CSG HOLDING CO., LTD. SEMI-ANNUAL REPORT 2018 Chairman of the Board: CHEN LIN August 2018 CSG Semi-annual Report 2018 Section I Important Notice, Content and Paraphrase Board of Directors and the Supervisory Committee of CSG Holding Co., Ltd. (hereinafter referred to as the Company) and its directors, supervisors and senior executives hereby confirm that there are no any fictitious statements, misleading statements, or important omissions carried in this report, and shall take all responsibilities, individual and/or joint, for the facticity, accuracy and completeness of the whole contents. Ms. Chen Lin, Chairman of the Board, Mr. Wang Jian, responsible person in charge of accounting and Ms.Wang Wenxin, principal of the financial department (accounting officer) confirm that the Financial Report enclosed in the semi-annual report of the Company is true, accurate and complete. All directors were present the meeting of the Board for deliberating the semi-annual report of the Company in person. This report involves future plans and some other forward-looking statements, which shall not be considered as virtual promises to investors. Investors are kindly reminded to pay attention to possible risks. Details of the risk factors and countermeasures of future development have been well-described in this report, please find in Section IV Performance Discussion and Analysis. The Company has no plans of cash dividend distribution, bonus shares being sent or converting capital reserve into share capital. This report is prepared both in Chinese and English. Should there be any inconsistency between the Chinese and English versions, the Chinese version shall prevail. 1 CSG Semi-annual Report 2018 Content Section I. Important Notice, Content and Paraphrase ...................................................................................... 1 Section II. Company Profile & Financial Highlights ......................................................................................... 4 Section III. Overview of the Company’s Business ............................................................................................. 7 Section IV. Performance Discussion and Analysis ......................................................................................... 10 Section V. Important Events .............................................................................................................................. 23 Section VI. Changes in Shares and Particulars about Shareholders.............................................................. 39 Section VII. Particulars about Directors, Supervisors and Senior Executives .............................................. 46 Section VIII. Financial Report .......................................................................................................................... 48 Section IX. Documents Available for Reference ............................................................................................. 131 2 CSG Semi-annual Report 2018 Paraphrase Items Refers to Contents Company, the Company, CSG or the Group Refers to CSG Holding Co., Ltd. Foresea Life Refers to Foresea Life Insurance Co., Ltd. Ultra-thin electronic glass Refers to The electronic glass with thickness between 0.1~1.1mm Second-generation energy-saving glass Refers to Double silver coated glass Third-generation energy-saving glass Refers to Triple Silver coated glass 3 CSG Semi-annual Report 2018 Section II. Company Profile & Financial Highlights I. Company Profile Short form of the stock Southern Glass A、Southern Glass B Stock code 000012、200012 Listing stock exchange Shenzhen Stock Exchange Legal Chinese name of the Company 中国南玻集团股份有限公司 Abbr. of legal Chinese name of the Company 南玻集团 Legal English name of the Company CSG Holding Co., Ltd. Abbr. of legal English name of the Company CSG Legal Representative Chen Lin II. Person/Way to contact Secretary of the Board Representative of security affairs Name Yang Xinyu Chen Chunyan CSG Building, No.1 of the 6th Industrial CSG Building, No.1 of the 6th Industrial Contact address Road, Shekou, Shenzhen, P. R.C. Road, Shekou, Shenzhen, P. R.C. Tel. (86)755-26860666 (86)755-26860666 Fax. (86)755-26860685 (86)755-26860685 E-mail securities@csgholding.com securities@csgholding.com III. Other information 1. Way of contact Whether registered address, office address and their postal codes, website address and email address of the Company changed in the report period or not □ Applicable √Not applicable The registered address, office address and their postal codes, website address and email address of the Company did not change in the report period. More details can be found in Annual Report 2017. 2. Information disclosure and preparation place Whether information disclosure and preparation place changed in the report period or not □Applicable √ Not applicable The newspapers designated by the Company for information disclosure, the website designated by CSRC for disclosing semi-annual report and preparation place of semi-annual report did not change in the report period. More details can be found in Annual Report 2017. 4 CSG Semi-annual Report 2018 3. Other relevant information Whether other relevant information changed in the report period or not □Applicable √ Not applicable IV. Main accounting data and financial indexes Whether it has retroactive adjustment or re-statement on previous accounting data for accounting policy changed and accounting error correction or not □Yes √ No The report period The same period Increase/decrease (Jan. to Jun.2018) of last year year-on-year Operating income (RMB) 5,471,169,598 4,944,337,861 10.66% Net profit attributable to shareholders of the listed company (RMB) 352,837,153 392,992,163 -10.22% [Note (1)] Net profit attributable to shareholders of the listed company after 334,049,718 360,945,244 -7.45% deducting non-recurring gains and losses (RMB) [Note (2)] Net cash flow arising from operating activities (RMB) 764,564,088 1,019,889,454 -25.03% Basic earnings per share (RMB/Share) [Note (3)] 0.13 0.14 -7.14% Diluted earnings per share (RMB/Share) [Note (4)] 0.12 0.14 -14.29% Weighted average ROE [Note (5)] 4.09% 4.95% -0.86% Increase/decrease in End of this period End of last year this period-end over that of last year-end Total assets (RMB) 20,524,811,756 19,535,002,368 5.07% Net assets attributable to shareholders of the listed company (RMB) 8,789,183,848 8,458,587,873 3.91% The total share capital of the company as of the previous trading day of disclosure (share) 2,856,769,678 Fully diluted earnings per share calculated with latest equity (RMB/share) 0.12 Note (1): The data in the above table has included apportionment of equity incentive expense included in profit and loss of RMB 93.81 million from Jan. to Jun. 2018, which affected the net profit attributable to shareholders of the listed company of RMB 82.55 million. In the period from Jan. to June 2018, after eliminating the impact of equity incentive cost sharing, the net profit attributable to shareholders of the listed company was RMB 435.39 million, with a year-on-year increase of RMB 42.4 million and growth rate of 10.79%; Note (2): After eliminating the impact of equity incentive cost sharing, net profit attributable to shareholders of the listed company from Jan. to June 2018 was RMB 416.6 million with a year-on-year increase of RMB 55.66 million and growth rate of 15.42%; Note (3): After eliminating the impact of equity incentive cost sharing, basic earnings per share from Jan. to June 2018 was RMB 0.16 per share, with year-on-year growth rate of 14.29%; Note (4): After eliminating the impact of equity incentive cost sharing, diluted earnings per share from Jan. to June 2018 was RMB 0.16 per share, with year-on-year growth rate of 14.29%; 5 CSG Semi-annual Report 2018 Note (5): After eliminating the impact of equity incentive cost sharing, weighted average ROE from Jan. to June 2018 was 5.05%, with year-on-year growth rate of 0.1%. V. Difference of accounting data under domestic and overseas accounting standards 1. Differences of the net profit and net assets disclosed in financial report prepared under international and Chinese accounting standards □ Applicable √ Not applicable No such differences in the report period. 2. Difference of the net profit and net assets disclosed in financial report prepared under overseas and Chinese accounting standards □ Applicable √ Not applicable No such differences in the report period. 3.Explanation of the difference of accounting data under domestic and overseas accounting standards □ Applicable √ Not applicable VI. Items and amounts of extraordinary profit (gains)/loss √Applicable □ Not applicable Unit: RMB Item Amount Note Gains/losses from the disposal of non-current asset (including the write-off that -567,830 accrued for impairment of assets) Governmental subsidy reckoned into current gains/losses (not including the subsidy enjoyed in quota or ration according to national standards, which are closely relevant 22,013,800 to enterprise’s business) Other non-operating income and expenditure except for the aforementioned items 1,567,244 Less: Impact on income tax 3,453,960 Impact on minority shareholders’ equity (post-tax) 771,819 Total 18,787,435 -- It did not exist that items defined as recurring profit (gain)/loss according to the lists of extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities to the Public --- Extraordinary Profit/loss in the report period.. 6 CSG Semi-annual Report 2018 Section III Overview of the Company’s Business I. Main business of the Company in the report period CSG is a leading domestic brand of energy-saving glass and a renowned brand of solar PV products, electronic glass and display devices. Its products and technologies are very popular at home and abroad. Its main business covers R&D, manufacturing and sales of high quality float glass and architectural glass, solar glass, silicon materials, renewable energy products such as PV battery and modules, and new materials and information display products such as ultra-thin electronic glass and display devices. It also provides one-stop services such as project development, construction, operation and maintenance of solar photovoltaic power plants. Flat glass business CSG’s five production bases for flat glass now has 10 float glass production lines representing the most advanced technology in domestic market and 2 solar glass production lines. The annual capacity of various high-grade float glass has reached more than 2.32 million tons and the annual capacity of solar rolled glass has reached over 0.43 million tons. The Company owns quartz sand raw material bases in Jiangyou, Sichuan Province and Yingde, Guangdong Province. The production bases for flat glass, solar glass of the Company located in Dongguan, Chengdu, Langfang, Wujiang, and Xianning, which can produce various colors of high-grade float glass and ultra-clear float glass with thickness from 1.3mm to 25mm, each performance indicator of which has reached domestic advanced level. Those products are widely used in high-grade buildings, decoration and furniture, mirror, automotive windshield, scanner, copier, display devices and solar energy field. The Company always adheres to innovation, transformation and upgrading as well as implementation of differentiated competitive strategy, which further enhances the profitability of flat glass business. In the first half of 2018, all subsidiaries actively launched the improvement and optimization of production process, and increased the sales of high-value-added products such as original glass of automotive glass, continuing to enhance the market competitiveness of CSG’s flat glass. Architectural glass business As the nation's largest supplier of high-grade engineering and architectural glass, CSG has five architectural energy-saving glass processing bases which are located in Tianjin, Dongguan, Xianning, Wujiang and Chengdu. The Company possesses the world's most advanced glass deep-processing equipment and testing instruments, and its products cover all kinds of architectural glass. R&D and use of coating technology of the Company keep pace with the world and its technology of high end product is even of the world’s leading level. Following the second generation of energy-saving glass products, the Company has successively developed the third generation and multi-function energy-saving glass products with continuous improving energy-saving and heat-preservation effect.Its high-quality energy-saving LOW-E insulating glass has occupied more than 50% of the domestic high-end market. At present, the Company’s LOW-E coated insulating glass and LOW-E coated glass have reached annual capacity of more than 16 million square meters and 36 million square meters respectively. The Company’s quality management system for engineering and architectural glass has been respectively approved by organizations of UK AOQC and Australia QAS. The product quality which meets the national standards of the US, the UK and Australia enables CSG has an advantage in the international tendering and bidding. Since 1988, CSG's engineers and technicians have been continuously participating in the formulation and compilation of various national standards and industry standards. Various high-quality architectural glass of the Company has been used in many landmark buildings at home and abroad, such as Beijing Capital International Airport, CCTV, Shanghai Oriental Fisherman's Wharf, China Resources Headquarters Building, Shenzhen KingKey100 Building, Ping An International Finance Centre, Hangzhou International Airport, Chengdu International Finance Centre, Hangzhou Hampton and other more than ten Hilton Hotel, Hong Kong Four Seasons Hotel, Melbourne Airport, Tokyo Midtown, International Centre of Abu Dhabi. 7 CSG Semi-annual Report 2018 Solar Energy PV business CSG has entered solar photovoltaic industry since 2005 and is one of enterprises which first enter the field in China. After more than ten years of construction, operation and technological upgrading, CSG has built a complete industrial chain in the world, covering high purity polycrystalline silicon materials, silicon wafer, silicon solar cell and modules, and design and construction of solar photovoltaic power plants, by which the Company ensures the stable quality and best cost-efficiency of its PV products to customers. The quality of the Company's polysilicon has reached the advanced level in the industry and it has reserved electronic-grade polysilicon production technology. Meanwhile, the Company is also promoting silicon wafer project of Yichang CSG and technological innovation of solar cell module in Dongguan in order to enhance the anti-risk capacity of its PV industry chain and drive the balanced, stable development of its PV industry chain. When the projects are completed, the quality and performance indicators of the Company's silicon wafers and silicon solar cells will be greatly increased and the general competitiveness of the chain will be further improved. To perfect its solar energy chain, in 2015, the Company established Shenzhen CSG PV Energy Co., Ltd., a wholly-owned subsidiary, the mainline business of which is to invest and develop solar photovoltaic power plants and extend CSG's solar energy industry to cover highly value-added terminal applications. At the end of 2016, the Company newly established New Energy Application Department to generally manage the investment, operation and maintenance of the Company's PV power plants and effectively integrate internal resources, so as to enlarge and strengthen its solar energy industry. Electronic glass and display device business The Company, with its more than 20 years of experience in float glass production and powerful technology and innovation team, entered the ultra-thin electronic glass market in 2010 and gradually completed the nationwide strategic layout with four production bases, namely Hebei Panel Glass, Yichang Nanbo Photoelectric Glass, Qingyuan CSG and Xianning CSG Photovoltaic Glass. Its electronic glass products have occupied more than 50% of the domestic market.The quality of CSG’s aluminum and high-aluminum electronic glass between 0.2mm to 1.1mm has reached the domestic leading level, the performance of which is comparable to that of imported products, breaking the monopoly of foreign technology. Currently, the products are widely used in mobile terminal cover glass, tempered glass protective film, ITO conductive Glass, extending to the fields of high-speed rail, military industry, smart home and others. Since Shenzhen Nanbo Display Technology Co., Ltd was established in the year of 2000, the Company’s main products and core technologies of the business have included vacuum magnetron sputtering coating, yellow light pattern forming and TP module processing, forming two complete touch industry chain.With electronic glass as basic materials, one industry chain is glass coating→glass yellow light pattern forming→glass touch module processing and its main products covers high-grade and medium-grade ITO conductive glass, glass Sensor/G-TP module, AR, AF, RT, DLC and other differentiated products of composite coatings on glass substrates. With flexible optical film as basic materials, the other industry chain is substrate coating→flexible yellow light pattern processing→flexible touch module manufacturing and its main products include high-grade and medium-grade ITO conductive roll film, ITO copper film, roll film Sensor/F-TP module, etc. Besides, the company has been devoted to the research and development of high-end anti-glare (AG) glass substrate since 2013 and presently it is able to successfully produce high-quality sodium calcium AG glass and high-alumina AG glass. With years of development, Shenzhen Nanbo Display Technology Co., Ltd has become an application materials supplier in the display touch industry, touch sensor and TP module, and it can provide customers with a full range of one-stop touch screen material solutions. 8 CSG Semi-annual Report 2018 II. Major changes in main assets 1. Details of major changes in main assets Main assets Note of major changes Equity assets There was no significant change in equity assets in the report period. Fixed assets There was no significant change in fixed assets in the report period. Intangible assets There was no significant change in intangible assets in the report period. Construction in progress There was no significant change in construction in progress in the report period. 2. Main overseas assets □ Applicable √ Not applicable III. Core Competitiveness Analysis ① The Company currently has built complete industrial chains in the industries it involved, which has complementary advantage. In the glass industry, the Company has set up the industry chain as quartz sand → high quality float glass → architectural energy-saving glass. In the solar energy industry, the Company has finished the comprehensive construction of industry chain from high purity polycrystalline silicon materials, silicon wafer processing to cell and its module, photovoltaic rolled glass, etc. and extended to terminal application of PV power plant. In the electronic glass and display device industry, the Company has set up a complete industrial chain from the production of the base materials of electronic glass to touch module processing. With the improvement of technology in the chains, the industrial advantages emerged. ②The Company possesses a complete industry layout. At present, the Company has established large production bases in East China, West China, South China, North China and Central China, which enables the Company to be closer to the market and serve the market better. ③The Company has capability of technology innovation and product innovation. It owns independent intellectual property rights of high-end float glass production process. The technology level of ultra-thin electronic glass is in the leading position in China. The Company also keeps its R&D and production of energy-saving glass in line with the world’s advanced level, and its technique and technology in the field of solar energy keep leading position in domestic market. ④The Company possesses high anti-risk capability. It has established a perfect internal control system. Meanwhile, the management and control ability of account receivable and inventory stand in a high level within the industry. CSG’s new management team has an international perspective and a more open management philosophy. It aims to achieve further expansion of capacity and market coverage and continues to expand new business fields along with the national policies of the Belt and Road based on the intensive development of CSG's main business, making the Company be bigger and stronger, so as to be a comprehensive industrial group. 9 CSG Semi-annual Report 2018 Section IV. Performance Discussion and Analysis I. Overview Since 2018, China has continued to deepen the supply-side structural reform, steadily propelled the tasks of de-capacity, de-leveraging, de-stocking, de-cost and addressing weakness, further promoted replacing old growth drivers with new ones, and continuously improved the structure of economic development. In 2018, CSG, facing the complex and volatile economic environment and increasingly fierce market competition, seized favorable market opportunities timely and coped with all kinds of difficulties bravely to ensure the development of production and operation activities. Oriented by market demand, the Company carefully analyzed its competitive advantages, took the initiative to transform business mode and update technologies, and improved operating quality by fine management to realize the advancement in stability. In the first half of 2018, the operation revenue of the Company was RMB 5,471 million with a year-on-year increase of RMB 527 million and growth rate of 10.66%. After eliminating the impact of equity incentive cost sharing, the Company realized net profit of RMB 444 million, with a year-on-year increase of RMB 44 million and growth rate of 10.87%, and net profit attributable to the parent company of RMB 435 million, with a year-on-year increase of RMB 42 million and growth rate of 10.79%. (I) Glass business The State has continuously strengthened the structural adjustment of excess capacity, adopted strict environmental protection control policies to eliminate backward production capacity, which promoted the glass business to enter a benign operation cycle step by step, and optimized the supply and demand structure. The Company spares no effort to grasp the development opportunities of all its products in the process of supply-side structural reform. Float glass: In the first half of 2018, the market of float glass continued the favorable trend of last year. The Company adhered to the concept of high-quality, energy-saving and environmental protection product. Based on its own technological quality advantages and capacity scale advantages, it has kept strengthening internal management and intensive cultivation, improved production technology level, co-ordinated sales management and quality services,facilitated differentiation and high-end of products, consolidated its brand advantage,and improved customer satisfaction. Consequently, the operating profit rose significantly and the revenue and net profit increased by 17 % and 24% respectively. Architectural glass: In 2018, due to the sustained high prices of bulk raw materials, especially glass originals, and the growth of downstream fixed asset investment slowed down, the profitability of architectural glass was squeezed. Under this pressure, the Company responded positively through a series of measures such as adjusting its market strategy, strengthening industry synergy, optimizing product structure, increasing overseas orders, intensifying communication with customers, improving production efficiency, and guaranteed the profit growth, with revenue rising by 6% year-on-year and net profit rising by 12%. (II) Solar energy business In 2018, the State further promoted high-quality and orderly development of the photovoltaic industry, and strove to cultivate a number of high-quality photovoltaic enterprises through the hands of the market, so as to push the achieving of the connection to grid at an equal price to be achieved. Besides, the investment and technical innovation in the photovoltaic industry have led to a substantial increase in production capacity and a downward pressure on market price.In addition, as the material manufacturing of photovoltaic industry is a heavy assets industry, as well as the energy cost of Yichang Base of the group is higher than that of other companies in the same industry. Consequently, the management has adopted various strategies to respond positively including attaching importance to production technology innovation and product innovation, planning technological upgrading, and enhanced the production capacity of high value-added products. Meanwhile, In compliance with the guidance of industry put forward by the 10 CSG Semi-annual Report 2018 State, the Company determined the connection to grid at an equal price as the cost control target and industrial development goal and ultimately realized revenue increased by 3.54% year-on-year, and accumulated net profit of RMB minus 45 million. (III)Electronic glass and display device business In the first half of 2018, with the accumulation of technology and the steady development of the market, the performance of the electronic glass and display devices continued to improve. For the sector of electronic glass, the company maintained its current capacity and its technology was approaching world-class level. The high-aluminum products of Qingyuan CSG have entered into the original chips market of cover plate of the domestic mainstream brands of mobile phone and Yichang Photoelectric has successfully gained its expected technical objective in technical innovation. With the trial production of Xianning Photoelectric, a new generation of high-aluminum products will be on the market, and the competitive advantage in the high-end electronic glass market will continue to strengthen. For the sector of display device, the Company has always adhered to the high-end and smart product route. As it seized the market opportunities of vehicle touch market in the first half year of 2018, the business shipment volumes of TP module increased substantially, with gross margin rising significantly. The revenue and net profit of the electronic glass and display device business sector rose by 19% year-on-year and 162% year-on-year respectively in the first half of the year. II. Main business analysis See the relevant content in “I. Overview” in “Performance Discussion and Analysis”. Year-on-year changes of main financial data Unit: RMB The corresponding Increase /decrease The report period Reasons of change period of last year year-on-year(%) Mainly due to the increase of sales Operating revenue 5,471,169,598 4,944,337,861 10.66% and the price rise of some products Mainly due to the increase of sales Operating costs 4,099,496,754 3,737,514,462 9.69% and part of fuel costs Mainly due to the increase in Sales expenses 172,217,254 156,344,731 10.15% transportation costs Mainly due to the increase of R&D Administration expenses 540,554,002 402,554,340 34.28% investment and equity incentive cost Mainly due to the increase in cash Financial expenses 185,877,426 143,374,027 29.65% reserves and interest rate rise Mainly due to reduction of the Income tax expenses 61,371,104 80,453,021 -23.72% subsidiary income tax expense of some subsidiaries Mainly due to the increase of R&D R&D investment 185,844,867 166,809,377 11.41% investment Net cash flow arising from Mainly due to the increase in cash 764,564,088 1,019,889,454 -25.03% operating activities payments for purchases of goods. Net cash flow arising from Mainly due to the decrease in the -320,027,457 -739,345,310 -56.71% investment activities cash paid to purchase fixed assets. 11 CSG Semi-annual Report 2018 Mainly because the external Net cash flow arising from borrowings repaid in current year 454,077,150 67,852,001 569.22% financing activities reduced while the new borrowings rose. Mainly because the net amount of Net increase of cash and 898,500,181 347,483,532 158.57% external financing rose and cash equivalent increased cash reserves. Major changes on profit composition or profit resources in the report period □Applicable √Not applicable There were no major changes on profit composition or profit resources in the report period. Composition of main business Unit: RMB Increase/decrease Increase/decrease Increase/decrease Operating Operating cost Gross profit ratio of operating of operating cost of gross profit revenue revenue y-o-y y-o-y ratio y-o-y According to industry Glass industry 3,633,095,495 2,557,816,187 29.60% 13.48% 7.59% 3.86% Electronic glass and display 433,619,425 291,441,739 32.79% 19.16% 11.99% 4.30% device industry Solar energy 1,408,790,389 1,282,040,941 9% 2.62% 15.11% -9.87% industry Inter-segment -48,174,687 -45,085,039 offset According to product Glass product 3,633,095,495 2,557,816,187 29.60% 13.48% 7.59% 3.86% Electronic glass and display 433,619,425 291,441,739 32.79% 19.16% 11.99% 4.30% device product Solar energy 1,408,790,389 1,282,040,941 9% 2.62% 15.11% -9.87% product Inter-segment -48,174,687 -45,085,039 offset According to region Mainland China 4,647,386,365 3,479,308,363 25.13% 5.05% 3.05% 1.45% H.K. China 152,221,834 93,917,427 38.30% -4.33% -1.52% -1.76% Asia (excluding 538,291,685 437,927,883 18.64% 89% 97.66% -3.57% Mainland China 12 CSG Semi-annual Report 2018 and H.K.) North America 18,072,258 15,723,035 13% 95.68% 110.37% -6.08% Australia 29,949,405 21,249,428 29.05% 26.54% 18.23% 4.99% Europe 37,480,049 35,277,495 5.88% 257.98% 270.87% -3.27% Other regions 3,929,026 2,810,197 28.48% 20.70% 10.18% 6.83% III. Non - core business analysis √Applicable □ Not applicable Unit: RMB Amount Percentage to total profits Explanation of the reason Whether sustainable or not Impairment of 3,653,609 0.87% Mainly due to provision for bad debts No assets Non-operating Mainly due to income incurred by 2,595,795 0.62% No income claims for compensation Mainly due to expenses incurred by Non-operating 878,551 0.21% assessment of deviation of electricity No expenses consumption IV. Assets and liabilities 1. Significant changes in assets composition Unit: RMB End of the same period of last End of the report period year Increase or Explanation of significant Percentage decrease in Percentage to changes Amount to total Amount proportion total assets assets Mainly due to the increase in Monetary funds 3,372,045,169 16.43% 934,235,201 5.16% 11.27% strategic cash reserves as well as debt restructuring Accounts 707,375,368 3.45% 679,943,915 3.76% -0.31% receivable Inventory 713,622,649 3.48% 630,593,776 3.48% Fixed assets 11,494,297,683 56% 11,773,502,135 65.05% -9.05% Construction in 1,190,859,428 5.80% 1,259,425,371 6.96% -1.16% progress Short-term 3,949,419,972 19.24% 2,399,694,000 13.26% 5.98% Mainly due to the increase of 13 CSG Semi-annual Report 2018 borrowing borrowing Mainly due to the issuance of Long-term 2,364,000,000 11.52% 1,624,000,000 8.97% 2.55% medium-term bill during the borrowing period 2. Assets and liabilities at fair value □Applicable √Not applicable 3. Limited asset rights as of the end of the report period Item Closing book value Limited reason Monetary funds 13,791,823 Limited margin circulation Fixed assets 2,369,789,041 Limited financing lease Total 2,383,580,864 V. Investment analysis 1. Overall situation √Applicable □ Not applicable Investment in the report period (RMB) Investment in the same period of last year ( RMB) Change range 327,218,870 763,429,330 -57.14% 2. The major equity investment obtained in the report period □Applicable √Not applicable 14 CSG Semi-annual Report 2018 3. The major ongoing non-equity investment in the report period √Applicable □ Not applicable Unit: RMB 0,000 Accumula tive Reasons for Fixed Amount amount Accumulative not Way asset invested actually Sourc revenue achieving of Industry Expected Date of Index of Project invest in the invested e of Progress of project achieved by the planned invest involved return disclosure disclosure ment report by the end funds the end of the progress and ment or not period of the report period the expected report return period The technical renovation of Own 600T production line in Hebei funds CSG. At present, the demolition 600T and of the project has been No gains as technicalr borro Manufa completed, and re-masonry and the project Notice enovation Self-b wings March 16, Yes cturing 266 266 rehabilitation are under way, 3,887 0 is in the number: project of uilt from 2018 industry and the denitrification project construction 2018-012 Hebei financ has begun construction. The period. CSG ial whole project meets the institu scheduled requirements, and it tions is under construction. Yichang Own CSG has added 1GW capacity The January 06, Notice Manufa CSG to Self-b funds of high-efficient polysilicon remaining 2016, April number: Yes cturing 508 46,182 14,853 671 add a uilt and wafer to achieve 2.2GW 500MW 16, 2016, July 2016-001、 industry 1GW borro capacity of polysilicon wafer. capacity 28, 2018 2016-018、 15 CSG Semi-annual Report 2018 silicon wings Construction of the first 500 construction 2018-040 wafer from MW capacity of polysilicon project has project financ wafer was completed in been ial September 2017,and the stopped. institu original capacity target has been tions achieved. The remaining 500MW capacity construction project has been stoped. CSG plans to construct a PV power plant within two years from 2016 to 2017. Its Own wholly-owned subsidiary, funds Shenzhen CSG PV Energy Co., and Ltd. will self-build 200MW and PV power borro the remaining 140MW will be Part of the Manufa Notice plant Self-b wings constructed by CSG with Qibin project has January 22, Yes cturing 582 25,490 4,344 2,667 number:201 investmen uilt from Group. During 2016 to June been 2016 industry 6-006 t financ 2018, Shenzhen CSG PV completed. ial developed and built a total of institu 81.5MW of photovoltaic power tions stations, including 61.5MW of distributed photovoltaic power plants and 20MW of centralized photovoltaic power plants. 