UNQ Holdings Limited provided preliminary unaudited consolidated group earnings guidance for the six months ended June 30, 2022. For the period, the group expects revenue to be in the range between RMB 1,050 million and RMB 1,150 million as compared to the revenue of the Group of RMB 1,481 million for the six months ended June 30, 2021; the net loss to be recorded by the Group for first half of 2022 is expected to range between RMB 30 million and RMB 33 million, while it recorded a net profit of RMB 35 million for first half of 2021. The abovementioned loss and decline in revenue are mainly attributable to the following factors: as a result of the resurgence of the COVID-19 pandemic and the corresponding preventive and control measures imposed by Chinese government, including, among other things, the overall static management in Shanghai and nearby regions, the logistics supply chain in relation to Shanghai was significantly and continuously affected and the Group's warehouses in and around Shanghai were closed intermittently in 1H2022, which in turn caused serious disruptions in delivery for these warehouses.

The operations of the Group in Shanghai and nearby regions were therefore adversely affected in 1H2022; and the decrease in consumer confidence, demand and enthusiasm in the market due to the repeated outbreaks of COVID-19 pandemic also had an adverse impact on the Group's performance for 1H2022. In 1H2022, the Group adopted sales promotion measures, proactively optimize and handle inventories. Meanwhile, the Group has made higher provision for diminution in value of inventories with regard to products in inventory close to expiry in 1H2022.

In addition, the performance of the Group for 1H2022 was also adversely affected by factors including continuous increase in traffic costs in the e-commerce industry. As the COVID-19 pandemic is gradually under effective control, the Group's business has currently resumed normal and operations have remained stable. The Board believes that the overall financial position of the Group continues to maintain healthy and sound and is confident of the long-term development and prospects of the Group.

It will also pay close attention to the business strategy and operating condition of the Group to cope with the impacts of changes in economic environment and strive to improve long-term business performance to reward the Shareholders.