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(a joint stock limited company incorporated in the People’s Republic of China)
(Stock Code: 2355)
INTERIM RESULTS ANNOUNCEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2007

The board of directors (the “Board”) of Baoye Group Company Limited (the “Company”) is pleased to announce the unaudited consolidated
interim results of the Company and its subsidiaries (collectively the “Group”) for the six months ended 30 June 2007 prepared in accordance
with the Hong Kong Financial Reporting Standards, together with comparative figures for the corresponding period in 2006. The interim
results had been reviewed by the audit committee of the Company and approved by the Board. The following financial information is
extracted from the unaudited consolidated financial information as set out in the Group’s 2007 Interim Report.


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Condensed Consolidated Income Statement
For the six months ended 30 June 2007
Unaudited
Six months ended 30 June
2007 2006

Notes RMB’000 RMB’000
Turnover 2 3,196,367 2,895,757
Cost of sales (3,010,687) (2,570,309)
Gross profit 185,680 325,448
Other gains – net 3 48,029 288,574
Selling and marketing costs (9,768) (6,291)
Administrative expenses (116,633) (78,959)
Operating profit 107,308 528,772
Finance costs (24,563) (26,524)
Share of losses of associates (333) (20)
Profit before income tax 82,412 502,228
Income tax expense 4 (11,499) (97,351)
Profit for the period 70,913 404,877
Attributable to:
Equity holders of the Company 65,015 401,068
Minority interests 5,898 3,809
70,913 404,877

Earnings per share for profit attributable to the equity
holders of the Company
– basic and diluted (expressed in RMB per share) 5 RMB0.10 RMB0.66

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Condensed Consolidated Balance Sheet
As at 30 June 2007
Unaudited Audited
30 June 31 December
2007 2006

Notes RMB’000 RMB’000
ASSETS

Non-current assets
Property, plant and equipment 737,487 677,386
Investment properties 40,566 40,515
Land use rights 747,388 792,261
Goodwill 16,534 16,534
Properties under development 377,754 442,076
Investment in associates 32,068 32,401
Deferred income tax assets 11,940 15,496
1,963,737 2,016,669

Current assets
Inventories 111,597 79,802
Land use rights 298,808 269,136
Properties under development 431,109 292,283
Completed properties held for sale 50,492 61,604
Due from customers on construction contracts 904,945 738,909
Trade receivables 6 672,455 682,864
Other receivables 1,219,310 721,651
Restricted bank deposits 150,525 125,702
Cash and cash equivalents 1,044,797 782,699
4,884,038 3,754,650

Total assets 6,847,775 5,771,319

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Unaudited Audited
30 June 31 December
2007 2006

Notes RMB’000 RMB’000
EQUITY

Capital and reserves attributable to the Company’s equity shareholders
Share capital 1,511,458 953,735
Reserves 227,951 227,951
Retained earnings 980,985 915,970
Proposed dividend – 46,407
2,720,394 2,144,063

Minority interests 51,089 45,191
Total equity 2,771,483 2,189,254
LIABILITIES

Non-current liabilities
Borrowings 20,000 –
Deferred income tax liabilities 106,564 133,434
126,564 133,434

Current liabilities
Trade payables 7 862,837 791,212
Other payables 558,953 661,666
Receipts in advance 459,752 262,657
Current income tax liabilities 83,384 76,476
Due to customers on construction contracts 635,328 429,591
Dividend payable 46,407 –
Borrowings 1,298,617 1,222,779
Provision for warranty 4,450 4,250
3,949,728 3,448,631

Total liabilities 4,076,292 3,582,065
Total equity and liabilities 6,847,775 5,771,319
Net current assets 934,310 306,019
Total assets less current liabilities 2,898,047 2,322,688

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Notes:
1. Basis of preparation and accounting policies
This condensed consolidated interim financial information for the six months ended 30 June 2007 has been prepared in accordance
with HKAS 34, “Interim financial reporting”. The interim condensed financial information should be read in conjunction with the
annual financial statements for the year ended 31 December 2006.
The accounting policies adopted are consistent with those of the annual financial statements for the year ended 31 December
2006, as described in the annual financial statements for the year ended 31 December 2006.
The adoption of new/revised HKFRS and interpretations
In 2007, the Group adopted the new standard, amendment and interpretations of Hong Kong Financial Reporting Standards
(“HKFRS”) below, which are relevant to its operations.
HKAS 1 (Amendment) Presentation of Financial Statements: Capital Disclosure
HK (IFRIC) – Int 9 Reassessment of Embedded Derivatives
HK (IFRIC) – Int 10 Interim Reporting and Impairment
HKFRS 7 Financial Instruments: Disclosure
The Group has assessed the impact of the adoption of these new standards, amendments and interpretations and considered that
there was no significant impact on the Group’s results and financial position nor any substantial changes in the Group’s accounting
policies.
2. Segment information
The Group is principally engaged in the following three main business segments:
• Construction – provision of construction services
• Building materials – manufacture and distribution of building materials
• Property development – development and sale of properties
The total revenue attributable from the above three segments is approximately RMB3,179,619,000 for the six moths ended 30 June
2007 (six months ended 30 June 2006: RMB2,870,471,000).
Other operations of the Group mainly comprise the provision of construction and decoration design services and provision of
rental services. Other results also comprise the investment properties fair value gains. Neither of these constitutes a separately
reportable segment.

