WUHAN BOILER COMPANY LIMITED
（200770）
）
2011 ANNUAL REPORT
Disclosing Newspaper: Securities Times and Ta Kung Pao
Disclosing Date: April 27, 2012
1
Contents
I. Important Notes----------------------------------------------------------------------------- 3
II. Company Profile---------------------------------------------------------------------------- 3
III. Summary of Accounting Data and Business Data-------------------------------------- 4
IV. Changes in Share Capital and Particulars about Shareholders------------------------ 6
V. Particulars about Directors, Supervisors, Senior Management and Employees--------10
VI. Corporate Governance-------------------------------------------------------------------- 18
VII. Brief Introduction of the Shareholders’ Meeting -------------------------- 23
VIII. Report of the Board of Directors ----------------------------------------------------- 23
IX. Report of the Board of Supervisors-------------------------------------------------------- 34
X. Significant Events------------------------------------------------------------------------- 37
XI. Financial Report--------------------------------------------------------------------------- 47
XII. Documents for Reference--------------------------------------------------------------- 47
2
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 to 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.
● 2011 Financial Auditing Report of the Company has been audited by Zhonghuan Haihua
Certified Public Accountants Co., Ltd, and a standard Auditor’s Report with unqualified
opinion has 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 ensure
that the Financial Report enclosed in this Annual Report is true and complete.
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
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 New
Technology Development Zone, Wuhan, Hubei
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
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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.: 420106271756432
The Certified Public Accountants engaged by the Company: Zhonghuan Haihua
Certified Public Accountants Co., Ltd.
Address: Zhonghuan Mansion, No. 169 East Lake Road, Wuchang District, Wuhan
Section III Summary of Accounting Data and Business Data
I. Accounting data for financial year 2011
Unit: RMB
Items Amount
Total profit -282,097,822.59
Net profit -263,537,079.89
Net profit attributable to shareholders of the Company -263,452,709.03
Net profit after deducting non-recurring gains and losses -264,043,557.18
Operating profit -282,688,670.74
Investment income 0.00
Net non-operating income and expenditure 590,848.15
Net cash flow arising from operating activities -310,753,665.44
Net increase/decrease of cash and cash equivalents 9,896,754.98
Note: Items and amount of non-recurring gains and losses deducted
Unit: RMB
Notes (if
Items of non-recurring gains and losses 2011 2010 2009
applicable)
Gains and losses on disposal of non-current assets,
-48,709.05 761,772.45 544,521.65
including reversal of the impairment loss
Government grant recognized in current year, except for
those acquired in the ordinary course of business or
283,776.00 103,307,776.00 277,776.00
granted continuously in certain standard quota according
to relevant national laws and regulations
4
Company restructuring expenses such as employee
-27,263,814.10
placement and integration costs
Separately tested for impairment of receivables
41,133,909.26
impairment reversal
Other non-operating income and expense other than
355,781.20 -141,568.49 -874,146.41
abovementioned
Non-recurring income tax effect of gains and losses -10,283,477.32
Minority interest share of non-recurring gains and losses 10,361.51 42,531.09
Total 590,848.15 134,788,773.41 -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
Increase/decrease
Items 2011 2010 2009
from last year ( ) ％
Gross revenue (Yuan) 518,177,439.70 623,370,633.11 -16.87% 517,679,190.56
Operating profit (Yuan) -282,688,670.74 -73,014,473.73 -287.17% -687,508,381.33
Total profit (Yuan) -282,097,822.59 30,913,506.23 -1012.54% -687,560,230.09
Net profit attributable to shareholders
-263,452,709.03 8,535,924.33 -3186.40% -675,672,514.99
of the Company (Yuan)
Net profit attributable to shareholders
of the Company after deducting
-264,043,557.18 -126,252,849.08 -109.14% -648,399,383.22
non-recurring gains and losses
(Yuan)
Net cash flow arising from operating
-310,753,665.44 1,217,583,145.02 -125.52% 278,461,556.72
activities (Yuan)
Increase/decrease
Items Dec. 31, 2011 Dec. 31, 2010 from the end of last Dec. 31, 2009
year (%)
Total assets (Yuan) 1,749,077,941.25 1,786,542,557.71 -2.10% 2,100,746,323.46
Total liabilities (Yuan) 2,895,658,545.56 2,669,586,082.13 8.47% 2,992,027,894.44
Owners’ equity attributable to
-1,148,878,381.87 -885,425,672.84 -29.75% -893,961,597.17
shareholders of the Company (Yuan)
Total share capital (share) 297,000,000.00 297,000,000.00 0.00 297,000,000.00
2. Key financial indices
Unit: RMB
Increase/decrease
Items 2011 2010 from last year 2009
( ) ％
Basic earnings per share (Yuan/share) -0.89 0.03 -3066.67% -2.27
Diluted earnings per share (Yuan/share) -0.89 0.03 -3066.67% -2.27
Basis earnings per share after deducting
-0.89 -0.43 -106.98% -2.18
non-recurring gains and losses (Yuan/share)
Weighted average rate of return on net
--- -0.96 ---
assets (%)
Weighted average rate of return on net
assets after deducting non-recurring gains --- --- ---
and losses (%)
Net cash flow per share arising from
-1.05 4.10 -125.61% 0.94
operating activities (Yuan/share)
Increase/decrease
Items Dec. 31, 2011 Dec. 31, 2010 from the end of Dec. 31, 2009
last year (%)
Net assets per share attributable to
-3.87 -2.98 -29.87% -3.01
shareholders of the Company (Yuan/share)
Debt Asset ratio (%) 165.55% 149.43% 16.12% 142.43%
3. In accordance with Information Disclosure Reporting Guidelines for Public Listed
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Companies (No. 9) promulgated by China Securities Regulatory Commission, the
Company’s return on net assets and earning per share for year 2011 calculated based on
fully diluted method and weighted average method.
● Return on Net Assets Unit: RMB
In current period The same period of last year
Profit in the report period Weighted Weighted
Fully Diluted Fully Diluted
Average Average
Net profit attributable to common shareholders of the
Company --- --- -0.96% -0.96%
Net profit attributable to common shareholders of the
Company after deducting non-recurring gains and losses
●Earnings per Share Unit: RMB
In current period The same period of last year
Diluted Diluted
Profit in the report period Basic earnings Basic earnings
earnings per earnings per
per share per share
share share
Net profit attributable to common shareholders of
the Company -0.89 -0.89 0.03 0.03
Net profit attributable to common shareholders of
the Company after deducting non-recurring gains -0.89 -0.89 -0.43 -0.43
and losses
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
Issuance Capitalization
Items Bonus
Amount Proportion of new of public Other Subtotal Amount Proportion
shares
shares reserve fund
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
20,530,000 6.91% 20,530,000 6.91%
corporations
Share held by foreign
151,470,000 51.00% 151,470,000 51.00%
corporations
Others
2. Raised corporate
shares
3. Employees 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
125,000,000 42.09% 125,000,000 42.09%
foreign shares
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
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(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 the report period.
(4) No employee shares remain within the Company.
(5) There was no profit distribution of the Company in the report period.
III. Introduction about shareholders
(1) As at the end of Dec. 31, 2011, the Company had 9,073 shareholders: including one
foreign corporation shareholder, Alstom (China) Investment Co., Ltd, one domestic
corporation shareholder, Wuhan Boiler Group Co., Ltd, and 9,071 shareholders having
domestically listed foreign shares.
(2) Shares held by the principal shareholders
As at end of Dec. 31, 2011, the top ten shareholders and the top ten shareholders holding
tradable shares of the Company are as follows:
Unit: share
Total number of shareholders Total number of shareholders one month
9,073 9,073
at the end of 2011 before publishing this report
Particulars about shares held by the top ten shareholders
Proportion Number of Shares
Nature of Total shares
Name of shareholders of shares non-tradable shares pledged or
shareholders held
held held frozen
ALSTOM (CHINA)
Foreign corporation 51.00% 151,470,000 151,470,000 0
INVESTMENT CO., LTD
WUHAN BOILER GROUP State-owned
6.91% 20,530,000 20,530,000 0
CO., LTD corporation
CHINA MERCHANTS
Foreign corporation 0.48% 1,411,694 0 0
SECURITIES (HK) CO., LTD.
Domestic natural
CHEN CHU YUN 0.46% 1,372,450 0 0
person
HSBC BROKING
SECURITIES (ASIA) Foreign corporation 0.42% 1,234,114 0 0
LIMITED-CLIENTS A/C
Domestic natural
WU ZHEN FA 0.38% 1,138,028 0 0
person
Domestic natural
ZHUANG CHANG XIONG 0.35% 1,035,000 0 0
person
Domestic natural
TANG JUAN 0.30% 887,236 0 0
person
GUOTAI JUNAN
SECURITIES(HONGKONG) Foreign corporation 0.29% 860,551 0 0
LIMITED
Domestic natural
ZHUANG YAO HUA 0.28% 821,150 0 0
person
Particulars about tradable shares held by the top ten shareholders
Number of tradable
Name of shareholders Type of share
shares held
CHINA MERCHANTS SECURITIES (HK) CO., LTD. 1,411,694 Domestically listed foreign shares
CHEN CHU YUN 1,372,450 Domestically listed foreign shares
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HSBC BROKING SECURITIES (ASIA) LIMITED-CLIENTS
1,234,114 Domestically listed foreign shares
A/C
WU ZHEN FA 1,138,028 Domestically listed foreign shares
ZHUANG CHANG XIONG 1,035,000 Domestically listed foreign shares
TANG JUAN 887,236 Domestically listed foreign shares
GUOTAI JUNAN SECURITIES(HONGKONG) LIMITED 860,551 Domestically listed foreign shares
ZHUANG YAO HUA 821,150 Domestically listed foreign shares
LI SHU HUI 808,552 Domestically listed foreign shares
ZHOU YONG YI 759,850 Domestically listed foreign shares
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,
Explanation on affiliated
no affiliated relationship exists between Alstom (China) Investment Co., Ltd. (the first
relationship among the top ten
principal shareholder of the Company), Wuhan Boiler Group Co., Ltd. (the second
shareholders or persons acting
principal shareholder of the Company) and the other shareholders, and they are not
in concert
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, 2011, 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. Dominique Pouliquen
Date of foundation: Jan 26, 1999
Registered capital: USD 60,964,400
Business License No.: 100000400008162
Business scope: lawfully investing in fields in which foreign investment is permitted by the
State; import, export, procurement (as an agent) and sale (as an agent) of equipments;
providing relevant services including training, human resources management, consultancy,
technology, storage, operating lease and etc.; participating in overseas projects from
Chinese enterprises entitled to execute overseas projects.
●Alstom Holdings, a company registered in France, is the controlling shareholder of
Alstom (China) Investment Co., Ltd.
Legal representative: Mr. Nicolas TISSOT
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.
8
Chairman of the Board and CEO: Mr. Patrick KRON
Date of foundation: Nov 17, 1992
Share capital: as of Dec 31, 2011, ALSTOM’s share capital amounts to EUR
2,061,487,064
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 30.75% shares of Alstom S.A.
Chairman of the Board and CEO: Mr. Martin Bouygues
Date of foundation: 1952
Share capital: EUR 314,869,079 as of Dec 31, 2011
Business Scope: Construction, telecommunication business and other investment
● Other shareholders hold 64.33% shares of Alstom S.A.
Other shareholders hold 64.33% 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)
Bouygues FRANKLIN RESOURCES Other Shareholders
30.75% 4.92% 64.33%
ALSTOM S.A.
(Listed in France)
100%
Alstom Holdings
100%
Alstom (China) Investment Co., Ltd.
51%
Wuhan Boiler Company Limited
9
Section V Particulars about Directors, Supervisors, Senior Management
and Employees
I. Basic information of directors, supervisors and senior management
Share excitation authorized during the
Total
report period Remuneration
remuneration
Shares Market drawn from
Beginning Shares at Reason drawn from the
Ending date at the price of shareholder
Name Title Gender Age date of the year for Company in Shares to Shares
of office term year Exercise stock at entities or other
office term beginning change the report be had been
end price the related parties
period (Ten exercised exercised
period or not
thousand)
end
Mr. YEUNG Chairman of
Oct 15, Oct 15,
Kwok Wei the Board of Male 62 0 0 0.00 Yes
2010 2013
Richard Directors
Oct 15, Oct 15,
Ms. Liu Yi Director Female 42 0 0 0.00 Yes
2010 2013
Mr.
Oct 15, Oct 15,
Dominique Director Male 51 0 0 0.00 Yes
2010 2013
Pouliquen
Mr. Guy Oct 15, Oct 15,
Director Male 62 0 0 0.00 Yes
Chardon 2010 2013
Mr. Xiong Oct 15, Oct 15,
Director Male 54 0 0 0.00 Yes
Gang 2010 2013
Mr. Xiang Oct 15, Oct 15,
Director Male 58 0 0 0.00 Yes
Rongwei 2010 2013
Mr. Shen Independent Oct 15, Oct 15,
Male 41 0 0 10.00 No
Weixing director 2010 2013
Mr. André Independent Oct 15, Oct 15,
Male 58 0 0 10.00 No
CHIENG director 2010 2013
Mr. Yang Independent Oct 15, Oct 15,
Male 51 0 0 10.00 No
Xiongsheng director 2010 2013
Mr. Shi Oct 15, Oct 15,
Supervisor Male 48 0 0 0.00 Yes
Ziling 2010 2013
Ms. Sun Oct 15, Oct 15,
Supervisor Female 41 0 0 0.00 Yes
Tong 2010 2013
Mr. Pei Oct 15, Oct 15,
Supervisor Male 52 0 0 57.14 No
Hanhua 2010 2013
Mr. Jay General Sep 28, Oct 15, 35.60
Male 49 0 0 No
Chen Manager 2011 2013 (2011.9-12)
Finance
Mr. Chin Oct 15, Oct 15,
Director & Male 39 0 0 73.49 No
Wee Hua 2010 2013
Vice GM
Board
Mr. Kevin Oct 15, Oct 15,
Secretary & Male 31 0 0 55.44 No
Qin 2010 2013
Vice GM
Total 251.67
Explanation:
1. No director, supervisor or senior management of the Company holds any Company
share.
2. Mr. YEUNG Kwok Wei Richard, Chairman of the Board of Directors of the Company, is
acting as Heard of Alstom Power China in Alstom (China) Investment Co., Ltd, the
controlling shareholder of the Company; Mr. Dominique Pouliquen, 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
10
acting as CFO 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 director Mr.
Xiong Gang is acting as Vice President for Public Affairs in Alstom (China) Investment
Co., Ltd, the controlling shareholder of the Company. Other directors, supervisors and
senior management do not hold any position in the controlling shareholder or shareholders
of the Company.
II. Background and working experience of directors, supervisors and senior management in
the latest five years.
Mr. YEUNG Kwok Wei Richard, Chairman of the Board of the Company, was born on
April 7, 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 Head of Power, Alstom Power, China. Mr. YEUNG
Kwok Wei Richard is the Chairman & Director of the 5th Board of Directors of the
Company. He doesn’t hold any shares of the Company and didn’t get any penalty or
punishment from China Securities Regulatory Commission, other government organs and
Chinese stock exchanges. He satisfies the qualification requirements of the Company Law
and related laws and regulations.
Director Ms. Liu Yi was born on March 20, 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 is the Director of the 5th Board of Directors of
the Company. She doesn’t hold any shares of the Company and didn’t get any penalty or
punishment from China Securities Regulatory Commission, other government organs and
Chinese stock exchanges. She satisfies the qualification requirements of the Company Law
and related laws and regulations.
Director 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 positions as Senior
Vice President of Alstom Turbomachines Group and Senior Vice President of Alstom
Power Thermal Products. Now Mr. Guy Chardon is Alstom Group Senior Vice President.
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
11
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 is the Director of
the 5th Board of Directors of the Company. He doesn’t hold any shares of the Company and
didn’t get any penalty or punishment from China Securities Regulatory Commission, other
government organs and Chinese stock exchanges. He satisfies the qualification
requirements of the Company Law and related laws and regulations.
Director Mr. Xiong Gang, born on June 21, 1957, Canadian nationality, holds a Master
degree in Public Administration (1988) and a Diploma of Advanced Studies in
International Public Administration (1986) from National Public Administration School of
University of Quebec, Canada, and a Bachelor degree from East China Normal University,
Shanghai (1981). Currently, Mr. Xiong Gang is working in Alstom (China) Investment Co.
Ltd as Vice President responsible for Public Affairs. Mr. Xiong Gang worked in
Hydro-Quebec (Canada) from January 1988 to August 2005 as Senior Marketing Advisor,
China Business Director and Asia Commercial Director, responsible for business
development and project management in China and other Asian countries. From 2001 to
2007, he was Chief Representative in Beijing for Meiya Power Company Ltd, responsible
for government relations and business development. Prior to joining in Alstom, he was
Chief China Representative and Business Development Director of AEI Asia Ltd (US). Mr.
Xiong Gang is the Director of the 5th Board of Directors of the Company. He doesn’t hold
any shares of the Company and didn’t get any penalty or punishment from China Securities
Regulatory Commission, other government organs and Chinese stock exchanges. He
satisfies the qualification requirements of the Company Law and related laws and
regulations.
Director Mr. Dominique Pouliquen was born on March 3, 1960, French nationality. Mr.
Dominique Pouliquen gained a master in Economy at Paris University in 1981, and was
graduated from the Institute of Politic Studies in Paris the following year. After a one year
career start in the banking sector as a financial analyst, he became consultant for six years,
specialized in productivity improvement, quality management and manufacturing software
for large international industrial companies. Thereafter he joined the Information
Technology sector in 1989, where he occupied various business development and sales
management positions. Mr. Dominique Pouliquen joined Alstom Transport in 1996 as
Project Manager after he left the Telis Group (merged with Sema Group). He was
responsible for developing and implementing the Transport Sales and Marketing
Information Systems. He then pursued his career development in Transport as Marketing
Director, followed-up Regional Director for Asia in the Service Segment. In 2001, he was
promoted to head the Product and Strategy as Senior Vice President and was nominated to
be part of the Transport Management Committee. Successfully carved significant
milestones in Alstom Transport, Dominique was sought to head the Train Life Services
Unit in 2005. Mr. Dominique Pouliquen is currently Country President, Alstom China and
Senior Vice President for Alstom Transport Asia Pacific Region. Mr. Dominique
Pouliquen is the Director of the 5th Board of Directors of the Company. He doesn’t hold
any shares of the Company and didn’t get any penalty or punishment from China Securities
12
Regulatory Commission, other government organs and Chinese stock exchanges. He
satisfies the qualification requirements of the Company Law and related laws and
regulations.
Director Mr. Xiang Rongwei was born on Apr. 15, 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 is the director of the 5th Board of Directors
of the Company. He doesn’t hold any shares of the Company and didn’t get any penalty or
punishment from China Securities Regulatory Commission, other government organs and
Chinese stock exchanges. He satisfies the qualification requirements of the Company Law
and related laws and regulations.
Independent Director Mr. Yang Xiongsheng was born on January 29, 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 part-time professor. He is also Independent Director in
Hongtu High-tech and S Yihua. Mr. Yang Xiongsheng is the Independent Director of the 5th
Board of Directors of the Company. He doesn’t hold any shares of the Company and 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. He satisfies the
qualification requirements of the Company Law and related laws and regulations.
Independent Director Mr. André CHIENG was born on November 8, 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, he 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
13
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 is the
Independent Director of the 5th Board of Directors of the Company. He doesn’t hold any
shares of the Company and 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. He satisfies the qualification requirements of the Company Law and
related laws and regulations.
Independent Director Mr. Shen Weixing was born on April 24, 1970, Chinese nationality,
Professor, Doctoral Supervisor of Law School of Tsinghua University. Currently he holds
the positions as Vice Dean of Law School, Director of Real Estate Law Research Center in
Tsinghua University, and Executive Director of Health Law Center in Tsinghua University.
He also takes the positions of Syndic of Civil Law Seminar of China Law Society, Vice
Secretary General of China Health Law Society, Vice Director Commissioner of Education
Committee of China Health Law Society, and Vice Chief Editor of Cross-Straight Law
Review. He obtained a bachelor degree of Law and a master degree of Law from Jilin
University, and a Ph.D. degree from China University of Political Science and Law. And
he was a post doctorate of Law School of Beijing University and visiting scholars of Law
School of Harvard University, Temple University, Cologne University, and Freiburg
University. Mr. Shen Weixing is the Independent Director of the 5th Board of Directors of
the Company. He doesn’t hold any shares of the Company and 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. He satisfies the qualification
requirements of the Company Law and related laws and regulations.
Convener of the Board of Supervisors Mr. Shi Ziling was born on Jan. 19, 1963, Chinese
nationality. He graduated from Zhejiang University in 1984 with a bachelor degree in
Thermophysics Cryogenic Engineering and got a MBA degree from Tongji University and
ENPC (Institut Franco-Chinois d'Ingenierie et de Management Shanghai, China/Paris,
France) in 2004. Since Jul. 2010, Mr. Shi Ziling has been working as Deputy to the Vice
President of Manufacturing Static Equipment Factories of Alstom Power Thermal Products;
from May 2005 to Jun. 2010, he served as Manufacturing Director and Deputy General
Manager in Alstom Beizhong Power (Beijing) Co., Ltd.; from Jan. 2004 to Apr. 2005, he
was Operation Director and General Manager of AMI DODUCO (Tianjin) Electrical
Contacts Manufacturing Co., Ltd. (US-WOFE); from Jan. 2001 to Dec. 2003, he was
Operation Department Manager of Alstom Shanghai Transformer Co., Ltd.; from 1997 to
2000, he was Senior Purchasing Manager in Alstom China Purchasing; from 1984 to 1997,
he ever took positions in 101 Research Institute of Department of Aerospace as Engineer
and Senior Engineer. Mr. Shi Ziling is the Convener of the 5th Board of Supervisors of the
Company. He doesn’t hold any shares of the Company and didn’t get any penalty or
punishment from China Securities Regulatory Commission, other government organs and
14
Chinese stock exchanges. He satisfies the qualification requirements of the Company Law
and related laws and regulations.
Supervisor Ms. Sun Tong was born on Jul. 2, 1970, Chinese nationality. From 1988 to 1992,
she 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 she worked in Public
Relations Department of Management Committee of Tianjin Development Zone during
1993 and 1994. Later, she became Administration & Finance manager in the joint company
of China Petroleum and Chemical Industry and Honeywell International Co., Ltd, Business
Operating and Controlling Manager of Equipment Department of 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. After that,
Ms. Sun Tong was promoted to be Deputy General Manager of Tianjin ALSTOM Hydro
Co., Ltd during 2004 and 2009. Now she holds the position as Finance Director for Special
Projects China in Alstom (China) Investment Co., Ltd. Ms. Sun Tong is the Supervisor of
the 5th Board of Supervisors of the Company. She doesn’t hold any shares of the Company
and didn’t get any penalty or punishment from China Securities Regulatory Commission,
other government organs and Chinese stock exchanges. She satisfies the qualification
requirements of the Company Law and related laws and regulations.
Employee Representative Supervisor Mr. Pei Hanhua was born in Nov. 1959, Chinese
nationality, Member of CPC. He is an economist, and graduated from Hubei Provincial
Party School of the CPC with a bachelor degree majoring in Economics Management. He
ever took the positions of Factory Director Assistant, Deputy Factory Director and Factory
Director of Steam Pressure Vessel Branch in the Company; he ever was Secretary of the
Party Branch of Purchasing Division in the Company; he worked as Deputy General
Manager of the Company from Apr. 2001 to Oct. 2010, in charge of the work in safety,
manufacturing, quality and purchasing, and concurrently Vice Chairman of Wuhan Safety
Production Association; He has been acting as Deputy Secretary of CPC and Secretary of
Committee for Disciplinary Inspection of the Company since Nov. 2009. Mr. Pei Hanhua is
the Employee Representative Supervisor of the 5th Board of Supervisors of the Company.
He doesn’t hold any shares of the Company and didn’t get any penalty or punishment from
China Securities Regulatory Commission, other government organs and Chinese stock
exchanges. He satisfies the qualification requirements of the Company Law and related
laws and regulations.
