600845 2005 1

2005...1...1...2...4...6...8...9...10...16...16...18...54 1

2005 1 2 3 4 1 Shanghai Baosight Software Co.,Ltd. Baosight 2 3 515 021-50801155 021-50803294 E-mail investor@baosight.com 515 021-50801155-1462 021-50803294 E-mail hudekang@baosight.com 4 515 515 201203 http://www.baosight.com investor@baosight.com 5 http://www.sse.com.cn 6 A A A 600845 B B B B 900926 7 1994 8 15 2950 2001 6 14 515 019032 310115607280598 989 23 1

2005 989 23 : : 78,255,887.63 65,186,083.73 61,834,180.34 292,581,991.00 1,899,633.41 70,065,708.66 3,628,809.99 1,345,440.96 3,215,928.02 54,660,359.62-810,515.92 : : 65,186,083.73 70,454,091.79 426,317,353.97 451,796,966.12 205,335.73 350,443.60 217,594.84 9,884.38 4,920,738.51-435,989.00 21,252,577.10-1,401,774.40 5,096,897.06 531,912.39 : : 3,019,361.04 272,227.50 2

2005 302,948.69 78,147.63 319,841.85-640,623.32 3,351,903.39 : : 2005 2004 2003 (%) 1,336,822,430.56 1,311,488,207.61 1.93 964,717,881.55 78,255,887.63 68,813,072.06 13.72 61,306,979.86 65,186,083.73 54,145,551.19 20.39 53,929,225.85 61,834,180.34 54,007,148.14 14.49 53,688,869.35 0.249 0.206 20.87 0.206 % 15.29 13.14 2.15 1.39 0.72 14.50 13.11 % 15.01 14.75 14.03 % 15.93 54,660,359.62 70,051,101.37-21.97 74,300,358.89 0.208 0.267-21.97 0.283 2005 2004 2003 (%) 872,936,737.16 702,580,750.25 24.25 603,014,256.77 426,317,353.97 411,982,701.01 3.48 357,743,586.74 1.626 1.571 3.50 1.364 1.605 1.547 3.75 1.336 15.07 : : 262,244,070.00 21,205,721.29 31,616,637.39 13,751,301.49 96,604,081.67 411,982,701.01 1,982,433.29 13,876,113.16 6,518,608.37 65,186,083.73 80,659,580.12 66,324,927.16 66,324,927.16 262,244,070.00 23,188,154.58 45,492,750.55 20,269,909.86 95,465,238.24 426,317,353.97 2,735.70 217,595.02 25% 3

2005 9,884.38 2) 3) 4), 1 : (%) (%) 1150,044,070 57.22% 150,044,070 57.22% 150,044,070 57.22% -150,044,070 150,044,070 150,044,070 57.22% 2 11,000,000 4.19% 11,000,000 4.19% 3 4 161,044,070 61.41% 161,044,070 61.41% 1 13,200,000 5.03% 13,200,000 5.03% 2 88,000,000 33.56% 88,000,000 33.56% 3 4 101,200,000 38.59% 101,200,000 38.59% 262,244,070 100.00% 262,244,070 100.00% 2 (1) (2) (3) 4

2005 1 : 16,128 (%) 57.22 150,044,070 150,044,070 1.07 2,794,550 0.67 1,752,500 0.53 1,400,000 ( ) 0.42 1,100,000 0.39 1,016,617 0.31 818,000 0.31 800,000 0.30 791,317 0.30 778,000 19,000 1,752,500 1,016,617 818,000 791,317 778,000 SKANDIA GLOBAL FUNDS PLC 710,257 683,410 616,343 WARBURG DILLON READ NOMINEES (HONG KONG) LTD - GENERAL A/C 601,994 595,900. 2 1 17,512,000,000.00 2000 2 3 2 2004 8 11 ( ) ( ) 2004 8 11 150044070 ( 57.22%) 2004 12 23 5

2005 150044070, 150044070 2005 4 21 150044070 ( 57.22%) 2005 12 31 3 100 77.86 57.22 3 : : ( ) 52 2004-04-29 2007-04-28 27356A 36256A 8900A 46.9 49 2005-08-17 2007-04-28 57500B 79700B 22200B 46.9 54 2004-04-29 2007-04-28 22110A 13700B 31110A13700B 9000A 41 2004-04-29 2007-04-28 46 2004-04-29 2007-04-28 48 2004-04-29 2007-04-28 16300A 23600A 7300A 38.6 49 2004-04-29 2007-04-28 12 54 2004-04-29 2007-04-28 12 41 2004-04-29 2007-04-28 12 50 2004-04-29 2007-04-28 48 2004-04-29 2007-04-28 52 2005-03-10 2007-04-28 4300A 7900A 3600A 28 48 2004-04-29 2007-04-28 6400A 40200B 6400A65400B 25200B 42.3 42 2004-04-29 2007-04-28 50700B 70200B 19500B 38.6 6

2005 43 2004-04-29 2007-04-28 19600A 26400A 6800A 38.6 35 2004-04-29 2007-04-28 43700B 63200B 19500B 38.6 39 2005-10-19 2007-04-28 12700A 19110A 6410A 38.6 / / / / / 102546A 205800B 119666A 292200B / 440.0 5 1) IT,, 2), 3) 4) 5) 6) 7) 863 8) 9) 10) 11) 12) 13) 14) 15) 16) 17) 7

2005 1 2 1,425 26 1 141 1,066 90 27 101 2 16 365 750 204 65 25 8

2005 1 4 2 2 4 4 0 4 3 1 2 1) 2001 3 2) 3) 4) 5) 9

2005 2001 2004 1 2004 2005 3 12 2005 4 21 515 155 157381114 60.01% B 51 6275292 154 7337044 2 2004 2004 2004 2005 2005 2005 2005 4 23 1 1 2005 2005 8 19 2005 9 23 515 16 153186471 58.41 % B 10 3100400 5 42001 2 2005 3 2005 2005 9 24, 2005 CMM5 10

2005 MES 2005 ecop 180 2005 4 CMMI3 2007 CMMI5 2005 13.36 1.93 6518.61 20.39 5466, 1 : : % (%) 748,190,476.76 554,205,565.68 25.93 26.08 31.65 3.13 128,058,858.14 73,122,904.58 42.90 33.21 30.86 1.03 399,221,346.58 358,345,906.50 10.24-28.96-30.69 2.23 61,351,749.08 44,126,273.29 28.08 2.32-0.03 1.69 1,336,822,430.56 1,029,800,650.25 22.97 1.93-0.79 2.11 2 : : ( ) 35,351,887.76 3.61 1,301,470,542.80 1.89 1,336,822,430.56 1.93 3 2005 2004 40,047,765.00 4.59% 11,958,897.20 1.70% 2.89 325,589,544.25 37.30% 209,180,211.28 29.77% 7.53 11

2005 138,359,028.40 15.85% 98,523,462.33 14.02% 1.83 147,832,958.53 16.94% 71,310,928.54 10.15% 6.79 21,217,249.81 2.43% 2,028,845.44 0.29% 2.14 42,550,508.61 4.87% 10,257,194.18 1.46% 3.41 872,936,737.16 702,580,750.25 2005 2005 2004 14,439,789.51 8,053,620.55 79.30% 72,493,684.97 53,304,427.55 36.00%, 3,628,809.99 1,234,664.24 193.91% 1,345,440.96 280,800.00 379.15%, 3,716,015.08 389,463.34 854.14% 4 2005 2004, 54,660,359.62 70,051,101.37-3,006,317.15-22,417,365.26-52,079,508.33 7,630,974.48 (5) 104,213,689.77 12.65% 610,937,260.44 45.70% 6 4,967,280.00 5,776,498.44 418,604.87 5,000,000.00 11,777,956.25-885,198.63 18,792,188.00 20,267,734.67-728,388.00 20,000,000.00 72,502,455.39 5,449,672.86 1,689,750.00 7,694,119.04 524,058.57 12

