After a preliminary review of the consolidated management accounts of Pan Asia Environmental Protection Group Ltd, the board of directors of the company informed the shareholders of the company and potential investors that the group might record a consolidated net loss for the six months ended 30 June 2012 as compared to the consolidated net profit for the corresponding period in 2011. The Board considers that the consolidated net loss for the six months ended 30 June 2012 was mainly due to the reasons that: there was a decrease in the revenue of the group for the six months ended 30 June 2012 due to keen competition in the industry; and there was a decrease in the gross profit margin of the group for the six months ended 30 June 2012 due to keen competition in the industry and increase in cost. This profit warning announcement is only based on the preliminary review by the company's management on the unaudited management accounts of the group.

The company is in the process of finalising the interim results of the group for the six-month period ended 30 June 2012. The overall financial results of the group for the six-month period ended 30 June 2012 will only be ascertained when all the relevant results and treatments are finalised. The interim results announcement of the group for the six-month period ended 30 June 2012 is expected to be announced before the end of August 2012.