京东方Ｂ(200725)2007年年度报告摘要（英文版）

Summary of Annual Report 2007 of BOE Technology Group Co., Ltd. BOE TECHNOLOGY GROUP CO., LTD. SUMMARY OF ANNUAL REPORT 2007 §1. Important Notes 1.1 The Board of Directors, Supervisory Committee, as well as directors, supervisors and Senior Executives of BOE TECHNOLOGY GROUP CO., LTD. (hereinafter referred to as “the Company”) hereby confirm that there exists no omission, misstatement, or misleading information in this report, and accept, individually and collectively, the responsibility for the correctness, accuracy and completeness of the contents of this report. The summary of annual report 2007 is abstracted from the full text of such report; the investors are suggested to read the full text of such report to understand more details. This report was prepared in both Chinese and English. Should there be any difference in interpretation between the Chinese version and English version, the Chinese version shall prevail. 1.2 None of the directors, supervisors, senior management demonstrated uncertainty or disagreement about the truthfulness, accuracy, and completeness of this annual report. 1.3 All directors of the Company attended the Board meeting. 1.4 KPMG Huazhen Certified Public Accountants produced the standard unqualified Auditors’ Report 2007 for the Company. 1.5 Mr. Wang Dongsheng, Chairman of the Board, Mr. Chen Yanshun, President of the Company, Ms. Sun Yun, Chief Financial Officer of the Company, as well as Ms. Yang Xiaoping who is in charge of the Planning & Finance Department, hereby confirm that the Financial Statements in the Annual Report is true and complete. §2. Company Profile 2.1 Basic information Stock abbreviation *ST BOE A, *ST BOE B Stock code 000725, 200725 Stock Exchange listed on Shenzhen Stock Exchange Registered address No. 10, Jiu Xian Qiao Road, Chaoyang District, Beijing Postal code of registered address 100016 Office address No. 10, Jiu Xian Qiao Road, Chaoyang District, Beijing Postal code of office address 100016 Internet website of the Company http://www.boe.com.cn E-mail of the Company Web.master@boe.com.cn 1 Summary of Annual Report 2007 of BOE Technology Group Co., Ltd. 2.2 Contact person and contact method Secretary of the Board Securities Affairs Representative Name Feng Liqiong Liu Hongfeng Contact address No. 10, Jiu Xian Qiao Road, Chaoyang No. 10, Jiu Xian Qiao Road, Chaoyang District, Beijing District, Beijing Telephone 010-64318888 Ext. 010-64318888 Ext. Fax 010-64366264 010-64366264 E-mail fengliqiong@boe.com.cn liuhongfeng@boe.com.cn §3. Summary of Accounting Data and Financial Indexes 3.1 Major accounting data Unit: RMB Yuan Increase/ 2007 2006 decrease than 2005 last year（％） Before adjustment After adjustment After Before adjustment After adjustment adjustment Operating income 11,170,448,855.00 8,881,914,054.00 8,839,664,291.00 26.37% 13,566,436,152.00 13,526,465,796.00 Total profit 840,799,064.00 -2,948,023,370.00 -1,774,051,251.00 147.39% -1,454,361,755.00 -1,113,777,333.00 Net profit attributable to 690,945,815.00 -1,721,944,721.00 -1,770,802,475.00 139.02% -1,587,087,256.00 -1,245,993,960.00 shareholders of listed company Net profit after deducting non-recurring gain and loss 656,453,416.00 -1,739,439,862.00 -1,788,310,829.00 136.71% -1,567,334,357.00 -1,371,121,301.00 attributable to shareholders of listed company Net cash flow arising from 2,292,098,399.00 843,112,560.00 836,205,986.00 174.11% -983,558,625.00 -990,439,962.00 operating activities Increase/ At the end of 2007 At the end of 2006 decrease than At the end of 2005 the end of 2 Summary of Annual Report 2007 of BOE Technology Group Co., Ltd. last year（％） Before adjustment After adjustment After Before adjustment After adjustment adjustment Total assets 13,381,274,861.00 16,212,082,151.00 16,554,514,012.00 -19.17% 20,922,521,843.00 21,490,400,732.00 Owners’ equity (shareholders’ 4,570,579,149.00 3,540,702,703.00 3,889,076,397.00 17.52% 3,377,859,054.00 3,968,250,425.00 equity) 3.2 Major financial indexes Unit: RMB Yuan Increase/ 2007 2006 decrease than 2005 last year（％） Before After After Before After adjustment adjustment adjustment adjustment adjustment Basic earnings per share 0.24 -0.73 -0.75 132.00% -0.72 -0.57 Diluted earnings per share 0.24 -0.73 -0.75 132.00% -0.72 -0.57 Basis earnings per share after deducting non-recurring gain 0.23 -0.74 -0.76 130.26% -0.72 -0.62 and loss Fully diluted return on equity 15.12% -48.63% -45.53% 60.65% -46.99% -31.40% Weighted average return on 16.33% -57.75% -51.16% 67.49% -38.30% -26.97% equity Fully diluted return on equity after deducting non-recurring 14.36% -49.13% -45.98% 60.34% -46.40% -34.55% gain and loss Weighted average return on equity after deducting 15.51% -58.37% -51.66% 67.17% -38.79% -29.68% non-recurring gain and loss Net cash flow per share arising 0.80 0.29 0.29 175.86% -0.45 -0.45 from operating activities Increase/ decrease than At the end of 2007 At the end of 2006 At the end of 2005 the end of last year（％） Before After After Before After adjustment adjustment adjustment adjustment adjustment Net assets per share 1.59 1.23 1.35 17.78% 1.54 1.81 attributable to shareholders of 3 Summary of Annual Report 2007 of BOE Technology Group Co., Ltd. listed company Items of non-recurring gains and losses √Applicable □Inapplicable Unit: RMB Yuan Items of non-recurring gains and losses Amount Disposal of long-term equity investment, fixed assets, construction in progress, intangible assets, other long-term -25,331,152.00 assets Non-rationed Government grants 53,270,000.00 Adjustment on staff welfare fee 20,748,620.00 Other non-operating net income/expense 9,254,553.00 Effect on taxation -15,956,225.00 Non-recurring gains and losses which influenced the net -7,493,397.00 profit of minority shareholders Total 34,492,399.00 Items measured by fair value √Applicable □Inapplicable Unit: RMB Yuan Balance at the Balance at the Change in current Influence on profit of Name of items period-begin period-end period current period Financial asses available 0.00 129,109,597.00 129,109,597.00 0.00 for sale Total 0.00 129,109,597.00 129,109,597.00 0.00 3.3 Difference between PRC GAAP and IFRS √Applicable □Inapplicable Unit: RMB Yuan PRC GAAP IFRS Net profit 897,106,952.00 897,106,952.00 Net assets 5,521,339,174.00 5,521,339,174.00 Explanation on the No difference difference 4 Summary of Annual Report 2007 of BOE Technology Group Co., Ltd. §4. Changes in Share Capital and Particulars about Shareholders 4.1 Statement of change in share Unit: share Before the change Change of this period (+,-) After the changed Issuance Capitalization Item Number of Proportion Bonus Number of Proportion of new of public Other Subtotal shares (%) shares shares (%) shares reserve I. Shares with 1,360,452,778 47.38% 0 0 0 -294,331,882 -294,331,882 1,066,120,896 37.13% conditional subscription 1. Shares held by the 548,691,862 19.11% 0 0 0 -257,994,187 -257,994,187 290,697,675 10.12% State 2. Shares held by 811,367,668 28.26% 0 0 0 -36,009,865 -36,009,865 775,357,803 27.00% state-owned legal person 3. Shares held by other 143,648 0.01% 0 0 0 -78,230 -78,230 65,418 0.00% domestic investors Including: Shares held by domestic non-stated 0 0.00% 0 0 0 0 0 0 0.00% legal persons Shares held by domestic 143,648 0.01% 0 0 0 -78,230 -78,230 65,418 0.00% natural persons 4. Shares held by 249,600 0.01% 0 0 0 -249,600 -249,600 0 0.00% foreign investors Including: Shares held 0 0.00% 0 0 0 0 0 0 0.00% by foreign legal persons Shares held by foreign 249,600 0.01% 0 0 0 -249,600 -249,600 0 0.00% natural persons II. Shares without 1,511,115,117 52.62% 0 0 0 294,331,882 294,331,882 1,805,446,999 62.88% conditional subscription 1. RMB ordinary shares 395,814,717 13.78% 0 0 0 294,082,282 294,082,282 689,896,999 24.03% 2. Domestically listed 1,115,300,400 38.84% 0 0 0 249,600 249,600 1,115,550,000 38.85% foreign shares 3. Overseas listed 0 0.00% 0 0 0 0 0 0 0.00% foreign shares 5 Summary of Annual Report 2007 of BOE Technology Group Co., Ltd. 4. Other 0 0.00% 0 0 0 0 0 0 0.00% III. Total Shares 2,871,567,895 100.00% 0 0 0 0 0 2,871,567,895 100.00% Change in shares with conditional subscription Unit: share Number of shares Number of shares Increase of shares Number of shares released from Name of with conditional with conditional with conditional conditional Reason Date of releasing shareholder subscription at the subscription in subscription at the subscription in year-begin 2007 year-end 2007 BEIJING BOE Moratorium due INVESTMENT & 684,187,435 36,009,865 0 648,177,570 to share merger Nov. 30, 2008 DEVELOPMENT reform CO., LTD BEIJING BOE INVESTMENT & Non-public 127,180,233 0 0 127,180,233 Oct. 9, 2009 DEVELOPMENT offering CO., LTD BEIJING ELECTRONICS Non-public 290,697,675 0 0 290,697,675 Oct. 9, 2009 HOLDINGS CO., offering LTD. BEIJING STATE-OWNED ASSETS 145,348,838 145,348,838 0 0－ Oct. 10, 2007 MANAGEMENT CO., LTD. BEIJING INDUSTRIAL DEVELOPMENT 112,645,349 112,645,349 0 0－ Oct. 10, 2007 INVESTMENT MANAGEMENT CO., LTD. Share held by WANG DONG 18,691 0 0 18,691 senior Nov. 25, 2010 SHENG management LIANG XIN 7,477 0 0 7,477 Share held by Nov. 25, 2010 6 Summary of Annual Report 2007 of BOE Technology Group Co., Ltd. QING senior management Share held by HAN GUO JIAN 7,476 0 0 7,476 senior Nov. 25, 2010 management Share held by SONG YING 18,691 0 0 18,691 senior Nov. 25, 2010 management Share held by WANG YAN JUN 7,476 0 0 7,476 senior Nov. 25, 2010 management Share held by SUN YUN 3,738 0 0 3,738 senior Nov. 25, 2010 management Share held by MU CHENG 1,869 0 0 1,869 senior Nov. 25, 2010 YUAN management Total 1,360,124,948 294,004,052 0 1,066,120,896 － － 4.2 