Dongfang Electric : ANNOUNCEMENT - LEVEL OF FULFILLMENT OF PERFORMANCE COMMITMENT IN 2020 OF THE TARGET COMPANIES UNDER ASSETS ACQUISITION BY ISSUANCE OF SHARES

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ANNOUNCEMENT

LEVEL OF FULFILLMENT OF PERFORMANCE COMMITMENT

IN 2020 OF THE TARGET COMPANIES UNDER ASSETS

ACQUISITION BY ISSUANCE OF SHARES

This announcement is made by Dongfang Electric Corporation Limited (the "Company") pursuant to Rule 13.10B of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

In June 2018, the Company completed the acquisition of 95% equity interest in Dongfang Electric Finance Co., Ltd. ("DEC Finance"), 100% equity interest in DEC International Cooperation Limited ("DEC International"), 100% equity interest in Sichuan Dongfang Electric Automatic Control Engineering Co., Ltd. ("DEC Automatic Control"), 41.24% equity interest in Dongfang Hitachi (Chengdu) Electronic Control Equipment Co., Ltd. ("DEC Hitachi"), 100% equity interest in DEC (Sichuan) Materials Co., Ltd. ("DEC Materials", formerly known as Dongfang Electric (Sichuan) Materials Co., Ltd.), 100% equity interest in DEC Bulk Logistic Co., Ltd. ("DEC Bulk Logistic"), 100% equity interest in Dongfang Electric (Chengdu) Hydrogen Fuel Cell Technology Co., Ltd. ("DEC Hydrogen", formerly known as Dongfang Electric (Chengdu) Clean Energy Co., Ltd.), 100% equity interest in DEC Academy of Science and Technology Co., Ltd. ("DEC Academy", formerly known as DEC Chengdu Smart Technology Co., Ltd.) and equipment assets and intellectual property and other intangible assets (other than the new special patent No. "201520304281.X") held by Dongfang Electric Corporation ("DEC").

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The Company has engaged Da Hua Certified Public Accountants (Special General Partnership) to carry out special audit in respect of the level of fulfillment of performance commitment in 2020 of the target companies that have made performance commitment under the asset restructuring. The level of fulfillment of the performance commitment is as follows:

1. PERFORMANCE COMMITMENT
   Pursuant to the Profit Forecast Compensation Agreement between Dongfang Electric Corporation Limited and Dongfang Electric Corporation and the Supplemental Agreement to the Profit Forecast Compensation Agreement between Dongfang Electric Corporation Limited and Dongfang Electric Corporation (together referred to as the "Profit Forecast Compensation Agreements") entered into between the Company and DEC on 7 March 2017 and 31 August 2017, respectively, performance commitment of the target assets which the valuer has carried out valuation using income approach and the result thereof has been taken as the pricing reference. As confirmed by both parties, the performance commitment only involved the following companies:
   For certain target assets of the transaction, namely, (i) 100% equity interest in DEC International, (ii) patents, proprietary technology, software products and trademark right in DEC Automatic Control, (iii) patents, proprietary technology, copyright and trademark right in DEC Hitachi, and (iv) trademark rights of Buram in DEC Materials, the valuer carried out valuation using income approach, and the results thereof were adopted as the pricing reference. Details of which are as follows:

		Unit: 0'000 Currency: RMB
	Accumulated Committed Net Profit
			For the year
	For the year	For the year	2018, 2019
Target Assets	2018	2018 and 2019	and 2020
100% equity interest in DEC International	22,640.01	47,557.85	74,380.80
Patents, proprietary technology and software
products in DEC Automatic Control	804.12	1,740.61	2,837.68
Trademark right in DEC Automatic Control	21.53	52.63	95.76
Patents, proprietary technology and copyright
in DEC Hitachi	142.68	310.18	498.67
Trademark right in DEC Hitachi	2.42	6.69	12.54
Trademark right of Buram in DEC Materials	2.21	4.49	6.83
DEC Finance	Where impairment exists in the impairment test, DEC
	shall make compensation pursuant to the agreement

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1. LEVEL OF FULFILLMENT OF THE PERFORMANCE COMMITMENT
   According to the Special Audit Report on Level of Fulfillment of Profit Forecast Involved in Assets Acquisition by Issuance of Shares and Connected Transaction

of Dongfang Electric Corporation Limited (Da Hua He Zi [2021] No. 002541)(《東 方 電 氣 股 份 有 限 公 司 發 行 股 份 購 買 資 產 暨 關 聯 交 易 事 項 所 涉 及 的

盈 利 預 測 實 現 情 況 的 專 項 審 核 報 告》( 大 華 核 字[2021]002541)) and the Audit Report on Impairment Test of Target Assets Injected in Dongfang Electric

Corporation Limited (Da Hua He Zi [2021] No. 002542)(《東 方 電 氣 股 份 有 限 公 司 注 入 標 的 資 產 減 值 測 試 審 核 報 告》( 大 華 核 字[2021] 第002542 號))

issued by Da Hua Certified Public Accountants (Special General Partnership), the level of fulfillment of the performance commitment in 2020 is as follows:

		Unit: 0'000 Currency: RMB
		Accumulated
	Net Profit of the	Net Profit of the
	Target Assets	Target Assets for	Whether
	Realized in the	the year 2018,	fulfilled the
Target Assets	year 2020	2019 and 2020	commitment
100% equity interest in DEC International	30,649.19	81,076.33	Yes
Patents, proprietary technology and software	2,446.14	5,580.92	Yes
products in DEC Automatic Control
and Patents, proprietary technology and
copyright in DEC Hitachi
Trademark rights in DEC Automatic Control	152.58	339.03	Yes
and Trademark right in DEC Hitachi
Trademark rights of Buram in DEC Materials	0.63	6.91	Yes
DEC Finance	Note		Yes

Note: On 31 December 2020, the valuation of 95% equity interest in DEC Finance (after deducting the impacts of capital injection from shareholders, donation received and profit distribution on the assets valuation during the compensation periods) amounted to RMB3,611,900,000, representing no impairment as compared with the transaction consideration for 95% equity interest in DEC Finance of RMB3,090,202,100.

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The net profit after deducting non-recurring items recorded by each of the aforesaid undertaking parties in 2020 has fulfilled the commitments made by DEC.

By Order of the Board

Dongfang Electric Corporation Limited

Gong Dan

Company Secretary

Chengdu, Sichuan, the PRC

30 March 2021

As at the date of this announcement, the directors of the Company are as follows:

Directors:	Yu Peigen, Huang Wei, Xu Peng and Bai Yong
Independent Non-executive	Gu Dake, Xu Haihe and Liu Dengqing
Directors:

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