京东方Ａ(000725)京东方Ｂ2005年年度报告摘要（英文版）

Stock Abbreviation: G-BOE, BOE-B Stock Code: 00725, 200725 No.: Annual Report 2005 BOE Technology Group Co., Ltd Summary of Annual Report 2005 Overseas Version §1. Important Notes 1.1 The Board of Directors, the Supervisory Committee as well as the directors, supervisors and senior executives of BOE Technology Group Co., Ltd (hereinafter referred to as “the Company”) hereby confirm that there are no false records, misleading statements or significant omissions in this report, and would shoulder any individual or joint responsibility concerning the authenticity, accuracy and completeness of the content. This Summary of Annual Report had been abstracted from the full text of the Annual Report. Investors may read the full text of the Annual Report to get more details. This Annual Report has been compiled in both Chinese and English. Should there be any ambiguity concerning meanings in the two versions, the Chinese one shall prevail. 1.2 No director, supervisor or senior executive declared that he/she could not guarantee the authenticity, accuracy or completeness of the content in the Annual Report, or that he/she had objections. 1.3 Independent Director Mr.Xie Zhihua and Mr. Li Zhaojie separately authorized Independent Director Mr. Tai Zhonghe and Mr. Zhang Baizhe to attend and vote at the BOD meeting. 1.4 KPMG Certified Public Accountants has provided the Company with a standard unqualified Auditors’ Report. 1.5 Chairman of the Board and CEO Mr. Wang Dongsheng, President Mr. Liang Xinqing, COO Mr. B.D.Choi, CFO Mr. Wang Yanjun, and Chief Accounting Officer and concurrently Principal of Planning & Financial Dept. Ms. Sun Yun 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 G-BOE, BOE-B Stock code 00725, 200725 Stock Exchange listed on Shenzhen Stock Exchange Registered address: No. 10, Jiu Xian Qiao Road, Chaoyang District, Beijing Registered address and office address Office address: No. 10, Jiu Xian Qiao Road, Chaoyang District, Beijing Postal code of the registered address: 100016 Postal code Postal code of the office address: 100016 Internet website of the Company http://www.boe.com.cn E-mail of the Company Web.master@boe.com.cn 2.2 Persons to contact and means for contact Securities Affairs Secretary of the Board Representative Name Chen Yanshun Zhong Huifeng No. 10, Jiu Xian Qiao Road, Chaoyang No. 10, Jiu Xian Qiao Road, Chaoyang Contact address District, Beijing District, Beijing Telephone 010-64366264, 64318888 Ext. 010-64366264, 64318888 Ext. Fax 010-64366264 010-64366264 E-mail yschen@boe.com.cn hfzhong@boe.com.cn §3. Accounting Data and Business Highlights 3.1 Major accounting data Unit: RMB’000 2005 2004 Increase / 2003 1 decrease this year After Before compared After Before adjustment adjustment with the adjustment adjustment last year (%) Sales revenue 13,449,713 12,441,708 12,441,708 8.10 11,180,106 11,180,106 Net profit －1,245,993 340,262 353,701 －466.19 481,946 396,016 Total assets 21,524,766 18,223,237 18,106,758 18.12 12,322,084 12,232,806 Shareholders’ equity (excluding 5,154,384 －24.73 2,643,140 2,553,862 minority interests) 3,967,616 5,270,862 3.2 Main financial indicators Unit: RMB 2004 (after Increase / decrease this year 2005 adjustment) compared with the last year (%) Earnings per share －0.57 0.23 －347.83 Return on equity －31.40% 6.46% －586.07 Net assets per share 1.81 3.60 －49.72 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 that year and those of 2005 upon the total share capital of 2,195,695,800 shares at the end of the year. 3.3 Differences in domestic and overseas accounting standards √Applicable □Inapplicable Unit: 000RMB CAS IAS Net profit -1,587,087 -1,245,993 Net profit As reported under Accounting System for Enterprise Business -1,587,087 Adjustment based on IFRS and other: Recognition and amortisation of positive goodwill 68,412 Recognition and amortisation of negative goodwill －14,485 Government grant 4,105 Capitalised general borrowing costs, net of related depreciation 33,185 Explanation on the Capitalised development costs, net of related depreciation 27,977 differences Gain on disposal of subsidiary 141,631 Appropriation of staff bonus and welfare fund -916 Amortisation of loans arrangement fee -3,085 Dilution gain on interest in associate 80,397 Equity accounting for interest in associates with the issuance of convertible debentures - Others 3,873 Balance after adjustment under IFRS -1,245,993 §4. Change in Share Capital and Particulars about Shareholders 4.1 Statement on change in shares Unit: share Increase / decrease during this change Before the change After this change (+/-) Shares transferred Amount Proportion Others Subtotal Amount Proportion with public reserves I. Shares with 596,954,640 40.78 298,541,720 -77,394,612 221,147,108 818,101,748 37.26% restrictions on sale 1. Shares 0 0.00% 0 0 0 0 0.00% 2 held by the State 2. Shares held by State-owned 590,452,200 40.34% 295,226,100 -76,784,000 218,442,100 808,894,300 36.84% legal persons 3. Other domestic 6,502,440 0.44% 3,251,220 -795,812 2,455,408 8,957,848 0.41% shares Including: Shares held by domestic 6,435,000 0.44% 3,217,500 -838,300 2,379,200 8,814,200 0.40% legal persons Shares held by domestic 67,440 0.00% 33,720 42,488 76,208 143,648 0.01% natural persons 4. Foreign 0 0.00% 64,400 185,200 249,600 249,600 0.01% shares