A Living Smart City Services : VOLUNTARY ANNOUNCEMENT - BUSINESS UPDATE

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A-LIVING SMART CITY SERVICES CO., LTD. * 雅生活智慧城市服務股份有限公司

(a joint stock company incorporated in the People's Republic of China with limited liability)

(Stock Code: 3319)

VOLUNTARY ANNOUNCEMENT

BUSINESS UPDATE

This announcement is made by the Company on a voluntary basis. The purpose of this announcement is to keep the Shareholders and potential investors informed of the latest business development of the Group.

The Company is pleased to announce that recently, the Group entered into agreements pursuant to which it agreed to acquire 51% equity interest in Beijing Huifeng, 60% equity interest in Shaanxi Mingtang and 51% equity interest in Dalian Mingri's UES Business, respectively, at a total consideration of RMB280,500,000, RMB144,000,000 and RMB300,032,400. The estimated net profit after taxation and excluding extraordinary items attributable to the shareholders of Beijing Huifeng, Shaanxi Mingtang and Dalian Mingri's UES Business for the Year 2021 in aggregate is approximately RMB134,000,000. The P/E Ratio for each of the acquisitions is calculated based on the net profit after taxation and excluding extraordinary items attributable to the shareholders for the Year 2021, ranging from approximately 9.6 to 10.5.

The Group entered into a non-legally binding framework agreement pursuant to which it has intended to acquire 51% equity interest in Anhui Yurun, at a total consideration of RMB153,000,000. The final consideration shall be subject to the determination between the parties in the relevant formal agreement. The estimated net profit after taxation and excluding extraordinary items attributable to the shareholders of Anhui Yurun for the Year 2021 is RMB30,000,000, and the P/E Ratio for the acquisition based on such estimation is approximately 10.

The Group also acquired an aggregate of 30% equity interest in ZH Sanitation through equity transfer and additional shares subscription, at a total consideration of RMB300,000,000. The estimated net profit after taxation and excluding extraordinary items attributable to the shareholders of ZH Sanitation for the Year 2021 is RMB104,000,000, and the P/E Ratio for the acquisition based on such estimation is approximately 9.6.

This announcement is made by A-Living Smart City Services Co., Ltd. (the "Company", together with its subsidiaries, the "Group") on a voluntary basis. The purpose of this announcement is to keep the shareholders of the Company (the "Shareholders") and potential investors informed of the latest business development of the Group.

(i)Beijing Huifeng Acquisition

On 22 March 2021, Beihai Leya Investment Co., Ltd.* (北海樂雅投資有限公司), an indirect wholly-owned subsidiary of the Company, as purchaser entered into an agreement with, among others, Linzhou Enran Enterprise Management Consulting Partnership (Limited Partnership)* (林州市恩然企業管理諮詢合夥企業（有限合夥）) as vendor, pursuant to which Beihai Leya Investment Co., Ltd.* has conditionally agreed to acquire an aggregate of 51% equity interest in Beijing Huifeng Qingxuan Environmental Technology Group Co., Ltd.* (北京慧豐清軒環境科技集團有限公司) ("Beijing Huifeng"), at a total consideration

of RMB280,500,000 ("Beijing Huifeng Acquisition").

The consideration for the Beijing Huifeng Acquisition was determined upon arm's length negotiation between the parties with reference to the estimated net profit after taxation and excluding extraordinary items attributable to the shareholders of Beijing Huifeng for the year ending 31 December 2021 (the "Year 2021").

The estimated net profit after taxation and excluding extraordinary items attributable to the shareholders of Beijing Huifeng for the Year 2021 is RMB53,000,000, and the price to earnings ratio (the "P/E Ratio") for Beijing Huifeng Acquisition based on such estimation is approximately 10.4.

