京东方Ａ(000725)京东方Ｂ2003年年度报告摘要（英文版）

BOE TECHNOLOGY GROUP CO., LTD. SUMMARY OF ANNUAL REPORT 2003 (Overseas Version) §1. Important Notes 1.1 Board of Directors of BOE TECHNOLOGY GROUP CO., LTD. (hereinafter referred to as the Company) and its members individually and collectively accept responsibility for the correctness, accuracy and completeness of the contents of this report and confirm that there are no material omissions nor errors which would render any statement misleading. The summary of annual report 2003 is abstracted from the annual report; the investors are suggested to read the full text of annual report to understand more details. If there is any different meaning between those two language, please abide the original Chinese meaning. 1.2 No director stated that they couldn’t ensure the correctness, accuracy and completeness of the contents of the Annual Report or have objection for this report. 1.3 Director of the Company, Mr. Xuan Jiansheng, Zhao Caiyong, Wang Hui and Xie Zhi Hua were absent from the Board meeting, Xuan Jiansheng and Zhao Caiyong entrusted Director Mr. Chen Yanshun and Jiang Yukun in writing to exercised the voting right on their behalf. 1.4 PricewaterhouseCoopers Zhongtian Certified Public Accountants issued an unqualified Auditors’Report for the Company. 1.5 Chairman of the Board and concurrently CEO Mr. Wang Dongsheng, President and concurrently COO Mr. Liang Xinqing, CFO Mr. Wang Yanjun, and Vice CFO and concurrently Secretary of Planning & Financial Dept. Ms. Sun Yun hereby confirm that the Financial Report enclosed the Annual Report is true and complete. §2. Company Profile 2.1 Basic information Short form of the stock BOE –A, BOE –B Stock code 000725, 200725 Listed stock exchange Shenzhen Stock Exchange Registered address and office address No. 10, Jiuxianqiao Road, Chaoyang District, Beijing Post code 100016 Internet web site of the Company http://www.boe.com.cn E-mail of the Company web.master@boe.com.cn 2.2 Contact person and method Secretary of the Board of Representative in charge of Directors Securities Affairs Name Zhong Huifeng 1 Contact address No. 10, Jiuxianqiao Road, Chaoyang District, Beijing Telephone 010-64366264 Fax 010-64366264 E-mail hfzhong@boe.com.cn §3. Summary of Accounting Data and Financial Indexes 3.1 Major accounting data Unit: In RMB’000 项 目 金 额 Profit before tax: 519,332 Net profit： 411,234 Sales gross profit： 1,727,377 Income from other business： 39,745 Operation income： 665,837 Net cash inflow： 709,206 Balance of cash and its equivalence in the year end： 2,051,459 3.2 Major financial indexes (Unit: RMB.000) ２００１ 指标项目 ２００３ ２００２ Before Ａｆｔｅｒ adjustment ａｄｊｕｓｔｍｅｎｔ Ｓａｌｅｓ １１，１８０，１０６ ４，７８２，５８７ ２，６６９，５４３ ２，６８３，７９８ Ｎｅｔ ｐｒｏｆｉｔ ４１１，２３４ ７９，０００ ２２，８１７ ２２，８１７ Ｔｏｔａｌ ａｓｓｅｔｓ １２，０４０，４５０ ６，７７９，２９４ ４，０３４，８１１ ４，０３４，８１１ Ｓｈａｒｅｈｏｌｄｅｒ’ｓ ２，５６９，０８０ ２，１７６，３９０ ２，１１３，０１０ ２，１１３，０１０ ｒｉｇｈｔｓ Ｕｎｉｔ ＲＭＢ Ｉｎｃｏｍｅ ｐｅｒ ｓｈａｒｅ ０．６２ ０．１２ ０．０４ ０．０４ Ｎｅｔ ａｓｓｅｔ ｐｅｒ ｓｈａｒｅ ３．９０ ３．９６ ３．８４ ３．８４ Ｎｅｔ ｃａｓｈ ｆｌｏｗ ｐｅｒ １．０８ ｓｈａｒｅ ｆｒｏｍ ０．３５ ０．７８ ０．７８ ｏｐｅｒａｔｉｏｎｓ Ｔｈｅ ｒａｔｉｏ ｏｆ ｎｅｔ １６％ ３．６３％ １．０８％ １．０８％ ａｓｓｅｔｓ （％） 3.3 Difference of net profit as audited by Chinese Accounting Standard (CAS) and 2 International Accounting Standard (IAS) √Applicable □Inapplicable Unit: In RMB’000 National accounting system International accounting system Net profit 403,185.3 411,234.0 Net asset Net profit Balance as reported under Accounting System for Enterprise Business 2,570,869 403,185 Adjustment based on IFRS and other: - Difference in term of amortization of goodwill －4,001 －1,333 Explanation - Reckoning rewards and welfares of the employee on difference into administrative expenses － －828 - Government subsidy －3,014 1,987 - Capitalization of R&D expenses 8,676 8,676 - Difference in negative goodwill when acquire the equity of subsidies －2,171 － - others －1,279 －453 Balance after adjustment under IAS 2,569,080 411,234 3.4 Changes in shareholders’equity in the report period (Unit: RMB’000) Ordinary Premium Items Other reserve Retained profit Total share share capital Jan. 1, 2003 549,554 1,150,895 280,767 195,174 2,176,390 Transferring capital reserve into share capital 109，911 -109，911 - Profit as of this year - - - 411，234 411，234 Translation difference - - -18,554 - -18，544 Public reserve - - 160,943 -160,943 Dec. 31, 2003 659,465 1,040，984 423,166 445,465 2，569，080 §4. Changes in Share Capital and Particulars about Shareholders 4.1 Statement of change in share capital (Unit: share) Increase / decrease in this time (+, -) Before the After the Transferring change change capital reserve Sub-total into share I. Unlisted Shares 1. Sponsors’shares 328,029,000 65,605,800 65,605,800 393,634,800 Including: State-owned share 328,029,000 65,605,800 65,605,800 393,634,800 Domestic legal person’ s shares 0 0 Foreign legal person’ s shares 0 0 3 Others 0 0 2. Raised legal person’ s shares 3,575,000 715,000 715,000 4,290,000 3. Inner employees’shares 8,450,000 1,690,000 1,690,000 10,140,000 4. Preference shares or others 0 0 Total unlisted shares 340,054,000 68,010,800 68,010,800 