Northeast Electric Development : Announcement on Litigation Progress

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

（Stock Code:0042）

ANNOUNCEMENT ON LITIGATION PROGRESS

Reference is made to the Announcements on Litigation Progress of Northeast Electric Development Co., Ltd.* (the "Company", together with its subsidiaries, the "Group") issued on 21 May 2019 and 22 August 2019. Unless the context otherwise requires, capitalized terms used herein shall have the same meanings as those defined in the Announcements.

I. Progress of the litigation

On 20 May 2019, Northeast Electric Development Co., Ltd. (hereinafter referred to as "NEE" or the "Company") received the Civil Ruling (2018) Qiong Min Chu No. 69 from the Hainan Provincial Higher People's Court. After accepting the equity transfer dispute between the plaintiff, Fuxin Enclosed Busbar Co., Ltd. * (阜新封閉 母線有限責任公司，a wholly-owned subsidiary of the Company, hereinafter referred

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to as "Fuxin Busbar") and the defendant, Shenyang High-Voltage Switchgear Co., Ltd. * (瀋陽高壓開關有限責任公司，an independent third party not related to the Company, hereinafter referred to as "Shenyang HVS") and NEE (hereinafter referred to as the "Case") on 30 November 2018, the Hainan Provincial Higher People's Court formed a collegial panel according to the law and held a public hearing on 21 March 2019, and the first instance judgment was made on 16 May 2019. As none of the parties in the Case appealed within the statutory time limit for appeal, the first instance judgment has come into effect. For details, please see the announcements issued by the Company on 21 May 2019 and 22 August 2019.

Pursuant to the Civil Ruling (2018) Qiong Min Chu No.69 issued by the Hainan Provincial Higher People's Court, as of 7 September 2020, the Group (NEE and its subsidiaries) is legally entitled to claim Shenyang HVS' matured debt totaling RMB178,549,569.56, including equity transfer payment, interest, interest on debt during the period of delayed performance. In accordance with Article 99 of the Contract Law of the People's Republic of China and other relevant laws, NEE has notified Shenyang HVS by post on 7 September 2020 that the aforesaid matured debt due from Shenyang HVS of RMB178,549,569.56 would be offset against the Company's matured debt due to Shenyang HVS of the same amount arising from the Civil Ruling (2004) Gao Min Chu Zi No.802 issued by the Beijing Municipal Higher People's Court and the Civil Ruling (2008) Min Er Zhong Zi No.23 issued by the Supreme People's Court, namely, the offset amount was RMB178,549,569.56. The Company will publish an announcement on influential provincial newspapers in

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Liaoning where Shenyang HVS is located on 11 September 2020, The debt offset will become effective on 11 September 2020.

II. Other undisclosed litigations or arbitrations

As of the date of the announcement, the Company and its subsidiaries did not have any other litigations or arbitrations that should be disclosed but have not been disclosed.

1. Possible impacts of the litigation herein on the current or future profits of the Company

According to the Civil Ruling (2004) Gao Min Chu Zi No.802 issued by the Beijing Municipal Higher People's Court, the Civil Ruling (2008) Min Er Zhong Zi No.23 issued by the Supreme People's Court, and the enforcement ruling (2017) Zhi Fu No.27 issued by the Supreme People's Court (for details, please refer to the Company's announcements dated 9 January 2008, 26 September 2008 and 20 October 2017), the Company shall make a payment of RMB272,577,700 to Shenyang HVS, and the debts involved have been accounted for in the fiscal year of 2017 (for details, please refer to the 2017 Annual Report). The Company has recognised the compensation payable as non-operating expenses in accordance with the final judgment of the court.

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Offsetting the debt of RMB178,549,569.56 will have material impacts on the net

profit and net assets of the Company. The Company will perform corresponding

accounting treatment on the above-mentioned offsetting of debts in strict accordance

with the relevant provisions of the accounting standards, and the specific accounting

treatment and its final impact on the Company's profits and losses shall be subject to

the audit results confirmed by the audit agency in 2020. The Company's designated

media for information disclosure are Securities Times *( 《 證 券 時 報 》 ), www.cninfo.com.cn( 巨 潮 資 訊 網 ), and Hong Kong Stock Exchange's website

(www.hkexnews.hk). Investors are advised to exercise caution when dealing in the

shares.

By order of the Board

Zhu Jie

Chairman

Haikou, Hainan Province, the PRC

10 September 2020

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.

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