BOE TECHNOLOGY GROUP CO., LTD — Annual Report 2006

Apr 27, 2007

BOE TECHNOLOGY GROUP CO., LTD. SUMMARY OF ANNUAL REPORT 2006

§1. Important Notes

1.1 The Board of Directors, the Supervisory Committee and directors, supervisors and senior management 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 that all information set forth herein are true, accurate and complete. The summary of annual report 2006 is abstracted from the full text of such report; the investors are suggested to read the full text of such report to understand more details. This report has been prepared in Chinese and English version respectively. In the event of difference in interpretation between the two versions, the Chinese report will prevail.

1.2 None of the directors, supervisors, senior management demonstrated uncertainty or disagreement about the truthfulness, accuracy, and completeness of this annual report.

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

1.4 KPMG Certified Public Accountants issued a standard unqualified Auditors' Report for the Company.

1.5 Mr. Wang Dongsheng, Chairman of the Board, Mr. Chen Yanshun, the 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.

§2. Company Profile

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

2.2 Contact person and contact method

	Secretary of the Board	Securities Affairs Representative
Name	Zhong Huifeng	Zhang Shitong
Contact address	No.10,JiuXianQiaoRoad,	No.10,JiuXianQiaoRoad,
	Chaoyang District, Beijing	Chaoyang District, Beijing
Telephone	010-64318888 Ext.	010-64318888 Ext.
Fax	010-64366264	010-64366264
E-mailhfzhong@boe.com.cn		boecapital@boe.com.cn

§3. Summary of Accounting Data and Financial Indexes

3.1 Major accounting data

Unit: RMB'000

	2006	2005	Increase/decreasecompared with thelast year(%)	2004
Sales revenue	8,769,966	13,449,713	34.79%	12,441,708
Net profit	-1,770,800	-1,245,993	-	340,262
	At the end of2006	At the end of2005	Increase/decreasecompared with theend of the lastyear(%)	At the end of2004
Total assets	16,693,219	21,524,766	-22.45%	18,223,237
Shareholder's equity	3,888,444	3,967,616	-2.00%	5,270,862

3.2 Major financial indexes

				Unit: RMB
	2006	2005	Increase/decreasecompared with the lastyear(%)	2004
Earnings per share	-0.78	-0.57	-	0.23
Return on net equity (%)	-45.54%	-31.40%	-	6.46%
Net assets per share	1.35	1.81	-25.41%	3.60

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 2004 and those of 2005 upon the total share capital of 2,195,695,800 shares at the end of 2005, as well as those of 2006 upon the total share capital of 2,871,567,895.

3.3 Difference in net profit as audited by Chinese Accounting Standard (CAS) and International Accounting Standard (IAS)

√Applicable □Inapplicable

		Unit: RMB'000
	CAS	IAS
Net profit	-1,721,945	-1,770,800
	Net loss under PRC GAAP	-1,721,945
	Adjustments:
	Recognition and amortisation of positive goodwillRecognition and amortisation of negative goodwill	105,108-79,278
	Government grant	7,642
Explanationon	Capitalised general borrowing costs,net of related depreciationCapitalised development costs, net of	-3,435
the difference	related depreciation	-200,450
	Appropriation of staff bonus and welfare fee	-3,617
	Amortisation of loans arrangement fee	-15,364
	Dilution on interest in an associate	142,594
	Others	-2,055
	Loss attributable to equity shareholders
	of the Company under IFRSs*	-1,770,800

§4. Changes in Share Capital Shareholders

4.1 Statement of change in Share Capital

					Unit: RMB
	Before the change			Change of this term (+,-)			After the changed
	Number	Proportion	Shares capitaltransferredfromnon-publicreserve	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-ownedlegal person	808,894,300	36.84%	+127,180,233	-124,706,865	+2,473,368	811,367,668	28.25%
3.Sharesheldbyotherdomestic investors	8,957,848	0.41%	0	-8,814,200	-8,814,200	143,648	0.01%
Including:
Shares held by domestic legalpersons	8,814,200	0.40%	0	-8,814,200	-8,814,200	0	0
Shares held by domestic naturalpersons (shares held by seniorexecutives)	143,648	0.01%	0	0	0	143,648	0.01%
4.Sharesheldbyforeigninvestors	249,600	0.01%	0	0	0	249,600	0.01%
Including:
Shares held by foreign legalpersons
Shares held by foreign naturalpersons (shares held by seniorexecutives)	249,600	0.01%	0	0	0	249,600	0.01%
II.Sharesnotsubjecttomoratorium	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 foreignshares	1,115,300,400	50.79%	0	0	0	1,115,300,400	38.84%
3.Overseaslistedforeignshares
4. Others
III. Total shares	2,195,695,800	100%	+675,872,095	0	+675,872,095	2,871,567,895	100%

