Hangzhou Steam Turbine Co., Ltd. The 3rd Quarterly Report 2012 Stock Code: 200771 Stock ID: Hangqilun B Announcement No. 2012-49 Hangzhou Steam Turbine Co., Ltd. The 3rd Quarterly Report 2012 (Full Text) I. Important Statement 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. All of the directors presented the board meeting at which this Quarterly Report was examined. Chairman Mr. Nie Zhonghai, Chief Financial Officer Mr. Yan Jianhua, and the Chief of Accounting Department Jiang Rong hereby declares: the Financial Statement in the report is guaranteed to be truthful and complete. II. Company Profile (I) Financial Highlihgts If retrospective adjustment has been carried out on financial reports of previous periods [] Yes [V] No [] Not applicable 2012.9.30 2011.12.31 Changed by (%) Gross Assets (RMB) 7,389,943,514.01 6,892,582,376.59 7.22% Owners’ equity attributable to the 3,635,837,569.19 3,315,262,942.01 9.67% shareholders of the listed company (yuan) Capital shares (shares) 754,010,400.00 628,342,000.00 20% Net asset per share attributable to the shareholders of the listed company 4.82 5.28 -8.71% (Yuan/share) Changed over the same Changed over the same July-Sept. 2012 Jan-Sept. 2012 period of last year (%) period of last year (%) Turnover (yuan) 1,153,549,504.35 3.72% 3,291,713,228.11 3.21% Net profit attributable to shareholders of the 171,801,329.76 82.27% 509,077,227.18 21.51% listed company (yuan) Net Cash flow generated by business -- -- 515,020,797.57 132.09% operation (RMB) Net Cash flow per share generated by -- -- 0.68 94.29% business operation (yuan/share) Basic earnings per share (Yuan/share) 0.225 80% 0.6752 21.53% Diluted earnings per share (Yuan/share) 0.225 80% 0.6752 21.53% Weighted average net 4.84% 1.65% 14.52% 0.62% income/asset ratio (%) Weighted average net income/asset ratio less non-recurring 4.87% 1.67% 14.54% 0.55% gain/loss(%) 1 Hangzhou Steam Turbine Co., Ltd. The 3rd Quarterly Report 2012 Income items and amounts after deducting of non-recurring gains/losses [V] Applicable [] Not applicable Amount from openning of Items year to the end of report Remarks period Gain/loss of non-current assets 106,157.34 Tax refunding or exemption without official certification or exceeded authority Gains and losses included in the current period of government subsidies, excluding those government grants which are closely related to normal business and in line with national 6,029,724.29 policy , or in accordance with fixed standards or quantities Capital adoption fee collected from non-financial organizations and accounted into current gain/loss Gain/loss from differences between the cost of enterprise merger and the fair value of recognizable net asset of the invested entities Gain/loss from non-monetary assets Gain/loss from commissioned investment or assets Asset impairment provisions provided for force-majeur Gain/loss from debt reorganization Enterprise reorganizing expenses, such as employee placement fee and integration fee Gain/loss from trade departing from fair value Current net gain/loss of subsidiaries under same control from beginning of term till date of consolidation Gain/loss generated by contingent liabilities without connection with main businesses Gain/loss from change of fair value of transactional asset and liabilities, and investment gains from disposal of transactional financial assets and liabilities and sellable financial assets, other than valid period value instruments related to the Company’s common businesses Restoring of receivable account impairment provision tested individually Gain/loss from commissioned loans Gain/loss from change of fair value of investment property measured at fair value in follow-up measurement Influence of one-time adjustment made on current gain/loss