The board of directors Kai Yuan Holdings Limited inform the shareholders of the company and potential investors that based on the preliminary review of the unaudited management accounts of the Group for the six months ended 30 June 2016 and information currently available to the company, the Group is expected to record a profit as compared to a loss for the corresponding period in 2015. The expected profit was mainly attributable to the gain on disposal of the Group's associates engaged in steel manufacturing and trading in China completed during the Interim Period; the reduction in finance costs after full repayment of the loan from a related company during the Interim Period; the absence of loss shared from the heat energy supply segment during the Interim Period, after the company completed disposal of this entire segment during the year ended 31 December 2015; but off-set by the decline in gross profit generated from the hotel operation segment as the result of continuous acts of terrorism in Europe and soften demand of hotel rooms in Hong Kong, both affecting occupancy and leading to the decline in average daily rate.