Including: Shares held by overseas 0 0.00% 0 0 0 0 0.00% legal persons Shares held by overseas 0 0.00% 64,400 185,200 249,600 249,600 0.01% natural persons II. Shares without 866,842,560 59.22% 433,356,880 77,394,612 510,751,492 1,377,594,052 62.74% restrictions on sale 1. RMB ordinary 123,142,560 8.41% 61,571,280 77,579,812 139,151,092 262,293,652 11.95% shares 2. B Share 743,700,000 50.81% 371,785,600 -185,200 371,600,400 1,115,300,400 50.79% 3. Overseas listed 0 0.00% 0 0 0 0 0.00% foreign shares 4. Others 0 0.00% 0 0 0 0 0.00% III. Total share 1,463,797,200 100.00% 731,898,600 0 731,898,600 2,195,695,800 100.00% number Time for listing and trading of shares with restrictions on sale Unit: share Number of Name of newly shareholders Number of Time for increased holding shares shares with No. listing and shares Restrictions with restriction on trading available for restrictions on sale held listing and sale trading Since the day it got the authorization for listing and trading in the A-share market, the BOE legal person shares held by it would not be traded or transferred within Beijing BOE 12 months. After the expiration of Investment & 1 720,197,300 Dec. 1, 2006 36,009,865 the aforesaid commitment, the Development former non-circulating shares sold Co., Ltd by it through trading at the Stock Exchange would not exceed 5 percent of the total shares of BOE within 12 months, and not exceed 10 percent within 24 months. 3 Dec. 1, 2007 36,009,865 Dec. 1, 2008 648,177,570 Since the day it got the Beijing authorization for listing and trading Dongdian in the A-share market, the BOE 2 Industrial 82,290,200 Dec. 1, 2006 82,290,200 legal person shares held by it would Development not be traded or transferred within Company 12 months. Since the day it got the Beijing Yixin authorization for listing and trading Micro Display in the A-share market, the BOE 3 Technology 8,814,200 Dec. 1, 2006 8,814,200 legal person shares held by it would Development not be traded or transferred within Center 12 months. Since the day it got the authorization for listing and trading Beijing in the A-share market, the BOE 4 Kinescope 6,406,800 Dec. 1, 2006 6,406,800 legal person shares held by it would General Factory not be traded or transferred within 12 months. 4.2 Statement on the shares held by the top ten shareholders and those held by the top ten shareholders holding shares without restrictions on sale Unit: share Total number of shareholders 71,341 Shares held by the top ten shareholders Number of Number of shares Nature of Proportion of Total number shares Name of shareholder with restrictions shareholder shares held of shares held pledged or on sale held frozen BEIJING BOE State-owned INVESTMENT & legal person 32.80% 720,197,300 720,197,300 0 DEVELOPMENT CO., LTD shareholder FIELDS PACIFIC Foreign 6.15% 135,000,000 0 0 LIMITED shareholder BEIJING DONGDIAN State-owned INDUSTRIAL legal person 3.75% 82,290,200 82,290,200 0 DEVELOPMETN shareholder COMPANY EMERGING MARKETS Foreign 1.53% 33,554,952 0 0 GROWTH FUND INC shareholder SHANGHAI HONG KONG Foreign 1.52% 33,421,443 0 0 WANGUO SECURITIES shareholder BOCI SECURITIES Foreign 1.17% 25,764,914 0 0 LIMITED shareholder TOP RESPECT GROUP Foreign 0.92% 20,250,000 0 0 LIMITED shareholder BONY-DREYFUS Foreign PIFI-DREYFUS PREMIER 0.80% 17,551,667 0 0 shareholder GREATER CHINA GUOTAI JUNAN Foreign SECURITIES HONG 0.73% 16,004,534 0 0 shareholder KONG LIMITED CAPITAL INTERNATIONAL Foreign 0.71% 15,629,925 0 0 EMERGING MARKETS shareholder FUND Shares held by the top ten shareholders of circulating shares Number of circulating shares Name of shareholder Type of shares held FIELDS PACIFIC LIMITED 135,000,000 B Share EMERGING MARKETS GROWTH FUND INC 33,554,952 B Share SHANGHAI HONG KONG WANGUO 33,421,443 B Share SECURITIES BOCI SECURITIES LIMITED 25,764,914 B Share TOP RESPECT GROUP LIMITED 20,250,000 B Share BONY-DREYFUS PIFI-DREYFUS PREMIER 17,551,667 B Share GREATER CHINA 4 GUOTAI JUNAN SECURITIES HONG KONG 16,004,534 B Share LIMITED CAPITAL INTERNATIONAL EMERGING 15,629,925 B Share MARKETS FUND BARINGS (IRELAND) SA THE ATLANTIS 10,999,919 B Share CHINA FUND PLC CITIC CAPITAL SECURITIES LIMITED 10,394,249 B Share It is unknown to the Company whether or not there were related Explanation on the relations among the aforesaid relations or concerted action among the top ten shareholders of shareholders or concerted actions circulating shares. 4.3 Information about the controlling shareholder and the actual controller 4.3.1 Particulars about change of the controlling shareholders and the actual controller □Applicable √Inapplicable 4.3.2 Details about the controlling shareholder and the actual controller (1) About the controlling shareholders Beijing BOE Investment & Development Co., Ltd. holds 32.80% of the Company’s total shares, therefore is the virtual controlling shareholder of the Company, whose main information is as follows: Name: Beijing BOE Investment & Development Co., Ltd. Legal Representative: Wang Dongsheng Date of Foundation: Apr. 21, 2005 Address: No.10 Jiuxianqiao Road, Chaoyang District, Beijing Registered Capital: RMB 680.982 million Type of the company: Sino-foreign Equity Joint Ventures Enterprises (proportion of foreign-currency is lower than 25%) Business Scope: R&D and production of electronic products, electronic raw materials and