CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 Financial Report of Semi-annual Report 2020 (I) Auditors’ Report Whether the Semi-annual Report has been audited or not □ Yes √ No The Company's Semi-annual Report has not been audited. (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. June 30, 2020 Unit: RMB Item June 30, 2020 December 31,2019 Current assets Cash at bank and on hand 3,074,973,644 1,986,980,418 Notes receivable 230,044,196 297,023,380 Accounts receivable 780,968,446 649,681,177 Receivables financing 303,344,206 258,296,826 Advances to suppliers 119,645,053 78,196,027 Other receivables 201,571,781 202,854,864 Inventories 1,036,632,734 812,321,690 Other current assets 151,162,747 447,995,931 Total current assets 5,898,342,807 4,733,350,313 Non-current assets Fixed assets 8,482,459,154 9,783,037,301 Construction in progress 3,116,834,966 1,902,140,035 Intangible assets 1,107,585,475 1,044,826,287 Development expenditure 109,312,689 85,240,356 Goodwill 315,097,756 315,097,756 Long-term prepaid expenses 11,110,889 11,351,431 Deferred tax assets 219,430,452 205,792,587 Other non-current assets 104,138,519 120,399,893 1 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 Total non-current assets 13,465,969,900 13,467,885,646 Totalassets 19,364,312,707 18,201,235,959 Current liabilities Short-term borrowings 1,604,423,055 2,240,969,137 Notes payable 187,639,865 232,063,968 Accounts payable 1,267,881,055 1,100,531,779 Advances from customers 292,803,811 Contract liabilities 269,082,855 Employee benefits payable 230,856,876 337,866,246 Taxes payable 135,641,333 115,425,044 Other payables 270,701,826 351,374,775 Of which: interest payable 108,653,849 73,251,086 Dividend payable 2,985,563 Current portion of non-current liabilities 2,092,839,388 1,712,456,928 Other current liabilities 300,000 300,000 Total current liabilities 6,059,366,253 6,383,791,688 Non-current liabilities Long-term borrowings 675,200,269 1,320,225,000 Bonds payable 1,991,652,870 Long-term payable 53,006,500 87,240,529 Deferred income 499,807,166 513,925,557 Deferred tax liabilities 32,958,226 30,197,657 Total non-current liabilities 3,252,625,031 1,951,588,743 Total liabilities 9,311,991,284 8,335,380,431 Shareholders’ equity Share capital 3,070,692,107 3,106,915,005 Capital surplus 596,997,085 683,219,358 Less: Treasury shares 118,066,397 Other comprehensive income 7,932,636 6,565,864 Special reserve 10,666,738 11,102,921 Surplus reserve 946,251,286 946,251,286 Undistributed profits 5,039,104,679 4,859,600,841 Total equity attributable to shareholders of parent company 9,671,644,531 9,495,588,878 Minority shareholders' equity 380,676,892 370,266,650 2 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 Total shareholders' equity 10,052,321,423 9,865,855,528 Totalliabilities and shareholders' equity 19,364,312,707 18,201,235,959 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 June 30, 2020 December 31,2019 Current assets Cash at bank and on hand 2,611,477,480 1,560,798,731 Advances to suppliers 3,606,751 1,799,222 Other receivables 3,736,236,883 3,179,500,967 Other current assets 300,000,000 Total current assets 6,351,321,114 5,042,098,920 Non-current assets Long-term receivables 1,200,000,000 1,200,000,000 Long-term equity investments 5,267,965,574 5,079,465,574 Fixed assets 19,242,074 19,550,442 Intangible assets 217,284 370,484 Other non-current assets 5,388,068 1,407,535 Total non-current assets 6,492,813,000 6,300,794,035 Total assets 12,844,134,114 11,342,892,955 Current liabilities Short-term borrowings 1,018,000,000 1,687,000,000 Notes payable 170,000,000 Accounts payable 628,828 236,346 Employee benefits payable 22,680,306 53,040,982 Taxes payable 527,877 2,901,358 Other payables 1,472,770,969 1,643,156,452 Of which: interest payable 48,504,355 41,186,139 Dividend payable 2,985,563 Current portion of non-current liabilities 2,000,000,000 1,200,000,000 Total current liabilities 4,514,607,980 4,756,335,138 Non-current liabilities Long-term borrowings 500,000,000 1,130,000,000 3 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 Bonds payable 1,991,652,870 Deferred income 181,188,683 182,386,537 Total non-current liabilities 2,672,841,553 1,312,386,537 Total liabilities 7,187,449,533 6,068,721,675 Shareholders’ equity Share capital 3,070,692,107 3,106,915,005 Capital surplus 741,824,399 828,046,672 Less:Treasury shares 118,066,397 Surplus reserve 960,796,646 960,796,646 Undistributed profits 883,371,429 496,479,354 Total shareholders' equity 5,656,684,581 5,274,171,280 Totalliabilities and shareholders' equity 12,844,134,114 11,342,892,955 3. Consolidated Income Statement Unit: RMB Item Half year of 2020 Half year of 2019 I. Total revenue 4,424,221,349 4,888,237,578 Of which:Business income 4,424,221,349 4,888,237,578 II. Total business cost 3,967,771,208 4,526,773,571 Of which:Business cost 3,159,567,031 3,671,376,825 Tax and surcharge 52,338,392 56,687,997 Sales expenses 161,639,534 172,503,399 Administrative expenses 317,419,407 292,862,355 R&D expenses 145,063,647 174,276,136 Financial expenses 131,743,197 159,066,859 Of which: interest expense 152,178,964 171,031,605 Interest income 24,931,363 14,923,375 Plus: Other income 48,009,326 107,755,413 Credit impairment loss (“- “for loss) -2,961,920 Asset impairment loss (“- “for loss) 154,053 -3,765,670 Income on disposal assets (“- “for loss) -342,005 370,969 III. Operational profit (“- “for loss) 501,309,595 465,824,719 Plus: non-operational income 2,218,131 3,666,315 Less: non-operational expenditure 17,535,553 6,293,227 4 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 IV. Total profit (“- “for loss) 485,992,173 463,197,807 Less: Income tax expenses 84,115,208 76,458,740 V. Net profit (“- “for net loss) 401,876,965 386,739,067 (I) Classification by business continuity 1. Net profit from continuing operations (“-” for net loss) 401,876,965 386,739,067 (II) Classification by ownership 1. Equity attributable to shareholders of parent company 391,466,723 377,342,401 2.Minority shareholder gains and losses 10,410,242 9,396,666 VI. Other comprehensive income net after tax 1,366,772 280,161 Other comprehensive income net after tax attributable to 1,366,772 280,161 shareholders of parent company (II) Other comprehensive income items which will be 1,366,772 280,161 reclassified subsequently into profit and loss 1.Differences on translation of foreign currency financial 1,366,772 280,161 statements VII. Total comprehensive income 403,243,737 387,019,228 Total comprehensive income attributable to shareholders of 392,833,495 377,622,562 parent company Total comprehensive income attributable to minority 10,410,242 9,396,666 shareholders VIII. Earnings per share: (I) Basic earnings per share 0.13 0.12 (II) Diluted earnings per share 0.13 0.12 Legal Representative:Chen Lin Principal in charge of accounting:Wang Jian Principal of the financial department:Wang Wenxin 4. Income Statement of the Parent Company Unit: RMB Item Half year of 2020 Half year of 2019 I. Revenue 37,484,754 38,156,685 Less: Business cost Tax and surcharge 1,021,570 484,868 Sales expenses Administrative expenses 59,530,745 63,631,618 R & D expenses 9,250 355,838 Financial expenses 79,503,361 64,544,835 5 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 Of which: interest expense 100,457,503 74,386,747 Interest income 22,683,049 12,738,082 Plus: Other income 1,955,221 1,466,247 Investment income(“- “for loss) 703,591,508 390,105,325 Credit impairment loss (“- “for loss) 6,972 Asset impairment loss (“- “for loss) 94,314 Income on disposal assets (“- “for loss) 981 II. Operating profit 602,974,510 300,805,412 Add: Non-operating revenue 2,403,225 Less: Non-operating expenses 4,119,550 3,859,460 III. Total profit (“- “for loss) 598,854,960 299,349,177 Less: Income tax (expenses)/revenue IV. Net profit (“- “for loss) 598,854,960 299,349,177 (I) Net profit for continuing operations(“- “for loss) 598,854,960 299,349,177 V. Other comprehensive income net after tax VI. Total comprehensive income 598,854,960 299,349,177 VII. Earnings per share (I) Basic earnings per share (II) Diluted earnings per share 5. Consolidated Cash Flow Statement Unit: RMB Item Half year of 2020 Half year of 2019 I. Cash flows from operating activities Cash received from sales of goods or rendering of services 4,739,003,316 5,267,136,350 Refund of taxes and surcharges 11,866,382 7,189,735 Receive other cash related to operating activities 69,696,304 69,328,688 Subtotal of cash inflow from operating activities 4,820,566,002 5,343,654,773 Cash paid for goods and services 2,767,721,923 3,243,706,052 Cash paid to and on behalf of employees 708,599,327 706,947,717 Payments of taxes and surcharges 284,726,645 310,470,632 Pay other cash related to operating activities 279,873,718 314,547,907 Subtotal of cash outflow from operating activities 4,040,921,613 4,575,672,308 Net cash flows from/(used in) operating activities 779,644,389 767,982,465 6 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 II. Cash flows from investing activities Cash received from investment recovery Cash received from investment income Net cash received from disposal of fixed assets, intangible 723,823 355,765 assets and other long-term assets Cash received relating to other investing activities 328,067,104 36,323,006 Subtotal of cash inflows from investing activities 328,790,927 36,678,771 Cash paid to acquire fixed assets, intangible assets and 436,165,155 283,862,176 other long-term assets Cash paid relating to other investing activities 21,848,237 44,089,887 Subtotal of cash outflows from investing activities 458,013,392 327,952,063 Net cash flows (used in)/from investing activities -129,222,465 -291,273,292 III. Cash flows from financing activities Cash received from borrowings 1,243,981,261 1,498,543,308 Cash received from bond issuance 1,991,680,000 Cash received relating to other financing activities 298,227 500,154,376 Subtotal of cash inflows from financing activities 3,235,959,488 1,998,697,684 Cash repayments of borrowings 1,827,110,966 1,833,149,550 Cash payments for interest expenses and distribution of 336,678,849 314,316,388 dividends or profits Cash payments relating to other financing activities 483,358,139 808,767,638 Subtotal of cash outflows from financing activities 2,647,147,954 2,956,233,576 Net cash flows (used in)/from financing activities 588,811,534 -957,535,892 IV. Effect of foreign exchange rate changes on cash and 587,483 -59,328 cash equivalents V. Net increase/(decrease) in cash and cash equivalents 1,239,820,941 -480,886,047 Add: Cash and cash equivalents at beginning of current 1,831,835,030 2,225,126,913 period VI. Cash and cash equivalents at end of current period 3,071,655,971 1,744,240,866 6. Cash Flow Statement of theParent Company Unit: RMB Item Half year of 2020 Half year of 2019 I. Cash flows from operating activities Refund of taxes and surcharges 613,917 7 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 Cash received relating to other operating activities 29,744,731 22,806,175 Sub-total of cash inflows 30,358,648 22,806,175 Cash paid to and on behalf of employees 79,870,460 69,731,706 Payments of taxes and surcharges 7,235,926 2,061,399 Cash paid relating to other operating activities 13,995,974 14,959,674 Sub-total of cash outflows 101,102,360 86,752,779 Net cash flows from/(used in) operating activities -70,743,712 -63,946,604 II. Cash flows from investing activities Net cash received from disposal of fixed assets, intangible 703,591,508 assets and other long-term assets Sub-total of cash inflows 1,000 Other cash received related to investment activities 300,000,000 Subtotal of cash inflow from investment activities 1,003,592,508 Cash paid to acquire fixed assets, intangible assets and 5,332,761 2,887,626 other long-term assets Cash paid for investing activities 188,500,000 10,000,000 Sub-total of cash outflows 193,832,761 12,887,626 Net cash flows (used in)/from investing activities 809,759,747 -12,887,626 III. Cash flows from financing activities Cash received from borrowings 832,999,801 1,300,000,000 Cash received relating to other financing activities 1,991,680,000 Sub-total of cash inflows 2,824,679,801 1,300,000,000 Cash repayments of borrowings 1,331,999,801 1,250,000,000 Cash payments for interest expenses and distribution of 308,585,809 242,330,883 dividends or profits Other cash paid relating to financing activities 722,080,591 604,806,391 Subtotal of cash outflows from financing activities 2,362,666,201 2,097,137,274 Net cash flows (used in)/from financing activities 462,013,600 -797,137,274 IV. Effect of foreign exchange rate changes on cash and 5,810 1,963 cash equivalents V.Net increase/(decrease) in cash and cash equivalents 1,201,035,445 -873,969,541 Add: Cash and cash equivalents at beginning of current 1,407,215,863 1,699,514,334 period VI. Cash and cash equivalents at end of current period 2,608,251,308 825,544,793 8 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 7. Consolidated Statement of Changes in Owners’ Equity Amount of the current period Unit: RMB Half year of 2020 Owners’ Equity Attributable to the Parent Company Other Minority Total Item Capital Less: treasury comprehe Special Surplus Undistributed shareholders shareholders' Share capital Subtotal surplus share nsive reserves reserve profits ' equity equity income I. Balance at the end 3,106,915,005 683,219,358 118,066,397 6,565,864 11,102,921 946,251,286 4,859,600,841 9,495,588,878 370,266,650 9,865,855,528 of the previous year II. Balance at the beginning of current 3,106,915,005 683,219,358 118,066,397 6,565,864 11,102,921 946,251,286 4,859,600,841 9,495,588,878 370,266,650 9,865,855,528 year III. Amount of change in current -36,222,898 -86,222,273 -118,066,397 1,366,772 -436,183 179,503,838 176,055,653 10,410,242 186,465,895 term(“- “for decrease) (I) Total amount of the comprehensive 1,366,772 391,466,723 392,833,495 10,410,242 403,243,737 income (II) Capital paid in and reduced by -36,222,898 -86,222,273 -118,066,397 -4,378,774 -4,378,774 owners 1. The amount of share-based -36,222,898 -86,222,273 -118,066,397 -4,378,774 -4,378,774 payment included in 9 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 owner's equity 2. Others (III) Profit -211,962,885 -211,962,885 -211,962,885 distribution 1. Appropriations to owners (or -211,962,885 -211,962,885 -211,962,885 shareholders) (IV) Internal carry-forward of owners’ equity (V) Specific reserve 436,183 436,183 436,183 2. Used in the period 436,183 436,183 436,183 (VI) Others IV. Balance at the 3,070,692,107 596,997,085 7,932,636 10,666,738 946,251,286 5,039,104,679 9,671,644,531 380,676,892 10,052,321,423 end of the period Amount of the previous period Unit: RMB Half year of 2019 Owners’ Equity Attributable to the Parent Company Other Minority Total Item Capital Less: treasury comprehe Special Surplus Undistributed shareholders shareholders' Share capital Subtotal surplus share nsive reserves reserve profits ' equity equity income I. Balance at the end of 2,863,277,201 1,095,339,421 277,180,983 5,080,234 6,068,600 924,305,375 4,486,264,723 9,103,154,571 346,277,891 9,449,432,462 the previous year II. Balance at the 2,863,277,201 1,095,339,421 277,180,983 5,080,234 6,068,600 924,305,375 4,486,264,723 9,103,154,571 346,277,891 9,449,432,462 10 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 beginning of current year III. Amount of change in current term(“- “for 244,918,962 -371,521,658 -139,903,420 280,161 2,166,651 236,135,366 251,882,902 9,396,666 261,279,568 decrease) (I) Total amount of the 280,161 377,342,401 377,622,562 9,396,666 387,019,228 comprehensive income (II) Capital paid in and -37,644,324 -88,958,372 -139,903,420 13,300,724 13,300,724 reduced by owners 1. The amount of share-based payment -37,644,324 -88,958,372 -139,903,420 13,300,724 13,300,724 included in owner's equity 2. Others (III) Profit distribution -141,207,035 -141,207,035 -141,207,035 1. Appropriations to surplus reserves 2. Distribution to the -141,207,035 -141,207,035 -141,207,035 owner (or shareholder) (IV) Internal carry-forward of 282,563,286 -282,563,286 owners’ equity 1.Capital reserve transferred to capital 282,563,286 -282,563,286 (or share capital) (V) Specific reserve 2,166,651 2,166,651 2,166,651 1. Withdrawn for the 3,646,882 3,646,882 3,646,882 11 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 period 2. Used in the period 1,480,231 1,480,231 1,480,231 (VI) Others IV. Balance at the end 3,108,196,163 723,817,763 137,277,563 5,360,395 8,235,251 924,305,375 4,722,400,089 9,355,037,473 355,674,557 9,710,712,030 of the period 8. Statement of changes in owner's equity of the parent company Amount of the current period Unit: RMB Half year of 2020 Item Capital Less: treasury Surplus Undistributed Total shareholders' Share capital surplus share reserve profits equity I. Balance at the end of the previous year 3,106,915,005 828,046,672 118,066,397 960,796,646 496,479,354 5,274,171,280 II. Balance at the beginning of current year 3,106,915,005 828,046,672 118,066,397 960,796,646 496,479,354 5,274,171,280 III. Amount of change in current term(“- “for decrease) -36,222,898 -86,222,273 -118,066,397 386,892,075 382,513,301 (I) Total amount of the comprehensive income 598,854,960 598,854,960 (II) Capital paid in and reduced by owners -36,222,898 -86,222,273 -118,066,397 -4,378,774 1. The amount of share-based payment included in owner's equity -36,222,898 -86,222,273 -118,066,397 -4,378,774 (III) Profit distribution -211,962,885 -211,962,885 1. Appropriations to owners (or shareholders) -211,962,885 -211,962,885 (IV) Internal carry-forward of owners’ equity (V) Special reserve IV. Balance at the end of the period 3,070,692,107 741,824,399 960,796,646 883,371,429 5,656,684,581 12 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 Amount of the previous period Unit: RMB Half year of 2019 Item Capital Less: treasury Surplus Undistributed Total shareholders' Share capital surplus share reserve profits equity I. Balance at the end of the previous year 2,863,277,201 1,240,166,735 277,180,983 938,850,735 440,114,948 5,205,228,636 II. Balance at the beginning of current year 2,863,277,201 1,240,166,735 277,180,983 938,850,735 440,114,948 5,205,228,636 III. Amount of change in current term(“- “for decrease) 244,918,962 -371,521,658 -139,903,420 158,142,142 171,442,866 (I) Total amount of the comprehensive income 299,349,177 299,349,177 (II) Capital paid in and reduced by owners -37,644,324 -88,958,372 -139,903,420 13,300,724 1.The amount of share-based payment included in owner's equity -37,644,324 -88,958,372 -139,903,420 13,300,724 (III) Profit distribution -141,207,035 -141,207,035 1. Appropriations to owners (or shareholders) -141,207,035 -141,207,035 (IV) Internal carry-forward of owners’ equity 282,563,286 -282,563,286 1.Capital reserve transferred to capital (or share capital) 282,563,286 -282,563,286 (V) Special reserve (VI) Others IV. Balance at the end of the period 3,108,196,163 868,645,077 137,277,563 938,850,735 598,257,090 5,376,671,502 13 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 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, 2019, the registered capital was RMB 3,070,692,107, 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, specialized glass, engineering glass, energy saving glass, silicon related materials, polysilicon and solar components and electronic-grade display device glass and the construction and operation of photovoltaic plant etc. The financial statements were authorized for issue by the Board of Directors on August 20, 2020. Details on the major subsidiaries included in the consolidated scope in current year were stated in the Note. 