BOE TECHNOLOGY GROUP CO., LTD — Annual Report 2005

Apr 28, 2006

BOE Technology Group Co., Ltd Summary of Annual Report 2005 Overseas Version

§1. Important Notes

1.1 The Board of Directors, the Supervisory Committee as well as the directors, supervisors and senior executives of BOE Technology Group Co., Ltd (hereinafter referred to as "the Company") hereby confirm that there are no false records, misleading statements or significant omissions in this report, and would shoulder any individual or joint responsibility concerning the authenticity, accuracy and completeness of the content. This Summary of Annual Report had been abstracted from the full text of the Annual Report. Investors may read the full text of the Annual Report to get more details. This Annual Report has been compiled in both Chinese and English. Should there be any ambiguity concerning meanings in the two versions, the Chinese one shall prevail.

1.2 No director, supervisor or senior executive declared that he/she could not guarantee the authenticity, accuracy or completeness of the content in the Annual Report, or that he/she had objections.

1.3 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.

1.4 KPMG Certified Public Accountants has provided the Company with a standard unqualified Auditors' Report.

1.5 Chairman of the Board and 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 declare that they can guarantee the authenticity and completeness of the Financial Report in this Annual Report.

§2. Company Profile

2.1 Basic information

Stock abbreviation	G-BOE, BOE-B
Stock code	00725, 200725
Stock Exchange listed on	Shenzhen Stock Exchange
Registered address and office address	Registered address: No. 10, Jiu Xian Qiao Road, ChaoyangDistrict, BeijingOffice address: No. 10, Jiu Xian Qiao Road, Chaoyang District,Beijing
Postal code	Postal code of the registered address: 100016Postal code of the office address: 100016
Internet website of the Company	http://www.boe.com.cn
E-mail of the Company	Web.master@boe.com.cn

2.2 Persons to contact and means for contact

	Secretary of the Board	Securities AffairsRepresentative
Name	Chen Yanshun	Zhong Huifeng
Contact address	No. 10, Jiu Xian Qiao Road, Chaoyang	No. 10, Jiu Xian Qiao Road, Chaoyang
	District, Beijing	District, Beijing
Telephone	010-64366264, 64318888 Ext.	010-64366264, 64318888 Ext.
Fax	010-64366264	010-64366264
E-mail	yschen@boe.com.cn	hfzhong@boe.com.cn

§3. Accounting Data and Business Highlights

3.1 Major accounting data

			Unit: RMB'000
2005	2004	Increase /	2003

		Afteradjustment	Beforeadjustment	decreasethis yearcomparedwith thelast year(%)	Afteradjustment	Beforeadjustment
Salesrevenue	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	21,524,766	18,223,237	18,106,758	18.12	12,322,084	12,232,806
Shareholders'equity(excludingminorityinterests)	3,967,616	5,270,862	5,154,384	-24.73	2,643,140	2,553,862

3.2 Main financial indicators

			Unit: RMB
	2005	2004 (afteradjustment)	Increase / decrease this yearcompared with the last year (%)
Earnings per share	-0.57	0.23	-347.83
Return on equity	-31.40%	6.46%	-586.07
Net assets per share	1.81	3.60	-49.72

Note: 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.

3.3 Differences in domestic and overseas accounting standards

√Applicable □Inapplicable

		Unit: 000RMB
	CAS	IAS
Net profit	-1,587,087	-1,245,993
		Net profit
	As reported under Accounting System for Enterprise Business	-1,587,087
	Adjustment based on IFRS and other:
	Recognition and amortisation of positive goodwill	68,412
	Recognition and amortisation of negative goodwill	-14,485
	Government grant	4,105
Explanation	Capitalised general borrowing costs, net of related depreciation	33,185
onthe	Capitalised development costs, net of related depreciation	27,977
differences	Gain on disposal of subsidiary	141,631
	Appropriation of staff bonus and welfare fund	-916
	Amortisation of loans arrangement fee	-3,085
	Dilution gain on interest in associate	80,397
	Equity accounting for interest in associates with the issuance of
	convertible debentures
	- Others	3,873
	Balance after adjustment under IFRS	-1,245,993

