WUHAN BOILER COMPANY LIMITED
（200770）
2009 ANNUAL REPORT
Disclosing Newspaper: Securities Times and Ta Kung Pao
Disclosing Date: March 30, 20102
Contents
I. Important Notes----------------------------------------------------------------------------- 3
II. Company Profile---------------------------------------------------------------------------- 4
III. Summary of Accounting Data and Business Data-------------------------------------- 6
IV. Changes in Share Capital and Particulars about Shareholders------------------------ 9
V. Particulars about Directors, Supervisors, Senior Management and Employees
------------------------------------------------------------------------------------------------13
VI. Corporate Governance-------------------------------------------------------------------- 23
VII. Brief Introduction to the Shareholders’ Meeting ------------------------------------ 29
VIII. Report of the Board of Directors------------------------------------------------------ 30
IX. Report of the Board of Supervisors -----------------------------------------------------44
X. Significant Events------------------------------------------------------------------------- 48
XI. Financial Report--------------------------------------------------------------------------- 57
XII. Documents for Reference----------------------------------------------------------------583
Section I Important Notes
The Board of Directors, the Board of Supervisors as well as directors, supervisors
and senior management of Wuhan Boiler Company Limited (hereinafter referred as
“the Company”) hereby confirm that there are no misstatements, misleading
statements or material omissions in this Annual Report and will take individual and/or
joint and several liabilities for the authenticity, accuracy and completeness of this
Annual Report.
No director, supervisor and senior management has disagreements to the
authenticity, accuracy and completeness of this Annual Report.
The Financial Audit Report 2009 of the Company had been audited by Wuhan
Zhonghuan Certified Public Accountants Ltd., and a standard unqualified Audit
Report had been issued.
Mr. YEUNG Kwok Wei Richard, the Chairman of the Board of Directors, Mr.
CHIN Wee Hua, Finance Director, and Mr. SEOW Ven Sern in charge of accounting,
hereby insure that the Financial Report enclosed in this Annual Report is true and
complete.4
Section II Company Profile
I. Legal Name of the Company
In Chinese: 武汉锅炉股份有限公司
In English: WUHAN BOILER COMPANY LIMITED
Abbr. in English: WBC
II. Legal Representative: YEUNG Kwok Wei Richard (Yang Guowei)
III. Secretary of the Board of Directors: Kevin Qin
Contact Address: No. 1, Liufangyuan Road, East Lake New Technology
Development Zone, Wuhan, Hubei
Contact Tel: (027) 81994266
Contact Fax: (027) 81994273
E-mail: kevin.qin@power.alstom.com
Securities Affairs Representative: Xu Youlan
Contact Tel: (027) 81993700
Contact Fax: (027) 81993701
E-mail: youlan.xu@power.alstom.com
IV. Registered Address and Office Address: No.1, Liufangyuan Road, East Lake
High-Tech Development Zone, Wuhan
Post Code: 430205
Internet Website: http://www.wbcl.com.cn
E-mail: cnwhu.wbc@power.alstom.com
V. Newspapers for Disclosing the Information of the Company
Securities Times (Domestic), Ta Kung Pao (Overseas)
Internet Website for Publishing the Annual Report: http://www.cninfo.com.cn
Place Where the Annual Report is Prepared and Placed: Securities Department of
the Company
VI. Stock Exchange Listed with: Shenzhen Stock Exchange
Stock Abbreviation: *ST WUGUO–B
Stock Code: 200770
VII. Other Information of the Company
Initial Registration Date: the Company was formally incorporated on Apr. 8 1998
Initial Registration Place: No. 586, Wuluo Road, Wuhan, Hubei
Registration Change Date: the Company changed its registration with Hubei
Administration for Industry and Commerce as a stock company (Sino-foreign
joint venture company and listed company) on Oct. 26, 2007.
The Changed Registration place: No. 586, Wuluo Road, Wuhan, Hubei
The Latest Registration Date: the Company changed its registration with Hubei
Administration for Industry and Commerce as a stock company (Sino-foreign
joint venture company and listed company) on Oct. 30, 2009.
The Latest Registration Place: No. 1, Liufangyuan Road, East Lake New
Technology Development Zone, Wuhan, Hubei
Business License No. 420000400000568
Tax Registration No. 4201062717564325
The Certified Public Accountants engaged by the Company: Wuhan Zhonghuan
Certified Public Accountants Ltd.
Address: 16/F, Tower B, Wuhan International Mansion6
Section III Summary of Accounting Data and Business Data
I. Accounting data for financial year 2009
Unit: RMB
Items Amount
Total profit -687,560,230.09
Net profit -676,744,666.95
Net profit attributable to shareholders of the Company -675,672,514.99
Net profit after deducting non-recurring gains and losses -648,399,383.22
Operating profit -687,508,381.33
Investment income 0.00
Net non-operating income and expenditure -51,848.76
Net cash flow arising from operating activities 278,461,556.72
Net increase/decrease in cash and cash equivalents -10,497,718.20
Note: Items and amounts of non-recurring gains and losses
Unit: RMB
Items of non-recurring gains and losses Amount
Gains on disposal of non-current assets including reversal of the impairment loss 544,521.65
Government grant recognized in current year, except for those acquired in the ordinary
course of business or granted continuously in certain standard quota according to relevant
national laws and regulations
277,776.00
Company restructuring expenses such as employee placement and integration costs -27,263,814.10
Other non-operating income and expense other than abovementioned -874,146.41
Minority interest share of non-recurring gains and losses 42,531.09
Total -27,273,131.77
II. Key accounting data and financial indices of the Company for the last three years
1. Key accounting data
Unit: RMB
Items 2009 2008
Increase/decrease
from last year (
％
)
2007
Operating revenue 517,679,190.56 1,121,071,252.12 -53.82% 1,770,372,881.47
Total profit -687,560,230.09 -372,568,353.42 -84.55% -521,693,773.71
Net profit attributable to shareholders of the
Company
-675,672,514.99 -353,934,337.61 -90.90% -480,602,218.59
Net profit attributable to shareholders of the
Company after deducting non-recurring
gains and losses
-648,399,383.22 -358,181,920.48 -81.03% -481,219,951.18
Net cash flow arising from operating
activities
278,461,556.72 -829,589,797.80 133.57% -89,934,049.57
Items 2009 2008
Increase/decrease
from last year (
％
)
20077
Total assets 2,100,746,323.46 2,867,879,261.58 -26.75% 2,525,381,208.62
Owners’ equity (or shareholders’ equity) -893,961,597.17 -218,289,082.18 -309.53% 135,840,152.09
2. Key financial indices
Unit: RMB
Items 2009 2008
Increase/decrease
from last year (%)
2007
Basic earnings per share -2.27 -1.19 -90.76% -1.62
Diluted earnings per share -2.27 -1.19 -90.76% -1.62
Basis earnings per share after deducting
non-recurring gains and losses
-2.18 -1.21 -80.17% -1.62
Fully diluted return on net assets --- --- --- -353.80%
Weighted average return on net assets --- --- --- -126.61%
Fully diluted return on net assets after deducting
non-recurring gains and losses
--- --- --- -354.25%
Weighted average return on net assets after
deducting non-recurring gains and losses
--- --- --- -126.77%
Net cash flow per share arising from operating
activities
0.94 -2.79 133.69% -0.30
Items
At the end
of 2009
At the end
of 2008
Increase/decrease
from last year (%)
At the end of
2007
Net assets per share attributable to shareholders of
the Company
-3.01 -0.73 -312.33% 0.46
3. In accordance with Information Disclosure Reporting Guidelines to Public Securities Companies No.9
promulgated by China Securities Regulatory Commission, the Company’s return on net assets and earnings per
share for year 2009 are calculated based on fully diluted method and weighted average method.
Return on Net Assets
Profit for this report period Current year
The same period of last
year
Fully
diluted
Weighted
average
Fully
diluted
Weighted
average
Net profit attributable to common shareholders of the
Company --- --- --- ---
Net profit attributable to common shareholders of the
Company after deducting non-recurring gains and losses
--- --- --- ---
Earnings per Share
In current period The same period of last year
Profit for this report period
Basis
earnings per
share
Diluted earnings
per share
Basis
earnings per
share
Diluted earnings
per share8
Net profit attributable to common
shareholders of the Company
-2.27 -2.27 -1.19 -1.19
Net profit attributable to common
shareholders of the Company after
deducting non-recurring gains and losses
-2.18 -2.18 -1.21 -1.219
Section IV Changes in Share Capital and Particulars about Shareholders
I. Changes in share capital
Unit: Share
Before the change Increase/decrease (+, - ) After the change
Items
Amount Proportion
Issuance
of new
shares
Bonus
shares
Capitalization
of public
reserve fund
Other Subtotal Amount Proportion
I. Non tradable shares 172,000,000 57.91% 172,000,000 57.91%
1. Sponsors’ shares 172,000,000 57.91% 172,000,000 57.91%
Including: Shares
held by the State
Share held by
domestic corporation
20,530,000 6.91% 20,530,000 6.91%
Share held by foreign
corporation
151,470,000 51.00% 151,470,000 51.00%
Others
2. Raised corporate
shares
3.Employee shares
4. Preference shares
or others
II. Tradable shares 125,000,000 42.09% 125,000,000 42.09%
1. RMB ordinary
shares
2. Domestically listed
foreign shares
125,000,000 42.09% 125,000,000 42.09%
3. Overseas listed
foreign shares
4. Others
III. Total shares 297,000,000 100.00% 297,000,000 100.00%
II. Issuance and listing of shares
(1) On Mar. 20 1998, the Company issued 125,000,000 domestically listed foreign
shares (B shares) to foreign investors at HKD 1.496 per share. The shares were listed
in Shenzhen Stock Exchange on Apr. 15, 1998 with the stock code 200770.
(2) At the end of this report period and inclusive of the last three years, neither shares
nor derivative securities were issued.
(3) Share structure of the Company never changed in this report period.
(4) No employee shares remain within the Company.
(5) There was no profit distribution of the Company in this report period.
III. Introduction about shareholders
(1) As at the end of Dec. 31 2009, the Company had 10,249 shareholders: including10
one foreign corporation shareholder, Alstom (China) Investment Co., Ltd, one
domestic corporation shareholder, Wuhan Boiler Group Co., Ltd, and 10,247
shareholders having domestically listed foreign shares.
(2) Shares held by the principal shareholders
As at end of Dec. 31 2009, the top ten shareholders and the top ten shareholders
holding tradable shares of the Company are as follows:
Total number of shareholders 10,249
Particulars about shares held by the top ten shareholders
Name of shareholders
Nature of
shareholders
Proportion of
shares held
Total shares
held
Number of non-tradable
shares held
Shares pledged
or frozen
ALSTOM (CHINA)
INVESTMENT COMPANY
LIMITED
Domestic nonstate-
owned
corporation
51.00% 151,470,000 151,470,000 0
WUHAN BOILER GROUP
CO., LTD
State-owned
corporation
6.91% 20,530,000 20,530,000 0
WANG JIA YI
Domestic natural
person
0.58% 1,713,699 0 0
CHEN CHU YUN
Domestic natural
person
0.46% 1,372,450 0 0
HSBC BROKING
SECURITIES (ASIA)
LIMITED-CLIENTS A/C
Foreign
corporation
0.42% 1,234,114 0 0
DAIWA SECS SMBC
HONG KONG
LTD-CLIENTS
Foreign
corporation
0.41% 1,205,445 0 0
ZHUANG CHANG XIONG
Domestic natural
person
0.35% 1,035,000 0 0
TANG JUAN
Domestic natural
person
0.30% 887,236 0 0
ZHUANG YAO HUA
Domestic natural
person
0.28% 821,150 0 0
LI SHU HUI
Domestic natural
person
0.27% 808,552 0 0
Particulars about tradable shares held by the top ten shareholders
Name of shareholders
Number of tradable
shares held
Type of share
WANG JIA YI 1,713,699 Domestically listed foreign shares
CHEN CHU YUN 1,372,450 Domestically listed foreign shares
HSBC BROKING SECURITIES (ASIA)
LIMITED-CLIENTS A/C
1,234,114 Domestically listed foreign shares
DAIWA SECS SMBC HONG KONG
LTD-CLIENTS
1,205,445 Domestically listed foreign shares
ZHUANG CHANG XIONG 1,035,000 Domestically listed foreign shares
TANG JUAN 887,236 Domestically listed foreign shares11
ZHUANG YAO HUA 821,150 Domestically listed foreign shares
LI SHU HUI 808,552 Domestically listed foreign shares
CHINA MERCHANTS SECURITIES(HK) CO.,
LTD.
802,505 Domestically listed foreign shares
GUOTAI JUNAN SECURITIES (HONGKONG)
LIMITED
761,351 Domestically listed foreign shares
Explanation on affiliated
relationship among the top
ten shareholders or persons
acting in concert
Among the top ten shareholders of the Company, Alstom (China) Investment Co., Ltd. (the first
principal shareholder of the Company) and Wuhan Boiler Group Co., Ltd. (the second principal
shareholder of the Company) hold non-tradable shares of the Company, the other eight
shareholders are public shareholders who hold tradable B shares. During the report period, the
change of shares held by the other eight shareholders was resulted from trading on the
secondary market. Among the top ten shareholders of the Company, no affiliated relationship
exists between Alstom (China) Investment Co., Ltd. (the first principal shareholder of the
Company), Wuhan Boiler Group Co., Ltd. (the second principal shareholder of the Company)
and the other shareholders, and they are not persons acting in concert as defined in the
Administrative Rules on Information Disclosure about Changing of Shareholding Status. The
Company is not aware of whether there is any affiliated relationship among the top ten
shareholders with tradable shares and whether there are persons acting in concert among them.
The Company is not aware of whether there is any affiliated relationship among the top ten
shareholders and the top ten shareholders with tradable share.
(3) The controlling shareholder and actual controller of the Company
Alstom (China) Investment Co., Ltd is the controlling shareholder of the Company,
holding 151,470,000 shares as of Dec. 31 2009, is the only shareholder holding over
10% shares of the Company. The shares held by Alstom (China) Investment Co., Ltd
accounts for 51% of total shares.
Legal representative: Mr. Claude Burckbuchler
Date of foundation: Jan. 26 1999
Registered capital: USD 60,964,400
Business License No. Qi-Du-Guo-Zi No. 000816
Business scope: to invest in the fields of industry, infrastructure and energy that
encouraged and permitted by China government for foreign investment, and to
provide relevant services.
Alstom Holdings, a company registered in France, is the controlling shareholder of
Alstom (China) Investment Co., Ltd
Legal representative: Mr. Poupart-Lafarge HENRI
Date of foundation: Jul. 29 1988
Registered capital: EUR 624,125,422.20
Business scope: shareholding.
Alstom S.A., a listed company in France, is the controlling shareholder of Alstom
Holdings.
Chairman of the Board and CEO: Mr. Patrick KRON
Date of foundation: Nov. 17 1992
Share capital: as of Mar. 31, 2009, Alstom’s share capital amounts to EUR 1,12
940,640,814
Business scope: the conduct of transactions in France and abroad, notably in the
following fields: energy, transmission and distribution of energy, transport, industrial
equipment, naval construction & repair work and engineering and consultancy, design
and/or production studies and general contracting associated with public or private
works and construction; and all the activities related or incidental to the above.
Bouygues, a company listed in France holds 29.95% shares of Alstom S.A.
Chairman of the Board and CEO: Mr. Martin Bouygues
Date of foundation: 1952
Share capital: EUR 347,502,578
Business Scope: construction, telecommunication business and other investment.
Other shareholders hold 65.14% shares of Alstom S.A.
Other shareholders hold 65.14% tradable shares of Alstom S.A.
(4) Illustration on relationship between the Company and its ultimate controlling
shareholder
(Note: there was no affiliated relationship or persons acting in concert among ultimate
controlling shareholders)
29.95% 4.91% 65.14%
100%
100%
100
％
51%
ALSTOM S. A.
(Listed in France)
Alstom Holdings
Alstom (China) Investment Co., Ltd
Wuhan Boiler Company Limited
FIDELITY INTERNATIONAL
(Fidelity International and FMR
LLC) Bouygues
Other shareholders13
Section V Particulars about Directors, Supervisors, Senior Management
and Employees
I. Basic information of directors, supervisors and senior management
Share excitation authorized during
the report period
Name Title Gender Age
Beginnin
g date of
office
term
Ending
date of
office
term
Shares
at the
year
beginni
ng
Sha
res
at
the
year
-en
d
Reaso
n for
chang
e
Total
remuneratio
n drawn
from the
Company in
this report
period (Ten
thousand)
Shares
to be
exercis
ed
Shares
had
been
exerci
sed
Exerc
ise
price
Market price
of stock at the
period-end
Remunerati
on drawn
from
shareholder
entities or
other related
parties or
not
Mr. YEUNG
Kwok Wei
Richard
(Yang Guowei)
Chairman of
the Board of
Directors
Male 60
Sep. 25,
2007
Sep. 25,
2010
0 0 0.00 Yes
Ms. Liu Yi Director Female 40
Sep. 25,
2007
Sep. 25,
2010
0 0 0.00 Yes
Mr. Claude
Burckbuchler
Director Male 60
Jun. 19,
2008
Sep. 25,
2010
0 0 0.00 Yes
Mr. Guy Chardon
(Ji Xiaodong)
Director Male 60
Jun. 2,
2009
Sep. 25,
2010
0 0 0.00 Yes
Mr. Xiong Gang Director Male 52
Jun. 2,
2009
Sep. 25,
2010
0 0 0.00 Yes
Mr. Xiang
Rongwei
Director Male 56
Nov. 5,
2008
Sep. 25,
2010
0 0 0.00 Yes
Mr. Wang Haisu
Independent
director
Male 55
Sep. 25,
2007
Sep. 25,
2010
0 0 10.00 No
Mr. André
CHIENG
(Qian Faren)
Independent
director
Male 56
Sep. 25,
2007
Sep. 25,
2010
0 0 10.00 No
Mr. Yang
Xiongsheng
Independent
director
Male 49
Sep. 25,
2007
Sep. 25,
2010
0 0
10.00
No
Mr. Victor Yang Supervisor Male 36
Jun. 2,
2009
Sep. 25,
2010
0 0 0.00 Yes
Ms. Sun Tong Supervisor Female 39
Jun. 19,
2008
Sep. 25,
2010
0 0 0.00 Yes
Mr. Yan Yaocai Supervisor Male 57
Feb. 20,
2009
Sep. 25,
2010
0 0 12.88 No
Mr. Gérard
VALLEE
General
Manger
Male 55
Aug. 20,
2007
Aug. 20,
2010
0 0 65.90 No
Mr. CHIN Wee
Hua
Finance
Director
Male 38
Oct. 26,
2009
Sep. 25,
2010
0 0
5.36
(Nov.-Dec.)
No14
Mr. Bai Xixin Vice GM Male 46
Sep. 25,
2007
Sep. 25,
2010
0 0 67.84 No
Mr. Jin Zhicheng Vice GM Male 50
Sep. 25,
2007
Sep. 25,
2010
0 0 27.98 No
Mr. Pei Hanhua Vice GM Male 50
Sep. 25,
2007
Sep. 25,
2010
0 0 48.69 No
Mr. Wu Xiaoqing Vice GM Male 41
Aug. 25,
2008
Sep. 25,
2010
0 0 56.49 No
Mr. Peter
Anthony Sommer
Vice GM Male 50
Aug. 25,
2008
Sep. 25,
2010
0 0 38.25 No
Mr. Kevin Qin
Board
Secretary
Male 29
Dec. 17,
2008
Sep. 25,
2010
0 0 42.45 No
Total: 395.84
Explanation:
1. No director, supervisor or senior management of the Company holds any Company
share.
2. Mr. Claude Burckbuchler, the board director of the Company, is acting as Legal
Representative in Alstom (China) Investment Co., Ltd, the controlling shareholder of
the Company; Ms. Liu Yi, the board director of the Company, is acting as CFO of
Alstom (China) Investment Co., Ltd, the controlling shareholder of the Company; Mr.
Xiong Gang, the board director of the Company, is acting as Vice President for Public
Affairs of Alstom (China) Investment Co., Ltd, the controlling shareholder of the
Company; the board director Mr. Xiang Rongwei is acting as Chairman of the Board
in Wuhan Boiler Group Co., Ltd, which is a shareholder of the Company; current
supervisor Mr. Victor Yang is acting as Legal Director in Alstom (China) Investment
Co., Ltd, the controlling shareholder of the Company. Other directors, supervisors and
senior management do not hold any position in shareholders.
II. Background and working experience of directors, supervisors and senior
management in latest five years
Mr. YEUNG Kwok Wei Richard (Yang Guowei), Chairman of the Board of the
Company, was born in April, 1949, Australian nationality. A HKIE Follow, major in
Electric Engineering and holder of MBA degree. He had worked for Hong Kong CLP
Co., Ltd, BBC, ABB and ALSTOM with positions held from Projects Sales Manager
to Senior Vice President. He ever held positions of Country Chief Representative and
Region Vice President in China of AREVA T&D SA. He is currently Regional
Director of International Networks of Alstom China in Hubei and Hong Kong. Mr.
YEUNG Kwok Wei Richard doesn’t hold any shares of WBC and didn’t get any
penalty or punishment from China Securities Regulatory Commission, other
government organs and Chinese stock exchanges.15
Ms. Liu Yi was born in Mar. 1969, Chinese nationality and holder of bachelor degree.
After graduation from Water Transport Department of Shanghai Marine College, she
worked as an Accountant and Internal Controlling Manager in Shell (China)
Development Co., Ltd, Total (China) Investment Co., Ltd and BP (China) Holdings
Limited. She is the Regional CFO of Alstom (China) Investment Co., Ltd (the
controlling shareholder of the Company). Ms. Liu Yi doesn’t hold any shares of WBC
and didn’t get any penalty or punishment from China Securities Regulatory
Commission, other government organs and Chinese stock exchanges.
Mr. Claude Burckbuchler, born on Oct. 8, 1949, French nationality, graduated from
Ecole Centrale Paris, was an engineer. Since Oct. 2007, Mr. Claude Burckbuchler
formally has been acting as President of Alstom China and President of Alstom Power
System in China. Before this, Mr. Claude Burckbuchler ever took several senior
positions in Alstom including General Manager and President of Global
Hydro-electric Power operation in China (from 1996 to 1998). In 2000, he was
appointed to act as Global President of Mechanical & Electrical Department, then
acted as Strategic Consultant of Merger and Acquisition of Electric Power
Department in Alstom. Before took part in Alstom, Mr. Claude Burckbuchler acted as
General Manager of Marine Affairs in Coflexip Company, which was famous in field
of petroleum and natural gas. Mr. Claude Burckbuchler doesn’t hold any shares of
WBC and didn’t get any penalty or punishment from China Securities Regulatory
Commission, other government organs and Chinese stock exchanges.
Mr. Guy Chardon was born on May 20 1949, French nationality. Mr. Guy Chardon
graduated from the Ecole Polytechnique in Paris in 1972 with a degree in Mechanical
Engineering and got an advanced degree from the Ecole des Mines in Paris in 1975.
Mr. Guy Chardon jointed Alstom in Oct 2003 and ever took the position as Senior
Vice President of Alstom Turbomachines Group. Now Mr. Guy Chardon is Senior
Vice President of Alstom Power Thermal Products. Before joining Alstom, Mr. Guy
Chardon ever was Senior Vice President of UK-based Imerys Paper Europe
(2001-2003), CEO of Manoir Industries Group (1998-2001), Executive Vice President
of France-based Labinal Group (1995-1998), Senior Vice President at Chicago-based
American National Can (1991-1995), Chairman and CEO of Pechiney Rhenalu
(1983-1991). Before entering executive management, Mr. Guy Chardon held various
civil servant positions in the French government, notably Advisor to the Minister for
External Trade and to the Prime Minister. Mr. Guy Chardon doesn’t hold any shares
of WBC and didn’t get any penalty or punishment from China Securities Regulatory
Commission, other government organs and Chinese stock exchanges.
Mr. Xiong Gang, born on June 21, 1957, Canadian nationality, graduated from State
Administration School of Canada Quebec University with a MBA degree in 1988 and
a diploma of Senior Research Course of International Administration in 1986. Mr.
Xiong graduated from East China Normal University with a bachelor degree.16
Currently, Mr. Xiong is working in Alstom (China) Investment Co., Ltd as Vice
President responsible for Public Affairs. Before joining in Alstom, Mr. Xiong ever
worked in US AEI (Asia) Co., Ltd as China Representative and Business
Development Director, in Meiya Power Company Ltd as Beijing Chief Representative
responsible for governmental affairs and business development between 2001 and
2007. Since January 1988, Mr. Xiong worked in Canada Quebec Water & Electricity
Co., Ltd as Marketing Development Manager, China Business Director, Asia Business
Director etc responsible for the Business Development and Project Management in
China and other Asian countries. Mr. Xiong Gang doesn’t hold any shares of WBC
and didn’t get any penalty or punishment from China Securities Regulatory
Commission, other government organs and Chinese stock exchanges.
Mr. Xiang Rongwei was born in Apr. 1953, Chinese nationality. As a holder of
Bachelor Degree, he worked as Deputy Director and Director of Finance as well as
Deputy General Accountant and General Accountant in Wuhan Boiler Factory, as
Deputy Chairman of the Board, Deputy General Manager, and General Manager in
Wuhan Boiler Group Co., Ltd., and as Director, Deputy General Manager, and
General Manager in Wuhan Boiler Co., Ltd. He holds the position as Chairman of the
Board of Wuhan Boiler Group Co., Ltd at present. Mr. Xiang Rongwei doesn’t hold
any shares of WBC and didn’t get any penalty or punishment from China Securities
Regulatory Commission, other government organs and Chinese stock exchanges.
Mr. Wang Haisu was born in Nov. 1954, Chinese nationality. He is a Doctor of
Philosophy in Economics, Professor and Doctoral Advisor. Currently he holds the
position as President of MBA College in Zhongnan University of Economics and Law
and professional researcher in Property Research Center of Key Research Base for
Humanities and Social Sciences under the Ministry of Education. His main research
area covers industrial organization, reform of state-owned enterprises and assets
appraisal. He also takes the positions of Vice Executive Director of Chinese Industrial
Economic Association, Vice President of Hubei Industrial Economic Association,
Director of China Appraisal Society, and Vice President of Hubei Appraisal Society,
consultant in Wuhan Association of Small and Medium Enterprises and member of
Drafting Group of Standards for the Appraisal of Assets in China. He was elected as a
member of Drafting Experts Group of National Standard for New-emerged Market by
International Valuation Standards Council at the end of 2000. Mr. Wang Haisu doesn’t
hold any shares of WBC, has no related relationship with the Company, the
controlling shareholder and actual controller of the Company. He didn’t get any
penalty or punishment from China Securities Regulatory Commission, other
government organs and Chinese stock exchanges.
Mr. André CHIENG was born in Nov. 1953, French nationality. He graduated from
Ecole Polytechnique in Paris. With strong interest in Economics, he once attended the
National Economics Management and Statistics Institute and Institute Etudes
Politiques de Paris. After he taught Economics in China for two years since 1978, he17
went back to France in 1980 and joined Louis-Dreyfus as General Manager of
BRANBRA Co., which has long been engaged in trade to China. In 1988, the
company changed its name into AEC ASITIQUE EUROPEENNE DE COMMERCE,
and enlarged its business of consulting. In the same year, Mr. André CHIENG was
appointed as Chairman of the Board of Directors and still holds the position now. Mr.
André CHIENG went and settled down in Beijing since 2001. He also takes the
positions of Vice President of Comité France Chine, politics & economy consultant of
Hebei province and honorary member of China Council for Promotion of
International Trade. Mr. André CHIENG doesn’t hold any shares of WBC, has no
related relationship with the Company, the controlling shareholder and actual
controller of the Company. He didn’t get any penalty or punishment from China
Securities Regulatory Commission, other government organs and Chinese stock
exchanges.
Mr. Yang Xiongsheng was born in Feb. 1960, Chinese nationality. He graduated from
Dongbei University of Finance and Economics with a Doctor of Philosophy in
Accountancy. Currently he holds positions as a Director, Professor and Doctoral
Supervisor in Department of Accountancy of Nanjing University. His major research
fields involve internal control, Basic Accounting Theory, finance management,
management accounting. Professor Yang is also a Committee Member and Vice
Secretary General of Accounting Society of China, Commissioner of China Internal
Control Standards Committee under the Ministry of Finance, Consultant of
accounting standards under the Ministry of Finance and Vice Chairman of Accounting
Society of Jiangsu. Besides, he also serves in Hohai University, Nanjing University of
Science and Technology, Anhui University of Finance & Economics, Anhui
University of Technology, and Zhejiang Institute of Finance & Economics as adjunct
professor. He is also Independent Director in Ninghu Expressway, Aerosun and Black
Peony. Mr. Yang Xiongsheng doesn’t hold any shares of WBC, has no related
relationship with the Company, the controlling shareholder and actual controller of the
Company. He didn’t get any penalty or punishment from China Securities Regulatory
Commission, other government organs and Chinese stock exchanges.
Mr. Victor Yang, Chinese nationality, was born on June 24, 1973. Victor graduated
from China Foreign Affairs University (“CFAU”) in 1995 with a bachelor degree of
Arts and got a LLM degree from CFAU in 1998. In 2002, Victor graduated from
Cambridge University UK with a LLM degree. Now, Victor is the Legal Director of
Alstom China Investment Co., Ltd and also responsible for North & East Asia and
China Legal Affairs of Alstom Power System. Before joining Alstom, Victor ever
worked in Beijing Sibirui Consulting Co., Ltd, Beijing Fudao-Net Information &
Technology Co., Ltd and Beijing Tianyuan Law Firm. Mr. Victor Yang doesn’t hold
any shares of WBC and didn’t get any penalty or punishment from China Securities
Regulatory Commission, other government organs and Chinese stock exchanges.
Ms. Sun Tong was born on Jul. 2, 1970, Chinese nationality. From 1988 to 1992, she18
studied at Tianjin University and got a dual-degree (Enterprise Management and
English for Science and Technology). She became an Assistant Lecturer at Tianjin
University of Finance and Economics during 1992 and 1993 and worked at Public
Relations Department of Management Committee of Tianjin Development Zone
during 1993 and 1994. Later, she became an Administrative Manager of Finance in
the joint company of China Petroleum and Chemical Industry and Honeywell
International Co., Ltd, Business Operating and Controlling Manager of Equipment
Department, Honeywell International (China area), and Manager of Honeywell
International in South China District etc. from 1994 to 2000. During the period of
2002 and 2004, she studied at EMBA and then acted as Financial Manager of Tianjin
ALSTOM Hydro Co., Ltd during 2001 and 2003. Now she holds the position as
Deputy General Manager of Tianjin ALSTOM Hydro Co., Ltd. Ms. Sun Tong doesn’t
hold any shares of WBC and didn’t get any penalty or punishment from China
Securities Regulatory Commission, other government organs and Chinese stock
exchanges.
Mr. Yan Yaocai, was born on Aug. 8, 1952, Chinese nationality, member of
Communist Party of China, holding college diploma, was an engineer. He started
work from Dec. 1968, and worked in Wuhan Boiler Company since Dec. 1975. Mr.
Yan Yaocai once acted as worker, technician and artisan in workshop; vice director,
director and vice factory director of technology department in Drum Work shop；
vice director of chief engineer office as well as vice chief of quality inspection section;
head of test centre; Vice Chief Engineer as well as chief of quality inspection section
and secretary of the sub-division of CCP. Now he is acting as Vice Chief Engineer as
well as manager of Quality Assurance Department and Quality Standard Department
and member of Party Committee; he was elected as Chairman of the 2nd Trade Union;
Mr. Yan Yaocai doesn’t hold any shares of WBC and didn’t get any penalty or
punishment from China Securities Regulatory Commission, other government organs
and Chinese stock exchanges.
Mr. Gérard VALLEE was born in Nov. 1954, French nationality. He graduated from
ENSAM Ecole National Superieure Des Atrs et Metiers in Paris with Engineering
Degree in 1977, and attended Ecole supérieure de commerce de Paris-Ecole des
Affaire de Paris (ESCP-EAP) in 1996, as well as MBA project execution of senior
management research in INSEAD in 2003. Once served as General Manager in
Alstom Beizhong Power (Beijing) Co., Ltd. and Alstom Shanghai Transformer Co.,
Ltd., he also held positions as Chief Procurement Officer (CPO) in Beijing Alstom
Engineering Consulting Co., Ltd. Besides, he once served as Manager of Purchasing
Department, Manager of Nuclear Power Department, Manager of Nuclear Power
Market Service and Contract Engineer of Nuclear Power Department in Alstom
Energy System Co., Ltd. Mr. Gérard VALLEE doesn’t hold any shares of WBC and
didn’t get any penalty or punishment from China Securities Regulatory Commission,
other government organs and Chinese stock exchanges.19
Mr. CHIN Wee Hua, Malaysian nationality, was born on Oct. 4, 1971. Mr. CHIN Wee
Hua graduated from the University of Western Australia, bachelor of Commerce with
major in Accounting and Finance. He is also a register Australian Certified Public
Accountants. Mr. CHIN Wee Hua graduated from University of Leicester UK with a
MBA degree. From 2001 to 2008, he is the Finance Director for Alstom Asia Pacific
(Malaysia) Sdn Bhd. Before joining Alstom, Mr. CHIN Wee Hua ever held position as
Senior Accountant in Roche (Malaysia) Sdn Bhd. From 1997 to 1999, he was
appointed the Senior Accountant for Lundin Oil Limited. From 1994 to 1997 he was
the Senior Auditor from PricewaterhouseCoopers. Mr. CHIN Wee Hua, doesn’t hold
any shares of WBC and didn’t get any penalty or punishment from China Securities
Regulatory Commission, other government organs and Chinese stock exchanges.
