CSG HOLDING CO., LTD.
SEMI-ANNUAL REPORT 2010
Chairman of the Board:
ZENG NAN
July 2010CSG HOLDING CO., LTD. Semi-Annual Report 2010
IMPORTANT NOTICE
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 jointly and severally, for the truthfulness, accuracy and completeness of the whole contents.
Because independent director Xie Rudong was taking a business leave, he authorized independent Chen Chao to vote as his behalf.
Mr. Zeng Nan, Chairman of the Board & CEO of the Company, CFO Mr. Luo Youming and principle of the financial department Mr. Huang Yanbin confirm that the Financial Report enclosed in this report is true and complete.
The semi-annual financial report of the Company had not been audited.
This report is prepared both in Chinese and in English. Should there be any difference in interpretation of the text between the two versions, the Chinese version shall prevail.
CONTENTS
IMPORTANT NOTICE___________________________________________________1
I Company Profile_______________________________________________________2
II Change in Share Capital and Particulars about the Shareholders_______________4
III Directors, Supervisors and Senior Executives______________________________6
IV Report of the Board of Director__________________________________________7
V Significant Events____________________________________________________12
VI Financial Report (Not Audited)_________________________________________19
VII Documents for Reference_____________________________________________91
-1-CSG HOLDING CO., LTD. Semi-Annual Report 2010
I Company Profile
i Basic Information of the Company
(i) Registered name of the Company
In Chinese: 中国南玻集团股份有限公司 (Abbr: 南玻集团)
In English: CSG Holding Co., Ltd. (Abbr: CSG )
(ii) Legal representative: Zeng Nan
(iii) Secretary of the board of directors: Wu Guobin
Securities affairs representative: Li Tao
Address: CSG Building, No.1, 6th Industrial Road, Shekou, Shenzhen, China.
Tel: (86) 755-26860666
Fax: (86) 755-26692755
E-mail: securities@csgholding.com
(iv) Registered office address: CSG Building, No.1, 6th Industrial Road, Shekou, Shenzhen, P.R.C.
Post code: 518067
Internet website: http://www.csgholding.com
E-mail: csg@csgholding.com
(v) Newspapers for disclosing the information: Securities Times, China Securities Journal and Hong Kong Commercial Daily.
Website for disclosing the information: http://www.cninfo.com.cn
The place where the Semi-Annual Report is prepared and kept: Securities Department.
(vi) Stock exchange listed with: Shenzhen Stock Exchange
Short form of the stock and stock code (A-share): Southern Glass A (000012)
Short form of the stock and stock code (B-share): Southern Glass B (200012)
-2-CSG HOLDING CO., LTD. Semi-Annual Report 2010
ii Financial Data Highlights
Unit: RMB Yuan
30 June 2010
31 December 2009
Increase/decrease at the
end of this report period compared with that at the end of last year (%)
Paid-in capital
2,078,582,560
1,223,738,124
69.86%
Total assets
11,050,457,328
10,913,350,017
1.26%
Shareholders’ equity
5,548,282,777
5,315,523,161
4.38%
Net assets per share (RMB)
2.67
4.34
-38.48%
Jan.~Jun. 2010
Jan.~Jun. 2009
Increase/decrease in this report period year-on-year (%)
Revenue
3,405,068,004
2,065,547,379
64.85%
Operating profit
801,975,031
298,102,608
169.03%
Total profit
829,278,685
311,966,965
165.82%
Net profit attributable to equity holders of the Company
635,951,595
261,159,985
143.51%
Net profit attributable to equity holders of the Company after extraordinary gains and losses
604,644,926
245,535,307
146.26%
Basic earnings per share Note
0.31
0.12
158.33%
Diluted earnings per share Note
0.31
0.12
158.33%
Weighted average return on equity (%)
11.40
5.56
Increase 5.84 percentage points
Net cash from operating activities
935,836,780
660,353,612
41.72%
Net cash from operating activities per share
0.45
0.54
-16.67%
Items of extraordinary gains and losses
Amount
Gain and losses on disposal of non-current assets
9,977,569
Government subsides recognized as gains and losses
12,605,425
Gains on disposal of available-for-sale financial assets
9,055,044
Net value of other non-operating expenses
4,720,660
Tax effects on extraordinary gain and losses
-3,903,597
Extraordinary gains and losses of minority interests
-1,148,432
Total
31,306,669
Note: The financial data in the same period last year have been adjusted as new paid-in capital.
-3-CSG HOLDING CO., LTD. Semi-Annual Report 2010
II Change in Share Capital and Particulars about the Shareholders
i Change in Share Capital
(i) In the report period, the total amount and the share structure of share capital changed due to implement 2009 Profit Distribution, buy back and writing off part of restricted shares bestowed by stock incentive plans of the Company, and release the part of incentive restricted shares, the change is as follows:
Unit: Share
Before the change
Increase / Decrease (+/-)
in the report period
After the change
Amount
Propor-tion
Capital surplus transfer to paid-in capital
Others
Sub-total
Amount
Propor-tion
Restricted shares
208,275,000
17.02%
145,062,750
-18,574,737
126,488,013
334,763,013
16.11%
State-owned shares
0
0
0
0
0
0
0
State-owned legal person’s shares
80,000,000
6.54%
56,000,000
0
56,000,000
136,000,000
6.54%
Other domestic shares
128,275,000
10.48%
89,062,750
-20,078,250
68,984,500
197,259,500
9.49%
-Domestic legal person’s shares
92,500,000
7.56%
64,750,000
0
64,750,000
157,250,000
7.57%
-Domestic natural person’s shares
35,775,000
2.92%
24,312,750
-20,078,250
4,234,500
40,009,500
1.92%
Foreign-owned shares
0
0
0
0
0
0
0
-Foreign legal person’s shares
0
0
0
0
0
0
0
-Foreign natural person’s shares
0
0
0
0
0
0
0
Senior executive shares
0
0
0
1,503,513
1,503,513
1,503,513
0.07%
Unrestricted shares
1,015,463,124
82.98%
710,824,186
17,532,237
728,356,423
1,743,819,547
83.89%
RMB ordinary shares
566,884,305
46.32%
396,819,013
17,532,237
414,351,250
981,235,555
47.21%
Domestic listed foreign shares
448,578,819
36.66%
314,005,173
0
314,005,173
762,583,992
36.69%
Overseas listed foreign shares
0
0
0
0
0
0
0
Others
0
0
0
0
0
0
0
Total shares
1,223,738,124
100%
855,886,936
-1,042,500
854,844,436
2,078,582,560
100%
(ii) The date for the restricted shares to be unrestricted
Unit: Share
Date
Additional shares tradable after
restricted period
Balance of the restricted shares
Balance of the unrestricted shares
15 October 2010
293,250,000
0
2,037,244,935
Note: The shares in the statement did not include the shares held by directors, supervisors and the restricted share issued by stock incentive plan.
-4-CSG HOLDING CO., LTD. Semi-Annual Report 2010
(iii) Restricted Shares held by the top ten shareholders and restricted conditions
Unit: Share
No
Name of the restricted shareholders
the restricted shares held
Date to be listed
Additional listed shares
Restricted condition
1
China Ping’an Trust & Investment Co., Ltd.
136,000,000
15 October 2010
136,000,000
Note 1
2
Citics Securities Co., Ltd.
136,000,000
15 October 2010
136,000,000
Note 1
3
CIL Holdings Limited
10,625,000
15 October 2010
10,625,000
Note 1
4
Zhejiang Silicon Paradise Pengcheng Venture & Investment Co., Ltd.
10,625,000
15 October 2010
10,625,000
Note 1
5
Zeng Nan
4,000,388
-
-
Note 2
6
Ke Hanqi
1,530,000
-
-
Note 2
7
Wu Guobin
1,530,000
-
-
Note 2
8
Zhang Fan
1,530,000
-
-
Note 2
9
Luo Youming
1,530,000
-
-
Note 2
10
Ding Jiuru
1,434,375
-
-
Note 2
Note 1: In October 2007, the Company issued 172,500,000 A shares to specific investors, the subscriber should not take transaction within 36 months since the date of the shares listing in the market.
Note 2: According to Restricted A Share Incentive Plan, the Company has accomplished the grant for these restricted shares on 14 July 2008. The granted day of the restricted shares was 16 June 2008, the lockup period is 12 months since the granted day, and the 48 months afterwards are unlocking periods. If the unlocking conditions regulated in the incentive plan are satisfied in each unlocking period, the incentive staffs could apply to unlock 25% of the total amount of restricted shares after 12 months, 24 months, 36 months and 48 months respectively since the granted day. More details is in part ii, (ii) Implementation of incentive plan in part V Significant Events.
ii Particulars about the Major Shareholders
(i) By the end of report period, the Company had total 138,231 shareholders, of which 98,530 held of A-shares and 39,701 held of B-shares.
(ii) Particulars about the principal shareholders ended report period
Unit: Share
Particulars about the shares held by the top ten shareholders
Name
Nature
Total
amount
Propor-tion
Restricted shares
shares pledged or frozen
①
China Ping’an Trust & Investment Co., Ltd.
-
136,000,000
6.54%
136,000,000
0
②
Citics Securities Co., Ltd.
State-owned legal person
136,000,000
6.54%
136,000,000
0
③
Shenzhen International Holdings (SZ) Limited
-
77,690,000
3.74%
0
0
④
China North Industries Corporation
State-owned legal person
75,167,934
3.62%
0
0
⑤
Xin Tong Chan Development (Shenzhen) Co., Ltd.
-
74,120,000
3.57%
0
0
⑥
China Construction Bank -Yinhua Core Value Select Stock Fund
-
55,107,491
2.65%
0
0
⑦
China Construction Bank – Yinhua - Dow Jones China 88 Select Equity Fund.
-
24,676,086
1.19%
0
0
⑧
Guotai Junan Securities (Hong Kong) Limited
Foreign legal person
18,302,209
0.88%
0
0
⑨
China Construction Bank - Yinhua Wealth Theme Stock Fund
-
16,305,791
0.78%
0
0
⑩
Bank of China - Yinhua Quality Growth Stock Fund
-
15,831,080
0.76%
0
0
-5-CSG HOLDING CO., LTD. Semi-Annual Report 2010
Particulars about the shares held by the top ten unrestricted shareholders
Name
Unrestricted shares
Type
①
Shenzhen International Holdings (SZ) Limited
77,690,000
A-share
②
China North Industries Corporation
75,167,934
A-share
③
Xin Tong Chan Development (Shenzhen) Co., Ltd.
74,120,000
A-share
④
China Construction Bank - Yinhua Core Value Select Stock Fund
55,107,491
A-share
⑤
China Construction Bank – Yinhua - Dow Jones China 88 Select Equity Fund.
24,676,086
A-share
⑥
Guotai Junan Securities (Hong Kong) Limited
18,302,209
B-share
⑦
China Construction Bank - Yinhua Wealth Theme Stock Fund
16,305,791
A-share
⑧
Bank of China - Yinhua Quality Growth Stock Fund
15,831,080
A-share
⑨
Bank of China－Yifagda Shenzhen 100 Trading Open Index
15,763,559
A-share
⑩
Dreyfus Premier Investment Fds Inc.-Dreyfus Greater China Fd
15,494,681
B-share
Statement on associated relationship among the above shareholders or consistent action
Among shareholders as listed above, Yiwan Industrial Development (Shenzhen) Co., Ltd. and Xin Tong Chan Development (Shenzhen) Co., Ltd. are holding enterprises of Shenzhen International Holdings Limited. Yinhua Core Value Select Stock Fund, Yinhua - Dow Jones China 88 Select Equity Fund, Yinhua Wealth Theme Stock Fund and Yinhua Quality Growth Stock Fund are the funds management by Yinhua Fund Management Company. Except for this, there is no associated relationship had been found among other shareholders.
(iii) There is no change on the actual controller of the Company in the report period.
III Directors, Supervisors and Senior Executives
i In the report period, change in shares held by directors, supervisors, and senior executives
Unit: Share
Name
Title
Shares held at the year-begin
Change in the report period
Shares held at the end of the report period
Reason for change
Date of change
Zeng Nan
Chairman of the Board/ CEO
3,137,559
2,196,291
5,333,850
Implement 2009 Profit Distribution
2010.5.14
Luo Youming
Chief Financial Officer
1,200,000
840,000
2,040,000
Implement 2009 Profit Distribution
2010.5.14
Ke Hanqi
President
1,200,000
840,000
2,040,000
Implement 2009 Profit Distribution
2010.5.14
Wu Guobin
Director/ Vice President/ Secretary of the Board
1,200,000
840,000
2,040,000
Implement 2009 Profit Distribution
2010.5.14
Zhang Fan
Vice President
1,200,000
840,000
2,040,000
Implement 2009 Profit Distribution
2010.5.14
Ding Jiuru
Vice President
1,125,000
787,500
1,912,500
Implement 2009 Profit Distribution
2010.5.14
Lu Wenhui
Vice President
450,000
315,000
765,000
Implement 2009 Profit Distribution
2010.5.14
ii Changes of directors, supervisors and senior executives in the report period
On 19 April 2010, Mr. Liu Yongsheng, former worker representative supervisor, handed in
-6-CSG HOLDING CO., LTD. Semi-Annual Report 2010
his resignation due to the change of work. And the First Workers Representative Congress 2010 elected Ms. Sun Jingyun as the workers representative supervisor of 5th Supervisory Committee of the Company.
IV Report of the Board of Director
i Discussion and Analysis about the Operation
The overall domestic economy has a good performance in the first half year of 2010. In first quarter, economy lasted the growth trend of the 2nd quarter of 2009. In the 2nd quarter, influenced by the investment decline, fluctuation of export and policies for property price control of the government, the increase of economy faced the challenge of lack of internal power for the growth, the growth of GDP depending on the investment and promotion for economy by consumption etc. In the first half year, the Company developeded market actively under being not sufficient of favorable domestic economy, the income and profit reached a record high in history. The Company realized operation income of RMB 3.41 billion and RMB 0.64 billion for net profit (gains and losses of minority shareholders were already deducted), a raise of 64.85% and 143.51% respectively compared with the same period of last year.
Flat glass industry: Although the float glass market has been affected by the policies for property price control in 2nd quarter, the flat glass industry still maintained a good situation in the first half year of 2010. Although the price of raw materials had a remarkable growth compared with the same period of last year, the flat glass industry department promoted strengthening productivity and yield as well as controlled operation cost effectively by the overall operation management on the nine float glass production lines. Meanwhile, the flat glass industry department increased the production of high added-value product such as float ultra-white glass, crystal-gray and emerald-green by applying its advantage of manufacturing technique of high quality float glass. According to the demand and supply in northern glass market, the flat glass industry department increased the production of ultra-thick glass to mitigate the competition pressure as well as maintain a profitability level. Moreover, TCO conductive glass project has entered volume production in first quarter of 2010 which made the Company to be the only producer that had the ability of volume production of TCO conductive glass which used in thin film solar cells in China. The income and profit of the first half year of 2010 made a record high respectively owing to the adjustment strategies against the variable market.
Architectural glass industry: Although faced the pressure both from rising cost and the intensified competition in the first half year, the Company's architectural glass industry still maintained a steady trend of growth. The price of the architectural glass had been restrained by intensified competition, and the price of float glass was still high in first half year that both affected the profitability of architectural glass. The architectural glass -7-CSG HOLDING CO., LTD. Semi-Annual Report 2010
industry department reinforced lean management actively to reduce the cost. At the same time, they strengthened marketing of the dual silver Low-E glass, and developed the dual silver Low-E glass which can be tempered on different places, transported and stored to long-distance, and maintain Low-E coating stability. Meanwhile, the R&D of triple silver Low-E glass made a further progress. The plan of production expanding for energy-saving glass in Dongguan, Chengdu and Wujiang, and team construction and upgrade of internal management etc. have been advanced as the schedule. The Company’s market position in the energy-saving glass industry will be further consolidated and strengthened along with the expanding projects put into production successively.
Fine glass and ceramics industry: Influenced by the financial crisis, fine glass and ceramics industry department still faced the pressure of price decrease. In order to deal with unfavorable market environment, the Company improved capacity utilization constantly as well as reduced relevant cost effectively by lean management. Meanwhile, the TP products have entered volume production, the production and sale of ITO FILM and TP have also made a great progress. That laid a foundation to extricate fine glass industry from difficulty. With the purpose of promoting competition ability further for sustainable development, the Company planed to make an independent operation platform for the department in order to added new vitalities to it.
Solar Energy Industry: By optimizing the production flow and technics continuously, the polysilicon project has reached the advanced level in China, and realized a better profitability in the status of price depression of polysilicon. Meanwhile, technical upgrading and expanding production project of polysilicon was going on smoothly, and it will be completed in early 2011. At that time, the production cost of polysilicon will be further deducted and the products will be more competitive. The 60MW wafer project, 1st phase of 160MW, has been put into production in the first half year and will make more profitability for the solar energy industry. The R&D of anti-reflective films in solar glass has made a great progress. At present, the Company has started selling the products with anti-reflective films. Solar cell and solar glass maintained good momentum of sale in the first half year. The advantages of complete photovoltaic solar industry chain have emerged gradually.
ii Operations in the Report Period
(i) Main operations scope and operation performance
Main business scope: producting, manufacturing and selling of energy-saving architecture materials such as flat glass and architecture glass, renewable energy products such as silicon materials and PV module, as well as new material and high-tech products such as fine glass and structure porcelain (for projects involved in production license and environment-protection approval document, they are declared particularly by subsidiaries). Providing coordination and service to subsidiaries in problems relevant to operation decision, administration consultation, market information, technical support as well as
-8-CSG HOLDING CO., LTD. Semi-Annual Report 2010
post training.
A Main business income classified according to industry
Unit: RMB Yuan
Jan.~Jun., 2010
Jan.~Jun., 2009
Industry
Income of main
business
Cost of main
business
Income of main
business
Cost of main
business
Flat glass industry
1,589,102,680
992,207,121
904,974,835
725,579,852
Architectural glass industry
951,380,317
670,338,490
852,949,006
554,395,287
Fine glass and ceramics industry
247,257,238
178,944,452
208,402,075
136,758,227
Solar energy industry
869,963,695
624,653,277
210,558,333
117,647,002
Real estate industry
3,549,092
3,086,026
12,153,673
5,366,121
- Elimination
-269,955,084
-269,955,084
-129,562,245
-122,807,308
Total
3,391,297,938
2,199,274,282
2,059,475,677
1,416,939,181
Note : The Company reorganized Dongguan CSG Solar Glass Co., Ltd. to the segment of Solar Energy Industry in the first half year 2010. The relevant comparatives have been restated. Same as below.
B Main business income classified according to location
Unit: RMB Yuan
Jan.~Jun., 2010
Jan.~Jun., 2009
Location
Income of main business
Proportion (%)
Income of main business
Proportion (%)
Mainland, P.R.C.
2,790,118,596
82.27%
1,731,690,500
84.08%
Hong Kong, P.R.C.
137,625,155
4.06%
120,695,796
5.86%
Asia (excluding Mainland & Hong Kong, P.R.C.)
114,208,936
3.37%
75,925,493
3.69%
Europe
221,087,465
6.52%
23,601,993
1.15%
Australia
31,966,396
0.94%
30,823,575
1.50%
Others
96,291,390
2.84%
76,738,320
3.73%
C Products accounting for over 10% of the main business income
Unit: RMB Yuan
Jan.~Jun., 2010
Increase/decrease in this report period compared with the same period in last year
Product
Income of main
business
Cost of main
business
Gross profit ratio
Income of main
business
Cost of main
business
Gross profit ratio
Float glass
1,589,102,680
992,207,121
37.56%
75.60%
36.75%
Increase 17.74 percentage points
Architectural glass
951,380,317
670,338,490
29.54%
11.54%
20.91%
Decrease 5.46 percentage points
Solar energy product
869,963,695
624,653,277
28.20%
313.17%
430.96%
Decrease 15.93 percentage points
(ii) Particular of material change happened to profit constitution, main business or its structure as well as its profit-making ability in the report period.
In report period, the gross profit margin of float glass in flat glass industry has a substantial growth year-on-year. The production of solar energy industry raised greatly and capacity utilization of some products upgraded led cost reduction. Therefore, the income and profit of flat glass industry and solar energy industry increased compared with the same period of last year.
(iii) In the report period, the company had no other operation business activities that had
-9-CSG HOLDING CO., LTD. Semi-Annual Report 2010
significant impact on the profits.
(iv) In the report period, there was no individual share-holding company whose investment income impacted on the net profit of the Company over 10%.
(v) Problems and countermeasures in the operation
In the second half year, due to the uncertainty of domestic property market, the market demand of flat glass and architectural glass will face challenges. Along with the new capacities and restored capacities put into production sequentially in flat glass industry, and the increase of energy-saving glass production, the pressure from market competition will be sharper. The Company develops market actively. At the same time, the Company will improve integrate operating level of all production line, use the whole industry chain and production structure to enhance the internal assimilation of productivity. On the other hand, the Company will utilize the scale advantage fully to enhance the lean management to lower the comprehensive cost. Furthermore, the Company will consolidate its core competency and market position by increasing investment on R&D continually and insisting on the differentiation strategies.
iii Investment in the Report Period
(i) Usage of raised funds
The Company did not raise and fund through share offering or used and fund raised previous share offering till the report period.
(ii) Investment of non-raising fund
Unit: RMB’0000
Project
Amount
Progress of project
Earning
Wujiang CSG float glass project
84,563
Planning to construct two production lines of high-grade float glass with daily melting capacities of 600 tons and 900 tons respectively in Wujiang Economic Development Zone. The production lines use clean energy - natural gas as the fuel and construct supporting waste-heat generation. The construction period is 12 months.
In the report period, the project is in preparation.
Technical upgrading project for the Shenzhen 2nd float glass production line
19,767
Planning to readjust the products structure of the 2nd line to produce ultra-white glass and ordinary white glass. And the daily melting capacities will also be promoted to 600T/D or so from the current capacities of 400T/D through equipment updating and restructuring. At the same time, heavy oil combustion systems will be transformed. Semi-dry flue gas desulfurization devices will be used to improve the gas emissions and use flue gas and steam from waste heat boiler for LiBr refrigeration to replace the Company’s existing air-conditioning refrigeration for the purpose of saving energy and protecting environment. The whole transformation is planned to be completed in September 2010.
In the report period, the project is in reconstruction.
-10-CSG HOLDING CO., LTD. Semi-Annual Report 2010
Chengdu CSG new coated glass production line
24,800
Planning to build a production line and its supporting facilities. When the project is completed, the yearly production capacities of Low-E compound-processed glass is 1.20 million square meters. The production line will be put into trial operation.
--
Expansion on capacity of Dongguan project
47,579
Planning to increase two coating glass production lines and some support insulating glass capacity. When the project is completed, the capacities of coated insulating glass will increase 1.2 million square meters, and capacities of the wide flat coated glass will increase 3 million square meters. It is estimated that the project will be completed and put into operation respectively in July 2011 and March 2012.
In the report period, the project is in preparation.
