方大集团股份有限公司 CHINA FANGDA GROUP CO., LTD.

Semi-Annual Report 2007

Important Statement

The Board of Directors and the directors of the Company guarantee that there are no significant omissions, fictitious or misleading statements carried in the Report and we will accept individual and joint responsibilities for the truthfulness, accuracy and completeness of the Report. This report has been examined and adopted by the 20th meeting of the 4th term of Board. Mr. Wen Simei, the independent director absent the meeting for business engagement, he entrusted independent director Zhen Xueding to exercise his right of voting and issued the independent opinions. The other directors all presented the meeting. The Financial Statement carried in the Semi-annual Report was not audited. Mr. Xiong Jianming, the Chairman of Board, and Mr. Lin Kebin, the Chief Financial Officer declare: the Financial Report carried in this report is authentic and completed. This report was prepared both in English and Chinese. Should there be any conflict in understanding, the Chinese version shall prevail.

Definitions

The following terms are defined to the companies goes after them unless otherwise stated. the Company : China Fangda Group Co., Ltd. The Group: the Company and its subsidiaries Fangda Decoration: Fangda Decoration Engineering Co., Ltd. Fangda Yide: Fangda Yide New Material Co., Ltd. Fangda Aluminium: Jiangxi Fangda New-type Aluminium Co., Ltd. Fangda Guoke: Shenzhen Fangda Guoke Electri-Optical Technical Co., Ltd. Fangda Automatic: Shenzhen Fangda Automatic System Co., Ltd. Fangda New Materials: Fangda New Materials (Jiangxi) Co., Ltd. HK Junjia: Hong Kong Junjia Group Co., Ltd. Banglin: Shenzhen Banglin Technology Development Co., Ltd. Shilihe: Shenzhen Shilihe Investment Co., Ltd. Onforce: Onforce International Co., Ltd. LED: GaN Lighting Diode Semiconductor

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Table of Contents

Important Statement ...... 1 I. Company Profile ...... 4 II. Change in Capital Share and Major Shareholders...... 6 III. Particulars about the Directors, Supervisors and Senior Executives...... 9 IV. Report of the Board ...... 10 V. Significant Events...... 14 VI. Financial Report...... 19 VII. Documents for Reference ...... 19

3 I. Company Profile

1. Company Profile:

(1) Legal Name of the Company in Chinese and English In Chinese: 方大集团股份有限公司 （abbreviation：方大集团） In English: CHINA FANGDA GROUP CO., LTD. （abbreviation：CFDC ） (2) Legal Representative: Mr. Xiong Jianming (3) Secretary of the Board: Mr. Zhou Zhigang Securities affair liaison: Ms. Wang Shuiyin Address: Fangda Town, Xili Longjing, Nanshan District, Shenzhen, PRC Post code: 518055 Tel: 86(755) 26788571 ext. 6622 Fax: 86(755) 26788353 Email: [email protected] (4) Registered Address of the Company: Fangda Building, Kejinan 12th Avenue, High-tech Zone, Shenzhen, PR China. Post code: 518057 Head office: Technology Building, Fangda Town, Xili Longjing, Nanshan District, Shenzhen, PRC Post code: 518055 Email: [email protected] Website: http://www.fangda.com (5) Official Medias of Information Disclosure China Securities Journal, Security Times, , Hong Kong Commercial Daily Website assigned by China Securities Regulatory Commission for the disclosing of Annual Report: http://www.cninfo.com.cn Website of the Company where the Semi-Annual Report is available: http://www.fangda.com This Semi-annual Report is available at: the Secretary Office of the Board of the Company. (6) Abbreviations and Codes of the Stock and the Stock Exchange Listed A Stock: Fangda A 000055 Shenzhen Stock Exchange B Stock: Fangda B 200055 Shenzhen Stock Exchange

4 2. Financial Highlights (in RMB yuan)

（1） Major accounting indices Ended this report Ended previous Increase/decrease term year (%) Gross Assets 1,218,498,673.20 1,202,945,538.36 1.29% Owners’ (shareholders’) equity 504,884,266.84 495,109,976.64 1.97% Net asset per share 1.30 1.40 -7.14% Report term Same period last Increase/decrease (Jan-Jun) year (%) Operation profit -9,621,394.76 -6,259,907.48 -53.70% Total profit 10,107,834.02 9,957,386.75 1.51% Net profit 9,774,290.20 10,282,535.32 -4.94% Net profit deducted non-recurring -9,116,359.10 -5,921,532.73 -53.95% gain/loss Basic gains per share 0.030 0.030 0.00% Diluted gains per share 0.030 0.030 0.00% Net earnings / asset 1.94% 2.08% -0.14% Cash flow generated by business 3,202,804.34 40,747,240.56 -92.14% operation, net Net Cash flow per share generated by 0.008 0.120 -93.33% business operation

Note: The non-recurring gain/loss were amounted to RMB18,890,649.30. Namely, RMB1,743,825.28 of non-current asset disposal; RMB302,216.00 of government subsidy; RMB12,000,000.00 of from the discrepancy between the fair value of recognizable assets before enterprise consolidation and the consolidation costs; RMB5,785,499.03 of debt reorganization; RMB-102,311.53 of other non-business income; and RMB838,579.48 of minority shareholders’ equity of non-recurring gain/loss.

（2） Impact on the net profit and net asset due to adjustment under IAS (In RMB Yuan) Domestic Accounting Standard International Accounting Standard Net profit 9,774,290.20 9,774,290.20 Net asset 504,884,266.84 612,368,494.61 After adopting of the new accounting standard, the differences between the net profit Statement produced by the domestic accounting standard and the overseas standard has been about the eliminated. The difference of net assets between the two standard were those accumulated diversity from the previous terms to the beginning of this term.

（3） Net income/asset ratio and earnings per share

Income over net asset Earnings per share Profit Items Basic Fully Weighted earnings Diluted earnings diluted average per share per share Operational profit -1.91% -1.92% -0.02 -0.02 Net profit 1.94% 1.95% 0.03 0.03 Net profit after deducting of -1.81% -1.82% -0.02 -0.02 non-recurring gain/loss

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II. Change in Capital Share and Major Shareholders

(I) Change of Capital Share

1. Causation of the change In the report term, the Shareholders’ Annual Meeting 2006 passed the plan of capitalizing of capital reserves to the entire shareholders as the following: basing on the total of 352,716,000 capital shares, 1 bonus share was allotted to each 10 shares of the entire shareholders, namely the capital shares were increased by 35,271,600 shares. Among them, 17,972,808 were allotted to A shareholders at 1 to 10 basis; 17,298,792 shares were allotted to B shareholders at 1 to 10 basis. The capital shares of the Company were increased up to 387,987,600 shares after completion of this capitalization.

