CSG HOLDING CO., LTD. THE THIRD QUARTER REPORT 2019 Chairman of the Board: CHEN LIN October 2019 CSG HOLDING CO., LTD. The Third Quarter Report 2019 Section I. Important Notice Board of Directors and the Supervisory Committee of CSG Holding Co., Ltd. (hereinafter referred to as the Company) and its directors, supervisors and senior executives hereby confirm that there are no any fictitious statements, misleading statements, or important omissions carried in this report, and shall take all responsibilities, individual and/or joint, for the facticity, accuracy and completeness of the whole contents. All directors were present at the meeting of the Board for deliberating the Third Quarter Report of 2019 of the Company in person. 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 Third Quarter Report of 2019 of the Company is true, accurate and complete. 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 HOLDING CO., LTD. The Third Quarter Report 2019 Section II. The Basic Information of the Company I. Main accounting data and financial indices Whether retrospective adjustment has been carried out on financial reports of previous periods or not □Yes √ No Increase/decrease in The end of the previous The end of the report period comparison with the end of the year previous year Total assets (RMB ) 18,422,844,539 19,114,234,184 -3.62% Net assets attributable to shareholders of 9,546,827,355 9,103,154,571 4.87% the Company (RMB ) Increase/decrease in Increase/decrease in comparison with the From 1 January to The report period comparison with the same period of the 30 September 2019 same period of 2018 previous year Operating income (RMB) 2,773,417,909 3.46% 7,661,655,487 -6.01% Net profit attributable to shareholders of 166,970,717 43.59% 544,313,118 16.03% the listed company (RMB) Net profit attributable to shareholders of the listed company after deducting 135,913,151 57.67% 419,852,595 0.05% non-recurring gains and losses (RMB) Net cash flow arising from operating -- -- 1,508,389,800 6.92% activities (RMB) Basic earnings per share (RMB/Share) 0.06 50% 0.18 12.50% Diluted earnings per share (RMB/Share) 0.05 25% 0.17 13.33% Weighted average ROE 1.77% 0.43% 5.84% 0.45% Items and amounts of extraordinary profit (gains)/loss √Applicable □ Not applicable Unit: RMB Amount from the beginning of year Item Note to the end of the report period Gains/losses from the disposal of non-current asset (including the write-off that 118,401 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 143,444,934 closely relevant to enterprise’s business) 2 CSG HOLDING CO., LTD. The Third Quarter Report 2019 Profits and losses from external entrusted loans 6,615,566 Other non-operating income and expenditure except for the aforementioned -998,605 items Less: Impact on income tax 20,592,883 Impact on minority shareholders’ equity (post-tax) 4,126,890 Total 124,460,523 -- 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 It did not exist that the items were defined as recurring profit (gain)/loss according to the definition or the list 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. II. Total of shareholders at the end of the report period and particulars about shareholdings of the top ten shareholders 1. Particulars about the total number of common shareholders and preference shareholders with voting rights recovered as well as the shareholdings of the top ten shareholders Unit: Share Total number of common shareholders Total number of preference shareholders with voting rights 145,442 0 at the end of the report period recovered at end of report period (if applicable) Particulars about the shareholdings of the top ten shareholders Number of share Proportion Amount of Amount of pledged/frozen Name of shareholder Nature of shareholder of shares restricted shares held Share held (%) shares held Amount status Foresea Life Insurance Co., Ltd. – Haili Domestic non state-owned 15.01% 466,386,874 0 Niannian legal person Foresea Life Insurance Co., Ltd. – Domestic non state-owned 3.81% 118,425,007 0 Universal Insurance Products legal person Domestic non state-owned Shenzhen Jushenghua Co., Ltd. 2.79% 86,633,447 0 Pledged 69,300,000 legal person Foresea Life Insurance Co., Ltd. – Own Domestic non state-owned 2.08% 64,765,161 0 Fund legal person Central Huijin Asset Management Ltd. State-owned legal person 1.86% 57,915,488 0 China Galaxy International Securities Foreign legal person 1.34% 41,544,370 0 (Hong Kong) Co., Limited 3 CSG HOLDING CO., LTD. The Third Quarter Report 2019 UBS AG Foreign legal person 1.18% 36,575,937 0 China Merchants Securities (HK) Co., State-owned legal person 1.05% 32,516,355 0 Limited Shenzhen International Holdings (SZ) State-owned legal person 0.94% 29,095,000 0 Limited VANGUARD EMERGING MARKETS Foreign legal person 0.62% 19,320,233 0 STOCK INDEX FUND Particulars about top ten shareholders with unrestricted shares held Amount of Type of shares Name of shareholder unrestricted shares Type Amount held Foresea Life Insurance Co., Ltd. – Haili Niannian 466,386,874 RMB ordinary shares 466,386,874 Foresea Life Insurance Co., Ltd. – Universal 118,425,007 RMB ordinary shares 118,425,007 Insurance Products Shenzhen Jushenghua Co., Ltd. 86,633,447 RMB ordinary shares 86,633,447 Foresea Life Insurance Co., Ltd. – Own Fund 64,765,161 RMB ordinary shares 64,765,161 Central Huijin Asset Management Ltd. 57,915,488 RMB ordinary shares 57,915,488 China Galaxy International Securities (Hong Kong) 41,544,370 Domestically listed foreign shares 41,544,370 Co., Limited UBS AG 36,575,937 RMB ordinary shares 36,575,937 China Merchants Securities (HK) Co., Limited 32,516,355 Domestically listed foreign shares 32,516,355 Shenzhen International Holdings (SZ) Limited 29,095,000 RMB ordinary shares 29,095,000 VANGUARD EMERGING MARKETS STOCK 19,320,233 Domestically listed foreign shares 19,320,233 INDEX FUND Among shareholders as listed above, Foresea Life Insurance Co., Ltd.