Shanghai Electric : Circular

March 31, 2021 at 01:42 am EDT

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult a licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Shanghai Electric Group Company Limited, you should at once hand this circular and the form of proxy and the reply slip to the purchaser or transferee or to the bank or licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, 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 circular.

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

(Stock Code: 02727)

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION;
1. GENERAL MANDATE TO ISSUE SHARES;

1. PROPOSED NON-PUBLIC ISSUANCE OF A SHARES UNDER THE GENERAL MANDATE;
2. 1. PROPOSED CONSEQUENTIAL AMENDMENTS TO THE ARTICLES OF ASSOCIATION;
  2. NOTICE OF EXTRAORDINARY GENERAL MEETING; AND
SUPPLEMENTAL NOTICE OF EXTRAORDINARY GENERAL MEETING

All capitalised terms used in this circular have the meanings set out in the section headed "Definitions" of this circular. A letter from the Board is set out on pages 1 to 32 of this circular.

A notice convening the EGM of the Company to be held at Fulin Hall, 9th Floor, Shanghai Bund Yujinxiang Xinya Hotel, 422 Tiantong Road, Shanghai, the PRC, at 9:00 a.m. on Tuesday, 20 April 2021 is set out on pages 192 to 193 of this circular. The supplemental notice of the EGM dated 26 March 2021 is enclosed with this circular, for the purpose of notifying the Shareholders of the addition of new resolutions in respect of (i) the General Mandate to issue Shares; (ii) proposed Non-public Issuance of A Shares under the General Mandate; and (iii) proposed consequential amendments to the Articles of Association. The resolution originally proposed to be considered at the EGM and contained in the original notice of the EGM remains unchanged.

A reply slip and a form of proxy for use at the EGM (the "Original Form of Proxy") have been published on the website of the Hong Kong Stock Exchange (http://www.hkexnews.hk) on Friday, 5 March 2021, and a supplemental form of proxy (the "Supplemental Form of Proxy") has been published on such website on 26 March 2021, incorporating new resolutions as proposed in the supplemental notice of the EGM enclosed in this circular. If you intend to appoint a proxy to attend the EGM, you are requested to complete and return the forms of proxy in accordance with the instructions printed thereon not less than 24 hours before the time fixed for holding the EGM or any adjournment thereof (as the case may be). Completion and return of the forms of proxy will not preclude you from attending the EGM and voting in person if you so wish. Shareholders who intend to attend the EGM in person or by proxy should complete and return the reply slip in accordance with the instructions printed thereon on or before Wednesday, 31 March 2021.

* For identification purpose only

31 March 2021

CONTENTS
	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
	ii
Letter from the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
	1
Appendix I - The Plan for The Non-Public Issuance of A Shares in 2021 . . . . . . . . . . . . . . . . . .	33
Appendix II - The Feasibility Analysis Report on The Use of Proceeds from
The Non-PublicIssuance of A Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	109
Appendix III - The Report on the Use of the Company's Previously Raised
Funds as of 31 December 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	138
Appendix IV - The Dilution of Immediate Returns upon The Non-Public Issuance of
A Shares and Remedial Measures, and Undertakings by
The Relevant Persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	164
Appendix V - The Company's Plan on Shareholders' Return for The Upcoming
Three Years (2021 - 2023). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	187
Notice of Extraordinary General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
	192
Supplemental Notice of Extraordinary General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
	194

- i -

DEFINITIONS

Unless the context otherwise requires, the following expressions in this circular shall have the following meanings:

"A Share(s)"	the A Share(s), being ordinary share(s) issued in the capital of the
	Company with a RMB denominated par value of RMB1.00 each
	and are listed on the Shanghai Stock Exchange;
"Articles of Association"	the articles of association of the Company;
"associate(s)"	has the meaning ascribed thereto under the Listing Rules;
"Board"	the board of Directors of the Company;
"Company"	Shanghai Electric Group Company Limited (上海電氣集團股份
	有限公司), a joint stock limited company duly incorporated in
	the PRC with limited liability, the H shares of which are listed
	on The Stock Exchange of Hong Kong Limited under stock code
	02727 and the A shares of which are listed on the Shanghai Stock
	Exchange under stock code 601727;
"connected person(s)"	has the meaning ascribed thereto under the Listing Rules;
"CSDC"	China Securities Depository and Clearing Corporation Limited,
	Shanghai branch;
"CSRC"	the China Securities Regulatory Commission;
"Directors"	the directors of the Company;
"EGM"	the extraordinary general meeting of the Company to be convened
	at 9:00 a.m. on Tuesday, 20 April 2021 at Fulin Hall, 9th Floor,
	Shanghai Bund Yujinxiang Xinya Hotel, 422 Tiantong Road,
	Shanghai, the PRC;
"General Mandate"	the unconditional general mandate to issue additional A Shares
	and/or H Shares to be granted to the Board at the EGM, details
	of which are set out in the section headed "II. General Mandate
	to issue Shares" in the letter from the Board contained in this
	circular;
"Group"	the Company and its subsidiaries from time to time;

- ii -

	DEFINITIONS

"H Share(s)"	the H Share(s), being the overseas listed foreign share(s) issued, in
	the capital of the Company with a RMB denominated par value of
	RMB1.00 each and are listed on the main board of the Hong Kong
	Stock Exchange;
"Hong Kong"	the Hong Kong Special Administrative Region of the People's
	Republic of China;
"Issue Period"	the appropriate period where the Company will issue A Shares to
	specific subscribers within 12 months after the relevant approval
	from the CSRC having been obtained;
"Latest Practicable Date"	30 March 2021, being the latest practicable date prior to the
	printing of this circular for the purpose of ascertaining certain
	information contained in this circular;
"Non-public Issuance of A Shares"	the proposed non-public issuance of A Shares by the Company
	of not more than 1,570,597,109 A Shares to not more than 35
	specific target subscribers, details of which are set out in the
	section headed "IV. Proposed Non-public Issuance of A Shares"
	in the letter from the Board contained in this circular;
"Pricing Benchmark Date"	has the meaning ascribed thereto under the section headed "IV.
	Proposed Non-public Issuance of A Shares - A. Issuance proposal
	for the proposed Non-public Issuance of A Shares - 4. Pricing
	Benchmark Date, issue price and pricing principles" in the letter
	from the Board contained in this circular;
"Listing Rules"	The Rules Governing the Listing of Securities on The Stock
	Exchange of Hong Kong Limited;
"PRC" or "China"	the People's Republic of China, but for the purposes of this
	announcement only, excludes Hong Kong Special Administrative
	Region, Macau Special Administrative Region and Taiwan;
"PRC Company Law"	the Company Law of the People's Republic of China, as amended,
	supplemented or otherwise modified from time to time;
"PRC Laws"	any and all laws, regulations, statutes, rules, decrees, notices and
	supreme court's judicial interpretations as may be in force and
	publicly available in the PRC from time to time;

- iii -

	DEFINITIONS

"Related Party Transaction"	has the meaning ascribed thereto under the SSE Listing Rules;
"RMB"	Renminbi, the lawful currency of the PRC;
"SFC"	the Securities and Futures Commission of Hong Kong;
"Shanghai SASAC"	Shanghai State-owned Assets Supervision and Administration
	Commission;
"Share(s)"	the ordinary share(s) of nominal value RMB1.00 each in the share
	capital of the Company, including both A Share(s) and H Share(s);
"Shareholder(s)"	the shareholder(s) of the Company, including both holder(s) of A
	Share(s) and holders of H Share(s) of the Company;
"SSE Listing Rules"	the Rules Governing the Listing of Stock on Shanghai Stock
	Exchange;
"Stock Exchange"	The Stock Exchange of Hong Kong Limited;
"Takeovers Code"	the Code on Takeovers and Mergers published by the SFC (as
	revised, supplemented or otherwise modified from time to time);
	and
"%"	per cent.

For identification purpose only

- iv -

LETTER FROM THE BOARD

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

	(Stock Code: 02727)
Executive Directors:	Registered office:
Mr. ZHENG Jianhua	30th Floor, Maxdo Center
Mr. HUANG Ou	No. 8 Xingyi Road
Mr. ZHU Zhaokai	Shanghai
Mr. ZHU Bin	PRC
Non-executive Directors:	Principal place of business in Hong Kong:
Ms. YAO Minfang	Rooms 901-903
Ms. LI An	Tower Two Lippo Centre
	89 Queensway, Hong Kong
Independent non-executive Directors:
Dr. XI Juntong
Dr. XU Jianxin
Dr. LIU Yunhong
	31 March 2021
To the Shareholders
Dear Sir or Madam,

（1）PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION;

1. 1. GENERAL MANDATE TO ISSUE SHARES;
2. PROPOSED NON-PUBLIC ISSUANCE OF A SHARES UNDER THE GENERAL MANDATE;
3. 1. PROPOSED CONSEQUENTIAL AMENDMENTS TO THE ARTICLES OF ASSOCIATION;
  2. NOTICE OF EXTRAORDINARY GENERAL MEETING; AND
SUPPLEMENTAL NOTICE OF EXTRAORDINARY GENERAL MEETING

- 1 -

LETTER FROM THE BOARD

INTRODUCTION
1. References are made to the announcement of the Company dated 5 March 2021 in relation to the proposed amendments to the Articles of Association, the announcement of the Company dated 26 March 2021 in relation to the approval of the proposed Non-public Issuance of A Shares by the Board of the Company, pursuant to which, the Company will issue a maximum of 1,570,597,109 new A Shares to no more than 35 specific target subscribers by way of non-public issuance, and the proceeds expected to be raised will be no more than RMB5,000 million. The A Shares to be issued pursuant to the proposed Non-public Issuance of A Shares will be issued under the General Mandate, which is subject to the Shareholders' approval at the EGM. In addition, the Board will seek the Shareholders' authorization at the EGM to make necessary consequential amendments to the Articles of Association in relation to the changes to the registered capital and capital structure of the Company arising from the completion of the proposed Non-public Issuance of A Shares under the General Mandate.
  The purpose of this circular, to which this letter forms a part of, is to give you a notice and supplemental notice of EGM, and to provide you with all the information reasonably necessary to enable you to make an informed decision on whether to vote for or against the proposed resolutions at the EGM.
  At the EGM, the following resolutions will be proposed for the Shareholders to approve: (i) proposed amendments to the Articles of Association; (ii) the General Mandate to issue Shares;
2. proposed Non-public Issuance of A Shares under the General Mandate; and (iv) proposed consequential amendments to the Articles of Association.

- 2 -

LETTER FROM THE BOARD

PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION
In order to improve the corporate governance structure and to further improve the quality and efficiency of corporate governance, according to the PRC Company Law, the Guidelines on Governance of Listed Companies, the Guidelines for the Articles of Association of Listed Companies, the Securities Law of the People's Republic of China and other laws, regulations and normative documents, and taking into account the requirements of the Approval of the Adjustments to the Provisions on Notice Period for Convening General Meetings and Other Matters Applicable to Overseas Listed Companies 《( 關於調整適用在境外上市公司召開股東大會通知期限等事項規定的批覆》) issued by the State Council on 17 October 2019, as well as the actual results of the repurchase and cancellation of certain restricted A shares, the repurchase and cancellation of certain H shares and the completion of the conversion of part of the convertible corporate bonds by the Company in 2020, the Company proposes to make amendments to certain articles in the Articles of Association and the Procedural Rules of the General Meeting annexed to the Articles of Association as follows:

Before amendment	After amendment

Article 20	Article 20
Upon completion of the initial capital increase	Upon completion of the initial capital increase
and issuance of A Shares in 2008, the private	and issuance of A Shares in 2008, the private
placement of A Shares in 2010, the conversion	placement of A Shares in 2010, the conversion
of part of the convertible corporate bonds	of part of the convertible corporate bonds
issued domestically in 2015 into shares, the	issued domestically in 2015 into shares, the
issuance of shares to Shanghai Electric (Group)	issuance of shares to Shanghai Electric (Group)
Corporation in 2016 for assets acquisition and	Corporation in 2016 for assets acquisition,
the issuance of shares to Shanghai Electric	the issuance of shares to Shanghai Electric
(Group) Corporation for assets acquisition and	(Group) Corporation for assets acquisition
raising of supporting funds in 2017, and the	and raising of supporting funds in 2017, the
completion of grant of the restricted shares	completion of grant of the restricted shares
under the Restricted A Share Incentive Scheme	under the Restricted A Share Incentive Scheme
of the Company in 2019, the registered capital	of the Company in 2019, the repurchase and
of the Company is RMB15,152,461,836 (as	cancellation of certain restricted A shares
of 30 September 2019). The change of the	of the Company in 2020 and the repurchase
registered capital of the Company shall be	and cancellation of certain H shares of the
conducted in accordance with the procedures	Company in 2020, the registered capital of
prescribed by relevant laws and regulations of	the Company is RMB15,705,971,092 (as of 1
the PRC.	February 2021). The change of the registered
	capital of the Company shall be conducted in
	accordance with the procedures prescribed by
	relevant laws and regulations of the PRC.

- 3 -

LETTER FROM THE BOARD

Before amendment		After amendment

Article 44	Article 44
⋯⋯	⋯⋯
If any of the Company's directors, supervisors,	If any of the Company's directors, supervisors,
senior management officers and shareholders	senior management officers and shareholders
who holds more than 5% of the total shares	who holds more than 5% of the total shares of
of the Company sell such person's shares	the Company sell such person's shares of the
of the Company within six (6) months after	Company or other securities with an equity

having bought such shares, or buy such shares	naturewithin six (6) months after having
within six (6) months after having sold them,	bought such shares or securities, or buy such

all earnings thus obtained shall belong to the	shares or securitieswithin six (6) months after
Company and be revoked by the board of	having sold them, all earnings thus obtained
directors of the Company. However, if the	shall belong to the Company and be revoked
securities company holds more than 5% of the	by the board of directors of the Company.
company's shares due to its undertaking of	However, a securities company which holds
shares remaining after sales, the sales of such	more than 5% of the Company's shares due to
shares shall be not limited by such time period	its undertaking of shares remaining after sales
of six (6) months.	upon underwriting and other circumstances
	stipulated by the China Securities Regulatory
⋯⋯	Commission are excluded. Shares or other
	securities with an equity nature held by
	directors, supervisors, senior management
	officers and natural person shareholders
	referred to in the preceding Paragraph include
	shares or other securities with an equity nature
	held by their spouses, parents and children and
	held under others' accounts.
	⋯⋯

- 4 -

LETTER FROM THE BOARD

Before amendment	After amendment

Article 46	Article 46
Within thirty (30) days prior to a general	Closure of registers of membersprior to a
meeting of shareholders or within five (5)	general meeting of shareholders or prior to the
days prior to the record date for dividend	record date for dividend distribution set by the
distribution set by the Company, no entry	Company shall be conducted in accordance
may be made in the register of shareholders to	with the laws, regulations and the relevant
record any change resulting from any transfer	requirements of the securities regulatory
of H shares.	authorities at the place where the shares of the
	Company are listed.

Article 63	Article 63
When the Company decides to convene a	When the Company decides to convene an
general meeting, it shall issue a written notice	annualgeneral meeting, it shall issue a written
forty-five (45) days prior to the meeting,	notice twenty (20) clear business daysprior
informing all registered shareholders of the	to the meeting. When the Company decides
matters to be deliberated at the meeting as	to convene an extraordinary general meeting,
well as the date and place of the meeting.	it shall issue a written notice ten (10) clear
Shareholders who intend to attend the general	business days or fifteen (15) days (whichever is
meeting shall deliver a written reply confirming	longer) prior to the meeting. Such notice shall
its attendance to the Company twenty (20) days	serve to inform all registered shareholders of
prior to the meeting.	the matters to be deliberated at the meeting as
	well as the date and place of the meeting.

- 5 -

LETTER FROM THE BOARD

Before amendment	After amendment

Article 66	Article 66
Based on the written replies received twenty	An extraordinary general meeting may not
(20) days prior to a general meeting, the	decide on matters not specified in the notice.
Company shall calculate the number of
voting shares represented by the shareholders
intending to attend the meeting . If the
number of voting shares represented by the
shareholders intending to attend the meeting
is more than half of the total number of the
Company's voting shares, the Company may
convene the general meeting; otherwise,
the Company shall, within five (5) days,
make another announcement informing the
shareholders of the matters to be deliberated
at the meeting as well as the date and place of
the meeting. The Company may convene the
general meeting thereafter.
An extraordinary general meeting may not
decide on matters not specified in the notice.

Article 68	Article 68
⋯⋯	⋯⋯
The announcement referred to in the preceding	The announcement referred to in the preceding
Paragraph shall be published in the designated	Paragraph shall be published on the website
media between forty-five (45) to fifty (50)	of the stock exchange and in the media that
days prior to the meeting. The designated	meet the conditions specified by securities
media shall mean media designated by PRC	regulatory authorities and other regulatory
laws, regulations or the competent securities	authoritiesprior to the meeting. Once the
regulatory authority of the State Council.	announcement is made, all holders of domestic
Once the announcement is made, all holders of	shares are deemed to have received the notice
domestic shares are deemed to have received	of the general meeting.
the notice of the general meeting.
	⋯⋯
⋯⋯

- 6 -

LETTER FROM THE BOARD

Before amendment	After amendment

Article 99	Article 99
When the Company decides to convene a	When the Company decides to convene a
meeting of class shareholders; it shall issue a	meeting of class shareholders, it shall issue
written notice forty-five (45) days prior to the	a written notice with reference to the notice
meeting, informing all registered shareholders	period of the general meeting set out in Article
of such class of the matters to be deliberated	63,informing all registered shareholders of
at the meeting as well as the date and place	such class of the matters to be deliberated at
of the meeting. Shareholders intending to	the meeting as well as the date and place of the
attend the meeting shall deliver a written reply	meeting.
confirming their attendance to the Company
twenty (20) days prior to the meeting.
If the number of shares carrying the right to
vote at the meeting represented by shareholders
intending to attend the meeting is more than
half (1/2) of the total number of shares of such
class that carry the right to vote at the meeting,
the Company may convene the meeting of
class shareholders; otherwise, the Company
shall, within five (5) days, make another
announcement informing the shareholders of
the matters to be deliberated at the meeting as
well as the date and place of the meeting. After
giving the announcement, the Company may
convene the meeting of class shareholders.

- 7 -

LETTER FROM THE BOARD

Before amendment		After amendment

Article 104	Article 104
The Board, independent director(s), and	The Board, independent director(s), the
the shareholder(s) who meet(s) the relevant	shareholder(s) holding 1% or more of voting shares,
requirements of the Company may solicit voting	or investor protection institutions established in
rights from shareholders publicly. During the	accordance with laws, administrative regulations
solicitation of voting rights from shareholders,	or the provisions of the securities regulatory
sufficient disclosure of information such as the	authorities may act as the solicitors, or entrust
specific voting preference shall be made to the	securities companies and securities service
shareholders from whom voting rights are being	agencies, to publicly request the Company's
solicited. No consideration or other form of	shareholders to entrust them to attend the
de facto consideration shall be involved in the	general meeting and exercise shareholder's
solicitation of voting rights from shareholders.	rights such as right of making motions and
The Company shall not impose any limitation	voting rights on behalf of such shareholders.
related to the minimum shareholding ratio on
the solicitation of voting rights.	In the case of soliciting shareholders' rights
	in accordance with the preceding Paragraph,
	the solicitor shall disclose the solicitation
	documents and the Company shall provide
	assistance.No consideration or other form of
	de facto consideration shall be involved in the
	public solicitation of rights from shareholders. If
	a public solicitation of rights from shareholders

	is in violation of any laws, administrative
	regulations, or the relevant provisions of the
	securities regulatory authorities, resulting in
	losses to the Company or its shareholders, the
	solicitor shall be liable for damages.

- 8 -

LETTER FROM THE BOARD

Before amendment	After amendment

Article 118	Article 118
The board of directors shall record decisions	The board of directors shall record decisions
on matters deliberated at a meeting to form	on matters deliberated at a meeting to form
the minutes of the meeting. Directors and	the minutes of the meeting. Directors and
secretary of the board of directors present	secretary of the board of directors present
at the meeting and the recorder shall affix	at the meeting and the recorder shall affix
their signatures on the meeting minutes. The	their signatures on the meeting minutes. The
directors shall be liable for the resolutions of	directors shall be liable for the resolutions of
the board of directors. If a resolution of the	the board of directors. If a resolution of the
board of directors is in violation of any laws,	board of directors is in violation of any laws,
administrative regulations, or these Articles	administrative regulations, or the Articles of
of Association, and therefore, results in any	Association and the resolutions of the general
material losses to the Company, directors	meeting,and therefore, results in any material
involved in the resolution shall be liable to	losses to the Company, directors involved
indemnify the Company. However, any director	in the resolution shall be liable to indemnify
who is proven to have expressed his objection	the Company. However, any director who is
to such resolution in voting and whose	proven to have expressed his objection to such
objection has been recorded in the minutes may	resolution in voting and whose objection has
be exempted from liabilities.	been recorded in the minutes may be exempted
	from liabilities.

Article 16 of the Procedural Rules of the	Article 16 of the Procedural Rules of the
General Meeting	General Meeting
When the Company decides to convene a	When the Company decides to convene an
general meeting, it shall issue a written notice	annualgeneral meeting, it shall issue a written
forty-five (45) days prior to the meeting,	notice twenty (20) clear business days prior
informing all registered shareholders of the	to the meeting. When the Company decides
matters to be deliberated at the meeting as	to convene an extraordinary general meeting,
well as the date and place of the meeting.	it shall issue a written notice ten (10) clear
Shareholders who intend to attend the general	business days or fifteen (15) days (whichever
meeting shall deliver a written reply confirming	is longer) prior to the meeting. Such written
its attendance to the Company twenty (20) days	notice shall serve to informall registered
prior to the meeting.	shareholders of the matters to be deliberated at
	the meeting as well as the date and place of the
	meeting.