2. Approval upon the change It was approved by the Shareholders’ Annual Meeting 2006.

3. Change in total capital shares and shareholding structure

(1) Change in capital shares Before the change Changed (+,-) After the change Issuing Transferred Bonus Amount Proportion of new from Others Sub-total Amount Proportion shares shares reserves I. Shares with conditional 71,919,175 20.39% 7,191,918 3,724 7,195,642 79,114,817 20.39% subscription 1. State-owned shares 2. State-owned legal person shares 3. Other domestic shares 71,919,175 20.39% 7,191,918 3,724 7,195,642 79,114,817 20.39% Incl. Non-government domestic legal person 71,840,400 20.37% 7,184,040 7,184,040 79,024,440 20.37% shares Domestic natural 78,775 0.02% 7,878 3,724 11,602 90,377 0.02% person shares 4. Share held by foreign investors Incl. Shares held by foreign legal persons Foreign natural person shares II. Shares with unconditional 280,796,825 79.61% 28,079,682 -3,724 28,075,958 308,872,783 79.61% subscription 1. Common shares in 107,808,905 30.57% 10,780,890 -3,724 10,777,166 118,586,071 30.57% RMB 2. Foreign shares in 172,987,920 49.04% 17,298,792 17,298,792 190,286,712 49.04% domestic market 3. Foreign shares in overseas market 4. Others III. Total of capital shares 352,716,000 100.00% 35,271,600 35,271,600 387,987,600 100.00%

6 (2) Date when the conditional shares are able to be traded

In shares Newly added Balance of shares with Balance of Date Remarks tradable shares conditional subscription unconditional shares April 10 2008 38,798,760 40,225,680 347,761,920 April 10 2009 40,225,680 0 387,987,600 (3) Amount and condition of the top 10 holders of conditional shares

In shares Shares with Date when Newly added Name of the No. conditioned trading is tradable Conditions holder subscription allowed shares Can’t be traded in 12 months since the launching of non-negotiable shares reconstruction plan; upon expiring 2008-04-10 19,399,380 of the above term, when the former non-negotiable share 1 Banglin 46,600,620 holders holding above 5% of the shares is trading its shares in the market, the number of traded shares shall not exceed 5% in 12 months, and shall not exceed 10% in 24 2009-04-10 27,201,240 months.

2008-04-10 19,399,380 Can’t be traded in 12 months since the launching of non-negotiable shares reconstruction plan; upon expiring Shenzhen of the above term, when the former non-negotiable share Shilihe 2 32,423,820 holders holding above 5% of the shares is trading its Investment shares in the market, the number of traded shares shall not Co., Ltd. exceed 5% in 12 months, and shall not exceed 10% in 24 months. 2009-04-10 13,024,440

4. Registration of the shares The newly added A shares have been transferred directly to the accounts of A share holders on May 11th 2007, while the newly added B shares have been transferred directly into the accounts of B share holders on May 15th 2007.

7 5. Shareholding status at the end of report term (as of June 30th 2007, in shares) Total of shareholders 58381 (including 34399 A-share holders, and 23982 B-share holders) Top 10 Shareholders Name of the Properties of Share Conditional Shares in Pledged or Total shares shareholder shareholder proportion % shares trading frozen Banglin Legal person 13.56% 52,600,620 46,600,620 6,000,000 46,600,620 shares Shenzhen Shilihe Legal person 8.49% 32,923,820 32,423,820 500,000 32,423,820 Investment Co., shares Ltd. Onforce Foreign International 5.20% 20,172,680 0 20,172,680 0 shares Ltd. A-share Sun En’ju 0.59% 2,300,000 0 2,300,000 N/A holder Chen Jinbiao Foreign 0.53% 2,038,888 0 2,038,888 N/A shares Shen Guo Foreign 0.41% 1,609,700 0 1,609,700 N/A shares Zhang Lingyi A-share 0.26% 1,023,330 0 1,023,330 N/A holder Lu Haiyun Foreign 0.24% 915,563 0 915,563 N/A shares Lu Yineng Foreign 0.21% 797,807 0 797,807 N/A shares Chen Foreign 0.19% 731,661 0 731,661 N/A Rongsheng shares Top 10 holders of unconditional shares Name of the shareholder Unconditional shares Category of shares Onforce International Ltd. 20,172,680 B shares Banglin 6,000,000 A shares Sun En’ju 2,300,000 A shares Chen Jinbiao 2,038,888 B shares Shen Guo 1,609,700 B shares Zhang Lingyi 1,023,330 A shares Lu Haiyun 915,563 B shares Lu Yineng 797,807 B shares Chen Rongsheng 731,661 B shares 内藤证券株式会社 729,662 B shares Notes to relationship or “action Among the top 10 shareholders, Banglin and Onforce are under the same controlling in concert” among the top ten shareholder, therefore they are regarded as related and act-in-concert parties. As for the other shareholders. holders of current shares, the Company has not been informed any situation of related parties or concerted operators. 6. Influences of the capital share changing on the financial indices of the latest year and latest term, such as basic earnings per share and diluted earnings per share, and net asset per share attributable to common shareholders of the Company. Upon completion of this common reserve capitalizing, amortized to the new amount of capital shares, say 387,987,600 shares, the earnings per share of 2006 was RMB0.027, the diluted earnings per share was RMB0.027, and net asset per share attributable to common shareholders of the Company was RMB1.276. 7. None of the controlling shareholder or substantial dominator of the Company has changed during the report term.

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III. Particulars about the Directors, Supervisors and Senior Executives

1. Changes in Shares Held by Directors, Supervisors and Senior Executives

Shares held at the Shares held at Changed in the Cause of Name Position beginning of term the end of term report term change Xiong Jianming Chairman, President 53,022 58,324 5,302 Capitalizing Wang Shengguo Director, Vice president 18,684 20,553 1,869 of common reserves Xiong Jianwei Director 0 0 Zhou Zhigang Director, Secretary of 0 0 the Board Zheng Xueding Independent Director 0 0 Dong Likun Independent Director 0 0 Wen Simei Independent Director 0 0 Yu Guoan Host of the Supervisory 0 0 Committee Song Wenqing Supervisor 0 0 Zheng Hua Supervisor 0 0 Yang Xiaozhuan Vice President 0 0 Li Gang Vice President 0 0

2. Changes occurred to the directors, supervisors and senior executives in the current term.

Name Position Job term Causation Approved by Shao Expiration of office term The Shareholders’ Annual Independent Director 2005.5.27-2007.4.9 Hanqing – 6 years Meeting 2006 Dong The Shareholders’ Annual Independent Director 2007.4.9-2008.5.27 Re-electing Likun Meeting 2006 Zhou The Shareholders’ Annual Director 2007.4.9-2008.5.27 To fill the vacancy Zhigang Meeting 2006 The 15th meeting of the 4th Li Gang Vice President 2007.3.18-2008.5.27 ----- term of Board Host of the Supervisory Resigned for business The Shareholders’ Annual Li Bangyan 2005.5.27-2007.4.9 Committee engagement Meeting 2006 Host of the Supervisory The Shareholders’ Annual Yu Guoan 2007.4.9-2008.5.27 Re-electing Committee Meeting 2006