components; the relevant technical development, technical consultation, technical service and transfer; sales of self-produced products. (Other than projects with limit and special provision invested by foreign investors) (2) The actual controller Beijing Electronics Holding Co., Ltd. held 56.25% equity of Beijing BOE Investment & Development Co., Ltd., who is was the actual controller of the Company. Beijing Electronics Holding Co., Ltd. belonged to state-owned holding company directly under Beijing Municipality as well as a Beijing municipal state-owned assets authorized operation unit. Beijing Dongdian Industrial Development Company (holding 3.75% of the Company’s shares) and Beijing Kinescope Factory (holding 0.29% of the Company’s shares), Shareholders of the Company, both were wholly-owned subsidiaries of Beijing Electronics Holding Co., Ltd., and belongs to associated enterprise with Beijing BOE Investment & Development Co., Ltd.. The main information of Beijing Electronics Holding Co., Ltd. was as follows: Name of the enterprise: Beijing Electronics Holding Co., Ltd. Legal Representative: Piao Shicheng Date of Foundation: April 8, 1997 Location: No.12 Jiuxianqiao Road, Chaoyang District, Beijing Registered Capital: RMB 1307.37 million Type: Limited Company (State-funded Corporations) Business scope: operation and management of state-owned assets within authorization; communications equipments, audio & visual products for broadcasting and television; computer and its supporting equipments and the applied products; electronic raw material and components; home electric appliances and electronic products; electronic surveying instruments and meters; mechanical and electric equipments; electronic transportation products and investment in business fields other than electronics and its management; development of real estate, lease and sales of commodity apartments; property management. 5 4.3.3 The property right and controlling relationship between the Company and the actual controller are as follows: Wang Dongsheng 20%, Jiang Yukun 10%, Liang Xinqing 10%, Zhao Caiyong 6.667%, Shi Dong 6.667%, Chen Yanshun 6.667%, Song Ying 6.667%, Han Guojian 6.667%, Gong Xiaoqing 3.333%, Wang Yanjun 3.333%, Wang Jiaheng State-Owned Assets Supervision & Administration 3.333%, Liu Xiaodong 3.333%, Ren Jianchang 1.667%, Sun Jiping 1.667%, Commission of Beijing People’s Government Zhang Peng 1.667%, Wang Aizhen 1.667%, Mu Chengyuan 1.667%, Xu Yan 1.667%, Hua Yulun 1.667%, Zhong Huifeng 1.667% 100% Beijing Electronics Holding Co., Ltd. Marubeni Corporation Beijing Intelligent Kechuang Technology Development Co., Ltd 56.25% 10% 33.75% Beijing BOE Investment & Development Co., Ltd. 32.80% BOE Technology Group Co., Ltd. Note: The Company regards Beijing Intelligent Kechuang Technology Development Co., Ltd. as a platform to implement equity encouragement for wholly core engineers and management, the aforesaid 20 subscribers are nominal shareholders, the equity of Beijing Intelligent Kechuang Technology Development Co., Ltd. was held in common by wholly core engineers and management. §5. Directors, Supervisors and Senior Executives 5.1 Changes of shares held by directors, supervisors and senior executives and their remunerations Number Number Drawing Beginning of shares of remuneration and held at shares from ending Reasons for Name Title Gender Age the held at shareholding day of the change beginning the end units or other office of the of the related units term year year or not Chairman of the Board, Capitalization Wang Chairman of Jun. 3, of public Male 48 2004 till 11,700 24,921 reserves, Dongsheng Executive now Split-share Reform Committee, CEO Capitalization Vice Jun. 5, of public Jiang Yukun Male 52 2004 till 7,020 14,953 Yes reserves, Chairman of now Split-share 6 Reform the Board Capitalization Jun. 5, of public Zhao Caiyong Director Male 58 2004 till 11,700 24,951 reserves, Yes now Split-share Reform Capitalization Sep. 5, of public Moriko Director Male 58 2005 till 0 0 reserves, Yes now Split-share Reform Capitalization Executive Jun. 5, of public Liang Xinqing Director, Male 53 2004 till 4,680 9,969 reserves, now Split-share President Reform Buy-in, Executive Jun. 5, capitalization B.D.Choi Male 56 2004 till 0 249,600 of public Director, COO now reserves Executive Director, Executive Jun. 5, Cheng Yanshun Male 40 2004 till 0 0 Vice-president, now Secretary of the Board Independent Jun. 5, Tai Zhonghe Male 55 2004 till 0 0 Director now Independent Jun. 5, Xie Zhihua Male 46 2004 till 0 0 Director now Independent Jun. 5, Zhang Baizhe Male 62 2004 till 0 0 Director now Independent Jun. 5, Li Zhaojie Male 50 2004 till 0 0 Director now Capitalization Convener of Jun. 5, of public Xia Zhenzhi Supervisory Male 43 2004 till 750 1,598 reserves, Yes now Split-share Committee Reform Capitalization Jun. 5, of public Mu Chengyuan Supervisor Male 38 2004 till 1,170 2,492 reserves, Yes now Split-share Reform Employee Aug. 5, Yang Anle Male 35 2005 till 0 0 Supervisor now Capitalization Employee Jun. 5, of public Xu Yan Female 54 2004 till 7,020 14,953 reserves, Supervisor now Split-share Reform Capitalization Jun. 5, of public Wang Yanjun CFO Male 36 2004 till 4,680 9,968 reserves, now Split-share Reform 7 Capitalization Jun. 5, of public Song Ying Vice president Female 48 2004 till 11,700 24,921 