Mr. Bai Xixin was born in Jan. 1963, Chinese nationality. He is a Senior Engineer. He
obtained his Bachelor Degree of Engineering from Huazhong University of Science
and Technology with major of power thermal energy and Master Degree from
Huazhong University of Science and Technology with major in western economics
management. He is currently Deputy General Manager and Chief Economist of the
Company. He successively held positions of Deputy Director of Design Division of
Wuhan Boiler Factory, Deputy Director of Planning & Sales Division and Foreign
Trade Division and Vice Chief Accountant and Director of Planning & Sales Division
and Director of Foreign Trade Division in the Company. Mr. Bai Xixin doesn’t hold
any shares of WBC and didn’t get any penalty or punishment from China Securities
Regulatory Commission, other government organs and Chinese stock exchanges.
Mr. Jin Zhicheng was born in Oct. 1959, Chinese nationality. He is an economist,
graduated from Jianghan University of Wuhan, majoring in Industrial Economics
Management, and from Hubei Provincial Party School of the CPC with a major of
Economics Management. In 1999, he studied MBA in the School of Economics and
Management of Tsinghua University. He is currently the Deputy General Manager of
the Company. He successively held positions of Factory Director Assistant as well as
Deputy Factory Director of Pipe Branch of the Company and Factory Director of
Processing Branch of the Company. Mr. Jin Zhicheng doesn’t hold any shares of
WBC and didn’t get any penalty or punishment from China Securities Regulatory
Commission, other government organs and Chinese stock exchanges.
Mr. Pei Hanhua was born in Nov. 1959, Chinese nationality. He is an economist,
graduated from Hubei Provincial Party School of the CPC with a bachelor degree
majoring in Economics Management. He now is Deputy General Manager. He ever
was Secretary of the Party Branch of Purchasing Division in the Company and Vice
Chairman of Wuhan Safety Production Association, ever in charge of safety, health
and environment of the Company. He ever took the positions of Factory Director
Assistant, Deputy Factory Director and Factory Director of Steam Pressure Vessel
Branch in the Company. Mr. Pei Hanhua doesn’t hold any shares of WBC and didn’t
get any penalty or punishment from China Securities Regulatory Commission, other20
government organs and Chinese stock exchanges.
Mr. Wu Xiaoqing was born in Oct. 1968, Chinese nationality. He graduated from
Shanghai Jiaotong University, majoring in Energy. He previously held the positions of
Purchasing Specialist of ABB Global Sourcing Shanghai Office, Sourcing Manager of
2nd period 2×900MW Boiler Project of ALSTOM Waigaoqiao Power Plant, Souring
Manager of ALSTOM Power Energy Recovery System Business Department in China
and Sourcing Manager of purchasing bulky cargos in Global Sourcing of ALSTOM
energy and environmental protection systems. Mr. Wu Xiaoqing doesn’t hold any
shares of WBC and didn’t get any penalty or punishment from China Securities
Regulatory Commission, other government organs and Chinese stock exchanges..
Mr. Peter Anthony Sommer was born in Jun. 1959, Australian nationality. Mr. Peter
Anthony Sommer possesses a Bachelor degree of Engineering and a Master degree of
Management. He successively served as Steam Turbine Operation Manager and
Manager of Scheme on Design of Senior Engineering in Australian Lansfield,
manager in charge of large-scale electric power projects in large trans-national
companies Australian Environment and Energy as well as Alstom. Mr. Peter Anthony
Sommer doesn’t hold any shares of WBC and didn’t get any penalty or punishment
from China Securities Regulatory Commission, other government organs and Chinese
stock exchanges.
Mr. Kevin Qin was born in Mar. 1980, Chinese nationality. He graduated from the
East China University of Politics and Law with a L.L.B degree in Civil and
Commercial Law and University of Durham with a L.L.M degree in European Union
Law. Mr. Kevin Qin now also holds the position of Legal Director in the Company.
He ever held positions as Assistant to CEO and Legal Counsel in Co-Wealth Group,
China Legal Manager of Pacific Media PLC, Special Assistant to CEO and Legal
Counsel in Cathay Industrial Biotech Ltd. Mr. Kevin Qin doesn’t hold any shares of
WBC and didn’t get any penalty or punishment from China Securities Regulatory
Commission, other government organs and Chinese stock exchanges.
III. Annual remuneration of directors, supervisors and senior management
1. Decision-making procedure of remuneration: remuneration of directors, supervisors
and senior management of the Company is paid in accordance with the standards
stipulated by the state labor ministry. Proposal on annual remuneration of directors,
supervisors and senior management was formulated by the Board of Directors in
compliance with the evaluation method of the Company, which is implemented after
getting reviewed and approved by the Shareholders’ Meeting.
2. The Company pays RMB 100,000 (before tax) to each independent director as
allowance. Traveling and accommodation expenses incurred for attending the Board
Meetings and the Shareholders’ Meetings will be reimbursed by the Company.21
IV. Changes of directors, supervisors and senior management during the report period
On February 20, 2009, the Company Employee Representatives’ Meeting elected Mr.
Yan Yaocai as employee representative supervisor of the 4th Board of Supervisors of
the Company through competitive election.
2008 Annual Shareholders’ Meeting was held on Jun. 2 2009, in which Proposal for
Electing Mr. Xiong Gang as a Candidate Director, Proposal for Electing Mr. Guy
Chardon as a Candidate Director and Proposal for Electing Mr. Victor Yang as a
Candidate Supervisor were reviewed and approved through accumulative voting. Mr.
Xiong Gang and Mr. Guy Chardon were elected as board directors of the Company,
and Mr. Victor Yang was elected as supervisor of the Company.
The 15th meeting of the 4th Board of Directors was held on Jun. 25 2009, in which
Proposal about Resignation of Finance Director, Mr. Philippe Vergne and Appointing
Mr. Carsten Roemer as a new Finance Director was reviewed and approved, and Mr.
Carsten Roemer was appointed as Financial Director of the Company.
The 18th meeting of the 4th Board of Directors was held on Oct. 26 2009, in which
Proposal about Resignation of Finance Director, Mr. Carsten Roemer and Appointing
Mr. CHIN Wee Hua as Finance Director of WBC was reviewed and approved, and Mr.
CHIN Wee Hua was appointed as Financial Director of the Company.
V. Employees
As at the end of this report period, the Company has a total number of 2,285
on-the-job staffs and 1,414 retired staffs. Details as follows:
Specialty Composition:
Items Number of person Proportion
（
%
）
Production Personnel 1,250 54.70
％
Sales Personnel 20 0.88
％
Technician 437 19.12
％
Financial Personnel 63 2.76
％
Administration Personnel 274 11.99
％
Other 241 10.55
％
Total 2,285 100
％
Education Background:
Items Number of person Proportion (%)
Undergraduate or above 374 16.37
％
3-year regular college graduate 592 25.91
％22
Senior high school (including technical secondary
school and technical school)
939
41.09
％
Junior high school or lower 380 16.63
％
Total 2,285 100
％23
Section VI Corporate Governance
I. Corporate governance structure of the Company
II. Corporate governance in this report period
The Board of Directors of the Company continuously improved its corporate
governance and standardized the Company’s operation strictly according to the
requirements of the Company Law, the Securities Law and other relevant laws and
regulations. In this report period, by launching specific correction activities, the
Company improved many aspects of governance and internal control system,
perfected its corporate governance and normalized operation. The Board of Directors
thinks that the actual situation of corporate governance of the Company is in
compliance with the requirements of Guiding Principle on Governing Listed
Companies.
1. About shareholders and Shareholders’ Meeting:
The Company convenes and holds Shareholders’ Meetings according to requirements
of Opinions on Standardization of Shareholders’ Meeting of Listed Companies and
Rules of Procedure for the Shareholders’ Meeting of Listed Companies, the Company
treats all shareholders equally, especially minority shareholders are insured to be
equally treated and they can fully exercise their lawful rights.
2. About relationship between controlling shareholder and the Company:
The controlling shareholder complies with laws while exercising their rights as
investors through the Shareholders’ Meeting and doesn’t, directly and indirectly,
intervene the Company’s decision-making and operation through other channels. The
Board of Supervisors
Board of Directors
Strategy Committee Audit Committee Nomination Committee Compensation Committee
Internal Audit Department Management Team
Shareholders’ Meeting24
human resources, assets, finance, organizations and operations of the Company are
independent of the controlling shareholder. The Company and controlling shareholder
maintain different financial accounts, independently undertake commercial liabilities
and market risks. Related transactions between the Company and controlling
shareholder are reasonable and fair, and its decision-making procedures comply with
the related regulations. The controlling shareholder doesn’t occupy any fund of the
Company and the Company doesn’t provide any guarantee to the controlling
shareholder and its subsidiaries.
3. About directors and the Board of Directors:
The Company elects and engages directors strictly in accordance with procedure on
director election, the Company Law and Articles of Association of the Company,
ensuring that the director election is public, just, fair and independent. The Company
ensures that the number and structure of directors is in compliance with provisions
stipulated in laws and regulations. The meetings of the Board of Directors are
convened and held according to the Rules of Procedure for the Board of Directors.
Board directors perform and fulfill their duties honestly, diligently and responsibly.
The Board of Directors establishes special committees, each of which performs its
own duty and improves the efficiency of the Board of Directors.
4. About supervisors and the Board of Supervisors:
The Company elects and engages supervisors strictly in accordance with procedure on
supervisor election, the Company Law and Articles of Association of the Company.
The Company ensures that the number and structure of supervisors is in compliance
with provisions stipulated in laws and regulations. The Board of Supervisors inspects
and supervises the legitimacy of activities of the Company finance, directors, senior
management and other managers, safeguards the benefits and interests of
shareholders.
5. About information disclosure and its transparency:
Secretary of the Board of Directors is responsible for information disclosure and
investor relationship management, including reception of visits and consultations
from investors. Securities Times and Hong Kong Ta Kung Pao are designated by the
Company as the newspapers for disclosing relevant information. According to laws,
regulations and requirements of the Management Rules on Information Disclosure of
the Company, the Company discloses the information authentically, accurately, timely
and completely to ensure all shareholders have equal opportunity to acquire
information.
III. Performance of Directors and Independent Directors
The Company has three independent directors, which meet the requirement of
Directive for Establishment Independent Directors’ System of Listed Companies
promulgated by China Securities Regulatory Commission. The independent directors
of the Company carefully fulfill their duties, prudently review and take a vote to
proposals submitted to all meetings of the Board and Shareholders’ Meetings and25
issued independent opinions, which made a positive effect on the reasonable
decision-making procedures of the Board and the protection of the legitimate rights of
shareholders.
1. Directors including Independent Directors attending the meeting of the Board:
Name Position held
Times that
should be
present at the
Board meetings
Times of
personal
presence
Times of
presence through
communication
Times by
power of
attorney
Times of
absence
Successively
absent twice
YEUNG Kwok Wei
Richard
Chairman of
the Board of
Directors
7 7 0 0 0 No
Ms. Liu Yi Director 7 7 0 0 0 No
Mr. Claude
Burckbuchler
Director 7 7 0 0 0 No
Mr. Guy Chardon Director 4 3 0 1 0 No
Mr. Xiong Gang Director 4 4 0 0 0 No
Mr. Xiang Rongwei Director 7 7 0 0 0 No
Mr. Wang Haisu
Independent
Director
7 7 0 0 0 No
André CHIENG
Independent
Director
7 7 0 0 0 No
Mr. Yang Xiongsheng
Independent
Director
7 7 0 0 0 No
2. Particulars about Independent Directors proposing different opinions on relevant
matters of the Company:
During the report period, all independent directors proposed no different opinion on
the relevant matters of the Company.
IV. Independence of personnel, assets, finance, organization and operations of the
Company from controlling shareholder
The Company is independent in personnel, assets, finance, organization and
operations from its controlling shareholder, Alstom (China) Investment Co., Ltd, and
independently responsible for commercial liabilities and market risks.
In Personnel, the Company establishes independent labor, personnel and salaries
management systems. No senior management possesses any position in the
controlling shareholder entities.
In assets, the relationship regarding assets ownership between the Company and the
controlling shareholder have been clearly defined, and the controlling shareholder
does not in possession of any assets, capital or other resources of the Company.26
In finance, the Company has its own independent finance department with perfect
accounting system and financial management system. Decisions in finance are made
according to the stringent requirements of accounting system for listed companies,
and the similar requirements have been applied to subsidiaries of the Company. The
Company has its own independent bank account and its taxations are paid
independently in compliance with legal requirement.
In organization structure, the Company already established independent, integrated
and effective operation system and responsibility of all organizations is clear. The
establishment and operation of corporate governance of the Company was already
implemented strictly in accordance with Articles of Association of the Company,
which introduced Independent Director System and established four special
committees under the Board. The production, operation and administration of the
Company are completely independent from the controlling shareholder. The Company
already established organization structure suitable for requirement of
self-development.
In operation, the Company has independent and integrated business and has capability
to self-operate, independent purchase, sales, and production systems. The purchase,
production and sales of raw materials and products are all conducted through the
independent system of the Company. There is no horizontal competition between the
Company and the controlling shareholder in domestic market.
V. Performance appraisal and stimulation mechanism for senior management
Appraisal and stimulation mechanism for senior management of the Company made
by the Board of Directors is based on the achievement of annual business target. In
accordance with annual business target, the Company pays annual salary to senior
management in line with individual performance review and other appraisal index
such as operation performance, safety production, diligent and honest administration.
VI. Particulars about the internal control of the Company
For standardizing and improving operations of the Company, in accordance with the
provisions of relevant laws and regulations such as the Company Law, the Securities
Law and the Guiding Principles on Governing Listed Companies, as well as the
Company’s real situation, gradually formulated and revised Articles of Association of
the Company, Rules of Procedure for the Shareholders’ Meeting, Rules of Procedure
for the Board of Directors, Rules of Procedure for the Board of Supervisors, the
Management Rules on Information Disclosure, Reception and Promotion Working
System, Management System for Fund Raised, Internal Audit System, Internal Report
System for Significant Events, the Measures Regarding the Administration of Change
in Shareholding held by Directors, Supervisors and Senior Management, Working
Rules for General Manager, Annual Report Working System for Independent
Directors and Audit Working System Regarding the Annual Financial Report for27
Audit Committee and etc..
In this report period, based on the requirements from China Securities Regulatory
Commission and Hubei Securities Regulatory Bureau, the Company formulated Insider
Dealing Code of the Company, System about Liabilities for Material Mistakes in
Disclosing Annual Reports, Management Rules on Derivative Investment of the
Company and Management Rules on External Reporting and Usage of the Information
to further enhance quality and transparency of annual report information disclosure and
perfect internal control system of the Company for purpose of improving the
Company’s management expertise and risk prevention capability.
The Internal Control Self-Assessment Report in 2009 was announced on March 30
2010 at the website http://www.cninfo.com.cn, which is the designated website by the
Company for disclosure of information.
1. Opinion of the Board of Directors concerning self-assessment of internal control
The current internal control system of the Company is in compliance with the relevant
laws and requirements set forth by securities supervision authorities, and it also
satisfies the actual needs of the Company operation. The management team has full
awareness to enhance the system of internal control, and formed a positive
environment as well as a good supervisory system for internal control. The current
internal control system is well targeted, reasonably established, and finely practiced,
which was well reflected in the internal control of the sales of production and money
collection, purchase and payment of stocks and approval and reimbursement for
expense and capital expenditure. Besides, it exerted positive effects on key sections,
important investments and important risks, ensuring normal operations in each
department and safety of all assets of the Company.
2. Opinion of the Board of Supervisors concerning Internal Control Self-assessment
Report
In accordance with relevant provisions stipulated by China Securities Regulatory
Commission and Shenzhen Stock Exchange and basic principles of internal control,
the Company improved the organization of internal control based on the reality of the
Company. With an updated internal control system, the Company conducted normal
internal control activities, promoted smooth and healthy operation of the Company
and ensured the plausibility and legality of internal control. The internal control
system enabled better protection and safety of the assets of the Company. The
self-assessment of the Board of Directors on the Company’s internal control system,
truly and objectively, reflected the actual situation of the internal control of the
Company.
3. Opinion of Independent Directors concerning Internal Control Self-assessment
Report
In this report period, a series of new management rules of the Company were revised,28
examined and approved the Board of Directors. With a fair and sound internal control
system of the Company, the key improvement activities concerning internal control
were launched stringently according to various rules of the Company. The internal
control on management of subsidiaries, related transactions, external guarantees and
information disclosure was strict, sufficient and effective, which helped to ensure
normal operation in business and management of the Company. The self-assessment
of the Board of Directors on the internal control was in accordance with actual
situation of the internal control of the Company.
VII. Verification of appraisal opinion from auditor concerning self-assessment of
internal control of the Company
During annual audit 2009, the auditor doesn’t express a verification report on the
self-assessment of internal control of the Company.
VIII. Corporate Social Responsibility Report of the Company
The Company doesn’t disclose the Corporate Social Responsibility Report.29
Section VII Brief Introduction of the Shareholders’ Meeting
I. Notice, convening and holding of the Shareholders’ Meeting
(1) Annual Shareholders’ Meeting
2008 Annual Shareholders’ Meeting was held by the Company on Jun. 2 2009, and
the meeting resolutions were published on Securities Times and Ta Kung Pao dated
Jun. 3 2009.
2008 Annual Report and its Summary Report, 2008 Profit Distribution etc were
reviewed and approved in the meeting.
(2) Extraordinary Shareholders’ Meeting
The First Extraordinary Shareholders’ Meeting 2009 was held by the Company on
Aug. 11 2009, and the meeting resolutions were published on Securities Times and Ta
Kung Pao dated Aug. 12 2009.
Proposal about an Entrusted Loan from Alstom (China) Investment Co., Ltd to WBC
through a Chinese Bank was reviewed and approved in the meeting.30
Section VIII Report of the Board of Directors
I. Discussion and analysis of operation results during this report period
The year 2009 was the second year after the Company being acquired and
restructured. And the sales revenue of the Company in 2009 decreased comparing to
the previous year because of the relocation of its production facilities from old site to
the new factory in the middle of 2009.
Due to reasons such as the gross profit decrease caused by less production activities
during the relocation period, the higher financial expenses caused by more loans and
the provision for impairment of materials, the Board of Directors of the Company
released a pre-warning announcement about annual operation result on Oct. 29 2009.
During this report period, the Company generated a total operating revenue of RMB
517,679,190.56, a decrease of 53.82％ as compared to last year; a total profit of
RMB -687,560,230.09, 84.55％down from the previous year; a net profit attributable
to shareholders of the Company RMB -675,672,514.99, a reduction of 90.90% over
last year.
II. Particulars about the operation of the Company
(1) Main business scope and operation status
The Company is mainly engaged in the development, production and sales of power
station boilers, special boilers, desulfurization equipments, other pressure vessels and
auxiliary equipments.
The Company’s main business classified by industry and product:
Unit: RMB
Segment information by industry
Industries
or products
Operating
revenue
Operating cost
Operating
profit
margin
(%)
Change in
operating
revenue
compared to
last year (%)
Change in
operating cost
compared to last
year (%)
Change in
operating profit
margin
compared to last
year (%)
Machinery 517,679,190.56 622,449,427.98 -20.24% -53.82% -44.08% -20.96%
Segment information by product31
Boilers 517,679,190.56 622,449,427.98 -20.24% -53.82% -44.08% -20.96%
Note:
The Company produces specialized equipments for the energy and environmental
protection industries and is classified under machinery manufacturing industry.
The Company’s main business classified by geographical area
Unit: RMB
Market Revenue Increase/decrease in operating revenue over last year (%)
Domestic 404,818,603.56 -61.49%
Overseas 112,860,587.00 61.82%
(2) Main suppliers and customers
The total purchase from the top five suppliers for the year 2009 was RMB
236,677,528.06 being 45.23% of the total annual purchase of the Company; the total
revenue from the top five customers was RMB 396,328,697.38, which was 76.56％of
the total revenue of the Company.
(3) Changes in the Company’s assets, liabilities and expenses during the report period
Unit: RMB
31 Dec 2009 31 Dec 2008
Items
Amount
Proportion to total
assets
Amount
Proportion
in total
assets
Change in
proportion to
total assets
Cash and bank balances 32,155,537.93 1.53% 47,867,354.63 1.67% -8.29%
Notes receivable 119,714,775.17 5.70% 380,000.00 0.01% 42908.21%
Prepayments 54,734,282.45 2.61% 141,863,705.37 4.95% -47.33%
Inventories 76,565,007.91 3.64% 918,505,849.66 32.03% -88.62%
Fixed assets 608,687,168.29 28.97% 121,851,170.82 4.25% 581.95%
Construction in progress 175,819,636.95 8.37% 406,345,860.06 14.17% -40.93%
Other non-current assets 24,525.50 0.001% 6,174,943.43 0.22% -99.46%
Notes payable 219,077,384.51 10.43% 433,649,225.98 15.12% -31.03%
Advanced payments from
customers
31,395,403.74 1.49% 10,442,136.73 0.36% 310.45%
Employee benefits payable 78,008,118.69 3.71% 44,989,865.76 1.57% 136.71%
Other payables 38,838,894.32 1.85% 25,258,271.32 0.88% 109.92%
Non-current liabilities due 0.00 0.00 90,000,000.00 3.14% -100.00%32
within 1-year
Long term loans 0.00 0.00 100,000,000.00 3.49% -100.00%
Other non-current liabilities 1,229,589.41 0.06% 20,646,122.33 0.72% -91.87%
Items 2009 2008 Increase/decrease proportion
Operating revenue 517,679,190.56 1,121,071,252.12 -53.82%
Operating Cost 622,449,427.98 1,113,022,567.22 -44.08%
Business taxes and surcharges 834,125.93 5,228,738.43 -84.05%
Selling expense 10,056,173.85 6,198,590.04 62.23%
Administration expense 157,810,983.11 115,279,632.30 36.89%
Impairment loss 306,125,486.73 163,188,219.75 87.59%
Gain/loss on change in fair
value
6,501.92 -1,015,005.38 100.64%
Gain/loss on investment 0.00 -1,354,516.32 100.00%
Non-operating expense 11,466,201.23 2,513,546.21 356.18%
Notes:
Cash and bank balances decreased as compared to last year mainly due to payments
for new factory capital expenditure during the report period;
Notes receivable increased as compared to last year mainly due to increase in the
customers’ collections in the form of banker acceptance draft;
Prepayments decreased as compared to last year mainly due to reduced purchases
arising from low business operations during factory relocation;
Inventory decreased as compared to last year mainly due to progress billings raised
per contract payment terms and provisions made for raw material stock obsolescence;
Fixed assets increased as compared to last year mainly due to capitalization of capital
expenditure in line with completion of the new factory construction;
Construction in progress decreased as compared to last year mainly due to
capitalization of capital expenditure in line with completion of the new factory
construction;
Other non-current assets decreased as compared to last year mainly due to settlement
of hedge contract for Perawang project;
Notes payable decreased as compared to last year mainly due to reduced purchases
arising from low business operations during factory relocation;
Advanced payments from customers increased as compared to last year mainly due to
RMB 20,826,000 received from ALSTOM Power Systems S.A Etablissement Boilers
for trade processing contract;
Employee benefits payable increased as compared to last year mainly due to provision
for employees’ retirement benefits;
Other payables increased as compared to last year mainly due to increase in balances33
with related parties RMB9,011,747.30, deposit of RMB1,760,000 held for fixed assets
disposal and accrual for insurance premium RMB2,757,391.59;
Non-current liabilities due within 1 year decreased as compared to last year mainly
due to repayment of bank borrowing upon maturity;
Long-term loan decreased as compared to last year mainly due to early settlement of
bank borrowing;
Other non-current liabilities decreased mainly due to settlement of hedge contract for
Perawang project and recognition of unrealized finance cost arising from discounted
employees’ retirement benefits;
Revenue decreased as compared to last year mainly due to low business operations
during factory relocation;
Operating cost decreased as compared to last year mainly due to low business
operations during factory relocation;
Business taxes and surcharges decreased as compared to last year mainly due to low
business operations during factory relocation;
Selling expense increased as compared to last year mainly due to RMB 2,795,710.32
allocation of factory relocation expenses;
Administration expense increased as compared to last year mainly due to provision
for employees’ retirement benefits RMB 28,658,255.24 and absence of raw material
stock count surplus which recorded RMB 11,591,570.87 in prior year.
Impairment loss increased as compared to last year mainly due to additional provision
for doubtful debts amounting RMB 123,629,564.83 made during the year;
Gain/loss on change in fair value improved as compared to last year mainly due to
settlement of hedge contract for Perawang project;
Gain/loss on investment improved as compared to last year due to the absence of
investment transaction which recorded a loss on disposal of subsidiaries in prior year;
Non-operating expense increased as compared to last year mainly due to disposal of
idle fixed assets during factory relocation.
(4) Fair value measurement during the report period
Measurement of fair value was in accordance with the stipulated accounting standards
and there was no deviation to this practice during the year under review.
(5) Changes in the Company’s cash flow position during the report period
Unit: RMB
Items 2009 2008 Increase/decrease (%)
Cash flow from operating activities:34
Cash inflow 681,427,298.45 1,120,815,165.76 -39.20%
Cash outflow 402,965,741.73 1,950,404,963.56 -79.34%
Net cash flow from operating activities 278,461,556.72 -829,589,797.80 -133.57%
Cash flow from investing activities:
Cash inflow 18,453,847.11 83,252,823.79 -77.83%
Cash outflow 302,672,430.66 373,774,884.68 -19.02%
Net cash flow from investing activities -284,218,583.55 -290,522,060.89 -2.17%
Cash flow from financing activities
Cash inflow 4,059,000,000.00 2,640,000,000.00 53.75%
Cash outflow 4,064,804,172.59 1,563,671,349.39 159.95%
Net cash flow from financing activities -5,804,172.59 1,076,328,650.61 -100.54%
Note:
Cash inflow from operating activities decreased as compared to last year mainly due
to low business operations during factory relocation;
Cash outflow from operating activities decreased as compared to last year mainly due
to low business operations during factory relocation;
Cash inflow from investing activities decreased as compared to last year mainly due
to lower amount of pledged cash being released during the year under review;
Cash inflow from financing activities increased as compared to last year mainly due
to increase in shareholder’s loan;
Cash outlow from financing activities increased as compared to last year mainly due
to repayment of bank borrowings.
(6) Operating results of holding subsidiaries and joint stock subsidiaries
At the end of the report period, the Company had two holding subsidiaries:Wuhan
Lanxiang Energy & Environmental Protection Technologies Inc. (hereinafter referred
to as “Lanxiang Company”) and Wuhan Boiler Boyu Industrial Co., Ltd. (hereinafter
referred to as “Boyu Company”). The basic information and general operating results
of the said subsidiaries were as follows:
Lanxiang Company
Lanxiang Company was established on Jun. 4 2002 with a registered capital of RMB
20 million, of which Wuhan Boiler Company Limited holds 95% equity. The
registration code of Lanxiang Company is 420100000094025. And its business scope35
includes: R&D, design, consultation and technology services related to boilers, energy
& environmental protection products, steel structures, thermal energy-related products
and their auxiliary equipments; marketing of products developed; energy project
(non-land construction projects) contracting and technical service (special-purpose
projects subject to governmental approval). In this report period, Lanxiang Company
generated operation revenue of RMB 2,280,000 and a net profit reaching RMB
-1,695,700.
On Apr. 22 2009, the Proposal for Liquidation of Lanxiang Company was approved
by the 12th meeting of the 4th Board of Directors of the Company. And the resolutions
made at the meeting were disclosed on Securities Times and Ta Kung Pao dated Apr.
27 2009. As of the end of this report period, the liquidation of Lanxiang Company
was not closed.
Boyu Company
Boyu Company was established on Sep. 30 1998 with its registration code of
4201001101773. Its registered capital is RMB 19.115 million. And its business scope
includes: product design, manufacturing and packaging of mechanical & electrical
products; processing of metal structures; design and production of mould & model;
production of various high- and medium-pressure valve roughcast, cast steel, cast iron
and non-ferrous metal cast. In this report period, Boyu Company generated operation
revenue of RMB 15,335,700 and a net profit of RMB -9,873,600.
On Aug. 25 2008, the Proposal for Liquidation of Boyu Company was approved by
the 8th meeting of the 4th Board of Directors of the Company. And the resolutions
made at the meeting were disclosed on Securities Times and Ta Kung Pao dated Aug.
28 2008. As of the end of this report period, the liquidation of Boyu Company was not
closed.
The Company has no other holding subsidiaries, share holdings and joint ventures.
III. Future outlook of the Company
(1) Analysis on the 2010 development trends of the industry where the Company is
engaged
In 2010, investment to new energy resources will become a worldwide spotlight.
Considering the increasing demand of electricity, the commitment of carbon emission
reduction and the planning for new industries, new energy resources and low-carbon
economy will be the main development trend of the industry of thermal products. It
will be inevitable and necessary for the thermal products industry to promote
energy-saving and emission reduction programs. Meanwhile, the environment
protection industry for power plants is expected to have good prospects, and the clean
energy equipments will have more market share in thermal products market. Because
the peak of thermal power investment already passed, the production and sales of36
thermal power equipments will continuously shrink in 2010. Therefore, the Company
is facing more difficult market environment and will have more difficulties to win
orders in 2010.
(2) Strategies of the Company for future development
Alstom in France, the controller of the Company’s controlling shareholder Alstom
(China) Investment Co., Ltd, owns the world-advanced AGVTM rail transport
technology and provides integrated power plant solutions covering a variety of energy
sources, including coal, hydro, natural gas, nuclear and wind energy. With Alstom as
a platform, the Company will look for opportunities to move up to a new level of
development.
The new plant with the investment about RMB 900 million has been officially
inaugurated on Nov. 12 2009. With the transfer of world-class supercritical and
ultra-supercritical boiler technologies from Alstom, the Company will be able to
provide environment friendly and high-efficient products which meet development
requirement of power market. Consequently, the overall performance of the Company
will be dramatically improved, especially that the Company’s engineering design,
manufacturing and quality of finished products will reach world class standard. So,
the Company will become one of Alstom’s major boiler manufacturing bases
worldwide and the sole base in China, as well as one of the important boiler
manufacturers in Asia and the world.
(3) Business plan for the new year
2010 is a very critical year for China economy development. Facing the uncertain
economic situation, the Company senior management pays high attention to changes
of domestic and foreign market and pressures of operation due to the 3 years
consecutive losses. If the Company fails to make profit in 2010, it will trigger the risk
of delisting of the Company stocks. Therefore, the senior management shall focus on
the following 6 priorities in order to avoid the risk of delisting and try to apply for
listing restoration of Company stocks:
1. After completing the technology transfer for 600 MW class supercritical pulverized
coal boilers, 350 MW class supercritical pulverized coal boiler technology
development and design, and the improvement of the technology for the 300MW
class pulverized coal boilers, the Company is actively bidding in domestic market.
The Company will complete the technology transfer for 1000MW class
Ultra-Supercritical pulverized coal boiler in 2010;
2. With the supports from Alstom, the Company will get export orders for assemblies
of boilers. Meanwhile, the Company will accumulate manufacturing experience about
Supercritical and Ultra-Supercritical boilers and demonstrate production capacity of
the new factory. Thus the Company can improve its domestic competition capacity37
and expand its domestic market share;
3. The Company provide more training to employees to further master new
technologies and adapt to new procedures so as to meet high quality requirements of
export orders and accumulate export sales performance;
4. The Company shall actively get continuous financing supports from Alstom (China)
Investment Co., Ltd so as to meet financing requirements of normal company
operation;
5. With the supports from Alstom, the Company will try to get advantageous payment
conditions for export orders in order to improve operating cash flow and reduce
financial cost;
6. The Company will actively execute all management systems and working
procedures, tighten cost control and cash flow management, try its best to finish more
orders, deliver products and recognize project profits so as to achieve the objective of
“turning loss to profit in 2010”.
(4) Major risks and solutions
According to the price policy announced recently, the factory prices of main steel
products are increasing dramatically with the largest price increase at RMB 600/ton,
which is giving much pressures to manufacturing industry of thermal products.
Considering the negative impact of the price fluctuation of raw materials, the
Company will continue to follow the price trend of raw material and strengthen the
quota control of raw material consumption. Meanwhile, the Company will execute
different purchasing strategies, keep good cooperation with its main suppliers and
sign long-term supply contracts so as to make sure that the material supply will be
well arranged with stable prices.
IV. Investment in this report period
(1) In this report period, the Company had not raised fund through share offering or
the application of fund from previous share offering.
(2) In this report period, the Company had not raised fund through share offering for
other investments.
V. Changes in accounting policies and accounting estimates and their impact
In this report period, there were no changes in accounting policies and accounting
estimates of the Company.
VI. Routine work of the Board of Directors
(I) Resolutions and information disclosure of the Board Meetings convened in this38
report period
In this report period, the Board of Directors convened 7 meetings, and the detailed
information regarding meeting, convening procedure and information disclosed are as
follows:
(1) On Apr. 22 2009, the 12th meeting of the 4th Board of Directors was convened at
the First meeting Room on 5/F, Tower C of Qiankun Plaza, Beijing. And the
resolutions made at the meeting were disclosed on Securities Times and Ta Kung Pao
dated Apr. 27 2009.
(2) On Apr. 22 2009, the 13th meeting of the 4th Board of Directors was convened at
the First meeting room on 5/F, Tower C of Qiankun Plaza, Beijing. And the
resolutions made at the meeting were disclosed on Securities Times and Ta Kung Pao
dated Apr. 28 2009.
(3) On May 11 2009, the 14th meeting of the 4th Board of Directors was convened at
No.3 meeting room of the Company. And the resolutions made at the meeting were
disclosed on Securities Times and Ta Kung Pao dated May 12 2009.