- 9 -

LETTER FROM THE BOARD

Before amendment	After amendment

Article 18 of the Procedural Rules of the	Delete this article, and the number sequence
General Meeting	of the subsequent articles shall be renumbered
	accordingly.
Based on the written replies received twenty
(20) days prior to a general meeting, the
Company shall calculate the number of
voting shares represented by the shareholders
intending to attend the meeting . If the
number of voting shares represented by the
shareholders intending to attend the meeting
is more than half of the total number of the
Company's voting shares, the Company may
convene the general meeting; otherwise,
the Company shall, within five (5) days,
make another announcement informing the
shareholders of the matters to be deliberated
at the meeting as well as the date and place of
the meeting. The Company may convene the
general meeting thereafter.

Article 21 of the Procedural Rules of the	Article 20 of the Procedural Rules of the
General Meeting	General Meeting
⋯	⋯
The above-mentioned announcement shall be	The above-mentioned announcement shall be
published in the designated media between	published on the website of the stock exchange
forty-five (45) to fifty (50) days prior to the	and in the media that meet the conditions
meeting. The designated media shall mean	specified by securities regulatory authorities
media designated by PRC laws, regulations or	and other regulatory authorities. Once the
the competent securities regulatory authority	announcement is made, all holders of domestic
of the State Council. Once the announcement	shares are deemed to have received the notice
is made, all holders of domestic shares are	of the general meeting.
deemed to have received the notice of the
general meeting.

- 10 -

LETTER FROM THE BOARD

Before amendment	After amendment

Article 63 of the Procedural Rules of the	Article 62 of the Procedural Rules of the
General Meeting	General Meeting
When the Company decides to convene a	When the Company decides to convene a
meeting of class shareholders, it shall issue a	meeting of class shareholders, it shall issue
written notice forty-five (45) days prior to the	a written notice with reference to the notice
meeting, informing all registered shareholders	period of the general meeting set out in Article
of such class of the matters to be deliberated	16,informing all registered shareholders of
at the meeting as well as the date and place	such class of the matters to be deliberated at
of the meeting. Shareholders intending to	the meeting as well as the date and place of the
attend the meeting shall deliver a written reply	meeting.
confirming their attendance to the Company
twenty (20) days prior to the meeting.

Article 64 of the Procedural Rules of the	Delete this article, and the number sequence
General Meeting	of the subsequent articles shall be renumbered
	accordingly.
If the number of shares carrying the right to
vote at the meeting represented by shareholders
intending to attend the meeting is more than
half (1/2) of the total number of shares of such
class that carry the right to vote at the meeting,
the Company may convene the meeting of
class shareholders; otherwise, the Company
shall, within five (5) days, make another
announcement informing the shareholders of
the matters to be deliberated at the meeting as
well as the date and place of the meeting. After
giving the announcement, the Company may
convene the meeting of class shareholders.

Save for the above amendments, the other articles of the Articles of Association remain unchanged.

The proposed amendments to the Articles of Association are still subject to consideration and approval at the general meeting of the Company. The Board has resolved to propose a resolution at the general meeting of the Company to authorise the Board in turn to authorise the management of the Company to handle the approval and filing procedures with relevant regulatory authorities involved in such amendments, and to make wording adjustments to such amendments according to opinions of the regulatory authorities.

- 11 -

LETTER FROM THE BOARD

GENERAL MANDATE TO ISSUE SHARES
To ensure flexibility and discretion to the Board to issue new Shares when it becomes desirable, the Board has resolved to submit a special resolution to the EGM for consideration and approval on a proposed General Mandate to issue certain Shares. Pursuant to the General Mandate (if granted), according to market conditions and the needs of the Company, the Board will separately or concurrently issue additional A Shares and/or H Shares in the share capital of the Company, the total number of such additional A Shares and/or H Shares to be issued shall not exceed each of 20% of the issued A Shares and H Shares of the Company, respectively, as at the time of approval of the relevant resolution at the EGM.
As at the Latest Practicable Date, the issued share capital of the Company comprised of 12,781,489,092 A Shares and 2,924,482,000 H Shares. Subject to the approval of the grant of the General Mandate by the Shareholders and on the basis that no further Shares are issued before the EGM, the Board will have the power to issue up to 2,556,297,818 A Shares and 584,896,400 H Shares.
The specific contents of the General Mandate include but are not limited to the following:
1. The granting of a general mandate to the Board of the Company (within the scope as set out in paragraph 2 below) to, subject to market conditions and the requirements of the Company, separately or concurrently issue additional shares of the issued A Shares and/or H Shares of the Company during the Relevant Period (as defined below), and to make decisions or grant power to make decisions which might require the exercise of such powers (including authorising the Board during the Relevant Period to make decisions or grant power to make decisions which might require the exercise of such powers after the end of the Relevant Period).
2. The aggregate number of the A Shares and/or H Shares conditionally or unconditionally agreed to be issued (whether pursuant to the exercise of options or otherwise) by the Board shall not exceed 20% of the respective class of Shares in issue of the Company when this resolution is approved at the EGM.
3. The Board is authorised to formulate and implement the detailed issuance plan, including but not limited to (i) the class and number of the new shares to be issued, (ii) the pricing mechanism and/or issue price (including price range), (iii) starting and closing date of the issuance, (iv) use of proceeds, (v) the making or granting of authorisations in respect of decisions which may require the exercise of such powers; and (vi) other contents that the detailed issuance plan should contain as required by the relevant laws and regulations and other regulatory documents, the relevant regulatory institutions, and the exchange where the relevant Shares are listed.

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LETTER FROM THE BOARD

The Board is authorised to engage intermediary institutions in respect of the issuance of Shares, to approve and sign all acts, documents and other matters necessary or relevant to the issuance of Shares, and to consider, approve, and sign, on behalf of the Company, agreements related to the issuance of Shares, including but not limited to subscription agreements, underwriting agreements and engagement agreements of intermediaries.
The Board is authorised to consider and execute, on behalf of the Company, statutory documents related to the issuance of Shares for submission to the relevant regulatory authorities, to carry out relevant approval procedures as required by regulatory authorities and the places in which the Company is listed, and to complete all necessary filings, registrations and record with the relevant governmental authorities of Hong Kong and/or any other regions or jurisdictions (if applicable).
The Board is authorised to amend, as required by regulatory authorities within or outside China, relevant agreements and statutory documents referred to in paragraphs (4) and (5) above.
The Board is authorised to approve the increase in registered capital of the Company after issuance of the new Shares, make appropriate and necessary amendments to the relevant contents of total share capital and shareholding structure in the Articles of Association, carry out the relevant approval, registration and filing procedures pursuant to domestic and overseas statutory requirements, and take any other action and complete any procedures required to implement the relevant share issuance and realize the increase in the registered capital of the Company.
Upon obtaining of the aforesaid mandate by the Board, to delegate the authority to the authorised person(s) of the Company to jointly or individually sign, execute, amend, complete and submit all agreements, contracts and documents relating to the issuance of shares under the General Mandate unless otherwise required under the relevant laws and regulations.
Exercise of the General Mandate by the Board is subject to the approvals of the CSRC and/ or the other relevant governmental authorities of the PRC and in accordance with the PRC Company Law, the Securities Law of the PRC, the Hong Kong Listing Rules or all applicable laws, regulations and rules of any other governmental or regulatory authorities.

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LETTER FROM THE BOARD

Except that the Board may make decisions or grant power to make decisions under the authorisation granted thereto during the Relevant Period in relation to the issuance of A Shares and/or H Shares, which might require further promotion or implementation after the end of the Relevant Period, the General Mandate shall be effective during the Relevant Period. "Relevant Period" means the period from the date of passing of this resolution as a special resolution at the EGM until whichever is the earliest of:

the conclusion of the next first annual general meeting, unless the General Mandate is renewed by an ordinary resolution passed in such annual general meeting; or
the revocation or variation of the authority given under this resolution by passing of a special resolution of the Company in a general meeting.

Should the Board or its authorised person(s), during the Relevant Period, sign the necessary documents, complete the necessary formalities or take relevant steps which might require to be performed or carried out upon or after the end of the Relevant Period or continued after the end of the Relevant Period, the Relevant Period will be extended accordingly.

The General Mandate has been considered and approved by the Board, and will be proposed at the EGM for the Shareholders' consideration and approval by way of special resolution.

IV. PROPOSED NON-PUBLIC ISSUANCE OF A SHARES

Issuance proposal for the proposed Non-public Issuance of A Shares

The Board is pleased to announce that, on 26 March 2021, the Board has approved the proposed Non-public Issuance of A Shares under the General Mandate, pursuant to which the Company will issue a maximum of 1,570,597,109 new A Shares to no more than 35 specific subscribers by way of non-public issuance, at a final issue price to be determined in the manner described under "4. Pricing Benchmark Date, issue price and pricing principles" below. The Company intends to raise gross proceeds of not more than RMB5,000 million.

Details of the proposed Non-public Issuance of A Shares are set out below:

1. Class and par value of	The Shares to be issued are A Shares with a par value of
Shares to be issued	RMB1.00 per share.

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LETTER FROM THE BOARD

2. Method and time of issuance

The proposed Non-public Issuance of A Shares will be undertaken by way of non-public issuance to specific subscribers. The Company will issue A Shares to specific subscribers at an appropriate time within the validity period as approved by the CSRC. According to the Administrative Measures for the Issuance of Securities by Listed Companies 《( 上市公司證券發行管理辦法》), the validity period of the CSRC approval will be 12 months. The Company will complete the proposed Non-public Issuance of A Shares as soon as practicable within 12 months after the relevant approval from the CSRC having been obtained.

3. Target subscribers and	The target subscribers of the Non-public Issuance of A
subscription method	Shares will be no more than 35 specific investors, including
	securities investment fund management companies,
	securities companies, insurance institutional investors,
	trust companies, finance companies, asset management
	companies, qualified foreign institutional investors and
	qualified RMB foreign institutional investors etc., being
	legal persons, natural persons or other legal investment
	entities who meet the relevant legal and regulatory
	requirements.
	Securities investment fund management companies, securities
	companies, qualified foreign institutional investors and
	qualified RMB foreign institutional investors that subscribe
	for the relevant A Shares with two or more of the products
	managed by them, shall be taken as one single target
	subscriber. A trust company that subscribes as a target
	subscriber may only use its proprietary funds for subscription.
	Upon obtaining the written approval of the CSRC for
	the proposed Non-public Issuance of A Shares, the final
	target subscribers shall be determined by the Board or its
	authorised person(s) under the authorisation granted at the
	EGM, with the sponsoring institution (lead underwriter)
	according to the price inquiry results based on the price
	priority and other principles according to the prices offered
	by the target subscribers. The Company will make further
	announcement(s) on the list of the final target subscribers
	upon such final decision having been made.

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LETTER FROM THE BOARD

	All A Shares to be issued under the proposed Non-public
	Issuance of A Shares will be subscribed for in cash.
4. Pricing Benchmark Date,	The pricing benchmark date of the proposed Non-public
issue price and pricing	Issuance of A Shares (the "Pricing Benchmark Date")
principles	shall be the first day of the Issue Period of the proposed
	Non-public Issuance of A Shares.
	Pursuant to Article 38 of the Administrative Measures for
	the Issuance of Securities by Listed Companies 《( 上市公司
	證券發行管理辦法》) and Article 7 of the Implementation
	Rules for the Non-public Issuance of Stocks by Listed
	Companies 《( 上市公司非公開發行股票實施細則》), the
	issue price of the Issuance shall be no less than 80% of
	the average trading price (rounded up to the nearest two
	decimal places) of the A Shares of the Company for the
	20 trading days preceding the Pricing Benchmark Date
	(excluding the Pricing Benchmark Date; same for below).
	The average trading price of the A Shares of the Company
	for the 20 trading days preceding the Pricing Benchmark
	Date shall be the total trading amount of the A Shares for
	the 20 trading days preceding the Pricing Benchmark Date
	divided by the total trading volume of the A Shares of the
	Company for the 20 trading days preceding the Pricing
	Benchmark Date. In addition, the issue price of the Issuance
	shall not be less than the price of the Company's latest
	audited net assets per share attributable to ordinary equity
	holders of the Company prior to the Non-public Issuance
	of A Shares. In the event that the Company distributes any
	dividends, grants bonus shares, or carries out capitalisation
	of capital reserve or other ex-right or ex-dividend activities
	during the period commencing from the balance sheet
	date of the latest audited financial report as at the Pricing
	Benchmark Date up to the date of the Issuance, the above
	net assets value per share attributable to ordinary equity
	holders of the Company shall be adjusted accordingly.
	Based on the aforementioned base price, the final issue
	price shall be determined in accordance with relevant laws
	and regulations and the request of the regulatory authorities,
	upon the Company obtaining the approval of the CSRC for
	the Non-public Issuance of A Shares, by the Board or its
	authorised person(s) under the authorisation granted at the
	EGM, with the sponsoring institution (lead underwriter)
	with reference to the price inquiry results based on the
	price priority and other principles according to the prices
	offered by the target subscribers.

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LETTER FROM THE BOARD

In the event that the Company distributes cash dividends, grants bonus shares, capitalisation of capital reserve or carries out any other ex-right or ex-dividend activities in respect of A Shares during the period commencing from the Pricing Benchmark Date of the Non-public Issuance of A Shares to the issuance date, adjustments shall be made to the base price for the Non-public Issuance of A Shares accordingly.

The average closing price of the H Shares in the five trading days immediately prior to 26 March 2021 (being the date of the Company's announcement issued in respect of the proposed Non-public Issuance of A Shares) was HK$2.908 per H Share (the "H Share Average Closing Price"). Pursuant to Rule 13.36(5) of the Hong Kong Listing Rules, the Company may not issue any securities pursuant to a general mandate given under Rule 13.36 (2)(b) if the relevant price represents a discount of 20% or more to the benchmarked price of the H Shares, such benchmarked price being the higher of: (i) the closing price of H Shares on the date of the relevant placing agreement or other agreement involving the proposed issue of securities under the general mandate; and (ii) the H Share Average Closing Price. The Company will make further announcement(s) when the Issue Price has been determined, and will comply with the relevant requirements under Rule 13.36(5) of the Hong Kong Listing Rules.

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LETTER FROM THE BOARD

5. Number of Shares to be	The number of Shares to be issued under the Non-public
issued	Issuance of A Shares shall be determined by dividing the
	funds to be raised with the issue price (if the number of
	Shares obtained is not a whole number, it shall be rounded
	down to the nearest whole number), and will not exceed
	1,570,597,109 Shares, representing not more than 10% of
	the total issued share capital of the Company prior to the
	completion of the Non-public Issuance of A Shares. The
	proportion of the maximum number of A Shares to be issued
	under the Non-public Issuance of A Share against the
	Company's total existing A shares issued is approximately
	12.29%.
	The maximum number of A Shares to be issued under
	the Non-public Issuance of A Shares will be based on the
	approval granted by the CSRC. After obtaining the approval
	for the proposed Non-public Issuance of A Shares from the
	CSRC, the Board or its authorised persons(s) shall, pursuant
	to the authorisation of the Shareholders in the EGM and
	within the scope approved by the CSRC, negotiate with
	the sponsoring institution (lead underwriter) to determine
	the final number of A Shares to be issued according
	to the relevant regulations of the CSRC and the actual
	circumstances at the time of issuance.
	If ex-rights or ex-dividend events (such as distribution
	of dividends, bonus issues or capitalisation of capital
	reserve) occur during the period between the date hereof
	to the issuance date, or there occurs any change in the
	share capital of the Company due to events such as the
	implementation of share award schemes or repurchase
	of Shares during such period, then the number caps of
	the of Shares under the Non-public Issuance of A Shares
	will be adjusted correspondingly according to relevant
	requirements.

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LETTER FROM THE BOARD

6. Lock-up period arrangement

Place of listing of the new
A Shares to be issued
Arrangement of accumulated undistributed profits
Validity of the resolutions in respect of the Non- Public Issuance of A Shares
Amount and use of proceeds

Upon the completion of the Non-public Issuance of A Shares, target subscribers shall not transfer or deal with the

Shares subscribed under the Non-public Issuance of A Shares during a period of six months commencing from the closing date of the Non-public Issuance of A Shares.

After the end of the aforementioned lock-up period, the transactions under the Non-public Issuance of A Shares shall be conducted in accordance with the relevant regulations of the CSRC and the Shanghai Stock Exchange.

In the event that the number of A Shares held by the target subscribers increases due to reasons such as bonus issue and/or capitalisation of capital reserve after completion of the Non-public Issuance of A Shares, such Shares shall also be subject to the aforementioned lock-up arrangement.

The A Shares to be issued under the Non-public Issuance of A Shares will be listed and traded on the Shanghai Stock Exchange.

Both new Shareholders and existing Shareholders after the issuance of A Shares under the Non-public Issuance of A Shares shall be entitled to the accumulated undistributed profits of the Company.

The resolutions regarding the Non-public Issuance of A Shares shall remain valid for a period of 12 months from the date of consideration and approval of such resolutions at the EGM.

The gross proceeds to be raised from the Non-public Issuance of A Shares is expected to be no more than RMB5,000 million. After the deduction of expenses related to the issuance, the proceeds raised will be applied in the following aspects:

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LETTER FROM THE BOARD

		Total
		investment	The
		amount of	amount of		Expected
		the relevant	proceeds to		time of
Item		project	be applied		utilisation*
		(RMB0'000)	(RMB0'000)
Non-carbon Energy Power	Supercritical CO2 technology research and
Technology Research	development project	98,711.00		55,000.00		2024
and Development	Large-capacity energy storage technology
Project	research and development project	32,997.00		19,000.00		2024
	Technology research and development project
	of hydrogen production from electrolyzed
	water	40,280.00	26,000.00	2024
Smart City Key	Smart city "unified management through
Platform and System	one network" system research and
Development Project	development project	44,052.88		34,000.00		2024
	Smart city rail transit system development
	project	51,573.21		38,000.00		2024
SEunicloud Industrial Internet Platform Upgrading and Innovation
Application Project		70,210.53	56,000.00	2024
Demonstration EPC Project of Comprehensive Utilisation of Multi-
Generation and Recycling of Coal Middlings of One Million Tonnes
Per Annum of Yan'an Energy and Chemical	191,701.93		125,000.00		2023
Replenishment of working capital	147,000.00		147,000.00		2021

Total		676,526.55		500,000.00

The proceeds are expected to be utilised during the respective construction period of the relevant projects, the actual time of which will be based on the overall progress and actual circumstances of the relevant projects.

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LETTER FROM THE BOARD

Prior to the receipt of the relevant proceeds raised from the Non-public Issuance of A Shares, based on the actual circumstances of the aforementioned projects, the Company may utilise its internal funds or funds obtained through other financing methods to invest in such projects, and replace such investment amount with the proceeds upon receiving the same.

Following receipt of the relevant proceeds, if the actual amount of net proceeds from the proposed Non-public Issuance of A Shares (after deduction of expenses related to the issuance) is less than the proposed amount of proceeds to be applied in the above projects, the Company will adjust and determine the specific investment projects, order of priority and specific investment amounts in each project based on the actual amount of net proceeds and the priority of the relevant projects, and any shortfall in the investment amounts will be made up by utilising the internal funds of the Company or through other financing methods. The aforementioned adjustments will be made in accordance with actual circumstances, in particular the priority and capital demand of the relevant specific investment projects (including the expected time of utilisation disclosed above) which may not be on a pro rata basis. The Company will disclose the actual use of proceeds from the Non- public Issuance of A Shares (including the changes and adjustments made to the proposed use of proceeds disclosed herein, if any) in its annual and interim reports in accordance with the Hong Kong Listing Rules and other applicable rules and regulations in the PRC.

Save for the proposed Non-public Issuance of A Shares, as at the Latest Practicable Date, the Company has no concrete plans to carry out other fund-raising activities in the forthcoming twelve months.

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LETTER FROM THE BOARD

As at the Latest Practicable Date, the Company has not entered into any agreement with any potential subscribers in respect of the proposed Non-public Issuance of A Shares, nor did the Company have any intention to issue any new A Share under the Non-public Issuance of A Shares to any connected person of the Company. If any of the new A Shares under the Non- public Issuance of A Shares is issued to any connected person of the Company, the Company will separately seek independent Shareholders' approval for granting specific mandate and comply with relevant requirements under Chapter 14A of the Hong Kong Listing Rules, including but not limited to announcement and the obtaining of independent Shareholders' approval.

