SIM Technology Group Ltd. provided earnings guidance for the six months ended June 30, 2012. For the period, the company expected to incur further loss as compared to the same period in 2011. Such loss is primarily attributable to the reasons as: the global handsets market condition is extremely severe, the group was facing fierce price competition in smart phones sales and the gross profit margin of the centralized purchase of smart phones by Mainland operators are too low; the sales volume of smart phones in open market were lower than expected; high-end ODM sales were also lower than expected due to the difficulties in operations experienced by the group's customers; and the loss has widened as a result of the drop in gross profit margin of handsets and that the research and development expenses and other expenses have remained high. The company has also expected a probable recognition of impairment on the goodwill arising from the acquisition of Smartwireless Technology Limited in year 2009. The exact amount of the impairment on the goodwill is yet to be determined. The board would like to emphasize that the impairment on goodwill is a non-cash accounting treatment and has no effect on the cash flow of the group's operations.