General Manager Mr. Jay Chen was born on Jan. 10, 1962, German nationality. Mr. Jay
Chen gained a Master degree in Electrical Engineering at Bochum University, Germany in
1989, and studied International Accounting & Finance in ACCA, UK in 1996. After started
his career in 1990 as a trainee in Weidmueller Interface GmbH & Co., he worked as
Product Manager and then Chief Representative for the following years. Thereafter he
joined Moeller Group (Eaton Corporation) in 1994, holding the position as Managing
15
Director in Moeller Electric Co. Ltd. China. Then he pursued further career development in
A. Friedr. Flender AG (Part of Siemens) as Executive Director Northeast Asia since 1998,
followed-up General Manager in Flender Power Transmission (Tianjin) Co. Ltd. In 2004,
he joined GE Energy holding the position as CEO of Shenyang GE Liming Gas Turbine
Components Co. Ltd., and then General Manager of GE Corporate leading the success of
sponsorship for Olympic Games 2008 and partnership with World EXPO 2010 Shanghai &
Asia Games 2010 Guangzhou. Since 2007, he took the position in Coperion (Nanjing)
Machinery Co. Ltd. as CEO, making significant achievements in restructuring and
integration of the company from a local private company to international player. Since July
2010, he has been worked as CEO and President in AE&E Nanjing Boiler Co., Ltd.. Mr.
Jay Chen is also Vice Chairman of Association of all enterprises of Jiangsu Province. Mr.
Jay Chen started to act as General Manager since September 2011. He doesn’t hold any
shares of the Company and didn’t get any penalty or punishment from China Securities
Regulatory Commission, other government organs and Chinese stock exchanges. He
satisfies the qualification requirements of the Company Law and related laws and
regulations.
Finance Director & Deputy General Manager 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 was 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 1999
to 2001. 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 started to act as Finance Director since Oct., 2009 and Deputy General
Manager since Oct., 2010. Mr. Chin Wee Hua doesn’t hold any shares of the Company and
didn’t get any penalty or punishment from China Securities Regulatory Commission, other
government organs and Chinese stock exchanges. He satisfies the qualification
requirements of the Company Law and related laws and regulations.
Board Secretary & Deputy General Manager 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 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 started to act as Board Secretary
since Dec., 2008 and Deputy General Manager since Oct., 2010. Mr. Kevin Qin doesn’t
hold any shares of the Company and didn’t get any penalty or punishment from China
Securities Regulatory Commission, other government organs and Chinese stock exchanges.
He satisfies the qualification requirements of the Company Law and related laws and
regulations.
16
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 and implemented after 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.
IV. Changes of directors, supervisors and senior management during the report period
The 6th Meeting of the 5th Board of Directors was held on Sep. 26, 2011, in which Proposal
about Resignation of General Manager, Mr. Glenn Anthony Hill, and Appointment of a
new General Manager, Mr. Jay Chen was reviewed and approved. Independent directors
expressed their independent opinions on the Proposal. The Meeting Resolutions were
announced on Securities Times and Ta Kung Pao dated Sep. 28, 2011 with Announcement
No. 2011-034.
V. Employees
As at the end of the report period, the Company has a total number of 2,003 on-the-job
staffs and 1,555 retired staffs. Details as follows:
Specialty Composition:
Items Number of person Proportion ） （
%
Production Personnel 1,045 52.17 ％
Sales Personnel 18 0.90 ％
Technician 363 18.12 ％
Financial Personnel 26 1.30 ％
Administration Personnel 202 10.09 ％
Other 349 17.42 ％
Total 2,003 100 ％
Education Background:
Items Number of person Proportion (%)
Undergraduate or above 385 19.22 ％
3-year regular college graduate 470 23.46 ％
Senior high school (including
technical secondary school and 820 40.94 ％
technical school)
Junior high school or lower 328 16.38 ％
Total 2,003 100 ％
17
Section VI Corporate Governance
I. Corporate governance structure of the Company
Shareholders’ Meeting
Board of Supervisors
Board of Directors
Strategy Committee Audit Committee Nomination Committee Compensation Committee
Internal Audit Management Team
II. Corporate governance in the 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 the 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 human resources,
assets, finance, organizations and operations of the Company are independent from the
controlling shareholder. The Company and the controlling shareholder maintain different
18
financial accounts, and independently undertake commercial liabilities and market risks.
Related transactions between the Company and the controlling shareholder are reasonable
and fair, and its decision-making procedures comply with 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. Members of the Board of 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 meets 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 fulfilled their duties, prudently reviewed and took a vote to proposals submitted
to all meetings of the Board of Directors and the Shareholders’ Meetings in the report
period and issued independent opinions, which made a positive effect on the reasonable
decision-making procedures of the Board of Directors and the protection of the legitimate
rights of shareholders.
19
(1) Directors including independent directors attending the meetings of the Board of
Directors:
Times that
Times of
should be Times of Times by
presence Times of Successively
Name Position present at personal power of
through absence absent twice
the Board presence attorney
communication
meetings
Mr. YEUNG Chairman of
Kwok Wei the Board of 5 5 0 0 0 No
Richard Directors
Ms. Liu Yi Director 5 5 0 0 0 No
Mr.
Dominique Director 5 5 0 0 0 No
Pouliquen
Mr. Guy
Director 5 5 0 0 0 No
Chardon
Mr. Xiong
Director 5 5 0 0 0 No
Gang
Mr. Xiang
Director 5 5 0 0 0 No
Rongwei
Mr. André Independent
5 5 0 0 0 No
CHIENG Director
Mr. Yang Independent
5 5 0 0 0 No
Xiongsheng Director
Mr. Shen Independent
5 5 0 0 0 No
Weixing Director
(2) Particulars about independent directors proposing different opinions on relevant matters
of the Company:
During the report period, none of independent directors proposed objection to the relevant
matters of the Company.
IV. Independence of personnel, assets, finance, organization and operations of the
Company from the 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.
In finance, the Company has its own independent financial accounting 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
20
compliance with legal requirements.
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 incentive mechanism for senior management
Appraisal and incentive 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 indexes such as operation
performance, safety production, diligent and honest administration.
VI. Work Plan for Implementation of Internal Control Standards of the Company
On March 23, 2012, Work Plan for Implementation of Internal Control Standards of the
Company was reviewed and approved by the 8th Meeting of the 5th Board of Directors. The
Work Plan was disclosed on Securities Times and Ta Kung Pao, as well as the website
http://www.cninfo.com.cn on March 27, 2012 with Announcement No. 2012-006.
VII. Particulars about the internal control of the Company
For further promoting standardization of corporate governance and improving operations
of the Company, 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, Audit Working System Regarding the Annual Financial Report for
Audit Committee, Insider Dealing Code (Revised), System about Liabilities for Material
Mistakes in Disclosing Annual Report, Management Rules on Derivative Investment and
Management Rules on External Reporting and Usage of the Information and etc.. The
21
Company further enhanced quality and transparency of annual report information
disclosure and perfected internal control system for the purpose of improving the
Company’s management expertise and risk prevention capability.
The Internal Control Self-assessment Report was disclosed on Apr. 27, 2012 at the website
http://www.cninfo.com.cn/, which is the designated website by the Company for
information disclosure.
(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 has 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 is 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 exerts
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 the report period, the Board of Directors revised, examined and approved a series of new
management rules of the Company. 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 guarantee 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.
VIII. Verification of appraisal opinion from auditor concerning self-assessment of internal
control of the Company
During annual audit 2011, the auditor doesn’t express a verification report on the
22
self-assessment of internal control of the Company.
IX. Corporate Social Responsibility Report of the Company
The Company doesn’t disclose the Corporate Social Responsibility Report.
Section VII Brief Introduction of the Shareholders’ Meeting
I. Notice, convening and holding of the Shareholders’ Meeting
(1) Annual Shareholders’ Meeting
2010 Annual Shareholders’ Meeting was held by the Company on May 31, 2011. 2010
Annual Report and its Summary Report and 2010 Profit Distribution etc. were reviewed
and approved in the Meeting. The meeting resolutions were disclosed on Securities Times
and Ta Kung Pao dated Jun. 1, 2011 with Announcement No. 2011-021.
Section VIII Report of the Board of Directors
I. Discussion and analysis of operation during the report period
In recent years, power station construction in China has slowed down. Despite still being
the main power source currently, thermal power is taking up a smaller and smaller share in
the power supply chart. Market demands have increasingly focused on
environment-protecting, high-efficient and renewable-energy-using equipments. The
number of new thermal power projects in China decreased and the traditional thermal
power market becomes tough. Meanwhile, due to the variable domestic economy, signed
contracts waiting for approval and etc., uncertainty of contract execution increased.
In the report period, the Company achieved operating revenue of RMB 518,177,439.70, a
decrease of 16.87% as compared with last year; total profit of RMB -282,097,822.59, a
year-on-year decrease of 1012.54%; and net profit attributable to shareholders of the
Company of RMB -263,452,709.03, representing a decrease of 3186.40% from the
previous 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 businesses classified by industries and products:
Unit: RMB 10,000
Main businesses classified by industries
Increase/decrease Increase/decrease Increase/decrease
Industries Operating
Operating Operating of operating of operating cost of operating profit
or profit rate
revenue cost revenue from last from last year rate from last year
products (%)
year (%) (%) (%)
Machinery 51,817.74 54,048.82 -4.31 -16.87 -10.43 -234.69
Main businesses classified by products
Boilers 51,817.74 54,048.82 -4.31 -16.87 -10.43 -234.69
23
Note: All the products of the Company belong to the machinery manufacturing industry
providing special equipments for energy and environmental protection industries.
The Company’s main businesses classified by geographical regions
Unit: RMB
Region Operating revenue Increase/decrease of operating revenue from last year (%)
Domestic 312,547,596.47 -21.43
Overseas 205,629,843.23 -8.85
(2) Main suppliers and customers
The total purchase from the top five suppliers for the year 2011 was RMB 222,878,203.72 ,
accounting for 38.51% of the total purchase of the Company in the year; the total sales
income from the top five customers was RMB 488,269,536.67, taking up 94.21% of the
total sales income of the Company.
(3) Changes in the Company’s assets, liabilities and expenses in the report period
Unit: RMB
Dec. 31, 2011 Dec. 31, 2010 Increase/decrease of
Items Proportion in total Proportion in total proportion in
Amount Amount total assets
assets assets
Cash and cash
22,999,242.02 1.31% 13,974,304.97 0.78% 0.53%
equivalents
Notes receivable 30,800,000.00 1.76% 43,164,000.00 2.42% -0.66%
Prepayments 39,005,432.77 2.23% 111,894,344.81 6.26% -4.03%
Inventories 240,116,922.49 13.73% 169,307,374.03 9.48% 4.25%
Fixed assets 766,802,430.73 43.84% 776,284,766.29 43.45% 0.39%
Construction in
2,398,543.47 0.14% 50,952,741.50 2.85% -2.71%
progress
Other non-current
5,790,508.71 0.33% 420,895.71 0.02% 0.31%
assets
Notes payable 45,548,201.49 2.60% 18,704,256.28 1.05% 1.55%
Advance from
912,493,449.25 52.17% 1,059,336,631.48 59.30% -7.13%
customers
Employee benefits
57,680,171.01 3.30% 70,602,009.08 3.95% -0.65%
payable
Other payables 97,831,275.42 5.59% 85,685,084.50 4.80% 0.79%
Other non-current
16,132,004.95 0.92% 3,291,690.22 0.18% 0.74%
liabilities
Items 2011 2010 Increase/decrease
Operating revenue 518,177,439.70 623,370,633.11 -16.87%
Operating cost 540,488,213.48 603,397,485.95 -10.43%
Business taxes and
136,187.73 -70,486.42 293.21%
surcharges
Selling expense 11,264,512.75 17,415,665.92 -35.32%
Administration
28,322,676.90 56,935,677.76 -50.25%
expense
Impairment loss 132,881,866.92 -61,000,877.18 317.84%
Net income from
-7,075,835.00 142,442.98 -5067.49%
changes in fair value
Investment income 0.00 0.00
Non-operating income 641,514.50 104,708,173.59 -99.39%
Non-operating
50,666.35 780,193.63 -93.51%
expense
24
Notes:
In the report period:
Cash and cash equivalents increased as compared to last year mainly due to increase in the
issuance of bank acceptance notes to settle vendors’ payment;
Notes receivable decreased as compared to last year mainly due to endorsement to settle
vendor payments and discount to raise fund for daily operations;
Prepayments decreased as compared to last year mainly due to decrease in the volume of
materials purchase for export projects;
Inventories increased as compared to last year mainly due to increase in the volume of
specific raw materials purchased in advance of commencement of overseas projects;
Fixed assets decreased as compared to last year mainly due to full capitalization of new
plant and office building which resulted in increase in accumulated depreciation;
Construction in progress decreased as compared to last year mainly due to capitalization to
fixed assets and intangible assets upon acceptance and handing over of the assets;
Other non-current assets increased as compared to last year mainly due to increase in the
volume of unexpired forward contracts;
Notes payable increased as compared to last year mainly due to increase in issuance of
banker acceptance notes to settle vendors’ payments;
Advance from customers decreased as compared to last year mainly due to completion of
overseas projects in progress which resulted in settlement of contract payments on
constructin contracts;
Employee benefits payable decreased as compared to last year mainly due to the payment
of retirees’ subsidization and inter-retirees salaries;
Other payables increased as compared to last year mainly due to TOT progress fee
(excluding withholding tax) RMB4,066,041.40 and ITSAS support fee RMB 6,727,182.07;
Other non-current liabilities increased as compared to last year mainly due to increase in
the volume of unexpired forward contracts;
Operating revenue decreased as compared to last year mainly due to decrease in number of
projects under execution and the postponement of the domestic projects
Operating cost decreased as compared to last year mainly due to decrease in projects under
execution;
25
Business taxes and surcharges increased as compared to last year mainly due to refund of
local education development fee of RMB483,561.86 from local tax bureau in the year of
2010;
Selling expense decreased as compared to last year mainly due to decrease in sales
personnel benefits and entertainment expense;
Administration expense decreased as compared to last year mainly due to: 1. increase in the
number of retirees and reversal of employee benefits; 2. the decrease in professional
consulting fees and leasing expense;
Impairment loss increased as compared to last year mainly due to: 1. increase in accounts
receivables and slow collection which resulted in the increase in bad debts provisions; 2.
increase in obsolete material provision;
Net income from changes in fair value decreased as compared to last year mainly due to
unrealized loss incurred by hedge accounting for the unexpired forward contracts;
Non-operating income decreased as compared to last year mainly due to sharp decrease in
government grant though reduced by a decrease in fixed assets disposal;
Non-operating expense decreased as compared to last year mainly due to decrease in fixed
assets disposal and penalty expenses.
(4) Measurement of fair value in the report period
Measurement of fair value was in accordance with the stipulated accounting standards. No
deviation in the report period.
(5) Changes in the Company’s cash flow position during the report period
Unit: RMB
Items 2011 2010 Increase/decrease (%)
Cash flow from operating activities:
Cash inflow 372,807,194.37 2,253,799,348.95 -83.46%
Cash outflow 683,560,859.81 1,036,216,203.93 -34.03%
Net cash flow from operating activities -310,753,665.44 1,217,583,145.02 -125.52%
Cash flow from investing activities:
Cash inflow 1,933,994.54 5,694,517.33 -66.04%
Cash outflow 14,349,561.09 78,299,682.48 -81.67%
Net cash flow from investing activities -12,415,566.55 -72,605,165.15 82.90%
Cash flow from financing activities:
Cash inflow 751,000,000.00 1,020,000,000.00 -26.37%
Cash outflow 416,026,715.38 2,182,487,904.25 -80.94%
Net cash flow from financing activities 334,973,284.62 -1,162,487,904.25 128.82%
Notes:
Cash inflow from operating activities decreased mainly due to decrease in contract deposits
26
received from customers;
Cash outflow from operating activities decreased mainly due to decrease in the volume of
materials purchase for export projects;
Cash inflow from investing activities decreased mainly due to decrease in fixed assets
disposal;
Cash outflow from investing activities decreased mainly due to decrease in purchase of
fixed assets;
Cash inflow from financing activities decreased mainly due to decrease in shareholder’s
entrusted loan;
Cash outflow from financing activities decreased mainly due to decrease in repayment of
shareholder’s entrusted loan.
(6) Operating results of holding subsidiaries and joint stock subsidiaries
At the end of the report period, the Company owned 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 No.
of Lanxiang Company is 420100000094025. And its business scope covers: 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 the report period, Lanxiang Company generated an operation revenue of
RMB 0 and a net profit reaching RMB -1,826,580.47.
Boyu Company
Boyu Company was established on Sep. 30, 1998 with its registration No. of
4201001101773. Its registered capital stands at 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; and
production of various high- and medium-pressure valve roughcast, cast steel, cast iron and
non-ferrous metal cast. In the report period, Boyu Company generated an operation
revenue of RMB 0 and a net profit of RMB 69,581.64.
The Company has no other holding subsidiaries, share holdings or joint ventures.
III. Future outlook of the Company
(1) Analysis on the development trends of the industry where the Company is engaged in
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2012
China’s accumulative social power consumption reached 4692.8 billion kilowatt-hours in
2011, an increase of about 12% from the previous year. In 2011, newly-increased installed
power-generating capacity was 90.41GW. The growth of China’s power consumption in
2012 will be 2% less than such growth in 2011 due to the downshifting trend of economy.
During the period of China’s 12th Five-year Plan, thermal power will still serve as China’s
principal power. 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. The demands for
clean thermal power generation technology and ultra-supercritical thermal power
equipments will keep increasing in future years.
(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 continue looking for opportunities to move up to a new level of
development. The products of the Company are environment-protecting and high-efficient
which meet the needs of the power market.
(3) Business plan for the new year
It is complex in domestic and overseas economic environment, as well as China’s power
market. The Company will keep an eye on changes in domestic and overseas markets based
on its own competitive edges. The Company will focus on the following five tasks:
1. On the basis of completion of the technology transfer for 1000MW class
Ultra-Supercritical pulverized coal boiler, 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 to expand market share and
improve market position;
2. With the supports from Alstom, the Company will get more export orders for assemblies
of boilers and deliver qualified products according to different quality standards. The
Company will focus on products quality control and delivery schedule management of
overseas projects, such as Sostanj, Narva, Manjung and etc. in order to improve its
international competitiveness and consolidate the achievement of the technology transfer.
3. The Company will startup boiler island engineering and project execution preparation
for oversea projects, and improve research ability of laboratory to pave the way for the
28
Company’s business growth and future development.
4. The Company will optimize the structure of production employees and nonproduction
employees, provide more training to on-the-job employees, speed up new technologies and
new procedures adaption and improve labor productivity so as to satisfy various
requirements of different quality standards from different orders.
5. The Company will improve business operation management, strengthen project
management and supply chain management, continue with inventory control, cost control
and cash flow management so as to complete orders with good quality and timely delivery.
(4) Major risks and solutions
Because of the uncertainty of domestic and international economic environment, the price
fluctuation of raw materials and unpredictable change of foreign exchange rate, the
Company’s operation risk is increasing. The Company will pay close attention to domestic
and international economic environment changes. Meanwhile, the Company will
strengthen the quota control of raw material consumption and strictly control costs so as to
mitigate the negative impact of the price fluctuation of raw materials.
IV. Investment in the report period
(1) In the report period, the Company did not conduct fund-raising or use funds raised in
previous periods.
(2) In the report period, the Company did not invest in any significant projects with
non-raised funds.
V. Changes in accounting policies and accounting estimates and their impact
In the report period, the Proposal to Change Accounting Estimate was reviewed and
approved at the 3rd Meeting of the 5th Board of Directors. The changes to accounting
estimates were proposed in line with the Company’s business expansion needs as follows:
Changes to the method and rate used in calculation of provision for warranty cost: enable
WBC’s product warranty cost be reflective of its actual claims to provide more reliable and
relevant accounting information.
In accordance with relevant provisions under Chinese Accounting Standards, the proposed
changes to Accounting Estimate are to be accounted for using the prospective application
approach, which bring no material impact to owners’ equity and net income of the periodic
reports.
Independent directors’ opinions: according to the related provisions of the Directive for
Establishing Independent Directors’ System of Listed Companies and Articles of
Association of WBC, as independent directors, we think that changing accounting estimate
is to truly reflect the financial status and operating results of WBC and provide more
accurate accounting information. It will not have material impact on owners’ equity and net
profit of periodic reports, and will not damage interests of WBC and minority shareholders.
VI. Routine work of the Board of Directors
29
(I) Resolutions and information disclosure of the Board Meetings convened in the report
period
In the report period, the Board of Directors convened five meetings, and the detailed
information regarding meetings, convening procedure were disclosed as follows:
(1) On Apr. 27, 2011, the 3rd Meeting of the 5th Board of Directors was convened at
Conference Room No. 1 on 5/F, Area C, Qiankun Building, Beijing. And the resolutions
made at the Meeting were disclosed on Securities Times and Ta Kung Pao dated Apr. 29,
2011.
(2) On Apr. 27, 2011, the 4th Meeting of the 5th Board of Directors was convened at
Conference Room No. 1 on 5/F, Area C, Qiankun Building, Beijing. And 2011 Quarterly
One Report reviewed and approved at the Meeting was disclosed on Securities Times and
Ta Kung Pao dated Apr. 29, 2011.
(3) On Aug. 26, 2011, the 5th Meeting of the 5th Board of Directors was convened at
Conference Room No. 2001 of the Company. And the resolutions made at the Meeting
were disclosed on Securities Times and Ta Kung Pao dated Aug. 30, 2011.
(4) On Sep. 26, 2011, the 6th Meeting of the 5th Board of Directors was convened at
Conference Room No. 2001 of the Company. And the resolutions made at the Meeting
were disclosed on Securities Times and Ta Kung Pao dated Sep. 28, 2011.
(5) On Oct. 28, 2011, the 7th Meeting of the 5th Board of Directors was convened at
Conference Room No. 2001 of the Company. And 2011 Quarterly Three Report reviewed
and approved at the Meeting was disclosed on Securities Times and Ta Kung Pao dated Oct.
31, 2011.
(II) Execution of the resolutions made at the Shareholders’ Meeting by the Board of
Directors
In the report period, according to relevant laws and regulations, as well as the resolutions
and authorization of the Shareholders’ Meeting, the Board of Directors conscientiously
executed the resolutions made at the Shareholders’ Meeting and actively and prudently did
the work under the principle of being responsible to all shareholders. And neither profit
distribution nor capitalization of public reserves was conducted in the year 2010.
(III) Performance of the Audit Committee of the Board of Directors
(1) The review opinion on the financial statements prepared by the Company before
audited by Zhonghuan Haihua Certified Public Accountants Co., Ltd.
Board of Directors of the Company,
We have reviewed the financial statements submitted by the Finance Department of the
Company, which include the balance sheet as at Dec. 31, 2011, 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
30
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 auditor’s 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
Jan. 21, 2012
(2) The review opinion on the financial statements of the Company after the preliminary
audit opinion was issued by Zhonghuan Haihua Certified Public Accountants Co., Ltd.
Board of Directors of the Company,
We have reviewed the preliminary audit opinion issued by Zhonghuan Haihua Certified
Public Accountants Co., Ltd. and the financial statements submitted by the Company,
which include the balance sheet as at Dec. 31, 2011, 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. Through a further review on 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 rules of the Company, presenting fairly the financial position of the Company as
at Dec. 31, 2011, as well as the operating results and its cash flows for the year then ended.
Audit Committee of the Board of Directors
Apr. 10, 2012
(3) The summary report of the audit work performed by Zhonghuan Haihua Certified
Public Accountants Co., Ltd.
Board of Directors of the Company,
In accordance with the audit plan of the Company, 7 auditors from Zhonghuan Haihua
Certified Public Accountants Co., Ltd. performed the audit of the 2011 financial statements.
The pre-audit communication commenced on December 20, 2011 and the formal audit on
February 15, 2012. 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
Zhonghuan Haihua Certified Public Accountants Co., Ltd. to draw a fair audit conclusion.
During the audit, the Audit Committee focused on the following questions when
communicating with the auditors:
31
1. Whether all the transactions were recorded and reported fully, truly and completely;
2. Whether the financial report was 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 Zhonghuan Haihua Certified Public Accountants Co., Ltd. gave positive
replies concerning the aforesaid questions and issued a standard unqualified auditor’s
report on Apr. 24, 2012. We hold the opinion that: with the excellent professional skills and
reasonable personnel allocation, the auditors performing the 2011 annual auditing
concluded their work in strict compliance with the Independent Auditing Criteria for
Chinese Registered Accountants; the auditor’s report issued presented a true and fair
reflection of the Company’s financial position as at Dec. 31, 2011, 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
Apr. 24, 2012
(4) Resolution of the Audit Committee on continuing to engage Zhonghuan Haihua
Certified Public Accountants Co., Ltd. as auditor for the year 2012
Zhonghuan Haihua Certified Public Accountants Co., Ltd. had been serving as the
Company’s annual auditor since the year 1998. And it performed competently and
diligently during the 2011 annual auditing. Therefore, the Audit Committee hereby
proposes to renew the engagement of China Chain International Certified Public
Accountants Co., Ltd. as the annual auditor for the year 2012, 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 2011 Annual Shareholders’ Meeting for examination and approval.