408,064,800 II. Listed Shares 1. RMB ordinary shares 60,000,000 12,000,000 12,000,000 72,000,000 2. Domestically listed foreign 149,500,000 29,900,000 29,900,000 179,400,000 shares 3. Overseas listed foreign 0 0 shares 4. Others 0 0 Total listed shares 209,500,000 41,900,000 41,900,000 251,400,000 III. Total shares 549,554,000 109,910,800 109,910,800 659,464,800 4.2 Statement of shares held by the top ten shareholders and the top ten shareholders of circulation share Total number of shareholders at the end of report period 51,815 Particulars about shares held by the top ten shareholders Nature of Number of Increase / Holding shareholders Type of shares share decrease in shares at Proportion (State-owned Full name of Shareholders (Circulating/No pledged/ the report the year-end (%) shareholder/for n-circulating) frozen year (share) (share) eign (share) shareholder) Beijing BOE Investment & Development 58,411,800 350,470,800 53.14 Non-circulating Unknown State-owned Co., Ltd. shareholder Beijing Dongdian Industrial Development 6,674,000 40,044,000 6.07 Non-circulating Unknown State-owned Company shareholder Beijing Yixin Microdisplay Technology 715,000 4,290,000 0.65 Non-circulating Unknown Legal person Development Center shareholder Unknown 3,499,940 0.53 Circulating Unknown Foreign FF GREATER CHINA FD GT1 24037 shareholder Beijing CRT General Plant 520,000 3,120,000 0.47 Non-circulating Unknown State-owned shareholder Unknown 2,581,395 0.39 Circulating Unknown Yu Long Securities Investment Funds ABU DHABI INVESTMENT Unknown 2,483,000 0.38 Circulating Unknown Foreign AUTHORITY shareholder BEST RELIANCE INVESTMENTS LTD Unknown 2,040,400 0.31 Circulating Unknown Foreign shareholder DZ BK INTL SA A/C UNION Unknown 2,000,000 0.30 Circulating Unknown Foreign INVESTMENT LUX SA S/A UNIEM shareholder FERNOST 4 NBP/FRUCTILUX SICAV Unknown 1,999,730 0.30 Circulating Unknown Foreign shareholder Explanation on associated relationship The actual controller of Beijing BOE Investment & Development Co., Ltd., Beijing among the top ten shareholders or Dongdian Industrial Development Company and Beijing CRT General Plant is consistent action Beijing Electronics Holding Co., Ltd.. For other shareholders, the Company is unknown whether there exists associated relationship. Particulars about shares held by the top ten shareholders of circulation share Name of shareholder (full name) Number of circulation shares Type (A-share, B-share, held at the year-end (share) H-share and other) FF GREATER CHINA FD GT1 24037 3,499,940 B-share YU LONG SECURITIES INVESTMENT 2,581,395 A-share FUNDS ABU DHABI INVESTMENT 2,483,000 B-share AUTHORITY BEST RELIANCE INVESTMENTS LTD 2,040,400 B-share DZ BK INTL SA A/C UNION 2,000,000 B-share INVESTMENT LUX SA S/A UNIEM FERNOST NBP/FRUCTILUX SICAV 1,999,730 B-share CHINA SOUTHERN (HK) CO., LTD. 1,900,000 B-share TOYO SECURITIES ASIA 1,664,580 B-share LIMITED-A/C CLIENT. SHANGHAI (HONG KONG) WANGUO 1,654,854 B-share SECURITIES JF REATER CHINA ABSOLUTE FUND 1,599,985 B-share Explanation on associated The Company is unknown whether there exists associated relationship among the top ten relationship or consistent action. shareholders circulation share or consistent action 4.3 Particulars about controlling shareholders and actual controller of the Company 4.3.1 Particulars about change in controlling shareholders and actual controller of the Company □Applicable √Inapplicable 4.3.2 Introduction of especial situation for controlling shareholder and other actual controller Beijing BOE Investment & Development Co., Ltd. holds 53.15% of the Company’s total shares, therefore is the virtual controlling shareholder of the Company; Beijing Electronics Holding Co., Ltd. holds 56.25% of the total shares of Beijing BOE Investment & Development Co. Ltd. and therefore is the virtual controller of the Company. Beijing Electronics Holding Co., Ltd. is a state-owned holding company under Beijing Municipal Government and is authorized to operate state-owned assets. Beijing BOE Investment & Development Co., Ltd. 5 Legal Representative: Wang Dongsheng Date of Foundation: Oct.15, 1956 Location: No.10 Jiuxianqiao Road,Chaoyang District, Beijing Registered Capital: RMB 680.982 million Business Scope: project investment, manufacture and design of electronic products, communications equipment, computer software & hardware, paper products, industrial gasses, mould and matrix, steam; acquisition and sales of mechanical and electrical equipment, metal products, computer software and hardware and supporting equipment, construction material, general merchandise; technical development, technical consultation, technical service and transfer, undertaking exhibitions and sales Beijing Electronics Holding Co., Ltd. Legal Representative: Bao Yutong Date of Foundation: April 8, 1997 Location: No.12 Jiuxianqiao Road, Chaoyang District, Beijing Registered Capital: RMB 1307.37 million Type: Limited Liability Company (owned and funded solely by the state) 