BOE TECHNOLOGY GROUP CO., LTD — Interim / Quarterly Report 2006

Aug 29, 2006

Stock Code: 200725 Short Form of the Stock: BOE B No.: 2006-029

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

§1. Important Notice

1.1 The Board of Directors, the Supervisory Committee as well as all directors, supervisors and senior management of BOE Technology Group Co., Ltd (hereinafter referred to as the Company) hereby assure that there are no false records, misleading statements or significant omissions in this report, and they would shoulder any individual as well as joint responsibility concerning to the authenticity, accuracy and completeness of the contents. The summary of interim report 2006 is abstracted from full text of the interim report, which is published on the Internet website http://www.cninfo.com.cn in the mean time. The investors are suggested to read the full text of interim report 2006 to understand more details. This Interim Report has been compiled in both Chinese and English. Should there be any ambiguity in the meanings of the two versions, the Chinese one shall prevail.

1.2 No director stated that he (she) could not ensure the correctness, accuracy and completeness of the contents of the Interim Report or have objection to this report. 1.3 All directors attended the Board meeting.

1.4 The interim financial report of the Company has not been audited.

1.5 Chairman of the Board and concurrently CEO Mr. Wang Dongsheng, President Mr. Chen Yanshun, COO Mr. B.D.Choi, CFO Mr. Wang Yanjun, and Chief Accounting Officer and concurrently Head of Plan & Financial Dept. Ms. Sun Yun hereby confirm that the Financial Report enclosed in the Interim Report is true and complete.

§2. Company Profile

2.1 Basic information

2.1 Basic information
Short form of the stock		G BOE, BOE B
Stock code		000725, 200725
Listed stock exchange		Shenzhen Stock Exchange
		Secretary of the Board		Securities Affairs Representative
Name		ZhongHuifeng		ZhangShitong
Contact address		No. 10, Jiuxianqiao Road, ChaoyangDistrict, Beijing		No. 10, Jiuxianqiao Road, ChaoyangDistrict, Beijing
Telephone		010－64318888		010－64318888
Fax		010－64326264		010－64326264
E-mail		hfzhong@boe.com.cn		boecapital@boe.com.cn

• 2.2 Major financial data and indexes

• 2.2.1 Major accounting data and financial indexes

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			Unit: RMB’000
Items	At the end of this report period	At the end of the last year	Increase/decrease at the end of this report period compared with the end of the lastyear（％）
Current assets	5,180,804	6,339,376	-18.28
Current liabilities	8,164,285	6,579,213	24.09
Total assets	19,848,463	21,524,766	-7.79
Shareholders’ equity (excluding minority interest)	2,227,153	3,967,616	-43.87
Net assets per share (RMB Yuan)	1.01	1.81	-44.20
Items	In this report period (Jan. to Jun. 2006)	At the same period of the last year	Increase/decrease in this report period compared with the same period of the lastyear(%)
Netprofit	-1,723,502	-965,736	-78.47%
Earnings per share (RMB Yuan)	-0.78	-0.66	-
Return on equity (%)	-77.39%	-24.68%	-
Net cash flow arising from operatingactivities	-1,809	-414,864	-

2.2.2 Difference between CAS and IAS

• √ Applicable □ Inapplicable

Unit: RMB

	CAS	IAS	IAS
Netprofit	-1,264,346	-1,723,502
	Net (Loss)/profit of the Company in consolidated statement
	under PRC GAAP		-1,264,346
	Adjustments:
	1. Recognition and amortisation of positive goodwill 54,488
	2. Recognition and amortisation of negative goodwill -7,426
Explanation on	3. Capitalised general borrowing costs and depreciation		-2,256
	withdrawn
difference
	4. Capitalised R&D costs and depreciation withdrawn -5,137
	5. Appropriation of staff bonus and welfare fund -3,410
	6. Amortisation of loans arrangement fee -5,343
	7. Unconfirmed investment loss -490,072
	Net (Loss)/profit of the Company in consolidated statement
	under IFRSs		-1,723,502

§3. Changes in Share Capital and Particulars about Shares held by Main Shareholders

3.1 Statement of change in shares

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□ Applicable √ Inapplicable

Number of shares held by the top ten shareholders subject to moratorium and trading moratorium