-Haili 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 Statement on associated relationship or consistent related legal person of Foresea Life Insurance Co., Ltd, which held action among the above shareholders: 40,187,904 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 N/A business (if applicable) Whether the top ten shareholders or top ten shareholders with unrestricted shares carried out buy back deals in the report period 4 CSG HOLDING CO., LTD. The Third Quarter Report 2019 □Yes √ No There were no buy back deals carried out by the top ten shareholders or top ten shareholders with unrestricted shares held in the report period. 2. Total number of preference shareholders and particulars about the shareholdings of the top ten preference shareholders □Applicable √ Not applicable 5 CSG HOLDING CO., LTD. The Third Quarter Report 2019 Section III. Important events I. Particulars and explanations about significant changes in main accounting statements and financial indices √Applicable □Not applicable Unit: RMB'0,000 30 September 31 December Increased/Decreased Item of balance sheet Note Rate 2019 2018 amount Notes receivable (1) 49,176 71,938 -22,762 -32% Accounts receivable (2) 78,185 59,223 18,962 32% Inventories (3) 81,431 60,014 21,417 36% Assets held for sale (4) - 4,598 -4,598 -100% Other non-current assets (5) 9,013 5,683 3,330 59% Notes payable (6) 19,145 10,515 8,630 82% Advance receipts (7) 26,818 20,663 6,155 30% Other payables (8) 30,946 55,275 -24,329 -44% Non-current liabilities due within one year (9) 167,581 81,945 85,636 105% Long-term borrowings (10) 108,040 231,570 -123,530 -53% Long-term payables (11) 19,054 52,991 -33,937 -64% Deferred income tax liabilities (12) 3,307 2,212 1,095 50% Capital reserve (13) 73,051 109,534 -36,483 -33% Treasury stocks (14) 12,232 27,718 -15,486 -56% Special reserve (15) 971 607 364 60% Other comprehensive income (16) 706 508 198 39% From January to From January to Increased/Decreased Item of income statement Note Rate September 2019 September 2018 amount Credit impairment loss (17) -354 -555 201 -36% Asset impairment loss (18) -13,533 - -13,533 Income from asset disposal (19) 12 -46 58 Other income (20) 14,344 5,476 8,868 162% Non-operating expenses (21) 746 149 597 401% Net amount of other comprehensive (22) 198 316 -118 -37% income after tax 6 CSG HOLDING CO., LTD. The Third Quarter Report 2019 Note: (1) The decrease in notes receivable was mainly due to the discounted bills of some subsidiaries. (2) The increase in accounts receivable was mainly due to the increase in revenue of the glass industry. (3) The increase in inventories was mainly due to the increase in production capacity and strategic reserves of some subsidiaries. (4) The decrease in assets held for sale was mainly due to the disposal of assets held for sale. (5) The increase in other non-current assets was mainly due to the increase in prepaid projects and equipment. (6) The increase in notes payable was mainly due to the slight increase in new notes issued by some companies in the current period. (7) The increase in advance receipts was mainly due to the increase in advance receipts from the glass industry. (8) The decrease in other payables was mainly due to the repurchase of restricted stocks. (9) The increase in non-current liabilities due within one year was mainly due to the transfer of medium-term notes to non-current liabilities due within one year. (10) The decrease in long-term borrowings was mainly due to the transfer of medium-term notes to non-current liabilities due within one year. (11) The decrease in long-term payables was mainly due to the repayment of financing leases during the period. (12) The increase in deferred income tax liabilities was mainly due to the increase in deferred income tax liabilities of certain subsidiaries. (13) The decrease in capital reserve was mainly due to the transfer of capital reserve into share capital and repurchase of restricted stocks during the period. (14) The decrease in treasury stocks was mainly due to the repurchase of restricted stocks. (15) The increase in special reserve was mainly due to the increase in investment in safety production during the period. (16) The increase in other comprehensive income was mainly due to the change in the translation difference of foreign currency statements. (17) The decrease in credit impairment loss was mainly due to the decrease in provision for bad debts of some subsidiaries. (18) The increase in asset impairment loss was mainly due to the provision for impairment of fixed assets and construction in progress during the period. (19) The increase in income from asset disposal was mainly due to the disposal of non-current assets. (20) The increase in other income was mainly due to the increase in amortization of government grants during the period. (21) The increase in non-operating expenses was mainly due to the increase in compensation and donation expenses. (22) The decrease in net amount of other comprehensive income after tax was mainly due to changes in the translation differences in foreign currency statements. 