Changfeng Axle (China) Company Limited provided group earnings guidance for the year ending December 31, 2012. The board of directors of the company informed the shareholders of the company and potential investors that based on the preliminary review of the unaudited management accounts of the group for the eleven months ended 30 November 2012, the net profit and revenue of the group for the year ending 31 December 2012 is expected to record a significant decline as compared with the corresponding period in 2011. It is expected that the group may incur a loss for the year ending 31 December 2012.

Based on the information currently available, the board considers that such loss is primarily attributable to: the decrease in sales volume of the group's products as a result of the weak market of medium and heavy duty truck; the continuing pressure exerted on the gross margins of the Group under keen competition; the impairment losses recognized in respect of property, plant and equipment; and the potential impairment losses on trade receivables and inventory.