Audit Committee of the Board of Directors
Apr. 24, 2012
(IV) Duty performance of the Remuneration and Appraisal Committee of the Board
The Remuneration and Appraisal Committee has reviewed the remuneration of directors,
supervisors and senior management disclosed in 2011 Annual Report of the Company, and
hereby express 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 process. The actual distribution of
remunerations for directors, supervisors and senior management and the corresponding
amount disclosed in 2011 Annual Report are factual and accurate.
Remuneration and Appraisal Committee of the Board of Directors
Apr. 24, 2012
VII. Plan of profit distribution or transfer of capital reserve to share capital for the year
32
2011
As audited by Zhonghuan Haihua Certified Public Accountants Co., Ltd., the Company
generated a net profit attributable to shareholders of the Company amounting to RMB
-263,452,709.03 in 2011. Neither profit distribution nor capitalization of public reserves
was conducted in the year 2011.
The aforesaid plan shall be submitted to the Company’s 2011 Annual Shareholders’
Meeting for review and approval.
VIII. Distribution of cash dividends in the past three years
Net profit attributable Proportion in the net
to shareholders of the profit attributable to Distributable
Cash dividend
Company in the shareholders of the profit for the
Year (tax included)
consolidated financial Company in the year (RMB
(RMB 10,000)
statements consolidated financial 10,000)
(RMB 10,000) statements (%)
2011 0.00 -26,345.27 --- -165,995.61
2010 0.00 853.59 --- -139,650.34
2009 0.00 -67,567.25 --- -140,503.93
Proportion of the accumulative
cash dividends in the past three
----- ----- -----
years in the average annual
attributable profit (%)
IX. Other information disclosed
(1) Securities Times and Ta Kung Pao were designated by the Company as the newspapers
for information disclosure in 2011, which remained unchanged in the report period.
(2) Special explanation by Zhonghuan Haihua Certified Public Accountants Co., Ltd. on
the funds occupation by the controlling shareholder or other related parties
Board of Directors of Wuhan Boiler Company Ltd.,
Entrusted by Wuhan Boiler Company Ltd. (“the Company”), and in accordance with
Chinese CPA Standards on Auditing, we audited the balance sheet, the consolidated
balance sheet as at Dec. 31, 2011, the income statement and the consolidated income
statement of 2011, the statement of changes in shareholders’ equity and the consolidated
statement of changes in shareholders’ equity, the cash flow statement and the consolidated
cash flow statement as well as the notes to the financial statements. Then we issued
Zhonghuan Audit No. (2012) 777 Auditor’s Report on Apr. 25, 2012.
In line with requirements of Circular on Relevant Issues Concerning Regulating Capital
Flow between Listed Companies and Related Parties and Provision of External Guarantees
By Listed Companies (ZJF [2003] No. 56 promulgated by CSRC), the Company compiled
the attached 2011 Fund Occupation Summary for the year ended Dec. 31, 2011 by its
controlling shareholder or other related parties.
According to Fund Occupation Summary, in 2011, the controlling shareholder and other
related parties of the Company had occupied accumulatively the Company’s fund for RMB
58,963,900.00. The Company’s funds were occupied for operating purposes. By Dec. 31,
2011, the controlling shareholder and other related parties of the Company had occupied
the Company’s fund for RMB 139,786,600.00. The Company’s funds were occupied for
operating purposes.
33
The full text of the Special Explanation on the Funds Occupation by the Controlling
Shareholder and Other Related Parties of Wuhan Boiler Company Ltd. issued by
Zhonghuan Haihua Certified Public Accountants Co., Ltd. was published on
www.cninfo.com.cn.
(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
the report period, the Company didn’t provide any guarantee to any external entity in any
form.
X. The Execution of Insider Dealing Code
In accordance with the requirements of Shenzhen Stock Exchange, China Securities
Regulatory Commission and Hubei Securities Regulatory Bureau, the Company has built
up the Insider Dealing Code, which defines the scope, reporting procedures, registration &
record management and confidential management of inside information, as well as
liabilities claim for 2011 Annual Report disclosure; standardizes the activities on investor
relations, such as external reception and online road show, etc.. Besides, the Company
made strict management of insiders in accordance with the above code and relevant
stipulations, and avoided the leak of inside information and the occurrence of insider
dealings.
During the report period, the Company has neither found leak of significant sensitive
information from insiders, nor received any investigation and rectification order issued by
regulatory authorities for the above reasons.
According to the requirements of the Provisions for Listed Companies on the
Establishment of the System for Registration and Administration of Insiders issued by
CSRC (CSRC Announcement [2011] No. 30) and the Notice on Strengthening
Management of Inside Information and Improving the System for Registration and
Administration of Insiders issued by Hubei Securities Regulatory Bureau, the Board of
Directors revised the Insider Dealing Code. The revised Insider Dealing Code was
reviewed and approved by the 9th Meeting of the Board of Directors.
Section IX Report of the Board of Supervisors
I. Work of the Board of Supervisors in this report period:
In 2011, 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,
34
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, and resolutions made
at the meetings as well as relevant information disclosures were as follows:
(1) The 3rd Meeting of the 5th Board of Supervisors was held at Conference Room No.1 on
5/F, Area C, Qiankun Building, Beijing on Apr. 27, 2011, where the following resolutions
were made:
1. Reviewed and approved 2010 Working Report of Board of Supervisors with 3 approval
votes, 0 against vote and 0 abstention vote;
2. Reviewed and approved 2010 Annual Report and its Summary Report with 3 approval
votes, 0 against vote and 0 abstention vote;
The opinion of the Board of Supervisors: The Board of Supervisors recognizes the
preparation and approval procedures of 2010 Annual Report are in accordance with laws,
regulations and rules of China Securities Regulatory Commission and Shenzhen Stock
Exchange. And the contents of 2010 Annual Report truly, accurately and completely reflect
the business performance results and financial status of the Company in 2010. The Board
of Supervisors gives a confirmative opinion.
3. Reviewed and approved 2010 Financial Audit Report with 3 approval votes, 0 against
vote and 0 abstention vote;
4. Reviewed and approved 2010 Internal Control Self-Assessment Report with 3 approval
votes, 0 against vote and 0 abstention vote;
The opinion of the Board of Supervisors: pursuant to relevant rules about internal control
issued by China Securities Regulatory Commission and Shenzhen Stock Exchange,
following principles of internal control and based on the Company’s real situation, the
Company well established its internal control organization, improved its internal control
system, carried out normal internal control activities and insured the rationality and legality
of internal control system in order to improve the standard operation, maintain healthy
business activities, and protect the safety and completeness of the Company’s assets.
Internal control self-assessment made by the Board of Directors of the Company, truly and
objectively, reflects the real situation of the Company’s internal control work, and the
Board of Supervisors gives a confirmative opinion.
5. Reviewed and approved Proposal to Change Accounting Estimate with 3 approval votes,
0 against vote and 0 abstention vote.
The opinion of the Board of Supervisors: the Company’s changes to the method and rate
used in calculation of provision for warranty cost are in accordance with provisions of
Enterprise Accounting Standard and Enterprise Accounting System. Such changes truly
reflect the financial status and operating results of the Company and will not damage
interests of the Company and minority shareholders.
The resolutions made at this Meeting of the Board of Supervisors were disclosed on
Securities Times and Ta Kung Pao dated Apr. 29, 2011.
(2) The 4th Meeting of the 5th Board of Supervisors was held at Conference Room No.1 on
5/F, Area C, Qiankun Building, Beijing on Apr. 27, 2011. All the three supervisors
35
attended the Meeting, which was in compliance with the Company Law and Articles of
Association of the Company. The Meeting was presided by Mr. Shi Ziling, the convener of
the Board of Supervisors. 2011 Quarterly One Report was reviewed and approved with a
voting result of “3 Agree, 0 Objection, 0 Waiver”.
The opinion of the Board of Supervisors: The Board of Supervisors recognized the
preparation and approval procedures of 2011 Quarterly One Report are in accordance with
laws, regulations and rules of China Securities Regulatory Commission and Shenzhen
Stock Exchange. And the contents of 2011 Quarterly One Report truly, accurately and
completely reflect the business performance results and financial status of the Company in
the first quarter of 2011. The Board of Supervisors gives a confirmative opinion.
(3) The 5th Meeting of the 5th Board of Supervisors was held at Conference Room No.2001
of the Company on Aug. 26, 2011, where resolutions were made as follows:
Reviewed and approved 2011 Interim Report and its Summary Report with a voting result
of “3 Agree, 0 Objection, 0 Waiver”.
The opinion of the Board of Supervisors: The Board of Supervisors recognizes the
preparation and approval procedures of 2011 Interim Report are in accordance with laws,
regulations and rules of China Securities Regulatory Commission and Shenzhen Stock
Exchange. And the contents of 2011 Interim Report truly, accurately and completely reflect
the business performance results and financial status of the Company in the first half of
2011. The Board of Supervisors gives a confirmative opinion.
(4) The 6th Meeting of the 5th Board of Supervisors was held at the Conference Room
No.2001 of the Company on 28 Oct. 2011, where 2011 Quarterly Three Report was
reviewed and approved with a voting result of “3 Agree, 0 Objection, 0 Waiver”.
The opinion of the Board of Supervisors: The Board of Supervisors recognizes the
preparation and approval procedures of 2011 Quarterly Three Report are in accordance
with laws, regulations and rules of China Securities Regulatory Commission and Shenzhen
Stock Exchange. And the contents of the 2011 Quarterly Three Report truly, accurately and
completely reflect the business performance results and financial status of the Company in
the third quarter of 2011. The Board of Supervisors gives a confirmative opinion.
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 2011, and the
36
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 2011
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
Zhonghuan Haihua Certified Public Accountants Co., Ltd. truly, objectively and fairly
reflected the financial status and the operating results for the year 2011 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 of information
disclosure was fulfilled timely.
Section X Significant Events
I. Significant lawsuits and arbitrations
By the end of the report period, the Company was involved in the following lawsuits:
Case No. 1:
Plaintiff: Wuhan Boiler Company Limited (“the Company”)
Defendant: Shanxi Zhenxing Group Co., Ltd.
On April 26, 2000, Shanxi Zhenxing Group Co., Ltd. (“Zhenxing Company”) signed the
Contract of 2×200MW Pulverized Coal Boilers with the Company. During executing the
Contract, the Company delivered Unit 1 boiler to Zhenxing Company according to the
Contract, but Zhenxing Company defaulted on the payment of Unit 1 of RMB 47.97
million. Manufacture of Unit 2 boiler has been suspended due to Zhenxing Company’s
fault. The Company required Zhenxing Company to pay the debt and settle the pending
issues of the Contract many times through various ways (including phone, fax and EMS),
but didn’t get any reply. In April 2010, the Company sued Zhenxing Company before
Shanxi High Court, requesting judgment against Zhenxing Company for paying overdue
RMB 47.97 million and undertaking liquidated damages and bank interests RMB 22.047
million in total. The Contract, meeting minutes, lawyer’s letters and other relevant
evidences were submitted to the Court.
37
On Jul. 2, 2010, the case was first heard at the Shanxi High Court, during which the
defendant Zhenxing Company raised an objection about the court’s jurisdiction on the case.
The court judged on the jurisdiction and rejected the Company’s case. Later, within the
valid period, the Company filed an appeal to the Supreme Court against the Shanxi High
Court’s judgment on the jurisdiction. The Supreme Court will, upon trial, deliver the final
ruling in writing to the Company a few days later.
The Announcement on the aforesaid case was disclosed on Securities Times and Ta Kung
Pao dated Jan. 18, 2011 with Announcement No. 2011-001.
Case No. 2:
Plaintiff: Wuhan Boiler Company Limited (“the Company”)
Defendant: Shandong Weiqiao Aluminum & Electricity Co., Ltd. (“Weiqiao A&E”)
On Jun. 26, 2007, the Company signed the Contract No. 2007D012 for supplying
4×1217T/H subcritical pulverized coal boilers with Weiqiao A&E. According to the
Contract, Weiqiao A&E should have paid a total of RMB 51.60 million to the Company as
deposits by the end of Aug. 2007. But it only paid RMB 10 million in Mar. 2008 and hasn’t
paid up all the prescribed deposits until now. Considering Weiqiao A&E has breached the
Contract to have defaulted on the deposits for over three years, the Company sued Weiqiao
A&E before Shandong High Court in Mar. 2011, requesting to forfeit the deposit of RMB
10 million paid by Weiqiao A&E and that Weiqiao A&E should compensate the Company
for its economic loss of RMB 67.40 million because of non execution of the
abovementioned Contract due to Weiqiao A&E’s fault.
The Announcement on the aforesaid case was disclosed on Securities Times and Ta Kung
Pao dated Apr. 13, 2011 with Announcement No. 2011-006.
Case No. 3:
Applicant: GSE China Limited (“GSE”)
Respondent: Wuhan Boiler Company Limited (“the Company”)
GSE claimed that:
On Oct. 18, 2007, as the general contractor, GSE signed two Contracts (No. WBC 2007
003A and No. WBC 2007 004A) with the Company for the construction of WBC’s factory
and office buildings. GSE commenced the construction and timely completed the
construction according to the Contracts, but the Company defaulted on the remaining
payment of RMB 24,931,319.10. GSE considered the Company’s behavior a violation to
the Contracts and filed an arbitration application to China International Economic And
Trade Arbitration Commission, requesting the Company to pay the outstanding payment,
the interest, attorney fees and other relevant fees of RMB 31,593,783.15 in total.
The Company responded that:
Concerning the Contract No. WBC 2007 003A and Contract No. WBC 2007 004A, the
terms for making the rest of the payment as stated in the Contracts were not achieved, so
the Company did not violate the Contracts. Meanwhile, GSE disregarded the Company’s
requirement for defects remedy, which should be considered as a violation to the Contracts.
The Company will prepare well for the arbitration case.
The Announcement on the aforesaid case was disclosed on Securities Times and Ta Kung
38
Pao dated Jun. 30, 2011 with Announcement No. 2011-023.
Case No. 4:
Plaintiff: Shandong Weiqiao Aluminum & Electricity Co., Ltd.
Defendant: Wuhan Boiler Company Limited
The plaintiff claimed that: On Jun. 26, 2007, the plaintiff signed the Contract No.
2007D012 for purchasing pulverized coal boilers with the defendant and paid RMB 10
million as deposit to the defendant whereas the defendant failed to execute its obligation to
deliver boilers as stipulated in the Contract. Despite the fact that the plaintiff had asked for
the delivery for many times, the defendant refused to make the delivery before a new
contract price upon mutual negotiation came up for reasons of production cost increasing.
Up until now, the defendant has not delivered even one boiler.
Claims of the plaintiff:
1. To order that the Contract No. 2007D012 signed between the plaintiff and defendant
shall be terminated; and
2. To order that the defendant shall doubly return the deposit to the plaintiff, i.e. RMB 20
million; and
3. To order that the defendant shall pay all expenses related to the lawsuit.
Case No. 5:
Plaintiff: Shandong Weiqiao Aluminum & Electricity Co., Ltd.
Defendant: Wuhan Boiler Company Limited
The plaintiff claimed that: On Feb. 6, 2007, the plaintiff signed the Contract No. 2007D003
for purchasing pulverized coal boilers with the defendant. The plaintiff paid to the
defendant the deposit for four boilers under the Contract on 25 Mar. 2007 and 15 May 2007
respectively, which was RMB 51.6 million in total. However, the defendant failed to
execute its obligation to deliver all boilers under the Contract. Only one boiler has been
delivered until now. As for the other three boilers, despite the fact that the plaintiff had
asked for delivery for many times, the defendant refused to make the delivery before a new
contract price upon mutual negotiation came up for reasons of production cost increasing.
Claims of the plaintiff:
1. To order that the Contract No. 2007D003 signed between the plaintiff and defendant
shall be terminated; and
2. To order that the defendant shall doubly return the deposit to the plaintiff, i.e. RMB 49.9
million; and
3. To order that the defendant shall pay all expenses related to the lawsuit.
Case No. 6:
Plaintiff: Zouping Hi-Tech Aluminum & Electricity Co., Ltd.
Defendant: Wuhan Boiler Company Limited
The plaintiff claimed that: On May 24, 2006, Shandong Weiqiao Aluminum & Electricity
Co., Ltd. (“Weiqiao A&E”) signed the Contract No. 2006D010 for purchasing pulverized
coal boilers with the defendant. Later, Weiqiao A&E paid to the defendant the total deposit
of RMB 5.2 million for the eight boilers under the Contract whereas the defendant failed to
39
execute its obligation to deliver all boilers under the Contract. Despite the fact that Weiqiao
A&E had asked for the full delivery for many times, the defendant refused to make the full
delivery before Weiqiao A&E paid the warehousing fee and other fees beyond the Contract.
Up until now, boilers Unit 7 and Unit 8 under the Contract have not been delivered. On
Mar. 23, 2010, the plaintiff, Weiqiao A&E and the defendant signed a contract transfer
agreement, transferring the rights and obligations of Weiqiao A&E in the Contract No.
2006D010 to the plaintiff.
Claims of the plaintiff:
1. To order that the Contract No. 2006D010 signed between the plaintiff and defendant
shall be terminated; and
2. To order that the defendant shall doubly return the deposit to the plaintiff, i.e. RMB 2.6
million; and
3. To order that the defendant shall pay all expenses related to the lawsuit.
The Announcement on the aforesaid cases was disclosed on Securities Times and Ta Kung
Pao dated Jul. 22, 2011 with Announcement No. 2011-026.
Case No. 7:
Plaintiff: Wuhan Boiler Company Limited (“the Company”)
Defendant: GSE China Limited (“GSE”)
In 2008, the Company decided GSE as the winning bidder for the construction of the
Company’s new factory through bidding process. Then the Company signed the
Construction Contracts with GSE and reported it to relevant construction administrative
department for record. The Construction Contracts have detailed stipulations on
construction period, quality standards and completion & acceptance, etc.. After signing the
Contracts, GSE subcontracted the construction project to other parties in violation of
relevant laws and regulations, as well as breached other terms and conditions of the
Contracts, which caused that some part of the project had quality problems, and that the
construction period, completion & acceptance all delayed. Moreover, relevant construction
documents have not been reported to the construction administrative department for record
so far. Therefore, the Company sued GSE before Wuhan Intermediate Court for GSE’s
violation of laws, regulations and the Contracts, requesting the Court to judge that GSE
should return the payment of RMB 30 million to the Company.
The Announcement on the aforesaid case was disclosed on Securities Times and Ta Kung
Pao dated Aug. 12, 2011 with Announcement No. 2011-028.
Case No. 8:
Plaintiff: Wuhan Boiler Company Limited (“the Company”)
Defendant: Shandong Weiqiao Aluminum & Electricity Co., Ltd. (“Weiqiao A&E”)
On Feb. 6, 2007, the Company signed the Contract No. 2007D003 supplying 4×1217T/H
subcritical pulverized coal boilers with Weiqiao A&E. During executing the Contract, the
Company has delivered Unit 1 on time in accordance with the Contract, but Weiqiao A&E
defaulted on the payment for Unit 1 to the Company time after time, and refused to
undertake the liquidated damages from delaying on payments for goods stipulated in the
Contract. Thus, the production of Boiler Unit 2-4 has been suspended so far in Apr. 2011.
40
The Company sued Weiqiao A&E before Shandong High Court, requesting the court to
judge that the Company should be entitled to forfeit the deposit of RMB 38.70 million for
Unit 2-4, and that Weiqiao A&E should make the payment of RMB 49.965 million, as well
as that Weiqiao A&E should compensate the Company for the economic losses of RMB
61.30 million because of non execution of the abovementioned Contract due to Weiqiao
A&E’s fault. Shandong High Court formally accepted this case on Sep. 7, 2011.
The Announcement on the aforesaid case was disclosed on Securities Times and Ta Kung
Pao dated Sep. 15, 2011 with Announcement No. 2011-033.
Case No. 9:
Plaintiff: Wuhan Boiler Company Limited (“the Company”)
Defendant: Shanxi Zhenxing Group Co., Ltd.
On April 26, 2000, Shanxi Zhenxing Group Co., Ltd. (“Zhenxing Company”) signed the
Contract of 2×200MW Pulverized Coal Boilers with the Company. During executing the
Contract, the Company delivered Unit 1 boiler to Zhenxing Company according to the
Contract, but Zhenxing Company defaulted on the payment of Unit 1 of RMB 47.97
million. Manufacture of Unit 2 boiler has been suspended due to Zhenxing Company’s
fault. The Company required Zhenxing Company to pay the debt and settle the pending
issues of the Contract many times through various ways (including phone, fax and EMS),
but didn’t get any reply. In April 2010, the Company sued Zhenxing Company before
Shanxi High Court, requesting judgment against Zhenxing Company for paying overdue
RMB 47.97 million and undertaking liquidated damages and bank interests RMB 22.047
million in total. The Contract, meeting minutes, lawyer’s letters and other relevant
evidences were submitted to the Court.
After several hearings, Shanxi High Court made the Rulings as follows:
1. Terminate the Contract between the Company and Zhenxing Company;
2. Defendant Zhenxing Company shall pay the contract price RMB 47.97 million and
related bank interest to the Company within 15 days after the Rulings coming into effect.
(Paid down payment RMB 8.15 million for Unit 2 are transferred to be part of the payment
for Unit 1, so RMB 8.15 million in overall overdue RMB 47.97 million for Unit 1 doesn’t
need to be paid.)
3. Other requests of the Company are rejected.
The Announcement on the aforesaid case was disclosed on Securities Times and Ta Kung
Pao dated Oct. 19, 2011 with Announcement No. 2011-037.
Case No. 10:
Plaintiff: Shandong Weiqiao Aluminum & Electricity Co., Ltd.
Defendant: Wuhan Boiler Company Limited
The plaintiff claimed that: On Feb. 6, 2007, the plaintiff signed the Contract No. 2007D003
for purchasing pulverized coal boilers with the defendant. The plaintiff paid to the
defendant the deposit for four boilers under the Contract on 25 Mar. 2007 and 15 May 2007
respectively, which was RMB 51.6 million in total. However, the defendant failed to
execute its obligation to deliver all boilers under the Contract. Only one boiler has been
delivered until now. As for the other three boilers, despite the fact that the plaintiff had
41
asked for delivery for many times, the defendant refused to make the delivery before a new
contract price upon mutual negotiation came up for reasons of production cost increasing.
Claims of the plaintiff:
1. To order that the Contract No. 2007D003 signed between the plaintiff and defendant
shall be terminated; and
2. To order that the defendant shall doubly return the deposit to the plaintiff, i.e. RMB 49.9
million; and
3. To order that the defendant shall pay all expenses related to the lawsuit.
During the court session, the plaintiff made additional claims, increasing the deposit to be
returned by the defendant from RMB 49.90 million to RMB 77.40 million. But the
defendant believed that such behavior had violated the stipulation on hierarchy-based
jurisdiction, because the amount of subject matter RMB 77.40 million had gone beyond the
jurisdiction of Binzhou Intermediate Court. The defendant raised an objection on
jurisdiction in accordance with relevant laws and regulations, requesting Binzhou
Intermediate Court to transfer the case to Shandong High Court. As for such objection,
Binzhou Intermediate Court made the rulings as follows:
“Transfer the case to Shandong High Court for trial”.
The Announcement on the aforesaid case was disclosed on Securities Times and Ta Kung
Pao dated Oct. 25, 2011 with Announcement No. 2011-038.
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 commodities, as well as providing and
receiving labor services
Related transactions on purchasing commodities and receiving labor services
2011 2010
Rule of
Details of
Related parties price Propotion Propotion
transaction Amount Amount
setting %
） （ %
） （
40,506.00 0.01 475,847.22 0.11
Wuhan Boiler Group Market
Boiler parts
Valve Co., Ltd. price
4,436,951.58 1.01
Wuhan Boiler (Group)
Market
Special Boiler Boiler parts
price
Engineering Co., Ltd.
24,285,640.99 7.87 19,717,948.72 4.51
ALSTOM Technical
Market
Services (Shanghai) Co., Raw material
price
Ltd.
42
2011 2010
Rule of
Details of
Related parties price Propotion Propotion
transaction Amount Amount
setting %
） （ %
） （
ALSTOM s.r.o 1,187,674.37 0.39 2,399,827.56 0.55
Market
Raw material
price
ALSTOM Power Service Market 16,879,708.57 100
Labor service
GmbH price
2,649,300.00 59.68
Wuhan Boiler (Group)
Market
Special Boiler Labor service
price
Engineering Co., Ltd.