§4. Change in Share Capital and Particulars about Shareholders

4.1 Statement on change in shares

						Unit: share
	Before the change			Increase / decrease during this change(+/-)		After this change
	Amount	Proportion	Sharestransferredwith publicreserves	Others	Subtotal	Amount	Proportion
I.Shareswithrestrictionson sale	596,954,640	40.78	298,541,720	-77,394,612	221,147,108	818,101,748	37.26%
1.Shares	0	0.00%	0	0	0	0	0.00%

held by the
State
2.SharesheldbyState-ownedlegalpersons	590,452,200	40.34%	295,226,100	-76,784,000	218,442,100	808,894,300	36.84%
3.Otherdomesticshares	6,502,440	0.44%	3,251,220	-795,812	2,455,408	8,957,848	0.41%
Including:
Shares heldby domesticlegalpersons	6,435,000	0.44%	3,217,500	-838,300	2,379,200	8,814,200	0.40%
Shares heldby domesticnaturalpersons	67,440	0.00%	33,720	42,488	76,208	143,648	0.01%
4.Foreignshares	0	0.00%	64,400	185,200	249,600	249,600	0.01%
Including:
Shares heldby overseaslegalpersons	0	0.00%	0	0	0	0	0.00%
Shares heldby overseasnaturalpersons	0	0.00%	64,400	185,200	249,600	249,600	0.01%
II.Shareswithoutrestrictionson sale	866,842,560	59.22%	433,356,880	77,394,612	510,751,492	1,377,594,052	62.74%
1.RMBordinaryshares	123,142,560	8.41%	61,571,280	77,579,812	139,151,092	262,293,652	11.95%
2. B Share	743,700,000	50.81%	371,785,600	-185,200	371,600,400	1,115,300,400	50.79%
3. Overseaslistedforeignshares	0	0.00%	0	0	0	0	0.00%
4. Others	0	0.00%	0	0	0	0	0.00%
III.Totalsharenumber	1,463,797,200	100.00%	731,898,600	0	731,898,600	2,195,695,800	100.00%

Time for listing and trading of shares with restrictions on sale

	Unit: share
--	-------------

No.	Name ofshareholdersholding shareswithrestrictions onsale	Number ofshares withrestriction onsale held	Time forlisting andtrading	Number ofnewlyincreasedsharesavailable forlisting andtrading	Restrictions
1	BeijingBOEInvestment&DevelopmentCo., Ltd	720,197,300	Dec. 1, 2006	36,009,865	Sincethedayitgottheauthorization for listing and tradingin the A-share market, the BOElegal person shares held by it wouldnot be traded or transferred within12 months. After the expiration oftheaforesaidcommitment,theformer non-circulating shares soldby it through trading at the StockExchange would not exceed 5percent of the total shares of BOEwithin 12 months, and not exceed10 percent within 24 months.

			Dec. 1, 2007	36,009,865
			Dec. 1, 2008	648,177,570
2	BeijingDongdianIndustrialDevelopmentCompany	82,290,200	Dec. 1, 2006	82,290,200	Sincethedayitgottheauthorization for listing and tradingin the A-share market, the BOElegal person shares held by it wouldnot be traded or transferred within12 months.
3	BeijingYixinMicroDisplayTechnologyDevelopmentCenter	8,814,200	Dec. 1, 2006	8,814,200	Sincethedayitgottheauthorization for listing and tradingin the A-share market, the BOElegal person shares held by it wouldnot be traded or transferred within12 months.
4	BeijingKinescopeGeneral Factory	6,406,800	Dec. 1, 2006	6,406,800	Sincethedayitgottheauthorization for listing and tradingin the A-share market, the BOElegal person shares held by it wouldnot be traded or transferred within12 months.

4.2 Statement on the shares held by the top ten shareholders and those held by the top ten shareholders holding shares without restrictions on sale

