Lifetech Scientific Corporation provided group earnings guidance for the six months ended June 30, 2015. For the period, the group is expected to record a net loss for the six months ended 30 June 2015 after taking into account the fair value loss of conversion option of the First Tranche Convertible Notes. The expected Fair Value Loss will be approximately RMB 237,500,000, which represents a decrease of approximately 0.9% as compared to the Fair Value Loss incurred in the corresponding period in 2014.

The board referred to the profit warning announcement in which the operating profit (without taking into account the Fair Value Loss) of the group recorded for the six months ended 30 June 2015 was stated to represent a decrease as compared to that of the corresponding period in 2014. The board clarified that the group is expected to record a substantial increase instead of a decrease in the operating profit for the six months ended 30 June 2015 as compared to the same period in 2014. The board clarified by re-stating, with amendments, as follows: The group is expected to record a net loss for the six months ended 30 June 2015 after taking into account the Fair Value Loss related to the First Tranche Convertible Notes.

Without taking into account the Fair Value Loss, it is expected there will be an operating profit recorded for the six months ended 30 June 2015 which represents a substantial increase as compared to that of the corresponding period in 2014. Such increase in operating profit was mainly because of growth of sales, increase of income recognized on the government grants and the service fee paid to a substantial shareholder during the corresponding period in 2014, which the expense was one-off in nature during that period. While without taking into account the Fair Value Loss, it is expected that there will be a net profit recorded for the six months ended 30 June 2015, which represents a decrease as compared to that of the corresponding period in 2014.

Such decrease was mainly because of the gain on disposal of an associate recorded during the corresponding period in 2014, which was an one-off transaction occurred during that period. Based on the fact that the Fair Value Loss is a non-operating and non-cash in nature, the disposal of an associate was an one-off transaction which occurred during the six months ended 30 June 2014 and the substantial increase in operating profit between the first six months ended 2014 and 2015, the Board is of the view that the Group's operating and financial positions are healthy and the Board remains positive on the prospects of the Group.