7 CSG HOLDING CO., LTD. The Third Quarter Report 2019 II. The progress of material events and the impact as well as the analysis of solutions √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 May 14, 2018, the Company’s 2017 annual shareholders’ meeting deliberated and approved the resolution on the application for registration and issuance of ultra-short-term financing bills. It agreed that the Company should register and issue ultra-short-term financing bills with a registered amount not exceeding RMB 4 billion yuan (not subject to the restriction that the amount of ultra-short-term issued shall not exceed 40% of net assets). With the period of validity of the quota not longer than two years, such ultra-short-term financing bills will be issued by installments in accordance with the actual capital needs of the Company and the situation of inter-bank market funds. On Sep. 17, 2018, the Chinese Association of Interbank Market Traders held its 63rd registration meeting in 2018, and decided to approve the registration of the ultra-short-term financing bills with a total amount of 1.5 billion yuan and a validity period of two years. The ultra-short-term financing bills are underwritten jointly by Minsheng Bank of China Limited and Industrial Bank Co., Ltd, and can be issued by installments within the validity period of registration. 3. Perpetual bonds On April 15, 2016, 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 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 10 December 2014, the First Extraordinary Shareholders’ General Meeting 2014 of CSG Holding Co., Ltd deliberated and approved the proposal of application for registration and issuance of medium-term notes with total amount of RMB 1.2 billion at most. On 21 May 2015, National Association of Financial Market Institutional Investors (NAFMII) held the 32nd registration meeting of 2015, in which NAFMII decided to accept the registration of 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 Jul.14, 2015, the Company issued the first batch of medium term notes with total amount of RMB 1.2 billion and valid term of 5 years at the issuance rate of 4.94%, which will be redeemed on 14 July 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 2 March 2018, National Association of Financial Market Institutional Investors (NAFMII) held the 14th registration meeting of 2018, in which NAFMII decided to accept the registration of 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 8 CSG HOLDING CO., LTD. The Third Quarter Report 2019 issued the first medium-term notes with a total amount of 800 million yuan and a term of three years. The issue rate was 7%, and the redemption date was 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. 5. Public issuance of corporate bonds On March 2, 2017, the 2nd Extraordinary General Meeting of Shareholders in 2017 reviewed and approved “the Proposal on the Public Issuance of Corporate Bonds for Qualified Investors". On February 27, 2019, the First Extraordinary General Meeting of Shareholders in 2019 The “Proposal on Extending the Validity Period of the Shareholders' Meeting for the Public Offering of Corporate Bonds to Qualified Investors” agreed to issue corporate bonds with a total issue of no more than RMB 2 billion and a term of no more than 10 years. On July 22, 2019, the Company received the “Approval of Approving CSG Holding Co., Ltd. to Issue Corporate Bonds to Qualified Investors” issued by China Securities Regulatory Commission (CSRC [2019] No. 1140). 6. Approved by the interim meeting of the Eighth Board of Directors of the Company held on September 11, 2019, the Company issued an entrusted loan with total amount of RMB 0.3 billion to Tengchong Yuezhou Water Investment Development Co., Ltd.. The validity period of the entrusted loan was 3 months and the annual interest rate was 8.5%. 7.On October 10, 2017, the 3rd Meeting of the Eighth Board of Directors of the Company deliberated and approved 2017 Restricted A- shares Incentive Plan of CSG Holding Co., Ltd (Draft ) and its summary, the Management Method of the Implementation and Review of 2017 A-share Restricted Stock Incentive Plan of CSG Holding Co., Ltd and the Proposal on Applying the General Meeting of Shareholders to Authorize the Board of Directors to Deal With the Related Matters on the Company’s 2017 Restricted A-shares Incentive Plan. The above contents are detailed in the Announcement of the Resolution on the 3 rd Meeting of the Eighth Board of Directors published on www.cninfo.com.cn on October 11, 2017 (Announcement No.: 2017-063). The Company’s independent directors issued independent opinions on the issues involved with 2017 Restricted A-shares Incentive Plan. On October 26, 2017, the Company convened the 5th Extraordinary General