Conditions precedent of the proposed Non-public Issuance of A Shares
1. The proposed Non-public Issuance of A Shares is subject to (i) the approval of the Shareholders at the EGM for the proposed Non-public Issuance of A Shares; (ii) the approval of the Shareholders at the EGM for the proposed granting of the General Mandate; and
2. the approval of the CSRC. Upon obtaining the approval of the CSRC, the Company will apply to the Shanghai Stock Exchange and the CSDC to complete the approval and registration procedures for the proposed Non-public Issuance of A Shares.
Impact on the shareholding structure of the Company
1. As at the Latest Practicable Date, the total issued share capital of the Company is 15,705,971,092 Shares, which comprises 12,781,489,092 A Shares and 2,924,482,000 H Shares. Assuming that there is no change in the total issued share capital of the Company since the Latest Practicable Date save for the issuance of the A Shares pursuant to the proposed Non-public Issuance of A Shares, insofar as the Directors are aware, the shareholding structure of the Company (i) as at the Latest Practicable Date, and
2. immediately after completion of the proposed Non-public Issuance of A Shares (assuming that the number of A Shares issued under the Non-public Issuance of A Shares is 1,570,597,109 Shares, that there will be no change in the existing Shareholders' shareholdings in the Company and that none of specific subscribers is or will become a connected person of the Company upon completion of the Non-public Issuance of A Shares) is set out as follows:

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LETTER FROM THE BOARD

					Immediately after
	As of the	completion of the proposed
	Latest Practicable Date	Non-public Issuance of A Shares
			Approximate			Approximate
			percentage of			percentage of
			the issued			the issued
	Number of	shares of	Number of	shares of
	Shares	the Company	Shares	the Company
A Shares	12,781,489,092		81.38		14,352,086,201		83.07
Non-public Shareholders (Note 1)	8,257,405,141		52.58	8,257,405,141	47.80
Public	4,524,083,951	28.80	6,094,681,060	35.27
H Shares	2,924,482,000	18.62	2,924,482,000	16.93
Non-public Shareholders (Note 1)	313,642,000		2.00	313,642,000	1.82
Public	2,610,840,000	16.62	2,610,840,000	15.11

Total	15,705,971,092		100.00		17,276,568,201	100.00

Notes:

1. Non-public shareholders comprise core connected persons of the Company, which include directors, supervisors and substantial shareholders of the Company and/or its subsidiaries, and their close associates.

Following completion of the Non-public Issuance of A Shares (assuming that the number of A Shares issued under the Non-public Issuance of A Shares is 1,570,597,109 Shares and that there is no other change to the total issued share capital of the Company), Shanghai Electric (Group) Corporation (上海電氣（集團）總公司) will become a holder of approximately 49.61% of the total issued Shares of the Company, and continue to be the holding company of the Company. The Company will continue to implement appropriate measures and mechanisms to ensure continual maintenance of the prescribed minimum public float of the Company under the Hong Kong Listing Rules.

Fund raising activities during the past 12 months
The Company has not conducted any fund raising activity involving issue of equity securities during the 12 months immediate preceding the Latest Practicable Date.

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LETTER FROM THE BOARD

Authorisation to the Board and its authorised person(s)
In connection with the proposed Non-public Issuance of A Shares, a resolution will be submitted to the Shareholders for approval by way of a special resolution at the EGM to authorise the Board or its authorised person(s) to deal with the matters in relation to the proposed Non-public Issuance of A Shares within the scope of authorisation. The contents of authorisation include but are not limited to the following:
1. To make appropriate amendments, adjustments and supplements to the terms of the proposed Non-public Issuance of A Shares within the scope permitted by the relevant laws, regulations and rules and the Articles of Association in accordance with the feedback of the regulatory authorities as well as the actual situations of the Company, to finalise the specific terms and plan for the proposed Non-public Issuance of A Shares prior to the issuance, and to formulate and implement the final plan for the proposed Non-public Issuance of A Shares, including but not limited to, the timing of the issuance, the subscription targets, method of the issuance, price of the issuance, number of Shares of the issuance, the use of proceeds, and to determine the timing to proceed with the Non-public Issuance of A Shares, the establishment of designated accounts for the proceeds, the signing of relevant account supervisory agreement(s) in respect of the designated accounts for the proceeds, as well as other matters related to the Non-public Issuance of A Shares.
2. To engage the intermediary institutions for the proposed Non-public Issuance of A Shares, to handle reporting matters related to issue of new Shares and their listing in connection with the Non-Public Issuance of A Shares, to approve, prepare, sign, modify and submit the application materials (or other necessary documents) related to the proposed Non-public Issuance of A Shares according to the relevant requirements of the regulatory authorities, to have full authority to respond to the queries raised by the regulatory authorities, to handle the relevant reporting, registration, filing, approval and consent procedures with the relevant governmental authorities, regulatory authorities, stock exchanges and securities registration and clearing institutions, and to handle information disclosure matters related to the Non-public Issuance of A Shares in accordance with regulatory requirements.
3. To prepare, sign, amend, supplement, submit, report and implement all the agreements, contracts and documents in relation to the proposed Non-public Issuance of A Shares (including but not limited to the share subscription agreement(s), agreement(s) related to the use of proceeds, engagement agreement(s) of intermediaries, announcement(s), policy(ies) and other disclosure documents).

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LETTER FROM THE BOARD

To make adjustments to the specific arrangements on the use of proceeds within the scope as approved by the Shareholders at the EGM, pursuant to the relevant laws and regulations of the State and the requirements of the regulatory authorities and having considered the actual progress of the implementation of the investment projects to which the fund raising relates and the actual amount of proceeds raised.
To handle the relevant matters such as registration, escrow arrangement, lock-up and listing of the A Shares under the Non-public Issuance of A Shares with the Shanghai Stock Exchange and the CSDC upon completion of the Non-public Issuance of A Shares.
To amend the relevant articles of the Articles of Association in order to reflect the registered capital and the capital structure of the Company following completion of the Non-public Issuance of A Shares, to handle the formalities for change of registration with the relevant industrial and commercial authority(ies) and to deal with other filing procedures.
To make corresponding adjustment(s) to the matters related to the proposed Non- public Issuance of A Shares if there is any change in the policies of the regulatory authorities in respect of non-public issuance of shares or any change in the market conditions (except for the matters that should be re-voted on at the general meeting of the Company according to the relevant laws and regulations, guidance materials, the Articles of Association and the requirements of the regulatory authorities).
To have a discretion to delay or cancel the implementation of the proposed Non-public Issuance of A Shares or continue to handle the proposed Non-public Issuance of A Shares based on new policies in the case of force majeure or any other circumstance which is sufficient to render the proposed Non-public Issuance of A Shares unimplementable, or although implementable, will cause material adverse effect to the Company if implemented, or if there is any change in the policies of the regulatory authorities in respect of non-public issuance of shares.
To analyse, study and demonstrate the dilution of immediate returns arising from the issuance of the A Shares under the Non-public Issuance of A Shares in the event of changes in policies and requirements of the relevant laws, regulations and the requirements of regulatory authorities on using re-financing to remedy the diluting effect on immediate returns, to formulate, amend and implement relevant remedial measures for dilution of immediate returns, and to handle any other matters in relation thereto.

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LETTER FROM THE BOARD

1. To deal with other matters relating to the Non-public Issuance of A Shares within the scope permitted under the relevant laws, regulations, guidance materials and the Articles of Association.
2. Subject to the grant the above authorisation to the Board by the Shareholders, to delegate the authorised person(s) of the Board to exercise all such matters authorised to be handled by the Board commencing on the date of approval at the EGM, unless otherwise required pursuant to the relevant laws and regulations.
3. In respect of the above authorisation to the Board that concerns the obtaining of approval from the CSRC on specific matters to be carried out after the Non-public Issuance of A Shares, such authorisation shall be valid until the date of completion of such specific matters. In respect of other matters, the above authorisation to the Board will be valid for 12 months commencing on the date of approval at the EGM.
Reasons for the proposed Non-public Issuance of A Shares
Upon completion of the Non-public Issuance of A Shares, gross proceeds in the amount of RMB5,000 million will be raised, which will strengthen the capital capability of the Group and lay a sound foundation for the Group's further expansion of its operations, and, in turn, enable it to realise breakthrough in its development and enhance its competitive strength.
As mentioned in the section headed "III. Proposed Non-public Issuance of A Shares - A. Issuance proposal for the proposed Non-public Issuance of A Shares - 10. Amount and use of proceeds" above, certain of the proceeds raised through the Non-public Issuance of A Shares is expected to be applied in Non-carbon Energy Power Technology Research and Development Project, Smart City Key Platform and System Development Project, SEunicloud Industrial Internet Platform Upgrading and Innovation Application Project, Demonstration EPC Project of Comprehensive Utilisation of Multi-Generation and Recycling of Coal Middlings of One Million Tonnes Per Annum of Yan'an Energy and Chemical, and replenishment of working capital of the Group. The construction of the above investment projects is conducive for the Company to accelerating the improvement of the technological strength in the fields of non-carbon energy, industrial Internet and smart city and other businesses, expanding the diversified businesses, furthering the digital transformation of the Company and strengthening the comprehensive competitiveness of the Company.

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LETTER FROM THE BOARD

The Non-public Issuance of A Shares was proposed after comprehensively considering the relevant laws and regulations regarding non-public issuance of A Shares in the PRC, the securities market conditions and the actual circumstances of the Company. As non-public issuance of A Shares is a direct means of fundraising, the time required by and financing costs of which are expected to be lower than other indirect means of fundraising and can effectively optimise the asset-liability structure of the Company while providing sufficient capital support for the Company's implementation of its strategic goals, the Company did not consider alternative fundraising methods appropriate. Moreover, the proposed size of the Non-public Issuance of A Shares (subject to the approval by the CSRC) is within the limit permitted under Rule 13.36(2) (b) (as modified by Rule 19A.38) of the Hong Kong Listing Rules. Therefore, the Directors are of the view that the proposed Non-public Issuance of A Shares under the General Mandate is compliant with the applicable laws, rules and regulations, time and cost efficient and in line with the Company's actual circumstances, strategic vision and sustainable development, and as such, it is in the best interest of the Company and its Shareholders as a whole.

In light of the above, the Directors are of the opinion that the proposed Non-public Issuance of A Shares is in the interests of the Company and the Shareholders as a whole.

Resolution on the Company's compliance with the conditions of Non-public Issuance of A Shares
After making an item-by-item check of the Company's actual operational and other circumstances in accordance with the requirements under the laws, regulations and other regulatory documents, including the PRC Company Law, the Securities Law of the People's Republic of China, the Administrative Measures for the Issuance of Securities by Listed Companies 《( 上市公司證券發行管理辦法》), and the Implementation Rules for the Non- public Issuance of Stocks by Listed Companies 《( 上市公司非公開發行股票實施細則》), the Board confirmed that the Company has complied with the applicable conditions of non- public issuance of domestic listed RMB-dominated ordinary shares (A Shares) and will be eligible to conduct the proposed Non-public Issuance of A Shares.
The resolution has been considered and approved at the meeting of the Board, and will be proposed at the EGM for Shareholders' consideration and approval by way of special resolution.

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LETTER FROM THE BOARD

Resolution on the plan for the Non-public Issuance of A Shares
In accordance with the requirements under the relevant laws, regulations and other regulatory documents, including the PRC Company Law, the Securities Law of the People's Republic of China, the Administrative Measures for the Issuance of Securities by Listed Companies 《( 上市公司證券發行管理辦法》), the Implementation Rules for the Non-publicIssuance of Stocks by Listed Companies 《( 上市公司非公開發行股票實施細則》), and the No. 25 of Standard of Content and Format on Information Disclosure for Publicly Listed Companies - Plan for and Issuance Report on Listed Companies' Non-publicIssuance of Shares 《( 公開發行證券的公司信息披露內容與格式準則第25號- 上市公司非公開發行股票預案和發行情況報告書》), the Company has formulated the Plan for the Non-publicIssuance of A Shares in 2021 of Shanghai Electric Group Company Limited 《( 上海電氣集團股份有限公司2021 年度非公開發行A股股票預案》) in Chinese, full text of which is set out in Appendix I to this circular. In the event of any discrepancy between the English translation and the Chinese version of the document, the Chinese version shall prevail.
The resolution has been considered and approved at the meeting of the Board, and will be proposed at the EGM for Shareholders' consideration and approval by way of special resolution.
Resolution on the feasibility analysis report on the use of proceeds from the Non-public Issuance of A Shares
In accordance with the relevant requirements under the relevant laws, regulations and other regulatory documents, including the PRC Company Law, the Securities Law of the People's Republic of China, the Administrative Measures for the Issuance of Securities by Listed Companies 《( 上市公司證券發行管理辦法》), and the Implementation Rules for the Non- public Issuance of Stocks by Listed Companies 《( 上市公司非公開發行股票實施細則》), the Company has prepared the Feasibility Analysis Report on the Use of Proceeds from the Non- public Issuance of A Shares of Shanghai Electric Group Company Limited 《( 上海電氣集團股份有限公司非公開發行A股股票募集資金使用可行性分析報告》) in Chinese, full text of which is set out in Appendix II to this circular. In the event of any discrepancy between the English translation and the Chinese version of the document, the Chinese version shall prevail.
The resolution has been considered and approved at the meeting of the Board, and will be proposed at the EGM for Shareholders' consideration and approval by way of special resolution.

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LETTER FROM THE BOARD

Resolution on preparation of the report on the use of previously raised proceeds
In accordance with the relevant requirements of the Regulations on the Report on the Use of the Previously Raised Proceeds (Zheng Jian Fa Xing Zi [2007] No.500) 《( 關於前次募集資金使用情況報告的規定》(證監發行字[2007]500號)) of the CSRC, the Company has prepared the Report on the Use of the Company's Previously Raised Funds as of December 31, 2020 《( 公司截至2020年12月31日止前次募集資金使用情況的報告》) in Chinese, full text of which is set out in Appendix III to this circular. In the event of any discrepancy between the English translation and the Chinese version of the document, the Chinese version shall prevail.
The resolution has been considered and approved at the meeting of the Board, and will be proposed at the EGM for Shareholders' consideration and approval by way of special resolution.
Resolution on the remedial measures for the dilution of immediate returns upon the Non-public Issuance of A Shares and undertakings by the relevant persons
In accordance with the requirements of the Opinions of the General Office of the State Council on Further Strengthening the Protection of Legitimate Rights and Interests of Small and Medium Investors in Capital Market (Guo Ban Fa [2013] No.110) 《( 國務院辦公廳關於進一步加強資本市場中小投資者合法權益保護工作的意見》(國辦發[2013]110號)) and the Guidance on Matters Relating to the Dilution of Immediate Returns as a Result of Initial Public Offering, Refinancing and Major Asset Reorganisation (CSRC Notice [2015] No.31)
《( 關於首發及再融資、重大資產重組攤薄即期回報有關事項的指導意見》(證監會公告
[2015]31號)), the Company analysed the impact of the proposed Non-public Issuance of A Shares on immediate returns and proposed the relevant remedial measures based on the actual circumstances and obtained undertakings regarding the implementation of such remedial measures by the relevant persons. Details of the dilution of immediate returns upon the Non-public Issuance of A Shares and remedial measures, and undertakings by the relevant persons are set out in Appendix IV to this circular. In the event of any discrepancy between the English translation and the Chinese version of the document, the Chinese version shall prevail.
The resolution has been considered and approved at the meeting of the Board, and will be proposed at the EGM for Shareholders' consideration and approval by way of special resolution.

- 29 -

LETTER FROM THE BOARD

Resolution on the Company's Plan on Shareholders' Return for the Upcoming Three Years (2021 - 2023)
In order to further strengthen the awareness of rewarding Shareholders, improve the profit- distribution system and offer reasonable investment returns to Shareholders, the Company has formulated the Plan on Shareholders' Return for the Upcoming Three Years (2021 - 2023) of Shanghai Electric Group Company Limited 《( 上海電氣集團股份有限公司未來三年(2021 - 2023年）股東回報規劃》) in accordance with the requirements of the PRC Company Law, the Securities Law of the People's Republic of China, the Notice of the China Securities Regulatory Commission on Further Implementing Matters Relevant to the Cash Dividend Distribution by Listed Companies 《( 中國證券監督管理委員會關於進一步落實上市公司現金分紅有關事項的通知》), the Regulatory Guidance No. 3 on Listed Companies - Distribution of Cash Dividends of Listed Companies 《( 上市公司監管指引第3號－上市公司現金分紅》) as well as the Articles of Association and taking into full account its actual circumstances. Full text of the Company's Plan on Shareholders' Return for the Upcoming Three Years (2021 - 2023) is set out in Appendix V to this circular. In the event of any discrepancy between the English translation and the Chinese version of the document, the Chinese version shall prevail.
The resolution has been considered and approved at the meeting of the Board, and will be proposed at the EGM for Shareholders' consideration and approval by way of special resolution.

IV. PROPOSED CONSEQUENTIAL AMENDMENTS TO THE ARTICLES OF ASSOCIATION

The existing registered capital of the Company is set out in the Articles of Association. Upon issue of Shares pursuant to the General Mandate, including the completion of the proposed Non-public Issuance of A Shares, the number of Shares in issue, the registered capital and the capital structure of the Company will change. Under the PRC Company Law and the Articles of Association, any increase in the registered capital and any material changes to the Articles of Association are subject to the approval of the Shareholders.

The Board will seek the Shareholders' authorisation at the EGM to authorise the Board or its authorised representative(s) to make necessary consequential amendments to the Articles of Association in relation to the changes to the registered capital and capital structure of the Company arising from the completion of the proposed Non-public Issuance of A Shares under the General Mandate and deal with the relevant registration and filing procedures with the relevant authorities and other matters in relation to the implementation of the Shareholders' and the Board's resolutions during their validity period relating to each of the proposals.

- 30 -

LETTER FROM THE BOARD

EGM
A notice convening the EGM to be held at 9:00 a.m. on Tuesday, 20 April 2021 at Fulin Hall, 9th Floor, Shanghai Bund Yujinxiang Xinya Hotel, 422 Tiantong Road, Shanghai, the PRC, is set out on pages 192 to 193 of this circular.
Notice of the EGM, the Original Form of Proxy to be used at the EGM and the relevant reply slip for attendance have been despatched to the Shareholders by the Company on 5 March 2021 and were also published on the website of the Hong Kong Stock Exchange (www.hkexnews.hk) and the website of the Company (www.shanghai-electric.com). The Supplemental Form of Proxy has been published by the Company on aforementioned websites on 26 March 2021. The supplemental notice of the EGM dated 26 March 2021 is enclosed with this circular, for the purpose of notifying the Shareholders of the addition of new resolutions in relation to (i) the General Mandate to issue shares; (ii) proposed Non-public Issuance of A Shares under the General Mandate; and (iii) proposed consequential amendments to the Articles of Association. The resolution originally proposed to be considered at the EGM and contained in the original notice of the EGM remains unchanged. Please refer to the original notice of the EGM dated 5 March 2021 for details of the resolution originally proposed to the EGM, eligibility for attending the EGM, procedures for closure of register of members, appointment of proxy and other relevant matters.
The Supplemental Form of Proxy is the supplemental form of proxy for the addition of the new resolutions as set out in the supplemental notice of the EGM dated 26 March 2021 and only serves as a supplement to the Original Form of Proxy for the EGM. The Supplemental Form of Proxy will not affect the validity of any proxy form duly completed and delivered by you in respect of the resolution set out in the notice of the EGM dated 5 March 2021. If you have validly appointed a proxy to attend and act for you at the EGM but do not duly complete and deliver the Supplemental Form of Proxy, your proxy will be entitled to vote at his/her discretion on the new resolutions as set out in the supplemental notice of the EGM dated 26 March 2021. If you do not duly complete and deliver the original proxy form but have duly completed and delivered this Supplemental Proxy Form and validly appointed a proxy to attend and act for you at the EGM, your proxy will be entitled to vote at his/her discretion on the resolutions set out in the Notice of the EGM dated 5 March 2021. If the proxy being appointed to attend the EGM under the Supplemental Form of Proxy is different from the proxy appointed under the Original Form of Proxy and both proxies attended the EGM, the proxy validly appointed under the original proxy form shall be designated to vote at the EGM.
In order to determine the list of Shareholders who are entitled to attend the EGM, the register of members of the H Shares will be closed from Saturday, 20 March 2021 to Tuesday, 20 April 2021 (both days inclusive) during which period no transfer of H Shares will be effected. Holders of the Company's H Shares whose names appear on the register of members of the H Shares on Tuesday, 20 April 2021 are entitled to attend the EGM.

- 31 -

LETTER FROM THE BOARD

In order to attend and vote at the EGM, holders of H Shares whose transfers have not been registered shall deposit the transfer documents together with the relevant share certificates at the H Share registrar of the Company, Computershare Hong Kong Investor Services Limited, at or before 4:30 p.m. on Wednesday, 31 March 2021. The address of the transfer office of Computershare Hong Kong Investor Services Limited is Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong.

None of the Shareholders has a material interest in the abovementioned resolutions proposed at the EGM and thus none is required to abstain from voting at the EGM on the resolutions. None of the Directors has material interests in any resolution proposed at the EGM.

VI. RECOMMENDATION

The Directors are of the view that the resolutions described in this circular are in the interests of the Company and the Shareholders as a whole.

Accordingly, the Directors (including the independent non-executive Directors) recommend all the relevant Shareholders to vote in favour of the resolutions to be proposed at the EGM.

VII. VOTING BY POLL

According to Rule 13.39(4) of the Listing Rules, the resolutions at the general meeting of the Company will be taken by way of poll.

By order of the Board

Shanghai Electric Group Company Limited

ZHENG Jianhua

Chairman of the Board

Shanghai, the PRC

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APPENDIX I THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES IN 2021

Stock Abbreviation (A Shares): Shanghai Electric				Stock Code: 601727
Stock Abbreviation (H Shares): SH Electric				Stock Code: 02727

Shanghai Electric Group Company Limited

(30th Floor, Maxdo Center, No.8 Xingyi Road, Shanghai)

The Plan for the Non-public Issuance

of A Shares in 2021

March 2021

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APPENDIX I THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES IN 2021

STATEMENTS OF THE ISSUER

All Directors of Shanghai Electric Group Company Limited (the "Company") warrant that there is no false representation or misleading statement contained in the Plan or material omission from the Plan, and jointly and severally accept legal responsibility for the truthfulness, accuracy and completeness of the Plan.
The Plan is a statement of Board of the Company on the non-public issuance of A Shares (the "Issuance" or "Non-publicIssuance") in 2021 by the Company. Matters mentioned in the Plan do not represent any substantive judgment, confirmation or approval from the approving authorities regarding matters relating to the Issuance. Effectiveness and completion of the matters relating to the Issuance mentioned in the Plan shall be subject to approval or authorisation by relevant approving authorities. Any decision or opinion expressed by the CSRC and other government authorities on the Issuance does not represent their substantial judgment or guarantee on the price of the Company's shares or returns to investors. Any statement contradicting the Plan is deemed false and a misrepresentation.
According to the Securities Law, upon the completion of the Issuance, the Company shall be responsible for any change in its operation and revenue, while the investment risks arising from the Issuance shall be borne by the investors.
If the investors are in any doubt as to the Plan, they should consult their stock brokers, legal advisers, professional accountants or other professional advisers.
The implementation of the Issuance will not result in any failure of the shareholding structure of the Company in meeting the listing requirements.