2005 12,415,703.98 10,803,682.38-830,841.01 193 05 25% IT 1 IBM Cisco 2) SAP Oracle 3) 4) 1) 2) 3) IT 4, : 1 13

2005 2 3 2005 2006 1) 2006 2) a b c 3) 4) 2006 : 1) 2) 1 2 3 14

2005 1 2 2005 25% 2005 11 2 441.37 75% 2005 11 16 849.08, 75% 1 1) 2005 3 10 2004 2004 2004 2004 2005 2005 3 2005 2004 2004 2) 2005 4 21 2005 3) 2005 8 17 2005 2005 2005 4) 2005 10 19 2005 2 1 2004 2004 2 2005 2005 2005 6 30 262,244,070 10 2.00 52,448,814.00 15

2005 2005 65,186,083.73 96,604,081.67 161,790,165.40 7,357,504.79 6,518,608.37 2005 52,448,814.00 95,465,238.24 200 70,454,091.79 103,812,021.75 174,266,113.54 7,357,504.79 6,518,608.37 350,443.60 2005 52,448,814.00 107,590,742.78 2005 1 2005 3 10 1 2004 2 2004 3 2004 4 2004 5 2004 6 2005 7 2005 8 2005 9 10 11 12 2004 13 2004 2 2005 4 21 2005 3 2005 8 17 1 2005 2 2005 3 4 5 6 2005 4 2005 10 19 1 2005 2 16

2005 2005 1 (1) : : ( ) 447,709,440.57 447,709,440.57 33.49 39,546,968.83 39,546,968.83 2.96 74,647,025.01 74,647,025.01 5.58 IT 2 25% 441.37 21.76 426.68 461.67 3 17

2005 2002 11 18 2007 9 20 294,189.60 30 2005 1 1 2005 12 31 1,084,000.00 2,906,400 2003 7 250 250 2005 7 200,772.68 2005 9 250 300 2005 4 19 1000, 1000 2005 6 29 2005 7 1 1000, 1000 2005 9 27 2005 10 13 1000, 1000 2005 12 30 2004 4 40 2005 12 31 135 82.5 13 77.5 13 18

2005 (2006) 198 ( )2005 12 31 2005 2005 2005 12 31 2005 2006 3 8 19

2005 2005 12 31 : : : 160,837,760.59 161,648,276.51 118,032,042.22 122,907,577.19 5,500,000.00 5,500,000.00 40,047,765.00 11,958,897.20 40,007,765.00 11,938,897.20 247,329.17 2,066,561.33 120,000.00 120,000.00 325,589,544.25 209,180,211.28 306,936,452.89 183,839,053.26 14,103,935.76 14,060,854.36 8,951,115.21 9,709,903.07 35,990,763.92 35,926,172.05 32,860,683.23 34,228,406.03 138,359,028.40 98,523,462.33 108,744,093.63 72,090,676.13 949,898.79 1,220,445.99 715,521.47 1,083,089.35 6,000,000.00 6,000,000.00 721,378,696.71 544,138,319.72 616,495,002.82 443,984,163.56 25,342,992.01 25,548,327.74 73,911,605.31 61,876,465.25 25,342,992.01 25,548,327.74 73,911,605.31 61,876,465.25 ( - 1,233,992.67 1,439,328.40 ) ( - ) 180,933,911.88 172,489,437.18 157,163,054.55 147,870,133.82 57,661,063.45 46,427,981.27 44,108,436.53 33,042,839.34 123,272,848.43 126,061,455.91 113,054,618.02 114,827,294.48 2,259,196.27 2,278,922.42 121,013,652.16 123,782,533.49 113,054,618.02 114,827,294.48 121,013,652.16 123,782,533.49 113,054,618.02 114,827,294.48 20

2005 1,205,372.64 4,067,737.70 1,105,372.62 3,927,737.70 3,996,023.64 5,043,831.60 3,397,452.65 4,283,080.73 5,201,396.28 9,111,569.30 4,502,825.27 8,210,818.43 872,936,737.16 702,580,750.25 807,964,051.42 628,898,741.72 3,000,000.00 5,990,000.00 21,530,747.72 18,941,634.90 20,478,591.95 18,941,634.90 148,149,354.17 117,875,209.57 128,304,884.75 100,167,600.93 147,832,958.53 71,310,928.54 136,692,795.87 55,020,220.25 9,007,609.20 13,022,911.67 6,477,011.61 8,490,479.46 107,915.90 340,099.46 1,960 797,009.36 1,314,868.58 21,217,249.81 2,028,845.44 18,691,057.30 346,787.24 16,537.81 61,536.22 3,771.20 58,427.54 42,550,508.61 10,257,194.18 40,728,142.82 8,906,841.24 9,365,350.00 7,436,292.92 9,351,000.00 7,423,375.90 343,030.27 403,918,271.38 248,579,521.48 360,727,255.50 199,357,327.46 601,952.16 20,846,582.55 18,020,903.91 20,846,582.55 17,870,903.91 21,448,534.71 18,020,903.91 20,846,582.55 17,870,903.91 425,366,806.09 266,600,425.39 381,573,838.05 217,228,231.37 ( 21,252,577.10 23,997,623.85 ) 262,244,070.00 262,244,070.00 262,244,070.00 262,244,070.00 262,244,070.00 262,244,070.00 262,244,070.00 262,244,070.00 21

2005 23,188,154.58 21,205,721.29 23,188,154.58 21,205,721.29 45,492,750.55 31,616,637.39 44,359,727.40 31,322,510.66 20,269,909.86 13,751,301.49 20,269,909.86 13,751,301.49 95,465,238.24 96,604,081.67 96,598,261.39 96,898,208.40 ( ) -72,859.40 312,190.66 ( ) 426,317,353.97 411,982,701.01 426,390,213.37 411,670,510.35 872,936,737.16 702,580,750.25 807,964,051.42 628,898,741.72 : : : 2005 1-12 : : : 1,336,822,430.56 1,311,488,207.61 1,172,933,650.51 1,118,985,806.53 1,029,800,650.05 1,037,970,920.7 906,597,829.55 887,569,281.08 14,439,789.51 8,053,620.55 12,596,182.78 6,545,836.17-292,581,991.00 265,463,666.36 253,739,638.18 224,870,689.28-1,899,633.41 1,725,235.94 2,139,935.48 2,635,857.96 : 72,493,684.97 53,304,427.55 65,090,722.33 46,765,814.63 151,560,044.24 146,630,290.43 125,973,072.61 121,872,647.23 362,186.54-80,629.96 61,051.15-76,535.82-70,065,708.66 67,334,814.28 64,754,727.57 58,944,621.20-3,628,809.99 1,234,664.24 5,821,472.04 4,983,651.94 1,345,440.96 280,800.00 1,012,440.96 6,800.00 3,716,015.08 389,463.34 3,035,690.06 379,395.64 500,087.06 426,669.80 357,488.77 395,913.30-78,255,887.63 68,813,072.06 74,266,841.86 63,918,555.48 11,515,329.97 11,515,185.71 9,080,758.13 9,772,986.29 22

2005 1,554,473.93 3,152,335.16 ( ) - 65,186,083.73 54,145,551.19 65,186,083.73 54,145,569.19 96,604,081.67 53,341,633.16 96,898,208.40 53,581,753.05 161,790,165.40 107,487,184.35 162,084,292.13 107,727,322.24 6,518,608.37 5,414,556.92 6,518,608.37 5,414,556.92 6,518,608.37 5,414,556.92 6,518,608.37 5,414,556.92 ( ) 419,448.21 26,994.42 419,448.21 26,994.42 147,914,052.24 96,604,081.67 149,047,075.39 96,898,208.40 52,448,814.00 52,448,814.00 ( - ) 95,465,238.24 96,604,081.67 96,598,261.39 96,898,208.40 1. 2. 3. ( ) 4. ( ) 5. 6. : : : 23