4 million Own The Company plans to No gains as square Manufa funds construct a 4 million square Notice Self-b the project meters Yes cturing 5,986 57,444 and meters PV glass production line 10,543 0 May 21, 2016 number:201 uilt is in the light guide industry borro for new type ultra-thin LCD 6-025 construction plate and wings display. The line is also 16 CSG Semi-annual Report 2018 PV glass from provided with a capacity of period. productio financ higher strength ultra-thin n line ial electronic glass than CSG institu Qingyuan. The equity of tions Xianning Feng Wei Technology Co., Ltd. has been acquired in 2016 and the project is under construction. Hebei Plan to establish a production Panel line for medium-alumina Glass ultra-thin electronic glass in No gains as project of Manufa Hebei Panel Glass, using clean the project Notice Self-b Own October 29, medium-a Yes cturing 0 1,266 natural gas as the fuel, and 0 0 is in the number:201 uilt funds 2014 lumina industry produce 0.33mm~1.1mm construction 4-030 ultra-thin medium-alumina ultra-thin period. electronic glass with float process. The glass project was still in preparation. Plan to increase two coating glass production lines and By now, Expansion support insulating glass part of the on capacity. When the project is project has energy-sa completed, the annual been Manufa Notice ving glass Self-b capacities of wide flat coated completed December 25, Yes cturing 0 21,239 -- 0 0 number:201 capacity uilt glass and coated insulating and the 2010 industry 0-046 of glass will rise by 3 million revenue was Wujiang square meters and 1.2 million not Project square meters respectively. The calculated wide flat coated glass line of 3 individually. million square meters has been 17 CSG Semi-annual Report 2018 completed, and the others will be invested according to market situations. Yichang Plan to build a crystalline CSG silicon solar cell production line 700MW Manufa with annual capacity of The project Notice Self-b December 25, crystalline Yes cturing 0 0 -- 700MW. The project was 0 0 was number:201 uilt 2010 silicon industry suspended and further suspended. 0-046 solar cell investment will be based on project actual industry situations. Expandin Plan to expand the solar module g 500MW production line with annual Manufa The project Notice solar Self-b capacity of 500MW. The project January 18, Yes cturing 0 0 -- 0 0 was number:201 module uilt was suspended and further 2011 industry suspended. 1-003 project in investment will be based on Dongguan actual industry situations. The Company plans to Relocatio construct a module workshop in n and Xianning, Hubei Province, of equipment which the final capacity will be upgrading 500MW. By relocation of some Manufa The project Notice of the Self-b of the module equipment of its Yes cturing 0 0 -- 0 0 was April 16, 2016 number:201 solar uilt subsidiary, Dongguan CSG PV industry suspended. 6-018 module Technology Co., Ltd. and productio purchase of some new n line in equipment, the first stage Dongguan capacity of the Xianning workshop will be 300MW and, 18 CSG Semi-annual Report 2018 afterwards, it will be expanded to 500MW as required by the market conditions. Solar online self-cleani The Company plans to Manufa The project Notice ng coated Self-b construct an online Yes cturing 0 0 -- 0 0 was April 16, 2016 number:201 glass uilt self-cleaning coated glass line industry suspended. 6-018 project of in Dongguan. Dongguan CSG The Company plans to construct an architectural glass Malaysia-i plant in Negeri Sembilan, nvested Manufa Malaysia. The Phase I capacity The project Notice Self-b architectur Yes cturing 0 0 -- of the newly-built plant will be 0 0 was April 16, 2016 number:201 uilt al glass industry 1,200,000 square meters suspended. 6-018 plant insulating glass and 1,000,000 square meters single coated glass. Total -- -- -- 7,342 151,887 -- -- 33,627 3,338 -- -- -- 19 CSG Semi-annual Report 2018 4. Financial assets investment (1) Securities investment □ Applicable √ Not applicable (2) Derivative investment □ Applicable √ Not applicable VI. Sale of major assets and equity 1. Sale of major assets □ Applicable √ Not applicable There was no sale of major assets in the report period. 2. Sale of major equity □ Applicable √ Not applicable VII. Analysis of main subsidiaries and joint-stock companies √Applicable □ Not applicable Particular about main subsidiaries and joint -stock companies which have influence on the Company's net profit by over 10% Unit: RMB Name of Registered Operating Type Main business Total assets Net assets Operating revenue Net profit company capital profit Development, Chengdu CSG manufacture and Subsidiary 260 million 1,058,545,003 510,073,253 549,440,862 121,815,810 103,491,263 Glass Co., Ltd. sales of various special glass Development and Xianning CSG manufacture and Subsidiary 235 million 813,053,777 418,589,912 395,860,809 64,778,232 57,874,224 Glass Co., Ltd. sales of various special glass Manufacture and Wujiang CSG 565.04 Subsidiary sales of various 1,789,551,580 877,988,690 831,333,867 137,948,797 119,532,274 Glass Co., Ltd. million special glass Manufacture and Dongguan sales of CSG Solar Subsidiary 480 million 1,322,873,969 661,957,756 526,314,116 76,749,240 65,347,973 Solar-Energy Glass Glass Co., Ltd. products 20 CSG Semi-annual Report 2018 Manufacture and Hebei CSG USD 48.06 Subsidiary sales of various 839,991,793 436,284,711 297,922,206 39,031,404 29,532,840 Glass Co., Ltd. million special glass Dongguan CSG Deep processing Subsidiary 240 million 919,028,260 491,472,854 411,980,590 20,542,961 19,153,525 Architectural of glass Glass Co., Ltd. Wujiang CSG East China Deep processing Subsidiary 320 million 816,346,288 449,638,623 302,466,866 12,968,250 12,581,038 Architectural of glass Glass Co., Ltd. Tianjin CSG Development, Energy producing and sales Subsidiary 336 million 756,155,581 529,888,778 353,514,982 20,739,218 17,628,335 Conservation of energy-saving Glass Co., Ltd special glass Manufacture and Yichang CSG sales of high purity 1,467.98 Polysilicon Subsidiary 3,999,258,649 1,352,851,454 859,485,208 -85,829,124 -73,792,946 silicon material million Co., Ltd. products Qingyuan CSG Development, New producing and sales Energy-Saving Subsidiary 300 million 714,720,246 320,410,765 144,999,746 45,527,193 38,873,189 of ultra-thin Materials Co., electronic glass Ltd. Shenzhen Manufacture and Nanbo Display Subsidiary sales of display 143 million 1,666,210,320 806,171,276 240,861,525 52,811,108 11,154,553 Technology device products Co., Ltd. CSG (Hongkong) Investment and HKD 1 Subsidiary 1,369,789,943 1,251,637,700 0 79,164,800 81,285,539 Investment trading million Co., Ltd. Particular about subsidiaries obtained or disposed in report period □ Applicable √ Not applicable VIII. Structured main bodies controlled by the Company □ Applicable √ Not applicable IX. Prediction of business performance from January to September 2018 Alert of loss or significant change in accumulative net profit from the beginning of year to the end of the next report period or compared with the same period of last year, and statement of causations. 21 CSG Semi-annual Report 2018 □ Applicable √Not applicable X. Risks and response measures the Company faces In 2018, in the face of “New Normal” of domestic economic development and “New CSG” construction task of the Company, the Company will face the following risks and challenges: ① In 2018, under the efforts of the Board of Directors and all employees, the daily operation of the Company is stable. However, the Company still faces the risk of lack of high-end talent reserve. To cope with aforesaid risks, the Company will take the following measures: A. Construct new corporate culture of CSG as soon as possible, establish an kind of open, equal, fair and enterprising corporate culture, and reinforce internal core cohesion of employees; B. Establish remuneration incentive system which related to performance and improve employee incentive mechanism; C. Strengthen internal employee training, introduce externalhigh-quality talent, and rapidly establish a high-quality talent team; D. Establish sustainable talent recruitment, cultivation, utilization, retaining, and development management system; create a future-oriented human resource production, development, supply system that can support the future development of CSG. ②The glass industry is under pressure from fierce competition for similar products and rising raw materials, the solar energy and PV industry is faced with the risk of industrial integration and price fluctuation, the electronic glass and display devices industry will encounter the risk of accelerated technical upgrading and slow down in electronic product demand. To cope with aforesaid risks, the company will take the following measures: A. In the flat glass industry, the Company will accelerate the technical upgrading and reform of the existing production line to realize differential operation, expand industrial scale and strengthen industrial competitiveness through industrial M&A; B. In architectural glass industry, the Company will strengthen the development of high-end market and overseas market, consolidate the competitive advantage of the Company, and actively develop the residence market, explore new profit growth point, and at the same time, maintain the industrial advantageous position of the Company through market-oriented extension of industrial chain; C. In the solar photovoltaic industry, the Company intends to further improve the power generation efficiency of silicon wafers, cells and modules, reduce manufacturing costs, and improve the market competitiveness of products through technical upgrading measures such as ingot single crystal and wet-method black silicon PERC technology. At the same time, the Company will firmly upgrade its technology towards electronic-grade polysilicon and excavate new products and explore new product market; D. In electronic glass and display devices industry, the Company will strengthen research and development of new technology, new product, maintain its technical leading advantage in the industry, and further improve the product quality of ultra-thin electronic glass, so as to rapidly develop terminal market and improve industrial profitability. ③ Since 2018, the market price of the glass and solar industry have experienced great fluctuations, while the price of upstream raw material has fluctuated significantly, and meanwhile the labor price is constantly rising, which has brought risks to the operation of the Company. To cope with risk, the Company will take the following measures: A. Vigorously exploit potential and increase efficiency, and effectively implement energy saving and consumption reduction; B. Focus on the market change, and lock the price of bulk commodity at proper time; C. Utilize bulk purchase advantage to reduce purchase cost; D. Improve automatic production level, raise labor productivity. ④ Risk of fluctuation of foreign exchange rate: At present, nearly 14.37% of the main business income of the Company are from overseas, in the future, the Company will further develop overseas business, and therefore, the fluctuation of exchange rate will bring certain risk to the operation of the Company. To cope with such risk, the Company will settle exchange in time and use safe and effective risk evading instrument and product to relatively lock exchange rate and reduce the risk caused by fluctuation of exchange 22 CSG Semi-annual Report 2018 rate. 23 CSG Semi-annual Report 2018 Section V. Important Events I. Particulars about annual general meeting and extraordinary general meeting held in the report period 1. Particulars about Shareholders' General Meeting in the report period Investor Meeting session Type of meeting Hold date Disclosure date Disclosure index participation ratio The First Extraordinary Extraordinary Juchao website(www.cninfo.com.cn) Shareholders’ 26.99% Mar. 15, 2018 Mar. 16, 2018 general meeting Notice number:2018-011 General Meeting of 2018 Annual Shareholders’ Annual general Juchao website(www.cninfo.com.cn) 27.27% May 14, 2018 May 15, 2018 General Meeting meeting Notice number:2018-024 of 2017 2. Extraordinary general meeting which is requested to convene by the preferred shareholders who have resumed the voting right □ Applicable √Not applicable II.Profit distribution and capitalization of capital reserve in the report period □ Applicable √Not applicable The Company has no plans of cash dividend distribution, bonus shares being sent or converting capital reserve into share capital. III. Commitments completed by the actual controllers, the shareholders, the related parties, the purchasers and the Company during the report period and those that hadn’t been completed execution by the end of the report period √Applicable □ Not applicable Type of Commit-m Commit- Implement- Commitments Promisee Content of commitments commitments ent date ment term ation Commitments The original The Company has implemented share By the end of Commitment for non-tradable merger reform in May 2006. Till June the report of share 2006-5-22 N/A Share Merger shareholder 2009, the share of the original period, the reduciton Reform Shenzhen non-tradable shareholders which above 24 CSG Semi-annual Report 2018 International holding over 5% total shares of the shareholders Holdings (SZ) Company had all released. Therein, the of the Limited and Xin original non-tradable shareholder Company had Tong Chan Shenzhen International Holdings (SZ) strictly carried Industrial Limited and Xin Tong Chan Industrial out their Development Development (Shenzhen) Co., Ltd. both promises. (Shenzhen) Co., are wholly-funded subsidiaries to Ltd. Shenzhen International Holdings Limited (hereinafter Shenzhen International for short) listed in Hong Kong united stock exchange main board. Shenzhen International made commitment that it would strictly carry out related regulations of Securities Law, Administration of the Takeover of Listed Companies Procedures and Guiding Opinions on the Listed Companies’ Transfer of Original Shares Released from Trading Restrictions issued by CSRC during implementing share decreasingly-held plan and take information disclosure responsibility timely. Foresea Life Insurance Co., Ltd., By the end of Shenzhen Jushenghua Co., Ltd. and During the report Chengtai Group Co., Ltd. issued the period period, the Commitment detailed report of equity change on 29 Foresea Life when above of horizontal June 2015, in which, they undertook to Commitments in Insurance Co., Foresea shareholders competition, keep independent from CSG in aspects report of Ltd., Shenzhen Life of the affiliate of personnel, assets, finance, 2015-6-29 acquisition or Jushenghua Co., remains Company had Transaction organization set-up and business as long equity change Ltd. and Chengtai the largest strictly carried and capital as Foresea Life Insurance remained the Group Co., Ltd. sharehold out their occupation largest shareholder of CSG. Meanwhile, er of the promises. they made commitment on regularizing Company related transaction and avoiding industry competition. Commitments in assets Not applicable reorganization Commitments in initial public Not applicable offering or re-financing 25 CSG Semi-annual Report 2018 During CSG has promised not to provide loans the The and other forms of financial assistance implemen Equity incentive The listed 2017-10-1 commitment for restricted stocks for the incentive tation of commitment company 0 is in normal targets under this plan, including the equity performance. providing guarantees for their loans. incentive plan Other commitments for medium and Not applicable small shareholders Completed on Yes time(Y/N) If the commitments is not fulfilled on Not applicable time, explain the reasons and the next work plan IV. Engaging and dismissing of CPA Whether the semi-annual report has been audited or not □ Yes √ No The semi-annual report of the Company has not been audited. V. Explanation from Board of Directors, Supervisory Committee and Independent Directors (if applicable) for “Non-standard audit report” of the period that issued by CPA □ Applicable √ Not applicable VI. Explanation from Board of Directors for “Non-standard audit report” of the previous year □ Applicable √ Not applicable VII. Issues related to bankruptcy and reorganization □ Applicable √ Not applicable VIII. Lawsuits Significant lawsuits and arbitrations □ Applicable √ Not applicable 26 CSG Semi-annual Report 2018 There were no significant lawsuits or arbitrations in the report period. Other lawsuits □ Applicable √ Not applicable IX. Penalty and rectification □ Applicable √ Not applicable No penalty or rectification for the Company in the report period. X. Integrity of the Company and its controlling shareholders and actual controllers □ Applicable √ Not applicable XI. Implementation of the Company’s stock incentive plan, employee stock ownership plan or other employee incentives √ Applicable □ Not applicable On Oct. 10, 2017, the third meeting of the company's eighth session of the board of directors deliberated and approved 2017 A-share Restricted Stock Incentive Plan (Draft) of CSG and its abstract, the Implementation Evaluation and Management Measures of 2017 A-share Restricted Stock Incentive Plan (Draft) of CSG and the Proposal to Apply for the Shareholders’ Meeting to Authorize the Board of Directors to Handle the Issues Related to 2017 A-share Restricted Stock Incentive Plan. For the above-mentioned contents, please refer to the Decision Bulletin of the Third Meeting of the Eighth Session of the Board of Directors (Notice No. 2017-063) published in www.cninfo.com.cn on Oct. 11, 2017. The independent directors of the company have issued independent opinions on the issues related to the company's 2017 restricted A-share incentive plan. On Oct. 26, 2017, 2017 fifth temporary shareholders’ meeting of the company convened the above three resolutions. On Dec. 11, 2017, the 21st temporary meeting of the eighth session of the board of directors deliberated and approved the Resolution on Adjusting the Granting List and Quantity of Targets of 2017 A-share Restricted Stock Incentive Plan. It is determined that 454 staff will be granted with 97,511,654 restricted shares on Dec. 11, 2017. The first award price is RMB 4.28 /share and 17,046,869 restricted shares will be reserved. The granting of restricted shares was completed on Dec. 25, 2017. For detailed contents, refer to the Announcement on Completion of the Granting of 2017 Restricted A-shares (Notice No.: 2017-079) published in www.cninfo.com.cn on Dec. 22, 2017. According to the relevant provisions of the Accounting Standards for Enterprises, the implementation of restricted shares will have certain impacts on the financial situation and operating results of the company in the coming years. The results will be based on the annual audit report issued by the accounting firm. XII.Major related transaction 1. Related transaction with routine operation concerned □ Applicable √ Not applicable In the report period, the Company did not have related transaction with routine operation concerned. 27 CSG Semi-annual Report 2018 2. Related transaction with acquisition of assets or equity, sales of assets or equity concerned □ Applicable √ Not applicable In the report period, the Company did not have related transaction with acquisition of assets or equity, sales of assets or equity concerned. 3. Related transaction with jointly external investment concerned □ Applicable √ Not applicable In the report period, the Company did not have related transaction with jointly external investment concerned. 4. Credits and liabilities with related parties □ Applicable √ Not applicable There were no credits and liabilities with related parties in the report period. 5. Other major related transaction □ Applicable √ Not applicable There was no other major related transaction in the report period. XIII.Particular about non-operating fund of listed company occupied by controlling shareholder and its affiliated enterprises □Applicable √Not applicable It did not exist that non-operating fund of the listed company was occupied by controlling shareholder or its affiliated enterprises in the report period. XIV. Significant contracts and their implementation 1. Trusteeship, contract and leasing (1) Trusteeship □ Applicable √ Not applicable No trusteeship for the Company in the report period. (2) Contract □ Applicable √ Not applicable No contract for the Company in the report period. 28 CSG Semi-annual Report 2018 (3) Leasing □ Applicable √ Not applicable No leasing for the Company in the report period. 2. Major guarantees √Applicable □ Not applicable (1) Guarantee Unit: RMB 0,000 Particulars about the external guarantee of the Company (Barring the guarantee for subsidiaries) Actual date of Complete Guarantee Name of the Related Actual Guarantee happening (Date Guarantee Guarantee implement for related Company Announcement guarantee limit of signing type term ation or party (Yes or guaranteed disclosure date limit agreement) not no) Guarantee of the Company for the subsidiaries Actual date of Complete Guarantee Name of the Related Actual Guarantee happening (Date Guarantee Guarantee implement for related Company Announcement guarantee limit of signing type term ation or party (Yes or guaranteed disclosure date limit agreement) not no) Chengdu CSG Joint liability 2017-07-31 5,000 2017-08-16 5,000 1 year No No Glass Co.,Ltd. guarantee Dongguan CSG Joint liability Architectural 2017-07-31 11,200 2017-08-11 10,000 1 year Yes No guarantee Glass Co., Ltd. Dongguan CSG Joint liability Architectural 2017-01-13 18,000 2017-02-09 13,000 1 year Yes No guarantee Glass Co., Ltd. Xianning CSG Joint liability 2017-07-31 7,000 2017-08-11 2,000 1 year Yes No Glass Co., Ltd. guarantee Xianning CSG Joint liability 2017-07-31 10,000 2017-09-12 1,000 1 year No No Glass Co., Ltd. guarantee Sichuan CSG Energy Joint liability 2017-07-31 7,000 2017-08-11 2,000 1 year No No Conservation guarantee Glass Co., Ltd. Sichuan CSG Energy Joint liability 2017-01-23 5,000 2017-04-11 2,000 1 year Yes No Conservation guarantee Glass Co., Ltd. Wujiang CSG Joint liability 2016-08-12 10,000 2017-03-07 5,000 1 year Yes No Glass Co., Ltd. guarantee 29 CSG Semi-annual Report 2018 Wujiang CSG Joint liability 2017-11-27 10,000 2017-11-30 3,000 1 year Yes No Glass Co., Ltd. guarantee Wujiang CSG East China Joint liability 2016-08-12 10,000 2017-04-28 6,000 1 year Yes No Architectural guarantee Glass Co., Ltd. Wujiang CSG East China Joint liability 2016-08-12 10,000 2018-04-20 6,000 1 year No No Architectural guarantee Glass Co., Ltd. Wujiang CSG East China Joint liability 2017-11-27 10,000 2017-11-30 3,000 1 year Yes No Architectural guarantee Glass Co., Ltd. Wujiang CSG East China Joint liability 2017-07-31 10,000 2017-09-14 10,000 1 year No No Architectural guarantee Glass Co., Ltd. Dongguan CSG Joint liability Solar Glass Co., 2017-07-31 15,000 2017-8-11 2,800 1 year No No guarantee Ltd. Yichang Nanbo Joint liability 2017-05-31 3,648 2017-06-02 3,600 1 year Yes No Display Co., Ltd. guarantee Tianjin CSG Joint liability Energy-Saving 2016-08-12 10,000 2017-02-14 2,000 1 year Yes No guarantee Glass Co., Ltd. Dongguan CSG Joint liability 2017-05-22 15,000 2017-06-15 4,680 1 year No No PV-tech Co., Ltd. guarantee Yichang CSG Joint liability Polysilicon Co., 2017-08-07 6,600 2017-08-25 4,000 1 year No No guarantee Ltd. Yichang CSG Joint liability Polysilicon Co., 2017-06-23 30,000 2017-07-10 5,000 1 year No No guarantee Ltd. Qingyuan CSG New Joint liability Energy-Saving 2017-09-15 5,000 2017-09-22 2,495 1 year No No guarantee Materials Co., Ltd. Zhanjiang CSG 2017-07-31 9,000 2017-09-26 9,000 Joint liability 3 years No No 30 CSG Semi-annual Report 2018 New Energy Co., guarantee Ltd. Xianning CSG Joint liability Photovoltaic Glass 2016-08-12 30,000 2017-01-03 19,000 3 years No No guarantee Co., Ltd. Xianning CSG Joint liability Photovoltaic Glass 2017-07-31 20,000 2017-09-07 3,400 3 years No No guarantee Co., Ltd. Yichang Nanbo Joint liability Photoelectric 2017-05-22 5,472 2017-05-26 5,400 3 years No No guarantee Glass Co., Ltd. Yichang Nanbo Joint liability Photoelectric 2016-12-14 2,432 2017-05-23 2,400 1 year Yes Yes guarantee Glass Co., Ltd. Yichang Nanbo Joint liability Photoelectric 2017-05-22 10,032 2017-05-31 7,094 3 years No No guarantee Glass Co., Ltd. Yichang CSG Joint liability Polysilicon Co., 2017-05-22 20,000 2017-06-22 13,043 3 years No No guarantee Ltd. Dongguan CSG Joint liability 2017-11-27 20,000 2017-12-20 16,881 3 years No No PV-tech Co., Ltd. guarantee Wujiang CSG Joint liability 2017-08-28 30,000 2017-09-13 25,000 3 years No No Glass Co., Ltd. guarantee Xianning CSG Joint liability 2017-08-28 25,000 2017-09-18 18,751 3 years No No Glass Co., Ltd. guarantee Dongguan CSG Joint liability Solar Glass Co., 2017-08-07 20,000 2017-09-22 18,500 3 years No No guarantee Ltd. Yichang CSG Joint liability Polysilicon Co., 2017-06-23 20,000 2017-06-28 16,049 3 years No No guarantee Ltd. Sichuan CSG Energy Joint liability 2017-09-25 15,000 2017-09-30 11,250 3 years No No Conservation guarantee Glass Co., Ltd. Hebei CSG Glass Joint liability 2017-10-10 20,000 2017-10-30 16,881 3 years No No Co., Ltd. guarantee Chengdu CSG Joint liability 2017-09-25 20,000 2017-09-28 15,929 3 years No No Glass Co.,Ltd. guarantee 31 CSG Semi-annual Report 2018 Dongguan CSG Joint liability Architectural 2017-01-13 18,000 2017-02-09 13,000 1 year No No guarantee Glass Co., Ltd. Wujiang CSG Joint liability 2017-08-28 10,000 2017-09-20 2,000 1 year No No Glass Co., Ltd. guarantee Wujiang CSG East China Joint liability 2017-11-27 10,000 2018-02-12 1,000 1 year No No Architectural guarantee Glass Co., Ltd. Wujiang CSG East China Joint liability 2017-11-27 10,000 2018-06-22 1,000 1 year No No Architectural guarantee Glass Co., Ltd. Wujiang CSG East China Joint liability 2017-11-27 10,000 2018-04-19 1,000 1 year No No Architectural guarantee Glass Co., Ltd. Yichang CSG Joint liability Polysilicon Co., 2017-06-23 30,000 2017-07-10 5,000 1 year No No guarantee Ltd. Xianning CSG Joint liability Photovoltaic Glass 2017-07-31 20,000 2017-09-07 5,000 3 years No No guarantee Co., Ltd. Wujiang CSG Joint liability 2017-08-28 10,000 2017-09-20 5,000 1 year No No Glass Co., Ltd. guarantee Chengdu CSG Joint liability 2017-05-22 5,000 2018-04-02 4,500 1 year No No Glass Co.,Ltd. guarantee Sichuan CSG Energy Joint liability 2017-05-02 5,000 2018-04-08 2,700 1 year No No Conservation guarantee Glass Co., Ltd. Wujiang CSG Joint liability 2017-11-27 10,000 2018-03-07 2,000 1 year No No Glass Co., Ltd. guarantee Dongguan CSG Joint liability 2017-05-22 10,500 2017-06-15 5 3 years No No PV-tech Co., Ltd. guarantee Chengdu CSG Joint liability 2017-07-31 7,000 2017-08-11 1,500 1 year No No Glass Co., Ltd. guarantee Xianning CSG Joint liability 2017-07-31 7,000 2017-08-11 2,000 1 year No No Glass Co., Ltd. guarantee Wujiang CSG 2018-03-09 10,000 2018-06-28 3,500 Joint liability 1 year No No 32 CSG Semi-annual Report 2018 Glass Co., Ltd. guarantee Wujiang CSG Joint liability 2017-08-28 10,000 2017-09-20 1,000 1 year No No Glass Co., Ltd. guarantee Dongguan CSG Joint liability Solar Glass Co., 2017-11-27 3,200 2018-06-14 3,000 1 year No No guarantee Ltd. Dongguan CSG Joint liability Solar Glass Co., 2017-09-15 4,000 2017-10-13 4,000 1 year No No guarantee Ltd. Tianjin CSG Joint liability Energy-Saving 2018-04-09 5,000 2018-06-22 2,000 1 year No No guarantee Glass Co., Ltd. Xianning CSG Joint liability Energy-Saving 2017-07-31 7,000 2017-08-11 3,000 1 year No No guarantee Glass Co., Ltd. China Southern Joint liability Glass (Hong 2018-06-20 6,009 2018-06-25 6,009 1 year No No guarantee Kong) Limited Total amount of actual Total amount of approving occurred guarantee for guarantee for subsidiaries in report 21,009 subsidiaries in report period 359,367 period (B1) (B2) Total balance of actual Total amount of approved guarantee for subsidiaries at guarantee for subsidiaries at the 585,813 the end of reporting period 307,367 end of reporting period (B3) (B4) Guarantee of subsidiaries for subsidiaries Guarante Related Actual date of Complete e for Announce Actual Name of the Company Guarantee happening (Date Guarantee Guarantee implemen related ment guarantee guaranteed limit of signing type term tation or party disclosure limit agreement) not (Yes or date no) Dongguan CSG Joint liability 2017-05-22 15,000 2017-06-15 4,680 1 year No Yes PV-tech Co., Ltd. guarantee Dongguan CSG Joint liability 2017-05-22 10,500 2017-06-15 5 3 years No Yes PV-tech Co., Ltd. guarantee Total amount of actual Total amount of approving occurred guarantee for guarantee for subsidiaries in report 0 4,685 subsidiaries in report period period (C1) (C2) Total amount of approved Total balance of actual 25,500 4,685 guarantee for subsidiaries at the guarantee for subsidiaries at 33 CSG Semi-annual Report 2018 end of reporting period (C3) the end of reporting period (C4) Total amount of guarantee of the Company (total of three abovementioned guarantee) Total amount of approving Total amount of actual guarantee in report period 21,009 occurred guarantee in report 364,052 (A1+B1+C1) period (A2+B2+C2) Total amount of approved Total balance of actual guarantee at the end of report 611,313 guarantee at the end of report 312,052 period (A3+B3+C3) period (A4+B4+C4) The proportion of the total amount of actual guarantee in the net 35.50% assets of the Company (that is A4+ B4+C4) Including: Amount of guarantee for shareholders, actual controller and its 0 related parties(D) The debts guarantee amount provided for the guaranteed parties 0 whose assets-liability ratio exceed 70% directly or indirectly(E) Proportion of total amount of guarantee in net assets of the 0 Company exceed 50%(F) Total amount of the aforesaid three guarantees(D+E+F) 0 The Company shall bear joint and several liabilities in guarantee Explanations on possibly bearing joint and several liquidating range if the subsidiaries fail to fulfill the obligation of responsibilities for undue guarantees (if any) repayment. Explanations on external guarantee against regulated procedures Nil (2) Illegal external guarantee □ Applicable √ Not applicable No illegal external guarantee in the report period. 