(4) On Jun. 25 2009, the 15th meeting of the 4th Board of Directors was convened at
No.3 meeting room of the Company. And the resolutions made at the meeting were
disclosed on Securities Times and Ta Kung Pao dated Jun. 30 2009.
(5) On Jul. 23 2009, the 16th meeting of the 4th Board of Directors was convened at
No.3 meeting room of the Company. And the resolutions made at the meeting were
disclosed on Securities Times and Ta Kung Pao dated Jul. 25 2009.
(6) On Aug. 25 2009, the 17th meeting of the 4th Board of Directors was convened at
No.3 meeting room of the Company. And the resolutions made at the meeting were
disclosed on Securities Times and Ta Kung Pao dated Aug. 28 2009.
(7) On Oct. 26 2009, the 18th meeting of the 4th Board of Directors was convened at
No.2006 meeting room of the Company. And the resolutions made at the meeting
were disclosed on Securities Times and Ta Kung Pao dated Oct. 29 2009.
(II) Execution of the resolutions made at the Shareholders’ Meeting by the Board of
Directors
In this report period, according to relevant laws and regulations, as well as the
resolutions and authorization of the Shareholders’ Meeting, the Board of Directors
seriously executed the resolutions made at the Shareholders’ Meeting and actively and
prudently did the work under the principle of being responsible for all shareholders.
And neither profit distribution nor transfer of capital reserve to share capital was
conducted in the year 2008.
(III) Performance of the Audit Committee of the Board
(1) The review opinion on the financial statements prepared by the Company before
auditing by Wuhan Zhonghuan Certified Public Accountants Ltd.
Board of Directors of the Company,39
We have reviewed the financial statements submitted by the Finance Department of
the Company, which include the balance sheet as at Dec. 31 2009, the income
statement, the cash flow statement, the statement of changes in owners’ equity for the
year then ended, as well as the notes to the financial statements. We focused on the
factuality and completeness of the financial information provided according to the
New Accounting Standards for Business Enterprises and the related financial rules of
the Company. Based on our inquiry with relevant financial personnel and
management about the Company’s computational procedures of financial information,
we believe that: all the transactions of the Company were fully recorded and the
related materials were complete; the accounting policies and accounting estimates
adopted were suitable and reasonable. Since there is still a time gap from this
preliminary review to the issuance of the first draft of the audit report, we hereby
remind the Finance Department of the Company to strictly follow the New
Accounting Standards for Business Enterprises when handling events after balance
sheet date to ensure the fairness, factuality and completeness of the financial
statements.
Audit Committee of the Board of Directors
Nov. 23 2009
(2) The review opinion on the financial statements of the Company after the
preliminary audit opinion issued by Wuhan Zhonghuan Certified Public Accountants
Ltd.
Board of Directors of the Company,
We have reviewed the preliminary audit opinion issued by Wuhan Zhonghuan
Certified Public Accountants Ltd. and the financial statements submitted by the
Company, which include the balance sheet as at Dec. 31 2009, the income statement,
the cash flow statement, the statement of change in owners’ equity for the year then
ended, as well as the notes to the financial statements. Through further review the
detail of the accounts records and vouchers, we maintain our original statement that:
in our opinion, the financial statements comply with the New Accounting Standards
for Business Enterprises and the related financial system of the Company, presenting
fairly in all material respects the financial position of the Company as at Dec. 31 2009,
as well as the operating results and its cash flows for the year then ended.
Audit Committee of the Board of Directors
Mar.16 2010
(3) The summary report of the audit work performed by Wuhan Zhonghuan Certified
Public Accountants Ltd.
Board of Directors of the Company,40
In accordance with the audit plan of the Company, 7 auditors from Wuhan Zhonghuan
Certified Public Accountants Ltd. performed the audit of the 2009 financial statements.
The pre-audit communication commenced on Nov. 6 2009 and the formal audit
started on Jan. 4 2010. The leader of the audit team conducted effective
communication with the Company’s relevant financial personnel, management
personnel and members of the Audit Committee on the subject of consolidation of the
Company’s financial statements and application of the New Accounting Standards for
Business Enterprises. Such in-depth communication provided all relevant parties with
an adequate understanding of the operation status and financial processes of the
Company, as well as the application of the New Accounting Standards for Business
Enterprises, which also provided a foundation for Wuhan Zhonghuan Certified Public
Accountants Ltd. to draw a fair audit conclusion.
During the audit, the Audit Committee focused on the following questions when
communicating with the auditors:
1. Whether all the transactions were recorded and reported fully, truly and completely;
2. Whether the financial reports were produced in accordance with the New
Accounting Standards for Business Enterprises and the requirements of the securities
regulatory authorities;
3. Whether the internal accounting control system of the Company was a sound one;
4. Whether all departments of the Company fully cooperated with the auditors in
providing the information required.
The auditors of Wuhan Zhonghuan Certified Public Accountants Ltd. gave positive
replies concerning the aforesaid questions and issued a standard unqualified audit
report on Mar. 28 2010. We hold the opinion that: with the excellent professional
skills and reasonable personnel allocation, the auditors performing the 2009 annual
auditing concluded their work in strict compliance with the Independent Auditing
Criteria for Chinese Registered Accountants; the audit report issued presented a true
and fair reflection of the Company’s financial position as of Dec. 31 2009, operating
results and cash flows position for the year then ended, and the audit conclusion was
in compliance with the Company’s actual situation.
Audit Committee of the Board of Directors
Mar. 28 2010
(4) Resolution on re-engaging Wuhan Zhonghuan Certified Public Accountants Ltd.
as auditor for the year 2010
Wuhan Zhonghuan Certified Public Accountants Ltd. had been serving as the
Company’s annual auditor since the year 1998. And it performed competently and
diligently during the 2009 annual auditing. Therefore, the Audit Committee hereby
proposes to re-engage of Wuhan Zhonghuan Certified Public Accountants Ltd. as the41
annual auditor for the year 2010, with an auditing fee of RMB 750,000.
The above resolution shall be submitted to the Board of Directors of the Company for
examination and 2009 Annual Shareholders’ Meeting for examination and approval.
Audit Committee of the Board of Directors
Mar. 28 2010
(IV) Duty performance of the Remuneration and Appraisal Committee of the Board
The Remuneration and Appraisal Committee have reviewed the remuneration of
directors, supervisors and senior management disclosed in 2009 Annual Report of the
Company, and hereby expresses our opinion as follows:
In our opinion, the current Compensation and Benefit system applied in the Company
was set up according to the stipulated decision-making procedures. The actual
distribution of remuneration for directors, supervisors and senior management and the
corresponding amount disclosed in 2009 Annual Report is true and accurate.
Remuneration and Appraisal Committee of the Board of Directors
Mar. 28 2010
VII. Plan of profit distribution or transfer of capital reserve to share capital for the
year 2009
As audited by Wuhan Zhonghuan Certified Public Accountants Ltd., the Company
generated a net profit attributable to shareholders of the listed company amounting to
RMB -675,672,514.99 in 2009. Neither profit distribution nor transfer of capital
reserve to share capital will be implemented in the year 2009.
The aforesaid plan shall be submitted to the Company’s 2009 Annual Shareholders’
Meeting for review and approval.
VIII. Details of the Company’s bonus distribution for the last three years
Year
Amount of cash
bonus(tax
included) (RMB
0’000)
Net profit attributable to
shareholders of the
Company in the
consolidated financial
statements (RMB 0’000)
Ratio to the net
profit attributable
to shareholders of
the Company in the
consolidated
financial statements
(%)
Distributable
profits for the year
(RMB 0’000)
2008 0.00 -35,393.43 0.00% -72,936.6842
2007 0.00 -48,060.22 0.00% -37,543.25
2006 594.00 1,274.89 46.59% 11,110.97
Proportion of the cumulative cash
bonus in the past three years to the
average annual distributable profits (%)
----- ----- -----
IX. Other information disclosed
(1) Securities Times and Ta Kung Pao were designated by the Company as the
newspapers for information disclosure in 2009, which remained unchanged in this
report period.
(2) Special explanation by Wuhan Zhonghuan Certified Public Accountants Ltd. on
the funds occupation by the controlling shareholder or other related parties
Board of Directors of Wuhan Boiler Company Limited:
We accepted your appointment, based on “Chinese Accounting Standard (2006)” to
audit Wuhan Boiler Company Limited (the “Company”) balance sheet and
consolidated balance sheet as at December 31, 2009, income statement and
consolidated income statement, statement of change in shareholders’ equity and
consolidated statement of change in shareholders’ equity, cash flow statement and
consolidated cash flow statement for year ended December 31, 2009 and the notes
to the financial statements for the year then ended and issued Zhonghuan Audit No.
(2010) 395 “Auditor’s Report”on March 28, 2010.
According to the requirements stated in China Securities Regulatory Commission
“Notice Concerning Some Issues on Regulating the Funds Between Listed Companies
and Associated Parties and External Guaranties Provided by Listed Companies No. 56
[2003] promulgated by CSRC”, the Company compiled the attached 2009 “Fund
Possession Summary” for the year ended December 31, 2009 for its controlling
shareholders and other associated parties.
According to “Fund Possession Summary”, in 2009, the controlling shareholders and
its associated parties of the Company had possessed accumulatively the listed
company’s fund for RMB 86,105,701.35. The listed company’s funds were possessed
for operating purposes. By December 31, 2009, the controlling shareholders and its
associated parties of the Company had possessed accumulatively the listed company’s
fund for RMB 124,685,786.16. The listed company’s funds were possessed for
operating purposes.
The full text of the Special Explanation on the Funds Occupation by the Controlling
Shareholder and other Related Parties of Wuhan Boiler Company Limited issued by
Wuhan Zhonghuan Certified Public Accountants Ltd. had been published on
www.cninfo.com.cn.43
(3) Special explanation and independent opinion on the accumulated external
guarantees and the current period external guarantees given by the independent
directors of the Company
The independent directors believed that the Company had strictly controlled external
guarantee issues, and no guarantees had been provided for shareholders, holding
subsidiaries of shareholders, related parties of shareholders, or other related parties
that the Company holds less than 50% shares, any non-legal person entities or any
individuals. In this report period, the Company didn’t provide any guarantee to any
external entity in any form.44
Section IX Report of the Board of Supervisors
I. Work of the Board of Supervisors in this report period:
In 2009, following the spirit of being responsible for all shareholders, the Company’s
Board of Supervisors conscientiously performed its responsibilities of supervision in
accordance with the Company Law, the Securities Law and Articles of Association of
the Company. There were five meetings of the Board of Supervisors held during the
report period in order to examine proposals, such as the Annual Report and the
Interim Report, supervise the execution of resolutions made by the Board of Directors,
and ensure that operations of the Board of Directors and the management team as well
as the Company finance are in accordance with laws and regulations.
Meetings convened by the Board of Supervisors in this report period, resolutions
made at the meetings and relevant information disclosures were as follows:
(1) The 8th meeting of the 4th Board of Supervisors was held at the First meeting
Room on 5/F, Tower C of Qiankun Plaza, Beijing at 9:00 a.m. on Apr. 22 2009, where
the following resolutions were made:
1. Reviewed and approved 2008 Working Report of Board of Supervisors with 3
approval votes, 0 against vote and 0 abstention vote;
2. Reviewed and approved 2008 Annual Report and its Summary Report with 3
approval votes, 0 against vote and 0 abstention vote;
Supervision opinion from the Board of Supervisors: The Board of Supervisors was of
the opinion that the Company’s 2008 Annual Report was prepared and reviewed in
compliance with relevant laws, regulations, Articles of Association of the Company
and rules of Shenzhen Stock Exchange; The contents of 2008 Annual Report could
truly reflect the financial status and operating results of the Company in the year 2008,
and the Annual Report was thus confirmed.
3. Reviewed and approved 2008 Financial Audit Report with 3 approval votes, 0
against vote and 0 abstention vote;
4. Reviewed and approved 2008 Internal Control Self-Assessment Report with 3
approval votes, 0 against vote and 0 abstention vote;
Supervision opinion from the Board of Supervisors: according to relevant rules of
CSRC and Shenzhen Stock Exchange, as well as the basic principles of internal
control, and based on the Company’s actual situation, the Company perfected the
organization structure of internal control, improved the internal control system and
carried out normal internal-control activities, which ensured the rationality and
legitimacy of the Company’s internal control, promoted the regular operation of the
Company and the healthy business activities, and safeguarded the safety and
completeness of the Company’s assets. The self-assessment given by the Board of45
Directors on the Company’s internal control was an objective and factual reflection of
the Company’s actual situation of internal control, and the Board of Supervisors thus
gave its acknowledgement.
5. Reviewed and approved Proposal about Resignation of Charles Liang from the
Board of Supervisors and Recommendation of Victor Yang as a Candidate Supervisor
with 3 approval votes, 0 against vote and 0 abstention vote.
The public notice of the resolutions made at this meeting of the Board of Supervisors
was published on Securities Times and Ta Kung Pao dated Apr. 27 2009.
(2) The 9th meeting of the 4th Board of Supervisors was held at the First Meeting
Room on 5/F, Tower C of Qiankun Plaza, Beijing on Apr. 22 2009, where the First
Quarterly Report 2009 was reviewed and approved with 3 approval votes, 0 against
vote and 0 abstention vote. And the Board of Supervisors was of the opinion that the
First Quarterly Report 2009 was a factual and fair reflection of the Company’s
operation and financial status.
(3) The 10th meeting of the 4th Board of Supervisors was held at No.3 Meeting Room
of the Company at 5:00 p.m. on Jun. 2 2009, where Mr. Victor Yang was elected as
the convener for the Board of Supervisors of the Company with 3 approval votes, 0
against vote and 0 abstention vote.
The public notice of the resolution made at this meeting of the Board of Supervisors
was published on Securities Times and Ta Kung Pao dated Jun. 4 2009.
(4) The 11th meeting of the 4th Board of Supervisors was held at the No.1 Meeting
Room of the Company at 2:15 p.m. on Aug. 25 2009, where 2009 Interim Report and
its Summary Report were reviewed and approved with 3 approval votes, 0 against
vote and 0 abstention vote.
Supervision opinion from the Board of Supervisors: the Board of Supervisors was of
the opinion that the Company’s 2009 Interim Report was prepared and reviewed in
compliance with relevant laws, regulations, Articles of Association of the Company
and rules of Shenzhen Stock Exchange; the contents of the 2009 Interim Report were
a factual and fair reflection of the Company’s operating results and financial status in
the middle of 2009, and the 2009 Interim Report was thus confirmed.
(5) The 12th meeting of the 4th Board of Supervisors was held at No.2006 Meeting
Room of the Company at 3:00 p.m. on Oct. 26 2009, where the Third Quarterly
Report 2009 was reviewed and approved with 3 approval votes, 0 against vote and 0
abstention vote.
Supervision opinion from the Board of Supervisors: the Board of Supervisors was of
the opinion that the Company’s Third Quarterly Report 2009 was prepared and46
reviewed in compliance with relevant laws, regulations, Articles of Association of the
Company and rules of Shenzhen Stock Exchange; the contents of the Third Quarterly
Report 2009 were a factual and fair reflection of the Company’s operating results and
financial status in the third quarter of 2009, and the Third Quarterly Report 2009 was
thus confirmed.
Ⅱ. Independent opinions expressed by the Board of Supervisors on the following
issues in this report period:
(1) the Company’s operation according to laws and regulations
In this report period, in accordance with relevant laws and regulations, the Board of
Supervisors had conducted supervision over the convening procedures of and
resolutions made at the Shareholders’ Meetings and the Board meetings, the
implementation by the Board of the various resolutions made at the Shareholders’
Meetings, the duty performance of the Company’s senior management and the
management system of the Company, etc. The Board of Supervisors believed that the
Board of Directors of the Company operated in strict compliance with the Company
Law, the Securities Law, Rules Governing the Listing of Stocks on Shenzhen Stock
Exchange, Articles of Association of the Company and other relevant rules and
regulations, fulfilled their duties in standardization in 2009, and the Board of
Directors performed their duties conscientiously and made scientific and reasonable
operation decisions. As a result, the internal management and internal control system
were further improved.
(2) Financial status of the Company
In this report period, the Board of Supervisors conducted periodic inspection into the
financial system and the financial status of the Company, and it believed that the 2009
Financial Report was a factual reflection of the financial status and operating results
of the Company. The Board of Supervisors also believed that the auditing opinions
given by Wuhan Zhonghuan Certified Public Accountants Ltd. truly, objectively and
fairly reflected the financial status and the operating results for the year 2009 without
any false information, misleading statements or material omissions.
(3) Use of raised funds
The Company had not raised any fund in the recent three years (including this report
period).
(4) Related transactions for asset purchases or sales
The Company had no related transactions for asset purchases or sales in this report
period.
(5) Inspection of related transactions
The prices of the related transactions of the Company in this report period were fair
and reasonable, which did not harm the interests of the Company. And the duty of47
information disclosure was fulfilled timely.48
Section X Significant Events
I. Significant lawsuits and arbitrations
(1) By the end of the report period, the Company was involved in two arbitrations,
details of which were as follows:
Arbitration case No.1: Sanmenxia Huineng Thermal Power Co., Ltd. (“Huineng
Company”) signed the Contract of 2×135MW Thermal Power Boilers with the
Company on May 11 2003. During executing the Contract, the Company delivered
two units boilers to Huineng Company according to the Contract, but Huineng
Company defaulted on the payment of RMB 9.58 million. The Company sent several
dunning letters for the debt, but didn’t get any payment. On Sep. 30 2009, the
Company submitted an arbitration application to Zhengzhou Arbitration Commission
with the claim of paying overdue RMB 9.58 million and undertaking liquidated
damages and bank interests RMB 9.848 million in total. The Contract, the dunning
letters, replies and other relevant evidences were submitted together to the Arbitration
Commission.
Arbitration case No.2: Henan Zhongmai Yong’an Power Co., Ltd. (Zhongmai
Yong’an Company) signed the Purchase and Sale Contract of 1×410t/h
High-temperature High-pressure Pulverized Coal Boiler with the Company on Jun.
26 2003. During executing the Contract, the Company delivered full set unit boiler to
Zhongmai Yong’an Company according to the Contract, but Zhongmai Yong’an
Company defaulted on the payment of RMB 14.325 million. The Company sent
several dunning letters for the debt, but didn’t get any payment. On Oct. 22 2009, the
Company submitted an arbitration application to Zhengzhou Arbitration Commission
with the claim of paying overdue RMB 14.325 million and undertaking liquidated
damages and interests RMB 6.6436 million in total. The Contract, the payment memo
and other relevant evidences were submitted together to the Arbitration Commission.
The public notices of the aforesaid issues were published on Securities Times and Ta
Kung Pao dated Dec. 16 2009.
(2) As of the date announcing this report, the Company has received the Arbitration
Award from Zhengzhou Arbitration Commission ([2009] Zheng Arbitration Zi
No.314). It has been ruled that:
1. The Respondent, Zhongmai Yong’an Company, should pay the Company overdue
RMB 14.324 million within 10 days after receipt of the Arbitration Award;
2. The Respondent, Zhongmai Yong’an Company, should pay the Company bank loan
interests accumulated since Jun. 7 2005 for RMB 11.2525 million Progress Payment
unpaid, and since Dec. 7 2006 for RMB 3.0725 million Quality Retention unpaid
within 10 days after receipt of the Arbitration Award. Such interest shall be calculated
until all the overdue payment and interest paid off.49
In case of delay paying the aforesaid overdue and interests, Zhongmai Yong’an
Company should pay double interests.
3. Other arbitration requests of the Company were rejected.
4. The Respondent, Zhongmai Yong’an Company, should bear arbitration fee RMB
173,411, which should be paid at the same time with the abovementioned payments to
the Company.
The public notice about details was published on Securities Times and Ta Kung Pao
dated Mar. 9 2010.
II. Significant acquisition, asset sales and mergers
In the report period, the Company did not conduct any significant acquisition, asset
sales or mergers.
III. Related transactions
（
1
）
Related transactions on purchasing and selling goods and offering and receiving services:
2009 2008
Related party
Type of
transaction
Details of
transaction
Rule of
price
setting Amount
Proportio
n
（
%
）
Amount
Proportion
（
%
）
Wuhan Boiler Group
Valve Co., Ltd.
Raw material
purchase
Valve purchase Market
price
6,267,549.00 1.62% 11,212,422.22 0.67%
Wuhan Special Boiler
Equipment and
Engineering Co., Ltd.
Raw material
purchase
Boiler
subassemblies
purchase
Market
price 30,600,000.00 7.92%
ALSTOM Technical
Services (Shanghai)
Co., Ltd.
Raw material
purchase
Boiler
subassemblies
purchase
Market
price 2,597,000.00 0.67% 1,298,000.00 0.08%
Wuhan Boiler Group
Valve Co., Ltd.
Sale
Material Market
price
104,269.23 0.01%
Wuhan Boiler Group
Co., Ltd.
Sale
Boiler products Market
price
9,102,631.01 0.82%
Wuhan Special Boiler
Equipment and
Engineering Co., Ltd.
Sale
Special boiler
products
Market
price 1,336,731.91 0.26% 80,732,431.77 7.29%
ALSTOM Power
Systems S.A
Provision of
service
Processing trade Market
price
3,123,900.00 100%50
2009 2008
Related party
Type of
transaction
Details of
transaction
Rule of
price
setting Amount
Proportio
n
（
%
）
Amount
Proportion
（
%
）
Etablissement Boilers
ALSTOM Projects
India Limited
Sale
Testing material Market
price
162,565.20 0.03%
ALSTOM Power Inc.
Sale
Boiler products Market
price
8,038,384.77 1.55%
ALSTOM
Technology Ltd
(Switzerland)
Technology
Transfer
Technology
Transfer
Market
price 3,072,690.00 100%
ALSTOM (Wuhan)
Engineering &
Technology Co., Ltd.
Translation
service
Translation
service
Market
price 213,231.02 76.25%
Wuhan Boiler Group
Yuntong Company
Limited
Transportatio
n
service
Transportation
service
Market
price 17,877,085.03 76.09% 70,975,019.54 100%
（
2
）
Lease
Lessor Lessee Lease
assets
Lease
amount
Starting
date
Ending
date
Yield Recognized
rule
Influence
Wuhan
Boiler
Group
Co.,
Ltd.
Wuhan
Boiler
Company
Limited
Office 2009.01.01 2009.09.30 -676,239.36
Contract
Increase
administration
expense in
current fiscal
year
Wuhan
Boiler
Group
Co.,
Ltd.
Wuhan
Boiler
Company
Limited
Warehouse 2009.01.01 2009.09.30 -388,728.00
Contract
Increase
manufacture
expense in
current fiscal
year
Wuhan
Boiler
Group
Co.,
Wuhan
Boiler
Company
Limited
Workshop 2009.01.01 2009.09.30 -260,409.60
Contract
Increase
manufacture
expense in
current fiscal51
Ltd. year
Wuhan
Boiler
Group
Co.,
Ltd.
Wuhan
Boiler
Company
Limited
Land 2009.01.01 2009.09.30 -1,781,683.18
Contract
Increase
administration
expense in
current fiscal
year
(3)Other related transactions
：
Related party Details of transaction Amount
ALSTOM Holdings Training fee 208,403.28
ALSTOM Power Inc Purchase of DELL servers 73,312.74
ALSTOM Power Inc Project consulting fee 771,845.87
ALSTOM (Switzerland) Ltd IT service fee 387,056.21
ALSTOM (Switzerland) Ltd SAP B1 Financial software 2,246,650.73
(4) Alstom (China) Investment Co., Ltd., the controlling shareholder of the Company,
provided shareholder loan of RMB 1,710,000,000 to the Company at 10% discount
off the benchmark interest rate. The Company paid RMB 63,611,347.50 loan interest
in 2009.
IV. Significant contracts and their implementation
(1) In the report period, there were no such events as entrustment, contracting or lease
of other companies’ assets by the Company and vice versa.
(2) In the report period, the Company neither provided any significant guarantee to
any other party nor provided guarantee to its controlling subsidiaries.
(3) In the report period, the Company did not entrust others to manage its cash assets.
Ⅴ. Derivative investment and derivative investment positions held by the Company
by the end of the report period
Table 1
Analysis on risks and control measures of derivative positions held in the
report period (including but not limited to market risk, liquidity risk,
credit risk, operation risk, legal risk, etc.)
----
Changes of market prices or fair values in the report period of the
invested derivatives. And the analysis on the fair values of the derivatives
should include the specific use methods and the relevant assumptions and
parameters
----52
Whether significant changes occurred to the Company’s accounting
policy and specific accounting principles of derivatives in the report
period compared to the previous report period
----
Specific opinion from independent directors, sponsors or financial
consultants on the Company’s derivative investment and risk control
----
Table 2
Unit: RMB 0’000
Type of contract
Opening
contract amount
Closing contract
amount
Gain or loss in the
report period (RMB
0’000)
Proportion of the
closing contract
amount in the
closing net assets of
the Company (%)
--- --- --- --- ---
Total --- --- --- ---
. Commitments made by the Company, its directors, supervisors, senior Ⅵ
management, shareholders holding more than 5% of the Company’s shares, actual
controller or any other relevant party in this report period, or such commitments
carried down to this report period
Commitment
Commitme
nt maker
Contents of commitment Execution
Commitment
concerning
share merger
reform
None None None
Commitment
concerning
share lock -up
None None None
Commitments
made in a
purchase
report or a
report on
changes of
owners’
equity
1.Alstom
(China)
Investm
ent Co.,
Ltd.
(“ACL”)
1. ACL committed to WBG that it shall not carry on
business in China in competition with the Company.
The restrictions contained in the clause above shall
not preclude ACL directly or indirectly from:
(1) carry on business activities in the same or any
related industry in any market or jurisdiction in
which the Company does not conduct business;
(2) tendering or contracting for the sale, distribution
or provision of products and services in
connection with projects in respect of which: a)
the Company is not qualified to tender or
contract for such project, or b) the Company has
declined or is unable for any reason to pursue
The
commitments
have been
faithfully
fulfilled.53
2.Wuhan
Boiler
Group
Co.,
Ltd.
(“WBG”)
such projects.
2. WBG committed to ACL that, for so long as ACL
holds not less than 30% of the outstanding shares of
the Company, except with the prior consent in
writing of ACL:
(1) for a period of ten years after Final Completion,
WBG will not, directly or indirectly, either on its
own account or in conjunction with or on behalf
of any person or entity, carry on, be engaged in,
or have an ownership interest in, any business
carried on by the Company or its Subsidiaries for
industrial or utility boiler products, components
and services with a capacity of 25 TPH and
above;
(2) for a period of three years after Final
Completion, WBG will not, directly or
indirectly, either on its own account or in
conjunction with or on behalf of any person or
entity, solicit or attempt to solicit from the
Company or any of its subsidiaries the business
of any person or entity which shall at any time
prior to Final Completion have been a customer
or identified prospective customer or a
representative or agent of the Company or any of
its subsidiaries; and
(3) for a period of three years after Final
Completion, WBG will not, directly or
indirectly, either on its own account or in
conjunction with or on behalf of any person or
entity, employ or solicit or attempt to employ or
solicit from the Company or any of its
subsidiaries any person who is at such time or
was prior to Final Completion a senior
management, manager, consultant or employee
of the Company or any of its subsidiaries.
Commitments
made in
material asset
reorganization
None None None
Commitments
made when
issuing
None None None54
Other
commitments
(including
supplementar
y ones)
The
Company
(1)Capital commitments
Up to December 31, 2009, the commitment related
to purchase of long-term assets which the contract
were signed but not reflected in the financial
statements amounted to RMB68,667,790.86, USD
787,232.20, EUR 397,600.00 and JPY 2,500,000.00.
(2)Other commitments
Up to December 31, 2009, the performance bond,
tender bond and warranty bond issued by the
Company remain unexpired amounted to RMB
173,983,520.00 and USD 3,126,923.00 respectively.
(1) The
performance of
previous year’s
capital
commitments:
the amount of
prior year’s
capital
commitments
fulfilled in 2009
was RMB
238,566,549.44,
USD
2,768,462.80,
EUR
725,000.00
(2)The
performance of
previous year’s
other
commitments:
performance
bond of RMB
51,673,970.00
was released in
line with the
completion of
related
contracts.
VII. Engagement or dismissal of Certified Public Accountants Company
In this report period, the Company continued to engage Wuhan Zhonghuan Certified
Public Accountants Ltd. as the auditing agency.
Expenses such as accommodation, travel, telecommunication, photocopying, etc.
during the auditing period would be paid by Wuhan Zhonghuan Certified Public
Accountants Ltd. In this report period, the Company had fully withdrawn the auditing
charge of 2009 Financial Report.
Wuhan Zhonghuan Certified Public Accountants Ltd. had provided auditing services
to the Company for 12 accounting years (including this year) in succession.
VIII. Visits, researches and interviews received by the Company in the report period
In this report period, according to the Guide on Fair Information Disclosure for Listed55
Companies, the Company patiently and friendly received phone calls and visits from
investors. The Company and relevant personnel obliged for information disclosure
strictly abided by the principle of fair information disclosure, with no events of
differential treatment or leak of undisclosed information.
Time Place
Way of
reception
Visitor
Main discussion and materials
provided by the Company
Jan.-Dec.
2009
Wuhan
By
telephone
Public
investors
Construction progress of the new plant,
production and operation, etc.
IX. Inspection and punishments received
In this report period, the Company, the Board of Directors, directors and senior
management received no administrative punishments or criticism by circular from
CSRC, or open criticism from Chinese securities exchanges.
X. There was no other significant event in this report period
Please see the Financial Report.
XI. Contingency
The Company delivered an alkaline recovery boiler to a customer in 2008. The boiler
was put into operation. Due to various reasons, the boiler was unable to continue
operating at full load and required some technical modification. The modification
work is expected to commence in year 2010. The Company provided RMB
50,956,000 in the book for this modification costs.
XII. Subsequent events
There was no significant event after balance sheet date that the Company needs to
disclose.
XIII. Other significant events
1. Borrowing cost:
(1) During the report period, the amount of borrowing costs capitalized was RMB
18,914,246.04.
(2) During the report period, the capitalization rate for borrowing cost was 5.748%.
2. Former controlling shareholder, Wuhan Boiler (Group) Co., Ltd., entered into a
share purchase agreement with Alstom (China) Investment Co., Ltd. on April 14, 2006.
The transaction was finally completed on August 24, 2007 after approval from
relevant authorities. At present, Alstom (China) Investment Co., Ltd. is the controlling
shareholder of the Company with 51% shares.
The transaction includes the following key elements according to the Share Purchase
Agreement (hereinafter as the “SPA”) signed in April 14, 2006:
(1) License, Technical Transfer and Assistance Agreement between Alstom
Technology Ltd. and the Company on Steam Generator;
(2) Relocation and Relocation Team Agreement, Relocation Compensation Agreement;56
(3) Statements and guarantee on relevant assets (including inventories and work in
progress) and liabilities, and further compensation guarantee, with the Company as
the beneficiary under SPA.
To the extent applicable, the value of the elements described above has been included
in the preparation of 2009 financial statements. The full execution of above
Agreements is critical to the future financial viability of the Company.57
Section XI Financial Report
I. Auditing opinions
The Financial Report 2009 of the Company had been audited by Wuhan Zhonghuan
Certified Public Accountants Ltd., and a standard Auditor’s Report with unqualified
opinion had been issued.
(1) Auditor’s Report (attached)
(2) Financial Statements and Notes (attached)58
Section XII Documents Available for Reference
I. Accounting statements with the signatures and seals of the Legal Representative, Finance
Director, and the persons in charge of the accounting departments;
II. Original copy of the Audit Report with the signatures and seals of Chinese CPAs, which
has been audited by Wuhan Zhonghuan Certified Public Accountants Ltd.;
III. Original copies of all documents of the Company and originals of the public notices
disclosed in Securities Times and Ta Kung Pao in this report period;
IV. Original copy of 2009 Annual Report of the Company.
This report is prepared in both Chinese and English. In the event of inconsistency, the
Chinese version of this Annual Report shall prevail.
Wuhan Boiler Company Limited
Chairman of the Board of Directors: YEUNG Kwok Wei Richard
Mar. 28 201059
ZHONG HUAN Wuhan Office: 16/F, Wuhan International Building, Dandong RD, Wuhan China ,
CERTIFIED PUBLIC ACCOUNTANTS zipcoad430022 Tel(86)(27)85826771 Fax(86)(27) 85424329
AUDITOR’S REPORT
ZHSZ (2010) No.395
TO THE SHAREHOLDERS OF WUHAN BOILER CO., LTD.
We have audited the accompanying financial statements of Wuhan Boiler Co., Ltd (the “Company”),
which comprise the balance sheet and the consolidated balance sheet as at December 31 2009, the
income statement, the consolidated income statement, the statement of change in equity, the
consolidated statement of change in equity, the cash flow statement and the consolidated cash flow
statement for the year then ended, and a summary of significant accounting policies and other
explanatory notes.
Management's responsibility for the financial statements
Preparing financial statements in compliance with Chinese Accounting Standard (2006) is the
responsibility of the Company’s management. This responsibility includes: designing, implementing and
maintaining internal controls relevant to the preparation of these financial statements to prevent these
financial statements from material misstatement arising from fraud or error; selecting and applying
proper accounting policies; and making reasonable accounting estimates.
Auditor's responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We
conducted our audit in accordance with Auditing Standards for CICPA. Those Standards require that we
plan and perform the audit to obtain reasonable assurance about whether the financial statements are
free from material misstatement.