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, 2020, the Group current liabilities exceed current assets about RMB161 million and committed capital expenditure of about RMB 550million. The directors of the Company have made an assessment that the Group has been in continuous business for many years and expects to continue to generate sufficient cash flow from operating activities in the next 12 months.From January to June 2020, the net cash inflow from operation activities is approximately RMB 780 million; and 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, 2020, the Group had unutilised banking facilities of approximately RMB 9.441 billion, among which long-term banking facilities were about RMB 1.475billion. 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, medium-term notesand corporate bonds. The directors of the Company believe that the above credit line and shareholder support are sufficient to meet the funding needs of the Group for repayment of debts and capital commitments. Therefore, the financial statements for the report period will continue to be prepared on a going concern basis. 14 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 V. Significant accounting policies and accounting estimates The Group determines specific accounting policies and accounting estimates based on the characteristics of production and operation, which are mainly reflected in the measurement of expected credit losses of receivables, the valuation method of inventories, fixed asset depreciation and intangible asset amortization, judgment standards for capitalization of development expenditures, income confirmation time, etc. Please see the 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 2020 truly and completely present the financial position as of June 30, 2020 and the operating results, cash flows and other information for the first half year of 2020 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). 5. Accounting treatment method of business combination under common control and not under common control (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 15 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 attributable to the combination are included in profit or loss in the period in which they are incurred. Transaction costs as sociated 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 statement s 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 retai ned 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. 16 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 7. Criteria for determining 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 curr ent 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 t he 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 instrument is a contract that forms a financial asset of one party and forms a financial liability or equity instrument of the other party. Afinancialassetorafinancialliabilityisrecognizedwhen the Group becomes a party to the contractual provisions of the instrument. (a)Financial assets (i)Classification and measurement According to the business model of the financial assets under management and the characteristics of the contractual cash flow of the financial assets, the Company divides the financial assets into the following three categories: (1) Financial assets measured at amortized cost; (2) Financial assets measured at fair value through other comprehensive income; (3) Financial assets at fair value through profit or loss. The financial assets are measured at fair value at initial recognition.Related transaction costs that are attributable to the acquisition of the financial assets are included in the initially recognised amounts, except for the financial assets at fair value through profit or loss, 17 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 the related transaction costs of which are recognized directly in profit or loss for the current period. Accounts receivable or notes receivable arising from sales of products or rendering of services (excluding or without regard to significant financing components) are initially recognized at the consideration that is entitled to be charged by the Group as expected. Debt instruments The debt instruments held by the Group refer to the instruments that meet the definition of financial liabilities from the perspective of the issuer, and are measured in the following three ways. Measured at amortised cost: The objective of the Group's business model is to hold the financial assets to collect the contractual cashflows, and the contractual cashflow characteristics are consistent with a basic lending arrangement, which gives rise on specified dates to the contractual cash flows that are solely payments of principal and interest on the principal amount outstanding. The interest income of such financial assets is recognised using the effective interest method.Such financial assets mainly comprise cash at bank and onhand, placements with and loans to banks and other financial institutions measured at amortised cost, notes receivable, accounts receivable, factoring receivables, loans and advances,other receivables and long-term receivables.Long-termreceivables that are due within one year (inclusive) as from the balance sheet date are included in the current portion of non-current assets. Measuredat fair value through other comprehensive income: The objective of the Group's business model is to hold the financial assets to collect the contractualcash flows and selling as target, andthecontractualcashflowcharacteristicsareconsistentwithabasiclendingarrangement.Such financial assets are measured at fair value and their changes are included in other comprehensive income, but impairment losses or gains, exchange gains and losses, and interest income calculated by the effective interest rate method are all included in the current profit and loss.Such financial assets mainly comprisereceivable financing and other financial debt investment.Other financial debt investments that are due within one year (inclusive) as from the balance sheet date are included in the current portion as other current assets. Measured at fair value through profit or loss: Debt instruments held by the Group that are not divided into those atamortised cost or those measured at fair value through other comprehensive income, are measured at fair value through profit or loss and included in financial assets held for trading. At initial recognition, the Group designates a portion of financial assets as at fair value through profit or loss to eliminate or significantly reduce an accounting mismatch. Financial assets that are due with in one year (inclusive) as from the balance sheet date and are expected to be held over one year are included in other non-current financial assets. Equity instruments Investments in equity instruments, over which the Group has no control, joint control or significant influence, aremeasured at fair value through profit or loss under financial assets held for trading; investments in equity instruments expected to be held over one year as from the balance sheet date are included in other non-current financial assets. In addition, a portion of certain investments in equity instruments not held for trading are designated as financial assets at fair value through other comprehensive income under other investments in equity instruments. The relevant dividend income of such financial 18 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 assets is recognised in profit or loss for the current period. (ii)Impairment The Group confirms the loss provision based on expected credit losses for financial assets measured at amortised cost. Giving consideration to reasonable and supportable information on past events, current conditions and forecasts of future economic conditions, as well as the default risk weight, the expected credit loss was confirmed. As at each balance sheet date, the expected credit losses of financial instruments at different stages are measured respectively. 12-month ECL provision is recognized for financial instruments in Stage1that have not had a significant increase in credit risk since initial recognition; lifetime ECL provision is recognized for financial instruments in Stage2 that have had a significant increase in credit risk yet without credit impairment since initial recognition; and lifetime ECL provision is recognized for financial instruments in Stage3 that have had credit impairment since initial recognition. For the financial instruments with lower credit risk on the balance sheet date, the Group assumes there is no significant increase in credit risks in ceinitial recognition and recognizes the 12-month ECL provision. For the financial instruments in Stage 1, Stage 2 and with lower credit risk, the Group calculates the interest income by applying the effective interest rate to the gross carrying amount (before deduction of the impairment provision). For the financial instrument in Stage3, the interest income is calculated by applying the effective interest rate to the amortised cost (after deduction of the impairment provision from the gross carrying amount). For notes and accounts receivables and receivables financing arising from daily business activities such as selling commodities and providing labor services, regardless of whether there is a significant financing component, the Group measures the loss provision based on the expected credit loss for the entire duration. In case the expected credit losses of an individually assessed financial asset cannot be evaluated with reasonable cost, the Group divides the receivables into certain groupings based on credit risk characteristics, and calculates the expected credit losses for the groupings. Basis for determined groupings and method for provision are as follows: Notes receivables Portfolio 1 Bank acceptance notes Expected credit loss method Notes receivables Portfolio 2 Tradeacceptance Notes Expected credit loss method Accounts receivables Portfolio1 Receivables related third party Expected credit loss method Accounts receivables Portfolio2 Receivables relatedparty Expected credit loss method Other receivables Portfolio1 Receivables related third party Expected credit loss method Other receivables Portfolio 2 Receivables related party Expected credit loss method For notes and accounts receivables and receivable financing arising from daily business activities such as selling commodities and providing labor services, the Group refers to historical credit loss experience, combined with current conditions and predictions of future economic conditions. In addition to notes receivable, factoring receivables and other receivables classified as a combination, the Group refers to historical credit loss experience, combines current conditions and predictions of future economic conditions, and passes default risk exposure and future 12. The expected credit loss rate within a month or the entire duration is calculated as the 19 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 expected credit loss. The Group recognizes the loss provision made or reversed into profit or loss for the current period. For debt instruments that are held at fair value and whose changes are included in other comprehensive income, the Group adjusts other comprehensive income while accounting for impairment losses or gains in the current profit or loss. (iii)Derecognition A financial asset is derecognised when any of the below criteria is met: (1)the contractual rights to receive the cashflows from the financial asset expire; (2) the financial asset has been transferred and the Group transfers substantially all the risks and rewards of ownership of the financial asset to the transferee;(3)the financial asset has been transferred and the Group has not retai ned control of the financial asset, although the Group neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset. (b) Financial liabilities The Group's financial liabilities mainly comprise financial liabilities at amortised cost, including bills payable, accounts payable, and other payables. This type of financial liability is initially measured at its fair value after deducting transaction costs, a nd is subsequently measured using the actual interest rate method. If the maturity is less than one year (including one year), it is listed as current liabilities; if the maturity is more than one year but matures within one year (including one year) from the balance sheet date, it is listed as non-expiring within one year Current liabilities; the rest are listed as non-current liabilities. A financial liability is derecognized or partly derecognized when the underlying present obligation is discharged or partly discharged. The difference between the carrying amount of the derecognized part of the financial liability and the consideration paid is recognised in profit or loss for the current period. (c)Determination of fair value of financial instruments The fair value of a financial instrument that is tradedinanactive market is determined at the quoted price in the active market. The fair value of a financial instrument that is not tradedinanactive market is determined by using a valuation technique. In valuation, the Group adopts valuation techniques applicable in the current situation and supported by adequateavailable data and other information, selects inputs with the same characteristics as those of assets or liabilities considered in relevant transactions of assets or liabilitiesby market participants, and gives priority to the use of relevant observable inputs. When relevant observable inputs are not available or feasible, unobservable inputs are adopted. 10. 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)Valuation method for issuing inventory Cost is determined using the weighted average method. The cost of finished goods and work in progress comprise raw materials, 20 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 direct labour and systematically allocated production overhead based on the normal production capacity. (c) Amortization methods of low-value consumables and packaging materials. Turnover materials include low-value consumables and packaging materials, amortized using the one-off write-off method. (d) The determination of net realisable value and the method of provision for decline in the value of inventories. Provision for decline in the value of inventories is determined at the excess amount of book values of the inventories over their net realizable value. Net realizable value is determined based on the estimated selling price in the ordinary course of business, less the estimated costs to completion and estimated costs necessary to make the sale and related taxes. (e) The Group adopts the perpetual inventory system. 11. Assets classified as held for sale A non-current asset or a disposal group is classified as held for sale when all of the following conditions are satisfied: (1) the non-current asset or the disposal group is available for immediate sale in its present condition subject to terms that are tradit ionally and customary for sales; (2) the Group has made a resolution and obtained appropriate approval for disposal of the non-current asset or the disposal group, and the transfer is to be completed within one year. Non-current assets (except for financial assets, investment properties at fair value and deferred tax assets) that meet the recognition criteria for held for sale are recognised at the amount equal to the lower of the fair value less costs to sell and book value. The difference between fair value less costs to sell and carrying amount, should be presented as impairment loss. Such non-current assets and assets included in disposal groups as classified as held for sale are accounted for as current assets; while liabilities included in disposal groups classified as held for sale are accounted for as current liabilities, and are presented separately in the balance sheet. A discontinued operation is a component of the Group that either has been disposed of or is classified as held for sale, and is separately identifiable operationally and for financial reporting purposes, and satisfies one of the following conditions: (1) represents a separate major line of business or geographical area of operations; (2) is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations; and (3) is a subsidiary acquired exclusively with a view to resale. The discontinuedoperation profits on income statement presentation have included the profits and loss of operation and disposal. 12. 