3. Other material contracts □ Applicable √ Not applicable No other material contracts for the Company in the report period. XV. Social responsibilities 1. Significant environmental situation Name of Name of Numb Exhaust Implementatio Approved Way of Emission Total Excessive Company or major er of vent n of pollutant total emission concentration emission emissions subsidiary pollutants Exhau distributio emission emission 34 CSG Semi-annual Report 2018 and st n standards characteristi vent c contaminant s 《Emission st Particulate Discharge andard of air s:96.82t/a; Dust\Soot\ after the Dust≤30mg/m; Particulates: Xianning Chimney, pollutants fo SO2:636.5 Reach the SO2\ treatment of soot≤40 mg/m; 19.6t; CSG Glass 16 Exhaust r flat glass in t/a; discharge Nitrogen denitrificati SO2≤200 mg/m; SO2:99.3t; Co., Ltd. gas outlet dustry》 Nitrogen standard oxide on and dust NOx≤350 mg/m NOx:233.5t (GB26453-20 oxides: removal 11) 1113.89t/a Particulate 《Emission st s:129.395t Discharge Particulates: andard of air /a; Dust\ Soot\ after the Dust≤26.8mg/m; 38.347t; Chengdu Chimney, pollutants fo SO2:1035. Reach the SO2\ treatment of soot≤23.8 mg/m; SO2::433.32 CSG Glass 15 Exhaust r flat glass in 162t/a; discharge Nitrogen denitrificati SO2≤263 mg/m; 6t; Co., Ltd. gas outlet dustry》 Nitrogen standard oxide on and dust NOx≤331.6 mg/m NOx:536.60 (GB26453-20 oxides: removal 8t 11) 1811.536t/ a 《Emission Standard for Particulate Discharge Air Pollutants s:59.78t/a; Dust\ Soot\ after the Particulates≤8.7 in Electronic Particulates: Hebei CSG Chimney, SO2:498.1 Reach the SO2\ treatment of mg/m Glass 2.46t; Glass Co., 10 Exhaust 8t/a; discharge Nitrogen denitrificati SO2≤50.3 mg/m; Industry》 SO2:14.27t; Ltd. gas outlet Nitrogen standard oxide on and dust NOx≤265.8 mg/m (DB13/2168 NOx:65.18t oxides: removal -2015)Hebei 982.2t/a Local Standard Discharged 《Comprehen to the sive Sewage sewage Discharge treatment PH\COD\ Standard》 COD:198. Yichang plant after Discharge COD:24.86t; rd Ammonia PH:6-9; Grade 3 47t/a; Reach the CSG being outlets of Ammonia nitrogen/flu 3 COD≤500mg/L; standard Ammonia discharge Polysilicon treated by waste nitrogen:0.3 oride Fluoride≤10 mg/L (GB8978-199 nitrogen:2. standard Co., Ltd. the water 5t 6), implement 49t/a Company's grade 1st sewage standard for treatment fluoride station. 35 CSG Semi-annual Report 2018 《Emission st Particulate Discharge andard of air Particulates: s:76.91t/a; Particulates\ after the Particulates≤20mg/ Wujiang Chimney, pollutants fo 13.1t; SO2:238.2 Reach the SO2\ treatment of m; SO2≤200 CSG Glass 39 Exhaust r flat glass in SO2:28.1t; 8t/a; discharge Nitrogen denitrificati mg/m; NOx≤300 Co., Ltd. gas outlet dustry》 NOx:194.76 Nitrogen standard oxide on and dust mg/m (GB26453-20 t oxides: removal 11) 818.04t/a 《Emission st Particulate Discharge andard of air Particulates: s:34.85t/a; Dongguan Dust\ Soot\ after the Dust≤5mg/m; Chimney, pollutants fo 8.75t; SO2:300.9 Reach the CSG Solar SO2\ treatment of soot≤10mg/m; 22 Exhaust r flat glass in SO2:104.49t; 9t/a; discharge Glass Co., Nitrogen denitrificati SO2≤400 mg/m; gas outlet dustry》 NOx:236.84 Nitrogen standard Ltd. oxide on and dust NOx≤650 mg/m (GB26453-20 t oxides: removal 11) 535.67t/a Discharged to the Discharge sewage Limits of treatment Water Dongguan PH:6~9; COD:5.4 plant after Discharge Pollutants in COD:0.37t; CSG PH\COD\ COD≤16 mg/L; t/a; Reach the being outlets of Guangdong Ammonia Architectura Ammonia 1 Ammonia Ammonia discharge treated by waste (DB44/26-200 nitrogen:0.0 l Glass Co., nitrogen nitrogen≤0.784 nitrogen:0. standard the water 1), the second 18t Ltd. mg/L 6 t/a company's period, the sewage first grade treatment standard station. Waste water: Waste The waste Discharge COD:4.86t; water: water is Limits of 2 Waste water: Ammonia Waste discharged Water SS≤50mg/L; Suspended outlet nitrogen:0.1 water: after the Pollutants in COD≤70 mg/L; matter: s for 7t; Fluoride treatment Guangdong 9.36t/a; by the waste Discharge Ammonia (DB44/26-200 Fluoride:0.4 \COD\ Dongguan nitrogen≤10mg/L; 2t COD:14.0 Ammonia company's water outlets of 1), the second Reach the CSG Fluoride≤8mg/L; 4t/a; sewage and waste period, the Exhaust gas nitrogen discharge PV-tech station, and 18 water and Exhaust gas: first grade Nitrogen Ammonia standard Co., Ltd. Exhaust 3 the exhaust outlet exhaust NOx≤30mg/m ; standard; oxide:9.325t nitrogen:1. gas: s for gas HF≤3 ; gas is Discharge 56t/a; 3 3 HF\NOx\H discharged exhau mg/m ;CL2≤5mg/m Standard of Fluoride:0.4 Fluoride:1. CI\CL2\NH3 after st gas ;HCI≤5mg/m3;VOC Pollutants in 1t; 56t/a \VOC treatment ≤30mg/m3; Battery Hydrogen by the Industry(GB3 fluoride: Exhaust company's 0484-2013);F 0.29t; gas 36 CSG Semi-annual Report 2018 exhaust gas or VOCs, refer Chlorine: Nitrogen treatment to implement 0.089t; oxide:20.8 tower. the Emission Ammonia:0. 25t/a; Standards for 674t; Fluoride:1. Furniture VOC:0.119t 5156t/a; Manufacturing Hydrogen Industry fluoride:1. (DB44/814-20 0829t/a; 10), the standard for Chlorine:0 the second .2363t/a; stage; For Ammonia: NH3, 2.3312t/a; implement the Emission VOC:1.09 Standards for 86 t/a Odor Pollutants(GB 14554-93). 《Emission Particulate Discharge standard for Dust≤30mg/m; s:8.2125t/a Dust\ Soot\ after the air pollutants Particulates: Hebei Panel Chimney, Soot≤20 ; Reach the SO2\ treatment of in electronic 0.921t;SO2: Glass Co. 5 Exhaust mg/m;SO2≤30 SO2:22t/a; discharge Nitrogen denitrificati glass 0.041t;NOx Ltd. gas outlet mg/m;NOx≤300mg Nitrogen standard oxide on and dust industry》 :8.819t; /m; oxide:39.4 removal (GB29495-20 t/a 13) Construction and operation of pollution prevention and control facilities The Company has built flue gas dust removal and denitrification system on production lines. The system runs normally, and the emission of exhaust gas meets regulations. The environmental impact assessment of construction projects and other environmental protection license The new production line of light guide plate photoelectric materials of Xianning CSG Photoelectric Glass Co. Ltd. newly established in 2017 has entered into the stage of trial production. Its pollution prevention and control facilities are running normally, and environmental protection acceptance work is being carried out. The subsidiary companies have effectively carrying out the “Three Simultaneous” procedures for all other new and old projects, and have been rewarded with the pollutant discharge license within the validity period. They timely declared the pollutant discharge, carried out the monitoring and reporting of pollutant discharge and paid the environmental tax. Emergency response plan system of environment incident In accordance with the national requirements, all subsidiary companies prepared emergency environmental response plan for environment incident, organized and carried out expert evaluation and put on record in the local environmental protection department as required, conducted the emergency drill against environmental incidents. And no major environmental incidents occurred in the 37 CSG Semi-annual Report 2018 first half of 2018. Environmental self-monitoring scheme In accordance with provisions of national laws and regulations and the requirements put forward in the assessment documents of the environment impact of construction project and reply, the subsidiary companies built on-line monitoring equipment for waste water and exhaust gas which are put into operation normally. They compared and reviewed the effectiveness of the on-line monitoring facilities on a regular basis. Besides, they also entrusted the third-party units to carry out the manual monitoring of the environment and fully monitor the discharge of the pollutants. Other environmental information to be disclosed The key monitored subsidiary companies above municipal level disclosed their environment protection status and made regular updating through websites, display cards, environmental information platform and other ways. Other information related to environment protection CSG always attaches great importance to environmental protection work, actively fulfills its social responsibility, adheres to the development road of energy saving, emission reduction, low carbon and environmental protection. In order to further reduce pollutant emissions, many subsidiaries of the group have carried out the construction of desulfurization facilities in 2018. After such facilities are completed and put into production, the emission concentration of sulfur dioxide will be further reduced substantially on the basis of existing emission level which has met with standards, and the ultra-low emissions will be achieved step-by-step. 2. Performance of social responsibility for targeted poverty alleviation No targeted poverty alleviation was carried out in the first half of the year, no follow-up plan for targeted poverty alleviation either. XVI. Statement on other important matters √Applicable □ Not applicable 1. Short-term Financing Bills On Dec.14, 2016, the second extraordinary shareholders’ general meeting of 2016 of CSG deliberated and approved the proposal of the offering and registration of short-term financing bills, and agreed the Company’s registration and issuance of short-term financing bills with a total amount of RMB 2.7 billion, which could be issued by stages within period of validity of the registration according to the Company’s actual demands for funds and the status of inter-bank funds. However, the term of each issue shall not be longer than one year and the registered quota shall not exceed 40 percent of the Company’s net assets. 2. Ultra-short-term financing bills On 14 May 2018, the 2017 Annual General Meeting of Shareholders’ deliberated and approved the proposal of application for registration and issuance of ultra-short-term financing bills with registered capital of RMB 4 billion at most and validity within 2 years(This amount is not subject to a 40% net asset limit). which could be issued by stages within period of validity of the registration according to the Company’s actual demands for funds and the status of inter-bank funds. For details, please refer to www.chinabond.com.cn and www.chinamoney.com.cn. 3. Perpetual bonds On April 15, 2016, the Shareholders’ General Meeting 2015 of CSG deliberated and approved the proposal of application for registration and issuance of perpetual bonds, and agreed the Company to register and issue perpetual bonds with total amount of 38 CSG Semi-annual Report 2018 RMB 3.1 billion which could be issued by stages within period of validity of the registration according to the Company’s actual demand for funds and the capital status of inter-bank market. 4. Medium-term notes On December 10, 2014, the First Extraordinary Shareholders’ General Meeting 2014 of CSG Holding Co., Ltd deliberated and approved the proposal of application for registeration and issuance of medium term notes with total amount of RMB 1.2 billion at most. On May 21, 2015, National Association of Financial Market Institutional Investors (NAFMII) held the 32nd registration meeting of 2015, in which NAFMII decided to accept the registration of the Company’s medium-term notes, amounting to RMB 1.2 billion and valid for two years. China Merchants Bank Co., Ltd. and Shanghai Pudong Development Bank Co., Ltd. were joint lead underwriters of these medium-term notes which could be issued by stages within period of validity of the registration. On July 10, 2015, the Company issued the first batch of medium term notes with total amount of RMB 1.2 billion and valid term of 5 years at the issuance rate of 4.94%, which will be redeemed on July 14, 2020. On April 15, 2016, the Shareholders’ General Meeting of 2015 of CSG deliberated and approved the proposal of application for registration and issuance of medium term notes with total amount of RMB 0.8 billion, which could be issued by stages within period of validity of the registration according to the Company’s actual demands for funds and the status of inter-bank funds. On March 2, 2018, National Association of Financial Market Institutional Investors (NAFMII) held the 14th registration meeting of 2018, in which NAFMII decided to accept the registration of the Company’s medium term notes, amounting to RMB 0.8 billion and valid for two years. Shanghai Pudong Development Bank Co., Ltd. and China CITIC Bank Corporation Limited were joint lead underwriters of these medium term notes which could be issued by stages within period of validity of the registration. On May 4, 2018, the Company issued the first batch of medium-term notes with total amount of RMB 0.8 billion and valid term of 3 years at the issuance rate of 7%, which will be redeemed on May 4, 2021. On May 22, 2017, the Shareholders’ General Meeting of 2016 of CSG deliberated and approved the proposal of application for registration and issuance of medium term notes with total amount of RMB 1 billion, which could be issued by stages within period of validity of the registration according to the Company’s actual demands for funds and the status of inter-bank funds. For details, please refer to www.chinabond.com.cn and www.chinamoney.com.cn. XVII. Significant events of subsidiaries of the Company □ Applicable √ Not applicable 39 CSG Semi-annual Report 2018 Section VI. Changes in Shares and Particulars about Shareholders I. Changes in Share Capital 1. Changes in Share Capital Unit: Share Before the Change Increase/Decrease in the Change (+, -) After the Change Capitalization Proportion New shares Bonus Proportion Amount of public Others Subtotal Amount (%) issued shares (%) reserve I. Restricted shares 97,772,560 3.94% 14,665,883 14,665,883 112,438,443 3.94% 1. State-owned shares 2. State-owned legal person’s shares 3. Other domestic shares 97,772,560 3.94% 14,665,883 14,665,883 112,438,443 3.94% Including: Domestic legal person’s shares Domestic natural 97,772,560 3.94% 14,665,883 14,665,883 112,438,443 3.94% person’s shares 4. Foreign shares Including: Foreign legal person’s shares Foreign natural person’s shares II. Unrestricted shares 2,386,374,987 96.06% 357,956,248 357,956,248 2,744,331,235 96.06% 1. RMB Ordinary shares 1,509,517,397 60.76% 226,298,989 226,298,989 1,735,816,386 60.76% 2. Domestically listed foreign shares 876,857,590 35.30% 131,657,259 131,657,259 1,008,514,849 35.30% 3. Overseas listed foreign shares 4. Others III.Total shares 2,484,147,547 100% 372,622,131 372,622,131 2,856,769,678 100% Reasons for share changed √ Applicable □ Not applicable Due to the implementation of profit distribution and the capitalizing of common reserves proposal in 2017, the total shares of the Company rose by 372,622,131 shares. Approval of share changed √ Applicable □ Not applicable 2017 profit distribution and the capitalization of capital reserve propose was deliberated and approved on the 5th Meeting of the 8th Session of Board of Directors held on Apr. 20, 2018 and 2017 Annual General Meeting of Shareholders held on May 14, 2018. Transfer of ownership of changes in shares 40 CSG Semi-annual Report 2018 √Applicable □Not applicable The registration date of the profit distribution and the capitalizing of common reserves in 2017 was June 26, 2018, and the ex-dividend date was June 27, 2018. A-shares transferred this time were directly credited to the A-shares securities account of shareholders on June 27, 2018. The registration date of B-shares was June 29, 2018, and the ex-dividend date was June 27, 2018. B-shares transferred this time were directly credited to the B-shares securities account of shareholders on June 29, 2018. Influence on the basic EPS and diluted EPS as well as other financial indexes of net assets per share attributable to common shareholders of Company in the latest year and period √Applicable □Not applicable Please refer to the main accounting data and financial indicators in this report for the details of the impact of stock changes. Other information necessary to be disclosed or need to be disclosed under requirement from securities regulators □Applicable √ Not applicable 2. Changes of restricted shares √Applicable □ Not applicable Unit: Share Number of Number of Number of new Number of Shareholder Restriction shares restricted shares released shares restricted shares restricted Released date s’ name reasons at Period-begin in the Year in the Year at Period-end Awarded equity incentives on According to the December 11, implementation of the 2017, and the Company's restricted stock restricted shares equity incentive plan to increased due to implement the lifting of the Chen Lin 3,207,639 0 481,146 3,688,785 the restriction period, after the implementation of ban is lifted, the shares the 2017 profit held by the executives will distribution and be locked according to capital reserve relevant policies. fund conversion scheme Awarded equity According to the incentives on implementation of the December 11, Company's restricted stock 2017, and the equity incentive plan to Lu Wenhui 2,405,729 0 360,859 2,766,588 restricted shares implement the lifting of the increased due to restriction period, after the the ban is lifted, the shares implementation of held by the executives will the 2017 profit be locked according to 41 CSG Semi-annual Report 2018 distribution and relevant policies. capital reserve fund conversion scheme Executive locked shares and Executive locked stocks awarded equity will be locked up for a long incentives on time. According to the December 11, implementation of the 2017 and the Company's restricted stock restricted shares equity incentive plan to Li Weinan 2,549,920 0 382,487 2,932,407 increased due to implement the lifting of the the restriction period, after the implementation of ban is lifted, the shares the 2017 profit added will be locked distribution and according to relevant capital reserve policies. fund conversion scheme Awarded equity incentives on According to the December 11, implementation of the 2017, and the Company's restricted stock restricted shares equity incentive plan to increased due to implement the lifting of the He Jin 1,600,000 0 240,000 1,840,000 the restriction period, after the implementation of ban is lifted, the shares the 2017 profit held by the executives will distribution and be locked according to capital reserve relevant policies. fund conversion scheme Awarded equity According to the incentives on implementation of the December 11, Company's restricted stock 2017, and the equity incentive plan to restricted shares implement the lifting of the Yang Xinyu 2,291,170 0 343,675 2,634,845 increased due to restriction period, after the the ban is lifted, the shares implementation of held by the executives will the 2017 profit be locked according to distribution and relevant policies. capital reserve 42 CSG Semi-annual Report 2018 fund conversion scheme Awarded equity incentives on December 11, 2017, and the According to the restricted shares Core implementation of the increased due to Managemen Company's restricted stock 62,410,653 0 9,361,591 71,772,244 the t Team (108 equity incentive plan to implementation of persons) implement the lifting of the the 2017 profit restriction period distribution and capital reserve fund conversion scheme Awarded equity incentives on December 11, 2017, and the Technology According to the restricted shares and implementation of the increased due to Business Company's restricted stock 23,305,293 0 3,495,802 26,801,095 the Backbone equity incentive plan to implementation of (341 implement the lifting of the the 2017 profit persons) restriction period distribution and capital reserve fund conversion scheme Executive locked shares increased due to the implementation of Zhao Peng 2,156 0 323 2,479 the 2017 profit Long-term locked distribution and capital reserve fund conversion scheme Total 97,772,560 0 14,665,883 112,438,443 -- -- II. Issuance and listing of Securities □Applicable √ Not applicable 43 CSG Semi-annual Report 2018 III.Amount of shareholders of the Company and particulars about shares holding Unit: share Total amount of shareholders Total amount of the preferred shareholders who have resumed 153,651 0 at the end of the report period the voting right at end of report period (if applicable) Shareholder with above 5% shares held or top ten shareholders Amount Number of share Proporti Total shares of Amount of pledged/frozen Nature of on of held at the Changes in Full name of Shareholders restricte un-restricted shareholder shares end of report report period Share d shares shares held Amount held (%) period status held Domestic non Foresea Life Insurance Co., Ltd. state-owned 14.84% 423,988,067 55,302,791 423,988,067 – Haili Niannian legal person Domestic non Foresea Life Insurance Co., Ltd. state-owned 3.77% 107,659,097 14,042,491 107,659,097 – Universal Insurance Products legal person Domestic non Pledge Shenzhen Jushenghua Co., Ltd. state-owned 2.76% 78,757,679 10,272,741 78,757,679 78,757,652 [Note] legal person Domestic non Foresea Life Insurance Co., Ltd. state-owned 2.06% 58,877,419 7,679,663 58,877,419 – Own Fund legal person Central Huijin Asset State-owned 1.84% 52,650,444 6,867,449 52,650,444 Management Ltd. legal person China Galaxy International Foreign legal Securities (Hong Kong) Co., 1.31% 37,313,064 4,917,019 37,313,064 person Limited China Merchants Securities State-owned 1.02% 29,155,288 3,098,580 29,155,288 (HK) Co., Limited legal person Domestic non Shenzhen International Holdings state-owned 0.93% 26,450,000 3,450,000 26,450,000 (SZ) Limited legal person Domestic Wang Heng 0.63% 17,939,087 4,433,546 17,939,087 natural person VANGUARD EMERGING Foreign legal MARKETS STOCK INDEX 0.61% 17,563,848 2,290,937 17,563,848 person FUND Strategic investors or general legal person N/A becomes top 10 shareholders due to shares 44 CSG Semi-annual Report 2018 issued (if applicable) Explanation on associated relationship among Among shareholders as listed above, Foresea Life Insurance Co., Ltd.-Haili the aforesaid shareholders Niannian, Foresea Life Insurance Co., Ltd.-Universal Insurance Products, Foresea Life Insurance Co., Ltd.-Own Fund are all held by Foresea Life Insurance Co., Ltd. Shenzhen Jushenghua Co., Ltd. is a related legal person of Foresea Life Insurance Co., Ltd. and Chengtai Group Co., Ltd., another related legal person of Foresea Life Insurance Co., Ltd, which held 36,534,458 shares via China Galaxy International Securities (Hong Kong) Co., Limited. Except for the above-mentioned shareholders, it is unknown whether other shareholders belong to related party or have associated relationship regulated by the Management Regulation of Information Disclosure on Change of Shareholding for Listed Companies. Particular about top ten shareholders with un-restrict shares held Type of shares Shareholders’ name Amount of un-restrict shares held at year-end Type Amount Foresea Life Insurance Co., Ltd. – 423,988,067 RMB ordinary shares 423,988,067 Haili Niannian Foresea Life Insurance Co., Ltd. – 107,659,097 RMB ordinary shares 107,659,097 Universal Insurance Products Shenzhen Jushenghua Co., Ltd. 78,757,679 RMB ordinary shares 78,757,679 Foresea Life Insurance Co., Ltd. – 58,877,419 RMB ordinary shares 58,877,419 Own Fund Central Huijin Asset Management 52,650,444 RMB ordinary shares 52,650,444 Ltd. China Galaxy International Domestically listed foreign Securities (Hong Kong) Co., 37,313,064 37,313,064 shares Limited China Merchants Securities (HK) Domestically listed foreign 29,155,288 29,155,288 Co., Limited shares Shenzhen International Holdings (SZ) 26,450,000 RMB ordinary shares 26,450,000 Limited Wang Heng 17,939,087 RMB ordinary shares 17,939,087 VANGUARD EMERGING Domestically listed foreign 17,563,848 17,563,848 MARKETS STOCK INDEX FUND shares Among shareholders as listed above, Foresea Life Insurance Co., Ltd.-Haili Niannian, Foresea Statement on associated relationship Life Insurance Co., Ltd.-Universal Insurance Products, Foresea Life Insurance Co., Ltd.-Own or consistent action among the Fund are all held by Foresea Life Insurance Co., Ltd. Shenzhen Jushenghua Co., Ltd. is a above shareholders: related legal person of Foresea Life Insurance Co., Ltd. and Chengtai Group Co., Ltd., another 45 CSG Semi-annual Report 2018 related legal person of Foresea Life Insurance Co., Ltd, which held 36,534,458 shares via China Galaxy International Securities (Hong Kong) Co., Limited. Except for the above-mentioned shareholders, It is unknown whether other shareholders belong to related party or have associated relationship regulated by the Management Regulation of Information Disclosure on Change of Shareholding for Listed Companies. Explanation on shareholders involving margin business (if N/A applicable) Note: On July 13, 2018, the Company received the notification letter from Shenzhen Jushenghua Co., Ltd, which indicated that the 78,757,652 unrestricted A-shares of CSG pledged by Jushenghua to China Galaxy Securities Co., Ltd had been released on July 12, 2018 and the releasing procedures of pledge has been completed in Shenzhen Branch of China Securities Depository and Clearing Co., Ltd. For detailed contents, please refer to the Announcement of Releasing Pledge of Shares Held by Shareholders ((Notice No. : 2018-034) issued on July 14, 2018. Whether the top ten shareholders or top ten shareholders with un-restrict shares carried out buy back deals in the report period □Yes √ No IV. Changes of controlling shareholder or actual controller Changes of controlling shareholders in the report period □Applicable √ Not applicable Changes of actual controller in the report period □Applicable √ Not applicable 46 CSG Semi-annual Report 2018 Section VII. Particulars about Directors, Supervisors, Senior Executives and Employees I. Changes of shares held by directors, supervisors and senior executives √ Applicable □ Not applicable The The The The The number number of number of number of number of The number of of restricted The number of shares held increase of decrease of shares held restricted shares shares restricted Working at the Name Title holding in holding in at the end granted at the granted in shares granted status beginning the current the current of the beginning of the the current in the current of the period period period period (shares) period period (shares) period (shares) (shares) (shares) (shares) (shares) Chairman of Currently Chen Lin 3,207,639 3,688,785 3,207,639 3,688,785 the Board in office Deputy Chairman of Currently Wang Jian the Board, in office CEO Jin Independent Currently Qingjun Director in office Zhan Independent Currently Weizai Director in office Zhu Independent Currently Guilong Director in office Zhang Currently Director Jinshun in office Ye Currently Director Weiqing in office Cheng Currently Director Xibao in office Chairman of Zhang the Currently Wandong Supervisory in office Board Currently Li Xinjun Supervisor in office Zhao Peng Staff Currently 2,875 3,306 47 CSG Semi-annual Report 2018 Supervisor in office Executive Currently Lu Wenhui Vice 2,405,729 2,766,588 2,405,729 2,766,588 in office President Vice Currently Li Weinan 2,636,170 3,031,595 2,636,170 3,031,595 president in office Vice Currently Li Cuixu president in office Vice Currently He Jin 1,600,000 1,840,000 1,600,000 1,840,000 president in office Yang Secretary of Currently 2,291,170 2,634,845 2,291,170 2,634,845 Xinyu the Board in office Pan Director & Post Yonghong CEO leaving Total -- -- 12,143,583 0 0 13,965,119 12,140,708 0 13,961,813 II. Changes of directors, supervisors and senior executives √ Applicable □ Not applicable Name Title Type Date Reason Senior management employed by the Board of Li Cuixu Vice president Be employed 2018-04-08 Directors Senior management employed by the Board of He Jin Vice president Be employed 2018-04-08 Directors Pan Yonghong Director,CEO Post leaving 2018-06-29 Resigned Senior management employed by the Board of Wang Jian CEO Be employed 2018-07-02 Directors 48 CSG Semi-annual Report 2018 Section VIII. Financial Report (I) Auditors’ Report Whether the Semi-annual Report has been audited or not □ Yes √ No (II) Financial Statements All figures in the Notes to the Financial Statements are in RMB. 1. Consolidated Balance Sheet Prepared by CSG Holding Co., Ltd. Unit: RMB Item Ending balance Beginning balance Current assets Cash at bank and on hand 3,372,045,169 2,462,605,764 Notes receivable 789,078,376 552,232,420 Accounts receivable 707,375,368 638,238,290 Advances to suppliers 122,002,548 143,848,023 Other receivables 209,270,387 205,939,019 Inventories 713,622,649 685,895,317 Assets classified as held for sale 45,983,520 45,983,520 Other current assets 178,803,755 200,847,989 Total current assets 6,138,181,772 4,935,590,342 Non-current assets Fixed assets 11,494,297,683 11,540,769,697 Construction in progress 1,190,859,428 1,417,624,618 Intangible assets 1,033,563,687 1,047,222,407 Development expenditure 71,977,914 61,365,537 Goodwill 397,392,156 397,392,156 Long-term prepaid expenses 12,251,997 2,223,397 Deferred tax assets 100,120,499 80,872,862 Other non-current assets 86,166,620 51,941,352 Total non-current assets 14,386,629,984 14,599,412,026 TOTAL ASSETS 20,524,811,756 19,535,002,368 49 CSG Semi-annual Report 2018 Current liabilities Short-term borrowings 3,949,419,972 3,704,630,909 Notes payable 208,201,622 213,401,622 Accounts payable 1,331,128,942 1,400,166,042 Advances from customers 183,976,533 195,563,465 Employee benefits payable 182,613,590 272,170,660 Taxes payable 107,612,699 111,996,764 Interest payable 73,371,196 34,032,740 Dividend payable 4,875,583 Other payables 620,540,633 619,324,354 Current portion of non-current liabilities 941,647,396 904,261,397 Other current liabilities 300,000 300,000 Total current liabilities 7,603,688,166 7,455,847,953 Non-current liabilities Long-term borrowings 2,364,000,000 1,554,120,000 Long term payable 866,214,017 1,161,794,247 Deferred income 550,026,465 562,701,103 Deferred tax liabilities 24,419,058 20,915,954 Total non-current liabilities 3,804,659,540 3,299,531,304 Total liabilities 11,408,347,706 10,755,379,257 Shareholders’ equity Share capital 2,856,769,678 2,484,147,547 Capital surplus 1,029,395,134 1,306,381,765 Less: Treasury shares 412,640,249 417,349,879 Other comprehensive income 2,640,961 1,948,943 Special reserve 3,988,036 3,224,938 Surplus reserve 920,592,332 920,592,332 Undistributed profits 4,388,437,956 4,159,642,227 Total equity attributable to shareholders of 8,789,183,848 8,458,587,873 parent company Minority shareholders' equity 327,280,202 321,035,238 Total shareholders' equity 9,116,464,050 8,779,623,111 TOTAL LIABILITIES AND SHAREHOLDERS’ 20,524,811,756 19,535,002,368 EQUITY 50 CSG Semi-annual Report 2018 Legal Representative:Chen Lin Principal in charge of accounting:Wang Jian Principal of the financial department:Wang Wenxin 2. Balance Sheet of the Parent Company Unit: RMB Item Ending balance Beginning balance Current assets Cash at bank and on hand 2,594,187,340 1,681,877,320 Advances to suppliers 2,839,117 146,132 Other receivables 2,811,139,401 2,400,334,816 Total current assets 5,408,165,858 4,082,358,268 Non-current assets Long-term receivables 1,200,000,000 1,200,000,000 Long-term equity investments 4,896,117,578 4,795,987,652 Fixed assets 20,923,085 22,182,246 Construction in progress 2,261,607 Intangible assets 1,079,827 1,742,109 Other non-current assets 533,718 2,132,041 