Changmao Biochemical Engineering Company Limited announced that based on the unaudited consolidated management accounts for the three months ended 31 March, there was a significant decline in the group's consolidated net profit as compared to that for the corresponding period in 2016. The Board believes that the Group's financial performance for quarter has been affected mainly by: the drop of profit margin of its products resulted from the significant increase in raw material price during the first three months in 2017 as compared to that in the corresponding period 2016; and the transformation of its maleic anhydride production lines with an existing annual production capacity of 20,000 tons in its Changzhou plant. The Group commenced the Transformation in March 2017 and it is currently expected that the Transformation will be completed in the period of June to July 2017. Upon completion of the Transformation, butane instead of benzene will be used as a raw material to manufacture maleic anhydride. During the period of the Transformation, the production of maleic anhydridea major raw material for the production of other major products of the Grouphas to be temporarily suspended and the Group has to source maleic anhydride from external suppliers and incur extra energy costs such as steam cost and other manufacturing cost. Steam was a side product of the maleic anhydride production lines which was previously recycled for production of other products before the suspension. The Board considers that despite the adverse financial impact resulted from the temporary increase in production costs in the short-run, the Transformation is expected to have a cost saving advantage in the long run. Based on the information currently available, the Group does not expect its results to substantially improve in the three months ending 30 June 2017. With reference to the results for 3M2017 and based on information currently available, in the event that the results of the Group does not improve in the three months ending 30 June 2017, the Group is expected to record a significant decline in the consolidated net profit for the six months ending 30 June 2017 as compared with that for the six months ended 30 June 2016.