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 21 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 equity method when preparing the consolidated financial statements. Investments in associates are accounted for using the equity method. (a) Initial recognition For long-term equity investments formed in business combination: when obtained from business combinations involving entities under common control, the long-term equity investment is stated at carrying amount of equity for the combined parties at the time of merger; when the long-term equity investment obtained from business combinations involving entities not under common control, the investment is measured at combination cost. For long-term equity investments not formed in business combination: the one paid by cash is initially measured at actual purchase price; the long-term investment obtained by issuing equity securities is stated at fair value of equity securities as initial investment cost. (b) Subsequent measurement and recognition of related profit or loss For long-term equity investments accounted for using the cost method, they are measured at the initial investment costs, and cash dividends or profit distribution declared by the investees are recognised as investment income in profit or loss. For long-term equity investments accounted for by the equity method, if the initial investment cost is greater than the fair value of the investee’s identifiable net assets, the initial investment cost shall be used as the long-term equity investment cost; if the initial investment cost is less than the investment, the invested entity shall be entitled to If the fair value share of net assets is identifiable, the difference is included in the current profit and loss, and the cost of equity investment in the growth period is adjusted 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 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) Basis for determining existence of control, jointly control or significant influence over investees The term "control" refers to the power in the investees, to obtain variable returns by participating in the related business activities of the investees, and the ability to affect the returns by exercising its power over the investees. The term "significant influence" refers to the power to participate in the formulation of financial and operating policies of an enterprise, but not the power to control, or jointly control, the formulation of such policies with other parties. 22 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 (d) Impairment of long-term equity investments Book value of long-term equity investments in subsidiaries and associates is reduced to the recoverable amount when the recoverable amount is less than book value. 13. Fixed assets (a) 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 probably flow to the Group and the costs can be reliably measured. Fixed assets purchased or constructed by the Group are initially measured at cost at the acquisition date. Subsequent expenditures incurred for a fixed asset are included in the cost of the fixed asset when it is probable that the associated economic benefits will flow to the Group and the related cost can be reliably measured. Book value of the replaced part is derecognised. All the other subsequent expenditures are recognised in profit or loss in the period in which they are incurred. (b)Depreciation methods Fixed assets are depreciated using the straight-line method to allocate the cost of the assets to their estimated residual values over their estimated useful lives. For the fixed assets that have been provided for impairment loss, the related depreciation charge is prospectively determined based upon the adjusted carrying amounts over their remaining useful lives. The estimated useful lives, the estimated net residual values expressed as a percentage of cost and the annual depreciation rates of fixed assets are as follows: Item Depreciation method Estimated useful lives Estimated net Annual depreciation rate residual value Building Straight-line method 20 to 35 years 5% 2.71% to 4.75% Machinery and equipment Straight-line method 8 to20 years 5% 4.75% to11.88% Motor vehicles and others Straight-line method 5 to8 years 0% 12.50% to20.00% The estimated useful life, the estimated net residual value of a fixed asset and the depreciation method applied to the asset are reviewed, and adjusted as appropriate at each year-end. (c) Book value of a fixed asset is reduced to the recoverable amount when the recoverable amount is below book value. (d)Disposal A fixed asset is derecognised on disposal or when no future economic benefits are expected from its use or disposal. The amount of proceeds from disposals on sale, transfer, retirement or damage of a fixed asset net ofits carrying amount and related taxes and expenses is recognised in profit or loss for the current period. 23 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 14. 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. 15.Borrowing costs The borrowing costs that are directly attributable to the acquisition and construction of an asset that needs a substantially long period of time for its intended use commence to be 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. 16. Intangible assets (1)Valuation method, useful life and impairment test Intangible assets, mainly including land use rights, patents and proprietary technologies, exploitation rights and others, are measured at cost. (a) Land use rights Land use rights are 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. 24 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 (b) Patents and proprietary technologies Patents and proprietary technologiesare 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 amortization method For an intangible asset with a finite useful life, review of its useful life and amortization method is performed at each year-end, with adjustment made as appropriate. (e) Impairment of intangible assets Book value of intangible assets is reduced to the recoverable amount when the recoverable amount is below book value. (2)Accounting policy for internal research and development expenditure 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 acti vities 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. 17. Impairment of long-term assets Fixed assets, construction in progress, intangible assets with finite useful lives and long-term equity investments in joint ventures and associates are tested for impairment if there is any indication that the assets may be impaired at the balance sheet date; intangible assets not ready for their intended use are tested at least annually for impairment, irrespective of whether there is any indication that 25 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 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 amou nt 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 a sset 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. 18. 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 amortization. 19. Employee benefits (1) Short-term employee benefits Short-term employee benefits include wages or salaries, bonuses, allowances and subsidies, staff welfare, medical care, work injury insurance, maternity insurance, housing funds, 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)Accounting treatment method for post-employment benefits The Group classifies post-employment benefit plans as either defined contribution plans or defined benefit plans. Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into a separate fund and will have no obligation to pay further contributions; and defined benefit plans are post-employment benefit plans other than defined contribution plans. During the reporting period, the Group's post-employment benefits mainly include basic pensions and unemployment insurance, both of which belong to the defined contribution plans. (3)Basic pensions The Group’s employees participate in the basic pension plan set up and administered by local authorities of Ministry of Human 26 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 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 dut y 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 period or the cost of relevant assets. (4)Accounting treatment of dismissal benefits The Group provides compensation for terminating the employment relationship with employees before the end of the employment contracts or as an offer to encourage employees to accept voluntary redundancy before the end of the employment contracts. The Group 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 dismissal benefits expected to be paid within one year since the balance sheet date are classified as current liabilities. 20. 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. 21. 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 27 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 the exercise date, the estimate is revised to equal the number of actual vested equity instruments. In the period at which performance conditions and term of service are met, the relevant cost and expenses of equity-settled payment should be recognized, and capital surplus is increased accordingly. Before the exercise date, the accruing amounts of equity-settled payments on balance sheet date reflect the part of expired waiting period and optimal estimation for the number of the Company final vested equity instruments. If the non-market conditions and term of service are not met so that share-based payment fail to exercise, the costs and expenses on this portion should not be recognized. If the share-based payment agreement sets out the market conditions and term of non-vesting, as long as performance conditions and term of service are met, it is should be regard as exercisable right, no matter the market conditions and non-vesting conditions are meet or not. If the terms of equity-settled payment are modified, at least the service is confirmed in accordance with the unmodified terms. In addition, the increase of the fair value of the authorized equity instruments, or the beneficial changes to the employees on the modification date, the increase of service 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 confirmed 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. 22. Revenue Has the new revenue standard been implemented √Yes □ No The Group has performed the performance obligation in the contract, that is, when the customer obtains control of the relevant goods or services, the revenue is recognized according to the transaction price allocated to the performance obligation. The performance obligation refers to the commitment of the Group to transfer to the customer in the contract that can clearly distinguish the goods or services. Transaction price refers to the amount of consideration that the Group is expected to be entitled to receive for the transfer of goods or services to customers, but does not include the amount collected on behalf of a third party and the amount expected to be returned to the customer by the Group. If one of the following conditions is met, the performance obligation is performed within a certain period of time, and the Group recognizes the revenue within a period of time according to the performance progress: (1) the customers obtain and consume the economic benefits brought about by the performance of the Group; (2) the customers can control the commodities under construction in the process of the Group's performance; (3) the products produced in the process of the Group's performance have no difference It can be used as an alternative and the Group is entitled to receive payment for the part of the contract which has been completed so far in the whole contract period. Otherwise, the Group recognizes revenue at the time when the customer obtains control of the relevant goods or services. 23. Government grants Government grants are transfers of monetary or non-monetary assets from the government to the Group at nil consideration, including tax refund and financial subsidies, etc. 28 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 A government grant is recognised when there is a reasonable assurance that the grants will be received and the Group will comply with all attached conditions. Monetary government grants are measured at the amounts received or receivable. Non-monetary government grants are measured at fair value, if the fair value cannot be reliably obtained, it is measured at nominal amount. The government grants related to assets refer to government grant obtained by enterprises and used for purchase and construct ion of long-term assets or formation of long-term asset in other ways. The government grants related to income refer to grants other than those related to assets. For government grants related to income, where the grant is a compensation for related expenses or losses to be incurred by the Group in the subsequent periods, the grant is recognised as deferred income, and included in profit or loss over the periods in which the related costs are recognised; where the grant is a compensation for related expenses or losses already incurred by the Group, the grant is recognised immediately in profit or loss for the current period.The company use the same method of presentation for similar government grants. The ordinary activity government grants should be counted into operating profits; the government grants which not belong to ordinary activities should be counted inton non-operationg income. 24. Deferred tax assets and deferred tax liabilities Deferred tax assets and deferred tax liabilities are calculated and recognized based on the differences arising between the tax bases of assets and liabilities and their carrying amounts (temporary differences). Deferred tax asset is recognized for the deductible losses that can be carried forward to subsequent years for deduction of the taxable profit in accordance with the tax laws. No deferred tax liability is recognized for a temporary difference arising from the initial recognition of goodwill. No deferred tax asset or deferred tax liability is recognized for the temporary differences resulting from the initial recognition of assets or liabilities due to a transaction other than a business combination, which affects neither accounting profit nor taxable profit (or deductible loss). At the balance sheet date, deferred tax assets and deferred tax liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled. Deferred tax assets are only recognized for deductible temporary differences, deductible losses and tax credits to the extent that it is probable that taxable profit will be available in the future against which the deductible temporary differences, deductible losses and tax credits can be utilized. Deferred tax liabilities are recognized for temporary differences arising from investments in subsidiaries and associates, except where the Group is able to control the timing of reversal of the temporary difference, and it is probable that the temporary differ ence will not reverse in the foreseeable future. When it is probable that the temporary differences arising from investments in subsidiaries and associates will be reversed in the foreseeable future and that the taxable profit will be available in the future against which the temporary differences can be utilized, the corresponding deferred tax assets are recognized. 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; That tax payer within the Group has a legally enforceable right to offset current tax assets against current tax liabilities. 29 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 25. Leases (1)Accounting treatment 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 treatment of finance 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. 26. Other important accounting policies and accounting estimates 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 t ax 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 is subject to sufficient taxable income that is 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. 30 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 (d) The useful life of fixed assets Management estimates the useful life of fixed assets, based on historical experiences on using fixed assets that have similar properties and functions. When there are differences between actually useful life and previously estimation, management will adjust estimation to useful life of fixed assets. The fixed assets would be written off or written down when fixed assets been disposed or became redundant. Thus, the estimated result based on existing experience may be different from the actual result of the next accounting period, which may cause major adjustment to book value of fixed assets on balance sheet. (e) Goodwill impairment Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating units (“CGUs”), or groups of CGUs, and future cash flow from each CGU or CGUs is forcasted and discounted with appropriate discount rate. 27. Significant accounting policies and changes in accounting estimates (1) Important accounting policy changes √ Applicable □Not applicable Details can be found on the Company's announcement of accounting policy changes. (2) Changes in important accounting estimates □Applicable √ Not applicable (3)Since 2020, adjustment of the relevant financial statements at current year beginning according to new standards for the new standards for revenues and the new standards for lease initially implemented from 2020 √Applicable □Not applicable Is it necessary to adjust the balance sheet accounts at the beginning of the year √Yes □ No Unit: RMB Item 31 December 2019 1 January 2020 Adjustment Advances from customers 292,803,811 -292,803,811 Contract liabilities 292,803,811 292,803,811 Note: The finance ministry issued Accounting Standard ForBusiness Enterprises no. 14 - revenue in July 2017. In accordance with the relevant provisions, enterprises that are listed both in domestic and abroad and enterprises that are listed abroad and prepare financial statements by adopting international financial reporting standards or accounting standards for business enterprises shall come into force as of January 1, 2018. Other domestic listed enterprises shall take effect as of January 1, 2020. In accordance with the above provisions, the company shall implement the newly issued revenue criterion from January 1, 2020, and the payment for the original advance sales contract shall be reported in the "Advance from customers", and the payment shall be 31 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 reported in the "Contract liability" from January 1, 2020. (4) Since 2020, note to the retroactive adjustment of the previous comparative data according to the new standards for revenues and the new standards for lease initially implemented □ Applicable √Not applicable 28. Others (1)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 are 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. (2) 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. An operating segment is a component of the Group that satisfies all of the following conditions: (a) the component is able to earn revenue and incur expenses from its ordinary activities; (b) whose operating results are regularly reviewed by the Group’s management to make decisions about resources to be allocated to the segment and to assess its performance, and (c) for which the information on financial position, operating results and cash flows is available to the Group. If two or more operating segments have similar economic characteristics and satisfy certain conditions, they are aggregated into one single operating segment. VI.Taxation 1. The main categories and rates of taxes Category Taxable basis Tax rate Taxable value-added amount (Tax payable is Value-added tax (“VAT”) calculated using the taxable sales amount multiplied 3%-13% by the applicable tax rate less deductible VAT input of 32 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 the current period) City maintenance and VAT paid 1%-7% construction tax Enterprise income tax Taxable income 0%-25% Educational surcharge VAT paid 3%-5% 2. Tax incentives The main tax incentives the Group is entitled to are as follows: Tianjin CSG Energy-Saving Glass Co., Ltd. (“Tianjin Energy Conservation”) passed review on a high and new tech enterprise in 2018 and obtained the Certificate of High and New Tech Enterprise, the period of validity is three years. It applies to 15% tax rate for three years since 2018. Dongguan CSG Architectural Glass Co., Ltd. (“Dongguan CSG”) passed review on a high and new tech enterprise in 2019 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 2019. Wujiang CSG East China Architectural Glass Co., Ltd. (“Wujiang CSG Engineering”) passed review on a high and new tech enterprise in 2017 and obtained the Certificate of High and New Tech Enterprise, the period of validity is three years. It applies 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 Polysilicon Co., Ltd.