governance for listed company from CSRC.
II. Independency of the Company relative to the largestshareholder’ in aspect of businesses, personnel, assets, organization and finance
The Company has been absolutely independent in business, personal, assets, organization and financial from its substantial shareholders ever since its establishment. The Company had an independent and complete business system and independent management capability.
1. In terms of business: The Company owns independent purchase and supply system of the raw resources, complete production
CSG Annual Report 2018 systems, independent sale system and customers. The Company is completely independent from the substantial shareholders in business. The substantial shareholders and their subsidiaries do not engage any identical business or similar business as the Company. 2. In terms of personnel: The Company established integrated management system of labor, personnel, salaries and the social security, which were absolutely independent from its holdingshareholder’s. Personnel of the managers, person in charge of the financial and other executive managers are obtained remuneration from the Company since on duty in the Company, and never received remuneration or take part-time jobs in largeshareholders’ company and other enterprises controlled by large shareholders. The recruitment and dismissal of Directors are conducted through legal procedure since the Company was listed and the manager has been appointed or dismissed by Board of Directors. The Board of Directors and theShareholders’ General Meeting have not received any interference of decisions on personnel appointment and removal from the largest shareholders.
3. In terms of asset: the Company is able to operate business independently and enjoys full control over the production system, auxiliary production system and facilities, land use right, industry property and non-patent technology owned or used by the Company. The investments to the Company from largest shareholder are monetary assets, and the largest shareholder has never occupied, damage or intervene to operation on these assets.
4. In terms of organization: The Company possessed sound corporate governance structure, establishedShareholders’ General Meeting, Board of Directors, Supervisory Committee, appointed general manager, and fixed related function departments. The Company had been totally independent from its large shareholders in organization structure. The Company has its own office and production sites that are different from those of the large shareholders. The largest shareholder and its related partiesdidn’t deliver any operation plan and order to the Company, neither influence the independence on management of the Company by any forms. 5. In terms of finance: The Company has set up independent financial department, established independent accounting calculation system and financial management system (included management system of its subsidiaries). The financial personnel of the Companydidn’t take part-time jobs in units of large shareholder or its subordinate units. The Company had independent bank accounts, separated from the large shareholders. The Company is independent taxpayer, paid taxes independently according the laws anddidn’t pay mixed taxes with the large shareholders. The financial decision-making of the Company was independent, and the large shareholders never interfered the usage of theCompany’s capital. The Company never offered guarantee to their large shareholders and its subordinate units and other related party. The largest shareholder and its related has never occupy or occupy disguised the capital.
III. Horizontal competition
□ Applicable√ Not applicable
IV. Annualshareholders’ general meeting and extraordinaryshareholders’ general meeting convened in the report period
1. AnnualShareholders’ General Meeting in the report period
|||||||
|-|-|-|-|-|-|
|||Ratio of investor||Date of||
|Session of meeting|Type||Date||Index of disclosure|
|||participation||disclosure||
||||||Announcement No.:|
|The First Extraordinary General|Extraordinary General|||||
|||26.99%|2018-03-15|2018-03-16|2018-011|
|Shareholders’ Meeting of 2018|Shareholders’ Meeting|||||
||||||（www.cninfo.com.cn）|
||||||Announcement No.:|
|Annual General Shareholders’|Annual General|||||
|||27.27%|2018-05-14|2018-05-15|2018-024|
|Meeting of 2017|Shareholders’ Meeting|||||
||||||（www.cninfo.com.cn）|
||||||Announcement No.:|
|The Second Extraordinary General|Extraordinary General|||||
|||26.84%|2018-08-06|2018-08-07|2018-041|
|Shareholders’ Meeting of 2018|Shareholders’ Meeting|||||
||||||（www.cninfo.com.cn）|
|The Third Extraordinary General|Extraordinary General|26.43%|2018-12-28|2018-12-29|Announcement No.:|

CSG Annual Report 2018
||||
|-|-|-|
|Shareholders’ Meeting of 2018|Shareholders’ Meeting|2018-074|
|||（www.cninfo.com.cn）|

 2. The preference shareholders convening the general meeting whose right to vote has been resumed□ Applicable√ Not applicable
V. Responsibility performance of independent directors in the report period
1. The attending of independent directors to Board meetings and generalshareholders’ meeting
|||||||||
|-|-|-|-|-|-|-|-|
|The situation of independent directors attending the board of directors and shareholders' meetings||||||||
|||||||Whether||
||Times of Board|Times of|Times of|||absent the||
|Name of||||Times of||||
||meeting supposed to|Presence|attending by||Times of|Meeting for|Times of|
|independent||||entrusted||||
||attend in the report|on the|communication||Absence|the second|Presence|
|director||||presence||||
||period|scene|way|||time in a row||
|||||||or not||
|Jin Qingjun|18|2|16|||No|3|
|Zhan Weizai|18|2|16|||No|3|
|Zhu Guilong|18|2|16|||No|2|

 Explanation of absence for the Board Meeting twice in a row
Not applicable
2. Objection for relevant events from independent directors
Whether independent directors came up with objection about theCompany’s relevant matters or not
□ Yes√No
During the report period, the independent directors did not raise objections to the Company's related matters.
3. Other explanation about responsibility performance of independent directors
Whether the opinions from independent directors were adopted or not
√Yes□ No
Explanation of the opinions from independent directors which were adopted or not adopted
In the report period, independent directors of the Company attended the board meetings and generalshareholders’ meetings, conscientiously performed their duties, and put forward constructive opinions or suggestions for the development of the Company strictly according to the requirements of the Guidelines for Operation of the Listed Companies on Main Board of Shenzhen Stock Exchange, the Listing Rules of Shenzhen Stock Exchange Stock, the Guidelines for Establishment of Independent Director Mechanism for Listed Companies and the Article of Association. Each independent director seriously deliberated all motions of the board of directors, gave independent opinions on significant operating management issues, engagement of senior management, internal control construction and so on, which played a positive role in safeguarding the interests of the company and minority shareholders. VI. Duty performance of the special committees under the board during the reporting period 1. Performance of the audit committee of the Board
The Audit Committee of the Board of Directors of the Company is constituted with 5 directors, and 3 of them are independent directors. The convoker is independent director. During the report period, according to demands of CSRC and Shenzhen Stock Exchange, and regulations of Rules of Procedure of the Audit Committee of the Board of Directors, Procedure for Annual Report
Work of the Audit Committee, the committee paid attention to the construction of corporate internal control system, audited the
internal audit report and financial report periodically, diligently and faithfully. They performed the following duties:
CSG Annual Report 2018①Deliberate theCompany’s financial statement and issue opinions
During the reporting period, in accordance with the requirements of the CSRC, the Audit Committee reviewed the relevant annual work plan for the audit of annual reports submitted by certified public accountants before the annual audited certified public accountants entered the market, and provided guidance opinions; At the same time, the basis, principles, and methods for the preparation of the Company's accounting statements are in compliance with the relevant provisions of national laws and regulations, and in all major respects they fairly reflect the financial status of the Company on December 31, 2018 and its operating results in 2018.
②Supervise the audit works conducted by the accountant firm
The Audit Committee communicated with the accounting firms and provides guidance and requirements for the annual financial report audit work and the plans and arrangements for the internal control report audit work. After the CPA came into the audit, the members of the Audit Committee kept close contact with the Company and the main project responsible personnel to understand the progress of the audit work and the concerns of the accountants, and timely feedback to thecompany’s relevant departments to ensure that the annual audit and information disclosure work was conducted as scheduled.
③ Summarize report on the audit works conducted by the accountant firm in previous year
Asia Pacific (Group) CPAs (special general partnership) strictly follows the China Auditing Standards and practices diligently, paying attention to the communication with the management and the audit committee, which reflects strong professional knowledge, good professional ethics and risk awareness. The firm successfully completed thecompany’s 2018 financial statement audit work and internal control audit work, and the audit quality is trustworthy.
2. Performance of the remuneration and examination committee of the Board
The remuneration and examination committee of the Board of Directors of the Company is constituted with 4 directors, and 3 of them are independent directors. The convoker is independent director.
①During the reporting period, the Compensation and Assessment Committee examined the remuneration of the management team of CSG and approved to report such remuneration to the board of directors for consideration.
②According to regulations of Rules of Procedure of The Remuneration and Appraisal Committee, the Remuneration and Appraisal Committee makes examination on the disclosed remuneration of the directors, supervisors and senior executives and thought it accorded with the relevant laws and regulations of the remuneration and appraisal system of the Company.
③The remuneration and examination committee deliberated the relevant items of equity incentive, relevant beneficiary avoiding for vote, and the deliberation results were submitted to the Board.
3. Performance of the nomination committee of the Board
The nomination committee of the Board of Directors of the Company is constituted with 5 directors, and 3 of them are independent directors. The convoker is independent director.
Nomination committee of the Board performed evaluation on the work of the Board, and believed that the directors of 8th session of the Board abided by the State laws, administrative rules and regulation of Article of Association since they took office. They attended or delegated to attend the Board Meeting and general meeting of shareholders on time, performed voting rights based on relevant regulations, actively kept eyes on the management situation of the Company, and performed the duty of Directors diligently. 4. Performance of the strategy committee of the Board
The strategy committee of the Board of Directors of the Company is constituted with 4 directors, and 1 of them is independent directors.
As the special institution responsible for the long-term development strategy and significant investment decision-making, the strategy committee made earnest research on the significant decisions affecting theCompany’s development and issued relevant recommendations according to the procedure rules of the strategy committee. During the reporting period, the committee considered
CSG Annual Report 2018 the profit distribution plan, and held the view that the profit distribution plan conformed to the requirements of the Company Law, the Enterprise Accounting Principles and the Articles of Association, and agreed to submitted the same to the board and general meeting for consideration. At the same time, the strategy committee considered issues concerning significant operation management, guarantee for controlling subsidiaries, related transaction, and investment projects of the Company, which were submitted to the board for consideration.
VII. Performance of the Supervisory Committee
During the report period, the Supervisory Committee found whether there was risk in the Company in the supervisory activities.□ Yes√ No
The Supervisory Committee had no objection on the supervised events during the report period.
VIII. Performance examination and incentives of senior management
On December 21, 2018, the company held an extraordinary meeting of the 8th board of directors, and reviewed and approved the “Proposal on the Compensation of CSG Group Management Team”. In order to maximize the company's operating efficiency, fully mobilize the enthusiasm of the management team to ensure the completion of the company's various operational indicators, the board of directors agreed to adopt an annual salary system for the company's management team. The annual salary system consists of a fixed annual salary and performance bonus. The performance bonus is an incentive income. The company conducts accounting according to the overall business situation and individual assessment. The specific payment rules are implemented according to the company's annual assessment plan. These measures have been implemented since 2018.
IX. Internal Control
1. Particulars about significant defects found in the internal control during the report period
□ Yes√ No
2. Self-appraisal report of internal control
|||||
|-|-|-|-|
|Disclosure date of full text of self-appraisal report of internal control||17 April 2019||
|||More details found in “Report of Internal Control of||
|Disclosure index of full text of self-appraisal report of internal control||CSG for year of 2018” published on Juchao Website||
|||(http://www.cninfo.com.cn)||
|The ratio of the total assets of the units included in the scope of evaluation||||
|||92%||
|to the total assets of the Company's consolidated financial statements||||
|The ratio of the operating income of the units included in the scope of||||
|evaluation to the operating income of the Company's consolidated financial||95%||
|statements||||
|Standards of Defects Evaluation||||
|Category|Financial Reports||Non-financial Reports|
||Major defects:||Major defects:|
||A. Fraud of directors, supervisors and senior||A. Major decision-making mistakes caused by|
||management;||decision-making process of key business;|
||B. Ineffective control environment;||B. Serious violation of state laws and regulations;|
||C. Invalid internal supervision;||C. Serious brain drain of senior and middle|
|Qualitative criteria||||
||D. Major internal control defects found and||management and or personnel at key technological|
||reported to the management but haven’t been||posts;|
||corrected after a reasonable time;||D. Major or significant defects found in the|
||E. Material misstatements are found by the external||internal control evaluation have not been rectified|
||audit but haven’t been found in the process of||and reformed;|
||internal control;||E. The company's major negative news frequently|

CSG Annual Report 2018
||||
|-|-|-|
||F. Financial reports submitted during the reporting|appears on media;|
||period completely cannot meet the needs and are|Significant defects:|
||severely punished by regulatory agencies;||
|||A. Big deviation of execution caused by executive|
||G. Other major defects that may affect the report|routine of key business;|
||users’ correct judgment.||
|||B. Regulatory authorities impose large amount of|
||Significant defects:|fines because the violation of laws and regulations;|
||A. Defects or invalidation of important financial|C. Defects or invalidation of important business’|
||control procedures;|internal control procedures;|
||B. Significant misstatements are found by the|Common defects: Other control defects except for|
||external audit but haven’t been found in the process|major defects and significant defects.|
||of internal control;||
||C. Financial reports submitted during the reporting||
||period have mistakes frequently;||
||D. Other significant defects that may affect the||
||report users’ correct judgment.||
||Common defects: Other control defects except for||
||major defects and significant defects.||
||Major defects:|Major defects:|
||A. Amount of net profit affected by misstatements|A. Amount of direct property loss: the direct loss|
||(based on consolidated statements): amount affected|amount is equal to or greater than 30 million yuan;|
||by misstatements is equal to or greater than 3% of|B.Group's reputation: major negative news spreads|
||net profit and the absolute amount is no less than 30|in numerous business areas or is widely reported|
||million yuan;|by national media and causes significant damages|
||B. Amount of assets and liabilities affected by|to the corporate reputation which takes more than|
||misstatements (based on consolidated statements):|six months to be restored.|
||amount affected by misstatements is equal to or|Significant defects:|
||greater than 1% of total assets.|A. Amount of direct property loss: the direct loss|
||Significant defects:|amount is equal to or greater than 20 million yuan|
|Quantitative standard|A. Amount of net profit affected by misstatements|but less than 30 million yuan;|
||(based on consolidated statements): not belong to|B. Group's reputation: negative news spreads|
||major defects and amount affected by|inside the industry or is reported or focused by|
||misstatements is equal to or greater than 2% of net|local media and causes certain damages to the|
||profit and the absolute amount is no less than 20|corporate reputation which takes more than three|
||million yuan;|months but less than six months to be restored.|
||B. Amount of assets and liabilities affected by|Common defects:|
||misstatements (based on consolidated statements):|A. Amount of direct property loss: defects except|
||amount affected by misstatements is equal to or|for major and significant defects.|
||greater than 0.5% of total assets but less than 1% of||
|||B. Group's reputation: negative news spreads|
||total assets.||
|||within the group and causes minor damages to the|
||Common defects: Defects except for major and|corporate reputation which takes less than three|
||significant defects.|months to be restored.|
|Amount of significant|||
|defects in financial reports|||
|Amount of significant|||
|defects in non-financial|||
|reports|||
|Amount of important|||
|defects in financial reports|||
|Amount of important|||
|defects in non-financial|||
|reports|||

Notes of the major issues related to internalcontrol：
As of the issuance date of the report, the company did not find internal control information which might have a significant impact on theinvestors’ understanding of the internal control evaluation report or their evaluation of internal control of the company or on the investment decisions made by investors.
CSG Annual Report 2018 X. Audit report of internal control
√Applicable□ Not applicable
|||
|-|-|
|Deliberations in Internal Control Audit Report||
|According to Guidelines of Enterprise Internal Control Audit and the relevant requirements of CICPA auditing standards, AsiaPacific (Group) CPAs (special general partnership) (hereinafter referred to as AP) audited the effectiveness of internal control overfinancial statements of the Company up to 31 December 2018, issued AP Ya-Kuai- A-Zhuan-Zi (2019) No. 0021 Internal ControlAudit Report and made the following opinions: AP thought that CSG Holding Co., Ltd. maintained effective internal control overfinancial statements in all major aspects according to the Fundamental Norms of Enterprise Internal Control and relevant rules onDecember 31, 2018.||
|Date of disclosing the internal||
||17 April 2019|
|control audit reports||
|Disclosure index of internal control|More details can be found in 2018 Internal Control Audit Report of CSG released on Juchao|
|audit report|Website (http://www.cninfo.com.cn)|
|Type of the auditor’s opinion|Standard unqualified opinion|
|Whether there are major flaws in||
||No|
|the non-financial report or not||

Whether the CPAs firm issued an Audit Report on Internal Control with non-standard opinion or not?
□Yes√ No
Whether the Audit Report on Internal Control from the CPAs firm is in consistent with the Self-appraisal Report from the Board or not?
√ Yes□ No
CSG Annual Report 2018 Section IX. Financial Report
I. Report of the Auditors
|||
|-|-|
|Type of Auditor’s Opinion|Standard and unqualified|
|Issue date of Report of the Auditors|16 April 2019|
|Name of Auditor’s organization|Asia Pacific (Group) CPAs (special general partnership)|
|Reference number of Report of the Auditors|Ya-Kuai- A-Shen-Zi (2019) No. 0034|
|Name of CPA|Zhao Qingjun, Zhou Xianhong|

Auditor’s Report
To the shareholders of CSG Holding Co., Ltd.:
I. Opinion
We have audited the accompanying financial statements of CSG Holding Co., Ltd. (hereinafter “the Company”), which comprise the Separate/Consolidated Statements of Financial Position as at 31 December 2018, and the Separate/Consolidated Statements of profit or loss, the Separate/Consolidated Statements of changes in equity and the Separate/Consolidated Statements of cash flows for the year then ended, and the notes to the financial statements.
In our opinion, the financial statements attached were prepared in line with the regulations of Accounting Standards for Business Enterprises in all significant aspects which gave a true and fair view of the consolidated and parent financial position of the Company as at Dec. 31, 2018 and the consolidated and parent business performance and cash flow of the Company for 2018.
II. Basis of Opinion
We conducted our audit in accordance with Standards on Auditing for Certified Public Accountants. Our responsibility is to express an opinion on these financial statements based on our audit. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
III. Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We determine the followings are key audit matters in need of communication in our report.
I) Impairment of fixed assets and the construction in progress
1. Matter description
As disclosed in the financial report, by 31st Dec 2018, Impairment provision for construction in progress of the CSG Group was RMB
366.69 million , Impairment provision for the fixed assets was RMB111.68 million. On 31 may 2018, the state introduced the‘Circular
of matters concerning Photovoltaic Power Generation in2018’, The policies mentioned above considerably affected the operations of
CSG Annual Report 2018CSG’s solar industry, by‘the section 8 of accounting standards for business enterprises- impairments ofassets’, the management of the company identified and ran impairment tests for some parts of related assets showing a sign of impairment. During the impairment test, the management has engaged an independent valuer to assist in the identification and valuation of the recoverable amount of relevant asset, and compared it with the book value of the corresponding assets. The test results showed that the recoverable amount of related assets was less than its book value. According to the difference, the provision for impairment of fixed assets and construction in progress should be noted by the company.
Due to the procedure of related assets impairment involved significant decisions and predictions made by the management team, we therefore have confirmed this as a key audit matter.
2. Countermeasures of Audit
1 Understood and tested the effectiveness of its execution of the internal control system of the fixed assets and the construction in progress;
2 Evaluated management's identification of relevant asset groups assertions and the amount of assets allocated in each asset group; 3 Checked the management's process of identifying the signs of impairment of related assets and assessed the reasonableness of their judgments;
4 Discussed with the management the specific process of the relevant asset impairment test, and understood the evaluation and approval process of the impairment test results;
5 Evaluated the management's use of the valuation method, discussed with the independent valuer the appropriateness of the valuation method, and independently compare the key assumptions, parameters and discount rates of the assessment with historical financial data and industry trends analysis;
6 Checked the asset in field survey and understood use of relevant asset and Reviewed relevant disclosures in the presentation of financial statements
II) Provision of Impairment in goodwill
1. Matter description
As disclosed in Notes, in December 31, 2018, the original value of CSG Group goodwill RMB 397.39 million as its acquired Shenzhen CSG Display Technology Co., Ltd. The management is required to annually perform the impairment test for goodwill. The management has engaged an independent valuer to assist in the identification and valuation of the recoverable amount of asset groups. The management tests goodwill for impairment by estimating the recoverable amounts of the asset groups that goodwill is allocated to, and then comparing these recoverable amounts with the carrying value of those asset groups and goodwill. The result of the impairment test indicated that the recoverable amount of the relevant asset group of goodwill is lower than the book value, and the provision for goodwill impairment should be noted by company. The group predicted the recoverable amounts which involves forecast of asset groups future cash flows, including significant judgments and assumptions including the selling price, the cost of production, the operating expense, the discount rate, the growth rate, etc. As the goodwill impairment test involved a complex process and the significant judgments of theCompany’s management, therefore, we consider this matter as key audit matters.
2. Countermeasures of Audit
1 Understood and tested the effectiveness of its execution of the internal control system of the provision of impairment in goodwill; 2 Checked whether goodwill was allocated to each of the cash-generating units in a reasonable methods;
3 Compared the relevant asset groups actual results in 2018 with their corresponding estimates made in the prior year to evaluate the reliability of themanagement’s estimates on cash flows;
4 Discussed with the management on key assumptions and assessed its rationality, including but not limited the key parameters for obtaining significant management estimates and judgments, such as the revenue growth rate, the gross profit margin, the expense growth rate and the discount rate etc., compared and analyzed historical data and industry level of relevant asset groups;
5 Discussed with the valuation experts the appropriateness of the application of the valuation method, and make independent
CSG Annual Report 2018 comparison and analysis of the key assumptions, parameters and discount rates of the assessment combined with historical financial data and industry development trends;
6 Checked the goodwill impairment test model calculation accuracy ;
7 Checked whether the impairment of goodwill have been properly presented and disclosed in the financial statements as required. IV. Other information
The management layer of the Company (hereinafter referred to as the management layer) shall be responsible for other information, including the information covered in the financial report, but excludes financial statements and our audit report.
Our audit opinions on financial statements do not cover other information; we will not make the authentication conclusion on other information in any form.
Combining our audit of the financial statement, our responsibility is to read other information, during which, we shall consider that whether other information has any significant difference with the financial statement or the circumstance we know during the audit or is there any significant misstatement.
Based on the work we already executed, if we confirm that there are significant misstatements in other information, we shall report such a fact. On such aspect, there is nothing to report.
V. Management’s Responsibility for the Financial Statements
Management of the Company is responsible for the preparation and fair presentation of these financial statements in accordance with the requirements of the Accounting Standards for Business Enterprises, and for such internal control as management
determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing financial statements, the management layer is responsible for assessing the Company's sustained business capability, disclosing matters related to continueoperating，using the going-concern assumption unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
The governance layer is responsible for supervising the financial reporting process of the company.
VI. The responsibility of Certified Public Accountants for the financial statement auditing.
Our objective is to obtain reasonable assurance on whether there is no misstatement in overall financial statements caused by fraud or error, and issue the audit report with audit opinions. Reasonable assurance is the high-level assurance, but itcan’t assure that a certain major misstatement can be always found when auditing according to the audit standard. The misstatement may be caused by malpractices or
error. If the misstatements within the rational expectations may affect the economic decision of the financial statement user according to the financial statement, it shall be deemed that the misstatement is significant.
During the process of conducting the audit work according to audit standards, we apply professional judgment and keep professional skepticism. Meanwhile, we also perform the following tasks:
(1) Identify and Estimate the significant misstatement risks of the financial statement due to the malpractices and error, design and implement the audit procedures to respond those risks, and obtain adequate and proper audit evidence serving as the basis of publishing the audit opinions. Since malpractices may involve in collusion, falsification, intentional omission, misrepresentation or overriding the internal control, the risk of failing to detect a significant misstatement due to malpractices is higher than the risk of failing to detect a significant misstatement due to the error.
(2) Understand the internal control related to audit, so as to design appropriate audit procedures.
(3) Estimate the appropriateness of the accounting policies selected by the management layer, and the rationality of making accounting estimate and relevant disclosures.
CSG Annual Report 2018 (4) Draw a conclusion on the appropriateness of the going concern assumption used by the management layer. Meanwhile, according to the obtained audit evidence, it may cause to come to the conclusion that there are substantial doubtable events or major uncertainty for the sustainable operation ability of the Company. In case that
we come to the conclusion that there is a significant uncertainty, the audit standards require us to remind the users of the statements to pay attention to relevant disclosures in the financial statements in the audit report; In case of any insufficient disclosure, we shall give modified opinions. Our conclusion is based on the available information up to the audit report day. However, the future events or circumstances may cause the Company cannot continue to operate.
(5) Estimate the overall presentation, structure and content (disclosure included) of the financial statements, and Estimate whether the financial statements fairly reflect relevant transactions and matters.
(6) Acquire adequate and appropriate audit evidences on the financial information of the entity or business activities of the Company, and give audit opinions on the consolidated financial statements. We are responsible for guiding, supervising and executing the audit of the Group, and take all responsibilities for the audit opinions.
We communicate with the governance layer about the audit scope, schedule, significant audit findings and other matters within the plan, including the noteworthy internal control defects recognized by us during the audit.
We also provide statements to the governance layer on the compliance with the professional ethics requirement related to the independence, and communicate with
the governance layer on all relationships and other matters that may reasonably be considered to affect our independence, as well as relevant preventive measures.
From the matters that we have communicated with the governance layer, we confirm the most important matters for the audit of the current financial statements, and thus constitute the key audit matters. We describe these matters in our audit report, unless laws and regulations prohibit the public disclosure of these matters, or in rare cases, if it is reasonably expected that the negative consequences of communicating a matter in the audit report will surpass the benefits in the public interests, we confirm that the matter shall not be communicated in the audit report.