Expansion on capacity of Wujiag Project
47,913
Planning to add two coating glass production lines and some support insulating glass capacity. When the project is completed, the capacities of coated insulating glass will add 1.2 million square meters, and capacities of the wide flat coated glass will add 3 million square meters every year. It is estimated that the project will be completed and put into operation respectively in Juneand December 2011.
In the report period, the project is in preparation.
Expansion on capacity of Chengdu project
19,835
Planning to build an ultra-wide coated glass production line. When the project is completed, the annual deep-processing capacities of the wide flat coated products will reach 3million square meters. The project is planed to put into operation in August 2011.
In the report period, the project is in preparation.
TCO conductive glass project
8,577
Planning to introduce a TCO glass product line applied in thin film solar cell with annual capacities of 460,000 square meters (3,450 tons per year). The production line has been put into volume production in March 2010.
In the report period, the project has not been put into commercial operation.
TCO conductive glass new product line project
35,000
Planning to build 4 TCO coating glass product lines in two phases with the total annual capacity of 2.52 million square meters. In which, phase I has 2 product lines with annual capacity of 1.26 million square meters, It is estimated that it will be put into volume production in early 2011, and another 2 product lines of Phase II will be completed in early 2012.
In the report period, the project is in preparation.
Yichang polysilicon technical upgrading and expanding production project
13,900
Planning to upgrade technical and expand production on 1500 T/Y of polysilicon project phase I. The project will enhanced the equipment capacity of polysilicon to 2000T/Y. At present, the project is going on smoothly, and will put into the production in the 2nd quarter 2011.
In the report period, the project is in construction period.
Yichang CSG 160 MW silicon wafer project
69,500
Planning to build solar wafer project with annual capacities of 160 MW. The phase I project with the capacities of 60MW has been put into production. The phase II project with the capacities of 100MW will be installed and adjusted at the end of this year.
--
Expansion project of solar cell
15,600
Planning to build a production line with annual output of 75MW. The prophase project with 25MW annual output had been completed in August 2009 and put into commercial operation in January 2010. The project with 50MW was in equipment installation and adjustment, and is expected to put into operation in the 3rd quarter 2010.
--
Total
387,034
-
--
iv The financial report in the semi-annual report 2010 of the Company has not been audited.
-11-CSG HOLDING CO., LTD. Semi-Annual Report 2010
V Significant Events
i. Corporate Governance
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 document on corporate governance of listed company issued by CSRS.
In the report period, according to the requirement of Notice about the Overall and Deeply Specific Movement on Standardized the Base Works of Financial Accounting of Listed Company in Shenzhen Area (SZSRC[2010]No.109) issued by China Securities Regulatory Commission Shenzhen Bureau, the Company made out a working plan about the Overall and Deeply Specific Movement on Standardized the Base Works of Financial Accounting in April 2010. According to the working plan, the Company took a self-inspection on the base work of financial accounting in the Company and in its all holding subsidiaries. As a result of this self-inspection, the Company has met the relevant requirements of laws and regulations of financial accounting in major aspects as the establishment of organization structure on financial accounting management, system formulation of financial accounting management, basic calculation work of financial accounting and development of financial information system etc.. These are beneficial in promoting the quality of financial accounting personnel and guarantee the safeness of Company’s financial information, and also make the financial information be reflected timely, accurately, truly and completely. For the problems found in self-inspection, the Company made out a correction work in measurement, responsibility person and the timetable, wrote a self-inspection report that submit to Board of the Directors for approval after the examination from auditing committee. The Company will perfect its financial accounting basic work further by strictly complying with the correction plan.
ii. Implementation of the Profit Distribution Plan and Incentive Stock Plan
(i) Implementation of profit distribution plan in the report period
The profit distribution plan 2009 was approved at the Shareholders’ General Meeting 2009 held on 20 April 2010, which the dividend would be distributed to shareholders in cash at the rate of RMB 3.50 for each 10 shares (including tax), meanwhile a bounds would be issued of 7 shares for each 10 shares by paid-in capital of capital surplus. The Company published a Notice on Dividend Distribution on China Securities Journal, Securities Times and Hong Kong Commercial Daily dated 6 May 2010 and accomplished the distribution.
-12-CSG HOLDING CO., LTD. Semi-Annual Report 2010
Neither profit would be distributed nor would capital surplus be transferred into share capital in the semi-annual 2010.
(ii) Implementation of incentive plan
According to Restricted A Share Incentive Plan (hereinafter Incentive Plan for short) approved by the Shareholders’ General Meeting, the Company actually issued 49,140,000 restricted A-shares to 244 incentive staff privately in July 2008, at price of RMB 8.58 per share. The amount of raised fund is RMB 421,621,200.
The Company bought back and wrote off totally 14,407,500 restricted A-shares respectively on 18 June 2009 and 20 January 2010. Among these shares, amount of 12,0652,500 restricted A-shares has been bought back and wrote off because achievement index of the Company did not satisfied unlocking conditions in 2009, and the balance 2,345,000 restricted A-shares has been bought back and wrote off because the 22 incentive staff had dismissed successively and hadn’t accorded with incentive condition.
On 13 May 2010, the Company implemented 2009 Profit Distribution Plan (to distribute RMB 3.5（tax included）and transfer capital surplus into share capital by the rate of 7 shares for each 10 shares) with restricted shares increasing from 34,732,500 shares to 59,045,250 shares.
According to the regulations of Incentive Plan, the 13th meeting of the 5th Board of Directors held on 26 March 2010 audited the incentive staffs’ release conditions and concluded the restricted shares held by incentive staffs satisfied unlocking conditions in 2010. At 25 June 2010, there were totally 19,035,750 restricted A-shares held by 214 incentive staffs were released.
At present, the amount of 1,938,000 restricted A-shares held by 8 original incentive staffs still are in the process of buying back and writing off.
Details of the aforesaid could be found in relevant notices published on China Securities Journal, Securities Times, Hong Kong Wen Wei Po and Juchao Information website (www.cninfo.com.cn) dated 17 June 2008, 14 July 2008, 19 June 2009 as well as published on China Securities Journal, Securities Times, Hong Kong Commercial Daily and Juchao Information website (www.cninfo.com.cn) dated 22 January, 26 May and 24 June 2010.
iii. In the report period, the Company has not been involved in any significant lawsuits or arbitrations.
-13-CSG HOLDING CO., LTD. Semi-Annual Report 2010
iv. At the end of the report period, the equity of other companies held by the Company.
Unit: RMB
Stock Code
Stock Abbr.
Initial Investment
Proportion of equity held
Book value at the period end
Gains/losses in 2008
Changes in Owners’ Equity
Item in accounting
Share type
000504
CCID Media
5,707,566
0.29%
0
9,055,054
0
Available-for-sale financial assets
Legal person share
Total
-
5,707,566
－
0
9,055,054
0
-
-
v. In the report period, there isn’t significant purchase and sale of assets and enterprise merger.
vi. There is no significant related transaction in the report period.
vii. Significant contract and implementation
(i) In the report period, neither has the Company entrusted, contracted or leased other companies’ assets, nor have other companies entrusted, contracted or leased the assets of the Company.
(ii) In the report period, the Company has not offered any guarantee to any external parties or individuals other than the Company’s own subsidiaries. All of the guarantees for holding companies all belonged to loans which supported their production and operation. At the 30 June 2010, the guarantees were as follows:
Unit: RMB’0000
Guarantee of the Company for the controlling subsidiaries
Total amount of guarantee for controlling subsidiaries in the report period
40,461
Balance of guarantee for controlling subsidiaries at the end of the report period
81,578
Particulars about the guarantee of the Company(Including the guarantee for the controlling subsidiaries)
Total amount of guarantee
81,578
Proportion of the total guarantee in net assets of the Company (%)
14.70%
Including:
- Total amount of the guarantee for shareholders, actual controller and correlated parties
0
- The debts guarantee amount provided for the guarantee of which the assets-liability ratio exceeded 70%
14,166
- Total amount of guarantee in net assets of the Company exceeded 50%
0
Total amount of guarantee in aforesaid three terms
14,166
(iii) In the report period, the Company has not entrusted others to conduct assets management.
(iv) Special explanations and independent opinions from independent directors.
Independent directors’ explanation on capital occupation of the Company’s holding shareholders and other associated parties is: Ended 30 June 2010, there was no capital occupation of the Company’s holding shareholders and other associated parties.
-14-CSG HOLDING CO., LTD. Semi-Annual Report 2010
Independent directors’ explanations on the Company’s external guarantee was: In the report period, the Company did not offer any guarantee to the controlling shareholders, related parties with share proportion less than 50%, unincorporated company or individual. In the report period, total guarantee for the holding subsidiaries of the Company was RMB 815.78 million, which accounted for 7.48% of the total asset, and 15.35% of net asset attributable to equity holders of the Company audited at the end of 31 December 2009. All the above guarantees have been approved by board of directors’ meeting or shareholders’ meeting, and has fulfilled information disclosure responsibility. In a word, we think the Company’s external guarantee is in accordance with requirements of Notice of China Securities Regulatory Commission on Regulating Listed Companies’ Provision of Guaranty to Other Parties (No. ZJF 120 [2005]) and other relevant regulations.
viii. Commitment Events
(i) The commitments performance of shareholders holding over 5% shares of the Company.
China Pingan Trust & Investment Co., Ltd and Citic Securities Co., Ltd. holding over 5% shares of the Company committed: The shares subscribed by private issue in 2007 are forbidden to transfer in 36 months since the last day of private issue.
By the end of the report period, they have strictly carried out their promises.
(ii) Additional commitments of the former non-tradable shareholders in the report period.
The Company has implemented share merger reform in May 2006. Till June 2008, the share of the original non-tradable shareholders which holding over 5% total shares of the Company had all released. Therein, the original non-tradable shareholder Shenzhen International Holdings (SZ) Limited (with former name of Yiwan Industrial Development (Shenzhen) Co., Ltd. ) and Xing Tong Chan Industrial Development (Shenzhen) Co., Ltd. both are wholly-funded subsidiaries to Shenzhen International Holdings Limited (hereinafter Shenzhen International for short) listed in Hong Kong united stock exchange main board. On 9 July 2009, Shenzhen International held the Shareholders’ General Meeting and authorized its board of directors to sale the CSG A share held by Shenzhen International at price of no less than RMB 8.5. 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.
By the end of the report period, the above former non-tradable shareholders of the Company have strictly carried out their promises
-15-CSG HOLDING CO., LTD. Semi-Annual Report 2010
ix. Punishment
In the report period, the Company and its directors, supervisors, senior executives and actual controller have not received any investigation from entitled organization, coercive measures adopted by judicial or discipline inspection department, deportation to judicial organ or investigated for criminal responsibility, inspection and administrative punishment from CSRC, ban to stock market, circulating a notice of criticism, punishments by other administration department, and public condemnation by Shenzhen Stock Exchange.
x. Other significant events
(i) Index of important information
In the report period, the notices have all been published in Securities Times, China Securities Journal, Hong Kong Commercial Daily and Juchao Information website (www.cninfo.com.cn).
Date
No.
Name
2010.1.22
2010-001
Notice on Accomplishment of Repurchase and write off of Restricted Stock Bestowed by Restricted A-share Incentive Plan
2010.1.28
2010-002
Notice on Performance Prediction 2009
2010.2.26
2010-003
Notice on Share Decrease of Shareholders
2010.3.18
2010-004
Clarification Announcement
2010.3.18
2010-005
Performance Express on 2009
2010.3.30
2010-006
Annual Report and its Summary of 2009
2010.3.30
2010-007
Notice on Resolutions of the 13th Meeting of the 5th Board of Directors
2010.3.30
2010-008
Notice on Resolutions of the 9th Meeting of the 5th Supervisory Committee
2010.3.30
2010-009
Notice on Holding the Annual Shareholders’ General Meeting 2009
2010.3.30
2010-010
Notice of Guarantee for Holding Subsidiaries
2010.4.6
2010-011
Notice on Performance Prediction of 1st Quarter 2010
2010.4.16
2010-012
The 1st Quarterly Report of 2010
2010.4.21
2010-013
Notice on Resolutions of the Annual Shareholders’ General Meeting 2009
2010.4.21
2010-014
Notice on Resolutions of the 15th Meeting of the 5th Board of Directors
2010.4.21
2010-015
Notice on the Alteration of Employee Supervisor
2010.4.30
2010-016
Notice of Board of the Directors
2010.5.6
2010-017
Notice on Profit Distributions of 2009
2010.5.26
2010-018
Notice of Resolutions of the Extraordinary Meeting of the 5th Board of Directors
2010.5.26
2010-019
Notice of Board of the Directors
2010.6.18
2010-020
Notice of Board of the Directors
2008.6.24
2010-021
Notice on Completion of Released for Incentive Restricted Share 2010
(ii) Corporate bonds
On 23 November 2009, the 2nd Extraordinary Shareholders’ General Meeting 2009 of the Company approved Proposal on Issuing Corporate Bonds, and agreed the Company to issue unsecured corporate bonds with the amount of RMB 2 billion, the duration lasts less than 7 years (including 7). The bonds with single period or multiple periods both are allowed, and the Company doesn’t plan to distribute and sell bonds to the original -16-CSG HOLDING CO., LTD. Semi-Annual Report 2010
shareholders preferentially. These raised funds intend to be used in paying back for short-term bank borrowings and complementing operation capitals of the Company. On the premise of fulfilling listed conditions, Shareholders’ General Meeting of Shareholders authorized Board of Directors to deal with the listing issues of the corporate bonds according to relevant regulations of Stock Exchanges.
The validity period of this issue is 18 months from the day Shareholders’ General Meeting approved it. At present, the bonds offering are being audited by China Securities Regulatory Commission.
(iii) Particulars of the joint stock listed company
The Company and its wholly-owned subsidiary -- CSG (Hong Kong) Ltd. have a joint share in Golden Glass Technologies Limited (“Golden Glass” for short). The application for IPO of Golden Glass has been approved at the 22nd Meeting 2010 by the Issuing Approval Committee of Growth Enterprises Market of CSRC on 27 April 2010. On 8 July 2010, Golden Glass (300093) issued shares publicly and listed in Growth Enterprises Market.
Before Golden Glass listing, the Company and CSG (Hong Kong) Ltd. totally held 11.11% of Golden Glass’s original share capital before offering, that was 10 million shares and RMB 23 million initial investment.
(iv) Particulars about the reception to investors in the report period.
Time
Place
Method
Object
Contents
2010.1.5
Conference Room
Interview
Polunin Capital Partners Limited
Introduction the disclosed information about operation and production of the Company
2010.1.7
Conference Room
Interview
China Southern Fund Management Co., Ltd., Harvest Fund Management Co., Ltd., China International Fund Management Co., Ltd., Guojin Tongyong Fund Management Co., Ltd.(Preparing for foundation), Lion Fund Management Co., Ltd., Fortune SGAM Fund Management Co., Ltd., Shenzhen Southern Huijin Investment Ltd., Huatai Asset Management Company Ltd.
Introduction the disclosed information about operation and production of the Company
2010.1.20
Conference Room
Interview
Beijing Gao Hua Securities Co., Ltd., Guosen Securities Co.,Ltd., Fuguo Fund Management Co., Ltd., China Asset Management Co., Ltd., Chilton Investment Company (HK) Ltd.
Introduction the disclosed information about operation and production of the Company
2010.2.4
Conference Room
Interview
China Post & Capital Fund Management Co., Ltd., ICBC Credit Suisse Asset Management Co. Ltd.
Introduction the disclosed information about operation and production of the Company
2010.4.30
Conference Room
Interview
Equinox Partners, L.P.
Introduction the disclosed information about operation and production of the Company -17-CSG HOLDING CO., LTD. Semi-Annual Report 2010
2010.5.14
Conference Room
Interview
Haitong Securities Co., Ltd., Yinghe Fund Management Co., Ltd.
Introduction the disclosed information about operation and production of the Company
2010.5.19
Conference Room
Interview
Hongyuan Securities Co., Ltd.
Introduction the disclosed information about operation and production of the Company
2010.5.28
Conference Room
Interview
China Merchants Securities Co., Ltd., Baoying Fund Management Co., Ltd.
Introduction the disclosed information about operation and production of the Company
-18-CSG HOLDING CO., LTD. Semi-Annual Report 2010
VI Financial Report (Not Audited)
CSG HOLDING CO., LTD.
CONSOLIDATED AND COMPANY BALANCE SHEETS
AS AT 30 JUNE 2010
(All amounts in RMB Yuan unless otherwise stated)
30 June
2010
31 December 2009
30 June
2010
31 December 2009
ASSETS
Note
Consolidated
Consolidated
Company
Company
Current assets
Cash at bank and on hand
5(1)
413,743,676
653,555,310
93,109,605
370,558,509
Notes receivable
5(2)
224,346,411
247,083,387
-
-
Accounts receivable
5(3)
321,853,719
287,912,855
-
-
Advances to suppliers
5(5)
84,008,943
101,019,512
340,000
300,000
Dividends receivable
-
-
452,284,070
-
Other receivables
5(4), 14(1)
37,179,799
15,377,152
1,976,487,489
2,074,373,917
Inventories
5(6)
462,997,515
371,296,246
-
-
Other current assets
-
17,500,000
-
-
Total current assets
1,544,130,063
1,693,744,462
2,522,221,164
2,445,232,426
Non-current assets
Available-for-sale financial assets
5(7)
-
7,528,589
-
7,528,589
Long-term receivables
14(3)
-
-
559,594,665
571,250,420
Long-term equity investments
5(8), 14(2)
27,200,000
27,200,000
3,243,639,763
3,037,789,922
Fixed assets
5(9)
7,916,796,241
8,054,820,901
17,519,256
18,831,791
Construction in progress
5(10)
1,081,190,929
631,983,774
-
-
Intangible assets
5(11)
384,015,189
392,040,050
5,533,855
5,766,855
Development expenditure
8,192,323
-
-
-
Goodwill
5(12)
18,404,380
18,404,380
-
-
Long-term prepaid expense
783,698
162,487
-
-
Deferred tax assets
5(13)
69,744,505
87,465,374
-
-
Total non-current assets
9,506,327,265
9,219,605,555
3,826,287,539
3,641,167,577
TOTAL ASSETS
11,050,457,328
10,913,350,017
6,348,508,703
6,086,400,003
-19-CSG HOLDING CO., LTD. Semi-Annual Report 2010
CSG HOLDING CO., LTD.
CONSOLIDATED AND COMPANY BALANCE SHEETS
AS AT 30 JUNE 2010 (Cont’d)
(All amounts in Rmb Yuan unless otherwise stated)
30 June
2010
31 December 2009
30 June
2010
31 December 2009
LIABILITIES AND OWNERS' EQUITY
Note
Consolidated
Consolidated
Company
Company
Current liabilities
Short-term borrowings
5(15)
2,423,960,952
2,481,152,687
1,713,410,700
1,714,462,400
Notes payable
5(16)
331,715,869
298,120,810
-
-
Accounts payable
5(17)
847,645,359
988,710,853
-
-
Advances from customers
5(18)
118,639,639
152,085,476
-
-
Employee benefits payable
5(19)
64,733,403
118,810,114
16,031,695
49,393,197
Taxes payable
5(20)
57,577,010
72,035,028
659,105
1,226,076
Interest payable
5(21)
40,192,537
14,880,351
4,794,300
1,849,500
Dividends payable
5(22)
9,416,643
687,627
687,627
687,627
Other payables
5(23), 14(4)
108,661,767
117,866,771
132,259,975
112,637,801
Current portion of non-current liabilities
5(24)
106,563,455
63,694,062
-
-
Other liabilities
5(25)
2,094,072
6,310,532
-
-
Total current liabilities
4,111,200,706
4,314,354,311
1,867,843,402
1,880,256,601
Non-current liabilities
Long-term borrowings
5(26)
1,040,260,197
908,309,884
-
-
Special payables
350,006
1,275,002
-
-
Deferred tax liabilities
5(13)
10,574,426
10,333,313
-
-
Other non-current liabilities
5(27)
65,771,226
68,004,475
-
-
Total non-current liabilities
1,116,955,855
987,922,674
-
-
Total liabilities
5,228,156,561
5,302,276,985
1,867,843,402
1,880,256,601
Owners' equity
Paid-in capital
5(28)
2,078,582,560
1,223,738,124
2,078,582,560
1,223,738,124
Capital surplus
5(29)
1,296,053,316
2,127,613,867
1,340,602,572
2,170,406,108
Less：Treasury shares
8
(1,938,000)
(1,492,500)
(1,938,000)
(1,492,500)
Surplus reserve
5(30)
437,054,602
437,054,602
437,054,602
437,054,602
Undistributed profits
5(31)
1,734,916,988
1,526,908,861
626,363,567
376,437,068
Difference on translation of foreign currency financial statements
3,613,311
1,700,207
-
-
Total equity attributable to equity holders of the Company
5,548,282,777
5,315,523,161
4,480,665,301
4,206,143,402
Minority interests
5(32)
274,017,990
295,549,871
-
-
Total owners' equity
5,822,300,767
5,611,073,032
4,480,665,301
4,206,143,402
TOTAL LIABILITIES AND OWNER'S EQUITY
11,050,457,328
10,913,350,017
6,348,508,703
6,086,400,003
The accompanying notes form an integral part of these financial statements. -20-CSG HOLDING CO., LTD. Semi-Annual Report 2010
CSG HOLDING CO., LTD.
CONSOLIDATED AND COMPANY INCOME STATEMENTS
FOR THE FIRST HALF YEAR ENDED 30 JUNE 2010
(All amounts in Rmb Yuan unless otherwise stated)
Jan.~Jun. 2010
Jan.~Jun. 2009
Jan.~Jun. 2010
Jan.~Jun. 2009
Items
Note
Consolidated
Consolidated
Company
Company
Revenue
5(33)
3,405,068,004
2,065,547,379
-
-
Less: Cost of sales
5(33)
(2,205,963,565)
(1,419,088,769)
-
-
Taxes and surcharges
5(34)
(2,454,555)
(2,788,785)
-
-
Selling and distribution expenses
(124,564,573)
(111,160,322)
-
-
General and administrative expenses
(220,592,531)
(187,534,021)
(29,259,218)
(36,652,268)
Financial (expenses)/income - net
5(35)
(57,476,189)
(53,691,077)
1,098,426
12,652,894
Asset impairment losses
5(37)
(1,096,604)
(121,367)
-
-
Add: Investment income
5(36), 14(5)
9,055,044
6,939,570
705,828,171
482,826,867
Operating profit
801,975,031
298,102,608
677,667,379
458,827,493
Add: Non-operating income
5(38)
30,048,303
15,166,527
220,000
2,600
Less: Non-operating expenses
5(39)
(2,744,649)
(1,302,170)
(17,412)
(3,963)
Including: Loss on disposal of non-current assets
(553,809)
(117,061)
(4,944)
(3,963)
Total profit
829,278,685
311,966,965
677,869,967
458,826,130
Less: Income tax expenses
5(40)
(127,600,069)
(22,990,603)
-
-
Net profit
701,678,616
288,976,362
677,869,967
458,826,130
Attributable to equity holders of the Company
635,951,595
261,159,985
Minority interests
65,727,021
27,816,377
Earnings per share
- Basic
5(41)
0.31
0.12
- Diluted
5(41)
0.31
0.12
Other comprehensive income
5(42)
(4,271,127)
5,044,229
(9,055,044)
3,658,688
Total comprehensive income
697,407,489
294,020,591
668,814,923
462,484,818
Total comprehensive income attributable to equity holders of the Company
631,680,468
266,204,214
Total comprehensive income attributable to minority interests
65,727,021
27,816,377
The accompanying notes form an integral part of these financial statements. -21-CSG HOLDING CO., LTD. Semi-Annual Report 2010
-22-
CSG HOLDING CO., LTD.