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. §5. Particulars About Directors, Supervisors and Senior Executives 5.1 Particulars about changes in shares held by directors, supervisors and senior executives Shares held Shares held Reason for change Name Title Gender Age Office term at the at the year-begin year-end Wang Dongsheng Chairman of the Board, Male 46 June 2001-June 2004 6500 7800 2002 profit distribution: Chairman of the Executive transferring capital reserve Committee, CEO into share capital at the rate of 2 shares for every 10 shares Jiang Yukun Vice Chairman of the Board Male 50 June 2001-June 2004 3900 4680 2002 profit distribution: transferring capital reserve into share capital at the rate of 2 shares for every 10 shares Liang Xinqing Executive Director, President Male 51 June 2001-June 2004 2600 3120 2002 profit distribution: 6 and COO transferring capital reserve into share capital at the rate of 2 shares for every 10 shares Cui Bingdou Executive Director, Executive Male 54 Oct. 2003- June 2004 0 0 Vice-President Chen Yanshun Executive Director, Senior Male 38 June 2001-June 2004 0 0 Vice-President Sun Jiping Executive Director, Senior Male 45 June 2001-June 2004 0 0 Vice-President Zhao Caiyong Director Male 56 June 2001-June 2004 6500 7800 2002 profit distribution: transferring capital reserve into share capital at the rate of 2 shares for every 10 shares Wang Hui Director Male 48 June 2001-June 2004 0 0 Tai Zhonghe Independent Director Male 53 June 2001-June 2004 0 0 Xie Zhihua Independent Director Male 44 May 2002- June 2004 0 0 Zhang Baizhe Independent Director Male 60 Oct. 2003- June 2004 0 0 Li Zhaojie Independent Director Male 48 Oct. 2003- June 2004 0 0 Wang Aizhen Convener of the Supervisory Female 54 June 2001-June 2004 1300 1560 2002 profit distribution: Committee transferring capital reserve into share capital at the rate of 2 shares for every 10 shares Mu Chengyuan Supervisor Male 36 Sep. 2001-June 2004 650 780 2002 profit distribution: transferring capital reserve into share capital at the rate of 2 shares for every 10 shares Yang Anle Supervisor Male 33 June 2001-June 2004 0 0 Xu Yan Employee Supervisor Female 52 June 2001-June 2004 3900 4680 2002 profit distribution: transferring capital reserve into share capital at the rate of 2 shares for every 10 shares Cao Hong Employee Supervisor Male 49 Aug. 2003- June 2004 1300 1560 2002 profit distribution: transferring capital reserve into share capital at the rate of 2 shares for every 10 shares Song Ying Senior Vice-President Female 46 June 2001-June 2004 6500 7800 2002 profit distribution: transferring capital reserve into share capital at the rate 7 of 2 shares for every 10 shares Ren Jianchang Senior Vice-President Male 57 June 2001-June 2004 0 0 Han Guojian Vice-President Male 50 June 2001-June 2004 2600 3120 2002 profit distribution: transferring capital reserve into share capital at the rate of 2 shares for every 10 shares Liu Xiaodong Vice-President Male 39 Apr. 2003- June 2004 0 0 Wang Jiaheng Vice-President Male 35 June 2001-June 2004 0 0 Wang Yanjun Chief Financial Officer Male 34 June 2001-June 2004 2600 3120 2002 profit distribution: transferring capital reserve into share capital at the rate of 2 shares for every 10 shares Zhang Peng Chief Tech. Supervisor Male 39 June 2001-June 2004 0 0 Zhong Huifeng Secretary of the Board Male 33 Apr. 2002- June 2004 0 0 5.2 Particulars about directors and supervisors holding the post in Shareholding Company √Applicable □Inapplicable Drawing the payment Name of Shareholding Title in Shareholding Name Office term from the Shareholding Company Company Company (Yes / No) Director, President and Beijing BOE Investment & Jinag Yukun Secretary of the Party 2004.1-2007.1 Yes Development Co., Ltd. Committee Director, Standing Beijing BOE Investment & Vice-President and Chief Yes Development Co., Ltd. Zhao Caiyong Accountants 2004.1-2007.1 Beijing Dongdian Industrial General Manager No Development Company Supervisor, Vice Secretary of the Party Committee, Beijing BOE Investment & Wang Aizhen Secretary of Discipline 2004.1-2007.1 Yes Development Co., Ltd. Commission and Chairwoman of Labor Union Beijing BOE Investment & Secretary of the Board and Mu Chengyuan 2004.1-2007.1 Yes Development Co., Ltd. Vice-President Beijing BOE Investment & Manager of Planning and Yes Development Co., Ltd. Financial Department Yang Anle 2004.1-2007.1 Beijing Dongdian Industrial Chief Accountant No Development Company 8 5.3 Particulars about the annual payment of directors, supervisors and senior executives Total annual payment RMB 6.135 million Total annual payment of the top three directors RMB 3.121 million drawing the highest payment Total annual payment of the top three senior RMB 3.121 million executives drawing the highest payment Allowance of independent director Mr. Tai Zhonghe: US$ 10,000 per year Mr. Xie Zhihua: RMB 50,000 per year Mr. Zhang Baizhe & Mr. Li Zhaojie: RMB 12,500 per quarter Other treatment of independent directors N/S Name of directors and supervisors