Asia-Pacific (Group) Certified Public Accountant of China
Certified Public Accountants
(special general partnership)
Beijing, China Certified Public Accountant of China
16April 2019
CSG Annual Report 2018 CSG HOLDING CO., LTD.
CONSOLIDATED ANDCOMPANY’S BALANCE SHEETS
AS AT 31 DECEMBER 2018
(All amounts in RMB Yuan unless otherwise stated)
[English translation for referenceonly]
31 December 2018 31 December 2017 31 December 2018 31 December 2017 ASSETS Note Consolidated Consolidated Company Company Current assets
Cash at bank and on hand 4(1) 2,226,447,720 2,462,605,764 1,700,726,151 1,681,877,320 Notes receivable and Accounts
receivable 4(2) 1,311,608,760 1,190,470,710 - - Inclouding :Notes receivable 4(2)1 719,375,448 552,232,420 - - Accounts receivable 4(2)2 592,233,312 638,238,290 - - Advances to suppliers 4(3) 91,176,675 143,848,023 438,167 146,132 Other receivables 4(4)/17(1) 207,424,295 205,939,019 2,912,516,245 2,400,334,816 Inventories 4(5) 600,139,750 685,895,317 - - Assets classified as held for sale 4(6) 45,983,520 45,983,520 - - Other current assets 4(7) 445,327,449 200,847,989 300,000,000 - Total current assets 4,928,108,169 4,935,590,342 4,913,680,563 4,082,358,268 Non-current assets
Long-term receivables 17(3) - - 1,200,000,000 1,200,000,000 Long-term equity investments 17(2) - - 4,964,696,831 4,795,987,652 Fixed assets 4(8) 9,930,843,775 11,540,769,697 20,926,071 22,182,246 Construction in progress 4(9) 2,559,179,442 1,417,624,618 - - Intangible assets 4(10) 1,035,731,324 1,047,222,407 879,146 1,742,109 Development expenditure 4(10) 74,549,257 61,365,537 - - Goodwill 4(11) 376,720,156 397,392,156 - - Long-term prepaid expenses 12,746,609 2,223,397 - - Deferred tax assets 4(12) 139,529,518 80,872,862 - - Other non-current assets 4(13) 56,825,934 51,941,352 732,038 2,132,041 Total non-current assets 14,186,126,015 14,599,412,026 6,187,234,086 6,022,044,048 TOTAL ASSETS 19,114,234,184 19,535,002,368 11,100,914,649 10,104,402,316
CSG Annual Report 2018 CSG HOLDING CO., LTD.
CONSOLIDATED ANDCOMPANY’S BALANCE SHEETS (CONT'D)
AS AT 31 DECEMBER 2018
(All amounts in RMB Yuan unless otherwise stated)
[English translation for referenceonly]
31 December 2018 31 December 2017 31 December 2018 31 December 2017 LIABILITIES AND OWNERS' EQUITY Note Consolidated Consolidated Company Company Current liabilities
Short-term borrowings 4(15) 2,922,679,590 3,704,630,909 2,000,000,000 2,600,000,000 Notes payable and Accounts payable 4(16) 1,315,009,263 1,613,567,664 261,024 261,024 Including : Notes payable 4(16)1 105,150,000 213,401,622 - - Accounts payable 4(16)2 1,209,859,263 1,400,166,042 261,024 261,024 Advances from customers 4(17) 206,631,008 195,563,465 - - Employee benefits payable 4(18) 266,459,151 272,170,660 41,096,020 40,856,313 Taxes payable 4(19) 111,967,365 111,996,764 1,099,231 1,762,580 4(20)
Other payables /17(4) 552,751,187 653,357,094 1,668,587,218 912,523,726 Including : Interest payable 4(20)1 73,612,703 34,032,740 41,572,125 3,090,735 Dividends payable 4(20)2 2,846,362 - 2,846,362 - Other payables 4(20)3 476,292,122 619,324,354 1,624,168,731 909,432,991 Current portion of non-current liabilities 4(21) 819,448,742 904,261,397 - 180,000,000 Other current liabilities 300,000 300,000 - - Total current liabilities 6,195,246,306 7,455,847,953 3,711,043,493 3,735,403,643 Non-current liabilities
Long-term borrowings 4(22) 2,315,700,000 1,554,120,000 2,000,000,000 1,200,000,000 Long-term payables 4(23) 529,910,796 1,161,794,247 - - Deferred tax liabilities 4(12) 22,118,840 20,915,954 - - Deferred income 4(24) 601,825,780 562,701,103 184,642,520 186,526,280 Total non-current liabilities 3,469,555,416 3,299,531,304 2,184,642,520 1,386,526,280 Total liabilities 9,664,801,722 10,755,379,257 5,895,686,013 5,121,929,923Shareholders’ equity
Share capital 4(25) 2,863,277,201 2,484,147,547 2,863,277,201 2,484,147,547 Capital surplus 4(26) 1,095,339,421 1,306,381,765 1,240,166,735 1,451,209,079 Less: Treasury shares 4(27) (277,180,983) (417,349,879) (277,180,983) (417,349,879) Other comprehensive income 4(28) 5,080,234 1,948,943
- - Special reserve 4(29) 6,068,600 3,224,938
- - Surplus reserve 4(30) 924,305,375 920,592,332 938,850,735 935,137,692 Undistributed profits 4(31) 4,486,264,723 4,159,642,227 440,114,948 529,327,954 Total equity attributable to shareholders of
parent company 9,103,154,571 8,458,587,873 5,205,228,636 4,982,472,393 Minority interests 346,277,891 321,035,238 -
- Total shareholders' equity 9,449,432,462 8,779,623,111 5,205,228,636 4,982,472,393 TOTAL LIABILITIES AND
SHAREHOLDERS’ EQUITY 19,114,234,184 19,535,002,368 11,100,914,649 10,104,402,316 The accompanying notes form an integral part of these financial statements.
Legal representative: Chen Lin Principal in charge of accounting: Wang Jian Head of accounting department:Wang Wenxin
CSG Annual Report 2018 CSG HOLDING CO., LTD.
CONSOLIDATED ANDCOMPANY’S INCOME STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
(All amounts in RMB Yuan unless otherwise stated)
[English translation for referenceonly]
2018 2017 2018 2017 Item Note Consolidated Consolidated Company Company Revenue 4(32) 10,609,963,011 10,879,400,746 58,900,937 58,687,566 Less: Cost of sales 4(32) (8,120,481,894) (8,216,358,372) - - Taxes and surcharges 4(33) (140,424,851) (124,523,926) (516,457) (4,942,397) Selling and distribution expenses 4(34) (354,983,459) (336,131,723) - - General and administrative expenses 4(35) (731,215,251) (588,652,397) (177,600,771) (117,287,822) Research and development expenses 4(36) (338,791,891) (330,677,375) (7,601) (6,779) Financial expenses - net 4(37) (349,403,487) (315,961,080) (76,503,819) (42,124,252) Including: interest expenses (401,627,067) (314,603,596) (131,665,668) (53,413,267) interest income 61,857,535 12,606,285 57,796,521 11,043,439 Asset impairment loss 4(39) (136,546,150) (69,399,755) (22,950) (80,219) 4(40)
Investment income/(loss) /17(5) - 427,636 231,537,607 436,068,825 Income on disposal assets 4(41) (454,368) (1,768,993) 2,440 - Other Income 4(42) 94,618,039 84,341,814 2,049,664 1,568,240 Operating profit 532,279,699 980,696,575 37,839,050 331,883,162 Add: Non-operating revenue 4(43) 13,858,651 20,763,042 134,006 40,000 Less: Non-operating expenses 4(44) (1,541,471) (5,152,591) (243,265) (3,426,562) Total profit 544,596,879 996,307,026 37,729,791 328,496,600 Less: Income tax (expenses)/revenue 4(45) (72,388,291) (167,670,991) (599,358) (7,655,575) Net profit 472,208,588 828,636,035 37,130,433 320,841,025 Classified by continuous operation:
Net income from continuing operations (“-” for net
loss) 472,208,588 828,636,035 37,130,433 320,841,025 Net income from discontinued operations (“-” for
net loss)
- - - - Classified by equity ownership:
Attributable to shareholders of parent company 452,965,935 825,388,312 - - Minority interests 19,242,653 3,247,723 - - Other comprehensive income net after tax 3,131,291 (2,705,028) - - Other comprehensive income net after tax
attributable to shareholders of parent company 3,131,291 (2,705,028) - - Other comprehensive income items which will be
3,131,291 (2,705,028) - - reclassified subsequently to profit or loss
Differences on translation of foreign currency
3,131,291 (2,705,028) - - financial statements
attO ribth ue tar bc lo em top r meh ine on rs ii tv ye
i
nin tec ro em ste
s
net after tax
- - - - Total comprehensive income 4(28) 475,339,879 825,931,007 37,130,433 320,841,025 Total comprehensive income attributable to
456,097,226 822,683,284
shareholders of parent company
Total comprehensive income attributable to minority
19,242,653 3,247,723
interests
Earnings per share 4(46)
Basic earnings per share (RMB Yuan) 4(46) 0.16 0.30
Diluted earnings per share (RMB Yuan) 4(46) 0.16 0.29
The accompanying notes form an integral part of these financial statements.
Legal representative: Chen Lin Principal in charge of accounting: Wang Jian Head of accounting department: Wang Wenxin
CSG Annual Report 2018 CSG HOLDING CO., LTD.
CONSOLIDATED ANDCOMPANY’S CASH FLOW STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
(All amounts in RMB Yuan unless otherwise stated)
[English translation for referenceonly]
2018 2017 2018 2017 Item Note Consolidated Consolidated Company Company 1. Cash flows from operating activities
Cash received from sales of goods or rendering of services 11,788,692,400 12,159,560,836 61,224,074 84,336,551 Refund of taxes and surcharges 82,340,672 24,706,337 - - Cash received relating to other operating activities 4(47)(a) 215,823,594 72,348,567 62,104,734 16,104,051 Sub-total of cash inflows 12,086,856,666 12,256,615,740 123,328,808 100,440,602 Cash paid for goods and services (7,251,436,467) (7,206,584,779) - (65,853) Cash paid to and on behalf of employees (1,316,396,954) (1,204,981,471) (96,333,808) (61,388,549) Payments of taxes and surcharges (784,858,705) (795,627,245) (3,313,177) (17,355,536) Cash paid relating to other operating activities 4(47)(b) (603,786,440) (585,976,089) (31,902,035) (26,421,920) Sub-total of cash outflows (9,956,478,566) (9,793,169,584) (131,549,020) (105,231,858) Net cash flows from/(used in) operating activities 2,130,378,100 2,463,446,156 (8,220,212) (4,791,256) 2. Cash flows from investing activities
Cash received from returns on investments
- - 231,537,607 436,068,825 Net cash received from disposal of fixed assets, intangible assets
4,272,239 4,370,785 2,440 - and other long-term assets
Cash received relating to other investing activities 4(47)(c) 31,055,318 187,756,255 - 5,966,582 Sub-total of cash inflows 35,327,557 192,127,040 231,540,047 442,035,407 Cash paid to acquire fixed assets, intangible assets and other
long-term assets (695,872,456) (1,212,172,338) (6,675,786) (3,996,610) Cash paid to acquire investments - - (72,000,000) - Cash paid relating to other investing activities 4(47)(d) (118,263,080) (200,085,036) (45,168) (284,975) Sub-total of cash outflows (814,135,536) (1,412,257,374) (78,720,954) (4,281,585) Net cash flows (used in)/from investing activities (778,807,979) (1,220,130,334) 152,819,093 437,753,822 3. Cash flows from financing activities
Cash received from capital contributions 36,161,814 417,349,879 36,161,814 417,349,879 Including: Cash received from capital contributions by minority
shareholders of subsidiaries - - - - Cash received from borrowings 4,636,519,062 4,096,568,050 3,340,000,000 2,750,693,638 Cash received relating to other financing activities 4(47)(e) - 3,616,000,000 44,696,063 2,700,067,157 Sub-total of cash inflows 4,672,680,876 8,129,917,929 3,420,857,877 5,868,110,674 Cash repayments of borrowings (4,737,952,772) (5,154,107,768) (3,320,000,000) (4,646,723,365) Cash payments for interest expenses and distribution of dividends
or profits (503,060,429) (558,404,559) (225,366,612) (275,981,816) Including: Cash payments for dividends to minority shareholders of
subsidiaries - (2,488,500) - - Cash payments relating to other financing activities 4(47)(f) (1,020,125,951) (1,783,109,674) - - Sub-total of cash outflows (6,261,139,152) (7,495,622,001) (3,545,366,612) (4,922,705,181) Net cash flows (used in)/from financing activities (1,588,458,276) 634,295,928 (124,508,735) 945,405,493 4. Effect of foreign exchange rate changes on cash 2,261,903 (2,425,575) (1,248,202) 666,398
CSG Annual Report 2018 5. Net increase/(decrease) in cash and cash equivalents 4(48)(b) (234,626,252) 1,875,186,175 18,841,944 1,379,034,457 Add: Cash and cash equivalents at beginning of year 2,459,753,165 584,566,990 1,680,672,390 301,637,933 6. Cash and cash equivalents at end of year 4(48)(c) 2,225,126,913 2,459,753,165 1,699,514,334 1,680,672,390 The accompanying notes form an integral part of these financial statements.
Legal representative: Chen Lin Principal in charge of accounting: Wang Jian Head of accounting department: Wang Wenxin
CSG Annual Report 2018 CSG HOLDING CO., LTD.
CONSOLIDATED STATEMENT OF CHANGES INSHAREHOLDERS’ EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2018
(All amounts in RMB Yuan unless otherwise stated)
[English translation for referenceonly]
Attributable to shareholders of parent company
Other Total Less: Treasury comprehensi Surplus Undistributed Minority shareholders' Item Share capital Capital surplus share ve income Special reserve reserve profits Sub-total interests equity Note 4(25) 4(26) 4(27) 4(28) 4(29) 4(30) 4(31)
Balance at 1 January 2017 2,075,335,560 1,260,702,197 - 4,653,971 5,843,473 888,508,230 3,573,871,573 7,808,915,004 320,276,015 8,129,191,019 Movements for the year ended 31 December
2017
Total comprehensive income
Net profit - - - - - - 825,388,312 825,388,312 3,247,723 828,636,035 Other comprehensive income 4(28) - - - (2,705,028) - - - (2,705,028) - (2,705,028) Total comprehensive income - - - (2,705,028) - - 825,388,312 822,683,284 3,247,723 825,931,007 Capital contribution and
withdrawal by shareholders 97,511,654 356,979,901 (417,349,879) - - - - 37,141,676 - 37,141,676 Share-based payments 97,511,654 328,032,920 (417,349,879) - - - - 8,194,695 - 8,194,695Shareholders’ Interest-free
borrowing - 28,946,981 - - - - - 28,946,981 - 28,946,981 Profit distribution - - - - - 32,084,102 (239,617,658) (207,533,556) (2,488,500) (210,022,056) Appropriation to surplus reserve 4(30) - - - - - 32,084,102 (32,084,102) - - - Distribution to the shareholders 4(31) - - - - - - (207,533,556) (207,533,556) (2,488,500) (210,022,056) Special reserve - - - - (2,618,535) - - (2,618,535) - (2,618,535) Special reserve appropriate 4(29) - - - - 7,831,127 - - 7,831,127 - 7,831,127 Special reserve used 4(29) - - - - (10,449,662) - - (10,449,662) - (10,449,662) Internal transfer of shareholders'
equity 311,300,333 (311,300,333) - - - - - - - - Capital reserve to share capital 311,300,333 (311,300,333) - - - - - - - - Balance at 31 December 2017 2,484,147,547 1,306,381,765 (417,349,879) 1,948,943 3,224,938 920,592,332 4,159,642,227 8,458,587,873 321,035,238 8,779,623,111 97
CSG Annual Report 2018 CSG HOLDING CO., LTD.
CONSOLIDATED STATEMENT OF CHANGES INSHAREHOLDERS’ EQUITY(CONT’D)
FOR THE YEAR ENDED 31 DECEMBER 2018
Attributable to shareholders of parent company
Other Total Less: Treasury comprehensi Surplus Undistributed Minority shareholders' Item Share capital Capital surplus share ve income Special reserve reserve profits Sub-total interests equity Note 4(25) 4(26) 4(27) 4(28) 4(29) 4(30) 4(31)
Balance at 1 January 2018 2,484,147,547 1,306,381,765 (417,349,879) 1,948,943 3,224,938 920,592,332 4,159,642,227 8,458,587,873 321,035,238 8,779,623,111 Movements for the year ended 31 December
2018
Total comprehensive income
Net profit - - - - - - 452,965,935 452,965,935 19,242,653 472,208,588 Other comprehensive income 4(28) - - - 3,131,291 - - - 3,131,291 - 3,131,291 Total comprehensive income - - - 3,131,291 - - 452,965,935 456,097,226 19,242,653 475,339,879 Capital increase or decrease from
shareholder 6,507,523 161,579,787 140,168,896 - - - - 308,256,206 6,000,000 314,256,206
||||
|-|-|-|
|- - - - - - - -6,507,523 161,579,787 140,168,896 - - - - 308,256,206|6,000,000-|6,000,000308,256,206|

 Profit distribution - - - - - 3,713,043 (126,343,439) (122,630,396) - (122,630,396)
||||
|-|-|-|
|- - - - - 3,713,043 (3,713,043) -- - - - - - (122,630,396) (122,630,396)|--|-(122,630,396)|

 Special reserve - - - - 2,843,662 - - 2,843,662 - 2,843,662
||||
|-|-|-|
|- - - - 8,319,885 - - 8,319,885- - - - (5,476,223) - - (5,476,223)|--|8,319,885(5,476,223)|

 Internal transfer of shareholders'
equity 372,622,131 (372,622,131) - - - - - - - -
||||
|-|-|-|
|372,622,131 (372,622,131) - - - - - -|-|-|

 Balance at 31 December 2018 2,863,277,201 1,095,339,421 (277,180,983) 5,080,234 6,068,600 924,305,375 4,486,264,723 9,103,154,571 346,277,891 9,449,432,462 The accompanying notes form an integral part of these financial statements.
Legal representative: Chen Lin Principal in charge of accounting: Wang Jian Head of accounting department: Wang Wenxin
CSG Annual Report 2018 CSG HOLDING CO., LTD.
COMPANY'S STATEMENT OF CHANGES INSHAREHOLDERS’ EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2018
(All amounts in RMB Yuan unless otherwise stated)
[English translation for referenceonly]
Attributable to shareholders of parent compan
Total Less: Treasury Surplus Undistributed shareholders' Item Share capital Capital surplus share reserve profits equity Balance at 1 January 2017 2,075,335,560 1,405,529,511 - 903,053,590 448,104,587 4,832,023,248 Movements for the year ended 31 December 2017
Total comprehensive income
Net profit - - - - 320,841,025 320,841,025 Total comprehensive income - - - - 320,841,025 320,841,025 Capital increase or decrease from
shareholder 97,511,654 356,979,901 (417,349,879) - - 37,141,676 Share-based payments 97,511,654 328,032,920 (417,349,879) - - 8,194,695Shareholders’ Interest-free borrowing - 28,946,981 - - - 28,946,981 Profit distribution - - - 32,084,102 (239,617,658) (207,533,556) Appropriation to surplus reserve - - - 32,084,102 (32,084,102) - Distribution to the shareholders - - - - (207,533,556) (207,533,556) Capital reserve to share capital 311,300,333 (311,300,333) - - - - Balance at 31 December 2017 2,484,147,547 1,451,209,079 (417,349,879) 935,137,692 529,327,954 4,982,472,393 Balance at 1 January 2018 2,484,147,547 1,451,209,079 (417,349,879) 935,137,692 529,327,954 4,982,472,393 Movements for the year ended 31 December 2018
Total comprehensive income
Net profit - - - - 37,130,433 37,130,433 Total comprehensive income - - - - 37,130,433 37,130,433 Capital increase or decrease from
shareholder 6,507,523 161,579,787 140,168,896 - - 308,256,206 Share-based payments 6,507,523 161,579,787 140,168,896 - - 308,256,206 Profit distribution - - - 3,713,043 (126,343,439) (122,630,396) Appropriation to surplus reserve - - - 3,713,043 (3,713,043) - Distribution to the shareholders - - - - (122,630,396) (122,630,396) Capital reserve to share capital 372,622,131 (372,622,131) - - - - Balance at 31 December 2018 2,863,277,201 1,240,166,735 (277,180,983) 938,850,735 440,114,948 5,205,228,636 The accompanying notes form an integral part of these financial statements.
Legal representative: Chen Lin Principal in charge of accounting: Wang Jian Head of accounting department: Wang Wenxin
CSG Annual Report 2018 1 General information
CSG Holding Co., LTD (the “Company”) was incorporated in September 1984, known as China South Glass Company, as a joint venture enterprise by Hong Kong China Merchants Shipping Co., LTD(香港招商局轮船股份有限公司), Shenzhen Building Materials Industry Corporation(深圳建筑材料工业集团公司), China North Industries Corporation(中国北方工业深圳公司) and Guangdong International Trust and Investment Corporation(广东国际信托投资公司). The Company was registered in Shenzhen, Guangdong Province of the People's Republic of China and its headquarters is located in Shenzhen, Guangdong Province of the People's Republic of China. The Company issued RMB-denominated ordinary shares (“A-share”) and foreign shares (“B-share”) publicly in October 1991 and January 1992 respectively, and was listed on Shenzhen Stock Exchange on February 1992. As at 31 December 2018, the registered capital was RMB2,863,277,201, with nominal value of RMB1 per share.
The Company and its subsidiaries (collectively referred to as the “Group”) are mainly engaged in the manufacture and sales of flat glass, specialized glass, engineering glass, energy saving glass, silicon related materials, polycrystalline silicon and solar components and electronic-grade display device glass and the construction and operation of photovoltaic plant etc.
Details on the majors subsidiaries included in the consolidated scope in current year were stated in Note 6(1).
The financial statements were authorized for issue by the Board of Directors on 16 April 2019.
2 Summary of significant accounting policies and accounting estimates
The Group determines its specific accounting policies and estimates according to manufacturing and operation feature. It mainly reflected in provision for bad debts of receivables (Note 2(10)), inventory costing method (Note 2(11)), amortization of Property, plant and equipment and intangible assets (Note 2(13) and (16)), criteria for determining capitalized development expenditure (Note 2(16)), and timing for revenue recognition (Note 2(24)).
Please see Note 2(30) for the key judgments adopted by the Group in applying important accounting policies.
(1) Basis of preparation
The financial statements are prepared in accordance with the Accounting Standards for Business Enterprises - Basic Standard, and the specific accounting standards and other relevant regulations issued by the Ministry of Finance on 15 February 2006 and in subsequent periods (hereafter collectively referred to as “the Accounting Standard for Business Enterprises” or “CAS”), and Information Disclosure Rule No. 15 for Companies with Public Traded Securities - Financial Reporting General Provision issued by China Security Regulatory Commission.
As at 31 December 2018, the Group current liabilities exceed current assets about RMB1.267 billion and committed capital expenditure of about RMB 0.131 billion (Note 11(1)). The directors of the Company has assessed the following facts and conditions: a) the Group has been able to generate positive operating cash flows in prior years and expect to do so in the next 12 months, and in 2018, the net cash inflow from operation activities is approximately RMB 2.13 billion; b) the Group has maintained good relationship with banks, so the Group has been able to successfully renew the bank facilities upon the expiry. As at 31 December 2018, the Group had unutilized banking facilities of approximately RMB7.054billion, among which long-term banking facilities were about RMB0.357 billion. In addition, the shareholder of the Group or other appointed related parties are willing to provide the Group with RMB2.00 billion interest-free loan. As at report date, the shareholder of Group has provided RMB 2 billion interest-free loan. The Group also has other sources of financing, such as
issuing short-term bonds, ultra-short-term financing bonds and medium-term notes. The directors are of view that the banking facilities andshareholder’s support above can meet the funding requirements of theGroup’s debt servicing and capital commitment. Accordingly, the directors of the Company had adopted the going concern basis in the preparation of the financial statements of the Company and the Group.
(2) Statement of compliance with the Accounting Standards for Business Enterprises
The financial statements of the Company for the year ended 31 December 2018 are in compliance with the Accounting Standards for Business Enterprises, and truly and completely present the financial position of the consolidated and the Company as at 31 December 2018 and their financial performance, cash flows and other information for the year then ended.
(3) Accounting year
TheCompany’s accounting year starts on 1 January and ends on 31 December.
CSG Annual Report 2018 (4) Recording currency
The recording currency is Renminbi (RMB).The economic environment of subsidiaries (China Southern Glass(Hong Kong) Limited, Hong Kong Southern Glass Trading co., Limited) determines their recording currency is Hongkong dollar. This report‘s recording currency is Renminbi (RMB).
(5) Business combinations
(a) Business combinations involving enterprises under common control
The consideration paid and net assets obtained by the absorbing party in a business combination are measured at book value. The difference between book value of the net assets obtained from the combination and book value of the consideration paid for the combination is treated as an adjustment to capital surplus (share premium). If the capital surplus (share premium) is not sufficient to absorb the difference, the remaining balance is adjusted against retained earnings. Costs directly attributable to the combination are included in profit or loss in the period in which they are incurred. Transaction costs associated with the issue of equity or debt securities for the business combination are included in the initially recognised amounts of the equity or debt securities.