(“Yichang CSG Polysilicon”) passed review on a high and new tech enterprise in 2017 and obtained the Certificate of High and New Tech Enterprise, the period of validity is three years. It applies to 15% tax rate for three years since 2017. Dongguan CSG PV-tech Co., Ltd. (“Dongguan CSG PV-tech”) passed review on a high and new tech enterprise in 2019 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 2019. Hebei Panel Glass Co., Ltd. (“Hebei Panel Glass”) passed review on a high and new tech enterprise in 2019 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 2019. Wujiang CSG 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, 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”) passed review on a high and new tech enterprise in 2017, and obtained the 33 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 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”) passed review on a high and new tech enterprise in2018, 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 2018. Yichang CSG Photoelectric Glass Co., Ltd. (“Yichang CSG Photoelectric”) passed review on a high and new tech enterprise in 2018, and obtained the Certificate of High and New Tech Enterprise, and the period of validity was three years. It applies to 15% tax rate for three years since 2018. Qingyuan CSG New Energy-Saving Materials Co., Ltd. (“Qingyuan CSG Energy-Saving”) passed review on a high and new tech enterprise in 2019, 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 2019. Hebei CSG Glass Co., Ltd. (“Hebei CSG”) was recognised as a high and new tech enterprise in 2018, and obtained the Certificate of High and New Tech Enterprise, and the period of validity was three years. It applies to 15% tax rate for three years since 2018. Shenzhen CSG Applied Technology Co., Ltd. (“Shenzhen Technology”) was recognised as a high and new tech enterprise in 2018, and obtained the Certificate of High and New Tech Enterprise, and the period of validity was three years. It applies to 15% tax rate for three years since 2018. Yichang CSG Display Co., Ltd (“Yichang CSG Displayer”) passed review on a high and new tech enterprisein 2018, 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 2018. Xianning CSG Photoelectric Glass Co., Ltd. (“Xianning Photoelectric”) passed review on a high and new tech enterprise in 2019 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 2019. 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 period. 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 period. Qingyuan CSG New Energy Co., Ltd. (“Qingyuan CSG New Energy”), Suzhou CSG PV Energy Co., Ltd. (“Suzhou CSG PV Energy”), Jiangsu Wujiang CSG New Energy Co., Ltd. (“Wujiang CSG New Energy”), and Yichang CSG New Energy Co., Ltd. (“Yichang CSG New Energy”), Zhangzhou CSG Kibing PV Energy Co., Ltd. (“Zhangzhou CSG”), Heyuan CSG Kibing PV Energy Co., Ltd. (“Heyuan CSG”), Shaoxing CSG Kibing PV Energy Co., Ltd. (“Shaoxing CSG”) ,XianningCSG PV Energy Co., Ltd.(“Xianning CSG PV Energy”) and Zhanjiang CSG New Energy Co., Ltd. (“Zhanjiang CSG PV Energy””),are public infrastructure project specially supported by the state in accordance with the Article 87 in Implementing Regulations of the Law of 34 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 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. 3. Others Some subsidiaries of the Group have used the “exempt, credit, refund” method on goods exported and the refund rate is0%-13%。 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 3,393 4,268 Cash at bank 2,891,652,578 1,781,830,762 Other cash balances 183,317,673 205,145,388 Total 3,074,973,644 1,986,980,418 Including: Total overseas deposits 35,025,997 40,403,719 Other cash balances include margin deposits for theissuance of bills and letter of creditfrom the bank, amounting to RMB 3,317,673 (Dec. 31, 2019: RMB 155,145,388), 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 Trade acceptance notes 230,044,196 297,023,380 Total 230,044,196 297,023,380 (2) By June 30, 2020, notes receivable which had been endorsed or discounted by the Group but are not yet due are as follows: Unit: RMB Amount of recognition termination at the Amount of not terminated recognition at Item period-end the period-end Trade acceptance notes 74,315,442 Total 74,315,442 35 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 3. Accounts receivable (1) 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 Proporti Proporti Propor Propor Amount Amount Amount Amount on on tion tion Provision for bad debts on 15,443,934 2% 15,443,934 100% 0 15,306,177 2% 15,306,177 100% 0 the individual basis Provision for bad debts by 797,041,090 98% 16,072,644 2% 780,968,446 662,934,109 98% 13,252,932 2% 649,681,177 portfolio Total 812,485,024 100% 31,516,578 4% 780,968,446 678,240,286 100% 28,559,109 4% 649,681,177 Provision for bad debts on the individual basis: Unit: RMB Closing balance Name Carrying amount Provision for bad debts Proportion Provision for bad debts on the individual basis 15,443,934 15,443,934 100% Total 15,443,934 15,443,934 100% Provision for bad debts by portfolio Unit: RMB Closing balance Name Carrying amount Provision for bad debts Proportion Portfolio 1 797,041,090 16,072,644 2% Total 797,041,090 16,072,644 2% As at 30 June 2020, the bad debts of receivables were RMB 15,443,934 (31 December 2019: RMB 15,306,177) that to be provided individually.It mainly represented the goods receivable due from a client of the subsidiary, Yichang CSG Displayer. Due to the client’s bankruptcy, Yichang CSG Displayer made full provision against this receivable. It also represented the goods receivable due from a client of the subsidiary, Dongguan CSG PV-tech. Due to business dispute, Dongguan CSG PV-tech made full provision against this receivable. 36 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 Disclosure by the ageing of accounts receivable Unit: RMB Ageing Closing balance Within 1 year (including 1 year) 733,993,069 1 to 2 years 53,948,845 2 to 3 years 13,892,201 Over 3 years 10,650,909 3 to 4 years 3,557,525 4 to 5 years 7,093,384 Total 812,485,024 (2)Provision for bad debts accrued, recovered or reversed in the current period Unit: RMB Amount of change in the current period Opening Category Collect or Closing balance balance Provision Write-off Others reversal Accounts receivable 28,559,109 5,714,069 2,756,600 31,516,578 bad debt provision Total 28,559,109 5,714,069 2,756,600 31,516,578 (3) Top 5 of the closing balance of the accounts receivable collected according to the arrears party Unit: RMB Closing balance of accounts Proportion in the total balance of accounts Ending balance of bad debt Name receivable receivable at the end of the period reserves Total balances for the five 120,042,616 15% 2,400,853 largest accounts receivable Total 120,042,616 15% 2,400,853 4. Receivables Financing Unit: RMB Item Closing balance Opening balance Bank acceptance notes 303,344,206 258,296,826 Total 303,344,206 258,296,826 37 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 (1) As at 30 June 2020, receivables financing which have been endorsed or discounted by the Group but are not yet due are as follows: Unit: RMB Item Derecognised at the end of the period Not derecognisedat the end of the period Bank acceptance notes 1,539,034,476 Total 1,539,034,476 5. Advances to suppliers (1) Listed by aging analysis Unit: RMB Closing balance Opening balance Ageing Amount Proportion Amount Proportion within1year 118,737,125 99% 76,048,960 97% 1 to 2years 152,422 2,107,931 3% 2 to 3years 719,471 1% 39,136 over 3 years 36,035 Total 119,645,053 100% 78,196,027 100% As at June 30, 2020, advances to suppliers over 1 year with a carrying amount of RMB 907,928 (31 December 2019: RMB 2,147,067) were mainly prepaid to supplier for materials, which were not fully settled since the materials had not been received. (2) Top 5 of the closing balance of the advances to suppliers collected according to the target Unit: RMB Percentage in total advances to suppliers Balance balance Total balances for the five largest advances to suppliers 65,411,561 55% 6. Other receivables Unit: RMB Item Closing balance Opening balance Other receivables 201,571,781 202,854,864 Total 201,571,781 202,854,864 (1) Other receivables 1) Classification of other receivables by nature 38 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 Unit: RMB Nature Closing book balance Opening book balance Receivables from special fund for talent 171,000,000 171,000,000 Refundable deposits 10,070,032 11,767,626 Payments made on behalf of other parties 14,285,218 15,337,999 Petty cash 1,096,557 328,077 Advance payment (i) 11,688,142 11,710,142 Others 9,211,319 8,486,056 Total 217,351,268 218,629,900 (i) The subsidiaries of Yingde CBM Mining Co., Ltd. and Wujiang CSG Co., Ltd. mainly prepaid to supplier for materials. The prepayments accounts are transferred to other receivables and the provision of the bad debts was provided individually. 2)Withdrawal of bad debt provision Unit: RMB Phase I Phase II Phase III Expected credit Expected credit loss for the Expected credit loss for the Bad debt provision Total losses in the next 12 entire duration (no credit entire duration (credit months impairmentoccurred) impairment occurred) Balance on1 January2020 4,138,582 11,636,454 15,775,036 Balance on1 January2020 —— —— —— —— in current period --Transferred to the Phase II --Transferred to the Phase III -- Transferred back to the Phase II -- Transferred back to the Phase I Withdrawal 257,778 257,778 Recovery 231,327 22,000 253,327 Write-off Verification Other changes Balance on 30 June 2020 4,165,033 11,614,454 15,779,487 Significant changes in book balance of loss reserve during the current period □ Applicable √ Not applicable Disclosure by the ageing of other receivables 39 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 Unit: RMB Ageing Closing balance Within 1 year (including 1 year) 6,961,148 1 to 2 years 10,188,123 2 to 3 years 4,349,434 Over 3 years 195,852,563 3 to 4 years 451,392 4 to 5 years 10,871,496 Over 5 years 184,529,675 Total 217,351,268 3) Provision for bad debts withdrawn, recovered or reversed during the report period Provision for bad debts: Unit: RMB Amount of change in the current period Opening Category Collect or Closing balance balance Provision Write-off Others reversal Provision for bad debts of other 15,775,036 257,778 253,327 15,779,487 receivables Total 15,775,036 257,778 253,327 15,779,487 4) Top 5 of the closing balance of the other accounts receivable collated according to the arrears party Unit: RMB Proportion in the total balance of other Closing balance of Name of Company Nature of business Closing balance Ageing receivables at the bad debt provision end of the period Company A Independent third party 171,000,000 Over 5 years 79% 3,420,000 Governmental 11,067,754 4 to5Years 5% 221,355 departmentB Independent third party Company C Independent third party 10,366,164 4 to5Years 5% 10,366,164 Company D Independent third party 3,350,000 1 to 2 Years 2% 67,000 Company E Independent third party 2,397,512 1 to 2 Years 1% 47,950 Total -- 198,181,430 -- 92% 14,122,469 40 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 7. Inventories (1) Inventory classification Unit: RMB Closing balance Opening balance Reserve for depreciation Reserve for depreciation Item Carrying of inventory or Carrying of inventory or Book value Book value amount impairment of contract amount impairment of contract performance cost performance cost Raw materials 270,776,192 1,487,158 269,289,034 227,091,252 1,930,091 225,161,161 Products in 22,532,829 22,532,829 31,568,189 31,568,189 process Products in stock 705,280,634 45,143 705,235,491 521,700,720 3,873,252 517,827,468 Material in 40,125,601 550,221 39,575,380 38,315,093 550,221 37,764,872 circulation Total 1,038,715,256 2,082,522 1,036,632,734 818,675,254 6,353,564 812,321,690 (2)Provision for decline in the value of inventories Unit: RMB Increased in this term Decreased in this term Item Opening balance Closing balance Provision Others Reversal or write off Others Raw materials 1,930,091 442,933 1,487,158 Products in stock 3,873,252 3,828,109 45,143 Material in 550,221 550,221 circulation Total 6,353,564 4,271,042 2,082,522 8. Other current assets Unit: RMB Item Closing balance Opening balance VAT to be offset 125,977,050 110,370,231 Enterprise income tax prepaid 13,044,977 18,012,235 VAT input to be recognized 11,910,045 19,613,465 Entrusted loan 300,000,000 Others 230,675 41 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 Total 151,162,747 447,995,931 9. Fixed assets Unit: RMB Item Closing balance Opening balance Fixed assets 8,482,459,154 9,783,037,301 Total 8,482,459,154 9,783,037,301 (1) Particulars of fixed assets Unit: RMB Machinery and Item Buildings Motor vehicles Total equipment I. Original book value: 1. Opening balance 3,900,630,113 11,813,659,817 222,517,407 15,936,807,337 2. Increased amount of the period (1) Acquisition 207,518 34,552,139 7,211,529 41,971,186 (2) Transfers from construction in progress 26,614,987 105,629,819 584,150 132,828,956 (3) Others 455,280 284,873 802 740,955 3. Decreased amount of the period (1) Disposal or retirement 16,418,845 2,097,736 18,516,581 (2) Others 151,851,665 1,333,423,890 861,005 1,486,136,560 4. Closing balance 3,776,056,233 10,604,283,913 227,355,147 14,607,695,293 II. Accumulative depreciation 1. Opening balance 931,980,928 4,611,711,739 214,066,407 5,757,759,074 2. Increased amount of the period (1) Provision 59,548,593 361,387,999 9,081,210 430,017,802 3. Decreased amount of the period (1) Disposal or retirement 12,799,435 2,089,860 14,889,295 (2) Others 22,615,651 314,774,166 441,386 337,831,203 4. Closing balance 968,913,870 4,645,526,137 220,616,371 5,835,056,378 III. Depreciation reserves 1. Opening balance 14,224,161 381,739,978 46,823 396,010,962 2. Increased amount of the period (1) Provision 42 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 (2) Others 3. Decreased amount of the period (1) Disposal or retirement 2,378,007 2,378,007 (2) Others 103,453,194 103,453,194 4. Closing balance 14,224,161 275,908,777 46,823 290,179,761 IV. Book value 1. Closing book value 2,792,918,202 5,682,848,999 6,691,953 8,482,459,154 2. Opening book value 2,954,425,024 6,820,208,100 8,404,177 9,783,037,301 (2) Fixed assets with pending certificates of ownership Unit: RMB Item Carrying amount Reasons for not yet obtaining certificates of title Have submitted the required documents and are in the process of Buildings 698,738,711 application, or the related land use right certificate pending 10. Construction in process Unit: RMB Item Closing balance Opening balance Construction in process 3,116,834,966 1,902,140,035 Total 3,116,834,966 1,902,140,035 (1) Particulars of construction in process Unit: RMB Closing balance Opening balance Provision Provision Item for for Book balance Book value Book balance Book value impairment impairment loss loss Yichang CSG polysilicon 1,535,667,571 375,097,200 1,160,570,371 1,532,811,638 375,097,200 1,157,714,438 tech-innovation project Yichanglarge scale silicon block 527,236,005 103,453,194 423,782,811 construction project Qingyuan New MaterialsPhase I 421,097,466 421,097,466 technical transformation project Yichang display device company flat 386,459,678 14,160,474 372,299,204 366,268,866 14,160,474 352,108,392 43 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 panel display project Qingyuan CSG Ultra-clean electronic glass and ultra-white special glass 305,403,338 305,403,338 88,706,261 88,706,261 production line construction project Dongguan PV B Building 450MWPERC battery technology 202,018,364 202,018,364 upgrade projec 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 projects Wujiang float Environmental reforming 10,842,871 10,842,871 10,281,838 10,281,838 project LED Sapphire Substrate Project 32,420,412 32,420,412 32,420,412 32,420,412 Dongguan Solar New PV Tech Glass 4,901,694 4,901,694 4,727,020 4,727,020 Processing Project Zhaoqing CSG high grade energy 4,354,015 4,354,015 saving glass production line project Zhaoqing CSG high grade automobile 3,822,191 3,822,191 glass production line project Dongguan PV A Building 300MWPERC battery technology 3,735,197 3,735,197 67,981,191 67,981,191 upgrade project Anhui Lightweight &high-permeability panel for solar energy equipment 1,569,295 1,569,295 manufacturing base project Anhui Fengyang quartz sand project 78,489 78,489 