Information of Beijing Huifeng

Beijing Huifeng is a company incorporated in the PRC with limited liability in 2004 and was ranked 28th among the top 100 environmental sanitation service enterprises in China in 2020 (in terms of annualised contract amount) and was ranked the first among the outstanding environmental sanitation engineering enterprises in Beijing. It is the leading enterprise of environmental sanitation services in Northern China. Its principal businesses include street cleansing in urban areas, waste sorting and disposal, landscape greening and maintenance, and etc.. It has national first class qualification for cleaning industry in China. Beijing Huifeng has strong footholds in its existing market. Its projects are mainly located in the Beijing-Tianjin-Hebei area, such as large-scale environmental sanitation integrated benchmark projects in areas including Hebei, Shaanxi, Inner Mongolia and Beijing. The projects are large in scale with high contract amount. The average project renewal rate from 2018 to 2020 exceeded 92%. As at 31 December 2020, the projects under its management reached 41, with annualised contract amount of approximately RMB480,000,000 and total contract amount of approximately RMB1,590,000,000.

(ii)Shaanxi Mingtang Acquisition

On 12 March 2021, Beihai Lechou Investment Co., Ltd.* (北海樂籌投資有限公司), an indirect wholly-owned subsidiary of the Company, as purchaser entered into an agreement with, among others, Zhengzhou Huangda Decoration Co., Ltd.* (鄭州煌達裝飾有限公司),

as vendor, pursuant to which Beihai Lechou Investment Co., Ltd.* has agreed to acquire an aggregate of 60% equity interest in Shaanxi Mingtang Sanitation Co., Ltd.* (陝西明堂環衛 有限公司) ("Shaanxi Mingtang"), at a total consideration of RMB144,000,000 ("Shaanxi Mingtang Acquisition").

The consideration for the Shaanxi Mingtang Acquisition was determined upon arm's length negotiation between the parties with reference to the estimated net profit after taxation and excluding extraordinary items attributable to the shareholders of Shaanxi Mingtang for the Year 2021.

The estimated net profit after taxation and excluding extraordinary items attributable to the shareholders of Shaanxi Mingtang for the Year 2021 is RMB25,000,000, and the P/E Ratio for Shaanxi Mingtang Acquisition based on such estimation is approximately 9.6.

Information of Shaanxi Mingtang

Shaanxi Mingtang is a company incorporated in the PRC with limited liability in 2014. It is a leading enterprise of environmental sanitation services in Shaanxi and is ranked on the list of the top 100 environmental sanitation service enterprises in China. It served as executive council member of the China Association of Urban Environmental Sanitation. Its principal businesses include environmental sanitation services in urban and rural areas, public building management services, landscape greening and maintenance, processing of waste on the water surface and processing of solid wastes. Shaanxi Mingtang has a strong presence in Shaanxi and grasps the opportunity in marketization with its strong market expansion capabilities, securing an increasing market share. Its projects are mainly located in the main urban district of Xi'an and the peripheral areas. As at 31 December 2020, the number of projects under management was 18, with an annualised contract amount of approximately RMB195,000,000 and a total contract amount of approximately RMB326,000,000. The average project renewal rate from 2018 to 2020 exceeded 92% and the fee collection rate of 2019 was 98%.

(iii)Dalian Mingri's UES Business Acquisition

On 31 December 2020, Yahao Environmental Technology Development Co., Ltd.* (雅昊環 境科技發展有限公司), an indirect wholly-owned subsidiary of the Company, as purchaser entered into an agreement ("Dalian Mingri Agreement") with, among others, Tianjin Haoda Landscaping Co., Ltd.* (天津昊達園林綠化有限公司), as vendor, pursuant to which Yahao

Environmental Technology Development Co., Ltd.* has conditionally agreed to acquire an aggregate of 51% equity interest in a company which will continue to operate and principally be engaged in the urban environmental sanitation business ("Dalian Mingri's UES Business") in Dalian Mingri Environmental Development Co., Ltd.* (大連明日環境發展有 限公司 ) ("Dalian Mingri") when the non-urban environmental sanitation business is separated from Dalian Mingri, at a total consideration of RMB300,032,400 ("Dalian Mingri's UES Business Acquisition").

