ANNUAL REPORT 2017
Chairman of the Board:
CHEN LIN
April 2018
CSG Annual Report 2017
Section I Important Notice, Content and Paraphrase
Board 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. Pan Yonghong, responsible person in charge ofaccounting and Ms.Wang Wenxin, principal of the financial department (accounting officer)confirm that the Financial Report enclosed in this 2017 Annual Report is true, accurate andcomplete.Except for the following director, other directors personally attended the meeting of the Board ofDirectors deliberating this Annual Report.
| Director’ Name who did not attend in person | Director’ Title who did not attend in person | Failure to attend the meeting in person | The name of the trustee |
| Zhang Jinshun | Director | Due to business trip | Chen Lin |
This report involves future plans and some other forward-looking statements, which shall not beconsidered as virtual promises to investors. Investors are kindly reminded to pay attention topossible risks.Details of the risk factors and countermeasures of future development have been well-described inthis report, please find in Section IV Business Discussion and Analysis.The deliberated and approved plan of profit distribution and capital reserve converted into sharecapital in the Board Meeting is distributing cash dividend of RMB 0.5 (tax included) for every 10shares to all shareholders based on 2,484,147,547 shares of the total share capital while dividendswill be distributed. Meanwhile the Company will transfer capital reserve into capital with 1.5 sharesfor every 10 shares to all shareholders based on 2,484,147,547 shares of the total share capital.This report is prepared both in Chinese and English. Should there be any inconsistency between theChinese and English versions, the Chinese version shall prevail.
CSG Annual Report 2017
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 .................................................................................................. 11
Section V. Important Events .............................................................................................................................. 33
Section VI. Changes in Shares and Particulars about Shareholders ............................................................. 50
Section VII. Particulars about Directors, Supervisors and Senior Executives and Employees ................... 62
Section VIII. Corporate Governance ................................................................................................................ 74
Section IX. Corporate Bonds ............................................................................................................................. 84
Section X. Financial Report ............................................................................................................................... 87
Section XI. Documents Available for Reference ............................................................................................ 307
CSG Annual Report 2017
Paraphrase
| Items | Refers to | Contents |
| Company, the Company, CSG or the Group | Refers to | CSG Holding Co., Ltd. |
| Foresea Life | Refers to | Foresea Life Insurance Co., Ltd. |
| Ultra-thin electronic glass | Refers to | The electronic glass with thickness between 0.1~1.1mm |
| Second-generation energy-saving glass | Refers to | Double silver coated glass |
| Third-generation energy-saving glass | Refers to | Triple silver coated glass |
CSG Annual Report 2017
Section II Company Profile & Financial Highlights
I. Company information
| Code for A-share | 000012 | Code for B-share | 200012 |
| Short form for A-share | Southern Glass A | Short form for B-share | Southern Glass B |
| Listing stock exchange | Shenzhen Stock Exchange | ||
| Legal Chinese name of the Company | 中国南玻集团股份有限公司 | ||
| Abbr. of legal Chinese name of the Company | 南玻集团 | ||
| Legal English name of the Company | CSG Holding Co., Ltd. | ||
| Abbr. of legal English name of the Company | CSG | ||
| Legal Representative | Chen Lin | ||
| Registered Add. | CSG Building, No.1, the 6th Industrial Road, Shekou, Shenzhen, P. R.C. | ||
| Post Code | 518067 | ||
| Office Add. | CSG Building, No.1, the 6th Industrial Road, Shekou, Shenzhen, P. R.C. | ||
| Post Code | 518067 | ||
| Internet website | www.csgholding.com | ||
| securities@csgholding.com | |||
II. Person/Way to contact
| Secretary of the Board | Representative of security affairs | |
| Name | Yang Xinyu | |
| Contacts add. | CSG Building, No.1 of the 6th Industrial Road, Shekou, Shenzhen, P. R.C. | |
| Tel. | (86)755-26860666 | |
| Fax. | (86)755-26860685 | |
| securities@csgholding.com |
III. Information disclosure and preparation place
| Newspapers for information disclosure | Securities Times, China Securities Journal, ShangHai Securities News, Securities Daily and Hong Kong Comercial Daily |
| Website assigned by CSRC to release the annual report | www.cninfo.com.cn |
| The place for preparation of the annual report | Office of the Board of Directors |
IV. Registration changes of the Company
| Organization code | Unified social credit code: 914403006188385775 |
CSG Annual Report 2017
| 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 firm | Asia Pacific (Group) CPAs (special general partnership) |
| Offices add. for CPA firm | Room 301, building 1, No. 9, Che Gong Zhuang Street, Xicheng District, Beijing, China |
| Signing Accountants | Pan Qian, Zhang Yan |
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 indexes
Whether it has retroactive adjustment or re-statement on previous accounting data for accounting policy changed and accountingerror correction or not
√Yes □ No
Retrospective adjustment or restatement reason: correction of accounting errors
| 2017 | 2016 | Changes over last year (%) | 2015 | |||
| Before adjusted | After adjusted | After adjusted | Before adjusted | After adjusted | ||
| Operating income (RMB) | 10,879,400,746 | 8,974,083,407 | 8,974,083,407 | 21.23% | 7,430,889,111 | 7,430,889,111 |
| Net profit attributable to shareholders of the listed company (RMB) | 825,388,312 | 797,721,576 | 797,721,576 | 3.47% | 532,653,110 | 532,653,110 |
| Net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses (RMB) | 745,373,108 | 776,950,973 | 776,950,973 | -4.06% | 299,683,946 | 299,683,946 |
| Net cash flow arising from operating activities (RMB) | 2,463,446,156 | 2,240,852,120 | 2,240,852,120 | 9.93% | 1,092,832,497 | 1,092,832,497 |
| Basic earnings per share (RMB/Share) | 0.35 | 0.38 | 0.33 | 6.06% | 0.26 | 0.26 |
| Diluted earnings per share (RMB/Share) | 0.35 | 0.38 | 0.33 | 6.06% | 0.26 | 0.26 |
| Weighted average ROE (%) | 10.15% | 10.32% | 10.33% | -0.18% | 6.72% | 6.72% |
CSG Annual Report 2017
| As at 31 Dec. 2017 | As at 31 Dec. 2016 | Changes over the end of last year | As at 31 Dec. 2015 | |||
| Before adjusted | After adjusted | After adjusted | Before adjusted | After adjusted | ||
| Total assets (RMB) | 19,535,002,368 | 16,979,235,630 | 17,146,815,630 | 13.93% | 15,489,600,160 | 15,657,180,160 |
| Net assets attributable to shareholders of the listed company (RMB) | 8,458,587,873 | 7,812,335,004 | 7,808,915,004 | 8.32% | 7,645,810,997 | 7,642,390,997 |
| The total share capital of the company as of the previous trading day of disclosure ( share ) | 2,484,147,547 | |||||
| Fully diluted earnings per share calculated with latest equity ( RMB/share ) | 0.33 | |||||
Reasons for Changes in Accounting Policies and Correction of Accounting Errors:
For details, please refer to “Section V. Important Events: VI. Comparing Accounting Statements, Accounting Estimates andAccounting Methods with the Financial Statements of the Previous Year” and “Section X. Financial Statements: the 31st item of the
correction of accounting errors of previous report periods in V. Significant Accounting Policies and Accounting Error."
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.
VIII. Main financial indexes by quarter
Unit: RMB
| Q1 | Q2 | Q3 | Q4 | |
| Operating income | 2,284,820,940 | 2,659,516,921 | 2,846,570,536 | 3,088,492,349 |
| Net profit attributable to shareholders of the listed company | 170,130,942 | 222,861,221 | 318,019,208 | 114,376,941 |
| Net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses | 149,271,133 | 211,674,111 | 278,181,102 | 106,246,762 |
| Net cash flow arising from operating activities | 435,937,189 | 583,952,265 | 768,209,238 | 675,347,464 |
Whether there are significant differences between the above-mentioned financial index or its total number and the relevant financial
index disclosed in the Company’s quarterly report and semi-annual report or not□Yes √ No
CSG Annual Report 2017
IX. Items and amounts of extraordinary gains/losses
√Applicable □ Not applicable
Unit: RMB
| Item | 2017 | 2016 | 2015 | Note |
| Gains/losses from the disposal of non-current asset (including the write-off that accrued for impairment of assets) | -1,768,993 | -1,759,358 | 2,441,151 | -- |
| 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) | 87,875,417 | 91,627,439 | 81,013,548 | -- |
| Gains on disposal of available-for-sale financial assets, gains and losses from change of fair values of held-for-transaction financial assets and financial liabilities except for the effective hedge business related to normal business of the Company, and investment income from disposal of transactional financial assets and liabilities and financial assets available for sale | 427,636 | -9,850,256 | 103,759,395 | -- |
| Other non-operating income and expenditure except for the aforementioned items | 12,076,848 | 1,306,284 | 33,268,175 | -- |
| Other gains/losses satisfied definition of extraordinary profit (gains)/loss | -45,909,181 | 100,146,152 | -- | |
| Less: Impact on income tax | 16,209,135 | 14,327,585 | 86,288,731 | -- |
| Impact on minority shareholders’ equity (post-tax) | 2,386,569 | 316,740 | 1,370,526 | -- |
| Total | 80,015,204 | 20,770,603 | 232,969,164 | -- |
During the reporting period, the Company did not exist in the case of a non recurrent profit and loss item defined as a regular profitand loss project, which was defined and enumerated according to the lists of extraordinary profit (gain)/loss in Q&A AnnouncementNo.1 on Information Disclosure for Companies Offering Their Securities to the Public --- Extraordinary Profit/loss.
CSG Annual Report 2017
Section III Overview of the Company’s Business
I. Main business of the Company in the report period
CSG is a leading domestic brand of energy-saving glass and a renowned brand of solar PV products and display devices. Its productsand technologies are very popular at home and abroad. Its main business covers R&D, manufacturing and sales of high quality floatglass and architectural glass, solar glass, silicon material, renewable energy products such as PV battery and modules, and newmaterials and information display products such as ultra-thin electronic glass and display devices. It also provides one-stop servicessuch as project development, construction, operation and maintenance of solar photovoltaic power plants.
Flat glass industry
CSG now has 10 float glass production lines representing the most advanced technology in domestic market and 2 solar glassproduction lines. The annual capacity of various high-grade float glass has reached more than 2.32 million tons and the annualcapacity of solar rolled glass has reached over 0.43 million tons. The Company owns quartz sand raw material bases in Jiangyou,Sichuan Province and Yingde, Guangdong Province. The production bases for flat glass, solar glass of the Company located inDongguan, Chengdu, Langfang, Wujiang, and Xianning, which can produce various colors of high-grade float glass and ultra-clearfloat glass with thickness from 1.3mm to 25mm. Those products are widely used in high-grade buildings, decoration and furniture,mirror, automotive windshield, scanner, copier, PDP TV, rear-projection television, display devices and solar energy field, eachperformance indicator of which has reached domestic advanced level.The Company always adheres to innovation, transformation and upgrading, and further enhances the profitability of flat glassindustry by the implementation of differentiated competitive strategy. In 2017, the second-line technological transformation projectof the subsidiary Hebei CSG was successfully completed and entered commercial operations. The original float glass production linewas transformed into a structure with one melter and two production lines, which can simultaneously produce two types of float glassto satisfy different specifications and requirements and thus significantly improve the flexibility of production line. The first-linetechnological transformation project of its subsidiary Chengdu CSG has succeeded which is targeted to produce high quality autoglass. The technology transformation and operation of such two production lines of float gloss shall further improve the competencyof CSG in the market of flat glass.
Architectural glass industry
As the nation's largest supplier of high-grade engineering and architectural glass, CSG has five architectural and energy-saving glassprocessing centers which are located in Tianjin, Dongguan, Xianning, Wujiang and Chengdu. The Company possesses the world'smost advanced glass deep-processing equipment and testing instruments, and its products cover all kinds of architectural glass. R&D
and use of coating technology of the Company keep pace with the world and its technology of high end product is even of the world’s
leading level. Following the second generation of energy-saving glass products, the Company has successively developed the thirdgeneration and multi-function energy-saving glass products with continuous improving energy-saving and heat-preservation effect.Itshigh-quality energy-saving LOW-E insulating glass has occupied more than 50% of the domestic high-end market. At present, the
Company’s LOW-E coated insulating glass and LOW-E coated glass have reached annual capacity of more than 16.00 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 by organizations
of UK AOQC and Australia QAS. The product quality which meets the national standards of the US, the UK and Australia enablesCSG has an advantage in the international tendering and bidding. Since 1988, CSG's engineers and technicians have beencontinuously participating in the formulation and compilation of various national standards and industry standards. Varioushigh-quality architectural glass of the Company has been used in many landmark buildings at home and abroad, such as BeijingCapital International Airport, CCTV, Shanghai Oriental Fisherman's Wharf, China Resources Headquarters Building, Shenzhen
CSG Annual Report 2017
KingKey100 Building, Shenzhen Bay Science and Technology Ecological Park, Ping An International Finance Centre, AnhuiRadio-Television New Center, Hangzhou International Airport, Yaxia Headquarters Building, Chengdu International Finance Centre,Hangzhou Hampton and other more than ten Hilton Hotel, Hong Kong Four Seasons Hotel, Melbourne Airport, Midtown,
International Centre of Abu Dhabi.
Solar Energy industry
CSG has entered solar photovoltaic industry since 2005 and is one of enterprises which first enter the field in China. After more thanten years of construction, operation and technological upgrading, CSG has built an industry chain in the world, covering high puritypolycrystalline silicon materials, silicon wafer, silicon solar cell and modules, and design and construction of solar photovoltaicpower plants, by which the Company ensures the stable quality and best cost-efficiency of its PV products to customers.The Company now produces 9,000 ton/year of polycrystalline silicon, 2.2 GW/year of silicon wafer, 0.85GW/year of solar cell, and0.4GW/year of modules. The quality and performance indicators of the Company's polysilicon have reached the advanced level in theindustry and it has reserved electronic-grade polysilicon production technology. Meanwhile, the Company is also promoting siliconwafer project of Yichang CSG and technological innovation and expansion and reconstruction projects of solar cell module inDongguan in order to enhance the anti-risk capacity of its PV industry chain and drive the balanced, stable development of its PVindustry chain. When the projects are completed, the quality and performance indicators of the Company's silicon wafers and siliconsolar cells will be greatly increased and the general competitiveness of the chain will be further improved.To perfect its solar energy chain, the Company established Shenzhen CSG PV Energy Co., Ltd., a wholly-owned subsidiary, in 2015,of which the mainline business is to invest and develop solar photovoltaic power plants and extend CSG's solar energy industry tocover highly value-added terminal applications. At the end of 2016, the Company newly established New Energy ApplicationDepartment to generally manage the investment, operation and maintenance of the Company's PV power plants and effectively
integrate internal assets, so as to enlarge and strengthen its solar energy business.
Electronic glass and display industry
The Company has built two complete chains of full-set out-cell touch panel from raw material, processing to touch panel integration
module, one of which is “glass coating → glass yellow light →FILM modules", and the other of which is "PET coating →FILMyellow light →FILM module”, and one AG glass production line of “glass AG surface physical treatment-chemical Processing” with
its more than ten years of experience since 2000 when it established Shenzhen Nanbo Display Technology Co., Ltd. Its productioncapacity covers glass coating, glass pattern processing, glass touch panel module, flexible material filming, flexible material patternprocessing, and full lamination of flexible touch panel display that holds a complete industry chain from ultra-thin sensor processingand ultra-thin touch panel module assembly to achieve high definition display and ultra-narrow edge touch panel solutions, the mainproducts of which covers differential products of glass substrate composite coating like Anti-glare glass (AG), Anti-reflection glass(AR), Anti-fingerprint glass (AF), Semi-translucent glass, Reflective and Semi-transparent Optics Coating Glass (RT), Diamond-likecarbon(DLC). CSG displays have become a supplier of high-quality electronic application materials for the touch industry, and touchsensor and TP suppliers to provide customers with one-stop TP solutions.The Company, with its more than 20 years of experience in float glass production and powerful technology and innovation team,entered the ultra-thin electronic glass market in 2010 and gradually completed the nationwide strategic layout. There are fourproduction bases, namely Hebei Panel Glass, Yichang Nanbo Photoelectric Glass, Qingyuan CSG and Xianning CSG Photovoltaic
Glass. The production capacity ranks first in China. The quality of CSG’s aluminum and high-aluminum electronic glass between
0.2mm to 1.1mm has reached the domestic leading level, the performance of which is comparable to that of imported products,breaking the monopoly of foreign technology. Currently, the products are widely used in mobile terminal cover glass, tempered glassprotective film, ITO conductive Glass, extending to the fields of high-speed rail, military industry, smart home and others.
CSG Annual Report 2017
II. Major changes in main assets
1. Details of major changes in main assets
| Main assets | Note of major changes |
| Equity assets | There was no significant change in equity assets in the report period. |
| Fixed assets | There was no significant change in fixed assets in the report period. |
| Intangible assets | There was no significant change in intangible assets in the report period. |
| Construction in progress | There was no significant change in construction in progress in the report period. |
2. Main overseas assets
□ Applicable √ Not applicable
III. Core Competitiveness Analysis
① The Company currently has built complete industrial chains in the industries it involved, which has complementary advantage. Inglass industry, the Company has set up the industry chain as quartz sand → high quality float glass → architectural energy-saving
glass. In the solar energy industry, the Company has finished the comprehensive construction of industry chain from high puritypolycrystalline silicon materials, silicon wafer processing to cell and its module, photovoltaic rolled glass, etc. and extended toterminal application of PV power plant. With the improvement of technology in the chains, the industrial advantages emerged.
②The Company possesses a complete industry layout. At present, the Company has established large production bases in East China,
West China, South China, North China and Central China, which enables the Company to be closer to the market and serve themarket better.
③The Company has capability of technology innovation and product innovation. It owns independent intellectual property rights of
high-end float glass production process. The technology level of ultra-thin electronic glass is in the leading position in China. The
Company also keeps its R&D and production of energy-saving glass in line with the world’s advanced level, and its technique and
technology in the field of solar energy keep leading position in domestic market.
④The Company possesses high anti-risk capability. It has established a perfect internal control system. Meanwhile, the managementand control ability of account receivable and inventory stand in a high level within the industry. CSG’s new management team has an
international perspective and a more open management philosophy. It aims to achieve the transfer of capacity and continues toexpand new business fields along with the national policies of the Belt and Road based on the intensive development of CSG's mainbusiness, making the Company be bigger and stronger, so as to be a comprehensive industrial group.
CSG Annual Report 2017
Section IV. Business Discussion and Analysis
Since 2017, the global economic recovery has been gathered momentum by main economies. China’s economy has continued the
development tendency of seeking advancement in stability, constantly deepened the supply-side structural reform, steadily propelledthe tasks of de-capacity, de-leveraging, de-stocking, de-cost and addressing weakness, further promoted replacing old growth driverswith new ones, and continuously improved the structure of economic development.For CSG, the Year 2017 was not only a year serving as a connecting link between the preceding and the following, but also animportant year for effectuating its future development. Oriented by market demand, the Company carefully analyzed its competitiveadvantages, took the initiative to transform business mode and update technologies, and improved operating quality by finemanagement to realize the advancement in stability. In 2017, the operation revenue of the Company was RMB 10,879 million withyear-on-year increase of RMB 1,905 million and growth rate of 21.23%, the net profit was RMB 829 million, with year-on-yearincrease of 24 million and growth rate of 3.04%, and the net profit attributable to the parent company was 825 million, withyear-on-year increase of 28 million and growth rate of 3.47%.
(I) Glass industry
Affected by the national environmental protection policies and supply-side reforms, each business segment of the Company facedvarious opportunities and challenges. Therefore, the Company tried to exploit the development opportunities for each product in the
process of supply-side structural reform, the details of which were as follows.
Float glass: The overall growth rate of domestic housing starts in 2017 slightly slowed down. However, the total amount ofconstruction area still increased, as well as the booming production and sales in the auto market, export growth, and the favorabledemand for electrical glass and other industrial glass, float glass products got a rising market. The Company took this opportunity tofurther strengthen overall management and control of sales, accurately grasp market conditions, strengthen industry synergy, promotethe differentiation of glass products, and further increase the market share of industrial glass. At the same time, it strengthened theinternal management, refined farming, continuous improvement of process technology, promoted energy conservation andconsumption reduction, tapping potential and increasing efficiency in an orderly manner. The key indicators such as the daily outputof glass and the yield rate of float glass were further improved. The growth of production and sales volume was stable. The revenueincreased by 32% and the profit increased by 99%.Architectural glass: In 2017, architectural glass was affected by the sharp increase in the prices of bulk raw materials, especiallyglass originals, and the growth of downstream fixed asset investment slowed down, its profitability was squeezed. Under thispressure, the Company responded positively, adjusted its market strategy, strengthened industry synergy, strengthenedcommunication with customers, launched functional glass such as glass with the function of antireflection, electric heating and heatpreservation, and opened up new product application markets to achieve revenue growth by 5 %, but subject to the skyrocketingprices of bulk materials, overall profitability of its architectural glass fell by 51%.
(II) Solar Energy industry
In 2017, the price of all types of photovoltaic products had a year-on-year decrease compared with the 2016 average price. In 2017,the Company made an overall arrangement in advance and responded positively. Through the simultaneous production and projectconstruction model, the Company completed the technological transformation of polysilicon, silicon wafer, solar cell, and module, aswell as the expansion of production capacity, which enabled the Company's product quality continuously to improve and enter theindustry's advanced level. At the same time, by continuously exploiting internal capacity, the unit consumption of various materialshas decreased significantly, and the total non-silicon cost of each product has dropped significantly year-on-year. The construction ofsolar power plants was also progressing as scheduled. The Company's installed capacity of the power plants has reached 128MW asof the end of December 2017. The Company has actively explored the application fields such as photovoltaic power generation and
CSG Annual Report 2017
BIPV (Building Integrated Photovoltaic), and further strengthened the industrial development. It realized annual revenue growth of
35% while net profit decrease of 12%.
(III) Electronic glass and display industry
In 2017, the Company attached great importance to improve the quality of electronic glass so as to keep playing its leading role in theindustry and get closer to international advanced level. At the same time, it strengthened the promotion of high-alumina glass market,especially the promotion of the terminal market, and gradually tapped into the main mobile terminal manufacturers in China. Withthe stability of the process, the entire production chain of the display business was opened up, and the production and sales volume ofeach product increased substantially. The annual revenue of the electronic glass and display industry increased by 102%, achieving anet profit of RMB 59 million, a substantial increase of 487%.
II. Main business analysis
1. Overview
Unit: RMB
| Items | 2017 | 2016 | Range of Change | Analysis of reasons |
| Operating income | 10,879,400,746 | 8,974,083,407 | 21.23% | Mainly due to the increase of sales |
| Operating costs | 8,216,358,372 | 6,562,214,373 | 25.21% | Mainly due to the increase of sales |
| Sales expenses | 336,131,723 | 301,815,090 | 11.37% | Mainly due to the increase in transportation costs and employee compensation |
| Administration expenses | 919,329,772 | 766,589,059 | 19.92% | Mainly due to the increase in employee compensation and R&D expenses |
| Including:R&D expenses | 330,677,375 | 285,129,442 | 15.97% | Mainly due to the increase of R&D investment |
| Financial expenses | 315,961,080 | 265,820,569 | 18.86% | Mainly due to the increase in interest expenses |
| Net cash flow arising from operating activities | 2,463,446,156 | 2,240,852,120 | 9.93% | Mainly due to the increase in cash received from sales of goods and provision of labor services. |
| Net cash flow arising from investment activities | -1,220,130,334 | -1,606,225,665 | -24.04% | Mainly due to the reduction of cash received by subsidiaries |
| Net cash flow arising from financing activities | 634,295,928 | -626,361,427 | -- | Mainly due to the decrease in cash paid for repayment of borrowings this year and the implementation of equity incentives |
CSG Annual Report 2017
2. Revenue and cost
(1) Constitution of operation revenue
Unit: RMB
| 2017 | 2016 | Increase/decrease y-o-y | |||
| Amount | Ratio in operation revenue | Amount | Ratio in operation revenue | ||
| total of operating income | 10,879,400,746 | 100% | 8,974,083,407 | 100% | 21.23% |
| According to industry | |||||
| Glass industry | 7,051,910,295 | 64.82% | 6,302,630,843 | 70.23% | 11.89% |
| Solar energy industry | 3,125,611,234 | 28.73% | 2,320,237,216 | 25.85% | 34.71% |
| Electronic glass & Display industry | 873,868,480 | 8.03% | 433,457,290 | 4.83% | 101.60% |
| Others | 58,687,566 | 0.54% | 22,581,871 | 0.25% | 159.89% |
| Amount of unutilized | -230,676,829 | -2.12% | -104,823,813 | -1.17% | 120.06% |
| According to product | |||||
| Glass products | 7,051,910,295 | 64.82% | 6,302,630,843 | 70.23% | 11.89% |
| Solar energy products | 3,125,611,234 | 28.73% | 2,320,237,216 | 25.85% | 34.71% |
| Electronic glass & Display products | 873,868,480 | 8.03% | 433,457,290 | 4.83% | 101.60% |
| Others | 58,687,566 | 0.54% | 22,581,871 | 0.25% | 159.89% |
| Amount of unutilized | -230,676,829 | -2.12% | -104,823,813 | -1.17% | 120.06% |
| According to region | |||||
| Mainland China | 9,506,249,433 | 87.38% | 7,971,929,246 | 88.83% | 19.25% |
| H.K. China | 434,551,436 | 3.99% | 135,128,604 | 1.51% | 221.58% |
| Europe | 26,534,686 | 0.24% | 25,914,385 | 0.29% | 2.39% |
| Asia (excluding Mainland China and H.K.) | 848,958,711 | 7.80% | 614,806,258 | 6.85% | 38.09% |
| Australia | 37,937,222 | 0.35% | 37,437,349 | 0.42% | 1.34% |
| North America | 6,030,936 | 0.06% | 134,941,952 | 1.50% | -95.53% |
| Other regions | 19,138,322 | 0.18% | 53,925,613 | 0.60% | -64.51% |
CSG Annual Report 2017
(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 revenue | Operating cost | Gross profit ratio | Increase/decrease of operating revenue y-o-y | Increase/decrease of operating cost y-o-y | Increase/decrease of gross profit ratio y-o-y | |
| According to industry | ||||||
| Glass products | 7,051,910,295 | 5,218,006,026 | 26.01% | 11.89% | 13.78% | -1.22% |
| Solar energy products | 3,125,611,234 | 2,513,477,557 | 19.58% | 34.71% | 43.70% | -5.03% |
| According to product | ||||||
| Glass products | 7,051,910,295 | 5,218,006,026 | 26.01% | 11.89% | 13.78% | -1.22% |
| Solar energy products | 3,125,611,234 | 2,513,477,557 | 19.58% | 34.71% | 43.70% | -5.03% |
| According to region | ||||||
| Mainland China | 9,506,249,433 | 7,145,720,399 | 24.83% | 19.25% | 22.05% | -1.73% |
Under the circumstances that the statistical standards for the Company’s main business data adjusted in the report period, the
Company's main business data in the recent year is calculated based on adjusted statistical standards at the end 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
| Industry | Item | Unit | 2017 | 2016 | Increase/decrease y-o-y (%) |
| Flat glass | Sales volume | 10,000-ton | 264 | 236 | 11.86% |
| Output | 10,000-ton | 270 | 234 | 15.38% | |
| Inventory | 10,000-ton | 9 | 3 | 200% | |
| Architectural glass | Sales volume | 10,000-M2 | 3,027 | 2,976 | 1.71% |
| Output | 10,000-M2 | 3,045 | 2,999 | 1.53% | |
| Inventory | 10,000-M2 | 49 | 58 | -15.52% | |
| Electronic glass | Sales volume | ton | 34,315 | 29,495 | 16.34% |
| Output | ton | 32,073 | 30,532 | 5.05% | |
| Inventory | ton | 2,212 | 4,614 | -52.06% | |
| Polysilicon | Sales volume | ton | 2,434 | 2,510 | -3.03% |
CSG Annual Report 2017
| Output | ton | 8,101 | 7,074 | 14.52% | |
| Inventory | ton | 122 | 280 | -56.43% | |
| Silicon wafer | Sales volume | 10,000-piece | 34,779 | 24,916 | 39.59% |
| Output | 10,000-piece | 34,840 | 25,403 | 37.15% | |
| Inventory | 10,000-piece | 156 | 283 | -44.88% | |
| Solar cell | Sales volume | MW | 540 | 320 | 68.75% |
| Output | MW | 733 | 394 | 86.04% | |
| Inventory | MW | 15 | 13 | 15.38% |
Reasons for y-o-y relevant data with over 30% changes
√Applicable □ Not applicable
1. The increase in flat glass inventory was mainly due to the increase of output.2. The decrease in the inventory of electronic glass was mainly due to the increase in sales.3. The decrease in polysilicon inventory is mainly because the internal use of polysilicon increased, the stock decreased.The
production and sales of silicon wafers and solar cells was mainly due to the Company’s internal technological transformation and
expansion of production capacity which led to an increase in output.
(4) Fulfillment of significant sales contracts signed by the Company up to the report period
□ Applicable √ Not applicable
(5) Constitution of operation cost
Constitution of operation cost of main businessIndustry classification
Unit: RMB
| Industry | Item | 2017 | 2016 | Increase/decrease y-o-y | ||
| Amount | Ratio in operation cost | Amount | Ratio in operation cost | |||
| Glass industry | Raw material | 3,950,753,501 | 76.28% | 3,490,284,457 | 76.83% | 13.19% |
| Labor wages | 483,035,118 | 9.33% | 429,777,957 | 9.46% | 12.39% | |
| Manufacturing costs | 745,385,164 | 14.39% | 622,885,161 | 13.71% | 19.67% | |
| Electronic glass & Display industry | Raw material | 407,632,245 | 62.46% | 164,264,376 | 54.19% | 148.16% |
| Labor wages | 76,167,671 | 11.67% | 41,457,372 | 13.68% | 83.73% | |
| Manufacturing costs | 168,846,577 | 25.87% | 97,396,154 | 32.13% | 73.36% | |
| Solar energy industry | Raw material | 2,045,079,539 | 82.00% | 1,312,414,211 | 75.92% | 55.83% |
| Labor wages | 193,384,939 | 7.75% | 172,281,138 | 9.97% | 12.25% | |
CSG Annual Report 2017
| Manufacturing costs | 255,426,988 | 10.24% | 243,978,054 | 14.11% | 4.69% |
Product classification
Unit: RMB
| Product | Item | 2017 | 2016 | Increase/decrease y-o-y | ||
| Amount | Ratio in operation cost | Amount | Ratio in operation cost | |||
| Glass products | Raw material | 3,950,753,501 | 76.28% | 3,490,284,457 | 76.83% | 13.19% |
| Labor wages | 483,035,118 | 9.33% | 429,777,957 | 9.46% | 12.39% | |
| Manufacturing costs | 745,385,164 | 14.39% | 622,885,161 | 13.71% | 19.67% | |
| Electronic glass & Display products | Raw material | 407,632,245 | 62.46% | 164,264,376 | 54.19% | 148.16% |
| Labor wages | 76,167,671 | 11.67% | 41,457,372 | 13.68% | 83.73% | |
| Manufacturing costs | 168,846,577 | 25.87% | 97,396,154 | 32.13% | 73.36% | |
| Solar energy products | Raw material | 2,045,079,539 | 82.00% | 1,312,414,211 | 75.92% | 55.83% |
| Labor wages | 193,384,939 | 7.75% | 172,281,138 | 9.97% | 12.25% | |
| Manufacturing costs | 255,426,988 | 10.24% | 243,978,054 | 14.11% | 4.69% | |
(6)Whether the consolidated scope changed during the report period
√ Yes □NoOn October 11, 2017, the Group established a subsidiary company, CHINA CSG （AUSTRALIA）PTY LTD. As of December 31,
2017, the Group who holds 100% of its shares has not invested yet.
(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) | 1,500,493,031 |
| Proportion in total annual sales volume for top five customers | 13.79% |
| Related party sales volume in total annual sales volume for top five customers accounted for the proportion of total annual sales | 0 |
Information of the top five customers of the Company
CSG Annual Report 2017
| Serial | Name of customer | Sales volume (RMB) | Proportion in total annual sales |
| 1 | Customer A | 494,783,375 | 4.55% |
| 2 | Customer B | 377,115,114 | 3.47% |
| 3 | Customer C | 288,125,076 | 2.65% |
| 4 | Customer D | 182,974,269 | 1.68% |
| 5 | Customer E | 157,495,197 | 1.45% |
| Total | -- | 1,500,493,031 | 13.79% |
Other statement of main customers
□ Applicable √ Not applicable
Major suppliers of the Company
| Total purchase amount from the top five suppliers (RMB) | 1,239,729,973 |
| Proportion in total annual purchase amount from the top five suppliers | 14.75% |
| Related party purchase amount in total annual purchase amount from the top five suppliers accounted for the proportion of total annual purchase amount | 0 |
Information of the top five suppliers of the Company
| Serial | Name of supplier | Purchase amount (RMB) | Proportion in total annual purchase |
| 1 | Supplier A | 422,959,179 | 5.04% |
| 2 | Supplier B | 332,874,011 | 3.96% |
| 3 | Supplier C | 193,237,278 | 2.30% |
| 4 | Supplier D | 157,616,197 | 1.87% |
| 5 | Supplier E | 133,043,308 | 1.58% |
| Total | -- | 1,239,729,973 | 14.75% |
Other statement of main suppliers
□ Applicable √ Not applicable
3. Expenses
Unit: RMB
| 2017 | 2016 | Increase/decrease y-o-y | Note of major changes | |
| Sales expense | 336,131,723 | 301,815,090 | 11.37% | -- |
| Management expense | 919,329,772 | 766,589,059 | 19.92% | -- |
| Financial expense | 315,961,080 | 265,820,569 | 18.86% | -- |
4. R&D expenses
√Applicable □ Not applicable
CSG Annual Report 2017
The Company always emphasizes research and development of new products, new technology and new craft, and R & D aims toclose to the market, production and industry.
R&D investment of the Company
| 2017 | 2016 | Ratio of change | |
| Number of R & D personnel (person) | 134 | 134 | -- |
| Ratio of number of R&D personnel | 1.11% | 1.16% | -0.05% |
| Amount of R & D investment (RMB) | 368,237,629 | 341,553,966 | 7.81% |
| Ratio of the R&D investment to the operating income | 3.38% | 3.81% | -0.43% |
| Amount of the capitalized R&D investment (RMB) | 43,122,431 | 23,213,785 | 85.76% |
| Ratio of the capitalized R&D investment to the R&D investment | 11.71% | 6.80% | 4.91% |
Reason of remarkable changes over the last year of the ratio of the total R&D investment amount to the operating income
□ Applicable √ Not applicable
Reason of substantial change of the ratio of the R&D investment capitalization and its reasonable explanation
□ Applicable √ Not applicable
5. Cash flow
Unit: RMB
| Item | 2017 | 2016 | Increase/decrease y-o-y |
| Subtotal of cash in-flow from operation activity | 12,256,615,740 | 10,492,184,098 | 16.82% |
| Subtotal of cash out-flow from operation activity | 9,793,169,584 | 8,251,331,978 | 18.69% |
| Net cash flow from operation activity | 2,463,446,156 | 2,240,852,120 | 9.93% |
| Subtotal of cash in-flow from investment activity | 192,127,040 | 372,941,656 | -48.48% |
| Subtotal of cash out-flow from investment activity | 1,412,257,374 | 1,979,167,321 | -28.64% |
| Net cash flow from investment activity | -1,220,130,334 | -1,606,225,665 | -24.04% |
| Subtotal of cash in-flow from financing activity | 8,129,917,929 | 9,762,174,851 | -16.72% |
| Subtotal of cash out-flow from financing activity | 7,495,622,001 | 10,388,536,278 | -27.85% |
| Net cash flow from financing activity | 634,295,928 | -626,361,427 | -- |
| Net increased amount of cash and cash equivalent | 1,875,186,175 | 9,822,113 | 18,991.47% |
Main reasons for y-o-y major changes in aspect of relevant data
√Applicable □ Not applicable
The increase of cash in-flow from financing activity was mainly due to the decrease in cash paid for debt service this year and theimplementation of equity incentives.Net increased amount of cash and cash equivalent increased mainly because the Company increased its cash reserves and strategiccapital reserves to reduce liquidity risk.
CSG Annual Report 2017
Notes to the reason of the significant differences between the net cash flow from the operating activities and the net profits of theyear during the report period
√Applicable □ Not applicable
Adjustment for the difference between net profit and amount of cash flow from operation activity for the year as follows:
Unit: RMB
| Net profit | 828,636,035 |
| Plus: impairment of assets | 69,399,755 |
| Depreciation of fixed assets | 957,475,579 |
| Amortization of intangible assets | 43,884,166 |
| Net change in safe production costs | -2,618,535 |
| Amortization of long-term deferred expenses | 1,072,529 |
| Share-based pay for employees | 8,194,695 |
| Net loss/ (gains) on disposal of fixed assets and intangible assets | 1,768,993 |
| Financial expenses | 314,603,596 |
| Investment (loss) / income | -427,636 |
| Deferred income tax assets decrease /( increase) | 15,578,992 |
| Decrease in deferred income tax liabilities | -8,833,183 |
| Decrease /( increase) in inventories | -201,257,769 |
| Increase in operating receivables | -206,859,922 |
| Increase in operating payables | 642,828,861 |
| Net cash flow from operating activities | 2,463,446,156 |
III. Analysis of the non-core business
√Applicable □ Not applicable
Unit: RMB
| Amount | Ratio in total profit | Note for the reason | Sustainable or not | |
| Investment income | 427,636 | 0.04% | Mainly investment income | No |
| Asset impairment | 69,399,755 | 6.97% | Mainly generated by provision for impairment of long-term assets | No |
| Non-operating income | 20,763,042 | 2.08% | Mainly government subsidy income | No |
| Non-operating expense | 5,152,591 | 0.52% | Mainly due to the disposal of non-current assets | No |
| Other income | 84,341,814 | 8.47% | mainly government subsidy income resulted by non-operating income reclassification | No |
CSG Annual Report 2017
IV. Assets and liabilities
1. Major changes of assets and liabilities composition
Unit: RMB
| As at 31 Dec. 2017 | As at 31 Dec. 2016 | Change of proportion | Notes of major changes | |||
| Amount | Proportion in total assets | Amount | Proportion in total assets | |||
| Monetary fund | 2,462,605,764 | 12.61% | 586,803,505 | 3.42% | 9.19% | Mainly because the Company increased its cash reserves and strategic capital reserves to reduce liquidity risk |
| Accounts receivable | 638,238,290 | 3.27% | 627,985,983 | 3.66% | -0.39% | |
| Inventory | 685,895,317 | 3.51% | 477,780,925 | 2.79% | 0.72% | |
| Fix assets | 11,540,769,697 | 59.08% | 11,457,972,991 | 66.82% | -7.74% | |
| Construction in process | 1,417,624,618 | 7.26% | 1,362,096,377 | 7.94% | -0.68% | |
| Short-term loans | 3,704,630,909 | 18.96% | 4,017,869,662 | 23.43% | -4.47% | |
| Long-term loans | 1,554,120,000 | 7.96% | 1,438,660,000 | 8.39% | -0.43% | |
2. Assets and liabilities measured at fair value
□ Applicable √ Not applicable
3. Limited asset rights as of the end of the report period
| Item | Limited amount | Limited reason |
| Money funds | 2,852,599 | Margin deposit deposited when the Company applies for a letter of credit issued by the bank and applies for loans from the bank. |
| Fix assets | 2,369,789,041 | Limited financing lease |
| Total | 2,372,641,640 |
V. Investment
1. Overall situation
√Applicable □ Not applicable
| Investment in the report period | Investment in the same period of last | Changes |
CSG Annual Report 2017
| (RMB) | year ( RMB) | |
| 1,412,257,374 | 1,979,167,321 | -28.64% |
2. The major equity investment obtained in the report period
□ Applicable √ Not applicable
CSG Annual Report 2017
3. The major ongoing non-equity investment in the report period
√Applicable □ Not applicable
Unit: RMB 0,000
| Project | Way of investment | Fixed asset investment or not | Industry involved | Amount invested in the report period | Accumulative amount actually invested by the end of the report period | Source of funds | Progress of project (ongoing projects) | Expected return | Accumulative revenue achieved by the end of the report period | Reasons for not achieving the planned progress and the expected return | Date of disclosure (if applicable) | Index of disclosure (if applicable) |
| Yichang CSG upgrading & expansion project of electronic grade polysilicon and cold-hydrogenation technical upgrading | Self-built | Yes | Manufacturing industry | 3,445 | 20,566 | Own funds and borrowings from financial institutions | To add a new cold-hydrogenation line in Yichang CSG, which can produce electronic grade polysilicon on basis of the solar grade polysilicon device, and meanwhile, add correspondent systems of reduction, rectification, recycle and utilities, so as to boost the actual capacity of polysilicon up to 12,000 tons/year (including 2,500 tons/year for electronic grade polysilicon and 9,500 tons/year for solar energy grade polysilicon). At present, the cold-hydrogenation line has been constructed. | 22,481 | 0 | Revenue could not be calculated separately. | March 31, 2015 | Notice number: 2015-009 |
| Yichang CSG to add a 1GW silicon wafer | Self-built | Yes | Manufacturing industry | 36,173 | 45,674 | Own funds and borrowings from financial | CSG has added 1GW capacity of high-efficient polysilicon wafer to achieve 2.2GW capacity of | 14,853 | 671 | The rest 500MW has not started yet. | January 06, 2016, April 16, | Notice number: 2016-001、 |
CSG Annual Report 2017
| project | institutions | polysilicon wafer. Construction of the first 500 MW capacity of polysilicon wafer was completed in September 2017. | 2016 | 2016-018 | ||||||||
| PV power plant investment | Self-built | Yes | Manufacturing industry | 9,529 | 24,908 | Own funds and borrowings from financial institutions | CSG plans to construct a PV power plant 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 2017, 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. | 4,344 | 634 | Part of the project has been completed. | January 22, 2016 | Notice number: 2016-006 |
| 4 million square meters light guide plate and PV glass production line | Self-built | Yes | Manufacturing industry | 37,131 | 51,458 | Own funds and borrowings from financial institutions | The Company plans to construct a 4 million square meters PV glass production line for new type ultra-thin LCD display. The line is also provided with a capacity of higher strength ultra-thin electronic glass than CSG Qingyuan. The equity of Xianning Feng Wei Technology Co., Ltd. has been acquired within the report period and the project is under construction. | 10,543 | 0 | No income for the project is in the construction period. | May 21, 2016 | Notice number: 2016-025 |
CSG Annual Report 2017
| Cold repair upgrading of the first line of Chengdu CSG | Self-built | Yes | Manufacturing industry | 5,784 | 9,498 | Own funds and borrowings from financial institutions | Cold repair upgrading has been performed for the first line of Chengdu CSG. The line will be upgraded to be a professional, high quality industrial thin glass line, featured 2mm series automobile glass while also covering 1.6mm. The project was completed in April 2017. | 2,228 | 2,461 | -- | -- | |
| Cold repair upgrading of the second line (900T) of Hebei CSG | Self-built | Yes | Manufacturing industry | 381 | 17,721 | Own funds and borrowings from financial institutions | The former 900T line of float glass of Hebei CSG was upgraded to produce 2mm~19mm glass wafer. The project was started on August 18, 2016 and was completed in February 2017. | 1,510 | 3,425 | -- | -- | |
| Hebei Panel Glass project of medium-alumina ultra-thin electronic glass | Self-built | Yes | Manufacturing industry | 319 | 1,266 | Own funds | Plan 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. | 0 | 0 | No gains as the project is in the construction period. | October 29, 2014 | Notice number: 2014-030 |
| Expansion on energy-saving glass capacity of Wujiang Project | Self-built | Yes | Manufacturing industry | 0 | 21,239 | -- | Plan to increase two coating glass production lines and support insulating glass capacity. When the project is completed, the annual capacities of wide flat coated glass and coated insulating glass will rise by 3 million square meters and 1.2 million square meters respectively. | 0 | 0 | By now, part of the project has been completed and the revenue was not calculated individually. | December 25, 2010 | Notice number: 2010-046 |
CSG Annual Report 2017
| The wide flat coated glass line of 3 million square meters has been completed, and the others will be invested according to market situations. | ||||||||||||
| Yichang CSG 700MW crystalline silicon solar cell project | Self-built | Yes | Manufacturing industry | 0 | 0 | -- | Plan 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. | 0 | 0 | The project was suspended. | December 25, 2010 | Notice number: 2010-046 |
| Expanding 500MW solar module project in Dongguan | Self-built | Yes | Manufacturing industry | 0 | 0 | -- | Plan 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. | 0 | 0 | The project was suspended. | January 18, 2011 | Notice number: 2011-003 |
| Relocation and equipment upgrading of the solar module production line in Dongguan | Self-built | Yes | Manufacturing industry | 0 | 0 | -- | The 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 by the market conditions. | 0 | 0 | The project was suspended. | April 16, 2016 | Notice number: 2016-018 |
| Solar online self-cleaning | Self-built | Yes | Manufacturing | 0 | 0 | -- | The Company plans to construct an online self-cleaning coated glass line | 0 | 0 | The project was suspended. | April 16, 2016 | Notice number: |
CSG Annual Report 2017
| coated glass project of Dongguan CSG | industry | in Dongguan. | 2016-018 | |||||||||
| Malaysia-invested architectural glass plant | Self-built | Yes | Manufacturing industry | 0 | 0 | -- | The 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 single coated glass. | 0 | 0 | The project was suspended. | April 16, 2016 | Notice number: 2016-018 |
| Total | -- | -- | -- | 92,762 | 192,330 | -- | -- | 55,959 | 7,191 | -- | -- | -- |
CSG Annual Report 2017
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 investmen 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
2. Sales of major equity
□ Applicable √ Not applicable
VII. Analysis of main holding companies and joint -stock company companies
√Applicable □ Not applicable
Particular about main subsidiaries and joint -stock companies which have influence on the Company's net profit by over 10%
Unit: RMB
| Name of company | Type | Main business | Registered capital | Total assets | Net Assets | Operating revenue | Operating profit | Net profit |
| Chengdu CSG Glass Co., Ltd. | Subsidiary | Development, manufacture and sales of various special glass | 260 million | 949,189,013 | 549,644,544 | 963,867,411 | 185,820,075 | 159,097,192 |
| Xianning CSG Glass Co., Ltd. | Subsidiary | Development and manufacture and sales of various special glass | 235 million | 785,113,404 | 357,755,489 | 751,277,647 | 116,921,901 | 108,893,438 |
CSG Annual Report 2017
| Hebei CSG Glass Co., Ltd. | Subsidiary | Manufacture and sales of various special glass | USD 48.06 million | 851,819,366 | 403,636,180 | 514,294,709 | 45,984,764 | 39,667,572 |
| Wujiang CSG Glass Co., Ltd. | Subsidiary | Manufacture and sales of various special glass | 565.04 million | 1,621,247,482 | 754,661,872 | 1,572,799,222 | 187,183,576 | 168,221,000 |
| Dongguan CSG Architectural Glass Co., Ltd. | Subsidiary | Deep processing of glass | 240 million | 1,016,566,291 | 468,852,301 | 945,665,074 | 44,682,681 | 41,741,286 |
| Wujiang CSG East China Architectural Glass Co., Ltd. | Subsidiary | Deep processing of glass | 320 million | 847,522,945 | 434,693,963 | 618,437,486 | 27,594,863 | 25,231,336 |
| Tianjin CSG Energy Conservation Glass Co., Ltd | Subsidiary | Development, producing and sales of energy-saving special glass | 336 million | 716,090,383 | 508,894,065 | 691,154,038 | 13,881,247 | 16,299,105 |
| Dongguan CSG Solar Glass Co., Ltd. | Subsidiary | Manufacture and sales of Solar-Energy Glass products | 480 million | 1,261,708,908 | 695,384,759 | 1,025,683,430 | 112,938,282 | 114,344,586 |
| Yichang CSG Polysilicon Co., Ltd. | Subsidiary | Manufacture and sales of high purity silicon material products | 1,467.98 million | 3,957,515,821 | 1,419,974,626 | 1,800,167,542 | 216,991,855 | 220,704,106 |
| Shenzhen Nanbo Display Technology Co., Ltd. | Joint-stock company | Manufacture and sales of display device products | 143 million | 1,614,937,532 | 788,622,997 | 563,191,871 | 23,175,445 | 14,127,081 |
| CSG (Hongkong) Investment Co., Ltd. | Subsidiary | Investment and trading | HKD 1 million | 84,410,779 | 48,099,751 | 350,102,367 | 16,970,070 | 14,186,621 |
Particular about subsidiaries obtained or disposed in report period
□ Applicable √ Not applicable
Notes of main subsidiaries and joint-stock companies
Affected by the Country’s macroeconomic policies, the products of the flat glass industry rose in selling price this year, when the
output increased, the profit increased. The price of raw materials for the architectural glass industry rose, so a certain level of profitwas maintained by measures such as cost reduction and efficiency increase. Affected by price fluctuations in the industrial chainmarket, the profit of solar energy section were under pressure. The business and process technology of the subsidiary company ofelectronic glass Qingyuan Energy-saving, as well as display business were stable, and the entire production chain production line was
CSG Annual Report 2017
opened up. The output and sales volume of each product increased significantly, so the profit increased.
