BOE TECHNOLOGY GROUP CO., LTD — Interim / Quarterly Report 2007

Oct 28, 2007

BOE TECHNOLOGY GROUP CO., LTD.

THE THIRD QUARTERLY REPORT 2007

§ 1 Significant Notice

1.1 The Board of Directors, the Supervisory Committee as well as 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 shoulder individually and jointly responsibility for true, accurate and complete of contents.

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

1.3 All directors attended the Board Meeting.

1.4 The Financial Report of the third quarterly report has not been audited.

1.5 Mr. Wang Dongsheng, Chairman of the Board of Directors of the Company, Mr. Chen Yanshun, and President of the Company, Ms. Sun Yun, Chief of Finance and Ms. Yang Xiaoping, Person in charge of accounting organization, hereby confirmed that the Financial Report enclosed in the Quarterly Report is true and complete.

§ 2 Company Profile

2.1 Main accounting data and financial indexes

2.1 Main accounting data and financial indexes	2.1 Main accounting data and financial indexes	2.1 Main accounting data and financial indexes	2.1 Main accounting data and financial indexes
Unit:RMB’000
	At the end of	At the end of	Increase/decrease at the end of the
	the report	the previous	report period compared with that at
	period	year	the end of the lastyear(%)
Total assets	15,378,223	16,693,219	-7.88%
Owner’s equity (shareholders’ equity)	4,134,808	3,888,444	6.34%
Net assetsper share(Yuan)	1.44	1.35	6.34%
	From the beginning of the year		Increase/decrease compared with
	to the end of the report period		the same period of pervious year
			(%)
Net cash flow arising from operating	1,438,557		190.59%
activities
Net cash flow per share arising from	0.50		-
operatingactivities(Yuan)
		From the
		beginning of	Increase/decrease during the report
	Report period
		the year to the	period compared with that of the
	(Jul. – Sep.)
		end of the	previous year (%)
		reportperiod
Equitybelonged to Group	419,641	246,616	-
EPS(Yuan)	0.14	0.08	-
Return on equity	10.15%	5.96%	-

Consolidated financial statement difference compiled by China Accounting Standard

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and International Financial Report Standard Unit: RMB Yuan

Owner’s net equityattributed toparent companyunder China AccountingStandard	495,202,589
1. Capitalization of loan expense and withdrawn depreciation in current	-2,672,168
2. Sale ofpart equityof affiliated company	-246,744,499
3. Employee’s bountyand welfare fund allocation, etc.	830,216
Owner’s netprofit belonged toparent companyunder International Standard	246,616,138

2.2 Total number of shareholders at the end of the report period and statement on shares held by the top ten shareholders holding shares not subject to trading moratorium

Unit: Share

moratorium	Unit: Share	Unit: Share
Total shareholder	79,735（amongwhich, 32,647 B share）
Shares held bythe topten shareholders not subject to moratorium
	Number of shares not subject
Name of shareholder		Type of share
	to moratorium held
FIELDS PACIFIC LIMITED	133,500,000	Domestically listed foreign shares
HUANG YING BIN	22,496,768	Domestically listed foreign shares
BEIJING BOE INVESTMENT AND DEVELOPMENT CO., LTD.	19,280,000	Renminbi ordinary shares
LI MING GONG	17,170,419	Domestically listed foreign shares
SHANGHAI HONGKONG WANGUO SECURITIES	15,296,718	Domestically listed foreign shares
BOCI SECURITIES LIMITED	14,217,818	Domestically listed foreign shares
HSBC BROKING SECURITIES (ASIA) LIMITED-CLIENTS A/C	11,616,130	Domestically listed foreign shares
SUN HUNG KAI INVESTMENT SERVICES LTD-CUSTOMERS A/C	11,458,543	Domestically listed foreign shares
BEIJNG YI XINGWEI DISPLAY TECHNOLOGY DEVELOPING CENTRE	8,814,200	Renminbi ordinary shares
GUOTAI JUNAN SECURIES HONG KONG LIMITED	7,733,675	Domestically listed foreign shares

§3. Significant events

• 3.1 Particular about large-scope

change in main item of accounting statement and financial index and reason for change

• √ Applicable □ Inapplicable

• I. Change in items of balance sheet:

• Affiliated company investment decreased by 34%, which mainly resulted from sale of

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part of equity of affiliated company.

1. Account receivable increased by 61% because TFT field trend got better and sales amount increased largely compared with year-begin.