The consideration for the Dalian Mingri's UES Business Acquisition was determined upon arm's length negotiation between the parties with reference to the guaranteed net profit after taxation and excluding extraordinary items attributable to the shareholders of Dalian Mingri's UES Business for the year ended 31 December 2020 (the "Year 2020") in the amount of RMB50,000,000. If the audited net profit after taxation and excluding extraordinary items attributable to the shareholders of Dalian Mingri's UES Business for the Year 2020 is less than RMB50,000,000, the consideration will be subject to certain refund mechanism set out in Dalian Mingri Agreement.

The shareholders of Dalian Mingri have guaranteed to the Company that the audited net profit after taxation and excluding extraordinary items attributable to the shareholders of Dalian Mingri's UES Business for the years ending 2021, 2022 and 2023 shall represent a compound annual growth rate of no less than 12% (the "Dalian Mingri PG"). If the sum of the audited net profit after taxation and excluding extraordinary items attributable to the shareholders of Dalian Mingri's UES Business for the years ending 2021, 2022 and 2023 is less than Dalian Mingri PG, the consideration will be subject to certain refund mechanism set out in the Dalian Mingri Agreement.

The estimated net profit after taxation and excluding extraordinary items attributable to the shareholders of Dalian Mingri's UES Business for the Year 2021 is RMB56,000,000 based on Dalian Mingri PG, and the P/E Ratio for Dalian Mingri's UES Business Acquisition based on such estimation is approximately 10.5.

Information of Dalian Mingri

Dalian Mingri is a company incorporated in the PRC with limited liability in 2003 and its scope of services includes road sweeping and cleaning in urban and rural areas, collection and transportation of wastes, public restroom services, sorting and processing of waste, processing of kitchen waste and greening management, and etc.. Dalian Mingri was ranked 16th among top 100 environmental sanitation service enterprises in China (in terms of the total amount of contracts) and obtained various professional qualifications for municipal environmental sanitation and comprehensive services, including national first class qualification for cleaning industry in China, the service qualification in the operational cleaning, collection and transportation of urban household waste and the qualification certificate for municipal environmental cleaning and maintenance services enterprises. As at 31 December 2020, Dalian Mingri had entered into contracts for 21 projects in total with a total contract amount of approximately RMB2,348,000,000, annualised contract amount of approximately RMB434,000,000 and average contract period of approximately 5.1 years with a fee collection rate of 99% in 2019. Dalian Mingri has strong capability in market expansion, the newly added annualised contract amount of development of the municipal sanitation projects for 2019 and 2020 were approximately RMB250,000,000 and approximately RMB147,000,000, respectively. Dalian Mingri currently manages various environmental sanitation benchmark projects in first- and second-tier cities like Zhengzhou and Dalian. The renewal rate of the projects was 100% in 2020.

(iv)Anhui Yurun Acquisition

On 12 March 2021, the Company as purchaser entered into a non-legally binding framework agreement with Tianjin Xinzhongpeng Environmental Sanitation Management Co., Ltd.* (天 津鑫眾鵬環境衛生管理有限公司) and Hefei Xinzhongjin Cleaning Service Co., Ltd.* (合肥 鑫眾金保潔服務有限責任公司) as vendors pursuant to which the Company has intended to acquire an aggregate of 51% equity interest in Anhui Yurun Road Cleaning Service Co., Ltd.* ( 安徽宇潤道路保潔服務有限公司 ) ("Anhui Yurun"), at a total consideration of RMB153,000,000 ("Anhui Yurun Acquisition"). The final consideration shall be subject to the determination between the parties in the relevant formal agreement.

The consideration for the Anhui Yurun Acquisition was determined upon arm's length negotiation between the parties with reference to the estimated net profit after taxation and excluding extraordinary items attributable to the shareholders of Anhui Yurun for the Year 2021.

