GOME Electrical Appliances Holding Limited has, over the past six months, overcome the most serious crisis and challenge has faced since incorporation. The Group has also gradually come back on the right track based on sound business policy, transforming the Group from focus on scale expansion to efficiency management. The operational focus has changed from revenue growth driven by increasing of new stores to earnings enhancement driven by individual store profitability. With this approach, the Group will improve store sales and profitability and optimize its network structure. Against the backdrop of the global financial crisis, it has established win-win partnerships with suppliers and banks, and attracted investment in the Group by Bain Capital Glory Limited (the “Bain Capital”), a global private equity investment company. The introduction of Bain Capital enhanced the Group’s capital strength and will help improve its corporate governance standards, enabling the Group to maintain a positive development momentum in both the household appliance retail sector and the capital market.

For the first half of 2009, the Group recorded revenue of approximately RMB20,463 million, down 17.73% from the corresponding period in 2008. During the reporting period, profit before tax amounted to approximately RMB750 million. Net profit attributable to the equity holders of the Company was approximately RMB580 million.

During the reporting period, the Group entered into an investment agreement with Bain Capital, pursuant to which Bain Capital agreed to conditionally subscribe for convertible bonds due 2016 issued by the Company for a total consideration of approximately US$233 million (equivalent to approximately RMB1,590 million). The investment in the Company made by Bain Capital represents a vote of confidence in the Group by the capital market, signifying investors with the development outlook of the household appliance chain store industry as very promising.

The Company also launched an open offer of approximately 2,296 million shares at a subscription price of HK$0.672 per share on the basis of 18 open offer shares for every 100 existing shares held. Upon completion of the open offer, the Company’s capital has been increased by approximately HK$1,543 million (equivalent to approximately RMB1,360 million).

These two financing projects had been completed on 3 August 2009, strengthening the Group’s capital by approximately RMB2,950 million. The three non-executive directors nominated by Bain Capital have officially been appointed to the board of the Company. Their extensive retail sector and capital market expertise will further strengthen the Board, improve corporate governance and allow the Group to maintain strong momentum in the business.