BOE TECHNOLOGY GROUP CO., LTD - Annual Report 2006

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BOE TECHNOLOGY GROUP CO., LTD.

ANNUAL REPORT 2006 (Overseas Version)

Stock Exchange Listed With: Shenzhen Stock Exchange

Short Form of the Stock: BOE - B

Stock Code: 200725

Apr. 25, 2007

Important Note:

Board of Directors, Supervisory Committee, directors, supervisors and senior executives of BOE TECHNOLOGY GROUP CO., LTD. (hereinafter referred to as the Company) warrant that this report does not contain any false or misleading statements or omit any material facts and all information set forth herein are true, accurate and complete. 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.

Mr. Wang Dongsheng, Chairman of the Board, Mr. Chen Yanshun, President of the Company, Mr. Wang Yanjun, CFO of the Company, and Ms. Sun Yun, Chief Accounting Officer and person in charge of the Planning & Finance Department hereby declare that they can guarantee the authenticity and completeness of the Financial Report in this Annual Report.

The Director, Tatta Kenichi and the Independent Director, Mr. Tai Zhonghe, didn’t attend the Board of Directors.

The Annual Report 2006 of the Company was prepared based on International Financial Reporting Standards.

Content

CHAPTER I. COMPANY PROFILE

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 Administrative Structure 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: Zhong Huifeng
Securities Affairs Representative: Zhang Shitong
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
Short Form for A-share: G BOE, Stock Code for A-share: 000725
Short Form for B-share: 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: Dec.19,2006

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 Huazhen 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

1. Major accounting data as of the year 2006

(Unit: In RMB’000)

	(Unit: In RMB’000
Items	Amount
Netprofit	1,770,800
Net cash inflow arisingfrom operatingactivities：	843,112
Balance in cash and cash equivalents at theyear-end	1,458,107

Difference in Accounting Statement between Chinese Accounting Standard and IFRS

Unit: RMB’000

	Unit: RMB’000	Unit: RMB’000
	For the years ended 31 December
In thousands of Renminbi	2006	2005
Net loss under PRC GAAP	(1,721,945)	(1,587,087)
Adjustments:
Recognition and amortisation of positive goodwill	105,108	68,412
Recognition and amortisation of negative goodwill	(79,278)	(14,485)
Government grant	7,642	4,105
Capitalised general borrowing costs,
net of related depreciation	(3,435)	33,185
Capitalised development costs, net of
related depreciation	(200,450)	27,977
Gain on disposal of a subsidiary	-	141,631
Appropriation of staff bonus and welfare fee	(3,617)	(916)
Amortisation of loans arrangement fee	(15,364)	(3,085)
Dilution on interest in an associate	142,594	80,397
Others	(2,055)	3,873
Loss attributable to equity shareholders
of the Company under IFRSs*	(1,770,800)	(1,245,993)

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

Unit: RMB’000

Major accounting data	2006	2005	2004
Sales revenue	8,769,966	13,449,713	12,441,708
Net profit	-1,770,800	-1,245,993	340,262
Total assets	16,693,219	21,524,766	18,223,237
Shareholders’ equity (excluding minority interests)	3,888,444	3,967,616	5,270,862

Earnings per share(Yuan)(fully diluted)	-0.78	-0.57	0.23
Net assets per share(Yuan)	1.35	1.81	3.60
Net assets profit(fully diluted)	-45.54%	-31.40%	6.46%

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, those of 2005 upon the total share capital of 2,195,695,800 shares at the end of the year and those of 2006 upon the total share capital of 2,871,567,895 shares at the end of the year .

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

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

Unit: RMB’000

	Attributable	to equity	shareholders of the company	shareholders of the company
	Share	Share		Accumulated	Minority	Total
	capital	premium	Reserves	losses	interests	equity
At 1 January 2006	2,195,696	1,552,913	680,190	(461,183)	233,881	4,201,497
Foreign currency translation differences	-	-	(177,507)	-	-	(177,507)
Income and expense recognized in equity	-	-	(177,507)	-	-	(177,507)
Loss for the year	-	-	-	(1,770,800)	(16,148)	(1,786,948)
Total recognized income and expense
for the year	-	-	(177,507)	(1,770,800)	(16,148)	(1,964,455)
Issue of new shares	675,872	1,193,263	-	-	-	1,869,135
Changes in minority interest due to
discontinued operation of BOE-Hydis	-	-	-	-	509,070	509,070
Capital contributions from minority
interests	-	-	-	-	40,020	40,020
Distributions to minority interests	-	-	-	-	(3,330)	(3,330)
Disposal of a subsidiary	-	-	-	-	(5,712)	(5,712)
At 31 December 2006	2,871,568	2,746,176	502,683	(2,231,983)	757,781	4,646,225

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, 2006)

Unit: Share

	Before the	change	Change of this term	Change of this term	(+,-)	After the changed	After the changed
	Number	Proportion	Shares capital transferred from non-public reserve	other	subtotal	Number	Proportion
I. Shares subject to moratorium	818,101,748	37.26%	+675,872,095	-133,521,065	+542,351,030	1,360,452,778	47.38%
1. Shares held by the State	0	0	+548,691,862	0	+548,691,862	548,691,862	19.11%

2. Shares held by state-owned legal person	808,894,300	36.84%	+127,180,233	-124,706,865	+2,473,368	811,367,668	28.25%
3. Shares held by other domestic investors	8,957,848	0.41%	0	-8,814,200	-8,814,200	143,648	0.01%
Including:
Shares held by domestic legal persons	8,814,200	0.40%	0	-8,814,200	-8,814,200	0	0
Shares held by domestic natural persons (shares held by senior executives)	143,648	0.01%	0	0	0	143,648	0.01%
4. Shares held by foreign investors	249,600	0.01%	0	0	0	249,600	0.01%
Including:
Shares held by foreign legal persons
Shares held by foreign natural persons (shares held by senior executives)	249,600	0.01%	0	0	0	249,600	0.01%
II. Shares not subject to moratorium	1,377,594,052	62.74%	0	+133,521,065	+133,521,065	1,511,115,117	52.62%
1. RMB ordinary shares	262,293,652	11.95%	0	+133,521,065	+133,521,065	395,814,717	13.78%
2. Domestically listed foreign shares	1,115,300,400	50.79%	0	0	0	1,115,300,400	38.84%
3. Overseas listed foreign shares
4. Others
III. Total shares	2,195,695,800	100%	+675,872,095	0	+675,872,095	2,871,567,895	100%

(1) The Company held Share Merger Reform Related Shareholders’ Meeting was held on Nov.24, 2005, examined and approved the Share Merger Reform of the Company. The Excise Day of Share Merger Reform was Nov.30, 2005. In accordance with the related commitment of list and circulation of the tradable shares subject to moratorium, on Dec.1, 2006, 124,706,865 shares held by state-owned legal person and 8,814,200 shares held by common legal person could get listed and circulated.
(2) The Company finished non-opened publication of A shares in Oct.2006 and the total share capital of the Company increased from 2,195,695,800 shares to 2,871,567,895 shares.
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 China Securities Regulatory Commission with ZJFXZ [2004] No. 2 document, the Company additionally issued 316,400,000 B shares in Jan, 2004, which

were listed for trade on Apr. 16, 2004. The total share capital increased from 659,464,800 shares to 975,864,800 shares.