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The business segment results for the six months ended 30 June 2007 and 2006 are as follows, respectively.
Six months ended 30 June 2007
Building Property
Construction materials development Others Group
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Total turnover 2,808,411 512,664 48,527 23,975 3,393,577
Inter-segment turnover (107,886) (82,097) – (7,227) (197,210)
External turnover 2,700,525 430,567 48,527 16,748 3,196,367
Operating profit 80,148 18,409 8,347 404 107,308
Finance costs (24,563)
Share of losses of associates (333)
Profit before income tax 82,412
Income tax expense (11,499)
Profit for the period 70,913
Other information
Depreciation 15,608 17,236 819 1,473 35,136
Amortisation 2,802 1,132 364 756 5,054
Impairment of receivables 3,507 5,293 – 108 8,908
Six months ended 30 June 2006
Building Property
Construction materials development Others Group
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Total turnover 2,107,437 483,803 391,007 37,895 3,020,142
Inter-segment turnover (76,541) (35,235) – (12,609) (124,385)
External turnover 2,030,896 448,568 391,007 25,286 2,895,757
Operating profit 315,707 41,578 168,147 3,340 528,772
Finance costs (26,524)
Share of losses of associates (20)
Profit before income tax 502,228
Income tax expense (97,351)
Profit for the period 404,877
Other information
Depreciation 10,096 12,378 601 1,073 24,148
Amortisation 1,442 36 322 – 1,800
Impairment of receivables 1,047 1,290 – – 2,337

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Inter-segment transactions were entered into under normal commercial terms and conditions that would also be available to
unrelated third parties.
The segment assets and liabilities as at 30 June 2007 and capital expenditure for the six months ended 30 June 2007 are as follows:
Building Property
Construction materials development Others Unallocated Group
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Assets 4,237,280 1,087,932 1,193,145 244,844 52,506 6,815,707
Associates – – 32,068 – – 32,068
Total assets 4,237,280 1,087,932 1,225,213 244,844 52,506 6,847,775
Liabilities 2,308,140 661,290 695,171 41,152 370,539 4,076,292
Capital expenditure 18,254 18,425 1,642 64,873 – 103,194
The segment assets and liabilities as at 31 December 2006 and capital expenditure for the six months ended 30 June 2006 are as
follows:
Building Property
Construction materials development Others Unallocated Group
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Assets 3,245,158 1,102,301 1,162,918 172,530 56,011 5,738,918
Associates – – 32,401 – – 32,401
Total assets 3,245,158 1,102,301 1,195,319 172,530 56,011 5,771,319
Liabilities 1,806,254 681,125 667,538 45,746 381,402 3,582,065
Capital expenditure 239,615 42,767 106 52 – 282,540
Segment assets consist primarily of land use rights, property, plant and equipment, properties under development, completed
properties held for sale, inventories, amounts due from customers on construction contracts, receivables and operating cash. They
exclude items such as deferred tax assets and investment properties.
Segment liabilities comprise operating liabilities including amounts due to customers on construction contracts. The segment
liabilities exclude items such as borrowings and income tax liabilities.
Capital expenditure comprises additions to property, plant and equipment.
No geographical segments information is presented as all the Group’s business activities were carried out and substantially all the
Group’s assets are located in the PRC.

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3. Other gains – net
Six months ended 30 June
2007 2006

RMB’000 RMB’000
Excess of the fair value of the net assets of subsidiaries acquired over the acquisition costs – 212,547
Interest income 31,093 34,925
Gains on debts restructuring 4,720 –
Government compensation 3,679 –
Gains on disposals of property, plant and equipment 2,577 32,870
Fair value gains on investment properties 51 3,832
Others 5,909 4,400
48,029 288,574

4. Income tax expense
No provision for Hong Kong profits tax has been made as the Group has no assessable profit earned in or derived from Hong Kong
for the six months ended 30 June 2007.
The Company and its subsidiaries are subject to PRC Enterprise Income Tax (“EIT”) at a rate of 33% (2006: 33%).
Pursuant to the PRC enterprise income tax law passed by the Tenth National People’s Congress on 16 March 2007, the new enterprise
income tax rates for domestic and foreign enterprises are unified at 25%, which will be effective from 1 January 2008. As a result,
the enterprise income tax rate of the Company and its subsidiaries incorporated in the PRC will change from 33% to 25% with
effective from 1 January 2008. The change in the carrying amount of the deferred tax assets and liabilities, as a result of the change
in tax rate, has been reflected in the financial information of the Group for the six months ended 30 June 2007.
The amounts of income tax expenses charged to the condensed consolidated interim income statement represent:
Six months ended 30 June
2007 2006