2005 2005 1-12 : : : 1,399,867,783.60 1,203,815,199.03 5,084,716.86 4,445,056.49 68,644,680.99 64,512,188.76 1,473,597,181.45 1,272,772,444.28 881,134,425.94 746,895,320.65 310,827,164.84 275,545,478.11 60,535,010.40 49,202,505.47 166,440,220.65 151,382,935.80 1,418,936,821.83 1,223,026,240.03 54,660,359.62 49,746,204.25 38,653,373.04 36,153,373.04 3,800,772.68 3,815,955.40 7,231,435.93 4,847,817.61 49,685,581.65 44,817,146.05 15,448,398.80 12,485,706.81 37,243,500.00 37,302,932.46 52,691,898.80 49,788,639.27-3,006,317.15-4,971,493.22 850,876.70 850,876.70 25,000,740.00 2,825,678.64 2,975,678.64 28,677,295.34 2,975,678.64 27,045,757.57 53,711,046.10 52,625,924.64 712,350.11 24

2005 80,756,803.67 52,625,924.64-52,079,508.33-49,650,246.00-385,050.06-810,515.92-4,875,534.97 1 65,186,083.73 65,186,083.73 ( - ) 1,554,473.93 6,687,210.72 6,023,316.77 17,290,571.94 15,144,862.98 2,862,365.06 2,822,365.08 1,047,807.96 885,628.08 270,547.20 367,567.88 1,937,624.10 1,927,624.10-3,353,976.97-2,742,753.97 ( : ) 226,555.83 166,037.12 541,314.97 177,110.64-3,628,809.99-5,821,472.04-41,213,146.50-38,030,997.93 ( ) -138,562,787.30-157,779,252.22 ( ) 143,814,524.94 161,420,084.03 ( ) 54,660,359.62 49,746,204.25 2 3 160,837,760.59 118,032,042.22 161,648,276.51 122,907,577.19-810,515.92-4,875,534.97 : : : 25

2005 2005 : : : 1 7,200,657.03 5,323,013.65 / / 317,617.01 12,206,053.67 2 7,099,357.74 4,885,076.61 / / 317,617.01 11,666,817.34 3 101,299.29 437,937.04 / / 539,236.33 4 5 6 7 59,920.84 1,377,580.43 1,437,501.27 8 1,303,937.42 1,303,937.42 9 10 11 12 13 2,278,922.42 19,726.15 19,726.15 2,259,196.27 14 15 2,278,922.42 19,726.15 19,726.15 2,259,196.27 16 17 18 19 20 21 9,539,500.29 6,700,594.08 19,726.15 337,343.16 15,902,751.21 : : : 26

2005 2005 : : : 1 6,204,015.42 4,903,354.35 / / 257,617.01 10,849,752.76 2 6,172,608.47 4,657,872.33 / / 257,617.01 10,572,863.79 3 31,406.95 245,482.02 / / 276,887.97 4 5 6 7 1,377,580.43 1,377,580.43 8 1,303,937.42 1,303,937.42 9 10 11 12 13 14 15 16 17 18 19 20 21 6,204,015.42 6,280,934.78 257,617.01 12,227,333.19 : : : 9 : : % 68.63 69.80 1.116 1.116 16.44 16.72 0.267 0.267 15.29 15.55 0.249 0.249 14.50 14.75 0.236 0.236 27

2005 28 2005 1. 1993 9 25 ( 1993) 409 1994 3 A B 1994 6 23 (1994)05 1995 5 (95)073 10:1 (95) 562 1995 10 019032 ( ) 262,244,070.00 ( ) 57.22% (2000)499 ( ) ( ) 2000 11 2001 3 26 2001 ( ) 2001 3 30, 2001 6 14 262,244,070.00 262,244,070 ( 1 ) (A )13,200,000 (B )88,000,000 (95) 562 A B 1994 3 11 1994 3 15 2004 8 11 ( ) ( ) ( ) 150,044,070 ( 57.22%) 2004 11 23 2004 12 2 (2004) 1954 [2004]1122 2005 4 19 [2005]25 2005 12 31 2. ( )

2005 3. 1. 2. 1 1 12 31 3. 4. 5. ( ) ( ) ( ) 6. ( ) ( ) 7. ( ) 8. (1) ( ) 29

2005 (2) 9. (1) / (2) ( ) 1 0.5% 1 2 10% 2 3 30% 3 50% 10. 12 12 11. (1) (2) 30

2005 (3) (4) (5) 12. (1) (2) 10 2002 10 2003 2004 5 28 ( ) (3) ( ) ( ) (4) (5) 2004 5 28 ( ) ( [2004]3 ) 31

2005 ( ) 13. (1) 1 2,000 2 (2) (3) (4) ( 4%) 20 30 3.2% 4.8% 5 19.2% 7 13.7% 5 19.2% 5 9 7 10.4% 20%( ) 14. (1) (2) ( 10 ) 5 5 32

2005 (3) 15. (1) (2) 16. (1) (2) A B C 17. 18. (1995)11 (96)2 *1 15% 17% 33

2005 *2 5% 1% 3% 0.5% *1 42% 27% 15% *2 [1999]273 (1999)93 217,153,788.50 (%) US 600,000.00 3,477,096.00 70 5,000,000.00 3,490,000.00 69.8 *1 ( ) US 2,170,000.00 8,984,310.00 52.9954 ( ) *2 20,000,000.00 19,615,360.88 75 ( ) JP 25,000,000.00 1,689,750.00 100 *3 US 1,500,000.00 9,104,755.00 73.33 ( ) *1 18% 12.2% 2005 12 31 34

2005 *2 4,743,500.00 ( )25% 2005 10 2005 11 100.30 2,000 2005 12 13 (2005)0841 *3 ( ) 300 150 2005 12 31 150 2004 12 31 1. 2005 2004 421,812.61 549,026.53 5,952.00 8.0709 48,038.00 247.00 8.2765 2,044.30 753,690.00 0.0685 51,611.88 661,693.00 0.079701 52,737.60 19,019.40 9.5624 181,871.11 515.00 11.2627 5,800.29 1,200.00 1.0405 1,248.60 14,400.00 1.0637 15,317.28 535.00 13.9150 7,444.53 - - - 144,614,809.25 161,099,249.98 76,219.42 8.0615 614,443.11 938,297.39 8.2765 7,765,818.34 70,851,504.00 0.0687 4,866,254.32 45,300,837.00 0.079701 3,610,522.01 4,857.21 9.5624 46,446.58 6.10 11.2627 68.70 15,801,138.73-160,837,760.59 161,648,276.51 2. 3,000,000.00 30,000,000.00 30,000,000.00 3,000,000.00 3,511,892.12 2,500,000.00 2,500,000.00 2,500,000.00 2,500,000.00 1800 5,500,000.00 32,500,000.00 32,500,000.00 5,500,000.00 3. 2005 2004 39,858,149.00 11,778,897.20 189,616.00 180,000.00 40,047,765.00 11,958,897.20 5%( 5%) 35

2005 4. 2005 2004 - - 120,000.00 5. 2005 2004 (%) (%) (%) (%) 1 292,840,158.71 86.83 0.43 1,273,801.00 199,224,596.69 92.12 0.17 335,720.48 1 2 36,318,924.14 10.77 11.12 4,037,925.31 12,680,419.77 5.86 23.48 2,977,985.31 2 3 4,593,649.88 1.36 72.46 3,328,368.20 1,378,631.97 0.64 57.28 789,731.36 3 3,503,628.86 1.04 86.39 3,026,722.83 2,995,920.59 1.38 100.00 2,995,920.59 337,256,361.59 100.00 11,666,817.34 216,279,569.02 100.00 7,099,357.74 5%( 5%) 114,550,006.64 1,239,726.40 317,617.01 5% 1 86.83% 0.5% 318,803.50 170,280,493.38 50.49% 6. 2005 2004 (%) (%) (%) (%) 1 9,957,821.17 68.00 0.49 49,218.79 12,827,746.99 90.58 0.33 42,238.52 1 2 4,100,000.00 28.00 8.96 367,279.39 1,245,650.21 8.80 0.50 6,228.25 2 3 519,114.47 3.55 15.86 82,317.45 20,996.45 0.15 89.07 18,702.52 3 66,236.45 0.45 61.02 40,420.70 67,760.00 0.47 50.37 34,130.00 14,643,172.09 100.00 539,236.33 14,162,153.65 100.00 101,299.29 5%( 5%) ( ) 1,350,000.00 1-2 981,037.00 <1 800,000.00 1-2 36