2. Account paid advanced, earnest money and other account receivable decreased by 45% because TFT field trend got better and stocking increased largely compared with year-begin, as well as export Custom deposit of the Company decreased.

3. Other accounts receivable increased by 233% because account paid in advance of part of equity belonged to affiliated company was sold out.

4. Reserve increased by 88%. The Company provided warranty repair service for selling products and withdrawn projected liabilities in accordance with certain proportion of sale. Because TFT field trend got better, sale of the Company increased largely, which resulted into projected liability balance increased largely compared with period-begin.

5. Loan and debt decreased by 63%, which resulted from debt payment of the Company. II. Change in items of income statement:

6. Administration expense decreased by 59%. Former subsidiary company of the

Company – BOEHYDIS Technology Co., Ltd. was no longer listed into group consolidated scope from Sep. 2006, which resulted into administration expense decreased largely compared with the same period of last year. Taking no account of this factor, administration expense of the Company decreased by 17% compared with the same period of last year.

1. Financial expense decreased by 53%. Former subsidiary company of the Company – BOEHYDIS Technology Co., Ltd. was no longer listed into group consolidated scope from Sep. 2006, which resulted into financial expense decreased largely compared with the same period of last year. Taking no account of this factor, financial expense decreased by 35% compared with the same period of last year, which resulted from loan payment of the Company within the year.

2. Occupied profit of affiliated company decreased by 94%, which resulted from sale of part of equity belonged to affiliated company.

3.2 Progress of significant events and influence as well as explanation on analysis of resolving proposal

√ Applicable □ Inapplicable

1. Progress of significant assets sale of the Company

The Company distributed and sold 200 million shares of TPV Technology Limited (hereinafter referred to as “TPV Technology”) to Hongkong Securities Market with 5.3 HKD/ share on Jan. 18, 2007. On May 14, 2007, Share Transfer Agreement was signed between the Company and China Greatwall Computer Shenzhen Co., Ltd. (hereinafter referred to as “Greatwall Computer”), in which the Company pre-planed to sell 200 million shares of TPV Technology held by it to Greatwall Technology with 5.7 HKD/share and total transaction amount of 1140 million HKD. The aforesaid share sales event had obtained unanimous opinion letter (ZJGSZ [2007] No. 70)issued by CSRC, also, it was examined and approved by the 3[rd] Extraordinary Shareholders’ General Meeting 2007 of the Company on May 31, 2007. Event of Greatwall Computer purchasing share of TPV Technology need to perform relevant authorization procedure, so event of Greatwall

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Computer selling its 200 million shares of TPV Technology was failed to be finished. The Company shall disclose relevant information in accordance with progress of the aforesaid projects.

1. Progress of three parties integration of the Company

On Dec. 21, 2006, Letter of Intent was signed between the Company and SVA (Group) Co., Ltd., SVA Electron Co., Ltd., SVA Information Industry Co., Ltd., Assets Management CO., Ltd. of Kunshan Economic and Technological Development Zone and Dragon Soaring Holdings, Ltd., among which, each party pre-planed to establish a new or elect an existent company as specialization company with owned TFT-LCD operation (including TFT-LCD large-sized panel and assets and cash), and help it become to unit plat of TFT-LCD operation. Owing to greater assets and complex work of this recombination item, as well as longer time of obtaining prophase authorization of government compared with forecast, each party signed Supplementary Agreement on Letter of Intent on Jun. 21, 2007, in which they approved the period of validity of Letter of Intent on extending recombination item. Subscription on ultima legal document of recombination project (including but not limited by recombination agreement and joint-stock contract and Article of specialization company) was changed from before Jun. 30, 2007 to Sep. 30, 2007 or before that. As at presenting date of this report, the Company was failed to sign ultima legal document on recombination project and the Company shall disclose relevant information timely in accordance with progress of the aforesaid projects.