Total non-current assets 6,120,915,815 6,022,044,048 TOTAL ASSETS 11,529,081,673 10,104,402,316 Current liabilities Short-term borrowings 2,850,000,000 2,600,000,000 Accounts payable 261,024 261,024 Employee benefits payable 23,615,615 40,856,313 Taxes payable 2,126,282 1,762,580 Interest payable 12,748,838 3,090,735 Dividends payable 4,875,583 Other payables 1,175,125,741 909,432,991 Non-current liabilities due within one year 180,000,000 180,000,000 Total current liabilities 4,248,753,083 3,735,403,643 Non-current liabilities Long-term borrowings 2,000,000,000 1,200,000,000 Deferred income 185,584,400 186,526,280 Total non-current liabilities 2,185,584,400 1,386,526,280 Total liabilities 6,434,337,483 5,121,929,923 51 CSG Semi-annual Report 2018 Shareholders’ equity Share capital 2,856,769,678 2,484,147,547 Capital surplus 1,174,222,448 1,451,209,079 Less:Treasury shares 412,640,249 417,349,879 Other comprehensive income Surplus reserve 935,137,692 935,137,692 Undistributed profits 541,254,621 529,327,954 Total shareholders' equity 5,094,744,190 4,982,472,393 TOTAL LIABILITIES AND SHAREHOLDERS’ 11,529,081,673 10,104,402,316 EQUITY 3. Consolidated Income Statement Unit: RMB Item Balance of this period Balance of last period I. Total revenue 5,471,169,598 4,944,337,861 Incl. Business income 5,471,169,598 4,944,337,861 II. Total business cost 5,073,729,591 4,502,642,030 Incl: Business cost 4,099,496,754 3,737,514,462 Tax and surcharge 71,930,546 61,745,775 Sales expense 172,217,254 156,344,731 Administrative expense 540,554,002 402,554,340 Financial expenses 185,877,426 143,374,027 Asset impairment loss 3,653,609 1,108,695 Plus: Income on disposal assets (“- “for loss) -567,830 -71,756 Other Income 21,863,800 23,674,234 III. Operational profit (“- “for loss) 418,735,977 465,298,309 Plus: non-operational income 2,595,795 15,971,862 Less: non-operational expenditure 878,551 603,102 IV. Total profit (“- “for loss) 420,453,221 480,667,069 Less: Income tax expenses 61,371,104 80,453,021 V. Net profit (“- “for net loss) 359,082,117 400,214,048 (I) Net income from continuing operations (“-” for 359,082,117 400,214,048 net loss) Attributable to shareholders of parent company 352,837,153 392,992,163 52 CSG Semi-annual Report 2018 Minority shareholder gains and losses 6,244,964 7,221,885 VI. Other comprehensive income net after tax 692,018 -1,076,264 Other comprehensive income net after tax 692,018 -1,076,264 attributable to shareholders of parent company Other comprehensive income items which will be 692,018 -1,076,264 reclassified subsequently to profit or loss Differences on translation of foreign currency 692,018 -1,076,264 financial statements VII. Total comprehensive income 359,774,135 399,137,784 Total comprehensive income attributable to 353,529,171 391,915,899 shareholders of parent company Total comprehensive income attributable to 6,244,964 7,221,885 minority shareholders VIII. Earnings per share: (I) Basic earnings per share 0.13 0.14 (II) Diluted earnings per share 0.12 0.14 Legal Representative:Chen Lin Principal in charge of accounting:Wang Jian Principal of the financial department:Wang Wenxin 4. Income Statement of the Parent Co. Unit: RMB Item Balance of this period Balance of last period I. Revenue 30,709,068 27,295,266 Less: Business cost Tax and surcharge 246,465 5,136,944 Sales expense Administrative expense 97,263,171 70,540,224 Financial expenses 29,932,558 19,800,295 Asset impairment loss -46,118 7,706 Plus: Investment income (“- “for loss) 231,537,606 Income on disposal assets (“- “for loss) 2,440 Other Income 991,880 18,000 II. Operating profit 135,844,918 -68,171,903 Add: Non-operating revenue 123,450 794,380 Less: Non-operating expenses 277 III. Total profit (“- “for loss) 135,968,091 -67,377,523 53 CSG Semi-annual Report 2018 Less: Income tax (expenses)/revenue IV. Net profit (“- “for loss) 135,968,091 -67,377,523 Net profit for continuing operations(“- “for 135,968,091 -67,377,523 loss) V. Total comprehensive income 135,968,091 -67,377,523 VI. Earnings per share (I) Basic earnings per share (II) Diluted earnings per share 5. Consolidated Cash Flow Statement Unit: RMB Item Balance of this period Balance of last period I. Cash flows from operating activities Cash received from sales of goods or rendering of 5,795,543,089 5,472,732,654 services Refund of taxes and surcharges 14,619,913 7,273,335 Cash received relating to other operating activities 63,866,925 68,210,702 Sub-total of cash inflows 5,874,029,927 5,548,216,691 Cash paid for goods and services 3,670,547,749 3,278,955,888 Cash paid to and on behalf of employees 723,605,247 617,464,364 Payments of taxes and surcharges 404,939,607 380,644,776 Cash paid relating to other operating activities 310,373,236 251,262,209 Sub-total of cash outflows 5,109,465,839 4,528,327,237 Net cash flows from/(used in) operating 764,564,088 1,019,889,454 activities II. Cash flows from investing activities Net cash received from disposal of fixed assets, 3,466,136 44,820 intangible assets and other long-term assets Cash received relating to other investing activities 3,725,277 24,039,200 Sub-total of cash inflows 7,191,413 24,084,020 Cash paid to acquire fixed assets, intangible assets 268,526,891 731,954,148 and other long-term assets Cash paid relating to other investing activities 58,691,979 31,475,182 Sub-total of cash outflows 327,218,870 763,429,330 Net cash flows (used in)/from investing -320,027,457 -739,345,310 activities III. Cash flows from financing activities Cash received from borrowings 2,870,654,472 1,452,919,750 54 CSG Semi-annual Report 2018 Cash received relating to other financing activities 16,276,534 1,666,591,530 Sub-total of cash inflows 2,886,931,006 3,119,511,280 Cash repayments of borrowings 1,777,250,000 2,924,757,768 Cash payments for interest expenses and 293,602,183 123,450,004 distribution of dividends or profits Cash payments relating to other financing 362,001,673 3,451,507 activities Sub-total of cash outflows 2,432,853,856 3,051,659,279 Net cash flows (used in)/from financing 454,077,150 67,852,001 activities 4. Effect of foreign exchange rate changes on cash -113,600 -912,613 and cash equivalents 5. Net increase/(decrease) in cash and cash 898,500,181 347,483,532 equivalents Add: Cash and cash equivalents at beginning 2,459,753,165 584,566,990 of current period 6. Cash and cash equivalents at end of current 3,358,253,346 932,050,522 period 6. Cash Flow Statement of the Parent Co. Unit: RMB Item Balance of this period Balance of last period I. Cash flows from operating activities Cash received relating to other operating activities 22,667,417 4,843,988 Sub-total of cash inflows 22,667,417 4,843,988 Cash paid to and on behalf of employees 63,635,591 33,652,141 Payments of taxes and surcharges 1,057,736 6,095,316 Cash paid relating to other operating activities 15,743,250 12,279,684 Sub-total of cash outflows 80,436,577 52,027,141 Net cash flows from/(used in) operating -57,769,160 -47,183,153 activities II. Cash flows from investing activities Net cash received from disposal of fixed assets, 2,440 intangible assets and other long-term assets Cash received relating to other investing activities 5,000,000 Sub-total of cash inflows 2,440 5,000,000 Cash paid to acquire fixed assets, intangible assets 4,544,893 565,260 and other long-term assets Cash paid for investing activities 36,750,000 Sub-total of cash outflows 41,294,893 565,260 Net cash flows (used in)/from investing -41,292,453 4,434,740 55 CSG Semi-annual Report 2018 activities III. Cash flows from financing activities Cash received from borrowings 2,190,000,000 990,693,638 Cash received relating to other financing activities 125,399,471 1,806,455,260 Sub-total of cash inflows 2,315,399,471 2,797,148,898 Cash repayments of borrowings 1,140,000,000 2,496,723,365 Cash payments for interest expenses and 164,279,306 2,213,425 distribution of dividends or profits Sub-total of cash outflows 1,304,279,306 2,498,936,790 Net cash flows (used in)/from financing 1,011,120,165 298,212,108 activities 4. Effect of foreign exchange rate changes on cash -1,253,410 855,016 and cash equivalents 5. Net increase/(decrease) in cash and cash 910,805,142 256,318,711 equivalents Add: Cash and cash equivalents at beginning 1,680,672,390 301,637,933 of current period 6. Cash and cash equivalents at end of current 2,591,477,532 557,956,644 period 56 CSG Semi-annual Report 2018 7. Statement of Change in Owners’ Equity (Consolidated) Amount of this term Unit: RMB Amount of the Current Term Owners’ Equity Attributable to the Parent Company Minority Item Other Total shareholders' Capital Less: treasury Special Surplus Undistributed shareholders' Share capital comprehensiv equity surplus share reserves reserve profits equity e income I. Balance at the end of the previous 2,484,147,547 1,306,381,765 417,349,879 1,948,943 3,224,938 920,592,332 4,159,642,227 321,035,238 8,779,623,111 year Plus: change of accounting policy Correction of errors in previous periods II. Balance at the beginning of current 2,484,147,547 1,306,381,765 417,349,879 1,948,943 3,224,938 920,592,332 4,159,642,227 321,035,238 8,779,623,111 year III. Amount of change in current term 372,622,131 -276,986,631 -4,709,630 692,018 763,098 228,795,729 6,244,964 336,840,939 (“- “for decrease) (I) Total amount of the comprehensive 692,018 352,837,153 6,244,964 359,774,135 income (II) Capital paid in and reduced by 95,635,500 -4,709,630 100,345,130 owners 1. Common shares invested by the 95,635,500 95,635,500 shareholders 2. Others -4,709,630 4,709,630 (III) Profit distribution -124,041,424 -124,041,424 57 CSG Semi-annual Report 2018 1. Appropriations to surplus reserves 2. Appropriations to owners (or -124,041,424 -124,041,424 shareholders) (IV) Internal carry-forward of owners’ 372,622,131 -372,622,131 equity New increase of capital (or share 372,622,131 -372,622,131 capital) from capital public reserves (V) Specific reserve 763,098 763,098 1. Withdrawn for the period 4,150,167 4,150,167 2. Used in the period 3,387,069 3,387,069 IV. Balance at the end of this term 2,856,769,678 1,029,395,134 412,640,249 2,640,961 3,988,036 920,592,332 4,388,437,956 327,280,202 9,116,464,050 Amount of last year Unit: RMB Amount of the same period of last year Owners’ Equity Attributable to the Parent Company Minority Total Item Other Capital Less: treasury Surplus Undistributed shareholders' shareholders' Share capital comprehensi Special reserves surplus share reserve profits equity equity ve income I. Balance at the end of the previous 2,075,335,560 1,260,702,197 4,653,971 5,843,473 888,508,230 3,573,871,573 320,276,015 8,129,191,019 year Plus: change of accounting policy Correction of errors in previous periods 58 CSG Semi-annual Report 2018 II. Balance at the beginning of current 2,075,335,560 1,260,702,197 4,653,971 5,843,473 888,508,230 3,573,871,573 320,276,015 8,129,191,019 year III. Amount of change in current term 408,811,987 45,679,568 417,349,879 -2,705,028 -2,618,535 32,084,102 585,770,654 759,223 650,432,092 (“- “for decrease) (I) Total amount of the comprehensive -2,705,028 825,388,312 3,247,723 825,931,007 income (II) Capital paid in and reduced by 97,511,654 356,979,901 417,349,879 37,141,676 owners 1. Common shares invested by the shareholders 2. Capital invested by the owners of other equity instruments 3. Amounts of share-based payments 97,511,654 328,032,920 417,349,879 8,194,695 recognized in owners’ equity 4. Others 28,946,981 28,946,981 (III) Profit distribution 32,084,102 -239,617,658 -2,488,500 -210,022,056 1. Appropriations to surplus reserves 32,084,102 -32,084,102 2. Appropriations to general risk provisions 3. Appropriations to owners (or -207,533,556 -2,488,500 -210,022,056 shareholders) (IV) Internal carry-forward of owners’ 311,300,333 -311,300,333 equity 1.New increase of capital (or share 311,300,333 -311,300,333 capital) from capital public reserves 59 CSG Semi-annual Report 2018 (V) Specific reserve -2,618,535 -2,618,535 1. Withdrawn for the period 7,831,127 7,831,127 2. Used in the period 10,449,662 10,449,662 (VI) Others IV. Balance at the end of this term 2,484,147,547 1,306,381,765 417,349,879 1,948,943 3,224,938 920,592,332 4,159,642,227 321,035,238 8,779,623,111 8. Statement of Change in Owners’ Equity (Parent Co.) Amount of this term Unit: RMB Amount of the Current Term Other Total Item Less: treasury Surplus Undistributed Share capital Capital surplus comprehensive Special reserves shareholders' share reserve profits income equity I. Balance at the end of the previous year 2,484,147,547 1,451,209,079 417,349,879 935,137,692 529,327,954 4,982,472,393 Plus: change of accounting policy Correction of errors in previous periods II. Balance at the beginning of current 2,484,147,547 1,451,209,079 417,349,879 935,137,692 529,327,954 4,982,472,393 year III. Amount of change in current term 372,622,131 -276,986,631 -4,709,630 11,926,667 112,271,797 (“- “for decrease) (I) Total amount of the comprehensive 135,968,091 135,968,091 income (II) Capital paid in and reduced by owners 95,635,500 -4,709,630 100,345,130 60 CSG Semi-annual Report 2018 1. Amounts of share-based payments 95,635,500 95,635,500 recognized in owners’ equity 2. Others -4,709,630 4,709,630 (III) Profit distribution -124,041,424 -124,041,424 1. Appropriations to surplus reserves 2. Appropriations to owners (or -124,041,424 -124,041,424 shareholders) (IV) Internal carry-forward of owners’ 372,622,131 -372,622,131 equity New increase of capital (or share capital) 372,622,131 -372,622,131 from capital public reserves IV. Balance at the end of this term 2,856,769,678 1,174,222,448 412,640,249 935,137,692 541,254,621 5,094,744,190 Amount of last year Unit: RMB Amount of the same period of last year Other Item Special Surplus Undistributed Total shareholders' Share capital Capital surplus Less: treasury share comprehensive reserves reserve profits equity income I. Balance at the end of the previous 2,075,335,560 1,405,529,511 903,053,590 448,104,587 4,832,023,248 year Plus: change of accounting policy Correction of errors in previous periods 61 CSG Semi-annual Report 2018 II. Balance at the beginning of current 2,075,335,560 1,405,529,511 903,053,590 448,104,587 4,832,023,248 year III. Amount of change in current term 408,811,987 45,679,568 417,349,879 32,084,102 81,223,367 150,449,145 (“- “for decrease) (I) Total amount of the comprehensive 320,841,025 320,841,025 income (II) Capital paid in and reduced by 97,511,654 356,979,901 417,349,879 37,141,676 owners 1. Amounts of share-based payments 97,511,654 328,032,920 417,349,879 8,194,695 recognized in owners’ equity 2. Others 28,946,981 28,946,981 (III) Profit distribution 32,084,102 -239,617,658 -207,533,556 1. Appropriations to surplus reserves 32,084,102 -32,084,102 2. Appropriations to owners (or -207,533,556 -207,533,556 shareholders) (IV) Internal carry-forward of owners’ 311,300,333 -311,300,333 equity 1.New increase of capital (or share 311,300,333 -311,300,333 capital) from capital public reserves IV. Balance at the end of this term 2,484,147,547 1,451,209,079 417,349,879 935,137,692 529,327,954 4,982,472,393 62 CSG Semi-annual Report 2018 III. Basic Information of the Company CSG Holding Co Ltd (the “Company”) was incorporated in September 1984, known as China South Glass Company, as a joint venture enterprise by Hong Kong China Merchants Shipping Co., LTD (香港招商局轮船股份有限公司), Shenzhen Building Materials Industry Corporation (深圳建筑材料工业集团公司), China North Industries Corporation (中国北方工业深圳公司) and Guangdong International Trust and Investment Corporation (广东国际信托投资公司). The Company was registered in Shenzhen, Guangdong Province of the People's Republic of China and its headquarters is located in Shenzhen, Guangdong Province of the People's Republic of China. The Company issued RMB-denominated ordinary shares (“A-share”) and foreign shares (“B-share”) publicly in October 1991 and January 1992 respectively, and was listed on Shenzhen Stock Exchange on February 1992. As at June 30, 2018, the registered capital was RMB 2,856,769,678, with nominal value of RMB 1 per share. The Company and its subsidiaries (collectively referred to as the “Group”) are mainly engaged in the manufacture and sales of flat glass, architectural glass and other building energy - saving materials, polycrystalline silicon and solar module and the construction and operation of photovoltaic plant as well as the manufacture and sales of electronic glass and display device etc. The main subsidiaries included in the scope of consolidation this year are detailed in the notes. The financial statements were authorised for issue by the Board of Directors on August 27, 2018. IV. Basis of the preparation of financial statements 1. Basis of preparation The financial statements are prepared in accordance with the Accounting Standards for Business Enterprises - Basic Standard, and the specific accounting standards and other relevant regulations issued by the Ministry of Finance on 15 February 2006 and in subsequent periods (hereafter collectively referred to as “the Accounting Standard for Business Enterprises” or “CAS”), and Information Disclosure Rule No. 15 for Companies with Public Traded Securities - Financial Reporting General Provision issued by China Security Regulatory Commission. 2. Going concern As at June 30, 2018, the Group current liabilities exceed current assets about RMB 1,466 million and committed capital expenditure of about RMB 218 million. The directors of the Company has assessed the following facts and conditions: a) the Group has been able to generate positive operating cash flows in prior years and expect to do so in the next 12 months, From January to June 2018, the net cash inflow from operation activities is approximately RMB 765 million; b) the Group has maintained good relationship with banks, so the Group has been able to successfully renew the bank facilities upon the expiry. As at June 30, 2018, the Group had unutilised banking facilities of approximately RMB 5.4 billion, among which long-term banking facilities were about RMB 251 million. In addition, the shareholder of the Group or other appointed related parties are willing to provide the Group with RMB 2 billion interest-free loan. The Group also has other sources of financing, such as issuing short-term bonds, ultra-short-term financing bonds and medium-term notes. The directors are of view that the banking facilities and shareholder’s support above can meet the funding requirements 63 CSG Semi-annual Report 2018 V. Significant accounting policies and accounting estimates The Group determines its specific accounting policies and estimates according to manufacturing and operation feature. It mainly reflected in provision for bad debts of receivables, inventory costing method, amortisation of property, plant and equipmentand intangible assets, criteria for determining capitalised development expenditure, and timing for revenue recognition. Please see Note for the key judgements adopted by the Group in applying important accounting policies. 1. Statement of compliance with the Accounting Standards for Business Enterprises The financial statements of the Company for the first half year of 2018 truly and completely present the financial position as of June 30, 2018 and the operating results, cash flows and other information for the first half year of 2018 of the Group and the Company in compliance with the Accounting Standards for Business Enterprises. 2. Accounting period The Company’s accounting year starts on 1 January and ends on 31 December. 3. Operating cycle The Company’s operating cycle starts on 1 January and ends on 31 December. 4. Recording currency The recording currency is Renminbi (RMB). The economic environment of subsidiaries, Hong Kong Southern Glass Trading Limited and China Southern Glass (Hong Kong) Limited, determines their recording currency is Hong Kong dollar. The recording currency in this report is Renminbi (RMB). 5. Business combinations (a)Business combinations involving entities under common control The consideration paid and net assets obtained by the absorbing party in a business combination are measured at book value. The difference between book value of the net assets obtained from the combination and book value of the consideration paid for the combination is treated as an adjustment to capital surplus (share premium). If the capital surplus (share premium) is not sufficient to absorb the difference, the remaining balance is adjusted against retained earnings. Costs directly attributable to the combination are included in profit or loss in the period in which they are incurred. Transaction costs associated with the issue of equity or debt securities for the business combination are included in the initially recognised amounts of the equity or debt securities. (b) Business combinations involving entities not under common control The cost of combination and identifiable net assets obtained by the acquirer in a business combination are measured at fair value at the acquisition date. Where the cost of the combination exceeds the acquirer’s interest in the fair value of the acquiree’s identifiable net assets, the difference is recognised as goodwill; where the cost of combination is lower than the acquirer’s interest in the fair value of the acquiree’s identifiable net assets, the difference is recognised in profit or loss for the current period. Costs directly 64 CSG Semi-annual Report 2018 attributable to the combination are included in profit or loss in the period in which they are incurred. Transaction costs associated with the issue of equity or debt securities for the business combination are included in the initially recognised amounts of the equity or debt securities. 6. Preparation of consolidated financial statements The consolidated financial statements comprise the financial statements of the Company and all of its subsidiaries. Subsidiaries are consolidated from the date on which the Group obtains control and are de-consolidated from the date that such control ceases. For a subsidiary that is acquired in a business combination involving enterprises under common control, it is included in the consolidated financial statements from the date when it, together with the Company, comes under common control of the ultimate controlling party. The portion of the net profits realised before the combination date presented separately in the consolidated income statement. In preparing the consolidated financial statements, where the accounting policies and the accounting periods of the Company and subsidiaries are inconsistent, the financial statements of the subsidiaries are adjusted in accordance with the accounting policies and the accounting period of the Company. For subsidiaries acquired from business combinations involving enterprises not under common control, the individual financial statements of the subsidiaries are adjusted based on the fair value of the identifiable net assets at the acquisition date. All significant intra-group balances, transactions and unrealised profits are eliminated in the consolidated financial statements. The portion of subsidiaries’ equity and the portion of a subsidiaries’ net profits and losses and comprehensive incomes for the period not attributable to Company are recognised as minority interests and presented separately in the consolidated financial statements under equity, net profits and total comprehensive income respectively. Unrealised profits and losses resulting from the sales of assets by the Company to its subsidiaries are fully eliminated against net profit attributable to shareholders of the parent company. Unrealised profits and losses resulting from the sales of assets by a subsidiary to the Company are eliminated and allocated between net profit attributable to shareholders of the parent company and non-controlling interests in accordance with the allocation proportion of the parent company in the subsidiary. Unrealised profits and losses resulting from the sales of assets by one subsidiary to another are eliminated and allocated between net profit attributable to shareholders of the parent company and non-controlling interests in accordance with the allocation proportion of the parent in the subsidiary. After the control over the subsidiary has been gained, whole or partial minority equities of the subsidiary owned by minority shareholders are acquired from the subsidiary’s minority shareholders. In the consolidated financial statements, the subsidiary's assets and liabilities are reflected with amount based on continuous calculation starting from the acquisition date or consolidation date. Capital surplus is adjusted according to the difference between newly increased long-term equity investment arising from acquisition of minority equity and the share of net assets calculated based on current shareholding ratio that the parent company is entitled to. The share is subject to continuous calculation starting from the acquisition date or consolidation date. If the capital surplus (capital premium or share capital premium) is not sufficient to absorb the difference, the remaining balance is adjusted against retained earnings. If the accounting treatment of a transaction which considers the Group as an accounting entity is different from that considers the Company or its subsidiaries as an accounting entity, it is adjusted from the perspective of the Group. 65 CSG Semi-annual Report 2018 7. Cash and cash equivalents Cash and cash equivalents comprise cash on hand, deposits that can be readily drawn on demand, and short-term and highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. 8. Translating of foreign currency operations and foreign currency report form (a) Foreign currency transaction Foreign currency transactions are translated into RMB using the exchange rates prevailing at the dates of the transactions. At the balance sheet date, monetary items denominated in foreign currencies are translated into RMB using the spot exchange rates on the balance sheet date. Exchange differences arising from these translations are 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 or construction of qualifying assets, which are capitalised as part of the cost of those assets. Non-monetary items denominated in foreign currencies that are measured at historical costs are translated at the balance sheet date using the spot exchange rates at the date of the transactions. The effect of exchange rate changes on cash is presented separately in the cash flow statement. (b) Translation of foreign currency financial statements The asset and liability items in the balance sheets for overseas operations are translated at the spot exchange rates on the balance sheet date. Among the shareholders’ equity items, the items other than “undistributed profits” are translated at the spot exchange rates of the transaction dates. The income and expense items in the income statements of overseas operations are translated at the spot exchange rates of the transaction dates. The differences arising from the above translation are presented separately in the shareholders’ equity. The cash flows of overseas operations are translated at the spot exchange rates on the dates of the cash flows. The effect of exchange rate changes on cash is presented separately in the cash flow statement. 9. Financial instrument (a) Financial assets (i) Classification of financial assets Financial assets are classified into the following categories at initial recognition: financial assets at fair value through profit or loss, receivables, available-for-sale financial assets and held-to-maturity investments. The classification of financial assets depends on the Group’s intention and ability to hold the financial assets. The Group had no financial assets at fair value through profit or loss and held-to-maturity investments for the period. Receivables Receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Receivables comprise notes receivable, accounts receivable and other receivables. Available-for-sale financial assets 66 CSG Semi-annual Report 2018 Available-for-sale financial assets are non-derivative financial assets that are either designated in this category or not classified in any of the other categories at initial recognition. Available-for-sale financial assets are included in other current assets on the balance sheet if management intends to dispose of them within 12 months after the balance sheet date. (ii) Recognition and measurement Financial assets are recognised at fair value on the balance sheet when the Group becomes a party to the contractual provisions of the financial instrument. The related transaction costs that are attributable to the acquisition of receivables and available-for-sale financial assets are included in their initial recognition amounts. Available-for-sale financial assets are subsequently measured at fair value. Investments in equity instruments are measured at cost when they do not have a quoted market price in an active market and whose fair value cannot be reliably measured. Receivables are measured at amortised cost using the effective interest method. Gains or losses arising from change in fair value of available-for-sale financial assets are recognised directly in equity, except for impairment losses and foreign exchange gains and losses arising from translation of monetary financial assets. When such financial assets are derecognised, the cumulative gains or losses previously recognised directly into equity are recycled into profit or loss for the current period. Interests on available-for-sale investments in debt instruments calculated using the effective interest method during the period in which such investments are held and cash dividends declared by the investee on available-for-sale investments in equity instruments are recognised as investment income, which is recognised in profit or loss for the period. (iii) Impairment of financial assets The Group assesses book values of financial assets at each balance sheet date. If there is objective evidence that a financial asset is impaired, an impairment loss is provided for. The objective evidence of impairment losses on financial assets refers to events that actually incurred after the initial recognition of financial assets, have influence on the expected future cash flow from the financial assets and the influence can be reliably measured. Objective evidence which indicates the occurrence of impairment for available-for-sale equity instruments includes significant or non-temporary decrease of fair value of equity instruments investment. The Group conducts individual Checkion on each available-for-sale equity instruments investment at balance sheet date, if the fair value of the available-for-sale equity instrument is less than its initial investment cost for more than 50% (inclusive) or less than its initial investment cost continually for more than 1 year, that means impairment incurred; if the fair value of the available-for-sale equity instrument is less than its initial investment cost for more than 20% (inclusive) but has not reached 50%, the Group will comprehensively consider other factors such as price volatility to determine whether the equity instrument investment has been impaired. The Group calculates the initial investment cost of initial available-for-sale equity instruments investment using the weighted average method. When an impairment loss on a financial asset carried at amortised cost has occurred, the amount of loss is provided for at the difference between the asset’s carrying amount and the present value of its estimated future cash flows (excluding future credit losses that have not been incurred). If there is objective evidence that the value of the financial asset is recovered and the recovery is related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed and the 67 CSG Semi-annual Report 2018 amount of reversal is recognised in profit or loss. If an impairment loss on available-for-sale financial assets measured at fair value is incurred, the cumulative losses arising from the decline in fair value that had been recognised directly in shareholders' equity are transferred out from equity and into impairment loss. For an investment in debt instrument classified as available-for-sale on which impairment losses have been recognised, if, in a subsequent period, its fair value increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the previously recognised impairment loss is reversed into profit or loss for the current period. For an investment in an equity instrument classified as available-for-sale on which impairment losses have been recognised, the increase in its fair value in a subsequent period is recognised directly in equity. (iv) Derecognition of financial assets Financial assets are derecognised 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 sum of the consideration received and the cumulative changes in fair value that had been recognised directly in owner's equity, is recognised in profit or loss. (b) Financial liabilities Financial liabilities are classified into two categories at initial recognition: financial liabilities at fair value through profit or loss and other financial liabilities. Other financial liabilities in the Group mainly include payables, borrowings and bonds payable. The fair value change of financial liabilities at fair value through profit or loss is charged to income statement. Payables comprise accounts payable, notes payable and other payables, which are recognised initially at fair value and measured subsequently at amortised cost using the effective interest method. Borrowings and bonds payable are recognised initially at fair value, net of transaction costs incurred, and subsequently measured at amortised cost using the effective interest method. Other financial liabilities within one year (including one year) is presented as current liabilities, while non-current financial liabilities due with one year (including one year) is reclassified as non-current liabilities due within one year. Others are presented as non-current liabilities. A financial liability (or a part of a financial liability) is derecognised when all or part of the obligation is extinguished. 