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 involvedFlat glass industryIn 2017, under the background of supply-side reform, the efforts to cut overcapacity of flat glass industry further intensified,especially more stringent environmental protection, energy consumption and other comprehensive standards were imposed in thesecond half of the year, which accelerated the elimination of backward production capacity. Downstream market, affected by realestate regulatory policy, had a slackening demand growth. Overall, the supply and demand in glass industry was basically balancedwith a rise in profitability. In 2018, it is predicated that the real estate policy will not be eased, which means that the demand of glasswill be mostly the same as 2017. As for the supply, production capacity will only fall down under the continuing policy ofovercapacity cut. More stringent emission standards probably implementing and environmental taxes imposing will increaseenvironmental protection costs of glass industry, resulting in a rise in market prices, which is beneficiary to CSG who always laysemphasis on environmental protection and possesses related equipment.Architectural glass industry
As the national economy enters “New Normal”, significant slowdown in fixed asset investment and skyrocket price in upstream float
glass made overall profitability of architectural glass industry decline. The architectural glass industry is facing a more severe marketsituation in the short term.But in the long run, energy-saving glass is the key of building energy conservation 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 popularizegreen building. According to Action Plan of Promoting Production and Application of Green Building Material jointly issued byMinistry of Industry and Information Technology and Ministry of Housing and Urban-Rural Development, the ratio of green buildingmaterial applied will be significantly increased and its quality will be improved dramatically. The proportion of green buildingmaterial will take up 30% in new building, 50% in green building, 70% in pilot project, and 80% in renovating existing building.High-end energy saving glass as an important part in green building has a huge market demand and the prospects for its developmentare worth looking forward to.Solar energy PV industry
A continuing rebound from 2012 has driven photovoltaic industry to a booming phrase. China’s PV market has ranked NO.1 globally
for five consecutive years while the production of PV components the global number one for eleven consecutive years, both of which
made China worthy of the name “The Strongest Country in Producing and Applying PV Products”. Up to the end of 2017, PVcapacity in China reached 130GW, surpassing the basic objective in “13th Five-Year Plan” of Energy Development that realizing110GW of solar power generation in 2020. Driven by the national green energy policy and skyrocket in PV market, China’s PV
industry will continue to expand.
According to “13th Five-Year Plan of Solar Energy Development”, it is expected to achieve grid parity through PV by 2020. Thus
the technical revolution will be the main theme and the driving force for the following development of PV industry, which means thatthe industry competition will be more intense and the industry shuffle will intensify. The industry resource and advantage will
integrate into the enterprises with innovative technology and strong power, thus “the stronger are getting stronger”.
Electronic glass and display device industry
CSG Annual Report 2017
In reference to the industry forecast presented by Touch Display Research, the operating revenue of displayer will continue to growglobally in the following ten years but the growth will slow down gradually. In this process, OLED whose display technology is themost competitive will gradually hold the dominant position in the whole industry. Looking at the analysis given by researchinstitution HIS, we can find that the conventional IFT-LCD has been in an oversupply state and the manufacturers are carrying out
the price war. Instead, the conventional and flexible OLED hasn’t been popularized, so the enterprises who master its technology of
mass production will take up the top of blue sea market. With the development and maturity of OLED technology, its market quotawill expand between 2018 and 2020, especially the technology of flexible OLED who has a folding intelligent terminal form will bethe revolutionary technology and give itself an advantage in the future.Ultrathin electronic glass is one of the key materials of touch display industry, its core technology was mastered by few developedcountries in the past and its high-end market has been monopolized by foreign enterprises such as Corning and Asahi Glass. As the
expansion of capacity in domestic ultrathin electronic glass enterprises represented by CSG, the product’s quality and performance
have been improved and promoted constantly, thus domestic brands have gradually replaced foreign ones in medium and high market.At present, though display industry has pulled through the period of explosive growth and marched into market stability, the fastpromotion of 5G communication network technique is expected to drive the increasing demands of double-sided glass for mobile
phones in the next few years, which will be the new opportunity and chance for domestic ultrathin glass enterprises to develop.
2. Development StrategyThe future development strategy of the Company is continuing to deepen culture and strengthen advantageous businesses of theCompany such as flat glass, architectural glass, solar energy PV and electronic glass and display devices. Through managementimprovement, market integration, acceleration of internationalization, realize leap-forward development of all business sectors of theCompany, it will greatly improve the industrial position of all sectors, and development into a respected international first-classenterprise.3. Business Plan of 2018
①Improve functions of headquarters, realize general planning management, promote centralized purchase, lean management, exploit
its potential and increase efficiency, and ensure the completion of operation construction objective of the Company in 2018;
② Improve R&D capacity, build up R&D talent team, and maintain the technical innovation advantage of the Company in 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, improve company incentive
mechanism, strengthen employee training, and introduce more high-quality talents;
⑤ Rationally plan asset-liability ratio level and ensure controllable financial risk;⑥ Vigorously conduct potential exploiting and efficiency increase activity, realize energy saving and consumption reduction, 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 SourcesIn 2018, CSG capital expenditure budget is about RMB 2.5 billion, which was mainly used in the project construction of photovoltaicpower plant investment project, increasing electronic glass and display device business capacity to achieve industry and productextension, flat glass technology transformation architectural glass process technological upgrading and informatization constructionproject. The capital is mainly from self-owned capital of CSG, borrowings from financial institutions and the raised funds frompublic issuance of corporate bonds.5. Risks and Countermeasures
In 2018, in the face of “New Normal” of domestic economic development and “New CSG” construction task of the Company, the
Company will face the following risks and challenges:
CSG Annual Report 2017
① In 2017, under the efforts of the Board of Directors and all employees, daily operation of the Company entered normal and stable
operation. However, the Company still faces the risk of insufficient reserves of senior talents for the long-term development of the
Company. To cope with aforesaid risks, the Company will take the following measures:
A. Construct new corporate culture of CSG as soon as possible, establish an kind of open, equal, fair and enterprising corporateculture, and reinforce internal core cohesion of employees;B. Establish remuneration incentive system which related to performance and improve employee incentive mechanism;C. Strengthen internal employee training, introduce external high-quality talent, and rapidly establish a high-quality talent team;D. Establish sustainable talent recruitment, cultivation, utilization, retaining, and development management system; create afuture-oriented human resource production, development, supply system that can support the future development of CSG.
②The flat glass and architectural glass industry continue to face the pressure of downward demand and excess capacity, the solar
energy and PV industry will face the risk of industrial integration and price fluctuation, display devices and electronic glass industrywill encounter the risk of accelerated technical upgrading and slow demand on electronic product. To cope with aforesaid risks, theCompany will take the following measures:
A. In the flat glass industry, the Company will accelerate the technical upgrading and reform of existing production line to realizedifferential operation, expand industrial scale and strengthen industrial competitiveness through industrial M&A;B. In architectural glass industry, the Company will strengthen the development of high-end market and overseas market, activelydevelop traditional residence market, and at the same time, maintain the industrial advantageous position of the Company throughmarket-oriented extension of industrial chain;C. In solar energy PV industry, the Company will increase technology and production capacity of silicon wafer, raise the productiveand technological level of polysilicon, enhance the support for downstream construction of photovoltaic power plants, and reduce therisk of price fluctuations of upstream silicon materials and other products.D. In electronic glass and display devices industry, the Company will strengthen research and development of new technology, newproduct, maintain its technical leading advantage in the industry, and further improve the product quality of ultra-thin electronic glass,so as to rapidly develop terminal market and improve industrial profitability.
③ Since 2017, the market price of glass and solar energy PV industrial has had great fluctuation. At the same time, the prices of
upstream raw materials have fluctuated, and the current rising labor costs have brought risks to the Company's operations. To copewith risk, the Company will take the following measures:
A. Vigorously exploit potential and increase efficiency, and effectively implement energy saving and consumption reduction;B. Focus on the market change, and lock the price of bulk commodity at proper time;C. Utilize bulk purchase advantage to reduce purchase cost;D. Improve automatic production level, raise labor productivity.
④ Risk of fluctuation of foreign exchange rate: At present, nearly 12.73% of the sales revenue of the Company is from overseas, in
the future, the Company will further develop overseas business, and therefore, the fluctuation of exchange rate will bring certain riskto the operation of the Company. To cope with such risk, the Company will settle exchange in time and use safe and effective riskevading instrument and product to relatively lock exchange rate and reduce the risk 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
| Reception time | Way | Type | Basic information index of investigation |
CSG Annual Report 2017
| 2017-5-10 | Field research | Institute | Details can be found in the Record Chart of the Investor Relation Activity disclosed on Juchao website (www.cninfo.com.cn) on 11 May 2017. |
| Reception times | 1 |
| Number of reception institutions | 8 |
| Number of reception person | 0 |
| Number of other reception | 0 |
| Disclosed, released or let out major undisclosed information | No |
CSG Annual Report 2017
Section V. Important Events
I. Profit distribution plan of common shares and capitalization of capital reserve plan of theCompany
Implementation or adjustment of profit distribution plan in the report period, cash dividend plan and converting capital reserve intoshare capital in particular
√ Applicable □Not applicableThe profit distribution plan for 2016 was approved by Annual General Shareholders’ Meeting of 2016 held on 22 May 2017 which
distributed distributing cash dividend of RMB 1.00 (tax included) for every 10 shares to all shareholders and transferred capitalreserve into capital with 1.5 shares for every 10 shares to all shareholders. Notice of the distribution was published on ChinaSecurities Journal, Securities Times, ShangHai Securities News and Hong Kong Commercial Daily on 11July 2017, and the profit hasbeen 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 thereport period)Statement on profit distribution plan and capitalization of capital reserve plan of the Company in 2017: based on 2,484,147,547shares 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 1.5 shares for every 10 shares to allshareholders based on 2,484,147,547 shares of the total share capital.Statement on profit distribution plan and capitalization of capital reserve plan of the Company in 2016: based on 2,075,335,560shares of the total share capital while dividends will be distributed, distributing cash dividend of RMB 1.00 (tax included) for every10 shares to all shareholders. Meanwhile the Company will transfer capital reserve into capital with 1.5 shares for every 10 shares toall shareholders based on 2,075,335,560 shares of the total share capital.Statement on profit distribution plan and capitalization of capital reserve plan of the Company in 2015: based on 2,075,335,560shares of the total shares while dividends will be distributed, distributing cash dividend of RMB 3.00 (tax included) for every 10shares to all shareholders. In 2015, the Company did not transfer capital reserve into capital.
Cash dividend in latest three years (including the report period)
Unit: RMB
CSG Annual Report 2017
| Year for bonus shares | Amount for cash dividend (tax included) | Net profit attributable to shareholders of listed company in consolidation statement for bonus year | Ratio in net profit attributable to shareholders of listed company contained in consolidation statement (%) | cash dividend by other ways | Proportion for cash dividend by other ways |
| 2017 | 124,207,377 | 825,388,312 | 15.05% | 0 | 0% |
| 2016 | 207,533,556 | 797,721,576 | 26.02% | 0 | 0% |
| 2015 | 622,600,668 | 532,653,110 | 116.89% | 0 | 0% |
The Company gains profits in the report period and the retained profit of parent company is positive but no plan of cash dividendproposed
□ 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) | 0.5 |
| Shares added for every 10-share base (Share) | 1.5 |
| Equity base for distribution preplan (share) | 2,484,147,547 |
| Total amount distribution in cash (RMB) (tax included) | 124,207,377 |
| Profit available for distribution (RMB) | 529,327,954 |
| Cash distributing accounted for the proportion of the total amount of profit distribution (%) | 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 825,388,312 and combined capital reserve was 1,306,381,765 in 2017. 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 32,084,102 based on the net profit RMB 320,841,025 of parent company statement 2017. Profit available for distribution in 2017 was RMB 529,327,954. The Board of Directors proposed to distribute every shareholder RMB 0.5 (including tax) for each 10 shares based on the amount 2,484,147,547 shares, and the total amount distribution is RMB 124,207,377 (including tax), and transfer capital reserve into capital with 1.5 shares for every 10 shares to all shareholders based on 2,484,147,547 shares of the total share capital. With total transferred amount of 372,622,132 shares, the total share capital of the Company will be changed from 2,484,147,547 shares to 2,856,769,679 shares. Board of directors consider that this proposal of profit distribution meet the specification of Corporation | |
CSG Annual Report 2017
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 completed
execution by the end of the report period
√Applicable □ Not applicable
Law, Accounting Standard for Enterprises and Articles of Association. The above profit distribution preplan must be submitted tothe 2017Annual General Meeting of shareholders.
Commitments
| Commitments | Promisee | Type of commitments | Content of commitments | Commit-ment date | Commit- ment term | Implement- ation |
| Commitments for Share Merger Reform | The original non-tradable shareholder Shenzhen International Holdings (SZ) Limited and Xin Tong Chan Industrial Development (Shenzhen) Co., Ltd. | Commitment of share reduction | The 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 | 2006-5-22 | N/A | By the end of the report period, the above shareholders of the Company had strictly carried out their promises. |
CSG Annual Report 2017
| of Original Shares Released from Trading Restrictions issued by CSRC during implementing share decreasingly-held plan and take information disclosure responsibility timely. | ||||||
| Commitments in report of acquisition or equity change | Foresea Life Insurance Co., Ltd,, Shenzhen Jushenghua Co., Ltd. and Chengtai Group Co., Ltd. | Commitment of horizontal competition, affiliate Transaction and capital occupation | Foresea Life Insurance Co., Ltd., Shenzhen Jushenghua Co., Ltd. and Chengtai Group Co., Ltd. issued detailed report of equity 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. | 2015-6-29 | During the period when Foresea Life remains the largest shareholder of the Company | By the end of the report period, the above shareholders of the Company had strictly carried out their promises. |
| Commitments in assets reorganization | Not applicable | |||||
| Commitments in initial public offering or re-financing | Not applicable | |||||
| Equity incentive commitment | The listed company | CSG 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. | 2017-10-10 | During the implementation of the equity incentive plan | The commitment is in normal performance. | |
| Other commitments for medium and small shareholders | Not applicable | |||||
CSG Annual Report 2017
| Completed on time(Yes/No) | Yes |
| If the commitments is not fulfilled on time, explain the reasons and the next work plan | Not 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
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 affiliated enterprises in thereport 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
On August 18, 2017, the 2
nd
Meeting of the 8
th
Session of the Board of Directors reviewed and approved the Proposal for changingAccounting Policy, which was based on the request of the notice issued by the Ministry of Finance on the issuance of the revised
“Enterprise Accounting Standards No. 16—Government Grants” (Finance and Accounting [2017] No. 15), and revised financialstatement presentation. “Other Income” item should be presented separately above “Operating Profit” item in the income statement.
The "Other Income" items are separately presented on the "Operating Profit" item. Since January 1, 2017, government subsidiesrelated to daily activities of enterprises have been reclassified from "Non-operating Income" item to "Other Income" item. Thecomparative financial statements of the year 2016 were not restated.On April 20, 2018, the 5
th
Meeting of the 8th Session of the Board of Directors reviewed and approved the Proposal for changingAccounting Policy, which was based on the request of the Notification of the issuance of No. 42 of Enterprise Accounting Standards:
Non-current Assets Held for Sale, Disposal Group and Termination of Operation(Finance and Accounting [2017] No. 13) and theNotification on Reversing and Issuing the Formats of Common Enterprise Financial Statements (Finance and Accounting [2017] No.
30), issued by the Ministry of Finance, and revised financial statement presentation. The “Asset Disposal Income” was added to theprofit statement, the “Gain/loss resulting from the disposal of non-current assets” which was originally booked in “Non-businessincome” and “Non-business Expenditure” was listed in “Asset disposal gain” and the comparable data during the comparable period
CSG Annual Report 2017
would be adjusted. Two items, (I) Net profit from continuous operation” and “(II) Net profit from terminated operation”, will
respectively reflect the net profit involved with continuous operation and terminated operation.The Company has conducted necessary communication with the accounting firm on this matter.
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 financial
report of last year
√Applicable □ Not applicableOn October 11, 2017, the Group established a subsidiary company, CHINA CSG （AUSTRALIA）PTY LTD. As of December 31,
2017, the Group who holds 100% of its shares has not invested yet.
IX. Engaging and dismissing of CPA firm
CPA firm engaged
| Name of domestic CPA firm | Asia Pacific (Group) CPAs (special general partnership) |
| Remuneration for domestic CPA firm (RMB 0,000) | 300 |
| Continuous life of auditing service for domestic CPA firm | 0 |
| Name of domestic CPA | Pan Qian, Zhang Yan |
| Continuous life of auditing service for domestic CPA | 0 |
Whether changed accounting firms in this period or not
√ Yes □ No
Whether changed the accounting firm during the audit period or not
√ Yes □ No
Whether performed the approval process when changed the accounting firm or not
√ Yes □ No
Detailed explanation of changing accounting firmThe interim meeting of the eighth session of the Board of Directors and the first extraordinary general meeting of shareholders in 2018reviewed and passed the "Proposal on Changing Accounting Firm." The Company plans to hire Asia Pacific (Group) CPAs (specialgeneral partnership) as the Company's 2017 annual financial audit agency and internal control audit agency. For details, please refer tothe announcements (2018-004 , 2018-011) published in China Securities Journal, Securities Times, Shanghai Securities News,Securities Daily, Hong Kong Commercial Daily and http://www.cninfo.com.cn on February 28, 2018 and March 15, 2018.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 the Company in thereport period, and contracted charges was RMB 0.30 million (not including traveling and accommodation expenses).
CSG Annual Report 2017
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 plan
or 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 2017 Restricted A- sharesIncentive Plan of CSG Holding Co., Ltd (Draft )and its summary, the Management Method of the Implementation and Review of2017 Restricted A-shares Incentive Plan of CSG Holding Co., Ltd and the Resolution on Applying the General Meeting of
Shareholders to Authorize the Board of Directors to Deal With the Related Matters on the Company’s 2017 Restricted A-shares
Incentive Plan. The above contents are detailed in the Announcement of the Resolution on the Third Meeting of the Eighth Session of
the Board of Directors published inwww.cninfo.com.cn (Announcement No.: 2017-063). The Company’s independent directors
issued independent opinions on the issues involved with restricted A- shares incentive plan.On Oct. 26, 2017, the Company convened the 5
th
Extraordinary General Meeting in 2017, which deliberated and approved the abovethree proposals. The Resolution on Adjusting the Object and Quantity Granted of 2017 Restricted A-share Incentive Plan and theResolution on Firstly Granted Restricted Shares to the Object of 2017 Restricted A-share were deliberated and approved on the
st
provisional meeting of the eighth session board of directors convened on Dec. 11
th
, 2017. It determined to grant 97,511,654restricted shares to 454 objects on Dec. 22, 2017, with price at RMB4.28/share. The reserved restricted shares was 17,046, 869shares.The granting of shares was completed on Dec. 25, 2017 and the specific content was detailed in the Announcement on Completingthe First Granting of 2017 Restricted Shares disclosed in www.cninfo.com.cn on Dec. 22, 2017 (Announcement No.:2017-079).According to the relevant provisions of the "Accounting Standards for Business Enterprises", the implementation of the Company'srestricted stock will have a certain impact on the Company's financial status and operating results in the next few years. The resultsare based on the annual audit report issued by the accounting firm.
CSG Annual Report 2017
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 report period.
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
CSG Annual Report 2017
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 guaranteed | Related Announcement disclosure date | Guarantee limit | Actual date of happening (Date of signing agreement) | Actual guarantee limit | Guarantee type | Guarantee term | Complete implementation or not | Guarantee for related party (Yes or no) |
| Guarantee of the Company for the subsidiaries | ||||||||
| Name of the Company guaranteed | Related Announcement disclosure date | Guarantee limit | Actual date of happening (Date of signing agreement) | Actual guarantee limit | Guarantee type | Guarantee term | Complete implementation or not | Guarantee for related party (Yes or no) |
| Chengdu CSG Glass Co.,Ltd. | 2017-07-31 | 5,000 | 2017-08-16 | 5,000 | Joint liability guarantee | 1 year | No | No |
| Dongguan CSG Architectural Glass Co., Ltd. | 2017-07-31 | 11,200 | 2017-08-11 | 10,000 | Joint liability guarantee | 1 year | No | No |
| Dongguan CSG Architectural Glass Co., Ltd. | 2017-01-13 | 18,000 | 2017-02-09 | 13,000 | Joint liability guarantee | 1 year | No | No |
| Xianning CSG Glass Co., Ltd. | 2017-07-31 | 7,000 | 2017-08-11 | 2,000 | Joint liability guarantee | 1 year | No | No |
| Xianning CSG Glass Co., Ltd. | 2017-07-31 | 10,000 | 2017-09-12 | 1,000 | Joint liability guarantee | 1 year | No | No |
| Sichuan CSG Energy Conservation Glass Co., Ltd. | 2017-07-31 | 7,000 | 2017-08-11 | 2,000 | Joint liability guarantee | 1 year | No | No |
| Sichuan CSG Energy Conservation Glass Co., Ltd. | 2017-01-23 | 5,000 | 2017-04-11 | 2,000 | Joint liability guarantee | 1 year | No | No |
| Wujiang CSG Glass Co., Ltd. | 2016-08-12 | 10,000 | 2017-03-07 | 5,000 | Joint liability guarantee | 1 year | No | No |
| Wujiang CSG Glass Co., Ltd. | 2017-11-27 | 10,000 | 2017-11-30 | 3,000 | Joint liability guarantee | 1 year | No | No |
CSG Annual Report 2017
| Wujiang CSG East China Architectural Glass Co., Ltd. | 2016-08-12 | 10,000 | 2017-04-28 | 6,000 | Joint liability guarantee | 1 year | No | No |
| Wujiang CSG East China Architectural Glass Co., Ltd. | 2017-11-27 | 10,000 | 2017-11-30 | 3,000 | Joint liability guarantee | 1 year | No | No |
| Wujiang CSG East China Architectural Glass Co., Ltd. | 2017-07-31 | 10,000 | 2017-09-14 | 10,000 | Joint liability guarantee | 1 year | No | No |
| Dongguan CSG Solar Glass Co., Ltd. | 2017-07-31 | 15,000 | 2017-12-14 | 3,300 | Joint liability guarantee | 1 year | No | No |
| Yichang Nanbo Display Co., Ltd. | 2017-05-31 | 3,648 | 2017-06-02 | 3,600 | Joint liability guarantee | 1 year | No | No |
| Tianjin CSG Energy-Saving Glass Co., Ltd. | 2016-08-12 | 10,000 | 2017-02-14 | 2,000 | Joint liability guarantee | 1 year | No | No |
| Dongguan CSG PV-tech Co., Ltd. | 2017-05-22 | 10,000 | 2017-06-15 | 4,680 | Joint liability guarantee | 1 year | No | No |
| Yichang CSG Polysilicon Co., Ltd. | 2017-08-07 | 6,600 | 2017-08-25 | 4,000 | Joint liability guarantee | 1 year | No | No |
| Yichang CSG Polysilicon Co., Ltd. | 2017-06-23 | 30,000 | 2017-07-10 | 5,000 | Joint liability guarantee | 1 year | No | No |
| Qingyuan CSG New Energy-Saving Materials Co., Ltd. | 2017-09-15 | 5,000 | 2017-09-22 | 3,410 | Joint liability guarantee | 1 year | No | No |
| Zhanjiang CSG New Energy Co., Ltd. | 2017-07-31 | 9,000 | 2017-09-26 | 9,000 | Joint liability guarantee | 3 years | No | No |
| Xianning CSG Photovoltaic Glass Co., Ltd. | 2016-08-12 | 30,000 | 2017-01-03 | 19,000 | Joint liability guarantee | 3 years | No | No |
| Xianning CSG Photovoltaic Glass Co., Ltd. | 2017-07-31 | 20,000 | 2017-09-07 | 3,500 | Joint liability guarantee | 3 years | No | No |
| Yichang Nanbo Photoelectric Glass Co., Ltd. | 2017-05-22 | 5,472 | 2017-05-26 | 5,400 | Joint liability guarantee | 3 years | No | No |
| Yichang Nanbo Photoelectric Glass Co., Ltd. | 2016-12-14 | 2,432 | 2017-05-23 | 2,400 | Joint liability guarantee | 1 year | No | No |
| Yichang Nanbo | 2017-05-22 | 10,032 | 2017-05-31 | 10,000 | Joint liability | 3 years | No | No |
CSG Annual Report 2017
| Photoelectric Glass Co., Ltd. | guarantee | |||||||
| Yichang CSG Polysilicon Co., Ltd. | 2017-05-22 | 20,000 | 2017-06-22 | 19,000 | Joint liability guarantee | 3 years | No | No |
| Dongguan CSG PV-tech Co., Ltd. | 2017-11-27 | 20,000 | 2017-12-20 | 20,000 | Joint liability guarantee | 3 years | No | No |
| Wujiang CSG Glass Co., Ltd. | 2017-08-28 | 30,000 | 2017-09-13 | 30,000 | Joint liability guarantee | 3 years | No | No |
| Xianning CSG Glass Co., Ltd. | 2017-08-28 | 25,000 | 2017-09-18 | 25,000 | Joint liability guarantee | 3 years | No | No |
| Dongguan CSG Solar Glass Co., Ltd. | 2017-08-07 | 20,000 | 2017-09-22 | 20,000 | Joint liability guarantee | 3 years | No | No |
| Yichang CSG Polysilicon Co., Ltd. | 2017-06-23 | 20,000 | 2017-06-28 | 20,000 | Joint liability guarantee | 3 years | No | No |
| Sichuan CSG Energy Conservation Glass Co., Ltd. | 2017-09-25 | 15,000 | 2017-09-30- | 15,000 | Joint liability guarantee | 3 years | No | No |
| Hebei CSG Glass Co., Ltd. | 2017-10-10 | 20,000 | 2017-10-30 | 20,000 | Joint liability guarantee | 3 years | No | No |
| Chengdu CSG Glass Co.,Ltd. | 2017-09-25 | 20,000 | 2017-09-28 | 20,000 | Joint liability guarantee | 3 years | No | No |
| Qingyuan CSG New Energy-Saving Materials Co., Ltd. | 2016-08-12 | 5,000 | 2016-12-14 | 735 | Joint liability guarantee | 1 year | Yes | No |
| Wujiang CSG Glass Co., Ltd. | 2016-08-12 | 10,000 | 2017-04-01 | 2,000 | Joint liability guarantee | 1 year | Yes | No |
| Xianning CSG Energy-saving Glass Co., Ltd. | 2016-01-05 | 10,000 | 2016-03-17 | 1,200 | Joint liability guarantee | 3 years | Yes | No |
| Wujiang CSG East China Architectural Glass Co., Ltd. | 2016-12-14 | 10,000 | 2017-05-22 | 1,000 | Joint liability guarantee | 1 year | Yes | No |
| Wujiang CSG East China Architectural Glass Co., Ltd. | 2015-06-15 | 15,000 | 2016-01-28 | 10,000 | Joint liability guarantee | 1 year | Yes | No |
| Dongguan CSG Architectural Glass Co., Ltd. | 2017-01-13 | 18,000 | 2017-02-09 | 7,000 | Joint liability guarantee | 1 year | Yes | No |
| Xianning CSG Glass | 2016-08-12 | 10,000 | 2016-08-16 | 800 | Joint liability | 1 year | Yes | No |
CSG Annual Report 2017
| Co., Ltd. | guarantee | |||||||
| Xianning CSG Energy-saving Glass Co., Ltd. | 2016-08-12 | 10,000 | 2016-08-16 | 2,600 | Joint liability guarantee | 1 year | Yes | No |
| Dongguan CSG Architectural Glass Co., Ltd. | 2016-08-12 | 11,200 | 2016-08-19 | 10,000 | Joint liability guarantee | 1 year | Yes | No |
| Sichuan CSG Energy Conservation Glass Co., Ltd. | 2016-03-23 | 13,000 | 2016-04-16 | 2,000 | Joint liability guarantee | 1 year | Yes | No |
| Dongguan CSG Solar Glass Co., Ltd. | 2016-03-23 | 15,000 | 2016-08-19 | 1,400 | Joint liability guarantee | 1 year | Yes | No |
| Dongguan CSG Solar Glass Co., Ltd. | 2016-03-23 | 15,000 | 2016-08-19 | 417 | Joint liability guarantee | 1 year | Yes | No |
| Dongguan CSG Solar Glass Co., Ltd. | 2016-03-23 | 15,000 | 2016-08-19 | 1,483 | Joint liability guarantee | 1 year | Yes | No |
| Dongguan CSG Architectural Glass Co., Ltd. | 2016-08-12 | 11,200 | 2016-08-19 | 10,000 | Joint liability guarantee | 1 year | Yes | No |
| Total amount of approving guarantee for subsidiaries in report period (B1) | 397,952 | Total amount of actual occurred guarantee for subsidiaries in report period (B2) | 376,925 | |||||
| Total amount of approved guarantee for subsidiaries at the end of reporting period (B3) | 460,384 | Total balance of actual guarantee for subsidiaries at the end of reporting period (B4) | 326,290 | |||||
| Guarantee of subsidiaries for subsidiaries | ||||||||
| Name of the Company guaranteed | Related Announcement disclosure date | Guarantee limit | Actual date of happening (Date of signing agreement) | Actual guarantee limit | Guarantee type | Guarantee term | Complete implementation or not | Guarantee for related party (Yes or no) |
| Total amount of guarantee of the Company( total of three abovementioned guarantee) | ||||||||
| Total amount of approving guarantee in report period (A1+B1+C1) | 397,952 | Total amount of actual occurred guarantee in report period (A2+B2+C2) | 376,925 | |||||
| Total amount of approved guarantee at the end of report period (A3+B3+C3) | 460,384 | Total balance of actual guarantee at the end of report period (A4+B4+C4) | 326,290 | |||||
| The proportion of the total amount of actual guarantee in the net assets of the Company(that is A4+ B4+C4) | 38.57% | |||||||
CSG Annual Report 2017
| Including: | |
| 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) | The Company shall bear joint and several liabilities in guarantee range if the subsidiaries fail to fulfill the obligation of repayment. |
| Explanations on external guarantee against regulated procedures | Nil |
(2) Illegal external guarantee
□ Applicable √ Not applicable
No Illegal external guarantee in the report period.
3. Entrust others to manage cash assets(1) Entrusted Financing
√Applicable □ Not applicable
Overview of Entrusted Financing in the report period
Unit: RMB 0,000
| Type | Sources of funds | Amount of occurrence | Unexpired balance | Overdue outstanding amount |
| Bank financial products | Own funds | 49,600 | 0 | 0 |
| Brokerage financial products | Own funds | 5,000 | 5,000 | 0 |
| Total | 54,600 | 5,000 | 0 | |
The specific circumstances of high-risk entrusted financing with large individual amount or low security, poor liquidity, and no costprotection
□ Applicable √ Not applicable
Entrusted financing appears to be unable to recover the principal or there may be other circumstances that may result in impairment
□ Applicable √ Not applicable
(2) Entrusted loans
□ Applicable √ Not applicable
The Company had no entrusted loans in the report period.
CSG Annual Report 2017
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
2017Annual Social Responsibilities Report of CSG was the 10th year the Company consecutively released social responsibilitiesreport. The report emphasized the year of 2017, systemically formulated the Company concrete actions of how to positively performthe social duties, and the efforts to implement the scientific development perspective, build a harmonious society, and advance thesustainable development of economic society. See the full report on www.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 the environmentalprotection department
| Name of Company or subsidiary | Name of major pollutants and characteristic contaminants | Way of emission | Number of Exhaust vent | Exhaust vent distribution | Emission concentration | Implementation of pollutant emission standards | Total emission | Approved total emission | Excessive emissions |
| Xianning CSG Glass Co., Ltd. | Dust\Soot\ SO2\ Nitrogen oxide | Discharge after the treatment of denitrification and dust removal | 16 | Chimney, Exhaust gas outlet | Dust≤30mg/m?；Soot≤40 mg/m?；SO2≤200 mg/m?；NOx≤350 mg/m?； | 《Emission standard of air pollutants for flat glass industry》(GB26453-2011) | Particulates≤50.92/a；SO2≤144.64t/a；NOx≤251.85t/a； | Particulates：96.82t/a；SO2:636.5t/a Nitrogen oxides：1113.89t/a | Reach the discharge standard |
| Chengdu CSG Glass Co., Ltd. | Dust\Soot\ SO2\ Nitrogen oxide | Discharge after the treatment of denitrification and dust removal | 15 | Chimney, Exhaust gas outlet | Dust≤28.4mg/m?；Soot≤32.13mg/m?；SO2≤277.6mg/m?；NOx≤330.3mg/m?； | 《Emission standard of air pollutants for flat glass industry》(GB26453-2011) | Particulates:74.7t；SO2: 679.392t；NOx :975.465t； | Particulates：129.395t/a；SO2:1035.162t/a Nitrogen oxides：1811.536t/a | Reach the discharge standard |
| Hebei CSG Glass Co., Ltd. | Particulates＼SO2＼Nitrogen | Discharged after denitrification, | 11 | Chimney, Exhaust gas outlet | Particulates≤16.9mg/m?； SO2≤113.2mg/m? | 《Emission Standard for Air Pollutants in | Particulates:21.74t；SO2:147.95t；NOx :421.9t | Particulates：59.78t/a；SO2:498.18t/ | Reach the discharge standard |
CSG Annual Report 2017
| oxides | desulfurization and dust removal | ； NOx≤324.1mg/m? | Electronic Glass Industry》（DB13/2168-2015）Hebei Local Standard | a NOx：982.2t/a | |||||
| Yichang CSG Polysilicon Co., Ltd. | PH\COD\ Ammonia nitrogen/Fluoride | Discharged to the sewage treatment plant after being treated by the Company's sewage treatment station. | 3 | Discharge outlets of waste water | PH:6-9；COD≤500mg/L；Fluoride≤10 mg/L； | 《Comprehensive Sewage Discharge Standard》Grade 3rd standard (GB8978-1996), implement grade 1st standard for fluoride | COD：61.6238t Ammonia nitrogen：2.1737t | COD：198.47t/a；Ammonia nitrogen：2.49t/a | Reach the discharge standard |
| Wujiang CSG Glass Co., Ltd. | Particulates\ SO2\ Nitrogen oxide | Discharge after the treatment of denitrification and dust removal | 39 | Chimney, Exhaust gas outlet | Particulates≤20mg/m?；SO2≤200 mg/m?；NOx≤300 mg/m?； | 《Emission standard of air pollutants for flat glass industry》(GB26453-2011) | Particulates:10.22t；SO2: 81.36t；NOx :225.49t | Particulates：76.91t/a；SO2:238.28t/a ; Nitrogen oxide：818.04t/a | Reach the discharge standard |
| Dongguan CSG Solar Glass Co., Ltd. | Dust\ Soot\ SO2\ Nitrogen oxide | Discharge after the treatment of denitrification and dust removal | 22 | Chimney, Exhaust gas outlet | Dust≤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) | Particulates:17.88t；SO2: 224.45t；NOx :464.13t； | Particulates：34.85t/a；SO2:300.99t/a; Nitrogen oxide：535.67t/a | Reach the discharge standard |
| Dongguan CSG Architectural Glass Co., Ltd. | PH\COD\ Ammonia nitrogen | Discharged after being treated by the Company's sewage treatment station | 1 | Discharge outlets of waste water | pH：6~9 COD≤25.8 mg/L； Ammonia nitrogen≤0.546 mg/L Fluoride≤0.369mg/L | Discharge Limits of Water Pollutants in Guangdong (DB44/26-2001), the second period, the first grade standard | COD:1.43t；Ammonia nitrogen:0.03t； | COD:5.4t/a； Ammonia nitrogen:0.6t/a； | Reach the discharge standard |
| Dongguan CSG PV-tech Co., Ltd. | Waste water: Fluoride \COD\ Ammonia | The waste water is discharged after being treated by the | 2 outlets for waste water and 18 | Discharge outlets of waste water and exhaust gas | Waste water：SS≤50mg/L；COD≤70 mg/L；Ammonia nitrogen≤ | Discharge Limits of Water Pollutants in Guangdong (DB44/26-2001) | Waste water： COD：10.05t；Ammonia nitrogen：0.36t；Fluoride：0.88t | Waste water： COD：14.04t/a；Ammonia | Reach the discharge standard |
CSG Annual Report 2017
| nitrogen Exhaust gas: HF\NOx\HCI\CL2\NH3\VOC | sewage treatment station, and the exhaust gas is discharged after being treated by the exhaust gas treatment tower. | outlets for exhaust gas | 10mg/L；Fluoride≤8mg/L；Exhaust gas：NOx≤30mg/m3；HF≤3 mg/m3；CL2≤5mg/m3；HCI≤5mg/m3；VOC≤30mg/m3； | , the second period, the first grade standard; Discharge Standard of Pollutants in Battery Industry(GB30484-2013);For VOCs, refer to implement the Emission Standards for Furniture Manufacturing Industry (DB44/814-2010), the standard for the second stage; For NH3, implement the Emission Standards for Odor Pollutants(GB14554-93). | Exhaust gas： Nitrogen oxides：18.247t；Fluoride：0.93t；Hydrogen fluoride：0.62t；Chlorine gas：0.136t；Ammonia：1.117t；VOC：0.2831t | nitrogen：1.56t/a；Fluoride：1.56t/a Exhaust gas： Nitrogen oxides：20.825t/a；Fluoride：1.5156t/a；Hydrogen fluoride：1.0829t/a；Chlorine gas：0.2363t/a；Ammonia：2.3312t/a；VOC：1.0986t/a |
Construction and operation of pollution prevention and control facilitiesThe Company has built flue gas dust removal and denitrification system on production lines. The system runs normally, and the
emission of exhaust gas meets regulations.The environmental impact assessment of construction projects and other environmental protection licenseIn 2017, the project for the construction of a photoconductive material production line for light guide plates of Xianning CSG
Photovoltaic Glass Co., Ltd. was newly launched, and environmental impact assessments have been carried out and approved.The
secondary companies have effectively carrying out the “Three Simultaneous” procedures for all other new and old projects, and have
been rewarded with the pollutant discharge license within the validity period. They timely declared the pollutant discharge, carriedout the monitoring and reporting of pollutant discharge and paid the pollutant discharge fee according to the relevant regulations ofthe state.
Emergency response plan system of environment incidentIn accordance with the national requirements, all secondary companies prepared emergency environmental response plan for
environment incident, organized and carried out expert evaluation and put on record in the local environmental protection departmentas required, conducted the emergency drill against environmental incidents. And there were no major environmental incidentsoccurred throughout the year.
CSG Annual Report 2017
Environmental self-monitoring schemeIn accordance with provisions of national laws and regulations and the requirements put forward in the assessment documents of the
environment impact of construction project and reply, the secondary companies built on-line monitoring equipment for waste waterand waste gas which are put into operation normally. They compared and reviewed the effectiveness of the on-line monitoring facilitieson a regular basis. Besides, they also entrusted the third party units to carry out the manual monitoring of the environment and fullymonitor the discharge of the pollutants.
Other environmental information to be disclosedThose key monitored secondary companies above municipal level disclosed their environment protection status and made regular
updating through websites, display cards, environmental information platform and other ways.Other information related to environment protectionCSG always attaches great importance to environmental protection work, actively fulfills its social responsibility, adheres to thedevelopment road of energy saving, emission reduction, low carbon and environmental protection. It made remarkable achievementsin daily environmental management and the reduction of pollutant discharge, and was praised by the government department. For
example, Xianning CSG was awarded with the title of “2017 Environmental Protection Outstanding Unit in High-Tech Zone” by the
Work Committee of Xianning New Technology Industry Development Zone and the Management Committee of Xianning High-techIndustrial Development Zone.
XIX. Statement on other important matters
√Applicable □ Not applicable
1. The Termination of Non-public offering of A-share
The Company convened the first interim shareholders’ meeting on July 2, 2015, which deliberated and approved the Proposal of
Non-public Offering of A-share to Specific Investors and related Proposals. The resolution on the non-public offering of shares of the
Company was valid within twelve months after it has been approved by the shareholders’ meeting.As of July 2, 2016, the Company’s proposal of non-public offering of A-share hadn’t obtained a written approval document from the
China Securities Regulatory Commission. As a result, the proposal of non-public offering of A-share was lapsed automaticallyaccording to the related provisions of China Securities Regulatory Commission and Shenzhen Stock Exchange. The Companypublicized the Accouchement of CSG on the Expiration of the Proposal of Non-public Offering of A-share on July 4, 2016(Announcement No.:2016-030).Afterwards, the Company and the sponsor institution respectively submitted the application for withdrawing the application fornon-public offering of shares. On Feb. 7, 2017, the Company received the Notification of China Securities Regulatory Commissionon Terminating the Application for Administration Permission (No.[2017]17) ,according to which, China Securities Regulatory
Commission decided to terminate the examination of the Company’s application for non-public offering of shares. The Company
publicized the Announcement on Receiving the Notification of China Securities Regulatory Commission to Terminate the Application
for Administration Permission On Feb. 8, 2017 (Announcement No.:2017-009).
2. Short-term Financing Bills
On Dec.14, 2016, the second extraordinary shareholders’ general meeting of 2016 of CSG deliberated and approved the proposal ofthe offering and registration of short-term financing bills, and agreed the Company’s registration and issuance of short-term financing
bills with a total amount of RMB 2.7 billion, which could be issued by stages within period of validity of the registration according to
the Company’s actual demands for funds and the status of inter-bank funds. However, the term of each issue shall not be longer than
CSG Annual Report 2017
one year and the registered quota shall not exceed 40 percent of the Company’s net assets.
3. Ultra-short-term financing bills
On 10 December 2014, the First Extraordinary Shareholders’ General Meeting 2014 of CSG Holding Co., Ltd deliberated and
approved the proposal of application for registration and issuance of ultra-short-term financing bills with registered capital of RMB 4billion at most and validity within 2 years. On 21 May 2015, National Association of Financial Market Institutional Investors
(NAFMII) held the 32nd registration meeting of 2015, in which NAFMII decided to accept the registration of the Company’s
ultra-short-term financing bills, amounting to RMB 4 billion and valid for two years. China Merchants Bank Co., Ltd., ShanghaiPudong Development Bank Co., Ltd., Industrial Bank Co., Ltd., China CITIC Bank Co., Ltd. and China Agriculture Bank Co., Ltd.were joint lead underwriters of these ultra-short-term financing bills, which could be issued by stages within period of validity of theregistration. On 17 May 2016, the Company issued the second batch of ultra-short-term financing bills for the year of 2016 with totalamount of RMB 0.9 billion and valid term of 270 days at the issuance rate of 4.18%, which has been redeemed on 13 February 2017.On 2 August 2016, the Company issued the third batch of ultra-short-term financing bills for the year of 2016 with total amount ofRMB 0.6 billion and valid term of 270 days at the issuance rate of 3.67%, which has been redeemed on 1 May 2017. On Sep. 1, 2016,the Company issued the forth batch of ultra-short-term financing bills for the year of 2016 with total amount of RMB 0.5 billion andvalid term of 270 days at the issuance rate of 3.5%, which has been redeemed on 2 June 2017.For details, please refer to www.chinabond.com.cn and www.chinamoney.com.cn.
4. Perpetual bonds
On April 15, 2016, the Shareholders’ General Meeting 2015 of CSG deliberated and approved the proposal of application for
registration and issuance of perpetual bonds, and agreed the Company to register and issue perpetual bonds with total amount of
RMB 3.1 billion which could be issued by stages within period of validity of the registration according to the Company’s actual
demand for funds and the capital status of inter-bank market.
5. Medium-term notes
On 10 December 2014, the First Extraordinary Shareholders’ General Meeting 2014 of CSG Holding Co., Ltd deliberated and
approved the proposal of application for registeration and issuance of medium term notes with total amount of RMB 1.2 billion atmost. On 21 May 2015, National Association of Financial Market Institutional Investors (NAFMII) held the 32nd registration
meeting of 2015, in which NAFMII decided to accept the registration of the Company’s medium term notes, amounting to RMB 1.2
billion and valid for two years. China Merchants Bank Co., Ltd. and Shanghai Pudong Development Bank Co., Ltd. were joint leadunderwriters of these medium term notes which could be issued by stages within period of validity of the registration.On 10 July2015, the Company issued the first batch of medium term notes with total amount of RMB 1.2 billion and valid term of 5 years at theissuance rate of 4.94%, which will be redeemed on 14 July 2020.
On April 15, 2016, the Shareholders’ General Meeting of 2015 of CSG deliberated and approved the proposal of application for
registration and issuance of medium term notes with total amount of RMB 0.8 billion, which could be issued by stages within period
of validity of the registration according to the Company’s actual demands for funds and the status of inter-bank funds. On 2 March
2018, National Association of Financial Market Institutional Investors (NAFMII) held the 14
th
registration meeting of 2018, in which
NAFMII decided to accept the registration of the Company’s medium term notes, amounting to RMB 0.8 billion and valid for two
years. Shanghai Pudong Development Bank Co., Ltd. and China CITIC Bank Corporation Limited were joint lead underwriters ofthese medium term notes which could be issued by stages within period of validity of the registration.