3. The Shareholders’ Annual Meeting 2006 was held in the report term.

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IV. Report of the Board

1. Financial position of the Company

In RMB Decrease/increase Items Jan-Jun 2007 Jan-Jun 2006 (±%) Business turnover 268,542,314.95 327,105,779.46 -17.90% Business profit -9,621,394.76 -6,259,907.48 -53.70% Administrative expenses 21,090,752.73 34,291,224.60 -38.50% Net profit 9,774,290.20 10,282,535.32 -4.94% Net increasing of cash and cash equivalents 27,627,650.41 6,389,466.90 332.39% Decrease/increase June 30 2007 Dec 31 2006 (±%) Gross assets 1,218,498,673.20 1,202,945,538.36 1.29% Shareholders’ Equity 504,884,266.84 495,109,976.64 1.97%

Major causes of the above movements: (1) Major business turnover has decreased by 17.90% from the same period of last year, which was caused by completion of the screen door projects of Tianjin Metro and Guangzhou Metro Line 3 at end of last year, thus the sales income of the corresponding period of last year decreased significantly. For the same reason, and the higher profit ratio of metro station screen door systems, the operation profit has decreased by 53.70% from the same period of last year. (2) Administrative expenses has decreased by 38.50% from the same period of last year, which was caused by enhancing of internal management efficiency and reducing of relative expenses. Namely, the lawsuit expenses has decreased by RMB3.05 million, Traveling, rental, and entertainment expenses decreased by RMB1.38 million., offsetting of welfare fee of RMB2.5 million, and the bad debt provisions has decreased by RMB4.5 million. (3) Net increasing of cash and cash equivalents was significant, that was caused by disposal of idle assets and increasing of borrowings.

2. Business Overview:

The Company’s business scope is composed by: development, design, production, installation, technical consulting & training, sales and after-sales service of new building materials, composite materials, metal products, metal structure, environmental protection equipment and materials, security equipment, metallurgic equipment, optical, mechanical and electronic integration products, macromolecule materials and products, fine chemical products, machinery equipment, photo-electric materials and equipment, photo-electric equipment, electronic display equipment, audio/video equipment, traffic facilities, metro platform screen doors, various ventilation equipment and products, plunger equipment, centralized air-conditioning equipment and spares and parts, semiconductor materials and devices, integrated circuit, illumination products and equipment, solar energy products, etc. The high-tech products of the Company’s new-type construction materials are the major source of business turnover and net profit of the Company. Products account for over 10% of the Company’s major business turnover or major business profit are: glass wall, metro screen doors, multi-layer aluminium board, single layer profiled aluminium board, and profiled aluminium materials.

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Increase/decrease of Increase/decrease of Gross Increase/decrease of On industry or Operation operation cost over the gross profit ratio over Turnover profit turnover over the same product cost same period of last the same period of last ratio (%) period of last year (%) year (%) year (%) Sales of products 10,362.08 9,012.89 13.02% -39.89% -37.40% -3.47% Construction and 15,205.96 13,230.61 12.99% 7.25% 5.63% 1.33% installations Property rent 1,286.19 388.27 69.81% -0.52% -6.36% 1.88% income Distribution on products Glass wall products 15,601.30 13,630.03 12.64% 10.04% 8.82% 0.98% Complex aluminium boards 3,386.85 3,156.45 6.80% -33.16% -31.25% -2.58% and single profiled plates Profiled aluminium products and 2,636.16 2,574.74 2.33% -10.55% -6.48% -4.26% coloured profiled plates Semi-conductor 1,390.33 1,258.45 9.49% 21.64% 20.27% 1.03% lighting products Screen door of 2,066.77 1,381.34 33.16% -71.84% -74.25% 6.26% metro station Others 1,772.81 630.74 64.42% -12.97% -40.31% 16.29%

Regions Turnover Increase/decrease of turnover over the last year (%) North 4,344.79 -49.47% South-west 2,142.43 2,517.26% East 5,879.43 7.41% North-east 152.80 -70.84% Central 745.70 -69.88% North-west 638.86 6,288.62% South 10,847.51 -14.87% Export 2,102.71 -20.09% Total 26,854.23 -14.05%

3. Business Analysis

First half-year, our country's economy continues keeping fast increase. At the same time, commodity price index amplitude aggrandizes. The price of energy resources and raw materials fluctuates at high level. Macroscopic regulation pressure further aggrandizes. Enterprises operation environment hasten tightly and operation cost increases. Our company overcomes many difficulties, and accomplishes operation target basically. During the report, our company signed sale orders amounted to RMB 392,690,000. The increasing ratio is 37.95%, then accomplished the major business turnover of RMB268,540,000, the net profit of RMB9,770,000, and the new cash flow of RMB2,7,630,000.

During the report term, our company's new-typed building materials industry market exploited fruitfully, complete localized metro screen doors product market which acquired major break while semiconductor lighting industry achieved the new developing opportunity.

1) New-typed building materials industry market exploit fruitfully During the report term, our company's new-typed building materials industry market exploited fruitfully and improved the quality of orders, continually won the bids of main projects, such as Xiamen Haifu center, Macao Science Museum, Xi'an's European and Asian economic forum, 2008 Olympics Games

11 Bicycle Gymnasium- --Laoshan Bicycle gymnasium, Mongolian Ulanbator development building, Tianjin Chengji economic and trade center, Nanjing Hongqiao New urban Square, Shenyang Heileidon Hotel, etc. The large-scale projects of aluminium board supply, such as Guangzhou Agricultural Bank Building, Hupei Province Tumour Hospital, Fujian Longyan Tobacco Building, etc. During the report, our company full capital sub- corporation, i.e. Shenzhen Fuda Decoration Project Ltd, which undertook Chongqing era square curtain wall project, was rewarded Chinese architectural engineering "Luban rewards".

Under the continually raising situation of RMB in value and debase export drawback, rely on technology, brand and other integrated advantages, our company signed AUD 100,000,000 (about RMB 650,000,000) curtain walls product overseas sale agreement, which is the important harvest and new starting point of our company actively exploiting international market. It is also a big brand at international range in getting the approved best annotation, which shows our company curtain walls product powerful increasing impetus and indicates our company curtain walls product march into a new developing period. At present, our company architectural curtain wall product and aluminium board product have been widely used in domestic area, it also widely used in America, Russia, Australia, etc. The international influence and competitive power of Fangda Brand Product enhances day by day. The new-typed building materials industry market exploitation harvest establishes a good basis for our company’s future development.