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 fair value of financial instruments The fair value of a financial instrument that is traded in an active market is determined at the quoted price in the active market. The fair value of a financial instrument that is not traded in an active market is determined by using a valuation technique. During valuation, the 68 CSG Semi-annual Report 2018 Group adopts a valuation technique suitable for current situation, which is supported by sufficient available data and other information, chooses the inputs consistent with the feature of assets or liabilities considered in the transaction thereof with market participants, and uses related observable inputs in preference to the greatest extent. Unobservable inputs are used when it is unable to obtain or is infeasible for related observable inputs. 10. Recognition standard impairment and receivables (1) Bad debt provision on receivable accounts with major amount individually Basis of recognition or standard amount of Receivables that are The amount individually greater than 20 million. individually significant Receivables that are individually significant are subject to separate impairment assessment. A provision for impairment Basis of bad debt provision on receivable accounts with major of the receivable is recognized if there is objective evidence amount individually that the Group will not be able to collect the full amounts according to the original terms. (2) Receivables that are provided for provision based on their credit risk characteristics Name of the portfolio Basis of bad debt provision Portfolio 1 according to percentage of balance method Portfolio 2 according to percentage of balance method Accounts on aging analysis basis in the portfolio: □Applicable √Non-applicable Accounts on percentage basis in the portfolio: √Applicable □Non-applicable Percentage of provision for Percentage of provision for other Name of the portfolio accounts receivable(%) receivables(%) Portfolio 1 2% 2% Portfolio 2 2% 2% Accounts on other basis in the portfolio: □Applicable √Non-applicable (3) The method of provision for impairment of receivables that are individually significant Reason for providing bad debt A provision for impairment of the receivable is recognized if there is objective evidence that individually: the Group will not be able to collect the full amounts according to the original terms. The provision for impairment of the receivable is established at the difference between the Basis of bad debt provision: carrying amount of the receivable and the present value of estimated future cash flows. 69 CSG Semi-annual Report 2018 11. Inventories (a) Classification Inventories refer to manufacturing sector, including raw materials, work in progress, finished goods and turnover materials, and are measured at the lower of cost and net realisable value. (b)Inventory costing method Cost is determined using the weighted average method. The cost of finished goods and work in progress comprise raw materials, direct labour and systematically allocated production overhead based on the normal production capacity. (c)Amortisation methods of low value consumables and packaging materials Turnover materials include low value consumables and packaging materials, which are expensed when issued. (d)The determination of net realisable value and the method of provision for impairment of inventories Provision for decline in the value of inventories is determined at the excess amount of the carrying amounts of the inventories over their net realisable value. Net realisable value is determined based on the estimated selling price in the ordinary course of business, less the estimated costs to completion and estimated costs necessary to make the sale and related taxes. (e)The Group adopts the perpetual inventory system. 12. Assets classified as held for sale A non-current asset or a disposal group is classified as held for sale when all of the following conditions are satisfied: (1) the non-current asset or the disposal group is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such non-current asset or disposal group; (2) the group has signed with other parties legally binding sale agreement and approval has been obtained, is expected to the sale will be completed within one year. Non-current assets (except for financial assets and deferred tax assets) that meet the recognition criteria for held for sale are recognised at the amount equal to the lower of the fair value less costs to sell and the carrying amount. The difference between fair value less costs to sell and the carrying amount should be presented as impairment loss. Such non-current assets and assets included in disposal groups as classified as held for sale are accounted for as current assets; while liabilities included in disposal groups classified as held for sale are accounted for as current liabilities, which are presented separately in the balance sheet. A discontinued operation is a component of the Group that either has been disposed of or is classified as held for sale, and is separately identifiable operationally and for financial reporting purposes, and satisfies one of the following conditions: (1) represents a separate major line of business or geographical area of operations; (2) is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations; and (3) is a subsidiary acquired exclusively with a view to resale. Earnings from discontinued operations stated in the income statement include operating profit and loss and disposal gains and losses. 70 CSG Semi-annual Report 2018 13. Long-term equity investments Long-term equity investments comprise the Company’s long-term equity investments in its subsidiaries, and the Group’s long-term equity investments in its associates. Subsidiaries are the investees over which the Company is able to exercise control. Associates are the investees that the Group has significant influence on their financial and operating policies. Investments in subsidiaries are measured using the cost method in the Company’s financial statements, and adjusted by using the equity method when preparing the consolidated financial statements. Investments in associates are accounted for using the equity method. (a) Initial recognition For long-term equity investments formed in business combination: when obtained from business combinations involving entities under common control, the long-term equity investment is stated at carrying amount of equity for the combined parties at the time of merger; when the long-term equity investment obtained from business combinations involving entities not under common control, the investment is measured at combination cost. For long-term equity investments not formed in business combination: the one paid by cash is initially measured at actual purchase price; the long-term investment obtained by issuing equity securities is stated at fair value of equity securities as initial investment cost. (b) Subsequent measurement and recognition method of profit or loss Long-term equity investments accounted for using the cost method are measured at initial investment cost. Cash dividend or profit distribution declared by the investees is recognised as investment income in profit or loss. For long-term equity investments accounted for using 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 difference is included in profit or loss for the current period and the cost of the long-term equity investment is adjusted upwards accordingly. For long-term equity investments accounted for using the equity method, the Group recognises the investment income according to its share of net profit or loss of the investee. The Group discontinues recognising its share of the net losses of an investee after the carrying amounts 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 additional losses and the criteria with respect to recognition of provisions under the accounting standards on contingencies are satisfied, the Group continues recognising the investment losses and the provisions. For changes in owners’ equity of the investee other than those arising from its net profit or loss, its proportionate share is directly recorded into capital surplus, provided that the proportion of shareholding of the Group in the investee remains unchanged. The carrying amount of the investment is reduced by the Group’s share of the profit 71 CSG Semi-annual Report 2018 distribution or cash dividends declared by an investee. The unrealised profits or losses arising from the transactions between the Group and its investees are eliminated in proportion to the Group’s equity interest in the investees, based on which the investment gain or losses are recognised. Any losses resulting from transactions between the Group and its investees attributable to asset impairment losses are not eliminated. (c) Definition of control, joint control and significant influence over the investees The term "control" refers to the power in the investees, to obtain variable returns by participating in the related business activities of the investees, and the ability to affect the returns by exercising its power over the investees. The term "significant influence" refers to the power to participate in the formulation of financial and operating policies of an enterprise, but not the power to control, or jointly control, the formulation of such policies with other parties. (d) Impairment of long-term equity investments The carrying amount of long-term equity investments in subsidiaries and associates is reduced to the recoverable amount when the recoverable amount is less than the carrying amount. 14. Fixed assets (1) Recognition and initial measurement Fixed assets comprise buildings, machinery and equipment, motor vehicles and others. Fixed assets are recognised when it is probable that the related economic benefits will flow to the Group and the costs can be reliably measured. Fixed assets purchased or constructed by the Group are initially measured at cost at the 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 associated economic benefits will flow to the Group and the related cost can be reliably measured. The carrying amount of the replaced part is derecognised. All the other subsequent expenditures are recognised in profit or loss in the period in which they are incurred. (2) Depreciation methods Fixed assets are depreciated using the straight-line method to allocate the cost of the assets to their estimated residual values over their estimated useful lives. For the fixed assets that have been provided for impairment loss, the related depreciation charge is prospectively determined based upon the adjusted carrying amounts over their remaining useful lives. The estimated useful lives, the estimated net residual values expressed as a percentage of cost and the annual depreciation rates of fixed assets are as follows: Estimated net residual Categories Depreciation methods Period of depreciation Annual depreciation rate value 72 CSG Semi-annual Report 2018 Buildings straight-line method 20 to 35 years 5% 2.71% ~ 4.75% Machinery and equipment straight-line method 8 to 20 years 5% 4.75%~11.88% Motor vehicles and others straight-line method 5 to 8 years 0% 12.50%~20.00% 15. Construction in progress Construction in progress is recorded at actual cost. Actual cost comprises construction cost, installation cost, borrowing costs eligible for capitalised condition and necessary expenditures incurred for its intended use. Actual cost also includes net of trial production cost and trial production income before construction in progress is put into production. Construction in progress is transferred to fixed assets when the assets are ready for their intended use, and depreciation begins from the following month. Book value of construction in progress is reduced to the recoverable amount when the recoverable amount is below book value。 16. Borrowing costs The borrowing costs that are directly attributable to the acquisition and construction of an asset that needs a substantially long period of time for its intended use commence to be capitalised 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 capitalisation of borrowing costs ceases when the asset under acquisition or construction becomes ready for its intended use and the borrowing costs incurred thereafter are recognised in profit or loss for the current period. Capitalisation of borrowing costs is suspended during periods in which the acquisition or construction of a fixed asset is interrupted abnormally and the interruption lasts for more than 3 months, until the acquisition or construction is resumed. For the specific borrowings obtained for the acquisition or construction of an asset qualifying for capitalisation, the amount of borrowing costs eligible for capitalisation is determined by deducting any interest income earned from depositing the unused specific borrowings in the banks or any investment income arising on the temporary investment of those borrowings during the capitalisation period. For the general borrowings obtained for the acquisition or construction of an asset qualifying for capitalisation, the amount of borrowing costs eligible for capitalisation is determined by applying the weighted average effective interest rate of general borrowings, to the weighted average of the excess amount of cumulative expenditures on the asset over the amount of specific borrowings. The effective interest rate is the rate at which the estimated future cash flows during the period of expected duration of the borrowings or applicable shorter period are discounted to the initial amount of the borrowings. 17. Intangible assets (1) Valuation method, service life and impairment test Intangible assets, mainly including land use rights, patents and proprietary technologies, exploitation rights and others, are measured at cost. 73 CSG Semi-annual Report 2018 (a) Land use rights Land use rights are amortised on the straight-line basis over their approved use period of 30 to 70 years. If the acquisition costs of the land use rights and the buildings located thereon cannot be reasonably allocated between the land use rights and the buildings, all of the acquisition costs are recognised as fixed assets. (b) Patents and proprietary technologies Patents are amortised on a straight-line basis over the estimated use life. (c) Exploitation rights Exploitation rights are amortised on a straight-line basis over permitted exploitation periods on the exploitation certificate. (d) Periodical review of useful life and amortisation method For an intangible asset with a finite useful life, review of its useful life and amortisation method is performed at each year-end, with adjustment made as appropriate. (e) Impairment of intangible assets Book value of intangible assets is reduced to the recoverable amount when the recoverable amount is below book value. (2) Internal research and development expenditure accounting policy The expenditure on an internal research and development project is classified into expenditure on the research phase and expenditure on the development phase based on its nature and whether there is material uncertainty that the research and development activities can form an intangible asset at end of the project. Expenditure on the research phase related to planned survey, evaluation and selection for research on manufacturing technique is recognised in profit or loss in the period in which it is incurred. Prior to mass production, expenditure on the development phase related to the design and testing phase in regards to the final application of manufacturing technique is capitalised only if all of the following conditions are satisfied: the development of manufacturing technique has been fully demonstrated by technical team; management has approved the budget for the development of manufacturing technique; there are research and analysis of pre-market research explaining that products manufactured with such technique are capable of marketing; There is sufficient technical and capital to support the development of manufacturing technique and subsequent mass production; and the expenditure on manufacturing technique development can be reliably gathered. Other development expenditures that do not meet the conditions above are recognised in profit or loss in the period in which they are incurred. Development costs previously recognised as expenses are not recognised as an asset in a subsequent period. Capitalised expenditure on the development phase is presented as development costs in the balance sheet and transferred to intangible assets at the date that the asset is ready for its intended use. 18. Impairment of long-term assets Fixed assets, construction in progress, intangible assets with finite useful lives and long-term equity investments in joint ventures and associates are tested for impairment if there is any indication that the assets may be impaired at the balance sheet date; intangible 74 CSG Semi-annual Report 2018 assets not ready for their intended use are tested at least annually for impairment, irrespective of whether there is any indication that they may be impaired. If the result of the impairment test indicates that the recoverable amount of an asset is less than its carrying amount, a provision for impairment and an impairment loss are recognised 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. Provision for asset impairment is determined and recognised on the individual asset basis. If it is not possible to estimate the recoverable amount of an individual asset, the recoverable amount of a group of assets to which the asset belongs is determined. A group of assets is the smallest group of assets that is able to generate independent cash inflows. Goodwill that is separately presented in the financial statements is tested at least annually for impairment, irrespective of whether there is any indication that it may be impaired. In conducting the test, book value of goodwill is allocated to the related asset groups or groups of asset groups which are expected to benefit from the synergies of the business combination. If the result of the test indicates that the recoverable amount of an asset group or group of asset groups, including the allocated goodwill, is lower than its carrying amount, the corresponding impairment loss is recognised. The impairment loss is first deducted from book value of goodwill that is allocated to the asset group or group of asset groups, and then deducted from book values of other assets within the asset groups or groups of asset groups in proportion to book values of assets other than goodwill. Once the above asset impairment loss is recognised, it will not be reversed for the value recovered in the subsequent periods. 19. Long-term prepaid expenses Long-term prepaid expenses include the expenditures that have been incurred but should be recognised as expenses over more than one year in the current and subsequent periods. Long-term prepaid expenses are amortised on the straight-line basis over the expected beneficial period and are presented at actual expenditure net of accumulated amortisation. 20. Employee benefits (1) Short-term employee benefits accounting method Short-term employee benefits include wages or salaries, bonuses, allowances and subsidies, staff welfare, medical care, work injury insurance, maternity insurance, housing funds, labour union funds, employee education funds and paid short-term leave, etc. The employee benefit liabilities are recognised in the accounting period in which the service is rendered by the employees, with a corresponding charge to the profit or loss for the current period or the cost of relevant assets. Employee benefits which are non-monetary benefits shall be measured at fair value. (2) Post-employment benefits accounting method The Group classifies post-employment benefit plans as either defined contribution plans or defined benefit plans. Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into a separate fund and will have no obligation to pay further contributions; and defined benefit plans are post-employment benefit plans other than defined contribution plans. During the reporting period, the Group's post-employment benefits mainly include basic pensions and unemployment insurance, both of which belong to the defined contribution plans. (3) Basic pensions The Group’s employees participate in the basic pension plan set up and administered by local authorities of Ministry of Human Resource and Social Security. Monthly payments of premiums on the basic pensions are calculated according to prescribed bases and percentage by the relevant local authorities. When employees retire, local labour and social security institutions have a duty to pay the basic pension insurance to them. The amounts based on the above calculations are recognised as liabilities in the accounting period in which the service has been rendered by the employees, with a corresponding charge to the profit or loss for the current 75 CSG Semi-annual Report 2018 period or the cost of relevant assets. (4) Termination benefits accounting method The Group provides compensation for terminating the employment relationship with employees before the end of the employment contracts or as an offer to encourage employees to accept voluntary redundancy before the end of the employment contracts. The Group recognises a liability arising from compensation for termination of the employment relationship with employees, with a corresponding charge to profit or loss at the earlier of the following dates: 1) when the Group cannot unilaterally withdraw the offer of termination benefits because of an employment termination plan or a curtailment proposal; 2) when the Group recognises costs or expenses related to the restructuring that involves the payment of termination benefits. The termination benefits expected to be paid within one year since the balance sheet date are classified as current liabilities. 21. Provisions Business restructuring, provisions for product warranties, loss contracts etc. are recognised when the Group has a present obligation, it is probable that an outflow of economic benefits will be required to settle the obligation, and the amount of the obligation can be measured reliably. A provision is initially measured at the best estimate of the expenditure required to settle the related present obligation. Factors surrounding a contingency, such as the risks, uncertainties and the time value of money, are taken into account as a whole in reaching the best estimate of a provision. Where the effect of the time value of money is material, the best estimate is determined by discounting the related future cash outflows. The increase in the discounted amount of the provision arising from passage of time is recognised as interest expense. Book value of provision is reviewed at each balance sheet date and adjusted to reflect the current best estimate. The provisions expected to be paid within one year since the balance sheet date are classified as current liabilities. 22. Share-based payments Share-based payments are divided into equity-settled and cash-settled payments. The term "equity-settled share-based payment" refers to a transaction in which an enterprise grants shares or other equity instruments as a consideration in return for services. Equity-settled share-based payment The Group‘s stock optionstock option plan is the equity-settled share-based payment in exchange of employees' services and is measured at the fair value of the equity instruments at grant date. The equity instruments are exercisable after services in vesting period are completed or specified performance conditions are met. In the vesting period, the services obtained in current period are included in relevant cost and expenses at the fair value of the equity instruments at grant date based on the best estimate of the number of exercisable equity instruments, and capital surplus is increased accordingly. If the subsequent information indicates the number of exercisable equity instruments differs from the previous estimate, an adjustment is made and, on the exercise date, the estimate is revised to equal the number of actual vested equity instruments. The Group determines the fair value of stock optionstock options using option pricing model, which is Black-Scholes option pricing model (B-S model). In the period at which performance conditions and term of service are met, the relevant cost and expenses of equity-settled payment should be recognized, and capital surplus is increased accordingly. Before the exercise date, the accruing amounts of equity-settled payments on balance sheet date reflect the part of expired waiting period and optimal estimation for the number of the Company final 76 CSG Semi-annual Report 2018 vested equity instruments. If the non-market conditions and term of service are not met so that share-based payment fail to exercise, the costs and expenses on this portion should not be recognized. If the share-based payment agreement sets out the market conditions and term of non-vesting, as long as performance conditions and term of service are met, it is should be regard as exercisable right, no matter the market conditions and non-vesting conditions are meet or not. If the terms of equity-settled payment are modified, at least the service is confirmed in accordance with the unmodified terms. In addition, the increase of the fair value of the authorized equity instruments, or the beneficial changes to the employees on the modification date, the increase of service are confirmed. If the equity-settled payment is cancelled, the cancellation date shall be deemed as an expedited exercise, and the unconfirmed amount shall be confirmed immediately. If the employee or other party is able to choose to meet the non-vesting conditions but not satisfied in the waiting period, equity-settled payment should be cancelled. But if a new equity instrument is granted, and the new equity instrument is confirm to replace the old equity instrument which is canceled in the authorization date of the new equity instrument, the new equity instrument should be disposed by using the same conditions and terms of the old equity instrument for modifications. 23. Revenue The amount of revenue is determined in accordance with the fair value of the consideration received or receivable for the sales of goods and services in the ordinary course of the Group’s activities. Revenue is shown net of discounts, rebates and returns. Revenue is recognised when the economic benefits associated with the transaction will probably flow to the Group, the related revenue can be reliably measured, and the specific revenue recognition criteria have been met for each type of the Group’s activities as described below: (a) Sales of goods The Group mainly sells flat and engineering glass, products related to solar energy, and electronic glass and displays. For domestic sales, the Group delivers the products to a certain place specified in the contract. When the buyer takes over the goods, the Group recognises revenue. For export sales, the Group recognises the revenue when it finished clearing goods for export and deliver the goods on board the vessel, or when the goods are delivered to a certain place specified in the contract. For above sales, when the buyer takes over the goods, the buyer has the right to sell the products, and should bear the risk of price fluctuation or goods damage. (b) Rendering of services Revenue is recognised for the rendering of service by the Group to external parties upon the completion of related service. (c) Transfer of asset use rights Interest income is recognised on a time-proportion basis using the effective interest method. 77 CSG Semi-annual Report 2018 24. Government grants (1)Judgment basis and accounting method of government grants related to an asset The government grants related to assets refers to government grant obtained by enterprises and used for purchase and construction of long-term assets or formation of long-term in other ways. The government subsidies related to assets will be used to write off the book value of assets concerned, or be recognized as the deferred gains and be booked into the gains and losses in a reasonable and systematic manner over the useful life of the assets concerned. (2) Judgment basis and accounting method of government grants related to income The government grants related to income refer to grants other than those related to assets. The income-related government subsidy which is used to compensate for costs or losses associated with the subsequent periods will be recognized as deferred gains and is recorded as current gains or losses or offsets related costs during the period in which the relevant cost costs or losses are recognized; The income-related government subsidy which is used to compensate for related costs or losses incurred will be directly included in current profits or losses or related costs. The group adopts the same presentation method for similar government grants. (3) Judgment basis and accounting method of government grants related to ordinary activities. The ordinary activitiy government grants should be counted into operating profits; the government grants which not belong ordinary activities should be counted inton non-operationg income. 