(b) Business combinations involving enterprises not under common control
The cost of combination and identifiable net assets obtained by the acquirer in a business combination are measured at fair value at the acquisition date. Where the cost of the combination exceeds theacquirer’s interest in the fair value of theacquiree’s identifiable net assets, the difference is recognized as goodwill; where the cost of combination is lower than theacquirer’s interest in the fair value of theacquiree’s identifiable net assets, the difference is recognized in profit or loss for the current period. Costs directly attributable to the combination are included in profit or loss in the period in which they are incurred. Transaction costs associated with the issue of equity or debt securities for the business combination are included in the initially recognized amounts of the equity or debt securities.
(6) Preparation of consolidated financial statements
The consolidated financial statements comprise the financial statements of the Company and all of its subsidiaries.
Subsidiaries are consolidated from the date on which the Group obtains control and are de-consolidated from the date that such control ceases. For a subsidiary that is acquired in a business combination involving enterprises under common control, it is included in the consolidated financial statements from the date when it, together with the Company, comes under common control of the ultimate controlling party. The portion of the net profits realized before the combination date is presented separately in the consolidated income statement.
In preparing the consolidated financial statements, where the accounting policies and the accounting periods of the Company and subsidiaries are inconsistent, the financial statements of the subsidiaries are adjusted in accordance with the accounting policies and the accounting period of the Company. For subsidiaries acquired from business combinations involving enterprises not under common control, the individual financial statements of the subsidiaries are adjusted based on the fair value of the identifiable net assets at the acquisition date.
All significant intra-group balances, transactions and unrealized profits are eliminated in the consolidated financial statements. The portion ofsubsidiaries’ equity and the portion of asubsidiaries’ net profits and losses and comprehensive incomes for the period not attributable to Company are recognized as minority interests and presented separately in the consolidated financial statements under equity, net profits and total comprehensive income respectively. Unrealized profits and losses resulting from the sales of assets by the Company to its subsidiaries are fully eliminated against net profit attributable to shareholders of the parent company. Unrealized profits and losses resulting from the sales of assets by a subsidiary to the Company are eliminated and allocated between net profit attributable to shareholders of the parent company and non-controlling interests in accordance with the allocation proportion of the parent company in the subsidiary. Unrealized profits and losses resulting from the sales of assets by one subsidiary to another are eliminated and allocated between net profit attributable to shareholders of the parent company and non-controlling interests in accordance with the allocation proportion of the parent in the subsidiary.
After the control over the subsidiary has been gained, whole or partial minority equities of the subsidiary owned by minority shareholders are acquired from thesubsidiary’s minority shareholders. In the consolidated financial statements, the subsidiary's assets and liabilities are reflected with amount based on continuous calculation starting from the acquisition date or consolidation date. Capital surplus is adjusted according to the difference between newly increased long-term equity investment arising from acquisition of minority equity and the share of net assets calculated based on current shareholding ratio that the parent company is entitled to. The share is subject to continuous calculation starting from the acquisition date or consolidation date. If the capital surplus (capital premium or share capital premium) is not sufficient to absorb the difference, the remaining balance is adjusted against retained
earnings.
CSG Annual Report 2018 If the accounting treatment of a transaction which considers the Group as an accounting entity is different from that considers the Company or its subsidiaries as an accounting entity, it is adjusted from the perspective of the Group.
(7) Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, deposits that can be readily drawn on demand, and short-term and highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. (8) Foreign currency transaction
(a) Foreign currency transaction
Foreign currency transactions are translated into RMB using the exchange rates prevailing at the dates of the transactions. At the balance sheet date, monetary items denominated in foreign currencies are translated into RMB using the spot exchange rates on the balance sheet date. Exchange differences arising from these translations are recognized in profit or loss for the current period, except for those attributable to foreign currency borrowings that have been taken out specifically for the acquisition or construction of qualifying assets, which are capitalized as part of the cost of those assets. Non-monetary items denominated in foreign currencies that are measured at historical costs are translated at the balance sheet date using the spot exchange rates at the date of the transactions. The effect of exchange rate changes on cash is presented separately in the cash flow statement.
(b) Translation of foreign currency financial statements
The asset and liability items in the balance sheets for overseas operations are translated at the spot exchange rates on the balance sheet date. Among theshareholders’ equity items, the items other than “undistributed profits” are translated at the spot exchange rates of the transaction dates. The income and expense items in the income statements of overseas operations are translated at the spot exchange rates of the transaction dates. The differences arising from the above translation are presented separately in theshareholders’ equity. The cash flows of overseas operations are translated at the spot exchange rates on the dates of the cash flows. The effect of exchange rate changes on cash is presented separately in the cash flow statement.
(9) Financial instrument
(a) Financial assets
(i) Classification of financial assets
Financial assets are classified into the following categories at initial recognition: financial assets at fair value through profit or loss, receivables, available-for-sale financial assets and held-to-maturity investments. The classification of financial assets depends on theGroup’s intention and ability to hold the financial assets. The Group had no financial assets at fair value through profit or loss and held-to-maturity investments for 2017.
Receivables
Receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Receivables comprise notes receivable, accounts receivable and other receivables. (Note 2(10))
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are either designated in this category or not classified in any of the other categories at initial recognition. Available-for-sale financial assets are included in other current assets on the balance sheet if management intends to dispose of them within 12 months after the balance sheet date.
(ii) Recognition and measurement
Financial assets are recognized at fair value on the balance sheet when the Group becomes a party to the contractual provisions of the financial instrument. The related transaction costs that are attributable to the acquisition of receivables and available-for-sale financial assets are included in their initial recognition amounts.
Available-for-sale financial assets are subsequently measured at fair value. Investments in equity instruments are measured at cost when they do not have a quoted market price in an active market and whose fair value cannot be reliably measured. Receivables are
measured at amortized cost using the effective interest method.
CSG Annual Report 2018 Gains or losses arising from change in fair value of available-for-sale financial assets are recognized directly in equity, except for impairment losses and foreign exchange gains and losses arising from translation of monetary financial assets. When such financial assets are derecognized, the cumulative gains or losses previously recognized directly into equity are recycled into profit or loss for the current period. Interests on available-for-sale investments in debt instruments calculated using the effective interest method during the period in which such investments are held and cash dividends declared by the investee on available-for-sale investments in equity instruments are recognized as investment income, which is recognized in profit or loss for the period.
(iii) Impairment of financial assets
The Group assesses book values of financial assets at each balance sheet date. If there is objective evidence that a financial asset is impaired, an impairment loss is provided for.
The objective evidence of impairment losses on financial assets refers to events that actually incurred after the initial recognition of financial assets, have influence on the expected future cash flow from the financial assets and the influence can be reliably measured. Objective evidence which indicates the occurrence of impairment for available-for-sale equity instruments includes significant or non-temporary decrease of fair value of equity instruments investment. The Group conducts individual Checkion on each available-for-sale equity instruments investment at balance sheet date, if the fair value of the available-for-sale equity instrument is less than its initial investment cost for more than50% (inclusive) or less than its initial investment cost continually for more than 1 year, that means impairment incurred; if the fair value of the available-for-sale equity instrument is less than its initial investment cost for more than20% (inclusive) but has not reached50%, the Group will comprehensively consider other factors such as price volatility to determine whether the equity instrument investment has been impaired. The Group calculates the initial investment cost of initial available-for-sale equity instruments investment using the weighted average method.
When an impairment loss on a financial asset carried at amortized cost has occurred, the amount of loss is provided for at the difference between theasset’s carrying amount and the present value of its estimated future cash flows (excluding future credit losses that have not been incurred). If there is objective evidence that the value of the financial asset is recovered and the recovery is related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed and the amount of reversal is recognized in profit or loss.
If an impairment loss on available-for-sale financial assets measured at fair value is incurred, the cumulative losses arising from the decline in fair value that had been recognized directly in shareholders' equity are transferred out from equity and into impairment loss. For an investment in debt instrument classified as available-for-sale on which impairment losses have been recognized, if, in a subsequent period, its fair value increases and the increase can be objectively related to an event occurring after the impairment loss was recognized in profit or loss, the previously recognized impairment loss is reversed into profit or loss for the current period. For an investment in an equity instrument classified as available-for-sale on which impairment losses have been recognized, the increase in its fair value in a subsequent period is recognized directly in equity.
(iv) Derecognition of financial assets
Financial assets are derecognized when: i) the contractual rights to receive the cash flows from the financial assets have expired; or ii) all substantial risks and rewards of ownership of the financial assets have been transferred; or iii) the control over the financial asset has been waived even if the Group does not transfer or retain nearly all of the risks and rewards relating to the ownership of a financial asset.
On derecognition of a financial asset, the difference between book value and the sum of the consideration received and the cumulative changes in fair value that had been recognized directly in owner's equity, is recognized in profit or loss.
(b) Financial liabilities
Financial liabilities are classified into two categories at initial recognition: financial liabilities at fair value through profit or loss and other financial liabilities. The financial liabilities of the Group mainly comprise other financial liabilities, including payables, borrowings and bonds payable.
The fair value change of financial liabilities at fair value through profit or loss is charged to income statement.
Payables comprise accounts payable, notes payable and other payables, which are recognized initially at fair value and measured subsequently at amortized cost using the effective interest method.
Borrowings and bonds payable are recognized initially at fair value, net of transaction costs incurred, and subsequently measured at amortized cost using the effective interest method.
CSG Annual Report 2018 Other financial liabilities within one year (inclusive) is presented as current liabilities, while non-current financial liabilities due with one year (inclusive) is reclassified as non-current liabilities due within one year. Others are presented as non-current liabilities. A financial liability (or a part of a financial liability) is derecognized when all or part of the obligation is extinguished. The difference between book value of a financial liability (or a part of financial liability) extinguished and the consideration paid is recognized in the income statement.
(c) Determination of fair value of financial instruments
The fair value of a financial instrument that is traded in an active market is determined at the quoted price in the active market. The fair value of a financial instrument that is not traded in an active market is determined by using a valuation technique. During valuation, the Group adopts a valuation technique suitable for current situation, which is supported by sufficient available data and other information, chooses the inputs consistent with the feature of assets or liabilities considered in the transaction thereof with market participants, and uses related observable inputs in preference to the greatest extent. Unobservable inputs are used when it is unable to obtain or is infeasible for related observable inputs.
(10) Receivables
Receivables comprise notes receivable, accounts receivable and other receivables. Accounts receivable arising from sales of goods or rendering of services are initially recognized at fair value of the contractual payments from the buyers or service recipients. (a) Receivables with amounts that are individually significant and subject to separate assessment for provision for bad debts
Receivables with amounts that are individually significant are subject to separate assessment for impairment. If there exists objective evidence that the Group will not be able to collect the amount under the original terms, a provision for bad debts of that receivable is made at the difference between its carrying amount and the present value of its estimated future cash flows.
The basis or amount for individually significant receivables is individually greater than RMB20 million.
(b) Receivables with amounts that are not individually significant but subject to separate assessment for provision for bad debts If there exists objective evidence that the Group will not be able to collect the amount under the original terms, a provision for bad debts of that receivable is made at the difference between its carrying amount and the present value of its estimated future cash flows. (c) Receivables that are subject to provision for bad debts on the grouping basis
Receivables with amounts that have not been individually provided for impairment are classified into certain groupings based on their credit risk characteristics. The provision for bad debts is determined based on the historical loss experience for the groupings of receivables with similar credit risk characteristics, taking into consideration of the current circumstances.
Basis for portfolio is as follows:
Portfolio 1 Receivables not impaired after separate assessment
Portfolio 2 Related party portfolio
The percentage of provision for the portfolio:
Percentage of provision for
accounts receivable Percentage of provision for other receivables
Portfolio 1 2% 2%
Portfolio 2 2% 2%
(d) The Group transfers receivables which have no recourse right to financial institution, the difference between book values which is trade amount cut the write-off receivables and related tax expenses charged into the income statement.
CSG Annual Report 2018 (11) Inventories
(a) Classification
Inventories refer to manufacturing sector, including raw materials, work in progress, finished goods and turnover materials, and are measured at the lower of cost and net realizable value.
(b) Inventory costing method
Cost is determined using the weighted average method. The cost of finished goods and work in progress comprise raw materials, direct labor and systematically allocated production overhead based on the normal production capacity.
(c) Amortization methods of low value consumables and packaging materials
Turnover materials include low value consumables and packaging materials, which are expensed when issued.
(d) The determination of net realizable value and the method of provision for decline in the value of inventories
Provision for decline in the value of inventories is determined at the excess amount of book values of the inventories over their net realizable value. Net realizable value is determined based on the estimated selling price in the ordinary course of business, less the estimated costs to completion and estimated costs necessary to make the sale and related taxes.
(e) The Group adopts the perpetual inventory system.
(12) Long-term equity investments
Long-term equity investments comprise theCompany’s long-term equity investments in its subsidiaries, and theGroup’s long-term equity investments in its associates.
Subsidiaries are the investees over which the Company is able to exercise control. Associates are the investees that the Group has significant influence on their financial and operating policies.
Investments in subsidiaries are measured using the cost method in theCompany’s financial statements, and adjusted by using the equity method when preparing the consolidated financial statements. Investments in associates are accounted for using the equity method.
(a) Initial recognition
For long-term equity investments formed in business combination: when obtained from business combinations involving entities under common control, the long-term equity investment is stated at carrying amount of equity for the combined parties at the time of merger; when the long-term equity investment obtained from business combinations involving entities not under common control, the investment is measured at combination cost.
For long-term equity investments not formed in business combination: the one paid by cash is initially measured at actual purchase price; the long-term investment obtained by issuing equity securities is stated at fair value of equity securities as initial investment cost..
(b) Subsequent measurement and recognition of related profit or loss
For long-term equity investments accounted for using the cost method, they are measured at the initial investment costs, and cash dividends or profit distribution declared by the investees are recognized as investment income in profit or loss.
For long-term equity investments accounted for using the equity method, where the initial investment cost of a long-term equity investment exceeds theGroup’s share of the fair value of theinvestee’s identifiable net assets at the acquisition date, the long-term equity investment is measured at the initial investment cost; where the initial investment cost is less than theGroup’s share of the fair value of theinvestee’s identifiable net assets at the acquisition date, the difference is included in profit or loss and the cost of the long-term equity investment is adjusted upwards accordingly.
Under the equity method, the Group recognizes the investment income according to its share of net profit or loss of the investee. The
Group discontinues recognizing its share of the net losses of an investee after book values of the long-term equity investment
CSG Annual Report 2018 together with any long-term interests that in substance form part of theinvestor’s net investment in the investee are reduced to zero. However, if the Group has obligations for additional losses and the criteria with respect to recognition of provisions under the accounting standards on contingencies are satisfied, the Group continues recognizing the investment losses and the provisions. For changes inowners’ equity of the investee other than those arising from its net profit or loss, its proportionate share is directly recorded into capital surplus, provided that the proportion of the shareholding of the Group in the investee remains unchanged. Book value of the investment is reduced by theGroup’s share of the profit distribution or cash dividends declared by an investee. The unrealized profits or losses arising from the intra-group transactions amongst the Group and its investees are eliminated in proportion to theGroup’s equity interest in the investees, and then based on which the investment gains or losses are recognized. Any losses resulting from transactions between the Group and its investees attributable to asset impairment losses are not eliminated.
(c) Basis for determining existence of control, jointly control or significant influence over investees
The term "control" refers to the power in the investees, to obtain variable returns by participating in the related business activities of the investees, and the ability to affect the returns by exercising its power over the investees.
The term "significant influence" refers to the power to participate in the formulation of financial and operating policies of an enterprise, but not the power to control, or jointly control, the formulation of such policies with other parties.
(d) Impairment of long-term equity investments
Book value of long-term equity investments in subsidiaries and associates is reduced to the recoverable amount when the recoverable amount is less than book value (Note 2(18)).
(13) Fixed assets
(a) Recognition and initial measurement
Fixed assets comprise buildings, machinery and equipment, motor vehicles and others.
Fixed assets are recognized when it is probable that the related economic benefits will probably flow to the Group and the costs can be reliably measured. Fixed assets purchased or constructed by the Group are initially measured at cost at the acquisition date. Subsequent expenditures incurred for a fixed asset are included in the cost of the fixed asset when it is probable that the associated economic benefits will flow to the Group and the related cost can be reliably measured. Book value of the replaced part is derecognized. All the other subsequent expenditures are recognized in profit or loss in the period in which they are incurred. (b) Depreciation methods
Fixed assets are depreciated using the straight-line method to allocate the cost of the assets to their estimated residual values over their estimated useful lives. For the fixed assets that have been provided for impairment loss, the related depreciation charge is prospectively determined based upon the adjusted carrying amounts over their remaining useful lives.
The estimated useful lives, the estimated net residual values expressed as a percentage of cost and the annual depreciation rates of fixed assets are as follows:
Estimated useful lives Estimated net residual value Annual depreciation rate Buildings 20 to 35 years 5% 2.71% to4.75% Machinery and equipment 8 to 20 years 5% 4.75% to11.88% Motor vehicles and others 5 to 8 years 0% 12.50% to20.00% The estimated useful life, the estimated net residual value of a fixed asset and the depreciation method applied to the asset are reviewed, and adjusted as appropriate at each year-end.
(c) Book value of a fixed asset is reduced to the recoverable amount when the recoverable amount is below book value (Note 2 (18)). (d) Disposal
A fixed asset is derecognized on disposal or when no future economic benefits are expected from its use or disposal. The amount of
CSG Annual Report 2018 proceeds from disposals on sale, transfer, retirement or damage of a fixed asset net of its carrying amount and related taxes and expenses is recognized in profit or loss for the current period.
(14) Construction in progress
Construction in progress is recorded at actual cost. Actual cost comprises construction cost, installation cost, borrowing costs eligible for capitalized condition and necessary expenditures incurred for its intended use. Actual cost also includes net of trial production cost and trial production income before construction in progress is put into production.
Construction in progress is transferred to fixed assets when the assets are ready for their intended use, and depreciation begins from the following month.
Book value of construction in progress is reduced to the recoverable amount when the recoverable amount is below book value (Note 2 (18)).
(15) Borrowing costs
The borrowing costs that are directly attributable to the acquisition and construction of an asset that needs a substantially long period of time for its intended use commence to be capitalized and recorded as part of the cost of the asset when expenditures for the asset and borrowing costs have been incurred, and the activities relating to the acquisition and construction that are necessary to prepare the asset for its intended use have commenced. The capitalization of borrowing costs ceases when the asset under acquisition or construction becomes ready for its intended use and the borrowing costs incurred thereafter are recognized in profit or loss for the current period. Capitalization of borrowing costs is suspended during periods in which the acquisition or construction of a fixed asset is interrupted abnormally and the interruption lasts for more than 3 months, until the acquisition or construction is resumed. For the specific borrowings obtained for the acquisition or construction of an asset qualifying for capitalization, the amount of borrowing costs eligible for capitalization is determined by deducting any interest income earned from depositing the unused specific borrowings in the banks or any investment income arising on the temporary investment of those borrowings during the capitalization period.
For the general borrowings obtained for the acquisition or construction of an asset qualifying for capitalization, the amount of borrowing costs eligible for capitalization is determined by applying the weighted average effective interest rate of general borrowings, to the weighted average of the excess amount of cumulative expenditures on the asset over the amount of specific borrowings. The effective interest rate is the rate at which the estimated future cash flows during the period of expected duration of the borrowings or applicable shorter period are discounted to the initial amount of the borrowings.
(16) Intangible assets
Intangible assets, mainly including land use rights, patents and proprietary technologies, exploitation rights and others, are measured at cost.
(a) Land use rights
Land use rights are amortized on the straight-line basis over their approved use period of 30 to 70 years. If the acquisition costs of the land use rights and the buildings located thereon cannot be reasonably allocated between the land use rights and the buildings, all of the acquisition costs are recognized as fixed assets.
(b) Patents and proprietary technologies
Patents are amortized on a straight-line basis over the estimated use life.
(c) Exploitation rights
Exploitation rights are amortized on a straight-line basis over permitted exploitation periods on the exploitation certificate.
(d) Periodical review of useful life and amortization method
For an intangible asset with a finite useful life, review of its useful life and amortization method is performed at each year-end, with adjustment made as appropriate.
(e) Research and development
CSG Annual Report 2018 The expenditure on an internal research and development project is classified into expenditure on the research phase and expenditure on the development phase based on its nature and whether there is material uncertainty that the research and development activities can form an intangible asset at end of the project.
Expenditure on the research phase related to planned survey, evaluation and selection for research on manufacturing technique is recognized in profit or loss in the period in which it is incurred. Prior to mass production, expenditure on the development phase related to the design and testing phase in regards to the final application of manufacturing technique is capitalized only if all of the following conditions are satisfied:
 The development of manufacturing technique has been fully demonstrated by technical team;
 The management has approved the budget for the development of manufacturing technique;
 There are research and analysis of pre-market research explaining that products manufactured with such technique are capable of marketing;
 There is sufficient technical and capital to support the development of manufacturing technique and subsequent mass production; and the expenditure on manufacturing technique development can be reliably gathered.
Other development expenditures that do not meet the conditions above are recognized in profit or loss in the period in which they are incurred. Development costs previously recognized as expenses are not recognized as an asset in a subsequent period. Capitalized expenditure on the development phase is presented as development costs in the balance sheet and transferred to intangible assets at the date that the asset is ready for its intended use.
(f) Impairment of intangible assets
Book value of intangible assets is reduced to the recoverable amount when the recoverable amount is below book value (Note 2 (18)).
(17) Long-term prepaid expenses
Long-term prepaid expenses include the expenditures that have been incurred but should be recognized as expenses over more than one year in the current and subsequent periods. Long-term prepaid expenses are amortized on the straight-line basis over the expected beneficial period and are presented at actual expenditure net of accumulated amortization.
(18) Impairment of long-term assets
Fixed assets, construction in progress, intangible assets with finite useful lives and long-term equity investments in joint ventures and associates are tested for impairment if there is any indication that the assets may be impaired at the balance sheet date; intangible assets not ready for their intended use are tested at least annually for impairment, irrespective of whether there is any indication that they may be impaired. If the result of the impairment test indicates that the recoverable amount of an asset is less than its carrying amount, a provision for impairment and an impairment loss are recognized for the amount by which theasset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of anasset’s fair value less costs to sell and the present value of the future cash flows expected to be derived from the asset. Provision for asset impairment is determined and recognized on the individual asset basis. If it is not possible to estimate the recoverable amount of an individual asset, the recoverable amount of a group of assets to which the asset belongs is determined. A group of assets is the smallest group of assets that is able to generate independent cash inflows.
Goodwill that is separately presented in the financial statements is tested at least annually for impairment, irrespective of whether there is any indication that it may be impaired. In conducting the test, book value of goodwill is allocated to the related asset groups or groups of asset groups which are expected to benefit from the synergies of the business combination. If the result of the test indicates that the recoverable amount of an asset group or group of asset groups, including the allocated goodwill, is lower than its carrying amount, the corresponding impairment loss is recognized. The impairment loss is first deducted from book value of goodwill that is allocated to the asset group or group of asset groups, and then deducted from book values of other assets within the asset groups or groups of asset groups in proportion to book values of assets other than goodwill.
Once the above asset impairment loss is recognized, it will not be reversed for the value recovered in the subsequent periods. (19) Employee benefits
Employee benefits include short-term employee benefits, post-employment benefits, termination benefits and other long-term employee benefits provided in various forms of consideration in exchange for service rendered by employees or compensations for
the termination of employment relationship.
CSG Annual Report 2018 (a) Short-term employee benefits
Short-term employee benefits include wages or salaries, bonuses, allowances and subsidies, staff welfare, medical care, work injury insurance, maternity insurance, housing funds, labor union funds, employee education funds and paid short-term leave, etc. The employee benefit liabilities are recognized in the accounting period in which the service is rendered by the employees, with a corresponding charge to the profit or loss for the current period or the cost of relevant assets. Employee benefits which are non-monetary benefits shall be measured at fair value.
(b) Post-employment benefits
The Group classifies post-employment benefit plans as either defined contribution plans or defined benefit plans. Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into a separate fund and will have no obligation to pay further contributions; and defined benefit plans are post-employment benefit plans other than defined contribution plans. During the reporting period, the Group's post-employment benefits mainly include basic pensions and unemployment insurance, both of which belong to the defined contribution plans.
Basic pensions
TheGroup’s employees participate in the basic pension plan set up and administered by local authorities of Ministry of Human Resource and Social Security. Monthly payments of premiums on the basic pensions are calculated according to prescribed bases and percentage by the relevant local authorities. When employees retire, local labor and social security institutions have a duty to pay the basic pension insurance to them. The amounts based on the above calculations are recognized as liabilities in the accounting period in which the service has been rendered by the employees, with a corresponding charge to the profit or loss for the current period or the cost of relevant assets.
(c) Termination benefits
The Group provides compensation for terminating the employment relationship with employees before the end of the employment contracts or as an offer to encourage employees to accept voluntary redundancy before the end of the employment contracts. The Group recognizes a liability arising from compensation for termination of the employment relationship with employees, with a corresponding charge to profit or loss at the earlier of the following dates: 1) when the Group cannot unilaterally withdraw the offer of termination benefits because of an employment termination plan or a curtailment proposal; 2) when the Group recognizes costs or expenses related to the restructuring that involves the payment of termination benefits.
The termination benefits expected to be paid within one year since the balance sheet date are classified as current liabilities. (20) Dividend distribution
Cash dividend is recognized as a liability for the period in which the dividend is approved by theshareholders’ meeting.
