Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Stock Code: 200771 Stock ID: Hangqilun B Announcement No.2019-18
Hangzhou Steam Turbine Co., Ltd.
2018 Annual Report
（Stock Code: 200771）
March 2019
1
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
I.Important Remarks, Table of Contents, and Definitions
The Board of Directors, The Supervisory Committee, the supervisors 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.
Chairman Mr. Zheng Bin, Chief Financial Officer Zhao Jiamao, and the Chief of Accounting Department Mr. Jin
Can hereby declare: the Financial Statement in the report is guaranteed to be truthful and complete.
All of the directors attended the board meeting on which this report was examined.
Please refer to the prospects for the future development of the company in Section 4 for the risks in the
company's operations. The company's designated information disclosure media are: Shanghai Securities News
(Chinese), Securities Times (Chinese), Hong Kong Commercial Daily (English), http://www.cninfo.com.cn (In
English and Chinese), all information of the company is subject to the information published in the above selected
media. Investors are advised to pay attention to investment risks.
The profit distribution proposal reviewed and approved by the boarding meeting was summarized as follows:
754,010,400 for the base, the Company would distribute cash dividend to all the shareholders at the rate of CNY
2.00 for every 10 shares (with tax inclusive) , 0 bonus shares（including tax）and no reserve would be converted
into share capital.
2
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Table of Contents
I.Important Notice, Table of contents and Definitions
II. Basic Information of the Company and Financial index
III. Outline of Company Business
IV. Management’s Discussion and Analysis
V. Important Events
VI. Change of share capital and shareholding of Principal Shareholders
VII. Situation of the Preferred Shares
VIII. Information about Directors, Supervisors and Senior Executives
IX. Administrative structure
X. Corporate Bond
XI. Financial Report
XII. Documents available for inspection
3
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Definition
Terms to be defined Refers to Definition
Company, the Company Refers to Hangzhou Steam Turbine Co., Ltd.
The Group, Hangqi Group Refers to Hangzhou Steam Turbine Power Group Co., Ltd.
The report period, the current period, the
Refers to January 1 – December 31 2018
current year
Hangzhou Zhongneng Steam Turbine Power Co., Ltd. – the holding subsidiary of
Zhongneng Co. Refers to
the Company
Hangzhou Steam Turbine Casting Co., Ltd. – the holding subsidiary of the
Casting Co. Refers to
Company
Zhejiang Steam Turbine Packaged Technology Development Co., Ltd. – the
Packaged Tech. Co. Refers to
holding subsidiary of the Company
Hangzhou Steam Turbine Machinery Equipment Co., Ltd. - the holding
Machinery Co. Refers to
subsidiary of the Company
Hangzhou Steam Turbine Auxiliary Machinery Co., Ltd. - the holding subsidiary
Auxiliary Machine Co. Refers to
of the Company
Zhejiang Turbine Import & Export Co., Ltd. – the holding subsidiary of the
Turbine Co. Refers to
Company
Hangzhou Steam Turbine Heavy Industry Co., Ltd. - the holding subsidiary of the
Heavy Industry Co. Refers to
Company
The Board of Directors Refers to The Board of Directors of Hangzhou Steam Turbine Co., Ltd.
The Supervisory Committee Refers to The Supervisory Committee of Hangzhou Steam Turbine Co., Ltd.
The Shareholders’ Meeting Refers to The Board of Directors of Hangzhou Steam Turbine Co., Ltd.
RMB, RMB0’000, RMB000’000’000 Refers to RMB Yuan, RMB10 thousand Yuan, RMB100 million Yuan
MW Refers to Unit of power: 1000KW
PLM Refers to Product life circle management information system
MES Refers to Manufacturing execution system
4
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
II. Basic Information of the Company and Financial index
I. Basic Information
Stock ID Hangqilun B Stock Code 200771
Stock Exchange Listed in Shenzhen Stock Exchange
Company Name in Chinese 杭州汽轮机股份有限公司
Short form of Company Name in
杭汽轮
Chinese
Name in English HANGZHOU STEAM TURBINE CO.,LTD
Abbreviation in English HTC
Legal representative: Zheng Bin
Reg. Add. No. 357 Shiqiao Rd. Hangzhou
Post Code 310022
Office address No. 357 Shiqiao Rd. Hangzhou
Post Code: 310022
Web Address www.htc.cn
Email. wg@htc.cn
II. Contacts
Secretary of the Board Representative of Stock Affairs
Name Wang Gang Wang Caihua
Address No. 357 Shiqiao Rd. Hangzhou No. 357 Shiqiao Rd. Hangzhou
Tel. 0571-85780198 0571-85780438
Fax. 0571-85780433 0571-85780433
Email. wg@htc.cn wangch@htc.cn
III. Place for information disclosure
Press media for information disclosure Securities Times, Shanghai Securities Daily, Hong Kong Commercial Daily
Web address for the annual report as assigned by
http://www.cninfo.com.cn
CSRC.
Place for inquiry of the annual report The Board of Directors’ Office of Hangzhou Steam Turbine Co., Ltd.
IV. Change of Business Registration
Organization code 913300007042026204
5
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
The original scope of main businesses of the Company: The design and manufacturing
of steam turbine, gas turbine, other rotating and to-and-fro machinery and auxiliary
equipment, and spare parts and components, sales of self-manufactured products and
the providing of relevant after-sales service and import & export service.
In July 2008, the business scope was modified to: Design and manufacturing of steam
turbine, gas turbine, other rotating and to-and-fro machinery and auxiliary equipment,
and spare parts and components, sales of self-manufactured products and the providing
of relevant after-sales service; sales and import & export of power plant, industrial
driving, industrial turbine equipment and complete equipment. For those involve in
quota or licensing shall follow legal procedures.
Change of main business since listed In March 2009, the business scope was modified to: Design and manufacturing of
steam turbine, gas turbine, other rotating and to-and-fro machinery and auxiliary
equipment, and spare parts and components, sales of self-manufactured products and
the providing of relevant after-sales service; sales and import & export of power plant,
industrial driving, industrial turbine equipment and complete equipment.
In December 2016, the business scope was modified to: Design and manufacturing of
steam turbine, gas turbine, other rotating and to-and-fro machinery and auxiliary
equipment, and spare parts and components, sales of self-manufactured products and
the providing of relevant after-sales service; sales and import & export of power plant,
industrial driving, industrial turbine equipment ,complete equipment and Energy
conservation and environmental protection projects.
Change of holding shareholder (if any) No change
V. Miscellaneous information
CPA hired by the Company
Name of the CPA Pan-China Certified Public Accountants (Special general partnership)
Address of the CPA B Unit, Huarun Building, No.1366, Qianjiang Road, Jianggan District Hangzhou
Name of CPA signed on the
Jiang Xiaodong,, Ye Xianbin
auditors’ report
The sponsor performing persist ant supervision duties engaged by the Company in the reporting period.
Not applicable
The Financial advisor performing persist ant supervision duties engaged by the Company in the reporting period
Not applicable
VI.Summary of Accounting data and Financial index
May the Company make retroactive adjustment or restatement of the accounting data of the previous years due to
change of the accounting policy and correction of accounting errors.