The share number held by the top ten shareholders subject to trading moratorium and trading moratorium narrate

No.	Name of shareholderssubject to tradingmoratorium	Number ofshares subjectto tradingmoratorium	Date on whichshares can be listedfor trading	Number ofadditionalshares can belisted fortrading	Trading moratorium
			Nov. 30, 2007	36,009,865	No trading and transferwithin 36
			Nov. 30, 2008	648,177,570	monthsasofthedatewhen
1	BeijingBOEInvestment&Development Co., Ltd.	811,367,668	Oct. 9, 2009	127,180,233	corporate shares of BOE held by thiscompany obtain the trading right inA-share market. After expiration oftheaforesaidundertaking,thiscompanycouldselloriginalnon-tradable shares through listingand trading on stock exchanges, butproportion of number of shares couldbe sold in total shares of BOE shallnot exceed 5 percent within 12months, as well as not exceed 10percent within 24 months.

2	BEIJINGELECTRONICSHOLDINGSCO.,LTD.	290,697,675	Oct. 9, 2009	290,697,675	No trading and transfer within 36monthsasofthedatewhencorporate shares of BOE held by thiscompany obtain the trading right inA-share market.
3	BEIJINGSTATE-OWNEDASSETSMANAGEMENT CO.,LTD.	145,348,838	Oct. 9, 2007	145,348,838	No trading and transfer within 12monthsasofthedatewhencorporate shares of BOE held by thiscompany obtain the trading right inA-share market.
4	BEIJINGINDUSTRIALDEVELOPMENTINVESTMENTMANAGEMENT CO.,LTD.	112,645,349	Oct. 9, 2007	112,645,349	No trading and transfer within 12monthsasofthedatewhencorporate shares of BOE held by thiscompany obtain the trading right inA-share market.

4.2 Statement of shares held by the top ten shareholders and the top ten shareholders with no moratorium

Unit: share
Total number of shareholders			73,239 shareholders in total (including 31,331 shareholders of share-B)
	shares held by the top ten shareholders
Name of shareholder	Nature ofshareholders	Proportion	Total number ofshares held	Number of shareswith moratorium	Sharepledged orfrozen
BEIJINGBOEINVESTMENT&DEVELOPMENT CO., LTD.	State-owned legalperson shares	29.51%	847,377,533	811,367,668	Naught
BEIJING ELECTRONICS HOLDINGSCO., LTD.	State-owned share	10.12%	290,697,675	290,697,675	Naught
BEIJINGSTATE-OWNEDASSETSMANAGEMENT CO., LTD.	State-ownedshare	5.06%	145,348,838	145,348,838	Naught
FIELDS PACIFIC LIMITED	B-share	4.70%	135,000,000	0	Unknown
BEIJINGINDUSTRIALDEVELOPMENTINVESTMENTMANAGEMENT CO., LTD.	State-owned share	3.92%	112,645,349	112,645,349	Naught
BEIJINGDONGDIANINDUSTRIALDEVELOPMENT COMPANY	A-share	1.98%	56,842,947	0	Naught
SHANGHAI (HONG KONG) WANGUOSECURITIES	B-share	0.96%	27,686,375	0	Unknown
GUOTAI JUNAN SECURITIES HONGKONG LIMITED	B-share	0.55%	15,775,901	0	Unknown
HCBCBROKINGSECURITIES(ASIA)LIMITED-CLIENTS A/C	B-share	0.45%	12,958,930	0	Unknown
SUN HUNG KAI INVEST SERVICESLTD-CUSTOMERS A/C	B-share	0.40%	11,498,843	0	Unknown
	shares held by the top ten shareholders with no moratorium
Name of shareholders		Numbers of shares with no moratorium		Type of shares
FIELDS PACIFIC LIMITED		135,000,000		B-share
BEIJINGDONGDIANINDUSTRIALDEVELOPMENT COMPANY		56,842,947		A-share
BEIJINGBOEINVESTMENT&DEVELOPMENT CO., LTD.		36,009,865		A-share
SHANGHAI (HONG KONG) WANGUOSECURITIES		27,686,375		B-share
GUOTAI JUNAN SECURITIES HONGKONG LIMITED		15,775,901		B-share
HCBCBROKINGSECURITIES(ASIA)LIMITED-CLIENTS A/C		12,958,930		B-share
SUN HUNG KAI INVEST SERVICESLTD-CUSTOMERS A/C		11,498,843		B-share
HUANG YINGBIN		11,266,240		B-share

