Vesync Co. Ltd. provided preliminary unaudited consolidated group earnings guidance for the six months ended June 30, 2022. For the period, the Group expects to record a decrease of approximately 40% to 60% in the profit attributable to owners of the parent for the Relevant Period as compared to that for the six months ended June 30, 2021.

The expected decrease in profit attributable to owners of the parent company for the Relevant Period was mainly due to the significant increase in cost of sales as compared to the corresponding period in 2021, primarily attributable to the rise in freight costs of not less than approximately 70% as compared to the corresponding period in 2021, resulting in a drop in the overall gross profit margin; the increase in loss resulting from changes in foreign currency exchange rates arose from the depreciation of non-US dollars against US dollar of not less than approximately USD 3,000,000, representing an increase of not less than approximately 320% as compared to the corresponding period in 2021; and the significant increase in staff costs of not less than approximately 70% as compared to the corresponding period in 2021 mainly due to the increase in number of employees of the Group as its business expands. The rise in international freight rate in 2021 had a significant impact on the Group's cost of sales during the second half of the 2021 and the Relevant Period, thereby reducing the Group's gross profit. The international freight rate has dropped in the Relevant Period in 2022, and it is expected that the impact on the Group's gross profit margin caused by the increase in freight rates in 2021 will be alleviated.

The Group's gross profit margin rate for the Relevant Period in 2022 increased by approximately 4% to 6% points as compared to the second half of 2021.