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APPENDIX I THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES IN 2021

Special Notice

The Plan of the Issuance has been considered and approved at the Company's 48th meeting of the fifth session of the Board, but is still subject to the approval at the general meeting following the obtaining of the consent from the competent authority for state-owned assets supervision and administration, and the implementation of which is subject to the approval of the CSRC.
The target subscribers of the Non-public Issuance will be no more than 35 specific investors, including securities investment fund management companies, securities companies, insurance institutional investors, trust companies, finance companies, asset management companies, qualified foreign institutional investors, and qualified RMB foreign institutional investors etc., being legal persons, natural persons or other legal investment entities who meet the relevant legal and regulatory requirements. Securities investment fund management companies, securities companies, qualified foreign institutional investors and qualified RMB foreign institutional investors that participate in the subscription with two or more products managed by them shall be taken as one single target subscriber. If the target subscriber is a trust company, it may only use its internal funds for subscription.
Upon obtaining the approval of the CSRC for the application for the Issuance, the final target subscribers shall be determined by the Board of the Company or its authorised person(s) under the authorisation granted at the general meeting, through negotiation with the sponsoring institution (lead underwriter) of the Issuance according to the price inquiry results based on the principle of price priority according to the prices offered by the target subscribers.
All target subscribers of the Issuance shall subscribe for the shares under the Non-public Issuance in cash.
The pricing benchmark date of the Issuance shall be the first day of the Issue Period of the Non- public Issuance of A Shares. The issue price shall be no less than 80% of the average trading price of the shares of the Company for the 20 trading days preceding the Pricing Benchmark Date (the average trading price of the shares of the Company for the 20 trading days preceding the Pricing Benchmark Date = the total trading amount of the shares of the Company for the 20 trading days preceding the Pricing Benchmark Date/the total trading volume of the shares of the Company for the 20 trading days preceding the Pricing Benchmark Date), and not less than the price of the Company's latest audited net assets per share attributable to ordinary equity holders of the Company prior to the Issuance. In the event that the Company distributes any dividends, grants bonus shares, or carries out capitalisation of capital reserve or other ex-right or ex-dividend activities during the period commencing from the balance sheet date of the latest audited financial report as at the Pricing Benchmark Date up to the date of the Issuance, the above net assets value per share attributable to ordinary equity holders of the Company shall be adjusted accordingly.

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APPENDIX I THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES IN 2021

The final issue price shall be determined in accordance with relevant requirements of laws and regulations and regulatory authorities and upon obtaining the approval of the CSRC for the application for the Issuance, by the Board of the Company or its authorised person(s) under the authorization granted at the general meeting, through negotiation with the sponsoring institution (lead underwriter) based on the principle of price priority according to the prices offered by the target subscribers.

In the event that the Company distributes cash dividends, grants bonus shares, carries out capitalisation of capital reserve or other ex-right or ex-dividend activities in respect of the shares of the Company during the period from the Pricing Benchmark Date of the Issuance to the issuance date, adjustments shall be made to the base price for the Issuance accordingly.

The number of shares to be issued under the Non-public Issuance shall be determined by dividing the funds raised with the issue price (if the number of shares obtained is not a whole number, it shall be rounded down to the nearest whole number), and will not exceed 1,570,597,109 Shares (inclusive 1,570,597,109 Shares), representing not more than 10% of the total share capital of the Company prior to the Non-public Issuance. The maximum number of the shares to be issued will be based on the approval granted by the CSRC. Within the scope approved by the CSRC, the Board or its authorised persons(s) shall, pursuant to the authorisation granted at the general meeting, negotiate with the sponsoring institution (lead underwriter) to determine the final number of the shares to be issued according to the relevant regulations of the CSRC and the actual circumstances at the time of issuance.
If ex-rights or ex-dividend events in respect of the shares of the Company (such as distribution of dividends, bonus issues or capitalisation of capital reserve) occur during the period between the date of announcement of the Board resolutions in relation to the Issuance to the issuance date, or there occurs any change in the total share capital of the Company due to events such as the implementation of equity incentive plans or repurchase of shares during such period, the maximum number of shares to be issued will be adjusted correspondingly.
Upon the completion of the Non-public Issuance, target subscribers shall not transfer or deal with the shares subscribed for during a period of six months commencing from the closing date of the Issuance. After the end of the lock-up period, the transactions under the Issuance shall be conducted in accordance with the relevant regulations of the CSRC and the Shanghai Stock Exchange.
In the event that the number of the shares held by the target subscribers increases due to reasons such as bonus issue and capitalisation of capital reserve after completion of the Non-public Issuance, such shares shall also be subject to the aforementioned lock-up arrangement.

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APPENDIX I THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES IN 2021

6. The gross proceeds from the Non-public Issuance is expected to be not more than RMB5,000 million, which, after deduction of issuance expenses, are intended to be fully invested in the following projects:

Name of the investment project		Total investment		The amount
			amount of the		of proceeds
Project name	Subproject name		relevant project		to be applied
		(RMB ten thousand)	(RMB ten thousand)
Non-carbon Energy Power	Supercritical CO2 technology	98,711.00		55,000.00
Technology Research and	research and development project
Development Project	Large-capacity energy storage	32,997.00		19,000.00
	technology research and
	development project
	Technology research and	40,280.00		26,000.00
	development project of hydrogen
	production from electrolyzed
	water
Smart City Key Platform and	Smart city "unified management	44,052.88		34,000.00
System Development Project	through one network" system
	research and development project
	Smart city rail transit system	51,573.21		38,000.00
	development project
SEunicloud Industrial Internet Platform Upgrading and Innovation	70,210.53		56,000.00
Application Project
Demonstration EPC Project of Comprehensive Utilisation of Multi-	191,701.93		125,000.00
Generation and Recycling of Coal Middlings of One Million
Tonnes Per Annum of Yan'an Energy and Chemical
Replenishment of working capital	147,000.00		147,000.00

Total		676,526.55		500,000.00

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APPENDIX I THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES IN 2021

Except for replenishment of working capital, the proceeds shall be all utilised in the capital expenditures of all investment projects. Prior to the receipt of the proceeds raised from the Issuance, based on the actual circumstances of the investment projects to be funded by the proceeds, the Company may utilise its internal funds or funds obtained through other financing methods to invest in such projects, and replace such investment amount with the proceeds upon receiving the same. Following the receipt of the proceeds, if the actual amount of the net proceeds (after deduction of issuance expenses) is less than the proposed aggregate amount of proceeds to be applied in the above projects, the Company will adjust and determine the specific investment projects, order of priority and specific investment amounts in each project based on the actual amount of the net proceeds and the priority and capital requirements of the projects, and any shortfall in the proceeds will be made up by utilising the internal funds of the Company or through other financing methods.

The Non-public Issuance will not result in any change to the de facto controller of the Company or any failure of the shareholding structure of the Company in meeting the listing requirements.
For the profit distribution in the latest three years, cash dividend policies and execution and the Company's Plan on Shareholders' Return for the Upcoming Three Years (2021-2023) (未來三年 (2021-2023年）的股東分紅回報規劃), please see "Section IV Profit distribution policy and relevant information of the Company" in this Plan for details.
For the impact of dilution of immediate returns resulting from the Issuance on the key financial indicators of the Company and the measures intended to be taken by the Company, please see "Section V Dilution of Immediate Returns Upon the Non-Public Issuance of A Shares and Remedial Measures" in this Plan for details. The investors are advised to pay attention to the risks associated with the dilution of shareholders' immediate returns by the Non-public Issuance. Although the Company has formulated remedial measures against the risks associated with the dilution of immediate returns, such remedial measures cannot be construed as a guarantee of the future profits of the Company. Investors shall not make investment decisions accordingly and the Company is not liable for any losses caused due to any investment decisions so made by investors. Investors are advised to be aware of relevant risks.
Upon the completion of the Non-public Issuance, the accumulated undistributed profits prior to the Issuance will be shared among new and existing shareholders upon the completion of the Issuance in accordance with the proportion of shareholding after the Issuance.

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APPENDIX I THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES IN 2021

Definitions

In this Plan, unless otherwise stated, the following abbreviations shall have the following specific meanings:

"Shanghai Electric", "Company",	Shanghai Electric Group Company Limited
"listed company", "Issuer"
"Issuance", "Non-public Issuance",	the proposed non-public issuance of not more than 1,570,597,109
"Non-public Issuance of A Shares"	A Shares (inclusive) by Shanghai Electric
"Plan"	the plan for the Non-public Issuance of A Shares in 2021 by
	Shanghai Electric Group Company Limited
"Pricing Benchmark Date"	the first day of the Issue Period of the Non-public Issuance of A
	Shares
"SEC"	Shanghai Electric (Group) Corporation
"Automation Institute"	Shanghai Electric Automation Design Institute Co., Ltd.
"Digital Technology Company"	Shanghai Electric Digital Technology Co., Ltd.
"Shanghai Boiler Works"	Shanghai Boiler Works Co., Ltd.
"Global Engineering"	Shanghai Electric Guokong Global Engineering Co., Ltd.
"Shanghai SASAC"	Shanghai Municipal State-owned Assets Supervision and
	Administration Commission
"Listing Rules"	the listing rules of the Shanghai Stock Exchange
"Articles of Association"	the articles of association of Shanghai Electric Group Company
	Limited
"CSRC"	the China Securities Regulatory Commission
"NDRC"	the National Development and Reform Commission of the
	People's Republic of China

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APPENDIX I THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES IN 2021

"MIIT"	Ministry of Industry and Information Technology of the People's
	Republic of China
"Shanghai Municipal Government"	Shanghai Municipal People's Government
"Company Law"	the Company Law of the People's Republic of China
"Securities Law"	the Securities Law of the People's Republic of China
"Implementation Rules"	the Implementation Rules for the Non-public Issuance of Stocks
	by Listed Companies (2020 Revision) 《( 上市公司非公開發行股
	票實施細則》(2020 年修訂)
"Board"	the board of directors of Shanghai Electric Group Company
	Limited
"Supervisory Committee"	the supervisory committee of Shanghai Electric Group Company
	Limited
"general meeting"	the general meeting of Shanghai Electric Group Company Limited
"latest three years"	2018, 2019 and 2020
"latest year"	2020

"RMB", "ten thousand", "100 million" Renminbi yuan, RMB ten thousand, RMB100 million

Note: unless otherwise specified, all the figures in the Plan are rounded off to 2 decimal places. Where there are discrepancies between the totals and the last digits of the sums of amounts listed, such discrepancies are due to rounding.

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APPENDIX I THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES IN 2021

	CONTENTS
SECTION I OVERVIEW OF THE PLAN FOR THE NON-PUBLIC ISSUANCE OF
A SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	43
I.	BASIC INFORMATION ON THE ISSUER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	43
II.	BACKGROUND AND PURPOSES OF THE ISSUANCE . . . . . . . . . . . . . . . . . . . . . . . .	44
III.	TARGET SUBSCRIBERS AND THEIR RELATIONSHIP WITH THE COMPANY . . . .	48
IV.	OVERVIEW OF THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES . . . .	48
V.	INVESTMENT PROJECTS TO BE FUNDED BY THE PROCEEDS . . . . . . . . . . . . . . . .	52
VI.	WHETHER THE ISSUANCE CONSTITUTES A RELATED PARTY TRANSACTION .	53
VII.	WHETHER THE ISSUANCE WILL RESULT IN ANY CHANGE IN CONTROL OF
	THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	53
VIII. APPROVAL PROCEDURES OF THE ISSUANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	53
IX.	WHETHER THE ISSUANCE WILL RESULT IN ANY FAILURE OF THE
	SHAREHOLDING STRUCTURE OF THE COMPANY IN MEETING THE LISTING
	REQUIREMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	53
SECTION II FEASIBILITY ANALYSIS OF THE BOARD ON THE USE OF PROCEEDS . . .	54
I.	PROPOSED USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	54

INFORMATION ON THE INVESTMENT PROJECTS TO BE FUNDED BY THE

PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

NECESSITY OF AND FEASIBILITY ANALYSIS ON THE INVESTMENT PROJECTS

TO BE FUNDED BY THE PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	64
IV. EFFECT OF THE ISSUANCE ON OPERATION AND MANAGEMENT AND
FINANCIAL POSITION OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	79
SECTION III DISCUSSION AND ANALYSIS OF THE BOARD ON THE IMPACT OF
THE ISSUANCE ON THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	80

CHANGES TO THE BUSINESS AND ASSETS, ARTICLES OF ASSOCIATION,

SHAREHOLDING STRUCTURE, COMPOSITION OF SENIOR MANAGEMENT AND
BUSINESS STRUCTURE OF THE COMPANY FOLLOWING THE ISSUANCE . . . . . .	80

CHANGES IN FINANCIAL POSITION, PROFITABILITY AND CASH FLOW OF THE

COMPANY FOLLOWING THE ISSUANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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APPENDIX I THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES IN 2021

CHANGES IN BUSINESS RELATIONSHIP, MANAGEMENT RELATIONSHIP, RELATED PARTY TRANSACTIONS AND PEER COMPETITION BETWEEN THE

	COMPANY AND THE CONTROLLING SHAREHOLDER AND ITS ASSOCIATES . . .	82
IV.	APPROPRIATION OF FUNDS AND ASSETS OF THE COMPANY BY THE
	CONTROLLING SHAREHOLDER AND ITS ASSOCIATES OR PROVISION OF
	GUARANTEE FOR THE CONTROLLING SHAREHOLDER AND ITS ASSOCIATES
	FOLLOWING THE COMPLETION OF THE ISSUANCE . . . . . . . . . . . . . . . . . . . . . . . .	82
V.	EFFECT OF THE ISSUANCE ON THE LIABILITIES OF THE COMPANY. . . . . . . . . .	83
VI.	RISKS ASSOCIATED WITH THE ISSUANCE OF SHARES . . . . . . . . . . . . . . . . . . . . .	83
SECTION IV PROFIT DISTRIBUTION POLICY AND RELEVANT INFORMATION OF
THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	87
I.	PROFIT DISTRIBUTION POLICY OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . .	87

THE COMPANY'S PLAN ON SHAREHOLDERS' RETURN FOR THE UPCOMING

THREE YEARS (2021 - 2023) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	90
III EXPLANATION ON THE IMPLEMENTATION OF THE PROFIT DISTRIBUTION
POLICY IN REGULAR REPORTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	95
IV PROFIT DISTRIBUTION IN THE LATEST THREE YEARS . . . . . . . . . . . . . . . . . . . . .	95
SECTION V DILUTION OF IMMEDIATE RETURNS UPON THE NON-PUBLIC
ISSUANCE OF A SHARES AND REMEDIAL MEASURES . . . . . . . . . . . . . . . . . . . . . . . . . . . .	97

THE IMPACT OF DILUTION OF IMMEDIATE RETURNS UPON THE NON-PUBLIC

ISSUANCE ON KEY FINANCIAL INDICATORS OF THE COMPANY. . . . . . . . . . . . .

ALERT OF RISKS SPECIFIC TO THE DILUTION OF IMMEDIATE RETURNS AS A

RESULT OF THE NON-PUBLIC ISSUANCE OF A SHARES. . . . . . . . . . . . . . . . . . . . . 102

III. THE NECESSITY AND REASONABLENESS OF THE NON-PUBLIC ISSUANCE. . . . 102 IV. THE RELATIONSHIP BETWEEN PROJECTS TO BE INVESTED THROUGH

FUND RAISING AND EXISTING BUSINESSES OF THE COMPANY AND THE COMPANY's RESERVE FOR THE INVESTMENT PROJECTS IN TERMS OF PERSONNEL, TECHNOLOGY, MARKET, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102

REMEDIAL MEASURES TO COUNTERACT THE DILUTION OF IMMEDIATE

RETURNS UPON THE NON-PUBLIC ISSUANCE OF A SHARES . . . . . . . . . . . . . . . . 104

VI. UNDERTAKINGS BY PERSONS RELEVANT TO THE COMPANY REGARDING REMEDIAL MEASURES TO COUNTERACT THE DILUTION OF IMMEDIATE RETURNS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106

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APPENDIX I THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES IN 2021

SECTION I OVERVIEW OF THE PLAN FOR

THE NON-PUBLIC ISSUANCE OF A SHARES

BASIC INFORMATION ON THE ISSUER
Company name: 上海電氣集團股份有限公司
English name: Shanghai Electric Group Company Limited
Residence of the Company: 30th Floor, Maxdo Center, No.8 Xingyi Road, Shanghai
Legal representative: Zheng Jianhua
Registered capital: RMB15,705,971,092
Date of incorporation: 1 March 2004
Listing date of the shares: 5 December 2008 (A Shares), 28 April 2005 (H Shares)
Places of listing of the shares: the Shanghai Stock Exchange; the Hong Kong Stock Exchange
Short name of the stock: SH Electric
Stock code: 601727.SH, 2727.HK
Secretary to the Board: Fu Rong
Telephone: +86(21)33261888
Email: ir@shanghai-electric.com
Website: http://www.shanghai-electric.com
Scope of business: permitted items: operation of Category III medical devices; production of Category III medical devices; production of Category II medical devices; various engineering construction activities; installation, repair and testing of power facilities; installation, renovation and repair of special equipment. (the business activities, which are subject to approval according to the laws, can be carried out only after being approved by the relevant departments, and specific operation projects are subject to approvals or permission from the relevant departments) General items: the design, manufacture and distribution of products of the equipment manufacturing industry including electric power station, transmission and distribution of electric power, integration of electric power and equipment, transportation, environment protection equipment, lithium-ion batteries and power supply system and provision of relevant post-sale services, the wholesale, import and export of goods and technology of the similar commodity of aforementioned products and to be their commission agent (auction excluded); provision of relevant supporting service, acting as the general contractor of electric power engineering projects, assembling and splitting supply of equipment, industrial design services, manufacturing of special equipment for petroleum drilling and extraction, sales of special equipment for petroleum drilling and extraction, manufacturing of special equipment for refining and chemical production, sales of special equipment for refining and chemical production, sales of Category I medical devices, production of Category I medical devices, sales of Category II medical devices, leasing of medical equipment, contracting of overseas projects, installation of general machinery and equipment, repair of special equipment, and provision of relevant technical service. (except for items that are subject to approval in accordance with the laws, the business activities shall be conducted independently with the business licence(s) in accordance with the laws)

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APPENDIX I THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES IN 2021

BACKGROUND AND PURPOSES OF THE ISSUANCE
1. Background of the Issuance

1. The industrialization of new energy is the trend of world energy development, and the low-carbon transformation is also the inevitable course for China

Industrialization of new energy has become a trend in the world's energy development. Low-carbon transformation and development is a must for China to cope with new internal and external situations and challenges. At present, carbon dioxide emissions caused by fossil fuel combustion are the most important source of greenhouse gas emissions. Internationally, China's carbon emissions surpassed those of the European Union in 2003 and the United States in 2006, making it the biggest source of carbon emissions for many years in a row, which has put China under increasing pressure to reduce carbon emissions internationally. Domestically, under the multiple constraints of energy resources and ecological environmental capacity, effectively strengthening carbon emission control has become an increasingly powerful way to promote high- quality development and push forward the supply-side structural reform.

In the context of the national government's efforts to promote the construction of clean energy and improve the domestic energy structure, Shanghai Electric, as a large state-owned comprehensive equipment manufacturing group committed to providing global customers with integrated technology and system solutions that are green, environmentally friendly, intelligent and interconnected, actively responds to the requirements of the national low-carbon and sustainable development, and carries out the layout of the new energy business.

2. Increasing demand for smart city construction has raised the requirements for enterprises' technological reserves and industrial transformation capabilities

A smart city refers to the use of various information technologies or innovative concepts to connect and integrate various urban systems and services, so as to enhance the efficiency of resource utilisation, optimise urban management and services, and improve the quality of life of citizens. Smart government administration and smart transportation are important components of smart city. With the promotion of technologies such as the Internet of Things, cloud computing and big data, the above technologies have been widely applied in the business areas of government administration and transportation. In the field of government administration, "digital

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APPENDIX I THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES IN 2021

government" was redefined. Under the leadership of new generation of information technology, the precision and intelligence of social management will be effectively driven by the government data governance. In the field of urban rail transit, automation technology and information systems are integrated to effectively improve station information management and operation and decision-making. As the scale of cities continues to expand, the demand for smart city construction from the public and the government also increases correspondingly, which in turn raises the requirements for technology reserves and industrial transformation capabilities of relevant enterprises.