Qingyuan quartz material processing 34,172,703 34,172,703 line Others 164,042,666 405,983 163,636,683 148,131,198 405,983 147,725,215 Total 3,682,620,247 565,785,281 3,116,834,966 2,364,472,122 462,332,087 1,902,140,035 44 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 (2)Construction in process in current period Unit: RMB Including: Proportion Accumulate amount Interest Transfer to between d amount of interest capitalizati Opening Increased this Closing Project Budget fixed assets engineering Progress Projects interest capitalizati on rate in Fund recourse balance term balance in this term input and capitalizatio on in current budget n current period period Yichang CSG polysilicon Internal fund 49,520,000 1,532,811,638 2,855,933 1,535,667,571 98% 100% tech-innovation project and bank loan Yichanglarge scale silicon Internal fund 29,010,000 527,436,978 200,973 527,236,005 15% 30% block construction project and bank loan Qingyuan New MaterialsPhase I technical 217,690,000 421,097,466 421,097,466 1% 1% Internal fund transformation project and bank loan Yichang display device company flat panel 1,970,000,000 366,268,866 20,844,397 626,202 27,383 386,459,678 90% 91% 12,611,762 1,051,620 4.10% Internal fund display project and bank loan Qingyuan CSG Ultra-clean electronic Internal fund glass and ultra-white 785,000,000 88,706,261 216,697,077 305,403,338 39% 65% 5,896,716 3,720,018 5.23% and bank loan special glass production line construction project Dongguan PV B Building Internal fund 100,990,000 202,220,467 202,103 202,018,364 1% 1% 450MWPERC battery and bank loan 45 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 technology upgrade projec Dongguan Solar Glass Phase I and II 396,410,000 78,970,995 78,970,995 80% 81% Internal fund improvement projects Wujiang float Environmental reforming 50,300,000 10,281,838 561,033 10,842,871 58% 99% Internal fund project LED Sapphire Substrate Internal fund 35,000,000 32,420,412 32,420,412 93% 93% 4,650,543 Project and bank loan Dongguan Solar New PV Tech Glass Processing 60,000,000 4,727,020 174,674 4,901,694 97% 100% Internal fund Project Zhaoqing CSG high grade energy saving glass 500,000,000 4,354,015 4,354,015 1% 1% Internal fund production line project and bank loan Zhaoqing CSG high grade automobile glass 609,830,000 3,822,191 3,822,191 1% 1% Internal fund production line project and bank loan Dongguan PV A Building 300MWPERC battery Internal fund 67,180,000 67,981,191 58,543,224 5,702,770 3,735,197 100% 100% 1,071,313 162,542 3.72% technology upgrade and bank loan project Anhui Lightweight Internal fund, &high-permeability panel private for solar energy 3,739,020,000 1,569,295 1,569,295 1% placement and equipment manufacturing bank loan base project 46 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 Anhui Fengyang quartz Internal fund 739,990,000 78,489 78,489 1% sand project and bank loan Qingyuan quartz material Internal fund 36,478,048 34,172,703 31,773,011 2,399,692 98% 99% processing line and bank loan Internal fund Others 698,449,399 148,131,198 59,742,696 41,886,519 1,944,709 164,042,666 295,421 20,020 and bank loan Total 10,084,867,447 2,364,472,122 1,461,454,711 132,828,956 10,477,630 3,682,620,247 -- -- 24,525,755 4,954,200 -- 47 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 11. Intangible assets (1) Particulars of intangible assets Unit: RMB Item Land use rights Patents Exploitation rights Others Total I. Original book value: 1. Opening balance 1,026,603,700 346,510,092 4,456,536 39,486,039 1,417,056,367 2. Increased amount of this period (1) Acquisition 87,344,000 2,195,526 89,539,526 (2) Internal R&D 134,119 134,119 (3) Increase in business combination 3. Decreased amount of the period (1) Disposal 4. Closing balance 1,113,947,700 346,644,211 4,456,536 41,681,565 1,506,730,012 II.Accumulated amortization 1. Opening balance 191,426,527 128,437,706 4,456,536 34,698,831 359,019,600 2. Increased amount of this period (1) Provision 10,630,998 14,968,785 1,314,674 26,914,457 3. Decreased amount of the period (1) Disposal 4. Closing balance 202,057,525 143,406,491 4,456,536 36,013,505 385,934,057 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 48 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 4. Closing balance 13,201,347 9,133 13,210,480 IV. Book value 1. Closing book value 911,890,175 190,036,373 5,658,927 1,107,585,475 2. Opening book value 835,177,173 204,871,039 4,778,075 1,044,826,287 At the end of the period, the intangible assets arising from internal research and development accounted for 16.97% of total of intangible assets. (2) Land use rights without property right certificates Unit: RMB Item Book value Reasonfor notyet obtaining certificates of title Land use rights 5,145,623 As at June 30, 2020, ownership certificates of land use right (“Land ownership Certificates”) for certain land use rights of the Group with carrying amounts of approximately RMB 5,145,623 (cost: RMB 6,685,352) had not yet been obtained by the Group (as at December 31, 2019, carrying amount: RMB 4,983,945, 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 Opening Internal Recognised Transfer to Closing Item balance development Others as intangible current profit balance expenditure assets and loss Development 85,240,356 24,206,452 134,119 109,312,689 expenditure Total 85,240,356 24,206,452 134,119 109,312,689 During Jan.-Jun. 2020, the total amount of research and development expenditures of the Group was RMB 169,270,099 (Jan.-Jun. 2019: RMB 190,082,381), including RMB 145,063,647 (Jan.-Jun. 2019: RMB 174,276,136) recorded in income statement for current period and the research and development expenditure with the amount of RMB 134,119recognised as intangible assets for the current period (Jan.-Jun. 2019: 19,782,076). At June 30, 2020, the intangible assets arising from internal research and development accounted for 16.97% of total of intangible assets (31 December 2019: 18.03%). 13. Goodwill (1) Book value of goodwill Unit: RMB 49 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 Name of the companies or goodwill item Opening balance Increased this term Decreased this term Closing balance Tianjin CSG Energy-Saving 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 (2) Goodwill impairment provision Unit: RMB Name ofthe companies or Increasedthis term Decreasedthis term Opening balance Closing balance goodwillitem Provision Disposal Shenzhen CSG Displayer 82,294,400 82,294,400 Total 82,294,400 82,294,400 14. Long-term prepaid expenses Unit: RMB Item Opening balance Increased this term Amortized this term Closing balance Expenses to be 11,351,431 581,194 821,736 11,110,889 amortized Total 11,351,431 581,194 821,736 11,110,889 15. Deferred income tax assets/deferred income tax liabilities (1) Unoffset deferred income tax assets Unit: RMB Closing balance Opening balance Item Deductible temporary Deferred income tax Deductible temporary Deferred income tax difference assets difference assets Provision for asset 861,194,739 131,770,639 864,645,227 131,772,057 impairments Deductible loss 592,014,209 95,895,112 497,964,481 83,129,146 Government grants 174,198,153 26,129,723 182,452,278 27,367,842 Accrued expenses 27,656,502 4,148,475 30,032,597 4,504,890 Depreciation of fixed 19,298,252 2,897,298 19,790,300 2,968,545 assets 50 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 Total 1,674,361,855 260,841,247 1,594,884,883 249,742,480 (2)Unoffset deferred income tax liabilities 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 485,789,467 74,369,021 494,317,001 74,147,550 Total 485,789,467 74,369,021 494,317,001 74,147,550 (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 deferred income tax deferred income tax deferred income tax deferred income tax Item assets and liabilities at assets or liabilities after assets and liabilities at assets or liabilities after the period-end off-set the period-beginning off-set Deferred tax assets 41,410,795 219,430,452 43,949,893 205,792,587 Deferred tax liabilities 41,410,795 32,958,226 43,949,893 30,197,657 (4) Details of unrecognised deferred income tax assets Unit: RMB Item Closing balance Opening balance Deductible losses 719,769,842 613,806,990 Total 719,769,842 613,806,990 (5) Deductible losses of unrecognized deferred income tax assets will due the following years Unit: RMB Year Closing balance Opening balance Note 2020 94,430,197 94,430,197 2021 111,625,585 111,625,585 2022 83,303,539 83,303,539 2023 146,238,837 146,238,837 2024 178,208,832 178,208,832 2025 105,962,852 51 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 Total 719,769,842 613,806,990 16. Other non-current assets Unit: RMB Closing balance Opening balance Item Impairment Impairment Book balance Book value Book balance Book value provision provision Prepayment of engineering equipment 97,628,519 97,628,519 88,489,893 88,489,893 Prepayment for lease of land use rights 6,510,000 6,510,000 31,910,000 31,910,000 Total 104,138,519 104,138,519 120,399,893 120,399,893 17. Short-term loans (1)Short-term loan classification Unit: RMB Item Closing balance Opening balance Mortgage loan 10,000,000 10,000,000 Guaranteed loan 576,423,055 543,969,137 Unsecured loan 718,000,000 1,687,000,000 Ultra short-term financing bills 300,000,000 Total 1,604,423,055 2,240,969,137 (i) On June 30, 2020, the Company provided guarantees for short-term loans of RMB 576,423,055(31 December 2019: RMB 543,969,137). There was no counter-guarantee provided by the minority shareholders of the subsidiary to the Company (31 December 2019: Nil). 18. Notes payable Unit: RMB Category Closing balance Opening balance Bank acceptance notes 187,639,865 232,063,968 Total 187,639,865 232,063,968 19. Accounts payable (1) Particulars of accounts payable Unit: RMB 52 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 Item Closing balance Opening balance Materials payable 855,846,830 728,499,891 Equipment payable 164,444,946 174,902,946 Construction expenses payable 125,197,391 93,584,879 Freight payable 73,675,926 68,149,272 Utilities payable 42,512,406 28,835,685 Others 6,203,556 6,559,106 Total 1,267,881,055 1,100,531,779 (2) Significant accounts payabledue for over one year Unit: RMB Item Closing balance Unpaid reason As the construction work had not passed the final Construction and equipments 178,218,319 acceptance test yet, the balance was not yet settled. Total 178,218,319 -- 20. Contract liabilities Unit: RMB Item Closing balance Opening balance Contract liabilities 269,082,855 Total 269,082,855 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 337,855,741 636,638,977 759,536,886 214,957,832 benefitspayable II. Welfare after departure- 10,505 20,924,069 16,390,997 4,543,577 defined contribution plans III.Termination benefits 18,479,127 7,123,660 11,355,467 Total 337,866,246 676,042,173 783,051,543 230,856,876 53 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 (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, 317,472,525 597,408,203 728,582,110 186,298,618 allowances and subsidies 2. Social security contributions 5,447 14,662,344 12,728,870 1,938,921 Including: Medical insurance 4,834 13,257,165 11,556,846 1,705,153 Work injury insurance 234 307,922 274,294 33,862 Maternity insurance 379 1,097,257 897,730 199,906 3. Housing funds 2,156,229 17,470,672 12,416,687 7,210,214 4.Labour union funds and employee 18,221,540 7,097,758 5,809,219 19,510,079 education funds Total 337,855,741 636,638,977 759,536,886 214,957,832 (3) List of defined contribution plans Unit: RMB Item Opening balance Increased this term Decreased this term Closing balance 1. Basic pensions 10,401 20,142,273 15,773,620 4,379,054 2. Unemployment insurance 104 781,796 617,377 164,523 Total 10,505 20,924,069 16,390,997 4,543,577 22. Tax payable Unit: RMB Item Closing balance Opening balance Value-added-tax payable 46,232,466 45,587,584 Corporate income tax payable 66,981,225 49,932,889 Individual income tax payable 2,557,384 5,451,521 City maintenance and construction tax 3,332,449 3,629,966 Property tax 8,456,536 4,270,528 Education surcharge 2,716,684 2,726,651 Environmental tax payable 1,947,086 1,712,052 Others 3,417,503 2,113,853 Total 135,641,333 115,425,044 54 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 23. Other payables Unit: RMB Item Closing balance Opening balance Interest payable 108,653,849 73,251,086 Dividend payable 2,985,563 Other payables 162,047,977 275,138,126 Total 270,701,826 351,374,775 (1) Interest payable Unit: RMB Item Closing balance Opening balance Interest payable for long-term borrowings 68,592,227 66,701,561 and medium-term notes Interest payable forcorporate bonds 32,333,333 Interest payable for short-term borrowings 3,528,289 6,549,525 Interest payable for ultra short-term 4,200,000 financing bills Total 108,653,849 73,251,086 (2)Dividends payable Unit: RMB Item Closing balance Opening balance Restricted shares dividend 2,985,563 Total 2,985,563 (3) Other payables 1) Listing other payables by nature of the payment Unit: RMB Item Closing balance Opening balance Guarantee deposits received from 76,123,502 75,417,942 construction contractors Accrued cost of sales 44,046,421 43,270,188 Payable for contracted labour costs 17,091,373 17,947,192 Temporary receipts 15,895,634 12,276,662 55 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 Deposit for disabled 6,016,454 4,735,246 Restricted share repurchases obligation 118,066,397 Others 2,874,593 3,424,499 Total 162,047,977 275,138,126 24. Current portion of non-current liabilities Unit: RMB Item Closing balance Opening balance Current portion of long-term borrowings 25,350,000 125,475,000 Current portion of finance lease 67,489,388 386,981,928 Medium term notes due within 1 year 2,000,000,000 1,200,000,000 Total 2,092,839,388 1,712,456,928 25. Other current liabilities Unit: RMB Item Closing balance Opening balance Others 300,000 300,000 Total 300,000 300,000 26. Long-term borrowings (1) Long-term loan classification Unit: RMB Item Closing balance Opening balance Guaranteed 175,200,269 190,225,000 Unsecured 500,000,000 330,000,000 Medium term notes 800,000,000 Total 675,200,269 1,320,225,000 As at 30 June 2020, the interest of long-term borrowings varied from4.60%-4.75% (31 December 2019:4.70%-7%). 27. Bonds payable (1) Bonds payable Unit: RMB Item Closing balance Opening balance 56 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 Bonds payable 1,991,652,870 Total 1,991,652,870 On February 24, 2020, the Company held the eighth meeting of the Eighth Board of Directors and the eighth meeting of the Eighth Board of Supervisors, which deliberated and approved the Proposal on the Public Issuance of Corporate Bonds to Qualified Investors, and was deliberated and approved by the First Extraordinary General Meeting of Shareholders of 2020 on March 12, 2020. Public issuance of corporate bonds with a total face value of no more than RMB 2 billion was approved by China Securities Regulatory Commission " ZJXK [2019] No. 1140". On March 24, 2020 and March 25, 2020, the Company issued 3-year corporate bonds with an annual interest rate of 6%. (2) Increase or decrease of bonds payable (excluding preferred shares, perpetual bonds and other financial instruments classified as financial liabilities) Unit: RMB Interest Amortization Face Amount of Opening Issue in the Current Closing Name Issue date Term accrued at of premium value issue balance period repayment balance face value and discount 20 2020-3-24 3 CSG 100 to 2,000,000,000 2,000,000,000 32,333,333 8,347,130 0 1,991,652,870 years 01 2020-3-25 Total -- -- -- 2,000,000,000 2,000,000,000 32,333,333 8,347,130 0 1,991,652,870 28. Long-term account payable Unit: RMB Item Closing balance Opening balance Long-term account payable 53,006,500 87,240,529 Total 53,006,500 87,240,529 (1) List of Long-term account payable by nature Unit: RMB Item Closing balance Opening balance Financial lease 53,006,500 87,240,529 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, 2020, the real interest rate of financing lease loans is 4.60%-5.23%. 