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 Jun. 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 from the former 1,463,797,200 shares.

The Company examined and approved the plan of share merger reform of BOE Technology Group Co., Ltd. in the shareholders’ general meeting related with share merger reform dated Nov. 24, 2005, and implemented the plan of shares merger reform on Nov. 30, 2005., which formally non-tradable 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 shares merger reform, the Company’s total share capital remained unchanged.

Approved by State Council Securities Regulatory Commission with ZJFXZ [2006] No. 36 document, the Company issued non-opened 675,872,095 A shares in Oct.2006 and the total share capital increased from 2,195,695,800 shares to 2,871,567,895 shares.

II. About shareholders

Number of shareholders and particulars about shares held by shareholders (as at Dec. 31, 2006)

Total number of shareholders	73,239 shareholders in total (including 31,331 shareholders of B-share)	73,239 shareholders in total (including 31,331 shareholders of B-share)	73,239 shareholders in total (including 31,331 shareholders of B-share)	73,239 shareholders in total (including 31,331 shareholders of B-share)	73,239 shareholders in total (including 31,331 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 of shares with conditional sales held	Share pledged or frozen
BEIJING BOE INVESTMENT & DEVELOPMENT CO., LTD.	State-owned legal person shares	29.5092%	847,377,533	811,367,668	0

BEIJING ELECTRONICS HOLDINGS CO., LTD.	State-owned corporate share	10.1233%	290,697,675	290,697,675	0
BEIJING STATE-OWNED ASSETS MANAGEMENT CO., LTD.	State-owned corporate share	5.0617%	145,348,838	145,348,838	0
FIELDS PACIFIC LIMITED	B-share	4.7013%	135,000,000	0	Unknown
BEIJING INDUSTRIAL DEVELOPMENT INVESTMENT MANAGEMENT CO., LTD.	State-owned corporate share	3.9228%	112,645,349	112,645,345	0
BEIJING DONGDIAN INDUSTRIAL DEVELOPMENT COMPANY	A-share	1.9795%	56,842,947	0	0
SHANGHAI (HONG KONG) WANGUO SECURITIES	B-share	0.9642%	27,686,375	0	Unknown
GUOTAI JUNAN SECURITIES HONG KONG LIMITED	B-share	0.5494%	15,775,901	0	Unknown
HCBC BROKING SECURITIES (ASIA)LIMITED-CLIENTS A/C	B-share	0.4513%	12,958,930	0	Unknown
SUN HUNG KAI INVEST SERVICES LTD-CUSTOMERS A/C	B-share	0.4004%	11,498,843	0	Unknown
Particulars about shares held by the top ten shareholders without conditional sales
Name of shareholders	Number of holding shares without conditional sales			Natural of equity
FIELDS PACIFIC LIMITED	135,000,000			B-share
BEIJING DONGDIAN INDUSTRIAL DEVELOPMENT COMPANY	56,842,947			A-share
BEIJING BOE INVESTMENT & DEVELOPMENT CO., LTD.	36,009,865			A-share
SHANGHAI (HONG KONG) WANGUO SECURITIES	27,686,375			B-share
GUOTAI JUNAN SECURITIES HONG KONG LIMITED	15,775,901			B-share
HCBC BROKING SECURITIES (ASIA)LIMITED-CLIENTS A/C	12,958,930			B-share
SUN HUNG KAI INVEST SERVICES LTD-CUSTOMERS A/C	11,498,843			B-share
HUANG YINGBIN	11,266,240			B-share
CITIC CAPITAL SECURITIES CO., LTD.	10,394,249			B-share
BARINGS(IRELAND)SA THE ATLANTIS CHINA FUND PLC	10,000,000			B-share

There exists associated relationship between Beijing BOE Investment Explanation on associated relationship & Development Co., Ltd. and Beijing Dongdian Industrial among the top ten shareholders or Development Company. The Company was unknown whether there acting-in-concert is any associated relationship among the top ten shareholders and the top ten shareholders of tradable share.

2. Number of shares held by shareholders with conditional sales

Unit: share

No.	Name of shareholders with conditional sales	Number of holding shares with conditional sales	Date of listing for trade	Number of additional shares could list for trade	Conditional sales
1	Beijing BOE Investment & Development Co., Ltd.	811,367,668	After G+24 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 non-tradable 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+36 months	648,177,570
			After T+36 months	127,180,233
2	BEIJING ELECTRONICS HOLDINGS CO., LTD.	290,697,675	After T+36 months	290,697,675	No trading and transfer may be taken within 36monthsas of the date when corporate shares of BOE held by this company obtain the trading right in A shares market.
3	BEIJING STATE-OWNED ASSETS MANAGEMENT CO., LTD.	145,348,838	After T+12 months	145,348,838	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.

	4	BEIJING INDUSTRIAL DEVELOPMENT INVESTMENT MANAGEMENT CO., LTD.	112,645,349	After T+12 months	112,645,349	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.

Note: G is November 30, 2005. I.e. the excise day of Share Merger Reform; T is October, 9, 2006, i.e. the registered and trusteeship day of the non-open A shares in Shenzhen subsidiary of China Securities Depository and Clearing Corporation Limited.

Brief introduction on controlling shareholder and the actual controller

(1) About the controlling shareholders Beijing BOE Investment & Development Co., Ltd. holds 29.51% of the Company’s total shares, therefore is the actual 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 conditions of actual controller

Beijing Electronics Holding Co., Ltd. held 56.25% equity of Beijing BOE Investment & Development Co., Ltd., and 10.12% equity of the Company directly, 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. The main information of Beijing Electronics Holding Co., Ltd. was as follows:

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

Legal Representative: Bu 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:

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 State-owned Assets Supervision & Administration 3.333%, Liu Xiaodong 3.333%, Ren Jianchang 1.667%, Sun Jiping 1.667%, Commission of Beijing People’s Government 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% 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. 29.51% 10.12% BOE Technology Group Co., Ltd.

Note: The Company regards Beijing Intelligent Kechuang Technology Development Co., Ltd. as a platform to implement equity encouragement for wholly core technology manager, the aforesaid 20 subscribers are nominal shareholders, investment proportion was not actual equity proportion, the equity of Beijing Intelligent Kechuang Technology Development Co., Ltd. was held in common by all implemented objectives of simulate plan of share equity encouragement mechanism.