An audit includes performing audit procedures, so as to obtain audit evidence to support the amounts
and disclosures in the financial statements. Audit procedures are relied on the auditors’ judgments,
including assessment on the risk of material misstatement of these financial statements arising from60
fraud or error. In risk assessment procedures, we consider internal controls relating to the preparation of
these financial statements to design appropriate audit procedures, but our objective is not to express our
opinion on the effectiveness of internal controls. An audit also includes assessing the reasonability of
accounting principles used and significant estimates made by the management, as well as evaluating the
overall financial statements presentation.
We believe that the audit evidence we have obtained is sufficient and effective, providing a reasonable
basis for our opinion.
Opinion
In our opinion, the financial statements comply with Chinese Accounting Standard (2006), and present
fairly in all material respects the financial position of the Company as of December 31 ,2009 and the
results of its financial performance and its cash flows for the year then ended.
Wuhan Zhonghuan Certified Public Accountants CICPA
CICPA
Wuhan, China March 28, 201061
Consol. No.1
Wuhan Boiler Co., Ltd Currency
：
RMB
Assets Notes 31-Dec-09 31-Dec-08
Current assets
Cash and cash equivalents 5.1 32,155,537.93 47,867,354.63
Settlement fund
Outgoing call loan
Trading finanical assets
Notes receivable 5.2 119,714,775.17 380,000.00
Accounts receivable 5.3 755,464,773.85 953,598,124.44
Prepayment 5.5 54,734,282.45 141,863,705.37
Insurance receivables
Reinsurance Receivable
Provision of reinsurance contract reserve receivable
Interests receivable
Dividend receivable
Other receivables 5.4 130,999,820.37 132,916,376.39
Financial assets purchased under agreement to resell
Inventories 5.6 76,565,007.91 918,505,849.66
Non-current assets due within 1-year
Other current assets
Total current assets 1,169,634,197.68 2,195,131,410.49
Non-current assets
： Loan and payment on other's behalf disbursed
Available-for-sale financial assets
Investment held to maturity
Long-term receivables
Long-term equity investment
Investment property
Fixed assets 5.7 608,687,168.29 121,851,170.82
Construction in progess 5.8 175,819,636.95 406,345,860.06
Engieering materials
Disposal of fixed assets 5.9 240,743.43
Production biological assets
Oil-gas assets
Intangible assets 5.10 61,342,914.10 64,344,904.52
R&D expenses
Goodwill
Long-term deferred expenses 5.11 100,000.00
Deferred tax assets 5.12 84,997,137.51 73,930,972.26
Other non-current assets 5.14 24,525.50 6,174,943.43
Total non-current assets 931,112,125.78 672,747,851.09
Total assets 2,100,746,323.46 2,867,879,261.58
Consolidated Balance Sheet (Assets)62
Consol. No.1
Wuhan Boiler Co., Ltd Currency
：
RMB
Liabilities and shareholder's equity Notes 31-Dec-09 31-Dec-08
Current liabilities
： Short-term loans 5.15 2,235,000,000.00 1,924,000,000.00
Loans from central bank
Deposits received and hold for others
Call loan received
Held-for-trading financial liabilities
Notes payable 5.16 219,077,384.51 433,649,225.98
Accounts payable 5.17 425,186,604.74 532,731,198.18
Advance from customers 5.18 31,395,403.74 10,442,136.73
Financial assets sold under agreements to repurchase
Fees and commissions payable
Payroll payable 5.19 78,008,118.69 44,989,865.76
Taxes payable 5.20 -91,501,043.47 -102,911,718.25
Interests payable 5.21 3,274,942.50 3,046,367.05
Dividend payable 5.22 562,000.00 562,000.00
Other payables 5.23 38,838,894.32 25,258,271.32
Amount due to reinsurance
Insurance contract provision
Entrusted trading of sesurities
Entrusted selling of securities
Non-current liabilities due within 1-year 5.24 90,000,000.00
Other current liabilities
Total current liabilities
：
2,939,842,305.03 2,961,767,346.77
Non-current liabilities
Long-term loans 5.25 100,000,000.00
Bonds payable
Long-term payables
Specific payables
Provision for liabilities 5.26 50,956,000.00
Deferred taxes liabilities 5.12 2,696.51
Other non-current liabilities 5.27 1,229,589.41 20,646,122.33
Total non-current liabilities
：
52,185,589.41 120,648,818.84
Total liabilities 2,992,027,894.44 3,082,416,165.61
Shareholders' Equity
： Share capital 5.28 297,000,000.00 297,000,000.00
Capital surplus 5.29 174,659,407.46 174,659,407.46
Less
：
Treasury Stock
Special reserve funds
Surplus reserve 5.30 39,418,356.83 39,418,356.83
General risk provision
Retained earnings 5.31 -1,405,039,361.46 -729,366,846.47
Foreign exchange difference
Total shareholders' equity attributable to shareholders of the Company -893,961,597.17 -218,289,082.18
Minority interest 2,680,026.19 3,752,178.15
Total shareholders' equity -891,281,570.98 -214,536,904.03
Total liabilities & shareholders' equity 2,100,746,323.46 2,867,879,261.58
Legal Representative: Chief Financial Official: Chief Accountant:
Consolidated Balance Sheet(Liabilities and Equity)63
Consol. No.2
Wuhan Boiler Co., Ltd Currency
：
RMB
Items Notes Year 2009 Year 2008
I. Total revenue 517,679,190.56 1,121,071,252.12
Including: revenue 5.32 517,679,190.56 1,121,071,252.12
Interest income
Insurance fee income
Fee and commission income
II. Total cost of sales 1,205,194,073.81 1,499,426,017.65
Including: Cost of sales 5.32 622,449,427.98 1,113,022,567.22
Interest expenses
Service charge and commission income
Insurance discharge payment
Claim expenses-net
Provision for insurance contract reserve-net
Insurance policy dividend paid
Reinsurance expense
Business taxes and surcharges 5.34 834,125.93 5,228,738.43
Sales expenses 5.35 10,056,173.85 6,198,590.04
Administration expenses 5.36 157,810,983.11 115,279,632.30
Financial costs 5.37 107,917,876.21 96,508,269.91
Impairment loss 5.39 306,125,486.73 163,188,219.75
Plus: gain/loss on change in fair value (“-”for loss) 5.38 6,501.92 -1,015,005.38
gain/loss on investment(“-”for loss) -1,354,516.32
Including: income from investment on associates and jointly ventures
Gain or loss on foreign exchange difference (“-”for loss)
III. Operating profit(“-”for loss) -687,508,381.33 -380,724,287.23
Plus: non-operating income 5.40 11,414,352.47 10,669,480.02
Less: non-operating expense 5.41 11,466,201.23 2,513,546.21
Including: loss from disposal of non-current asset 10,558,089.59 2,173,157.31
IV. Total profit(“-”for loss) -687,560,230.09 -372,568,353.42
Less: income tax expense 5.42 -10,815,563.14 -14,895,591.36
V. Net profit(“-”for loss) -676,744,666.95 -357,672,762.06
including: net profit gained by combined company before combination
Including:Attributable to equity holders of the parent company -675,672,514.99 -353,934,337.61
Minority interest -1,072,151.96 -3,738,424.45
VI. Earnings per share
(I) basic earnings per share (
￥
/share) 5.43 -2.27 -1.19
(II) diluted earnings per share (
/share) 5.43 -2.27 -1.19
Ⅶ
Other Comprehensive Income
Ⅷ
Total Comprehensive Income -676,744,666.95 -357,672,762.06
including: parent company's total comprehensive Income -675,672,514.99 -353,934,337.61
including: Minority's total comprehensive Income -1,072,151.96 -3,738,424.45
Consolidated Income Statement64
Consol. No. 3
Wuhan Boiler Co., Ltd Currency
： Items Notes Year 2009 Year 2008
1. Cash flows from operating activities
Cash received from sales of goods or rending of services 681,052,594.26 1,120,531,878.78
Net increase of deposits received and held for others
Net increase of loans from central bank
Net increase of inter-bank loans from other financial assets
Cash received against original insurance contract
Net Cash received from reinsurance
Net increase of client deposit and investment
Cash received from disposal of held-for-trading financial assets
Cash received as Interests, fees and commissions received
Net increase of inter-bank fund received
Cash received under repurchasing, net
Tax returned
Other cash received from operating activities 5.44 374,704.19 283,286.98
Sub-total of cash inflows from operating activities 681,427,298.45 1,120,815,165.76
Cash paid for goods and services 206,512,379.24 1,740,194,953.61
Net increase of loans and advances
Net increase of deposit in central bank,banks and other financial institutions
Cash paid for original contract claim
Cash paid for interests, fees and commission
Cash paid for policy dividend
Cash paid to and for employees 146,595,951.97 130,952,575.68
Cash paid for all types of taxes 8,899,734.76 42,135,501.79
Other cash paid relating to operating activities 5.44 40,957,675.76 37,121,932.48
Sub-total of cash outflows from operating activities 402,965,741.73 1,950,404,963.56
Net cash flow from operating activities 278,461,556.72 -829,589,797.80
2. Cash Flows from Investing Activities
Cash received from return on investments
Cash received from investment income
Net cash received from disposal of fixed assets, intangible assets and other long-term assets 12,407,095.04 1,374,199.21
Net cash received from disposal of subsidiaries and other operating units 387,061.57
Other cash received relating to investing activities 5.44 6,046,752.07 81,491,563.01
Sub-total of cash inflows from investing activities 18,453,847.11 83,252,823.79
Cash paid for acquisition of fixed assets, intangible assets and other long-term assets 301,492,802.94 360,032,680.20
Cash paid for acquisition of investments 10,984,500.00
Net increase of pledged loans
Net cash paid for acquisition of subsidiaries and other operating units
Other cash paid relating to investing activities 5.44 1,179,627.72 2,757,704.48
Sub-total of cash outflows from investing activities 302,672,430.66 373,774,884.68
Net cash flow from investing activities -284,218,583.55 -290,522,060.89
3. Cash Flows from Financing Activities:
Cash received from investment
Including: Cash received from minority shareholders of subsidiaries
Cash received from borrowings 4,059,000,000.00 2,640,000,000.00
Cash received from bonds issuing
Cash received relating to financing activities
Sub-total of cash inflows from financing activities 4,059,000,000.00 2,640,000,000.00
Cash paid for repayments of borrowings 3,938,000,000.00 1,462,500,000.00
Cash paid for dividends, profit distribution or interest 126,804,172.59 101,171,349.39
Including: dividends or profits paid to minority shareholders by subsidiaries
Other cash paid relating to financing activities
Sub-total of cash outflows from financing activities 4,064,804,172.59 1,563,671,349.39
Net cash flow from financing activities -5,804,172.59 1,076,328,650.61
4. Effect of foreign exchange rate changes 1,063,481.22 -30,493.88
5. Net decrease in cash and cash equivalents -10,497,718.20 -43,813,701.96
Add : Cash and cash equivalents at the beginning of the year 5.45 37,612,024.12 81,425,726.08
6. Cash and cash equivalents at the end of the year 5.45 27,114,305.92 37,612,024.12
Consoliated Cashflow Statement65
Consol. No. 4
Wuhan Boiler Co., Ltd Currency
：
RMB
Share capital Capital reserve
Less:
Treasur
y stock
special
reserve
fund
Surplus
reserve
General Risk
provision
Retained earnings others
I. Balance at 31 December, 2008 297,000,000.00 174,659,407.46 39,418,356.83 -729,366,846.47 3,752,178.15 -214,536,904.03
Change in accounting policies
Correction of errors in previous period
Others
II. Balance at 1 January, 2009 297,000,000.00 174,659,407.46 39,418,356.83 -729,366,846.47 3,752,178.15 -214,536,904.03
III. Increase/ decrease during the financial year (“-”for loss) -675,672,514.99 -1,072,151.96 -676,744,666.95
(I) Net profit -675,672,514.99 -1,072,151.96 -676,744,666.95
(II) Other comprehensive income
Subtotal of (I)and (II) -675,672,514.99 -1,072,151.96 -676,744,666.95
(III) Contributions and decrease of capital
1. Contributions by shareholders
2. Equity settled share-based payment
3. Others
(IV) Profit distribution
1. Surplus reserve accrued
2. General risk provision accrued
3. Distribution to shareholders
4. Others
(V) Transfer within shareholders' equity
1. Captial reserve transferred to capital (share capital)
2. Surplus reserve transferred to capital (share capital)
3. Surplus reserve offsetting losses
4. Others
(
Ⅵ
)special reserve fund
1. Increase
2. Decrease
IV. Balance at 31 December, 2009 297,000,000.00 174,659,407.46 39,418,356.83 -1,405,039,361.46 2,680,026.19 -891,281,570.98
Legal Representative: Chief Financial Official: Chief Accountant:
Consolidated Statement of Change in Equity
Items
Year 2009
Shareholders' equity belonged to shareholders'of the Company
Minority interest Total66
Consol. No. 4
Wuhan Boiler Co., Ltd Currency
：
RMB
Share capital Capital reserve
Less:
Treasur
y stock
Surplus
reserve
General Risk
provision
Retained earnings others
I. Balance at 31 December, 2007 297,000,000.00 174,854,304.12 39,418,356.83 -375,432,508.86 21,041,996.14 156,882,148.23
Plus: Change in accounting policies
Correction of errors in previous period
Others
II. Balance at 1 January, 2008 297,000,000.00 174,854,304.12 39,418,356.83 -375,432,508.86 21,041,996.14 156,882,148.23
III. Increase/ decrease during the financial year (“-”for loss) -194,896.66 -353,934,337.61 -17,289,817.99 -371,419,052.26
(I) Net profit -353,934,337.61 -3,738,424.45 -357,672,762.06
(II) Other comprehensive income
Subtotal of (I)and (II) -353,934,337.61 -3,738,424.45 -357,672,762.06
(III) Contributions and decrease of capital -194,896.66 -13,551,393.54 -13,746,290.20
1. Contributions by shareholders -194,896.66 -13,551,393.54 -13,746,290.20
2. Equity settled share-based payment
3. Others
(IV) Profit distribution
1. Surplus reserve accrued
2. General risk provision accrued
3. Distribution to shareholders
4. Others
(V) Transfer within shareholders' equity
1. Captial reserve transferred to capital (share capital)
2. Surplus reserve transferred to capital (share capital)
3. Surplus reserve offsetting losses
4. Others
(
Ⅵ
)special reserve fund
1. Increase
2. Decrease
IV. Balance at 31 December, 2008 297,000,000.00 174,659,407.46 39,418,356.83 -729,366,846.47 3,752,178.15 -214,536,904.03
Legal Representative: Chief Financial Official: Chief Accountant:
Consolidated Statement of Change in Equity
Items
Year 2008
Shareholders' equity belonged to shareholders'of the Company
Minority interest Total67
Consol. No.1
Wuhan Boiler Co., Ltd Currency
：
RMB
Assets Notes 31-Dec-09 31-Dec-08
Current assets
Cash and cash equivalents 31,098,844.47 31,599,034.00
Trading finanical assets
Notes receivable 119,714,775.17
Accounts receivable
1.1
745,771,518.31 942,918,219.40
Prepayment 54,734,282.45 141,118,425.37
Interest receivables
Dividend receivables
Other receivables
1.2
131,153,621.75 132,785,791.48
Inventories 76,565,007.91 905,820,307.66
Non-current assets due within 1-year
Other current assets
Total current assets 1,159,038,050.06 2,154,241,777.91
Non-current assets
： Available-for-sale financial assets
Investment held to maturity
Long-term receivables
Long-term equity investment
1.3
39,234,287.13 39,234,287.13
Investment property
Fixed assets 608,844,145.28 118,360,293.74
Construction in progess 175,819,636.95 406,345,860.06
Engieering materials
Disposal of fixed assets
Production biological assets
Oil-gas assets
Intangible assets 61,342,914.10 64,344,904.52
R&D expenses
Goodwill
Long-term deferred expenses 100,000.00
Deferred tax 84,863,443.76 73,797,278.51
Other non-current assets 24,525.50 6,174,943.43
Total non-current assets 970,128,952.72 708,357,567.39
Total assets 2,129,167,002.78 2,862,599,345.30
Legal Representative: Chief Financial Official: Chief Accountant:
Balance Sheet (Assets)68
Consol. No.1
Wuhan Boiler Co., Ltd Currency
：
RMB
Liabilities and shareholder's equity Notes 31-Dec-09 31-Dec-08
Current liabilities
： Short-term loan 2,235,000,000.00 1,924,000,000.00
Held-for-trading financial liabilities
Notes payable 219,077,384.51 433,649,225.98
Accounts payable 429,999,448.33 529,612,333.97
Advance from customers 31,395,403.74 10,342,136.73
Payroll payable 77,711,552.34 44,680,505.04
Taxes payable -91,754,906.91 -103,411,510.50
Interests payable 3,274,942.50 3,046,367.05
Dividend payables
Other payables 72,648,001.34 44,276,690.75
Non-current liabilities due within 1-year 90,000,000.00
Other current liabilities
Total current liabilities
：
2,977,351,825.85 2,976,195,749.02
Non-current liabilities
： Long-term loans 100,000,000.00
Bonds payable
Long-term payables
Specific payables
Provision for liabilities 50,956,000.00
Deferred taxes liabilities 2,696.51
Other non-current liabilities 1,229,589.41 20,646,122.33
Total non-current liabilities
：
52,185,589.41 120,648,818.84
Total liabilities 3,029,537,415.26 3,096,844,567.86
Shareholders' Equity
： Share capital 297,000,000.00 297,000,000.00
Capital surplus 174,854,304.12 174,854,304.12
Less
：
Treasury Stock
special reserve fund
Surplus reserve 39,418,356.83 39,418,356.83
Generic Risk Reserve
Retained earning -1,411,643,073.43 -745,517,883.51
Total shareholders' equity: -900,370,412.48 -234,245,222.56
Total liabilities and shareholders' equity: 2,129,167,002.78 2,862,599,345.30
Legal Representative: Chief Financial Official: Chief Accountant:
Balance Sheet(Liabilities and Equity)69
Consol. No.2
Wuhan Boiler Co., Ltd Currency
：
RMB
Items Notes Year 2009 Year 2008
I. Total revenue 11.4 515,399,190.56 1,093,604,084.61
Less
：
cost of sales 11.4 618,772,502.35 1,091,202,762.12
Business taxes and surcharges 456,983.45 4,164,752.45
Sales expenses 10,012,794.95 4,720,721.57
Administration expenses 150,404,848.18 107,582,012.72
Financial costs 107,920,125.10 94,948,752.50
Impairment loss 305,831,263.24 161,673,699.87
Plus: gain/loss on change in fair value (“-”for loss) 6,501.92 -1,015,005.38
gain/loss on investment(“-”for loss) -3,580,135.15
Including: income from investment on associates and jointly ventures
Ⅱ
. Operating profit(“-”for loss) - 677,992,824.79 -375,283,757.15
Plus: non-operating income 11,413,751.59 10,659,579.81
Less: non-operating expense 10,614,978.48 2,077,115.79
Including: loss from disposal of non-current asset 9,919,490.82 1,760,411.19
Ⅲ
. Total profit(“-”for loss) - 677,194,051.68 -366,701,293.13
Less: income tax expense - 11,068,861.76 -16,233,064.67
Ⅳ
. Net profit(“-”for loss) - 666,125,189.92 -350,468,228.46
Ⅴ
. Earnings per share
(I) basic earnings per share (
￥
/share) - 2.24 -1.18
(II) diluted earnings per share (
￥
/share) - 2.24 -1.18
Other comprehensive income
Total comprehensive income - 666,125,189.92 -350,468,228.46
Legal Representative: Chief Financial Official: Chief Accountant:
Income Statement70
Consol. No. 3
Wuhan Boiler Co., Ltd Currency
：
RMB
Items Notes Year 2009 Year 2008
1. Cash flows from operating activities
Cash received from sales of goods or rending of services 678,137,395.60 1,061,395,602.35
Tax returned
Other cash received from operating activities 12,672,864.35 23,325.32
Sub-total of cash inflows from operating activities 690,810,259.95 1,061,418,927.67
Cash paid for goods and services 213,294,506.24 1,715,250,053.74
Cash paid to and for employees 138,348,342.36 111,126,491.37
Cash paid for all types of taxes 5,589,400.41 32,832,649.05
Other cash paid relating to operating activities 39,876,984.17 39,018,514.27
Sub-total of cash outflows from operating activities 397,109,233.18 1,898,227,708.43
Net cash flow from operating activities 293,701,026.77 -836,808,780.76
2. Cash Flows from Investing Activities
Cash received from return on investments
Cash received from investment income
Net cash received from disposal of fixed assets, intangible assets and other long-term assets 12,393,840.04 857,955.00
Net cash received from disposal of subsidiaries and other operating units 1,520,000.00
Other cash received relating to investing activities 6,027,169.79 81,409,320.69
Sub-total of cash inflows from investing activities 18,421,009.83 83,787,275.69
Cash paid for acquisition of fixed assets, intangible assets and other long-term assets 301,491,202.94 359,694,745.15
Cash paid for acquisition of investments 10,984,500.00
Net cash paid for acquisition of subsidiaries and other operating units
Other cash paid relating to investing activities 1,176,233.32 2,722,864.08
Sub-total of cash outflows from investing activities 302,667,436.26 373,402,109.23
Net cash flow from investing activities -284,246,426.43 -289,614,833.54
3. Cash Flows from Financing Activities:
Cash received from investment
Cash received from borrowings 4,059,000,000.00 2,640,000,000.00
Cash received relating to financing activities
Sub-total of cash inflows from financing activities 4,059,000,000.00 2,640,000,000.00
Cash paid for repayments of borrowings 3,938,000,000.00 1,461,000,000.00
Cash paid for dividends, profit distribution or interest 126,804,172.59 99,939,443.32
Other cash payments relating to financing activities
Sub-total of cash outflows from financing activities 4,064,804,172.59 1,560,939,443.32
Net cash flow from financing activities -5,804,172.59 1,079,060,556.68
4. Effect of foreign exchange rate changes 1,063,481.22 -30,493.88
5. Increase in cash and cash equivalents 11.5 4,713,908.97 -47,393,551.50
Add : Cash and cash equivalents at the beginning of the year 11.5 21,343,703.49 68,737,254.99
6. Cash and cash equivalents at the end of the year 11.5 26,057,612.46 21,343,703.49
Legal Representative: Chief Financial Official: Chief Accountant:
Cashflow Statement71
Consol. No. 4
Wuhan Boiler Co., Ltd Currency
：
RMB
Share capital Capital reserve
Less:
Treasury stock
special reserve
fund
Surplus reserve
General Risk
provision
Retained earnings Total
I. Balance at 31 December, 2008 297,000,000.00 174,854,304.12 39,418,356.83 -745,517,883.51 -234,245,222.56
Change in accounting policies
Correction of errors in previous period
Others
II. Balance at 1 January, 2009 297,000,000.00 174,854,304.12 39,418,356.83 -745,517,883.51 -234,245,222.56
III. Increase/ decrease during the financial year (“-”for loss) -666,125,189.92 -666,125,189.92
(I) Net profit -666,125,189.92 -666,125,189.92
(II) Other comprehensive income
Subtotal of (I)and (II) -666,125,189.92 -666,125,189.92
(III) Contributions and decrease of capital
1. Contributions by shareholders
2. Equity settled share-based payment
3. Others
(IV) Profit distribution
1. Surplus reserve accrued
2. General risk provision accrued
3. Distribution to shareholders
4. Others
(V) Transfer within shareholders' equity
1. Captial reserve transferred to capital (share capital)
2. Surplus reserve transferred to capital (share capital)
3. Surplus reserve offsetting losses
4. Others
(
Ⅵ
)special reserve fund
1. Increase
2. Decrease
IV. Balance at 31 December, 2009 297,000,000.00 174,854,304.12 39,418,356.83 -1,411,643,073.43 -900,370,412.48
Legal Representative: Chief Financial Official: Chief Accountant:
Statement of Change in Equity
Items
Year 200972
Consol. No. 4
Wuhan Boiler Co., Ltd Currency
：
RMB
Share capital Capital reserve
Less:
Treasury stock
special reserve
fund
Surplus reserve
General Risk
provision
Retained earnings Total
I. Balance at 31 December, 2007 297,000,000.00 174,854,304.12 39,418,356.83 -395,049,655.05 116,223,005.90
Plus: Change in accounting policies
Correction of errors in previous period
Others
II. Balance at 1 January, 2008 297,000,000.00 174,854,304.12 39,418,356.83 -395,049,655.05 116,223,005.90
III. Increase/ decrease during the financial year (“-”for loss) -350,468,228.46 -350,468,228.46
(I) Net profit -350,468,228.46 -350,468,228.46
(II) Other comprehensive income
Subtotal of (I)and (II) -350,468,228.46 -350,468,228.46
(III) Contributions and decrease of capital
1. Contributions by shareholders
2. Equity settled share-based payment
3. Others
(IV) Profit distribution
1. Surplus reserve accrued
2. General risk provision accrued
3. Distribution to shareholders
4. Others
(V) Transfer within shareholders' equity
1. Captial reserve transferred to capital (share capital)
2. Surplus reserve transferred to capital (share capital)
3. Surplus reserve offsetting losses
4. Others
(
Ⅵ
)special reserve fund
1. Increase
2. Decrease
IV. Balance at 31 December, 2008 297,000,000.00 174,854,304.12 39,418,356.83 -745,517,883.51 -234,245,222.56
Legal Representative: Chief Financial Official: Chief Accountant:
Items
Year 2008
Statement of Change in Equity73
NOTES TO THE FINANCIAL STATEMENTS
As of December 31, 2009
Important Notes:
This report has been prepared in Chinese version and English version respectively. In the event of
difference in interpretation between the two versions, the Chinese report shall prevail.
Note 1 Description of business
Wuhan Boiler Co., Ltd (the “Company”) was established by Wuhan Boiler (Group) Co., Ltd (the
“Group”) with the exclusive operating assets of boiler manufacturing in September 1997 and
listed in B share market in April 1998. The share capital of the Company is 297,000,000 shares.
The “Group” holds 172,000,000 shares accounting for 57.91% shareholding and the public
shareholding (Domestically listed share in foreign currency) is 125,000,000 shares accounting for
42.09% shareholding. The Company's B-shares listed in the Shenzhen Stock Exchange. The
Company obtained the corporate business license documented as Qi Gu Er Zong Fu Zi No.002591
on November 16, 1998. The Group transferred its 51% shareholding of Wuhan Boiler Co., Ltd to
Alstom (China) Investment Co., Ltd in 2007 with approval of State-owned Assets Supervision and
Administration Commission of the State Council. The share transfer procedures were completed in
August 2007. Alstom (China) Investment Co., Ltd holds 151,470,000 shares accounting for 51%
shareholding; Wuhan Boiler (Group) Co., Ltd holds 20,530,000 shares accounting for 6.91%
shareholding and public tradable shares is 125,000,000 accounting for 42.09% shareholding as at
December 31, 2007.
1. The register capital of the Company is 297,000,000.00.
2. LiuFangYuan Road Te No.1, Donghu New Technology Development Zone, Wuhan city,
Hubei Province
3. Business scope of the Company is researching, designing, developing and manufacturing of
types I, II, III pressure vessels, power station boilers, special boilers, auxiliary boilers,
desulfurization equipments and so on. The Company is a big boiler manufacturing enterprise and
the main operating actibities are in China. The major customer markets of the Company are
various power plants and power stations. Certain products are auxiliary equipments and pressure
vessels target refineries and chemical enterprises. The Company produces three categories74
products: power station boilers, special boilers and other products. Power station boils are used in
power stations. Special boilers are designed and manufactured according to customers’ profit and
loss balance combustion technology or specific requirement of fuel, which is energy saving and
enviorment friendly. The special boilers include alkali recovery boilers, circulating fluidized bed
boilers, bagasse-fired boilers, the stand vertical-burning boilers, liquid slag-off boilers, waste heat
boilers and so on.
4. Parent company of the Company is Alstom (China) Investment Co., Ltd. The parent company
of Alstom (China) Investment Co., Ltd.is Alstom Holdings .
5. These financial statements were authorised for issue in accordance with the resolution of the
4th section of the 19th Meeting of Board of Director on March 28, 2010.
Note 2 Main accounting policies and estimates
1.Basic of preparation of financial statements
The financial statements have been prepared on the basic assumption of going concern and on the
accrual basis of accounting. The effects of evens and other transactions actually occurred and they
have been recorded and measured in accordance with the Chinese Accounting Standards (2006):
Framework and other accounting standards.
2.Declaration of following the accounting standard
The financial statements prepared by the Company are truly and completely reflect the financial
position, operation result and cash flow of the Company.
3.Fiscal year
The accounting period of the Group is from January 1 to December 31 of the Gregorian calendar.
4.Monetary unit
Renminbi (RMB) is used as the accounting standard currency.
5.Accounting method of business combination under the same control and not under the same75
control
(1) The Company adopts equity method for business combination under same control. The assets
and liabilities that the combining party obtained in a business combination shall be measured on
their carrying amount in the combined party on the combining date. The difference between the
carrying amount of net assets acquired by the combining party and the carrying amount of the
consideration paid by it (or the total par value of the shares issued) shall be adjusted to capital
surplus. If the capital surplus is not sufficient for adjustment, retained earning is adjusted
respectively. The business combination costs that are directly attributable to the combination, such
as audit fees, valuation fees, legal service fees and so on are recognized in profit or loss during the
current period when they occurred. The bonds issued for a business combination or the handling
fees, commissions and other expenses for bearing other liabilities shall be recorded in the amount
of initial measurement of the bonds or other debts. The handling fees, commissions and other
expenses for the issuance of equity securities for the business combination shall be credited
against the surplus of equity securities; if the surplus is not sufficient, the retained earnings shall
be offset. Where a relationship between a parent company and a subsidiary company is formed
due to a business combination, the parent company shall, on the combining date, prepare
consolidated financial statements according to the accounting policy of the Company.
(2) The Company adopts acquisition method for business combination not under same control.
The acquirer shall recognize the initial cost of combination under the following principles:
a) When business combination is achieved through a single exchange transaction, the cost of a
business combination is the aggregate of the fair values, at the date of exchange, of assets given,
liabilities incurred or assumed, and equity securities issued by the acquirer, in exchange for
control of the acquiree;
b) For the business combination involved more than one exchange transaction, the cost of the
combination is the aggregate cost of the individual transactions;
c) The costs directly attributed to business combination are included in the cost of combination;
d) Where a business combination contract or agreement provides for a future event which may
adjust the cost of combination, the Company shall include the amount of the adjustment in the cost
of the combination at the acquisition date if the future event leading to the adjustment is probable
and the amount of the adjustment can be measured reliably.76
The acquirer shall, on the acquisition date, measure the assets given and liabilities incurred or
assumed by an enterprise for a business combination in light of their fair value, and shall record
the balances between them and their carrying amounts into the profits and losses at the current
period.
The acquirer shall distribute the combination costs on the acquisition date, and shall recognize all
identifiable assets, liabilities and contingent liabilities it obtains from the acquiree. (1) the acquirer
shall recognize the difference that the combination costs are over the fair value of the identifiable
net assets obtained from acquiree as goodwill; (2) if the combination costs are less than the fair
value of the identifiable net assets obtained from acquiree, the acquirer shall reexamine the
measurement of the fair values of the identifiable assets, liabilities and contingent liabilities
obtained from the acquiree as well as the combination costs; and then after the reexamination, the
result is still the same, the difference shall be recorded in the profit and loss of the current period.
Where a relationship between a parent company and a subsidiary company is formed due to a
business combination, the parent company shall prepare accounting books for future reference,
which shall record the fair value of the identifiable assets, liabilities and contingent liabilities
obtained from the subsidiary company on the acquisition date. When preparing consolidated
financial statements, it shall adjust the financial statements of the subsidiary company on the basis
of the fair values of the identifiable assets, liabilities and contingent liabilities determined on the
acquisition date according to the Company’s accounting policy of “Consolidated financial
statement”.
6.Basis of consolidation
(1) Scope of consolidation
Consolidated financial statements are included all subsidiaries of the parent.
When the parent owns, directly or indirectly through subsidiaries, more than half of the voting
power of investee company, the investee company is regarding as subsidiary and included
consolidated financial statements. If the parent owns half or less of the voting power of an entity77
when there is any following condition incurred, the investee company is regarding as subsidiary
and included consolidated financial statements.
A. power over more than half of the voting rights by virtue of an agreement with other investors;
B. power to govern the financial and operating policies of the entity under a statute or an
agreement;
C. power to appoint or remove the majority of the members of the board of directors or
equivalent governing body;
D. power to cast the majority of votes at meetings of the board of directors or equivalent
governing body and control of the entity is by that board or body.
If there is evidence suggesting that no control of investee company exists, the investee company
cannot be included in the consolidated financial statements.
(2) Principle of consolidation
The consolidated financial statements are based on the financial statements of individual
subsidiaries which are included in the consolidation scope and prepared after adjustment of
long-term equity investment under equity method and elimination effect of intragroup transaction.
(3) Minority interests
The portion of the equity of the subsidiaries that are not owned by the parent is presented as
minority interest in the consolidated balance sheet.
The portion of the profit or loss of the subsidiaries that are not owned by the parent is presented as
minority interest in the consolidated income statement.
(4) Excess losses
The amount which losses of subsidiaries during the period exceeds the proportion of minority’s
obligation is offset minority interest as agreed in the subsidiaries’ association or agreement and
minorities have ability to bear the excess losses. Otherwise, the excess losses are offset equity of
the parent company. Profits made afterward by subsidiaries are attributable to equity of the parent
company before recovery of excess losses.78
(5) Increase or decrease of the subsidiaries
For any subsidiary acquired by the Company through business combination under the same
control, when the consolidated balance sheet for the current period is being prepared, the
beginning balances in the consolidated balance sheet are made corresponding modification. For
addition business combination not under same control during the reporting period, the Company
makes no adjustment for the beginning balances in the consolidated balance sheet. When
disposing subsidiary during the reporting period, the Company makes no adjustment for the
beginning balances in the consolidated balance sheet.
