Shanghai Electric : ANNOUNCEMENT ON PROGRESS OF EXTERNAL INVESTMENT

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SHANGHAI ELECTRIC GROUP COMPANY LIMITED

上海電氣集團股份有限公司

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

(Stock Code: 02727)

ANNOUNCEMENT ON PROGRESS OF EXTERNAL INVESTMENT

Reference is made to the announcement of Shanghai Electric Group Company Limited (the "Company") dated 11 November 2019 in relation to that the Company entered into a share transfer agreement with Mr. Wang Weidong and Ms. Xu Xiaoju, pursuant to which, the Company will acquire 36,589,932 shares held by Mr. Wang Weidong and Ms. Xu Xiaoju in Shenzhen Yinghe Technology Co., Ltd ( 深圳市贏合科技股份有限公司 ) (the "Target Company" or the "Yinghe Technology") at a price of RMB26.21 per share (the "First Share Transfer"), representing 9.73% of the total share capital of Yinghe Technology and the total transfer price of the target shares is RMB959,022,117.72, that Mr. Wang Weidong and Ms. Xu Xiaoju entered into the Commitment on Waiver of All Voting Rights, and that the Company entered into the Conditional Share Subscription Agreement with Yinghe Technology (the "Original Share Subscription Agreement"), pursuant to which, the Company proposed to subscribe for the shares of Yinghe Technology to be issued under the non-public issuance with full amount in cash of no more than RMB2,000 million (the "Non-publicIssuance"), the announcement of the Company dated 18 December 2019 in relation to the completion of the First Share Transfer, and the announcement of the Company dated 17 February 2020 in relation to the Company's acquisition of 7.30% shares of Yinghe Technology held by Mr. Wang Weidong and Ms. Xu Xiaoju (the "Second Share Transfer"). Terms defined in the abovementioned announcements shall have the same meaning when used herein unless the context herein requires otherwise.

As of the date of this announcement, the Company held 36,589,932 shares in Yinghe Technology, representing 9.73% of the total share capital of Yinghe Technology. Yinghe Technology has changed its board of directors and the number of directors nominated by the Company represented more than half of the number of the seats on the board of Yinghe Technology, and Mr. Wang Weidong and Ms. Xu Xiaoju give up the voting rights attached to the 109,769,800 shares held by them in Yinghe Technology. The Company has become the controlling shareholder of Yinghe Technology and Yinghe Technology has become a subsidiary of the Company. The State-owned Assets Supervision and Administration

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Commission of Shanghai Municipal Government is the ultimate beneficial owner of Yinghe Technology. Upon completion of the Second Share Transfer, the Company will hold 64,032,318 shares in Yinghe Technology, representing 17.03% of the total share capital of Yinghe Technology.

According to the resolution in respect of adjustment of the Non-public Issuance reviewed and approved by the board of directors of Yinghe Technology held on 19 February 2020, the price of the Non-public Issuance of Yinghe Technology was RMB34.01 per share with reference to 80% of the average trading price of the A shares of Yinghe Technology in the 20 trading days before the benchmarking pricing date, which is the first date of the issuance period for the Non- public Issuance, and the Company is expected to subscribe for 58,806,233 shares (the final number of shares to be subscribed is subject to the requirements approved by the China Securities Regulatory Commission). On 19 February 2020, the Company and Yinghe Technology entered into the Share Subscription Agreement for Non-public Issuance of Shenzhen Yinghe Technology Co., Ltd (the "New Share Subscription Agreement") in accordance with the above pricing principle, and terminated the Original Share Subscription Agreement. Save for the change in the abovementioned pricing principle, the terms of the New Share Subscription Agreement have no substantive changes compared to the Original Share Subscription Agreement. After the completion of the Non-public Issuance of Yinghe Technology and the Second Share Transfer, it is expected that the Company will hold a total of 122,838,614 shares in Yinghe Technology, representing 28.25% of the total share capital of Yinghe Technology.

Through the subscription of shares under the Non-public Issuance of Yinghe Technology, the Company will further enhance its control over Yinghe Technology, which could help the Company seize the development opportunity in the field of lithium battery manufacturing, which will be conducive to the further optimization of the Company's industrial layout structure to ultimately improve the Company's overall competitiveness.

By order of the Board

Shanghai Electric Group Company Limited

ZHENG Jianhua

Chairman of the Board

Shanghai, the PRC, 19 February 2020

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As at the date of this announcement, the executive directors of the Company are Mr. ZHENG Jianhua, Mr. HUANG Ou, Mr. ZHU Zhaokai and Mr. ZHU Bin; the non-executive directors of the Company are Ms. YAO Minfang and Ms. LI An; and the independent non-executive directors of the Company are Dr. CHU Junhao, Dr. XI Juntong and Dr. XU Jianxin.

* For identification purpose only

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