On May 22, 2017, the Shareholders’ General Meeting of 2016 of CSG deliberated and approved the proposal of application for
registration and issuance of medium term notes with total amount of RMB 1 billion, which could be issued by stages within period of
validity of the registration according to the Company’s actual demands for funds and the status of inter-bank funds.
CSG Annual Report 2017
For details, please refer to www.chinabond.com.cn and www.chinamoney.com.cn.
XX. Significant events of subsidiaries of the Company
□ Applicable √ Not applicable
CSG Annual Report 2017
Section VI. Changes in Shares and Particulars about Shareholders
I. Changes in Share Capital1. Changes in Share Capital
Unit: Share
| Before the Change | Increase/Decrease in the Change (+, -) | After the Change | |||||||
| Amount | Proportion (%) | New shares issued | Bonus shares | Capitalization of public reserve | Others | Subtotal | Amount | Proportion (%) | |
| I. Restricted shares | 12,736,888 | 0.61% | 97,511,654 | 0 | -12,475,982 | 85,035,672 | 97,772,560 | 3.94% | |
| 1. State-owned shares | |||||||||
| 2. State-owned legal person’s shares | |||||||||
| 3. Other domestic shares | 12,736,888 | 0.61% | 97,511,654 | 0 | -12,475,982 | 85,035,672 | 97,772,560 | 3.94% | |
| Including: Domestic legal person’s shares | |||||||||
| Domestic natural person’s shares | 12,736,888 | 0.61% | 97,511,654 | 0 | -12,475,982 | 85,035,672 | 97,772,560 | 3.94% | |
| 4. Foreign shares | |||||||||
| Including: Foreign legal person’s shares | |||||||||
| Foreign natural person’s shares | |||||||||
| II. Unrestricted shares | 2,062,598,672 | 99.39% | 0 | 311,300,333 | 12,475,982 | 323,776,315 | 2,386,374,987 | 96.06% | |
| 1. RMB Ordinary shares | 1,300,128,680 | 62.65% | 0 | 196,912,735 | 12,475,982 | 209,388,717 | 1,509,517,397 | 60.77% | |
| 2. Domestically listed foreign shares | 762,469,992 | 36.74% | 0 | 114,387,598 | 0 | 114,387,598 | 876,857,590 | 35.30% | |
| 3. Overseas listed foreign shares | |||||||||
| 4. Others | |||||||||
| III.Total shares | 2,075,335,560 | 100% | 97,511,654 | 311,300,333 | 0 | 408,811,987 | 2,484,147,547 | 100% | |
Reason for equity changes
√Applicable □Not applicable
1. Within the report period, the total shares of the Company rose by 97,511,654 due to the implementation of restricted shareincentive plan.
2. The total share of the Company rose by 311,300,333 due the implementation of the implementation of 2016 profit distribution andcapitalization of capital reserve.
3. Due to changes in the posts of directors, supervisors and other senior management of the Company, the restricted shares held by
CSG Annual Report 2017
the senior management of the Company were adjusted consequently according to the provisions of the Shenzhen branch of the ChinaSecurities Registration and Shenzhen Branch of China Securities Depository and Clearing Corporation Limited and as a result, therestricted shares and non-restricted shares of the Company changed accordingly.
Approval on equity changes
√Applicable □Not applicable
1. 2016 profit distribution and the capitalization of capital reserve propose was deliberated and approved on the 19
th
Meeting of the
th
Session of Board of Directors held on Apr. 27, 2017 and 2016 Annual General Meeting of Shareholders held on May 22, 2017.2. The restricted share incentive plan of the Company were deliberated and approved on the 3
rd
Meeting of the 8
th
Session of b Boardof Directors and the 3
rd
Meeting of the 8
th
Session of Supervisor Committee convened on Oct. 10. 2017, and eventually deliberatedand approved on the 5
th
Extraordinary General Meeting of Shareholders of 2017 convened on Oct. 26, 2017.
Transfer of ownership of changes in shares
√Applicable □Not applicable
1. The A-share registration date for 2016 annual profit distribution and the capitalization of capital reserve was on Jul. 19, 2017 and
the ex-dividend date was Jul. 19, 2017. A-shares bonus (or capitalized) were directly recorded in the stockholders’ A-share accounts
on July 19, 2017. The registration date and ex-dividend date of B shares were July 21, 2017 and July 19, 2017 respectively. B-shares
bonus (or capitalized) were directly recorded in shareholders’ B-share accounts on Jul. 21, 2017.2. The first granting date of the company’s restricted stock incentive plan is Dec. 11, 2017, and the first granted restricted shares
shall not permitted for trading until Dec. 25, 2017.3. On Jan. 11, 2017, Mr. Zhao Peng was elected as the employee representative supervisor of the 7
th
Session of the SupervisorCommittee of the Company in the First Staff Congress of the Company and therefore 75% or 1875 shares of the Company held byhim were classified as executive locked stocks. On Apr. 13, 2017, Mr. Zhao Peng was elected as the employee representativesupervisor of 8
th
of the Supervisor Committee of the Company in the Second Staff Congress of the Company in 2017 and therefore75% or 1875 shares of the Company held by him were reclassified as executive locked stocks. Due to the profit distribution andcapitalization of capital reserve on Jul. 21, 2017, the shares held by Mr. Zhao Peng rose by 375 shares and 75% or 281 shares addedwere classified as executive locked stocks.
4. On Feb. 23, 2017, the interim meeting of the 7
th
Session of Board of Directors of the Company deliberated and approved theProposal for Employing Senior Management in which Mr. Li Weinan was elected as Vice President of the Company. And as a result,75% or 225,000 shares held by him was classified as executive locked stocks. On May 2, 2017, the 1
st
Meeting of the 8
th
Session ofBoard of Directors of the Company deliberated and approved the Proposal for Employing the New Session of Senior Managementwhere Mr. Li Weinan was elected as Vice President of the Company. And as a result, 75% or 225,000 shares held by him wereclassified as executive locked stocks. Due to the profit distribution and capitalization of capital reserve on Jul. 19, 2017, the sharesheld by Mr. Li Weinan rose by 45,000 shares and 75% or 33, 750 added were classified as executive locked stocks.
Influence on the basic EPS and diluted EPS as well as other financial indexes of net assets per share attributable to commonshareholders of Company in the latest year and period
√Applicable □ Not applicable
CSG Annual Report 2017
Please refer to the main accounting data and financial indicators in this report for the details of the impact of stock changes.
Other information necessary to be disclosed or need to be disclosed under requirement from security regulators
□Applicable √ Not applicable
2. Changes of restricted shares
√Applicable □ Not applicable
Unit: Share
| Shareholders’ name | Number of shares restricted at Period-begin | Number of shares released in the Year | Number of new shares restricted in the Year | Number of shares restricted at Period-end | Restriction reasons | Released date |
| Zeng Nan | 4,500,388 | 4,500,388 | 0 | 0 | On 15 November 2016, Zeng Nan who used to be chairman of the Board of Directors of the Company resigned from his office. According to relevant requirements, all the shares held by him had to be locked up for six months. | 2017-5-16 |
| Wu Guobin | 1,810,000 | 1,810,000 | 0 | 0 | On 15 November 2016, Wu Guobin who used to be CEO of the Company resigned from his office. According to relevant requirements, all the shares held by him had to be locked up for six months. | 2017-5-16 |
| Luo Youming | 1,790,000 | 1,790,000 | 0 | 0 | On 15 November 2016, Luo Youming who used to be CFO of the Company resigned from his office. According to relevant requirements, all the shares held by him had to be locked up for six months. | 2017-5-16 |
| Ke Hanqi | 1,730,000 | 1,730,000 | 0 | 0 | On 15 November 2016, Ke Hanqi who used to be vice president of the Company resigned from his office. According to relevant requirements, all the shares held by him had to be locked up for six months. | 2017-5-16 |
| Zhang Fan | 1,530,000 | 1,530,000 | 0 | 0 | On 15 November 2016, Zhang Fan who used to be vice president of the Company resigned from his office. According to relevant requirements, all the shares held by him had to be | 2017-5-16 |
CSG Annual Report 2017
| locked up for six months. | ||||||
| Zhang Bozhong | 114,000 | 114,000 | 0 | 0 | On 15 November 2016, Zhang Bozhong who used to be vice president of the Company resigned from his office. According to relevant requirements, all the shares held by him had to be locked up for six months. | 2017-5-16 |
| Ding Jiuru | 1,050,000 | 1,050,000 | 0 | 0 | On 16 November 2016, Ding Jiuru who used to be Secretary of the Board of Directors of the Company resigned from his office. According to relevant requirements, all the shares held by him had to be locked up for six months. | 2017-5-17 |
| Zhou Hong | 212,500 | 212,500 | 0 | 0 | On 12 August 2016, Zhou Hong who used to be Secretary of the Board of Directors of the Company resigned from her office. According to relevant requirements, all the shares held by her had to be locked up for six months. | 2017-2-13 |
| Chen Lin | 0 | 0 | 3,207,639 | 3,207,639 | Awarded equity incentives on December 11, 2017 | According to the implementation of the Company's restricted stock equity incentive plan to implement the lifting of the restriction period, after the ban is lifted, the shares held by the executives will be locked according to relevant policies. |
| Lu Wenhui | 0 | 0 | 2,405,729 | 2,405,729 | Awarded equity incentives on December 11, 2017 | According to the implementation of the Company's restricted stock equity incentive plan to implement the lifting of the restriction period, |
CSG Annual Report 2017
| after the ban is lifted, the shares held by the executives will be locked according to relevant policies. | ||||||
| Li Weinan | 0 | 0 | 2,549,920 | 2,549,920 | Executive locked stocks of 258,750 shares and 2,291,170 shares of equity incentives awarded on December 11, 2017 | Executive locked stocks of 258,750 will be locked up for a long time. According to the implementation of the Company's restricted stock equity incentive plan to implement the lifting of the restriction period, after the ban is lifted, the shares added will be locked according to relevant policies. |
| He Jin | 0 | 0 | 1,600,000 | 1,600,000 | Awarded equity incentives on December 11, 2017 | According to the implementation of the Company's restricted stock equity incentive plan to implement the lifting of the restriction period, after the ban is lifted, the shares held by the executives will be locked according to relevant policies. |
| Yang Xinyu | 0 | 0 | 2,291,170 | 2,291,170 | Awarded equity incentives on December 11, 2017 | According to the implementation of the Company's restricted stock equity incentive plan to implement the lifting of the restriction period, after the ban is lifted, |
CSG Annual Report 2017
| the shares held by the executives will be locked according to relevant policies. | ||||||
| Core Management Team (108 persons) | 0 | 0 | 62,410,653 | 62,410,653 | Awarded equity incentives on December 11, 2017 | According to the implementation of the Company's restricted stock equity incentive plan to implement the lifting of the restriction period |
| Technology and Business Backbone (341 persons) | 0 | 0 | 23,305,293 | 23,305,293 | Awarded equity incentives on December 11, 2017 | According to the implementation of the Company's restricted stock equity incentive plan to implement the lifting of the restriction period |
| Zhao Peng | 0 | 0 | 2,156 | 2,156 | Executive locked stocks of of 2156 shares | Long-term locked |
| Total | 12,736,888 | 12,736,888 | 97,772,560 | 97,772,560 | -- | -- |
Note: In case the unlocking conditions of the restricted stock incentive plan is satisfied, the restricted shares Unlock in three phasesafter 12 months from the date of grant: 40% of the restricted stocks will be available for circulation within the period (from the firsttrading day following the lock-up period of 12 months to the last trading day of lock-up period of 24 months), 30% of the restrictedstocks will be available for circulation within the period (from the first trading day following the lock-up period of 24 months to thelast trading day of the lock-up period of 36 months), and 30% of the restricted stocks will be available for circulation within theperiod (from the first trading day following the lock-up period of 36 months to the last trading day of the lock-up period of 48months).
II. Issuance and listing of Securities
1. Security issued (excluding preferred stock) in the report period
√Applicable □ Not applicable
| Name of stock and its derivative securities | Issue date | Issue price (or interest rate) | Issue volume | Listing date | Number of permitted trading transactions | Transaction termination date |
| Stock class | ||||||
| Southern Glass A | December 11, 2017 | 4.28 | 97,511,654 | December 25, | 97,511,654 | |
CSG Annual Report 2017
Explanation of the issuance of securities (excluding preferred shares) during the reporting periodOn Oct. 10, 2017, the 3
rd
Meeting of the 8
th
Board of Directors of the Company deliberated and approved 2017 Restricted A- sharesIncentive Plan of CSG Holding Co., Ltd (Draft )and its summary, the Management Method of the Implementation and Review of2017 Restricted A-shares Incentive Plan of CSG Holding Co., Ltd and the Resolution on Applying the General Meeting of
Shareholders to Authorize the Board of Directors to Deal With the Related Matters on the Company’s 2017 Restricted A-shares
Incentive Plan. The above contents are detailed in the Announcement of the Resolution on the Third Meeting of the Eighth Session of
the Board of Directors published inwww.cninfo.com.cn (Announcement No.: 2017-063). The Company’s independent directors
issued independent opinions on the issues involved with restricted A- shares incentive plan.On Oct. 26, 2017, the Company convened the 5
th
Extraordinary General Meeting in 2017, which deliberated and approved the abovethree proposals. The Resolution on Adjusting the Object and Quantity Granted of 2017 Restricted A-share Incentive Plan and theResolution on Firstly Granted Restricted Shares to the Object of 2017 Restricted A-share were deliberated and approved on the
st
provisional meeting of the eighth session board of directors convened on Dec. 11
th
, 2017. It determined to grant 97,511,654restricted shares to 454 objects, with price at RMB 4.28/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 on Completingthe First Granting of 2017 Restricted Shares disclosed in www.cninfo.com.cn on Dec. 22, 2017 (Announcement No.:2017-079).
2. Particulars about changes of total shares and shareholder structure as well as changes of assets andliability structure
√Applicable □ Not applicable
1. Statement on profit distribution plan and capitalization of capital reserve plan of the Company in 2016: based on 2,075,335,560shares of the total share capital while dividends will be distributed, distributing cash dividend of RMB 1.00 (tax included) for every10 shares to all shareholders. Meanwhile the Company will transfer capital reserve into capital with 1.5 shares for every 10 shares toall shareholders based on 2,075,335,560 shares of the total share capital. The program was completed on July 21, 2017.2. During the report period, the Company issued 97,511,654 restricted stocks to 454 incentive targets. The initial grant date for thisrestricted stock was December 11, 2017, and the share capital was increased to 2,484,147,547 shares after the grant was completed. Thelisting date for the initial grant of shares was December 25, 2017.
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
2017Total shareholders at
the end of the reportperiod
| Total shareholders at the end of the report period | 165,330 | Total shareholders at the end of the month before this annual report disclosed | 157,660 | Total preference shareholders with voting rights recovered at end of report period (if | N/A | Total preference shareholders with voting rights recovered at end of the month before this annual | N/A |
CSG Annual Report 2017
| applicable) | report disclosed (if applicable) | ||||||||||||
| Shareholder with above 5% shares hold or top 10 shareholders | |||||||||||||
| Full name of Shareholders | Nature of shareholder | Proportion of shares held (%) | Total shares held at the end of report period | Changes in report period | Amount of restricted shares held | Amount of un-restricted shares held | Number of share pledged/frozen | ||||||
| Share status | Amount | ||||||||||||
| Foresea Life Insurance Co., Ltd. – Haili Niannian | Domestic non state-owned legal person | 14.84% | 368,685,276 | 48,089,384 | 368,685,276 | ||||||||
| Foresea Life Insurance Co., Ltd. – Universal Insurance Products | Domestic non state-owned legal person | 3.77% | 93,616,606 | 12,210,862 | 93,616,606 | ||||||||
| Shenzhen Jushenghua Co., Ltd. | Domestic non state-owned legal person | 2.76% | 68,484,938 | 8,932,818 | 68,484,938 | pledged | 68,484,915 | ||||||
| Foresea Life Insurance Co., Ltd. – Own Fund | Domestic non state-owned legal person | 2.06% | 51,197,756 | 6,677,968 | 51,197,756 | ||||||||
| Central Huijin Asset Management Ltd. | State-owned legal person | 1.84% | 45,782,995 | 5,971,695 | 45,782,995 | ||||||||
| China Galaxy International Securities (Hong Kong) Co., Limited | Foreign legal person | 1.30% | 32,396,045 | 3,703,833 | 32,396,045 | ||||||||
| China Merchants Securities (HK) Co., Limited | State-owned legal person | 1.05% | 26,056,708 | -4,060,347 | 26,056,708 | ||||||||
| Shenzhen International Holdings (SZ) Limited | Domestic non state-owned legal person | 0.93% | 23,000,000 | 3,000,000 | 23,000,000 | ||||||||
| VANGUARD EMERGING MARKETS STOCK INDEX FUND | Foreign legal person | 0.61% | 15,272,911 | 1,992,119 | 15,272,911 | ||||||||
| Wang Heng | Domestic natural person | 0.54% | 13,505,541 | 8,552,035 | 13,505,541 | ||||||||
| Strategic investors or general legal person becomes top 10 shareholders due to shares issued (if applicable) | N/A | ||||||||||||
CSG Annual Report 2017
| Explanation on associated relationship among the aforesaid 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 31,769,094 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’ name | Amount of un-restrict shares held at year-end | Type of shares | |||
| Type | Amount | ||||
| Foresea Life Insurance Co., Ltd. – Haili Niannian | 368,685,276 | RMB ordinary shares | 368,685,276 | ||
| Foresea Life Insurance Co., Ltd. – Universal Insurance Products | 93,616,606 | RMB ordinary shares | 93,616,606 | ||
| Shenzhen Jushenghua Co., Ltd. | 68,484,938 | RMB ordinary shares | 68,484,938 | ||
| Foresea Life Insurance Co., Ltd. – Own Fund | 51,197,756 | RMB ordinary shares | 51,197,756 | ||
| Central Huijin Asset Management Ltd. | 45,782,995 | RMB ordinary shares | 45,782,995 | ||
| China Galaxy International Securities (Hong Kong) Co., Limited | 32,396,045 | Domestically listed foreign shares | 32,396,045 | ||
| China Merchants Securities (HK) Co., Limited | 26,056,708 | Domestically listed foreign shares | 26,056,708 | ||
| Shenzhen International Holdings (SZ) Limited | 23,000,000 | RMB ordinary shares | 23,000,000 | ||
| VANGUARD EMERGING MARKETS STOCK INDEX FUND | 15,272,911 | Domestically listed foreign shares | 15,272,911 | ||
| Wang Heng | 13,505,541 | RMB ordinary shares | 13,505,541 | ||
| 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 31,769,094 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 | ||||
CSG Annual Report 2017
Whether the company’s top 10 common shareholders and the top 10 shareholders of ordinary shares subject to unlimited 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 largest shareholder that has
totally held 519,824,469 shares of the Company via Foresea Life Insurance Co., Ltd.–Haili Niannian, Foresea Life Insurance Co.,Ltd.–universal insurance products, Foresea Life Insurance Co., Ltd.–own fund, Foresea Life Insurance Co., Ltd.–a combination of itsown funds together with Huatai till the end of the report period, which accounts for 20.93% of the Company’s total shares; its relatedlegal person Shenzhen Jushenghua Co., Ltd. held 68,484,938 shares, which accounts for 2.76% of the Company’s total shares; its
related legal person Chengtai Group Co., Ltd. held 40,876,749 shares of B-share via China Galaxy International Securities (Hong
Kong) Co., Ltd and Guosen Securities (Hong Kong) Brokerage Co., Limited, which accounts for 1.65% of the Company’s total shares.Foresea Life Insurance and its related legal persons totally held 25.33% of the Company’s total shares, which is less than 30%,
meanwhile, the number of directors recommended by Foresea Life Insurance and its related legal 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 controlling shareholder. Foresea Life Insurance Co., Ltd. is the Company's largest shareholder that has
totally held 519,824,469 shares of the Company via Foresea Life Insurance Co., Ltd.–Haili Niannian, Foresea Life Insurance Co.,Ltd.–universal insurance products, Foresea Life Insurance Co., Ltd.–own fund, Foresea Life Insurance Co., Ltd.–a combination of itsown funds together with Huatai till the end of the report period, which accounts for 20.93% of the Company’s total shares; its relatedlegal person Shenzhen Jushenghua Co., Ltd. held 68,484,938 shares, which accounts for 2.76% of the Company’s total shares; its
related legal person Chengtai Group Co., Ltd. held 40,876,749 shares of B-share via China Galaxy International Securities (Hong
Kong) Co., Ltd and Guosen Securities (Hong Kong) Brokerage Co., Limited, which accounts for 1.65% of the Company’s total shares.Foresea Life Insurance and its related legal persons totally held 25.33% of the Company’s total shares, which is less than 30%,
meanwhile, the number of directors recommended by Foresea Life Insurance and its related legal persons 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
CSG Annual Report 2017
| Shareholders | Nationality | Whether to obtain the right of abode in other countries or regions |
| Yao Zhenhua | China | No |
| Major occupations and duties | Chairman of Shenzhen Baoneng Investment Group Co., Ltd. | |
| Situation of holding domestic and abroad listed companies over the past 10 years | N/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:
30%
Shenzhen Zheshang BaonengIndustry Investment partnership
Enterprise Limited
Shenzhen Zheshang BaonengIndustry Investment partnership
Enterprise Limited
100%
100%CSG Holding
Co., Ltd.
CSG HoldingCo., Ltd.
1.65%
1.65%
Chengtai GroupCo., Ltd.
Chengtai GroupCo., 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 LogisticsCo., Ltd
| Shenzhen Baoneng Chuangying Investment Company Limited | Shenzhen Baoyuan Logistics Co., Ltd | |
Yao ZhenhuaShenzhen Baoneng Investment Group Co.,
Ltd.
Shenzhen Baoneng Investment Group Co.,Ltd.
67.40%
67.40%1.92%
1.92%2.76%
2.76%51%
| 51% | 20% | 19.80% |
CSG Annual Report 2017
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
CSG Annual Report 2017
Section VII. Particulars about Directors, Supervisors, Senior
Executives and Employees
I. Changes of shares held by directors, supervisors and senior executives
| Name | Title | Working status | Sex | Age | Start dated of office term | End date of office term | Shares 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 Lin | Chairman of the Board | Currently in office | Female | 46 | 2016-11-19 | 2020-05-02 | 3,207,639 | 3,207,639 | |||
| Wang Jian | Secretary of the Party Committee, Deputy Chairman of the Board | Currently in office | Male | 54 | 2016-01-21 | 2020-05-02 | |||||
| Jin Qingjun | Independent Director | Currently in office | Male | 61 | 2016-12-14 | 2020-05-02 | |||||
| Zhan Weizai | Independent Director | Currently in office | Male | 54 | 2016-12-14 | 2020-05-02 | |||||
| Zhu Guilong | Independent Director | Currently in office | Male | 54 | 2017-05-02 | 2020-05-02 | |||||
| Zhang Jinshun | Director | Currently in office | Male | 53 | 2017-05-02 | 2020-05-02 | |||||
| Ye Weiqing | Director | Currently in office | Female | 46 | 2016-01-21 | 2020-05-02 | |||||
| Cheng Xibao | Director | Currently in office | Female | 36 | 2016-01-21 | 2020-05-02 | |||||
| Pan Yonghong | Director & CEO | Currently in office | Male | 49 | 2017-02-23 | 2020-05-02 | |||||
| Zhang Wandong | Chairman of the supervisory board | Currently in office | Female | 49 | 2017-01-13 | 2020-05-02 | |||||
| Li Xinjun | Supervisor | Currently | Male | 50 | 2017-01- | 2020-05- |
CSG Annual Report 2017
| in office | 13 | 02 | |||||||||
| Zhao Peng | Supervisor | Currently in office | Male | 56 | 2017-01-11 | 2020-04-13 | |||||
| Lu Wenhui | Executive Vice President | Currently in office | Male | 55 | 2017-02-23 | 2020-05-02 | 2,405,729 | 2,405,729 | |||
| Li Weinan | Vice president | Currently in office | Male | 56 | 2017-02-23 | 2020-05-02 | 2,636,170 | 2,636,170 | |||
| Li Cuixu | Vice president | Currently in office | Male | 43 | 2018-04-08 | 2020-05-02 | |||||
| He Jin | Vice president | Currently in office | Male | 46 | 2018-04-08 | 2020-05-02 | 1,600,000 | 1,600,000 | |||
| Yang Xinyu | Secretary of the Board | Currently in office | Male | 38 | 2017-05-02 | 2020-05-02 | 2,291,170 | 2,291,170 | |||
| Fu Qilin | Independent Director | Post leaving | Male | 63 | 2012-04-17 | 2017-05-02 | |||||
| Long Long | Chairman of the supervisory board | Post leaving | Male | 62 | 2011-04-15 | 2017-01-13 | |||||
| Hong Guo’an | Supervisor | Post leaving | Male | 63 | 2011-04-15 | 2017-01-13 | |||||
| Yan Wendou | Supervisor | Post leaving | Male | 50 | 2014-03-15 | 2017-01-11 | |||||
| Total | -- | -- | -- | -- | -- | -- | 12,140,708 | 12,140,708 |
II. Changes of directors, supervisors and senior executives
√Applicable □ Not applicable
| Name | Title | Type | Date | Reason |
| Wang Jian | Deputy Chairman of the Board | Be elected | 2017-09-15 | Election of deputy chairman of board |
| Zhu Guilong | Independent Director | Be elected | 2017-05-02 | Election the Board of Directors |
| Zhang Jinshun | Director | Be elected | 2017-05-02 | Election the Board of Directors |
| Pan Yonghong | Director | Be elected | 2017-05-02 | Election the Board of Directors |
| Zhao Peng | Supervisor | Be elected | 2017-01-11 | Election of employee supervisor |
| Lu Wenhui | Executive Vice President | Be employed | 2017-02-23 | Senior management employed by the Board of Directors |
CSG Annual Report 2017
| Li Weinan | Vice president | Be employed | 2017-02-23 | Senior management employed by the Board of Directors |
| Li Cuixu | Vice president | Be employed | 2018-04-08 | Senior management employed by the Board of Directors |
| He Jin | Vice president | Be employed | 2018-04-08 | Senior management employed by the Board of Directors |
| Yang Xinyu | Secretary of the Board | Be employed | 2017-05-02 | Secretary employed by the Board of Directors |
| Fu Qilin | Independent Director | Post leaving | 2017-05-2 | The change of the board of directors |
| Long Long | Chairman of the supervisory board | Post leaving | 2017-01-13 | Resigned |
| Hong Guo’an | Supervisor | Post leaving | 2017-01-13 | Resigned |
| Yan Wendou | Supervisor | Post leaving | 2017-01-11 | Resigned |
III. Post-holding
Major professional background, working experience of directors, supervisors and senior executive and their major responsibility inthe Company at presentChen Lin: took posts of General Manager Assistant in Shenzhen Juhua Investment and Development Co., Ltd., Department Manager,General Manager Assistant, and Deputy General Manager in Shenzhen Shum Yip Logistics Group Co., Ltd. At present, she isDeputy General Manager in Shenzhen Shum Yip Logistics Group Co., Ltd., Chairman of the Board of Supervisors of Foresea LifeInsurance Co., Ltd. and Chairman of Board of Supervisors of Xinjiang Qianhai United Property & Casualty Insurance Co., Ltd.,Executive Director and General Manager of Shenghua Credit Co., Ltd., Chairman of Board of Shenzhen Baoyuan Logistics Co., Ltd,Supervisor of Shenzhen Jushenghua Co., Ltd., Director of Guangdong Shaoneng Group Co., Ltd., Chairman of the Board of BaonengAutomobile Co., Ltd., Chairman of the Board of Qoros 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 Managerand senior consultant of China North Vehicle Co., Ltd., and Deputy Chairman and Chairman of Shanghai Nonferrous MetalsE-Commerce Co., Ltd., General Manager of investment management department of China North Industries Corporation, Chairman ofthe Board of Chengdu Yinhe Dynasty Hotel Co., Ltd., Deputy Chairman of the Board of Shenzhen Baoyin Electricity Co., Ltd.,Chairman of the Board of North Property Development Company Limited. At present he is Secretary of the Party Committee andDeputy Chairman of the Company.Jin Qingjun: took posts of the lawyer of Zhongxin Lawyer Firm and the partner of Xinda Lawyer Firm. He currently serves as thepartner of King & Wood Mallesons, the Independent Director of Invesco Great Wall Fund Management Company Limited,Independent Director of Guo Tai Jun An Securities, Independent Director of Bank of Tianjin Co., Ltd, Independent Director ofSino-Ocean Land Holdings Limited, Independent Director of Times Property Holding Limited, Director of Konka Group Co., Ltd,External Supervisor of China Merchants Bank Co., Ltd, and Independent Director of the Company.Zhan Weizai: took posts of Vice Manager of the financial department of Donghui Industrial Co., Ltd, General Manager Assistant ofShenzhen Xili Hotel, Director and Chief Financial Officer of Shenzhen Qiaoshe Industry Co.,Ltd.., the Leader of the audit & lawdepartment of Shenzhe Truism (Group) Company and Vice General Manager of Sinosafe General Insurance Company Limited. Hecurrently holds the post of Supervisor of Shenzhen Dewo Industrial Development Co., Ltd, Supervisor of Shenzhen Dewo
CSG Annual Report 2017
Investment Development Co., Ltd, Chairman of Board and Manager of Huazhang Investment Holding Co., Ltd, Independent Directorof Shenzhen Neptunus Bioengineering Co., Ltd., Independent Director of Hubei Zhenhua Chemical Co., Ltd, Independent Directorof Shenzhen Longood Intelligent Electric Co., Ltd., Independent Director of Shenzhen Liantronics Co., Ltd and Independent Directorof the Company.Zhu Guilong: took posts of the researcher of the Institute of Forecasting and Development at Hefei University of Technology.Currently, he is a professor and doctoral tutor of the School of Business Administration, South China University of Technology, andholds a concurrent post of the Vice Chairman of Systems Engineering Society of China, Executive Director of Chinese AssociationFor Science of Science and S&T Policy, the Vice Chairman of Guangdong Institute of Technical Economy and ManagementModernization, and Guangdong Economic Society, the Independent Director of GRG BANKING EQUIPMENT CO., LTD., theIndependent Director of Jiangsu Saifutian Steel Cable Co., Ltd., Independent Director of Guangzhou Kingmed Diagnostics GroupCo., Ltd., and the Independent Director of the Company.Zhang Jinshun: took posts of member of the Party Committee and Deputy President of the head office of Ping An Bank, as well asChairman of Board of Ping An Trust Co., Ltd. and the Secretary of the Party Committee. He currently serves as Deputy Chairman ofthe Board of Shenzhen Baoneng Investment Group Co., Ltd., President and CEO of Shenzhen jushenghua Co., Ltd., Chairman ofBoard of Foresea Life Insurance Co., Ltd., and Director of the Company.Ye Weiqing: took posts of the Financial Administrator, Senior Vice President and Director of Shenzhen Baoneng Investment GroupCo., Ltd. At present, she is the Chairman of Board and General Manager of Shenzhen Jushenghua Co., Ltd., Director of Foresea LifeInsurance Co., Ltd., Chairman of Board and General Manager of Baoneng Real Estate Co., Ltd., Chairman of Board of BaonengSouth China Investment Co., Ltd, Executive Director and General Manager of Shenzhen Shining Asset Management Co., Ltd, theExecutive Director and General Manager of Qianhai E-payment Co., Ltd, Chairman of Board and General Manager of ShenzhenLaihua Property Development Co., Ltd, Chairman of Board and General Manager of Shenzhen Liujin Plaza Investment Co., Ltd, theChairman of Board and General Manager of Shenzhen Shum Yip Logistics Center Investment Development Co., Ltd., Chairman ofBoard and the 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 Boardand General Manager of Shenzhen Hualitong Investment Co., Ltd, Director of Shenzhen Baoyuan Logistics Co., Ltd, Chairman ofBoard of Baoneng Hotel Investment Co., Ltd, Chairman of Board of Qinglan Industry(Shenzhen) Co., Ltd, Chairman of Board andGeneral Manager of Shenzhen Zhonglin Industry Development Co., Ltd, Director of Shenzhen Baoneng Investment Group Co., Ltd.Director of Jonjee Hi-tech Industrial & Commercial Holding Co., Ltd., Director of Shenzhen Shum Yip Logistics Group Co., Ltd.and Director of the Company.Cheng Xibao: took posts of Deputy Manager and Manager of financial department of Huizhou Olympic Garden Co., Ltd., which is asubsidiary of China Sports Group Industry, Manager of financial department of Shenzhen Xuansheng Investment Co., Ltd., which isa subsidiary of Foxconn, and Manager, Vice President, Executive Vice President of financial department, President Assistant andVice President of Shenzhen Baoneng Investment Group Co., Ltd. At present, she is Vice President of Shenzhen Baoneng InvestmentGroup Co., Ltd. and Vice President of Shenzhen Jushenghua Co., Ltd., Vice President of Baoneng City Development andConstruction Group Co., Ltd., the Supervisor of Xinjiang Qianhai United Property & Casualty Insurance Co., Ltd., Director ofForesea Life Insurance Co., Ltd. Director of Baoneng Automobile Co., Ltd., Director of Qoros Automobile Co., Ltd., Supervisor ofGuizhou Baoneng Automobile Co., Ltd. and Director of the Company.Pan Yonghong: took posts of Director, Chief Financial Officer and General Manager of China Resources Cement InvestmentLimited, General Manager and President of China Resources Cement Holdings Limited and Senior Vice President of ChinaResources Asset Management Limited. He currently serves as Director of the Company and Chief Executive Officer of theCompany.Zhang Wandong: took the post of the certified lawyer of Grandall (Shenzhen) Law Firm. She currently serves as the certifiedlawyer of Guangdong Shu Jin Law Firm, Supervisor of Zhejiang Ruizhen Logistics Co., Ltd., Supervisor of Shanghai Jiajin LogisticsCo., Ltd., Supervisor of Zhejiang Ruizhen Supply China Management Co., Ltd., Supervisor of Yancheng Ruizhen Logistics Co., Ltd.,
CSG Annual Report 2017
Director of Shenzhen Sinotrix Software Co.,Ltd. and Chairman of the supervisory board of the Company.Li Xinjun: took the post of the Chief Financial Officer of Shenzhen Zhongshanglong Industrial Co., Ltd. He currently serves as theGeneral Manager of Shenzhen Zhongzhun Certified Tax Agent Co., Ltd., Chairman of Board of Zhongzhun Certified PublicAccountants (Shenzhen) Office and Supervisor of the Company.Zhao Peng: took posts of General Manager Assistant of Libi Composite Plastics (Shenzhen) Co., Ltd., Assistant to the Chairman ofShenzhen Wanji Group Co., Ltd., Director of Kongfujia Wine Co., Ltd., General Manager of Shenwei Pharmaceutical Co., Ltd., ViceGeneral Manager and General Manager of Shenzhen Engineering, a subsidiary of the Company, the Assistant of the GeneralManager and Vice General Manager of Wujiang Engineering, a subsidiary of the Company, the Assistant of the General Manager ofTianjin Engineering, the original subsidiary of the Company and the Manager of the Research, Development and InvestmentManagement Department, the Operation Management Department and the Strategy Development Department of the Company. Hecurrently holds the post of the Director of the Strategy Department of the Company and the Employee Supervisor of the Company.
Mr. Lu Wenhui: took posts of Vice General Manager of the Company and General manager of Float Glass Business Department ofthe company, the vice president of the company and the general manager of the Engineering and Automotive Glass BusinessDepartment of the company, the chief economy expert of the company, the manager of Enterprise Operation Department, the vicepresident of the Solar Business Department, the vice president of the company and the president of the Fine Glass BusinessDepartment, and the president of Shenzhen Monitor Company, a subsidiary company. At present, he is the executive vice presidentand the president of the Intelligent Electronic Display Business Department.
Li Weinan: took posts of the manager of the company’s Securities Investment Department and the manager of OperationDepartment, the assistant of the company’s president and the general manager of Dongguan Solar Energy Company, the general
manager of Dongguan PV, the general manager of CSG (Yichang), the executive vice president of the company, the president of theSolar Business Department, and the president of the Electronic Glass and Display Parts Department. He is presently the vicepresident of the company.
Li Cuixu: took posts of the director of the Safety Production Department of Hebei Shijiazhuang New Cast Pipe Co., Ltd., the projectmanager, assistant general manager and deputy general manager of the Investment and Management Department of China NorthIndustrial Company. He is present the vice president of the company.
He Jin: took posts of a senior economy expert.He has been the general manager of CSG (Shenzhen) Float Glass Co., Ltd., the vicepresident of Float Glass Department, 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 the assistantpresident of the company, the president of the Flat Panel and Electronic Glass Department and the vice president of the company.Yang Xinyu: took posts of the Securities Department of Beijing Jindu Law Firm, the risk control director of the Law Department ofHonghua International Medical Holding Co., Ltd and the assistant of the chairman of the board. He is currently the secretary of theboard of directors, the assistant president and the director of the Audit and Supervision Department.
Post-holding in shareholder’s unit√Applicable □ Not applicable
| Name | Name of shareholder’s unit | Position in shareholder’s unit | Start dated of office term | End date of office term | Received remuneration from shareholder’s unit or not |
| Chen Lin | Foresea Life Insurance Co., Ltd. | Chairman of Supervisory Committee | Apr. 2012 | -- | Yes |
| Shenzhen Juhua Investment and | Supervisor | Jul. 2016 | -- | No |
CSG Annual Report 2017
| Development Co., Ltd. | |||||
| Wang Jian | China North Industrial Corporation | General Manager of Investment and Operation Department | Apr. 2012 | Sep.2017 | Yes |
| Ye Weiqing | Shenzhen Jushenghua Co., Ltd. | Chairman of Board and General Manager | Nov. 2009 | -- | No |
| Foresea Life Insurance Co., Ltd. | Director | Feb. 2012 | -- | No | |
| Chen Xibao | Shenzhen Jushenghua Co., Ltd. | Vice President | Mar. 2016 | -- | No |
| Zhang Jinshun | Shenzhen Jushenghua Co., Ltd. | President & CEO | Jan. 2016 | Yes | |
| Foresea Life Insurance Co., Ltd. | Chairman of Board | Sep. 2017 | No | ||
| Note of post-holding in shareholder’s unit | N/A | ||||
Post-holding in other unit
√Applicable □Not applicable
| Name | Name of other units | Position in other unit n | Start dated of office term | End date of office term | Received remuneration from other unit or not |
| Chen Lin | Shenzhen Shum Yip Logistics Group Co., Ltd. | Deputy General Manager | May 2003 | -- | No |
| Xinjiang Qianhai United Property & Casualty Insurance Co., Ltd. | Chairman of the Board of Supervisors | Jul. 2016 | -- | No | |
| Shenghua Credit Co., Ltd. | Executive Director & General Manager | Sep. 2015 | -- | No | |
| Shenzhen Baoyuan Logistics Co., Ltd. | Chairman of the Board | June 2010 | -- | No | |
| Guangdong Shaoneng Group Co., Ltd. | Director | Nov. 2015 | -- | Yes | |
| Baoneng Automobile Co., Ltd. | Chairman of the Board | Dec. 2017 | -- | No | |
| Qoros Automobile Co., Ltd. | Chairman of the Board | Dec. 2017 | -- | No | |
| Wang Jian | Chengdu Yinhe Dynasty Hotel Co., Ltd., | Chairman of the Board | Apr. 2012 | Sep. 2017 | No |
| Shenzhen Baoyin Electricity Co., Ltd. | Deputy Chairman of the Board | Sep. 2012 | Sep. 2017 | No | |
| North Property Development Company Limited | Chairman of the Board | May, 2014 | Sep. 2017 | No | |
| Jin Qingjun | King & Wood Mallesons | Partner | Sep. 2002 | -- | Yes |
| Invesco Great Wall Fund Management | Independent director | April 2003 | -- | Yes |
CSG Annual Report 2017
| Company Limited | |||||
| Guo Tai Jun An Securities | Independent director | Jan. 2013 | -- | Yes | |
| Bank of Tianjin Co., Ltd. | Independent director | Mar. 2017 | -- | Yes | |
| Sino-Ocean Land Holdings Limited | Independent director | Mar. 2016 | -- | Yes | |
| Times Property Holding Limited | Independent director | Oct. 2015 | -- | Yes | |
| Konka Group Co., Ltd. | Director | May 2015 | -- | Yes | |
| China Merchants Bank Co., Ltd. | External supervisor | Oct. 2014 | -- | Yes | |
| Zhan Weizai | Shenzhen Dewo Industrial Development Co., Ltd, | Supervisor | June 2010 | -- | No |
| Shenzhen Dewo Investment Development Co., Ltd. | Supervisor | Sep. 2011 | -- | No | |
| Huazhang Investment Holding Co., Ltd | Chairman of Board and manager | May 2011 | -- | Yes | |
| Shenzhen Neptunus Bioengineering Co., Ltd. | Independent director | Aug. 2013 | -- | Yes | |
| Hubei Zhenhua Chemical Co., Ltd. | Independent director | Mar. 2015 | -- | Yes | |
| Shenzhen Longood Intelligent Electric Co., Ltd. | Independent director | Oct. 2012 | -- | Yes | |
| Shenzhen Liantronics Co., Ltd. | Independent director | Nov. 2016 | -- | Yes | |
| Zhu Guilong | South China University of Technology | Professor and Doctoral tutor | Aug. 2000 | -- | Yes |
| GRG BANKING EQUIPMENT CO., LTD. | Independent director | Dec. 2017 | -- | Yes | |
| Jiangsu Saifutian Steel Cable Co., Ltd. | Independent director | Aug. 2017 | -- | Yes | |
| Guangzhou Kingmed Diagnostics Group Co., Ltd. | Independent director | Nov. 2015 | -- | Yes | |
| Zhang Jinshun | Shenzhen Baoneng Investment Group Co., Ltd. | Deputy Chairman of the Board | Mar. 2017 | -- | No |
| Ye Weiqing | Baoneng South China Investment Co., Ltd. | Chairman of the Board | Aug. 2017 | -- | No |
| Shenzhen Shining Asset Management Co., Ltd. | Executive Director and General Manager | Jun. 2015 | -- | No | |
| Qianhai E-payment Co., Ltd. | Executive Director and General Manager | Jun. 2014 | -- | No | |
| Shenzhen Laihua Property Development Co., Ltd. | Chairman of Board and General Manager | Nov. 2016 | -- | No | |
| Shenzhen Liujin Plaza Investment Co., | Chairman of Board and General Manager | Feb. 2014 | -- | No |
CSG Annual Report 2017
| Ltd. | |||||
| Shenzhen Shum Yip Logistics Center Investment Development Co., Ltd. | Chairman of Board and General Manager | Feb. 2014 | -- | No | |
| Shenzhen Baoneng Jianye Property Co., Ltd. | Director | Aug. 2013 | -- | No | |
| Shenzhen Baoneng Century Property Development Co., Ltd. | Chairman of Board and General Manager | Jul. 2013 | -- | No | |
| All City Co., Ltd. | Chairman of Board and General Manager | Apr. 2013 | -- | No | |
| Shenzhen Hualitong Investment Co., Ltd. | Chairman of Board and General Manager | Mar. 2012 | -- | No | |
| Shenzhen Baoyuan Logistics Co., Ltd. | Director | Jun. 2010 | -- | No | |
| Baoneng Hotel Investment Co., Ltd. | Chairman of Board | Mar. 2010 | -- | No | |
| Qinglan Industry (Shenzhen) Co., Ltd. | Chairman of Board | Jul. 2012 | -- | No | |
| Baoning Property Co., Ltd. | Chairman of Board and General Manager | May 2012 | -- | No | |
| Shenzhen Zhonglin Industry Development Co., Ltd. | Chairman of Board and General Manager | May 2012 | -- | No | |
| Shenzhen Baoneng Investment Group Co., Ltd. | Director | Oct. 2013 | -- | No | |
| Jonjee Hi-tech Industrial & Commercial Holding Co., Ltd. | Director | May 2016 | -- | No | |
| Shenzhen Shum Yip Logistics Group Co., Ltd. | Director | Oct. 2003 | -- | No | |
| Chen Xibao | Shenzhen Baoneng Investment Group Co., Ltd. | Vice President | Dec. 2017 | -- | Yes |
| Baoneng City Development and Construction Group Co., Ltd. | Vice President | Dec. 2017 | No | ||
| Xinjiang Qianhai United Property & Casualty Insurance Co., Ltd. | Supervisor | Sep. 2016 | -- | No | |
| Foresea Life Insurance Co., Ltd. | Director | Oct. 2017 | -- | No | |
| Baoneng Automobile Co., Ltd. | Director | Mar. 2017 | -- | No | |
| Qoros Automobile Co., Ltd. | Director | Dec. 2017 | -- | No | |
| Guizhou Baoneng Automobile Co., Ltd. | Supervisor | Jan. 2018 | -- | No | |
| Li Weinan | Yichang Hongtai Property Co., Ltd. | Chairman of Board | Nov. 2013 | Dec. 2017 | No |
| Zhang Wandong | Guangdong Shu Jin Law Firm | Certified lawyer | Jan. 2010 | -- | Yes |
| Zhejiang Ruizhen Logistics Co., Ltd. | Supervisor | Dec. 2014 | -- | No | |
| Shanghai Jiajin Logistics Co., Ltd. | Supervisor | Jun. 2006 | -- | No | |
| Zhejiang Ruizhen Supply China Management Co., Ltd. | Supervisor | May 2016 | -- | No |
CSG Annual Report 2017
| Yancheng Ruizhen Logistics Co., Ltd. | Supervisor | Aug. 2017 | -- | No | |
| Shenzhen Sinotrix Software Co.,Ltd. | Director | Jan. 2001 | -- | No | |
| Li Xinjun | Shenzhen Renda Certified Tax Agent Co., Ltd. | General Manager | Dec. 2004 | -- | Yes |
| Zhongzhun Certified Public Accountants (Shenzhen) Office | Chairman of Board | Nov. 2010 | -- | Yes |
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 executives
Decision-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’s unit and
external supervisors are planned and proposed by the Remuneration &Assessment Committee of the Board and approved by the
Shareholders’ General Meeting after deliberation of the Board. Remuneration for senior executives is proposed 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 confirmed based onindustry standards and real situation of the Company. The remuneration for senior executives implements floating reward mechanismwith reference to basic salary and business performance. Bonus for performance rewards is withdrawal by proportion quarterlyaccording 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 director fromnon-shareholder’s unit and each external supervisor are RMB 0.10 million per year, paid by actual month of service. The total
remuneration for directors, supervisor and senior executives in the report period was RMB 13.3829 million.Remuneration for directors, supervisors and senior executives of the Company within the report period
Unit: RMB0,000
| Name | Title | Sex | Age | Post-holding status | Total remuneration obtained from the Company before taxation | Received remuneration from related party of the Company or not |
| Chen Lin | Chairman of the Board | Female | 46 | Currently in office | 0 | Yes |
| Wang Jian | Secretary of the Party Committee, Deputy Chairman of the Board | Male | 54 | Currently in office | 109.15 | No |
| Jin Qingjun | Independent Director | Male | 61 | Currently in office | 10.83 | No |
| Zhan Weizai | Independent Director | Male | 54 | Currently in office | 10.83 | No |
| Zhu Guilong | Independent | Male | 54 | Currently in | 6.67 | No |
CSG Annual Report 2017
| Director | office | |||||
| Zhang Jinshun | Director | Male | 53 | Currently in office | 0 | Yes |
| Ye Weiqing | Director | Female | 46 | Currently in office | 0 | Yes |
| Cheng Xibao | Director | Female | 36 | Currently in office | 0 | Yes |
| Pan Yonghong | Director & CEO | Male | 49 | Currently in office | 354.41 | No |
| Zhang Wandong | Chairman of the supervisory board | Female | 49 | Currently in office | 10 | No |
| Li Xinjun | Supervisor | Male | 50 | Currently in office | 10 | No |
| Zhao Peng | Supervisor | Male | 56 | Currently in office | 87.36 | No |
| Lu Wenhui | Executive Vice President | Male | 55 | Currently in office | 280.56 | No |
| Li Weinan | Vice president | Male | 56 | Currently in office | 237.98 | No |
| Li Cuixu | Vice president | Male | 43 | Currently in office | 0 | No |
| He Jin | Vice president | Male | 46 | Currently in office | 135.47 | No |
| Yang Xinyu | Secretary of the Board | Male | 38 | Currently in office | 85.03 | No |
| Fu Qilin | Independent Director | Male | 63 | Post leaving | 0 | No |
| Long Long | Chairman of the supervisory board | Male | 62 | Post leaving | 0 | No |
| Hong Guo’an | Supervisor | Male | 63 | Post leaving | 0 | No |
| Yan Wendou | Supervisor | Male | 50 | Post leaving | 0 | No |
| Total | -- | -- | -- | -- | 1,338.29 | -- |
Directors and senior management of the company were granted equity incentives during the reporting period
√Applicable □Not applicable
Unit: Share
| Name | Title | Number of shares outstandi | Number of shares already | The exercise price of | Market price at the end of the | The number of restricted | Number of shares unlocked | Number of restricted shares | The granting price of | The number of restricted |
CSG Annual Report 2017
| ng during the report period | exercised during the report period | the exercised shares during the report period (RMB / share) | report period (RMB / share) | stocks held at the beginning of the period | in this period | newly granted during the report period | restricted stock (RMB / share) | stocks held at the end of the period | ||
| Chen Lin | Chairman of the Board | 0 | 0 | -- | -- | 0 | 0 | 3,207,639 | 4.28 | 3,207,639 |
| Lu Wenhui | Executive Vice President | 0 | 0 | -- | -- | 0 | 0 | 2,405,729 | 4.28 | 2,405,729 |
| Li Weinan | Vice president | 0 | 0 | -- | -- | 0 | 0 | 2,291,170 | 4.28 | 2,291,170 |
| He Jin | Vice president | 0 | 0 | -- | -- | 0 | 0 | 1,600,000 | 4.28 | 1,600,000 |
| Yang Xinyu | Secretary of the Board | 0 | 0 | -- | -- | 0 | 0 | 2,291,170 | 4.28 | 2,291,170 |
| Total | -- | 0 | 0 | -- | -- | 0 | 0 | 10,195,708 | -- | 10,195,708 |
| Remarks (if any) | The above restricted stocks held by directors and senior executives have not been unlocked. | |||||||||
V. Particulars of workforce
1. Number, professional composition and educational background of employees
| Number of employees in the parent company (person) | 141 |
| Number of employees in major subsidiaries of the Company (person) | 11,964 |
| Total number of employees (person) | 12,105 |
| Total number of employees received salaries in the period (person) | 12,105 |
| Number of retired employees whose costs beared by the parent company and its main subsidiaries (person) | 0 |
| Professional composition | |
| Category of professional composition | Number of professional composition (person) |
| Production personnel | 8,835 |
| Salesman | 582 |
| Technician | 1,500 |
| Financial personnel | 116 |
| Administrative personnel | 1,072 |
CSG Annual Report 2017
| Total | 12,105 |
| Educational background | |
| Category of educational background | Number (person) |
| Doctor | 8 |
| Master | 184 |
| Undergraduate | 2,202 |
| Junior college | 2,343 |
| Degree below junior college | 7,368 |
| Total | 12,105 |
2. Staff remuneration policy
The Company adopted the salary management of basic pay plus performance pay, encouraged the staff to reach their employmentobjectives and obtain high performance payment through their endeavor. Realize the salary system of linking the salary andassessment results together via effective performance appraisal, and stimulate the positiveness of to strive to realize the enterpriseobjectives by adjusting the income of staff with good and bad performance.
