BOE TECHNOLOGY GROUP CO., LTD - Annual Report 2005

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BOE TECHNOLOGY GROUP CO., LTD.

ANNUAL REPORT 2005 (Overseas Version)

Stock Exchange Listed On: Shenzhen Stock Exchange Stock Symbol: BOE - B Stock Code: 200725

Apr. 25, 2006

Important Note:

Board of Directors, Supervisory Committee, directors, supervisors and senior executives of BOE TECHNOLOGY GROUP CO., LTD. (hereinafter referred to as the Company) individually and collectively accept responsibility for the correctness, accuracy and completeness of the contents of this report and confirm that there are no material omissions or errors which would render any statement misleading. This report was prepared in both Chinese and English. Should there be any difference in interpretation between the Chinese version and English version, the Chinese version shall prevail.

Chairman of the Board and concurrently CEO Mr. Wang Dongsheng, President Mr. Liang Xinqing, COO Mr. B.D.Choi, CFO Mr. Wang Yanjun and Chief Accounting Officer and concurrently Principal of Planning & Financial Dept. Ms. Sun Yun hereby confirm that the Financial Report enclosed with the Annual Report is true and complete.

Independent Director Mr.Xie Zhihua and Mr. Li Zhaojie separately authorized Independent Director Mr. Tai Zhonghe and Mr. Zhang Baizhe to attend and vote at the BOD meeting.

The Annual Report 2005 of the Company was prepared based on International Financial Reporting Standards

Chapter Ⅰ Company Profil e ⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯ ⋯⋯⋯⋯⋯
Chapter Ⅱ Summary of Financial Highlights and Business Highlights ⋯⋯⋯⋯
Chapter Ⅲ Changes in Share Capital and Particulars about Shareholders ⋯⋯⋯⋯⋯⋯
Chapter Ⅳ Directors, Supervisors, Senior Executives and Employees ⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯
Chapter Ⅴ Corporate Governance ⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯
Chapter Ⅵ Shareholders’ General Meeting ⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯
Chapter Ⅶ Report of the Board of Directors ⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯
Chapter Ⅷ Report of the Supervisory Committee ⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯
Chapter Ⅸ Significant Events ⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯
Chapter Ⅹ Financial Report Chapter Ⅺ Documents for Reference ⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯⋯

CHAPTER I. COMPANY PROFILE

Legal Name of the Company:

In Chinese: 京东方科技集团股份有限公司

In English: BOE TECHNOLOGY GROUP CO., LTD.

Abbr. in Chinese: 京东方
Abbr. in English: BOE
Legal Representative: Wang Dongsheng
Secretary of the Board of Directors: Chen Yanshun
Securities Affairs Representative: Zhong Huifeng Contact Address: No. 10, Jiuxianqiao Road, Chaoyang District, Beijing
Tel: (86) 10 – 64366264 64318888 ext.
Fax: (86) 10 – 64366264
E-mail: [email protected] [email protected]
Registered Address: No. 10, Jiuxianqiao Road, Chaoyang District, Beijing Office Address: No. 10, Jiuxianqiao Road, Chaoyang District, Beijing Post Code: 100016

The Company’s Internet Website: http://www.boe.com.cn

E-mail: [email protected]
Newspapers Chosen for Disclosing the Information of the Company:
Securities Times, China Securities Journal, Shanghai Securities News and Hong Kong Ta Kung Pao

Internet Website for Publishing the Annual Report: http://www.cninfo.com.cn

Place Where the Annual Report is Prepared and Placed: Capital and Investor Relationship Dept. of the Company
Stock Exchange Listed with: Shenzhen Stock Exchange
A-share Symbol: G BOE, Stock Code for A-share: 000725
B-share Symbol: BOE - B, Stock Code for B-share: 200725
Other Related Information: Initial registration date: April 9, 1993

Initial registration address: No.10, Jiuxianqiao Road, Chaoyang District, Beijing The latest changing registrations date: Aug. 15, 2005

Registration address after change: No.10, Jiuxianqiao Road, Chaoyang District, Beijing Registered number of enterprise legal person’s business license: 100001501259

Registration number of taxation: GSJZ No.110105101101660

DSJZ No. 110105101101660000

Certified Public Accountants engaged by the Company:

Domestic: KPMG Huazheng Certified Public Accountants

Office Address: 8/F, Office Tower E2, Oriental Plaza1, East Chang An Avenue, Beijing International: KPMG Certified Public Accountants

Office Address: 8/F, Prince's Building, 10 Chater Road, Central, Hong Kong

CHAPTER II. SUMMARY OF FINANCIAL HIGHLIGHTS AND BUSINESS

HIGHLIGHTS

Major accounting data as of the year 2005

(Unit: In RMB’000)

	(Unit: In RMB’
Items	Amount
Profit before tax	-1,246,610
Netprofit	-1,245,993
Other operatingincome	100,384
Operating profit	-1,075,732

Net cash inflow arisingfrom operatingactivities：	-983,559
Balance in cash and cash equivalents at theyear-end	1,164,052

Note: Difference in net assets and net profit as reported based on Accounting System for Enterprise Business (domestic financial report) and IFRS (overseas financial report)

Unit: RMB’000

		Unit:RMB’0
	Net assets	Net profit
Asreported under Accounting System for EnterpriseBusiness	3,377,859	-1,587,087
Adjustment based on IFRS and other:
Recognitionand amortisationofpositive goodwill	63,078	68,412
Recognition and amortisation of negative goodwill	101,715	－14,485
Government grant	-3,014	4,105
Capitalised general borrowing costs, net of related depreciation	33,185	33,185
Capitalised development costs,net of related depreciation	200,450	27,977
Gain on disposal of subsidiary	141,631	141,631
Appropriationofstaffbonus and welfarefund		-916
Amortisationof loans arrangementfee	15,364	-3,085
Dilution gain on interest in associate	-73,750	80,397
Equity accounting for interest in associates with the issuance of convertible debentures	111,357
-Others	-259	3,873
Balance after adjustment under IFRS	3,967,616	-1,245,993

2. Major accounting data and financial indexes over the past three years as ended the report period:

Unit: RMB’000

	2005	2004	2004	Increase / decrease this year compared with the last year (%)	2003	2003
		After adjustment	Before adjustment		After adjustment	Before adjustment
Sales revenue	13,449,713	12,441,708	12,441,708	8.10%	11,180,106	11,180,106
Net profit	－1,245,993	340,262	353,701	-466.19%	481,946	396,016
Total assets	21,284,929	18,223,237	18,106,758	18.12%	12,322,084	12,232,806
Shareholders’ equity (excluding minority interests)	3,967,616	5,270,862	5,154,384	-24.73%	2,643,140	2,553,862

Unit: RMB

			Unit:RMB
	2005	2004 (after adjustment)	Increase / decrease this year compared with the last year (%)
Earningsper share	-0.57	0.23	-344.12%
Return on equity	-31.4%	6.46%	-586.07%
Net assetsper share	1.81	3.60	-49.72%

Note: ① The aforesaid diluted data of 2004 had been calculated based upon the total share capital of 1,463,797,200 shares at the end of that year and those of 2005 upon the total share capital of 2,195,695,800 shares at the end of the year.

② The above data were reported in accordance with the consolidated accounting statements.

Changes and in shareholders’ equity in the report period and its reason

Unit: RMB’000

	Share capital	Capital reserve	Surplus reserve	Retained profit	Minority shareholders’ equity	Shareholders’ equity
Amount at the	1,463,797	2,284,812	708,167	814,086	524,973	5,795,835

beginning of the period
Capitalisation of share premium	731,899	-731,899	-	-	-	-
Net loss for theyear	-	-	-	-1,154,586	-	-1,154,586
Profits attributable to minorityinterests		-	-	-91,407	91,407	-
Foreign currency translation difference	-	-	-27,977	-	-	-27,977
Dividend approved duringtheyear				-29,276		-29,276
Capital contributions from minorityinterests	-	-	-	-	18,529	18,529
Distributed to minorityshareholders	-	-	-	-	-5,550	-5,550
Disposal of associated companies	-	-	-	-	-395,478	-395,478
Amount at the end of theperiod	2,195,696	1,552,913	680,190	-461,183	233,881	4,201,497

CHAPTER III. CHANGES IN SHARE CAPITAL AND PARTICULARS ABOUT SHAREHOLDERS

I. Changes in share capital

1. Statement of change in the Company’s shares (as at Dec. 31, 2005)

						Unit: Share	Unit: Share
	Before the	change	Change of this term(+,-)			After the changed
	Number	Proportion	Shares capital transferred from public reserve	Split-share Reform	subtotal	Number	Proportion
I.Lock-up Shares	596954640	40.78%	+298541720	-77394612	+221147108	818101748	37.26%
1. Shares held bythe State
2. Shares held by state-owned legalperson	590452200	40.33%	+295226100	-76784000	+218442100	808894300	36.84%
3. Shares held by other domestic investors	6502440	0.45%	+3251220	-795812	+2455408	8957848	0.41%
Including:
Shares held by domestic legal persons	6435000	0.44%	+3217500	-838300	+2379200	8814200	0.40%
Shares held by domestic natural persons (shares held by senior executives)	67440	0.01%	+33720	+42488	+76208	143648	0.01%
4. Shares held by foreign investors	0	0	+64400	+185200	+249600	249600	0.01%
Including:
Shares held by foreign legal persons
Shares held by foreign natural persons (shares held by senior executives)	0	0	+64400	+185200	+249600	249600	0.01%
II. Shares without Lock-up	866842560	59.22%	+433356880	+77394612	+510751492	1377594052	62.74%
1. RMB ordinaryshares	123142560	8.41%	+61571280	+77579812	+139151092	262293652	11.95%
2. Domestically listed foreign shares	743700000	50.81%	+371785600	-185200	+371600400	1115300400	50.79%
3. Overseas listed foreign shares
4. Others
III. Total shares	1463797200	100%	+731898600	0	+731898600	2195695800	100%

Issuance and Listing of shares in recent three years ended the report period According to China Securities Regulatory Commission with ZJGSZ [2000] No. 197 document, 10,140,000 inner employees’ shares issued by the Company were listed for trade on Jan. 12, 2004.

Approved by State Council Securities Regulatory Commission with ZJFXZ [2004] No. 2 document, the Company additionally issued 316,400,000 B shares on Jan. 13 to 15, 2004, which were listed for trade on Apr. 16, 2004.

As examined and approved by the shareholders’ general meeting 2003 (May 28, 2004), based on the total share capital amounting to 975,864,800 shares after additional issuance of B- share, the Company implemented the plan of transferring capital reserve into share capital at the rate of 5 shares for every 10 shares to all shareholders dated June 9, 2004. After transferring capital reserve into share capital, the Company’s total shares capital has increased to 1,463,797,200 shares from 975,864,800 shares.

As examined and approved by the 1[st] extraordinary shareholders’ general meeting 2005 (July 5, 2005), based on the total share capital amounting to 1,463,797,200 shares, the Company implemented the plan of transferring capital reserve into share capital at the rate of 5 shares for every 10 shares to all shareholders dated July 19, 2005. After transferring capital reserve into share capital, the Company’s total shares capital has increased to 2,195,695,800 shares.