Unit: share

No.	Name of shareholders subject to moratorium	Number of holding shares subject to moratorium	Date of listing for trade	Number of additional shares could list for trade	Trading moratorium
1	Beijing BOE Investment and Development Co., Ltd	720,197,300	Dec. 1, 2006	36,009,865	The BOE legal person shares held by this company shall not be traded or transferred within 12 months since the acquisition of the listing right at the A-share market. After the expiration of the aforesaid commitment, the originally non-circulating shares sold through listing and trading at the Stock Exchange shall not exceed 5% of the total shares of BOE within 12 months, and not exceed 10% within 24 months.
			Dec. 1, 2007	36,009,865
			Dec. 1, 2008	648,177,570
2	Beijing Dongdian Industrial Development Company	82,290,200	Dec. 1, 2006	82,290,200	The BOE legal person shares held by this company shall not be traded or transferred within 12 months since the acquisition of the listing right at the A-share market.
3	Beijing Yixin Micro-Display Technology Development Center	8,814,200	Dec. 1, 2006	8,814,200	The BOE legal person shares held by this company shall not be traded or transferred within 12 months since the acquisition of the listing right at the A-share market.
4	Beijing Kinescope General Factory	6,406,800	Dec. 1, 2006	6,406,800	The BOE legal person shares held by this company shall not be traded or transferred within 12 months since the acquisition of the listing right at the A-share market.

3.2 Particulars about shares held by the top ten shareholders and the top ten shareholders not subject to moratorium

Unit: share

Total shareholders at the end of report period	Total shareholders at the end of report period	Total shareholders at the end of report period	71,294 shareholders, including 30,614 B-share shareholders.	71,294 shareholders, including 30,614 B-share shareholders.	71,294 shareholders, including 30,614 B-share shareholders.
Particulars about shares held by the top ten shareholders
				Number of holding	Number of
	Nature of		Total number of
Name of Shareholder		Proportion (%)		shares subject to	shares pledged
	shareholders		shares held (share)
				moratorium	or frozen
BEIJING BOE	State-owned	32.80%	720,197,300	720,197,300	0

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INVESTMENT AND	shareholder	shareholder
DEVELOPMENT CO., LTD
FIELDS PACIFIC LIMITED	Foreign shareholder		6.15%	135,000,000	0	0
BEIJING DONGDIAN
INDUSTRIAL	State-owned
			3.75%	82,290,200	82,290,200	0
DEVELOPMENT	shareholder
COMPANY
SHANGHAI (HONG KONG)
	Foreign shareholder		1.84%	40,350,575	0	0
WANGUO SECURITIES
EMERGING MARKETS
	Foreign shareholder		1.53%	33,554,952	0	0
GROWTH FUND INC
GUOTAI JUNAN
SECURITIES HONG KONG	Foreign shareholder		1.35%	29,667,730	0	0
LIMITED
CAPITAL
INTERNATIONAL
	Foreign shareholder		0.71%	15,629,925	0	0
EMERGING MARKETS
FUND
HSBC BROKING
SECURITIES (ASIA)	Foreign shareholder		0.59%	13,052,680	0	0
LIMITED-CLIENTS A/C
HUANG YING BIN	Foreign shareholder		0.54%	11,761,065	0	0
SUN HUNG KAI
INVESTMENT SERVICES	Foreign shareholder		0.49%	10,799,343	0	0
LTD-CUSTOMERS A/C
Particulars about shares held by the top ten shareholders not subject to moratorium
		Number of holding shares not subject
Name of shareholders					Type
		to moratorium
FIELDS PACIFIC LIMITED		135,000,000			Domestically listed foreign share
SHANGHAI (HONG KONG) WANGUO
		40,350,575			Domestically listed foreign share
SECURITIES
EMERGING MARKETS GROWTH FUND INC		33,554,952			Domestically listed foreign share
GUOTAI JUNAN SECURITIES HONG KONG
		29,667,730			Domestically listed foreign share
LIMITED
CAPITAL INTERNATIONAL EMERGING
		15,629,925			Domestically listed foreign share
MARKETS FUND
HSBC BROKING SECURITIES (ASIA)
		13,052,680			Domestically listed foreign share
LIMITED-CLIENTS A/C
HUANG YING BIN		11,761,065			Domestically listed foreign share
SUN HUNG KAI INVESTMENT SERVICES
		10,799,343			Domestically listed foreign share
LTD-CUSTOMERS A/C
CITIC CAPITAL SECURITIES LIMITED		10,394,249			Domestically listed foreign share
BARINGS (IRELAND) SA THE ATLANTIS
		10,000,000			Domestically listed foreign share
CHINA FUND PLC