The shareholders of Anhui Yurun have guaranteed to the Company that the audited net profit after taxation and excluding extraordinary items attributable to the shareholders of Anhui Yurun for the years ending 2022, 2023 and 2024 shall represent a compound annual growth rate of no less than 15% ("Anhui Yurun PG"). If the sum of the audited net profit after taxation and excluding extraordinary items attributable to the shareholders of Anhui Yurun for the years ending 2022, 2023 and 2024 is less than Anhui Yurun PG, the consideration will be subject to certain refund mechanism set out in the relevant formal agreement.

The estimated net profit after taxation and excluding extraordinary items attributable to the shareholders of Anhui Yurun for the Year 2021 is RMB30,000,000, and the P/E Ratio for Anhui Yurun Acquisition based on such estimation is approximately 10.

Information of Anhui Yurun

Anhui Yurun is a company incorporated in the PRC with limited liability in 2009 and was ranked on the list of the top 100 cleaning services brands in China. With outstanding capabilities in specialized services, the company possesses the qualifications of national grade-A qualification for environment and sanitation operations and national first class qualification for cleaning industry in China. Its main businesses include cleaning services, municipal road cleaning and cleansing, improvement, dredging and cleaning of river, garbage sorting as well as the operational cleaning and transportation services of municipal solid waste. Anhui Yurun has deeply penetrated into Central China market and its projects are mainly distributed over Anhui, Shandong, and Hunan. In 2019, Anhui Yurun underwent transformation and started vigorous market expansion. In 2020, the total amount of newly obtained annualised contracts reached approximately RMB110,000,000. As at 31 December 2020, a total of 25 projects was under its management, with an annualised contract amount of approximately RMB240,000,000 and total contract amount of approximately RMB650,000,000. In 2019, the fee collection rate was approximately 95%.

(v)ZH Sanitation Acquisition

On 18 September 2020, the Company as purchaser entered into an agreement ( " ZH Sanitation Agreement") with, among others, Zhongshan Huihang Environmental Services Co., Ltd.* (中山市輝航環保服務有限公司) as vendor, pursuant to which the Company has agreed to acquire an aggregate of 30% equity interest in ZHS Beautiful Urban and Rural Areas Sanitation Group Co., Ltd.* (中航美麗城鄉環衛集團有限公司) ("ZH Sanitation") through equity transfer and additional shares subscription, at a total consideration of RMB300,000,000 ("ZH Sanitation Acquisition").

The consideration for the ZH Sanitation Acquisition was determined upon arm's length negotiation between the parties with reference to the guaranteed net profit after taxation and excluding extraordinary items attributable to the shareholders of ZH Sanitation for the Year 2020 in the amount of RMB80,000,000. If the audited net profit after taxation and excluding extraordinary items attributable to the shareholders of ZH Sanitation for the Year 2020 is less than RMB80,000,000, the consideration will be subject to certain refund mechanism set out in ZH Sanitation Agreement.

The shareholders of ZH Sanitation have guaranteed to the Company that the audited net profit after taxation and excluding extraordinary items attributable to the shareholders of ZH Sanitation for the years ending 2021, 2022 and 2023 shall represent a compound annual growth rate of no less than 30% (the "ZH Sanitation PG"). If the sum of the audited net profit after taxation and excluding extraordinary items attributable to the shareholders of ZH Sanitation for the years ending 2021, 2022 and 2023 is less than ZH Sanitation PG, the consideration will be subject to certain refund mechanism set out in ZH Sanitation Agreement.

The estimated net profit after taxation and excluding extraordinary items attributable to the shareholders of ZH Sanitation for the Year 2021 is RMB104,000,000 based on ZH Sanitation PG, and the P/E Ratio for ZH Sanitation Acquisition based on such estimation is approximately 9.6.