CITICCAPITALSECURITIESCO.,LTD.	10,394,249	B-share
BARINGS(IRELAND)SATHEATLANTIS CHINA FUND PLC	10,000,000	B-share
Explanationonassociatedrelationshipamongthetoptenshareholders or acting-in-concert	There exists associated relationship between Beijing BOE Investment &Development Co., Ltd. and Beijing Dongdian Industrial DevelopmentCompany. It is unknown whether there is any associated relationship amongthe top ten shareholders and the top ten shareholders of tradable share.

4.3 Particulars about the controlling shareholders and actual controllers of the Company

4.3.1 Particulars about change in the controlling shareholders and actual controllers of the Company

□Applicable √Inapplicable

4.3.2 Introduction to detail situation for the controlling shareholders and the actual controllers

(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 shares 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., and 10.12% equity of the Company directly, is was the actual controller of the Company.

Beijing Electronics Holding Co., Ltd. is 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: Pu Shicheng

Date of Foundation: April 8, 1997

Location: No.12 Jiuxianqiao Road, Chaoyang District, Beijing

Registered Capital: RMB 1,307.37 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 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 equity incentive.

					Number of shareheld		Receivingpayment
Name	Sex	Age	Title	Office term	Yearend	Yearbegin	from thecompanyor not
Wang	Male	50	Chairman of the Board, Chairman of	Jun. 2004-	24921	24921	Yes
Dongsheng			Executive Committee	Jun. 2007
Han	Male	59	Vice Chairman of the Board	Sep. 2004-	0	0	No
Yansheng				Jun. 2007
Liang	Male	55	Vice Chairman of the Board	Jun. 2004-	9969	9969	Yes
Xinqing				Jun. 2007

§5.Directors, Supervisors and Senior Management

5.1 changes in shares held by directors, supervisors and senior management

ChengYanshun	Male	41	Executive Director, president	Jun. 2004-Jun. 2007	0	0	Yes
Zhao	Male	60	Director	May, 2006-	24921	24921	No
Caiyong				Jun. 2007
Tatta	Male	56	Director	May, 2006-	0	0	No
Kenichi				Jun. 2007
Gui	female	33	Director	Nov.2006-	0	0	No
Jinghua				Jun.2007
Tai	Male	56	Independent Director	Jun. 2004-			No
Zhonghe				Jun. 2007	0	0
Xie	Male	47	Independent Director	Jun. 2004-			No
Zhihua				Jun. 2007	0	0
Zhang	Male	63	Independent Director	Jun. 2004-	0	0	No
Baizhe				Jun. 2007
Li	Male	51	Independent Director	Jun. 2004-	0	0	No
Zhaojie				Jun. 2007
Wu	Male	40	Convener of Supervisory Committee	May. 2006-	0	0	No
Wenxue				Jun. 2007
Mu	Male	39	Supervisor	Jun. 2004-	2492	2492	No
Chengyuan				Jun. 2007
Chen Ping	female	45	Supervisor	May, 2006-			No
				Jun. 2007	0	0
Xu Yan	Female	55	Employee Supervisor	Jun. 2004-			Yes
				Jun. 2007	14953	14953
Yang	Male	36	Employee Supervisor	Jun. 2004-			Yes
An'le				Jun. 2007	0	0
Wang	Male	38	Vice-President	Jun. 2004-	0	0	Yes
Jiaheng				Jun. 2007
Song Ying	Female	49	Vice-president	Jun. 2004-	24921	24921	Yes
				Jun. 2007
Wang Yanjun	Male	37	Financial controller	Jun. 2004-	9968	9968	Yes
				Jun. 2007
Ren	Male	60	Vice-president	Jun. 2004-	0	0	Yes
Jianchang				Jun. 2007
Han Guojian	Male	53	Vice-president	Jun. 2004-			Yes
				Mar. 2007	9968	9968

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

§6 Report of the Board of Directors

6.1 Discussion and analysis by the senior management

The Company has focused its core operations in the display area, and there are seven large subordinate display-related groups, i.e. the TFT-LCD 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 the operations involving the display parts and materials, display devices, monitors and Flat Panel TVs and application terminal products.

