Xiwang Sugar Holdings Co. Ltd. board of directors announced that the Group is expected to record a substantial decrease in profit or even a loss for the year ending December 31, 2012 as compared to a profit for the year ended December 31, 2011. The deteriorated financial results were mainly attributable to the continual rise in the cost of corn, which was the major production cost of the Group.

Moreover, the uncertainties in the global and domestic economic environments and the macro-economic measures imposed by the Chinese government in particular those against real estate speculation have led to decline in the growth of demand for many industries such as food and beverage, and construction etc. Under this situation, the selling prices of the Group's major products such as starch sugars and sodium gluconate have been lower and the prices of raw materials have been higher as compared to those of previous year, and therefore the profit margins of the Group's major products are lower as compared to those of previous year.