ALSTOM Power Systems Market 2,837,547.00 0.92 5,114,984.98 1.17
Raw material
S.A Etablissement Boilers price
ALSTOM Power System Market 51,925,074.91 16.84 138,323,945.45 31.62
Raw material
GmbH price
Wuhan Boiler (Group) 4,977,108.90 100.00 13,157,402.24 74.43
Transport Market
Yuntong Co., Ltd
service price
Related transactions on selling commodities and providing labor services
2011 2010
Related parties Details of Rule of price
Propotion Propotion
transaction setting Amount Amount
%
） （ %
） （
Wuhan Boiler (Group) 856,223.33 0.14
Sales of Market price
Special Boiler
products
Engineering Co., Ltd.
ALSTOM Power 1,654,424.15 0.33 23,158,666.00 3.85
Sales of Market price
Systems S.A
products
Etablissement Boilers
194,912,137.57 39.16 182,937,634.29 30.43
ALSTOM Power System Sales of Market price
GmbH products
ALSTOM Sizhou 683,760.68 0.11
Sales of Market price
Electric Power
products
Equipment (Qingdao)
Co. Ltd
ALSTOM (Wuhan) 2,592,397.96 100.00
Labor Market price
Engineering &
service
Technology Co., Ltd.
43
2011 2010
Related parties Details of Rule of price
Propotion Propotion
transaction setting Amount Amount
%
） （ %
） （
PT ALSTOM Power Sales of 1,028,216.42 6.16
Market price
Energy System Indonesia materials
ALSTOM Power INC. Sales of 1,243,445.58 7.45
Market price
materials
ALSTOM Power INC. Sales of 4,685,285.58 0.94
Market price
products
(2) Related transactions on leasing
None
(3) Other related transactions
Related parties Transactions Amount
ALSTOM Holdings Training fees 191,906.45
ALSTOM IS&T SAS ITSAS fees 6,727,182.07
ALSTOM (China) Investment Co., Ltd. ITSSC fees 5,850,356.07
ALSTOM (China) Investment Co., Ltd. Training fees 174,335.86
ALSTOM (Wuhan) Engineering & Technology Co., Ltd. Translation fees 433,109.00
ALSTOM (Wuhan) Engineering & Technology Co., Ltd. Experiment service fee 791,650.00
ALSTOM (Wuhan) Engineering & Technology Co., Ltd. Leasehold income 571,479.00
ALSTOM Technology Ltd (Switzerland) Technology transfer fee 7,505,484.40
PDMS software
ALSTOM (Switzerland) Ltd 416,702.25
application service fees
ALSTOM (Switzerland) Ltd Relocation of Windsor Lab 584,386.19
PMX Financial software
ALSTOM (Switzerland) Ltd 4,693,831.04
support fees
SAP B1 Financial
ALSTOM (Switzerland) Ltd 87,702.72
software costs
(4) Alstom (China) Investment Co., Ltd., the Company’s controlling shareholder, entrusted
China Construction Bank to provide a loan of RMB 1,563,000,000.00 to the Company at
10% discount off the benchmark interest rate. The Company paid RMB 76,026,715.38 loan
interest in 2011.
IV. Significant contracts and their implementation
(1) In the report period, there were no such events such 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 any guarantee to its controlled subsidiaries.
44
(3) In the report period, the Company did not entrust others to manage its cash assets.
V. Derivatives investment and derivative investment positions held by the Company at 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 value of the derivatives should
----
include the specific use methods and the relevant assumptions and
parameters.
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 derivatives investment and risk control
Table 2
Unit: RMB 10,000
Proportion of the
Gain or loss in the closing contract
Beginning Closing contract
Type of contract report period amount in the closing
contract amount amount
(RMB 10,000) net assets of the
Company (%)
--- --- --- --- ---
Total --- --- --- ---
VI. Commitments made by the Company, its directors, supervisors, senior management,
shareholders holding more than 5% of the Company’s shares, actual controller or any other
relevant party in the report period, or such commitments carried down to the report period
Commitment
Commitment Contents of commitment Execution
maker
Commitment
concerning the share None None None
reform
Commitment
concerning share None None None
trading lock-up
Commitments made
in a purchase report
or a report on None None None
changes of owners’
equity
Commitments made
in material asset None None None
reorganization
Commitments made
None None None
when issuing
45
(1) Capital commitments (1) The performance of
Up to December 31, 2011, the previous year’s capital
commitment related to purchases commitments:
of long-term assets which the The amount of prior
contract were signed but not year's capital
reflected in the financial commitments fulfilled in
statements amounted to 2011 was
RMB2,218,930.85, RMB40,911,747.16,
Other commitments USD157,085.00, EUR15,071.50. USD270,881.00,
(including The Company EUR117,999.50.
supplementary ones) (2) Other commitments
Up to December 31, 2011, the (2) The performance of
performance bond, tender bond previous year’s other
and warranty bond issued by the commitments:
Company remain unexpired The amount of bond
amounted to RMB78,068,360.00 expired in 2011 were:
and USD3,126,920.00. The performance bond RMB
tender bond issued in 2011 was 31,450,000.00, tender
RMB 1,600,000.00. bond RMB 1,600,000.00.
VII. Engagement or dismissal of CPA firms
In the report period, the Company continued to engage Zhonghuan Haihua Certified Public
Accountants Co., Ltd. as the auditing agency.
Expenses arising from accommodation, travel, telecommunication, photocopying, etc.
during the auditing period would be paid by Zhonghuan Haihua Certified Public
Accountants Co., Ltd.. In the report period, the Company had withdrawn, at full amount,
the auditing charge of 2011 Financial Report.
Zhonghuan Haihua Certified Public Accountants Co., Ltd. had provided auditing service to
the Company for 14 accounting years (including this year) in succession.
VIII. Visits, researches and interviews received by the Company
In the report period, according to the Guide on Fair Information Disclosure for Listed
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.
Main discussion and materials provided
Time Place Way of reception Visitor
by the Company
Production and operation situation,
Jan. - Dec. By telephone and Public
Wuhan annual operating results and progress of
2011 on-site acceptance investor
listing restoration, etc.
IX. Investigations and punishments received
In the 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 the stock exchange.
X. There was no other significant events in the report period.
Please see the Financial Report.
XI. Contingent
46
There was no other event to disclose during this report period
XII. Subsequent events
As at 28 March 2012, the Company received the civil mediation statement issued by the
High Court of Shandong Province. According to the mediation statement, both of
Shandong Weiqiao Aluminium Co., Ltd. and Binzhou Gaoxin Aluminium Co.,Ltd shall pay
RMB105,003,000.00 to the Company, and terminate the boiler supply contracts signed
among the three parties in 2006 and 2007 at the same time. Meanwhile, the Company will
sign a new contract of four sets of subcritical pulverized coal boilers with Shandong
Weiqiao Chuangye group and Binzhou Beihai New material Co.,Ltd. Since the above
contract execution needs a long period, it is unable to estimate the impact of this matter to
the financial position and operating results of the Company at present.
Section XI Financial Report
I. Auditing opinions
2011 Financial Report of the Company had been audited by Zhonghuan Haihua Certified
Public Accountants Co., Ltd. and a standard Auditor’s Report with unqualified opinion had
been issued.
(1) Auditor’s Report (attached)
(2) Financial Statements and Notes (attached)
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 Auditor’s Report with the signatures and seals of Chinese CPAs,
which has been audited by Zhonghuan Haihua Certified Public Accountants Co., 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 the report period.
IV. Original copy of 2011 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
April 25, 2012
47
ZHONG HUAN HAI HUA Office: Zhong Huan Building, No.169 Dong Hu Road, Wuhan, China
CERTIFIED PUBLIC ACCOUNTANTS Postcode: 430077 Tel (86) (27) 85836779
： Fax (86) (27) 85424329
：
AUDITOR’S REPORT
ZHSZ 2012 No.777
（ ）
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 2011, 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 Standards (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 involves performing audit procedures, so as to obtain audit evidence supporting the amounts
and disclosures in the financial statements. The procedures selected depend on the auditors’ judgments,
including the assessment of risks of material misstatement of these financial statements whether due to
fraud or error. In making those risk assessment, we consider internal controls relevant to the company’s
preparation and fair presentation of these financial statements in order to design appropriate audit
procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on
the effectiveness of the company’s 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, 2011 and the
results of its operations and its cash flows for the year then ended.
Zhonghuan Haihua Certified Public Accountants Co., Ltd CICPA Zhu Ye
CICPA Zhong Jianbing
Wuhan, China April 25, 2012
48
Consolidated Balance Sheet (Assets)
Consol. No.1
Wuhan Boiler Co., Ltd ：
Currency RMB
Assets Notes 31/Dec/11 31/Dec/10
Current assets
Cash and cash equivalents 5.1 22,999,242.02 13,974,304.97
Settlement fund
Outgoing call loan
Trading finanical assets
Notes receivable 5.2 30,800,000.00 43,164,000.00
Accounts receivable 5.3 371,210,285.79 364,514,763.75
Prepayment 5.5 39,005,432.77 111,894,344.81
Insurance receivables
Reinsurance Receivable
Provision of reinsurance contract reserve receivable
Interests receivable
Dividend receivable
Other receivables 5.4 103,236,840.39 136,383,710.94
Financial assets purchased under agreement to resell
Inventories 5.6 240,116,922.49 169,307,374.03
Non-current assets due within 1-year
Other current assets
Total current assets 807,368,723.46 839,238,498.50
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 5.7 766,802,430.73 776,284,766.29
Construction in progess 5.8 2,398,543.47 50,952,741.50
Engieering materials
Disposal of fixed assets
Production biological assets
Oil-gas assets
Intangible assets 5.9 85,835,314.34 57,323,977.87
R&D expenses
Goodwill
Long-term deferred expenses
Deferred tax assets 5.10 80,882,420.54 62,321,677.84
Other non-current assets 5.12 5,790,508.71 420,895.71
Total non-current assets 941,709,217.79 947,304,059.21
Total assets 1,749,077,941.25 1,786,542,557.71
Legal Representative: Chief Financial Official: Chief Accountant:
49
Consolidated Balance Sheet (Liabilities and Equity)
Consol. No.1
Wuhan Boiler Co., Ltd ：
Currency RMB
Liabilities and shareholder's equity Notes 31-Dec-11 31-Dec-10
：
Current liabilities
Short-term loans 5.13 1,563,000,000.00 1,152,000,000.00
Loans from central bank
Deposits received and hold for others
Call loan received
Held-for-trading financial liabilities
Notes payable 5.14 45,548,201.49 18,704,256.28
Accounts payable 5.15 309,278,906.64 315,446,635.93
Advance from customers 5.16 912,493,449.25 1,059,336,631.48
Financial assets sold under agreements to repurchase
Fees and commissions payable
Payroll payable 5.17 57,680,171.01 70,602,009.08
Taxes payable 5.18 -108,883,733.20 -88,432,481.81
Interests payable 5.19 2,016,270.00 2,003,046.13
Dividend payable 5.20 562,000.00 562,000.00
Other payables 5.21 97,831,275.42 85,685,084.50
Amount due to reinsurance
Insurance contract provision
Entrusted trading of sesurities
Entrusted selling of securities
Non-current liabilities due within 1-year
Other current liabilities
：
Total current liabilities 2,879,526,540.61 2,615,907,181.59
Non-current liabilities ：
Long-term loans
Bonds payable
Long-term payables
Specific payables
Provision for liabilities 5.22 50,387,210.32
Deferred taxes liabilities
Other non-current liabilities 5.23 16,132,004.95 3,291,690.22
Total non-current liabilities： 16,132,004.95 53,678,900.54
Total liabilities 2,895,658,545.56 2,669,586,082.13
Shareholders' Equity ：
Share capital 5.24 297,000,000.00 297,000,000.00
Capital surplus 5.25 174,659,407.46 174,659,407.46
：
Less Treasury Stock
Special reserve funds
Surplus reserve 5.26 39,418,356.83 39,418,356.83
General risk provision
Retained earnings 5.27 -1,659,956,146.16 -1,396,503,437.13
Foreign exchange difference
Total shareholders' equity attributable to shareholders of the Company -1,148,878,381.87 -885,425,672.84
Minority interest 2,297,777.56 2,382,148.42
Total shareholders' equity -1,146,580,604.31 -883,043,524.42
Total liabilities & shareholders' equity 1,749,077,941.25 1,786,542,557.71
Legal Representative: Chief Financial Official: Chief Accountant:
50
Consolidated Income Statement
Consol. No.2
Wuhan Boiler Co., Ltd ：
Currency RMB
Items Notes Year 2010 Year 2009
I. Total revenue 518,177,439.70 623,370,633.11
Including: revenue 5.28 518,177,439.70 623,370,633.11
Interest income
Insurance fee income
Fee and commission income
II. Total cost of sales 793,790,275.44 696,527,549.82
Including: Cost of sales 5.28 540,488,213.48 603,397,485.95
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 5.30 136,187.73 -70,486.42
Selling expenses 5.31 11,264,512.75 17,415,665.92
Administration expenses 5.32 28,322,676.90 56,935,677.76
Financial costs 5.33 80,696,817.66 79,850,083.79
Impairment loss 5.34 132,881,866.92 -61,000,877.18
Plus: gain/loss on change in fair value (“-”for loss) 5.35 -7,075,835.00 142,442.98
gain/loss on investment(“-”for loss)
Including: income from investment on associates and jointly ventures
Gain or loss on foreign exchange difference (“-”for loss)
III. Operating profit(“-”for loss) -282,688,670.74 -73,014,473.73
Plus: non-operating income 5.36 641,514.50 104,708,173.59
Less: non-operating expense 5.37 50,666.35 780,193.63
Including: loss from disposal of non-current asset 50,666.35 223,151.23
IV. Total profit(“-”for loss) -282,097,822.59 30,913,506.23
Less: income tax expense 5.38 -18,560,742.70 22,675,459.67
V. Net profit(“-”for loss) -263,537,079.89 8,238,046.56
including: net profit gained by combined company before combination
Including:Attributable to equity holders of the parent company -263,452,709.03 8,535,924.33
Minority interest -84,370.86 -297,877.77
VI. Earnings per share
(I) basic earnings per share ( ￥ /share) 5.39 -0.89 0.03
￥
(II) diluted earnings per share ( /share) 5.39 -0.89 0.03
Ⅶ Other Comprehensive Income
Ⅷ Total Comprehensive Income -263,537,079.89 8,238,046.56
including: parent company's total comprehensive Income -263,452,709.03 8,535,924.33
including: Minority's total comprehensive Income -84,370.86 -297,877.77
Legal Representative: Chief Financial Official: Chief Accountant:
51
Consoliated Cashflow Statement
Consol. No. 3
Wuhan Boiler Co., Ltd ：
Currency RMB
Items Notes Year 2011 Year 2010
1. Cash flows from operating activities
Cash received from sales of goods or rendering of services 372,769,310.22 2,139,388,784.07
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 5.40 37,884.15 114,410,564.88
Sub-total of cash inflows from operating activities 372,807,194.37 2,253,799,348.95
Cash paid for goods and services 492,147,345.35 829,907,026.29
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 155,067,205.34 148,089,490.68
Cash paid for all types of taxes 7,234,070.12 18,339,342.41
Other cash paid relating to operating activities 5.40 29,112,239.00 39,880,344.55
Sub-total of cash outflows from operating activities 683,560,859.81 1,036,216,203.93
Net cash flow from operating activities -310,753,665.44 1,217,583,145.02
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 33,660.00 3,755,427.51
Net cash received from disposal of subsidiaries and other operating units
Other cash received relating to investing activities 5.40 1,900,334.54 1,939,089.82
Sub-total of cash inflows from investing activities 1,933,994.54 5,694,517.33
Cash paid for acquisition of fixed assets, intangible assets and other long-term assets 13,569,997.73 78,026,202.72
Cash paid for acquisition of investments
Net increase of pledged loans
Net cash paid for acquisition of subsidiaries and other operating units
Other cash paid relating to investing activities 5.40 779,563.36 273,479.76
Sub-total of cash outflows from investing activities 14,349,561.09 78,299,682.48
Net cash flow from investing activities -12,415,566.55 -72,605,165.15
3. Cash Flows from Financing Activities:
Cash received from investment
Including: Cash received from minority shareholders of subsidiaries
Cash received from borrowings 751,000,000.00 1,020,000,000.00
Cash received from bonds issuing
Cash received relating to financing activities
Sub-total of cash inflows from financing activities 751,000,000.00 1,020,000,000.00
Cash paid for repayments of borrowings 340,000,000.00 2,103,000,000.00
Cash paid for dividends, profit distribution or interest 76,026,715.38 79,487,904.25
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 416,026,715.38 2,182,487,904.25
Net cash flow from financing activities 334,973,284.62 -1,162,487,904.25
4. Effect of foreign exchange rate changes -1,907,297.65 886,893.51
5. Net decrease in cash and cash equivalents 9,896,754.98 -16,623,030.87
Add : Cash and cash equivalents at the beginning of the year 5.41 10,491,275.05 27,114,305.92
6. Cash and cash equivalents at the end of the year 5.41 20,388,030.03 10,491,275.05
Legal Representative: Chief Financial Official: Chief Accountant:
52
Consolidated Statement of Change in Equity
Consol. No. 4
Wuhan Boiler Co., Ltd Currency RMB
：
Year 2011
Shareholders' equity belonged to shareholders' of the Company
Items Less: Special General
Minority interest Total
Share capital Capital reserve Treasur reserve Surplus reserve Risk Retained earnings others
y stock fund provision
I. Balance at 31 December, 2009 297,000,000.00 174,659,407.46 39,418,356.83 -1,396,503,437.13 2,382,148.42 -883,043,524.42
Change in accounting policies
Correction of errors in previous period
Others
II. Balance at 1 January, 2010 297,000,000.00 174,659,407.46 39,418,356.83 -1,396,503,437.13 2,382,148.42 -883,043,524.42
III. Increase/ decrease during the financial year (“-”for loss) -263,452,709.03 -84,370.86 -263,537,079.89
(I) Net profit -263,452,709.03 -84,370.86 -263,537,079.89
(II) Other comprehensive income
Subtotal of (I)and (II) -263,452,709.03 -84,370.86 -263,537,079.89
(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, 2010 297,000,000.00 174,659,407.46 39,418,356.83 -1,659,956,146.16 2,297,777.56 -1,146,580,604.31
Legal Representative: Chief Financial Official: Chief Accountant:
53
Consolidated Statement of Change in Equity
Consol. No. 4
Wuhan Boiler Co., Ltd ：
Currency RMB
Year 2010
Shareholders' equity belonged to shareholders' of the Company
Items Less: Special General
Minority interest Total
Share capital Capital reserve Treasur reserve Surplus reserve Risk Retained earnings others
y stock fund provision
I. Balance at 31 December, 2008 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
Plus: 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 -1,405,039,361.46 2,680,026.19 -891,281,570.98
III. Increase/ decrease during the financial year (“-”for loss) 8,535,924.33 -297,877.77 8,238,046.56
(I) Net profit 8,535,924.33 -297,877.77 8,238,046.56
(II) Other comprehensive income
Subtotal of (I)and (II) 8,535,924.33 -297,877.77 8,238,046.56
(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 -1,396,503,437.13 2,382,148.42 -883,043,524.42
Legal Representative: Chief Financial Official: Chief Accountant:
54
Balance Sheet (Assets)
Consol. No.1
Wuhan Boiler Co., Ltd ：
Currency RMB
Assets Notes 31-Dec-11 31-Dec-10
Current assets
Cash and cash equivalents 21,560,606.33 13,310,174.46
Trading finanical assets
Notes receivable 30,800,000.00 42,164,000.00
Accounts receivable 1.01 369,042,511.88 358,592,870.99
Prepayment 39,005,432.77 111,894,344.81
Interest receivables
Dividend receivables
Other receivables 2.01 103,457,164.68 136,373,830.94
Inventories 240,116,922.49 169,307,374.03
Non-current assets due within 1-year
Other current assets
Total current assets 803,982,638.15 831,642,595.23
Non-current assets ：
Available-for-sale financial assets
Investment held to maturity
Long-term receivables
Long-term equity investment 3.01 39,234,287.13 39,234,287.13
Investment property
Fixed assets 766,959,407.72 776,441,743.28
Construction in progess 2,398,543.47 50,952,741.50
Engieering materials
Disposal of fixed assets
Production biological assets
Oil-gas assets
Intangible assets 85,835,314.34 57,323,977.87
R&D expenses
Goodwill
Long-term deferred expenses
Deferred tax 80,882,420.54 62,321,677.84
Other non-current assets 5,790,508.71 420,895.71
Total non-current assets 981,100,481.91 986,695,323.33
Total assets 1,785,083,120.06 1,818,337,918.56
Legal Representative: Chief Financial Official: Chief Accountant:
55
Balance Sheet (Liabilities and Equity)
Consol. No.1
Wuhan Boiler Co., Ltd ：
Currency RMB
Liabilities and shareholder's equity Notes 31-Dec-11 31-Dec-10
Current liabilities ：
Short-term loan 1,563,000,000.00 1,152,000,000.00
Held-for-trading financial liabilities
Notes payable 45,548,201.49 18,704,256.28
Accounts payable 314,236,789.08 320,392,299.70
Advance from customers 912,493,449.25 1,059,336,631.48
Payroll payable 57,479,531.47 70,401,369.54
Taxes payable -108,883,733.20 -88,432,481.81
Interests payable 2,016,270.00 2,003,046.13
Dividend payables
Other payables 135,779,767.30 119,817,611.28
Non-current liabilities due within 1-year
Other current liabilities
Total current liabilities ： 2,921,670,275.39 2,654,222,732.60
Non-current liabilities ：
Long-term loans
Bonds payable
Long-term payables
Specific payables
Provision for liabilities 50,387,210.32
Deferred taxes liabilities
Other non-current liabilities 16,132,004.95 3,291,690.22
Total non-current liabilities ： 16,132,004.95 53,678,900.54
Total liabilities 2,937,802,280.34 2,707,901,633.14
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 -1,663,991,821.23 -1,400,836,375.53
Total shareholders' equity: -1,152,719,160.28 -889,563,714.58
Total liabilities and shareholders' equity: 1,785,083,120.06 1,818,337,918.56
Legal Representative: Chief Financial Official: Chief Accountant:
56
Income Statement
Consol. No.2
Wuhan Boiler Co., Ltd Currency RMB
：
Items Notes Year 2011 Year 2010
I. Total revenue 10.4 518,177,439.70 623,587,785.11
Less ： cost of sales 10.4 540,488,213.48 603,397,485.95
Business taxes and surcharges 136,187.73 -88,684.13
Selling expenses 11,264,512.75 17,415,665.92
Administration expenses 28,304,151.56 56,033,991.21
Financial costs 80,715,188.85 79,860,442.72
Impairment loss 132,500,386.88 -62,101,927.34
Plus: gain/loss on change in fair value (“-”for loss) -7,075,835.00 142,442.98
gain/loss on investment(“-”for loss) - -
Including: income from investment on associates and jointly ventures - -
Ⅱ. Operating profit(“-”for loss) -282,307,036.55 -70,786,746.24
Plus: non-operating income 641,514.50 104,618,174.45
Less: non-operating expense 50,666.35 482,964.39
Including: loss from disposal of non-current asset 50,666.35 153,304.39
Ⅲ. Total profit(“-”for loss) -281,716,188.40 33,348,463.82
Less: income tax expense -18,560,742.70 22,541,765.92
Ⅳ. Net profit(“-”for loss) -263,155,445.70 10,806,697.90
Ⅴ. Earnings per share
(I) basic earnings per share ( ￥ /share) -0.89 0.04
(II) diluted earnings per share ( ￥ /share) -0.89 0.04
Other comprehensive income
Total comprehensive income -263,155,445.70 10,806,697.90
Legal Representative: Chief Financial Official: Chief Accountant:
57
Cashflow Statement
Consol. No. 3
Wuhan Boiler Co., Ltd Currency RMB
：
Items Notes Year 2011 Year 2010
1. Cash flows from operating activities
Cash received from sales of goods or rendering of services 372,222,650.48 2,139,388,784.07
Tax returned
Other cash received from operating activities 461,102.82 113,724,156.43
Sub-total of cash inflows from operating activities 372,683,753.30 2,253,112,940.50
Cash paid for goods and services 492,146,492.55 831,089,090.69
Cash paid to and for employees 155,067,205.34 146,996,161.75
Cash paid for all types of taxes 7,234,070.12 18,000,743.98
Other cash paid relating to operating activities 29,745,544.72 38,664,712.18
Sub-total of cash outflows from operating activities 684,193,312.73 1,034,750,708.60
Net cash flow from operating activities -311,509,559.43 1,218,362,231.90
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 33,660.00 3,379,262.51
Net cash received from disposal of subsidiaries and other operating units
Other cash received relating to investing activities 1,881,373.35 1,928,730.89
Sub-total of cash inflows from investing activities 1,915,033.35 5,307,993.40
Cash paid for acquisition of fixed assets, intangible assets and other long-term assets 13,569,997.73 78,026,202.72
Cash paid for acquisition of investments
Net cash paid for acquisition of subsidiaries and other operating units
Other cash paid relating to investing activities 779,213.36 273,479.76
Sub-total of cash outflows from investing activities 14,349,211.09 78,299,682.48
Net cash flow from investing activities -12,434,177.74 -72,991,689.08
3. Cash Flows from Financing Activities:
Cash received from investment
Cash received from borrowings 751,000,000.00 1,020,000,000.00
Cash received relating to financing activities
Sub-total of cash inflows from financing activities 751,000,000.00 1,020,000,000.00
Cash paid for repayments of borrowings 340,000,000.00 2,103,000,000.00
Cash paid for dividends, profit distribution or interest 76,026,715.38 79,487,904.25
Other cash payments relating to financing activities
Sub-total of cash outflows from financing activities 416,026,715.38 2,182,487,904.25
Net cash flow from financing activities 334,973,284.62 -1,162,487,904.25
4. Effect of foreign exchange rate changes -1,907,297.65 886,893.51
5. Increase in cash and cash equivalents 10.5 9,122,249.80 -16,230,467.92
Add : Cash and cash equivalents at the beginning of the year 10.5 9,827,144.54 26,057,612.46
6. Cash and cash equivalents at the end of the year 10.5 18,949,394.34 9,827,144.54
Legal Representative: Chief Financial Official: Chief Accountant:
58
Statement of Change in Equity
Consol. No. 4
Wuhan Boiler Co., Ltd ：
Currency RMB
Year 2011
Items Less: Special reserve General Risk
Share capital Capital reserve Surplus reserve Retained earnings Total
Treasury stock fund provision
I. Balance at 31 December, 2009 297,000,000.00 174,854,304.12 39,418,356.83 -1,400,836,375.53 -889,563,714.58
Change in accounting policies
Correction of errors in previous period
Others
II. Balance at 1 January, 2010 297,000,000.00 174,854,304.12 39,418,356.83 -1,400,836,375.53 -889,563,714.58
III. Increase/ decrease during the financial year (“-”for loss) -263,155,445.70 -263,155,445.70
(I) Net profit -263,155,445.70 -263,155,445.70
(II) Other comprehensive income
Subtotal of (I)and (II) -263,155,445.70 -263,155,445.70
(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, 2010 297,000,000.00 174,854,304.12 39,418,356.83 -1,663,991,821.23 -1,152,719,160.28
Legal Representative: Chief Financial Official: Chief Accountant:
59
Statement of Change in Equity
Consol. No. 4
Wuhan Boiler Co., Ltd ：
Currency RMB
Year 2010
Items Less: Special reserve General Risk
Share capital Capital reserve Surplus reserve Retained earnings Total
Treasury stock fund provision
I. Balance at 31 December, 2008 297,000,000.00 174,854,304.12 39,418,356.83 -1,411,643,073.43 -900,370,412.48
Plus: 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 -1,411,643,073.43 -900,370,412.48
III. Increase/ decrease during the financial year (“-”for loss) 10,806,697.90 10,806,697.90
(I) Net profit 10,806,697.90 10,806,697.90
(II) Other comprehensive income
Subtotal of (I)and (II) 10,806,697.90 10,806,697.90
(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 -1,400,836,375.53 -889,563,714.58
Legal Representative: Chief Financial Official: Chief Accountant:
60
NOTES TO THE FINANCIAL STATEMENTS
As of December 31, 2011
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 total number of issued shares outstanding of the Company is
297,000,000. The ‘Group’ holds 172,000,000 shares accounting for 57.91% of total issued equity, and
the public shareholders (Domestically listed share in foreign currency) hold 125,000,000 shares
accounting for 42.09% of total 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. As at December 31, 2011, Alstom (China) Investment Co., Ltd, Wuhan Boiler (Group) Co.,
Ltd and public shareholders hold 151,470,000 shares, 20,530,000 shares and 125,000,000 shares
respectively, accounting for 51%, 6.91% and 42.09% of total shareholding respectively.