3. Staff training plan
The Company attached great importance to the team construction, thought highly of the training, allocated training fee for cultivating
employee’s skill, developing capabilities and promoting quality. The Company overall implemented training program for senior
management so as to offer a strong support for improving levels of education and skills for employees. As for the senior management,middle management and junior employees, the Company formulated a personalized training plan for the purpose of adapting andpromoting the business development of CSG. Training and development will be the normalized important work of HR in the future,which will receive more support from the Company.
4. Labor outsourcing
□ Applicable √ Not applicable
CSG Annual Report 2017
VIII. Corporate Governance
I. Corporate governance of the Company
In strict compliance with the requirements of the relevant laws and regulation including The Company Law, Securities Law and Ruleof Governance for Listed Company, the Company has been putting efforts in improving the corporate governance, strengtheningmanagement of information disclosure, regulating operation activities and establishing a modern corporate system. At present, thesystem for corporate governance of the Company is basically perfect, operation is regulated, corporate governance is consummated,
which accord with the requirements of relevant documents on corporate governance of listed company issued by CSRS.
The Company has established the Information Disclosure Management System and promptly improved it in accordance with newlyissued laws and regulations, clarified the standards of insider information, and established inside information insider registrationsystem and record management system. In order to further strengthen the Company's internal information disclosure control, enhancethe disclosure consciousness of relevant personnel, and improve the quality of corporate information disclosure, in 2016, theCompany set up information Disclosure Committee, and formulate Rules for the implementation of the information disclosureCommittee. During the report period, the Company disclosed information with facticity, completeness, timeliness and fairness,strictly fulfilled the responsibilities and obligations of information disclosure of listed companies to ensure that investors are able tokeep abreast of the Company's operation and development strategies. There was no regulatory punishment caused by informationdisclosure in the report period. Meanwhile, the Company delivered the Inside Information Insider Table to Shenzhen Stock Exchange
when submitting periodic reports. It didn’t exist that insiders used the inside information to trade the Company’s shares before themajor sensitive information which could affect the Company’s share price was disclosed.
The Company has seriously implemented the requirements of the relevant regulatory to cash dividends. The Company formulated theReturn plan for Shareholders of CSG Holding Co., Ltd. in the Next Three Years (2015- 2017) according to relevant regulations oftheNotice of Further Implementation of Cash Dividends of the Listed Companies(ZJF No.: [2012] 37) and the Regulatory Guidelines ofListed Companies No. 3 - Cash Dividends of Listed Companies(ZGZJHGGNo. [2013] 43) issued by China Securities Regulatory
Commission, further improved the Company’s decision-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 largest shareholder and actualcontroller. And it did not exist that non-operating fund of listed company was occupied by the largest shareholder and its affiliatedenterprises.Is there any difference between the actual condition of corporate governance and relevant regulations about corporate governance forlisted company from CSRC?
□Yes √ No
There are no differences between the actual condition of corporate governance and relevant regulations about corporate governancefor listed company from CSRC.
II. Independency of the Company relative to the largest shareholder’ in aspect of businesses,
personnel, assets, organization and finance
The Company has been absolutely independent in business, personal, assets, organization and financial from its substantialshareholders ever since its establishment. The Company had an independent and complete business system and independentmanagement capability.
CSG Annual Report 2017
1. In terms of business: The Company owns independent purchase and supply system of the raw resources, complete production
systems, independent sale system and customers. The Company is completely independent from the substantial shareholders inbusiness. The substantial shareholders and their subsidiaries do not engage any identical business or similar business as theCompany.2. In terms of personnel: The Company established integrated management system of labor, personnel, salaries and the social security,
which were absolutely independent from its holding shareholder’s. Personnel of the managers, person in charge of the financial
and other executive managers are obtained remuneration from the Company since on duty in the Company, and never received
remuneration or take part-time jobs in large shareholders’ company and other enterprises controlled by large shareholders. The
recruitment and dismissal of Directors are conducted through legal procedure since the Company was listed and the manager has
been appointed or dismissed by Board of Directors. The Board of Directors and the Shareholders’ General Meeting have not
received any interference of decisions on personnel appointment 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 production system,
auxiliary production system and facilities, land use right, industry property and non-patent technology owned or used by theCompany. The investments to the Company from largest shareholder are monetary assets, and the largest shareholder has neveroccupy, 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 function departments. TheCompany had been totally independent from its large shareholders in organization structure. The Company has its own office and
production sites that are different from those of the large shareholders. The largest shareholder and its related parties didn’t deliver
any operation plan and order to the Company, neither influence the independence on management of the Company by any forms.5. In terms of finance: The Company has set up independent financial department, established independent accounting calculationsystem and financial management system (included management system of its subsidiaries). The financial personnel of the Company
didn’t take part-time jobs in units of large shareholder or its subordinate units. The Company had independent bank accounts,separated from the large shareholders. The Company is independent taxpayer, paid taxes 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 interferred the usage of the Company’s capital. The Company never offered guarantee to their large shareholders
and its subordinate units and other related party. The largest shareholder and its related has never occupy or occupy disguised thecapital.
III. Horizontal competition
□ Applicable √ Not applicable
IV. Annual shareholders’ general meeting and extraordinary shareholders’ general meeting
convened in the report period
Annual Shareholders’ General Meeting in the report period
| Session of meeting | Type | Ratio of investor participation | Date | Date of disclosure | Index of disclosure |
| The First Extraordinary General Shareholders’ Meeting of 2017 | Extraordinary General Shareholders’ Meeting | 29.55% | 2017- 01-13 | 2017-01-14 | Announcement No.: 2017-003 |
CSG Annual Report 2017
| （www.cninfo.com.cn） | |||||
| The Second Extraordinary General Shareholders’ Meeting of 2017 | Extraordinary General Shareholders’ Meeting | 30.26% | 2017-03-02 | 2017-03-03 | Announcement No.: 2017-018 （www.cninfo.com.cn） |
| TheThird Extraordinary General Shareholders’ Meeting of 2017 | Extraordinary General Shareholders’ Meeting | 29% | 2017-05-02 | 2017-05-03 | Announcement No.: 2017-033 （www.cninfo.com.cn） |
| Annual General Shareholders’ Meeting of 2016 | Annual General Shareholders’ Meeting | 29.07% | 2017-05-22 | 2017-05-23 | Announcement No.: 2017-035 （www.cninfo.com.cn） |
| The Fourth Extraordinary General Shareholders’ Meeting of 2017 | Extraordinary General Shareholders’ Meeting | 29.44% | 2017-08-18 | 2017-08-19 | Announcement No.: 2017-051 （www.cninfo.com.cn） |
| The Fifth Extraordinary General Shareholders’ Meeting of 2017 | Extraordinary General Shareholders’ Meeting | 30.15% | 2017-10-26 | 2017-10-27 | Announcement No.: 2017-070 （www.cninfo.com.cn） |
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 director | Times of Board meeting supposed to attend in the report period | Times of Presence | Times of attending by communication way | Times of entrusted presence | Times of Absence | Whether absent the Meeting for the second time in a row or not |
| Jin Qingjun | 20 | 5 | 15 | 0 | 0 | No |
| Zhan Weizai | 20 | 6 | 14 | 0 | 0 | No |
| Zhu Guilong | 14 | 4 | 10 | 0 | 0 | No |
| Fu Qilin | 6 | 2 | 4 | 0 | 0 | No |
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 adopted
CSG Annual Report 2017
In 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 the development of the Companystrictly according to the requirements of the Guidelines for Operation of the Listed Companies on Main Board of Shenzhen StockExchange, the Listing Rules of Shenzhen Stock Exchange Stock, the Guidelines for Establishment of Independent DirectorMechanism for Listed Companies and the Article of Association. Each independent director seriously deliberated all motions of theboard of directors, gave independent opinions on significant operating management issues, engagement of senior management,internal control construction and so on, which played a positive role in safeguarding the interests of the company and minorityshareholders.
VI. Duty performance of the special committees under the board during the reporting period
1. Performance of the audit committee of the BoardThe Audit Committee of the Board of Directors of the Company is constituted with 5 directors, and 3 of them are independentdirectors. The convoker is independent director. During the report period, according to demands of CSRC and Shenzhen StockExchange, and regulations of Rules of Procedure of the Audit Committee of the Board of Directors, Procedure for Annual ReportWork of the Audit Committee, the committee paid attention to the construction of corporate internal control system, audited theinternal audit report and financial report periodically, diligently and faithfully. They performed the following duties:
①Deliberate the Company’s finanical statement and issue opinions
During the reporting period, in accordance with the requirements of the Securities Regulatory Commission, the Audit Committeereviewed the relevant 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; after the annual audit certified public
accountants issued preliminary audit opinions, the audit The committee reviewed the Company’s financial accounting statementsagain and expressed opinions on the company’s adjustment of accounting errors and other related matters of the financial statements.It is believed that this adjustment of accounting errors is conducive to a more fair and objective reflection of the company’s financial
status, and agrees to handle the correction of accounting errors. . At the same time, the basis, basis, principles, and methods for thepreparation of the Company's 2017 accounting statements are in compliance with the relevant provisions of national laws andregulations, and in all major respects they fairly reflect the financial status of the Company on December 31, 2017 and its operatingresults in 2017.
②Supervise the audit works conducted by the accountant firm
The Audit Committee communicated with the accounting firms and provides guidance and requirements for the annual financialreport audit work and the plans and arrangements for the internal control report audit work. After the CPA came into the audit, themembers of the Audit Committee kept close contact with the Company and the main project responsible 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 was conducted as scheduled.
③ Summarize report on the audit works conducted by the accountant firm in previous year
Asia Pacific (Group) CPAs (special general partnership) strictly follows the China Auditing Standards and practices diligently, payingattention to the communication with the management and the audit committee, which reflects strong professional knowledge, good
professional ethics and risk awareness. The firm successfully completed the company’s 2017 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 BoardThe remuneration and examination committee of the Board of Directors of the Company is constituted with 5 directors, and 3 ofthem are independent directors. The convoker is independent director.
①According to regulations of Rules of Procedure of The Remuneration and Appraisal Committee, the Remuneration and Appraisal
CSG Annual Report 2017
Committee makes examination on the disclosed remuneration of the directors, supervisors and senior executives and thought itaccorded with the relevant laws and regulations of the remuneration and appraisal system of the Company.
②The remuneration and examination committee deliberated the relevant items of equity incentive, relevant beneficiary avoiding for
vote, and the deliberation results were submitted to the Board.3. Performance of the nomination committee of the BoardThe nomination committee of the Board of Directors of the Company is constituted with 5 directors, and 3 of them are independentdirectors. The convoker is independent director.
①In the report period, nomination committee reviewed to determine candidates of by-election directors for 7th session of the Board,
and agreed to submit the deliberation to the Board and general meeting of shareholders.
②Nomination committee of the Board performed evaluation on the work of the Board, and believed that the directors of 7
th
sessionof the Board abided by the State laws, administrative rules and regulation of Article of Association since they took office. Theyattended or delegated to attend the Board Meeting and general meeting of shareholders on time, performed voting rights based onrelevant regulations, actively kept eyes on the management situation of the Company, and performed the duty of Directors diligently.4. Performance of the strategy committee of the BoardThe strategy committee of the Board of Directors of the Company is constituted with 5 directors, and 1 of them is independentdirectors.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. During the reporting period, the committee consideredthe profit distribution plan, and held the view that the profit distribution plan conformed to the requirements of the Company Law,the Enterprise Accounting Principles and the Articles of Association, and agreed to submitted the same to the board and generalmeeting for consideration. 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 were submitted to theboard for consideration.
VII. Performance of the Supervisory Committee
During the report period, the Supervisory Committee found whether there was risk in the Company in the supervisory activities
□ Yes √ No
The Supervisory Committee had no objection on the supervised events during the report period.
VIII. Performance examination and incentives of senior management
The Board of Directors approved the incentive measure for outstanding achievement of management team as follows: performance
bonus of the Company’s management team will be calculated quarterly, when the quarter cumulative annualized return on equity
reaches 8%, the performance bonus will be calculated by 8% of the cumulative total of net profit (no deduction of minority interests,the same below) in this quarter, when the quarter cumulative annualized return on equity exceeds 8%, the performance bonus will becalculated based on 8% with a corresponding increase of 0.2% for every 1% increased, the performance bonus calculated in thisquarter should be the balance between the cumulative total bonus to be calculated in this quarter and the cumulative total bonusobtained in the previous quarter; when the cumulative annualized return on equity in this quarter does not reach 8% but the singlequarter cumulative annualized return on equity reaches or exceeds 8%, the performance bonuses will be calculated based on the totalnet profits in this quarter according to the above-mentioned calculating rules, otherwise, no performance bonus should be calculated
in this quarter.
CSG Annual Report 2017
IX. Internal Control
1. Particulars about significant defects found in the internal control during the reportperiod
□ Yes √ No
1. Self-appraisal report of internal control
| Disclosure date of full text of self-appraisal report of internal control | 2018-4-23 | ||
| Disclosure index of full text of self-appraisal report of internal control | More details found in ” Report of Internal Control of CSG for year of 2017” 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 statements | 96% | ||
| 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 statements | 97% | ||
| Standards of Defects Evaluation | |||
| Category | Financial Reports | Non-financial Reports | |
| Qualitative criteria | Major defects: A. Fraud of directors, supervisors and senior management; 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; | Major defects: A. Major decision-making mistakes caused by decision-making process of key business; 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. | |
CSG Annual Report 2017
| 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. | ||
| Quantitative standard | Major 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 reports | 0 | |
| Amount of significant defects in non-financial reports | 0 | |
| Amount of important defects in financial reports | 0 | |
| Amount of important defects in non-financial reports | 0 | |
CSG Annual Report 2017
Notes to other major issues related to internal controlIn the period from 2012 to 2013, in order to attract CSG to further expand industrial investment in Yichang area and locate the
projects related to fine glass and ultra-thin electronic glass in Yichang, the people’s government of Yichang area had signed three
agreements with CSG in succession, according to which, the local government would offer related preferential policies to CSG so asto support the related development of industries. Thereinto, the administration committee of Yichang Hi-tech Industrial Areacommitted to offer a special government subsidy at RMB171.00 million to CSG, which should be used for the talent introduction andresettlement by CSG in Yichang area. According to provisions of agreements alike, the company commissioned CSG (Yichang)Silicon Material Co., Ltd., a wholly owned subsidiary of CSG, to receive such funds. The administration committee of YichangHi-tech Industrial Area has appropriated full amount of such funds to CSG (Yichang) Silicon Material Co., Ltd.in the year of 2014.Now, it is found out that, after receiving the above subsidy funds from the government of Yichang, CSG (Yichang) Silicon MaterialCo., Ltd., not subject to the appropriable review and approval of involved authorities including the board of directors at that time,immediately transferred such funds in full to Yichang Hongtai Properties Co., Ltd, which is jointly held and indirectly controlled bysome former natural top executives of our company and has no ownership relationship with our company. In that year, CSG did notcarry out any accounting treatment and disclosure in financial statements at the level of headquarters or in the consolidated financialstatements.The company attached great importance to this problem. First, organized a special internal verification on the issue, fully understoodthe relevant information, and interviewed the relevant government departments to understand the nature and purpose of suchgovernment subsidy and related provisions on the use of such funds; Secondly, strengthened training and publicity of informationdisclosure rules, and enhanced training and publicity to top management in the aspect of supervision rules and professional ethics;Thirdly, integrated the internal control system of the company and strengthened internal supervision.As of the issuance date of the report, the company did not find other internal control information which might have a significant
impact on the investors’ understanding of the internal control evaluation report or their evaluation of internal control of the company
or on the investment decisions made by investors.
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 2017, issued AP Ya-Kuai- A-He-Zi (2018) No. 0025 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, 2017. | |
| Date of disclosing the internal control audit reports | 23 April 2018 |
| Disclosure index of internal control audit report | More details can be found in 2017 Internal Control Audit Report of CSG released on Juchao Website (http://www.cninfo.com.cn) |
| Type of the auditor’s opinion | Standard unqualified opinion |
| Whether there are major flaws in the non-financial report or not | No |
Whether the CPAs firm issued an Audit Report on Internal Control with non-standard opinion or not?
CSG Annual Report 2017
□Yes √ No
Whether the Audit Report on Internal Control from the CPAs firm is in consistent with the Self-appraisal Report from the Board ornot?
√ Yes □ No
IX. Corporate Bonds
Whether the company has a public offering and is listed on the stock exchange, and the company bonds that have not beenfully paid or matured on the date of approval of the annual reportNo
| Name | Short name | Bond code | Issue date | Maturity date | Bond balance (RMB 0,000) | Interest rate | Way of repayment of principal and interest |
| Corporate bond in 2010 of CSG | 10 CSG 02 | 112022 | 2010-10-20 | 2017-10-20 | 0 | 5.33% | Using simple interest year - on - year, non - compound interest, the interest is paid once a year and the principal is paid at a time once due, and the final interest is paid together with the principal. |
| Corporate bond listing or transfer trading place | Shenzhen Stock Exchange | ||||||
| Appropriate arrangements for investors | The corporate bond "10 CSG 02" established the sell-back option for investors, which was completed in 2015. | ||||||
| Interest payment and encashment of corporate bonds during the reporting period | The corporate bond “10 CSG 02” expired on October 20, 2017. The Company completed the bond principal and the payment of interest between October 20, 2016 and October 19, 2017 on October 20, 2017. | ||||||
| Implementation of the special provisions including option and exchangeable terms of issuers or investors attached to corporate bonds and the relevant provisions during the report period (if applicable) | N/A | ||||||
II. Informantion of bond trustee and credit rating institution
| Bond trustee: | ||||||||
| Name | China Merchants Securities Co., Ltd. | Office adds. | 38-45 floor, Ablock, Jiangsu Building, Yitian Road, Futian District, Shenzhen | Contact person | Nie Dongyun | Tel. | 0755-82960984 | |
| Credit rating institution which tracks rating corporate bonds in the report period: | ||||||||
| Name | CCXR | Office adds. | 8 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 the change, performance of the procedure, and the impact on the interest of investors etc. (if applicable) | Not applicable | |||||||
III. The use of fund raised by corporate bonds
| The use of fund raised by corporate bonds and performance of the procedure | The raised fund is in strict accordance with the relevant provisions. |
| Balance at the end of year | 0 |
| The operation of the special account for raised fund | The operation of the special account for raised fund is 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 commitment | Consistent |
IV. Information of the rating of corporation bonds
According to track rating of China Chengxin Securities Rating Co., Ltd. (Abbreviation “CCXR”) in 2017, the Company's
subject credit rating is AA +, rating outlook is stable, and the bonds credit rating of the current period is evaluated as AA +.
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, the relevant implementations are asfollows:
I. Debt repayment planThe 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 make surethe due principal and interest be paid in time. The capital sources for paying the corporation bonds in the report period were
mainly the cash flow generated by the Company’s operating activities and the bank loans.
In 2017, the Company paid the principal and interest of corporation bond "10 CSG 02" on time.
II. Repayment safeguards for the Company’s bonds
In order to fully and effectively maintained the interests of the bondholders, the Company has made a series plans for thetimely and sufficient repayment for bonds in the report period, including confirming the specialized departments andpersonnel, arranging the funds for repayment, establishing the management measures, achieving the organizationcoordination, and strengthening information disclosure so as to form a set of safeguards to ensure the security payment ofbond.
(I) Establish the "Bondholders' Meeting Rules"The Company has established the "Bondholders' Meeting Rules" for the corporation bonds in accordance with the "PilotApproach for the Issuance of Corporation Bonds", appointed the range, procedures and other important matters forbondholders to exercise rights by bondholders' meeting and made reasonable institutional arrangements to ensure theprincipal and interest of the corporation bonds be paid timely and sufficiently.
(II) Engage bond trusteeThe Company has engaged China Merchants Securities Co., Ltd. as the trustee for the corporation bonds in accordance withthe "Pilot Approach for the Issuance of Corporation Bonds", and signed the "Bond Trusteeship Agreement". In the duration
of the corporation bonds, the bond trustee will maintain the interests of the Company’s bondholders according to the
agreement.
(III) Establish the specialized reimbursement working group and set up special account for debt repaymentThe Company used the funds raised from the bond strictly in accordance with the "Financial Management System" and"Financial Funds Management Approach". The Company has appointed the financial department to take the lead and takecharge of the repayment of corporation bonds, implement and arrange the repayment funds for principal and interest ofcorporation bonds in the annual financial budget so as to ensure the principal and interest be paid on time and guarantee theinterests of bondholders. Within 15 working days before the annual interest pay day and annual principal pay day ofcorporation bonds, the Company specially establishes a working group of which the members are composed of personnelfrom the company's financial management department to take charge of the repayment of interests and other relevant work.The Company guarantees the funds for payment of interest will be sent to the special repayment account three days before theannual interest payment and the funds for cashing principle will be sent to the special repayment account one week before thedue date of corporation bonds, the special repayment account will pay both the principle and interest.
(IV) Improve profitability, strengthen funds management, and optimize debt structureThe Company has a rigorous financial system and a normative management system, account receivable turnover and
inventory turnover are in good status, the Company’s financial policies are steady, and the structure of assets and liabilities is
reasonable. The Company will continue its efforts to enhance the profitability of main business and the marketcompetitiveness of products so as to improve the Company 's return on assets; the Company also will continue to strengthenthe management of accounts receivable and inventory so as to improve accounts receivable turnover and inventory turnover,and thereby enhance the Company 's ability to obtain cash.
(V) Strict information disclosure
The Company follows the principle of truly, accurately and completely disclosing information so that the Company’s debt
paying ability and use of proceeds can be under the supervision of the bondholders, bond trustee and shareholders to preventdebt repayment risk.
(VI) Other safeguardsWhen the Company cannot pay interest and principal on time or has other breach of contracts, the Company will at least takefollowing measures:
1. Do not distribute profits to shareholders.2. Postpone the implementation of capital expenditure projects such as major foreign investment, mergers and acquisitions.
VI. Information about the bond-holder meeting during the reporting period
There was no bond-holder meeting convened in the report period.
VII. Information about the obligations fulfilled by the bond trustee in the report period
The Company disclosed the "2010 Annual Corporate Bonds Trusteeship Transaction Report (2016)" prepared by ChinaMerchants Securities Co., Ltd. at Juchao website (http//www.cninfo.com.cn) on May 18, 2017.
VIII. The key accounting data and financial indicators of the latest two years to the end of the reportperiod
RMB 0,000
| Item | 2017 | 2016 | Rate of change over the same period |
| Earnings before interest tax depreciation and amortiation | 231,334 | 213,158 | 8.48% |
| Flow rate | 66% | 38% | 28% |
| Assets liabilities rate | 55% | 53% | 2% |
| Speed ratio | 57% | 31% | 26% |
| Total debt ratio of EBITDA | 22% | 24% | -2% |
| Interest coverage ratio | 3.81 | 4.44 | -14.19% |
| Cash interest coverage ratio | 9.38 | 10.36 | -9.46% |
| interest coverage ratio of EBITDA | 6.72 | 7.79 | -13.74% |
| Loan repayment rate | 100% | 100% | -- |
| interest coverage ratio | 100% | 100% | -- |
IX. Payment of principle and interest for other bonds and debt financing instrumentsduring the report period
1. On February 13, 2017, the Company completed the repayment of the second batch of ultra-short- term financing bills of2016 with total amount of RMB 0.9 billion and annual rate of 4.18%, which were issued on May 7, 2016.2. On May 1, 2017, the Company completed the repayment of the third batch of ultra-short- term financing bills of 2016 withtotal amount of RMB 0.6 billion and annual rate of 3.67%, which were issued on August 2, 2016.3. On June 2, 2017, the Company completed the repayment of the fourth batch of ultra-short- term financing bills of 2016with total amount of RMB 0.5 billion and annual rate of 3.50%, which were issued on September 1, 2016.
X. Information about of bank credit and use, as well as repayment of bank loans duringthe report period
In the report period, the Company gained bank credit of RMB 8,548.21 million and use quota of RMB 4,632.13 million andrepaid loans of RMB 2,154.11 million.
XI. Information about fulfillment of the stipulations or commitments specified in theProspectus of the issuance of the bonds during the report period
Not applicable
XII. Major matters occurring during the report period
Other major matters please refer to note nineteen “Explanation on other major matters ” in the fifth section “ImportantEvents” in this report.
XIII. Whether there is a guarantor of corporate bonds
□ Yes √ No
Section X. Financial Report
I. Report of the Auditors
| Type of Auditor’s Opinion | Standard and unqualified |
| Issue date of Report of the Auditors | 20 April 2018 |
| Name of Auditor’s organization | Asia Pacific (Group) CPAs (special general partnership) |
| Reference number of Report of the Auditors | Ya-Kuai- A-Shen-Zi (2018) No. 0118 |
| Name of CPA | Pan Qian, Zhang Yan |
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 of Financial Position as at 31 December 2017, and the Separate/ConsolidatedStatements of profit or loss, the Separate/Consolidated Statements off changes in equity and the Separate/ConsolidatedStatements of cash flows for the year then ended, and the notes to the financial statements.
In our opinion, the financial statements attached were prepared in line with the regulations of Accounting Standards forBusiness Enterprises in all significant aspects which gave a true and fair view of the consolidated and parent financialposition of the Company as at Dec. 31, 2017 and the consolidated and parent business performance and cash flow of theCompany for 2017.
II. Basis of Opinion
We conducted our audit in accordance with Standards on Auditing for Certified Public Accountants. Our responsibility is toexpress an opinion on these financial statements based on our audit. Those standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are freefrom material misstatement. We believe that the audit evidence we have obtained is sufficient and appropriate to provide abasis for our audit opinion.
III. Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financialstatements of the current period. These matters were addressed in the context of our audit of the financial statements as awhole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We determine thefollowings are key audit matters in need of communication in our report.
I) Impairment of fixed assets and the construction in progress
1. Matter description
As of December 31, 2017, the balance of fixed assets of the CSG Group was RMB 16.670 billion and book value was RMB11.541 billion, the original value of the construction in progress was RMB 1.51 billion, and book value was RMB 1.42 billion.Book value of fixed assets and construction in progress was 66.33%. By the end of the period, a total of RMB 375 millionwas depreciated for fixed assets and construction in progress. For details, please refer to Note 4(9) and Note 4(10) of theFinancial Statements. The matter involves significant amount, and involves significant judgments and estimates made by themanagement. Therefore, we consider the impairment provisions for fixed assets and construction in progress as key auditmatters.
2. Countermeasures of Audit
(1) Estimate the rationality and the effectiveness of its execution of the internal control system of the fixed assets and theconstruction in progress;
(2) Check the asset impairment list of the construction in progress and the fixed assets, field survey and the fixed asset anduse or storage of projects under construction;
(3) Check the method and calculation basis for checking the recoverable amount;communicate with the management layer, understand and estimate whether the accounting estimate of the managementlayer about withdrawing the preparation for the impairment of assets is rational;
(4) Check whether the asset impairment perform relevant approval process;
(5) Review the confirmation of book values of the assets at the point of impairment, recalculate the recoverable amount andthe impaired amount, Check whether the asset impairment account of the Company is handled correctly and Estimatewhether the withdrawal of the asset impairment is rational and adequate.
(6) Check the presentation of financial statements and disclosure about the impairment of fixed assets and the constraction inprogress.
II) Prior period accounting error correction
1. Matter description
1. As of December 31, 2017, CSG’s consolidated statements of financial position listed a deferred income of RMB 171
million, which occurred and was received in 2014 but was not handled correctly the government subsidy special fundfor the introduction of talents. For details, see Note (32) of Annotation 2 Important Account Policies. This matter is forall parties to pay attention to the accounting error correction. Therefore, we regard this matter as a key audit matter.
2. Countermeasures of Audit
(1)To understand the reasons for the formation of the matter, and to correct the situation of the previous accounts and toobtain relevant audit evidence;
(2) Analyze the nature and use of government subsidy funds according to the supporting documents such as governmentdocuments, receipt and payment vouchers that have been obtained, and understand the use of special funds;
(3) Check whether the accounting treatment and amount of the corrective matters are correct; whether the tax-related matterscomply with the relevant provisions of the relevant tax laws;
(4) Conduct interviews with relevant government agencies to understand the nature and uses of government subsidy fundsand related regulations regarding the use of funds;
(5) To understand the current status and follow-up arrangements of government subsidies for management;
(6) Check whether the government subsidy and the corresponding accounting title 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 otherinformation, including the information covered in the financial report, but excludes financial statements and our audit report.
Our audit opinions on financial statements do not cover other information; we will not make the authentication conclusion onother information in any form.
Combining our audit of the financial statement, our responsibility is to read other information, during which, we shallconsider that whether other information has any significant difference with the financial statement or the circumstance weknow during the audit or is there any significant misstatement.
Based on the work we already executed, if we confirm that there are significant misstatements in other information, we shallreport such a fact. On such aspect, there is nothing to report.
V. Management’s Responsibility for the Financial Statements
Management of the Company is responsible for the preparation and fair presentation of these financial statements inaccordance with the requirements of the Accounting Standards for Business Enterprises, and for such internal control asmanagement
determines is necessary to enable the preparation of financial statements that are free from material misstatement, whetherdue to fraud or error.
In preparing financial statements, the management layer is responsible for assessing the Company's sustained business
capability, disclosing matters related to continue operating，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 the company.
VI. The responsibility of Certified Public Accountants for the financial statement auditing.Our objective is to obtain reasonable assurance on whether there is no misstatement in overall financial statements caused by
fraud or error, and issue the audit report with audit opinions. Reasonable assurance is the high-level assurance, but it can’t
assure that a certain major misstatement can be always found when auditing according to the audit standard. Themisstatement may be caused by malpractices or
error. If the misstatements within the rational expectations may affect the economic decision of the financial statement useraccording to the financial statement, it shall be deemed that the misstatement is significant.
During the process of conducting the audit work according to audit standards, we apply professional judgment and keepprofessional skepticism. Meanwhile, we also perform the following tasks:
(1) Identify and Estimate the significant misstatement risks of the financial statement due to the malpractices and error,design and implement the audit procedures to respond those risks, and obtain adequate and proper audit evidence serving asthe basis of publishing the audit opinions. Since malpractices may involve in collusion, falsification, intentional omission,misrepresentation or overriding the internal control, the risk of failing to detect a significant misstatement due to malpracticesis higher than the risk of failing to detect a significant misstatement due to the error.
(2) Understand the internal control related to audit, so as to design appropriate audit procedures.
(3) Estimate the appropriateness of the accounting policies selected by the management layer, and the rationality of makingaccounting estimate and relevant disclosures.
(4) Draw a conclusion on the appropriateness of the going concern assumption used by the management layer. Meanwhile,according to the obtained audit evidence, it may cause to come to the conclusion that there are substantial doubtable events ormajor uncertainty for the sustainable operation ability of the Company. In case that we come to the conclusion that there is asignificant uncertainty, the audit standards require us to remind the users of the statements to pay attention to relevantdisclosures in the financial statements in the audit report; In case of any insufficient disclosure, we shall give modifiedopinions. Our conclusion is based on the available information up to the audit report day. However, the future events orcircumstances may cause the Company cannot continue to operate.
(5) Estimate the overall presentation, structure and content (disclosure included) of the financial statements, and Estimatewhether the financial statements fairly reflect relevant transactions and matters.
(6) Acquire adequate and appropriate audit evidences on the financial information of the entity or business activities of theCompany, and give audit opinions on the consolidated financial statements. We are responsible for guiding, supervising andexecuting the audit of the Group, and take all responsibilities for the audit opinions.
We communicate with the governance layer about the audit scope, schedule, significant audit findings and other matterswithin the plan, including the noteworthy internal control defects recognized by us during the audit.
We also provide statements to the governance layer on the compliance with the professional ethics requirement related to theindependence, and communicate withthe governance layer on all relationships and other matters that may reasonably be considered to affect our independence, aswell as relevant preventive measures.
From the matters that we have communicated with the governance layer, we confirm the most important matters for the auditof the current financial statements, and thus constitute the key audit matters. We describe these matters in our audit report,
unless laws and regulations prohibit the public disclosure of these matters, or in rare cases, if it is reasonably expected thatthe negative consequences of communicating a matter in the audit report will surpass the benefits in the public interests, weconfirm that the matter shall not be communicated in the audit report.
| Asia-Pacific (Group) Certified Public Accountants | Certified Public Accountant of China |
| (special general partnership) | |
| Beijing, China | Certified Public Accountant of China |
20April 2018
CONSOLIDATED AND COMPANY’S BALANCE SHEETS
AS AT 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
| 31 December 2017 | 31 December 2016 | 31 December 2017 | 31 December 2016 | ||
| ASSETS | Note | Consolidated | Consolidated | Company | Company |
| (Restated | (Restated | ||||
| Current assets | |||||
| Cash at bank and on hand | 4(1) | 2,462,605,764 | 586,803,505 | 1,681,877,320 | 302,841,481 |
| Notes receivable | 4(2) | 552,232,420 | 456,347,237 | - | - |
| Accounts receivable | 4(3) | 638,238,290 | 627,985,983 | - | - |
| Advances to suppliers | 4(4) | 143,848,023 | 95,733,132 | 146,132 | 16,880 |
| Other receivables | 4(5)/16(1) | 205,939,019 | 200,809,149 | 2,400,334,816 | 4,030,701,029 |
| Inventories | 4(6) | 685,895,317 | 477,780,925 | - | - |
| Assets classified as held for sale | 4(7) | 45,983,520 | - | - | - |
| Other current assets | 4(8) | 200,847,989 | 199,905,577 | - | - |
| Total current assets | 4,935,590,342 | 2,645,365,508 | 4,082,358,268 | 4,333,559,390 | |
| Non-current assets | |||||
| Long-term receivables | 16(3) | - | - | 1,200,000,000 | 2,003,645,000 |
| Long-term equity investments | 16(2) | - | - | 4,795,987,652 | 4,790,440,632 |
| Fixed assets | 4(9) | 11,540,769,697 | 11,457,972,991 | 22,182,246 | 26,073,848 |
| Construction in progress | 4(10) | 1,417,624,618 | 1,362,096,377 | - | - |
| Intangible assets | 4(11) | 1,047,222,407 | 1,032,458,977 | 1,742,109 | 1,393,454 |
| Development expenditure | 4(11) | 61,365,537 | 66,927,714 | - | - |
| Goodwill | 4(12) | 397,392,156 | 397,392,156 | - | - |
| Long-term prepaid expenses | 2,223,397 | 975,660 | - | - | |
| Deferred tax assets | 4(13) | 80,872,862 | 96,451,854 | - | - |
| Other non-current assets | 4(14) | 51,941,352 | 87,174,393 | 2,132,041 | - |
| Total non-current assets | 14,599,412,026 | 14,501,450,122 | 6,022,044,048 | 6,821,552,934 | |
| TOTAL ASSETS | 19,535,002,368 | 17,146,815,630 | 10,104,402,316 | 11,155,112,324 |
CONSOLIDATED AND COMPANY’S BALANCE SHEETS (CONT'D)
AS AT 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
| 31 December 2017 | 31 December 2016 | 31 December 2017 | 31 December 2016 | ||
| LIABILITIES AND OWNERS' EQUITY | Note | Consolidated | Consolidated | Company | Company |
| (Restated | (Restated | ||||
| Current liabilities | |||||
| Short-term borrowings | 4(16) | 3,704,630,909 | 4,017,869,662 | 2,600,000,000 | 3,495,163,044 |
| Notes payable | 4(17) | 213,401,622 | 20,000,000 | - | - |
| Accounts payable | 4(18) | 1,400,166,042 | 1,169,869,370 | 261,024 | 317,874 |
| Advances from customers | 4(19) | 195,563,465 | 142,330,979 | - | - |
| Employee benefits payable | 4(20) | 272,170,660 | 193,372,239 | 40,856,313 | 18,380,010 |
| Taxes payable | 4(21) | 111,996,764 | 115,592,616 | 1,762,580 | 1,804,568 |
| Interest payable | 4(22) | 34,032,740 | 78,225,904 | 3,090,735 | 3,794,646 |
| Other payables | 4(23) /16(4) | 619,324,354 | 188,321,450 | 909,432,991 | 240,593,894 |
| Current portion of non-current liabilities | 4(24) | 904,261,397 | 1,029,340,000 | 180,000,000 | 1,000,000,000 |
| Other current liabilities | 300,000 | 300,000 | - | - | |
| Total current liabilities | 7,455,847,953 | 6,955,222,220 | 3,735,403,643 | 4,760,054,036 |
| Non-current liabilities | |||||
| Long-term borrowings | 4(25) | 1,554,120,000 | 1,438,660,000 | 1,200,000,000 | 1,380,000,000 |
| Bonds payable | 4(26) | 1,161,794,247 | - | - | - |
| Deferred tax liabilities | 4(13) | 20,915,954 | 29,749,137 | - | - |
| Deferred income | 4(27) | 562,701,103 | 593,993,254 | 186,526,280 | 183,035,040 |
| Total non-current liabilities | 3,299,531,304 | 2,062,402,391 | 1,386,526,280 | 1,563,035,040 | |
| Total liabilities | 10,755,379,257 | 9,017,624,611 | 5,121,929,923 | 6,323,089,076 | |
| Shareholders’ equity | |||||
| Share capital | 4(28) | 2,484,147,547 | 2,075,335,560 | 2,484,147,547 | 2,075,335,560 |
| Capital surplus | 4(29) | 1,306,381,765 | 1,260,702,197 | 1,451,209,079 | 1,405,529,511 |
| Less:Treasury shares | 4(30) | (417,349,879) | - | (417,349,879) | - |
| Other comprehensive income | 4(31) | 1,948,943 | 4,653,971 | - | - |
| Special reserve | 4(32) | 3,224,938 | 5,843,473 | - | - |
| Surplus reserve | 4(33) | 920,592,332 | 888,508,230 | 935,137,692 | 903,053,590 |
| Undistributed profits | 4(34) | 4,159,642,227 | 3,573,871,573 | 529,327,954 | 448,104,587 |
| Total equity attributable to shareholders of parent company | 8,458,587,873 | 7,808,915,004 | 4,982,472,393 | 4,832,023,248 | |
| Minority interests | 321,035,238 | 320,276,015 | - | - | |
| Total shareholders' equity | 8,779,623,111 | 8,129,191,019 | 4,982,472,393 | 4,832,023,248 | |
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 19,535,002,368 | 17,146,815,630 | 10,104,402,316 | 11,155,112,324 |
The accompanying notes form an integral part of these financial statements.
Legal representative: Principal in charge of accounting: Head of accountingdepartment:
CONSOLIDATED AND COMPANY’S INCOME STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
| 2017 | 2016 | 2017 | 2016 | ||
| Item | Note | Consolidated | Consolidated | Company | Company |
| Revenue | 4(35) | 10,879,400,746 | 8,974,083,407 | 58,687,566 | 22,581,872 |
| Less: Cost of sales | 4(35) | (8,216,358,372) | (6,562,214,373) | - | (60,337) |
| Taxes and surcharges | 4(36) | (124,523,926) | (103,159,546) | (4,942,397) | (92,575) |
| Selling and distribution expenses | 4(37) | (336,131,723) | (301,815,090) | - | - |
| General and administrative expenses | 4(38) | (919,329,772) | (766,589,059) | (117,294,601) | (122,708,284) |
| Financial expenses - net | 4(39) | (315,961,080) | (265,820,569) | (42,124,252) | (20,405,532) |
| Asset impairment loss | 4(41) | (69,399,755) | (58,862,764) | (80,219) | 1,767,753 |
| Add: Gain or loss from changes in fair value | 4(42) | - | 228,500,000 | - | 228,500,000 |
| Investment income/(loss) | 4(43) /16(5) | 427,636 | (279,187,752) | 436,068,825 | 186,072,766 |
| Income on disposal assets | 4(44) | (1,768,993) | (1,759,358) | - | 3,210 |
| Other Income | 4(45) | 84,341,814 | - | 1,568,240 | - |
| Operating profit | 980,696,575 | 863,174,896 | 331,883,162 | 295,658,873 | |
| Add: Non-operating revenue | 4(46) | 20,763,042 | 98,078,639 | 40,000 | 1,574,277 |
| Less: Non-operating expenses | 4(47) | (5,152,591) | (5,144,916) | (3,426,562) | - |
| Total profit | 996,307,026 | 956,108,619 | 328,496,600 | 297,233,150 | |
| Less: Income tax (expenses)/revenue | 4(48) | (167,670,991) | (151,882,095) | (7,655,575) | 45,854 |
| Net profit | 828,636,035 | 804,226,524 | 320,841,025 | 297,279,004 | |
| Classified by continuous operation: | |||||
| Net income from continuing operations (“-” for net loss) | 828,636,035 | 804,226,524 | 320,841,025 | 297,279,004 | |
| Net income from discontinued operations (“-” for net loss) | - | - | - | - | |
| Classified by equity ownership: | |||||
| Attributable to shareholders of parentcompany | 825,388,312 | 797,721,576 | - | - | |
| Minority interests | 3,247,723 | 6,504,948 | - | - | |
| Other comprehensive income net after tax | (2,705,028) | 1,686,199 | - | - | |
| Other comprehensive income net after tax attributable to shareholders of parentcompany | (2,705,028) | 1,686,199 | - | - | |
| Other comprehensive income items which will be reclassified subsequently to profit or loss | (2,705,028) | 1,686,199 | - | - | |
| Differences on translation of foreign currency financial statements | (2,705,028) | 1,686,199 | - | - | |
| Other comprehensive income net after tax attributable to minority interests | - | - | - | - | |
| Total comprehensive income | 4(31) | 825,931,007 | 805,912,723 | 320,841,025 | 297,279,004 |
| Total comprehensive income attributable to shareholders of parent company | 822,683,284 | 799,407,775 | |||
| Total comprehensive income attributable to minority interests | 3,247,723 | 6,504,948 | |||
| Earnings per share | 4(49) | ||||
| Basic earnings per share (RMB Yuan) | 4(49) | 0.35 | 0.33 | ||
| Diluted earnings per share (RMB Yuan) | 4(49) | 0.35 | 0.33 |
The accompanying notes form an integral part of these financial statements.