CHAPTER IV. DIRECTORS, SUPERVISORS, SENIOR EXECUTIVES AND EMPLOYEES

I. Directors, supervisors and senior executives

1. General introduction about directors, supervisors and senior executives

Name	Sax	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	50	Chairman of the Board, Chairman of Executive Committee	Jun. 2004- Jun. 2007	24921	24921	Yes

Han Yansheng	Male	59	Vice Chairman of the Board	Sep. 2004- Jun. 2007	0	0	No
Liang xinqing	Male	55	Vice Chairman of the Board	Jun. 2004- Jun. 2007	9969	9969	Yes
Cheng Yanshun	Male	41	Executive Director, Vice-president	Jun. 2004- Jun. 2007	0	0	Yes
Zhao Caiyong	Male	60	Director	May, 2006- Jun. 2007	24921	24921	No
Tatta Kenichi	Male	56	Director	May, 2006- Jun. 2007	0	0	No
Gui Jinghua	femal e	33	Director	Nov.2006- Jun.2007	0	0	No
Tai Zhonghe	Male	56	Independent Director	Jun. 2004- Jun. 2007	0	0	No
Xie Zhihua	Male	47	Independent Director	Jun. 2004- Jun. 2007	0	0	No
Zhang Baizhe	Male	63	Independent Director	Jun. 2004- Jun. 2007	0	0	No
Li Zhaojie	Male	51	Independent Director	Jun. 2004- Jun. 2007	0	0	No
Wu Wenxue	Male	40	Convener of Supervisory Committee	May. 2006- Jun. 2007	0	0	No
Mu Chengyuan	Male	39	Supervisor	Jun. 2004- Jun. 2007	2492	2492	No
Chen Ping	femal e	45	Supervisor	May, 2006- Jun. 2007	0	0	No
Xu Yan	Female	55	Employee Supervisor	Jun. 2004- Jun. 2007	14953	14953	Yes
Yang Anle	Male	36	Employee Supervisor	Jun. 2004- Jun. 2007	0	0	Yes
Wang Jiaheng	Male	38	Vice-President	Jun. 2004- Jun. 2007	0	0	Yes
Song Ying	Female	49	Vice-president	Jun. 2004- Jun. 2007	24921	24921	Yes
Wang Yanjun	Male	37	Financial controller	Jun. 2004- Jun. 2007	9968	9968	Yes
Ren Jianchang	Male	60	Vice-president	Jun. 2004- Jun. 2007	0	0	Yes

Han Guojian	Male	53	Vice-president	Jun. 2004- Mar. 2007	9968	9968	Yes
Liu Xiaodong	Male	42	Vice-president	Jun. 2004- Mar. 2007	0	0	Yes
Su Zhiwen	Male	38	Auditing chief	Sep. 2004- Jun. 2007	0	0	Yes
Feng Weidong	Male	39	Vice-president	Sep.2004- Jun.2007	0	0	Yes
Cao Hong	Male	47	Vice-president	Apr.2005- Jun. 2007	4984	4984	Yes
Lin Rongzhen	Male	44	Vice-president	Nov. 2005- Jun. 2007	0	0	Yes
Li Zhenlie	Male	45	Technical Controller	May, 2006- Jun. 2007	0	0	Yes
Zhong Huifeng	Male	36	Secretary of the Board of Directors	May, 2006- Jun.2007	0	0	Yes

Main work experience and part-time job about directors, supervisors and senior executives

(1) Mr. Wang Dongsheng, 50 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. Now he takes the posts of Chairman of the Board, Chairman of Executive Committee and CEO of the 4th Board of Directors of the Company and concurrently takes the posts of Chairman of the Board of Beijing BOE Investment and Development Co., Ltd., Director of TPV Technology Co., Ltd. Chairman of the Board of Beijing Sevenstar Science & Technology Co., Ltd., Chairman of Directors of Beijing BOE Optoelectronics Technology Director of Beijing Intelligent Kechuang Technology Development Co., Ltd. and Vice Chairman of China Electronic Chamber of Commerce.

(2)Mr. Han Yansheng, 59 years old, Associated Colleges Degree, he had taken the posts of Factory Managing Director, a member of the Communist Party of Beijing No.1 Semiconductor Device Factory, Manager of Adjustment Office of Beijing Government Electronic Office, Deputy Manager of Beijing Government Electronic Office, Director and Deputy General Manager of Beijing Electronic Information Industry (Group) Co., Ltd. He is now the Vice Chairman of the 4th Board of Directors of the Company, Director and General Vice President of Beijing Electronic Holdings Co., Ltd.

(3) Mr. Liang Xinqing, 55 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. He is now the Vice Chairman of the 4th Board of Directors of the Company, Chairman of the Board of Beijing Nittan Electronic Co., Ltd. Director of Beijing Matsushita Color CRT Co., Ltd.

Chairman of the Board of Beijing Orient Hengtong Enterprise Co., Ltd, Chairman of the Board of BOE Enterprise Co., Ltd and Beijing Xingcheng Enterprise Co., Ltd. Director of Beijing Electronic City Co., Ltd. Director of Beijing Intelligent Kechuang Technology Development Co., Ltd. Director and President of BOE Investment Development Co., Ltd.

(4) Mr. Chen Yanshun, 41 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 Executive Director and Senior Vice President of the 3[rd] Board of Directors. Now he takes the posts of Executive Director and the president of the 4[th ] Board of Directors of the Company and Director of TPV 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. Chairman of the Board of Directors of BOE BOE Hyundai(Beijing) LCD Inc., Chairman of the Board of Directors of BOE (Hebei) Mobile Display Technology Co., Ltd.and Chairman of the Board of Beijing Intelligent Kechuang Technology Development Co., Ltd.

(5)Mr. Zhao Caiyong, 60 years old, Master degree, Senior Accountant, he has taken the posts of General Accountant of Beijing Vacuum Tube Factory, Director of the 1st Board of Directors and Financial Controller of the Company, Director of the 2nd and 3rd Board of Directors of the Company, General Deputy Manager of Beijing Dongdian Industrial Development Co., Ltd. Chairman of the Board of Directors of Beijing Asahi Glass Electronics Co., Ltd, Chairman of the Board of Directors of Beijing Nissin Electronics Precision Component Co., Ltd.and convener of the Supervisory Committee of Beijing Intelligent Kechuang Technology Development Co., Ltd.

(6) Mr. Tatta Kenichi, 56 years old, graduated from Department of Industrial Chemistry of Seikei University in Japan. He has ever taken the head of Organic Chemical Products Dept., Assistant to the head of Chemical Dept, head of Agrochemical Products Dept; head of Fundamental Chemical Product Dept, head of Abiochemical Product Dept. Now is the Company Director of 4[th] Board of Directors, Executive GM and head of Chemical Dept of Marubeni Co., Ltd, Director of Beijing BOE Investment Development Co., Ltd

(7) Ms. Gui Jinghua, 33 years old, is a master. She has taken the posts of Project Manager of China National Aero-Technology Import & Export Company, Assistant Manager of Sun Media Group Holdings Limited and manager of Investment Department of Panasia International Media Holdings Co., Ltd. He is now the Director of the 4th Board of Directors of the Company, Deputy Manager of Infrastructure Investment Department and Manager of Strategy Investment Department of Beijing State-owned Assets Management Co., Ltd.