RMB’000 RMB’000
PRC current income tax 34,813 110,545
Deferred income tax (23,314) (13,194)
11,499 97,351

5. Earnings per share
The calculation of basic earnings per share for the six months ended 30 June 2007 is based on the Group’s profit attributable to
equity holders of the Company of RMB65,015,000 (six months ended 30 June 2006: RMB401,068,000) and weighted average number
of 653,476,598 ordinary shares (six months ended 30 June 2006: the ordinary shares in issue of 610,927,013 shares) during the six
months ended 30 June 2007.
The basic and diluted earnings per share are the same since there are no dilutive shares.

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6. Trade receivables
30 June 31 December
2007 2006

RMB’000 RMB’000
Trade receivables 694,130 698,041
Less: provision for doubtful debts (21,675) (15,177)
672,455 682,864

At 30 June 2007, the ageing analysis of the trade receivables is as follows:
30 June 31 December
2007 2006

RMB’000 RMB’000
Within 3 months 234,400 321,703
3 months to 1 year 267,694 231,379
1 to 2 years 80,841 89,397
2 to 3 years 64,093 29,776
Over 3 years 47,102 25,786
694,130 698,041

Customers are generally granted credit terms of 1 to 3 months for construction business, 1 to 12 months for building materials
business and no credit terms for property development business.
There is no concentration of credit risk with respect to trade receivables, as the Group has a large number of customers, nationally
dispersed.
7. Trade payables
At 30 June 2007, the ageing analysis of the trade payables is as follows:
30 June 31 December
2007 2006

RMB’000 RMB’000
Within 3 months 370,108 427,430
3 months to 1 year 275,645 196,935
1 to 2 years 99,981 58,220
2 to 3 years 34,500 22,829
Over 3 years 82,603 85,798
862,837 791,212

8. Dividends
The Board does not recommend the payment of an interim dividend for the six months ended 30 June 2007. A final dividend of
RMB0.07 per ordinary share for 2006, amounting to total dividend of RMB46,407,000 was approved at the annual general meeting
on 25 June 2007, which was paid on 18 July 2007.

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Management Discussion and Analysis
Results Overview
For the six months ended 30 June 2007, the Group’s turnover was RMB3,196,367,000, representing an increase of approximately 10%
from the corresponding period last year. Operating profit was RMB107,308,000, representing a decrease of approximately 80% from the
corresponding period last year. Profit attributable to equity holders of the Company amounted to RMB65,015,000, representing a decrease
of approximately 84%, compared with the same period last year. Earnings per share was RMB0.10, representing a decrease of approximately
85% compared with the corresponding period last year; and net assets per share was RMB4.10, representing an increase of approximately
21% over the same period last year.
Turnover
For the six months ended 30 June
2007 2006

RMB’000 % of total RMB’000 % of total Change
Construction 2,700,525 84% 2,030,896 70% +33%
Building Materials 430,567 13% 448,568 15% -4%
Property Development 48,527 2% 391,007 14% -88%
Others 16,748 1% 25,286 1% -34%
Total 3,196,367 100% 2,895,757 100% 10%
Operating Profit
For the six months ended 30 June
2007 2006

RMB’000 % of total RMB’000 % of total Change
Construction 80,148 74.6% 315,707 60% -75%
Building Materials 18,409 17% 41,578 8% -56%
Property Development 8,347 8% 168,147 31% -95%
Others 404 0.4% 3,340 1% -88%
Total 107,308 100% 528,772 100% -80%
Construction Business
For the six months ended 30 June 2007, the Group’s construction business achieved a turnover of RMB2,700,525,000, representing a
growth of approximately 33% over the same period last year. Operating profit amounted to RMB80,148,000, representing a decline of
approximately 75% compared to the same period last year. The reduction in operating profit for the six months ended 30 June 2007 was
primarily attributable to the exclusion of a one-off gain of RMB212,547,000 resulting from the acquisition of the Hubei Construction
Group by the Group last year. Without taking into account of such one-off gain, the operating profit for the six months ended 30 June
2007 decreased by 22% from the corresponding period last year.
According to the Group’s expansion strategy, our business has been extended to major cities in China. The pre-operating and start-up
expenses incurred in expanding into new markets have led to significant increase in general and administrative expenses. In addition,
due to the increase in staff cost and operating losses contributed by the Hubei Construction Group, which the Group acquired in 2006,
the growth in operating profit was thwarted even when the turnover of the construction business has registered an increase.
Since the acquisition of the entire interest of the Hubei Construction Group in February 2006, the post-acquisition re-organisation,
business restructuring, and discharging of manpower of the Hubei Construction Group had been completed recently. As at 30 June
2007, Hubei Baoye was still under the start-up phase after such re-organisation and has not yet turned into full scale operations, leading
to an operating loss of RMB19,120,000. At present, part of the industrial use land held by the former Hubei Construction Group was in
the progress to convert into commercial and residential use (details of which are as shown on the section headed Prospect under Property
Development Business), whereas the property development business in Wuhan has begun. Besides, the design and construction of the
Wuhan Housing Industrial Park is underway. Building on the foundation of the construction business of the Group, by rapidly developing
the building materials and property development business in Hubei using the “three-in-one” business model of the Group in Hubei, it is
expected that Hubei Baoye would become the base of the Group in central China and grow to a similar scale of business comparable to
what the Group has attained in the Yangtze Delta region in the coming three to five years.

