Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no

responsibility for the contents of this announcement, make no representation as to its accuracy or
completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or
in reliance upon the whole or any part of the contents of this announcement.

SHANGHAI ELECTRIC GROUP COMPANY LIMITED

上海電氣集團股份有限公司
(A joint stock company incorporated in the People’s Republic of China with limited liability)
(Stock Code: 02727)

2016 INTERIM RESULTS

Financial Highlights

► Revenue for the first half of 2016 was RMB36,867 million, a decrease of 0.70% over the
corresponding period of last year

► Profit attributable to owners of the company for the first half of 2016 was RMB1,245million, a
decrease of 10.90% over the corresponding period of last year

► Basic earnings per share were RMB9.71 cents, representing a decrease of 10.92% over the
corresponding period of last year

► The Board of Directors did not recommend the payment of an interim dividend in respect of the
reporting period

The board of directors (the “Board”) of Shanghai Electric Group Company Limited (the “Company”) is
pleased to announce the interim results of the Company and its subsidiaries (the “Group”) for the six months
ended 30 June 2016. The results have not been audited but have been reviewed by audit committee of the
Company.

1
SHANGHAI ELECTRIC GROUP COMPANY LIMITED

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS

AND OTHER COMPREHENSIVE INCOME

Notes Unaudited
For the six months ended 30 June
2016 2015
RMB'000 RMB'000
(Restated)

Revenue 3 36,866,602 37,125,005

Cost of sales (30,175,828) (30,305,153)
Gross profit 6,690,774 6,819,852
Other income and gains, net 3 895,245 1,115,973
Distribution expenses (1,025,469) (1,022,695)
Administrative expenses (3,587,370) (3,996,209)
Operating Profit 2,973,180 2,916,921
Finance costs (261,553) (214,184)
Share of profits and losses accounted for
using the equity method :
Joint ventures (23,838) (23,596)
Associates 305,698 350,995
Profit before income tax 4 2,993,487 3,030,136
Income tax expense 5 (571,107) (539,179)
Profit for the period 2,422,380 2,490,957

Profit attributable to:

Owners of the Company 1,245,006 1,397,243
Non-controlling interests 1,177,374 1,093,714
2,422,380 2,490,957

Cents per share Cents per share

EARNINGS PER SHARE ATTRIBUTABLE

TO ORDINARY EQUITY HOLDERS OF
THE COMPANY 7

Basic earnings per share 9.71cents 10.90cents

Diluted earnings per share 9.71cents 10.90cents

continued/…

2
SHANGHAI ELECTRIC GROUP COMPANY LIMITED

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS

AND OTHER COMPREHENSIVE INCOME (CONT’D)

Unaudited
For the six months ended 30 June
2016 2015
RMB'000 RMB'000
(Restated)

Profit for the period 2,422,380 2,490,957

Other comprehensive income:

Items that may be reclassified to profit or loss

Fair value gains on available-for-sale financial

assets, net of tax (216,312) 678,306
Cash flow hedges, net of tax 1,907 4,690
Currency translation differences (22,011) (14,088)
Others 586 (310)
(235,830) 668,598

Items that will not be reclassified

subsequently to profit or loss

Remeasurements losses of defined benefit

obligations - (7,182)

Other comprehensive income for the

period, net of tax (235,830) 661,416

Total comprehensive income for the period 2,186,550 3,152,373

Attributable to:
Owners of the Company 1,027,942 1,970,286
Non-controlling interests 1,158,608 1,182,087
2,186,550 3,152,373

3
SHANGHAI ELECTRIC GROUP COMPANY LIMITED

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(Restated)
Note Unaudited Unaudited
30 June 2016 31 December 2015
RMB'000 RMB'000

Assets
Non-current assets
Property, plant and equipment 12,405,156 12,393,484
Investment properties 367,725 379,455
Prepaid land lease payments 1,734,840 1,750,690
Goodwill 189,151 189,151
Intangible assets 979,271 1,007,526
Investments in joint ventures 2,949,381 2,920,691
Investments in associates 5,428,070 4,757,306
Other investments 1,400,275 1,720,767
Deferred tax assets 3,002,129 2,911,443
Loans and lease receivables 8,004,202 7,141,055
Other non-current assets 81,546 175,718
Total non-current assets 36,541,746 35,347,286

Current assets
Inventories 23,020,366 21,587,556
Construction contracts 3,274,643 2,885,697
Trade receivables 8 28,250,214 26,021,351
Loans and lease receivables 7,953,971 8,054,059
Discounted bills receivable 414,828 365,953
Bills receivable 5,607,804 6,726,313
Prepayments, deposits and other
receivables 12,183,712 10,634,914
Investments 15,566,014 8,072,160
Derivative financial instruments 674,464 664,805
Due from the Central Bank* 2,647,073 3,063,635
Restricted deposits 633,700 632,092
Cash and cash equivalents 27,517,633 36,969,895
Assets of disposal group
classified as held for sale - 4,442,156
Total current assets 127,744,422 130,120,586

Total assets 164,286,168 165,467,872

*Central Bank is the abbreviation of the People’s Bank of China.

continued/…

4
SHANGHAI ELECTRIC GROUP COMPANY LIMITED

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(CONT'D)

(Restated)
Note Unaudited Unaudited
30 June 2016 31 December 2015
RMB'000 RMB'000

Equity and liabilities

Liabilities
Non-current liabilities
Bonds 11,072,831 10,792,803
Interest-bearing bank and other
borrowings 330,281 122,729
Provisions 139,230 148,988
Government grants 656,743 660,933
Other non-current liabilities 1,080,894 935,950
Deferred tax liabilities 229,064 282,439
Total non-current liabilities 13,509,043 12,943,842