Statement of shares held by the top ten shareholders and the top ten shareholders holding shares without conditional subscription Unit: share Total number of shareholders 73,752 Particulars about shares held by the top ten shareholders Number of shares with Nature of Total number of Share pledged or Name of shareholder Proportion (%) conditional subscription shareholders shares held frozen held BEIJING BOE INVESTMENT Stated-owned & DEVELOPMENT CO., 27.27% 783,182,303 775,357,803 0 legal person LTD. BEIJING ELECTRONICS State-owned 10.12% 290,697,675 290,697,675 0 HOLDINGS CO., LTD. shares BEIJING STATE-OWNED State-owned ASSETS MANAGEMENT 3.95% 113,324,751 0 0 shares CO., LTD. BEIJING INDUSTRIAL DEVELOPMENT State-owned 3.92% 112,645,349 0 0 INVESTMENT shares MANAGEMENT CO., LTD. 7 Summary of Annual Report 2007 of BOE Technology Group Co., Ltd. Foreign legal FIELDS PACIFIC LIMITED 3.75% 107,692,821 0 person SBCI FINANCE ASIA LTD Unknown 1.14% 32,649,315 0 A/C SBC HONG KONG BOCI SECURITIES LIMITED Unknown 0.98% 28,108,090 0 HUANG YING BIN Unknown 0.84% 24,005,968 0 Domestic natural LI MING GONG 0.60% 17,170,419 0 person GUOTAI JUNAN SECURITIES HONG KONG Unknown 0.55% 15,706,569 0 LIMITED Particulars about shares held by the top ten shareholders holding shares without conditional subscription Name of shareholders Name of shareholders Name of shareholders BEIJING STATE-OWNED ASSETS 113,324,751 Renminbi ordinary share MANAGEMENT CO., LTD. BEIJING INDUSTRIAL DEVELOPMENT 112,645,349 Renminbi ordinary share INVESTMENT MANAGEMENT CO., LTD. FIELDS PACIFIC LIMITED 107,692,821 Domestically listed foreign shares SBCI FINANCE ASIA LTD A/C SBC HONG Domestically listed foreign shares 32,649,315 KONG BOCI SECURITIES LIMITED 28,108,090 Domestically listed foreign shares HUANG YING BIN 24,005,968 Domestically listed foreign shares LI MING GONG 17,170,419 Domestically listed foreign shares GUOTAI JUNAN SECURITIES HONG KONG Domestically listed foreign shares 15,706,569 LIMITED PERSHING LLC__ 14,109,926 Domestically listed foreign shares SUN HUNG KAI INVESTMENT SERVICES Domestically listed foreign shares 11,944,743 LTD-CUSTOMERS A/C Explanation on associated 1. Beijing Industrial Development Investment Management Co., Ltd. is the wholly-owned subsidiary relationship among the top ten company of Beijing State-Owned Assets Management Co., Ltd. There exists associated relationship. shareholders or 2. The Company is not aware of whether there is any associated relationship or not among top ten action-in-concert shareholders of tradable share. 4.3 Particulars about the controlling shareholders and actual controllers of the Company 4.3.1 Particulars about change in the controlling shareholders and actual controllers of the Company □Applicable √Inapplicable 8 Summary of Annual Report 2007 of BOE Technology Group Co., Ltd. 4.3.2 Introduction to detailed situation for the controlling shareholders and the actual controllers (1) About the controlling shareholders Beijing BOE Investment & Development Co., Ltd. held 27.27 % of the Company’s total shares, therefore is the actual controlling shareholder of the Company, whose main information is as follows: Name: Beijing BOE Investment & Development Co., Ltd. Legal Representative: Wang Dongsheng Date of Foundation: Apr. 21, 2005 Address: No.10 Jiuxianqiao Road, Chaoyang District, Beijing Registered Capital: RMB 680.982 million Type of the company: Sino-foreign Equity Joint Ventures Enterprises (proportion of foreign-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) About the actual controller Beijing Electronics Holding Co., Ltd. held 56.25% of shares of Beijing BOE Investment & Development Co., Ltd., and 10.12% of shares of the Company directly, it 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. The main information of Beijing Electronics Holding Co., Ltd. was as follows: Name of the enterprise: Beijing Electronics Holding Co., Ltd. Legal Representative: Bu Shicheng Date of Foundation: Apr. 8, 1997 Location: No.12 Jiuxianqiao Road, Chaoyang District, Beijing Registered Capital: RMB 1,307.37 million Type: Limited Company (State-owned sole corporations) Business scope: operation and management of state-owned assets within authorization; communications equipments, audio & visual products for broadcasting and television; computer and its supporting equipments and the applied products; electronic raw material and components; home electric appliances and electronic products; electronic surveying instruments and meters; mechanical and electric equipments; electronic transportation products and investment in business fields other than electronics and its management; development of real estate, lease and sales of commodity apartments; property management. 4.3.3 The property right and controlling relationship between the Company and the actual controller are as follows: the Company are as follows: 9 Summary of Annual Report 2007 of BOE Technology Group Co., Ltd. Wang Dongsheng 20%, Jiang Yukun 10%, Liang Xinqing 10%, Zhao Caiyong State-owned Assets Supervision & Administration 6.667%, Shi Dong 6.667%, Chen Yanshun 6.667%, Song Ying 6.667%, Han Commission of Beijing People’s Government Guojian 6.667%, Gong Xiaoqing 3.333%, Wang Yanjun 3.333%, Wang Jiaheng 3.333%, Liu Xiaodong 3.333%, Ren Jianchang 1.667%, Sun Jiping 1.667%, Zh P 1 667% W Ai’ h 1 667% M Ch 1 667% X Y 100% 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. 27.27% 10.12% BOE Technology Group Co., Ltd. Note: The Company regards Beijing Intelligent Kechuang Technology Development Co., Ltd. as a platform to implement equity incentive for wholly core technology manager, the aforesaid 20 subscribers are nominal shareholders, investment proportion was not actual equity proportion, the equity of Beijing Intelligent Kechuang Technology Development Co., Ltd. was held in common by all implemented objectives of simulate plan of equity incentive mechanism. 10 Summary of Annual Report 2007 of BOE Technology Group Co., Ltd. §5. Particulars about Directors, Supervisors and Senior Management 5.1 Particulars about changes in shares held by directors, supervisors and senior management Equity incentive granted during the Drawing Total payment report period payment Number Number drawn from from the of shares Market Beginning of shares Reason the Company shareholding Ending date held at Number price of Name Title Gender Age date of office held at s for in the report companies Number of of office term the of shares Exercis stock at term the change period or other share year-begi to be e price the year-end (RMB’0000) related exercised n exercise period- (before tax) parties or not end (Yes / No Chairman of the Board, Wang May 25, May 25, Director of Male 50 24,921 24,921 - 0.00 0 0 0.00 0.00 No Dongsheng 2007 2010 Executive Committee Vice Han May 25, May 25, Chairman of Male 60 0 0- 0.00 0 0 0.00 0.00 Yes Yansheng 2007 2010 the Board Vice Liang May 25, May 25, Chairman of Male 55 9,969 9,969 - 0.00 0 0 0.00 0.00 No Xinqing 2007 2010 the Board Executive Chen May 25, May 25, Director, Male 41 0 0- 0.00 0 0 0.00 0.00 No Yanshun 2007 2010 President Executive Han Director, Nov. 16, May 25, Male 54 9,968 9,968 - 0.00 0 0 0.00 0.00 No Guojian Vice 2007 2010 President Executive Wang Director, May 25, May 25, Male 38 0 0- 0.00 0 0 0.00 0.00 No Jiaheng Vice 2007 2010 President Gui Femal May 25, May 25, Director 34 0 0- 0.00 0 0 0.00 0.00 Yes Jinghua e 2007 2010 Independent May 25, May 25, Xie Zhihua Male 48 0 0- 0.00 0 0 0.00 0.00 No Director 2007 2010 Zhang Independent May 25, May 25, Male 64 0 0- 0.00 0 0 0.00 0.00 No Baizhe Director 2007 2010 11 Summary of Annual Report 2007 of BOE Technology Group Co., Ltd. Dong Independent May 25, May 25, Male 56 0 0- 0.00 0 0 0.00 0.00 No Ansheng Director 2007 2010 Ouyang Independent Nov. 16, May 25, Male 61 0 0- 0.00 0 0 0.00 0.00 No Zhongcan Director 2007 2010 Convener of Wu May 25, May 25, Supervisory Male 41 0 0- 0.00 0 0 0.00 0.00 Yes Wenxue 2007 2010 Committee Mu May 25, May 25, Supervisor Male 40 2,492 2,492 - 0.00 0 0 0.00 0.00 Yes Chengyuan 2007 2010 Femal May 25, May 25, Chen Ping Supervisor 47 0 0- 0.00 0 0 0.00 0.00 Yes e 2007 2010 Employee May 25, May 25, Yang Anle Male 37 0 0- 0.00 0 0 0.00 0.00 No Supervisor 2007 2010 Employee May 25, May 25, Li Wei Male 43 0 0- 0.00 0 0 0.00 0.00 No Supervisor 2007 2010 Liu Vice Aug. 29 May 25, Male 43 0 0- 0.00 0 0 0.00 0.00 No Xiaodong President 2007 2010 Vice Femal May 25, May 25, Song Ying 50 24,921 24,921 - 0.00 0 0 0.00 0.00 No president e 2007 2010 Vice president, Wang Aug. 22, May 25, Chief Male 38 9,968 9,968 - 0.00 0 0 0.00 0.00 No Yanjun 2007 2010 Investment Officer Dong Vice Femal Aug. 22, May 25, 44 0 0- 0.00 0 0 0.00 0.00 No Youmei President e 2007 2010 General Oct. 30, May 25, Su Zhiwen Male 38 0 0- 0.00 0 0 0.00 0.00 No Auditor 2007 2010 Chief Femal Aug. 22, May 25, Sun Yun Financial 38 4,984 4,984 - 0.00 0 0 0.00 0.00 No e 2007 2010 Officer Feng Secretary of Femal Aug. 22, May 25, 35 0 0- 0.00 0 0 0.00 0.00 No Liqiong the Board e 2007 2010 Total - - - - - 87,223 87,223 - 0.00 0 0 - - - Numbers of shares futures and restricted shares of the Company entitled to the foresaid members. □Applicable √Inapplicable 12 Summary of Annual Report 2007 of BOE Technology Group Co., Ltd. §6 Report of the Board of Directors 6.1 Discussion and analysis by the management team I. Operation of the Company 2007 is the pivotal year in the development course of the Company and TFT-LCD Business. Suffering market depression and great consecutive reduction of the price for two years, the market is becoming stable gradually. For the products of TET-LCD, the price has been raised