Unit: share

Total number of shareholders					71,341
		Shares held by the top ten shareholders
Name of shareholder	Nature ofshareholder	Proportion ofshares held	Total numberof shares held	Number of shareswith restrictionson sale held	Number ofsharespledged orfrozen
BEIJINGBOEINVESTMENT&DEVELOPMENT CO., LTD	State-ownedlegalpersonshareholder	32.80%	720,197,300	720,197,300	0
FIELDSPACIFICLIMITED	Foreignshareholder	6.15%	135,000,000	0	0
BEIJINGDONGDIANINDUSTRIALDEVELOPMETNCOMPANY	State-ownedlegalpersonshareholder	3.75%	82,290,200	82,290,200	0
EMERGINGMARKETSGROWTH FUND INC	Foreignshareholder	1.53%	33,554,952	0	0
SHANGHAI HONG KONGWANGUO SECURITIES	Foreignshareholder	1.52%	33,421,443	0	0
BOCISECURITIESLIMITED	Foreignshareholder	1.17%	25,764,914	0	0
TOPRESPECTGROUPLIMITED	Foreignshareholder	0.92%	20,250,000	0	0
BONY-DREYFUSPIFI-DREYFUS PREMIERGREATER CHINA	Foreignshareholder	0.80%	17,551,667	0	0
GUOTAIJUNANSECURITIESHONGKONG LIMITED	Foreignshareholder	0.73%	16,004,534	0	0
CAPITALINTERNATIONALEMERGINGMARKETSFUND	Foreignshareholder	0.71%	15,629,925	0	0
	Shares held by the top ten shareholders of circulating shares
Name of shareholder			Number of circulating sharesheld	Type of shares
FIELDS PACIFIC LIMITED			135,000,000	B Share
EMERGING MARKETS GROWTH FUND INC			33,554,952	B Share
SHANGHAIHONGSECURITIES	KONGWANGUO		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 PREMIERGREATER CHINA			17,551,667	B Share

4

GUOTAI JUNAN SECURITIES HONG KONGLIMITED	16,004,534	B Share
CAPITALINTERNATIONALEMERGINGMARKETS FUND	15,629,925	B Share
BARINGS (IRELAND) SA THE ATLANTISCHINA FUND PLC	10,999,919	B Share
CITIC CAPITAL SECURITIES LIMITED	10,394,249	B Share
Explanation on the relations among the aforesaidshareholders or concerted actions	circulating shares.	It is unknown to the Company whether or not there were relatedrelations or concerted action among the top ten shareholders of

4.3 Information about the controlling shareholder and the actual controller

4.3.1 Particulars about change of the controlling shareholders and the actual controller

□Applicable √Inapplicable

4.3.2 Details about the 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 a 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), Shareholders of the Company, 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: Piao 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.

4.3.3 The property right and controlling relationship between the Company and the actual controller are as follows:

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.

§5. Directors, Supervisors and Senior Executives

5.1 Changes of shares held by directors, supervisors and senior executives and their remunerations

Name	Title	Gender	Age	Beginningandendingday ofofficeterm	Numberof sharesheld atthebeginningof theyear	Numberofsharesheld atthe endof theyear	Reasons forthe change	Drawingremunerationfromshareholdingunits or otherrelated unitsor not
WangDongsheng	ChairmanoftheBoard,ChairmanofExecutiveCommittee,CEO	Male	48	Jun.3,2004tillnow	11,700	24,921	Capitalizationofpublicreserves,Split-shareReform
Jiang Yukun	ViceChairman of	Male	52	Jun.5,2004tillnow	7,020	14,953	Capitalizationofpublicreserves,Split-share	Yes

	the Board							Reform
Zhao Caiyong	Director	Male	58	Jun.2004now	5,till	11,700	24,951	Capitalizationofpublicreserves,Split-shareReform	Yes
Moriko	Director	Male	58	Sep.2005now	5,till	0	0	Capitalizationofpublicreserves,Split-shareReform	Yes
Liang Xinqing	ExecutiveDirector,President	Male	53	Jun.2004now	5,till	4,680	9,969	Capitalizationofpublicreserves,Split-shareReform
B.D.Choi	ExecutiveDirector, COO	Male	56	Jun.2004now	5,till	0	249,600	Buy-in,capitalizationofpublicreserves
Cheng Yanshun	ExecutiveDirector,ExecutiveVice-president,Secretaryofthe Board	Male	40	Jun.2004now	5,till	0	0
Tai Zhonghe	IndependentDirector	Male	55	Jun.2004now	5,till	0	0
Xie Zhihua	IndependentDirector	Male	46	Jun.2004now	5,till	0	0
Zhang Baizhe	IndependentDirector	Male	62	Jun.2004now	5,till	0	0
Li Zhaojie	IndependentDirector	Male	50	Jun.2004now	5,till	0	0
Xia Zhenzhi	ConvenerofSupervisoryCommittee	Male	43	Jun.2004now	5,till	750	1,598	Capitalizationofpublicreserves,Split-shareReform	Yes
Mu Chengyuan	Supervisor	Male	38	Jun.2004now	5,till	1,170	2,492	Capitalizationofpublicreserves,Split-shareReform	Yes
Yang Anle	EmployeeSupervisor	Male	35	Aug.2005now	5,till	0	0
Xu Yan	EmployeeSupervisor	Female	54	Jun.2004now	5,till	7,020	14,953	Capitalizationofpublicreserves,Split-shareReform
Wang Yanjun	CFO	Male	36	Jun.2004now	5,till	4,680	9,968	Capitalizationofpublicreserves,Split-shareReform

