Sprocomm Intelligence Limited provided earnings guidance for the year ended December 31, 2021. The group expects that it will record a net loss in the range of approximately RMB 15 million to approximately RMB 25 million for the year ended 31 December 2021, as opposed to a net profit of approximately RMB 30.7 million for the year ended 31 December 2020. The expected net loss is mainly attributed to: (i) the decrease in the sales revenue by approximately 10% to 15% due to the decrease in demand for smartphones as compared with the year ended 31 December 2020; (ii) the increase in the costs of raw materials (in particular mobile chips and screen for the mobile devices) driven by the global shortage of electronic components.

As a result, the Group's overall gross profit margin for the year ended 31 December 2021 is expected to decrease; (iii) the decrease in other income by approximately 30% to 40% resulting from the decrease in one-off government subsidies; and (iv) the increase in contributions to retirement benefits scheme for the Group's employees as micro, small and medium size enterprises enrolled in China Social Security Schemes were exempt from making employer contributions to pension, unemployment and work-related injury insurance schemes between February and December 2020.