2) Complete local made metro screen doors product market achieves major break During the report, full subsidiaries of the Company, i.e. Shenzhen Fuda Automatic System Ltd and Shenzhen Metro Ltd signed the project contract of Shenzhen Metro No. one line continued construction engineering screen door (PSD) system. It means our company complete sinicized metro screen door product will be used in metro engineering project, which is also the first practical application of completely local made metro screen door product in China. Meanwhile, it indicates Chinese metro screen door major equipment manufacturing achieved great break. Our company local made metro screen door product have very important significance to cut large scale cost, enhance market competitive power and share, and the development of our company metro screen door industry. At present, our company metro screen door product has been widely and successfully used in Chinese urban metro system, such as Hong Kong, Guangzhou, Shanghai, Tianjin, Beijing, Shenzhen, etc. The market share takes domestic primacy, and keep integrated leading place of talent, technology, market, brand, etc. in metro screen door industry.

3) Semiconductor lighting industry achieves new development opportunity. During the report term, in order to further enlarge its scale and enhance competitive power, our company, Shenyang city government, and Shenyang Hunnan New District administrative committee signed the cooperation agreement of Shenyang joint venture establishment of Shenyang Fangda Semiconductor Lighting Ltd in Shenyang, which has very important significance to improve our company semiconductor lighting industry. Via several years of technical accumulation and development, our company has occupied the top of Chinese semiconductor lighting industry, achieved a series of significant technical break and independent intellectual property right, formed a whole industrial chain of terminal market application from semiconductor lighting extended sheet, chip, to relative products and development, manufacture, construction of engineering application, etc. and improve continually in product operation process. Fangda Ltd entered a new development stage. 4) The great developing potential in green products

The revised draft of "Energy Resources saving Law", which was submitted to Standing Committee of the National People Congress consider on 24th, June, 2007. In this law, Energy resource saving was considered to basic policy. Energy resource saving and pollution reducing are decision-making and disposal of government, which is the only way to build up saving resource and kindly environment society. Meanwhile, it also can promote economic construction adjustment and change increasing style. Energy resource saving is the best way to reduce pollution. To develop circular economy and improve energy resource saving and pollution reducing measure by different levels' government, which can provide the historical development opportunity for manufacturer of green product and equipment, so green product industry has an important

12 position and great potential in future economic development. Our company’s semiconductor lighting product, underground shield door product, solar power curtain wall, etc. are efficient green product, which have the integrated advantage of independent intellectual property right, advanced technic, brand, market, etc. and accord with national industry development trend. Now they are widely in different field and have great potential, which establish good basis for our company to share the harvest of national developing circular economy.

4. Investment in the report term

1) Application of the proceeds raised through share placing The Company raised no funds through public offering in the report term. The fund raised previously has been utilized completely in year 2000. 2) Utilization of fund from channel other than share placing The Company conducted no major investment projects financed by fund from other resources than share placing.

5. Business operation results in the report term There’s no difference between the actual results and the predictions of the previous periodic reports.

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V. Significant Events

1. Company Administration

Up to present, the Company has already established essential rules according to the relative laws and regulations, including the Articles of Association, Shareholders’ Meeting Criteria, Board Meeting Criteria, Supervisory Committee Meeting Criteria, Information Disclosure Criteria, and Investor Reception and Promoting Criteria. Within the Board of Directors, the Company established the special committees including Strategy Committee and Auditing Committee. Up to present, all of the aforesaid criteria and regulations have been properly and effectively practiced. The overall administrative structure is basically complying with the requirements of China Securities Regulatory Commission, and it will be further improved constantly along with the Company’s development. According to the “Circular about Special Activities to Enhance Company Administration” (known as “Circular No.28” hereinafter) issued by China Securities Regulatory Commission the Company performed proper inspections against the instructions attached to Circular No. 28. The details are as the followings: (1) The information disclosure administration needs to be improved; (2)The functions of special committees of the Board need to be further enhanced, as well as the internal auditing process. (3) The internal controlling system needs to be further specialized and improved to enforce its performance. Corresponding reorganizing plan was produced focusing on the problems discovered in the inspection, and was passed on the 19th meeting of the 4th term of Board. In the report term, part of the reorganizing plan has been carried out. The Information Disclosure Criteria and Investor Reception and Promotion Criteria were produced and passed by the Board. The Administrative Criteria of Shareholding by Directors, Supervisors, and Executives has been drafted as well as the Administrative Criteria of Fund from Financing. The entire plan will be completed before the end of 2007. The company will keep enhancing the administration practice, improving the internal control system, to ensure the Company a healthy development.

2. Execution of profit distribution and capitalizing of common reserves in the report term.

No profit distribution was carried out in the report term. The common reserve capitalizing plan of 2006 is: base on the total capital shares of 352,716,000, capitalizing of common reserves will be one share upon each 10 shares to the entire shareholders. Totally 35,271,600 shares are capitalized. The total of capital shares will increase from 352,716,000 up to 387,987,600 shares. The newly added A shares have been transferred directly to the accounts of A share holders on May 11th 2007, while the newly added B shares have been transferred directly into the accounts of B share holders on May 15th 2007. The Company conducted no share equity promotion scheme in the report term.

3. No major lawsuit or arbitration issues occurred in the report term.

On April 30th 2007, Shenzhen Fangda Decoration Engineering Co., Ltd.- the subsidiary of the Company appealed to Heilongjiang Ha’erbin People’s Middle Court for the overdue project payment owed by Heilongjiang Beiya Real-estate Development Co., Ltd. The claim was the project payment and penalty totalled to RMB10.9542 million, and also the property preservation. The court accepted the appeal on May 17th 2007. No judgment has been made until the end of the report term. Nevertheless, this issue made no major influence on the Company’s financial situation or its operation results.

14 4. Investment in the report term, including holding of shares of other listed companies, commercial banks, securities companies, companies, trust companies, future companies, and companies which is planning to place shares publicly.

In RMB Change of Gain/loss of Stock Amount Initial Share Book value at the owners’ equity Stock ID the report Code (shares) investment portion end of term in the report term term Xugong 000425 1,988,500 9,520,388.31 0.36% 9,520,388.31 0.00 0.00 Tech Sihuan 000518 7,195,280 6,270,000.00 0.70% 6,325,296.00 0.00 0.00 Biology S*ST 600800 Magnetic 1,000,000 4,850,000.00 0.18% 4,850,000.00 0.00 0.00 Card Total 20,640,388.31 20,695,684.31 0.00 0.00

5. Acquisition / selling of asset, intake, or merger event occurred during the report term.

(1) The Company acquired no assets in the report term. (2) Selling of assets in the report term. On March 20th 2007, the Company sold the 100% share equities of Fangda (US) Company to natural person Zhang Jian at price of USD5,003,000, which influenced the net gain/loss by RMB-621 thousand. However it made no major influence on the consistency of the Company’s business or stability of the executive team. On April 30 2007, the 100% share equities of Shenzhen Fangda Special Structure Co., Ltd. hold by the Company and its subsidiaries to natural person Zhang Hanjin, and Rao Libing at price of RMB5 million, which influenced the net gain/loss by RMB-442.8 thousand. It made no major influence on the consistency of the Company’s business or stability of the executive team.