Information of ZH Sanitation

ZH Sanitation, incorporated in China with limited liability in 2011, is a leader of integrated eco-environmental services in China. It was ranked the top 10 environmental sanitation enterprises in China in 2020 (in terms of the total amount of contracts). With national first class qualification for cleaning industry in China, the company has strong comprehensive strength and excellent service capabilities. Its main business covers four areas: integrated operation of sanitation in urban and rural areas, integrated operation and maintenance of public utilities, investment and operation of municipal infrastructure, and smart city construction. ZH Sanitation has completed its national layout with business mainly concentrated along coastal cities. It manages a number of benchmark urban integrated sanitation service projects in the Guangdong-Hong Kong-Macao Greater Bay Area, Shanghai and Zhejiang province. Projects under ZH Sanitation's management are large in scale with relatively high amount of annualised contract value, long project term and high stability.

Reasons for and benefits of the Acquisitions

The Company has been actively extending the industrial chain layout and constantly seeking opportunities of business breakthrough. The Company took the lead in strategic transformation into an integrated smart city services provider and operator, by establishing its fifth business segment - city services and targeting the blue ocean market of city services with a market size of over a trillion yuan. The above-mentioned acquisition targets are all located in the first- and second-tier cities and economically developed regions. The Company can swiftly implement its city services business in the cities of East, South, West and North regions of China and can complement the existing comprehensive property management business of the Company, thus, creating synergy. The target companies have extensive networks of market resources, strong market expansion capabilities, outstanding track record, healthy financial status and rapid and strong growth momentum. Leveraging the professional qualifications and leading position in the environmental sanitation industry of the mergers and acquisitions (M&A) targets, the Company can rapidly achieve breakthroughs in the extension of industrial chain, forge the city services sector into an important growth driver, and realize the blueprint of all-scenario comprehensive services of the Group. With higher demand for integrated environmental sanitation and integrated management services, as well as the market-oriented development, all parties will make good use of their edges of experience and resources to jointly explore the broad development of smart city services in the future.

The Group will seize the opportunities of market-oriented development of city services and intelligence upgrades of the industry to increase its influence and market share in the integrated city services sector. The Group will further expand the scale of city services business, increase its market shares, optimize the business-portfolio layout and enhance its overall market influence according to its predetermined strategies.

General

To the best of the knowledge, information and belief of the directors of the Company, having made all reasonable enquiries, each of the counterparties and their respective ultimate beneficial owners involved in Beijing Huifeng Acquisition, Shaanxi Mingtang Acquisition, Dalian Mingri's UES Business Acquisition, Anhui Yurun Acquisition and ZH Sanitation Acquisition (collectively, the "Acquisitions") are third parties independent of and not connected with the Group as at the date of the respective Acquisitions. Further, the counterparties to each of the Acquisitions are independent to each other. Moreover, as none of the applicable percentage ratios calculated pursuant to Rule 14.07 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules") in respect of each of the Acquisitions exceeds 5%, each of the Acquisitions does not constitute a notifiable transaction under Chapter 14 of the Listing Rules.

Shareholders and potential investors should note that the above information is unaudited and prepared based on the information currently available to the Group's management as at the date of this announcement, and is by no means a representation or a basis of reference or indication of the revenue or profit to be generated by the Group or any financial performance of the Group. Shareholders and potential investors are cautioned not to unduly rely on the above data.

Shareholders and potential investors should exercise caution when dealing in the shares of the Company.

By Order of the Board A-Living Smart City Services Co., Ltd.

LI Dalong

Executive Director, President (General Manager) and

Chief Executive Officer

Hong Kong, 22 March 2021

As at the date of this announcement, the Board comprises eight members, being Mr. Chan Cheuk Hung^ (Co-chairman), Mr. Huang Fengchao^ (Co-chairman), Mr. Li Dalong^ (President (General Manager) and Chief Executive Officer), Mr. Wei Xianzhong^^, Ms. Yue Yuan^^, Mr. Wan Kam To^^^, Ms. Wong Chui Ping Cassie ^^^ and Mr. Wang Peng^^^.

^	Executive Directors
^^	Non-executive Directors
^^^	Independent Non-executive Directors
*	for identification purposes only