25. Deferred tax assets and deferred tax liabilities Deferred tax assets and deferred tax liabilities are calculated and recognised based on the differences arising between the tax bases of assets and liabilities and their carrying amounts (temporary differences). Deferred tax asset is recognised for the deductible losses that can be carried forward to subsequent years for deduction of the taxable profit in accordance with the tax laws. No deferred tax liability is recognised for a temporary difference arising from the initial recognition of goodwill. No deferred tax asset or deferred tax liability is recognised 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 realised or the liability is settled. Deferred tax assets are only recognised 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 utilised. Deferred tax liabilities are recognised for temporary differences arising from investments in subsidiaries and associates, except where the Group is able to control the timing of reversal of the temporary difference, and it is probable that the temporary difference will not reverse in the foreseeable future. When it is probable that the temporary differences arising from investments in subsidiaries and associates will be reversed in the foreseeable future and that the taxable profit will be available in the future against which the temporary differences can be utilised, the corresponding deferred tax assets are recognised. 78 CSG Semi-annual Report 2018 Deferred tax assets and liabilities are offset when: the deferred taxes are related to the same tax payer within the Group and the same taxation authority; and, that tax payer within the Group has a legally enforceable right to offset current tax assets against current tax liabilities. 26. Leases (1) Accounting method of operating lease Lease payments under an operating lease are recognised on a straight-line basis over the period of the lease, and are either capitalised as part of the cost of related assets, or charged as an expense for the current period. Lease income under an operating lease is recognised as revenue on a straight-line basis over the period of the lease. (2) Accounting method of financing lease A lease that transfers substantially all the risks and rewards incidental to ownership of an asset is a finance lease. An operating lease is a lease other than a finance lease. 27. Safety production costs According to relevant regulations of the Ministry of Finance and National Administration of Work Safety, a subsidiary of the Group which is engaged in producing and selling polysilicon appropriates safety production costs on following basis: (a) 4% for revenue below RMB10 million (inclusive) of the year; (b) 2% for the revenue between RMB10 million to RMB100 million (inclusive) of the year; (c) 0.5% for the revenue between RMB100 million to RMB1 billion (inclusive) of the year; (d) 0.2% for the revenue above RMB1 billion of the year. The safety production costs is mainly used for the overhaul, renewal and maintenance of safety facilities. The safety production costs are charged to costs of related products or profit or loss when appropriated, and safety production costs in equity account are credited correspondingly. When using the special reserve, if the expenditures are expenses in nature, the expenses incurred are offset against the special reserve directly when incurred. If the expenditures are capital expenditures, when projects are completed and transferred to fixed assets, the special reserve should be offset against the cost of fixed assets, and a corresponding accumulated depreciation are recognised. The fixed assets are no longer be depreciated in future. 28. Segment information The Group identifies operating segments based on the internal organisation structure, management requirements and internal reporting system, and discloses segment information of reportable segments which is determined on the basis of operating segments. 29. Significant changes in accounting policies (1) Changes in significant accounting policies □Applicable √Not applicable 79 CSG Semi-annual Report 2018 (2)Changes in significant accounting estimates □Applicable √ Not applicable 30. Critical accounting estimates and judgements The Group continually Estimates the critical accounting estimates and key assumptions applied based on historical experience and other factors, including expectations of future events that are believed to be reasonable. The critical accounting estimates and key assumptions that have a significant risk of possibly causing a material adjustment to book values of assets and liabilities within the next accounting year are outlined below: (a) Income tax The Group is subject to Income tax in numerous jurisdictions. There are some transactions and events for which the ultimate tax determination is uncertain during the ordinary course of business. Significant judgement is required from the Group in determining the provision for Income tax in each of these jurisdictions. Where the final identified outcome of these tax matters is different from the initially-recorded amount, such difference will impact the income tax expenses and deferred income tax in the period in which such determination is finally made. (b) Deferred income tax Estimates on deferred tax assets are based on estimates on amount of taxable income and applicable tax rate for every year. Realisation of deferred income tax are subject to sufficient taxable income that are possible to be obtained by the Group in the future. Change of the future tax rate as well as the reversed time of temporary difference might have effects on tax expense (income) and the balance of deferred tax assets or liabilities. Those estimates may also cause significant adjustment on deferred tax. (c) Impairment of long-term assets (excluding goodwill) Long-term assets at the balance sheet date should be subject to impairment testing if there are any indications of impairment. Management determines whether the long-term assets impaired or not by evaluating and analysing following aspects: (1) whether the event affecting assets impairment occurs; (2) whether the expected obtainable present value of future cash flows is lower than the asset’s carrying amount by continually using the assets or disposal; and (3) whether the assumptions used in expected obtainable present value of future cash flows are appropriate. Various assumptions, including the discount rate and growth rate applied in the method of present value of future cash flow, are required in evaluating the recoverable amount of assets. If these assumptions cannot be conformed, the recoverable amount should be modified, and the long-term assets may be impaired accordingly. (d) The useful life of fixed assets Management estimates the useful life of fixed assets, based on historical experiences on using fixed assets that have similar properties and functions. When there are differences between actually useful life and previously estimation, management will adjust estimation to useful life of fixed assets. The fixed assets would be written off or written down when fixed assets been disposed or became redundant. Thus, the estimated result based on existing experience may be different from the actual result of the next accounting period, which may cause major adjustment to book value of fixed assets on balance sheet. (e) Goodwill impairment 80 CSG Semi-annual Report 2018 Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units (“CGUs”), or groups of CGUs, and future cash flow from each CGU or CGUs is forcasted and discounted with appropriate discount rate. VI. Taxation 1. The main categories and rates of taxes applicable to the Group are set out below: Tax item Tax basis Tax rate Taxable value-added amount (Tax payable is calculated Value-added tax (“VAT”) using the taxable sales amount multiplied by the applicable 6%-17% tax rate less deductible VAT input of the current period) City maintenance and construction tax VAT paid 1%-7% Enterprise income tax Taxable income 0%-25% Educational surcharge VAT paid 3%-5% Resource tax Sales volume of silica 6.5% 2. Tax incentives The main tax incentives the Group is entitled to are as follows: Tianjin Energy Conservation Glass Co., Ltd. (“Tianjin Energy Conservation”) passed review on a high and new tech enterprise in 2015 and obtained the Certificate of High and New Tech Enterprise, the period of validity is three years. It applies to 15% tax rate for three years since 2015. Currently in the review of high and new tech enterprise, this report period temporary by 15% income tax rate. Dongguan CSG Architectural Glass Co., Ltd. (“Dongguan CSG”) passed review on a high and new tech enterprise in 2016 and obtained the Certificate of High and New Tech Enterprise, the period of validity is three years. It applies to 15% tax rate for three years since 2016. Wujiang CSG North-east Architectural Glass Co., Ltd. (“Wujiang CSG”) passed review on a high and new tech enterprise in 2017 and obtained the Certificate of High and New Tech Enterprise, the period of validity is three years. It applies to 15% tax rate for three years since 2017. Dongguan CSG Solar Glass Co., Ltd. (“Dongguan CSG Solar”) passed review on a high and new tech enterprise in 2017 and obtained the Certificate of High and New Tech Enterprise, the period of validity is three years. It applies to 15% tax rate for three years since 2017. Yichang CSG Silicon Co., Ltd. (“Yichang CSG Silicon”) passed review on a high and new tech enterprise in 2017 and obtained the Certificate of High and New Tech Enterprise, the period of validity is three years. It applies to 15% tax rate for three years since 2017. 81 CSG Semi-annual Report 2018 Dongguan CSG PV-tech Co., Ltd. (“Dongguan CSG PV-tech”) passed review on a high and new tech enterprise in 2016 and obtained the Certificate of High and New Tech Enterprise, the period of validity is three years. It applies to 15% tax rate for three years since 2016. Hebei Panel Glass Co., Ltd. (“Hebei Panel”) passed review on a high and new tech enterprise in 2016 and obtained the Certificate of High and New Tech Enterprise, the period of validity is three years. It applies to 15% tax rate for three years since 2016. Wujiang CSG Glass Co., Ltd. (“Wujiang CSG”) was recognised as a high and new tech enterprise in 2017, and obtained the Certificate of High and New Tech Enterprise, and the period of validity was three years. It applies to 15% tax rate for three years since 2017. Xianning CSG Glass Co Ltd. (“Xianning CSG”) was recognised as a high and new tech enterprise in 2017, and obtained the Certificate of High and New Tech Enterprise, and the period of validity was three years. It applies to 15% tax rate for three years since 2017. Xianning CSG Energy-Saving Glass Co., Ltd. (“Xianning CSG Energy-Saving”) was recognised as a high and new tech enterprise in 2015, and obtained the Certificate of High and New Tech Enterprise, and the period of validity was three years. It applies to 15% tax rate for three years since 2015. Currently in the review of high and new tech enterprise, this report period temporary by 15% income tax rate. Yichang CSG Photoelectric Glass Co., Ltd. (“Yichang CSG Photoelectric”) was recognised as a high and new tech enterprise in 2015, and obtained the Certificate of High and New Tech Enterprise, and the period of validity was three years. It applies to 15% tax rate for three years since 2015. Currently in the review of high and new tech enterprise, this report period temporary by 15% income tax rate. Yichang CSG Display Co., Ltd (“Yichang CSG Display”) was recognised as a high and new tech enterprise in 2016, and obtained the Certificate of High and New Tech Enterprise, and the period of validity was three years. It applies to 15% tax rate for three years since 2016. Qingyuan CSG New Energy-Saving Materials Co., Ltd. (“Qingyuan CSG Energy-Saving”) was recognised as a high and new tech enterprise in 2016, and obtained the Certificate of High and New Tech Enterprise, and the period of validity was three years. It applies to 15% tax rate for three years since 2016. Sichuan CSG Energy Conservation Glass Co., Ltd. (“Sichuan CSG Energy Conservation”) obtains enterprise income tax preferential treatment for Western Development, and temporarily calculates enterprise income tax at a tax rate of 15% for current year. Chengdu CSG Glass Co., Ltd. (“Chengdu CSG”) obtains enterprise income tax preferential treatment for Western Development, and temporarily calculates enterprise income tax at a tax rate of 15% for current year. Qingyuan CSG New Energy Co., Ltd. (“Qingyuan CSG New Energy”), Suzhou CSG PV Energy Co., Ltd. (“Suzhou CSG PV Energy”), Jiangsu Wujiang CSG New Energy Co., Ltd. (“Wujiang CSG New Energy”), and Yichang CSG New Energy Co., Ltd. (“Yichang CSG New Energy”), Zhangzhou CSG Kibing PV Energy Co., Ltd. (“Zhangzhou CSG”), Heyuan CSG Kibing PV Energy 82 CSG Semi-annual Report 2018 Co., Ltd. (“Heyuan CSG”), Shaoxing CSG Kibing PV Energy Co., Ltd. (“Shaoxing CSG”) are public infrastructure project specially supported by the state in accordance with the Article 87 in Implementing Regulations of the Law of the People's Republic of China on Enterprise Income Tax, and can enjoy the tax preferential policy of “three-year exemptions and three-year halves”, that is, starting from the tax year when the first revenue from production and operation occurs, the enterprise income tax is exempted from the first to the third year, while half of the enterprise income tax is collected for the following three years. Qingyuan CSG New Energy, Suzhou CSG PV Energy and Wujiang CSG New Energy started to carry out operations in 2015, while Yichang CSG New Energy started operation in 2016, Zhangzhou CSG, Heyuan CSG and Shaoxing CSG started operation in 2017. In addition, pursuant to the document Fogang Guo Shui Shui Tong [2015] No. 2489, the VAT for photovoltaic power generation of Qingyuan CSG New Energy is subject to the refund upon collection policy. 3. Others Some subsidiaries of the Group have used the “exempt, credit, refund” method on goods exported and the refund rate is 5%-17%. VII. Notes to the consolidated financial statements 1. Cash at bank and on hand Unit: RMB Item Balance at the end of the period Balance at the beginning of the period Cash on hand 14,984 36,182 Cash at bank 3,358,238,362 2,409,716,983 Other cash balances 13,791,823 52,852,599 Total 3,372,045,169 2,462,605,764 Other cash balances include margin deposits for the application of opening letter of credit and loan from the bank, amounting to RMB 13,791,823 (Dec. 31,2017: RMB 2,852,599), which is restricted cash. 2. Notes receivable (1) Notes receivable listed by classification Unit: RMB Item Balance at the end of the period Balance at the beginning of the period Bank acceptance notes 443,248,211 222,826,841 Trade acceptance notes 345,830,165 329,405,579 Total 789,078,376 552,232,420 83 CSG Semi-annual Report 2018 (2) Notes receivable which have been endorsed or discounted at the end of the term by the Group but are not yet due are as follows: Unit: RMB Amount of recognition termination Amount of not terminated recognition at the Item at the period-end period-end Bank acceptance notes 2,358,041,319 Trade acceptance notes 150,400,507 Total 2,358,041,319 150,400,507 3. Accounts receivable (1) Accounts receivable disclosed by category Unit: RMB End of term Beginning of term Carrying amount Provision for bad debts Carrying amount Provision for bad debts Category Proporti Propor Book value Propor Propor Book value Amount Amount Amount Amount on tion tion tion With amounts that are individually significant but that the related provision for bad debts is provided on the individual basis Accounts receivable withdrawn bad debt provision 710,368,384 97% 14,207,893 2% 696,160,491 636,614,136 96% 12,233,039 2% 624,381,097 according to credit risks characteristics With amounts that are not individually 19,750,276 3% 8,535,399 43% 11,214,877 23,536,221 4% 9,679,028 41% 13,857,193 significant but that the related provision for 84 CSG Semi-annual Report 2018 bad debts is provided on the individual basis Total 730,118,660 100% 22,743,292 3% 707,375,368 660,150,357 100% 21,912,067 3% 638,238,290 Accounts receivable with large amount individually and bad debt provisions were provided □ Applicable √ Non-applicable Accounts receivable on which bad debt provisions are provided on age analyze basis in the portfolio □ Applicable √ Non-applicable Accounts receivable on which bad debt provisions are provided on percentage analyze basis in a portfolio √Applicable □ Non-applicable Unit: RMB Closing balalnce Name of portfolio Accounts receivable Bad debt provision Proportion % Portfolio 1 710,368,384 14,207,893 2% Total 710,368,384 14,207,893 2% (2) Accounts receivable withdraw, reversed or collected during the reporting period The withdrawal amount of the bad debt provision during the report period was of RMB 7,311,182. The amount of the reversed or collected part during the report period was of RMB 3,725,813. (3) The actual write-off accounts receivable Unit: RMB Item Write-off amount Accounts receivable 2,754,144 The receivables actually written off during the year amounted to RMB 2,754,144, which was due to small receivables and non-related transactions. The reasons for write-off include business disputes or failure to contact the debtor and result in uncollectible payments. (4) Top 5 of the closing balance of the accounts receivable colleted according to the arrears party As at June 30, 2018, the top 5 of the closing balance of the accounts receivable colleted according to the arrears party were collected and analyzed as follows: Balance Provision for bad debts Percentage in total accounts receivable balance Total balances for the five largest 100,227,996 2,004,560 14% accounts receivable 85 CSG Semi-annual Report 2018 4. Advances to suppliers (1) Listed by aging analysis Unit: RMB Closing balance Opening balance Age Amount Proportion Amount Proportion within 1 year 109,057,887 89% 130,813,397 91% 1 to 2 years 102,035 264,952 2 to 3 years 72,952 12,769,674 9% over 3 years 12,769,674 11% Total 122,002,548 -- 143,848,023 -- As at June 30, 2018, advances to suppliers ageing over one-year amount to RMB 12,944,661 (December 31 2017: RMB 13,034,626). They were mainly mainly for prepaid gas and material purchases, and the payment had not been selected because the materials had not been received. (2) Top 5 of the closing balance of the advances to suppliers colleted according to the target As at June 30, 2018, the top five largest advances to supplies are set out as below: Balance Percentage in total advances balance Total advances for the five largest advances 56,202,340 46% 5. Other account receivable (1) Other accounts receivable disclosed by category: Unit: RMB End of term Beginning of term Provision for bad Provision for bad Carrying amount Carrying amount Category debts debts Book value Book value Propor Propor Propor Propor Amount Amount Amount Amount tion tion tion tion With amounts that are individually significant but that the related provision for bad debts is provided on the individual basis 86 CSG Semi-annual Report 2018 Accounts receivable withdrawn bad debt provision according 213,536,126 100% 4,265,739 2% 209,270,387 210,136,518 100% 4,197,499 2% 205,939,019 to credit risks characteristics With amounts that are not individually significant but that the related provision 322,905 322,905 100% 322,905 322,905 100% for bad debts is provided on the individual basis Total 213,859,031 100% 4,588,644 2% 209,270,387 210,459,423 100% 4,520,404 2% 205,939,019 Other accounts receivable with large amount and were provided bad debt provisions individually at end of period. □ Applicable √ Non-applicable Other accounts receivable in the portfolio on which bad debt provisions were provided on age analyze basis □ Applicable √ Non-applicable Other accounts receivable in the portfolio on which bad debt provisions were provided on percentage basis √ Applicable □ Non-applicable Unit: RMB Closing balance Name of portfolio Other receivable accounts Provision for bad debts proportion Portfolio 1 42,536,126 845,739 2% Portfolio 2 171,000,000 3,420,000 2% Total 213,536,126 4,265,739 2% Other accounts receivable in the portfolio on which bad debt provisions were provided on other basis □ Applicable √ Non-applicable (2) Accounts receivable withdraw, reversed or collected during the reporting period The withdrawal amount of the bad debt provision during the report period was of RMB150,117. The amount of the reversed or collected part during the report period was of RMB 81,877. (3) Other accounts receivable classified by the nature of accounts Unit: RMB Nature Closing balance Opening balance Receivables from related parties 171,000,000 171,000,000 Refundable deposits 20,162,058 16,957,562 87 CSG Semi-annual Report 2018 Payments made on behalf of other parties 13,889,009 19,306,658 Petty cash 1,519,176 875,714 Others 7,288,788 2,319,489 Total 213,859,031 210,459,423 (4) Top 5 of the closing balance of the other accounts receivable collated according to the arrears party Unit: RMB Proportion of the Name of the total year end Closing balance of companies Nature of business Closing balance Ages balance of the bad debt provision Industrial accounts receivable Company A Related parties 171,000,000 4 to 5 years 80% 3,420,000 Governmental Independent third party 3 to 4 years 11,067,754 5% 221,355 department B Company C Independent third party 5,000,000 1 to 2 years 2% 100,000 Company D Independent third party 3,350,000 Within 1 year 2% 67,000 Governmental Independent third party Within 1 year 2,728,214 1% 54,564 department E Total -- 193,145,968 -- 90% 3,862,919 6. Inventories (1) Categories of inventory Unit: RMB Closing balance Opening balance Item Provision for Provision for decline Carrying amount Book value Carrying amount Book value decline in the value in the value Raw materials 209,815,202 1,444,252 208,370,950 213,348,012 1,447,590 211,900,422 Products in process 20,713,776 20,713,776 45,614,905 45,614,905 Products in stock 443,933,341 68,974 443,864,367 387,489,714 68,974 387,420,740 Material in 40,673,556 40,673,556 40,959,250 40,959,250 circulation Total 715,135,875 1,513,226 713,622,649 687,411,881 1,516,564 685,895,317 (2) Provision for decline in the value of inventories Unit: RMB 88 CSG Semi-annual Report 2018 Increased in this term Decreased in this term Category Opening balance Closing balance Withdrawal Other Reverse or write-off Other Raw materials 1,447,590 3,338 1,444,252 Products in stock 68,974 68,974 Total 1,516,564 3,338 1,513,226 Provision for decline in the value of inventories is as follows: Basis for provision for decline in the value of inventories Reasons of reversal of the decline in the value of inventories Products in stock The amount of carrying amount less than that of net realisable value due to decline in price of products Sold Raw materials The amount of book value more that of net realisable value due to sluggish or damaged raw materials Used 7. Assets classified as held for sale Unit: RMB carrying amounts Estimated Item Fair value Estimated disposal costs at the end of period disposal time Intangible assets 15,048,314 18,390,394 Construction in progress 30,935,206 37,805,606 Total 45,983,520 56,196,000 -- The subsidiary of the Group, Dongguan CSG PV-tech signed a grant contract of land use right with third party Dongguan Chaoying Textile Co., LTD. (Dongguan Chaoying Company) on 17 June 2016. Dongguan CSG PV-tech sells its land use right along with the buildings on the land to Dongguan Chaoying Company. Therefore, the construction-in-progress and intangible assets of Dongguan CSG PV-tech were transferred to assets held for sale. By the end of this reporting period, the above transfer procedures have not been completed. 8. Other current assets Item Closing balance Opening balance VAT to be offset 154,548,103 181,667,326 Enterprise income tax prepaid 2,198,301 1,132,508 VAT input to be recognised 22,057,351 18,048,155 Total: 178,803,755 200,847,989 89 CSG Semi-annual Report 2018 9. Fixed assets (1) Particulars of fixed assets Unit: RMB Machinery and Item Buildings Motor vehicles Total equipment I. Original book value: 1. Opening balance 3,999,368,700 12,462,823,260 208,292,757 16,670,484,717 2. Increased amount of the period (1) Acquisition 71,132 7,573,067 3,439,675 11,083,874 (2) Transfers from construction in progress 10,251,332 430,457,709 2,839,472 443,548,513 (3) Others 6,596,592 18,819,685 2,274,639 27,690,916 3. Decreased amount of the period (1) Disposal or retirement 19,245,299 2,743,499 21,988,798 (2) Transfer to construction in progress 145,340,491 145,340,491 4. Closing balance 4,016,287,756 12,755,087,931 214,103,044 16,985,478,731 II. Accumulative depreciation 1. Opening balance 751,518,811 3,908,894,072 188,549,283 4,848,962,166 2. Increased amount of the period (1) Provision 63,278,467 422,717,038 11,716,224 497,711,729 3. Decreased amount of the period (1) Disposal or retirement 4,968,193 2,715,456 7,683,649 (2) Transferred to construction in progress 117,366,019 117,366,019 4. Closing balance 814,797,278 4,209,276,898 197,550,051 5,221,624,227 III. Depreciation reserves 1. Opening balance 10,580,861 270,171,993 280,752,854 2. Increased amount of the period (1) Provision 3. Decreased amount of the period (1) Disposal or retirement 11,196,033 11,196,033 4. Closing balance 10,580,861 258,975,960 269,556,821 IV. Book value 1. Closing book value 3,190,909,617 8,286,835,073 16,552,993 11,494,297,683 2. Opening book value 3,237,269,028 8,283,757,195 19,743,474 11,540,769,697 90 CSG Semi-annual Report 2018 (2) Fixed assets with pending certificates of ownership Unit: RMB Items Book value Reason for not yet obtaining certificates of title Have submitted the required documents and are in the process of Buildings 825,479,080 application, or the related land use right certificate pending 10. Construction in process (1)Particulars of construction in process Unit: RMB Closing balance Opening balance Item Provision for Provision for Carrying amount Carrying amount Carrying amount Carrying amount impairment loss impairment loss Xianning CSG Photoelectric Glass 460,524,423 460,524,423 400,665,493 400,665,493 project Yichang display device company flat 321,772,258 14,160,474 307,611,784 298,794,622 14,160,474 284,634,148 panel display project Yichang Optoelectronic Technology 1,117,944 1,117,944 242,055,237 242,055,237 Reform Project Hebei float 600T tech-innovation 116,421,995 116,421,995 113,762,853 113,762,853 project Zhanjiang Photovoltaic 20MV Step-by-step Photovoltaic Power Plant 4,239,529 4,239,529 100,570,104 100,570,104 Project Dongguan Solar Glass Phase I and II 78,970,995 40,248,018 38,722,977 78,970,995 40,248,018 38,722,977 improvement project Wujiang energy glass expansion 70,936,821 19,876,460 51,060,361 72,600,518 19,876,460 52,724,058 project Yichang 1GW silicon slice project 48,653,281 48,653,281 43,617,802 43,617,802 LED Sapphire Substrate Project 31,762,102 19,303,853 12,458,249 30,886,629 19,303,853 11,582,776 Wujiang Photovoltaic Packaging 4,805,466 4,805,466 7,414,854 7,414,854 Materials Project Dongguan PV Tech 200MW PV-tech 1,541,388 1,541,388 1,179,935 1,179,935 Battery Expansion project Dongguan Solar Glass new 32,491,564 32,491,564 1,888,363 1,888,363 photovoltaic glass project others 111,616,450 405,983 111,210,467 119,212,001 405,983 118,806,018 91 CSG Semi-annual Report 2018 Total 1,284,854,216 93,994,788 1,190,859,428 1,511,619,406 93,994,788 1,417,624,618 92 CSG Semi-annual Report 2018 (2) Movement of significant project Unit: RMB Proportion Accumulate Including: Capitalizin Transfer to fixed Other between Opening Increased Closing of interest g rate of Projects Budget assets in this decreases in engineering Progress Fund recourse balance this term balance interest capitalized this interest term this term input and capitalized term this term budget Xianning CSG Photoelectric Glass 510,000,000 400,665,493 59,858,930 460,524,423 91% 100% 14,047,509 6,276,896 4.75% Internal fund and project bank loan Yichang display Internal fund and device company flat 1,970,000,000 298,794,622 23,438,436 460,800 321,772,258 82% 85% 6,607,890 2,463,731 4.47% bank loan panel display project Yichang Optoelectronic 258,296,536 242,055,237 9,970,569 250,054,605 853,257 1,117,944 100% 100% Technology Reform Project Internal fund Hebei float 600T tech-innovation 145,750,000 113,762,853 2,659,142 116,421,995 14% 15% 163,839 163,839 4.94% Internal fund and project bank loan Zhanjiang Photovoltaic 20MV Step-by-step 133,000,000 100,570,104 92,218,630 4,111,945 4,239,529 100% 100% 2,280,097 Photovoltaic Power Internal fund and Plant Project bank loan 93 CSG Semi-annual Report 2018 Dongguan Solar Glass Phase I and II 396,410,000 78,970,995 78,970,995 80% 81% improvement project Internal fund Wujiang energy glass Internal fund and 845,630,000 72,600,518 1,396,512 2,899,013 161,196 70,936,821 100% 100% 20,120,444 expansion project bank loan Yichang 1GW silicon Internal fund and 1,073,209,600 43,617,802 5,081,198 45,719 48,653,281 39% 60% 10,105,307 1,475,314 5.15% slice project bank loan LED Sapphire Internal fund and 35,000,000 30,886,629 875,473 31,762,102 88% 88% 4,650,543 Substrate Project bank loan Wujiang Photovoltaic Internal fund and Packaging Materials 520,100,000 7,414,854 22,910,266 24,771,759 747,895 4,805,466 95% 100% bank loan Project Dongguan PV Tech 200MW PV-tech Internal fund and 697,000,000 1,179,935 1,094,726 733,273 1,541,388 100% 100% 32,417,335 Battery Expansion bank loan project Dongguan Solar Glass new 60,000,000 1,888,363 30,603,201 32,491,564 57% 80% Internal fund photovoltaic glass project Internal fund and others 1,283,748,333 119,212,001 64,904,542 72,364,714 135,379 111,616,450 8,789,090 9,388 bank loan Total 7,928,144,469 1,511,619,406 222,792,995 443,548,513 6,009,672 1,284,854,216 -- -- 99,182,054 10,389,168 -- 94 CSG Semi-annual Report 2018 11. Intangible assets (1) Particulars of intangible assets Unit: RMB Exploitation Item Land use rights Patents Others Total rights I. Original book value: 1. Opening balance 1,026,603,700 246,011,919 4,456,536 36,106,710 1,313,178,865 2. Increased amount of this period (1) Acquisition 25,361 278,387 303,748 (2) Internal R&D 9,191,305 9,191,305 3. Decreased amount of the period (1)Disposal 4. Closing balance 1,026,603,700 255,228,585 4,456,536 36,385,097 1,322,673,918 II. Accumulated amortisation 1. Opening balance 149,057,265 74,985,236 3,706,724 24,996,753 252,745,978 2. Increased amount of this period (1) Provision 10,193,270 9,333,131 200,321 3,427,051 23,153,773 3. Decreased amount of the period (1) Disposal 4. Closing balance 159,250,535 84,318,367 3,907,045 28,423,804 275,899,751 III. Impairment provision 1. Opening balance 13,201,347 9,133 13,210,480 2. Increased amount of this period (1) Provision 3. Decreased amount of this period (1) Disposal 4. Closing balance 13,201,347 9,133 13,210,480 IV. Book value 1. Closing book value 867,353,165 157,708,871 549,491 7,952,160 1,033,563,687 2. Opening book value 877,546,435 157,825,336 749,812 11,100,824 1,047,222,407 At the end of the period, the intangible assets arising from internal research and development accounted for 12.98% of total of intangible assets. 95 CSG Semi-annual Report 2018 (2) Land use rights not licensed yet Unit: RMB Item Book value Reason for not yet obtaining certificates of title Land 5,351,068 in the process As at June 30, 2018, ownership certificates of land use right (“Land ownership Certificates”) for certain land use rights of the Group with carrying amounts of approximately RMB 5,351,068 (cost: RMB 6,586,712) had not yet been obtained by the Group (as at December 31, 2017, carrying amount: RMB 5,473,442, cost: RMB 6,586,712). The Company’s management is of the view that there is no legal restriction for the Group to apply for and obtain the Land Ownership Certificates and has no adverse effect on the Group’s business operation. 12. Development expenditure Unit: RMB The increased amount in the period The decrease amount in the period Item Opening balance Closing balance Internal development expenditure Recognised as intangible assets Development 61,365,537 19,803,682 9,191,305 71,977,914 expenditure Total 61,365,537 19,803,682 9,191,305 71,977,914 During Jan.