The board of directors of Huazhong Holdings Company Limited that, based on the information currently available and a preliminary review of the consolidated management accounts of the Group for the year ended December 31, 2012, the company expects to record a substantial decrease in the operating profit and net income as compared to those of the year ended December 31, 2011. The Board considers that the expected decrease in operating profit and net income was mainly attributable to pressure on the selling price of the Group's products as a result of fierce competition in the industry and increase in the raw materials and labour costs and overall slowdown in China's economy in the year of 2012. In addition, in the year of 2011, the company recorded a one-off asset disposal income as a result of disposal of production equipment, intangible assets and land use right, which further widened the gap in the financial results between the 2011 and 2012.