1. The register capital of the Company is 297,000,000.00.
2. No.1 LiuFangYuan Road, Donghu New Technology Development District, Wuhan, Hubei.
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, and desulfurization
equipments and so on. The Company is a big boiler manufacturing enterprise and the main operating
activities 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 categories 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 environment friendly. The special boilers include alkali
61
recovery boilers, circulating fluidized bed boilers, bagasse-fired boilers, the stand vertical-burning
boilers, liquid slag-off boilers, and waste heat boilers and so on.
4. The 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 9th
Meeting of the 5th Board of Directors on April 25, 2012.
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 events 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 reporting currency.
5. Accounting method of business combination under the same control and not under the same
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
62
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 earnings are 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 transactions, equity investment in
acquiree held by acquirer before the acquisition date shall be disclosed differently in separate and
consolidated financial statements:
i.On separate financial statements, both carrying amount of equity investment in acquiree held by
acquirer before the acquisition date and the increase in the cost of equity investment on that date,
shall be included in the initial investment costs; on disposal of the equity investment, any related
other comprehensive income(e.g. available-for-sale financial assets at fair value through capital
reserve), shall be transferred to investment income in the period, if equity investment in acquiree
held by acquirer before the acquisition date involves other comprehensive income.
ii.On consolidated financial statements, equity investment in acquiree held by acquirer before the
acquisition date, shall be revalued at fair value on that date, and the difference shall be included in
investment income in the period; any related other comprehensive income shall be transferred to
63
investment income in the period on the acquisition date, if equity investment in acquiree held by
acquirer before the acquisition date involves other comprehensive income. Moreover, the acquirer
shall disclose the fair value of this equity investment on the acquisition date and related profit or
loss recognized from the revaluation in the notes.
c) The business combination costs that are directly attributable to the combination, such as audit fees,
valuation fees, legal service fees and other administration cost should be recognized in profit or loss
during the current period when they occurred; commissions and other expenses for the issuance of
equity or debt securities for the business combination, shall be recognized as the initial recognition
amounts of equity or debt securities
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.
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
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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
The scope of consolidated financial statements 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 entity 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 are evidences 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 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.
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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
In the consolidated financial statement, when the proportion of minority’s obligation for the current
subsidiaries’ losses exceeds the equity hold by theses minority shareholder, the excess amount should
still offset minority’s interest.
(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, cash flow 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, cash flow 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
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the reporting period, cash flow 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 of change of value.
8. Foreign currency translations
Any transaction is converted into the reporting currency according to the approximate exchange rate of
the spot 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
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‘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 spot rate on the transaction occurring date. The foreign exchange
difference arisen from the translation of foreign currency financial statements 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
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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 which 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
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）
a Held-to-maturity investments, loans and receivables
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 in the profit or loss of the
current period.
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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
①The Company's financial liabilities are classified as financial liabilities at fair value through profit or
loss, and other financial liabilities.
②Financial 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.
③Subsequent 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 transfer
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
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difference between the follows is recognised in profit or loss of the current period.
①the carrying amount of transferring financial assets;
②the 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.
①the carrying amount allocated to the part derecognised;
②the 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. Recognition and measurement of bad debt provision for accounts receivables
(1) Recognition and measurement of bad debt provision for the individually significant receivables
Judgement basis or monetary standards Top 5 of account receivables at year end.
of provision for bad debts of the
individually significant receivables
Method of provision for bad debts of the The impairment test is carried on individually for each
individually significant receivables individually significant receivable.
A. If there are substantive evidences indicated that a
receivable has been impaired, it should make a provision for
bad debts.
B. If a receivable is found not to be individually impaired,
it should be included in a group of similar credit risk
characteristics receivables and make a collective assessment
of impairment.
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(2) Recognition and measurement of bad debt provision for groups of receivables
Recognition of groups of receivables
Names of group Basis of recognition
Besides the receivables which are individually impaired, the Company determines
measurement of bad debt provision for groups of receivables on the basis of
Group A analyzing actual situation, and assessing the same or similar actual impairment rate
of groups of receivables with similar credit risk characteristics, which divided by
aging analysis in previous periods.
Receivables with confirmed letter credit or guarantee from the bank and provision
Group B for sales tax which is to be paid as stipulated in contract are not classified as
provision for bad debts.
Measurement of bad debt provision for groups of receivables
Names of group Measurement
Group A Aging analysis method
Group B No bad debt provision
The aging analysis method for groups of receivables
Proportion of Accounts Proportion of Other
Aging of receivables
receivables (%) 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
(3) Receivables which are not significant, but still need individually recognition of bad debt provision.
Reason If there are substantive evidences shown there is a special impairment of insignificant
receivables, then they need individually impairment tests.
Method Measurement of the percentage of bad debts provision is based on current situation.
11. Inventory
(1) Inventories are asset items held for sale in the ordinary 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:
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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:
①It is probable that future economic benefits associated with the inventories will flow to the Company
entity;
②The cost of the inventories can be measured reliably.
(3) The method of measuring inventories: Raw materials and circulating materials are measured at
actual cost method. The moving weighted average method shall be used when sending out these
materials. 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.
①Estimation 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.
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.
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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
produced 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 deducting 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 contract
should be included as contract costs when the contract is acquired, where the costs could 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:
①For long-term equity investment arising from business combination, the initial cost is recognized
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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
earnings 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 earnings 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 earnings 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 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 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
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when they occurred; commissions and other expenses for the issuance of equity or debt securities for the
business combination, shall be recognized as the initial recognition amounts of equity or debt securities.
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’.
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.
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(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-term 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.
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③ The Company adopts the accounting policy of recognition and measurement 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.
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 jointly control and significant influence:
If the investment satisfies the following conditions, the company has jointly controls over the investee:
(1) None 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 venture. (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 satisfies the following conditions, the company has significant influence over the
investee: (1) there is commissary in the directorate or similar right organization of investee. (2)
Participate decision-making process, including the process of dividend distribution. (3) There is
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
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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:
Estimated Useful Lives Residual value Annual Depreciation Rate
The categories
(years) (%) (%)
Property and buildings 40 0 2.50
Machineries 7-20 0 14.29-5.00
Vehicles 6 0 16.67
Electronic equipment 3-18 0 33.33-5.56
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.
80
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 the 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 costs 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) The principles for capitalization of borrowing costs and capitalization period
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;
81
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.
(2) Calculation 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.
82
(1) Recognition of intangible assets
The Company recognizes an intangible asset when that intangible asset fulfills both of the following
conditions:
①It is probable that the economic benefits associated with that asset will flow to the Company and,
②The 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:
①The technical feasibility of completing the intangible asset so that it will be available for use or sale;
②Its intention to complete the intangible asset and use or sell it;
③The 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;
④The 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
①An intangible asset is measured initially at its cost.
②Subsequent 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
83
(1) Recognition of contingent liabilities
The company should recognize the related obligation as a provision for liability when the obligation
meets the following conditions:
①That obligation is a present obligation of the enterprise;
②It is probable that an outflow of economic benefits from the enterprise will be required to settle the
obligation;
③A 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 expenditure
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:
①Where the contingency involves a single item, the best estimate involves a single item, the best
estimate should be determined according to the most likely outcome;
②Where 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
84
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.
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 accumulative estimated contract costs exceed the contract revenue, an estimated loss should
be recognized in 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
85
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 total 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 warranty cost at 0.5% of total contract revenue pro-rate for the first 12-month
warranty period and additional 0.25% pro-rate for each subsequent 12-month period and charges it into
cost of sales for the period.
21. Government Grants
(1) Recognition of government grants
No government grants may be recognized unless the following conditions are met simultaneously:
① The company is able to meet the requirements for the government subsidies; and
② The company can receive the government subsidies.
(2) Measurement of government grants
86
① If a government subsidy is a monetary asset, it shall be measured in the light of the received or
receivable amount; if a government subsidy is a non-monetary asset, it shall be measured at its fair value.
If its fair value cannot be obtained in a reliable way, it shall be measured at its nominal amount.
② The government subsidies pertinent to assets shall be recognized as deferred income, equally
distributed within the useful lives of the relevant assets, and included in the current profits and losses. If
the relevant assets are sold, transferred, obsolete or destroyed before useful lives end, undistributed
deferred income shall be recognized as the current profits and losses of disposal of assets.
The government subsidies pertinent to incomes shall be treated respectively in accordance with the
circumstances as follows:
A. Those subsidies used for compensating the related future expenses or losses of the enterprise shall
be recognized as deferred income and shall be included in the current profits and losses during the
period when the relevant expenses are recognized; or
B. Those subsidies used for compensating the related expenses or losses incurred to the enterprise
shall be directly included in the current profits and losses.
③ If it is necessary to refund any government subsidy which has been recognized, it shall be treated
respectively in accordance with the circumstances as follows:
A. If there is the deferred income concerned, the book balance of the deferred income shall be offset
against, but the excessive part shall be included in the current profits and losses; and
B. If there is no deferred income concerned to the government subsidy, it shall be directly included in
the current profits and losses.
22. 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.
87
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
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.
23. 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.
88
）（
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 cannot 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 current financial income; Contingent rents shall be charged as
expenses in the periods in which they are incurred.
24. Assets held for sales:
(1) Recognition criteria of the assets held for sale
89
The Non-Current Assets which meet the following conditions will be classified as assets held for sales
by the company:
①The entity has made the resolution in disposing the non-current assets.
②The entity has signed the irrevocable transfer agreement with the assignee.
③The 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.
25. 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.
(4) When the following conditions are satisfied, the company stop using the fair value hedging:
A. Hedging instruments expired, sold, contract terminated or executed.
90
B. The hedge can no longer satisfy the conditions in using the method of hedging accounting.
C. Cancellation of the designation of the hedging.
26. Changes in accounting policies and estimates:
）（
1 Changes in accounting policy
There are no changes in the accounting policies for the previous financial year.
）（
2 Changes in accounting estimate
In accordance with the resolution of the 3th Meeting of 5th section the of Board of Director on April 27,
2011, the accounting estimate on the method and rate used in calculation of warranty provision was
authorized for change.
Previous Accounting Estimate: The Company accrued warranty cost at 2.5% of actual total production
costs for its completed project and charged it into cost of sales for the period.
Current Accounting Estimate: The Company accrues warranty cost at 0.5% of total contract revenue
pro-rate for the first 12-month warranty period and additional 0.25% pro-rate for each subsequent
12-month period and charges it into cost of sales for the period.
The change to Accounting Estimate is adopted using prospective application approach, the impact to the
net profit of the current financial year is RMB11,509,762.24.
27. Correction of the accounting errors from previous term
There is no correction of the accounting error from previous term in this report period.
28. 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
91
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 Company 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.; 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.
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.
92
The Company assesses goodwill 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.
29. 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. Local education surtax is 2% of turnover tax payable.
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
Catego Registered Registered
Subsidiaries Business nature Business scope
ries address capital
Wuhan Lan Limite 586 Wuluo Manufacturing 20,000,000.00 Boiler, energy environmental protection
Xiang d Rd., products, Steel structures, technology
Power liabilit Wuhan research of heat energy products and its
Environment y accessorial equipment, design, technical
al Protection Comp Consultancy, technical service, sales of
Technology any developed products, energy project
Company (non-construction project)
Limited
Gas-steam Combined Cycle Heat Recovery
Boiler, Circulating fluidized bed Boiler,
Production and sale of the boiler’s
components and the energy saving
Investment Sharehol Voting Consolid
Subsidiaries Other essential investment
（ RMB ） ding% right% ated
93
Wuhan Lan Xiang Power 24,984,500.00 95 95 Yes
Environmental Protection
Technology Company Limited
Minority Amount of minority interest in income
Subsidiaries
interest statement deducted from minority interest
Wuhan Lan Xiang Power Environmental Protection 1,730,423.50
Technology Company Limited
(2)Obtained by business combination under same control
Registered Business Registered
Subsidiaries Categories Business scope
address nature capital
Wuhan Limited 586 Wuluo Manufacturing 19,115,250.00 Packaging, design, and manufacturing
Boiler BoYu liability Rd., Wuhan of Mechanical and Electrical products;
Industrial Company processing of metal components;
Co., Ltd design and manufacturing of model
；
and mold Manufacturing of valve
rough casting, steel casting, iron
casting, nonferrous metal casting.
Investment Other
Shareholding Voting
Subsidiaries essential Consolidated
（ RMB ） % right%
investment
Wuhan Boiler BoYu Industrial Co., Ltd 14,249,787.13 90 90 Yes
Minority Amount of minority interest in income statement
Subsidiaries
interest deducted from minority interest
Wuhan Boiler BoYu Industrial Co., Ltd 567,354.06
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 especially indicated, the closing balance and the opening balance refer to the balance at Dec 31,
2011 and Dec 31, 2010 respectively. All of amounts are presented in RMB.
1. Cash and cash equivalent
Item Closing balance Opening balance
Bank deposit 20,388,030.03 10,361,930.05
94
Other cash and cash equivalent 2,611,211.99 3,612,374.92
Total 22,999,242.02 13,974,304.97
Closing balance
Item
Currency Original currency Exchange rate RMB
Bank deposit RMB 19,988,018.67 1.0000 19,988,018.67
USD 4,409.68 6.3009 27,784.95
EUR 45,601.99 8.1625 372,226.25
JPY 2.00 0.0811 0.16
Subtotal —— —— 20,388,030.03
Other cash and cash equivalents RMB 2,611,211.99 1.0000 2,611,211.99
Subtotal —— —— 2,611,211.99
Total 22,999,242.02
Opening balance
Item
Currency Original currency Exchange rate RMB
Bank deposit RMB 10,028,948.53 1.0000 10,028,948.53
USD 67.30 6.6227 445.71
EUR 37,760.27 8.8065 332,535.81
Subtotal —— —— 10,361,930.05
Other cash and cash equivalents RMB 3,612,374.92 1.0000 3,612,374.92
Subtotal —— —— 3,612,374.92
Total 13,974,304.97
Note: The closing balance of the cash and cash equivalent increased 64.58% as compared to last year
mainly due to increase in issurance of bank acceptance notes to settle vendors’ payment.
2. Notes receivable
(1)Category of Notes receivable:
Category Closing balance Opening balance
Bank acceptance 30,800,000.00 43,164,000.00
Total 30,800,000.00 43,164,000.00
(2)The top five receivable endorsed but not matured as of year end
Expiration
Company Issued date Amount Notes
date
95
Gansu Diantou Jinchang Generating Co.Ltd 2011/07/18 2012/01/18 10,000,000.00
Gansu Diantou Jinchang Generating Co.Ltd 2011/07/18 2012/01/18 6,300,000.00
Tianma(Chengdu) Railway Bearing Co., Ltd 2011/07/21 2012/01/21 2,000,000.00
China energy and abundant coal and Electric
2011/10/31 2012/04/30 2,000,000.00
Power Company Limited
China energy and abundant coal and Electric
2011/10/31 2012/04/30 2,000,000.00
Power Company Limited
3. Accounts receivable
(1)Accounts receivable by categories are as follows:
Closing balance
Balance Provision for doubtful debts
Category
Proportion Proportion
Amount Amount
(%) (%)
Individually significant receivables 62,049,078.35 10.30 14,302,475.00 23.05
Group A (using aging analysis) 425,648,417.47 70.68 139,555,835.03 32.79
Group B (No bad debt provision for
account receivables)
Other insignificant receivables but still
are impaired individually 114,547,641.91 19.02 77,176,541.91 67.38
Total 602,245,137.73 100.00 231,034,851.94 38.36
Opening balance
Balance Provision for doubtful debts
Category
Proportion Proportion
Amount Amount
(%) (%)
Individually significant receivables
Group A (using aging analysis) 400,417,419.70 76.97 90,042,423.27 22.49
Group B (No bad debt provision for 15,549,187.32 2.99
account receivables)
Other insignificant receivables but still 104,273,124.83 20.04 65,682,544.83 62.99
are impaired individually
Total 520,239,731.85 100.00 155,724,968.10 29.93
Notes for Group A (Recognition provision for doubtful debt of groups of receivables is based on aging
analysis):
96
Closing balance
Balance Provision for doubtful debts
Aging of receivables
Proportion
Amount
(%)
Within 1 year (including 1 year) 153,994,058.92 36.18 4,619,821.77
1-2 years(including 2 year) 5,654,629.94 1.33 169,638.90
2-3 years(including 3 year) 76,422,460.00 17.95 4,585,347.60
3-4 years(including 4 year) 53,323,414.86 12.53 10,664,682.98
4-5 years(including 5 year) 20,921,887.46 4.92 4,184,377.49
Over 5 years 115,331,966.29 27.09 115,331,966.29
Total 425,648,417.47 100.00 139,555,835.03
Opening balance
Balance Provision for doubtful debts
Aging of receivables
Proportion
Amount
(%)
Within 1 year (including 1 year) 41,301,700.11 10.31 1,239,051.00
1-2 years(including 2 year) 134,391,314.04 33.57 4,031,739.43
2-3 years(including 3 year) 77,837,009.86 19.44 4,670,220.59
3-4 years(including 4 year) 30,967,385.66 7.73 6,193,477.13
4-5 years(including 5 year) 52,515,093.64 13.12 10,503,018.73
Over 5 years 63,404,916.39 15.83 63,404,916.39
Total 400,417,419.70 100.00 90,042,423.27
Notes for Other insignificant receivables (Receivables which are not significant, but still need
individually recognition of bad debt provision) ：
Item Closing balance Bad debt provision Note
Product payment and retention 176,596,720.26 91,479,016.91 Details are tabulated below
Details：
Company Reasons for provision
97
Company Reasons for provision
Huaneng Nanjing Combustion Engine The retention money is difficult to be received due to
Generating Co.Ltd the quality issues of boiler.
Dongfang Xiwang Baotou Xitu Aluminium The Company is required to bear part of the subsequent
Co., Ltd. costs and thus the receivable amount is not expected to
be fully recoverable.
Luoyang Yichuan Longquan Kengkou Deduction for equipment maintenance
Generating Co., Ltd.
Shanxi Datang International Yungang Deduction for equipment quality issues
Thermal Power Co.Ltd
Datang Liaoyuan Power Plant Deduction for equipment quality issues
China Machine Import and Export Company The retention money is difficult to be received due to
the quality issues.
Gansu Diantou Jinchang Generating Co.Ltd The retention money is not expected to be fully
received
China Shenhua Nengyuan Co., Ltd Guohua Deduction for equipment quality issues
Huizhou Power Co.
Guodian Lanzhou Thermopower 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
Shandong Power No.3 Project Company The retention money is difficult to be received due to
the quality issues.
Wuhan Zhongjia Natural Gas Compressor The customer has disputes over the contract settlement
Co.Ltd and the receivable amount is not expected to be fully
recoverable.
Chiping Xinyuan Aluminum 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
China Power Engineering Consulting Group, The customer has disputes over the contract settlement
Zhongnan Power Design Institute and the receivable amount is not expected to be fully
recoverable
PT INDAH KIAT PULP&PAPER TBK ， It is difficult for the equipment to achieve the status of
full load operation, retention money cannot be recalled
Dongfang Xiwang Baotou Xitu Aluminum The retention money is difficult to be received due to
Co., Ltd. the quality issues.
Anshan Xinli Co.,Ltd The retention money is difficult to be received due to
the quality issues.
Guiyang Crystal Co.,Ltd The retention money is difficult to be received due to
the quality issues.
(2)In 2011, the company's management took measures to strengthen the collection and increase
98
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, 2011, RMB12, 686,831.68 has been recovered for the debts aging more than 5 years a
20.01% of the last year’s accounts receivable for aging more than 5 years.
(3)The write-off of accounts receivable
Name of company The nature Written off Reason Related
of accounts party
receivable transaction
Anshan Thermopower Material Retention 2,018,000.00 Restructuring of No
Co.,Ltd. enterprise
Dayan Mining Retention 162,000.00 Restructuring of No
enterprise
Dongfang Electrics Group Beijing Retention 456,500.00 Expenses No
Branch deduction
Dongguan Hailong Paper Co., Ltd. Retention 349,917.60 On account for No
long term
E-Steel Group Retention 122,850.00 Product loss No
Shunde Jinfeng Rinsing Co.Ltd Retention 165,000.00 Quality deduction No
Guodian Ningxia Shizuishan Retention 832,228.99 Quality deduction No
Generating Co.,Ltd.
Guodian Shizuishan No.1 Generating Retention 500,000.00 Quality deduction No
Co.,Ltd.