No
2018 2017 Changed over last 2016
6
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
year（％）
Operating revenue（Yuan） 4,642,807,589.69 3,447,142,669.49 34.69% 3,235,303,379.24
Net profit attributable to the shareholders of
345,824,339.47 68,753,250.90 402.99% 31,955,445.73
the listed company（Yuan）
Net profit after deducting of non-recurring
gain/loss attributable to the shareholders of 280,075,101.48 -1,460,504.46 19，276.60% -8,366,688.71
listed company（Yuan）
Cash flow generated by business operation,
644,433,167.20 205,302,791.77 213.89% 506,159,428.42
net（Yuan）
Basic earning per share(Yuan/Share) 0.46 0.09 411.11% 0.04
Diluted gains per share(Yuan/Share) 0.46 0.09 411.11% 0.04
Net asset earning ratio（%） 5.82% 1.12% 4.70% 0.60%
Changed over last
End of 2018 End of 2017 End of 2016
year（％）
Gross assets（Yuan） 11,569,169,903.81 10,830,597,182.38 6.82% 10,550,899,708.34
Net assets attributable to shareholders of the
6,007,540,929.16 5,884,816,809.55 2.09% 6,385,346,243.23
listed company（Yuan）
VII.The differences between domestic and international accounting standards
1. Differences between the net profit and net asset in the financial reports prepared under IAS and Chinese
Accounting Standard
No difference in the reporting period.
2. Differences between the net profit and net asset in the financial reports prepared under IAS and Chinese
Accounting Standard
No difference in the reporting period.
VIII.Main Financial Index by Quarters
In RMB
First quarter Second quarter Third quarter Fourth quarter
Operating revenue 962,078,793.39 1,322,052,188.74 1,108,687,686.30 1,249,988,921.26
Net profit attributable to the
39,042,232.50 89,468,361.51 163,313,243.33 54,000,502.13
shareholders of the listed company
Net profit after deducting of
non-recurring gain/loss attributable to 28,469,122.60 61,001,604.12 144,020,340.79 46,584,033.97
the shareholders of listed company
Net Cash flow generated by business
126,725,248.14 431,061,942.59 42,274,340.29 44,371,636.18
operation
Any material difference between the financial indicators above or their summations and those which have been
disclosed in quarterly or semi-annual reports?
7
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
No
IX.Items and amount of non-current gains and losses
In RMB
Items Amount (2018) Amount (2017) Amount (2016) Notes
Non-current asset disposal gain/loss(including the write-off part
-40,478.16 6,608,574.41 326,453.30
for which assets impairment provision is made)
Tax refund, deduction and exemption that is examined and
approved by authority exceeding or has no official approval 2,140,524.49 1,250,418.38
document.
Governmental Subsidy accounted as current gain/loss, except for
those subsidies at with amount or quantity fixed by the national
23,300,479.35 8,945,252.87 16,968,792.22
government and closely related to the Company’s business
operation.
Debt restructuring profit or loss 7,064,832.00
In addition to normal business with the company effective
hedging related business, holders of tradable financial assets,
transactions and financial liabilities arising from changes in fair
48,433,535.22 62,623,000.27 28,548,677.87
value gains and losses, as well as the disposal of trading of
financial assets, trading financial liabilities and available-for-sale
financial assets gains return on investment
Other non-operating income and expenditure beside for the above
-1,703,546.21 6,505,882.53 7,345,994.24
items
Less: Influenced amount of income tax 11,452,856.21 11,777,992.62 8,701,193.64
Amount of influence of minority interests（After tax） 1,993,252.49 3,941,380.48 4,166,589.55
Total 65,749,237.99 70,213,755.36 40,322,134.44 --
For the Company’s non-recurring gain/loss items as defined in the Explanatory Announcement No. 1 on
Information Disclosure for Companies Offering their Securities to the Public – Non-recurring Gains and Losses
and its non-recurring gain/loss items as illustrated in the Explanatory Announcement No. 1 on Information
Disclosure for Companies Offering their Securities to the Public – Non-recurring Gains and Losses which have
been defined as recurring gains and losses, it is necessary to explain the reason.
Not applicable
8
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
III. Outline of Company Business
I. Main Business the Company is Engaged in During the Report Period
Whether the company needs to comply with the disclosure requirements of the particular industry
No
As the leading provider of turbo machinery equipment and relevant service in China, our company is mainly
famous for designing and producing rotating turbo machinery like industrial steam turbines and gas turbines. Our
company, one of the major companies drafting the industrial standard in Chinese domestic industry of industrial
steam turbine, has developed into the biggest base to research, develop and produce industrial steam turbines in
China and ranks first among industrial steam turbine producers in terms of the market occupancy. Holding the
principle “our products should be based on clients’ demands” as our business mode and characteristic, our
company designs and produces in accordance with every client’s personal demands so as to meet personalized
needs in engineering projects to the utmost. To realize the fast research and development of our products, our
company has adopted the advanced modular design technique and, on the other hand, introduces information
technique to assist the collaborative production to achieve the resource saving and flexible production. In addition,
our company also provides our clients with relevant service such as engineering programs, general engineering
contracting, operation and maintenance of our products as well as remote control and so on.
Industrial steam turbines use the steam featuring high temperature and high pressure as their working
medium so as to convert the thermal energy into mechanical energy to drive various industrial equipments through
the rotating steam turbines. As for different objects driven by industrial steam turbines, the steam turbines could
be divided into industrial driving steam turbines and industrial power-generation steam turbines. Mainly driving
rotating machines like compressors, air blowers, pumps and squeezers, industrial driving steam turbines, as the
core power part in numerous large-scale industrial equipments, are always introduced into some industries like oil
refining, chemical engineering, chemical fertilizer, building materials, metallurgy, electric power, light industry
and environmental production. The industrial power-generation steam turbines, mainly utilized to drive electric
generators and provide thermal energy, are mainly adopted in private stations, regional projects of combined heat
and power generation, power generation by recycling waste heat in industrial production, urban waster power
plants and gas-steam combined cyclepower stations in various industrial sectors. The gas turbines produced by our
company are mainly used by metallurgical industry to recycle the waste heat from the blast furnace exhaust to
generate power.
In the gas turbine business, the Company has cooperated with Siemens on the advanced natural gas turbine
SGT-800 model-with features of high efficiency, high reliability and low emission, thus to enter the distributed
natural gas field. As the general whole-set maker of SGT-800 in China, the company has launched the gas turbine
business in respect of the project procurement and the integrated implementation. Hangzhou Steam Turbine has
the type selection ability for the distributed energy combined cycle project, has established a complete system of
supporting standard and material system, and it can complete the independent processing or matching work for the
equipment besides the gas turbine body. In the industrial fields including the cogeneration /combined cycle power
plant and the oil & gas project with distributed energy projects that adopt the small and medium gas turbines, the
Company not only can provide gas turbine equipment for customers, but also can provide customers with
9
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
complete sets of equipment for gas turbine power plant and the efficient integrated solutions. Especially, it can
provide customers with operational support services throughout the product life, and this service model is
conductive for the establishment of long-term business cooperation relationships between the company and its
customers.
As the major producer of industrial equipments in China during the report period, our company is mainly
benefited from the following factors in terms of the elements driving our business performance:
1. On the basis of market demands. The relevant market demands fluctuate differently due to various business
condition and investment cycles in different industrial fields. The company further made more specified positions
toward the market for the products, implemented the differentiated marketing strategy, and integrated the business
sectors and tapped into the potential. During the reporting period, the domestic oil refining and chemical
investment projects started at multiple points and drove the demand for related equipment manufacturing. The
company grasped the growth opportunities in the petrochemical sector, and formulated the flexible price strategies
for the fields of low-end and mid-end drive, ensured the market share and continuously consolidated and
strengthened the existing market advantages. Adhering to the "Go global" strategy, the Company continued to
expand the overseas markets, establish overseas offices and increase its market influence.