(21) Deferred tax assets and deferred tax liabilities
Deferred tax assets and deferred tax liabilities are calculated and recognized based on the differences arising between the tax bases of assets and liabilities and their carrying amounts (temporary differences). Deferred tax asset is recognized for the deductible losses that can be carried forward to subsequent years for deduction of the taxable profit in accordance with the tax laws. No deferred tax liability is recognized for a temporary difference arising from the initial recognition of goodwill. No deferred tax asset or deferred tax liability is recognized for the temporary differences resulting from the initial recognition of assets or liabilities due to a transaction other than a business combination, which affects neither accounting profit nor taxable profit (or deductible loss). At the balance sheet date, deferred tax assets and deferred tax liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled.
Deferred tax assets are only recognized for deductible temporary differences, deductible losses and tax credits to the extent that it is probable that taxable profit will be available in the future against which the deductible temporary differences, deductible losses and tax credits can be utilized.
Deferred tax liabilities are recognized for temporary differences arising from investments in subsidiaries and associates, except where the Group is able to control the timing of reversal of the temporary difference, and it is probable that the temporary difference will not reverse in the foreseeable future. When it is probable that the temporary differences arising from investments in subsidiaries and associates will be reversed in the foreseeable future and that the taxable profit will be available in the future against which the temporary differences can be utilized, the corresponding deferred tax assets are recognized.
CSG Annual Report 2018 Deferred tax assets and liabilities are offset when:
 The deferred taxes are related to the same tax payer within the Group and the same taxation authority; and,
 That tax payer within the Group has a legally enforceable right to offset current tax assets against current tax liabilities. (22) Provisions
Business restructuring, provisions for product warranties, loss contracts etc. are recognized when the Group has a present obligation, it is probable that an outflow of economic benefits will be required to settle the obligation, and the amount of the obligation can be measured reliably.
A provision is initially measured at the best estimate of the expenditure required to settle the related present obligation. Factors surrounding a contingency, such as the risks, uncertainties and the time value of money, are taken into account as a whole in reaching the best estimate of a provision. Where the effect of the time value of money is material, the best estimate is determined by discounting the related future cash outflows. The increase in the discounted amount of the provision arising from passage of time is recognized as interest expense.
Book value of provision is reviewed at each balance sheet date and adjusted to reflect the current best estimate.
The provisions expected to be paid within one year since the balance sheet date are classified as current liabilities.
(23) Share-based payments
Share-based payments are divided into equity-settled and cash-settled payments. The term "equity-settled share-based payment" refers to a transaction in which an enterprise grants shares or other equity instruments as a consideration in return for services. Equity-settled share-based payment TheGroup‘s stock option stock option plan is the equity-settled share-based payment in exchange of employees' services and is measured at the fair value of the equity instruments at grant date. The equity instruments are exercisable after services in vesting period are completed or specified performance conditions are met. In the vesting period, the services obtained in current period are included in relevant cost and expenses at the fair value of the equity instruments at grant date based on the best estimate of the number of exercisable equity instruments, and capital surplus is increased accordingly. If the subsequent information indicates the number of exercisable equity instruments differs from the previous estimate, an adjustment is made and, on the exercise date, the estimate is revised to equal the number of actual vested equity instruments. The Group determines the fair value of stock option stock options using option pricing model, which is Black-Scholes option pricing model (B-S model). In the period at which performance conditions and term of service are met, the relevant cost and expenses of equity-settled payment should be recognized, and capital surplus is increased accordingly. Before the exercise date, the accruing amounts of equity-settled payments on balance sheet date reflect the part of expired waiting period and optimal estimation for the number of the Company final vested equity instruments.
If the non-market conditions and term of service are not met so that share-based payment fail to exercise, the costs and expenses on this portion should not be recognized. If the share-based payment agreement sets out the market conditions and term of non-vesting, as long as performance conditions and term of service are met, it is should be regard as exercisable right, no matter the market conditions and non-vesting conditions are meet or not.
If the terms of equity-settled payment are modified, at least the service is confirmed in accordance with the unmodified terms. In addition, the increase of the fair value of the authorized equity instruments, or the beneficial changes to the employees on the modification date, the increase of service is confirmed.
If the equity-settled payment is cancelled, the cancellation date shall be deemed as an expedited exercise, and the unconfirmed amount shall be confirmed immediately. If the employee or other party is able to choose to meet the non-vesting conditions but not satisfied in the waiting period, equity-settled payment should be cancelled. But if a new equity instrument is granted, and the new equity instrument is confirm to replace the old equity instrument which is canceled in the authorization date of the new equity instrument, the new equity instrument should be disposed by using the same conditions and terms of the old equity instrument for modifications
(24) Revenue recognition
The amount of revenue is determined in accordance with the fair value of the consideration received or receivable for the sales of
goods and services in the ordinary course of theGroup’s activities. Revenue is shown net of discounts, rebates and returns.
CSG Annual Report 2018 Revenue is recognized when the economic benefits associated with the transaction will probably flow to the Group, the related revenue can be reliably measured, and the specific revenue recognition criteria have been met for each type of theGroup’s activities as described below:
(a) Sales of goods
The Group mainly sells flat and engineering glass, products related to solar energy, and electronic glass and displays. For domestic sales, the Group delivers the products to a certain place specified in the contract. When the buyer takes over the goods, the Group recognizes revenue. For export sales, the Group recognizes the revenue when it finished clearing goods for export and deliver the goods on board the vessel, or when the goods are delivered to a certain place specified in the contract. For above sales, when the buyer takes over the goods, the buyer has the right to sell the products, and should bear the risk of price fluctuation or goods damage. (b) Rendering of services
Revenue is recognized for the rendering of service by the Group to external parties upon the completion of related service.
(c) Transfer of asset use rights
Interest income is recognized on a time-proportion basis using the effective interest method.
(25) Government grants
Government grants are transfers of monetary or non-monetary assets from the government to the Group at nil consideration, including tax refund and financial subsidies, etc.
A government grant is recognized when there is a reasonable assurance that the grants will be received and the Group will comply with all attached conditions. Monetary government grants are measured at the amounts received or receivable. Non-monetary government grant are measured at fair value, if the fair value cannot be reliably obtained, it is measured at nominal amount. The government grants related to assets refer to government grant obtained by enterprises and used for purchase and construction of long-term assets or formation of long-term asset in other ways. The government grants related to income refer to grants other than those related to assets.
For government grants related to income, where the grant is a compensation for related expenses or losses to be incurred by the Group in the subsequent periods, the grant is recognized as deferred income, and included in profit or loss over the periods in which the related costs are recognized; where the grant is a compensation for related expenses or losses already incurred by the Group, the grant is recognized immediately in profit or loss for the current period. The company uses the same method of presentation for similar government grants.
The ordinary activity government grants should be counted into operating profits; the government grants which not belong ordinary activities should be counted into non-operating income.
(26) Leases
A lease that transfers substantially all the risks and rewards incidental to ownership of an asset is a finance lease. An operating lease is a lease other than a finance lease.
Lease payments under an operating lease are recognized on a straight-line basis over the period of the lease, and are either capitalized as part of the cost of related assets, or charged as an expense for the current period.
Lease income under an operating lease is recognized as revenue on a straight-line basis over the period of the lease.
(27) Assets classified as held for sale
A non-current asset or a disposal group is classified as held for sale when all of the following conditions are satisfied: (1) the non-current asset or the disposal group is available for immediate sale in its present condition subject to terms that are traditionally and customary for sales; (2) the Group has made a resolution and obtained appropriate approval for disposal of the non-current asset or the disposal group, and the transfer is to be completed within one year.
CSG Annual Report 2018 Non-current assets (except for financial assets, investment properties at fair value and deferred tax assets) that meet the recognition criteria for held for sale are recognized at the amount equal to the lower of the fair value less costs to sell and book value. The difference between fair value less costs to sell and carrying amount should be presented as impairment loss.
Such non-current assets and assets included in disposal groups as classified as held for sale are accounted for as current assets; while liabilities included in disposal groups classified as held for sale are accounted for as current liabilities, and are presented separately in the balance sheet.
A discontinued operation is a component of the Group that either has been disposed of or is classified as held for sale, and is separately identifiable operationally and for financial reporting purposes, and satisfies one of the following conditions: (1) represents a separate major line of business or geographical area of operations; (2) is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations; and (3) is a subsidiary acquired exclusively with a view to resale. The discontinued operation profits on income statement presentation have included the profits and loss of operation and disposal. (28) Safety production costs
According to relevant regulations of the Ministry of Finance and National Administration of Work Safety, a subsidiary of the Group which is engaged in producing and selling polysilicon appropriates safety production costs on following basis:
(a) 4% for revenue below RMB10 million (inclusive) of the year;
(b) 2% for the revenue between RMB10 million to RMB100 million (inclusive) of the year;
(c) 0.5% for the revenue between RMB100 million to RMB1 billion (inclusive) of the year;
(d) 0.2% for the revenue above RMB1 billion of the year.
The safety production costs is mainly used for the overhaul, renewal and maintenance of safety facilities. The safety production costs are charged to costs of related products or profit or loss when appropriated, and safety production costs in equity account are credited correspondingly. When using the special reserve, if the expenditures are expenses in nature, the expenses incurred are offset against the special reserve directly when incurred. If the expenditures are capital expenditures, when projects are completed and transferred to fixed assets, the special reserve should be offset against the cost of fixed assets, and a corresponding accumulated depreciation are recognized. The fixed assets are no longer be depreciated in future.
(29) Segment information
The Group identifies operating segments based on the internal organization structure, management requirements and internal reporting system, and discloses segment information of reportable segments which is determined on the basis of operating segments. An operating segment is a component of the Group that satisfies all of the following conditions: (1) the component is able to earn revenue and incur expenses from its ordinary activities; (2) whose operating results are regularly reviewed by theGroup’s management to make decisions about resources to be allocated to the segment and to assess its performance, and (3) for which the information on financial position, operating results and cash flows is available to the Group. If two or more operating segments have similar economic characteristics and satisfy certain conditions, they are aggregated into one single operating segment.
(30) Critical accounting estimates and judgments
The Group continually Estimates the critical accounting estimates and key assumptions applied based on historical experience and other factors, including expectations of future events that are believed to be reasonable.
The critical accounting estimates and key assumptions that have a significant risk of possibly causing a material adjustment to book values of assets and liabilities within the next accounting year are outlined below:
(a) Income tax
The Group is subject to Income tax in numerous jurisdictions. There are some transactions and events for which the ultimate tax determination is uncertain during the ordinary course of business. Significant judgment is required from the Group in determining the provision for Income tax in each of these jurisdictions. Where the final identified outcome of these tax matters is different from the initially-recorded amount, such difference will impact the income tax expenses and deferred income tax in the period in which such determination is finally made.
CSG Annual Report 2018 (b) Deferred income tax
Estimates on deferred tax assets are based on estimates on amount of taxable income and applicable tax rate for every year. Realisation of deferred income tax are subject to sufficient taxable income that are possible to be obtained by the Group in the future. Change of the future tax rate as well as the reversed time of temporary difference might have effects on tax expense (income) and the balance of deferred tax assets or liabilities. Those estimates may also cause significant adjustment on deferred tax.
(c) Impairment of long-term assets (excluding goodwill)
Long-term assets at the balance sheet date should be subject to impairment testing if there are any indications of impairment. Management determines whether the long-term assets impaired or not by evaluating and analyzing following aspects: (1) whether the event affecting assets impairment occurs; (2) whether the expected obtainable present value of future cash flows is lower than theasset’s carrying amount by continually using the assets or disposal; and (3) whether the assumptions used in expected obtainable present value of future cash flows are appropriate.
Various assumptions, including the discount rate and growth rate applied in the method of present value of future cash flow, are required in evaluating the recoverable amount of assets. If these assumptions cannot be conformed, the recoverable amount should be modified, and the long-term assets may be impaired accordingly.
(d) The useful life of fixed assets
Management estimates the useful life of fixed assets, based on historical experiences on using fixed assets that have similar properties and functions. When there are differences between actually useful life and previously estimation, management will adjust estimation to useful life of fixed assets. The fixed assets would be written off or written down when fixed assets been disposed or became redundant. Thus, the estimated result based on existing experience may be different from the actual result of the next accounting period, which may cause major adjustment to book value of fixed assets on balance sheet.
(e) Goodwill impairment
Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units (“CGUs”), or groups of CGUs, and future cash flow from each CGU or CGUs is forecasted and discounted with appropriate discount rate.
(31) Significant changes in accounting policies
In 2018, the Ministry of Finance issued the Notice of the Ministry of Finance on Revising the Format of 2018 General Enterprise Financial Statements (Finance (2018) No.15), and revised the financial statement format of general enterprises accordingly .The line items of "Notes receivable" and "Accounts receivable" in the balance sheet are listed as "Notes receivable and accounts receivable"; "Interest receivable " "Dividends receivable" and "Other receivables” are included in "Other receivables"; "Fixed assets" and "Disposal of fixed assets" is included in "Fixed assets"; "Engineering materials” and "Construction in progress" is included in "Construction in progress"; The "Notes Payable" and "Accounts payable" in the balance sheet are listed as "Notes Payable" and "Accounts payable; "Interest payable " "dividend payable” and "Other payables” are included in "Other payables"; "Long-term payables" and "Special payables" is included in "Long-term payables". In income statement, the original "Administration expenses" is reclassified as "Administration expenses” and"R&D Expenses" separately; The items "Including: interest expenses" and "Interest income" are added to the financial expenses in the income statement. In the table of changes in owner's equity, the item "Carry-forward retained earnings of the variation of the defined benefit plan" is added. The company adopts the retrospective adjustment method for the change of the accounting policy, and the items in 2017 financial statements are retrospectively adjusted as follows:
Before adjustment After adjustment
Notes receivable 552,232,420 Notes receivable and Accounts
1,190,470,710
Accounts receivable 638,238,290 receivable
Other receivables 205,939,019
Interest receivable - Other receivables 205,939,019
Dividends receivable -
Fixed assets 11,540,769,697
Fixed assets 11,540,769,697
Disposal of fixed assets -
Construction in progress 1,417,624,618
Construction in progress 1,417,624,618
Engineering material -
Notes payable 213,401,622 Notes payable and Accounts
1,613,567,664
Accounts payable 1,400,166,042 payable
Other payables 619,324,354 Other payables 653,357,094
CSG Annual Report 2018 Interest payable 34,032,740
Dividend payable -
Long-term payable 1,161,794,247
Long-term prepaid expenses 1,161,794,247
Special payable -
General and administrative
588,652,397
General and administrative expenses 919,329,772 expenses
Research and development cost 330,677,375
3 Taxation
(1) The main categories and rates of taxes applicable to the Group are set out below:
Category Taxable basis Tax rate
Enterprise income tax Taxable income 0% to25%
Value-added tax (“VAT”) (a) Taxable value-added amount (Tax payable is calculated using the6% to17%
taxable sales amount multiplied by the applicable tax rate less
deductible VAT input of the current period)
City maintenance and construction VAT paid 1% to7%
tax
Educational surcharge VAT paid 3% to5%
Some subsidiaries of the Group have used the “exempt, credit, refund” method on goods exported and the refund rate is5%-17%. (2) Tax incentives
The main tax incentives the Group is entitled to are as follows:
Tianjin CSG Energy Conservation Glass Co., Ltd. (“Tianjin Energy Conservation”) passed review on a high and new tech enterprise in 2018 and obtained the Certificate of High and New Tech Enterprise, the period of validity is three years. It applies to15% tax rate for three years since 2018.
Dongguan CSG Architectural Glass Co., Ltd. (“Dongguan CSG”) passed review on a high and new tech enterprise in 2016 and obtained the Certificate of High and New Tech Enterprise, the period of validity is three years. It applies to15% tax rate for three years since 2016.
Wujiang CSG East China Architectural Glass Co., Ltd. (“Wujiang CSG Engineering”) passed review on a high and new tech enterprise in 2017 and obtained the Certificate of High and New Tech Enterprise, the period of validity is three years. It applies to15% tax rate for three years since 2017.
Dongguan CSG Solar Glass Co., Ltd. (“Dongguan CSG Solar”) passed review on a high and new tech enterprise in 2017 and obtained the Certificate of High and New Tech Enterprise, the period of validity is three years. It applies to15% tax rate for three years since 2017.
Yichang CSG polysilicon Co., Ltd. (“Yichang CSG polysilicon”) passed review on a high and new tech enterprise in 2017 and obtained the Certificate of High and New Tech Enterprise, the period of validity is three years. It applies to15% tax rate for three years since 2017.
Dongguan CSG PV-tech Co., Ltd. (“Dongguan CSG PV-tech”) passed review on a high and new tech enterprise in 2016 and obtained the Certificate of High and New Tech Enterprise, the period of validity is three years. It applies to15% tax rate for three years since 2016.
Hebei Shichuang Glass Co., Ltd. (“Hebei Shichuang”) passed review on a high and new tech enterprise in 2016 and obtained the Certificate of High and New Tech Enterprise, the period of validity is three years. It applies to15% tax rate for three years since 2016.
Wujiang CSG Glass Co., Ltd. (“Wujiang CSG”) was recognised as a high and new tech enterprise in 2017, and obtained the Certificate of High and New Tech Enterprise, and the period of validity was three years. It applies to15% tax rate for three years since 2017.
Xianning CSG Glass Co Ltd. (“Xianning CSG”) was recognised as a high and new tech enterprise in 2017, and obtained the
Certificate of High and New Tech Enterprise, and the period of validity was three years. It applies to15% tax rate for three years
CSG Annual Report 2018 since 2017.
Xianning CSG Energy-Saving Glass Co., Ltd. (“Xianning CSG Energy-Saving”) was recognised as a high and new tech enterprise in 2018, and obtained the Certificate of High and New Tech Enterprise, and the period of validity was three years. It applies to15% tax rate for three years since 2018.
Yichang CSG Photoelectric Glass Co., Ltd. (“Yichang CSG Photoelectric”) was recognised as a high and new tech enterprise in 2018, and obtained the Certificate of High and New Tech Enterprise, and the period of validity was three years. It applies to15% tax rate for three years since 2018.
Yichang CSG Display Co., Ltd (“Yichang CSG Display”) was recognised as a high and new tech enterprise in 2018, and obtained the Certificate of High and New Tech Enterprise, and the period of validity was three years. It applies to15% tax rate for three years since 2018.
Qingyuan CSG New Energy-Saving Materials Co., Ltd. (“Qingyuan CSG Energy-Saving”) was recognised as a high and new tech enterprise in 2016, and obtained the Certificate of High and New Tech Enterprise, and the period of validity was three years. It applies to15% tax rate for three years since 2016.
Hebei CSG Glass Co Ltd. (“Hebei CSG”) was recognised as a high and new tech enterprise in 2018, and obtained the Certificate of High and New Tech Enterprise, and the period of validity was three years. It applies to15% tax rate for three years since 2018. Shenzhen CSG Applied Technology Co Ltd. (“Shenzhen Technology”) was recognised as a high and new tech enterprise in 2018, and obtained the Certificate of High and New Tech Enterprise, and the period of validity was three years. It applies to15% tax rate for three years since 2018.
Sichuan CSG Energy Conservation Glass Co., Ltd. (“Sichuan CSG Energy Conservation”) obtains enterprise income tax preferential treatment for Western Development, and temporarily calculates enterprise income tax at a tax rate of15% for current year.
Chengdu CSG Glass Co., Ltd. (“Chengdu CSG”) obtains enterprise income tax preferential treatment for Western Development, and temporarily calculates enterprise income tax at a tax rate of15% for current year.
Qingyuan CSG New Energy Co., Ltd. (“Qingyuan CSG New Energy”), Suzhou CSG PV Energy Co., Ltd. (“Suzhou CSG PV Energy”), Jiangsu Wujiang CSG New Energy Co., Ltd. (“Wujiang CSG New Energy”), and Yichang CSG New Energy Co., Ltd. (“Yichang CSG New Energy”), Zhangzhou CSG Kibing PV Energy Co., Ltd. (“Zhangzhou CSG”), Heyuan CSG Kibing PV Energy Co., Ltd. (“Heyuan CSG”), Shaoxing CSG Kibing PV Energy Co., Ltd. (“Shaoxing CSG”) Xinning CSG PV Energy Co., Ltd.(“Xianning CSG PV Energy”) and Zhanjiang CSG New Energy Co., Ltd. (“Zhanjiang CSG PV Energy””),are public infrastructure project specially supported by the state in accordance with the Article 87 in Implementing Regulations of the Law of the People's Republic of China on Enterprise Income Tax, and can enjoy the tax preferential policy of “three-year exemptions and three-year halves”, that is, starting from the tax year when the first revenue from production and operation occurs, the enterprise income tax is exempted from the first to the third year, while half of the enterprise income tax is collected for the following three years. Qingyuan CSG New Energy, Suzhou CSG PV Energy and Wujiang CSG New Energy started to carry out operations in 2015; The applicable enterprise income tax rate for them is12.5% for the current year. Yichang CSG New Energy started operation in 2016, Zhangzhou CSG, Heyuan CSG and Shaoxing CSG started operation in 2017. Zhanjiang CSG PVEnergy、Xianning CSG PV Energy started operation in 2018.The applicable enterprise income tax rate for them is0% for the current year.
In addition, pursuant to the document Fogang Guo Shui Shui Tong[2015] No. 2489, the VAT for photovoltaic power generation of Qingyuan CSG New Energy is subject to the refund upon collection policy.
CSG Annual Report 2018 4 Notes to the consolidated financial statements
(1) Cash at bank and on hand
31 December 2018 31 December 2017 Cash on hand 9,731 36,182 Cash at bank 2,225,117,182 2,409,716,983 Other cash balances 1,320,807 52,852,599 2,226,447,720 2,462,605,764 Including: Total overseas deposits 37,790,337 24,049,075 Other cash balances include margin deposits for issuing letters of credit and applying loans, amounting to RMB1,320,807 (31 December 2017: RMB2,852,599), which is restricted cash.
(2) Notes receivable and Accounts receivable
31 December 2018 31 December 2017 Notes receivable 719,375,448 552,232,420 Accounts receivable 592,233,312 638,238,290 1,311,608,760 1,190,470,710 1. Notes receivable
31 December 2018 31 December 2017 Trade acceptance notes 415,194,892 329,405,579 Bank acceptance notes 304,180,556 222,826,841 719,375,448 552,232,420 (a) As at 31 December 2018, notes receivable which have been endorsed or discounted by the Group but are not yet due are as follows:
Derecognized Not derecognized Trade acceptance notes - 224,935,914 Bank acceptance notes 1,991,011,932 - 1,991,011,932 224,935,914
CSG Annual Report 2018 2. Accounts receivable
31 December 2018 31 December 2017 Accounts receivable 611,899,209 660,150,357 Less: Provision for bad debts (19,665,897) (21,912,067) 592,233,312 638,238,290 (a) The ageing of accounts receivable is analysed as follows:
31 December 2018 31 December 2017 Within 1 year 583,789,669 639,294,320 1 to 2 years 15,284,163 8,343,672 2 to 3 years 6,586,079 12,512,365 Over 3 years 6,239,298 - 611,899,209 660,150,357 As at 31 December 2018, accounts receivable of RMB138,819,578 (31 December 2017: RMB93,961,486) were overdue. But based on analysis on financial positions and credit records of such customers, such receivables were considered recoverable and unimpaired by the Company. Therefore no provision for impairment loss had been made. The overdue ageing of the accounts receivable is analyzed as follows:
31 December 2018 31 December 2017 Within 1 year 127,058,887 86,358,511 1 to 2 years 7,822,324 7,448,217 2 to 3 years
3,938,367 154,758 138,819,578 93,961,486 (b) Accounts receivable are analysed by categories as follows:
31 December 2018 31 December 2017
Provision for bad Provision for bad Carrying amount debts Carrying amount debts
% of total Provision for % of total Provision for
Amount balance bad debts % Amount balance bad debts % Provision for bad debts by
groupings
Portfolio 1 598,852,703 98% (11,976,169)2% 636,614,136 96% (12,233,039) 2% With amounts that are not
individually significant but
that the related provision for
bad debts is provided on the
individual basis 13,046,506 2% (7,689,728)59% 23,536,221 4% (9,679,028)41% 611,899,209 100% (19,665,897)3% 660,150,357 100% (21,912,067) 3%
CSG Annual Report 2018 (c) Provision for bad debts provided on grouping basis using the percentage of provision method is analysed as follows:
31 December 2018 31 December 2017
Carrying amount Provision for bad debts Carrying amount Provision for bad debts
Amount Amount % Amount Amount % Portfolio 1 598,852,703 (11,976,169) 2% 636,614,136 (12,233,039) 2% 598,852,703 (11,976,169) 2% 636,614,136 (12,233,039) 2% (d) As at 31 December 2018, the Company had no accounts receivable with amounts that were individually significant and that the related provision for bad debts was provided on the individual basis (31 December 2017: Nil).
(e) As at 31 December 2018, accounts receivable of RMB13,046,506 (31 December 2017: RMB23,536,221) were not individually significant but provided for bad debts separately. It mainly represented the goods receivable due from a client of the subsidiary, Yichang CSG Display. Due to theclient’s bankruptcy, Yichang CSG Display made full provision against this receivable. It also represented the goods receivable due from a client of the subsidiary, Dongguan CSG PV-tech. Due to business dispute, Dongguan CSG PV-tech made partial provision against the receivable.
(f) Accounts receivables of RMB 2,750,772 were written off this year, The reasons for the written-off included disputes with customers and ability to reach a settlement with creditors.