Meeting in 2017, which deliberated and approved the above three proposals. The Proposal on Adjusting the Object and Quantity Granted of 2017 A-share Restricted Stock Incentive Plan and the Proposal on Firstly Granted Restricted Shares to the Object of 2017 Restricted A-share were deliberated and approved on the interim meeting of the Eighth Board of Directors which was convened on December 11, 2017. It determined December 11, 2017 as the grant date, to grant 97,511,654 restricted shares to 454 objects at the grant price of RMB 4.28 yuan/share, with 17,046,869 shares of reserved restricted shares. The granting of shares was completed on December 25, 2017 and the specific content was detailed in the Announcement on Completing the First Granting of 2017 Restricted Shares disclosed on www.cninfo.com.cn on December 22, 2017 (Announcement No.:2017-079). On July 20, 2018, the Company held an interim meeting of the Eighth Board of Directors and an interim meeting of the the Eighth Board of Supervisors, and reviewed and approved the Proposal on Repurchase and Cancellation of Part of Restricted Stocks of Restricted Stock Incentive Plan, and agreed to repurchase and cancel the total of 3,319,057 shares of all restricted stocks held by 15 unqualified original incentives. The independent directors of the Company issued a consent opinion. And on August 6, 2018, the 2nd Extraordinary General Meeting in 2018 approved the proposal. As of September 10, 2018, the Company had completed the 9 CSG HOLDING CO., LTD. The Third Quarter Report 2019 cancellation procedures for the above-mentioned restricted stocks in Shenzhen Branch of China Securities Depository and Clearing Corporation Limited. The total number of shares of the Company was changed from 2,856,769,678 shares to 2,853,450,621 shares. On September 13, 2018, the Company held an interim meeting of the Eighth Board of Directors and an interim meeting of the Eighth Board of Supervisors, and reviewed and approved the Proposal on Granting Reserved Restricted Stocks of 2017 Restricted Stock Incentive Plan for Incentive Objects, which determined September 13, 2018 as the grant date, to grant 9,826,580 restricted shares to 75 objects at the grant price of RMB 3.68 yuan/share. The independent directors issued independent opinions on the above proposal, and the Company's board of supervisors re-checked the list of incentive objects on the grant date. The shares granted had been registered in Shenzhen Branch of China Securities Depository and Clearing Corporation Limited and listed on September 28, 2018. The total number of shares of the Company was changed from 2,853,450,621 shares to 2,863,277,201 shares. On December 12, 2018, the Company held an interim meeting of the Eighth Board of Directors and an interim meeting of the Eighth Board of Supervisors, and reviewed and approved the Proposal on Repurchase and Cancellation of Part of Restricted Stocks of Restricted Stock Incentive Plan, and agreed to repurchase and cancel the total of 436,719 shares of all restricted stocks held by 8 unqualified original incentive objects. The proposal was approved by the 3rd Extraordinary General Meeting in 2018 on December 28, 2018. As of June 18, 2019, the Company had completed the cancellation procedures for the above-mentioned restricted stocks in Shenzhen Branch of China Securities Depository and Clearing Corporation Limited and the specific content was detailed in the Announcement on the Completion of Repurchasing Part of Restricted Stocks disclosed on www.cninfo.com.cn on June 19, 2019 (Announcement No.: 2019-040). On December 12, 2018, the Company held an interim meeting of the Eighth Board of Directors and an interim meeting of the Eighth Board of Supervisors, and reviewed and approved the Proposal on the First Achievement of Lifting the Restriction Conditions for the First Granted Shares of the Company's 2017 A-share Restricted Stock Incentive Plan in the First Unlock Period. In addition to the fact that the eight incentive objects did not have the conditions to unlock restricted stocks due to their resignation, the total number of incentive objects who reached the conditions for unlocking restricted stocks was 431 persons, and the number of restricted stocks that could be unlocked was 43,353,050 shares, accounting for 1.51% of the current total share capital of the Company. The board of supervisors, independent directors, and law firms separately issued clear consent opinions. The unlock date of the restricted stocks, which was the date of listing, was December 21, 2018. On April 16, 2019, the Company held the 8th Meeting of the Eighth Board of Directors and the 8th Meeting of the Eighth Board of Supervisors, which reviewed and approved the Proposal on Repurchase and Cancellation of Part of Restricted Stocks of Restricted Stock Incentive Plan and the Proposal on Repurchase and Cancellation of Restricted Stocks that Had Not Reached the Unlocking Condition of the Second Unlock Period, and agreed to repurchase and cancel the total of 3,473,329 shares of all restricted stocks held by 14 unqualified original incentives, as well as the total of 33,734,276 shares of 483 incentive objects that did not meet the unlocking conditions of the second unlock period. The independent directors of