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As at 30 June 2007, the Group’s total contract value of construction-in-progress amounted to RMB19,767,270,000, surpassing the same
period last year by approximately 41%, details of which are analyzed below:
By project nature:
As at 30 June
2007 2006

RMB million % of total RMB million % of total Change
Government & Public Buildings 8,302 42% 6,036 43% +38%
Urban Infrastructure 5,337 27% 3,650 26% +46%
Residential Projects 3,163 16% 1,965 14% +61%
Industrial Projects 2,965 15% 2,387 17% +24%
Total 19,767 100% 14,038 100% +41%
As depicted from the above analysis, the Group’s construction business is largely drawn from customers with good reputation and credit
standing in the areas of governmental organizations; this has minimized our collection risk in receivables and finance.
By region:
As at 30 June
2007 2006

RMB million % of total RMB million % of total Change
Zhejiang Province 7,511 38% 5,476 39% +37%
Shanghai 7,314 37% 4,913 35% +49%
Central China Region 4,151 21% 3,228 23% +29%
Northern China Region 791 4% 421 3% +88%
Total 19,767 100% 14,038 100 +41%
As noted from the above analysis by region, construction business of the Group has been outbreaked successfully from Zhejiang Province
as substantiated by the significant increase in percentage of business in other provinces. This demonstrates the effectiveness of our
business expansion strategy and speeds up the pace in transforming the Group from a regional enterprise to a nation wide enterprise.
Property Development Business
For the six months ended 30 June 2007, the turnover of the Group’s property development business amounted to RMB48,527,000,
representing a decrease of approximately 88% from the same period last year. The Group’s property development business contributed
an operating profit of RMB8,347,000, representing a decline of approximately 95% from the same period last year. The Group adopts the
completion method in accounting for revenue recognition for its property development business.
During the period under review, the turnover of the Group’s property development business was mainly derived from Zhejiang Commercial
City located in Hefei City, Anhui. The total gross floor area of Zhejiang Commercial City sold was approximately 8,000 square metres,
with an average selling price per square metre of approximately RMB6,400, contributing to a turnover of RMB51,200,000. During the
period under review, approximately 50,000 square metres of the Group’s City Green Garden Phase I in Hefei City were pre-sold. However,
due to certain inspection procedures have not been completed prior to the delivery of sales units, these sales have not been recognized
in the six months ended 30 June 2007.

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Projects under development
As at 30 June 2007, the Group’s projects under development is summarized below:
Equity Interest
Project Name Location Saleable Area of the Group
(square metres)
Linjiang Green Garden Shaoxing 56,000 100%
Jing’an Ziyuan Shanghai 51,000 70%
City Green Garden Phase I Hefei 50,000 100%
City Green Garden Phase II Hefei 170,000 100%
Zhejiang Commercial City Hefei 92,000 75%
Baoye Four Seasons Garden Shaoxing 525,000 100%
Increase in Land Reserve
In April 2007, the Group acquired the land use right of a piece of land located in Keqiao, Shaoxing County, a total area of approximately
100,000 square metres with 2.5 times plot ratio for development of residential area of 250,000 square metres, from public tendering at
a total consideration of RMB750,000,000. The land is in the development zone of the future central business district of Keqiao, alongside
the “dual lakes” district, east of Dabanhu, with adequate and well-developed community facilities. The project will be positioned as a
premier residential property in Keqiao, Shaoxing County.
In May 2007, the Group entered into a contract to acquire a residential land use right of 58,570 square meters with a plot ratio of 2.8
times for development of area of 164,000 square meters residential units, at a total consideration of RMB172,000,000. The land is located
at city centre of Hefei with adequate and well-developed community facilities and will be developed for commercial and residential use
properties.
In August 2007, the Group and Greentown China Holdings Limited, a listed company in HKEx (stock code: 3900), jointly successfully
secured a residential land area at No.1, Yang Ming Road, Shaoxing County, of a total area of approximately 180,000 square metres with a
plot ratio of 1 time for development of 180,000 square metres up-scale residential properties, at a total consideration of RMB1,095,000,000.
The Group is interested in 49% of the project. The land area is of close proximity to the resort district of Kuaijishan where the Group’s golf
club and Baoye Four Seasons Garden projects are located, 8 kilometres from the central business district, and will be developed as low
rise premium residential properties and deluxe service apartments.
Building Materials Business
For the six months ended 30 June 2007, the turnover of the Group’s building materials business was RMB430,567,000, representing a
decrease of approximately 4% over the same period last year. The Group’s building materials business contributed an operating profit of
RMB18,409,000, representing a decrease of approximately 56% over the same period last year.
As production for steel structure and wood products are in their start-up phase, utilization rate of the plant capacity has not reached to
a satisfactory level. Depreciation and other fixed costs attributed by plant buildings and machineries have caused pressure on the overall
profit margin of the building materials business. Simultaneously, building materials is in a fierce competition market. The high end
products which the Group is focusing on would require more product promotion and marketing before the turnover is expected to
increase significantly.

