Hangzhou Steam Turbine Co., Ltd. The 1st Quarterly Report 2010 (Full text) Stock Code: 200771 Stock ID: Hangqilun B Announcement No. 2010-21 Hangzhou Steam Turbine Co., Ltd. The 1st Quarterly Report 2010 (Full Text) §1 Important Declaration 1.1 The Board of Directors and the directors of the Company guarantee that there are no significant omissions, fictitious or misleading statements carried in the Report and we will accept individual and joint responsibilities for the truthfulness, accuracy and completeness of the Report. 1.2 The financial statements carried in this report are not audited. 1.3. Chairman Mr. Nie Zhonghai, General Manager Mr. Yan Jianhuan, Chief Financial Officer Mr. Bai Ronghua, and the Chief of Accounting Department Mr. Wu Guomei hereby declares: the Financial Statement in the report is guaranteed to be truthful and complete. §2 Company Profile 2.1 Financial highlights In RMB Yuan Ended this report term Ended previous year Changed by (%) Gross Assets (RMB) 5,213,495,583.77 4,910,772,244.30 6.16% Owners’ equity attributable to the shareholders of the listed company (yuan) 2,431,492,991.04 2,336,109,466.46 4.08% Capital shares (shares) 371,800,000.00 371,800,000.00 0.00% Net asset per share attributable to the shareholders of the listed company (Yuan/share) 6.54 6.28 4.14% This report term Same period last year Changed by (%) Turnover (yuan) 709,878,971.12 716,800,324.88 -0.97% Net profit attributable to shareholders of the listed company (yuan) 95,383,524.58 96,697,447.87 -1.36% Net Cash flow generated by business operation (RMB) 187,637,137.31 -41,605,455.48 -550.99% Net Cash flow per share generated by business operation (yuan/share) 0.50 -0.11 -554.55% Basic earnings per share (Yuan/share) 0.26 0.26 0.00% Diluted earnings per share (Yuan/share) 0.26 0.26 0.00% Weighted average net income/asset ratio (%) 4.00% 4.96% -0.96% Weighted average net income/asset ratio less non-recurring gain/loss(%) 4.04% 4.98% -0.94% 1Hangzhou Steam Turbine Co., Ltd. The 1st Quarterly Report 2010 (Full text) Non-recurring gain and loss items Amount of the period from the beginning of year to the end ofreport term Gain/loss of non-current assets 1,380.00 Government subsidies accounted into current gain/loss account, other than those closely related to the Company’s common business, comply with the national policy and continues to enjoy at certain fixed rate or amount. 193,600.00 Other non-business income and expenditures other than the above -1,531,984.78 Influenced amount of minority shareholders’ equity 323,201.00 Influenced amount of income tax 101,698.47 Total -912,105.31 Statement on non-recurring gain/loss accounts None 2.2 Total of shareholders and top-10 holders of current shares In shares Total shareholders at the end of the report period (accounts) 15,792 Top Ten Shareholders of Negotiable Shares Full name of shareholder Negotiable shares held at the end of report term Categories SCHRODER INTL SELECTION FD-GREATER CN FD GTI 25287 6,287,474 Foreign shares placed in domestic exchange NORGES BANK 2,669,261 Foreign shares placed in domestic exchange TOYO SECURITIES ASIA LIMITED-A/C CLIENT. 1,370,925 Foreign shares placed in domestic exchange BOCHK INVESTMENT FUNDS-BOCHK CHINA GOLDEN DRAGON FUND 1,276,797 Foreign shares placed in domestic exchange Xia Zulin 1,184,194 Foreign shares placed in domestic exchange AUSTRALIANSUPER PTY LTD 1,039,606 Foreign shares placed in domestic exchange Hu Xiaofeng 948,646 Foreign shares placed in domestic exchange Natio Securities Co.,Ltd. 895,130 Foreign shares placed in domestic exchange INVESTERINGSFORENINGEN DANSKE INVEST 820,795 Foreign shares placed in domestic exchange GUOTAI JUNAN SECURITIES(HONGKONG) LIMITED 590,437 Foreign shares placed in domestic exchange §3 Significant Events 3.1 Details and causations of major change in major accounting subjects and financial indices □applicable √ not applicable 3.2 Progress of significant events, their influence, countermeasures, and analysis 2Hangzhou Steam Turbine Co., Ltd. The 1st Quarterly Report 2010 (Full text) □applicable √ not applicable 3.3 Fulfilling of commitment issues made by the Company, shareholder, or substantial controller □applicable √ not applicable 3.4 Estimated accumulative profit from the year beginning to the end of the next report period may be of deficits; or in comparison with the same period of the previous year, give the warning of great change and the notice to the reasons. □applicable √ not applicable 3.5 Major events needs to be explained 3.5.1 Investment in securities □applicable √ not applicable 3.5.2 Reception of investigations, communications, or interviews Time/date Place Way Visitors Main content involved and material provided Feb 04, 2010 HTC Face to face talk Dahe Securities Capital expenditure, possibility of issuing H shares Mar 15, 2010 HTC Face to face talk Zhongjin Co. Hong Kong Hangzhou Bank Share, order trend, influence of financial crisis, productivity, competitors, share equity reformation Mar 17, 2010 HTC Telephone communication Huale Investment Production circle, order source, influence of material price, financing resource 3.5.3 Statement on other significant issues □applicable √ not applicable 3.6 Investment in derivate financial instruments □applicable √ not applicable 3.6.1 Derivate financial instrument stock at end of report term □applicable √ not applicable §4 Attachments 3Hangzhou Steam Turbine Co., Ltd. The 1st Quarterly Report 2010 (Full text) 4.1 Balance Sheet Prepared by: Hangzhou Steam Turbine Co., Ltd. March 31, 2010 in RMB Yuan Balance at the end of term Balance at the beginning of year Items Consolidated Parent company Consolidated Parent company Current asset: Monetary capital 697,794,083.13 312,123,039.14 486,439,602.82 100,717,329.17 Settlement provision Outgoing call loan Transactional financial assets Notes receivable 501,611,052.95 380,876,228.20 585,510,190.21 434,620,525.22 Account receivable 1,241,261,417.81 1,026,467,674.19 1,329,433,302.65 1,115,063,042.90 Prepayment 333,705,071.84 133,959,284.18 219,791,399.56 78,676,643.13 Insurance receivable Reinsurance receivable Provisions of Reinsurance contracts receivable Interest receivable Dividend receivable 1,000,000.00 Other account receivable 25,516,857.93 23,476,569.16 17,333,756.04 16,869,617.12 Repurchasing of financial assets Inventories 1,120,543,391.50 840,332,847.83 1,009,100,047.12 774,155,875.55 Non-current asset due in 1 year Other current asset 43,313.06 108,275.80 Total of current asset 3,921,475,188.22 2,717,235,642.70 3,647,716,574.20 2,520,103,033.09 Non-current assets Loans and payment on other’s behalf disbursed Sellable financial asset Expired investment in possess Long-term receivable Long-term share equity investment 402,586,451.62 472,280,099.47 402,586,451.62 472,280,099.47 Investment properties Fixed assets 524,963,560.76 347,991,453.05 528,315,267.49 350,458,537.59 Construction in process 154,122,500.27 10,392,558.79 133,993,100.65 14,507,898.96 Engineering goods 221,108.29 Fixed asset disposal Production physical assets Gas & petrol Intangible assets 153,543,594.77 46,724,159.17 141,444,716.26 47,902,806.89 R&D expense Goodwill 187,501.55 Long-term amortizable expenses 9,224,016.38 7,438,801.13 8,092,318.74 7,438,801.13 Differed income tax asset 47,171,661.91 39,114,576.96 48,623,815.34 39,114,576.96 Other non-current asset Total of non-current assets 1,292,020,395.55 923,941,648.57 1,263,055,670.10 931,702,721.00 Total of assets 5,213,495,583.77 3,641,177,291.27 4,910,772,244.30 3,451,805,754.09 Current liabilities Short-term loans 261,000,000.00 136,000,000.00 4Hangzhou Steam Turbine Co., Ltd. The 1st Quarterly Report 2010 (Full text) Loan from Central Bank Deposit received and hold for others Call loan received Trade off financial liabilities Notes payable 100,234,899.50 141,792,872.50 103,656,815.22 155,170,592.22 Account payable 443,879,012.33 334,464,537.97 320,766,161.48 202,453,257.90 Prepayment received 1,238,338,088.16 825,061,170.13 1,233,884,154.03 872,137,702.04 Selling of repurchased financial assets Fees and commissions receivable Employees’ wage payable 19,953,107.85 12,385,206.54 23,241,197.54 14,713,270.72 Tax payable 63,617,243.64 40,135,484.25 89,484,573.70 62,319,098.96 Interest payable 195,250.00 Dividend payable Other account payable 26,275,153.06 20,647,986.68 24,231,372.13 14,582,847.36 Reinsurance fee payable Insurance contract provision Entrusted trading of securities Entrusted selling of securities Non-current liability due in 1 year Other current liability Total of current liability 2,153,297,504.54 1,374,487,258.07 1,931,459,524.10 1,321,376,769.20 Non-current liabilities Long-term borrowings 247,463,800.00 190,463,800.00 247,463,800.00 190,463,800.00 Bond payable Long-term payable 330,000.00 330,000.00 Special payable Expected liabilities Differed income tax liability 1,225,366.39 1,225,366.39 1,225,366.39 1,225,366.39 Other non-recurring liabilities 7,352,740.00 5,972,250.00 3,322,740.00 1,942,250.00 Total of non-current liabilities 256,371,906.39 197,661,416.39 252,341,906.39 193,631,416.39 Total of liability 2,409,669,410.93 1,572,148,674.46 2,183,801,430.49 1,515,008,185.59 Owners’ equity (or shareholders’ equity) Capital paid in (or share capital) 371,800,000.00 371,800,000.00 371,800,000.00 371,800,000.00 Capital reserves 138,953,250.09 138,953,250.09 138,953,250.09 138,953,250.09 Less: Shares in stock Special reserves Surplus reserves 327,932,742.87 309,176,337.74 327,932,742.87 309,176,337.74 Common risk provision Retained profit 1,592,806,998.08 1,249,099,028.98 1,497,423,473.50 1,116,867,980.67 Different of foreign currency translation Total of owner’s equity belong to the parent company 2,431,492,991.04 2,069,028,616.81 2,336,109,466.46 1,936,797,568.50 Minor shareholders’ equity 372,333,181.80 390,861,347.35 Total of owners’ equity 2,803,826,172.84 2,069,028,616.81 2,726,970,813.81 1,936,797,568.50 Total of liabilities and owners’ equity 5,213,495,583.77 3,641,177,291.27 4,910,772,244.30 3,451,805,754.09 5Hangzhou Steam Turbine Co., Ltd. The 1st Quarterly Report 2010 (Full text) 6Hangzhou Steam Turbine Co., Ltd. The 1st Quarterly Report 2010 (Full text) 4.2 Income Statement Prepared by: Hangzhou Steam Turbine Co., Ltd. Jan - Mar 2010 in RMB Yuan Amount of the Current Term Amount of the Previous Term Items Consolidated Parent company Consolidated Parent company I. Total revenue 709,878,971.12 548,240,687.52 716,800,324.88 492,913,863.62 Incl. Business income 709,878,971.12 548,240,687.52 716,800,324.88 492,913,863.62 Interest income Insurance fee earned Fee and commission received II. Total business cost 572,913,622.02 476,470,948.81 584,770,532.46 411,077,211.89 Incl. Business cost 438,375,203.33 385,058,189.93 474,040,731.30 332,334,060.43 Interest expense Fee and commission paid Insurance discharge payment Net claim amount paid Net insurance policy reserves provided Insurance policy dividend paid Reinsurance expenses Business tax and surcharge 1,918,650.87 861,172.58 1,705,196.17 460,274.06 Sales expense 31,037,615.06 20,744,345.18 24,538,057.17 17,702,128.19 Administrative expense 85,588,983.18 59,182,063.42 74,335,470.02 53,420,366.94 Financial expenses 4,520,863.98 2,494,960.97 -8,181,068.89 -8,716,604.49 Asset impairment loss 11,472,305.60 8,130,216.73 18,332,146.69 15,876,986.76 Plus: Gains from change of fair value (“-“ for loss) Investment gain (“-“ for loss) 1,000,000.00 71,698,725.00 1,200,000.00 24,320,000.00 Incl. Investment gains from affiliates Gains from currency exchange (“-“ for loss) III. Operational profit (“-“ for loss) 137,965,349.10 143,468,463.71 133,229,792.42 106,156,651.73 Plus: Non business income 194,980.00 3,000.00 2,095,987.62 155,617.96 Less: Non-business expenses 1,531,984.78 558,240.69 1,520,355.44 1,092,913.86 Incl. Loss from disposal of non-current assets IV. Gross profit (“-“ for loss) 136,628,344.32 142,913,223.02 133,805,424.60 105,219,355.83 Less: Income tax expenses 21,691,352.48 10,682,174.71 19,537,038.92 12,134,903.38 V. Net profit (“-“ for net loss) 114,936,991.84 132,231,048.31 114,268,385.68 93,084,452.45 Net profit attributable to the owners of parent company 95,383,524.58 132,231,048.31 96,697,447.87 93,084,452.45 Minor shareholders’ equity 19,553,467.26 17,570,937.81 VI. Earnings per share: (I) Basic earnings per share 0.26 0.36 0.26 0.25 (II) Diluted earnings per share 0.26 0.36 0.26 0.25 VII. Other misc. incomes VIII. Total of misc. incomes 114,936,991.84 132,231,048.31 114,268,385.68 93,084,452.45 Total of misc. incomes attributable to the owners of the parent company 95,383,524.58 132,231,048.31 96,697,447.87 93,084,452.45 Total misc gains attributable to the minor shareholders 19,553,467.26 17,570,937.81 7Hangzhou Steam Turbine Co., Ltd. The 1st Quarterly Report 2010 (Full text) 4.3 Cash Flow Statement Prepared by: Hangzhou Steam Turbine Co., Ltd. Jan - Mar 2010 in RMB Yuan Amount of the Current Term Amount of the Previous Term Items Consolidated Parent company Consolidated Parent company I. Net cash flow from business operation Cash received from sales of products and providing of services 875,308,023.89 608,922,723.65 596,113,098.37 381,712,075.45 Net increase of customer deposits and capital kept for brother company Net increase of loans from central bank Net increase of inter-bank loans from other financial bodies Cash received against original insurance contract Net cash received from reinsurance business Net increase of client deposit and investment Net increase of trade financial asset disposal Cash received as interest, processing fee, and commission Net increase of inter-bank fund received Net increase of repurchasing business Tax returned 14,458,577.73 14,407,182.93 Other cash received from business operation 14,180,662.40 4,464,148.75 39,872,265.56 1,853,462.25 Sub-total of cash inflow from business activities 889,488,686.29 613,386,872.40 650,443,941.66 397,972,720.63 Cash paid for purchasing of merchandise and services 384,407,097.46 270,543,733.96 496,060,972.85 402,429,264.06 Net increase of client trade and advance Net increase of savings in central bank and brother company Cash paid for original contract claim Cash paid for interest, processing fee and commission Cash paid for policy dividend Cash paid to staffs or paid for staffs 116,056,227.39 93,676,294.38 106,449,877.42 84,972,704.35 Taxes paid 105,146,312.68 70,987,668.45 40,865,671.94 17,420,227.70 Other cash paid for business activities 96,241,911.45 13,720,995.38 48,672,874.93 9,128,533.74 Sub-total of cash outflow from business activities 701,851,548.98 448,928,692.17 692,049,397.14 513,950,729.85 Cash flow generated by business operation, net 187,637,137.31 164,458,180.23 -41,605,455.48 -115,978,009.22 II. Cash flow generated by investing Cash received from investment retrieving Cash received as investment gains 71,698,725.00 1,200,000.00 41,532,500.00 Net cash retrieved from disposal of fixed assets, intangible assets, and other long-term assets Net cash received from disposal of subsidiaries or other operational units Other investment-related cash received 90,868.96 Sub-total of cash inflow due to investment activities 90,868.96 71,698,725.00 1,200,000.00 41,532,500.00 Cash paid for construction of fixed assets, intangible assets and other long-term assets 67,019,024.68 22,509,090.75 13,627,787.76 4,678,937.74 Cash paid as investment 700,000.00 892,320.00 892,320.00 Net increase of loan against pledge Net cash received from subsidiaries and other operational units 8Hangzhou Steam Turbine Co., Ltd. The 1st Quarterly Report 2010 (Full text) 9 Other cash paid for investment activities Sub-total of cash outflow due to investment activities 67,719,024.68 22,509,090.75 14,520,107.76 5,571,257.74 Net cash flow generated by investment -67,628,155.72 49,189,634.25 -13,320,107.76 35,961,242.26 III. Cash flow generated by financing Cash received as investment Incl. Cash received as investment from minor shareholders Cash received as loans 160,000,000.00 140,463,800.00 90,463,800.00 Cash received from bond placing Other financing-related cash received Subtotal of cash inflow from financing activities 160,000,000.00 140,463,800.00 90,463,800.00 Cash to repay debts 35,000,000.00 50,000,000.00 Cash paid as dividend, profit, or interests 33,498,933.02 2,086,548.68 28,887,833.00 1,267,500.00 Incl. Dividend and profit paid by subsidiaries to minor shareholders Other cash paid for financing activities Subtotal of cash outflow due to financing activities 68,498,933.02 2,086,548.68 78,887,833.00 1,267,500.00 Net cash flow generated by financing 91,501,066.98 -2,086,548.68 61,575,967.00 89,196,300.00 IV. Influence of exchange rate alternation on cash and cash equivalents -155,568.26 -155,555.83 10,097,465.13 10,097,452.71 V. Net increase of cash and cash equivalents 211,354,480.31 211,405,709.97 16,747,868.89 19,276,985.75 Plus: Balance of cash and cash equivalents at the beginning of term 486,439,602.82 100,717,329.17 450,103,030.94 158,711,304.02 VI. Balance of cash and cash equivalents at the end of term 697,794,083.13 312,123,039.14 466,850,899.83 177,988,289.77 4.4 Auditors’ Report Auditor’s opinion: not audited. Hangzhou Steam Turbine Co., Ltd. Legal representative: Mr. Nie Zhonghai April 28, 2010