reserves, now Split-share Reform Jun. 5, Ren Jianchang Vice president Male 59 2004 till 0 0 now Capitalization Jun. 5, of public Han Guojian Vice president Male 52 2004 till 4,680 9,968 reserves, now Split-share Reform Jun. 5, Liu Xiaodong Vice president Male 41 2004 till 0 0 now Jun. 5, Wang Jiaheng Vice president Male 37 2004 till 0 0 now Capitalization Vice-president, Sep. 5, of public Cao Hong Investment Male 46 2005 till 2,340 4,984 reserves, now Split-share Manager Reform Sep. 5, Feng Weidong Vice president Male 38 2004 till 0 0 now Auditor Sep. 5, Su Zhiwen Male 37 2004 till 0 0 General now Technology Nov. 8, Lin Rongzhen Male 43 2005 till 0 0 Manager now Total - - - - 67,440 393,248 - - §6 Report of the Board of Directors 6.1 Discussion and analyses of the management team In the report period, the Company had spared no efforts to promote the realization of mass production of the Beijing TFT-LCD 5G production line as planned and increase the output quantity of TFT-LCD products. The sales revenue totaled RMB 13,449,713,000, up by 8.10% year-on-year. However, due to the price downslides in TFT-LCD market, small production capacity, low localized raw material supplying ratio, and increases in R&D expenses and financial expenses, the profitability of the main operations of the Company has decreased by large margins compared with the same period of the last year, and the losses totaled RMB1,245,993,000. The Company plans to invest USD 90 million in the technological transformation work for the Beijing TFT-LCD 5G production line in 2006, expand the production scale of the Beijing TFT-LCD 5G production line from 60,000 pieces of substrate per month to 85,000 pieces per month, improve production capacity and reduce the depreciation level of each unit of product; actively promote the work on the localized supplying of the upper-stream raw materials, gradually replace the raw materials imported and cut purchase costs; speed up the adjusting of product structure, expand the output of the products of large market demands, increase the proportion of the products with added value of the AFFS technology and improve profitability. 6.2 Main operations classified according to industry and products 8 Breakdown of main operations classified according to products Unit: RMB’000 Increase or decrease Increase or decrease of Increase or decrease of Gross profit Product Sales revenue Sales cost of sales revenue sales cost year-on-year gross profit ratio ratio year-on-year (%) (%) year-on-year (%) Display terminal products 4,612,913 4,382,124 5.00% 5.08 5.22 -1.96 Display devices – Thin Film Transistor Liquid Crystal 7,950,352 8,431,119 -6.05% 45.35 70.40 -163.48 Small-size display devices 682,158 565,189 17.15% -73.16 -73.92 16.35 Other operations 1,083,246 814,380 24.82% 30.00 41.17 -19.15 Internal offset －878,956 -809,207 - - - - Total 13,449,713 13,383,605 0.49 8.10 19.95 -95.25 6.3 Main operations classified according to regions Unit: RMB’000 Income from main Increase or decrease of income from main operations Region operations compared with the last year (%) China 6,514,081 6.21% Other Asian countries 5,045,182 106.52% Europe 414,566 -14.39% America 1,309,074 -54.87% Other regions 166,810 -65.26% Total 13,449,713 8.10% 6.4 Use of raised proceeds □Applicable √Inapplicable Projects changed □Applicable √Inapplicable 6.5 Projects invested with non-raised proceeds √Applicable □Inapplicable Unit: RMB’0000 Investment Progress of the Profit-making status of the Project amount project project TFT-LCD 5G Production Line 274,375 831,672 Finished One Drop Filling Equipment (ODF) 18,745 47,447 Finished Vacuum Fluorescent Display (VFD) Production Finished Line Phase 5 686 12,370 Investment in Beijing Fangyi Integrated Circuit Finished Designing Co., Ltd 4,110 4,110 Investment in Beijing BOE Chatani Electronics Finished Co., Ltd 2803 2803 Investment increase in BOE Hydis Technology Finished Co., Ltd 1,035 125,227 Investment increase in Suzhou BOE Chatani Finished Electronics Co., Ltd 2,792 5,309 Total 304,546 1,028,938 6.6 Explanation given by the Board on the “qualified opinions” of the Certified Public Accountants □Applicable √Inapplicable 6.7 Proposal on profit distribution or capitalization of public reserves made by the Board □Applicable √Inapplicable There was profit made by the Company in the report period, but no cash profit distribution preplan had been proposed: □Applicable √Inapplicable 9 §7 Significant Events 7.1 Purchase of assets □Applicable √Inapplicable 7.2 Sales of assets □Applicable √Inapplicable 7.3 Important guarantees √Applicable □Inapplicable (1) External guarantees The Company provided a 5% guarantee for the loan obtained by Beijing Municipal Administration & Communications Card Co., Ltd from the Beijing Branch of the Bank of Communications, the ceiling of the loan was RMB 120 million and the loan required guarantee. The ceiling of the guarantee to be provided by the Company was RMB 6 million. By Dec. 31, 2005, the Company had actually provided RMB 4.5 million guarantees for the loan totaling RMB 90 million got from the Beijing Branch of the Bank of Communications. The loan term was from Jan. 29, 2006 to Apr. 22, 2006. This guarantee issue had exerted no significant influence on the Company. The Company’s subordinate subsidiary Zhejiang BOE had provided guarantee for Zhejiang Huanyu