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For the six months ended 30 June 2007, the turnover breakdown of the Group’s building materials business is as follows:
For the six months ended 30 June
2007 2006

Turnover Turnover
RMB’000 RMB’000 Change
Ready-mixed Concrete 124,864 136,439 -8%
Curtain Wall 103,336 96,514 +7%
Wood Products & Interior Decoration 86,113 78,441 +10%
Steel Structure 73,196 68,598 +7%
Concrete Pipes 21,528 32,541 -34%
Concrete Ducts 12,917 18,698 -31%
Large Roof Sheathings 4,306 8,821 -51%
Fire Proof Materials 4,307 8,516 -49%
Total 430,567 448,568 -4%
On 8 March 2006, the Group signed a co-operative agreement with Japan’s Daiwa House Industry Company Limited (“Daiwa Japan”),
pursuant to which both parties formed a strategic alliance for 10 years in the co-development of technological advancement skills for
the manufacture of industrialized residential units. Two of the technologies developed by joint efforts have already been applied for
patent rights with the relevant government authorities. At the same time, the technology for industrialization of residential housing has
been adopted for use in various construction projects including Linjiang Green Garden, five star hotel of Suzhou Aster Hotel, and detached
houses in Anhui. During the period under review, the Group has joined forces with Daiwa Japan to participate in “The Third International
Exposition for New Intelligent, Environmentally Friendly, and Energy Saving Building Technologies and Products”, captured enormous
attention in the market.
Business Prospect
With effect from 1 January 2008, “Income Tax Law of the People’s Republic of China for enterprises with Foreign Investment and Foreign
Enterprises” and “Interim Provision Concerning Imposition of Income Tax Law of People’s Republic of China for Foreign Enterprises” will
be merged into a single rules and regulation. After the merger, the Group’s enterprise income tax rate will be reduced from the current
level of 33% to 25%, the 8% reduction in enterprise income tax rate will enhance the Group’s profitability significantly.
Construction Business
China’s rapid economic development and increasing urbanization have provided unprecedented growth opportunity for the Group. At
present, the Group has extended its business networks successfully into the mid west China region, northern China region, and southern
China region covering the major cities in 13 provinces. The Group has basically laid down the foundation by adopting the strategy of
“Expanding into areas beyond Zhejiang Province and Yangtze Delta and covering the whole of China”. In future, the Group will endeavour
to maintain this growth and expansion strategy, consolidating its market share in the existing markets and, at appropriate times, to
explore new emerging markets on a nationwide basis by setting up regional management centres.
Using the “three-in-one” business model, the Group will continue to develop its construction business in new markets in light of the
government policies on increased urbanization and “Nation retreats, people proceeds”. On one hand, the Group will increase its efforts
in developing new markets in major cities. On the other hand, it will enhance its market share in high end infrastructural construction
projects including railways, water supplies and facilities, transportation, bridges through merger and acquisition. The profit margin of
the Group’s construction business will steadily increase as its share of high end business increases.
Resulting from the continuous Group’s expansion into major cities, start-up and administrative costs have increased substantially. In
order to maintain competitiveness in securing new construction projects in new markets, the Group’s operating profit margin saw a
decline. The Group believes that this trend is inevitable in the short term. However, in the mid and longer term, followed by an increased
market share, together with a better understanding of the new markets, our established reputation and brand building, it is expected
that profit returns will be generated by the Group.