2. Innovation and further reform in difficult areas of product technology.
Our company continuously improves product technical performance and tackles hard issues in the scientific
researches of product structure, core parts, basic design, manufacturing technology, material technology, etc. In
addition, basing on clients’ demands, our company launches the study “The Demonstration and Application
Project for Packaging Technology of Steam Turbine” to push forward the intelligence of our products and the
development of the integration technology. Meantime, the company cooperated with universities, scientific
research institutes to build the technological exchange and cooperation platform.
3. Upgrading and transformation of industrial structure transformation.The company jointed with Siemens to
enter the distributed energy market and enhance the development and utilization of natural gas distributed energy.
In the industrial fields including the cogeneration /combined cycle power plant and the oil & gas project with
distributed energy projects that adopt the small and medium gas turbines, the Company not only can provide gas
turbine equipment for customers, but also can provide customers with complete sets of equipment for gas turbine
power plant and the efficient integrated solutions.
4. Brand and market position. The company’s products have a good reputation and extensive brand influence
in the domestic market, The company has maintained a leading market share in the domestic industrial drive. The
company's products have a high reputation and brand influence in the domestic market.
5.Cost controlling level. As domestic labor costs continue to rise and the price of industrial products continue to
decline, the product profitability is facing a severe test. In recent years, the company continuously improves the
level of costs controlling by improving the organizational structure, optimizing business processes, enhancing the
supply chain controlling, strengthening risk management, raising the efficiency of all the staff and so on.
6.Emphasis on quality engineering and services: promote the key project management, meticulously plan key
projects, implement dynamic quality supervision; attach importance to products’ after-sales service market,
integrate existing resources to increase after-sales service initiative, extend product value chain, and promote the
company’s transformation from manufacturing to service.
II. Major Changes in Main Assets
10
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
1.Major Changes in Main Assets
Main assets Major changes
Mainly caused by the volatility in share price of Hangzhou Bank with the Company’s
Equity assets
investment and participation
Mainly caused by the Completion of the company’s Steam turbine Bulding transferred to
Fixed assets
fixed assets
Intangible assets No major changes
Mainly caused by the new investment in the current period of the steam turbine Heavy
Construction in progress
industry project with the progress of the project
2. Main Conditions of Overseas Assets
Not applicable
III. Analysis On core Competitiveness
Whether the company needs to comply with the disclosure requirements of the particular industry
No
Firstly. A complete technical innovation system was established. The Company has under its possession of
national, provincial, and municipal grade technical centers, a doctorial workstation, and an academician
workstation. Close co-operations were carried out with institutions and universities from throughout the country.
As the main drafter of national standard on industrial steam turbine, the Company has the newest technical trend
under its close observation. The Company is now providing nearly 600 different models of steam turbines to the
customers and hold the newest technical system covering the product lines up to 150 MW.Cooperating with
SIEMENS in the field of gas turbine, our company has been capable of selecting the model of the combined
recycling project of distributed energy. In addition, our company has also been able to finish the independent
processing or supporting work which doesn’t need to depend on the gas turbine machine.
Secondly .The advantages of solutions. The modular design of industrial steam turbine and the production pattern
featuring parallelization production enable our company to give considerations to the cost, date of delivery and
clients’ demands in the process of production in accordance with clients’ personalized designs, thereby making our
company capable of advancing with the development trend of individual requirements. Our company has always
been devoting to the localization in terms of the gas turbine business so as to achieve the localized one-stop
service step by step including the sale, production, installation, debugging, operation, training and after-sale
service. Our company has always been striving to provide clients with the complete equipment of gas turbine
power station and the efficient total solutions.
Thirdly, the Company has established strategic co-operations with main customers in the country. Further
marketing approaches were carried on by involving itself in the customers’ value. A sound and steady image has
been set up in the domestic steam turbine market. In the global market, the Company has acquired multiple
important certifications and has established a primary global recognition.
11
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Fourthly, the Company has its complete service providing system. The Company is not only capable to provide
onsite 24-hour service for the Company’s own products, but also accumulated rich experiences in technical
maintenance and reengineering of other manufacturers’ products.
Fifthly, the Company has cultivated a significant advantage in human resources. Great importance has been
attached to construction of work teams with collection of high-end workforce in the areas of research &
development, At the same time, our company values the cooperation with universities. “Zhejiang Technical
Association for Gas Turbines in Equipment Manufacturing Industry” was officially founded jointly by our
company and Zhejiang University and other scientific research institutions to build a new platform for integration
of production and research in terms of gas turbine technology.The Company has cultivated a significant advantage
in human resources. Great importance has been attached to construction of work teams with collection of high-end
workforce in the areas of research & development, designing, technique, testing, and quality control. An excellent
workforce provides a sound foundation to lift quality and services.
12
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
IV. Management’s Discussion and Analysis
I. General
Within the report period, facing the intricate situations at home and abroad, the Company has steadily promoted the
implementation of the "13th Five-Year" strategic plan, adhered to the economic policies of "innovation persisting,
coordinated advance, culture leading and management strengthening" to insist on the technical innovation of
products and accelerate the transformation and upgrading of the Company, orderly carried out the relocation to
ensure the production schedule of products, seized the high-end market segments to enhance the Company's
industrial position, started the enterprise culture construction to increase the cohesion and converge the talents, and
constantly improved the enterprise management to effectively prevent the enterprise risks. After the joint efforts of
all employees, the Company has realized turnover of RMB 4642.8076 million, an increase of 34.69%; Total profit
of RMB470.0691 million , an increase of 254.35%, net profit attributable to owners of the parent company of
RMB345.8243 million, an increase of 402.99% the annual operation target in 2018 has been successfully
completed.
I. Insist on technical innovation of products to speed up the transformation and upgrading of the Company
Within the report period, the Company has developed 21 new products and completed 16 scientific research
projects. Among them, the successful development of the turbine used in the HNKS63/112-type 80,000 cubic-level
air separation units has enabled the Company with the complete product and technology system in the large air
separation field. The smooth test run and delivery of the double-cylinder double-speed 50 MW steam turbine sets in
the central solar project have indicated the technology and market breakthroughs of the Company in the
photo-thermal field.
The company's "Key Technology and Application of Steam Turbine Series Damping Damping Blade Design"
jointly developed by the company and Xijiao University won the second prize of National Science and
Technology Progress Award in 2018.yThe Company's project of "Key Technologies and Applications of Energy
Field Compound Laser Surface Modification" has been awarded with the First Prize of the China Mechanical
Industry Science and Technology Award. The project of "R& D of Key Technologies and Industrial Applications for
Long Twisted Vanes of Industrial Steam Turbines" has been awarded with the Second Prize of the Science and
Technology Award of China Machinery Industry Federation. The project of "Domestic Industrial Steam Turbines
for 100,000 m3 Air Separation Units" has been awarded with the First Prize of the Zhejiang Mechanical Industry
Technology Award. In 2018, the Company has obtained 32 authorized patents, including that the project of "Design
Methods for Gas Flow Bending Stress of Self-locking Damping Blade Based on Fluid-solid Coupling" has been
awarded with the Zhejiang Patent Gold Award.
The successful acceptance of the Company's provincial intelligent manufacturing demonstration project "Study on
Discrete Intelligent Manufacturing Modes and Digital Workshop Construction" has provided the preliminary
exploration and path plan for the intelligent manufacturing construction of the Company's new plant. The new
remote product monitoring service released by the Company through the service big data platform has extended the
13
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
intelligent manufacturing to the product service end and also an important step for the transformation of the
Company to the service-oriented manufacturing enterprise.
II. Orderly carry out the relocation to ensure the production schedule of products
Within the report period, the Company's "Steam Turbine Power Building" has been delivered as a whole, and
the main project of Steam turbine heavy industry and large equipment foundation construction have been started
comprehensively. As the "spearhead", the painting workshop of the Company was relocated into the new plant in
October 2018.