Song Ying	Vice president	Female	48	Jun.2004now	5,till	11,700	24,921	Capitalizationofpublicreserves,Split-shareReform
Ren Jianchang	Vice president	Male	59	Jun.2004now	5,till	0	0
Han Guojian	Vice president	Male	52	Jun.2004now	5,till	4,680	9,968	Capitalizationofpublicreserves,Split-shareReform
Liu Xiaodong	Vice president	Male	41	Jun.2004now	5,till	0	0
Wang Jiaheng	Vice president	Male	37	Jun.2004now	5,till	0	0
Cao Hong	Vice-president,InvestmentManager	Male	46	Sep.2005now	5,till	2,340	4,984	Capitalizationofpublicreserves,Split-shareReform
Feng Weidong	Vice president	Male	38	Sep.2004now	5,till	0	0
Su Zhiwen	AuditorGeneral	Male	37	Sep.2004now	5,till	0	0
Lin Rongzhen	TechnologyManager	Male	43	Nov.2005now	8,till	0	0
Total	-	-	-	-		67,440	393,248	-	-

§6 Report of the Board of Directors

6.1 Discussion and analyses of the management team

In the report period, the Company had spared no efforts to promote the realization of mass production of the Beijing TFT-LCD 5G production line as planned and increase the output quantity of TFT-LCD products. The sales revenue totaled RMB 13,449,713,000, up by 8.10% year-on-year. However, due to the price downslides in TFT-LCD market, small production capacity, low localized raw material supplying ratio, 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.

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 and reduce the depreciation level of each unit of product; actively promote the work on the localized supplying of the upper-stream raw materials, gradually replace the raw materials imported and cut purchase costs; speed up the adjusting of product structure, expand the output of the products of large market demands, increase the proportion of the products with added value of the AFFS technology and improve profitability.

Product	Sales revenue	Sales cost	Gross profitratio	Increase or decreaseof sales revenueyear-on-year (%)	Increase or decrease ofsales cost year-on-year(%)	Increase or decrease ofgross profit ratioyear-on-year (%)
Display
terminal
products	4,612,913	4,382,124	5.00%	5.08	5.22	-1.96
Display
devices – Thin
Film
Transistor
Liquid Crystal	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
Internal offset	-878,956	-809,207	-	-	-	-
Total	13,449,713	13,383,605	0.49	8.10	19.95	-95.25

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

6.3 Main operations classified according to regions

		Unit: RMB'000
Region	Income from mainoperations	Increase or decrease of income from main operationscompared with the last year (%)
China	6,514,081	6.21%
Other Asian countries	5,045,182	106.52%
Europe	414,566	-14.39%
America	1,309,074	-54.87%
Other regions	166,810	-65.26%
Total	13,449,713	8.10%

6.4 Use of raised proceeds

□Applicable √Inapplicable

Projects changed

□Applicable √Inapplicable

6.5 Projects invested with non-raised proceeds

√Applicable □Inapplicable

			Unit: RMB'0000
Project	Investment	Progress of the	Profit-making status of the
	amount	project	project
TFT-LCD 5G Production Line	274,375	831,672	Finished
One Drop Filling Equipment (ODF)	18,745	47,447	Finished
Vacuum Fluorescent Display (VFD) Production			Finished
Line Phase 5	686	12,370
Investment in Beijing Fangyi Integrated Circuit
Designing Co., Ltd	4,110	4,110	Finished
Investment in Beijing BOE Chatani Electronics
Co., Ltd	2803	2803	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

6.6 Explanation given by the Board on the "qualified opinions" of the Certified Public Accountants

□Applicable √Inapplicable

6.7 Proposal on profit distribution or capitalization of public reserves made by the Board □Applicable √Inapplicable

There was profit made by the Company in the report period, but no cash profit distribution preplan had been proposed:

□Applicable √Inapplicable

§7 Significant Events

7.1 Purchase of assets □Applicable √Inapplicable 7.2 Sales of assets □Applicable √Inapplicable 7.3 Important guarantees √Applicable □Inapplicable

(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 subordinate 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.

7.4 Significant related transactions

7.4.1 Related transactions concerning routine operation

√Applicable □Inapplicable

				Unit: RMB'0000
		Selling products and offering laborservice to related parties		Purchasing products and acceptinglabor service from related parties
Related parties		Proportion taking up the		Proportion taking up the
	Amount	amount of the same kind	Amount	amount of the same kind
		of transactions		of transactions
Marubeni Corporation, Japan	0.00	0.00%	129,046.07	6.70%
TPV Technology Limited	246,944.53	18.34%	39,863.56	2.07%
Hyundai LCD Inc.	13,002.22	0.97%	19,960.12	1.04%
Beijing Matsushita Color CRT	7,752.45	0.58%	0.52	0.00%
Co., Ltd
Total	267,699.20		188,870.27	9.80%

An amount of RMB 460,000 occurred during the related transactions of the Company selling products or providing labor service to the controlling shareholder or its subsidiaries in the report period.

7.4.2 Related credits and liabilities current

√Applicable □Inapplicable

				Unit: RMB'0000
Related parties	Capital provided to relatedparties		Capital provided to the Listed Company byrelated parties
	Amount	Balance	Amount	Balance
Marubeni Corporation, Japan	0.00	0.00	128,634.78	6,307.76

Beijing Matsushita Color CRTCo., Ltd	6,561.62	1,221.72	0.00	0.00
TPV Technology Limited	248,244.30	28,252.52	0.00	0.00
Hyundai LCD Inc.	13,005.69	4,258.61	19,960.12	4,182.27
Beijing Xingcheng Property Co.,Ltd	4,446.04	7,337.24	0.00	0.00
Total	272,257.65	41,070.09	148,594.90	10,490.03

In the report period, the Listed Company had provided RMB 5,000,000 to the controlling shareholder and its subsidiaries, and the balance was RMB 2,250,000.

Capital occupation and plan for clearing:

□Applicable √Inapplicable

7.5 Financing entrustment

□Applicable √Inapplicable

7.6 Implementation of commitments

7.6.1 Commitments on Split-share Reform

1. Content of the commitments

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.

1. Implementation of the commitments

The implementation of the Split-share Reform plan of the Company was finished on Nov. 30, 2005. All shareholders of non-circulating shares have fulfilled their commitments made in the Split-share Reform plan.

1. Breach of commitments

□Applicable √Inapplicable

7.6.2 Other commitments

√Applicable □Inapplicable

For details of the commitments made by the Company, please read the relevant content on the commitments in the Notes to the Accounting Statements.

7.7 Significant lawsuits and arbitrations

√Applicable □Inapplicable

1. 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.

2. In October 2005, the Company's subordinate subsidiary, the South Korean BOE Hydis received notices from Sharp Company, LG Philips Company, 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 difficult 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.

§8 Report of the Supervisory Committee

√Applicable □Inapplicable

I. Meetings held and content 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:

1. On Apr. 25, 2005, the 4th meeting of the 4th Supervisory Committee was held, at which some documents had been examined and approved, including:

1. Work Report 2004 of the Supervisory Committee;

2. Text and Summary of the Annual Report 2004;

3. 1st Quarterly Report 2005;

4. Report on the Correction of Accounting Errors for the Year 2003;

5. Explanation on the Use of the Proceeds Raised Last Time;

6. Proposal on the Routine Related Transactions of 2005.

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

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

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.

1. 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.

1. 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.

1. 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.

§9. Financial Report

9.1 Auditing opinions

Auditing opinions: standard unqualified opinions

9.2 Financial statements (attached at the back)

9.3 Detailed explanation on the changes in the accounting policies, accounting estimation or accounting methods compared with the latest Annual Report

√Applicable □Inapplicable

The implementation of the newly revised International Financial Report Standards started on Jan. 1, 2005, and the Company has amended relevant accounting policies according to it.

9.4 Content of significant accounting errors, amounts changed, reasons and influences □Applicable √Inapplicable

9.5 Detailed explanation on the changes in the consolidation scope compared with the latest Annual Report

√Applicable □Inapplicable

(1) According to the Agreement on Transferring Shares of Beijing Top Victory Electronics Co., Ltd signed by the Company and TPV Technology Limited, the Company transferred its 45.21 percent equity in Beijing Top Victory Electronics Co., Ltd to TPV Technology Limited on Nov. 30, 2005. Therefore, only the business achievement before Nov. 30, 2005 of Beijing Top Victory Electronics Co., Ltd had been included in the consolidation scope in the report period.

(2) Beijing BOE Chatani Electronics Co., Ltd and Beijing Fangyi Integrated Circuit Designing Co., Ltd are companies newly established this year, and they had been included in the consolidation scope of the accounting statements.

(3) As approved by relevant institutions, the commercial registration of Beijing BOE TAIWA Optoelectronics Co., Ltd had been officially cancelled in 2005. Therefore, it had not been included in the consolidation scope.

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

Consolidated income statement For the year ended 31 December 2005

			2005			2004
		Continuing	Discontinued		Continuing	Discontinued
		operations	operation	Total	operations	operations	Total
							(restated)
	Note	RMB'000	RMB'000	RMB'000	RMB'000	RMB'000	RMB'000
Turnover	5	8,836,800	4,612,913	13,449,713	8,051,994	4,389,714	12,441,708
Cost of sales		(9,000,718)_________	(4,382,887)_________	(13,383,605)________	(6,993,079)_________	(4,164,761)	(11,157,840)__________
Gross (loss)/profit		(163,918)	230,026	66,108		_________224,953	1,283,868
					1,058,915
Other operating income/(expenses)	7	94,053	6,331	100,384	(15,524)	4,654	(10,870)
Distribution expenses		(267,824)	(54,924)	(322,748)	(258,093)	(57,356)	(315,449)
Administrative expenses		(524,308)	(29,351)	(553,659)	(429,110)	(43,559)	(472,669)
Research and development expenses		(346,836)_________	(18,981)_________	(365,817)________	(304,215)_________	(15,012)	(319,227)_______
(Loss)/profit from operations		(1,208,833)	133,101	(1,075,732)	51,973	_________113,680	165,653
Net financing costs	8(a)	(463,357)	(3,991)	(467,348)	(38,252)	(8,112)	(46,364)
Share of profits of associates	17	296,470	-	296,470	316,046	-	316,046
		_________	_________	________	_________	_________	_______
(Loss)/profit before tax	8	(1,375,720)	129,110	(1,246,610)	329,767	105,568	435,335
Income tax expense	9(a)	(29,764)_________	(11,965)_________	(41,729)_______	(4,652)_________	(8,460)	(13,112)_______
(Loss)/profit after tax but before gain		(1,405,484)	117,145	(1,288,339)	325,115	_________97,108	422,223
on sale of discontinued operation
Gain on sale of discontinued operation netof tax		133,753	-	133,753	-	-	-
		_________	_________	_______	_________	_________	_______
(Loss)/profit for the year		(1,271,731)========	117,145=========	(1,154,586)========	325,115========	97,108========	422,223========
Attributable to:
EquityshareholdersoftheCompany		(1,298,954)	52,961	(1,245,993)	296,359	43,903	340,262
Minority interests		27,223_________	64,184_________	91,407_________	28,756_________	53,205_________	81,961_________
		(1,271,731)========	117,145=========	(1,154,586)========	325,115========	97,108========	422,223========
Basic
(Loss)/earnings per share	10	(0.59)	0.02	(0.57)	0.14	0.02	0.16
		========	=========	========	========	========	========

Consolidated balance sheet

At 31 December 2005

	Note	2005	2004(restated)
		RMB'000	RMB'000
Non-current assets
Property, plant and equipment	12	11,330,272	4,970,500
Construction in progress	13	285,244	5,065,349
Intangible assets	14	449,850	300,789
Lease prepayments	15	103,332	133,355
Investment properties	16	113,121	118,547
Interest in associates	17	2,820,463	2,209,700
Other investments	18	10,661	8,190
Deferred tax assets	19	1,940	13,220
Long term deposits	20	23,856	22,153
Other non-current assets		46,651	33,492
		15,185,390	12,875,295
Current assets
Inventories	21	1,919,901	1,127,066
Trade receivables	22	1,876,294	2,042,427
Held-to-maturity securities	18	-	44,031
Prepayments, deposits and other receivables		462,501	300,130
Deposits with banks	23	916,628	298,318
Cash and cash equivalents	23	1,164,052	1,535,970
		6,339,376	5,347,942
Current liabilities
Trade payables	24	1,769,720	1,975,512
Other payables		972,555	1,292,295
Current taxation	9(b)	23,211	7,172
Provisions	25	50,771	43,994
Short term bank and other loans	26	3,762,956	5,436,259
		6,579,213	8,755,232
Net current liabilities		(239,837)	(3,407,290)
Total assets less current liabilities		14,945,553	9,468,005

Consolidated balance sheet (continued)

At 31 December 2005

(Expressed in Renminbi)

	Note	2005	2004(restated)
		RMB'000	RMB'000
Non-current liabilities
Bank and other loans	26	9,569,710	2,493,721
Long-term notes payable	27	299,939	299,939
Employee benefits	28	17,280	19,685
Deferred tax liabilities	19	588	15
Other non-current liabilities	29	856,539	858,810
		10,744,056	3,672,170
Net assets		4,201,497	5,795,835
Capital and reserves
Share capital	30	2,195,696	1,463,797
Share premium		1,552,913	2,284,812
Reserves	31	680,190	708,167
(Accumulated losses)/retained profits		(461,183)	814,086
Total equity attributable to equity
shareholders of the Company		3,967,616	5,270,862
Minority interests		233,881	524,973
Total equity		4,201,497	5,795,835

Approved and authorised for issue by the board of directors on [25] April 2006.

) )

) )

) Directors

Consolidated statement of changes in equity For the year ended 31 December 2005

					Equity attributable to equity shareholders of the company__
					(Accumulated
		Share	Share		losses)/	Minority
		capital	premium	Reserves	retained profits	interests	Total equity
	Note	RMB'000	RMB'000	RMB'000	RMB'000	RMB'000	RMB'000
At 1 January 2004- As previously reported- Prior year adjustmentsarisingfrom		659,465	1,040,984	406,358	447,055	525,602	3,079,464
changesinaccountingpolicies	3	-	-	11,753	118,164	-	129,917
As restated		_________659,465	_________1,040,984	_________418,111	_________565,219	_________525,602	_________3,209,381
Issue of new shares	30	-------------316,400	-------------1,731,760	--------------	--------------	--------------	-------------2,048,160
Capitalisation of share		-------------	-------------	-------------	-------------	-------------	-------------
premium	30	487,932	(487,932)	-	-	-	-
Net profit / (loss) for theyear-Aspreviouslyreported-Prioryearadjustments		--------------	--------------	--------------	-------------353,701	--------------	-------------353,701
arisingfromchangesinaccountingpolicies		-	-	-	(13,439)	81,961	68,522
As restated		_________-	_________-	_________-	_________340,262	_________81,961	_________422,223
Currencytranslationdifferences	31	---------------------------	---------------------------	-------------208,419-------------	---------------------------	---------------------------	-------------208,419-------------
Dividendapprovedduring the year	11	--------------	--------------	--------------	(9,758)-------------	--------------	(9,758)-------------
Transfer for the year	31	-_________	-_________	81,637_________	(81,637)_________	-_________	-_________
Deemeddisposalofsubsidiary		--------------	--------------	--------------	--------------	(82,590)-------------	(82,590)-------------
At 31 December 2004		1,463,797	2,284,812=========	708,167========	814,086=========	524,973=======	5,795,835========
		========		=

Consolidated statement of changes in equity (continued) For the year ended 31 December 2005

					Equity attributable to equity shareholders of the Company
		Sharecapital	Sharepremium	Reserves	(Accumulatedlosses)/retainedprofits	Minorityinterests	Total equity
	Note	RMB'000	RMB'000	RMB'000	RMB'000	RMB'000	RMB'000
At 1 January 2005-Aspreviouslyreported-Prioryearadjustments fromchangesin		1,463,797	2,284,812	696,414	709,361	-	5,154,384
accountingpolicies	3	-	-	11,753	104,725	524,973	641,451
As restated		_________1,463,797	_________2,284,812-------------	_________708,167-------------	_________814,086-------------	_________524,973-------------	_________5,795,835-------------
Capitalisationofshare premium	30	-------------731,899	(731,899)-------------	--------------	--------------	--------------	--------------
Net loss for the year		--------------	--------------	--------------	(1,154,586)-------------	--------------	(1,154,586)-------------
Profitsattributabletominorityinterests		---------------------------	--------------	--------------	(91,407)-------------	91,407-------------	--------------
Currency translationdifferences	31	--------------	--------------	(27,977)-------------	--------------	--------------	(27,977)-------------
Dividendapprovedduring the year	11	-	--------------	--------------	(29,276)-------------	--------------	(29,276)-------------
Capital contributionsfromminorityinterests		--------------	--------------	--------------	--------------	18,529-------------	18,529-------------
Distributionstominority interests		--------------	--------------	--------------	--------------	(5,550)-------------	(5,550)-------------
Disposalofsubsidiary	6	--------------	-	-	-	(395,478)	(395,478)

			-------------	-------------	-------------	-------------	-------------
		-------------
At312005	December	2,195,696	1,552,913	680,190	(461,183)	233,881	4,201,497

Consolidated cash flow statement For the year ended 31 December 2005

		Year ended	31 December
		2005	2004
	Note	RMB'000	RMB'000
Cash flows from operating activities
			435,335
(Loss)/profit before tax		(1,246,610)
Adjustments for:
			720,442
- Depreciation		1,229,595
- Amortisation of intangible assets		32,660	29,727
- Amortisation of lease prepayments		2,934	2,609
- (Reversed)/ impairment loss on property, plant and equipment		(60)	4,738
- Impairment loss on construction in progress		19,932	340
- Impairment loss on intangible assets		407	230
- Impairment loss on held-to-maturity securities		17,961	-
- Impairment loss on unquoted equity securities		-	15,688
- Provision for bad and doubtful debt		5,623	11,042
- Provision for obsolete inventories		85,411	75,961
- Share of profits of associates		(296,470)	(316,046)
- Interest income		(51,691)	(66,207)
- Other finance costs		519,039	112,571
- (Gain)/ loss on disposal of property, plant and equipment		(5,697)	500
- Gain on disposal of unquoted securities		(3,520)	(31,421)
- Amortisation of government grant		(37,583)	(21,279)
Operating profit before change in working capital		271,931	974,230
Increase in inventories		(1,037,363)	(542,657)
Increase in trade and other receivables		(1,181,452)	(316,479)
Decrease in employee benefit obligations		2,405	5,102
Increase in trade and other payables		982,482	275,318
Cash generated from the operating activities		(961,997)	395,514
Income taxes paid		(21,562)	(24,007)
			371,507
Net cash from operating activities		(983,559)
Cash flows from investing activities
Proceeds from sale of property, plant and equipment		36,112	49,509
Proceeds from sales of intangible assets		1,378	-

Proceeds from sales of investments		5,520	-
Interest income received		51,691	53,358
Acquisitions of property, plant and equipment		(3,934,768)	(5,422,599)
Acquisitions of intangible assets		(32,082)	(371,341)
Acquisitions of available-for-sale investments		(8,576)	-
Acquisitions of associate		-	(400)
Acquisitions of convertible debenture		-	(2,235)
Refund of investment costs		26,070	32,978
Payments for lease prepayments		-	-
Business combinations, net of cash acquired		-	(4,200)
Disposal of subsidiaries, net of cash disposed	6	(53,609)	58,197
Disposal of an associate, net of cash disposed		-	66,757
Increase in long-term receivables		(9,540)	(105,281)
Placement of pledged deposits		(618,310)	31,957
Placement of long-term fixed deposits		-	(220,749)
Dividend received		115,285	48,577
Net cash used in investing activities		(4,420,829)	(5,785,472)

Consolidated cash flow statement (continued) For the year ended 31 December 2005

	Years ended 31 December
	2005	2004
	Rmb'000	Rmb'000
Cash flows from financing activities
Proceeds from government loan	-	450,000
Proceeds from bank and other loans	12,421,541	10,399,068
Proceeds from issue of convertible debentures	-	71,448
Proceeds from issue of corporate debentures	1,583,475	-
Proceeds from capital contribution	18,529	2,076,121
Repayments of bank and other loans	(8,288,467)	(7,902,354)
Dividend paid	(35,675)	(28,032)
Interest paid	(552,157)	(287,847)
Payment for other financing activities	(59,474)	(62,018)
Net cash from financing activities	5,087,772	4,716,386
Effect of exchange rate changes	(55,302)	59,624
Net decrease in cash and cash equivalents	(371,918)	(637,955)
Cash and cash equivalents at 1 January	1,535,970	2,173,925
Cash and cash equivalents at 31 December	1,164,052	1,535,970