since April, and the industry trends to a favorable development of regular supply, reinstitution of cycle and stable expanding of the market. The Company executed the metaphase activity compendium and annual operation firmly, seized the opportunity, and got the best operation achievement after entering into TFT-LCD industry by actualizing “Four Stratagems”, strengthening management, reducing cost, increasing margin profit and improving profit capability. Main achievements: 1. Realizing overall the operation target and other main operation index In the reporting period, benefit from revivification of TFT-LCD market, increment of the price, implementation of measures such as reducing cost, increasing benefit, enhancing production capacity, improving localized raw material supporting ratio, and decreases in financial expense, operation of the Company in 2007 has ultimately improved, and the profitability of the main operations has raised much compared with the same period of last year. The Company realized annual sales revenue about RMB 11.17 billion, operating profit about RMB 596 million and the net profit attributable to owners of the listed company about RMB 693 million, which has increased by large margins compared with the same period of the last year. The company has realized the overall operation target and other main operation index brought by the Board of Directors. In the report period, production of TFT-LCD, which used in IT and small-sized television, has realized 10.1 million pieces and sales volume has realized 10.66 million pieces. The production capacity and sales volumes created the new highest since put into production; Mobile display business has realized module sales about 13.75 million pieces 93% up compared with the same period of the last year, operation of most other business increased at different range and the comprehensive core competition competence promoted obviously. 2. Realizing the profit of TFT-LCD business of the Company and promoting overall core competition competence The Company made breakthrough progress in TFT-LCD business in 2007, achieved a significant increase in profit and obviously promoted the comprehensive core competition competence. The overall profit capability, operation capability and sale capability promoted obviously by actualizing “Four Stratagems”, expanding sales, reducing cost and strengthening management of supply and demand. In the reporting period, the abilities of technology research & development, technics progress and extending new product were obviously. The effect of increasing production capability is obviously by improving the technics and enhancing the production efficiency; extending new product and promoting the quality of products to meet the need of customers; expanding contribution margin of unit product and the annual sales revenue from new products accounted for over 60% of the revenue. 13 Summary of Annual Report 2007 of BOE Technology Group Co., Ltd. 3. Continuously optimizing financial structure of the Company The Company fundamentally reversed the financial crisis at the beginning of the year with one year’s effort and the financial structure optimized continuously. The Company paid about RMB 4 billion for the loan of bank in 2007, including BOEOT paid about RMB 1.537 billion. The liabilities of the Company as at the end of 31 December 2007 decreased much compared with that of the last year from 71.9% at the beginning of 2007 down to 58.7%, which was comparatively safe. 4. Pushing the great project orderly as scheduled (1) BOEOT project of increasing capital and expanding production: Owing the firm actualization of “Four Stratagems” and execution of expanding production from 60K/month to 85K/month, the comprehensive core competition competence of BOEOT has been promoted, which offer guarantee for operation profit. The project of 85K/ month to 100K/month is pushing energetically. (2) Project of Non-public issuance of securities in China: According to the Shareholders’ Meeting, the Board of Directors was energetically pushing non-public issuance of Share A in the reporting period ing and the Company received the Formal Invitation Letter from China Securities Regulatory Commission on 28 December 2007. (3) Project of the 4.5 generation TFT-LCD production line in Chengdu: According to the authorization of Shareholders’ General Meeting, the Board of Directors actively pushed construction of the 4.5 generation TFT-LCD production line in Chengdu. The approval documents, Notice of Record-keeping of the Enterprise Investment of Sichuan Development and Reform Commission with file No. CTZB [5100000710161] 7963, Reply on Environment Impact Report of 4.5 generation TFT-LCD of BOE Technology Group Co., Ltd in Chengdu of State Environmental Protection Administration with file HS[207] No.599, Contract on the Transfer of State-owned Land Use Right with serial No. 5101GXX [2007] CRHT No. 79, has been signed. The tendering and biding of the early project has been completed and order of main equipments has been mostly finished. The construction of 4.5 generation production line will be started in March 2008. 5. As for operations of mobile & application display and product of lighting display, overcame the fiercer market competition, enhanced overall management, improved capability and promoted core competition competence; Enhanced management optimize market structure to overcome sliding down of the industry and market competition, steady the market and ensure normal operation; Pushed the general planning and construction of base of headquarters as scheduled. II. Outlook of the development of the Company in future 1. The macro-economy policy Development of TFT-LCD industry is largely encouraged by the country, which brought forward definitely to develop display products with high definition and large screen and to establish industry chain between flat panel display materials and device in National Outlines for Medium and Long-term Planning for Scientific and Technological Development (2006-2020). The Ninth Five-Year Plan of the People's Republic of China for National Economic and Social Development and the Outline of the Long-Term Target for the Year 2010 indicated that electronics is the pillar industry of national economy of China; LCD will be one of the development keys in new-type electronic components and LCD is listed into the Catalogue of Industries, Products and Technology Currently Particularly Encouraged by the State for Development. The State Council claimed definitely that TFT-LCD industry shall be the one of the special items of electronic components 14 Summary of Annual Report 2007 of BOE Technology Group Co., Ltd. which was greatly pushed and supported in the period of the eleventh five-year plan. Development of display products with high definition and large screen was listed to be the preceded selection which is supported emphatically by the country in National Outlines for Medium and Long-term Planning for Scientific and Technological Development. General Office of National Development and Reform Commission Concerning Announcement on Execution of Organization of Special Items of New-typed LCD Industry Structure issued by National Development and Reform Commission on 6 Dec. 2007, and organize to execute Special Items of New-typed LCD Industry Structure by Development and Reform Commission. TFT-LCD industry has become the basis of the industry in the information era and the strategic meaning of the country is very important. The development of TFT-LCD industry in Chinese mainland plays a very important role in accelerating the healthy development of electronic information industry in our country and improvement of technology of information, material, equipment, system and safety of the country. Premier Minister Wen jiabao brought forward “Continue to execute special items of a passel high technology industry such as new-typed display, broadband telecommunication and network and biological medicine” in government report of the First Session of 11th National People’s Congress, which pointed out the policy direction of the development of flat panel display and parts. 2. Development trend of the industry and opportunity of the Company Electronic information industry is still the upgrade and development motivation of global industry and the important position of FPD, as representative product of TFT-LCD, was more obviously. The research of DisplaySearch indicated that total production sales of global FPD achieved USD 101.9 billion, which will break through USD 150 million. The rapid development of FPD industry urged the overall display industry trend to be state of flat panelize. It forecasted that proportion of FPD will rise further in the coming three years. As for the leading of current flat panel technology, the market scale of TFT-LCD accounts for 85% of FPD. According to the information offered by DisplaySearch, TFT-LCD industry shall increase at the average annual growth rate 15% in the coming four years. TFT-LCD industry in Chinese mainland shall meet the rare opportunity. TFT-LCD industry experienced the first development step which characterized “persistent investment, promotion of performance and reduction of cost” and shall enter in the second development step which characterized “creation of value, innovation of technology and transformation of mode”. The application area of TFT-LCD is expanding, which experienced notebook, monitor and television three steps, then expanded to wider field like public information display, more advanced television, electronic newspaper, multifunctional integrate information product, personal digital product etc. TFT-LCD display exists in everywhere. 