CONSOLIDATED AND COMPANY CASH FLOW STATEMENTS
FOR THE FIRST HALF YEAR ENDED 30 JUNE 2010
(All amounts in Rmb Yuan unless otherwise stated)
Jan.~Jun. 2010
Jan.~Jun. 2009
Jan.~Jun. 2010
Jan.~Jun. 2009
Items
Notes Consolida
ted
Consolidated
Company
Company
Cash flows from operating activities
Cash received from sales of goods or rendering of services
3,837,181,164
2,389,527,452
-
-
Refund of taxes and surcharges
13,393,936
20,925,167
-
-
Cash received relating to other operating activities
5(43)
25,752,999
51,965,762
1,754,526
194,290,838
Sub-total of cash inflows
3,876,328,099
2,462,418,381
1,754,526
194,290,838
Cash paid for goods and services
(2,073,921,416)
(1,275,898,522)
-
-
Cash paid to and on behalf of employees
(322,438,294)
(180,525,063)
(69,084,371)
(6,531,129)
Payments of taxes and surcharges
(366,576,042)
(193,446,268)
(798,881)
(168,572)
Cash paid relating to other operating activities
5(43)
(177,555,567)
(152,194,916)
(4,357,263)
(265,165,692)
Sub-total of cash outflows
(2,940,491,319)
(1,802,064,769)
(74,240,515)
(271,865,393)
Net cash flows from operating activities
5(44)、14(6)
935,836,780
660,353,612
(72,485,989)
(77,574,555)
Cash flows from investing activities
Cash received from disposal of investments
10,401,160
7,658,227
10,401,160
7,658,227
Cash received from returns on investments
-
-
244,489,057
203,216,340
Net cash received from disposal of fixed assets, intangible assets and other long-term assets
10,428,461
1,519,647
-
-
Cash received relating to other investing activities
-
57,155,525
161,767,878
18,628,005
Sub-total of cash inflows
20,829,621
66,333,399
416,658,095
229,502,572
Cash paid to acquire fixed assets, intangible assets and other long-term assets
(736,904,427)
(669,513,362)
(844,493)
(1,259,618)
Cash paid to acquire investments
-
-
(183,126,000)
(120,360,000)
Cash paid relating to other investing activities
(11,523,976)
(21,345,370)
-
-
Sub-total of cash outflows
(748,428,403)
(690,858,732)
(183,970,493)
(121,619,618)
Net cash flows from investing activities
(727,598,782)
(624,525,333)
232,687,602
107,882,954
Cash flows from financing activities
Cash received from capital contributions
-
-
-
-
Including: Cash received from capital contributions by minority shareholders of a subsidiaries
-
-
-
-
Cash received from borrowings
610,431,052
1,945,542,226
114,276,500
437,513,800
Cash received from other financing activities
5(43)
4,064,616
356,800,907
-
375,340,000
Sub-total of cash inflows
614,495,668
2,302,343,133
114,276,500
812,853,800
Cash repayments of borrowings
(492,803,079)
(2,031,815,467)
114,276,500
(686,504,000)
Cash payments for interest expenses and distribution of dividends or profits
(546,135,631)
(259,685,948)
(428,708,921)
(136,106,917)
Including: Cash payments for dividends or profit to minority shareholders of subsidiaries
(80,286,898)
(64,416,978)
-
-
Cash payments relating to other financing activities
5(43)
(18,200,016)
(131,026,601)
(8,840,400)
(114,671,700)
Sub-total of cash outflows
(1,057,138,726)
(2,422,528,016)
(551,825,821)
(937,282,617)
Net cash flows from financing activities
(442,643,058)
(120,184,883)
(437,549,321)
(124,428,817)
Effect of foreign exchange rate changes on cash and cash equivalents
(1,479,110)
6,618,182
(101,196)
16,962
Net increase/(decrease) in cash and cash equivalents
5(44)、14(6)
(235,884,170)
(77,738,422)
(277,448,904)
(94,103,456)
Add: Cash and cash equivalents at beginning of year
635,618,163
394,923,631
370,558,509
168,142,506
Cash and cash equivalents at end of year
5(44)、14(6)
399,733,993
317,185,209
93,109,605
74,039,050
The accompanying notes form an integral part of these financial statements.CSG HOLDING CO., LTD. Semi-Annual Report 2010
CSG HOLDING CO., LTD.
CONSOLIDATED STATEMENT OF CHANGES IN OWNER'S EQUITY
FOR THE FIRST HALF YEAR ENDED 30 JUNE 2010
(All amounts in Rmb Yuan unless otherwise stated)
Attributable to equity holders of the Company
Items
Paid-in
capital
Capital
surplus
Less:
Treasury shares
Surplus reserves
Undistributed profits
Difference on translation of foreign currency financial statements
Sub-total
Minority interests
Total owners' equity
Note
5(28)
5(29)
8
5(30)
5(31)
5(32)
Balanced at 1 January 2009
1,237,103,124
2,067,761,896
(12,952,500)
391,040,358
863,352,524
(1,698,863)
4,544,606,539
268,410,601
4,813,017,140
Movement for the first half year ended 30 June 2009
Net profit
-261,1
-261,1
98527,8
,377288,97
Other comprehensive income
5(42)
-
3,658,688
-
-
-
1,385,541
5,044,229
-
5,044,229
Capital contribution and withdrawal by owners
(13,365,000)
37,122,294
12,952,500
-
-
-
36,709,794
2,044,409
38,754,203
- Capital contribution by owners
- Share-based payments recognized in owner’s equity
8
(13,365,000)
37,122,294
12,952,500
-
-
-
36,709,794
2,044,409
38,754,203
Profit distribution
-(122,37
-(122,37
,812)(64,41
6,978)(186,79
- Appropriation to surplus reserves
- Profit distribution to equity owners
-(122,37
-(122,37
,812)(64,41
6,978)(186,79
Balanced at 30 June 2009
1,223,738,124
2,108,542,878
-
391,040,358
1,002,138,697
(313,322)
4,725,146,735
233,854,409
4,959,001,144
-23-CSG HOLDING CO., LTD. Semi-Annual Report 2010
-24-
CSG HOLDING CO., LTD.
CONSOLIDATED STATEMENT OF CHANGES IN OWNER'S EQUITY
FOR THE FIRST HALF YEAR ENDED 30 JUNE 2010 (Cont’d)
(All amounts in Rmb Yuan unless otherwise stated)
Attributable to equity holders of the Company
Items
Paid-in
capital
Capital
surplus
Less:
Treasury
shares
Surplus reserves
Undistributed profits
Difference on translation of foreign currency financial statements
Sub-total
Minority interests
Total owners' equity
Note
5(28)
5(29)
8
5(30)
5(31)
5(32)
Balanced at 1 January 2010
1,223,738,124
2,127,613,867
(1,492,500)
437,054,602
1,526,908,861
1,700,207
5,315,523,161
295,549,871
5,611,073,032
Movement for the first half year ended 30 June 2010
Net profit
-
-
-
-
635,951,595
-
635,951,595
65,727,021
701,678,616
Other comprehensive income
5(42)
-
(6,184,231)
-
-
-
1,913,104
(4,271,127)
-
(4,271,127)
Capital contribution and withdrawal by owners
(1,042,500)
30,510,616
(78,000)
-
-
-
29,390,116
1,757,015
31,147,131
- Capital contribution by owners
- Share-based payments recognized in owner’s equity
8
(1,042,500)
30,510,616
(78,000)
-
-
-
29,390,116
1,757,015
31,147,131
Capital surplus transfer to paid-in capital
855,886,936
(855,886,936)
(367,500)
-
-
-
(367,500)
-
(367,500)
Profit distribution
-
-
-
-
(427,943,468)
-
(427,943,468)
(89,015,917)
(516,959,385)
- Appropriation to surplus reserves
- Profit distribution to equity owners
-
-
-
-
(427,943,468)
-
(427,943,468)
(89,015,917)
(516,959,385)
Balanced at 30 June 2010
2,078,582,560
1,296,053,316
(1,938,000)
437,054,602
1,734,916,988
3,613,311
5,548,282,777
274,017,990
5,822,300,767
The accompanying notes form an integral part of these financial statements.CSG HOLDING CO., LTD. Semi-Annual Report 2010
CSG HOLDING CO., LTD.
COMPANY STATEMENT OF CHANGES IN OWNER'S EQUITY
FOR THE FIRST HALF YEAR ENDED 30 JUNE 2010
(All amounts in Rmb Yuan unless otherwise stated)
Items
Paid-in capital
Capital surplus
Less: Treasury shares
Surplus reserves
Undistributed profits
Total owners' equity
Note
5(28)
5(29)
8
5(30)
Balance at 1 January 2009
1,237,103,124
2,107,751,509
(12,952,500)
391,040,358
84,682,684
3,807,625,175
Movement for the first half year ended 30 June 2009
Net profit
-
-
-
-
458,826,130
458,826,130
Other comprehensive income
-
3,658,688
-
-
-
3,658,688
Capital contribution and withdrawal by owners
(13,365,000)
39,166,703
12,952,500
-
-
38,754,203
-Share-based payments recognized in owner’s equity
8
(13,365,000)
39,166,703
12,952,500
-
-
38,754,203
Profit distribution
-
-
-
-
(122,373,812)
(122,373,812)
- Appropriation to surplus reserves
-
-
-
-
-
-
- Profit distribution to equity owners
-
-
-
-
(122,373,812)
(122,373,812)
Balance at 30 June 2009
1,223,738,124
2,150,576,900
-
391,040,358
421,135,002
4,186,490,384
Balance at 1 January 2010
1,223,738,124
2,170,406,108
(1,492,500)
437,054,602
376,437,068
4,206,143,402
Movement for the first half year ended 30 June 2010
Net profit
-
-
-
-
677,869,967
677,869,967
Other comprehensive income
-
(6,184,231)
-
-
-
(6,184,231)
Capital contribution and withdrawal by owners
(1,042,500)
32,267,631
(78,000)
-
-
31,147,131
-Share-based payments recognized in owner’s equity
8
(1,042,500)
32,267,631
(78,000)
-
-
31,147,131
Capital surplus transfer to paid-in capital
855,886,936
(855,886,936)
(367,500)
-
-
(367,500)
Profit distribution
-
-
-
-
(427,943,468)
(427,943,468)
- Appropriation to surplus reserves
-
-
-
-
-
-
- Profit distribution to equity owners
-
-
-
-
(427,943,468)
(427,943,468)
Balance at 30 June 2010
2,078,582,560
1,340,602,572
(1,938,000)
437,054,602
626,363,567
4,480,665,301
The accompanying notes form an integral part of these financial statements. -25-CSG HOLDING CO., LTD. Semi-Annual Report 2010
CSG HOLDING CO., LTD.
NOTES TO FINANCIAL STATEMENTS
FOR THE FIRST HALF YEAR ENDED 30 JUNE 2010
(All amounts in RMB unless otherwise stated)
1 General information
CSG Holding Co Ltd (the “Company”) was incorporated in 1984 in Shenzhen, the People’s Republic of China (the “PRC”), known as China South Glass Company, as a joint venture enterprise by 香港招商局轮船股份有限公司、深圳建筑材料工业集团公司、中国北方工业深圳公司 and广东国际信托投资公司, with a registered capital of US dollar 500,000. In October 1991, as approved by the Shenzhen municipal government with document SFBF (1991) 828, China South Glass Company was reorganized as joint stock limited company, the general capital was RMB 71,232,550, with nominal value of RMB 1 per share.
As approved by People’s Bank of China Shenzhen Branch with document No. SRYFZ (1991)087 and SRYFZ (1992) 010, the Company issued, by public offering, the domestic shares (‘A shares’) of 20,300,000 shares and domestically listed foreign shares (‘B shares’) of 16,000,000, in October 1991 and January 1992, respectively. Both shares were listed in Shenzhen Stock Exchange in February 1992. The general capital of the Company increased to RMB 107,532,550.
As approved by China Securities Regulatory Committee with document (1995) No. 16, State Planning Committee with document JWZ (1994) No. 1748 and State Administrative of Foreign Exchange with document HZF (95) No. 191, the Company issued USD 45 million convertible bonds on Swiss between June and July 1995, of which convertible bonds amounting to USD 44 million had been converted into 75,411,268 B shares, the remaining balances were repaid upon maturity.
The Company issued new capital of RMB 832,519,306 during the period from 1993 to 2005 by the means of warrants, bonus issue and capitalization of capital reserve.
As approved by Shenzhen Municipal State Owned Assets Management and Supervisory Committee with document (2006) No. 190 “the Approval over the Share Restructuring Scheme by CSG Holding Co Ltd”, the Company went the share restructuring scheme. The shareholders of the non public shares offered to the listed A share shareholders 57,065,893 of non public shares, being 3.55 per 10 listed A shares, in return for the conversion of the non public’s shares into listed A shares. Since 24 May 2006, the non public shares converted into listed A shares on Shenzhen Stock Exchange. On 31 December 2009, shareholders’ the non public shares all converted into listed A shares.
As approved by China Security Regulatory Committee with document ZJFX (2007) No. 231, the Company issued, by private placement, 172,500,000 A shares during the period from 20 September to 27 September 2007, at subscription price of RMB8 per share. The general capital of the Company increased to 1,187,963,124 upon the completion of the placement.
According to the Company’s restricted A share stock incentive scheme, the Company granted 49,140,000 A shares to employees through a non-public placement on 16 June 2008, at price of -26-CSG HOLDING CO., LTD. Semi-Annual Report 2010
RMB8.58 pre share. The general capital of the Company increased to 1,237,103,124 upon the completion of the issuance.
According to the Company’s restricted A share stock incentive scheme, the Company should repurchased and cancelled the shares which didn’t satisfied unlocking conditions. As 2008 performance of the Group failed to meet the vesting conditions of the A share stock incentive scheme and certain employees left the Group, the Company repurchased and cancelled 13,365,000 A shares in 2009. The company's general capital was reduced to 1,223,738,124. As certain employees left the Group in 2009, the Company repurchased and cancelled 1,042,500 A shares in January 2010. The company’s general capital reduced to 1,222,695,624. (Note 5(28)).
According to the resolutions of the Annual Shareholders’ General Meeting dated 20 April 2010, a bonus issued of 7 shares for each 10 shares by capitalization of capital surplus based on the total share capital 1,222,695,624 shares. The total transferred capital surplus was 855,886,936 shares. The Company’s general capital increased to 2,078,582,560. The Company has not yet applied for increased capital verification.
A bonus issue of 7 shares for each 10 shares by capitalization of capital surplus
The Company and its subsidiaries (collectively referred to the “Group”) are mainly engaged in the manufacturing and selling of floating glass, specialized glass, engineering glass, ITO glass, ceramics products, energy saving glass, silicon related materials and solar panels; real estate development and property management, investment holding and others.
The financial statements were authorized for issue by the board of directors on 20 July 2010.
2 Summary of significant accounting policies and accounting estimates
(1) Basis of preparation
The financial statements have been prepared in accordance with the Basic Standards and 38 Specific Standards of the Accounting standards for Business Enterprises issued by the Ministry of Finance on 15 February 2006, and the Application Guidance for Accounting Standards for Business Enterprises, Interpretation of Accounting Standards for Business Enterprises and other relevant regulations issued thereafter (hereafter referred to as “the Accounting Standards for Business enterprises” or “CAS”), and “Information Disclosure Rule No. 15 for Companies with Public Traded Securities - Financial Reporting General Provision”(2010 Amendment) issued by China Security Regulatory Commission.
As at 30 June 2010, the Group had net current liabilities of RMB 2,567,070,643. 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 year ending 31 December 2010; b) the Group has maintained good relationship with banks so the Group has been able to successfully renew the bank facilities upon the expiry; in addition, as at 30 June 2010, the Group had unutilized banking facilities of approximately RMB12.4 billion. The directors are of view that the above banking facilities can meet the funding requirements of the Group’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
-27-CSG HOLDING CO., LTD. Semi-Annual Report 2010
and the Group.
(2) Statement of compliance with the Accounting Standards for Business Enterprises.
The financial statements of the Company for the first half year ended 30 June 2010 truly and completely present the financial position as of 30 June 2010 and the operating results, cash flows and other information for the first half year then ended of the Group and the Company in compliance with the Accounting Standards for Business Enterprises.
(3) Accounting period
The Company’s accounting year starts on 1 January and ends on 31 December.
(4) Recording currency
The recording currency is Renminbi (RMB).
(5) Business combinations
(a) Business combinations involving entities under common control
The assets and liabilities that the combining party obtains in a business combination shall be measured on the basis of their carrying amount in the combined party. As for the balance between the carrying amount of the net assets obtained by the combining party and the carrying amount of the consideration paid by it, the additional paid-in capital shall be adjusted. If the additional paid-in capital is not sufficient to be offset, the retained earnings shall be adjusted.
Costs directly attributable to business combination are recorded into the profits and losses once incurred.
(b) Business combinations involving entities not under common control
The cost of combination and identifiable net assets obtained by the acquirer in a business combination are measured at the fair value at the acquisition date. The excess of the cost of acquisition over the Group’s share of the fair value of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the Group’s share of fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement.
Costs directly attributable to business combination are included in the cost of combination.
(6) Basis of preparation of consolidated financial statements
The scope of consolidation includes the Company and all of its subsidiaries.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group and are de-consolidated from the date that control ceases. For the subsidiary being acquired under common control, it is included in the scope of consolidation from the date it first came under the common control with the Company, the net profit or loss of such subsidiary before the acquisition
-28-CSG HOLDING CO., LTD. Semi-Annual Report 2010
date should also be separately disclosed in the consolidated income statement.
Accounting policies of subsidiaries have been adjusted where necessary to ensure consistency with the policies adopted by the Group. For subsidiaries acquired in a business combination involving entities not under common control, the individual financial statements of the subsidiaries are adjusted based on the fair value of the identifiable assets and liabilities at the acquisition date.
All significant inter-group balances, transactions and unrealized profits are eliminated in the consolidated financial statements. The portion of equity and net profits or losses of a subsidiary not belonging to the Company is recognized as minority interests and separately presented in equity and net profits respectively.
(7) Cash and Cash equivalent
Cash and cash equivalents comprise cash in hand, deposits held at call with bank 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 translation
(a) Foreign currency transactions
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 currency are translated into RMB using the spot exchange rate on the balance sheet date. Exchange differences arising from these translations are recognised 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, construction or production of qualifying assets, which are capitalised as part of the cost of those assets. Non-monetary items denominated in foreign currency that are measured in terms of historical cost are translated at the balance sheet date using the spot exchange rate at the date of the transaction. 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 foreign operation are translated at the spot exchange rate on the balance sheet date. Among the owner’s equity items, the items other than “undistributed profits” are translated at the spot exchange rate of the transaction date. The income and expense items in the income statements of overseas businesses are translated at the spot exchange rate of the transaction date. The differences arising from the above translation are presented separately in the owner’s equities. The cash flows of overseas businesses are translated at the spot exchange rate on the date of the cash flows. The effect of exchange rate changes on cash is presented separately in the cash flow statement.
(9) Financial Instruments
-29-CSG HOLDING CO., LTD. Semi-Annual Report 2010
(a) Financial assets
(i) Classification
Financial assets are classified into the following categories at initial recognition: at fair value through profit or loss, loans and receivables available-for-sale and financial assets held to maturity. The classification of financial assets depends on the Group’s intention and ability to hold the financial assets. The Group has no financial assets at fair value through profit or loss.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include financial assets held for the purpose of selling in the short term, which are presented as financial assets held for trading on the balance sheet
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives that are designated to be available for sale upon initial recognition and financial assets not classified in any other categories. Available-for-sale financial assets are included in other current assets if management intends to dispose of them within 12 months from balance sheet date.
Held-to-maturity investment
Held-to-maturity investments are non-derivative financial assets with fixed maturity and fixed or determinable payments that management has the positive intention and ability to hold to maturity. Held-to-maturity investments with maturities less than 12 months of the balance sheet date are included in other current assets or current portion of non-current assets on the balance sheet.
(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. Transaction costs of financial assets carried at the fair value through profit or loss are expensed in the income statement; Transaction costs of other financial assets are included in financial assets at initial recognition.
Financial assets at fair value through profit or loss and 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. Loans and receivables and held-to-maturity investment are measured at amortised cost using the effective interest method.
Gain or losses arising from changes in the fair value of the financial assets at fair value through -30-CSG HOLDING CO., LTD. Semi-Annual Report 2010
profit or loss are recognized in the income statement. Interest or dividend income and disposal gain or loss from such assets is recognized in the income statement.
A gain or loss arising from change in fair value of an available-for-sale financial asset is recognised directly in equity, except for impairment losses and foreign exchange gains and losses arising from the translation of monetary financial assets. When such financial asset is derecognised, the cumulative gain or loss previously recognised in equity is recognised in income statement. Interest on available for sale debt instrument, calculated using effective interest method, and cash dividends declared by the investee on available-for-sale equity instruments are recognised as investment income in income statement.
(iii) Impairment of financial assets
The Group assesses the carrying amount of financial assets other than financial assets at fair value through profit or loss at each balance sheet date. If there is objective evidence that the financial asset is impaired, the Group shall determine the amount of any impairment loss accounts.
If an impairment loss on a financial asset carried at amortized cost has been incurred, the amount of loss is measured at the difference between the asset’s carrying amount and the present value of 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 recovered and the recovery can be 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 income statement.
In the case of a significant or prolonged decline in the fair value of available-for-sale financial assets, the cumulative loss arising from the decline in fair value that had been recognized directly in equity is removed from equity and recognized as impairment loss. For an available for sale debt instrument, if there is objective evidence that the value of the financial asset recovered and the recovery can be 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 income statement. For an available for sale equty instrument, if there is objective evidence that the value recovered and the recoery can be objectively related to an event occurring after the impairment loss recognized, the previously recognized impairment loss is reversed and directly recognized 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 the carrying amount and the aggregate of consideration received and the accumulative amount of changes of fair value originally recorded in the owner’s equity is recognised in the income statement.
-31-CSG HOLDING CO., LTD. Semi-Annual Report 2010
(b) Financial liabilities
Financial liabilities are classified into the following categories at initial recognition: the financial liabilities at fair value through profit or loss and other financial liabilities. The financial liabilities in the Group mainly comprise of other financial liabilities, including payables and borrowings.
Payables comprise accounts payable and other payables, which are recognised initially at fair value and measured subsequently at amortised cost using the effective interest method. Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities.
Borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently carried at amortised costs using the effective interest method. Borrowings are classified as the short-term borrowings if they mature within one year (one year included); others are classified as long-term borrowings; long-term borrowings due for repayment within one year since the balance sheet day are classified as current portion of non-current liabilities.
A financial liability (or a part of financial liability) is derecognised when and only when the obligation specified in the contract is discharged or cancelled. The difference between the carrying amount of a financial liability (or a part of financial liability) extinguished and the consideration paid is recognised in the income statement.
(c) Determination of the fair value of the 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 for which the market is not active is determined by using a valuation technique. Valuation techniques include using prices of recent market transactions between knowledgeable, willing parties, reference to the current fair value of another financial asset that is substantially the same with this instrument, and discounted cash flow analysis. When a valuation technique is used to establish the fair value of a financial instrument, management uses observable market data as much as possible and relies as little as possible on the Group-specific inputs.
(10) Receivables
Receivables comprise, accounts receivable and other receivables. Accounts receivable arising from sale of goods or rendering of services are initially recognized at fair value of the contractual payments from the buyer.
(a) The recognition criteria and method of provision for impairment of receivables that are individually significant:
- The recognition criteria of receivables that are individually significant
Receivables that are individually significant are subject to separate impairment assessment. A provision for impairment of the receivable is recognized if there is objective evidence that the Group will not be able to collect the full amounts according to the original terms.
-32-CSG HOLDING CO., LTD. Semi-Annual Report 2010
- The method of provision for impairment of receivables that are individually significant
The provision for impairment of the receivable is established at the difference between the carrying amount of the receivable and the present value of estimated future cash flows.
(b) The criteria and method of provision for impairment of remaining receivables
Receivables that are not impaired after separate assessment and remaining receivables not subject to separate assessment are grouped for impairment assessment, and is provided for the impairment at 2% of balances, based on the Group’s historical data of bad debts.
(11) Inventories
(a) Classification
Inventories include manufacturing sector and real estate development sector, and are presented at the lower of cost and net realisable value.
(b) Inventory costing method
Manufacturing sector inventories include raw materials, work in progress, finished goods and turnover materials. Cost is determined using the weighted average method. The cost of finished goods and work in progress comprises raw materials, direct labour and an allocation of all production overhead expenditures incurred based on normal operating capacity. Turnover materials include low cost consumables and packaging materials, are expensed upon issuance.
The real estate development sector inventories are properties held for sale, the cost comprised of land and construction costs. Cost is determined using the individual actual cost.
(c) The determination of net realisable value and the method of provision for impairment of inventories
Provisions for declines in the value of inventories are determined at the carrying value of the inventories net of 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 relevant taxes.
(d) The Group adopts the perpetual inventory system.
(e) Low-value consumption goods and package material amortization method
Low-value consumption goods and package materials are applying one-off amortization method.
(12) Long-term equity investments
Long-term equity investments comprise the Company’s long-term equity investments in its subsidiaries as well as the long-term equity investments where the Group does not have control, joint control or significant influence over the investees, and which are not quoted in an active -33-CSG HOLDING CO., LTD. Semi-Annual Report 2010
market and whose fair value cannot be reliably measured.
Subsidiaries are all investees over which the Company is able to control. Joint ventures are all investees over which the Group is able to exercise joint control together with other ventures. Associates are all investees that the Group has significant influence on their financial and operating policies.
Investments in subsidiaries are measured using the cost method in the Company’s financial statements, and adjusted by using the equity method when preparing the consolidated financial statements. Interests in joint ventures and associates are accounted for using the equity method. Long-term equity investments where the Group does not have control, joint control or significant influence over the investees, and which are not quoted in an active market and whose fair value cannot be reliably measured are measured using the cost method.
(a) Initial recognition
Long-term equity investments accounted for on cost method are measured at the fair value of initial investment cost. As for long-term equity investments accounted for on the equity method, where the initial investment cost exceeds the Group’s share of the fair value of the investee’s identifiable net assets at the time of acquisition, the investment is initially measured at cost; where the initial investment cost is less than the Group’s share of the fair value of the investee’s identifiable net assets at the time of acquisition, the long-term equity investment is stated at the Group’s share of the fair value of the investee’s identifiable net assets and the difference is included in income statement.
If the shares granted to the employee of subsidiaries are settled in equity instruments of the Company, the expenses, being determined at the fair value of the equity instruments on grant date, related to the employees’ service in current period are recognized as part of the cost of investments in subsidiaries.
(b) Subsequent measurement
When using the cost method, investment income is recognized in income statement for the dividends declared by the investee.
When using the equity method, the Group recognised the investment income based on its share of net profit or loss of the investee. The Group discontinues recognising its share of net losses of an investee when the carrying amount of the long-term equity investment together with any long-term interests that, in substance, form part of the investor’s net investment in the investee are reduced to zero. However, if the Group has obligations for bearing additional losses and the obligation meets the recognition criteria of provision under CAS 13 Contingency, the Group continues to recognise the investment losses as provision. For changes in owner’s equity of the investee other than those arising from its net profit or loss, the Group record directly in capital surplus for its proportion, provided that the Group’s proportion of shareholding in the investee remains unchanged. The carrying amount of the investment is reduced by the Group’s share of the dividends declared by the investee. Unrealised gains on transactions between the Group and the investees are eliminated to the extent of the Group’s interest in the investees. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
-34-CSG HOLDING CO., LTD. Semi-Annual Report 2010
(c) Definition of control, joint control and significant influence over the investees
Control refers to the power to govern the financial and operating policies of an enterprise, so as to obtain benefits from their operating activities. When assessing whether the Group has control over investee, the existence and effect of potential voting rights that are currently exercisable or convertible, such as convertible bonds and share warrants, are also taken into consideration.
Joint control is the contractually agreed sharing of control over an economic activity, and exists only when the strategic financial and operating decisions relating to the activity require the unanimous consent of all the parties sharing control.
Significant influence refers to the power to participate in making decisions on the 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
The carrying amount of long-term equity investments in subsidiaries, joint ventures and associates is reduced to the recoverable amount when the recoverable amount is less than the carrying amount (Note 2(18)). Once the impairment loss is recognized, it is not allowed to be reversed for any value recovered in the subsequent periods.
(13) Fixed assets
(a) Recognition and initial measurement
Fixed assets comprise buildings, machinery and equipment, motor vehicles, computer and electronic equipment and office equipment.
Fixed asset is recognized when it is probable that the economic benefits associated with the fixed asset will flow to the Group and its cost can be reliably measured. Fixed assets purchased or constructed by the Group are initially measured at cost at the time of acquisition.
Subsequent expenditures incurred for a fixed asset are included in the cost of the fixed asset when it is probable that the economic benefits associated with the fixed asset will flow to the Group and its cost can be reliably measured. The carrying amount of those parts that are replaced is derecognized and all the other subsequent expenditures are recognized in income statement when they are incurred.
(b) Depreciation
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 being 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, estimated residual values expressed as a percentage of cost and annual depreciation rates are as follows:
-35-CSG HOLDING CO., LTD. Semi-Annual Report 2010
Estimated
useful lives
Estimated residual value
Annual
depreciation rate
Buildings
10-40 years
5%-10%
2.25% to 9.5%
Machinery and equipment
10-16 years
5%-10%
5.63% to 9.5%
Motor vehicles and others
3-10 years
5%-10%
9% to 31.67%
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 least at each financial year-end.
(c) The carrying amount of fix assets is reduced to the recoverable amount when the recoverable amount is less than the carrying amount (Note2 (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 proceeds on sale, transfer, retirement or damage of a fixed asset net of its carrying amount and related taxes and expenses is recognized in income statement.
(14) Construction in progress
Construction in progress is measured at actual cost. Actual cost comprises construction costs, Installation costs, borrowing costs that are eligible for capitalization incurred before the assets are ready for their intended use and other costs necessary to bring the fixed assets ready for their intended use. Construction in progress is transferred to fixed assets when the assets are ready for their intended use and are depreciate from the next month. The carrying amount of construction in progress is reduced to the recoverable amount when the recoverable amount is less than the carrying amount (Note 2(18)).
(15) Borrowing costs
The borrowing costs that are directly attributable to the acquisition and construction of a fixed asset that needs a substantially long period of time of acquisition and construction 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, the borrowing costs incurred thereafter are recognized in income statement. Capitalization of borrowing costs is suspended when 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 a borrowing that is specifically for the purpose of obtaining a qualifying asset, the amounts of borrowing costs eligible for capitalisation are the actual borrowing costs incurred on that borrowing during the period less any investment income on the temporary investment of these borrowings.
-36-CSG HOLDING CO., LTD. Semi-Annual Report 2010
For the other borrowings related to acquisition, construction and production of a qualifying asset, the amount of borrowing costs eligible for capitalisation shall be the lower of the actual borrowing costs incurred and the amount of qualifying asset not financed by specific borrowings multiplying capitalisation rate. The capitalisation rate is the weighted average interest rate of these borrowings.
(16) Intangible assets
Intangible assets including land use rights and, patents and exploitation rights, intangible assets are measured at cost.
(a) Land use rights
Land use rights are amortized on the straight-line basis over the period of the land use rights from 30 to 70 years. If it is impracticable to allocate the amount paid for the purchase of land use rights and buildings between the land use rights and the buildings on a reasonable basis, the entire amount is accounted for as fixed assets.
(b) Patents
Patents are amortized on a straight-line basis over periods as stipulated by the contracts.
(c) Exploitation rights
Exploitation rights are amortized on permitted exploitation periods set out on the exploitation certificate.
(d) Periodical review of useful life and amortisation method
The estimated useful life and amortization method for an intangible asset with an indefinite useful life is reviewed, and adjusted if appropriate at each financial year-end.
(e) Research and development
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 finally create an intangible asset.
Expenditure on the research phase is recognized in profit or loss in the period in which it is incurred. Expenditure on the development phase is recognized as an intangible asset only if all of the following standards are met:
?it is technically feasible to complete the intangible asset so that it will be available for use;
?management intends to complete the intangible asset and use or sell it;
?it can be demonstrated how the intangible asset will generate economic benefits;
-37-CSG HOLDING CO., LTD. Semi-Annual Report 2010
?adequate technical, financial and other resources to complete the development and the ability to use or sell the intangible asset; and
?the expenditure attributable to the intangible asset during its development phase can be reliably measured.
Other development expenditures that do not meet the conditions above are recognized in income statement as incurred. Development costs previously recognized as an expense 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 the asset is ready for its intended use.
(f) Impairment of intangible asset
The carrying amount of intangible asset is reduced to the recoverable amount when the recoverable amount is less than the carrying amount (Note 2(18)).
(17) Long-term prepaid expenses
Long-term prepaid expenses represent prepayments that should be amortized over more than one year. Long-term prepaid expenses are amortized on the straight-line basis over the expected beneficial period and are presented at cost net of accumulated amortization.
(18) Impairment of long-term assets
Fixed assets, construction in progress, intangible assets with definite useful lives and long-term equity investments in subsidiaries are tested for impairment if there is any indication that an asset may be impaired at the balance date. If the result of the impairment test indicates that the recoverable amount of the asset is less than its carrying amount, a provision for impairment and an impairment loss are recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and the present value of the future cash flows expected to be derived from the asset. A provision for asset impairment is determined and recognized on an individual asset basis. If it is not possible to estimate the recoverable amount of an individual asset, the recoverable amount of the cash generated unit (CGU) to which the asset belongs is determined. A CGU is the smallest group of assets that is able to generate independent cash inflows.
Separately recognized goodwill is tested at least annually for impairment, irrespective of whether there is any indication that the asset may be impaired. During the test, the carrying value of goodwill is allocated to the related assets or CGU which is expected to benefit from the synergies of the business combination. If the result of the test indicates that the recoverable amount of an asset or CGU including the allocated goodwill is lower than their carrying amount, the corresponding impairment loss is recognized. The impairment loss is first deducted from the carrying amount of goodwill allocated to the assets or groups of assets, and then deducted from the carrying amount of the remaining assets or groups of assets pro rata excluding goodwill.
Once the asset impairment loss mentioned above is recognized, it is not allowed to be reversed for the value recovered in the subsequent periods.
(19) Employee benefits
Employee benefits mainly include wages or salaries, bonuses, allowances and subsidies, staff
-38-CSG HOLDING CO., LTD. Semi-Annual Report 2010
welfare, social security contributions, housing funds, labor union funds, employee education funds and other expenditures incurred in exchange for service rendered by employees.
If the Group commits to terminate the employment with an employee before the expiry of the labor contract or provide compensation as a result of an offer made in order to encourage voluntary redundancy, with a formal plan for the termination or has put forward a proposal for voluntary redundancy and is without realistic possibility of withdrawal, the Group shall recognize a liability and a expenses for termination benefit.
Except for the termination benefits, employee benefits except for the severance pay are recognized as a liability in the accounting period in which an employee has rendered service and costs of assets or expenses to whichever the employee service is attributable.
(20) Profit distribution
Cash dividends distribution is recognized as a liability in the period in which the dividends are approved by the shareholders’ meeting.
(21) Share Based Payment
(a) Type of share based payment
Share-based payment is a transaction in which the entity received services from employee or other parties in exchange of equity instruments of the entity, or settlement based on the price of the entity’s equity instruments. Share-based payment plan is be classified as either equity-settled share-based payments or cash-settled share-based payments.
The Group’s restricted A share incentive scheme is equity-settled share-based payment to receive employee service, and measured at fair value of the equity instruments granted on grante date. The shares granted are vest after completing service in the vesting period and achieving specified performance. The Group recognised the services received in current period as cost or expense and credit the capital surplus correspondingly, based on the best estimate of the number of equity instruments expected to vest and the fair value of equity instruments at grant date.
If subsequent information indicates that the number of equity instruments expected to vest differs from previous estimate, the Group shall revise the estimate accordingly and adjust the number of shares to actual exercised.
The Group has no cash settled share-based payments in the report period.
(b) Method for determination of equity instrument fair value
The fair value of the restricted A share is determined on the market price of the Group’s A share on the grant date after deducting the considerations paid by the employees.
(c) The basis of determining the number of equity instruments expected to be vest
On each balance sheet date during the vesting period, the Group revise its estimates of the number -39-CSG HOLDING CO., LTD. Semi-Annual Report 2010
of equity instruments that are expected to vest based on the latest employee turnover rate and other information.
On the vesting date, the actual equity instrument vested is the same with the expected number.
(d) The accounting treatment for subscription, repurchase and cancellation of granted shares.
The Group recognises share capital and capital surplus on grant date of restricted shares; The Group recognises treasury shares and reverse capital surplus on the date when it shall repurchase the shares. The Group cancels the share capital and treasury shares on cancellation date.
(22) Provision
Provisions for restructuring, product warranties and onerous contracts are recognized when the Group has a present obligation, and 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. Provisions are not recognized for future operating losses.
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 recognised as interest expense.
On each balance sheet date, balances of provisions are reviewed and adjusted where necessary, to reflect the current best estimate.
(23) Revenue recognition
The amount of revenue is determined in accordance with the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Group’s activities. Revenue is shown net of value-added tax, rebates, discounts and returns.
Revenue is recognized when the economic benefits associated with the transaction will flow to the Group, the relevant revenue can be reliably measured and specific revenue recognition criteria have been met for each of the Group’s activities as described below:
(a) Sales of goods
Revenue from sales of goods is recognized when the goods are delivered, significant risks and rewards of ownership of the goods are transferred to the buyers, and the Group retains neither continuing managerial involvement to the degree usually associated with the ownership nor effective control over the goods sold.
(b) Rendering of services
Service income is recognised under percentage of completion method. The -40-CSG HOLDING CO., LTD. Semi-Annual Report 2010
percentage-of-completion is assessed on the basis of the costs incurred as a percentage of total estimated costs.
(c) Interest income
Interest income is recognised on a time-proportion basis using the effective interest method.
(24) Government grants
Government grants are the monetary asset the Group receives from the government for free, including tax refund, government subsidies, etc.
Grants from the government are recognized when there is a reasonable assurance that the grants will be received and the Group will comply with all attached conditions. Government grants are measured at the amounts received or receivable. The non-monetary government grant are measured at fair value, if the fair value can not be reliably obtained, it is measured at nominal amount.
Government grants relating to assets are recognized as deferred income and are credited to the income statement on a straight-line basis over the expected lives of the related assets. The government grants measured at nominal amount is credited to the income statement directly.
Government grants relating to income, which is used to compensate the expenses/costs incurred in future, are recognized as deferred income and then credited to the income statement over the period necessary to match them with the expenses that they are intended to compensate. Government grants relating to income, which is used to compensate the expenses/costs incurred in the past, are credited to the income statement directly.
(25) Deferred tax asset and deferred tax liability
Deferred tax assets and deferred tax liabilities are calculated and recognized based on the differences arising between the tax base of assets and liabilities and their carrying amount (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 law. 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, joint ventures and associates, except where the Group is able to control the timing of the reversal of the temporary difference, and it is probable that the temporary difference will not -41-CSG HOLDING CO., LTD. Semi-Annual Report 2010
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.
Deferred tax assets and liabilities are offset and presented on net basis when:
?The deferred taxes are relate to the same taxable entity with same taxation authority, and;
?That entity has a legally enforceable right to offset current tax assets against current tax liabilities.
(26) Leases
A finance lease is a lease that transfers substantially all the risks and rewards incidental to ownership of an asset. An operating lease is a lease other than a finance lease. The Group has no finance lease in the report period.
Operating lease
Lease payments under an operating lease are recognised on a straight-line basis over the period of the lease.
(27) Segment reporting
The Group identifies operating segments based on the internal organization structure, management requirements and the 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 revenues and incur expenses from ordinary activities; (2) whose operating results are regularly reviewed by the Group’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 a single operating segment.
(28) Critical accounting assumptions
The Group continually evaluates the critical accounting estimates and key judgments applied based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The critical accounting estimates and key assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are outlined below:
(a) Income taxes
The Group is subject to income taxes in numerous jurisdictions. There are many transactions and -42-CSG HOLDING CO., LTD. Semi-Annual Report 2010
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 taxes in each of these jurisdictions. The Group recognizes income taxes in each jurisdiction based on estimates. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.
The Group also estimated the recoverability of deferred tax assets, and only recognise to the extent that it can be recovered. The Group recognised deferred tax assets of RMB 69,744,000 as of 30 June 2010, based on the forecast of the respective taxable entities’ taxable profits in next three years. If the estimated future taxable profits are different from Group’s estimation, the differences will also have an impact on the recoverability of deferred tax assets and the income tax expenses in the period when they are realised or expire.
(b) Contingent consideration and indemnification assets
During the year 2009, the Group acquired 75% interests in Heyuan Yuanchang Mining Company Limited (the company name has changed to “Heyuan CSG Mining Co Ltd“ (Heyuan CSG”) after completion of acquisition) from Heyuan City Yuanchang Construction Company limited(“Yuanchang Construction” thereafter).According to the relevant share transfer agreement, Yuanchang Construction will completion the legal produces to extend the period of the exploration permit and increase the mining quota. After completion of above procedures, the Group will pay additional consideration of RMB 14,280,000 to Yuanchang Construction. If Yuanchang Construction cannot complete above procedures, it shall compensate the Group the loss. If the loss can not be reliably measured, the compensation shall be 30% of total consideration which is RMB 34,560,000. Until the issuance of these financial statements, the above procedures have not yet completed. The Group considered, after obtaining a legal advice, that it cannot estimate whether the above procedures can probably be completed, and accordingly cannot reliably measure the contingent consideration or indemnification asset. As a result, the contingent consideration and the indemnification asset were not recognized in these financial statements.
-43-CSG HOLDING CO., LTD. Semi-Annual Report 2010
3 Taxation
(1) The types and rates of taxes applicable to the Group during the current year are set out below:
Type
Taxable basis
Tax rate
Enterprise income tax
Taxable income
15% to 25%
Value added tax (“VAT”)
Taxable value added amount (Tax payable is calculated using the taxable sales amount multiplied by the effective tax rate less current period’s deductible VAT input )
17%
Business tax
Taxable turnover
5%
Urban construction tax
Total VAT, Business tax and GST
5% to 7%
Educational surtax and surcharge
Total VAT, Business tax and GST
3%
Resource Tax
Quantities of Silica sold
3 Yuan per ton
(2) As at 31 December 2009, the tax privilege treatment enjoyed by the subsidiaries of the Company were described as below:
The Company and certain subsidiaries are established in Shenzhen special economic zone, so the original enterprise income tax rate is 15%. Accordance with the relevant provision of the Corporate Income Tax (“CIT”) law, the CIT rate of the company and the subsidiary will transit to 25% in five years from 2008 to 2012. The CIT rate for current year was 22%. Chengdu CSG Co. Ltd. was qualified as foreign investment enterprise in encourage category and established in western areas, and entitled to the western area development tax incentive measures, which was affirmed by CGSH (2008) 154 from tax bureau. Other subsidiaries in PRC are subject to 25% CIT rate. Overseas subsidiaries are subject to the tax rates levied by the tax jurisdictions where they operate.
As approved by Tianjin Wuqing District State Tax Bureau (JSWQJM (2008) No. 317), Tianjin Energy Conservation Glass Co., Ltd. enjoys the exemption from CIT for two years starting from the first profit marking year after offset the accumulated losses, and half rate for next three years. This year was the third profit making year and the applicable corporate income tax rate for current year was 12.5%.
With an approval from Chengdu Shuangliu County State Tax Bureau (SGSJM (2007) No. 73) , Chengdu CSG Glass Co., Ltd. enjoys the exemption from CIT for two years starting from the first profit marking year after offset the accumulated losses, and half rate for next three years. The first profit making year was 2006. The applicable corporate income tax for current year was 7.5%.
With an approval from Guangdong Dongguan State Tax Bureau, Dongguan CSG Glass Co., Ltd. enjoys the exemption from CIT for two years starting from the first profit marking year after offset the accumulated losses, and half rate for next three years. The first profit making year was 2007 and the applicable enterprise income tax rate for current year was 12.5%.
With an approval from Guangdong Dongguan State Tax Bureau, Dongguan CSG Architectural Co., Ltd. enjoys the exemption from CIT for two years starting from the first profit marking year after offset the accumulated losses, and half rate for next three years. The first profit making year
-44-CSG HOLDING CO., LTD. Semi-Annual Report 2010
-45-
was 2007 and the applicable enterprise income tax rate for current year was 12.5%.
With an approval from Guangdong Dongguan State Tax Bureau, Dongguang CSG PV-tech Co., Ltd. enjoys the exemption from CIT for two years and half rate for next three years from 2008. The income tax rate for current year was 12.5%.
With an approval from Jiangsu Suzhou State Tax Bureau, Wujiang CSG North-east Architectural Glass Co., Ltd. enjoys the exemption from CIT for two years and half rate for next three years from 2008. The income tax rate for current year was 12.5%.
With an approval from Hubei Yichang State Tax Bureau, YIchang CSG Silicon Co., Ltd. enjoys the exemption from CIT for two years and half rate for next three years from 2008. The income tax rate for current year was 12.5%.
Tianjin CSG Architectural Glass Co., Ltd. was identified as high-tech enterprise in 2009, and got the High-tech Certificate valid for three years. The income tax rate for current year was 15%.
