CSG HOLDING CO.,LTD. — Interim / Quarterly Report 2004

Oct 23, 2004

CSG HOLDING CO., LTD. The Third Quarter Report 2004

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CSG HOLDING CO., LTD.

THE THIRD QUARTER REPORT 2004

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CEO:ZENG NAN

October 2004

CSG HOLDING CO., LTD. The Third Quarter Report 2004

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CSG HOLDING CO., LTD. THE THIRD QUARTER REPORT 2004

I Important Notes

i The Board of Directors of CSG Holding Co., Ltd. (hereinafter referred to as the Company) and its directors hereby confirms that there are no important omissions, fictitious statements or serious misleading information carried in this report, and shall take all responsibilities, jointly and severally, for the truthfulness, accuracy and completeness of the whole contents. ii The third quarter financial report of 2004 has not been audited.

iii Chairman of the Board of the Company Mr. Cheng Chao, CEO Mr. Zeng Nan and Chief Financial Supervisor Ms. Sun Jingbo hereby confirm that the Financial Report of the First Quarter Report is true and complete.

iv This Report is prepared both in Chinese and in English. Should there be any difference in interpretation of the text between the two versions, the Chinese version shall prevail.

II Company Profile

i Basic information of the Company

	Short form of the stock Stock code Name Address Telephone Fax E-mail	Southern Glass A / Southern Glass B 000012 / 200012 Secretary of the Board of directors Wu Guobin CSG Building, No. 1, Industrial Road, Shekou, Shenzhen, PRC 0755-26860666 0755-26692755 szcsgcsg@public.szptt.net.cn	Authorized representative in
			charge of securities affairs Li Tao CSG Building, No. 1, Industrial Road, Shekou, Shenzhen, PRC 0755-26860666 0755-26692755 szcsgcsg@public.szptt.net.cn

ii Financial Information

• (i) Main accounting data financial indexes (Unit: RMB’000)

Total assets Shareholders’ equity Equity per share Net cash flow from operating activities Earning per share Return on equity (%)	The	30 September 2004 4,563,749 2,266,887 RMB 3.35 3rd quarter of 2004 - RMB 0.132 3.93	31 December 2003 3,526,990 2,132,202 RMB 3.15 From 1 January to 30 September, 2004 358,154 RMB 0.409 12.21	Increase/decrease in amount at the report period-end from the end of last year (%) 29.40 6.32 6.32 Increase/decrease in amount in the report period from the same period of previous year (%) - 35.94 0.76

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CSG HOLDING CO., LTD. The Third Quarter Report 2004

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(ii) Income Statement

CSG HOLDING CO., LTD. CONSOLIDATED INCOME STATEMENT FOR THE THIRD QUARTER ENDED 30 SEPTEMBER 2004

	From January to September, 2004 RMB’000 1,334,155 (821,798) 512,357 7,494 (84,159) (92,882) (638) 342,172 (18,449) 323,723 (25,716) 298,007 (21,210) 276,797 RMB 0.409	From January to September, 2003 RMB’000 943,277 (597,912)	From January to September, 2003 RMB’000 943,277 (597,912)
			345,365 5,887 (72,713) (79,125) (827)
			198,587 (17,941)
			180,646 (13,023)
			167,623 (9,513)
		158,110 RMB 0.234

iii Total number of shareholders and statement of shares held by the top ten shareholders of circulating shares at the end of the report period.

Total number of shareholders at the end of report period: 48,064 (including 17,217 of A-share and 30,847 of B-share)

Shares held by the top ten shareholders of circulating shares:

Name China Merchants (Glass Industry) Holding Co., Ltd. BTFE-Value Partners Intelligent FD-China B SHS FD Value Partners Intelligent Funds-Chinese Mainland Focus Fund Gguotai Junan Securities Hong Kong Limited GTJA Allianz Desheng Small Refined Securities Investment Funds Haifutong Earnings Growth Securities Investment Funds Dacheng Blue Chips Steady Securities Investment Funds Jingfu Securities Investment Funds Lion Balance Securities Investment Funds Nomura TB/Nomura ITM

Number of circulating shares held at the end of report period Type 11,015,268 B 8,533,729 B 8,191,491 B 6,693,299 B 4,304,337 A 3,721,384 A 3,613,431 A 3,512,368 A 3,435,460 A 3,000,000 B

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CSG HOLDING CO., LTD. The Third Quarter Report 2004

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III Discussion and analysis of the operation

i Brief analysis of the whole situation of operation activities of the Company in the report period.

