Northeast Electric Development : ANNOUNCEMENT ON PROVISION FOR IMPAIRMENT AND RECOGNITION OF LOSSES

The Hong Kong Exchanges and Clearing Limited and the Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

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

（Stock Code:0042）

ANNOUNCEMENT ON PROVISION FOR IMPAIRMENT AND

RECOGNITION OF LOSSES

This announcement is made by Northeast Electric Development Co., Ltd. (the "Company")

pursuant to Rule 13.09 (2) of the Rules Governing the Listing of Securities (the "Listing Rules") on the Stock Exchange of Hong Kong Limited (the "Stock Exchange"), and Inside Information

Provisions (as defined in the Listing Rules) (the "Inside Information Provisions") under Part

XIVA of the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong).

The Proposal on the Provision for Assets Impairment was considered and approved at the 20th meeting of the 9th Board of Directors and the 14th meeting of the 9th Supervisory Committee held by Northeast Electric Development Co., Ltd. (hereinafter referred to as the "Company") on 29

March 2021 respectively. The proposal shall be not subject to consideration at the Company's general meeting.

I. Summary of provision for impairment and recognition of losses during the reporting period

Due to the continuous impact of the global public health emergency on aviation and hotel sectors since 2020, HNA Group Co., Ltd. (the indirect controlling shareholder of the Company, hereinafter referred to as the "HNA Group") and its related parties are exposed to a relatively high liquidity risk.

According to the Company's announcements dated 29 January 2021, 10 February 2021 and 15

March 2021 respectively, the Hainan Higher People's Court (the "Court") has ruled that the claim for reorganization of HNA Group and its related parties by the relevant creditor has been accepted.

In order to give a true, objective and fair view of the financial position and asset values of the

Company and its subsidiaries (collectively, the "Group") as at 31 December 2020, according to the relevant requirements of the Accounting Standards and the Company's accounting policies and accounting estimates, the Company makes provision of loss allowance of RMB71,765,302.96 for deposits of HNA Finance Company and recognises net loss from interest in associates of

RMB48,900,000.00 on long-term equity investment, which accordingly reduces the net profit and net assets for the current period; in addition, the Company recognises losses of

RMB198,078,808.21 on fair value changes in financial assets designated at fair value through other comprehensive income, thus reducing the net assets for the current period.

II. Basis and reasons for provision for impairment and recognition of losses

After evaluating the asset risks of HNA Group and its related parties, the Company's management made judgments based on: (1) According to relevant requirements of PRC Accounting Standards for

Business Enterprises No. 8 - Impairment of Assets, the investor discontinues recognising its share of net losses incurred by investees after the carrying amount of the long-term equity investment and other long-term interests that in substance form part of the net investment in investees is reduced to zero, with the reduction recognised in profit or loss for the current period; (2) according to the relevant requirements of the Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments, the Company performs impairment accounting and recognises provision for losses on financial instruments based on expected credit losses, and recognises changes in the fair value of financial assets at fair value through other comprehensive income.

Further, the Company has made reference to the relevant requirements of the IFRS 36- Impairment of Asset and IFRS 9-Financial Instruments.

Given that HNA Group and its related parties have been included into the asset reorganization, the

Company makes full provisions for impairment and recognizes losses in full, though there is no clear reorganization plan yet.

