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As disclosed in the 2007 Interim Report of the Group, the Group has made a provision of RMB11,469,000
for impairment loss of loan receivables. The provision represented the non-repayment of the loans from
two companies named 青島易貝科技有限公司 (Qingdao Yi Bei Technology Limited) and 青島銀通科技開
發有限公司 (Qingdao Yin Tong Technology Development Limited) (collectively, the “Companies”) (both are
independent third parties) in the amount of RMB1,722,000 and RMB9,747,000 respectively since the
Group has learnt that the Companies are under the process of liquidation. Despite repeated demands
made by the Group, the Companies have failed to make full repayment.

The Group had initiated arbitration proceedings against the Companies respectively, and the Group has
received favourable arbitration results from the relevant arbitration committees. The Group will explore all
legal and practicable means in order to enforce the arbitration awards against the Companies for repayment.
However, as the Companies may not have substantial assets sufficient for repayment, the Group has
adopted a prudent approach to make the full provision.
Except the above, there were no other loan receivables as at 31 December 2007.
Net loss
For the year ended 31 December 2007, the Group recorded a net loss of approximately RMB33,004,000
as compared with the net loss of approximately RMB16,192,000 for the previous year. The loss was
further increased mainly due to a decline in demands of RCCs market which led to a substantial decrease
in income for the period. Basic loss per share in 2007 was RMB8.25 Cents as compared with basic loss
per share in 2006 of RMB4.05 Cents.