In 2018, almost 200 devices were purchased for the new plant of the Company with the fixed asset investment
exceeding RMB 300 million. In order to ensure the success of the Company's comprehensive relocation, the
dedicated working group has been established in the Company to formulate the relocation plan, issue the related
systems and sufficiently guarantee the comprehensive relocation of the Company.
In the report period, the Company has fully explored the capacity resources, intensified the capability
construction of supply chain, continued the dynamic optimization of operation plan, conquered such adverse factors
as short production cycle and many changes in the contract execution and broken the historical records of steam
turbine set manufacturing. The product container technology self-researched by the Company has enabled the
overall assembly, overall delivery and transport and overall installation by users on site to extremely improve the
product quality and user experience.
III. Seize the high-end market segments to enhance the Company's industrial position
In the report period, the domestic industry-driven market has continuously shown the exuberant market
demand after being driven by the petroleum refining investment and construction.
In the dragging market, the 1,500,000t/a ethylene unit ethylene project signed between the Company and
Dalian Hengli is the largest domestic single-wire ethylene unit around the world. The Company has successfully
won the bidding of this project after the competition with such international famous manufacturers as GM, Siemens,
Elliott and Mitsubishi and taken the international position for the Company's products, technologies and market
competitiveness. The Company has obtained the orders for the 2,200,000t/a coal-to-methanol project and 105,000
Nm3/a air separation unit turbines of Ningxia Baofeng Energy and the low-pressure driven steam turbine set for the
PX Phase II project of Sinopec Hainan Refining & Chemical, and broken the monopoly of foreign counterparts.
The order for the 1,250,000t ethylene project of Zhejiang Satellite Energy undertaken by the Company is the first
ethane-to-ethylene unit above the 1,000,000-level in China. The Company has successfully realized the cooperation
between the compressors of Elliott and the turbines of the Company again to make new contributions to the
expansion of the cooperation mode of the imported compressors + HTC's turbines in the driven core fields like
ethylene.
In the generator sets, the condensate pumping steam turbine sets for the 2*100MW combined cycle power
generation project of China Power (Changshu) supplied by the Company are the performance in the domestic
100MW combined cycle power generation projects for the first time, with greater demonstration significance for the
14
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
subsequent supporting steam turbine market of 100MW combined cycle units in Jiangsu Province and even the
whole country.
In the gas turbines, the Company has actively expanded the cooperating projects in the fields relating to such
industrial chains as small and medium-sized gas turbines and distributed energy resources and successfully signed
the contract with Huafeng regarding the microfiber gas turbine combined cycle project to realize the expansion from
gas turbine products to gas turbine projects and from the cooperated manufacturing to gas turbine project services.
The Company has undertaken the gas turbine after-sales service contracts of RMB 80 million hitting a new high
again.
IV. Start the enterprise culture construction to increase the cohesion and converge the talents
Within the report period, the Company has commenced the enterprise culture construction project with the
themes of "spiritual motivation and future winning", and elected the enterprise culture ambassador, aiming at
agglomerating the consensus of all employees in the Company and simulating the impetus that employees actively
participate in the enterprise change to promote the transformation and upgrading.
A series of enterprise culture activities has been carried out by the Company combining the 60 anniversaries of
plant establishment and 20 anniversaries of listing, and further firmly built the era responsibility of the pillars of a
great power for all employees by a review of enterprise development. The HTC's spirit of originality has been
presented to users and suppliers after the Company held the "20 Anniversaries of Listing and Turbine Power
High-end Development Forum" to transfer the ideas of "driving the industrial civilization and sustaining China's
momentum" to show the latest technical innovation and development trend of HTC. The unique industrial position
of the listed company has been shown to institutional and individual investors by holding the open day activities of
"Enter HTC" for investors.
The Company has actively promoted the talent construction, and improved the reserve cadres election
mechanism to cultivate and store the preeminent talented managers. After the organization of skill master studio for
foreign exchange and learning activities, the Company has applied for the "Millions of Talents" in Zhejiang
Province, prepared the supporting scheme for highly skilled leading talents in the 10,000 talent plan of Zhejiang
Province, constantly appraised and elected the "shining turbine worker", first elected the "craftsman of HTC" and
cultivated the backbone elites in all fields and all departments of the Company.
V. Constantly improved the enterprise management to effectively prevent the enterprise risks
Within the report period, the Company has unceasingly improved the governance structure of subsidiaries and
strengthened the management and control for subsidiaries by assigning directors and supervisors to them to ensure
their standard governance with the operation and development consistent with the Company's strategic goals.
With the further implementation of the Company's management system integration project and the parallel
promotion of lean production project in all workshops, the annual key management tasks have been fulfilled. The
Construction of Digitized, Visual and Lean Production Quality Project for Discrete Manufacturing by MES System
of the Company has been awarded with the First Prize of the provincial and municipal enterprise management
15
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
modern innovation achievements.
Based on the big data analysis, the research on the product costs and earnings has been advanced by the
Company to explore the sales pricing reform of products and constantly update and improve the Company's sale
price system. The list of qualified suppliers has been complemented by the Company with the sufficient use of
outsourcing resources to save the purchasing costs of the Company by such means as open tender, centralized
ordering, price comparison and forcing the prices down. Through the formulation of Standard Text of Equipment
Procurement Contract in Large Supporting Field and the Review Specifications for Equipment Procurement
Contract in Large Supporting Field by the Company, the review for the prices, quality and delivery dates of
supporting product parts has been strengthened, to ensure that the Company's products and the supporting parts
purchased meet the users' requirements.
After the preparation of the risk management implementation plan, the Company has carried out the risk evaluation
for key risk aspects of the Company to prevent and control the enterprise system risk. The Company has
strengthened the legal means to professionally support the business and suitably solved the contract disputes with
effective recovery of long aging overdue receivables.
II. Main business analysis
1. General
Refer to relevant contents of “1.Summarization” in “Discussion and Analysis of Management”.
2. Revenue and cost
(1)Component of Business Income
In RMB
2018 2017 Changed over last
Amount Proportion Amount Proportion year（％）
Total operating revenue 4,642,807,589.69 100% 3,447,142,669.49 100% 34.69%
On Industries
Boiler and power machine
4,170,860,461.92 89.83% 3,030,946,418.89 87.93% 37.61%
manufacture
Nonferrous metal alloy
133,291,110.39 2.87% 91,384,682.32 2.65% 45.86%
manufacture
Other 338,656,017.38 7.30% 324,811,568.28 9.42% 4.26%
On Products
Industrial steam turbine 3,745,445,441.72 80.67% 2,692,843,753.69 78.12% 39.09%
Casting products 133,291,110.39 2.87% 91,384,682.32 2.65% 45.86%
Auxiliary machinery 248,879,821.14 5.36% 118,292,027.16 3.43% 110.39%
16
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Part 176,535,199.06 3.80% 219,810,638.04 6.38% -19.69%
Other 338,656,017.38 7.30% 324,811,568.28 9.42% 4.26%
District
Domestic 4,493,091,404.24 96.78% 3,240,202,391.60 94.00% 38.67%
Overseas 149,716,185.45 3.22% 206,940,277.89 6.00% -27.65%
(2)Situation of Industry, Product and District Occupying the Company’s Business Income and Operating Profit
with Profit over 10%
Whether the company needs to comply with the disclosure requirements of the particular industry
No
In RMB
Increase/decre Increase/decr
Increase/decreas ase of ease of gross
Gross e of revenue in business cost profit rate
Turnover Operation cost profit the same period over the same over the same
rate(%) of the previous period of period of the
year(%) previous year previous year
(%) (%)
On Industries
Boiler and power machine
4,170,860,461.92 2,883,329,426.80
manufacture 30.87% 37.61% 31.32% 3.31%
On Products
Industrial steam turbine 3,745,445,441.72 2,584,502,463.97 31.00% 39.09% 29.90% 4.88%
Under circumstances of adjustment in reporting period for statistic scope of main business data, adjusted main
business based on latest on year’s scope of period-end.
