The board of directors of Volcano Spring International Holdings Limited informed the shareholders of the Company (the "Shareholders") and the potential investors that, based on the unaudited consolidated management accounts of the Group for the six months ended 30 June 2023 and information currently available to the Company, the Group expects to record a net loss after tax of not less than approximately RMB 20.0 million for the six months ended 30 June 2023, as compared with a net loss after tax of approximately RMB 18.3 million for the corresponding period in 2022. The global economy is slowing down in 2023 under the weight of higher inflationary rates and progressive monetary tightening. This has had an adverse impact on the financial performance of the Group.

The expected increase in net loss for the six months ended 30 June 2023 is primarily attributed to an increase in finance costs of approximately RMB 4.0 million resulting from the increase in borrowings to finance the Group's business operations and the rise in interest rates.