Construction Group Co., Ltd for its loan with a ceiling of RMB 50,000,000. By Dec. 31, 2005, the actual balance of this guarantee loan totaled RMB 42,100,000. (2) Internal guarantees In the report period, the Company had provided guarantees for the subordinate subsidiary Zhejiang BOE’s loan of RMB 187,510,000, Vacuum Electric Equipment’s loan of RMB 4,000,000, BOE Hyundai’s loan of RMB 21,062,768 and BOEOT’s loan of RMB 6,037,964,000 (BOEOT had provided its fixed assets with total net value of RMB 7,473,300,000 as mortgage.). The guarantees totaled RMB 716,896,507. In the report period, Zhejiang BOE, the Company’s subordinate subsidiary, had provided guarantees for its subordinate subsidiary Shaoxing BOE for a loan of RMB 9,000,000; the Company’s subsidiary Suzhou Chatani for its subordinate subsidiary Beijing Chatani for a loan of RMB 41,700,000. 7.4 Significant related transactions 7.4.1 Related transactions concerning routine 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 0.00 0.00% 129,046.07 6.70% TPV Technology Limited 246,944.53 18.34% 39,863.56 2.07% Hyundai LCD Inc. 13,002.22 0.97% 19,960.12 1.04% Beijing Matsushita Color CRT 7,752.45 0.58% 0.52 0.00% Co., Ltd Total 267,699.20 188,870.27 9.80% An amount of RMB 460,000 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. 7.4.2 Related credits and liabilities current √Applicable □Inapplicable Unit: RMB’0000 Capital provided to related Capital provided to the Listed Company by Related parties parties related parties Amount Balance Amount Balance Marubeni Corporation, Japan 0.00 0.00 128,634.78 6,307.76 10 Beijing Matsushita Color CRT 6,561.62 1,221.72 0.00 0.00 Co., Ltd TPV Technology Limited 248,244.30 28,252.52 0.00 0.00 Hyundai LCD Inc. 13,005.69 4,258.61 19,960.12 4,182.27 Beijing Xingcheng Property Co., 4,446.04 7,337.24 0.00 0.00 Ltd Total 272,257.65 41,070.09 148,594.90 10,490.03 In the report period, the Listed Company had provided RMB 5,000,000 to the controlling shareholder and its subsidiaries, and the balance was RMB 2,250,000. Capital occupation and plan for clearing: □Applicable √Inapplicable 7.5 Financing entrustment □Applicable √Inapplicable 7.6 Implementation of commitments 7.6.1 Commitments on Split-share Reform 1. Content of the commitments All the shareholders holding non-circulating shares of the Company had promised not to trade or transfer the Company’s shares held by them before Nov. 29, 2006. In the meantime, the controlling shareholder of the Company BOE Investment had made further commitments that after the expiration of the aforesaid commitment, the total former non-circulating shares sold by it through listing at the Stock Exchange would not exceed 5 percent of the Company’s total share number within 12 months, and not exceed 10 percent within 24 months. 2. Implementation of the commitments The implementation of the Split-share Reform plan of the Company was finished on Nov. 30, 2005. All shareholders of non-circulating shares have fulfilled their commitments made in the Split-share Reform plan. 3. Breach of commitments □Applicable √Inapplicable 7.6.2 Other commitments √Applicable □Inapplicable For details of the commitments made by the Company, please read the relevant content on the commitments in the Notes to the Accounting Statements. 7.7 Significant lawsuits and arbitrations √Applicable □Inapplicable 1. On Jan. 14, 2004, the Company’s subordinate subsidiary Beijing BOE Land Co., Ltd (hereinafter referred to as “BOE Land”) and Beijing Zhongye Anshunda Metallurgical Corporation (hereinafter referred to as Zhongye Anshunda) signed a Framework Agreement on Reorganizing the Beijing Zhongjin Shunda Property Co., Ltd (hereinafter referred to as Zhongjin Property). According to the agreement, BOE Land and Zhongye Anshunda would hold 60 percent and 40 percent of Zhongjin Property’s equity after the reorganization respectively. BOE Land had finished the relevant reorganization procedures of capital injection, etc as according to the agreement, but Zhongye Anshunda had failed to finish the capital injection as planned due to the pledge of land. The Company had appealed to the court for the preservation of the investment fund in this project, and the Final Judgment (2005) GMZZ No. 1020 issued by Beijing Municipal High People’s Court ruled that this Framework Agreement and relevant supplementary agreements be terminated, and that Zhongye Anshunda return the investment fund injected by the Company in this project. Right now, this judgment has not been implemented. 2. In October 2005, the Company’s subordinate subsidiary, the South Korean BOE Hydis received notices from Sharp Company, LG Philips Company, Honeywell International Incorporation and Honeywell Intellectual Properties Incorporation, 11 proclaiming that some of their patents had been infringed and that royalties had to be paid. The Board of Directors reckoned that this event was still under inspection and it was difficult to estimate the potential lawsuit result, therefore no reserves had been withdrawn in the consolidated statements for the possible liabilities that might be caused by this issue. §8 Report of the Supervisory Committee √Applicable □Inapplicable I. Meetings held and content of the resolutions The Supervisory Committee had fulfilled their duties strictly in accordance with relevant regulations in the Company Law and Articles of Association, etc. It had held 3 meetings in the report period and attended the Board meetings, with details as follows: 1. On Apr. 25, 2005, the 4th meeting of the 4th Supervisory Committee was held, at which some documents had been examined and approved, including: 1) Work Report 2004 of the Supervisory Committee; 2) Text and Summary of the Annual Report 2004; 3) 1st Quarterly Report 2005; 4) Report on the Correction of Accounting Errors for the Year 2003; 5) Explanation on the Use of the Proceeds Raised Last Time; 6) Proposal on the Routine Related Transactions of 2005. 