replica handbags

Turnover and gross profit margin
For the year ended 31 December 2007, consolidated turnover and cost of sales of the Group was
RMB6,966,000 representing a decrease of 70.3% from RMB23,466,000 in 2006 and RMB5,463,000
representing a decrease of 67.0% from RMB16,556,000 in 2006, respectively. The gross profits decreased
by 78.2% to RMB1,503,000 from RMB6,910,000 in 2006 as a result of the reduction in the number of
customers which led to a significant decline in turnover.

Selling and distribution costs
During the reporting year, the Group reduced the scale of marketing activities due to the lack of largescale
tender projects in the RCCs market, which led to a decrease of 61.5% in selling and distribution
costs to RMB2,081,000 from RMB5,410,000 in 2006, representing 29.9% to the Group’s turnover in
2007. The current decrease in selling and distribution expenses was mainly attributable to the decrease in
turnover and the number and salaries of sales representatives during the year.
General and administrative expenses
Excluding the factor that a fair value of the share options of RMB8,216,000 granted to employees and
consultants was recognised as an expense in 2007, the Group’s administrative expenses for the year
ended 31 December 2007 were approximately RMB11,026,000 (2006: approximately RMB15,978,000),
representing a decrease of approximately 31.0% as compared to 2006.