-Jun. 2018, the total amount of research and development expenditures of the Group was RMB 185,844,867 (Jan.-Jun. 2017: RMB 166,809,377), including RMB 166,041,185 (Jan.-Jun. 2017: RMB 151,590,181) recorded in income statement for current period and the research and development expenditure with the amount of RMB 9,191,305 recognised as intangible assets for the current period (Jan.-Jun. 2017: 6,097,439). As at June 30, 2018, the intangible assets arising from internal research and development accounted for 12.98 % of total of intangible assets (31 December 2017: 12.37 %). 13. Goodwill (1) Book value of goodwill Unit: RMB Name of the companies or goodwill item Opening balance Increased this term Decreased this term Closing balance Tianjin CSG Architectural Glass Co., Ltd. 3,039,946 3,039,946 Xianning CSG Photoelectric 4,857,406 4,857,406 Shenzhen CSG Display 389,494,804 389,494,804 Total 397,392,156 397,392,156 96 CSG Semi-annual Report 2018 14. Long-term prepaid expenses Unit: RMB Item Opening balance Increased this term Amortized this term Closing balance Expenses to be amortized 2,223,397 10,823,584 794,984 12,251,997 Total 2,223,397 10,823,584 794,984 12,251,997 15. Deferred income tax asset/deferred income tax liabilities (1) Deferred income tax assets had not been off-set Unit: RMB Closing balance Opening balance Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax difference assets difference assets Provision for asset 358,728,456 53,970,832 361,149,562 55,552,592 impairments Deductible loss 186,903,882 33,564,573 133,658,792 24,457,319 Government grants 174,742,139 27,365,959 128,189,967 20,424,022 Accrued expenses 49,145,573 7,371,836 50,193,405 7,529,011 Depreciation of fixed assets 20,764,321 4,607,204 33,762,174 8,000,331 Share payment 62,178,136 10,200,424 5,196,945 867,677 Total 852,462,507 137,080,828 712,150,845 116,830,952 (2) Deferred tax liabilities before offsetting Unit: RMB Closing balance Opening balance Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax difference liabilities difference liabilities Depreciation of fixed assets 399,860,322 61,379,387 371,115,284 56,874,044 Total 399,860,322 61,379,387 371,115,284 56,874,044 (3) The net balances of deferred tax assets or liabilities Unit: RMB Off-set amount of Closing balance of Off-set amount of Opening balance of Item deferred income tax deferred income tax deferred income tax deferred income tax 97 CSG Semi-annual Report 2018 assets and liabilities at assetsor liabilities after assets and liabilities at assetsor liabilities after the period-end off-set the period-beginning off-set Deferred tax assets 36,960,329 100,120,499 35,958,090 80,872,862 Deferred tax liabilities 36,960,329 24,419,058 35,958,090 20,915,954 (4) Details of unrecognised deferred income tax assets Unit: RMB Item Closing balance Opening balance Deductible losses 521,381,041 425,759,321 Total 521,381,041 425,759,321 (5) Deductible losses of unrecognized deferred income tax assets will due the following years Unit: RMB Year Closing balance Opening balance Note 2018 年 54,100,000 54,100,000 2019 年 82,300,000 82,300,000 2020 年 94,430,197 94,430,197 2021 年 111,625,585 111,625,585 2022 年 83,303,539 83,303,539 2023 年 95,621,720 Total 521,381,041 425,759,321 -- 16. Other non-current assets Unit: RMB Item Closing balance Opening balance Prepayment of engineering equipment 79,656,620 45,431,352 Prepayment for lease of land use rights 6,510,000 6,510,000 Total 86,166,620 51,941,352 17. Short-term loans (1) Categories of short-term loans Unit: RMB Item Closing balance Opening balance 98 CSG Semi-annual Report 2018 Guaranteed loan 1,099,419,972 1,012,898,300 Unsecured loan 2,850,000,000 2,691,732,609 Total 3,949,419,972 3,704,630,909 As at June 30, 2018, the interest of short-term borrowings varied from 2.95% to 6.18% (31 December 2017: 2.70% to 5.66%). 18. Notes payable Unit: RMB Category Closing balance Opening balance Bank acceptance notes 208,201,622 213,401,622 Total 208,201,622 213,401,622 19. Accounts payable (1) Particulars of accounts payable Unit: RMB Item Closing balance Opening balance Materials payable 786,952,582 798,178,206 Equipment payable 293,681,363 329,926,045 Construction expenses payable 134,857,144 167,394,038 Freight payable 71,579,206 61,671,023 Utilities payable 31,002,278 35,973,405 Others 13,056,369 7,023,325 Total 1,331,128,942 1,400,166,042 (2) Significant accounts payable due for over one year Unit: RMB Item Closing balance Unpaid reason Account payable for construction and As the construction work had not passed the final 148,507,365 equipments. acceptance test yet, the balance was not yet settled. Total 148,507,365 -- 20. Advances from customers (1) List of advance from customers Unit: RMB 99 CSG Semi-annual Report 2018 Item Closing balance Opening balance Advances from customers 183,976,533 195,563,465 Total 183,976,533 195,563,465 21. Employee benefits payable (1) List of Employee benefits payable Unit: RMB Item Opening balance Increased this term Decreased this term Closing balance I. Short-term employee 272,144,440 736,129,597 825,838,639 182,435,398 benefits payable II. Welfare after departure- defined 26,220 55,521,053 55,369,081 178,192 contribution plans Total 272,170,660 791,650,650 881,207,720 182,613,590 (2) List of short-term employee benefits Unit: RMB Item Opening balance Increased this term Decreased this term Closing balance 1. Wages and salaries, bonuses, 175,485,615 557,542,383 607,426,805 125,601,193 allowances and subsidies 2. Social security contributions 13,752 22,071,046 21,990,590 94,208 Including: Medical insurance 12,358 18,579,525 18,510,496 81,387 Work injury insurance 984 2,270,598 2,261,771 9,811 Maternity insurance 410 1,220,923 1,218,323 3,010 3. Housing funds 2,758,371 23,814,977 24,343,892 2,229,456 4.Labour union funds and 15,280,702 8,234,381 6,081,286 17,433,797 employee education funds 5.Management bonus (i) 78,606,000 28,831,310 70,360,566 37,076,744 6. Share payment (ii) 95,635,500 95,635,500 Total 272,144,440 736,129,597 825,838,639 182,435,398 (3) List of defined contribution plans Unit: RMB Item Opening balance Increased this term Decreased this term Closing balance 100 CSG Semi-annual Report 2018 1. Basic pensions 25,388 53,602,090 53,455,510 171,968 2. Unemployment insurance 832 1,918,963 1,913,571 6,224 Total 26,220 55,521,053 55,369,081 178,192 Pursuant to the resolution at the 7th session in the 5th meeting of the board of directors of the Company on 31 March 2015, the board of directors adopted a management bonus scheme which was based on the quarterly return on net assets and the net profit for the quarter. During the first half of 2018, management bonuses amounting to RMB 31,000,000 (Jan.-Jun. 2017: RMB 35,700,000) were accrued and charged to profit or loss. Pursuant to the resolution at the 7th session in the temporary conference of the board of directors of the Company on 11 December 2017, to implemented equity incentive plans of restricted stock for the Company directors and senior management, core management team, backbones of technology and busines. The company first awarded 97,511,654 restricted shares to 454 incentive objects for the first time at RMB 4.28 per share. The total fair value of the equity instruments granted to the incentive object by the company for the first time is RMB 289,519,900. The total value of such fair value as the total cost of the company's equity incentive plan will be confirmed in stages according to the ratio of unlocking/exercising in the implementation of the equity incentive plan, and it is included in the cost in the term of "management fees" and "capital reserves - other capital reserves". In the first half of 2018, and the cost associated with equity incentive plan is confirmed at RMB 95,635,500 in this phase. 22. Tax payable Unit: RMB Item Closing balance Opening balance Value-added-tax payable 37,724,917 48,496,225 Corporate income tax payable 41,970,446 35,100,800 Individual income tax payable 5,768,179 5,177,080 City maintenance and construction tax 2,888,985 4,261,902 Property tax payable 8,058,999 8,617,044 Education surcharge payable 2,430,091 3,348,566 environmental protection tax 2,926,779 Others 5,844,303 6,995,147 Total 107,612,699 111,996,764 23. Interest payable Unit: RMB Item Closing balance Opening balance Interest of long-term borrowings with periodic payments of 976,143 938,950 interest and return of principal at maturity Interest payable for short-term borrowings 6,110,565 5,471,325 101 CSG Semi-annual Report 2018 Interest payable for medium term notes 66,284,488 27,622,465 Total 73,371,196 34,032,740 24. Dividends payable Unit: RMB Item Closing balance Opening balance Restricted shares dividend 4,875,583 Total 4,875,583 25. Other account payable (1) List of other account payable by nature Unit: RMB Item Closing balance Opening balance Guarantee deposits received from construction 60,768,771 49,624,256 contractors Accrued cost of sales (i) 25,927,613 58,584,562 Temporary collection of payment for land 55,496,000 56,196,000 transfer Payable for contracted labour costs 17,614,260 17,568,695 Temporary receipts 15,621,231 7,964,070 Deposit for disabled 5,280,590 5,230,110 Restricted share repurchases obligation (ii) 412,474,296 417,349,879 Industrial production scheduling funds 15,000,000 Others 12,357,872 6,806,782 Total 620,540,633 619,324,354 (i) It represented the payment made to external third parties arising from undertaking the rights of debtor and creditor, comprising water and electricity, professional service fee and travelling expenses etc. (ii) In this item, the repurchase obligation of restricted shares is recognized by the company as liabilities and meanwhile the treasury stock will be recognized in terms of corresponding amount. 26. Current portion of non-current liabilities Unit: RMB Item Closing balance Opening balance Current portion of long-term borrowings 234,000,000 194,880,000 102 CSG Semi-annual Report 2018 Current portion of finance lease 707,647,396 709,381,397 Total 941,647,396 904,261,397 27. Other current liabilities Unit: RMB Item Closing balance Opening balance Others 300,000 300,000 Total 300,000 300,000 28. Long-term borrowings (1) Categories of long-term loans Unit: RMB Item Closing balance Opening balance Guaranteed 364,000,000 354,120,000 Medium term notes 2,000,000,000 1,200,000,000 Total 2,364,000,000 1,554,120,000 Approved by file No. [2015] MTN225 of Inter-bank Market Trading Association, the Company is entitled to issue medium term notes with the limit of RMB 1,200,000,000, which expires on 28 May 2017. On 14 July 2015, the Company issued the Phase I medium term notes of RMB 1,200,000,000 for 2015, with the maturity data of 14 July 2020 and annual rate of 4.94%. Approved by file No. [2018] MTN157 of Inter-bank Market Trading Association, the Company is entitled to issue medium term notes with the limit of RMB 800,000,000, which expires on 20 March 2020. On 4 May 2018, the Company issued the Phase I medium term notes of RMB 800,000,000 for 2018, with the maturity data of 4 May 2021 and annual rate of 7%. As at 30 June 2018, the interest of long-term borrowings varied from 4.75%-7% (31 December 2017: 4.75%-5.94%). 29. Long-term account payable (1) List of Long-term account payable by nature Unit: RMB Item Closing balance Opening balance Finacial lease 866,214,017 1,161,794,247 103 CSG Semi-annual Report 2018 The sale and leaseback lease of the group in this phase is a mortgage loan with a lease term of 36 months. On June 30, 2018, the real interest rate of financing lease loans is 4.49%-7.8%. 30. Deferred income Unit: RMB Increase in current decrease in current Item Opening balance Closing balance Reason period period Government grants 562,701,103 2,680,000 15,354,638 550,026,465 Total 562,701,103 2,680,000 15,354,638 550,026,465 -- Government grants are analysed below: Unit: RMB Amount of cost and Increase in Included in expense Opening Other Closing Related to assets Item in debt current non-busines Account to written balance changes balance or income period s income other inco down in me in this current period period Tianjin CSG Golden 53,717,119 1,687,446 52,029,673 Sun Project (i) Assets related Dongguan CSG Golden Sun 43,328,250 1,375,500 41,952,750 Project (ii) Assets related Hebei CSG Golden 44,000,000 1,375,000 42,625,000 Sun Project (iii) Assets related Xianning CSG Golden Sun 47,982,917 1,515,250 46,467,667 Project (iv) Assets related Infrastructure compensation for 39,628,898 2,020,769 37,608,129 Wujiang CSG Glass Co., Ltd (v) Assets related Qingyuan Energy-saving project 20,789,167 1,235,000 19,554,167 (vi) Assets related Yichang Silicon products project 21,796,875 1,406,250 20,390,625 (vii) Assets related Yichang CSG silicon 12,662,876 613,867 12,049,009 Assets related 104 CSG Semi-annual Report 2018 slice auxiliary project (viii) Sichuan energy-saving 10,475,460 827,010 9,648,450 glass project (ix) Assets related Group coating film experimental 7,526,280 941,880 6,584,400 project (x) Assets related Yichang expert 3,599,883 153,331 3,446,552 silicon project (xi) Assets related Yichang semiconductor 3,400,000 133,333 3,266,667 silicon project (xii) Assets related Yichang CSG Display 50,836,604 1,267,239 49,569,365 project (xiii) Assets related Xianning Photoelectric 7,800,000 7,800,000 project (xiv) Assets related Group talent fund 171,000,000 171,000,000 project (xv) Income related Assets related/Income 24,156,774 2,680,000 716,775 85,988 26,034,011 Others related Total 562,701,103 2,680,000 15,268,650 85,988 550,026,465 —— (i)The allowance was granted by Tianjin Municipal Government. The allowance was used for establishing PV power station by Tianjin CSG Architectural Glass Co., Ltd. The facilities belonged to Tianjin CSG upon completion. The allowance will be credited to income statement in 20 years, the useful life of the PV power station. (ii)The allowance was granted by Dongguan Municipal Government. The allowance was used for establishing PV power station by Dongguan CSG Architectural Glass Co., Ltd. The facilities belonged to Dongguan CSG upon completion. The allowance will be credited to income statement in 20 years, the useful life of the PV power station. (iii)The allowance was granted by Langfang Municipal Government. The allowance was used for establishing PV power station by Hebei CSG Glass Co., Ltd. ("Hebei CSG"). When the facilities were set up, they belonged to Hebei CSG. The allowance will be credited to income statement in 20 years, the useful life of the PV power station. (iv)The allowance was granted by Xianning Municipal Government. The allowance was used for establishing PV power station by Xianning CSG Glass Co Ltd. The facilities belonged to Xianning CSG upon completion. The allowance will be credited to income statement in 20 years, the useful life of the PV power station. (v)The allowance was infrastructure compensation granted by Wujiang municipal government, and will be credited to income statement in 15 years, the shortest operating period as committed by the Group. 105 CSG Semi-annual Report 2018 (vi)The allowance was a pilot project for strategic emerging industry clusters development, which was used to establish high performance ultra-thin electronic glass production lines by Qingyuan CSG. The allowance will be credited to income statement in 10 years, the useful life of the production line. (vii)The balance represented amounts granted to Yi Chang CSG Silicon Materials Co., Ltd. by Yichang City Dongshan Development Corporation under the provisions of the investment contract signed between the Group and the Municipal Government of Yi Chang. The proceeds were designed for the construction of electricity transformer and the pipelines. Yichang Silicon is entitled to the ownership of the facilities, which will be amortised by 16 years according to the useful life of the converting station. (viii)It represented the government supporting fund obtained by Yichang Silicon from the acquiring of the assets and liabilities of Crucible project of Yichang Hejing Photoelectric Ceramic Co., Ltd. The proceeds would be amortised and credited to income statement by 16 years after related assets were put into use. (ix)It represented the funds granted by Chengdu local government for energy glass project. It will be amortised and credited to income statement in 15 years, in accordance with the minimum operating period committed by the Group. (x)The allowance was granted by Shenzhen City Development and Reform Commission for the development of Group Coating Film experimental project. The grant will be amortised and credited to income statement by 20 years in the estimated useful life of the relevant fixed assets. (xi) It represented the funds granted by Hubei local government for inport discount complement and international corporation special subsidy. The grant will be amortised and credited to income statement by 12 and 15 years (xii) It represented the funds granted by Yichang Municipal Government for Yichang CSG Display Company's flat project construction support funds and construction of coil coating three-line project. The grant will be amortised and credited to income statement by 15 years (xiii) It represented the funds granted by Yichang Municipal Government for Yichang CSG Display Company's flat project construction support funds and construction of coil coating three-line project. The grant will be amortised and credited to income statement by 15 years. (xiv) It represented the funds granted by Xianning Government of the Project supporting fund for photoconductive glass of light guide plate production line, which is used to pay for Xianning CSG Glass Co. Ltd. constructing the project of photoelectric optical glass of light guide plate production line. After the completion of the production line, the ownership belongs to Xianning photoelectric. The allowance will be credited to income statement in 8 years, the useful life of the production line. (xv)The allowance was granted by Administrative Commission of Yichang High-tech Industrial Development Zone. For senior management personnel, engineering technical personnel and senior professional technical team which is working at Yichang or plane to introduction, RMB171 million fund was set up, as a special fund for talent introduction and housing resettlement. 106 CSG Semi-annual Report 2018 31. Share Capital Unit: RMB Changed in the report period (+,-) Opening Closing Transferred balance New issues Bonus issue Others Sub-total balance from reserves Total of capital 2,484,147,547 372,622,131 372,622,131 2,856,769,678 shares 32. Capital surplus Unit: RMB Item Opening balance Increased this term Decreased this term Closing balance Capital premium (Share premium) 1,353,802,562 372,622,131 981,180,431 Other capital surplus -47,420,797 95,635,500 48,214,703 Total 1,306,381,765 95,635,500 372,622,131 1,029,395,134 (i)The Company passed the 2017 annual general meeting of shareholders held on May 14, 2018 and transferred 1.5 shares to every 10 shares for all shareholders. The total share capital before the distribution was 2,484,147,547 shares, and the total share capital after the dividend was increased to 2,856,769,678 shares. Capital reserve decreased by RMB 372,622,131; (ii) This year, due to the equity incentive plan, the share payment fee of RMB 95,635,500 was confirmed. 33. Treasury shares Unit: RMB Item Opening balance Increased this term Decreased this term Closing balance Obligations of restricted share buybacks 417,349,879 4,709,630 412,640,249 Total 417,349,879 4,709,630 412,640,249 The Company calculated the amount determined based on the number of restricted stocks issued and the corresponding repurchase price, and confirmed the liabilities and treasury stocks. The decrease in treasury stocks was mainly due to the transfer of the restricted stock stocks during the report period. 34. Other comprehensive income Unit: RMB Occuring in current period Opening Closing Item Amount Less: Amount Less: After-tax After-tax balance balance incurred transferred into income attribute to attribute to before profit and loss in the tax the parent minority 107 CSG Semi-annual Report 2018 income current period that expense company shareholder tax recognized into other comprehensive income in prior period I. Other comprehensive income not reclassified into profit and loss in futur II. Other comprehensive income reclassified into profit and loss in 1,948,943 692,018 692,018 2,640,961 future Differences on translation of foreign -601,057 692,018 692,018 90,961 currency financial statements Finance incentives for energy and 2,550,000 2,550,000 technical transformation Total of other comprehensive income 1,948,943 692,018 692,018 2,640,961 35. Special reserves Unit: RMB Item Opening balance Increased this term Decreased this term Closing balance Safety production cost 3,224,938 4,150,167 3,387,069 3,988,036 Total 3,224,938 4,150,167 3,387,069 3,988,036 36. Surplus reserves Unit: RMB Item Beginning of term Increased this term Decreased this term End of term Statutory surplus reserve 792,739,764 792,739,764 Discretionary surplus reserve 127,852,568 127,852,568 Total 920,592,332 920,592,332 37. Undistributed profits Unit: RMB Items The current period The same period of last year Retained earnings at the end of the previous term 4,159,642,227 3,576,949,573 before adjustment Retained earnings at the beginning of this term 4,159,642,227 3,573,871,573 108 CSG Semi-annual Report 2018 after adjustment Add: net profits belonging to equity holders of the 352,837,153 392,992,163 Company Less: Appropriations to statutory surplus reserve common stock dividends payable 124,041,424 207,533,556 Retained earnings in the end 4,388,437,956 3,759,330,180 38. Revenue and cost of sales Unit: RMB Occurred in current term Occurred in previous term Item Revenue Cost Revenue Cost Revenue from main operations 5,427,330,622 4,086,213,828 4,914,535,874 3,730,914,851 Revenue from other operations 43,838,976 13,282,926 29,801,987 6,599,611 Total 5,471,169,598 4,099,496,754 4,944,337,861 3,737,514,462 39. Tax and surcharge Unit: RMB Item Occurred in current term Occurred in previous term City maintenance and construction tax 20,205,850 15,364,494 Educational surcharge 16,053,678 11,927,211 Housing property tax 15,231,539 14,797,102 Land use rights 10,028,066 11,043,223 Business tax 2,733,716 2,411,686 Environmental protection tax 5,879,730 Others 1,797,967 6,202,059 Total 71,930,546 61,745,775 40. Selling Expenses Unit: RMB Item Occurred in current term Occurred in previous term Freight expenses 83,319,840 76,391,481 Employee benefits 56,534,666 49,496,703 Entertainment expenses 6,061,293 5,674,868 Business travle expenses 4,909,377 5,113,500 109 CSG Semi-annual Report 2018 Vehicle use fee 3,839,779 3,531,901 Rental expenses 3,085,489 3,029,551 Compensation 765,215 532,240 General office expenses 1,492,596 1,536,282 Depreciation expenses 494,202 482,108 Others 11,714,797 10,556,097 Total 172,217,254 156,344,731 41. Administrative Expenses Unit: RMB Item Occurred in current term Occurred in previous term Research and development expenses 166,041,185 151,590,181 Employee benefits 237,887,025 135,166,127 Depreciation expenses 31,624,004 31,885,617 Amortisation of intangible assets 23,153,773 19,756,528 General office expenses 10,595,047 12,640,569 Labour union funds 7,756,982 7,083,212 Entertainment fees 7,056,600 4,800,751 Business travel expenses 5,348,267 4,486,643 Utility fees 4,734,267 4,529,626 Canteen costs 4,046,654 4,404,253 Vehicle use fee 3,268,588 2,966,987 Rental expenses 2,273,435 2,457,132 Consulting advisers 14,334,351 6,015,614 Others 22,433,824 14,771,100 Total 540,554,002 402,554,340 42. Finance Expenses Unit: RMB Item Occurred in current term Occurred in previous term Interest expenses 203,531,507 143,194,586 Less: Interest income 23,033,418 4,186,712 Exchange losses -1,568,225 2,109,890 Others 6,947,562 2,256,263 110 CSG Semi-annual Report 2018 Total 185,877,426 143,374,027 43. Asset impairment losses Unit: RMB Item Occurred in current term Occurred in previous term Bad debt loss 3,653,609 1,108,695 Total 3,653,609 1,108,695 44. Asset disposal income Unit: RMB Source of income from assets disposal Occurred in current term Occurred in previous term Gains on disposal of non-current assets -567,830 -71,756 45. Other income Unit: RMB Source of other gains Occurred in current term Occurred in previous term Government subsidy amortization 15,268,650 Industry support funds 236,000 12,600,000 Research grants 1,423,460 6,479,492 Energy conservation and utilization 7,000 128,116 support funds Government incentive funds 4,239,400 4,323,546 Others 689,290 143,080 Total 21,863,800 23,674,234 46. Non-operating income Unit: RMB Occurred in current Occurred in previous Amount of non-recurring gain and loss Item term term included in the report period Government grants 150,000 14,826,965 150,000 Default income 75,000 75,000 Compensation income 837,396 146,436 837,396 Amounts unable to pay 282,061 520 282,061 Others 1,251,338 997,941 1,251,338 111 CSG Semi-annual Report 2018 Total 2,595,795 15,971,862 2,595,795 Government subsidy included in current profit and loss Unit: RMB Item Occurred in current term Occurred in previous term Related to assets or income Government grants amortisation 14,826,965 Assets related/Income related Government awards fund 150,000 Income related Total 150,000 14,826,965 -- 47. Non-operating expenses Unit: RMB Occurred in current Occurred in previous Amount of non-recurring Item term term gain and loss included in the report period Donation 199,999 Others 878,551 403,103 878,551 Total 878,551 603,102 878,551 48. Income tax expenses (1) List of income tax expenses Unit: RMB Item Occurred in current term Occurred in previous term Current income tax 77,115,637 74,283,293 Deferred income tax -15,744,533 6,169,728 Total 61,371,104 80,453,021 (2) Adjustment process of accounting profit and income tax expense Unit: RMB Item Occurred in current term Total profit 420,453,221 Current income tax expense accounted by tax and relevant regulations 58,805,863 Costs, expenses and losses not deductible for tax purposes 493,030 The impact of the application of the deductible losses of of the deferred -2,047,668 income tax not recognized in the previous periods Influence of deductible temporary difference or deductible losses of 23,905,430 112 CSG Semi-annual Report 2018 unrecognized deferred income tax assets Balance the previous year income tax adjustment -14,815,121 Impact of tax incentives -4,036,456 Non-taxable income -933,974 Income tax expenses 61,371,104 49. Other comprehensive income The details can be found in notes to the financial statements. 50. Items of the cash flow statement (1) Cash generated by other operating activities Unit: RMB Item Occurred in current term Occurred in previous term Government grant 6,745,150 23,674,234 Interest income 23,033,418 4,186,712 Others 34,088,357 40,349,756 Total 63,866,925 68,210,702 (2) Cash paid relating to other operating activities Unit: RMB Item Occurred in current term Occurred in previous term Freight expenses 88,366,623 68,348,981 Canteen costs 18,797,322 21,140,169 General office expenses 15,300,093 16,993,639 Research and development expenses 32,721,683 26,795,302 Business travel expenses 12,947,259 12,971,903 Entertainment fees 13,644,421 11,650,156 Vehicle use fee 7,827,828 7,589,416 Maintenance fee 15,974,559 9,445,635 Rental expenses 5,358,924 4,103,767 Insurance 9,642,870 6,679,946 Bank fees 6,947,562 2,256,263 Consulting fees 8,397,822 6,015,614 113 CSG Semi-annual Report 2018 Others 74,446,270 57,271,418 Total 310,373,236 251,262,209 (3) Cash generated by other investing activities Unit: RMB Item Occurred in current term Occurred in previous term Government grants related to assets received 2,680,000 12,800,000 Collection trusted 11,239,200 Income from trial production of construction in progress 1,045,277 Total 3,725,277 24,039,200 (4) Cash paid relating to other investing activities Unit: RMB Item Occurred in current term Occurred in previous term Payment for deposit and margin 4,673,145 31,475,182 Trial production expenditure in construction 54,018,834 Total 58,691,979 31,475,182 (5) Cash generated by other financing activities Unit: RMB Item Occurred in current term Occurred in previous term Received interest free loan 1,381,000,000 Received mortgage loan 278,400,000 Collection of income tax of dividends of 1,276,534 A-share & B-share Collection 2,490,239 Collect industrial production scheduling 15,000,000 4,701,291 fund Total 16,276,534 1,666,591,530 (6) Cash paid relating to other financing activities Unit: RMB Item Occurred in current term Occurred in previous term Payment of income tax of dividends of 1,701,507 114 CSG Semi-annual Report 2018 A-share & B-share Cash paid for Commission fee 1,920,000 1,750,000 Repay financing leases 347,964,797 Payment for deposit and margin 12,116,876 Total 362,001,673 3,451,507 51. Supplement information to the cash flow statement (1) Supplement information to the cash flow statement Unit: RMB Supplementary Info. Amount of this term Amount of last term 1. Reconciliation from net profit to cash flows from operating -- -- activities Net profit 359,082,117 400,214,048 Add: Provisions for assets impairment 3,653,609 1,108,695 Depreciation of fixed assets, gas and petrol depreciation, 497,530,356 480,563,388 production goods depreciation Amortisation of intangible assets 23,153,773 19,756,528 Amortisation of long-term prepaid expenses Losses on disposal of fixed assets intangible assets and 567,830 71,756 other long-term assets (“- “for gains) Losses on scrapping of fixed assets (“- “for gains) Loss from changes in fair value (“- “for gains) Finance expenses (“- “for gains) 203,531,507 143,194,586 Investment loss (“- “for gains) Decrease in deferred tax assets (“- “for increase) -19,247,637 11,754,644 Increase of deferred income tax liability (“- “for decrease) 3,503,104 -5,584,916 Decrease of inventory (“- “for increase) -27,723,994 -152,812,851 Decrease of operational receivable items (“- “for increase) -288,368,392 -132,167,898 Increase of operational payable items (“- “for decrease) -86,753,685 253,791,474 Others 95,635,500 Net cash flow generated by business operation 764,564,088 1,019,889,454 2. Net change of cash and cash equivalents -- -- Balance of cash at period end 3,358,253,346 932,050,522 Less: Initial balance of cash 2,459,753,165 584,566,990 115 CSG Semi-annual Report 2018 Net increasing of cash and cash equivalents 898,500,181 347,483,532 (2) Formation of cash and cash equivalents Unit: RMB Item Closing balance Opening balance I. Cash 3,358,253,346 2,459,753,165 Incl: Cash on hand 14,984 36,182 Bank deposits that can be readily drawn on demand 3,358,238,362 2,409,716,983 Other cash balances that can be readily drawn on demand 50,000,000 II. Cash equivalents III. Balance of cash and cash equivalents at th end of the period 3,358,253,346 2,459,753,165 52. Assets with restricted ownership or use rights Unit: RMB Item Ending book value Reason for restriction Monetary assets 13,791,823 Restricted deposit flow Fixed assets 2,369,789,041 Limited finance lease Total 2,383,580,864 -- 53. Foreign currency monetary items (1) Foreign currency monetary items Unit: RMB Closing balance of foreign Closing Item Exchange rate currency balance convert to RMB Cash at bank and on hand -- -- 52,567,315 Incl: USD 7,509,132 6.6166 49,684,923 EUR 676 7.6515 5,172 HKD 3,309,892 0.8431 2,790,570 AUD 17,443 4.8633 84,831 JPY 30,367 0.0599 1,819 Accounts receivable -- -- 159,975,673 Incl: USD 22,876,273 6.6166 151,363,148 EUR 989,154 7.6515 7,568,512 116 CSG Semi-annual Report 2018 HKD 1,238,303 0.8431 1,044,013 Short-term borrowings 63,232,500 Incl: HKD 75,000,000 0.8431 63,232,500 Accounts payable 59,173,980 Incl: HKD 307 0.8431 259 USD 6,386,858 6.6166 42,259,285 EUR 1,964,778 7.6515 15,033,499 JPY 31,401,285 0.0599 1,880,937 VIII. The changes of consolidation scope 1. Other On March 9, 2017, The Group established a subsidiary company, Chengdu CSG PV Energy Co., Ltd. As