Legal representative: Principal in charge of accounting: Head of accounting department:
CONSOLIDATED AND COMPANY’S CASH FLOW STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
| 2017 | 2016 | 2017 | 2016 | ||
| Item | Note | Consolidated | Consolidated | Company | Company |
| 1. Cash flows from operating activities | |||||
| Cash received from sales of goods or rendering of services | 12,159,560,836 | 10,375,273,438 | 84,336,551 | - | |
| Refund of taxes and surcharges | 24,706,337 | 69,632,529 | - | - | |
| Cash received relating to other operating activities | 4(50)(a) | 72,348,567 | 47,278,131 | 16,104,051 | 3,798,557 |
| Sub-total of cash inflows | 12,256,615,740 | 10,492,184,098 | 100,440,602 | 3,798,557 | |
| Cash paid for goods and services | (7,206,584,779) | (5,719,787,359) | (65,853) | - | |
| Cash paid to and on behalf of employees | (1,204,981,471) | (1,198,976,110) | (61,388,549) | (125,316,231) | |
| Payments of taxes and surcharges | (795,627,245) | (780,678,441) | (17,355,536) | (39,189,451) | |
| Cash paid relating to other operating activities | 4(50)(b) | (585,976,089) | (551,890,068) | (26,421,920) | (13,035,783) |
| Sub-total of cash outflows | (9,793,169,584) | (8,251,331,978) | (105,231,858) | (177,541,465) | |
| Net cash flows from/(used in) operating activities | 2,463,446,156 | 2,240,852,120 | (4,791,256) | (173,742,908) | |
| 2. Cash flows from investing activities | |||||
| Cash received from returns on investments | - | - | 436,068,825 | 395,236,932 | |
| Net cash received from disposal of fixed assets, intangible assets and other long-term assets | 4,370,785 | 8,426,349 | - | 3,210 | |
| Cash received relating to other investing activities | 4(50)(c) | 187,756,255 | 364,515,307 | 5,966,582 | 736,648,232 |
| Sub-total of cash inflows | 192,127,040 | 372,941,656 | 442,035,407 | 1,131,888,374 | |
| Cash paid to acquire fixed assets, intangible assets and other long-term assets | (1,212,172,338) | (1,289,115,730) | (3,996,610) | (807,521) | |
| Cash paid to acquire investments | - | (4,252,960) | - | (158,896,160) | |
| Net cash received from acquired subsidiaries | - | (503,593,518) | - | (502,204,796) | |
| Cash paid relating to other investing activities | 4(50)(d) | (200,085,036) | (182,205,113) | (284,975) | - |
| Sub-total of cash outflows | (1,412,257,374) | (1,979,167,321) | (4,281,585) | (661,908,477) | |
| Net cash flows (used in)/from investing activities | (1,220,130,334) | (1,606,225,665) | 437,753,822 | 469,979,897 | |
| 3. Cash flows from financing activities | |||||
| Cash received from capital contributions | 417,349,879 | 14,500,000 | 417,349,879 | - | |
| Including: Cash received from capital contributions by minority shareholders of subsidiaries | - | 14,500,000 | - | - | |
| Cash received from borrowings | 4,096,568,050 | 9,747,674,851 | 2,750,693,638 | 9,117,091,808 | |
| Cash received relating to other financing activities | 4(50)(e) | 3,616,000,000 | - | 2,700,067,157 | - |
| Sub-total of cash inflows | 8,129,917,929 | 9,762,174,851 | 5,868,110,674 | 9,117,091,808 | |
| Cash repayments of borrowings | (5,154,107,768) | (9,481,131,859) | (4,646,723,365) | (8,580,928,764) | |
| Cash payments for interest expenses and distribution of dividends or profits | (558,404,559) | (907,404,419) | (275,981,816) | (871,890,165) | |
| Including: Cash payments for dividends to minority shareholders of subsidiaries | (2,488,500) | - | - | - | |
| Cash payments relating to other financing activities | 4(50)(f) | (1,783,109,674) | - | - | (53,686,866) |
| Sub-total of cash outflows | (7,495,622,001) | (10,388,536,278) | (4,922,705,181) | (9,506,505,795) | |
| Net cash flows (used in)/from financing activities | 634,295,928 | (626,361,427) | 945,405,493 | (389,413,987) | |
| 4. Effect of foreign exchange rate changes on cash | (2,425,575) | 1,557,085 | 666,398 | 208,178 | |
| 5. Net increase/(decrease) in cash and cash equivalents | 4(51)(b) | 1,875,186,175 | 9,822,113 | 1,379,034,457 | (92,968,820) |
| Add: Cash and cash equivalents at beginning of year | 584,566,990 | 574,744,877 | 301,637,933 | 394,606,753 | |
| 6. Cash and cash equivalents at end of year | 4(51)(c) | 2,459,753,165 | 584,566,990 | 1,680,672,390 | 301,637,933 |
The accompanying notes form an integral part of these financial statements.
Legal representative: Principal in charge of accounting: Head of accountingdepartment:
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CSG HOLDING CO., LTD.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
| Attributable to shareholders of parentcompany | ||||||||||||
| Item | Share capital | Capital surplus | Other comprehensive income | Special reserve | Surplus reserve | Undistributed profits | Sub-total | Minority interests | Total shareholders' equity | |||
| Note | 4(28) | 4(29) | 4(31) | 4(32) | 4(33) | 4(34) | ||||||
| Balance at 31 December 2015 | 2,075,335,560 | 1,261,391,272 | 2,967,772 | 15,437,498 | 859,122,330 | 3,431,556,565 | 7,645,810,997 | 3,080,480 | 7,648,891,477 | |||
| Prior period accounting error correction | - | - | - | - | (342,000) | (3,078,000) | (3,420,000) | (3,420,000) | ||||
| Balance at 1 January 2016(Restated) | 2,075,335,560 | 1,261,391,272 | 2,967,772 | 15,437,498 | 858,780,330 | 3,428,478,565 | 7,642,390,997 | 3,080,480 | 7,645,471,477 | |||
| Movements for the year ended 31 December 2016 (Restated) | ||||||||||||
| Total comprehensive income | ||||||||||||
| Net profit | - | - | - | - | - | 797,721,576 | 797,721,576 | 6,504,948 | 804,226,524 | |||
| Other comprehensive income | 4(31) | - | - | 1,686,199 | - | - | - | 1,686,199 | - | 1,686,199 | ||
| Total comprehensive income | - | - | 1,686,199 | - | - | 797,721,576 | 799,407,775 | 6,504,948 | 805,912,723 | |||
| Capital invest or reduce from shareholders | - | 402,262 | - | - | - | - | 402,262 | 313,771,067 | 314,173,329 | |||
| Minority shareholders invest capital | - | - | - | - | - | - | - | 313,628,750 | 313,628,750 | |||
| Share-based payments | - | 402,262 | - | - | - | - | 402,262 | 142,317 | 544,579 | |||
| Effect of changes in investees’ other equity applying the equity method | - | 81,143 | - | - | - | - | 81,143 | - | 81,143 | |||
| Profit distribution | - | - | - | - | 29,727,900 | (652,328,568) | (622,600,668) | - | - | - | (622,600,668) | |
| Appropriation to surplus reserve | 4(33) | - | - | - | - | 29,727,900 | (29,727,900) | - | - | - | ||
| Distribution to the shareholders | 4(34) | - | - | - | - | - | (622,600,668) | (622,600,668) | - | (622,600,668) | ||
| Special reserve | - | - | - | (9,594,025) | - | - | (9,594,025) | - | (9,594,025) | |||
| Special reserve appropriated | 4(32) | - | - | - | 6,930,650 | - | - | 6,930,650 | - | 6,930,650 | ||
| Special reserve used | 4(32) | - | - | - | (16,524,675) | - | - | (16,524,675) | - | (16,524,675) | ||
- 99 -
| Others | - | (1,172,480) | - | - | - | - | (1,172,480) | (3,080,480) | (4,252,960) | |||
| Transactions with minority shareholders | - | (1,172,480) | - | - | - | - | (1,172,480) | (3,080,480) | (4,252,960) | |||
| Balance at 31 December 2016 | 2,075,335,560 | 1,260,702,197 | 4,653,971 | 5,843,473 | 888,508,230 | 3,573,871,573 | 7,808,915,004 | 320,276,015 | 8,129,191,019 |
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CSG HOLDING CO., LTD.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (CONT’D)
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
| Attributable to shareholders of parentcompany | |||||||||||
| Item | Share capital | Capital surplus | Less: Treasury share | Other comprehensive income | Special reserve | Surplus reserve | Undistributed profits | Sub-total | Minority interests | Total shareholders' equity | |
| Note | 4(28) | 4(29) | 4(30) | 4(31) | 4(32) | 4(33) | 4(34) | ||||
| Balance at 1 January 2017(Restated) | 2,075,335,560 | 1,260,702,197 | - | 4,653,971 | 5,843,473 | 888,508,230 | 3,573,871,573 | 7,808,915,004 | 320,276,015 | 8,129,191,019 | |
| Movements for the year ended 31 December 2017 | |||||||||||
| Total comprehensive income | |||||||||||
| Net profit | - | - | - | - | - | - | 825,388,312 | 825,388,312 | 3,247,723 | 828,636,035 | |
| Other comprehensive income | 4(31) | - | - | - | (2,705,028) | - | - | - | (2,705,028) | - | (2,705,028) |
| Total comprehensive income | - | - | - | (2,705,028) | - | - | 825,388,312 | 822,683,284 | 3,247,723 | 825,931,007 | |
| Capital increase or decrease from shareholder | 97,511,654 | 356,979,901 | (417,349,879) | - | - | - | - | 37,141,676 | - | 37,141,676 | |
| Share-based payments | 97,511,654 | 328,032,920 | (417,349,879) | - | - | - | - | 8,194,695 | - | 8,194,695 | |
| Shareholders’ Interest-free borrowing | - | 28,946,981 | - | - | - | - | - | 28,946,981 | - | 28,946,981 | |
| Profit distribution | - | - | - | - | - | 32,084,102 | (239,617,658) | (207,533,556) | (2,488,500) | (210,022,056) | |
| Appropriation to surplus reserve | 4(33) | - | - | - | - | - | 32,084,102 | (32,084,102) | - | - | - |
| Distribution to the shareholders | 4(34) | - | - | - | - | - | - | (207,533,556) | (207,533,556) | (2,488,500) | (210,022,056) |
| Special reserve | - | - | - | - | (2,618,535) | - | - | (2,618,535) | - | (2,618,535) | |
| Special reserve appropriated | 4(32) | - | - | - | - | 7,831,127 | - | - | 7,831,127 | - | 7,831,127 |
| Special reserve used | 4(32) | - | - | - | - | (10,449,662) | - | - | (10,449,662) | - | (10,449,662) |
| Internal transfer of shareholders' equity | 311,300,333 | (311,300,333) | - | - | - | - | - | - | - | - | |
| Capital reserve to share capital | 311,300,333 | (311,300,333) | - | - | - | - | - | - | - | - | |
| 2,484,147,547 | 1,306,381,765 | (417,349,879) | 1,948,943 | 3,224,938 | 920,592,332 | 4,159,642,227 | 8,458,587,873 | 321,035,238 | 8,779,623,111 | ||
- 101 -
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’ EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
| Attributable to shareholders of parent company | |||||||
| Item | Share capital | Capital surplus | Less: Treasury share | Surplus reserve | Undistributed profits | Total shareholders' equity | |
| Balance at 31 December 2015 | 2,075,335,560 | 1,404,803,407 | - | 873,667,690 | 806,232,151 | 5,160,038,808 | |
| Prior period accounting error correction | - | - | - | (342,000) | (3,078,000) | (3,420,000) | |
| Balance at 1 January 2016（Restated) | 2,075,335,560 | 1,404,803,407 | - | 873,325,690 | 803,154,151 | 5,156,618,808 | |
| Movements for the year ended 31 December 2016 | |||||||
| Total comprehensive income | |||||||
| Net profit | - | - | - | - | 297,279,004 | 297,279,004 | |
| Other comprehensive income | - | - | - | - | - | - | |
| Total comprehensive income | - | - | - | - | 297,279,004 | 297,279,004 | |
| Effect of changes in investees’ other equity applying the equity method | - | 726,104 | - | - | - | 726,104 | |
| Profit distribution | - | - | - | 29,727,900 | (652,328,568) | (622,600,668) | |
| - Appropriation to surplus reserve | - | - | - | 29,727,900 | (29,727,900) | - | |
| - Distribution to the shareholders | - | - | - | - | (622,600,668) | (622,600,668) | |
| Balance at 31 December 2016 (Restated) | 2,075,335,560 | 1,405,529,511 | - | 903,053,590 | 448,104,587 | 4,832,023,248 | |
| Balance at 1 January 2017(Restated) | 2,075,335,560 | 1,405,529,511 | - | 903,053,590 | 448,104,587 | 4,832,023,248 | |
| Movements for the year ended 31 December 2017 | |||||||
| Total comprehensive income | |||||||
| Net profit | - | - | - | - | 320,841,025 | 320,841,025 | |
| Total comprehensive income | - | - | - | - | 320,841,025 | 320,841,025 | |
| Capital increase or decrease from shareholder | 97,511,654 | 356,979,901 | (417,349,879) | - | - | 37,141,676 | |
| Share-based payments | 97,511,654 | 328,032,920 | (417,349,879) | - | - | 8,194,695 | |
| Shareholders’ Interest-free borrowing | - | 28,946,981 | - | - | - | 28,946,981 | |
| Profit distribution | - | - | - | 32,084,102 | (239,617,658) | (207,533,556) | |
| Appropriation to surplus reserve | - | - | - | 32,084,102 | (32,084,102) | - | |
| Distribution to the shareholders | - | - | - | - | (207,533,556) | (207,533,556) | |
| Capital reserve to share capital | 311,300,333 | (311,300,333) | - | - | - | - | |
| Balance at 31 December 2017 | 2,484,147,547 | 1,451,209,079 | (417,349,879) | 935,137,692 | 529,327,954 | 4,982,472,393 | |
The accompanying notes form an integral part of these financial statements.
Legal representative: Principal in charge of accounting: Head of accountingdepartment:
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 103 -
1 General information
CSG Holding Co Ltd (the “Company”) was incorporated in September 1984, known as China South GlassCompany, 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 IndustriesCorporation (中国北方工业深圳公司) and Guangdong International Trust and Investment Corporation (广东国际信托投资公司). The Company was registered in Shenzhen, Guangdong Province of the People's Republic of China
and its headquarters is located in Shenzhen, Guangdong Province of the People's Republic of China. The
Company issued RMB-denominated ordinary shares (“A-share”) and foreign shares (“B-share”) publicly in October
1991 and January 1992 respectively, and was listed on Shenzhen Stock Exchange on February 1992. As at 31December 2017, the registered capital was RMB2,484,147,547, with nominal value of RMB1 per share.
The Company and its subsidiaries (collectively referred to as the “Group”) are mainly engaged in the manufacture
and sales of flat glass, specialised glass, engineering glass, energy saving glass, silicon related materials,polycrystalline silicon and solar components and electronic-grade display device glass and the construction andoperation of photovoltaic plant etc.
Details on the majors subsidiaries included in the consolidated scope in current year were stated in Note 6(1).
The financial statements were authorised for issue by the Board of Directors on 20 April 2018.
2 Summary of significant accounting policies and accounting estimates
The Group determines its specific accounting policies and estimates according to manufacturing and operationfeature. It mainly reflected in provision for bad debts of receivables (Note 2(10)), inventory costing method (Note2(11)), amortisation of Property,plant and equipmentand intangible assets (Note 2(13) and (16)), criteria fordetermining capitalised development expenditure (Note 2(16)), and timing for revenue recognition (Note 2(24)).
Please see Note 2(30) for the key judgements adopted by the Group in applying important accounting policies.
(1) Basis of preparation
The financial statements are prepared in accordance with the Accounting Standards for Business Enterprises -Basic Standard, and the specific accounting standards and other relevant regulations issued by the Ministry of
Finance on 15 February 2006 and in subsequent periods (hereafter collectively referred to as “the AccountingStandard for Business Enterprises” or “CAS”), and Information Disclosure Rule No. 15 for Companies with Public
Traded Securities - Financial Reporting General Provision issued by China Security Regulatory Commission.
As at 31 December 2017, the Group current liabilities exceed current assets about RMB2.52 billion and committedcapital expenditure of about RMB 0.15 billion (Note 11(1)). The directors of the Company has assessed thefollowing facts and conditions: a) the Group has been able to generate positive operating cash flows in prior yearsand expect to do so in the next 12 months, and in 2017, the net cash inflow from operation activities isapproximately RMB2.463 billion; b) the Group has maintained good relationship with banks, so the Group hasbeen able to successfully renew the bank facilities upon the expiry. As at 31 December 2017, the Group hadunutilised banking facilities of approximately RMB4.00 billion, among which long-term banking facilities were aboutRMB0.57billion. In addition, the shareholder of the Group or other appointed related parties are willing to providetheGroup with RMB2.00 billion interest-free loan. As at report date, the shareholder of Group has providedRMB1.610 billion interest-free loan. The Group also has other sources of financing, such as issuing short-termbonds, ultra-short-term financing bonds and medium-term notes. The directors are of view that the banking
facilities and shareholder’s support above can meet the funding requirements2 Summary of significant accounting policies and accounting estimates (Cont’d)
(1) Basis of preparation (Cont’d)
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
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of the Group’s debt servicing and capital commitment. Accordingly, the directors of the Company had adopted the
going concern basis in the preparation of the financial statements of the Company and the Group.
(2) S
tatement of compliance with the Accounting Standards for Business Enterprises
The financial statements of the Company for the year ended 31 December 2017 are in compliance with theAccounting Standards for Business Enterprises, and truly and completely present the financial position of theconsolidated and the Company as at 31 December 2017 and their financial performance, cash flows and otherinformation for the year then ended.
(3) A
ccounting year
The Company’s accounting year starts on 1 January and ends on 31 December.
(4) R
ecording currency
The recording currency is Renminbi (RMB).The economic environment of subsidiaries (China SouthernGlass(Hong Kong) Limited, Hong Kong Southern Glass Trading co., Limited) determines their recording currency
is Hongkong dollar. This report ‘s recording currency is Renminbi (RMB).
(5) B
usiness combinations
(a) Business combinations involving enterprises under common control
The consideration paid and net assets obtained by the absorbing party in a business combination are measured atbook value. The difference between book value of the net assets obtained from the combination and book value ofthe consideration paid for the combination is treated as an adjustment to capital surplus (share premium). If thecapital surplus (share premium) is not sufficient to absorb the difference, the remaining balance is adjusted againstretained earnings. Costs directly attributable to the combination are included in profit or loss in the period in whichthey are 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.
(b) Business combinations involving enterprises not under common control
The cost of combination and identifiable net assets obtained by the acquirer in a business combination are
measured at fair value at the acquisition date. Where the cost of the combination exceeds the acquirer’s interest inthe fair value of the acquiree’s identifiable net assets, the difference is recognised as goodwill; where the cost ofcombination is lower than the acquirer’s interest in the fair value of the acquiree’s identifiable net assets, the
difference is recognised in profit or loss for the current period. Costs directly attributable to the combination areincluded in profit or loss in the period in which they are incurred. Transaction costs associated with the issue ofequity or debt securities for the business combination are included in the initially recognised amounts of the equityor debt securities.
(6) P
reparation of consolidated financial statements
The consolidated financial statements comprise the financial statements of the Company and all of its subsidiaries.
Subsidiaries are consolidated from the date on which the Group obtains control and are de-consolidated from the
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
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date that such control ceases. For a subsidiary that is acquired in a business combination involving enterprisesunder common control, it is included in the consolidated financial statements from the date when it, together withthe 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 is presentedseparately in the consolidated income statement.
In preparing the consolidated financial statements, where the accounting policies and the accounting periods of theCompany and subsidiaries are inconsistent, the financial statements of the subsidiaries are adjusted in accordancewith the accounting policies and the accounting period of the Company. For subsidiaries acquired from businesscombinations involving enterprises not under common control, the individual financial statements of thesubsidiaries are adjusted based on the fair value of the identifiable net assets at the acquisition date.
All significant intra-group balances, transactions and unrealised profits are eliminated in the consolidated financial
statements. The portion of subsidiaries’ equity and the portion of a subsidiaries’ net profits and losses and
comprehensive incomes for the period not attributable to Company are recognised as minority interests andpresented separately in the consolidated financial statements under equity, net profits and total comprehensiveincome respectively. Unrealised profits and losses resulting from the sales of assets by the Company to itssubsidiaries are fully eliminated against net profit attributable to shareholders of the parent company. Unrealisedprofits and losses resulting from the sales of assets by a subsidiary to the Company are eliminated and allocatedbetween net profit attributable to shareholders of the parent company and non-controlling interests in accordancewith the allocation proportion of the parent company in the subsidiary. Unrealised profits and losses resulting fromthe sales of assets by one subsidiary to another are eliminated and allocated between net profit attributable toshareholders of the parent company and non-controlling interests in accordance with the allocation proportion ofthe parent in the subsidiary.
After the control over the subsidiary has been gained, whole or partial minority equities of the subsidiary owned by
minority shareholders are acquired from the subsidiary’s minority shareholders. In the consolidated financial
statements, the subsidiary's assets and liabilities are reflected with amount based on continuous calculationstarting from the acquisition date or consolidation date. Capital surplus is adjusted according to the differencebetween newly increased long-term equity investment arising from acquisition of minority equity and the share ofnet assets calculated based on current shareholding ratio that the parent company is entitled to. The share issubject to continuous calculation starting from the acquisition date or consolidation date. If the capital surplus(capital premium or share capital premium) is not sufficient to absorb the difference, the remaining balance isadjusted against retained earnings.
If the accounting treatment of a transaction which considers the Group as an accounting entity is different from thatconsiders the Company or its subsidiaries as an accounting entity, it is adjusted from 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-termand highly liquid investments that are readily convertible to known amounts of cash and which are subject to aninsignificant 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 the dates of thetransactions.
2 Summary of significant accounting policies and accounting estimates (Cont’d)
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
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(8) Foreign currency transaction (Cont’d)
At the balance sheet date, monetary items denominated in foreign currencies are translated into RMB using thespot exchange rates on the balance sheet date. Exchange differences arising from these translations arerecognised in profit or loss for the current period, except for those attributable to foreign currency borrowings thathave been taken out specifically for the acquisition or construction of qualifying assets, which are capitalised aspart of the cost of those assets. Non-monetary items denominated in foreign currencies that are measured athistorical costs are translated at the balance sheet date using the spot exchange rates at the date of thetransactions. The effect of exchange rate changes on cash is presented separately in the cash flow statement.
(b) Translation of foreign currency financial statements
The asset and liability items in the balance sheets for overseas operations are translated at the spot exchange
rates on the balance sheet date. Among the shareholders’ equity items, the items other than “undistributed profits”
are translated at the spot exchange rates of the transaction dates. The income and expense items in the incomestatements of overseas operations are translated at the spot exchange rates of the transaction dates. The
differences arising from the above translation are presented separately in the shareholders’ equity. The cash flows
of overseas operations are translated at the spot exchange rates on the dates of the cash flows. The effect ofexchange rate changes on cash is presented separately in the cash flow statement.
(9) Financial instrument
(a) Financial assets
(i) Classification of financial assets
Financial assets are classified into the following categories at initial recognition: financial assets at fair valuethrough profit or loss, receivables, available-for-sale financial assets and held-to-maturity investments. The
classification of financial assets depends on the Group’s intention and ability to hold the financial assets. The
Group had no financial assets at fair value through profit or loss and held-to-maturity investments for 2017.
Receivables
Receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in anactive market. Receivables comprise notes receivable, accounts receivable and other receivables. (Note 2(10))
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are either designated in this category ornot classified in any of the other categories at initial recognition. Available-for-sale financial assets are included inother current assets on the balance sheet if management intends to dispose of them within 12 months after thebalance sheet date.
(ii) Recognition and measurement
Financial assets are recognised at fair value on the balance sheet when the Group becomes a party to thecontractual provisions of the financial instrument. The related transaction costs that are attributable to theacquisition of receivables and available-for-sale financial assets are included in their initial recognition amounts.
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(9) Financial instrument (Cont’d)
Available-for-sale financial assets are subsequently measured at fair value. Investments in equity instruments are
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
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measured at cost when they do not have a quoted market price in an active market and whose fair value cannot bereliably measured. Receivables are measured at amortised cost using the effective interest method.
Gains or losses arising from change in fair value of available-for-sale financial assets are recognised directly inequity, except for impairment losses and foreign exchange gains and losses arising from translation of monetaryfinancial assets. When such financial assets are derecognised, the cumulative gains or losses previouslyrecognised directly into equity are recycled into profit or loss for the current period. Interests on available-for-saleinvestments in debt instruments calculated using the effective interest method during the period in which suchinvestments are held and cash dividends declared by the investee on available-for-sale investments in equityinstruments are recognised as investment income, which is recognised in profit or loss for the period.
(a) Financial assets
(iii) Impairment of financial assets
The Group assesses book values of financial assets at each balance sheet date. If there is objective evidence thata financial asset is impaired, an impairment loss is provided for.
The objective evidence of impairment losses on financial assets refers to events that actually incurred after theinitial recognition of financial assets, have influence on the expected future cash flow from the financial assets andthe influence can be reliably measured.
Objective evidence which indicates the occurrence of impairment for available-for-sale equity instruments includessignificant or non-temporary decrease of fair value of equity instruments investment. The Group conductsindividual Checkion on each available-for-sale equity instruments investment at balance sheet date, if the fair valueof the available-for-sale equity instrument is less than its initial investment cost for more than 50% (inclusive) orless than its initial investment cost continually for more than 1 year, that means impairment incurred; if the fairvalue of the available-for-sale equity instrument is less than its initial investment cost for more than 20% (inclusive)but has not reached 50%, the Group will comprehensively consider other factors such as price volatility todetermine whether the equity instrument investment has been impaired. The Group calculates the initialinvestment cost of initial available-for-sale equity instruments investment using the weighted average method.
When an impairment loss on a financial asset carried at amortised cost has occurred, the amount of loss is
provided for at the difference between the asset’s carrying amount and the present value of its estimated future
cash flows (excluding future credit losses that have not been incurred). If there is objective evidence that the valueof the financial asset is recovered and the recovery is related objectively to an event occurring after the impairmentwas recognised, the previously recognised impairment loss is reversed and the amount of reversal is recognised inprofit or loss.
If an impairment loss on available-for-sale financial assets measured at fair value is incurred, the cumulative lossesarising from the decline in fair value that had been recognised directly in shareholders' equity are transferred outfrom equity and into impairment loss. For an investment in debt instrument classified as available-for-sale on whichimpairment losses have been recognised, if, in a subsequent period, its fair value increases and the increase canbe objectively related to an event occurring after the impairment loss was recognised in profit or loss, thepreviously recognised impairment loss is reversed into profit or loss for the current period. For an investment in anequity
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(9) Financial instrument (Cont’d)
instrument classified as available-for-sale on which impairment losses have been recognised, the increase in itsfair value in a subsequent period is recognised directly in equity.
(iv) Derecognition of financial assets
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
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Financial assets are derecognised when: i) the contractual rights to receive the cash flows from the financial assetshave expired; or ii) all substantial risks and rewards of ownership of the financial assets have been transferred; oriii) the control over the financial asset has been waived even if the Group does not transfer or retain nearly all of therisks and rewards relating to the ownership of a financial asset.
On derecognition of a financial asset, the difference between book value and the sum of the consideration receivedand the cumulative changes in fair value that had been recognised directly in owner's equity, is recognised in profitor loss.
(b) Financial liabilities
Financial liabilities are classified into two categories at initial recognition: financial liabilities at fair value throughprofit or loss and other financial liabilities. The financial liabilities of the Group mainly comprise other financialliabilities, including payables, borrowings and bonds payable.
The fair value change of financial liabilities at fair value through profit or loss is charged to income statement.
Payables comprise accounts payable, notes payable and other payables, which are recognised initially at fair valueand measured subsequently at amortised cost using the effective interest method.
Borrowings and bonds payable are recognised initially at fair value, net of transaction costs incurred, andsubsequently measured at amortised cost using the effective interest method.
Other financial liabilities within one year (inclusive) is presented as current liabilities, while non-current financialliabilities due with one year (inclusive) is reclassified as non-current liabilities due within one year. Others arepresented as non-current liabilities.
A financial liability (or a part of a financial liability) is derecognised when all or part of the obligation is extinguished.The difference between book value of a financial liability (or a part of financial liability) extinguished and theconsideration paid is recognised in the income statement.
(c) Determination of fair value of financial instruments
The fair value of a financial instrument that is traded in an active market is determined at the quoted price in theactive market. The fair value of a financial instrument that is not traded in an active market is determined by using avaluation technique. During valuation, the Group adopts a valuation technique suitable for current situation, whichis supported by sufficient available data and other information, chooses the inputs consistent with the feature ofassets or liabilities considered in the transaction thereof with market participants, and uses related observableinputs in preference to the greatest extent. Unobservable inputs are used when it is unable to obtain or is infeasiblefor related observable inputs.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
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2 Summary of significant accounting policies and accounting estimates (Cont’d)
(10) Receivables
Receivables comprise notes receivable, accounts receivable and other receivables. Accounts receivable arisingfrom sales of goods or rendering of services are initially recognised at fair value of the contractual payments fromthe buyers or service recipients.
(a) Receivables with amounts that are individually significant and subject to separate assessment for provision for bad
debts
Receivables with amounts that are individually significant are subject to separate assessment for impairment. Ifthere exists objective evidence that the Group will not be able to collect the amount under the original terms, aprovision for bad debts of that receivable is made at the difference between its carrying amount and the presentvalue of its estimated future cash flows.
The basis or amount for individually significant receivables is individually greater than RMB20 million.
(b) Receivables with amounts that are not individually significant but subject to separate assessment for provision for
bad debts
If there exists objective evidence that the Group will not be able to collect the amount under the original terms, aprovision for bad debts of that receivable is made at the difference between its carrying amount and the presentvalue of its estimated future cash flows.
(c) Receivables that are subject to provision for bad debts on the grouping basis
Receivables with amounts that have not been individually provided for impairment are classified into certaingroupings based on their credit risk characteristics. The provision for bad debts is determined based on thehistorical loss experience for the groupings of receivables with similar credit risk characteristics, taking intoconsideration of the current circumstances.
Basis for portfolio is as follows:
| Portfolio 1 | Receivables not impaired after separate assessment |
| Portfolio 2 | Related party portfolio |
The percentage of provision for the portfolio:
| Percentage of provision for accounts receivable | Percentage of provision for other receivables | |
| Portfolio 1 | 2% | 2% |
| Portfolio 2 | 2% | 2% |
(d) The Group transfers receivables which have no recourse right to financial institution, the difference between book
values which is trade amount cut the write-off receivables and related tax expenses charged into the incomestatement.
(11) Inventories
(a) Classification
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
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Inventories refer to manufacturing sector, including raw materials, work in progress, finished goods and turnovermaterials, and are measured at the lower of cost and net realisable value.
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(11) Inventories (Cont’d)
(b) Inventory costing method
Cost is determined using the weighted average method. The cost of finished goods and work in progress compriseraw materials, direct labour and systematically allocated production overhead based on the normal productioncapacity.
(c) Amortisation methods of low value consumables and packaging materials
Turnover materials include low value consumables and packaging materials, which are expensed when issued.
(d) The determination of net realisable value and the method of provision for decline in the value of inventories
Provision for decline in the value of inventories is determined at the excess amount of book values of theinventories over their net realisable value. Net realisable value is determined based on the estimated selling pricein the ordinary course of business, less the estimated costs to completion and estimated costs necessary to makethe sale and related taxes.
(e) The Group adopts the perpetual inventory system.
(12) Long-term equity investments
Long-term equity investments comprise the Company’s long-term equity investments in its subsidiaries, and theGroup’s long-term equity investments in its associates.
Subsidiaries are the investees over which the Company is able to exercise control. Associates are the investeesthat the Group has significant influence on their financial and operating policies.
Investments in subsidiaries are measured using the cost method in the Company’s financial statements, and
adjusted by using the equity method when preparing the consolidated financial statements. Investments inassociates are accounted for using the equity method.
(a) Initial recognition
For long-term equity investments formed in business combination: when obtained from business combinationsinvolving entities under common control, the long-term equity investment is stated at carrying amount of equity forthe combined parties at the time of merger; when the long-term equity investment obtained from businesscombinations involving entities not under common control, the investment is measured at combination cost.
For long-term equity investments not formed in business combination: the one paid by cash is initially measured atactual purchase price; the long-term investment obtained by issuing equity securities is stated at fair value of equitysecurities as initial investment cost..
(b) Subsequent measurement and recognition of related profit or loss
For long-term equity investments accounted for using the cost method, they are measured at the initial investmentcosts, and cash dividends or profit distribution declared by the investees are recognised as investment income inprofit or loss.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
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For long-term equity investments accounted for using the equity method, where the initial investment cost of a
long-term equity investment exceeds the Group’s share of the fair value of the investee’s2 Summary of significant accounting policies and accounting estimates (Cont’d)
(12) Long-term equity investments (Cont’d)
identifiable net assets at the acquisition date, the long-term equity investment is measured at the initial investment
cost; where the initial investment cost is less than the Group’s share of the fair value of the investee’s identifiable
net assets at the acquisition date, the difference is included in profit or loss and the cost of the long-term equityinvestment is adjusted upwards accordingly.
Under the equity method, the Group recognises the investment income according to its share of net profit or loss ofthe investee. The Group discontinues recognising its share of the net losses of an investee after book values of the
long-term equity investment together with any long-term interests that in substance form part of the investor’s net
investment in the investee are reduced to zero. However, if the Group has obligations for additional losses and thecriteria with respect to recognition of provisions under the accounting standards on contingencies are satisfied, the
Group continues recognising the investment losses and the provisions. For changes in owners’ equity of the
investee other than those arising from its net profit or loss, its proportionate share is directly recorded into capitalsurplus, 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 cash dividends declared by an
investee. The unrealised profits or losses arising from the intra-group transactions amongst the Group and its
investees are eliminated in proportion to the Group’s equity interest in the investees, and then based on which the
investment gains or losses are recognised. Any losses resulting from transactions between the Group and itsinvestees attributable to asset impairment losses are not eliminated.
(c) Basis for determining existence of control, jointly control or significant influence over investees
The term "control" refers to the power in the investees, to obtain variable returns by participating in the relatedbusiness activities of the investees, and the ability to affect the returns by exercising its power over the investees.
The term "significant influence" refers to the power to participate in the formulation of financial and operatingpolicies of an enterprise, but not the power to control, or jointly control, the formulation of such policies with otherparties.
(d) Impairment of long-term equity investments
Book value of long-term equity investments in subsidiaries and associates is reduced to the recoverable amountwhen the recoverable amount is less than book value (Note 2(18)).
(13) Fixed assets
(a) Recognition and initial measurement
Fixed assets comprise buildings, machinery and equipment, motor vehicles and others.
Fixed assets are recognised when it is probable that the related economic benefits will probably flow to the Groupand the costs can be reliably measured. Fixed assets purchased or constructed by the Group are initiallymeasured at cost at the acquisition date.
Subsequent expenditures incurred for a fixed asset are included in the cost of the fixed asset when it is probablethat the associated economic benefits will flow to the Group and the related cost can be reliably measured. Bookvalue of the replaced part is derecognised. All the other subsequent expenditures are recognised in profit or loss inthe period in which they are incurred.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
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2 Summary of significant accounting policies and accounting estimates (Cont’d)
(b) Depreciation methods
Fixed assets are depreciated using the straight-line method to allocate the cost of the assets to their estimatedresidual values over their estimated useful lives. For the fixed assets that have been provided for impairment loss,the related depreciation charge is prospectively determined based upon the adjusted carrying amounts over theirremaining useful lives.
The estimated useful lives, the estimated net residual values expressed as a percentage of cost and the annualdepreciation 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 depreciation method applied tothe 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 (18)).
(d) Disposal
A fixed asset is derecognised on disposal or when no future economic benefits are expected from its use ordisposal. The amount of proceeds from disposals on sale, transfer, retirement or damage of a fixed asset net of itscarrying amount and related taxes and expenses is recognised in profit or loss for the current period.
(14) Construction in progress
Construction in progress is recorded at actual cost. Actual cost comprises construction cost, installation cost,borrowing costs eligible for capitalised condition and necessary expenditures incurred for its intended use. Actualcost also includes net of trial production cost and trial production income before construction in progress is put intoproduction.
Construction in progress is transferred to fixed assets when the assets are ready for their intended use, anddepreciation begins from the following month.
Book value of construction in progress is reduced to the recoverable amount when the recoverable amount isbelow book value (Note 2 (18)).
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
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2 Summary of significant accounting policies and accounting estimates (Cont’d)
(15) Borrowing costs
The borrowing costs that are directly attributable to the acquisition and construction of an asset that needs asubstantially long period of time for its intended use commence to be capitalised and recorded as part of the cost ofthe asset when expenditures for the asset and borrowing costs have been incurred, and the activities relating to theacquisition and construction that are necessary to prepare the asset for its intended use have commenced. Thecapitalisation of borrowing costs ceases when the asset under acquisition or construction becomes ready for itsintended use and the borrowing costs incurred thereafter are recognised in profit or loss for the current period.Capitalisation of borrowing costs is suspended during periods in which the acquisition or construction of a fixedasset is 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 for capitalisation, theamount of borrowing costs eligible for capitalisation is determined by deducting any interest income earned fromdepositing the unused specific borrowings in the banks or any investment income arising on the temporaryinvestment of those borrowings during the capitalisation period.
For the general borrowings obtained for the acquisition or construction of an asset qualifying for capitalisation, theamount of borrowing costs eligible for capitalisation is determined by applying the weighted average effectiveinterest rate of general borrowings, to the weighted average of the excess amount of cumulative expenditures onthe asset over the amount of specific borrowings. The effective interest rate is the rate at which the estimatedfuture cash flows during the period of expected duration of the borrowings or applicable shorter period arediscounted to the initial amount of the borrowings.
(16) Intangible assets
Intangible assets, mainly including land use rights, patents and proprietary technologies, exploitation rights andothers, are measured at cost.
(a) Land use rights
Land use rights are amortised on the straight-line basis over their approved use period of 30 to 70 years. If theacquisition costs of the land use rights and the buildings located thereon cannot be reasonably allocated betweenthe land use rights and the buildings, all of the acquisition costs are recognised as fixed assets.
(b) Patents and proprietary technologies
Patents are amortised on a straight-line basis over the estimated use life.
(c) Exploitation rights
Exploitation rights are amortised on a straight-line basis over permitted exploitation periods on the exploitationcertificate.
(d) Periodical review of useful life and amortisation method
For an intangible asset with a finite useful life, review of its useful life and amortisation method is performed at eachyear-end, with adjustment made as appropriate.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
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2 Summary of significant accounting policies and accounting estimates (Cont’d)(16) Intangible assets (Cont’d)
(e) Research and development
The expenditure on an internal research and development project is classified into expenditure on the researchphase and expenditure on the development phase based on its nature and whether there is material uncertaintythat the research and development activities can form an intangible asset at end of the project.
Expenditure on the research phase related to planned survey, evaluation and selection for research onmanufacturing technique is recognised in profit or loss in the period in which it is incurred. Prior to mass production,expenditure on the development phase related to the design and testing phase in regards to the final application ofmanufacturing technique is capitalised only if all of the following conditions are satisfied:
? the development of manufacturing technique has been fully demonstrated by technical team;? management has approved the budget for the development of manufacturing technique;? there are research and analysis of pre-market research explaining that products manufactured with such
technique are capable of marketing;
? There is sufficient technical and capital to support the development of manufacturing technique and
subsequent mass production; and the expenditure on manufacturing technique development can bereliably gathered.
Other development expenditures that do not meet the conditions above are recognised in profit or loss in theperiod in which they are incurred. Development costs previously recognised as expenses are not recognised as anasset in a subsequent period. Capitalised expenditure on the development phase is presented as developmentcosts in the balance sheet and transferred to intangible assets at the date that the asset is ready for its intendeduse.
(f) Impairment of intangible assets
Book value of intangible assets is reduced to the recoverable amount when the recoverable amount is below bookvalue (Note 2 (18)).
(17) Long-term prepaid expenses
Long-term prepaid expenses include the expenditures that have been incurred but should be recognised asexpenses over more than one year in the current and subsequent periods. Long-term prepaid expenses areamortised on the straight-line basis over the expected beneficial period and are presented at actual expenditurenet of accumulated amortisation.
(18) Impairment of long-term assets
Fixed assets, construction in progress, intangible assets with finite useful lives and long-term equity investments injoint ventures and associates are tested for impairment if there is any indication that the assets may be impaired atthe balance sheet date; intangible assets not ready for their intended use are tested at least annually forimpairment, irrespective of whether there is any indication that they may be impaired. If the result of the impairmenttest indicates that the recoverable amount of an asset is less than its carrying amount, a provision for impairment
and an impairment loss are recognised for the amount by which the asset’s carrying amount exceeds itsrecoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and the
present value of the future cash flows expected to be derived from the asset. Provision for asset impairment isdetermined and recognised on the individual asset basis. If it is not possible to estimate the recoverable amount ofan individual asset, the recoverable amount of a group of assets to which the asset belongs is determined. A groupof assets is the smallest group of assets that is able to generate independent cash inflows.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
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2 Summary of significant accounting policies and accounting estimates (Cont’d)
(18) Impairment of long-term assets (Cont’d)
Goodwill that is separately presented in the financial statements is tested at least annually for impairment,irrespective of whether there is any indication that it may be impaired. In conducting the test, book value of goodwillis allocated to the related asset groups or groups of asset groups which are expected to benefit from the synergiesof the business combination. If the result of the test indicates that the recoverable amount of an asset group orgroup of asset groups, including the allocated goodwill, is lower than its carrying amount, the correspondingimpairment loss is recognised. The impairment loss is first deducted from book value of goodwill that is allocated tothe asset group or group of asset groups, and then deducted from book values of other assets within the assetgroups or groups of asset groups in proportion to book values of assets other than goodwill.
Once the above asset impairment loss is recognised, it will not be reversed for the value recovered in thesubsequent periods.
(19) Employee benefits
Employee benefits include short-term employee benefits, post-employment benefits, termination benefits and otherlong-term employee benefits provided in various forms of consideration in exchange for service rendered byemployees 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, staff welfare, medicalcare, work injury insurance, maternity insurance, housing funds, labour union funds, employee education fundsand paid short-term leave, etc. The employee benefit liabilities are recognised in the accounting period in which theservice is rendered by the employees, with a corresponding charge to the profit or loss for the current period or thecost 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 defined benefit plans.Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions intoa separate fund and will have no obligation to pay further contributions; and defined benefit plans arepost-employment benefit plans other than defined contribution plans. During the reporting period, the Group'spost-employment benefits mainly include basic pensions and unemployment insurance, both of which belong tothe defined contribution plans.
Basic pensions
The Group’s employees participate in the basic pension plan set up and administered by local authorities of
Ministry of Human Resource and Social Security. Monthly payments of premiums on the basic pensions arecalculated according to prescribed bases and percentage by the relevant local authorities. When employees retire,local labour and social security institutions have a duty to pay the basic pension insurance to them. The amountsbased on the above calculations are recognised as liabilities in the accounting period in which the service has beenrendered by the employees, with a corresponding charge to the profit or loss for the current period or the cost ofrelevant assets..
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
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2 Summary of significant accounting policies and accounting estimates (Cont’d)
(19) Employee benefits (Cont’d)
(c) Termination benefits
The Group provides compensation for terminating the employment relationship with employees before the end ofthe employment contracts or as an offer to encourage employees to accept voluntary redundancy before the end ofthe employment contracts. The Group recognises a liability arising from compensation for termination of theemployment relationship with employees, with a corresponding charge to profit or loss at the earlier of the followingdates: 1) when the Group cannot unilaterally withdraw the offer of termination benefits because of an employmenttermination plan or a curtailment proposal; 2) when the Group recognises costs or expenses related to therestructuring that involves the payment of termination benefits.
The termination benefits expected to be paid within one year since the balance sheet date are classified as currentliabilities.
(20) Dividend distribution
Cash dividend is recognised as a liability for the period in which the dividend is approved by the shareholders’
meeting.
(21) Deferred tax assets and deferred tax liabilities
Deferred tax assets and deferred tax liabilities are calculated and recognised based on the differences arisingbetween the tax bases of assets and liabilities and their carrying amounts (temporary differences). Deferred taxasset is recognised for the deductible losses that can be carried forward to subsequent years for deduction of thetaxable profit in accordance with the tax laws. No deferred tax liability is recognised for a temporary differencearising from the initial recognition of goodwill. No deferred tax asset or deferred tax liability is recognised for thetemporary differences resulting from the initial recognition of assets or liabilities due to a transaction other than abusiness combination, which affects neither accounting profit nor taxable profit (or deductible loss). At the balancesheet 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 and tax credits tothe extent that it is probable that taxable profit will be available in the future against which the deductible temporarydifferences, deductible losses and tax credits can be utilised.
Deferred tax liabilities are recognised for temporary differences arising from investments in subsidiaries andassociates, except where the Group is able to control the timing of reversal of the temporary difference, and it isprobable that the temporary difference will not reverse in the foreseeable future. When it is probable that thetemporary differences arising from investments in subsidiaries and associates will be reversed in the foreseeablefuture and that the taxable profit will be available in the future against which the temporary differences can beutilised, the corresponding deferred 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.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 117 -
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(22) Provisions
Business restructuring, provisions for product warranties, loss contracts etc. are recognised when the Group has apresent obligation, it is probable that an outflow of economic benefits will be required to settle the obligation, andthe amount of the obligation can be measured reliably.
A provision is initially measured at the best estimate of the expenditure required to settle the related presentobligation. Factors surrounding a contingency, such as the risks, uncertainties and the time value of money, aretaken into account as a whole in reaching the best estimate of a provision. Where the effect of the time value ofmoney is material, the best estimate is determined by discounting the related future cash outflows. The increase inthe discounted amount of the provision arising from passage of time is recognised as interest expense.
Book value of provision is reviewed at each balance sheet date and adjusted to reflect the current best estimate.
The provisions expected to be paid within one year since the balance sheet date are classified as current liabilities.
(23) Share-based payments
Share-based payments are divided into equity-settled and cash-settled payments. The term "equity-settledshare-based payment" refers to a transaction in which an enterprise grants shares or other equity instruments as aconsideration in return for services.
Equity-settled share-based payment The Group‘s stock optionstock option plan is the equity-settled share-based
payment in exchange of employees' services and is measured at the fair value of the equity instruments at grantdate. The equity instruments are exercisable after services in vesting period are completed or specifiedperformance conditions are met. In the vesting period, the services obtained in current period are included inrelevant cost and expenses at the fair value of the equity instruments at grant date based on the best estimate ofthe number of exercisable equity instruments, and capital surplus is increased accordingly. If the subsequentinformation indicates the number of exercisable equity instruments differs from the previous estimate, anadjustment is made and, on the exercise date, the estimate is revised to equal the number of actual vested equityinstruments. The Group determines the fair value of stock optionstock options using option pricing model, which isBlack-Scholes option pricing model (B-S model).
In the period at which performance conditions and term of service are met, the relevant cost and expenses ofequity-settled payment should be recognized, and capital surplus is increased accordingly. Before the exercisedate, the accruing amounts of equity-settled payments on balance sheet date reflect the part of expired waitingperiod and optimal estimation for the number of the Company final vested equity instruments.
If the non-market conditions and term of service are not met so that share-based payment fail to exercise, the costsand expenses on this portion should not be recognized. If the share-based payment agreement sets out the marketconditions and term of non-vesting, as long as performance conditions and term of service are met, it is should beregard as exercisable right, no matter the market conditions and non-vesting conditions are meet or not.