6. No significant related transactions occurred during the report term.

7. Particulars about material contracts and their fulfilling

(1) The Company has never involved in such events as keeping as custodian, contracted or leased any other company’s assets and vice versa in the report term. (2) Particulars about material contracts（including the agreement） and their fulfilling ① On May 5th 2007, Shenzhen Fangda Decoration Engineering Co., Ltd. (Fangda Decoration) – the fully owned subsidiary of the Company entered the glass curtain wall supplying contract with PACIFIC SINO ENTERPRISES LIMITED and KIKUKAWA INDUSTRY INTERNATIONAL LTD. Since the engaging of the contract, if the products of Fangda Decoration are meeting with the requirements of PACIFIC SINO and KIKUKAWA, and at acceptable prices, they will purchase the curtain wall products from Fangda Decoration from the assigned locations of Australia, Dubai, India, and South Africa. The total purchase will not less than 100 million Australia Dollar, which is RMB650 million. From the end of report term up to the date of this report, the first order of this agreement has been launched with amount of RMB7.69 million. ② On June 3 2007, the Company agreed to establish Shenyang Fangda Semiconductor Lighting Co., Ltd. (the “Joint Company”) together with Shenyang People’s Government and Shenyang Hunnan New

15 District Administration Committee. The total investment will be RMB500 million, and the Company will be registered to RMB200 million of capital. Shenyang People’s Government and Shenyang Hunnan New District Administration Committee will invest with RMB100 million of cash and land using rights of RMB25 million to take 25% of the registered capital. While the Company is about to invest with its current semiconductor assets to take 75% of the registered capital. The Joint Company will be engaged in the business range of: semiconductor extension, chips, sealing, testing, semiconductor lighting products and projects, automatic equipments, researching, manufacturing and sales of new materials. The details of this cooperation is under negotiation at present. (3) Independent opinions of the independent directors on the external guarantees occurred in this term and accumulated: In accordance with the document Zheng-Jian-Fa [2003]56 titled “The notification to the listed companies for the regulating of fund interchange with related parties and external guarantees”, as the independent directors of the Company, we performed inspection on the situation of the Company regarding the position of external guarantees. In our opinion, the Company didn’t provided any new guarantee in the report term to any of the controlling shareholder, other related parties, nor any none legal person individual or entity. None of the controlling shareholder or other related parties have forced the Company to provide guarantee to any 3rd parties. Following is the details of guarantees at June 30th 2007.

RMB0’000 External Guarantee (Exclude controlled subsidiaries) Guarantee provided Date of Amount Type of Term Completed or not Related party or to contract guaranteed guarantee not ------Total occurred in the report term - Total of balance of guarantees in the report term - Guarantee provided to controlled subsidiaries Total of guarantee provide to controlled subsidiaries in the report term 15,192.22 Total of balance of guarantee provide to controlled subsidiaries in the report term 28,192.22 Total of guarantee (including provided to controlled subsidiaries) Total of guarantees 28,192.22 Proportion of the total guarantee in the net asset of the Company 55.84 % Including: Balance of guarantee provided to controlling shareholder and other related parties who 0 take less than 50% of the capital share Total of guarantee provided directly or indirectly to parties with liability/asset ratio over 0 70% The part of guarantee exceeded 50% of the net asset 2,948.01 Total of the above three subjects 2,948.01 (4) In the report term, the Company never entrusted others to manage major cash assets.

16 8. No commitment event carried out by the Company or any of the shareholders holding more than 5% of the share capital in the report term, which made major influence on the business results or financial situation.

9. The Financial Report carried in this Semi-Annual Report was not audited by CPAs. The Company didn’t replaced the CPAs in the report term.

10. In the report term, none of the directors, supervisors, executives, shareholders, substantial dominators, buyer of the Company was investigated by relative departments, executed by legal & discipline departments, delivered to legal departments, appeared for crime, investigated or punished by China Securities Regulatory Commission, restricted to security market, criticized publicly, regarded as improper person, punished by other executive departments, or publicly condemned by the Stock Exchange.

11. Reception of investigators in the report term

The Company keeps following with the “Instruction for Fair Information Disclosure by Shenzhen Stock Exchange”. In the report term, no organization investors such as foundation companies or individual investors investigated the Company. To ensure the fairness of information disclosure, the Company provided no non-public information selectively, privately, in advance, or to particular objects. 12. The followings are the regular and extraordinary announcements and reports published in the report term: No. Content Date of Press media Page No. publishing 2007-01 Resolutions of the 1st Shareholders’ Jan 9 2007 China Securities Journal C005 Special Meeting 2007 Securities Times C7 Shanghai Securities Daily D12 Hong Kong Commercial Daily (English) B3 2007-02 Announcement Jan 11 China Securities Journal C004 2007 Securities Times B8 Shanghai Securities Daily D9 Hong Kong Commercial Daily (English) B5 2007-03 Annual Report 2007 Summary Mar 20 China Securities Journal D032 2007 Securities Times C23、C24 Shanghai Securities Daily D9、D10 Hong Kong Commercial Daily (English) B8、B9 2007-04 Resolutions of the 15th meeting of the Mar 20 China Securities Journal D032 4th term of board 2007 Securities Times C24 Shanghai Securities Daily D9 Hong Kong Commercial Daily (English) B9 2007-05 Announcement Mar 20 China Securities Journal D032 The Resolutions of the 9th Meeting of 2007 Securities Times C23 the 4th Term of Supervisory Shanghai Securities Daily D9 Committee Hong Kong Commercial Daily (English) B9 2007-06 Statement of the Independent Director Mar 20 China Securities Journal D032 Nominators, Statement of the 2007 Securities Times C23 Independent Director Nominees, Shanghai Securities Daily D9 Supplementary Statement of the Nominees of Independent Directors on Hong Kong Commercial Daily (English) B9 their independency 2007-07 Notice about convening of the Mar 20 China Securities Journal D032 Shareholders’ Annual Meeting 2007 2007 Securities Times C23 Shanghai Securities Daily D9 Hong Kong Commercial Daily (English) B9 2007-08 Announcement Mar 28 China Securities Journal A12 2007 Securities Times A20 Shanghai Securities Daily D89 Hong Kong Commercial Daily (English) B3