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:

1. 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.

2. Small production-scale of TFT-LCD products of the Company failed to create an obvious advantage.

3. Localization fitting degree of TFT-LCD industry was low, and export & import of key raw material resulted in higher production cost.

4. Bank loan interest expense of TFT-LCD operation increased.

5. Benefiting from increase achievement of inferior affiliated company --- TPV Technology Limited, the investment income of the Company was increased synchronously.

6.1.1 Possible accounting policies change and accounting estimate change subsequent to implementation of new accounting standards and the impact on the Company's financial status and operating results

□Applicable √Inapplicable

6.2 Main operations classified according to industries or products

					Unit: RMB'000
Classified	Income from main	Cost of main	Profit ratio of	Increase or decrease	Increase or decrease of

according to	operations	operations	main	of income from main	cost from main
industries			operations	operations compared	operations compared
			(%)	with the last year (%)	with the last year (%)
TFT-LCD	8,300,696	10,746,360	-29.46%	4.41%	11.50%
Small-sizeflat
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%

6.3 Main operations classified according to area

Unit: RMB'000 Areas Income from main operations Increase/decrease of income from main operations over the last year (%) China 3,567,312 -45.24% Other Asian countries 4,439,485 -12.01% America 470,232 13.43% Europe 224,345 -82.865 Other countries 68,592 -58.88% Total 8,769,966 -34.79%

6.4 Use of the raised fund

√Applicable □Inapplicable

Unit: RMB'0000

Total amount ofraised fund		186,000	Total amount of raised fund used as of the	45,272
			Total amount of raised fund usedaccumulatively			45,272
Consented projects	Plannedinvestmentamount	Changeprojects or not	Actualinvestmentamount	Accruedamount ofearnings inthis year	Compliancewith plannedprogress ornot	Compliancewith estimatedearnings or not
IncreaseinvestmentandproductioncapacityprojectofBeijingBOEOptoelectronicsTechnology Co., Ltd.	USD 90million	No	45,272	-	Yes	-
Production line projectofCFusedbylarge-size TFT-LCD	250,000	No	-	-	-	-
Total		-	45,272	-	-	-
Explanation on failing to catch upwith the planned progress or get theexpected gains (with details downto each project)		The increase investment and production of optoelectronics was underimplementation according to the plan; CF project can not be put intoconstruction according to the plan due to the smaller funds.
Explanation on the project changesand procedure of changes (withdetails down to each project)		Naught

Particulars about the changed projects □Applicable √Inapplicable

6.5 Application of the non-raised proceeds

Name of projects	Investment amount of	Progress of projects	Earnings of projects
	project
InvestedJulong		Completed	-
Optoelectronics Co., Ltd.	800
The 5th production line of		Under construction	-
TFT-LCD	18,390	period
Main body project of BOE		Under construction	-
Hebei mobile workshop	2,108	period
Mainbodyprojectof		Completed	-
Suzhou CHAGU workshop	3,901
Mainbodyprojectof		Completed	-
special display workshop	808
Total	26,007	-	-

√Applicable □Inapplicable

6.6 Explanation of the Board of Directors on the "Qualified Opinion" issued by the Certified Public Accountants

□Applicable √Inapplicable

6.7 Preplan of profit distribution or capitalization of common reserves for 2006 made by the Board of Directors

□Applicable √Inapplicable

The Company did not provide profit distribution preplan though the Company achieved the profit in the report period

□Applicable √Inapplicable

§7 Significant Events

7.1 Purchase of assets □Applicable √Inapplicable

7.2 Sales of assets

	√Applicable		□Inapplicable
Counterpartand assets sold	Asset sold	Sellingdate	Sellingprice	Net profit made bythe sold assets forthe Company duringthe period betweenthe beginning of theyear and the sellingday	Gainsandlossesarisingfromsuchsale	Relatedtransactionor not	Explainprinciple ofpricing	Ownershiptransfer ofthe involvedassets fullyaccomplishedor not	Credit andliabilitiesof theinvolvedassets fullytransferredor not
ShenzhenRISHUNDATrade CO.Ltd	ShenzhenIntelligenceDisplayTechnologyCompany59.8% SharePorpoting and7589300 Debt	August in2006	1000	9.73	-753	No	MarketPrinciple	Yes	Yes
TeralanceSemiconductorInc	75% equity ofBeijing FangyiIntegrateCircuit DesignCo., Ltd	August in2006	USD 4.5million	-233.28	549.88-	No	Marketprinciple	Yes	Yes