3. The market demand of China's industrial internet continues to unleash

At present, the industrial internet technology has been widely applied in industries and fields such as petrochemical, steel, electronic information, home appliances, apparel, energy, machinery, automobile and aerospace, giving rise to new models and new business forms such as networked collaboration, service-oriented manufacturing and scale customisation, helping enterprises to achieve quality and efficiency improvements and speeding up the process of digital transformation. In the future, the depth of integration, implementation effect and inclusive level of the industrial internet technology in various application fields will continue to improve, and its role in driving and supporting the national economy will become increasingly prominent.

At present, the overall scale of China's manufacturing industry ranks first in the world, but compared with advanced countries, the problem of being large but not strong is still prominent, the extensive development model that mainly relied on the input of resource elements and scale expansion in the past is difficult to sustain, and it is urgent to promote the digital transformation of traditional manufacturing industry. Driven by the dual factors of industrial upgrading demand and international competitive pressure, the market demand for industrial internet in China continues to unleash and the scale of the industry will continue to expand.

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APPENDIX I THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES IN 2021

Purpose of the Issuance

1. Promoting the transformation and development of the Company's new energy business and enhancing its technical strength

Shanghai Electric is a state-ownedlarge-scale comprehensive high-end equipment manufacturer, focusing on three major fields: energy equipment, industrial equipment and integrated services, and is committed to providing global customers with integrated technology and system solutions that are green, environmentally friendly, intelligent and interconnected. The Company's principal business has a wide range of products, involving a number of industrial sectors. In order to actively respond to the requirements of the national low-carbon and sustainable development, the comprehensive development of the new energy business has been the focus of the Company's development and an important direction for its transformation and development. Through the implementation of the Non-carbon Energy Power Technology Research and Development Project, one of the proceeds-funded projects, the Company will accelerate the development of new energy technologies such as supercritical CO2, large-capacity energy storage and hydrogen production from electrolyzed water, so as to seize the opportunities for industrial development, promptly adapt to market changes, occupy the high ground of new markets and technologies, and improve the Company's technical strength.

2. Strengthening the development of the Company's principal business and enhancing its overall competitiveness

In recent years, the Company has built a multi-industry and cross-region SEunicloud industrial internet platform for high-end equipment such as thermal power, wind power, gas turbines, machine tools, rail transits and lifts, relied on its accumulated experience in the high-end equipment industry and rich software and hardware system resources and by comprehensive application of advanced technologies such as Internet of Things, edge computing, big data, cloud platforms and micro services, which has comprehensively improved the production control level, supply chain coordination level and product remote service capability of the Group's subordinate enterprises.

SEunicloud Industrial Internet Platform Upgrading and Innovative Application Project, one of the proceeds-funded projects, aims to comprehensively upgrade the original SEunicloud Platform, and is highly related to the Company's principal business, and will help the Company to develop its advantageous business areas to a deeper level, fortify the foundation of development, continue to strengthen its competitive edge in the market, thereby further improving its comprehensive competitiveness.

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APPENDIX I THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES IN 2021

3. Actively developing diversified businesses and planning our future strategic layout

The Smart City Key Platform and System Development Project is one of the investment projects, which will be geared towards the business scenarios in the vertical areas related to the "unified management through one network" ("一網統管") system and rail transportation system of smart city, applying digital technologies such as big data, cloud computing and artificial intelligence to establish a three-dimensional business service system based on intelligent data analysis and cloud service products, which will facilitate the diversified development of the Company's businesses, developing new profit growth points. It is a forward-looking strategic choice for the Company to occupy the market.

The demonstration EPC project of comprehensive utilisation of multi-generation and recycling of coal middlings of one million tonnes per annum of Yan'an Energy and Chemical, one of the proceeds-funded projects, is one of the ten projects for transformation and upgrading of Yan'an City and the first demonstration project of comprehensive utilisation of multi-generation and recycling of low-rank coal in Yan'an. The implementation of the project is conducive to the Company's further accumulation of experience in the implementation of chemical engineering EPC general contracting projects, enhancing its ability to undertake large-scale projects and further improving the overall competitiveness of the Company's chemical business segment.

4. Enhancing the Company's capital strength and supporting the sustainable development of the Company's principal business

The Company has broad room for future development and expects a continuous increase in its business scale, which will in turn increase its demand for liquidity. Currently, the Company mainly uses debt financing methods such as bank loans to meet its liquidity requirements. With the continuous expansion of the Company's business scale, it is necessary to raise funds through equity financing to enhance its capital strength, so as to support the continuous development of the Company's principal business and meet the needs in relation to the continuous expansion of the Company's business scale.

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APPENDIX I THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES IN 2021

TARGET SUBSCRIBERS AND THEIR RELATIONSHIP WITH THE COMPANY
The target subscribers of the Non-public Issuance of Shares will be no more than 35 specific investors, including securities investment fund management companies, securities companies, insurance institutional investors, trust companies, finance companies, asset management companies, qualified foreign institutional investors, and qualified RMB foreign institutional investors etc., being legal persons, natural persons or other legal investment entities who meet the legal and regulatory requirements. Securities investment fund management companies, securities companies, qualified foreign institutional investors and qualified RMB foreign institutional investors that participate in the subscription with two or more of the products managed by them shall be taken as one single target subscriber. A trust company that subscribes as a target subscriber may only use its proprietary funds for subscription.
Upon obtaining the approval of the CSRC for the application for the Issuance, the final target subscribers shall be determined by the Board or its authorised person(s) under the authorisation granted at the general meeting, through negotiation with the sponsoring institution (lead underwriter) of the Issuance according to the price inquiry results based on the principle of price priority according to the prices offered by the target subscribers.

As of the date of announcement of the Plan, there is no identified target subscriber for the Non- public Issuance of A Shares of the Company, and therefore the relationship between target subscribers and the Company is yet to be confirmed. Disclosure of the relationship between target subscribers and the Company will be made in the issuance report to be published following the completion of the Issuance.

IV. OVERVIEW OF THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES

Class and Par Value of the Shares to be Issued

The shares to be issued pursuant to the Non-public Issuance are ordinary shares in RMB (A Shares) with a par value of RMB1.00 per share.

Method and Time of Issuance
The Issuance will be undertaken by way of non-public issuance to specific subscribers. The Company will issue shares to specific subscribers at an appropriate time within the required validity period as approved by the CSRC.

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APPENDIX I THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES IN 2021

Target Subscribers and Subscription Method
The target subscribers of the Non-public Issuance of Shares will be no more than 35 specific investors, including securities investment fund management companies, securities companies, insurance institutional investors, trust companies, finance companies, asset management companies, qualified foreign institutional investors, and qualified RMB foreign institutional investors etc., being legal persons, natural persons or other legal investment entities who meet the legal and regulatory requirements. Securities investment fund management companies, securities companies, qualified foreign institutional investors and qualified RMB foreign institutional investors that subscribe with two or more of the products managed by them shall be taken as one single target subscriber. A trust company that subscribes as a target subscriber may only use its proprietary funds for subscription.
Upon obtaining the approval of the CSRC for the application for the Issuance, the final target subscribers shall be determined by the Board or its authorized person(s) under the authorisation granted at the general meeting, through negotiation with the sponsoring institution (lead underwriter) of the Issuance according to the price inquiry results based on the principle of price priority according to the prices offered by the target subscribers.

All target subscribers of the Issuance shall subscribe for the shares under the Non-public Issuance in cash.

(IV) Pricing Benchmark Date, Issue Price and Pricing Principles

The Pricing Benchmark Date of the Issuance is the first day of the Issue Period of the Non- public Issuance of A Shares of the Company.

The issue price shall be no less than 80% of the average trading price of the shares of the Company for the 20 trading days preceding the Pricing Benchmark Date (the average trading price of the shares of the Company for the 20 trading days preceding the Pricing Benchmark Date = the total trading amount of the shares of the Company for the 20 trading days preceding the Pricing Benchmark Date/the total trading volume of the shares of the Company for the 20 trading days preceding the Pricing Benchmark Date), and not less than the price of the Company's latest audited net assets per share attributable to ordinary equity holders of the Company prior to the Issuance. In the event that the Company distributes any dividends, grants bonus shares, or carries out capitalisation of capital reserve or other ex-right or ex- dividend activities during the period commencing from the balance sheet date of the latest audited financial report as at the Pricing Benchmark Date up to the date of the Issuance, the above net assets value per share attributable to ordinary equity holders of the Company shall be adjusted accordingly.

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APPENDIX I THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES IN 2021

Distribution of cash dividends: P1=P0-D

Grant of bonus shares or capitalisation of capital reserve: P1=P0/(1+N)

Distributing cash dividends together with granting bonus shares or capitalisation of capital reserve: P1=(P0-D)/(1+N)

Among which, P0 is the base price for the Issuance before adjustments, D is the distribution of cash dividend per share, N is the number of grant of bonus shares per share or capitalisation of capital reserve, and P1 is the base price for the Issuance after adjustments.

Number of A Shares to be Issued
The number of shares to be issued under the Non-public Issuance of A Shares shall be determined by dividing the total amount of funds raised with the issue price (if the number of shares obtained is not a whole number, it shall be rounded down to the nearest whole number); meanwhile the number of shares to be issued under the Non-public Issuance of A Shares will not exceed 1,570,597,109 Shares (inclusive 1,570,597,109 Shares) and will not exceed 10% of the total share capital of the Company preceding the Non-public Issuance. The maximum number of shares to be issued shall be based on the approval granted by the CSRC in relation to the Issuance. Within the scope approved by the CSRC, the Board or its authorised person(s) under the authorisation granted at the general meeting of the Company shall determine the final number of shares to be issued according to relevant regulations of the CSRC and the actual circumstances at the time of issuance after negotiation with the sponsoring institution (lead underwriter) of the Issuance.

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APPENDIX I THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES IN 2021

If ex-rights or ex-dividend events in respect of the shares of the Company (such as distribution of dividends, bonus issues or capitalisation of capital reserve) occur during the period between the date of announcement of the Board resolutions in relation to the Issuance to the issuance date, or there occurs any change in the total share capital of the Company due to events such as the implementation of equity incentive plans or repurchase of shares, the maximum number of shares to be issued under the Issuance will be adjusted correspondingly.

(VI) Lock-up Period

Upon the completion of the Non-public Issuance, target subscribers shall not transfer or deal on listing with the shares subscribed for during a period of six months commencing from the closing date of the Issuance. After the end of the lock-up period, the transactions of shares issued under the Issuance shall be conducted in accordance with the relevant regulations of the CSRC and the Shanghai Stock Exchange.

In the event that the number of the shares of the Company held by the target subscribers increases due to reasons such as bonus issue or capitalisation of capital reserve after completion of the Non-public Issuance, such shares shall also be subject to the aforementioned lock-up period arrangement.

(VII) Place of Listing

The shares to be issued under the Non-public Issuance will be listed and traded on the Shanghai Stock Exchange.

(VIII) Arrangement for Accumulated Undistributed Profits Prior to the Non-public Issuance

Upon the completion of the Issuance, the accumulated undistributed profits prior to the Issuance shall be shared among new and existing shareholders after completion of the Issuance in proportion to the shareholding percentages upon the Issuance.

(IX) Validity of the Resolutions in respect of the Non-Public Issuance

The validity of the Plan of Non-public Issuance of A Shares shall be a period of 12 months from the date of consideration and approval of such resolutions at the general meeting of the Company.

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APPENDIX I THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES IN 2021

INVESTMENT PROJECTS TO BE FUNDED BY THE PROCEEDS

The gross proceeds from the Non-public Issuance of Shares are expected to be not more than RMB5,000 million, which, after deduction of issuance expenses, are intended to be fully invested in the following projects:

Name of the investment project		Total investment		The amount
			amount of the		of proceeds
Project name	Subproject name		relevant project		to be applied
		(RMB ten thousand)	(RMB ten thousand)
Non-carbon Energy Power	Supercritical CO2 technology
Technology Research and	research and development project	98,711.00	55,000.00
Development Project	Large-capacity energy storage
	technology research and
	development project	32,997.00	19,000.00
	Technology research and
	development project of hydrogen
	production from electrolyzed
	water	40,280.00	26,000.00
Smart City Key Platform and	Smart city "unified management
System Development Project	through one network" system
	research and development project	44,052.88	34,000.00
	Smart city rail transit system
	development project	51,573.21	38,000.00
SEunicloud Industrial Internet Platform Upgrading and Innovation
Application Project		70,210.53	56,000.00
Demonstration EPC Project of Comprehensive Utilisation of Multi-
Generation and Recycling of Coal Middlings of One Million
Tonnes Per Annum of Yan'an Energy and Chemical	191,701.93	125,000.00
Replenishment of working capital	147,000.00	147,000.00

Total		676,526.55	500,000.00

Prior to the receipt of the proceeds raised from the Issuance, based on the actual circumstances of the investment projects to be funded by the proceeds, the Company may utilise its internal funds or funds obtained through other financing methods to invest in such projects, and replace such investment amount with the proceeds upon receiving the same. Following the receipt of the proceeds, if the actual amount of the net proceeds (after deduction of issuance expenses) is less than the proposed aggregate amount of proceeds to be applied in the above projects, the Company will adjust and determine the specific investment projects, order of priority and specific investment amounts in each project based on the actual amount of the net proceeds and the priority and capital requirements of the projects, and any shortfall in the investment amounts will be made up by utilising the internal funds of the Company or through other financing methods.

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APPENDIX I THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES IN 2021

VI. WHETHER THE ISSUANCE CONSTITUTES A RELATED PARTY TRANSACTION

As of the date of announcement of the Plan, the target subscribers are yet to be confirmed. Disclosure of whether the Issuance constitutes a related party transaction will be made in the issuance report to be published following the completion of the Issuance.

VII. WHETHER THE ISSUANCE WILL RESULT IN ANY CHANGE IN CONTROL OF THE COMPANY

Both prior to and subsequent to the Issuance, SEC is the controlling shareholder of the Company and Shanghai SASAC is the de facto controller of the Company. The Issuance will not result in any change of control of the Company.

VIII. APPROVAL PROCEDURES OF THE ISSUANCE

Approval Obtained for the Issuance

Matters in relation to the Non-public Issuance have been considered and approved at the 48th meeting of the fifth session of the Board of the Company.

Outstanding Approval Procedures to be Fulfilled for the Issuance
1. The Non-public Issuance is subject to consideration and approval at the general meeting of the Company after obtaining consent from the competent authority for state-owned assets supervision and administration;
2. The Non-public Issuance is subject to approval at the general meeting of the Company;
3. The Non-public Issuance is subject to approval of the CSRC.

IX. WHETHER THE ISSUANCE WILL RESULT IN ANY FAILURE OF THE SHAREHOLDING STRUCTURE OF THE COMPANY IN MEETING THE LISTING REQUIREMENTS

The Non-public Issuance will not result in any failure of the shareholding structure of the Company in meeting the listing requirements.

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APPENDIX I THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES IN 2021

SECTION II FEASIBILITY ANALYSIS OF THE BOARD ON THE USE OF PROCEEDS

PROPOSED USE OF PROCEEDS

The gross proceeds from the Non-public Issuance of A Shares is expected to be not more than RMB5,000 million, which, after deduction of issuance expenses, are intended to be invested in the following projects:

Name of the investment project		Total investment		The amount
			amount of the		of proceeds
Project name	Subproject name		relevant project		to be applied
		(RMB ten thousand)	(RMB ten thousand)
Non-carbon Energy Power	Supercritical CO2 technology	98,711.00		55,000.00
Technology Research and	research and development project
Development Project	Large-capacity energy storage	32,997.00		19,000.00
	technology research and
	development project
	Technology research and	40,280.00		26,000.00
	development project of hydrogen
	production from electrolyzed
	water
Smart City Key Platform and	Smart city "unified management	44,052.88		34,000.00
System Development Project	through one network" system
	research and development project
	Smart city rail transit system	51,573.21		38,000.00
	development project
SEunicloud Industrial Internet Platform Upgrading and Innovation	70,210.53		56,000.00
Application Project
Demonstration EPC Project of Comprehensive Utilisation of Multi-	191,701.93		125,000.00
Generation and Recycling of Coal Middlings of One Million
Tonnes Per Annum of Yan'an Energy and Chemical
Replenishment of working capital	147,000.00		147,000.00

Total		676,526.55		500,000.00

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APPENDIX I THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES IN 2021

Except for replenishment of working capital, the proceeds shall be all utilised in the capital expenditures of all investment projects. Prior to the receipt of the proceeds raised from the Issuance, based on the actual circumstances of the investment projects to be funded by the proceeds, the Company may utilise its internal funds or funds obtained through other financing methods to invest in such projects, and replace such investment amount with the proceeds upon receiving the same. Following the receipt of the proceeds, if the actual amount of the net proceeds from the Issuance (after deduction of issuance expenses) is less than the proposed aggregate amount of proceeds to be applied in the above projects, the Company will adjust and determine the specific investment projects, order of priority and specific investment amounts in each project based on the actual amount of the net proceeds and the priority and capital requirements of the projects, and any shortfall in the proceeds will be made up by utilising the internal funds of the Company or through other financing methods.

INFORMATION ON THE INVESTMENT PROJECTS TO BE FUNDED BY THE PROCEEDS
1. Non-carbonEnergy Power Technology Research and Development Project

The project includes three sub-projects of "supercritical CO2 technology research and development project", "large-capacity energy storage technology research and development project" and "technology research and development project of hydrogen production from electrolyzed water", the implementation subject of which is Shanghai Electric.

1. Supercritical CO2 technology research and development project

Basic information of the project

Supercritical carbon dioxide (CO2) refers to a special state fluid formed when CO2 is above its critical temperature (Tc=304.1K) and critical pressure (Pc=7.38MPa). CO2 is a non-toxic,non-flammable, colorless and odorless natural working medium. In the supercritical cycle using CO2 as the working medium, CO2 absorbs heat from the heat source, generates steam to drive the turbine, and then completes the whole process of heat conversion through regenerative heat, cooling and compression. At present, nuclear power generation, coal-fired power generation and solar photovoltaic power generation are all based on the water vapor Rankine cycle principle. The supercritical CO2 Brayton cycle is a new type of power cycle that has gradually emerged in recent years. According to research, this cycle has obvious advantages in terms of power density and compression volume, and the cycle efficiency can be increased by more than 3% compared to the traditional water vapor Rankine cycle.

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APPENDIX I THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES IN 2021

The supercritical CO2 technology research and development project intends to acquire advanced research and development equipment for the research and development of power circulation systems, core equipment and key technologies as well as experimental iterations, with a view to breaking the bottleneck in the development of existing power circulation technologies and improving the deficiencies of the original water vapor Rankine cycle system. Upon completion of the research and development of supercritical CO2 technology, the Company will be able to produce supercritical CO2 circulation systems and core equipment at 2-50MW power levels, which can be widely applied to nuclear power generation, solar thermal power generation, biomass power generation and ship power plants, etc. It is expected to play an important role in the future power system structure.

Estimated project investment

The total investment of this project is RMB987,110,000 and the amount of proceeds to be utilized is RMB550 million, the breakdown of which is as follows:

			Investment		Proceeds to be
No.	Item		Amount		Applied
		(RMB ten thousand) (RMB ten thousand)
1	Equipment purchase and
	installment cost	44,288.00	44,000.00
2	R&D cost	43,160.00	11,000.00
3	Reserves	2,215.00		-
4	Initial working capital	9,048.00		-

	Total investment	98,711.00	55,000.00

Economic efficiency of the project

The construction period of this project is 36 months. As estimated, the after-tax investment payback period (including the construction period) of this project is 6.51 years, which has a sound economic benefit.

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APPENDIX I THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES IN 2021

Approvals required for the project

This project is planned to be implemented in the existing industrial park of Shanghai Electric (not involving the newly-added land and newly-built plant), of which, the Company has legally obtained the relevant land use rights.

The Company has obtained the Certificate of Filing for Investment Project of

Shanghai Municipality (Project code: 2103-310112-04-05-993072)《( 上海市企業投資項目備案證明》(項目代碼：2103-310112-04-05-993072)) issued by the Economic Commission of Minhang District, Shanghai (上海市閔行區經濟委員會).

for Construction Projects (2021 Revision) (Decree No.16 of the Ministry of Ecological Environment) 《( 建設項目環境影響評價分類管理名錄(2021年版)》) (生態環境部令第16號)), no procedures for environmental impact assessment is

required for the project.

2. Large-capacity energy storage technology research and development project

Basic information of the project

The large-capacity energy storage technology provides a package of solutions for achieving the sustainable development goal of power grids, solving the imbalance between power supply and demand and improving power supply reliability. The large-capacity energy storage system can ensure the continuity and stability of large-scale wind power generation, photovoltaic power generation and other new energy power generation, and will be widely applied in grid-connection of new energy power generation.

Based on the innovative development and market demand of energy storage lithium battery technology, this project will research and develop two core technology segments, namely energy storage cells and energy storage system integration, and eventually master the core technologies of long-life energy storage cells, intelligent energy management, high-efficiency energy storage system products and comprehensive system solutions, so as to form the production capacities of large-capacity,long-life,low-cost and high-safety energy storage cells and container storage systems. The relevant technologies, when mature, will be used in the fields of power generation, power transmission and distribution and electricity consumption. It covers energy storage facilities for large-scale solar or wind power generation, energy storage for industrial enterprises, energy storage for commercial buildings and data centers, energy storage charging stations and backup batteries for communication base stations, enhancing the core competitiveness of the Company's energy storage business segment.

