The board of directors of China Kangda Food Company Limited expected to record a significant decrease in profit or a loss for the year ending December 31, 2012 compared to a profit for the year ended 31 December 2011. The expected decline in the unaudited net profit of the Group is mainly attributable to: a decrease in demand for rabbit meat of the certain countries in the European Union because of the economic uncertainty emanating from Europe; the intense competition of chicken meat in the PRC market; and the increased labour costs in compliance with the revised requirements in minimum wages and social security regulations in the PRC.