(g) As at 31 December 2018, Total balances for the five largest accounts receivable set out as below:
Provision for bad Percentage in total accounts
Balance debts receivable balance
Total balances for the five largest accounts
receivable 82,666,183 (1,653,324) 14% (3) Advances to suppliers
(a) The ageing of prepayment is analysed below:
31 December 2018 31 December 2017
% of total % of total
Amount balance Amount balance
Within 1 year 76,372,805 84% 130,813,397 91% 1 to 2 years 2,034,196 2% 264,952 - 2 to 3 years - - 12,769,674 9% Over 3 years 12,769,674 14% - - 91,176,675 100% 143,848,023 100% As at 31 December 2018, advances to suppliers over 1 year with a carrying amount of RMB14,803,870 (31 December 2017: RMB13,034,626) were mainly advances paid for Natural gas and materials, which were not fully settled since the materials had not been received.
CSG Annual Report 2018 (b) As at 31 December 2018, the five largest prepayment are analyzed as follows:
Percentage in total
advances to suppliers
Balance balance
Total balances for the five largest advances to suppliers 48,332,569 53% (4) Other receivables
31 December 2018 31 December 2017 Receivables from special fund for talent 171,000,000 171,000,000 Refundable deposits 21,351,937 16,957,562 Payments made on behalf of other parties 15,036,194 19,306,658 Petty cash 489,912 875,714 Export tax rebates receivable 137,744 - Others 3,962,723 2,319,489 211,978,510 210,459,423 Less: Provision for bad debts (4,554,215) (4,520,404) 207,424,295 205,939,019 (a) The ageing of other receivables is analyzed as follows:
31 December 2018 31 December 2017 Within 1 year 11,684,072 22,924,535 1 to 2 years 14,639,759 2,813,012 2 to 3 years 1,060,654 11,211,511 3 to 4 years 11,121,084 171,855,888 4 to 5 years 171,843,311 86,395 Over 5 years 1,629,630 1,568,082 211,978,510 210,459,423 As at 31 December 2018, other receivables of RMB13,594,025 (31 December 2017: RMB2,510,365) were overdue. But based on analysis on financial positions and credit records of such customers, such receivables were considered recoverable and unimpaired by the Company. Therefore no provision for impairment loss had been made.
CSG Annual Report 2018 (b) Other receivables are analysed by categories as follows:
31 December 2018 31 December 2017
Provision for bad
Carrying amount debts Carrying amount Provision for bad debts% of total Provision for % of total Provision for
Amount balance bad debts % Amount balance bad debts % Provision for bad debts by
groupings
Portfolio 1 211,655,605 100% (4,231,310) 2% 39,136,518 19% (777,499) 2% Portfolio 2 - - - - 171,000,000 81% (3,420,000) 2% Not individually significant
but provided for bad debts
separately 322,905 - (322,905)100% 322,905 - (322,905)100% 211,978,510 100% (4,554,215)2% 210,459,423 100% (4,520,404)2% (c) The reason why not individually significant but provided for bad debts separately is the payment is not recoverable over 5 years.
(d) For other receivables provided for bad debts by portfolio, the percentage of provision for the portfolio is as follows: 31 December 2018 31 December 2017
Carrying amount Provision for bad debts Carrying amount Provision for bad debts
Amount Amount % Amount Amount % Portfolio 1 211,655,605 (4,231,310) 2% 39,136,518 (777,499) 2% Portfolio 2 - - 171,000,000 (3,420,000) 2% 211,655,605 (4,231,310) 2% 210,136,518 (4,197,499) 2% (e) As at 31 December 2018, the top 5 largest other receivables are analysed as bellow:
Percentage in total other Provision for bad
Nature of business Balance Ageing receivables balance debts
Company A Independent third party 171,000,000 4 to5Years 81% 3,420,000 Governmental
department B Independent third party 11,067,754 3 to4Years 5% 221,355 Company C Independent third party 5,000,000 1 to 2 years 2% 100,000 Company D Independent third party 3,859,460 Within 1 year 2% 77,189 Company E Independent third party 3,350,000 1 to 2 years 2% 67,000 194,277,214 92% 3,885,544
CSG Annual Report 2018 (5) Inventories
(a) Inventories are summarized by categories as follows:
31 December 2018 31 December 2017
Provision for Provision for
decline in the
decline in the
Carrying value of value of
amount inventories Carrying amount C arrying amount inventories Carrying amount Raw materials 224,107,756 (1,438,767) 222,668,989 213,348,012 (1,447,590) 211,900,422 Work in progress 25,088,903 - 25,088,903 45,614,905 - 45,614,905 Finished goods 309,132,138 (566,246) 308,565,892 387,489,714 (68,974) 387,420,740 Turnover materials 43,815,966 - 43,815,966 40,959,250 - 40,959,250 602,144,763 (2,005,013) 600,139,750 687,411,881 (1,516,564) 685,895,317 (b) Provision for decline in the value of inventories are analyzed as follows:
31 December
2017 Increase in current year Reversal in current year 31 December 2018 Finished goods 68,974 497,272 - 566,246 Raw materials 1,447,590 - (8,823) 1,438,767 1,516,564 497,272 (8,823) 2,005,013 (c) Provision for decline in the value of inventories is as follows:
Reasons of reversal of the decline Basis for provision for decline in the value of inventories in the value of inventories The amount of carrying amount less net realizable value due to
Finished goods decline in price of products Sold The amount of book value less net realizable value due to
Raw materials sluggish or damaged raw materials Used (6) Assets classified as held for sale
carrying amounts
Estimated
Estimated Item at the end of period Fair value disposal costs disposal time Intangible assets 15,048,314 18,390,394 June of 2019 Construction in progress 30,935,206 37,805,606 June of 2019 45,983,520 56,196,000 -
The subsidiary of the Group, Dongguan CSG PV-tech signed a grant contract of land use right with third party Dongguan Chaoyin Textile Co., LTD. (Dongguan Chaoyin Company) on 17 June 2016. Dongguan CSG PV-tech sells its land use right along with the buildings on the land to Dongguan Chaoyin Company. Therefore, the construction-in-progress and intangible assets of Dongguan CSG PV-tech were transferred to assets held for sale. As at 31 December 2018, the transfer of propery rights had not been finalised.
CSG Annual Report 2018 (7) Other current assets
31 December 2018 31 December 2017 VAT to be offset 115,329,834 181,667,326 Entrusted loan (i) 300,000,000 - Enterprise income tax prepaid 21,277,486 1,132,508 VAT input to be recognized 8,720,129 18,048,155 445,327,449 200,847,989 (i)On December 21, 2018, reviewed and approved by the Group's eighth session of the Board of Directors , The group issued Tengchong Yuezhou Water Investment Development Co., Ltd. entrusted Loans RMB 0.3 billion via China Everbright Bank shenzhen(Nanshan) branch . The period of entrusted loan was 3 months and annual interest rate8.5%
(8) Fixed assets
Machinery and Motor vehicles
Buildings equipment and others Total Cost
31 December 2017 3,999,368,700 12,462,823,260 208,292,757 16,670,484,717 Increase in current year
Acquisition 3,370,397 48,694,459 11,144,592 63,209,448 Transfers from construction in
133,371,640 1,178,070,597 6,488,900 1,317,931,137 progress (Note 4(9))
Others 5,630,152 2,636,218 - 8,266,370 Decrease in current year
Disposal or retirement - (15,440,941) (5,023,202) (20,464,143) Others (291,848,507) (2,790,972,405) (3,640,750) (3,086,461,662) 31 December 2018 3,849,892,382 10,885,811,188 217,262,297 14,952,965,867 Accumulated depreciation
31 December 2017 751,518,811 3,908,894,072 188,549,283 4,848,962,166 Increase in current year
Provision 125,540,858 817,166,294 23,228,298 965,935,450 Decrease in current year
Disposal or retirement - (2,736,162) (4,792,845) (7,529,007) Others (61,216,903) (832,213,509) (3,494,074) (896,924,486) 31 December 2018 815,842,766 3,891,110,695 203,490,662 4,910,444,123 Provision for impairment loss
31 December 2017 10,580,861 270,171,993 - 280,752,854 Increase in current year
CSG Annual Report 2018 Provision 11,270,855 1,103,115 - 12,373,970 Others 19,876,460 - 19,876,460 Decrease in current year
Disposal or retirement - (11,214,371) - (11,214,371) Others - (190,110,944) - (190,110,944) 31 December 2018 21,851,716 89,826,253 - 111,677,969 Carrying amount
31 December 2018 3,012,197,900 6,904,874,240 13,771,635 9,930,843,775 31 December 2017 3,237,269,028 8,283,757,195 19,743,474 11,540,769,697 In 2018, the depreciation amount provided for fixed assets was RMB965,935,450 (2017: RMB980,581,921), and the amount of depreciation expenses charged to cost of sales, selling and distribution expenses, general and administrative expenses and construction in progress was RMB902,224,539, RMB 973,181, RMB 62,737,730 and RMB 0(2017：RMB 890,575,701, RMB 970,739, RMB 65,929,139 and RMB 23,106,342) respectively.
In 2018, the cost of fixed assets transferred from construction in progress amounted to RMB 1,317,931,137 (2017:RMB 1,438,870,858).
(a) Fixed assets with pending certificates of ownership
Carrying amount Reasons for not yet obtaining certificates of title
Have submitted the required documents and are in the process of application,
Buildings 874,593,679 or the related land use right certificate pending
(9) Construction in progress
31 December 2018 31 December 2017
Carrying Provision for Carrying Carrying Provision for
Carrying amount amount impairment loss amount amount impairment loss
Yichang CSG polysilicon
tech-innovation project
1,465,710,819 (253,983,876)
1,211,726,943
- - - Yichang CSG polysilicon
Wafer production capacity and 707,199,477 (25,475,004) 681,724,473 - - - tech-upgrade project
Yichang display device
company flat panel display 354,190,988 (14,160,474) 340,030,514 298,794,622 (14,160,474) 284,634,148 project
Dongguan Solar Glass Phase I
78,970,995 (40,248,018) 38,722,977 78,970,995 (40,248,018) 38,722,977 and II improvement project
Yichang 1GW silicon slice
48,859,613 - 48,859,613 43,617,802 - 43,617,802 project
Dongguan Solar New PV Tech
41,074,003 41,074,003 1,888,363 - 1,888,363 Glass Processing Project
LED Sapphire Substrate Project 32,420,412 (32,420,412) - 30,886,629 (19,303,853) 11,582,776 Hebei CSG Environmental
19,012,500 - 19,012,500 - - - reforming project
Chendu float Environmental
16,989,203 - 16,989,203 - - - reforming project
Wujiang float Environmental
16,494,538 - 16,494,538 - - - reforming project
Dongguan Jingyu Jadeglass
14,273,358 - 14,273,358 - - -
Project
CSG Annual Report 2018 Qingyuan CSG Ultra-white
electronic glass and ultra-white
338,679 - 338,679 - - - special glass production line
project
Xianning CSG Photoelectric
- - - 400,665,493 - 400,665,493 Glass project
Yichang Optoelectronic
- - - 242,055,237 - 242,055,237 Technology Reform Project
Hebei float 600T
tech-innovation project
- - - 113,762,853 - 113,762,853 Zhanjiang Photovoltaic 20MV
Step-by-step Photovoltaic - - - 100,570,104 - 100,570,104 Power Plant Project
Wujiang energy glass
- - - 72,600,518 (19,876,460) 52,724,058 expansion project
Wujiang Photovoltaic
- - - 7,414,854 - 7,414,854 Packaging Materials Project
Others 130,338,624 (405,983) 129,932,641 120,391,936 (405,983) 119,985,953 2,925,873,209 (366,693,767) 2,559,179,442 1,511,619,406 (93,994,788) 1,417,624,618
CSG Annual Report 2018 (a) Movement of significant project
Including:
Proportion Amount of
Transfer to fixed Amount of
31 December Increase in Other decreases 31 December between borrowing costs Capitalisation rate Source of Project name Budget
2017 current year
assets in current
in current year 2018 engineering input capitalised in
borrowing costs
for in current year fund year capitalised in
and budget (i) 2018
2018
Yichang CSG polysilicon Internal fund 49,520,000 - 1,465,710,819 - - 1,465,710,819 19% - - - and bank tech-innovation project
loan Yichang CSG polysilicon
Internal fund Wafer production capacity 144,570,000 - 707,199,477 - - 707,199,477 4% 30,138 30,138 5.28% and bank and tech-upgrade project loan Yichang display device
Internal fund company flat panel display 1,970,000,000 298,794,622 55,910,329 (513,963) - 354,190,988 86% 8,543,752 4,399,593 4.06% and bank project loan Dongguan Solar Glass
Phase I and II 396,410,000 78,970,995 - - - 78,970,995 80% - - - Internal fund improvement project
Yichang 1GW silicon slice Internal fund 1,073,209,600 43,617,802 9,506,541 (4,264,730) - 48,859,613 44% 11,713,945 3,083,952 5.28% and bank project
loan Dongguan Solar New PV
Tech Glass Processing 60,000,000 1,888,363 55,105,795 (15,920,155) - 41,074,003 95% - - - Internal fund Project
LED Sapphire Substrate Internal fund 35,000,000 30,886,629 1,533,783 - - 32,420,412 93% 4,650,543 - - and bank Project
loan Hebei CSG Environmental
25,700,000 - 19,012,500 - - 19,012,500 74% - - - Internal reforming project fundn Chendu float
Environmental reforming 25,000,000 - 16,989,203 - - 16,989,203 68% - - - Internal fund project
Wujiang float
Environmental reforming 50,300,000 - 16,494,538 - - 16,494,538 33% - - - Internal fund project
Dongguan Jingyu
Jadeglass Project
30,000,000 - 14,273,358 - - 14,273,358 48% - - - Internal fund Qingyuan CSG
Ultra-white electronic
Internal fund glass and ultra-white 785,000,000 - 338,679 - - 338,679 - - - - and bank special glass production loan line project
CSG Annual Report 2018 Including:
Proportion Amount of
Transfer to fixed Amount of
31 December Increase in Other decreases 31 December between borrowing costs Capitalisation rate Source of Project name Budget
2017 current year
assets yi en
a
c ru rrent
in current year 2018 en ag ni dn e be ur din gg
e
ti n (ip )u t capi 2ta 0l 1is 8e d in
bo cr ar po iw
2ta
0i ln 1isg
8e
dc o is nt s
for in current year fund Xianning CSG Internal fund 510,000,000 400,665,493 93,175,330 (493,840,823) - - 100% 20,466,317 12,695,704 4.75% and bank Photoelectric Glass project
loan Yichang Optoelectronic
Internal fund Technology Reform 258,296,536 242,055,237 7,999,369 (250,054,606) - - 100% - - - and bank Project loan Hebei float 600T Internal fund 145,750,000 113,762,853 124,052,098 (234,744,769) (3,070,182) - 100% 1,830,487 1,830,487 4.94% and bank tech-innovation project
loan Zhanjiang Photovoltaic
20MV Step-by-step Internal fund 133,000,000 100,570,104 - (97,484,158) (3,085,946) - 99% 2,280,097 - - and bank Photovoltaic Power Plant
loan Project
Wujiang energy glass Internal fund expansion project
845,630,000 72,600,518 2,197,579 (74,798,097) - - 100% 20,120,444 - - a lon ad n b ank Wujiang Photovoltaic
Internal fund Packaging Materials 520,100,000 7,414,854 22,445,450 (29,860,304) - - 100% - - - and bank Project loan Internal fund Others 1,185,132,635 120,391,936 127,596,221 (116,449,532 ) (1,200,001) 130,338,624 32,839,290 96,251 - and bank loan 8,242,618,771 1,511,619,406 2,739,541,069 (1,317,931,137) (7,356,129) 2,925,873,209 102,475,013 22,136,125
(i) The proportion of project expenditure incurred to the budget is determined by the accumulative expenditures incurred divided by the total budget. Some of the projects are transferred to property, plant, and equipment because the construction is completed.
(ii) The budget and actual expenditures incurred for these kinds of projects include cost of acquiring land use rights. The balance of construction in progress does not include the costs of acquiring land-use rights.
CSG Annual Report 2018 (b) Provision for impairment of construction in progress
provision from
provision increased long-term assets Decrease in current
Project name 31 December 2017 31 December 2018 in current year transferred in year
current year
Dongguan Solar Glass Phase I
40,248,018 - - - 40,248,018 and II improvement project
Wujiang float glass project 19,876,460 - - (19,876,460) - Yichang CSG Display panel
14,160,474 - - - 14,160,474 display project
LED Sapphire Substrate Project 19,303,853 13,116,559 - - 32,420,412 Yichang CSG polysilicon Wafer
production capacity and - 20,537,934 4,937,070 - 25,475,004 tech-upgrade project(i)
Yichang CSG polysilicon
- 68,810,002 185,173,874 - 253,983,876 tech-innovation project(i)
Others 405,983 - - - 405,983 93,994,788 102,464,495 190,110,944 (19,876,460) 366,693,767 (i)On 31 may 2018, the state introduced the‘Circular of matters concerning Photovoltaic Power Generation in2018’, The policies mentioned above considerably affected the operations ofCSG’s solar industry, bythe‘section 8 of accounting standards for businessenterprises– impairments ofassets’, the management of the company identified and ran impairment tests for some parts of related assets showing a sign of impairment, and the provision for impairment was noted by company.
CSG Annual Report 2018 (10) Intangible assets and development expenditure
Patents and
Land use rights proprietary Exploitation rights Others Total
technologies
Cost
31 December 2017 1,026,603,700 246,011,919 4,456,536 36,106,710 1,313,178,865 Acquisition in current year - 1,440,455 - 1,900,706 3,341,161 Transfers from development
- 29,735,459 - - 29,735,459 expenditure in current year
Others - 6,000,000 - - 6,000,000 31 December 2018 1,026,603,700 283,187,833 4,456,536 38,007,416 1,352,255,485 Accumulated amortization
31 December 2017 149,057,265 74,985,236 3,706,724 24,996,753 252,745,978 Provision in current year 21,184,631 22,400,518 400,641 6,581,913 50,567,703 31 December 2018 170,241,896 97,385,754 4,107,365 31,578,666 303,313,681 Provision for impairment loss
31 December 2017 - 13,201,347 - 9,133 13,210,480 31 December 2018 - 13,201,347 - 9,133 13,210,480 Carrying amount
31 December 2018 856,361,804 172,600,732 349,171 6,419,617 1,035,731,324 31 December 2017 877,546,435 157,825,336 749,812 11,100,824 1,047,222,407 In 2018, the amortization of intangible assets amounted to RMB50,567,703 (2017: RMB 43,884,166).
As at 31 December 2018, ownership certificates of land use rights (“Land ownership Certificates”) for certain land use rights of the Group with carrying amounts of approximately RMB5,228,694 (cost: RMB6,586,712) had not yet been obtained by the Group (31 December 2017: carrying amount: RMB5,473,442, cost: RMB 6,586,712). TheCompany’s management are of the view that there is no legal restriction for the Group to apply for and obtain the Land Ownership Certificates and has no adverse effect on theGroup’s business operation.
Research expenditure is analyzed below:
Increase in
Decrease in current year
31 December 2017 current year 31 December 2018
Recognised as Recognised as
expenses intangible assets
Development costs 61,365,537 42,963,845 (44,666) (29,735,459) 74,549,257
In 2018, the total amount of research and development expenditures of the Group was RMB 381,711,070 (2017: RMB 368,237,629), including RMB 338,791,891 (2017: RMB 330,677,375) recorded in income statement for current period and the research and development expenditure with the amount of RMB 29,735,459 recognized as intangible assets for the current period (2017: 43,122,431). At 31 December 2018, the intangible assets arising from internal research and development accounted for14.21% of total of intangible assets (31 December 2017:12.37%).
CSG Annual Report 2018 (11) Goodwill
(a) Book value of goodwill
31 December Increase in Decrease in
31 December 2017 current year current year 2018 Tianjin CSG Architectural Glass Co., Ltd. 3,039,946 3,039,946 Xianning CSG Photoelectric 4,857,406 4,857,406 Shenzhen CSG Display 389,494,804 389,494,804 397,392,156 397,392,156 (b) Provision of impairment of goodwill
31 December Increase in Decrease in
31 December 2017 current year current year 2018 Tianjin CSG Architectural Glass Co., Ltd.
Xianning CSG Photoelectric
Shenzhen CSG Display 20,672,000 20,672,000 20,672,000 20,672,000 The goodwill allocated to the asset groups and groups of asset groups from Tianjin CSG Architectural was summarized by operating segments as Architectural Glass segment. The goodwill allocated to the asset groups and groups of asset groups from Shenzhen CSG Display and Xianning CSG Photoelectric are summarized by operating segments as Electronic Glass and Display segment.
Combining with the prediction of the future business and independent third party appraisal institution, the Company's management considered that the goodwill was impaired RMB 20,672,000 as at 31 December 2018.
The recoverable amount of asset groups is determined by net present value of estimated future cash flows which is determined according to the five-year budget approved by management. The cash flow exceed five years is forecasted by using growth rates not exceeding similar long-term average growth rates of each assetgroup’s industry. The discount rates used are the pre-tax interest rates that are able to reflect the risks specific to the related asset groups.
(12) Deferred tax assets and liabilities
(a) Deferred tax assets before offsetting
31 December 2018 31 December 2017
Deductible
Deferred tax Deductible temporary
temporary Deferred tax assets assets differences
differences
Provision for asset impairments 394,331,591 68,458,375 361,149,562 55,552,592 Tax losses 407,739,415 72,421,592 133,658,792 24,457,319 Government grants 256,949,965 41,523,325 128,189,967 20,424,022 Accrued expenses 42,393,456 6,359,019 50,193,405 7,529,011 Depreciation of fixed assets 27,973,574 4,311,723 33,762,174 8,000,331 Share payment 16,366,061 2,597,038 5,196,945 867,677 1,145,754,062 195,671,072 712,150,845 116,830,952
CSG Annual Report 2018 Including:
Expected to be reversed within
54,631,827 33,751,219 one year (inclusive)
Expected to be reversed after one
141,039,245 83,079,733 year
195,671,072 116,830,952 (b) Deferred tax liabilities before offsetting
31 December 2018 31 December 2017
Taxable temporary Taxable temporary
differences Deferred tax liabilities differences Deferred tax liabilities Depreciation of fixed
474,157,813 78,260,394 371,115,284 56,874,044 assets
Including:
Expected to be reversed within
23,373,156 4,247,230 one year (inclusive)
Expected to be reversed after one
54,887,238 52,626,814 year
78,260,394 56,874,044 (c) Deductible losses that are not recognized as deferred tax assets of the Group are analyzed as follows:
31 December 2018 31 December 2017 Deductible losses 517,898,158 425,759,321 The deductible tax losses not recognized as deferred tax assets mainly represented the tax losses of the Company and some closed subsidiaries. Management was unable to expect that whether there were taxable profit would be available in the future against which these deductible tax losses can be utilized, and accordingly, did not recognize the deferred tax assets.
(d) The tax losses for which no deferred tax assets were recognized will expire in the following years:
31 December 2018 31 December 2017 2018 - 54,100,000 2019 82,300,000 82,300,000 2020 94,430,197 94,430,197 2021 111,625,585 111,625,585 2022 83,303,539 83,303,539 2023 146,238,837 - 517,898,158 425,759,321 (e) The net balances of deferred tax assets and liabilities after offsetting are as follows:
CSG Annual Report 2018 31 December 2018 31 December 2017
Deductible/taxable Deductible/taxable Net deferred tax temporary differences after Net deferred tax assets temporary differences assets or liabilities offsetting or liabilities after offsetting Deferred tax assets 139,529,518 817,628,525 80,872,862 472,134,707 Deferred tax liabilities 22,118,840 146,032,276 20,915,954 131,099,146 (13) Other non-current assets
31 December 2018 31 December 2017 Prepayment for equipment and software upgrading expenses 50,315,934 45,431,352 Prepayment for lease of land use rights 6,510,000 6,510,000 56,825,934 51,941,352 (14) Provision for asset impairment
Other
31 December Increase in Increased in Reversal in Written off in 31 December 2017 current year current year current year cur rent year 2018 Provision for bad debts 26,432,471 13,699,656 - (13,161,243) (2,750,772) 24,220,112 Including: Provision for bad debts of
accounts receivable 21,912,067 13,421,633 - (12,917,031) (2,750,772) 19,665,897 Provision for bad debts of
other receivables 4,520,404 278,023 - (244,212) - 4,554,215 Provision for decline in the value of
inventories 1,516,564 497,272 - - (8,823) 2,005,013 Provision for impairment of fixed
assets 280,752,854 12,373,970 19,876,460 - (201,325,315) 111,677,969 Provision for impairment of
construction in progress 93,994,788 102,464,495 190,110,944 - (19,876,460) 366,693,767 Provision for impairment of intangible
assets 13,210,480 - - - - 13,210,480 Provision for impairment of goodwill - 20,672,000 - - - 20,672,000 415,907,157 149,707,393 209,987,404 (13,161,243) (223,961,370) 538,479,341 (15) Short-term borrowings
31 December 2018 31 December 2017 Unsecured 2,008,000,000 2,691,732,609 Guaranteed (i) 909,679,590 1,012,898,300 Mortgage loan 5,000,000 - 2,922,679,590 3,704,630,909 (i) As at 31 December 2018, the Company provided its subsidiaries with guarantee for the short-term borrowings of RMB909,679,590 (31 December 2017: RMB1,012,898,300), and the Company had no counter guarantee from minority shareholders of subsidiaries (31 December 2017: Nil).
CSG Annual Report 2018 As at 31 December 2018, the interest of short-term borrowings varied from2.95% to5.66% (31 December 2017:2.70% to5.66%).