of June 30, 2018, the Group has not invested yet. The Company holds 100% of its shares. On March 2, 2017, The Group established a subsidiary company, Xianning CSG PV Energy Co., Ltd. As of June 30, 2018, the Group has not invested yet. The Company holds 100% of its shares. On February 22, 2017, The Group established a subsidiary company, Yichang CSG PV Energy Co., Ltd. As of June 30, 2018, the Group has not invested yet. The Company holds 100% of its shares. IX. Interest in other entities 1. Interest in subsidiary (1) Composition of the Group Major business Place of Shareholding (%) Name of subsidiary Scope of business Way of acquicition location registration Direct Indirect Chengdu, Development, production and sales of special Establishment Chengdu CSG Chengdu, PRC PRC glass 75% 25% Chengdu, Development, production and sales of special Split-off Sichuan CSG Energy Conservation Chengdu, PRC PRC glass and processing of glass 75% 25% Development, production and sales of special Establishment Tianjin Energy Conservation Tianjin, PRC Tianjin, PRC glass 75% 25% Dongguan, Establishment Dongguan CSG Dongguan, PRC PRC Intensive processing of glass 75% 25% Dongguan CSG Solar Dongguan, PRC Dongguan, Production and sales of solar glass 75% 25% Establishment 117 CSG Semi-annual Report 2018 PRC Dongguan, Production and sales of hi-tech green battery Establishment Dongguan CSG PV-tech Dongguan, PRC PRC and components 100% Yichang, Production and sales of high-purity silicon Establishment Yichang CSG Silicon Yichang, PRC PRC materials 75% 25% Wujiang, Establishment Wujiang CSG Wujiang, PRC PRC Intensive processing of glass 75% 25% Yongqing, Establishment Hebei CSG Yongqing, PRC PRC Production and sales of special glass 75% 25% Wujiang, Establishment Wujiang CSG Wujiang, PRC PRC Production and sales of special glass 100% China Southern Glass (Hong Kong) Hong Kong, Establishment Limited Hong Kong, PRC PRC Investment holding 100% Yongqing, Production and sales of ultra-thin electronic Establishment Hebei Shichuang Yongqing, PRC PRC glass 100% Xianning, Establishment Xianning CSG Xianning, PRC PRC Production and sales of special glass 75% 25% Xianning, Split-off Xianning CSG Energy-Saving Xianning, PRC PRC Intensive processing of glass 75% 25% Qingyuan, Production and sales of ultra-thin electronic Establishment Qingyuan CSG Energy-Saving Qingyuan, PRC PRC glass 100% Shenzhen CSG Financial Leasing Co., Shenzhen, Establishment Ltd. Shenzhen, PRC PRC Finance leasing, etc. 75% 25% Jiangyou CSG Mining Development Co. Jiangyou, Production and sales of silica and its Establishment Ltd. Jiangyou, PRC PRC by-products 100% Shenzhen, Establishment Shenzhen CSG PV Energy Co., Ltd. Shenzhen, PRC PRC Investment management of photovoltaic plant 100% Shenzhen, Production and sales of display component Acquisition Shenzhen Nanbo Display Shenzhen, PRC PRC products 60.80% Xianning, Acquisition Xianning CSG Photoelectric Xianning, PRC PRC Photoelectric glass and high aluminium glass 37.50% 62.50% (2)The significant non-fully-owned subsidiaries of the Group Unit: RMB Total profit or loss Dividends distributed Shareholding Minority interest attributable to minority to minority interests Subsidiaries of minority as at 30 June shareholders for the year for the year ended 30 shareholders 2018 ended 30 June 2018 June 2018 118 CSG Semi-annual Report 2018 Shenzhen Nanbo Display Technology Co., 39.20% 4,388,860 307,291,224 Ltd. (3) The major financial information of the significant non-fully-owned subsidiaries of the Group Unit: RMB Closing balance Name of Current Non-current Subsidiary Total assets Current liabilities Non-current liabilities Total liabilities assets assets Shenzhen 260,907,161 1,405,303,159 1,666,210,320 621,330,169 238,708,875 860,039,044 Nanbo Opening balance Display Technology Current Non-current Total assets Current liabilities Non-current liabilities Total liabilities Co., Ltd. assets assets 230,735,047 1,384,202,485 1,614,937,532 588,962,555 237,351,982 826,314,537 Unit: RMB Occurred in current term Occurred in previous term Name of Total Cash flows from Total Cash flows Subsidiary Revenue Net profit comprehensi operating Revenue Net profit comprehensiv from operating ve income activities e income activities Shenzhen Nanbo Display 240,861,525 11,154,553 11,154,553 30,440,528 228,993,498 14,924,574 14,924,574 27,884,582 Technology Co., Ltd. 119 CSG Semi-annual Report 2018 X. Risk related to financial instrument The Group's activities expose it to a variety of financial risks: market risk (primarily currency risk and interest rate risk), credit risk and liquidity risk. The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance. (1) Market risk (a) Foreign exchange risk The Group’s major operational activities are carried out in Mainland China and a majority of the transactions are denominated in RMB. However, some of the export business is settled in foreign currency. Besides, the Group is exposed to foreign exchange risk arising from the recognised assets and liabilities, and future transactions denominated in foreign currencies, primarily with respect to US dollars and HKD. The Group monitors the scale of foreign currency transactions, foreign currency assets and liabilities, and adjust settlement currency of export business, to furthest reduce the currency risk. As at 30 June 2018 the carrying amounts in RMB equivalent of the Group’s assets and liabilities denominated in foreign currencies are summarized below: 30 June 2018 USD HKD Others Total Financial assets denominated in foreign currency- Cash at bank and on hand 49,684,923 2,790,570 91,822 52,567,315 Receivables 151,363,148 1,044,013 7,568,512 159,975,673 Total 201,048,071 3,834,583 7,660,334 212,542,988 Financial liabilities denominated in foreign currency Short-term borrowings 63,232,500 63,232,500 Payables 42,259,285 259 16,914,436 59,173,980 Total 42,259,285 63,232,759 16,914,436 122,406,480 31 December 2017 USD HKD Others Total Financial assets denominated in foreign currency- Cash at bank and on hand 74,120,750 6,114,383 112,007 80,347,140 Receivables 127,354,518 9,654,366 7,387,101 144,395,985 Total 201,475,268 15,768,749 7,499,108 224,743,125 Financial liabilities denominated in foreign currency Short-term borrowings 62,692,500 62,692,500 Payables 104,040,185 257 36,939,407 140,979,849 120 CSG Semi-annual Report 2018 Total 104,040,185 62,692,757 36,939,407 203,672,349 As at 30 June 2018, if the currency had strengthened/weakened by 10% against the USD while all other variables had been held constant, the Group’s net profit for the year would have been approximately RMB13,497,047 lower/higher (31 December 2017: approximately RMB8,281,982 lower/higher) for various financial assets and liabilities denominated in USD. As at 30 June 2018, if the currency had strengthened/weakened by 10% against the HKD while all other variables had been held constant, the Group’s net profit for the year would have been approximately RMB5,048,845 higher/lower (31 December 2017: approximately RMB3,988,541higher/lower ) for various financial assets and liabilities denominated in HKD. Other changes in exchange rate had no significant influence on the Group's operating activities. (b) Interest rate risk The Group's interest rate risk arises from long-term interest bearing borrowings including long-term borrowings and bonds payable. Financial liabilities issued at floating rates expose the Group to cash flow interest rate risk. Financial liabilities issued at fixed rates expose the Group to fair value interest rate risk. The Group determines the relative proportions of its fixed rate and floating rate contracts depending on the prevailing market conditions. As at 30 June 2018, the Group’s long-term interest-bearing debt at variable rates and fixed rates as illustrated below: 30 June 2018 31 December 2017 Debt at fixed rates 2,274,000,000 1,425,000,000 Debt at variable rates 90,000,000 129,120,000 Total 2,364,000,000 1,554,120,000 The Group continuously monitors the interest rate position of the Group. Increases in interest rates will increase the cost of new borrowing and the interest expenses with respect to the Group’s outstanding floating rate borrowings, and therefore could have a material adverse effect on the Group’s financial position. The Group makes adjustments timely with reference to the latest market conditions, which includes increasing/decreasing long-term fixed rate debts at the anticipation of increasing/decreasing interest rate. (2) Credit risk Credit risk is managed on the grouping basis. Credit risk mainly arises from cash at bank, notes receivable, accounts receivable, other receivables. The Group expects that there is no significant credit risk associated with cash at bank since they are mainly deposited at state-owned banks and other medium or large size listed banks. Management does not expect that there will be any significant losses from non-performance by these counterparties. Furthermore, as the Group’s bank acceptance notes receivable are generally accepted by the state-owned banks and other large and medium listed banks, management believes the credit risk should be limited. In addition, the Group has policies to limit the credit exposure on accounts receivable, other receivables and trade acceptance notes receivable. The Group assesses the credit quality of and sets credit limits on its customers by taking into account their financial position, the availability of guarantee from third parties, their credit history and other factors such as current market conditions. The 121 CSG Semi-annual Report 2018 credit history of the customers is regularly monitored by the Group. In respect of customers with a poor credit history, the Group will use written payment reminders, or shorten or cancel credit periods, to ensure the overall credit risk of the Group is limited to a controllable extent. (3) Liquidity risk Cash flow forecasting is performed by each subsidiary of the Group and aggregated by the Group’s finance department in its headquarters. The Group’s finance department at its headquarters monitors rolling forecasts of the Group's short-term and long-term liquidity requirements to ensure it has sufficient cash reserve, while maintaining sufficient headroom on its undrawn committed borrowing facilities from major financial institutions so that the Group does not breach borrowing limits or covenants on any of its borrowing facilities to meet the short-term and long-term liquidity requirements. As at 30 June 2018, the Group had net current liabilities of approximately RMB 1,466 million and committed capital expenditures of approximately RMB 218 million. Management will implement the following measures to ensure the liquidation risk limited to a controllable extent: (a) The Group will have steady cash inflows from operating activities; (b) The Group will pay the debts that mature and finance the construction projects through the existing bank facilities; (c) The Group will closely monitoring the payment of construction expenditure in terms of payment time and amount. The financial liabilities of the Group at the balance sheet date are analysed by their maturity date below at their undiscounted contractual cash as follows: 30 June 2018 Within 1 year 1 to 2 years 2 to 5 years Over 5 years Total Short-term borrowings 4,044,317,738 4,044,317,738 Notes payable 208,201,622 208,201,622 Accounts payable 1,331,128,942 1,331,128,942 Other payables 620,540,633 620,540,633 Interest payable 73,371,196 73,371,196 Dividend payable 4,875,583 4,875,583 Other current liabilities 300,000 300,000 Non-current liabilities due 945,751,458 945,751,458 within one year Long-term payables 641,223,971 224,990,046 866,214,017 Long-term borrowings 124,645,000 124,645,000 2,417,851,740 2,667,141,740 Total 7,353,132,172 765,868,971 2,642,841,786 10,761,842,929 31 December 2017 Within 1 year 1 to 2 years 2 to 5 years Over 5 years Total Short-term borrowings 3,810,013,826 3,810,013,826 122 CSG Semi-annual Report 2018 Notes payable 213,401,622 213,401,622 Accounts payable 1,400,166,042 1,400,166,042 Interest payable 34,032,740 34,032,740 Other payables 619,324,354 619,324,354 Other current liabilities 300,000 300,000 Non-current liabilities due 911,348,902 911,348,902 within one year Long-term payables 600,436,759 561,357,488 1,161,794,247 Long-term borrowings 80,169,450 117,889,436 1,580,649,809 1,778,708,695 Total 7,068,756,936 718,326,195 2,142,007,297 9,929,090,428 XI. Disclosure of fair value 1. Fair value of financial assets and financial liabilities not measured at fair value The Group’s financial assets and financial liabilities measured at amortized cost mainly include: accounts receivable, short-term borrowings, accounts payable, long term borrowings, bonds payable , long-term payables, ect. Except for financial liabilities listed below, book value of the other financial assets and liabilities not measured at fair value is a reasonable approximation of their fair value. 30 June 2018 31 December 2017 Carrying amount Fair value Carrying amount Fair value Financial liabilities - Medium term notes 2,000,000,000 2,005,577,600 1,200,000,000 1,171,444,800 Total 2,000,000,000 2,005,577,600 1,200,000,000 1,171,444,800 The fair values of payables and medium-term notes are the present value of the contractually determined stream of future cash flows at the rate of interest applied at that time by the market to instruments of comparable credit status and providing substantially the same cash flows on the same terms, thereinto bonds payable belongs to Level 1 and medium term notes belong to Level 2. XII. Related party and related Transaction 1. The subsidiaries The general information and other related information of the subsidiaries are set out in attached note. 2. Joint venture of the Company On June 30, 2018, the Company has no joint venture. 123 CSG Semi-annual Report 2018 3. Other related parties Name of other related parties Relations between other related parties and the Company Persons acting in concert with the first majority shareholder of the Shenzhen Jushenghua Co. Ltd. Group Yichang Hongtai Real Estate Co. Ltd Other related parties and their affiliates. 4. Receivables from related parties (1) Receivable item Name of the Closing banlance Opening banlance Related parties item Book balance Bad debt provision Book balance Bad debt provision Other Yichang Hongtai Real 171,000,000 3,420,000 171,000,000 3,420,000 receivables Estate Co. Ltd 5. Related party commitment The commitments in relation to related parties contracted for but not yet necessary to be recognised on the balance sheet by the Group as at the balance sheet date are as follows: On 22 November 2016, the Company received a letter from its shareholder, Jushenghua, stating that to support the Group’s steady operation and development, Jushenghua, as the shareholder of the Company, would like to offer interest-free borrowings with the total amount of RMB2 billion to the Company or through related parties designated by it. For any borrowing drawn, its repayment date is negotiated by the Company and Jushenghua upon withdrawal. When a borrowing is due, if an extension is needed, the Company can apply to the actual lender based on the Company’s operation; where the actual lender agrees with the extension application, the term of the borrowing is extended accordingly. XIII. Share Payment 1. Overall situation of share payment √ Applicable □ Non-applicable On December 11, 2017, reviewed and approved by the Group's eighth session of the Board of Directors, the Group implemented the 2017 A Share Restricted Stock Incentive Plan. The incentive targets for the restricted shares granted under this plan include company directors and senior management personnel. A total of 454 core management teams, company technology members and main employees. The first grant date of this restricted stock was December 11, 2017. The company granted 97,511,654 restricted shares for the first time to 454 incentive targets. The initial grant price was 4.28RMB per share. Reserved restricted stock ending balance 17,046,869 shares, the grant price has not been determined. The shares granted of the first time has been registered and listed. This incentive plan is valid for 48 months from the date of grant of the restricted stock to the date of unlocking of all restricted stocks 124 CSG Semi-annual Report 2018 or the completion of repurchase and cancellation. During the unlocking/exercise period, if the unlocking/exercise condition specified in the incentive plan is reached, the restricted stock granted is unlocked in three phases after 12 months from the grant date. Unlock Schedule Unlock Time Unlock Ratio First unlock from the date of the first transaction 12 months after the award date to the date of 40% the last transaction within 24 months from the grant date. Second unlock from the date of the first trading day 24 months after the grant date to the date of 30% the last trading day within 36 months from the grant date Third unlock from the date of the first trading day 36 months after the grant date to the day of 30% the last trading day within 48 months from the grant date 2. Equity-settled share payment √ Applicable □ Non-applicable Method for Determining the Fair Value of Equity Black-Scholes Model Instruments on the Grant Date Determination of the number of vesting equity Based on the latest information on the change in the number of instruments exercisable rights and the completion of performance indicators, the number of equity instruments that are expected to be exercised is revised. Reasons for significant differences between current Not applicable estimates and previous estimates Cumulative amount of equity-settled share-based 103,830,195 payment in capital reserves Total equity confirmed by equity-settled 95,635,500 share-based payment in this period According to the relevant provisions of Accounting Standards for Business Enterprises No. 11 - Share Payment and Enterprise Accounting Standard No. 22 - Recognition and Measurement of Financial Instruments, the Group uses the Black-Scholes model (BS model) as a pricing model, deducting incentive objects. The fair value of the restricted stock will be used after the lock-in costs that are required to obtain the rational expected return from the sales restriction period are lifted in the future. The Group will, on each balance sheet date of the lock-in period, revise the number of restricted stocks that are expected to be unlockable based on the newly obtained changes in the number of unlockable persons and performance indicators, and follow the fair value of the restricted stock grant date. The services obtained during the current period are included in the relevant costs or expenses and capital reserves. The Group actually granted restricted stocks of 97,511,654 shares in 2017, and the total fair value of the equity instruments granted to the incentive target for the first day of grant was RMB 289,519,900, the total fair value as the total cost of the company's equity incentive plan will be confirmed in stages according to the unlocking/exercise ratio during the implementation of the equity incentive plan, and will be included in the “management fees” and “capital” of each period accordingly. 125 CSG Semi-annual Report 2018 In the first half of 2018, the Group achieved conditions for unlocking restricted stocks. In the current period, the relevant cost sharing amount of the incentive plan was recognized as RMB 95,635,500. 3. Share payment in cash □Applicable √ Non-applicable XIV. Commitments and contingencies 1. Significant commitments Important commitments on balance sheet date. (1) Capital commitments Capital expenditures contracted for by the Group at the balance sheet date but are not yet necessary to be recognized on the balance sheet are as follows: 30 June 2018 31 December 2017 Buildings, machinery and equipment 217,726,070 150,418,893 (2) Operating lease commitments The future minimum lease payments due under the signed irrevocable operating leases contracts are summarized as follows: 30 June 2018 31 December 2017 Within 1 year 2,911,953 3,675,748 1 to 2 years 1,944,336 1,914,948 2 to 3 years 1,300,108 1,472,224 Over 3 years 2,656,252 3,443,641 Total 8,812,649 10,506,561 XV. Other significant events 1. Segment information (1) Definition foundation and accounting policy of segment The Group's business activities are categorised by product and service as follows: - Glass segment, engaged in production and sales of float glass and engineering glass and other building energy - saving materials, the silica for the production thereof, etc. - Solar energy segment, engaged in manufacturing and sales of polycrystalline silicon and solar battery and applications, etc. 126 CSG Semi-annual Report 2018 - Electronic glass and display segment is responsible for production and sales of display components and special ultra-thin glass products, etc. The reportable segments of the Group are the business units that provide different products or service. Different businesses require different technologies and marketing strategies. The Group, therefore, separately manages the production and operation of each reportable segment and Estimates their operating results respectively, in order to make decisions about resources to be allocated to these segments and to assess their performance. Inter-segment transfer prices are measured by reference to selling prices to third parties. The assets are allocated based on the operations of the segment and the physical location of the asset. The liabilities are allocated based on the operations of the segment. Expenses indirectly attributable to each segment are allocated to the segments based on the proportion of each segment’s revenue. (2)Financial information of segment Unit: RMB Electronic glass Glass industry and displays Solar energy industry Others Unallocated Elimination Total Revenue from external 3,612,878,032 436,685,900 1,420,997,880 607,786 5,471,169,598 customers Inter-segment revenue 52,785,600 242,621 16,016,462 30,101,282 -99,145,965 Interest income 1,136,795 87,494 162,504 311 21,646,314 23,033,418 Interest expenses 93,306,653 10,576,695 50,461,160 49,186,999 203,531,507 Asset impairment 3,069,970 -136,967 766,724 -46,118 3,653,609 losses Depreciation and 296,233,712 64,199,352 157,440,200 12,005 3,593,844 521,479,113 amortisation expenses Total profit/(loss) 515,942,875 62,163,871 -58,388,826 -13,019 -96,162,032 -3,089,648 420,453,221 Income tax 72,809,465 4,251,301 -13,871,995 -1,817,667 61,371,104 (expenses)/income Net profit/(loss) 443,133,410 57,912,570 -44,516,831 -13,019 -94,344,365 -3,089,648 359,082,117 Total assets 8,890,658,347 3,147,841,600 5,031,590,904 653,411 3,454,067,494 20,524,811,756 Total liabilities 3,288,898,941 754,504,302 1,506,784,163 2,504,400 5,855,655,900 11,408,347,706 Increase in non-current 106,223,491 146,160,834 19,499,210 3,892,727 275,776,262 assets (i) 127 CSG Semi-annual Report 2018 (3) Other statement The Group’s revenue from external customers domestically and in foreign countries or geographical areas, and the total non-current assets other than financial assets and deferred tax assets located domestically and in foreign countries or geographical areas are as follows: Revenue from external customers Jan.-Jun. 2018 Jan.-Jun. 2017 Mainland 4,691,225,341 4,453,794,331 Hong Kong 152,221,834 159,110,247 Europe 37,480,049 10,469,923 Asia (other than Mainland and Hong Kong) 538,291,685 284,803,871 Australia 29,949,405 23,668,506 North America 18,072,258 9,235,672 Other regions 3,929,026 3,255,311 Total 5,471,169,598 4,944,337,861 Total non-current assets 30 June 2018 31 December 2017 Mainland 14,273,593,858 14,505,740,522 Hong Kong 12,915,627 12,798,642 Total 14,286,509,485 14,518,539,164 The Group has a large number of customers, but no revenue from a single customer exceed 10% or more of the Group’s revenue. XVI. Notes to Financial Statements of the Parent Company 1. Other accounts receivable (1) Other accounts receivable disclosed by category: Unit: RMB Closing balance Openning balance Bad debt Book balance Book balance Bad debt provision Category provision Book value Book value Propor Amount Proportion Amount Amount Proportion Amount Proportion tion Other accounts receivable withdrawn bad debt provision 2,814,602,307 100% 3,462,906 2,811,139,401 2,403,843,840 100% 3,509,024 2,400,334,816 according to credit risks characteristics Total 2,814,602,307 100% 3,462,906 2,811,139,401 2,403,843,840 100% 3,509,024 2,400,334,816 128 CSG Semi-annual Report 2018 Other accounts receivable with large amount and were provided bad debt provisions individually at end of period. □ Applicable √ Non-applicable Other accounts receivable in the portfolio on which bad debt provisions were provided on aging analysis basis □ Applicable √ Non-applicable Other accounts receivable in the portfolio on which bad debt provisions were provided on percentage basis √ Applicable □ Non-applicable Unit: RMB Closing balance Name of portfolio Other receivable accounts Bad debt provision proportion% portfolio 1 2,145,321 42,906 2% portfolio 2 2,812,456,986 3,420,000 Total 2,814,602,307 3,462,906 Other receivable accounts in the portfolio on which bad debt provisions were provided on other basis □ Applicable √ Non-applicable (2) Accounts receivable withdraw, reversed or collected during the reporting period The amount of provision for bad debts during the report period was RMB760. The amount of the reversed or collected part during the report period was RMB 46,878. (3) Other accounts receivable classified by the nature of accounts Unit: RMB Nature of accounts Ending book balance Beginning book balance Accounts receivable of related party 2,812,456,986 2,399,392,648 Others 2,145,321 4,451,192 Total 2,814,602,307 2,403,843,840 (4) Top 5 of the closing balance of the other accounts receivable collated according to the arrears party Unit: RMB Proportion of the total Closing Nature of Name of the company Closing balance Ages year end balance of the balance of bad accounts accounts receivable (%) debt provision Yichang CSG Polysilicon Co., Ltd. Subsidiary 1,377,570,600 Within 1 year 49% Yichang CSG Display Co.,Ltd.. Subsidiary 307,293,852 Within 1 year 11% Qingyuan CSG Energy Conservation Subsidiary 256,179,923 9% New Meterials Co., Ltd. Within 1 year Yichang Hongtai Real Estate Co. Ltd Related party 171,000,000 4 to 5 years 6% 3,420,000 Shenzhen Nanbo Display Technology Subsidiary 144,702,069 Within 1 year 5% 129 CSG Semi-annual Report 2018 Co., Ltd. Total -- 2,256,746,444 -- 80% 3,420,000 2. Long-term equity investment Unit: RMB Closing balance Opening balance Item Impairment Impairment Book balance Book value Book balance Book value provision provision Investment in 4,911,117,578 15,000,000 4,896,117,578 4,810,987,652 15,000,000 4,795,987,652 subsidiaries Total 4,911,117,578 15,000,000 4,896,117,578 4,810,987,652 15,000,000 4,795,987,652 (1) Inventment in subsidiaries Unit: RMB Provision for Closing balance Opening Increase in Decrease in Invested company Closing balance impairment of the of impairment balance the term the term current period provision Chengdu CSG Glass Co., Ltd. 146,977,347 3,480,978 150,458,325 Sichuan CSG Energy Conservation 115,546,714 2,989,152 118,535,866 Tianjin Energy Conservation Glass Co. Ltd 243,191,428 3,366,378 246,557,806 Dongguan CSG Architectural Glass Co., Ltd. 193,916,049 3,467,028 197,383,077 Dongguan CSG Solar Glass Co., Ltd. 349,801,154 4,135,152 353,936,306 Yichang CSG Polysilicon Co., Ltd. 633,464,168 5,906,676 639,370,844 Wujiang CSG North-east Architectural Glass 251,516,189 2,363,622 253,879,811 Co., Ltd. Hebei CSG Glass Co., Ltd. 262,265,341 3,115,692 265,381,033 China Southern Glass (Hong Kong) Limited 85,802,602 704,790 86,507,392 Wujiang CSG Glass Co., Ltd. 562,527,754 4,063,524 566,591,278 Hebei Panel Glass Co., Ltd. 243,271,470 2,435,250 245,706,720 Jiangyou CSG Mining Development Co. 100,837,599 1,313,604 102,151,203 Ltd. Xianning CSG Glass Co Ltd. 177,295,494 2,960,502 180,255,996 Xianning CSG Energy Conservation Glass Co 161,543,844 3,060,774 164,604,618 Ltd. Qingyuan CSG Energy Saving New Materials 300,376,848 2,231,838 302,608,686 Co.,Ltd 130 CSG Semi-annual Report 2018 Shenzhen CSG Financial Leasing Co., Ltd. 133,500,000 133,500,000 Shenzhen CSG PV Energy Co., Ltd. 100,052,985 618,360 100,671,345 Shenzhen Nanbo Display Technology Co., Ltd. 542,691,888 6,393,726 549,085,614 Xianning CSG Photoelectric Glass Co., Ltd. 38,470,534 39,323,724 77,794,258 Others(ii) 167,938,244 8,199,156 176,137,400 15,000,000 Total 4,810,987,652 100,129,926 4,911,117,578 15,000,000 (2) Other notes (i) As at June 30, 2018, long-term equity investment in subsidiaries contained the restricted stocks granted by the Company to the Employees of subsidiaries of the company, and the Company did not charge any fees for the restricted stocks which was deemed as an increase of costs of Long-term equity investment for subsidiaries by RMB 177,962,267 (31 December 2017: RMB114,582,341). (ii) The subsidiaries which have made provision for impairment were basically closed down in the previous year, and the provision for impairment for the long-term equity investment of them had been made by the Company according to the recoverable amount. 3. Operating income and operating costs Unit: RMB Occurred in this term Occurred in previous term Item Income Costs Income Costs Main business Other business 30,709,068 27,295,266 Total 30,709,068 27,295,266 4. Investment income Unit: RMB Item Occurred in this term Occurred in previous term Long-term equity investment accounted by cost method 231,537,606 Total 231,537,606 XVII. Supplementary Information 1. Statement of non-recurring gains and losses √Applicable □ Not applicable Unit: RMB Item Amount Note 131 CSG Semi-annual Report 2018 Gains or losses on disposal of non-current assets -567,830 Government grants recognised in profit or loss for current period (not including the subsidy enjoyed in 22,013,800 quota or ration according to national standards, which are closely relevant to enterprise’s business) Non-operating income and expenses other than aforesaid items 1,567,244 Less: Effect of income tax 3,453,960 Effect of minority interests 771,819 Total 18,787,435 -- Explain reasons for the extraordinary profit (gain)/loss defined by Q&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities to the Public --- Extraordinary Profit/loss, and the items defined as recurring profit (gain)/loss according to the lists of extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities to the Public --- Extraordinary Profit/loss. □Applicable √ Not applicable 2. Return on net assets and earnings per share The weighted Earnings per share Profit in the report period average net Basic earnings per Diluted earnings per assets ratio share (RMB/share) share (RMB/share) Net profit attributable to shareholders of the listed company(RMB) 4.09% 0.13 0.12 Net profit attributable to shareholders of the listed company after 3.87% 0.12 0.12 deducting non-recurring gains and losses(RMB) 3. Difference of accounting data under domestic and overseas accounting standards (1) Differences of the net profit and net assets disclosed in financial report prepared under international and Chinese accounting standards □ Applicable √ Not applicable (2) Difference of the net profit and net assets disclosed in financial report prepared under overseas and Chinese accounting standards □ Applicable √ Not applicable 132 CSG Semi-annual Report 2018 Section IX. Documents available for Reference I. Text of the Semi-annual Report carrying the legal representative’s signature; II. Text of the financial report carrying the signatures and seals of the legal representative, responsible person in charge of accounting and person in charge of financial institution; III. All texts of the Company’s documents and original public notices disclosed in the papers appointed by CSRC in the report period. Board of Directors of CSG Holding Co., Ltd. 28 August 2018 133