Current liabilities
Trade payables 9 31,443,647 28,607,973
Bills payable 4,524,869 3,439,412
Other payables and accruals 51,340,120 52,418,583
Derivative financial instruments 24,479 25,507
Customer deposits 3,444,188 5,704,331
Interest-bearing bank and other
borrowings 2,714,709 1,947,968
Tax payable 790,241 1,382,553
Provisions 3,122,749 3,257,222
Liabilities of disposal group
classified as held for sale - 3,752,429
Total current liabilities 97,405,002 100,535,978

Total liabilities 110,914,045 113,479,820

Equity
Equity attributable to owners of the
Company
Ordinary shares 12,824,309 12,824,305
Reserves 28,039,809 26,444,777
Retained earnings
-Proposed final dividends - -
40,864,118 39,269,082

Non-controlling interests 12,508,005 12,718,970

Total equity 53,372,123 51,988,052

Total equity and liabilities 164,286,168 165,467,872

Net current assets 30,339,420 29,584,608

Total assets less current liabilities 66,881,166 64,931,894

5
SHANGHAI ELECTRIC GROUP COMPANY LIMITED

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION

FOR THE SIX MONTHS ENDED 30 JUNE 2016

1. BASIS OF PRESENTATION AND ACCOUNTING POLICIES

Basis of preparation

The condensed consolidated interim financial information for the six months ended 30 June 2016
has been prepared in accordance with Hong Kong Accounting Standard ("HKAS") 34 “Interim
Financial Reporting”. The condensed consolidated interim financial information should be read in
conjunction with the annual financial statements of the Group for the year ended 31 December 2015
(the “Annual Financial Statements”), which were prepared in accordance with Hong Kong Financial
Reporting Standards (“HKFRSs”).

Accounting policy

Except as described below, the accounting policies adopted are consistent with those used for and
described in the annual consolidated financial statements of the Company for the year ended 31
December 2015.

Taxes on income in the interim periods are accrued using the tax rate that would be applicable to
expected total annual earnings.

New amendment and improvements of HKFRSs adopted by the Group in 2016

• HKFRS 14 “Regulatory Deferral Accounts”;

• Amendment to HKFRS 11 “Accounting for acquisitions of interests in joint operations”;
• Amendments to HKAS 16 and HKAS 38 “Clarification of acceptable methods of depreciation
and amortisation”;
• Amendment to HKAS 27 “Equity method in separate financial statements”;
• Annual improvements 2014, affecting the following 4 standards: HKFRS 5 “Non-current assets
held for sale and discontinued operations”, HKFRS 7 “Financial instruments: Disclosures”,
“HKAS 19 ‘Employee benefits”, “HKAS 34 Interim financial reporting”;
• Amendments to HKFRS 10, HKFRS 12 and HKAS 28 “Investment entities: applying the
consolidation exception”;
• Amendments to HKAS 1 “Disclosure initiative”.

The adoption of the above new amendment and improvements starting from 1 January 2016 did
not give rise to any significant impact on the Group’s results of operations and financial position
for the six months ended 30 June 2016.

The Group has not early adopted any new accounting and financial reporting standards,
amendments and improvements to existing standards which have been issued but are not yet
effective for the financial year beginning on or after 1 January 2016.

6
SHANGHAI ELECTRIC GROUP COMPANY LIMITED

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION

FOR THE SIX MONTHS ENDED 30 JUNE 2016

2. SEGMENT INFORMATION

The Group organises and manages its operating business in accordance with the nature of business
and provision of goods and services. Each business segment of the Group is one operating group,
providing goods and services with risks and rewards different from those of the other business
segments.

The details of operating segments are as follows:

(a) the new energy and environmental protection equipment segment is engaged in the design,
manufacture and sale of nuclear power nuclear island equipment products, wind power equipment
products and heavy machinery including large forging components, and in the provision of
solution package for comprehensive utilisation of solid waste, sewage treatment, power generation
environment protection and distributed energy systems;

(b) the high efficiency and clean energy equipment segment is engaged in the design, manufacture
and sale of thermal power equipment products and corollary equipment, nuclear power
conventional island equipment products and power transmission and distribution equipment
products;

(c) the industrial equipment segment is engaged in the design, manufacture and sale of elevators,
electrical motors, machine tools, marine crankshafts and other electromechanical equipment
products;

(d) the modern services segment is principally engaged in the provision of integrated engineering
services for power station projects and other industries, financial products and services,
international trading services, financial lease and related consulting services and insurance
brokerage services;

(e) the “others” segment includes business of units such as the central research institute.

7
SHANGHAI ELECTRIC GROUP COMPANY LIMITED

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION

FOR THE SIX MONTHS ENDED 30 JUNE 2016

2. SEGMENT INFORMATION (continued)

Business segments
The revenue and profit or loss as well as assets and liabilities of each business segment of the Group for the period ended and as at 30 June 2016 are presented below:
New energy and
environmental High efficiency
protection and clean energy Industrial Modern
equipment equipment equipment services Others Elimination Total
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
At 30 June 2016
(Unaudited)

Segment revenue
Sales to external customers 4,624,520 12,196,199 11,406,643 8,144,444 494,796 - 36,866,602
Intersegment sales 324,300 1,332,307 107,719 230,646 4,453 (1,999,425) -

Total 4,948,820 13,528,506 11,514,362 8,375,090 499,249 (1,999,425) 36,866,602

Operating profit 84,790 434,312 1,234,303 971,735 179,325 68,715 2,973,180

Financial expenses (261,553)