The Company examined and approved the plan of Split-share Reform of BOE Technology Group Co., Ltd. in the shareholders’ general meeting related with Split-share Reform dated Nov. 24, 2005, and implemented the plan of Split-share Reform on Nov. 30, 2005., which formally nontradable shareholders would obtain trading right after paying the consideration of 77,622,300 shares in total to shareholders of tradable A shares. After implementation of Split-share Reform, the Company’s total share capital remained unchanged.

II. About shareholders

Number of shareholders and particulars about shares held by shareholders (as at Dec. 31, 2005)

2005)
Total number of shareholders	71,341 shareholders in total(including31,308 shareholders of B-share)
Particulars about shares held by the top ten shareholders
Name of shareholder	Nature of shareholders	Proportion (%)	Total number of shares held	Number ofLock-up Shares	Share pledged or frozen
BEIJING BOE INVESTMENT & DEVELOPMENT CO., LTD.	State-owned corporate share	32.80%	720,197,300	720,197,300	0
FIELDS PACIFIC LIMITED	B-share	6.15%	135,000,000	0	Unknown
BEIJING DONGDIAN INDUSTRIAL DEVELOPMENT COMPANY	State-owned corporate share	3.75%	82,290,200	82,290,200	0
EMERGING MARKETS GROWTH FUND INC	B-share	1.53%	33,554,952	0	Unknown
SHANGHAI (HONG KONG) WANGUO SECURITIES	B-share	1.52%	33,421,443	0	Unknown
BOCI SECURITIES LIMITED	B-share	1.17%	25,764,914	0	Unknown
TOP RESPECT GROUP LIMITED	B-share	0.92%	20,250,000	0	Unknown
BONY-DREYFUS PIFI-DREYFUS PREMIER GREATER CHINA	B-share	0.80%	17,551,667	0	Unknown
GUOTAI JUNAN SECURITIES HONG KONG LIMITED	B-share	0.73%	16,004,534	0	Unknown
CAPITAL INTERNATIONAL EMERGING MARKETS FUND	B-share	0.71%	15,629,925	0	Unknown
Particulars about shares held by the top ten shareholders without conditional sales
Name of shareholders	Number of Shares without Lock-up			Natural of equity
FIELDS PACIFIC LIMITED	135,000,000			B-share
EMERGING MARKETS GROWTH FUND INC	33,554,952			B-share
SHANGHAI (HONG KONG) WANGUO SECURITIES	33,421,443			B-share
BOCI SECURITIES LIMITED	25,764,914			B-share
TOP RESPECT GROUP LIMITED	20,250,000			B-share
BONY-DREYFUS PIFI-DREYFUS PREMIER GREATER CHINA	17,551,667			B-share

GUOTAI JUNAN SECURITIES HONG KONG LIMITED	16,004,534	B-share
CAPITAL INTERNATIONAL EMERGING MARKETS FUND	15,629,925	B-share
BARINGS(IRELAND) SA THE ATLANTIS CHINA FUND PLC	10,999,919	B-share
CITIC CAPITAL SECURITIES CO.,LTD.	10,394,249	B-share
Explanation on associated relationship among the top ten shareholders or acting-in-concert	There exists connected relationship between Beijing BOE Investment & Development Co., Ltd. and Beijing Dongdian Industrial Development Company. The Company was unknown whether there is any associated relationship among the top ten shareholders and the top tenshareholders oftradable share.

2. Number of shares held by shareholders with conditional sales and

Unit: share

					Unit: share
No.	Name of shareholders with conditional sales	Number of Lock-up Shares	Date of listing for trade	Number of additional shares could list for trade	Conditional sales
1	Beijing BOE Investment & Development Co., Ltd.	720,197,300	After G+12 months	36,009,865	No trading and transfer may be taken within 12 monthsas of the date when corporate shares of BOE held by this company obtain the trading right in A shares market. After expiration of the aforesaid undertaking, this company could sale original nontradable shares through listing and trading on stock exchanges, but proportion of number of shares could be sold in total shares of BOE shall not exceed 5 percent within 12 months, as well as not exceed 10 percent within 24 months.
			After G+24 months	36,009,865
			After G+36 months	648,177,570
2	Beijing Dongdian Industrial Development Company	82,290,200	After G+12 months	82,290,200	No trading and transfer may be taken within 12 monthsas of the date when corporate shares of BOE held by this company obtain the trading right in A shares market.
3	Beijing Yixinwei Display Technology Development Center	8,814,200	After G+12 months	8,814,200	No trading and transfer may be taken within 12 monthsas of the date when corporate shares of BOE held by this company obtain the trading right in A sharesmarket.
4	Beijing Kinescope Factory	6,406,800	After G+12 months	6,406,800	No trading and transfer may be taken within 12 monthsas of the date when corporate shares of BOE held by this company obtain the trading right in A sharesmarket.

Note: G is November 30, 2005.

3. About controlling shareholder and the actual controller

(1) About the controlling shareholders

Beijing BOE Investment & Development Co., Ltd. holds 32.80% of the Company’s total shares, therefore is the virtual controlling shareholder of the Company, whose main information is as follows:

Name: Beijing BOE Investment & Development Co., Ltd. Legal Representative: Wang Dongsheng Date of Foundation: Apr. 21, 2005

Address: No.10 Jiuxianqiao Road, Chaoyang District, Beijing Registered Capital: RMB 680.982 million

Type of the company: Sino-foreign Equity Joint Ventures Enterprises (proportion of foreign-currency is lower than 25%)

Business Scope: R&D and production of electronic products, electronic raw materials and components; the relevant technical development, technical consultation, technical service and transfer; sales of self-produced products. (Other than projects with limit and special provision invested by foreign investors)

(2) The actual controller

Beijing Electronics Holding Co., Ltd. held 56.25% equity of Beijing BOE Investment & Development Co., Ltd., who is was the actual controller of the Company. Beijing Electronics Holding Co., Ltd. belonged to state-owned holding company directly under Beijing Municipality as well as an Beijing municipal state-owned assets authorized operation unit. Beijing Dongdian Industrial Development Company (holding 3.75% of the Company’s shares) and Beijing Kinescope Factory (holding 0.29% of the Company’s shares) both were wholly-owned subsidiaries of Beijing Electronics Holding Co., Ltd., and belongs to associated enterprise with Beijing BOE Investment & Development Co., Ltd.. The main information of Beijing Electronics Holding Co., Ltd. was as follows:

Name of the enterprise: Beijing Electronics Holding Co., Ltd.

Legal Representative: Pu Shicheng Date of Foundation: April 8, 1997 Location: No.12 Jiuxianqiao Road, Chaoyang District, Beijing Registered Capital: RMB 1307.37 million

Type: Limited Company (State-funded Corporations) Business scope: operation and management of state-owned assets within authorization; communications equipments, audio & visual products for broadcasting and television; computer and its supporting equipments and the applied products; electronic raw material and components; home electric appliances and electronic products; electronic surveying instruments and meters; mechanical and electric equipments; electronic transportation products and investment in business fields other than electronics and its management; development of real estate, lease and sales of commodity apartments; property management.

(3) The property right and controlling relationship between the actual controller and the Company are as follows:

State-owned Assets Supervision & Administration Commission of Beijing People’s Government

Wang Dongsheng 20%, Jiang Yukun 10%, Liang Xinqing 10%, Zhao Caiyong 6.667%, Shi Dong 6.667%, Chen Yanshun 6.667%, Song Ying 6.667%, Han Guojian 6.667%, Gong Xiaoqing 3.333%, Wang yanjun 3.333%, Wang Jiaheng 3.333%, Liu Xiaodong 3.333%, Ren Jianchang 1.667%, Sun Jiping 1.667%, Zhang Peng 1.667%, Wang Ai’zhen 1.667%, Mu Chengyuan 1.667%, Xu Yan 1.667%, Hua Yulun 1.667%, Zhong Huifeng 1.667%

100%

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Beijing Electronics Holding Co., Ltd. Marubeni Corporation Beijing Intelligent Kechuang Technology Development Co., Ltd.
56.25% 10% 33.75%
Beijing BOE Investment & Development Co., Ltd.
32.80%
BOE Technology Group Co., Ltd.
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Note: The Company regards Beijing Intelligent Kechuang Technology Development Co., Ltd. as a platform to implement equity encouragement for wholly core engineers and management, the aforesaid 20 subscribers are nominal shareholders, the equity of Beijing Intelligent Kechuang Technology Development Co., Ltd. was held in common by wholly core engineers and management.

CHAPTER IV. DIRECTORS, SUPERVISORS, SENIOR EXECUTIVES AND EMPLOYEES

I. Directors, supervisors and senior executives

General introduction about directors, supervisors and senior executives

Name	Gend er	Age	Title	Office term	Number of share held	Number of share held	Receiving payment from the company or not
					Year- end	Year- begin
Wang Dongsheng	Male	48	Chairman of the Board, Chairman of Executive Committee、CEO	Jun. 2004- Jun. 2007	24921	11700	Yes
Jiang Yukun	Male	52	Vice Chairman of the Board	Jun. 2004- Jun. 2007	14953	7020	No
Zhao Caiyong	Male	58	Director	Jun. 2004- Jun. 2007	24921	11700	No
Moriko	Male	58	Director	Sep. 2005- Jun. 2007	0	0	No
Liang Xinqing	Male	53	Executive Director, President	Jun. 2004- Jun. 2007	9969	4680	Yes
B.D.Choi	Male	56	Executive Director, COO	Jun. 2004- Jun. 2007	249600	0	Yes
Cheng Yanshun	Male	40	Executive Director, Executive Vice-president, Secretaryof the Board	Jun. 2004- Jun. 2007	0	0	Yes
Tai Zhonghe	Male	55	Independent Director	Jun. 2004- Jun. 2007	0	0	No
Xie Zhihua	Male	46	Independent Director	Jun. 2004- Jun. 2007	0	0	No
Zhang Baizhe	Male	62	Independent Director	Jun. 2004- Jun. 2007	0	0	No
Li Zhaojie	Male	50	Independent Director	Jun. 2004- Jun. 2007	0	0	No
Xia Zhenzhi	Male	43	Convener of Supervisory Committee	Jun. 2004- Jun. 2007	1598	750	No
Mu Chengyuan	Male	38	Supervisor	Jun. 2004- Jun. 2007	2492	1170	No
Yang Anle	Male	35	Employee Supervisor	Jun. 2004- Jun. 2007	0	0	Yes
Xu Yan	Female	54	Employee Supervisor	Jun. 2004- Jun. 2007	14953	7020	Yes
Wang Yanjun	Male	36	CFO	Jun. 2004- Jun. 2007	9968	4680	Yes

Song Ying	Female	48	Vice-president	Jun. 2004- Jun. 2007	24921	11700	Yes
Ren Jianchang	Male	59	Vice-president	Jun. 2004- Jun. 2007	0	0	Yes
Han Guojian	Male	52	Vice-president	Jun. 2004- Jun. 2007	9968	4680	Yes
Liu Xiaodong	Male	41	Vice-president	Jun. 2004- Jun. 2007	0	0	Yes
Wang Jiaheng	Male	37	Vice-president	Jun. 2004- Jun. 2007	0	0	Yes
Cao Hong	Male	46	Vice-president, Investment Manager	Jun. 2004- Jun. 2007	4984	2340	Yes
Feng Weidong	Male	38	Vice-president	Sep. 2004- Jun. 2007	0	0	Yes
Su Zhiwen	Male	37	Auditor-General	Sep. 2004- Jun. 2007	0	0	Yes
Lin Rongzhen	Male	43	CTO	Nov. 2005- Jun. 2007	0	0	Yes

Note: ① Shares held by directors, supervisors and senior executives has increased because the Company implemented plan of transferring capital reserve into share capital at the rate of 5 shares for every 10 shares and plan of Split-share Reform.