3. Development stratagem of the Company The vision for BOE Technology Group Co., Ltd is to become the leading enterprise in global display field. The Company will keep firm in ideal and faith, with Concept of Scientific Development as guide, with accumulation and promotion of core competition competence and actualization of maximizing enterprise value as target, persist in stratagem direction of accuracy and dealing with concrete matters relating to work, enhance the execution; persist in with market and client as guide and seek active 15 Summary of Annual Report 2007 of BOE Technology Group Co., Ltd. development; persist in independent innovation, branding BOE Technology Group Co., Ltd with technology; persist in intensive development and pursue maximum of resource benefit; persist in “teamwork, speed and quality” and enhance competition competence; persist in human-oriented and ensure many elites in the Company. 4. Outlook of development of relevant operation unit (1) TFT-LCD operation used in IT and small-sized television Further, firmly and continuously fulfill the four stratagems “Maximum of margin profit of each mother glass, sales drives production, high efficiency of working capital and getting the upper hand by quality and speed”, continuously promote the innovation of technology, sales & marketing and management, reduce the cost, enhance profitability and tap potential of the fifth TET-LCD. (2) TFT-LLCD used in mobile and application products Elaborate layout, organization and direction of project of the 4.5 generation production line, not only ensuring the quality, budget, plan and successful volume production, but also the pivotal works such as increasing the clients, research and development of products, management of supply and employer training. Meanwhile, make use of the accumulative knowledge and successful experience of the Fifth Line to guarantee the success of operation. (3) Display lighting products With the object of establishing long-term stable benefit model, establish the competitive supply system, promote innovation ability of technology and management continuously, reduce cost, increase added-value, improve marketing capability, solidify and expand strategic client’s relationship, improve the clients’ class and increase the enterprise value. (4) Display system and solutions Strengthen the cooperation with clients and suppliers by improvement ability of sales, technology and management, and established high value extending operation when actualize creation of value. (5) Other display devices & fitting products Exert fully the advantage of current resource, optimize product structure and promote ability of benefit. Manoeuvre every positive energy and active factors to guarantee the products to be the most competitive and most effective; meanwhile, make full use of human resources, material resources and management technology and seek new opportunity of development. (6) International headquarters base Accelerate the integration of property of the base, cultivate the talent, amplify the organization, strengthen the management and improve the capacity of operation development. Accumulate fund, talent and experience by development of the base to extent development, follow in order and advance step by step and operate steadily, and supply long-term stable cash flow and profit. 6.2 Main operations classified according to industries or products Unit: RMB’0000 Main operations according to industries Increase/decreas Increase/ Increase/decrease Classified by industries or Operating Gross profit ratio Operating cost e of operating decrease of of gross profit products income (%) income than last operating cost ratio than last 16 Summary of Annual Report 2007 of BOE Technology Group Co., Ltd. year (%) than last year year (%) (%) TFT-LCD 1,067,445.53 901,932.83 15.51% 15.43% -14.05% 215.06% Other operations 160,936.86 131,152.82 18.51% 26.79% 24.59% 8.44% Counteract -111,337.50 -106,698.62 4.17% -33.63% -31.04% -46.40% Total 1,117,044.89 926,387.03 17.07% 26.37% -7.36% 230.06% Main operation according to products TFT-LCD 962,952.74 804,884.49 16.41% 12.20% -18.96% 204.45% Small-size flat display 104,492.79 97,048.34 7.12% 57.05% 72.44% -53.77% Other operations 160,936.86 131,152.82 18.51% 26.79% 24.59% 8.44% Counteract -111,337.50 -106,698.62 4.17% -33.63% -31.04% -46.40% Total 1,117,044.89 926,387.03 17.07% 26.37% -7.36% 230.06% 6.3 Main operations classified according to area Unit: RMB’0000 Increase/ decrease of operating Region Operating income income than last year (%) China 555,800.07 52.90% Other Asian countries 485,759.80 9.38% Europe 47,398.84 0.72% America 2,948.95 -86.86% Other countries 25,137.23 266.39% Total 1,117,044.89 26.37% 6.4 Use of the raised proceeds √Applicable □Inapplicable Unit: RMB’0000 Total amount of raised proceeds 6,989.00 Total amount of raised used as of the report year 186,000.00 proceeds Total amount of raised proceeds 52,261.00 used accumulatively Committed Projects Changed Planned Actual Compliance with Estimated Accrued amount of projects or investment investment planned progress earnings earnings not amount amount or not Project on increase Good 74,520.00 39,112.00 Yes 32,971.00 investment and expansion of 17 Summary of Annual Report 2007 of BOE Technology Group Co., Ltd. production capacity of No Beijing BOE Optoelectronics Technology Co., Ltd. Production line project of CF used by large-size Yes 250,000.00 0.00 No 33,017.00 - TFT-LCD Total - 324,520.00 39,112.00 - 65,988.00 - Explanation on failing to catch up with the planned progress or get the expected No gains (with details down to each project) Explanation on the project Owing to the raised proceeds was not enough, CF project cannot actualize investment and construction as changes and procedure of scheduled. changes (with details down to each project) Usage of the raised proceeds Usage changed to the second Increase investment and production of the fifth TFT-LCD production line of not used yet Beijing BOE Optoelectronics Technology Co., Ltd and complementarity of the liquid capital of the Company. Particulars about the changed projects √Applicable □Inapplicable Unit: RMB’0000 Total amount of changed investment 80,419.00 project Projects after The relevant Planned investment Actual Compliance with Estimated earnings Accrued amount change committed amount of changed investment planned progress of changed project of earnings projects projects amount of or not changed projects The second Increase Production line investment and project of CF used production of the by large-size fifth TFT-LCD TFT-LCD 67,739.00 0.00 Yes 21,668.00 - production line of Beijing BOE Optoelectronics Technology Co., Ltd Complementarity of Production line 12,680.00 12,680.00 Yes 747.00 - the working capital project of CF used 18 Summary of Annual Report 2007 of BOE Technology Group Co., Ltd. by large-size TFT-LCD Total - 80,419.00 12,680.00 - 22,415.00 - Explanation on failing to catch up with the planned progress or get the - expected gains (with details down to each project) 6.5 Application of the non-raised proceeds √Applicable □Inapplicable Unit: RMB’0000 Name of projects Investment amount Progress of projects Earnings of projects of project Invested and established Xiamen BOE Completed Good 3,750.00 Technology Group Co., Ltd Special display 4,000.00 Completed Good Invested and established Vacuum Completed 2,315.00 Good Technology Co., Ltd Workshop construction of BOE Completed 3,576.00 Good Technology Group Ltd in Heibei Workshop of reconstruction of UP3 6,939.00 Processing as schedule Good Total 20,580.00 - - 6.6 Explanation of the Board of Directors on the “Non-standard Opinion” issued by the Certified Public Accountants □Applicable √Inapplicable 6.7 Preplan of profit distribution or share capital transferred from capital reserve for 2007 made by the Board of Directors □Applicable √Inapplicable The Company did not appropriate share distribution preplan though the Company achieved the profit in the report period √Applicable □Inapplicable The reasons why the Company did not appropriate share distribution preplan though the Company Usage and plan of 19 Summary of Annual Report 2007 of BOE Technology Group Co., Ltd. achieved the profit in the report period undistributed profit Up to Dec. 31, 2007, the accumulative retained profit of the Group, which was accumulative loss, was RMB -1,540,405,268. According to the provisions stipulated by laws and regulations such as the Company Law of the People's Republic of China, Questions and Answers on the Standards for Information Disclosure by Companies Naught that Offer Securities to the Public (No. 3) China Securities Regulatory Commission: Source, Procedure and Disclosure of Reparation of Accumulative Loss and regulations stipulated in Article Association of the Company, owing to accumulative loss has not been repaired, the profit distribution and plan on capitalization of public reserves of the Company of 2007 was not implemented. §7 Significant Events 7.1 Purchase of assets □Applicable √Inapplicable 7.2 Sales of assets √Applicable □Inapplicable Unit: RMB’0000 Net profit made by the sold Ownership Credit and assets for the transfer of Gains and liabilities of Company Related Explain the Counterpart and losses the involved Asset sold Selling date Selling price during the transaction principle of involved assets sold arising from assets fully period between or not pricing assets fully such sale transferred the beginning accomplish or not of the year and ed or not the selling day Negotiation 200 million price based UBS