Share of profits and losses of:
Joint ventures (23,838)
Associates 305,698

Profit before tax 2,993,487

Income tax expense (571,107)

Profit for the period 2,422,380

Assets and Liabilities

Total assets 23,507,121 55,758,565 37,569,155 71,868,691 23,830,546 (48,247,910) 164,286,168

Total liabilities 14,682,919 38,356,858 24,030,126 62,324,162 12,177,245 (40,657,265) 110,914,045

8
SHANGHAI ELECTRIC GROUP COMPANY LIMITED

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION

FOR THE SIX MONTHS ENDED 30 JUNE 2016

2. SEGMENT INFORMATION (continued)

Business segments (continued)
The revenue and profit or loss as well as assets and liabilities of each business segment of the Group for the period ended and as at 30 June 2015 are presented below:
New energy and
environmental High efficiency
protection and clean energy Industrial Modern
equipment equipment equipment services Others Elimination Total
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
At 30 June 2015
(Restated and Unaudited)

Segment revenue
Sales to external customers 3,630,715 12,813,832 12,060,950 8,399,720 219,788 - 37,125,005
Intersegment sales 525,892 267,636 445,599 261,744 19,511 (1,520,382) -

Total 4,156,607 13,081,468 12,506,549 8,661,464 239,299 (1,520,382) 37,125,005

Operating profit/(loss) (63,201) 157,385 1,081,122 1,729,781 54,673 (42,839) 2,916,921

Financial expenses (214,184)

Share of profits and losses of:
Joint ventures (23,596)
Associates 350,995

Profit before tax 3,030,136

Income tax expense (539,179)

Profit for the period 2,490,957

Assets and Liabilities

Total assets 23,015,084 48,427,726 37,964,196 65,376,631 23,849,596 (37,784,175) 160,849,058

Total liabilities 13,926,639 33,965,511 25,566,773 55,980,384 14,006,754 (32,966,689) 110,479,372

9
SHANGHAI ELECTRIC GROUP COMPANY LIMITED

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION

FOR THE SIX MONTHS ENDED 30 JUNE 2016

2. SEGMENT INFORMATION (continued)

Geographical segment

Information on revenue of geographical segments of the Group for the six months ended 30 June
2016 and the six months ended 30 June 2015 is listed below:

Unaudited
For the six months ended 30 June 2016 For the six months ended 30 June 2015
(Restated)
Other Other
Mainland countries/ Mainland countries/
China jurisdictions Total China jurisdictions Total
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000

Segment revenue:
Sales to external
customers 33,843,547 3,023,055 36,866,602 33,113,437 4,011,568 37,125,005

3. REVENUE, OTHER INCOME AND GAINS, NET

Revenue includes turnover and other revenue that arise from the ordinary course of business of
the Group. The Group’s turnover, which arises from the principal activities of the Group,
represents the net invoiced value of goods sold, after allowances for returns and trade discounts,
an appropriate proportion of contract revenue of construction contracts and the value of services
rendered.

An analysis of revenue, other income and gains - net is as follows:

Unaudited
For the six months ended 30 June
2016 2015
RMB'000 RMB'000
(Restated)

Revenues

Revenues from main operations 35,721,563 35,954,650

Revenues from other operations 1,145,039 1,170,355
36,866,602 37,125,005

Revenues from other operations

Sales of raw materials, spare parts and semi-finished goods 401,411 271,942
Finance lease income 298,478 169,446
Rental income under operating leases 48,760 70,740
Finance Company*:
Interest income from banks and other financial institutions 83,265 260,942
Interest income on loans receivable and discounted bills
receivable 133,539 199,509
Others 179,586 197,776
1,145,039 1,170,355

*Finance Company is the abbreviation of Shanghai Electric Group Finance Co., Ltd.
continued/…

10
SHANGHAI ELECTRIC GROUP COMPANY LIMITED

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION

FOR THE SIX MONTHS ENDED 30 JUNE 2016

3. REVENUE, OTHER INCOME AND GAINS, NET (continued)

Unaudited
For the six months ended 30 June
2016 2015
RMB'000 RMB'000
(Restated)

Other income
Interest income on bank balances and time deposits 130,941 139,551

Interest income on debt investment 7,088 10,306

Dividend income from equity investments and
investment funds 117,449 72,918
Subsidy income 66,866 222,332
322,344 445,107

Other gains, net

Gain on disposal of property, plant and equipment 8,047 3,776
Gain on disposal of a subsidiary 210,989 76,997
Gain/(loss) on disposal of an associate 48,700 (3,874)
Investments at fair value through profit or loss:
Unrealised fair value gains/(losses), net 391 (12,812)
Realised fair value gains, net 5,908 78,420
Derivative financial instruments - transactions not
qualifying as hedges:
Unrealised fair value loss/(gain), net (653) 1,636
Realised gains on available-for-sale investments 219,222 481,018
Debt restructure gain, net 2,999 1,300
Exchange gain/(loss), net 77,409 (1,482)
Others (111) 45,887
572,901 670,866

895,245 1,115,973

11
SHANGHAI ELECTRIC GROUP COMPANY LIMITED

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION

FOR THE SIX MONTHS ENDED 30 JUNE 2016

4. PROFIT BEFORE TAX

The Group’s profit before tax is arrived at after charging/(crediting):

Unaudited
For the six months ended 30 June
2016 2015
RMB'000 RMB'000
(Restated)

Cost of inventories sold 23,957,789 23,842,206

Cost of construction contracts 3,322,571 3,697,307
Cost of services provided 2,404,718 2,195,625

Finance Company:
Interest expense due to banks and other financial institutions 17,691 28,666
Interest expense on customer deposits 6,877 10,163
24,568 38,829

Depreciation of property, plant and equipment 658,420 687,790

Depreciation of investment properties 11,760 10,518
Recognition of prepaid land lease payments 21,603 28,127
Amortisation of patents and licences 16,730 24,806
Amortisation of concession intangible assets 9,656 8,692
Amortisation of other intangible assets 14,968 4,986
Amortisation of other non-current assets 18,496 42,142

Research and development costs:

Amortisation of technology know-how 13,147 21,385
Current period expenditure 939,471 1,010,959
952,618 1,032,344
Minimum lease payments under operating leases:
Land and buildings 88,992 98,682
Plant, machinery and motor vehicles 19,342 22,440
Staff costs 2,686,064 2,888,971
Impairment of inventories to net realisable value 342,505 86,983
Impairment of trade receivables and other receivables 516,995 438,090
Impairment of lease receivables 82,894 23,942
Impairment of property, plant and equipment 864 -

Product warranty provision:

Additional provision 169,533 272,246
Onerous contract provision:
Additional provision 653,551 747,759

12
SHANGHAI ELECTRIC GROUP COMPANY LIMITED

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION

FOR THE SIX MONTHS ENDED 30 JUNE 2016

5. INCOME TAX

The Company and all of its subsidiaries that operate in Mainland China were subject to the statutory
corporate income tax rate of 25% for the six months ended 30 June 2016 under the income tax rules
and regulations of the PRC, except that:

Eleven subsidiaries of the Company were subject to a corporate income tax rate of 15% as they have
been assessed as “High-New Technology Enterprises”, approved by certain government bureaus.
These subsidiaries include Shanghai Electric Group Shanghai Electric Machinery Co., Ltd.,
Shanghai Boiler Works, Ltd., Shanghai Electric Wind Power Equipment Co., Ltd., Shanghai Heavy
Machine Tool Works Co., Ltd., Shanghai No.1 Machine Tool Works Co., Ltd., Shanghai Machine
Tool Works Ltd., Shanghai Centrifuge Institute Co., Ltd., Shanghai Electric Automation R&D
Institute Ltd Inc., Shanghai Capital Numerical Control Co., Ltd., Shanghai Institute of Mechanical
& Electric Engineering Co., Ltd. and Shanghai Institute of Machine Building Technology Co., Ltd..
The abovementioned subsidiaries, upon receipt of the “High-New Technology Enterprise
Certificate”, are subject to corporate income tax rate of 15% for 3 years from the year of the receipt
of the said certificate. As of 30 June 2016, Shanghai Electric Nuclear Power Equipment Co., Ltd.
(“Nuclear Power”) and Shanghai Electric SPX Engineering Technology Co., Ltd. (“SPX
Engineering”), subsidiaries of the Company, have submitted the application for the High-New
Technology Enterprises. The board of the Company is of the view that Nuclear Power and SPX
Engineering are virtually certain to be subject to a corporate income tax rate of 15% in the year of
2016 as they will be assessed as “High-New Technology Enterprises”, to be approved by certain
government bureaus. Therefore, all the above mentioned subsidiaries calculated taxes on profit at
the rates of 15% for the six months ended 30 June 2016.

Taxes on profits assessable elsewhere have been calculated at the rates of tax prevailing in the
countries/jurisdictions in which the Group operates, based on existing legislation, interpretations and
practices in respect thereof.

Unaudited
For the six months ended 30 June
2016 2015
RMB'000 RMB'000
(Restated)

The Group:
Current - Mainland China
Charge for the period 763,716 765,616
Overprovision in prior years (48,641) (32,842)
Current - Elsewhere
Charge for the period 56 (151)
Underprovision in prior years - 151
Deferred (144,024) (193,595)

Total tax charge for the period 571,107 539,179

13
SHANGHAI ELECTRIC GROUP COMPANY LIMITED

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION

FOR THE SIX MONTHS ENDED 30 JUNE 2016

6. DIVIDEND

The Board of Directors did not recommend the payment of an interim dividend in respect of the
period.

7. EARNINGS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE

PARENT

Basic

The calculation of the basic earnings per share is based on the profit for the period attributable to
ordinary equity holders of the parent company amounting to RMB 1,245,006,000 (for the six
months ended 30 June 2015: RMB1,397,243,000), and the weighted average number of ordinary
shares of 12,824,307,029(for the six months ended 30 June 2015: 12,823,626,660) in issue during
the period.

Diluted

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary
shares outstanding to assume conversion of all dilutive potential ordinary shares. The Company
has potential ordinary shares arisen from the Electric Convertible Bonds. The Electric Convertible
Bond is assumed to have been converted into ordinary shares and the net profit is adjusted to
eliminate interest expense less the tax effect. The result is anti-dilutive and therefore there is no
dilutive ordinary share for the calculation of diluted earnings per share for the six month ended 30
June 2016.

14
SHANGHAI ELECTRIC GROUP COMPANY LIMITED

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION

FOR THE SIX MONTHS ENDED 30 JUNE 2016

8. TRADE RECEIVABLES

The aging of trade receivables net of provision for bad debts calculated based on maturity date is
analysed below:

30 June 2016 31 December 2015

(Restated and
(Unaudited) Unaudited)
RMB'000 RMB'000

Undue 18,897,877 17,628,182

Within 3 months 3,772,105 3,502,372
Over 3 months but within 6 months 1,717,293 1,624,600
Over 6 months but within 1 year 1,739,190 1,298,438
Over 1 year but within 2 years 1,439,746 1,309,037
Over 2 years but within 3 years 568,322 527,189
Over 3 years past due 115,681 131,533
28,250,214 26,021,351

For the sale of large-scale products, deposits and progress payments are required from
customers. Retention money is calculated mainly at 5% to 10% of the total sales value, with
retention periods of one to two years.