2005 300,000.00 <1 120,000.00 <1 3,551,037.00 24.25% 7. 2005 2004 (%) (%) 1 35,628,736.82 98.99 35,388,559.38 98.51 1 2 301,242.10 0.84 532,499.67 1.48 2 3 58,272.00 0.16 5,113.00 0.01 3 2,513.00 0.01 - - 35,990,763.92 100.00 35,926,172.05 100.00 5%( 5%) 8. 110,834,572.57 82,695,360.72-1,303,937.42 - - - 1,303,937.42 4,430,221.57 3,178,538.95 - - - - - - 11,407,674.29 6,795,942.77 59,920.84 - - - - 59.920.84 720,051.19 325,098.70 - - - - - - 1,191,699.38 1,005,514.04-73,643.01 - - - 73,643.01 3,171,516.12 4,582,927.99 - - - - - - * 8,040,794.55 - - - - - - - 139,796,529.67 98,583,383.17 59,920.84 1,377,580.43 - - - 1,437,501.27 * 9. 2005 2004-10,100.00 948,601.67 1,026,603.33-12,500.00-66,401.71 1,297.12 104,840.95 949,898.79 1,220,445.99 10. 99 6,000,000.00 4% 6,000,000.002005 8 10-6,000,000.00 120,000.00 1,200,000.00 37

2005 11. (1) ( ) 1,439,328.40-205,335.73 1,233,992.67 - - - - - - 1,439,328.40-205,335.73 1,233,992.67 - - - - - - ( ) 24,108,999.34 - - 24,108,999.34 - - - - - - 24,108,999.34 - - 24,108,999.34 - - - - - - 25,548,327.74-205,335.73 25,342,992.01 - - - - - - (2) ( ) 2,042,882.71 10 204,288.25 1,227,620.55 10,474.74 10 1,047.48 6,372.12 2,053,357.45 205,335.73 1,233,992.67 (3) ( ) ( ) 13,600,000.00 17% 9,508,999.34 8% 1,000,000.00 7.128% 24,108,999.34 6.14% 12. (1) 86,370,256.97-2,918,883.00 83,451,373.97 62,450,538.91 15,002,833.36 6,090,010.04 71,363,362.23 15,834,001.94 2,139,665.22 1,223,947.35 16,749,719.81 3,893,164.96 1,174,136.42 146,003.46 4,921,297.92 3,941,474.40 713,035.25 206,351.70 4,448,157.95 172,489,437.18 19,029,670.25 10,585,195.55 180,933,911.88 38

2005 (2) 10,386,467.29 2,405,038.01 1,204,039.10 11,587,466.20 26,461,619.82 10,772,054.20 3,869,850.30 33,363,823.72 7,283,060.73 1,862,480.08 726,264.08 8,419,276.73 1,621,591.76 790,042.08 82,234.58 2,329,399.26 675,241.67 1,460,957.57 175,101.70 1,961,097.54 46,427,981.27 17,290,571.94 6,057,489.76 57,661,063.45 (3) 75,983,789.68 71,863,907.77 35,988,919.09 37,999,538.51 8,550,941.21 8,330,443.08 2,271,573.20 2,591,898.66 3,266,232.73 2,487,060.41 126,061,455.91 123,272,848.43 (4) - - - - - - 1,840,110.25 - - - - 1,840,110.25 352,256.21 - - 7,258.15 7,258.15 344,998.06 86,555.96 - - 12,468.00 12,468.00 74,087.96 - - - - - - 2,278,922.42 - - 19,726.15 19,726.15 2,259,196.27 (5) 75,983,789.68 71,863,907.77 34,148,808.84 36,159,428.26 8,198,685.00 7,985,445.02 2,185,017.24 2,517,810.70 3,266,232.73 2,487,060.41 123,782,533.49 121,013,652.16 (6) 172,489,437.18 19,029,670.25 19,029,670.25 10,585,195.55 10,585,195.55 180,933,911.88 39

2005 46,427,981.27 17,290,571.94 17,290,571.94 6,057,489.76 6,057,489.76 57,661,063.45 (7) 1,250,203.55 (8) 115,000.00 275,748.20 13. 12,508,732.00 3,127,183.21-2,501,746.70 11,883,295.49-625,436.51 5 1,803,093.00 940,554.49-360,618.36 1,223,156.87-579,936.13 2-19 14,311,825.00 4,067,737.70-2,862,365.06 13,106,452.36-1,205,372.64 14. 8,966,987.00 4,810,733.88-1,021,908.08 5,178,161.20-3,788,825.80 3-57 517,996.80 233,097.72-25,899.88 310,798.96-207,197.84 96 9,484,983.80 5,043,831.60-1,047,807.96 5,488,960.16-3,996,023.64 15. 2005 2004 3,000,000.00 5,990,000.00 16. 2005 2004 12,807,396.41 18,314,222.50 8,723,351.31 627,412.40 21,530,747.72 18,941,634.90 40

2005 5%( 5%) 17. 5%( 5%) 1,992,594.85 18. 5%( 5%) 51,750,849.43 19. 9,007,609.20 20. 2005 2004 378,687.27 287,695.68 ( ) 335,879.04 335,879.04 82,443.05 691,293.86 797,009.36 1,314,868.58 21. 2005 2004 1,947,102.11 (998,723.75) 1,376,173.18 2,119,358.53 14,396.06 32,471.64 5,441,349.66 62,527.07 12,863,212.08 785,562.93 (424,983.28) 27,649.02 21,217,249.81 2,028,845.44 22. 2005 2004 10,085.86 13,304.81 6,451.95 38,447.97-9,783.44 16,537.81 61,536.22 23. 5%( 5%) 41

2005 2005 30,500,000.00 3,701,421.86 622,158.02 549,445.90 287,727.83 24. 2005 2004 1,020,000.00 1,200,000.00 8,200,000.00 5,800,000.00-50,000.00 4,350.00 12,917.02 141,000.00 373,375.90 9,365,350.00 7,436,292.92 25. 2005 2004 * 4,992,000.00 343,030.27 - - - 26. 2005 2004 8,760,000.00 601,952.16 - - - * 27. 2005 2004 14,255,000.00 10,852,336.61 8,255,000.00 4,000,000.00 863-852,336.61 *1 MES *3 6,000,000.00 6,000,000.00 6,591,582.55 7,168,567.30 726,902.00 800,000.00-150,000.00 DSS Real Time System 50,000.00 - - 534,800.00 *1 1,163,051.39 2,700,000.00-1,263,263.30 *2 798,458.10 781,872.00 ERP MES *1-157,800.00 MES 123,171.06 297,040.00 42