If the terms of equity-settled payment are modified, at least the service is confirmed in accordance with theunmodified terms. In addition, the increase of the fair value of the authorized equity instruments, or the beneficialchanges to the employees on the modification date, the increase of service are confirmed.
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(23) Share-based payments (Cont’d)
If the equity-settled payment is cancelled, the cancellation date shall be deemed as an expedited exercise, and the
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 118 -
unconfirmed amount shall be confirmed immediately. If the employee or other party is able to choose to meet the
non-vesting conditions but not satisfied in the waiting period, equity-settled payment should be cancelled. But if a
new equity instrument is granted, and the new equity instrument is confirm to replace the old equity instrumentwhich is canceled in the authorization date of the new equity instrument, the new equity instrument should bedisposed by using the same conditions and terms of the old equity instrument for modifications
(24) Revenue recognition
The amount of revenue is determined in accordance with the fair value of the consideration received or receivable
for the sales of goods and services in the ordinary course of the Group’s activities. Revenue is shown net of
discounts, rebates and returns.
Revenue is recognised when the economic benefits associated with the transaction will probably flow to the Group,the related revenue can be reliably measured, and the specific revenue recognition criteria have been met for each
type of the Group’s activities as described below:
(a) Sales of goods
The Group mainly sells flat and engineering glass, products related to solar energy, and electronic glass anddisplays. For domestic sales, the Group delivers the products to a certain place specified in the contract. When thebuyer takes over the goods, the Group recognises revenue. For export sales, the Group recognises the revenuewhen it finished clearing goods for export and deliver the goods on board the vessel, or when the goods aredelivered to a certain place specified in the contract. For above sales, when the buyer takes over the goods, thebuyer has the right to sell the products, and should bear the risk of price fluctuation or goods damage.
(b) Rendering of services
Revenue is recognised for the rendering of service by the Group to external parties upon the completion of relatedservice.
(c) Transfer of asset use rights
Interest income is recognised on a time-proportion basis using the effective interest method.
(25) Government grants
Government grants are transfers of monetary or non-monetary assets from the government to the Group at nilconsideration, including tax refund and financial subsidies, etc.
A government grant is recognised when there is a reasonable assurance that the grants will be received and theGroup will comply with all attached conditions. Monetary government grants are measured at the amounts receivedor receivable. Non-monetary government grant are measured at fair value, if the fair value cannot be reliablyobtained, it is measured at nominal amount.
The government grants related to assets refer to government grant obtained by enterprises and used for purchaseand construction of long-term assets or formation of long-term asset in other ways. The government grants relatedto income refer to grants other than those related to assets.
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(25) Government grants (Cont’d)
For government grants related to income, where the grant is a compensation for related expenses or losses to beincurred by the Group in the subsequent periods, the grant is recognised as deferred income, and included in profit
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 119 -
or loss over the periods in which the related costs are recognised; where the grant is a compensation for relatedexpenses or losses already incurred by the Group, the grant is recognised immediately in profit or loss for thecurrent period.The company use the same method of presentation for similar government grants.
The ordinary activitiy government grants should be counted into operating profits; the government grants which notbelong ordinary activities should be counted inton non-operationg income.
(26) Leases
A lease that transfers substantially all the risks and rewards incidental to ownership of an asset is a finance lease.An operating lease is a lease other than a finance lease.
Lease payments under an operating lease are recognised on a straight-line basis over the period of the lease, andare either capitalised as part of the cost of related assets, or charged as an expense for the current period.
Lease income under an operating lease is recognised as revenue on a straight-line basis over the period of thelease.
(27) Assets classified as held for sale
A non-current asset or a disposal group is classified as held for sale when all of the following conditions aresatisfied: (1) the non-current asset or the disposal group is available for immediate sale in its present conditionsubject to terms that are traditionally and customary for sales; (2) the Group has made a resolution and obtainedappropriate approval for disposal of the non-current asset or the disposal group, and the transfer is to becompleted within one year.
Non-current assets (except for financial assets, investment properties at fair value and deferred tax assets) thatmeet the recognition criteria for held for sale are recognised at the amount equal to the lower of the fair value lesscosts to sell and book value. The difference between fair value less costs to sell and carrying amount, should bepresented as impairment loss.
Such non-current assets and assets included in disposal groups as classified as held for sale are accounted for ascurrent assets; while liabilities included in disposal groups classified as held for sale are accounted for as currentliabilities, and are presented separately in the balance sheet.
A discontinued operation is a component of the Group that either has been disposed of or is classified as held forsale, and is separately identifiable operationally and for financial reporting purposes, and satisfies one of thefollowing conditions: (1) represents a separate major line of business or geographical area of operations; (2) is partof a single coordinated plan to dispose of a separate major line of business or geographical area of operations; and(3) is a subsidiary acquired exclusively with a view to resale.
The discontinued operation profits on income statement presentation have included the profits and loss ofoperation and disposal.
(28) Safety production costs
According to relevant regulations of the Ministry of Finance and National Administration of Work Safety, asubsidiary of the Group which is engaged in producing and selling polysilicon appropriates safety production costson following basis:
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(28) Safety production costs
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 120 -
(a) 4% for revenue below RMB10 million (inclusive) of the year;(b) 2% for the revenue between RMB10 million to RMB100 million (inclusive) of the year;(c) 0.5% for the revenue between RMB100 million to RMB1 billion (inclusive) of the year;(d) 0.2% for the revenue above RMB1 billion of the year.
The safety production costs is mainly used for the overhaul, renewal and maintenance of safety facilities. Thesafety production costs are charged to costs of related products or profit or loss when appropriated, and safetyproduction costs in equity account are credited correspondingly. When using the special reserve, if theexpenditures are expenses in nature, the expenses incurred are offset against the special reserve directly whenincurred. If the expenditures are capital expenditures, when projects are completed and transferred to fixed assets,the special reserve should be offset against the cost of fixed assets, and a corresponding accumulateddepreciation are recognised. The fixed assets are no longer be depreciated in future.
(29) Segment information
The Group identifies operating segments based on the internal organisation structure, management requirementsand internal reporting system, and discloses segment information of reportable segments which is determined onthe basis of operating segments.
An operating segment is a component of the Group that satisfies all of the following conditions: (1) the componentis able to earn revenue and incur expenses from its ordinary activities; (2) whose operating results are regularly
reviewed by the Group’s management to make decisions about resources to be allocated to the segment and to
assess its performance, and (3) for which the information on financial position, operating results and cash flows isavailable to the Group. If two or more operating segments have similar economic characteristics and satisfy certainconditions, they are aggregated into one single operating segment.
(30) Critical accounting estimates and judgements
The Group continually Estimates the critical accounting estimates and key assumptions applied based on historicalexperience and other factors, including expectations of future events that are believed to be reasonable.
The critical accounting estimates and key assumptions that have a significant risk of possibly causing a materialadjustment to book values of assets and liabilities within the next accounting year are outlined below:
(a) Income tax
The Group is subject to Income tax in numerous jurisdictions. There are some transactions and events for whichthe ultimate tax determination is uncertain during the ordinary course of business. Significant judgement is requiredfrom the Group in determining the provision for Income tax in each of these jurisdictions. Where the final identifiedoutcome of these tax matters is different from the initially-recorded amount, such difference will impact the incometax expenses and deferred income tax in the period in which such determination is finally made.
(b) Deferred income tax
Estimates on deferred tax assets are based on estimates on amount of taxable income and applicable tax rate forevery year. Realisation of deferred income tax are subject to sufficient taxable income that are possible to beobtained by the Group in the future. Change of the future tax rate as well as the reversed time of temporarydifference might have effects on tax expense (income) and the balance of
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(30) 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 deferred tax.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 121 -
(c) Impairment of long-term assets (excluding goodwill)
Long-term assets at the balance sheet date should be subject to impairment testing if there are any indications ofimpairment. Management determines whether the long-term assets impaired or not by evaluating and analysingfollowing aspects: (1) whether the event affecting assets impairment occurs; (2) whether the expected obtainable
present value of future cash flows is lower than the asset’s carrying amount by continually using the assets or
disposal; and (3) whether the assumptions used in expected obtainable present value of future cash flows areappropriate.
Various assumptions, including the discount rate and growth rate applied in the method of present value of futurecash flow, are required in evaluating the recoverable amount of assets. If these assumptions cannot be conformed,the recoverable amount should be modified, and the long-term assets may be impaired accordingly.
(d) The useful life of fixed assets
Management estimates the useful life of fixed assets, based on historical experiences on using fixed assets thathave similar properties and functions. When there are differences between actually useful life and previouslyestimation, management will adjust estimation to useful life of fixed assets. The fixed assets would be written off orwritten down when fixed assets been disposed or became redundant. Thus, the estimated result based on existingexperience may be different from the actual result of the next accounting period, which may cause majoradjustment to book value of fixed assets on balance sheet.
(e) Goodwill impairment
Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstancesindicate a potential impairment. For the purpose of impairment testing, goodwill acquired in a business combination
is allocated to each of the cash-generating units (“CGUs”), or groups of CGUs, and future cash flow from eachCGU or CGUs is forcasted and discounted with appropriate discount rate.
(31) Significant changes in accounting policies
In 2017, the Ministry of Finance released the “Accounting Standard for Business Enterprises No. 42—Non-currentAssets or Disposal Groups Held for Sale and Discontinued Operations”, revised “Accounting Standard for BusinessEnterprises No. 16—Government Grants” and the “Circular on Amendment to Formats of Financial Statements ofGeneral Industry” and its interpretation (Cai Kuai [2017] 30). The financial statements are prepared in accordance
with the above standards and circular, and impacts are as follows:
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(31) Significant changes in accounting policies (Cont’d)
| The nature and the reasons of the changes in accounting policies | The line items affected | The amounts affected | ||
| The Company and its subsidiaries recorded the VAT return obtained and other government grants related to ordinary activities in 2017 in other income. The comparatives as at 31 December 2016 were not restated | N/A | N/A | ||
| The Company and its subsidiaries recorded the gains or losses on disposals of fixed assets occurred in 2017, in loss on disposals of assets. The comparatives as at 31 December 2016 were restated accordingly | 2016 | |||
| Income on disposal assets | ||||
| Non-operating income | ||||
| Non-operating expense | ||||
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 122 -
| The Company’s assets for sale in 2017 is presented separately. The comparative financial statement at 31 December 2016 is not presented | N/A | N/A | |
(32) Prior period accounting error correction
a. Matter descreption
During the preparation of the current financial statements, the company discovered that: On December 10, 2012,the People's Government of Yichang City and the Company signed the Cooperation Agreement on Fine Glass and
Ultrathin Electronic Glass Project (hereinafter referred to as the “original agreement”);Two supplemental
agreements were formed based on the original agreement: On March 20, 2013, the People's Government of
Yichang and the Company signed a supplementary agreement (I) 《Cooperation Agreement on Fine Glass andUltra-thin Electronic Glass Projects》、 December 30, 2013 Yichang High and new technology development zonemanagement committee and the company signed a supplementary agreement (II) 《Cooperative Agreement onFine Glass and Ultrathin Electronic Glass Projects》. The main contents of the supplementary agreement (II) are as
follows:
The management committee of Yichang High-tech Industrial Development Zone agreed to establish a RMB 171
million talent fund for the company’s mid- to senior-level management、 engineering and technical personnel and
senior professional mechanics who be introduced to Yichang, as a special fund subsidy for the introduction oftalents and the placement of talented people. The company is responsible for formulating the housing resettlementsubsidy program and supervising the use of this special fund.According to the agreement, the company entrusted the wholly-owned subsidiary Yichang CSG Silicon MaterialCo., Ltd. to collect the fund, and the management committee of Yichang High-tech Industrial Development Zonefully allocated to Yichang CSG Silicon Material Co., Ltd.The funds were subsidized by the government to the company, but Yichang CSG Silicon Material Co., Ltd.received this amount and transferred it to Yichang Hongtai Real Estate Co., Ltd. in full amount without properapproval from the company's board of directors and other relevant authorities. (Yichang Hongtai Real Estate Co.,Ltd. is a company jointly indirect controlled by part of the former natural executives of the company. Thecompany has no equity relationship with the company. For details of the company, see Note 8(4)).
2 Summary of significant accounting policies and accounting estimates (Cont’d)
(32) Prior period accounting error correction (Cont’d)
b. Accounting treatment
Yichang CSG Silicon Material Co., Ltd. received the above fund from February 21, 2014 to April 28, 2014, andtransferred it to Yichang Hongtai Real Estate Co., Ltd. in full and also handled the accounting treatment accordingto the collecting and paying. The Company did not conduct any accounting treatment and report disclosure inconsolidated Statements.
According to the relevant provisions of the “Accounting Standards for Business Enterprises - GovernmentSubsidies”, the company believes that the special funds in the above agreement constitute a government subsidy,
and the government subsidy related to income should be confirmed in the financial statements of thecorresponding accounting period, recognition of expense at the same time carring forward the profits and loss ofthe current.Therefore, the company in the current period Items were corrected for accounting errors.
c. Impact on the financial statements
The Group and the Company made retrospective adjustments to the above accounting errors. In the consolidatedbalance sheet, other receivables were increased by RMB171,000,000 as of December 31, 2016 (January 1, 2016:
RMB171,000,000). December 2016 On the 31st, other receivables - bad debt provisions were increased by3,420,000 yuan (January 1, 2016: RMB3,420,000), and deferred income was increased by 171 million yuan(December 1, 2016: RMB171 million) on December 31, 2016. As of December 31, 2016, the surplus reserve wasreduced by RMB342,000 (January 1, 2016: RMB 342,000). As of December 31, 2016, the undistributed profit wasreduced by RMB 3,078,000 (January 1, 2016: RMB 3,078,000).
In the company's balance sheet, other receivables were increased by RMB171,000,000 (December 1, 2016:
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 123 -
RMB171,000,000) as of December 31, 2016, and other receivables – provision for bad debts increased by
RMB3,420,000 (December 31, 2016) ( January 1, 2016: RMB3,420,000), 20 yuan December 31, 2016 deferredincome increased by RMB171,000,000 (January 1, 2016: RMB171,000,000), December 31, 2016 surplus reservedecreased by RMB342,000 (January 1, 2016: RMB342,000), Undistributed profits decreased by RMB3,078,000(December 1, 2016: RMB 3,078,000) as of December 31, 2016.
3 Taxation
(1) The main categories and rates of taxes applicable to the Group are set out below:
| Category | Taxable basis | Tax rate | |
| Enterprise income tax | Taxable income | 0% 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) | 6% to 17% | |
| City maintenance and construction tax | VAT paid | 1% to 7% | |
| Educational surcharge | VAT paid | 3% to 5% | |
| Resource tax | Silica sold Sales | 6.5% | |
Some subsidiaries of the Group have used the “exempt, credit, refund” method on goods exported and the refund
rate is 5%-17%.
3 Taxation (Cont’d)
(2) Tax incentives
The main tax incentives the Group is entitled to are as follows:
Tianjin Energy Conservation Glass Co., Ltd. (“Tianjin Energy Conservation”) passed review on a high and new tech
enterprise in 2015 and obtained the Certificate of High and New Tech Enterprise, the period of validity is threeyears. It applies to 15% tax rate for three years since 2015.
Dongguan CSG Architectural Glass Co., Ltd. (“Dongguan CSG”) passed review on a high and new tech enterprise
in 2016 and obtained the Certificate of High and New Tech Enterprise, the period of validity is three years. Itapplies to 15% tax rate for three years since 2016.
Wujiang CSG North-east Architectural Glass Co., Ltd. (“Wujiang CSG”) passed review on a high and new tech
enterprise in 2017 and obtained the Certificate of High and New Tech Enterprise, the period of validity is threeyears. It applies to 15% tax rate for three years since 2017.
Dongguan CSG Solar Glass Co., Ltd. (“Dongguan CSG Solar”) passed review on a high and new tech enterprise in
2017 and obtained the Certificate of High and New Tech Enterprise, the period of validity is three years. It appliesto 15% tax rate for three years since 2017.
Yichang CSG Silicon Co., Ltd. (“Yichang CSG Silicon”) passed review on a high and new tech enterprise in 2017
and obtained the Certificate of High and New Tech Enterprise, the period of validity is three years. It applies to 15%tax rate for three years since 2017.
Dongguan CSG PV-tech Co., Ltd. (“Dongguan CSG PV-tech”) passed review on a high and new tech enterprise in
2016 and obtained the Certificate of High and New Tech Enterprise, the period of validity is three years. It appliesto 15% tax rate for three years since 2016.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 124 -
Hebei Shichuang Glass Co., Ltd. (“Hebei Shichuang”) passed review on a high and new tech enterprise in 2016
and obtained the Certificate of High and New Tech Enterprise, the period of validity is three years. It applies to 15%tax rate for three years since 2016.
Wujiang CSG Glass Co., Ltd. (“Wujiang CSG”) was recognised as a high and new tech enterprise in 2017, and
obtained the Certificate of High and New Tech Enterprise, and the period of validity was three years. It applies to15% tax rate for three years since 2017.
Xianning CSG Glass Co Ltd. (“Xianning CSG”) was recognised as a high and new tech enterprise in 2017, and
obtained the Certificate of High and New Tech Enterprise, and the period of validity was three years. It applies to15% tax rate for three years since 2017.
Xianning CSG Energy-Saving Glass Co., Ltd. (“Xianning CSG Energy-Saving”) was recognised as a high and new
tech enterprise in 2015, and obtained the Certificate of High and New Tech Enterprise, and the period of validitywas three years. It applies to 15% tax rate for three years since 2015.
Yichang CSG Photoelectric Glass Co., Ltd. (“Yichang CSG Photoelectric”) was recognised as a high and new tech
enterprise in 2015, and obtained the Certificate of High and New Tech Enterprise, and the period of validity wasthree years. It applies to 15% tax rate for three years since 2015.
Yichang CSG Display Co., Ltd (“Yichang CSG Display”) was recognised as a high and new tech enterprise in 2016,
and obtained the Certificate of High and New Tech Enterprise, and the period of validity was three years. It appliesto 15% tax rate for three years since 2016.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 125 -
3 Taxation (Cont'd)
(2) Tax incentives (Cont’d)
Qingyuan CSG New Energy-Saving Materials Co., Ltd. (“Qingyuan CSG Energy-Saving”) was recognised as a
high and new tech enterprise in 2016, and obtained the Certificate of High and New Tech Enterprise, and theperiod of validity was three years. It applies to 15% tax rate for three years since 2016.
Sichuan CSG Energy Conservation Glass Co., Ltd. (“Sichuan CSG Energy Conservation”) obtains enterprise
income tax preferential treatment for Western Development, and temporarily calculates enterprise income tax at atax rate of 15% for current year.
Chengdu CSG Glass Co., Ltd. (“Chengdu CSG”) obtains enterprise income tax preferential treatment for Western
Development, and temporarily calculates enterprise income tax at a tax rate of 15% for current year.
Qingyuan CSG New Energy Co., Ltd. (“Qingyuan CSG New Energy”), Suzhou CSG PV Energy Co., Ltd. (“SuzhouCSG PV Energy”), Jiangsu Wujiang CSG New Energy Co., Ltd. (“Wujiang CSG New Energy”), and Yichang CSGNew Energy Co., Ltd. (“Yichang CSG New Energy”), Zhangzhou CSG Kibing PV Energy Co., Ltd. (“ZhangzhouCSG”), Heyuan CSG Kibing PV Energy Co., Ltd. (“Heyuan CSG”), Shaoxing CSG Kibing PV Energy Co., Ltd.(“Shaoxing CSG”) are public infrastructure project specially supported by the state in accordance with the Article
87 in Implementing Regulations of the Law of the People's Republic of China on Enterprise Income Tax, and can
enjoy the tax preferential policy of “three-year exemptions and three-year halves”, that is, starting from the tax year
when the first revenue from production and operation occurs, the enterprise income tax is exempted from the firstto the third year, while half of the enterprise income tax is collected for the following three years. Qingyuan CSGNew Energy, Suzhou CSG PV Energy and Wujiang CSG New Energy started to carry out operations in 2015, whileYichang CSG New Energy started operation in 2016, Zhangzhou CSG, Heyuan CSG and Shaoxing CSG startedoperation in 2017. The applicable enterprise income tax rate for them is 0% for the current year.
In addition, pursuant to the document Fogang Guo Shui Shui Tong [2015] No. 2489, the VAT for photovoltaic powergeneration of Qingyuan CSG New Energy is subject to the refund upon collection policy.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 126 -
4 Notes to the consolidated financial statements
(1) Cash at bank and on hand
| 31 December 2017 | 31 December 2016 | ||
| Cash on hand | 36,182 | 17,239 | |
| Cash at bank | 2,409,716,983 | 584,549,751 | |
| Other cash balances | 52,852,599 | 2,236,515 | |
| 2,462,605,764 | 586,803,505 | ||
| Including: Total overseas deposits | 24,049,075 | 12,956,226 |
Other cash balances include margin deposits for issuing letters of credit and applying loans, amounting toRMB2,852,599 (31 December 2016: RMB2,236,515), which is restricted cash.
(2) Notes receivable
| 31 December 2017 | 31 December 2016 | ||
| Trade acceptance notes | 329,405,579 | 317,789,825 | |
| Bank acceptance notes | 222,826,841 | 138,557,412 | |
| 552,232,420 | 456,347,237 |
| (a) | As at 31 December 2017, notes receivable which have been endorsed or discounted by the Group but are not yet due are as follows: | |||
| Derecognised | Not derecognised | |||
| Trade acceptance notes | - | 179,023,725 | ||
| Bank acceptance notes | 3,154,733,678 | - | ||
| 3,154,733,678 | 179,023,725 | |||
(3) Accounts receivable
| 31 December 2017 | 31 December 2016 | ||
| Accounts receivable | 660,150,357 | 644,454,374 | |
| Less: Provision for bad debts | (21,912,067) | (16,468,391) | |
| 638,238,290 | 627,985,983 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
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4 Notes to the consolidated financial statements (Cont’d)
(3) Accounts receivable (Cont’d)
(a) The ageing of accounts receivable is analysed as follows:
| 31 December 2017 | 31 December 2016 | ||||
| Within 1 year | 639,294,320 | 628,822,515 | |||
| 1 to 2 years | 8,343,672 | 15,585,397 | |||
| 2 to 3 years | 12,512,365 | - | |||
| Over 3 years | - | 46,462 | |||
| 660,150,357 | 644,454,374 | ||||
| As at 31 December 2017, accounts receivable of RMB93,961,486 (31 December 2016: RMB50,609,529) were overdue. But based on analysis on financial positions and credit records of such customers, such receivables were considered recoverable and unimpaired by the Company. Therefore no provision for impairment loss had been made. The overdue ageing of the accounts receivable is analysed as follows: | |||||
| 31 December 2017 | 31 December 2016 | ||||
| Within 1 year | 86,358,511 | 47,568,459 | |||
| 1 to 2 years | 7,448,217 | 3,041,070 | |||
| 2 to 3 years | 154,758 | ||||
| 93,961,486 | 50,609,529 | ||||
(b) Accounts receivable are analysed by categories as follows:
| 31 December 2017 | 31 December 2016 | ||||||||||
| Carrying amount | Provision for bad debts | Carrying amount | Provision for bad debts | ||||||||
| Amount | % of total balance | Provision for bad debts | % | Amount | % of total balance | Provision for bad debts | % | ||||
| Provision for bad debts by groupings | |||||||||||
| Portfolio 1 | 636,614,136 | 96% | (12,233,039) | 2% | 631,863,585 | 98% | (12,187,534) | 2% | |||
| With amounts that are not individually significant but that the related provision for bad debts is provided on the individual basis | 23,536,221 | 4% | (9,679,028) | 41% | 12,590,789 | 2% | (4,280,857) | 34% | |||
| 660,150,357 | 100% | (21,912,067) | 3% | 644,454,374 | 100% | (16,468,391) | 3% | ||||
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 128 -
4 Notes to the consolidated financial statements (Cont’d)
(3) Accounts receivable (Cont’d)
(c) Provision for bad debts provided on grouping basis using the percentage of provision method is analysed as
follows:
| 31 December 2017 | 31 December 2016 | ||||||||
| Carrying amount | Provision for bad debts | Carrying amount | Provision for bad debts | ||||||
| Amount | Amount | % | Amount | Amount | % | ||||
| Portfolio 1 | 636,614,136 | (12,233,039) | 2% | 631,863,585 | (12,187,534) | 2% | |||
| 636,614,136 | (12,233,039) | 2% | 631,863,585 | (12,187,534) | 2% | ||||
(d) As at 31 December 2017, the Company had no accounts receivable with amounts that were individually significant
and that the related provision for bad debts was provided on the individual basis (31 December 2016: Nil).
(e) As at 31 December 2017, accounts receivable of RMB23,536,221 (31 December 2016: RMB12,590,789) were not
individually significant but provided for bad debts separately. It mainly represented the goods receivable due from
a client of the subsidiary, Yichang CSG Display. Due to the client’s bankruptcy, Yichang CSG Display made full
provision against this receivable. It also represented the goods receivable due from a client of the subsidiary,Dongguan CSG PV-tech. Due to business dispute, Dongguan CSG PV-tech made partial provision against thereceivable.
(f) Accounts receivables of RMB117,931 were written off this year, all of which were low amount of accounts receivable and
none of which arose from related-party transactions. The reasons for the written-off included disputes withcustomers and inability to contact with creditors and etc.
(g) As at 31 December 2017, the Group’s top five entities with the largest accounts receivable balances are set out as
below:
| Balance | Provision for bad debts | Percentage in total accounts receivable balance | |||
| Total balances for the five largest accounts receivable | 104,847,077 | (2,096,942) | 16% |
(4) Advances to suppliers
(a) The ageing of prepayment is analysed below:
| 31 December 2017 | 31 December 2016 | ||||||
| Amount | % of total balance | Amount | % of total balance | ||||
| Within 1 year | 130,813,397 | 91% | 80,819,387 | 84% | |||
| 1 to 2 years | 264,952 | - | 14,913,745 | 16% | |||
| 2 to 3 years | 12,769,674 | 9% | - | - | |||
| 143,848,023 | 100% | 95,733,132 | 100% | ||||
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 129 -
As at 31 December 2017, advances to suppliers over 1 year with a carrying amount of RMB13,034,626 (31December 2016: RMB14,913,745) were mainly advances paid for materials, which were not fully settled since thematerials had not been received.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 130 -
4 Notes to the consolidated financial statements (Cont’d)
(4) Advances to suppliers (Cont’d)
(b) As at 31 December 2017, the five largest prepayment are analysed as follows:
| Balance | Percentage in total advances to suppliers balance | ||
| Total balances for the five largest advances to suppliers | 53,034,242 | 37% |
(5) Other receivables
| 31 December 2017 | 31 December 2016 | ||
| Receivables from related parties (Note 8(5)) | 171,000,000 | 171,000,000 | |
| Refundable deposits | 16,957,562 | 6,121,403 | |
| Payments made on behalf of other parties | 19,306,658 | 25,019,422 | |
| Petty cash | 875,714 | 959,785 | |
| Export tax rebates receivable | - | 755,372 | |
| Others | 2,319,489 | 1,047,235 | |
| 210,459,423 | 204,903,217 | ||
| Less: Provision for bad debts | (4,520,404) | (4,094,068) | |
| 205,939,019 | 200,809,149 |
(a) The ageing of other receivables is analysed as follows:
| 31 December 2017 | 31 December 2016 | |||
| Within 1 year | 22,924,535 | 19,918,108 | ||
| 1 to 2 years | 2,813,012 | 11,275,420 | ||
| 2 to 3 years | 11,211,511 | 171,903,685 | ||
| 3 to 4 years | 171,855,888 | 123,670 | ||
| 4 to 5 years | 86,395 | 1,156,315 | ||
| Over 5 years | 1,568,082 | 526,019 | ||
| 210,459,423 | 204,903,217 | |||
| As at 31 December 2017, other receivables of RMB2,510,365 (31 December 2016: RMB1,806,004) were overdue. But based on analysis on financial positions and credit records of such customers, such receivables were considered recoverable and unimpaired by the Company. Therefore no provision for impairment loss had been made. | ||||
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 131 -
4 Notes to the consolidated financial statements (Cont’d)
(5) Other receivables (Cont'd)
(b) Other receivables are analysed by categories as follows:
| 31 December 2017 | 31 December 2016 | ||||||||||
| Carrying amount | Provision for bad debts | Carrying amount | Provision for bad debts | ||||||||
| Amount | % of total balance | Provision for bad debts | % | Amount | % of total balance | Provision for bad debts | % | ||||
| Provision for bad debts by groupings | |||||||||||
| Portfolio 1 | 39,136,518 | 19% | (777,499) | 2% | 33,903,217 | 17% | (674,068) | 2% | |||
| Portfolio 2 | 171,000,000 | 81% | (3,420,000) | 2% | 171,000,000 | 83% | (3,420,000) | 2% | |||
| Not individually significant but provided for bad debts separately | 322,905 | - | (322,905) | 100% | |||||||
| 210,459,423 | 100% | (4,520,404) | 2% | 204,903,217 | 100% | (4,094,068) | 2% | ||||
(c) The reason why not individually significant but provided for bad debts separately is the payment is not
recoverable over 5 years.
(d) The other receivables actually written off during the year amounted to RMB199,796, which was due to small
receivables and non-related transactions. The reasons for write-off include business disputes or failureto contact the debtor and result in uncollectible payments.
(e) For other receivables provided for bad debts by portfolio, the percentage of provision for the portfolio is as
follows:
| 31 December 2017 | 31 December 2016 | ||||||||
| Carrying amount | Provision for bad debts | Carrying amount | Provision for bad debts | ||||||
| Amount | Amount | % | Amount | Amount | % | ||||
| Portfolio 1 | 39,136,518 | (777,499) | 2% | 33,903,217 | (674,068) | 2% | |||
| Portfolio 2 | 171,000,000 | (3,420,000) | 2% | 171,000,000 | (3,420,000) | 2% | |||
| 210,136,518 | (4,197,499) | 2% | 204,903,217 | (4,094,068) | 2% | ||||
(f) As at 31 December 2017, the top 5 largest other receivables are analysed as bellow:
| Nature of business | Balance | Ageing | Percentage in total other receivables balance | Provision for bad debts | ||
| Company A | Independent third party | 171,000,000 | 3 to 4 Years | 81% | 3,420,000 | |
| Governmental departmentB | Independent third party | 11,067,754 | 2 to3 Years | 5% | 221,355 | |
| Company C | Independent third party | 5,000,000 | Within 1 year | 2% | 100,000 | |
| Company D | Independent third party | 3,717,415 | Within 1 year | 2% | 74,348 | |
| Company E | Independent third party | 3,350,000 | Within 1 year | 2% | 67,000 | |
| 194,135,169 | 92% | 3,882,703 | ||||
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 132 -
4 Notes to the consolidated financial statements (Cont’d)
(6) Inventories
(a) Inventories are summarised by categories as follows:
| 31 December 2017 | 31 December 2016 | ||||||||||
| Carrying amount | Provision for decline in the value of inventories | Carrying amount | Carrying amount | Provision for decline in the value of inventories | Carrying amount | ||||||
| Raw materials | 213,348,012 | (1,447,590) | 211,900,422 | 166,639,254 | (2,025,446) | 164,613,808 | |||||
| Work in progress | 45,614,905 | - | 45,614,905 | 18,893,651 | - | 18,893,651 | |||||
| Finished goods | 387,489,714 | (68,974) | 387,420,740 | 274,559,889 | (6,347,741) | 268,212,148 | |||||
| Turnover materials | 40,959,250 | - | 40,959,250 | 26,061,318 | - | 26,061,318 | |||||
| 687,411,881 | (1,516,564) | 685,895,317 | 486,154,112 | (8,373,187) | 477,780,925 | ||||||
(b) Provision for decline in the value of inventories are analysed as follows:
| 31 December 2016 | Increase in current year | Reversal in current year | 31 December 2017 | ||||
| Finished goods | 6,347,741 | 68,974 | (6,347,741) | 68,974 | |||
| Raw materials | 2,025,446 | - | (577,856) | 1,447,590 | |||
| 8,373,187 | 68,974 | (6,925,597) | 1,516,564 |
(c) Provision for decline in the value of inventories is as follows:
| Basis for provision for decline in the value of inventories | Reasons of reversal of the decline in the value of inventories | ||
| Finished goods | The amount of carrying amount less net realisable value due to decline in price of products | Sold | |
| Raw materials | The amount of book value less net realisable value due to sluggish or damaged raw materials | Used |
(7) Assets classified as held for sale
| Item | carrying amounts at the end of period | Fair value | Estimated disposal costs | Estimated disposal time | ||||
| Intangible assets | 15,048,314 | 18,390,394 | June of 2018 | |||||
| Construction in progress | 30,935,206 | 37,805,606 | June of 2018 | |||||
| 45,983,520 | 56,196,000 | - |
The subsidiary of the Group, Dongguan CSG PV-tech signed a grant contract of land use right with third party
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 133 -
Dongguan Chaoyin Textile Co., LTD. (Dongguan Chaoyin Company) on 17 June 2016. Dongguan CSG PV-techsells its land use right along with the buildings on the land to Dongguan Chaoyin Company. Therefore, theconstruction-in-progress and intangible assets of Dongguan CSG PV-tech were transferred to assets held for sale.As at 31 December 2017, the transfer of propery rights had not been finalised.
4 Notes to the consolidated financial statements (Cont’d)
(8) Other current assets
| 31 December 2017 | 31 December 2016 | ||
| VAT to be offset | 181,667,326 | 150,317,894 | |
| Assets classified as held for sale | - | 40,049,163 | |
| Enterprise income tax prepaid | 1,132,508 | 1,325,723 | |
| VAT input to be recognised | 18,048,155 | 8,212,797 | |
| 200,847,989 | 199,905,577 |
(9) Fixed assets
| Buildings | Machinery and equipment | Motor vehicles | Total | ||||
| Cost | |||||||
| 31 December 2016 | 3,911,336,527 | 11,699,296,248 | 201,923,067 | 15,812,555,842 | |||
| Increase in current year | |||||||
| Acquisition | 4,924,460 | 18,947,748 | 7,467,964 | 31,340,172 | |||
| Transfers from construction in progress (Note 4(10)) | 94,982,205 | 1,338,373,278 | 5,515,375 | 1,438,870,858 | |||
| Adjustment of completion settlement | 738,830 | 19,721,695 | 238,675 | 20,699,200 | |||
| Decrease in current year | |||||||
| Disposal or retirement | (8,917,927) | (52,049,454) | (6,203,870) | (67,171,251) | |||
| Transfer to construction in progress | (3,695,395) | (561,466,255) | (648,454) | (565,810,104) | |||
| 31 December 2017 | 3,999,368,700 | 12,462,823,260 | 208,292,757 | 16,670,484,717 | |||
| Accumulated depreciation | |||||||
| 31 December 2016 | 629,946,237 | 3,287,606,208 | 172,265,020 | 4,089,817,465 | |||
| Increase in current year | |||||||
| Provision | 124,679,206 | 833,507,101 | 22,395,614 | 980,581,921 | |||
| Decrease in current year | |||||||
| Disposal or retirement | (1,211,382) | (13,892,180) | (5,723,521) | (20,827,083) | |||
| Transfer to construction in progress | (1,895,250) | (198,327,057) | (387,830) | (200,610,137) | |||
| 31 December 2017 | 751,518,811 | 3,908,894,072 | 188,549,283 | 4,848,962,166 | |||
| Provision for impairment loss | |||||||
| 31 December 2016 | - | 264,765,386 | - | 264,765,386 | |||
| Provision | 10,580,861 | 25,679,443 | 36,260,304 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 134 -
| Disposal or retirement | (20,272,836) | (20,272,836) | |||||
| 31 December 2017 | 10,580,861 | 270,171,993 | 280,752,854 | ||||
| Carrying amount | |||||||
| 31 December 2017 | 3,237,269,028 | 8,283,757,195 | 19,743,474 | 11,540,769,697 | |||
| 31 December 2016 | 3,281,390,290 | 8,146,924,654 | 29,658,047 | 11,457,972,991 |
In 2017, the depreciation amount provided for fixed assets was RMB980,581,921 (2016: RMB891,257,741), andthe amount of depreciation expenses charged to cost of sales, selling and distribution expenses, general andadministrative expenses and construction in progress was RMB890,575,701, RMB 970,739 , RMB 65,929,139
and RMB 23,106,342 (2016：RMB 819,298,731, RMB 979,874, RMB 59,067,087 and RMB 11,912,049)
respectively.
In 2017, the cost of fixed assets transferred from construction in progress amounted to RMB 1,438,870,858 (2016:
RMB1,281,171,543).
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 135 -
4 Notes to the consolidated financial statements (Cont’d)
Fixed assets (Cont’d)
(a) Fixed assets with pending certificates of ownership
| Carrying amount | Reasons for not yet obtaining certificates of title | |
| Buildings | 893,119,983 | Have submitted the required documents and are in the process of application, or the related land use right certificate pending |
(10) Construction in progress
| 31 December 2017 | 31 December 2016 | ||||||
| Carrying amount | Provision for impairment loss | Carrying amount | Carrying amount | Provision for impairment loss | Carrying amount | ||
| Xianning CSG Photoelectric Glass project | 400,665,493 | - | 400,665,493 | 41,267,876 | - | 41,267,876 | |
| Yichang display device company flat panel display project | 298,794,622 | (14,160,474) | 284,634,148 | 274,342,571 | (14,160,474) | 260,182,097 | |
| Yichang Optoelectronic Technology Reform Project | 242,055,237 | - | 242,055,237 | - | - | - | |
| Hebei float 600T tech-innovation project | 113,762,853 | - | 113,762,853 | - | - | - | |
| Zhanjiang Photovoltaic 20MV Step-by-step Photovoltaic Power Plant Project | 100,570,104 | - | 100,570,104 | 8,855,560 | - | 8,855,560 | |
| Dongguan Solar Glass Phase I and II improvement project | 78,970,995 | (40,248,018) | 38,722,977 | 78,970,995 | (33,075,116) | 45,895,879 | |
| Wujiang energy glass expansion project | 72,600,518 | (19,876,460) | 52,724,058 | 70,178,986 | (19,876,460) | 50,302,526 | |
| Yichang 1GW silicon slice project | 43,617,802 | - | 43,617,802 | 95,011,027 | - | 95,011,027 | |
| LED Sapphire Substrate Project | 30,886,629 | (19,303,853) | 11,582,776 | 29,472,040 | - | 29,472,040 | |
| Wujiang Photovoltaic Packaging Materials Project | 7,414,854 | - | 7,414,854 | 1,583,553 | - | 1,583,553 | |
| Yichang 5000T electronic-grade polysilicon project | 943,396 | - | 943,396 | 171,211,288 | - | 171,211,288 | |
| Heyuan Kibing PV tech 11MV distributed generation project | 2,267,345 | - | 2,267,345 | 85,126,446 | - | 85,126,446 | |
| Dongguan PV Tech 200MW PV-tech Battery Expansion project | 1,179,935 | - | 1,179,935 | 8,224,072 | - | 8,224,072 | |
| Hebei float 900T tech-innovation project | - | - | - | 388,627,081 | - | 388,627,081 | |
| Chengdu float 550T line tech-renovation | - | - | - | 102,304,740 | - | 102,304,740 | |
| Qingyuan high-performance ultrathin electronic glass project | - | - | - | 1,034,372 | - | 1,034,372 | |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 136 -
| Sichuan energy-saving project Phase III | - | - | - | 13,005,928 | - | 13,005,928 | |
| Others | 117,889,623 | (405,983) | 117,483,640 | 59,991,892 | - | 59,991,892 | |
| 1,511,619,406 | (93,994,788) | 1,417,624,618 | 1,429,208,427 | (67,112,050) | 1,362,096,377 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 137 -
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 138 -
4 Notes to the consolidated financial statements (Cont’d)
(10) Construction in progress (Cont'd)
(a) Movement of significant project
| Project name | Budget | 31 December 2016 | Increase in current year | Transfer to fixed assets in current year | Other decreases in current year | 31 December 2017 | Proportion between engineering input and budget (i) | Amount of borrowing costs capitalised in 2017 | Including: Amount of borrowing costs capitalised in 2017 | Capitalisation rate for in current year | Source of fund |
| Xianning CSG Photoelectric Glass project | 510,000,000 | 41,267,876 | 371,315,353 | (11,692,808) | (224,928) | 400,665,493 | 81% | 7,770,613 | 7,770,613 | 4.75% | Internal fund and bank loan |
| Yichang CSG flat panel display project | 1,970,000,000 | 274,342,571 | 68,678,108 | (44,226,057) | - | 298,794,622 | 81% | 4,144,159 | 3,146,516 | 4.20% | Internal fund and bank loan |
| Yichang Optoelectronic Technology Reform Project | 258,296,536 | - | 242,055,237 | - | - | 242,055,237 | 60% | - | - | - | Internal fund and bank loan |
| Hebei float 600T tech-innovation project | 129,180,000 | - | 121,809,135 | (284,860) | (7,761,422) | 113,762,853 | 1% | - | - | - | Internal fund |
| Zhanjiang Photovoltaic 20MV Step-by-step Photovoltaic Power Plant Project | 133,000,000 | 8,855,560 | 91,714,544 | - | - | 100,570,104 | 96% | 2,280,097 | 2,280,097 | 5.74% | Internal fund and bank loan |
| Dongguan Solar Glass Phase I and II improvement project | 396,410,000 | 78,970,995 | - | - | - | 78,970,995 | 80% | - | - | - | Internal fund |
| Wujiang energy glass expansion project | 845,630,000 | 70,178,986 | 3,279,395 | (676,165) | (181,698) | 72,600,518 | 99% | 20,120,444 | - | - | Internal fund |
| Yichang 1GW silicon slice project | 1,073,209,600 | 95,011,027 | 361,731,413 | (413,124,638) | - | 43,617,802 | 36% | 8,629,993 | 8,083,768 | 4.79% | Internal fund and bank loan |
| LED Sapphire Substrate Project | 35,000,000 | 29,472,040 | 2,696,640 | (1,282,051) | - | 30,886,629 | 88% | 4,650,543 | 899,966 | 4.78% | Internal fund and bank loan |
| Wujiang Photovoltaic Packaging Materials Project | 520,100,000 | 1,583,553 | 7,288,394 | (1,457,093) | - | 7,414,854 | 87% | - | - | - | Internal fund and bank loan |
| Yichang 5000T electronic-grade | 698,396,700 | 171,211,288 | 45,733,419 | (216,001,311) | - | 943,396 | 26% | 8,453,998 | 5,244,463 | 4.44% | Internal fund and |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 139 -
| polysilicon project | bank loan | ||||||||||
| Heyuan Kibing PV tech 11MV distributed generation project | 91,600,000 | 85,126,446 | 3,577,331 | (77,641,121) | (8,795,311) | 2,267,345 | 93% | 325,704 | 325,704 | 5.00% | Internal fund |
| Dongguan PV Tech 200MW PV-tech Battery Expansion project | 697,000,000 | 8,224,072 | 49,163,936 | (56,208,073) | - | 1,179,935 | 100% | 32,417,335 | 401,535 | 4.80% | Internal fund and bank loan |
| Hebei float 900T tech-innovation project | 124,000,000 | 388,627,081 | 3,816,268 | (392,210,090) | (233,259) | - | 100% | 4,211,893 | 1,057,593 | 4.94% | Internal fund and bank loan |
| Chengdu float 550T line tech-renovation | 200,000,000 | 102,304,740 | 57,840,038 | (160,144,778) | - | - | 100% | 306,663 | 306,663 | 4.60% | Internal fund and bank loan |
| Qingyuan high-performance ultrathin electronic glass project | 471,660,000 | 1,034,372 | - | - | (1,034,372) | - | 100% | - | - | - | Internal fund and bank loan |
| Sichuan energy-saving project Phase III | 222,817,517 | 13,005,928 | - | (10,119,658) | (2,886,270) | - | 100% | - | - | - | Internal fund |
| Others | 2,657,421,716 | 59,991,892 | 111,879,886 | (53,802,155) | (180,000) | 117,889,623 | 339,257 | 339,257 | 4.15% | Internal fund and bank loan | |
| 11,033,722,069 | 1,429,208,427 | 1,542,579,097 | (1,438,870,858) | (21,297,260) | 1,511,619,406 | 93,650,699 | 29,856,175 |
(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.
(ii) The budget and actual expenditures incurred for these kinds of projects include cost of acquiring land use rights. The balance of construction in progress does not
include the costs of acquiring land-use right
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 140 -
4 Notes to the consolidated financial statements (Cont’d)
(10) Construction in progress (Cont'd)
(b) Provision for impairment of construction in progress
| Project name | 31 December 2016 | Increase in current year | Decrease in current year | 31 December 2017 | Reason for provision |
| Dongguan Solar Glass Phase I and II improvement project | 33,075,116 | 7,172,902 | - | 40,248,018 | - |
| Wujiang float glass project | 19,876,460 | - | - | 19,876,460 | - |
| Yichang CSG Display panel display project | 14,160,474 | - | - | 14,160,474 | - |
| LED Sapphire Substrate Project | - | 19,303,853 | - | 19,303,853 | - |
| Others | - | 405,983 | - | 405,983 | - |
| 67,112,050 | 26,882,738 | - | 93,994,788 | - |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 141 -
4 Notes to the consolidated financial statements (Cont’d)
(11) Intangible assets and development expenditure
| Land use rights | Patents and proprietary technologies | Exploitation rights | Others | Total | |
| Cost | |||||
| 31 December 2016 | 1,026,603,700 | 199,922,986 | 4,456,536 | 23,548,047 | 1,254,531,269 |
| Acquisition in current year | - | 2,966,502 | - | 12,558,663 | 15,525,165 |
| Transfers from development expenditure in current year | - | 43,122,431 | - | - | 43,122,431 |
| 31 December 2017 | 1,026,603,700 | 246,011,919 | 4,456,536 | 36,106,710 | 1,313,178,865 |
| Accumulated amortisation | |||||
| 31 December 2016 | 128,007,677 | 57,225,743 | 3,306,083 | 20,322,309 | 208,861,812 |
| Provision in current year | 21,049,588 | 17,759,493 | 400,641 | 4,674,444 | 43,884,166 |
| 31 December 2017 | 149,057,265 | 74,985,236 | 3,706,724 | 24,996,753 | 252,745,978 |
| Provision for impairment loss | |||||
| 31 December 2016 | - | 13,201,347 | - | 9,133 | 13,210,480 |
| 31 December 2017 | - | 13,201,347 | - | 9,133 | 13,210,480 |
| Carrying amount | |||||
| 31 December 2017 | 877,546,435 | 157,825,336 | 749,812 | 11,100,824 | 1,047,222,407 |
| 31 December 2016 | 898,596,023 | 129,495,896 | 1,150,453 | 3,216,605 | 1,032,458,977 |
In 2017, the amortisation of intangible assets amounted to RMB43,884,166 (2016: RMB36,907,548).