For the sale of other products, the Group’s trading terms with its customers are mainly on credit
except for new customers, where payment in advance or cash on delivery is normally required.
The credit period is generally three months and may extend to six months for key customers.

9. TRADE PAYABLES
An aging analysis of the trade payables based on the invoice date is as follows:

30 June 2016 31 December 2015

(Restated and
(Unaudited) Unaudited)
RMB'000 RMB'000

Within 3 months 21,899,543 19,660,514

Over 3 months but within 6 months 3,553,226 3,470,778
Over 6 months but within 1 year 2,779,335 2,764,540
Over 1 year but within 2 years 1,592,990 1,342,428
Over 2 years but within 3 years 973,727 766,339
Over 3 years 644,826 603,374
31,443,647 28,607,973

15
SHANGHAI ELECTRIC GROUP COMPANY LIMITED
30 JUNE 2016

REVIEW OF OPERATIONS

The year of 2016 marked the commencement of the “Thirteenth Five-year Plan” as well as a year for
Shanghai Electric’s business transformation and management improvement. During the reporting period,
Shanghai Electric adhered to the principle of stability and resilience by staying focus on generation and
preservation of cash, further deepened our reform and accelerated innovation. Major focuses set at the
beginning of the year has made steady progress and the Company maintained a stable development. During
the reporting period, the Company achieved a turnover of RMB36,867 million, representing a decrease of
0.7% as compared to that in the corresponding period of the preceding year; the net profit attributable to
shareholders of the parent company amounted to RMB1,245 million, representing a decrease of 10.9% as
compared to that in the corresponding period of the preceding year.

During the reporting period, the Company obtained new orders in the amount of RMB 49,460 million,
representing an increase of 54.90% over the corresponding period of the preceding year, among which, new
orders from new energy and environmental protection equipment, high efficiency and clean energy
equipment and modern services accounted for 17.87%, 39.22% and 42.91% of the total new orders,
respectively. As at the end of the reporting period, the Company’s orders on hand amounted to RMB224,640
million (with orders in the aggregate amount of RMB92,220 million not yet coming into effect). It
represented a decrease of 10.49% over the corresponding period of the preceding year, among which, the
order on hand from new energy and environmental protection equipment, high efficiency and clean energy
equipment and modern services accounted for 12.49%, 58.38% and 29.13% of the total orders on hand
respectively.

New Energy and Environmental Protection Equipment

During the reporting period, domestic nuclear power market began to recover gradually. Most of the nuclear
power projects under construction had been resumed one after another while new nuclear power projects
were progressing slowly. During the reporting period, the first pressure vessel for high temperature gas-
cooled reactor in the world independently developed by us, was successfully delivered to Huaneng for its
nuclear power station project in Shidaowan. Besides, the reactor vessel internals for CAP1400 project, a
major project for National Energy Administration of China, passed for pre-inspection, filling a niche in
relevant domestic field. Based on the foundation we continuously concluded from successful commissioning
of nuclear power projects in Yangjiang and Fangchenggang, we have developed the Pakistan K2 and K3
units, the very first one of its type in China, with our independent intellectual property rights, and further
advanced specialized R&D projects such as welding rotors for nuclear power equipment. During the
reporting period, we strived to provide full operating cycle and comprehensive services to our wind power
equipment customers. We proactively enhanced our capabilities in research and development of wind power
technologies and engineering services, and at the same time explored the business model of investment in
and operation of as well as construction contracting for wind farms. During the reporting period, we
commenced construction of wind farms in Heilongjiang Province with initial attainment of the wind power
business model of “equipment manufacturing plus engineering service plus wind farm investment”. During
the reporting period, we received new wind power equipment orders of RMB7,890 million, representing an
increase of 32.61% over the corresponding period of the preceding year. Wind power equipment orders on
hand by the end of the reporting period amounted to RMB12,980 million, representing an increase of 24.69%
over the corresponding period of the preceding year. We continued to maintain our leading position in
offshore wind power equipment market in China, ranking number 1 within China in terms of offshore wind
power capacity installation. Meanwhile, the cloud computing and big data-based remote system management
platform, “Feng Yun” system, had been put online which marked a new service model of wind power station
in the technological revolution era. During the reporting period, we received a 4MW offshore wind turbines
order of 100 units from Binghai in Jiangsu Province, which is the largest offshore wind turbines order in
terms of value ever recorded in China. During the reporting period, our environmental protection industry
business remained focus on the three main businesses, namely solid waste treatment, water treatment and
distributed energy. We have successively signed a series of photovoltaic projects in Anhui, Hebei and
Tianjin, China, with a total contracted capacity of over 1,000MW.

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REVIEW OF OPERATIONS (continued)

High Efficiency and Clean Energy Equipment

During the reporting period, given the persistent slowdown in domestic thermal power market, we intensively
cultivated our thermal power business by shifting gradually from passive engagement in development of new
products driven by market demands, to an active innovation model with product research and development
leading the market demands. During the reporting period, we received new coal-fired power equipment
orders with a value of RMB10,100 million, maintaining at a similar level as compared to the corresponding
period of the preceding year. Coal-fired power equipment orders on hand by the end of the reporting period
amounted to RMB96,800 million (with orders in the aggregate amount of RMB43,500 million not yet
coming into effect), representing an increase of 7.56% over the corresponding period of the preceding year.
In the gas turbine area, taking advantage of our acquisition of 40% equity interest in Ansaldo Energia S.p.A.
(“Ansaldo”) in Italy, and through the concerted efforts with Ansaldo in the heavy gas turbine market, the
Company enhanced its capabilities in absorbing and mastering gas turbine design skills and core technologies
for servicing gas turbines, as well as accelerating the progress of independent development of the Company’s
gas turbine business. During the reporting period, we received new gas turbine orders in the amount of
RMB2,060 million, representing an increase of 134.09% over the corresponding period of preceding year.
Gas turbine orders on hand by the end of the reporting period amounted to RMB10,090 million, representing
an increase of 29.86% over the corresponding period of preceding year. During the reporting period, we
stressed on the further development of the industry strategic plan of “3+1”, which refers to development
direction towards “high voltage technology, intelligence-based manufacturing, power electronics technology
and engineering service” for our power transmission and distribution equipment business, continuously
enhanced our industry capability level and proactively strived for market expansion. We were awarded the
tender for 500kV transformer project under the 220-750kV transformers project in the 2nd power
transmission equipment tender invitation from State Grid Corporation of China in 2016, marking a new stage
of development for the Company’s products. Our self-developed DC traction supply substation had
succeeded in the tender for the modern light rail project of Longhua New District, Shenzhen, which achieved
breakthrough in obtaining our first order in DC traction supply equipment to be utilized by any rail systems
in China.

Industrial Equipment
During the reporting period, while regional differentiation became more and more apparent in national real
estate market, competition in the elevator market intensified. On the other hand, quantity of elevators in
service in China exceeded 4 million as at the end of 2015. With increasing number of elevators in service for
over 15 years, there will be significant increase in the replacement of old elevators in the future, resulting in
yearly growth in production value for elevator repairs, maintenance and retrofit. Meanwhile, against the
backdrop of continuous acceleration of industrialization and urbanization, coupled with supportive public
transportation, elevator market will manage to keep the momentum for stable development in a prolonged
period in the future. During the reporting period, while accommodating conditions in the market, Shanghai
Mitsubishi Elevator Co., Ltd. (“Shanghai Mitsubishi Elevator”) attached more importance to maintaining
and developing relationships with major strategic customers, as well as stepping up effort on core and major
projects in second-and-third tier cities. During the reporting period, major projects undertaken included
Shengjing Financial Plaza（盛京金融廣場）, Chengdu Taihe International Fortune(成都泰和國際財富),
Di Jing Yuan in Xiamen（廈門帝景苑）, Shenzhen Metro Technology Building (深圳地鐵科技大厦),
Shanghai Jin Mao Palace (上海大寧金茂府) and Qingdao Jiaodong International Airport（青島㬵東新國
際機場）. In the meantime, Shanghai Mitsubishi Elevator continued to explore the development of service
industrialization. In light of rapid growth in demand for in-use elevator, especially for business of retrofit of
old elevators, Shanghai Mitsubishi Elevator is speeding up the construction of service centers, logistics
centers and training centers. With the principle of “service marketing”, we created a new growth driver for
services in addition to the business of retrofit of old elevators. Shanghai Mitsubishi Elevator has made all
efforts to push forward the application of mobile internet in engineering services and enhancement of
information technology in aspects of project management installation and repairs and maintenance quality
check. Through big data analysis and application on customers’ information, improvement in operating
SHANGHAI ELECTRIC GROUP COMPANY LIMITED
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REVIEW OF OPERATIONS (continued)

efficiency, as well as strengthening of management and control capabilities, revenue generated from
installation and maintenance services of Shanghai Mitsubishi Elevator exceeded RMB 2,500 million for the
first half of 2016, accounting for more than 28% of turnover of Shanghai Mitsubishi Elevator.

Modern Services
During the reporting period, we continue to develop the power plant engineering business at steady pace.
Devising upon the National Initiative of “One Belt One Road”, we regarded over 50 countries and regions
covered by the “One Belt One Road” initiative as the core markets of our engineering industry and planned
to extend its overseas sales network into Malaysia, Turkey, Poland, Pakistan and Columbia, and actively
promote the construction of sales networks, so as to achieve the sales capacity in multiple regions. During
the reporting period, the Company and Egyptian Electricity Holding Company entered into a conditional
EPC (engineering, procurement, construction) general contracting agreement regarding the Hamrawien coal-
fired power plant projects in Egypt during President Xi Jinping’s visit to Egypt, which is the first ever coal-
fired power plant sales order in Egypt. A general contracting agreement BDWC-1-LOT3A on design,
equipment supply, land construction work and installation of supply substation was entered into between
Ethiopia Electric Power and us, with contract value of approximately US$100 million. Regarding our power
plant engineering business, we will explore new energy and distributed energy markets instead of focusing
merely on coal-fired market. We will also strive to facilitate the business model of “integrating business and
finance” while enhancing the effort on project investment and project financing. During the reporting period,
to capture opportunities in the market of thermal power enhancement projects, we undertook an EPC
agreement relating to the capacity expansion, energy conservation, emission reduction as well as integration
and upgrading of phase two of Daihai power plants in Inner Mongolia, thereby continuing to achieve
breakthroughs in aspect of upgrading power generating units market. During the reporting period, our
financial service platform has continued the expansion of its services and functionality, and has been
gradually transformed from single internal banking service provider into a comprehensive financial services
provider with diversified financial services. Our financing company has further improved the construction
of global treasury capability of the Group. Our leasing company has further improved its strength of support
for the core businesses of the Group while our insurance brokerage company has further enhanced the
centralized management over the insurance affairs of the Group to boost rapid development.