Investment shares of TPV on share Jan. 23, 2007 103,666.00 0.00 -4,731.00 No Yes Yes Bank Technology Co., price of Ltd. TPV technology Negotiation China Greatwall 200 million price based Computer shares of TPV on share Dec. 24, 2007 112,215.00 6,580.00 175.00 No Yes Yes Shenzhen Co., Technology Co., price of Ltd Ltd. TPV technology Explanation on the influences exerted by the issues mentioned in 7.1 and 7.2 upon the continuity of 20 Summary of Annual Report 2007 of BOE Technology Group Co., Ltd. the Company’s business and the stability of the management team Naught 7.3 Significant guarantees √Applicable □Inapplicable Unit: RMB’0000 21 Summary of Annual Report 2007 of BOE Technology Group Co., Ltd. External guarantee of the Company (excluding the guarantee for the shareholding subsidiaries) Date of occurrence Name of the Company Amount of Guarantee Accomplished Guarantee for related (date of agreement Guarantee type guaranteed guarantee term or not party (yes or not) signed) Zhejiang Huanyu Mutual Construction Group Jun. 13, 2007 3,000.00 One year No No guarantee Co., Ltd. Zhejiang Huanyu Mutual Construction Group Aug. 20, 2007 1,541.00 One year No No guarantee Co., Ltd. Zhejiang Yuegong Steel Mutual Oct. 8, 2007 1,500.00 One year No No Structure Co., Ltd., guarantee Total amount of guarantee occurred in the 9,262.00 report period Total balance of guarantee at the end of the 6,041.00 report period Guarantee of the Company for the shareholding subsidiaries Total amount of guarantee occurred for 161,288.00 shareholding subsidiaries in the report period Total balance of guarantee occurred for shareholding subsidiaries at the end of the 147,079.00 report period Total amount of external guarantee of the Company (Including the guarantee for the shareholding subsidiaries) Total amount of guarantee 153,120.00 The proportion of the total amount of 33.50% guarantee in the net assets of the Company Of which: The amount of guarantee provided for shareholders, actual controller and other 0.00 related parties Guarantee amount for the debts of the guaranteed companies with an asset-liability 6,200.00 ratio of over 70 percent, directly or indirectly The amount by which the total guarantee 0.00 amount exceeded 50 percent of the net assets Total amount of the above three guarantees 6,200.00 22 Summary of Annual Report 2007 of BOE Technology Group Co., Ltd. 7.4 Significant related transactions 7.4.1 Related transactions concerning routine operation √Applicable □Inapplicable Unit: RMB’0000 Selling products and offering labor service to Purchasing products and accepting labor related parties service from related parties Related parties Proportion taking up Proportion taking up Amount the amount of the same Amount the amount of the same kind of transactions kind of transactions TPV Technology Limited 82,613.00 8.00% 0.00 0.00% Beijing Matsushita Color CRT Co., 4,237.00 0.00% 0.00 0.00% Ltd Marubeni Corporation, Japan 0.00 0.00% 21,284.00 2.00% Beijing Sevenstar Huasheng 0.00 0.00% 5,000.00 1.00% Electronics and Machinery Co., Ltd Total 86,850.00 8.00% 26,284.00 3.00% Of which, the amount of RMB 170,000 occurred during the related transactions of the Company selling products or providing labor service to its controlling shareholder or its subsidiaries in the report period. 7.4.2 Related credits and liabilities current √Applicable □Inapplicable Unit: RMB’0000 Funds provided by the listed company to Funds provide by related parties to listed Related parties related parties company Occurred amount Balance Occurred amount Balance Beijing Dongdian Industrial 12.00 221.00 0.00 0.00 Development Co., Ltd. Beijing Sevenstar Huasheng 5,000.00 5,000.00 0.00 0.00 Electronics and Machinery Co., Ltd Beijing Nissin Electronics Precision 574.00 106.00 0.00 0.00 Component Co., Ltd Beijing Nittan Electronics Co. 266.00 38.00 168.00 16.00 Ltd.(BNT) Beijing Matsushita Color CRT Co., 4,852.00 675.00 0.00 0.00 Ltd Beijing Star City Real Estate 147.00 7,305.00 0.00 500.00 Development Co., Ltd. Chengdu BOE Optoelectronics 301.00 301.00 0.00 0.00 23 Summary of Annual Report 2007 of BOE Technology Group Co., Ltd. Technology Co., Ltd. Total 11,152.00 13,646.00 168.00 516.00 Of which: The funds provided by the Listed Company to controlling shareholder and its subsidiaries during the report period totaled RMB 50.18 million, as well as the balance of RMB 52.28 million. 7.4.3 Progress of repayment on the capital occupied as at the end of 2007 □Applicable √Inapplicable New capital occupation in the year 2007 □Applicable √Inapplicable In case of the Company's failure to complete the repayment of the capital occupation of non-operating as at the end of 2007, relevant reason, measures for debt repayment and plan for responsibility ascertainment □Applicable √Inapplicable 7.5 Financing entrustment □Applicable √Inapplicable 7.6 Implementation of commitments √Applicable □Inapplicable 1. Commitments on the Share Merger Reform All non-circulating shareholders promised no trading or transfer of shares of the Company held by them occurred before Nov. 29, 2006. Meanwhile, the controlling shareholder of Beijing BOE Investment Development Co., Ltd further committed: after the accomplishment of the former commitment period, the proportion of sold shares of the total shares listing and trading through Shenzhen Stock Exchange is no more than 5% within 12 months and no more 10% within 24 months. As at Dec. 31, 2007, Beijing BOE Investment Development Co., Ltd held 783,182,203 shares of the Company, and reduced 64,195,230 shares of the Company in 2007, presenting 2.24% of the total shares of the Company, which followed the above commitment. 2. Please refer to the relevant contents of commitments in Note of Accounting Statements. 3. In the report period, the Company and shareholders holding over 5% have no other commitments. 7.7 Significant lawsuits and arbitrations √Applicable □Inapplicable 1. Beijing Star City Real Estate Development Co., Ltd paid RMB 44,579,247 for counterclaim & debt, guarantee expense and removal expense. So far, the case has been mediated by the Second Intermediate People Court of Beijing and the Reconciliation Agreement was signed on Sep. 26, 2007, in which prescribed the 6th and 12th floor of 24 Summary of Annual Report 2007 of BOE Technology Group Co., Ltd. office building of C building of Star City International Edifice (tagging floor) and 2 parking spots located underground 3rd floor and RMB 1,801,945.35 was paid for the debt to the Company of RMB 44,579,247. On Sep. 27, 2007, the court issued Civil Mediation Agreement based on the above Reconciliation Agreement. On Oct. 18, 2007, Star City Real Estate handed over the land and money for debt to the Company. Star City Real Estate should discharge all the loan interest that needed paying for the mortgage of the 6th and 12th floor of office building (tagging floor) within 300 days since the date of signing the reconciliation agreement due to the 6th and 12th floor of office building of C building of Star City International Edifice being mortgaged to Beijing Zhongguan Village Branch, China Minsheng Banking Corp., Ltd. Otherwise, the Company had the rights to quit the above agreement on liquidation of debt and apply to execute the above resolution on debt compulsively by the court. So far, the Company has sealed up the land usufruct of garden in No. 10 Jiuxing Bridge Road, Beijing belonged to Star City Real Estate and underground 1st, 2nd, 3rd floor of garage in the construction of Star City International Edifice, as well as the property of FC6-F6, FC12-F12, FC13-F15 of C building of Star City International Edifice, with quota RMB 44,579,247. 2. Beijing BOE Real Estate Co., Ltd., subsidiary of the Company, claimed for compensation, economic loss and caution money total RMB 49,909,384.60 from Star City Real Estate. So far, the case has been mediated by the Second Intermediate People Court of Beijing and the Reconciliation Agreement was signed on Sep. 26, 2007, in which prescribed the 19th and 20th floor of office building of C building of Star City International Edifice (tagging floor) and 46 parking spots located underground 3rd floor and RMB 2,017,395.74 was paid for the debt to Beijing BOE Real Estate Co., Ltd of RMB 49,909,382. On Sep. 27, 2007, the court issued Civil Mediation Agreement based on the above Reconciliation Agreement. On Oct. 18, 2007, Beijing BOE Real Estate Co., Ltd and Star City Real Estate signed the Contract about Buying and Selling Houses for the 19th and 20th floor of office building of C building of Star City International Edifice (tagging floor) on net, also handed over all the above property for debt. So far, Beijing BOE Real Estate Co., Ltd has sealed up in turn the land usufruct of garden in No. 10 Jiuxing Bridge Road, Beijing belonged to Star City Real Estate and underground 1st, 2nd, 3rd floor of garage in the construction of Star City International Edifice, as well as the property of FC6-F6, FC12-F12, FC13-F15 of C building of Star City International Edifice, with quota RMB 49,909,384.60. 7.8 Other significant events and explanation on analysis to their influences and solutions 7.8.1 Securities investment □Applicable √Inapplicable 7.8.2 Equity of other listed companies held by the Company □Applicable √Inapplicable 7.8.3 Equity of non-listed financial enterprises held by the Company □Applicable √Inapplicable 25 Summary of Annual Report 2007 of BOE Technology Group Co., Ltd. 7.8.4 Trading of shares of other listed companies □Applicable √Inapplicable §8 Report of the Supervisory Committee √Applicable □Inapplicable In 2007, the Supervisory Committee fulfilled its duties strictly in accordance with the Company Law, Article of Association and the Rules of Procedure of the Supervisory Committee. Moreover, members of the Supervisory Committee 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 on the decision of the Company. The Supervisory Committee supervised the Board of Directors and the Managements to work legally and make decision reasonably, which ensured the Company’s finance could be worked out canonically and safeguarded the interest of the Company and its shareholders. 