Jia Yao Holdings Limited provided earnings guidance for the year ended December 31, 2015. The board of directors of the Company informed the shareholders of the Company and potential investors that after a preliminary review on the Group's unaudited consolidated management accounts for the year ended December 31, 2015, the Group expects to record a substantial decrease in gross profit and net profit after tax. The net profit after tax for the year ended December 31, 2015 is expected to be ranged from approximately RMB 4.0 million to RMB 6.0 million as compared to the net profit after tax of approximately RMB 12.9 million for the year ended December 31, 2014, representing a decrease ranges from approximately 53.5% to 69.0%.

The aforesaid decrease in net profit after tax is mainly due to (i) the significant increase in cost of sales because of the lower production efficiency on the new production line of handmade products (including both paper cigarette packages and social product paper packages), which caused the gross profit and gross profit margin to decrease; (ii) the continuing increase in overall production costs during the year ended December 31, 2015; and (iii) the increase in research and development expenses.