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APPENDIX I THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES IN 2021

Estimated project investment

The total investment of this project is RMB329.97 million, and the amount of proceeds to be utilized is RMB190.00 million, the breakdown of which is as follows:

			Investment		Proceeds to be
No.	Item		Amount		Applied
		(RMB ten thousand) (RMB ten thousand)
1	Equipment purchase and
	installment cost	10,090.00	10,000.00
2	R&D cost	20,050.50	9,000.00
3	Reserves	504.50		-
4	Initial working capital	2,352.00		-

	Total investment	32,997.00	19,000.00

Economic efficiency of the project

The construction period of this project is 36 months. As estimated, the after-tax investment payback period (including the construction period) of this project is

6.33 years, which has a sound economic benefit.
Approvals required for the project

The Company has obtained the Certificate of Filing for Investment Project of Shanghai Municipality (Project code: 2103-310112-04-05-783656)《( 上海市企業投資項目備案證明》(項目代碼：2103-310112-04-05-783656)) issued by the Economic Commission of Minhang District, Shanghai (上海市閔行區經濟委員會).

It is a technology research and development project without emission of waste gas, waste water or hazardous waste. Pursuant to the requirements of Classified Administration Catalogue of Environmental Impact Assessments for Construction Projects (2021 Revision) (Decree No.16 of the Ministry of Ecological Environment) 《( 建設項目環境影響評價分類管理名錄(2021年版)》) (生態環境部令第16號)), no procedures for environmental impact assessment is required for the project.

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APPENDIX I THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES IN 2021

3. Technology research and development project of hydrogen production from electrolyzed water

Basic information of the project

Hydrogen production from electrolyzed water means that photovoltaic, wind power and other new energy electric power are utilized to produce hydrogen, which is close to non-carbon emission and can make full use of the "three curtailments" (wind, solar and water curtailments) energy to produce hydrogen from electrolyzed water. It is an efficient and clean hydrogen production technology. The technology is quite simple and convenient and has high product purity, which can greatly reduce the cost of hydrogen production and is an important technical link for the production of "green hydrogen".

The project will take hydrogen production as the starting point, grasp the key technologies of alkaline electrolyzed water hydrogen production and proton exchange membrane (PEM) electrolyzed water hydrogen production through technology research and development, and develop alkaline and PEM hydrogen production equipment with high-cost performance. The Company will further increase hydrogen production capacity while improving equipment performance and achieve the strategic development goal of leading the development of hydrogen energy industry by technology.

This project is designated for the research and development of the core technology of hydrogen production from electrolyzed water, and its main target applications include hydrogen refueling stations, renewable energy coupled with hydrogen production (i.e., electricity generated from renewable energy is converted into hydrogen energy for storage through renewable energy power generation - technology of hydrogen production from electrolyzed water) and industrial hydrogen, etc. After the completion of the project construction, it will help the Company to build up its strength for the long-term development of the overall layout of the entire industrial chain in the hydrogen energy field and promote the transformation and upgrading of Shanghai Electric to the field of hydrogen energy and comprehensive energy.

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APPENDIX I THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES IN 2021

Estimated project investment

The total investment of this project is RMB402.80 million, and the amount of proceeds to be utilized is RMB260.00 million, the breakdown of which is as follows:

			Investment		Proceeds to be
No.	Item		Amount		Applied
		(RMB ten thousand) (RMB ten thousand)
1	Equipment purchase and
	installment cost	22,860.00	22,000.00
2	R&D cost	14,477.00	4,000.00
3	Reserves	1,143.00		-
4	Initial working capital	1,800.00		-

	Total investment	40,280.00	26,000.00

Economic efficiency of the project

The construction period of this project is 36 months. As estimated, the after-tax investment payback period (including the construction period) of this project is

6.51 years, which has a sound economic benefit.
Approvals required for the project

The Company has obtained the Certificate of Filing for Investment Project of Shanghai Municipality (Project code: 2103-310112-04-05-801578) 《( 上海市企業投資項目備案證明》(項目代碼：2103-310112-04-05-801578))issued by the Development and Reform Commission of Minhang District, Shanghai (上海市閔行區發展和改革委員會).

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APPENDIX I THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES IN 2021

Smart City Key Platform and System Development Project
The project includes two sub-projects of "smart city "unified management through one network" system research and development project" and "smart city rail transit system development project", the implementation subject of which for the project is Automation Institute, a wholly-owned subsidiary of Shanghai Electric.

1. Smart city "unified management through one network" system research and development project

Basic information of the project

Based on advanced information technologies such as mobile internet, Internet of Things, big data and AI, smart city "unified management through one network" system provides a system platform of comprehensive management service for urban management fields such as municipal and public utilities. Upon completion, the platform will provide functional services such as basic support, convenient services and intelligent operation.

This project intends to research and develop key technology for smart city "unified management through one network" management platform and develop big central platform and cloud platform, so as to achieve the objectives of making public services accessible and social governance precise as well as empowering the modernization of governance system and governance ability by improving government governance and service capabilities through digital means.

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APPENDIX I THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES IN 2021

Estimated project investment

The total investment of this project is RMB440,528,800, and the amount of proceeds to be applied is RMB340.00 million, the breakdown of which is as follows:

			Investment		Proceeds to be
No.	Item		Amount		Applied
		(RMB ten thousand) (RMB ten thousand)
1	Hardware and software
	purchase cost	14,732.00	14,000.00
2	Server lease expense	2,250.00		-
3	System development cost	20,197.68	20,000.00
4	Reserves	1,473.20		-
5	Initial working capital	5,400.00		-

	Total investment	44,052.88	34,000.00

Economic efficiency of the project

The construction period of this project is 36 months. As estimated, the after-tax investment payback period (including the construction period) of this project is

7.79 years, which has a sound economic benefit.
Approvals required for the project

This project is planned to be implemented in the automatic science park of Shanghai Electric (not involving the newly-added land and newly-built plant), of which, the Company has legally obtained the relevant land use rights.

Automation Institute has obtained the Certificate of Filing for Investment Project of Shanghai Municipality (Project code: 2103-310101-04-04-613316)《( 上海市企業投資項目備案證明》》(項目代碼：2103-310101-04-04-613316)) issued by the Development and Reform Commission of Huangpu District, Shanghai.

It is an information construction project without pollutant emission. Pursuant to the requirements of Classified Administration Catalogue of Environmental Impact Assessments for Construction Projects (2021 Revision) (Decree No.16 of the Ministry of Ecological Environment) 《( 建設項目環境影響評價分類管理名錄(2021年版)》) (生態環境部令第16號)), no procedures for environmental impact assessment is required for the project.

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APPENDIX I THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES IN 2021

2. Smart city rail transit system development project

Basic information of the project

This project is proposed to develop the smart city rail transit integrated monitoring cloud platform and smart operation and maintenance platform. The smart city rail transit integrated monitoring cloud platform intends to realize the intelligent operation of urban rail transit through the development of AI, intelligent control, big data, cloud computing and other cutting-edge technologies, with the support of central real-time data base and historical data base of rail transit institution. The smart operation and maintenance platform is a big data center featuring intelligent cooperation among vehicle health monitoring, intelligent diagnosis, equipment operation and maintenance, vehicle inspection and repairing, decision support and emergency response, to ultimately realize three big functional services, i.e., rail transit data integration, rail transit intelligent maintenance and rail transit information service.

Estimated project investment

The total investment of this project is RMB515,732,100, and the amount of proceeds to be applied is RMB380.00 million, the breakdown of which is as follows:

			Investment		Proceeds to be
No.	Item		Amount		Applied
		(RMB ten thousand) (RMB ten thousand)
1	Hardware and software
	purchase cost	9,235.42	9,000.00
2	Server lease expense	5,347.20		-
3	System development cost	29,477.06	29,000.00
4	Reserves	923.53		-
5	Initial working capital	6,590.00		-

	Total investment	51,573.21	38,000.00

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APPENDIX I THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES IN 2021

Economic efficiency of the project

The construction period of this project is 36 months. As estimated, the after-tax investment payback period (including the construction period) of this project is

7.75 years, which has a sound economic benefit.
Approvals required for the project

Automation Institute has obtained the Certificate of Filing for Investment Project of Shanghai Municipality (Project code: 2103-310101-04-04-167606)《( 上海市企業投資項目備案證明》》(項目代碼：2103-310101-04-04-167606)) issued by the Development and Reform Commission of Huangpu District, Shanghai.

SEunicloud Industrial Internet Platform Upgrading and Innovation Application Project

1. Basic information of the project

In 2014, relevant companies under Shanghai Electric developed the industrial internet platforms applied in wind power and power station equipment, respectively. Under such basis, Shanghai Electric determined to conduct unified plan and constructed an industrial internet platform at group level. In September 2019, Shanghai Electric officially released the SEunicloud industrial internet platform in 2019 China International Industry Fair. At present, the platform, integrating the applications of equipment networking, fault diagnosis, remote operation and maintenance and energy planning, etc., has preliminarily equipped with the capability for undertaking the businesses of the Group.

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APPENDIX I THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES IN 2021

By using advanced technologies such as Internet of Things, edge computing, big data, cloud platforms and micro services, the project is proposed to achieve the development, upgrading and functional iteration of PaaS platform, equipment access and edge service technology, "SEunicloud-IoT (星雲物聯)" access platform and industrial APP under the SEunicloud industrial internet platform, and to establish an extensible open cloud platform; meanwhile, the application functions and comprehensive solutions for industries such as thermal power, wind power, gas turbine, distributed energy, rail traffic, rehabilitation therapy, machine tools, environmental protection and motor are formed by way of expanding the platform based on the application demand of all industries.

The implementation subject of the project is Digital Technology Company, a wholly-owned subsidiary of Shanghai Electric.

2. Estimated project investment

The total investment of this project is RMB702,105,300, and the amount of proceeds to be applied is RMB560.00 million, the breakdown of which is as follows:

			Investment	Proceeds to be
No.	Item		Amount	Applied
		(RMB ten thousand) (RMB ten thousand)
1	Hardware and software
	purchase cost	19,638.60	19,638.60
2	System development cost	48,440.00	36,361.40
3	Hardware resource and
	service lease expense	1,150.00	-
4	Reserves	981.92	-

	Total investment	70,210.53		56,000.00

3. Economic efficiency of the project

The construction period of this project is 36 months.

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APPENDIX I THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES IN 2021

The implementation of this project will not produce the economic efficiency directly, but it will facilitate the Group members of Shanghai Electric to improve work efficiency, reduce the production and operation costs, and enhance the digital and intelligent level of the enterprises, which will in turn increase the overall economic efficiency. Upon the maturity of platform development, under the premise of giving priority to meet the usage needs of the enterprises with the Group, the customized services may also be provided based on the needs of the customers outside the Group, thus achieving the according economic efficiency.

4. Approvals required for the project

This project is planned to be implemented in the existing industrial park of Digital Technology Company (not involving the newly-added land and newly-built plant), of which, the Company has legally obtained the relevant land use rights.

Digital Technology Company has obtained the Certificate of Filing for Investment Project of Shanghai Municipality (Project code: 2103-310104-04-04-995016)《( 上海市企業投資項目備案證明》》(項目代碼：2103-310104-04-04-995016)) issued by the Shanghai Municipal Development & Reform Commission.

It is an information construction project without pollutant emission. Pursuant to the requirements of Classified Administration Catalogue of Environmental Impact Assessments for Construction Projects (2021 Revision) (Decree No.16 of the Ministry of Ecological Environment) 《( 建設項目環境影響評價分類管理名錄（2021年版）》(生態環境部令第16號)), no procedures for environmental impact assessment is required for the project.

(IV) Demonstration EPC Project of Comprehensive Utilisation of Multi-Generation and Recycling of Coal Middlings of One Million Tonnes Per Annum of Yan'an Energy and Chemical

1. Basic information of the project

This project is one of the ten projects for transformation and upgrading of Yan'an City and the Property Owner is Yan'an Energy and Chemical Group Co., Ltd. Zichang Company (延安能源化工（集團）有限責任公司子長公司). The main content of this project is the design, construction and installment of 400,000 tonnes per annum coal middlings medium and low temperature pyrolysis multi-generation equipment, 700,000 tonnes per annum coal middlings and coal gasification multi-generation equipment, 150,000 tonnes per annum cobalt-basedFischer-Tropsch fine chemicals equipment, and supporting utilities and auxiliary facilities. Upon reaching the production volume, the project will produce the high-end fine chemicals including aromatic solvent oil, Fischer-Tropsch synthetic wax (with high melting point), full synthetic lubricant base oil, high-end white oil, etc. and quality-improved clean coal and other product coals.

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APPENDIX I THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES IN 2021

This project is undertaken by the consortium composed by Shanghai Boiler Works, a wholly-owned subsidiary of Shanghai Electric, and Global Engineering, a controlling subsidiary of Shanghai Boiler Works for the EPC general contracting construction. In particular, Shanghai Boiler Works, as the implementation subject and the consortium leader of the project to be funded with the proceeds, is responsible for the overall management and coordination, the purchase of equipment materials and debugging and other works of the project; Global Engineering, as a member of the consortium, is responsible for the design and other works of the project.

2. Estimated project investment

The total investment of this project is RMB1,917,019,300, and the amount of proceeds to be applied is RMB1,250.00 million, the breakdown of which is as follows:

			Investment	Proceeds to be
No.	Item		Amount	Applied
		(RMB ten thousand) (RMB ten thousand)
1	Design charge	960.00	-
2	Construction cost	54,376.48	-
3	Equipment purchase cost	125,362.32	125,000.00
4	Other construction charges	4,853.13	-
5	Technology license and
	process package cost	6,150.00	-

	Total investment	191,701.93		125,000.00

Part of the proceeds utilised in this project shall all be utilised in equipment purchase cost by Shanghai Boiler Works.

3. Economic efficiency of the project

The construction period of this project is 24 months. The profit for the project is achieved by the difference between the project income and the investment cost of the project. As estimated, the project has sound economic benefit.

4. Approvals required for the project

As of the date of announcement of the Plan, the Property Owner is handling the procedures for bid, auction and listing for transfer of the project land.

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APPENDIX I THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES IN 2021

The Property Owner has obtained the Confirmation Letter on Enterprise Investment Project Filing of Shaanxi Province (Project code: 2020-610623-26-03-048019)《( 陝西省企業投資項目備案確認書》(項目代碼：2020-610623-26-03-048019)) issued by Yan'an Municipal Bureau of Administrative Services.

As at the date of announcement of this plan, the Property Owner is in the process of preparation of the environmental assessment report and will handle the procedures for approval for the environmental assessment report for the project.

1. Replenishment of Working Capital
  In order to satisfy the requirements of the Company for working capital for its business development and optimize capital structure, the proceeds to be raised from the Non-public Issuance used for replenishment of working capital is proposed no more than RMB1,470.00 million.
NECESSITY OF AND FEASIBILITY ANALYSIS ON THE INVESTMENT PROJECTS TO BE FUNDED BY THE PROCEEDS
1. Non-carbonEnergy Power Technology Research and Development Project
1. Necessity of implementation of the project

It will speed up the industrialization of new energy, and achieve the sustainable development of energy

Low-carbon transformation and development is an inevitable choice for China to cope with new internal and external situations and challenges. In recent years, as a kind of secondhand energy with broad sources which is clean, non-carbon, flexible and high-efficient, and can be applied in multiple scenarios, hydrogen is gradually becoming an important trend towards which global energy technology revolution moves. The implementation of this project will help accelerate the development of supercritical CO2, large-capacity energy storage and hydrogen production and other new energy technologies, is a strategic choice for the Company to cope with global climate change, guarantee the security of energy supply of the state and achieve sustainable development, is an important move to implement the spirit of the 19th Party Congress, establish a "clean and low-carbon, safe and efficient" energy system, and push forward energy supply-sided structural reform. It is important practice to drive regional high-quality economic development with energy revolution.

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APPENDIX I THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES IN 2021

It will help achieve the development strategy of the Company, and enhance the operation capability of the Company

In the context of the national government's efforts to promote the construction of clean energy and improve the domestic energy structure, Shanghai Electric, as

1. large state-owned comprehensive equipment manufacturing group, committing to providing global customers with integrated technology and system solutions that are green, environmentally friendly, intelligent and interconnected, actively responds to the requirements of the national low-carbon and sustainable development, and carries out the layout of the new energy business. The implementation of this project will help to grasp the development opportunities, quickly adapt to market changes, and occupy the top of new markets and new technologies, in order to enhance the business strength of the Company.
It conforms to the requirements of technological development of new energy

Efficient, clean and low-carbon development has currently become a major trend in the world's energy development. Countries are constantly seeking low-cost clean energy alternatives to promote green and low-carbon economic transformation. At present, the world's energy technology innovation has entered an active period, with countries competing to seize the first opportunity to advance energy technology and seeking the competitive high ground for a new round of scientific and technological revolution and industrial transformation. With the implementation of this project, in the energy transformation revolution nowadays, by virtue of its strong technological and market advantages accumulated in traditional energy area, Shanghai Electric adapts to the requirement of technological development, transforms its advantages accumulated in the past into opportunities in new fields, and has completed the development and industrialization of advanced technology in a rapid manner.

2. Feasibility of implementation of the project

The construction of this project is in line with national policies

China takes a positive attitude towards the development of new energy and has clearly proposed to support the development of new energy industry in a number of industrial policies, and more and more supporting policies have been introduced and support has increased in recent years. In October 2017, five ministries and commissions including the National Development and Reform Commission jointly issued the Guidance on Promoting the Development of Energy Storage Technology and Industry in China, which is the first guiding

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APPENDIX I THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES IN 2021

policy on the development of large-scale energy storage technology and application in China, giving energy storage a richer application approach. In December 2019, the National Bureau of Statistics issued the Energy Statistical Reporting System and required hydrogen to be included in energy statistics in 2020 together with coal, natural gas, crude oil, electricity and biofuels. In June 2020, the National Energy Administration issued the Guidance on Energy Work in 2020, which promotes the development of hydrogen energy industry in terms of reform and innovation and promoting the industrialization of new technologies. This project is a state-encouraged one, which is in line with the national industrial policies and development direction.

The Company has sound technological base

In the field of supercritical CO2, through years of technical research and development as well as accumulation, Shanghai Electric has owned certain technological reserves in terms of ultra-high parameter recycling system and the development technology and materials of core technology and other factors. In the field of large-capacity energy storage, after the preliminary research and development work, Shanghai Electric has made initial achievements in long life battery cells and energy storage system products, and has applied for relevant invention patents, and possesses the independent intellectual property rights. In the field of hydrogen energy, Shanghai Electric has preliminarily mastered the key technologies such as the research and development of proton exchange membrane fuel cell system and electric reactor and the research and development of biomass gasification, which will provide technical support for the future development of industries of the equipment required for planning the hydrogen production, storage and transportation and application.

Broad future market prospect

With the change of new energy industry, the future development prospect of supercritical CO2, energy storage and hydrogen energy industries will be broader. Supercritical CO2 technology applies to the technology development of complicated and complete system under the multi-scenario power level of 2-50MW. It's expected that at the late "14th Five Year Plan", such technology will preliminarily pace into industrial stage with the mature development of supercritical CO2 technology and improvement of component matching capacity in China.

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APPENDIX I THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES IN 2021

In the field of energy storage, according to the Zhongguancun Energy Storage Industry Technology Alliance (CNESA) forecast, by the end of 2025, the cumulative installed scale of operational electrochemical energy storage projects in China will reach 15GW. The compound growth rate in the next 5 years will be close to 55%, and the market development prospect for energy storage is broad.

Governments and enterprises in China are actively exploring the road for hydrogen energy industry development, and developed major hydrogen energy industry clusters such as Beijing-Tianjin-Hebei, Yangtze River Delta and Pearl River Delta, gradually radiating to the surrounding areas. After years of scientific and technological research, China has mastered partial core technologies for hydrogen energy infrastructures and fuel cell-related core technologies, formulated and introduced 86 national standards. It's expected that the future hydrogen energy industry in China will speed up its growth.

The broad new energy market in the future provides a solid market base for the implementation of this project.

Smart City Key Platform and System Development Project

1. Necessity of implementation of the project

To follow the trend of developing smart cities, and promote the development of digital economy

Smart city represents that the urban system and services are interconnected and integrated by all information technologies or innovative ideas for the purpose of strengthening the efficiency of urban resource application, optimizing urban management and services so as to improve life quality of citizens. Smart political affairs, smart transportation, etc. are the significant components of smart city. The implementation of the project is conductive for the Company to follow the trend of developing smart city, improving the Company's ability to research and develop and provide system platform related to smart city, which, through export of high-quality and convenient system solutions, help the relevant governmental institutions and rail transit operational institution to better utilize digital technology to optimize their business process, optimize theirs organization and management, and further promote the development of digital economy.

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APPENDIX I THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES IN 2021

To achieve breakthroughs in key and core technologies, and strengthen technology reserve and industry transformation capabilities

With the promotion of technologies such as the Internet of Things, cloud computing and big data, the above technologies have been widely applied in business areas such as administration and transportation. In the field of administration, "digital government" was redefined. Under the leadership of new generation of information technology, the precision and intelligence of social management will be effectively driven by the governmental data governance. In the field of urban rail transportation, automation technology and information systems are integrated to effectively improve station information management and operation and decision-making. With the implementation of this project, the Company will increase input in the research and development of its central platforms and cloud platforms, further increase the Company's technology reserve, improve its research and development and innovation capacity, and build core supporting capabilities for its digital business, so as to ensure its products as well as services in the field of smart city to maintain their industrial leading position in the future.

To achieve diversified business development, and create new profit growth points

The project will apply big data, cloud computing, AI and other digital technologies to the business scenarios of relevant vertical areas in smart administration and smart transportation, to establish three-dimensional business service system based on integration of intelligent data analysis and cloud service products, which will facilitate the diversified development of the Company's businesses, thus developing new profit growth points.