the Company issued a consent opinion. And on May 9, 2019, the proposals were approved by the 2018 Annual General Meeting of Shareholders. As of June 18, 2019, the Company had completed the cancellation procedures for the above-mentioned restricted stocks in Shenzhen Branch of China Securities Depository and Clearing Corporation Limited and the specific content was detailed in the Announcement on the Completion of Repurchasing Part of Restricted Stock disclosed on www.cninfo.com.cn on June 19, 2019 (Announcement No.: 2019-040). On September 16, 2019, the Company held an interim meeting of the Eighth Board of Directors and an interim meeting of the Eighth Board of Supervisors, and reviewed and approved the Proposal on Repurchase and Cancellation of Part of Restricted Stocks of Restricted Stock Incentive Plan, and agreed to repurchase and cancel the total of 1,281,158 shares of all restricted stocks held by 18 unqualified original incentive objects. The proposal was approved by the 4th Extraordinary General Meeting in 2019 on October 10, 2019. The proposal was approved by the 4th Extraordinary General Meeting in 2019 on October 10, 2019. The above restricted stock has not completed the cancellation procedure. 10 CSG HOLDING CO., LTD. The Third Quarter Report 2019 On September 16, 2019, the Company held an interim meeting of the Eighth Board of Directors and an interim meeting of the Eighth Board of Supervisors, and reviewed and approved the Proposal on the First Achievement of Lifting the Restriction Conditions for the Reserved Granted Shares of the Company's 2017 A-share Restricted Stock Incentive Plan in the First Unlock Period. In addition to the fact that 3 incentive objects did not have the conditions to unlock restricted stocks due to their resignation, the total number of incentive objects who reached the conditions for unlocking restricted stocks was 71 persons, and the number of restricted stocks that could be unlocked was 3,909,350 shares, accounting for 0.13% of the current total share capital of the Company. The board of supervisors, independent directors, and law firms separately issued clear consent opinions. The unlock date of the restricted stocks, which was the date of listing, was September 25, 2019. According to the relevant provisions of the "Accounting Standards for Business Enterprises", the implementation of the Company's restricted stocks will have certain impact on the Company's financial status and operating results in the next few years. The results are subject to the annual audit report issued by the accounting firm. Implementation progress of share buyback □Applicable √Not applicable Implementation progress of share buyback reduction through centralized bidding □Applicable √Not applicable III. Commitments made by the actual controller, the shareholders, the related parties, the purchasers and the Company which failed to be fulfilled in time during the report period □ Applicable √Not applicable There were no commitments made by the actual controller, the shareholders, the related parties, the purchasers or the Company which failed to be fulfilled in time during the report period. IV. Prediction of business performance of 2019 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. □ Applicable √Not applicable V. Securities investment □ Applicable √Not applicable The Company had no securities investment in the report period. VI. Entrusted financial management □ Applicable √Not applicable The Company had no entrusted financial management in the report period. 11 CSG HOLDING CO., LTD. The Third Quarter Report 2019 VII. Derivatives investment □ Applicable √Not applicable The Company had no derivatives investment in the report period. VIII. Reception of research, communication and interview in the report period □ Applicable √Not applicable The Company had no reception of research, communication or interview in the report period. IX. Illegal external guarantee □ Applicable √Not applicable The Company had no illegal external guarantee in the report period. X. Particulars about non-operating fund of listed company which is occupied by controlling shareholder and its affiliated enterprises □ Applicable √Not applicable In the report period, it did not exist that non-operating fund of listed company was occupied by controlling shareholder or its affiliated enterprises. 12 CSG HOLDING CO., LTD. The Third Quarter Report 2019 Section IV. Financial Report (I) Financial Statements 1. Consolidated Balance Sheet Prepared by CSG Holding Co., Ltd. September 30, 2019 Unit: RMB Item September 30, 2019 December 31, 2018 Current asset: Monetary capital 1,863,545,157 2,226,447,720 Notes receivable 491,760,141 719,375,448 Accounts receivable 781,854,555 592,233,312 Prepayments 115,332,062 91,176,675 Other receivables 204,222,903 207,424,295 Accounts receivable 814,306,954 600,139,750 Holding assets for sale 45,983,520 Other current assets 428,468,741 445,327,449 Total current assets 4,699,490,513 4,928,108,169 Non-current assets: Fixed assets 10,003,094,368 9,930,843,775 Construction in progress 1,981,632,062 2,559,179,442 Intangible assets 1,039,671,918 1,035,731,324 Development expenditure 57,602,714 74,549,257 Goodwill 376,720,156 376,720,156 Long-term prepaid expenses 11,414,449 12,746,609 Deferred