China Oriental Group Co. Ltd. provided preliminary earnings guidance for the year ended December 31, 2012. The Board informed the shareholders of the company and potential investors that based on a preliminary review of the unaudited management accounts of the group for the year ended December 31, 2012, the Board expects that the net profit for the year ended December 31, 2012 will be substantially lower than the net profit recorded in the year ended December 31, 2011.

The substantial decrease in net profit is mainly attributable to the slowdown of the investment in steel related industries and the imbalance between the demand and the supply of the steel production capacity in Mainland China and the material fluctuation of the prices of major raw materials in 2012 which led to a significant decrease in the average selling prices and the gross profit of the steel products of the group; and the substantial loss incurred by Jinxi Jinlan due to the inappropriate operating decision made and poor risk management by the senior management of Jinxi Jinlan and the write-down in value of the inventories of Jinxi Jinlan in 2012. This is also a main reason for the decrease in the overall profitability of the group.