Unit: RMB

Items	Amount for provision for the reporting period	Basis	Reasons for provision
Provision for bad debts of deposits of HNA Finance Company	71,765,302.96	TheCompanycalculatestheexpected credit loss by referring to similar historical credit loss experience, current situation and forecasts conditions,offuture accordingeconomictodefaultriskexposurethe and lifetime expected credit loss rates	Regarding the deposits with HNA Group Finance Co., Ltd., considering that it has been ordered by the court to be reorganised, although there is no clear creditors' compensation plan yet, it is estimated that there is almostnoamountwouldbecomerecoverableaftercomprehensive consideration of the debtor's credit status, repayment ability, third party's credit enhancement measures, disposal cycle and other factors, and the Company therefore makes full provisions for credit impairment losses.
Losses on long-term equity investment	48,900,000.00	Theinvestoriscontinuesrecognising its share of net losses incurred by investees after the carrying amount of long-term equityinvestmentandotherlong-terminterests that insubstance form part of the net	As of the end of the reporting period, the Company holds 30% equity interests in the joint venture Chongqing HNA Hotel Investment Company Limited. Considering that it has been ordered by the court to be reorganised, although there is no clear reorgnisation plan yet, all of its property assets have been used as bank collateral for the loans of related parties; it is estimated that there is almost no
investmentininvesteesreducedtozero,withis the reduction recognised in profit or loss for the current period.	amount would become recoverable after comprehensive consideration of the related parties' credit status, repayment ability and other factors, and the Company therefore recognises investment losses in full.
Changes in the fair value of other equity instrument investment	198,078,808.2 1	The Company recognises changes in the fair value financial assets atfairvaluethroughothercomprehensive income, with the relevant changes included into other comprehensive income.	As of the end of the reporting period, the Company is the indirect holder of 10.5% equity investment in HNA Tianjin Center Development Co., Ltd. Considering that it has been ordered by the court to be reorganised, although there is no clear reorgnisation plan yet, all of its property assets have been used as bank collateral for the loans of related parties; it is estimated that there is almost no amount would become recoverable after comprehensive consideration of the related parties' credit status, repayment ability and other factors, and the Company therefore recognises the fair value of the equity at the end of the period as RMB0.

III. Effect of provision for impairment and recognition of losses on the financial position of the Company

Subject to the auditing procedure, we made provisions for credit impairment losses of

RMB71,765,302.96 and recognised losses on long-term equity investment of RMB 48,900,000.00, reducing the current net profit and net assets accordingly; and recognised financial assets at fair value through other comprehensive income of RMB198,078,808.21, leading to the decrease in the current net assets accordingly.

IV. Explanation of the Board on whether the provision for impairment and recognition of losses conform to the Accounting Standards for Business Enterprises

In the opinion of the Board of the Company, the provision for impairment and recognition of losses are made in compliance with the Accounting Standards for Business Enterprises and the Company's accounting policies and accounting estimates, adopting reasonable and adequate basis and reasons, and reflect the financial positionand asset values of the Company in a fair way and accord with the long-term interests of the Company and its all shareholders. Therefore, the Board unanimously agreed to pass the relevant proposal.

V. Independent opinions of independent directors on the provisions for impairment and recognition of losses

After information on the provision for assets impairment provided by the Company is reviewed and the Company's personnel concerned are debriefed, it is believed that:

(I) The Company made provisions for assets impairment to ensure its standard operation to reflect the Company's financial position and operating results fairly with prudent accounting principles；

(II) The provision for assets impairment accords with the interests of the Company and its all shareholders, and does not harm the interests of the Company and its shareholders, and the decision-making procedures for the provision for assets impairment are in compliance with the provisions of laws and regulations and the Articles of Association.

In consideration of the above, we agree with the Company's provision for impairment and recognition of losses，we agrees with the accounting treatment of the provisions for impairment and recognition of losses of the Company.

VI. Review opinions of the Supervisory Committee on whether the provision for impairment and recognition of losses conform to the Accounting Standards for Business Enterprises

In our opinion, the above accounting treatment is in compliance with Accounting Standards for

Business Enterprises and the Company's accounting policies and accounting estimates. The basis and reasons for the provision are reasonable and adequate and in line with the actual situation of the

Company and reflects the Company's assets, liabilities and financial position fairly. The board of directors has deliberated the relevant proposals and carried out the necessary decision-making procedures.

In consideration of the above, the Supervisory Committee agrees with the accounting treatment of the Company's provision for impairment and recognition of losses，we agrees with the accounting treatment of the provisions for impairment and recognition of losses of the Company.

By order of the Board

Zhu Jie Chairman

Haikou, Hainan Province, the PRC

29 March 2021

As at the date of this Announcement, the Board comprises of six executive Directors, namely Mr.

Zhu Jie, Mr. Wang Yongfan, Mr. Bao Zongbao, Mr. Su Weiguo, Mr. Guo Qianli and Mr. Li Guoqing; and three independent non-executive Directors, namely Mr. Li Ming, Mr. Fang Guangrong and Mr.

Wang Hongyu.