For any subsidiary acquired by the Company through business combination under the same
control, when the consolidated income statement for the current period is being prepared, sales,
expense and profit for the period from the beginning of the consolidated period to the year end of
the reporting period are included in the consolidated income statement. For addition business
combination not under same control during the reporting period, revenue, expense and profit for
the period from acquisition date to the year end of the reporting period is included in the
consolidated income statement. When disposing subsidiary during the reporting period, sales,
expense and profit for the period from the beginning to the disposal date are included in the
consolidated income statement.
For any subsidiary acquired by the Company through business combination under the same
control, when the consolidated cash flow statement for the current period is being prepared,
cashflow for the period from the beginning of the consolidated period to the year end of the
reporting period is included in the consolidated cash flow statement. For addition business
combination not under same control during the reporting period, cashflow for the period from
acquisition date to the year end of the reporting period is included in the consolidated cash flow
statement. When disposing subsidiary during the reporting period, cashflow for the period from
the beginning to the disposal date is included in the consolidated cash flow statement.
7.Cash and cash equivalent
Cash equivalent is defined as the short-term (normally matured within three months after
purchased date), highly-liquid investment which is easily transferred into cash and has low risk of79
change of value.
8.Foreign currency translations
Any transaction is converted into the accounting standard currency according to the approximate
exchange rate of the sight rate on the occurrence date of the transaction.
(1) Foreign currency exchange difference
On balance sheet date, the Company accounts for monetary and non-monetary items denominated
in foreign currencies as follows: a) monetary items denominated in foreign currencies are
translated at the foreign exchange rates ruling at the balance sheet date. Foreign exchange gains
and losses arising from the difference between the balance sheet date exchange rate and the
exchange rate ruling at the time of initial recognition or the exchange rate ruling at the last balance
sheet date are recognized in income statement; b) Non-monetary items that are measured in terms
of historical cost in a foreign currency are translated using the current exchange rates ruling at the
transaction dates. Non-monetary items denominated in foreign currencies that are stated at fair
value are translated using the current exchange rates ruling at the dates the fair value was
determined, the difference between the amount of functional currency after translation and the
original amount of functional currency is treated as part of change in fair value (including change
in exchange rate) and recognized in income statement. During the capitalization period, exchange
differences arising from foreign currency borrowings are capitalized as part of the cost of the
capitalized assets.
(2) Translations of financial statements in foreign currencies
The Company translates the financial statements of its foreign operation in accordance with the
following provisions: a) the asset and liability items in the balance sheets shall be translated at a
spot exchange rate ruling at the balance sheet date. Among the owner's equity items, except the
ones as "retained earnings", others shall be translated at the spot exchange rate ruling at the time
when they occurred;. b) The income and expense items in the income statements shall be
translated with approximate exchange rate of the sight rate on the transaction occurring date. The
foreign exchange difference arisen from the translation of foreign currency financial statements80
shall be presented separately under the owner's equity in the balance sheet. The translation of
comparative financial statements shall be subject to the aforesaid provisions.
9.Recognition and measurement of financial instrument
(1) Recognition of financial instrument
The Company recognises a financial asset or financial liability on its balance sheet when, and only
when, the Company becomes a contractual party of financial instrument
(2) Classification and measurement of financial assets
①
The Company classifies the financial assets into the following four categories: a) financial
assets at fair value through profit or loss; b) held-to-maturity investments; c) loans and receivables;
and d) available-for-sale financial assets.
②
The financial assets are initially recognised at fair value. Gains or losses arising from a
change in the fair value of a financial asset at fair value through profit or loss is recognised in
profit or loss when it incurred and relevant transaction costs are recognised as expense when it
incurred. For other financial assets, the transaction costs are recognised as costs of the financial
assets.
③
Measurement of financial assets
A. A financial asset at fair value through profit or loss includes financial assets held for trading
and financial assets designated by the Company as at fair value through profit or loss. The
Company subsequently measures the financial asset at fair value through profit or loss at fair value
and recognises the gain or loss arising from a change in the fair value of a financial asset at fair
value through profit or loss as profit or loss in the current period.
B. Held-to-maturity investments are measured at amortised cost using the effective interest
method. A gain or loss is recognised in profit or loss during the current period when the financial
asset is derecognized or impaired and through the amortisation process.
C. Loans and receivables are measured at amortised cost using the effective interest method. A
gain or loss is recognised in profit or loss during the current period when the financial asset is
derecognized or impaired and through the amortisation process.
D. Available-for-sale financial assets are measured at fair value and the gain or loss arising from a
change in the fair value of available-for-sale financial assets is recognised as capital reserve which81
is transferred into profit or loss when it is impaired or derecognised. Interests or cash dividends
during the holding period are recognised in profit or loss for the current period.
④
Impairment of financial assets
A. The Company assesses the carrying amount of the financial assets except the financial asset
at fair value through profit or loss at each balance sheet date, if there is any objective evidence that
a financial asset or group of financial assets is impaired, the Company shall recognize impairment
loss.
B. The objective evidences that the Company uses to determine the impairment are as follows:
a
）
significant financial difficulty of the issuer or obligor;
b
）
a breach of contract, such as a default or delinquency in interest or principal payments;
c
）
the lender, for economic or legal reasons relating to the borrower's financial difficulty, granting
to the borrower a concession that the lender would not otherwise consider;
d
）
it becoming probable that the borrower will enter bankruptcy or other financial reorganisation;
e
）
the disappearance of an active market for that financial asset because of financial difficulties;
f
）
observable data indicating that there is a measurable decrease in the estimated future cash flows
from a group of financial assets since the initial recognition of those assets, although the decrease
cannot yet be identified with the individual financial assets in the group, including: (i) Adverse
changes in the payment status of borrowers in the group or (ii) an increase in the unemployment
rate in the geographical area of the borrowers, a decrease in property prices for mortgages in the
relevant area, or adverse changes in industry conditions that affect the borrowers.
g
）
significant changes with an adverse effect that have taken place in the technological, market,
economic or legal environment in which the borrower operates, and indicates that the cost of the
investment in the equity instrument may not be recovered;
h
）
a significant or non-temporary decrease in fair value of equity investment instruments;
i
）
other objective evidences showing the impairment of the financial assets.
C. Measurement of impairment loss of financial assets
a
）
held-to-maturity investments, loans and receivables82
If there is objective evidence that an impairment loss on loans and receivables or held-to-maturity
investments carried at amortised cost has been incurred, the amount of the loss is measured as the
difference between the asset's carrying amount and the present value of estimated future cash
flows. The amount of the loss is recognised in profit or loss of the current period.
The Company assesses whether objective evidence of impairment exists individually for financial
assets that are individually significant, and individually or collectively for financial assets that are
not individually significant. If the Company determines that no objective evidence of impairment
exists for an individually assessed financial asset, whether significant or not, it includes the asset
in a group of financial assets with similar credit risk characteristics and collectively assesses them
for impairment. Assets that are individually assessed for impairment and for which an impairment
loss is or continues to be recognised are not included in a collective assessment of impairment.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be
related objectively to an event occurring after the impairment was recognised, the previously
recognised impairment loss of financial asset measured at amortised cost is be reversed. The
amount of the reversal is recognised in profit or loss of the current period.
b
）
Available-for-sale financial assets
When a decline in the fair value of an available-for-sale financial asset has been recognised
directly in equity, the cumulative loss that had been recognised directly in equity is removed from
equity and recognised in profit or loss even though the financial asset has not been derecognised.
If there is objective evidence that an impairment loss has been incurred on an unquoted equity
instrument that is not carried at fair value because its fair value cannot be reliably measured, or on
a derivative asset that is linked to and must be settled by delivery of such an unquoted equity
instrument, the amount of the impairment loss is measured as the difference between the carrying
amount of the financial asset and the present value of estimated future cash flows discounted at the
current market rate of return for a similar financial asset. Such impairment losses are recognised in83
the profit or loss of the current period.
If, in a subsequent period, the fair value of a debt instrument classified as available for sale
increases and the increase can be objectively related to an event occurring after the impairment
loss was recognised in profit or loss, the impairment loss is reversed, with the amount of the
reversal recognised in profit or loss of the current period.
Impairment losses recognised in profit or loss for an investment in an equity instrument classified
as available for sale is not reversed through profit or loss. For impairment loss has been incurred
on an unquoted equity instrument that is not carried at fair value because its fair value cannot be
reliably measured, or on a derivative asset that is linked to and must be settled by delivery of such
an unquoted equity instrument, the impairment loss is not reversed through profit or loss.
(3) Classification and measurement of financial liabilities
①
The Company's financial liabilities are classified as financial liabilities at fair value through
profit or loss, and other financial liabilities.
②
Financial liabilities are initially measured at fair value. For the financial liability at fair value
through profit or loss at its fair value, relevant transaction costs are recognised as expense when it
incurred. For the other financial liabilities, relevant transaction costs are recongnised as costs.
③
Subsequent measurement of financial liabilities
A. Financial liabilities at fair value through profit or loss include financial liabilities held for
trading and financial assets designated by the Company as at fair value through profit or loss. The
Company recognises a financial liability at fair value through profit or loss at its fair value. A gain
or loss of change in fair value is recognised in the profit or loss of the current period.
B. Other financial liabilities are measured by amortised cost using effective interest rate.
(4) Recognisation of fair value of financial instrument
If there is an active market for the financial instrument, the fair value is quoted prices in the active
market.
If the market for a financial instrument is not active, the Company establishes fair value by using a
valuation technique.
(5) Recognition and measurement of financial assets transfer84
The Company derecognises financial assets when the Company transfers substantially all the risks
and rewards of ownership of the financial assets. On derecognition of a financial asset in its
entirety, the difference between the follows is recognised in profit or loss of the current period.
①
the carrying amount of transferring financial assets;
②
the sum of the consideration received and any cumulative gain or loss that had been recognised
directly in equity (including financial assets transferred to available for sale category).
If the transferred asset is part of a larger financial asset and the part transferred qualifies for
derecognition in its entirety, the previous carrying amount of the larger financial asset is allocated
between the part that continues to be recognised and the part that is derecognised, based on the
relative fair values of those parts on the date of the transfer. The difference between the follows is
recognised in profit or loss of the current period.
①
the carrying amount allocated to the part derecognised;
②
the sum of the consideration received for the part derecognised and any cumulative gain or loss
allocated to it that had been recognised directly in equity (including financial assets transferred to
available for sale category).
A cumulative gain or loss that had been recognised in equity is allocated between the part that
continues to be recognised and the part that is derecognised, based on the relative fair values of
those parts.
If a transfer does not qualify for derecognition, the Company continues to recognise the
transferred asset in its entirety and shall recognize a financial liability for the consideration
received.
When the Company continues to recognise a financial asset to the extent of its continuing
involvement, the Company also recognises an associated liability. The transferred asset and the
associated liability are measured on a basis that reflects the rights and obligations that the
Company has retained.
10.Accounting method of bad debt
(1) Accounting method of bad debt provision for the individually significant receivables, the
impairment test is carried on individually.
Standards of provision for bad debts of the individually significant receivables: top 5 of account85
receivables at year end.
Method of provision for bad debts of the individually significant receivables: aging analysis with
individual recognition method
(2) For the receivables which are not individually significant, but which are assessed at high risk
level through credit risk combination.
Basis of credit risk characteristics’ combination: receivables’ aging is over 5 years and closing
balance is not included in top 5 of receivables.
In accordance with credit risk characteristics, the method of provision for bad debts is aging
analysis with individual recognition method
(3) The aging analysis method
Aging of receivables
Proportion of Accounts
receivables (%)
Proportion of Other
receivables (%)
Within 1 year (including 1 year) 3 3
1-2 years 3 3
2-3 years 6 6
3-4 years 20 20
4-5 years 20 20
Over 5 years 100 100
Note of provision for bad debts: The Company performs impairment test for receivables and
provide provision for impairment loss of receivables at each balance sheet date. For the
individually significant receivables, the impairment test is carried on individually. If there is
objective evidence that an impairment loss on loans and receivables, the Company provides
provision for impairment loss for the amount which is measured as the difference between the
asset's carrying amount and the present value of estimated future cash flows. For the receivables
which are not individually significant or the individually significant receivables which are not
determined for impairment, the Company asseses the asset in a group of financial assets with
similar credit risk characteristics and collectively provide them for provision of impairment
according to certain percentage of the total receivables at the balance sheet date.
Note of provision for other methods:86
Receivables with confirmed letter credit or guarantee from the bank and provision for sales tax
which is to be paid as stipulated in contract are not classified as provision for bad debts.
11. Inventory
(1) Inventories are asset items held for sale in the ordinaery course of business or goods that will
be used or consumed in the production of goods to be sold. They are divided into the following
categories: goods purchased raw materials, finished goods, work-in-progress, and goods for
processing on consignment.
(2) Recognition of inventory
：
The Company recognizes inventories when the following
conditions are satisfied:
①
It is probable that future economic benefits associated with the inventories will flow to the
Company entity;
②
The cost of the inventories can be measured reliably.
(3) The method of measuring inventories: Raw materials and circulating materials are measured
at standard cost method which the variance between standard cost and actual cost is adjusted
monthly. Finished goods and work-in-progress are measured at actual cost which is allocated
according to the job reference.
(4) Amortisation method of low-value consumption goods and packages: Low-value
consumption goods and packages are fully amortised when they are required and delivered.
(5) Inventories shall be measured at the lower of cost and net realisable value at the balance sheet
date. Where the net realizable value is lower than the cost, the difference shall be recognized as
provision for impairment of inventories and charged to profit or loss.
①
Estimation of net realizable value
Estimates of net realisable value are based on the most reliable evidence available .These
estimates take into consideration the purpose for which the inventory is held and the influence the
events after balance sheet date.87
Materials and other supplies held for use in the production are measured at cost if the net
realizable value of the finished goods in which they will be incorporated is higher than their cost.
However, when a decline in the price of materials indicates that the cost of the finished products
will exceed their net realisable value, the materials are measured at net realisable value.
The net realisable value of inventories held to satisfy sales or service contracts is generally based
on the contract price.
If the quantity specified in sales contracts is less than the inventory quantities held by the
Company, the net realisable value of the excess shall be based on general selling prices.
②
The Company generally provides provision for impairment of inventory individually. For large
quantity and low value items of inventories, cost and net realisable value are determined based on
categories of inventories.
Where certain items of inventory have similar purposes or end uses and relate to the same product
line producted and marketed in the same geographical area, and therefore cannot be practicably
evaluated separately from other items in that product line, costs and net realisable values of those
items may be determined on an aggregate basis.
(6)The Company adopts perpetual inventory system for its inventory taking.
12. Measurement of construction contracts
Construction contracts are measured at the actual cost, including the direct and indirect costs
incurred and attributable to a contract for the period from the date the contract is signed to the
final completion of the contract. The construction contract in progress should be presented in the
balance sheet at the net amount of payment amount after decuting the sum of the accumulated
costs occurred and the accumulated margin profit (loss) recognized. The excess of the sum of the
accumulated costs occurred and the accumulated margin profit (loss) recognized over the payment
amount should be presented as inventory. The excess of the payment amount over the sum of the
accumulated costs occurred and the accumulated margin profit (loss) should be presented as
advanced from customers.
Costs such as travelling expenses and tender charges incurred relating to the signing of the
constract should be included as contract costs when the contract is acquired, where the costs could88
be recognized individually and measured reliably and the contract is probably signed; otherwise it
should be charged into the profit and loss for the period.
13.Long-term equity investment
(1) Initial measurement
The Company initially measures long-term equity investments under two conditions:
①
For long-term equity investment arising from business combination, the initial cost is
recognized under the following principles.
A. If the business combination is under the same control and the acquirer obtains long-term equity
investment in the consideration of cash, non-monetary asset exchange or bearing acquiree’s
liabilities, the initial cost is the carrying amount of the proportion of the acquiree’s owner’s equity
at the acquisition date. The difference between cash paid, the carrying amount of the
non-monetary asset exchanged and the acquiree’s liabilities beard and the initial cost of the
long-term equity investment should be adjusted to capital surplus. If the capital surplus is not
sufficient for adjustment, retained earning is adjusted respectively. The business combination costs
that are directly attributable to the combination, such as audit fees, valuation fees, legal service
fees and so on are recognized in profit or loss during the current period when they occurred.
If the acquirer issuing equity securities as consideration, the initial cost is the carrying amount of
the proportion of the acquiree’s owner’s equity at the acquisition date. Amount of share capital
equal to the par value of the shares issued. The difference between initial cost of the long-term
equity investment and the par value of shares issued is adjusted to capital surplus. If the capital
surplus is not sufficient for adjustment, retained earning is adjusted respectively. The costs of
issuing equity securities occurred in business combination such as charges of security issuing and
commissions are deducted from the premium of equity securities. If the premium is not sufficient
for deducting, retained earning is adjusted respectively.
B.If the business combination is not under the same control, the acquirer recognizes the initial cost
of combination under the following principles.
a) When business combination is achieved through a single exchange transaction, the cost of a89
business combination is the aggregate of the fair values, at the date of exchange, of assets given,
liabilities incurred or assumed, and equity securities issued by the acquirer, in exchange for
control of the acquiree;
b) For the business combination involved more than one exchange transaction, the cost of the
combination is the aggregate cost of the individual transactions;
c) The costs directly attributed to business combination are included in the cost of combination;
d) Where a business combination contract or agreement provides for a future event which may
adjust the cost of combination, the Company shall include the amount of the adjustment in the cost
of the combination at the acquisition date if the future event leading to the adjustment is probable
and the amount of the adjustment can be measured reliably.
②
For long-term equity investment obtained in any method other than business combination, the
initial cost is recognized under the following principles.
A. If the long-term equity investment is acquired in cash consideration, the initial cost is the
actual payment which includes direct expenses paid to acquire the long-term equity investment,
taxes and other necessary expense.
B. If the long-term equity investment is acquired by issuing equity securities, the initial cost is
the fair value of the equity securities issued. However, cash dividends or profits that are declared
but unpaid shall not be included in the initial cost. Direct costs attributed to issue equity securities
such as handling charges and commissions paid to securities underwriting agencies are deducted
from premium of equity securities. If the premium is not sufficient for deduction, reserved fund
and retained earnings is adjusted respectively.
C. For the long-term equity investment invested by investors, the initial cost is the agreed value
prescribed in the investment contract or agreement unless the agreed value is not fair.
D. For the long-term equity investment acquired through non-monetary asset exchange, the
initial cost is recognized according to “Accounting Standards for Business Enterprises No.
7-Non-monetary transactions”.
E. For the long-term equity investment acquired through debt restructuring, the initial cost is
recognized according to “Accounting Standards for Business Enterprises No. 12-Debt
restructuring”.90
③
If there are cash dividends or profits that are declared but unpaid included in the consideration
paid, the cash dividends or profits declared but unpaid shall be recognized as receivables
separately rather than as part of initial cost of long-term equity instruments no matter through
which method the long-term equity investment is acquired.
(2) Subsequent measurement
The Company adopts either cost method or equity method for the long-term equity investment
according to the extent of influence, existence of active market and availability of fair value. The
equity method is used when the Company has joint control or significant influence over the
investee enterprise. The cost method is used when the Company has control or does not have joint
control or significant influence over the investee enterprise and there is no quoted price in active
market or there is no reliable fair value.
①
For the long-term equity investment under cost method, and except from cash dividends or
profits distributed are declared but unpaid included in the consideration paid, the other declared
cash dividends or profits are normally recognized as investment income for the current period
when it incurred. The net profits are no longer divided into the pre-investment profits and
after-investment profits.
The Company recognizes the receivable cash dividends or profits according to above regulations,
and the impairment test is needed to be concerned. To indicate the evidence of impairments, it
should be concerned about whether the carrying amount of the long-term equity investments is
greater than the book value of net assets that have been acquired (including the related goodwill)
or other similar situations. When these situations occur, the impairment test of long-term equity
investments should be performed according to “Chinese Accounting Standard No.8 - Impairment
of assets”, Where the carrying amount of long-term equity investment exceeds the recoverable
amount, the difference shall be recognized as impairment loss, and a provision for impairment loss
should be made.
②
For long-term equity investment under equity method, the Company adjusts carrying amount
of the long-term equity investment and recognises investment income according to the proportion
of net profit or loss after acquisition. The Company reduces carrying amount of the long-term91
investment regarding to declared cash dividend or profit distribution.
For long-term equity investment under equity method, the Company recognises net losses incurred
by the investee enterprise to the extent that the carrying amount and the substantial net investment
of the long-term equity investment is reduced to zero except there is further obligation of the
excess losses. If the investee enterprise realises net profits in subsequent periods, the Company
increase the carrying amount of the investment above zero at the amount at which its share of
profits exceeds its share of previously unrecognized losses.
③
The Company adopts the same manner of financial instrument for the impairment of
long-term equity investment which is measured under cost method and there is no quoted price in
active market or there is no reliable fair value. Impairment of long-term equity investments other
than above refers to accounting policy “Impirment of assets” of the Company.
④
On disposal of an equity investment, the difference between the carrying amount of the
investment and the sale proceeds actually received is recognised as an investment gain or loss for
the current period. When the equity method is adopted, change in equity of the investee other than
profit or loss is recorded in equity. On disposal of the equity investment, amount of change which
is recorded in equity previously is transferred to profit or loss for the current period regarding to
the proportion of disposal.
（
3
）
Recognition of common control and significant influence:
If the investment satisifies the follwing conditions, the company has common control to the
investee: (1) None part of the joint venture can control the joint business activities individually; (2)
Any decision of the joint venture business must be approved by all parts of the joint centure. (3)
One part of the joint venture can be offered to manage daily business activities by using contract
or agreement. However, the right is restricted by financial and management policies allowed by all
parties of the joint venture.
If the investment satisifies the following conditions, the company has significant influence to the
investee: (1) there is commissary in the directorate or similar righ organization of investee. (2)
Participate decision-making process, including the process of dividend distribution. (3) There is92
significant transaction between investor and investee. (4) Appoint manager to investee. (5) Supply
key technology materials to investee. Investor holds more than 20% but less than 50% shares of
investee directly or indirectly.
(4) Impairment test and method of provision for impairment loss
The Company adopts the same manner of financial instrument for the impairment of long-term
equity investment which is measured under cost method and there is no quoted price in active
market or there is no reliable fair value. Impairment of long-term equity investments other than
above refers to accounting policy “Impairment of assets” of the Company.
14.Recognition and measurement of fixed assets
Fixed assets are tangible assets that: 1) are held for use in the production or supply of goods or
services, for rental to others, or for administrative purposes; and 2) have useful life more than one
year.
(1) A fixed asset shall be initially recognized at cost when the following condition are satisfied:
①
It is probable that future economic benefits associated with the assets will flow to the
Company;
②
The cost of the assets can be measured reliably.
(2) Depreciation
Subsequent expenditure relating to a fixed asset shall be added to the carrying amount of the asset
when the expenditure qualifies for capitalization. Subsequent expenditure that does not qualify for
capitalization shall be recognized as an expense for the current period.
The depreciation method adopted by the Company is straight-line method.
The estimated useful lives, residual value and annual depreciation rate of fixed assets are shown as
follows:
The categories
Estimated Useful Lives
(years)
Residual value
(%)
Annual Depreciation Rate
(%)
Property and buildings 15-30 3 6.47-3.23
Machineries 7-18 3 13.86-5.3993
Vehicles 6 3 16.17
Electronic equipment 4-5 3 24.25-19.40
The Company reviews the useful life, estimated residual value and depreciation method of a fixed
asset at the end of each financial year. If expectations are significantly different from previous
estimates, the useful life shall be revised accordingly. If expectations are significantly different
from previous estimates, the estimated residual value also shall be revised accordingly. If there has
been a significant change in the expected realization pattern of economic benefits from those
assets, the depreciation method shall be changed accordingly. The changes in useful life, estimated
residual value and depreciation method shall be treated as change in accounting estimates.
(3) Fixed assets acquired under finance lease
The Company identifies a lease of asset as finance lease when substantially all the risks and
rewards incidental to legal ownership of the asset are transferred.
A fixed asset acquired under finance lease shall be valued at the lower of the fair value of the
leased asset and the present value of the minimum lease payments at the inception of lease.
The depreciation method of fixed assets acquired under finance lease is consistent with that for
depreciable assets owned by the Company. If the Company can reasonably confirm that it will
obtain the ownership of leased asset at the end of lease term, the leased asset shall be depreciated
during the useful life of the leased asset. If the Company cannot reasonably confirm that it will
obtain the ownership of leased asset at the end of lease term, the leased asset shall be depreciated
during shorter of the useful life of the leased asset and the lease term.
(4) Impairment of fixed asset refers to accounting policy “Impairment of assets” of the
Company.
15.Construction in progress
(1) Construction in progress of the Company includes constructing property, building installation,
equipments installation, prepaid expenses, as well as individual projects.
(2) Construction in progress is recorded at actual costs incurred. It also includes borrowing costs94
eligible for capitalization and gain or loss of exchange difference.
(3) The Company transfers construction in progress to fixed assets when the project is completed
or the project is available for use. For the construction in progress which is capable of operating in
the manner intended by management without the final account for completed project, an estimated
value is recognised as its cost and the depreciation amount is based on the estimated value. When
the final account for completed project is obtained, cost of the asset should be adjusted to the
actual cost. However, there is no need to adjust depreciation of the asset in prior period.
(4) Impairment of construction in progress refers to accounting policy “Impairment of assets” of
the Company.
16.Recognition and measurement of borrowing cost
(1) Capitalization and capitalization period of borrowing costs
The costs of borrowings designated for acquisition or construction of qualifying assets should be
capitalized as part of the cost of the assets. Capitalisation of borrowing costs starts when
①
The capital expenditures have incurred;
②
The borrowing costs have incurred;
③
The acquisition and construction activities that are necessary to bring the asset to its
expected usable condition have commenced.
Other borrowing costs that do not qualify for capitalization should be expensed off during current
period.
Capitalization of borrowing costs should be suspended during periods in which the acquisition or
construction is interrupted abnormally, and the interruption period is three months or longer.
These borrowing costs should be recognized directly in profit or loss during the current period.
However, capitalization of borrowing costs during the suspended periods should continue when
the interruption is a necessary part of the process of bringing the asset to working condition for its
intended use.
Capitalization of borrowing costs ceases when the qualifying asset being acquired or constructed
is substantially ready for its intended use. Subsequent borrowing costs should be expensed off
during the period in which they are incurred.95
(2) Calculation method of capitalization for borrowing costs
To the extent that funds are borrowed specifically for the purpose of acquiring or constructing a
qualifying asset, the amount of borrowing costs eligible for capitalization on that asset is
determined as the actual borrowing costs incurred on that borrowing during the period less any
investment income on the temporary investment of the borrowing.
To the extent that funds are borrowed generally and used for the purpose of acquiring or
constructing a qualifying asset, the amount of borrowing costs eligible for capitalization shall be
determined by applying a capitalization rate to the weighted average of excess of accumulated
expenditures on qualifying asset over that on specific purpose borrowing. The capitalization rate is
the weighted average of the borrowing costs applicable to the borrowings of the Company that are
outstanding during the period, other than borrowings made specifically for the purpose of
acquiring or constructing a qualifying asset.
17.Recognition and measurement of intangible assets
Intangible assets are identifiable non-monetary asset that are owned or controlled by the Company
and are without physical substance.
(1) Recognition of intangible assets
The Company recognizes an intangible asset when that intangible asset fulfills both of the
following conditions:
①
It is probable that the economic benefits associated with that asset will flow to the Company;
and
②
The cost of that asset can be measured reliably.
Expenditures incurred during the research phase of an internal project shall be recognized as
expenses in the period in which they are incurred. Expenditures incurred during the development
phase of an internal project shall be recognized as an intangible asset if, and only if, the Company
can demonstrate all of the following:
①
The technical feasibility of completing the intangible asset so that it will be available for use or
sale;
②
Its intention to complete the intangible asset and use or sell it;96
③
The method that the intangible asset will generate probable future economic benefits. Among
other things, the Company can demonstrate the existence of a market for the output of the
intangible asset or the intangible asset itself or, if it is to be used internally, the usefulness of the
intangible asset;
④
The availability of adequate technical, financial and other resources to complete the
development and to use or sell the intangible asset;
⑤
Its ability to measure reliably the expenditure attributable to the intangible asset during its
development.
(2) Measurement of intangible assets
①
An intangible asset is measured initially at its cost.
②
Subsequent measurement of intangible assets
A. For an intangible asset with finite useful life, the Company estimates its useful life at the time
of acquisition and amortizes it during its useful life in a reasonable and systematic way. The
amount of amortization is allocated to relevant costs and expenses according to the nature of
beneficial items. The Company does not amortize intangible asset with infinite useful life.
B. Impairment of intangible assets refers to accounting policy “Impairment of assets” of the
Company.
18.recognition and measurement of contingent liabilities
(1) Recognition of contingent liabilities
The company should recognize the related obligation as a provision for liability when the
obligation meets the following conditions:
①
That obligation is a present obligation of the enterprise;
②
It is probable that an outflow of economic benefits from the enterprise will be required to settle
the obligation;
③
A reliable estimate can be made of the amount of the obligation.
(2) Measurement of contingent liabilities
To fulfill the present obligations, which initially measured by the best estimate of the expenditure97
required to settle the liability. Where there is a continuous range of possible amounts of the
expenditure required to settle the liability, as all kinds of possibilities are at same level, the best
estimate should be determined according to the average of the lower and upper limit of the range.
In other cases, the best estimate should be determined in accordance with the following methods:
①
Where the contingency involves a single item, the best estimate involves a singe item, the best
estimate should be determined according to the most likely outcome;
②
Where the contingency involves several items; the best estimate should be determined by
weighting all possible outcomes by their associated probabilities of occurrence.
To determine the best estimate, it should be considered with factors such as: related contingency
risks, uncertain matters and time value of currency. If time value of currency has a significant
impact, the best estimate should be measured at its converted present value through the relevant
future cash outflows.
Where some or all of the expenditures are expected to be reimbursed by a third party, the
reimbursement should be separately recognized as an asset only when it is virtually received. The
amount of the reimbursement should not exceed the carrying amount of the liability recognized.
At balance sheet date, the Company should review book value of provision for liabilities. If there
is strong evidence that the book value does not truly indicate the current best estimate, it should be
adjusted in accordance with the current best estimate.
19.revenue
(1) Construction contract revenue
a) When the outcome of a construction contract can be estimated reliably, contract revenue and
contract costs associated with the construction contract is recognised as revenue and expenses
respectively by reference to the stage of completion of the contract activity at the balance sheet
date. The outcome of a construction contract can be estimated reliably when all the following
conditions are satisfied: 1
）
Total contract revenue can be measured reliably; 2
）
It is probable that
the economic benefits associated with the contract will flow to the entity; 3
）
Both the contract
costs to complete the contract and the stage of contract completion at the balance sheet date can be
measured reliably; and 4
）
The contract costs attributable to the contract can be clearly identified
and measured reliably.98
b) When the outcome of a construction contract cannot be estimated reliably and contract costs
are expected to be recoverable, revenue is recognised only to the extent of contract costs incurred
that it is probable will be recoverable. Contract costs are recognised as an expense in the period in
which they are incurred. Contract costs that are not probable of being recovered are recognised as
an expense immediately and no revenue is recognised.
c) If the construction contract is interrupted, the Company does not recognise any revenue and
gross profit for the current period. If the contract does not recommence in 3 years, gross profit
recognized is written off and the 50% of the contract costs is recognized in the third and the other
50% of the contract costs is recognized in the fourth year evently.
d) If the accumulative estimated contract costs exceed the contract revenue, an estimated loss
should be recognized as an expense during the current financial period.
(2) Sale of goods
The Company recognises revenue from sale of goods when all the following conditions have been
satisfied:
a) The Company has transferred to the buyer the significant risks and rewards of ownership of
the goods;
b) The Company retains neither continuing managerial involvement to the degree usually
associated with ownership nor effective control over the goods sold;
c) The relevant amount of revenue and costs can be measured reliably; and
d) The economic benefits associated with the transaction will flow to the Company
(3) Rendering of services:
①
Revenue associated with the transaction is recognised by reference to the stage of completion
of the transaction at the balance sheet date.The service revenue is recognised at the balance sheet
date according to the percentage of completion of the services when (i) the total revenue and total99
cost can be reliably measured, (ii) the economic benefit pertaining to the service will flow to the
Company; (iii) the percentage of completion can be determined reliably.
②
When the outcome of the transaction involving the rendering of services cannot be estimated
reliably at the balance sheet date, revenue is recognised according to the following:
A. When it is probable that the Company will recover the transaction costs incurred, revenue is
recognised only to the extent of the expenses recognised that are recoverable. and the costs
incurred are recognised as an expense.
B. When it is not probable that the costs incurred will be recovered, revenue is not recognised
and the costs incurred are recognised as an expense.
(4) Revenue arising from the use by others of the Company’s assets
Revenue arising from the use by others of the Company’s assets includes interest revenue and
royalty revenue. The Company recognised revenue arising from the use by others of the
Company’s assets when (a) it is probable that the economic benefits associated with the
transaction will flow to the Company and (b) the amount of the revenue can be measured reliably.
20.Accrued costs
The Company accrues the extended cost at 2.5% of the actual total production cost over the
finished products and charges it into the costs of sales for the period.
21.Income tax
The Company adopts the balance sheet liability method for corporate income taxes.