Guodian Xuanwei Generating Co., Retention 494,452.30 Expenses No
Ltd. deduction
Hubei Shanonda Co., Ltd. Retention 5,009.50 On account for No
long term
Hubei Daye Thermopower Retention 842,700.00 Quality deduction No
Generating Plant
Hubei Changyuan No.1 Generating Retention 600,000.00 Expenses No
Co., Ltd. deduction
Jiangxi Xinyu Generating Co., Ltd. Retention 3,224,097.13 Quality deduction No
Jiulong Paper (Taicang) Co.,Ltd. Retention 150,000.00 Quality deduction No
Maoming Thermopower Plant Retention 76,000.00 Quality deduction No
Nantong Wanda Boiler Co., Ltd. Retention 69,155.00 Quality deduction No
Ningxia Hebing Thermal Power Retention 70,000.00 Quality deduction No
Plant
99
Name of company The nature Written off Reason Related
of accounts party
receivable transaction
Sinopec Qingdao petrochemical Retention 180,569.30 On account for No
limited liability company long term
Shandong Bohui Paper Retention 380,000.00 Restructuring of No
enterprise
Shanxi Hepo Generating Co., Ltd. Retention 211,000.00 Quality deduction No
Shijiazhuang Nanjiao Thermopower Retention 465,000.00 Enterprise was No
Co., Ltd. shut down
WISCO Technical Reconstruction Retention 35,000.00 Quality deduction No
Project Equipment Procurement
Company
Wuhan Silu New Technology Co.Ltd Retention 139,200.00 Enterprise No
cancellation
Xiangfan Thermopower Industry Retention 300,000.00 Quality deduction No
Co., Ltd.
Xuzhou Chacheng Power Co.,Ltd. Retention 1,435,224.83 Quality deduction No
Yueyang Petrochemical Plant Retention 107,950.00 Quality deduction No
Yunnan Manghe Sugar Plant Retention 492,000.00 Bankrupt No
Yunan Longjiang Retention 460,000.00 Quality deduction No
Hubei chemical fertilizer plant Retention 200,000.00 Quality deduction No
Wuhan Xianglong Electric Utility Retention 325,000.00 Quality deduction No
Co., Ltd.
Xiamen Environmental Sanitation Retention 101,000.00 Quality deduction No
Guodian Xuanwei Generating Co., Design fee 25,380.00 Expenses No
Ltd. deduction
Total 14,995,234.65
Note: Above write-off accounts receivable retention were for projects which have completed more than
5 years.
(4)There is no accounts receivable due from shareholders with more than 5% (including 5%) of the
voting shares of the Company.
(5)Information of top 5 receivables:
The relationship
Company Amount Age Proportion
with the Company
100
The relationship
Company Amount Age Proportion
with the Company
Shandong Weiqiao Aluminum Non-affiliated 135,002,999.99 1-4 years 22.42
and Electricity Co., Ltd.
ALSTOM Power INC Affiliated 56,139,758.93 Within 1 year 9.32
Shanxi Zhengxin Group Co., Non-affiliated 39,820,000.00 Over 5 years 6.61
Ltd.
Guodian Lanzhou Non-affiliated 31,160,000.00 Within 1 year 5.17
Thermopower Co., Ltd.
China Shenhua Nengyuan Co., Non-affiliated 30,889,078.35 Within 1 year 5.13
Ltd Guohua Huizhou Power
Branch.
Total 293,011,837.27 48.65
(6)The amounts due from related parties
Company The relationship with the Amount Proportion
Company
Wuhan Boiler (Group) Special Boiler A subsidiary of the second 9,954,995.28 1.65
Engineering Co., Ltd. largest shareholder
ALSTOM Power System GmbH A subsidiary of the ultimate 125,629.94 0.02
holding company
ALSTOM Power INC A subsidiary of the ultimate 9.32
holding company 56,139,758.93
ALSTOM Sizhou Electric Power A subsidiary of the ultimate 40,000.00 0.01
Equipment (Qingdao) Co. Ltd holding company
Total 66,260,384.15 11.00
4. Other receivables
(1)Other receivables disclosed by type:
Closing balance
Categories Balance Provision for doubtful debts
Proportion Proportion
Amount Amount
(%) (%)
Individually significant receivables 26,673,222.30 19.10 26,673,222.30 100.00
Group A (using aging analysis) 85,239,498.12 61.03 7,124,402.55 8.36
Group B (No bad debt provision for 25,121,744.82 17.98
account receivables)
101
Closing balance
Balance Provision for doubtful debts
Categories
Proportion Proportion
Amount Amount
(%) (%)
Other insignificant receivables but 2,636,308.95 1.89 2,636,308.95 100.00
still are impaired individually
Total 139,670,774.19 100.00 36,433,933.80 26.09
Opening balance
Balance Provision for doubtful debts
Categories
Proportion Proportion
Amount Amount
(%) (%)
Individually significant 5,538,447.44 3.29 5,538,447.44 100.00
receivables
Group A (using aging analysis) 76,977,864.46 45.65 3,101,768.66 4.03
Group B (No bad debt provision 62,507,615.14 37.07
for account receivables)
Other insignificant receivables but 23,596,656.07 13.99 23,596,656.07 100.00
still are impaired individually
Total 168,620,583.11 100.00 32,236,872.17 19.12
Notes for Group A (Recognition provision for doubtful debt of groups of receivables is based on aging
analysis):
Closing balance
Aging of receivables Balance Provision for doubtful debts
Amount Proportion (%)
Within 1 year (including 1 year) 4,416,898.14 5.18 132,506.94
1-2 years(including 2 year) 4,580,229.37 5.37 137,406.88
2-3 years(including 3 year) 63,012,895.74 73.93 3,780,773.75
3-4 years(including 4 year) 12,684,699.87 14.88 2,536,939.98
4-5 years(including 5 year) 10,000.00 0.01 2,000.00
Over 5 years 534,775.00 0.63 534,775.00
Total 85,239,498.12 100.00 7,124,402.55
102
Opening balance
Aging of receivables Balance Provision for doubtful debts
Amount Proportion (%)
Within 1 year (including 1 year) 6,610,079.55 8.59 198,302.39
1-2 years(including 2 year) 60,756,310.82 78.93 1,822,689.32
2-3 years(including 3 year) 9,066,699.09 11.78 544,001.95
3-4 years(including 4 year) 10,000.00 0.01 2,000.00
Over 5 years 534,775.00 0.69 534,775.00
Total 76,977,864.46 100.00 3,101,768.66
Individually significant receivables or insignificant receivables requiring impairment test, and providing
provision for doubtful debt ：
Bad debt Accrual
Item Balance Reason
provision percentage
3RC Company Limited 336,604.05 336,604.05 100.00% Bankruptcy
Value Added Tax paid for 28,377,636.20 28,377,636.20 100.00% Projects are suspended
suspended projects and the amount is not
expected to be
recoverable
Litigation cost recovery 595,291.00 595,291.00 100.00% Difficult to execute the
court judge
Total 29,309,531.25 29,309,531.25
(2)Accounts receivable is due from shareholders with more than 5% (including 5%) of the voting shares
of the Company.
Closing balance Opening balance
Name of company Provision for Provision for
Amount Amount
bad debt doubtful debts
Wuhan Boiler Group Co., Ltd. 64,030,488.11 4,586,848.27 64,030,488.11 1,796,641.13
ALSTOM (China) Investment 3,529,700.20 105,891.01 3,159,900.37 94,797.01
Co., Ltd.
Total 67,560,188.31 4,692,739.28 67,190,388.48 1,891,438.14
Note: Account receivable of RMB 64,030,488.11 from the second largest shareholder, Wuhan Boiler
Group Co., Ltd., is the compensation for the relocation of the old factory
103
：
(3)Details of top 5 other receivables
Company The relationship Amount Aging Proportion of
with the Company the total (%)
Wuhan Boiler Group Co., Ltd. The company's 64,030,488.11 3-4 years 45.84
second-largest
shareholder
Shandong Luneng Material Non-affiliated 25,659,390.26 2-3 years 18.37
Group Co. Limited
Donghu Development Zone Non-affiliated 10,774,265.00 3-4 years 7.71
Committee
Shandong Weiqiao Aluminum Non-affiliated 7,638,811.97 3-4 years 5.47
and Electricity Co., Ltd.
Shanxi Zhengxin Group Co., Non-affiliated 6,722,635.47 Over 5 4.81
Ltd. years
Total 114,825,590.81 82.20
(4)The amounts due from related parties
The relationship with the Proportion of the
Name of company Amount
Company total (%)
Wuhan Boiler Group YunTong Subsidiary of Second 10,171.01 0.01
Co., Ltd. largest shareholder
Wuhan Boiler Group Valve Co., Subsidiary of Second 240,571.49 0.17
Ltd largest shareholder
ALSTOM Power Systems S.A A subsidiary of the ultimate 35,836.70 0.03
Establishment Boilers holding company
ALSTOM (Switzerland) Ltd A subsidiary of the ultimate 254,359.93 0.18
holding company
ALSTOM Power Systems GmbH A subsidiary of the ultimate 1,929,580.66 1.38
holding company
Total 2,470,519.79 1.77
104
．
5 Prepayment
(1)Aging analysis:
Closing balance Opening balance
Aging
Proportion Proportion
Amount Amount
(%) (%)
Less than 1 year (including 1 year) 21,345,726.59 54.73 94,391,475.66 84.36
1 year to 2 years (including 2 years) 616,453.62 1.58 17,498,669.15 15.64
2 years to 3 years (including 3 years) 17,039,052.56 43.68 4,200.00 0.004
Over 3 years 4,200.00 0.01
Total 39,005,432.77 100.00 111,894,344.81 100.00
Note: Prepayment decreases by 65.14% this year. It’s mainly due to decrease in the volume of materials
purchase for export projects.
(2)Details of top 5 prepayment
Name of company The relationship Amount Aging Reasons
with the
Company
Howden Hua Engineering Co., Ltd. Non-affiliated 7,400,000.00 2009 Project has not
yet completed
Wuhan ZhiMiao Machinery Non-affiliated 6,807,692.30 2009 Project has not
Manufacturing Co., Ltd., yet completed
V&M DEUTSCHLAND GmbH Non-affiliated 4,970,195.75 2011 Project has not
yet completed
Changzhi Tsinghua steel structure Non-affiliated 4,277,499.98 2011 Project has not
limited company yet completed
ALSTOM Technical Services A subsidiary of 3,260,000.00 2011 Project has not
(Shanghai) Ltd the ultimate yet completed
holding company
Total 26,715,388.03
(3)There is 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 not yet to settle.
105
6. Inventory
(1)Categories:
Closing balance Opening balance
Categories
Impairment of Impairment of
Original value Book value Original value Book value
inventories inventories
Raw materials 251,754,730.97 77,838,517.97 173,916,213.00 185,535,520.38 100,609,111.64 84,926,408.74
Construction 152,978,904.28 86,778,194.79 66,200,709.49 174,998,729.88 90,877,317.30 84,121,412.58
contract assets
Finished 259,552.71 259,552.71
products
Total 404,733,635.25 164,616,712.76 240,116,922.49 360,793,802.97 191,486,428.94 169,307,374.03
Note: Raw material increases 35.69% due to purchase of specific raw materials in advance of
commencement of overseas projects .
(2)Impairment of inventories
Opening Decrease Closing
Categories Increase
balance balance
Reversal Written off
Raw materials 100,609,111.64 38,379,686.80 61,150,280.47 77,838,517.97
Construction contract 90,877,317.30 4,099,122.51 86,778,194.79
assets
Total 191,486,428.94 38,379,686.80 65,249,402.98 164,616,712.76
Note 1: The impairment of the raw materials is written off because of the disposal of obsolete raw
materials and materials issued to production for projects.
Note 2: Write-off of the asset impairment from Construction contract is according to the Accounting
Standards on Construction Contract to release the loss provision based on completion progress.
(3)Details of impairment of inventories
Reasons Proportion of reversal of
The bases of provision for impairment
Item for provision for impairment of
of inventories
reversal inventories to closing balance
1.Raw materials According to the net realizable value
2.Construction Expected loss from contract loss
contract assets
7. Fixed assets
(1)Fixed assets details:
106
Item Opening Increase Decrease Closing
balance balance
1. Cost 909,335,865.37 31,280,134.52 696,760.31 939,919,239.58
Property and buildings 518,751,485.23 223,076.00 518,974,561.23
Machineries 361,440,070.80 20,335,748.97 19,911.97 381,755,907.80
Vehicles 1,421,315.64 24,000.00 114,441.00 1,330,874.64
Electronic equipments and office 27,722,993.70 10,697,309.55 562,407.34 37,857,895.91
equipments
2.Accumulated depreciation 130,577,821.04 40,607,295.77 536,392.48 170,648,724.33
Property and buildings 15,676,163.33 12,982,516.30 28,658,679.63
Machineries 104,515,837.73 19,637,692.04 5,789.73 124,147,740.04
Vehicles 635,659.99 158,215.54 75,721.67 718,153.86
Electronic equipments and office 9,750,159.99 7,828,871.89 454,881.08 17,124,150.80
equipments
3.The net book value of fixed 778,758,044.33 -9,327,161.25 160,367.83 769,270,515.25
assets
Property and buildings 503,075,321.90 -12,759,440.30 490,315,881.60
Machineries 256,924,233.07 698,056.93 14,122.24 257,608,167.76
Vehicles 785,655.65 -134,215.54 38,719.33 612,720.78
Electronic equipments and office 17,972,833.71 2,868,437.66 107,526.26 20,733,745.11
equipments
4. Impairment of fixed assets 2,473,278.04 5,193.52 2,468,084.52
Property and buildings
Machineries 2,313,136.08 5,193.52 2,307,942.56
Vehicles 102,424.14 102,424.14
Electronic equipments and office 57,717.82 57,717.82
equipments
5.Carrying amount 776,284,766.29 -9,327,161.25 155,174.31 766,802,430.73
Property and buildings 503,075,321.90 -12,759,440.30 490,315,881.60
Machineries 254,611,096.99 698,056.93 8,928.72 255,300,225.20
Vehicles 683,231.51 -134,215.54 38,719.33 510,296.64
Electronic equipments and office 17,915,115.89 2,868,437.66 107,526.26 20,676,027.29
equipments
Note 1: Depreciation of fixed assets is RMB 40,607,295.77 in current fiscal year.
107
Note 2: RMB 21,641,723.37 is transferred from construction in progress into fixed assets during this
period.
(2)Fixed assets without certification of property
Item The reasons Expected time
New plant and office building Applying for certificate of property, but not approved 2012
8. Construction in progress
(1)Details
Closing balance Opening balance
Item
Book value Impairment Net book value Book value Impairment Net book value
1.Newly
established
8,683,448.40 8,683,448.40
base of the
company
2. Equipment
for New base
2,398,543.47 2,398,543.47 15,380,343.50 15,380,343.50
of the
Company
3. Purchased
26,888,949.60 26,888,949.60
technology
Total 2,398,543.47 2,398,543.47 50,952,741.50 50,952,741.50
(2)Significant changes in construction in progress, a
Capitalised
Opening Transferred to Other Closing
Project Increase interest
balance fixed assets decrease balance
rate (%)
1.Newly 8,683,448.40 8,683,448.40
established base of
the company:
Including:
Capitalized amount
of borrowing costs
2.Equipment for
New base of the 15,380,343.50 12,958,274.97 23,525.06 2,398,543.47
Company
Including:
Capitalized amount 410,108.37 345,632.27 64,476.10
of borrowing costs
3.Purchased 26,888,949.60 7,505,484.40 34,394,434.00
technology
Total 50,952,741.50 7,505,484.40 21,641,723.37 34,417,959.06 2,398,543.47
108
Significant changes in construction in progress b
Budget Accumulated Including: Interest
Financial
Project % of budget amount of interest capitalized in the
(10,000RMB) source
capitalized current year
1.Newly 50,070.00 Self-financing, 105% 19,649,371.90
established base loan
of the company:
2.Equipment for 40,000.00 Self-financing, 72% 8,999,350.34
new base of the loan
company
Total 90,070.00 28,648,722.24
Note 1: The balance of the construction in progress at the end of the period decreases 95.29%. This is
due to capitalization to fixed assets and intangible assets upon the acceptance and handling over of the
assets and the completion of technology transfer.
Note 2: By 31 December 2011, newly established base has been fully completed.
Note 3: As of December 31, 2011, the construction in progress does not have indication of impairment,
so no impairment for construction in progress.
(3)Major construction in progress
Project Progress Remark
New base construction The new base is completed and in use
Equipment purchased for new base All of equipments are in use
9. Intangible assets
(1)Details of intangible assets are as following:
Opening Closing
Category Increase Decrease
balance balance
Cost 114,050,055.97 35,199,132.73 149,249,188.70
1.Land use right 41,666,503.00 -66,666.28 41,599,836.72
2.Proprietary technology 56,900,206.41 34,394,434.00 91,294,640.41
3.Software 15,483,346.56 871,365.01 16,354,711.57
Accumulated amortization 56,726,078.10 6,687,796.26 63,413,874.36
109
Opening Closing
Category Increase Decrease
balance balance
1.Land use right 2,222,213.46 833,210.36 3,055,423.82
2.Proprietary technology 44,899,280.82 2,481,257.05 47,380,537.87
3.Software 9,604,583.82 3,373,328.85 12,977,912.67
Carrying amount of intangible assets 57,323,977.87 28,511,336.47 85,835,314.34
1.Land 39,444,289.54 -899,876.64 38,544,412.90
2.Proprietary technology 12,000,925.59 31,913,176.95 43,914,102.54
3.Software 5,878,762.74 -2,501,963.84 3,376,798.90
Impairment of intangible assets
1.Land use right
2.Proprietary technology
3.Software
Net book value of intangible assets 57,323,977.87 28,511,336.47 85,835,314.34
1.Land use right 39,444,289.54 -899,876.64 38,544,412.90
2.Proprietary technology 12,000,925.59 31,913,176.95 43,914,102.54
3.Software 5,878,762.74 -2,501,963.84 3,376,798.90
Note: The amortization of the intangible assets is RMB6, 687,796.26 in the current fiscal year.
10. 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 liabilities
Item Closing balance Opening balance
Deferred tax assets:
Impairment of assets 80,882,420.54 62,321,677.84
Total 80,882,420.54 62,321,677.84
(2)Unrecognized deferred income tax assets
Item Closing balance Opening balance
Deductible temporary differences 156,695,381.00 241,267,862.35
Tax losses 1,383,594,551.62 1,125,392,951.71
Total 1,540,289,932.62 1,366,660,814.06
110
(3)The tax losses unrecognized as deferred tax assets will expire in 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 364,372,073.45 364,372,073.45
2015 138,617,290.31 138,617,290.31
2016 258,201,599.91
Total 1,383,594,551.62 1,125,392,951.71
(4)Temporary difference
Temporary difference
Item
Closing balance Opening balance
1. Deductible temporary difference
① Provision for bad debt 234,283,402.84 155,936,116.01
② Impairment of inventories 86,778,194.79 90,877,317.30
③ Impairment of fixed assets 2,468,084.52 2,473,278.04
Total 323,529,682.15 249,286,711.35
11. Impairment of assets
Decrease Closing
Categories Opening balance Increase
balance
Reversal Written off
1.Provision for bad 187,961,840.27 94,502,180.12 14,995,234.65 267,468,785.74
debt
Including: ① 155,724,968.10 90,305,118.49 14,995,234.65 231,034,851.94
Provision for bad
and doubtful debt of
accounts receivable
②Provision for bad 32,236,872.17 4,197,061.63 36,433,933.80
debt of other
receivables
2. Impairment of 191,486,428.94 38,379,686.80 65,249,402.98 164,616,712.76
inventories
3. Impairment of 2,473,278.04 5,193.52 2,468,084.52
fixed assets
Total 381,921,547.25 132,881,866.92 80,249,831.15 434,553,583.02
111
Note 1: Provision for bad and doubtful debt of accounts receivable refers to Note5 .3 (3).
Note 2:Write-off of inventories impairment refers to Note5 .6 (2).
Note 3: The write-off for impairment of fixed assets is caused by the disposal of the previously impaired
fixed assets.
12. Other non-current assets
Item Closing balance Opening balance
Hedging 5,790,508.71 420,895.71
Total 5,790,508.71 420,895.71
Note: The hedging instruments have increased 1275.76% as compared to last year mainly due to
increase in the volume of unexpired forward contracts.
13. Short-term loan
Category Closing balance Opening balance
Entrust borrowings 1,563,000,000.00 1,152,000,000.00
Total 1,563,000,000.00 1,152,000,000.00
Note 1: The entrust borrowings are supplies by Alstom (China) Investment Co., Ltd, and the maximum
amount is RMB 1,800,000,000.00,
Note 2: The closing balance of short-term loan increased 35.68% as compared to the opening balance
mainly due to the decrease in the cash received from operating activities.
14. Notes payable
Category Closing balance Opening balance Amount due in next accounting period
Bank Acceptance 45,548,201.49 18,704,256.28 45,548,201.49
Total 45,548,201.49 18,704,256.28 45,548,201.49
Note 1: The increase of Notes payable is 143.52%. It's mainly due to increased payments of note
payables.
Note 2: There was no notes payable due from shareholders with more than 5% (including 5%) of the
voting shares of the Company.
112
．
15 Accounts Payable
Item Closing balance Opening balance
Amount 309,278,906.64 315,446,635.93
Total 309,278,906.64 315,446,635.93
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
ALSTOM Power System GmbH 1,003,018.90 16,577,651.22
ALSTOM Power Systems S.A Establishment Boilers 2,857,805.54
ALSTOM Power INC. 1,176,160.65 488,787.14
ALSTOM s.r.o 989,816.18 412,125.94
ALSTOM (Switzerland) Ltd 331,361.30
PT ALATOM Power Energy System Indonesia 10,614.19
ALATOM Power Service GmbH 11,772,599.40
ALSTOM Technical Services (Shanghai) Ltd 4,767,000.00 2,307,000.00
Wuhan Boiler (Group) Yuntong Co., Ltd 383,570.01 3,123,121.06
Wuhan Boiler (Group) Valve Co., Ltd 1,099,530.54 1,690,329.14
Wuhan Boiler (Group) Special Boiler Engineering Co., Ltd. 24,225,755.73 24,225,755.73
Total 45,759,426.90 51,682,575.77
Note: The accounts payable aged longer than 1 year is mainly for retrofit processing fees. As the project
has yet to complete, it can’t be settled until the warranty period of the boiler is expired.
．
16 Advance from customers
Item Closing balance Opening balance
Amount 912,493,449.25 1,059,336,631.48
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 Estonia AS 38,415,853.47
ALSTOM Power System GmbH 808,650,445.76 976,283,726.72
Total 847,066,299.23 976,283,726.72
113
Note1: Advanced from customers with aging over 1 year, were unsettled contract payments on projects
under execution. According to the Company’s accounting method on construction contract in progress,
the account shall be carried forward after the settlement of contract payments on construction contract in
progress.
17. Payroll payable:
(1)Details:
Item Opening Increase Decrease Closing
balance balance
1.Salary,bonus, allowance, 9,395,562.87 116,041,344.29 116,574,312.64 8,862,594.52
subsidy
2. Employee welfare 31,043.56 31,043.56
3.Social insurance 23,795,615.42 23,795,615.42
including ①： Medical insurance 6,168,422.86 6,168,422.86
②Retirement pension 15,223,836.34 15,223,836.34
③Unemployment insurance 1,334,810.42 1,334,810.42
④injury insurance premium 538,294.45 538,294.45
⑤Pregnancy insurance 530,251.35 530,251.35
4. Housing fund 5,990,262.00 5,990,262.00
5. Labour union fee and 2,929,586.47 2,345,851.12 2,160,384.80 3,115,052.79
employee education fee
6.Redemption for terminations of
labor contract
7.Other 58,245,816.18 -8,253,456.55 4,320,879.49 45,671,480.14
：
including Share payment in cash
Total 70,602,009.08 139,919,616.28 152,841,454.35 57,680,171.01
(2)The balance of the payroll payable-other decreases and it is mainly due to payment made to retirees’
allowance and internal retirees’ allowance.
114
．
18 Taxes payable
Taxes Closing balance Opening balance
1.Value-added tax -112,642,915.78 -89,309,204.79
2.Business tax 485.87 175,178.17
3.Levee fee 4.86 1,751.78
4.Personal income tax 17,217.84 75,537.63
5.Education surtax 14.58 5,255.35
6.Local education development fee 9.72 521.81
7.Urban maintenance and construction tax 34.01 12,262.47
8.stamp duty 8,638.30 312,881.76
9.Land Use Tax 293,334.00 293,334.01
10. Tax withholding for corporate income tax 3,439,443.40
Total -108,883,733.20 -88,432,481.81
19 ．
Interest payable
Item Closing balance Opening balance
Interest payable on short-term borrowings 2,016,270.00 2,003,046.13
Total 2,016,270.00 2,003,046.13
20. Dividends payable
Main investor Opening Closing Reason of failure payment
balance balance 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 166,000.00 166,000.00 The company is in liquidation
Source Dynamics
Shanghai Power Equipment 144,000.00 144,000.00 The company is in liquidation
Research Institute
Wuhan Urban Environmental 144,000.00 144,000.00 The company is in liquidation
Engineering Company
Total 562,000.00 562,000.00
Note: dividends payable is the unpaid dividend of Wuhan Lan Xiang Energy Environmental Protection
Technology Co., Ltd.