② Mr. B.D.Choi, executive director and concurrently COO bought 249,600 B shares of BOE (including bonus shares) from July 11, 2005 to August 5, 2005. The said shares were frozen according to the relevant regulations.

Main work experience and part-time job about directors, supervisors and senior executives (1) Mr. Wang Dongsheng, 48 years old, Master of Engineering, ever took the posts of Chairman of the Board and President of the 1[st ] and 2[nd ] Board of Directors, and Chairman of Board, Chairman of Executive Committee and CEO of the 3[rd] Board of Directors of the Company, Representative Director and Chairman in BOE-HYDIS Technology Co., Ltd., Chairman of the Board in BOE Hyundai LCD Inc. and Chairman of the Board of Suzhou BOE CHATANI Electronics Co., Ltd.. Now he takes the posts of Chairman of the Board, Chairman of Executive Committee and CEO of the 4[th] Board of Directors of the Company and concurrently takes the posts of Director of Top Victory Technology Co., Ltd., Director of Beijing Matsushita Color CRT Co., Ltd., Director and President of Beijing Electronic Holding Co., Ltd., Chairman of the Board of Beijing BOE Investment and Development Co., Ltd., Chairman of the Board of Beijing Sevenstar Science & Technology Co., Ltd., Director of Beijing Intelligent Kechuang Technology Development Co., Ltd. and Vice Chairman of China Electronic Chamber of Commerce.

(2) Mr. Jiang Yukun, 52 years old, senior economist. He ever took the posts of Managing Deputy Factory Director and Secretary of Committee of Communist Party of China of Beijing Electronic Tube Factory, Director and Vice President of the 1[st] Board of Directors and Vice Chairman of the 2[nd] and 3[rd] Board of Directors of the Company. Now he takes the post of Vice Chairman of the 4[th] Board of Directors of the Company and concurrently takes the posts of Director and President in Beijing BOE Investment and Development Co., Ltd.,

General Manager and Vice Secretary of CPC in Beijing Dongdian Industrial Development Company, Chairman of the Board in Beijing Songyan Economy and Trade Co., Ltd., Vice Chairman of Beijing Star City Real Estate Development Co. Ltd. and Director of Beijing Intelligent Kechuang Technology Development Co., Ltd..

(3) Mr. Zhao Caiyong, 58 years old, senior accountant, has ever been taken the posts of Chief Accountant in Beijing Electronic Tube Factory, Director and Chief Financial Officer of the 1[st] Board of Directors of the Company, Director of the 2[nd] and 3[rd] Board of Directors of the Company and Deputy Factory Director of Beijing Electronic Tube Factory. Now he takes the posts of Director of the 4[th] Board of Directors of the Company and concurrently takes the posts of Standing Deputy General Manager of Beijing Dongdian Industrial Development Company, Chairman of the Board of Beijing Asahi Glass Electronics Co., Ltd., Chairman of the Board of Beijing Nissin Electronics Precision Component Co., Ltd. and convener of Beijing Intelligent Kechuang Technology Development Co., Ltd..

(4) Mr. Moriko (もりひかる), 58 years old, from Fukuoka, Japan, graduated from Agriculture Department of Kyushu University. In 1971, he entered in Japan Marubeni 饭田 Corporation (now Marubeni Corporation), and ever took the posts of head of organic chemical products Dept., head of Dept. of chemical synthetic fiber raw material, deputy general head and executive officer of Dept. of organic·fine chemical products; chairman of Marubeni (Thailand) Inc. and head of Bangkok branch. Now he acts as Director of the 4[th] Board of Directors of the Company, Director of Beijing BOE Investment and Development Co., Ltd., and Standing Executive Officer of Marubeni Corporation and Head of Chemical Products Dept. in Marubeni Corporation.

(5) Mr. Liang Xinqing, 53 years old and senior engineer. He ever took the posts of Standing Director and Vice President of the 1[st] Board of Directors of the Company, Director of the 2[nd] Board of Directors of the Company, Executive Director, President and COO of the 3[rd] Board of Directors of the Company, Chairman of the Board of Beijing Asahi Glass Electronics Co., Ltd., Chairman of the Board of Beijing Nissin Electronics Precision Component Co., Ltd., Deputy General Manager of Beijing Matsushita Color CRT Co., Ltd.. Now he takes the posts of Executive Director and President of the 4[th] Board of Directors of the Company and concurrently takes the posts of and Director of Beijing Intelligent Kechuang Technology Development Co., Ltd..

(6) Mr. B.D.Choi, 56 years old, came from Seoul of Korea, bachelor of engineering, ever took the posts of researcher of Industrial Experimentation Institute of Korea Commerce and Industry Minister, industrial analyst of Korea Developing Financial Technology Minister, sales manager of DuPont Far Eastern Co., Chief Executive of Korea Silicon Wafer Manufactory Co.; he held the positions of GM and Senior Vice-president of Storage Business Division of Hyundai Group and GM, Executive Vice-president of LCD Division and CEO of HYDIS in succession. In Jan. 2003, he entered into the Company and took the posts of executive director and executive vice president of the 3[rd] Board of Directors. And he is now in charge of executive director and COO of the 4[th] Board of Directors of the Company, executive officer of TFT-LCD Division and concurrently representative director of BOE-Hydis Technology Co., Ltd. and Chairman of the Board of Beijing BOE Optoelectronics Technology Co., Ltd., Chairman of the Board of BOE Hyundai LCD Inc. and Chairman of the Board of BOE (Hebei) Mobile Display Technology Co., Ltd.

(7) Mr. Chen Yanshun, 40 years old, master of economics, has ever been taken the posts of lecturer of Chongqing Industry & Commerce University, Secretary of the Board of the 1[st] Board of Directors of the Company, Secretary and Vice President of the 2[nd] Board of Directors and Secretary and Senior Vice President of the 3[rd] Board of Directors. Now he takes the posts of Executive Director, Secretary of the Board and Executive Vice-president of the 4[th ] Board of Directors of the Company and concurrently Director of Top Victory Technology Co., Ltd., Director of Zhejiang Beijing Orient Vacuum Electronic Co., Ltd., Supervisor of BOE-HYDIS Technology Co., Ltd., Director of Beijing BOE Optoelectronics

Technology Co., Ltd. and Chairman of the Board of Beijing Intelligent Kechuang Technology Development Co., Ltd..

(8) Mr. Tai Zhonghe, 55 years old, Taiwanese of China, master, ever worked in Shinstone Computer Co., Ltd. and is one of founders of Acer Incorporated. He successively took the posts of Deputy General Manager of Acer Co., Ltd., General Manager of Acer Science and Technology, Executive Deputy General Manager and General Manager of Marketing Division Group in Acer, General Manager of PC Division in America Branch of Acer, Vice Chairman of the Board of America Branch of Lijie Computer Co., Ltd. and Chairman of the Board of America InterNex Company, Independent Director of the 3[rd] Board of Directors of the Company. Now he takes the posts of Independent Director of the 4[th] Board of Directors of the Company, Copartner and Chairman of the Board of Xuyang Financing Counseling Co., Ltd., Chairman of the Board of Chief Telecom Inc., and Chairman of the Board and Publisher of Taiwan Digitimes.

(9) Mr. Xie Zhihua, 46 years old, doctor in economics, professor, instructor of doctorate and China certified public accountant, ever took the post of independent director of the 3[rd] Board of Directors. He now is Independent Director of the 4[th] Board of Directors of the Company, Vice President of Beijing Technology and Business University, Director of Accounting Society of China, Director of Accounting Professor Association of China, Managing Director of Commercial Accounting Society of China, Vice Chairman of Accounting Society of Beijing, Director of Beijing Society of Finance, Managing Director of Auditing Society of Beijing, Committeeman in Senior Title Assessment Committee of Beijing Accounting Serial and Professor Serial, Specially Engaged Researcher in China Problems Research Center of Cardiff University in England, Guest Professor of Kingston College in Canada, Expert Committeeman of Title and Vocation Certificate Examination of China Insurance Regulatory Commission, Specially Engaged Professor and Researcher of the Institute for Fiscal Science Research under the State Ministry of Finance and in over 20 academies and scientific research institutes such as Hunan University and etc..

(10) Mr. Zhang Baizhe, 61 years old, senior engineer of Tsinghua University, expert in LCD, ever took part in establishment and preparation of LCD Scientific Research and Industrial Development Plan during “seventh Five-Year Plan”, “eighth Five-Year Plan” and “ninth Five-Year Plan” from Ministry of Electron and Beijing, and ever took the posts of appraiser of appraisal group on optoelectronics technology of technology advanced award of Ministry of Electron, expert of the appraisal expert group of the state secret technology of the State Science and Technology Commission, and was engaged as expert of the 1[st] domestic expert group by UNDP to participated establishment and guidance work of technology plan related with LCD field; ever took charge of foundation of the 1[st] LCD material manufactory so as to realized LCD domestically produced; took charge to accomplished construction of STD-LCD model production line from “eighth Five-Year plan” science and technology task center of the State Plan Commission and Beijing Science Commission and construction of LCD production line from Hong Kong TQL Co.; guided to accomplish construction of large area precision masks production line of Qingyi Precision Maskmaking (Shenzhen) Ltd.; independent director of the 3[rd] Board of the Directors. He is now in charge of independent director of the 4th Board of the Directors; Deputy General Manager of. Beijing Tsinghua Liquid Crystal Materials Co., Ltd., executive director of Beijing TSING Electronics Co., Ltd. and consular of Beijing Tsinghua ERC of Liquid Crystal Technology.

(11) Mr. Li Zhaojie, 50 years old, master of Law and Library Information of University of California of US, doctor of Law of Toronto of Canada, ever took the posts of vice professor of Law Institute of Beijing University, visiting professor Law Institute of University of Duke US, visiting professor of Law Institute of Hong Kong University and Hong Kong City University, lawyer of Wang-And-WangUSA Los Angeles of USA, law consular of Beijng Wang’s Funds, law expert of Olympic Venue Construction & Management Held in Beijing, the 3[rd] Board of Directors of the Company. He is now in charge independent director of the

4[th] Board of Directors and professor of Law Institute of Tsinghua University.

