Jianzhong Construction Development Limited provided earnings guidance for the five months ended May 31, 2022. For the period, the group expected to record a net loss of approximately RMB 17.9 million (five months ended 31 May 2021: net profit of approximately RMB 18.9 million). The Board considers that the said expected net loss for the Relevant Period was primarily attributable to: the increase in impairment losses on assets arising from contracts with customers. The Board are aware of a series of negative news over the financial conditions of certain real estate developers in the PRC. In this regard, and taking into account the
recent repayment records, the Board decided to make additional impairment on the trade receivables, bills receivable and contract assets during the Relevant Period, to reflect the weakened liquidity conditions of the property market. The decrease in revenue and gross profit from construction service: In view of the recent market sentiment of the real estate sector in the PRC, the Group has adopted a more prudent approach to tender for new construction
projects, which led to the decrease in revenue from construction service during the Relevant Period.