115
．
21 Other payables
Item Closing balance Opening balance
Amount 97,831,275.42 85,685,084.50
Note 1: 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 Co., Ltd. 974,056.13 974,056.13
ALSTOM Technology Ltd (Switzerland) 30,903,465.60 26,623,254.00
ALSTOM (Switzerland) Ltd 4,258,401.06 192,289.93
ALSTOM (China) Investment Co., Ltd. 5,110,602.37 3,489,547.49
ALSTOM Power INC 515,415.55 838,869.33
ALSTOM IS&T SAS 6,054,216.36
ALSTOM Beizhong Power (Beijing) Co.,Ltd 1,356,789.48 26,532.30
ALSTOM (Wuhan) Engineering & Technology Co., Ltd. 219,718.00
Total 49,172,946.55 32,364,267.18
Note 2: The other large amount accounts payable aged more than 1 year is mainly the amount collected
from employees on behalf to purchase ALSTOM stocks.
Note 3: The significant amount of other payables details:
Item Amount The nature or content
ALSTOM Technology Ltd (Switzerland) 30,903,465.60 TOT technology transfer fee
ALSTOM IS&T SAS 6,054,216.36 ITSAS service fee
Stock deductions 5,894,314.13 Collected and remit on behalf of
employees
ALSTOM (China) Investment Co., Ltd 5,110,602.37 ITSSC service fee
ALSTOM (Switzerland) Ltd 4,258,401.06 PMX fee
Total 52,220,999.52
．
22 Provision for contingent liabilities
Item Opening balance Increase Decrease Closing balance
Product quality guarantee 50,387,210.32 50,387,210.32
Total 50,387,210.32 50,387,210.32
116
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. In 2011 the Company and customer signed settlement agreement in
relation to the contract responsibilities. The liability for production quality guarantee had been released.
．
23 Other non-current liabilities
item Closing balance Opening balance
1. Deferred income 12,870,288.00 13,148,064.00
2. Hedged items 12,727,399.85 281,951.85
3. Unrecognized finance cost -9,465,682.90 -10,138,325.63
Total 16,132,004.95 3,291,690.22
Note1: The unrecognized financing cost is the discount fees of employee retirement benefits in
accordance with the regulations stipulated in ‘Employee Benefits’ Accounting Standards.
Note2: The hedging items have increased 4414.03% this year. This is mainly due to increase in the
volume of unexpired forward contracts.
24 ． Share Capital
The changes in share capital
Opening balance Increase/Decrease (+/-) Closing balance
Items Issuing Reserves
Bonus
Amount Proportion new transferred Others Subtotal Amount Proportion
shares
shares to shares
1. Limited shares 17,200 57.91% 17,200 57.91%
① National holdings
② state-owned
corporation
Holdings
③other 2,053 6.91% 2,053 6.91%
non-state-owned
corporation
Holdings
Including:
i. Domestic 2,053 6.91% 2,053 6.91%
corporation
holdings
ii. Domestic
natural person
holdings
117
Opening balance Increase/Decrease (+/-) Closing balance
Items Issuing Reserves
Bonus
Amount Proportion new transferred Others Subtotal Amount Proportion
shares
shares to shares
④International 15,147 51% 15,147 51%
holdings
Including:
i. International 15,147 51% 15,147 51%
corporation
holdings
ii. International
natural person
holdings
2. Unlimited shares 12,500 42.09% 12,500 42.09%
①stock A
②stock B 12,500 42.09% 12,500 42.09%
③stock H
④others
3.Total shares 29,700 100% 29,700 100%
．
25 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 29,749,688.88 29,749,688.88
accounting standard
Total 174,659,407.46 174,659,407.46
26 ． Surplus reserve
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
．
27 Retained earnings
118
Item Amount Extraction or allocation
proportion
Opening balance of retained earnings before -1,396,503,437.13
adjustments
Add: Adjustments on opening balance of retained
earning
Opening balance of retained earnings after -1,396,503,437.13
adjustments
Plus: net profit for the year -263,452,709.03
Retained earnings at the end of the year -1,659,956,146.16
．
28 Revenue and Cost of Sales
(1)Revenue
Item 2011 2010
Sales 497,721,814.25 601,188,043.45
Other operating income 20,455,625.45 22,182,589.66
Cost of sales 540,488,213.48 603,397,485.95
Note 1: Sales decreases 17.21%, it is mainly due to decrease in number of projects under execution.
(2)Listed by the categories of production or business
2011 2010
Categories
Revenue Cost of sales Revenue Cost of sales
Boilers and associated product
sales 497,721,814.25 503,352,735.72 601,188,043.45 583,556,169.73
Technical Services 497,721,814.25 503,352,735.72 601,188,043.45 583,556,169.73
(3)Top 5 customers
Customers Revenue Proportion of total revenue (%)
ALSTOM Power System GmbH 194,912,137.57 37.61%
Chiping Xinyuan Aluminum Co., Ltd. 93,549,575.93 18.05%
Guodian Xi’an thermoelectric project
preparatory office 83,606,557.64 16.13%
Shandong Luneng Material Group Co. Limited 81,459,607.64 15.72%
119
Customers Revenue Proportion of total revenue (%)
Gansu Diantou Jinchang Generating Co.Ltd 34,741,657.89 6.70%
Total 488,269,536.67 94.21%
．
29 Revenue from the construction contracts
Recognised profits to
Accumulated
date (recognised
Project Total amount Construction costs Progress billings
losses as negative
incurred to date
figure)
Fixed price 3,054,030,620.18 1,421,985,482.29 61,546,954.56 1,330,553,532.56
construction
contract
including:
ALSTOM Power 454,944,191.76 228,207,416.57 45,396,084.41 64,345,458.00
System GmbH
Chiping Xinyuan 239,965,811.97 295,869,431.28 7,982,404.97 227,967,521.38
Aluminum Co.,
Ltd.
Guodian Xi’an 267,418,803.42 78,037,966.83 3,182,550.54 39,556,795.00
thermoelectric
project
preparatory office
Shandong Luneng 335,811,965.81 245,386,537.83 71,985,896.42 302,230,770.08
Material Group
Co. Limited
Note: There is no estimated loss during the current period.
．
30 Business tax and surcharges
Item 2011 2010 Base of payment
Business tax 120,451.16 335,780.89
Urban maintenance and construction tax 8,431.59 12,262.47
Education surtax 3,613.55 23,453.06
Note 3
Levee fee 1,282.40 5,570.76
Local education development fee -450,601.30
Local education surtax 2,409.03 3,047.70
Total 136,187.73 -70,486.42
Note: the ending balance of business tax and surcharges increases, and it is due to refund of local
120
education development fee of RMB 483,561.86 from local tax bureau in 2010.
31 ．
Selling expenses
Item 2011 2010
Salary & bonus 2,339,934.29 6,481,082.62
Social insurance 447,508.92 828,023.74
Travel expenses 1,420,024.54 887,358.27
Housing fund 111,060.00 207,241.00
Business entertainment expenses 814,811.13 2,322,314.98
Depreciation 483,452.85 406,777.85
Lease expenses 218,357.76 414,716.69
Others 5,429,363.26 5,868,150.77
Total 11,264,512.75 17,415,665.92
Note: Sales expense decreases by 35.32% this year. It is due to decrease in sales personnel benefits and
entertainment expenses.
．
32 Administration expenses
Item 2011 2010
Salary & Benefit 13,864,398.23 14,182,055.84
Social insurance 823,113.29 2,533,642.15
Property tax and Land use tax 6,103,099.65 5,713,923.10
Insurance expenses 2,086,724.81 2,125,633.84
Travel expenses 1,988,180.62 2,110,033.22
Housing fund 208,821.00 642,091.00
Training expenses 310,981.09 1,837,777.11
Amortization of intangible assets 3,261,057.94 5,631,136.64
Business entertainment expenses 1,262,926.94 1,524,756.54
Depreciation 987,736.50 4,336,451.98
Consultant service expense 1,597,007.86 4,566,828.62
Lease expenses 2,522,297.15 9,831,254.71
121
Item 2011 2010
Employee retirement fees and other benefits -8,253,456.55
Others 1,559,788.37 1,900,093.01
Total 28,322,676.90 56,935,677.76
Note: Administration expense decreased 50.25% as compared to last year due to: 1. reversal of
employees retirement benefits and other benefits; 2. decrease in professional consulting fees and leasing
expense.
33 ．Financial expenses
Item 2011 2010
Interest expenses 76,039,939.25 78,216,007.88
Less ： Interest income 1,028,516.61 372,239.38
Foreign exchange loss 2,143,035.23 -1,074,930.83
Others 3,542,359.79 3,081,246.12
Total 80,696,817.66 79,850,083.79
34 ．Impairment losses
Item 2011 2010
1. Provision for Impairment loss of bad debts 94,502,180.12 -68,714,543.98
2. Impairment loss of inventories 38,379,686.80 7,713,666.80
Total 132,881,866.92 -61,000,877.18
Note: the ending balance of impairment loss increases by RMB193, 882,744.10 in comparison with that
of last year. It is mainly due to increase in doubtful debts provision resulted from increase in accounts
receivable, slowdown of accounts receivable collection schedule and increase in impairment loss
provided on obsolete materials.
35 ．Fair value gains
Item 2011 2010
Hedging-trade -7,075,835.00 142,442.98
122
Item 2011 2010
total -7,075,835.00 142,442.98
Notes: The ending balance of Hedging decreases by RMB7, 218,277.98 in comparison with that of last
year. This is mainly due to increase in unrealized loss incurred by hedge accounting.
．
36 Non-operating gains
Item 2011 2010
1. Gain on disposal of non-current assets 1,957.30 984,923.68
：
including Gain on disposal of fixed assets 1,957.30 984,923.68
2. The government subsidies 283,776.00 103,307,776.00
3. Penalty claimed 320,924.66
4. Indemnity or fine claimed 26,633.32 12,771.96
5.Others 329,147.88 81,777.29
Total 641,514.50 104,708,173.59
Note: The closing balance of Non-operating gains decreases 99.39%. It is mainly due to a sharp
decrease in government grant and a decrease in fixed assets disposal.
Details of government subsidies
Categories 2011 2010
1. Employee settlement subsidies 100,000,000.00
Income base 2. Investment subsidies for the project in emerging industry 3,030,000.00
3 ． SME growth program: prize money supplied for capital 6,000.00
Asset base 1 ． Revenue of land use right of new factory 277,776.00 277,776.00
Total 283,776.00 103,307,776.00
Note: The government subsidies are amortized deferred income related to land use right of new factory.
．
37 Non-operating losses
Item 2011 2010
1.Loss on disposal of non-current assets 50,666.35 223,151.23
Including: Loss on disposal of fixed assets 50,666.35 223,151.23
2. Default penalty 300,302.28
123
3. Breach Penalty 37,160.00
4.Project deduction of subsidiary 191,471.64
5. Others 28,108.48
Total 50,666.35 780,193.63
Note: The non-operating expenses decreases 93.51%. It is mainly due to reduce in disposal of fixed
assets and penalty expenses.
38 ．
Income tax expense
Item 2011 2010
Current income tax expense
Add: Deferred income tax -18,560,742.70 22,675,459.67
Income tax expense -18,560,742.70 22,675,459.67
．
39 Earnings per share
Item 2011 2010
Basic earning per share -0.89 0.03
Diluted earning per share -0.89 0.03
：
Notes: Basic earnings per share and diluted earnings per share calculation process
．
A Basic earnings per share=P÷S= -263,452,709.03 ÷297,000,000.00=-0.89
S=S0+S1+Si×Mi÷MO-Sj×Mj÷MO-Sk
In the equation above, P represents the net profit or profit after deducting extraordinary gain or loss
attributable to ordinary shareholders. S represents the weighted average number of ordinary shares
during the period. S0 represents the number of ordinary shares at the beginning of the period. S1
represents 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
124
after reducing shares to the end of the period.
(A) Diluted Earnings Per Share =[P+(Diluted potential common stock dividends-convert cost) /(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 ）
In the equation above, P represents the net profit or profit after deducting extraordinary gain or loss
attributable to ordinary shareholders. When calculating the diluted Earnings per Share, company
considered in sequence from dilutive potential ordinary shares to get the lowest earnings per share.
For business combination under the same control during the reporting period and the combing party
issue new shares as consideration, when calculating the EPS at the end of reporting period, company
should treat these shares as they are normal outstanding shares at the beginning of combining date
(Weighting coefficient is 1). When calculation the EPS during the comparing period, should treat these
shares as they are normal outstanding shares at the beginning of comparing period. When calculation the
EPS after deducting extraordinary gain or loss at the end of reporting period, should treat these new
shares as they are issued one month after the combing date. When calculation the EPS after deducting
extraordinary gain or loss during the comparing period should ignore these new shares (Weighting
coefficient is 0).
For business combination under the same control at the accounting period and the combing party issue
new shares as consideration, when calculating the EPS at the accounting period or the comparing period,
company should use the basic EPS method to treat these new shares.
Unlisted company purchase listed company by issue share to become a listed company indirectly, when
calculating the EPR during the reporting period:
Weighted average number of ordinary shares during the period = (Weighted average number of shares
from the beginning of reporting period to the end of the month which combination happened) +
(Weighted average number of shares from the next month of the combination to the end of the reporting
period)
Weighted average number of shares from the beginning of reporting period to the end of the month
which combination happened = Weighted average number of share of the acquirer (subsidiary in law) ×
Share exchange rate in the acquisition agreement ×number of months from the beginning to the month
which acquisition happens ÷ number of months during the period
125
Weighted average number of shares from the next month of the combination to the end of the reporting
period = Weighted average number of share of the acquiree (parent in law) ×number of months from the
next month to the end of period ÷ number of months during the period
Unlisted company purchase listed company by issue share to become a listed company indirectly, when
calculating the EPR during the comparing period:
Weighted average number of ordinary shares during the period = Weighted average number of share of
the acquirer (subsidiary in law) × Share exchange rate in the acquisition agreement.
．
40 Relevant information about cash flow statement
(1)Other cash received from operating activities
Item Amount
Other cash received from operating activities 37,884.15
including: Government grants 6,000.00
Insurance compensation 26,632.99
(2)Other cash paid from operating activities
Item Amount
Other cash paid relating to operating activities 29,112,239.00
Including: Staff training 2,547,551.76
Energy expenses 1,246,255.89
Food expenses 4,949,965.39
Lease expenses 3,594,105.16
Recruitment expenses 498,485.16
Travel expenses 3,610,821.46
Cleaning service expenses 123,427.63
Security expenses 1,320,000.00
Consultant service expenses 2,764,601.25
Insurance expenses 924,464.43
Business entertainment expenses 2,077,738.07
Maintenance and repair cost 1,195,534.02
126
Item Amount
Office expenses 994,811.78
Book expenses 318,260.00
Advertising expenses 905,555.80
Litigation cost 1,293,089.00
Stock refund 381,080.00
(3)Other cash received from investing activities
Item Amount
Cash received relating to financing activities 1,900,334.54
Including: Decrease in retention deposits 871,817.93
Interest income 1,009,555.42
(4)Other cash paid from financing activities
Item Amount
Other cash payments relating to financing activities 779,563.36
Including: bank charges 779,443.79
41 ．
Supplementary information of cash flow statement
Supplementary information 2011 2010
1. Reconciliation of net profit to net cash flows generated from
operations ：
Net profit -263,537,079.89 8,238,046.56
Provision for impairments of assets. 67,632,463.94 -172,363,150.40
Depreciation of fixed assets, oil-gas assets and productive 40,607,295.77 36,650,183.99
biological assets
Amortization of intangible assets 6,687,796.26 7,799,476.51
Amortization of long-term deferred expense
Losses/gains on disposal of property, plant and equipment, 48,709.05 -761,772.45
intangible asset and other long-term assets (gains: negative)
Losses/gains on scrapped of fixed assets (gains: negative)
Losses/gains from variation of fair value (gains: negative) 7,075,835.00 -142,442.98
127
Supplementary information 2011 2010
Finance cost (income: negative) 80,696,817.66 79,850,083.79
Investment loss (gains: negative)
Decrease in deferred tax assets (increase: negative) -18,560,742.70 22,675,459.67
Increase in deferred tax liabilities (decrease: negative)
Decrease in inventory (increase: negative) -43,939,832.28 10,906,240.30
Decrease in accounts receivable from operating activities 12,843,915.27 568,541,263.02
(increase: negative)
Increase in payables from operating activities (decrease: -200,308,843.52 656,189,757.01
negative)
Others
Net cash flows generated from operating activities -310,753,665.44 1,217,583,145.02
2. Significant investing and financing activities without
involvement of cash receipts and payments
Debt converted to capital
Finance leased fixed assets
3. Movement of Cash and cash equivalent:
Closing balance of Cash 20,388,030.03 10,491,275.05
Less: opening balance of cash 10,491,275.05 27,114,305.92
Plus: closing balance of cash equivalent
Less: opening balance of cash equivalents
The net increase in cash and cash equivalents 9,896,754.98 -16,623,030.87
(2)Cash and cash equivalents:
Item 2011 2010
1. Cash
Including: Cash on hand
Bank deposit on demand 20,388,030.03 10,361,930.05
Other cash and cash equivalent on demand 129,345.00
Central Bank deposit on demand
Due from banks
Call loan to banks
128
Item 2011 2010
2. Cash equivalent
Including: bond investments due in three months
3. Closing balance of cash and cash equivalents 20,388,030.03 10,491,275.05
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 Relationship Business Type Registration Legal Nature of Registered Capital
company Representative the
business
ALSTOM Shareholder Foreign-owned Fifth floor. Dominique Lawfully USD60,964,400.00
(China) enterprises QianKun Pouliquen investing
Investment building ,No. in fields in
Co., Ltd. 6 , West No 6 which
street, foreign
Sanlitun, investment
chaoyang is
district, permitted
Beijing by the
State
Parent company The parent The parent The ultimate Organization
company's company's voting controlling party of Code
shareholding (%) right (%) the Company
ALSTOM (China) 51 51 ALSTOM Holdings 71092378-2
Investment Co., Ltd.
3. Subsidiary of the Company relating to information disclosure:
Subsidiary Registered Type Nature Principal Legal representative Registered Percentage of Percent Organization
address activities capital(RMB) Shareholding age of Code
% voting
right
%
Wuhan Control Control 586 Chong Packaging, design, and 19,115,250.00 90% 90% 71456410-7
Boiler Bo Yu shareholder shareholder Wuluo Bao qian manufacturing of
Industrial Rd., Mechanical and
Co., Ltd. Wuhan Electrical products;
processing of metal
129
Subsidiary Registered Type Nature Principal Legal representative Registered Percentage of Percent Organization
address activities capital(RMB) Shareholding age of Code
% voting
right
%
components; design
and manufacturing of
model and mold ；
Manufacturing of valve
rough casting, steel
casting, iron casting,
nonferrous metal
casting.
Wuhan Lan Control Control 586 Guowei Boiler, energy 20,000,000.00 95% 95% 73753132-4
Xiang Power shareholder shareholder Wuluo Yang environmental
Environmenta Rd., protection products,
l Protection Wuhan Steel structures,
Technology technology research of
Company heat energy products
Limited and its accessorial
equipment, design,
technical Consultancy,
technical service, sales
of developed products,
energy project
(non-construction
project)
4. Other related parties
Organization
Company Relationship
Code
ALSTOM Poer INC. A subsidiary of ultimate holding
company
ALSTOM Projects India Limited A subsidiary of ultimate holding
company
ALSTOM Power Systems S.A Establishment Boilers A subsidiary of ultimate holding
company
ALSTOM Power System GmbH A subsidiary of ultimate holding
company
ALSTOM Power Service GmbH A subsidiary of ultimate holding
company
PT ALSTOM Power Energy Systems Indonesia A subsidiary of ultimate holding
company
ALSTOM Power Energy A subsidiary of ultimate holding
company
ALATOM Estonia AS A subsidiary of ultimate holding
company
ALSTOM IS&T SAS A subsidiary of ultimate holding
company
ALSTOM Technology Ltd (Switzerland) A subsidiary of ultimate holding
company
ALSTOM s.r.o A subsidiary of ultimate holding
company
ALSTOM Holdings Ultimate holding company
130
Organization
Company Relationship
Code
ALSTOM (Switzerland) Ltd A subsidiary of ultimate holding
company
ALSTOM Sizhou Electric Power Equipment A subsidiary of ultimate holding 70649461-2
(Qingdao) Co. Ltd company
ALSTOM Beizhong Power(Beijing)Co.,Ltd A subsidiary of ultimate holding 76935519-3
company
ALSTOM (Wuhan) Engineering & Technology Co., A subsidiary of ultimate holding 77459437-5
Ltd. company
ALSTOM (China) Investment Co., Ltd. The company's largest 71092378-2
shareholder
ALSTOM Technical Services (Shanghai) Co., Ltd. A subsidiary of ultimate holding 60742241-0
company
Wuhan Boiler Group Co., Ltd. The second largest shareholder 17771651-4
Wuhan Boiler Group Valve Co., Ltd. Subsidiary of the second 30024542-1
largest shareholder
Wuhan Boiler (Group) Special Boiler Engineering Subsidiary of the second 87769907-3
Co., Ltd. largest shareholder
Wuhan Boiler (Group) Yuntong Co., Ltd Subsidiary of the second 30024726-7
largest shareholder
5. Related party transactions
(1)Purchase and service received
Related parties Details of Rule of 2011 2010
transaction price
setting Proportion Proportion
Amount Amount
） （
% ） （
%
Wuhan Boiler Group Boiler Market 40,506.00 0.01 475,847.22 0.11
Valve Co., Ltd. parts price
Wuhan Boiler Boiler Market 4,436,951.58 1.01
(Group)Special Boiler parts price
Engineering Co., Ltd.
ALSTOM Technical Raw Market 24,285,640.99 7.87 19,717,948.72 4.51
Services (Shanghai) Co., material price
Ltd.
ALSTOM s.r.o Raw Market 1,187,674.37 0.39 2,399,827.56 0.55
material price
Wuhan Boiler Labor Market 2,649,300.00 59.68
(Group)Special Boiler service price
Engineering Co., Ltd.
ALSTOM Power Service Labor Market 16,879,708.57 100.00
GmbH service price
131
Related parties Details of Rule of 2011 2010
transaction price
setting Proportion Proportion
Amount Amount
） （
% ） （
%
ALSTOM Power Systems Raw Market 2,837,547.00 0.92 5,114,984.98 1.17
S.A Establishment Boilers material price
ALSTOM Power System Raw Market 51,925,074.91 16.84 138,323,945.45 31.62
Gmbh material price
Wuhan Boiler (Group) Transport Market 4,977,108.90 100.00 13,157,402.24 74.43
Yuntong Co., Ltd service price
Sales and service provided
Related parties Details of Rule of price 2011 2010
transaction setting
Proportion Proportion
Amount Amount
） （
% ） （
%
Wuhan Boiler Sales of Market price 856,223.33 0.14
(Group)Special Boiler products
Engineering Co., Ltd.
ALSTOM Power Sales of Market price 1,654,424.15 0.33 23,158,666.00 3.85
Systems S.A products
Establishment Boilers
ALSTOM Power System Sales of Market price 194,912,137.57 39.16 182,937,634.29 30.43
GmbH products
ALSTOM Sizhou Sales of Market price 683,760.68 0.11
Electric Power products
Equipment (Qingdao)
Co. Ltd
ALSTOM (Wuhan) Labor Market price 2,592,397.96 100.00
Engineering & service
Technology Co., Ltd.
PT ALSTOM Power Sales of Market price 1,028,216.42 6.16
Energy Systems materials
Indonesia
ALSTOM Power INC. Sales of Market price 1,243,445.58 7.45
materials
ALSTOM Power INC. Sales of Market price 4,685,285.58 0.94
products
(2)Other related party transactions:
Related parties Transactions Amount
ALSTOM Holdings Training fees 191,906.45
ALSTOM IS&T SAS ITSAS fees 6,727,182.07
ALSTOM (China) Investment Co., Ltd. ITSSC fees 5,850,356.07
ALSTOM (China) Investment Co., Ltd. Training fees 174,335.86
132
ALSTOM (Wuhan) Engineering & Technology Co., Ltd. Translation fees 433,109.00
ALSTOM (Wuhan) Engineering & Technology Co., Ltd. Experiment service fee 791,650.00
ALSTOM (Wuhan) Engineering & Technology Co., Ltd. Leasehold income 571,479.00
ALSTOM Technology Ltd (Switzerland) Technology transfer fee 7,505,484.40
PDMS software application
ALSTOM (Switzerland) Ltd 416,702.25
service fees
ALSTOM (Switzerland) Ltd Relocation of Windsor Lab 584,386.19
PMX Financial software
ALSTOM (Switzerland) Ltd 4,693,831.04
support fees
SAP B1 Financial software
ALSTOM (Switzerland) Ltd 87,702.72
costs
(3)ALSTOM (China) Investment Co., Ltd entrust China Construction Bank to provide a shareholder’s
entrusted loan to Wuhan Boiler Co., Ltd. The amount is RMB 1,563,000,000.00 with a floating
downward 10% of PBOC benchmark interest rate. The cumulative interest expense paid in 2011 was
RMB 76,026,715.38.
