The board of directors of Arts Optical International Holdings Limited informed the shareholders of the company and potential investors that based on the company's preliminary review of the results of the Group for the five months ended 31 May, 2016, the Group is expected to record a substantial loss for the six months ending 30 June, 2016. The anticipated loss for the six months ending 30 June, 2016 is mainly attributable to: (i) the negative impact on the profitability of the Group arising from diseconomies of scale as the Group's consolidated revenue decreased by 12% from HKD 621.6 million in the first five months of 2015 to HKD 544.8 million in the first five months of 2016; (ii) the continuous increase in labour costs and other operating costs in Mainland China in the first five months of 2016 as compared with the corresponding period in 2015; (iii) additional costs and expenses incurred in the first five months of 2016 as the Group entered into the final execution phase of its factory relocation project with new buildings being constructed on its factory sites in Pingdi Town of Shenzhen City, Heyuan City and Zhongshan City, which resulted in higher depreciation charges of the buildings and leasehold improvement; and (iv) net economic compensation for past service to the employees of the Group of approximately HKD 286.6 million recognized as an expense in the first five months of 2016 relating to the disposal of land and premises situated at Longguan District, Shenzhen City.