29. Deferred income Unit: RMB Increase in current decrease in current Item Opening balance Closing balance Reason period period 57 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 Government grants 513,925,557 3,000,000 17,118,391 499,807,166 Total 513,925,557 3,000,000 17,118,391 499,807,166 -- Projects involving government subsidies: Unit: RMB Account to Amount of cost Increase in Included in Related to Opening other inco and expense Other Closing Item in debt current non-business assets or balance me in this written down in changes balance period income income period current period Tianjin CSG Golden 46,967,335 1,687,446 45,279,889 Assets related Sun Project (i) Dongguan CSG Golden Sun Project 37,826,250 1,375,500 36,450,750 Assets related (ii) Hebei CSG Golden 38,500,000 1,375,000 37,125,000 Assets related Sun Project (iii) Xianning CSG Golden Sun Project 41,921,917 1,515,250 40,406,667 Assets related (iv) Infrastructure compensation for 31,545,822 2,020,769 29,525,053 Assets related Wujiang CSG Glass Co., Ltd (v) Qingyuan Energy-saving 15,849,167 1,035,365 14,813,802 Assets related project (vi) Yichang Silicon products project 16,171,875 1,406,250 14,765,625 Assets related (vii) Yichang CSG silicon slice 15,275,961 560,194 14,715,767 Assets related auxiliary project (viii) Sichuan energy-saving glass 7,167,420 827,010 6,340,410 Assets related project (ix) Group coating film experimental project 3,758,760 931,190 2,827,570 Assets related (x) Yichang CSG 45,767,648 1,267,240 44,500,408 Assets related Display project (xi) 58 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 Xianning Photoelectric project 7,280,000 260,000 7,020,000 Assets related (xii) Group talent fund Income 171,000,000 171,000,000 project (xiii) related Assets and 34,893,402 3,000,000 2,857,177 35,036,225 income Others related Total 513,925,557 3,000,000 17,118,391 499,807,166 Other statement: (i)The allowance was granted by Tianjin Municipal Government. The allowance was used for establishing PV power station by Tianjin CSG Energy-Saving Glass Co., Ltd. The facilities belonged to Tianjin CSG upon completion. The allowance will be credited to income statement in 20 years, the useful life of the PV power station. (ii)The allowance was granted by Dongguan Municipal Government. The allowance was used for establishing PV power station by Dongguan CSG Architectural Glass Co., Ltd. The facilities belonged to Dongguan CSG upon completion. The allowance will be credited to income statement in 20 years, the useful life of the PV power station. (iii)The allowance was granted by Langfang Municipal Government. The allowance was used for establishing PV power station by Hebei CSG Glass Co., Ltd. ("Hebei CSG"). When the facilities were set up, they belonged to Hebei CSG. The allowance will be credited to income statement in 20 years, the useful life of the PV power station. (iv)The allowance was granted by Xianning Municipal Government. The allowance was used for establishing PV power station by Xianning CSG Glass Co., Ltd. The facilities belonged to Xianning CSG upon completion. The allowance will be credited to income statement in 20 years, the useful life of the PV power station. (v)The allowance was infrastructure compensation granted by Wujiang municipal government, and will be credited to income statement in 15 years, the shortest operating period as committed by the Group. (vi)The allowance was a pilot project for strategic emerging industry clusters development, which was used to establish high performance ultra-thin electronic glass production lines by Qingyuan CSG. The allowance will be credited to income statement in 10 years, the useful life of the production line. (vii)The balance represented amounts granted to Yichang CSG polysilicon Co., Ltd. by Yichang City Dongshan Development Corporation under the provisions of the investment contract signed between the Group and the Municipal Government of Yi Chang. The proceeds were designed for the construction of electricity transformer and the pipelines. Yichang polysilicon is entitled to the ownership of 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 polysilicon from the acquiring of the assets and liabilities of Crucible project of Yichang Hejing Photoelectric Ceramic Co., Ltd. The proceeds would be amortised and credited to income statement by 16 years after related assets were put into use. (ix)It represented the funds granted by Chengdu local government for energy glass project. It will be amortised and credited to income 59 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 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 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. (xii) It represented the funds granted by Xianning Government of the Project supporting fund for photoconductive glass production line, which is used to pay for Xianning CSG Glass Co., Ltd. constructing the project of photoelectric optical glass production line. After the completion of the production line, the ownership belongs to Xianning photoelectric. The allowance will be credited to income statement in 8 years, the useful life of the production line. (xiii)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, fund of RMB171 million was set up, as a special fund for talent introduction and housing resettlement. 30. Share Capital Unit: RMB Changed in the report period (+,-) Opening Closing Transferred balance New issues Bonusissue Others Sub-total balance fromreserves Total ofcapital 3,106,915,005 -36,222,898 -36,222,898 3,070,692,107 shares 31.Capital surplus Unit: RMB Item Opening balance Increased this term Decreased this term Closing balance Capital premium (Share premium) 738,834,850 86,222,273 652,612,577 Other capital surplus -55,615,492 -55,615,492 Total 683,219,358 86,222,273 596,997,085 On April 28, 2020, the Company held the 11th Meeting of the Eighth Board of Directors and the 11th 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 HadNot Reached the Unlocking Condition of the ThirdUnlock Period, and agreed to repurchase and cancel the total of 909,936 shares of all restricted stocks held by14 unqualified original incentives, as well as the total of 35,312,962 shares of 451 incentive objects that did not meet the unlocking conditions of the third unlock period.The independent directors of the Company issued a consent opinion. And on May 21, 2020, the proposals were approved by the 2019 Annual General Meeting of Shareholders. As of June 16, 2020, the Company had completed 60 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 the cancellation procedures for the above-mentioned restricted stocks in Shenzhen Branch of China Securities Depository and Clearing Corporation Limited. 32. Treasury shares Unit: RMB Item Opening balance Increased this term Decreased this term Closing balance Obligations of restricted share buybacks(i) 118,066,397 118,066,397 Total 118,066,397 118,066,397 The Company calculated the amount determined based on the number of restricted shares issued and the corresponding repurchase price, and confirmed the liabilities and treasury shares. The decrease in treasury shares was mainly due to the repurchase of the restricted sharesduring the report period. 33. Other comprehensive income Unit: RMB Occuring in current period Less: Amount Less: Amount transferred transferred into into profit and retained loss in the Opening Amount earnings in the Less: After-tax After-tax Closing Item current period balance incurred current period income attribute to attribute to balance that before that recognized tax the parent minority recognized income tax into other expense company shareholder into other comprehensive comprehensiv income in prior e income in period prior period I. Other comprehensive income items which can not be reclassified to profit or loss II. Other comprehensive income items which will 6,565,864 1,366,772 1,366,772 7,932,636 be reclassified to profit or loss Differences on translation of foreign 4,015,864 1,366,772 1,366,772 5,382,636 currency financial statements Finance incentives for 2,550,000 2,550,000 61 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 energy and technical transformation Total of other 6,565,864 1,366,772 1,366,772 7,932,636 comprehensive income 34. Special reserves Unit: RMB Item Opening balance Increased this term Decreased this term Closing balance Safety production cost 11,102,921 436,183 10,666,738 Total 11,102,921 436,183 10,666,738 35. Surplus reserves Unit: RMB Item Beginning of term Increased this term Decreased this term End of term Statutory surplus reserve 818,398,718 818,398,718 Discretionary surplus 127,852,568 127,852,568 reserve Total 946,251,286 946,251,286 36. Undistributed profits Unit: RMB Item The current period The same period of last year Retained earnings at the end of the previous term 4,859,600,841 4,486,264,723 before adjustment Retained earnings at the beginning of this term 4,859,600,841 4,486,264,723 after adjustment Add: net profits belonging to equity holders of the 391,466,723 377,342,401 Company Less:Appropriations to statutory surplus reserve Common stock dividends payable 211,962,885 141,207,035 Retained earnings in the end 5,039,104,679 4,722,400,089 37. Revenue and cost of sales Unit: RMB Occurred in current term Occurred in previous term Item Revenue Cost Revenue Cost 62 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 Revenue from main 4,384,952,565 3,156,673,458 4,850,355,669 3,668,177,768 operations Revenue from other 39,268,784 2,893,573 37,881,909 3,199,057 operations Total 4,424,221,349 3,159,567,031 4,888,237,578 3,671,376,825 38. Tax and surcharge Unit: RMB Item Occurred in current term Occurred in previous term City maintenance and construction tax 13,417,822 15,651,946 Educational surcharge 11,582,943 13,026,844 Housing property tax 14,336,199 15,524,671 Land use rights 6,477,593 6,750,190 Environmental protection tax 3,590,774 4,518,549 Others 2,933,061 1,215,797 Total 52,338,392 56,687,997 39. Sales Expenses Unit: RMB Item Occurred in current term Occurred in previous term Freight expenses 68,005,806 76,898,158 Employee benefits 65,900,124 66,858,153 Entertainment expenses 5,966,150 7,648,722 Business travel expenses 2,646,504 5,382,042 Vehicle use fee 3,267,556 3,898,844 Rental expenses 3,280,632 3,374,917 Depreciation expenses 464,897 446,163 Others 12,107,865 7,996,400 Total 161,639,534 172,503,399 40. Administrative Expenses Unit: RMB Item Occurred in current term Occurred in previous term Employee benefits 154,039,065 168,542,149 Depreciation expenses 30,983,197 32,466,946 63 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 Amortization of intangible assets 26,914,457 26,121,476 General office expenses 11,476,149 9,380,061 Labour union funds 7,058,240 7,121,128 Entertainment fees 4,133,275 5,308,266 Business travel expenses 1,800,471 4,513,036 Utility fees 2,887,017 3,597,714 Vehicle use fee 2,011,558 2,421,233 Consulting advisers 7,668,560 15,564,251 Factory shutdown losses 42,910,507 Others 25,536,911 17,826,095 Total 317,419,407 292,862,355 41. Research and development expenses Unit: RMB Item Occurred in current term Occurred in previous term Research and development expenses 145,063,647 174,276,136 Total 145,063,647 174,276,136 42. Finance Expenses Unit: RMB Item Occurred in current term Occurred in previous term Interest on borrowings 157,133,164 175,240,871 Less: Capitalised interest 4,954,200 4,209,266 Interest expenses 152,178,964 171,031,605 Less: Interest income 24,931,363 14,923,375 Exchange losses -499,379 -1,574,396 Others 4,994,975 4,533,025 Total 131,743,197 159,066,859 43. Other income Unit: RMB Source of other gains Occurred in current term Occurred in previous term Government subsidy amortization 17,118,391 76,730,356 Industry support funds 3,698,000 14,640,420 64 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 Government incentive funds 13,973,402 6,133,101 Research grants 5,613,820 3,859,699 Others 7,605,713 6,391,837 Total 48,009,326 107,755,413 44. Credit impairment losses Unit: RMB Item Occurred in current term Occurred in previous term Losses on bad debts of other receivables 4,451 Losses on bad debts of accounts receivable 2,957,469 Total 2,961,920 45. Asset impairment losses Unit: RMB Item Occurred in current term Occurred in previous term I. Bad debt loss 3,765,670 II. Decline in the value of inventories -154,053 Total -154,053 3,765,670 46. Asset disposal income Unit: RMB Source of income from assets disposal Occurred in current term Occurred in previous term Gains on disposal of assets -342,005 370,969 47. Non-operating income Unit: RMB Amount of non-recurring gain and Item Occurred in current term Occurred in previous term loss included in the report period Government subsidy 100,000 100,000 Compensation income 580,519 2,723,039 580,519 Amounts unable to pay 876,291 353,473 876,291 Others 661,321 589,803 661,321 Total 2,218,131 3,666,315 2,218,131 Government subsidies included in current profit and loss: 65 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 Unit: RMB Affect the Occurred Asset Reasons Special Subsidy profit and loss Occurred in in related / Subsidy payer for Type subsidy projects of the current current term previous income subsidy or not year or not term related Shenzhen Luohu Epidemic District Bureau Income prevention of industry and Subsidy Epidemic prevention subsidy No No 100,000 0 related subsidy information technology 48. Non-operating expenses Unit: RMB Amount of non-recurring gain and loss Item Occurred in current term Occurred in previous term included in the report period Donation 17,496,945 1,565,000 17,496,945 Compensation 20,600 4,077,304 20,600 Others 18,008 650,923 18,008 Total 17,535,553 6,293,227 17,535,553 49. Income tax expenses (1) List of income tax expenses Unit: RMB Item Occurred in current term Occurred in previous term Current income tax expenses 94,992,504 68,977,764 Deferred income tax expenses -10,877,296 7,480,976 Total 84,115,208 76,458,740 (2) Adjustment process of accounting profit and income tax expense Unit: RMB Item Occurred in current term Total profit 485,992,173 Current income tax expense accounted by tax and relevant regulations 67,999,384 Costs, expenses and losses not deductible for tax purposes 387,278 Impact on the use of deductible loss of deferred income tax assets not -966,760 66 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 recognized in previous period Influence of deductible temporary difference or deductible losses of 26,490,713 unrecognized deferred income tax assets Balance the previous year income tax adjustment -6,388,091 Impact of tax incentives -3,407,316 Income tax expenses 84,115,208 50. Other comprehensive income See the note for details. 51. Items of the cash flow statement (1) Other cash received related to operating activities Unit: RMB Item Occurred in current term Occurred in previous term Interest income 24,931,363 14,923,375 Government grant 33,990,935 42,825,057 Others 10,774,006 11,580,256 Total 69,696,304 69,328,688 (2) Other cash paid related to operating activities Unit: RMB Item Occurred in current term Occurred in previous term Freight expenses 74,815,811 89,770,136 General office expenses 17,610,516 16,108,811 Business travel expenses 6,371,021 12,052,639 Entertainment fees 10,976,482 13,964,607 Vehicle use fee 5,738,312 6,995,143 Commission 4,994,975 4,533,025 Insurance 9,758,524 9,534,154 Research and development expenses 15,358,169 16,850,014 Maintenance fee 10,630,309 14,530,543 Rental expenses 7,252,265 5,861,795 Consulting fees 5,151,892 10,062,588 Others 111,215,442 114,284,452 67 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 Total 279,873,718 314,547,907 (3) Other cash received related to investment activities Unit: RMB Item Occurred in current term Occurred in previous term Deposit 198,380 5,471,303 Income from trial production of construction in progress 27,868,724 30,851,703 Recovery of investment funds 300,000,000 Total 328,067,104 36,323,006 (4) Other cash paid related to investment activities Unit: RMB Item Occurred in current term Occurred in previous term Trial production expenditure in construction 21,848,237 44,089,887 Total 21,848,237 44,089,887 (5) Other cash received related to financing activities Unit: RMB Item Occurred in current term Occurred in previous term Income from financing leases 200,000,000 Collect entrusted loan 300,000,000 Collection of income tax of dividends of A-share & B-share 154,376 Deposit 298,227 Total 298,227 500,154,376 (6) Other cash paid related to financing activities Unit: RMB Item Occurred in current term Occurred in previous term Repay financing leases 357,808,728 515,199,702 Equity incentive repurchase payment 122,445,171 139,978,039 Payment for deposit and margin 147,843,719 Payment formargin and fees of loansandbills 3,050,301 5,746,178 Pay individual income tax on dividends of A and B shares 53,939 Total 483,358,139 808,767,638 68 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 52. 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 401,876,965 386,739,067 Add: Provisions for assets impairment -154,053 3,765,670 Credit impairment loss 2,961,920 Depreciation of fixed assets 430,017,802 445,268,018 Amortization of intangible assets 26,914,457 26,121,476 Amortization of long-term prepaid expenses 821,736 881,546 Losses on disposal of fixed assets intangible assets and other 342,005 -370,969 long-term assets (“- “for gains) Finance expenses (“- “for gains) 152,178,964 171,031,605 Decrease in deferred tax assets (“- “for increase) -13,637,865 -2,206,249 Increase of deferred income tax liability (“- “for decrease) 2,760,569 9,687,225 Decrease of inventory (“- “for increase) -220,040,002 -133,241,843 Decrease of operational receivable items (“- “for increase) -154,063,031 -157,088,345 Increase of operational payable items (“- “for decrease) 150,101,105 1,853,269 Others -436,183 15,541,995 Net cash flow generated by business operation 779,644,389 767,982,465 2. Significant investment and financing activities that do not involve -- -- cash receipts and payments: 3. Net change of cash and cash equivalents -- -- Balance of cash at period end 3,071,655,971 1,744,240,866 Less: Initial balance of cash 1,831,835,030 2,225,126,913 Net increasing of cash and cash equivalents 1,239,820,941 -480,886,047 (2) Formation of cash and cash equivalents Unit: RMB Item Closing balance Opening balance I. Cash 3,071,655,971 1,831,835,030 Incl: Cash on hand 3,393 4,268 Bank deposits that can be readily drawn on demand 2,891,652,578 1,781,830,762 69 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 Other cash balances that can be readily drawn on demand 180,000,000 50,000,000 II. Balance of cash and cash equivalents at the end of the period 3,071,655,971 1,831,835,030 53. Notes to items in statement of changes in owner's equity □ Applicable √ Not applicable 54. Assets with restricted ownership or use rights Unit: RMB Item Ending book value Reason for restriction Monetary assets 3,317,673 Restricted deposit flow Fixed assets 478,620,783 Limited finance lease Total 481,938,456 -- 55. 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 -- -- 50,983,859 Incl: HKD 9,220,760 0.9134 8,422,242 USD 5,973,317 7.0795 42,288,101 EUR 33,653 7.9610 267,908 JPY 26,261 0.0658 1,728 AUD 797 4.8657 3,880 Accounts receivable -- -- 93,365,388 Incl: HKD 2,462,433 0.9134 2,249,186 USD 11,795,686 7.0795 83,507,560 EUR 955,739 7.9610 7,608,642 Short-term borrowings -- -- 97,903,962 Incl: HKD 75,000,000 0.9134 68,505,000 USD 4,152,689 7.0795 29,398,962 Accounts payable -- -- 39,913,201 Incl: HKD 91,624 0.9134 83,689 70 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 USD 4,700,244 7.0795 33,275,379 EUR 770,864 7.9610 6,136,851 JPY 6,341,672 0.0658 417,282 Contractual liabilities -- -- 27,174,183 Incl: HKD 11,673,237 0.9134 10,662,335 USD 2,324,908 7.0795 16,459,186 EUR 6,615 7.9610 52,662 (2) Description of overseas business entities, including for important overseas business entities, their main overseas business locations, recording currency and selection basis shall be disclosed, as well as the reasons for changes in recording currency if recording currency changed. □ Applicable √Not applicable 56. Hedging □ Applicable √Not applicable 57. Government subsidy (1) Basic situation of government subsidies Unit: RMB Amount included in current Type Amount Presentation project profit and loss Government subsidy amortization 17,118,391 Other income 17,118,391 Other government subsidies 30,890,935 Other income 30,890,935 Other government subsidies 100,000 Non operating income 100,000 Total 48,109,326 48,109,326 58. Others □ Applicable √Not applicable VIII. The changes of consolidation scope 1. Changes in scope of consolidation for other reasons On January7, 2020, the Group set up a subsidiary, CSG (Thailand) Co., Ltd. As of June 30, 2020, the Group has invested USD 808,000. The Group owns 100% of its equity. 