1. Operation according to the laws According to the related national laws and rules and the Article of Association of the Company, in the report period the Company established sound Legal Person Governance and relatively perfect Internal Control System. The procedure on decision-making of the Company was in line with the laws and rules. Moreover, no directors and the senior management staff of the Company were found to violate laws, regulations and the Articles of Association of the Company or harm the interests of the Company and shareholders when they performed duties. 2. Financial inspection In the opinion of the Supervisory Committee, the Company had sound financial system and standardized accounting calculation. The financial report objectively, fairly and truly reflected the Company's financial position and operating results. The KPMG Huazhen certified Public Accountants audited the Financial Report of the Company 2007 and issued the standard unqualified auditor's reports on the Company's financial affairs for 2007. 3. Application of raised funds The Company non-publicly issued A share for 675,872,095 shares on Oct. 2006, utilized the raised proceeds for increase investment capacity project in BOE Optoelectronics (Increase Investment Capacity Project) and the project of Color Filter (CF) production line for large size TFT-LCD (CF Project). In the report period, the capital for Increase Investment Capacity Project followed project plan and was implemented successfully, while the CF Project wasn’t implemented due to the shortage of raised proceeds. The Company would implement CF Project by postponement, which was considered and approved in the 3rd meeting of the 5th Board of Directors and the 4th Annual Shareholders’ General Meeting 2007 of the Company. Therefore, the untapped raised proceeds was used for the second Increase Investment Capacity Project in Gen5 production line of TFT-LCD and working capital of the Company for complement based on the additional investment required by BOE Optoelectronics. 26 Summary of Annual Report 2007 of BOE Technology Group Co., Ltd. The Supervisory Committee believed that, the stop of the previous raised proceeds projects and the changes on usage of the raised proceeds complied with the actual producing and operating statue of the Company, of which the procedure was legal and effective as the Company conducted special management for the raised proceeds based on rules. 4. Opinions on transaction of purchase and sales of assets In the reporting period, the Company conducted the transaction of selling the held shares of TPV Technology Limited and the held equities of Beijing Star City Real Estate Development Co., Ltd (Star City Real Estate). In the opinion of the Supervisory Committee, the voting procedure on the previous transaction was legal, public, fair and reasonable; no internal transaction harmed part of shareholders’ equity or caused the asset loss of the Company, which was in line with the demand on the business development of the Company. 5. Opinions on the related transaction In the reporting period, the related transactions existing between the Company and the related parties were equal with fair value, which did not harm the interest of the Company and its shareholders. §9 Financial Report 9.1 Auditing opinion Auditors’ Report An unqualified auditors’ report Full Text of Auditors’ Report AUDITORS’ REPORT KPMG-A(2008)AR No.0144 All Shareholders of BOE Technology Group Company Limited: We have audited the accompanying financial statements of the Company, which comprise the consolidated balance sheet and balance sheet as at 31 December 2007, the consolidated income statement and income statement, the consolidated statement of changes in equity and statement of changes in equity, the consolidated cash flow statement and cash flow statement for the year then ended, and notes to the financial statements. Management’s Responsibility for the Financial Statements The Company’s management is responsible for the preparation of these financial statements in accordance with China Accounting Standards for Business Enterprises (2006) issued by the Ministry of Finance of the People’s Republic of China. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We 27 Summary of Annual Report 2007 of BOE Technology Group Co., Ltd. conducted our audit in accordance with China Standards on Auditing for Certified Public Accountants. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements comply with the requirements of China Accounting Standards for Business Enterprises (2006) issued by the Ministry of Finance of the People’s Republic of China and present fairly, in all material respects, the consolidated financial position and financial position of the Company as at 31 December 2007, and the consolidated results of operations and results of operations and the consolidated cash flows and cash flows of the Company for the year then ended. KPMG Huazhen Certified Public Accountants Registered in the People’s Republic of China Zhang Jun Beijing, the People’s Republic of China Zhang Yansheng 29 March 2008 9.2 Financial statement 28 Summary of Annual Report 2007 of BOE Technology Group Co., Ltd. 9.2.1 Balance sheet BOE Technology Group Company Limited Consolidated balance sheet as at 31 December 2007 (Expressed in Renminbi) Note 2007 2006 Assets Current assets Cash at bank and on hand 7 1,704,436,404 1,803,824,228 Bills receivable 8 175,783,058 49,110,684 Accounts receivable 9 1,793,612,342 1,106,252,358 Prepayments 10 112,038,696 51,084,053 Interest receivable 11 1,516,906 2,879,304 Other receivables 13 80,595,468 178,247,383 Inventories 14 791,698,020 1,251,245,918 Other current assets 4,841,501 4,600,285 Total current assets 4,664,522,395 4,447,244,213 ------------------- ------------------- Non-current assets Available-for-sale financial assets 15 129,109,597 - Held-to-maturity investments 16 - - Long-term equity investments 17 641,652,657 3,144,360,569 Investment property 18 126,367,406 135,553,995 Fixed assets 19 6,897,275,352 7,913,483,823 Construction in progress 20 54,745,615 64,430,107 Intangible assets 21 742,637,961 794,991,915 Goodwill 22 47,364,310 47,364,310 Long-term deferred expenses 23 1,266,496 5,253,326 Deferred tax assets 24 76,333,072 1,831,754 Total non-current assets 8,716,752,466 12,107,269,799 ------------------- ------------------- Total assets 13,381,274,861 16,554,514,012 29 Summary of Annual Report 2007 of BOE Technology Group Co., Ltd. BOE Technology Group Company Limited Consolidated balance sheet (continued) as at 31 December 2007 (Expressed in Renminbi) Note 2007 2006 Liabilities and shareholders’ equity Current liabilities Short-term loans 27 428,011,512 2,446,176,689 Bills payable 28 55,000,000 74,872,077 Accounts payable 29 1,498,985,231 1,851,708,650 Advances from customers 30 176,435,585 20,696,877 Employee benefits payable 31 153,060,763 105,015,400 Taxes payable 5(3) 50,273,186 (96,591,421) Interest payable 21,207,784 20,929,722 Dividends payable 32 6,668,965 6,668,965 Other payables 33 159,051,186 175,527,827 Non-current liabilities due within one year 34 692,700,000 2,098,296,571 Other current liabilities 35 57,740,852 54,995,000 Total current liabilities 3,299,135,064 6,758,296,357 ------------------- ------------------- Non-current liabilities Long-term loans 36 4,494,667,804 5,083,637,429 Deferred tax liabilities 24 19,333,205 28,274 Other non-current liabilities 37 46,799,614 65,484,401 Total non-current liabilities 4,560,800,623 5,149,150,104 ------------------- ------------------- Total liabilities 7,859,935,687 11,907,446,461 ------------------- ------------------- 30 Summary of Annual Report 2007 of BOE Technology Group Co., Ltd. BOE Technology Group Company Limited Consolidated balance sheet (continued) as at 31 December 2007 (Expressed in Renminbi) Note 2007 2006 Liabilities and shareholders’ equity (continued) Shareholders’ equity Share capital 38 2,871,567,895 2,871,567,895 Capital reserve 39 2,740,627,893 2,746,176,454 Surplus reserve 40 499,092,613 499,092,613 Retained earnings 41 (1,540,405,268) (2,231,351,083) Foreign currency translation differences for foreign operations (303,984) 3,590,518 Total equity attributable to equity holders of the Company 4,570,579,149 3,889,076,397 Minority interests 950,760,025 757,991,154 Total equity 5,521,339,174 4,647,067,551 ------------------- ------------------- Total liabilities and shareholders’ equity 13,381,274,861 16,554,514,012 31 Summary of Annual Report 2007 of BOE Technology Group Co., Ltd. BOE Technology Group Company Limited Balance sheet as at 31 December 2007 (Expressed in Renminbi) Note 2007 2006 Assets Current assets Cash at bank and on hand 7 936,584,272 940,625,651 Bills receivable 8 6,119,683 7,335,011 Accounts receivable 9 28,017,264 40,238,118 Prepayments 10 2,542,716 1,902,105 Interest receivable 11 1,516,906 2,879,304 Dividends receivable 12 8,204,147 - Other receivables 13 106,249,337 110,680,392 Inventories 14 9,789,493 41,684,323 Other current assets - 34,535 Total current assets 1,099,023,818 1,145,379,439 ------------------- ------------------- Non-current