– 14 –
Property Development Business
During the period under review, the Group has acquired a total of three parcels of land, having an aggregate of 340,000 square metres
of land areas as reserve, which would provide a total of 600,000 square metres gross floor areas for development. Based on our internal
estimate, using the prevailing market prices, these projects are expected to generate satisfactory returns and, in anticipation of the
surging properties prices in the near future, and have seeded a solid earning growth for the Group in the years to come.
Approximately 500,000 square metres of industrial use land was obtained from the acquisition of Hubei Construction Group, of which
37,000 square metres can be used for residential development purposes according to the land use right certificate, with a plot ratio of
1.8 times and a gross floor area of approximately 67,000 square metres. Another six applications for change of use pertaining to six
parcels of land, having an aggregate area of approximately 200,000 square metres, have been submitted to the relevant government
authorities for approval, four of which will be designated for residential use and the remaining will be designated for commercial use. It
is expected that these approvals and the respective land use right certificates will be obtained in the year of 2007.
The Group will accelerate the development of existing land reserves, taking advantage of the competitive cost and quality advantages
that are set by the “three-in-one” business model. The land reserves the Group has acquired are of low cost base and high quality, which
will contribute significant profitability to the Group when they are being developed in the next few years.
Building Materials Business
The applications for two international technology patent rights by the Group and Daiwa Japan are now being processed by the relevant
government authorities. The Group will, on this basis, increase its allocation of resources to research and development aiming to develop
and acquire proprietary and core technologies and more patent rights. The Group believes that only leading edge technologies will
facilitate increase in market share. At the same time, the Group will focus on developing environmental friendly construction and building
materials to promote the nation’s policy on “Four Savings and One Environmental Friendly” in industrialization of construction and
building materials market.
During the period under review, construction of Hubei Baoye Housing Industrial Park has been commenced, which has rallied high level
support and attention from the Hubei Provincial Government. The Group will speed up the construction progress of the Hubei Baoye
Housing Industrial Park. At the same time, the production facilities of the Anhui Baoye Housing Industrial Park have begun to build scale
and momentum, of which production lines of curtain wall, modernized building materials, heat and energy conserve materials, and
building equipment have been completed and put into production.
The Group is committed to promote the nation’s conserving energy and minimizing waste, and “Four Savings and One Environmental
Friendly” policies by investing and developing industrialization of construction and building materials. Investment in construction and
building materials is different from consumable products, and would require a much longer investment and return cycle. However, the
Group believes that this is the development trend of industry and sees an enormous development potential. Leveraging on our strengths
and support in construction and property development business, and co-operation with Daiwa Japan on technology development for
industrialisation of building materials and construction, the Group is one of the leading companies in pre-fabricated building materials
and construction in China. At present, apart from the Shaoxing Housing Industrial Park, our production base has been extended to
strategic locations, such as Hefei and Wuhan, all of which have provided a solid foundation for the Group to maintain its leading position
in industrialization of building materials and construction in China.
Financial Review
Treasury Policies
The Group adopts a prudent approach on financial policies and takes stringent risk management control over its investment, financing
and cash as well as maintaining a sound capital structure. The Group will adjust its investment, financing and capital structure from time
to time according to its sustainable development and internal resources available, with a view to optimizing the capital structure of the
Group.
The Group has established a financial settlement center, which centralizes funding for all its subsidiaries at Group level. The Board
believes that such policy will enable the Group to achieve better controls on the treasury operations, minimize financing risks and lower
the average cost of capital.

– 15 –
Financial Resources and Liabilities
With its steady growth in cash flow, sound credit record and excellent reputation in the industry, the Group renewed an AAA credit
rating by a credit rating institution recognized by the People’s Bank of China in 2007. Such excellent credit rating will benefit the Company’s
financing activities and allows the Group to continue to enjoy the prime rate offered by the People’s Bank of China. At present, the bank
borrowings of the Group bear an interest rate between 6% to 8% per annum. During the period, 92% of the Group’s borrowings were on
an unsecured basis. The Group will take advantage of its good credit to continue to take borrowings on an unsecured basis, which will be
complemented by secured project loans when necessary.
As at 30 June 2007, the Group’s net bank borrowings, after deduction of cash, cash equivalent and bank deposits, amounted to
RMB123,295,000 (30 June 2006: RMB325,617,000). The Group’s net gearing ratio (net bank borrowings/the total shareholders’ equity)
was 4.5% (30 June 2006:15.7%). During the period under review, the Group acquired land use rights in respect of 3 parcels of land and as
a result, it is expected that a total of RMB1,500,000,000 would be required to discharge its relevant obligations in the second half of 2007.
In this connection, the Group would require additional bank borrowings of approximately RMB800,000,000, in addition to the proceeds
received from placing of new H shares in February 2007 and bank deposit balances, to settle these obligations. Thus, bank borrowings
and the net gearing ratio of the Group are expected to increase. However, the Group is confident that it will continue to adopts a
prudent policy on gearing ratio.
Use of Proceeds
In February 2007, through placing of new H shares to Tiger Global, L.P. (“Tiger Global”), the Group had raised proceeds of approximately
RMB557,723,000 (after deduction of issuance expense). The proceeds received have been applied as follows:
RMB
Deposit Payment for Acquisition of a land use right in Shaoxing (i) 226,500,000
Deposit Payment for Acquisition of a land use right in Hefei (ii) 50,000,000
General Working Capital 121,223,000
Repayment of Bank Borrowings 160,000,000
Total: 557,723,000
(i) During the period under review, the Group has acquired land use right in respect of a parcel of land near Dabanhu, Shaoxing
County at a total consideration of RMB755,000,000 and as at 30 June 2007, the Group has paid a cash deposit of RMB226,500,000
equivalent to 30% of the total consideration.
(ii) The Group has entered into a contract to acquire a residential land use right in Hefei at a total consideration of RMB172,000,000. As
at 30 June 2007, the Group had already paid a deposit of RMB50,000,000.
Key Financial Ratios
As at 30 June
2007 2006