account according to the laws and regulations regarding tax and accounting Consigning fee received for cosigned operation Other non-business income and expenditures other than the above -4,660,169.96 Other gain/loss items satisfying the definition of non-recurring gain/loss account Influenced amount of minority shareholders’ equity -1,791,112.11 Influenced amount of income tax -441,242.69 Total -756,643.13 -- (II) Top 10 shareholders at the end of report period, and total number of shareholders Total shareholders at the end of the report 17,374 period (accounts) Top ten holders of the shares without subscription limitation Name of the shareholder Amount of unconditional shares holding at Categories and amounts of shares 2 Hangzhou Steam Turbine Co., Ltd. The 3rd Quarterly Report 2012 the end of report term Categories Amount Foreign shares placed in Li Minggong 7,994,742 7,994,742 domestic exchange Foreign shares placed in NORGES BANK 2,987,354 2,987,354 domestic exchange TOYO SECURITIES ASIA LIMITED-A/C Foreign shares placed in 2,420,169 2,420,169 CLIENT. domestic exchange BOCHK INVESTMENT FUNDS-BOCHK Foreign shares placed in 2,301,344 2,301,344 CHINA GOLDEN DRAGON FUND domestic exchange Foreign shares placed in Shanghai Hong Kong Wanguo Securities 2,246,385 2,246,385 domestic exchange Foreign shares placed in Guo Xian 2,192,405 2,192,405 domestic exchange Foreign shares placed in AUSTRALIANSUPER PTY LTD 2,108,321 2,108,321 domestic exchange Foreign shares placed in Fu Shuying 1,762,910 1,762,910 domestic exchange FIRST SECURITIES (HK) NOMINEE Foreign shares placed in 1,562,404 1,562,404 LIMITED domestic exchange Foreign shares placed in Natio Securities Co.,Ltd. 1,561,982 1,561,982 domestic exchange (1) It is unknown whether there is any relationship among the 10 current-share holders. (2) ) None of the other shareholders are regarded as Act in Concert relationship Situations of the shareholders according to the Administrative Regulations of Information Disclosing of Public Companies. III. Material Events (I) Material changes in accounting items and indicies [V] Applicable [] Not applicable Scale of Balance Sheet Items End of term Beginning of term Remarks on the change change % Prepayment for imported product parts Prepayment 328,415,646.12 208,732,412.73 57.34 according to the purchasing contract Non-current asset due 485,000,000.00 20,000,000.00 2325.00 Purchasing of financial products in 1 year Expiring of financial instruments in Other current asset 2,481,616.41 5,661,299.59 -56.17 possession of Machinery Co. Construction in 76,884,195.50 56,000,094.04 37.29 Increase of equipment under construction process Other non-current 25,000,000.00 -100.00 Retreiving of trust products asset Disbursing of payment for purchased Account payable 837,782,330.47 590,763,406.24 41.81 goods according to the contract Interest payable 31,740.00 260,577.78 -87.82 Interest due paid Decrease of financed leasing by Long-term payable 25,880,665.06 44,818,324.41 -42.25 Zhongcheng Shangtong Co. Other non-recurring Government subsidiy related to assets 23,729,374.65 17,310,045.00 37.08 liabilities received by the Company and Zhongneng 3 Hangzhou Steam Turbine Co., Ltd. The 3rd Quarterly Report 2012 Co. Income Statement Same period of Scale of Current term Remarks on the change Items last term change Financial expenses 26,177,710.58 19,987,788.00 30.97 Increase of interest paid for loans Asset impairment loss -8,170,020.59 61,695,340.39 -113.24 Reinforce of account retreiving approach Non-operational 9,196,783.57 2,862,687.58 221.26 Governmental favorible to the company income Minor shareholders’ Significant decrease of income from 60,725,778.19 118,031,023.69 -48.55 equity subsidiaries in the report period (II) Progress, influences, and