China Specialty Glass AG and Saint-Gobain Glass France Terminate Distributorship Agreement

january 9 2012

China Specialty Glass AG (CSG), informed that CSG’s operating entity Guangzhou Hing Wah Glass Industry Co. (HWG), Ltd. and the Miroiterie du Rhin SAS, a subsidiary of Saint-Gobain Glass France, have terminated the existing exclusive distributorship agreement effective on December 31, 2011. The agreement, which was signed on May 27, 2011, covered selected advanced glazing solutions. The termination will have the following impacts on the consolidated financial statements:

The non-satisfying development of the co-operation between both parties already led in the interim financial statements for the nine months ended 30 September 2011 to an impairment loss of EUR 3.6 million on the distribution rights related to the agreement. The determination of this impairment loss also took into account potential further payments which CSG’s Management Board had estimated at EUR 2 million. However, in the termination settlement a final payment of only EUR 1 million was agreed. This will lead to a negative effect on the profit before tax for the full year results 2011 in the amount of approximately EUR 2.6 million instead of the anticipated EUR 3.6 million in the third quarter 2011. The related distribution rights assets with a net book value in the latest financial statements for the nine months ended 30 September 2011 of EUR 15.6 million and related liabilities of EUR 16.6 million will no longer be recognized in the statement of financial position as a result of this settlement. This will lead to income of approximately EUR 1 million in the fourth quarter of 2011 which will partially offset the impairment loss of EUR 3.6 million recognized in the third quarter of 2011, and hence result in the net negative effect on profits before tax of approximately EUR 2.6 million for the financial year. The amount of the net effect could vary according to exchange rate movements as the distribution rights are denominated in Renminbi.

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