assets Available-for-sale financial assets 15 129,109,597 - Held-to-maturity investments 16 - - Long-term receivables - 30,000,000 Long-term equity investments 17 4,679,889,634 7,073,097,546 Investment property 18 35,603,254 37,034,861 Fixed assets 19 163,064,649 192,646,587 Construction in progress 20 18,510,239 11,589,020 Intangible assets 21 52,095,063 46,952,358 Total non-current assets 5,078,272,436 7,391,320,372 ------------------- ------------------- Total assets 6,177,296,254 8,536,699,811 32 Summary of Annual Report 2007 of BOE Technology Group Co., Ltd. BOE Technology Group Company Limited Balance sheet (continued) as at 31 December 2007 (Expressed in Renminbi) Note 2007 2006 Liabilities and shareholders’ equity Current liabilities Short-term loans 27 - 1,897,000,000 Accounts payable 29 4,798,143 10,329,605 Advances from customers 30 3,338,989 61,011,094 Employee benefits payable 31 24,323,520 39,460,075 Taxes payable 5(3) 5,965,964 17,906,503 Interest payable 12,054,232 8,298,713 Dividends payable 32 6,455,264 6,455,264 Other payables 33 42,350,819 103,734,531 Non-current liabilities due within one year 34 682,500,000 727,500,000 Total current liabilities 781,786,931 2,871,695,785 ------------------- ------------------- Non-current liabilities Long-term loans 36 277,500,000 432,500,000 Other non-current liabilities 37 26,797,146 59,144,664 Total non-current liabilities 304,297,146 491,644,664 ------------------- ------------------- Total liabilities 1,086,084,077 3,363,340,449 ------------------- ------------------- 33 Summary of Annual Report 2007 of BOE Technology Group Co., Ltd. BOE Technology Group Company Limited Balance sheet (continued) as at 31 December 2007 (Expressed in Renminbi) Note 2007 2006 Liabilities and shareholders’ equity (continued) Shareholders’ equity Share capital 38 2,871,567,895 2,871,567,895 Capital reserve 39 2,770,165,978 2,775,714,539 Surplus reserve 40 499,092,613 499,092,613 Retained earnings 41 (1,049,614,309) (973,015,685) Total equity 5,091,212,177 5,173,359,362 ------------------- ------------------- Total liabilities and shareholders’ equity 6,177,296,254 8,536,699,811 ------------------- ------------------- 34 Summary of Annual Report 2007 of BOE Technology Group Co., Ltd. 9.2.2 Income statement BOE Technology Group Company Limited Consolidated income statement for the year ended 31 December 2007 (Expressed in Renminbi) Note 2007 2006 Operating income 43 11,170,448,855 8,839,664,291 Less: Operating costs 44 9,263,870,340 9,999,735,790 Business taxes and surcharges 45 16,445,071 12,888,872 Selling and distribution expenses 197,845,776 225,356,491 General and administrative expenses 559,821,122 886,525,995 Financial expenses 46 289,848,468 630,752,384 Impairment loss 47 119,783,374 368,459,722 Add: Investment (losses)/income 48 (128,315,862) 1,381,856,120 Including: (loss)/income from investment in associates and jointly controlled enterprises (83,656,078) 418,780,123 Operating profit (loss) 594,518,842 (1,902,198,843) Add: Non-operating income 49 278,274,136 133,191,777 Less: Non-operating expenses 50 31,993,914 5,044,185 (Including: loss (gain) from non-current assets disposal) 3,078,825 2,889,415 Profit (loss) before income tax 840,799,064 (1,774,051,251) 35 Summary of Annual Report 2007 of BOE Technology Group Co., Ltd. BOE Technology Group Company Limited Consolidated income statement (continued) for the year ended 31 December 2007 (Expressed in Renminbi) Note 2007 2006 Profit (loss) before income tax 840,799,064 (1,774,051,251) Less: Income tax expenses 51 (56,307,888) 12,899,610 Net profit (loss) for the year 897,106,952 (1,786,950,861) Attributable to: Equity shareholders of the Company 690,945,815 (1,770,802,475) Minority shareholders 206,161,137 (16,148,386) Earnings (loss) per share 61(1) Basic and Diluted earnings/(loss) per share 0.24 (0.75) 36 Summary of Annual Report 2007 of BOE Technology Group Co., Ltd. BOE Technology Group Company Limited Income statement for the year ended 31 December 2007 (Expressed in Renminbi) Note 2007 2006 Operating income 43 207,253,580 193,971,711 Less: Operating costs 44 129,275,928 120,037,726 Business taxes and surcharges 45 3,941,274 4,086,723 Selling and distribution expenses 2,460,586 3,837,797 General and administrative expenses 81,743,957 102,074,393 Financial expenses 46 41,317,382 171,519,494 Impairment loss 47 12,270,098 58,840,686 Add: Investment loss 48 (118,074,757) (376,937,661) Including: (loss)/income from investment in associates and jointly controlled enterprises (83,656,078) 418,780,123 Operating profit (loss) (181,830,402) (643,362,769) Add: Non-operating income 49 91,692,474 1,580,668 Less: Non-operating expenses 50 2,085,647 2,243,466 Including: loss (gain) from disposal of non-current assets 1,753,361 2,009,340 Loss before income tax (92,223,575) (644,025,567) Less: Income tax expenses 51 (15,624,951) 4,477,785 Net loss for the year (76,598,624) (648,503,352) 37 Summary of Annual Report 2007 of BOE Technology Group Co., Ltd. 9.2.3 Cash flow statement BOE Technology Group Company Limited Consolidated cash flow statement for the year ended 31 December 2007 (Expressed in Renminbi) Note 2007 2006 Cash flows from operating activities: Cash received from sale of goods and rendering of services 11,237,354,875 9,860,373,410 Refund of taxes 12,648,968 9,341,173 Other cash received relating to operating activities 116,063,939 505,704,613 Sub-total of cash inflows 11,366,067,782 10,375,419,196 ------------------- ------------------- Cash paid for goods and services (8,245,828,893) (8,054,485,538) Cash paid to and for employees (557,309,348) (847,242,567) Cash paid for all types of taxes (114,212,824) (160,082,965) Other cash paid relating to operating activities (156,618,318) (477,402,140) Sub-total of cash outflows (9,073,969,383) (9,539,213,210) ------------------- ------------------- Net cash flow from operating activities 52(1) 2,292,098,399 836,205,986 ------------------- ------------------- Cash flows from investing activities: Cash received from disposal of investments 2,159,086,728 2,786,771 Cash received from disposal of subsidiaries - 33,736,000 Cash received from return on investments 86,169,745 147,176,543 Net cash received from disposal of fixed assets, intangible assets and other long-term assets 64,459,631 77,729,142 Cash received from return on restricted deposits 52,416,698 565,518,086 Other cash received relating to investing activities 33,924,559 29,699,356 Sub-total of cash inflows 2,396,057,361 856,645,898 ------------------- ------------------- Disposal of subsidiaries, net of cash disposed - (44,380,478) Disposal of discontinued operation, net of cash disposed - (240,533,287) Cash paid for acquisition of fixed assets, intangible assets and other long-term assets (374,009,390) (755,379,718) Cash paid for acquisition of investments (5,454,000) (8,000,000) Other cash paid relating to investing activities - (1,622,526) Sub-total of cash outflows (379,463,390) (1,049,916,009) ------------------- ------------------- Net cash flow from investing activities 2,016,593,971 (193,270,111) ------------------- ------------------- 38 Summary of Annual Report 2007 of BOE Technology Group Co., Ltd. BOE Technology Group Company Limited Consolidated cash flow statement (continued) for the year ended 31 December 2007 (Expressed in Renminbi) Note 2007 2006 Cash flows from financing activities: Cash received from investors - 1,200,000,005 Cash received from borrowings 1,721,033,502 4,366,028,595 Sub-total of cash inflows 1,721,033,502 5,566,028,600 ------------------- ------------------- Cash repayments of borrowings (5,493,863,572) (5,092,850,750) Cash paid for dividends, profits distribution or interest(514,475,334) (794,018,074) (Including: dividends and profits paid to minority shareholders by subsidiaries) (1,152,000) (3,330,000) Other cash paid relating to financing activities (5,895,098) (12,543,692) Sub-total of cash outflows (6,014,234,004) (5,899,412,516) ------------------- ------------------- Net cash flow from financing activities (4,293,200,502) (333,383,916) ------------------- ------------------- Effect of foreign exchange rate changes on cash and cash equivalents (16,046,045) (17,577,026) ------------------- ------------------- Net (decrease)/increase in cash and cash equivalents 52(3) (554,177) 291,974,933 Add: Cash and cash equivalents at the beginning of the year 1,452,714,377 1,160,739,444 Cash and cash equivalents at the end of the year 1,452,160,200 1,452,714,377 39 Summary of Annual Report 2007 of BOE Technology Group Co., Ltd. BOE Technology Group Company Limited Cash flow statement for the year ended 31 December 2007 (Expressed in Renminbi) Note 2007 2006 Cash flows from operating activities: Cash received from sale of goods and rendering of services 178,176,343 257,990,123 Refund of taxes 760,952 605,383 Other cash received relating to operating activities 359,688,715 99,212,555 Sub-total of cash inflows 538,626,010 357,808,061 ------------------- ------------------- Cash paid for goods and services (88,966,023) (102,304,992) Cash paid to and for employees (54,075,409) (61,165,923) Cash paid for all types of taxes (13,621,433) (18,539,160) Other cash paid relating to operating activities (384,466,381) (66,509,983) Sub-total of cash outflows (541,129,246) (248,520,058) ------------------- ------------------- Net cash flow from operating activities 52(1) (2,503,236) 109,288,003 ------------------- ------------------- Cash flows from investing activities: Cash received from disposal of investments 2,189,018,147 26,522,771 Cash received from return on investments 86,069,746 