(8) Mr. Tai Zhonghe, 56 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, 47 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, 63 years old, senior engineer of Tsinghua University, expert in LCD, ever took part in 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, 51 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. Wu Wenxue, 40 years old, master of Economics, he has taken the posts of the project manager of Huaxia Securities Issuing Development, Deputy Director of Beijing Foster Automobile Decorations Factory, and Deputy Chief of Comprehensive Management and Deputy Directors of Policies Research Office of Beijing Gongmei Group Company, Deputy General Manager of Beijing Gongmei Art World, General

Manager of Beijing Wo La Fey Decoration Co., Ltd., Deputy General Manager and a member of Beijing Guomei Co., Ltd. and Deputy General Manager of China Youfa International Project Design Consulting Co., Ltd. He is now the Convener of the 4th Supervisory Committee and Vice President of Beijing Electronics Holdings Co., Ltd. (13) Mr. Mu Chengyuan, 39 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) Ms. Chen Ping, 45 years old, Associated College Agree, and Senior Accountant. He has taken the posts of Deputy General Accountant and Manager of Planning and Financing Department of BOE Investment Development Co., Ltd. She is now the Supervisor of the 4th Supervisory Committee of the Company, Chief Accountant and Manager of Planning and Financing Department of Beijing Dongdian Industrial Development Co., Ltd.

(15) Ms. Xu Yan, 55 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) Mr. Yang Anle, 36, master. He has taken the posts of Deputy Section Chief of Financing and Accounting Section of Beijing Vacuum Tube Co., Ltd. Manager of Financing and Accounting Department of BOE Investment Development Co., Ltd. Chief Financial Officer of Beijing Dongdian Enterprise Development Co., Ltd. Supervisor of the 2[nd, ] 3[rd] and 4[th] Supervisory Committee. He is now the Staff Supervisor of the 4th Supervisory Committee and Section Chief of Investment Management Section of the Company, Director of Beijing BOE Special Display Technology Co., Ltd. BOE Hyundai (Beijing) Display Technology Co., Ltd. Suzhou BOE CHATANI Electronics Co., Ltd. Beijing Orient Vacuum Electric Co., Ltd. Beijing Star City Real Estate Development Co. Ltd. and Beijing Orient Wanshili Intelligent Technology Co., Ltd.

(17) Mr. Wang Jiaheng, 37 years old, MBA, ever took the post of Electronic Components General Division of the Company. Now he takes the posts of Vice-president of the Company and Director of Korea Hyundai LCD Inc., Director and Director of Beijing Nissin Electronics Precision Component Co., Ltd. Director and General Manager of BOE Hyundai (Beijing) Display Technology Co., Ltd. and BOE (Hebei) Mobile Display Technology Co., Ltd. and Director of Zhejiang Beijing Orient Vacuum Electronic Co., Ltd.

(18) Ms. Song Ying, 49 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..

(19) Mr. Wang Yanjun, 37 years old, master degree, EMBA, 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. 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. Now he takes the posts of Chief Financial Officer of the Company Director of Top Victory Technology Co., Ltd., Director of BOE-HYDIS Technology Co., Ltd., and Director of Beijing Intelligent Kechuang Technology Development Co., Ltd.

(20) Mr. Ren Jianchang, 60 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.

(21) Mr. Han Guojian, 53 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, Beijing BOE Optoelectronics Technology Co., Ltd. and Chairman of the Board of Beijing BOE Special Display Technology Co., Ltd., Director of BOE Hyundai LCD Inc. and Director of BOE (Hebei) Mobile Display Technology Co., Ltd.

(22) Mr. Liu Xiaodong, 42 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.

(23) Mr, Su Zhiwen, 38 years old, native of Hong Kong of China. MBA in Hong Kong Technology University, a member of Hong Kong Accountant Association and

experienced member of The Association of Chartered Certified Accountants in UK. He has taken the posts of Manager of Check and Consulting Department of PriceWaterhouseCoopers CPAs, Chief Financial Controller of Hong Kong Economic Daily Group and Assistant President of the Board of Directors. He is now the Audit Chief of the Company.

(24) 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.

(25) Mr. Cao Hong, 47 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, Chairman of the Board of Beijing Fangyi Integrate Circuit Design Co., Ltd., Director of Suzhou BOE CHATANI Electronics Co., Ltd., 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., 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.

(26) Mr. Lin Rongzhen, 44 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, Senior Managing Director of Development Center of TFT-LCD Business Group in the Company and Technology Chief Officer of the Company. He is now the Technical Controller of the Company.

(27) Mr. Li Zhenlie, 45 years old, native of Korea, Doctor in Electronics. He has taken the posts of Senior Manager, Chief Engineer, Administrator of HYDIS Bezel Panel Engineer Dept. Product Project Dept. and LCD research Center. He entered the Company in Jan. 2003 and was appointed as the Vice President of LCD Center of BOE-Hydis Technology Co., Ltd. Technical Controller of TFT-LCD Project Area. He is now the Technical Principal of the Company.

(28) Mr. Zhong Huifeng, 36 years old, master, he has taken the posts of Securities Stuff Representatives of the 2nd Board of Directors and Manger of Securities Dept. of the Company, Secretary of the 3rd Board of Directors, Securities Stuff Representative of the 4th Board of Directors. He is now the Secretary of the 4th Board of Directors of the Company.

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

companies
name	Title	office in shareholders’ unit
		Name of shareholders	office
Han Yansheng	Vice Chairman of the Board of Directors	BOE Investment Development Co., Ltd.	Vice Chairman of the Board of Directors
		BOE Electronic Holdings Co., Ltd.	Director, General Vice President
Batian Xianyi	Director	BOE Investment Development Co., Ltd.	Director
Gui Jinghua	Director	Beijing state-owned Assets Management Co., Ltd.	Deputy Manager of Infrastructure Investment
Zhao Caiyong	Director	Beijing Dongdian Enterprise Development Co., Ltd.	Deputy General Manager
Wu Wenxue	Supervisor	Beijing Electronic Holdings Co., Ltd.	Vice President
Chen Ping	Supervisor	Beijing Dongdian Enterprise Development Co., Ltd.	Chief Accountant, Manager of Planning and Financial Dept.
Mu Chengyuan	Supervisor	BOE Investment and Development Co., Ltd.	Vice President, Secretary of the Board of Directors

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 9,498,000 (pretax) in the year 2006.

The total amount of remunerations paid to the top three directors that enjoy the highest salaries totaled RMB2,059,000 (Pretax), while the total amount of remunerations paid to the top three senior executives that enjoy the highest salaries totaled RMB 3,188,000 (Pretax).

Subsidies for independent directors (after-tax): USD 10,000 per year for Mr. Tai Zhonghe, and RMB 80,000 per year for Mr. Xie Zhihua, Mr. Zhang Baizhe and Mr. Li Zhaojie respectively.