2. On Aug. 24, 2005, the 5th meeting of the 4th Supervisory Committee was held, at which the Semi-Annual Report 2005 had been examined and approved. 3. On Oct. 27, 2005, the 6th meeting of the 4th Supervisory Committee was held, at which the 3rd Quarterly Report 2005 had been examined and approved. II. Independent opinions 1. Operation The Supervisory Committee had fulfilled its duties strictly in accordance with the Company Law, Articles of Association and the Rules of Procedure of the Supervisory Committee. In the report period, members of the Supervisory Committee had attended the Board meetings and had conducted supervision over the convening procedures and the decision-making procedures of the Shareholders’ General Meeting and the Board of Directors, the implementation of the resolutions of the Shareholders’ General Meeting by the Board, as well as the operation of the decisions of the Company. The Supervisory Committee believed that the various decision-making procedures of the Company had been legal, and that, the directors and senior executives had no behavior during their daily work that had gone against the Articles of Association or done harm to the interests of the shareholders or the Company. 2. Finance inspection The Supervisory Committee believed that the auditing opinions expressed by the KPMG Certified Public Accountants and the KPMG Huazhen Certified Public Accountants had been objective, and that the Financial Report had truly reflected the financial status and business performance of the Company. 3. Transactions of assets 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. 4. Related transactions The related transactions of the Company had all been conducted according to the market rules and the principle of being fair and square. There were 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 12 engaged financial consultants for professional advices. Independent directors had expressed their independent opinions as well. §9. Financial Report 9.1 Auditing opinions Auditing opinions: standard unqualified opinions 9.2 Financial statements (attached at the back) 9.3 Detailed explanation on the changes in the accounting policies, accounting estimation or accounting methods compared with the latest Annual Report √Applicable □Inapplicable The implementation of the newly revised International Financial Report Standards started on Jan. 1, 2005, and the Company has amended relevant accounting policies according to it. 9.4 Content of significant accounting errors, amounts changed, reasons and influences □Applicable √Inapplicable 9.5 Detailed explanation on the changes in the consolidation scope compared with the latest Annual Report √Applicable □Inapplicable (1) According to the Agreement on Transferring Shares of Beijing Top Victory Electronics Co., Ltd signed by the Company and TPV Technology Limited, the Company transferred its 45.21 percent equity in Beijing Top Victory Electronics Co., Ltd to TPV Technology Limited on Nov. 30, 2005. Therefore, only the business achievement before Nov. 30, 2005 of Beijing Top Victory Electronics Co., Ltd had been included in the consolidation scope in the report period. (2) Beijing BOE Chatani Electronics Co., Ltd and Beijing Fangyi Integrated Circuit Designing Co., Ltd are companies newly established this year, and they had been included in the consolidation scope of the accounting statements. (3) As approved by relevant institutions, the commercial registration of Beijing BOE TAIWA Optoelectronics Co., Ltd had been officially cancelled in 2005. Therefore, it had not been included in the consolidation scope. BOE Technology Group Co., Ltd Board of Directors Apr. 25, 2006 13 Consolidated income statement For the year ended 31 December 2005 (Expressed in Renminbi) 2005 2004 Continuing Discontinued Continuing Discontinued operations operation Total operations operations Total (restated) Note RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 Turnover 5 8,836,800 4,612,913 13,449,713 8,051,994 4,389,714 12,441,708 Cost of sales (9,000,718) (4,382,887) (13,383,605) (6,993,079) (4,164,761) (11,157,840) _________ _________ ________ _________ __________ _________ Gross (loss)/profit (163,918) 230,026 66,108 224,953 1,283,868 1,058,915 Other operating income/(expenses) 7 94,053 6,331 100,384 (15,524) 4,654 (10,870) Distribution expenses (267,824) (54,924) (322,748) (258,093) (57,356) (315,449) Administrative expenses (524,308) (29,351) (553,659) (429,110) (43,559) (472,669) Research and development expenses (346,836) (18,981) (365,817) (304,215) (15,012) (319,227) _________ _________ ________ _________ _______ _________ (Loss)/profit from operations (1,208,833) 133,101 (1,075,732) 51,973 113,680 165,653 Net financing costs 