7.3 Significant guarantees

√Applicable □ Inapplicable

External guarantee of the Company (excluding the guarantee for the shareholding subsidiaries)
Name of theCompanyguaranteed	Date of occurrence(date of agreementsigned)	Amount ofguarantee	Guaranteetype	Guarantee term	Accomplishedor not	Guaranteefor relatedparty (yes ornot)
ZhejiangHuanyuConstructionGroup Co.,Ltd.	May 18, 2006	3221	mutualguarantee	One year	No	No
	Total amount of guarantee occurred in the report period		3221
Total balance of guarantee at the end of the report period (A)Guarantee of the Company for the shareholding subsidiaries					3221
period	Total amount of guarantee occurred for shareholding subsidiaries in the report			12732
the report period (B)	Total balance of guarantee occurred for shareholding subsidiaries at the end of			99767
	Total amount of external guarantee of the Company (Including the guarantee for the shareholding subsidiaries)
Total amount of guarantee (A+B)				102988
Company	The proportion of the total amount of guarantee in the net assets of the					29.09%
Of which:
The amount of guarantee provided for shareholders, actual controller and otherrelated parties (C)			0
Guarantee amount for the debts of the guaranteed companies with anasset-liability ratio of over 70 percent, directly or indirectly (D)					91205
	The amount by which the total guarantee amount exceeded 50 percent of the					0
net assets (E)	Total amount of the above three guarantees (C+D+E)					91205

The number above is the actual Guarantee Amount to Dec. 31th, 2006. In the external Guarantee Amount, the highest Guarantee Amount to Zhejiang Huanyu Construction Group Co.Ltd. is RMB 40 Million.

7.4 Significant related transactions

7.4.1 Related transactions concerning Daily operation

√Applicable □Inapplicable

Unit: RMB'0000

		Selling products and offering labor	Purchasing products and accepting
		service to related parties		labor 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	-	-	104,238	10.47%
Hyundai LCD Inc.	1,638	0.19%	2,045	0.21%
TPV Technology Limited	105,326	11.99%	-	-
Beijing Matsushita Color CRT
Co., Ltd	6,017	0.69%	-	-
Total	112,981	12.87%	106,282	10.68%

An amount of RMB 0 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.

√Applicable	□Inapplicable
Related parties		Funds provided by the listed company to		Funds provide by related parties to listed
		related parties		company on the market
	Occurred amount	Balance	Occurred amount	Balance
MarubeniCorporation,Japan	-	-	104,238	22,516
Beijing Matsushita ColorCRT Co., Ltd	7,628	1,385	-	-
TPVTechnologyLimited	94,596	30,861	-	-
Hyundai LCD Inc.	1,648	199	2,464	-
Beijing Star City RealEstate Development Co.,Ltd.	148	3,033	-	-
Total	104,020	35,478	106,702	22,516

7.4.2 Related credits and liabilities

Of which: The funds provided by the Listed Company to controlling shareholder and its subsidiaries during the report period totaled RMB 0 , as well as the balance of RMB 0.

7.4.3 Progress of repayment on the capital occupied as at the end of 2005 □Applicable √Inapplicable

New capital occupation in the year 2006 □Applicable √Inapplicable

In case of the Company's failure to complete the repayment of the capital occupation of non-operating as at the end of 2006, relevant reason, measures for debt repayment and plan for responsibility ascertainment

□Applicable √Inapplicable

7.5 Financing entrustment

□Applicable √Inapplicable

7.6 Implementation of commitments

7.6.1 The commitments made by the original shareholders holding nontradable shares during the Share Merger Reform and their implementation □Applicable √Inapplicable

7.6.2 The quantity of shares with no moratorium held by the original nontradable shareholders who hold over 5% of total shares at the end of the report period □Applicable √Inapplicable

7.7 Significant lawsuits and arbitrations

√Applicable □Inapplicable

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.

1. 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.

§8 Report of the Supervisory Committee

√Applicable □Inapplicable

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.

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.

1. fund-raised usage

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 raised fund of the Company will put into production in accordance with commitment projects, in the report period.