Not applicable
(3)Whether the Company’s Physical Sales Income Exceeded Service Income
Change over same
Business categories Items Unit 2018 2017
period last year
Sales Set/package 442 388 13.92%
Steam turbine Output Set/package 451 361 24.93%
Inventory Set/package 180 171 5.26%
Sales Set/package 4 3 33.33%
Gas turbine,
Output Set/package 2 4 -50.00%
compressor
Inventory Set/package 7 9 -22.22%
Statement on change of amounts for over 30% YoY.
The gas turbine and compressor products have a small output and a low proportion in the total products of
our Company. Therefore, the slight change in the absolute production and sales and stock in the period caused a
17
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
large fluctuation in its relative increase and decrease.
(4)Major orders in hand.
Not Applicable
(5)Component of business cost
Product category
In RMB
2018 2017 Increase/De
Category Items Proportion in the Proportion in the crease
Amount Amount
operating costs (%) operating costs (%) (%)
Industrial steam
2,584,502,463.97 80.26% 1,989,579,236.24 81.19%
turbine 29.90%
Casting 109,373,524.81 3.40% 68,739,724.43 2.81% 59.11%
Auxiliary
220,254,043.83 6.84% 91,269,179.11 3.72%
machinery 141.32%
Part 78,572,919.00 2.44% 114,854,559.39 4.69% -31.59%
Other 227,318,868.30 7.06% 186,144,626.62 7.59% 22.12%
Subtotal 3,220,021,819.91 100.00% 2,450,587,325.79 100.00% 31.40%
(6)Whether Changes Occurred in Consolidation Scope in the Report Period
No
(7)Relevant Situation of Significant Changes or Adjustment of the Business, Product or Service in the Company’s
Report Period
Not applicable
(8)Situation of Main Sales Customers and Main Supplier
Information of Main sales customers
Total sales amount to top 5 customers (Yuan) 1,624,183,928.81
Proportion of sales to top 5 customers in the annual sales(%) 34.98%
Proportion of the sales volume to the top five customers in the total sales to the
0.00%
related parties in the year
Information of the Company’s top 5 customers
No Name Amount（RMB） Proportion
1 Customer 1 616,115,825.66 13.27%
2 Customer 2 529,146,968.53 11.40%
3 Customer 3 239,149,941.00 5.15%
4 Customer 4 122,103,261.39 2.63%
5 Customer 5 117,667,932.23 2.53%
Total -- 1,624,183,928.81 34.98%
Notes
18
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Not applicable
Principal suppliers
Total purchase of top 5 Suppliers（Yuan） 757,749,294.63
Percentage of total purchase of top 5 suppliers In total annual purchase(%) 23.98%
Proportion of purchase amount from the top 5 suppliers in the total purchase amount from the
5.49%
related parties in the year
Information about the top 5 suppliers
No Name Amount（RMB） Proportion
1 Supplier 1 267,961,237.04 8.48%
2 Supplier 2 173,472,628.12 5.49%
3 Supplier 3 121,761,368.52 3.85%
4 Supplier 4 106,361,550.64 3.37%
5 Supplier 5 88,192,510.31 2.79%
Total -- 757,749,294.63 23.98%
Notes
Not applicable
3.Expenses
In RMB
Increase/Decrease
2018 2017 Notes
(%)
Sale expenses 174,205,763.02 169,520,147.67 2.76%
Administration
453,278,171.52 433,151,164.67 4.65%
expenses
Mainly due to the increase in
Financial
-17,422,889.91 24,287,127.82 -171.74% interest income and exchange
expenses
gains during the period
Mainly due to the increase in
R & D cost 264,643,888.76 211,027,767.11 25.41% R&D investment in the current
period
4. Research and Development
In 2018, the Company's total investment in R &D was RMB 264,643,888.76, accounting for 5.7% of the
operation revenue. In the industrial steam turbines, the successful project approval and development of such new
products as the largest steam turbine for 1,500,000t/a ethylene unit in the world, methyl alcohol synthesis gas
EHNKS50/50 high rotation speed steam turbine of China National Coal (Erdos) and axial exhaust NKS71/2.8 steam
turbine for PTA waste heat utilization have guaranteed the competitive advantages of the Company's leading
19
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
products in the international market. In the information-oriented development and application, the MES system has
been on line for operation formally, and the industrial Internet application service platform has been constructed.
The deep integration of informatization and industrialization has been accelerated continuously.
R & D investment situation
Increase/Decrease
2018 2017
(%)
Number of Research and Development persons
(persons) 912 887 2.82%
Proportion of Research and Development persons 26.41% 24.43% 1.98%
Amount of Research and Development
264,643,888.76 211,027,767.11 25.41%
Investment (In RMB)
Proportion of Research and Development
5.70% 6.12% -0.42%
Investment of Operation Revenue
Amount of Research and Development
0.00 0.00
Investment Capitalization (In RMB)
Proportion of Capitalization Research and
Development Investment of Research and 0.00% 0.00%
Development Investment
The Reason of the Prominent Change in Total Amount of Research and Development Input Occupying the
Business Income Year on Year
Not applicable
Explanation of the Reason for Substantial Changes in the Research and Development Input’s Capitalization Rate
and Its Reasonableness
Not applicable
5.Cash Flow
In RMB
Increase/Decrease(
Items 2018 2017
%)
Subtotal of cash inflow received from operation
4,382,919,022.39 3,645,358,287.67 20.23%
activities
Subtotal of cash outflow received from
3,738,485,855.19 3,440,055,495.90 8.68%
operation activities
Net cash flow arising from operating activities 644,433,167.20 205,302,791.77 213.89%
Subtotal of cash inflow received from investing
4,717,583,835.95 4,340,596,720.83 8.69%
activities
Subtotal of cash outflow for investment
5,257,955,267.16 4,183,532,647.57 25.68%
activities
Net cash flow arising from investment activities -540,371,431.21 157,064,073.26 -444.05%
Subtotal cash inflow received from financing
246,875,000.00 232,500,000.00 6.18%
activities
20
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Subtotal cash outflow for financing activities 233,036,102.69 281,399,925.68 -17.19%
Net cash flow arising from financing activities 13,838,897.31 -48,899,925.68 128.30%
Net increase in cash and cash equivalents 124,693,982.37 306,255,849.98 -59.28%
Notes to the year-on-year change of the relevant data
Items 2018 2017 Proportion % Reason
Net cash flow arising Mainly due to the increase in sales
from operating activities volume and the increase in cash
644,433,167.20 205,302,791.77 213.89%
received from sales of goods during
the period.
Net cash flow arising Mainly due to the increase in net
from investment activities expenditure on wealth management
-540,371,431.21 157,064,073.26 -444.05% products and the increase in cash paid
for purchase and construction of
projects.
Net cash flow arising Mainly due to the increase in cash
from financing activities received by the casting company in
13,838,897.31 -48,899,925.68 128.30% the current period by absorption of
capital increase from minority
shareholders
Notes to the big difference between cash flow from operating activities and net profit in the reporting year
Not applicable
III.Analysis of Non-core Business
In RMB
Proportion in total Sustainable
Amount Explanation of cause
profit (yes or no)
Mainly due to the investment income of
Investment income 117,535,765.44 25.00% wealth management products and dividends
of Hangzhou Bank this year
Mainly due to the provision for inventory
falling price and the provision for bad debts
based on the aging analysis method of
receivables for various types of raw
Impairment of assets 184,355,819.30 39.22%
materials, self-made semi-finished products,
work-in-progress products, and finished
goods whose estimated net realizable value
is lower than the corresponding book value.
Non-operating income 12,138,431.92 2.58% Mainly due to contract compensation
21
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
income and purchase debt restructuring and
reduction of accounts payable
Mainly due to contract compensation
Non-operating expenses 7,169,435.39 1.53%
expenses
IV.Condition of Asset and Liabilities
1.Condition of Asset Causing Significant Change
In RMB
End of 2018 End of 2017
Proporti Proporti Notes to
on in the on the
Proportion in the
Amount total Amount increase/ significant
total assets(%)
assets(% decrease change
)
Monetary fund 1,382,392,009.59 11.95% 1,222,677,495.94 11.29% 0.66%
Accounts
1,940,798,255.26 16.78% 1,695,217,448.46 15.65% 1.13%
receivable
Inventories 2,188,121,342.87 18.91% 2,092,575,691.92 19.32% -0.41%
Long-term equity
8,221,439.29 0.07% 5,800,000.00 0.05% 0.02%
investment
Fixed assets 783,740,928.49 6.77% 566,710,937.10 5.23% 1.54%
Construction in
454,767,328.93 3.93% 255,921,660.09 2.36% 1.57%
process
Short-term loans 139,600,000.00 1.21% 115,500,000.00 1.07% 0.14%
Long-term loans 22,700,000.00 0.20% 100,000,000.00 0.92% -0.72%
2.AssetandLiabilitiesMeasuredbyFairValue
In RMB
Impairm Purcha Sold
Cumulative
ent sed in inthis
Profit/losson fair fairvalue
provided this repor
Items Opening balance value changes in this changes Closing balance
in this reporti ting
reporting period charged to
Reportin ng perio
equity
g period period d
Financial assets
3.Available-for –sale 1,620,922,484
2,239,086,521.28 -227,209,996.88 2,011,876,524.40
financial assets .40
1,620,922,484
Total of the above 2,239,086,521.28 -227,209,996.88 2,011,876,524.40
.40
Financial Liabilities 0.00 0.00 0 0.00
Significant changes in the measurement attributes of the main assets in this Reporting Period
22
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
No
3. Restricted asset rights as of the end of this Reporting Period
Items End of Book value Reason
Monetary fund 120,205,192.39 Utilized for issuing bank acceptance bill, L/C , L/G and Court freezing payment
Notes receivable 88,112,807.60 Utilized for issuing bank acceptance bill
Dividend receivable 16,557,292.60 Utilized for guaranteeing the investment loan for China Development Funds
Available for salefinancial 333,592,000.00 Utilized for guaranteeing the investment loan for China Development Funds
assets
Fixed assets 121,500,420.99 Utilized for pledging to obtain the bank loan and guaranteeing the investment
loan for China Development Funds
Construction in process 293,963,202.50 Utilized for guaranteeing the investment loan for China Development Funds
Invisible assets 85,918,827.81 Utilized for pledging to obtain the bank loan and guaranteeing the investment
loan for China Development Funds
Total 1,059,849,743.89
V.Investment situation
1. General
Investment Amount in 2018(Yuan) Investment Amount in 2017(Yuan) Change rate
555,376,162.93 249,867,277.94 122.27%
2.Condition of Acquiring Significant Share Right Investment during the Report Period
Not applicable
3.Situation of the Significant Non-equity Investment Undergoing in the Report Period
In RMB
23
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Accrued Reasons for not
Invest Accrued Actual Antici Realized Reaching the
Fixed Investment amount
ment Industry involved in Investment Amount Capital Projectschedul pated Income up to Planned Disclosure Disclosure
Project name investment in this reporting
date Index
meth investment projects up to the End of Source e incom the End of Schedule and
s or not period
od Reporting Period e Reporting Anticipated
Period Income
Steam turbine Self-b General equipment
Yes 109,994,014.28 231,425,262.04 Self funds 100.00% No
building uilt manufacturing
Turbine heavy Self-b General equipment
Yes 362,129,955.27 482,532,051.84 Self funds 27.84% No
industry uilt manufacturing
Total -- -- -- 472,123,969.55 713,957,313.88 -- -- 0.00 0.00 -- -- --
24
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
4.Investment of Financial Asset
（1）Securities investment
In RMB
Mode of Purchase Sale Sauc
Gain/los
Stock accounti Book value balance at Cumulative fair amount amount Book value balance e of
Security Security Initial investment Changes in fair value s of the Accounting
Abbreviati ng the beginning of the value changes in in the in the at the end of the the
category code cost of the this period reportin items
on: measure reporting period equity this this reporting period shar
g period
ment period period es
Domesti Financial
Self
c and Hangzhou assets
600926 390,954,040.00 FVM 2,239,086,521.28 -227,209,996.88 1,377,784,111.74 2,011,876,524.40 fund
foreign Bank available for
s
stocks sale
Total 390,954,040.00 -- 2,239,086,521.28 -227,209,996.88 1,377,784,111.74 0.00 0.00 0.00 2,011,876,524.40 -- --
Disclosure Date of
Announcement on Securities
Investment Approved by the
Board of Directors
Disclosure Date of
Announcement on Securities
Investment Approved by the
Shareholders Meeting(If any)
25
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
（2）Investment in Derivatives
The Company had no investment in derivatives in the reporting period.
5.Application of the raised capital
Nil
26
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
VI.Significant Asset and Right Offering
1.SituationofSignificantAssetSale
Nil
2.Sales of major equity
Not applicable
Ⅶ.Analysis of the Main Share Holding Companies and Share Participating Companies
Situation of Main Subsidiaries and the Joint-stock Company with over 10% net profit influencing to the Company
In RMB
Company Sectors
Name Registered capital Total assets Net assets Turnover Operating profit Net Profit
type engaged in
Zhejiang Steam Turbine Packaged Trade of
Subsidiaries 51,000,000.00 272,775,507.88 89,106,117.14 220,230,100.85 12,599,099.02 11,113,668.04
Technology Development Co., Ltd. packadged
Hangzhou Zhongneng Steam Turbine Manufacturi
Subsidiaries 92,500,000.00 1,177,919,594.93 358,370,751.87 988,083,271.30 79,280,956.58 70,253,285.20
Power Co., Ltd. ng
Hangzhou Steam Turbine Casting Co.,
Subsidiaries Casting 29,500,000.00 613,474,956.73 244,452,732.22 446,900,632.40 13,365,680.61 12,800,550.85
Ltd.
Hangzhou Steam Turbine Machinery & Manufacturi
Subsidiaries 30,000,000.00 253,677,936.65 154,002,383.08 242,356,767.43 65,994,727.07 50,543,093.33
Equipment Co., Ltd. ng
Hangzhou Steam Turbine Auxiliary Manufacturi
Subsidiaries 80,000,000.00 752,951,907.69 203,604,911.49 568,575,713.37 567,875.91 1,087,673.40
Machine Co., Ltd. ng
Zhejiang Turbine Import & Export Co., Commerce
Subsidiaries 20,000,000.00 201,437,840.18 50,430,712.02 150,756,529.28 4,239,419.26 3,869,102.43
Ltd. & trade
Hangzhou Steam Turbine Heavy Industry Manufacturi
Subsidiaries 558,966,865.00 601,979,851.73 586,469,638.31 124,421,761.96 3,514,934.14 2,599,390.62
Co., Ltd. ng
Subsidiaries obtained or disposed in the reporting period
Not applicable
27
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
VIII.Special purpose vehicle controlled by the Company
Notapplicable
IX. Development prospect
(I) Development and competition of the whole industry
The company, which is a leading domestic industrial turbomachinery equipment and service provider, mainly
designs, manufactures and sells rotary industrial turbines such as industrial steam turbines and gas turbines. Its
business activities are closely related to the macroeconomic situation, fiscal and monetary policies, industrial
investment scale and the economic prosperity of the industry.
Recently, in the context of rapid scientific and technological progress, the global industrial revolution has
accelerated the expansion of new energy applications, and the global energy structure is experiencing the
unprecedented profound changes. Simultaneously, the Sino-US trade friction, Brexit, interest rate increase by FED
and the intensified geopolitical conflicts in the Middle East, Latin America, etc. have largely raised the uncertainties
of international trade and investment market, and the risk aversion of investors has flown high, resulting in a
turbulent situation in the course of economic development for lots of economic entities, which have caused the
complicated external environmental influence faced by the industrial development.
At present, our national economy are still in the key phase to promote the high-quality development relying on
structural adjustment, transformation and upgrading. Under the effect of a series of national policies to reduction
taxes, stabilize the growth and promote the real economy development, the basic energy, chemical engineering,
metallurgy, power, building materials and other industries have gradually risen from the valley bottom. With the
new industrial investments poured in and the obvious investment recovery particularly in such fields as coal
chemical industry, oil refining, photovoltaic power generation and ethylene, excellent market opportunities have
been brought to the main business development of the Company. The Company has successively obtained the orders
for the 10,000,000t oil refining projects of Dalian Hengli, Zhejiang Petrochemical, Zhongke Zhanjiang, etc. and for
1,000,000t ethylene projects of Yantai Wanhua and Satellite Petrochemical with lots of benefits. However, it
remains doubtful for the "small spring" for the construction investments in the petrochemical engineering and coal
chemical industry, and the excess production capacity of the steam turbine industry in China and even the world is
still severe. After the comprehensive suspension of domestic large-scale thermal power construction, the large
machine plants at home and abroad have entered the small machine market one after another, and the all-out price
war among foreign companies and us are getting worse. The future market competition will be more cruel certainly.
With the continuous promotion of such strategies as the Belt and Road Initiative, Strategic Action Plan for
Energy Development (2014-2020), the enhancement in the demands for solar thermal power generation, nuclear
power, biomass power generation, coal-to-liquids, coal gas, integrated utilization of waste heat and waste gas and
distributed energy resources has brought giant industrial opportunities, and the new market demands are emerging
constantly. The competition among domestic backbone steam turbine manufacturers and international giants is
getting more and more intense. The Company will rank as one of the world-class turbine machinery and service
suppliers only by speeding up the enterprise transformation and upgrading, intensifying the technological
28
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
innovation and independent research and development, accelerating the market development and cooperation in the
gas turbine distributed energy field, promoting the intelligent manufacturing and industrialization of manufacturing
services, making high-end competitive products and building the brand advantages.
(II) Development strategy
The core of the company’s “13th Five-Year Plan” development strategy is to speed up the transformation of
the company and, in overall, to achieve the technological model innovation and business model innovation.
In the technological model innovation, the company will further increase the strength of innovation-driven,
combine independent innovation and technology introduction and advance in multiple lines in industrial turbines,
gas turbines, distributed energy, and nuclear power fields, and the company will actively capture the market
demand and strive to realize the major technology and market breakthroughs in the fields of gas turbines and
nuclear power.
In terms of business model innovation, the company will realize the extension from the enterprise value
management process to the customer value creation process and realize the transition from production-oriented
manufacturing to service-oriented manufacturing, and upgrade the company to become a whole-set equipment
manufacturer and a system operator from the single product manufacturer, thus to finally shape the ability of
providing and implementing the comprehensive overall solutions.
On the basis of consolidating the position in the industrial steam turbine market, the Company will accelerate the
gas turbine business, strengthen the nuclear power business, expand the service and engineering business, and
form four major business sectors. At the same time, the company will rely on the five major supporting projects
namely the quality project, the resource integration, process reengineering, management improvement and
informatization project to shape the company's new core competitiveness.
(III) Business plan
2019 is the 70th anniversary of the founding of New China, and it’s a decisive year for the Company's
relocation and construction, as well as is a key year for the Company to implement transformation and upgrading.
The company will adopt the "cohesive strategy, comprehensive relocation, deepening management, and thickly
cultivated culture" as its annual work policy, adhere to the strategy as the key point, stick to cultural leadership
and innovation driven, continuously perfect the management and persist in transformation and upgrading to
promote development.
The company will adhere to the "13th Five-Year Plan" as the development guiding principle, explore ways to
change corporate systems and mechanisms, and accelerate the implementation of transformation and upgrading to
promote development.
Also, it will actively explore the complete set of business, extend the industrial layout, advance to the
high-end of the industrial chain, and gradually realize the transformation from production-oriented manufacturing
to service-oriented manufacturing, and become a service-oriented manufacturing enterprise integrating product
manufacturing, engineering complete sets and overall solutions.
2. Comprehensive Relocation
The company will follow the planning and coordination of the relocation and construction work directed by
the higher-level government departments, organize the construction and relocation work in an orderly manner, and
ensure that the relocation and construction will be completed smoothly and orderly. It will coordinate the
relationship between relocation and production capacity to ensure the successful completion of contracted product
tasks, do a good job in the selection and procurement of new equipment, further improve the installation and
29
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
commissioning plan for newly-added and relocated equipment, obtain all the resources needed for installation and
relocation, thus to ensure that the steam turbine heavy machine company will be put into operation as soon as
possible.
Plus, it will strengthen the connection between production and marketing, improve the supply chain support
capability, balance the internal and external supply capacity, and strengthen the supply chain process management
and quality control.
Further adjust and improve the integration of production line organization and function, gradually build a
manufacturing and production organization framework compatible with the new production organization of the
new plant after relocation, optimize the operation process, strengthen the integration of the manufacturing process,
and improve the agility and efficiency of manufacturing and improve the rapid response ability.
3. Innovation Driven
According to the product technology development strategy, the Company will focus on the research &
development and service of Dalian Hengli 1.5 million tons/year ethylene unit; promote the landing and
development of the first subcritical unit; promote the one-button start-stop, digital delivery, and improve the
assembly technology including the engineering materials, packaging and transportation, installation and use of
software and the specifications; vigorously carry out remote operation and maintenance service system and roll
out the industrial interconnection service application projects; carry out the product quality big data work,
improve the inspection technical specifications; and actively explore the technical research for gas turbine parts.
4. Consolidating the Market
The Company will increase the research efforts focusing on key areas, key customers and key projects,
strengthen the integration work of marketing and branding, continuously improve the project execution level and
innovate the marketing model. It will continuously expand the product application areas and seek more
development opportunities in energy-saving applications and new energy fields.
5. Deepening the Management
Deeply promote the three management projects of “lean production”, “management integration” and “key
management tasks of the year”, and further strengthen the precision management ability on marketing, technology,
technical process, manufacturing, functional management and other processes.
Continue to promote the construction of ERP, PLM, MES, industrial Internet of Things and other
informatization projects, explore 5G applications, deepen MES applications and the second-phase development,
actively carry out the ERP solution planning, promote the Company's hybrid cloud planning program and advance
the supplying code program of purchased parts, guiding the Company's transition from traditional manufacturing
to smart manufacturing.
Drive the improvement of the Company's accounts receivable management model, focus on the recovery of
long-aged receivables, and pay attention to the control and professional role of financial and legal solution in
overdue accounts receivable.