In the 3[rd] quarter 2004, macro-economy in the internal still kept a good trend. Although the government has conducted strong macro-economic control to partial industries and its influence to partial industries also took on in the 3[rd] quarter, the management of the Company replied seriously and strengthened operating management under the lead of the Board of Directors. All businesses were not influenced obviously, and still kept relatively good growth trend. In the report period, sales price of float glass increased obviously over the same period of last year, which counteracted great pressure in continuous rise in prices of such main raw materials as heavy oil and soda ash etc. Meanwhile, the Company strengthened the control of all other expenses and expenditures. Net profit of float glass increased 46% over the same period of last year. ITO glass always kept good sales since the beginning of the year, and sales income and net profit in the 3[rd] quarter increased 56% and 87% respectively over the same period of the last year. The influence of glass processing business from macro-economic control was relatively great. The Company conducted relatively cautious principle in the sales and customer credit in order to reduce operating risks, so sales income and net profit realized in the 3[rd] quarter only increased 22% and 15% respectively over the same period of last year, both of which were lower than the average growth level of the Company. Real estate made up the deficits and got surpluses by catching the good chance that the demand in real estate market was prosperous in this year. During early three quarters, the Company realized sales RMB 1,334.16 million, increasing 41.44% compared with the same period of the previous year; realized net profit RMB 276.80 million, increasing 75.07% compared with the same period of the previous year. In the 3[rd] quarter, the Company realized sales RMB 483.91 thousand and net profit RMB 89.17 thousand, increasing 30.69% and 35.94% respectively compared with the same period of the previous year.

(i) Industry or product of main business accounting for 10% of income or total profit from main business

√ Applicable □ Non-applicable

Industry Sales ofglassproducts	Income from January to September, 2004 (RMB’000) 1,170,997	Income from January to September, 2003
		(RMB’000) 862,368

(ii) Features of the periodicity and seasonality of the Company’s operation

□ Applicable √ Non-applicable

(iii) Profit composing in the report period (explanation on significant change and the changing reason of the proportion of main business profit, other business profit, period cost, investment income, allowance income and net non-business income/lost in the total profit compared with the previous report period)

□ Applicable √ Non-applicable

(iv) Explanation of reason of significant change of main business and its structure compared with the previous report period □ Applicable √ Non-applicable

(v) Explanation of reason of significant change of profitability capability of main business (gross profit radio) compared with the previous year □ Applicable √ Non-applicable

ii Explanation and analysis of significant events and its effect as well as its counter measure □ Applicable √ Non-applicable

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CSG HOLDING CO., LTD. The Third Quarter Report 2004

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iii Explanation on the change of accounting policy, accounting estimate and consolidation scope as well as the reason for significant accounting false □ Applicable √ Non-applicable

iv Explanation of the Board of Directors and the Supervisory Committee on the “Non-standard Opinion” after audited. □ Applicable √ Non-applicable

v Caution and explanation of reason of forecasting a possible loss in accumulated net profit from the year-begin to the end of next report period or significant change of accumulated net profit in comparison with the same period in last year. √ Applicable □ Non-applicable

Since 2004, the Company has kept a good trend of growth. The Company realized net profit RMB 276.80 million at the end of the 3[rd] quarter 2004, exceeding the net profit RMB 202.63 million in 2003. Meanwhile, the overall production of Color Filer project would affect on the achievements of the Company actively in the 4[th] quarter 2004. The Company estimates that the net profit of the Company in 2004 will increase over 50% compare with the last year.

vi Adjustment on the disclosed annual operating plans or budget □ Applicable √ Non-applicable

Board of Directors of CSG Holding Co., Ltd. 22 October 2004

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CSG HOLDING CO., LTD. The Third Quarter Report 2004

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CSG HOLDING CO., LTD. CONSOLIDATED INCOME STATEMENT FOR THE THIRD QUARTER ENDED 30 SEPTEMBER 2004