MANGEMENT DISCUSSION AND ANALYSIS

During the reporting period, the Group recorded a turnover of RMB36,867 million, representing a decrease
of 0.7% compared with that of the same period of the preceding year. The net profit attributable to
shareholders of the parent company amounted to RMB1,245 million, representing a decrease of 10.9%
compared with that of the same period of the preceding year.

New Energy and Environmental Protection Equipment

During the reporting period, the new energy and environmental protection equipment segment achieved sales
revenue of RMB 4,949 million, representing an increase of 19.1% as compared to the corresponding period
of the preceding year. The increase is mainly due to the increase of revenue from wind power equipment of
48.2% as compared to the corresponding period of the preceding year to RMB3,012 million. During the
reporting period, the gross profit margin of the segment increased by 0.7 percentage point from that of the
corresponding period of the preceding year to 14.6% and the operating profit margin of the segment increased
by 3.2 percentage points from that of the corresponding period of the preceding year to 1.7%, mainly due to
expansion of scale of operation of and revenue from the segment over the reporting period.

High Efficiency and Clean Energy Equipment

During the reporting period, the high efficiency and clean energy equipment segment achieved a turnover of
RMB 13,529 million, representing an increase of 3.4% as compared to the corresponding period of the
preceding year. Gross profit margin of the segment increased by 0.1 percentage point from that of the
corresponding period of the preceding year to 15.5%, while operating profit margin of the segment increased

SHANGHAI ELECTRIC GROUP COMPANY LIMITED

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MANGEMENT DISCUSSION AND ANALYSIS (continued)

by 1.1 percentage points from that of the corresponding period of the preceding year to 3.2%. The increase
is mainly due to greater proportion of 1000MW products (which is of higher profitability) within the sales
of coal-fired power equipment as compared to the corresponding period of the preceding year.

Industrial Equipment
During the reporting period, the industrial equipment segment recorded a turnover of RMB 11,514 million,
representing a decrease of 7.9% as compared to the corresponding period of the preceding year. Gross profit
margin of the segment increased by 1.4 percentage points from that of the corresponding period of the
preceding year to 22.4%, while operating profit margin of the segment increased by 2.1 percentage points
from that of the corresponding period of the preceding year to 10.7%, mainly due to the industry-leading
level of gross profit margin maintained by our elevator business together with the Company’s move to exit
the printing and packaging business which had yielded remarkable results, boosting the profitability of the
segment.

Modern Services
During the reporting period, the modern services segment recorded a turnover of RMB 8,375 million,
representing a decrease of 3.3% as compared to the corresponding period of the preceding year. Gross profit
margin of the segment decreased by 5.0 percentage points from that of the corresponding period of the
preceding year to 13.4%, while operating profit margin of the segment decreased by 8.4 percentage points
from that of the corresponding period of the preceding year to 11.6%. The decrease is mainly due to the
difference in project scale and gross profit margin level of the power plant engineering business between the
reporting period and the corresponding period of the preceding year, and the adverse impact over our
financial service business due to volatility of stock market leading to a decrease in relevant investment
revenue as compared to the corresponding period of the preceding year.

Outlook
Looking forward to the second half of 2016, we will stay on the track of “adhering to the development theme
of innovation and development, insisting on pressing ahead development with a direction towards high-end
technology, asset-light business structure, group level centralized management and controls, hierarchy-
reduced operation structure, as well as intelligent products” and insist on the concept of “One Company” and
adhere to the principle of stable and steady development with a focus on generation and preservation of cash,
as well as expediting the Group’s transformation into a quality and effectiveness targeted development mode,
to persevere with our goal of building Shanghai Electric into a multinational group with global presence and
operations, international competitiveness and brand influence.

Assets Restructuring and Placing of A Shares

On 18 January 2016, the assets restructuring and the placing of A shares (the “Transactions”) were approved
by the shareholders of the Company at the 2016 first extraordinary general meeting, the 2016 first A shares
class meeting and the 2016 first H shares class meeting. The Company proposed to conduct an assets swap
for its 100% equity interests in Shanghai Heavy Machinery Plant Co., Ltd., at a value of RMB1.00, with the
equivalent portion of 100% equity interests in Shanghai Electric Industrial Company Limited, 61% equity
interests in Shanghai DENSO Fuel Injection Co., Ltd., 100% equity interests in Shanghai Blower Works Co.,
Ltd. and 14.79% equity interests in Shanghai Rail Traffic Equipment Development Co., Ltd. held by
Shanghai Electric (Group) Corporation (“SEC”). The difference between the consideration for the equity
interests of the incoming assets and that for the outgoing assets of RMB3,400,913,224 and the consideration
for the land use rights for 14 parcels of land located at Shanghai, the PRC, the buildings and structures erected
thereon with certain auxiliary facilities together with equipment and machines held by SEC (the “Target
Properties”) of the incoming assets of RMB2,916,326,263 will be settled by the way of issuance of
606,843,370 consideration shares by the Company to SEC at the issue price of RMB10.41 per consideration
share. The Transactions have been approved by China Securities Regulatory Commission on 26 April 2016.

SHANGHAI ELECTRIC GROUP COMPANY LIMITED

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MANGEMENT DISCUSSION AND ANALYSIS (continued)

For details of the implementation progress of the Transactions, please refer to the announcements of the
Company dated 21 June 2016, 21 July 2016 and 19 August 2016.

MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS

The Company has adopted the provisions as set out in Appendix 10 of the Rules Governing the Listing of
Securities on the Stock Exchange of Hong Kong Limited (the “Hong Kong Listing Rules”) as its model code
for securities transactions by directors (the “Directors”), supervisors (the “Supervisors”) and relevant
employees of the Company. Further to the Company’s enquiry, all Directors and Supervisors confirmed that
they had complied with the Model Code and the relevant provisions as set out in Appendix 10 of the Hong
Kong Listing Rules during the period from 1 January 2016 to 30 June 2016. No violation of the Model Code
by relevant employees has been found by the Company.

CORPORATE GOVERNANCE

For the first half of 2016, the Board is of the view that the Company had complied with the code provisions
of the Corporate Governance Code (the “Code”) as set out in Appendix 14 of the Hong Kong Listing Rules
except for a deviation from code provision A.2.1 of the Code concerning the requirements to separate the
roles of the chairman and chief executive officer.

Pursuant to code provision A.2.1 of the Code, roles of the chairman and chief executive officer should
separate and should not be performed by the same individual. The division of responsibilities between the
chairman and chief executive officer should be clearly established and set out in writing. For the first half of
2016, the duties of the chairman of the Board and the chief executive officer have been carried out by Mr.
Huang Dinan. However, Mr. Zheng Jianhua, an executive Director and the President, has been responsible
for all the day-to-day operations of the Company and execution of instructions from the Board. The Company
is of the opinion that segregation of duties and responsibilities between the Board and the senior management
has been well maintained and there exists no problem of over-centralization of management authority.

STRATEGY COMMITTEE

The Strategy Committee is currently composed of Mr. Huang Dinan, Mr. Wang Qiang (resigned on 6th June
2016), Mr. Zheng Jianhua, Dr. Lui Sun Wing and Dr. Chu Junhao.

NOMINATION COMMITTEE

The Nomination Committee currently comprises Dr. Chu Junhao, Mr. Wang Qiang (resigned on 6th June
2016) and Mr. Kan Shun Ming. The primary functions of our Nomination Committee include studying the
criteria, procedures and methods for selecting candidates for Directors and making recommendations to the
Board.

To realize a sustainable and balanced development, the Company adopted the written policy of Board
member diversification. A diversified Board enables the Company to reach its strategic goals and promote a
sustainable development. When deciding the Board member composition, the Company takes several
elements into consideration including but not limited to gender, age, cultural and educational background,
region, expertises, skills, knowledge and terms of service. The Nomination Committee sticks to the principle
of meritocracy in the nomination of the directors and fully considers the above mentioned goals and
requirements.

AUDIT COMMITTEE

The Audit Committee currently comprises Mr. Kan Shun Ming, Dr. Lui Sun Wing , Dr. Chu Junhao and Ms.
SHANGHAI ELECTRIC GROUP COMPANY LIMITED
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AUDIT COMMITTEE (continued)

Yao Minfang. During the reporting period, the Board revised the Terms of Reference for the Audit
Committee, which specifies that the Audit Committee is also responsible for evaluating and reviewing the
effectiveness of the risk management and internal control systems of the Company and its subsidiaries on a
regular basis. The review should cover financial, operational, compliance controls and etc. to ensure the
Company establishes and maintains appropriate and effective risk management and internal control systems.
The Audit Committee has reviewed the accounting policies adopted by the Group with the management and
the Company's external auditors, and conducted a review of the credit limits for connected transactions of
the Company. They also discussed internal controls of the Group and financial reporting matters, including
having reviewed and agreed to the unaudited interim condensed consolidated financial statements for the
period under review.

REMUNERATION COMMITTEE

The Remuneration Committee, which comprises Dr. Lui Sun Wing, Mr. Wang Qiang (resigned on 6th June
2016) and Dr. Chu Junhao, is mainly responsible for providing recommendations to the Board in respect of
the remuneration policy for and the structure of the Directors, Supervisors and operation team of the
Company, and determining applicable and transparent procedures.

INTERIM DIVIDEND

The Board of Directors did not recommend the payment of an interim dividend in respect of the reporting
period.

PURCHASE, SALE OR REDEMPTION OF THE COMPANY’S SECURITIES

During the reporting period, neither the Company nor any of its subsidiaries has purchased, sold or redeemed
any of the Company’s securities.

DISCLOSURE OF INFORMATION ON STOCK EXCHANGE’S WEBSITE

The results announcement will be published on the Company’s website (http://www.shanghai-electric.com)

and the Stock Exchange’s website (http://www.hkexnews.hk). The 2016 Interim Report will be despatched
to the shareholders of the Company and will be made available on the websites of the Company and the
Stock Exchange in due course.

BOARD OF DIRECTORS AND SUPERVISORS

As at the date of this announcement, the executive Directors of the Company are Mr. Huang Dinan, Mr.
Zheng Jianhua and Mr. Huang Ou; the non-executive Directors of the Company are Mr. Li Jianjin, Mr. Zhu
Kelin and Ms. Yao Minfang; and the independent non-executive Directors of the Company are Dr. Lui Sun
Wing, Mr. Kan Shun Ming and Dr. Chu Junhao.

As at the date of this announcement, the Supervisors of the Company are Mr. Dong Jianhua, Mr. Li Bin, Mr.
Zhou Changsheng and Mr. Zheng Weijian.

By order of the Board

Shanghai Electric Group Company Limited
Huang Dinan
Chairman

Shanghai, the PRC, 26 August 2016

# For identification purpose only

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