As at 31 December 2017, ownership certificates of land use rights (“Land ownership Certificates”) for certain land
use rights of the Group with carrying amounts of approximately RMB5,473,442 (cost: RMB6,586,712) had not yetbeen obtained by the Group (31 December 2016: carrying amount: RMB5,718,191, cost: RMB 6,586,712). The
Company’s management are of the view that there is no legal restriction for the Group to apply for and obtain theLand Ownership Certificates and has no adverse effect on the Group’s business operation.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 142 -
4 Notes to the consolidated financial statements (Cont’d)
(11) Intangible assets and development expenditure (Cont'd)
Research expenditure is analysed below:
| 31 December 2016 | Increase in current year | Decrease in current year | 31 December 2017 | |||||||
| Recognised as expense | Recognised as intangible assets | |||||||||
| Development costs | 66,927,714 | 37,560,254 | (43,122,431) | 61,365,537 | ||||||
In 2017, the total amount of research and development expenditures of the Group was RMB 368,237,629 (2016:
RMB 341,553,966), including RMB 330,677,375 (2016: RMB 285,129,442) recorded in income statement forcurrent period and the research and development expenditure with the amount of RMB 43,122,431 recognised asintangible assets for the current period (2016: 23,213,785). As at 31 December 2017, the intangible assets arisingfrom internal research and development accounted for 12.37 % of total of intangible assets (31 December 2016:
9.51 %).
(12) Goodwill
| 31 December 2016 | Increase in current year | Decrease in current year | 31 December 2017 | ||||
| Tianjin CSG Architectural Glass Co., Ltd. | 3,039,946 | 3,039,946 | |||||
| Xianning CSG Photoelectric | 4,857,406 | 4,857,406 | |||||
| Shenzhen CSG Display | 389,494,804 | 389,494,804 | |||||
| 397,392,156 | 397,392,156 |
The goodwill allocated to the asset groups and groups of asset groups from Tianjin CSG Architectural wassummarised by operating segments as Architectural Glass segment. The goodwill allocated to the asset groups andgroups of asset groups from Shenzhen CSG Display and Xianning CSG Photoelectric are summarised by operatingsegments as Electronic Glass and Display segment.
Combining with the prediction of the future business and independent third party appraisal institution,the Company'smanagement considered that the goodwill was not impaired as at 31 December 2017.
The recoverable amount of asset groups is determinded by net present value of estimated future cash flows whichis determined according to the five-year budget approved by management. The cashflow exceed five years is
forcasted by using growth rates not exceeding similar long-term average growth rates of each asset group’s
industry. The discount rates used are the pre-tax interest rates that are able to reflect the risks specific to the relatedasset groups.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 143 -
4 Notes to the consolidated financial statements (Cont’d)
(13) Deferred tax assets and liabilities
(a) Deferred tax assets before offsetting
| 31 December 2017 | 31 December 2016 | |||
| Deductible temporary differences | Deferred tax assets | Deductible temporary differences | Deferred tax assets | |
| Provision for asset impairments | 361,149,562 | 55,552,592 | 410,272,182 | 61,899,046 |
| Tax losses | 133,658,792 | 24,457,319 | 164,790,392 | 28,883,903 |
| Government grants | 128,189,967 | 20,424,022 | 129,722,993 | 20,654,199 |
| Accrued expenses | 50,193,405 | 7,529,011 | 81,018,069 | 12,352,386 |
| Depreciation of fixed assets | 33,762,174 | 8,000,331 | 28,241,461 | 6,320,146 |
| Share payment | 5,196,945 | 867,677 | - | - |
| 712,150,845 | 116,830,952 | 814,045,097 | 130,109,680 | |
| Including: | |||||||||
| Expected to be reversed within one year (inclusive) | 33,751,219 | 33,957,444 | |||||||
| Expected to be reversed after one year | 83,079,733 | 96,152,236 | |||||||
| 116,830,952 | 130,109,680 | ||||||||
(b) Deferred tax liabilities before offsetting
| 31 December 2017 | 31 December 2016 | ||||||
| Taxable temporary differences | Deferred tax liabilities | Taxable temporary differences | Deferred tax liabilities | ||||
| Depreciation of fixed assets | 371,115,284 | 56,874,044 | 396,118,583 | 63,406,963 | |||
| Including: | ||||||||
| Expected to be reversed within one year (inclusive) | 4,247,230 | 3,342,336 | ||||||
| Expected to be reversed after one year | 52,626,814 | 60,064,627 | ||||||
| 56,874,044 | 63,406,963 | |||||||
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 144 -
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 2017 | 31 December 2016 | ||
| Deductible losses | 425,759,321 | 342,455,782 |
The deductible tax losses not recognised as deferred tax assets mainly represented the tax losses of the Companyand some closed subsidiaries. Management was unable to expect that whether there were taxable profit would beavailable in the future against which these deductible tax losses can be utilised, and accordingly, did not recognisethe deferred tax assets.
(d) The tax losses for which no deferred tax assets were recognised will expire in the following years:
| 31 December 2017 | 31 December 2016 | ||
| 2018 | 54,100,000 | 54,100,000 | |
| 2019 | 82,300,000 | 82,300,000 | |
| 2020 | 94,430,197 | 94,430,197 | |
| 2021 | 111,625,585 | 111,625,585 | |
| 2022 | 83,303,539 | - | |
| 425,759,321 | 342,455,782 |
(e) The net balances of deferred tax assets and liabilities after offsetting are as follows:
| 31 December 2017 | 31 December 2016 | ||||||
| Net deferred tax assets or liabilities | Deductible/taxable temporary differences after offsetting | Net deferred tax assets or liabilities | Deductible/taxable temporary differences after offsetting | ||||
| Deferred tax assets | 80,872,862 | 472,134,707 | 96,451,854 | 565,834,538 | |||
| Deferred tax liabilities | 20,915,954 | 131,099,146 | 29,749,137 | 147,908,024 | |||
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 145 -
4 Notes to the consolidated financial statements (Cont’d)
(14) Other non-current assets
| 31 December 2017 | 31 December 2016 | ||
| Prepayment for equipment and software upgrading expenses | 45,431,352 | 69,945,550 | |
| VAT input to be offset | - | 10,718,843 | |
| Prepayment for lease of land use rights | 6,510,000 | 6,510,000 | |
| 51,941,352 | 87,174,393 |
(15) Provision for asset impairment
| 31 December 2016 | Increase in current year | Reversal in current year | Written off in current year | 31 December 2017 | |||
| Provision for bad debts | 20,562,459 | 9,498,129 | (3,310,390) | (317,727) | 26,432,471 | ||
| Including: Provision for bad debts of accounts receivable | 16,468,391 | 8,845,491 | (3,283,884) | (117,931) | 21,912,067 | ||
| Provision for bad debts of other receivables | 4,094,068 | 652,638 | (26,506) | (199,796) | 4,520,404 | ||
| Provision for decline in the value of inventories | 8,373,187 | 68,974 | (6,925,597) | 1,516,564 | |||
| Provision for impairment of fixed assets | 264,765,386 | 36,260,304 | (20,272,836) | 280,752,854 | |||
| Provision for impairment of construction in progress | 67,112,050 | 26,882,738 | - | 93,994,788 | |||
| Provision for impairment of intangible assets | 13,210,480 | - | - | - | 13,210,480 | ||
| 374,023,562 | 72,710,145 | (3,310,390) | (27,516,160) | 415,907,157 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 146 -
4 Notes to the consolidated financial statements (Cont’d)
(16) Short-term borrowings
| 31 December 2017 | 31 December 2016 | ||
| Ultra-short-term financial bonds (i) | - | 2,000,000,000 | |
| Unsecured | 2,691,732,609 | 1,650,251,293 | |
| Guaranteed (ii) | 1,012,898,300 | 367,618,369 | |
| 3,704,630,909 | 4,017,869,662 |
(i) Approved by file No. [2015] SCP163 of Inter-bank Market Trading Association, the Company is entitled to
issue ultra-short-term financial bonds with the limit of RMB4,000,000,000, which expires on 28 May 2017.
On 2 Augest 2016, the Company issued the Phase III ultra-short-term financial bonds of RMB600,000,000 for2016, with the maturity data of May 1 2017 and annual rate of 3.67%. As at the reporting date, suchUltra-short-term bonds had been repaid.
On 1 September 2016, the Company issued the Phase IV ultra-short-term financial bonds ofRMB500,000,000 for 2016, with the maturity data of 2 June 2017 and annual rate of 3.5%. As at the reportingdate, such ultra-short-term bonds had been repaid.
(ii) As at 31 December 2017, the Company provided its subsidiaries with guarantee for the short-term
borrowings of RMB1,012,898,300 (31 December 2016: RMB367,618,369), and the Company had nocounter guarantee from minority shareholders of subsidiaries (31 December 2016: Nil).
(iii) As at 31 December 2017, the interest of short-term borrowings varied from 2.70% to 5.66% (31 December
2016: 2.70% to 4.79%).
(17) Notes payable
| 31 December 2017 | 31 December 2016 | ||
| Bank acceptance notes | 213,401,622 | 20,000,000 |
All notes payable are due within one year.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 147 -
4 Notes to the consolidated financial statements (Cont’d)
(18) Accounts payable
| 31 December 2017 | 31 December 2016 | ||
| Materials payable | 798,178,206 | 747,769,987 | |
| Equipment payable | 329,926,045 | 233,779,329 | |
| Construction expenses payable | 167,394,038 | 100,246,462 | |
| Freight payable | 61,671,023 | 40,916,380 | |
| Utilities payable | 35,973,405 | 44,602,055 | |
| Others | 7,023,325 | 2,555,157 | |
| 1,400,166,042 | 1,169,869,370 |
As at 31 December 2017, the amount of accounts payable over 1 year was approximately RMB160,638,075 (31December 2016: RMB140,385,720), which mainly comprised payables for construction and equipment. As theconstruction work had not passed the final acceptance test yet, the balance was not yet settled.
(19) Advances from customers
| 31 December 2017 | 31 December 2016 | ||
| Advances for goods from customers | 195,563,465 | 142,330,979 |
The ageing of balances was substantively within 1 year.
(20) Employee benefits payable
| 31 December 2017 | 31 December 2016 | ||
| Short-term employee benefits payable (a) | 272,144,440 | 193,166,719 | |
| Defined contribution plans payable (b) | 26,220 | 205,520 | |
| 272,170,660 | 193,372,239 |
(a) Short-term employee benefits
| 31 December 2016 | Increase in current year | Decrease in current year | 31 December 2017 | |
| Wages and salaries, bonus, allowances and subsidies | 159,601,219 | 1,083,193,468 | (1,067,309,072) | 175,485,615 |
| Social security contributions | 50,331 | 40,182,933 | (40,219,512) | 13,752 |
| Including: Medical insurance | 31,340 | 33,865,801 | (33,884,783) | 12,358 |
| Work injury insurance | 12,677 | 4,356,310 | (4,368,003) | 984 |
| Maternity insurance | 6,314 | 1,960,822 | (1,966,726) | 410 |
| Housing funds | 2,603,791 | 49,264,799 | (49,110,219) | 2,758,371 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 148 -
| Labour union funds and employee education funds | 15,571,378 | 14,607,578 | (14,898,254) | 15,280,702 |
| Management bonus (i) | 15,340,000 | 79,735,128 | (16,469,128) | 78,606,000 |
| Share-based payments | - | 8,194,695 | (8,194,695) | - |
| 193,166,719 | 1,275,178,601 | (1,196,200,880) | 272,144,440 |
4 Notes to the consolidated financial statements (Cont’d)
(20) Employee benefits payable (Cont’d)
Pursuant to the resolution at the 7th session in the 5th meeting of the board of directors of the Company on 31March 2015, the board of directors adopted a management bonus scheme which was based on the quarterly returnon net assets and the net profit for the quarter. During the year, management bonuses amounting toRMB79,735,128 (2016: RMB82,470,000) were accrued and charged to profit or loss.
Pursuant to the resolution at the 7th session in the temporary conference of the board of directors of the Companyon 11 December 2017, to implemented equity incentive plans of restricted stock for the Company directors andsenior management, core management team, backbones of technology and busines. The company first awarded97,511,654 restricted shares to 454 incentive objects for the first time at RMB4.28 per share. The total fair value ofthe equity instruments granted to the incentive object by the company for the first time is RMB289,519,900. Thetotal value of such fair value as the total cost of the company's equity incentive plan will be confirmed in stagesaccording to the ratio of unlocking/exercising in the implementation of the equity incentive plan, and it is includedin the cost in the term of "management fees" and "capital reserves - other capital reserves". The Company unlockthe conditions of restricted share in 2017, and the cost associated with equity incentive plan is confirmed atRMB8,194,695 in this phase.
(b) Defined contribution plans
| 31 December 2016 | Increase in current year | Decrease in current year | 31 December 2017 | |||
| Basic pensions | 192,780 | 109,332,705 | (109,500,097) | 25,388 | ||
| Unemployment insurance | 12,740 | 3,866,282 | (3,878,190) | 832 | ||
| 205,520 | 113,198,987 | (113,378,287) | 26,220 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 149 -
4 Notes to the consolidated financial statements (Cont’d)
(21) Taxes payable
| 31 December 2017 | 31 December 2016 | ||
| VAT payable | 35,100,800 | 46,726,185 | |
| Enterprise income tax payable | 48,496,225 | 41,919,187 | |
| Housing property tax payable | 8,617,044 | 10,998,756 | |
| Individual income tax payable | 5,177,080 | 3,755,374 | |
| City maintenance and construction tax payable | 4,261,902 | 3,482,715 | |
| Educational surcharge payable | 3,348,566 | 3,351,165 | |
| Others | 6,995,147 | 5,359,234 | |
| 111,996,764 | 115,592,616 |
(22) Interest payable
| 31 December 2017 | 31 December 2016 | ||
| Interest of ultra-short-term financial bonds | - | 38,040,006 | |
| Interest payable for medium term notes | 27,622,465 | 27,621,021 | |
| Interest for corporate bonds | - | 10,660,000 | |
| Interest of long-term borrowings with periodic payments of interest and return of principal at maturity | 938,950 | 514,750 | |
| Interest payable for short-term borrowings | 5,471,325 | 1,390,127 | |
| 34,032,740 | 78,225,904 |
(23) Other payables
| 31 December 2017 | 31 December 2016 | ||
| Guarantee deposits received from construction contractors | 49,624,256 | 69,156,801 | |
| Accrued cost of sales (i) | 58,584,562 | 47,671,047 | |
| Temporary collection of payment for land transfer | 56,196,000 | 28,098,000 | |
| Payable for contracted labour costs | 17,568,695 | 17,467,346 | |
| Temporary receipts | 7,964,070 | 14,022,924 | |
| Deposit for disabled | 5,230,110 | 3,509,947 | |
| Restricted share repurchase obligation | 417,349,879 | - | |
| Others | 6,806,782 | 8,395,385 | |
| 619,324,354 | 188,321,450 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 150 -
(i) It represented the payment made to external third parties arising from undertaking the rights of debtor and
creditor, comprising water and electricity, professional service fee and travelling expenses etc.(ii) In the year ending 31 December 2017, the unlock conditions of first granted restricted stock was not met. The
Company will confirm the actual amount of restricted stock subscription RMB417,349,879 as thecorresponding expected liability, and confirm the corresponding amount of stock shares.
The ageing of other payables was substantively within 1 year.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 151 -
4 Notes to the consolidated financial statements (Cont’d)
(24) Current portion of non-current liabilities
| 31 December 2017 | 31 December 2016 | ||
| Current portion of long-term borrowings | |||
| - Guaranteed | 14,880,000 | 29,340,000 | |
| - Unsecured | 180,000,000 | - | |
| Current portion of corporate bonds | - | 1,000,000,000 | |
| Current portion of finance lease | 709,381,397 | - | |
| 904,261,397 | 1,029,340,000 |
(25) Long-term borrowings
| 31 December 2017 | 31 December 2016 | ||
| Medium term notes (i) | 1,200,000,000 | 1,200,000,000 | |
| Unsecured | - | 180,000,000 | |
| Guaranteed | 354,120,000 | 58,660,000 | |
| 1,554,120,000 | 1,438,660,000 |
(i) Approved by file No. [2015] MTN225 of Inter-bank Market Trading Association, the Company is entitled to
issue medium term notes with the limit of RMB1,200,000,000, which expires on 28 May 2017.
On 14 July 2015, the Company issued the Phase I medium term notes of RMB1,200,000,000 for 2015, withthe maturity data of 14 July 2020 and annual rate of 4.94%.
As at 31 December 2017, the interest of long-term borrowings varied from 4.75% to 5.94% (31 December2015: 4.51% to 4.94%).
(26) Long-term account payable
| 31 December 2017 | 31 December 2016 | ||
| Finance lease | 1,161,794,247 | - |
TheSale and leaseback lease of the group in this phase is a mortgage loan with a lease term of 36 months. OnDecember 31, 2017, the real interest rate of financing lease loans is 4.49%-7.8%.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 152 -
4 Notes to the consolidated financial statements (Cont’d)
(27) Deferred income
| 31 December 2017 | 31 December 2016 | ||
| Government grants | 562,701,103 | 593,993,254 |
Government grants are analysed as follows:
| Government grants | 31 December 2016 | Increase in current year | Other decrease in current year | Non-operating income in current year | 31 December 2017 | Assets/Income related |
| Tianjin CSG Golden Sun Project (i) | 57,092,011 | - | -- | (3,374,892) | 53,717,119 | Assets related |
| Dongguan CSG Golden Sun Project (ii) | 46,079,250 | - | -- | (2,751,000) | 43,328,250 | Assets related |
| Hebei CSG Golden Sun Project (iii) | 46,750,000 | - | -- | (2,750,000) | 44,000,000 | Assets related |
| Xianning CSG Golden Sun Project (iv) | 51,013,417 | - | -- | (3,030,500) | 47,982,917 | Assets related |
| Infrastructure compensation for Wujiang CSG Glass Co., Ltd (v) | 43,670,435 | - | -- | (4,041,537) | 39,628,898 | Assets related |
| Qingyuan Energy-saving project (vi) | 23,259,167 | - | -- | (2,470,000) | 20,789,167 | Assets related |
| Yichang Silicon products project (vii) | 24,609,375 | - | -- | (2,812,500) | 21,796,875 | Assets related |
| Yichang CSG silicon slice auxiliary project (viii) | 13,890,609 | - | -- | (1,227,733) | 12,662,876 | Assets related |
| Sichuan energy-saving glass project (ix) | 12,129,480 | - | -- | (1,654,020) | 10,475,460 | Assets related |
| Group coating film experimental project (x) | 9,035,040 | - | -- | (1,508,760) | 7,526,280 | Assets related |
| Yichang expert silicon project (xi) | 3,906,547 | - | -- | (306,664) | 3,599,883 | Assets related |
| Yichang semiconductor silicon project (xii) | 3,666,667 | - | -- | (266,667) | 3,400,000 | Assets related |
| Yichang CSG Display project (xiii) | 53,371,082 | - | -- | (2,534,478) | 50,836,604 | Assets related |
| Xianning Photoelectric project (xiv) | - | 7,800,000 | - | - | 7,800,000 | Assets related |
| Group talent fund project (xv) | 171,000,000 | - | - | - | 171,000,000 | Assets related |
| Others | 34,520,174 | 8,150,000 | (171,976) | (18,341,424) | 24,156,774 | Assets related/Income related |
| 593,993,254 | 15,950,000 | (171,976) | (47,070,175) | 562,701,103 |
(i) The allowance was granted by Tianjin Municipal Government. The allowance was used for
establishing PV power station by Tianjin CSG Architectural Glass Co., Ltd. The facilities belongedto Tianjin CSG upon completion. The allowance will be credited to income statement in 20 years,the useful life of the PV power station.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 153 -
(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.
(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 XianningCSG upon completion. The allowance will be credited to income statement in 20 years, the usefullife of the PV power station.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 154 -
4 Notes to the consolidated financial statements (Cont’d)
(27) Deferred income (Cont’d)
(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 Silicon Materials Co., Ltd. by
Yichang City Dongshan Development Corporation under the provisions of the investment contractsigned between the Group and the Municipal Government of Yi Chang. The proceeds weredesigned for the construction of electricity transformer and the pipelines. Yichang Silicon is
entitled to the ownership of the facilities， which will be amortised by 16 years according to the
useful life of the converting station.
(viii) It represented the government supporting fund obtained by Yichang Silicon from the acquiring of
the assets and liabilities of Crucible project of Yichang Hejing Photoelectric Ceramic Co., Ltd. Theproceeds would be amortised and credited to income statement by 16 years after related assetswere 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 Silicon “Hubeisemiconductor silicon preparative technique project laboratory”. The grant will be amortised and
credited to income statement by 15 years
(xiii) It represented the funds granted by Yichang Municipal Government for Yichang CSG Display
Company's flat project construction support funds and construction of coil coating three-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.constructing the 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.
(xv) The allowance was granted by Administrative Commission of Yichang High-tech Industrial
Development Zone. For senior management personnel, engineering technical personnel and
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 155 -
senior professional technical team which is working at Yichang or plane to introduction, RMB171million fund was set up, as a special fund for talent introduction and housing resettlement.
4 Notes to the consolidated financial statements (Cont’d)
(28) Share capital
| Movement for the year ended 31 December 2017 | |||||||||||||
| 31 December 2016 | New issues during the year | Bonus issue | Capitalisation | Others | 31 December 2017 | ||||||||
| RMB-denominated ordinary shares | 1,312,751,568 | - | - | 196,912,735 | - | 1,509,664,303 | |||||||
| Limited selling condition shares | - | 97,511,654 | - | - | - | 97,511,654 | |||||||
| Domestically listed foreign shares | 762,583,992 | - | - | 114,387,598 | - | 876,971,590 | |||||||
| 2,075,335,560 | 97,511,654 | - | 311,300,333 | - | 2,484,147,547 | ||||||||
Thepar value of the RMB-denominated ordinary shares is RMB1, and that of domestically listed foreign shares is HKD1.
(29) Capital surplus
| 31 December 2016 | Increase in current year | Decrease in current year | 31 December 2017 | ||||
| Share premium (i) | 1,345,264,670 | 319,838,225 | (311,300,333) | 1,353,802,562 | |||
| Other capital surplus | (84,562,473) | 37,141,676 | - | (47,420,797) | |||
| Share of changes in equity other than comprehensive income and profit distribution of investees under the equity method | 757,420 | - | - | 757,420 | |||
| Share-based payment (ii) | 2,811,683 | 8,194,695 | - | 11,006,378 | |||
| Transfer of capital surplus recognised under the previous accounting system | (2,250,222) | - | - | (2,250,222) | |||
| Disposal of fractional shares | 1,316,208 | - | - | 1,316,208 | |||
| Purchase of minority interests | (87,197,562) | - | - | (87,197,562) | |||
| (iii) | 28,946,981 | 28,946,981 | |||||
| 1,260,702,197 | 356,979,901 | (311,300,333) | 1,306,381,765 |
| 31 December 2015 | Increase in current year | Decrease in current year | 31 December 2016 | ||||
| Share premium | 1,345,264,670 | - | - | 1,345,264,670 | |||
| Other capital surplus | (83,873,398) | 483,405 | (1,172,480) | (84,562,473) |
| Movement for the year ended 31 December 2016 | |||||||||||||||
| 31 December 2015 | New issues during the year | Bonus issue | Capitalisation | Others | 31 December 2016 | ||||||||||
| RMB-denominated ordinary shares | 1,312,751,568 | - | - | - | - | 1,312,751,568 | |||||||||
| Domestically listed foreign shares | 762,583,992 | - | - | - | - | 762,583,992 | |||||||||
| 2,075,335,560 | - | - | - | - | 2,075,335,560 | ||||||||||
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 156 -
| Share of changes in equity other than comprehensive income and profit distribution of investees under the equity method | 676,277 | 81,143 | - | 757,420 | |||
| Share-based payment | 2,409,421 | 402,262 | - | 2,811,683 | |||
| Transfer of capital surplus recognised under the previous accounting system | (2,250,222) | - | - | (2,250,222) | |||
| Disposal of fractional shares | 1,316,208 | - | - | 1,316,208 | |||
| Purchase of minority interests | (86,025,082) | - | (1,172,480) | (87,197,562) |
| 1,261,391,272 | 483,405 | (1,172,480) | 1,260,702,197 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 157 -
4 Notes to the consolidated financial statements (Cont’d)
(29) Capital surplus(Cont’d)
(a) The reason for the decrease of capital reserve - other in current year was the acquisition of minority interests, with the
detail as follows:
(i)The Company passed the 2016 annual general meeting of shareholders held on May 22, 2017 and transferred1.5 shares to every 10 shares for all shareholders. The total share capital before the distribution was 2,075,335,560shares, and the total share capital after the dividend was increased to 2,386,635,893 shares. Capital reservedecreased by RMB311,300,333;
In this year, the equity incentive plan received RMB 417,349,879 of capital contribution from the incentive object,including RMB 97,511,654 of the share capital, which was included in the capital reserve of RMB 319,838,225.
(ii) This year, due to the equity incentive plan, the share payment fee of RMB8,194,695 was confirmed.
(iii) The shareholder Ju Shenghua provided interest-free loans of RMB1.61 billion to the company. The interest-freeloans were charged to other capital reserves of RMB28,946,981 based on the interest expense calculated on thebank loan interest for the same period.
(30) Treasury shares
| 31 December 2016 | Increase in current year | Decrease in current year | 31 December 2017 | ||||
| Obligations of restricted share buybacks | - | 417,349,879 | - | 417,349,879 | |||
| - | 417,349,879 | - | 417,349,879 |
Explanation on changes in treasury stocks: The company confirms liabilities and treasury shares at the same time,based on the number of restricted shares issued and the corresponding repurchase price.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 158 -
4 Notes to the consolidated financial statements (Cont’d)
(31) Other comprehensive income
| Other comprehensive income in Balance Sheet | Other comprehensive income in Income Statement for the year ended 31 December 2017 | ||||||||||||||
| 31 December 2016 | Attributable to parent company after tax | 31 December 2017 | Actual amount before tax for current year | Less: Reclassification of previous other comprehensive income to profit or loss in current year | Less: Income tax expenses | Attributable to parent company after tax | Attributable to minority shareholders after tax | ||||||||
| Other comprehensive income items which will be reclassified subsequently to profit or loss | |||||||||||||||
| Financial rewards for energy-saving technical retrofits | 2,550,000 | - | 2,550,000 | - | - | - | - | - | |||||||
| Difference on translation of foreign currency financial statements | 2,103,971 | (2,705,028) | (601,057) | (2,705,028) | - | - | (2,705,028) | - | |||||||
| 4,653,971 | (2,705,028) | 1,948,943 | (2,705,028) | - | - | (2,705,028) | - | ||||||||
| Other comprehensive income in Balance Sheet | Other comprehensive income in Income Statement for the year ended 31 December 2016 | |||||||||||||||
| 31 December 2015 | Attributable to parent company after tax | 31 December 2016 | Actual amount before tax for current year | Less: Reclassification of previous other comprehensive income to profit or loss in current year | Less: Income tax expenses | Attributable to parent company after tax | Attributable to minority shareholders after tax | |||||||||
| Other comprehensive income items which will be reclassified subsequently to profit or loss | ||||||||||||||||
| Financial rewards for energy-saving technical retrofits | 2,550,000 | - | 2,550,000 | - | - | - | - | - | ||||||||
Notes to the financial statementsfor the year ended 31 December 2017
(All amounts in RMB Yuan unless otherwise stated)
[English translation for reference only]
- 159 -
| Differences on translation of foreign currency financial statements | 417,772 | 1,686,199 | 2,103,971 | 1,686,199 | - | - | 1,686,199 | - | ||||||||
| 2,967,772 | 1,686,199 | 4,653,971 | 1,686,199 | - | - | 1,686,199 | - |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 160 -
4 Notes to the consolidated financial statements (Cont’d)
(32) Special reserve
| 31 December 2016 | Increase in current year | Decrease in current year | 31 December 2017 | ||||
| Safety production costs | 5,843,473 | 7,831,127 | (1,0449,662) | 3,224,938 |
The subsidiary Yichang CSG Silicon is a high risk chemical production enterprise. Therefore, the Company appropriatedsuch reserve in accordance with relevant regulations.
(33) Surplus reserve
| 31 December 2016 | Increase in current year | Decrease in current year | 31 December 2017 | ||||
| Statutory surplus reserve | 760,655,662 | 32,084,102 | - | 792,739,764 | |||
| Discretionary surplus reserve | 127,852,568 | - | - | 127,852,568 | |||
| 888,508,230 | 32,084,102 | - | 920,592,332 |
| 31 December 2015 | Increase in current year | Decrease in current year | 31 December 2016 | ||||
| Statutory surplus reserve | 730,927,762 | 29,727,900 | - | 760,655,662 | |||
| Discretionary surplus reserve | 127,852,568 | - | - | 127,852,568 | |||
| 858,780,330 | 29,727,900 | - | 888,508,230 |
In accordance with the Company Law of the People’s Republic of China and the Company’s Articles of Association, the
Company should appropriate 10% of net profit for the year to the statutory surplus reserve, and the Company can ceaseappropriation when the statutory surplus reserve accumulated to more than 50% of the registered capital. The statutorysurplus reserve can be used to make up for the loss or increase the paid-in capital after approval from the appropriateauthorities. The Company accrued statutory surplus reserve at the amount of RMB32,084,102 10% of the net profit, in2017 (2016: RMB29,727,900, accrued at 10% of the net profit).
The Company appropriates for the discretionary surplus reserve after the shareholders’ meeting approves the proposal
from the Board of Directors. The discretionary surplus reserve can be used to make up for the loss or increase the sharecapital after approval from the appropriate authorities. The Company did not appropriate to discretionary surplus reserveduring the year.
Notes to the financial statements for the year ended 31 December 2016
(All amounts in RMB Yuan unless otherwise stated)
- 161 -
4 Notes to the consolidated financial statements (Cont’d)
(34) Undistributed profits
| 2017 | 2016 | ||
| Undistributed profits at beginning of year | 3,573,871,573 | 3,428,478,565 | |
| Add: Net profits attributable to shareholders of parent company | 825,388,312 | 797,721,576 | |
| Less: Appropriation for statutory surplus reserve | (32,084,102) | (29,727,900) | |
| Ordinary share dividends payable (a) | (207,533,556) | (622,600,668) | |
| Undistributed profits at end of year | 4,159,642,227 | 3,573,871,573 |
(a) Pursuant to the resolution of Board of Directors of the Company on 22 May 2017, the Company paid cash dividends of RMB1
(tax inclusive) for each 10 shares based on total shares of 2,075,335,560, with the total cash dividends distributed ofRMB207,533,556.
(35) Revenue and cost of sales
| 2017 | 2016 | ||
| Revenue from main operations | 10,786,756,657 | 8,886,948,218 | |
| Revenue from other operations | 92,644,089 | 87,135,189 | |
| 10,879,400,746 | 8,974,083,407 | ||
| 2017 | 2016 | ||
| Cost of sales from main operations | 8,183,862,835 | 6,510,577,440 | |
| Cost of sales from other operations | 32,495,537 | 51,636,933 | |
| 8,216,358,372 | 6,562,214,373 |
(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:
| 2017 | 2016 | ||||||
| Revenue | Cost | Revenue | Cost | ||||
| Glass industry | 6,975,512,082 | 5,179,173,783 | 6,244,550,400 | 4,542,947,575 | |||
| Solar panel and parts | 3,091,397,745 | 2,493,891,466 | 2,283,441,881 | 1,728,673,404 | |||
| Electronic glass and displays | 867,223,335 | 652,646,493 | 424,883,660 | 303,117,902 | |||
| Elimination | (147,376,505) | (141,848,907) | (65,927,723) | (64,161,441) | |||
| 10,786,756,657 | 8,183,862,835 | 8,886,948,218 | 6,510,577,440 | ||||
Notes to the financial statements for the year ended 31 December 2016
(All amounts in RMB Yuan unless otherwise stated)
- 162 -
Notes to the financial statements for the year ended 31 December 2016
(All amounts in RMB Yuan unless otherwise stated)
- 163 -
4 Notes to the consolidated financial statements (Cont’d)
(35) Revenue and cost of sales (Cont’d)
(b) Revenue and cost of sales from other operations
| 2017 | 2016 | ||||||
| Revenue | Cost | Revenue | Cost | ||||
| Sales of raw materials | 69,908,277 | 29,437,767 | 63,211,682 | 45,044,785 | |||
| Others | 22,735,812 | 3,057,770 | 23,923,507 | 6,592,148 | |||
| 92,644,089 | 32,495,537 | 87,135,189 | 51,636,933 | ||||
(36) Taxes and surtax
| 2017 | 2016 | ||
| City maintenance and construction tax | 33,115,925 | 33,343,735 | |
| Educational surcharge | 26,156,521 | 26,597,418 | |
| Housing property tax | 29,539,408 | 19,980,233 | |
| Land use rights | 21,941,304 | 14,851,345 | |
| Business tax | 5,395,333 | 3,486,149 | |
| Others | 8,375,435 | 4,900,666 | |
| 124,523,926 | 103,159,546 |
(37) Selling expenses
| 2017 | 2016 | ||
| Freight expenses | 159,825,411 | 140,132,227 | |
| Employee benefits | 110,068,886 | 100,367,564 | |
| Entertainment fees | 12,690,770 | 12,607,179 | |
| Business travel expenses | 10,931,013 | 10,738,590 | |
| Vehicle use fee | 7,609,882 | 7,358,948 | |
| Rental expenses | 5,937,331 | 5,376,741 | |
| General office expenses | 3,662,269 | 7,239,581 | |
| Depreciation expenses | 970,739 | 979,874 | |
| Others | 24,435,422 | 17,014,386 | |
| 336,131,723 | 301,815,090 |
Notes to the financial statements for the year ended 31 December 2016
(All amounts in RMB Yuan unless otherwise stated)
- 164 -
4 Notes to the consolidated financial statements (Cont’d)
(38) Administrative expense
| 2017 | 2016 | ||
| Research and development expenses | 330,677,375 | 285,129,442 | |
| Employee benefits | 295,657,274 | 250,150,056 | |
| Depreciation expenses | 65,929,139 | 59,067,087 | |
| Amortisation of intangible assets | 43,884,166 | 36,907,548 | |
| General office expenses | 25,126,422 | 24,313,472 | |
| Taxes | - | 16,957,060 | |
| Labour union funds | 14,696,230 | 11,325,909 | |
| Entertainment fees | 12,027,303 | 10,834,055 | |
| Business travel expenses | 11,074,568 | 10,495,397 | |
| Utility fees | 10,108,470 | 10,065,166 | |
| Canteen costs | 9,357,983 | 8,486,926 | |
| Vehicle use fee | 6,639,769 | 6,141,700 | |
| Rental expenses | 4,551,968 | 3,104,038 | |
| Consulting advisers | 24,935,512 | 9,453,050 | |
| Others | 64,663,593 | 24,158,153 | |
| 919,329,772 | 766,589,059 |
(39) Financial expenses
| 2017 | 2016 | ||
| Interest on borrowings | 344,459,771 | 273,665,849 | |
| Less: Capitalised interest | (29,856,175) | (15,346,518) | |
| Interest expenses | 314,603,596 | 258,319,331 | |
| Less: Interest income | (12,606,285) | (3,193,680) | |
| Exchange losses | 4,780,451 | 249,220 | |
| Others | 9,183,318 | 10,445,698 | |
| 315,961,080 | 265,820,569 |
Notes to the financial statements for the year ended 31 December 2016
(All amounts in RMB Yuan unless otherwise stated)
- 165 -
4 Notes to the consolidated financial statements (Cont’d)
(40) Expenses by nature
The cost of sales, selling and distribution expenses and general and administrative expenses in the income statement arelisted as follows by nature:
| 2017 | 2016 | ||
| Changes in inventories of finished goods and work in progress | (139,651,079) | (111,401,312) | |
| Consumed raw materials and low value consumables, etc. | 4,941,314,821 | 3,245,155,140 | |
| Fuel fee | 1,143,379,014 | 1,059,231,787 | |
| Employee benefits | 1,222,510,952 | 1,196,241,368 | |
| Depreciation and amortisation expenses | 1,002,432,274 | 917,152,746 | |
| Utility fees | 778,033,060 | 830,921,457 | |
| Freight expenses | 159,825,411 | 140,132,227 | |
| Taxes | - | 16,957,060 | |
| General office expenses | 43,816,479 | 45,018,706 | |
| Canteen costs | 39,682,701 | 38,395,686 | |
| Business travel expenses | 26,904,472 | 27,482,191 | |
| Entertainment fees | 26,167,761 | 24,785,451 | |
| Vehicle use fee | 15,851,907 | 15,227,050 | |
| Rental expenses | 10,489,299 | 8,480,779 | |
| Others | 201,062,795 | 176,838,186 | |
| 9,471,819,867 | 7,630,618,522 |
(41) Asset impairment losses
| 2017 | 2016 | ||
| Impaiement of fixed assets | 36,260,304 | 49,894,197 | |
| Bad debts | 6,187,739 | 2,245,583 | |
| Decline in the value of inventories | 68,974 | 6,722,984 | |
| ? Impairment loss in construction under construction | 26,882,738 | - | |
| 69,399,755 | 58,862,764 |
(42) Gain or loss from change in fair value
| 2017 | 2016 | ||
| Financial liabilities at fair value through profit or loss |
Notes to the financial statements for the year ended 31 December 2016
(All amounts in RMB Yuan unless otherwise stated)
- 166 -
| Change in fair value during holding period of derivative financial instruments | - | (9,850,256) | |
| Losses from disposal of derivative financial instruments(Note 4(43)) | - | 238,350,256 | |
| - | 228,500,000 |
Notes to the financial statements for the year ended 31 December 2016
(All amounts in RMB Yuan unless otherwise stated)
- 167 -
4 Notes to the consolidated financial statements (Cont’d)
(43) Investment income
| 2017 | 2016 | ||
| Losses from long-term equity investment under equity method | - | 5,071,685 | |
| Losses from disposal of financial liabilities at fair value through profit or loss | 427,636 | (238,350,256) | |
| Losses from disposal of long-term equity investment | - | (45,909,181) | |
| 427,636 | (279,187,752) |
There is no significant restriction on the remittance of investment income to the Group.
(44) Asset disposal income
| 2017 | 2016 | ||
| Gains on disposal of fixed assets | (1,768,993) | (1,759,358) | |
| (1,768,993) | (1,759,358) |
(45) Other income
| 2017 | 2016 | ||
| Government subsidy amortization | 47,070,175 | -- | |
| Industry support funds | 16,123,793 | -- | |
| Research grants | 6,940,140 | -- | |
| Energy conservation and utilization support funds | 228,116 | -- | |
| Government incentive funds | 12,457,123 | -- | |
| Technological transformation discount | 306,000 | -- | |
| Energy conservation and utilization support funds | 100,000 | -- | |
| Others | 1,116,467 | -- | |
| 84,341,814 | -- |
(46) Non-operating income
| 2017 | 2016 | Amount of non-recurring gains and losses included in 2017 | |||
Notes to the financial statements for the year ended 31 December 2016
(All amounts in RMB Yuan unless otherwise stated)
- 168 -
| Government grants (a) | 3,533,603 | 91,627,439 | 3,533,603 | ||
| Default income | 275,000 | 11,000 | 275,000 | ||
| Compensation income | 15,557,320 | 1,016,936 | 15,557,320 | ||
| Amounts unable to pay | 27,959 | 875,302 | 27,959 | ||
| Others | 1,369,160 | 4,547,962 | 1,369,160 | ||
| 20,763,042 | 98,078,639 | 20,763,042 |
4 Notes to the consolidated financial statements (Cont’d)
(a) Government grants are analysed below:
| 2017 | 2016 | Category | |||
| Government grants amortisation | - | 28,054,929 | Asset-income related | ||
| Industry support fund | - | 26,108,198 | Income related | ||
| Tax returns | - | 25,360,000 | Income related | ||
| Energy-saving award | 414,309 | Income related | |||
| Government awards fund | 2,748,263 | 2,332,700 | Income related | ||
| Subsidies for research and development | - | 4,364,900 | Income related | ||
| Interest subsidy for technological renovation | 600,000 | - | Income related | ||
| Energy-saving fund | - | 3,520,000 | Income related | ||
| Others | 185,340 | 1,472,403 | Income related | ||
| 3,533,603 | 91,627,439 |
(47) Non-operating expenses
| 2017 | 2016 | Amount of non-recurring gains and losses included in 2017 | |||
| Losses on disposal of inventory material | - | 4,096,235 | - | ||
| Compensation | 492,228 | 410,326 | 492,228 | ||
| Donation | 1,118,999 | 120,000 | 1,118,999 | ||
| Others | 3,541,364 | 518,355 | 3,541,364 | ||
| 5,152,591 | 5,144,916 | 5,152,591 |
Notes to the financial statements for the year ended 31 December 2016
(All amounts in RMB Yuan unless otherwise stated)
- 169 -
4 Notes to the consolidated financial statements (Cont’d)
(48) Income tax expenses
| 2017 | 2016 | ||
| Current income tax | 160,923,182 | 140,207,714 | |
| Deferred income tax | 6,747,809 | 11,674,381 | |
| 167,670,991 | 151,882,095 |
The reconciliation from income tax calculated based on the applicable tax rates and total profit presented in theconsolidated income statement to the income tax expenses is listed below:
| 2017 | 2016 | ||
| Total profit | 996,307,026 | 956,108,619 | |
| Income tax expenses calculated at applicable tax rates by company | 149,078,702 | 145,901,167 | |
| Effect of changes in tax rates | - | 4,545,871 | |
| Costs, expenses and losses not deductible for tax purposes | 7,893,473 | 2,227,140 | |
| Income not subject to tax | (33,833) | (855) | |
| Deductible losses for which no deferred tax asset was recognised in current period | 20,825,885 | 25,603,526 | |
| Written-off of deductible losses for which deferred tax asset was recognised previously | - | 1,469,360 | |
| Effect of tax incentives | (13,637,793) | (10,147,358) | |
| Reconciliation of income tax for prior years in annual filing | 3,544,557 | (17,716,756) | |
| Income tax expenses | 167,670,991 | 151,882,095 |
Notes to the financial statements for the year ended 31 December 2016
(All amounts in RMB Yuan unless otherwise stated)
- 170 -
4 Notes to the consolidated financial statements (Cont’d)
(49) Earnings per share
The basic earnings per share is calculated by dividing the net profit attributable to ordinary shareholders of the companyby 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) interest on dilutivepotential ordinary shares that have been recognized as expenses in the current period; (2) dilutive potential ordinary Theincome or expenses that will be generated when the shares are converted; (3) The above-mentioned adjustments relatedto income tax effects.
The denominator of the diluted earnings per share equals the sum of: (1) the weighted average number of ordinary sharesof the parent company in the underlying earnings per share; (2) ordinary shares that are increased assuming the dilutionof potential ordinary shares into common shares The weighted average.
When calculating the weighted average of the number of ordinary shares increased from diluted common stocks toordinary shares, the diluted potential ordinary shares issued during the previous period are assumed to be converted atthe beginning of the current period; diluted potential ordinary shares of the current period are issued. , assuming aconversion on the issue date.