solutions of material events 1. Non-standard opinions [] Applicable; [V] Not applicable 2. Providing of capital to the controlling shareholder or related parties, or illegal providing of external guarantees [] Applicable; [V] Not applicable 3. Engaging and executing of material contracts [] Applicable; [V] Not applicable 4. Others [] Applicable; [V] Not applicable (III) Commitment issues made by the Company or shareholders holding over 5% of the shares, in the report period or carried down from previous period [] Applicable; [V] Not applicable (IV) Prediction of business performance for 2012 [] Applicable; [V] Not applicable (V) Other material events to be presented 1. Securities investment [] Applicable; [V] Not applicable 2. Investment in derivate instruments [] Applicable; [V] Not applicable 4 Hangzhou Steam Turbine Co., Ltd. The 3rd Quarterly Report 2012 3. Derivate instruments in stock [] Applicable; [V] Not applicable 4 Reception of investigations, communications, or interviews Type of Time/date Place Way Visitors Main content involved and material provided visitors Overseas market, industrial situation, strategy January 13, The Field research institution North-east Security plan, market share, delayed delivery, prospect on 2012 Company gas turbine, portion of outsourced manufacturing Sweeden Yingtuo Capital Product character, delivery circle, receivable Feb 16, The Field research institution Management Co. account, market share, competitors, minority 2012 Company (pronunciation) shareholders, overseas market, dividend policy February The institution Industrial situation, down stream market, group Field research Jinshi Investment 24, 2012 Company business, future of B shares institution Recent projects, industrial barrier, financial March 09, The resources, main products and orders, delivery Field research Huili Foundation 2012 Company circle, influence of the raw material, market competition* March 23, The institution Field research Yichuang Morgan Enterprise debenture 2012 Company institution Overseas market, Bank of Hangzhou, August 07, The Telephone Nomura Securities (HK) subsidiaries, dividend police, B-stock problems, 2012 Company communication business trend of 2nd half of year 5. Issuing of corporation bonds [] Yes [V] No IV. Attachement (I) Financial Statements Consolidated or not [V] Yes [] No [] Not applicable 1. Consolidated Balance Sheet Prepared by: Hangzhou Steam Turbine Co., Ltd In RMB Items Closing balance Openning balance Current asset: Monetary capital 482,927,124.83 662,648,725.65 Settlement provision 0.00 Outgoing call loan 0.00 Transactional financial assets 0.00 Notes receivable 783,791,494.50 783,869,310.40 Account receivable 1,800,177,356.04 1,812,706,051.31 5 Hangzhou Steam Turbine Co., Ltd. The 3rd Quarterly Report 2012 Prepayment 328,415,646.12 208,732,412.73 Insurance receivable 0.00 Reinsurance receivable 0.00 Provisions of Reinsurance contracts receivable 0.00 Interest receivable 0.00 Dividend receivable 0.00 Other account receivable 63,688,454.67 75,627,129.17 Repurchasing of financial assets 0.00 Inventories 1,657,172,077.74 1,465,135,236.51 Non-current asset due in 1 year 485,000,000.00 20,000,000.00 Other current asset 2,481,616.41 5,661,299.59 Total of current asset 5,603,653,770.31 5,034,380,165.36 Non-current assets Disburse of consigned loans 0.00 Sellable financial asset 0.00 Expired investment in possess 0.00 Long-term receivable 0.00 Long-term share equity investment 462,088,813.22 462,088,813.22 Investment real estates 0.00 Fixed assets 893,662,394.71 944,932,607.77 Construction in process 76,884,195.50 56,000,094.04 Engineering goods 0.00 Fixed asset disposal 0.00 Production physical assets 0.00 Gas & petrol 0.00 Intangible assets 261,765,402.56 276,922,402.76 R&D expense 0.00 Goodwill 0.00 Long-term amortizable expenses 5,518,172.49 4,959,937.22 Deferred income tax asset 86,370,765.22 88,298,356.22 Other non-current asset 25,000,000.00 Total of non-current assets 1,786,289,743.70 1,858,202,211.23 Total of assets 7,389,943,514.01 6,892,582,376.59 Current liabilities Short-term loans 260,400,000.00 279,317,423.50 Loan from Central Bank 0.00 Deposit received and hold for others 0.00 Call loan received 0.00 Trade off financial liabilities 0.00 Notes payable 133,528,000.00 139,807,194.00 Account payable 837,782,330.47 590,763,406.24 Prepayment received 1,529,807,123.11 1,574,022,744.91 6 Hangzhou Steam Turbine Co., Ltd. The 3rd Quarterly Report 2012 Selling of repurchased financial assets 0.00 Fees and commissions receivable 0.00 Employees’ wage payable 47,545,408.78 29,149,223.54 Tax payable 90,243,242.27 90,706,239.00 Interest payable 31,740.00 260,577.78 Dividend payable 9,000,000.00 Other account payable 262,536,152.75 227,302,074.82 Reinsurance fee payable 0.00 Insurance contract provision 0.00 Entrusted trading of securities 0.00 Entrusted selling of securities 0.00 Non-current liability due in 1 year 10,000,000.00 10,000,000.00 Other current liability 0.00 Total of current liability 3,180,873,997.38 2,941,328,883.79 Non-current liabilities Long-term borrowings 125,000,000.00 125,000,000.00 Bond payable 0.00 Long-term payable 25,880,665.06 44,818,324.41 Special payable 0.00 Anticipated liabilities 0.00 Deferred income tax liability 1,041,180.44 1,041,180.44 Other non-recurring liabilities 23,729,374.65 17,310,045.00 Total of non-current liabilities 175,651,220.15 188,169,549.85 Total of liability 3,356,525,217.53 3,129,498,433.64 Owners’ equity (or shareholders’ equity) Capital paid in (or share capital) 754,010,400.00 628,342,000.00 Capital reserves 139,590,345.09 139,590,345.09 Less: Shares in stock 0.00 Special reserves 0.00 Surplus reserves 453,183,370.20 453,183,370.20 Common risk provision 0.00 Retained profit 2,289,053,453.90 2,094,147,226.72 Different of foreign currency translation Total of owner’s equity belong to the parent company 3,635,837,569.19 3,315,262,942.01 Minor shareholders’ equity 397,580,727.29 447,821,000.94 Total of owners’ equity (or shareholders’ equity) 4,033,418,296.48 3,763,083,942.95 Total of liability and shareholders’ equity (or owners’ equity) 7,389,943,514.01 6,892,582,376.59 Legal representative: Nie Zhonghai CFO: Yan Jianhua Accounting Manager: Jiang Rong 2. Balance Sheet of the Parent Company Prepared by: Hangzhou Steam Turbine Co., Ltd 7 Hangzhou Steam Turbine Co., Ltd. The 3rd Quarterly Report 2012 In RMB Items Closing balance Openning balance Current asset: Monetary capital 236,514,542.49 335,248,349.26 Transactional financial assets Notes receivable 469,813,777.13 448,393,858.41 Account receivable 1,428,153,243.80 1,395,509,702.83 Prepayment 228,479,979.29 113,735,693.96 Interest receivable Dividend receivable Other account receivable 38,379,528.34 12,151,541.72 Inventories 1,186,363,984.84 1,070,075,603.00 Non-current asset due in 1 year 320,000,000.00 Other current asset Total of current asset 3,907,705,055.89 3,375,114,749.18 Non-current assets Sellable financial asset Expired investment in possess Long-term receivable Long-term share equity investment 516,782,461.07 516,782,461.07 Investment real estates Fixed assets 333,125,227.03 361,028,552.81 Construction in process 51,689,044.74 40,483,268.63 Engineering goods Fixed asset disposal Production physical assets Gas & petrol Intangible assets 44,366,863.73 45,545,511.45 R&D expense Goodwill Long-term amortizable expenses 3,381,273.23 3,381,273.23 Deferred income tax asset 54,740,403.46 54,740,403.46 Other non-current asset Total of non-current assets 1,004,085,273.26 1,021,961,470.65 Total of assets 4,911,790,329.15 4,397,076,219.83 Current liabilities Short-term loans 16,317,423.50 Trade off financial liabilities Notes payable Account payable 489,234,755.41 276,473,416.53 Prepayment received 1,033,856,937.04 1,032,539,706.27 Employees’ wage payable 28,394,047.72 16,525,266.24 8 Hangzhou Steam Turbine Co., Ltd. The 3rd Quarterly Report 2012 Tax payable 61,199,038.87 67,963,322.70 Interest payable Dividend payable Other account payable 15,752,386.29 38,189,812.37 Non-current liability due in 1 year Other current liability Total of current liability 1,628,437,165.33 1,448,008,947.61 Non-current liabilities Long-term borrowings 100,000,000.00 100,000,000.00 Bond payable Long-term payable Special payable Anticipated liabilities Deferred income tax liability 1,041,180.44 1,041,180.44 Other non-recurring liabilities 4,828,250.00 778,250.00 Total of non-current liabilities 105,869,430.44 101,819,430.44 Total of liability 1,734,306,595.77 1,549,828,378.05 Owners’ equity (or shareholders’ equity) Capital paid in (or share capital) 754,010,400.00 628,342,000.00 Capital reserves 138,953,250.09 138,953,250.09 Less: Shares in stock Special reserves Surplus reserves 434,426,965.07 434,426,965.07 Common risk provision Retained profit 1,850,093,118.22 1,645,525,626.62 Different of foreign currency translation Total of owners’ equity (or shareholders’ equity) 3,177,483,733.38 2,847,247,841.78 Total of liability and shareholders’ equity (or owners’ equity) 4,911,790,329.15 4,397,076,219.83 Legal representative: Nie Zhonghai CFO: Yan Jianhua Accounting Manager: Jiang Rong 3. Income Statement (Consolidated) of the Report Period Prepared by: Hangzhou Steam Turbine Co., Ltd In RMB Amount of the Current Amount of the Previous Items Term Term I. Total revenue 1,153,549,504.35 1,112,160,521.12 Incl. Business income 1,153,549,504.35 1,112,160,521.12 Interest income Insurance fee earned Fee and commission received II. Total business cost 919,977,520.20 949,493,894.83 9 Hangzhou Steam Turbine Co., Ltd. The 3rd Quarterly Report 2012 Incl. Business cost 735,639,047.97 700,368,481.58 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 11,361,736.58 8,680,745.29 Sales expense 44,836,276.87 41,300,686.49 Administrative expense 129,498,752.56 170,997,621.04 Financial expenses 10,552,067.66 7,944,564.14 Asset impairment loss -11,910,361.44 20,201,796.29 Plus: gains from change of fair value (“-“ for loss) Investment gains (“-“ for loss) 2,036,164.35 Incl. Investment gains from affiliates Exchange gains (“-“ for loss) III. Operational profit (“-“ for loss) 235,608,148.50 162,666,626.29 Plus: non-operational income 1,204,849.89 1,394,313.98 Less: non-operational expenditure 2,476,330.68 1,906,579.55 Incl. Loss from disposal of non-current assets IV. Gross profit (“-“ for loss) 234,336,667.71 162,154,360.72 Less: Income tax expenses 38,359,692.36 25,023,538.57 V. Net profit (“-“ for net loss) 195,976,975.35 137,130,822.15 Including: Net profit realized by the entity taken over before the takover Net profit attributable to the owners of parent company 171,801,329.76 94,256,215.05 Minor shareholders’ equity 24,175,645.59 42,874,607.10 VI. Earnings per share: -- -- (I) Basic earnings per share 0.225 0.125 (II) Diluted earnings per share 0.225 0.125 VII. Other misc. incomes VIII. Total of misc. incomes 195,976,975.35 137,130,822.15 Total of misc. incomes attributable to the owners of the parent 171,801,329.76 94,256,215.05 company Total misc gains attributable to the minor shareholders 24,175,645.59 42,874,607.10 Net profit contributed by entities merged under common control in the report period was RMB0. Legal representative: Nie Zhonghai CFO: Yan Jianhua Accounting Manager: Jiang Rong 4. Income Statement (Parent Co.) of the Report Period Prepared by: Hangzhou Steam Turbine Co., Ltd In RMB 10 Hangzhou Steam Turbine Co., Ltd. The 3rd Quarterly Report 2012 Items Amount of the Current Term Amount of the Previous Term I. Turnover 695,714,551.43 733,003,169.08 Less: Operation cost 438,393,801.73 472,452,314.25 Business tax and surcharge 7,087,384.05 5,556,175.27 Sales expense 31,911,659.17 29,080,367.35 Administrative expense 75,238,702.58 135,461,353.51 Financial expenses 627,851.95 1,790,572.58 Asset impairment loss -9,953,910.91 18,242,874.68 Plus: gains from change of fair value (“-“ for loss) Investment gains (“-“ for loss) 970,821.90 29,832,984.38 Incl. Investment gains from affiliates II. Operational profit (“-“ for loss) 153,379,884.76 100,252,495.82 Plus: Non business income 70,534.29 996,399.22 Less: Non-business expenses 950,936.06 1,177,280.26 Incl. Loss from disposal of non-current assets III. Total profit (“-“ for loss) 152,499,482.99 100,071,614.78 Less: Income tax expenses 22,874,922.44 10,535,794.56 IV. Net profit (“-“ for net loss) 129,624,560.55 89,535,820.22 V. Earnings per share -- -- (I) Basic earnings per share (II) Diluted earnings per share VI. Other misc gains VII. Total of integrated income 129,624,560.55 89,535,820.22 Legal representative: Nie Zhonghai CFO: Yan Jianhua Accounting Manager: Jiang Rong 5. Income Statement (Consolidated) (Jan 1 – Sept. 30, 2012) Prepared by: Hangzhou Steam Turbine Co., Ltd In RMB Amount of the Current Amount of the Previous Items Term Term I. Total revenue 3,291,713,228.11 3,189,200,509.03 Incl. Business income 3,291,713,228.11 3,189,200,509.03 Interest income Insurance fee earned Fee and commission received II. Total business cost 2,648,431,451.97 2,574,862,792.05 Incl. Business cost 2,091,415,260.34 1,960,731,058.37 Interest expense Fee and commission paid Insurance discharge payment Net claim amount paid 11 Hangzhou Steam Turbine Co., Ltd. The 3rd Quarterly Report 2012 Net insurance policy reserves provided Insurance policy dividend paid Reinsurance expenses Business tax and surcharge 30,367,923.20 23,868,624.69 Sales expense 119,894,402.11 114,925,583.33 Administrative expense 388,746,176.33 393,654,397.27 Financial expenses 26,177,710.58 19,987,788.00 Asset impairment loss -8,170,020.59 61,695,340.39 Plus: gains from change of fair value (“-“ for loss) Investment gains (“-“ for loss) 32,452,060.00 24,118,640.00 Incl. Investment gains from affiliates Exchange gains (“-“ for loss) III. Operational profit (“-“ for loss) 675,733,836.14 638,456,356.98 Plus: non-operational income 9,196,783.57 2,862,687.58 Less: non-operational expenditure 7,721,071.90 7,847,825.28 Incl. Loss from disposal of non-current assets IV. Gross profit (“-“ for loss) 677,209,547.81 633,471,219.28 Less: Income tax expenses 107,406,542.44 96,478,179.62 V. Net profit (“-“ for net loss) 569,803,005.37 536,993,039.66 Including: Net profit realized by the entity taken over before the takover Net profit attributable to the owners of parent company 509,077,227.18 418,962,015.97 Minor shareholders’ equity 60,725,778.19 118,031,023.69 VI. Earnings per share: -- -- (I) Basic earnings per share 0.6752 0.5556 (II) Diluted earnings per share 0.6752 0.5556 VII. Other misc. incomes VIII. Total of misc. incomes 569,803,005.37 536,993,039.66 Total of misc. incomes attributable to the owners of the parent 509,077,227.18 418,962,015.97 company Total misc gains attributable to the minor shareholders 60,725,778.19 118,031,023.69 When merger happened under common control in the report period, the net profit realized by the merged party before the merger was RMB0. Legal representative: Nie Zhonghai CFO: Yan Jianhua Accounting Manager: Jiang Rong 6. Income Statement (Parent Co.) (Jan 1 – Sept. 30, 2012) Prepared by: Hangzhou Steam Turbine Co., Ltd In RMB Items Amount of the Current Term Amount of the Previous Term I. Turnover 2,121,565,998.88 1,956,165,756.00 Less: Operation cost 1,374,654,457.09 1,231,832,711.94 Business tax and surcharge 19,761,855.57 14,030,037.37 12 Hangzhou Steam Turbine Co., Ltd. The 3rd Quarterly Report 2012 Sales expense 82,051,025.12 70,607,975.37 Administrative expense 233,185,933.50 272,779,902.85 Financial expenses 2,826,905.46 2,606,113.65 Asset impairment loss -15,305,568.72 48,649,237.76 Plus: gains from change of fair value (“-“ for loss) Investment gains (“-“ for loss) 158,539,399.14 195,464,548.13 Incl. Investment gains from affiliates II. Operational profit (“-“ for loss) 582,930,790.00 511,124,325.19 Plus: Non business income 3,060,174.42 2,371,007.26 Less: Non-business expenses 3,069,888.42 3,456,597.01 Incl. Loss from disposal of non-current assets III. Total profit (“-“ for loss) 582,921,076.00 510,038,735.44 Less: Income tax expenses 64,182,584.40 45,720,069.86 IV. Net profit (“-“ for net loss) 518,738,491.60 464,318,665.58 V. Earnings per share -- -- (I) Basic earnings per share (II) Diluted earnings per share VI. Other misc gains VII. Total of integrated income 518,738,491.60 464,318,665.58 Legal representative: Nie Zhonghai CFO: Yan Jianhua Accounting Manager: Jiang Rong 7. Cash Flow Statement (Consolidated)(Jan 1 – Sept. 30, 2012) Prepared by: Hangzhou Steam Turbine Co., Ltd In RMB Amount of the Current Amount of the Previous Items Term Term I. Net cash flow from business operation Cash received from sales of products and providing of services 3,015,099,021.38 2,995,289,829.17 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 42,402,957.02 23,130,489.84 Other cash received from business operation 47,894,649.38 87,610,371.37 Sub-total of cash inflow from business activities 3,105,396,627.78 3,106,030,690.38 13 Hangzhou Steam Turbine Co., Ltd. The 3rd Quarterly Report 2012 Cash paid for purchasing of merchandise and services 1,573,278,527.47 1,826,497,820.89 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 465,067,398.21 449,333,566.90 Taxes paid 363,773,578.59 358,107,303.80 Other cash paid for business activities 188,256,325.94 250,182,667.18 Sub-total of cash outflow from business activities 2,590,375,830.21 2,884,121,358.77 Cash flow generated by business operation, net 515,020,797.57 221,909,331.61 II. Cash flow generated by investing Cash received from investment retrieving 5,100,060.30 Cash received as investment profit 31,863,791.20 24,118,640.00 Net cash retrieved from disposal of fixed assets, intangible assets, and 3,834,627.54 2,285,530.00 other long-term assets Net cash received from disposal of subsidiaries or other operational units -653,509.83 Other investment-related cash received 695,029,568.43 Sub-total of cash inflow due to investment activities 735,174,537.64 26,404,170.00 Cash paid for construction of fixed assets, intangible assets and other 53,852,920.63 117,099,867.64 long-term assets Cash paid as investment 49,502,361.60 Net increase of loan against pledge Net cash received from subsidiaries and other operational units Other cash paid for investment activities 1,130,001,681.82 25,000,000.00 Sub-total of cash outflow due to investment activities 1,183,854,602.45 191,602,229.24 Net cash flow generated by investment -448,680,064.81 -165,198,059.24 III. Cash flow generated by financing Cash received as investment 4,400,000.00 7,380,000.00 Incl. Cash received as investment from minor shareholders Cash received as loans 499,400,000.00 538,000,000.00 Cash received from bond placing Other financing-related cash received 743,994.80 Subtotal of cash inflow from financing activities 504,543,994.80 545,380,000.00 Cash to repay debts 448,978,316.50 448,463,800.00 Cash paid as dividend, profit, or interests 300,995,201.22 339,214,705.04 Incl. Dividend and profit paid by subsidiaries to minor shareholders Other cash paid for financing activities 708,350.24 Subtotal of cash outflow due to financing activities 750,681,867.96 787,678,505.04 Net cash flow generated by financing -246,137,873.16 -242,298,505.04 IV. Influence of exchange rate alternation on cash and cash equivalents 75,539.58 -1,511,133.75 V. Net increase of cash and cash equivalents -179,721,600.82 -187,098,366.42 14 Hangzhou Steam Turbine Co., Ltd. The 3rd Quarterly Report 2012 Plus: Balance of cash and cash equivalents at the beginning of term 662,648,725.65 657,077,394.71 VI. Balance of cash and cash equivalents at the end of term 482,927,124.83 469,979,028.29 Legal representative: Nie Zhonghai CFO: Yan Jianhua Accounting Manager: Jiang Rong 8. Cash Flow Statement (Parent Co.)(Jan 1 – Sept. 30, 2012) Prepared by: Hangzhou Steam Turbine Co., Ltd In RMB Amount of the Current Amount of the Previous Items Term Term I. Net cash flow from business operation Cash received from sales of products and providing of services 1,924,746,836.33 1,531,935,681.97 Tax returned Other cash received from business operation 9,956,117.97 20,422,983.16 Sub-total of cash inflow from business activities 1,934,702,954.30 1,552,358,665.13 Cash paid for purchasing of merchandise and services 996,899,824.92 879,108,057.13 Cash paid to staffs or paid for staffs 341,032,683.88 348,663,853.76 Taxes paid 223,650,735.34 192,841,301.56 Other cash paid for business activities 70,823,705.13 72,881,267.55 Sub-total of cash outflow from business activities 1,632,406,949.27 1,493,494,480.00 Cash flow generated by business operation, net 302,296,005.03 58,864,185.13 II. Cash flow generated by investing Cash received from investment retrieving Cash received as investment profit 158,539,399.14 195,464,548.13 Net cash retrieved from disposal of fixed assets, intangible assets, and 3,464,000.00 1,834,530.00 other long-term assets Net cash received from disposal of subsidiaries or other operational units Other investment-related cash received 540,000,000.00 Sub-total of cash inflow due to investment activities 702,003,399.14 197,299,078.13 Cash paid for construction of fixed assets, intangible assets and other 34,111,384.25 40,975,730.25 long-term assets Cash paid as investment 34,502,361.60 Net cash received from subsidiaries and other operational units Other cash paid for investment activities 860,000,000.00 Sub-total of cash outflow due to investment activities 894,111,384.25 75,478,091.85 Net cash flow generated by investment -192,107,985.11 121,820,986.28 III. Cash flow generated by financing Cash received as investment Cash received as loans 100,000,000.00 Cash received from bond placing Other financing-related cash received Subtotal of cash inflow from financing activities 0.00 100,000,000.00 Cash to repay debts 16,317,423.50 150,463,800.00 Cash paid as dividend, profit, or interests 192,615,075.46 196,845,365.66 15 Hangzhou Steam Turbine Co., Ltd. The 3rd Quarterly Report 2012 Other cash paid for financing activities Subtotal of cash outflow due to financing activities 208,932,498.96 347,309,165.66 Net cash flow generated by financing -208,932,498.96 -247,309,165.66 IV. Influence of exchange rate alternation on cash and cash equivalents 10,672.27 -1,412,229.23 V. Net increase of cash and cash equivalents -98,733,806.77 -68,036,223.48 Plus: Balance of cash and cash equivalents at the beginning of term 335,248,349.26 332,065,321.54 VI. Balance of cash and cash equivalents at the end of term 236,514,542.49 264,029,098.06 Legal representative: Nie Zhonghai CFO: Yan Jianhua Accounting Manager: Jiang Rong Hangzho Steam Turbine Co., Ltd. Chairman of the Board: Nie Zhonghai October 26, 2012 16