Shenzhen CSG Float Glass Co., Ltd. was identified as high-tech enterprise in 2009, and got the High-tech Certificate valid for three years. The income tax rate for current year was 15%.
Shenzhen CSG Display Technology Co., Ltd. was identified as high-tech enterprise in 2009, and got the High-tech Certificate valid for three years. The income tax rate for current year was 15%.CSG HOLDING CO., LTD. Semi-Annual Report 2010
4 Business Combination and Consolidation
(1) Subsidiaries
(a) Subsidiaries established by the Group
Type of Subsidiary
Place of registration
Type of Business
Registered
capital
Nature of business and principal activities
Type of Company
Legal Representative
Organization code
(in RMB ten thousand Yuan)
Shenzhen CSG Float Glass Co., Ltd.
Direct
Shenzhen, the PRC
Manufacturing
70,574
Floating Glass manufacturing
Limited Company
Zhang Fan
618806866
Guangzhou CSG Glass Co., Ltd. (Note (b))
Direct
Guangzhou, the PRC
Manufacturing
26,000
Floating Glass manufacturing
Joint Venture
Zhang Fan
751970446
Chengdu CSG Glass Co., Ltd.
Direct
Chengdu, the PRC
Manufacturing
24,666
Floating Glass manufacturing and Processed glass
Joint Venture
Zhang Fan
75878841-X
Tianjin CSG Architectural Glass Co., Ltd.
Direct
Tianjin, the PRC
Manufacturing
17,800
Processed glass
Joint Venture
Wu Guobin
73847290-1
Tianjin Energy Conservation Glass Co., Ltd.
Direct
Tianjin, the PRC
Manufacturing
12,800
Production of specialized glass
Joint Venture
Wu Guobin
79253038-3
Shenzhen CSG Display Technology Co., Ltd.
Direct
Shenzhen, the PRC
Manufacturing
USD900
Production of monitor display glass
Joint Venture
Ke Hanqi
723033463
Shenzhen CSG Wellight Conductive Coating Co., Ltd.
Direct
Shenzhen, the PRC
Manufacturing
USD1,780
Production of colorful filter glass
Joint Venture
Ke Hanqi
61880717-2
Dongguan CSG Architectural Glass Co., Ltd.
Direct
Dongguan, the PRC
Manufacturing
24,000
Processed glass
Joint Venture
Wu Guobin
78117633-1
Dongguan CSG Solar Glass Co., Ltd.
Direct
Dongguan, the PRC
Manufacturing
20,000
Production of solar glass
Joint Venture
Li Weinan
78117638-2
Yichang CSG Silicon Co., Ltd.
Direct
Yichang, the PRC
Manufacturing
65,248
Production of silicon related materials
Joint Venture
Ke Hanqi
790576740
Wujiang CSG North-east Architectural Glass Co., Ltd.
Direct
Wujiang, the PRC
Manufacturing
32,000
Processed glass
Joint Venture
Wu Guobin
79331343-6
Dongguan CSG PV-tech Co., Ltd.
Direct
Shenzhen, the PRC
Manufacturing
20,000
Production of solar battery and applications
Joint Venture
Ke Hanqi
784875904
Hebei CSG Glass Co., Ltd.
Direct
Yongqing, the PRC
Manufacturing
USD4,806
Production of specialized glass
Joint Venture
Zhang Fan
66907553-0
Wujiang CSG Glass Co., Ltd.
Direct
Wujiang, the PRC
Manufacturing
USD4,000
Production of specialized glass
Joint Venture
Zhang Fan
69451657-X
Dongguan CSG Ceramics Technology Co., Ltd.
Direct
Dongguan, the PRC
Manufacturing
5,000
Production of ceramics products
Limited Company
Ke Hanqi
66650604-0
China Southern Glass (Hong Kong) Limited
Direct
Hong Kong
Trade
HKD8,644
Trading and investment holding
Limited Company
Zeng Nan
824279
-46-CSG HOLDING CO., LTD. Semi-Annual Report 2010
Actual Capital amounts of the report period
Other Item amounts composing actual investment
Stakes
(%)
Vote right
(%)
The description if the stakes are not equal with the vote right
Consolidate
Minority interest
Losses shared by minority shareholders
The loss recognized in equity contributed to equity owners of the Company at the excess of the ministry interests’ share of loss in subsidiaries for the year over minority interests in equity brought forward
(in RMB ten thousand Yuan)
(in RMB ten thousand Yuan)
(in RMB ten thousand Yuan)
(in RMB ten thousand Yuan)
(in RMB ten thousand Yuan)
Shenzhen CSG Float Glass Co., Ltd.
70,574
7,500
100
100
N.A
YES
-
-
-
Guangzhou CSG Glass Co., Ltd. (Note (b))
19,500
-
100
100
N.A
YES
-
-
-
Chengdu CSG Glass Co., Ltd.
9,951
-
75
75
N.A
YES
14,051
-
Tianjin CSG Architectural Glass Co., Ltd.
13,350
-
100
100
N.A
YES
-
-
-
Tianjin Energy Conservation Glass Co., Ltd.
9,600
18,000
100
100
N.A
YES
-
-
-
Shenzhen CSG Display Technology Co., Ltd.
USD 675
5,074
75
75
N.A
YES
4,250
-
-
Shenzhen CSG Wellight Conductive Coating Co., Ltd.
USD 896
5,570
70
75
(i)
YES
4,836
311
-
Dongguan CSG Architectural Glass Co., Ltd.
18,000
13,661
100
100
N.A
YES
-
-
-
Dongguan CSG Solar Glass Co., Ltd.
12,875
-
100
100
N.A
YES
-
-
-
Yichang CSG Silicon Co., Ltd. (i)
45,000
-
93.97
83.3
(i)
YES
3,897
-
-
Wujiang CSG North-east Architectural Glass Co., Ltd.
24,000
5,600
100
100
N.A
YES
-
-
-
Dongguan CSG PV-tech Co., Ltd.
10,500
-
100
100
N.A
YES
Wujiang CSG Glass Co., Ltd.
USD 450
-
100
100
N.A
YES
Hebei CSG Glass Co., Ltd.
USD 3,605
-
100
100
N.A
YES
Dongguan CSG Ceramics Technology Co., Ltd.
5,000
-
100
100
N.A
YES
China Southern Glass (Hong Kong) Limited
HKD 8,644
-
100
100
N.A
YES
(i) The proportion of voting power is determined on the proportion of the Company’s directors to the total directors of the subsidiary. -47-CSG HOLDING CO., LTD. Semi-Annual Report 2010
-48-
(b) The subsidiary acquired through business combination not under common control
Type of Subsidiary
Place of registration
Type of Business
Registered
capital
Nature of business and principal activities
Type of Company
Legal Representative
Organization code
(in RMB ten thousand Yuan)
Heyuan CSG
Indirect
Heyuan, the PRC
Manufacturing
1,200
Production of Silica
Limited Company
Zhang Fan
66989568-6
Actual Capital amounts of the report period
Other Item amounts composing actual investment
Stakes
(%)
Vote right
(%)
Consolidate
Minority interest
Losses shared by minority interest
The loss recognized in equity contributed to equity owners of the Company at the excess of the ministry interests’ share of loss in subsidiaries for the year over minority interests in equity brought forward
(in RMB ten thousand Yuan)
(in RMB ten thousand Yuan)
(in RMB ten thousand Yuan)
(in RMB ten thousand Yuan)
(in RMB ten thousand Yuan)
Heyuan CSG
2,778
-
75
75
YES
366
22
-CSG HOLDING CO., LTD. Semi-Annual Report 2010
(2) The new subsidiary included in the scope of the consolidation in the report period.
30 June 2010
Net Loss
Net Asset
Wujiang CSG Glass Co., Ltd.
39,418,964
1,549,336
As approved by Certificate of Approval (SWZSFZ (2009) No. 82279), Wujiang CSG Glass Co., Ltd. established on 28 September 2009. The company was in preparation ended 30 June 2010.
(3) Exchange rate for the translation of the major foreign operations’ financial statements
Asset and Liability Items
30 June 2010
31 December 2009
Revenue, cost, expense and cash flow items
China Southern Glass (Hong Kong) Limited
1HKD=0.8724RMB
1HKD=0.8805RMB
The spot exchange rate on transaction date
China Southern Glass (Australia) Pty Ltd.
1AUD=5.9209RMB
1AUD=6.1294RMB
The spot exchange rate on transaction date
5 Notes to the consolidated financial statements
(1) Cash at bank and on hand
30 June 2010
31 December 2009
Original
currency
Exchange
rate
RMB equivalent
Original currency
Exchange
rate
RMB
equivalent
Cash on hand-
RMB
41,404
21,058
HKD
7,589
0.8724
6,621
8,521
0.8805
7,503
USD
3
6.7909
20
3
6.8282
20
EUR
7
8.2710
56
-
9.7971
-
AUD
200
5.9209
1,184
200
6.1294
1,226
JPY
-
0.0767
-
20,244
0.0738
1,494
49,285
31,301
Cash at bank
RMB
333,174,570
598,127,156
HKD
6,857,529
0.8724
5,982,508
4,822,760
0.8805
4,246,440
USD
7,047,637
6.7909
47,859,798
2,904,322
6.8282
19,831,291
EUR
85
8.2710
701
4,201
9.7971
41,158
AUD
2,028,380
5.9209
12,009,834
1,929,160
6.1294
11,824,593
JPY
145,724
0.0767
11,177
99,959
0.0738
7,377
399,038,588
634,078,015
Other cash balances-
RMB
14,654,793
19,444,970
HKD
1,129
0.8724
985
1,129
0.8805
994
EUR
3
8.2710
25
3
9.7971
30
14,655,803
19,445,994
413,743,676
653,555,310
-49-CSG HOLDING CO., LTD. Semi-Annual Report 2010
(2) Notes receivable
30 June 2010
31 December 2009
Trade acceptance notes
31,491,169
18,808,896
Bank acceptance notes
192,855,242
228,274,491
224,346,411
247,083,387
(3) Accounts receivable
30 June 2010
31 December 2009
Accounts receivable
328,635,631
293,672,037
Less: provision for bad debts
(6,781,912)
(5,759,182)
321,853,719
287,912,855
(a) The aging of accounts receivables are analysed below:
30 June 2010
31 December 2009
Within 1 year
325,857,130
288,895,718
1 to 2 years
1,752,379
3,568,788
2 to 3 years
928,877
1,000,286
3 to 4 years
84,347
84,347
4 to 5 years
-
7,826
Over 5 years
12,898
115,072
328,635,631
293,672,037
(b) Accounts receivable are analyzed by categories as follows:
30 June 2010
31 December 2009
Amount
% of total balance
Provision for bad debts
Provision coverage
Amount
% of total balance
Provision for bad debts
Provision coverage
Individually significant
-
-
-
-
-
-
-
-
Others
328,635,631
100%
(6,781,912)
2%
293,672,037
100%
(5,759,182)
2%
328,635,631
100%
(6,781,912)
2%
293,672,037
100%
(5,759,182)
2%
(c) As at 30 June 2010, no provisions for impairment or bad debts are made individually.
(d) Accounts receivables of RMB353,354 were written off this first half year, all of which are small accounts receivable and none of them was created from related-party transactions. The reasons for written off include disputes with customers and unable to contact with creditors and etc.
(e) The Group did not have any balances due by parties having 5% or above voting rights in the Company.
(f) As at 30 June 2010, the Group’s five largest accounts receivable balances are set out below:
-50-CSG HOLDING CO., LTD. Semi-Annual Report 2010
Relationship
Amount
Aging
% of total balance
Client A
Independent third party
35,111,811
With 1 year
10%
Client B
Independent third party
27,960,285
With 1 year
9%
Client C
Independent third party
26,286,903
With 1 year
8%
Client D
Independent third party
18,136,698
With 1 year
6%
Client E
Independent third party
12,512,298
With 1 year
4%
120,007,995
37%
(g) There is no amount due from related parties of the Group.
(h) The following balances were dominated in foreign currency.
30 June 2010
31 December 2009
Original currency
Exchange rate
RMB equivalent
Original currency
Exchange rate
RMB equivalent
HKD
14,436,890
0.8724
12,594,743
9,023,773
0.8805
7,945,432
USD
9,803,789
6.7909
66,576,549
10,688,678
6.8282
72,984,432
EUR
990,294
8.2710
8,190,719
613,557
9.7971
6,011,077
AUD
62,842
5.9209
372,082
93,980
6.1294
576,041
JPY
34,209,140
0.0767
2,623,841
30,494,620
0.0738
2,250,503
90,357,934
89,767,485
(4) Other receivables
30 June 2010
31 December 2009
Deposits with contractors
15,149,600
6,222,948
Payments on behalf of other parties
3,398,476
3,391,096
Staff advances
4,867,145
4,075,089
Receivable of export tax rebates
13,977,710
2,733,550
Others
4,205,333
3,188,209
41,598,264
19,610,892
Less: Provision for bad debts
(4,418,465)
(4,233,740)
37,179,799
15,377,152
(a) The aging of other receivables are analysed below:
30 June 2010
31 December 2009
With 1 year
34,563,087
12,366,348
1 to 2 years
2,932,224
3,086,485
2 to 3 years
3,088
49,001
3 to 4 years
1,530,835
1,498,877
4 to 5 years
1,116,397
1,435,248
Over 5 years
1,452,633
1,174,933
41,598,264
19,610,892 -51-CSG HOLDING CO., LTD. Semi-Annual Report 2010
(b) Other receivables are analyzed by categories as follows:
30 June 2010
31 December 2009
Amount
% of total balance
Provision for bad debts
Provision coverage
Amount
% of total balance
Provision for bad debts
Provision coverage
Individually significant
-
-
-
-
-
-
-
-
Others
41,598,264
100%
(4,418,465)
11%
19,610,892
100%
(4,233,740)
22%
41,598,264
100%
(4,418,465)
11%
19,610,892
100%
(4,233,740)
22%
(c) As at 30 June 2010, the provisions for other receivables that are not individually significant but are subject to separate impairment assessment are analysed below:
Amount
Provisions
% of total balance
Reasons
IANUAS.P.A
1,490,277
(1,490,277)
100%
Concluded as not be recovered
Guangdong Shilian Company Limited.
810,344
(810,344)
100%
Concluded as not be recovered
Gas pipeline expense of CSG staff quarter
710,000
(710,000)
100%
Can not reach the debtors
3,010,621
(3,010,621)
(d) No other receivables were written off in 2009.
(e) The Group did not have any balances which were due by parties having 5% or above voting rights in the Company.
(f) As at 30 June 2010, the largest five balances are set out below:
Relationship
Amount
Aging
% of total balance
Receivable of export tax rebates
Independent third party
13,977,710
With 1 year
34%
Shuangliu Construction Bureau
Independent third party
4,589,765
1 to 2 years
11%
IANUAS.P.A
Independent third party
1,490,277
3 to 4 years
4%
Guangdong Shilian Company limited
Independent third party
810,344
Over 5 years
2%
Yongqing State Development and Reform Commission
Independent third party
490,000
With 1 year
1%
21,358,096
51%
(g) There is no amount due from related parties of the Group.
(h) The balances of other receivables are mainly denominated in RMB.
-52-CSG HOLDING CO., LTD. Semi-Annual Report 2010
(5) Advance to suppliers
(a) The aging of advance to suppliers are within one year.
(b) As at 30 June 2010, the five largest advances to supplies are set out below:
Relationship
Amount
% of total balance
Payment
time
Reason for unsettlement
Supplier A
Independent third party
8,379,953
10%
2010
Prepayment for material
Supplier B
Independent third party
6,506,573
8%
2010
Prepayment for fuels
Supplier C
Independent third party
5,973,968
7%
2010
Prepayment for freight
Supplier D
Independent third party
5,600,712
7%
2010
Prepayment for land
Supplier E
Independent third party
5,317,759
6%
2010
Prepayment for materials
31,778,965
38%
(c) The Group did not have any balances which were due to parties having 5% or above shareholdings in the Company.
(d) There is no advance to related companies of the Group.
(e) The main balances of advance to suppliers are dominated in RMB.
(6) Inventories
(a) The inventory is categorised as below:
30 June 2010
31 December 2009
Book Balance
Provision for declines in the value of inventories
Net book value
Book Balance
Provision for declines in the value of inventories
Net book value
Raw materials
237,870,614
-
237,870,614
147,216,695
-
147,216,695
Work in progress
7,783,039
-
7,783,039
15,296,953
-
15,296,953
Finished goods
175,136,488
(837,722)
174,298,766
169,919,822
(1,474,305)
168,445,517
Package materials
40,880,406
(392,709)
40,487,697
35,086,365
(392,709)
34,693,656
Properties held for sale
12,740,529
(10,183,130)
2,557,399
25,540,139
(19,896,714)
5,643,425
474,411,076
(11,413,561)
462,997,515
393,059,974
(21,763,728)
371,296,246
(b) The provisions for declines in the value of inventories is analysed below:
Less
31 December 2009
Additions
Reverse
Written off
30 June 2010
Finished goods
1,474,305
-
(464,205)
(172,378)
837,722
Package materials
392,709
-
-
-
392,709
Properties held for sale
19,896,714
-
-
(9,713,584)
10,183,130
21,763,728
-
(464,205)
(9,885,962)
11,413,561
-53-CSG HOLDING CO., LTD. Semi-Annual Report 2010
(c) The provisions for declines in the value of inventories is analysed below:
basis to make provisions
Finished goods
The carrying amount of inventories net of the net realizable value
Properties held for sale
The carrying amount of inventories net of the net realizable value
(7) Available-for-sale financial assets
30 June 2010
31 December 2009
Available-for-sale equity instruments
-
7,528,589
(8) Long-term equity investments
30 June 2010
31 December 2009
Other long-term equity investments (a)
27,644,997
27,644,997
Less: Provision for impairment of long-term equity investments (b)
(444,997)
(444,997)
27,200,000
27,200,000
The long-term equity investments of the Group are not subject to restriction on conversion into cash or restriction on remittance of investment income.
(a) Other long-term equity investments
Original Cost
31 December 2009
Movement in the year
30 June 2010
Cash dividends declared this year
Guangdong Golden Glass Technology Co., Ltd.
23,000,000
23,000,000
-
23,000,000
-
Beijing Wan Tong Industrial Co., Ltd.
4,200,000
4,200,000
-
4,200,000
-
Hainan Pearl River Construction Co., Ltd.
395,000
395,000
-
395,000
-
Hainan Heng Tong Industrial Co., Ltd.
49,997
49,997
-
49,997
-
27,644,997
27,644,997
-
27,644,997
-
Name of investees
Accounting Method
Shareholdingpercentage
Voting rights percentage
Reasons for the difference between shareholding and voting rights percentage
Guangdong Golden Glass Technology Co., Ltd.
Cost method
11.11%
11.11%
Not applicable
Beijing Wan Tong Industrial Co., Ltd.
Cost method
0.32%
0.32%
Not applicable
(b) Provision for impairment of long-term equity investments
-54-CSG HOLDING CO., LTD. Semi-Annual Report 2010
31 December 2009
Additions
Deduction
30 June 2010
Hainan Pearl River Construction Co., Ltd.
395,000
-
-
395,000
Hainan Heng Tong Industrial Co., Ltd.
49,997
-
-
49,997
444,997
-
-
444,997
(9) Fixed asset
31 December 2009
Additions
Deductions
30 June 2010
Total cost
9,869,028,932
133,629,124
(12,330,566)
9,990,327,490
Buildings
2,228,668,763
33,361,862
(1,866,054)
2,260,164,571
Machinery and equipment
7,434,311,116
95,369,128
(8,878,036)
7,520,802,208
Motor vehicles and others
206,049,053
4,898,134
(1,586,476)
209,360,711
Accumulated depreciation
1,660,472,424
263,621,244
(4,298,026)
1,919,795,642
Buildings
218,276,570
35,425,361
(214,940)
253,486,991
Machinery and equipment
1,338,478,070
220,072,926
(3,151,032)
1,555,399,964
Motor vehicles and others
103,717,784
8,122,957
(932,054)
110,908,687
Total book value
8,208,556,508
8,070,531,848
Buildings
2,010,392,193
2,006,677,580
Machinery and equipment
6,095,833,046
5,965,402,244
Motor vehicles and others
102,331,269
98,452,024
Total provision for impairment loss
153,735,607
-
-
153,735,607
Buildings
8,124,640
-
-
8,124,640
Machinery and equipment
145,574,854
-
-
145,574,854
Motor vehicles and others
36,113
-
-
36,113
Net book value
8,054,820,901
7,916,796,241
Buildings
2,002,267,553
1,998,552,940
Machinery and equipment
5,950,258,192
5,819,827,390
Motor vehicles and others
102,295,156
98,415,911
The depreciation charged in the first half year 2010 was RMB 263,621,244 (the first half year 2009, RMB 197,160,079). The amount of fixed assets transferred from constructions in progress was RMB 94,318,843 (the first half year 2009, RMB 1,341,077,647).
As at 30 June 2010, building with net book value of RMB 8,230,410 (original cost at RMB 10,084,311) (31 December 2009: net book value of RMB 8,632,415, original cost at RMB 10,084,311) was pledged as security for long-term borrowings of RMB 1,538,230 (Note 5(26)) and current partition of long-term borrowings of RMB 5,033,930 (31 December 2009: long-term borrowings of RMB 3,927,069 and long-term borrowings within one year of RMB 5,080,612).
In the first half year 2010, the depreciation charged to cost of sales, selling expenses and administrative expenses were RMB 248,332,028, RMB 1,149,807 and RMB 14,139,409, respectively (In the first half year 2009: RMB182,460,818, RMB750,856 and RMB13,948,405).
As at 30 June 2010, Buildings Ownership Certificates for certain buildings of the Group with carrying amounts of approximately RMB971,529,102 (original cost of RMB1,089,073,208) (31 -55-CSG HOLDING CO., LTD. Semi-Annual Report 2010
-56-
December 2009: carrying amount of RMB1,081,491,599, original cost of RMB1,186,863,762) had not yet been obtained by the Group. Included were certain buildings with carrying amounts of RMB 624,073,480 (original cost at RMB660,271,667) because the land ownership certificates of the lands on which these buildings located had not been obtained (31 December 2009: carrying amount of RMB801,617,221, original cost of RMB 864,760,539). The Company’s directors are of the view that there is no legal restriction for the Group to apply for and obtain the Buildings Ownership Certificates and there will not be any significant adverse impact on the operations of the Group.
Reason
Estimated date of obtaining the ownership certificate
Building
Have submitted the required documents and are in the process of application, or the related land use right certificate pending.