2005 70,000.00 - - 940,000.00-140,000.00 - *3-483,792.00 CMM 2,400,000.00-180,000.00-20,846,582.55 18,020,903.91 *1 MES 964,600.00 *2 787,618.19 *3 2001 10 ( ) 600 2005 12 31 28. 1 ( A /B ) (%) ( ) / (%) 1. 150,044,070.00 57.22 - - - - - 150,044,070.00 57.22 (1) 150,044,070.00 57.22 - - - - (150,044,070.00) - - (2) - - - - - - 150,044,070.00 154,044,070.00 57.22 (3) - - - - - - - - - (4) - - - - - - - - - 2. 11,000,000.00 4.19 - - - - - 11,000,000.00 4.19 3. - - - - - - - - - 4. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 161,044,070.00 61.41 - - - - - 161,044,070.00 61.41 1. 13,200,000.00 5.03 - - - - - 13,200,000.00 5.03 2. 88,000,000.00 33.56 - - - - - 88,000,000.00 33.56 3. - - - - - - - - - 4. - - - - - - - - - 101,200,000.00 38.59 - - - - - 101,200,000.00 38.59 262,244,070.00 100.00 - - - - - 262,244,070.00 100.00 29. 367,200.00 2,735.70-369,935.70 28,461.83 217,595.02 246,056.85 2,552,746.38 9,884.38-2,562,630.76-1,752,218.19 1,752,218.19 18,257,313.08 - - 18,257,313.08 21,205,721.29 1,982,433.29-23,188,154.58 2,735.70 43

2005 217,595.02 25% 9,884.38 30. 16,581,253.43 7,357,504.79-23,938,758.22 13,751,301.49 6,518,608.37-20,269,909.86 1,284,082.47 - - 1,284,082.47 31,616,637.39 13,876,113.16-45,492,750.55 31. 2005 (1) 96,604,081.67 (2) 65,186,083.73 (3) 7,357,504.79 (4) 6,518,608.37 (5) 52,448,814.00 (6) 95,465,238.24 10% 10% 2004 10% 10% 2005 0.20 / 32. 2005 2004 2005 2004 2005 2004 748,190,476.76 593,412,893.14 554,205,565.68 420,964,791.40 193,984,911.08 172,448,101.74 128,058,858.14 96,130,719.95 73,122,904.58 55,878,961.97 54,935,953.56 40,251,757.98 399,221,346.58 561,984,509.52 358,345,906.50 516,986,330.36 40,875,440.08 44,998,179.16 61,351,749.08 59,960,085.00 44,126,273.29 44,140,836.97 17,225,475.79 15,819,248.03 1,336,822,430.56 1,311,488,207.61 1,029,800,650.05 1,037,970,920.70 307,021,780.51 273,517,286.91 - - - - - - 1,336,822,430.56 1,311,488,207.61 1,029,800,650.05 1,037,970,920.70 307,021,780.51 273,517,286.91 610,937,260.44 45.70% 44

2005 33. 2005 2004 14,346,903.46 7,902,253.87 31,434.27 58,898.28 39,778.73 55,571.66 21,673.05 36,896.74 14,439,789.51 8,053,620.55 34. 2005 2004 541,314.97 525,914.96 1,195,993.98 720,705.51 719,537.80 86,313.68 179,756.27 297,327.75 207,603.18 362,186.54 (80,629.96) 35. 2005 2004 * 120,000.00 240,000.00 (205,335.73) (205,335.76) ( ) 3,360,000.00 1,200,000.00 354,145.72-3,628,809.99 1,234,664.24 * 36. 2005 2004 6,800.00 1,012,440.96 - [2000]25 (2005) 2000.6.24-0009 24494/ ( 2010.12.31 )[2004]0075 21669 / (2005) 0068 29409/ (2005)31849-274,000.00 1112303592 2001.1.1-2003.12.31 333,000.00 - [2005]55 1,345,440.96 280,800.00 45

2005 37. : 2005 30,500,000.00 2,810,783.00 1,195,993.98 38. : 2005 87,375,308.00 39. : 2005 2,825,678.64 1. 2005 2004 (%) (%) (%) (%) 1 276,293,732.41 87.01 0.41 1,125,184.57 173,990,479.43 91.57 0.14 250,335.81 1 2 34,152,621.08 10.76 10.78 3,682,819.20 12,441,865.26 6.55 23.10 2,873,614.76 2 3 3,926,712.31 1.24 78.77 3,093,233.32 1,244,859.58 0.66 57.37 714,200.44 3 3,136,250.88 0.99 85.19 2,671,626.70 2,334,457.46 1.22 100.00 2,334,457.46 317,509,316.68 100.00 10,572,863.79 190,011,661.73 100.00 6,172,608.47 722,453.40 257,617.01 5% 1 87.01% 0.5% 164,043,309.18 51.67% 46

2005 2. 2005 2004 (%) (%) (%) (%) 1 7,374,265.06 79.91 0.49 35,860.81 8,495,659.81 87.21 0.29 25,178.70 1 2 1,586,557.12 17.19 10.00 158,709.71 1,245,650.21 12.79 0.51 6,228.25 2 3 267,181.00 2.90 30.81 82,317.45 - - - 9,228,003.18 100.00 276,887.97 9,741,310.02 100.00 31,406.95 ( ) 981,037.00 <1 800,000.00 1-2 300,000.00 <1 120,000.00 <1 100,000.00 1-2 5% 1 79.91% 2,301,037.00 24.94% 3. (1) ( ) 37,767,465.91 14,537,209.13 2,502,069.07 49,802,605.97 - - - - - - 37,767,465.91 14,537,209.13 2,502,069.07 49,802,605.97 - - - - - - ( ) 24,108,999.34 - - 24,108,999.34 - - - - - - 24,108,999.34 - - 24,108,999.34 - - - - - - 61,876,465.25 14,537,209.13 2,502,069.07 73,911,605.31 - - - - - - (2) ( ) ( ) (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)=(5)+(6) +(9)+(11) 1999.03-70% 3,477,096.00-293,023.41 215,955.41 379,436.82 - - 3,856,532.82 2019. 03 2001.12-69.80% 1,295,840.55 151,276.74 (617,868.65) - 460,302.73 9,884.38 234,184.09 2,141,604.11 2051.12 2002.2-52.9954% 8,973,835.26 - (386,012.13) - 279,256.11-60,722.13 9,313,813.50 2009.3 2003.1-75% 6,739,261.83 12,131,154.32 3,189,516.66 2,080,777.93 3,917,424.46 2,735.70 2,735.70 22,790,576.31 2009.1 47

2005 100% 1,689,750.00-524,058.57-1,034,402.05 - - 2,724,152.05 2004.3-73.33% 9,104,755.00 - (609,283.13) - (1,362,820.49)- - 7,741,934.51 2024.3 31,280,538.64 12,282,431.06 2,393,434.73 2,296,733.34 4,708,001.68 12,620.08 297,641.92 48,568,613.30 2,042,882.71 10 204,288.25 1,227,620.55 10,474.74 10 1,047.48 6,372.12 2,053,357.45 205,335.73 1,233,992.67 (3) ( ) 13,600,000.00 17% 9,508,999.34 8% 1,000,000.00 7.128% 24,108,999.34 16.35% 4. 2005 2004 2005 2004 2005 2004 728,646,412.04 568,872,686.02 544,981,734.79 408,288,883.36 183,664,677.25 160,583,802.66 112,626,210.54 86,252,164.01 65,591,957.49 51,441,893.85 47,034,253.05 34,810,270.16 331,661,027.93 463,860,956.50 296,024,137.27 427,838,503.87 35,636,890.66 36,022,452.63 1,172,933,650.51 1,118,985,806.53 906,597,829.55 887,569,281.08 266,335,820.96 231,416,525.45 5. 2005 2004 * 120,000.00 240,000.00 ( ) 3,360,000.00 1,200,000.00 2,393,434.73 3,676,128.97 (205,335.73) (205,335.76) 153,373.04 72,858.73 5,821,472.04 4,983,651.94 * 48

2005 ( ) 1. 2. 12,512,000,000.005,000,000,000.00-17,512,000,000.00 8,678,889.20 11,321,110.80-20,000,000.00 US 3,000,000.00 - US 1,500,000.00US 1,500,000.00 3. % % % % 150,044,070.00 57.22 - - 150,044,070.00 57.22 - - - - 150,044,070.00 57.22 - - 150,044,070.00 57.22 4,339,444.60 50.00 10,660,555.40 25.00 - - 15,000,000.00 75.00 ( ) 49