tax assets 163,089,054 139,529,518 Other non-current assets 90,129,305 56,825,934 Total non-current assets 13,723,354,026 14,186,126,015 Total assets 18,422,844,539 19,114,234,184 Current liabilities: Short-term loan 2,860,000,039 2,922,679,590 Notes payable 191,449,162 105,150,000 Accounts payable 1,031,457,587 1,209,859,263 13 CSG HOLDING CO., LTD. The Third Quarter Report 2019 Advance payment 268,182,351 206,631,008 Payroll payable 227,888,841 266,459,151 Taxes payable 124,296,873 111,967,365 Other payables 309,463,325 552,751,187 Including: interest payable 42,358,192 73,612,703 Dividend payable 3,043,798 2,846,362 Non-current liabilities due within one year 1,675,813,653 819,448,742 Other current liabilities 300,000 300,000 Total current liabilities 6,688,851,831 6,195,246,306 Non-current liabilities: Long term borrowing 1,080,400,000 2,315,700,000 Long-term payables 190,542,654 529,910,796 Deferred income 519,119,390 601,825,780 Deferred income tax liabilities 33,071,122 22,118,840 Total non-current liabilities 1,823,133,166 3,469,555,416 Total Liabilities 8,511,984,997 9,664,801,722 Owners' equity: Share capital 3,108,196,163 2,863,277,201 Capital reserve 730,505,435 1,095,339,421 Less: Treasury shares 122,316,511 277,180,983 Other comprehensive income 7,059,689 5,080,234 Special reserves 9,706,398 6,068,600 Surplus reserve 924,305,375 924,305,375 Undistributed profit 4,889,370,806 4,486,264,723 Total owner's equity attributable to the parent company 9,546,827,355 9,103,154,571 Minority shareholders' equity 364,032,187 346,277,891 Total owner's equity 9,910,859,542 9,449,432,462 Total Liabilities and Owner's Equity 18,422,844,539 19,114,234,184 Legal representative: Chen Lin Principal in charge of accounting: Wang Jian Head of accounting department: Wang Wenxin 2. Balance Sheet of the Parent Company Unit: RMB Item September 30, 2019 December 31, 2018 14 CSG HOLDING CO., LTD. The Third Quarter Report 2019 Current asset: Monetary capital 1,171,946,331 1,700,726,151 Prepayments 278,156 438,167 Other receivables 3,552,175,851 2,912,516,245 Other current assets 300,116,326 300,000,000 Total current assets 5,024,516,664 4,913,680,563 Non-current assets: Long-term receivables 1,200,000,000 1,200,000,000 Long-term equity investment 5,043,863,570 4,964,696,831 Fixed assets 20,833,632 20,926,071 Intangible assets 574,403 879,146 Other non-current assets 1,358,333 732,038 Total non-current assets 6,266,629,938 6,187,234,086 Total assets 11,291,146,602 11,100,914,649 Current liabilities: Short-term loan 2,159,500,000 2,000,000,000 Notes payable 170,000,000 Accounts payable 236,346 261,024 Payroll payable 34,230,524 41,096,020 Taxes payable 2,298,360 1,099,231 Other payables 1,316,949,901 1,668,587,218 Including: interest payable 27,375,326 41,572,125 Dividend payable 3,043,798 2,846,362 Non-current liabilities due within one year 1,200,000,000 Total current liabilities 4,883,215,131 3,711,043,493 Non-current liabilities: Long term borrowing 877,500,000 2,000,000,000 Deferred income 182,990,809 184,642,520 Total non-current liabilities 1,060,490,809 2,184,642,520 Total Liabilities 5,943,705,940 5,895,686,013 Owners' equity: Share capital 3,108,196,163 2,863,277,201 Capital reserve 875,332,749 1,240,166,735 Less: Treasury shares 122,316,511 277,180,983 15 CSG HOLDING CO., LTD. The Third Quarter Report 2019 Surplus reserve 938,850,735 938,850,735 Undistributed profit 547,377,526 440,114,948 Total owner's equity 5,347,440,662 5,205,228,636 Total Liabilities and Owner's Equity 11,291,146,602 11,100,914,649 3. Consolidated Income Statement Unit: RMB Item Balance of this period Balance of last period I. Total operating income 2,773,417,909 2,680,693,459 Including: operating income 2,773,417,909 2,680,693,459 II. Total operating costs 2,464,522,217 2,561,744,922 Including: Operating costs 2,029,994,395 2,092,944,976 Taxes and surcharges 29,661,141 35,812,891 sales expense 93,556,963 90,526,141 Management costs 149,384,270 168,654,876 R&D expenses 89,453,795 86,247,328 Financial expenses 72,471,653 87,558,710 Including: interest expense 77,460,347 109,819,290 Interest income 7,162,227 23,542,159 Plus: other income 35,689,521 32,285,163 Credit impairment loss (“-“ for loss) 223,834 -1,891,859 Asset impairment loss (“-“ for loss) -135,326,316 Asset disposal income (“-“ for loss) -252,568 112,525 III. Operating profit (“-“ for loss) 209,230,163 149,454,366 Plus: non-operating income 2,790,510 5,625,593 Less: non-operating expenses 1,162,203 614,072 IV. Gross profit (“-“ for loss) 210,858,470 154,465,887 Less: Income tax expenses 35,530,123 27,650,222 V. Net profit (“-“ for net loss) 175,328,347 126,815,665 (I) Classification by business continuity 1. Net profit from continuing operations (“-“ for net loss) 175,328,347 126,815,665 2. Termination of operating net profit (“-“ for net loss) (II) )Classification by ownership 1. Net profit attributable to the owners of parent 166,970,717 116,279,185 16 CSG HOLDING CO., LTD. The Third Quarter Report 2019 company 2. Minor shareholders’ equity 8,357,630 10,536,480 VI. Net amount of other gains after tax 1,699,294 2,463,096 Net amount of other gains after tax attributable to owners 1,699,294 2,463,096 of parent company (II)Other comprehensive income that will be reclassified 