2010 to 2012
(10) Construction in progress
30 June 2010
31 December 2009
Book Value
Impairment Provision
Net Book Value
Book Value
Impairment Provision
Net Book Value
Shenzhen Float Second Line Transformation project
181,005,363
-
181,005,363
123,146,669
-
123,146,669
Tianjin Energy Glass project
129,632,915
-
129,632,915
121,098,664
-
121,098,664
Chengdu Coating Line
239,913,517
-
239,913,517
107,807,773
-
107,807,773
Shenzhen Float TCO project
86,233,084
-
86,233,084
72,062,161
-
72,062,161
Yichang 60MW & 40MW Silicon products project
190,246,595
-
190,246,595
57,704,714
-
57,704,714
Dongguan Solar Glass PV-tech Battery 25MW & 50MW Expansion project
51,179,424
-
51,179,424
50,030,253
-
50,030,253
Wujiang Energy Glass Expansion project 15,195
,243
-
15,195,243
477,210
-
477,210
Tianjin Coating Line B Transformation project
14,301,735
-
14,301,735
-
-
-
Jiangyou Placer project (Phase I)
33,408,855
-
33,408,855
13,430,282
-
13,430,282
Heyuan Placer project
24,316,694
-
24,316,694
13,060,064
-
13,060,064
Dongguan Coating Line Transformation project
17,968,221
- 17,968
,221
-
-
-
Other projects
99,812,185
(2,022,902)
97,789,283
75,188,886
(2,022,902)
73,165,984
1,083
,213,831
(2,022,902)
1,081,190,929
634,006,676
(2,022,902)
631,983,774CSG HOLDING CO., LTD. Semi-Annual Report 2010
-57-
(a) Movement of Significant Project
Name of projects
Budget
31 December 2009
Current year additions
Transfer to fixed assets during the current year
30 June
2010
Proportion between Engineering input and budget
Amount of accumulated
interest capitalized
Amount of
interest capitalized
in 2009
Capitalization rate for 2009
Source of fund
Shenzhen Float Second Line Transformation project (i)
203,220,000
123,146,669
57,858,694
-
181,005,363
31%
78,814
78,814
2.00%
Internal fund and loan
Tianjin Energy Glass project
412,142,361
121,098,664
8,534,251
-
129,632,915
89%
1,607,931
80,708
1.37%
Internal fund and loan
Chengdu Coating Line
257,726,269
106,329,070
133,584,447
-
239,913,517
93%
8,540,761
4,130,059
4.29%
Internal fund and loan
Shenzhen Float TCO project
93,210,500
72,062,161
20,292,550
(6,121,627)
86,233,084
99%
1,326,970
158,750
2.00%
Internal fund and loan
Yichang 60MW & 40MW Silicon products project
323,146,737
57,704,714
132,541,881
-
190,246,595
59%
2,572,909
2,153,001
4.07%
Internal fund and loan
Dongguan Solar Glass PV-tech Battery 25MW & 50MW Expansion project
156,547,116
50,030,253
44,559,331
(43,410,160)
51,179,424
85%
1,968,599
507,750
5.32%
Internal fund and loan
Wujiang Energy Glass Expansion project
451,742,900
477,210
14,718,033
-
15,195,243
3%
79,932
79,932
2.46%
Internal fund and loan
Dongguan Coating Line Transformation project
52,555,149
17,755,954
212,268
-
17,968,221
34%
-
-
-
Internal fund and loan
Tianjin Coating Line B Transformation project
20,000,000
103,259
14,198,476
-
14,301,735
72%
23,593
23,593
1.20%
Internal fund and loan
Jiangyou Placer project
91,615,777
13,430,282
19,978,573
-
33,408,855
36%
-
-
-
Internal fund
Heyuan Placer project
28,738,948
13,060,064
11,256,630
-
24,316,694
85%
-
-
-
Internal fund
575,198,300
457,735,134
(49,531,787)
983,401,646
16,199,509
7,212,607
(i) The accumulated investment of this project included the transfer of fixed assets to construction in progress. The proportion between engineering input and budget is determined by the proportion of actual capital expenditures to total budget expenditures.CSG HOLDING CO., LTD. Semi-Annual Report 2010
(b) Provision for impairment of Construction in Progress
Name
31 December 2009
Addition
Deduction
30 June 2010
Reason for provision
Yichang Silicon products project
2,022,902
-
-
2,022,902
Equipments not suitable or will not for use. Provision is determined by the difference between carrying amount and estimated net selling price.
(c) Progress analyze of significant Construction in progress
Progress
Note
Shenzhen Float Second Line Transformation project
60%
Physical progress of the construction work
Tiianjin Energy Glass project
98%
Physical progress of the construction work
Chengdu Coating Line
95%
Almost completed
Shenzhen Float TCO project
99%
Almost completed
Yichang 60MW Silicon products project
99%
Almost completed
Yichang 40MW Silicon products project
30%
Physical progress of the construction work
Dongguan Solar Glass PV-tech Battery 25MW Expansion project
100%
Has been transferred to fixed assets
Dongguan Solar Glass PV-tech Battery 50MW Expansion project
90%
Physical progress of the construction work
Wujiang Energy Glass Expansion project
3%
Physical progress of the construction work
(11) Intangible assets
31 December 2009
Additions
Decrease
30 June 2010
Total original cost
464,700,277
358,052
-
465,058,329
Land use rights
390,004,881
77,846
-
390,082,727
Patents
60,011,731
1,705
-
60,013,436
Exploitation rights
8,216,507
107,701
-
8,324,208
Others
6,467,158
170,800
-
6,637,958
Accumulated amortization
72,660,227
8,382,913
-
81,043,140
Land use rights
64,271,334
4,870,430
-
69,141,764
Patents
7,284,758
2,901,975
-
10,186,733
Exploitation rights
461,775
290,693
-
752,468
Others
642,360
319,815
-
962,175
Net book value
392,040,050
358,052
(8,382,913)
384,015,189
Land use rights
325,733,547
77,846
(4,870,430)
320,940,963
Patents
52,726,973
1,705
(2,901,975)
49,826,703
Exploitation rights
7,754,732
107,701
(290,693)
7,571,740
Others
5,824,798
170,800
(319,815)
5,675,783
-58-CSG HOLDING CO., LTD. Semi-Annual Report 2010
In the first half year 2010, the amortization amount is RMB8,382,913 (the first half year 2009：RMB5,674,574).
As at 30 June 2010, ownership certificates of land use right (“Land ownership Certificates”) for certain land use rights of the Group with carrying amounts of approximately RMB 50,552,711 (Original cost: RMB 54,445,094) had not yet been obtained by the Group (31 December 2009, net book value: RMB 62,866,841, original cost: RMB 69,952,500). The Company’s directors are of the view that there is no legal restriction for the Group to apply for and obtain the Land Ownership Certificates and there will not be any significant adverse impact on the operations of the Group. The management expected that the land use right certificates can be obtained in the period of 2010 to 2011.
Research expenditure is analyzed below:
Decrease
31 December 2009
Current year additions
Recognized as expense
Recognize as intangible asset
30 June 2010
Development expenditure
-
37,175,637
(28,983,314)
-
8,192,323
(12) Goodwill
31 December 2009
Addition
Deduction
30 June 2010
Goodwill
Tianjin CSG Architectural Glass Co., Ltd.
3,039,946
-
-
3,039,946
Heyuan CSG Mining Development Co., Ltd.
15,364,434
-
-
15,364,434
18,404,380
-
-
18,404,380
(13) Deferred income tax assets and liabilities
(a) Deferred income tax assets before offset
30 June 2010
31 December 2009
Deferred income tax assets
The temporary differences
Deferred income tax assets
The temporary differences
Provisions for impairment of assets
36,368,683
142,867,896
36,882,176
147,392,425
Start-up cost
714,264
5,753,491
1,152,644
7,053,775
Accrued expense
1,875,702
12,218,546
3,832,701
17,219,821
Tax loss
29,025,805
124,417,768
43,179,695
225,114,064
Provisions
319,415
2,129,433
779,681
3,118,726
Special payables
1,780,474
23,389,653
1,850,719
24,235,000
Accumulated depreciation
1,940,915
8,445,475
885,904
4,225,431
72,025,258
319,222,262
88,563,520
428,359,242
(b) Deferred income tax liabilities before offset
-59-CSG HOLDING CO., LTD. Semi-Annual Report 2010
30 June 2010
31 December 2009
Deferred income tax assets
The temporary differences
Deferred income tax assets
The temporary differences
Accumulated depreciations
3,380,448
16,497,241
1,956,728
8,000,577
Withholding income tax(i)
9,474,731
189,494,620
9,474,731
189,494,620
12,855,179
205,991,861
11,431,459
197,495,197
(i) In accordance with CIT, if the subsidiaries in China Mainland remit dividends to those subsidiaries overseas, the overseas subsidiaries should pay the certain income tax for their dividends.
(c) The temporary differences and tax loss not recognized as deferred income tax assets are analyzed below:
30 June 2010
31 December 2009
Temporary differences
810,344
810,344
Deductible tax loss (i)
118,671,115
135,497,545
119,481,459
136,307,889
(i) The deductible tax losses not recognized as deferred tax assets mainly represented the tax losses of the Company and subsidiaries in real estate sector. The management expected that it is not probable that taxable profit will be available in the future against these deductible tax losses, and accordingly, did not recognize the deferred tax assets.
(d) The tax losses for which deferred tax assets are not recognized will expire in the following years:
30 June 2010
31 December 2009
2010
19,015,964
54,947,944
2011
54,947,944
8,277,649
2012
7,827,118
51,772,875
2013
50,438,201
4,034,172
2014
4,034,172
16,464,905
2015
16,464,905
-
152,728,304
135,497,545
(e) The offsetting amount between deferred income tax assets and deferred income tax liabilities
30 June 2010
31 December 2009
Deferred income tax assets
2,280,753
1,098,146
Deferred income tax liabilities
2,280,753
1,098,146
Net deferred income tax assets and deferred income tax liabilities after offsetting:
30 June 2010
31 December 2009
Net deferred income tax assets
69,744,505
87,465,374
Net deferred income tax liabilities
10,574,426
10,333,313
-60-CSG HOLDING CO., LTD. Semi-Annual Report 2010
(14) Asset of impairment
Deductions
31 December 2009
Additions
Reverse
Written-off
30 June 2010
Provisions for bad debts
9,992,922
1,828,074
(267,265)
(353,354)
11,200,377
-accounts receivables
5,759,182
1,630,162
(254,078)
(353,354)
6,781,912
4,233,740
-other receivables
197,912
(13,187)
-
4,418,465
Provisions for impairment of inventories
21,763,728
-
(464,205)
(9,885,962)
11,413,561
Provisions for impairment of long-term investment
444,997
-
-
-
444,997
Provisions for impairment of fixed assets
153,735,607
-
-
-
153,7
35,607
Provisions for constructions in progress
2,022,902
-
-
-
2,022,902
187,960,156
1,828,074
(731,470)
(10,239,316)
178,8
17,444
(15) Short-term borrowings
(a) Categorization of short-term borrowings
30 June 2010
31 December 2009
Guaranteed
213,647,888
168,087,120
Unsecured
610,313,064
713,065,567
Short-term finance bonds
1,600,000,000
1,600,000,000
2,423,960,952
2,481,152,687
As at 30 June 2010, loans of certain subsidiaries of the Company amounting to RMB213,647,888 (31 December 2009: RMB168,087,120) were guaranteed by the Company, of which, the minority shareholders provided a back to back guarantee to the Company amounting to RMB18,900,655 (31 December 2009: RMB16,450,420).
As registered with National Association of Financial Market Institutional Investors with document ZSXZ (2008) No, CP59, the Company was authorized to issue short term finance bond with a nominal amount of RMB1,600,000,000, with the maturity of 21 August 2010. The Company issued short term finance bonds with a nominal amount of RMB600,000,000 on 28 August 2009, with an annual interest rate of 3.1% and maturity of 27 August 2010 and RMB1,000,000,000 on 29 October 2009, with an annual interest rate of 3.26% and maturity of 28 October 2010.
As at 30 June 2010, the weighted average interest rate of short-term borrowings was 2.67% per annum (2009: 3.01%).
(b) As at 30 June 2010, no short-term loan of the Group was past due.
(c) The following balances were dominated in foreign currency. -61-CSG HOLDING CO., LTD. Semi-Annual Report 2010
30 June 2010
31 December 2009
Original currency
Exchange rate
RMB equivalent
Original currency
Exchange rate
RMB equivalent
HKD
169,998,051
0.8724
148,306,300
220,234,997
0.8805
193,916,915
USD
96,549,007
6.7909
655,654,652
94,495,734
6.8282
645,235,772
803,960,952
839,152,687
(16) Notes payable
30 June 2010
31 December 2009
Trade acceptance notes
30,395,184
37,519,109
Bank acceptance notes
301,320,685
260,601,701
331,715,869
298,120,810
All notes payable are due within one year.
(17) Accounts payable
30 June 2010
31 December 2009
Account payable for materials
396,382,996
383,741,733
Account payable for equipments
262,636,943
377,960,454
Account payable for constructions
138,900,071
180,875,283
Account payable for freight
33,603,515
37,622,903
Others
16,121,834
8,510,480
847,645,359
988,710,853
(a) The Group did not have any balances which were due to parties having 5% or above shareholdings in the Company.
(b) The Group did not have any balances which were due to related parties.
(c) As at 30 June 2010, accounts payable over 1 year is approximately RMB 93,913,852 (31 December 2010: RMB 121,683,339), which mainly comprised of payables for construction works.
(d) The following balances were dominated in foreign currency
30 June 2010
31 December 2009
Original currency
Exchange rate
RMB equivalent
Original currency
Exchange rate
RMB equivalent
HKD
938,881
0.8724
819,080
382,996
0.8805
337,228
USD
3,509,042
6.7909
23,829,553
3,706,434
6.8282
25,308,275
EUR
2,782,074
8.271
23,010,534
2,494,012
9.7971
24,434,082
JPY
-
0.0767
-
90,030,501
0.0738
6,644,251
AUD
9,197
5.9209
54,452
-
-
-
47,713,619
56,723,836
-62-CSG HOLDING CO., LTD. Semi-Annual Report 2010
(18) Advances from customers
30 June 2010
31 December 2009
Advances from customers
118,639,639
152,085,476
The Group did not have any balances which were due to parties having 5% or above voting rights in the Company.
The Group did not have any balances which were due to related parties.
The balances were substantively dominated in RMB and with the aging within 1 year.
(19) Employee benefits payable
31 December 2009
Additions
Decrease
30 June 2010
Wages and salaries, bonuses, allowances and subsidies
64,432,126
234,608,458
(255,653,227)
43,387,357
Social security contributions
536,700
21,983,337
(22,010,958)
509,079
Included: Medical
112,706
4,634,600
(4,639,510)
107,796
Pension
275,270
15,947,563
(15,971,938)
250,895
Unemployment
83,923
871,921
(862,775)
93,069
Injury
34,763
331,854
(338,819)
27,798
Maternity
30,038
197,399
(197,916)
29,521
Housing funds
95,658
3,773,627
(3,780,098)
89,187
Labor union and employee education funds
6,375,630
4,071,985
(4,699,835)
5,747,780
Management bonus (a)
47,370,000
30,000,000
(62,370,000)
15,000,000
118,810,114
294,437,407
(348,514,118)
64,733,403
(a) Pursuant to the resolution in the 15th meeting of the third session board of directors of the Company on 28 January 2005, the board of directors adopted a management bonus scheme which is based on the annual return on net assets and the net profit for the year. During the year, a management bonus amounting to RMB 30,000,000 (the first half year 2009: RMB 15,000,000) were accrued and charged to income statements.
As at 30 June 2010, there was no overdue payroll and welfare expense. The balances will be settled in 2010.
In the first half year 2010, the staff costs recognized relating to share based payment amounted to RMB 36,227,271 (the first half year 2009: RMB 42,293,453) (Note 8).
-63-CSG HOLDING CO., LTD. Semi-Annual Report 2010
(20) Taxes payable
30 June 2010
31 December 2009
Value-added-tax payable
(11,129,244)
20,798,392
Corporate income tax payable
58,030,402
44,159,103
Business tax payable
150,894
174,866
Others
10,524,958
6,902,667
57,577,010
72,035,028
(21) Interest payable
30 June 2010
31 December 2009
Interest payable for long-term borrowings
1,818,508
1,226,266
Interest payable for short-term borrowings (include short-term finance bonds)
38,374,029
13,654,085
40,192,537
14,880,351
(22) Dividends payable
30 June 2010
31 December 2009
Guangbang Investment Ltd.
8,729,016
-
dividends declared before the Share Merger Reform of the Company but not yet able to pay to then shareholders
687,627
687,627
9,416,643
687,627
As at 30 June 2010, the balance of the dividends payable included minority dividends declared but not yet to pay of Shenzhen CSG Display Technology Co., Ltd., subsidiary company, amounted to RMB 8,729,016, and those declared before the Share Merger Reform of the Company but not yet able to pay to then shareholders amounted to RMB 687,627.
(23) Other payables
30 June 2010
31 December 2009
Repurchase of shares
9,263,640
12,654,600
Guarantee deposits received from fixed assets vendors
38,472,590
44,842,612
Temporary receipts
18,372,764
17,242,924
Accrued operating expenses (i)
17,140,974
17,219,821
Contracted labor costs
2,387,837
1,863,030
Others
23,023,962
24,043,784
108,661,767
117,866,771
-64-CSG HOLDING CO., LTD. Semi-Annual Report 2010
(i) Accrued operating expenses include expenses that has incurred but not received invoices, including utilities expenses, service charges, travelling expenses, etc.
The Groups did not have any balances which were due to parties holding 5% or above voting rights of the Company.
The Groups did not have any balances which were due to related parties
Most of the other payables are due within 1 year.
The balances are substantively dominated in RMB.
(24) Non-current liabilities due within 1 year
30 June 2010
31 December 2009
Long-term borrowing due within 1year
- pledged (i)
5,033,930
5,080,612
- guaranteed (ii)
101,529,525
58,613,450
106,563,455
63,694,062
(i) Certain fixed assets with the net book value of RMB 8,230,410 (31 December 2009: RMB 8,632,415) (original cost: RMB 10,084,311, 31 December 2009: RMB 10,084,311)) were pledged (Note5 (9)). The interest is payable every month and the principals will be repaid by monthly installments from July 2010 to June 2011.
(ii) The loans are guaranteed by the Company in favor of the subsidiaries, of which RMB 11,168,500 (31 December 2009: 12,662,500) were back to back guaranteed by the minority shareholders of the subsidiaries of the Company.
(a) The top 5 long-term borrowings due within 1 year:
30 June 2010
31 December 2009
Beginning Date
Maturity date
Currency
Interest rate (%)
Foreign
amount
RMB
Currency amount
RMB
Bank A
2008/10/30
2010/10/30
RMB
Benchmark interest rate with 10% off
-
28,000,000
-
37,000,000
Bank B
2008/03/31
2011/03/31
RMB
Benchmark interest rate with 10% off
-
20,000,000
-
-
Bank C
2008/06/10
2011/03/09
RMB
Benchmark interest rate with 5% off
-
17,000,000
-
-
Bank C
2008/01/17
2011/05/28
RMB
Benchmark interest rate with 10% off
-
10,000,000
-
-
Bank C
2007/11/14
2010/12/31
USD
3 month LIBOR + 60BPS
1,350,000
9,170,000
1,350,000
9,218,070
84,170,000
46,218,070
(b) The following balances of long-term borrowings due within 1 year are dominated in foreign currency:
-65-CSG HOLDING CO., LTD. Semi-Annual Report 2010
30 June 2010
31 December 2009
Original Currency
Exchange
rate
RMB Equivalent
Original Currency
Exchange
rate
RMB Equivalent
HKD
5,770,209
0.8724
5,033,930
5,770,144
0.8805
5,080,612
USD
2,250,000
6.7909
15,279,525
2,250,000
6.8282
15,363,450
20,313,455
20,444,062
(25) Other current liabilities
31 December 2009
Current year additions
Current year reductions
30 June 2010
Provision
- Restructuring
869,104
-
(75,032)
794,072
- Warranty
5,141,428
-
(4,141,428)
1,000,000
- Others
300,000
-
-
300,000
6,310,532
-
(4,216,460)
2,094,072
(26) Long-term borrowings
30 June 2010
31 December 2009
Unsecured
467,176,317
406,057,277
Guarantee (i)
571,545,650
498,325,538
Pledge (ii)
1,538,230
3,927,069
1,040,260,197
908,309,884
(i) As at 30 June 2010, loans of certain subsidiaries of the Company were guaranteed by the Company, of which, the minority shareholders provided a back to back guarantee to the Company amounting to 40,870,700 (31 December 2009: RMB 20,135,700). The interest should be paid monthly or quarterly. The principals will be repaid between July 2011 and September 2014.
(ii) The borrowings were secured with pledge by the Group’s fixed assets with a net book value of RMB 8,230,410 (original cost of RMB10,084,311) (31 December 2009: Net book value of RMB 8,632,415, original cost of RMB 10,084,311) (Note 5(9)). The principal is repayable during July 2011 to November 2011.
(a) The top 5 long-term borrowings:
30 June 2010
31 December 2009
Beginning Date
Maturity date
Currency
Interest rate (%)
Foreign
amount
RMB
Currency amount
RMB
Bank D
2010/03/25
2012/03/12
USD
LIBOR + 60BPS
10,000,000
67,910,000
-
-
Bank E
2010/03/01
2014/05/09
RMB
Benchmark interest rate
-
50,000,000
-
-
Bank B
2008/08/06
2011/08/06
RMB
Benchmark interest rate downward 10%
-
50,000,000
-
50,000,000
Bank E
2008/05/22
2014/05/09
RMB
Benchmark interest rate
-
50,000,000
-
50,000,000
Bank E
2008/05/23
2014/05/09
RMB
Benchmark interest rate
-
50,000,000
-
50,000,000
267,910,000
150,000,000
-66-CSG HOLDING CO., LTD. Semi-Annual Report 2010
(b) The maturity of long-term borrowings is :
30 June 2010
31 December 2009
Between 1 to 2 years
411,129,230
233,502,607
Between 2 to 5 years
629,130,967
674,807,277
1,040,260,197
908,309,884
(c) The following balances were dominated in foreign currency.
30 June 2010
31 December 2009
Original currency
Exchange rate
RMB equivalent
Original currency
Exchange rate
RMB equivalent
HKD
1,582,069
0.8724
1,380,197
4,460,044
0.8805
3,927,069
USD
27,167,528
6.7909
184,491,966
14,667,528
6.8282
100,152,815
185,872,163
104,079,884
The weighted average interest rate of long-term borrowings was 4.78% per annum as at 30 June 2010 (2009: 5.24%).
(27) Other non-current liabilities
30 June 2010
31 December 2009
Deferred income –governmental grants related to assets
- Yichang Silicon products project (a)
42,890,626
44,296,875
- Chengdu Float Cogeneration project (b)
22,880,600
23,707,600
65,771,226
68,004,475
(a) As at 30 June 2010, the balance represented amounts paid to Yi Chang CSG Silicon Materials Co., Ltd. (“Yichang Silicon”) by 宜昌市东山建设发展总公司 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 etc. Yichang Silicon is entitled to the ownership of the facilities.
(b) It represented the assistance contributed by Chengdu local government for energy saving glass construction phase III, being amortized and credited to income statement over 15 years, the committed minimum operating period.