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APPENDIX I THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES IN 2021

2. Feasibility of implementation of the project

The support of national industrial policy provides a sound policy environment for project implementation

Chinese government attaches great importance to the development of the field relevant to smart city, and has successively introduced a series of industrial policies related to cloud computing, enterprise cloudification, electronic administration, rail traffic and other factors to promote the digital transformation and upgrading of industrial construction. In 2016, the NDRC and Ministry of Transport jointly issued the Implementation Measure on Promotion of "Internet +" Convenient Transportation for Further Development of Intelligent Transportation 《( 推進"互聯網+"便捷交通促進智慧交通發展的實施方案》), requesting the realisation of intelligent transportation by application of internet technologies. In 2020, The Certain Opinions on Further Acceleration of Smart City Construction 《( 關於進一步加快智慧城市建設的若干意見》) introduced by Shanghai municipal government, specifies that the promotion of the "unified management through one network" ("一網統管") of city operation has sped up, and by 2022, Shanghai will be built as a vanguard of new smart cities in the world. The introduction and implementation of relevant policies are conducive to the sustainable and rapid development of the relevant smart city industry on an ongoing basis, providing a sound policy environment for the implementation of the project.

Technical reserve provides technical guarantee for project implementation

After years of independent research and development, Automation Institute, the implementation subject of this project, has accumulated various core technologies regarding the development of front-end operation platform software and back-end user software. The Company keeps its focus on the development of cutting-edge technologies in the field of smart city, keeps abreast of the development trend of industrial technology, invests huge research and development resources in cloud computing, big data and other aspects and occupies a certain technical reserve. Automation Institute has over 40% employees with senior and intermediate technological titles and a number of technology leaders. The sound technical reserves provide a technical guarantee for project implementation.

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APPENDIX I THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES IN 2021

The industry has a broad market prospect, providing a good market base for project implementation

In recent years, the Chinese government has successively launched and promoted smart city pilot work, constantly released bonus policies related to smart city and the relevant market scale is expanding. According to the relevant data released by Markets and Markets, the market research institution, the market scale of smart city in China is expected to increase to UD$59.9 billion in 2023 from US$30.4 billion in 2018.

In the field of rail transit service, with the continuous increase in the mileage of operating lines and vehicle population, there is a large rigid demand on guaranteeing the operation security, improving service quality and reducing operation costs in the domestic rail traffic industry. The smart traffic system integrated with cloud computing, big data and other advanced technologies allows the realisation of the intelligent operation and maintenance of urban rail, so as to lower the operational risks and effectively improve the effectiveness of operation and maintenance. According to the relevant information of Leadleo Academy (頭豹研究院), the market scale of the national intelligent urban rail traffic was RMB22.65 billion and is expected to reach RMB44.25 billion in 2023.

The main application areas of smart city have broad market development potential, which provides a sound market base for project implementation.

SEunicloud Industrial Internet Platform Upgrading and Innovation Application Project

1. Necessity of implementation of the project

To respond to national industrial policy, and promote the technological innovation in the industrial internet industry

With the implementation of this project, the Company will respond to the national industrial policies, continue to input resources into research and development, establish industrial internet platform ecology, fully improve the production management and control level, supply chain collaboration level and products' distant service capabilities of its subordinate enterprises, promote the Group's transformation from traditional manufacturing to manufacturing service, and drive the technological innovation and the iteration of products in industrial internet industry.

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APPENDIX I THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES IN 2021

To deepen the integration and application of industrial internet technology and products, and help to enhance the integration and collaboration level of the corporate

At present, the industrial internet technology has been widely applied in various industries and fields, giving rise to new models and new business forms such as networked collaboration, service-oriented manufacturing and scale customisation, helping enterprises to achieve quality and efficiency improvements and speeding up the process of digital transformation of relevant industries. In the future, the depth of integration and inclusive level of the industrial internet in various application fields will continue to improve, and its role in driving and supporting the national economy will become increasingly prominent. The businesses of Shanghai Electric covers three business fields of energy equipment, industrial equipment and integrated service. The implementation of the project will deepen the integration and application of industrial internet technology in all business fields in the Group, achieving the refinement management and intelligent management for the production process of relevant units, accelerating product upgrading and intelligent manufacturing application, and enhancing the integration and collaboration level of the corporate.

To strengthen the development of the Company's principal business and enhance its overall competitiveness

This project, being highly related to the Company's principal business, will help the Company to develop its advantageous business areas to a deeper level, and continue to strengthen its competitive edge in the market. The implementation of this project will export products and services with better quality in the future to meet the diversified and customized needs of customers, thereby further enhancing its profitability and building its comprehensive competitiveness.

2. Feasibility of implementation of the project

As a guidance, national policy providing a good policy environment for project implementation

The government and regulatory authorities in China have promulgated a series of policies to accelerate the establishment of a generic technology system for industrial internet, and comprehensively support the building of China into a stronger country through manufacturing industry and national cyber development strategy. In March 2020, the MIIT issued the Notice on Promoting the Accelerated Development of Industrial Internet 《( 關於推動工業互聯網加快

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發展的通知》), proposing to promote the integration and innovation of industrial internet in a wider scope, to a greater degree and at a higher level, and enhance the core capabilities of the industrial internet platforms. In January 2021, the MIIT issued Action Plan for Innovation and Development of Industrial Internet (2021-2023)《( 工業互聯網創新發展行動計劃(2021-2013年)》), proposing to preliminarily construct an industrial internet network infrastructure covering all regions and all industries and a characteristic industrial internet platform for key industries and areas by 2023. The intensive introduction of supportive industrial policies has provided a good policy environment for the smooth implementation of this project.

Continuous release of market demand providing a good market environment for project implementation

At present, the market demand for industrial internet in China continues to unleash and the scale of the industry continues to expand. According to the data issued by the State Statistics Bureau, the existing scale of industrial internet platform and industrial software industry in China increased to RMB248.6 billion in 2019 from RMB149 billion in 2017 with a compound annual growth rate of 29.20%. With the development of relevant technologies and the lead of industrial needs, deepening the in-depth application of industrial internet in all industrial fields, improving the implementation effect and inclusive level of the application, and expanding the application scope of industrial internet, will be the main driving factors for the market expansion of the future industrial internet. Each industrial internet product produced by this project will effectively meet the enterprise demands and has a broad application space, and there is a good market environment for project implementation.

The Company gathered various high-quality resources, laying a solid foundation for project implementation

Shanghai Electric has extensive technical reserves and rich experience in the field of industrial internet. With over a decade of accumulation, Digital Technology Company has established an information platform at group level for supporting the complete process management including R&D design, production and manufacturing, purchase and storage, product sales and after-sales service, and built a core IT team of about 100 staff with rich experience in information, AI, big data and cloud computing. The Company accumulates years of experiences in industrial application as well as platform construction and integrates high-quality resources in multiple factors, laying a solid technical foundation for the implementation of this project.

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(IV) Demonstration EPC Project of Comprehensive Utilisation of Multi-Generation and Recycling of Coal Middlings of One Million Tonnes Per Annum of Yan'an Energy and Chemical

1. Necessity of implementation of the project

Implementation of the project helping to improve the undertaking capability of the Company for chemical engineering EPC projects

With Shanghai Boiler Works as an important platform for carrying out the chemical segment construction, Shanghai Electric fully integrates the available equipment and technology supporting resources, so as to comprehensively strengthen the system solution capability of chemical project integrating "consulting + technology + equipment + design + installment + debugging + service". The implementation of the project helps Shanghai Boiler Works to further accumulate the implementation experience of chemical engineering EPC general contracting project, improve the capability to undertake the large-scale project, and further enhance the comprehensive competitiveness of the Company in terms of chemical business segment.

Implementation of the project helping to expand the market influence of the Company in the field of chemical engineering

This project is one of the ten projects for transformation and upgrading of Yan'an City and the first demonstration project of comprehensive utilisation of multi-generation and recycling of low-rank coal in Yan'an, and the milestone project for Shanghai Electric to step into the market of large-scale chemical engineering project. Undertaking the project helps to expand the market influence of the Company in the field of large-scale chemical engineering.

Strengthening the Company's capital strength and enhancing the comprehensive competitiveness in chemical engineering business segment

Chemical engineering belongs to capital and technology intensive industry, the features in long cycle of production and payment collection and large resource occupancy, etc. for its complete production process and needs a relatively large and long-term capital scale. As EPC general contracting model requests for a stronger capital strength of general contractor, the market subject with strong capital strength plays a more obvious competitive advantage while undertaking the large-scale projects. Therefore, it is necessary for the Company to strengthen capital strength by way of equity financing, providing a sufficient capital guarantee for the Company in the sustainable development of chemical engineering segment.

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2. Feasibility of implementation of the project

Well-establishedproject owner

The controlling shareholder of Yan'an Energy and Chemical Group Zichang Chemical Co., Ltd. (延安能源化工（集團）子長化工有限責任公司), the owner of the project, is Yan'an Energy and Chemical Group Co., Ltd. Yan'an Energy and Chemical Group Co., Ltd. is a key leading state-owned enterprise in Yan'an, and has complete industrial layout and scientific development strategy, with clear shareholding structure, sound financial position and good profitability, debt servicing capability, operation capability and development capability, which will provide sufficient safeguarding for the successful implementation of this project.

Strong comprehensive profitability upon the completion of the project

In recent years, with the rebound of international oil price, the coal chemical industrial product industry encounters an economical turning point accordingly. Demonstration EPC project of comprehensive utilisation of multi-generation and recycling of coal middlings of one million tonnes per annum of Yan'an Energy and Chemical is established in the major domestic coal production regions and will form a complete recycling production chain upon the completion of the project, which can effectively reduce the production cost. In the meantime, the large demand in the downward market of the product and a strong profitability provide a sufficient safeguarding for the payment collection of EPF project.

Necessity of Replenishment of Working Capital

1. To strengthen capital base strength of the Company and support the Company's principal business for sustainable development

In view of the wide development space of the Company in the future, the business scale of the Company is expected to maintain sustainable growth, and the demand on the working capital of the Company increases accordingly. At present, the demand on the working capital of the Company is satisfied by the bank loan and other debt financing ways. As the Company's business scale is increasing, it is necessary to replenish working capital through equity financing for raising funds, so as to support the Company's principal business for sustainable development and accommodate the needs as a result of the expanding business scale of the Company.

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2. To reduce the financial risks and optimize financial structure of the Company

As at 31 December 2020, the total assets, total liabilities and gearing ratio on a consolidated basis of the Company were RMB315,402,734,000, RMB208,553,392,000 and 66.12%。The proceeds raised under the Non-public Issuance of Shares is conductive to optimizing financial structure and reducing financial risks of the Company, thus guaranteeing the robust operation and sustainable development of the Company.

IV. EFFECT OF THE ISSUANCE ON OPERATION AND MANAGEMENT AND FINANCIAL POSITION OF THE COMPANY

Impact of the Issuance on the Operation and Management of the Company

The investment projects to be funded by the proceeds are important measures for the Company to improve its industrial layout, consolidate its core competitiveness, and make breakthroughs in the key core technologies of the industry, which is in line with relevant national industrial policies and the overall strategic development direction of the Company in the future. The investment projects have good technological advancement and market competitiveness, and are of considerable significance to enhancement of its research and development capabilities and sustainable profitability.

Impact of the Issuance on the Financial Position of the Company
The Non-public Issuance will increase the Company's total assets and net assets amounts, lower the overall gearing ratio level correspondingly and help the Company improve its capital strength, laying a foundation for the future development of the Company.
Upon completion of the Issuance, the total amount of share capital of the Company will increase but it will take a certain period of time for investment projects to be funded by the proceeds to generate economic benefits. Hence, earnings per share of the Company may be diluted in the short term.
The impact of the Non-public Issuance on cash flow of the Company is shown as follows: (1) the Issuance will increase the Company's cash inflow from financing activities and therefore enhance its liquidity and solvency; (2) the increase in the Company's net assets may enhance its ability of multi-channel financing, which will in turn bring a positive impact on its cash inflow from potential financing activities in the future; (3) with the benefits of the investment projects being gradually realised, the Company's net cash flow from operating activities and sustainability are expected to be effectively increased.

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APPENDIX I THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES IN 2021

SECTION III DISCUSSION AND ANALYSIS OF THE BOARD ON

THE IMPACT OF THE ISSUANCE ON THE COMPANY

CHANGES TO THE BUSINESS AND ASSETS, ARTICLES OF ASSOCIATION, SHAREHOLDING STRUCTURE, COMPOSITION OF SENIOR MANAGEMENT AND BUSINESS STRUCTURE OF THE COMPANY FOLLOWING THE ISSUANCE
1. Effects on the Business and Assets of the Company
  The gross proceeds from the Issuance, after deduction of issue cost, will be fully used for Non-carbon Energy Power Technology Research and Development Project, Smart City Key Platform and System Development Project, SEunicloud Industrial Internet Platform Upgrading and Innovation Application Project, Demonstration EPC Project of Comprehensive Utilisation of Multi-Generation and Recycling of Coal Middlings of One Million Tonnes Per Annum of Yan'an Energy and Chemical and replenishment of working capital. The Issuance does not involve integration of business or assets of the Company. Upon the completion of the Issuance, there will be no material change to the Company's principal business. Following the gradual implementation of the investment projects, the industrial chain layout and product structure of the Company will be optimised, facilitating the Company's continuous high-quality development.

Effects on the Company's Articles of Association

Upon the completion of the Issuance, the Company will make adjustments to the items in its Articles of Association that are related to the Non-Public Issuance, such as the registered capital, the total number of shares, the share capital, etc. in accordance with the circumstances of the Non-public Issuance, and will handle the relevant industrial and commercial registrations on the changes. Save for the above, the Company has no other plans to amend or adjust the Articles of Association.

Effects on Shareholding Structure
Upon the completion of the Issuance, the share capital of the Company will increase accordingly and the shareholder structure of the Company will also change. The shareholding proportion of the existing shareholders will also change accordingly.
As at the date of announcement of this Plan, the total number of shares of the Company was 15,705,971,092. SEC together with Shanghai Electric Group Hongkong Company Limited (上海電氣集團香港有限公司), its party acting in concert, held 8,571,047,141 shares of the Company in total, representing 54.57% of the Company's total share capital, and SEC was the Company's controlling shareholder and the Shanghai SASAC was the Company's de facto controller.
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APPENDIX I THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES IN 2021

The number of shares to be issued under the Non-public Issuance shall not exceed 1,570,597,109 shares (inclusive), which is not more than 10% of the total share capital of the Company prior to the Non-public Issuance. Based on an assumption of the issuance of 1,570,597,109 shares, upon the completion of the Issuance, the shares of the Company held by SEC and its party acting in concert will represent 49.61% of the total share capital of the Company and the controlling shareholder and de facto controller of the Company remain unchanged.

(IV) Effects on the Composition of Senior Management

As at the date of announcement of this Plan, the Company has no plan to adjust the composition of its senior management and the composition of the senior management will not change due to the Issuance. If the Company intends to adjust the composition of senior management in the future, it will strictly perform necessary approval procedures and information disclosure obligations in accordance with the relevant requirements.

1. Effects on the Business Structure
  The proceeds to be raised from the Issuance will be used for Non-carbon Energy Power Technology Research and Development Project, Smart City Key Platform and System Development Project, SEunicloud Industrial Internet Platform Upgrading and Innovation Application Project, Demonstration EPC Project of Comprehensive Utilisation of Multi- Generation and Recycling of Coal Middlings of One Million Tonnes Per Annum of Yan'an Energy and Chemical and replenishment of working capital. The construction of the investment projects to be funded with the proceeds raised mentioned above will be beneficial to the Company's accelerated enhancement of its technological strength in the business areas of non-carbon energy, industrial internet, smart city and large-scale chemical engineering, expansion of diversified businesses, further digital transformation of the Company and enhancement of the overall competitiveness of the Company. Upon the completion of the Issuance, there will be no material change to the Company's business structure.
CHANGES IN FINANCIAL POSITION, PROFITABILITY AND CASH FLOW OF THE COMPANY FOLLOWING THE ISSUANCE
1. Effects on the Financial Position of the Company
  Upon the completion of the Issuance, both of the total assets and net assets of the Company will increase. The gearing ratio of the Company will be lowered, which in turn will improve the quality of the Company's assets and enhance the Company's ability to resist financial risks.

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APPENDIX I THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES IN 2021

Effects on Profitability of the Company

Upon the completion of the Non-public Issuance, the total share capital of the Company will increase. Although the earnings per share of the Company may be diluted and the return on net assets may be decreased in the short term, upon the completion of the investment projects to be funded by the proceeds, the core competitiveness of the Company will be further enhanced, thereby strengthening the overall profitability of the Company.

1. Effects on Cash Flow of the Company
  Upon the completion of the Non-public Issuance, cash inflow from financing activities of the Company will significantly increase. As the implementation of the Company, net cash flow from operating activities of the Company will also increase in the future.
CHANGES IN BUSINESS RELATIONSHIP, MANAGEMENT RELATIONSHIP, RELATED PARTY TRANSACTIONS AND PEER COMPETITION BETWEEN THE COMPANY AND THE CONTROLLING SHAREHOLDER AND ITS ASSOCIATES
Prior to the Issuance, the Company operates in an independent manner in terms of business, personnel, assets, institution and finance, and is not under the influence of its controlling shareholder and its associates. Upon completion of the Issuance, the business relationship, management relationship, related party transactions and peer competition between the Company and its controlling shareholder and its associates will not be significantly changed. The Company will strictly comply with relevant laws and regulations and rules regarding related party transactions of the Companies and other requirements, uphold the principles of impartiality, fairness and openness, and strictly perform its information disclosure obligation and approval procedures for related party transactions, in order to maintain its independence as a listed company and safeguard the interest of the listed company and other shareholders.

IV. APPROPRIATION OF FUNDS AND ASSETS OF THE COMPANY BY THE CONTROLLING SHAREHOLDER AND ITS ASSOCIATES OR PROVISION OF GUARANTEE FOR THE CONTROLLING SHAREHOLDER AND ITS ASSOCIATES FOLLOWING THE COMPLETION OF THE ISSUANCE

Upon the completion of the Issuance, there will be no circumstances where the funds or assets of the Company will be appropriated in violation of regulations by the Company, its controlling shareholder and de facto controller and its associates, and no guarantee will be provided by the Company to the controlling shareholder, the de facto controller and its associates in violation of regulations.

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APPENDIX I THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES IN 2021

EFFECTS OF THE ISSUANCE ON THE LIABILITIES OF THE COMPANY

Upon the completion of the Issuance, the total assets and net assets of the Company will increase, while the gearing ratio will be lowered and the Company's solvency and risk resistance capabilities will be effectively strengthened. The Issuance will not significantly increase the Company's liabilities, including contingent liabilities, nor will it result in an excessively low liability proportion or an unreasonable financial cost.

VI. RISKS ASSOCIATED WITH THE ISSUANCE OF SHARES

Risks Associated with the Non-public Issuance of A Shares

1. Risks associated with approvals

The plan for the Non-public Issuance of A Shares is subject to the consideration and approval at the general meeting of the Company following the obtaining of the approval of the competent authority of state assets, and can only be implemented after obtaining the approval by the CSRC. There are uncertainties associated with the outcome of, and timeframe for, the obtaining of approvals for the above matters. Investors are advised to be aware of investment risks.

2. Risks associated with issuance

As the Issuance is available to no more than 35 specific qualified target subscribers for fund raising, and the result of issuance will be subject to various internal and external factors such as the general condition of the securities market, trend of the Company's share price and recognition of the investors on the plan of the Issuance. As such, the Issuance to specific target subscribers is subject to the risk of there being insufficient proceeds raised.

3. Risks associated with the dilution of immediate returns as a result of the Issuance to specific target subscribers

As the total share capital and net assets scale of the Company will increase significantly upon receipt of the proceeds raised from the Issuance and it will take a certain period of time for the benefits arising from the proceeds to materialise, before which, the profit of the Company and the returns to shareholders still mainly rely on the existing businesses. Therefore, the Issuance of Shares to specific target subscribers may cause the Company's immediate returns to be diluted in the short term.

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In addition, if the investment projects to be funded by the proceeds fail to realise the expected benefits, which in turn cause an inability for the Group's future business scale and profit level to generate corresponding growth, the earnings per share, return on net assets and other financial indicators of the Company will see a certain degree of decline. Investors are hereby reminded to pay attention to the risks that the Issuance to specific targets subscribers may subject to risks related to dilution of immediate returns.

4. Risks associated with fluctuations in stock prices

Stock investment itself has certain risks. Stock prices are not only affected by the Company's financial status, operating results and development prospects, but also by various factors such as national economic policies, business cycles, inflation, stock market supply and demand, and occurrence of major natural disasters. Therefore, after the completion of the Issuance, there will be uncertainties in the stock prices in the Company's secondary market. If the performance of the stock prices is lower than investors' expectations, there is a risk that investors will suffer investment losses.

Market and Operation Risks

1. Market risk

Since the equipment manufacturing industry is greatly affected by social fixed asset investment, and is greatly connected with national economic growth, both of the constant changes in the macro economy and the periodic fluctuations in the industry development will pose challenges on the sustainable development of the Company. At present, the COVID-19 pandemic has been effectively controlled in China, however, the risk of a second outbreak exists abroad. If the pandemic fails to be effectively controlled or continues to spread around the world in the future, it is expected to have a certain impact on the demand of the Company's downstream industries.