(1) Deferred tax asset
①
Where there are deductible temporary differences between the carrying amount of assets or
liabilities in the balance sheet and their tax bases, a deferred tax asset shall be recognised for all
those deductible temporary differences to the extent that it is probable that taxable profit will be
available against which the deductible temporary difference can be utilized. Deferred tax assets
should be measured at the tax rates that are expected to apply to the period when the asset is
realised or the liability is settled.100
②
At the balance sheet date, where there is strong evidence showing that sufficient taxable
profit will be available against which the deductible temporary difference can be utilized, the
deferred tax asset unrecognized in prior period shall be recognized.
③
The Company assesses the carrying amount of deferred tax asset at the balance sheet date. If
it’s probable that sufficient taxable profit will not be available against which the deductible
temporary difference can be utilized, the Company shall write down the carrying amount of
deferred tax asset, or reverse the amount written down later when it’s probable that sufficient
taxable profit will be available.
(2) Deferred tax liability
A deferred tax liability shall be recognized for all taxable temporary differences, which are
differences between the carrying amount of an asset or liability in the balance sheet and its tax
base, and measured at the tax rates that are expected to apply to the period when the asset is
realised or the liability is settled.
22.Operating lease and financial lease
（
1
）
Operating leases
Lessee in an operating lease shall treat the lease payment under an operating lease as a relevant
asset cost or the current profit or loss on a straight-line basis over the lease term. The initial direct
costs incurred shall be recognized as the current profit or loss; Contingent rents shall be charged as
expenses in the periods in which they are incurred. .
Lessors in an operating lease shall present the assets subject to operating leases in the relevant
items of their balance sheet according to the nature of the asset. Lease income from operating
leases shall be recognized as the current profit or loss on a straight-line basis over the lease term;
Initial direct costs incurred by lessors shall be recognized as the current profit or loss; Lessors
shall apply the depreciation policy for the similar assets to depreciate the fixed assets in the
operating lease; For other assets in the operating lease , lessors shall adopt a reasonable
systematical method to amortize; Contingent rents shall be charged as expenses in the periods in
which they are incurred.101
（
2
）
Finance lease
For the lessee, a fixed asset acquired under finance lease shall be valued at the lower of the fair
value of the leased asset and the present value of the minimum lease payments at the inception of
lease. The minimum lease payments as the entering value in long-term account payable, the
difference as unrecognized financing charges; The initial direct costs identified as directly
attributable to activities performed by the lessee during the negotiation and signing of the finance
lease such as handling fees, legal fees, travel expenses, stamp tax shall be counted as lease asset
value; the unrecognized financing charges shall be apportioned at each period during the lease
term and adopt the effective interest rate method to calculate and confirm the current financing
charge; Contingent rents shall be charged as expenses in the periods in which they are incurred.
When the lessee calculates the present value of the minimum lease payments, for that lessee who
can obtain the interest rate implicit in the lease, the discount rate shall be the interest rate implicit
in the lease; otherwise the discount rate shall adopt the interest rate specified in the lease
agreement. If the lessee can not get the interest rate implicit in the lease and there is no specified
interest rate in the lease agreement, the discount rate shall adopt the current bank loan interest rate.
Lessees shall depreciate the leased assets with the depreciation policy which is consistent with the
normal depreciation policy for similar assets. If there is reasonable certainty that the lessee will
obtain ownership by the end of the lease term, the depreciation shall be allocated to the useful life
of the asset. If there is no reasonably certainty that the lessee will obtain ownership by the end of
the lease term, the asset shall be depreciated over the shorter of the lease term and its useful life.
On the initial date of financial lease, lessee of the financial lease shall record the sum of the
minimum lease payments and initial direct costs as the financing lease accounts receivable, and
also record the unguaranteed residual value; recognize the difference between the total minimum
lease payments , initial direct costs ,unguaranteed residual value and sum of the present value as
the unrealized financing income; the unrealized financing income shall be distributed to each
period over the lease term; adopt the actual interest rate to calculate the currect financial income;
Contingent rents shall be charged as expenses in the periods in which they are incurred.
23.Assets held for sales:102
(1) Recognition criteria of the assets held for sale
The Non-Current Assets which meet the following conditions will be classified as assets held for
sales by the company:
①
The entity has made the resolution in disposing the non-current assets.
②
The entity has signed the irrevocable transfer agreement with the assignee.
③
The sale transaction is highly probable to be completed within one year.
(2) Accounting treatments of assets held for sales
For the fixed assets held for sales, the entity shall adjust the predicted net residual value of this
fixed asset to make the predicted net residual value of this fixed asset to reflect the amount of its
fair value less costs to sell, but it shall not exceed the original book value of fixed assets at the
time when it meets the conditions of held for sales. The difference between the original book
value and the adjusted predicted net residual value shall be treated as loss in assets and presented
in profit or loss of current period. The fixed assets held for sales shall not count the depreciation
but shall be measured at the lower of its carrying amount and the fair value less costs to sell.
The other non-current assets such as impairment assets which meet the conditions of held for sales
shall be treated in accordance to the above principles.
24.Hedging:
The company uses fair value hedging for its hedging.
(1) For derivative instruments as the hedging instrument, the profit or loss resulted from the
changes of fair value is included in the profit/loss of the current period; for non-derivative
instruments as the hedging instrument, the profit or loss resulted from the change of book
value due to foreign exchange rate is included in the profit/loss of the current period.
(2) The profit or loss resulted from the hedged risk of the hedged items is included in the
profit/loss of the current period. The book value of the hedged items is adjusted at the same
time.
(3) In a fair value hedging of a firm commitment of a purchased asset or assumed liability, the
accumulated amount in the change of fair value (profit or loss being confirmed) caused by the
hedging risk of this firm commitment should be used to adjust the initial confirmed amount of
the purchased assets of assumed liability of the firm commitment.103
(4) When the following conditions are satisfied, the company stop using the fair value hedging:
A. Hedging instruments expired, sold, contract terminated or executed.
B. The hedge can no longer satisfy the conditions in using the method of hedging
accounting.
C. Cancellation of the designation of the hedging.
25.Changes in accounting policies and estimates,
1. Changes in accounting policies
There is no change in accounting policies during the financial year.
2. Changes in accounting estimates
There is no change in accounting estimate during the financial year.
26.Correction of the accounting errors from previous term
There is no correction of the accounting error from previous term in this report period.
27.Impairment of assets
It suggests that an asset may be impaired if there is any of the following indication:
(1) during the period, an asset's market value has declined significantly more than it would be
expected as a result of the passage of time or normal use during the current period;
(2) significant changes with an adverse effect on the Company have taken place during the
period, or will take place in the near future, in the technological, market, economic or legal
environment in which the Company operates or in the market to which an asset is dedicated;
(3) market interest rates or other market rates of return on investments have increased during the
period, and those increases are likely to affect the discount rate used in calculating an asset's value
in use and decrease the asset's recoverable amount materially;
(4) evidence is available of obsolescence or physical damage of an asset;
(5) the asset becomes idle, or the Comopany plans to discontinue or to dispose of an asset before
the previously expected date;
(6) evidence is available from internal reporting that indicates that the economic performance of
an asset is, or will be, worse than expected, for example, the net cash flow generated from assets
or the operating profit (or loss) realized by assets is lower (higher) than the excepted amount, etc.;104
and
(7) Other evidence indicates that assets may be impaired.
The Company assesses long-term equity investment, fixed assets, construction materials,
constructions in progress and intangible assets (except for those with uncertain useful life) that
apply Accounting Standard for Business Enterprises No. 8 - Impairment of assets at the balance
sheet date. If there is any indication that an asset may be impaired, the Company should assess the
asset for impairment and estimate the recoverable amount of the impaired asset.
Recoverable amount is measured as the higher of an asset's fair value less costs to sell and the
present value of estimated future cash flows from continuing use of the asset. If carrying amount
of an asset is higher than its recoverable amount, the carrying amount of this asset should be
written down to its recoverable amount with the difference recognized as impairment loss and
charged to profit or loss accordingly. Simultaneously a provision for impairment loss should be
made.
There is any indication that an asset may be impaired, the Company usually estimates its
recoverable amount on an individual item basis. However if it’s not possible to estimate
recoverable amount of the individual asset, the Company should determine the recoverable
amount of the cash-generating unit to which the asset belongs.
An asset's cash-generating unit is the smallest group of assets that includes the asset and generates
cash inflows that are largely independent of the cash inflows from other assets or groups of assets.
Identification of cash-generating unit is based on whether the cash inflows generated by the
cash-generating unit are largely independent of the cash inflows from other assets or groups of
assets.
The Company assesses goodwills acquired in a business combination and intangible assets with
uncertain useful life for impairment each year no matter whether indication that an asset may be
impaired exists or not. Impairment assessment of goodwill is carried together with the impairment
assessment of related cash-generating unit or group of cash-generating units.
Once impairment loss is recognized, it cannot be reversed in subsequent financial period.105
28. Notes of corporation pension plan changes
There is still no corporation pension plan in this fiscal year.
Note 3 Taxation
1. The value-added output tax rates are 17% and paid by deducting value added input tax.
2. The business tax rate is 5% of revenue.
3. Urban maintenance and construction tax is 7% of turnover tax payable.
4. Education surtax is 3% of turnover tax payable.
5. Non staple food price restraining fund is 1‰ of revenue
6. Corporate income tax: the corporate income tax rate of the Company is 25%.
Note 4 Business combination and consolidated financial statements
1. Subsidiaries
（
1
）
The subsidiaries obtained through the establishment of or investment subsidiary
Subsidiaries
Catego
ries
Registered
address
Business nature
Registered
capital
Business scope
Wuhan Lan
Xiang
Power
Environment
al Protection
Technology
Company
Limited
586 Wuluo
Rd.,
Wuhan
Manufacturing 20,000,000.00 Boiler, energy environmental protection
products, Steel structures, technology
research of heat energy products and its
accessorial equipment,design, technical
Consultancy, technical service, sales of
developed products, energy project
(non-construction project)
Gas-steam Combined Cycle Heat Recovery
Boiler, Circulating fluidized bed Boiler,
Production and sale of the boiler’s
components and the energy saving
Subsidiaries Investment
（
RMB
）
Other essential investment
Sharehol
ding%
Voting
right%
Consolid
ated
Wuhan Lan Xiang Power
Environmental Protection
Technology Company Limited
24,984,500.00 95 95 Yes
Subsidiaries Minority
interest
Amount of minority
interest in income
statement deducted
Balance after deduction of losses of
subsidiaries during the period exceeding
the proportion of minority shareholders106
from minority interest from equity of parent company
Wuhan Lan Xiang Power
Environmental Protection
Technology Company Limited
1,994,541.78
（
2
）
Obtained by business combination under same control
Subsidiaries
Categories
Registered
address
Business
nature
Registered
capital
Business scope
Wuhan
Boiler BoYu
Industrial
Co., Ltd
586 Wuluo
Rd., Wuhan
Manufacturing 19,115,250.00 Packaging, design, and manufacturing
of Mechanical and Electrical products;
processing of metal compenents;
design and manufacturing of model
and mold
；
Manufacturing of valve
srough casting, steel casting, iron
casting, nonferrous metal casting.
Subsidiaries
Investment
（
RMB
）
Other
essential
investment
Shareholding
%
Voting
right%
Consolidated
Wuhan Boiler BoYu Industrial Co., Ltd
14,249,787.13 90 90 Yes
Subsidiaries
Minority
interest
Amount of minority
interest in income
statement deducted
from minority
interest
Balance after deduction of losses of subsidiaries
during the period exceeding the proportion of
minority shareholders from equity of parent company
Wuhan Boiler BoYu
Industrial Co., Ltd
685,484.41
2.The changes of consolidated scope
(1) No new issue included in the scope of consolidated subsidiaries
(2) The current scope of non-consolidated subsidiaries not included in
Note5 Notes to the consolidated financial statements
(Except for especially indicated, the closing balance and the opening balance refer to the balance
at Dec 31, 2009 and Dec 31, 2008 respectively; all amounts are presented in RMB).
1.Cash and cash equivalent
Item Closing balance Opening balance
Cash 8,286.48 401,400.85107
Bank deposit 26,674,869.44 35,918,973.27
Other cash and cash equivalent 5,472,382.01 11,546,980.51
Total 32,155,537.93 47,867,354.63
Closing balance
Item
Currency Original currency Exchange rate RMB
Cash RMB 8,286.48 1.00 8,286.48
EUR
Subtotal —— —— 8,286.48
Bank deposit RMB 18,973,269.46 1.00 18,973,269.46
USD 551,050.49 6.8282 3,762,682.96
EUR 397,705.61 9.7971 3,896,361.63
JPY 576,772.00 0.0738 42,555.39
Subtotal —— —— 26,674,869.44
Other cash and cash equivalents RMB 5,472,382.01 1.00 5,472,382.01
Subtotal —— —— 5,472,382.01
Total 32,155,537.93
Opening balance
Item
Currency Original currency Exchange rate RMB
Cash RMB 9,593.18 1.00 9,593.18
EUR 40,564.00 9.659 391,807.67
Subtotal —— —— 401,400.85
Bank deposit RMB 32,818,701.11 1.00 32,818,701.11
USD 453,607.95 6.8346 3,100,228.89
HKD 4.48 9.659 43.27
Subtotal —— —— 35,918,973.27
Other cash and cash equivalents RMB 11,546,980.51 1.00 11,546,980.51
Subtotal —— —— 11,546,980.51108
Total 47,867,354.63
Note: The closing balance of the cash and cash equivalent this year is decreased RMB
15,711,816.70 or 32.82%. Mainly due to payments for new factory capital expenditure during the
year under review.
2.Notes receivable
(1)Category of Notes receivable:
Category Closing balance Opening balance
Bank acceptance 119,714,775.17 380,000.00
Total 119,714,775.17 380,000.00
(3) The top five pledged notes receivable
Company Issued
date
Expiration
date
Amount Notes
Shandong Xinfa Hualu Aluminium Co., Ltd. 2009.7.28 2010.1.27 10,000,000.00
Zouping High power Co., LTD. 2009.7.27 2010.1.27 10,000,000.00
Dongfang Xiwang Baotou Xitu Aluminium 2009.8.21 2010.2.21 10,000,000.00
Henan wanda aluminium Co., LTD. 2009.8.17 2010.2.17 10,000,000.00
Minsheng Financial Leasing Co.,LTD 2009.8.28 2010.2.28 10,000,000.00
(3)The top five receivable endorsed but not matured as of year end
Company Issued date Expiration
date
Amount Notes
Minsheng Financial Leasing Co.,LTD 2009.8.28 2010.2.28 30,000,000.00
Guodian Lanzhou Thermopower Co., Ltd. 2009.7.28-20
09.9.25
2010.1.28-
2010.3.24
32,870,000.00
Wuhan Boiler (Group) Co., Ltd 2009.9.3 2010.1.30 16,538,493.52
Guangxi WuHang Energy Co., LTD 2009.8.27 2010.2.27 6,690,000.00
Shandong Xinfa Hualu Aluminium Co., Ltd. 2009.7.28 2010.1.27 3,000,000.00
(4)The Notes receivable this year is increased RMB 119,334,775.17 or 31403.89%, mainly due to
increase in customers’ collections in the form of banker acceptance draft.
3.Accounts receivable
(1)Accounts receivable by categories are as follows:
Category Closing balance109
Balance Provision for doubtful debts
Amount
Proportion
(%)
Amount
Proportion
(%)
Individually significant receivables 355,931,287.32
36.14 59,502,956.50
25.93
Individually insignificant receivables
with high credit risk in group
assessment
84,171,639.90
8.55 84,171,639.90 36.69
Other insignificant amount 544,797,243.20 55.31 85,760,800.17 37.38
Total 984,900,170.42 100 229,435,396.57 100
The classification of the accounts receivable: Individually significant receivables are top 5
accounts receivable; Individually insignificant receivables with high credit risk in group
assessment are the aging beyond the 5 years but not in the top 5 of accounts receivable; others are
other insignificant amount.
Opening balance
Balance Provision for doubtful debt
Category
Amount
Proportion
(%)
Amount
Proportion
(%)
Individually significant receivables 420,133,703.02 38.74% 22,923,600.00 17.53
Individually insignificant receivables
with high credit risk in group
assessment
51,926,411.09 4.79% 51,926,411.09 39.69
Other insignificant amount 612,356,354.28 56.47% 55,968,332.86 42.78
Total 1,084,416,468.39 100.00% 130,818,343.95 100
(2)Individually significant receivables or insignificant receivables requiring impairment test, and
providing provision for bad debt
：
Item Closing balance Bad debt provision Note
Product payment and
retention
249,113,721.83 110,474,613.06 Details are tabulated
below
Details:
Company Reason for provision
Dongfang Xiwang Baotou Xitu Aluminium The Company is required to bear part of the subsequent
costs and thus the receivable amount is not expected to be
fully recoverable
Shanxi Hongdong HuaShi Thermoelectric Co., Ltd. Age more than 3 years and deemed irrecoverable
Datang Hunchun Power Generation Co. Ltd. Age more than 3 years and deemed irrecoverable
Datang Shuangyashan Thermal Power Co., Ltd. The Company is required to bear part of the subsequent
costs and thus the receivable amount is not expected to be
fully recoverable
Xuzhou Cha City Electric Co., Ltd. Age more than 3 years and deemed irrecoverable
Hubei Shuanghuan Technology Co., Ltd. The company have sent many dunning letters but to no110
Company Reason for provision
avail
China Shipping Industry Corporation 719 Bureau Retention money difficult to recover
China Power Engineering Consulting Group, Zhongnan
Power Design Institute
The customer has disputes over the contract settlement
and the receivable amount is not expected to be fully
recoverable
Zhengzhou Gas Power Generation Co., Ltd. The customer has disputes over the contract settlement
and the receivable amount is not expected to be fully
recoverable
Huaneng Henan Zhongyuan Gas Power Generation Co., Ltd. The customer has disputes over the contract settlement
and the receivable amount is not expected to be fully
recoverable
SINOPEC Hubei Chemical Fertilizer Plant Retention money difficult to recover
Ningxia Western PVC Co., Ltd. Equipment rework charges
Gansu Zhangye, Electric Power Investment Co., Ltd. Retention money difficult to recover
Shanxi Zhengxin Group Co., Ltd. Customers did not receive special funding and the
receivable amount not expected to be fully recoverable
PT INDAH KIAT PULP & PAPER, TBK The portion covered by letter of credit received was not
subjected to general provision for doubtful debt
Individually insignificant receivables with high credit risk in group assessment
：
Closing balance
Aging Balance
Amount Proportion (%)
Provision for doubtful
debts
More than 5 years 84,171,639.90 8.55 84,171,639.90
Total 84,171,639.90 8.55 84,171,639.90
Opening balance
Aging Balance
Amount Proportion (%)
Provision for doubtful
debts
More than 5 years 51,926,411.09 4.79% 51,926,411.09
Total 51,926,411.09 4.79% 51,926,411.09
(3)In 2009, the company's management took measures to strengthen the collection and increase
collection efforts, to get the co-operation among Finance and other Business departments to
collect the payments, to have management to track the progress of the payment collection at any
time. As of December 31, 2009, RMB 12,335,059.67 has been recovered for the debts aging more
than 5 years a 23.75% of the last year’s accounts receivable for aging more than 5 years.
(4)The write-off of accounts receivable
Name of company The nature of
accounts receivable
Written off Reason Related party
transaction
Zhengzhou Ju Jin Thermoelectric
Energy Co., Ltd.,
Retention 114,000.00 Rework charges No
XinJiang kuiTun Thermal Power Plant Retention 430,000.00 Rework charges No111
Name of company The nature of
accounts receivable
Written off Reason Related party
transaction
AoShiLong Machinery Co., Ltd. Retention 241,922.10 Charge
replacement parts
No
Huadian Tengzhou Xinyuan
Thermoelectric Co., Ltd.
Retention 428,500.00 Rework charges No
Jinhua Chemical (Group) Co., Ltd. Retention 75,000.00 Bankrupt No
China Petroleum Fushun Petrochemical
Company
Retention 100,000.00 Quality deduction No
Lin Zhou City Power Plant Retention 100,000.00 Quality deduction No
Wuhan High-tech Thermal Power Co.,
Ltd.
Retention 80,000.00 Quality deduction No
Wuhan Tianyuan Boiler Co., Ltd. Design fees 110,000.00 Termination of
contract
No
Tianjin Botian Chemical Company Reimbursed Freight 1,493.00 Lost documents No
Total 1,680,915.10
Note: Above write-off accounts receivable retention were for projects which have completed more
than 5 years.
(5)Accounts receivable due from shareholders with more than 5% (including 5%) of the voting
shares of the Company.
Closing balance Opening balance
Name of company Amount Provision for
doubtful debts
Amount Provision for
doubtful debts
Wuhan Boiler Group Co., Ltd. 17,477,670.00 2,009,932.05 44,119,317.50 1,673,151.60
Total 17,477,670.00 2,009,932.05 44,119,317.50 1,673,151.60
(6)Information of top 5 receivables:
Company The relationship
with the Company
Amount Age Proportion
Shandong Weiqiao Aluminum
and Electricity Co., Ltd.
Non-affiliated
113,816,000.00
1-4 years 11.56%
Huaneng Henan Zhongyuan Gas
Power Generation Co., Ltd.
Non-affiliated
42,308,000.00
1-2 years 4.30%
Shanxi Zhengxin Group Co., Ltd. Non-affiliated 47,970,000.00 3-4 years 4.87%
PT INDAH KIAT PULP &
PAPER, TBK
Non-affiliated 53,362,287.32 Less than 1
year
5.42%
China Shenhua Energy Company
Limited, Huizhou Guohua
Thermal Power Branch
Non-affiliated 98,475,000.00 Less than 1
year
10.00%
Total 355,931,287.32 36.15%
(7)The amounts due from related parties
Company The relationship with the
Company
Amount Proportion112
Wuhan Special Boiler Complete
Equipment Engineering Co., Ltd.
A subsidiary of the second
largest shareholder
18,174,794.81 1.85%
ALSTOM Projects India Limited A subsidiary of the ultimate
holding company
145,265.00 0.01%
ALSTOM Power Systems S.A
Etablissement Boilers
A subsidiary of the ultimate
holding company
17,702,100.00 1.80%
Total 36,022,159.81 3.66%
(8)Accounts receivable by aging are as follows:
Closing balance
Aging Balance
Amount Proportion (%)
Provision for doubtful
debts
Less than 1 year (including 1 year) 435,721,605.86 44.24 12,575,172.56
1-2 years (including 2 years) 198,125,084.53 20.12 18,087,346.04
2-3 years (including 3 years) 72,304,741.11 7.34 30,963,414.38
3-4 years (including 4 years) 160,014,783.23 16.25 66,932,380.68
4-5 years (including 5 years) 34,562,315.79 3.50 16,705,443.01
More than 5 years 84,171,639.90 8.55 84,171,639.90
Total 984,900,170.42 100.00 229,435,396.57
Opening balance
Aging Balance
Amount Proportion (%)
Provision for doubtful
debts
Less than 1 year (including 1 year) 456,643,635.25 42.11 10,031,364.30
1-2 years (including 2 years) 158,077,327.27 14.58 4,742,319.82
2-3 years (including 3 years) 310,731,902.22 28.65 37,559,914.13
3-4 years (including 4 years) 52,370,931.36 4.83 10,474,186.27
4-5 years (including 5 years) 54,666,261.20 5.04 16,084,148.34
More than 5 years 51,926,411.09 4.79 51,926,411.09
Total 1,084,416,468.39 100.00 130,818,343.95
4.Other receivables
(1)Other receivables disclosed by type:113
Closing balance
Balance Provision for doubtful debts
Categories
Amount
Proportion
(%)
Amount
Proportion
(%)
Individually significant receivables 148,234,656.60 91.87 29,442,214.08 96.97
Individually insignificant receivables
with high credit risk in group
assessment
534,775.00 0.33 534,775.00 1.76
Other insignificant amount 12,591,734.82 7.80 384,356.97 1.27
Total 161,361,166.42 100.00 30,361,346.05 100.00
The classification of the accounts receivable: Individually significant receivables are top 5
accounts receivable; Individually insignificant receivables with high credit risk in group
assessment are the aging beyond the 5 years but not in the top 5 of accounts receivable; others are
other insignificant amount.
Opening balance
Balance Provision for doubtful debts
Categories
Amount
Proportion
(%)
Amount
Proportion
(%)
Individually significant receivables 130,715,211.73 97.39% 416,757.83 32.00
Individually insignificant receivables
with high credit risk in group
assessment
534,775.00 0.40% 534,775.00 41.06
Other insignificant amount 2,968,864.52 2.21% 350,942.03 26.94
Total 134,218,851.25 100.00% 1,302,474.86 100.00
(2)Individually significant receivables or insignificant receivables requiring impairment test, and
providing provision for doubtful debt
：
Item Balance Bad debt
provision
Accrual
percentage
Reason114
3RC Company Limited 336,604.05 336,604.05 100.00% Bankruptcy
Value Added Tax paid for
suspended projects
27,193,448.17 27,193,448.17 100.00% Projects were suspended
and the amount is not
expected to be recoverable
Total 27,530,052.22 27,530,052.22
Individually insignificant receivables with high credit risk in group assessment
Closing balance
Aging Balance
Amount Proportion (%)
Provision for bad debt
More than 5 years 534,775.00 0.33% 534,775.00
Totai 534,775.00 0.33% 534,775.00
Opening balance
Aging Balance
Amount Proportion (%)
Provision for bad debt
More than 5 years 534,775.00 0.40% 534,775.00
Total 534,775.00 0.40% 534,775.00
(3)Accounts receivable due from shareholders with more than 5% (including 5%) of the voting
shares of the Company.
Closing balance Opening balance
Name of company Amount provision for
bad debt
Amount Provision for
doubtful debts
Wuhan Boiler Group Co., Ltd. 67,194,318.11 1,851,395.87 5,407,948.32 162,238.45
Total 67,194,318.11 1,851,395.87 5,407,948.32 162,238.45
(4)Nature of significant of other receivables
A. Account receivable of RMB 67,194,318.11 from the second largest shareholder, Wuhan Boiler
Group Co., Ltd., is the compensation for the relocation of the old factory.
B. The value –add output tax ( “VAT”) for suspended projects is the amount of VAT paid in
accordance to the provision for tax law.
C. Account receivable of RMB10,774,265.00 from Donghu Development Zone Committee is the
amount paid by the Company to connect the new factory to external power substation and this
amount is reimbursable from the local Government.115
(5)Details of top 5 other receivables
：
Company The relationship with the
Company
Amount Aging Proportion of
the total (%)
Wuhan Boiler Group
Co., Ltd.
The company's
second-largest shareholder
67,194,318.11 1-2 years 41.64
Shandong Weiqiao
Aluminum and
Electricty Co., Ltd.
Non-affiliated 25,575,846.15 1-2 years 15.85
Donghu Development
Zone Committee
Non-affiliated 10,774,265.00 1-2 years 6.68
Henan Weihua Heavy
Machinery Co., Ltd.
Non-affiliated 2,471,403.00 Less than
1 year
1.53
WuYu Alloy Factory Non-affiliated 534,775.00 more than
5 years
0.33
Total 106,550,607.26 66.03
(6)The amounts due from related parties
Name of company The relationship with
the Company
Amount Proportion of the
total (%)
Wuhan Boiler Group,YunTong Co.,
Ltd.
Subsidiary of Second
largest shareholder
25,499.73 0.02
Wuhan Boiler Group Valve Co., Ltd Subsidiary of Second
largest shareholder
240,571.49 0.15
Total -- 266,071.22 0.17
(7)Other receivables by aging are as follows:
Closing balance
Aging Balance
Amount Proportion (%)
Provision for doubtful
debts
Less than 1 year (including 1 year) 151,413,088.28 93.83 29,224,058.31
1-2 years (including 2 years) 9,403,303.14 5.83 601,912.74
2-3 years (including 3 years) 10,000.00 0.01 600.00
More than 5 years 534,775.00 0.33 534,775.00
Total 161,361,166.42 100.00 30,361,346.05
Opening balance
Aging Balance
Amount Proportion (%)
Provision for doubtful
debts
Less than 1 year (including 1 year) 132,814,276.25 98.95 718,081.86
1-2 years (including 2 years) 85,600.00 0.06 2,568.00
2-3 years (including 3 years) 784,200.00 0.58 47,050.00
More than 5 years 534,775.00 0.41 534,775.00116
Total 134,218,851.25 100.00 1,302,474.86
5
．
Prepayment
(1)Aging analysis:
Closing balance Aging Opening balance
Amount Proportion (%) Amount Proportion (%)
Less than 1 year (including 1 year) 38,673,471.83 70.66 139,116,204.67 98.06
1 year to 2 years (including 2 years) 14,649,310.62 26.76 2,747,500.70 1.94
2 years to 3 years (including 3 years) 1,411,500.00 2.58
Total 54,734,282.45 100.00 141,863,705.37 100.00
Note: Prepayment decreased RMB 87,129,422.92 or 61.42%., mainly due to reduced purchases
arising from low business operations during factory relocation.
(2)Details of top 5 prepayment
Name of company The relationship
with the Company
Amount Aging Reasons
Zhejiang Rong Zhi Energy
Technology Co., Ltd
Non-affiliated 14,115,000.00 2007 -2009 Project has
not yet
completed
Howden Hua Engineering
Co., Ltd.
Non-affiliated 8,603,000.00 2009 Project has
not yet
completed
Luxembourg, Arcelor
International Co., Ltd
Non-affiliated 7,488,326.20 2009 Project has
not yet
completed
Wuhan ZhiMiao Machinery
Manufacturing Co., Ltd.,
Non-affiliated 7,381,432.62 2009 Project has
not yet
completed
ALSTOM Technical
Services (Shanghai) Co., Ltd.
A subsidiary of the
ultimate holding
company
3,555,000.00 2009 Project has
not yet
completed
Total 41,142,758.82 --
(3)There was no amount due from shareholders with more than 5% (including 5%) of the voting
shares of the Company in prepayment.
(4)The prepayment aged more than 1 year is for the contract purchase which has yet to settle.
6.Inventory
(1)Categories:
Categories Closing balance Opening balance
Book balance Provision for
impairment of
inventories
Book value Book balance Provision for
impairment of
inventories
Book value117
Raw materials 341,074,909.41 173,984,295.85 167,090,613.56 336,319,266.68 46,973,514.72 289,345,751.96
Construction
contract assets
30,625,133.86 121,150,739.51 -90,525,605.65 772,112,606.26 153,839,867.50 618,272,738.76
Finished
products
10,425,822.46 10,425,822.46
Turnover
Materials
461,536.48 461,536.48
Total 371,700,043.27 295,135,035.36 76,565,007.91 1,119,319,231.88 200,813,382.22 918,505,849.66
Note: Assets from construction contracts were reduced RMB 741,487,472.40. The percentage of
reduction is 96.03%. The main reasons are as follows:
A. The number of the new starting projects in 2009 is less and most of the ongoing projects from
last year have been completed.
B. The increase in progress billings raised and closed the gap between costs incurred and progress
billings. This result in the balance of the cost incurred for ongoing construction contracts close to
the balance of the progress billing and resulted in small balance in construction contract assets or
amount due from customer.
(2)Provision for impairment of inventories
Categories Opening Decrease
balance
Increase
Reversal Written off
Closing
balance
Raw materials 46,973,514.72 141,610,234.21 14,599,453.08 173,984,295.85
Construction contract
assets
153,839,867.50 34,682,159.38 67,371,287.37 121,150,739.51
Total 200,813,382.22 176,292,393.59 81,970,740.45 295,135,035.36
Note 1: The impairment of the raw materials is written off because of the disposal of raw
materials.
Note 2: Provision for write-off of the impairment of the assets from construction contracts is the
provision for the expected loss of the contract in accordance with the Chinese Accounting
Standard on “Construction Contract”
(3)Details of provision for impairment of inventories
Item
The bases of
provision for
impairment of
inventories
Reasons for reversal
Proportion of reversal of
provision for impairment of
inventories to closing balance
1.Raw materials According to the
assessment value
2.Construction contract
assets
expected loss from
contract loss118
7.Fixed assets
(1)Fixed assets details:
Item Opening
balance
Increase Decrease Closing
balance
1. Cost 449,465,369.28 583,481,219.04 307,237,565.97 725,709,022.35
Including: Property and
buildings
166,962,869.95 504,339,267.23 166,962,869.95 504,339,267.23
Machineries 267,443,034.46 64,380,530.13 136,046,999.72 195,776,564.87
Vehicles 4,793,053.08 1,758,352.00 3,034,701.08
Electronic equipments and
office equipment
10,266,411.79 14,761,421.68 2,469,344.30 22,558,489.17
2.Accumulated depreciation 320,657,172.90 20,244,292.63 227,447,624.83 113,453,840.70
Including: Property and
buildings
101,039,938.42 6,095,078.63 104,077,460.21 3,057,556.84
Machineries 212,364,184.27 11,005,075.01 120,144,226.07 103,225,033.21
Vehicles 3,250,908.13 491,028.90 1,333,789.94 2,408,147.09
Electronic equipments and
office equipment
4,002,142.08 2,653,110.09 1,892,148.61 4,763,103.56
3.The net book value of fixed
assets
128,808,196.38 563,236,926.41 79,789,941.14 612,255,181.65
Including: Property and
buildings
65,922,931.53 498,244,188.60 62,885,409.74 501,281,710.39
Machineries 55,078,850.19 53,375,455.12 15,902,773.65 92,551,531.66
Vehicles 1,542,144.95 -491,028.90 424,562.06 626,553.99
Electronic equipments and
office equipment
6,264,269.71 12,108,311.59 577,195.69 17,795,385.61
4. Provision for impairment
loss
6,957,025.56 476,254.23 3,865,266.43 3,568,013.36
Including: Property and
buildings
Machineries 6,957,025.56 373,919.00 3,865,266.43 3,465,678.13
Vehicles
Electronic equipments and
office equipment
102,335.23 102,335.23
5.Carrying amount 121,851,170.82 562,760,672.18 75,924,674.71 608,687,168.29
Including: Property and
buildings
65,922,931.53 498,244,188.60 62,885,409.74 501,281,710.39
Machineries 48,121,824.63 53,001,536.12 12,037,507.22 89,085,853.53
Vehicles 1,542,144.95 -491,028.90 424,562.06 626,553.99
Electronic equipments and
office equipment
6,264,269.71 12,005,976.36 577,195.69 17,693,050.38
Note 1, Amount of depreciation charge is RMB 20,244,292.63 for current fiscal year.