1. Particulars of information disclosure

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

§9 Financial Report

9.1 Auditing opinion Auditing opinion: the standard unqualified Auditing opinion

9.2 Financial statement (attachment)

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

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

9.5 Compared with the latest Annual Report, there were some changes in the consolidation statement scope:

√Applicable □Inapplicable

(1) In accordance with the Agreement on Equity Transfer signed among the Company, BOE-Hydis Co., Ltd. (hereinafter referred to as "BOE-Hydis", the subsidiary of the Company) and Teralance Semiconductor Inc., the Company and BOE-Hydis respectively transferred their 75% and 25% equity of Beijing Fangyi Integrated Circuit Design Co., Ltd. (hereinafter referred to as "Beijing Fangyi") to Teralance Semiconductor Inc.. Therefore, only the operation result before Aug. 31, 2006 of Beijing Fangyi had been included in the consolidation scope in the report period.

(2) BOE (Hebei) Mobile Display Technology Co., Ltd., Beijing BOE Marketing Co., Ltd. BOE (Korea) Co., Ltd. are subsidiaries of the Company newly established in 2006, Therefore, they was brought into the consolidation scope of accounting statement. BOE Optoelectronics Holding Co., Ltd. had been included in the consolidation scope.

(3) BOE-Hydis applied the procedure of restoration of operation to the Court on Sep. 29, 2006. Therefore, it had not been included in the consolidation scope since Oct. 2006.

(4) In accordance with the Agreement on Equity Transfer signed by Zhejiang BOE, the subsidiary of the Company, and Shenzhen Rishunsheng Trade Co., Ltd., Zhejiang BOE transferred its 59.8% equity of Shenzhen BOE to Shenzhen Rishunsheng Trade Co., Ltd. on Aug. 31, 2006. Therefore, only the operation result before Aug. 31, 2006 of Zhejiang BOE had been included in the consolidation scope in the report period.

Board of Directors of BOE Technology Group Co., Ltd. April 25, 2007

Consolidated income statement

For the year ended 31 December 2006

	Note	2006	2005(Restated)
Continuing operations
Turnover	3	6,118,316	2,510,119
Cost of sales		(6,819,052)	(2,204,143)
Gross (loss) / profit		(700,736)	305,976
Other operating income, net	6	138,945	98,898
Distribution expenses		(154,772)	(110,800)
Administrative expenses		(334,225)	(523,940)
Research and development expenses		(135,892)	(76,389)
Loss from operating activities		(1,186,680)	(306,255)
Finance income		133,558	140,793
Finance expenses		(654,924)	(489,258)
Net financing costs	7(a)	(521,366)	(348,465)
Share of profits from associates and a jointly
controlled entity	16	391,298	296,469
Loss before income tax		(1,316,748)	(358,251)
Income tax expense	8(a)	(13,605)	(29,075)
Loss from continuing operations		(1,330,353)	(387,326)
Discontinued operations
Loss from discontinued operation, net of income tax	5	(456,595)	(767,260)
Loss for the year	7	(1,786,948)	(1,154,586)
Attributable to:
Equity shareholders of the Company		(1,770,800)	(1,245,993)
Minority interest		(16,148)	91,407
Loss for the year		(1,786,948)	(1,154,586)
Basic and diluted loss per share (Renminbi)	9	(0.73)	(0.57)
Continuing operations
Basic and diluted loss per share (Renminbi)	9	(0.54)	(0.22)

Consolidated balance sheet

At 31 December 2006

	Note	2006	2005
Assets
Property, plant and equipment	11	7,897,569	11,330,272
Construction in progress	12	64,482	285,244
Intangible assets	13	740,405	449,850
Lease prepayments	14	102,629	103,332
Investment properties	15	176,085	113,121
Investments in associates and a jointly controlled entity	16	3,075,083	2,820,463
Other investments	17	17,368	10,661
Deferred tax assets	18	1,832	1,940
Long term deposits		-	23,856
Other assets		2,089	46,651
Total non-current assets		12,077,542
	15,185,390
Inventories	19	1,266,044	1,919,901
Trade receivables	20	1,174,942	1,876,294
Prepayments, deposits and other receivables		365,474	462,501
Deposits with banks	21	351,110	916,628
Cash and cash equivalents	21	1,458,107	1,164,052
Total current assets		4,615,677	6,339,376
Total assets		16,693,219	21,524,766
Liabilities
Trade payables	22	1,748,424	1,769,720
Other payables		535,712	972,555
Current taxation	8(b)	21,767	23,211
Provisions	23	29,603	50,771
Loans and borrowings	24	4,557,204	3,762,956
Total current liabilities		6,892,710	6,579,213

Consolidated balance sheet (continued)

At 31 December 2006

	Note	2006	2005
Non-current liabilities
Loans and borrowings	24	5,088,771	9,569,710
Long-term notes payable	25	-	299,939
Employee benefits		-	17,280
Deferred tax liabilities	18	28	588
Other liabilities	26	65,485	856,539
Total non-current liabilities		5,154,284	10,744,056
Total liabilities		12,046,994	17,323,269
Equity
Share capital	27	2,871,568	2,195,696
Share premium		2,746,176	1,552,913
Reserves	28	502,683	680,190
Accumulated losses		(2,231,983)	(461,183)
Total equity attributable to equity
shareholders of the Company		3,888,444	3,967,616
Minority interest		757,781	233,881
Total equity		4,646,225	4,201,497
Total equity and liabilities		16,693,219	21,524,766

Consolidated cash flow statement For the year ended 31 December 2006

	Note	2006	2005
Cash flows from operating activities			(Restated)
Loss for the year		(1,786,948)	(1,154,586)
Adjustments for:
Depreciation		1,570,252	1,229,595
Amortisation of intangible assets		60,974	32,660
Amortisation of lease prepayments		2,124	2,934
Recognition / (Reversal) impairment losses on property,
plant and equipment		180,050	(60)
Impairment loss on construction in progress		1,699	19,932
Impairment loss on intangible assets		-	407
Impairment loss on held-to-maturity securities		-	17,961
Impairment loss on investments in associates and
a jointly controlled entity		26,858	-
Impairment loss on bad and doubtful debt		30,085	5,623
Provision for inventories		360,054	85,411
Share of profit from associates and
a jointly controlled entity		(391,298)	(296,469)
Interest income		(30,151)	(51,691)
Other finance costs		678,276	519,039
Gain on sale of property, plant and equipment		(22,499)	(5,697)
Gain on sale of unquoted securities		-	(3,520)
Amortisation of government grant		(43,401)	(37,583)
Loss on sale of discontinued operation,
net of income tax		(964,176)	(133,754)
Income tax expense		13,334	41,729
		(314,767)	271,931
Increase in inventories		(64,103)	(1,037,363)
Decrease / (increase) in trade and other receivables		635,088	(1,181,452)
Decrease in employee benefit obligationsIncrease in trade and other payables		-601,672	2,405982,482
Cash generated from the operating activities		857,890	(961,997)
Income taxes paid		(14,778)	(21,562)
Net cash from operating activities		843,112------------------	(983,559)------------------
Cash flows from investing activities
Proceeds from sale of property, plant and equipment		77,612	36,112
Proceeds from sales of intangible assets		-	1,378
Proceeds from sales of investments		2,787	5,520
Proceeds from sales of subsidiaries		33,736	-
Interest income received		29,720	51,691
Acquisitions of property, plant and equipment		(747,520)	(3,944,308)
Acquisitions of intangible assets		(33,722)	(32,082)
Acquisitions of available-for-sale investments		-	(8,576)
(Acquisitions) / refund of investment costs		(8,000)	26,070
Disposal of discontinued operation, net of cash disposed	5	(240,533)	(53,609)
Disposal of subsidiaries, net of cash disposed		(44,380)	-
Placement of pledged deposits		565,518	(618,310)
Placement of long-term fixed deposits		23,856	-
Dividend received		144,040	115,285
Net cash used in investing activities		(196,886)------------------	(4,420,829)------------------

Consolidated cash flow statement (continued)

For the year ended 31 December 2006

Note	2006	2005
Cash flows from financing activities
Proceeds from loans and borrowings	4,367,239	12,421,541
Proceeds from issue of corporate debentures	-	1,583,475
Proceeds from capital contribution	1,200,000	18,529
Repayments of loans and borrowings	(5,095,272)	(8,288,467)
Dividend paid	(3,373)	(35,675)
Interest paid	(790,645)	(552,157)
Payment for other financing activities	(12,543)	(59,474)
Net cash from financing activities	(334,594)	5,087,772
Effect of exchange rate changes	(17,577)	(55,302)
Net increase / (decrease) in cash and cash equivalents	294,055	(371,918)
Cash and cash equivalents at 1 January	1,164,052	1,535,970
Cash and cash equivalents at 31 December	1,458,107	1,164,052