Return on equity (%) 2.4% 19.4%
Net assets value per share (RMB) 4.10 3.39
Net gearing ratio (%) 4.5% 15.7%
Current ratio 1.24 1.12
Return on equity = profits attributable to equity holders of the Company/total equity shareholders’ fund of the Company
Net assets value per share = net assets/number of issued shares at the end of the period under review
Net gearing ratio = net bank borrowings/total equity shareholders’ fund of the Company
Current ratio = current assets/current liabilities
The proceeds raised from the placing of new H shares in February 2007 of RMB557,723,000 were immediately being applied for use in
acquisition projects. As a result, the new assets value per share increased significantly. Besides, the net gearing ratio was further reduced.
However, on the other hand, the contrast of return on equity between the six months ended 2007 and 2006 was due to a one-off gain
from the acquisition of Hubei Construction Group by the Group being recorded last year, no gain of a similar scale was recorded during
the six months ended 30 June 2007.

– 16 –
Cash Flow Analysis
For the six months ended 30 June
2007 2006

RMB’000 RMB’000
Net cash (outflow) from operating activities (1) (329,896) (140,732)
Net cash (outflow)/inflow from investing activities (2) (61,567) 29,690
Net cash inflow from financing activities (3) 653,561 104,714
Increase/(decrease) in cash and cash equivalents 262,098 (6,328)
(1) The net cash outflow from operating activities during the period was RMB329,896,000, representing an increase of net cash outflow
compared to the same period last year. The increase was primarily the result of deposit payment of RMB226,500,000 made in
respect of 30% of total consideration of Dabanhu’s land use rights in Shaoxing County, and deposit payment of RMB50,000,000 for
the acquisition of Hefei Jinheng Real Estate Development Company Limited.
(2) The cash outflow from investing activities during the period was mainly due to the increased spending on the construction of
infrastructure of Baoye Four Seasons Garden and Hefei Housing Industrial Park.
(3) The cash inflow from financial activities during the period was mainly attributable to the proceeds of RMB557,723,000 received
through the placing of new H shares to Tiger Global in February 2007.
Land Appreciation Tax
On 28 December 2006, the State Administration of Taxation pronounced a circular in respect of the rules and regulations pertaining to
land appreciation tax applicable to real estate and property development enterprise in clearing their pending tax assessment. The
appreciation tax came into effect in 1993. The Group has consistently complied with the tax rules and regulations in the PRC and conformed
to the Hong Kong Financial and Accounting Reporting Standards in accounting for such tax provision. Besides, the Group is a construction
enterprise with construction as its core business, while building materials and property development as its supporting businesses.
Therefore, the financial impact resulting from the tax pronouncement towards the Group’s operating results would be minimal.
Administrative Expenses
The Group’s administrative expenses grew from RMB78,959,000 in the same period of 2006 to RMB116,633,000 for the six months ended
30 June 2007, registering an increase of approximately 48% or RMB37,674,000. The increase was primarily attributable to various
re-organization and restructuring expenses amounting to RMB40,919,000, an increase of approximately 111% or RMB21,496,000 over
the same period last year, incurred by the Hubei Construction Group; and the establishment of regional management centers by the
Baoye Construction Group to explore other provincial markets, the administrative expenses amounted to approximately RMB45,882,000
in the period under review, an increase of approximately 82% or RMB20,663,000 over the same period last year. The Group believes that
these start-up and re-organization expenses will contribute to the profit growth of the Group in the long run.
External Guarantee and Fulfillment
30 June 31 December
2007 2006

RMB’000 RMB’000
Guarantees given to banks in respect of mortgage facilities granted to third parties 35,302 19,800
Guarantees given to banks in respect of bank loans of third parties – 20,000
The Group has issued performance guarantees in respect of mortgage facilities granted by certain banks relating to the mortgage loans
arranged for certain purchasers of property projects developed by the subsidiaries of the Group. The banks will release such guarantee
only upon the building ownership certificates of such properties are delivered to the banks as securities.
Details of the Charges on the Group’s Assets
As at 30 June 2007, land use rights, buildings and properties under development at a total value of approximately RMB85,726,000
(31 December 2006: RMB319,409,000) were pledged to banks as security in securing short-term bank loans.

