The board of directors of Lam Soon Hong Kong Ltd. to inform to the shareholders of the company and potential investors that, based on the information currently available to the Board, the Group is expected to record a loss for the financial year ended June 30, 2012 as compared to a profit recorded for the previous corresponding financial year. To the best knowledge of the Board, the expected loss is mainly attributable to (i) the increase in commodity prices not being fully passed on to customers. The company faced adverse external market factors with rising raw material and production costs and aggressive market price competition. Such factors remained and continued to weigh down the overall profitability during the financial year ended June 30, 2012; and (ii) the increase in selling and marketing expenses owing to expansion to new markets for widening sales penetration in the People's Republic of China.