receiving no Jiang yukun, Zhao yongcai, Wang Hui, Wang aizhen, Mu payment or allowance from the Company chengyuan, Yang anle Payment (RMD) Number of persons More than 200 thousand 12 100 thousand to 200 thousand 2 Less than 100 thousand 1 §6. Report of the Board of Directors 6.1 Discussion and analysis to the whole operation in the report period In the report period, the Company firmly carried out the work policy of “Changing those impossible into possible and creating strong points of individual, department and company”, on the one hand, overcoming the influence of SARS epidemic, fully pushing the industrial development in all causes especially in TFT-LCD cause by catching market chance and gaining relatively good operating achievements; on the other hand, constructing and accomplishing the flat display industrial structure with TFT-LCD cause as the core so as to found a foundation for the future development of the Company. In the report period, the Company realized income from main operations amounting to RMB 11180 million, an increase of 133.77% over the same period of last year, and realized net profit amounting to RMB 411 million, an increase of 420.25% over the same period of last year. 6.2 Statement of main operations classified according to industries or products Unit: RMB’000 Ｃｌａｓｓｉｆｉｅｄ ａｃｃｏｒｄｉｎｇ Ｉｎｃｏｍｅ ｆｒｏｍ Ｃｏｓｔ ｏｆ ｍａｉｎ Ｇｒｏｓｓ Ｉｎｃｒｅａｓｅ／ｄｅｃｒｅａ Ｉｎｃｒｅａｓｅ／ｄｅｃｒ Ｉｎｃｒｅａｓｅ／ｄｅｃｒｅａ ｔｏ ｉｎｄｕｓｔｒｉｅｓ ｏｒ ｍａｉｎ ｏｐｅｒａｔｉｏｎｓ ｐｒｏｆｉｔ ｓｅ ｉｎ ｉｎｃｏｍｅ ｆｒｏｍ ｅａｓｅ ｉｎ ｃｏｓｔ ｏｆ ｓｅ ｉｎ ｇｒｏｓｓ ｐｒｏｄｕｃｔｓ ｏｐｅｒａｔｉｏｎｓ （ＲＭＢ） ｒａｔｉｏ ｍａｉｎ ｏｐｅｒａｔｉｏｎｓ ｍａｉｎ ｐｒｏｆｉｔ ｒａｔｉｏ （ＲＭＢ） （％） ｏｖｅｒ ｔｈｅ ｌａｓｔ ｏｐｅｒａｔｉｏｎｓ ｏｖｅｒ ｔｈｅ ｌａｓｔ ｙｅａｒ （％） ｏｖｅｒ ｔｈｅ ｌａｓｔ ｙｅａｒ （％） ｙｅａｒ （％） Ｂｕｓｉｎｅｓｓ ｏｆ ｍｏｎｉｔｏｒ ６．２７％ ２０．８９％ ２１．０９％ －２．４９％ ｔｅｒｍｉｎａｌ ｐｒｏｄｕｃｔｓ ３，１４５，９２５ ２，９４８，７５１ 9 Ｂｕｓｉｎｅｓｓ ｏｆ ｄｉｓｐｌａｙ ｄｅｖｉｃｅｓ –Ｔｈｉｎ ｆｉｌｍ ５，６７３，９０９ ４，５６１，７６３ １９．６１％ － － － ｔｒａｎｓｉｓｔｏｒ ｌｉｑｕｉｄ Ｂｕｓｉｎｅｓｓ ｏｆ ｓｍａｌｌ－ｓｉｚｅｄ ２，００６，５７７ １，７１３，５９９ １４．６１％ １５．４２％ ２４．２２％ －２９．２５％ ｄｉｓｐｌａｙ ｄｅｖｉｃｅ Ｏｔｈｅｒ ｂｕｓｉｎｅｓｓｅｓ ５１４，３６５ ３８９，８４１ ２４．２１％ １３．３３％ １３．１９％ ０．３７％ Ｏｔｈｅｒｓ －１６０，６７０ －１６１，２２５ － － － － Ｃｏｕｎｔｅｒａｃｔｉｏｎ １１，１８０，１０６ ９，４５２，７２９ １５．４６％ １３３．７７％ １２８．１４％ １６．３３％ Ｓｕｍ ３，１４５，９２５ ２，９４８，７５１ ６．２７％ ２０．８９％ ２１．０９％ －２．４９％ 6.3 Particulars about main operations classified according to areas Unit: RMB’000 Ｓａｌｅｓ Ｔｏｔａｌ ａｓｓｅｔ Ｅｘｐｅｎｓｅ ２００３ ２００２ ２００３ ２００２ ２００３ ２００２ Ｃｈｉｎａ ｍａｉｎ ｌａｎｄ ４，８１９，３６６ ２，０８９，７０９ ６，０８２，４０７ ５，６２５，６４７ ３３１，３２７ ７０９，５６８ Ｋｏｒｅａ １，４７５，９７１ ５０６，１４４ ５，２８２，１４０ ８９３，７５６ ３，２８６，２１３ ３０，０４５ Ｔａｉｗａｎ １，０４９，４６２ － ３４９，６２５ － ９０２ － ＵＳ ９５２，７６１ ６９１，９７８ ４３，６７６ ２２，３４８ － － Ｇｅｒｍａｎｙ ８４８，５６６ ５４５，９５０ １１６，０１４ ２３７，５４３ － － Ｏｔｈｅｒ ＥＵ ｃｏｕｎｔｒｉｅｓ ４９８，５７８ ６８２，６７６ － － － － Ｏｔｈｅｒ ｃｏｕｎｔｒｉｅｓ ｉｎ Ａｓｉａ ３３７，５３６ １２９，８３２ １６６，５８８ － ４５８ － Ｏｔｈｅｒ ｃｏｕｎｔｒｉｅｓ １，１９７，８６６ １３６，２９８ － － － － １１，１８０，１０６ ４，７８２，５８７ １２，０４０，４５０ ６，７７９，２９４ ３，６１８，９００ ７３９，６１３ 6.4 Particulars about the customers of purchase and sales Unit: RMB’0000 Total amount of purchase 368,656.00 Proportion in the total 39.00% of the top five suppliers amount of purchase Total amount of sales of the 357,763.00 Proportion in the total 32.00% top five sales customers amount of sales 6.5 Operation of share-holding companies (applicable to the situation where investment earnings takes over 10% of its net profit) √Applicable □Inapplicable Name of share-holding company Beijing· Matsushita Color CRT Co., Ltd. 10 Investment earnings contributed in the period 8,862.00 Proportion in net profit of the listed company 21.98% Shareholding company Business scope Production of CRT used in color TVs and CDT used in color monitors, sales of self-produced products and provision of after service Net profit 29,539.00 6.6 Explanation on reasons of material changes in main operations and its structure √Applicable □Inapplicable Since the Company entered into the field of TFT-LCD business in Jan. 2003, the business volume of TFT-LCD business reached over 50% in main operations of the Company. BOE-Hydis Technology Co., Ltd., a subsidiary in Korea, was listed into the consolidated scope of the Company. 6.7 Explanation on reasons of material changes in profitability capability of main operations (gross profit ratio) than that in the last year □Applicable √Inapplicable 6.8 Analysis to reasons of material changes in operating results and profit structure compared with the previous year √Applicable □Inapplicable Since the Company entered into the field of TFT-LCD business in Jan. 2003, the business volume of TFT-LCD business reached over 50% in main operations of the Company. BOE-Hydis Technology Co., Ltd., a subsidiary in Korea, was listed into the consolidated scope of the Company. Analysis to reasons of material changes in the whole financial position than that in the last year □Applicable √Inapplicable 6.9 Explanation on the past, current and future important effects of the material changes in production and operation environment, macro-policies and regulations on the Company’ s financial position and operating results □Applicable √Inapplicable 6.10 Completion of the profit estimation □Applicable √Inapplicable 6.11 Completion of the business plan □Applicable √Inapplicable 6.12 Application of the raised proceeds √Applicable □Inapplicable Unit: RMB’0000 Total amount of raised Total amount Total amount of raised proceeds of raised proceeds used 11 proceeds used accumulatively in the report year Committed projects Planned Change Actual Accrued amount of Compliance with amount of projects or not amount of earnings planned progress and input input estimated earnings or not Innovation project in No No development technology of 10,000.00 7,511.00 -836.00 municipal traffic “All-in-one Card”system in Beijing Brand access cause operating No Yes 11,200.00 9,345.00 project Purchase of TFT-LCD No Yes business project of Korean 13,574.43 13,574.43 52,010.00 Hydis Technology Inc. Total 34,774.43 - 30,000.43 51,174.00 - Explanation on not reaching Beijing urban traffic “All-in-one card”project: Due to adjustment in the whole implementation plan planned progress and earnings of traffic “All-in-one card” project, the progress of engineering construction burdened by the (In detailed projects) Company was adjusted accordingly. It was predicted that the trial operation in partial bus, track and taxi line would be enlarged in the second half of year 2003. Explanation on reasons and Annual Shareholders’General Meeting 2002 of the Company held on May 30, 2003 considered and procedures of change (In passed Proposal on Changing and Adjusting Use of the Raised Proceeds in Partial Projects. The detailed projects) Company ① changed the use of the rest raised proceeds amounting to RMB 10.34 million in “BOE E-commerce project” to supplement the running capital of the Company; ②All of the rest raised proceeds amounting to RMB 910,000 in “Technical reconstruction project of terminal production lines for special computers”accomplished and the rest RMB 1.79 million in “Technical reconstruction project of production lines in mobile computers”was adjusted to supplement the Company’s running capital. For details, please refer to Public Notice on Resolutions of Annual Shareholders’General Meeting 2002 of BOE Technology Group Co., Ltd. published on Ta Kung Pao, Securities Times, China Securities and Shanghai Securities News dated May 31, 2003. Particulars about the changed projects √Applicable □Inapplicable Unit: RMB’0000 Total amount of capital 1,304.00 of changed investment projects Projects after change Corresponding Planned Actual amount Accrued Compliance with projects committed input of input amount of planned progress originally amount of earnings and estimated changed earnings or not projects Supplementing running BOE E-commerce 1,034.00 1,034.00 1,034.00 Yes 12 capital project Supplementing running Technical Yes capital reconstruction project of terminal production 91.00 91.00 91.00 lines for special computers Supplementing running Technical Yes capital reconstruction project 179.00 179.00 179.00 of production lines in mobile computers Total - 1,304.00 1,304.00 1,304.00 - Explanation on not Naught reaching planned progress and earnings (In detailed projects) 6.13 Application of the proceeds not raised through shares offering √Applicable □Inapplicable Unit: RMB’0000 Names of projects Amount of projects Progress of projects Earnings of projects Purchase of 3.49% 556.00 Completed 1084 equity from Hyundai LCD Inc. Jointly establishing 6,208.00 Investment amount in -966 Beijing BOE the 1st phase Photoelectric Technology Co., Ltd. Purchase of 26.36% 111,142.00 Completed Not annexed in 2003 equity from Top Victory Technology Jointly establishing 620.70 Investment amount in 288 BOE Hyundai LCD the 2nd phase Inc. Reconstruction of 10,247.00 Developed as 1874 VFD production lines scheduled Engineering of main 1,308.00 Developed as Can not calculate body of factories scheduled independently income due to the construction of factory Engineering of clear 1,233.00 Developed as Can not calculate factories scheduled independently income due to the construction of factory Total 241,932.59 - - 13 6.14 Explanation of the Board of Directors on the “Qualified Opinion”made by the Certified Public Accountants □Applicable √Inapplicable 6.15 Business plan as of the next year of the Board of Directors (If it has) □Applicable √Inapplicable Profit estimation of the next year (If it has) □Applicable √Inapplicable 6.16 The preplan on the profit distribution and capitalization of capital public reserve of the Board of Directors The Company realized net profit amounting to RMB 403,185,267 in 2003. According to the provisions in the Articles of Association of the Company, after 10% of the net profit being appropriating as statutory reserve amounting to RMB 40,235,748, 5% of the net profit being appropriating as statutory welfare funds amounting to RMB 20,117,874 and 25% of the net profit being appropriating as discretionary surplus reserve amounting to RMB 100,589,369 and after appropriated employee bonus and welfare funds amounting to RMB 827,792 being deducted, plus the accumulative retained earnings in previous years amounting to RMB 192,962,577, the actual profit available for distribution to shareholders was RMB 434,377,061 