1,699,294 2,463,096 into profit or loss 8. Foreign currency financial statement translation 1,699,294 2,463,096 difference VII. Total of misc. incomes 177,027,641 129,278,761 Total of misc. incomes attributable to the owners of the 168,670,011 118,742,281 parent company Total misc gains attributable to the minor shareholders 8,357,630 10,536,480 VIII. Earnings per share: (I) Basic earnings per share 0.06 0.04 (II) Diluted earnings per share 0.05 0.04 Legal representative: Chen Lin Principal in charge of accounting: Wang Jian Head of accounting department: Wang Wenxin 4. Income Statement of the Parent Company Unit: RMB Item Balance of this period Balance of last period I. Operating income 19,599,133 14,147,677 Less: Operating costs 0 0 Taxes and surcharges 33,330 144,784 sales expense Management costs 38,951,830 39,974,380 R&D expenses 410,606 944,937 Financial expenses 32,656,871 23,855,339 Including: interest expense 39,315,340 45,996,709 Interest income 6,337,011 21,853,898 Plus: other income 2,146,610 470,940 Credit impairment loss (“-“ for loss) -44,670 -54,340 Asset disposal income (“-“ for loss) 502,000 II. Operating profit (“-“ for loss) -49,849,564 -50,355,163 17 CSG HOLDING CO., LTD. The Third Quarter Report 2019 Plus: non-operating income 10,556 Less: non-operating expenses 1,030,000 242,988 III. Gross profit (“-“ for loss) -50,879,564 -50,587,595 Less: Income tax expenses 599,358 IV.Net profit (“-“ for net loss) -50,879,564 -51,186,953 (I) Net profit from continuing operations (“-“ for net -50,879,564 -51,186,953 loss) (II) Termination of operating net profit (“-“ for net loss) VI. Total of misc. incomes -50,879,564 -51,186,953 VII. Earnings per share: 5. Consolidated income statement for Jan.-Sept. 2019 Unit: RMB Item Balance of this period Balance of last period I. Total revenue 7,661,655,487 8,151,251,436 Including: Business income 7,661,655,487 8,151,251,436 II. Total business cost 6,991,295,788 7,631,820,904 Including: Business cost 5,701,371,220 6,192,441,730 Tax and surcharges 86,349,138 107,743,437 Sales expense 266,060,362 262,743,395 Administrative expense 442,246,625 523,550,697 R&D expenses 263,729,931 271,905,509 Financial expenses 231,538,512 273,436,136 Including: Interest expense 248,491,952 313,350,797 Interest income 22,085,602 46,575,577 Plus: other income 143,444,934 54,760,584 Credit impairment loss (“-“ for loss) -3,541,836 -5,545,468 Asset impairment loss (“-“ for loss) -135,326,316 Asset disposal income (“-“ for loss) 118,401 -455,305 III. Operating profit (“-“ for loss) 675,054,882 568,190,343 Plus: non-operating income 6,456,825 8,221,388 Less: non-operating expenses 7,455,430 1,492,623 IV. Gross profit (“-“ for loss) 674,056,277 574,919,108 Less: Income tax expenses 111,988,863 89,021,326 18 CSG HOLDING CO., LTD. The Third Quarter Report 2019 V. Net profit (“-“ for net loss) 562,067,414 485,897,782 (I) Classification by business continuity 1. Net profit from continuing operations (“-“ for net loss) 562,067,414 485,897,782 2. Termination of operating net profit (“-“ for net loss) (II) Classification by ownership 1. Net profit attributable to the owners of parent company 544,313,118 469,116,338 2. Minor shareholders’ equity 17,754,296 16,781,444 VI. Net amount of other gains after tax 1,979,455 3,155,114 Net amount of other gains after tax attributable to owners 1,979,455 3,155,114 of parent company (II)Other comprehensive income that will be reclassified 1,979,455 3,155,114 into profit or loss 8. Foreign currency financial statement translation 1,979,455 3,155,114 difference VII. Total of comprehensive income 564,046,869 489,052,896 Total of misc. incomes attributable to the owners of the parent 546,292,573 472,271,452 company Total misc gains attributable to the minor shareholders 17,754,296 16,781,444 VIII. Earnings per share: (I) Basic earnings per share 0.18 0.16 (II) Diluted earnings per share 0.17 0.15 Legal representative: Chen Lin Principal in charge of accounting: Wang Jian Head of accounting department: Wang Wenxin 6. Income statement of the Parent Company for Jan.-Sept. 2019 Unit: RMB Item Balance of this period Balance of last period I. Total revenue 57,755,818 44,248,959 Less: Operating costs 0 0 Tax and surcharges 518,198 391,249 Sales expense Administrative expense 102,583,448 135,342,752 R&D expenses 766,444 2,839,736 Financial expenses 97,201,706 53,787,897 Including: Interest expense 113,702,087 94,678,140 19 CSG HOLDING CO., LTD. The Third Quarter Report 2019 Interest income 19,075,093 43,313,805 Plus: other income 3,612,857 2,070,606 Investment income(“-“ for loss) 390,105,325 231,537,606 Credit impairment loss (“-“ for loss) 49,644 -8,222 Asset disposal income (“-“ for loss) 502,000 2,440 II. Operating profit (“-“ for loss) 250,955,848 85,489,755 Plus: non-operating income 2,403,225 134,006 Less: non-operating expenses 4,889,460 243,265 III. Gross profit (“-“ for loss) 248,469,613 85,380,496 Less: Income tax expenses 599,358 VI. Net profit (“-“ for net loss) 248,469,613 84,781,138 (I) Net profit from continuing operations (“-“ for net 248,469,613 84,781,138 loss) (II) Termination of operating net profit (“-“ for net loss) VI. Total of comprehensive income 248,469,613 84,781,138 VII. Earnings per share: 7. Consolidated Cash Flow Statement for Jan.