Chu Kong Petroleum and Natural Gas Steel Pipe Holdings Limited provided consolidated earnings guidance for the six months ending June 30, 2013. The board of directors of Chu Kong Petroleum and Natural Gas Steel Pipe Holdings Limited currently available and the preliminary review of the consolidated management accounts of the Group for the five months ended 31 May 2013 by the management of the Group, it is expected that the Group's unaudited consolidated net profit for the six months ended 30 June 2013 may significantly decrease as compared to the same period of the previous year. The expected decrease in the Group's profit as compared to the same period in the previous year is mainly attributable to the decrease in both domestic and export sales orders received by the Group and the increase in the operational expenses of the new production bases of the Group.

The company's management believes the decrease in orders received by the Group is due to the delay in the opening of the bidding process of a number of pipeline projects in the PRC and overseas. As such, a number of contracts that the Group initially expected to bid for had not been made available for the bidding process. In addition, as disclosed in the recently published annual report of the company, the Group's new production bases in Zhuhai and Lianyungang commenced full commercial operation in June and September 2012 respectively.

As a result, the Group's operating expenses for first half of 2013 increased significantly as compared with the same period in 2012, but the economies of the enlarged scale of operations from such new production bases cannot be reflected on the financial results for six months of 2013. It is expected that new production bases in Zhuhai and Lianyungang will considerably contribute to the Group in future.