In light of the operational environment in the steel industry in the Mainland China, the board of China Oriental Group Co. Ltd. announced that
based on the unaudited management accounts of the Group for July and August of 2012 and the performance of the Group in September 2012, it is expected that the Group is likely to incur a loss in the third quarter of 2012. Such expected loss in the third quarter of 2012 was mainly due to (1) the substantial decrease in the selling price of steel products during the period from July 2012 to September 2012 which led to a decrease in gross profit of the Group; and (2) the prices of raw material for the production of steel had decreased significantly during the third quarter of 2012 which led to a write-down in value of the raw material inventories of the Group.

The performance of the Group in the fourth quarter of 2012 will not improve significantly if steel prices and operational environment for the steel manufacturing further deteriorate or do not improve. In light of this, the Board expects that the Group is likely to experience a significant decline in profit or may even incur a loss in the second half of 2012 as compared to the profit made in the corresponding period of 2011.