in 2003. According to the Company’s need for capital in the operation, the Board of Directors suggested no cash dividends being distributed in 2003 but capitalizing capital reserve to all its shareholders at the rate of 5 shares capitalized and RMB 0.1 (Tax included) distributed for every 10 shares based on the total share capital of the Company amounting to 975,864,800 shares after additional issuance of B shares. §7. Significant Events 7.1 Purchase of assets √ Applicable □ Inapplicable Unit: (RMB) ’0000 Related Contribution to net profit of the transaction or Transaction parties and the Company of the assets Date of purchase Purchase price not (if yes, assets purchased purchased from the date of explain principle purchase to the year-end of pricing) TFT-LCD business of Jan. 22, 2003 52,010.00 No HYDIS 26.36% equity of TPV Dec. 30, 2003 0.00 No 7.2 Sales of assets √ Applicable □ Inapplicable 14 Unit: (RMB) ’0000 Contribution to net profit of Profit or Date Transaction parties and the Sale the Company of the assets loss Related transaction or not (if yes, of assets sold price sold from the year-beginning from explain principle of pricing) sale to the date of sale sale Transaction party: Beijing Electronics Town Co., Ltd.; the Apr. Yes, pricing based on the assets sold: 70% equity of 21, 0.00 0.00 assessed property price under the 3,880.00 Beijing BOE Land Co., Ltd. 2003 principle of market held by the Company Yes, pricing based on the Transaction party: Beijing Jul assessed price of land use right, BOE Land Co., Ltd.; the assets 10, 8,270.00 0.00 0.00 house property and affiliated sold: Xingke Building 2003 equipments of Xing Ke Building under the principle of market Influence on consistence of business and stability of managers caused by the issues interfered in purchase and sale It is in favor of concentrating on the development of display industry, meanwhile is in favor of realizing the professional operation of real estate business. 7.3 Important guarantee □Applicable √Inapplicable 7.4 Related credits and liabilities current √ Applicable □ Inapplicable Unit: (RMB) ’0000 Supply funds to related parties Related parties supplied funds to the Related parties Company Occurred amount Balance Occurred amount Balance Beijing·Matsushita Color CRT 0.00 3,407.00 8,699.00 0.00 Co., Ltd. Top Victory Technology Co., 0.00 29,725.00 0.00 5,293.00 Ltd. Beijing Orient Mosler Intelligence Technology Co., 345.00 211.00 135.00 0.00 Ltd. Beijing Xingcheng Land Co., 1,240.00 3,340.00 0.00 0.00 Ltd. Beijing BOE Land Co., Ltd. 1,049.00 1,049.00 0.00 387.00 Beijing BOE Investment & 0.00 144.00 563.00 0.00 Development Co., Ltd. Shenzhen Zhongda Industrial 0.00 37.00 67.00 0.00 Co., Ltd. 15 Beijing BOE Digital 0.00 0.48 396.30 0.00 Technology Co., Ltd. Total amount 2,634.00 37,913.48 9860.00 5,681.00 7.5 Entrusted assets □ Applicable √ Inapplicable 7.6 Implementation of commitment items □ Applicable √ Inapplicable 7.7 Significant lawsuit and arbitration √ Applicable □ Inapplicable The Korean subsidiary of the Company, BOE-Hydis Technology Co., Ltd. received the notification of Sharp Corporation, LG·Philips LCD and Guardian Industries who announced the Company infringed some patent right of them and counterclaimed the use expense. The investigation of the event was still in process and it was difficult to assess the result of potential lawsuit temporarily, so the Company has not appropriated any provision for liabilities caused by the event in the consolidated statement. 7.8 Particulars about the performance of obligations of Independent Directors The Company has engaged four independent directors at present, which were the specialists in IT, finance, law and TFT-LTD. During their term, independent directors performed their duties as Independent Director according to the relevant regulations of Guiding Opinions on the Establishment of Independent Director System in Listed Companies, actively expressed independent opinions on the Company’s vital purchasing of assets, related transaction, posts change of directors and senior executives and the other major projects and played an important role in promoting the Company’s strategic decision-making process, and safeguarded the benefits of the mass of medium and small shareholders and the interest of the Company in real earnest. §8.Report of the Supervisory Committee Meetings of the Supervisory Committee and their resolutions On Apr. 18, 2003, the Company held the 7th meeting of the 3rd Supervisory Committee, which examined and approved Work Report of the Supervisory Committee in 2002, Financial Settlement Report in 2002, Profit Distribution Preplan for 2002, Annual Report 2002 and Summary, Proposal on Adjusting Usage of Raised Capital of Partial Items and Explanation on Usage of the Last Raised Capital. On Apr. 29, 2003, the Company held the 8th meeting of the 3rd Supervisory Committee, which examined and approved the 1st Quarterly Report of 2003 of the Company. On May 12, 2003, the Company held the 9th meeting of the 3rd