(16) Notes payable and Accounts payable
31 December 2018 31 December 2017 Notes payable 105,150,000
213,401,622 Accounts payable 1,209,859,263
1,400,166,042 1,315,009,263 1,613,567,6641、 Notes payable
31 December 2018 31 December 2017 Bank acceptance notes 105,150,000 213,401,622 All notes payable are due within one year.
2、 Accounts payable
31 December 2018 31 December 2017 Materials payable 749,987,838 798,178,206 Equipment payable 230,997,567 329,926,045 Construction expenses payable 133,247,003 167,394,038 Freight payable 62,455,534 61,671,023 Utilities payable 27,099,683 35,973,405 Others 6,071,638 7,023,325 1,209,859,263 1,400,166,042 As at 31 December 2018, the amount of accounts payable over 1 year was approximately RMB159,491,611 (31 December 2017: RMB160,638,075), which mainly comprised payables for construction and equipment. As the construction work had not passed the final acceptance test yet, the balance was not yet settled.
(17) Advances from customers
31 December 2018 31 December 2017 Advances for goods from customers 206,631,008 195,563,465 The ageing of balances was substantively within 1 year.
CSG Annual Report 2018 (18) Employee benefits payable
31 December 2018 31 December 2017 Short-term employee benefits payable (a) 262,906,600 272,144,440 Defined contribution plans payable (b) 54,313 26,220 Termination benefits(c) 3,498,238
266,459,151 272,170,660 (a) Short-term employee benefits
31 December 2017
Increase in Decrease in current 31 December
current year year 2018
Wages and salaries, bonus, allowances and
175,485,615 1,207,779,066 (1,140,700,379) 242,564,302
subsidies
Social security contributions 13,752 43,590,775 (43,579,846) 24,681
Including: Medical insurance 12,358 36,366,039 (36,357,092) 21,305
Work injury insurance 984 4,692,227 (4,690,854) 2,357
Maternity insurance 410 2,532,509 (2,531,900) 1,019
Housing funds 2,758,371 45,979,653 (46,124,437) 2,613,587
Labour union funds and employee
15,280,702 15,807,368 (13,384,040) 17,704,030
education funds
Management bonus (i) 78,606,000 - (78,606,000) -
Share-based payments - 144,278,158 (144,278,158) -
272,144,440 1,457,435,020 (1,466,672,860) 262,906,600
(i) Pursuant to the resolution at the 8th session in the temporary conference of the board of directors of the Company on 11 December 2017, to implemented equity incentive plans of restricted stock for the Company directors and senior management, core management team, backbones of technology and business. The company first awarded 97,511,654 restricted shares to 454 incentive objects for the first time at RMB4.28 per share. The total fair value of the equity instruments granted to the incentive object by the company for the first time is RMB289,519,900. The total value of such fair value as the total cost of the company's equity incentive plan will be confirmed in stages according to the ratio of unlocking/exercising in the implementation of the equity incentive plan, and it is included in the cost in the term of "management fees and Construction in progress " and "capital reserves - other capital reserves".
Pursuant to the resolution at the 8th session in the temporary conference of the board of directors of the Company on 13 September 2018, The grant date was confirmed on September 13,2018. The company awarded 9,826,580 restricted shares to 75 incentive objects for the first time at RMB3.68 per share. The total fair value of the equity instruments granted to the incentive object by the company is RMB8,256,000. The total value of such fair value as the total cost of the company's equity incentive plan will be confirmed in stages according to the ratio of unlocking/exercising in the implementation of the equity incentive plan, and it is included in the cost in the term of "management fees and Construction in progress " and "capital reserves - other capital reserves". In addition, according to theGroup’s performance in 2018, the unlocking conditions for the second post lock-up period for the ordinary A restricted shares incentive plan for 2017 In addition, according to theGroup’s performance in 2018, the unlocking conditions for the second post lock-up period for the restricted shares incentive plan for 2017 and for the second post lock-up period for the restricted shares incentive plan for 2018 were not met. Therefore, by December 31 2018 ,expenses for the second post lock-up period for the ordinary A restricted shares was reduced by RMB 41,856,285.
CSG Annual Report 2018 The Company unlock the conditions of restricted share in 2018, and the cost associated with equity incentive plan is confirmed at RMB144,278,158 in this phase.
(b) Defined contribution plans
Increase in Decrease in
31 December 2017 current year current year 31 December 2018 Basic pensions 25,388 106,923,957 (106,896,772) 52,573 Unemployment insurance 832 3,774,201 (3,773,293) 1,740 26,220 110,698,158 (110,670,065) 54,313 (c) Termination benefits
Increase in Decrease in
31 December 2017 current year current year 31 December 2018 Other dismissal welfare - 9,812,341 (6,314,103) 3,498,238 - 9,812,341 (6,314,103) 3,498,238 (19) Taxes payable
31 December 2018 31 December 2017 Enterprise income tax payable 36,008,341 35,100,800 VAT payable 54,091,751 48,496,225 Housing property tax payable 5,156,058 8,617,044 Individual income tax payable 3,367,389 5,177,080 City maintenance and construction tax payable 3,246,775 4,261,902 Educational surcharge payable 2,586,657 3,348,566 Environmental tax payable 2,350,943 - Others 5,159,451 6,995,147 111,967,365 111,996,764 (20) Other payables
31 December 2018 31 December 2017 Interest payable 73,612,703 34,032,740 Dividend payable 2,846,362
- Other payables 476,292,122 619,324,354 552,751,187 653,357,094
CSG Annual Report 2018 1. Interest payable
31 December 2018 31 December 2017 Interest payable for medium term notes 65,267,308 27,622,465 Interest of long-term borrowings with periodic payments of interest
and return of principal at maturity 754,878 938,950 Interest payable for short-term borrowings 7,590,517 5,471,325 73,612,703 34,032,740 2. Dividend payable
31 December 2018 31 December 2017 Restricted share dividend payable 2,846,362
2,846,362 - 3. Other payables
31 December 2018 31 December 2017 Guarantee deposits received from construction contractors 63,181,510 49,624,256 Accrued cost of sales (i) 37,407,112 58,584,562 Temporary collection of payment for land transfer 56,106,781 56,196,000 Payable for contracted labor costs 16,030,100 17,568,695 Temporary receipts 13,581,459 7,964,070 Deposit for disabled 4,943,347 5,230,110 Restricted share repurchase obligation 275,748,309 417,349,879 Others 9,293,504 6,806,782 476,292,122 619,324,354 (i) It represented the payment made to external third parties arising from undertaking the rights of debtor and creditor, comprising water and electricity, professional service fee and travelling expenses etc.
The ageing of other payables was substantively within 1 year.
(21) Current portion of non-current liabilities
31 December 2018 31 December 2017 Current portion of long-term borrowings
- Guaranteed
87,800,000 14,880,000 - Unsecured
- 180,000,000 Current portion of finance lease 731,648,742 709,381,397 819,448,742 904,261,397
CSG Annual Report 2018 (22) Long-term borrowings
31 December 2018 31 December 2017 Medium term notes (i) 2,000,000,000 1,200,000,000 Guaranteed 315,700,000 354,120,000 2,315,700,000 1,554,120,000 (i) Approved by file No.[2015] MTN225 of Inter-bank Market Trading Association, the Company is entitled to issue medium term notes with the limit of RMB 1,200,000,000, which expires on 28 May 2017.
On 14 July 2015, the Company issued the Phase I medium term notes of RMB1,200,000,000 for 2015, with the maturity data of 14 July 2020 and annual rate of4.94%.
Approved by file No.[2018] MTN157 of Inter-bank Market Trading Association, the Company is entitled to issue medium term notes with the limit of RMB 800,000,000 which expires on 20 March 2020.
On 14 May 2018, the Company issued the Phase I medium term notes of RMB 800,000,000 for 2018, with the maturity data of 4 May 2021 and annual rate of7%.
As at 31 December 2018, the interest of long-term borrowings varied from4.75% to7.00% (31 December 2017:4.75% to5.94%).
(23) Long-term account payable
31 December 2018 31 December 2017 Finance lease 529,910,796 1,161,794,247 The Sale and leaseback lease of the group in this phase is a mortgage loan with a lease term of 36 months. On December 31, 2018, the real interest rate of financing lease loans is4.49%-7.8%.
(24) Deferred income
31 December 2018 31 December 2017 Government grants 601,825,780 562,701,103 Government grants are analyzed as follows:
Non-operating
31 December Increase in Other decrease in income in current 31 December
Government grants 2017 current year current year year 2018 Assets/Income related
Tianjin CSG Golden Sun Project
(i) 53,717,119 - - (3,374,892) 50,342,227 Assets related
Dongguan CSG Golden Sun
Project (ii) 43,328,250 - - (2,751,000) 40,577,250 Assets related
Hebei CSG Golden Sun Project
(iii) 44,000,000 - - (2,750,000) 41,250,000 Assets related
Xianning CSG Golden Sun Project
(iv) 47,982,917 - - (3,030,500) 44,952,417 Assets related
Infrastructure compensation for
Wujiang CSG Glass Co., Ltd
(v) 39,628,898 - - (4,041,538) 35,587,360 Assets related
CSG Annual Report 2018 Qingyuan Energy-saving project
(vi) 20,789,167 - - (2,470,000) 18,319,167 Assets related
Yichang polysilicon products
project (vii) 21,796,875 - - (2,812,500) 18,984,375 Assets related
Yichang CSG polysilicon slice
auxiliary project (viii) 12,662,876 571,590 (2,384,700) (1,235,755) 9,614,011 Assets related
Sichuan energy-saving glass
project (ix) 10,475,460 - - (1,654,020) 8,821,440 Assets related
Group coating film experimental
project (x) 7,526,280 - - (1,883,760) 5,642,520 Assets related
Yichang expert silicon project (xi) 3,599,883 - - (272,730) 3,327,153 Assets related
Yichang semiconductor silicon
project (xii) 3,400,000 - - (266,667) 3,133,333 Assets related
Yichang CSG Display project (xiii) 50,836,604 - - (2,534,478) 48,302,126 Assets related
Xianning Photoelectric project
-
(xiv) 7,800,000 - - 7,800,000 Assets related
Group talent fund project (xv) 171,000,000 - - - 171,000,000 Income related
Qingyuan CSG Energy-Saving
Industry Co-construction
support fund(xvi) 74,170,000 - (11,343,456) 62,826,544 Income related
Assets related/Income
Others 24,156,774 9,028,290 (175,834) (1,663,373) 31,345,857 related
562,701,103 83,769,880 (2,560,534) (42,084,669 ) 601,825,780
(i) The allowance was granted by Tianjin Municipal Government. The allowance was used for establishing PV power station by Tianjin CSG Architectural Glass Co., Ltd. The facilities belonged to Tianjin CSG upon completion. The allowance will be credited to income statement in 20 years, the useful life of the PV power station.
(ii) The allowance was granted by Dongguan Municipal Government. The allowance was used for establishing PV power station by Dongguan CSG Architectural Glass Co., Ltd. The facilities belonged to Dongguan CSG upon completion. The allowance will be credited to income statement in 20 years, the useful life of the PV power station.
(iii) The allowance was granted by Langfang Municipal Government. The allowance was used for establishing PV power station by Hebei CSG Glass Co., Ltd. ("Hebei CSG"). When the facilities were set up, they belonged to Hebei CSG. The allowance will be credited to income statement in 20 years, the useful life of the PV power station.
(iv) The allowance was granted by Xianning Municipal Government. The allowance was used for establishing PV power station by Xianning CSG Glass Co Ltd. The facilities belonged to Xianning CSG upon completion. The allowance will be credited to income statement in 20 years, the useful life of the PV power station.
(v) The allowance was infrastructure compensation granted by Wujiang municipal government, and will be credited to income statement in 15 years, the shortest operating period as committed by the Group.
(vi) The allowance was a pilot project for strategic emerging industry clusters development, which was used to establish high performance ultra-thin electronic glass production lines by Qingyuan CSG. The allowance will be credited to income statement in 10 years, the useful life of the production line.
(vii) The balance represented amounts granted to Yichang CSG polysilicon Co., Ltd. by Yichang City Dongshan Development Corporation under the provisions of the investment contract signed between the Group and the Municipal Government of Yi Chang. The proceeds were designed for the construction of electricity transformer and the pipelines. Yichang polysilicon is entitled to the ownership of thefacilities， which will be amortised by 16 years according to the useful life of the converting station.
(viii) It represented the government supporting fund obtained by Yichang polysilicon from the acquiring of the assets and liabilities of Crucible project of Yichang Hejing Photoelectric Ceramic Co., Ltd. The proceeds would be amortised and credited to income statement by 16 years after related assets were put into use.
CSG Annual Report 2018 (ix) It represented the funds granted by Chengdu local government for energy glass project. It will be amortised and credited to income statement in 15 years, in accordance with the minimum operating period committed by the Group.
(x) The allowance was granted by Shenzhen City Development and Reform Commission for the development of Group Coating Film experimental project. The grant will be amortised and credited to income statement by 20 years in the estimated useful life of the relevant fixed assets.
(xi) It represented the funds granted by Hubei local government for inport discount complement and international corporation special subsidy. The grant will be amortised and credited to income statement by 12 to 15 years. (xii) It represented the special subsidy of Yichang National Regional Strategic Emerging Industry Development Pilot Project II, which is used to complement Yichang CSG Polysilicon “Hubei semiconductor silicon preparative technique project laboratory”. The grant will be amortised and credited to income statement by 15 years. (xiii) It represented the funds granted by Yichang Municipal Government for Yichang CSG Display Company's flat project construction support funds and construction of coil coating three-line project. The grant will be amortised and credited to income statement by 15 years.
(xiv) It represented the funds granted by Xianning Government of the Project supporting fund for photoconductive glass production line,which is used to pay for Xianning CSG Glass Co. Ltd. constructing the project of photoelectric photoelectric optical glass production line . After the completion of the production line, the ownership belongs to Xianning photoelectric. The allowance will be credited to income statement in 8 years, the useful life of the production line.
(xv) The allowance was granted by Administrative Commission of Yichang High-tech Industrial Development Zone. For senior management personnel, engineering technical personnel and senior professional technical team which is working at Yichang or plane to introduction, RMB171 million fund was set up, as a special fund for talent introduction and housing resettlement.
(xvi) The allowance was granted by Fogang Municipal Government related 2018 province industry co-construction support fund. The allowance was used for company development and operation by Qingyuan CSG New Energy-Saving Materials Co., Ltd.
(25) Share capital
Movement for the year ended 31 December 2018
31 December New issues Bonus 31 December
2017 during the year issue Capitalisation Others 2018
RMB-denominated ordinary shares
1,509,664,303 - - 226,449,645 43,353,050 1,779,466,998
Limited selling condition shares 97,511,654 9,826,580 - 14,626,748 (46,672,107) 75,292,875
Domestically listed foreign shares
876,971,590 - - 131,545,738 - 1,008,517,328
2,484,147,547 9,826,580 - 372,622,131 (3,319,057) 2,863,277,201
Movement for the year ended 31 December 2017
31 December New issues during Bonus 31 December
2016 the year issue Capitalisation
Others
2017
RMB-denominated ordinary shares
1,312,751,568 - - 196,912,735
-
1,509,664,303
Limited selling condition shares - 97,511,654 - 97,511,654
Domestically listed foreign shares
762,583,992 - - 114,387,598
-
876,971,590
2,075,335,560 97,511,654 - 311,300,333
-
2,484,147,547
The par value of the RMB-denominated ordinary shares is RMB1, and that of domestically listed foreign shares is HKD1.
CSG Annual Report 2018 (26) Capital surplus
Increase in Decrease in
31 December 2017 current year current year 31 December 2018
Share premium (i) 1,353,802,562 151,633,385 (381,655,736) 1,123,780,211
Other capital surplus (47,420,797) 144,278,158 (125,298,151) (28,440,790)
Share of changes in equity other than
comprehensive income and profit distribution
of investees under the equity method 757,420 - - 757,420
Share-based payment (ii) 11,006,378 144,278,158 (125,298,151) 29,986,385
Transfer of capital surplus recognized under the
-
previous accounting system (2,250,222) - (2,250,222)
Disposal of fractional shares 1,316,208
-
- 1,316,208
Purchase of minority interests (87,197,562) - - (87,197,562)
Shareholders interest-free loans 28,946,981
-
- 28,946,981
-
1,306,381,765 295,911,543 (506,953,887) 1,095,339,421
Increase in Decrease in
31 December 2016 current year current year 31 December 2017 Share premium 1,345,264,670 319,838,225 (311,300,333) 1,353,802,562 Other capital surplus (84,562,473) 37,141,676 - (47,420,797) Share of changes in equity other than
comprehensive income and profit
distribution of investees under the equity
method 757,420 - - 757,420 Share-based payment 2,811,683 8,194,695 - 11,006,378 Transfer of capital surplus recognised under the
-
previous accounting system (2,250,222) - (2,250,222) Disposal of fractional shares 1,316,208
-
- 1,316,208
Purchase of minority interests (87,197,562) - - (87,197,562) Shareholders interest-free loans - 28,946,981 - 28,946,981 1,260,702,197 356,979,901 (311,300,333) 1,306,381,765 (a) The reason for the decrease of capital reserve - other in current year was the acquisition of minority interests, with the detail as follows:
(i)The Company passed the 2017 annual general meeting of shareholders held on May 14, 2018 and transferred 1.5 shares to every 10 shares for all shareholders. The total share capital before the distribution was 2,484,147,547 shares, and the total share capital after the dividend was increased to 2,856,769,678 shares. Capital reserve decreased by RMB 372,622,131;
By the 2th temporary meeting of shareholders held on 6th August 2018,the company decided to repurchase and cancel the still-restricted shares which have already been granted to and held by 15 recipients no longer qualified for “incentive plan” due to either resignation or position adjustment 3,319,057 shares were repurchased and cancelled, the capital reserve was reduced by RMB 9,033,605. The company has finished above cancellations of the restricted shares by 1st September 2018.
(ii)The Company held the 8th temporary meeting of Board member members on September 13, 2018 , which reviewed and approved September 13, 2018 to be the shares granting date and 75 recipients to be granted 9,826,580 restricted shares in total. The price of shares to be granted was determined as RMB 3.68 /share., the capital reserve increased by RMB 26,335,234.
CSG Annual Report 2018 The Company held the 8th temporary meeting of Board member members on December 12, 2018 , which reviewed and approved the releasing conditions on the first- time expiring trading restrictions of the initial part of the incentive plan on restricted shares from ordinary A . A total of 431 recipients of the incentive plan were able to fulfill the conditions. The amount of 43,353,050 shares could be released from restrictions. Other capital reserve and share payment was decreased by RMB 125,298,151, capital reserve and capital premium was decreased by RMB125,298,151. The restricted shares was released and listed by company on December 21 2018.
In addition, according to theGroup’s performance in 2018, the unlocking conditions for the second post lock-up period for the ordinary A restricted shares incentive plan for 2017 In addition, according to theGroup’s performance in 2018, the unlocking conditions for the second post lock-up period for the restricted shares incentive plan for 2017 and for the second post lock-up period for the restricted shares incentive plan for 2018 were not met. Therefore, by December 31 2018, expenses for the second post lock-up period for the ordinary A restricted shares was reduced by RMB 41,856,285.
This year, due to the equity incentive plan, the share payment fee of RMB144,278,158 was confirmed
(27) Treasury shares
Increase in Decrease in
31 December 2017 current year current year 31 December 2018 Obligations of restricted share buybacks 417,349,879 37,594,488 (177,763,384）) 277,180,983 417,349,879 37,594,488 (177,763,384）) 277,180,983 Explanation on changes in treasury stocks: The company confirms liabilities and treasury shares at the same time, based on the number of restricted shares issued and the corresponding repurchase price.
CSG Annual Report 2018 (28) Other comprehensive income
Other comprehensive income in Balance Sheet Other comprehensive income in Income Statement for the year ended 31 December 2018 Less: Reclassification
Attributable to of previous other Attributable to parent Actual amount comprehensive Attributable to minority company after before tax for income to profit or Less: Income parent company shareholders after 31 December 2017 tax 31 December 2018 current year loss in current year tax expenses after tax tax Other comprehensive income items which
will be reclassified subsequently to profit
or loss
Financial rewards for energy-saving
technical retrofits 2,550,000 - 2,550,000 - - - - - Difference on translation of foreign
currency financial statements (601,057) 3,131,291 2,530,234 3,131,291 - - 3,131,291 - 1,948,943 3,131,291 5,080,234 3,131,291 - - 3,131,291 - Other comprehensive income in Balance Sheet Other comprehensive income in Income Statement for the year ended 31 December 2017 Less: Reclassification
Attributable of previous other Attributable to to parent Actual amount comprehensive income Attributable to minority 31 December company 31 December before tax for to profit or loss in Less: Income parent company shareholders after 2016 after tax 2017 current year current year tax expenses after tax tax Other comprehensive income items which will be
reclassified subsequently to profit or loss
Financial rewards for energy-saving technical
retrofits 2,550,000 - 2,550,000 - - - - - Difference on translation of foreign currency
financial statements 2,103,971 (2,705,028) (601,057) (2,705,028) - - (2,705,028) - 4,653,971 (2,705,028) 1,948,943 (2,705,028) - - (2,705,028) - 141
CSG Annual Report 2018 (29) Special reserve
Increase in current Decrease in
31 December 2017 year current year 31 December 2018 Safety production costs 3,224,938 8,319,885 (5,476,223) 6,068,600 The subsidiary Yichang CSG Polysilicon is a high risk chemical production enterprise. Therefore, the Company appropriated such reserve in accordance with relevant regulations.
(30) Surplus reserve
Increase in current Decrease in
31 December 2017 year current year 31 December 2018 Statutory surplus reserve 792,739,764 3,713,043 - 796,452,807 Discretionary surplus reserve 127,852,568 - - 127,852,568 920,592,332 3,713,043 - 924,305,375 Increase in current Decrease in
31 December 2016 year current year 31 December 2017 Statutory surplus reserve 760,655,662 32,084,102 - 792,739,764 Discretionary surplus reserve 127,852,568 - - 127,852,568 888,508,230 32,084,102 - 920,592,332 In accordance with the Company Law of thePeople’s Republic of China and theCompany’s Articles of Association, the Company should appropriate10% of net profit for the year to the statutory surplus reserve, and the Company can cease appropriation when the statutory surplus reserve accumulated to more than50% of the registered capital. The statutory surplus reserve can be used to make up for the loss or increase the paid-in capital after approval from the appropriate authorities. The Company accrued statutory surplus reserve at the amount of RMB3,713,043 based on10% of the net profit, in 2018 (2017: RMB32,084,102, accrued at10% of the net profit).
The Company appropriates for the discretionary surplus reserve after theshareholders’ meeting approves the proposal from the Board of Directors. The discretionary surplus reserve can be used to make up for the loss or increase the share capital after approval from the appropriate authorities. The Company did not appropriate to discretionary surplus reserve during the year.
(31) Undistributed profits
2018 2017 Undistributed profits at beginning of year 4,159,642,227 3,573,871,573 Add: Net profits attributable to shareholders of parent company 452,965,935 825,388,312 Less: Appropriation for statutory surplus reserve (3,713,043) (32,084,102) Ordinary share dividends payable (a) (122,630,396) (207,533,556) Undistributed profits at end of year 4,486,264,723 4,159,642,227 (a) Pursuant to the resolution of Board of Directors of the Company on 14 May 2018, the Company paid cash dividends of RMB0.5 (tax inclusive) for each 10 shares based on total shares of 2,484,147,547, with the total cash dividends distributed of RMB124,207,377. Recipients resigned were expected to be decreased revocable cash dividends of RMB 1,576,981 in current year.