The basic calculation of basic earnings per share and diluted earnings per share are as follows:
| 2017 | 2016 | ||
| Profit | |||
| Consolidated net profit attributable to ordinary shareholders of parent company | 825,388,312 | 797,721,576 | |
| Shares | |||
| Weighted average number of outstanding ordinary | 2,386,635,893 | 2,386,635,893 | |
| Dilution Effect - Weighted average number of ordinary shares | |||
| Stock options | 4,062,986 | - | |
| The weighted average number of ordinary shares issued by the company after adjustment | 2,390,698,879 | 2,386,635,893 |
| Basic earnings per share | 0.35 | 0.33 |
among them：
| - Continuing basic earnings per share | 0.35 | 0.33 | |
| - Termination of basic earnings per share | - | - | |
| Diluted earnings per share | 0.35 | 0.33 |
among them：
Notes to the financial statements for the year ended 31 December 2016
(All amounts in RMB Yuan unless otherwise stated)
- 171 -
| - Continuing basic earnings per share | 0.35 | 0.33 | |
| - Termination of basic earnings per share | - | - |
4 Notes to the consolidated financial statements (Cont’d)
(50) Notes to the cash flow statement
(a) Cash generated by other operating activities
| 2017 | 2016 | ||
| Government grants | 40,805,242 | 38,212,510 | |
| Interest income | 12,606,285 | 3,193,680 | |
| Others | 18,937,040 | 5,871,941 | |
| 72,348,567 | 47,278,131 |
(b) Cash paid relating to other operating activities
| 2017 | 2016 | ||
| Freight expenses | 170,941,469 | 170,991,413 | |
| Canteen costs | 39,682,701 | 38,395,686 | |
| General office expenses | 34,267,447 | 32,516,317 | |
| Research and development expenses | 31,684,954 | 25,191,468 | |
| Business travel expenses | 27,935,416 | 26,421,204 | |
| Entertainment fees | 25,206,039 | 24,573,593 | |
| Vehicle use fee | 15,851,907 | 15,227,050 | |
| Maintenance fee | 25,969,168 | 15,804,981 | |
| Rental expenses | 10,489,299 | 8,480,779 | |
| Insurance | 8,759,738 | 10,750,838 | |
| Bank fees | 9,183,318 | 10,445,698 | |
| Others | 186,004,633 | 173,091,041 | |
| 585,976,089 | 551,890,068 |
(c) Cash generated by other investing activities
| 2017 | 2016 | ||
| Income from trial production of construction in progress | 124,108,255 | 155,174,454 | |
| Final payment of Shenzhen CSG Display’s subdiary equity transfer | - | 150,000,000 |
Notes to the financial statements for the year ended 31 December 2016
(All amounts in RMB Yuan unless otherwise stated)
- 172 -
| Government grants related to assets received | 15,950,000 | 16,351,250 | |
| Land grant funds received | 28,098,000 | 28,098,000 | |
| Insurance claims received | 19,600,000 | - | |
| Government lands refund received | - | 14,891,603 | |
| 187,756,255 | 364,515,307 |
4 Notes to the consolidated financial statements (Cont’d)
(d) Cash paid relating to other investing activities
| 2017 | 2016 | ||
| Trial production expenditure in construction | 156,543,177 | 166,905,113 | |
| The subsidies which Qingyuan energy returns to government | - | 15,300,000 | |
| Deposit | 43,541,859 | - | |
| 200,085,036 | 182,205,113 |
(e) Cash generated by other financing activities
| 2017 | 2016 | ||
| Interest-free borrowing | 1,610,000,000 | - | |
| Income from financing leases | 1,986,000,000 | - | |
| Receiving industrial production dispatch funds | 20,000,000 | - | |
| 3,616,000,000 | - |
(f) Cash payments relating to other financing activities
| 2017 | 2016 | ||
| Repay financing leases | 104,821,449 | - | |
| Pay for industrial production scheduling funds | 31,000,000 | - | |
| Return interest-free loan | 1,610,000,000 | - |
Notes to the financial statements for the year ended 31 December 2016
(All amounts in RMB Yuan unless otherwise stated)
- 173 -
| Deposit | 5,030,994 | - | |
| Payment of loan, security and fee for bills | 32,257,231 | - | |
| 1,783,109,674 | - |
4 Notes to the consolidated financial statements (Cont’d)
(51) Supplementary information to the cash flow statement
(a) Reconciliation from net profit to cash flows from operating activities
| 2017 | 2016 | ||
| Net profit | 828,636,035 | 804,226,524 | |
| Add: Provision for asset impairment | 69,399,755 | 58,862,764 | |
| Depreciation of fixed assets | 957,475,579 | 879,345,692 | |
| Amortisation of intangible assets | 43,884,166 | 36,907,548 | |
| Net movements of safety production costs | (2,618,535) | (9,594,025) | |
| Amortisation of long-term prepaid expenses | 1,072,529 | 899,506 | |
| Net losses/(gains) on disposal of fixed assets and intangible assets | 8,194,695 | - | |
| Employee compensation based on shares | 1,768,993 | 1,759,358 | |
| Financial expenses | 314,603,596 | 258,319,331 | |
| Investment income/(loss) | (427,636) | 279,187,752 | |
| Decrease/(increase) in deferred tax assets | 15,578,992 | 13,884,362 | |
| Increase/(decrease) in deferred tax liabilities | (8,833,183) | (2,209,981) | |
| (Increase)/decrease in inventories | - | (228,500,000) | |
| Decrease/(increase) in operating receivables | (201,257,769) | (71,720,745) | |
| Increase in operating payables | (206,859,922) | (259,804,129) |
Notes to the financial statements for the year ended 31 December 2016
(All amounts in RMB Yuan unless otherwise stated)
- 174 -
| Increase in operating receivables | 642,828,861 | 479,288,163 | |
| Net cash flows from operating activities | 2,463,446,156 | 2,240,852,120 |
(b) Net increase/(decrease) in cash
| 2017 | 2016 | ||
| Cash and cash equivalents at end of year | 2,459,753,165 | 584,566,990 | |
| Less: Cash and cash equivalents at beginning of year | (584,566,990) | (574,744,877) | |
| Net increase in cash and cash equivalents | 1,875,186,175 | 9,822,113 |
(c) Cash and cash equivalents
| 31 December 2017 | 31 December 2016 | ||
| Cash | |||
| - Cash on hand | 36,182 | 17,239 | |
| - Bank deposits that can be readily drawn on demand | 2,409,716,983 | 584,549,751 | |
| - Other cash balances that can be readily drawn on demand | 50,000,000 | - | |
| Cash at end of year | 2,459,753,165 | 584,566,990 |
4 Notes to the consolidated financial statements (Cont’d)
(52) Assets with restricted ownership or use rights
| 2017 | 2016 | Reason | ||
| Monetary assets | 2,852,599 | 2,236,515 | Restricted deposit flow | |
| Property,plant and equipment | 2,369,789,041 | - | Limited finance lease | |
| 2,372,641,640 | 2,236,515 |
(53) Monetary items denominated in foreign currencies
| 31 December 2017 | |||||
| Balances denominated in foreign currencies | Exchange rates | Balances denominated in RMB | |||
Notes to the financial statements for the year ended 31 December 2016
(All amounts in RMB Yuan unless otherwise stated)
- 175 -
| Cash at bank and on hand - | |||||
| HKD | 7,314,730 | 0.8359 | 6,114,383 | ||
| USD | 11,343,508 | 6.5342 | 74,120,750 | ||
| EUR | 675 | 7.8023 | 5,267 | ||
| JPY | 309,620 | 0.0579 | 17,927 | ||
| AUD | 17,439 | 5.0928 | 88,813 | ||
| 80,347,140 | |||||
| Accounts receivable - | |||||
| HKD | 11,549,666 | 0.8359 | 9,654,366 | ||
| USD | 19,490,453 | 6.5342 | 127,354,518 | ||
| EUR | 946,785 | 7.8023 | 7,387,101 | ||
| 144,395,985 | |||||
| Short-term borrowings - | |||||
| HKD | 75,000,000 | 0.8359 | 62,692,500 | ||
| Accounts payable - | |||||
| HKD | 307 | 0.8359 | 257 | ||
| USD | 15,922,406 | 6.5342 | 104,040,185 | ||
| EUR | 2,642,275 | 7.8023 | 20,615,822 | ||
| JPY | 281,927,203 | 0.0579 | 16,323,585 | ||
| 140,979,849 |
5 The changes of consolidation scope
The Group established a subsidiary company, China CGS (AUSTRILIA) PTY LTD, on 31 December 2017, and the Grouphas not invested yet. The Company holds 100% of its shares.
Notes to the financial statements for the year ended 31 December 2016
(All amounts in RMB Yuan unless otherwise stated)
- 176 -
6 Interest in other entities
(1) Interest in subsidiaries
(a) Structure of the enterprise group
As at 31 December 2017, information of the Company’s major subsidiaries is set out below:
| Major business location | Place of registration | Scope of business | Shareholding (%) | ||
| Direct | Indirect | ||||
| Chengdu CSG | Chengdu, PRC | Chengdu, PRC | Development, production and sales of special glass | 75% | 25% |
| Sichuan CSG Energy Conservation | Chengdu, PRC | Chengdu, PRC | Development, production and sales of special glass and processing of glass | 75% | 25% |
| Tianjin Energy Conservation | Tianjin, PRC | Tianjin, PRC | Development, production and sales of special glass | 75% | 25% |
| Dongguan CSG | Dongguan, PRC | Dongguan, PRC | Intensive processing of glass | 75% | 25% |
| Dongguan CSG Solar | Dongguan, PRC | Dongguan, PRC | Production and sales of solar glass | 75% | 25% |
| Dongguan CSG PV-tech | Dongguan, PRC | Dongguan, PRC | Production and sales of hi-tech green battery and components | - | 100% |
| Yichang CSG Silicon | Yichang, PRC | Yichang, PRC | Production and sales of high-purity silicon materials | 75% | 25% |
| Wujiang CSG | Wujiang, PRC | Wujiang, PRC | Intensive processing of glass | 75% | 25% |
| Hebei CSG | Yongqing, PRC | Yongqing, PRC | Production and sales of special glass | 75% | 25% |
| Wujiang CSG | Wujiang, PRC | Wujiang, PRC | Production and sales of special glass | 100% | - |
| China Southern Glass (Hong Kong) Limited | Hong Kong, PRC | Hong Kong, PRC | Investment holding | 100% | - |
| Hebei Shichuang | Yongqing, PRC | Yongqing, PRC | Production and sales of ultra-thin electronic glass | 100% | - |
| Xianning CSG | Xianning, PRC | Xianning, PRC | Production and sales of special glass | 75% | 25% |
| Xianning CSG Energy-Saving | Xianning, PRC | Xianning, PRC | Intensive processing of glass | 75% | 25% |
| Qingyuan CSG Energy-Saving | Qingyuan, PRC | Qingyuan, PRC | Production and sales of ultra-thin electronic glass | 100% | - |
| Shenzhen CSG Financial Leasing Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Finance leasing, etc. | 75% | 25% |
| Jiangyou CSG Mining Development Co. Ltd. | Jiangyou, PRC | Jiangyou, PRC | Production and sales of silica and its by-products | 100% | - |
| Shenzhen CSG PV Energy Co., Ltd. | Shenzhen, PRC | Shenzhen, PRC | Investment management of photovoltaic plant | 100% | - |
| Qingyuan CSG New Energy Co., Ltd. | Qingyuan, PRC | Qingyuan, PRC | Clean energy development, photovoltaic power generation | - | 100% |
| Suzhou CSG PV-tech Co., Ltd. | Wujiang, PRC | Wujiang, PRC | Clean energy development, photovoltaic power generation | - | 100% |
| Wujiang CSG New Energy Co., Ltd. | Wujiang, PRC | Wujiang, PRC | Clean energy development, photovoltaic power generation | - | 100% |
| Yichang CSG New Energy Co., Ltd | Yichang, PRC | Yichang, PRC | Clean energy development, photovoltaic power generation | - | 100% |
| Shenzhen CSG Display: | Shenzhen, PRC | Shenzhen, PRC | Production and sales of display component products | 60.80% | - |
| Xianning CSG Photoelectric | Xianning, PRC | Xianning, PRC | Photoelectric glass and high aluminium glass | 37.50% | 62.50% |
Notes to the financial statements for the year ended 31 December 2016
(All amounts in RMB Yuan unless otherwise stated)
- 177 -
6 Interest in other entities (Cont'd)
(1) Interest in subsidiaries (Cont'd)
(b) Subsidiaries with significant minority interests
| Subsidiaries | Shareholding of minority shareholders | Profit or loss attributable to minority shareholders for the year ended 31 December 2017 | Dividends distributed to minority shareholders for the year ended 31 December 2017 | Minority interests as at 31 December 2017 |
| Shenzhen CSG Display | 39.20% | (436,287) | 2,488,500 | 302,902,364 |
The major financial information of the significant non-fully-owned subsidiaries of the Group is listed below:
| 31 December 2017 | |||||||||
| Current assets | Non-current assets | Total assets | Current liabilities | Non-current liabilities | Total liabilities | ||||
| Shenzhen CSG Display | 230,735,047 | 1,384,202,485 | 1,614,937,532 | 588,962,555 | 237,351,982 | 826,314,537 | |||
| 2017 | |||||||||
| Revenue | Net profit | Total comprehensive income | Cash flows from operating activities | ||||||
| Shenzhen CSG Display | 563,191,871 | 14,127,082 | 14,127,082 | 91,246,186 | |||||
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 178 -
7 Segment information
To meet operating strategies and requirements of business development, the Group adjusted its operating
structure in current year. The Group’s management allocated resources, Estimated segment performance,
updated reporting segment, and disclosed segment information according to revised operating segments in currentyear. Segment information of prior year had been restated in accordance with updated reporting segments.
Before the revision, the Group's business activities are categorised by product or service as follows:
- Flat glass segment, engaged in production and sales of float glass and the silica for the production
thereof, etc.- Engineering glass segment, engaged in manufacturing and sales of engineering glass, etc.- Solar energy segment, engaged in manufacturing and sales of polycrystalline silicon and solar
battery and applications, etc.
After the revision, the Group's business activities are categorised by product and service as follows:
- Glass segment, engaged in production and sales of float glass and engineering glass and 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. Differentbusinesses require different technologies and marketing strategies. The Group, therefore, separately manages theproduction and operation of each reportable segment and Estimates their operating results respectively, in order tomake decisions about resources to be allocated to these segments and to assess their performance.
Inter-segment transfer prices are measured by reference to selling prices to third parties.
The assets are allocated based on the operations of the segment and the physical location of the asset. Theliabilities are allocated based on the operations of the segment. Expenses indirectly attributable to each segment
are allocated to the segments based on the proportion of each segment’s revenue.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 179 -
7 Segment information (Cont’d)
(a) Segment information as at and for the year ended 31 December 2017 is as follows:
| Flat glass | Electronic glass and displays | Solar energy | Others | Unallocated | Elimination | Total | |||||||||
| Revenue from external customers | 6,954,683,103 | 873,166,517 | 3,050,921,865 | - | 629,261 | - | 10,879,400,746 | ||||||||
| Inter-segment revenue | 97,227,192 | 701,963 | 74,689,369 | - | 58,058,305 | (230,676,829) | - | ||||||||
| Interest income | 1,152,232 | 146,973 | 262,942 | 608 | 11,043,530 | - | 12,606,285 | ||||||||
| Interest expenses | (153,982,540) | (32,003,353) | (79,797,858) | - | (54,488,918) | 5,669,073 | (314,603,596) | ||||||||
| Asset impairment losses | (20,109,566) | (352,808) | (48,857,162) | - | (80,219) | - | (69,399,755) | ||||||||
| Depreciation and amortisation expenses | (601,774,748) | (132,769,853) | (261,527,443) | (107,198) | (6,253,032) | - | (1,002,432,274) | ||||||||
| Total profit/(loss) | 827,335,674 | 80,463,836 | 218,437,923 | (110,328) | (124,292,481) | (5,527,598) | 996,307,026 | ||||||||
| Income tax (expenses)/income | (118,701,953) | (21,223,939) | (23,950,456) | (3,794,643) | - | (167,670,991) | |||||||||
| Net profit/(loss) | 708,633,721 | 59,239,897 | 194,487,467 | (110,328) | (128,087,124) | (5,527,598) | 828,636,035 | ||||||||
| Total assets | 9,121,982,895 | - | 3,032,467,443 | 4,969,121,408 | 664,853 | 2,410,765,769 | - | 19,535,002,368 |
| Total liabilities | 3,453,100,959 | - | 856,548,520 | 1,640,361,900 | 2,502,814 | 4,802,865,064 | - | 10,755,379,257 | |||||||
| Increase in non-current assets (i) | 160,029,169 | 459,791,787 | 629,473,708 | - | 2,875,254 | - | 1,252,169,918 | ||||||||
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 180 -
7 Segment information (Cont’d)
(b) Segment information as at and for the year ended 31 December 2016 is as follows:
| Flat glass | Electronic glass and displays | Solar energy | Others | Unallocated | Elimination | Total | ||||||||
| Revenue from external customers | 6,248,986,019 | 432,923,679 | 2,291,096,315 | - | 1,077,394 | - | 8,974,083,407 | |||||||
| Inter-segment revenue | 53,644,824 | 533,611 | 29,140,901 | - | 21,504,477 | (104,823,813) | - | |||||||
| Interest income | 709,739 | 169,281 | 215,863 | 69 | 3,680,920 | (1,582,192) | 3,193,680 | |||||||
| Interest expenses | (141,501,800) | (20,216,385) | (80,249,948) | - | (22,179,393) | 5,828,195 | (258,319,331) | |||||||
| Investment income from associates | - | - | - | - | 5,071,685 | - | 5,071,685 | |||||||
| Asset impairment losses | (1,347,361) | (6,474,743) | (52,808,413) | - | 1,767,753 | - | (58,862,764) | |||||||
| Depreciation and amortisation expenses | (579,880,012) | (89,743,215) | (240,386,653) | - | (7,142,866) | - | (917,152,746) | |||||||
| Change in fair value of derivative financial instruments | - | - | - | - | - | (9,850,256) | - | (9,850,256) | ||||||
| Total profit/(loss) | 870,911,083 | 19,861,854 | 246,515,279 | (64,601) | (179,348,714) | (1,766,282) | 956,108,619 | |||||||
| Income tax (expenses)/income | (115,934,739) | (9,777,225) | (26,285,679) | - | 115,548 | - | (151,882,095) | |||||||
| Net profit/(loss) | 754,976,344 | 10,084,629 | 220,229,600 | (64,601) | (179,233,166) | (1,766,282) | 804,226,524 | |||||||
| Total assets | 9,002,421,342 | - | 2,594,860,320 | 4,476,309,055 | 135,161 | 1,073,089,752 | - | 17,146,815,630 | ||||||
| Total liabilities | 1,789,702,282 | - | 566,783,261 | 519,338,730 | 2,502,814 | 6,139,297,524 | - | 9,017,624,611 | ||||||
| Increase in non-current assets (i) | 368,179,542 | 1,539,319,460 | 652,019,325 | - | 4,578,555 | - | 2,564,096,882 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 181 -
7 Segment information (Cont’d)
The Group’s revenue from external customers domestically and in foreign countries or geographical areas, and the
total non-current assets other than financial assets and deferred tax assets located domestically and in foreigncountries or geographical areas are as follows:
| Revenue from external customers | 2017 | 2016 | |
| Mainland | 9,506,249,433 | 7,971,929,246 | |
| Hong Kong, PRC | 434,551,436 | 135,128,604 | |
| Europe | 26,534,686 | 25,914,385 | |
| Asia (other than Mainland and Hong Kong) | 848,958,711 | 614,806,258 | |
| Australia | 37,937,222 | 37,437,349 | |
| North America | 6,030,936 | 134,941,952 | |
| Other regions | 19,138,322 | 53,925,613 | |
| 10,879,400,746 | 8,974,083,407 |
| Total non-current assets | 31 December 2017 | 31 December 2016 | |
| Mainland | 14,505,740,522 | 14,392,447,014 | |
| Hong Kong, PRC | 12,798,642 | 12,551,254 | |
| 14,518,539,164 | 14,404,998,268 |
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
Shenzhen CSG Display company is a joint venture of the Company, and it became a subsidiary of our company onJune 3, 2016. Prior to June 3, 2016, the related transaction between Shenzhen CSG Display company and theGroup is noted, as indicated in note 8 (5).
On December 31, 2017, the Company has no joint venture.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 182 -
8 Related parties and related party transactions (Cont’d)
(4) Other related parties information
| Relationship with the Group | ||
| Shenzhen Jushenghua Co., Ltd. (“Jushenghua”) | Persons acting in concert with the first majority shareholder of the Group | |
| Shenzhen Qianhai Ruinan Investment LLP | Controlled by the former key management personnel of the Croup | |
| Yichang Hongtai Real Estate Co. Ltd | Other related parties and their affiliates | |
(5) Related party transactions
(a) Purchase and sales of goods, provision and receiving of labour
| Related parties | Related party transactions | Pricing policies | 2017 | 2016 | |
| Shenzhen CSG Display | Purchase of materials | Refer to market price | - | 608,722 | |
| Shenzhen CSG Display | Sales of goods | Refer to market price | - | 1,500,899 | |
| Xianning CSG Photoelectric | Sales of special glass | Refer to market price | - | 2,349,353 | |
| - | 4,458,974 |
(b) Leases
The Group as the lessor:
| Name of the lessee | Category of the leased asset | Lease income recognised in 2017 | Lease income recognised in 2016 | |
| Shenzhen CSG Display | Equipment under finance leases | - | 2,359,961 | |
| - | 2,359,961 |
(c) Gains on equity transfer
None
(d) Acquisition of equity
| Related parties | Related party transactions | Pricing principle | 2017 | 2016 | |
| Shenzhen Qianhai | Acquire 37.5% of | Refer to fair value | - | 38,250,000 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 183 -
| Ruinan Investment LLP | Xianning CSG Photoelectric’s equity | of the equity |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 184 -
8 Related parties and related party transactions (Cont’d)
(5) Related party transactions
(e) Advances paid on behalf of related parties
| Related parties | Related party transactions | Pricing policies | 2017 | 2016 | |
| Shenzhen CSG Display | Advances of electric charge | Refer to market price | - | 8,168,076 | |
(f) Remuneration of key management
| 2017 | 2016 | ||
| Remuneration | 12,030,000 | 10,914,002 |
(6) Receivables from related parties
| December 31, 2017 | December 31, 2016 | |||||||
| Book balance | Bad debt preparation | Book balance | Bad debt preparation | |||||
| Other receivables | Yichang Hongtai Real Estate Company | 171,000,000 | (3,420,000) | 171,000,000 | (3,420,000) | |||
(7) Commitments in relation to related parties
The commitments in relation to related parties contracted for but not yet necessary to be recognised on thebalance sheet by the Group as at the balance sheet date are as follows:
| Related parties | Related party transactions | Restrictive terms on borrowings | 2017 | 2016 | |
| Shenzhen Jushenghua Co., Ltd. (“Jushenghua”) | Facility of interest-free loans provided for the Company | Nil | 2,000,000,000 | 2,000,000,000 |
On 22 November 2016, the Company received a letter from its shareholder, Jushenghua, stating that to support the
Group’s steady operation and development, Jushenghua, as the shareholder of the Company, would like to offer
interest-free borrowings with the total amount of RMB2 billion to the Company or through related partiesdesignated by it. For any borrowing drawn, its repayment date is negotiated by the Company and Jushenghuaupon withdrawal. When a borrowing is due, if an extension is needed, the Company can apply to the actual lender
based on the Company’s operation; where the actual lender agrees with the extension application, the term of the
borrowing is extended accordingly. The shareholder provided RMB 1 billion 610 million interest free loan to thegroup in the current year, which has been returned to all in December 31, 2017.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 185 -
9 Share Payment
1. Overall situation of share payment
| The total number of equity instruments granted by the company in the current period Restricted shares | 97,511,654 shares |
| Total amount of various equity instruments that the company exercises during the current period | - |
| The total number of various equity instruments that have failed in the current period | - |
| The scope of the company’s outstanding share options and the remaining duration of the contract at the end of the period | - |
| The scope of the company's exercise of other equity instruments at the end of the period and the remaining duration of the contract | - |
Note: On December 11, 2017, reviewed and approved by the Group's eighth session of the Board of Directors, theGroup implemented the 2017 A Share Restricted Stock Incentive Plan. The incentive targets for the restrictedshares granted under this plan include company directors and senior management personnel. A total of 454 coremanagement teams, company technology members and main employees. The first grant date of this restrictedstock was December 11, 2017. The company granted 97,511,654 restricted shares for the first time to 454incentive targets. The initial grant price was 4.28RMB per share. Reserved restricted stock ending balance17,046,869 shares, the grant price has not been determined. The shares granted of the first time has beenregistered and listed.
This incentive plan is valid for 48 months from the date of grant of the restricted stock to the date of unlocking of allrestricted stocks or the completion of repurchase and cancellation. During the unlocking/exercise period, if theunlocking/exercise condition specified in the incentive plan is reached, the restricted stock granted is unlocked inthree phases after 12 months from the grant date.
The unlock period is shown in the following table:
| Unlock Schedule | Unlock Time | Unlock Ratio |
| First unlock | from the date of the first transaction 12 months after the award date to the date of the last transaction within 24 months from the grant date. | 40% |
| Second unlock | from 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 date | 30% |
| Third unlock | from the date of the first trading day 36 months after the grant date to the day of the last trading day within 48 months from the grant date | 30% |
9 Share Payment (Cont’d)
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 186 -
2. Equity-settled share payment
| Method for Determining the Fair Value of Equity Instruments on the Grant Date | Black-Scholes Model |
| Determination of the best estimate of the number of vesting equity instruments | Based 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 estimates | Not applicable |
| Cumulative amount of equity-settled share-based payment in capital reserves | 8,194,695 |
| Total equity confirmed by equity-settled share-based payment in this period | 8,194,695 |
According to the relevant provisions of Accounting Standards for Business Enterprises No. 11 - Share Paymentand Enterprise Accounting Standard No. 22 - Recognition and Measurement of Financial Instruments, the Groupuses the Black-Scholes model (BS model) as a pricing model, deducting incentive objects. The fair value of therestricted stock will be used after the lock-in costs that are required to obtain the rational expected return from thesales restriction period are lifted in the future. The Group will, on each balance sheet date of the lock-in period,revise the number of restricted stocks that are expected to be unlockable based on the newly obtained changes inthe number of unlockable 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 expenses and capitalreserves.
The Group actually granted restricted stocks of 97,511,654 shares in 2017, and the total fair value of the equityinstruments granted to the incentive target for the first day of grant was RMB 289,519,900, the total fair value asthe total cost of the company's equity incentive plan will be confirmed in stages according to the unlocking/exercise
ratio during the implementation of the equity incentive plan, and will be included in the “management fees” and“capital” of each period accordingly.
In 2017, the Group achieved conditions for unlocking restricted stocks. In the current period, the relevant costsharing amount of the incentive plan was recognized as RMB 8,194,695.
10 Contingencies
Nil.
11 Commitments
(1) Capital commitments
Capital expenditures contracted for by the Group at the balance sheet date but are not yet necessary to berecognized on the balance sheet are as follows:
| 31 December 2017 | 31 December 2016 | |||
| Buildings, machinery and equipment | 150,418,893 | 280,938,401 |
11 Commitments (Cont’d)
(2) Operating lease commitments
The future minimum lease payments due under the signed irrevocable operating leases contracts are summarized
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 187 -
as follows:
| 31 December 2017 | 31 December 2016 | ||
| Within 1 year | 3,675,748 | 1,142,713 | |
| 1 to 2 years | 1,914,948 | 831,008 | |
| 2 to 3 years | 1,472,224 | 273,320 | |
| Over 3 years | 3,443,641 | 282,534 | |
| 10,506,561 | 2,529,575 |
12 Events after the balance sheet date
Statement of profit distribution after balance sheet date
| Amount | |
| Proposed distribution of cash dividends | 124,207,377 |
Pursuant to the resolution of the board of directors dated April 20, 2018, the board of directors proposed that thecompany distribute cash dividends of RMB 124,207,377 to all shareholders, which has not yet been recognized as aliability in the financial statements. In addition, the board of directors proposes to use the capital of 2,484,147,547 asthe base to transfer 1.5 shares for every 10 shares to all shareholders in a total of 372,622,132 shares, which hasnot yet been reclassified as capital in the financial statements.
13 Financial instrument and risk
The Group's activities expose it to a variety of financial risks: market risk (primarily foreign exchange risk and interestrate risk), credit risk and liquidity risk. The Group's overall risk management program focuses on the unpredictabilityof financial markets and seeks to minimize potential adverse effects on the Group's financial performance.
(1) Market risk
(a) Foreign exchange risk
The Group’s major operational activities are carried out in Mainland China and a majority of the transactions are
denominated in RMB. Some export business, however, is denominated in foreign currencies. In addition, theGroup is exposed to foreign exchange risk arising from the recognized assets and liabilities, and futuretransactions denominated in foreign currencies, primarily with respect to US dollars and Hong Kong dollar. TheGroup monitors the scale of foreign currency transactions, foreign currency assets and liabilities, and adjustsettlement currency of export business, to furthest reduce the currency risk.
As at 31 December 2017, book values in RMB equivalent of the Group’s assets and liabilities denominated in
foreign currencies are summarized below:
13 Financial instrument and risk (Cont’d)
(1) Market risk (Cont'd)
| 31 December 2017 | |||||||
| USD | HKD | Others | Total | ||||
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 188 -
| Financial assets denominated in foreign currency - | |||||||
| Cash at bank and on hand | 74,120,750 | 6,114,383 | 112,007 | 80,347,140 | |||
| Receivables | 127,354,518 | 9,654,366 | 7,387,101 | 144,395,985 | |||
| 201,475,268 | 15,768,749 | 7,499,108 | 224,743,125 | ||||
| Financial liabilities denominated in foreign currency - | |||||||
| Short-term borrowings | - | 62,692,500 | - | 62,692,500 | |||
| Payables | 104,040,185 | 257 | 36,939,407 | 140,979,849 | |||
| 104,040,185 | 62,692,757 | 36,939,407 | 203,672,349 |
| 31 December 2016 | |||||||
| USD | HKD | Others | Total | ||||
| Financial assets denominated in foreign currency - | |||||||
| Cash at bank and on hand | 24,360,614 | 5,551,402 | 840,393 | 30,752,409 | |||
| Receivables | 105,742,398 | - | 6,917,969 | 112,660,367 | |||
| 130,103,012 | 5,551,402 | 7,758,362 | 143,412,776 | ||||
| Financial liabilities denominated in foreign currency - | |||||||
| Short-term borrowings | - | 67,087,500 | - | 67,087,500 | |||
| Payables | 74,140,797 | 275 | 24,217,998 | 98,359,070 | |||
| 74,140,797 | 67,087,775 | 24,217,998 | 165,446,570 | ||||
As at 31 December 2017, if the currency had strengthened/weakened by 10% against the USD while all other
variables had been held constant, the Group’s net profit for the year would have been approximately
RMB8,281,982 lower/higher (31 December 2016: approximately RMB4,756,788 lower/higher) for various financialassets and liabilities denominated in USD.
As at 31 December 2017, if the currency had strengthened/weakened by 10% against the HKD while all other
variables had been held constant, the Group’s net profit for the year would have been approximately
RMB3,988,541 higher/lower (31 December 2016: approximately RMB5,230,592higher/lower ) for various financialassets and liabilities denominated in HKD.
Other changes in exchange rate had no significant influence on the Group's operating activities.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 189 -
13 Financial instrument and risk (Cont’d)
(1) Market risk (Cont'd)
(b) interest rate risk
The Group's interest rate risk arises from long-term interest bearing debts including long-term borrowings andbonds payable. Financial liabilities issued at floating rates expose the Group to cash flow interest rate risk.Financial liabilities issued at fixed rates expose the Group to fair value interest rate risk. The Group determines therelative proportions of its fixed rate and floating rate contracts depending on the prevailing market conditions. As at
31 December 2017, the Group’s long-term interest-bearing debts at and fixed rates and floating rates are illustrated
below:
| 31 December 2017 | 31 December 2016 | ||
| Debt at fixed rates | 1,425,000,000 | 1,380,000,000 | |
| Debt at floating rates | 129,120,000 | 58,660,000 | |
| 1,554,120,000 | 1,438,660,000 |
The Group continuously monitors the interest rate position of the Group. Increases in interest rates will increase
the cost of new borrowing and the interest expenses with respect to the Group’s outstanding floating rateborrowings, and therefore could have a material adverse effect on the Group’s financial position. The Group makes
adjustments timely with reference to the latest market conditions, which includes increasing/decreasing long-termfixed rate debts at the anticipation of increasing/decreasing interest rate.
(2) Credit risk
Credit risk is managed on the grouping basis. Credit risk mainly arises from cash at bank, notes receivable,accounts receivable, other receivables.
The Group expects that there is no significant credit risk associated with cash at bank since they are mainlydeposited at state-owned banks and other medium or large size listed banks. Management does not expect that
there will be any significant losses from non-performance by these counterparties. Furthermore, as the Group’s
bank acceptance notes receivable are generally accepted by the state-owned banks and other large and mediumlisted banks, management believes the credit risk should be limited.
In addition, the Group has policies to limit the credit exposure on accounts receivable, other receivables and tradeacceptance notes receivable. The Group assesses the credit quality of and sets credit limits on its customers bytaking into account their financial position, the availability of guarantee from third parties, their credit history andother factors such as current market conditions. The credit history of the customers is regularly monitored by theGroup. In respect of customers with a poor credit history, the Group will use written payment reminders, or shortenor cancel credit periods, to ensure the overall credit risk of the Group is limited to a controllable extent.
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 190 -
13 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’s financedepartment in its headquarters. The Group’s finance department at its headquarters monitors rolling forecasts of
the Group's short-term and long-term liquidity requirements to ensure it has sufficient cash reserve, whilemaintaining sufficient headroom on its undrawn committed borrowing facilities from major financial institutions sothat the Group does not breach borrowing limits or covenants on any of its borrowing facilities to meet theshort-term and long-term liquidity requirements.
As stated in Note 2(1) above, as at 31 December 2017, the Group had net current liabilities of approximatelyRMB2.52 billion and committed capital expenditures of approximately RMB0.15 billion. Management willimplement the following measures to ensure the liquidation risk limited to a controllable extent:
(a) The Group will have steady cash inflows from operating activities;(b) The Group will pay the debts that mature and finance the construction projects through the existing bank
facilities;(c) The Group will closely monitoring the payment of construction expenditure in terms of payment time and
amount.
The financial liabilities of the Group at the balance sheet date are analyzed by their maturity date below at theirundiscounted contractual cash flows:
| 31 December 2017 | |||||||||
| Within 1 year | 1 to 2 years | 2 to 5years | Over 5 years | Total | |||||
| Short-term borrowings | 3,810,013,826 | - | - | - | 3,810,013,826 | ||||
| Notes payable | 213,401,622 | - | - | - | 213,401,622 | ||||
| Accounts payable | 1,400,166,042 | - | - | - | 1,400,166,042 | ||||
| Interest payable | 34,032,740 | - | - | - | 34,032,740 | ||||
| Other payables | 619,324,354 | - | - | - | 619,324,354 | ||||
| Other current liabilities | 300,000 | - | - | - | 300,000 | ||||
| Current portion of non-Current liabilities | 911,348,902 | - | - | - | 911,348,902 | ||||
| Long-term payables | - | 600,436,759 | 561,357,488 | - | 1,161,794,247 | ||||
| Long-term borrowings | 80,169,450 | 117,889,436 | 1,580,649,809 | - | 1,778,708,695 | ||||
| 7,068,756,936 | 718,326,195 | 2,142,007,297 | - | 9,929,090,428 | |||||
| 31 December 2016 | |||||||||
| Within 1 year | 1 to 2 years | 2 to 5 years | Over 5 years | Total | |||||
| Short-term borrowings | 4,043,966,809 | - | - | - | 4,043,966,809 | ||||
| Notes payable | 20,000,000 | - | - | - | 20,000,000 | ||||
| Accounts payable | 1,169,869,370 | - | - | - | 1,169,869,370 | ||||
| Interest payable | 78,225,904 | - | - | - | 78,225,904 | ||||
| Other payables | 188,321,450 | - | - | - | 188,321,450 | ||||
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 191 -
| Other current liabilities | 300,000 | - | - | - | 300,000 | ||||
| Current portion of non-current liabilities | 1,068,336,787 | - | - | - | 1,068,336,787 | ||||
| Long-term borrowings | 73,188,850 | 290,439,172 | 1,287,871,345 | - | 1,651,499,367 | ||||
| 6,642,209,170 | 290,439,172 | 1,287,871,345 | - | 8,220,519,687 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 192 -
14 Fair value estimates
Based on the lowest level input that is significant to the fair value measurement in its entirety, the fair valuehierarchy has the following levels:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, eitherdirectly or indirectly.
Level 3: Unobservable inputs for the asset or liability.
(a) Financial instruments measured at fair value
As of 31 December 2017, the group has no assets measured at fair value.
(b) Financial instruments not measured but disclosed at fair value
The group’s financial assets and financial liabilities measured at amortized cost mainly include: accounts
receivable, short-term borrowings, accounts payable, long term borrowings, bonds payable , long-term payables,ect.
Except for financial liabilities listed below, book value of the other financial assets and liabilities not measured atfair value is a reasonable approximation of their fair value.
| 31 December 2017 | 31 December 2016 | ||||||
| Carrying amount | Fair value | Carrying amount | Fair value | ||||
| Financial liabilities | |||||||
| Corporate bonds payable | - | - | 1,000,000,000 | 1,009,177,000 | |||
| Medium term notes | 1,200,000,000 | 1,171,444,800 | 1,200,000,000 | 1,175,308,800 | |||
| 1,200,000,000 | 1,171,444,800 | 2,200,000,000 | 2,184,485,800 | ||||
The fair values of payables and medium-term notes are the present value of the contractually determined stream offuture cash flows at the rate of interest applied at that time by the market to instruments of comparable credit statusand providing substantially the same cash flows on the same terms, thereinto bonds payable belongs to Level 1and medium term notes belong to Level 2.
15 Capital management
The Group’s capital management policies aim to safeguard the Group’s ability to continue as a going concern in
order to provide returns for shareholders and benefits for other stakeholders, and to maintain an optimal capitalstructure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid toshareholders, refund capital to shareholders, issue new shares or sell assets to reduce debts.
The Group is not subject to external mandatory capital requirements, and monitors capital on the basis of gearingratio.
As at 31 December 2017 and 31 December 2016, the Group's gearing ratio is as follows:
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 193 -
| 31 December 2017 | 31 December 2016 | ||
| Total liabilities | 10,755,379,257 | 9,017,624,611 | |
| Total assets | 19,535,002,368 | 17,146,815,630 | |
| Gearing ratio | 55% | 53% |
16 Notes to the Company’s financial statements
(1) Other receivables
| 31 December 2017 | 31 December 2016 | ||
| Receivables from related parties | 2,399,392,648 | 4,033,706,419 | |
| Others | 4,451,192 | 423,416 | |
| 2,403,843,840 | 4,034,129,835 | ||
| Less: Provision for bad debts | (3,509,024) | (3,428,806) | |
| 2,400,334,816 | 4,030,701,029 |
(a) The ageing of other receivables is analysed as follows:
| 31 December 2017 | 31 December 2016 | ||
| Within 1 year | 2,232,668,334 | 3,863,129,835 | |
| Over 1year | 171,175,506 | 171,000,000 | |
| 2,403,843,840 | 4,034,129,835 |
As at 31 December 2017, the Company had no overdue but not impaired other receivables (31December 2016: Nil).
(b) Other receivables are analysed by categories as follows:
| 31 December 2017 | 31 December 2016 | ||||||||||
| Carrying amount | Provision for bad debts | Carrying amount | Provision for bad debts | ||||||||
| Amount | % of total balance | Provision for bad debts | % | Amount | % of total balance | Provision for bad debts | % | ||||
| Provision for bad debts by groupings | |||||||||||
| - Group 1 | 4,451,192 | - | (89,024) | 2% | 423,416 | - | (8,806) | 2% | |||
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 194 -
| - Group 2 | 2,399,392,648 | 100% | (3,420,000) | - | 4,033,706,419 | 100% | (3,420,000) | - | |||
| 2,403,843,840 | 100% | (3,509,024) | - | 4,034,129,835 | 100% | (3,428,806) | - |
(c) or other receivables provided for bad debts by portfolio, the percentage of provision for the portfolio is as
follows:
| 31 December 2017 | 31 December 2016 | ||||||||
| Carrying amount | Provision for bad debts | Carrying amount | Provision for bad debts | ||||||
| Amount | Amount | % | Amount | Amount | % | ||||
| Portfolio 1 | 4,451,192 | (89,024) | 2% | 423,416 | (8,806) | 2% | |||
| Portfolio 2 | 2,399,392,648 | (3,420,000) | - | 4,033,706,419 | (3,420,000) | - | |||
| 2,403,843,840 | (3,509,024) | - | 4,034,129,835 | (3,428,806) | - | ||||
16 Notes to the Company’s financial statements (Cont’d)
(1) Other receivables (Cont'd)
??? As at 31 December 2017, the Group’s top five entities with the largest other receivables balances are
summarised as below:??
| Relationship with the Group | Amount | Ageing | % of total balance | |
| Yichang CSG Silicon | Subsidiary | 1,265,446,303 | Within 1 year | 53% |
| Qingyuan CSG Energy-Saving | Subsidiary | 315,175,452 | Within 1 year | 13% |
| Yichang CSG Display | Subsidiary | 217,350,199 | Within 1 year | 9% |
| Yichang Hongtai Real Estate Co. Ltd | Other related parties and their affiliates | 171,000,000 | Over 1 year | 7% |
| Xianning CSG photoelectric glass | Subsidiary | 120,520,736 | Within 1 year | 5% |
| 2,089,492,690 | 87% |
(2) Long-term equity investments
| 31 December 2017 | 31 December 2016 | ||
| Subsidiaries (a) | 4,810,987,652 | 4,805,440,632 | |
| Less: Impairment provision for investments in subsidiaries (a) | (15,000,000) | (15,000,000) | |
| 4,795,987,652 | 4,790,440,632 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 195 -
16 Notes to the Company’s financial statements (Cont’d)
(2) Long-term equity investments (Cont’d)
(a) Subsidiaries
| Movement | in current | year | ||||||||||||||
| 31 December 2016 | Additional investment | Decrease in investment | Provision for impairment loss | 31 December 2017 | Provision for impairment loss | Cash dividends declared in current year | ||||||||||
| (i) | (i) | |||||||||||||||
| Chengdu CSG | 146,679,073 | 298,274 | - | - | 146,977,347 | - | 29,098,516 | |||||||||
| Sichuan CSG Energy Conservation | 115,290,583 | 256,131 | - | - | 115,546,714 | - | 36,798,924 | |||||||||
| Tianjin Energy Conservation | 242,902,974 | 288,454 | - | - | 243,191,428 | - | ||||||||||
| Dongguan CSG | 193,618,971 | 297,078 | - | - | 193,916,049 | - | ||||||||||
| Dongguan CSG Solar | 349,446,826 | 354,328 | - | - | 349,801,154 | - | 109,684,420 | |||||||||
| Yichang CSG Silicon | 632,958,044 | 506,124 | - | - | 633,464,168 | - | ||||||||||
| Wujiang CSG | 251,313,658 | 202,531 | - | - | 251,516,189 | - | 35,752,200 | |||||||||
| Hebei CSG | 261,998,368 | 266,973 | - | - | 262,265,341 | - | ||||||||||
| China Southern Glass (Hong Kong) Limited | 85,742,211 | 60,391 | - | - | 85,802,602 | - | ||||||||||
| Wujiang CSG | 562,179,564 | 348,190 | - | - | 562,527,754 | - | 175,598,720 | |||||||||
| Hebei Shichuang | 243,062,801 | 208,669 | - | - | 243,271,470 | - | ||||||||||
| Jiangyou CSG Mining Development Co. Ltd. | 100,725,041 | 112,558 | - | - | 100,837,599 | - | ||||||||||
| Xianning CSG | 177,041,818 | 253,676 | - | - | 177,295,494 | - | 47,124,545 | |||||||||
| Xianning CSG Energy-Saving | 161,281,576 | 262,268 | - | - | 161,543,844 | - | ||||||||||
| Qingyuan CSG Energy-Saving | 300,185,609 | 191,239 | - | - | 300,376,848 | - | ||||||||||
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 196 -
| Shenzhen CSG Financial Leasing Co., Ltd. | 133,500,000 | - | - | 133,500,000 | - | |||||||||
| Shenzhen CSG PV Energy Co., Ltd. | 100,000,000 | 52,985 | - | - | 100,052,985 | - | ||||||||
| Shenzhen CSG Display | 542,027,830 | 664,058 | - | - | 542,691,888 | - | 2,011,500 | |||||||
| Xianning CSG Photoelectric | 38,250,000 | 220,534 | - | - | 38,470,534 | - | ||||||||
| Others (ii) | 167,235,685 | 702,559 | - | - | 167,938,244 | (15,000,000) | ||||||||
| 4,805,440,632 | 5,547,020 | - | - | 4,810,987,652 | (15,000,000) | 436,068,825 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 197 –
16 Notes to the Company’s financial statements (Cont’d)
(2) Long-term equity investments (Cont’d)
(a) Subsidiaries (Cont'd)
(i) As at 31 December 2017, included in the investments in subsidiaries were deemed investment costs of
RMB 114,582,341 (31 December 2016: RMB 109,035,321), the fair value of the equity instruments of theCompany granted to the employee of the subsidiaries for their serviced provided to the subsidiaries forwhich the Company did not charge the subsidiaries.
(ii) The operations of the subsidiaries against which provision was made were basically ceased. The Company
made provision against the long-term investment in these subsidiaries based on their recoverable amountsin previous years.
(3) Long-term receivables
| 31 December 2017 | 31 December 2016 | ||
| Bonds payable and long-term borrowings allocated to subsidiaries | 1,200,000,000 | 1,905,645,000 | |
| Entrusted loans allocated to subsidiaries | 98,000,000 | ||
| 1,200,000,000 | 2,003,645,000 | ||
| Less: Provisions for impairment | - | ||
| 1,200,000,000 | 2,003,645,000 |
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2017
(All amounts in RMB Yuan unless otherwise stated)[English translation for reference only]
- 198 -
16 Notes to the Company’s financial statements (Cont’d)
(3) Long-term receivables (Cont’d)
(4) Other payables
| 31 December 2017 | 31 December 2016 | ||
| Subsidiaries | 477,067,694 | 233,414,167 | |
| Share repurchase | 417,349,879 | - | |
| Others | 15,015,418 | 7,179,727 | |
| 909,432,991 | 240,593,894 |
(5) Investment income
| 2017 | 2016 | ||
| Investment income from long-term equity investment under cost method | 436,068,825 | 395,236,932 | |
| Investment income from long-term equity investment under equity method | - | 29,186,090 | |
| Losses from disposal of financial liabilities at fair value through profit or loss | - | (238,350,256) | |
| 436,068,825 | 186,072,766 |
There is no significant restriction on the remittance of investment income to the Company.
| 31 December 2016 | Movements in current year | 31 December 2017 | Provision for impairment loss | Reversals of provision for impairment loss in current year | |||||
| Chengdu CSG | 190,000,000 | (140,000,000) | 50,000,000 | - | - | ||||
| Sichuan CSG Energy Conservation | 114,665,000 | (94,665,000) | 20,000,000 | - | - | ||||
| Dongguan CSG PV-tech | 160,105,000 | (110,105,000) | 50,000,000 | - | - | ||||
| Yichang CSG Silicon | 472,480,000 | (122,480,000) | 350,000,000 | - | - | ||||
| Dongguan CSG | 99,835,000 | (24,835,000) | 75,000,000 | - | - | ||||
| Wujiang CSG | 310,000,000 | (100,000,000) | 210,000,000 | - | - | ||||
| Dongguan CSG Solar | 193,780,000 | (73,780,000) | 120,000,000 | - | - | ||||
| Wujiang CSG | 69,890,000 | (19,890,000) | 50,000,000 | - | - | ||||
| Qingyuan CSG Energy-Saving | 148,000,000 | (98,000,000) | 50,000,000 | - | - | ||||
| Xianning CSG Energy-Saving | 80,000,000 | - | 80,000,000 | - | - | ||||
| Xianning CSG | 75,000,000 | - | 75,000,000 | - | - | ||||
| Hebei CSG Class | 69,890,000 | (19,890,000) | 50,000,000 | ||||||
| Hebei CSG Window | 20,000,000 | - | 20,000,000 | - | - | ||||
| 2,003,645,000 | (803,645,000) | 1,200,000,000 | - | - |
- 199 -
I Statement of non-recurring gains and losses
| 2017 | 2016 | ||
| Gains or losses on disposal of non-current assets | 1,768,993 | 1,759,358 | |
| Government grants recognised in profit or loss for current period | (87,875,417) | (91,627,439) | |
| Gain or loss from change in fair value | - | (228,500,000) | |
| Investment losses from disposal of financial liabilities at fair value through profit or loss | (427,636) | 238,350,256 | |
| Losses from revaluation of stock rights under business combinations involving enterprises not under common control | - | 45,909,181 | |
| Non-operating income and expenses other than aforesaid items | (12,076,848) | (1,306,284) | |
| (98,610,908) | (35,414,928) | ||
| Effect of income tax | 16,209,135 | 14,327,585 | |
| Effect of minority interests (after tax) | 2,386,569 | 316,740 | |
| Total non-recurring gains and losses | (80,015,204) | (20,770,603) |
(1) Basis for preparation of statement of non-recurring gains and losses
Under the requirements in Explanatory Announcement No. 1 on Information Disclosure by Companies Offering Securities
to the Public – Non-recurring Profit or Loss [2008] from CSRC, non-recurring profit or loss refer to those arises from
transactions and events that are not directly relevant to ordinary activities, or that are relevant to ordinary activities, but areextraordinary and not expected to recur frequently that would have an influence on users of financial statements makingeconomic decisions on the financial performance and profitability of an enterprise.
II Return on net assets and earnings per share
| Weighted average return on net assets (%) | Earnings per share | |||||
| Basic earnings per share | Diluted earnings per share | |||||
| 2017 | 2016 | 2017 | 2016 | 2017 | 2016 | |
| Net profit attributable to ordinary shareholders of the Company | 10.15% | 10.33% | 0.35 | 0.33 | 0.35 | 0.33 |
- 200 -
| Net profit attributable to ordinary shareholders of the Company after deducting non-recurring gains and losses | 9.16% | 10.06% | 0.31 | 0.33 | 0.31 | 0.33 |
- 201 -
Section XI. Documents Available for Reference
I. Text of the Annual Report carrying the legal representative’s signature;
II. Text of the financial report carrying the signatures and seals of the legal representative, responsible person incharge of accounting and person in charge of financial institution;
III. Original of the Auditors’ Report carrying the seal of Asia Pacific (Group) CPAs (special general partnership)
and the signatures and seals of the certified public accountants;
IV. All texts of the Company’s documents and original public notices disclosed in the website and papers
appointed by CSRC in the report period.
Board of Directors ofCSG Holding Co., Ltd.23 April 2018