1. Progress in selling part of equity in large-sized TFT-LCD business On Mar. 12, 2007, the 32[th ] meeting of the 4[th] Board of Directors examined and approved the events concerning large-sized TFT business restructuring. It was also examined and approved by the 2[nd] Extraordinary Shareholders’ General Meeting 2007 in Apr. 25, 2007. As the overall TFT industry began to warm up in May, 2007, some shareholders suggested the Company to postpone divestment and restructuring of large-sized TFT-LCD business in telephone and e-mails. On Aug. 29, 2007, the 3[rd] meeting of 5[th] Board of Directors of the Company examined and approved the Proposal on Ceasing Part Equity Transfer in Large-sized TFT-LCD Business which was also approved by the 4[th] Extraordinary Shareholders’ General Meeting 2007 held on Sep. 26, 2007. 4. Progress in non-open issuance On Aug. 29, 2007, the 3[rd] meeting of 5[th] Board of Directors of the Company examined and approved the Proposal on Non-open Issuance Scheme of A Shares which was also approved by the 4[th] Extraordinary Shareholders’ General Meeting 2007 held on Sep. 26, 2007. 5. Lawsuit and arbitrage of the Company in the report period or going down to the report period In the report period, there was no new significant lawsuit and arbitrage. The Company disclosed progress of debt dissension case on the Company and its subsidiary company – Beijing BOE Real Estate Co., Ltd. litigating Beijing Star City Real Estate Development Co. Ltd. in Annual Report 2006, and the details are as follows: After intermediation made by Beijing 2[nd] Intermediate People’s Court, Lawsuit Pacification Agreement was signed among the Company, Beijing BOE Real Estate Co., Ltd., Beijing Dongdian Industry Development Company and Beijing Star City Real Estate

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Development Co., Ltd. (hereinafter referred to as “Star City Company”), in which, Star City Company shall discharge debt RMB 44,579,247.21 of the Company with the 6[th] floor, 12[th] floor of C building of Star City International Mansion and 2 parking sites in underground 3[rd] floor, as well as RMB 1,801,945.35; However, the 6[th] floor, 12[th] floor of C building of Star City International Mansion had already pledged to China Minsheng Bank Beijing Zhong Guang Cun Branch, so Star City Company shall discharge capital and interest of all loan paid for pledge of commercial building within 300 days after signature of this agreement. Otherwise, the Company has right to give up debt discharging arrangement of the aforesaid agreement and apply court to execute the aforesaid debt by force. Beijing Second Intermediate People’s Court framed the (2007) EZMCZ No. 859 Civil Intermediation Paper in accordance with the content of Lawsuit Intermediation Agreement.

3.3 Implementation on commitments made by the Company, shareholders and the actual controller

□ Applicable √ Inapplicable

3.4 Warnings of possible loss or great change of the accumulated net profit made during the period from the beginning of the year to the end of the next report period compared with the same period of the last year according to prediction, as well as explanations on the reasons

√ Applicable □ Inapplicable

Owing to price rise in TFT-LCD board market as well as the 5[th] generation production-line of Beijing TFT-LCD enhancing management, controlling cost, developing new products, improving arts and crafts and perfecting raw-material supply system and client system, etc., profit making competence of the Company was improved greatly.

With the aforesaid reason, the Company predicted that outstanding achievement will make up the deficits and get surpluses and increase largely from Jan. 1, 2007 to Dec. 31, 2007. The concrete data will be disclosed in Annual Report 2007.

3.5 Other significant events need to be explained

3.5.1 Securities investment □ Applicable √ Inapplicable

3.5.2 Equity of other listed companies held by the Company □ Applicable √ Inapplicable

3.5.3 Equity of non-listed financial enterprises and companies to be listed held by the Company □ Applicable √ Inapplicable

3.5.4 Investigation, communication and interview of the Company in the report period

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Reception time	Reception place	Reception way	Reception object	Discussion content and materials provided by the Company
Jul. 6, 2007	Meeting room of the Company	Field research	Daiwa Institute of Research Ltd.	Basic information of the Company; status quo of the industry, development trend and strategy of the Company; progress in integration among three national TFT factory teams, particulars about selling held equity of TPV Technical Ltd. and new-established 4.5 line.
Aug. 16, 2007	Meeting room of the Company	Field research	Fair Capital
Sep. 3, 2007	Meeting room of the Company	Field research	Morgan Stanley
Sep. 11, 2007	Meeting room of the Company	Field research	Industrial Securities
Sep. 26, 2007	Meeting room of the Company	Field research	China IMC

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4 Attachment §

4.1 Consolidated Balance Sheet

BOE TECHNOLOGY GROUP CO., LTD.