71 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 On February5, 2020, the Group set up a subsidiary, Anhui CSG New Energy Materials Technology Co., Ltd.As of June 30, 2020, the Group has invested RMB 3million. The Group owns 100% of its equity. On February8, 2020, the Group set up a subsidiary, Anhui CSG New Quartz Material Co., Ltd.As of June 30, 2020, As of June 30, 2020, the Group has invested RMB 3million. The Group owns 100% of its equity. On February10, 2020, the Group set up a subsidiary, Shenzhen CSG Medical Technology Co., Ltd.As of June 30, 2020, As of June 30, 2020, the Group has invested RMB 20 million. The Group owns 100% of its equity. IX. Interest in other entities 1. Interest in subsidiary (1) Composition of the Group Major business Place of Shareholding (%) Way of Name of subsidiary Scope of business location registration Direct Indirect acquicition Development, production and Chengdu CSG Chengdu, PRC Chengdu, PRC 75% 25% Establishment sales of special glass Development, production and Sichuan CSG Energy Chengdu, PRC Chengdu, PRC sales of special glass and 75% 25% Split-off Conservation processing of glass Tianjin Energy Development, production and Tianjin, PRC Tianjin, PRC 75% 25% Establishment Conservation sales of special glass Dongguan CSG Dongguan, PRC Dongguan, PRC Intensive processing of glass 75% 25% Establishment Engineering Production and sales of solar Dongguan CSG Solar Dongguan, PRC Dongguan, PRC 75% 25% Establishment glass Production and sales of hi-tech Dongguan CSG PV-tech Dongguan, PRC Dongguan, PRC 100% Establishment green battery and components Yichang CSG Production and sales of Yichang, PRC Yichang, PRC 75% 25% Establishment Polysilicon high-purity silicon materials Wujiang CSG Wujiang, PRC Wujiang, PRC Intensive processing of glass 75% 25% Establishment Engineering Production and sales of special Hebei CSG Yongqing, PRC Yongqing, PRC 75% 25% Establishment glass Production and sales of special Wujiang CSG Wujiang, PRC Wujiang, PRC 100% Establishment glass China Southern Glass Hong Kong, Hong Kong, Investment holding 100% Establishment (Hong Kong) Limited PRC PRC 72 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 Production and sales of Hebei Shichuang Yongqing, PRC Yongqing, PRC 100% Establishment ultra-thin electronic glass Production and sales of special Xianning CSG Xianning, PRC Xianning, PRC 75% 25% Establishment glass Xianning CSG Xianning, PRC Xianning, PRC Intensive processing of glass 75% 25% Split-off Energy-Saving Qingyuan CSG Production and sales of Qingyuan, PRC Qingyuan, PRC 100% Establishment Energy-Saving ultra-thin electronic glass Shenzhen CSG Financial Leasing Co., Shenzhen, PRC Shenzhen, PRC Finance leasing, etc. 75% 25% Establishment Ltd. Jiangyou CSG Mining Production and sales of silica Jiangyou, PRC Jiangyou, PRC 100% Establishment Development Co., Ltd. and its by-products Shenzhen CSG PV Investment management of Shenzhen, PRC Shenzhen, PRC 100% Establishment Energy Co., Ltd. photovoltaic plant Qingyuan CSG New Clean energy development, Qingyuan, PRC Qingyuan, PRC 100% Establishment Energy Co., Ltd. photovoltaic power generation Suzhou CSG PV-tech Clean energy development, Wujiang, PRC Wujiang, PRC 100% Establishment Co., Ltd. photovoltaic power generation Wujiang CSG New Clean energy development, Wujiang, PRC Wujiang, PRC 100% Establishment Energy Co., Ltd. photovoltaic power generation Yichang CSG New Clean energy development, Yichang, PRC Yichang, PRC 100% Establishment Energy Co., Ltd photovoltaic power generation Production and sales of display Shenzhen CSG Display Shenzhen, PRC Shenzhen, PRC 60.8% Acquisition component products Xianning CSG Photoelectric glass and high Xianning, PRC Xianning, PRC 50% 50% Acquisition Photoelectric aluminium glass ZhaoqingEnergy-Saving Production and sales of special Zhaoqing, PRC Zhaoqing, PRC 100% Establishment Glass glass Zhaoqing Automobile Production and sales of special Zhaoqing, PRC Zhaoqing, PRC 100% Establishment Glass glass Sales, research and development Shenzhen CSG Medical Shenzhen, PRC Shenzhen, PRC 100% Establishment of medical masks, etc Develop, manufacture and sell Anhui CSG New key materials or complete sets Anhui, PRC Anhui, PRC 100% Establishment Energy Materials of equipment for new energy power generation Anhui CSG New Quartz Quartzite mining, processing, Anhui, PRC Anhui, PRC 100% Establishment material purification, sales 73 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 (2)Important non-wholly owned subsidiary Unit: RMB Shareholding of Total profit or loss attributable to Dividends distributed to Minority interest Subsidiaries minority minority shareholders for the year minority interests for the as at 30 June shareholders ended 30 June 2020 year ended 30 June 2020 2020 Shenzhen CSG Display 39.20% 9,831,670 350,797,051 (3) Major financial information of important non-wholly owned subsidiaries Unit: RMB Closing balance Name of Current Non-current Subsidiary Total assets Current liabilities Non-current liabilities Total liabilities assets assets 225,448,197 1,417,146,203 1,642,594,400 613,555,840 93,098,021 706,653,861 Opening balance Shenzhen CSG Current Non-current Display Total assets Current liabilities Non-current liabilities Total liabilities assets assets 215,814,081 1,426,057,340 1,641,871,421 612,571,719 118,439,954 731,011,673 Unit: RMB Occurred in current term Occurred in previous term Cash flows Cash flows Name of Total Total from from Subsidiary Revenue Net profit comprehensive Revenue Net profit comprehensiv operating operating income e income activities activities Shenzhen CSG 212,884,437 25,080,790 25,080,790 61,513,296 276,594,464 22,096,117 22,096,117 47,005,530 Display 2. Equity in structured entities not included in the consolidated financial statements Related description of structured entities not included in the scope of consolidated financial statements: □ Applicable √Not applicable 3. Other □ Applicable √Not applicable 74 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 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 adjusts settlement currency of export business, to furthest reduce the currency risk. As at 30 June 2020, the carrying amounts in RMB equivalent of the Group’s assets and liabilities denominated in foreign currencies are summarized below: 30 June 2020 USD HKD Others Total Financial assets denominated in foreign currency- Cash at bank and on hand 42,288,101 8,422,242 273,516 50,983,859 Receivables 83,507,560 2,249,186 7,608,642 93,365,388 Total 125,795,661 10,671,428 7,882,158 144,349,247 Financial liabilities denominated in foreign currency Short-term borrowings 29,398,962 68,505,000 97,903,962 Payables 33,275,379 83,689 6,554,133 39,913,201 Total 62,674,341 68,588,689 6,554,133 137,817,163 31 December 2019 USD HKD Others Total Financial assets denominated in foreign currency- Cash at bank and on hand 41,907,573 3,907,829 354,589 46,169,991 Receivables 80,789,758 1,487,715 7,527,045 89,804,518 Total 122,697,331 5,395,544 7,881,634 135,974,509 Financial liabilities denominated in foreign currency Short-term borrowings 4,938,410 67,185,000 72,123,410 75 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 Payables 39,609,462 275 11,628,253 51,237,990 Total 44,547,872 67,185,275 11,628,253 123,361,400 As at 30 June 2020, 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 RMB5,365,312 lower/higher (31 December 2019: approximately RMB6,642,704 lower/higher) for various financial assets and liabilities denominated in USD. As at 30 June 2020, 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 RMB4,922,967 higher/lower (31 December 2019: approximately RMB5,252,127higher/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 interestbearing 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 floati ng rate contracts depending on the prevailing market conditions. As at 30 June 2020, the Group’s long-term interest-bearing debt at variable rates and fixed rates as illustrated below: Type 30 June 2020 31 December 2019 Debt at fixed rates 2,414,353,139 951,975,000 Debt at variable rates 252,500,000 368,250,000 Total 2,666,853,139 1,320,225,000 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 76 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 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 2020, the Group had net current liabilities of approximately RMB161million and committed capital expenditures of approximately RMB 550million. 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 monitor 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 2020 Within 1 year 1 to 2 years 2 to 5 years Over 5 years Total Short-term borrowings 1,628,874,284 1,628,874,284 Notes payable 187,639,865 187,639,865 Accounts payable 1,267,881,055 1,267,881,055 Other payables 270,701,826 270,701,826 Other current liabilities 300,000 300,000 Non-current liabilities due within 2,144,276,826 2,144,276,826 one year Long-term payables 53,006,500 53,006,500 Long-term borrowings 31,768,162 647,116,172 17,081,456 23,994,667 719,960,457 Bonds payable 120,000,000 120,000,000 2,088,109,589 2,328,109,589 Total 5,651,442,018 820,122,672 2,105,191,045 23,994,667 8,600,750,402 31 December 2019 Within 1 year 1 to 2 years 2 to 5 years Over 5 years Total Short-term borrowings 2,279,068,830 2,279,068,830 Notes payable 232,063,968 232,063,968 77 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 Accounts payable 1,100,531,779 1,100,531,779 Other payables 351,374,775 351,374,775 Other current liabilities 300,000 300,000 Non-current liabilities due within 1,749,763,512 1,749,763,512 one year Long-term payables 87,240,529 87,240,529 Long-term borrowings 81,253,313 1,338,406,582 19,752,667 1,439,412,562 Total 5,794,356,177 1,425,647,111 19,752,667 7,239,755,955 XI. Disclosure of fair value Based on the lowest level input that is significant to the fair value measurement in its entirety, the fair value hierarchy has the following levels: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3: Unobservable inputs for the asset or liability. (a) Assets continuously measured at fair value By June 30, 2020, the Group’s using assets and liabilities measured at fair value are listed three levels as followings: 30 June 2020 Level 1 Level 2 Level 3 Total Measured at fair value through other comprehensive income Receivables Financing 303,344,206 303,344,206 Total 303,344,206 303,344,206 (b) Assets and liability that not measured but disclosed 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 2020 31 December 2019 Carrying amount Fair value Carrying amount Fair value Financial liabilities Bonds payable 1,991,652,870 1,991,852,035 Medium term notes 800,000,000 807,757,600 Total 1,991,652,870 1,991,852,035 800,000,000 807,757,600 The fair values of bonds payable 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, therefore they belong to Level 2. 78 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 XII. Related party and related Transaction 1. Information of the parent company The Company regards no entity as the parent company. 2. The subsidiaries The general information and other related information of the subsidiaries are set out in attached note. 3. Joint venture of the Company Nil. 4. Other related parties Other related parties Relationship between other related parties and the enterprise Shenzhen jushenghua Co., Ltd. Party acting in concert of the Company's largest shareholder Foresea Life Insurance Co., Ltd. The Company's largest shareholder Xinjiang Qianhai United Property Insurance Co., Ltd. Related party of the shareholder of the Company 5. Related party transactions (1)Related transactions for the purchase and sale of goods, provision and receipt of services √ Applicable □ Not applicable Related party Related party transactions Amount incurred in the Amount incurred in the current period previous period Shenzhen jushenghua Co., Ltd. Sale ofmasks 12,118,000 Other related parties Sale ofmasks and others 6,222,400 Total 18,340,400 (2) Other related transactions Unit: RMB Amount incurred in the Amount incurred in the Related parties Related party transactions current period previous period Foresea Life Insurance Co., Ltd. Purchase life insurance 1,903,094 527,941 Xinjiang Qianhai United Property Insurance Purchase auto insurance, 178,374 43,224 Co., Ltd. property insurance Total 2,081,468 571,165 79 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 6. Accounts receivable and payable of related parties (1) Receivables □ Applicable √ Not applicable (2) Payables □ Applicable √ Not applicable 7. Commitment of related parties □ Applicable √ Not applicable 8. Others 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: Related parties Related party transactions Restrictive terms on borrowings Year of 2020 Year of 2019 Shenzhen Jushenghua Co., Facility of interest-free loans Nil 2,000,000,000 2,000,000,000 Ltd. provided for the Company 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 RMB 2 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. The shareholder provided nil interest free loan to the group in the report period. XIII. Share Payment 1. Overall situation of share payment √ Applicable □ Not applicable Unit: RMB The total number of equity instruments granted by the company in the current period Total amount of various equity instruments that the company exercises during the current period The total number of various equity instruments that have repurchased in the current period 36,222,898 The scope of the company’s outstanding share options and the remaining duration of the contract at the end of the period The scope of the company's exercise price of other equity instruments at the end of the period and the remaining duration of the contract at the end of the period 80 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 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 RMB 4.28 per share. Reserved restricted stock ending balance 17,046,869 shares, the grant price has not been determined. The shares granted of the first time has been registered and listed. By the 2nd temporary meeting of shareholders held on 6 August 2018, the company decided to repurchase and cancel the still-restricted shares which have already been granted to and held by 15 recipients no longer qualified for 2017 A Share Restricted Stock Incentive Plan due to either resignation or position adjustment. A total of 3,319,057 shares were repurchased and cancelled, and the company has finished above cancellations of the restricted shares by September 10, 2018. The Company held the 8th temporary meeting of the Board on September 13, 2018, which reviewed and approved September 13, 2018 to be the shares granting date and 75 recipients to be granted 9,826,580 restricted shares in total. The Company held the 8th temporary meeting of the Board on December 12, 2018, which reviewed and approved the releasing conditions on the first- time expiring trading restrictions of the initial part of the incentive plan on restricted shares from ordinary A. A total of 431 recipients of the incentive plan were able to fullfil the conditions. The amount of 43,353,050 shares could be released from restrictions. The unlock date of the restricted stocks, which was the date of listing, was December 21, 2018. On December 12, 2018, the company held the 8th meeting of the 8th Board of directors, and the meeting of the 8th board of supervisors. The meetings approved the “Proposal concerning the repurchase and cancellation of some restricted shares from the ’incentive plan’ of restricted shares”, and the meetings approved to repurchase and cancel a total of 436,719 restricted shares which have already been granted to and held by 8 recipients who are unqualified for the “incentive plan”. This was reviewed and approved by the third temporary meeting of shareholders on December 28, 2018. By June 18, 2019, the cancellation procedure of above restricted shares had been accomplished. On April 16, 2019, the company held the 8th meeting of the 8th Board of directors, and the 8th meeting of the 8th Board of supervisors. The meetings approved the “Proposal concerning the repurchase and cancellation of some restricted shares from the ’incentive plan’ of restricted shares”, and the “Proposal concerning the repurchase and cancellation of restricted shares failing to meet the second-term unlocking condition”. The meetings approved to repurchase and cancel a total of 3,473,329 restricted shares which have already been granted to and held by 14 recipients who are unqualified for the “incentive plan”, and repurchase and cancel a total of 33,734,276 restricted shares failing to meet the second-term unlocking condition from 483 “incentive” recipients. Independent directors agreed with this and it was approved by the annual general meeting of shareholders on May 9, 2019. By June 18, 2019, the cancellation procedure of above restricted shares had been accomplished. On September 16 2019, the Company held the 8th temporary meeting of the Board and the 8th temporary meeting of Supervisors. The meetings reviewed and approved the “Proposal concerning the repurchase and cancellation of some restricted shares from the ’incentive plan’ of restricted shares”. The meetings approved to repurchase and cancel a total of 1,281,158 restricted shares which have already been granted to and held by 18 recipients unqualified for the “incentive plan”, this was reviewed and approved by the 4th temporary meeting of shareholders on October 10 2019. By June 16, 2020, the cancellation procedure of above restricted shares had been accomplished. 