The board of directors of the Shenguan Holdings (Group) Ltd. provides earnings guidance for the full year ended December 31, 2016. Based on the preliminary assessment by the board of the unaudited consolidated management accounts of the group and the information currently available to the board, the group is expected to record a decrease of approximately 50% in its net profit for the year ended 31 December 2016 as compared to that for the same period in 2015. Such decrease is primarily due to increase of sales volume of collagen casings and decrease in average selling price. During the reporting period, the amortization of the technology knowhow and the impairment of goodwill had caused a decrease in the group's net profit. the amortization and the impairment had no effect on the cash flow of the group. Other factors that had caused the decrease of the group's net profit included expenses incurred for development of new products and businesses during the reporting period.