-Sept. 2019 Unit: RMB Item Balance of this period Balance of last period I. Net cash flow from business operation Cash received from sales of products and providing of 8,428,098,411 8,874,070,807 services Tax returned 18,305,669 81,506,819 Other cash received from business operation 102,269,234 114,952,740 Sub-total of cash inflow from business activities 8,548,673,314 9,070,530,366 Cash paid for purchasing of merchandise and services 5,090,478,028 5,549,504,979 Cash paid to staffs or paid for staffs 999,968,278 1,020,862,956 Taxes paid 477,640,490 605,975,057 Other cash paid for business activities 472,196,718 483,361,352 Sub-total of cash outflow from business activities 7,040,283,514 7,659,704,344 Net cash flow generated by business operation 1,508,389,800 1,410,826,022 II. Cash flow generated by investing Net cash retrieved from disposal of fixed assets, intangible 514,875 3,689,092 assets, and other long-term assets 20 CSG HOLDING CO., LTD. The Third Quarter Report 2019 Other investment-related cash received 36,440,563 24,683,677 Sub-total of cash inflow due to investment activities 36,955,438 28,372,769 Cash paid for construction of fixed assets, intangible assets 459,047,736 462,402,032 and other long-term assets Other cash paid for investment activities 53,341,928 93,641,334 Sub-total of cash outflow due to investment activities 512,389,664 556,043,366 Net cash flow generated by investment -475,434,226 -527,670,597 III. Cash flow generated by financing Cash received as investment 9,826,580 Cash received as loans 2,525,743,740 3,871,266,495 Other financing-related cash received 500,000,000 46,330,808 Subtotal of cash inflow from financing activities 3,025,743,740 3,927,423,883 Cash to repay debts 2,600,659,040 3,255,750,000 Cash paid as dividend, profit, or interests 425,509,363 438,702,824 Other cash paid for financing activities 1,546,884,782 568,114,332 Subtotal of cash outflow due to financing activities 4,573,053,185 4,262,567,156 Net cash flow generated by financing -1,547,309,445 -335,143,273 IV. Influence of exchange rate alternation on cash and cash 1,571,638 2,487,631 equivalents V. Net increase of cash and cash equivalents -512,782,233 550,499,783 Plus: Balance of cash and cash equivalents at the beginning of 2,225,126,913 2,459,753,165 term VI. Balance of cash and cash equivalents at the end of term 1,712,344,680 3,010,252,948 8. Cash Flow Statement of the Parent Company for Jan.-Sept. 2019 Unit: RMB Item Balance of this period Balance of last period I. Net cash flow from business operation Other cash received from business operation 35,177,783 45,225,208 Sub-total of cash inflow from business activities 35,177,783 45,225,208 Cash paid to staffs or paid for staffs 88,784,201 80,647,604 Taxes paid 3,219,099 2,520,750 Other cash paid for business activities 28,928,195 25,910,236 Sub-total of cash outflow from business activities 120,931,495 109,078,590 Net cash flow generated by business operation -85,753,712 -63,853,382 21 CSG HOLDING CO., LTD. The Third Quarter Report 2019 II. Cash flow generated by investing Net cash retrieved from disposal of fixed assets, intangible 2,000 2,440 assets, and other long-term assets Sub-total of cash inflow due to investment activities 2,000 2,440 Cash paid for construction of fixed assets, intangible assets 4,877,721 5,604,540 and other long-term assets Cash paid as investment 66,000,000 46,750,000 Sub-total of cash outflow due to investment activities 70,877,721 52,354,540 Net cash flow generated by investment -70,875,721 -52,352,100 III. Cash flow generated by financing Cash received as investment 9,826,580 Cash received as loans 2,024,500,000 2,917,500,000 Other financing-related cash received 124,357,949 Subtotal of cash inflow from financing activities 2,024,500,000 3,051,684,529 Cash to repay debts 1,787,500,000 2,150,000,000 Cash paid as dividend, profit, or interests 207,984,342 199,721,074 Other cash paid for financing activities 550,998,441 Subtotal of cash outflow due to financing activities 2,546,482,783 2,349,721,074 Net cash flow generated by financing -521,982,783 701,963,455 IV. Influence of exchange rate alternation on cash and cash 35,235 -1,245,875 equivalents V. Net increase of cash and cash equivalents -678,576,981 584,512,098 Plus: Balance of cash and cash equivalents at the beginning of 1,699,514,334 1,680,672,390 term VI. Balance of cash and cash equivalents at the end of term 1,020,937,353 2,265,184,488 II. Note to the Adjustment of the Financial Statements 1. Adjustment of the relevant items of the financial statements at the current year beginning according to the new standards for financial instruments, the new standards for revenues and the new standards for lease implemented commencing from year 2019 □ Applicable √Not applicable 2. Note to the retroactive adjustment of the previous comparative data according to the new standards for financial instruments and the new standards for lease implemented commencing from year 2019 □ Applicable √Not applicable 22 CSG HOLDING CO., LTD. The Third Quarter Report 2019 III .Auditor’s Report Whether the third quarter report has been audited or not □Yes √No The third quarter report of the Company has not been audited. Board of Directors of CSG Holding Co., Ltd. 28 October 2019 23