81 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 On September 16 2019, the Company held the 8th temporary meeting of the Board and the 8th temporary meeting of Supervisors, which reviewed and approved the releasing conditions on the first-time expiring trading restrictions of the initial part of the incentive plan on restricted shares from ordinary A. In addition to the fact that 3 recipients did not have the conditions to unlock restricted stocksdue to their resignation, a total of 71 recipients of the incentive plan were able to fulfil the conditions.The amount of 3,909,350 shares could be released from restrictions. The restricted shares were released and listed by company on September 25, 2019. On April 28, 2020, the company held the 11th meeting of the 8th board of directors, and the 11th meeting of the 8th board of supervisors. The meetings approved the “Proposal concerning the repurchase and cancellation of some restricted shares from the ’incentive plan’ of restricted shares”, and the “Proposal concerning the repurchase and cancellation of restricted shares failing to meet the third-term unlocking condition”. The meetings approved to repurchase and cancel a total of 909,936 restricted shares which have already been granted to and held by 14 recipients who are unqualified for the “incentive plan”, and repurchase and cancel a total of 35,312,962 restricted shares failing to meet the second-term unlocking condition from 451 “incentive” recipients. Independent directors agreed with this and it was approved by the annual general meeting of shareholders on May 21, 2020. By June 16 2020, the cancellation procedure of above restricted shares had been accomplished. This incentive plan is valid for 48 months from the date of grant of the restricted stock to the date of unlocking of all restricted stocks or the completion of repurchase and cancellation. During the unlocking/exercise period, if the unlocking/exercise condition specified in the incentive plan is reached, the restricted stock granted is unlocked in three phases after 12 months from the grant date. The unlock period is shown in the following table: Unlock Schedule Unlock Time Unlock Ratio from the date of the first transaction 12 months after the award date to the date of the last 40% First unlock transaction within 24 months from the grant date. from the date of the first trading day 24 months after the grant date to the date of the last 30% Second unlock trading day within 36 months from the grant date from the date of the first trading day 36 months after the grant date to the day of the last 30% Third unlock trading day within 48 months from the grant date 2. Equity-settled share payment √ Applicable □ Not applicable Unit: RMB Method for Determining the Fair Value of Equity Instruments on the Grant Date Black-Scholes Model Based on the latest information on the change in the number of exercisable rights and the Determination of the number of vesting equity instruments completion of performance indicators, the number of equity instruments that are expected to be exercised is revised. Reasons for significant differences between current estimates and previous Not applicable estimates Cumulative amount of equity-settled share-based payment in capital reserves 128,276,983 82 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 Total equity confirmed by equity-settled 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 surplus. The Group actually granted restricted stocks of 97,511,654 shares in 2017, and the total fair value of the equity instruments granted to the incentive target for the first day of grant was RMB 289,519,900, the total fair value as the total cost of the company's equity incentive plan will be confirmed in stages according to the unlocking/exercise ratio during the implementation of the equity incentive plan, and will be included in the "management fees and Construction in progress and capital surplus-other capital surplus " of each period accordingly. By the 2nd temporary meeting of shareholders held on 6 August 2018, the company decided to repurchase and cancel the still-restricted shares which have already been granted to and held by 15 recipients no longer qualified for 2017 A Share Restricted Stock Incentive Plan due to either resignation or position adjustment. A total of 3,319,057 shares were repurchased and cancelled, and the company has finished above cancellations of the restricted shares by September 10, 2018. The Company held the 8th temporary meeting of the Board on September 13, 2018, which reviewed and approved September 13, 2018 to be the shares granting date and 75 recipients to be granted 9,826,580 restricted shares in total. The Company held the 8th temporary meeting of Board of Directors on December 12, 2018, which reviewed and approved the releasing conditions on the first-time expiring trading restrictions of the initial part of the incentive plan on restricted shares from ordinary A during 2017. A total of 431 recipients of the incentive plan were able to fullfil the conditions. The amount of 43,353,050 shares could be released from restrictions. The restricted shares was released and listed by the Company on December 21, 2018. On December 12, 2018, the company held the 8th meeting of the 8th Board of Directors, and the 8th meeting of the 8th Board of Supervisors. The meetings approved the “Proposal concerning the repurchase and cancellation of some restricted shares from the ’incentive plan’ of restricted shares”, and the meetings approved to repurchase and cancel a total of 436,719 restricted shares which have already been granted to and held by 8 recipients who are unqualified for the “incentive plan”. This was reviewed and approved by the third temporary meeting of shareholders on December 28, 2018. The cancellations of above restricted shares have been finished. In addition, according to the Group’s performance in 2018, the unlocking conditions for the first post lock-up period for the restricted shares incentive plan for 2017 and for the second post lock-up period for the restricted shares incentive plan for 2018 were not met. Therefore, by year end, expenses for the second post lock-up period for the ordinary A restricted shares was reduced by RMB 41,856,285. On April 16, 2019, the company held the 8th meeting of the 8th Board of Supervisors, and the 8th meeting of the 8th Board of Supervisors. The meetings approved the “Proposal concerning the repurchase and cancellation of some restricted shares from 83 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 the’incentive plan’ of restricted shares”, and the “Proposal concerning the repurchase and cancellation of restricted shares failing to meet the second-term unlocking condition”. The meetings approved to repurchase and cancel a total of 3,473,329 restricted shares which have already been granted to and held by 14 recipients who are unqualified for the “incentive plan”, and repurchase and cancel a total of 33,734,276 restricted shares failing to meet the second-term unlocking condition from 483 “incentive” recipients. Independent directors agreed with this and it was approved by the annual general meeting of shareholders on May 9, 2019. By June 18, 2019, the cancellations procedure of above restricted shares had been accomplished. On September 16, 2019, the Company held the 8th temporary meeting of Board of Directors and the 8th temporary meeting of Board of Supervisors. The meetings reviewed and approved the “Proposal concerning the repurchase and cancellation of some restricted shares from the ’incentive plan’ of restricted shares”. The meetings approved to repurchase and cancel a total of 1,281,158 restricted shares which have already been granted to and held by 18 recipients unqualified for the “incentive plan”, this was reviewed and approved by the 4th temporary meeting of shareholders on October 10 2019. By June 16, 2020, the cancellations procedure of above restricted shares had been accomplished. On September 16, 2019, the Company held the 8th temporary meeting of Board of Directors and the 8th temporary meeting of Board of Supervisors, which reviewed and approved the releasing conditions on the first-time expiring trading restrictions of the initial part of the incentive plan on restricted shares from ordinary A. In addition to the fact that 3 recipients did not have the conditions to unlock restricted stocksdue to their resignation, a total of 71 recipients of the incentive plan were able to fulfil the conditions. The amount of 3,909,350 shares could be released from restrictions. The restricted shares were released and listed by the company on September 25, 2019. On April 28, 2020, the company held the 11th meeting of the 8th Board of Directors, and the 11th meeting of the 8th board of Board of Supervisors. The meetings approved the “Proposal concerning the repurchase and cancellation of some restricted shares from the ’incentive plan’ of restricted shares”, and the “Proposal concerning the repurchase and cancellation of restricted shares failing to meet the third-term unlocking condition”. The meetings approved to repurchase and cancel a total of 909,936 restricted shares which have already been granted to and held by 14 recipients who are unqualified for the “incentive plan”, and repurchase and cancel a total of 35,312,962 restricted shares failing to meet the second-term unlocking condition from 451 “incentive” recipients. Independent directors agreed with this and it was approved by the annual general meeting of shareholders on May 21, 2020. By June 16, 2020, the cancellations procedure of above restricted shares had been accomplished. 3. Share payment in cash □Applicable √Not applicable 4. Modification and termination of share based payment □Applicable √Not applicable 5. Others □Applicable √Not applicable 84 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 XIV. Commitments and contingencies 1. Significant commitments (1) Capital commitments Capital expenditures contracted for by the Group at the balance sheet date but are not yet necessary to be recognized on the balance sheet are as follows: Item 30 June 2020 31 December 2019 Buildings, machinery and equipment 550,172,794 491,835,351 (2) Operating lease commitments The future minimum lease payments due under the signed irrevocable operating leases contracts are summarized as follows: 30 June 2020 31 December 2019 Within 1 year 3,583,635 2,457,100 1 to 2 years 903,456 1,412,642 2 to 3 years 54,000 652,804 Over 3 years 60,000 Total 4,541,091 4,582,546 2. 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 polysilicon and solar battery and applications, etc. Electronic glass and display segment is responsible for production and sales of display components and special ultra-thin glass products, etc. The reportable segments of the Group are the business units that provide different products or service. Different businesses require different technologies and marketing strategies. The Group, therefore, separately manages the production and operation of each reportable segment and Estimates their operating results respectively, in order to make decisions about resources to be allocated to these segments and to assess their performance. Inter-segment transfer prices are measured by reference to selling prices to third parties. The assets are allocated based on the operations of the segment and the physical location of the asset. The liabilities are allocated 85 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 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 Solar energy and Item Glass industry Unallocated Elimination Total and display other industries Revenue from 3,575,677,167 402,961,663 439,860,149 5,722,370 4,424,221,349 external customers Inter-segment 16,138,128 1,903,311 38,935,604 32,112,917 -89,089,960 - revenue Interest income 993,317 844,205 243,563 22,850,278 24,931,363 Interest expenses 28,590,444 8,409,247 13,933,995 101,245,278 152,178,964 Asset impairment -37,110 -116,943 -154,053 losses Credit impairment 2,331,283 -239,114 876,723 -6,972 2,961,920 loss Depreciation and amortization 299,602,937 82,290,663 72,923,473 2,936,922 457,753,995 expenses Total profit 521,867,500 63,418,187 4,166,560 -103,460,074 485,992,173 Income tax expenses 71,452,478 9,253,051 3,409,679 84,115,208 Net profit 450,415,022 54,165,136 756,881 -103,460,074 401,876,965 Total assets 8,206,963,735 3,615,380,471 3,991,099,094 3,550,869,407 19,364,312,707 Total liabilities 2,160,005,072 713,860,001 479,454,395 5,958,671,816 9,311,991,284 Increase in non 149,426,510 248,257,148 45,304,030 2,863,976 445,851,664 current assets (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. 2020 Jan.-Jun. 2019 Mainland 3,862,784,501 4,155,252,155 Overseas 561,436,848 732,985,423 Total 4,424,221,349 4,888,237,578 Total non-current assets 30 June 2020 31 December 2019 86 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 Mainland 13,234,044,518 13,249,557,840 Hong Kong 12,494,930 12,535,219 Total 13,246,539,448 13,262,093,059 The Group has a large number of customers, but no revenue from a single customer exceed 10% or more of the Group’s revenue. 3. Other important transactions and matters that have an impact on investors' decisions □Applicable √ Not applicable 4. Others □Applicable √ Not applicable XV. Notes to Financial Statements of the Parent Company 1. Other receivables Unit: RMB Nature of accounts Ending book balance Beginning book balance Other receivables 3,736,236,883 3,179,500,967 Total 3,736,236,883 3,179,500,967 1) 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 3,566,033,088 3,008,955,525 Others 173,677,342 174,025,961 Total 3,739,710,430 3,182,981,486 2) Withdrawal of bad debt provision Unit: RMB Phase I Phase II Phase III Expected credit Expected credit loss for the Expected credit loss for the Bad debt provision Total losses in the next 12 entire duration (no credit entire duration (credit months impairmentoccurred) impairment occurred) Balance on1 January2020 3,480,519 3,480,519 Balance on1 January2020 —— —— —— —— in current period 87 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 --Transferred to the Phase II --Transferred to the Phase III -- Transferred back to the Phase II -- Transferred back to the Phase I Withdrawal 123,501 123,501 Recovery 130,473 130,473 Write-off Verification Other changes Balance on 30 June 2020 3,473,547 3,473,547 3) Disclosure by ageing Unit: RMB Ageing Closing balance Within 1 year (including 1 year) 3,567,040,760 1 to 2 years 1,506,675 2 to 3 years 8,044 Over 3 years 171,154,951 3 to 4 years 154,951 4 to 5 years Over 5 years 171,000,000 Total 3,739,710,430 4) Provision for bad debts accrued, recovered or reversed in the current period Provision for bad debts: Unit: RMB Opening Amount of change in the current period Category Closing balance balance Provision Collect or reversal Write-off Others Provision for bad 3,480,519 123,501 130,473 3,473,547 debts by portfolio Total 3,480,519 123,501 130,473 3,473,547 88 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 5) Top 5 of the closing balance of the other accounts receivable collated according to the arrears party Unit: RMB Proportion of the total Closing Name ofthe company Nature of accounts Closing balance Ageing year end balance of the balance of bad accounts receivable (%) debt provision Yichang CSG Subsidiary 1,881,373,607 Within 1 year 50% Polysilicon Yichang CSG Display Subsidiary 356,890,268 Within 1 year 10% Qingyuan CSG Subsidiary 268,044,219 Within 1 year 7% Energy-saving Xianning CSG Subsidiary 261,847,799 Within 1 year 7% Photoelectric Shenzhen CSG PV Subsidiary 174,800,604 Within 1 year 5% Total -- 2,942,956,497 -- 79% 3. 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 5,282,965,574 15,000,000 5,267,965,574 5,094,465,574 15,000,000 5,079,465,574 subsidiaries Total 5,282,965,574 15,000,000 5,267,965,574 5,094,465,574 15,000,000 5,079,465,574 (1) Investment in subsidiaries Unit: RMB Increase and decrease in the current period Closing Closing balance of Opening balance Provision Invested company Additional Reducing balance provision (book value) for Others investment investment (book value) for impairment impairment Chengdu CSG Glass Co., Ltd. 151,397,763 151,397,763 Sichuan CSG Energy 119,256,949 119,256,949 Conservation Tianjin Energy Conservation Glass 247,833,327 247,833,327 Co., Ltd 89 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 Dongguan CSG Architectural Glass 198,276,242 198,276,242 Co., Ltd. Dongguan CSG Solar Glass Co., 355,120,247 355,120,247 Ltd. Yichang CSG Polysilicon Co., Ltd. 640,856,170 640,856,170 Wujiang CSG North-east 254,401,190 254,401,190 Architectural Glass Co., Ltd. Hebei CSG Glass Co., Ltd. 266,189,705 266,189,705 China Southern Glass (Hong Kong) 87,767,304 87,767,304 Limited Wujiang CSG Glass Co., Ltd. 567,645,430 567,645,430 Hebei Panel Glass Co., Ltd. 246,370,595 246,370,595 Jiangyou CSG Mining Development 102,415,096 102,415,096 Co., Ltd. Xianning CSG Glass Co., Ltd. 181,116,277 181,116,277 Xianning CSG Energy Conservation 165,452,035 165,452,035 Glass Co., Ltd. Qingyuan CSG Energy Saving New 303,273,105 100,000,000 403,273,105 Materials Co.,Ltd. Shenzhen CSG Financial Leasing 133,500,000 133,500,000 Co., Ltd. Shenzhen CSG PV Energy Co., Ltd. 100,335,176 100,335,176 Shenzhen Nanbo Display 550,765,474 550,765,474 Technology Co., Ltd. Xianning CSG Photoelectric Glass 139,755,437 139,755,437 Co., Ltd. ZhaoqingCSG Energy-Saving 12,801,000 31,900,000 44,701,000 GlassCo., Ltd. ZhaoqingCSG Automobile 12,601,000 30,600,000 43,201,000 GlassCo., Ltd. Anhui CSG New Energy Materials 3,000,000 3,000,000 Anhui CSG New Quartz material 3,000,000 3,000,000 Shenzhen CSG Medical 20,000,000 20,000,000 Others(i) (ii) 257,336,052 257,336,052 15,000,000 Total 5,094,465,574 188,500,000 5,282,965,574 15,000,000 90 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 (2) Other notes (i) As at June 30, 2020, 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 194,658,263 (31 December 2019: RMB 194,658,263). (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 Other business 37,484,754 38,156,685 Total 37,484,754 38,156,685 New revenue guidelines have been implemented or not √Yes □No 4. Investment income Unit: RMB Item Occurred in this term Occurred in previous term Long-term equity investment accounted by cost method 703,591,508 390,105,325 Total 703,591,508 390,105,325 XVI. Supplementary Information 1. 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 -342,005 Governmental subsidy reckoned into current gains/losses (not including the subsidy enjoyed in quota 48,109,326 or ration according to national standards, which are closely relevant to enterprise’s business) Loss and profit from external entrusted loan 5,546,384 Other non-operating income and expenditure except for -15,417,422 91 CSG HOLDING CO., LTD. Financial Report of Semi-annual Report 2020 the aforementioned items Less: Impact on income tax 4,330,999 Impact on minority shareholders’ equity (post-tax) 742,858 Total 32,822,426 -- 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 ordinary shareholders of the Company 4.08% 0.13 0.13 Net profit attributable to ordinary shareholders of the Company after 3.74% 0.12 0.12 deducting non-recurring gains and losses 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 92