．
6 Amounts due from/to related parties
Amount due from related parties
Closing balance Opening balance
Item Related parties Provision for Provision for
Balance doubtful Balance doubtful
debts debts
Accounts Wuhan Boiler 9,954,995.28 1,990,999.06 9,954,995.28 597,299.72
receivable (Group)Special
Boiler Engineering
Co., Ltd.
ALSTOM Power Inc. 56,139,758.93 1,684,192.77
ALSTOM Power 125,629.94 3,768.90 135,170.61 4,055.12
System GmbH
ALSTOM Sizhou 40,000.00 1,200.00 680,000.00 20,400.00
Electric Power
Equipment (Qingdao)
Co. Ltd
Prepayment ALSTOM Technical 3,260,000.00 9,840,000.00
Services (Shanghai)
Co., Ltd.
ALSTOM Power 2,711,519.75
133
Closing balance Opening balance
Item Related parties Provision for Provision for
Balance doubtful Balance doubtful
debts debts
Systems S.A
Establishment Boilers
ALSTOM Power 74,800,403.17
System GmbH
Other Wuhan Boiler Group 64,030,488.11 4,586,848.27 64,030,488.11 1,796,641.13
receivables Co., Ltd.
Wuhan Boiler Group 240,571.49 14,434.29 240,571.49 7,217.14
Valve Co., Ltd.
Wuhan Boiler 10,171.01 610.26 25,499.73 764.99
(Group) Yuntong Co.,
Ltd
ALSTOM Power 35,836.70 1,075.10 863.87 25.92
Systems S.A
Establishment Boilers
Alstom (Switzerland) 254,359.93 7,630.80
Ltd
Alstom Power 1,929,580.66 57,887.42
Systems GmbH
ALSTOM (China) 3,529,700.20 105,891.01 3,159,900.37 94,797.01
Investment Co., Ltd.
Amount due to related parties
Item Related parties Closing Opening
balance balance
Accounts payable Wuhan Boiler (Group) Yuntong Co., Ltd 383,570.01 3,123,121.06
Wuhan Boiler Group Valve Co., Ltd. 1,099,530.54 1,690,329.14
Wuhan Boiler (Group) Special Boiler 24,225,755.73 24,225,755.73
Engineering Co., Ltd.
ALSTOM Technical Services (Shanghai) Co., 4,767,000.00 2,307,000.00
Ltd.
ALSTOM Power System GmbH 1,003,018.90 16,577,651.22
ALSTOM Power Systems S.A Establishment 2,857,805.54
Boilers
134
Item Related parties Closing Opening
balance balance
ALSTOM Power INC 1,176,160.65 488,787.14
ALSTOM s.r.o 989,816.18 412,125.94
ALSTOM (Switzerland) Ltd 331,361.30
PT Alstom Power Energy System Indonesia 10,614.19
Alstom Power Service GmbH 11,772,599.40
Advance from Alstom Estonia AS 38,415,853.47
customers
ALSTOM Power System GmbH 808,650,445.76 976,283,726.72
Other payable Wuhan Boiler Group Co., Ltd. 974,056.13 974,056.13
ALSTOM (China) Investment Co., Ltd. 5,110,602.37 3,489,547.49
ALSTOM (Wuhan) Engineering & Technology 219,718.00
Co., Ltd.
ALSTOM Power INC 515,415.55 838,869.33
ALSTOM IS&T SAS 6,054,216.36
ALSTOM Beizhong Power(Beijing)Co.,Ltd 1,356,789.48 26,532.30
ALSTOM (Switzerland) Ltd 4,258,401.06 192,289.93
ALSTOM Technology Ltd (Switzerland) 30,903,465.60 26,623,254.00
Note7. Contingency
Besides the note5.23 statement, there is no other event to disclose during this report period.
Note.8 Commitments
1. Significant commitments
(1)Capital commitments
Up to 31December 2011, the commitment related to purchases of long-term assets which the contract
were signed but not reflected in the financial statements amounted to RMB2,218,930.85,
USD157,085.00, EUR15,071.50.
(2)Other commitments
135
Up to 31December 2011, the performance bond, tender bond and warranty bond issued by the Company
remain unexpired amounted to RMB78, 068,360.00 and USD3,126,923.00. The tender bond issued in
2011 is RMB 1,600,000.00.
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 2011 is RMB40, 911,747.16, USD270, 881.00, EUR117, 999.50.
(2)The performance of previous year's other commitments: The amount of bond expired in 2011 are:
performance bond RMB 31,450,000.00, tender bond RMB 1,600,000.00.
Note9. Events after the Balance Sheet Date
As at 28 March 2012, the Company received the civil mediation statement issued by the Higher Peoples’
Court of Shandong Province. According to the mediation statement, both of Shandong Weiqiao
Aluminium Co., Ltd. and Binzhou Gaoxin Aluminium Co.,Ltd shall pay RMB105,003,000.00 to the
Company, and terminate the boiler supply contracts signed among the three parties in 2006 and 2007 at
the same time. Meanwhile, the Company will sign a new contract of four sets of subcritical pulverized
coal boilers with Shandong Weiqiao Chuangye group and Binzhou Beihai New material Co.,Ltd. Since
the above contract execution needs a long period, it is unable to estimate the impact of this matter to the
finical position and operating results of the Company at present.
Note10. Notes of financial statements of parent company
1. Accounts receivable
(1)Accounts receivable by categories are as follows:
Closing balance
Balance Provision for bad and
Category doubtful debts
Proportion Proportion
Amount Amount
(%) (%)
Individually significant receivables 62,049,078.35 10.38 14,302,475.00 23.05
Group A (using aging analysis) 422,516,551.97 70.67 137,823,743.44 32.62
Group B (No bad debt provision for
account receivables)
Other insignificant receivables but 113,324,678.40 18.95 76,721,578.40 67.70
still are impaired individually
136
Closing balance
Balance Provision for bad and
Category doubtful debts
Proportion Proportion
Amount Amount
(%) (%)
Total 597,890,308.72 100.00 228,847,796.84 38.28
Opening balance
Balance Balance
Category
Proportion Proportion
Amount Amount
(%) (%)
Individually significant receivables
Group A (using aging analysis) 392,671,753.45 76.62 88,218,649.78 22.47
Group B (No bad debt provision for 15,549,187.32 3.03
account receivables)
Other insignificant receivables but 104,273,124.83 20.35 65,682,544.83 62.99
still are impaired individually
Total 512,494,065.60 100.00 153,901,194.61 30.03
Description for categories of accounts receivable:
Notes for Group A (Recognition provision for doubtful debt of groups of receivables is based on aging
analysis):
Closing balance
Aging of receivables Balance
Provision for doubtful debts
Amount Proportion (%)
Within 1 year (including 1 year) 153,994,058.92 36.45 4,619,821.77
1-2 years(including 2 year) 5,654,629.94 1.34 169,638.90
2-3 years(including 3 year) 76,422,460.00 18.09 4,585,347.60
3-4 years(including 4 year) 52,497,995.28 12.43 10,499,599.06
4-5 years(including 5 year) 19,997,589.64 4.73 3,999,517.92
Over 5 years 113,949,818.19 26.96 113,949,818.19
Total 422,516,551.97 100.00 137,823,743.44
137
Opening balance
Aging of receivables Balance
Balance
Amount Proportion (%)
Within 1 year (including 1 year) 41,301,700.11 10.52 1,239,051.00
1-2 years(including 2 year) 132,931,314.04 33.85 3,987,939.42
2-3 years(including 3 year) 75,145,590.28 19.14 4,508,735.42
3-4 years(including 4 year) 29,200,124.33 7.44 5,840,024.87
4-5 years(including 5 year) 51,812,657.02 13.19 10,362,531.40
Over 5 years 62,280,367.67 15.86 62,280,367.67
Total 392,671,753.45 100.00 88,218,649.78
Notes for closing balance of other insignificant receivables (Receivables which are not significant, but
still need individually recognition of bad debt provision) ：
Item Closing balance Bad debt provision Note
Product payment and 175,373,756.75 91,024,053.40 Details are presented as
retention following table
Details：
Company Reason for provision
Huaneng Nanjing Combustion Engine Due to the quality problems of equipments, it is
Generating Co.Ltd difficult to receive retention money.
Dongfang Xiwang Baotou Xitu Aluminum The Company is required to bear part of the subsequent
Co., Ltd. costs and thus the receivable amount is not expected to
be fully recoverable.
Luoyang Yichuan Longquan Kengkou Deduction for equipment maintenance
Generating Co., Ltd.
Shanxi Datang International Yungang Deduction for equipment quality issues
Thermal Power Co.Ltd
Datang Liaoyuan Power Plant Deduction for equipment quality issues
China Machine Import and Export Company Due to the quality problems of equipments, it is
difficult to receive retention money.
Gansu Diantou Jinchang Generating Co.Ltd It is difficult to fully receive retention money.
China Shenhua Nengyuan Co., Ltd Guohua Deduction for equipment quality issues
Huizhou Power Co.
138
Company Reason for provision
Guodian Lanzhou Thermopower 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
Shandong Power No.3 Project Company Due to the quality issues of equipments, it is difficult to
receive retention money.
Wuhan Zhongjia Natural Gas Compressor The customer has disputes over the contract settlement
Co.Ltd and the receivable amount is not expected to be fully
recoverable.
Chiping Xinyuan Aluminum 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
China Power Engineering Consulting Group, The customer has disputes over the contract settlement
Zhongnan Power Design Institute and the receivable amount is not expected to be fully
recoverable
PT INDAH KIAT PULP&PAPER TBK ， It is difficult for the equipment to achieve full load
operation, retention money cannot be recalled
(2)In 2011, 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, 2011, RMB 12,686,831.68 has been recovered for the debts aging more than 5 years a
20.37% of the last year’s accounts receivable for aging more than 5 years.
(3)The write-off of accounts receivable
Name of company The nature Written off Reason Related
of accounts party
receivable transaction
Anshan Thermopower Material Retention 2,018,000.00 Restructuring of No
Co.,Ltd. enterprise
Dayan Mining Retention 162,000.00 Restructuring of No
enterprise
Dongfang Electrics Group Beijing Retention 456,500.00 Expenses No
Branch deduction
Dongguan Hailong Paper Co., Ltd. Retention 349,917.60 On account for No
long term
E-Steel Group Retention 122,850.00 Product loss No
Shunde Jinfeng Rinsing Co.Ltd Retention 165,000.00 Quality deduction No
139
Name of company The nature Written off Reason Related
of accounts party
receivable transaction
Guodian Ningxia Shizuishan Retention 832,228.99 Quality deduction No
Generating Co.,Ltd.
Guodian Shizuishan No.1 Generating Retention 500,000.00 Quality deduction No
Co.,Ltd.
Guodian Xuanwei Generating Co., Retention 494,452.30 Expenses No
Ltd. deduction
Hubei Shanonda Co., Ltd. Retention 5,009.50 On account for No
long term
Hubei Daye Thermopower Retention 842,700.00 Quality deduction No
Generating Plant
Hubei Changyuan No.1 Generating Retention 600,000.00 Expenses No
Co., Ltd. deduction
Jiangxi Xinyu Generating Co., Ltd. Retention 3,224,097.13 Quality deduction No
Jiulong Paper (Taicang) Co.,Ltd. Retention 150,000.00 Quality deduction No
Maoming Thermopower Plant Retention 76,000.00 Quality deduction No
Nantong Wanda Boiler Co., Ltd. Retention 69,155.00 Quality deduction No
Ningxia Hebing Thermal Power Retention 70,000.00 Quality deduction No
Plant
Sinopec Qingdao petrochemical Retention 180,569.30 On account for No
limited liability company long term
Shandong Bohui Paper Retention 380,000.00 Restructuring of No
enterprise
Shanxi Hepo Generating Co., Ltd. Retention 211,000.00 Quality deduction No
Shijiazhuang Nanjiao Thermopower Retention 465,000.00 Enterprise was No
Co., Ltd. shut down
WISCO Technical Reconstruction Retention 35,000.00 Quality deduction No
Project Equipment Procurement
Company
Wuhan Silu New Technology Co.Ltd Retention 139,200.00 Enterprise No
cancellation
Xiangfan Thermopower Industry Retention 300,000.00 Quality deduction No
Co., Ltd.
Xuzhou Chacheng Power Co.,Ltd. Retention 1,435,224.83 Quality deduction No
Yueyang Petrochemical Plant Retention 107,950.00 Quality deduction No
Yunnan Manghe Sugar Plant Retention 492,000.00 Bankrupt No
140
Name of company The nature Written off Reason Related
of accounts party
receivable transaction
Yunan Longjiang Retention 460,000.00 Quality deduction No
Hubei chemical fertilizer plant Retention 200,000.00 Quality deduction No
Wuhan Xianglong Electric Utility Retention 325,000.00 Quality deduction No
Co., Ltd.
Xiamen Environmental Sanitation Retention 101,000.00 Quality deduction No
Total 14,969,854.65
Note: Above write-off accounts receivable retention were for projects which have completed more than
5 years.
(4)There is no accounts receivable due from shareholders with more than 5% (including 5%) of the
voting shares of the Company.
(5)Information of top 5 receivables:
The relationship
Company with the Amount Age Proportion
Company
Shandong Weiqiao Aluminum and Non-affiliated 135,002,999.99 1-4 years 22.58
Electricity Co., Ltd.
ALSTOM Power INC Affiliated 56,139,758.93 Within 1 year 9.39
Shanxi Zhengxin Group Co., Ltd. Non-affiliated 39,820,000.00 Over 5 years 6.66
Guodian Lanzhou Thermopower Non-affiliated 31,160,000.00 Within 1 year 5.21
Co., Ltd.
China Shenhua Nengyuan Co., Ltd Non-affiliated 30,889,078.35 Within 1 year 5.17
Guohua Huizhou Power Branch.
Total 293,011,837.27 49.01
(6)Accounts receivable of related parties
Company The relationship with the Amount Proportion
Company
Wuhan Boiler (Group) Special A subsidiary of the second 9,954,995.28 1.67
Boiler Engineering Co., Ltd. largest shareholder
ALSTOM Power System GmbH A subsidiary of the ultimate 125,629.94 0.02
holding company
ALSTOM Power INC A subsidiary of the ultimate 9.39
holding company 56,139,758.93
ALSTOM Sizhou Electric Power A subsidiary of the ultimate 40,000.00 0.01
Equipment (Qingdao) Co. Ltd holding company
141
Total 66,260,384.15 11.09
．
2 Other receivables
(1)Other receivables disclosed by type:
Closing balance
Categories Balance Provision for doubtful debts
Proportion Proportion
Amount Amount
(%) (%)
Individually significant receivables 26,673,222.30 19.14 26,673,222.30 100.00
Group A (using aging analysis) 84,930,108.98 60.94 6,594,689.12 7.76
Group B (No bad debt provision for 25,121,744.82 18.03
account receivables)
Other insignificant receivables but 2,636,308.95 1.89 2,636,308.95 100.00
still are impaired individually
Total 139,361,385.05 100.00 35,904,220.37 25.76
Opening balance
Categories Balance Provision for doubtful debts
Proportion Proportion
Amount Amount
(%) (%)
Individually significant 5,538,447.44 3.30 5,538,447.44 100.00
receivables
Group A (using aging analysis) 76,431,089.46 45.47 2,564,873.66 3.36
Group B (No bad debt provision 62,507,615.14 37.19
for account receivables)
Other insignificant receivables but 23,596,656.07 14.04 23,596,656.07 100.00
still are impaired individually
Total 168,073,808.11 100.00 31,699,977.17 18.86
Notes for Group A (Recognition provision for doubtful debt of groups of receivables is based on aging
analysis):
Closing balance
Aging of receivables Balance Provision for doubtful debts
Amount Proportion (%)
Within 1 year (including 1 year) 4,652,284.00 5.48 139,568.52
1-2 years(including 2 year) 4,580,229.37 5.39 137,406.88
2-3 years(including 3 year) 63,012,895.74 74.19 3,780,773.74
3-4 years(including 4 year) 12,684,699.87 14.94 2,536,939.98
Total 84,930,108.98 100.00 6,594,689.12
142
Opening balance
Aging of receivables Balance Provision for doubtful debts
Amount Amount
Within 1 year (including 1 year) 6,610,079.55 8.65 198,302.39
1-2 years(including 2 year) 60,756,310.82 79.49 1,822,689.32
2-3 years(including 3 year) 9,064,699.09 11.86 543,881.95
Total 76,431,089.46 100.00 2,564,873.66
Individually significant receivables or insignificant receivables requiring impairment test, and providing
provision for doubtful debt ：
Item Balance Bad debt Accrual Reason
provision percentage
3RC Company Limited 336,604.05 336,604.05 100.00% Bankruptcy
Value Added Tax paid for 28,377,636.20 28,377,636.20 100.00% Projects were suspended
suspended projects and the amount is not
expected to be recoverable
Legal cost 595,291.00 595,291.00 100.00% Difficult to execute court
jusdge
Total 29,309,531.25 29,309,531.25
(2)Accounts receivable is 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 Amount provision for
bad debt bad debt
Wuhan Boiler Group Co., Ltd. 64,030,488.11 4,586,848.27 64,030,488.11 1,796,641.13
ALSTOM (China) Investment 3,529,700.20 105,891.01 3,159,900.37 94,797.01
Co., Ltd.
Total 67,560,188.31 4,692,739.28 67,190,388.48 1,891,438.14
Note: Account receivable of RMB 64,030,488.11 from the second largest shareholder, Wuhan Boiler
Group Co., Ltd., is the compensation for the relocation of the old factory
(3)Details of top 5 other receivables ：
Company The relationship Amount Aging Proportion of
with the Company the total (%)
Wuhan Boiler Group Co., The company's 64,030,488.11 3-4 years 45.95
Ltd. second-largest
shareholder
143
Company The relationship Amount Aging Proportion of
with the Company the total (%)
Shandong Luneng Material Non-affiliated 25,659,390.26 2-3 years 18.41
Group Co. Limited
Donghu Development Zone Non-affiliated 10,774,265.00 3-4 years 7.73
Committee
Shandong Weiqiao Non-affiliated 7,638,811.97 3-4 years 5.48
Aluminum and Electricity
Co., Ltd.
Shanxi Zhengxin Group Non-affiliated 6,722,635.47 Over 5 years 4.82
Co., Ltd.
Total 114,825,590.81 82.39
(4)The amounts due from related parties
The relationship with the Proportion of the
Name of company Amount
Company total (%)
Wuhan Boiler Group YunTong Subsidiary of Second largest 10,171.01 0.01
Co., Ltd. shareholder
Wuhan Boiler Group Valve Co., Subsidiary of Second largest 240,571.49 0.17
Ltd shareholder
ALSTOM Power Systems S.A A subsidiary of the ultimate 35,836.70 0.03
Establishment Boilers holding company
ALSTOM (Switzerland) Ltd A subsidiary of the ultimate 254,359.93 0.18
holding company
ALSTOM Power Systems GmbH A subsidiary of the ultimate 1,929,580.66 1.38
holding company
Total 2,470,519.79 1.77
3. Long-term equity investments
Original
Opening Increase/ Closing Shareholding Voting right
Company investment
balance decrease balance Proportion Proportion
amount
Long-term equity
investment under cost
144
Original
Opening Increase/ Closing Shareholding Voting right
Company investment
balance decrease balance Proportion Proportion
amount
method
Wuhan Lan Xiang 14,000,000.00 24,984,500.00 24,984,500.00 95% 95%
Energy
Environmental
Protection
Technology Co., Ltd.
Wuhan Boiler Bo Yu 14,249,787.13 14,249,787.13 14,249,787.13 90% 90%
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, 2011, there are
no other business activities, but liquidation is still in progress.
4. Revenue and Cost of Sales
(1)Revenue
Item 2011 2010
Sales 497,721,814.25 601,188,043.45
Other operating income 20,455,625.45 22,399,741.66
Cost of sales 540,488,213.48 603,397,485.95
Note: Sales decreases17.21%, it is mainly due to decrease in number of projects under execution.
(2)Listed by the categories of production or business
2011 2010
Categories
Revenue Cost of sales Revenue Cost of sales
Boilers and associated
product sales 497,721,814.25 503,352,735.72 601,188,043.45 583,556,169.73
Total 497,721,814.25 503,352,735.72 601,188,043.45 583,556,169.73
(3)Top five customers
Company Revenue Proportion of total revenue
ALSTOM Power System GmbH 194,912,137.57 37.61%
Chiping Xinyuan Aluminum Co., Ltd. 93,549,575.93 18.05%
Guodian Xi’an thermoelectric project preparatory
office 83,606,557.64 16.13%
Shandong Luneng Material Group Co. Limited 81,459,607.64 15.72%
Gansu Diantou Jinchang Generating Co.Ltd 34,741,657.89 6.70%
Total 488,269,536.67 94.21%
5. Supplementary Cash Flow Information
Supplementary information 2011 2010
145
Supplementary information 2011 2010
1. Reconciliation of net profit to net cash flows generated from
operations ：
Net profit -263,155,445.70 10,806,697.90
Provision for impairments of assets. 67,250,983.90 -173,464,200.56
Depreciation of fixed assets, oil-gas assets and productive 40,607,295.77 36,650,183.99
biological assets
Amortization of intangible assets 6,687,796.26 7,799,476.51
Amortization of long-term deferred expense
Losses/gains on disposal of property, plant and equipment, 48,709.05 -793,669.73
intangible asset and other long-term assets (gains: negative)
Losses/gains on scrapped of fixed assets (gains: negative)
Losses/gains from variation of fair value (gains: negative) 7,075,835.00 -142,442.98
Finance cost (income: negative) 80,715,188.85 79,860,442.72
Investment loss (gains: negative)
Decrease in deferred tax assets (increase: negative) -18,560,742.70 22,541,765.92
Increase in deferred tax liabilities (decrease: negative)
Decrease in inventory (increase: negative) -43,939,832.28 10,906,240.30
Decrease in accounts receivable from operating activities 480,719,907.30
(increase: negative) 8,451,318.03
Increase in payables from operating activities (decrease: 743,477,830.53
negative) -196,690,665.61
Other
Net cash flows generated from operating activities -311,509,559.43 1,218,362,231.90
2. Significant investing and financing activities without
involvement of cash receipts and payments
Debt converted to capital
Convertible corporate bonds within one year
Finance leased fixed assets
3. Movement of Cash and cash equivalent:
146
Supplementary information 2011 2010
Closing balance of Cash 18,949,394.34 9,827,144.54
Less: opening balance of cash 9,827,144.54 26,057,612.46
Plus: closing balance of cash equivalent
Less: opening balance of cash equivalents
The net increase in cash and cash equivalents 9,122,249.80 -16,230,467.92
Note11. 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 2011
Gains on disposal of non-current assets including reversal of the impairment loss -48,709.05
Unauthorised approval, with or without formal approval documents, or occasional tax
return, relief
Government grant recognized in current year, except for those acquired in the 283,776.00
ordinary course of business or granted continuously in certain standard quota
according to relevant national laws and regulations
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
Significant loss of fair trading price over the fair value of transactions generated part
of the profit and loss
147
Item 2011
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.
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 355,781.20
Other non-recurring gains and losses in line with the definition of profit and loss
items
subtotal 590,848.15
Less: non-recurring income tax effect of gains and losses
Minority interest share of non-recurring gains and losses
Total 590,848.15
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:
EPS
The weighted
2011 average ROE (%) Basic Diluted
EPS EPS
Net profit attributable to the Company's common stock
-0.89 -0.89
shareholders of net profit
Net profit after deducting non-recurring gains and losses
-0.89 -0.89
attributable to shareholders of the Company's common
stock
148
EPS
The weighted
2010 average ROE (%) Basic Diluted
EPS EPS
Net profit attributable to the Company's common stock
-0.96 0.03 0.03
shareholders of net profit
Net profit after deducting non-recurring gains and losses
-0.43 -0.43
attributable to shareholders of the Company's common
stock
Legal Representative: Chief Financial Official: Chief Accountant:
149
