Continued Enhancement on Sales Efficiency & Supplier Relationship
Increase in Same-store Sales

November 20, 2007, Hong Kong --- GOME Electrical Appliances Holding Limited (HKSE: 493, “GOME” or “the Company”), the largest household appliances and consumer electronics retailer, reported its unaudited quarterly results for the nine months ended 30 September, 2007.

2007 Q3 Highlights

 Significant improvement in sales efficiency with same-store sales increased by 0.76%
 Strengthened cooperation with suppliers
 Net profit attributable to equity holders rose by approximately 34%. Excluding the fair value loss on the derivative component of convertible bonds and other non-cash convertible bonds interests, net profit attributable to equity holders would have risen by approximately 154.45% and reached approximately RMB1,313 million

Financial Highlights

(RMB million) For the nine months ended 30 September
2007
(unaudited) 2006
(unaudited) Percentage Change (%)
Revenue 30,319 17,786 70.46
Adjusted Gross Profit 4,603 2,485 85.23
Operating Profit 1,287 641 100.78
Profit Attributable to Equity Holders of the Company 753 560 34.46
Profit Attributable to Equity Holders of the Company* 1,313 516 154.45

*Excluding the fair value (loss)/gain on the derivative component of convertible bonds and other non-cash convertible bonds interests.


During the third quarter of 2007, the Company significantly enhanced store management and operating efficiency while further optimizing its store network and improving terms with its suppliers. As a result, revenue for the nine months ended 30 September increased to RMB30,319 million, representing a growth of 70.46% over the same period last year. Adjusted gross profit reached RMB4,603 million, representing a growth of 85.23% compared to the corresponding period in 2006. Net profit attributable to equity holders rose by approximately 34.46% to approximately RMB753 million. Excluding the fair value loss on the derivative component of convertible bonds and other non-cash convertible bonds interests, net profit attributable to equity holders would have risen by approximately 154.45% and reached approximately RMB1,313 million. Successful network optimization measures have resulted in a widened same-store sales growth to 0.76% as compared to the corresponding period in 2006.

Business Review

For the nine months ended 30 September
2007
(unaudited) 2006
(unaudited) Percentage Change (%)
Same-store Sales
(RMB billion) 14.34 14.23 0.76
Adjusted Gross Margin (%) 15.18 13.97 1.21
EBIT Margin* (%) 4.24 3.60 0.64
Operating Expense Ratio** (%) 10.94 10.37 0.57

*Excluding the fair value (loss)/gain on the derivative component of convertible bonds.
**Including the exchange loss of RMB 89 million, which is not related to daily operations. The exchange loss is 0.29% to the revenue for the nine months ended 30 September 2007.

In the third quarter of 2007, GOME continued to optimize its store network and rationalize the overlapping service area of China Paradise and GOME. The Company opened 85 new stores in the first three quarters of 2007 and established its presence in 11 new cities, bringing the total number of stores to 672 as at the end of the period under review, covering 171 cities.

GOME continued to strengthen cooperation with suppliers. The Company’s market reputation and extensive network enabled it to secure more favourable terms from key suppliers. For the period under review, the top five suppliers contributed 30.6% of GOME’s total purchases.

Upgraded store structure and excellent customer service also attracted prestigious partners to GOME. In the third quarter of 2007, GOME entered into an exclusive agreement with Dell to sell the Dell computers in GOME stores. GOME is Dell’s first retail partner in China.



Business Outlook

In terms of operation strategy, the Group will continue to focus on enhancing sales efficiency and improving the profitability of individual stores. The Group will also categorize its stores to satisfy customers' diversified needs.

Mr. Chen Xiao, President of GOME, said, “Looking forward, we are confident that our commitment in providing quality and diverse products and a superior customer experience will widen our lead in the fast growing electronic appliances and consuming electronic retail industry in China.”

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For further information, please contact Hill and Knowlton Asia Limited:
Ellen Chan
(852) 2894 6213 / 6370 4060
ellen.chan@hillandknowlton.com.hk
Kong Hoi Ni
(852) 2894 6323/ 9807 2495
hoini.kong@hillandknowlton.com.hk



About GOME
GOME Electrical Appliances Holding Limited, the listed vehicle of the GOME Group, was listed on The Hong Kong Stock Exchange in July 2004 (HKSE: 493). The GOME Group was founded in China in 1987 and is engaged in the retail business of electrical appliances and consumer electronic products in China. It is the largest retail chain of electrical appliances and consumer electronics and the largest retail chain enterprise in China.