2005 ( ) 1. 2005 2004 ( ) 2005 2004 (%) (%) - - - 2,628,350.82 0.34 5,024,891.72 0.61 3,005,335.50 0.39 3,220,726.75 0.39 - - - 1,600,000.00 0.20 - - - 852,862.79 0.11 887,043.42 0.12 2. 2005 2004 ( ) 2005 2004 (%) (%) 447,709,440.57 33.49 312,347,922.06 23.82 12,131,397.12 0.91 33,481,548.46 2.55 39,546,968.83 2.96 30,893,392.83 2.35 18,276,958.92 1.37 40,988,231.01 3.12 13,103,197.96 0.98 67,152,144.32 5.12 1,609,909.50 0.12 - - - 4,278,619.81 0.32 5,850,469.48 0.45 74,647,025.01 5.58 83,432,978.08 6.36 900,504.81 0.07 1,436,421.68 0.11 521,300.00 0.04 564,255.65 0.04 5,665,450.55 0.42 4,041,110.91 0.31 9,384,608.89 0.70 27,642,537.55 2.11 18,878,249.42 1.41 - - - 36,008,806.43 2.70 24,090,622.05 1.84 50

2005 3,000 5% 2005 (%) 298,470,182.71 39.89 87,818,460.22 68.58 61,420,797.64 15.39 17,328,636.03 2.32 700,553.50 0.55 21,517,779.30 0.05 49,330,470.43 6.59 10,612,214.91 8.29 14,704,339.67 3.68 2004 (%) 196,793,512.29 33.16 63,139,633.82 71.52 52,414,775.95 11.12 18,184,075.79 3.06 300,000.00 0.34 14,997,472.67 3.18 16,036,918.19 2.70 2,949,610.75 3.34 22,001,702.07 4.67 18,178,229.87 3.06 2,883,928.82 3.27 9,831,234.14 2.09 47,481,840.66 8.00 35,951,137.42 7.63 59,325,840.07 10.00 7,826,304.25 1.66 IT 3. 2005 2004 ( ) ( ) ( ) (%) 2005 2004 2005 2004-120,000.00-100.00 114,550,006.64 30,351,749.70 33.97 14.03 7,840,930.34 8,725,263.24 2.32 4.03 1,837,430.78 2,259,706.12 0.54 1.04 1,435,590.00-0.43-171,728.89 214,479.80 0.05 0.10-4,420,595.84-2.04 51,461.67 25,034.48 0.02 0.01 433,158.51 1,544,575.14 0.13 0.71 1,407,146.60-0.42-51

2005 4,463,975.83 502,814.79 1.32 0.23 80,000.00 2,259,719.88 0.02 1.04 1,149,119.37-0.34-2,854,547.89 3,368,194.00 0.85 1.56 1,002,246.13-0.30-3,477,843.15 1,577,416.71 1.03 0.73 140,755,185.80 55,249,549.70 41.74 25.52 378,687.27 287,695.68 47.51 21.88-560.00-0.00-200,000.00-0.56-200,560.00-0.56 1,992,594.85 765,152.80 1.36 0.65 235,776.42 111,276.42 0.16 0.09 179,454.00 169,511.85 0.12 0.14 2,407,825.27 1,045,941.07 1.64 0.88 51,750,849.43-35.01-1,655,079.51-1.12-1,280,000.00-0.87-292,994.35 1,504,505.17 0.20 2.11-648,724.42-0.91 4,436,696.35 8,810,553.13 3.00 12.36 1,348,212.31 1,776,260.05 0.91 2.49-1,704,183.57-2.39 1,087,758.78-0.74-2,580,663.47 1,949,563.95 1.73 2.73 64,432,254.20 16,393,790.29 43.58 22.99 4. 2005 2004 ( ) ( ) ( ) (%) 2005 2004 2005 2004-1,540.00-0.01-316,000.00-2.23 981,037.00-6.70-981,037.00 317,540.00 6.70 2.24-149,799.00-1.46 30,500,000.00 800.00 71.68 0.01-250,000.00-2.44 52

2005-23,753.00-0.23 30,500,000.00 424,352.00 71.68 4.14 5. (1) 2005 426.68461.67441.37 217,595.02 25% (2) 2003 7 250 250 2005 7 200,772.68 (3) 2005 9 250 (4) 300 (5) 2005 2004 1,042,252.86 9,786,539.92 1,148,889.21 8,864,380.35 USD4,614.22 USD384,412.56 3,126,164.34 1,581,579.96 2005 1,647 2005 12 31 300 5.22% 207,921.30 (6) 2003 7 2003 7 2005 8 200 2005 12 31 100 2004 9 2004 9 2006 12 300 2005 12 31 100 53

2005 (7) 2002 11 18 2007 9 20 294,189.60 30 2005 1 1 2005 12 31 1,084,000.00 2,906,400 (8) 2004-04-29 2007-04-28 46.9 2005-08-17 2007-04-28 46.9 2004-04-29 2007-04-28 46.9 2004-04-29 2007-04-28 2004-04-29 2007-04-28 2004-04-29 2007-04-28 38.6 2004-04-29 2007-04-28 12 2004-04-29 2007-04-28 12 2004-04-29 2007-04-28 12 2004-04-29 2007-04-28 2004-04-29 2007-04-28 2005-03-10 2007-04-28 28 2004-04-29 2007-04-28 42.3 2004-04-29 2007-04-28 38.6 2004-04-29 2007-04-28 38.6 2004-04-29 2007-04-28 38.6 2005-10-19 2007-04-28 38.6 440.0 1. 2004 4 40 2005 12 31 135 2. 2005 2004 1 641.16 442.90 2 5 ( 5 ) 811.56 871.00 5 173.89 180.50 1,626.61 1,494.40 54

2005 2006 3 8 (1) 100% (2) ( ) 47.0046% (3) 32% 1 (2004 ) 2005 2004 2,559,819.01 (101,795.45) 182,317.50 122,230.00-17,004.91 - - 249,826.83-305,047.24 20,841.13 270,636.77 328,734.74 (215,743.96) (248,612.28) 3,351,903.39 138,403.05 55

2005 2006 3 8 [ : 2005 ] 2006 3 8 [ : 2005 ] 2005 1 2 3 2006 3 8 56

AFSCIE Baosight2005 Draft 2:39:18 PM 3/9/2006 Audited Financial Statements Shanghai Baosight Software Co., Ltd. (Incorporated in the People s Republic of China with limited liability) 31 December 2005

Shanghai Baosight Software Co., Ltd. CONTENTS Pages REPORT OF THE AUDITORS 1 AUDITED FINANCIAL STATEMENTS Consolidated: Income Statement 2 Balance Sheet 3 Cash Flow Statement 4 Statement of Changes in Equity 5 Notes to Consolidated Financial Statements 6-35

REPORT OF THE AUDITORS To the members Shanghai Baosight Software Co., Ltd. (Incorporated in the People s Republic of China with limited liability) We have audited the accompanying consolidated balance sheet of Shanghai Baosight Software Co., Ltd. (the Company ) and its subsidiaries (the Group ) as at 31 December 2005, and the related consolidated statements of income and cash flows for the year then ended. These financial statements are the responsibility of the directors. Our responsibility is to express an opinion on these financial statements based on our audit. This report is made solely to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report. We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements give a true and fair view of the financial position of the Group as at 31 December 2005 and of the results of its operations and its cash flows for the year then ended in accordance with International Financial Reporting Standards. Certified Public Accountants Hong Kong 8 March 2006 1

Shanghai Baosight Software Co., Ltd. Consolidated Income Statement For the year ended 31 December 2005 2005 2004 Notes Rmb 000 Rmb 000 Revenue 4 1,310,582 1,286,900 Cost of sales (1,029,801) (1,032,775) Gross profit 280,781 254,125 Other income 5 23,313 13,475 Selling and distribution costs (72,494) (53,304) Administrative expenses (151,434) (144,623) Profit from operating activities 6 80,166 69,673 Finance costs 7 (1,558) (580) Profit before tax 78,608 69,093 Income tax expense 8(a) (6,418) (11,374) Profit for the year 72,190 57,719 Attributable to: Equity holders of the parent 70,455 54,355 Minority interests 1,735 3,364 Earnings per share attributable to ordinary equity holders of the parent 72,190 57,719 Basic - For profit for the year 9 Rmb0.2687 Rmb0.2073 The accompanying notes on pages 6 to 35 form an integral part of the financial statements. 2

Shanghai Baosight Software Co., Ltd. Consolidated Balance Sheet At 31 December 2005 2005 2004 ASSETS Notes Rmb 000 Rmb 000 Non-current assets Property, plant and equipment 11 102,106 105,206 Land use rights 12 22,904 23,439 Available-for-sale investments 13 24,109 24,109 Intangible assets 14 2,971 5,834 Deferred tax assets 8(c) 5,097-157,187 158,588 Current assets Held for trading investments 15 3,000 3,000 Held-to-maturity investments 16 2,500 8,620 Inventories 17 138,359 98,523 Trade and other receivables, net 18 334,803 280,556 Unbilled amounts due from customers for contract works 19 81,879 81,891 Cash and cash equivalents 160,838 161,648 721,379 634,238 TOTAL ASSETS 878,566 792,826 EQUITY AND LIABILITIES Equity attributable to equity holders of the parent Issued capital 24 262,244 262,244 Reserves 25 168,125 150,507 430,369 412,751 Minority interests 21,429 24,018 Total equity 451,798 436,769 Non-current liabilities Interest-bearing loans and borrowings 20 602 - Deferred income 22 1,402 - Long term liabilities 23 20,846 18,021 22,850 18,021 Current liabilities Interest-bearing loans and borrowings 20 3,343 5,990 Trade and other payables 21 395,134 332,489 Income tax payable/(recoverable) 8(b) 5,441 (443) 403,918 338,036 Total liabilities 426,768 356,057 TOTAL EQUITY AND LIABILITIES 878,566 792,826 The accompanying notes on pages 6 to 35 form an integral part of the financial statements. 3

Shanghai Baosight Software Co., Ltd. Consolidated Cash Flow Statement For the year ended 31 December 2005 2005 2004 Notes Rmb 000 Rmb 000 Cash flows from operating activities before interest and income tax 26(a) 61,896 82,168 Interest paid (541) (466) Income tax paid (5,631) (13,055) Net cash inflow from operating activities 55,724 68,647 Cash flows from investing activities Purchases of property, plant and equipment (15,447) (19,587) Proceeds from disposal of property, plant and equipment 7,269 - Purchases of intangible assets - (200) Bank interest received 1,196 721 Purchase of held-to-maturity investments (2,500) - Proceeds from disposal of held-to-maturity investments 8,941 - Investment income received 3,513 1,440 Decrease in a time deposit matured beyond three months - 7,732 Acquisition of additional equity interests in a subsidiary from a minority investor 26(b) (4,744) - Incorporation of a subsidiary - 3,311 Net cash outflow from investing activities (1,772) (6,583) Cash flows from financing activities Dividends paid to minority shareholders (731) (56) Repayment of interest-bearing loans and borrowings (27,045) (5,000) Proceeds from interest-bearing loans and borrowings 25,000 5,990 Capital contribution from a minority investor of a subsidiary 26(c) 854 - Dividends paid to equity holders of the parent (52,449) - Net cash inflow/(outflow) from financing activities (54,371) 934 Net increase/(decrease) in cash and cash equivalents (419) 62,998 Net foreign exchange difference (391) 162 Cash and cash equivalents at 1 January 161,648 98,488 Cash and cash equivalents at 31 December 160,838 161,648 The accompanying notes on pages 6 to 35 form an integral part of the financial statements. 4

Shanghai Baosight Software Co., Ltd. Consolidated Statement of Changes in Equity For the year ended 31 December 2005 Attributable to equity holders of the parent Minority Total interests equity Statutory Discretionary Statutory Foreign surplus surplus public currency Issued Share common common welfare translation Retained capital premium reserve reserve fund difference earnings Total Rmb 000 Rmb 000 Rmb 000 Rmb 000 Rmb 000 Rmb 000 Rmb 000 Rmb 000 Rmb 000 Rmb 000 (note 24) (note 25) (note 25) (note 25) (note 25) (note 25) (note 25) At 1 January 2004 262,244 14,410 10,678 1,910 8,496 249 60,340 358,327 17,378 375,705 Net profit for the year - - - - - - 54,355 54,355 3,364 57,719 Foreign currency translation difference on an overseas subsidiary - - - - - 69-69 - 69 Dividends of subsidiaries - - - - - - - - (35) (35) Incorporation of a subsidiary - - - - - - - - 3,311 3,311 Transfer to/(from) retained earnings - - 5,468-5,415 - (10,883) - - - At 31 December 2004 262,244 14,410 16,146 1,910 13,911 318 103,812 412,751 24,018 436,769 Net profit for the year - - - - - - 70,455 70,455 1,735 72,190 Arising from acquisition of additional equity interests in a subsidiary - - - - - - - - (4,631) (4,631) Capital contribution from a minority investor of a subsidiary - 3 - - - - - 3 2,501 2,504 Foreign currency translation difference on an overseas subsidiary - - - - - (391) - (391) - (391) Transfer to/(from) retained earnings - - 7,358-6,519 - (13,877) - - - Financial subsidy - 350 - - - - (350) - - - Equity dividends - - - - - - (52,449) (52,449) - (52,449) (Note10) Dividends of subsidiaries - - - - - - - - (2,194) (2,194) At 31 December 2005 262,244 14,763 23,504 1,910 20,430 (73) 107,591 430,369 21,429 451,798 The accompanying notes on pages 6 to 35 form an integral part of the financial statements. 5

Shanghai Baosight Software Co., Ltd. Notes to Consolidated Financial Statements 31 December 2005 1. Corporate information Shanghai Baosight Software Co., Ltd. (the Company ) was reorganised into a joint stock limited company in the People s Republic of China (the PRC ) on 5 January 1994. Subsequent to a further reorganisation to rationalise the Company s structure in preparation for the listing of its shares, its ordinary ( A ) and special ordinary ( B ) shares have been listed on the Shanghai Stock Exchange since 1994. The Company was originally engaged in the manufacture and sale of steel tubes. Pursuant to the board of directors meeting and the first extraordinary shareholders meeting of the Company held in early 2001, it was resolved to swap with Baosteel Information Technology Company Limited ( BIT ), a wholly-owned subsidiary of Shanghai Baosteel Group ( SBG ), all of the business undertakings of the Company together with its underlying assets and liabilities in return for all of the business undertakings of BIT and its underlying assets and liabilities (the Asset Restructuring ), based on the revalued amounts of their respective net assets as at 30 November 2000. The difference in the revalued amounts was reimbursed by cash. Upon completion of the Asset Restructuring on 31 March 2001, the principal activities of the Company and its subsidiaries (the Group ) changed from the manufacture and sale of steel tubes to software development, system integration and surveillance equipment. The registered office of the Company is located at No. 515 Guoshoujin Road, Shanghai, the PRC. On 2 May 2005, upon approval from Shanghai Foreign Investment Commission and Stateowned Assets Supervision and Administration Commission of the State Council, SBG transferred all its 150,044,070 shares in the Company (57.22% of total shares of the Company) to Baoshan Iron & Steel Co., Ltd. Thereafter, Baoshan Iron & Steal Co., Ltd. has become the major shareholder of the Company. 2.1 Basis of preparation The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards ( IFRSs ), which comprise standards and interpretations approved by the International Accounting Standards Board, and International Accounting Standards and the Standing Interpretations Committee interpretations approved by the International Accounting Standards Committee that remain in effect. The consolidated financial statements have been prepared under the historical cost convention unless otherwise disclosed in the accounting policies below. 6

