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南玻B:2019年年度报告(英文版) 下载公告
公告日期:2020-04-30

CSG HOLDING CO., LTD.

ANNUAL REPORT 2019

Chairman of the Board:

CHEN LIN

April 2020

Section I Important Notice, Content and ParaphraseBoard of Directors and the Supervisory Committee of CSG Holding Co., Ltd. (hereinafter referredto as the Company) and its directors, supervisors and senior executives hereby confirm that thereare no any fictitious statements, misleading statements, or important omissions carried in this report,and shall take all responsibilities, individual and/or joint, for the facticity, accuracy andcompleteness of the whole contents.Ms. Chen Lin, Chairman of the Board, Mr. Wang Jian, responsible person in charge of accountingand Ms.Wang Wenxin, principal of the financial department (accounting officer) confirm that theFinancial Report enclosed in this Annual Report 2019 is true, accurate and complete.All directors were present at the meeting of the Board for deliberating the annual report of theCompany in person.The future plans, development strategies and other forward-looking statements mentioned in thisreport do not constitute a material commitment of the company to investors. Investors and relevantparties should pay attention to investment risks, and understand the differences between plans,forecasts and commitments.The company has described the risk factors and countermeasures of the company's futuredevelopment in detail in this report. Please refer to Section IV. Business Discussion and Analysis.The company shall comply with the disclosure requirements of "Shenzhen Stock Exchange IndustryInformation Disclosure Guidelines No. 13 - Listed Companies Engaged in Non-Metal BuildingMaterials Related Business".The deliberated and approved plan of profit distribution in the Board Meeting is distributing cashdividend of RMB 0.7 yuan (tax included) for every 10 shares to all shareholders based on3,106,915,005 shares of the total current share capital. The actual amount of the cash dividenddistributed will be determined according to the total share capital on the registration date of thecompany's implementation of the profit distribution plan.This report is prepared both in Chinese and English. Should there be any inconsistency between theChinese and English versions, the Chinese version shall prevail.

Content

Section I. Important Notice, Content and Paraphrase ...................................................................................... 1

Section II. Company Profile & Financial Highlights ............................................................................................ 4

Section III. Overview of the Company’s Business ............................................................................................. 8

Section IV. Business Discussion and Analysis .................................................................................................. 12

Section V. Important Events ............................................................................................................................ 34

Section VI. Changes in Shares and Particulars about Shareholders ................................................................ 59

Section VII. Particulars about Directors, Supervisors, Senior Executives and Employees .............................. 68

Section VIII. Corporate Governance ................................................................................................................ 79Section IX. Corporate Bonds…………………………………………………………………………………………………….……………......87Section X. Financial Report ............................................................................................................................. 91

Section XI. Documents Available for Reference ........................................................................................... 180

Paraphrase

ItemsRefers toContents
Company, the Company, CSG or the GroupRefers toCSG Holding Co., Ltd.
Foresea LifeRefers toForesea Life Insurance Co., Ltd.
Ultra-thin electronic glassRefers toThe electronic glass with thickness between 0.1~1.1mm
Second-generation energy-saving glassRefers toDouble silver coated glass
Third-generation energy-saving glassRefers toTriple silver coated glass
AG glassRefers toAnti-glare glass
AF glassRefers toAnti-fingerprint glass

Section II Company Profile & Financial HighlightsI. Company information

Code for A-share000012Code for B-share200012
Short form for A-shareSouthern Glass AShort form for B-shareSouthern Glass B
Listing stock exchangeShenzhen Stock Exchange
Legal Chinese name of the Company中国南玻集团股份有限公司
Abbr. of legal Chinese name of the Company南玻集团
Legal English name of the CompanyCSG Holding Co., Ltd.
Abbr. of legal English name of the CompanyCSG
Legal RepresentativeChen Lin
Registered Add.CSG Building, No.1, the 6th Industrial Road, Shekou, Shenzhen, P. R.C.
Post Code518067
Office Add.CSG Building, No.1, the 6th Industrial Road, Shekou, Shenzhen, P. R.C.
Post Code518067
Internet websitewww.csgholding.com
E-mailsecurities@csgholding.com

II. Person/Way to contact

Secretary of the BoardRepresentative of security affairs
NameYang XinyuChen Chunyan
Contacts add.CSG Building, No.1 of the 6th Industrial Road, Shekou, Shenzhen, P. R.C.CSG Building, No.1 of the 6th Industrial Road, Shekou, Shenzhen, P. R.C.
Tel.(86)755-26860666(86)755-26860666
Fax.(86)755-26860685(86)755-26860685
E-mailsecurities@csgholding.comsecurities@csgholding.com

III. Information disclosure and preparation place

Newspapers for information disclosureSecurities Times, China Securities Journal, Shanghai Securities News, Securities Daily and Hong Kong Commercial Daily
Website assigned by CSRC to release the annual reportwww.cninfo.com.cn
The place for preparation of the annual reportOffice of the Board of Directors

IV. Registration changes of the Company

Organization codeUnified social credit code: 914403006188385775
Changes of main business since listing (if applicable)No changes
Previous changes for controlling shareholders (if applicable)No changes

V. Other relevant information

CPA firm engaged by the Company

Name of CPA firmAsia Pacific (Group) CPAs (special general partnership)
Offices add. for CPA firmRoom 301, building 1, No. 9, Che Gong Zhuang Street, Xicheng District, Beijing, China
Signing AccountantsZhao Qingjun, Zhou Xianhong

Sponsor institute engaged by the Company for performing continuous supervision duties in the report period

□ Applicable √ Not applicable

Financial consultant engaged by the Company for performing continuous supervision duties in the report period

□ Applicable √ Not applicable

VI. Main accounting data and financial indexesWhether it has retroactive adjustment or re-statement on previous accounting data for accounting policy changed andaccounting error correction or not

□Yes √No

20192018Changes over last year2017
Operating income (RMB)10,472,028,09910,609,963,011-1.30%10,879,400,746
Net profit attributable to shareholders of the listed company (RMB)536,430,818452,965,93518.43%825,388,312
Net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses (RMB)374,386,216367,579,8351.85%745,373,108
Net cash flow arising from operating activities (RMB)2,379,036,3202,130,378,10011.67%2,463,446,156
Basic earnings per share (RMB/Share)0.170.1513.33%0.30
Diluted earnings per share (RMB/Share)0.170.1421.43%0.29
Weighted average ROE (%)5.77%5.16%0.61%10.15%
As at 31 Dec. 2019As at 31 Dec. 2018Changes over the end of last yearAs at 31 Dec. 2017
Total assets (RMB)18,201,235,95919,114,234,184-4.78%19,535,002,368
Net assets attributable to shareholders of the listed company (RMB)9,495,588,8789,103,154,5714.31%8,458,587,873
The total share capital of the company as of the previous trading day of disclosure (share)3,106,915,005
Fully diluted earnings per share calculated with latest share equity (RMB/share)0.17

Note: The total amount of 1,281,158 shares of restricted stocks held by 18 unqualified original incentives, which hadbeen repurchased but not yet cancelled, were deducted from the total share capital.

VII. Accounting Data Differences under Chinese Accounting Standards (CAS) andInternational Financial Reporting Standards (IFRS) and Foreign Accounting Standards

1. Net Income and Equity Differences under CAS and IFRS

□ Applicable √ Not applicable

No such differences for the Report Period.

2. Net Income and Equity Differences under CAS and Foreign Accounting Standards

□ Applicable √ Not applicable

No such differences for the Report Period.

3. Reason of the difference between domestic and foreign accounting data

□ Applicable √ Not applicable

VIII. Main financial indexes by quarter

Unit: RMB

Q1Q2Q3Q4
Operating income2,222,721,5142,665,516,0642,773,417,9092,810,372,612
Net profit attributable to shareholders of the listed company132,188,324245,154,077166,970,717-7,882,300
Net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses82,573,767201,365,677135,913,151-45,466,379
Net cash flow arising from operating activities136,317,362631,665,103740,407,335870,646,520

Whether there are significant differences between the above-mentioned financial index or its total number and therelevant financial index disclosed in the Company’s quarterly report and semi-annual report or not

□Yes √ No

IX. Items and amounts of extraordinary gains/losses

√Applicable □ Not applicable

Unit: RMB

Item201920182017Note
Gains/losses from the disposal of non-current asset (including the write-off that accrued for impairment of assets)-909,968-454,368-1,768,993
Governmental subsidy reckoned into current gains/losses (not including the subsidy enjoyed in quota or ration according to national standards, which are closely relevant to enterprise’s business)184,131,42094,835,53987,875,417
In addition to the normal business of the company effective hedging related business, tradable financial assets, derivative financial assets, tradable financial liabilities, changes in the fair value of the derivative financial liabilities to generate profits and losses, as well as the disposal of tradable financial assets, derivative financial assets, tradable financial liabilities, derivative financial liabilities and other creditor's rights investment returns.427,636
Loss and profit from external entrusted loan11,894,654534,591
Other non-operating income and expenditure except for the aforementioned items-1,612,25312,099,68012,076,848
Less: Impact on income tax25,951,26316,483,87016,209,135
Impact on minority shareholders’ equity (post-tax)5,507,9885,145,4722,386,569
Total162,044,60285,386,10080,015,204--

Reason shall be provided for the non-recurring profit and loss items defined by the company according to the definitionin the No. 1 of Explanatory Announcement on Information Disclosure for Companies Offering their Securities to thePublic: Non-recurring Profit and Loss and the listed non-recurring profit and loss items defined into recurring profit andloss items.

□ Applicable √ Not applicable

Section III Overview of the Company’s BusinessI. Main business of the Company in the report periodCSG is a leading domestic brand of energy-saving glass and a renowned brand of solar PV products and display devices.Its products and technologies are very popular at home and abroad. Its main business covers R&D, manufacturing andsales of high quality float glass and architectural glass, solar glass, silicon material, renewable energy products such asPV battery and modules, and new materials and information display products such as ultra-thin electronic glass anddisplay devices. It also provides one-stop services such as project development, construction, operation andmaintenance of solar photovoltaic power plants.Flat glass industry

CSG now has 10 float glass production lines representing the most advanced technology, 2 solar glass production linesand 12 solar glass deep processing production lines in Dongguan, Chengdu, Langfang, Wujiang, Xianning, and also hasquartz sand raw material processing and production bases in Sichuan Jiangyou and Guangdong Qingyuan. The annualcapacity of various high-grade float glass has reached more than 2.47 million tons and the annual capacity of solar glasshas reached over 0.43 million tons. The float glass products cover high-grade float glass and ultra-clear float glass withvarious thicknesses from 1.3mm to 25mm, and the performance of the products all reach the leading level in China.Solar glass has a capacity of 60 million square per year of deep processing, the products of which cover a variety ofthickness of 2-4mm deep processing products.The glass of CSG are widely used in in high-end architectural curtain walls, decoration and furniture, reflective mirror,automotive windshield, scanner and photocopier transparent panel, home appliance panel, display devices protectionand solar energy field.The Company’s Products are sold all over the world, and it has established long-term, stablebusiness cooperation with many well-known processing enterprises.The Company always adheres to innovation, transformation and upgrading, and further enhances the profitability of flatglass industry by the implementation of differentiated competitive strategy. In 2019, the subsidiary Chengdu CSGCo.,Ltd. switched to the production of ultra-white float glass in the second line, further increasing the proportion ofCSG glass in the ultra-white float glass market.Through speeding up technology upgrade and reform for solar glass,theproductivity of 1.6-2.5mm ultra-thin solar glass for double-glass PV module was further improved. By focusing ondeveloping overseas market,the proportion of overseas revenue continuely increased.The exploration of high value-added markets such as ultra-clear glass as well as the expansion of overseas market which further enhanced the marketcompetitiveness of CSG's flat glass.Architectural glass industryCSG Group is one of the largest suppliers of high-grade engineering and architectural glass in China.. It has built fiveenergy-saving glass processing bases in Tianjin, Dongguan, Xianning, Wujiang and Chengdu. Now it is preparing tobuild Zhaoqing energy-saving glass processing base to meet the growing demand of high-grade energy-saving glass.The Company has the world's leading glass deep processing equipment and testing equipment, and its products cover allkinds of engineering and construction glass. The Company's R&D and application of glass coating technology keepspace with the world and its technology of high-end product even leads the world. Following the second generation ofenergy-saving glass products, the Company has successively developed the third generation and multi-function energy-saving glass products with continuous improving energy-saving and heat-preservation effect. The domestic high-endmarket share of high-quality energy-saving and environment-friendly LOW-E insulating glass far exceeds that of

competitors. At present, the Company’s coated insulating glass and coated glass have reached annual capacity of morethan16.00 million square meters and 36.00 million square meters respectively.The Company’s quality management system for engineering and architectural glass has been respectively approved byorganizations of UK AOQC and Australia QAS. The product quality which meets the national standards of the US, theUK and Australia enables CSG has an advantage in the international tendering and bidding. Since 1988, CSG'sengineers and technicians have been continuously participating in the formulation and compilation of various nationalstandards and industry standards. Various high-quality architectural glass of the Company has been used in manylandmark buildings at home and abroad, such as Beijing Capital International Airport, CCTV, Shanghai OrientalFisherman’s Wharf, China Resources Headquarters Building, Shenzhen KingKey100 Building, Shenzhen Upperhills,Shenzhen ShenNine Pioneer Park, Shenzhen Bay Science and Technology Ecological zone, Shenzhen Trade QianhaiCenter, Hong Kong-Zhuhai- Macao Bridge Zhuhai port, Donggua International Trade Center, Ping An InternationalFinance Centre, Xiamen Yinglan International Financial Center, Xujiahui Center Hongqiao Road plot T1 officebuilding, Poly Yuzhu Port, Chengdu Tianfu International Airport, Beijing Tongzhou Ocean Center, Huahao centertower project, Yangzhou jin 'ao center, Fosun south headquarters building, Anhui radio and television station newcenter, Hangzhou International Airport, Hangzhou Europe finance City, Shanghai Qiantan Iron Lion Gate Center,Hangzhou Pinggao Entrepreneurship City, Kunming Henglong Square, Chengdu Zhongjiao International Center,Changsha World Trade Center, Hefei Evergrande Center, Valley of light star block G, Beijing Subsidiary administrativeCenter, Beijing Daxing International Airport, Qingdao Jiaodong International Airport, Shanxi China Resources Center,Yasha Headquarters Building, Chengdu International Finance Center, Hangzhou Hampton and other more than tenHilton Hotels, Hong Kong Four Seasons Hotel, Melbourne Airport, Midtown, International Centre of Abu Dhabi,Korea LCT and Metropolis Phase 2B.Furthermore, the jade glass project has been formally put into production. This project will open up the market of high-end decoration projects for CSG in the future and further strengthen the competitive advantage of CSG in the field ofconstruction engineering.

Solar Energy industryCSG has entered solar photovoltaic industry since 2005 and is one of enterprises which firstly enter the field in China.After more than ten years of construction, operation and technological upgrading, CSG has built an industry chain in thefield, covering high- purity polycrystalline silicon materials, high-efficiency silicon wafer, silicon solar cell andmodules, and the design and construction of solar photovoltaic power plants, by which the Company ensures the stablequality and best cost-efficiency of its PV products to customers.The Company now produces 9,000 ton/year of high purity polycrystalline silicon, 2.2 GW/year of silicon wafer,1GW/year of solar cell, and 0.4GW/year of modules. The quality and performance indicators of the Company'spolysilicon have reached the advanced level in the industry and it has reserved electronic-grade polysilicon productiontechnology. In order to actively respond to the changes in the industry with the continuous introduction of newtechnologies, the company took the initiative to upgrade the parking technology of polysilicon, and sought to move tothe regions with low electricity prices. Meanwhile, in order to improve the ability to resist risk of the photovoltaicindustry chain, promoting steady balanced development of pv industry chain, the company also completed the waferand the PERC battery module technical innovation .To build the whole solar industry chain, the Company established Shenzhen CSG PV Energy Co., Ltd., a wholly-ownedsubsidiary, in 2015, of which the mainline business is to invest and develop solar power plants and extend CSG's solarenergy industry to cover highly value-added terminal applications. The Company strengthened the investment,operation and maintenance of the Company's PV power plants and effectively integrated internal assets, so as toimprove its solar energy business competitivity.

Electronic glass and display industryIn 2019, the Company continued to develop electronic glass business. Four subsidiaries including Hebei Panel, Yichang Photoelectric,Qingyuan New Energy-Saving Materials, Xianning Photoelectric continued to actively upgrade products and market in smartelectronic terminals, touch control components, automotive displays, industrial automation control commercial displays, militarysecurity, smart home application, and the market share and brand effect of medium, high aluminum electronic glass products of theCompany were greatly increased. The three characteristics of abundant product structure, reliable delivery guarantee and strongtechnical innovation helped the electronic glass business of the Company maintain the dominant position in the fierce marketcompetition.In the fourth quarter of 2019, the subsidiary Xianning Opto-electronics Co., LTD. 's new generation of high-alumina electronic glassproducts officially met the requirements for batch delivery. The excellent performance of the new generation of high-aluminaelectronic glass of CSG can meet the downstream end customers' higher standard requirements for basic materials in the fields of 3Dcurved surface technology and 5G communication solutions.The successful development of this product marks the furtherenhancement of the competitiveness of CSG in the high-end application market.CSG has long been committed to becoming the industry's leading electronic glass material solutions provider. We will continue todevelop stronger and more competitive glass protective materials in the field of touch display, develop human-machine interactioninterface materials in the fields of smart home, vehicle-mounted display and advanced medical treatment, and develop revolutionaryalternative materials in the field of transportation and security.CSG has been engaged in the field of touch display since 2000. After 20 years of development, its main products and coretechnologies have covered three businesses including vacuum magnetron sputtering coating, yellow light pattern forming and TPmodule processing.The Company aims to domestic and foreign high-end customers, and has formed two complete touch industrialchains. The industrial chain of "glass coating → glass yellow light pattern forming → glass touch module processing" is based onelectronic glass. The main products include: high and mid-grade ITO conductive glass, glass Sensor/ G-TP module, anti-reflection(AR), anti-fingerprint (AF), semi-anti-reflection and semi-permeable (RT) composite coating products. Another industrial chain of“substrate coating → flexible yellow light pattern processing → flexible touch module processing" is based on flexible optical film.The main products include: high and mid-grade ITO conductive film, ITO copper film, film Sensor/ F-TP module.In recent years, the Company has successfully realized the business transformation to the field of on-board touch control, establishedthe TAIF16949 quality management system supporting the automobile industry, and continuously increased the investment layout inthe on-board segment. The products target at on-board front load market, aiming at high-end brand customers. At present, theproducts in the on-board field including on-board glass Sensor, on-board multi-functional 3A cover plate, on-board touch module, etc.In 2019, mass production and sales of high-end 3A glass cover plate for on-board center control screen market was realized, and theoutput and sales of on-board glass Sensor steadily increased, which became a new profit growth point of CSG Display Device. Afteryears of development, CSG Display Device has become a high-quality supplier of electronic application materials, touch controlSensor and TP module in the display touch industry, which can provide customers with a comprehensive one-stop solution of touchscreen materials.

II. Major changes in main assets

1. Details of major changes in main assets

Main assetsNote of major changes
Equity assetsThere was no significant change in equity assets in the report period.
Fixed assetsThere was no significant change in fixed assets in the report period.
Intangible assetsThere was no significant change in intangible assets in the report period.
Construction in progressSome of subsidiary companies transferred their projects under construction into fixed assets in the report period.
Short term LoansThe company has repaid part of the loan in the report period.
Long term LoansMainly due to some of the medium-term notes reclassification to the one-year maturity of non-current liabilities.

2. Main overseas assets

□ Applicable √ Not applicable

III. Core Competitiveness Analysis

1. The Company currently has built complete industrial chains in the involved industries, which has complementaryadvantage. For example in glass industry, the Company has set up the industry chain as quartz sand → high quality floatglass → architectural energy-saving glass. With continuous the improvement of technology in the chains, the industrialadvantages emerged.

2. The Company possesses a complete industry layout. At present, the Company has established large production basesin East China, West China, South China, North China and Central China, which enables the Company to be closer tothe market and serve the market better.

3. The Company has capability of technology innovation and product innovation. It owns independent intellectualproperty rights of high-end float glass production process. The technology level of ultra-thin electronic glass is in theleading position in China. The Company also keeps its R&D and production of energy-saving glass in line with theworld’s advanced level.

4. The Company possesses high anti-risk capability. It has established an effective internal control system. Meanwhile,the management and control ability of account receivable and inventory stand in a high level within the industry. CSG’snew management team has an international perspective and a more open management philosophy. It aims to achieve thetransfer of capacity and continues to expand new business fields along with the national policies of the Belt and Roadbased on the intensive development of CSG's main business, making the Company be bigger and stronger, so as to be acomprehensive industrial group.

Section IV. Business Discussion and AnalysisI. Introduction

Since 2019, the downward pressure on the global macroeconomy has been increasing. Under the fierce internationalcompetition, manufacturing enterprises are facing both severe challenges and great opportunities. China is in the crucialperiod of transforming the development mode and optimizing the economic structure. With the deepening of the supply-side structural reform, the industrial structure is constantly improved, and the market competitiveness is steadilyimproved. Under the situation that the glass industry's demand margin is obviously improved while the supply-sideconstraints continue, the prosperity degree gradually from botton improves.In 2019, facing the complex economic situation, "de-leveraging, de-capacity" policy influence, the business cost such asenergy, raw materials, security and environmental protection were constantly increasing. Under the strong leadership ofthe board of directors and management of the Company, all staff of the group were united,progressive, overcomeddifficulties, focusing on "industrial optimization, technical innovation and structural adjustment, the whole process ofsystematism lean management".The company determined to enlarge and strengthen the glass industry strategy,coordinated business upgrade of electronic glass and display devices, and Scaled up efforts to implement the solarindustry breakthrough, At the same time, the company focues on the connotative growth combined with denotativedevelopment, through the deepening of lean production, strengthening basic management, promoting the factory’smanagement level of informatization and automation and continues to promote scientific research, innovation, productupgrading and technological progress to improve the productivity and market competitiveness of enterprises,to improvethe company's sustainable development ability by optimizing product structure and extending the layout of industrialchain. In 2019, the company worked on a glass-based strategy, gave full play to the group's strong foundation in theglass industry, technology and team accumulation, in the complex economic and policy environment we have achievedremarkable business results, in which the glass main business increases steadily, the electronic glass and display devicebusiness grows rapidly. Excluding the impairment of assets, the annual net profit was 980 million yuan, up 66% year-on-year. Although the technical upgrading of polysilicon in the photovoltaic industry affected part of the revenue, thecompany still achieved operating revenue of over 10 billion yuan, reaching 10.472 billion yuan, a decrease of 1.3%.After the asset impairment, the company achieved a net profit of 560 million yuan, up 18.68%, and the parentcompany's net profit of 536 million yuan, up 18.43%.(I) Glass industry

In 2019, the overall performance of China's national economy was stable and the quality of development was steadilyimproved. China's GDP reached 99 trillion yuan, up 6.1% year-on-year. Investment in fixed assets (excluding ruralhouseholds) reached 55 trillion yuan, up 5.4% year-on-year. Investment in real estate development reached 13.22trillion yuan, up 9.9% year on year, while investment in infrastructure rose 3.8%. China's cumulative flat glassproduction grew by 6.6% year-on-year in 2019 (source: National Bureau of Statistics).In 2019, the company's flat glassproduction increased by 8.09% year on year.Energy saving glass business is the core business of the group. The five production bases cover Beijing-Tianjin-Hebei,Yangtze River Delta, Pearl River Delta, Chengdu-Chongqing region and Hubei region in central China, and theproducts are mainly high value-added products. With obvious location advantage, quality advantage and brandadvantage, the group is the main high-end industrial glass supplier in the region and in China. The glass industry hasobvious periodicity and seasonality. The development of the industry is closely related to the scale of social fixed assetinvestment and the real estate industry. At the same time, it is affected by the weather and holidays. The sales is usually

slow in the first quarter, when holidays are concentrated and the weather is cold. The main sales mode of flat glass ofthe company is to produce and sell on demand, cash on the spot, and the sales mode of the architectural glass is tocustomized the production according to the customer's needs and to settle according to the progress of the project bybatch. The company practices the business philosophy of green development and environmental protection, and all theproduction line fuel uses clean energy natural gas. Compared with other enterprises in the same industry that use fuelssuch as heavy oil or petroleum coke, the fuel cost of the company is relatively high. In 2019, the price of natural gasrises, and the company's fuel cost increases accordingly.In 2019, facing adverse market conditions such as rising cost of mineral raw materials and natural gas, the companyintegrates product application into more subdivided industries through product structure adjustment and innovation, andreduces the purchase cost by adjusting the purchase method, reduce the comprehensive operation cost by digging intothe internal potential and improve the quality and efficiency. At the same time, adhere to the product differentiationstrategy and other measures, the glass industry against the trend of growth, achieved better business performance. In2019, the glass industry achieved operating revenue of 7.98 billion yuan, an increase of 526 million yuan or 7.06%year-on-year.Net profit reached 935 million yuan, up 17%.Flat glass:In 2019, the average price of flat glass declined compared with last year due to factors such as the slowinggrowth of fixed asset investment and the year-on-year increase of total production capacity in the industry. At the sametime, the company needs to deal with increasing environmental requirements, continuous rise of price of raw materials,fuel, the downstream market slowdown in demand, lower market price and severer market competition, relative higherfuel cost,the flat glass business of CSG faces more serious pressure of business. By continuously optimizing theproduct structure, increasing the market development of new products and new applications, increasing the salesstrength of differentiated products and increasing the sales strength of overseas markets, the operating revenue of flatglass is increased compared with the same period last year.

Architectural glass: CSG Group is a leading enterprise in the domestic architectural energy-saving glass industry. Thearchitectural glass business is the brand support of CSG, and has formed the quality, service and continuous R&Dcapabilities that match the brand. In 2019, facing the pressure of the macro environment, architectural glass haswithstood the test of the market through a series of key works such as contract signing and productivity coordinationimprovement, differentiated product development, intelligent automation upgrading and transformation, contractperformance control and cost assessment, In 2019, the company's advantages in engineering glass highlighted, the salesquality and price of major products rose together, and the profit level improved substantially, so as to maintain theleading position in the industry. To further seize the market opportunities of the Guangdong-Hong Kong-Macao GreaterBay Area, to serve better the industry and construction of the bay area, and to strengthen the competitiveness andinfluence of CSG in south China, the company invested and set up Zhaoqing SG Energy-saving Glass Co., Ltd. inZhaoqing High-Tech Development Zone at the end of 2019 with the approval of the board of directors to build a high-grade energy-saving glass production line. The construction of this production base strengthens the company's marketposition in south China and further radiates to overseas markets such as southeast Asia and Australia.

(II) Electronic glass and display industry

Electronic glass and display device industry is an extension of the group's competitiveness and brand influence, and isalso another high market share and reputable industry besides the flat glass, architectural glass industry. In 2019, therevenue profit of Electronic glass and display device business continued to rise year-on-year, and the revenue reached

1.044 billion yuan, up 8.76% year-on-year. Net profit reached 208 million yuan, up 46% year-on-year. The technologyiteration ability of CSG high alumina ultra-thin glass products is in the leading position in China, and won the "2019industry leader in touch display" award. Through technological innovation, the CSG Group opens the promotion lines

of downstream application and widen the technological gap with domestic counterparts. In 2019, the company'selectronic glass production capacity and industrial influence further enhanced as Xianning Electronic glass productionbase enters commercial operation. At the same time, the company gradually increased the R&D investment ofelectronic glass, successfully completed the development of a new generation of high-alumina electronic glass products.The excellent performance of CSG’s new generation of high-alumina electronic glass can meet the downstreamterminal customers' higher standard requirements for basic materials in the fields of 3D curved surface technology and5G communication solutions, and the market development is also progressing smoothly. At present, the innovativetechnology of one kiln and two lines of Qingyuan CSG which is under construction can not only enrich the productportfolio, but also further strengthen the cost barrier of the medium and low end electronic glass products. In the future,the group will continue to promote the upgrading of the electronic glass business, and further improve the group'scomprehensive competitiveness in the electronic glass industry.The display industry continues to improve production efficiency and yield through asset activation, strengthening thetechnical advantages of large-sized capacitive touch screens such as glass structure and film structure. In thecompetitive market environment, through the development of high value-added products and high growth customers,the company optimizes product structure and customer structure, and constantly consolidates and improves the marketshare of products. This year, the volume growth of on-board glass Sensor business realizes accelerated growth, and themarket share is greatly increased, which leads to the growth of ITO glass business and significant progress in thedevelopment of AG glass and cover plate business, which lays a foundation for the further improvement of thecompany's competitiveness and market position in the field of on-board touch control.

(III) Solar Energy industryAffected by the "May 31 new photovoltaic policy" in 2018, major changes have taken place in the overall operatingsituation of the solar energy industry,relatively heavy assets, old production capacity, and the distribution in theregion of high electricity prices, enterprises and production capacity of higher cost has greater operating pressure. SoYichang CSG Polydilicon, a subsidiary of the group, is facing serious challenges in its operation due to its location in aregion with high electricity prices and heavy burden of accumulated assets. After nearly a year of research andpreparation in 2019, the group determines the company’s working methodology of overall breakthrough for solarenergy industry. On one hand, the operation burden is reduced by eliminating inefficient assets with outdated processand high energy consumption, idle equipment, at the same time, PV grade polysilicon production capacity is prepared tobe moved and integrated to regions with lower electricity prices; on the other hand, quality of products and assets isimproved through technological upgrading and transformation, so as to achieve the sound operation of the photovoltaicindustry. In 2019, under the impact of the technical transformation of polysilicon production, the overall revenuedeclined.In 2019, the solar energy sector achieved an operating revenue of 1.542 billion yuan, a year-on-year decrease of 800million yuan, after drawing 406 million yuan impairment provision, a net profit of -328 million yuan, a year-on-yeardecrease of 91 million yuan.

II. Main business analysis

1. Overview

Unit: RMB

Items20192018Range of ChangeAnalysis of reasons
Operating income10,472,028,09910,609,963,011-1.30%
Operating costs7,743,129,6148,120,481,894-4.65%
Sales expenses389,269,235354,983,4599.66%
Administration expenses602,590,650731,215,251-17.59%Mainly due to the reduction of the amortization of equity incentive costs
R&D expenses366,871,283338,791,8918.29%
Financial expenses290,417,403349,403,487-16.88%Mainly due to the decrease in interest expenses
Net cash flow arising from operating activities2,379,036,3202,130,378,10011.67%Mainly due to a decrease in cash payments for goods purchased and services received.
Net cash flow arising from investment activities-733,075,474-778,807,979
Net cash flow arising from financing activities-2,040,156,870-1,588,458,276Mainly due to a reduction in cash received on loans.

2. Revenue and cost

(1) Constitution of operation revenue

Unit: RMB

20192018Increase/decrease y-o-y
AmountRatio in operation revenueAmountRatio in operation revenue
Total of operating income10,472,028,099100%10,609,963,011100%-1.30%
According to industry
Glass industry7,979,780,61576.20%7,453,555,12470.25%7.06%
Solar energy industry1,542,206,62014.73%2,341,776,47422.07%-34.14%
Electronic glass & Display industry1,044,208,0709.97%960,075,4289.05%8.76%
Others82,205,7120.79%58,900,9370.56%39.57%
Amount of unutilized-176,372,918-1.69%-204,344,952-1.93%-13.69%
According to product
Glass products7,979,780,61576.20%7,453,555,12470.25%7.06%
Solar energy products1,542,206,62014.73%2,341,776,47422.07%-34.14%
Electronic glass & Display products1,044,208,0709.97%960,075,4289.05%8.76%
Others82,205,7120.79%58,900,9370.56%39.57%
Amount of unutilized-176,372,918-1.69%-204,344,952-1.93%-13.69%
According to region
Mainland China9,123,825,21387.13%9,151,411,89386.25%-0.30%
Overseas1,348,202,88612.87%1,458,551,11813.75%-7.57%

(2) List of the industries, products or regions exceed 10% of the operating income or operating profits ofthe Company

√Applicable □ Not applicable

Unit: RMB

Operating revenueOperating costGross profit ratioIncrease/decrease of operating revenue y-o-yIncrease/decrease of operating cost y-o-yIncrease/decrease of gross profit ratio y-o-y
According to industry
Glass industry7,979,780,6155,792,756,34427.41%7.06%7.26%-0.13%
Solar energy industry1,542,206,6201,319,668,97014.43%-34.14%-39.93%8.24%
Electronic glass and display device industry1,044,208,070736,766,16029.44%8.76%10.32%-1.00%
According to product
Glass products7,979,780,6155,792,756,34427.41%7.06%7.26%-0.13%
Solar energy products1,542,206,6201,319,668,97014.43%-34.14%-39.93%8.24%
Electronic glass & Display device products1,044,208,070736,766,16029.44%8.76%10.32%-1.00%
According to region
Mainland China9,123,825,2136,716,284,77226.39%-0.30%-3.49%2.44%
Overseas1,348,202,8861,026,844,84223.84%-7.57%-11.58%3.46%

Under the circumstances that the statistical standards for the Company’s main business data adjusted in the reportperiod, the Company's main business data in the recent year is calculated based on adjusted statistical standards at theend of the report period

□ Applicable √ Not applicable

(3) Whether the Company’s goods selling revenue higher than the service revenue

Whether the Company’s goods selling revenue higher than the service revenue

√Yes □ No

IndustryItemUnit20192018Increase/decrease y-o-y (%)
Flat glassSales volume10,000-ton2922746.57%
Output10,000-ton2942728.09%
Inventory10,000-ton9650%
Architectural glassSales volume10,000-M22,8792,47116.51%
Output10,000-M22,9162,50016.64%
Inventory10,000-M21147258.33%
Electronic glassSales volumeton50,49739,93126.46%
Outputton61,72243,27542.63%
Inventoryton17,4785,742204.39%
PolysiliconSales volumeton4,753-100%
Outputton7,692-100%
Inventoryton38-100%
Silicon waferSales volume10,000-piece36,78226,34639.61%
Output10,000-piece36,99025,71543.85%
Inventory10,000-piece53042125.89%
Solar cellSales volumeMW784836-6.22%
OutputMW890917-2.94%
InventoryMW341978.95%

Reasons for y-o-y relevant data with over 30% changes

√Applicable □ Not applicable

1. Flat glass: The increase in inventories was mainly due to the increase in production by about 220,000 tons, whichincreased the inventory level.

2. Architectural glass: Through internal technical transformation and equipment capacity improvement, the companyhas greatly increased production quantity, resulting in an increase in inventory level

3. Electronic glass: Large-scale output of new production line was largely ahead of time schedule planned,while themarket promotion is still inprogress.

4. Polysilicon: Polysilicon is under upgrading this year, no production and sales, last year left a small amount ofinventory was left mainly for internal consumption.

5. Silicon wafer: The increase of production and sales is mainly due to the recovery of production capacity aftertechnical transformation, and the corresponding increase of production and sales.

6. Solar cell: The battery production is based on sales, inventory increase is mainly affected by the customers’ pick-uptime.

(4) Fulfillment of significant sales contracts signed by the Company up to the report period

□ Applicable √ Not applicable

(5) Constitution of operation cost

Main business cost structureIndustry classification

Unit: RMB

IndustryItem20192018Increase/decrease y-o-y
AmountRatio in operation costAmountRatio in operation cost
Glass industryRaw material4,558,141,05178.98%4,250,705,13979.08%7.23%
Labor wages560,930,6649.72%506,600,5639.42%10.72%
Manufacturing costs652,239,42211.30%618,127,41911.50%5.52%
Electronic glass & Display industryRaw material482,812,07965.57%437,942,81865.75%10.25%
Labor wages97,520,76313.24%86,736,18413.02%12.43%
Manufacturing costs155,953,71121.18%141,429,61521.23%10.27%
Solar energy industryRaw material1,058,197,05682.17%1,758,180,91280.99%-39.81%
Labor wages109,535,1728.51%164,144,4587.56%-33.27%
Manufacturing costs120,118,7499.33%248,666,10511.45%-51.69%

Product classification

Unit: RMB

ProductItem20192018Increase/decrease y-o-y
AmountRatio in operation costAmountRatio in operation cost
Glass productsRaw material4,558,141,05178.98%4,250,705,13979.08%7.23%
Labor wages560,930,6649.72%506,600,5639.42%10.72%
Manufacturing costs652,239,42211.30%618,127,41911.50%5.52%
Electronic glass & Display productsRaw material482,812,07965.57%437,942,81865.75%10.25%
Labor wages97,520,76313.24%86,736,18413.02%12.43%
Manufacturing costs155,953,71121.18%141,429,61521.23%10.27%
Solar energy productsRaw material1,058,197,05682.17%1,758,180,91280.99%-39.81%
Labor wages109,535,1728.51%164,144,4587.56%-33.27%
Manufacturing costs120,118,7499.33%248,666,10511.45%-51.69%

(6) Whether the consolidated scope changed during the report period

√ Yes □No

On March 21, 2019, the group established Zhuhai CSG Commercial Factoring Co., Ltd. As of December 31, 2019, thegroup has made a monetary capital contribution of 50 million yuan, and the group holds 100% of its shares.On May 14, 2019, the group established Zhuhai Hengqin New District CSG Glass Industrial Co., Ltd. As of December31, 2019, the group has made a monetary capital contribution of 6 million yuan, and the group holds 100% of its shares.On June 11, 2019, the group established Shenzhen CSG Supply Chain Management Service Co., Ltd. As of December31, 2019, the group has made a monetary capital contribution of 6 million yuan, and the group holds 100% of its shares.On July 24, 2019, the group set up Shenzhen CSG technologyCo., Ltd. As of December 31, 2019, the group has notinvested, and the group holds 100% of its shares.On August 6, 2019, the group set up Shenzhen CSG Hongkai Zone Operation Management co., Ltd. As of December31, 2019, the group has not invested, and the group holds 100% of its shares.On December 13, 2019, the group established Zhaoqing CSG Energy Conservation Glass Co., Ltd. As of December 31,2019, the group has made a monetary capital contribution of 12.801 million yuan, and the group holds 100% of itsshares.On December 13, 2019, the group established Zhaoqing CSG Automotive Glass Co., Ltd. As of December 31, 2019, thegroup has made a monetary capital contribution of 12.601 million yuan, and the group holds 100% of its shares.

(7) Major changes or adjustment in business, product or service of the Company in the report period

□ Applicable √ Not applicable

(8) Major customers and major suppliers

Major customers of the Company

Total sales to the top five customers (RMB)1,202,772,383
Proportion in total annual sales volume for top five customers11.49%

Information of the top five customers of the Company

SerialName of customerSales volume (RMB)Proportion in total annual sales
1Customer A316,259,1503.02%
2Customer B272,944,4772.61%
3Customer C271,514,8592.59%
4Customer D181,983,8671.74%
5Customer E160,070,0301.53%
Total1,202,772,38311.49%

Other statement of main customers

□ Applicable √ Not applicable

Major suppliers of the Company

Total purchase amount from the top five suppliers (RMB)1,282,467,323
Proportion in total annual purchase amount from the top five suppliers16.19%

Information of the top five suppliers of the Company

SerialName of supplierPurchase amount (RMB)Proportion in total annual purchase
1Supplier A411,556,0565.19%
2Supplier B245,300,3243.10%
3Supplier C240,702,0003.04%
4Supplier D220,491,4702.78%
5Supplier E164,417,4732.08%
Total1,282,467,32316.19%

Other statement of major suppliers

□ Applicable √ Not applicable

3. Expenses

Unit: RMB

20192018Increase/decrease y-o-yNote of major changes
Sales expense389,269,235354,983,4599.66%
Management expense602,590,650731,215,251-17.59%Mainly due to the reduction of the amortization of equity incentive costs
Financial expense290,417,403349,403,487-16.88%Mainly due to the reduction of interest costs.
R&D expenses366,871,283338,791,8918.29%

4. R&D expenses

√Applicable □ Not applicable

The Company always emphasizes R&D of new products, new technology and new craft, and R&D aims to stay close tothe market, production and industry.

R&D investment of the Company

20192018Ratio of change
Number of R & D personnel (person)18414626.03%
Ratio of number of R&D personnel1.76%1.35%0.41%
Amount of R & D investment (RMB)440,884,641381,711,07015.50%
Ratio of the R&D investment to the operating income4.21%3.60%0.61%
Amount of the capitalized R&D investment (RMB)74,013,35842,963,84572.27%
Ratio of the capitalized R&D investment to the R&D investment16.79%11.26%5.53%

Reason of remarkable changes over the last year of the ratio of the total R&D investment amount to the operatingincome

□ Applicable √ Not applicable

Reason of substantial change of the ratio of the R&D investment capitalization and its reasonable explanation

√ Applicable □ Not applicable

Mainly due to increased investment in research and development.

5. Cash flow

Unit: RMB

Item20192018Increase/decrease y-o-y
Subtotal of cash in-flow from operation activity11,798,483,07512,086,856,666-2.39%
Subtotal of cash out-flow from operation activity9,419,446,7559,956,478,566-5.39%
Net cash flow from operation activity2,379,036,3202,130,378,10011.67%
Subtotal of cash in-flow from investment activity37,590,25135,327,5576.4%
Subtotal of cash out-flow from investment activity770,665,725814,135,536-5.34%
Net cash flow from investment activity-733,075,474-778,807,979
Subtotal of cash in-flow from financing activity3,471,013,3524,672,680,876-25.72%
Subtotal of cash out-flow from financing activity5,511,170,2226,261,139,152-11.98%
Net cash flow from financing activity (i)-2,040,156,870-1,588,458,276
Net increased amount of cash and cash equivalent (ii)-393,291,883-234,626,252

Relevant data year-on-year major changes in the main influencing factors

√Applicable □ Not applicable

(i) It is mainly caused by the decrease of cash from loans received.

Notes to the reason of the significant differences between the net cash flow from the operating activities and the netprofits of the year during the report periodApplicable √ Not applicable

III. Analysis of the non-core business

√Applicable □ Not applicable

Unit: RMB

AmountRatio in total profitNote for the reasonSustainable or not
Asset impairment463,324,68569.98%Mainly due to the provision of long-term asset impairmentNo
Non-operating income7,827,8341.18%Mainly due to the claims and unpayable amountsNo
Non-operating expense9,440,0871.43%Mainly due to donations and compensation expensesNo
Other Income184,131,42027.81%Mainly due to the department of government subsidies amortizationNo
Credit impairment loss20,114,0333.04%Mainly due to the provision of accounts receivable and other receivables impairment lossesNo

IV. Assets and liabilities

1. Major changes of assets and liabilities composition

Unit: RMB

As at 31 Dec. 2019As at 31 Dec. 2018Change of proportionNotes of major changes
AmountProportion in total assetsAmountProportion in total assets
Monetary funds1,986,980,41810.92%2,226,447,72011.65%-0.73%
Advance payment78,196,0270.43%91,176,6750.48%-0.05%
Notes receivable297,023,3801.63%719,375,4483.76%-2.13%Mainly due to the classification of some notes into receivables financing according to the new financial instrument standards
Accounts receivable649,681,1773.57%592,233,3123.10%0.47%
Receivables financing258,296,8261.42%01.42%Mainly due to the classification of some notes into receivables financing according to the new financial instrument standards
Inventory812,321,6904.46%600,139,7503.14%1.32%Mainly due to the increase of goods in stock
Holding assets for sale0.00%45,983,5200.24%-0.24%Mainly due to the disposal of assets held for sale
Fix assets9,783,037,30153.75%9,930,843,77551.96%1.79%
Construction in process1,902,140,03510.45%2,559,179,44213.39%-2.94%
Deferred income tax assets205,792,5871.13%139,529,5180.73%0.40%Mainly due to long-term asset impairment and tax losses increase
Other Non-Current Assets120,399,8930.66%56,825,9340.30%0.36%Mainly due to the advance payment of engineering equipment and the increase of land assignment fee
Short-term loans2,240,969,13712.31%2,922,679,59015.29%-2.98%
Notes payable232,063,9681.27%105,150,0000.55%0.72%Mainly due to the increase of new bills issued by some subsidiaries
Prepayments292,803,8111.61%206,631,0081.08%0.53%Mainly due to the increase of advance payment of some subsidiaries
Other payables351,374,7751.93%552,751,1872.89%-0.96%Mainly due to the repurchase of restricted stock
Current portion of non-current liabilities1,712,456,9289.41%819,448,7424.29%5.12%Mainly due to the reclassification of medium-term notes to non-current liabilities due within one year
Long-term loans1,320,225,0007.25%2,315,700,00012.12%-4.87%Mainly due to the reclassification of medium-term notes to non-current liabilities due within one year
Long term Accounts payable87,240,5290.48%529,910,7962.77%-2.29%Mainly due to the repayment of financial leasing
Deferred income tax liabilities30,197,6570.17%22,118,8400.12%0.05%
Capital reserve683,219,3583.75%1,095,339,4215.73%-1.98%Mainly due to the repurchase of
restricted stock and Capital reserve into share capital
Treasury stock118,066,3970.65%277,180,9831.45%-0.80%Mainly due to the repurchase of restricted stock
Other Comprehensive Income6,565,8640.04%5,080,2340.03%0.01%Mainly due to foreign currency statement translation difference changes
Special Reserve11,102,9210.06%6,068,6000.03%0.03%

2. Assets and liabilities measured at fair value

□ Applicable √ Not applicable

3. Limited asset rights as of the end of the report period

ItemLimited amountLimited reason
Monetary funds155,145,388Limited margin transfer
Fix assets1,373,926,910Limited of Leveraged lease and Mortgage loan
Total1,529,072,298

V. Investment

1. Overall situation

√Applicable □ Not applicable

Investment in the report period (RMB)Investment in the same period of last year ( RMB)Changes
770,665,725814,135,536-5.34%

2. The major equity investment obtained in the report period

□ Applicable √ Not applicable

3. The major ongoing non-equity investment in the report period

√Applicable □ Not applicable

Unit: RMB 0,000

ProjectWay of investmentFixed asset investment or notIndustry involvedAmount invested in the report periodAccumulative amount actually invested by the end of the report periodSource of fundsProgress of project (ongoing projects)Expected returnAccumulative revenue achieved by the end of the report periodReasons for not achieving the planned progress and the expected returnDate of disclosure (if applicable)Index of disclosure (if applicable)
Qingyuan CSG ultra-clear electronic glass and ultra-clear special glass product line construction projectSelf-builtYesManufacturing industry8,8398,873Own funds and loans from financial institutionsThe company plans to adopt the advanced design concept of one kiln and two lines, and build a production line of one kiln and two lines (80 + 620T/D) for ultra-white electronics and ultra-white special glass with a daily melting capacity of 700 tons in Qingyuan CSG. The first-line plan is designed according to 80T/D, will produce 0.33-1.1mm, considering the production capacity of 2mm, mainly producing electronic display toughened protective glass for mobile phones. The second-line plan is designed according to 620T/D, with two series of 3-4mm and 15-22mm for differentiated management, and 5-12mm as the transition, mainly producing AG anti-dazzle, "exposure glass" for scanning and copier, TCO for thin film battery, battery front plate and back plate and other ultra-clear special glass.16,420Project construction period, no profits temporarily.Decenber 22, 2018Notice number: 2018-072
ZhaoqingSelf-builtYesManufaThe CSG Group plans to invest in7,000Project constructionDecembeNotice
CSG high-grade Energy Conservation glass production line projectcturing industrythe construction of energy-saving glass production project in Zhaoqing from 2019 to 2021. After the production, the company will produce 2.5 million square meters of energy-saving insulating glass and 3.5 million square meters of coated energy-saving products with an estimated annual profit of 70 million yuan. At present, the land auction has been completed and an investment agreement has been signed with the local government.period, no profits temporarily.r 13, 2019number: 2019-077
Zhaoqing CSG high-grade automotive glass production line projectSelf-builtYesManufacturing industryThe CSG group plans to invest in the construction of high-end automotive glass production line in Zhaoqing from 2019 to 2021, with an annual production capacity of 800,000 sets and an estimated annual profit of 58 million yuan. The land auction has been completed and an investment agreement has been signed with the local government.5,800Project construction period, no profits temporarily.December 13, 2019Notice number: 2019-077
Yichang CSG Polysilicon wafer capacity technology upgrade projectSelf-builtYesManufacturing industry2,0872,682Own funds and loans from financial institutionsIt is planned to fully implement the diamond wire cutting technology in the production of silicon wafers, introduce the casting single crystal technology and the wet black silicon technology, and upgrade the production capacity of the 1.3 GW polysilicon wafers in the early stage of the company to form an annual output of about 1.2 GW of cast single wafer. And annual production capacity of about 0.8GW wet black silicon wafer. The main part of the project was12,599Project revenue cannot be accounted for separately.July 28, 2018Notice number: 2018-040
completed in June 2019.
Yichang CSG to add a 1GW silicon wafer projectSelf-builtYesManufacturing industry2,74249,367Own funds and loans from financial institutionsCSG has added 1GW capacity of high-efficient polysilicon wafer to achieve 2.2GW capacity of polysilicon wafer. Construction of the first 500 MW capacity of polysilicon wafer was completed in September 2017. The company has decided to stop the implementation of the other 500MW capacity project. For details, please refer to the announcement of the resolution of the extraordinary meeting of the 8th Board of Directors in 2018.14,853Project revenue cannot be accounted for separately. The company has decided to stop the implementation of the post-500MW capacity project. For details, please refer to the announcement of the resolution of the extraordinary meeting of the 8th Board of Directors in 2018.January 06, 2016, April 16, 2016, July 28, 2018Notice number: 2016-001、2016-018、2018-040
PV power plant investmentSelf-builtYesManufacturing industry26,214Own funds and loans from financial institutionsCSG plans to construct PV power plants within two years from 2016 to 2017. Its wholly-owned subsidiary, Shenzhen CSG PV Energy Co., Ltd. will self-build 200MW and the remaining 140MW will be constructed by CSG with Qibin Group. During 2016 to 2018, Shenzhen CSG PV developed and built a total of 78MW of photovoltaic power stations, including 58MW of distributed photovoltaic power plants and 20MW of centralized photovoltaic power plants.4,3444,840Part of the project has been completed.January 22, 2016Notice number: 2016-006
Hebei Panel Glass project of medium-alumina ultra-thin electronic glass product line projectSelf-builtYesManufacturing industry1,266Own fundsPlan to establish a production line for medium-alumina ultra-thin electronic glass in Hebei Panel Glass, using clean natural gas as the fuel, and produce 0.33mm~1.1mm medium-alumina ultra-thin glass with float process. The project was still in preparation.October 29, 2014Notice number: 2014-030
Yichang CSG 700MW crystalline silicon solar cell projectSelf-builtYesManufacturing industryPlan to build a crystalline silicon solar cell production line with annual capacity of 700MW. The project was suspended and further investment will be based on actual industry situations.The project was suspended.December 25, 2010Notice number: 2010-046
Expanding 500MW solar module project in DongguanSelf-builtYesManufacturing industryPlan to expand the solar module production line with annual capacity of 500MW. The project was suspended and further investment will be based on actual industry situations.The project was suspended.January 19, 2011Notice number: 2011-003
Relocation and equipment upgrading of the solar module production line in DongguanSelf-builtYesManufacturing industryThe Company plans to construct a module workshop in Xianning, Hubei Province, of which the final capacity will be 500MW. By relocation of some of the module equipment of its subsidiary, Dongguan CSG PV Technology Co., Ltd. and purchase of some new equipment, the first stage capacity of the Xianning workshop will be 300MW and, afterwards, it will be expanded to 500MW as required upon the market conditions.The project was suspended.April 16, 2016Notice number: 2016-018
Dongguan CSG Solar online self-cleaning coated glass projectSelf-builtYesManufacturing industryThe Company plans to construct an online self-cleaning coated glass line in Dongguan.The project was suspended.April 16, 2016Notice number: 2016-018
Malaysia-invested architectural glass plantSelf-builtYesManufacturing industryThe Company plans to construct an architectural glass plant in Negeri Sembilan, Malaysia. The Phase I capacity of the newly-built plant will be 1,200,000 square meters insulating glass and 1,000,000 square meters singleThe project was suspended.April 16, 2016Notice number: 2016-018
coated glass.
Total------13,66888,402----61,0164,840------

4. Financial assets investment

(1) Securities investment

□ Applicable √ Not applicable

There was no securities investment during the report period.

(2) Derivative investment

□ Applicable √ Not applicable

There was no derivative investment during the report period.

5. Use of raised fund

□ Applicable √ Not applicable

There was no such case during the report period.

VI. Sales of major assets and equity

1. Sales of major assets

□ Applicable √ Not applicable

No significant assets were sold during the reporting period.

2. Sales of major equity

□ Applicable √ Not applicable

VII. Analysis of main holding companies and joint -stock companies

√Applicable □ Not applicable

Particular about main subsidiaries and joint -stock companies which have influence on the Company's net profit by over10%

Unit: RMB

Name of companyTypeMain businessRegistered capitalTotal assetsNet AssetsOperating revenueOperating profitNet profit
Chengdu CSG Glass Co., Ltd.SubsidiaryDevelopment, manufacture and sales of various special glass260 million840,990,586546,952,6521,072,080,856163,678,120139,431,223
Xianning CSG Glass Co., Ltd.SubsidiaryDevelopment and manufacture and sales of various special glass235 million831,429,012520,961,544755,511,58963,493,80456,278,817
Hebei CSG Glass Co., Ltd.SubsidiaryManufacture and sales of various special glassUSD 48.06million892,359,312572,521,445860,035,303104,091,09791,827,037
Wujiang CSG Glass Co., Ltd.SubsidiaryManufacture and sales of various special glass565.04 million1,609,229,0081,071,447,8371,594,296,478187,711,190160,859,577
Dongguan CSG Architectural Glass Co., Ltd.SubsidiaryDeep processing of glass240 million883,788,994457,634,6451,059,498,565118,732,812104,071,914
Wujiang CSG East China Architectural Glass Co., Ltd.SubsidiaryDeep processing of glass320 million828,653,010554,182,040807,053,98196,625,75183,821,772
Qingyuan CSG New energy saving materials Co., Ltd.SubsidiaryManufacture and sales of Ultra-thin electronic glass300 million851,692,264405,052,746191,876,250111,244,92596,443,283
Tianjin CSG Energy Conservation Glass Co., LtdSubsidiaryDevelopment, producing and sales of energy-saving special glass336 million821,352,824566,873,379803,383,317103,070,42788,116,551
Dongguan CSG Solar Glass Co., Ltd.SubsidiaryManufacture and sales of Solar-Energy Glass products480 million1,199,438,692805,281,4251,132,495,470141,508,441122,877,781
Yichang CSG Polysilicon Co., Ltd.SubsidiaryManufacture and sales of high purity silicon material products1,467.98 million3,222,544,630760,173,819709,922,429-454,839,506-384,967,337
Shenzhen Nanbo Display Technology Co., Ltd.SubsidiaryManufacture and sales of display device products143 million1,641,871,421910,859,748561,179,16876,920,79465,100,006

Particular about subsidiaries obtained or disposed in report period

□ Applicable √ Not applicable

Description of the major holding company:

Affected by factors such as the slowdown in growth of fixed asset investment and the year-on-year increase in the total productioncapacity of the industry, the sales price of float glass products of subsidiaries of the flat glass sector has declined to a certain extentthis year, and the company also needs to face the pressure of increasing environmental protection requirements and continuouslyrising price of raw material and fuel, resulting in a year-on-year decline in profits. However, through the promotion of overseasorders and the increase of the share of double glass module, the solar glass support for the benefits of flat glass. In 2019, theadvantages of engineering glass will be further reflected. The sales volume and price of major products have risen and the profit levelhas been greatly improved, so as to maintain the leading position in the industry. Yichang silicon material of the Group’s solarenergy sector was affected by polysilicon technical transformation, and its operating revenue decreased year on year. At the sametime, in order to reduce the business burden of the enterprise and promote the sound development in the medium and long term, theGroup upholding prudent and steady operating principle, some of the silicon materials of backward technology, high energyconsumption of the assets of 397 million yuan impairment provision. Electronic glass and display device business is the company'shigh-growth business segment, the revenue and profit continue to climb year on year.VIII. Structured main bodies controlled by the Company

□ Applicable √ Not applicable

IX. Outlook of the Company’s future development

1. Tendency of development of the industries the Company involved

Flat glass industry

In recent years,under the policy of supply-side reform and other policies, the supply and demand structure of the industry has beenoptimized, and the state of overcapacity has been improved. A series of policies implemented by the state, such as industrial guidance

catalogue, air pollution treatment, elimination of non-standard products and production control, have effectively controlled industrialcapacity, improved product quality and accelerated the elimination of backward production capacity. In 2019, although the demandof the real estate sector is slightly weak, the expansion of the use of flat glass and the improvement of the production capacitystructure, the overall market supply and demand structure is stable.In 2020, the regulation policy of real estate is expected to be considerably relaxed, the data of completed real estate area is expectedto be revised, and the market supply and demand environment is expected to be stable. With the continued implementation of thepolicy of further capacity reduction and the possible implementation of stricter emission standards, it is expected that the overallmarket supply and demand relationship will shift to a tight supply situation, and the industry leader will benefit significantly. Theimprovement of the industry and market structure will benefit the CSG Group which has been paying attention to environmentalprotection and has complete environmental protection facilities.

Architectural glass industryAlong with the domestic economic entered the "new normal", float glass price floating at high position, CSG Groupthrough promotion on brand, quality, service, market for high-value, Vigorously develop the equipment automation andinformatization, reduce the cost of the industry and increase the profit. Market position of CSG further consolidated,looking for opportunities in the crisis, CSG architectural glass performance increase dramatically in 2019.

In the long run, Low-E energy-saving glass is the key of construction energy-saving whose penetration has been over 80% indeveloped countries but less than 15% in China so far. In recent years, Chinese government has expanded more efforts to promotegreen building. In 2016, NDRC and Urban-Rural Development jointly issued the action plan for cities to adapt to climate change,which proposed that by 2020, China will build 30 pilot cities to adapingt to climate change, the governance of pilot cities uponclimate change adapting is significantly improved, and the proportion of green buildings to be promoted will reach 50%. It can beseen that the future market has broad prospects.Solar energy industryIn 2019, subsidies for new domestic power stations almost completely decline, and the photovoltaic industry isundergoing a transformation from policy orientation to market orientation. On the power generation side, the on-gridelectricity price of photovoltaic is gradually integrated with that of thermal power. Photovoltaic power generation willface the competition of thermal power, and the cost of photovoltaic KWH determines the destiny of the industry. Theupstream of the manufacturing end of the industrial chain has high energy consumption, which will be concentrated inthe western region with low electricity price. The downstream of the manufacturing end of the industrial chain willfocus on single crystal products with high photoelectric conversion efficiency. The competition in the industry is stillfierce, only the enterprises that have the advantage of cost or technology can survive.Electronic glass and display industryConsumer electronics industry has entered the inventory market, market resources continue to concentrate on the head positionmanufacturers. From the macro point of view, the slowdown in industry growth will intensify the competition situation in theuperstream of the industrial chain in a short term, and the enterprise differentiation in the downstream of the industrial chain will leadto the evolution of the competition pattern of the uperstream material manufacturers. But at the same time, it also provides the marketopportunity for the upstream material manufacturers with the leading technology innovation ability and benign operation to developfast.With the popularization and development of 5G technology, smart home, smart car, smart factory, advanced medical treatment andother application segments are about to enter a high-speed development stage, which will provide a broader market prospect andmarket space for the electronic glass industry.

According to the display industry forecast given by the authoritative research institute Touch Display Research, theglobal touch display industry revenue will continue to grow in the next decade, but the growth rate will gradually slowdown. In this process, OLED display technology, as the most competitive display technology, will gradually occupy the

dominant position in the market, especially flexible OLED technology, for its foldable character, becoming arevolutionary technology upgrade. The peripheral material to flexible OLED is expected to occupy a larger marketadvantage in the future. In addition, in the field of automotive electronics, with the rapid development of new energyvehicles, as well as the development of technologies such as vehicle networking technology, and multi-screen, large-screen or curved surfaces technology integrated automotive touch-control display products will become the standardlayout for automobiles, which has a broad market prospect.

2. Company Development Strategy

2020 is the 36th anniversary of the establishment of CSG Group. The company will firmly stick to the strategy ofworking hard to make the glass industry, as our main business, bigger and stronger, and coordinate the development ofelectronic glass and display device business, pursue high-quality development, adhering to the purpose of "businessfirst", continue to enhance the company's core competitiveness and strengthen strategic support for the development ofthe industry, to promote the key cultivation business to grow into a strategic support industry as soon as possible,occupy the commanding heights of the industry, strengthen the advantage of raw material resources, improvetechnology and R&D strength, expand market share and market influence, integrate industrial resources,comprehensively improve the credibility and influence of the CSG brand, plan the layout of the CSG industry from aglobal and macro perspective, and build the CSG Group into a transnational enterprise group with internationalinfluence related to the upstream and downstream of the glass industry.

3. Business Plan of 2020

①Improve functions of headquarters, realize general planning management, promote centralized purchase, leanmanagement, exploit its potential and increase efficiency, and ensure the completion of operation construction objectiveof the Company in 2020;

② Improve R&D capacity, build up R&D talent team, and maintain the technical innovation advantage of the Companyin the industry;

③ Create open, equal, fair and initiative enterprise culture, and strengthen core cohesion of the Company;

④ Strengthen talent management, establish remuneration incentive system related to the performance, improvecompany incentive mechanism, strengthen employee training, and introduce high-quality talents;

⑤ Rationally plan asset-liability ratio level and ensure financial risk under control;

⑥ Vigorously conduct potential exploiting and efficiency increase activity, realize energy saving and consumptionreduction, and strengthen competitiveness of the Company;

⑦ Improve information level of the Company, and create the world first-class information management platform.

4. Capital Requirements, Plan and Sources

In 2020, the company's budget capital expenditure was about 3.191 billion yuan, mainly for the construction of lightweight and high-transmittance solar pane project ultra-clean electronic glass and ultra-clean special glass productionline, photovoltaic power station investment, PV cellar production line technology upgrade, engineering glass workshopautomation and production capacity expansion. The sources of funds are mainly funds raised by private offering self-owned funds, loans from financial institutions, and public issuance of corporate bonds.

5. Risks and Countermeasures

In 2020, in the face of “New Normal” of domestic economic development and the task of building a“Hundred yearsCSG”, the Company will face the following risks and challenges:

① In 2019, under the efforts of the Board of Directors and all employees, daily operation of the Company enterednormal and stable operation. However, the Company still faces the risk of insufficient reserves of senior talents for thelong-term development of the Company. To cope with aforesaid risks, the Company will take the following measures:

A. Establish an open, equal, fair and enterprising corporate culture, strengthen the internal core cohesion of employees;B. Establish remuneration incentive system which related to performance and improve employee incentive mechanism;C. Strengthen internal employee training, introduce external high-quality talent, and rapidly establish a high-qualitytalent team;D. Establish sustainable talent recruitment, cultivation, utilization, retaining, and development management system;create a future-oriented human resource production, development, supply system that can support the futuredevelopment of CSG.

②The glass industry continue to face the pressure of downward demand and horizontal competition, the solarphotovoltaic industry will enconter the risk of product price fluctuations and a shrinking market share for polysiliconproducts. The electronic glass and display devices industries will encounter the risk of overcapacity and falling demand.To cope with aforesaid risks, the Company will take the following measures:

A. In the flat glass industry, the Company will expand the industrial scale and enhance the competitiveness of theindustry through continuous lean management, differentiated management and product structure optimization.B. In the architectural glass industry, the Company will strengthen the development of high-end market and overseasmarket, actively develop traditional residence market, and at the same time, maintain the industrial advantageousposition of the Company through market-oriented extension of industrial chain;C. In the solar photovoltaic industry, the company will continue to improve product quality, accelerate the introductionof new technologies and research and development, improve production efficiency, reduce unit costs. In order to copewith the declining market share of polysilicon products, the company has completed the PERC battery technologyupgrade of 400MW and made preparations for the PERC battery technology upgrade on the whole line to adapt to themarket changes. In addition, the company's polysilicon chip business, relying on the leading edge of technology, willcontinue to maintain long-term strategic cooperation with industry leaders, to ensure that in the severe market situationstill occupy a stable market share.D. In electronic glass and display devices industry, the Company will strengthen research and development of newtechnology, new product, maintain its technical leading advantage in the industry, and rapidly develop terminal marketand improve industrial profitability.

③ Since 2019, the market price of glass and solar energy PV industrial has fluctuated greatly. At the same time, theprices of upstream raw materials have fluctuated, and the current rising labor costs have brought risks to the Company'soperations.To cope with risk, the Company will take the following measures:

A. Vigorously exploit potential and increase efficiency, and effectively implement energy saving and consumptionreduction;B. Focus on the market change, and lock the price of bulk commodity at proper time;C. Utilize bulk purchase advantage to reduce purchase cost;D. Improve automatic production level, raise labor productivity.

④ Risk of fluctuation of foreign exchange rate: At present, nearly 12.98% of the sales revenue of the Company is fromoverseas, in the future, the Company will further develop overseas business, and therefore, the fluctuation of exchangerate will bring certain risk to the operation of the Company. To cope with such risk, the Company will settle exchangein time and use safe and effective risk evading instrument and product to relatively lock exchange rate and reduce therisk caused by fluctuation of exchange rate.

X. Reception of research, communication and interview

1. Particulars about research, communication and interview in the report period

□Applicable √Not applicable

The Company did not receive any research, communication or interviews during the report period.

Section V. Important Events

I. Profit distribution plan of common shares and capitalization of capital reserve plan of theCompanyImplementation or adjustment of profit distribution plan in the report period, cash dividend plan and converting capitalreserve into share capital in particular

√ Applicable □Not applicable

The profit distribution plan for 2018 was approved by Annual General Shareholders’ Meeting of 2018 held on 9 May2019 which distributed distributing cash dividend of RMB 0.5 (tax included) for every 10 shares to all shareholders andtransferred capital reserve into capital with 1 shares for every 10 shares to all shareholders. Notice of the distributionwas published on China Securities Journal, Securities Times, Shanghai Securities News and Hong Kong CommercialDaily on 20 June 2019, and the profit has been distributed.

Special explanation on cash dividend policy
Satisfy regulations of General Meeting or requirement of Article of Association (Yes/No)Yes
Well-defined and clearly dividend standards and proportion (Yes/No)Yes
Completed relevant decision-making process and mechanism (Yes/No)Yes
Independent directors perform duties completely and play a proper role (Yes/No)Yes
Minority shareholders have ample opportunities and their legitimate rights and interests are effectively protected (Yes/No)Yes
Condition and procedures are compliance and transparent while the cash bonus policy adjusted or changed (Yes/No)Yes

Statement on profit distribution plan and capitalization of capital reserve plan of the Company in nearly three years(including the report period)Statement on profit distribution plan in 2019:Based on the current total share capital of 3,106,915,005 shares,distributing cash dividend of RMB 0.7 (tax included) for every 10 shares to all shareholders.Statement on profit distribution plan and capitalization of capital reserve plan of the Company in 2018: based on2,825,632,877 shares of the total share capital while dividends will be distributed, distributing cash dividend of RMB

0.5 (tax included) for every 10 shares to all shareholders. Meanwhile the Company will transfer capital reserve intocapital with 1 share for every 10 shares to all shareholders based on 2,825,632,877 shares of the total share capital.Statement on profit distribution plan and capitalization of capital reserve plan of the Company in 2017: based on2,484,147,547 shares of the total share capital while dividends will be distributed, distributing cash dividend of RMB

0.5 (tax included) for every 10 shares to all shareholders. Meanwhile the Company will transfer capital reserve intocapital with 1.5 shares for every 10 shares to all shareholders based on 2,484,147,547 shares of the total share capital.

Cash dividend in latest three years (including the report period)

Unit: RMB

Year for bonus sharesAmount for cash dividend (tax included)Net profit attributable to shareholders of listed company in consolidation statement for bonus yearRatio in net profit attributable to shareholders of listed company contained in consolidation statementCash dividend by other ways (such as repurchase shares)Proportion for cash dividends in other ways to the net profit attributable to ordinary shareholders of listed companiesAmount for cash dividend (including other ways)Net profit attributable to shareholders of listed company in consolidation statement for bonus year (including other
in the consolidated statementsways)
2019217,484,050536,430,81840.54%00%217,484,05040.54%
2018141,281,644452,965,93531.61%0%141,281,64431.19%
2017124,207,377825,388,31215.05%0%124,207,37715.05%

Note:

1. The actual amount of the cash dividend distributed and capital reserve transferred will be determined according to thetotal share capital on the capital reserved registration date for profit distribution implementation.

2. Dividends from equity incentives for restricted shares are distributed by the Company itself.The Company gains profits in the report period and the retained profit of parent company is positive but no plan of cashdividend proposed

□ Applicable √ Not applicable

II. Proposal of profit distribution preplan or share conversion from capital public reserve inthe report period

√Applicable □ Not applicable

Distributing bonus shares for every 10 shares (share)0
Distributing cash dividend for every 10 shares (tax included) (RMB)0.7
Shares added for every 10-share base (Share)0
Equity base for distribution preplan (share)3,106,915,005
Total amount distribution in cash (RMB) (tax included)217,484,050
Cash dividend amount in other ways (such as repurchasing shares) (RMB)0
Total cash dividends (including other methods) (RMB)217,484,050
Profit available for distribution (RMB)496,479,354
Cash distributing accounted for the proportion of the total amount of profit distribution (including other methods)100%
Particular about cash dividend in the period
If the Company's development stage is not easy to distinguish but there are major capital expenditure arrangements, when the profit is distributed, the proportion of cash dividends in this profit distribution should be at least 20%.
Details of proposal of profit distribution preplan or share conversion from capital public reserve
According to the financial report audited by Asia Pacific (Group) CPAs (special general partnership), the net profit attributable to equity holders of the Company in consolidated statement was RMB 536,430,818 in 2019. Since cash dividend distribution bases on the distributable profit of parent company, the Company took 10% of the net profit as stationary surplus reserve which was RMB 21,945,911 based on the net profit RMB 219,459,106 of parent company statement 2019. The allocation for Shareholders in 2019 was RMB 496,479,354. The deliberated and approved plan of profit distribution in the Board Meeting is distributing cash dividend of RMB 0.7 yuan (tax included) for every 10 shares to all shareholders based on 3,106,915,005 shares of the total currently share capital., and the total amount distribution is RMB 217,484,050 (including tax)The actual amount of the cash dividend distributed will be determined according to the total share capital on the registration date of the Company's implementation of the profit distribution plan. The actual amount of the cash dividend distributed and capital reserve transferred will be determined according to the total share capital on the capital reserved registration date for profit distribution implementation when the company implements the profit distribution plan. The above profit distribution proposal must be submitted to the 2019 Annual General Meeting of shareholders.

III. Implementation of commitment

1. Commitments completed by the actual controllers, the shareholders, the related parties, the purchasers,the Company or the other related parties during the report period and those hadn’t been completedexecution by the end of the report period

√Applicable □ Not applicable

CommitmentsPromiseeType of commitmentsContent of commitmentsCommitment dateCommitment termImplementation
Commitments for Share Merger ReformThe original non-tradable shareholder Shenzhen International Holdings (SZ) Limited and Xin Tong Chan Industrial Development (Shenzhen) Co., Ltd.Commitment of share reductionThe Company has implemented share merger reform in May 2006. Till June 2009, the share of the original non-tradable shareholders which holding over 5% total shares of the Company had all released. Therein, the original non-tradable shareholder Shenzhen International Holdings (SZ) Limited and Xin Tong Chan Industrial Development (Shenzhen) Co., Ltd. both are wholly-funded subsidiaries to Shenzhen International Holdings Limited (hereinafter Shenzhen International for short) listed in Hong Kong united stock exchange main board. Shenzhen International made commitment that it would strictly carry out related regulations of Securities Law, Administration of the Takeover of Listed Companies Procedures and Guiding Opinions on the Listed Companies’ Transfer of Original Shares Released from Trading Restrictions issued by CSRC during implementing share decreasingly-held plan and take information disclosure responsibility timely.2006-5-22N/ABy the end of the report period, the above shareholders of the Company had strictly carried out their promises.
Commitments in report of acquisition or equity changeForesea Life Insurance Co., Ltd, Shenzhen Jushenghua Co., Ltd. and ChengtaiCommitment of horizontal competition, affiliateForesea Life Insurance Co., Ltd., Shenzhen Jushenghua Co., Ltd. and Chengtai Group Co., Ltd. issued detailed report of2015-6-29During the period when Foresea LifeBy the end of the report period, the above shareholders
Group Co., Ltd.Transaction and capital occupationequity change on 29 June 2015, in which, they undertook to keep independent from CSG in aspects of personnel, assets, finance, organization set-up and business as long as Foresea Life Insurance remained the largest shareholder of CSG. Meanwhile, they made commitment on regularizing related transaction and avoiding industry competition.remains the largest shareholder of the Companyof the Company had strictly carried out their promises.
Commitments in assets reorganizationNot applicable
Commitments in initial public offering or re-financingNot applicable
Equity incentive commitmentThe listed companyCSG has promised not to provide loans and other forms of financial assistance for restricted stocks for the incentive targets under this plan, including providing guarantees for their loans.2017-10-10During the implementation of the equity incentive planThe commitment is in normal performance.
Other commitments for medium and small shareholdersNot applicable
Completed on time(Yes/No)Yes
If the commitments is not fulfilled on time, explain the reasons and the next work planNot applicable

2. If there are assets or projects of the Company, which has profit forecast and the report period is still inforecasting period, the Company should explain reasons why they reach the original profit forecast

□ Applicable √ Not applicable

Commitments made by shareholders and counterparties in reporting annual operating performance of a company

□ Applicable √ Not applicable

IV. Particular about non-operating fund of listed company which is occupied by controllingshareholder and its affiliated enterprises

□ Applicable √ Not applicable

There was no non-operating fund of listed company which is occupied by controlling shareholder and its affiliatedenterprises in the report period.V. Explanation from Board of Directors, Supervisory Committee and Independent Directors(if applicable) for “Non-standard audit report” of the period that issued by CPA

□ Applicable √ Not applicable

VI. Particulars about the changes in aspects of accounting policy, accounting estimate andcalculation method compared with the financial report of last year

√Applicable □ Not applicable

The content and reason of accounting policy changeApproval procedures
According to the Circular on the Amendment to the Formats of Corporate Financial Statements for the Year of 2019(Cai Kuai [2019] No. 6) issued by the ministry of finance in April 2019,adjust the format of financial statement.The 9th meeting of the 8th board of directors held on August 21, 2019 considered and approved the motion on accounting policy change.
According to the Ministry of Finance issued CAS 22–Recognition and Measurement of Financial Instruments, CAS 23–Transfer of Financial Assets, AS 24–Hedging and CAS 37–Presentation of Financial Instruments (collectively, “New Financial Instruments Standards”) in 2017,domestic listed companies are required to start the implementation from January 1, 2019.The 9th meeting of the 8th board of directors held on August 21, 2019 considered and approved the motion on accounting policy change.
According to the requirements specified in the Notice on DistributingRevised No. 7 of Accounting Standards for Business Enterprises - Exchange of Non-monetary Assets (CK [2019] No. 8), the exchange of non-monetary assets occurring in the period from Jan. 1, 2019 to the implementation date has been adjusted according to the revised standards, while that occurring before Jan. 1, 2019 shall not be retroactively adjusted. The above changes in accounting policy don’t have a significant impact on the company’s financial statements in 2019.The 11th meeting of the 8th board of directors held on April 28, 2020 considered and approved the motion on accounting policy change.
According to the requirements specified in the Notice on DistributingRevised No. 12 of Accounting Standards for Business Enterprises - Debt Restructuring (CK [2019] No. 9), the debt restructuring occurring in the period from Jan. 1, 2019 to the implementation date has been adjusted according to the revised standards, while that occurring before Jan. 1, 2019 shall not be retroactively adjusted. That aforesaid changes in accounting policy don’t have a significant impact on the company’s financial statements in 2019.The 11th meeting of the 8th board of directors held on April 28, 2020 considered and approved the motion on accounting policy change.

The financial statements or the year ended 31 December 2019 are prepared in accordance with the above standards andcircular. The revised Standard for Exchange of Non-monetary Assets and Standard for Debt Restructuring have nosignificant impact on the Group and the Company, other amendments' impact on the Group's and the Company'sfinancial statements are set out as follows.(a)General enterprise financial statement format modification(i) The impact on the consolidated balance sheet for 2018 is shown below:

Consolidate balance sheet itemsBefore the adjustmentAfter the adjustment
Notes receivable and accounts receivable1,311,608,760
Notes receivable719,375,448
accounts receivable592,233,312
Notes payable and accounts payable1,315,009,263
Notes payable105,150,000
accounts payable1,209,859,263

(ii) The impact on the company's balance sheet for 2018 is shown below:

Company balance sheet itemsBefore adjustedAfter adjusted
Notes receivable and accounts receivable
Notes receivable
Accounts receivable
Notes payable and accounts payable261,024
Notes payable
Accounts payable261,024

(b) Financial instruments

According to the new financial instruments standard, the Group and the company adjusted the cumulative effect ofinitially applying the standard as an adjustment to the opening balance of retained earnings in 2019 and other relevantline items in the financial statements. The comparative financial statements have not been restated. On December 31,2018 and January 1, 2019, neither the consolidation nor the company was designated as a financial asset measured atfair value through profit or loss.

(i) On January 1, 2019, the financial assets in the consolidated financial statements were classified and measuredaccording to the original financial instrument standards and the new financial instrument standards:

Original financial instrument criteriaNew guidelines for financial instruments
ItemMeasurement categoryConsolidated book valueItemMeasurement categoryConsolidated book value
Cash and Bank BalancesAmortized cost2,226,447,720Cash and Bank BalancesAmortized cost2,226,447,720
Notes receivableAmortized cost719,375,448Receivables financingIt is measured at fair value and its changes are included in other comprehensive income304,180,556
Notes receivableAmortized cost415,194,892
Accounts receivableAmortized cost592,233,312Accounts receivableAmortized cost592,233,312
Other receivablesAmortized cost207,424,295Other receivablesAmortized cost207,424,295

(ii) On January 1, 2019, the financial assets in the company's financial statements were classified and measuredaccording to the provisions of the original financial instrument standards and the new financial instrument standards:

Original financial instrument criteriaNew guidelines for financial instruments
ItemMeasurement categoryBook value of the companyItemMeasurement categoryBook value of the company
Cash and BankAmortized1,700,726,151Cash and BankAmortized cost1,700,726,151
BalancescostBalances
Notes receivableAmortized costNotes receivableAmortized cost
Accounts receivableAmortized costAccounts receivableAmortized cost
Other receivablesAmortized cost2,912,516,245Other receivablesAmortized cost2,912,516,245

VII. Description of major accounting errors within report period that need retrospectiverestatement

□ Applicable √ Not applicable

There were no major accounting errors within report period that need retrospective restatement.

VIII. Description of changes in consolidation statement’s scope compared with the financialreport of last year

√Applicable □ Not applicable

On March 21, 2019, the group established Zhuhai CSG Commercial Factoring Co., Ltd. As of December 31, 2019, thegroup has made a monetary capital contribution of 50 million yuan, and the group holds 100% of its shares.On May 14, 2019, the group established Zhuhai Hengqin New District CSG Glass Industrial Co., Ltd. As of December31, 2019, the group has made a monetary capital contribution of 6 million yuan, and the group holds 100% of its shares.On June 11, 2019, the group established Shenzhen CSG Supply Chain Management Service Co., Ltd. As of December31, 2019, the group has made a monetary capital contribution of 6 million yuan, and the group holds 100% of its shares.On July 24, 2019, the group set up Shenzhen CSG technology Co., Ltd. As of December 31, 2019, the group has notinvested, and the group holds 100% of its shares.On August 6, 2019, the group set up Shenzhen CSG Hongkai Zone Operation Management co., Ltd. As of December31, 2019, the group has not invested, and the group holds 100% of its shares.On December 13, 2019, the group established Zhaoqing CSG Energy Conservation Glass Co., Ltd. As of December 31,2019, the group has made a monetary capital contribution of 12.801 million yuan, and the group holds 100% of itsshares.On December 13, 2019, the group established Zhaoqing CSG Automotive Glass Co., Ltd. As of December 31, 2019, thegroup has made a monetary capital contribution of 12.601 million yuan, and the group holds 100% of its shares.IX. Engaging and dismissing of CPA firmCPA firm engaged

Name of domestic CPA firmAsia Pacific (Group) CPAs (special general partnership)
Remuneration for domestic CPA firm (RMB 0,000)300
Continuous life of auditing service for domestic CPA firm2
Name of domestic CPAZhao Qingjun, Zhou Xianhong
Continuous life of auditing service for domestic CPA2

Whether changed accounting firms in this period or not

□ Yes √No

Whether changed the accounting firm during the audit period or not

□ Yes √No

Appointment of internal control auditing accounting firm, financial consultant or sponsor

√Applicable □ Not applicable

Asia Pacific (Group) CPAs (special general partnership) was engaged as audit institute of internal control for theCompany in the report period, and contracted charges was RMB 0.30 million (not including traveling andaccommodation expenses).

X. Particular about the Company suspended from the stock market listing and delisting afterthe disclosure of the annual report

□ Applicable √ Not applicable

XI. Issues related to bankruptcy and reorganization

□ Applicable √ Not applicable

XII. Significant lawsuits and arbitrations

□ Applicable √ Not applicable

XIII. Penalty and rectification

□ Applicable √ Not applicable

XIV. Integrity of the Company and its controlling shareholders and actual controllers

□ Applicable √ Not applicable

XV. Implementation of the Company’s stock incentive plan, employee stock ownership planor other employee incentives

√Applicable □ Not applicable

On Oct. 10, 2017, the 3

rd Meeting of the 8

th

Board of Directors of the Company deliberated and approved 2017Restricted A- shares Incentive Plan of CSG Holding Co., Ltd (Draft )and its summary, the Management Method of theImplementation and Review of 2017 Restricted A-shares Incentive Plan of CSG Holding Co., Ltd and the Resolution onApplying the General Meeting of Shareholders to Authorize the Board of Directors to Deal With the Related Matters onthe Company’s 2017 Restricted A-shares Incentive Plan. The above contents are detailed in the Announcement of theResolution on the Third Meeting of the Eighth Session of the Board of Directors published in www.cninfo.com.cnOct.11, 2017. (Announcement No.: 2017-063). The Company’s independent directors issued independent opinions onthe issues involved with restricted A- shares incentive plan.On Oct. 26, 2017, the Company convened the 5

thExtraordinary General Meeting in 2017, which deliberated andapproved the above three proposals. The Resolution on Adjusting the Object and Quantity Granted of 2017 RestrictedA-share Incentive Plan and the Resolution on Firstly Granted Restricted Shares to the Object of 2017 Restricted A-sharewere deliberated and approved on the 21

st

provisional meeting of the eighth session board of directors convened on Dec.

th

, 2017. It determined to grant 97,511,654 restricted shares to 454 objects on Dec. 11, 2017, with price atRMB4.28/share. The reserved restricted shares was 17,046,869 shares.The granting of shares was completed on Dec. 25, 2017 and the specific content was detailed in the Announcement onCompleting the First Granting of 2017 Restricted Shares disclosed in www.cninfo.com.cn on Dec. 22, 2017(Announcement No.:2017-079).On July 20, 2018, the company held the extraordinary meeting of the 8th Board of Directors and the extraordinarymeeting of the 8th Board of Supervisors, and reviewed and approved the Proposal on Repurchase and RestrictingPartially Restricted Stocks of Restricted Stock Incentive Plan. The independent director of the company issued aconsent. Opinions; and on August 6, 2018, the second extraordinary shareholders meeting in 2018 was approved. As ofSeptember 10, 2018, the company has completed the cancellation procedures for the above-mentioned restricted stocksat China Securities Depository and Clearing Co., Ltd. Shenzhen Branch. The total number of shares of the companywas changed from 2,856,769,678 shares to 2,853,450,621 shares.On September 13, 2018, the company convened an extraordinary meeting of the 8th Board of Directors and an ad hocmeeting of the 8th Board of Supervisors, and reviewed and approved the Proposal on Granting Restricted Stocks to the2017 Restricted Stock Incentive Plan for Incentive Objects. The grant date for the second reserved restricted stock wasSeptember 13, 2018, and the company agreed to grant a total of 9,826,580 reserved restricted stocks to 75 incentivetargets at a price of 3.68 yuan/share. The independent directors have issued independent opinions on the above proposal,and the company's supervisory board has once again verified the list of incentive targets on the grant date. The sharesgranted have been registered in the Shenzhen Branch of China Registration and Clearing Corporation and listed onSeptember 28, 2018. The total number of shares of the company has changed from 2,853,450,621 shares to2,863,277,201 shares.On December 12, 2018, the company held the extraordinary meeting of the 8th Board of Directors and the extraordinarymeeting of the 8th Board of Supervisors, and reviewed and approved the Proposal on Repurchase and RestrictingPartially Restricted Stocks of Restricted Stock Incentive Plan, and reviewed and agreed to repurchase and write-off of atotal of 436,719 shares of all restricted shares granted but not yet unrestricted to sale by 8 unqualified original incentivesubjects, The total number of all restricted stocks that were not eligible for the original incentives but not yet releasedwas limited to 436,719 shares, and was approved by the third extraordinary general meeting of 2018 on December 28,2018. As of June 18, 2019, the company has completed the cancellation procedures of the above-mentioned restrictedstock at the Shenzhen branch of China securities registration and clearing co., Ltd.,For details, please refer to the notice on completion of cancellation of partial restricted stock repurchase (notice No.:

2019-040) published on Juchao information website (www.cninfo.com.cn) on June 19, 2019.On December 12, 2018, the company held the extraordinary meeting of the 8th Board of Directors and the 8thExtraordinary Meeting of the Board of Supervisors, and reviewed and approved the first release of the company's 2017A-share restricted stock incentive plan for the first time. In addition to the fact that the eight incentive targets have notbeen able to lift the restrictions on sales, the total number of incentives for the conditions for lifting the restrictions is431, and the number of restricted stocks that can be unlocked is 43,353,050 shares, accounting for the current company.

1.51% of the total share capital. The board of supervisors, independent directors, and law firms issued separate opinions.The date of the restricted stock release date is December 21, 2018.On April 16, 2019, the company held the 8th meeting of the 8th board of directors, and the 8th meeting of the 8th boardof supervisors. The meetings approved the “Proposal concerning the repurchase and cancellation of some restrictedshares from the ‘incentive plan’ of restricted shares”, and the “Proposal concerning the repurchase andcancellation of restricted shares failing to meet the second-term unlocking condition”. The meetings approved torepurchase and cancel a total of 3,473,329 restricted shares which have already been granted to and held by 14recipients 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 directorsagreed 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 has been accomplished.For details, please refer to the notice on completion of cancellation of partial restricted stock repurchase (notice No.:

2019-040) published on Juchao information website (www.cninfo.com.cn) on June 19, 2019.On September 16, 2019, the company convened an extraordinary meeting of the 8th Board of Directors and anextraordinary meeting of the 8th Board of Supervisors, and reviewed and approved the “Proposal on Repurchase andCancelation part of Restricted Stocks of Restricted Stock Incentive Plan”, considered and agreed to repurchase andcancel the total of 1,281,158 shares of 18 incentive targets of all restricted stocks that have been granted to them whohave not been eligible with stock still under restriction. It was approved by the forth extraordinary general meeting ofshareholders in 2019, held on October 10, 2019. The above restricted stock has not completed the cancellationprocedures at the end of the reporting period.On September 16, 2019, the company convened an extraordinary meeting of the 8th Board of Directors and anextraordinary meeting of the 8th Board of Supervisors, and reviewed and approved the "proposal on the achievement ofcondition for unlock the first restriction period stock of the 2017 a-share restricted stock incentive plan of the company".Except the 3 incentive objects who have left the company and are no longer qualified for unlocking, the total number ofincentive objects who meet the condition for unlocking is 71, and the number of restricted shares that can be unlocked is3,909,350, accounting for 0.13% of the total share capital of the company at present. The board of supervisors, theindependent directors and the law firm have expressed their express consents. The unlock date/ listing date of theserestricted stock is September 25, 2019.

XVI. Major related transaction

1. Related transaction with routine operation concerned

□ Applicable √ Not applicable

There was no related transaction with routine operation concerned in the report period.

2. Related transaction with acquisition of assets or equity, sales of assets or equity concerned

□ Applicable √ Not applicable

There was no related transaction with acquisition of assets or equity, sales of assets or equity concerned in the reportperiod.

3. Related transaction with jointly external investment concerned

□ Applicable √ Not applicable

There was no related transaction with jointly external investment concerned in the report period.

4. Credits and liabilities with related parties

□ Applicable √ Not applicable

There were no credits and liabilities with related parties in the report period.

5. Other major related transaction

□ Applicable √ Not applicable

There was no other major related transaction in the report period.

XVII. Significant contracts and their implementation

1. Trusteeship, contracting and leasing

(1) Trusteeship

□ Applicable √ Not applicable

No trusteeship for the Company in the report period.

(2) Contract

□ Applicable √ Not applicable

No contract for the Company in the report period.

(3) Leasing

□ Applicable √ Not applicable

No leasing for the Company in the report period.

2. Major guarantees

√Applicable □ Not applicable

(1) Guarantee

Unit: RMB 0,000

Particulars about the external guarantee of the Company (Barring the guarantee for subsidiaries)
Name of the Company guaranteedRelated Announcement disclosure dateGuarantee limitActual date of happening (Date of signing agreement)Actual guarantee limitGuarantee typeGuarantee termComplete implementation or notGuarantee for related party (Yes or no)
Guarantee of the Company for the subsidiaries
Name of the Company guaranteedRelated Announcement disclosure dateGuarantee limitActual date of happening (Date of signing agreement)Actual guarantee limitGuarantee typeGuarantee termComplete implementation or notGuarantee for related party (Yes or no)
Yichang Nanbo Photoelectric Glass Co., Ltd.2017-5-225,4722017-5-265,400Joint liability guarantee3 yearsYesNo
Yichang CSG Polysilicon Co., Ltd.2017-5-2220,0002017-6-229,928Joint liability guarantee3 yearsYesNo
Yichang CSG Polysilicon Co., Ltd.2017-6-2320,0002017-6-2811,214Joint liability guarantee3 yearsYesNo
Chengdu CSG Glass Co.,Ltd.2017-5-225,0002018-4-24,500Joint liability guarantee1 yearYesNo
Sichuan CSG Energy Conservation Glass Co., Ltd.2017-5-25,0002018-4-82,700Joint liability guarantee1 yearYesNo
Chengdu CSG Glass Co.,Ltd.2018-7-216,5002018-8-104,500Joint liability guarantee1 yearYesNo
Wujiang CSG Glass Co., Ltd.2018-3-910,0002018-6-283,500Joint liability guarantee1 yearYesNo
Wujiang CSG Glass Co., Ltd.2018-8-115,0002018-11-302,551Joint liability guarantee1 yearYesNo
Dongguan CSG Solar Glass Co., Ltd.2017-11-273,2002018-6-143,000Joint liability guarantee1 yearYesNo
Tianjin CSG Energy-Saving Glass Co., Ltd.2018-4-95,0002018-6-222,000Joint liability guarantee1yearYesNo
Dongguan CSG Architectural Glass Co., Ltd.2018-7-2111,2002018-8-102,145Joint liability guarantee1 yearYesNo
Xianning CSG Glass Co., Ltd.2018-7-215,0002018-8-103,000Joint liability guarantee1 yearYesNo
Hebei Panel Glass Co., Ltd.2018-7-211,5002018-8-10637Joint liability guarantee1 yearYesNo
China Southern Glass (Hong Kong) Ltd.2018-6-196,5722018-8-106,572Joint liability guarantee1 yearYesNo
Sichuan CSG Energy Conservation Glass Co., Ltd.2018-7-216,5002018-8-102,000Joint liability guarantee1 yearYesNo
Sichuan CSG Energy Conservation Glass Co., Ltd.2018-7-216,5002018-8-101,932Joint liability guarantee1 yearYesNo
Wujiang CSG East China Architectural Glass Co., Ltd.2018-8-1110,0002018-9-116,000Joint liability guarantee1 yearYesNo
Dongguan CSG Solar Glass Co., Ltd.2018-7-2115,0002018-8-103,200Joint liability guarantee1 yearYesNo
Dongguan CSG Solar Glass Co., Ltd.2018-7-2115,0002018-8-10693Joint liability guarantee1 yearYesNo
Tianjin CSG Energy-Saving Glass Co., Ltd.2018-7-212,0002018-8-102,000Joint liability guarantee1 yearYesNo
Dongguan CSG2018-7-2111,2002018-8-102,144Joint1 yearYesNo
Architectural Glass Co., Ltd.liability guarantee
Wujiang CSG Glass Co., Ltd.2018-8-115,0002018-11-302,551Joint liability guarantee1 yearYesNo
Wujiang CSG Glass Co., Ltd.2018-8-1110,0002018-9-115,000Joint liability guarantee1 yearYesNo
Dongguan CSG Architectural Glass Co., Ltd.2018-7-2111,2002018-8-104,000Joint liability guarantee1 yearYesNo
Dongguan CSG Architectural Glass Co., Ltd.2018-8-1118,0002018-10-3018,000Joint liability guarantee1 yearYesNo
Dongguan CSG PV-tech Co., Ltd.2018-7-320,0002018-8-215,527Joint liability guarantee1 yearYesNo
Qingyuan CSG New Energy-Saving Materials Co., Ltd.2018-8-114,3302018-10-23500Joint liability guarantee1 yearYesNo
Yichang Nanbo Photoelectric Glass Co., Ltd.2018-7-211,5202018-9-26100Joint liability guarantee1 yearYesNo
Xianning CSG Energy-Saving Glass Co., Ltd.2018-7-215,0002018-8-103,000Joint liability guarantee1 yearYesNo
Chengdu CSG Glass Co.,Ltd.2018-7-216,5002018-8-102,800Joint liability guarantee1 yearYesNo
Wujiang CSG Glass Co., Ltd.2018-8-115,0002018-11-30852Joint liability guarantee1 yearYesNo
Hebei Panel Glass Co., Ltd.2018-7-211,5002018-8-10698Joint liability guarantee1 yearYesNo
Sichuan CSG Energy Conservation Glass Co., Ltd.2018-7-216,5002018-8-102,000Joint liability guarantee1 yearYesNo
Dongguan CSG Solar Glass Co., Ltd.2018-7-2115,0002018-8-102,300Joint liability guarantee1 yearYesNo
Dongguan CSG Solar Glass Co., Ltd.2019-2-205,0002019-6-28439Joint liability guarantee1 yearYesNo
Tianjin CSG Energy-Saving Glass Co., Ltd.2018-7-212,0002018-8-102,000Joint liability guarantee1 yearYesNo
Dongguan CSG Solar Glass Co., Ltd.2019-2-268,0002019-5-29500Joint liability guarantee1 yearYesNo
Dongguan CSG Solar Glass Co., Ltd.2019-2-125,0002019-5-29500Joint liability guarantee1 yearYesNo
Dongguan CSG Solar Glass Co., Ltd.2019-3-193,2002019-6-27500Joint liability guarantee1 yearYesNo
Dongguan CSG Solar Glass Co.,2017-8-720,0002017-9-2213,500Joint liability3 yearsYesNo
Ltd.guarantee
Sichuan CSG Energy Conservation Glass Co., Ltd.2017-9-2515,0002017-9-306,250Joint liability guarantee3 yearsYesNo
Chengdu CSG Glass Co.,Ltd.2017-9-2520,0002017-9-289,616Joint liability guarantee3 yearsYesNo
Zhanjiang CSG New Energy Co., Ltd.2017-7-319,0002017-9-265,738Joint liability guarantee3 yearsNoNo
Xianning CSG Photovoltaic Glass Co., Ltd.2016-8-1630,0002017-1-317,732Joint liability guarantee3 yearsNoNo
Xianning CSG Photovoltaic Glass Co., Ltd.2016-8-1630,0002017-1-3410Joint liability guarantee3 yearsNoNo
Xianning CSG Photovoltaic Glass Co., Ltd.2017-8-120,0002017-9-78,100Joint liability guarantee3 yearsNoNo
Yichang Nanbo Photoelectric Glass Co., Ltd.2017-5-2210,0322017-5-261,788Joint liability guarantee3 yearsNoNo
Dongguan CSG PV-tech Co., Ltd.2017-11-2720,0002017-12-207,020Joint liability guarantee3 yearsNoNo
Dongguan CSG PV-tech Co., Ltd.2019-8-2330,5002019-12-171,165Joint liability guarantee2 yearsNoNo
Xianning CSG Glass Co., Ltd.2017-9-1625,0002017-9-186,250Joint liability guarantee3 yearsNoNo
Xianning CSG Glass Co., Ltd.2019-2-264,0002019-4-12,000Joint liability guarantee1 yearNoNo
Hebei CSG Glass Co., Ltd.2017-10-1020,0002017-10-307,019Joint liability guarantee3 yearsNoNo
Chengdu CSG Glass Co.,Ltd.2019-6-15,0002019-7-302,000Joint liability guarantee1 yearNoNo
Chengdu CSG Glass Co.,Ltd.2019-2-268,0002019-5-242,500Joint liability guarantee1 yearNoNo
Sichuan CSG Energy Conservation Glass Co., Ltd.2019-6-15,0002019-7-231,500Joint liability guarantee1 yearNoNo
Wujiang CSG Glass Co., Ltd.2017-8-2830,0002017-9-1310,000Joint liability guarantee3 yearsNoNo
Wujiang CSG Glass Co., Ltd.2019-9-1810,0002019-10-121,000Joint liability guarantee1 yearNoNo
Wujiang CSG Glass Co., Ltd.2019-9-1810,0002019-10-12700Joint liability guarantee1 yearNoNo
Wujiang CSG Glass Co., Ltd.2019-11-2010,0002019-12-231,724Joint liability1 yearNoNo
guarantee
Wujiang CSG Glass Co., Ltd.2019-2-268,0002019-5-311,500Joint liability guarantee1 yearNoNo
Dongguan CSG Architectural Glass Co., Ltd.2019-4-176,0002019-8-301,000Joint liability guarantee1 yearNoNo
Dongguan CSG Architectural Glass Co., Ltd.2018-10-918,0002018-10-3018,000Joint liability guarantee1 yearYesNo
Wujiang CSG Glass Co., Ltd.2019-10-286,0002019-10-28Joint liability guarantee1 yearNoNo
Wujiang CSG East China Architectural Glass Co., Ltd.2019-11-2110,0002019-12-23Joint liability guarantee1 yearNoNo
Wujiang CSG East China Architectural Glass Co., Ltd.2018-8-1110,0002019-9-116,000Joint liability guarantee1 yearYesNo
Wujiang CSG East China Architectural Glass Co., Ltd.2019-9-1810,0002019-12-234,434Joint liability guarantee1 yearNoNo
Wujiang CSG East China Architectural Glass Co., Ltd.2018-10-910,0002019-3-282,000Joint liability guarantee1 yearNoNo
Dongguan CSG Solar Glass Co., Ltd.2019-10-285,0002019-12-17Joint liability guarantee2 yearsNoNo
Dongguan CSG Solar Glass Co., Ltd.2019-2-268,0002019-5-29500Joint liability guarantee1 yearNoNo
Dongguan CSG Solar Glass Co., Ltd.2019-2-1272,2882019-5-292,000Joint liability guarantee1 yearNoNo
Dongguan CSG Solar Glass Co., Ltd.2019-1-224,5002019-11-291,000Joint liability guarantee1 yearNoNo
Dongguan CSG Solar Glass Co., Ltd.2019-3-193,2002019-6-271,000Joint liability guarantee1 yearNoNo
Qingyuan CSG New Energy-Saving Materials Co., Ltd.2019-12-104,3302019-12-10Joint liability guarantee1 yearNoNo
Qingyuan CSG New Energy-Saving Materials Co., Ltd.2019-3-1220,0002019-3-1915,294Joint liability guarantee3 yearsNoNo
Yichang CSG Display Co., Ltd.2018-12-135,0002019-12-10663Joint liability guarantee1 yearNoNo
Yichang CSG Display Co., Ltd.2019-2-262,4322019-10-31300Joint liability guarantee1 yearNoNo
China Southern Glass (Hong Kong) Ltd.2019-6-148,0002019-10-166,718Joint liability guarantee1 yearNoNo
Dongguan CSG Architectural Glass Co., Ltd.2019-8-232019-9-174,000Joint liability guarantee1 yearNoNo
Dongguan CSG2019-8-232019-9-171,131Joint1 yearNoNo
Architectural Glass Co., Ltd.liability guarantee
Dongguan CSG Solar Glass Co., Ltd.2019-8-232019-9-171,500Joint liability guarantee1 yearNoNo
Dongguan CSG PV-tech Co., Ltd.2019-8-232019-9-175,500Joint liability guarantee1 yearNoNo
Qingyuan CSG New Energy-Saving Materials Co., Ltd.2019-8-232019-9-174,200Joint liability guarantee1 yearNoNo
Hebei Panel Glass Co., Ltd.2019-8-232019-9-17450Joint liability guarantee1 yearYesNo
Hebei Panel Glass Co., Ltd.2019-8-232019-9-17249Joint liability guarantee1 yearYesNo
Chengdu CSG Glass Co.,Ltd.2019-8-232019-9-17800Joint liability guarantee1 yearNoNo
Sichuan CSG Energy Conservation Glass Co., Ltd.2019-8-232019-9-174,147Joint liability guarantee1 yearNoNo
Xianning CSG Energy-Saving Glass Co., Ltd.2019-8-232019-9-171,906Joint liability guarantee1 yearNoNo
Wujiang CSG East China Architectural Glass Co., Ltd.2019-8-232019-9-171,082Joint liability guarantee1 yearNoNo
Tianjin CSG Energy-Saving Glass Co., Ltd.2019-8-232019-9-172,000Joint liability guarantee1 yearNoNo
Tianjin CSG Energy-Saving Glass Co., Ltd.2019-8-232019-9-17500Joint liability guarantee1 yearNoNo
Tianjin CSG Energy-Saving Glass Co., Ltd.2019-8-232019-9-17419Joint liability guarantee1 yearNoNo
Total amount of approving guarantee for subsidiaries in report period (B1)354,506Total amount of actual occurred guarantee for subsidiaries in report period (B2)78,821
Total amount of approved guarantee for subsidiaries at the end of reporting period (B3)499,282Total balance of actual guarantee for subsidiaries at the end of reporting period (B4)140,240
Total amount of guarantee of the Company( total of three abovementioned guarantee)
Total amount of approving guarantee in report period (A1+B1+C1)354,506Total amount of actual occurred guarantee in report period (A2+B2+C2)78,821
Total amount of approved guarantee at the end of report period (A3+B3+C3)499,282Total balance of actual guarantee at the end of report period (A4+B4+C4)140,240
The proportion of the total amount of actual guarantee in14.77%
the net assets of the Company(that is A4+ B4+C4)
Including:
Total amount of the aforesaid three guarantees(D+E+F)0
Amount of guarantee for shareholders, actual controller and its related parties(D)0
The debts guarantee amount provided for the guaranteed parties whose assets-liability ratio exceed 70% directly or indirectly(E)0
Proportion of total amount of guarantee in net assets of the Company exceed 50%(F)0
Total amount of the aforesaid three guarantees(D+E+F)0
Explanations on possibly bearing joint and several liquidating responsibilities for undue guarantees (if any)N/A
Explanations on external guarantee against regulated procedures(if any)N/A
Explanations on Guarantee of the Company for the subsidiariesThe total Guarantee limit was 3,545.06 million in the reporting period, and the company's guarantee line in HSBC (China) co., LTD for the above-mentioned subsidiaries shall not exceed 480 million in total. The company and its wholly-owned subsidiary Yichang CSG Polysilicon Co.,Ltd. jointly guaranteed 305 million for Dongguan CSG PV-tech Co., Ltd.. The company has carried out the bill pool business of 400 millio. The company and its holding subsidiaries can adopt various guarantee methods such as pledge of maximum amount, general pledge, pledge of certificates of deposit, pledge of bills, pledge of security deposit and so on for the establishment and use of the bill pool.

(2) Illegal external guarantee

□ Applicable √ Not applicable

No Illegal external guarantee in the report period.

3. Entrust others to manage cash assets

(1) Entrusted Financing

□Applicable √Not applicable

No Entrusted financing in the report period.

(2) Entrusted loans

√ Applicable □ Not applicable

Unit: RMB 0,000

Accrued of loanAmount of loanUnexpired balanceOverdue outstanding amount
60,000Own funds30,000

Note:

At the 8th extraordinary meeting of the board of directors held on September 11, 2019, the company considered andapproved the issuance of entrusted loans to Yuezhou water investment and development co., TD. of Tengchong, with atotal amount of 300 million yuan. The term of the entrusted loan is 3 months and the annualized interest rate of theentrusted loan is 8.5%. The principal and proceeds of the entrusted loan have been recovered according to the contract.At the 8th extraordinary meeting of the board of directors held on December 20, 2019, the company considered andapproved the issuance of entrusted loans to Yuezhou water investment and development co., TD. of Tengchong, with atotal amount of 300 million yuan. The term of the entrusted loan is 3 months and the annualized interest rate of theentrusted loan is 8.5%. March 24,2020, the principal and proceeds of the entrusted loan have been recovered accordingto the contract.Mar.24.2019,Above loans capital and income has been withdrew.

The specific circumstances of high-risk entrusted loan with large individual amount or low security, poor liquidity, andno cost protection

□ Applicable √ Not applicable

Entrusted loan appears to be unable to recover the principal or there may be other circumstances that may result inimpairment

□ Applicable √ Not applicable

4. Other material contracts

□ Applicable √ Not applicable

No other material contracts for the Company in the report period.XVIII. Social responsibilities

1. Performance of social responsibilities

2019 Annual Social Responsibilities Report of CSG is the 12th annual report released by the Company consecutively.The report focusing on the year of 2019, systemically formulated the Company concrete actions of how to positivelyperform the social responsibilities, and the efforts to implement the”Scientific Development Perspective”, building up aharmonious society, and advancing the sustainable development of economic and society. See the full report onwww.cninfo.com.cn.

2. Circumstances related to environmental protection

Whether the listed company and its subsidiaries belong to the key pollutant discharge units announced by theenvironmental protection departmentYes

Name of Company or subsidiaryName of major pollutants and characteristic contaminantsWay of emissionNumber of Exhaust ventExhaust vent distributionEmission concentrationImplementation of pollutant emission standardsTotal emissionApproved total emissionExcessive emissions
Xianning CSGDust\Soot\ SO2\Discharge after the16Chimney, ExhaustDust≤30mg/m?;Soot≤40《Emission standard of airParticulates:26.21t;Particulates:Reach the discharge
Glass Co., Ltd.Nitrogen oxidetreatment of denitrification and dust removalventmg/m?;SO2≤300 mg/m?;NOx≤350 mg/m?.pollutants for flat glass industry》(GB26453-2011)SO2:202.45t;NOx:269.05t.96.82t/a;SO2:636.5t/a Nitrogen oxides:1113.89t/astandard
Chengdu CSG Glass Co., LtdDust\Soot\SO2\Nitrogen oxideDischarge after the treatment of denitrification and dust removal15chimney, exhaust ventDust≤30mg/m?;Soot≤20mg/m?;SO2≤200mg/m?;NOx≤350mg/m?.《Emission standard of air pollutants for flat glass industry》(GB26453-2011)Particulates:44.468t;SO2: 372.91t;NOx :755.85t.Particulates:129.395t/a;SO2:1035.162t/a;NOx:1811.536t/a。Reach the discharge standard
Hebei CSG Glass Co., Ltd.Dust\Particulates\SO2\Nitrogen oxideDischarge after denitrification, desulfurization and dust removal treatment12chimney, exhaust ventDust≤20mg/m?;Particulates≤10mg/m?;SO2≤50mg/m?;NOx≤200mg/m?.《Emission standard of air pollutants for flat glass industry》DB13/2168-2015 Hebei local standardParticulates:5.39t;SO2:58.2t;NOx :261.47t.Particulates:59.78t/a;SO2:498.18t/a;NOx:982.2t/a。Reach the discharge standard
Qingyuan CSG New Energy-Saving Materials Co., LtdParticulates \SO2\Nitrogen oxideDischarge after the treatment of denitrification and dust removal4chimney, exhaust ventParticulates≤30mg/m?;SO2≤280mg/m?;NOx≤550mg/m?.《Emission standard of air pollutants for flat glass industry》(GB26453-2011) 《by Guangdong Province Emission Standard of Air Pollutant for glass industry》, (DB 44/2159-2019)Particulates:4.868t;SO2: 1.62t;NOx :92.558t.Particulates:5.475t/a SO2:30.456t/a;NOx :247.258t/a。Reach the discharge standard
Yichang CSG Polysilicon Co., LtdPH\COD\Ammonia nitrogen\FluorideDischarged to the sewage treatment plant after being treated by the Company's sewage treatment station.3Sewage ventPH:6-9;COD≤500mg/L;Fluoride≤10 mg/L.《Sewage Integrated Emission Standards》Level 3 Standard (GB8978-1996),Fluoride implementation of primary standardsCOD:21.335t;Ammonia nitrogen:0.94t.COD:198.47t/a;Ammonia nitrogen:2.49t/a。Reach the discharge standard
Wujiang CSG Glass Co., LtdParticulates\SO2\Nitrogen oxideDischarge after the treatment of denitrification and dust removal39chimney, exhaust ventParticulates≤40mg/m?;SO2≤250 mg/m?;NOx≤300 mg/m?.《Emission standard of air pollutants for flat glass industry》(GB26453-2011)Particulates:36.94t;SO2:203.78t;NOx :368.58t.Particulates:76.91t/a;SO2:238.28t/a;NOx:818.04t/aReach the discharge standard
Dongguan CSG Solar Glass Co., Ltd.dust\soot\SO2\Nitrogen oxideDischarge after the treatment of denitrification and dust removal22chimney, exhaust ventdust≤5mg/m?;soot≤10 mg/m?;SO2≤400 mg/m?;NOx≤650 mg/m?。《Emission standard of air pollutants for flat glass industry》(GB26453-2011)Particulates5.57t;SO2: 249.48t;NOx :297.08t.Particulates:34.85t/a;SO2:300.99t/a;NOx:535.67t/a。Reach the discharge standard
Dongguan CSG Architectural Glass Co., Ltd.PH\COD\Ammonia nitrogenDischarged to the sewage treatment plant after being treated by the Company's sewage treatment station.1Sewage ventPH:6~9;COD≤16 mg/L;Ammonia nitrogen≤0.784 mg/L.《Guangdong Province water pollutant emission limit》(DB44/26-2001)Second period Level 1 StandardCOD:1.33t;Ammonia nitrogen:0.02t。COD:5.4t/a;Ammonia nitrogen:0.6t/a。Reach the discharge standard
Dongguan CSG PV-tech Co., Ltd.waste water:Fluoride\COD\Ammonia nitrogen:HF\NOxThe wastewater is discharged after being treated by the sewage station, and the exhaust gas is discharged after being treated by the exhaust gas treatment tower.20Sewage vent,Exhaust ventCOD≤70 mg/L;Ammonia nitrogen≤10mg/L;Fluoride≤8mg/L;exhaust:NOx≤30mg/m3;HF≤3 mg/m3.《Guangdong Province water pollutant emission limit》(DB44/26-2001)Second period first level standard;《Battery industry pollutant discharge standards》(GB30484-2013).waste water:COD:13.963t;Ammonia nitrogen:1.48t;Fluoride:1.18t; Exhuast:Nitrogen oxide:19.814t;Fluoride:1.335t.waste water:COD:14.04t/a;Ammonia nitrogen:1.56t/a;Fluoride:1.56t/a; exhaust:Nitrogen oxide:20.825t/a;:Fluoride: 1.5156t/a.Reach the discharge standard
Hebei Panel Glass Co., Ltd.Dust\Soot\SO2\Nitrogen oxideDischarge after the treatment of denitrification and dust removal5Chimney, exhaust ventdust≤30mg/m?;soot≤10 mg/m?;SO2≤50 mg/m?;NOx≤200mg/m?。《Electrical Glass Industry Air Pollutant Emission Standards》(GB29495-2013)Particulates:0.511t;SO2: 0.45t;NOx :7.02t.Particulates:8.2125t/a;SO2:22t/a;NOx:39.4t/a。Reach the discharge standard
Jiangyou CSG Mining Development Co.,LTD.Particulates\CODDischarge after dust removal by cloth bag; Discharge after treatment by sewage treatment equipment5Sewage vent,Exhaust ventParticulates≤20mg/m?;COD≤24mg/m?.《Emission Standard of Air Pollutants》GB16297-1996 Level 2 Standard;《integrated wastewater discharge standard》GB8978-1996Particulates:0.5t;COD:0.18t。Particulates: 12.96t/a;COD:0.57t/a。Reach the discharge standard
Level 1 Standard
Yichang CSG Display Co., Ltd.COD\Ammonia nitrogen\Nitrogen oxideThe waste water is discharged after being treated by the sewage station, and the exhaust gas is discharged after being treated by the exhaust gas treatment tower.2Sewage vent,Exhaust ventCOD≤500mg/;NOx<240mg/m?.。《Sewage Integrated Emission Standards》Level 3 Standard (GB8978-1996);《The Integrated Emission Standard of Air Pollutants》(GB16297-1996)COD:84.077t;NOx:0.08t.COD:99.5t/a; Nitrogen oxide:22.4t/a。Reach the discharge standard
Xianning CSG Photovoltaic Glass Co., LtdDust\Soot\SO2\Nitrogen oxideDischarge after the treatment of denitrification and dust removal6Chimney, Exhaust ventDust≤15mg/m?; Soot≤15 mg/m?;SO2≤10 mg/m?;NOx≤350 mg/m?.《Electrical Glass Industry Air Pollutant Emission Standards》(GB29495-2013)Particulates:2.16t;NOx: 50.01t.Particulates:17.656t/a;SO2:65.6t/a; Nitrogen oxide:163.81t/a。Reach the discharge standard

Construction and operation of pollution prevention and control facilitiesIn the prevention and control of pollution facilitie, the Company has built flue gas dust removal and denitrificationsystem on production lines. The system runs normally, and the emission of exhaust gas meets regulations standard.Chengdu CSG Glass Co., Ltd. and Wujiang CSG Glass Co., Ltd. have added flue gas desulfurization facilities, andpollutant emissions have been further reduced. Meanwhile, the company strictly implements the requirements of "threesimultaneous" construction projects for environmental protection, ensure that the environmental protection facilities aredesigned, constructed and put into use simultaneously with the main part of the project. In order to ensure theimplementation of all environmental measures, we check and confirm the implementation of all measures. Aiming atthe environmental protection facilities that have been built and put into operation, the company actively carries out thework of pollution source reduction and pollution prevention and control facilities’ upgrading and renovation, so as toreduce pollutant emissions through the combination of source reduction, process control and terminal treatment. Interms of the operation of pollution prevention and control facilities, we first defined the red line of operation andmanagement of environmental protection facilities. Secondly, continuously strengthen the operation processmanagement of environmental protection facilities, improve the operation stability and treatment efficiency. Finally, thepollutant emission level is monitored through the combination of online monitoring and manual monitoring to ensurethe steady discharge of pollutants to the standard.The environmental impact assessment of construction projects and other environmental protection licenseThe company strictly implements the relevant requirements of the environmental impact assessment law, carries out theenvironmental impact assessment for new projects, and implements the environmental protection measures in theevaluation documents in the design documents and engineering construction. After the new projects are put intooperation, the company has completed the independent acceptance procedures of environmental protection for the

completion of the construction projects on schedule, so as to ensure that the production of the construction projects islegal and compliant.In 2018, the new jade glass plates project of Dongguan CSG Jingyu new material co., Ltd. had been approved andobtained the environmental influence appraise, the project construction had been completed and had been turned intoproduction commissioning. The project for the construction of 1.2 million cells AG&AF glass plate by Yichang DisplayCo., Ltd., had been approved and obtained the environmental influence appraise in 2018, which is during theconstruction period, the project has completed part of the capacity construction and now enters the pilot productionstage. The project for the construction of Easy-clean glass coating production line by Xianning CSG Energy-Savinghad been approved and obtained the environmental influence appraise in 2018,the project has completed part of thecapacity construction and now enters the pilot production stage. The project of One Furnace Two Lines whichQingyuan CSG Energy-saving had been approved and obtained the environmental influence appraise in 2018, and theproject is under construction. The project for the construction of Quartz material processing line by Qingyuan CSG hadbeen approved and obtained the environmental influence appraise in 2018, the project construction had been completedand had been turned into production commissioning. The subsidiaries have effectively carrying out the “ThreeSimultaneous” procedures for all other new and old projects, and have been rewarded with the pollutant dischargelicense within the validity period. They timely declared the pollutant discharge, carried out the monitoring and reportingof pollutant discharge and paid the pollutant discharge fee according to the relevant regulations of the state.Emergency response plan system of environment incidentIn accordance with the national requirements, all subsidiaries prepared emergency environmental response plan forenvironment incident, organized and carried out expert evaluation and filed with the local environmental protectiondepartment as required, conducted the emergency drill against environmental incidents. And there were no majorenvironmental incidents occurred in 2019.Environmental self-monitoring schemeIn accordance with national laws and regulations, construction project environmental impact assessment documents andthe requirements of their approvals, the subsidiaries have built online monitoring facilities for waste water and exhaustgas, and connected with environmental protection regulatory departments. They have carried out regular comparisonand verification of the effectiveness of online monitoring facilities and entrusted third-party units to carry out manualenvironmental monitoring. Through the combination of self-monitoring and external contracting monitoring, the dailychecking of the operation effect of environmental protection facilities and the discharge of three wastes is carried out, soas to realize dynamic and real-time environmental monitoring and comprehensively monitoring of the discharge ofpollutants.Other environmental information to be disclosedThose subsidiaries which were on key monitoring list of the government above municipal level all disclosed theirenvironment protection status and made regular updating through websites, local government environmentalinformation platform, display pads ,Group website and other ways. In 2019, key enterprises have completed theannual environmental information bulletin update.Other information related to environment protectionCSG always attaches great importance to environmental protection work, actively fulfills its social responsibility,adheres to the development road of energy saving, emission reduction, low-carbon and environmental protection. Tofurther reduce the emission of pollutants, a number of subsidiaries of the group carried out the construction of

desulfurization facilities and standby denitrification facilities in 2019. Upon completion and operation, the emissionconcentration of sulfur dioxide is significantly reduced on the basis of existing standard emissions. Hebei SG Glass Co.,Ltd.. and Hebei Panel Glass Co., Ltd. have achieved ultra-low emission of pollutants, and have been rated as class Anational environmental protection enterprises. Tianjin SG Energy-saving Glass Co., Ltd.. and Xianning SG Glass Co.,Ltd.. have become the fourth batch of national green factories, and Xianning SG Glass Co., Ltd.. has won the title of"energy-saving, environmental protection, green and low-carbon advanced typical enterprise".

XIX. Statement on other important matters

√Applicable □ Not applicable

1. Ultra-short-term financing bills

On May 14, 2018, the company’s 2017 annual shareholders’ meeting deliberated and approved the resolution on theapplication for registration and issuance of ultra-short-term financing bills. It agreed that the company should registerand issue ultra-short-term financing bills with a registered amount not exceeding 4 billion yuan (not subject to therestriction that the amount of ultra-short-erm issued shall not exceed 40% of net assets). With the period of validity ofthe quota not longer than two years, such ultra-short-term financing bills will be issued by installments in accordancewith the actual capital needs of the company and the situation of inter-bank market funds. On Sep. 17, 2018, theChinese Association of Interbank Market Traders held its 63rd registration meeting in 2018, and decided to approve theregistration of the ultra-short-term financing bills with a total amount of 1.5 billion yuan and a validity period of twoyears. The ultra-short-term financing bills are underwritten jointly by Minsheng Bank of China Limited and IndustrialBank Co., Ltd, and can be issued by installments within the validity period of registration. On February 21, 2020, thecompany issued ultra-short-term financing bonds with a total amount of 300 million yuan and a term of 270 days in thefirst phase of 2020, with an interest rate of 4% and a payment date of November 21, 2020.

2. Medium-term notes

On 10 December 2014, the First Extraordinary Shareholders’ General Meeting 2014 of CSG Holding Co., Ltddeliberated and approved the proposal of application for registration and issuance of medium-term notes with totalamount of RMB 1.2 billion at most. On 21 May 2015, National Association of Financial Market Institutional Investors(NAFMII) held the 32nd registration meeting of 2015, in which NAFMII decided to accept the registration of theCompany’s medium-term notes, amounting to RMB 1.2 billion and valid for two years. China Merchants Bank Co., Ltd.and Shanghai Pudong Development Bank Co., Ltd. were joint lead underwriters of these medium term notes whichcould be issued by stages within period of validity of the registration on Jul.14, 2015, the Company issued the firstbatch of medium term notes with total amount of RMB 1.2 billion and valid term of 5 years at the issuance rate of

4.94%, which will be redeemed on 14 July 2020.

On April 15, 2016, the Shareholders’ General Meeting of 2015 of CSG deliberated and approved the proposal ofapplication for registration and issuance of medium-term notes with total amount of RMB 0.8 billion, which could beissued by stages within period of validity of the registration according to the Company’s actual demands for funds andthe status of inter-bank funds. On 2 March 2018, National Association of Financial Market Institutional Investors(NAFMII) held the 14

th

registration meeting of 2018, in which NAFMII decided to accept the registration of theCompany’s medium-term notes, amounting to RMB 0.8 billion and valid for two years. Shanghai Pudong DevelopmentBank Co., Ltd. and China CITIC Bank Corporation Limited were joint lead underwriters of these medium-term noteswhich could be issued by stages within period of validity of the registration. On May 4, 2018, the company issued the

first medium-term notes with a total amount of 800 million yuan and a term of three years. The issue rate was 7%, andthe redemption date was May 4, 2021.For details, please refer to www.chinabond.com.cn and www.chinamoney.com.cn.

3. Public issuance of corporate bonds

On March 2, 2017, the 2nd Extraordinary General Meeting of Shareholders in 2017 reviewed and approved “theProposal on the Public Issuance of Corporate Bonds for Qualified Investors". On February 27, 2019, the FirstExtraordinary General Meeting of Shareholders in 2019 The “Proposal on Extending the Validity Period of theShareholders' Meeting for the Public Offering of Corporate Bonds to Qualified Investors” agreed to issue corporatebonds with a total issue of no more than RMB 2 billion and a term of no more than 10 years.The company received the reply of China Securities Regulatory Commission on approval of CSG Holding Co., Ltd. 's PublicIssuance of Corporate Bonds to Qualified Investors (ZJXK [2019] No.1140) on July 22, 2019. From March 24, 2020 to March 25,2020, the company issued the first installment of 2020 with a total amount of 2 billion corporate bonds with a maturity of 3 years,with an interest rate of 6% and a payment date of March 25, 2023 (see "Section 9 Relevant Situation of Corporate Bonds" for details).On March 12, 2020, the first general meeting of shareholders in 2020 reviewed and approved the Proposal on Public Issuance ofCorporate Bonds to Qualified Investors, which approves the company to issue corporate bonds with a total amount of no more than

1.8 billion and a term of no more than 10 years.

4. The holding of the bondholders' meeting during the reporting period

On January 8, 2019, the company issued the notice of convening the first meeting of CSG Holding Co., ltd. in 2015 andthe notice of convening the first meeting of CSG Holding Co., Ltd. On January 22, 2019, the company in 2015 the firstphase of the medium-term notes holders meeting, in 2018 the first phase of the medium-term notes holders meeting off-site way and proceed to a vote, in 2015 the first phase of the medium-term notes holder and in 2018 the first phase ofthe medium-term notes holders meeting due to attend the meeting held by the holder of voting rights have not reachedthe amount of total at least two-thirds of the votes, the meeting did not come into effect.On May 31, 2019, due to the capital decrease caused by buyback and cancellation of part of restricted stocks of stockincentive plan and restricted stocks that fail to meet the unlocking condition of the second unlocking period, thecompany issued Announcement on Holding the First Phase of Medium-term Notes Holder Meeting of CSG HoldingCo., Ltd. in 2015, Announcement on Holding the First Phase of Medium-term Notes Holder Meeting of CSG HoldingCo., Ltd. in 2018. On June 18, 2019, the first phase of the medium-term notes holders meeting in 2015 and the firstphase of the medium-term notes holder meeting in 2018 were held and voted in off-site way. The amount of votingrights held by the holders that attended the first phase of the medium-term notes holders meeting in 2015 and the firstphase of the medium-term notes holder meeting in 2018 was less than 2/3 of total voting rights, and the meeting did nottake effect.On October 17, 2019, due to the capital decrease caused by buyback and cancellation of part of restricted stocks ofstock incentive plan, the company issued Announcement on Holding the Third Holder Meeting in 2019 for the FirstPhase of Medium-term Notes of CSG Holding Co., Ltd. in 2015, Announcement on Holding the Third Holder Meetingin 2019 for the First Phase of Medium-term Notes of CSG Holding Co., Ltd. in 2018. On October 31, 2019, the thirdholder meeting in 2019 for the first phase of the medium-term notes in 2015 and the third holder meeting in 2019 forthe first phase of the medium-term notes in 2018 were held and voted in off-site way. The amount of voting rights heldby the holders that attended the third holder meeting in 2019 for the first phase of the medium-term notes in 2015 andthe third holder meeting in 2019 for the first phase of the medium-term notes in 2018 was less than 2/3 of total votingrights, and the meeting did not take effect.

XX. Significant events of subsidiaries of the Company

□ Applicable √ Not applicable

Section VI. Changes in Shares and Particulars about ShareholdersI. Changes in Share Capital

Unit: Share

Before the ChangeIncrease/Decrease in the Change (+, -)After the Change
AmountProportion (%)New shares issuedBonus sharesCapitalization of public reserveOthersSubtotalAmountProportion (%)
I. Restricted shares77,578,5032.71%4,069,124-40,559,457-36,490,33341,088,1701.32%
1. State-owned shares
2. State-owned legal person’s shares
3. Other domestic shares77,578,5032.71%4,069,124-40,559,457-36,490,33341,088,1701.32%
Including: Domestic legal person’s shares
Domestic natural person’s shares77,578,5032.71%4,069,124-40,559,457-36,490,33341,088,1701.32%
4. Foreign shares
Including: Foreign legal person’s shares
Foreign natural person’s shares
II. Unrestricted shares2,785,698,69897.29%278,494,1622,915,133281,409,2953,067,107,99398.68%
1. RMB Ordinary shares1,777,184,67662.07%177,642,6782,914,607180,557,2851,957,741,96162.99%
2. Domestically listed foreign shares1,008,514,02235.22%100,851,484526100,852,0101,109,366,03235.69%
3. Overseas listed foreign shares
4. Others
III.Total shares2,863,277,201100%282,563,286-37,644,324244,918,9623,108,196,163100%

1. The number of shares before the change of this report has been adjusted from the number at the end of the 2018annual report, due to reasons such as China securities registration and clearing co., LTD. 's adjustment of the sharessubject to the high limit of directors' supervision prior to the opening of the first trading day of 2019 in accordancewith relevant regulations.

2. The total number of shares after the change includes all the 1,281,158 restricted shares of the 18 unqualified originalincentive subjects who have been repurchased but have not completed write-off in the previous time.Reasons for equity changes

√Applicable □Not applicable

1. The company's total shares were reduced by 37,644,324 due to the repurchase of some restricted stock in therestricted stock incentive program and the repurchase of restricted stock that did not meet the unlocking conditions ofthe second unlocking period.

2. The company's total capital stock increased by 282,563,286 shares due to the implementation of the 2018 annualprofit distribution and capital reserve fund capital increase plan.

3. As A result of the company's 2017 A share restricted stock incentive plan reserved to grant part of the first period oflifting restrictions on the completion of conditions for lifting restrictions, restricted stock lifting restrictions on the saleof 3,909,350 shares. After the shares held by the senior management are unlocked, the corresponding shares are lockedin accordance with relevant regulations.

4. Due to the change of the company's senior management and the lockup of their shareholding, the Shenzhen branchof China securities registration and clearing Co., Ltd. shall adjust the restricted shares held by the senior management inaccordance with relevant regulations, and the company’s restricted shares and unrestricted shares changed accordingly.Approval on equity changes

√Applicable □Not applicable

1.The company's 2018 annual profit distribution and capital accumulation fund to increase the share capital plan wasapproved by the eighth meeting of the eighth board of directors held on April 16, 2019 and the 2018 annual generalmeeting of shareholders held on May 9, 2019.

2. The company's repurchase and cancellation of some restricted stock incentive plans was deliberated and passed at thextraordinary meeting of the 8th board of directors and the extraordinary meeting of the 8th board of supervisors held onDecember 12, 2018, and deliberated and passed at the 8th extraordinary meeting of the 8th board of directors and the8the extraordinary meeting of the 8th board of supervisors held on April 16, 2018. Also deliberated and passed at thethird extraordinary general meeting of shareholders in 2018 and the annual general meeting of shareholders in 2018respectively.

3. On September 16, 2019, the company convened an extraordinary meeting of the 8th Board of Directors and anextraordinary meeting of the 8th Board of Supervisors, and reviewed and approved the "proposal on the achievement ofcondition for unlock the first restriction period stock of the 2017 a-share restricted stock incentive plan of the company".Except the 3 incentive objects who have left the company and are no longer qualified for unlocking, the total number ofincentive objects who meet the condition for unlocking is 71, and the number of restricted shares that can be unlocked is3,909,350, accounting for 0.13% of the total share capital of the company at present. The board of supervisors, theindependent directors and the law firm have expressed their express consents.

Transfer of ownership of changes in shares

√Applicable □Not applicable

1. The A-share registration date for 2018 annual profit distribution and the capitalization of capital reserve was on June25, 2019 and the ex-dividend date was June 26, 2019. A-shares bonus (or capitalized) were directly recorded in thestockholders’ A-share accounts on June 26, 2019. The registration date and ex-dividend date of B shares were June 28,

2019 and June 26, 2019 respectively. B-shares bonus (or capitalized) were directly recorded in shareholders’ B-shareaccounts on June 28, 2019.

2. The company repurchases and cancels all the restricted shares of 8 unqualified original incentive subjects who havebeen granted but have not yet been released from sale, by June 18, 2019, the company has completed the cancellationprocedures of the above-mentioned restricted stock at the Shenzhen branch of China securities registration and clearingco., LTD.

3. The company repurchase and cancels all the restricted shares of 14 non-eligible former incentive subjects that hadbeen granted but had not been released, and repurchases and cancels all the restricted shares of 483 incentive subjectsthat do not meet the unlocking conditions of the second unlocking period, by June 18, 2019, the company hascompleted the cancellation procedures of the above-mentioned restricted stock at the Shenzhen branch of Chinasecurities registration and clearing co., LTD.

4. Because the condition of unlock the first restriction period stock of the company's 2017 a-share restricted stockincentive plan has been met, and as the change of senior management and lockup of their shareholdings, the Shenzhenbranch of China securities registration and clearing Co., Ltd. Adjusted the company’s restricted shares and unrestrictedshares accordingly in accordance with relevant regulations.

Implementation progress of share repurchase

□Applicable √Not applicable

Implementation progress of share buyback reduction through centralized bidding

□Applicable √Not applicable

Influence on the basic EPS and diluted EPS as well as other financial indexes of net assets per share attributable tocommon shareholders of Company in the latest year and period

√Applicable □ Not applicable

Please refer to the main accounting data and financial indicators in this report for the details of the impact of stockchanges.Other information necessary to be disclosed or need to be disclosed under requirement from security regulators

□Applicable √ Not applicable

2. Changes of restricted shares

√Applicable □ Not applicable

Unit: Share

Shareholders’ nameNumber of shares restricted at Period-beginNumber of shares released in the YearNumber of restricted shares repurchased in the yearNumber of new shares restricted in the YearNumber of shares restricted at Period-endRestriction reasonsReleased date
Chen Lin2,766,58901,106,635165,9951,825,949Executive lockup stocks of 608,649 shares, equity incentives restricted stocks of 1,217,300 shares.Unlock period in accordance with the requirement of implementation of the Company's restricted stock equity incentive plan, once unlocked executive lockup
will be implemented according to relevant policies.
Wang Jian2,300,0001,012,000690,000540,5001,138,500Executive lockup stocks of 379,500 shares, equity incentives restricted stocks of 759,000 shares.Unlock period in accordance with the requirement of implementation of the Company's restricted stock equity incentive plan, once unlocked executive lockup will be implemented according to relevant policies.
Lu Wenhui2,074,9410829,976124,4961,369,461Executive lockup stocks of 456,486 shares, equity incentives restricted stocks of 912,975 shares.Unlock period in accordance with the requirement of implementation of the Company's restricted stock equity incentive plan, once unlocked executive lockup will be implemented according to relevant policies.
He Jin1,530,00088,000612,000179,8001,009,800Executive lockup stocks of 336,600 shares, equity incentives restricted stocks of 673,200 shares.Unlock period in accordance with the requirement of implementation of the Company's restricted stock equity incentive plan, once unlocked executive lockup will be implemented according to relevant policies.
Yang Xinyu1,976,1340790,453118,5681,304,249Executive lockup stocks of 434,750 shares, equity incentives restricted stocks of 869,499 shares.Unlock period in accordance with the requirement of implementation of the Company's restricted stock equity incentive plan, once unlocked executive lockup will be implemented according to relevant policies.
Core Management Team (note3)43,827,1831,017,20122,239,2482,158,78422,729,518Equity incentivesUnlock period in accordance with the requirement of implementation of the Company's restricted stock equity incentive plan.
Technology and Business Backbone(note4)19,006,7541,343,3939,249,135975,7719,389,997Equity incentivesUnlock period in accordance with the requirement of implementation of the Company's restricted stock equity incentive plan.
Zhao Peng1,023,206448,756305,970239,398507,878Supervisor’s departure lockup stocks of 171,311 shares, equity incentives restricted stocks of 336,567 shares.Unlock period in accordance with the requirement of implementation of the Company's restricted stock equity incentive plan, once unlocked executive lockup will be implemented according to relevant policies.
Li Weinan2,273,69601,580,907504,0291,196,818Executive’s departure lockup stocks of 1,196,818 shares.Unlock period in accordance with the requirement of implementation of the Company's restricted stock equity incentive plan.
Li Cuixu (note2)800,0000240,00056,000616,000Equity incentives restricted stocks of 616,000 shares.Unlock period in accordance with the requirement of implementation of the Company's restricted stock equity incentive plan.
Total77,578,5033,909,35037,644,3245,063,34141,088,170----

Note 1:The number of restricted shares at the beginning of the period in the above table has been adjustedcompared with the number at the end of the 2018 annual report, which is caused by China Securities Registration and

Clearing co., LTD. 's adjustment of the current period of limited shares of directors before the opening of the firsttrading day in 2019 in accordance with relevant regulations.Note 2:Mr. Li cuixu has resigned from his position as Vice President of the company on May 30, 2019, and hisholding of 616,000 equity incentive restricted stock units has been repurchased but has not yet completed thecancellation procedures.

Note 3:One member of the core management team repurchased 181,072 shares due to his quit and has notcompleted the cancellation procedures.Note 4:Among the technical and business backbone, 16 employees have repurchased 484,086 shares of restrictedstock for reasons such as leaving their posts or adjusting their positions according to the assessment results, which donot meet the incentive conditions, and have not completed the cancellation procedures.

II. Issuance and listing of Securities

1. Security issued (excluding preferred stock) in the report period

□Applicable √Not applicable

2. Particulars about changes of total shares and shareholder structure as well as changes of assets andliability structure

√Applicable □ Not applicable

1. The company repurchased a total of 37,644,324 restricted shares,include 3,910,048 shares held by the 22 originalincentive targets but not yet unlocked and 33,734,276 shares of 483 incentive subjects did not meet the unlockingconditions of the second unlocking period. The share capital was 2,825,632,877 shares after the repurchase. Thecancellation of restricted stock repurchase has been completed on June 18, 2019; the total number of shares of thecompany was changed from 2,863,277,201 shares to 2,825,632,877 shares.

2. Statement on profit distribution plan and capitalization of capital reserve plan of the Company in 2018: based on 2,825,632,877shares of the total share capital while dividends will be distributed, distributing cash dividend of RMB 0.5 (tax included) for every 10shares to all shareholders. Meanwhile the Company will transfer capital reserve into capital with 1 shares for every 10 shares to allshareholders based on 2,825,632,877 shares of the total share capital. The program was completed on June 28, 2019, and the totalshare capital was increased to 3,108,196,163 shares after the plan was completed.

3. On September 16, 2019, the company convened an extraordinary meeting of the 8th Board of Directors and anextraordinary meeting of the 8th Board of Supervisors, and reviewed and approved the “Proposal on Repurchase andCancel part of Restricted Stocks of Restricted Stock Incentive Plan”, considered and agreed to repurchase and cancelthe total of 1,281,158 shares of 18 incentive targets of all restricted stocks that have been granted to them who have notbeen eligible with stock still under restriction. It was approved by the forth extraordinary general meeting ofshareholders in 2019, held on October 10, 2019. The above restricted stock has not completed the cancellationprocedures at the end of the reporting period.

4. On September 16, 2019, the company convened an extraordinary meeting of the 8th Board of Directors and anextraordinary meeting of the 8th Board of Supervisors, and reviewed and approved the "proposal on the achievement ofcondition for unlock the first restriction period stock of the 2017 a-share restricted stock incentive plan of the company".Except the 3 incentive objects who have left the company and are no longer qualified for unlocking, the total number ofincentive objects who meet the condition for unlocking is 71, and the number of restricted shares that can be unlocked is3,909,350, accounting for 0.13% of the total share capital of the company at present. The board of supervisors, the

independent directors and the law firm have expressed their express consents. The unlock date/ listing date of theserestricted stock is September 25, 2019.

3. Existing internal staff shares

□ Applicable √ Not applicable

III. Particulars about shareholder and actual controller of the Company

1. Amount of shareholders of the Company and particulars about shares holding

Unit: Share

Total shareholders at the end of the report period143,451Total shareholders at the end of the month before this annual report disclosed148,844Total preference shareholders with voting rights recovered at end of report period (if applicable)0Total preference shareholders with voting rights recovered at end of the month before this annual report disclosed (if applicable)0
Shareholder with above 5% shares hold or top 10 shareholders
Full name of ShareholdersNature of shareholderProportion of shares held (%)Total shares held at the end of report periodChanges in report periodAmount of restricted shares heldAmount of un-restricted shares heldNumber of share pledged/frozen
Share statusAmount
Foresea Life Insurance Co., Ltd. – Haili NiannianDomestic non state-owned legal person15.01%466,386,87442,398,807466,386,874
Foresea Life Insurance Co., Ltd. – Universal Insurance ProductsDomestic non state-owned legal person3.81%118,425,00710,765,910118,425,007
Shenzhen Jushenghua Co., Ltd.Domestic non state-owned legal person2.79%86,633,4477,875,76886,633,447Pledged81,000,000
Foresea Life Insurance Co., Ltd. – Own FundDomestic non state-owned legal person2.08%64,765,1615,887,74264,765,161
Central Huijin Asset Management Ltd.State-owned legal person1.86%57,915,4885,265,04457,915,488
China Galaxy International Securities (Hong Kong) Co., LimitedForeign legal person1.34%41,544,3703,731,30641,544,370
UBS AGForeign legal person1.14%35,504,33635,780,83935,504,336
Hong Kong Securities Clearing Co., Ltd.Foreign legal person1.14%35,324,32630,153,65335,324,326
China Merchants Securities (HK) Co., LimitedState-owned legal person1.04%32,458,9373,437,66232,458,937
Shenzhen International Holdings (SZ) LimitedState-owned legal person0.94%29,095,0002,645,00029,095,000
Strategic investors or general legal person becomes top 10 shareholders due to shares issued (if applicable)(note 3)N/A
Explanation on associated relationship among the aforesaid shareholdersAmong shareholders as listed above, Foresea Life Insurance Co., Ltd.-Haili Niannian, Foresea Life Insurance Co., Ltd.-Universal Insurance Products, Foresea Life Insurance Co., Ltd.-Own Fund are all held by Foresea Life Insurance Co., Ltd. Shenzhen Jushenghua Co., Ltd. is a related legal person of Foresea Life Insurance Co., Ltd. and Chengtai Group Co., Ltd., another
related legal person of Foresea Life Insurance Co., Ltd, which held 40,187,904 shares via China Galaxy International Securities (Hong Kong) Co., Limited. Except for the above-mentioned shareholders, it is unknown whether other shareholders belong to related party or have associated relationship regulated by the Management Regulation of Information Disclosure on Change of Shareholding for Listed Companies.
Particular about top ten shareholders with un-restrict shares held
Shareholders’ nameAmount of un-restrict shares held at year-endType of shares
TypeAmount
Foresea Life Insurance Co., Ltd. – Haili Niannian466,386,874RMB ordinary shares466,386,874
Foresea Life Insurance Co., Ltd. – Universal Insurance Products118,425,007RMB ordinary shares118,425,007
Shenzhen Jushenghua Co., Ltd.86,633,447RMB ordinary shares86,633,447
Foresea Life Insurance Co., Ltd. – Own Fund64,765,161RMB ordinary shares64,765,161
Central Huijin Asset Management Ltd.57,915,488RMB ordinary shares57,915,488
China Galaxy International Securities (Hong Kong) Co., Limited41,544,370Domestically listed foreign shares41,544,370
UBS AG35,504,336RMB ordinary shares35,504,336
Hong Kong Securities Clearing Co., Ltd.35,324,326RMB ordinary shares35,324,326
China Merchants Securities (HK) Co., Limited32,458,937Domestically listed foreign shares32,458,937
Shenzhen International Holdings (SZ) Limited29,095,000RMB ordinary shares29,095,000
Statement on associated relationship or consistent action among the above shareholders:Among shareholders as listed above, Foresea Life Insurance Co., Ltd.-Haili Niannian, Foresea Life Insurance Co., Ltd.-Universal Insurance Products, Foresea Life Insurance Co., Ltd.-Own Fund are all held by Foresea Life Insurance Co., Ltd. Shenzhen Jushenghua Co., Ltd. is a related legal person of Foresea Life Insurance Co., Ltd. and Chengtai Group Co., Ltd., another related legal person of Foresea Life Insurance Co., Ltd, which held 40,187,904 shares via China Galaxy International Securities (Hong Kong) Co., Limited. Except for the above-mentioned shareholders, it is unknown whether other shareholders belong to related party or have associated relationship regulated by the Management Regulation of Information Disclosure on Change of Shareholding for Listed Companies.
Explanation on shareholders involving margin business (if applicable)N/A

Whether the company’s top 10 common shareholders and the top 10 shareholders of ordinary shares subject tounlimited sales have agreed to buy back transactions during the reporting period

□Yes √ No

2. Controlling shareholder of the Company

The nature of controlling shareholders: No holding bodyThe type of controlling shareholder: Not existExplanation on the Company without controlling shareholderCurrently the Company has no controlling shareholder. Foresea Life Insurance Co., Ltd. is the Company's largestshareholder that has totally held 657,577,954 shares of the Company via Foresea Life Insurance Co., Ltd.–HailiNiannian, Foresea Life Insurance Co., Ltd.–universal insurance products, Foresea Life Insurance Co., Ltd.–own fund,Foresea Life Insurance Co., Ltd.–a combination of its own funds together with Huatai till the end of the report period,which accounts for 21.16% of the Company’s total shares; its person acting in concert Shenzhen Jushenghua Co., Ltd.held 86,633,447 shares, which accounts for 2.79% of the Company’s total shares; its person acting in concert ChengtaiGroup Co., Ltd. held 51,709,088 shares of B-share via China Galaxy International Securities (Hong Kong) Co., Ltd andGuosen Securities (Hong Kong) Brokerage Co., Limited, which accounts for 1.66% of the Company’s total shares.Foresea Life Insurance and its persons acting in concert totally held 25.61% of the Company’s total shares, which is lessthan 30%, meanwhile, the number of directors recommended by Foresea Life Insurance and its persons acting inconcert l persons was no more than half of total number of the Company’s board of directors.

Other shareholders of the Company hold less than 5% of the shares.Changes of controlling shareholders in the report period

□ Applicable √ Not applicable

3. Actual controller of the Company

The nature of actual controller: no actual controllerThe type of actual controller: Not existExplanation on the Company without actual controllerCurrently the Company has no actual controller. Foresea Life Insurance Co., Ltd. is the Company's largest shareholderthat has totally held 657,577,954 shares of the Company via Foresea Life Insurance Co., Ltd.–Haili Niannian, ForeseaLife Insurance Co., Ltd.–universal insurance products, Foresea Life Insurance Co., Ltd.–own fund, Foresea LifeInsurance Co., Ltd.–a combination of its own funds together with Huatai till the end of the report period, whichaccounts for 21.16% of the Company’s total shares; its person acting in concert Shenzhen Jushenghua Co., Ltd. held86,633,447 shares, which accounts for 2.79% of the Company’s total shares; its person acting in concert ChengtaiGroup Co., Ltd. held 51,709,088 shares of B-share via China Galaxy International Securities (Hong Kong) Co., Ltd andGuosen Securities (Hong Kong) Brokerage Co., Limited, which accounts for 1.66% of the Company’s total shares.Foresea Life Insurance and its persons acting in concert totally held 25.61% of the Company’s total shares, which is lessthan 30%, meanwhile, the number of directors recommended by Foresea Life Insurance and its persons acting inconcert was no more than half of total number of the Company’s board of directors.Shareholders with over 10% shares held in ultimate controlling level

√Yes □No

Natural personShares held in ultimate controlling level

ShareholdersNationalityWhether to obtain the right of abode in other countries or regions
Yao ZhenhuaChinaNo
Major occupations and dutiesChairman of Shenzhen Baoneng Investment Group Co., Ltd.
Situation of holding domestic and abroad listed companies over the past 10 yearsN/A

Changes of actual controller in the report period

□ Applicable √ Not applicable

Property right and controlling relationship between the largest shareholder and the Company is as follow:

Actual controller controlling of the Company by entrust or other assets management

□Applicable √Not applicable

4. Particulars about other legal person shareholders holding over 10% shares

□ Applicable √ Not applicable

5. Limitation on share reduction of controlling shareholders, actual controllers, Recombination party andother commitment subjects

□ Applicable √ Not applicable

30%Shenzhen Zheshang BaonengIndustry Investment partnership

Enterprise Limited

Shenzhen Zheshang BaonengIndustry Investment partnership

Enterprise Limited100%

100%

CSG Holding

Co., Ltd.

CSG Holding

Co., Ltd.

1.66%

1.66%

Chengtai Group

Co., Ltd.

Chengtai Group

Co., Ltd.

ShenzhenHualitongInvestment

Co., Ltd.

ShenzhenHualitongInvestment

Co., Ltd.

100%

100%

Foresea Life Insurance Co., Ltd.

Foresea Life Insurance Co., Ltd.

4.6%

4.6%4.6%
Shenzhen Jushenghua Co., Ltd.Shenzhen Shenyue Holding Co., Ltd.Shenzhen Yueshang Logisitics Co., Ltd.Kaixinheng Co., Ltd.Jinfeng Tongyuan Co., Ltd.

0.68%

Shenzhen Baoyuan Logistics

Co., Ltd

Shenzhen Baoneng Chuangying Investment partenership Co., Ltd.Shenzhen Baoyuan Logistics Co., Ltd

Yao Zhenhua

Shenzhen Baoneng Investment Group

Co., Ltd.

Shenzhen Baoneng Investment Group

Co., Ltd.

67.40%

67.40%

1.92%

1.92%

2.75%

2.75%

51%

51%20%19.80%

Section VII. Particulars about Directors, Supervisors, Senior

Executives and EmployeesI. Changes of shares held by directors, supervisors and senior executives

NameTitleWorking statusSexAgeStart dated of office termEnd date of office termShares held at period-begin (Share)Amount of shares increased in this period (Share)Amount of shares decreased in this period (Share)Other changes (share)Shares held at period-end (Share)
Chen LinChairman of the BoardCurrently in officeFemale482016-11-192020-05-023,688,785-848,4202,840,365
Wang JianSecretary of the Party Committee, Deputy Chairman of the Board, CEOCurrently in officeMale562016-01-212020-05-022,300,000-529,0001,771,000
Zhan WeizaiIndependent DirectorCurrently in officeMale562016-12-142020-05-02
Zhu GuilongIndependent DirectorCurrently in officeMale562017-05-022020-05-02
Zhu QianyuIndependent DirectorCurrently in officeFemale452019-04-102020-05-02
Zhang JinshunDirectorCurrently in officeMale552017-05-022020-05-02
Ye WeiqingDirectorCurrently in officeFemale482016-01-212020-05-02
Cheng XibaoDirectorCurrently in officeFemale382016-01-212020-05-02
Li JianghuaChairman of the supervisory board, employee supervisoryCurrently in officeMale432019-03-272020-05-02
Li XinjunSupervisorCurrently in officeMale522017-01-132020-05-02
Gao ChangkunEmployee SupervisorCurrently in officeMale512018-08-302020-05-02
Lu WenhuiExecutive Vice PresidentCurrently in officeMale572017-02-232020-05-022,766,588-636,3152,130,273
He JinVice presidentCurrently in officeMale482018-04-082020-05-022,040,000-469,2001,570,800
Yang XinyuSecretary of the BoardCurrently in officeMale402017-05-022020-05-022,634,845-606,0142,028,831
Jin QingjunIndependent DirectorPost LeavingMale632016-12-142019-04-10
Zhang WandongChairman of the board of supervisorsPost LeavingFemal512017-01-132019-03-27
Li WeinanVice presidentPost LeavingMale582017-02-232019-02-183,031,595-1,834,7441,196,851
Li CuixuVice presidentPost LeavingMale452018-04-082019-05-30800,000-184,000616,000
Total------------17,261,813-5,107,69312,154,120

II. Changes of directors, supervisors and senior executives

√Applicable □ Not applicable

NameTitleTypeDateReason
Zhu QianyuIndependent DirectorBe employed2019-04-10By-election of independent directors
Li JianghuaChairman of the supervisory board, employee supervisoryBe employed2019-04-01 2019-03-27Election by the supervisory board Election by the employees meeting
Li WeinanVice presidentBe employed2019-02-18Removed
Zhang WandongChairman of the board of supervisorsPost leaving2019-03-27Resigned
Jin QingjunIndependent DirectorPost leaving2019-04-10Resigned
Li CuixuVice presidentPost leaving2019-05-30Resigned

III. Post-holdingMajor professional background, working experience of directors, supervisors and senior executive and their majorresponsibility in the Company at presentChen Lin: took posts of Department Manager, General Manager Assistant in Shenzhen Shum Yip Logistics Group Co.,Ltd. At present, she is the Senior Vice President of Shenzhen Baoneng Investment Group Co., Ltd., Deputy GeneralManager in Shenzhen Shum Yip Logistics Group Co., Ltd., Chairman of Board of Supervisors of Foresea LifeInsurance Co., Ltd., Chairman of Board of Supervisors of Xinjiang Qianhai United Property & Casualty InsuranceCo.,Ltd., Supervisors of Shenzhen Jushenghua Co., Ltd., Director of Guangdong Shaoneng Group Co., Ltd., Director ofNanning department store Co., Ltd., Chairman of the Board of Jonjee Hi-tech Industrial & Commercial Holding Co.,Ltd., Chairman of the Board of Baoneng Automobile Co., Ltd., and Chairman of the Board of the Company.

Wang Jian: took posts of General Manager and Executive Director of China North Industries Tianjin Corporation,General Manager of China North Vehicle Co., Ltd., and Deputy Chairman and Chairman of Shanghai NonferrousMetals E-Commerce Co., Ltd., General Manager of investment management department of China North IndustriesCorporation, Chairman of the Board of Chengdu Yinhe Dynasty Hotel Co., Ltd., Deputy Chairman of the Board ofShenzhen Baoyin Electricity Co., Ltd., Chairman of the Board of North Property Development Company Limited. Atpresent he is Secretary of the Party Committee, Deputy Chairman and CEO of the Company.

Zhan Weizai: took past of Department of economic management of Xizang University and Secretary of the leaguegeneral branch, Vice Manager of the financial department of Donghui Industrial Co., Ltd., Director and Chief FinancialOfficer of Shenzhen Qiaoshe Industry Co.,Ltd., Chief Financial Officer of Shenzhe Truism (Group) Company,ViceGeneral Manager of Sinosafe General Insurance Company Limited., Vice General Manager of Sinosafe Insurance assetmanagement center,Independent Director of Shenzhen Neptunus Bioengineering Co., Ltd., Independent Director ofShenzhen Liantronics Co., Ltd.; At present, he is the Supervisor of Shenzhen Dewo Industrial Development Co., Ltd.,Supervisor of Shenzhen Dewo Investment Development Co., Ltd., Visiting Professor of Jiangxi University of Financeand Economics, Visiting Professor at Social Security Center of Wuhan University, Chairman of Shenzhen JiangcairenEducation Management Co., Ltd., Independent Director of Shenzhen Weiye Decoration Group Co., Ltd., IndependentDirector of Chongqing Zijian electronics Co., Ltd. Independent Director of Dongguan Qinshang Optoelectronic Co.,Ltd., and Independent Director of the Company.

Zhu Guilong: took posts of the researcher of the Institute of Forecasting and Development at Hefei University ofTechnology, the Independent Director of Jiangsu Saifutian Steel Cable Co., Ltd. Currently, he is a professor anddoctoral tutor of the School of Business Administration, South China University of Technology, Executive Director ofChinese Association For Science of Science and S&T Policy, the Vice Chairman of Guangdong Institute of TechnicalEconomy and Management Modernization, and Guangdong Economic Society, the Independent Director of GRGBANKING EQUIPMENT CO., Ltd., Independent Director of Guangzhou Kingmed Diagnostics Group Co.,Ltd.,Independent Director of Guangzhou bank Co.,Ltd., Director of Jiangxi Jiufeng Energy Co.,Ltd. and the IndependentDirector of the Company.

Zhu Qianyu: took posts of lecturer and associate professor of Central South University for Nationalities, a postdoctoralfellow at Peking University, and an independent director of Jilin Shixian Paper Co.,Ltd., At present, she is associateprofessor at Renmin University of China and independent director of the Company.

Zhang Jinshun: took posts of member of the Party Committee and Deputy President of the head office of Ping AnBank, Secretary of the Party Committee and Chairman of Board of Ping An Trust Co.,Ltd., General Manager ofChang’an International Trust Co.,Ltd., He currently serves as Deputy Chairman of the Board of Shenzhen BaonengInvestment Group Co.,Ltd., President and CEO of Shenzhen Jushenghua Co.,Ltd., Chairman of Board of Foresea LifeInsurance Co.,Ltd., and director of the Company.

Ye Weiqing: took posts of the Financial Administrator and Senior Vice President of Shenzhen Baoneng InvestmentGroup Co., Ltd., Director of Foresea Life Insurance Co., Ltd., Chairman of Board of Qinglan Industry (Shenzhen) Co.,Ltd., Director of Jonjee Hi-tech Industrial & Commercial Holding Co., Ltd., Chairman of Board and General Managerof Baoneng Real Estate Co., Ltd., Deputy Chairman of Baoneng holdings (China) co., Ltd., Chairman of Board ofBaoneng South China Investment Co., Ltd., Executive Director and General Manager of Shenzhen Shining AssetManagement Co., Ltd, Chairman of Board and General Manager of Shenzhen Laihua Property Development Co., Ltd.,Chairman of Board and General Manager of Shenzhen Liujin Plaza Investment Co.,Ltd., the Chairman of Board andGeneral Manager of Shenzhen Shum Yip Logistics Center Investment Development Co., Ltd., Chairman of Board andthe Director of Shenzhen Baoneng Jianye Property Co., Ltd, Chairman of Board and General Manager of ShenzhenBaoneng Century Property Development Co., Ltd. Chairman of Board and General Manager of All City Co., Ltd,Chairman of Board of Baoneng Hotel Investment Co.,Ltd, Chairman of Board and General Manager of ShenzhenZhonglin Industry Development Co.,Ltd.. At present, she is The chairman of the joint chiefs of staff of Baoxin Financial

Group co., Ltd., SVP of the Baoxin Industrial Group co. LTD, the Chairman of Board and General Manager ofShenzhen Jushenghua Co.,Ltd., the Executive Director and General Manager of Qianhai E-payment Co.,Ltd., Chairmanof Board and General Manager of Shenzhen Hualitong Investment Co.,Ltd., Director of Shenzhen Baoyuan LogisticsCo., Ltd., Director of Shenzhen Shum Yip Logistics Group Co., Ltd., Director of Baoxin Holdings Co., Ltd., GeneralManager and Director of Baoneng Taisheng Co., Ltd., Director of Baoneng Taifeng Co., Ltd., and Director of theCompany.

Cheng Xibao: took posts of Deputy Manager and Manager of financial department of Huizhou Olympic Garden Co.,Ltd., which is a subsidiary of China Sports Group Industry, Manager of financial department of Shenzhen XuanshengInvestment Co., Ltd., which is a subsidiary of Foxconn, and Manager, Vice President, Executive Vice President offinancial department, President Assistant of Shenzhen Baoneng Investment Group Co.,Ltd., At present, she is VicePresident of Shenzhen Baoneng Investment Group Co., Ltd., Executive Vice President of Baoneng City Developmentand Construction Group Co.,Ltd., the Supervisor of Xinjiang Qianhai United Property & Casualty Insurance Co., Ltd.,Director of Foresea Life Insurance Co., Ltd. Director of Baoneng Automobile Co., Ltd., Director of Qoros AutomobileCo., Ltd., Director of Guizhou Baoneng Automobile Co., Ltd., Director of Shenzhen Shenzhen Baoneng TravelCo.,LTD., Supervisor of Guizhou Baoneng Automobile Co., Ltd., and Director of the Company.

Li Jianghua: took post of group manager of Ping’an Technology (Shenzhen) Co., Ltd., IT engineer of Shenzhen OneCard Club Technology Services Co., Ltd., the assistant of general manager and deputy general manager of theOperation Service Department of the Information Management Center of Foresea Life Insurance, the deputy generalmanager of IT Department of Xinjiang Qianhai United Property & Casualty Insurance Co., Ltd., the general manager ofIntegrated Financial Development Department of Foresea Life Insurance, and chairman of the supervisory board of theCompany.

Li Xinjun: took the post of the Chief Financial Officer of Shenzhen Zhongshanglong Industrial Co., Ltd. He currentlyserves as the General Manager of Shenzhen Zhongzhun Certified Tax Agent Co., Ltd., Supervisor of ZhongzhunCertified Public Accountants (special general partnership) and Supervisor of the Company.

Gao Changkun: took the post of the operation director of Beijing lianxing ketong microelectronics Co., LTD., and theinvestment specialist of Pintree (Shanghai) Equity investment and management Co., Ltd. At present, he is the Presidentof the solar energy business division and the supervisor of the employees of the Company.Lu Wenhui: took posts of Vice General Manager of the Company and General manager of Float Glass BusinessDepartment of the company, the vice president of the company and the general manager of the Engineering andAutomotive Glass Business Department of the company, the chief economy expert of the company, the director ofEnterprise Operation Department, the vice president of the Solar Business Department, the vice president of thecompany and the president of the Fine Glass Business Department, and the president of Shenzhen Monitor Company, asubsidiary company. At present, he is the vice president and the president of the Overseas Business Division of theCompany.He Jin: took posts of a the general manager of CSG (Shenzhen) Float Glass Co., Ltd., the vice president of Float GlassDepartment, the general manager of CSG (Dongguan) Solar Glass Co., Ltd., the general manager of CSG (Chengdu)Co., Ltd. and the general manager of CSG (Qingyuan) Energy Saving New Material Co., Ltd. He is currently presidentof the Flat Panel and Electronic Glass Division and the vice president of the company.

Yang Xinyu: took posts of the Securities Department of Beijing KWM Law Firm, the risk control director, the assistantof the chairman of the board and head of the Law Department of Honghua International Medical Holding Co., Ltd., andthe director of the Audit and Supervision Department, the director of the Stock affairs Department of the company. Heis currently the secretary of the board of directors of the company.

Post-holding in shareholder’s unit

√Applicable □ Not applicable

NameName of shareholder’s unitPosition in shareholder’s unitStart dated of office termEnd date of office termReceived remuneration from shareholder’s unit or not
Chen LinForesea Life Insurance Co., Ltd.Chairman of Supervisory BoardApr. 2012Yes
Shenzhen Jushenghua Co., Ltd.SupervisorJuly 2016No
Zhang JinshunShenzhen Jushenghua Co., Ltd.President & CEOJan. 2016Yes
Foresea Life Insurance Co., Ltd.Chairman of BoardSep. 2017No
Ye WeiqingShenzhen Jushenghua Co., Ltd.Chairman of Board and General ManagerNov. 2009No
Foresea Life Insurance Co., Ltd.DirectorFeb. 2012Dec. 2018No
Cheng XibaoShenzhen Jushenghua Co., Ltd.Vice PresidentMar. 2016Apr. 2019No
Foresea Life Insurance Co., Ltd.DirectorOct. 2017No
Note of post-holding in shareholder’s unitN/A

Post-holding in other unit

√Applicable □Not applicable

NameName of other unitsPosition in other unit nStart dated of office termEnd date of office termReceived remuneration from other unit or not
Chen LinShenzhen Shum Yip Logistics Group Co., Ltd.Deputy General ManagerMay 2003No
Shenzhen Baoneng Investment Group Co., Ltd.Executive Vice PresentOct. 2014No
Xinjiang Qianhai United Property & Casualty Insurance Co.,Ltd.Chairman of the Supervisory boardMay 2016No
Guangdong Shaoneng Group Co., Ltd.DirectorNov. 2015Yes
Nanning department store co., Ltd.DirectorApr. 2018Yes
Jonjee Hi-tech Industrial & Commercial Holding Co., Ltd.Chairman of the BoardNov. 2018Yes
Baoneng Automobile Co., Ltd.Chairman of the BoardDec. 2017No
Zhu QianyuRenmin University of ChinaAssociate ProfessorMar. 2010Yes
Zhan WeizaiShenzhen Dewo Industrial Development Co., Ltd,SupervisorJune 2010No
Shenzhen Dewo Investment Development Co., Ltd.SupervisorSep. 2011No
Shenzhen Neptunus Bioengineering Co., Ltd.Independent directorAug. 2013Yes
Shenzhen Liantronics Co., Ltd.Independent directorNov. 2016Yes
Shenzhen Jiangcairen Education Management Co., Ltd.Chairman of the BoardJul. 2017No
Shenzhen Weiye Decoration Group Co., Ltd.Independent directorSep. 2018Yes
Chongqing Zijian electronics Co., Ltd.Independent directorNov. 2019Yes
Dongguan Qinshang Optoelectronic Co., Ltd.Independent directorMar. 2020Yes
Zhu GuilongSouth China University of TechnologyProfessor and Doctoral tutorAug. 2000Yes
GRG BANKING EQUIPMENT CO., LTD.Independent directorJan. 2018Yes
Guangzhou Kingmed Diagnostics Group Co., Ltd.Independent directorNov. 2015Yes
Guangzhou bank Co.,Ltd.Independent directorApr. 2019Yes
Jiangxi Jiufeng Energy Co.,Ltd.directorJan. 2019Yes
Zhang JinshunShenzhen Baoneng Investment Group Co., Ltd.Deputy Chairman of the BoardMar. 2017No
Ye WeiqingBaoneng South China Investment Co., Ltd.Chairman of the BoardAug. 2017Jan. 2020No
Shenzhen Shining Asset Management Co., Ltd.Executive Director and General ManagerJun. 2015Aug. 2019No
Baoneng Holdings (China) Co., Ltd.Deputy Chairman of the BoardMay 2018Nov. 2019No
Shenzhen Laihua Property Development Co., Ltd.Chairman of Board and General ManagerNov. 2016Feb. 2020No
Shenzhen Liujin Plaza Investment Co., Ltd.Chairman of Board and General ManagerFeb. 2014Nov. 2019No
Shenzhen Shum Yip Logistics Center Investment Development Co., Ltd.Chairman of Board and General ManagerFeb. 2014Nov. 2019No
Shenzhen Baoneng Jianye Property Co., Ltd.DirectorAug. 2013Nov. 2019No
Shenzhen Baoneng Century Property Development Co., Ltd.Chairman of Board and General ManagerJul. 2013Oct. 2019No
All City Co., Ltd.Chairman of Board and General ManagerApr. 2013Dec. 2019No
Baoneng Hotel Investment Co., Ltd.Chairman of BoardMar. 2010Nov. 2019No
Qinglan Industry (Shenzhen) Co., Ltd.Chairman of BoardJul. 2012May 2018No
Baoning Property Co., Ltd.Chairman of Board and General ManagerMay 2012Dec. 2019No
Shenzhen Zhonglin Industry Development Co., Ltd.Chairman of Board and General ManagerMay 2012Dec. 2019No
Jonjee Hi-tech Industrial & Commercial Holding Co.,DirectorMay 2016Nov. 2018No
Ltd.
Baoxin Financial Group co., Ltd.Chairman of the joint chiefs of staffAug. 2019Yes
Shenzhen Baoxin Industrial Group co. LTDSVPJune 2019Yes
Shenzhen Baoneng Investment Group Co., Ltd.DirectorOct. 2013Apr.2020No
Shenzhen Shum Yip Logistics Group Co., Ltd.DirectorOct. 2003No
Qianhai E-payment Co., Ltd.Executive Director and General ManagerJun. 2014No
Shenzhen Hualitong Investment Co., Ltd.Chairman of Board and General ManagerMar. 2012No
Shenzhen Baoyuan Logistics Co., Ltd.DirectorJun. 2010No
Baoxin Holdings Co., Ltd.DirectorMar. 2020No
Baoneng Taisheng Co., Ltd.General Manager and DirectorApr. 2012No
Baoneng Taifeng Co.,Ltd.DirectorApr. 2012No
Cheng XibaoShenzhen Baoneng Investment Group Co., Ltd.Vice PresidentDec. 2017No
Baoneng City Development and Construction Group Co., Ltd.Excecutive Vice PresidentOct. 2018Yes
Xinjiang Qianhai United Property & Casualty Insurance Co., Ltd.SupervisorSep. 2016No
Baoneng Automobile Co., Ltd.DirectorMar. 2017No
Qoros Automobile Co., Ltd.DirectorDec. 2017No
Shenzhen Baoneng Travel Co.,LTD.DirectorSep. 2019No
Guizhou Baoneng Automobile Co., Ltd.SupervisorJan. 2018No
Li XinjunShenzhen Zhongzhun Tax Agent Office Co., Ltd.General ManagerDec. 2004No
Zhongzhun Certified Public Accountants (special general partnership))SupervisorJan. 2019Yes
Note of post-holding in shareholder’s unitN/A

Punishment of securities regulatory authority in the last three years to the Company’s current and retired directors,supervisors and senior management during the report period

□ Applicable √ Not applicable

IV. Remuneration for directors, supervisors and senior executivesDecision-making procedures, recognition basis and payment for directors, supervisors and senior executives

1. Decision-making procedures: The allowances for independent directors, external directors from non-shareholder’sunit and external supervisors are planned and proposed by the Remuneration &Assessment Committee of the Board andapproved by the Shareholders’ General Meeting after deliberation of the Board. Remuneration for senior executives isproposed by the Remuneration &Assessment Committee of the Board and decided by the Board after discussion.

2. Confirmation basis of remuneration: The allowances for independent directors and external supervisors are confirmedbased on industry standards and real situation of the Company. The remuneration for senior executives implementsfloating reward mechanism with reference to basic salary and business performance. Bonus for performance rewards iswithdrawal by proportion quarterly according to return on equity and based on the total net profit after taxation.

3. Actual remuneration payment: The allowances for each of the Company’s independent directors, external directorfrom non-shareholder’s unit and each external supervisor are RMB 0.15 million per year, paid by actual month ofservice. The total remuneration for directors, supervisor and senior executives in the report period was RMB 22.58million.Remuneration for directors, supervisors and senior executives of the Company within the report period.

Unit: RMB0,000

NameTitleSexAgePost-holding statusTotal remuneration obtained from the Company before taxationReceived remuneration from related party of the Company or not
Chen LinChairman of the BoardFemale48Currently in officeYes
Wang JianSecretary of the Party Committee, Deputy Chairman of the Board, CEOMale56Currently in office450.89No
Zhan WeizaiIndependent DirectorMale56Currently in office15No
Zhu GuilongIndependent DirectorMale56Currently in office15No
Zhu QianyuIndependent DirectorFemale45Currently in office11.25No
Zhang JinshunDirectorMale55Currently in officeYes
Ye WeiqingDirectorFemale48Currently in officeYes
Cheng XibaoDirectorFemale38Currently in officeYes
Li JianghuaChairman of the Supervisory Board Employee SupervisorMale43Currently in office104.75No
Li XinjunSupervisorMale52Currently in office15No
Gao ChangkunEmployee SupervisorMale51Currently in office180.22No
Lu WenhuiExecutive Vice PresidentMale57Currently in office471.43No
He JinVice presidentMale48Currently in office449.09No
Yang XinyuSecretary of the BoardMale40Currently in office200.64No
Li WeinanVice presidentMale58Post leaving157.27No
Li CuixuVice presidentMale45Post leaving179.79No
Jin QingjunIndependent DirectorMale63Post leaving3.75No
Zhang WandongChairman of the supervisory boardFemale51Post leaving3.75No
Total2,257.83

Directors and senior management of the company were granted equity incentives during the reporting period

√Applicable □Not applicable

Unit: Share

NameTitleNumber of shares outstanding during the report periodNumber of shares already exercised during the report periodThe exercise price of the exercised shares during the report period (RMB / share)Market price at the end of the report period (RMB / share)The number of restricted stocks held at the beginning of the periodNumber of shares unlocked in this periodNumber of restricted shares newly granted during the report periodThe granting price of restricted stock (RMB / share)The number of restricted stocks held at the end of the period
Chen LinChairman of the Board002,213,271004.281,217,300
Wang JianSecretary of the Party Committee, Deputy Chairman of the Board, CEO002,300,0001,012,00003.68759,000
Lu WenhuiExecutive Vice President001,659,953004.28912,975
He JinVice president001,304,00088,0000Awarded for the first time: 4.28 The reserved awarded: 3.68673,200
Yang XinyuSecretary of the Board001,580,907004.28869,499
Li WeinanVice president001,580,907004.280
Li CuixuVice president00800,000003.68616,000
Total--00----11,439,0381,100,0000--5,047,974
Remarks (if any)①In case the unlocking conditions of the restricted stock incentive plan is satisfied, the restricted shares Unlock in three phases after 12 months from the date of grant: 40% of the restricted stocks will be available for circulation within the period (from the first trading day following the lock-up period of 12 months to the last trading day of lock-up period of 24 months), 30% of the restricted stocks will be available for circulation within the period (from the first trading day following the lock-up period of 24 months to the last trading day of the lock-up period of 36 months), and 30% of the restricted stocks will be available for circulation within the period (from the first trading day following the lock-up period of 36 months to the last trading day of the lock-up period of 48 months). ②Except Mr. Li Weinan does not meet the requirements for the incentive due to departure, to whom the restricted stock that has been granted but has not been unlocked is cancelled by the company, the other directors, senior managers mentioned above have not met the performance conditions for the company to unlock the second unlocking period of the 2017 a-share restricted stock incentive plan, the restricted shares that can be released during the second

V. Particulars of workforce

1. Number, professional composition and educational background of employees

unlocking period shall not be released and shall be repurchased and cancelled by the company,totaling 4,269,064 shares.

③ In the above-mentioned directors and senior managers, Mr. Wang Jian, Mr. He Jin (with theexception of 200,000 shares reserved), are awarded restricted shares on Sep. 13, 2018. Theconditions to unlock restricted shares in the first restriction periods have been satisfied after 12months from the date of award, and therefore, the conditions on restricted shares were lifted onSep. 25, 2019 in the first restriction periods. The amount of restricted shares involved accountsfor 40% of the total number of restricted shares granted. Mr. Li Cuixu did not meet the unlockconditions due to his resignation, and his holding of 616,000 equity incentive restricted shareshas been repurchased by the company, but has not completed the cancellation procedures.

Number of employees in the parent company (person)

Number of employees in the parent company (person)536(i)
Number of employees in major subsidiaries of the Company (person)9,918
Total number of employees (person)10,454
Total number of employees received salaries in the period (person)10,454
Number of retired employees whose costs bore by the parent company and its main subsidiaries (person)0
Professional composition
Category of professional compositionNumber of professional composition (person)
Production personnel7,194
Salesman623
Technician1,456
Financial personnel119
Administrative personnel1,062
Total10,454
Educational background
Category of educational backgroundNumber (person)
Doctor7
Master159
Undergraduate2,259
Junior college1,921
Degree below junior college6,108
Total10,454

(i) Among them, there are 378 employees sent by the headquarters to the subsidiary.

2. Staff remuneration policy

In 2019,the company continue to emphasize the principle of "performance orientation" in compensation management,through strengthening the concept of organizational performance and strengthening the application of performanceresults, we advocate that salary incentives should be inclined to high-performing organizations and high-performingindividuals, to improve the work enthusiasm of employees, and then improve the overall performance of theorganization, to achieve the business objectives.

3. Staff training plan

The company has always attached great importance to the talent team construction and staff training and development.Every year, the company sets up a special fund for the employees' skills training, capacity development and qualityimprovement. The company has established a comprehensive training and development system for all kinds ofemployees, and developed personalized training and development systems for senior, middle and grass-roots employees,so as to stimulate the drive of employees, enhance the competitiveness of the enterprise, and provide a strong guaranteefor the development of CSG Group. Based on the strategy of sustainable development of human resources, the companywill continue to deepen the scientific and systematic operation of training and development, so as to energize, promotemanagement and increase benefits, and achieve a win-win situation for the growth of employees and the developmentof the enterprise.

4. Labor outsourcing

□ Applicable √ Not applicable

Section VIII. Corporate Governance

I. Corporate governance of the CompanyIn strict compliance with the requirements of the relevant laws and regulation including The Company Law, SecuritiesLaw and Rule of Governance for Listed Company, the Company has been putting efforts in improving the corporategovernance, strengthening management of information disclosure, regulating operation activities and establishing amodern corporate system. At present, the system for corporate governance of the Company is basically perfect,operation is regulated, corporate governance is consummated, which accord with the requirements of relevantdocuments on corporate governance of listed company issued by CSRS.The Company has established the Information Disclosure Management System and promptly improved it in accordancewith newly issued laws and regulations, clarified the standards of insider information, and established insideinformation insider registration system and record management system. In order to further strengthen the Company'sinternal information disclosure control, enhance the disclosure consciousness of relevant personnel, and improve thequality of corporate information disclosure, in 2016, the Company set up information Disclosure Committee, andformulate Rules for the implementation of the information disclosure Committee. During the report period, theCompany disclosed information with facticity, completeness, timeliness and fairness, strictly fulfilled theresponsibilities and obligations of information disclosure of listed companies to ensure that investors are able to keepabreast of the Company's operation and development strategies. There was no regulatory punishment caused byinformation disclosure in the report period. Meanwhile, the Company delivered the Inside Information Insider Table toShenzhen Stock Exchange when submitting periodic reports. It didn’t exist that insiders used the inside information totrade the Company’s shares before the major sensitive information which could affect the Company’s share price wasdisclosed.The Company has seriously implemented the requirements of the relevant regulatory to cash dividends. The Companyformulated the Return plan for Shareholders of CSG Holding Co., Ltd. in the Next Three Years (2018- 2020) accordingto relevant regulations of the Notice of Further Implementation of Cash Dividends of the Listed Companies (ZJF No.:

[2012] 37) and the Regulatory Guidelines of Listed Companies No. 3 - Cash Dividends of Listed Companies(ZGZJHGG No. [2013] 43) issued by China Securities Regulatory Commission, further improved the Company’sdecision-making and supervision mechanism for distribution of profits, and protected the interests of investors.During the report period, it did not exist that the Company provided the undisclosed information to the largestshareholder and actual controller. And it did not exist that non-operating fund of listed company was occupied by thelargest shareholder and its affiliated enterprises.Is there any difference between the actual condition of corporate governance and relevant regulations about corporategovernance for listed company from CSRC?

□Yes √ No

There are no differences between the actual condition of corporate governance and relevant regulations about corporategovernance for listed company from CSRC.

II. Independency of the Company relative to the largest shareholder’ in aspect of businesses,personnel, assets, organization and financeThe Company has been absolutely independent in business, personal, assets, organization and financial from itssubstantial shareholders ever since its establishment. The Company had an independent and complete business systemand independent management capability.

1. In terms of business: The Company owns independent purchase and supply system of the raw resources, completeproduction systems, independent sale system and customers. The Company is completely independent from thesubstantial shareholders in business. The substantial shareholders and their subsidiaries do not engage any identicalbusiness or similar business as the Company.

2. In terms of personnel: The Company established integrated management system of labor, personnel, salaries and thesocial security, which were absolutely independent from its holding shareholder’s. Personnel of the managers, person incharge of the financial and other executive managers are obtained remuneration from the Company since on duty in theCompany, and never received remuneration or take part-time jobs in large shareholders’ company and other enterprisescontrolled by large shareholders. The recruitment and dismissal of Directors are conducted through legal proceduresince the Company was listed and the manager has been appointed or dismissed by Board of Directors. The Board ofDirectors and the Shareholders’ General Meeting have not received any interference of decisions on personnelappointment and removal from the largest shareholders.

3. In terms of asset: the Company is able to operate business independently and enjoys full control over the productionsystem, auxiliary production system and facilities, land use right, industry property and non-patent technology owned orused by the Company. The investments to the Company from largest shareholder are monetary assets, and the largestshareholder has never occupied, damage or intervene to operation on these assets.

4. In terms of organization: The Company possessed sound corporate governance structure, established Shareholders’General Meeting, Board of Directors, Supervisory Committee, appointed general manager, and fixed related functiondepartments. The Company had been totally independent from its large shareholders in organization structure. TheCompany has its own office and production sites that are different from those of the large shareholders. The largestshareholder and its related parties didn’t deliver any operation plan and order to the Company, neither influence theindependence on management of the Company by any forms.

5. In terms of finance: The Company has set up independent financial department, established independent accountingcalculation system and financial management system (included management system of its subsidiaries). The financialpersonnel of the Company didn’t take part-time jobs in units of large shareholder or its subordinate units. The Companyhad independent bank accounts, separated from the large shareholders. The Company is independent taxpayer, paidtaxes independently according the laws and didn’t pay mixed taxes with the large shareholders. The financial decision-making of the Company was independent, and the large shareholders never interfered the usage of the Company’scapital. The Company never offered guarantee to their large shareholders and its subordinate units and other relatedparty. The largest shareholder and its related has never occupy or occupy disguised the capital.

III. Horizontal competition

□ Applicable √ Not applicable

IV. Annual shareholders’ general meeting and extraordinary shareholders’ general meetingconvened in the report period

1. Annual Shareholders’ General Meeting in the report period

Session of meetingTypeRatio of investor participationDateDate of disclosureIndex of disclosure
The First Extraordinary General Shareholders’ Meeting of 2019Extraordinary General Shareholders’ Meeting27.20%2019-02-272019-02-28Announcement No.: 2019-016(www.cninfo.com.cn)
The Second Extraordinary General Shareholders’ Meeting of 2019Extraordinary General Shareholders’ Meeting27.19%2019-04-102019-04-11Announcement No.: 2019-025(www.cninfo.com.cn)
Annual General Shareholders’ Meeting of 2018Annual General Shareholders’ Meeting27.53%2019-05-092019-05-10Announcement No.: 2019-035 (www.cninfo.com.cn)
The Third Extraordinary General Shareholders’ Meeting of 2019Extraordinary General Shareholders’ Meeting27.13%2019-08-212019-08-22Announcement No.: 2019-044(www.cninfo.com.cn)
The Fourth Extraordinary General Shareholders’ Meeting of 2019Extraordinary General Shareholders’ Meeting27.60%2019-10-102019-10-11Announcement No.: 2019-060 (www.cninfo.com.cn)
The Fifth Extraordinary General Shareholders’ Meeting of 2019Extraordinary General Shareholders’ Meeting27.65%2019-12-262019-12-27Announcement No.: 2019-081 (www.cninfo.com.cn)

2. The preference shareholders convening the general meeting whose right to vote has been resumed

□ Applicable √ Not applicable

V. Responsibility performance of independent directors in the report period

1. The attending of independent directors to Board meetings and general shareholders’ meeting

The situation of independent directors attending the board of directors and shareholders' meetings
Name of independent directorTimes of Board meeting supposed to attend in the report periodTimes of Presence on the sceneTimes of attending by communication wayTimes of entrusted presenceTimes of AbsenceWhether absent the Meeting for the second time in a row or notTimes of Presence
Zhu Qianyu1211100No0
Zhan Weizai1921700No2
Zhu Guilong1921700No4
Jin Qingjun70700No1

Explanation of absence for the Board Meeting twice in a rowNot applicable

2. Objection for relevant events from independent directors

Whether independent directors came up with objection about the Company’s relevant matters or not

□ Yes √No

During the report period, the independent directors did not raise objections to the Company's related matters.

3. Other explanation about responsibility performance of independent directors

Whether the opinions from independent directors were adopted or not

√Yes □ No

Explanation of the opinions from independent directors which were adopted or not adoptedIn the report period, independent directors of the Company attended the board meetings and general shareholders’meetings, conscientiously performed their duties, and put forward constructive opinions or suggestions for thedevelopment of the Company strictly according to the requirements of the Guidelines for Operation of the ListedCompanies on Main Board of Shenzhen Stock Exchange, the Listing Rules of Shenzhen Stock Exchange Stock, theGuidelines for Establishment of Independent Director Mechanism for Listed Companies and the Article of Association.Each independent director seriously deliberated all motions of the board of directors, and gave independent opinions onsignificant operating management issues, by-election of independent directors, provided entrusted loans, distribution ofprofits, Equity incentive restricted stock repurchase and unlock, engagement of auditors, internal control constructionand so on. The suggestions about the company of the independent directors have been adopted, and they have played anactive role in safeguarding the interests of the company and minority shareholdersVI. Duty performance of the special committees under the board during the reporting period

1. Performance of the audit committee of the Board

The Audit Committee of the Board of Directors of the Company is constituted with 5 directors, and 3 of them areindependent directors. The convoker is independent director. During the report period, according to demands of CSRCand Shenzhen Stock Exchange, and regulations of Rules of Procedure of the Audit Committee of the Board of Directors,Procedure for Annual Report Work of the Audit Committee, the committee paid attention to the construction ofcorporate internal control system, audited the internal audit report and financial report periodically, diligently andfaithfully. They performed the following duties:

①Deliberate the Company’s financial statement and issue opinions

During the reporting period, in accordance with the requirements of the CSRC, the Audit Committee reviewed therelevant annual work plan for the audit of annual reports submitted by certified public accountants before the annualaudited certified public accountants entered the market, and provided guidance opinions; At the same time, the basis,principles, and methods for the preparation of the Company's accounting statements are in compliance with the relevantprovisions of national laws and regulations, and in all major respects they fairly reflect the financial status of theCompany on December 31, 2019 and its operating results in 2019.

②Supervise the audit works conducted by the accountant firm

The Audit Committee communicated with the accounting firms and provides guidance and requirements for the annualfinancial report audit work and the plans and arrangements for the internal control report audit work. After the CPAcame into the audit, the members of the Audit Committee kept close contact with the Company and the main projectresponsible personnel to understand the progress of the audit work and the concerns of the accountants, and timely

feedback to the company’s relevant departments to ensure that the annual audit and information disclosure work wasconducted as scheduled.

③ Summarize report on the audit works conducted by the accountant firm in previous yearAsia Pacific (Group) CPAs (special general partnership) strictly follows the China Auditing Standards and practicesdiligently, paying attention to the communication with the management and the audit committee, which reflects strongprofessional knowledge, good professional ethics and risk awareness. The firm successfully completed the company’s2018 financial statement audit work and internal control audit work, and the audit quality is trustworthy.

2. Performance of the remuneration and examination committee of the Board

The remuneration and examination committee of the Board of Directors of the Company is constituted with 4 directors,and 3 of them are independent directors. The convoker is independent director.

①According to regulations of Rules of Procedure of The Remuneration and Appraisal Committee, the Remunerationand Appraisal Committee makes examination on the disclosed remuneration of the directors, supervisors and seniorexecutives and thought it accorded with the relevant laws and regulations of the remuneration and appraisal system ofthe Company.

②The remuneration and examination committee reviewed the proposals on the allowance of external supervisors andthe allowance of external directors (except for the incumbents of shareholder units), and reported the results to the boardof directors.

③The remuneration and examination committee considered a bill to repurchase and cancel some restricted stock underthe restricted stock incentive program and reported the results to the Board.

④The remuneration and examination committee deliberated the matters related to the achievement of the conditions forthe lifting of restrictions in the first release period of the company's a-share restricted stock incentive plan in 2017, andreported the results to the board of directors.

3. Performance of the nomination committee of the Board

The nomination committee of the Board of Directors of the Company is constituted with 5 directors, and 3 of them areindependent directors. The convoker is independent director.The nominating committee considered the motion on the by-election of the company's eighth independent directors andreported the result to the Board. Nomination committee of the Board performed evaluation on the work of the Board,and believed that the directors of 8th session of the Board abided by the State laws, administrative rules and regulationof Article of Association since they took office. They attended or delegated to attend the Board Meeting and generalmeeting of shareholders on time, performed voting rights based on relevant regulations, actively kept eyes on themanagement situation of the Company, and performed the duty of Directors diligently.

4. Performance of the strategy committee of the Board

The strategy committee of the Board of Directors of the Company is constituted with 4 directors, and 1 of them isindependent directors.As the special institution responsible for the long-term development strategy and significant investment decision-making, the strategy committee made earnest research on the significant decisions affecting the Company’s

development and issued relevant recommendations according to the procedure rules of the strategy committee. Duringthe reporting period, the strategy committee considered on the profit distribution plan and entrusted loan,and held theview that the major issues above confirm to the requirement of the Company Law, the Enterprise AccountingPrinciples and the Articles of Association, and agreed to submitted the same to the board and general meeting forconsideration. At the same time, the strategy committee considered issues concerning significant operation management,guarantee for controlling subsidiaries, related transaction, and investment projects of the Company, which weresubmitted to the board for consideration.VII. Performance of the Supervisory CommitteeDuring the report period, the Supervisory Committee found whether there was risk in the Company in the supervisoryactivities.

□ Yes √ No

The Supervisory Committee had no objection on the supervised events during the report period.VIII. Performance examination and incentives of senior managementIn order to maximize the company's operating efficiency, fully mobilize the enthusiasm of the management team toensure the completion of the company's various operational indicators, the board of directors agreed to adopt an annualsalary system for the company's management team. The annual salary system consists of a fixed annual salary andperformance bonus. The performance bonus is an incentive income. The company conducts accounting according to theoverall business situation and individual assessment. The specific payment rules are implemented according to thecompany's annual assessment plan. These measures have been implemented since 2018.IX. Internal Control

1. Particulars about significant defects found in the internal control during the report period

□ Yes √ No

2. Self-appraisal report of internal control

Disclosure date of full text of self-appraisal report of internal controlApr. 30, 2020
Disclosure index of full text of self-appraisal report of internal controlMore details found in “Report of Internal Control of CSG for year of 2019” published on Juchao Website (http://www.cninfo.com.cn)
The ratio of the total assets of the units included in the scope of evaluation to the total assets of the Company's consolidated financial statements95%
The ratio of the operating income of the units included in the scope of evaluation to the operating income of the Company's consolidated financial statements98%
Standards of Defects Evaluation
CategoryFinancial ReportsNon-financial Reports
Qualitative criteriaMajor defects: A. Fraud of directors, supervisors and senior management;Major defects: A. Major decision-making mistakes caused by decision-making process of key business;
B. Ineffective control environment; C. Invalid internal supervision; D. Major internal control defects found and reported to the management but haven’t been corrected after a reasonable time; E. Material misstatements are found by the external audit but haven’t been found in the process of internal control; F. Financial reports submitted during the reporting period completely cannot meet the needs and are severely punished by regulatory agencies; G. Other major defects that may affect the report users’ correct judgment. Significant defects: A. Defects or invalidation of important financial control procedures; B. Significant misstatements are found by the external audit but haven’t been found in the process of internal control; C. Financial reports submitted during the reporting period have mistakes frequently; D. Other significant defects that may affect the report users’ correct judgment. Common defects: Other control defects except for major defects and significant defects.B. Serious violation of state laws and regulations; C. Serious brain drain of senior and middle management and or personnel at key technological posts; D. Major or significant defects found in the internal control evaluation have not been rectified and reformed; E. The company's major negative news frequently appears on media; Significant defects: A. Big deviation of execution caused by executive routine of key business; B. Regulatory authorities impose large amount of fines because the violation of laws and regulations; C. Defects or invalidation of important business’ internal control procedures; Common defects: Other control defects except for major defects and significant defects.
Quantitative standardMajor defects: A. Amount of net profit affected by misstatements (based on consolidated statements): amount affected by misstatements is equal to or greater than 3% of net profit and the absolute amount is no less than 30 million yuan; B. Amount of assets and liabilities affected by misstatements (based on consolidated statements): amount affected by misstatements is equal to or greater than 1% of total assets. Significant defects: A. Amount of net profit affected by misstatements (based on consolidated statements): not belong to major defects and amount affected by misstatements is equal to or greater than 2% of net profit and the absolute amount is no less than 20 million yuan; B. Amount of assets and liabilities affected by misstatements (based on consolidated statements): amount affected by misstatements is equal to or greater than 0.5% of total assets but less than 1% of total assets. Common defects: Defects except for major and significant defects.Major defects: A. Amount of direct property loss: the direct loss amount is equal to or greater than 30 million yuan; B.Group's reputation: major negative news spreads in numerous business areas or is widely reported by national media and causes significant damages to the corporate reputation which takes more than six months to be restored. Significant defects: A. Amount of direct property loss: the direct loss amount is equal to or greater than 20 million yuan but less than 30 million yuan; B. Group's reputation: negative news spreads inside the industry or is reported or focused by local media and causes certain damages to the corporate reputation which takes more than three months but less than six months to be restored. Common defects: A. Amount of direct property loss: defects except for major and significant defects. B. Group's reputation: negative news spreads within the group and causes minor damages to the corporate reputation which takes less than three months to be restored.
Amount of significant defects in financial reports0
Amount of significant defects in non-financial reports0
Amount of important defects in financial reports0
Amount of important defects in non-financial reports0

X. Audit report of internal control

√Applicable □ Not applicable

Deliberations in Internal Control Audit Report
According to Guidelines of Enterprise Internal Control Audit and the relevant requirements of CICPA auditing standards, Asia Pacific (Group) CPAs (special general partnership) (hereinafter referred to as AP) audited the effectiveness of internal control over financial statements of the Company up to 31 December 2019, issued AP Ya-Kuai- A-Zhuan-Zi (2020) No. 0072 Internal Control Audit Report and made the following opinions: AP thought that CSG Holding Co., Ltd. maintained effective internal control over financial statements in all major aspects according to the Fundamental Norms of Enterprise Internal Control and relevant rules on December 31, 2019.
Disclosure of internal control audit reportDisclosure
Date of disclosing the internal control audit reports30 April 2020
Disclosure index of internal control audit reportMore details can be found in 2019 Internal Control Audit Report of CSG released on Juchao Website (http://www.cninfo.com.cn)
Type of the auditor’s opinionStandard unqualified opinion
Whether there are major flaws in the non-financial report or notNo

Whether the CPAs firm issued an Audit Report on Internal Control with non-standard opinion or not?

□Yes √ No

A statement of the internal control audit report issued by an accounting firm with non-standard opinions.Whether the Audit Report on Internal Control from the CPAs firm is in consistent with the Self-appraisal Report fromthe Board or not?

√ Yes □ No

Section IX. Corporate BondsWhether the company has a public offering and is listed on the stock exchange, and the company bonds that have notbeen fully paid or matured on the date of approval of the annual reportYesI.Basic information about corporate bonds

NameShort nameBond codeIssue dateMaturity dateBond balance (RMB 0,000)Interest rateWay of repayment of principal and interest
CSG Holding Co., Ltd. Public issue of corporate bonds to qualified investors in 2020 (phase I)20 CSG 011490792020-3-24 to 2020-3-252023-3-25200,0006%Use simple interest to calculate the annual interest, excluding compound interest. Interest is paid once a year, principal is repaid once due, and the last installment of interest is paid together with the principal.
Corporate bond listing or transfer trading placeShenzhen Stock Exchange
Appropriate arrangements for investorsCorporate bonds shall be publicly issued to qualified institutional investors who have opened qualified A-share securities accounts in the Shenzhen branch of China securities registration and clearing Co., Ltd., in accordance with the provisions of the "measures for the administration of corporate bond issuance and trading".
Interest payment and encashment of corporate bonds during the reporting periodThe current bond has not entered the interest - paying period.

II. Informantion of bond trustee and credit rating institution

Not applicable

Bond trustee:

Bond trustee:
NameWestern Securities Co., LtdOffice adds.Room 10000, building 8, 319 dongxin street, xincheng district, xi 'an city, shaanxi provinceContact personLv YueTel.010-68086722
Credit rating institution which tracks rating corporate bonds in the report period:
NameCCXROffice adds.21 floor, Anji Building, 760 Tibet South Road, Huangpu District, Shanghai
If bond trustee and credit rating institution engaged by the Company changed in the report period, explain the reason of theThe bond rating agency China credit securities assessment co., LTD. (hereinafter referred to as "China credit rating") is a wholly owned subsidiary of China credit international credit rating co., LTD.

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change, performance of the procedure, and the impact on the interest of investors etc. (if applicable)(hereinafter referred to as "China credit international"). According to the notice of China credit international, on February 25, 2020, China credit international received the reply of China securities regulatory commission on the approval of China credit rating international co., Ltd. to engage in the credit rating business of the securities market (license no. [2020] 267).According to this reply, zhongxin international will carry out credit rating business of securities market from February 26, 2020;Credit rating business of credit rating in securities market of credit rating co., LTD., a wholly-owned subsidiary of credit rating international, is inherited by credit rating international.

III. The use of fund raised by corporate bonds

The use of fund raised by corporate bonds and performance of the procedureThe raised fund is in strict accordance with the relevant provisions.
Balance at the end of year (RMB0,000)0
The operation of the special account for raised fundThe operation of the special account for raised fund is in strictly accordance with the relevant provisions of prospectus commitment.
Whether the use of raised fund is consistent with the purpose, plan of use and other agreements of prospectus commitmentConsistent

Note:By the end of 2019, the Company had not issued corporate bonds.IV. Information of the rating of corporation bonds

According to CSG Holding Co., Ltd. 2019 corporate bond credit rating report (CCXR [2019] g214-3) issued by Chinacredit rating agency, the main credit rating of the company is AA + and the outlook of the rating is stable. The creditrating of this bond is AA+.China Credit International will conduct tracking rating during the term of validity of the bonds: it will complete theregular tracking rating of the year within two months after the release of the company's annual report, and disclose thebond tracking rating report of the previous year within six months from the end of each fiscal year according to thelisting rules; Issue random tracking ratings as appropriate. The rating results and other relevant information will bepublished on the website of China credit international (www.ccxi.com.cn) and the website of the exchange to draw theattention of investors.V. Trust mechanism, debt repayment plans and other debt repayment safeguards ofcorporation bonds

During the report period, the trust mechanism, debt repayment plans and other debt repayment safeguards have not beenchanged which are the same as the relevant commitments of raising instruction manual.I. Credit promotion measuresThe bonds are unsecured.

II. Debt repayment plan

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"20 CSG 01" will pay interest once a year during its duration, and the principal will be repaid once upon maturity. Theinterest of the last period will be paid together with the repayment of the principal. The payment date of "20 CSG 01" isMarch 25 of each year from 2021 to 2023, and the payment date is March 25, 2023 (in case of a statutory holiday or restday, it will be postponed to the first trading day thereafter).The Company established the annual and monthly plan for application of funds based on the payment arrangement forcoming due principal and interest of the corporation bonds, reasonably managed and allocated the funds so as to makesure the due principal and interest be paid in time. The capital sources for paying the corporation bonds in the reportperiod were mainly the cash flow generated by the Company’s operating activities and the bank loans. The financialstructure of the company remains stable, and the stable cash inflow provides a strong guarantee for the repayment ofprincipal and interest of the company's bonds. The repayment plan has not changed and is consistent with the relevantcommitments in the prospectus.

Ⅲ. Repayment safeguardsIn order to fully and effectively maintained the interests of the bondholders, the Company has made a series plans forthe timely and sufficient repayment for bonds in the report period, including confirming the specialized departments andpersonnel, arranging the funds for repayment, strictly implement the use of the raised funds, give full play to the role ofbond trustee, Set the rules for bondholders' meetings, strictly fulfill the obligation of information disclosure, so as toDevelop a set of safeguards to ensure that bonds are repaid safely

VI. Information about the bond-holder meeting during the reporting periodNo

VII. Information about the obligations fulfilled by the bond trustee in the report periodNoVIII. The key accounting data and financial indicators of the latest two years to the end of the report period

RMB 0,000

Item20192018Rate of change over the same period
Earnings before interest tax depreciation and amortiation195,447196,438-0.50%
Flow rate74%80%-6%
Assets liabilities rate46%51%-5%
Speed ratio61%70%-9%
Total debt ratio of EBITDA23%20%3%
Interest coverage ratio2.992.2334.08%
Cash interest coverage ratio8.916.7032.99%
interest coverage ratio of EBITDA5.954.6428.23%
Loan repayment rate100%100%
interest coverage ratio100%100%

The above accounting data and financial indicators year-on-year change more than 30% of the main reasons

√Applicable □Not applicable

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Interest protection multiple: mainly due to the increase of net profit, interest expense reductionMultiple of cash interest protection: mainly due to the increase of net cash flow from operating activities and thedecrease of interest expense

IX. Payment of principle and interest for other bonds and debt financing instruments duringthe report periodOn May 4, 2019, the company paid the first installment of the first term medium-term note of 2018 with an annualinterest rate of 7% and a total amount of 800 million yuan issued on May 4, 2018.

On July 14, 2019, the company completed the fourth installment of 2015 interim notes issued on July 14, 2015 with atotal amount of 1.2 billion yuan and an annual interest rate of 4.94%.X. Information about of bank credit and use, as well as repayment of bank loans during thereport periodDuring the reporting period, the company's credit standing is good, and it has established a long-term and stable creditbusiness relationship with banking institutions. As of December 31, 2019, the company had obtained 11.403 billionyuan of bank credit, with a quota of 3.63 billion yuan and an available quota of 7.773 billion yuan.

XI. Information about fulfillment of the stipulations or commitments specified in theProspectus of the issuance of the bonds during the report periodNoXII. Major matters occurring during the report periodNo

XIII. Whether there is a guarantor of corporate bonds

□ Yes √ No

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Section X. Financial Report

I. Report of the Auditors

Type of Auditor’s OpinionStandard and unqualified
Issue date of Report of the Auditors28 April 2020
Name of Auditor’s organizationAsia Pacific (Group) CPAs (special general partnership)
Reference number of Report of the AuditorsYa-Kuai- A-Shen-Zi (2020) No. 0638
Name of CPAZhao Qingjun, Zhou Xianhong

Auditor’s Report

To the shareholders of CSG Holding Co., Ltd.:

I. Opinion

We have audited the accompanying financial statements of CSG Holding Co., Ltd.(hereinafter“the Company”), which comprise the Separate/Consolidated Statements ofFinancial Position as at 31 December 2019, and the Separate/Consolidated Statements ofprofit or loss, the Separate/Consolidated Statements of changes in equity and theSeparate/Consolidated Statements of cash flows for the year then ended, and the notes tothe financial statements.

In our opinion, the financial statements attached were prepared in line with the regulationsof Accounting Standards for Business Enterprises in all significant aspects which gave atrue and fair view of the consolidated and parent financial position of the Company as atDec. 31, 2019 and the consolidated and parent business performance and cash flow of theCompany for 2019.

II. Basis of Opinion

We conducted our audit in accordance with Standards on Auditing for Certified PublicAccountants. Our responsibility is to express an opinion on these financial statementsbased on our audit. Those standards require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether the financialstatements are free from material misstatement. We believe that the audit evidence wehave obtained is sufficient and appropriate to provide a basis for our audit opinion.

III. Key audit matters

Key audit matters are those matters that, in our professional judgement, were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole, and informing our opinion thereon, and we do not provide a separate opinion on these matters.We determine the followings are key audit matters in need of communication in our report.

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I) Impairment of assets

1. Matter description

As disclosed in the financial report, by 31st December 2019 , Impairment provision forconstruction in progress of The Company was RMB 462.33 million, Impairment provisionthe fixed assets was RMB 396.01 million. As the domestic market is highly competitive inthe polycrystalline silicon industry,the management of the company identified andconducted impairment tests for some related assets which show a sign of impairment.During the test, the management has engaged an independent valuer to assist in theidentification and valuation of the recoverable amount of relevant asset and compared itwith the book value of the corresponding assets. The results showed that the recoverableamount of related assets was lower than its book value. According to the differences inamount, the provision for impairment of fixed assets and construction in progress shouldbe noted by the company. The impairment test involves confirming key parametersincluding discount rate and assumptions for future administration, such as the revenuegrowth rate, the gross profit margin etc. Due to the procedure of related assets impairmentinvolved significant decisions and predictions made by the management team, wetherefore have confirmed thisas a key audit matter.

2. Countermeasures of Audit

1 Understood and evaluated the effectiveness of design and operation of the internalcontrol system of the fixed assets and the construction in progress;

2 Evaluated management's identification of the relevant asset groupsassertions and theamount of assets allocated to each asset group;

3 Reviewed the management's process of identifying the signs of impairment of relatedassets and assessed the reasonableness of their judgments;

4 Obtained and reviewed the report of assets impairment issued by the external valuer,and assessed the independence, professional competency and objectivity of theindependent valuer;

5 Discussed with the management, compared and analyzed historical data and industrylevel of relevant asset groups; evaluated key assumptions and assessed its rationality,including the key parameters for obtaining significant management

estimates and judgments, such as the revenue growth rate, the gross profit margin, theexpense growth rate and the discount rate etc.;

6 Checked the asset in field survey and understood the use of relevant asset andReviewed relevant disclosures in the presentation of financial statements.

II) Provision of Impairment in goodwill

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1. Matter description

As disclosed in the report: by 31st December 2019, the goodwill of The Company is theoriginally valued at RMB 397.39 million, mainly included goodwill RMB 389.49 million fromthe acquisition of Shenzhen CSG Display Device Technology Co., Ltd.The management isrequired to annually perform the impairment test for goodwill. In this year’s test, themanagement has engaged an independent valuer to assist in the identification andvaluation of the recoverable amount of asset groups. The management tests goodwill forimpairment byestimatingtherecoverableamountsoftheassetgroupsthat goodwill is allocatedto, and then comparing these recoverable amounts with the carrying value of thoseassetgroupsandgoodwill . The result of the impairment test indicated that the recoverableamount of the relevant asset groups of goodwill is lower than the book value, and theprovision for goodwill impairment should be noted by company. As the goodwill impairmenttest involved a complex process and the significant judgments of the company’smanagement, we consider this matter as key audit matters.

2. Countermeasures of Audit

1 Understood and evaluated the effectiveness of design and operation of the internalcontrol system of the provision of impairment in goodwill;

2 Compared the relevant asset groups actual results in 2019 with their correspondingestimates made in the prior year to evaluate the reliability of the management’sestimates on cash flows;

3 Obtained and reviewed the report of goodwill impairment issued by the externalvaluer,and assessed the independence, professional competency and objectivity of theindependent valuer;

4 Discussed with the management, compared and analyzed historical data and industrylevel of relevant asset groups; evaluated key assumptions and assessed its rationality,including the key parameters for obtaining significant managementestimates and judgments, such as the revenue growth rate, the gross profit margin, theexpense growth rate and the discount rate etc.

5Checked whether the goodwill was allocated to each of the cash-generating units in areasonable methods; Checked the goodwill impairment test model calculation accuracy ;

6 Checked whether the impairment of goodwill have been properly presented anddisclosed in the financial statements as required.

IV. Other information

The management layer of the Company (hereinafter referred to as the management layer)shall be responsible for other information, including the information covered in the financialreport, but excludes financial statements and our audit report.

Our audit opinion on financial statements does not include other information; we will notmake the authentication conclusion on other information in any form.

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In connection with our audit of the financial statements, our responsibilityis toreadthe otherinformation and, in doing so, consider whether the other information ismateriallyinconsistent with the financial statements or our knowledge obtained in theaudit orotherwise appears to be materially misstated.

If based on the work we haveperformed, we conclude that there is a material misstatementof this otherinformation,we are required to report that fact. We have nothing to report inthis regard.

V. Responsibilities of Management and Those Charged with Governance for theFinancial Statements

Management of the Company is responsible for the preparation and fair presentation ofthese financial statements in accordance with the requirements of the AccountingStandards for Business Enterprises, and for such internal control as management.

determines is necessary to enable the preparation of financial statements that are freefrom material misstatement, whether due to fraud or error.

In preparing financial statements, the management layer is responsible for assessing thecompany's sustained business capability, disclosing matters related to continueoperating,using the going-concern assumption unless management either intends.

to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The governance layer is responsible for supervising the financial reporting process of thecompany.

VI. Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether these financialstatements as a whole are free from material misstatement, whether due to fraud or error,and to issue an auditor's report that includes our opinion.Reasonable assurance is thehigh-level assurance, but it can’t assure that a certain major misstatement can be alwaysfound when auditing according to the audit standard. The misstatement may be caused bymalpractices or error. If the misstatements within the rational expectations may affect theeconomic decision of the financial statement user according to the financial statement, itshall be deemed that the misstatement is significant.

During the process of conducting the audit work according to audit standards, we applyprofessional judgment and keep professional skepticism. Meanwhile, we also perform thefollowing tasks:

(1) Identify and assess the risks of material misstatement of the financial statements,whether dueto fraud or error, design and perform audit procedures responsive to thoserisks, and obtain audit evidence that is sufficient and appropriate to provide a basis for ouropinion. The risk of not detecting a material misstatement resulting from fraud is higher

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than for one resulting from error, as fraud may involve collusion, forgery, intentionalomissions, misrepresentations, or the override of internal control.

(2)Understand the internal control related to audit, so as to design appropriate auditprocedures.

(3)Estimate the appropriateness of the accounting policies selected by the managementlayer, and the rationality of making accounting estimate and relevant disclosures.

(4)Draw a conclusion on the appropriateness of the going concern assumption used by themanagement layer. Meanwhile, according to the obtained audit evidence,it may cause tocome to the conclusion that there are substantial doubtable events or major uncertainty forthe sustainable operation ability of the Company. In case that we come to the conclusionthat there is a significant uncertainty, the audit standardsrequire us to remind the users of the statements to pay attention to relevant disclosures inthe financial statements in the audit report; In case of any insufficient disclosure, we shallgive modified opinions. Our conclusion is based on the available information up to theaudit report day. However, the future events or circumstances may cause the Companycannot continue to operate.

(5) Estimate the overall presentation, structure and content (disclosure included) of thefinancial statements, and Estimate whether the financial statements fairly reflect relevanttransactions and matters.

(6) Acquire adequate and appropriate audit evidences on the financial information of theentity or business activities of the Company, and give audit opinions on the consolidatedfinancial statements. We are responsible for guiding, supervising and executing the auditof the Group, and take all responsibilities for the audit opinions.

We communicate with the governance layer about the audit scope, schedule, significantaudit findings and other matters within the plan, including the noteworthy internal controldefects recognized by us during the audit.

We also provide statements to the governance layer on the compliance with theprofessional ethics requirement related to the independence, and communicate withthe governance layer on all relationships and other matters that may reasonably beconsidered to affect our independence, as well as relevant preventive measures.

From the matters that we have communicated with the governance layer, we confirm themost important matters for the audit of the current financial statements, and thus constitutethe key audit matters. We describe these matters in our audit report, unless laws andregulations prohibit the public disclosure of these matters, or in rare cases, if it isreasonably expected that the negative consequences of communicating a matter in theaudit report will surpass the benefits in the public interests, we confirm that the matter shallnot be communicated in the audit report.

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Asia-Pacific (Group) Certified Public AccountantsCertified Public Accountant of China
(special general partnership)
Beijing, ChinaCertified Public Accountant of China

28April 2020

CSG HOLDING CO., LTD.

CONSOLIDATED AND COMPANY’SBALANCE SHEETSAS AT 31 DECEMBER 2019

(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]

31 December 201931 December 201831 December 201931 December 2018
ASSETSNoteConsolidatedConsolidatedCompanyCompany
Current assets
Cash at bank and on hand4(1)1,986,980,4182,226,447,7201,560,798,7311,700,726,151
Notes receivable4(2)297,023,380719,375,448--
Accounts receivable4(3)649,681,177592,233,312--
Receivables Financing4(4)258,296,826---
Advances to suppliers4(5)78,196,02791,176,6751,799,222438,167
Other receivables4(6)/17(1)202,854,864207,424,2953,179,500,9672,912,516,245
Inventories4(7)812,321,690600,139,750--
Assets classified as held for sale-45,983,520--
Other current assets4(8)447,995,931445,327,449300,000,000300,000,000
Total current assets4,733,350,3134,928,108,1695,042,098,9204,913,680,563
Non-current assets
Long-term receivables17(3)--1,200,000,0001,200,000,000
Long-term equity investments17(2)--5,079,465,5744,964,696,831
Fixed assets4(9)9,783,037,3019,930,843,77519,550,44220,926,071
Construction in progress4(10)1,902,140,0352,559,179,442--
Intangible assets4(11)1,044,826,2871,035,731,324370,484879,146
Development expenditure4(11)85,240,35674,549,257--
Goodwill4(12)315,097,756376,720,156--
Long-term prepaid expenses11,351,43112,746,609--
Deferred tax assets4(13)205,792,587139,529,518--
Other non-current assets4(14)120,399,89356,825,9341,407,535732,038
Total non-current assets13,467,885,64614,186,126,0156,300,794,0356,187,234,086
TOTAL ASSETS18,201,235,95919,114,234,18411,342,892,95511,100,914,649

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CSG HOLDING CO., LTD.

CONSOLIDATED AND COMPANY’S BALANCE SHEETS (CONT'D)AS AT 31 DECEMBER 2019

(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]

31 December 201931 December 201831 December 201931 December 2018
LIABILITIES AND OWNERS' EQUITYNoteConsolidatedConsolidatedCompanyCompany
Current liabilities
Short-term borrowings4(16)2,240,969,1372,922,679,5901,687,000,0002,000,000,000
Notes payable4(17)232,063,968105,150,000170,000,000-
Accounts payable4(18)1,100,531,7791,209,859,263236,346261,024
Advances from customers4(19)292,803,811206,631,008--
Employee benefits payable4(20)337,866,246266,459,15153,040,98241,096,020
Taxes payable4(21)115,425,044111,967,3652,901,3581,099,231
Other payables4(22) /17(4)351,374,775552,751,1871,643,156,4521,668,587,218
Current portion of non-current liabilities4(23)1,712,456,928819,448,7421,200,000,000-
Other current liabilities300,000300,000--
Total current liabilities6,383,791,6886,195,246,3064,756,335,1383,711,043,493
Non-current liabilities
Long-term borrowings4(24)1,320,225,0002,315,700,0001,130,000,0002,000,000,000
Long-term payables4(25)87,240,529529,910,796--
Deferred tax liabilities4(13)30,197,65722,118,840--
Deferred income4(26)513,925,557601,825,780182,386,537184,642,520
Total non-current liabilities1,951,588,7433,469,555,4161,312,386,5372,184,642,520
Total liabilities8,335,380,4319,664,801,7226,068,721,6755,895,686,013
Shareholders’ equity
Share capital4(27)3,106,915,0052,863,277,2013,106,915,0052,863,277,201
Capital surplus4(28)683,219,3581,095,339,421828,046,6721,240,166,735
Less:Treasury shares4(29)(118,066,397)(277,180,983)(118,066,397)(277,180,983)
Other comprehensive income4(30)6,565,8645,080,234--
Special reserve4(31)11,102,9216,068,600--
Surplus reserve4(32)946,251,286924,305,375960,796,646938,850,735
Undistributed profits4(33)4,859,600,8414,486,264,723496,479,354440,114,948
Total equity attributable to shareholders of parent company9,495,588,8789,103,154,5715,274,171,2805,205,228,636
Minority interests370,266,650346,277,891--
Total shareholders' equity9,865,855,5289,449,432,4625,274,171,2805,205,228,636
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY18,201,235,95919,114,234,18411,342,892,95511,100,914,649

The accompanying notes form an integral part of these financial statements.

Legal representative:Principal in charge of accounting: Head of accounting department:

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CSG HOLDING CO., LTD.

CONSOLIDATED AND COMPANY’S INCOME STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]

2019201820192018
ItemNoteConsolidatedConsolidatedCompanyCompany
Revenue4(34)10,472,028,09910,609,963,01182,205,71258,900,937
Less: Cost of sales4(34)(7,743,129,614)(8,120,481,894)--
Taxes and surcharges4(35)(115,813,768)(140,424,851)(639,077)(516,457)
Selling and distribution expenses4(36)(389,269,235)(354,983,459)--
General and administrative expenses4(37)(602,590,650)(731,215,251)(131,340,380)(177,600,771)
Reseach and development expenses4(38)(366,871,283)(338,791,891)(794,864)(7,601)
Financial expenses - net4(39)(290,417,403)(349,403,487)(121,920,540)(76,503,819)
Inclouding: interest expenses(319,591,750)(401,627,067)(151,864,568)(131,665,668)
Interest income36,942,50961,857,53532,612,79457,796,521
Add:Other Income4(41)184,131,42094,618,0393,775,7112,049,664
Investment income17(5)--390,105,325231,537,607
Credit impairment loss4(42)(20,114,033)-
Asset impairment loss4(43)(463,324,685)(136,546,150)51,454(22,950)
Income on disposal assets4(44)(909,968)(454,368)502,0002,440
Operating profit663,718,880532,279,699221,945,34137,839,050
Add: Non-operating revenue4(45)7,827,83413,858,6512,403,225134,006
Less: Non-operating expenses4(46)(9,440,087)(1,541,471)(4,889,460)(243,265)
Total profit662,106,627544,596,879219,459,10637,729,791
Less: Income tax (expenses)/revenue4(47)(101,687,050)(72,388,291)-(599,358)
Net profit560,419,577472,208,588219,459,10637,130,433
Classified by continuous operation:
Net income from continuing operations (“-” for netloss)560,419,577472,208,588219,459,10637,130,433
Net income from discontinued operations (“-” for netloss)----
Classified by equity ownership:
Attributable to shareholders of parentcompany536,430,818452,965,935--
Minority interests23,988,75919,242,653--
Other comprehensive income net after tax1,485,6303,131,291--
Other comprehensive income net after tax attributable to shareholders of parentcompany1,485,6303,131,291--
Other comprehensive income items which will be reclassified subsequently to profit or loss1,485,6303,131,291--
Differences on translation of foreign currency financial statements1,485,6303,131,291--
Other comprehensive income net after tax attributable to minority interests----
Total comprehensive income561,905,207475,339,879219,459,10637,130,433
Total comprehensive income attributable to shareholders of parent company537,916,448456,097,226
Total comprehensive income attributable to minority interests23,988,75919,242,653
Earnings per share4(48)
Basic earnings per share (RMB Yuan)4(48)0.170.15
Diluted earnings per share (RMB Yuan)4(48)0.170.14

The accompanying notes form an integral part of these financial statements.

Legal representative:Principal in charge of accounting: Head of accounting department:

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CSG HOLDING CO., LTD.

CONSOLIDATED AND COMPANY’S CASH FLOW STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]

2019201820192018
ItemNoteConsolidatedConsolidatedCompanyCompany
1. Cash flows from operating activities
Cash received from sales of goods or rendering of services11,615,107,73411,788,692,40074,350,54361,224,074
Refund of taxes and surcharges24,913,21682,340,672582,881-
Cash received relating to other operating activities4(49)(a)158,462,125215,823,59451,436,37962,104,734
Sub-total of cash inflows11,798,483,07512,086,856,666126,369,803123,328,808
Cash paid for goods and services(6,831,844,733)(7,251,436,467)--
Cash paid to and on behalf of employees(1,316,636,342)(1,316,396,954)(109,657,156)(96,333,808)
Payments of taxes and surcharges(667,769,135)(784,858,705)(2,766,954)(3,313,177)
Cash paid relating to other operating activities4(49)(b)(603,196,545)(603,786,440)(34,547,014)(31,902,035)
Sub-total of cash outflows(9,419,446,755)(9,956,478,566)(146,971,124)(131,549,020)
Net cash flows from/(used in) operating activities2,379,036,3202,130,378,100(20,601,321)(8,220,212)
2. Cash flows from investing activities
Cash received from returns on investments--390,105,325231,537,607
Net cash received from disposal of fixed assets, intangible assets and other long-term assets940,7914,272,2392,0002,440
Cash received relating to other investing activities4(49)(c)36,649,46031,055,318--
Sub-total of cash inflows37,590,25135,327,557390,107,325231,540,047
Cash paid to acquire fixed assets, intangible assets and other long-term assets(715,488,350)(695,872,456)(5,044,017)(6,675,786)
Cash paid to acquire investments--(131,402,000)(72,000,000)
Cash paid relating to other investing activities4(49)(d)(55,177,375)(118,263,080)(86,952)(45,168)
Sub-total of cash outflows(770,665,725)(814,135,536)(136,532,969)(78,720,954)
Net cash flows (used in)/from investing activities(733,075,474)(778,807,979)253,574,356152,819,093
3. Cash flows from financing activities
Cash received from capital contributions-36,161,814-36,161,814
Including: Cash received from capital contributions by minority shareholders of subsidiaries----
Cash received from borrowings3,271,013,3524,636,519,0622,675,000,0003,340,000,000
Cash received relating to other financing activities4(49)(e)200,000,000--44,696,063
Sub-total of cash inflows3,471,013,3524,672,680,8762,675,000,0003,420,857,877
Cash repayments of borrowings(3,712,064,157)(4,737,952,772)(2,658,000,000)(3,320,000,000)
Cash payments for interest expenses and distribution of dividends or profits(468,314,362)(503,060,429)(232,336,010)(225,366,612)
Including: Cash payments for dividends to minority shareholders of subsidiaries----
Cash payments relating to other financing activities4(49)(f)(1,330,791,703)(1,020,125,951)(309,952,407)-
Sub-total of cash outflows(5,511,170,222)(6,261,139,152)(3,200,288,417)(3,545,366,612)
Net cash flows (used in)/from financing activities(2,040,156,870)(1,588,458,276)(525,288,417)(124,508,735)
4. Effect of foreign exchange rate changes on cash904,1412,261,90316,911(1,248,202)
5. Net increase/(decrease) in cash and cash equivalents4(50)(b)(393,291,883)(234,626,252)(292,298,471)18,841,944
Add: Cash and cash equivalents at beginning of year2,225,126,9132,459,753,1651,699,514,3341,680,672,390
6. Cash and cash equivalents at end of year4(50)(c)1,831,835,0302,225,126,9131,407,215,8631,699,514,334

The accompanying notes form an integral part of these financial statements.

Legal representative:Principal in charge of accounting: Head of accounting department:

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CSG HOLDING CO., LTD.

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITYFOR THE YEAR ENDED 31 DECEMBER 2019(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]

Attributable to shareholders of parentcompany
ItemShare capitalCapital surplusLess:Treasury shareOther comprehensive incomeSpecial reserveSurplus reserveUndistributed profitsSub-totalMinority interestsTotal shareholders' equity
Note4(27)4(28)4(29)4(30)4(31)4(32)4(33)
Balance at 1 January 20182,484,147,5471,306,381,765(417,349,879)1,948,9433,224,938920,592,3324,159,642,2278,458,587,873321,035,2388,779,623,111
Movements for the year ended 31 December 2018
Total comprehensive income
Net profit------452,965,935452,965,93519,242,653472,208,588
Other comprehensive income4(30)---3,131,291---3,131,291-3,131,291
Total comprehensive income---3,131,291--452,965,935456,097,22619,242,653475,339,879
Capital contributionandwithdrawal by shareholders6,507,523161,579,787140,168,896----308,256,2066,000,000314,256,206
Share-based payments--------6,000,0006,000,000
Shareholders? Interest-free borrowing6,507,523161,579,787140,168,896----308,256,206-308,256,206
Profit distribution-----3,713,043(126,343,439)(122,630,396)-(122,630,396)
Appropriation to surplus reserve4(32)-----3,713,043(3,713,043)---
Distribution to the shareholders4(33)------(122,630,396)(122,630,396)-(122,630,396)
Special reserve----2,843,662--2,843,662-2,843,662
Special reserve appropriate4(31)----8,319,885--8,319,885-8,319,885
Special reserve used4(31)----(5,476,223)--(5,476,223)-(5,476,223)
Internal transfer of shareholders' equity372,622,131(372,622,131)--------
Capital reserve to share capital372,622,131(372,622,131)--------
Balance at 31 December 20182,863,277,2011,095,339,421(277,180,983)5,080,2346,068,600924,305,3754,486,264,7239,103,154,571346,277,8919,449,432,462
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CSG HOLDING CO., LTD.

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (CONT’D)FOR THE YEAR ENDED 31 DECEMBER 2019(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]

Attributable to shareholders of parentcompany
ItemShare capitalCapital surplusLess:Treasury shareOther comprehensive incomeSpecial reserveSurplus reserveUndistributed profitsSub-totalMinority interestsTotal shareholders' equity
Note4(27)4(28)4(29)4(30)4(31)4(32)4(33)
Balance at 1 January 20192,863,277,2011,095,339,421(277,180,983)5,080,2346,068,600924,305,3754,486,264,7239,103,154,571346,277,8919,449,432,462
Movements for the year ended 31 December 2019
Total comprehensive income
Net profit------536,430,818536,430,81823,988,759560,419,577
Other comprehensive income4(30)---1,485,630---1,485,630-1,485,630
Total comprehensive income---1,485,630--536,430,818537,916,44823,988,759561,905,207
Capital increase or decrease from shareholder(38,925,482)(129,556,777)159,114,586----(9,367,673)-(9,367,673)
Share-based payments(38,925,482)(129,556,777)159,114,586----(9,367,673)-(9,367,673)
Profit distribution-----21,945,911(163,094,700)(141,148,789)-(141,148,789)
Appropriation to surplus reserve4(32)-----21,945,911(21,945,911)---
Distribution to the shareholders4(33)------(141,148,789)(141,148,789)-(141,148,789)
Special reserve----5,034,321--5,034,321-5,034,321
Special reserve appropriate4(31)----7,293,766--7,293,766-7,293,766
Special reserve used4(31)----(2,259,445)--(2,259,445)-(2,259,445)
Internal transfer of shareholders' equity282,563,286(282,563,286)--------
Capital reserve to share capital282,563,286(282,563,286)--------
Balance at 31 December 20193,106,915,005683,219,358(118,066,397)6,565,86411,102,921946,251,2864,859,600,8419,495,588,878370,266,6509,865,855,528

The accompanying notes form an integral part of these financial statements.

Legal representative: Principal in charge of accounting: Head of accounting department:

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CSG HOLDING CO., LTD.

COMPANY'S STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITYFOR THE YEAR ENDED 31 DECEMBER 2019(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]

Attributable to shareholders of parent company
ItemShare capitalCapital surplusLess: Treasury shareSurplus reserveUndistributed profitsTotal shareholders' equity
Balance at 1 January 20182,484,147,5471,451,209,079(417,349,879)935,137,692529,327,9544,982,472,393
Movements for the year ended 31 December 2018
Total comprehensive income
Net profit----37,130,43337,130,433
Total comprehensive income----37,130,43337,130,433
Capital increase or decrease from shareholder6,507,523161,579,787140,168,896--308,256,206
Share-based payments6,507,523161,579,787140,168,896--308,256,206
Profit distribution---3,713,043(126,343,439)(122,630,396)
Appropriation to surplus reserve---3,713,043(3,713,043)-
Distribution to the shareholders----(122,630,396)(122,630,396)
Capital reserve to share capital372,622,131(372,622,131)----
Balance at 31 December 20182,863,277,2011,240,166,735(277,180,983)938,850,735440,114,9485,205,228,636
Balance at 1 January 20192,863,277,2011,240,166,735(277,180,983)938,850,735440,114,9485,205,228,636
Movements for the year ended 31 December 2019
Total comprehensive income
Net profit----219,459,106219,459,106
Total comprehensive income----219,459,106219,459,106
Capital increase or decrease from shareholder(38,925,482)(129,556,777)159,114,586--(9,367,673)
Share-based payments(38,925,482)(129,556,777)159,114,586--(9,367,673)
Profit distribution---21,945,911(163,094,700)(141,148,789)
Appropriation to surplus reserve---21,945,911(21,945,911)-
Distribution to the shareholders----(141,148,789)(141,148,789)
Capital reserve to share capital282,563,286(282,563,286)----
Balance at 31 December 20193,106,915,005828,046,672(118,066,397)960,796,646496,479,3545,274,171,280

The accompanying notes form an integral part of these financial statements.

Legal representative:Principal in charge of accounting: Head of accounting department:

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1 General information

CSG Holding Co.,LTD (the “Company”) was incorporated in September 1984, known as China SouthGlass 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 Trustand 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-denominatedordinary shares (“A-share”) and foreign shares (“B-share”) publicly in October 1991 and January 1992respectively, and was listed on Shenzhen Stock Exchange on February 1992. As at 31 December2019, the registered capital was RMB3,106,915,005, with nominal value of RMB1 per share.

The Company and its subsidiaries (collectively referred to as the “Group”) are mainly engaged in themanufacture and sales of flat glass, specialised glass, engineering glass, energy saving glass, siliconrelated materials, polycrystalline silicon and solar components and electronic-grade display deviceglass and the construction and operation of photovoltaic plant etc.

Details on the majors subsidiaries included in the consolidated scope in current year were stated inNote 6(1).

The financial statements were authorised for issue by the Board of Directors on 28 April 2020.

2 Summary of significant accounting policies and accounting estimates

The Group determines its specific accounting policies and accounting estimates to manufacturing andoperation feature. It mainly reflected in expected credit impairment losses of receivables wasmeasured(Note 2(9)), inventory costing method (Note 2(10)), amortisation of property,plant andequipment and intangible assets (Note2(12) and(15)), criteria for determining capitalised developmentexpenditure (Note 2(5)), and timing for revenue recognition (Note 2(22)).

Please see Note 2(29) for the key judgements adopted by the Group in applying important accountingpolicies.

(1) Basis of preparation

The financial statements are prepared in accordance with the Accounting Standards for BusinessEnterprises - Basic Standard, and the specific accounting standards and other relevant regulationsissued by the Ministry of Finance on 15 February 2006 and in subsequent periods (hereaftercollectively referred to as “the Accounting Standard for Business Enterprises” or “CAS”), andInformation Disclosure Rule No. 15 for Companies with Public Traded Securities - Financial ReportingGeneral Provision issued by China Security Regulatory Commission.

As at 31 December 2019, the Group current liabilities exceed current assets about RMB1.65 billionandcommitted capital expenditure of about RMB 0.492 billion (Note 11(1)). The directors of the Companyhas assessed the following facts and conditions: a) the Group has been able to generate positiveoperating cash flows in prior years and expect to do so in the next 12 months, and in 2019, the netcash inflow from operation activities is approximately RMB2.379billion; b) the Group has maintainedgood relationship with banks, so the Group has been able to successfully renew the bank facilitiesupon the expiry. As at 31 December 2019, the Group had unutilised banking facilities of approximatelyRMB7.773billion, among which long-term banking facilities were about RMB1.094 billion. In addition,the shareholder of the Group or other appointed related parties are willing to provide theGroup withRMB2 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 notes and issue corporate bonds,.Theboard of directors of view that the banking facilities and shareholder?s support above can meet thefunding requirements.of the Group?s debt servicing and capital commitment.

2 Summary of significant accounting policies and accounting estimates(Cont’d)

(1) Basis of preparation(Cont?d)

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Accordingly, the directors of theCompany had adopted the going concern basis in the preparation ofthe financial statements of the Company and the Group.

(2) Statement of compliance with the Accounting Standards for Business Enterprises

The financial statements of the Company for the year ended 31 December 2019 are in compliancewith the Accounting Standards for Business Enterprises, and truly and completely present the financialposition of the consolidated and the Company as at 31 December 2019 and their financialperformance, cash flows for the year then ended.

(3) Accounting year

The Company?s accounting year starts on 1 January and ends on 31 December.

(4) Recording currency

The recording currency is Renminbi (RMB).

(5) Business combinations

(a) Business combinations involving enterprises under common control

The consideration paid and net assets obtained by the absorbing party in a business combination aremeasured at book value. The difference between book value of the net assets obtained from thecombination and book value of the consideration paid for the combination is treated as an adjustmentto capital surplus (share premium). If the capital surplus (share premium) is not sufficient to absorb thedifference, the remaining balance is adjusted against retained earnings. Costs directly attributable tothe combination are included in profit or loss in the period in which they are incurred. Transactioncosts associated with the issue of equity or debt securities for the business combination are includedin the initially recognised amounts of the equity or debt securities.

(b) Business combinations involving enterprises not under common control

The cost of combination and identifiable net assets obtained by the acquirer in a business combinationare measured at fair value at the acquisition date. Where the cost of the combination exceeds theacquirer?s interest in the fair value of the acquiree?s identifiable net assets, the difference is recognisedas goodwill; where the cost of combination is lower than the acquirer?s interest in the fair value of theacquiree?s identifiable net assets, the difference is recognised in profit or loss for the current period.Costs directly attributable to the combination are included in profit or loss in the period in which theyare incurred. Transaction costs associated with the issue of equity or debt securities for the businesscombination 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 itssubsidiaries.

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 businesscombination involving enterprises under common control, it is included in the consolidated financialstatements from the date when it, together with the Company, comes under common control of the

2 Summary of significant accounting policies and accounting estimates(Cont’d)

(6) Preparation of consolidated financial statements(Cont?d)

ultimate controlling party. The portion of the net profits realised before the combination date ispresented separately in the consolidated income statement.

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In preparing the consolidated financial statements, where the accounting policies and the accountingperiods of the Company and subsidiaries are inconsistent, the financial statements of the subsidiariesare 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 theidentifiable net assets at the acquisition date.

All significant intra-group balances, transactions and unrealised profits are eliminated in theconsolidated 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 arerecognised as minority interests and presented separately in the consolidated financial statementsunder equity, net profits and total comprehensive income respectively. Unrealised profits and lossesresulting from the sales of assets by the Company to its subsidiaries are fully eliminated against netprofit attributable to shareholders of the parent company. Unrealised profits and losses resulting fromthe sales of assets by a subsidiary to the Company are eliminated and allocated between net profitattributable to shareholders of the parent company and non-controlling interests in accordance withthe allocation proportion of the parent company in the subsidiary. Unrealised profits and lossesresulting from the sales of assets by one subsidiary to another are eliminated and allocated betweennet profit attributable to shareholders of the parent company and non-controlling interests inaccordance 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 thesubsidiary 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 withamount 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 equityinvestment arising from acquisition of minority equity and the share of net assets calculated based oncurrent shareholding ratio that the parent company is entitled to. The share is subject to continuouscalculation starting from the acquisition date or consolidation date. If the capital surplus (capitalpremium or share capital premium) is not sufficient to absorb the difference, the remaining balance isadjusted against retained earnings.

If the accounting treatment of a transaction which considers the Group as an accounting entity isdifferent from that considers the Company or its subsidiaries as an accounting entity, it is adjustedfrom the perspective of the Group.

(7) Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, deposits that can be readily drawn on demand,and short-term and highly liquid investments that are readily convertible to known amounts of cashand which are subject to an insignificant risk of changes in value.

(8) Foreign currency transaction

(a) Foreign currency transaction

Foreign currency transactions are translated into RMB using the exchange rates prevailing at thedates of the transactions.

2 Summary of significant accounting policies and accounting estimates(Cont’d)

(8) Foreign currency transaction(Cont?d)

At the balance sheet date, monetary items denominated in foreign currencies are translated into RMBusing the spot exchange rates on the balance sheet date. Exchange differences arising from thesetranslations are recognised in profit or loss for the current period, except for those attributable toforeign currency borrowings that have been taken out specifically for the acquisition or construction ofqualifying assets, which are capitalised as part of the cost of those assets. Non-monetary itemsdenominated in foreign currencies that are measured at historical costs are translated at the balancesheet date using the spot exchange rates at the date of the transactions. The effect of exchange ratechanges on cash is presented separately in the cash flow statement.

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(b) Translation of foreign currency financial statements

The asset and liability items in the balance sheets for overseas operations are translated at the spotexchange 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 incomeand expense items in the income statements of overseas operations are translated at the spotexchange rates of the transaction dates. The differences arising from the above translation arepresented separately in the shareholders? equity. The cash flows of overseas operations are translatedat the spot exchange rates on the dates of the cash flows. The effect of exchange rate changes oncash is presented separately in the cash flow statement.

(9) Financial instrument

Afinancialinstrumentisanycontractthatgivesrisetoafinancialassetofoneentityandafinancialliabilityorequityinstrumentofanotherentity.Afinancialassetorafinancialliabilityisrecognisedwhen the Group becomes aparty to the contractual provisions of the instrument.

(a) Financial assets

(i)Classification and measurement

Basedonthebusinessmodelformanagingthefinancialassetsandthecontractualcashflowcharacteristicsofthefinancialassets,financial assets are classified as: (1) financial assets at amortised cost; (2) financialassets at fair value through other comprehensive income; (3) financial assets at fair value throughprofit or loss.

Thefinancialassetsaremeasuredatfairvalueatinitialrecognition.Related transaction costs that areattributable 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, the relatedtransactioncostsofwhicharerecogniseddirectlyinprofitorlossforthecurrentperiod.Accountsreceivableornotesreceivablearisingfromsalesofproductsorrenderingofservices(excludingorwithoutregardtosignificantfinancingcomponents)areinitiallyrecognisedattheconsiderationthatisentitledtobechargedbytheGroupasexpected.

Debt instruments

The debt instruments held by the Group refer to the instruments thatmeetthedefinitionoffinancialliabilitiesfromtheperspectiveoftheissuer, and are measured in the followingways.

Measured at amortised cost

TheobjectiveoftheGroup'sbusinessmodelistoholdthefinancialassetstocollectthecontractualcashflows,andthecontractualcashflowcharacteristicsareconsistentwitha

2 Summary of significant accounting policies and accounting estimates(Cont’d)

(9) Financial instrument(Cont?d)

basiclendingarrangement, which gives rise on specified dates to the contractual cash flows that aresolely payments of principal and interest on the principal amount outstanding. The interest income ofsuch financial assets is recognised using the effective interest method.Such financialassetsmainlycomprisecashatbankandonhand,placementswith andloanstobanksandotherfinancialinstitutionsmeasured at amortisedcost,notes receivable, accounts receivable, factoringreceivables, loans and advances,other receivables and long-term receivables.Long-termreceivablesthat are due within one year (inclusive) as from the balance sheet date are included in the currentportion of non-current assets.

Financial assets at fair value through other comprehensive income:

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The objective of the Group's business model is to hold the financial assets to collect the contractualcash flows and selling as target, and the contractual cash flow characteristics are consistent witha basic lending arrangement.Such financial assets are measured at fair value and their changes areincluded 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 profitand loss.Such financial assets mainly comprise receivable financing and other financial debtinvestment.Other financial debt investment that are due within one year (inclusive) as from the balancesheet date are included in the current portion as other current assets.

Measured at fair value through profit or loss:

DebtinstrumentsheldbytheGroupthatarenotdividedintothoseatamortisedcost,orthosemeasuredatfairvaluethroughothercomprehensiveincome,aremeasuredatfairvaluethroughprofitorlossandincludedinfinancialassetsheldfortrading.Atinitialrecognition,theGroupdesignatesaportionoffinancialassetsasatfair value through profit orloss to eliminate or significantly reduce anaccountingmismatch.Financialassetsthatareduewithinoneyear(inclusive) as from the balance sheetdate and are expected to be held over one year are included in other non-current financial assets.

Equity instruments

Investmentsinequityinstruments,overwhichtheGrouphasnocontrol,jointcontrolorsignificantinfluence,aremeasuredatfairvaluethroughprofitorlossunderfinancialassetsheldfortrading;investmentsinequityinstrumentsexpectedtobeheldoveroneyearasfromthebalancesheetdateareincludedinothernon-currentfinancialassets.

In addition, a portion of certain investments in equity instruments not held for trading are designated asfinancial assets at fair value throughothercomprehensiveincomeunderotherinvestmentsinequityinstruments.Therelevantdividendincomeofsuchfinancialassetsisrecognised in profit or loss for the current period.

(ii)Impairment

The Group confirms the loss provision based on expected credit losses for financial assets measuredat amortised cost.

Giving consideration to reasonable and supportable information on past events, currentconditions and forecasts of future economic conditions, as well as the default risk weight , theexpected credit loss was confirmed .

2 Summary of significant accounting policies and accounting estimates(Cont’d)

(9) Financial instrument(Cont?d)

Asateachbalancesheetdate,theexpectedcreditlossesoffinancialinstrumentsatdifferentstagesaremeasuredrespectively.12-monthECLprovisionisrecognisedforfinancialinstrumentsinStage1thathavenothadasignificantincreaseincreditrisksinceinitialrecognition;lifetimeECLprovisionisrecognisedforfinancialinstrumentsinStage2thathavehadasignificantincreaseincreditrisk yet without credit impairment since initial recognition; and lifetimeECLprovisionisrecognisedforfinancialinstrumentsinStage3thathave had credit impairment since initialrecognition.

Forthefinancialinstrumentswithlowercreditriskonthebalancesheetdate,theGroupassumesthereisnosignificantincreaseincreditrisksinceinitialrecognitionandrecognisesthe12-monthECLprovision.

For the financial instruments in Stage 1, Stage 2 and with lower credit risk, the Group calculates theinterest income by applying the effectiveinterestratetothegrosscarryingamount(beforedeductionoftheimpairmentprovision).ForthefinancialinstrumentinStage3,theinterest income is calculated by applying the effective interest rate to the amortisedcost (after deduction of the impairment provision from the gross carrying amount).

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For notes and accounts receivables and factoringreceivables arising from daily business activitiessuch as selling commodities and providing labor services, the Group recognises the lifetimeexpectedcreditlossprovisionregardlessofwhetherthereexistsasignificant financing component

In case the expected credit losses of an individually assessed financial asset cannot be evaluated withreasonable cost, the Group divides thereceivablesintocertaingroupingsbasedoncreditriskcharacteristics,andcalculatestheexpectedcreditlossesforthegroupings.Basisfordetermined groupings and method for provision are as follows:

Notes receivables Portfolio 1Bank acceptance notesExpected credit loss method
Notes receivables Portfolio 2Tradeacceptance NotesExpected credit loss method
Accounts receivables Portfolio1Receivables related third partyExpected credit loss method
Accounts receivables Portfolio2Receivables relatedpartyExpected credit loss method
Other receivables Portfolio1Receivables related third partyExpected credit loss method
Other receivables Portfolio 2Receivables related partyExpected credit loss method

For notes and accounts receivables and receivable financing arising from daily business activitiessuch as selling commodities and providing labor services, the Group refers to historical credit lossexperience, combined with current conditions and predictions of future economic conditions . Inaddition 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 offuture economic conditions, and passes default risk exposure and future 12 The expected credit lossrate within a month or the entire duration is calculated as the expected credit loss.

TheGrouprecognisesthelossprovisionmadeorreversedintoprofitor loss for the current period.For debtinstruments that are held at fair value and whose changes are included in other comprehensiveincome, the Group adjusts other comprehensive income while accounting for impairment losses orgains in the current profit or loss.

(iii)Derecognition

A financial asset is derecognised when any of the below criteria is met:

(1)thecontractualrightstoreceivethecashflowsfromthefinancialasset expire; (2) the financial asset hasbeen transferred

2 Summary of significant accounting policies and accounting estimates(Cont’d)

(9) Financial instrument(Cont?d)

and the Grouptransferssubstantiallyalltherisksandrewardsofownershipofthefinancialassettothetransferee;or(3)thefinancialassethasbeentransferredandtheGrouphasnotretainedcontrolofthefinancialasset, although theGroup neither transfers nor retains substantially all the risks and rewards of ownership of the financialasset.

Whenafinancialassetisderecognised,thedifferencebetweenthecarryingamountandthesumoftheconsiderationreceivedandthecumulative changes in fair value that are previously recognised directlyinothercomprehensiveincomeisrecognisedinprofitorlossforthecurrentperiod,exceptforthoseasinvestmentsinotherequityinstruments,thedifferenceaforementionedisrecognisedinretainedearnings instead.

(b) Financial liabilities

Financialliabilitiesareclassifiedasfinancialliabilitiesatamortisedcost and financial liabilities at fair valuethrough profit or loss at initial recognition.

The Group's financial liabilities are mainly mainly comprise financial liabilities at amortised cost,including bills payable, accounts payable, and other payables. This type of financial liability is initiallymeasured at its fair value after deducting transaction costs, and is subsequently measured using theactual interest rate method. If the maturity is less than one year (including one year), it is listed as

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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 arelisted as non-current liabilities.

Afinancialliabilityisderecognisedorpartlyderecognisedwhentheunderlyingpresentobligationisdischargedorpartlydischarged.Thedifferencebetweenthecarryingamountofthederecognisedpartofthe financial liability and the consideration paid is recognised in profit or loss forthe current period.

(c) Determination of fair value of financial instruments

Thefairvalueofafinancialinstrumentthatistradedinanactivemarket is determined at the quoted price inthe active market. The fair valueofafinancialinstrumentthatisnottradedinanactivemarketis determinedby using a valuation technique. In valuation, the Groupadoptsvaluationtechniquesapplicableinthecurrentsituationandsupportedbyadequateavailabledataandotherinformation,selectsinputswiththesamecharacteristicsasthoseofassetsorliabilitiesconsideredinrelevanttransactionsofassetsorliabilitiesbymarketparticipants,andgivesprioritytotheuseofrelevantobservableinputs. 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 goodsand turnover materials, and are measured at the lower of cost and net realisable value.

(b) Inventory costing method

Cost is determined using the weighted average method. The cost of finished goods and work inprogress comprise raw materials, direct labour and systematically allocated production overheadbased on the normal production capacity.

2 Summary of significant accounting policies and accounting estimates(Cont’d)

(10) Inventories(Cont?d)

(c) Amortisation methods of low value consumables and packaging materials

Turnover materials include low value consumables and packaging materials, which are expensedwhen issued.

(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 ofthe inventories over their net realisable value. Net realisable value is determined based on theestimated selling price in the ordinary course of business, less the estimated costs to completion andestimated costs necessary to make the sale and related taxes.

(e) The Group adopts the perpetual inventory system.

(11) 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 theinvestees 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 financialstatements, and adjusted by using the equity method when preparing the consolidated financialstatements. Investments in associates are accounted for using the equity method.

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(a) Initial recognition

For long-term equity investments formed in business combination: when obtained from businesscombinations involving entities under common control, the long-term equity investment is stated atcarrying amount of equity for the combined parties at the time of merger; when the long-term equityinvestment obtained from business combinations involving entities not under common control, theinvestment is measured at combination cost.

For long-term equity investments not formed in business combination: the one paid by cash is initiallymeasured at actual purchase price; the long-term investment obtained by issuing equity securities isstated 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 initialinvestment costs, and cash dividends or profit distribution declared by the investees are recognised asinvestment income in profit or loss.

For long-term equity investments accounted for using the equity method, where the initial investmentcost of a long-term equity investment exceeds the Group?s share of the fair value of the investee?s

identifiable net assets at the acquisition date, the long-term equity investment is measured at the initialinvestment cost; where the initial investment cost is less than the Group?s share of the fair value of theinvestee?s identifiable net assets at the acquisition date, the difference is included in profit or loss andthe cost of the long-term equity investment is adjusted upwards accordingly.

2 Summary of significant accounting policies and accounting estimates(Cont’d)

(11) Long-term equity investments(Cont?d)

Under the equity method, the Group recognises the investment income according to its share of netprofit or loss of the investee. The Group discontinues recognising its share of the net losses of aninvestee after book values of the long-term equity investment together with any long-term interests thatin substance form part of the investor?s net investment in the investee are reduced to zero. However, ifthe 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 theinvestment losses and the provisions. For changes in owners? equity of the investee other than thosearising from its net profit or loss, its proportionate share is directly recorded into capital surplus,provided that the proportion of the shareholding of the Group in the investee remains unchanged.Book value of the investment is reduced by the Group?s share of the profit distribution or cashdividends declared by an investee. The unrealised profits or losses arising from the intra-grouptransactions amongst the Group and its investees are eliminated in proportion to the Group?s equityinterest in the investees, and then based on which the investment gains or losses are recognised. Anylosses resulting from transactions between the Group and its investees attributable to assetimpairment 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 therelated business activities of the investees, and the ability to affect the returns by exercising its powerover the investees.

The term "significant influence" refers to the power to participate in the formulation of financial andoperating policies of an enterprise, but not the power to control, or jointly control, the formulation ofsuch policies with other parties.

(d) Impairment of long-term equity investments

Book value of long-term equity investments in subsidiaries and associates is reduced to therecoverable amount when the recoverable amount is less than book value (Note 2(18)).

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(12) 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 tothe Group and the costs can be reliably measured. Fixed assets purchased or constructed by theGroup 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 itis probable that the associated economic benefits will flow to the Group and the related cost can bereliably measured. Book value of the replaced part is derecognised. All the other subsequentexpenditures are recognised in profit or loss in the period in which they are incurred.

2 Summary of significant accounting policies and accounting estimates (Cont’d)

(12) Fixed assets(Cont?d)

(b) Depreciation methods

Fixed assets are depreciated using the straight-line method to allocate the cost of the assets to theirestimated residual values over their estimated useful lives. For the fixed assets that have beenprovided for impairment loss, the related depreciation charge is prospectively determined based uponthe adjusted carrying amounts over their remaining useful lives.

The estimated useful lives, the estimated net residual values expressed as a percentage of cost andthe annual depreciation rates of fixed assets are as follows:

Estimated useful lives Estimated net residual value Annual depreciation rate

Buildings 20 to 35 years 5% 2.71% to 4.75%Machinery and equipment 8 to 20 years 5% 4.75% to 11.88%Motor vehicles and others 5 to 8 years 0% 12.50% to 20.00%

The estimated useful life, the estimated net residual value of a fixed asset and the depreciationmethod applied to the asset are reviewed, and adjusted as appropriate at each year-end.

(c) Book value of a fixed asset is reduced to the recoverable amount when the recoverable amount is

below book value (Note 2 (17)).

(d) Disposal

A fixed asset is derecognised on disposal or when no future economic benefits are expected from itsuse or disposal. The amount of proceeds from disposals on sale, transfer, retirement or damage of afixed asset net of its carrying amount and related taxes and expenses is recognised in profit or loss forthe current period.

(13) 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 incurredfor its intended use. Actual cost also includes net of trial production cost and trial production incomebefore 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 recoverableamount is below book value (Note 2 (17)).

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2 Summary of significant accounting policies and accounting estimates (Cont’d)

(14) Borrowing costs

The borrowing costs that are directly attributable to the acquisition and construction of an asset thatneeds a substantially long period of time for its intended use commence to be capitalised andrecorded as part of the cost of the asset when expenditures for the asset and borrowing costs havebeen incurred, and the activities relating to the acquisition and construction that are necessary toprepare the asset for its intended use have commenced. The capitalisation of borrowing costs ceaseswhen the asset under acquisition or construction becomes ready for its intended use and theborrowing costs incurred thereafter are recognised in profit or loss for the current period. Capitalisationof borrowing costs is suspended during periods in which the acquisition or construction of a fixed assetis interrupted abnormally and the interruption lasts for more than 3 months, until the acquisition orconstruction is resumed.

For the specific borrowings obtained for the acquisition or construction of an asset qualifying forcapitalisation, the amount of borrowing costs eligible for capitalisation is determined by deducting anyinterest income earned from depositing the unused specific borrowings in the banks or any investmentincome 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 forcapitalisation, the amount of borrowing costs eligible for capitalisation is determined by applying theweighted average effective interest rate of general borrowings, to the weighted average of the excessamount of cumulative expenditures on the asset over the amount of specific borrowings. The effectiveinterest rate is the rate at which the estimated future cash flows during the period of expected durationof the borrowings or applicable shorter period are discounted to the initial amount of the borrowings.

(15) Intangible assets

Intangible assets, mainly including land use rights, patents and proprietary technologies, exploitationrights 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 70years. If the acquisition costs of the land use rights and the buildings located thereon cannot bereasonably allocated between the land use rights and the buildings, all of the acquisition costs arerecognised as fixed assets.

(b) Patents and proprietary technologies

Patents are amortised on a straight-line basis over the estimated use life.

(c) Exploitation rights

Exploitation rights are amortised on a straight-line basis over permitted exploitation periods on theexploitation certificate.

(d) Periodical review of useful life and amortisation method

For an intangible asset with a finite useful life, review of its useful life and amortisation method isperformed at each year-end, with adjustment made as appropriate.

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2 Summary of significant accounting policies and accounting estimates (Cont’d)

(15) Intangible assets(Cont?d)

(e) Research and development

The expenditure on an internal research and development project is classified into expenditure on theresearch phase and expenditure on the development phase based on its nature and whether there ismaterial uncertainty that the research and development activities can form an intangible asset at endof the project.

Expenditure on the research phase related to planned survey, evaluation and selection for research onmanufacturing technique is recognised in profit or loss in the period in which it is incurred. Prior tomass production, expenditure on the development phase related to the design and testing phase inregards to the final application of manufacturing technique is capitalised only if all of the followingconditions 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 lossin the period in which they are incurred. Development costs previously recognised as expenses arenot recognised as an asset in a subsequent period. Capitalised expenditure on the developmentphase is presented as development costs in the balance sheet and transferred to intangible assets atthe date that the asset is ready for its intended use.

(f) Impairment of intangible assets

Book value of intangible assets is reduced to the recoverable amount when the recoverable amount isbelow book value (Note 2 (17)).

(16) Long-term prepaid expenses

Long-term prepaid expenses include the expenditures that have been incurred but should berecognised as expenses over more than one year in the current and subsequent periods. Long-termprepaid expenses are amortised on the straight-line basis over the expected beneficial period and arepresented at actual expenditure net of accumulated amortisation.

(17) Impairment of long-term assets

Fixed assets, construction in progress, intangible assets with finite useful lives and long-term equityinvestments in joint ventures and associates are tested for impairment if there is any indication that theassets may be impaired at the balance sheet date; intangible assets not ready for their intended useare tested at least annually for impairment, irrespective of whether there is any indication that theymay be impaired. If the result of the impairment test indicates that the recoverable amount of an assetis less than its carrying amount, a provision for impairment and an impairment loss are recognised forthe amount by which the asset?s carrying amount exceeds its recoverable amount. The recoverableamount is the higher of an asset?s fair value less costs to sell and the present value of the future cashflows expected to be derived from the asset. Provision for asset impairment is determined andrecognised on the individual asset basis. If it is not possible to estimate the recoverable amount of anindividual asset, the recoverable amount of a group of assets to which the asset belongs is determined.A group of assets is the smallest group of assets that is able to generate independent cash inflows.

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2 Summary of significant accounting policies and accounting estimates (Cont’d)

(17) Impairment of long-term assets(Cont?d)

Goodwill that is separately presented in the financial statements is tested at least annually forimpairment, irrespective of whether there is any indication that it may be impaired. In conducting thetest, book value of goodwill is allocated to the related asset groups or groups of asset groups whichare expected to benefit from the synergies of the business combination. If the result of the testindicates that the recoverable amount of an asset group or group of asset groups, including theallocated 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 orgroup of asset groups, and then deducted from book values of other assets within the asset groups orgroups 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 inthe subsequent periods.

(18) Employee benefits

Employee benefits include short-term employee benefits, post-employment benefits, terminationbenefits and other long-term employee benefits provided in various forms of consideration in exchangefor service rendered by employees or compensations for the termination of employment relationship.

(a) Short-term employee benefits

Short-term employee benefits include wages or salaries, bonuses, allowances and subsidies, staffwelfare, 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 arerecognised in the accounting period in which the service is rendered by the employees, with acorresponding charge to the profit or loss for the current period or the cost of relevant assets.Employee benefits which are non-monetary benefits shall be measured at fair value.

(b) Post-employment benefits

The Group classifies post-employment benefit plans as either defined contribution plans or definedbenefit plans. Defined contribution plans are post-employment benefit plans under which the Grouppays 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 andunemployment insurance, both of which belong to the defined contribution plans.

(c) Basic pensions

The Group?s employees participate in the basic pension plan set up and administered by localauthorities of Ministry of Human Resource and Social Security. Monthly payments of premiums on thebasic pensions are calculated according to prescribed bases and percentage by the relevant localauthorities. When employees retire, local labour and social security institutions have a duty to pay thebasic pension insurance to them. The amounts based on the above calculations are recognised asliabilities in the accounting period in which the service has been rendered by the employees, with acorresponding charge to the profit or loss for the current period or the cost of relevant assets..

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2 Summary of significant accounting policies and accounting estimates (Cont’d)

(18) Employee benefits (Cont?d)

(d) Termination benefits

The Group provides compensation for terminating the employment relationship with employees beforethe end of the employment contracts or as an offer to encourage employees to accept voluntaryredundancy before the end of the employment contracts. The Group recognises a liability arising fromcompensation for termination of the employment relationship with employees, with a correspondingcharge to profit or loss at the earlier of the following dates: 1) when the Group cannot unilaterallywithdraw the offer of termination benefits because of an employment termination plan or a curtailmentproposal; 2) when the Group recognises costs or expenses related to the restructuring that involvesthe payment of termination benefits.

The termination benefits expected to be paid within one year since the balance sheet date areclassified as current liabilities.

(19) Dividend distribution

Cash dividend is recognised as a liability for the period in which the dividend is approved by theshareholders? meeting.

(20) Deferred tax assets and deferred tax liabilities

Deferred tax assets and deferred tax liabilities are calculated and recognised based on the differencesarising between the tax bases of assets and liabilities and their carrying amounts (temporarydifferences). Deferred tax asset is recognised for the deductible losses that can be carried forward tosubsequent years for deduction of the taxable profit in accordance with the tax laws. No deferred taxliability is recognised for a temporary difference arising from the initial recognition of goodwill. Nodeferred tax asset or deferred tax liability is recognised for the temporary differences resulting from theinitial recognition of assets or liabilities due to a transaction other than a business combination, whichaffects 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 applyto the period when the asset is realised or the liability is settled.

Deferred tax assets are only recognised for deductible temporary differences, deductible losses andtax credits to the extent that it is probable that taxable profit will be available in the future against whichthe deductible temporary differences, deductible losses and tax credits can be utilised.

Deferred tax liabilities are recognised for temporary differences arising from investments insubsidiaries and associates, except where the Group is able to control the timing of reversal of thetemporary difference, and it is probable that the temporary difference will not reverse in theforeseeable future. When it is probable that the temporary differences arising from investments insubsidiaries and associates will be reversed in the foreseeable future and that the taxable profit will beavailable in the future against which the temporary differences can be utilised, the correspondingdeferred tax assets are recognised.

Deferred tax assets and liabilities are offset when:

? the deferred taxes are related to the same tax payer within the Group and the same taxation

authority; and,? that tax payer within the Group has a legally enforceable right to offset current tax assets

against current tax liabilities.

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2 Summary of significant accounting policies and accounting estimates (Cont’d)

(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 otherequity instruments as a consideration in return for services.

Equity-settled share-based payment The Group?s stock optionstock option plan is the equity-settledshare-based payment in exchange of employees' services and is measured at the fair value of theequity instruments at grant date. The equity instruments are exercisable after services in vestingperiod are completed or specified performance conditions are met. In the vesting period, the servicesobtained in current period are included in relevant cost and expenses at the fair value of the equityinstruments 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 ofexercisable equity instruments differs from the previous estimate, an adjustment is made and, on theexercise 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 andexpenses 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 datereflect the part of expired waiting period and optimal estimation for the number of the Company finalvested equity instruments.

If the non-market conditions and term of service are not met so that share-based payment fail toexercise, 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 asperformance conditions and term of service are met, it is should be regard as exercisable right, nomatter 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 withthe unmodified terms. In addition, the increase of the fair value of the authorized equity instruments, orthe beneficial changes to the employees on the modification date, the increase of service areconfirmed.

If the equity-settled payment is cancelled, the cancellation date shall be deemed as an expeditedexercise, and the unconfirmed amount shall be confirmed immediately. If the employee or other partyis 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 equityinstrument is confirm to replace the old equity instrument which is canceled in the authorization date ofthe new equity instrument, the new equity instrument should be disposed by using the sameconditions and terms of the old equity instrument for modifications.

(22) Revenue recognition

The amount of revenue is determined in accordance with the fair value of the consideration receivedor receivable for the sales of goods and services in the ordinary course of the Group?s activities.Revenue is shown net of discounts, rebates and returns.

Revenue is recognised when the economic benefits associated with the transaction will probably flowto the Group, the related revenue can be reliably measured, and the specific revenue recognitioncriteria have been met for each type of the Group?s activities as described below:

2 Summary of significant accounting policies and accounting estimates (Cont’d)

(22) Revenue recognition (Cont?d)

(a) Sales of goods

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The Group mainly sells flat and engineering glass, products related to solar energy, and electronicglass and displays. For domestic sales, the Group delivers the products to a certain place specified inthe contract. When the buyer takes over the goods, the Group recognises revenue. For export sales,the Group recognises the revenue when it finished clearing goods for export and deliver the goods onboard the vessel, or when the goods are delivered to a certain place specified in the contract. Forabove sales, when the buyer takes over the goods, the buyer has the right to sell the products, andshould bear the risk of price fluctuation or goods damage.

(b) Rendering of services

Revenue is recognised for the rendering of service by the Group to external parties upon thecompletion of related service.

(c) Transfer of asset use rights

Interest income is recognised on a time-proportion basis using the effective interest method.

(23) Provisions

Business restructuring, provisions for product warranties, loss contracts etc. are recognised when theGroup has a present obligation, it is probable that an outflow of economic benefits will be required tosettle 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 relatedpresent obligation. Factors surrounding a contingency, such as the risks, uncertainties and the timevalue of money, are taken into account as a whole in reaching the best estimate of a provision. Wherethe effect of the time value of money is material, the best estimate is determined by discounting therelated future cash outflows. The increase in the discounted amount of the provision arising frompassage of time is recognised as interest expense.

Book value of provision is reviewed at each balance sheet date and adjusted to reflect the current bestestimate.

The provisions expected to be paid within one year since the balance sheet date are classified ascurrent liabilities.

(24) Government grants

Government grants are transfers of monetary or non-monetary assets from the government to theGroup at nil consideration, including tax refund and financial subsidies, etc.

A government grant is recognised when there is a reasonable assurance that the grants will bereceived and the Group will comply with all attached conditions. Monetary government grants aremeasured at the amounts received or receivable. Non-monetary government grant are measured atfair 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 usedfor purchase and construction of long-term assets or formation of long-term asset in other ways. Thegovernment grants related to income refer to grants other than those related to assets.

2 Summary of significant accounting policies and accounting estimates (Cont’d)

(24) Government grants (Cont?d)

For government grants related to income, where the grant is a compensation for related expenses orlosses to be incurred by the Group in the subsequent periods, the grant is recognised as deferredincome, and included in profit or loss over the periods in which the related costs are recognised; wherethe grant is a compensation for related expenses or losses already incurred by the Group, the grant isrecognised immediately in profit or loss for the current period.The company use the same method ofpresentation for similar government grants.

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The ordinary activitiy government grants should be counted into operating profits; the governmentgrants which not belong ordinary activities should be counted inton non-operationg income.

(25) Leases

A lease that transfers substantially all the risks and rewards incidental to ownership of an asset is afinance lease. An operating lease is a lease other than a finance lease.

Lease payments under an operating lease are recognised on a straight-line basis over the period ofthe lease, and are either capitalised as part of the cost of related assets, or charged as an expense forthe current period.

Lease income under an operating lease is recognised as revenue on a straight-line basis over theperiod of the lease.

(26) Assets classified as held for sale

A non-current asset or a disposal group is classified as held for sale when all of the followingconditions are satisfied: (1) the non-current asset or the disposal group is available for immediate salein its present condition subject to terms that are traditionally and customary for sales; (2) the Grouphas made a resolution and obtained appropriate approval for disposal of the non-current asset or thedisposal 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 taxassets) that meet the recognition criteria for held for sale are recognised at the amount equal to thelower of the fair value less costs to sell and book value. The difference between fair value less costs tosell 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 areaccounted for as current assets; while liabilities included in disposal groups classified as held for saleare 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 classifiedas held for sale, and is separately identifiable operationally and for financial reporting purposes, andsatisfies one of the following conditions: (1) represents a separate major line of business orgeographical area of operations; (2) is part of a single coordinated plan to dispose of a separate majorline of business or geographical area of operations; and (3) is a subsidiary acquired exclusively with aview to resale.

The discontinuedoperation profits on income statement presentation have included the profits and lossof operation and disposal.

(27) Safety production costs

According to relevant regulations of the Ministry of Finance and National Administration of Work Safety,a subsidiary of the Group which is engaged in producing and selling polysilicon appropriates safetyproduction costs on following basis:

2 Summary of significant accounting policies and accounting estimates (Cont’d)

(27) Safety production costs (Cont?d)

(a) 4% for revenue below RMB10 million (inclusive) of the year;(b) 2% for the revenue between RMB10 million to RMB100 million (inclusive) of the year;(c) 0.5% for the revenue between RMB100 million to RMB1 billion (inclusive) of the year;(d) 0.2% for the revenue above RMB1 billion of the year.

The safety production costs is mainly used for the overhaul, renewal and maintenance of safetyfacilities. The safety production costs are charged to costs of related products or profit or loss whenappropriated, and safety production costs in equity account are credited correspondingly. When usingthe special reserve, if the expenditures are expenses in nature, the expenses incurred are offsetagainst the special reserve directly when incurred. If the expenditures are capital expenditures, whenprojects are completed and transferred to fixed assets, the special reserve should be offset against the

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cost of fixed assets, and a corresponding accumulated depreciation are recognised. The fixed assetsare no longer be depreciated in future.

(28) Segment information

The Group identifies operating segments based on the internal organisation structure, managementrequirements and internal reporting system, and discloses segment information of reportablesegments which is determined on the basis of operating segments.

An operating segment is a component of the Group that satisfies all of the following conditions: (1) thecomponent is able to earn revenue and incur expenses from its ordinary activities; (2) whose operatingresults are regularly reviewed by the Group?s management to make decisions about resources to beallocated to the segment and to assess its performance, and (3) for which the information on financialposition, operating results and cash flows is available to the Group. If two or more operating segmentshave similar economic characteristics and satisfy certain conditions, they are aggregated into onesingle operating segment.

(29) Critical accounting estimates and judgements

The Group continually Estimates the critical accounting estimates and key assumptions applied basedon historical experience and other factors, including expectations of future events that are believed tobe reasonable.

The critical accounting estimates and key assumptions that have a significant risk of possibly causinga material adjustment to book values of assets and liabilities within the next accounting year areoutlined below:

(a) Income tax

The Group is subject to Income tax in numerous jurisdictions. There are some transactions and eventsfor which the ultimate tax determination is uncertain during the ordinary course of business. Significantjudgement is required from the Group in determining the provision for Income tax in each of thesejurisdictions. 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 theperiod 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 applicabletax rate for every year. Realisation of deferred income tax are subject to sufficient taxable income thatare possible to be obtained by the Group in the future. Change of the future tax rate as well as thereversed time of temporary difference might have effects on tax expense (income) and the balance of

2 Summary of significant accounting policies and accounting estimates (Cont’d)

(29) Critical accounting estimates and judgements (Cont?d)

(b) Deferred income tax (Cont?d)

deferred tax assets or liabilities. Those estimates may also cause significant adjustment on deferredtax.

(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 anyindications of impairment. Management determines whether the long-term assets impaired or not byevaluating 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?scarrying amount by continually using the assets or disposal; and (3) whether the assumptions used inexpected obtainable present value of future cash flows are appropriate.

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Various assumptions, including the discount rate and growth rate applied in the method of presentvalue of future cash flow, are required in evaluating the recoverable amount of assets. If theseassumptions cannot be conformed, the recoverable amount should be modified, and the long-termassets may be impaired accordingly.

(d) The useful life of fixed assets

Management estimates the useful life of fixed assets, based on historical experiences on using fixedassets that have similar properties and functions. When there are differences between actually usefullife and previously estimation, management will adjust estimation to useful life of fixed assets. Thefixed assets would be written off or written down when fixed assets been disposed or becameredundant. Thus, the estimated result based on existing experience may be different from the actualresult of the next accounting period, which may cause major adjustment to book value of fixed assetson balance sheet.

(e) Goodwill impairment

Goodwill impairment reviews are undertaken annually or more frequently if events or changes incircumstances indicate a potential impairment. For the purpose of impairment testing, goodwillacquired in a business combination is allocated to each of the cash-generating units (“CGUs”), orgroups of CGUs, and future cash flow from each CGU or CGUs is forcasted and discounted withappropriate discount rate.

2 Summary of significant accounting policies and accounting estimates (Cont’d)

(30) Significant changes in accounting policies and accounting estimates

The Ministry of Finance released the revised CAS 22– Recognition and Measurement ofFinancial Instruments, CAS 23–Transfer of Financial Assets, CAS 24–Hedging and CAS 37–Presentation of Financial Instruments (collectively, “New Financial Instruments Standards”) in2017 and the Circular on the Amendment to the Formats of Corporate Financial Statementsfor the Year of 2019(CaiKuai [2019] No. 6), revised CAS 7–Exchange of Non-monetaryAssets (“Standard for Exchange of Non-monetary Assets”) and CAS 12–Debt Restructuring(“Standard for Debt Restructuring”) in 2019. The financial statements for the year ended 31December 2019 are prepared in accordance with the above standards and circular. Therevised Standard for Exchange of Non-monetary Assets and Standard for Debt Restructuring haveno significant impact on the Group and the Company, other amendments' impact on theGroup's and the Company's financial statements are set out as follows.

(a) Modification of general enterprise financial statement format

(i)The impact of consolidated balance sheet of 2018 was listed as followings

Consolidated balance sheet itemsBefore adjustedAfter adjusted
accounts receivable and notes receivable1,311,608,760-
notes receivable-719,375,448
accounts receivable-592,233,312
accounts payable and notes payable1,315,009,263-
notes payable-105,150,000
accounts payable-1,209,859,263

(ii)The impact of company balance sheet of 2018 was listed as followings

Parent company balance sheet itemsBefore adjustedAfter adjusted
accounts receivable and notes--
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receivable
notes receivable--
accounts receivable--
accounts payable and notes payable261,024-
notes payable--
accounts payable-261,024

2 Summary of significant accounting policies and accounting estimates (Cont’d)

(30) Significant changes in accounting policies and accounting estimates (Cont?d)

(b) Financialinstruments

According to the new financial instruments standard, the Group and the company adjusted thecumulativeeffect of initiallyapplyingthestandard asanadjustmenttotheopeningbalanceofretainedearningsin2019andotherrelevantlineitemsinthefinancialstatements. The comparative financial statements have not been restated. On December 31, 2018 andJanuary 1, 2019, neither the consolidation nor the company was designated as a financial assetmeasured at fair value through profit or loss.

(i) As at 1 January 2019, the financial assets presented in the Group's consolidated financial statements

were classified and measured in accordance with the Original/New Financial Instruments Standardsas follows:

Previous Standards for Financial InstrumentsNew Standards for Financial Instruments
ItemsMeasurement CategoryConsolidated book valueItemsMeasurement CategoryConsolidated book value
Cash and Bank BalancesAmortized cost2,226,447,720Cash and Bank BalancesAmortized cost2,226,447,720
NotesreceivableAmortized cost719,375,448Receivables FinancingMeasured at fair value through other comprehensive income304,180,556
NotesreceivableAmortized cost415,194,892
Accounts receivableAmortized cost592,233,312Accounts receivableAmortized cost592,233,312
Other ReceivablesAmortized cost207,424,295Other ReceivablesAmortized cost207,424,295

(ii) As at 1 January 2019, the financial assets presented in the Group's consolidated financial statements

were classified and measured in accordance with the Original/New Financial Instruments Standardsas follows:

Previous Standards for Financial InstrumentsNew Standards for Financial Instruments
ItemsMeasurement CategoryConsolidated book valueItemsMeasurementCategoryConsolidated book value
Cash and Bank BalancesAmortized cost1,700,726,151Cash and Bank BalancesAmortized cost1,700,726,151
NotesreceivableAmortized cost-Receivables FinancingMeasured at fair value through other comprehensive income-
NotesreceivableAmortized cost-
Accounts receivableAmortized cost-Accounts receivableAmortized cost-
Other ReceivablesAmortized cost2,912,516,245Other ReceivablesAmortized cost2,912,516,245
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3 Taxation

(1) The main categories and rates of taxes applicable to the Group are set out below:

CategoryTaxable basisTax rate
Enterprise income taxTaxable income0% to 25%
Value-added tax (“VAT”) (a)Taxable value-added amount (Tax payable is calculated using the taxable sales amount multiplied by the applicable tax rate less deductible VAT input of the current period)3% to 16%
City maintenance and construction taxVAT paid1% to 7%
Educational surchargeVAT paid3% to 5%

Some subsidiaries of the Group have used the “exempt, credit, refund” method on goods exported andthe refund rate is 13%-16%.

(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 ahigh 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 newtech enterprise in 2019 and obtained the Certificate of High and New Tech Enterprise, the period ofvalidity 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 ona 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 newtech enterprise in 2017 and obtained the Certificate of High and New Tech Enterprise, the period ofvalidity 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 techenterprise in 2017 and obtained the Certificate of High and New Tech Enterprise, the period of validityis 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 newtech enterprise in 2019 and obtained the Certificate of High and New Tech Enterprise, the period ofvalidity is three years. It applies to 15% tax rate for three years since 2019.

HebeiShichuang Glass Co., Ltd. (“HebeiShichuang”) passed review on a high and new techenterprise in 2019 and obtained the Certificate of High and New Tech Enterprise, the period of validityis 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 in2017, and obtained the Certificate of High and New Tech Enterprise, and the period of validity wasthree years. It applies to 15% tax rate for three years since 2017.

3 Taxation (Cont’d)

(2) Tax incentives(Cont?d)

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Xianning CSG Glass Co Ltd. (“Xianning CSG”) passed review on a high and new tech enterprise in2017, and obtained the Certificate of High and New Tech Enterprise, and the period of validity wasthree 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 ahigh 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 highand new tech enterprise in 2018, and obtained the Certificate of High and New Tech Enterprise, andthe period of validity was three years. It applies to 15% tax rate for three years since 2018.

Yichang CSG Display Co., Ltd (“Yichang CSG Display”) passed review on a high and new techenterprisein 2018, and obtained the Certificate of High and New Tech Enterprise, and the period ofvalidity 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”) passedreview on a high and new tech enterprise in 2019, and obtained the Certificate of High and New TechEnterprise, and the period of validity was three years. It applies to 15% tax rate for three years since2019.

HebeiCSG 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 threeyears. It applies to 15% tax rate for three years since 2018.

Shenzhen CSG Applied Technology Co Ltd. (“Shenzhen Technology”) was recognised as a high andnew tech enterprise in 2018, and obtained the Certificate of High and New Tech Enterprise, and theperiod 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 andnew tech enterprise in 2019 and obtained the Certificate of High and New Tech Enterprise, the periodof 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”) obtainsenterprise income tax preferential treatment for Western Development, and temporarily calculatesenterprise income tax at a tax rate of 15% for current year.

Chengdu CSG Glass Co., Ltd. (“Chengdu CSG”) obtains enterprise income tax preferential treatmentfor Western Development, and temporarily calculates enterprise income tax at a tax rate of 15% forcurrent year.

Qingyuan CSG New Energy Co., Ltd. (“Qingyuan CSG New Energy”), Suzhou CSG PV Energy Co.,Ltd. (“Suzhou CSG PV Energy”), Jiangsu Wujiang CSG New Energy Co., Ltd. (“Wujiang CSG NewEnergy”), and Yichang CSG New Energy Co., Ltd. (“Yichang CSG New Energy”), Zhangzhou CSGKibing PV Energy Co., Ltd. (“Zhangzhou CSG”), Heyuan CSG Kibing PV Energy Co., Ltd. (“HeyuanCSG”), 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 PVEnergy””),are public infrastructure project specially supported by the state in accordance with theArticle 87 in Implementing Regulations of the Law of the People's Republic of China on EnterpriseIncome 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, theenterprise income tax is exempted from the first to the third year, while half of the enterprise incometax is collected for the following three years.

4 Notes to the consolidated financial statements

(1) Cash at bank and on hand

31 December 201931 December 2018
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Cash on hand4,2689,731
Cash at bank1,781,830,7622,225,117,182
Other cash balances205,145,3881,320,807
1,986,980,4182,226,447,720
Including: Total overseas deposits40,403,71937,790,337

Other cash balances include margin deposits for issuing letters of credit and applying loans,amounting to RMB155,145,388 (31 December 2018: RMB1,320,807), which is restricted cash.

(2) Notes receivable

31 December 201931 December 2018
Trade acceptance notes297,023,380415,194,892
Bank acceptance notes-304,180,556
297,023,380719,375,448
(a)As at 31 December 2019, notes receivable which have been endorsed or discounted by the Group but are not yet due are as follows:
DerecognisedNot derecognised
Trade acceptance notes-114,033,639

In 2019, according to group daily funds management needs,the part of the bank acceptance bills isclassified as a financial asset measured at fair value and its changes are included in othercomprehensive income and listed as receivable Financing (Note 4 (4))

4 Notes to the consolidated financial statements (Cont’d)

(3) Accounts receivable

31 December 201931 December 2018
Accounts receivable678,240,286611,899,209
Less: Provision for bad debts(28,559,109)(19,665,897)
649,681,177592,233,312

(a) The ageing of accounts receivable is analysed as follows:

31 December 201931 December 2018
Within 1 year618,151,739583,789,669
1 to 2 years38,737,77415,284,163
2 to 3 years13,140,8996,586,079
Over 3 years8,209,8746,239,298
678,240,286611,899,209

(b) Accounts receivable are analysed by category as follows:

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31 December 201931 December 2018
Carrying amountProvision for bad debtsCarrying amountProvision for bad debts
Amount% of total balanceProvision for bad debts%Amount% of total balanceProvision for bad debts%
Provision for bad debts by groupings
Portfolio 1662,934,10998%(13,252,932)2%598,852,70398%(11,976,169)2%
Provided for bad bebts individually15,306,1772%(15,306,177)100%13,046,5062%(7,689,728)59%
678,240,286100%(28,559,109)4%611,899,209100%(19,665,897)3%

(c) Foraccounts receivable provided for bad debts by portfolio, the expected credit impairment loss for the

portfolio is as follows:

31 December 201931 December 2018
Carrying amountProvision for bad debtsCarrying amountProvision for bad debts
AmountAmount%AmountAmount%
Portfolio 1662,934,109(13,252,932)2%598,852,703(11,976,169)2%
662,934,109(13,252,932)2%598,852,703(11,976,169)2%

(d) As at 31 December 2019, the bad debts of receivables was RMB15,306,177(31 December 2018:

RMB13,046,506) that to be provided individually. It mainly represented the goods receivable due froma client of the subsidiary, Yichang CSG Display. Due to the client?s bankruptcy, Yichang CSG Displaymade full provision against this receivable. It also represented the goods receivable due from a clientof the subsidiary, Dongguan CSG PV-tech. Due to business dispute, Dongguan CSG PV-tech madefull provision against this receivable.

(e) Accounts receivableswere not written off for this year, (31 December 2018: RMB2,750,772).

4 Notes to the consolidated financial statements (Cont’d)

(3) Accounts receivable (Cont?d)

(f) As at 31 December 2019, Total balances for the five largest accounts receivableset out as below:

BalanceProvision for bad debtsPercentage in total accounts receivable balance
Total balances for the five largest accounts receivable138,169,108(2,763,383)20%

(4) Receivables Financing

31 December 201931 December 2018
Bank acceptance notes258,296,826-
258,296,826-
(a)(4) As at 31 December 2019, receivables financing which have been endorsed or discounted by the Group but are not yet due are as follows:
DerecognisedNot derecognised
Bank acceptance notes2,180,985,281-

(5) Advances to suppliers

(a) The ageing of prepayment is analysed below:

31 December 201931 December 2018
- 127 -
Amount% of total balanceAmount% of total balance
Within 1 year76,048,96097%76,372,80584%
1 to 2 years2,107,9313%2,034,1962%
2 to 3 years39,136---
Over 3 years--12,769,67414%
78,196,027100%91,176,675100%

As at 31 December 2019, advances to suppliers over 1 year with a carrying amount of RMB 2,147,067(31 December 2018: RMB14,803,870) were mainly prepaid to supplier for materials, which were notfully settled since the materials had not been received.

4 Notes to the consolidated financial statements (Cont’d)

(5) Advances to suppliers (Cont?d)

(b) As at 31 December 2019, the five largest prepayment are analysed as follows:

BalancePercentage in total advances to suppliers balance
Total balances for the five largest advances to suppliers39,008,73650%

(6) Other receivables

31 December 201931 December 2018
Receivables from special fund for talent171,000,000171,000,000
Refundable deposits11,767,62621,351,937
Payments made on behalf of other parties15,337,99915,036,194
Petty cash328,077489,912
Export tax rebates receivable-137,744
Advances to suppliers(i)11,710,142-
Others8,486,0563,962,723
218,629,900211,978,510
Less: Provision for bad debts(15,775,036)(4,554,215)
202,854,864207,424,295

(i) The subsidiaries of Yingde CBM Mining Co., Ltd. and Wujiang CSG Co., Ltd. mainly prepaid to supplier for

materials.This year, the prepayments accounts are transferred to other receivables and the provisionof the bad debts was provided individually in current year.

(a) The ageing of other receivables is analysed as follows:

31 December 201931 December 2018
Within 1 year10,868,48311,684,072
1 to 2 years6,159,19514,639,759
2 to 3 years5,740,0191,060,654
3 to 4 years957,12111,121,084
4 to 5 years21,484,748171,843,311
Over 5 years173,420,3341,629,630
218,629,900211,978,510
- 128 -

4 Notes to the consolidated financial statements (Cont’d)

(6) Other receivables (Cont'd)

(b) Other receivables are analysed by category as follows:

31 December 201931 December 2018
Carrying amountProvision for bad debtsCarrying amountProvision for bad debts
Amount% of total balanceProvision for bad debts%Amount% of total balanceProvision for bad debts%
Provision for bad debts by groupings
Portfolio 1206,596,85394%(4,138,582)2%211,655,605100%(4,231,310)2%
Provided for bad bebts individually12,033,0476%(11,636,454)97%322,905-(322,905)100%
218,629,900100%(15,775,036)7%211,978,510100%(4,554,215)2%

(c) The reason for the bad debts was provided individually as the payment will not be recoverable due to

long aging time.

(d) For other receivables provided for bad debts by portfolio, the expected credit impairment loss for the

portfolio is as follows:

31 December 201931 December 2018
Carrying amountProvision for bad debtsCarrying amountProvision for bad debts
AmountAmount%AmountAmount%
Portfolio 1206,596,853(4,138,582)2%211,655,605(4,231,310)2%
206,596,853(4,138,582)2%211,655,605(4,231,310)2%

4 Notes to the consolidated financial statements (Cont’d)

(6) Other receivables (Cont'd)

(e) Provision for bad debts

bad debtsStage 1Stage 2Stage 331 December 2019
Expected credit losses in the following 12 months (grouping)Lifetime expected credit losses (credit unimpaired)Lifetime expected credit losses (credit impaired))Total
1 January 2019(4,231,310)-(322,905)(4,554,215)
Amounts in current year----
——Transferred stage 2----
——Transferred stage 3----
——Reversed stage 2----
—— Reversed stage 1----
Increased in current year(210,813)-(11,313,549)(11,524,362)
Reversed in current year303,541--303,541
Disposal in current year---
Write-off in current year--
Other movements---
31 December 2019---
(4,138,582)-(11,636,454)(15,775,036)
- 129 -

(f) As at 31 December 2019, the top 5 largest other receivables are analysed as bellow:

Nature of businessBalanceAgeingPercentage in total other receivables balanceProvision for bad debts
Company AIndependent third party171,000,000Over 5Years78%3,420,000
Governmental departmentBIndependent third party11,067,7544 to 5 Years5%221,355
Company CIndependent third party10,366,1644 to 5 years5%10,366,164
Company DIndependent third party6,700,0001 to 2 years3%134,000
Company EIndependent third party2,227,0001 to 2 years1%44,540
201,360,91892%14,186,059

4 Notes to the consolidated financial statements (Cont’d)

(7) Inventories

(a) Inventories are summarised by category as follows:

31 December 201931 December 2018
Carrying amountProvision for decline in the value of inventoriesCarrying amountCarrying amountProvision for decline in the value of inventoriesCarrying amount
Raw materials227,091,252(1,930,091)225,161,161224,107,756(1,438,767)222,668,989
Work in progress31,568,189-31,568,18925,088,903-25,088,903
Finished goods521,700,720(3,873,252)517,827,468309,132,138(566,246)308,565,892
Turnover materials38,315,093(550,221)37,764,87243,815,966-43,815,966
818,675,254(6,353,564)812,321,690602,144,763(2,005,013)600,139,750

(b) Provision for decline in the value of inventories are analysed as follows:

31 December 2018Increase in current yearReversal in current year31 December 2019
Finished goods566,2463,793,212(486,206)3,873,252
Raw materials1,438,767494,852(3,528)1,930,091
Turnover materials550,221-550,221
2,005,0134,838,285(489,734)6,353,564

(c) Provision for decline in the value of inventories is as follows:

Basis for provision for decline in the value of inventoriesReasons of reversal of the decline in the value of inventories
Finished goodsThe amount of carrying amount less net realisable value due to decline in price of productsSold
Raw materialsThe amount of book value less net realisable value due to sluggish or damaged raw materialsUsed
Turnover materialsThe amount of book value less net realisable value due to sluggish or damaged raw materialsUsed
- 130 -

4 Notes to the consolidated financial statements (Cont’d)

(8) Other current assets

31 December 201931 December 2018
VAT to be offset110,370,231115,329,834
Entrusted loan300,000,000300,000,000
Enterprise income tax prepaid18,012,23521,277,486
VAT input to be recognised19,613,4658,720,129
447,995,931445,327,449

4 Notes to the consolidated financial statements (Cont’d)

(9) Fixed assets

BuildingsMachinery and equipmentMotor vehicles and othersTotal
Cost
31 December 20183,849,892,38210,885,811,188217,262,29714,952,965,867
Increase in current year
Acquisition4,428,37128,723,8588,805,93241,958,161
Transfers from construction in progress (Note 4(10))64,166,6051,007,374,9965,355,3811,076,896,982
Others3,426,8402,921,5321,128,0347,476,406
Decrease in current year
Disposal or retirement(20,853,800)(52,637,153)(8,005,932)(81,496,885)
Others(430,285)(58,534,604)(2,028,305)(60,993,194)
31 December 20193,900,630,11311,813,659,817222,517,40715,936,807,337
Accumulated depreciation
31 December 2018815,842,7663,891,110,695203,490,6624,910,444,123
Increase in current year
Provision120,487,407775,078,17419,789,795915,355,376
Decrease in current year
Disposal or retirement(4,341,084)(42,060,077)(7,906,027)(54,307,188)
Others(8,161)(12,417,053)(1,308,023)(13,733,237)
31 December 2019931,980,9284,611,711,739214,066,4075,757,759,074
Provision for impairment loss
31 December 201821,851,71689,826,253-111,677,969
Increase in current year
Provision2,953,307277,502,88246,823280,503,012
Others-25,475,004-25,475,004
Decrease in current year
Disposal or retirement(10,580,862)(5,294,301)-(15,875,163)
Others-(5,769,860)-(5,769,860)
31 December 201914,224,161381,739,97846,823396,010,962
Carrying amount
31 December 20192,954,425,0246,820,208,1008,404,1779,783,037,301
31 December 20183,012,197,9006,904,874,24013,771,6359,930,843,775

In 2019, the depreciation amount provided for fixed assets was RMB915,355,376 (2018:

RMB965,935,450), and the amount of depreciation expenses charged to cost of sales, selling anddistribution expenses, general and administrative expenses wasRMB849,668,442, RMB 906,236,RMB 64,780,698 (2018:RMB902,224,539, RMB 973,181, RMB 62,737,730) respectively.

- 131 -

In 2019, the cost of fixed assets transferred from construction in progress amounted toRMB1,076,896,982 (2018: RMB1,317,931,137).

4 Notes to the consolidated financial statements (Cont’d)

(9) Fixed assets (Cont'd)

(a) Fixed assets with pending certificates of ownership

Carrying amountReasons for not yet obtaining certificates of title
Buildings684,804,154Have submitted the required documents and are in the process of application, or the related land use right certificate pending

4 Notes to the consolidated financial statements (Cont’d)

(10) Construction in progress

31 December 201931 December 2018
Carrying amountProvision for impairment lossCarrying amountCarrying amountProvision for impairment lossCarrying amount
Yichang CSG polysilicon tech-innovation project1,532,811,638(375,097,200)1,157,714,4381,465,710,819(253,983,876)1,211,726,943
Yichang display device company flat panel display project366,268,866(14,160,474)352,108,392354,190,988(14,160,474)340,030,514
Qingyuan CSG Ultra-clean electronic glass and ultra-white special glass production line construction project88,706,261-88,706,261338,679-338,679
Dongguan Solar Glass Phase I and II improvement project78,970,995(40,248,018)38,722,97778,970,995(40,248,018)38,722,977
Dongguan PV A Building PERC battery technology upgrade project67,981,191-67,981,1913,735,197-3,735,197
Qingyuan Quartz Material Processing Production Line project34,172,703-34,172,7031,976,972-1,976,972
LED Sapphire Substrate Project32,420,412(32,420,412)-32,420,412(32,420,412)-
Wujiang float Environmental reforming project10,281,838-10,281,83816,494,538-16,494,538
Dongguan Solar New PV Tech Glass Processing Project4,727,020-4,727,02041,074,003-41,074,003
Yichang CSG to add a 1GW silicon wafer project495,727-495,72748,859,613-48,859,613
Dongguan JingyuJadeglass Project395,482-395,48214,273,358-14,273,358
Yichang CSG Silicon wafer capacity technology upgrade project357,163-357,163707,199,477(25,475,004)681,724,473
Hebei CSG Environmental reforming project---19,012,500-19,012,500
Chendu float Environmental reforming project---16,989,203-16,989,203
Others146,882,826(405,983)146,476,843124,626,455(405,983)124,220,472
2,364,472,122(462,332,087)1,902,140,0352,925,873,209(366,693,767)2,559,179,442
- 132 -

4 Notes to the consolidated financial statements (Cont’d)

(10) Construction in progress (Cont'd)

(a) Movements of significant project

Project nameBudget31 December 2018Increase in current yearTransfer to fixed assets in current yearOther decreases in current year31 December 2019Proportion between engineering input and budget (i)Amount of borrowing costs capitalisedIncluding: Amount of borrowing costs capitalised in 2018Capitalisation rate for in current yeaSource of fund
Yichang CSG polysilicon tech-innovation project49,520,0001,465,710,81968,193,953-(1,093,134)1,532,811,63892%---Internal fund and bank loan
Yichang display device company flat panel display project1,970,000,000354,190,98840,182,081(28,104,203)-366,268,86689%11,560,1423,016,3904.10%Internal fund and bank loan
Qingyuan CSG Ultra-clean electronic glass and ultra-white special glass production line construction project785,000,000338,67988,392,184(24,602)-88,706,26111%2,176,6982,176,6985.23%Internal fund and bank loan
Dongguan Solar Glass Phase I and II improvement project396,410,00078,970,995---78,970,99580%---Internal fund
Dongguan PV A Building PERC battery technology upgradeproject67,180,0003,735,19768,050,995(3,805,001)-67,981,191100%908,771908,7715.15%Internal fund and bank loan
Qingyuan Quartz Material Processing Production Lineproject34,828,0481,976,97232,195,731--34,172,70398%---Internal fund
LED Sapphire Substrate Project35,000,00032,420,412--32,420,41293%4,650,543--Internal fund and bank loan
Wujiang energy glass expansion project50,300,00016,494,53812,179,394(18,392,094)-10,281,83857%---Internal fund
Dongguan Solar New PV Tech Glass Processing Project60,000,00041,074,003949,966(37,296,949)-4,727,02096%---Internal fund
Yichang CSG to add a 1GW silicon wafer project1,073,209,60048,859,61327,420,604(75,784,490)-495,72787%13,970,8882,256,9435.05%Internal fund and bank loan
Dongguan JingyuJadeglass Project30,000,00014,273,35814,484,307(28,362,183)-395,48294%---Internal fund
Yichang CSG Silicon wafer capacity technology upgrade project144,570,000707,199,47720,870,628(727,712,942)-357,16323%399,703369,5655.05%Internal fund and bank loan
Hebei CSG Environmental reforming project25,700,00019,012,500-(19,012,500)--74%---Internal fund
Chendu float Environmental reforming project25,000,00016,989,2036,574,010(23,563,213)--94%---Internal fund
Others1,415,555,546124,626,455137,095,176(114,838,805)-146,882,826-32,878,429408,1295.15%Internal fund and bank loan
6,162,273,1942,925,873,209516,589,029(1,076,896,982)(1,093,134)2,364,472,12266,545,1749,136,496

(i) The proportion of project expenditure incurred to the budget is determined by the accumulative expenditures incurred divided by the total budget.

Some of the projects are transferred to property, plant, and equipment because the construction is completed.

- 133 -

4 Notes to the consolidated financial statements (Cont’d)

(10) Construction in progress (Cont'd)

(b) Provision for impairment of construction in progress

Project name31 December 2018provision increased in current yearprovision from long-term assets trasfered in current yearDecrease in current year31 December 2019
Dongguan Solar Glass Phase I and II improvement project40,248,018---40,248,018
Yichang display device company flat panel display project14,160,474---14,160,474
LED Sapphire Substrate Project32,420,412---32,420,412
Yichang CSG Silicon wafer capacity technology upgrade project25,475,004--(25,475,004)-
Yichang CSG polysilicon tech-innovation project253,983,876116,364,7045,769,860(1,021,240)375,097,200
Others405,983---405,983
366,693,767116,364,7045,769,860(26,496,244)462,332,087

(i)Due to the fierce competition in the domestic polysilicon industry, by the‘section 8 of accountingstandards for business enterprises– impairments of assets’, the management of the companyidentified and ran impairment tests for some parts of related assets showing a sign of impairment,andthe provision for impairment was noted by company.

4 Notes to the consolidated financial statements (Cont’d)

(11) Intangible assets and development expenditure

Land use rightsPatents and proprietary technologiesExploitation rightsOthersTotal
Cost
31December 20181,026,603,700283,187,8334,456,53638,007,4161,352,255,485
Acquisition in current year---1,478,6231,478,623
Transfers from development expenditure in current year-63,322,259--63,322,259
31December 20191,026,603,700346,510,0924,456,53639,486,0391,417,056,367
Accumulated amortisation
31December 2018170,241,89697,385,7544,107,36531,578,666303,313,681
Provision in current year21,184,63131,051,952349,1713,120,16555,705,919
31December 2019191,426,527128,437,7064,456,53634,698,831359,019,600
Provision for impairment loss
31December 2018-13,201,347-9,13313,210,480
31December 2019-13,201,347-9,13313,210,480
Carrying amount
- 134 -
31December 2019835,177,173204,871,039-4,778,0751,044,826,287
31December 2018856,361,804172,600,732349,1716,419,6171,035,731,324

In 2019, the amortisation of intangible assets amounted to RMB55,705,919 (2018: RMB50,567,703).

As at 31 December 2019, ownership certificates of land use rights (“Land ownership Certificates”) forcertain land use rights of the Group with carrying amounts of approximately RMB4,983,945 (cost:

RMB6,586,712) had not yet been obtained by the Group (31 December 2018: carrying amount:

RMB5,228,694, cost: RMB6,586,712). The Company?s management are of the view that there is nolegal restriction for the Group to apply for and obtain the Land Ownership Certificates and has noadverse effect on the Group?s business operation.

Research expenditure is analysed below:

31 December 2018Increase incurrent yearDecrease in current year31 December 2019
Recognised as expensesRecognised as intangible assets
Development costs74,549,25774,013,358(63,322,259)85,240,356

In 2019, the total amount of research and development expenditures of the Group wasRMB440,884,641 (2018: RMB 381,711,070), including RMB366,871,283 (2018: RMB 338,791,891)recorded in income statement for current period and the research and development expenditure withthe amount of RMB63,322,259 recognised as intangible assets for the current period (2018:

29,735,459). As at 31 December 2019, the intangible assets arising from internal research anddevelopment accounted for 18.03% of total of intangible assets (31 December 2018: 14.21%).

4 Notes to the consolidated financial statements (Cont’d)

(12) Goodwill

(a) Book value of goodwill

31 December 2018Increase in current yearDecrease in current year31 December 2019
Tianjin CSG Architectural Glass Co., Ltd.3,039,946--3,039,946
Xianning CSG Photoelectric4,857,406--4,857,406
Shenzhen CSG Display(i)389,494,804--389,494,804
397,392,156--397,392,156

(b) Impairment of goodwill

31 December 2018Increase in current yearDecrease in current year31 December 2019
Shenzhen CSG Display(i)20,672,00061,622,400-82,294,400
20,672,00061,622,400-82,294,400

The calculation of the impairment used the higher conclusions of the two future measurement methodsof the present value of the expected future cash flow and the fair value minus the disposal expenses.The methods, assumptions, asset groups, etc. of the goodwill impairment test this year wasconsistented with the date of purchase and the previous year.

(i) Shenzhen CSG Display adopting the method of discounting future cashflow is with the following main

hypothesizes:

20192018
income growth for the predicted period-1%-33%5%-32%
- 135 -
income growth for the stabilized period0%0%
gross profit margin20%-23%23%-24%
discount rate11%11%

Combining with the prediction of the future business and independent third party appraisalinstitution,the Company's management considered that the goodwill wasimpairedRMB 61,622,400as at31 December 2019(2018: RMB 20,672,000).

4 Notes to the consolidated financial statements (Cont’d)

(13) Deferred tax assets and liabilities

(a) Deferred tax assets before offsetting

31 December 201931 December 2018
Deductible temporary differencesDeferred tax assetsDeductible temporary differencesDeferred tax assets
Provision for asset impairments864,645,227131,772,057394,331,59168,458,375
Tax losses497,964,48183,129,146407,739,41572,421,592
Government grants182,452,27827,367,842256,949,96541,523,325
Accrued expenses30,032,5974,504,89042,393,4566,359,019
Depreciation of fixed assets19,790,3002,968,54527,973,5744,311,723
Share payment--16,366,0612,597,038
1,594,884,883249,742,4801,145,754,062195,671,072
Including:
Expected to be reversed within one year (inclusive)18,423,31554,631,827
Expected to be reversed after one year231,319,165141,039,245
249,742,480195,671,072

(b) Deferred tax liabilities before offsetting

31 December 201931 December 2018
Taxable temporary differencesDeferred tax liabilitiesTaxable temporary differencesDeferred tax liabilities
Depreciation of fixed assets494,317,00174,147,550474,157,81378,260,394
Including:
Expected to be reversed within one year (inclusive)13,617,60623,373,156
Expected to be reversed after one year60,529,94454,887,238
74,147,55078,260,394
- 136 -

4 Notes to the consolidated financial statements (Cont’d)

(13) Deferred tax assets and liabilities (Cont?d)

(c) Deductible losses that are not recognised as deferred tax assets of the Group are analysed as follows:

31 December 201931 December 2018
Deductible losses613,806,990517,898,158

The deductible tax losses not recognised as deferred tax assets mainly represented the tax losses ofthe Company and some closed subsidiaries. Management was unable to expect that whether therewere taxable profit would be available in the future against which these deductible tax losses can beutilised, and accordingly, did not recognise the deferred tax assets.

(d) The tax losses for which no deferred tax assets were recognised will expire in the following years:

31 December 201931 December 2018
2019-82,300,000
202094,430,19794,430,197
2021111,625,585111,625,585
202283,303,53983,303,539
2023146,238,837146,238,837
2024178,208,832-
613,806,990517,898,158

(e) The net balances of deferred tax assets and liabilities after offsetting are as follows:

31 December 201931 December 2018
Net deferred tax assets or liabilitiesDeductible/taxable temporary differences after offsettingNet deferred tax assets or liabilitiesDeductible/taxable temporary differences after offsetting
Deferred tax assets205,792,5871,301,885,596139,529,518817,628,525
Deferred tax liabilities30,197,657201,317,71422,118,840146,032,276

4 Notes to the consolidated financial statements (Cont’d)

(14) Other non-current assets

31 December 201931 December 2018
Prepayment for equipment and project88,489,89350,315,934
Prepayment for lease of land use rights31,910,0006,510,000
120,399,89356,825,934

(15) Impairment of asset

31 December 2018Increase in current yearOther Increased in current yearReversal in current yearWritten off in current year31 December 2019
Provision for bad debts24,220,11229,243,867-(9,129,834)-44,334,145
Including: Provision for bad debts of accounts receivable19,665,89717,719,505-(8,826,293)-28,559,109
- 137 -
Provision for bad debts of other receivables4,554,21511,524,362-(303,541)-15,775,036
Provision for decline in the value of inventories2,005,0134,838,285-(3,716)(486,018)6,353,564
Provision for impairment of fixed assets111,677,969280,503,01225,475,004-(21,645,023)396,010,962
Provision for impairment of construction in progress366,693,767116,364,7045,769,860-(26,496,244)462,332,087
Provision for impairment of intangible assets13,210,480----13,210,480
Provision for impairment of goodwill20,672,00061,622,400---82,294,400
538,479,341492,572,26831,244,864(9,133,550)(48,627,285)1,004,535,638

4 Notes to the consolidated financial statements (Cont’d)

(16) Short-term borrowings

31 December 201931 December 2018
Unsecured1,687,000,0002,008,000,000
Guaranteed (i)543,969,137909,679,590
Mortgage loan10,000,0005,000,000
2,240,969,1372,922,679,590

(i) As at 31 December 2019, the Company provided its subsidiaries with guarantee for the short-

term borrowings of RMB543,969,137 (31 December 2018: RMB909,679,590).

As at 31 December 2019, the interest of short-term borrowings varied from 2.95% to 4.79% (31

December 2018: 2.95% to 5.66%).

(17) Notes payable

31 December 201931 December 2018
Bank acceptance notes232,063,968105,150,000

All notes payable are due within one year.

(18) Accounts payable

31 December 201931 December 2018
Materials payable728,499,891749,987,838
Equipment payable174,902,946230,997,567
Construction expenses payable93,584,879133,247,003
Freight payable68,149,27262,455,534
Utilities payable28,835,68527,099,683
Others6,559,1066,071,638
1,100,531,7791,209,859,263

As at 31 December 2019, the amount of accounts payable over 1 year was approximatelyRMB180,273,623 (31 December 2018: RMB159,491,611), which mainly comprised payables forconstruction and equipment. As the construction work had not passed the final acceptance test yet, thebalance was not yet settled.

(19) Advances from customers

31 December 201931 December 2018
- 138 -
Advances for goods from customers292,803,811206,631,008

The ageing of balances was substantively within 1 year.

4 Notes to the consolidated financial statements (Cont’d)

(20) Employee benefits payable

31 December 201931 December 2018
Short-term employee benefits payable (a)337,855,741262,906,600
Defined contribution plans payable (b)10,50554,313
Termination benefits(c)-3,498,238
337,866,246266,459,151

(a) Short-term employee benefits

31 December 2018Increase in current yearDecrease in current year31 December 2019
Wages and salaries, bonus, allowances and subsidies242,564,3021,305,299,616(1,230,391,393)317,472,525
Social security contributions24,68142,726,248(42,745,482)5,447
Including: Medical insurance21,30536,659,746(36,676,217)4,834
Work injury insurance2,3573,417,212(3,419,335)234
Maternity insurance1,0192,649,290(2,649,930)379
Housing funds2,613,58737,349,346(37,806,704)2,156,229
Labour union funds and employee education funds17,704,03014,973,300(14,455,790)18,221,540
Share-based payments-24,845,972(24,845,972)-
262,906,6001,425,194,482(1,350,245,341)337,855,741

(b) Defined contribution plans

31 December 2018Increase in current yearDecrease in current year31 December 2019
Basic pensions52,573100,361,383(100,403,555)10,401
Unemployment insurance1,7403,611,179(3,612,815)104
54,313103,972,562(104,016,370)10,505

(c) Termination benefits

31 December 2018Increase in current yearDecrease in current year31 December 2019
Other dismissal welfare3,498,23814,962,930(18,461,168)-
3,498,23814,962,930(18,461,168)-
- 139 -

4 Notes to the consolidated financial statements (Cont’d)

(21) Taxes payable

31 December 201931 December 2018
Enterprise income tax payable49,932,88936,008,341
VAT payable45,587,58454,091,751
Housing property tax payable4,270,5285,156,058
Individual income tax payable5,451,5213,367,389
City maintenance and construction tax payable3,629,9663,246,775
Educational surcharge payable2,726,6512,586,657
Environmental tax payable1,712,0522,350,943
Others2,113,8535,159,451
115,425,044111,967,365

(22) Other payables

31 December 201931 December 2018
Interest payable73,251,08673,612,703
Dividend payable2,985,5632,846,362
Other payables275,138,126476,292,122
351,374,775552,751,187

1、 Interest payable

31 December 201931 December 2018
Interest payable for medium term notes66,227,42565,267,308
Interest of long-term borrowings with periodic payments of interest and return of principal at maturity474,136754,878
Interest payable for short-term borrowings6,549,5257,590,517
73,251,08673,612,703

2、 Dividend payable

31 December 201931 December 2018
Restricted share dividend payable2,985,5632,846,362
2,985,5632,846,362

4 Notes to the consolidated financial statements (Cont’d)

(22) Other payables (Cont?d)

3、 Other payables

31 December 201931 December 2018
Guarantee deposits received from construction contractors75,417,94263,181,510
Accrued cost of sales (i)43,270,18837,407,112
- 140 -
Temporary collection of payment for land transfer-56,106,781
Payable for contracted labour costs17,947,19216,030,100
Temporary receipts12,276,66213,581,459
Deposit for disabled4,735,2464,943,347
Restricted share repurchase obligation118,066,397275,748,309
Others3,424,4999,293,504
275,138,126476,292,122

(i) It represented the payment made to external third parties arising from undertaking the rights of

debtor and creditor, comprising water and electricity, professional service fee and travellingexpenses etc.

The ageing of other payables was substantively within 1 year.

(23) Current portion of non-current liabilities

31 December 201931 December 2018
Current portion of long-term borrowings
- Guaranteed125,475,00087,800,000
medium term notes due within 1 year1,200,000,000-
Current portion of finance lease386,981,928731,648,742
1,712,456,928819,448,742

4 Notes to the consolidated financial statements (Cont’d)

(24) Long-term borrowings

31 December 201931 December 2018
Medium term notes (i)800,000,0002,000,000,000
Guaranteed190,225,000315,700,000
Unsecured330,000,000-
1,320,225,0002,315,700,000

(i) Approved by file No. [2018] MTN157 of Inter-bank Market Trading Association, the Company is

entitled to issue medium term notes with the limit of RMB800,000,000, which expires on 20March 2020.

On 4May 2018, the Company issued the Phase I medium term notes of RMB800,000,000 for2018, with the maturity data of 4 May 2021 and annual rate of 7%.

As at 31 December 2019, the interest of long-term borrowings varied from 4.70% to 7.00% (31December 2018: 4.75% to 7.00%).

(25) Long-term account payable

31 December 201931 December 2018
Finance lease87,240,529529,910,796

TheSale and leaseback lease of the group in this phase is a mortgage loan with a lease term of 36months. On December 31, 2019, the real interest rate of financing lease loans is4.49%-7.8%.

4 Notes to the consolidated financial statements (Cont’d)

- 141 -

(26) Deferred income

31 December 201931 December 2018
Government grants513,925,557601,825,780

Government grants are analysed as follows:

Government grants31 December 2018Increase in current yearOther decrease in current yearNon-operating income in current year31 December 2019Assets/Income related
Tianjin CSG Golden Sun Project (i)50,342,227--(3,374,892)46,967,335Assets related
Dongguan CSG Golden Sun Project (ii)40,577,250--(2,751,000)37,826,250Assets related
Hebei CSG Golden Sun Project (iii)41,250,000--(2,750,000)38,500,000Assets related
Xianning CSG Golden Sun Project (iv)44,952,417--(3,030,500)41,921,917Assets related
Infrastructure compensation for Wujiang CSG Glass Co., Ltd (v)35,587,360--(4,041,538)31,545,822Assets related
Qingyuan Energy-saving project (vi)18,319,167--(2,470,000)15,849,167Assets related
Yichangpolysilicon products project (vii)18,984,375--(2,812,500)16,171,875Assets related
Yichang CSG silicon slice auxiliary project (viii)9,614,0117,189,255-(1,527,305)15,275,961Assets related
Sichuan energy-saving glass project (ix)8,821,440--(1,654,020)7,167,420Assets related
Group coating film experimental project (x)5,642,520--(1,883,760)3,758,760Assets related
Yichang expert silicon project (xi)3,327,153--(303,178)3,023,975Assets related
Yichang semiconductor silicon project (xii)3,133,333--(266,667)2,866,666Assets related
Yichang CSG Display project (xiii)48,302,126--(2,534,478)45,767,648Assets related
Xianning Photoelectric project (xiv)7,800,000--(520,000)7,280,000Assets related
Group talent fund project (xv)171,000,000---171,000,000Income related
Qingyuan CSG Energy-Saving Industry Co-construction support fund(xvi)62,826,54425,830,000(88,656,544)-Income related
Others31,345,857400,000-(2,743,096)29,002,761Assets related/Income related
601,825,78033,419,255-(121,319,478)513,925,557

(i) The allowance was granted by Tianjin Municipal Government. The allowance was used for

establishing PV power station by Tianjin CSG Architectural Glass Co., Ltd. The facilitiesbelonged to Tianjin CSG upon completion. The allowance will be credited to income statement in20 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 facilitiesbelonged to Dongguan CSG upon completion. The allowance will be credited to incomestatement 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 facilitieswere set up, they belonged to Hebei CSG. The allowance will be credited to income statement in20 years, the useful life of the PV power station.

4 Notes to the consolidated financial statements (Cont’d)

(26)Deferred income (Cont?d)

(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

- 142 -

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 bythe 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 QingyuanCSG. The allowance will be credited to income statement in 10 years, the useful life of theproduction line.

(vii) The balance represented amounts granted to Yi Chang CSG polysilicon Materials Co., Ltd. by

Yichang City Dongshan Development Corporation under the provisions of the investmentcontract signed between the Group and the Municipal Government of Yi Chang. The proceedswere designed for the construction of electricity transformer and the pipelines.Yichangpolysilicon is entitled to the ownership of the facilities, which will be amortised by 16years according to the useful life of the converting station.

(viii) It represented the government supporting fund obtained by Yichangpolysilicon from the acquiring

of the assets and liabilities of Crucible project of YichangHejing Photoelectric Ceramic Co., Ltd.The proceeds would be amortised and credited to income statement by 16 years after relatedassets were put into use.

(ix) It represented the funds granted by Chengdu local government for energy glass project. It will be

amortised and credited to income statement in 15 years, in accordance with the minimumoperating 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 andcredited to income statement by 20 years in the estimated useful life of the relevant fixed assets.

(xi) It represented the funds granted by Hubei local government for inport discount complement and

international corporation special subsidy. The grant will be amortised and credited to incomestatement by 12 to 15 years.

(xii) It represented the special subsidy of Yichang National Regional Strategic Emerging Industry

Development Pilot Project II, which is used to complement Yichang CSG PolysSilicon “Hubeisemiconductor silicon preparative technique project laboratory”. The grant will be amortised andcredited to income statement by 15 years.

(xiii) It represented the funds granted by Yichang Municipal Government for Yichang CSG Display

Company's flat project construction support funds and construction of coil coating three-lineproject. The grant will be amortised and credited to income statement by 15 years.

(xiv) It represented the funds granted by Xianning Government of the Project supporting fund for

photoconductive glass production line,which is used to pay for Xianning CSG Glass Co.Ltd.constructingthe project of photoelectric photoelectric optical glass production line .After thecompletion of the production line, the ownership belongs to Xianning photoelectric. Theallowance will be credited to income statement in 8 years, the useful life of the production line.

4 Notes to the consolidated financial statements (Cont’d)

(26)Deferred income (Cont?d)

(xv) The allowance was granted by Administrative Commission of Yichang High-tech Industrial

Development Zone. For senior management personnel, engineering technical personnel andsenior professional technical team who are working at Yichang or plane to introduction, RMB171million fund was set up, as a special fund for talent introduction and housing resettlement.

- 143 -

(xvi) The allowance was granted by Fogang Municipal Governmentrelated 2018 province industry co-

construction support fund . The allowance was used for company development and operation byQingyuan CSG New Energy-Saving Materials Co., Ltd.

(27) Share capital

Movement for the year ended 31 December 2019
31 December 2018New issues during the yearBonus issueCapitalisationOthers31 December 2019
RMB-denominated ordinary shares1,779,466,998--177,946,6993,909,3501,961,323,047
Limited selling condition shares75,292,875--3,764,855(42,834,832)36,222,898
Domestically listed foreign shares1,008,517,328--100,851,732-1,109,369,060
2,863,277,201--282,563,286(38,925,482)3,106,915,005

The par value of the RMB-denominated ordinary shares is RMB1, and that of domestically listed foreignshares is HKD1.

(28) Capital surplus

31 December 2018Increase in current yearDecrease in current year31 December 2019
Share premium1,123,780,2112,978,832(387,924,193)738,834,850
Other capital surplus(28,440,790)24,845,972(52,020,674)(55,615,492)
Share of changes in equity other than comprehensive income and profit distribution of investees under the equity method757,420--757,420
Share-based payment29,986,38524,845,972(52,020,674)2,811,683
Transfer of capital surplus recognised under the previous accounting system(2,250,222)--(2,250,222)
Disposal of fractional shares1,316,208--1,316,208
Purchase of minority interests(87,197,562)--(87,197,562)
Shareholdersinterest-free loans28,946,981--28,946,981
-27,824,804-
1,095,339,42127,824,804(439,944,867)683,219,358

4 Notes to the consolidated financial statements (Cont’d)

(28)Capital surplus (Cont?d)

31 December 2017Increase in current yearDecrease in current year31 December 2018
Share premium1,353,802,562151,633,385(381,655,736)1,123,780,211
Other capital surplus(47,420,797)144,278,158(125,298,151)(28,440,790)
Share of changes in equity other than comprehensive income and profit distribution of investees under the equity method757,420--757,420
Share-based payment11,006,378144,278,158(125,298,151)29,986,385
Transfer of capital surplus recognised under the previous accounting system(2,250,222)--(2,250,222)
Disposal of fractional shares1,316,208--1,316,208
Purchase of minority interests(87,197,562)--(87,197,562)
Movement for the year ended 31 December 2018
31 December 2017New issues during the yearBonus issueCapitalisationOthers31 December 2018
RMB-denominated ordinary shares1,509,664,303--226,449,64543,353,0501,779,466,998
Limited selling condition shares97,511,6549,826,58014,626,748(46,672,107)75,292,875
Domestically listed foreign shares876,971,590--131,545,738-1,008,517,328
2,484,147,5479,826,580-372,622,131(3,319,057)2,863,277,201
- 144 -
Shareholdersinterest-free loans28,946,981--28,946,981
1,306,381,765295,911,543(506,953,887)1,095,339,421

The reason for the decrease of capital surplus - other in current year was the acquisition of minorityinterests, with the detail as follows:

The Company held the 2018 annual general meeting of shareholders on May 9, 2019 and decided totransfer 1.0 share to every 10 shares for all shareholders. The total share capital before the distributionwas 2,825,632,877 shares, and the total share capital after the dividend was increased to3,108,196,163 shares. Capital surplus decreased by RMB 282,563,286;

On December 12 2018, the company held the 8th temporary meeting of Board members and the 8thtemporary meeting of Supervisors. The meetings reviewed and approved the “Proposal concerningthe repurchase and cancellation of some restricted shares from the ‘incentive plan’ of restrictedshares”. The company agreed to repurchase and cancel the restricted shares which have alreadybeen granted to and held by 8 recipients unqualified for the “incentive plan”. A total of 436,719shares were approved to be repurchased at the 3rd temporary meeting of shareholders on December28, 2018. By June 18 2019.the cancellations procedure of above restricted shares have beenaccomplished.

On April 16, 2019, the company held the 8th meeting of the 8th board of directors, and the 8th meetingof the 8th board of supervisors. The meetings approved the “Proposal concerning the repurchase andcancellation 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 3,473,329restricted shares which have already been granted to and held by 14 recipients who are unqualified forthe “incentive plan”, and repurchase and cancel a total of 33,734,276 restricted shares failing tomeet the second-term unlocking condition from 483 “incentive” recipients. Independent directorsagreed 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 have been accomplished.

On September16 2019,the Company held the 8th temporary meeting of Board member members andthe 8th temporary meeting of Supervisors , which reviewed and approved the releasing conditions onthe first-time expiring trading restrictions of the initial part of the incentive plan on restrictedshares from ordinary A . A total of 71 recipients of the incentive plan were able to fulfil theconditions. The amount of 3,909,350 shares could be released from restrictions. The restrictedshares was released and listed by company on September 25 2019 .

4 Notes to the consolidated financial statements (Cont’d)

(28)Capital surplus (Cont?d)

On September 16 2019, the Company held the 8th temporary meeting of Board members and the 8thtemporary meeting of Supervisors. The meetings reviewed and approved the “Proposal concerningthe repurchase and cancellation of some restricted shares from the ‘incentive plan’ of restrictedshares”. The meetings approved to repurchase and cancel a total of 1,281,158 restricted shareswhich 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.The cancellations of above restricted shares have not been finished yet.

(29) Treasury shares

31 December 2018Increase in current yearDecrease in current year31 December 2019
Obligations of restricted share buybacks277,180,983-(159,114,586)118,066,397
277,180,983-(159,114,586)118,066,397
- 145 -

Explanation on changes in treasury stocks: The company confirms liabilities and treasury shares at thesame time, based on the number of restricted shares issued and the corresponding repurchase price.

- 146 -

4 Notes to the consolidated financial statements (Cont’d)

(30) Other comprehensive income

Other comprehensive income in Balance SheetOther comprehensive income in Income Statement for the year ended 31 December 2019
31 December 2018Attributable to parent company after tax31 December 2019Actual amount before tax for current yearLess: Reclassification of previous other comprehensive income to profit or loss in current yearLess: Income tax expensesAttributable to parent company after taxAttributable to minority shareholders after tax
Other comprehensive income items which will be reclassified subsequently to profit or loss
Financial rewards for energy-saving technical retrofits2,550,000-2,550,000-----
Difference on translation of foreign currency financial statements2,530,2341,485,6304,015,8641,485,630--1,485,630-
5,080,2341,485,6306,565,8641,485,630--1,485,630-
Other comprehensive income in Balance SheetOther comprehensive income in Income Statement for the year ended 31 December 2018
31 December 2017Attributable to parent company after tax31 December 2018Actual amount before tax for current yearLess: Reclassification of previous other comprehensive income to profit or loss in current yearLess: Income tax expensesAttributable to parent company after taxAttributable to minority shareholders after tax
Other comprehensive income items which will be reclassified subsequently to profit or loss
Financial rewards for energy-saving technical retrofits2,550,000-2,550,000-----
Difference on translation of foreign currency financial statements(601,057)3,131,2912,530,2343,131,291--3,131,291-
1,948,9433,131,2915,080,2343,131,291--3,131,291-
- 147 -

4 Notes to the consolidated financial statements (Cont’d)

(31) Special reserve

31 December 2018Increase in current yearDecrease in current year31 December 2019
Safety production costs6,068,6007,293,766(2,259,445)11,102,921

The subsidiary Yichang CSG PolysSilicon is a high risk chemical production enterprise. Therefore, theCompany appropriated such reserve in accordance with relevant regulations.

(32) Surplus reserve

31 December 2018Increase in current yearDecrease in current year31 December 2019
Statutory surplus reserve796,452,80721,945,911-818,398,718
Discretionary surplus reserve127,852,568--127,852,568
924,305,37521,945,911-946,251,286
31 December 2017Increase in current yearDecrease in current year31 December 2018
Statutory surplus reserve792,739,7643,713,043-796,452,807
Discretionary surplus reserve127,852,568--127,852,568
920,592,3323,713,043-924,305,375

In accordance with the Company Lawof the People’s Republic of China and the Company?s Articles ofAssociation, the Company should appropriate 10% of net profit for the year to the statutory surplus reserve,and the Company can cease appropriation when the statutory surplus reserve accumulated to more than50% of the registered capital. The statutory surplus reserve can be used to make up for the loss or increasethe paid-in capital after approval from the appropriate authorities. The Company accrued statutory surplusreserve at the amount of RMB21,945,911 based on10% of the net profit, in 2019 (2018: RMB3,713,043accrued at 10% of the net profit).

The Company appropriates for the discretionary surplus reserve after the shareholders? meeting approvesthe proposal from the Board of Directors. The discretionary surplus reserve can be used to make up for theloss or increase the share capital after approval from the appropriate authorities. The Company did notappropriate to discretionary surplus reserve during the year.

- 148 -

4 Notes to the consolidated financial statements (Cont’d)

(33) Undistributed profits

20192018
Undistributed profit at the beginning of year4,486,264,7234,159,642,227
Add:Net profits attributable to shareholders of parent company536,430,818452,965,935
Less: Appropriation for statutory surplus reserve(21,945,911)(3,713,043)
Ordinary share dividends payable (a)(141,148,789)(122,630,396)
Undistributed profits at end of year4,859,600,8414,486,264,723

(a) Pursuant to the resolution of Board of Directors of the Company on 9 May 2019, the Company paid cash

dividends of RMB0.5 (tax inclusive) for each 10 shares based on total shares of 2,825,632,877, with the totalcash dividends distributed of RMB141,281,644.

Recipients resigned were expected to be decreased revocable cash dividends of RMB 132,855 in currentyear.

(34) Revenue and cost of sales

20192018
Revenue from main operations10,390,235,11510,536,501,926
Revenue from other operations81,792,98473,461,085
10,472,028,09910,609,963,011
20192018
Cost of sales from main operations7,738,447,1368,112,012,841
Cost of sales from other operations4,682,4788,469,053
7,743,129,6148,120,481,894

(a) Revenue and cost of sales from main operations

Revenue and cost of sales from main operations analysed by industry and product are set out below:

20192018
RevenueCostRevenueCost
Glass industry7,907,268,3755,771,311,1377,385,946,4315,375,433,121
Solarenergy industry1,498,836,9421,287,850,9772,296,917,2142,170,991,475
Electronic glass and display1,041,131,329736,286,553955,864,280666,108,617
Elimination(57,001,531)(57,001,531)(102,225,999)(100,520,372)
10,390,235,1157,738,447,13610,536,501,9268,112,012,841
- 149 -

4 Notes to the consolidated financial statements (Cont’d)

(34) Revenue and cost of sales (Cont?d)

(b) Revenue and cost of sales from other operations

20192018
RevenueCostRevenueCost
Sales of raw materials and Others81,792,9844,682,47873,461,0858,469,053
81,792,9844,682,47873,461,0858,469,053

(35) Taxes and surtax

20192018
City maintenance and construction tax31,635,20837,842,081
Educational surcharge26,205,28229,975,981
Housing property tax31,118,37931,453,204
Land use rights13,478,33820,147,106
Stamp tax4,994,4755,492,647
Environmental tax8,176,50810,136,863
Others205,5785,376,969
115,813,768140,424,851

(36) Selling expenses

20192018
Freight expenses166,179,716163,197,092
Employee benefits154,777,915120,513,530
Entertainment fees15,906,22614,654,064
Business travel expenses12,222,21811,066,121
Vehicle use fees8,061,6368,480,143
Rental expenses7,050,6066,469,600
Depreciation expenses906,236973,181
Others24,164,68229,629,728
389,269,235354,983,459
- 150 -

4 Notes to the consolidated financial statements (Cont’d)

(37) Administrative expenses

20192018
Employee benefits335,972,452442,272,618
Depreciation expenses64,780,69862,737,730
Amortisation of intangible assets55,705,91950,567,703
General office expenses23,368,74822,933,432
Labour union funds14,435,21415,317,022
Entertainment fees12,872,93414,159,098
Business travel expenses10,031,10611,903,093
Utility fees7,528,25210,833,683
Canteen costs7,514,3158,202,537
Vehicle use fees5,630,0146,853,349
Consulting advisers32,345,02832,308,070
Others32,405,97053,126,916
602,590,650731,215,251

(38) Research and development expenses

20192018
Research and development expenses366,871,283338,791,891
366,871,283338,791,891

(39) Financial expenses

20192018
Interest on borrowings328,728,246423,763,192
Less: Capitalised interest(9,136,496)(22,136,125)
Interest expenses319,591,750401,627,067
Less: Interest income(36,942,509)(61,857,535)
Exchange losses(2,869,494)(4,955,956)
Others10,637,65614,589,911
290,417,403349,403,487
- 151 -

4 Notes to the consolidated financial statements (Cont’d)

(40) Expenses by nature

The cost of sales, selling and distribution expenses, general and administrative expenses, Research anddevelopment expenses in the income statement are listed as follows by nature:

20192018
Changes in inventories of finished goods and work in progress(219,047,868)98,883,578
Consumed raw materials and low value consumables, etc.4,582,575,2014,545,216,065
Fuel fee1,389,885,2931,223,356,407
Employee benefits1,263,114,7431,335,584,375
Depreciation and amortisation expenses972,774,7591,018,151,059
Utility fees627,935,953813,320,471
Freight expenses174,194,886171,566,693
General office expenses45,273,41442,726,767
Canteen costs35,334,18637,952,058
Business travel expenses26,251,18327,455,316
Entertainment fees31,635,78431,045,998
Vehicle use fee15,028,99516,882,396
Rental expenses11,370,77511,212,221
Others145,533,478172,119,091
9,101,860,7829,545,472,495

(41) Other income

20192018
Government subsidy amortization121,319,47842,084,669
Industry support funds20,938,17217,950,780
Research grants5,641,26210,368,881
Government incentive funds19,639,75313,647,951
Others16,592,75510,565,758
184,131,42094,618,039

(42) Credit impairment losses

20192018
Losses on bad debts of accounts receivable8,893,212-
Losses on bad debts of other receivables11,220,821-
20,114,033-

(43) Asset impairment losses

20192018
Impaiement loss of fixed assets280,503,01212,373,970
- 152 -
Decline in the value of inventories4,834,569497,272
Impairment loss in construction in progress116,364,704102,464,495
Impairment loss in goodwill61,622,40020,672,000
Accounts receivable/other receivablesimpairment losses-538,413
463,324,685136,546,150

(44) Asset disposal income

20192018
Gains on disposal of non-current assets(909,968)(454,368)
(909,968)(454,368)

(45) Non-operating income

20192018Amount of non-recurring gains and losses included in 2019
Government grants (a)-217,500-
Default income-50,400-
Compensation income4,557,6206,537,8754,557,620
Amounts unable to pay1,384,2964,778,5831,384,296
Others1,885,9182,274,2931,885,918
7,827,83413,858,6517,827,834

(46) Non-operating expenses

20192018Amount of non-recurring gains and losses included in 2019
Compensation4,126,950-4,126,950
Donation1,659,000260,0331,659,000
Others3,654,1371,281,4383,654,137
9,440,0871,541,4719,440,087

4 Notes to the consolidated financial statements (Cont’d)

(47) Income tax expenses

20192018
Current income tax159,871,302129,842,061
Deferred income tax(58,184,252)(57,453,770)
101,687,05072,388,291
- 153 -

The reconciliation from income tax calculated based on the applicable tax rates and total profit presented inthe consolidated income statement to the income tax expenses is listed below:

20192018
Total profit662,106,627544,596,879
Income tax expenses calculated at applicable tax rates by company94,958,27464,115,428
Effect of changes in tax rates2,130,5421,512,060
Costs, expenses and losses not deductible for tax purposes2,091,92519,250,051
Deductible losses of unrecognised deferred income tax assetsin the previous period(2,495,678)-
Deductible losses for which no deferred tax asset was recognised in current period44,552,20836,559,709
Effect of tax incentives(37,141,013)(32,258,314)
Reconciliation of income tax for prior years in annual filing(2,409,208)(16,790,643)
Income tax expenses101,687,05072,388,291

4 Notes to the consolidated financial statements (Cont’d)

(48) Earnings per share

The basic earnings per share is calculated by dividing the net profit attributable to ordinary shareholders ofthe company by the weighted average number of ordinary shares outstanding.

The numerator of diluted earnings per share is determined based on the net profit attributable to the commonshareholders of the company's common stock. The following factors are adjusted to determine: (1) intereston dilutive potential ordinary shares that have been recognized as expenses in the current period; (2) dilutivepotential ordinary The income or expenses that will be generated when the shares are converted; (3) Theabove-mentioned adjustments related to income tax effects.

The denominator of the diluted earnings per share equals the sum of: (1) the weighted average number ofordinary shares of the parent company in the underlying earnings per share; (2) ordinary shares that areincreased assuming the dilution of potential ordinary shares into common shares The weighted average.

When calculating the weighted average of the number of ordinary shares increased from diluted commonstocks to ordinary shares, the diluted potential ordinary shares issued during the previous period areassumed to be converted at the beginning of the current period; diluted potential ordinary shares of thecurrent period are issued. , assuming a conversion on the issue date.

The basic calculation of basic earnings per share and diluted earnings per share are as follows:

(a) Basic earnings per share:

20192018
Consolidated net profit attributable to ordinary shareholders of parent company536,430,818452,965,935
Weighted average number of outstanding ordinary3,070,692,1073,066,782,757
Basic earnings per share0.170.15

(b) Diluted earnings per share:

- 154 -

Diluted earnings per share are calculated by dividing consolidated net profit attributable to ordinaryshareholders of the parent company adjusted based on the dilutive potential ordinary shares by the adjustedweighted average number of outstanding ordinary shares of the Company. For the year ended 31 December2019, the Company had diluted earnings per shares of RMB 0.17 (2018: RMB 0.14 per share).

4 Notes to the consolidated financial statements (Cont’d)

(49) Notes to the cash flow statement

(a) Cash generated by other operating activities

20192018
Government grants96,231,197136,520,750
Interest income36,942,50961,857,535
Others25,288,41917,445,309
158,462,125215,823,594

(b) Cash paid relating to other operating activities

20192018
Freight expenses187,867,670194,159,982
Canteen costs35,334,18637,952,058
General office expenses37,580,12134,495,884
Research and development expenses34,156,73535,304,568
Business travel expenses27,054,90228,171,433
Entertainment fees28,986,05528,744,002
Vehicle use fee15,028,99516,882,396
Maintenance fee27,637,95334,453,953
Rental expenses11,370,77511,212,221
Insurance12,270,65411,942,647
Fees10,637,65614,589,911
Consulting advisers20,605,17216,675,549
Others154,665,671139,201,836
603,196,545603,786,440

(c) Cash generated by other investing activities

20192018
Income from trial production of construction in progress33,207,22830,517,662
Deposit3,442,232537,656
36,649,46031,055,318

(d) Cash paid relating to other investing activities

- 155 -
20192018
Trial production expenditure in construction55,177,375118,263,080
55,177,375118,263,080

4 Notes to the consolidated financial statements (Cont’d)

(49) Notes to the cash flow statement (Cont?d)

(e) Cash generated by other financing activities

20192018
Income from finance lease200,000,000-
200,000,000-

(f) Cash payments relating to other financing activities

20192018
Repay financing leases1,024,419,924688,061,105
Deposit150,493,88410,098,279
Payment of loan, security and fee for bills11,591,5089,613,905
Entrusted loan-300,000,000
Equity incentive fund144,286,38712,352,662
1,330,791,7031,020,125,951

4 Notes to the consolidated financial statements (Cont’d)

(50) Supplementary information to the cash flow statement

(a) Reconciliation from net profit to cash flows from operating activities

20192018
Net profit560,419,577472,208,588
Add: Provision for asset impairment463,324,685136,546,150
Provision for credit impairment20,114,033-
Depreciation of fixed assets915,355,376965,935,450
Amortisation of intangible assets55,705,91950,567,703
Net movements of safety production costs5,034,3212,843,662
Amortisation of long-term prepaid expenses1,713,4641,647,906
Employee compensation based on shares(24,195,870)141,486,074
Losses on disposal of fixed assets and intangible assets909,968454,368
Financial expenses319,591,750401,627,067
Decrease/(increase) in deferred tax assets(66,263,069)(58,656,656)
- 156 -
Increase/(decrease) in deferred tax liabilities8,078,8171,202,886
(Increase)/decrease in inventories(216,530,491)85,267,118
Increase in operating payables106,031,510(63,345,244)
Increase in operating receivables229,746,330(7,406,972)
Net cash flows from operating activities2,379,036,3202,130,378,100

(b) Net increase/(decrease) in cash

20192018
Cash and cash equivalents at end of year1,831,835,0302,225,126,913
Less: Cash and cash equivalents at beginning of year(2,225,126,913)(2,459,753,165)
Net increase in cash and cash equivalents(393,291,883)(234,626,252)

(c) Cash and cash equivalents

31 December 201931 December 2018
Cash
- Cash on hand4,2689,731
- Bank deposits that can be readily drawn on demand1,781,830,7622,225,117,182
- Other cash balances that can be readily drawn on demand50,000,000-
Cash at end of year1,831,835,0302,225,126,913

4 Notes to the consolidated financial statements (Cont’d)

(51) Assets with restricted ownership or use rights

20192018Reason
Monetary assets155,145,3881,320,807Restricted deposit flow
Property,plant and equipment1,373,926,9102,381,348,551Limited finance lease and Restricted mortage loan
1,529,072,2982,382,669,358

(52) Monetary items denominated in foreign currencies

31 December 2019
Balances denominated in foreign currenciesExchange ratesBalances denominated in RMB
Cash at bank and on hand -
HKD4,362,3900.89583,907,829
USD6,007,2216.976241,907,573
EUR43,5787.8155340,581
JPY139,5790.06418,947
AUD1,0364.88435,061
46,169,991
Accounts receivable -
- 157 -
HKD1,660,7670.89581,487,715
USD11,580,7696.976280,789,758
EUR963,0927.81557,527,045
89,804,518
Short-term borrowings -
HKD75,000,0000.895867,185,000
USD707,8946.97624,938,410
72,123,410
Accounts payable -
HKD3070.8958275
USD5,677,7996.976239,609,462
EUR1,363,7337.815510,658,259
JPY15,132,5120.0641969,994
51,237,990
Advances from customers -
HKD4,287,3670.89583,840,623
USD3,180,0056.976222,184,351
EUR48,6717.8155380,388
26,405,362

5 The changes of consolidation scope

On 21March2019,theGroupsetupasubsidiary, Zhuhai CSG Commercial Factoring Co., Ltd..and the Grouphas invested RMB 50,000,000 . The Group owns 100% of its equity.

On 14 May2019,theGroupsetupasubsidiary, Zhuhai Hengqin New District CSG Glass Industry Co., Ltd..andthe Group has invested RMB 6,000,000 . The Group owns 100% of its equity.

On 11June2019,theGroupsetupasubsidiary, Shenzhen CSG Supply Chain Management Service Co., Ltd.and the Group has invested RMB 6,000,000 . The Group owns 100% of its equity.

The Group established a subsidiary company, Changshu CSG New Energy Co., Ltd. on 24 July 2019, andthe Group has not invested yet. The Company holds 100% of its shares.

The Group established a subsidiary company, Changshu CSG New Energy Co., Ltd. on 6 August 2019, andthe Group has not invested yet. The Company holds 100% of its shares.

On 13 December2019,theGroupsetupasubsidiary, Zhaoqing CSG Energy-saving Glass Co., Ltd.. and theGroup has invested RMB 12,801,000 . The Group owns 100% of its equity.

On 13 December2019,theGroupsetupasubsidiary, Zhaoqing CSG Automotive Glass Co., Ltd. and the Grouphas invested RMB 12,601,000 . The Group owns 100% of its equity

6 Interest in subsidiaries

(1) Interest in subsidiaries

(a) Structure of the enterprise group

As at 31 December 2019, information of the Company?s major subsidiaries is set out below:

Major businessPlace of registrationScope of businessShareholding (%)
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locationDirectIndirect
Chengdu CSGChengdu, PRCChengdu, PRCDevelopment, production and sales of special glass75%25%
Sichuan CSG Energy ConservationChengdu, PRCChengdu, PRCDevelopment, production and sales of special glass and processing of glass75%25%
Tianjin Energy ConservationTianjin, PRCTianjin, PRCDevelopment, production and sales of special glass75%25%
Dongguan CSG EngineeringDongguan, PRCDongguan, PRCIntensive processing of glass75%25%
Dongguan CSG SolarDongguan, PRCDongguan, PRCProduction and sales of solar glass75%25%
Dongguan CSG PV-techDongguan, PRCDongguan, PRCProduction and sales of hi-tech green battery and components-100%
Yichang CSG PolysSiliconYichang, PRCYichang, PRCProduction and sales of high-purity silicon materials75%25%
Wujiang CSG EngineeringWujiang, PRCWujiang, PRCIntensive processing of glass75%25%
Hebei CSGYongqing, PRCYongqing, PRCProduction and sales of special glass75%25%
Wujiang CSGWujiang, PRCWujiang, PRCProduction and sales of special glass100%-
China Southern Glass (Hong Kong) LimitedHong Kong, PRCHong Kong, PRCInvestment holding100%-
HebeiShichuangYongqing, PRCYongqing, PRCProduction and sales of ultra-thin electronic glass100%-
Xianning CSGXianning, PRCXianning, PRCProduction and sales of special glass75%25%
Xianning CSG Energy-SavingXianning, PRCXianning, PRCIntensive processing of glass75%25%
Qingyuan CSG Energy-SavingQingyuan, PRCQingyuan, PRCProduction and sales of ultra-thin electronic glass100%-
Shenzhen CSG Financial Leasing Co., Ltd.Shenzhen, PRCShenzhen, PRCFinance leasing, etc.75%25%
Jiangyou CSG Mining Development Co. Ltd.Jiangyou, PRCJiangyou, PRCProduction and sales of silica and its by-products100%-
Shenzhen CSG PV Energy Co., Ltd.Shenzhen, PRCShenzhen, PRCInvestment management of photovoltaic plant100%-
Qingyuan CSG New Energy Co., Ltd.Qingyuan, PRCQingyuan, PRCClean energy development, photovoltaic power generation-100%
Suzhou CSG PV-tech Co., Ltd.Wujiang, PRCWujiang, PRCClean energy development, photovoltaic power generation-100%
Wujiang CSG New Energy Co., Ltd.Wujiang, PRCWujiang, PRCClean energy development, photovoltaic power generation-100%
Yichang CSG New Energy Co., LtdYichang, PRCYichang, PRCClean energy development, photovoltaic power generation-100%
Shenzhen CSG Display:Shenzhen, PRCShenzhen, PRCProduction and sales of display component products60.80%-
Xianning CSG PhotoelectricXianning, PRCXianning, PRCPhotoelectric glass and high aluminium glass50%50%
Zhaoqing Energy Saving CompanyZhaoqing PRCZhaoping PRCProduction and sales of various special glasses100%
Zhaoqing Automobile CompanyZhaoqing PRCZhaoqing PRCProduction and sales of various special glasses100%

6 Interest in subsidiaries (Cont'd)

(1) Interest in subsidiaries (Cont'd)

(b) Subsidiaries with significant minority interests

SubsidiariesShareholding of minority shareholdersProfit or loss attributable to minority shareholders for the year ended 31 December 2019Dividends distributed to minority shareholders for the year ended 31 December 2019Minority interests as at 31 December 2019
Shenzhen CSG Display39.20%22,162,525-340,965,381

The major financial information of the significant non-fully-owned subsidiaries of the Group is listed below:

31 December 2019
Current assetsNon-current assetsTotal assetsCurrent liabilitiesNon-current liabilitiesTotal liabilities
Shenzhen CSG Display215,814,0811,426,057,3401,641,871,421612,571,719118,439,954731,011,673
- 159 -
2019
RevenueNet profitTotal comprehensive incomeCash flows from operating activities
Shenzhen CSG Display561,179,16865,100,00665,100,00698,934,841

7Segment information

-The Group's business activities are classifcated by product and service as follows:

- Glass segment, engaged in production and sales of float glass and engineering glass and the silica

for the production thereof, etc.- Solar energy segment, engaged in manufacturing and sales of polycrystalline silicon and solar

battery and applications, etc.- Electronic glass and display segment is responsible for production and sales of display components

and special ultra-thin glass products, etc.

The reportable segments of the Group are the business units that provide different products or service.Different businesses require different technologies and marketing strategies. The Group, therefore,separately manages the production and operation of each reportable segment and Estimates their operatingresults respectively, in order to make decisions about resources to be allocated to these segments and toassess 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. Theliabilities are allocated based on the operations of the segment. Expenses indirectly attributable to eachsegment are allocated to the segments based on the proportion of each segment?s revenue.

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7 Segment information (Cont’d)

(a) Segment information as at and for the year ended 31 December 2019 is as follows:

Flat glassElectronic glass and displaysSolar energyOthersUnallocatedEliminationTotal
Revenue from external customers7,919,060,5041,041,459,5121,499,613,429-11,894,654-10,472,028,099
Inter-segment revenue60,720,1112,748,55842,593,191-70,311,058(176,372,918)-
Interest income2,298,7831,462,028255,368111,51932,814,811-36,942,509
Interest expenses(106,131,665)(25,138,973)(34,842,227)-(153,625,419)146,534(319,591,750)
Asset impairment losses(599,105)-(401,103,180)-(61,622,400)-(463,324,685)
Credit impairment loss(14,142,940)(131,168)(5,826,252)(65,127)51,454(20,114,033)
Depreciation and amortisation expenses(613,199,303)(185,107,441)(168,524,801)(24,155)(5,919,059)-(972,774,759)
Total profit/(loss)1,075,860,225237,606,588(395,689,706)(997,765)(254,672,715)-662,106,627
Income tax (expenses)/income(141,068,203)(30,038,136)67,558,364242,9211,618,004-(101,687,050)
Net profit/(loss)934,792,022207,568,452(328,131,342)(754,844)(253,054,711)-560,419,577
Total assets8,101,022,4623,293,542,7743,989,824,2649,179,7152,807,666,744-18,201,235,959
Total liabilities2,190,661,316757,717,011594,782,2843,021,4444,789,198,376-8,335,380,431
Increase in non-current assets190,498,106143,904,520189,301,563-3,954,944-527,659,133
- 161 -

7 Segment information (Cont’d)

(b) Segment information as at and for the year ended 31 December 2018 is as follows:

Flat glassElectronic glass and displaysSolar energyOthersUnallocatedEliminationTotal
Revenue from external customers7,348,784,136959,296,7612,300,739,737-1,142,377-10,609,963,011
Inter-segment revenue104,770,988778,66741,036,737-57,758,560(204,344,952)-
Interest income3,071,723173,121458,67462158,153,396-61,857,535
Interest expenses(166,301,267)(18,270,988)( 84,347,386 )-(132,907,678)200,252(401,627,067)
Asset impairment losses(427,608)(34,175)(115,389,417)-(20,694,950)-(136,546,150)
Depreciation and amortisation expenses(596,848,697)(143,796,422)(270,419,285)(24,083)( 7,062,572)-(1,018,151,059)
Total profit/(loss)915,309,261163,147,030(296,236,904)(25,076)(235,891,805)(1,705,627)544,596,879
Income tax (expenses)/income(113,371,067)(20,814,888)58,961,350-2,836,314-(72,388,291)
Net profit/(loss)801,938,194142,332,142(237,275,554)(25,076)(233,055,491)(1,705,627)472,208,588
Total assets8,463,669,9983,209,225,1234,665,311,805641,3342,775,385,924-19,114,234,184
Total liabilities3,064,099,160831,715,5061,050,655,9952,504,4004,715,826,661-9,664,801,722
Increase in non-current assets358,628,578170,767,43967,224,833-4,861,828-601,482,678
- 162 -

7 Segment information (Cont’d)

The Group?s revenue from external customers domestically and in foreign countries or geographicalareas, and the total non-current assets other than financial assets and deferred tax assets locateddomestically and in foreign countries or geographical areas are as follows:

Revenue from external customers20192018
Mainland9,123,825,2139,151,411,893
Overseas1,348,202,8861,458,551,118
10,472,028,09910,609,963,011
Total non-current assets31 December 201931 December 2018
Mainland13,249,557,84014,033,948,714
Hong Kong, PRC12,535,21912,647,783
13,262,093,05914,046,596,497

No revenue from a single customer exceeded 10% or more of the Group?s revenue.

8 Related parties and related party transactions

(1) Information of the parent company

The Company regards no entity as the parent company.

(2) The subsidiaries

The general information and other related information of the subsidiaries are set out in Note 6(1).

(3) The associates

On December 31, 2019, the Company has no joint venture.

- 163 -

8 Related parties and related party transactions (Cont’d)

(4) Other related parties information

Relationship with the Group
Shenzhen JushenghuaCo.,Ltd. (“Jushenghua”)Persons acting in concert with the first majority shareholder of the Group
Shenzhen QianhaiRuinan Investment LLPControlled by the former key management personnel of the Croup
Xinjiang Qianhai United Property & Casualty InsuranceRelated parties of group shareholders

(5) Related party transactions

(a) Purchase and sales of goods, provision and receiving of labour

None

(b) Leases

None

(c) Gains on equity transfer

None

(d) Acquisition of equity

None

(e) Advances paid on behalf of related parties

None

(f) Remuneration of key management

20192018
Remuneration21,940,80023,846,000

(g) Other

Related partiesRelated party transactions20192018
Shenzhen QianhaiRuinan Investment LLPBuy life insurance for employees3,567,9102,515,064
Xinjiang Qianhai United Property & Casualty InsuranceBuy car insurance for employees235,095481,505
3,803,0052,996,569

8 Related parties and related party transactions (Cont’d)

- 164 -

(6) Accounts receivable from related parties

None

(7) Commitments in relation to related parties

The commitments in relation to related parties contracted for but not yet necessary to be recognisedon the balance sheet by the Group as at the balance sheet date are as follows:

Related partiesRelated party transactionsRestrictive terms on borrowings20192018
Shenzhen Jushenghua Co., Ltd. (“Jushenghua”)Facility of interest-free loans provided for the CompanyNil2,000,000,0002,000,000,000

On 22 November 2016, the Company received a letter from its shareholder, Jushenghua, stating thatto support the Group?s steady operation and development, Jushenghua, as the shareholder of theCompany, would like to offer interest-free borrowings with the total amount of RMB2 billion to theCompany or through related parties designated by it. For any borrowing drawn, its repayment date isnegotiated by the Company and Jushenghua upon withdrawal. When a borrowing is due, if anextension 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 extendedaccordingly.The shareholder provided nil interest free loan to the groupin 2019.

9 Share Payment

1. Overall situation of share payment

The total number of various equity instruments that have repurchased in the current period38,925,482shares
Total amount of various equity instruments that the company exercises during the current period3,909,350shares
The total number of equity instruments granted by the company in the current period Restricted shares-

Note: On December 11, 2017, reviewed and approved by the Group's eighth session of the Board ofDirectors, the Group implemented the 2017 A Share Restricted Stock Incentive Plan. The incentivetargets for the restricted shares granted under this plan include company directors and seniormanagement personnel. A total of 454 core management teams, company technology members andmain employees. The first grant date of this restricted stock was December 11, 2017. The companygranted 97,511,654 restricted shares for the first time to 454 incentive targets. The initial grant pricewas 4.28RMB per share. Reserved restricted stock ending balance 17,046,869 shares, the grant pricehas not been determined. The shares granted of the first time has been registered and listed.

By the 2nd temporary meeting of shareholders held on 6th August 2018,the company decided torepurchase and cancel the still-restricted shares which have already been granted to and held by 15recipients no longer qualified for “incentive plan” due to either resignation or position adjustment3,319,057 shares were repurchased and cancelled, The company has finished above cancellations ofthe restricted shares by September 10 2018.

9 Share Payment (Cont’d)

1.Overall situation of share payment (Cont'd)

- 165 -

The Company held the 8th temporary meeting of Board member members on September 13, 2018 ,which reviewed and approved September 13, 2018 to be the shares granting date and 75 recipients tobe granted9,826,580restricted shares in total.

The Company held the 8th temporary meeting of Board member members on December 12, 2018 ,which reviewed and approved the releasing conditions on the first- time expiring trading restrictions ofthe initial part of the incentive plan on restricted shares from ordinary A . A total of 431 recipients of theincentive plan were able to fullfil the conditions. The amount of 43,353,050 shares could be releasedfrom restrictions.

On December 12, 2018, the company held the 8th meeting of the 8th board of directors, and themeeting of the 8th board of supervisors. The meetings approved the “Proposal concerning therepurchase and cancellation of some restricted shares from the ‘incentive plan’ of restrictedshares”, and the meetings approved to repurchase and cancel a total of 436,719 restricted shareswhich have already been granted to and held by 8 recipients who are unqualified for the “incentiveplan”. this was reviewed and approved by the third temporary meeting of shareholders on December28 2018. The cancellations of above restricted shares have been finished.

On April 16, 2019, the company held the 8th meeting of the 8th board of directors, and the 8th meetingof the 8th board of supervisors. The meetings approved the “Proposal concerning the repurchaseand 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 3,473,329restricted shares which have already been granted to and held by 14 recipients who are unqualified forthe “incentive plan”, and repurchase and cancel a total of 33,734,276 restricted shares failing tomeet the second-term unlocking condition from 483 “incentive” recipients. Independent directorsagreed 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 have been accomplished.

On September 16 2019, the Company held the 8th temporary meeting of Board members and the 8thtemporary meeting of Supervisors. The meetings reviewed and approved the “Proposal concerningthe repurchase and cancellation of some restricted shares from the ‘incentive plan’ of restrictedshares”. The meetings approved to repurchase and cancel a total of 1,281,158 restricted shareswhich 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.The cancellations of above restricted shares have not been finished yet.

On September 16 2019,the Company held the 8th temporary meeting of Board member members andthe 8th temporary meeting of Supervisors , which reviewed and approved thereleasingconditionsonthe first-timeexpiringtradingrestrictionsoftheinitialpartoftheincentiveplanonrestrictedsharesfromordinaryA.Atotalof71recipientsoftheincentiveplanwereableto fulfil theconditions.Theamountof3,909,350 shares could be released from restrictions.TherestrictedshareswasreleasedandlistedbycompanyonSeptember25 2019.

This incentive plan is valid for 48 months from the date of grant of the restricted stock to the date ofunlocking of all restricted stocks or the completion of repurchase and cancellation. During theunlocking/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.

9 Share Payment (Cont’d)

1.Overall situation of share payment (Cont'd)

The unlock period is shown in the following table:

Unlock ScheduleUnlock TimeUnlock Ratio
- 166 -
First unlockfrom the date of the first transaction 12 months after the award date to the date of the last transaction within 24 months from the grant date.40%
Second unlockfrom the date of the first trading day 24 months after the grant date to the date of the last trading day within 36 months from the grant date30%
Third unlock

2. Equity-settled share payment

30%Method for Determining the Fair Value ofEquity Instruments on the Grant Date

Method for Determining the Fair Value of Equity Instruments on the Grant DateBlack-Scholes Model
Determination of the best estimate of the number of vesting equity instrumentsBased on the latest information on the change in the number of exercisable rights and the completion of performance indicators, the number of equity instruments that are expected to be exercised is revised.
Reasons for significant differences between current estimates and previous estimatesNot applicable
Cumulative amount of equity-settled share-based payment in capital reserves128,276,983
Total equity confirmed by equity-settled share-based payment in this period(24,195,870)

According to the relevant provisions of Accounting Standards for Business Enterprises No. 11 - SharePayment and Enterprise Accounting Standard No. 22 - Recognition and Measurement of FinancialInstruments, the Group uses the Black-Scholes model (BS model) as a pricing model, deductingincentive objects. The fair value of the restricted stock will be used after the lock-in costs that arerequired 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 restrictedstocks that are expected to be unlockable based on the newly obtained changes in the number ofunlockable persons and performance indicators, and follow the fair value of the restricted stock grantdate. The services obtained during the current period are included in the relevant costs or expensesand capital surplus.

The Group actually granted restricted stocks of 97,511,654 shares in 2017, and the total fair value ofthe 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 stagesaccording to the unlocking/exercise ratio during the implementation of the equity incentive plan, andwill be included in the "management fees and Construction in progress and capital surplus-othercapital surplus " of each period accordingly.

By the 2nd temporary meeting of shareholders held on 6th August 2018,the company decided torepurchase and cancel the still-restricted shares which have already been granted to and held by 15recipients no longer qualified for “incentive plan” due to either resignation or position adjustment3,319,057 shares were repurchased and cancelled, The company has finished above cancellations ofthe restricted shares by September 10 2018.

9 Share Payment (Cont’d)

2.Equity-settled share payment(Cont'd)

The Company held the 8th temporary meeting of Board member members on September 13, 2018 ,which reviewed and approved September 13, 2018 to be the shares granting date and 75 recipients tobe granted 9,826,580 restricted shares in total.

The Company held the 8th temporary meeting of Board member members on December 12, 2018 ,which reviewed and approved the releasing conditions on the first- time expiring trading restrictions of

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the initial part of the incentive plan on restricted shares from ordinary A during 2017. A total of 431recipients of the incentive plan were able to fullfil the conditions. The amount of43,353,050sharescould be released from restrictions. The restricted shares was released and listed by company onDecember 21 2018.

On December 12, 2018, the company held the 8th meeting of the 8th board of directors, and the 8thmeeting of the 8th board of supervisors. The meetings approved the “Proposal concerning therepurchase and cancellation of some restricted shares from the ‘incentive plan’ of restrictedshares”, and the meetings approved to repurchase and cancel a total of 436,719 restricted shareswhich have already been granted to and held by 8 recipients who are unqualified for the “incentiveplan”. this was reviewed and approved by the third temporary meeting of shareholders on December28 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 postlock-up period for the restricted shares incentive plan for 2017 and for the second post lock-up periodfor the restricted shares incentive plan for 2018 were not met. Therefore, by year end ,expenses forthe 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 directors, and the 8th meetingof the 8th board of supervisors. The meetings approved the “Proposal concerning the repurchaseand 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 3,473,329restricted shares which have already been granted to and held by 14 recipients who are unqualified forthe “incentive plan”, and repurchase and cancel a total of 33,734,276 restricted shares failing tomeet the second-term unlocking condition from 483 “incentive” recipients. Independent directorsagreed 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 have been accomplished.

On September 16 2019, the Company held the 8th temporary meeting of Board members and the 8thtemporary meeting of Supervisors. The meetings reviewed and approved the “Proposal concerningthe repurchase and cancellation of some restricted shares from the ‘incentive plan’ of restrictedshares”. The meetings approved to repurchase and cancel a total of 1,281,158 restricted shareswhich 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.The cancellations of above restricted shares have not been finished yet.

On September 16 2019,the Company held the 8th temporary meeting of Board member members andthe 8th temporary meeting of Supervisors , which reviewed and approved thereleasingconditionsonthe first-timeexpiringtradingrestrictionsoftheinitialpartoftheincentiveplanonrestrictedsharesfromordinaryA.Atotalof71recipientsoftheincentiveplanwereableto fulfil theconditions.Theamountof3,909,350 shares could be released from restrictions.TherestrictedshareswasreleasedandlistedbycompanyonSeptember25 2019

9 Share Payment (Cont’d)

2.Equity-settled share payment(Cont'd)

This year, due to the equity incentive plan, the share payment fee of RMB 24,845,972 was confirmedaccording to the plan. Due to an underperformance, a reverse to the third term share-based paymentis RMB 49,041,842.

10 Contingencies

Nil.

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11 Commitments

(1) Capital commitments

Capital expenditures contracted for by the Group at the balance sheet date but are not yet necessaryto be recognized on the balance sheet are as follows:

31 December 201931 December 2018
Buildings, machinery and equipment491,835,351130,748,435

(2) Operating lease commitments

The future minimum lease payments due under the signed irrevocable operating leases contracts aresummarized as follows:

31 December 201931 December 2018
Within 1 year2,457,10019,016,297
1 to 2 years1,412,64216,993,654
2 to 3 years652,80416,654,854
Over 3 years60,0001,093,859
4,582,54653,758,664

12 Events after the balance sheet date

(a) Statement of profit distribution after balance sheet date

Amount
Proposed distribution of cash dividends217,484,050

According to the resolution of the board of directors on April 28, 2020, the board of directors proposedthat the company distribute a cash dividend of RMB 217,484,050to all shareholders. This proposal isapproving by the general meeting of shareholders. The cash dividend proposed after the balance sheetdate has not been confirmed in this financial statement as a liability.

(b) Issue corporate bonds

On February 24, 2020, the eighth interim meeting of the board of directors of the company reviewed andapproved the proposed public issue of RMB 1.8 billion of corporate bonds for the purpose of adjustingthe debt structure and supplementing working capital.

On March 30, 2020, the company's "20 CSG 01" 2 billion bond was listed on the Shenzhen StockExchange.

(c) Proposed construction project

LocationProjectTotal planned investment
Fengyang county, anhui provinceLightweight high-transparent panel manufacturing base for solar equipment3.73902 billion
Fengyang county, anhui provinceAnnual output of 0.6 million tons of low-iron (ultra-white) quartz For the sand production base0.73999 billion
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(d) Non-public offering

ContentThe effected amount of financial status and operating resultsUnable to estimate the impact reason
Non-public offering-Issuance and the issue price are not determined

13 Other significant events

(1) 171 million special funds for the introduction of talents was follow-up progress.

(a) Matter description

As at December 10, 2012, the People's Government of Yichang City and the Company signed theCooperation Agreement on Fine Glass and Ultrathin Electronic Glass Project ;The managementcommittee of Yichang High-tech Industrial Development Zone agreed to establish a RMB 171 milliontalent fund as a special fund subsidy for the introduction of talents and the placement of talented people.The company of Yichang CSG PolysSiliconCo.Ltd. is responsible for formulating the housingresettlement subsidy program and supervising the use of this special fund.The funds were subsidizedby the government to the company, but Yichang CSG PolysSiliconCo., Ltd. received this amount andtransferred it to YichangHongtai Real Estate Co., Ltd. in full amount without proper approval from thecompany's board of directors and other relevant authorities. ( YichangHongtai Real Estate Co.,Ltd. is acompany jointly indirect controlled bypart of the former natural executives of the company. Thecompany has no equity relationship with the company ) .Yichang CSG PolysSiliconCo., Ltd. receivedthe above fund and transferred it to YichangHongtai Real Estate Co., Ltd. in full and also handled theaccounting treatment according to the collecting and paying. In 2017, Prior period accounting error fromabove matters was corrected by company.

(b) Subsequent progress

It is be heard that the Shenzhen People's Procuratorate has filed a public prosecution with theShenzhen Intermediate People's Court for Zeng Nan and others' crimes of breach of trust to damagethe interests of listed companies .This case has been filed by the court of Shenzhen IntermediatePeople's Court and is currently being heard.

(c) Receivable talent fund from YichangHongtai Real Estate Co., Ltd.

December 31, 2019December 31, 2018
Book balanceBad debt preparationBook balanceBad debt preparation
Other receivablesYichangHongtaiReal EstateCompany171,000,000(3,420,000)171,000,000(3,420,000)

14 Financial instrument and risk

The Group's activities expose it to a variety of financial risks: market risk (primarily foreign exchange riskand interest rate risk), credit risk and liquidity risk. The Group's overall risk management programfocuses on the unpredictability of financial market and seeks to reduce potential adverse effects on theGroup's financial performance.

(1) Market risk

(a) Foreign exchange risk

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The Group?s major operational activities are carried out in Mainland China and a majority of thetransactions are denominated in RMB. Some export business, however, is denominated in foreigncurrencies. In addition, the Group is exposed to foreign exchange risk arising from the recognizedassets and liabilities, and future transactions denominated in foreign currencies, primarily with respectto US dollars andHong Kong dollar. The Group monitors the scale of foreign currency transactions,foreign currency assets and liabilities, and adjust settlement currency of export business, to furthestreduce the currency risk.

14 Financial instrument and risk (Cont’d)

(1) Market risk (Cont'd)

On 31 December 2019, book values in RMB equivalent of the Group?s assets and liabilitiesdenominated in foreign currencies are summarized below:

31 December 2019
USDHKDOthersTotal
Financial assets denominated in foreign currency -
Cash at bank and on hand41,907,5733,907,829354,58946,169,991
Receivables80,789,7581,487,7157,527,04589,804,518
122,697,3315,395,5447,881,634135,974,509
Financial liabilities denominated in foreign currency -
Short-term borrowings4,938,41067,185,000-72,123,410
Payables39,609,46227511,628,25351,237,990
44,547,87267,185,27511,628,253123,361,400
31 December 2018
USDHKDOthersTotal
Financial assets denominated in foreign currency -
Cash at bank and on hand81,350,5251,383,5941,304,92584,039,044
Receivables118,697,7951,372,8727,429,706127,500,373
200,048,3202,756,4668,734,631211,539,417
Financial liabilities denominated in foreign currency -
Short-term borrowings-65,715,000-65,715,000
Payables56,170,81726912,397,08068,568,166
56,170,81765,715,26912,397,080134,283,166

On 31 December 2019, if the currency had strengthened/weakened by 10% against the USD while allother variables had been held constant, the Group?s net profit for the year would have beenapproximately RMB6,642,704lower/higher (31 December 2018: approximately RMB12,229,588lower/higher) for various financial assets and liabilities denominated in USD.

On 31 December 2019, if the currency had strengthened/weakened by 10% against the HKD while allother variables had been held constant, the Group?s net profit for the year would have beenapproximately RMB5,252,127higher/lower (31 December 2018: approximatelyRMB5,351,498higher/lower ) for various financial assets and liabilities denominated in HKD.

Other changes in exchange rate had no significant impact on the Group's operating activities.

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14 Financial instrument and risk (Cont’d)

(b) Foreign exchange risk

The Group's interest rate risk arises from long-term interest bearing debts including long-termborrowings and bonds payable. Financial liabilities issued at floating rates expose the Group to cashflow interest rate risk. Financial liabilities issued at fixed rates expose the Group to fair value interestrate risk. The Group determines the relative proportions of its fixed rate and floating rate contractsdepending on the prevailing market conditions. As at 31 December 2019, the Group?s long-terminterest-bearing debts at and fixed rates and floating rates are illustrated below:

31 December 201931 December 2018
Debt at fixed rates951,975,0002,258,325,000
Debt at floating rates368,250,00057,375,000
1,320,225,0002,315,700,000

The Group continuously monitors the interest rate position of the Group. Increases in interest rates willincrease the cost of new borrowing and the interest expenses with respect to the Group?s outstandingfloating rate borrowings, and therefore could have a material adverse effect on the Group?s financialposition. The Group makes adjustments timely with reference to the latest market conditions, whichincludes increasing/decreasing long-term fixed rate debts at the anticipation of increasing/decreasinginterest rate.

(2) Credit risk

Credit risk is managed on the grouping basis. Credit risk mainly arises from cash at bank, notesreceivable, accounts receivable, other receivables.

The Group expects that there is no significant credit risk associated with cash at bank since they aremainly deposited at state-owned banks and other medium or large size listed banks. Managementdoes 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 shouldbe limited.

In addition, the Group has policies to limit the credit exposure on accounts receivable, otherreceivables and trade acceptance notes receivable. The Group assesses the credit quality of and setscredit limits on its customers by taking into account their financial position, the availability of guaranteefrom third parties, their credit history and other factors such as current market conditions. The credithistory of the customers is regularly monitored by the Group. In respect of customers with a poor credithistory, the Group will use written payment reminders, or shorten or cancel credit periods, to ensurethe overall credit risk of the Group is limited to a controllable extent.

14 Financial instrument and risk (Cont’d)

(3) Liquidity risk

Cash flow forecasting is performed by each subsidiary of the Group and aggregated by the Group?sfinance department in its headquarters. The Group?s finance department at its headquarters monitorsrolling forecasts of the Group's short-term and long-term liquidity requirements to ensure it hassufficient cash reserve, while maintaining sufficient headroom on its undrawn committed borrowingfacilities from major financial institutions so that the Group does not breach borrowing limits orcovenants on any of its borrowing facilities to meet the short-term and long-term liquidity requirements.

As stated in Note 2(1) above, as at 31 December 2019, the Group had net current liabilities ofapproximately RMB1.65 billion and committed capital expenditures of approximately RMB0.492 billion.

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Management will implement the following measures to ensure the liquidation risk limited to acontrollable 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 theexisting bank facilities;(c) The Group will closely monitoring the payment of construction expenditure in terms of paymenttime and amount.

The financial liabilities of the Group at the balance sheet date are analyzed by their maturity datebelow at their undiscounted contractual cash flows:

31 December 2019
Within 1 year1 to 2 years2 to 5yearsOver 5 yearsTotal