17 2007-09 The Resolutions of Shareholders’ April 10 China Securities Journal C005 Annual Meeting 2007 2007 Securities Times A9 Shanghai Securities Daily D62 Hong Kong Commercial Daily (English) B5 2007-10 Resolutions of the 10th Meeting of the April 10 China Securities Journal C005 4th Term of Supervisory Committee 2007 Securities Times A9 Shanghai Securities Daily D62 Hong Kong Commercial Daily (English) B5 2007-11 Announcement on Releasing of Share April 19th China Securities Journal C005 Equities from Pledging 2007 Securities Times C89 Shanghai Securities Daily D75 Hong Kong Commercial Daily (English) B8 2007-12 The 1st Quarterly Report 2007 April 21 China Securities Journal C045 2007 Securities Times C24 Shanghai Securities Daily 65 Hong Kong Commercial Daily (English) A4 2007-13 Prompts on Releasing of the April 23 China Securities Journal C013 Conditional Shares 2007 Securities Times C4 Shanghai Securities Daily A30 Hong Kong Commercial Daily (English) A7 2007-14 Announcement on Capitalizing of April 28, China Securities Journal C005 Common Reserves 2007 Securities Times C8 Shanghai Securities Daily 158 Hong Kong Commercial Daily (English) A6 2007-15 Announcement May 9 China Securities Journal C009 2007 Securities Times B8 Shanghai Securities Daily D24 Hong Kong Commercial Daily (English) A6 2007-16 Public Notice on Irregular Vibration of May 14, China Securities Journal C008 Stock Price 2007 Securities Times C11 Shanghai Securities Daily A16 Hong Kong Commercial Daily (English) B3 2007-17 Shareholder’s Announcement on May 17 China Securities Journal C008 Decreasing of Shareholding 2007 Securities Times B9 Shanghai Securities Daily D3 Hong Kong Commercial Daily (English) A4 2007-18 Resolutions of the 17th Meeting of the May 19 China Securities Journal C016 4th Term of Board 2007 Securities Times C20 Shanghai Securities Daily 32 Hong Kong Commercial Daily (English) B3 2007-19 Announcement May 19 China Securities Journal C016 2007 Securities Times C20 Shanghai Securities Daily 32 Hong Kong Commercial Daily (English) B3 2007-20 Announcement May 26 China Securities Journal C004 2007 Securities Times C4 Shanghai Securities Daily 28 Hong Kong Commercial Daily (English) B5 2007-21 Announcement May 29 China Securities Journal C017 2007 Securities Times B8 Shanghai Securities Daily D8 Hong Kong Commercial Daily (English) B7 2007-22 Announcement of Resolutions of the June 5 China Securities Journal C008 18th Meeting of the 4th Term of Board 2007 Securities Times C12 Shanghai Securities Daily D14 Hong Kong Commercial Daily (English) A4 2007-23 Announcement on External Investment June 5 China Securities Journal C008 2007 Securities Times C12 Shanghai Securities Daily D14 Hong Kong Commercial Daily (English) A4 2007-24 Announcement June 12 China Securities Journal C004 2007 Securities Times C20 Shanghai Securities Daily D17 Hong Kong Commercial Daily (English) B4

18 2007-25 Resolutions of the 19th Meeting of the June 30 China Securities Journal C004 4th Term of Board 2007 Securities Times C41 Shanghai Securities Daily 80 Hong Kong Commercial Daily (English) B11 All of the above announcements are available in the website assigned by China Securities Regulatory Commission: www.cninfo.com.cn

VI. Financial Report

(Not Audited)

1. Financial Statements (Not audited, enclosed)

2. Notes to Financial Statements (enclosed)

VII. Documents for Reference

1. Semi-annual Report carried with personal signature and seal of the Chairman of the Board;

2. Accounting Statements with signatures and seals of the legal representative and financial

principal and chief of accounting department;

3. Originals of all documents and manuscripts of Public Notices of the Company disclosed in

public in the newspapers as designated by China Securities Regulatory Commission.

4. The Article of Association of the Company adopted by the latest Shareholders’ General Meeting.

The Board of Directors of

China Fangda Group Co., Ltd.

July 21st 2007

19 Balance Sheet

Prepared by: China Fangda Group Co., Ltd. June 30th 2007 in RMB yuan At the end of term Beginning of term Items Consolidated Parent company Consolidated Parent company Current asset: Monetary fund 151,341,675.27 23,561,797.30 123,714,024.86 14,945,658.66 Settlement provision Outgoing call loan Trading financial assets 200,000.00 Notes receivable 941,314.00 369,000.00 Account receivable 324,659,314.53 85,363,864.05 342,046,757.77 82,812,141.30 Prepaid fund 24,886,806.20 2,329,665.45 17,155,062.23 3,872,222.98 Insurance receivable Reinsurance receivable Provisions of Reinsurance contracts receivable Interest receivable Other account receivable 35,903,272.01 83,632,041.81 25,661,514.71 91,804,346.85 Repurchasing of financial assets Inventories 83,325,969.29 12,883,030.93 101,483,784.74 14,459,232.75 Non-current asset due in 1 year Other current asset Total of current asset 621,058,351.30 207,770,399.54 610,630,144.31 207,893,602.54 Non-current assets Loans and payment on other’s behalf disbursed Disposable financial asset Expired investment in possess Long-term receivable Long-term share equity investment 32,345,684.31 253,116,074.14 17,345,684.31 267,207,418.49 Property investment 209,196,628.00 202,266,626.00 209,196,628.00 202,266,626.00 Fixed assets 290,557,421.43 106,434,626.32 305,382,490.39 110,463,934.04 Construction in progress 424,809.06 155,452.00 Engineering material Fixed asset disposal Production physical assets Gas & petrol Intangible assets 37,007,444.17 30,485,995.60 37,104,238.39 30,192,036.94 R&D expense 5,377,269.89 Goodwill 306,626.75 Long-term expenses to be amortized 30,750.00 30,750.00 Differed income tax asset 22,500,315.04 12,598,403.53 22,793,524.21 12,635,622.20 Other non-current asset Total of non-current assets 597,440,321.90 604,901,725.59 592,315,394.05 622,765,637.67 Total of assets 1,218,498,673.20 812,672,125.13 1,202,945,538.36 830,659,240.21