2. Competition risk

The Issuer's principal business mainly involves three major areas, namely energy equipment, industrial equipment and integrated services. As a comprehensive equipment manufacturing group, the Issuer, although in a leading position in the market, also faces competition from other large companies. In the international market, large power generation equipment manufacturing companies including G.E (General Electric) and SIEMENS all have advanced industrial technologies, and have gradually penetrated the Chinese market through joint ventures with domestic companies. As more and more multinational companies engaging in the same industry enter the Chinese market and expand their scale of production and sale in China, the Issuer's will face increasingly fierce market competition in the above-mentioned fields. If the Issuer fails to effectively enhance its own competitive advantage to consolidate its competitive position in the industry, its market share may be reduced, and its future business development may be adversely affected.

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3. Raw material price fluctuation risk

The Issuer is principally engaged in the manufacture of large equipment, for which the raw materials are mainly metals such as steel, copper and aluminum. The cost of raw materials may be affected by various factors, such as market supply and demand, changes in suppliers, availability of alternative materials, changes in the production condition of suppliers and natural disasters. In recent years, the prices of metals such as steel, copper and aluminum have fluctuated significantly, resulting in increased uncertainty in the consolidated costs of the Issuer. Due to the time lag between the pricing of sales of products and the raw material purchases of the Issuer, if raw material costs increase significantly during such period and the Issuer is unable to transfer the increased costs to its downstream customers in a timely manner, the profitability of the Issuer may be adversely affected.

In recent years, due to the impact of slowdown in the growth rate of fixed asset investment in China, especially the cancellation, slow approval, slow construction and suspension of a large number of coal power projects, the coal power related business of the Issuer has been facing significantly increased operating pressure. The price of major raw materials such as steel and non-ferrous metals fluctuated significantly, which will expose the Company to certain risks of raw material price fluctuations.

4. Overseas business risk

The Issuer has been exploring overseas markets in recent years, especially in the integrated services segment, which has undertaken a number of large-scale overseas projects. With the Company's continuous expansion of overseas business, the political and economic situation of the relevant countries may bring corresponding risks to the progress of completion of projects and the owner's ability to pay. As the possibility of the risk resulting from changes in the political and economic pattern of the countries where the overseas business locates is increasing, the risk related to commercial disputes between the Issuer and overseas owners and partners may also increase. In addition, due to the impact of the trade war between the U.S. and China, the Issuer is exposed to the risk of declining demand in overseas markets, reduced order volume and delayed delivery of orders.

5. Exchange rate fluctuation risk

The power station facilities, power station projects, transmission and distribution projects and other business of the Company all involve export business, and the contracts of such business, the amounts of which are relatively high, are dominated in USD in general; imported equipment and parts and components are required to be purchases in the course of production of the Company, and relevant contracts are mostly dominated in USD and other main foreign currencies. If the fluctuation in the exchange rate of RMB against USD and other main foreign currencies tends to increase, the exchange rate risk to the Company may increase.

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6. Periodic and policy risks

Given that the Issuer's energy equipment and industrial equipment businesses are highly correlated with the state's investment scale of fixed assets, and are greatly affected by national economic periodic fluctuations and macro policy adjustments, the Company is exposed to certain risks of economic cycle fluctuations and policy adjustments. As power equipment is the core product of the Issuer, market demand is significantly affected by the operation of power generation industry, and power demand is directly subject to periodic fluctuations of economy. The export scale of power station facilities, power station projects, transmission and distribution projects of the Issuer is relatively large, thus, the changes in global economic situation and the adjustment to national export policy will have certain impact on the operation business of the Company.

7. Other force majeure risks

The Company does not exclude the possibility of adverse impact arising from politics, policies, economy, natural disasters and other factors beyond its control.

Risks Associated with the Investment Projects Funded by the Proceeds
The feasibility study on the Company's projects to be funded with the proceeds raised is proposed based on the current economic situation, industry development trend, future market demand forecast, the Company's technical research and development capabilities and other factors. After prudent forecasting, the Company expected that the economic benefit of the investment projects to be funded with the proceeds is good. However, considering the uncertainties in the future economic situation, industry development trend and market competition environment, as well as the risks of the implementation of the projects (cost increase, schedule delay, and failure of timely availability of funds raised, etc.) and possible increase of personnel salary, the actual benefits of the investment project to be funded with the proceeds raised may be less than expected.

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SECTION IV PROFIT DISTRIBUTION POLICY AND RELEVANT INFORMATION OF THE COMPANY

PROFIT DISTRIBUTION POLICY OF THE COMPANY
According to the Company's Articles of Association, which is currently in effect and was considered and approved at the annual general meeting for the year 2019 held on 29 June 2020, the relevant profit distribution policy of the Company is as follows:
"Article 170 Profits shall be distributed pro rata among shareholders within six (6) months of the end of each fiscal year. Plans for the distribution of profits shall be resolved by way of ordinary resolution at the general meeting. Except as otherwise resolved by the general meeting, the general meeting may grant the board of director the right to distribute interim profits.
The amount of any share paid up before the issuance of the payment demand of such share may carry interests, but the holder of such share shall not be entitled to participate in the distribution of the dividend of such pre-paid shares subsequently declared.
In the event that the power should be exercised to forfeit unclaimed dividends, such power shall not be exercised at least six (6) years after the date of declaration of the dividend.
Any of the above disposals shall not violate the mandatory provisions of laws and administrative regulations.
Article 171 The Company's profit distribution policies:

Basic principle of profit distribution: The Company shall carry out an ongoing and stable profit distribution policy. The distribution of profit of the Company shall be focused on providing reasonable investment returns to investors and take into account the Company's sustainable development;

Method and interval of profit distribution: The Company may distribute dividends in the form of cash, shares or a combination of cash and shares. The Company shall first adopt cash dividends to distribute profit. Subject to the satisfaction of the conditions for profit distribution, the Company shall distribute profit on an annual basis. The Company may carry out an interim profit distribution if conditions permit;

Conditions and proportion of cash dividends distribution: Save for special conditions, the Company shall adopt cash dividends when there are positive accumulated and undistributed profits in a profitable year. The accumulated distribution of cash dividends over the last three years shall not be less than 30% of the average annual distributable profits for the last three years in principle.
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Subject to the satisfaction of conditions of cash dividends distribution, in the case where the Company is at the mature stage of development and has no arrangement for significant capital outlay, the proportion of cash dividends in the profit distribution shall account for at least 80% of such distribution; in the case where the Company is at the mature stage of development and has an arrangement for significant capital outlay, the proportion of cash dividends in the profit distribution shall account for at least 40% of such distribution; in the case where the Company is at the growing stage of development and has an arrangement for significant capital outlay, the proportion of cash dividends in the profit distribution shall account for at least 20% of such distribution. The Board of directors shall determine the Company's stage of development for the purpose of cash dividends distribution with reference to the actual situation. Where the Company's stage of development is difficult to be ascertained but an arrangement for significant capital outlay exists, the profit distribution shall be handled pursuant to the aforesaid rules.

Special conditions refer to: (1) the auditors have not provided a standard unqualified opinion in their audit report in respect of the Company's financial statements for that year;

the Company has a material investment plan or an arrangement for significant capital outlay (excluding a fund raising event). A material investment plan or an arrangement for significant capital outlay refers to the accumulated expenditures for transactions such as external investments, assets acquisitions and investments in fixed assets of the Company in the next 12 months having reached or exceeded 30% of the latest audited net assets; (3) the balance of cash, excluding cash raised from capital markets and cash within special funding for special purposes or special account management funding such as a government special financial funds (including bank deposits and bonds with high liquidity), is not sufficient to pay the cash dividends; (4) the net operating cash flow of the Company for that year is negative; (5) a material change in the external operating environment occurs, which has a material effect on the production and operations of the Company; (6) other events materially affecting the production and operations and the funding of the Company have occurred or are expected to occur during the next 12 months.

Where the Company fails to determine a profit distribution proposal of that year in accordance with the above cash dividends policy in the event of special conditions, the Company shall disclose in the regular report such information as the specific reasons, the exact purpose for retention of the undistributed profit and the expected return for such purpose. Independent directors of the Company shall express an independent opinion in this regard.

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(IV) Conditions of dividend distribution in the form of shares: Where the Company's share capital size and equity structure are reasonable and its share capital increases in line with its growth in operating results, the Company may distribute its profit in the form of shares. The profit distribution in the form of shares by the Company shall be made on the premise of giving reasonable cash dividends return to shareholders and maintaining proper share capital size, while taking into full consideration of factors including the growth of the Company and the dilution to net asset value per share.

Consideration and deliberation procedures and decision-making mechanism for profit distribution proposal: In the event of profit distribution by the Company, the Board of directors shall formulate the distribution proposal and submit the proposal to the Shareholders' meeting of the Company for approval. The Board of directors shall carefully study and deliberate such matters including the timing, conditions and minimum proportion, conditions of adjustment and the requirements of the decision-making process for cash dividend distribution of the Company in formulating the detailed proposal of cash dividends distribution, and independent directors shall expressly give their opinions. The independent directors may gather views from minority shareholders and propose a distribution proposal which will be submitted directly to the Board of directors for its approval. Prior to the consideration of the detailed proposal of cash dividends distribution at the general meeting, the Company shall actively communicate and exchange views with the shareholders, in particular the minority shareholders, through various channels, such that the opinions and requests of the minority shareholders can be fully heard, and their concerns can be responded in a timely manner.

(VI) Amendment of profit distribution policy: The profit distribution policy of the Company shall not be amended randomly. The profit distribution policy can be amended where there is a material change in the production and operations of the Company, the need for an investment plan or a long-term development of the Company, changes in the external operating environment or changes in policies and regulations, the profit distribution policy may be amended after detailed discussion and upon the satisfaction of conditions stipulated by this Articles of Association. Independent directors shall expressly give their opinions regarding the amendments of profit distribution policy. The amended profit distribution policy shall not violate the relevant provisions of the regulatory authorities. The relevant proposal to amend the profit distribution policy shall first be approved by the Board of the Company and then submitted by the Board of the Company for consideration at a shareholders' general meeting. Such proposal should be passed by an affirmative vote of more than two-thirds of the Company's total voting shares being held by the shareholders who are present at the general meeting.

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Article 172 After the general meeting has adopted the resolution on the plan for distribution of the Company's profits, the board of directors of the Company shall complete the distribution of dividends (or shares) within two (2) months of the date of the completion of such general meeting.

Article 173 The Company shall calculate, declare and pay dividends and other amounts payable to holders of domestic shares in Renminbi. The Company shall calculate and declare cash dividends and other payments payable to holders of overseas-listed foreign shares in Renminbi, and shall pay such amounts in the foreign currency where such overseas- listed foreign shares are listed (if such shares are listed in more than one places, such amounts shall be paid in the currency of the main place where such shares are listed determined by the Board of the Company).

Article 174 The foreign currency that the Company uses in paying dividends and other amounts to holders of foreign shares shall be obtained in accordance with the relevant foreign exchange administrative regulations of the PRC.

Article 175 The Company shall withhold and pay on behalf of its shareholders the taxes levied on the dividends in accordance with the provisions of the PRC tax law.

Article 176 The Company shall appoint collecting agents for holders of overseas-listed foreign shares. Collecting agents shall receive dividends distributed by and other sums payable on overseas-listed foreign shares by the Company on behalf of relevant shareholders.

Collecting agents appointed by the Company shall comply with the requirements of the laws of where the stock exchange on which shares of the Company are listed is located, and the provisions of such stock exchange.

The receiving agents appointed by the Company for holders of overseas-listed foreign shares listed in Hong Kong shall each be a company registered as a trust company under the Trustee Ordinance of Hong Kong (Chapter 29 of the Laws of Hong Kong).

THE COMPANY'S PLAN ON SHAREHOLDERS' RETURN FOR THE UPCOMING THREE YEARS (2021 - 2023)
To establish and improve the shareholder's return mechanism, enhance the transparency and operability of the decision-making mechanism for the profit distribution policy, make positive return to investors, and effectively protect the legitimate rights and interests of minority shareholders, the Plan on Shareholders' Return for the Upcoming Three Years (2021 - 2023) of Shanghai Electric Group Company Limited has hereby been formulated pursuant to the Company Law of the People's Republic of China, the Securities Law of the People's Republic of China, the Notice on Further

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Implementing Matters Relevant to the Cash Dividend Distribution by Listed Companies 《( 關於進一步落實上市公司現金分紅有關事項的通知》) and the Regulatory Guidance No. 3 on Listed Companies - Distribution of Cash Dividend by Listed Companies (CSRC Announcement [2013] No.43) 《( 上市公司監管指引第3號-上市公司現金分紅》(證監會公告[2013]43號)) issued by the China Securities Regulatory Commission ("CSRC") and other laws and regulations, as well as the relevant provisions of the Articles of Association of Shanghai Electric Group Company Limited, taking into account the Company's actual circumstances.

Principles of Formulating the Plan on Shareholders' Return
1. To make positive return to investors while taking into account the sustainable development of the Company;
2. To further enhance the transparency of the Company's profit distribution, especially cash dividends, to help investors to form stable expectation of return;
3. To maintain the continuity and stability of the Company's profit distribution policy;
4. To strictly comply with relevant requirements of profit distribution under relevant laws and regulations and the Articles of Association of Shanghai Electric Group Company Limited.

Considerations in Formulating the Plan on Shareholders' Return
The plan on shareholders' return is an arrangement for profit distribution formulated on the basis of the comprehensive analysis of shareholders' demands and wishes regarding returns, the Company's developmental stage and plan, profitability, social capital cost and external financing environment, and giving full consideration to conditions such as the Company's current and future profitability scales, cash flows and capital needs of investment projects, capital structure and financing abilities, with the hope of balancing reasonable investment return to shareholders and capital needs for the Company's sustainable development.

Cycle of Formulating Plan on Shareholders' Return
The Company will review the plan on shareholders' return every three years, and make proper and necessary amendments to its then effective dividend distribution policy based on the opinions of the shareholders (especially the minority shareholders), independent directors and supervisors, and determine the plan on shareholders' return for such period. The Board of the Company will formulate annual and interim dividend proposal based on specific operating information after fully considering the Company's then profitability, cash flows, developmental stage, ordinary working capital requirements and foreseeable substantial capital expenditures. The independent directors may gather views from minority shareholders and propose a distribution proposal which will be submitted directly to the Board of directors for its approval. When the detailed profit distribution plan is considered at

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APPENDIX I THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES IN 2021

the general meeting, the Company shall actively communicate and exchange views with the shareholders, in particular the minority shareholders, through various channels, such that the opinions and requests of the minority shareholders can be fully heard, and their concerns can be responded in a timely manner.

(IV) Details of the Company's Plan on Shareholders' Return for the Upcoming Three Years (2021-2023)

The Company shall carry out an ongoing and stable profit distribution policy. The distribution of profit of the Company shall be focused on providing reasonable investment returns to investors and take into account the Company's sustainable development:

1. Method and interval of profit distribution

The Company may distribute dividends in the form of cash, shares or a combination of cash and shares. The Company shall first adopt cash dividends to distribute profit. Subject to the satisfaction of the conditions for profit distribution, the Company shall distribute profit on an annual basis. The Company may carry out an interim profit distribution if conditions permit.

2. Conditions and proportion of cash dividends distribution

Save for special conditions, the Company shall adopt cash dividends when there are positive accumulated and undistributed profits in a profitable year. The accumulated distribution of cash dividends over the last three years shall not be less than 30% of the average annual distributable profits for the last three years in principle. Subject to the satisfaction of conditions of cash dividends distribution, in the case where the Company is at the mature stage of development and has no arrangement for significant capital outlay, the proportion of cash dividends in the profit distribution shall account for at least 80% of such distribution; in the case where the Company is at the mature stage of development and has an arrangement for significant capital outlay, the proportion of cash dividends in the profit distribution shall account for at least 40% of such distribution; in the case where the Company is at the growing stage of development and has an arrangement for significant capital outlay, the proportion of cash dividends in the profit distribution shall account for at least 20% of such distribution. The Board of directors shall determine the Company's stage of development for the purpose of cash dividends distribution with reference to the actual situation. Where the Company's stage of development is difficult to be ascertained but an arrangement for significant capital outlay exists, the profit distribution shall be handled pursuant to the aforesaid rules.

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APPENDIX I THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES IN 2021

Special conditions refer to: ① the auditors have not provided a standard unqualified opinion in their audit report in respect of the Company's financial statements for that year; ② the Company has a material investment plan or an arrangement for significant capital outlay (excluding a fund raising event). A material investment plan or an arrangement for significant capital outlay refers to the accumulated expenditures for transactions such as external investments, assets acquisitions and investments in fixed assets of the Company in the next 12 months having reached or exceeded 30% of the latest audited net assets; ③ the balance of cash, excluding cash raised from capital markets and cash within special funding for special purposes or special account management funding such as a government special financial funds (including bank deposits and bonds with high liquidity), is not sufficient to pay the cash dividends; ④the net operating cash flow of the Company for that year is negative; ⑤ a material change in the external operating environment occurs, which has a material effect on the production and operations of the Company; ⑥ other events materially affecting the production and operations and the funding of the Company have occurred or are expected to occur during the next 12 months.

3. Conditions of dividend distribution in the form of shares

Where the Company's share capital size and equity structure are reasonable and its share capital increases in line with its growth in operating results, the Company may distribute its profit in the form of shares. The profit distribution in the form of shares by the Company shall be made on the premise of giving reasonable cash dividends return to shareholders and maintaining proper share capital size, while taking into full consideration of factors including the growth of the Company and the dilution to net asset value per share."

4. Consideration and deliberation procedures and decision-making mechanism for profit distribution plan

In the event of profit distribution by the Company, the Board shall formulate the distribution proposal and submit the proposal to the general meeting of the Company for approval. The Board shall carefully study and deliberate such matters including the timing, conditions and minimum proportion, conditions of adjustment and the

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APPENDIX I THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES IN 2021

requirements of the decision-making process for cash dividend distribution of the Company in formulating the detailed proposal of cash dividends distribution, and independent directors shall expressly give their opinions. The independent directors may gather views from minority shareholders and propose a distribution proposal which will be submitted directly to the Board for approval. Prior to the consideration of the detailed proposal of cash dividends distribution at the general meeting, the Company shall actively communicate and exchange views with the shareholders, in particular the minority shareholders, through various channels, such that the opinions and requests of the minority shareholders can be fully heard, and their concerns can be responded in a timely manner.

5. Amendments of profit distribution policy

The profit distribution policy of the Company shall not be amended randomly. The profit distribution policy can be amended where there is a material change in the production and operations of the Company, the need for an investment plan or a long- term development of the Company, changes in the external operating environment or changes in policies and regulations, the profit distribution policy may be amended after detailed discussion and upon the satisfaction of conditions stipulated by the Articles of Association of Shanghai Electric Group Company Limited. Independent directors shall expressly give their opinions regarding the amendments of profit distribution policy. The amended profit distribution policy shall not violate the relevant provisions of the regulatory authorities. The relevant proposal to amend the profit distribution policy shall first be considered and approved by the Board of the Company and then submitted by the Board of the Company for consideration at a general meeting. Such proposal should be passed by an affirmative vote of more than two-thirds of the Company's total voting shares being held by the shareholders who are present at the general meeting.

Implementation of the Plan on Shareholders' Return
Any matters not covered in the Plan on Shareholders' Return shall be governed by the relevant laws, regulations, regulatory documents and the Articles of Association of Shanghai Electric Group Company Limited. The Board of the Company is responsible for interpreting the Plan on Shareholders' Return. The Plan shall come into force on the date of its approval at the general meeting.

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APPENDIX I THE PLAN FOR THE NON-PUBLIC ISSUANCE OF A SHARES IN 2021

EXPLANATION ON THE IMPLEMENTATION OF THE PROFIT DISTRIBUTION POLICY IN REGULAR REPORTS
1. The Company shall disclose in the regular report the implementation of the profit distribution plan and cash dividends policy in accordance with the relevant requirements of the CSRC and the stock exchanges
2. Where the Company recorded profits for the previous accounting year, however, the Board of the Company failed to recommend the cash dividend distribution proposal at the end of the previous accounting year, the Board of the Company shall specify the reason therefor and the use of undistributed profit retained by the Company. Independent directors shall express an independent opinion in this regard.

IV. PROFIT DISTRIBUTION IN THE LATEST THREE YEARS

Profit Distribution Plan in the Latest Three Years

1. Profit distribution of the Company for 2018

2018 annual profit distribution plan which was considered and approved at the 2018 annual general meeting of the Company held on 10 June 2019: a cash dividend of RMB0.6146 (including tax) per 10 Shares based on the total share capital of the Company on the record date for the implementation of the profit distribution plan was distributed, and a total of cash dividend of RMB931,270,200 was paid out.

2. Profit distribution plan of the Company for 2019

2019 annual profit distribution plan which was considered and approved at the 2019 annual general meeting of the Company held on 29 June 2020: no cash dividend was distributed, no bonus share was issued and no capitalisation of reserve was implemented in 2019. The undistributed profit of the Company was carried forward for distribution in subsequent years.

3. Profit distribution of the Company for 2020

2020 annual profit distribution plan which was considered and approved at the 48th meeting of the fifth session of the board of director of the Company held on 26 March 2021: a cash dividend of RMB0.7178 (including tax) per 10 Shares based on the total share capital of the Company on the record date for the implementation of the profit distribution plan will be distributed, and it is expected that a total of dividend of RMB1,127,375,000 will be paid out. As of the date of the announcement of the plan, the profit distribution plan has yet to be submitted to the general meeting of the Company for consideration, which will be implemented after being approved at the general meeting.

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Shanghai Electric Group Co. Ltd. published this content on 31 March 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 31 March 2021 05:41:05 UTC.

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Shanghai Electric Group Company Limited

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