Particulars about shares held by the top	Particulars about shares held by the top	Particulars about shares held by the top	ten shareholders not subject to moratorium	ten shareholders not subject to moratorium
Name of shareholders				Number of holding shares not subject to moratorium	Type
FIELDS PACIFIC LIMITED				135,000,000	Domestically listed foreign share
SHANGHAI (HONG KONG)		WANGUO
SECURITIES				40,350,575	Domestically listed foreign share
EMERGING MARKETS GROWTH		FUND INC		33,554,952	Domestically listed foreign share
GUOTAI JUNAN SECURITIES HONG			KONG
LIMITED				29,667,730	Domestically listed foreign share
CAPITAL INTERNATIONAL		EMERGING
MARKETS FUND				15,629,925	Domestically listed foreign share
HSBC BROKING SECURITIES			(ASIA)
LIMITED-CLIENTS A/C				13,052,680	Domestically listed foreign share
HUANG YING BIN				11,761,065	Domestically listed foreign share
SUN HUNG KAI INVESTMENT		SERVICES
LTD-CUSTOMERS A/C				10,799,343	Domestically listed foreign share
CITIC CAPITAL SECURITIES LIMITED				10,394,249	Domestically listed foreign share
BARINGS (IRELAND) SA	THE	ATLANTIS
CHINA FUND PLC				10,000,000	Domestically listed foreign share

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Explanation on associated relationship among the top ten shareholders or acting-in-concert

There exists associated relationship between Beijing BOE Investment & Development Co., Ltd. and Beijing Dongdian Industrial Development Company. It is not known to the Company whether there is any associated relationship among the top ten shareholders

• 3.3 Particulars about change in controlling shareholder and actual controller of the Company

• Applicable √ Inapplicable

§4. Particulars about Directors, Supervisors and Senior Management

• 4.1 Particulars about changes in shares held by directors, supervisors and senior management

• Applicable √ Inapplicable

§5. Discussion and Analysis of the Management

• 5.1 Main operations classified according to industries or products

Unit: RMB’000

5.1 Main operations classified according to industries or products Unit: RMB’000	5.1 Main operations classified according to industries or products Unit: RMB’000	5.1 Main operations classified according to industries or products Unit: RMB’000	5.1 Main operations classified according to industries or products Unit: RMB’000	5.1 Main operations classified according to industries or products Unit: RMB’000	5.1 Main operations classified according to industries or products Unit: RMB’000	5.1 Main operations classified according to industries or products Unit: RMB’000
		Main operations classified according to products
Industries	Income from main operations	Cost of main operations	Profit ratio of main operations (%)	Increase or decrease of income from main operations compared with the last year (%)	Increase or decrease of cost from main operations compared with the last year (%)	Increase or decrease of profit ratio of main operations compared with the last year (%)
TFT-LCD business	3,639,446	4,793,413	-31.71	77.52	88.59	-32.26
SLCD business	319,835	263,325	17.67	-0.46	0.11	-2.57
Other business	542,137	459,557	15.23	29.46	37.83	-25.25
Elimination	-215,053	-205,884	-	-	-	-
Total	4,286,365	5,310,411	-23.89	-0.82	22.88	-275.38

5.2 Main operations classified according to region

Unit: RMB’0000 Yuan

		Unit: RMB’0000 Yuan
Region	Income from main operations	Increase/decrease in income from main operations over the lastyear(%)
PRC	978,863	-65.06
Other Asian region	3,788,533	146.42
European region	330,443	280.49
American region	157,838	-67.44
Elimination	-969,312	-
Total	4,286,365	-0.82

5.3 Other operations activities having significant influence on net profit

• Applicable √ Inapplicable

5.4 Operation of share-holding companies

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□ Applicable √ Inapplicable

5.5 Reasons of significant changes in main operations and its structure compared with the last year

□ Applicable √ Inapplicable

5.6 Reasons of significant changes in profitability capability of main operations (gross profit ratio) than that in the last year

√ Applicable □ Inapplicable

In the report period, the main operations of the Company have not changed. The profitability of the main operations has decreased by a large margin compared with the same period of last year, and so has the net profit of the Company.

During the upper half year 2006, under the influence of the competition in the TFT-LCD market, the prices of the main products of the TFT-LCD business have dropped, resulting in the huge sum of losses. Especially in the 2[nd] quarter 2006, the prices of TFT-LCD products slumped by large margins. Take the 17” products as an example. At the beginning of 2006, the price was about USD 140, but at the end of June 2006, it went down to as low as USD 105.

5.7 Analysis to reasons of significant changes in profit breakdown compared with the previous year

□ Applicable √ Inapplicable

5.8 Utilization of the raised proceeds

5.8.1 Utilization of the raised proceeds □ Applicable √ Inapplicable

5.8.2 Change of projects □ Applicable √ Inapplicable

5.9 Revised business plan of the Board for the second half of 2006 □ Applicable √ Inapplicable

5.10 Estimation on accumulative net profit from the beginning of the year to the end of next report period to be loss probably or the warning of its significant change compared with the corresponding period of the last year and explanation on reason √ Applicable □ Inapplicable

√Applicable	□Inapplicable
Prediction on achievements	√Loss □Further increase by large margins □Further decrease by large margins □Turningaround from loss-makingstatus
Explanation on the achievement prediction (explanation on reason, indetermination and	Since the prices of TFT-LCD products have slumped by large margins, it is predicted that the accumulated net profit made from the beginning of the year to the end of the next report period will still be loss even though the environment of theglobal TFT-LCD market has become stable. The

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	influence of achievement forecasts)	Company cannot predict the exact amount of losses yet. However, as the market revives and the measures adopted by the Company are put into practice, the Company will try to minimize the losses as much as possible. It is suggested that investors watch out for investment risks.

5.11 Explanation of the Management Team on “Qualified Opinion” from the Certified Public Accountants in the report period

□ Applicable √ Inapplicable

5.12 Explanation of the Management Team on changes and solutions of the issues involved in “Qualified Opinion” from the Certified Public Accountants in the last year □ Applicable √ Inapplicable

§6. Important Events

6.1 Purchase, sales and assets reorganization

6.1.1 Purchase of assets or assets bought-in

□ Applicable √ Inapplicable

6.1.2 Sales of assets or assets sold

□ Applicable √ Inapplicable

• 6.2 Important guarantee events √ Applicable □ Inapplicable

Unit: RMB’0000

6.2 Important guarantee events √Applicable□Inapplicable Unit: RMB’0000	6.2 Important guarantee events √Applicable□Inapplicable Unit: RMB’0000	6.2 Important guarantee events √Applicable□Inapplicable Unit: RMB’0000	6.2 Important guarantee events √Applicable□Inapplicable Unit: RMB’0000	6.2 Important guarantee events √Applicable□Inapplicable Unit: RMB’0000	6.2 Important guarantee events √Applicable□Inapplicable Unit: RMB’0000	6.2 Important guarantee events √Applicable□Inapplicable Unit: RMB’0000
External guarantees of the Company (excluding guarantees for shareholding subsidiaries)
Name of companies guaranteed	Date of occurrence (agreement signing day)	Guarantee amount	Guarantee type	Guarantee term	Accomplished or not	For related parties or not (yes or no)
Zhejiang Huanyu Construction Group Co., Ltd.	18 May 2006	3,589.00	Guarantee each other	One year	No	No
Total guarantee amount occurred in the report period				3,589
Total guarantee balance at the end of the report period (A)				3,589
Guarantees for shareholding subsidiaries by the Company
Total guarantee amount occurred in the report period for shareholding subsidiaries				12,576
Total guarantee balance at the end of the report period for shareholding subsidiaries (B)				76,814
Total guarantee amount of the Company (including guarantees for shareholding subsidiaries)
Total guarantee amount (A+B)				80,403
Proportion of the Company’s net assets taken by the total guarantee amount				50%
Including:
Guarantee amount for shareholders, the actual controller and their related parties (C)				0
Guarantee amount for the debts of the guaranteed companies with an asset-liability ratio of over 70 percent, directly or indirectly (D)				61,964

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The amount by which the total guarantee amount exceeded 50 percent of the net assets 0 (E) Total amount of aforesaid three types of guarantees *(C+D+E) 61,964

(E)

Note: according to statistics data of domestic statement

6.3 Related credits and liabilities current

√ Applicable □ Inapplicable

Unit: RMB’0000

√Applicable	□Inapplicable			Unit: RMB’0000	Unit: RMB’0000
Name of related party	Relationship with the Listed Company	Capital provided to related parties by the Listed Company		Capital provided to the Listed Company by related parties
		Amount	Balance	Amount	Balance
TPV Technology Limited	Associates of the Company	45,157	10,027	0	0
Beijing Matsushita Color CRT Co., Ltd	Associates of the Company	2,507	1,010	0	0
Beijing Star City Real Estate Development Co., Ltd.	Associates of the Company	105	7,368	0	0
Marubeni	Shareholder of parent company	0	0	49,695	7,581
Total		47,769	47,769	49,695	7,581

The capital provided by the Listed Company to the controlling shareholder and its subsidiaries during the report period totaled RMB 0.00, and the balance was RMB 0.00.

6.4 Significant lawsuits and arbitrations

□ Applicable √ Inapplicable

6.5 Other important events as well as analyses and explanations on their influences and solutions

Non-operating capital occupation and clearing progress:

□ Applicable √ Inapplicable

6.6 Special commitments made by the originally non-circulating shareholder during the Share Merger Reform and their implementation

□ Applicable √ Inapplicable

6.7 Explanation on the time arrangements for the Share Merger Reform by companies

that have not carried out the reform

□ Applicable √ Inapplicable

Explanations by companies that have not carried out the share merger reform for failing to implement their commitments of Share Merger Reform as planned

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□ Applicable √ Inapplicable

§7. Financial Report

7.1 Auditors’ opinions

Financial Report √ Un-audited □ Audited

7.2 Statement of profit and profit distribution

7.2.2 Consolidated income statement

Prepared by BOE Technology Group Co., Ltd. January – June 2006 Unit: RMB’000

.2 Statement of profit and profit distribution .2.2 Consolidated income statement repared by BOE Technology Group Co., Ltd. January	– June 2006 Unit: RMB’000
Turnover Cost of sales Gross (loss)/profit Other operating profit Distribution expenses Administrative expenses (Loss)/profit from operations Net financing costs Share of profits of associates (Loss)/profit before tax Income tax Total profit Among which: Equity of the Group Minority interests	Ended 30 June
	2006 2005 4,286,365 4,321,711 -5,310,411 -4,596,766
	-1,024,046 -275,055 105,422 -8,850 -104,039 -136,716 -505,803 -413,692
	-1,528,466 -834,313
	-371,643 -175,191
	140,125 106,015 -1,759,984 -903,489 -3,649 -40,430
	-1,763,633 -943,919 -1,723,502 -965,736 -40,131 21,817

Legal representative: Wang Dongsheng Person in charge of accounting work: Wang Yanjun Person in charge of accounting organ: Sun Yun

7.3 Notes to the statements

7.3.1 Should there be any changes in accounting policies or accounting estimation or accounting errors correction, give the relevant content, reasons and amounts influenced.

□ Applicable √ Inapplicable

7.3.2 Should there be any significant changes in the consolidation scope of the financial statements, give the reasons and the amounts influenced. √ Applicable □ Inapplicable

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(i) In accordance with the resolutions of the 23rd meeting of the 4th Board of Directors, the Company and BOE-Hydis jointly invested to set up BOE (Hebei) Mobile Display Technology Co., Ltd. (BOEHB), and took the business license of BOEHB on Apr. 7, 2006, thus, the Company would bring it into the consolidated scope.

(ii) Korea FineICs Co., Ltd and BOE TFT-LCD EUROPE GMBH were established by BOE-Hydis as its controlling subsidiary in 2004 and 2005 respectively, thus, the Company would bring them into the consolidated scope in the current period.

Board of Directors of BOE Technology Group Co., Ltd. Aug. 24, 2006

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