(12) Mr. Xia Zhenzhi, 43 years old, bachelor degree, ever took the posts of secretary of League Party of Beijing Electronic Tube Factory, deputy division chief of personnel department and concurrently minister of Party Organization Dept. of Beijing Orient Electronics Group Co., Ltd., Manager of HR Department and minister of Party Organization Department of Beijing BOE Investment and Development Co., Ltd., and Deputy General Manager and secretary of CPC of Beijing Dongdian Industrial Development Company. He now acts as convener of the 4[th] Supervisory Committee of the Company, Deputy Secretary of the CPC and Principal of Labor Union of Beijing Dongdian Industrial Development Company.

(13) Mr. Mu Chengyuan, 38 years old, bachelor degree, economist, ever took the posts of Manager of comprehensive department of Guomao Branch of the Company, Deputy General Manager of Beijing Orient Lighting Lamps Engineering Co., Ltd., Division Chief of Assets Operating and Management Division of Beijing Electronic Tube Factory and Supervisor of the 3[rd] Supervisory Committee of the Company, now he is charge of supervisor of the 4[th] Supervisory Committee, Secretary of the Board and standing Vice-president of Beijing BOE Investment and Development Co., Ltd..

(14) Mr. Yang Anle, 35 years old, master degree. He has ever been worked in Planning and Financial Department of the Company and in Financial Department of Beijing Orient Top Victory Electronics Co., Ltd. and has ever been taken the posts of Deputy Division Chief of Planning Financial Division in Beijing Electronic Tube Factory, Manager of Planning and Financial Department of Beijing BOE Investment and Development Co., Ltd., CFO of Beijing Dongdian Industrial Development Company and Supervisor of the 2[nd ] ,3[rd] and 4[th] Supervisory Committee of the Company. Now he takes the posts of Employee Supervisor of the 4[th] Supervisory Committee of the Company, Director of Beijing BOE Special Display Technology Co., Ltd. and Director of Beijing Orient Mosler Intelligence Technology Co., Ltd..

(15) Ms. Xu Yan, 54 years old, college degree and economist, she ever took the posts of Secretary of CPC Branch, Chairman of Labor Union and Personnel Deputy Factory Director etc. in Beijing Electronic Tube Factory Branch, Deputy General Manager of HR Dept. in the Company, Director in Beijing Electronic Tube Factory Office and Party Committee Office and Employee Supervisor of the 3[rd] Supervisory Committee of the Company. Now she takes the posts of Employee Supervisor of the 4[th] Supervisory Committee of the Company, Vice-Secretary of CPC and Secretary of Committee for Discipline Inspection and concurrently Principal of Labor Union.

(16) Ms. Song Ying, 48 years old, senior accountant, she has ever been taken the posts of Division Chief of Planning and Financial Division in Beijing Electronic Tube Factory, Manager of Financial Department, Chief Financial Officer of the Company of the Company, Director and Managing Vice-President of the 2[nd] Board of Directors of the Company, Executive Director and Senior Vice-president of the 3[rd] Board of Directors. Now she takes the posts of Secretary of CPC and Vice-president of the Company and concurrently Vice Chairman of the Board of Zhejiang Beijing Orient Vacuum Electronic Co., Ltd., Director of Beijing Matsushita Color CRT Co., Ltd. and Director of Beijing Intelligent Kechuang Technology Development Co., Ltd..

(17) Mr. Ren Jianchang, 59 years old, senior engineer, ever worked as technical principal in America Westinghouse Electric Company, Germany SIEMENS Company, AEG Company and CALOR-EMAG Company and etc. in succession. He has ever taken the post of Chief Engineer of Vacuum Switch Tube in ABB Company and was awarded several technical patents in Germany. He has ever taken the posts of Director and Vice-president of the 2[nd] and 3[rd] Board of Directors and General Manager of Beijing Orient Vacuum Electric Co., Ltd.. Now he takes the posts of Vice-president of the Company and concurrently Chairman of the Board of Beijing Orient Vacuum Electric Co., Ltd..

(18) Mr. Han Guojian, 52 years old, undergraduate, senior engineer, he successively took Technical Chief Officer in Division under the Company, Deputy General Manager of Beijing Asahi Glass Electronics Co., Ltd. and Chairman of the Board of Beijing BOE YAMATO Photoelectron Co., Ltd.. Now he takes the posts of Vice-president of the Company and concurrently takes posts of Chairman of the Board of Beijing BOE Special Technology Co., Ltd., Representative Director of BOE-Hydis Technology Co., Ltd, Director of Beijing BOE Optoelectronics Technology Co., Ltd., Director of BOE Hyundai LCD Inc. and Director of BOE (Hebei) Mobile Display Technology Co., Ltd..

(19) Mr. Liu Xiaodong, 41 years old, undergraduate, engineer, he ever worked in Research Institute of Beijing Information Optics Apparatus. He successively took the posts of Director, Deputy General Manager and Secretary of CPC of Beijing Matsushita Color CRT Co., Ltd. and Director of BOE CHATANI Electronics Co., Ltd.. Now he takes the posts of Vice-president of the Company, Director and General Manager of Beijing BOE Optoelectronics Technology Co., Ltd..

(20) Mr. Wang Jiaheng, 36 years old, MBA, ever took the posts of Deputy Manager in International Cooperation and Investment Department, Manager in Enterprise Development Department and General Manger in Electronic Components General Division of the Company. Now he takes the posts of Vice-president of the Company and concurrently Director of Korea Hyundai LCD Inc., Director and General Manager of BOE Hyundai LCD Inc., Director of Beijing Nissin Electronics Precision Component Co., Ltd. and Director of BOE (Hebei) Mobile Display Technology Co., Ltd..

(21) Mr. Wang Yanjun, 36 years old, master, accountant. He ever took Division Chief in Financial Division of Beijing Electronic Tube Factory, Secretary of Financial Department of the Company, Director of Beijing Asahi Glass Electronics Co., Ltd., Director of Beijing Nissin Electronics Precision Component Co., Ltd., Director of Beijing Orient Top Victory Electronics Co., Ltd. and Director of Zhejiang Beijing Orient Vacuum Electronic Co., Ltd.. Now he takes the posts of Chief Financial Officer of the Company and concurrently Director of Beijing BOE Optoelectronics Technology Co., Ltd., of Top Victory Technology Co., Ltd., Director of BOE-HYDIS Technology Co., Ltd., Director of Beijing Star City Real Estate Development Co. Ltd., Chairman of the Board of Beijing BOE Land Co., Ltd., Chairman of the Board of Beijing Orient Hengtong Properties Co., Ltd. and Director of Beijing Intelligent Kechuang Technology Development Co., Ltd..

(22) Mr. Cao Hong, 46 years old, undergraduate, professional senior engineer, he ever took the posts of Deputy Factory Manager and Factory Manager of Beijing BOE Semiconductor Devices Factory and Employee Supervisor of the 3[rd] and 4[th ] Supervisory Committee and Assistant President of the Company. He is now in charge of Vice-president and Investment Chief Officer of the Company, Chairman of the Board of Beijing BOE Semiconductor Co., Ltd., Chairman of the Board of Beijing Fangyi Integrate Circuit Design Co., Ltd., Director of Suzhou BOE CHATANI Electronics Co., Ltd., Director of Beijing Asahi Glass Electronics Co., Ltd., Director of Beijing Nittan Electronics Co., Ltd., Director of BOE Hyundai LCD Inc. and Director of Beijing BOE CHATANI Electronics Co., Ltd.

(23) Mr. Feng Weidong, 38 years old, doctor of management science and engineering of Tianjin University, ever was post doctorate of economic management of Qinghua University, and successively took the posts of General Manager of foreign cooperation department of Datang Telecom Technology & Industry Group, assistant to President and senior engineer of Central Research, research assistant to professor of electric and computer engineering department of University of Connecticut of US, central researcher of Engineering and Advanced Technology of Taylor L. Booth, and assistant to president and concurrently Director of enterprise planning department of the Company. He is now in charge of Vice-president of the Company.

(24) Mr. Su Zhiwen, 37 years old, H. K. China nationality, MBA of Hong Kong University of Technology, member of Hong Kong Society of Accountants and senior member the

Association of Chartered Certified Accountants. He successively took the posts of manager of check and business consultant department of Hong Kong Pricewaterhouse Coopers CPAs, CFO of Hong Kong Economic Times Holding Limited, and Assistant to Chairman of the Board of the Company. He is now in charge of Auditing Chief of the Company.

(25) Mr. Lin Rongzhen, 43 years old, Korea nationality, doctor of Science in Physics. He ever worked in Korea LG Electronics Co., and successively took the posts of Chief Engineer, Executive Chief Officer and Managing Director in Product Development Dept. of Hyundai Electronics and its subsidiaries HYDIS, Managing Director in Development Dept. of BOE-Hydis Technology Co., Ltd., a Korea subsidiary of the Company; and Managing Director of Development Center of TFT-LCD Business Group. Now he acts as Senior Managing Director of Development Center of TFT-LCD Business Group in the Company and Technology Chief Officer of the Company.

3. Directors and supervisors assuming title in and receiving pay from shareholding companies

Name	Title
	Beijing BOE Investment & Development Co., Ltd.	Beijing Dongdian Industrial Development Company
Jinag Yukun	Director and concurrently President	General Manager and concurrently Vice Secretaryof CPC
Zhao Caiyong		StandingDeputyGeneral Manager
Xia Zhenzhi		Vice Secretary of CPC and Principal of labor union
Mu Chengyuan	Secretaryof the Board and StandingVice President

II. Remunerations for directors, supervisors and senior executives

The Nomination, Remuneration and Examination Committee of the Board of Directors would formulate the methods on remuneration, welfare and examination for directors and senior executives of the Company, and would also conduct the performance examination on directors and senior executives. The remuneration and welfare standards would set according to the market remuneration level as well as the real status of the Company and the individual conditions of the directors and senior executives. The actual remuneration would be proposed by the Nomination, Remuneration and Examination Committee according to the remuneration and welfare standards as well as the results of the performance evaluation, and then would be implemented after having been examined and approved by the Board of Directors.

The remunerations (including basic salary, as well as the various rewards, welfare, subsidy, housing allowance, and other subsidies) for the current directors, supervisors and senior executives totaled RMB 8,027,000 (pretax) in the year 2005.

The total amount of remunerations paid to the top three directors that enjoy the highest salaries totaled RMB 3,577,000 (Pretax), while the total amount of remunerations paid to the top three senior executives that enjoy the highest salaries totaled RMB 4,003,000 (Pretax).

Subsidies for independent directors (after-tax): USD 10,000 per year for Mr. Tai Zhonghe, and RMB 50,000 per year for Mr. Xie Zhihua, Mr. Zhang Baizhe and Mr. Li Zhaojie respectively.

In the year 2005, there were 16 directors, supervisors and senior executives that had drawn salaries from the Company, with 3 people drawing salaries below RMB 200,000, 10 people between RMB 200,000 and RMB 500,000 and 3 people above RMB 500,000.

III. Changes of directors, supervisors and senior executives in the report period On Apr. 25, 2005, as examined and approved by the 9[th] meeting of the 4[th] Board of Directors,

Executive Director Mr. Chen Yanshun was engaged as the Executive Vice President and concurrently Secretary of the Board, and Mr. Cao Hong was engaged as Vice President and concurrently Chief Supervisor of Investment Management. Since Mr. Cao Hong, then a Employee Representative Supervisor, had been engaged by the Board of the Company as Vice President and concurrently Chief Supervisor of Investment Management, he applied for resignation from the position of Workers’ Representative Supervisor to the Workers’ Conference of the Labor Union of the Company.

On Aug. 8, 2005, as examined and approved by the presidium joint meeting of the Workers’ Conference, Supervisor Mr. Yang Anle was elected as the Employee Representative Supervisor.

Executive Director and concurrently Executive Vice President Doctor Xuan Jiansheng had held posts of Chairman of the Board and CEO of TPV Technology Limited. To strengthen the work of TPV Technology Limited, Doctor Xuan Jiansheng had applied for resignation from the positions of Executive Director and Executive Vice President of the Company. On Aug. 24, 2005, the 13[th] meeting of the 4[th] Board of the Company accepted Doctor Xuan Jiansheng’s application of resignation. Having been examined and approved by the 3[rd] Provisional Shareholders’ General Meeting 2005 (Sep. 29, 2005) of the Company, Doctor Xuan Jiansheng resigned from the post of Executive Director of the Company.

As examined and approved by the 13[th] meeting of the 4[th] Board of the Company (Aug. 24, 2005) and the 3[rd] Provisional Shareholders’ General Meeting 2005 (Sep. 29, 2005), Mr. Moriko was elected as director to the 4[th] Board of Directors of the Company.

On Nov. 21, 2005, as examined and approved by the 16[th] meeting of the 4[th] Board of the Company, President Mr. Liang Xinqing would not hold the concurrent post of COO of the Company; Executive Vice President Mr. B.D.Choi was engaged as COO, taking charge of the operation of the Company’s main business TFT-LCD; Mr. Lin Rongzhen was engaged as CTO of the Company, mainly taking charge of the technology R & D as well as management work.

IV. Statement on the employees of the Company

By the end of 2005, the number of the employees in service of the Company (including the headquarter of the Company and main controlling subsidiaries) totaled 12,249, with their work divisions and education levels as follows (Unit: person):

Work division	Technology R& D	Technology R& D	Professional skills	Professional skills	Marketing personnel	Management personnel	Financial personnel	Production personnel	Others
Number	443		1273		304	804	159	8967	299
proportion	3.62%		10.39%		2.48%	6.56%	1.30%	73.21%	2.44%

Educational background		Doctor & Post-Doctor		Master	Bachelor	Junior College Graduate	Vocational School Graduate		Others
Number		52		410	1588	1807	4227		4165
Proportion		0.42		3.35%	12.96%	14.75%	34.51%		34.01%

Section V. Corporate Government

I. Corporate Government

In the report period, the Company had operated strictly in accordance with the Company Law, Securities Law, and Code of Corporate Governance for Listed Companies in China, and had continually improved the Corporate Government structure. In the report period, the Company had revised the Articles of Association, Independent Director System and the Rules of Information Disclosure, and had formulated the Internal Report System on Important Information in accordance with the Regulations on Reinforcement of Protection of Interests of Public Shareholders issued by the CSRC, and the newly amended Stock Listing Rules of Shenzhen Stock Exchange.

The Company had successfully implemented the Split-share Reform in the report period and thus further improved the stock liquidity and the capital structure.

In the new year, the Board of Directors would further revise and improve the Articles of Association in conformity with the newly amended laws and regulations, such as the Company Law, Securities Law and the Opinions on Improving the Quality of Listed Companies, etc.

In line with the administration concept of “good faith, standardization, transparency and responsibility”, the Company had learned various laws, regulations as well as other normative documents concerning Corporate Government in time, conducted self-inspection according to requirements, abided by the rules on information disclosure, strictly performed the information disclosure duty of listed companies, actively improved the quality of information disclosure, continually strengthened the management work on the relationship with investors and earnestly protect the investors’ interests.

II. Duty performance of independent directors

The current four independent directors engaged by the Company are experts in areas of the IT industry, Finance, Law and TFT-LCD respectively. In the report period, the independent directors had fulfilled their responsibilities strictly in conformity with the Guidelines on Establishing the Independent Director System in Listed Companies, and had expressed independent opinions on the change of the Certified Public Accountants, related transactions, change of directors and senior executives, Split-share Reform and other significant events, which had helped a lot in the Company’s strategic decisions and had practically protected the interests of the general medium and small shareholders and the Company.

Attendance of independent directors at the Board meetings in the report period:

Name of independent director	Number of Board meetings needed to attend this year	Number of meetings present in person (including written Opinion )	Number of meetings present by authorized person	Number of meetings absent from
Tai Zhonghe	10	10
Xie Zhihua	10	9		1
ZhangBaizhe	10	9	1
Li Zhaojie	10	10

III. Independence of the Company in business, personnel, assets, organizations and finance from the controlling shareholder

The Company had separate businesses, personnel, assets, organizations and finance from the controlling shareholder and the actual controller. With its personnel, finance and organizations independent and assets complete, the Company had full production and operation capability.

Businesses: The Company was independent in the business aspect from the controlling

shareholder and the actual controller and had its own independent purchase and sales systems; the purchase of main materials and the sales of products were all conducted through its own supply and sales systems; the Company also made its own decisions and assumed sole responsibility for its profits and losses, and it had independent and complete businesses and self-operation capability. The related transactions had been conducted according to the market principles and regulations, and there were no cases that had done harm to the legal interests of all the shareholders or the Company.

Personnel: The Company was completely independent in labor, personnel and remunerations, etc. President, Vice President, Chief Finance Officer, Secretary of the Board as well as other senior executives of the Company all worked full-time and had not held any concurrent posts at the controlling shareholder’s place.
Assets: The Company had independent and complete assets and clear ownership, and had the production system, ancillary production system as well as supporting facilities, land use rights and intellectual property rights, etc. Neither the controlling shareholder nor the actual controller had any cases of occupying the Company’s assets.
Organizations: The Company had established organizations completely independent from the controlling shareholder and the actual controller, had independent and sound organizations and Corporate Government structure.
Finance: The Company had established independent financial departments, and the finance personnel all worked full-time. The Company had formulated a standard and independent finance accounting system as well as a financial management system targeting at subsidiaries, established the corporate financial management archives and also equipped with relevant management personnel.

IV. Examination and incentives for the senior executives According to the performance examination method, the senior executives would sign a Target Responsibility Paper with the Group which sets the work goals, key performance indicators (KPI) as well as the evaluation, reward and punishment standards. the work targets accomplishment would be evaluated in the quarterly analyses, semi-annual reports and annual examinations. The examination and evaluation results would decide the remunerations, position shifts as well as the trainings taked by the senior executives.

Section VI. Shareholders’ General Meeting

Details on the Shareholders’ General Meetings held in the report period are as follows: I. Shareholders’ General Meeting 2004

The Shareholders’ General Meeting 2004 was held at Guomen Hotel, Beijing on May 31, 2005. And the Company published the Public Notice on the Resolutions of the Shareholders’ General Meeting 2004 of BOE Technology Group Co., Ltd in Securities Times, China Securities Journal, Shanghai Securities News and Hong Kong Ta Kung Pao on Jun. 1, 2005.

II. 1[st] Provisional Shareholders’ General Meeting 2005

The 1[st] Provisional Shareholders’ General Meeting 2005 was held at Guomen Hotel, Beijing on Jul. 5, 2005. And the Company published the Public Notice on the Resolutions of the 1[st] Provisional Shareholders’ General Meeting 2005 of BOE Technology Group Co., Ltd in Securities Times, China Securities Journal, Shanghai Securities News and Hong Kong Ta Kung Pao on Jul. 6, 2005.

III. 2[nd] Provisional Shareholders’ General Meeting 2005

The 2[nd] Provisional Shareholders’ General Meeting 2005 was held at Guomen Hotel, Beijing on Aug. 2, 2005. And the Company published the Public Notice on the Resolutions of the 2[nd] Provisional Shareholders’ General Meeting 2005 of BOE Technology Group Co., Ltd in Securities Times, China Securities Journal, Shanghai Securities News and Hong Kong Ta Kung Pao on Aug. 3, 2005.

IV. 3[rd] Provisional Shareholders’ General Meeting 2005

The 3[rd] Provisional Shareholders’ General Meeting 2005 was held at Guomen Hotel, Beijing on Sep. 29, 2005. And the Company published the Public Notice on the Resolutions of the 3[rd] Provisional Shareholders’ General Meeting 2005 of BOE Technology Group Co., Ltd in Securities Times, China Securities Journal, Shanghai Securities News and Hong Kong Ta Kung Pao on Sep. 30, 2005.

V. 4[th] Provisional Shareholders’ General Meeting 2005

The 4[th] Provisional Shareholders’ General Meeting 2005 was held at Guomen Hotel, Beijing on Dec. 22, 2005. And the Company published the Public Notice on the Resolutions of the 4[th] Provisional Shareholders’ General Meeting 2005 of BOE Technology Group Co., Ltd in Securities Times, China Securities Journal, Shanghai Securities News and Hong Kong Ta Kung Pao on Dec. 23, 2005.

VI. Shareholders’ General Meeting on Split-share Reform

On Nov. 24, 2005, the Shareholders’ General Meeting on Split-share Reform was held at Guomen Hotel, Beijing. And the Company published the Public Notice on the Ballot Result of the Shareholders’ General Meeting on Split-share Reform of BOE Technology Group Co., Ltd in Securities Times, China Securities Journal, Shanghai Securities News and Hong Kong Ta Kung Pao on Nov. 25, 2005.

Section VII. Report of the Board of Directors

I. Main business scope and overall operation

The Company has focused its core operations in the display area, and there are seven large subordinate display-related groups, i.e. the TFT-LCD SBU, monitor and Flat Panel andTV SBU, professional display system SBU, mobile display system SBU, display application system SBU, precision electronic parts and materials SBU and the CRT SBU, with the operations involving the display parts and materials, display devices, monitors and Flat Panel TVs and application terminal products.

In the report period, the sales revenue realized by the Company totaled RMB 13,449,713,000, up by 8.10 percent year-on-year. However, due to the price downslides in TFT-LCD market, small production capacity, high component and raw material supply costs, and increases in R&D expenses and financial expenses, the profitability of the main operations of the Company has decreased by large margins compared with the same period of the last year, and the losses totaled RMB1,245,993,000.

1. Distribution of main operations

Breakdown of main operations classified according to products Unit: RMB’000

Product	Sales revenue	Sales cost	Gross profit ratio	Increase or decrease of sales revenue year-on-year (%)	Increase or decrease of sales cost year-on-year (%)	Increase or decrease of gross profit ratio year-on-year (%)
Display terminal products	4,612,913	4,382,124	5.00%	5.08	5.22	-1.96
Display devices – Thin Film Transistor LiquidCrystal	7,950,352	8,431,119	-6.05%	45.35	70.40	-163.48
Small-size display devices	682,158	565,189	17.15%	-73.16	-73.92	16.35%
Other operations	1,083,246	814,380	24.82%	30.00	41.17	-19.15
Internaloffset	-878,956	-809,207	-	-	-	-
Total	13,449,713	13,383,605	0.49	8.10	19.95	-95.25

The data under the items of sales revenue and sales costs from the display terminal products operation were those of the period from January to November 2005 of Beijing Orient Top Victory Electronics Co., Ltd, which used to be the Company’s subsidiary and had not been included in the consolidation scope since December 2005.

Sales revenue and sales costs from the display devices – Thin Film Transistor Liquid Crystal had increased by large margins compared with the same period of the last year, mainly because the controlling subsidiary of the Company Beijing BOE Optoelectronics Technology Co., Ltd (BOEOT) had launched its TFT-LCD 5G production line into mass production in May 2005. The gross profit ratio had decreased by a large margin compared with the same period of the last year, and explanations had been given on the reasons in “II Analyses on the main operations and business of the Company”.

Sales revenue and sales costs from small-size display devices had decreased by large margins year-on-year, while the gross profit ratio had increased by a large margin. Reasons were that the income statement of the former controlling subsidiary of the Company Hyundai LCD Inc. had been included in the consolidation scope in 2004 while its income statement had not been included in consolidation scope in 2005.

Breakdown according to regional distribution Unit: RMB’000 Regions Sales revenue of Sales revenue of Increase or decrease of sales revenue

	2005	2004	year-on-year
China	6,514,081	6,133,427	6.21%
Other Asian countries	5,045,182	2,442,940	106.52%
Europe	414,566	484,249	-14.39%
America	1,309,074	2,900,883	-54.87%
Other countries	166,810	480,209	-65.26%
Total	13,449,713	12,441,708	8.10%

II. Analyses on the main operations and business of the Company

(I) Analyses on the profitability of the main operations

In the report period, the main operations of the Company remained unchanged, while the profitability of the main operations had decreased by a large margin compared with the same period of the last year and so did the net profit of the Company. Reasons for the year-on-year large-margin decrease of the net profit of the Company included: ① Due to low price in the TFT-LCD market as well as the adjustment to product structure, the South Korean subsidiary BOE Hydis Technology Co., Ltd influenced the consolidated financial statements of the Company by RMB –1,144,860,000; ② Since the TFT-LCD 5G production line of BOEOT were at its inception and the market price was low, this company influenced the consolidated financial statements of the Company by RMB -394,590,000; ③ The affiliated company Hyundai LCD Inc. suffered operation difficulties and the net profit of Beijing Matsushita Color CRT Co., Ltd decreased, which had led to the large-margin decrease of the Company’s investment yield compared with the same period of the last year.

1. The price of the Company’s main product LCD panel had decreased by a large margin, but the price of raw materials decreased slowly.

Due to the influence of the cyclicity of the LCD industry (known as “LCD Cycle”), the price of LCD panel started to decrease by large margins in the second half of 2004 and the trend lasts till now. The TFT-LCD industry was at its valley period. In the meantime, the price of raw materials decreased slowly.. Take 17” product, the current main product of the Company, as an example. The price of each unit of 17” product was about USD 280 in June 2004, and then it decreased to approximately USD 150 in 2005, a margin close to 47%. Also, the downslide margin of raw material prices had been far behind that of the TFT-LCD prices. There had been great fluctuations in the business performance and even losses in most of the TFT-LCD manufacturers worldwide, including BOE.

2. The scale of the Company’s TFT-LCD production was small, hence no obvious advantages

in scale.

In May 2005, the TFT-LCD 5G production line of the Company launched mass production and full production was achieved in the 3[rd] quarter of 2005, thereby increased the overall production capacity scale by a large margin compared with that of 2004. However, the overall scale of the Company was still smaller than the global major panel manufacturers, and the bargaining power of the Company in raw material purchase was lower, too. Apart from these, small scale had resulted in high average fixed cost of each unit of product.

As the Beijing TFT-LCD 5G production line launched into production, the South Korean subsidiary BOE Hydis Technology Co., Ltd began focusing on the production of mobile and professional display products, such as the small-size panels for portable computers, cell phones and medical equipments, etc. In the report period, BOE Hydis started to adjust its product structure. Although the output of mobile and professional display products increase gradually, it had not formed large scale yet. To satisfy the demands from original customers, the 17” products still took up over 40 percent in BOE Hydis, sinceinfluenced by the market price fluctuation, therefore BOE Hydis suffered some losses during operation.

The localized supplying for TFT-LCD industry was poor.

As an emerging industry domestically, the TFT-LCD had low supplying ratio. Since the beginning of the construction of the TFT-LCD 5G production line in Beijing, the Company had started to carry out the project of localized supplying of raw materials. After two years’ efforts, more than 10 overseas enterprises providing raw materials had settled down in the BOE Beijing Display Technology Park. However, the localized supply of the key raw materials still had not been achieved, and the key raw materials all depended on import, resulting in production costs higher than the average level among foreign enterprises of the same business:

4. R&D expenses had increased by large margins.

To ensure the success of the Beijing TFT-LCD 5G production line, the Company had done a lot preparation in R&D and trial production in the initial period. Apart from this, to meet the market demands and step up the adjustments to product structure, the Company had expanded its R&D investment in Wide Screen and LCD TVs. Due to the cyclicity of product development, corresponding rewards would not show up enough in the same period of the occurrence of the R&D expenses.

5. The financial expenses had increased by large margins.

Due to small capital scale, the Company had to shoulder heavy interest burden from large amount of liabilities for the construction of Beijing TFT-LCD 5G production line. And the financial expenses in the report period reached as high as RMB 665,556,000.

6. The investment yield had decreased.

Influenced by the competition from TFT-LCD products in the cell phone market, the price of CSTN product had dropped, leading to the difficulties in operation and liability repayment by the South Korean Hyundai LCD Inc., an affiliated company of the Company and the its minus net assets. The Company had reduced the book Value of long-term equity investment for the South Korean Hyundai LCD Inc. according to the equity of this company held by the Company. Apart from this, the net profit of the Company’s affiliated company Beijing Matsushita Color CRT Co., Ltd had decreased because of the stagnant TV market, and the investment yield of the Company decreased correspondingly.

(II) Breakdown of the assets and liabilities of the Company

Unit: RMB’000

Item	Dec. 31, 2005	Dec. 31, 2005	Dec. 31, 2004	Dec. 31, 2004	Increase or decrease margin
	Amount	Proportion	Amount	Proportion
Total assets	21,524,766	100.00%	18,223,237	100.00%	18.12%
Trade receivable	1,876,294	8.72%	2,042,427	11.20%	-8.13%
Inventories	1,919,901	8.92%	1,127,066	6.18%	70.35%
Interest in associate	2,820,463	13.10%	2,209,700	12.13%	127.95%
Fixed assets	11,330,272	52.64%	4,970,500	27.28%	27.64%
construction inprogress	285,244	1.33%	5,065,349	27.80%	-94.37%
Short-term loans	3,762,956	17.48%	5,436,259	29.83%	-30.78%
Long-term loans	9,569,710	44.46%	2,493,721	13.68%	283.75%

Reasons for the decrease of Trade receivable: The Company had sold the equity of the former controlling subsidiary Beijing Orient Top Victory Electronics Co., Ltd. Reasons for the increase of inventories: The TFT-LCD 5G production line of the Company’s controlling subsidiary BOEOT had been launched into mass production.

Reasons for the increase of interest in associates: 1. The Company had injected the equity of the former controlling subsidiary Beijing Orient Top Victory Electronics Co., Ltd into the Company’s affiliated company TPV Technology Limited, resulting in the investment cost increase by the Company in TPV Technology Limited. 2. TPV Technology Limited issued new shares, and its net assets had increased thereby, resulting in the interest increase of the

Company in TPV Technology Limited. 3. The business profit of TPV Technology Limited in 2005 had increased, resulting in the investment yield increase of the Company.

Reasons for the increase of net fixed assets: The TFT-LCD 5G production line of the Company’s controlling subsidiary BOEOT had been transferred from under-construction project into fixed assets.

Reasons for the decrease of construction in progress: The TFT-LCD 5G production line of the Company’s controlling subsidiary BOEOT had been transferred from under-construction project into fixed assets.

Reasons for the decrease of short-term loans: The Company had repaid part of the short-term loans with the syndicate loans obtained.

Reasons for the increase of long-term loans: The Company had got syndicate loans for the investment in and construction of the Beijing TFT-LCD 5G production line, and the Company’s controlling subsidiary the South Korean BOE Hydis Technology Co., Ltd had issued corporate bonds.

(III) Analyses on the operations and business achievements of the major controlling companies and shareholding companies

Controlling companies

Unit: 000RMB

Name of company	Main products	Registered capital	Assets scale	Net profit	Income from main operations	Cost of main operations
BOE Hydis Technology Co., Ltd	Development, manufacture and sales of TFT-LCD products	626,306	6,460,260	－ 1,144,864	6,326,673	6,796,575
BOEOT	Development and manufacture of TFT displaydevices	4,138,391	11,245,033	-394,590	3,418,070	3,316,694

2. Shareholding companies

Unit: RMB’000

Name of company	Mainproducts or services	Registered capital	Assets scale	Net profit
TPV Technology Limited	Manufacture and sales of CRT and LCD displaymonitors	144,852	24,648,198	1,225,519
Beijing Matsushita Color CRT Co.,Ltd	Manufacture and sales of CRTs	1,240,754	3,636,598	113,394

III. Measures to take in 2006 by the Company

1. Expand production scale and realize scale economy in production;

The Company plans to invest USD 90 million in the technological transformation work for the Beijing TFT-LCD 5G production line in 2006, expand the production scale of the Beijing TFT-LCD 5G production line from 60,000 pieces of substrate per month to 85,000 pieces per month, improve production capacity, reduce the depreciation level of each unit of product, and uplift the bargaining power in raw material purchase through expanding production scale, so as to realize scale economy in production.

Realize the localized supplying of raw materials and cut purchase costs;

The Company will actively promote the work on the localized supplying of the upper-stream raw materials, cooperate with the raw material manufacturers that have already made investments to expand their production scales, attract investments from more raw material manufacturers, gradually replace the raw materials imported and cut purchase costs.

Step up the adjustments to the product structure and switch into the products of high added value.

The Company plans to speed up the adjusting of product structure, expand the output of the products of large market demands, such as TFT cell phone screens, mid-size monitors and TV

screens and improve the income and profit levels; in the meantime, increase the proportion of the products with added value of the AFFS technology and improve profitability.

IV. Investment in the report period

The Company had not raised any proceeds in the report period, nor had it used any proceeds raised previously in the report period.
Significant investments with non-raised proceeds

Unit: RMB’0000

Project	Investment amount	Progress of the project	Profit-making status of the project
TFT-LCD 5G Production Line	274,375	831,672	Finished
One DropFillingEquipment(ODF)	18,745	47,447	Finished
Vacuum Fluorescent Display (VFD) Production Line Phase 5	686	12,370	Finished
Investment in Beijing Fangyi Integrated Circuit DesigningCo.,Ltd	4,110	4,110	Finished
Investment in Beijing BOE Chatani Electronics Co.,Ltd	2,803	2,803	Finished
Investment increase in BOE Hydis Technology Co.,Ltd	1,035	125,227	Finished
Investment increase in Suzhou BOE Chatani Electronics Co.,Ltd	2,792	5,309	Finished
Total	304,546	1,028,938

V. Revision of the accounting policies in the report period

The implementation of the newly revised International Financial Report Standards started on Jan. 1, 2005. The Company has already made retrospective adjustments to the data of 2004. For details, please read the content on the revised accounting policies in the accounting report.

VI. Routine work of the Board of Directors

Meetings held by the Board and content of the resolutions Meetings held by the Board in the report period were as follows:

1) On Jan. 31, 2005, the Company held the 7[th] meeting of the 4[th] Board of Directors, and public notices on the resolutions of this meeting were published in Securities Times, China Securities Journal, Shanghai Securities News and Hong Kong Ta Kong Pao on Feb. 3, 2005. 2) On Feb. 24, 2005, the Company held the 8[th] meeting of the 4[th] Board of Directors, at which following resolutions had been examined and approved: the Proposal on Establishing a Driver IC Design Company and the Proposal on Lease of Premises from Beijing Dongdian Industrial Development Company. Since the capital amount involved in these proposals were small, relevant issues involved in the resolutions were disclosed in the Annual Report 2004 of BOE Technology Group Co., Ltd, which was published in Securities Times, China Securities Journal, Shanghai Securities News and Hong Kong Ta Kong Pao on Apr. 28, 2005.

3) On Apr. 25, 2005, the Company held the 9[th] meeting of the 4[th] Board of Directors, and the public notices on the resolutions of this meeting were published in Securities Times, China Securities Journal, Shanghai Securities News and Hong Kong Ta Kong Pao on Apr. 28, 2005. 4) On May 8, 2005, the Company held the 10[th] meeting of the 4[th] Board of Directors, at which the Proposal on the Integration of the Monitor Operation and the Plat-Panel TV Operation had been examined and approved. Since the issues in the resolution involved commercial secrets, they were disclosed in the Public Notice on the Integration of the Monitor Operation and the Plat-Panel TV Operation of BOE Technology Group Co., Ltd published in Securities Times, China Securities Journal, Shanghai Securities News and Hong Kong Ta Kong Pao on Jun. 16, 2005.

5) On May 31, 2005, the Company held the 11[th] meeting of the 4[th] Board of Directors, and the public notices on the resolutions were published in Securities Times, China Securities Journal, Shanghai Securities News and Hong Kong Ta Kong Pao on Jun. 2, 2005.

6) On Jun. 30, 2005, the Company held the 12[th] meeting of the 4[th] Board of Directors, and the public notices on the resolutions were published in Securities Times, China Securities Journal, Shanghai Securities News and Hong Kong Ta Kong Pao on Jul. 1, 2005.

7) On Aug. 24, 2005, the Company held the 13[th] meeting of the 4[th] Board of Directors, and the public notices on the resolutions were published in Securities Times, China Securities Journal, Shanghai Securities News and Hong Kong Ta Kong Pao on Aug. 26, 2005.

8) On Nov. 9, 2005, the Company held the 15[th] meeting of the 4[th] Board of Directors, and the public notices on the resolutions were published in Securities Times, China Securities Journal, Shanghai Securities News and Hong Kong Ta Kong Pao on Nov. 11, 2005.

9) On Nov. 21, 2005, the Company held the 16[th] meeting of the 4[th] Board of Directors, and the public notices on the resolutions were published in Securities Times, China Securities Journal, Shanghai Securities News and Hong Kong Ta Kong Pao on Nov. 23, 2005.

Implementation of the resolutions made at the Shareholders’ General Meeting by the Board According to the relevant resolutions made at the Shareholders’ General Meeting 2004, the Board of the Company implemented the profit distribution plan for the year 2004: based upon the total share capital of 1,463,797,200 shares, dividend of RMB 0.2 in cash had been distributed to all shareholders for every 10 shares held by them (Pretax. Tax deducted, actual dividend for individual shareholders and investment funds among the A-share social public shareholders was RMB 0.18 in cash for every 10 shares. No tax had been deducted for B shares for that time being.). The record date was Jun. 27, 2005, and the ex-dividend date Jun. 28, 2005. Dividend for B-share shareholders had been paid in HKD, and the exchange rate had been the middle price of the HKD against RMB exchange rates announced by the People’s Bank of China on the first work day (Jun. 1, 2005) since approval of the implementation of this profit distribution plan by the Shareholders’ General Meeting 2004, i.e. HKD 1 = RMB1.0637.

On Jun. 3, 2005, the Company published the Public Notice on the Distribution of Bonus and Dividend for 2004 by BOT Technology Group Co., Ltd in Securities Times, China Securities Journal, Shanghai Securities News and Hong Kong Ta Kong Pao.

According to the relevant resolutions made at the 1[st] Provisional Shareholders’ General Meeting 2005, the Board of the Company implemented the plan on transferring capital public reserves into share capital: Based upon the total share capital of 1,463,797,200 shares, 5 shares transferred with capital public reserves had been distributed to all shareholders for every 10 shares held by them. The record date was Jul. 18, 2005, and the ex-dividend date Jul. 19, 2005.

On Jul. 13, 2005, the Company published the Public Notice on the Implementation of Transferring Public Reserves into Share Capital by BOE Technology Group Co., Ltd in Securities Times, China Securities Journal, Shanghai Securities News and Hong Kong Ta Kong Pao.

VII. Preplan on profit distribution and preplan on capitalization of public reserves for the report period

As audited by KPMG Certified Public Accountants, the Company made losses of RMB 1,587,087,256 in 2005. Therefore, the Board of the Company had decided not to distribute any profit or capitalize any public reserves for 2005.

Section VIII. Report of the Supervisory Committee

I. Meetings held and contents of the resolutions

The Supervisory Committee had fulfilled their duties strictly in accordance with relevant regulations in the Company Law and Articles of Association, etc. It had held 3 meetings in the report period and attended the Board meetings, with details as follows:

On Apr. 25, 2005, the 4[th] meeting of the 4[th] Supervisory Committee was held, at which some documents had been examined and approved, including the Work Report 2004 of the Supervisory Committee, the Text and Summary of the Annual Report 2004, the 1[st] Quarterly Report 2005, the Report on the Correction of Accounting Errors for the Year 2003, Explanation on the Use of the Proceeds Raised Last Time and the Proposal on the Routine Related Transactions of 2005.

Public notices on the resolutions were published by the Company in Securities Times, China Securities Journal, Shanghai Securities News and Hong Kong Ta Kung Pao on Apr. 28, 2005.

On Aug. 24, 2005, the 5[th] meeting of the 4[th] Supervisory Committee was held, at which the Semi-Annual Report 2005 had been examined and approved.

Public notices on the resolutions were published by the Company in Securities Times, China Securities Journal, Shanghai Securities News and Hong Kong Ta Kung Pao on Aug. 26, 2005.

On Oct. 27, 2005, the 6[th] meeting of the 4[th] Supervisory Committee was held, at which the 3[rd] Quarterly Report 2005 had been examined and approved.

Public notices on the resolutions were published by the Company in Securities Times, China Securities Journal, Shanghai Securities News and Hong Kong Ta Kung Pao on Oct. 29, 2005.

II. Independent opinions

1. Operation

The Supervisory Committee had fulfilled its duties strictly in accordance with the Company Law, Articles of Association and the Rules of Procedure of the Supervisory Committee. In the report period, members of the Supervisory Committee had attended the Board meetings and had conducted supervision over the convening procedures and the decision-making procedures of the Shareholders’ General Meeting and the Board of Directors, the implementation of the resolutions of the Shareholders’ General Meeting by the Board, as well as the operation of the decisions of the Company. The Supervisory Committee believed that the various decision-making procedures of the Company had been legal, and that, the directors and senior executives had no behavior during their daily work that had gone against the Articles of Association or done harm to the interests of the shareholders or the Company.

2. Finance inspection

The Supervisory Committee believed that the auditing opinions expressed by the KPMG Certified Public Accountants and the KPMG Huazhen Certified Public Accountants had been objective, and that the Financial Report had truly reflected the financial status and business performance of the Company.

3. Transactions of assets purchase or sale

In the report period, the transaction prices of the assets sales had been reasonable and the transactions had been in conformity with legal procedures. And there had been no insides dealings or other cases that had done harm to the interests or rights of part of the shareholders or had led to the loss of the Company’s assets.

4. Related transactions

The related transactions of the Company had all been conducted according to the market rules

and the principle of being fair and square. There were been no cases that had done harm to the interests of the minority shareholders. The Company had disclosed the information on the significant related transactions in time, and had also engaged financial consultants for professional advices. Independent directors had expressed their independent opinions as well.

Section IX. Significant Events

I. Lawsuits and arbitrations having occurred in the report period and those having lasted into the report period

On Jan. 14, 2004, the Company’s subordinate subsidiary Beijing BOE Land Co., Ltd (hereinafter referred to as “BOE Land”) and Beijing Zhongye Anshunda Metallurgical Corporation (hereinafter referred to as Zhongye Anshunda) signed a Framework Agreement on Reorganizing the Beijing Zhongjin Shunda Property Co., Ltd (hereinafter referred to as Zhongjin Property). According to the agreement, BOE Land and Zhongye Anshunda would hold 60 percent and 40 percent of Zhongjin Property’s equity after the reorganization respectively. BOE Land had finished the relevant reorganization procedures of capital injection, etc as according to the agreement, but Zhongye Anshunda had failed to finish the capital injection as planned due to the pledge of land. The Company had appealed to the court for the preservation of the investment fund in this project, and the Final Judgment (2005) GMZZ No. 1020 issued by Beijing Municipal High People’s Court ruled that this Framework Agreement and relevant supplementary agreements be terminated, and that Zhongye Anshunda return the investment fund injected by the Company in this project. Right now, this judgment has not been implemented.
The Company’s subordinate subsidiary, the South Korean BOE Hydis had received notices from Sharp Company, LG Philips and Honeywell International Incorporation and Honeywell Intellectual Properties Incorporation, proclaiming that some of their patents had been infringed and that royalties had to be paid. The Board of Directors reckoned that this event was still under inspection and it was hard to estimate the potential lawsuit result, therefore no reserves had been withdrawn in the consolidated statements for the possible liabilities that might be caused by this issue.

II Implementation of assets sales in the report period

Integration of the monitor operation and the flat-panel TV operation: on Jun. 15, 2005, the Company signed the Agreement of Transferring Shares of Beijing Orient Top Victory Electronics Co., Ltd with the Company’s subordinate affiliated company TPV Technology Limited. According to the Agreement, the Company would inject the 45.21 percent equity of Beijing Orient Top Victory Electronics Co., Ltd into TPV Technology Limited in exchange for the 68,326,408 shares newly issued by TPV Technology Limited targeting at the Company. The assets / equity transfers involved in the aforesaid equity transfer issue were finished on Nov. 30, 2005.
Transfer of the 40 percent equity of Beijing Star City Property Co., Ltd held by the Company: the 13[th] meeting of the 4[th] Board of Directors of the Company (held on Aug. 24, 2005) examined and approved the Proposal on Transferring the Equity of Star City Property Held by the Company. On Aug. 29, 2005, the Company signed the Equity Transfer Agreement and the Agreement on Credits and Liabilities with Harper & Harper Investment Consultation Co., Ltd (hereinafter referred to as Harper Investment), Jade Dragon Capital AG (hereinafter referred to as JD Company), Harper & Harper Ltd, Hong Kong Xujing Investment Co., Ltd, Singapore Dianli Technologies Private Co., Ltd and Beijing Star City Property Co., Ltd (hereinafter referred to as Star City Property). According to these Agreements, the Company would transfer its 40 percent equity in Star City Property to Harper Investment (or any assignee designated by it) at the price of RMB 60 million. Since Harper Investment had failed to pay the BOE the transfer fund at the time as stipulated in the Agreements, the Company had decided to terminate these Agreements and other relevant agreements, and these assets would be planned by the Company according to business development demands.

III. Significant related transactions

1. Related transactions concerning routine operation

The transactions between the Company and related parties had all been conducted according to the market principles within the amount limits for routine related transactions in 2005 as examined and approved by the Shareholders’ General Meeting. For details, please read the relevant content in the part concerning relation with related parties and transactions with them in the notes to the accounting statements.

Related transaction on assets or equity transfer

Please read the relevant content concerning the integration of the monitor operation and the flat-panel TV operation above.

The Company had no related transaction on external co-investment with related parties.

IV. Significant contracts and their implementation

1. Termination of the Operation Entrustment Contract

In April 2003, the Company signed an Operation Entrustment Contract with BOE Land, which stated that the Company would entrust BOE Land with the operation of the assets including the energy facilities of water, power, gas and heat, etc, the housing properties, land, under-construction projects, etc at “BOE Digital Rose Garden (No. 10, Jiu Xian Road, Chaoyang District, Beijing)” and “BOE Small Backlight Project District (No. 10, Jiu Xian Road, Chaoyang District, Beijing)”, which had a book value of RMB 241,780,000.

Since entrusted operation result had been far from meeting the expectations of both parties, in the meantime, the energy supply situation, especially power supply, in Beijing had become more and more tense, and the requirements on energy management in the area by Beijing Municipal Government had become stricter and stricter, which the energy assets operation mode by BOE Land entrusted by the Company could no longer satisfy. Therefore, as examined and approved by the 13[th] meeting of the 4[th] Board of Directors of the Company (held on Aug. 24, 2005), the Company had decided to terminate this Operation Entrustment Contract and the entrusted operation.

2. Significant guarantees

(1) External guarantees

The Company provided a 5% guarantee for the loan obtained by Beijing Municipal Administration & Communications Card Co., Ltd from the Beijing Branch of the Bank of Communications, the ceiling of the loan was RMB 120 million and the loan required guarantee. The ceiling of the guarantee to be provided by the Company was RMB 6 million. By Dec. 31, 2005, the Company had actually provided RMB 4.5 million guarantees for the loan totaling RMB 90 million got from the Beijing Branch of the Bank of Communications. The loan term was from Jan. 29, 2006 to Apr. 22, 2006. This guarantee issue had exerted no significant influence on the Company.

The Company’s subordinate subsidiary Zhejiang BOE had provided guarantee for Zhejiang Huanyu Construction Group Co., Ltd for its loan with a ceiling of RMB 50,000,000. By Dec. 31, 2005, the actual balance of this guarantee loan totaled RMB 42,100,000.

(2) Internal guarantees

In the report period, the Company had provided guarantees for the subordinate subsidiary Zhejiang BOE’s loan of RMB 187,510,000, Vacuum Electric Equipment’s loan of RMB 4,000,000, BOE Hyundai’s loan of RMB 21,062,768 and BOEOT’s loan of RMB 6,037,964,000 (BOEOT had provided its fixed assets with total net value of RMB 7,473,300,000 as mortgage.). The guarantees totaled RMB 716,896,507.

In the report period, Zhejiang BOE, the Company’s subordinate subsidiary, had provided

guarantees for its subsidiary Shaoxing BOE for a loan of RMB 9,000,000; the Company’s subsidiary Suzhou Chatani for its subordinate subsidiary Beijing Chatani for a loan of RMB 41,700,000.

In the report period, the Company had not entrusted others with cash assets management.
The Company had no other significant contracts.

V. Implement of the commitments made by the Company in the report period

Commitments on the Split-share Reform

All the shareholders holding non-circulating shares of the Company had promised not to trade or transfer the Company’s shares held by them before Nov. 29, 2006. In the meantime, the controlling shareholder of the Company BOE Investment had made further commitments that after the expiration of the aforesaid commitment, the total former non-circulating shares sold by it through listing at the Stock Exchange would not exceed 5 percent of the Company’s total share number within 12 months, and not exceed 10 percent within 24 months.

Details on the commitments of the Company, please read the relevant content on the commitment issues in the notes to the accounting statements.
The Company or shareholders holding over 5 percent stocks had made no other commitments in the report period.

VI. Certified Public Accountants engaged by the Company and remuneration paid in the report period

On Dec. 22, 2005, the Company held the 4[th] Provisional Shareholders’ General Meeting 2005, at which the Proposal on Changing the Certified Public Accountants had been examined and approved. KPMG Certified Public Accountants had been engaged as the Auditor of the Company.

Remuneration paid to the Certified Public Accountants by the Company in the report period was as follows:

The remuneration paid to KPMG Certified Public Accountants totaled RMB 3.2 million.

VII. In the report period, neither the Company, nor its Board, directors, supervisors nor any other senior executives had been enforced by the CSRC, received any administrative punishments or criticism from the CSRC, or publicly criticized by the Shenzhen Stock Exchange.

VIII. Other significant events

To promote the development of its TFT-LCD operation, the Company signed a Strategic Cooperation Agreement with Marubeni Corporation, Japan (hereinafter referred to as Marubeni Japan) on Mar. 1, 2005 in Beijing. On the same day, the actual controller of the Company Beijing Electronics Holdings Co., Ltd signed the Contract on the Joint Operation of Beijing BOE Investment & Development Co., Ltd with Beijing Zhineng Kechuang Technology Development Co., Ltd and Marubeni Japan. According to the agreement, Marubeni Japan, as a strategic investor, would join in the system reform and reorganization work of the Company’s controlling shareholder Beijing BOE Investment & Development Co., Ltd. 56.25 percent of the stocks of Beijing BOE Investment & Development Co., Ltd were held by Beijing Electronics Holdings Co., Ltd, 33.75 percent by Beijing Zhineng Kechuang Technology Development Co., Ltd, and 10 percent by Marubeni Japan. For details, please read the Public Notice on the Signing of a Strategic Cooperation Agreement by BOE Technology Group Co., Ltd and Marubeni Corporation, Japan, as well as the Report on the Changes in Shares Held by Shareholders of BOE Technology Group Co., Ltd published on Mar. 2, 2005.

On Mar. 31, 2005, the Company’s subordinate subsidiary BOEOT signed an Agreement on Syndicated Loan with the banking syndicate (the creditor) with the Beijing Urban Construction Development Professional Sub-Branch of the China Construction Bank Co., Ltd (hereinafter referred to as Urban Construction Sub-Branch of Construction Bank) as the sole leading bank. The loan totaled USD 740 million (including RMB with equal translated value), of which the term of the loan for fixed assets was 5 years since the day of initial drawing, while the term of the loan for current capital was 3 years since the day of initial drawing. In the meantime, BOEOT also signed the Account Supervision Agreement, the Agreement on the Pledge of Machinery Equipment and the Agreement on the Pledge of Real Estate, while the Company and Beijing Electronics Holdings Co., Ltd signed Guarantee Agreements with the creditor separately and provided irrevocable guarantees for this syndicated loan both separately and jointly. For details, please read the Public Notice on the USD-740-Million Syndicated Loan for the TFT-LCD 5G Production Line of BOE Technology Group Co., Ltd published on Apr. 8, 2005.
The Company’s wholly-owned subsidiary BOE Hydis in South Korea had successfully issued, for the first time, KRW 60 billion corporate bonds of public raising that would pay interest, require no registration and provide no guarantees (the term being 2 years), and KRW 140 billion the same kind of corporate bonds during the second time (the bonds with 3-year term totaling KRW 90 billion, and the bonds with 5-year term totaling KRW 50 billion).
On Nov. 30, 2005, the Company and TPV Technology Limited finished the assets / equity transfer procedures on the integration of the monitor operation and the flat-panel TV operation. The Company had injected its 45.21 percent equity of Beijing Orient Top Victory Electronics Co., Ltd into TPV Technology Limited in exchange for the 68,326,408 shares newly issued by TPV Technology Limited targeting at the Company. The shares of TPV Technology Limited held by the Company increased to 424,360,191 shares. In February 2006, TPV Technology Limited had the current shares placed and new shares subscribed, and its total share capital increased to 1,906,410,754. With the 22.26 percent equity of TPV Technology Limited held by it, the Company continued to be the principal shareholder of this company.

Section X. Financial Report

I. Accounting Statements (see statements attached)

II. Notes to the Accounting Statements (see attachments)

Section XI. Documents for Reference

Accounting Statements with the signatures and seals of the Legal Representative, Chief Financial Officer and the person in charge of accounting department;
Originals of the Auditors’ Report with the seals of the Certified Public Accountants as well as the signatures and seals of the CPAs;
Texts of all the documents of the Company disclosed in the newspapers designated by the CSRC in the report period and originals of all the public notices.

BOE Technology Group Co., Ltd Board of Directors Apr. 25, 2006

BOE Technology Group Company Limited 京东方科技集团有限公司

31 December 2005

Report of the independent auditors to the shareholders of BOE Technology Group Company Limited

(Established as a joint stock company in the People’s Republic of China with limited liability)

We have audited the accompanying consolidated balance sheet of BOE Technology Group Company Limited (the “Company”) and its subsidiaries (hereinafter collectively referred to as the “Group”) as of 31 December 2005 and the related consolidated statements of income, changes in equity and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company’s directors. Our responsibility is to form an independent opinion solely to you, as a body, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report.

We conducted our audit in accordance with International Standards on Auditing. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements give a true and fair view of the financial position of the Group as of 31 December 2005 and of the results of its operating loss and its cash flows for the year then ended in accordance with International Financial Reporting Standards.

Certified Public Accountants Hong Kong 25 April 2006