	The 3rd quarter	The 3rd quarter	From January to	From January to	From January to	From January to
	of 2004	of 2003	September, 2004		September, 2003
	RMB’000	RMB’000		RMB’000		RMB’000
Sales	483,908	370,280		1,334,155		943,277
Cost of sales	(297,085)	(228,090)		(821,798)		(597,912)
Gross profit	186,823	142,190		512,357		345,365
Other operating income	1,134	867		7,494		5,887
Distribution costs	(30,146)	(29,088)		(84,159)		(72,713)
Administrative expenses	(40,802)	(34,280)		(92,882)		(79,125)
Other operating expenses	(169)	(154)		(638)		(827)
Profit from operations	116,840	79,535		342,172		198,587
Finance costs, net	(10,243)	(4,691)		(18,449)		(17,941)
Profit before tax	106,597	74,844		323,723		180,646
Income tax expense	(8,973)	(5,753)		(25,716)		(13,023)
Profit after tax	97,624	69,091		298,007		167,623
Minority interests	(8,451)	(3,493)		(21,210)		(9,513)
Net profit	89,173	65,598		276,797		158,110
Earnings per share	RMB 0.132	RMB 0.097		RMB 0.409		RMB 0.234

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CSG HOLDING CO., LTD. The Third Quarter Report 2004

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CSG HOLDING CO., LTD. CONSOLIDATED BALANCE SHEET AS OF 30 SEPTEMBER 2004

ASSETS Non-current assets Property, plant and equipment Construction-in-progress Land use rights Intangible assets Available-for-sale investments Deferred tax assets Current assets Inventories Properties held for sale Trade receivables Other receivables and prepayments Trading investments Cash and cash equivalents Total assets EQUITY AND LIABILITIES Shareholders’ equity Share capital Reserves Retained earnings Minority interests Non-current liabilities Borrowings Current liabilities Trade and other payables Current tax liabilities Borrowings Total equity and liabilities		30 September 2004 RMB’000 2,866,331 492,787 132,276 5,436 8,482 927 3,506,239 161,985 184,433 275,022 43,843 741 391,486 1,057,510 4,563,749 676,975 1,176,063 413,849 2,266,887 114,735 517,389 502,140 21,481 1,141,117 1,664,738 4,563,749		31 December 2003 RMB’000 2,064,436 559,601 91,283 (5,954) 9,078 927	31 December 2003 RMB’000 2,064,436 559,601 91,283 (5,954) 9,078 927
					2,719,371
					103,887 231,558 214,317 38,154 859 218,844
					807,619
					3,526,990
					676,975 1,196,089 259,138
					2,132,202
					91,272
					163,337
					337,869 18,626 783,684
					1,140,179
					3,526,990

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CSG HOLDING CO., LTD. The Third Quarter Report 2004

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CSG HOLDING CO., LTD. CONSOLIDATED CASH FLOW STATEMENT FOR THE THIRD QUARTER ENDED 30 SEPTEMBER 2004

Cash flows from operating activities Cash generated from operations Interest paid Income tax paid Net cash from operating activities Cash flows from investing activities Purchase of property, plant and equipment Purchase of land use rights Purchase of trading investments Purchase from sale of trading investments Purchase from sale of property, plant and equipment Interest received Net cash used in investing activities Cash flows form financing activities Proceeds from borrowings Repayments of borrowings Dividends paid to shareholders Dividends paid to minority interests Capital contributed by minority shareholders Pledged bank deposits Net cash generated from (used in) financing activities Effect of exchange rate changes Net decrease in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year		From January to September, 2004 RMB’000 404,586 (22,615) (23,817) 358,154 (780,026) - (932) 1,306 818 1,219 (777,615) 2,281,351 (1,569,865) (121,432) (11,726) 13,991 484 592,803 (216) 173,126 213,859 386,985	From January to September, 2004 RMB’000 404,586 (22,615) (23,817) 358,154 (780,026) - (932) 1,306 818 1,219 (777,615) 2,281,351 (1,569,865) (121,432) (11,726) 13,991 484 592,803 (216) 173,126 213,859 386,985	From January to September, 2003 RMB’000 325,266 (17,434) (10,451)	From January to September, 2003 RMB’000 325,266 (17,434) (10,451)	From January to September, 2003 RMB’000 325,266 (17,434) (10,451)
						297,381
						(395,953) (10,991) - - - 898
						(406,046)
					1,438,217 (1,199,879) (101,132) (11,653) 6,007 715
					132,275
					52
					23,662 179,865
					203,527

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