A-Living Smart City Services Co., Ltd. provided group earning guidance for year ended 31 December 2023. The board of directors of the Company informed the shareholders of the Company and potential investors that, based on the preliminary review of the unaudited consolidated management accounts of the Group for the year ended 31 December 2023 and information currently available to the Board, it is expected that the unaudited comprehensive income of the Group for the year ended 31 December 2023 recorded steady growth; the net operating cash flow is expected to be approximately RMB 900 million, representing a significant increase as compared with that for the corresponding period in 2022, recording positive operating cash flow. The abovementioned growth is primarily due to the increase in revenue of the non-cyclical businesses and the continued stable business operations of the Group.

The unaudited consolidated net profit attributable to the Shareholders for the year ended 31 December 2023 is expected to be approximately RMB 320 million to RMB 500 million, representing a decrease of approximately 73% to 83% as compared to that for the corresponding period in 2022. The decrease is primarily due to the following reasons: The adjustment of business structure of the Group led to a decrease in the proportion of revenues and profits from the extended value-added service businesses and an increase in the proportion of non-cyclical businesses with increasing related costs. An impairment provision from approximately RMB 200 million to RMB 300 million has been made for the trade receivables from the related party customers of the Group based on the principle of prudence.

It was mainly due to the fact that the supply and demand in real estate market have changed significantly. The related party customers of the Group are under periodic liquidity pressure, leading to an increase in the settlement cycle for related businesses. Therefore, the Company prudently assessed the amount of provision for impairment of trade receivables from the related party customers and made reasonable accounting estimates.

The Company will continue to engage in discussions with the related party customers regarding the payment arrangements, and to maintain close communication and promote the implementation of various measures for collecting trade receivables at its best efforts. An impairment from approximately RMB 400 million to RMB 500 million has been made for the goodwill of the Group based on the principle of prudence. It was mainly due to the fact that the business expansion of some subsidiaries acquired by the Group in previous years has not been carried out as scheduled and some existing business has been adjusted by the Group, leading to declines in revenues and profits from some subsidiaries.