8(a) (463,357) (3,991) (467,348) (38,252) (8,112) (46,364) Share of profits of associates 17 296,470 - 296,470 316,046 - 316,046 _________ _________ ________ _________ _______ _________ (Loss)/profit before tax 8 (1,375,720) 129,110 (1,246,610) 329,767 105,568 435,335 Income tax expense 9(a) (29,764) (11,965) (41,729) (4,652) (8,460) (13,112) _________ _________ _______ _________ _______ _________ (Loss)/profit after tax but before gain (1,405,484) 117,145 (1,288,339) 325,115 97,108 422,223 on sale of discontinued operation Gain on sale of discontinued operation net of tax 133,753 - 133,753 - - - _________ _________ _______ _________ _______ _________ (Loss)/profit for the year (1,271,731) 117,145 (1,154,586) 325,115 97,108 422,223 ======== ========= ======== ======== ======== ======== Attributable to: Equity shareholders of the (1,298,954) 52,961 (1,245,993) 296,359 43,903 340,262 Company Minority interests 27,223 64,184 91,407 28,756 53,205 81,961 _________ _________ _________ _________ _________ _________ (1,271,731) 117,145 (1,154,586) 325,115 97,108 422,223 ======== ========= ======== ======== ======== ======== Basic (Loss)/earnings per share 10 (0.59) 0.02 (0.57) 0.16 0.14 0.02 ======== ========= ======== ======== ======== ======== 14 Consolidated balance sheet At 31 December 2005 (Expressed in Renminbi) Note 2005 2004 (restated) RMB’000 RMB’000 Non-current assets Property, plant and equipment 12 11,330,272 4,970,500 Construction in progress 13 285,244 5,065,349 Intangible assets 14 449,850 300,789 Lease prepayments 15 103,332 133,355 Investment properties 16 113,121 118,547 Interest in associates 17 2,820,463 2,209,700 Other investments 18 10,661 8,190 Deferred tax assets 19 1,940 13,220 Long term deposits 20 23,856 22,153 Other non-current assets 46,651 33,492 15,185,390 12,875,295 Current assets Inventories 21 1,919,901 1,127,066 Trade receivables 22 1,876,294 2,042,427 Held-to-maturity securities 18 - 44,031 Prepayments, deposits and other receivables 462,501 300,130 Deposits with banks 23 916,628 298,318 Cash and cash equivalents 23 1,164,052 1,535,970 6,339,376 5,347,942 Current liabilities Trade payables 24 1,769,720 1,975,512 Other payables 972,555 1,292,295 Current taxation 9(b) 23,211 7,172 Provisions 25 50,771 43,994 Short term bank and other loans 26 3,762,956 5,436,259 6,579,213 8,755,232 Net current liabilities (239,837) (3,407,290) Total assets less current liabilities 14,945,553 9,468,005 15 Consolidated balance sheet (continued) At 31 December 2005 (Expressed in Renminbi) Note 2005 2004 (restated) RMB’000 RMB’000 Non-current liabilities Bank and other loans 26 9,569,710 2,493,721 Long-term notes payable 27 299,939 299,939 Employee benefits 28 17,280 19,685 Deferred tax liabilities 19 588 15 Other non-current liabilities 29 856,539 858,810 10,744,056 3,672,170 Net assets 4,201,497 5,795,835 Capital and reserves Share capital 30 2,195,696 1,463,797 Share premium 1,552,913 2,284,812 Reserves 31 680,190 708,167 (Accumulated losses)/retained profits (461,183) 814,086 Total equity attributable to equity shareholders of the Company 3,967,616 5,270,862 Minority interests 233,881 524,973 Total equity 4,201,497 5,795,835 Approved and authorised for issue by the board of directors on [25] April 2006. ) ) ) Directors ) ) 16 Consolidated statement of changes in equity For the year ended 31 December 2005 (Expressed in Renminbi) Equity attributable to equity shareholders of the company__ (Accumulated Share Share losses)/ Minority capital premium Reserves retained profits interests Total equity Note RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 At 1 January 2004 - As previously reported 659,465 1,040,984 406,358 447,055 525,602 3,079,464 - Prior year adjustments arising from changes in accounting 3 - - 11,753 118,164 - 129,917 policies _________ _________ _________ _________ _________ _________ As restated 659,465 1,040,984 418,111 565,219 525,602 3,209,381 ------------- ------------- ------------- ------------- ------------- ------------- Issue of new shares 30 316,400 1,731,760 - - - 2,048,160 ------------- ------------- ------------- ------------- ------------- ------------- Capitalisation of share premium 30 487,932 (487,932) - - - - ------------- ------------- ------------- ------------- ------------- ------------- Net profit / (loss) for the year - As previously - - - 353,701 - 353,701 reported - Prior year adjustments arising from changes in accounting - - - (13,439) 81,961 68,522 policies _________ _________ _________ _________ _________ _________ As restated - - - 340,262 81,961 422,223 ------------- ------------- ------------- ------------- ------------- ------------- Currency translation 31 differences - - 208,419 - - 208,419 ------------- ------------- ------------- ------------- ------------- ------------- Dividend approved during the year 11 - - - (9,758) - (9,758) ------------- ------------- ------------- ------------- ------------- ------------- Transfer for the year 31 - - 81,637 (81,637) - - _________ _________ _________ _________ _________ _________ Deemed disposal of subsidiary - - - - (82,590) (82,590) ------------- ------------- ------------- ------------- ------------- ------------- At 31 December 2004 1,463,797 2,284,812 708,167 814,086 524,973 5,795,835 ========= ======== ========= ======= ======== ======== = 17 Consolidated statement of changes in