Shanghai Baosight Software Co., Ltd. Notes to Consolidated Financial Statements 31 December 2005 2.1 Basis of preparation (continued) The Group maintains its books and prepares its statutory financial statements in accordance with the relevant accounting principles and financial regulations promulgated by the Ministry of Finance of the PRC applicable to companies established in the PRC. The accounting policies and bases adopted in the preparation of the statutory financial statements differ in certain respects from IFRSs. The differences arising from restating the results of operations and financial position to comply with IFRSs have been adjusted in these financial statements, but will not be taken up in the accounting records of the Group. The principal adjustments made in presenting the financial statements of the Group to conform with IFRSs include: - Recognition of goodwill/negative goodwill; - Recognition of deferred taxes; - Recognition of government grants and subsidies; - Treatment of financial assets and liabilities; and - Other adjustments. The net impact of these IFRSs adjustments is included in note 31 to the consolidated financial statements. 2.2 Adoption of new and revised IFRSs during the year The accounting policies adopted are consistent with those of the previous financial year except that the Group has adopted those new/revised IFRSs mandatory for financial years beginning on or after 1 January 2005. The following new and revised IFRSs affect the Group and are adopted for the first time for the current year s consolidated financial statements: IAS 1 Presentation of Financial Statements; IAS 2 Inventories; IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors; IAS 10 Events after the Balance Sheet Date; IAS 16 Property, Plant and Equipment; IAS 17 Leases; IAS 21 Effects of Changes in Foreign Exchange Rates; IAS 24 Related Party Disclosures; IAS 27 Consolidated and Separate Financial Statements; IAS 32 Financial Instruments: Disclosure and Presentation; IAS 33 Earnings per Share; IAS 36 Impairment of Assets IAS 38 Intangible Assets; IAS 39 Financial Instruments: Recognition and Measurement; IFRS 3 Business Combinations; and IFRS 5 Non-Current Assets Held for Sales and Discontinued Operations. The adoption of IAS 2, 8, 10, 16, 17, 21, 24, 27, 32, 33, 36, 38, 39 and IFRS 3 and 5 has had no material impact on the accounting policies of the Group and the methods of computation in the Group s financial statements. 7

Shanghai Baosight Software Co., Ltd. Notes to Consolidated Financial Statements 31 December 2005 2.2 Adoption of new and revised IFRSs during the year (continued) The impact of adopting IAS 1 Presentation of financial statements is summarised as follows: IAS 1 has affected the presentation of minority interests on the face of the consolidated balance sheet, consolidated income statement, consolidated statement of changes in equity and other disclosures. 2.3 Impact of issued but not yet effective IFRSs The Group has not applied the following new and revised IFRSs, that have been issued but are not yet effective, to these financial statements. These IFRSs are effective for annual periods beginning on or after 1 January 2006: IAS 1 Amendment IAS 19 Amendment IAS 21 Amendment IAS 39 Amendment IAS 39 Amendment IAS 39 & IFRS 4 Amendments IFRS 1 & 6 Amendments IFRS 6 IFRS 7 IFRIC - Int 4 IFRIC - Int 5 IFRIC - Int 6 Capital Disclosures Actuarial Gains and Losses, Group Plans and Disclosures Net Investment in a Foreign Operation Cash Flow Hedge Accounting of Forecast Intragroup Transactions The Fair Value Option Financial Guarantee Contracts First-time Adoption of IFRS and Exploration for and Evaluation of Mineral Resources Exploration for and Evaluation of Mineral Resources Financial Instruments: Disclosures Determining whether an Arrangement contains a Lease Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds Liabilities arising from Participating in a Specific Market Waste Electrical and Electronic Equipment IFRIC Int 7 Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinflationary Economics IFRIC Int 8 Scope of IFRS 2 IFRIC Int 9 Reassessment of Embedded Derivatives The Group expects that the adoption of the pronouncements listed above will not have any significant impact on the Group s consolidated financial statements or not relevant to the activities of the Group in the period of initial application. 3. Summary of significant accounting policies Basis of consolidation The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at 31 December each year. The financial statements of subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. Adjustments are made to bring into line any dissimilar accounting policies that may exist. All intra-group balances and transactions, including unrealised profits arising from intragroup transactions, have been eliminated in full. Unrealised losses are eliminated unless costs cannot be recovered. 8

Shanghai Baosight Software Co., Ltd. Notes to Consolidated Financial Statements 31 December 2005 3. Summary of significant accounting policies (continued) Basis of consolidation (continued) Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. Particulars of the Group s consolidated subsidiaries are as follows: Name Date of establishment Percentage of equity attributable to the Group Principal activities Shanghai Baoxi Computer Technology Co., Ltd. ( Baoxi ) Shanghai Baoscope Information Technology Co., Ltd. Shanghai Baoni Computer Systems Integration Co., Ltd. Shanghai Baokang Electronic Engineering Co., Ltd. ( Baokang ) Japan Baosight Co., Ltd. ( Japan Baosight ) Shanghai Renwei Software Co., Ltd. 19 March 1999 70 Software development, computer information and provision of consultancy services 13 May 1998 69.8 Computer networks, equipment installation and e-commerce 17 March 1994 53 Software development, system integration and provision of related technical services 11 January 1994 75 Design, development, manufacture and sale of electronics surveillance systems and equipment and provision of related technical services 10 January 2003 100 Software development and system integration 15 March 2004 73.3 Software development, system integration, sale of computer hardware and provision of related technical services Minority interests represent the portion of profit or loss and net assets in the Group s subsidiaries, not held by the Group and are presented separately in the consolidated income statement and within equity in the consolidated balance sheet, separately from parent shareholders equity. Subsidiaries A subsidiary is an entity whose financial and operating policies the Company controls, directly or indirectly, so as to obtain benefits from its activities. The results of subsidiaries are included in the Company s income statement to the extent of dividends received and receivable. The Company s investments in subsidiaries that are not classified as held for sale in accordance with IFRS 5 are stated at cost less any impairment losses. 9

Shanghai Baosight Software Co., Ltd. Notes to Consolidated Financial Statements 31 December 2005 3. Summary of significant accounting policies (continued) Related parties A party is considered to be related to the Group if: (a) the party, directly or indirectly through one or more intermediaries, (i) controls, is controlled by, or is under common control with, the Group; (ii) has an interest in the Group that gives it significant influence over the Group; or (iii) has joint control over the Group; (b) the party is an associate; (c) the party is a jointly-controlled entity; (d) the party is a member of the key management personnel of the Group or its parent; (e) the party is a close member of the family of any individual referred to in (a) or (d); or (f) the party is an entity that is controlled, jointly controlled or significantly influenced by or for which significant voting power in such entity resides with, directly or indirectly, any individual referred to in (d) or (e). Property, plant and equipment Property, plant and equipment are stated at cost, excluding the costs of day-to-day servicing, less accumulated depreciation and any impairment in value. Such cost includes the cost of replacing part of such plant and equipment when that cost is incurred if the recognition criteria are met. Depreciation is calculated on a straight-line basis to write off the cost of property, plant and equipment over their estimated useful lives, after taking into account their estimated residual values (apart from leasehold improvements which do not have residual value). The estimated useful lives of assets are as follows: Leasehold improvements Buildings Computer, electronic and related equipment Motor vehicles, furniture and fixtures Over the lease terms 10 to 30 years 5 years 7 years The asset s residual values, useful lives and depreciation method are reviewed, and adjusted if appropriate, at each financial year end. The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. Expenditure incurred after items of property, plant and equipment have been put into operation, such as repairs and maintenance, is normally charged to the consolidated income statement in the period in which it is incurred. In situations where it can be clearly demonstrated that the expenditure has resulted in an increase in future economic benefits expected to be obtained from the use of an item of property, plant and equipment, and where the cost of the item can be measured liability, the expenditure is capitalised as an additional cost of the asset or as a replacement. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the consolidated income statement in the year the asset is derecognised. 10