163,342,566 Net cash received from disposal of fixed assets, intangible assets and other long-term assets 951,495 5,687,961 Cash received from return on restricted deposits in financial institution 34,920,000 216,909,127 Other cash received relating to investing activities 112,309,096 16,625,114 Sub-total of cash inflows 2,423,268,484 429,087,539 ------------------- ------------------- Cash paid for acquisition of fixed assets, intangible assets and other long-term assets (13,495,244) (8,250,081) Cash paid for acquisition of investments (106,104,076) (602,576,111) Other cash paid relating to investing activities (113,500,000) (69,010,037) Sub-total of cash outflows (233,099,320) (679,836,229) ------------------- ------------------- Net cash flow from investing activities 2,190,169,164 (250,748,690) ------------------- ------------------- 40 Summary of Annual Report 2007 of BOE Technology Group Co., Ltd. BOE Technology Group Company Limited Cash flow statement (continued) for the year ended 31 December 2007 (Expressed in Renminbi) Note 2007 2006 Cash flows from financing activities: Cash received from investors - 1,200,000,005 Cash received from borrowings 467,000,000 2,217,000,000 Sub-total of cash inflows 467,000,000 3,417,000,005 ------------------- ------------------- Cash repayments of borrowings (2,564,000,000) (2,389,000,000) Cash paid for dividends, profits distribution or interest (54,708,438) (193,850,836) Other cash paid relating to financing activities - (12,543,692) Sub-total of cash outflows (2,618,708,438) (2,595,394,528) ------------------- ------------------- Net cash flow from financing activities (2,151,708,438) 821,605,477 ------------------- ------------------- Effect of foreign exchange rate changes on cash and cash equivalents (5,078,869) (1,366,867) ------------------- ------------------- Net increase in cash and cash equivalents 52(3) 30,878,621 678,777,923 Add: Cash and cash equivalents at the beginning of the year 897,305,651 218,527,728 Cash and cash equivalents at the end of the year 928,184,272 897,305,651 41 Summary of Annual Repor BOE Technology Group Company Limited Consolidated statement of changes in shareholder’s equity for the year ended 31 December 2007 (Expressed in Renminbi) Attributable to equity shareholders of the Company Foreign currency translation differences Share Capital Surplus Retained for foreign Note capital reserve reserve earnings operations Balance at 31 December 2006 2,871,567,895 2,746,176,454 499,092,613 (2,231,351,083) 3,590,518 3,88 Balance at 1 January 2007 2,871,567,895 2,746,176,454 499,092,613 (2,231,351,083) 3,590,518 3,88 ------------------- ------------------- ------------------- ------------------- ------------------- ------ Changes in equity for the year 1. Net profit for the year - - - 690,945,815 - 69 2. Gain and loss recognised directly in equity - Net changes in fair value of available-for-sale financial assets - (5,548,561) - - - Others - - - - (3,894,502) Sub-total of 1&2 - (5,548,561) - 690,945,815 (3,894,502) 68 ------------------- ------------------- ------------------- ------------------- ------------------- ------ Appropriation of profits 42 - Distributions to shareholders - - - - - Balance at 31 December 2007 2,871,567,895 2,740,627,893 499,092,613 (1,540,405,268) (303,984) 4,57 Summary of Annual Repor BOE Technology Group Company Limited Consolidated statement of changes in shareholders’ equity (continued) for the year ended 31 December 2006 (Expressed in Renminbi) Attributable to equity shareholders of the Company Foreign currency translation differences Share Capital Surplus Retained for foreign Note capital reserve reserve earnings operations Balance at 31 December 2005 2,195,695,800 1,616,639,249 494,122,613 (1,095,418,183) 166,819,575 3,3 Changes in accounting policies 4(2) - (63,725,666) 4,970,000 634,869,575 14,277,462 5 Balance at 1 January 2006 2,195,695,800 1,552,913,583 499,092,613 (460,548,608) 181,097,037 3,9 ------------------- ------------------- ------------------- ------------------- ------------------- ------ Changes in equity for the year 1. Net loss for the year - - - (1,770,802,475) - (1,77 2. Gain and loss recognised directly in equity - Lost of control right over BOE-Hydis 6(3) - - - - - - Disposal of subsidiaries - - - - - - Others - - - - (177,506,519) (1 Sub-total of 1&2 - - - (1,770,802,475) (177,506,519) (1,9 ------------------- ------------------- ------------------- ------------------- ------------------- ------ Changes in equity for the year 3. Shareholders’ contributions and decrease of capital - Contribution by shareholders 675,872,095 1,193,262,871 - - - 1,8 4. Appropriation of profits - Distributions to shareholders - - - - - Balance at 31 December 2006 2,871,567,895 2,746,176,454 499,092,613 (2,231,351,083) 3,590,518 3,8 Summary of Annual Repor BOE Technology Group Company Limited Statement of changes in equity for the year ended 31 December 2007 (Expressed in Renminbi) Share Capital Surplus capital reserve reserve Balance at 31 December 2006 2,871,567,895 2,775,714,539 499,092,613 Balance at 1 January 2007 2,871,567,895 2,775,714,539 499,092,613 ------------------- ------------------- ------------------- Changes in equity for the year 1. Net loss for the year - - - 2. Loss recognised directly in equity - Net changes in fair value of available-for-sale financial assets - (5,548,561) - Sub-total of 1&2 - (5,548,561) - ------------------- ------------------- ------------------- Balance at 31 December 2007 2,871,567,895 2,770,165,978 499,092,613 Summary of Annual Repor BOE Technology Group Company Limited Statement of changes in equity (continued) for the year ended 31 December 2006 (Expressed in Renminbi) Share Capital Surplus capital reserve reserve Balance at 31 December 2005 2,195,695,800 1,644,981,467 494,122,613 Changes in accounting policies - (63,725,666) 4,970,000 Balance at 1 January 2006 2,195,695,800 1,581,255,801 499,092,613 ------------------- ------------------- ------------------- Changes in equity for the year 1. Net loss for the year - - - 2. Gain recognised directly in equity - Others - 1,195,867 - Sub-total of 1&2 - 1,195,867 - ------------------- ------------------- ------------------- 3. Shareholders’ contributions and decrease of capital - Contribution by shareholders 675,872,095 1,193,262,871 - Balance at 31 December 2006 2,871,567,895 2,775,714,539 499,092,613 Summary of Annual Repor Summary of Annual Report 2007 of BOE Technology Group Co., Ltd. 9.3 Detailed explanation on the changes in the accounting policies, accounting estimate or accounting methods compared with the latest Annual Repot √Applicable □Inapplicable The Group has issued B shares. The financial statements in prior years were reported by using the applicable PRC accounting regulations and the International Financial Reporting Standards (IFRS). Pursuant to the requirements of the “Q&A No.1 in China Accounting Standards Bulletin No.1” (CAS Bulletin 1) issued by the Minister of Finance in 16 November 2007, the Group, at the date of first-time adoption, made retrospective adjustments based on the following principles. Where the principles stipulated in CAS (2006) differ from those of the applicable PRC accounting regulations, and these principles in CAS (2006) are same as those adopted by the Group in preparing the financial statements in accordance with IFRS in prior years, the Group made retrospective adjustments to those items affected by the changes in accounting policies due to the first-time adoption of CAS (2006), based on the information used in preparing the financial statements in accordance with IFRS. In addition, the Group made retrospective adjustments to other items such as long-term equity investment、goodwill、Government grants、Borrowing costs、Intangible assets in accordance with the requirements of “CAS 38 – First-time Adoption of CAS” (CAS 38) and CAS Bulletin 1. 9.4 Content of significant accounting errors, amounts changed, reasons and influences □Applicable √Inapplicable 9.5 Compared with the latest Annual Report, there were some changes in the consolidation statement scope: √Applicable □Inapplicable 1) BOE Digital is a subsidiary which has discontinued operation. It is excluded from the group consolidation in 2006. According to Enterprise Accounting Standard No. 33 - Consolidated Financial Statements, BOE Digital is included in group consolidation in 2007. The former year’s comparative consolidated financial statements are restated accordingly. 2) Pursuant to the resolution passed by the Board of Directors, Vacuum Technology (formerly known as the Company’s Vacuum Electric Division) was registered as the Company’s wholly-owned subsidiary on 20 April 2007. It has been included in the consolidated financial statements for the current reporting period. 3) XiaMen BOE is a wholly owned subsidiary established by the Company on 30 November 2007. For the current reporting period, it has been included in the consolidated financial statements. 4) Last year, the jointly controlled entity Beijing Ashai Glass Electronics Co., Ltd. (Beijing Ashai) has been included in the consolidated financial statements using proportion method. In accordance with the requirements of the “Accounting Standards for Business Enterprises No. 33 - Consolidated Financial Statements”, investment in a jointly controlled entity is accounted for using equity method and is no longer included in the consolidated financial statements using proportion method. The relevant adjustments have been made using equity method for comparative figures. Beijing Ashai has not been included in prior year’s consolidated financial statements. 47