CSG Annual Report 2018 (32) Revenue and cost of sales
2018 2017 Revenue from main operations 10,536,501,926 10,786,756,657 Revenue from other operations 73,461,085 92,644,089 10,609,963,011 10,879,400,746 2018 2017 Cost of sales from main operations 8,112,012,841 8,183,862,835 Cost of sales from other operations 8,469,053 32,495,537 8,120,481,894 8,216,358,372 (a) Revenue and cost of sales from main operations
Revenue and cost of sales from main operations analyzed by industry and product are set out below:
2018 2017
Revenue Cost Revenue Cost Glass industry 7,385,946,431 5,375,433,121 6,975,512,082 5,179,173,783 Solar energy industry 2,296,917,214 2,170,991,475 3,091,397,745 2,493,891,466 Electronic glass and display 955,864,280 666,108,617 867,223,335 652,646,493 Elimination (102,225,999) (100,520,372) (147,376,505) (141,848,907) 10,536,501,926 8,112,012,841 10,786,756,657 8,183,862,835 (b) Revenue and cost of sales from other operations
2018 2017
Revenue Cost Revenue Cost Sales of raw materials and Others 73,461,085 8,469,053 92,644,089 32,495,537 73,461,085 8,469,053 92,644,089 32,495,537 (33) Taxes and surtax
2018 2017 City maintenance and construction tax 37,842,081 33,115,925 Educational surcharge 29,975,981 26,156,521 Housing property tax 31,453,204 29,539,408 Land use rights 20,147,106 21,941,304 Stamp tax 5,492,647 5,395,333
CSG Annual Report 2018 Environmental tax 10,136,863 - Others 5,376,969 8,375,435 140,424,851 124,523,926 (34) Selling expenses
2018 2017 Freight expenses 163,197,092 159,825,411 Employee benefits 120,513,530 110,068,886 Entertainment fees 14,654,064 12,690,770 Business travel expenses 11,066,121 10,931,013 Vehicle use fees 8,480,143 7,609,882 Rental expenses 6,469,600 5,937,331 Depreciation expenses 973,181 970,739 Others 29,629,728 28,097,691 354,983,459 336,131,723 (35) Administrative expenses
2018 2017 Employee benefits 442,272,618 295,657,274 Depreciation expenses 62,737,730 65,929,139 Amortization of intangible assets 50,567,703 43,884,166 General office expenses 22,933,432 25,126,422 Labor union funds 15,317,022 14,696,230 Entertainment fees 14,159,098 12,027,303 Business travel expenses 11,903,093 11,074,568 Utility fees 10,833,683 10,108,470 Canteen costs 8,202,537 9,357,983 Vehicle use fees 6,853,349 6,639,769 Consulting advisers 32,308,070 24,935,512 Others 53,126,916 69,215,561 731,215,251 588,652,397
CSG Annual Report 2018 (36) Research and development expenses
2018 2017 Research and development expenses 338,791,891 330,677,375 338,791,891 330,677,375 (37) Financial expenses
2018 2017 Interest on borrowings 423,763,192 344,459,771 Less: Capitalized interest (22,136,125) (29,856,175) Interest expenses 401,627,067 314,603,596 Less: Interest income (61,857,535) (12,606,285) Exchange losses (4,955,956) 4,780,451 Others 14,589,911 9,183,318 349,403,487 315,961,080 (38) Expenses by nature
The cost of sales, selling and distribution expenses, general and administrative expenses, Research and development expenses in the income statement are listed as follows by nature:
2018 2017 Changes in inventories of finished goods and work in progress 98,883,578 (139,651,079) Consumed raw materials and low value consumables, etc. 4,545,216,065 4,941,314,821 Fuel fee 1,223,356,407 1,143,379,014 Employee benefits 1,335,584,375 1,222,510,952 Depreciation and amortization expenses 1,018,151,059 1,002,432,274 Utility fees 813,320,471 778,033,060 Freight expenses 171,566,693 159,825,411 General office expenses 42,726,767 43,816,479 Canteen costs 37,952,058 39,682,701 Business travel expenses 27,455,316 26,904,472 Entertainment fees 31,045,998 26,167,761 Vehicle use fee 16,882,396 15,851,907 Rental expenses 11,212,221 10,489,299 Others 172,119,091 201,062,795 9,545,472,495 9,471,819,867
CSG Annual Report 2018 (39) Asset impairment losses
2018 2017 Impairment loss of fixed assets 12,373,970 36,260,304 Bad debts 538,413 6,187,739 Decline in the value of inventories 497,272 68,974 Impairment loss in construction in progress 102,464,495 26,882,738 Impairment loss in goodwill 20,672,000 - 136,546,150 69,399,755 (40) Investment income
2018 2017 Losses from disposal of financial liabilities at fair value through
profit or loss - 427,636 - 427,636 There is no significant restriction on the remittance of investment income to the Group.
(41) Asset disposal income
2018 2017 Gains on disposal of non-current assets (454,368) (1,768,993) (454,368) (1,768,993) (42) Other income
2018 2017
Government subsidy amortization 42,084,669 47,070,175 Industry support funds 17,950,780 16,123,793 Research grants 10,368,881 6,940,140 Government incentive funds 13,647,951 12,457,123 Others 10,565,758 1,750,583 94,618,039 84,341,814 (43) Non-operating income
Amount of non-recurring gains and losses included in 2018 2017 2018 Government grants (a) 217,500 3,533,603 217,500
CSG Annual Report 2018 Default income 50,400 275,000 50,400 Compensation income 6,537,875 15,557,320 6,537,875 Amounts unable to pay 4,778,583 27,959 4,778,583 Others 2,274,293 1,369,160 2,274,293 13,858,651 20,763,042 13,858,651 (a) Government grants are analysed below:
2018 2017 Category Government awards fund 150,000 2,748,263 Income related Interest subsidy for technological renovation - 600,000 Income related Others 67,500 185,340 Income related 217,500 3,533,603
(44) Non-operating expenses
Amount of non-recurring gains and losses included in 2018 2017 2018 Compensation - 492,228 - Donation 260,033 1,118,999 260,033 Others 1,281,438 3,541,364 1,281,438 1,541,471
5,152,591 1,541,471 (45) Income tax expenses
2018 2017 Current income tax 129,842,061 160,923,182 Deferred income tax (57,453,770) 6,747,809 72,388,291 167,670,991 The reconciliation from income tax calculated based on the applicable tax rates and total profit presented in the consolidated income statement to the income tax expenses is listed below:
2018 2017 Total profit 544,596,879 996,307,026 Income tax expenses calculated at applicable tax rates by company 64,115,428 149,078,702 Effect of changes in tax rates 1,512,060 - Costs, expenses and losses not deductible for tax purposes 19,250,051 7,893,473
CSG Annual Report 2018 Income not subject to tax - (33,833) Deductible losses for which no deferred tax asset was recognised in
36,559,709 20,825,885 current period
Effect of tax incentives (32,258,314) (13,637,793) Reconciliation of income tax for prior years in annual filing (16,790,643) 3,544,557 Income tax expenses 72,388,291 167,670,991 (46) Earnings per share
The basic earnings per share is calculated by dividing the net profit attributable to ordinary shareholders of the company by the weighted average number of ordinary shares outstanding.
The numerator of diluted earnings per share is determined based on the net profit attributable to the common shareholders of the company's common stock. The following factors are adjusted to determine: (1) interest on dilutive potential ordinary shares that have been recognized as expenses in the current period; (2) dilutive potential ordinary The income or expenses that will be generated when the shares are converted; (3) The above-mentioned adjustments related to income tax effects.
The denominator of the diluted earnings per share equals the sum of: (1) the weighted average number of ordinary shares of the parent company in the underlying earnings per share; (2) ordinary shares that are increased assuming the dilution of potential ordinary shares into common shares The weighted average.
When calculating the weighted average of the number of ordinary shares increased from diluted common stocks to ordinary shares, the diluted potential ordinary shares issued during the previous period are assumed to be converted at the beginning of the current period; diluted potential ordinary shares of the current period are issued. , assuming a conversion on the issue date.
The basic calculation of basic earnings per share and diluted earnings per share are as follows:
(a) Basic earnings per share:
2018 2017 Consolidated net profit attributable to ordinary shareholders of
452,965,935 825,388,312 parent company
Weighted average number of outstanding ordinary 2,787,726,094 2,744,631,277 Basic earnings per share 0.16 0.30 (b) Diluted earnings per share:
Diluted earnings per share are calculated by dividing consolidated net profit attributable to ordinary shareholders of the parent company adjusted based on the dilutive potential ordinary shares by the adjusted weighted average number of outstanding ordinary shares of the Company. For the year ended 31 December 2018, the Company had diluted earnings per shares of RMB 0.16(2017: RMB 0.29 per share).
(47) Notes to the cash flow statement
(a) Cash generated by other operating activities
2018 2017 Government grants 136,520,750 40,805,242 Interest income 61,857,535 12,606,285 Others 17,445,309 18,937,040 215,823,594 72,348,567
CSG Annual Report 2018 (b) Cash paid relating to other operating activities
2018 2017 Freight expenses 194,159,982 170,941,469 Canteen costs 37,952,058 39,682,701 General office expenses 34,495,884 34,267,447 Research and development expenses 35,304,568 31,684,954 Business travel expenses 28,171,433 27,935,416 Entertainment fees 28,744,002 25,206,039 Vehicle use fee 16,882,396 15,851,907 Maintenance fee 34,453,953 25,969,168 Rental expenses 11,212,221 10,489,299 Insurance 11,942,647 8,759,738 Bank fees 14,589,911 9,183,318 Others 155,877,385 186,004,633 603,786,440 585,976,089 (c) Cash generated by other investing activities
2018 2017 Income from trial production of construction in progress 30,517,662 124,108,255 Government grants related to assets received - 15,950,000 Land grant funds received - 28,098,000 Insurance claims received - 19,600,000 Deposit 537,656 - 31,055,318 187,756,255 (d) Cash paid relating to other investing activities
2018 2017 Trial production expenditure in construction 118,263,080 156,543,177 Deposit - 43,541,859 118,263,080 200,085,036 (e) Cash generated by other financing activities
2018 2017 Interest-free borrowing - 1,610,000,000 Income from financing leases - 1,986,000,000 Receiving industrial production dispatch funds - 20,000,000 - 3,616,000,000
CSG Annual Report 2018 (f) Cash payments relating to other financing activities
2018 2017 Repay financing leases 688,061,105 104,821,449 Pay for industrial production scheduling funds - 31,000,000 Return interest-free loan - 1,610,000,000 Deposit 10,098,279 5,030,994 Payment of loan, security and fee for bills 9,613,905 32,257,231 Entrusted loan 300,000,000 - Equity incentive fund 12,352,662 - 1,020,125,951 1,783,109,674 (48) Supplementary information to the cash flow statement
(a) Reconciliation from net profit to cash flows from operating activities
2018 2017 Net profit 472,208,588 828,636,035 Add: Provision for asset impairment 136,546,150 69,399,755 Depreciation of fixed assets 965,935,450 957,475,579 Amortization of intangible assets 50,567,703 43,884,166 Net movements of safety production costs 2,843,662 (2,618,535) Amortization of long-term prepaid expenses 1,647,906 1,072,529 Net losses/(gains) on disposal of fixed assets and intangible
141,486,074 8,194,695 assets
Employee compensation based on shares 454,368 1,768,993 Financial expenses 401,627,067 314,603,596 Investment income/(loss) - (427,636) Decrease/(increase) in deferred tax assets (58,656,656) 15,578,992 Increase/(decrease) in deferred tax liabilities 1,202,886 (8,833,183) (Increase)/decrease in inventories 85,267,118 (201,257,769) Increase in operating payables (63,345,244) (206,859,922) Increase in operating receivables (7,406,972) 642,828,861 Net cash flows from operating activities 2,130,378,100 2,463,446,156 (b) Net increase/(decrease) in cash
2018 2017 Cash and cash equivalents at end of year 2,225,126,913 2,459,753,165 Less: Cash and cash equivalents at beginning of year (2,459,753,165) (584,566,990) Net increase in cash and cash equivalents (234,626,252) 1,875,186,175
CSG Annual Report 2018 (c) Cash and cash equivalents
31 December 2018 31 December 2017 Cash
- Cash on hand 9,731 36,182 - Bank deposits that can be readily drawn on demand 2,225,117,182 2,409,716,983 - Other cash balances that can be readily drawn on demand - 50,000,000 Cash at end of year 2,225,126,913 2,459,753,165 (49) Assets with restricted ownership or use rights
2018 2017 Reason
Monetary assets 1,320,807 2,852,599 Restricted deposit flow
Limited finance lease and
Property, plant and equipment 2,381,348,551 2,369,789,041
Restricted mortage loan
2,382,669,358 2,372,641,640
(50) Monetary items denominated in foreign currencies
31 December 2018
Balances denominated in Balances denominated in foreign currencies Exchange rates RMB Cash at bank and on hand -
HKD 1,579,085 0.8762 1,383,594 USD 11,853,148 6.8632 81,350,525 EUR 70,422 7.8473 552,623 JPY 12,072,746 0.0619 747,303 AUD 1,036 4.8250 4,999 84,039,044 Accounts receivable -
HKD 1,566,848 0.8762 1,372,872 USD 17,294,818 6.8632 118,697,795 EUR 946,785 7.8473 7,429,706 127,500,373 Short-term borrowings -
HKD 75,000,000 0.8762 65,715,000 65,715,000 Accounts payable -
HKD 307 0.8762 269 USD 8,184,348 6.8632 56,170,817 EUR 1,372,385 7.8473 10,769,517 JPY 26,293,425 0.0619 1,627,563 68,568,166
CSG Annual Report 2018 5 The changes of consolidation scope
On 11 Feb 2018, the Group set up a subsidiary, Qingyuan CGS Quartz Materials co , Ltd. and the Group has invested RMB 6,000,000 . The Group owns100% of its equity.
On 30 Mar 2018, the Group set up a subsidiary, Dongguan Jingyu New material Co., Ltd. and the Group has invested RMB 24,000,000. The Group owns80% of its equity.
The Group established a subsidiary company, Changshu CSG New Energy Co., Ltd. on 22 May 2018, and the Group has not invested yet. The Company holds100% of its shares.
6 Interest in other entities
(1) Interest in subsidiaries
(a) Structure of the enterprise group
As at 31 December 2018, information of theCompany’s major subsidiaries is set out below:
Shareholding Major
(%)
business Place of
location registration Scope of business Direct Indirect Chengdu, Chengdu, Development, production and sales of special
Chengdu CSG PRC PRC glass 75% 25% Chengdu, Chengdu, Development, production and sales of special
Sichuan CSG Energy Conservation PRC PRC glass and processing of glass 75% 25% Development, production and sales of special
Tianjin Energy Conservation Tianjin, PRC Tianjin, PRC glass 75% 25% Dongguan, Dongguan,
Dongguan CSG Engineering PRC PRC Intensive processing of glass 75% 25% Dongguan, Dongguan,
Dongguan CSG Solar PRC PRC Production and sales of solar glass 75% 25% Dongguan, Dongguan, Production and sales of hi-tech green battery and
Dongguan CSG PV-tech PRC PRC components - 100% Yichang, Yichang, Production and sales of high-purity silicon
Yichang CSG Polysilicon PRC PRC materials 75% 25% Wujiang, Wujiang,
Wujiang CSG Engineering PRC PRC Intensive processing of glass 75% 25% Yongqing, Yongqing,
Hebei CSG PRC PRC Production and sales of special glass 75% 25% Wujiang, Wujiang,
Wujiang CSG PRC PRC Production and sales of special glass 100% - Hong Kong, Hong Kong,
China Southern Glass (Hong Kong) Limited PRC PRC Investment holding 100% - Yongqing, Yongqing,
Hebei Shichuang PRC PRC Production and sales of ultra-thin electronic glass 100% - Xianning, Xianning,
Xianning CSG PRC PRC Production and sales of special glass 75% 25% Xianning, Xianning,
Xianning CSG Energy-Saving PRC PRC Intensive processing of glass 75% 25% Qingyuan, Qingyuan,
Qingyuan CSG Energy-Saving PRC PRC Production and sales of ultra-thin electronic glass 100% - Shenzhen, Shenzhen,
Shenzhen CSG Financial Leasing Co., Ltd. PRC PRC Finance leasing, etc. 75% 25% Jiangyou, Jiangyou,
Jiangyou CSG Mining Development Co. Ltd. PRC PRC Production and sales of silica and its by-products 100% - Shenzhen, Shenzhen,
Shenzhen CSG PV Energy Co., Ltd. PRC PRC Investment management of photovoltaic plant 100% - Qingyuan, Qingyuan, Clean energy development, photovoltaic power
Qingyuan CSG New Energy Co., Ltd. PRC PRC generation - 100% Suzhou CSG PV-tech Co., Ltd.
Wujiang, Wujiang, Clean energy development, photovoltaic power
- 100%
CSG Annual Report 2018 PRC PRC generation
Wujiang, Wujiang, Clean energy development, photovoltaic power
Wujiang CSG New Energy Co., Ltd. PRC PRC generation - 100% Yichang, Yichang, Clean energy development, photovoltaic power
Yichang CSG New Energy Co., Ltd PRC PRC generation - 100% Shenzhen, Shenzhen, Production and sales of display component
Shenzhen CSG Display: PRC PRC products60.80% - Xianning, Xianning,
Xianning CSG Photoelectric PRC PRC Photoelectric glass and high aluminium glass37.50%62.50% (b) Subsidiaries with significant minority interests
Profit or loss attributable to Dividends distributed to Minority interests as Shareholding of minority shareholders for the minority shareholders for the at 31 December Subsidiaries minority shareholders year ended 31 December 2018 year ended 31 December 2018 2018 Shenzhen CSG Display 39.20% 15,900,492 - 318,802,856 The major financial information of the significant non-fully-owned subsidiaries of the Group is listed below:
31 December 2018
Non-current Non-current
Current assets assets Total assets Current liabilities liabilities Total liabilities Shenzhen CSG Display 220,538,417 1,418,945,195 1,639,483,612 620,430,756 171,541,290 791,972,046 2018
Cash flows from operating Revenue Net profit Total comprehensive income activities Shenzhen CSG Display
564,971,827 49,063,159 49,063,159 143,806,892
CSG Annual Report 2018 7 Segment information
The Group's business activities are categorized by product and service as follows:
- Glass segment, engaged in production and sales of float glass and engineering glass and the silica for the production thereof, etc.
- Solar energy segment, engaged in manufacturing and sales of polycrystalline silicon and solar battery and applications, etc.
- Electronic glass and display segment is responsible for production and sales of display components and special ultra-thin glass products, etc.
The reportable segments of the Group are the business units that provide different products or service. Different businesses require different technologies and marketing strategies. The Group, therefore, separately manages the production and operation of each reportable segment and Estimates their operating results respectively, in order to make decisions about resources to be allocated to these segments and to assess their performance.
Inter-segment transfer prices are measured by reference to selling prices to third parties.
The assets are allocated based on the operations of the segment and the physical location of the asset. The liabilities are allocated based on the operations of the segment. Expenses indirectly attributable to each segment are allocated to the segments based on the proportion of eachsegment’s revenue.
CSG Annual Report 2018 (a) Segment information as at and for the year ended 31 December 2018 is as follows:
Electronic glass
Flat glass and displays Solar energy Others Unallocated Elimination Total
959,296,761 2,300,739,737 - 1,142,377 - 10,609,963,011
Revenue from external customers 7,348,784,136
Inter-segment revenue 104,770,988 778,667 41,036,737 - 57,758,560 (204,344,952) -
Interest income 3,071,723 173,121 458,674 621 58,153,396 - 61,857,535
Interest expenses (166,301,267) (18,270,988) ( 84,347,386 ) - (132,907,678) 200,252 (401,627,067)
Asset impairment losses (21,099,608) (34,175) (115,389,417) - (22,950) - (136,546,150)
Depreciation and amortization expenses (596,848,697) ( 143,796,422) (270,419,285) (24,083) ( 7,062,572) - (1,018,151,059)
Total profit/(loss) 915,309,261 163,147,030 (296,236,904) (25,076) (235,891,805) (1,705,627) 544,596,879
Income tax (expenses)/income (113,371,067) (20,814,888) 58,961,350 - 2,836,314 - (72,388,291)
Net profit/(loss) 801,938,194 142,332,142 (237,275,554) (25,076) (233,055,491) (1,705,627) 472,208,588
Total assets 8,463,669,998 3,209,225,123 4,665,311,805 641,334 2,775,385,924 - 19,114,234,184
Total liabilities 3,064,099,160 831,715,506 1,050,655,995 2,504,400 4,715,826,661 - 9,664,801,722
Increase in non-current assets 358,628,578 170,767,439 67,224,833 - 4,861,828 - 601,482,678
CSG Annual Report 2018 (b) Segment information as at and for the year ended 31 December 2017 is as follows:
Electronic glass
Flat glass and displays Solar energy Others Unallocated Elimination Total
Revenue from external customers 6,954,683,103 873,166,517 3,050,921,865 - 629,261 - 10,879,400,746
Inter-segment revenue 97,227,192 701,963 74,689,369 - 58,058,305 (230,676,829) -
Interest income 1,152,232 146,973 262,942 608 11,043,530 - 12,606,285
Interest expenses (153,982,540) (32,003,353) (79,797,858) - (54,488,918) 5,669,073 (314,603,596)
Asset impairment losses (20,109,566) (352,808) (48,857,162) - (80,219) - (69,399,755)
Depreciation and amortization expenses (601,774,748) (132,769,853) (261,527,443) (107,198) (6,253,032) - (1,002,432,274)
Total profit/(loss) 827,335,674 80,463,836 218,437,923 (110,328) (124,292,481) (5,527,598) 996,307,026
Income tax (expenses)/income (118,701,953) (21,223,939) (23,950,456) - (3,794,643) - (167,670,991)
Net profit/(loss) 708,633,721 59,239,897 194,487,467 (110,328) (128,087,124) (5,527,598) 828,636,035
Total assets 9,121,982,895 3,032,467,443 4,969,121,408 664,853 2,410,765,769 -- 19,535,002,368
Total liabilities 3,453,100,959 856,548,520 1,640,361,900 2,502,814 4,802,865,064 - 10,755,379,257
Increase in non-current assets 160,029,169 459,791,787 629,473,708 - 2,875,254 - 1,252,169,918
CSG Annual Report 2018 TheGroup’s revenue from external customers domestically and in foreign countries or geographical areas, and the total non-current assets other than financial assets and deferred tax assets located domestically and in foreign countries or geographical areas are as follows:
Revenue from external customers 2018 2017 Mainland 9,151,411,893 9,506,249,433 Hong Kong, PRC 196,186,618 434,551,436 Europe 53,541,882 26,534,686 Asia (other than Mainland and Hong Kong) 1,125,389,041 848,958,711 Australia 39,605,066 37,937,222 North America 31,189,420 6,030,936 Other regions 12,639,091 19,138,322 10,609,963,011 10,879,400,746 Total non-current assets 31 December 2018 31 December 2017 Mainland 14,033,948,714 14,505,740,522 Hong Kong, PRC 12,647,783 12,798,642 14,046,596,497 14,518,539,164 No revenue from a single customer exceeded10% or more of theGroup’s revenue.
8 Related parties and related party transactions
(1) Information of the parent company
The Company regards no entity as the parent company.
(2) The subsidiaries
The general information and other related information of the subsidiaries are set out in Note 6(1).
(3) The associates
On December 31, 2018, the Company has no joint venture.
CSG Annual Report 2018 (4) Other related parties information
Relationship with the Group
Shenzhen Jushenghua Co.,Ltd. (“Jushenghua”) Persons acting in concert with the first majority shareholder of the Group
Shenzhen Qianhai Ruinan Investment LLP Controlled by the former key management personnel of the Croup Xinjiang Qianhai United Property& Casualty Insurance Related parties of group shareholders
(5) Related party transactions
(a) Purchase and sales of goods, provision and receiving of labor
None
(b) Leases
None
(c) Gains on equity transfer
None
(d) Acquisition of equity
None
(e) Advances paid on behalf of related parties
None
(f) Remuneration of key management
2018 2017 Remuneration 23,846,000 12,030,000 (g) Other
Related parties Related party transactions 2018 2017 Shenzhen Qianhai Ruinan Buy life insurance for
2,515,064 2,416,456 Investment LLP employees
Buy car insurance for
Xinjiang Qianhai United Property
481,505 374,076 employees
& Casualty Insurance
2,996,569 2,790,532
CSG Annual Report 2018 (6) Commitments in relation to related parties
The commitments in relation to related parties contracted for but not yet necessary to be recognised on the balance sheet by the Group as at the balance sheet date are as follows:
Restrictive terms on
Related parties Related party transactions borrowings 2018 2017 Facility of interest-free
Shenzhen Jushenghua Co., loans provided for the
Ltd. (“Jushenghua”) Company Nil 2,000,000,000 2,000,000,000 On 22 November 2016, the Company received a letter from its shareholder, Jushenghua, stating that to support theGroup’s steady operation and development, Jushenghua, as the shareholder of the Company, would like to offer interest-free borrowings with the total amount of RMB2 billion to the Company or through related parties designated by it. For any borrowing drawn, its repayment date is negotiated by the Company and Jushenghua upon withdrawal. When a borrowing is due, if an extension is needed, the Company can apply to the actual lender based on theCompany’s operation; where the actual lender agrees with the extension application, the term of the borrowing is extended accordingly. The shareholder provided nil interest free loan to the group in 2018.
9 Share Payment
1. Overall situation of share payment
The total number of various equity instruments 3,319,057 shares that have repurchased in the current period
Total amount of various equity instruments that the 43,353,050 shares company exercises during the current period
The total number of equity instruments granted by the 9,826,580 shares company in the current period Restricted shares
The scope of thecompany’s outstanding share options - and the remaining duration of the contract at the end of
the period
The scope of the company's exercise of other equity - instruments at the end of the period and the remaining
duration of the contract
Note: On December 11, 2017, reviewed and approved by the Group's eighth session of the Board of Directors, the Group implemented the 2017 A Share Restricted Stock Incentive Plan. The incentive targets for the restricted shares granted under this plan include company directors and senior management personnel. The total of 454 core management teams, company technology members and main employees. The first grant date of this restricted stock was December 11, 2017. The company granted 97,511,654 restricted shares for the first time to 454 incentive targets. The initial grant price was 4.28RMB per share. Reserved restricted stock ending balance 17,046,869 shares, the grant price has not been determined. The shares granted of the first time has been registered and listed.
By the 2th temporary meeting of shareholders held on 6th August 2018,the company decided to repurchase and cancel the still-restricted shares which have already been granted to and held by 15recipients no longer qualified for “incentive plan” due to either resignation or position adjustment 3,319,057 shares were repurchased and cancelled, The company has finished above cancellations of the restricted shares by 1st September 2018.
The Company held the 8th temporary meeting of Board member members on December 12, 2018 , which reviewed and approved the releasing conditions on the first- time expiring trading restrictions of the initial part of the incentive plan on restricted shares from ordinary A . A total of 431 recipients of the incentive plan were able to fullfil the conditions. The amount of 43,353,050 shares could be released from restrictions.
The Company held the 8th temporary meeting of Board member members on September 13, 2018 , which reviewed and approved September 13, 2018 to be the shares granting date and 75 recipients to be granted 9,826,580 restricted shares in
total.