Note 2, The original cost of transfer from construction in progress into fixed assets during this
period is RMB 580,448,743.60
Note 3, the balance of the fixed assets at the end of the period is increased RMB 276,243,653.07
in comparison with that at the beginning of this year. The percentage of the increase is 61.46%.
This is due to the commissioning of the new production facility and disposal of fixed assets.
(2)Temporarily idle fixed assets :
Item Cost Accumulated Impairment Carrying Estimated119
depreciation amount commissioning
time
Machineries 195,776,564.87 103,225,033.21 3,465,678.13 89,085,853.53
Electronic
and office
equipment
22,558,489.17 4,763,103.56 102,335.23 17,693,050.38
Total 218,335,054.04 107,988,136.77 3,568,013.36 106,778,903.91
(3)Fixed assets without certification
Item The reasons Expected time
New plant and office building Final accounts audit unfinished
8.Construction in progress
(1)Details
Closing balance Opening balance
Item Closing
balance
Impairment Net book value Book balance Impairment Net book value
1.Newly
established
base of the
company
6,896,046.00 6,896,046.00 277,749,717.79 277,749,717.79
2. Equipment
for New base
of the
Company
165,849,325.95 165,849,325.95 128,596,142.27 128,596,142.27
3. Purchased
technology
3,074,265.00 3,074,265.00
Total 175,819,636.95 175,819,636.95 406,345,860.06 406,345,860.06
(2)Significant changes in construction in progress, a
Project Opening balance Increase Transferred to
fixed assets
Other decrease Closing balance Capitalised
interest rate
(%)
1.Newly
established base
of the company:
277,749,717.79 234,304,007.56 504,316,751.39 840,927.96 6,896,046.00
Including:
Capitalized
amount of
borrowing costs
7,133,219.75 12,516,152.15 19,649,371.90 5.748
2.Equipment
for New base of
the Company
128,596,142.27 113,863,403.96 76,131,992.21 478,228.07 165,849,325.95
Including:
Capitalized
amount of
borrowing costs
2,601,256.45 6,398,093.89 2,895,093.85 6,104,256.49 5.748
3.Purchased
technology
3,074,265.00 3,074,265.00
Total 406,345,860.06 351,241,676.52 580,448,743.60 1,319,156.03 175,819,636.95
Including
：
Capitalized
amount of
borrowing costs
9,734,476.20 18,914,246.04 22,544,465.75 6,104,256.49
Significant changes in construction in progress b120
Project Budget Financial
source
% of
budget
Accumulated amount
of interest capitalized
Including: Interest
capitalized this year
1.Newly established
base of the company:
50,070.00 Self-financing,
loan
102% 19,649,371.90 12,516,152.15
2.Equipment for new
base of the company
40,000.00 Self-financing,
loan
61% 8,999,350.34 6,398,093.89
Total 90,070.00 28,648,722.24 18,914,246.04
Note 1. The balance of the construction in progress at the end of the period is decreased RMB
230,526,223.11 in comparison with that at the beginning of this year. The percentage of the
decrease is 56.73%. This is due to the utilization of the new production facility and the
construction in progress being capitalised into fixed assets.
Note 2. Capitalization of borrowing costs refers to Note 10 on Other important matters 1.
Note 3. By 31 December,2009 Newly established base has been basically completed.
Note 4. As of December 31, 2009, in the construction in progress does not have indication of
impairment, so no provision for impairment in construction in progress
9.Disposal of fixed assets
Item Closing
balance
Opening
balance
Reasons
Bo Yu's car 128,692.99 Liquidation of the company has not finished
LanXiang company’s car 112,050.44 Liquidation of the company has not finished
Total 240,743.43
10.Intangibles assets
(1)Details of intangible assets are as following:
Category Opening
balance
Increase Decrease Closing
balance
Cost 106,043,334.42 4,226,181.27 110,269,515.69
1.Land use right 41,666,503.00 41,666,503.00
2.Proprietary technology 56,900,206.41 56,900,206.41
3.Software 7,476,625.01 4,226,181.27 11,702,806.28
Accumulated amortization 41,698,429.90 7,228,171.69 48,926,601.59
1.Land use right 555,553.36 833,330.04 1,388,883.40121
Category Opening
balance
Increase Decrease Closing
balance
2.Proprietary technology 39,541,827.87 3,067,276.14 42,609,104.01
3.Software 1,601,048.67 3,327,565.51 4,928,614.18
Carrying amount of intangible assets 64,344,904.52 -3,001,990.42 61,342,914.10
1.Land 41,110,949.64 -833,330.04 40,277,619.60
2.Proprietary technology 17,358,378.54 -3,067,276.14 14,291,102.40
3.Software 5,875,576.34 898,615.76 6,774,192.10
Accumulative impairment of intangible
assets
1.Land use right
2.Proprietary technology
3.Software
Total book value of intangible assets 64,344,904.52 -3,001,990.42 61,342,914.10
1.Land use right 41,110,949.64 -833,330.04 40,277,619.60
2.Proprietary technology 17,358,378.54 -3,067,276.14 14,291,102.40
3.Software 5,875,576.34 898,615.76 6,774,192.10
Note: The amortization of the intangible assets is RMB 7,228,171.69 this year
11. The long-term deferred expenses
Item Opening
balance
Increase Amortization Other
decrease
Closing
balance
Reasons
Co-construction
substation
100,000.00 100,000.00
Total 100,000.00 100,000.00
12. Deferred tax assets and liabilities
(A)Deferred tax assets and liabilities are not listed as the net value after offset.
(1)Recognized deferred tax assets and liabilities122
Item Closing balance Opening balance
Item
Deferred tax assets: 84,997,137.51 73,930,972.26
Provision for asset impairment 84,997,137.51 73,930,972.26
Sub-total
Deferred income tax liabilities:
Donation 2,696.51
Sub-total 2,696.51
(2)Unrecognized deferred income tax assets
Item Closing balance Opening balance
Deductible temporary differences 334,661,885.17 74,021,946.20
Tax losses 982,000,742.68 622,403,587.95
Total 1,316,662,627.85 696,425,534.15
(3)The deferred income tax assets unrecognized deductible losses due to the following year
Year Closing balance Opening balance Notes
2012 322,036,470.99 322,036,470.99
2013 300,367,116.96 300,367,116.96
2014 359,597,154.73
Total 982,000,742.68 622,403,587.95
(4)Temporary difference
Temporary difference
Item
Closing balance Opening balance
1. Deductable temporary difference
①
Provision for bad debt 215,269,797.18 87,953,481.26
②
Provision for loss of inventories impairment 121,150,739.51 200,813,382.22
③
Provision for loss of fixed assets impairment 3,568,013.36 6,957,025.56
Total 339,988,550.05 295,723,889.04
13. Provision for impairment of assets123
Categories Opening balance Increase Decrease
Reversal Written off
Closing
balance
1.Provision for bad debt 132,120,818.81 129,356,838.91 1,680,915.10 259,796,742.62
Including: Provision for bad
① debt of accounts receivable
130,818,343.95 100,297,967.72 1,680,915.10 229,435,396.57
Provision for bad debt of
②other receivables
1,302,474.86 29,058,871.19 30,361,346.05
2.Provision for loss of
inventories impairment
200,813,382.22 176,292,393.59 81,970,740.45 295,135,035.36
3.Provision for loss of fixed
assets impairment
6,957,025.56 476,254.23 3,865,266.43 3,568,013.36
Total 339,891,226.59 306,125,486.73 87,516,921.98 558,499,791.34
Note 1:Provision for bad debt of accounts receivable refers to Note5 .3 (4).
Note 2:Written-off of provision for inventories impairment, refers to Note5 .6 (2).
Note 3:The write-off of the provision for impairment of fixed assets is caused by the disposal of
the provision for the impairment of fixed assets.
14. Other non-current assets
Item Opening balance Closing balance
Hedging 6,174,943.43 24,525.50
Total 6,174,943.43 24,525.50
Note: The hedging instruments has been decreased RMB 6,150,417.93 this year. The percentage
of decrease is 99.60%. This is mainly due to the settlement of Perawang project this year.
15. Short-term loan
Category Closing balance Opening balance
Credit borrowings 525,000,000.00 954,000,000.00
Entrust borrowings 1,710,000,000.00 970,000,000.00
Total 2,235,000,000.00 1,924,000,000.00
Note: The entrust borrowings are supplies by Alstom (China) Investment Co., Ltd, and the
maximum amount is RMB 1,800,000,000.00
16. Notes payable124
Category Closing balance Opening balance Amount due in next accounting period
Bank Acceptance 219,077,384.51 419,917,469.28 219,077,384.51
Commercial acceptance 13,731,756.70
Total 219,077,384.51 433,649,225.98 219,077,384.51
Note 1. The decreased of Notes payable is RMB 214,571,841.47, the decrease proportion is
49.48%, . the main reason is due to increasing the proportion of payment and decrease of the
purchasing this year.
Note 2. There was no Notes payable due from shareholders with more than 5% (including 5%) of
the voting shares of the Company.
17. Accounts Payable
Item Closing balance Opening balance
Amount 425,186,604.74 532,731,198.18
Total 425,186,604.74 532,731,198.18
The accounts payable to shareholders with more than 5% (including 5%) of the voting shares of
the Company or related parties:
Company Closing
balance
Opening
balance
Wuhan Boiler (Group) Yuntong Co., Ltd 4,099,499.20 16,735,786.80
Wuhan Boiler (Group) Valve Co., Ltd 1,302,071.50 5,399,315.70
Wuhan Special Boiler Complete Equipment Engineering Co., Ltd. 21,316,800.00 6,116,800.00
Alstom Power Boiler Company 682,820.00 683,460.00
Total 27,401,190.70 28,935,362.50
Note: The accounts payable aged more than 1 year is mainly for handling the diffused processing
fees. Due to the project being not completed, it can’t be settled until the warranty period of the
boiler is expired.
18.Advance from customers
Item Closing balance Opening balance
Amount 31,395,403.74 10,442,136.73125
Advanced from customers from shareholders with more than 5% (including 5%) of the voting
shares of the Company or related parties:
company Closing balance Opening balance
ALSTOM Power Systems S.A Etablissement Boilers 20,826,000.00
Total 20,826,000.00
Note1: Advanced from customers, including amount of RMB10, 342,136.73with aging over 1 year,
was unsettled contract payments on construction in progress. According to the Company’s
accounting method of contract on construction in progress, the account shall be carried forward
after the settlement of contract payments on construction in progress.
Note 2:The balance of the advanced from the customers at the end of the period is increased RMB
20,953,267.01 in comparison with that at the beginning of this year. The percentage of the
increase is 200.66%. This is due to the collection of processing trade from ALSTOM Power
Systems S.A Etablissement Boilers of RMB 20,826,000.00
19. Payroll payable:
(1)Details:
Item Opening
balance
Increase Decrease Closing
balance
1.Salary,bonus, allowance,
subsidy
12,117,598.75 103,156,991.13 105,395,669.88 9,878,920.00
2. Employee welfare 31,043.56 1,174,978.07 1,174,978.07 31,043.56
3.Social insurance 29,727.71 28,287,699.01 28,317,426.72
including
：
Medical insurance
①
7,059,124.99 7,059,124.99
Retirement pension
②
23,461.47 18,843,474.19 18,866,935.66
Unemployment insurance
③
6,266.24 1,367,150.14 1,373,416.38
④
injury insurance premium 523,418.66 523,418.66
Pregnancy insurance
⑤
494,531.03 494,531.03
4. Housing fund 9,830,789.00 9,830,789.00
5. Labour union fee and
employee education fee
2,935,887.09 5,483,233.13 5,574,848.97 2,844,271.25
6.Redemption for terminations
of labor contract
7.Other
29,875,608.65 40,956,954.87 5,578,679.64 65,253,883.88
including
：
Share payment in
cash
Total 44,989,865.76 188,890,645.21 155,872,392.28 78,008,118.69126
(2)The balance of the payroll payable at the end of the period is increase RMB 33,018,252.93 in
comparison with that at the beginning of this year. The percentage of the increase is 73.39%. This
is due to the provision for employee retirement benefits.
20. Taxes payable
Taxes Closing balance Opening balance
1.Value-added tax -93,082,219.15 -104,727,763.16
2.Business tax 3,142.12 26,289.26
3.City levee fee 4,183.91 -83.89
4.Corporate Income Tax 363,748.50
5.Personal income tax 70,097.01 428,538.54
6.Surcharge for education 6,227.07 -125.83
7.Local education development fee 6,231.75 125,162.68
8.Urban maintenance and construction tax 14,529.82 -293.60
9.Property Tax 1,172,357.93 470,009.32
10.Non staple food price restraining fund 1,005.28 1,221.28
11.stamp duty 10,066.78 401,578.65
12.Land Use Tax 293,334.01
Total -91,501,043.47 -102,911,718.25
21. Interest payable
Item Closing balance Opening balance
Interest payable on short-term borrowings 3,274,942.50 3,046,367.05
Total 3,274,942.50 3,046,367.05
22. Dividends payable
Main investor Opening
balance
Closing balance Reason of failure payment
more than 1 year
HIT East Power Electric Co.,
Ltd.
108,000.00 108,000.00 The company is in liquidation
West Jiaotong University Star
Source Dynamics
166,000.00 166,000.00 The company is in liquidation
Shanghai Power Equipment 144,000.00 144,000.00 The company is in liquidation127
Research Institute
Wuhan Urban Environmental
Engineering Company
144,000.00 144,000.00 The company is in liquidation
Total 562,000.00 562,000.00
Note: dividends payable is due to unpaid dividend by Wuhan Lan Xiang Energy Environmental
Protection Technology Co., Ltd.
23
．
Other payables
Item Closing balance Opening balance
Amount 38,838,894.32 25,258,271.32
Note 1: The amount of RMB 974,056.13is due from Wuhan Boiler (Group) Co., Ltd holding
6.91% of the voting shares of the Company at the end of the period.
Note 2: Other payables from shareholders with more than 5% (including 5%) of the voting shares
of the Company or related parties:
company Closing balance Opening balance
Wuhan Boiler (Group) Yuntong Co., Ltd 572,628.90
ALSTOM Technology Ltd (Switzerland) 3,072,690.00
Total 3,645,318.90
Note 3 The other large amount accounts payable aged more than 1 year is mainly the amount paid
to purchase ALSTOM stocks.
Note 4, the significant amount of other payables details:
Item Amount The nature or content
Stock deductions 7,083,489.47 Collected and remit on behalf
employee
ALSTOM Technology Ltd (Switzerland) 3,072,690.00 TOT technology transfer fee
China Ping An Property & Casualty Insurance
Co., Ltd. Shenzhen Branch
2,757,391.59 Property insurance
Precision CNC Machine Tool Co., Ltd., Wuhan
Chiang Kai-shek
1,760,000.00 Disposal of equipment
Wuhan Boiler Group Co., Ltd. 974,056.13 Collection fee
Total 15,647,627.19
Note 5:the balance of other accounts payable at the end of the period is increased RMB
13,580,623.00 in comparison with that at the beginning of this year. The percentage of the
increase is 53.77%. This is due to increasing related party transaction amounted to RMB
9,011,747.31, deposit held from disposal of fixed assets amounted to RMB1,760,000.00 and128
provision for special insurance premium amounted to RMB2,757,391.59.
24.Non-current liabilities due in one year
(1)Details
Category Closing balance Opening balance
Long-term loan 90,000,000.00
total 90,000,000.00
(2)Details information of long-term loan due in one year
Category Closing balance Opening balance
Credit borrowings 90,000,000.00
Total 90,000,000.00
Note: the ending balance of non-current liabilities due in one year is zero, is due to repayment of
bank borrowing upon maturity.
25. Long-term borrowings
Item Closing balance Opening balance
Credit loan 100,000,000.00
Total 100,000,000.00
Note: The ending balance of long-term loan is zero, due to early settlement of bank borrowing.
26. Provision for contingent liabilities
Item Opening balance Increase Decrease Closing balance
Product quality guarantee 50,956,000.00 50,956,000.00
Total 50,956,000.00 50,956,000.00
Note: The Company delivered an alkaline recovery boiler to a customer in 2008. The boiler was
put into operation. Due to various reasons, the boiler was unable to continue operating at full load
and required some technical modification. The modification work is expected to commence in
year 2010. The Company provided RMB 50,956,000 in the Book for this modification costs.
27
．
Other non-current liabilities129
item Closing balance Opening balance
1. Deferred income 13,425,840.00 13,703,616.00
2. Hedged items 28,024.62 6,942,506.33
3. The unrecognized finance cost -12,224,275.21
Total 1,229,589.41 20,646,122.33
Note1: The unrecognized financing cost is the discount fees of employee retirement benefits in
accordance with the regulations stipulated in “Employee Benefits” Accounting Standards.
Note 2: The closing balance of Hedged item decreased by RMB 6,914,481.71 in comparison with
that of opening balance this year, the percentage of the decrease is 99.60%, it is due to settlement
of Perawang project.
28. Paid-in capital
Increase/Decrease (+/-)
Item
Opening
balance
Issuing
new
shares
Bonus
shares
Reserves
transferred to
shares
Other Subtotal
Closing
balance
Total 297,000,000.00 297,000,000.00
29. Capital surplus
Item Opening balance Increase Decrease Closing balance
Capital premium 144,909,718.58 144,909,718.58
Other capital surplus 29,749,688.88 29,749,688.88
Including: Transfer from items
under previous
accounting standard
29,749,688.88 29,749,688.88
Total 174,659,407.46 174,659,407.46
30. Surplus reserve
item Opening balance Increase Decrease Closing Balance130
item Opening balance Increase Decrease Closing Balance
Legal surplus 39,418,356.83 39,418,356.83
Total 39,418,356.83 39,418,356.83
31
．
Retained earnings
Item Amount Extraction or allocation
proportion
Opening balance of retained earnings before
adjustments
-729,366,846.47
Add: Adjustments on opening balance of
retained earning
Opening balance of retained earnings after
adjustments
-729,366,846.47
Plus: net profit for the year -675,672,514.99
Retained earnings at the end of the year -1,405,039,361.46
32. Revenue and Cost of Sales
(1)Revenue
Item 2009 2008
Sales 505,589,918.54 1,114,599,428.80
Other operating income 12,089,272.02 6,471,823.32
Cost of sales 604,427,084.84 1,108,612,095.55
Other operating cost 18,022,343.14 4,410,471.67
(2)Listed by the categories of production or business
2009 2008
Categories
Revenue Cost of sales Revenue Cost of sales
Boilers and associated
product sales
503,309,918.54 602,436,884.84 1,112,491,428.80 1,105,865,930.50
Technical Services 2,280,000.00 1,990,200.00 2,108,000.00 2,746,165.05
Total 505,589,918.54 604,427,084.84 1,114,599,428.80 1,108,612,095.55
(3)Top five customers
company Revenue Proportion of total
revenue (%)131
company Revenue Proportion of total
revenue (%)
State Power Thermal Power Co., Ltd., Lanzhou 102,887,506.33 19.87%
Huizhou, Guangdong Guohua Thermal Power Project
preparation Agency
65,570,802.08 12.67%
PT INDAH KIAT PULP & PAPER, TBK 104,659,637.03 20.22%
Chiping Source Aluminum Co., Ltd. 42,304,788.48 8.17%
Huangshi, Hubei Huadian Power Generation Co., Ltd. 80,905,963.46 15.63%
Total 396,328,697.38 76.56%
(4)The sales this year decreased by 53.82% in comparison with last year, the cost of sales this year
decreased by 44.08% in comparison with last year, it is due to the relocation of new factory.
33. Revenue from the construction contracts
Project Total amount
Accumulated
Construction costs
incurred to date
Recognised profits to
date (recognised
losses as negative
figure)
Progress billings
Fixed price
construction
contract
2,709,640,994.20 1,678,909,493.09 -236,796,893.80 1,431,798,039.25
including:
State Power
Thermal Power
Co., Ltd.,
Lanzhou
281,000,000.00 252,796,788.30 -37,357,850.82 172,512,820.52
Huizhou,
Guangdong
Guohua Thermal
Power Project
preparation
Agency
337,450,000.00 259,729,984.65 -32,097,040.79 260,209,401.69
PT INDAH KIAT
PULP & PAPER,
TBK
235,769,994.20 201,931,032.41 -17,216,431.59 211,966,794.78
Huangshi, Hubei
Huadian Power
Generation Co.,
Ltd.
137,000,000.00 119,931,616.06 -13,413,223.75 93,941,772.65132
Note: The loss of the current construction contracts is estimated to be RMB 34,682,159.38. The
main reason for estimated loss is as following: The client, Shangdong Weiqiao Aluminum and
Electricity Co., Ltd., requested the company to execute the two onerous contracts. The company
provided for the estimated loss fo the contracts.
34. Business tax and surcharges
Item 2009 2008 Base of payment
Business tax 79,798.63 497,558.67 Note 3
Urban maintenance and construction tax 157,857.15 2,410,599.68 Note 3
Additional education Fees 67,066.78 907,189.70 Note 3
Levee fee 44,747.93 571,344.47
Non staple food price restraining fund 15,335.68 -285,386.61 Note 3
Local education development fee 469,319.76 1,127,432.52
Total 834,125.93 5,228,738.43
Note: the ending balance of business tax and value added tax is decreased 84.05% in comparison
with last year, it is due to the relocation of new factory affecting the production resulting in
decrease in sales.
35. Sales expenses
Selling expense amounted RMB 10,056,173.85 was 62.23% increase than last year and the
increased amount is RMB 3,857,583.81, It is mainly due to share the RMB 2,795,710.32 expenses
to relocate the new factory.
36. Administration expenses
Administration expenses of the period amounted RMB157,810,983.11,is 36.89% increased than
that of last year and increased amount is RMB42,531,350.81. The reasons are as following:
provision for retirement benefits amounted to RMB28,658,255.24, deceased raw material
inventory surplus amounted RMB11,591,570.87.133
37. Financial expenses
The financial expense is RMB 107,917,876.21 this year, the ending balance is increased by
RMB11,409,606.30 in comparison with that of last year, the percentage of increase is 11.82%. it is
due to the increase in interest payment from the increased loan amounted to RMB 16,456,310.40
from increase loan, discounted notes charges reduced RMB 2,809,199.86.
38. Fair value gains
source 2009 2008
Hedging-trade 6,501.92 -1,015,005.38
total 6,501.92 -1,015,005.38
Notes:the ending balance of Hedging is increased by RMB 1,021,507.30 in comparison with that
of last year, it is due to the loss of RMB 1,000,000.00 from Perawang project last year.
39. Impairment losses
Item 2009 2008
1. Provision for Impairment loss of bad debts 129,356,838.91 5,727,274.08
2. Impairment loss of inventories 176,292,393.59 157,460,945.67
3. Impairment loss of fixed assets 476,254.23
Total 306,125,486.73 163,188,219.75
Note: the ending balance of impairment loss is increased by RMB142,937,266.98 in comparison
with that of last year, the percentage of increase is 87.59%, it is due to increasing provision for
bad debt amounted RMB 123,629,564.83 than last year.
40. Non-operating gains
Item 2009 2008
1. Gain on disposal of non-current assets 11,102,611.24 1,704,565.68
including
：
Gain on disposal of fixed assets 11,102,611.24 1,704,565.68
2. The government subsidies 277,776.00
3. Others 3 3 ,9 6 5 .23 8,964,914.34134
Item 2009 2008
Total 11,414,352.47 10,669,480.02
Note: The government subsidies are amortized deferred income related with new land.
41. Non-operating losses
Item 2009 2008
1.Loss on disposal of non-current assets 10,558,089.59 2,173,157.31
Including: Loss on disposal of fixed assets 10,558,089.59 1,903,657.31
Loss on disposed intangible assets 269,500.00
2.Extraordinary losses – amercement and overdue fine 191,312.97 320,388.90
3.Non-profit donation contribution 20,000.00
4.Loss on Theft and movement 716,798.67
Total 11,466,201.23 2,513,546.21
Note: The non-operating expenses is increased by RMB 8,952,655.02 in comparison with that of
last year. The percentage of increase is 356.18%. It is due to the increase of the disposal of fixed
assets from the relocation of new factory.
42. Income tax expense
Item 2009 2008
Current income tax expense 253,298.62 1,337,473.31
Add: Deferred income tax -11,068,861.76 -16,233,064.67
Income tax expense -10,815,563.14 -14,895,591.36
43. Earning per share
Item 2009 2008
Basic earning per share -2.27 -1.19
Diluted earning per share -2.27 -1.19
Basic earnings per share and diluted earnings per share calculation process
(1) Calculation of basic earnings per share is as following:
Basic earnings per share = P0 ÷ S
S = S0 + S1 + Si × Mi ÷ M0-Sj × Mj ÷ M0-Sk135
P0 represents the amounts attributable to ordinary equity holders of the Company in respect of:
(a) Profit or loss attributable to the Company; and
(b) Profit or loss after deducting extraordinary gain or loss attributable to the Company.
S0 represents the weighted average number of ordinary shares outstanding during the period. S0
represents the number of ordinary shares at the beginning of the period. S1represents the number
of additional ordinary shares issued on capital surplus transfer or share dividends appropriation; Si
represents the number of ordinary shares issued in exchange for cash or issued as a result of the
conversion of a debt instrument to ordinary shares during the period. Sj represents reduced
number of ordinary shares such as shares buy back. Sk represents the number of a reverse share
split. Mo represents the months during the period. Mi represents the months from the following
month after issuing incremental shares to the end of the period. Mj represents the months from the
following month after reducing shares to the end of the period.
(2)For the diluted potential ordinary shares, the net profits attributed to ordinary shareholders
during the reporting term and the weighted average number of outstanding ordinary shares should
be adjusted separately, and it shall be used to calculate the diluted earnings per share. Under the
circumstances to issue the diluted potential ordinary shares such as convertible bonds, stock
options, stock warrants, the diluted earnings per share shall be calculated in the light of the
formula as follow:
Diluted Earnings Per Share =P1/(S0
＋
S1
＋
Si×Mi÷M0–Sj×Mj÷M0–Sk+ The weighted average
number of incremental ordinary shares on warrants, options, convertible debt and so on
）
P1represents the amounts attributable to ordinary equity holders of the Company in respect of: (a)
Profit or loss attributable to the Company; and (b) Profit or loss after deducting extraordinary gain
or loss attributable to the Company, adjust according to the accounting standards for enterprises
and other relevant provisions. The Company considered in sequence from dilutive potential
ordinary shares to get the lowest earnings per share.
44. Relevant information about cash flow statement
(1)Other cash received from operating activities
Item Amount136
Other cash received from operating activities 374,704.19
including: liquidated damages 30,864.35
Petty cash return 343,839.84
(2)Other cash paid from operating activities
Item Amount
Other cash paid relating to operating activities 40,957,675.76
Including: significant items
Maintenance Fee 4,566,775.43
Meals expense 871,871.69
Office expenses 811,495.17
Utility expenses 1,490,428.04
Audit fees 750,000.00
Travelling expense 1,400,879.03
Business entertainment expenses 654,178.61
Recruitment costs 1,300,241.00
Insurance expenses 3,573,013.93
Transportation expenses 609,496.20
Consulting fees 12,067,021.39
Business administration expenses 2,673,204.26
Rental expense 2,956,828.92
Vehicle rental fee 2,929,384.90
Temporary paid for the cable installation fees for the new factory. 3,274,265.00
(3)Other cash received from investing activities
Item Amount
Cash received relating to financing activities 6,046,752.07
Including: Margin deposits 5,214,098.50
Interest 832,653.57
(4)Other cash paid from financing activities
Item Amount137
Other cash payments relating to financing activities 1,179,627.72
Including: bank charges 1,179,627.72
45.Supplementary information of cash flow statement
Supplementary information 2009 2008
1. Reconciliation of net profit to net cash flows generated from
operations
：
Net profit -676,744,666.95 -357,672,762.06
Provision for impairments of assets. 224,043,253.28 67,038,571.17
Depreciation of fixed assets, oil-gas assets and productive
biological assets
20,244,292.63 23,135,148.47
Amortization of intangible assets 7,228,171.69 5,583,836.07
Amortization of long-term deferred expense 100,000.00 150,000.00
Losses/gains on disposal of property, plant and equipment,
intangible asset and other long-term assets (gains: negative)
-544,521.65 468,591.63
Losses/gains on scrapped of fixed assets (gains: negative)
Losses/gains from variation of fair value (gains: negative) -6,501.92 1,015,005.38
Finance cost (income: negative) 107,903,937.22 96,048,416.25
Investment loss (gains: negative) 1,354,516.32
Decrease in deferred tax assets (increase: negative) -11,066,165.25 -16,233,064.67
Increase in deferred tax liabilities (decrease: negative) -2,696.51
Decrease in inventory (increase: negative) 747,619,188.61 25,007,464.96
Decrease in accounts receivable from operating activities
(increase: negative)
126,072,211.70 -170,510,839.42
Increase in payables from operating activities (decrease:
negative)
-266,384,946.13 -504,974,681.90
Others
Net cash flows generated from operating activities 278,461,556.72 -829,589,797.80
2. Significant investing and financing activities without
involvement of cash receipts and payments
Debt converted to capital138
Supplementary information 2009 2008
Finance leased fixed assets
3. Movement of Cash and cash equivalent:
Closing balance of Cash 27,114,305.92 37,612,024.12
Less: opening balance of cash 37,612,024.12 81,425,726.08
Plus: closing balance of cash equivalent
Less: opening balance of cash equivalents
The net increase in cash and cash equivalents -10,497,718.20 -43,813,701.96
(2)The information of acquisition or disposal of subsidiaries and other companies in current fiscal
year:
Item 2009 2008
1. Information of Acquisition of subsidiaries and other business
(1)Acquisition price:
(2)The payment of cash or equivalents to acquire Subsidiaries and
other business
Less: cash and cash equivalents holding by the subsidiaries and other
business
(3)Net cash paid to acquire Subsidiaries and other business
(4) Net assets of subsidiaries
Current asset:
Non-current assets
Current liability:
Non-current liabilities
2. The information of disposal subsidiaries and other business :
(1)Disposal price: 1,520,000.00
(2)Cash or cash equivalent received from disposal of subsidiaries and
other business units
1,520,000.00
Less: cash or cash equivalent holding by the subsidiaries and other
companies
1,132,938.43
(3)Net cash received from disposal of subsidiaries and other business
units
387,061.57
(4)Net assets of the subsidiaries disposal 5,636,306.52
Current asset: 13,147,358.75
Non-current asset: 8,501,946.41
Current liability: 16,012,998.64
Non-current liability:139
(3)Cash and cash equivalents:
Item 2009 2008
1. Cash
Including: Cash on hand 8,286.48 401,400.85
Bank deposit on demand 26,674,869.44 35,918,973.27
Central Bank deposit on demand 431,150.00 1,291,650.00
Due from banks
Call loan to banks
2. Cash equivalent
Including: bond investments due in three months
3. Closing balance of cash and cash equivalents 27,114,305.92 37,612,024.12
Note6.Related Party Relationships and Transactions
1.The company's related party identification criteria:
The company's corporate accounting standards and in accordance with the relevant provisions of
China Securities Regulatory Commission to determine the identification criteria related parties as
follows: one control, joint control the other party or exercise significant influence on the other side,
as well as two or more than two parties are of the same party to control, joint control or significant
influence, and constitute a related party.
2.The parent company of the relevant information:
Parent
company
Relationship Business Type Registration Legal
Representative
Nature of the
business
Registered Capital
Alstom
(China)
Investment
Co., Ltd.
Shareholder Foreign-owned
enterprises
Fifth floor.
QianKun
building ,No.
6 , West No 6
street,
Sanlitun,
chaoyang
district,
Claude
Burckbuchler
Foreign
investor are
allowed and
encouraged to
invest in
industrial,
infrastructure
and the energy
field in China
USD60,964,400.0
0140
Beijing
Parent company The parent
company's
shareholding (%)
The parent
company's voting
right (%)
The ultimate
controlling party of
the Company
Organization
Code
Alstom (China)
Investment Co.,
Ltd.
51 51 ALSTOM Holdings 71092378-2
3.Subsidiary of the Company relating to information disclosure:
Subsidiary Registered
address
Type Nature Principal
activities
Legal representative Registered
capital(RMB)
Percentage
of
Shareholdi
ng %
Percentage
of voting
right %
Organization
Code
Wuhan Boiler
Bo Yu
Industrial Co.,
Ltd.
Control
shareholder
Control
shareholder
586
Wuluo
Rd.,
Wuhan
Chong
Bao qian
Packaging, design, and
manufacturing of
Mechanical and
Electrical products;
processing of metal
compenents; design
and manufacturing of
model and mold
； Manufacturing of valve
srough casting, steel
casting, iron casting,
nonferrous metal
casting.