Consolidated Balance Sheet dated Sep. 30, 2007

Unit: RMB'000 Assets Non-current assets Proporty, plant and equipment Project in construction Investing property Intangible assets Land use right Affiliated company investment Other investments Deferred tax assets Other non-current assets Current assets Inventories Account receivable Advance payment,earnest money,other acco Cash and cash equivalent Total assets Shareholders' equity and liabilities Shareholders' equity Capital Cpital(or Stock) premium Reserve Retained earnings Minority equity Total equity Non-current liabilities Loan and borrowing Deferred tax liabilities Other non-current liabilities Current liabilities Account payable Other account payable Tax payable Reserved fund Loan and borrowing Total liabilities Total shareholders' equity and liabilities		Sep. 30, 2007	Sep. 30, 2007	Sep. 30, 2007	Dec. 31, 2006	Dec. 31, 2006	Dec. 31, 2006
		2007 7,139,087 62,583 163,702 722,755 98,614 2,020,967 19,491 4,282 3,494		2007 10,234,975 5,143,248 15,378,223 4,946,543 5,054,530 5,377,150 10,431,680 15,378,223	2006 7,897,569 64,482 176,085 740,405 102,629 3,075,083 17,368 1,832 2,089		2006 12,077,542 4,615,677
	o	931,617 1,892,266 200,264 2,119,101			1,266,044 1,174,942 365,474 1,809,217
		2,871,568 2,746,176 502,431 (1,985,367) 811,735 4,968,480 91 85,959			2,871,568 2,746,176 502,683 (2,231,983) 757,781 5,088,771 28 65,485
							16,693,219
							4,646,225 5,154,284 6,892,710
		4,968,480 91 85,959			5,088,771 28 65,485
		1,812,416 1,784,903 16,993 55,867 1,706,971			1,748,424 535,712 21,767 29,603 4,557,204
							12,046,994
							16,693,219

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4.2 Consolidated Income Statement

BOE TECHNOLOGY GROUP CO., LTD.

Consolidated Income Statement (Jan. - Sep., 2007)

Unit: RMB'000 Sales income Cost of sale Gross profit of sale Profit of other operations Selling and distribution expenses Administrative expenses Business profit Financial expense - net Profit of affiliated company Profit of group per tax Income tax Total profit Including: equity attributed to group Minority equity	FromJan. to Sep.
	2007 2006 7,736,455 6,653,150 (6,885,505) (8,135,191) 850,950 (1,482,041) 193,320 148,759 (155,033) (144,324) (348,457) (852,603) 540,780 (2,330,209) (277,449) (586,976) 62,470 1,068,560 325,801 (1,848,625) (11,847) (5,412) 313,954 (1,854,037) 246,616 (1,832,438) 67,338 (21,599)

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4.3 Consolidated Cash Flow Statement

BOE TECHNOLOGY GROUP CO., LTD.

Cash Flow Statement (Jan. - Sep., 2007)

Unit: RMB'000 Cash flows from operating activities Net profit Items adjustment: Income tax Depreciation expense Amortization expense Impairment reserve Loss of fixed assets disposal Financial expense Investment loss Changes in working capital: Inventories Receivable and other accounts receivable Annuities and other dimission welfare Account payable Net cash inflows of operation activities Interest receivable Tax payable Net cash flows from operating activities Cash flows from investing activities Net cash outflows of investing subsidiary company Purchase of fixed assets Purchse of intangible assets Purchases of available-for-sale investments Purchase of affiliated company Purchse of long-term bonus investment Cash outflow in disposal of affiliated company investment Received dividend and interest income of bond Receiving back long-term bond investment Increase of limited deposit deposited in financial institute Other investment activities Cash outflow in sale of non-current assets Cash flow of investment activities, net Cash flow of financing activities Cash flow of issuing convertible bond Cash received from absorbing investment New increased borrowing Cash inflow of other financing activities Loan payment Dividend paid to shareholder of the Group Dividend paid to minority shareholders Interest payout Cash outflow of other financing activities Cash flow of financing activities, net Effect on changes of exchange rate Increase/decrease of cash and cash equivalent Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year	313,954
	11,847 825,374 38,899 -58,825 -1,264 233,593 -16,481 399,046 -623,371 4,374 289,556 1,416,702 15,626 6,229 1,438,557
	- -236,743 - - - - 1,036,658 94,284 - -102,730 - 1,122,313 1,913,782
	- - 1,544,771 - -4,283,474 - - -388,182 - -3,126,885
	-18,267
	207,187
	1,458,107
	1,665,261

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4.4 Auditors’ Report

Auditing opinion: Un-audited

BOE Technology Group Co., Ltd. Chairman of the Board of Directors of the Company ： Wang Dongsheng

Oct 25, 2007

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