Shengli Oil & Gas Pipe Holdings Limited provided group earnings guidance for the full year ended December 31, 2013. The company expected that there would be a significant deterioration in the operating results of the group for the year ended December 31, 2013 as compared to that of 2012. Based on the information currently available, the decrease in the profits is principally attributable to the lower sales registered in spiral submerged arc welded (SSAW) pipe and anti-corrosion service due to the overall delays in commencement of construction works in major pipeline projects in the PRC; and the substantial increase in overall expenses following the development/expansion of the group with its newly started projects such as Hunan Shengli Xianggang Steel Pipe Co.

Ltd., a subsidiary of the company, such as the construction costs; depreciation costs for pre-welding and precision-welding production line; and increase in finance costs. Also, the other income of the group is expected to be lower than the previous year due to decrease in one-off government subsidies and extraordinary profit.