The increase in operating expenses was primarily due to the compensation payments related to the Company's organization restructuring, as well as the Company's increased spending on research and development for the Android platform/Android products.

  As of December 31, 2011 As of September 30, 2012 As of December 31, 2012
       
Headcount      
Operations 162 122 97
Research and development 355 369 248
Sales and marketing 119 96 85
General and administrative 87 98 91
       
Total Headcount 723 685 521

The Company's employee headcount decreased 27.9% to 521 as of December 31, 2012 from 723 as of December 31, 2011. The decrease in headcount mainly resulted from the Company's organization restructuring, which rebalanced headcount between our smart phone and feature phone businesses and reduced resources in the feature phone sector due to the shrinking feature phone market.

Net profit and EPS

Net profit in third quarter 2013 was RMB3.8 million (US$0.6 million), down 39.8% compared to third quarter 2012.

Non-IFRS net profit in third quarter 2013 was RMB8.3 million (US$1.3 million), down 55.9% from RMB18.9 million in third quarter 2012.

Basic and diluted EPS in third quarter 2013 were RMB0.01 (US$0.00), which represents the equivalent of RMB0.11 (US$0.02) per ADS.

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