-67-CSG HOLDING CO., LTD. Semi-Annual Report 2010
(28) Share capital
Movement
31 December 2009
New issues during the year
Bonus issue
Capitalisation
Others
Subtotal
30 June 2010
Shares with restriction on disposals
- State shares
-
-
-
-
-
-
-
- PRC legal person shares
80,000,000
-
-
56,000,000
-
56,000,000
136,000,000
- Others
128,275,000
-
-
89,062,750
(18,574,737)
70,488,013
198,763,013
Included: Domestic no-state shares
92,500,000
-
-
64,750,000
-
64,750,000
157,250,000
Domestic person shares
35,775,000
-
-
24,312,750
(18,574,737)
5,738,013
41,513,013
208,275,000
-
-
145,062,750
(18,574,737)
126,488,013
334,763,013
Shares without restriction on disposals
- PRC public shares
566,884,305
-
-
396,819,013
17,532,237
414,351,250
981,235,555
- Domestically listed foreign shares
448,578,819
-
-
314,005,173
-
314,005,173
762,583,992
1,015,463,124
-
-
710,824,186
17,532,237
728,356,423
1,743,819,547
1,223,738,124
-
-
855,886,936
(1,042,500)
854,844,436
2,078,582,560
Movement
31 December 2008
New issues during the year
Bonus issue
Capitalisa-tion
Others
Subtotal
30 June 2009
Shares with restriction on disposals
- State shares
-
-
-
-
-
- PRC legal person shares
90,837,560
-
-
-
(10,837,560)
(10,837,560)
80,000,000
- Others
157,905,446
-
-
-
(29,527,307)
(29,527,307)
128,378,139
Included: Domestic no-state shares
108,662,277
-
-
-
(16,059,138)
(16,059,138)
92,603,139
Domestic person shares
49,243,169
-
-
-
(13,468,169)
(13,468,169)
35,775,000
248,743,006
-
-
-
(40,364,867)
(40,364,867)
208,378,139
Shares without restriction on disposals
- PRC public shares
539,781,299
-
-
-
26,999,867
26,999,867
566,781,166
- Domestically listed foreign shares
448,578,819
-
-
-
-
-
448,578,819
988,360,118
-
-
-
26,999,867
26,999,867
1,015,359,985
1,237,103,124
-
-
-
(13,365,000)
(13,365,000)
1,223,738,124
The nominal value of the Domestic is RMB1, and that of domestically listed foreign shares is HKD 1.
Due to the employee departure, the Company repurchased and cancelled 1,042,500 restricted A shares (Note 8). The capital reduction has been verified by Shenzhen Nanfang-Minhe CPA and SZYZ [2010] 012 capital verification report has been issued.
-68-CSG HOLDING CO., LTD. Semi-Annual Report 2010
According to the resolutions of the Annual Shareholders’ General Meeting dated 20 April 2010, the Company transferred capital surplus to paid-in capital at the rate of 7 shares for each 10 shares based on the total share capital 1,222,695,624 shares. The total transferred capital surplus was 855,886,936 shares. The Company has not yet applied for increased capital verification.
(29) Capital reserve
31 December 2009
Current year additions
Current year reductions
30 June 2010
Capital premium
1,777,902,326
-
(855,886,936)
922,015,390
Other reserve
349,711,541
34,470,256
(10,143,871)
374,037,926
Change in fair value of available-for-sale financial assets
6,184,231
-
(6,184,231)
-
Share based payment (Note 8)
380,487,961
34,470,256
(3,959,640)
410,998,577
Acquisition of minority interest
(36,172,929)
-
-
(36,172,929)
Finance incentives for energy and technical transformation
1,462,500
-
-
1,462,500
Transfer from the balance of capital surplus recognized under previous accounting system
(2,250,222)
-
-
(2,250,222)
2,127,613,867
34,470,256
(866,030,807)
1,296,053,316
31 December 2008
Current year additions
Current year reductions
30 June 2009
Capital premium
1,777,902,326
-
-
1,777,902,326
Other reserve
289,859,570
49,159,045
(8,378,063)
330,640,552
Change in fair value of available-for-sale financial assets
8,859,189
8,910,001
(5,251,313)
12,517,877
Share based payment (Note 8)
318,668,911
40,249,044
(3,126,750)
355,791,205
Acquisition of minority interest (i)
(35,418,308)
-
-
(35,418,308)
Finance incentives for energy and technical transformation (ii)
(2,250,222)
-
-
(2,250,222)
2,067,761,896
49,159,045
(8,378,063)
2,108,542,878
(30) Surplus reserve
31 December
2009
Current year
additions
Current year
reductions
30 June 2010
Reserve fund
309,202,034
-
-
309,202,034
Enterprise Expansion Fund
127,852,568
-
-
127,852,568
437,054,602
-
-
437,054,602
-69-CSG HOLDING CO., LTD. Semi-Annual Report 2010
31 December
2008
Current year
additions
Current year
reductions
30 June 2010
Reserve fund
263,187,790
-
-
263,187,790
Enterprise Expansion Fund
127,852,568
-
-
127,852,568
391,040,358
-
-
391,040,358
According to the Articles of Association of the Company and the Company Law of PRC, the Company has to appropriate 10% of its net profit after making good of the deficit of prior years to the statutory surplus reserve, until where the reserve balance has reached 50% of the paid in share capital of the Company. With the approval obtained form the relevant government authorities, the statutory surplus reserve can be utilized to offset any deficit or to increase the share capital of the Company, provided that the remaining balance of the reserve, after such utilizations, does not fall below 25% of the issued share capital balance. The Company did not appropriate to the statutory surplus reserve during the report period.
The appropriation to discretion surplus reserve is to be proposed by the board of the directors of the Company and approved by the annual general meeting of the shareholders. The discretion can be utilized to offset the deficit or increase the share capital. The Company did not appropriate to discretion surplus reserve during the report period.
(31) Undistributed profit
Jan. ~ Jun. 2010
Jan. ~ Jun. 2009
Amount
Appropriation rate
Amount
Appropriation rate
Undistributed profit at the beginning
1,526,908,861
863,352,524
Add: net profits belonging to parent shareholders
635,951,595
261,159,985
Less: Appropriation of statutory surplus reserve
-
-
-
-
Dividends payable
(427,943,468)
51%
(122,373,812)
29%
Undistributed profits in the end
1,734,916,988
1,002,138,697
As at 30 June 2010, undistributed profit of the Group included the surplus reserve of the subsidiaries attributable to the Group amounting to RMB 403,980,240 (31 December 2009: RMB 403,980,240). The Company and its subsidiary companies did not appropriate to statutory surplus reserve during the report period.
At shareholders meeting on 20 April 2010 a dividend of RMB3.50 for each 10 shares of 1,222,695,624 outstanding shares as at 31 December 2008 was announced, with an aggregated amount of 427,943,468. And a bonus issue of 7 shares for each 10 shares by capitalization of capital surplus.
(32) Minority interests
Minority interests are analyzed as follows:
-70-CSG HOLDING CO., LTD. Semi-Annual Report 2010
30 June 2010
31 December 2009
Shenzhen CSG Wellight Conductive Coating Co., Ltd.
48,361,665
51,112,784
Shenzhen CSG Display Technology Co., Ltd.
42,504,151
42,120,320
Chengdu CSG Glass Co., Ltd.
140,514,461
161,673,353
Yichang CSG Silicon Co., Ltd.
38,973,258
36,762,886
Heyuan CSG Mining Development Co., Ltd.
3,664,455
3,880,528
274,017,990
295,549,871
(33) Revenue and cost of sales
Jan. ~ Jun. 2010
Jan. ~ Jun. 2009
Revenue from main operations
3,391,297,938
2,059,475,677
Revenue from other operations
13,770,066
6,071,702
3,405,068,004
2,065,547,379
Jan. ~ Jun. 2010
Jan. ~ Jun. 2009
Cost of sales from main operations
2,199,274,282
1,416,939,181
Cost of sales from other operations
6,689,283
2,149,588
2,205,963,565
1,419,088,769
(a) Revenue and cost of main operations.
Revenue and cost of main operations analyzed by product are set out below:
Jan. ~ Jun. 2010
Jan. ~ Jun. 2009
Revenue
Cost
Revenue
Cost
Floating glass
1,589,102,680
992,207,121
904,974,835
725,579,852
Engineering glass
951,380,317
670,338,490
852,949,006
554,395,287
ITO glass & ceramics
247,257,238
178,944,452
208,402,075
136,758,227
Solar panel and parts
869,963,695
624,653,277
210,558,333
117,647,002
Property
3,549,092
3,086,026
12,153,673
5,366,121
Elimination
(269,955,084)
(269,955,084)
(129,562,245)
(122,807,308)
3,391,297,938
2,199,274,282
2,059,475,677
1,416,939,181
Revenue and cost of main operations analyzed by geographical location are set out below:
-71-CSG HOLDING CO., LTD. Semi-Annual Report 2010
Jan. ~ Jun. 2010
Jan. ~ Jun. 2009
Revenue
Cost
Revenue
Cost
Mainland, P.R.C.
2,790,118,596
1,777,156,328
1,731,690,500
1,195,273,460
Hong Kong, P.R.C.
137,625,155
91,354,826
120,695,796
83,064,236
Asia (excluding Mainland & Hong Kong, P.R.C.)
114,208,936
69,709,549
75,925,493
53,512,509
Europe
221,087,465
176,927,282
23,601,993
12,416,391
Australia
31,966,396
17,792,892
30,823,575
17,060,494
Others
96,291,390
66,333,405
76,738,320
55,612,091
3,391,297,938
2,199,274,282
2,059,475,677
1,416,939,181
(b) Other revenue and cost
Jan. ~ Jun. 2010
Jan. ~ Jun. 2009
Revenue
Cost
Revenue
Cost
Sale of raw materials
5,836,522
4,820,131
2,024,776
1,929,865
Others
7,933,544
1,869,152
4,046,926
219,723
13,770,066
6,689,283
6,071,702
2,149,588
(c) Top five customers are analyzed as follows:
The sales to the Group’s top five customers were amounting to RMB 521,479,711 (the first half year 2009: RMB 329,348,532), account for 16% of the Group’s total sales (the first half year 2009: 16%).
Revenue
% of the total revenue of the group
The largest
164,919,876
5%
The second largest
141,504,289
4%
The third largest
91,082,228
3%
The fourth largest
64,284,147
2%
The fifth largest
59,689,171
2%
521,479,711
16%
(34) Tax and surcharges
Jan. ~ Jun. 2010
Jan. ~ Jun. 2009
Business tax
242,063
721,665
City maintenance and construction tax
447,758
450,555
Educational surcharge
368,878
345,513
Resources duty
604,974
655,065
Others
790,882
615,987
2,454,555
2,788,785
-72-CSG HOLDING CO., LTD. Semi-Annual Report 2010
(35) Finance expenses
Jan. ~ Jun. 2010
Jan. ~ Jun. 2009
Interest expenses
- Interests on borrowings
25,486,503
42,842,546
- Interests on short term finance bonds
25,359,546
21,561,142
- Interests on discounting bank acceptance notes
5,071,227
2,523,757
55,917,276
66,927,445
Less: interest income
(2,546,216)
(19,591,697)
Exchange loss/(gain)-net
(1,322,503)
477,352
Others
5,427,632
5,877,977
57,476,189
53,691,077
(36) Investment income
Jan. ~ Jun. 2010
Jan.~Jun. 2009
Gain from available-for-sale financial assets
9,055,044
6,939,570
There is no significant restriction on the remittance of investment income to the Group.
(37) Impairment losses
Jan. ~ Jun. 2010
Jan. ~ Jun. 2009
Provision for bad debts
1,560,809
1,937,952
Provision for inventories
(464,205)
(1,816,585)
1,096,604
121,367
(38) Non-operating income
Jan. ~ Jun. 2010
Jan. ~ Jun. 2009
Gain on disposal of fixed assets
10,602,591
1,318,400
Gain on fine and confiscation
2,968,813
-
Government grants (a)
12,605,425
13,717,224
Claim income
322,800
-
Others
3,548,674
130,903
30,048,303
15,166,527
-73-CSG HOLDING CO., LTD. Semi-Annual Report 2010
(a) Government grants is analyzed below:
Jan. ~ Jun. 2010
Jan. ~ Jun. 2009
Value-added Tax refund,
1,011,205
1,758,593
Subsidy on research and development
1,368,058
1,803,000
Social insurance funds concession
50,000
431,500
Government subsidy on electricity bills
3,750,000
505,380
Compensation on interest expenses in relating to technical improvements expenditure
677,500
51,667
Assistance for information technology development
220,000
-
Assistance on expenditures for environmental protection
802,509
-
others
4,726,153
9,167,084
12,605,425
13,717,224
(39) Non-operating expenses
Jan. ~ Jun. 2010
Jan. ~ Jun. 2009
Loss on disposal of fixed assets
625,022
117,061
Loss on compensations
519,480
1,073,752
Donation
1,200,000
-
Others
400,147
111,357
2,744,649
1,302,170
(40) Income tax expenses
Jan. ~ Jun. 2010
Jan. ~ Jun. 2009
Current income tax
109,638,087
23,138,981
Deferred income tax
17,961,982
(148,378)
127,600,069
22,990,603
The reconciliation from income tax calculated based on applicable tax rate and total profit presented in the consolidated financial statements to the income tax expenses is as follows:
-74-CSG HOLDING CO., LTD. Semi-Annual Report 2010
Jan.~Jun. 2010
Jan.~Jun. 2009
Total profit
829,278,685
311,966,965
Income tax calculated at applicable tax rates
121,669,285
24,202,278
Effect of change in tax rates
2,930,473
(73,151)
Expenses not deductable for tax purpose
3,457,792
3,894,997
Utilization of previously unrecognized tax losses
(471,233)
(2,116,274)
Tax loss for which no deferred income tax asset was recognized
647,096
601,651
Utilization of previously unrecognized deferred tax assets
(633,344)
(1,487,872)
Tax refund for purchase of domestic produced equipments
-
(2,031,026)
Income tax expenses
127,600,069
22,990,603
(41) Earnings per share
(a) Earnings per share - basic
Basic earnings per share is calculated by dividing the profit attributable to shareholders of the Company by the weighted average number of ordinary shares in issue during the year.
Jan.~Jun. 2010
Jan. ~ Jun. 2009
Consolidated profit attributable to shareholders of the Company
635,951,595
261,159,985
Weighted average number of ordinary shares in issue
2,077,749,810
2,103,075,311
Basic earnings per share
0.31
0.12
A bonus issued of 7 shares for each 10 shares by capitalization of capital surplus in the report period. The earning per share – basic of the first half year 2009 has been adjusted as the new capital.
(b) Earnings per share - diluted
Diluted earnings per share is calculated by dividing the profit attributable to shareholders of the Company, which is adjusted according to potential dilutive shares, by the adjusted weighted average number of ordinary shares in issue during the year. The Company had no potential dilutive outstanding equity instruments issued as at 30 June 2010 (the first half year 2009: Nil), accordingly the diluted earnings per share are equals as basic earnings per share.
(42) Other comprehensive income
-75-CSG HOLDING CO., LTD. Semi-Annual Report 2010
Jan.~Jun. 2010
Jan.~Jun. 2009
Gain from available for sale financial assets
-
8,910,001
Less: effect of income tax resulted from available for sale financial assets
-
-
Transferred from previously recognized as other comprehensive income
(6,184,231)
(5,251,313)
Subtotal
(6,184,231)
3,658,688
Difference on translation of foreign currency financial statements
1,913,104
1,385,541
(4,271,127)
5,044,229
(43) Notes to consolidated cash flow statements
(a) Cash received relating to other operating activities
Jan. ~ Jun. 2010
Jan. ~ Jun. 2009
Interest income
2,546,216
1,388,586
Government grant
8,592,321
13,682,618
Return the pledged deposit and guarantee money received previously
12,993,515
27,229,775
Others
1,620,947
9,664,783
25,752,999
51,965,762
(b) Cash paid relating to other operating activities
Jan. ~ Jun. 2010
Jan. ~ Jun. 2009
Delivery cost
81,145,396
70,896,689
Canteen cost
14,581,684
10,787,431
Bank fees
8,496,728
5,368,416
Travelling expenses
8,608,327
7,779,007
Office expenses
10,272,943
9,137,541
Others
54,450,489
48,225,832
177,555,567
152,194,916
(c) Cash received relating to other financing activities
Jan. ~ Jun. 2010
Jan. ~ Jun. 2009
Return of deposits for borrowings
4,064,616
356,800,907
(d) Cash paid relating to other financing activities
Jan. ~ Jun. 2010
Jan. ~ Jun. 2009
Repurchase of restricted shares
18,200,016
114,671,700
Payment of deposits for borrowings
-
16,354,901
18,200,016
131,026,601 -76-CSG HOLDING CO., LTD. Semi-Annual Report 2010
-77-
(44) Supplement notes of cash flow statement
(a) Reconciliation from the net profit to the cash flows from operating activities
Jan. ~ Jun. 2010
Jan. ~ Jun. 2009
Net profit
701,678,616
288,976,362
Add: Provisions for assets impairment
1,096,604
121,367
Depreciation of fixed assets 263,621,2
44
197,160,079
Amortization of intangible assets
8,382,913
5,674,574
Losses/(Gain) on disposal of fixed assets and intangible assets
(9,977,569)
(1,201,339)
Finance expenses
56,073,883 58,678,65
2
Investment income
(9,055,044)
(6,939,570)
Decrease in deferred tax assets
17,720,869
(181,529)
Increase in deferred tax liability
241,113
33,151
Increase in inventories
(91,237,064)
(33,236,366)
Increase in operating receivables (48,718,4
07)
(102,869,656)
Increase in operating payables 9,782,351
211,844,434
Employee service cost relating to share based payment
36,227,271 42,293,45
3
Net cash flows from operating activities
935,836,780
660,353,612
Net (decrease)/increase in cash and cash equivalents:
Jan. ~ Jun. 2010
Jan. ~ Jun. 2009
Cash at end of year
399,733,993
317,185,209
Less: cash at beginning of year
(635,618,163)
(394,923,631)
Net increase /(decrease) in cash and cash equivalents
(235,884,170)
(77,738,422)
(b) Cash and cash equivalents
30 June 2010
31 December 2009
Cash
-Cash on hand
49,285
86,714
-Cash at bank without restriction 399,038,5
88
317,098,495
-Others without restriction
646,120
-
Cash and cash equivalents at end of year
399,733,993
317,185,209CSG HOLDING CO., LTD. Semi-Annual Report 2010
6 Segment information
The management evaluate the performance of floating glass, engeering glass, ITO glass, solar energy and others respectively. Inter-segment transfers are measured by reference to the market price.
The Group reclassified the ceramics industry operations to ITO glass segment from other segment in the second half year 2009 and reclassified solar glass operation to solar energy industry from flat glass industry in the report period, to more effectively assess the financial performance and allocate resources. The comparative information of the first half year 2009 also restated.
(a) Segment information as at and for the first half year ended 30 June 2010 is as follows:
Floating glass
Engineering glass
ITO glass & ceramics
Solar energy
Others
Undistributed profits
Elimination
Total
Revenue from external customers
1,327,002,977
957,693,656
245,917,212
870,703,707
3,750,452
3,405,068,004
Inter-segment revenue
266,207,749
787,672
1,343,425
1,616,238
-
(269,955,084)
-
Revenue
1,593,210,726
958,481,328
247,260,637
872,319,945
3,750,452
(269,955,084)
3,405,068,004
Less: Operating expenses
(1,082,691,136)
(795,646,018)
(212,592,075)
(700,485,730)
(3,862,358)
(77,770,740)
269,955,084
(2,603,092,973)
Segment results
510,519,590
162,835,310
34,668,562
171,834,215
(111,906)
(77,770,740)
-
801,975,031
Segment assets
3,976,096,208
3,095,216,534
1,075,123,855
2,675,595,769
7,886,130
220,538,832
11,050,457,328
Segment liabilities
541,346,017
565,341,383
108,716,727
408,843,555
6,622,680
3,597,286,199
5,228,156,561
Depreciation and amortization
101,152,995
68,562,302
33,048,744
67,510,167
1,729,949
272,004,157
Provisions for asset impairment
344,557
1,202,925
(374,655)
(67,550)
(8,673)
1,096,604
Capital expenditures
124,370,863
203,336,725
4,899,916
247,169,310
171,225
579,948,039
-78-CSG HOLDING CO., LTD. Semi-Annual Report 2010
-79-
(b) Segment information as at and for the first half year ended 30 June 2009 is as follows:
Floating glass
Engineering glass
ITO glass & ceramics
Solar energy
Others
Undistributed profits
Elimination
Total
Revenue from external customers
786,624,275
855,634,811
208,316,437
210,249,329
4,722,527
2,065,547,379
Inter-segment revenue
119,988,007
1,600,516
94,718
309,004
7,570,000
(129,562,245)
-
Revenue
906,612,282
857,235,327
208,411,155
210,558,333
12,292,527
(129,562,245)
2,065,547,379
Less: Operating expenses
(803,634,323)
(669,687,313)
(163,843,861)
(163,517,195)
(6,209,035)
(83,360,352)
122,807,308
(1,767,444,771)
Segment results
102,977,959
187,548,014
44,567,294
47,041,138
6,083,492
(83,360,352)
(6,754,937)
298,102,608
Segment assets
3,806,000,634
2,895,449,906
1,086,565,659
2,369,518,054
12,117,860
440,775,320
10,610,427,433
Segment liabilities
558,697,864
569,508,891
138,053,339
396,296,761
7,371,970
3,981,497,464
5,651,426,289
Depreciation and amortization
86,740,896
63,959,945
31,726,971
19,035,680
1,371,161
202,834,653
Provisions for asset impairment
(1,336,081)
72,401
51,608
1,333,439
-
121,367
Capital expenditures
256,163,002
91,098,791
19,526,490
326,140,316
185,176
693,113,775CSG HOLDING CO., LTD. Semi-Annual Report 2010
Revenue from external customers derived from both mainland and other countries and the total of non-current assets other then financial instruments and deferred tax assets are analysed below:
Revenue from external customers
Jan. ~ Jun. 2010
Jan. ~ Jun. 2009
Mainland, P.R.C.
2,803,888,662
1,737,762,202
Hong Kong, P.R.C.
137,625,155
120,695,796
Asia (excluding Mainland & Hong Kong, P.R.C.)
114,208,936
75,925,493
Europe
221,087,465
23,601,993
Australia
31,966,396
30,823,575
Others
96,291,390
76,738,320
3,405,068,004
2,065,547,379
Non-current assets
30 June 2010
31 December 2009
Mainland, P.R.C.
9,421,152,984
9,108,839,550
Hong Kong, P.R.C.
15,033,959
15,319,559
Australia
395,817
452,483
9,436,582,760
9,124,611,592
The Group has a large number of customers, no revenue from a customer exceed 10% or more of the Group’s revenue.
7 Related parties and related party transactions
(1) The parent company and subsidiaries
The Company regard no entity is the parent company.
(2) Related party transactions
The condition and information of related party is analysed in Note4.
8 Share-based payment
(1) Overview
Pursuant to the restricted A share incentive scheme approved by the first special general meeting of the shareholders on 13 June 2008, the Company granted 49,140,000 share of restricted A share of the Company to certain qualified employees of the Group (“the Qualified Employee”) at a grant price of RMB8.58 per share on 16 June 2008.