Supervisory Committee, which examined and approved Proposal on Increasing Examined Items in Annual Shareholders’General Meeting 2002. On Aug. 21, 2003, the Company held the 10th meeting of the 3rd Supervisory Committee, which examined and approved Semiannual Report 2003 of the Company. On Oct. 29, 2003, the Company held the 10th meeting of the 3rd Supervisory 16 Committee, which examined and approved the 3rd Quarterly Report of 2003 of the Company. Independent opinion of the Supervisory Committee In the report year, the Supervisory Committee supervised over the validity when the directors and senior executives of the Company executed the duties in the Company strictly according to relevant laws, regulations, Articles of Association of the Company and Procedure Rule for the Supervisory Committee, checked relevant financial report of the Company, put forward to new proposal before holding Annual Shareholders’General Meeting 2002 and specially examined the usage of the raised capital of the Company. Aiming for the work of the Company in this year, the Supervisory Committee expressed the independent opinion as follows: (1) The Board of Directors, directors and other senior executives of the Company carried on the work strictly according to laws, regulations and Articles of Association of the Company and there was no behavior of damaging the interest of the Company and the shareholders. (2) The Company truly and completely issued financial statement strictly according to relevant accounting laws, regulations and rules, standardized the internal control system in a systemic way, established and perfected the financial system of the Company. (3) Taking the maximum of the interest of the shareholders and the Company as springboard, the Company consistently perfected the construction of the Company’s administration structure, actually implemented every resolution of the Shareholders’ General Meeting, did a large amount of work with effect in respect of urging the maximum of the fortune of the shareholders. (4) The related transactions involved by the Company was strictly in accordance with the market rule and obeyed the principle of fairness and justness. There existed no situation of damaging the interest of minority shareholders and the Company made information disclosure for the significant related transactions in time and engaged financial consultant to issue consultant’s opinion and the independent directors also expressed the independent opinion. (5) The appointing and removing of senior executives of the Company was in accordance with relevant laws, regulations and the meet of stratagem development of the Company. (6) The raised capital of the Company was put in strictly according to the promised items and the increase of used items and change of usage of the raised capital all implemented relevant law procedures. (7) The relevant purchase behaviors of significant assets of the Company were made the feasibility research of the items. The Company engaged relevant experts to examine them and implemented relevant procedures of submitting and authorization in compliance with the systemic regulations of external investment and guaranteed the investment was scientific. 17 §9. Financial Report 9.1 Auditors’opinion Please look though the attachment files behind 9.2 Consolidated Financial Reports Prepared by: BOE Technology Group Co., Ltd. Please look though the attachment files behind 9.3 Explanation on change of accounting policy, accounting assessment and settlement method compared with the latest annual report □Applicable √Inapplicable 9.4 The company’s subsidiaries Suzhou Boe CHATANI Co. Ltd. and BOE-Hydis have been annexed into the range of accounting statement during report periods. Board of Directors of Boe Technology Group Co., Ltd. Apr. 23, 2004 Report of the auditors To the shareholders of BOE Technology Group Co., Ltd. We have audited the accompanying consolidated balance sheet of BOE Technology Group Co., Ltd. (the Company) and its subsidiaries (the Group) as of 31 December 2003 and the related consolidated income and cash flow statements for the year then ended. These financial statements set out on pages 2 to 45 are the responsibility of the Company’ s management. Our 18 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 plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements present fairly in all material respects, the financial position of the Group as of 31 December 2003 and of the results of its operations and its cash flows for the year then ended in accordance with International Financial Reporting Standards. PricewaterhouseCoopers Zhong Tian CPAs Co., Ltd. 23 April 2004 BOE TECHNOLOGY GROUP CO., LTD. CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2003 Year ended 31 December (all amounts in RMB thousands) Notes 2003 2002 Sales 11,180,106 4,782,587 19 Cost of sales (9,452,729) (4,147,036) I. Gross profit 1,727,377 635,551 II. Other operating income 39,745 18,979 Distribution costs (288,021) (160,302) Administrative expenses (792,720) (274,640) Other operating expenses (20,544) (4,301) III. Profit from operations 665,837 215,287 Finance costs – net (235,550) (65,542) IV. Group profit before tax 430,287 149,745 Available-for-sale investments - losses (11,047) (5,761) Share of result of associates before tax 100,092 72,922 V. Profit before tax 519,332 216,906 VI. Income tax expenses (30,003) (51,356) Group profit before minority interest 489,329 165,550 Minority interests (78,095) (86,550) VII. Net profit 411,234 79,000 Basic earnings per share Rmb0.62 Rmb0.12 20 BOE TECHNOLOGY GROUP CO., LTD. CONSOLIDATED BALANCE SHEET AS AT 31 DECEMBER 2003 As at 31 December (all amounts in RMB thousands) Notes 2003 2003 2002 2002 ASSETS Non-current assets Property, plant and equipment 4,221,901 1,326,218 Investment Property 14,780 17,430 Intangible assets 41,438 96,924 Land use rights 109,797 100,266 Investments in associates 1,901,399 741,841 Available-for-sale investments 66,474 93,200 Held-to-maturity investments 173 22 Deferred tax assets 10,759 3,753 Other assets 125,547 15,664 6,492,268 2,395,318 Current assets Inventories 1,248,919 560,402 Receivables and prepayments 2,247,804 1,529,348 Cash and cash equivalents 2,051,459 2,294,226 5,548,182 4,383,976 Total assets 12,040,450 6,779,294 EQUITY AND LIABILITIES Capital and reserves Ordinary shares 659,465 549,554 Share premium 1,040,984 1,150,895 Other reserves 423,166 280,767 Retained earnings 445,465 195,174 2,569,080 2,176,390 Minority interests 525,602 457,862 Non-current liabilities Borrowings 1,766,291 268,804 Deferred tax liabilities 8,383 9,523 Post-employment benefit obligations 14,643 6,428 Other liabilities 441,357 72,912 21 2,230,674 357,667 Current liabilities Trade and other payables 2,426,082 1,481,219 Current tax liabilities 13,530 28,751 Borrowings 4,249,483 2,263,875 Provisions 25,999 13,530 6,715,094 3,787,375 Total liabilities 8,945,768 4,145,042 Total equity and liabilities 12,040,450 6,779,294 BOE TECHNOLOGY GROUP CO., LTD. CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’EQUITY FOR THE YEAR ENDED 31 DECEMBER 2003 Ordinary Share Retained (all amounts in RMB thousands) Notes shares premium Other reserves earnings Total Balance at 1 January 2002 549,554 1,150,895 235,871 176,690 2,113,010 Addition of capital reserves - - 4,412 - 4,412 Dividends relating to 2001 - - - (27,478) (27,478) Net profit - - - 79,000 79,000 Currency translation differences 7,446 - 7,446 Provision of general reserves - - 33,038 (33,038) - Balance at 31 December 2002/ 549,554 1,150,895 280,767 195,174 2,176,390 1 January 2003 Conversion of share premium to ordinary shares 109,911 (109,911) - - - Net profit - - - 411,234 411,234 Currency translation differences - - (18,544) - (18,544) Provision of general reserves - - 160,943 (160,943) - Balance at 31 December 2003 659,465 1,040,984 423,166 445,465 2,569,080 22 BOE TECHNOLOGY GROUP CO., LTD. CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2003 Year ended 31 December (all amounts in RMB thousands) Notes 2003 2002 Cash flows from operating activities Net profit 411,234 79,000 Adjustments for: Minority interests 78,095 86,550 Tax 18,889 47,189 Depreciation 615,248 136,756 Amortisation 23,968 22,091 Impairment charge and write off 109,756 28,358 Loss on sale of property, plant and equipment 6,475 188 Finance costs 211,824 64,644 Share of result before tax of associates (100,092) (72,922) Changes in working capital: Inventories (381,001) (152,479) Trade and other receivables (129,678) (748,400) Pensions and other retirement benefits 8,215 6,428 Payables (183,185) 712,276 Cash generated from operations 689,748 209,679 Interest received 39,651 8,629 Tax paid (20,193) (25,669) Net cash from operating activities 709,206 192,639 Cash flows from investing activities Acquisition of subsidiary, net of cash acquired (2,433,235) (526,396) Purchase of property, plant and equipment (643,878) (255,880) Purchase of intangible assets (15,505) (34,170) Purchase of available-for-sale investments (84) (25,171) Purchase of association (1,174,623) (11,443) Disposal of subsidiary, net of cash disposed 1,389 2,704 Proceeds from sale of property, plant and machinery 15,716 179 Dividends received 20,442 3,733 Net cash used in investing activities (4,229,778) (846,444) Cash flows from financing activities Proceeds from convertible bonds - 130,720 Proceeds from minority interest - 134,512 Proceeds from borrowings 8,811,082 3,332,947 Proceeds from other financial activities 104,413 Repayments of borrowings (5,352,148) (1,787,367) Dividends paid to group shareholders (13,434) (42,487) Dividends paid to minority interests (3,864) (7,840) 23 Interest paid (216,241) (80,359) Payment for other financing activities (34,019) (17,795) Net cash from financing activities 3,295,789 1,662,331 Effects of exchange rate changes (17,984) 16,502 Increase/(Decrease) in cash and cash equivalents (242,767) 1,025,028 Cash and cash equivalent at beginning of year 2,294,226 1,207,639 Cash and cash equivalent at end of year 2,051,459 2,232,667 24