Current liabilities Short-term loans 477,500,000.00 65,000,000.00 421,352,390.00 120,000,000.00 Loan from Central Bank Deposit received and hold for others Call loan received Trade off financial liabilities Notes payable 34,602,236.21 20,000,000.00 38,141,544.89 10,000,000.00 Account payable 109,933,423.48 2,976,624.08 133,567,698.13 11,078,308.53 Prepayment received 38,587,691.50 3,561,285.14 50,635,531.06 5,923,109.51 Selling of repurchased financial assets Fees and commissions receivable Employees’ wage payable 3,281,725.55 -38,456.00 4,474,097.41 Tax payable 12,332,225.62 1,302,897.44 15,778,377.34 1,108,374.19 Interest payable Other account payable 14,325,558.52 220,154,060.50 21,174,520.28 181,006,830.01 Reinsurance fee payable Insurance contract provision Entrusted trading of securities Entrusted selling of securities Non-current liability due in 1 year Other current liability Total of current liability 690,562,860.88 312,956,411.16 685,124,159.11 329,116,622.24 Non-current liabilities Long-term borrowings Bond payable Long-term payable Special payable 8,400,000.00 4,800,000.00 8,400,000.00 4,800,000.00 Expected liabilities 2,000,000.00 2,000,000.00 Differed income tax liability 7,466,283.93 6,278,894.28 7,466,283.93 6,278,894.28 Other non-recurring liabilities Total of non-current liabilities 17,866,283.93 11,078,894.28 17,866,283.93 11,078,894.28 Total of liability 708,429,144.81 324,035,305.44 702,990,443.04 340,195,516.52 Owners’ equity (or shareholders’ equity) Practical capital collected (or share capital) 387,987,600.00 387,987,600.00 352,716,000.00 352,716,000.00 Capital reserves 72,810,271.38 72,810,271.38 108,321,912.25 108,321,912.25 Less: Shares in stock Surplus reserves 30,808,684.43 62,830,896.69 32,022,212.26 Common risk provision Attributable profit 13,277,711.03 27,838,948.31 -28,518,791.43 -2,356,359.95 Different of foreign currency translation -240,040.87 -240,040.87 Total of owner’s equity belong to the parent company 504,884,266.84 488,636,819.69 495,109,976.64 490,463,723.69 Minor shareholders’ equity 5,185,261.55 4,845,118.68 Total of owners’ equity 510,069,528.39 488,636,819.69 499,955,095.32 490,463,723.69 Total of liabilities and owners’ equity 1,218,498,673.20 812,672,125.13 1,202,945,538.36 830,659,240.21

2 Income Statement

Prepared by: China Fangda Group Co., Ltd. Jan-Jun 2007 RMB Yuan Current term Same period last year Items Parent Parent Consolidated Consolidated company company I. Total business income 268,542,314.950 35,870,462.710 327,105,779.460 79,826,955.230 Incl. Business income 268,542,314.950 35,870,462.710 327,105,779.460 79,826,955.230 Interest income Insurance fee earned Fee and commission received II. Total business cost 274,687,814.700 36,246,844.830 333,365,686.940 89,453,705.550 Incl. Business cost 226,317,591.490 24,561,288.310 273,368,259.010 70,419,397.840 Interest expense Fee and commission paid Insurance discharge payment Net claim amount paid Net insurance policy reserves provided Insurance policy dividend paid Reinsurance expenses Business tax and surcharge 5,679,929.740 559,581.630 4,901,505.520 Sales expense 8,023,433.460 1,106.000 9,671,846.680 Administrative expense 21,090,752.730 8,019,580.320 34,291,224.600 13,135,918.420 Financial expenses 13,808,692.080 3,330,959.390 11,132,851.130 5,898,389.290 Asset impairment loss -232,584.800 -225,670.820 Plus: Gains from change of fair value (“-“ for loss) Investment gain (“-“ for loss) -3,475,895.010 -1,503,151.350 Incl. Investment gains from affiliates Gains from currency exchange (“-“ for loss) III. Operational profit (“-“ for loss) -9,621,394.760 -1,879,533.470 -6,259,907.480 -9,626,750.320 Plus: Non business income 21,138,551.910 141,848.050 17,301,131.060 6,861,350.000 Less: Non-business expenses 1,409,323.130 52,000.000 1,083,836.830 13,185.380 Incl. Loss from disposal of non-current assets IV. Gross profit (“-“ for loss) 10,107,834.020 -1,789,685.420 9,957,386.750 -2,778,585.700 Less: Income tax expenses -6,599.050 37,218.670 V. Net profit (“-“ for net loss) 10,114,433.070 -1,826,904.090 9,957,386.750 -2,778,585.700 Net profit attributable to the owners of parent 9,774,290.200 10,282,535.320 company Minor shareholders’ equity 340,142.870 -325,148.570 VI. Earnings per share: (I) Basic earnings per share 0.030 0.030 (II) Diluted earnings per share 0.030 0.030

Cash Flow Statement

Prepared by: China Fangda Group Co., Ltd. Jan-Jun 2007 RMB Yuan Current term Same period last year Items Parent Parent Consolidated Consolidated company company I. Net cash flow from business operation Cash received from sales of products and providing of services 303,541,952.84 26,154,660.18 346,534,948.66 61,421,851.69 Net increase of customer deposits and capital kept for brother company Net increase of loans from central bank Net increase of inter-bank loans from other financial bodies Cash received against original insurance contract Net cash received from reinsurance business Net increase of client deposit and investment Net increase of trade financial asset disposal Cash received as interest, processing fee, and commission Net increase of inter-bank fund received Net increase of repurchasing business Tax returned 1,872,714.72 794,187.19 Other cash received from business operation 13,823,410.79 1,452,538.42 20,413,730.78 1,185,245.68 Sub-total of cash inflow from business activities 319,238,078.35 27,607,198.60 367,742,866.63 62,607,097.37 Cash paid for purchasing of merchandise and services 238,255,858.15 13,900,411.29 261,117,435.67 42,957,024.36 Net increase of client trade and advance Net increase of savings in central bank and brother company Cash paid for original contract claim Cash paid for interest, processing fee and commission Cash paid for policy dividend Cash paid to staffs or paid for staffs 21,364,920.30 2,344,033.60 22,629,898.94 1,994,514.16 Taxes paid 12,698,192.28 1,957,902.17 14,960,679.19 984,397.59 Other cash paid for business activities 43,716,303.28 8,389,305.44 28,287,612.27 6,520,968.07 Sub-total of cash outflow from business activities 316,035,274.01 26,591,652.50 326,995,626.07 52,456,904.18 Cash flow generated by business operation, net 3,202,804.34 1,015,546.10 40,747,240.56 10,150,193.19 II. Cash flow generated by investing Cash received from investment retrieving 280,924.32 Cash received as investment gains Net cash retrieved from disposal of fixed assets, intangible assets, 6,795,468.00 50,000.00 6,500.00 6,500.00 and other long-term assets Net cash received from disposal of subsidiaries or other operational -11,745,736.23 2,550,000.00 units Other investment-related cash received Sub-total of cash inflow due to investment activities -4,669,343.91 2,600,000.00 6,500.00 6,500.00 Cash paid for construction of fixed assets, intangible assets and other 6,311,849.25 1,892,980.00 14,471,278.99 7,347,444.86 long-term assets Cash paid as investment 3,000,000.00 28,640,000.00 Net increase of loan against pledge Net cash received from subsidiaries and other operational units Other cash paid for investment activities Sub-total of cash outflow due to investment activities 9,311,849.25 30,532,980.00 14,471,278.99 7,347,444.86 Net cash flow generated by investment -13,981,193.16 -27,932,980.00 -14,464,778.99 -7,340,944.86 III. Cash flow generated by financing Cash received as investment Incl. Cash received as investment from minor shareholders Cash received as loans 386,818,209.98 169,587,112.48 303,173,937.97 206,069,530.41 Cash received from bond placing Other financing-related cash received 5,588.05 5,588.05 1,000.00 8,000,000.00 Subtotal of cash inflow from financing activities 386,823,798.03 169,592,700.53 303,174,937.97 214,069,530.41 Cash to repay debts 333,797,351.59 130,000,000.00 313,317,306.05 129,924,981.00 Cash paid as dividend, profit, or interests 12,342,692.52 2,352,935.00 8,349,448.20 5,349,680.22 Incl. Dividend and profit paid by subsidiaries to minor shareholders Other cash paid for financing activities 2,238,349.94 1,700,000.00 1,401,178.39 77,850,000.00 Subtotal of cash outflow due to financing activities 348,378,394.05 134,052,935.00 323,067,932.64 213,124,661.22 Net cash flow generated by financing 38,445,403.98 35,539,765.53 -19,892,994.67 944,869.19 IV. Influence of exchange rate alternation on cash and cash equivalents -39,364.75 -6,192.99 V. Net increase of cash and cash equivalents 27,627,650.41 8,616,138.64 6,389,466.90 3,754,117.52 Plus: Balance of cash and cash equivalents at the beginning of term 123,714,024.86 14,945,658.66 117,195,459.67 35,811,442.73 VI. Balance of cash and cash equivalents at the end of term 151,341,675.27 23,561,797.30 123,584,926.57 39,565,560.25