equity (continued) For the year ended 31 December 2005 (Expressed in Renminbi) Equity attributable to equity shareholders of the Company (Accumulated Share Share losses)/retained Minority capital premium Reserves profits interests Total equity Note RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 At 1 January 2005 - As previously reported 1,463,797 2,284,812 696,414 709,361 - 5,154,384 - Prior year adjustments from changes in accounting - - 11,753 104,725 524,973 641,451 policies 3 _________ _________ _________ _________ _________ _________ As restated 1,463,797 2,284,812 708,167 814,086 524,973 5,795,835 ------------- ------------- ------------- ------------- ------------- ------------- Capitalisation of share premium 30 731,899 (731,899) - - - - ------------- ------------- ------------- ------------- ------------- ------------- Net loss for the year - - - (1,154,586) - (1,154,586) ------------- ------------- ------------- ------------- ------------- ------------- Profits attributable to minority interests - - - (91,407) 91,407 - ------------- ------------- ------------- ------------- ------------- ------------- Currency translation differences 31 - - (27,977) - - (27,977) ------------- ------------- ------------- ------------- ------------- ------------- Dividend approved during the year 11 - - - (29,276) - (29,276) ------------- ------------- ------------- ------------- ------------- ------------- Capital contributions from minority interests - - - - 18,529 18,529 ------------- ------------- ------------- ------------- ------------- ------------- Distributions to minority interests - - - - (5,550) (5,550) ------------- ------------- ------------- ------------- ------------- ------------- Disposal of subsidiary 6 - - - - (395,478) (395,478) 18 ------------- ------------- ------------- ------------- ------------- ------------- At 31 December 2005 2,195,696 1,552,913 680,190 (461,183) 233,881 4,201,497 19 Consolidated cash flow statement For the year ended 31 December 2005 (Expressed in Renminbi) Year ended 31 December 2005 2004 Note RMB’000 RMB’000 Cash flows from operating activities 435,335 (Loss)/profit before tax (1,246,610) Adjustments for: 720,442 - Depreciation 1,229,595 - Amortisation of intangible assets 32,660 29,727 - Amortisation of lease prepayments 2,934 2,609 - (Reversed)/ impairment loss on property, plant and equipment (60) 4,738 - Impairment loss on construction in progress 19,932 340 - Impairment loss on intangible assets 407 230 - Impairment loss on held-to-maturity securities 17,961 - - Impairment loss on unquoted equity securities - 15,688 - Provision for bad and doubtful debt 5,623 11,042 - Provision for obsolete inventories 85,411 75,961 - Share of profits of associates (296,470) (316,046) - Interest income (51,691) (66,207) - Other finance costs 519,039 112,571 - (Gain)/ loss on disposal of property, plant and equipment (5,697) 500 - Gain on disposal of unquoted securities (3,520) (31,421) - Amortisation of government grant (37,583) (21,279) Operating profit before change in working capital 271,931 974,230 Increase in inventories (1,037,363) (542,657) Increase in trade and other receivables (1,181,452) (316,479) Decrease in employee benefit obligations 2,405 5,102 Increase in trade and other payables 982,482 275,318 Cash generated from the operating activities (961,997) 395,514 Income taxes paid (21,562) (24,007) 371,507 Net cash from operating activities (983,559) Cash flows from investing activities Proceeds from sale of property, plant and equipment 36,112 49,509 Proceeds from sales of intangible assets 1,378 - 20 Proceeds from sales of investments 5,520 - Interest income received 51,691 53,358 Acquisitions of property, plant and equipment (3,934,768) (5,422,599) Acquisitions of intangible assets (32,082) (371,341) Acquisitions of available-for-sale investments (8,576) - Acquisitions of associate - (400) Acquisitions of convertible debenture - (2,235) Refund of investment costs 26,070 32,978 Payments for lease prepayments - - Business combinations, net of cash acquired - (4,200) Disposal of subsidiaries, net of cash disposed 6 (53,609) 58,197 Disposal of an associate, net of cash disposed - 66,757 Increase in long-term receivables (9,540) (105,281) Placement of pledged deposits (618,310) 31,957 Placement of long-term fixed deposits - (220,749) Dividend received 115,285 48,577 Net cash used in investing activities (4,420,829) (5,785,472) Consolidated cash flow statement (continued) For the year ended 31 December 2005 (Expressed in Renminbi) Years ended 31 December 2005 2004 Rmb’000 Rmb’000 Cash flows from financing activities Proceeds from government loan - 450,000 Proceeds from bank and other loans 12,421,541 10,399,068 Proceeds from issue of convertible debentures - 71,448 Proceeds from issue of corporate debentures 1,583,475 - Proceeds from capital contribution 18,529 2,076,121 Repayments of bank and other loans (8,288,467) (7,902,354) Dividend paid (35,675) (28,032) Interest paid (552,157) (287,847) Payment for other financing activities (59,474) (62,018) Net cash from financing activities 5,087,772 4,716,386 Effect of exchange rate changes (55,302) 59,624 Net decrease in cash and cash equivalents (371,918) (637,955) Cash and cash equivalents at 1 January 1,535,970 2,173,925 Cash and cash equivalents at 31 December 1,164,052 1,535,970 21