The scheme will open for 60 months after the grant date of the restricted A share (“Grant Date”). The first twelve months following the Grant Date will be lock out period, in which the restricted A shares received by the Qualified Employees will be locked and cannot be transferred. The next 48 months are unlock period, the restricted A share can be transferred if certain vesting conditions are meet, by four batches of 25% each, starting at the end of first twelve months after -80-CSG HOLDING CO., LTD. Semi-Annual Report 2010
the Grant Date.
The vesting conditions under the Company’s restricted A share incentive scheme performance appraisal policy include: a) the lower of the weighted average returns on net assets and the pre-exceptional item weighed average returns on net assets is 10% higher or same in the preceding year; b) the average annualized growth rate of the net profit of the Group from 2007 is 10% higher or same; and c) the Qualified Employees remains in service and performance is satisfied.
(2) Restricted share stock quantity movement and related owner’s equity movement
Items
Restricted A share stock(share)
Equity
Treasure Shares
Capital reserve
Minority equity
1 January 2009
36,187,500
49,140,000
(12,952,500)
318,668,911
2,321,083
Repurchase for resignation of the employees
(412,500)
-
(412,500)
(3,126,750)
-
Repurchase and canceled shares
-
(13,365,000)
13,365,000
-
-
Expense recognized this half year
-
-
-
40,249,044
2,044,409
30 June 2009
35,775,000
35,775,000
-
355,791,205
4,365,492
1 January 2010
34,282,500
35,775,000
(1,492,500)
380,487,961
5,831,590
Capital surplus transfer to paid-in capital
23,997,750
24,312,750
(315,000)
-
-
Repurchase for resignation of the employees
(1,173,000)
-
(1,173,000)
(3,959,640)
-
Repurchase and canceled shares
-
(1,042,500)
1,042,500
-
-
Expense recognized this year
-
-
-
34,470,256
1,757,015
30 June 2010
57,107,250
59,045,250
(1,938,000)
410,998,577
7,588,605
- Unrestricted shares (i)
19,035,750
19,035,750
-
142,728,409
3,466,151
- Restricted shares
38,071,500
40,009,500
(1,938,000)
268,270,168
4,122,454
(i) On 26 March 2010, the 13th of the Company’s 5th Meeting of Board of the Directors considered that restricted shares held by incentive staffs satisfied release conditions 2010. The restricted shares total of 19,035,750 shares has been released in the report period (the first half year 2009: Nil).
(3) At the Grant Date, the fair value of the restricted A share is 6.63 per share (amount to 3.90 per share after transferring capital surplus to paid-in capital), being determined on the market price of the Group’s A share on the Grant Date after deducting the considerations paid by the employees.
Management estimated that the Group can meet the performance target in the vesting period, and substantially all the employees can complete the required service period. -81-CSG HOLDING CO., LTD. Semi-Annual Report 2010
9 Contingencies
As at 30 June 2010, the Group has no significant contingency liability.
10 Commitments
(1) Commitments relating to capital expenditure
As at 30 June 2010, commitments relating to capital expenditure that has signed but not recognized in the financial statement are analyzed below:
30 June 2010
31 December 2010
Property, plant and equipment
297,781,862
418,149,652
(2) Fulfillment of previous commitment
The commitment relating to capital expenditures at 31 December 2009 has been fulfilled.
11 Events after balance sheet date
Guangdong Golden Glass Technologies Ltd. (hereinafter referred to as “Golden Glass”), share-holding subsidiaries of the Company, listed at the Shenzhen Stock Exchange on 8 July 2010 as the price of 22.12 per share. The Company and CSG (Hong Kong) Ltd., wholly owned subsidiary company, hold the 10 million original shares of Golden Glass together. It was 11.11% of total capital of Golden Glass before listed. The initial investment was amount of RMB 23 million. Among these shares, 7,713,800 shares will be locked for 12 months and 2,286,200 shares will be locked for 36 months.
12 Assets and liabilities measured at fair value
31 December 2009
Profits and losses on the changes
in fair value
Changes in fair value recognized in the equity
Impairment recognized in the first half year
30 June 2010
Assets available for sale
7,528,589
-
-
-
-
13 Financial asset and liabilities dominated in foreign currency
-82-CSG HOLDING CO., LTD. Semi-Annual Report 2010
31 December 2009
Profits and losses on the changes
in fair value
Changes in fair value recognized in the equity
Impairment recognized in the first half year
30 June 2010
Financial assets
- Foreign currency and receivables
125,729,612
-
-
11,809
156,230,843
Financial liabilities
- borrowing and payables
1,020,400,469
-
-
-
1,057,860,189
14 Notes to the Company’s financial statements
(1) Other receivables
30 June 2010
31 December 2009
Other receivables due by subsidiaries
1,975,308,029
2,074,354,697
Other receivables
1,989,804
829,564
1,977,297,833
2,075,184,261
Less: provision for bad debts
(810,344)
(810,344)
1,976,487,489
2,074,373,917
(a) The aging of receivables is analyzed below:
30 June 2010
31 December 2009
Within 1 year
1,976,487,489
2,074,373,917
Over 3 years
810,344
810,344
1,977,297,833
2,075,184,261
(b) The other receivables are analyzed by categories as follows:
30 June 2010
31 December 2009
Amount
% of total balance
Provision for bad debts
Provision ratio
Amount
% of total balance
Provision for bad debts
Provision ratio
Individually significant
1,760,043,178
89%
-
-
1,869,280,021
90%
-
-
Others
217,254,655
11%
(810,344)
0.4%
205,904,240
10%
(810,344)
0.4%
1,977,297,833
100%
(810,344)
0.1%
2,075,184,261
100%
(810,344)
0.1%
(c) The impairment provision for impairment evaluated individually is analyzed as bellows:
Book value
Impairment provision
Provision ratio
Reason
Guangdong Shilian Company Limited
810,345
(810,345)
100%
Unlikely to be recovered
-83-CSG HOLDING CO., LTD. Semi-Annual Report 2010
-84-
(d) Other receivables are not due by the shareholders have more than 5% (include 5%) of the company’s shares.
(e) The biggest five of other receivables at 30 June 2010 are analyzed as below:
Relationship with the Group Amount
Aging
Proportion
Chengdu CSG Glass Co. Ltd.
subsidiary
432,730,714
With one year
22%
Guangzhou CSG Glass Co. Ltd
subsidiary
323,025,083
With one year
16%
Shenzhen CSG Float Glass Co. Ltd.
subsidiary
310,178,744
With one year
16%
Shenzhen CSG Wellight Conductive Coating Co. Ltd.
subsidiary
279,580,195
With one year
14%
Dongguan CSG Solar Glass Co. Ltd
subsidiary
245,732,817
With one year
12%
1,591,247,553
80%
(f) Other receivable due by related parties are analyzed as below:
30 June 2010
31 December 2009
Related Party Name
Relationship with the company
Amount
Proportion
Impairment provision
Amount
Proportion
Impairment provision
Chengdu CSG Glass Co. Ltd.
subsidiary
432,730,714
22%
-
479,108,736
23%
-
Guangzhou CSG Glass Co. Ltd.
subsidiary 323,025
,083
16%
-
354,141,280
17%
-
Shenzhen CSG Float Glass Co. Ltd
subsidiary
310,178,744
16%
-
401,787,406
19%
-
Shenzhen CSG Wellight Conductive Coating Co. Ltd.
subsidiary 279,580
,195
14%
-
258,988,669
12%
-
Dongguan CSG Solar Glass Co. Ltd
subsidiary
245,732,817
12%
-
279,136,128
14%
-
Yichang CSG Silicon Co. Ltd
subsidiary 168,795
,625
9%
-
96,117,802
5%
-
Others sub
sidiary
215,264,851
11%
-
205,074,676
10%
-
1,975,308,029
100%
-
2,074,354,697
100%
-
(2) Long-term equity investments
30 June 2010
31 December 2009
Subsidiaries (a)
3,308,673,235
3,102,823,394
Other long-term equity investments (b)
21,841,000
21,841,000
3,330,514,235
3,124,664,394
Less: Impairment provision for investments in subsidiaries (a)
(86,874,472)
(86,874,472)
3,243,639,7
63
3,037,789,922
The long-term equity investments of the Group are not subject to restriction on conversion into cash or restriction on remittance of investment income.CSG HOLDING CO., LTD. Semi-Annual Report 2010
-85-
(a) Subsidiaries
Accounting method
Initial investment cost
31 December 2009
Addition/ (Deduction)
30 June 2010
Impairment provision
Impairment provision for this half year
Cash dividend declared to distribution
(i)
Shenzhen CSG Float Glass Co., Ltd
Cost method
705,736,250
610,535,508
101,584,679
712,120,187
-
Guangzhou CSG Glass Co., Ltd.
Cost method
195,000,000
198,937,459
1,093,742
200,031,201
-64,949,237
Chengdu CSG Glass Co., Ltd.
Cost method
99,514,360
109,637,624
3,102,390
112,740,014
-239,482,427
Tianjin CSG Architectural Glass Co., Ltd
Cost method
133,500,000
137,306,740
1,250,161
138,556,901
7,599,635
Tianjin Energy Conservation Glass Co., Ltd
Cost method
96,000,000
99,806,740
1,250,161
101,056,901
-45,372,220
Shenzhen CSG Display Technology Co., Ltd.
Cost method
55,867,928
61,898,804
1,604,105
63,502,909
-27,565,316
Shenzhen CSG Wellight Conductive Coating Co., Ltd.
Cost method
73,624,561
77,304,748
1,200,285
78,505,033
-
Dongguan CSG Architectural Glass Co., Ltd
Cost method
180,000,000
188,737,451
2,464,714
191,202,165
-95,045,588
Dongguan CSG Solar Glass Co., Ltd
Cost method
128,753,465
135,176,532
1,970,230
137,146,762
-78,078,792
Yichang CSG Silicon Co., Ltd
Cost method
450,000,000
458,177,775
2,433,361
460,611,136
-
Wujiang CSG North-east Architectural Glass Co., Ltd.
Cost method
240,000,000
245,963,131
1,996,329
247,959,460
-67,662,098
Dongguan CSG PV-tech Co., Ltd
Cost method
105,000,000
78,963,244
31,205,548
110,168,792
-
Hebei CSG Glass Co., Ltd.
Cost method
253,354,574
258,792,013
1,611,030
260,403,043
-65,649,374
Dongguan CSG Ceramics Technology Co., Ltd
Cost method
50,000,000
53,062,114
(1,401,056)
51,661,058
-
CSG (Hongkong) Co., Ltd.
Cost method
81,664,761
83,930,640
709,778
84,640,418
-
Wujiang CSG Glass Co., Ltd.
Cost method
30,726,000
-
30,726,000
30,726,000
-
Others (ii)
Cost method
351,070,874
304,592,871
23,048,384
327,641,255
(86,874,472)
-
5,368,440
3,229,812,773
3,102,823,394
205,849,841
3,308,673,235
(86,874,472)
-
696,773,127
(i) As at 30 June 2010, included in the investments in subsidiaries were deemed investment costs of RMB 105,580,464, being 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. (31 December 2009: 82,856,622).
(ii) Others mainly included the subsidiaries in real estate segment and subsidiaries of architectural segment, which located in Shenzhen but the production lines have moved to Dong guan. The operations of there subsidiaries have discontinued. The Company has made provision against the long term investment in these subsidiaries.CSG HOLDING CO., LTD. Semi-Annual Report 2010
(b) Other long-term equity investments
Accounting
Method
31 December 2009
Addition/ (Deduction)
30 June 2010
Proportion of holdings
Proportion of vote right
Description for the difference between holdings and vote right
Beijing Wan Tong Industrial Co., Ltd.
Cost method
4,200,000
-
4,200,000
0.32%
0.32%
N.A
Guangdong Godden Glass Technologies Ltd.
Cost method
17,641,000
-
17,641,000
8.52%
8.52%
N.A
21,841,000
-
21,841,000
(3) Long term receivables
30 June 2010
31 December 2009
Substantive long-term investments in subsidiaries
703,103,080
714,758,835
Less: impairment provision
(143,508,415)
(143,508,415)
559,594,665
571,250,420
31 December 2009
Addition/(Deduction)
30 June 2010
Addition of Impairment
Deduction of Impairment
Shenzhen CSG Float Glass Co.Ltd
75,000,000
-
75,000,000
-
-
Wujiang CSG North-east Architectural Glass Co.Ltd.
56,000,000
-
56,000,000
-
-
Dongguan CSG Architectural Glass Co.Ltd
146,267,089
(9,655,753)
136,611,336
-
-
Tianjin Energy Conservation Glass Co.Ltd
180,000,000
-
180,000,000
-
-
Shenzhen CSG Wellight Conductive Coating Co.Ltd.
55,704,030
-
55,704,030
-
-
Shenzhen CSG Display Technology Co.Ltd.
50,743,944
-
50,743,944
-
-
Others
151,043,772
(2,000,002)
149,043,770
(143,508,415)
-
714,758,835
(11,655,755)
703,103,080
(143,508,415)
-
The company recognizes impairment provisions on the long term receivables based on the subsidiaries’ net liabilities.
(4) Other payables
30 June 2010
31 December 2009
Subsidiaries
118,734,889
86,254,852
Liabilities relating to stock withdrawn
9,263,640
12,654,600
Others
4,261,446
13,728,349
132,259,975
112,637,801
-86-CSG HOLDING CO., LTD. Semi-Annual Report 2010
(5) Investment income
Jan.~Jun. 2010
Jan.~Jun. 2009
Cash dividends of investment stated at cost(a)
696,773,127
471,712,307
Gain on disposal of available-for-sale financial assets
9,055,044
6,939,570
Reversed of impairment provision of long-term receivables
-
4,174,990
705,828,171
482,826,867
(a) Cash dividends of investment stated at cost
There is no significant restriction on the investment income remittance to the Company.
Investment incomes from top five investees or amounted to over 5% of total profit are analyzed as below:
Jan.~Jun. 2010
Jan.~Jun. 2009
Reason for the movement
Chengdu CSG Glass Co., Ltd.
239,482,427
93,357,852
Profit increased
Dongguan CSG Architectural Glass Co., Ltd
95,045,588
52,235,360
Profit increased
Dongguan CSG Solar Glass Co., Ltd
78,078,792
100,875,695
Profit decreased
Wujiang CSG North-east Architectural Glass Co., Ltd.
67,662,098
13,101,757
Profit increased
Hebei CSG Glass Co., Ltd.
65,649,374
-
Dividend distribution for 2009
Guangzhou CSG Glass Co., Ltd.
64,949,237
21,413,104
Profit increased
Tianjin CSG Energy Conservation Glass Co., Ltd
45,372,220
35,273,698
Profit increased
656,239,736
316,257,466
(6) Notes to the Company’s cash flow statements
Reconciliation from the net profit to the cash flows from operating activities
Jan.~Jun. 2010
Jan.~Jun. 2009
Net profit
677,869,967
458,826,130
Add: Depreciation of fixed assets
1,481,428
1,318,497
Amortization of intangible assets
233,000
33,408
Losses on disposal of fixed assetsand intangible assets
1,932
3,962
Finance expenses
134,952
(12,551,830)
Investment income
(705,828,171)
(482,826,867)
Increase in operating receivables
(25,972,359)
(227,960)
Increase/(decrease) in operating payables
(33,910,167)
(55,984,986)
Value of employee service relating to share based payment
13,503,429
13,835,091
Net cash flows from operating activities
(72,485,989)
(77,574,555)
-87-CSG HOLDING CO., LTD. Semi-Annual Report 2010
Movement of the cash and cash equivalent
Jan.~Jun. 2010
Jan.~Jun. 2009
Cash at the end of the year
93,109,605
74,039,050
Less: Cash at the beginning of the year
(370,558,509)
(168,142,506)
Net increase/(decrease) in cash and cash equivalent
(277,448,904)
(94,103,456)
SUPPLEMENTAL INFORMATION
1 Breakdown of Non-recurring gains and losses
Jan.~Jun. 2010
Jan.~Jun. 2009
Gains and losses of disposal of non-current asset
(9,977,569)
(1,201,339)
Government subsidy recognized as gains and losses
(12,605,425)
-
Gain from disposal of available for sales financial assets
(9,055,044)
(6,939,570)
Other non-operating gains and losses
(4,720,660)
(12,663,018)
(36,358,698)
(20,803,927)
Affect of enterprise income tax
3,903,597
2,742,967
Affect of minority interest (after tax)
1,148,432
2,436,282
(31,306,669)
(15,624,678)
(1) The basis of preparation of extraordinary gains and losses schedule
According to the Q&A on Disclosure of Information by Public Companies No1-Extraordinary gains and losses [2008], extraordinary gains and losses are the gains and losses being resulted from transactions/events which are not incurred by the operation of the entity, or, though incurred by the operation, the nature, amounts or the frequently of such transactions/events will lead to a misleading presentation of the normal performance and profitability of the operation of the entity. -88-CSG HOLDING CO., LTD. Semi-Annual Report 2010
2 Return on equity and earnings per share
Earning per share
Weighted average ROE (%)
Basic earning per share
Dilute earning per share
Jan.~Jun. 2010
Jan.~Jun. 2009
Jan.~Jun. 2010
Jan.~Jun. 2009
Jan.~Jun. 2010
Jan.~Jun. 2009
Net profit attributable to common stock shareholders
11.40%
5.56%
0.31
0.12
0.31
0.12
Net profit less Non-recurring gains and losses attributable to common stock shareholders
10.84%
5.23%
0.29
0.12
0.29
0.12
A bonus issued of 7 shares for each 10 shares by capitalization of capital surplus in the report period. The earning per share – basic of the first half year 2009 has been adjusted as the new capital.
3 Description of significant movement of the main financial statement data of the Group
The items which variation in the financial statement data is up to 30% (30% containing) above, or proportion of the whole asset on 30 June 2010 is up to 5%(5% containing) or proportion of the whole profit up to 10%(10% containing) are analyzed as below:
Items of balance sheet：
30 June 2010
31 December 2009
Addition / (Deduction)
Fluctuation
Note
Cash at bank and on hand
413,743,676
653,555,310
(239,811,634)
-37%
(1)
Other receivables
37,179,799
15,377,152
21,802,647
142%
(2)
Other current assets
-
17,500,000
(17,500,000)
-100%
(3)
Available-for-sale financial assets
-
7,528,589
(7,528,589)
-100%
(4)
Fixed assets
7,916,796,241
8,054,820,901
(138,024,660)
-2%
(5)
Construction in progress
1,081,190,929
631,983,774
449,207,155
71%
(6)
Short-term borrowings
2,423,960,952
2,481,152,687
(57,191,735)
-2%
(7)
Accounts payable
847,645,359
988,710,853
(141,065,494)
-14%
(8)
Employee benefits payable
64,733,403
118,810,114
(54,076,711)
-46%
(9)
Interest payable
40,192,537
14,880,351
25,312,186
170%
(10)
Dividends payable
9,416,643
687,627
8,729,016
1269%
(11)
Current portion of non-current liabilities
106,563,455
63,694,062
42,869,393
67%
(12)
Other non-current liabilities
2,094,072
6,310,532
(4,216,460)
-67%
(13)
Notes:
(1) The decrease of cash at bank and on hand is because of the decrease of cash at bank.
(2) The increase of other receivable is mainly due to the increase of export tax rebate receivables of Dongguan CSG PV-tech Co., Ltd. -- a subsidiary of the Group.
(3) The decrease of other current assets is because of the cost-conservation financial products bought by subsidiary company of the Group came due within the report period. -89-CSG HOLDING CO., LTD. Semi-Annual Report 2010
(4) The decrease of available-for-sale financial assets is mainly due to the selling of domestic listed A-shares in report period.
(5) The increase of fixed assets is mainly due to the Group’s accrued depreciation sum of capital assets over increased sum of capital assets in the report period.
(6) The increase of Construction in progress is mainly due to the construction objects have been invested as the plan.
(7) The decrease of short-term borrowings is due to the repayment of the short term loan.
(8) The decrease of accounts payable is mainly due to the payment on equipment and construction cost.
(9) The decrease of employee benefits payable was mainly due to the Company’s payment of the management reward fund and staff year-end bonus in the report period.
(10) The increase of interest payable is mainly due to the Company’s undue interest payment for provisionary short-term financing securities in the report period.
(11) The increase of dividends payable is mainly due to minority shareholders’ dividend unpaid yet has been announced to distribute by Shenzhen CSG Display Technology Co., Ltd. -- the Company’s subsidiary, in the report period.
(12) The increase of current portion of non-current liabilities is mainly due to the increased of long-term loans within one year.
(13) The decrease of other non-current liabilities is mainly due to the Company’s payment for accrued provisionary liability for previous years.
Items of Income statement:
Jan.~Jun. 2010
Jan.~Jun. 2009
Addition/(Deduction))
Fluctuation
Note
Revenue
3,405,068,004
2,065,547,379
1,339,520,625
65%
(14)
Cost
2,205,963,565
1,419,088,769
786,874,796
55%
(15)
Selling and distribution expense
124,564,573
111,160,322
13,404,251
12%
(16)
General and administrative expense
220,592,531
187,534,021
33,058,510
18%
(17)
Financial expense
57,476,189
53,691,077
3,785,112
7%
(18)
Investment income
9,055,044
6,939,570
2,115,474
30%
(19)
Non-operating income
30,048,303
15,166,527
14,881,776
98%
(20)
Non-operating loss
2,744,649
1,302,170
1,442,479
111%
(21)
Income tax expense
127,600,069
22,990,603
104,609,466
455%
(22)
Note:
(14) The increase in revenue is mainly due to the increase of both selling price and the sales volumes in flat glass industry and the sale volumes in solar energy industry.
(15) The increase in cost is mainly due to the increase on revenue.
(16) The increase in selling and distribution expense is mainly due to the increase of the revenue. It leads to the increase of the expense related with the revenue like the freight expenses and Employee benefits.
(17) The increase on general and administrative expense is mainly due to the increase of the management bonus and research and development expenditures as well as amortization of intangible assets.
-90-CSG HOLDING CO., LTD. Semi-Annual Report 2010
(18) The increase of financial costs is mainly due to decrease of interest income affected by decrease of pledged deposit margin in the report period.
(19) The increase of investment income is mainly due to the selling of financial assets available for sale in the report period, namely increase of transferred returned.
(20) The increase of on non-operation income is mainly due to the gain on disposal of fixed assets from technological transformation of Shenzhen float 2nd line.
(21) The increase of non-operating losses is mainly due to the increase of donation expenditure affected by the donation to Yushu disaster district in Qinghai in the report period.
(22) The increase on income tax is mainly due to the increase on pre-tax profit.
VII Documents for Reference
i. Original of Semi-Annual Report with the signature of legal representative.
ii. Financial statement with the signature and seal of the legal representative, CFO and manager of financial department.
iii. Original of the documents and public notices disclosed on the newspapers designated by CSRC in the report period.
iv. The article of the Company.
Board of Directors of
CSG Holding Co., Ltd.
20 July 2010
-91-