2 Change in Owners’ Equities

Prepared by: China Fangda Group Co., Ltd. Jan-Jun 2007 RMB Yuan Amount of the Current Term Items Owners’ Equity Attributable to the Parent Company Minor Total of Share Capital Less: Shares Surplus Common risk Attributable shareholders’ owners’ Others capital reserves in stock reserves provision profit equity equity I. Balance at the end of last year 352,716,000.00 108,321,912.25 62,830,896.69 -28,518,791.43 -240,040.87 4,346,246.51 499,456,223.15 Plus: Change of accounting policy Correcting of previous errors II. Balance at the beginning of current year 352,716,000.00 108,321,912.25 62,830,896.69 -28,518,791.43 -240,040.87 4,346,246.51 499,456,223.15 III. Changed in the current year (“-“ for decrease) 35,271,600.00 -35,511,640.87 -32,022,212.26 41,796,502.46 240,040.87 340,142.87 10,114,433.07 (I) Net profit 9,774,290.20 340,142.87 10,114,433.07 (II) Gains/losses accounted into owners’ equity directly 1. Change in fair value of sellable financial assets, net 2. Influence of change in other owners’ equity of invested

enterprises on equity basis 3. Influence of income tax related to owners’ equity items 4. Others Total of (I) and (II) 9,774,290.20 340,142.87 10,114,433.07 (III) Investment or decreasing of capital by owners 1. Investment by owners 2. Amount of shares paid and accounted as owners’ equity 3. Others (IV) Profit allotment 1. Providing of surplus reserves 2. Providing of common risk provisions 3. Allotment to the owners (or shareholders) 4. Others (V) Internal transferring of owners’ equity 35,271,600.00 -35,511,640.87 -32,022,212.26 32,022,212.26 240,040.87 0.00 1. Capitalizing of capital reserves (or to capital shares) 35,271,600.00 -35,271,600.00 2. Capitalizing of surplus reserves (or to capital shares) 3. Making up losses by surplus reserves -32,022,212.26 32,022,212.26 4. Others -240,040.87 240,040.87 IV. Balance at the end of this term 387,987,600.00 72,810,271.38 30,808,684.43 13,277,711.03 4,686,389.38 509,570,656.22 Legal representative: Chief financial officer: Head of accounting dept.:

3

Change in Owners’ Equities (Cont.)

Prepared by: China Fangda Group Co., Ltd. June 30 2007 RMB Yuan Amount of Last Year Items Owners’ Equity Attributable to the Parent Company Minor Total of Share Capital Less: Shares Surplus Common risk Attributable shareholders’ owners’ Others capital reserves in stock reserves provision profit equity equity I. Balance at the end of last year 296,400,000.00 164,427,617.04 61,228,622.41 -104,877,420.89 -109,743.30 5,145,583.02 422,214,658.28 Plus: Change of accounting policy 733,586.16 69,240,505.44 498,872.17 70,472,963.77 Correcting of previous errors II. Balance at the beginning of current year 296,400,000.00 164,427,617.04 61,962,208.57 -35,636,915.45 -109,743.30 5,644,455.19 492,687,622.05 III. Changed in the current year (“-“ for decrease) 56,316,000.00 -56,105,704.79 868,688.12 7,118,124.02 -130,297.57 -799,336.51 7,267,473.27 (I) Net profit 7,986,812.14 -799,336.51 7,187,475.63 (II) Gains/losses accounted into owners’ equity directly 210,295.21 -130,297.57 79,997.64 1. Change in fair value of sellable financial assets, net 2. Influence of change in other owners’ equity of invested enterprises on equity basis 3. Influence of income tax related to owners’ equity items 4. Others 210,295.21 -130,297.57 79,997.64 Total of (I) and (II) 210,295.21 7,986,812.14 -130,297.57 -799,336.51 7,267,473.27 (III) Investment or decreasing of capital by owners 1. Investment by owners 2. Amount of shares paid and accounted as owners’ equity 3. Others (IV) Profit allotment 868,688.12 -868,688.12 1. Providing of surplus reserves 868,688.12 -868,688.12 2. Providing of common risk provisions 3. Allotment to the owners (or shareholders) 4. Others (V) Internal transferring of owners’ equity 56,316,000.00 -56,316,000.00 1. Capitalizing of capital reserves (or to capital shares) 56,316,000.00 -56,316,000.00 2. Capitalizing of surplus reserves (or to capital shares) 3. Making up losses by surplus reserves 4. Others IV. Balance at the end of this term 352,716,000.00 108,321,912.25 62,830,896.69 -28,518,791.43 -240,040.87 4,845,118.68 499,955,095.32 Legal representative: Chief financial officer: Head of accounting dept.:

4