– 17 –
Capital Expenditure Plan
It is expected that the Group’s capital expenditure in 2007 will amount to RMB100,000,000, of which RMB60,101,000 has been applied
for use in investment properties, factory buildings, and machineries for Baoye Four Seasons Garden and Hefei Housing Industrial Park
projects in the period under review. It is expected that the balance will be incurred in the second half of the year for construction
spending for the said two projects and for purchasing research and testing equipment for Zhejiang Baoye Group Construction Research
Institute at a total expenditure of approximately RMB40,000,000.
Adjustment of RMB Exchange Rate and Foreign Exchange Risks
The majority of the Group’s business and all bank borrowings are denominated and accounted for in RMB, and therefore do not have any
direct exposure to foreign exchange fluctuation. The Board does not expect the adjustment of RMB exchange rate and other foreign
exchange fluctuations will have any direct impact on the business operations or results of the Group.
Connected Transactions
During the period under review, the Group did not constitute any connected transaction that requires disclosure under the Listing
Rules.
Purchase, Sale or Redemption of Securities
Neither the Company nor any of its subsidiaries has purchased, sold or redeemed any of the Company’s listed securities during the six
months ended 30 June 2007.
Human Resources and Remuneration Policies
As at 30 June 2007, the Group had a total of approximately 2,100 permanent employees (the same period in 2006: 1,987), and
approximately 52,000 construction workers (the same period in 2006: approximately 51,000) who are not permanent employees of the
Group. For the six months ended 30 June 2007, total staff costs amounted to RMB421,060,000 (the same period in 2006: RMB409,103,000).
Remuneration is determined by reference to market terms as well as the performance, qualification and experience of the individual.
Other benefits provided by the Group include pension and medical insurance. The Group highly values human resources management,
and devotes to establishing a high quality team to support its long term business development. The Board intends to implement a more
effective employee incentive plan.
Code on Corporate Governance Practices
In the opinion of the directors, the Company has complied with the Code on Corporate Governance Practices set out in Appendix 14 of
the Listing Rules during the six months ended 30 June 2007, except that the role of the chief executive officer of the Company has been
assumed by Mr. Pang Baogen, the chairman of the Board, since the former chief executive officer of the Company resigned. Three general
managers have been appointed to oversee and manage the three main business activities (construction, property development and
building materials) of the Group respectively, each of whom has partly shared the duty of the chief executive officer. The Board believes
that the current arrangement has installed a proper segregation of duties and adequately streamlined the responsibility. The Board also
believes that simple management structure can enhance the communication amongst staff at different levels as well as enabling efficient
execution of new policies. Therefore, the Board endorsed the position of chief executive officer to be assumed by the chairman of the
Board. Nevertheless, the Board will regularly review the management structure to ensure that it meets the business development
requirements of the Group.

– 18 –
Model Code for Securities Transactions by Directors
The Board has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (“Model Code”) contained in Appendix
10 of the Listing Rules as its own code of conduct regarding the securities transactions by the directors. Specific enquiries have been
made by the Company, all directors have confirmed that they have complied with the required standards set out in the Model Code
throughout the six months ended 30 June 2007.
Audit Committee
The audit committee of the Company consists of three independent non-executive directors, namely Mr. Wang Youwei (Chairman), Mr.
Yi Deqing and Mr. Dennis Yin Ming Chan. The audit committee held one meeting during the period under review and all three members
attended the meeting. The audit committee has discussed the accounting policies as well as critical accounting estimates and assumptions
with management, discussed with the auditors on the audit plan and key audit areas. The audit objectives and the scope of the internal
audit department of the Group were also discussed. The interim results of the Group for the six months ended 30 June 2007 had been
reviewed by the audit committee.
Publication of Interim Report
The full text of the Company’s 2007 Interim Report will be sent to the shareholders of the Company and posted on the websites of The
Stock Exchange of Hong Kong Limited (www.hkex.com.hk) and the Company (www.irasia.com/listco/hk/baoyegroup) respectively in
due course.
Appreciation
The Board would like to take this opportunity to express gratitude to our shareholders, customers, suppliers, banks, professional parties
and employees for their continuous patronage and support.
By order of the Board
Baoye Group Company Limited
Pang Baogen
Chairman
Zhejiang, the PRC
14 September 2007
As at the date of this announcement, the Board includes five executive directors, Mr. Pang Baogen, Mr. Gao Jiming, Mr. Gao Lin, Mr. Zhou
Hanwan and Mr. Wang Rongfu, one non-executive director, Mr. Hu Shaozeng, and four independent non-executive directors, Mr. Wang Youwei,
Mr. Yi Deqing, Mr. Dennis Yin Ming Chan and Mr. Sun Chuanlin.