The board of directors of Hainan Meilan International Airport Company Limited announce that on 11 March 2021, Meilan Freight, a non-wholly owned subsidiary of the Company, and the Parent Company entered into the Renewed Lease Agreement, pursuant to which the Parent Company agreed to lease the Leased Assets to Meilan Freight for use of providing ground services to flights and passengers or other services within the business scope of Meilan Freight for a term commencing on 12 March 2021 and ending on 11 March 2023 (both days inclusive). The term of the Renewed Lease Agreement is commencing on 12 March 2021 and ending on 11 March 2023 (both days inclusive). The Leased Assets shall be used only for the purpose of providing ground services to flights and passengers or other services within the business scope of Meilan Freight. The Leased Assets, comprising of: the Land Use Rights of the New Cargo Terminal with a total area of approximately 128,540 sq.m.; the Property of the New Cargo Terminal with a total gross floor area of approximately 25,980 sq.m.; and the Equipment, including, among others, storehouses, low-voltage power distribution boxes, high-voltage power distribution boxes, air conditioners, luggage carousels and cameras. The annual rental for the Leased Assets payable by Meilan Freight to the Parent Company under the Renewed Lease Agreement shall be RMB 20,000,000 (including VAT) in aggregation (including the annual rental for the Land Use Rights of RMB 9,600,000 (including VAT), the annual rental for the Property of RMB8,100,000 (including VAT) and the annual rental for the Equipment of RMB 2,300,000 (including VAT)), which is determined based on arm's length negotiations between the two parties with reference to (i) the total area of the New Cargo Terminal under the Land Use Rights and the total gross floor area of the Property; (ii) the prevailing market rental for the land use rights and properties located at similar locations, i.e. approximately RMB75 (including VAT) per sq.m. per year for the land use rights and approximately RMB 312 (including VAT) per sq.m. per year for the properties; and (iii) the depreciation of the Equipment. To satisfy the business needs of Meilan Freight, Meilan Freight and the Parent Company entered into the Renewed Lease Agreement, through which, Meilan Freight can use the Leased Assets to provide better ground services and other services to the passengers in Meilan Airport and expand its operating area as well as increase its operational efficiency. The Directors (including the independent non-executive Directors) are of the view that (i) the terms and conditions of the Renewed Lease Agreement and the Connected Transactions contemplated thereunder have been negotiated on an arms' length basis and are on normal commercial terms; (ii) the Connected Transactions will be conducted in the ordinary and usual course of business of the Company; and (iii) the terms of the Connected Transactions are fair and reasonable and in the interest of the Company and the Shareholders as a whole.