19,115,250.00 90% 90% 71456410-7
Wuhan Lan
Xiang Power
Environmental
Protection
Technology
Company
Limited
Control
shareholder
Control
shareholder
586
Wuluo
Rd.,
Wuhan
Guowei
Yang
Boiler, energy
environmental
protection products,
Steel structures,
technology research of
heat energy products
and its accessorial
equipment,design,
technical Consultancy,
technical service, sales
of developed products,
energy project
(non-construction
project)
20,000,000.00 95% 95% 73753132-4
4.Other related parties141
Company Relationship Organization
Code
ALSTOM POWER INC. A subsidiary of ultimate holding
company
ALSTOM Projects India Limited A subsidiary of ultimate holding
company
ALSTOM Power Systems S.A Etablissement
Boilers
A subsidiary of ultimate holding
company
ALSTOM Power System Gmbh A subsidiary of ultimate holding
company
ALSTOM Technology Ltd (Switzerland) A subsidiary of ultimate holding
company
ALSTOM Holdings Ultimate holding company
ALSTOM (Switzerland) Ltd A subsidiary of ultimate holding
company
ALSTOM (Wuhan) Engineering & Technology
Co., Ltd.
A subsidiary of ultimate holding
company
77459437-5
Alstom (China) Investment Co., Ltd. The company's largest shareholder 71092378-2
ALSTOM Technical Services (Shanghai) Co.,
Ltd.
A subsidiary of ultimate holding
company
60742241-0
Wuhan Boiler Group Co., Ltd. The second largest shareholder 17771651-4
Wuhan Boiler Group Co., Ltd. Valve Subsidiary of the second largest
shareholder
30024542-1
Wuhan Special Boiler Complete Equipment
Engineering Co., Ltd.
Subsidiary of the second largest
shareholder
87769907-3
Wuhan Boiler Group, American Express Co., Ltd. Subsidiary of the second largest
shareholder
30024726-7
5.Related party transactions
(1)Purchasing and selling goods and service
Related parties Type of transaction Details of 2009 2008
transaction
Rule of
price
setting
Amount proportion Amount Proportion(%)
Wuhan Boiler
(Group) Valve Co.,
Ltd
Raw material
purchasing
Valve Market
price
6,267,549.00 1.62% 11,212,422.22 0.67%
Wuhan Special Boiler
Complete Equipment
Engineering Co., Ltd.
Raw material
purchasing
Special boiler
products
Market
price
30,600,000.00 7.92%
ALSTOM Technical
Services (Shanghai)
Co., Ltd.
Raw material
purchasing
Special boiler
products
Market
price
2,597,000.00 0.67% 1,298,000.00 0.08%
Wuhan Boiler
(Group) Valve Co.,
Ltd.
Sales Materials Market
price
104,269.23 0.01%
Wuhan Boiler Group
Co., Ltd.
Sales boiler
products
Market
price
9,102,631.01 0.82%
Wuhan Special Boiler
Complete Equipment
Engineering Co., Ltd.
Sales Special boiler
products
Market
price
1,336,731.91 0.26% 80,732,431.77 7.29%
ALSTOM Power
Systems S.A
Etablissement Boilers
Provides services Processing
Trade
Market
price
3,123,900.00 100%
ALSTOM Projects
India Limited
Sales Testing
Materials
Market
price
162,565.20 0.03%
ALSTOM POWER
INC.
Sales boiler
products
Market
price
8,038,384.77 1.55%
ALSTOM Technology
Ltd (Switzerland)
Technology transfer
fee
Technology
transfer fee
Market
price
3,072,690.00 100%
ALSTOM (Wuhan)
Engineering &
Technology Co., Ltd.
Provides translation
services
provides
translation
services
Market
price
213,231.02 76.25%
Wuhan Boiler
(Group) Yuntong Co.,
Provides
transportation service
Transportation
servicet
Market
price
17,877,085.03 76.09% 70,975,019.54 100%142
Related parties Type of transaction Details of 2009 2008
transaction
Rule of
price
setting
Amount proportion Amount Proportion(%)
Ltd
(2)Lease
Lessor Lessee
Leasing
assets
Lease
amount
Starting
date
Ending
date
Yield
Recognized
rule
Influence
Wuhan
Boiler
Group Co.,
Ltd.
Wuhan
Boiler
Co., Ltd.
Office 2009.01.01 2009.09.30 -676,239.36 contract Increase administration
expense in current
fiscal year
Wuhan
Boiler
Group Co.,
Ltd.
Wuhan
Boiler
Co., Ltd.
Warehouse 2009.01.01 2009.09.30 -388,728.00 contract Increase administration
expense in current
fiscal year
Wuhan
Boiler
Group Co.,
Ltd.
Wuhan
Boiler
Co., Ltd.
Workshop 2009.01.01 2009.09.30 -260,409.60 contract Increase
administration expense
in current fiscal year
Wuhan
Boiler
Group Co.,
Ltd.
Wuhan
Boiler
Co., Ltd.
Land 2009.01.01 2009.09.30 -1,781,683.18 contract Increase
administration expense
in current fiscal year
(3) Other related party transactions:
Related parties Transactions Amount
ALSTOM Holdings Training fees 208,403.28
ALSTOM Power INC Purchase DELL server costs 73,312.74
ALSTOM Power INC Project Consulting fees 771,845.87
ALSTOM (Switzerland) Ltd Information Technology service fee 387,056.21
ALSTOM (Switzerland) Ltd SAP B1 Financial software costs 2,246,650.73
(4)Alstom (China) Investment Co., Ltd entrust China construction bank provided a loan to Wuhan
Boiler Co., Ltd. The amount is RMB 1,710,000,000.00 with a floating downward 10% of loan
rate.The accumulate interest expense are RMB 63,611,347.50 in 2009.
6
．
Amounts due from/to related parties
Item 2009 2008
Trade receivables
Wuhan Boiler Group Co., Ltd. 17,477,670.00 44,119,317.50
Wuhan Special Boiler Complete Equipment Engineering Co., Ltd. 18,174,794.81 33,657,132.81
ALSTOM Power Systems S.A Etablissement Boilers 17,702,100.00
ALSTOM Projects India Limited 145,265.00
Prepayments143
Item 2009 2008
ALSTOM Technical Services (Shanghai) Co., Ltd. 3,555,000.00 1,298,000.00
Other receivables:
Wuhan Boiler Group Co., Ltd. 67,194,318.11 5,407,948.32
Wuhan Boiler Group Valve Co., Ltd. 240,571.49 113,589.71
Wuhan Boiler Group YunTong Co., Ltd. 25,499.73
Trade payables
：
Wuhan Boiler Group YunTong Co., Ltd. 4,099,499.20 16,735,786.80
Wuhan Boiler Group Valve Co., Ltd. 1,302,071.50 5,399,315.70
Wuhan Special Boiler Complete Equipment Engineering Co., Ltd. 21,316,800.00 6,116,800.00
Alstom Power Boiler Company 682,820.00 683,460.00
Advanced from customers:
ALSTOM Power Systems S.A Etablissement Boilers 20,826,000.00
Other payables
Wuhan Boiler Group, American Express Co., Ltd. 572,628.90
Wuhan Boiler Group Co., Ltd. 974,056.13 11,499,926.80
Alstom Technology Ltd (Switzerland) 3,072,690.00
Note7.Contingency
Besides the note5.26 statement, there is no other events to disclose during this report period.
Note.8 Commitments
1.Significant commitments
(1)Capital commitments144
Up to 31December 2009, the commitment related to purchases of long-term assets which the
contract were signed but not reflected in the financial statements amounted to RMB68,667,790.86,
USD787,232.20, EUR397,600.00 and JPY 2,500,000.00.
(2)Other commitments
Up to 31December 2009, the performance bonds and tender bond and warranty bond issued by the
Company remain unexpired amounted to RMB173,983,520.00 and USD3,126,923.00
respectively.
2.The performance of previous commitments
(1)The performance of previous year's capital commitments: the amount of prior year's capital
commitments fulfilled in 2009 was RMB 238,566,549.44 , USD 2,768,462.80, EUR 725,000.00
(2)The performance of previous year's other commitments: performance bond of RMB
51,673,970.00 was released in tandem with the completion of related contracts
Note9.Events after the Balance Sheet Date
There was no significant events after the balance sheet date that the Company need to disclose.
Note10.Other significant events
1: Borrowing cost:
(1)During the year under review, the amount of borrowing costs capitalised was
RMB18,914,246.04.
(2)During the year under review, the capitalization rate for borrowing was 5.748%.
2. Former parent company, Wuhan Boiler (Group) Co., Ltd, entered into a share transfer
agreement with Alstom (China) Investment Co., Ltd on 14 April,2006. The transaction was
completed on 24 August , 2007 after approval from relevant authorities. At present Alstom (China)
Investment Co., Ltd is the parent company of the Company with 51% shareholdings.
The transaction includes the following key elements according to the Share Transfer Agreement
(hereinafter as the “SPA”) signed on 14 April, 2006:
(1)License, Technical Transfer and Assistance Agreement between Alstom Technology Ltd and
the Company about Steam Generator;
(2)Relocation and Relocation Team Agreement, Relocation Compensation Agreement;
(3)Statements and guarantee about related assets ( including inventories and items in progress) and
liabilities, and further compensation guarantee, with the Company as the beneficiary under SPA.145
To the extent applicable, the value of the elements described above has been included in the
preparation of 2009 financial statements. The full execution of above Agreement is critical to the
future financial viability of the Company.
Note11.Notes of financial statements of parent company
1. Accounts receivable
(1)Accounts receivable by categories are as follows:
Closing balance
Balance Provision for doubtful debts
Category
Amount
Proportion
(%)
Amount
Proportion
(%)
Individually significant receivables 355,931,287.32 36.56 59,502,956.50 26.13
Individually insignificant receivables
with high credit risk in group
assessment
83,138,549.90 8.54 83,138,549.90 36.51
Other insignificant amount 534,421,786.86 54.90 85,078,599.37 37.36
Total 973,491,624.08 100.00 227,720,105.77 100.00
The classification of the accounts receivable: Individually significant receivables are top 5
accounts receivable; Individually insignificant receivables with high credit risk in group
assessment are the aging beyond the 5 years but not in the top 5 of accounts receivable; others are
other insignificant amount.
Opening balance
Balance Provision for doubtful debts
Category
Amount
Proportion
(%)
Amount
Proportion
(%)
Individually significant receivables 420,133,703.02 39.18 22,923,600.00 17.73
Individually insignificant receivables
with high credit risk in group
assessment
50,893,321.09 4.75 50,893,321.09 39.36
Other insignificant amount 601,185,557.89 56.07 55,477,441.51 42.91
Total 1,072,212,582.00 100.00 129,294,362.60 100.00146
(2)Individually significant receivables or insignificant receivables requiring impairment test, and
providing provision for bad debt
：
Item Closing balance Bad debt provision Note
Payment for goods and
product qulity issuance
249,113,721.83 110,474,613.06 Details are tabulated
below
Details:
Name of company Reason for Provision
Dongfang Xiwang Baotou Xitu Aluminium The Company is required to bear part of the subsequent
costs and thus the receivable amount is not expected to be
fully recoverable
Shanxi Hongdong HuaShi Thermoelectric Co., Ltd. Age more than 3 years and deemed irrecoverable
Datang Hunchun Power Generation Co. Ltd. Age more than 3 years and deemed irrecoverable
Datang Shuangyashan Thermal Power Co., Ltd. The Company is required to bear part of the subsequent
costs and thus the receivable amount is not expected to be
fully recoverable
Xuzhou Cha City Electric Co., Ltd. Age more than 3 years and deemed irrecoverable
China Shipping Industry Corporation 719 Bureau The company have sent many dunning letters but to no
avail
China Shipbuilding Industry Corporation Diqiyijiu by Retention money difficult to recover
China Power Engineering Consulting Group, Zhongnan
Power Design Institute
The customer has disputes over the contract
settlement and the receivable amount is not
expected to be fully recoverable
Zhengzhou Gas Power Generation Co., Ltd. The customer has disputes over the contract
settlement and the receivable amount is not
expected to be fully recoverable
Huaneng Henan Zhongyuan Gas Power Generation Co.,
Ltd.
The customer has disputes over the contract
settlement and the receivable amount is not
expected to be fully recoverable
SINOPEC Hubei Chemical Fertilizer Plant Retention money difficult to recover
Ningxia Western PVC Co., Ltd. Equipment rework charges
Gansu Zhangye Electric Power Investment Co., Ltd. Quality guarantee deposit amount is difficult to recover
Shanxi Zhengxin Group Co., Ltd. Customers did not receive special funding and the
receivable amount not expected to be fully recoverable
PT INDAH KIAT PULP & PAPER, TBK The portion covered by letter of credit received was not
subjected to general provision for doubtful debt
Individually insignificant receivables with high credit risk in group assessment
：
Closing balance
Aging Balance
Amount Proportion (%)
Provision for doubtable
debt
More than 5 years 83,138,549.90 8.54 83,138,549.90
Total 83,138,549.90 8.54 83,138,549.90
Aging Opening balance147
Balance
Amount Proportion (%)
Provision for doubtable
debt
More than 5 years 50,893,321.09 4.75 50,893,321.09
Total 50,893,321.09 4.75 50,893,321.09
(3) In 2009, the company's management took measures to strengthen the collection and increase
collection efforts, to get the co-operation among Finance and other Business departments to
collect the payments, to have management to track the progress of the payment collection at any
time. As of December 31, 2009, RMB 12,335,059.67 has been recovered for the debts aging more
than 5 years. a 23.75% of the last year’s accounts receivable for aging more than 5 years.
(4)The write-off of accounts receivable
Name of company The nature of
accounts
receivable
Written off Reason Related party
transaction
Zhengzhou Ju Jin Thermoelectric
Energy Co., Ltd.,
Retention 114,000.00 Rework charges No
XinJiang kuiTun Thermal Power
Plant
Retention 430,000.00 Rework charges No
AoShiLong Machinery Co.,
Ltd.
Retention 241,922.10 Charge
replacement
parts
No
Huadian Tengzhou Xinyuan
Thermoelectric Co., Ltd.
Retention 428,500.00 Rework charges No
Jinhua Chemical (Group) Co.,
Ltd.
Retention 75,000.00 Bankrupt No
China Petroleum Fushun
Petrochemical Company
Retention 100,000.00 Quality
deduction
No
Lin Zhou City Power Plant Retention 100,000.00 Quality
deduction
No
Wuhan High-tech Thermal Power
Co., Ltd.
Retention 80,000.00 Quality
deduction
No
Total 1,569,422.10 -- --
Note: Above write-off accounts receivable retention were for projects which have completed more
than 5 years.
(5)accounts receivable due from shareholders with more than 5% (including 5%) of the voting
shares of the Company.
Name of company Closing balance Opening balance148
Amount provision for
doubtful
debts
Amount Provision for
doubtful debts
Wuhan Boiler Group Co., Ltd. 17,477,670.00 2,009,932.05 44,119,317.50 1,673,151.60
Total 17,477,670.00 2,009,932.05 44,119,317.50 1,673,151.60
(6)Information of top 5 receivables:
Company The relationship
with the Company
Amount Aging Proportion
Shandong Weiqiao Aluminum and
Electricity Co., Ltd.
Non-affiliated 113,816,000.00 1-4 years 11.69
Huaneng Henan Zhongyuan Gas
Power Generation Co., Ltd.
Non-affiliated 42,308,000.00 1-2 years 4.35
Shanxi revitalization Group Co., Ltd. Non-affiliated 47,970,000.00 3-4 years 4.93
PT INDAH KIAT PULP & PAPER,
TBK
Non-affiliated 53,362,287.32 Less than
1 year
5.48
China Shenhua Energy Company
Limited, Huizhou Guohua Thermal
Power Company
Non-affiliated 98,475,000.00 Less than
1 year
10.12
Total 355,931,287.32 36.57
(7)The amounts due from related parties
Company The relationship with the
Company
Amount Proportion
Wuhan Special Boiler Complete
Equipment Engineering Co., Ltd.
A subsidiary of the second
largest shareholder
18,174,794.81 1.87
ALSTOM Projects India Limited Ultimately control 145,265.00 0.01
ALSTOM Power Systems S.A
Etablissement Boilers
Ultimately control 17,702,100.00 1.82
Total 36,022,159.81 3.70149
(8)Accounts receivable by aging are as follows:
Closing balance
Aging Balance
Amount Proportion (%)
Provision for doubtful
debts
Less than 1 year (including 1 year) 434,261,605.86 44.60 12,531,372.56
1-2 years (including 2 years) 193,296,020.31 19.86 17,942,474.11
2-3 years (including 3 years) 69,992,244.33 7.19 30,824,664.57
3-4 years (including 4 years) 158,743,978.85 16.31 66,678,219.80
4-5 years (including 5 years) 34,059,224.83 3.50 16,604,824.83
More than 5 years 83,138,549.90 8.54 83,138,549.90
Total 973,491,624.08 100.00 227,720,105.77
Opening balance
Aging Balance
Amount Proportion (%)
Provision for doubtful
debts
Less than 1 year (including 1 year) 450,207,778.83 41.98 9,838,288.60
1-2 years (including 2 years) 155,319,622.69 14.49 4,659,588.68
2-3 years (including 3 years) 309,443,598.19 28.86 37,482,615.89
3-4 years (including 4 years) 51,682,000.00 4.82 10,336,400.00
4-5 years (including 5 years) 54,666,261.20 5.10 16,084,148.34
More than 5 years 50,893,321.09 4.75 50,893,321.09
Total 1,072,212,582.00 100.00 129,294,362.60
2.Other receivables
(1)Other receivables disclosed by type:
Closing balance
Balance Provision for doubtful debts
Category
Amount
Proportion
(%)
Amount
Proportion
(%)150
Closing balance
Balance Provision for doubtful debts
Category
Amount
Proportion
(%)
Amount
Proportion
(%)
Individually significant receivables 148,234,656.60 92.08 29,442,214.08 98.70
Individually insignificant receivables
with high credit risk in group
assessment
Other insignificant amount 12,749,983.67 7.92 388,804.44 1.30
Total 160,984,640.27 100.00 29,831,018.52 100.00
The classification of the accounts receivable: Individually significant receivables are top 5
accounts receivable; Individually insignificant receivables with high credit risk in group
assessment are the aging beyond the 5 years but not in the top 5 of accounts receivable; others are
other insignificant amount.
Opening balance
Balance Provision for doubtful debts
Category
Amount
Proportion
(%)
Amount
Proportion
(%)
Individually significant receivables 130,715,211.73 97.88 416,757.83 54.58
Individually insignificant receivables
with high credit risk in group
assessment
Other insignificant amount 2,834,148.12 2.12 346,810.54 45.42
Total 133,549,359.85 100.00 763,568.37 100.00
(2)Individually significant receivables or insignificant receivables requiring impairment test, and
providing provision for bad debt
：
Item Balance Bad debt
provision
Accrual
percentage
Reason
3RC Company Limited 336,604.05 336,604.05 100.00% Bankruptcy151
Value Added Tax paid for
suspended projects
27,193,448.17 27,193,448.17 100.00% Projects were suspended
and the amount is not
expected to be recoverable
Total 27,530,052.22 27,530,052.22
(3)Accounts receivable due from shareholders with more than 5% (including 5%) of the voting
shares of the Company.
Closing balance Opening balance
Name of company Amount Provision for
bad debt
Amount Provision for
bad debt
Wuhan Boiler Group Co., Ltd. 67,194,318.11 1,851,395.87 5,407,948.32 162,238.45
Total 67,194,318.11 1,851,395.87 5,407,948.32 162,238.45
(4)Nature of significant of other receivables
A. Account receivable of RMB 67,194,318.11 from the second largest shareholder, Wuhan Boiler
Group Co., Ltd., is the compensation for the relocation of the old factory.
B. The value –add output tax ( “VAT”) for suspended projects is the amount of VAT paid in
accordance to the provision for tax law.
C. Account receivable of RMB10,774,265.00 from Donghu Development Zone Committee is the
amount paid by the Company to connect the new factory to external power substation and this
amount is reimbursable from the local Government.
(5)Details of top 5 other receivables
：
Company The relationship
with the Company
Amount Aging Proportion of
the total (%)
Wuhan Boiler Group Co.,
Ltd.
The company's
second-largest
shareholder
67,194,318.11 1-2 years 41.74
Shandong Weiqiao
Aluminum and Electricty
Co., Ltd.
Non-affiliated 25,575,846.15 1-2 years 15.89
Donghu Development Zone
Committee
Non-affiliated 10,774,265.00 1-2 years 6.69
Henan Weihua Heavy
Machinery Co., Ltd.
Non-affiliated 2,471,403.00 Less than
1 year
1.54
Wuhan Boiler Group Valve
Co.,Ltd
A subsidiary of
second largest
shareholder
240,571.49 Less than
1 year
0.15152
Company The relationship
with the Company
Amount Aging Proportion of
the total (%)
Total -- 106,256,403.75 66.01
(6)The amounts due from related parties
Name of company The relationship with
the Company
Amount Proportion of the
total (%)
Wuhan Boiler Group, American
Express Co., Ltd.
Subsidiary of Second
largest shareholder
25,499.73 0.02
Wuhan boiler group valve limited
liability company
Subsidiary of Second
largest shareholder
240,571.49 0.15
Wuhan Boiler Bo Yu Industrial Co.,
Ltd.
Subsidiary 170,567.02 0.11
Total 436,638.24 0.28
(7)Other receivables by aging are as follows:
Closing balance
Aging Balance
Amount Proportion (%)
Provision for doubtful
debt
Less than 1 year (including 1 year) 151,583,337.13 94.16 29,229,165.78
1-2 years (including 2 years) 9,401,303.14 5.84 601,852.74
Total 160,984,640.27 100.00 29,831,018.52
Opening balance
Aging Balance
Amount Proportion (%)
Provision for doubtful
debt
Less than 1 year (including 1 year) 133,549,359.85 100.00 763,568.37
Total 133,549,359.85 100.00 763,568.37
3.Long-term equity investments
Company Original
investment
amount
Opening
balancee
Increase/
decrease
Closing
balance
Shareholding
Proportion
Voting right
Proportion
Long-term equity
investment under cost
method
Wuhan Lan Xiang
Energy
Environmental
Protection
Technology Co., Ltd.
14,000,000.00 24,984,500.00 24,984,500.00 95% 95%
Wuhan Boiler Bo Yu 14,249,787.13 14,249,787.13 14,249,787.13 90% 90%153
Industrial Co., Ltd.
Total 28,249,787.13 39,234,287.13 39,234,287.13
Note: The above two subsidiaries companies are under liquidation as of December 31, 2009 , there
are no other business activities, but they have not been completed the liquidation.
4.Revenue and Cost of Sales
(1)The details of the revenue are shown as following
Item 2009 2008
Sales 503,309,918.54 1,087,199,799.76
Other operating income 12,089,272.02 6,404,284.85
Cost of sales 600,750,159.21 1,086,792,290.45
Other operating cost 18,022,343.14 4,410,471.67
(2)Listed by the categories of production or business:
Categories 2009 2008
Revenue Cost of sales Revenue Cost of sales
Boilers and associated
product sales
503,309,918.54 600,750,159.21 1,087,199,799.76 1,086,792,290.45
Total 503,309,918.54 600,750,159.21 1,087,199,799.76 1,086,792,290.45
(3)Top 5 customers
Company Revenue Proportion of total
revenue (%)
State Power Thermal Power Co., Ltd., Lanzhou 102,887,506.33 19.96
Huizhou, Guangdong Guohua Thermal Power Project
preparation Agency
65,570,802.08 12.72
PT INDAH KIAT PULP & PAPER, TBK 104,659,637.03 20.31
Chiping Source Aluminum Co., Ltd. 42,304,788.48 8.21
Huangshi, Hubei Huadian Power Generation Co., Ltd. 80,905,963.46 15.70
Total 396,328,697.38 76.90
5.Supplementary Cash Flow Information
Supplementary information 2009 2008
1. Reconciliation of net profit to net cash flows generated from
operations
：
Net profit -666,125,189.92 -350,468,228.46
Provision for impairments of assets. 223,860,522.79 66,235,651.29154
Supplementary information 2009 2008
Depreciation of fixed assets, oil-gas assets and productive
biological assets
19,803,496.61 20,811,569.20
Amortization of intangible assets 7,228,171.69 5,548,836.07
Amortization of long-term deferred expense 100,000.00 150,000.00
Losses/gains on disposal of property, plant and equipment,
intangible asset and other long-term assets (gains: negative)
-1,183,120.42 56,120.51
Losses/gains on scrapped of fixed assets (gains: negative)
Losses/gains from variation of fair value (gains: negative) -6,501.92 1,015,005.38
Finance cost (income: negative) 107,920,125.10 94,948,752.50
Investment loss (gains: negative) 3,580,135.15
Decrease in deferred tax assets (increase: negative) -11,066,165.25 -16,233,064.67
Increase in deferred tax liabilities (decrease: negative) -2,696.51
Decrease in inventory (increase: negative) 734,933,646.61 28,351,927.02
Decrease in accounts receivable from operating activities
(increase: negative)
96,993,223.06 -220,443,993.30
Increase in payables from operating activities (decrease:
negative)
-218,754,485.07 -470,361,491.45
Other
Net cash flows generated from operating activities 293,701,026.77 -836,808,780.76
2. Significant investing and financing activities without
involvement of cash receipts and payments
Debt converted to capital
Convertibled corporate bonds within one year
Finance leased fixed assets
3. Movement of Cash and cash equivalent:
Closing balance of Cash 26,057,612.46 21,343,703.49
Less: opening balance of cash 21,343,703.49 68,737,254.99
Plus: closing balance of cash equivalent
Less: opening balance of cash equivalents
The net increase in cash and cash equivalents 4,713,908.97 -47,393,551.50155
Note12.Supplementary information
1.Extraordinary gains or losses
(1)According to the China Securities Regulatory Commission Announcement [2008] No. 43,
extraordinary gains or losses are calculated and disclosed according to “Regulation on the
Preparation of Information Disclosures of Companies Issuing Public Shares No.1.”
(positive figure represents gain/negative figure represents
loss)
Item 2009 illustration
Gains on disposal of non-current assets including reversal of the
impairment loss
544,521.65
Ultra vires approval, with or without formal approval documents, or
occasional tax return, relief
Government grant recognized in current year, except for those
acquired in the ordinary course of business or granted continuously
in certain standard quota according to relevant national laws and
regulations
277,776.00
Included in current profit and loss against the non-financial
enterprises occupation fee funds collected
The investment cost of subsidiaries obtained by the enterprise, joint
ventures and partnership enterprise is less than the revenues
generated from the fair value of identifiable net assets of the
unvested units.
Exchange gains and losses of non-monetary assets
Gains and loss through entrust others to invest or manage assets,
Gains and loss for the provision of impairment of assets due to
force majeure factors, such as victims of natural disaster
Debt restructuring gains and losses
Company restructuring expenses such as employee placement and
integration costs
-27,263,814.10
Significant loss of fair trading price over the fair value of
transactions generated part of the profit and loss
Current net profit or loss from the beginning to the date of merge
for the subsidiary resulted from the merge of the enterprise under
the control of the same company.
Profit or loss generated from the matters which is not related to the
company’s normal operation or contingency.156
Item 2009 illustration
In addition to the normal operations associated with the company
effective hedging business, holders of tradable financial assets,
trading financial liabilities resulting from changes in fair value
gains and losses, as well as the disposal of trading financial assets,
trading financial liabilities and financial assets available for sale
achieved an investment return
Separately tested for impairment of receivables impairment reversal
Entrusted to the profit and loss made foreign loans
Fair value model with subsequent measurement of investment real
estate gains and losses arising from changes in fair value
According to tax, accounting and other laws and regulations require
a one-time adjustment of current profit and loss impact on the
current profit and loss
Entrusting fee incomes from entrust operation.
Other non-operating income and expense other than
abovementioned
-874,146.41
Other non-recurring gains and losses in line with the definition of
profit and loss items
subtotal -27,315,662.86
Less: non-recurring income tax effect of gains and losses
Minority interest share of non-recurring gains and losses -42,531.09
Total -27,273,131.77
2.According to China Securities Regulatory Commission, "the public issuance of securities of
companies prepare an Information Disclosure Rule 9 - return on equity and earnings per share
calculation and disclosure" (2010 Amendment) the requirements of the calculation of net capital
gains rate, earnings per share:
2009 The EPS
weighted
average
ROE(%)
Basic
EPS
Diluted
EPS
Net profit attributable to the Company's common stock
shareholders of net profit
-2.27 -2.27
Net profit after deducting non-recurring gains and losses
attributable to shareholders of the Company's common stock
-2.18 -2.18
EPS
2008
The
weighted
average
ROE(%)
Basic
EPS
Diluted
EPS
Net profit attributable to the Company's common stock -1.19 -1.19157
EPS
2008
The
weighted
average
ROE(%)
Basic
EPS
Diluted
EPS
shareholders of net profit
Net profit after deducting non-recurring gains and losses
attributable to shareholders of the Company's common stock
-1.21 -1.21
3.Details and reasons for the special change of the company financial statements
(1)The assets and liabilities item
Item Closing
Balance
Opening
balance
Change
Ratio
Reasons
Cash and cash
equivalent
32,155,537.93 47,867,354.63 -32.82% Mainly due to payments for
new factory capital expenditure
during the year under review.
Notes receivable 119,714,775.17 380,000.00 31403.89% Mainly due to increase in
customers’ collections in the
form of banker acceptance
draft.
Prepayment 54,734,282.45 141,863,705.37 -61.42% Mainly due to reduced
purchases arising from low
business operations during
factory relocation.
Inventory 76,565,007.91 918,505,849.66 -91.66% Mainly due to progress billings
raised per contract payment
terms and provisions made for
raw material stock
obsolescence
Fixed assets 608,687,168.29 121,851,170.82 399.53% Mainly due to capitalization of
capital expenditure in line with
completion of the new factory
construction
Construction in
progress
175,819,636.95 406,345,860.06 -56.73% Mainly due to capitalization of
capital expenditure in line with
completion of the new factory
construction
Other non-current
assets
24,525.50 6,174,943.43 -99.60% Mainly due to settlement of
hedge contract for Perawang
project
Notes payable 219,077,384.51 433,649,225.98 -49.48% Mainly due to reduced
purchases arising from low
business operations during
factory relocation.158
Item Closing
Balance
Opening
balance
Change
Ratio
Reasons
Advanced from
customers
31,395,403.74 10,442,136.73 200.66% Mainly due to RMB 20,826,000
received from ALSTOM Power
Systems S.A Etablissment Boilers
for trade processing contract.
Payroll payable 78,008,118.69 44,989,865.76 73.39% Mainly due to provision for
employees retirement benefits
Other payables 38,838,894.32 25,258,271.32 53.77% Mainly due to increase in
balances with related parties
RMB 9,011,747.31, deposit of
RMB1,760,000.00 held for
fixed assets disposal and
accrual for insurance premium
to RMB2,757,391.59
Due within one
year of
non-current
liabilities
90,000,000.00 -100.00% Mainly due to repayment of
bank borrowing upon maturity
Long-term
borrowings
100,000,000.00 -100.00% Mainly due to earlry settlement
of bank borrowing
Other non-current
liabilities
1,229,589.41 20,646,122.33 -94.04% Mainly due to settlement of
hedge contract for Perawang
project and recognition of
unrealized finance cost arising
form discounted employees
retirement benefits
(2) Income statement items
Item 2009 2008 Change
Ratio
Reasons
Revenue 517,679,190.56 1,121,071,252.12 -53.82% Mainly due to low business
operation during factory
relocation
Operating costs 622,449,427.98 1,113,022,567.22 -44.08% Mainly due to low business
operation during factory
relocation
Business tax
and surcharges
834,125.93 5,228,738.43 -84.05% Mainly due to low business
operation during factory
relocation
Sales expenses 10,056,173.85 6,198,590.04 62.23% Mainly due to
RMB2,795,710.32 allocation
of factory relocation expenses
Administration
expenses
157,810,983.11 115,279,632.30 36.89% Mainly due to provision for
employees retirement benefits
RMB28,658,255.24, and
absence of raw material stock
count surplus which recorded
RMB11,591,570.87 in prior159
Item 2009 2008 Change
Ratio
Reasons
year
Impairment
losses
306,125,486.73 163,188,219.75 87.59% Mainly due to additional
provision for doubtful debts
amounting RMB
123,629,564.83 made during the
year
Net changes in
fair value
6,501.92 -1,015,005.38 100.64% Mainly due to settlement of
hedge contract for Perawang
Project
Investment
Income
-1,354,516.32 100.00% Improved as compared to last
year in the absence of
investment transaction which
recorded a loss on disposal of
subsidiary in prior year
Non-operating
expenses
11,466,201.23 2,513,546.21 356.18% Mainly due to disposal of idle
fixed assets during factory
relation
(3) Cash flow statement
Item 2009 2008 Change
Ratio
Reasons
Cash received from
sales of goods and
rendering of services
681,052,594.26 1,120,531,878.78 -39.22% Low business operations
during factory relocation
Cash paid from
purchase of goods,
receive services
206,512,379.24 1,740,194,953.61 -88.13% Low business operations
during factory relocation
Payment of the taxes 8,899,734.76 42,135,501.79 -78.88% Low business operations
during factory relocation
Net cash received
from disposal of fixed
assets, intangible
assets and other
long-term assets
12,407,095.04 1,374,199.21 802.86% Increase in fixed assets
disposed during the
relocation of new
factory
Net cash received
from disposal of
subsidiaries and other
business units
387,061.57 -100.00% Disposal of a subsidiary
in prior year
Cash received from
others related from
investment activities
6,046,752.07 81,491,563.01 -92.58% Mainly due to lower
amount of pledged cash
being released during
the year under review
Cash payment to
Investment
10,984,500.00 -100.00% No investment
transaction during the
year under review160
Item 2009 2008 Change
Ratio
Reasons
Cash payment to
others related to the
investment
1,179,627.72 2,757,704.48 -57.22% Decrease in bank
charges
Legal Representative: Chief Financial Official: Chief Accountant:
