Hangzhou Steam Turbine Co., Ltd. The 3rd Quarterly Report 2014 (Full Text) Stock Code: 200771 Stock ID: Hangqilun B Announcement No. 2014-40 Hangzhou Steam Turbine Co., Ltd. The 3rd Quarterly Report 2014 (Full text) Chapter I Important Prompt 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 Pu Yangshuo, and the Chief of Accounting Department Ms. Jiang Rong hereby declare: the Financial Statement in the report is guaranteed to be truthful and complete. 1 Hangzhou Steam Turbine Co., Ltd. The 3rd Quarterly Report 2014 (Official Text) Chapter II. Financial Highlights and Change of Shareholders I. Main accounting data and indices Are there any retrospective adjustment or restatement of financial information of previous year due to change of accounting policies or correcting of accounting errors? No Ended this report Changed at end of report period over end of End of prev. year term previous period Gross Assets (RMB) 7,567,407,579.21 7,645,648,806.43 -1.02% Net asset attributable to 4,264,229,058.12 4,230,942,110.74 0.79% owners of the PLC The amount of from beginning of year to From beginning of Increase/decrease the end of report This report term year to the end of (%) period over the report period amount of same period last year Turnover (RMB) 706,544,529.11 -50.70% 2,449,907,171.38 -29.05% Net profit attributable to shareholders of the listed -12,209,753.03 -105.27% 183,965,097.98 -60.41% company (yuan) Net profit attributable to the shareholders of the listed company and after deducting -15,815,908.84 -106.83% 165,598,183.52 -63.33% of non-recurring gain/loss(RMB) Net Cash flow generated by -- -- 210,768,345.76 25.83% business operation (RMB) Basic earnings per share -0.0162 -105.28% 0.244 -60.40% (Yuan/share) Diluted earnings per share -0.0162 -105.28% 0.244 -60.40% (Yuan/share) Net income on asset, -0.29% -104.91% 4.31% -62.84% weighted 2 Hangzhou Steam Turbine Co., Ltd. The 3rd Quarterly Report 2014 (Official Text) Non-recurring gain/loss items and amounts In RMB Yuan Amount from the Items beginning to the end Remarks of term Gain/loss from disposal of non-current assets (includes the recovered part 226,881.76 of asset impairment provision already provided) Gains and losses included in the current period of government subsidies, excluding those government grants which are closely related to normal 4,508,789.53 business and in line with national policy , or in accordance with fixed standards or quantities Gain/loss from change of fair value of transactional asset and liabilities, and investment gains from disposal of transactional financial assets and 13,329,640.61 liabilities and sellable financial assets, other than valid period value instruments related to the Company’s common businesses Other non-business income and expenditures other than the above 5,452,449.87 Less: Influenced amount of income tax 3,524,369.67 Influence on minority shareholders’ equity (after tax) 1,626,477.64 Total 18,366,914.46 -- None of non-recurring gain/loss items recognized as recurring gain/loss items as defined by the Information Disclosure Explanatory Announcement No.1 – Non-recurring gain/loss in the report period. 3 Hangzhou Steam Turbine Co., Ltd. The 3rd Quarterly Report 2014 (Official Text) II. Total of shareholders and top-10 shareholders at end of period 1 Position of shareholders and top-10 holders at end of the report period In shares Total common shareholders at the end of 754,010,400 the report period Top 10 common share holders Frozen or Amount of Properties of Share Amount of pledged Name of the shareholder unconditional shares shareholder proportion % shares Status of held Amount shares Hangzhou Steam Turbine Power Group State-owned 63.64% 479,824,800 479,824,800 Co., Ltd. legal person Overseas legal NORGES BANK 0.82% 6,148,775 0 person Overseas legal GIC PRIVATE LIMITED 0.35% 2,665,330 0 person Overseas legal AUSTRALIANSUPER PTY LTD 0.28% 2,108,321 0 person Domestic Xia Zulin 0.27% 2,013,200 0 natural person BOCHK INVESTMENT Overseas legal FUNDS-BOCHK CHINA GOLDEN 0.27% 2,000,344 0 person DRAGON FUND GUOTAI JUNAN Overseas legal 0.25% 1,887,049 0 SECURITIES(HONGKONG) LIMITED person Domestic Zhu Guanhong 0.25% 1,882,540 0 natural person VANGUARD TOTAL Overseas legal INTERNATIONAL STOCK INDEX 0.24% 1,839,436 0 person FUND Overseas legal KGI ASIA LIMITED 0.23% 1,765,389 0 person Top 10 Holders of Unrestricted Shares Number of Category of shares Name of the shareholder unrestricted shares Category of shares Amount held NORGES BANK 6,148,775 Foreign shares placed in domestic exchange 6,148,775 GIC PRIVATE LIMITED 2,665,330 Foreign shares placed in domestic exchange 2,665,330 AUSTRALIANSUPER PTY LTD 2,108,321 Foreign shares placed in domestic exchange 2,108,321 Xia Zulin 2,013,200 Foreign shares placed in domestic exchange 2,013,200 BOCHK INVESTMENT FUNDS-BOCHK CHINA GOLDEN 2,000,344 Foreign shares placed in domestic exchange 2,000,344 DRAGON FUND GUOTAI JUNAN 1,887,049 Foreign shares placed in domestic exchange 1,887,049 SECURITIES(HONGKONG) LIMITED Zhu Guanhong 1,882,540 Foreign shares placed in domestic exchange 1,882,540 VANGUARD TOTAL INTERNATIONAL STOCK INDEX 1,839,436 Foreign shares placed in domestic exchange 1,839,436 FUND KGI ASIA LIMITED 1,765,389 Foreign shares placed in domestic exchange 1,765,389 Fu Shuying 1,276,180 Foreign shares placed in domestic exchange 1,276,180 (1) There is not any relationship between Hangzhou Steam Turbine Group Power Group Co., Ltd. and other shareholders; (3) It is unknown whether there is any relationship Notes to relationship or “action in among the 10 unrestricted current-share holders. (3) None of HSTG or other shareholders concert” among the top ten shareholders. is acting-in-concert as described by Administration Rules of Information Disclosure on Change of Shareholding Position No agreed repurchasing trade by shareholders in the report period 2. Total of shareholders and top-10 preferential shareholders at end of the report period: Not applicable 4 Hangzhou Steam Turbine Co., Ltd. The 3rd Quarterly Report 2014 (Official Text) Chapter III. Significant Issues I. Particulars and causations of material change in major accounting items and indices Scale of Balance Sheet Items End of term Beginning of term Remarks on the change change Mainly returning of loans and change of financial Monetary capital 448,104,748.45 883,141,568.17 -49.26% instruments Notes receivable 607,303,635.55 921,474,660.68 -34.09% Mainly due and transferring of notes Other account receivable 45,923,077.08 31,299,637.50 46.72% Mainly increase of custom deposits Inventories 2,025,686,008.51 1,522,662,268.44 33.04% Mainly increase of goods in stock at end of period Other current asset 512,041,753.62 318,647,045.27 60.69% Mainly increase of financial instruments Mainly booking of land property by Steam Turbine Intangible assets 307,687,077.78 225,562,108.26 36.41% Heavy Industry Co., one of the subsidiaries, in the period Mainly transferring of land property under Heavy Other non-current asset 66,500,000.00 -100.00% Industry Co. to intangible assets Short-term loans 216,900,000.00 376,900,000.00 -42.45% Mainly returning of bank loans by the parent co. Mainly decrease of notes issued by the subsidiaries Notes payable 92,257,335.70 168,751,198.95 -45.33% in the period Mainly decrease of sales, and the VAT and income Tax payable 28,820,706.96 107,956,056.99 -73.30% tax payable in the 4th quarter of last year was great Income Statement Same period of last Scale of Remarks on the change Current term Items term change Mainly decrease of sales and reducing of costs by 1,501,106,574.52 2,306,739,124.63 -34.93% accounting of R&D by the parent co. Operation cost Mainly increase of interest expenses and exchange 13,514,406.60 2,769,682.15 387.94% gains by parent co. Financial expenses Mainly change in account age structure and increase Asset impairment loss 107,639,925.91 23,286,159.94 362.25% of impairment provision drawn Mainly the great gains of Zhongneng Co. from 37,778,981.98 67,805,353.37 -44.28% disposal of equity investment in the Group Packaged Investment income Co. in the same period of last year Mainly compensations gained for termination of Non-operational income 12,838,708.67 5,263,886.21 143.90% contracts Mainly decrease of net profit of subsidiaries YoY, Minor shareholders’ 46,198,204.89 74,698,515.76 -38.15% and decreasing of shareholding by minority equity shareholders of subsidiaries Cash Flow Statement Same period of last Scale of Remarks on the change Current term Items term change Net cash flow generated Mainly decrease of cash received from purchasing of -239,012,783.71 50,314,770.97 -575.04% financial instruments by investment Net increasing of cash Mainly decrease of net cash flow from investment -307,872,522.20 -41.09% activities and cash equivalents -434,376,078.12 II. Position and impact of major issues and analysis of solutions: Not applicable III. There is no commitment issues by shareholders with 5% or over of the Company’s shares occurred in the report period or carried over from previous period. IV. Prospect on the business performance of year 2014 Not applicable V. Securities investment No securities investment in the report period. VI. Investment in derivate instruments No derivate instrument investment in the report period. VII. Reception of investigation, communication, or visiting in report period No investigation, communication, or visiting occurred in report period. 5 Hangzhou Steam Turbine Co., Ltd. The 3rd Quarterly Report 2014 (Official Text) Chapter IV. Financial Statements I. Financial Statements 1. Consolidated Balance Sheet Prepared by: Hangzhou Steam Turbine Co., Ltd In RMB Yuan Items Closing balance Opening balance Current asset: Monetary capital 448,104,748.45 883,141,568.17 Settlement provision Outgoing call loan Financial assets accounted at fair value and fluctuation accounted into current income Notes receivable 607,303,635.55 921,474,660.68 Account receivable 2,046,457,273.37 2,116,165,121.01 Prepayment 224,736,352.23 221,002,418.39 Insurance receivable Reinsurance receivable Provisions of Reinsurance contracts receivable Interest receivable Dividend receivable Other account receivable 45,923,077.08 31,299,637.50 Repurchasing of financial assets Inventories 2,025,686,008.51 1,522,662,268.44 Categorized as asset hold for sale Non-current asset due in 1 year Other current asset 512,041,753.62 318,647,045.27 Total of current asset 5,910,252,848.81 6,014,392,719.46 Non-current assets Disburse of consigned loans Sellable financial asset Expired investment in possess Long-term receivable Long-term share equity investment 491,729,826.87 472,349,826.87 Investment real estates Fixed assets 557,591,205.04 609,425,345.52 Construction in process 198,487,455.90 166,904,606.60 Engineering goods Fixed asset disposal Production physical assets Gas & petrol Intangible assets 307,687,077.78 225,562,108.26 R&D expense Goodwill Long-term amortizable expenses 36,748.58 36,748.58 Deferred income tax asset 101,622,416.23 90,477,451.14 Other non-current asset 66,500,000.00 Total of non-current assets 1,657,154,730.40 1,631,256,086.97 6 Hangzhou Steam Turbine Co., Ltd. The 3rd Quarterly Report 2014 (Official Text) Total of assets 7,567,407,579.21 7,645,648,806.43 Current liabilities Short-term loans 216,900,000.00 376,900,000.00 Loan from Central Bank Deposit received and hold for others Call loan received Financial liabilities booked as current gain/loss at fair value Notes payable 92,257,335.70 168,751,198.95 Account payable 968,573,408.85 778,441,385.31 Advances received 1,529,481,032.98 1,480,588,499.90 Selling of repurchased financial assets Fees and commissions receivable Employees’ wage payable 74,000,639.09 63,401,599.09 Tax payable 28,820,706.96 107,956,056.99 Interest payable Dividend payable Other account payable 33,600,691.23 46,941,539.40 Reinsurance fee payable Insurance contract provision Entrusted trading of securities Entrusted selling of securities Liabilities categorized as hold for sale Non-current liability due in 1 year Other current liability Total of current liability 2,943,633,814.81 3,022,980,279.64 Non-current liabilities Long-term borrowings Bond payable Long-term payable 330,000.00 330,000.00 Special payable Expected liabilities Deferred income tax liability 1,017,473.05 1,017,473.05 Other non-recurring liabilities 9,854,167.00 9,700,985.00 Total of non-current liabilities 11,201,640.05 11,048,458.05 Total of liability 2,954,835,454.86 3,034,028,737.69 Owners’ equity (or shareholders’ equity) Capital paid in (or share capital) 754,010,400.00 754,010,400.00 Capital reserves 139,590,345.09 139,590,345.09 Less: Shares in stock Special reserves 17,170,102.10 17,276,201.15 Surplus reserves 583,824,678.05 583,824,678.05 Common risk provision Retained profit 2,769,965,648.28 2,736,802,630.30 Different of foreign currency translation -332,115.40 -562,143.85 Total of owner’s equity belong to the parent company 4,264,229,058.12 4,230,942,110.74 Minor shareholders’ equity 348,343,066.23 380,677,958.00 Total of owners’ equity (or shareholders’ equity) 4,612,572,124.35 4,611,620,068.74 Total of liability and shareholders’ equity (or owners’ equity) 7,567,407,579.21 7,645,648,806.43 7 Hangzhou Steam Turbine Co., Ltd. The 3rd Quarterly Report 2014 (Official Text) Legal representative: Nie Zhonghai Accounting supervisor: Pu Yangshuo Manager of financial dept.: Jiang Rong 2. Balance Sheet of the Parent Company Prepared by: Hangzhou Steam Turbine Co., Ltd In RMB Yuan Items Closing balance Opening balance Current asset: Monetary capital 225,766,064.98 295,292,983.14 Financial assets accounted at fair value and fluctuation accounted into current income Notes receivable 327,650,783.85 601,340,832.00 Account receivable 1,719,350,042.29 1,788,860,441.94 Prepayment 88,152,632.57 142,783,696.27 Interest receivable Dividend receivable Other account receivable 45,698,026.90 25,065,309.78 Inventories 1,601,046,261.03 1,119,933,842.22 Categorized as asset hold for sale Non-current asset due in 1 year Other current asset 100,000,000.00 Total of current asset 4,107,663,811.62 3,973,277,105.35 Non-current assets Sellable financial asset Expired investment in possess Long-term receivable Long-term share equity investment 949,669,204.90 949,669,204.90 Investment real estates Fixed assets 279,239,085.14 316,182,652.53 Construction in process 141,117,850.74 124,088,852.72 Engineering goods Fixed asset disposal Production physical assets Gas & petrol Intangible assets 184,615,554.69 181,668,119.33 R&D expense Goodwill Long-term amortizable expenses Deferred income tax asset 66,600,704.59 61,066,646.31 Other non-current asset Total of non-current assets 1,621,242,400.06 1,632,675,475.79 8 Hangzhou Steam Turbine Co., Ltd. The 3rd Quarterly Report 2014 (Official Text) Total of assets 5,728,906,211.68 5,605,952,581.14 Current liabilities Short-term loans 100,000,000.00 260,000,000.00 Financial liabilities booked as current gain/loss at fair value Notes payable Account payable 666,012,828.28 469,018,283.68 Advances received 1,089,397,713.38 1,060,240,346.99 Employees’ wage payable 56,277,973.03 49,561,769.28 Tax payable 3,105,115.81 63,656,915.72 Interest payable Dividend payable Other account payable 22,652,960.97 31,407,616.90 Liabilities categorized as hold for sale Non-current liability due in 1 year Other current liability Total of current liability 1,937,446,591.47 1,933,884,932.57 Non-current liabilities Long-term borrowings Bond payable Long-term payable Special payable Expected liabilities Deferred income tax liability 1,017,473.05 1,017,473.05 Other non-recurring liabilities 353,432.00 200,250.00 Total of non-current liabilities 1,370,905.05 1,217,723.05 Total of liability 1,938,817,496.52 1,935,102,655.62 Owners’ equity (or shareholders’ equity) Capital paid in (or share capital) 754,010,400.00 754,010,400.00 Capital reserves 138,953,250.09 138,953,250.09 Less: Shares in stock Special reserves 7,295,765.20 7,295,765.20 Surplus reserves 565,068,272.92 565,068,272.92 Common risk provision Retained profit 2,324,761,026.95 2,205,522,237.31 Different of foreign currency translation Total of owners’ equity (or shareholders’ equity) 3,790,088,715.16 3,670,849,925.52 Total of liability and shareholders’ equity (or owners’ equity) 5,728,906,211.68 5,605,952,581.14 Legal representative: Nie Zhonghai Accounting supervisor: Pu Yangshuo Manager of financial dept.: Jiang Rong 9 Hangzhou Steam Turbine Co., Ltd. The 3rd Quarterly Report 2014 (Official Text) 3. Consolidated Income Statement of the Report Period Prepared by: Hangzhou Steam Turbine Co., Ltd In RMB Yuan Amount of the Amount of the Items Current Term Previous Term I. Total revenue 706,544,529.11 1,433,030,061.77 Incl. Business income 706,544,529.11 1,433,030,061.77 Interest income Insurance fee earned Fee and commission received II. Total business cost 705,484,827.53 1,137,435,503.14 Incl. Business cost 426,659,724.36 956,705,213.47 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 3,132,113.23 9,643,444.05 Sales expense 40,281,485.15 45,535,606.35 Administrative expense 178,682,753.46 124,632,553.55 Financial expenses 4,311,919.88 1,227,627.22 Asset impairment loss 52,416,831.45 -308,941.50 Plus: Gains from change of fair value (“-“ for loss) Investment gains (“-“ for loss) 4,110,745.22 3,109,284.61 Incl. Investment gains from affiliates Gains from currency exchange (“-“ for loss) III. Operation profit (“-“ for loss) 5,170,446.80 298,703,843.24 Plus: non-operational income 644,378.96 1,061,195.58 Less: non-operational expenditure 1,449,834.18 1,986,788.58 Incl. Loss from disposal of non-current assets IV. Total profit (“-“ for total loss) 4,364,991.58 297,778,250.24 Less: Income tax expenses 1,903,773.35 47,226,269.36 V. Net profit (“-“ for net loss) 2,461,218.23 250,551,980.88 Including: Net profit realized by the entity taken over before the takeover Net profit attributable to the owners of parent company -12,209,753.03 231,707,861.66 Minor shareholders’ equity 14,670,971.26 18,844,119.22 VI. Earnings per share: -- -- (I) Basic earnings per share -0.0162 0.307 (II) Diluted earnings per share -0.0162 0.307 VII. Other misc. incomes -211,118.68 0.00 Incl. Other misc. gains unable to be relocated to income account in -211,118.68 succeeding fiscal period Other misc. gains able to be relocated to income account in succeeding fiscal period when certain conditions are satisfied VIII. Total of misc. incomes 2,250,099.55 250,551,980.88 10 Hangzhou Steam Turbine Co., Ltd. The 3rd Quarterly Report 2014 (Official Text) Total of misc. incomes attributable to the owners of the parent -12,299,646.52 231,707,861.66 company Total misc gains attributable to the minor shareholders 14,549,746.07 18,844,119.22 Legal representative: Nie Zhonghai Accounting supervisor: Pu Yangshuo Manager of financial dept.: Jiang Rong 4. Income Statement (Parent Co.) of the Report Period Prepared by: Hangzhou Steam Turbine Co., Ltd In RMB Yuan Amount of the Amount of the Items Current Term Previous Term I. Turnover 443,746,680.14 993,137,360.52 Less: Operation cost 295,827,680.15 640,789,724.23 Business tax and surcharge 147,931.96 8,106,389.98 Sales expense 25,112,415.75 32,222,574.42 Administrative expense 116,945,798.30 71,951,158.89 Financial expenses 3,148,783.60 -9,088.82 Asset impairment loss 39,732,317.21 -3,163,606.33 Plus: Gains from fluctuation of fair value (“-“ for loss) Investment gains (“-“ for loss) 619,989.06 2,748,325.71 Incl. Investment gains from affiliates II. Operational profit (“-“ for loss) -36,548,257.77 245,988,533.86 Plus: Non business income 496,938.53 225,778.58 Less: Non-business expenses 743,746.68 1,041,807.70 Incl. Loss from disposal of non-current assets III. Total profit (“-“ for total loss) -36,795,065.92 245,172,504.74 Less: Income tax expenses -5,534,058.28 36,775,875.70 IV. Net profit (“-“ for net loss) -31,261,007.64 208,396,629.04 V. Earnings per share -- -- (I) Basic earnings per share -0.0415 0.2764 (II) Diluted earnings per share -0.0415 0.2764 VI. Other misc gains Incl. Other misc. gains unable to be relocated to income account in succeeding fiscal period Other misc. gains able to be relocated to income account in succeeding fiscal period when certain conditions are satisfied VII. Total of integrated income -31,261,007.64 208,396,629.04 Legal representative: Nie Zhonghai Accounting supervisor: Pu Yangshuo Manager of financial dept.: Jiang Rong 11 Hangzhou Steam Turbine Co., Ltd. The 3rd Quarterly Report 2014 (Official Text) 5. Consolidated Income Statement (Jan. 1 – end of the report period) Prepared by: Hangzhou Steam Turbine Co., Ltd In RMB Yuan Amount of the Amount of the Items Current Term Previous Term I. Total revenue 2,449,907,171.38 3,452,775,892.69 Incl. Business income 2,449,907,171.38 3,452,775,892.69 Interest income Insurance fee earned Fee and commission received II. Total business cost 2,222,781,370.80 2,884,707,303.20 Incl. Business cost 1,501,106,574.52 2,306,739,124.63 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 14,558,787.17 27,012,783.00 Sales expense 108,479,459.34 137,573,060.91 Administrative expense 477,482,217.26 387,326,492.57 Financial expenses 13,514,406.60 2,769,682.15 Asset impairment loss 107,639,925.91 23,286,159.94 Plus: Gains from change of fair value (“-“ for loss) Investment gains (“-“ for loss) 37,778,981.98 67,805,353.37 Incl. Investment gains from affiliates Gains from currency exchange (“-“ for loss) III. Operation profit (“-“ for loss) 264,904,782.56 635,873,942.86 Plus: non-operational income 12,838,708.67 5,263,886.21 Less: non-operational expenditure 6,002,486.34 6,897,884.22 Incl. Loss from disposal of non-current assets IV. Total profit (“-“ for total loss) 271,741,004.89 634,239,944.85 Less: Income tax expenses 41,577,702.02 94,907,343.05 V. Net profit (“-“ for net loss) 230,163,302.87 539,332,601.80 Including: Net profit realized by the entity taken over before the takeover Net profit attributable to the owners of parent company 183,965,097.98 464,634,086.04 Minor shareholders’ equity 46,198,204.89 74,698,515.76 VI. Earnings per share: -- -- (I) Basic earnings per share 0.244 0.6162 (II) Diluted earnings per share 0.244 0.6162 VII. Other misc. incomes 540,231.59 0.00 Incl. Other misc. gains unable to be relocated to income account in 540,231.59 succeeding fiscal period Other misc. gains able to be relocated to income account in succeeding fiscal period when certain conditions are satisfied 12 Hangzhou Steam Turbine Co., Ltd. The 3rd Quarterly Report 2014 (Official Text) VIII. Total of misc. incomes 230,703,534.46 539,332,601.80 Total of misc. incomes attributable to the owners of the parent 184,195,126.43 464,634,086.04 company Total misc gains attributable to the minor shareholders 46,508,408.03 74,698,515.76 Legal representative: Nie Zhonghai Accounting supervisor: Pu Yangshuo Manager of financial dept.: Jiang Rong 6. Income Statement (Parent Co.) (Jan. 1 – end of report period) Prepared by: Hangzhou Steam Turbine Co., Ltd In RMB Yuan Amount of the Amount of the Items Current Term Previous Term I. Turnover 1,645,224,984.09 2,500,255,851.39 Less: Operation cost 1,077,000,448.16 1,718,472,918.62 Business tax and surcharge 6,188,669.35 20,493,560.05 Sales expense 67,650,712.32 93,337,423.68 Administrative expense 302,983,112.05 241,403,148.89 Financial expenses 11,235,672.66 -880,744.76 Asset impairment loss 88,881,876.60 13,749,891.62 Plus: Gains from fluctuation of fair value (“-“ for loss) Investment gains (“-“ for loss) 196,472,798.54 179,246,988.27 Incl. Investment gains from affiliates II. Operational profit (“-“ for loss) 287,757,291.49 592,926,641.56 Plus: Non business income 1,541,026.53 1,128,154.91 Less: Non-business expenses 3,231,719.44 4,893,263.72 Incl. Loss from disposal of non-current assets III. Total profit (“-“ for total loss) 286,066,598.58 589,161,532.75 Less: Income tax expenses 16,025,728.94 62,958,558.54 IV. Net profit (“-“ for net loss) 270,040,869.64 526,202,974.21 V. Earnings per share -- -- (I) Basic earnings per share -0.0466 0.3581 (II) Diluted earnings per share -0.0466 0.3581 VI. Other misc gains Incl. Other misc. gains unable to be relocated to income account in succeeding fiscal period Other misc. gains able to be relocated to income account in succeeding fiscal period when certain conditions are satisfied VII. Total of integrated income 270,040,869.64 526,202,974.21 Legal representative: Nie Zhonghai Accounting supervisor: Pu Yangshuo Manager of financial dept.: Jiang Rong 13 Hangzhou Steam Turbine Co., Ltd. The 3rd Quarterly Report 2014 (Official Text) 7. Cash Flow Statement (Consolidated)(Jan. 1 – end of report period) Prepared by: Hangzhou Steam Turbine Co., Ltd In RMB Yuan 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 2,249,496,848.88 2,699,496,763.68 services 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 727,421.29 8,029,266.19 Other cash received from business operation 11,400,718.81 18,655,038.67 Sub-total of cash inflow from business activities 2,261,624,988.98 2,726,181,068.54 Cash paid for purchasing of merchandise and services 1,142,505,900.71 1,666,054,955.86 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 483,472,204.24 500,863,380.86 Taxes paid 263,554,947.64 336,258,666.65 Other cash paid for business activities 161,323,590.63 55,497,556.07 Sub-total of cash outflow from business activities 2,050,856,643.22 2,558,674,559.44 Cash flow generated by business operation, net 210,768,345.76 167,506,509.10 II. Cash flow generated by investing Cash received from investment retrieving 28,992,921.48 Cash received as investment profit 37,778,981.98 90,335,486.98 14 Hangzhou Steam Turbine Co., Ltd. The 3rd Quarterly Report 2014 (Official Text) Net cash retrieved from disposal of fixed assets, intangible 1,143,341.52 124,157.69 assets, and other long-term assets Net cash received from disposal of subsidiaries or other -2,446,457.95 operational units Other investment-related cash received 1,506,500,000.00 2,148,610,000.00 Sub-total of cash inflow due to investment activities 1,545,422,323.50 2,265,616,108.20 Cash paid for construction of fixed assets, intangible assets 64,653,546.21 99,679,971.54 and other long-term assets Cash paid as investment 19,380,000.00 17,619,786.63 Net increase of loan against pledge Net cash received from subsidiaries and other operational units Other cash paid for investment activities 1,700,401,561.00 2,098,001,579.06 Sub-total of cash outflow due to investment activities 1,784,435,107.21 2,215,301,337.23 Net cash flow generated by investment -239,012,783.71 50,314,770.97 III. Cash flow generated by financing Cash received as investment 1,989,626.40 Incl. Cash received as investment from minor shareholders Cash received as loans 113,100,000.00 195,510,000.00 Cash received from bond placing Other financing-related cash received Subtotal of cash inflow from financing activities 115,089,626.40 195,510,000.00 Cash to repay debts 279,040,000.00 309,949,250.40 Cash paid as dividend, profit, or interests 242,572,577.84 409,632,833.71 Incl. Dividend and profit paid by subsidiaries to minor shareholders Other cash paid for financing activities Subtotal of cash outflow due to financing activities 521,612,577.84 719,582,084.11 Net cash flow generated by financing -406,522,951.44 -524,072,084.11 IV. Influence of exchange rate alternation on cash and cash 391,311.27 -1,621,718.16 equivalents V. Net increase of cash and cash equivalents -434,376,078.12 -307,872,522.20 Plus: Balance of cash and cash equivalents at the beginning 883,141,568.17 1,100,640,580.62 of term VI. Balance of cash and cash equivalents at the end of term 448,765,490.05 792,768,058.42 Legal representative: Nie Zhonghai Accounting supervisor: Pu Yangshuo Manager of financial dept.: Jiang Rong 8. Cash Flow Statement (Parent Co.)(Jan. 1 – end of report period) Prepared by: Hangzhou Steam Turbine Co., Ltd 15 Hangzhou Steam Turbine Co., Ltd. The 3rd Quarterly Report 2014 (Official Text) In RMB Yuan Amount of the Current Amount of the Items Term Previous Term I. Net cash flow from business operation Cash received from sales of products and providing of 1,511,986,900.40 1,828,493,361.61 services Tax returned 495,978.53 1,231,582.69 Other cash received from business operation 2,919,304.73 5,096,003.37 Sub-total of cash inflow from business activities 1,515,402,183.66 1,834,820,947.67 Cash paid for purchasing of merchandise and services 764,505,559.08 1,149,639,225.24 Cash paid to staffs or paid for staffs 340,242,709.56 357,461,704.02 Taxes paid 141,456,732.73 204,242,739.04 Other cash paid for business activities 82,644,685.61 187,650,940.94 Sub-total of cash outflow from business activities 1,328,849,686.98 1,898,994,609.24 Cash flow generated by business operation, net 186,552,496.68 -64,173,661.57 II. Cash flow generated by investing Cash received from investment retrieving Cash received as investment profit 196,472,798.54 189,446,988.27 Net cash retrieved from disposal of fixed assets, intangible 122,000.00 assets, and other long-term assets Net cash received from disposal of subsidiaries or other operational units Other investment-related cash received 408,000,000.00 1,830,000,000.00 Sub-total of cash inflow due to investment activities 604,472,798.54 2,019,568,988.27 Cash paid for construction of fixed assets, intangible assets 33,205,930.34 87,268,824.09 and other long-term assets Cash paid as investment 3,798,261.63 Net cash received from subsidiaries and other operational units Other cash paid for investment activities 508,000,000.00 1,730,000,000.00 Sub-total of cash outflow due to investment activities 541,205,930.34 1,821,067,085.72 Net cash flow generated by investment 63,266,868.20 198,501,902.55 III. Cash flow generated by financing Cash received as investment Cash received as loans Cash received from bond placing Other financing-related cash received Subtotal of cash inflow from financing activities Cash to repay debts 160,000,000.00 100,000,000.00 Cash paid as dividend, profit, or interests 159,170,746.67 302,269,159.99 Other cash paid for financing activities Subtotal of cash outflow due to financing activities 319,170,746.67 402,269,159.99 Net cash flow generated by financing -319,170,746.67 -402,269,159.99 IV. Influence of exchange rate alternation on cash and cash -175,536.37 -1,572,362.52 equivalents V. Net increase of cash and cash equivalents -69,526,918.16 -269,513,281.53 Plus: Balance of cash and cash equivalents at the beginning of 295,292,983.14 654,577,030.60 term VI. Balance of cash and cash equivalents at the end of term 225,766,064.98 385,063,749.07 Legal representative: Nie Zhonghai Accounting supervisor: Pu Yangshuo Manager of financial dept.: Jiang Rong 16 Hangzhou Steam Turbine Co., Ltd. The 3rd Quarterly Report 2014 (Official Text) II. Auditors’ Report The 3rd quarterly report has not been audited. Hangzhou Steam Turbine Co., Ltd. Chairman of the Board: Nie Zhonghai October 28, 2014 17