In the year 2006, there were 17 directors, supervisors and senior executives that had drawn salaries from the Company, with 2 people drawing salaries below RMB 200,000, 5 people between RMB 200,000 and RMB 500,000 and 10 people above RMB 500,000.

III. Changes of directors, supervisors and senior executives in the report period On Apr. 25, 2006, as examined and approved by the 23rd meeting of the 4th Board of Directors, the Director of the Company, Mr. Sen Guang dismissed the post owing to work movement and the Board of Directors elected Mr. Batian Xianyi as the candidate of Director in the 4th Board of Directors.

On Apr.25, 2006, as examined and approved by the 7th Supervisory Committee of the Company, Mr. Xia Zhenzhi dismissed the convener and Supervisor of the Company, and the Supervisory Committee elected Mr. Wu Wenxue and Ms. Chen Ping as the Supervisors of the 4th Supervisory Committee.

On May, 29, 2006, as examined and approved by the General Shareholders’ Meeting 2005, Mr. Sen Guang dismissed the post of Director of the Company and Mr. Batian Xianyi was elected as the Director; Mr. Xia Zhenzhi dismissed the posts of convener, Supervisor of the Supervisory Committee and Mr. Wu Wenxue and Ms. Chen Ping were elected as the Supervisors of the 4th Supervisory Committee.

On May, 29, 2006, as examined and approved by the 8th meeting of the 4th Supervisory Committee, Mr. Wu Wenxue was elected as the convener of the 4th Supervisory Committee of the Company. Besides, the 4th Supervisory Committee engaged the Supervisor, Mr. Mu Chengyuan as the Secretary of the Supervisory Committee.

On May, 31, 2006, as examined and approved by the 24th meeting of the 4th Board of Directors, the Vice Chairman of the Board of Directors, Mr. Jiang Yukun dismissed the post and Mr. Liang Xinqing was engaged as Vice Chairman of the 4th Board of Directors and no longer held the post of president. Mr. Chen Yanshun was engaged as the President of the Company and no longer held the post of Vice President and Secretary of the Board of Directors; Mr. Lin Rongzhen was engaged as the Vice President and no longer held the post of Technical Controller; Mr. Li zhenlie was

engaged as the Technical Controller; Zhong Huifeng was engaged as the Secretary of the Board of Directors.

On Aug.24, 2006, as examined and approved by the 25th meeting of the 4th Board of Directors, Mr. Han Yansheng was engaged as the candidate of Director of the 4th Board of Directors.

On Sep.15, 2006, as examined and approved by the 2nd extraordinary General Meeting of Shareholders 2006, Mr. Jiang Yukun dismissed the post of Director of the Company and Mr. Han Yansheng was engaged as the Supervisor of the 4th Supervisory Committee.

On Sep.19, 2006, as approved by the Board of Directors, Mr. Cui Bingdou dismissed the posts of Executive Director and COO owing to personal reasons.

On Oct.26, 2006, as examined and approved by 28th meeting of the 4th Board of Directors, Mr. Han Yansheng was engaged as the Vice Chairman of the Board of Directors; Ms. Gui Jinghua was elected as the candidate of the 4th Board of Directors.

On Nov.16, 2006, as examined and approved by the 3rd extraordinary General Meeting of Shareholders 2006, Ms. Gui Jinghua was elected as the Director of the 4th Board of Directors.

IV. Statement on the employees of the Company

By the end of 2006, the number of the employees in service of the Company (including headquarter of the Company and main controlling subsidiaries) totaled 9848, with their work divisions and education levels as follows (Unit: person):

Work division	Technology R & D	Professional skills	Professional skills	Marketing personnel	Management personnel	Financial personnel	Financial personnel	Production personnel	Others
Number	288	1035		196	770	159		133	277
proportion	2.92%	10.51%		1.99%	7.82%	1.35%		72.60%	2.81%

Educational background	Doctor & Post-Doctor		Master	Bachelor	Junior College Graduate		Vocational School Graduate		Others
Number	31		261	1235	1401		4349		2571
Proportion	0.31%		2.65%	12.54%	14.23%		44.16%		26.11%

Chapter V Administrative Structure

I. Corporate administration

In the report period, the Company had operated strictly in accordance with the Company Law, Securities Law, Code of Corporate Governance for Listed Companies in China and combined the fact of itself, modified and perfected Articles of

Association, Rules of Procedures of the General Meeting of Shareholders, Rules of Procedures of the Board of Directors and Rules of Procedures of the Supervisory Committee, further improved the legal person corporate governance structure required by modern enterprises system, continuously promoted the decision-making system and efficient supervision system construction, and protected the legal rights of the Company, shareholders and creditors.

II. Duty performance of independent directors

The current four independent directors engaged by the Company are experts in areas of 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 related transactions, work shifts of directors and senior executives, 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 presenting written opinions)	Number of meetings present by authorized persons	Number of meetings absent from
Tai Zhonghe	13	12	0	1
Xie Zhihua	13	13	0	0
Zhang Baizhe	13	13	0	0
Li Zhaojie	13	11	1	1

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 administration structure, and had not carried out any work together with the controlling shareholder or the actual controller.
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 (HR Department)

According to the performance examination method, the senior executives would sign a Target Responsibility Paper with the Group and set the work goals, key performance indicators (KPI) as well as the evaluation, reward and punishment standards. Into the work targets accomplishment evaluation would be introduced 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 to receive of the senior executives.

Chapter VI Shareholders’ General Meeting

Details on the Shareholders’ General Meetings held in the report period are as follows:

I. 1[st] extraordinary Shareholders’ General Meeting 2006

The 1[st] extraordinary Shareholders’ General Meeting 2006 was held at Guomen Hotel, Beijing on May 19, 2006. And the Company published the Public Notice on the Resolutions of the 1[st] Provisional Shareholders’ General Meeting 2006 of BOE Technology Group Co., Ltd in Securities Times, China Securities Journal, Shanghai Securities News and Hong Kong Ta Kung Pao on May 22, 2006.

II. Shareholders’ General Meeting 2005

The Shareholders’ General Meeting 2005 was held at Guomen Hotel, Beijing on May 29, 2006. And the Company published the Public Notice on the Resolutions of the 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 May 30, 2006.

III. 2[nd] extraordinary Shareholders’ General Meeting 2006

The 2[nd] extraordinary Shareholders’ General Meeting 2006 was held at Guomen Hotel, Beijing on Sep.15, 2006. And the Company published the Public Notice on the Resolutions of the 2[nd] Provisional Shareholders’ General Meeting 2006 of BOE Technology Group Co., Ltd in Securities Times, China Securities Journal, Shanghai Securities News and Hong Kong Ta Kung Pao on Sep.16, 2006.

IV. 3[rd] extraordinary Shareholders’ General Meeting 2006

The 3[rd] extraordinary Shareholders’ General Meeting 2006 was held at Guomen Hotel, Beijing on Nov.16, 2006. And the Company published the Public Notice on the Resolutions of the 3[rd] Provisional Shareholders’ General Meeting 2006 of BOE Technology Group Co., Ltd in Securities Times, China Securities Journal, Shanghai Securities News and Hong Kong Ta Kung Pao on Nov. 17, 2006.

Chapter VII Report of the Board of Directors

I. Main business scope and overall operation

The Company has fixed its core operations in the display area, and there are seven large subordinate display-related groups, i.e. the TFT-LCD group, monitor and Flat Panel TV group, professional display system group, mobile display system group, display application system group, precision electronic parts and materials group and the CRT group, with 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 RMB8,769,966,000, up by -34.79 percent year-on-year. However, due to the price downslides in TFT-LCD market, small production capacity, low localized raw material supporting 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 made totaled RMB 1,770,800,000 .

1. Distribution of main operations

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

Products	Sales income	Sales cost	Gross profit ratio	Increase or decrease of sales income	Increase or decrease of sales cost year-on-year

				year-on-year (%)	(%)
TFT-LCD	8,300,696	10,746,360	-29.46%	4.41%	11.50%
Small-size flat display	657,740	635,075	3.45%	-3.58%	0.10%
Other operations	1,268,784	1,253,956	1.17%	17.13%	101.65%
Internal offset	-1,457,254	-1,384,461	-	-	-
Total	8,769,966	11,250,930	-28.29%	-34.79%	-22.54%

Sales income and sales cost of other operations increased for increment of TFT-LCD fitting parties operation.

Breakdown according to regional distribution Unit: RMB’000

Regions	Sales income in 2006	Sales income of 2005	Increase or decrease of sales income year-on-year
China	3,567,312	6,514,081	-45.24%
Other Asian countries	4,439,485	5,045,182	-12.01%
Europe	470,232	414,566	13.43%
America	224,345	1,309,074	-82.86%
Other countries	68,592	166,810	-58.88%
Total	8,769,966	13,449,713	-34.79%

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

(I) Analyses on the profitability of the main operations

In the report period, there was little change on main business and main business profitability, and main operation achievement was still in the state of loss. The related details are as follows:

Quantity of TFT-LCD operation production and sale increased.

However, TFT-LCD operation involved in great loss provided continuous decreasing price of TFT-LCD and slowly decreasing price of raw material.

Small production-scale of TFT-LCD products of the Company failed to create an obvious advantage.
Local fitting degree of TFT-LCD industry was low, and export & import of key raw material resulted in higher production cost.
Bank loan interest expense of TFT-LCD operation increased.
Benefiting from increment achievement of inferior affiliated company --- TPV Technology Limited, the investment income of the Company was increased synchronously.

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

Unit: RMB’000

Item	Dec. 31, 2006	Dec. 31, 2006	Dec. 31, 2005	Dec. 31, 2005	Increase or decrease margin
	Amount	Proportion	Amount	Proportion
Total assets	16,693,219	100.00%	21,524,766	100%	-22.45%
Accounts receivable	1,174,942	7.04%	1,876,294	8.72%	-37.38%
Inventories	1,266,044	7.58%	1,919,901	8.92%	-34.06%

Affiliated company’s equity	3,075,083	18.42%	2,820,463	13.10%	9.03%
Fixed assets	7,897,569	47.31%	11,330,272	52.64%	-30.30%
Projects under construction	64,482	0.39%	285,244	1.33%	-77.39%
Short-term bank loans and other loans	4,557,204	27.30%	3,762,956	17.48%	21.11%
bank loans and other loans	5,088,771	30.48%	9,569,710	44.46%	-46.82%

Former subsidiary of the Company --- BOE-Hydis applied for court for revivification procedure of enterprise on Sep. 29, 2006. From Oct. 2006, the Company no longer took it into consolidated form, which resulted in great decrease of total assets, account receivable, inventories, fixed assets, and bank loans & other loans, compared with those of last year.

Reasons on decrease of Projects under construction: ① TFT-LCD the Gen5 product-line’s construction project of the subsidiary of the Company --- Beijing BOE Optoelectronics Technology Co., Ltd. transferred into fixed assets. ② BOE-Hydis was no longer taken into consolidated form from Oct. 2006.

( Ⅲ ) Cash flow change of the Company

Unit: RMB’000

(Ⅲ) Cash flow change of the Company		Unit: RMB’000
Item	Dec. 31, 2006	Dec. 31, 2005
Cash flow net amount from operation activity	843,112	-983,559
Cash flow net amount from investment activity	-196,886	-4,420,829
Cash flow net amount from fund-raising activity	-334,594	5,087,772

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

Controlling companies

Unit: RMB

Name of company	Main products	Registered capital	Assets scale	Net profit	Income from main operations	Cost of main operations
Beijing BOE Photoelectricity Technology Co., Ltd.	Develop and product thin film transistor liquid crystal displays	USD 550 million	10,277,136,525	-1,504,439,047	5,726,750,491	6,595,685,733

Shareholding companies

Unit: USD’000

Name of company	Main products or services	Registered capital	Assets scale	Net profit
TPV Technology Limited	Display	1,046,928	3,060,856	151,760

Ⅲ . Investment in the report period

Usage of proceeds raised in the report period

Unit: RMB’0000

Total amount of raised proceeds	186,000	186,000	Total amount of raised proceeds used as of the report year	Total amount of raised proceeds used as of the report year	Total amount of raised proceeds used as of the report year	45,272
			Total amount of raised proceeds used accumulatively			45,272
Committed projects	Planned investment amount	Change projects or not	Actual investment amount	Accrued amount of earnings in thisyear	Compliance with planned progress or not	Compliance with estimated earnings or not
Increase investment and production capacity project of Beijing BOE Optoelectronics Technology Co., Ltd.	USD 90 million	No	45,272	-	Yes	-
Production line project of CF used by large-size TFT-LCD	250,000	No	-	-	-	-
Total		-	45,272	-	-	-
Explanation on failing to catch up with the planned progress or get the expected gains (with details down to eachproject)		The increase investment and production of optoelectronics was under implementation according to the plan; CF project can not be put into construction according to the plan due to the smaller funds.
Explanation on the project changes and procedure of changes (with details down to eachproject)		Naught

2. Significant investments with non-raised proceeds

Unit: RMB’0000

Name ofprojects	Investment amount ofproject	Progress ofprojects
Invested JulongOptoelectronics Co., Ltd.	800	Completed
Gen5 production line of TFT-LCD	18,390	Under construction period
Main body project of BOE Hebei moving workshop	2,108	Under construction period
Main body project of Suzhou CHATANI workshop	3,901	completed
Main body project of special display workshop	808	Completed
Total	26,007	-

. Routine work of the Board of Directors Ⅴ

In the report period, particulars of the Board of Directors of the Company are as follows:

1) The 18[th] meeting of the 4[th] Board of Directors was held on Jan. 10, 2006. Resolution of meeting refers to business secret, so related resolutions were disclosed on Suggestive Notice Concerning Moving Display System Industry Project Construction Getting Entrustment Loan in Securities Times, China Securities Journal, Shanghai Securities News and Hong Kong Ta Kung Pao on Jan. 25, 2006.

2) The 19[th] meeting of the 4[th] Board of Directors was held on Feb. 6, 2006. Public notice on resolutions was disclosed on Securities Times, China Securities Journal, Shanghai Securities News and Hong Kong Ta Kung Pao on Feb. 8, 2006.

3) The 20[th] meeting of the 4[th] Board of Directors was held on Mar. 14, 2006. Public notice on resolutions was disclosed on Securities Times, China Securities Journal, Shanghai Securities News and Hong Kong Ta Kung Pao on Mar. 17, 2006.

4) The 21[st] meeting of the 4[th] Board of Directors was held on Apr. 18, 2006. Public notice on resolutions was disclosed on Securities Times, China Securities Journal, Shanghai Securities News and Hong Kong Ta Kung Pao on Apr. 19, 2006.

5) The 22[nd] meeting of the 4[th] Board of Directors was held on Apr. 21, 2006. Public notice on resolutions was disclosed on Securities Times, China Securities Journal, Shanghai Securities News and Hong Kong Ta Kung Pao on Apr. 24, 2006.

6) The 23[rd] meeting of the 4[th] Board of Directors was held on Apr. 25, 2006. Public notice on resolutions was disclosed on Securities Times, China Securities Journal, Shanghai Securities News and Hong Kong Ta Kung Pao on Apr. 28, 2006.

7) The 24[th] meeting of the 4[th] Board of Directors was held on May 31, 2006. Public notice on resolutions was disclosed on Securities Times, China Securities Journal, Shanghai Securities News and Hong Kong Ta Kung Pao on June 3, 2006.

8) The 25[th] meeting of the 4[th] Board of Directors was held on Aug. 24, 2006. Public notice on resolutions was disclosed on Securities Times, China Securities Journal, Shanghai Securities News and Hong Kong Ta Kung Pao on Aug. 29, 2006.

9) The 26[th] meeting of the 4[th] Board of Directors was held on Sep. 7, 2006. Public notice on resolutions was disclosed on Securities Times, China Securities Journal, Shanghai Securities News and Hong Kong Ta Kung Pao on Sep. 9, 2006.

10) The 28[th] meeting of the 4[th] Board of Directors was held on Oct. 26, 2006. Public notice on resolutions was disclosed on Securities Times, China Securities Journal, Shanghai Securities News and Hong Kong Ta Kung Pao on Oct. 28, 2006.

11) The 29[th] meeting of the 4[th] Board of Directors was held on Dec. 1, 2006, in which considered and approved the proposal Concerning about Prolonging Joint Operation Term with Beijing Matsushita Color CRT Co., Ltd.. Resolutions of meeting refers to business secret, so related resolutions were disclosed on Notice Concerning Deferred Joint Operation of Inferior Affliated Company --- Beijing Matsushita Color CRT Co., Ltd. in Securities Times, China Securities Journal, Shanghai Securities News and Hong Kong Ta Kung Pao on Dec. 12, 2006.

12) The 30[th] meeting of the 4[th] Board of Directors was held on Dec. 27, 2006. Public notice on resolutions was disclosed on Securities Times, China Securities Journal, Shanghai Securities News and Hong Kong Ta Kung Pao on Dec. 29, 2006.

VI. 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 1,721,944,721 in 2006. Therefore, the Board of the Company had decided not to distribute any profit or capitalize any public reserves for 2006.

Chapter 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 4 meetings in the report period and attended the Board meetings, with details as follows:

On Apr. 25, 2006, the 7[th] meeting of the 4[th] Supervisory Committee was held, at which some documents had been examined and approved, including the Work Report 2005 of the Supervisory Committee, the Text and Summary of the Annual Report 2005, the 1[st] Quarterly Report 2006, the Proposal on Withdrawing Assets Depreciation Reserves, Annual Internal Control Self-valuation Report 2005, the Proposal on the Routine Related Transactions of 2006, the Proposal on Modifying Rule of Procedure of the Supervisory Committee, the Proposal on Election-added Supervisor, and the Proposal on Setting Obligation Risk Insurance for Director, Supervisor and Senior Executive.
The 8[th] meeting of the 4[th] Supervisory Committee was held on May 29[th] , 2006, in which considered and approved the Proposal on Electing Convener of Supervisory Committee for the Company, and the Proposal on Employing Secretary of Supervisory Committee.

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 May 30, 2006.

The 9[th] meeting of the 4[th] Supervisory Committee was held on Aug. 24, 2006, in which considered and approved the Mid-term Report 2006.

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. 28, 2006.

The 10[th] meeting of the 4[th] Supervisory Committee was held on Oct. 26, 2006, in which considered and approved the 3[rd] Quarter Report 2006.

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, 2006.

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 purchased or sold

In the report period, the transaction prices of the assets sold 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 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.

5. Particulars about usage of fund raised

The Company non-publicly issued A share for 675,872,095 shares on Oct. 2006. And about usage of that fund-raised, the Supervisory Committee of the Company believed that, the part raised for increase investment and production capacity project in Beijing BOE Optoelectronics Technology Co., Ltd. is following project capital need plan, while the project of Color Filter (CF) production line for large size TFT-LCD wasn’t implemented due to shortage of fund raised, and the fund remained is put into special financial account based on the supervision regulations on securities.

6. Particulars of information disclosure

In the report period, there was no untimely or inadequate information disclosure.

Chapter IX Significant Events

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

1, Beijing Star City Real Estate Development Co. Ltd. (“Star City Real Estate” for short), affiliated company of the Company, paid RMB 44,579,247 for counterclaim & debt, guarantee expense and removal expense. Star City Real Estate affirmed the fund and presented the Affirmance Correspondence on BOE Liability. The Company sued and sealed up the land usufruct (JSGAFGY (2003C) Z No. 10071) of garden in No. 10 Jiuxian Bridge Road, Beijing belonged to Star City Real Estate. Also, closed down first floor to fourth floor of emporium and underground first, second floor of garage in the construction of Star City International Edifice. All unsold real estate of A building of Star City International Edifice were limited RMB 44,579,247. This case was accepted by the Second Intermediate People Court of Beijing without verdict.

Beijing BOE Real Estate Co., Ltd., subsidiary of the Company, claimed for compensation, economic loss and caution money total RMB 49,909,382 from Star City Real Estate. The Company sued and sealed up the land usufruct (JSGAFGY (2003C) Z No. 10071) of garden in No. 10 Jiuxian Bridge Road, Beijing belonged to Star City Real Estate. Also, closed down first floor to fourth floor of emporium and underground first, second floor of garage in the construction of Star City International Edifice. All unsold real estate of A building of Star City International Edifice were limited RMB 49,909,382. This case was accepted by the Second Intermediate People Court of Beijing without verdict.
Zhejiang BOE, subsidiary of the Company, should receive amount for RMB 2,076 thousand from Jianxun Technology Co., Ltd.. And this case was accepted by the Second Intermediate People Court of Shaoxing without verdict. II Implementation of assets sales in the report period

The Company held the 24th meeting of the 4th Board of Directors on May 31, 2006, in which considered and approved the Proposal on Conformity of Beijing FineICs Co., Ltd. The Company and its former subsidiary --- BOE Hydis will transfer all the shares’ equity of Beijing Fangyi held by themselves to Teralane Semiconductor Inc. (“TLS” for short) respectively. As consideration share, TLS paid cash USD 3 million and 5 million shares of TLS share (converted into USD 1.5 million) for the Company, also, it paid 5 million shares of TLS share (converted into USD 1.5 million) for BOE Hydis. Ended nowadays, TLS has finished counter purchase of 5 million shares of TLS held by BOE Hydis.

III. Significant related transactions

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 2006 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.

There was no related transaction on assets or equity transfer
The Company had no related transaction on external co-investment with related parties.

IV. Significant contracts and their implementation

There were no events of trusteeship, contract and tenancy
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. In Apr. 2006, the guarantee was at the expiry of the term, the Company no longer guaranteed for it.

Besides, Zhejiang BOE provided guarantee for Zhejiang Huanyu Construction Group Co., Ltd., and the ceiling of guarantee was RMB 40 million (year 2005: RMB 50 million). On Dec. 31st, 2006, the actual balance of this guarantee debt was RMB 32.2071 million (year 2005: RMB 42.1005million). The term of this debt is from Jan. 19, 2006 to Feb. 18, 2009.

(2) Internal guarantees

In the report period, the Company had provided guarantees for the subordinate subsidiary Zhejiang BOE’s loan of RMB 79,120,567 (year 2005: RMB 187,510,000), and BOEOT’s loan of RMB 5,940,512,634 (year 2005: RMB 6,037,964,000) (BOEOT had provided its fixed assets with total net value of RMB 6,931,629,650 as mortgage (year 2005: RMB 7,473,299,892)). The guarantees totaled RMB 870,351,352.

On Dec. 31, Zhejiang BOE had provided guarantees for Shaoxing BOE for a loan of RMB 6,500,000 (year 2004: RMB 9,000,000).

On Dec. 31, 2006, Suzhou Chatani provided guarantees for its subordinate subsidiary Beijing Chatani for a loan of RMB 41,700,000 (year 2005: RMB 41,700,000).

In the report period, the Company consigned no one to manage cash assets.
The Company had no other significant contract.
V. Implement of the commitments made by the Company in the report period
Commitments on the Share Merger Reform

All non-circulating shareholders promised no trading or transfer of shares held by them occurred before Nov. 29, 2006. Meanwhile, the controlling shareholder of BOE Investment further committed: after the accomplishment of the former commitment period, the proportion of sold shares of the totals shares listing and trading through Shenzhen Stock Exchange is no more than 5% within 12 months and no more than 10% within 24 months.

Please refer to the relevant contents of commitments in financial statements.
In the report period, the Company and shareholders holding over 5% have no other commitments.

XI. In the report period, the payments of the Certified Public Accountants employed

by the Company

On Dec. 22, 2005, the Company held 4[th] extraordinary Shareholders’ General Meeting, in which examined and approved the Proposal on Changing Certified Public Accountants. The Company employed KPMG Certified Public Accountants as the auditor of the Company.

In the report period, the payment for Certified Public Accountants by the Company was as follows:

The payment for KPMG Certified Public Accountants amounted to RMB 3,600,000.

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

XIII Other significant issues

The 26[th] Meeting of the 4[th] Board of Directors of the Company was held on Sep. 7, 2006, which examined and approved the Proposal on BOE Hydis Technology Co., Ltd. Applying Legal Re-adjustment Procedures. The Korean wholly subsidiary of the Company, BOE Hydis Technology Co., Ltd., facing the payment of bank loan consistently suffered losses because of decrease of cost competitive edge since the later half of 2004; the structure adjustment and loan readjustment plan proposed by the Company was not in progress by schedule. According to the Korean Law, to realize the self help of the enterprise and, according to the Korean Law, BOE Hydis Technology Co., Ltd. applied for to local court of Seoul, Korea.
The 21[st] meeting of the 4[th] Board of Directors of the Company (Apr. 18, 2006) and the 2006 1[st] extraordinary Shareholders’ General Meeting of the Company (May 19, 2006) examined and approved issuing A-shares to Specific Objects. Approved by CSRC ZJFXZ[2006] No. 36 Document, the Company has accomplished issuing 675,872,095 A shares, raised capital amounting to RMB1,860,000,005.45 (Including: RMB 1200,000,005.45 in cash and liability subscribing A shares for RMB660,000,000).,deducting the issuing expenses, the net amount of raised capital was RMB 1,855,307,359.89.
On Dec. 28, 2006, the Company published Suggestive Public Notice on Preplanning of Integration with Domestic TFT–LCD Enterprises. In order to improve the competitive edge and shareholders’ value of TFT-LCD industry in mainland China, the Company signed Letter of Intent with Shanghai SVA Group Co., Ltd., Shanghai SVA Electron Co., Ltd., Shanghai SVA Information Industry Co., Ltd., Kunshan Economic and Technological Development Zone Assets Operation Co., Ltd. and Longteng Holding Co., Ltd.. It was planning to constitute a new company or choose one of the present companies as professional company and make a platform of TFT-LCD business for the above companies, with their possessed TFT-LCD business (including flowing capital and cash of large size TFT-LCD panel and the upper and

lower supply chain.) All parties will re-estimate value of their TFT-LCD business putting into the professional company, work for the constitution and development strategy of the professional company, reach accord on related conformity events, and sign the contract and articles of the professional company before June 30, 2007. If they did not reach an agreement by then, the Letter of Intent terminates.

Ⅸ . Events post to balance sheet

Please refer to the details post to balance sheet in accounting statement annotations.

Chapter X Financial Report

I. Accounting Statements (see statements attached)

II. Notes to the Accounting Statements (see attachments)

Chapter 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.

Board of Directors

BOE Technology Group Co., Ltd

Apr. 25, 2007

BOE Technology Group Company Limited

31 December 2006

Report of the 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)

Report on the consolidated financial statements

We have audited the accompanying consolidated financial statements of BOE Technology Group Company Limited (the “Company”) and its subsidiaries (the “Group”) set out on pages 3 to 62, which comprise the consolidated balance sheet as at 31 December 2006, and the consolidated income statement, the consolidated statement of changes in equity and the consolidated cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory notes.

Management’s responsibility for the financial statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatements, whether due to fraud error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditors’ responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with relevant ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting principles used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Opinion

In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of the Group as of 31 December 2006, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards.

Certified Public Accountants 8[th] Floor, Prince’s Building 10 Chater Road Central, Hong Kong

25 April 2007