Shandong Xinhua Pharmaceutical Company Limited provided preliminary earnings guidance for the six months ended June 30, 2013. The company reported based on the company's preliminary estimates for the period from January 1, 2013 to June 30, 2013, a decrease in the net profit attributable to the shareholders is expected to be recorded as compared to that for the corresponding period in 2012. The company expects profit approximately RMB 3,120,000 to RMB 9,360,000 and basic earnings profit approximately RMB 0.01 per share to RMB 0.02 per share.

The company reported such estimated decrease in the profit attributable to the Shareholders is mainly attributable to factors such as the formation of fixed assets in the new park area resulting in an increase in depreciation charges, an increase in costs caused by the fluctuating raw material and power consumption during the initial production stage of production lines, an increase in management costs as more resources have been allocated to environmental protection, a foreign exchange loss caused by the appreciation of the Renminbi, an increase in financial expenses due to increased borrowings and an increase in expenses caused by increased investment in the research and development of new products.