CSG Annual Report 2018 This incentive plan is valid for 48 months from the date of grant of the restricted stock to the date of unlocking of all restricted stocks or the completion of repurchase and cancellation. During the unlocking/exercise period, if the unlocking/exercise condition specified in the incentive plan is reached, the restricted stock granted is unlocked in three phases after 12 months from the grant date.
The unlock period is shown in the following table:
Unlock Schedule Unlock Time Unlock Ratio
First unlock from the date of the first transaction 12 months after the 40%
award date to the date of the last transaction within 24
months from the grant date.
Second unlock from the date of the first trading day 24 months after the 30%
grant date to the date of the last trading day within 36
months from the grant date
Third unlock from the date of the first trading day 36 months after the 30%
grant date to the day of the last trading day within 48
months from the grant date
2. Equity-settled share payment
Method for Determining the Fair Value of Equity Black-Scholes Model
Instruments on the Grant Date
Determination of the best estimate of the number of Based on the latest information on the change in the
vesting equity instruments number of exercisable rights and the completion of
performance indicators, the number of equity
instruments that are expected to be exercised is
revised.
Reasons for significant differences between current Not applicable
estimates and previous estimates
Cumulative amount of equity-settled share-based
payment in capital reserves 152,472,853
Total equity confirmed by equity-settled share-based
payment in this period 144,278,158
According to the relevant provisions of Accounting Standards for Business Enterprises No. 11 - Share Payment and Enterprise Accounting Standard No. 22 - Recognition and Measurement of Financial Instruments, the Group uses the Black-Scholes model (BS model) as a pricing model, deducting incentive objects. The fair value of the restricted stock will be used after the lock-in costs that are required to obtain the rational expected return from the sales restriction period are lifted in the future. The Group will, on each balance sheet date of the lock-in period, revise the number of restricted stocks that are expected to be unlikable based on the newly obtained changes in the number of unlockable persons and performance indicators, and follow the fair value of the restricted stock grant date. The services obtained during the current period are included in the relevant costs or expenses and capital reserves.
The Group actually granted restricted stocks of 97,511,654 shares in 2017, and the total fair value of the equity instruments granted to the incentive target for the first day of grant was RMB 289,519,900, the total fair value as the total cost of the company's equity incentive plan will be confirmed in stages according to the unlocking/exercise ratio during the implementation of the equity incentive plan, and will be included in the "management fees and Construction in progress " of each period accordingly.
By the 2th temporary meeting of shareholders held on 6th August 2018,the company decided to repurchase and cancel the still-restricted shares which have already been granted to and held by 15 recipients no longer qualified for “incentive plan” due to either resignation or position adjustment 3,319,057 shares were repurchased and cancelled, The company has finished above cancellations of the restricted shares by 1st September 2018.
The Company held the 8th temporary meeting of Board member members on September 13, 2018 , which reviewed and approved September 13, 2018 to be the shares granting date and 75 recipients to be granted 9,826,580 restricted shares in total.
The Company held the 8th temporary meeting of Board member members on December 12, 2018, which reviewed and approved the releasing conditions on the first- time expiring trading restrictions of the initial part of the incentive plan on
restricted shares from ordinary A . A total of 431 recipients of the incentive plan were able to fulfill the conditions. The
CSG Annual Report 2018 amount of 43,353,050 shares could be released from restrictions. The restricted shares was released and listed by company on December 21 2018.
In addition, according to theGroup’s performance in 2018, the unlocking conditions for the second post lock-up period for the ordinary A restricted shares incentive plan for 2017 In addition, according to theGroup’s performance in 2018, the unlocking conditions for the second post lock-up period for the restricted shares incentive plan for 2017 and for the second post lock-up period for the restricted shares incentive plan for 2018 were not met. Therefore, by December 31 2018 ,expenses for the second post lock-up period for the ordinary A restricted shares was reduced by RMB 41,856,285.
In 2018, the Group achieved conditions for unlocking restricted stocks. In the current period, the relevant cost sharing amount of the incentive plan was recognized as RMB 144,278,158.
10 Contingencies
Nil.
11 Commitments
(1) Capital commitments
Capital expenditures contracted for by the Group at the balance sheet date but are not yet necessary to be recognized on the balance sheet are as follows:
31 December 2018 31 December 2017 Buildings, machinery and equipment 130,748,435 150,418,893 (2) Operating lease commitments
The future minimum lease payments due under the signed irrevocable operating leases contracts are summarized as follows: 31 December 2018 31 December 2017 Within 1 year 19,016,297 3,675,748 1 to 2 years 16,993,654 1,914,948 2 to 3 years 16,654,854 1,472,224 Over 3 years 1,093,859 3,443,641 53,758,664 10,506,561 12 Events after the balance sheet date
Statement of profit distribution after balance sheet date
Amount Proposed distribution of cash dividends 143,163,860 Pursuant to the resolution of the board of directors dated April 16, 2019, the board of directors proposed that the company distribute cash dividends of RMB 143,163,860 to all shareholders, which has not yet been recognized as a liability in the financial statements. In addition, the board of directors proposes to use the capital of 2,863,277,201 as the base to transfer 1 shares for every 10 shares to all shareholders in a total of 286,327,720 shares, which has not yet been reclassified as capital in the financial statements.
CSG Annual Report 2018 13 Other significant events
(1) 171 million special funds for the introduction of talents was follow-up progress.
(a) Matter description
On December 10, 2012, the People's Government of Yichang City and the Company signed the Cooperation Agreement on Fine Glass and Ultrathin Electronic Glass Project ;The management committee of Yichang High-tech Industrial Development Zone agreed to establish a RMB 171 million talent fund as a special fund subsidy for the introduction of talents and the placement of talented people. The company of Yichang CSG Polysilicon Co.Ltd. is responsible for formulating the housing resettlement subsidy program and supervising the use of this special fund.The funds were subsidized by the government to the company, but Yichang CSG Polysilicon Co., Ltd. received this amount and transferred it to Yichang Hongtai Real Estate Co., Ltd. in full amount without proper approval from the company's board of directors and other relevant authorities. ( Yichang Hongtai Real Estate Co.,Ltd. is a company jointly indirect controlled by part of the former natural executives of the company. The company has no equity relationship with the company ) .Yichang CSG Polysilicon Co., Ltd. received the above fund and transferred it to Yichang Hongtai Real Estate Co., Ltd. in full and also handled the accounting treatment according to the collecting and paying. In 2017, Prior period accounting error from above matters was corrected by company.
(b) Subsequent progress
The company learned from bureau of the Shenzhen Economic Crime Investigation in January 2019. According to the criminal clues handed over by the Shenzhen Securities Regulatory Commission and Some suggestions provided by People‘s Procuratorate of Shenzhen, then bureau of the Shenzhen Economic Crime Investigation decide and censored that Some of the former senior management ( Zeng nan, etc) damaged the interests of listed companies and have taken criminal enforcement measures. By 31 December 2018, the investigation of the case was still in progress.
(c) Receivable talent fund from Yichang Hongtai Real Estate Co., Ltd.
December 31, 2018 December 31, 2017 Bad debt Bad debt Book balance preparation Book balance preparation Other Yichang Hongtai Real
receivables Estate Company(i) 171,000,000 (3,420,000) 171,000,000 (3,420,000) (i)Yichang Hongtai Real Estate Co., Ltd. was no longer associated with the Group since 2018.
14 Financial instrument and risk
The Group's activities expose it to a variety of financial risks: market risk (primarily foreign exchange risk and interest rate risk), credit risk and liquidity risk. The Group's overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group's financial performance.
(1) Market risk
(a) Foreign exchange risk
TheGroup’s major operational activities are carried out in Mainland China and a majority of the transactions are denominated in RMB. Some export business, however, is denominated in foreign currencies. In addition, the Group is exposed to foreign exchange risk arising from the recognized assets and liabilities, and future transactions denominated in foreign currencies, primarily with respect to US dollars and Hong Kong dollar. The Group monitors the scale of foreign currency transactions, foreign currency assets and liabilities, and adjust settlement currency of export business, to furthest reduce the currency risk.
As at 31 December 2018, book values in RMB equivalent of theGroup’s assets and liabilities denominated in foreign currencies are summarized below:
CSG Annual Report 2018 31 December 2018
USD HKD Others Total Financial assets denominated in
foreign currency -
Cash at bank and on hand 81,350,525 1,383,594 1,304,925 84,039,044 Receivables 118,697,795 1,372,872 7,429,706 127,500,373 200,048,320 2,756,466 8,734,631 211,539,417 Financial liabilities denominated in
foreign currency -
Short-term borrowings - 65,715,000 - 65,715,000 Payables 56,170,817 269 12,397,080 68,568,166 56,170,817 65,715,269 12,397,080 134,283,166 31 December 2017
USD HKD Others Total Financial assets denominated in
foreign currency -
Cash at bank and on hand 74,120,750 6,114,383 112,007 80,347,140 Receivables 127,354,518 9,654,366 7,387,101 144,395,985 201,475,268 15,768,749 7,499,108 224,743,125 Financial liabilities denominated in
foreign currency -
Short-term borrowings - 62,692,500 - 62,692,500 Payables 104,040,185 257 36,939,407 140,979,849 104,040,185 62,692,757 36,939,407 203,672,349 As at 31 December 2018, if the currency had strengthened/weakened by10% against the USD while all other variables had been held constant, theGroup’s net profit for the year would have been approximately RMB12,229,588 lower/higher (31 December 2017: approximately RMB8,281,982 lower/higher) for various financial assets and liabilities denominated in USD. As at 31 December 2018, if the currency had strengthened/weakened by10% against the HKD while all other variables had been held constant, theGroup’s net profit for the year would have been approximately RMB5,351,498 higher/lower (31 December 2017: approximately RMB3,988,541higher/lower ) for various financial assets and liabilities denominated in HKD.
Other changes in exchange rate had no significant influence on the Group's operating activities.
(b) interest rate risk
The Group's interest rate risk arises from long-term interest bearing debts including long-term borrowings and bonds payable. Financial liabilities issued at floating rates expose the Group to cash flow interest rate risk. Financial liabilities issued at fixed rates expose the Group to fair value interest rate risk. The Group determines the relative proportions of its fixed rate and floating rate contracts depending on the prevailing market conditions. As at 31 December 2018, theGroup’s long-term interest-bearing debts at and fixed rates and floating rates are illustrated below:
CSG Annual Report 2018 31 December 2018 31 December 2017 Debt at fixed rates 2,258,325,000 1,425,000,000 Debt at floating rates 57,375,000 129,120,000 2,315,700,000 1,554,120,000 The Group continuously monitors the interest rate position of the Group. Increases in interest rates will increase the cost of new borrowing and the interest expenses with respect to theGroup’s outstanding floating rate borrowings, and therefore could have a material adverse effect on theGroup’s financial position. The Group makes adjustments timely with reference to the latest market conditions, which includes increasing/decreasing long-term fixed rate debts at the anticipation of increasing/decreasing interest rate.
(2) Credit risk
Credit risk is managed on the grouping basis. Credit risk mainly arises from cash at bank, notes receivable, accounts receivable, other receivables.
The Group expects that there is no significant credit risk associated with cash at bank since they are mainly deposited at state-owned banks and other medium or large size listed banks. Management does not expect that there will be any significant losses from non-performance by these counterparties. Furthermore, as theGroup’s bank acceptance notes receivable are generally accepted by the state-owned banks and other large and medium listed banks, management believes the credit risk should be limited.
In addition, the Group has policies to limit the credit exposure on accounts receivable, other receivables and trade acceptance notes receivable. The Group assesses the credit quality of and sets credit limits on its customers by taking into account their financial position, the availability of guarantee from third parties, their credit history and other factors such as current market conditions. The credit history of the customers is regularly monitored by the Group. In respect of customers with a poor credit history, the Group will use written payment reminders, or shorten or cancel credit periods, to ensure the overall credit risk of the Group is limited to a controllable extent.
(3) Liquidity risk
Cash flow forecasting is performed by each subsidiary of the Group and aggregated by theGroup’s finance department in its headquarters. TheGroup’s finance department at its headquarters monitors rolling forecasts of the Group's short-term and long-term liquidity requirements to ensure it has sufficient cash reserve, while maintaining sufficient headroom on its undrawn committed borrowing facilities from major financial institutions so that the Group does not breach borrowing limits or covenants on any of its borrowing facilities to meet the short-term and long-term liquidity requirements.
As stated in Note 2(1) above, as at 31 December 2018, the Group had net current liabilities of approximately RMB1.267 billion and committed capital expenditures of approximately RMB0.131 billion. Management will implement the following measures to ensure the liquidation risk limited to a controllable extent:
(a) The Group will have steady cash inflows from operating activities;
(b) The Group will pay the debts that mature and finance the construction projects through the existing bank facilities; (c) The Group will closely monitoring the payment of construction expenditure in terms of payment time and amount. The financial liabilities of the Group at the balance sheet date are analyzed by their maturity date below at their undiscounted contractual cash flows:
31 December 2018
Within 1 year 1 to 2 years 2 to 5years Over 5 years Total Short-term borrowings
2,991,136,478 - - - 2,991,136,478 Notes payable/Accounts payable
1,315,009,263 - - - 1,315,009,263 Other payables
552,751,187 - - - 552,751,187 Other current liabilities
300,000 - - - 300,000 Current portion of non-Current
821,135,376 821,135,376
liabilities - - -
CSG Annual Report 2018 Long-term payables
- 529,910,796 - - 529,910,796 Long-term borrowings
134,337,188 1,403,773,698 1,044,119,211 - 2,582,230,097 5,814,669,492 1,933,684,494 1,044,119,211 - 8,792,473,197 31 December 2017
Within 1 year 1 to 2 years 2 to 5 years Over 5 years Total Short-term borrowings 3,810,013,826 - - - 3,810,013,826 Notes payable/Accounts payable 1,613,567,664 - - - 1,613,567,664 Other payables 653,357,094 - - - 653,357,094 Other current liabilities 300,000 - - - 300,000 Current portion of non-current
911,348,902 911,348,902 liabilities - - -
Long-term payables - 600,436,759 561,357,488 1,161,794,247 Long-term borrowings 80,169,450 117,889,436 1,580,649,809 - 1,778,708,695 7,068,756,936 718,326,195 2,142,007,297 - 9,929,090,428 15 Fair value estimates
Based on the lowest level input that is significant to the fair value measurement in its entirety, the fair value hierarchy has the following levels:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3: Unobservable inputs for the asset or liability.
(a) Financial instruments measured at fair value
As of 31 December 2018, the group has no assets measured at fair value.
(b) Financial instruments not measured but disclosed at fair value
Thegroup’s financial assets and financial liabilities measured at amortized cost mainly include: accounts receivable, short-term borrowings, accounts payable, long term borrowings, bonds payable , long-term payables, ect.
Except for financial liabilities listed below, book value of the other financial assets and liabilities not measured at fair value is a reasonable approximation of their fair value.
31 December 2018 31 December 2017 Carrying amount Fair value Carrying amount Fair value Financial liabilities
Medium term notes 2,000,000,000 2,028,614,800 1,200,000,000 1,171,444,800 2,000,000,000 2,028,614,800 1,200,000,000 1,171,444,800 The fair values of medium-term notes are the present value of the contractually determined stream of future cash flows at the rate of interest applied at that time by the market to instruments of comparable credit status and providing substantially the same cash flows on the same terms, there into medium term notes belong to Level 2.
CSG Annual Report 2018 16 Capital management
TheGroup’s capital management policies aim to safeguard theGroup’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders, and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, refund capital to shareholders, issue new shares or sell assets to reduce debts.
The Group is not subject to external mandatory capital requirements, and monitors capital on the basis of gearing ratio. As at 31 December 2018 and 31 December 2017, the Group's gearing ratio is as follows:
31 December 2018 31 December 2017 Total liabilities 9,664,801,722 10,755,379,257 Total assets 19,114,234,184 19,535,002,368 Gearing ratio 51% 55% 17 Notes to theCompany’s financial statements
(1) Other receivables
31 December 2018 31 December 2017 Receivables from related parties 2,739,449,549 2,399,392,648 Others 176,598,669 4,451,192 2,916,048,218 2,403,843,840 Less: Provision for bad debts (3,531,973) (3,509,024) 2,912,516,245 2,400,334,816 (a) The ageing of other receivables is analysed as follows:
31 December 2018 31 December 2017 Within 1 year 2,744,831,250 2,232,668,334 Over 1year 171,216,968 171,175,506 2,916,048,218 2,403,843,840 As at 31 December 2018, the Company had no overdue but not impaired other receivables (31 December 2017: Nil). (b) Other receivables are analysed by categories as follows:
31 December 2018 31 December 2017
Provision for bad
Carrying amount debts Carrying amount Provision for bad debts% of total Provision for bad % of total Provision for Amount balance debts% Amount balance bad debts% Provision for bad debts by
groupings
CSG Annual Report 2018 - Group 1 176,598,669 6% (3,531,973)2% 4,451,192 - (89,024)2% - Group 2 2,739,449,549 94% - - 2,399,392,648 100% (3,420,000) - 2,916,048,218 100% (3,531,973) - 2,403,843,840 100% (3,509,024) - (c) Or other receivables provided for bad debts by portfolio, the percentage of provision for the portfolio is as follows:
31 December 2018 31 December 2017
Carrying amount Provision for bad debts Carrying amount Provision for bad debts Amount Amount % Amount Amount % Portfolio 1 176,598,669 (3,531,973) 2% 4,451,192 (89,024) 2% Portfolio 2 2,739,449,549 - - 2,399,392,648 (3,420,000) - 2,916,048,218 (3,531,973) - 2,403,843,840 (3,509,024) - (d) As at 31 December 2018, theGroup’s top five entities with the largest other receivables balances are summarised as below: Relationship % of with the Group Amount Ageing total balance Yichang CSG Polysilicon Subsidiary 1,640,114,921 Within 1 year 56% Yichang CSG Display Subsidiary 294,484,589 Within 1 year 10% Qingyuan CSG Energy-Saving Subsidiary 192,435,333 Within 1 year 7% Yichang Hongtai Real Estate Co. Independent third p
Ltd arty 171,000,000 4 to 5 years 6% Shenzhen CSG PV Energy Co.,
Ltd. Subsidiary 137,714,602 Within 1 year 5% 2,435,749,445 84% (2) Long-term equity investments
31 December 2018 31 December 2017 Subsidiaries (a) 4,979,696,831 4,810,987,652 Less: Impairment provision for investments in subsidiaries (a) (15,000,000) (15,000,000) 4,964,696,831 4,795,987,652
CSG Annual Report 2018 (a) Subsidiaries
Movement in current year
Provision for Provision for Cash dividends 31 December Additional Decrease in impairment 31 December impairment declared in
2017 investment investment loss 2018 loss current year (i) (i)
Chengdu CSG 146,977,347 5,399,177 - - 152,376,524 - 109,907,648 Sichuan CSG Energy Conservation 115,546,714 4,507,100 - - 120,053,814 - - Tianjin Energy Conservation 243,191,428 5,357,457 - - 248,548,885 - - Dongguan CSG Engineering 193,916,049 5,296,789 - - 199,212,838 - - Dongguan CSG Solar 349,801,154 6,439,022 - - 356,240,176 - 77,182,596 Yichang CSG Polysilicon 633,464,168 8,947,932 - - 642,412,100 - - Wujiang CSG Engineering 251,516,189 3,525,424 - - 255,041,613 - - Hebei CSG 262,265,341 4,788,173 - - 267,053,514 - - China Southern Glass (Hong Kong)
85,802,602 1,130,027 86,932,629 - Limited - - -
Wujiang CSG 562,527,754 6,221,992 - - 568,749,746 - - Hebei Shichuang 243,271,470 3,779,667 - - 247,051,137 - - Jiangyou CSG Mining Development
100,837,599 1,928,053 102,765,652 - Co. Ltd. - - -
Xianning CSG 177,295,494 4,614,617 - - 181,910,111 - - Xianning CSG Energy-Saving 161,543,844 4,755,349 - - 166,299,193 - 44,447,363 Qingyuan CSG Energy-Saving 300,376,848 3,484,710 - - 303,861,558 - - Shenzhen CSG Financial Leasing Co.,
133,500,000 - 133,500,000 - Ltd. - - -
Shenzhen CSG PV Energy Co., Ltd. 100,052,985 309,562 - - 100,362,547 - - Shenzhen CSG Display 542,691,888 9,825,410 - - 552,517,298 - - Xianning CSG Photoelectric 38,470,534 52,000,967 - - 90,471,501 - - Others (ii) 167,938,244 36,397,751 - - 204,335,995 (15,000,000) - 4,810,987,652 168,709,179 - - 4,979,696,831 (15,000,000) 231,537,607 168
CSG Annual Report 2018 (i) As at 31 December 2018, included in the investments in subsidiaries were deemed investment costs of RMB 211,291,520 (31 December 2017: RMB 114,582,341), the fair value of the equity instruments of the Company granted to the employee of the subsidiaries for their serviced provided to the subsidiaries for which the Company did not charge the subsidiaries.
(ii) The operations of the subsidiaries against which provision was made were basically ceased. The Company made provision against the long-term investment in these subsidiaries based on their recoverable amounts in previous years.
(3) Long-term receivables
31 December 2018 31 December 2017 Bonds payable and long-term borrowings allocated to subsidiaries 1,200,000,000 1,200,000,000 1,200,000,000 1,200,000,000 Less: Provisions for impairment - 1,200,000,000 1,200,000,000 Provision Reversals of for provision for 31 December Movements in 31 December impairment impairment loss 2017 current year 2018 loss in current year Chengdu CSG 50,000,000 - 50,000,000 - - Sichuan CSG Energy Conservation 20,000,000 - 20,000,000 - - Dongguan CSG PV-tech 50,000,000 - 50,000,000 - - Yichang CSG Polysilicon 350,000,000 - 350,000,000 - - Dongguan CSG Engineering 75,000,000 - 75,000,000 - - Wujiang CSG 210,000,000 - 210,000,000 - - Dongguan CSG Solar 120,000,000 - 120,000,000 - - Wujiang CSG Engineering 50,000,000 - 50,000,000 - - Qingyuan CSG Energy-Saving 50,000,000 - 50,000,000 - - Xianning CSG Energy-Saving 80,000,000 - 80,000,000 - - Xianning CSG 75,000,000 - 75,000,000 - - Hebei CSG 50,000,000 - 50,000,000
Hebei shichuang 20,000,000 - 20,000,000 - - 1,200,000,000 - 1,200,000,000 - -
CSG Annual Report 2018 (4) Other payables
31 December 2018 31 December 2017 Interest payable 41,572,125 3,090,735 Dividend payable 2,846,362 - Other payables 1,624,168,731 909,432,991 1,668,587,218 912,523,726 1. Interest payable
31 December 2018 31 December 2017 Interest payable for medium term notes 37,644,444 - Interest payable for short-term borrowings 3,927,681 3,090,735 41,572,125 3,090,735 2. Dividend payable
31 December 2018 31 December 2017 Restricted share dividend payable 2,846,362 - 2,846,362
- 3. Other payables
31 December 2018 31 December 2017 Subsidiaries 1,339,762,543 477,067,694 Share repurchase 275,748,309 417,349,879 Others 8,657,879 15,015,418 1,624,168,731 909,432,991
CSG Annual Report 2018 (5) Investment income
2018 2017 Investment income from long-term equity investment under cost
method 231,537,607 436,068,825 231,537,607 436,068,825 There is no significant restriction on the remittance of investment income to the Company.
I Statement of non-recurring gains and losses
2018 2017 Gains or losses on disposal of non-current assets 454,368 1,768,993 Government grants recognized in profit or loss for current period (94,835,539) (87,875,417) Investment losses from disposal of financial liabilities at fair value
through profit or loss - (427,636) Income from external entrusted loans (534,591) - Non-operating income and expenses other than aforesaid items (12,099,680) (12,076,848) (107,015,442) (98,610,908) Effect of income tax 16,483,870 16,209,135 Effect of minority interests (after tax) 5,145,472 2,386,569 Total non-recurring gains and losses (85,386,100) (80,015,204) (1) Basis for preparation of statement of non-recurring gains and losses
Under the requirements in Explanatory Announcement No. 1 on Information Disclosure by Companies Offering Securities to the Public– Non-recurring Profit or Loss[2008] from CSRC, non-recurring profit or loss refer to those arises from transactions and events that are not directly relevant to ordinary activities, or that are relevant to ordinary activities, but are extraordinary and not expected to recur frequently that would have an influence on users of financial statements making economic decisions on the financial performance and profitability of an enterprise.
CSG Annual Report 2018 II Return on net assets and earnings per share
Earnings per share
Weighted average return on
net assets(%) Basic earnings per share Diluted earnings per share 2018 2017 2018 2017 2018 2017 Net profit attributable to ordinary
shareholders of the Company 5.16% 10.15% 0.16 0.30 0.16 0.29 Net profit attributable to ordinary
shareholders of the Company
after deducting non-recurring
gains and losses 4.19% 9.16% 0.13 0.27 0.13 0.26
CSG Annual Report 2018 Section X. Documents Available for Reference
I. Text of the financial report carrying the signatures and seals of the legal representative, responsible person in charge of accounting and person in charge of financial institution;
II. Original of theAuditors’ Report carrying the seal of Asia Pacific (Group) CPAs (special general partnership) and the signatures and seals of the certified public accountants;
III. All texts of theCompany’s documents and original public notices disclosed in the website and papers appointed by CSRC in the report period.
IV. The reports which published in the other stock market.
Board of Directors of
CSG Holding Co., Ltd.
17 April 2019