6. Thickly-cultivated Culture
Adhere to the innovation driven, promote the cultural construction and brand creation in the new era for
Hangzhou Steam Turbine, systematically strengthen the construction and management of the talent team, further
30
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
improve the assessment and incentive system, and achieve business empowerment, brand enhancement, and talent
advancement.
Enhance the depth and thickness of the culture, and by centering on the relocation and construction of the
new plant and the strategic transformation of the “13th Five-Year Plan”, continue to promote the corporate culture
construction project, deepen and refine the core cultural values of the enterprise, establish a scientific corporate
culture management system with continuous reviewing and continuous improvement , promote the Company's
brand building, establish a unified, standardized and unique corporate image, cultivate the employees' sense of
identity, pride and belonging, create a trustworthy brand image and promote the business development.
(IV) Risks analysis
1.Market Risks
In view of distinct excess production capacity of domestic turbines, the market competition will be further
intensified, and the product distribution of the Company will be further impacted.Relying on technological
innovation, the company will actively highlight the core technology advantages, expand the marketing channels,
improve the product quality, enhance the end service capabilities, continuously increase the added-value of
products and vigorously tap into the potential demands to positively respond to the market and defuse the market
risks.
2. Contract execution risk
As the market volatility becomes more intensified, there are more frequent changes in the contract during the
execution of the contract for the company, and delays and suspensions of the project schedule happen from time to
time, which will have a large impact on the internal realization process of production of the company, and
meanwhile it also increases the cost of the company’s contract performance and the contract risk. The company
will further strengthen the connection between production and sales, improve the speed and level of the company's
response to the market, and well control the contract execution risk.
3. Accounts receivable risk
With the increasing risk in the business downturns and investment projects in some customers of the
downstream industry, the company's receivables recovery has more risk, and the average age of accounts tends to
increase, which will have a large impact on the company's operating results. The company will implement the
customer credit management, strengthen the contract signing and perform the risk control, increase the assessment
of accounts receivable, and reduce the adverse impact of overdue receivables.
4. Exchange rate risk
In 2018, the Sino-US trade friction was continuously upgraded. In 2019, the international markets remain
volatile.The expansion of the company's international procurement and international sales business will cause the
company's international balance of payments to be affected by exchange rate fluctuations, and there is a certain
risk of exchange loss. With the increase in the two-way volatility of the RMB exchange rate, the uncertainty of
foreign exchange gains and losses has been increased. The company will refer to the exchange rate volatility cycle
and adopt appropriate exchange rate risk management tools to minimize exchange loss.
5. The company's profitability decline risk
With the adjustment and changes in the market structure, the product structure of the Company in 2019 has
been changed compared with that in 2018. There is a risk that the Company's operating sales will decline in 2019
with fluctuation in the profitability of products at the same time. the Company will strive to improve the internal
management, reduce the operating costs and increase the operational efficiency to resolve the risk of declining
31
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
profitability.
6. Overseas market risk
During the "Thirteenth Five-Year Plan" period, the company will vigorously implement the "go global"
strategy, further expand overseas target markets, and increase the company's share and influence in the
international market. However, at present, the overseas target market is affected by geopolitical conflicts,
unpredictable changes of internal political and economic situation and trade barrier policies in the region, thus
there is great uncertainty in the implementation of overseas market strategies. The company will increase market
research efforts, actively demonstrate countermeasures, and explore the development path of business localization.
7. Operating environment change risk
The plant will be comprehensively relocated in 2019 for the Company with inevitable large impact and influence on
the manufacturing. Although the company will formulate the plans of relocation safety, security and emergency
countermeasures to avoid various issues arising from the equipment disassembly, cargo transportation and storage,
turnover and so on, the possibility of various types of personnel injuries, loss of goods and instability incidents
will still exist in the relocation process. Therefore, the company will ensure the smooth and orderly
implementation of all aspects of comprehensive security, safety production and logistical support in the relocation
and reconstruction process.
X. Particulars about researches, visits and interviews received in this reporting period
1.Particulars about researches, visits and interviews received in this reporting period
Reception time Way of reception Types of visitors Basic index
Onsite Details are the relevant information disclosure
April 26,2018 Organization
investigation
（http://www.cninfo.com.cn/）
Onsite Details are the relevant information disclosure
June 13,2018 Organization
investigation
（http://www.cninfo.com.cn/）
Onsite Details are the relevant information disclosure
June 27,2018 Organization
investigation
（http://www.cninfo.com.cn/）
Onsite Details are the relevant information disclosure
July 13,2018 Individual
investigation （http://www.cninfo.com.cn/）
Reception times 4
Reception agency amount 3
Reception personal number 1
Others 0
Whether to disclose, reveal or disclose non-public material
No
information
32
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
V. Important Events
I. Specification of profit distribution of common shares and capitalizing of common reserves
Formulation, implementation and adjustment of profit distribution policy of common shares especially cash
dividend policy during the reporting period
1. [Dividend sharing principle]: Keep profit distribution policy continuous and stable, pay enough attention
to the ROI of investors, and give reasonable consideration to our long-term profits, overall profits of all
shareholders and sustainable development;
2. [Prioritized cash dividend]: Dividend can be allotted either in cash, stock or in combination of cash and
stock, the precondition of which is the company is in profitable state, plentiful in cash flow, and sustaining
operation and long-range development are well guaranteed;
3. [Solicit suggestions and demands of independent director and medium and small shareholders]: The board of
directors will work out a specific dividend sharing plan by giving sufficient consideration to business operation,
development stage, earning performance, cash flow and current capital requirements and taking medium and small
shareholders’ views into account. Later, the plan is submitted to the shareholders’ general meeting for deliberation
after listening to opinions of independent directors. The general meeting is supposed to take advantage of varieties
of channels to contact and exchange ideas with shareholders, especially with medium and small shareholders, give
ear to their suggestions and demands and get well prepared for answering the problems they are concerned about
4. [Dividend sharing cycle]: Dividend is distributed among shareholders based on an annual cycle as a
general rule. We will publish the dividend sharing plan within four months after accounting year and put the plan
into practice within two months after deliberation of the shareholders meeting;
5. [Ration of dividend sharing]: The profits accumulated in cash in the last three years are not less than 30%
of annual average distributable profits in the same year;
6. 【Decision-making procedure of dividend sharing】: In the light of Articles of Association, the dividend
sharing plan is proposed by the board of directors, and submitted to the shareholders meeting for consideration
after being deliberated and approved by the board of directors and commented by the independent directors;
7. 【Adjustment process of dividend policies】: For the profit distribution policies that need to be adjusted
according to the business operation, investment planning and long-term development, the adjusted profit
distribution policies shall not violate the relevant provisions of CSRC (China Securities Regulatory Commission)
and the stock exchange. The proposals regarding the adjustment of profit distribution policies should seek advice
from the independent directors and board of supervisors, and they shall be deliberated by the board of directors
and then submitted to the general meetings. The proposals need to receive more than 2/3 of the voting rights held
by the shareholders attending the general meetings before implementation.
Special cash dividend policy description
Whether meets the requirements of the provisions of the articles of association or shareholders' meeting resolutions: Yes
Whether dividends standard and proportion are clear Yes
Whether decision making and supervision mechanism for profit distribution are completed Yes
Whether independent directors perform their duties responsibly and play its due role: Yes
33
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Whether the Minority shareholders have adequate opportunity to express their views and aspirations and Their legitimate
Yes
rights and interests have been fully protected
Whether the Cash dividend policy to adjust or change the conditions and procedures are compliant and transparent Yes
The profit distribution preplan or proposal and the preplan or proposal of conversion of the capital reserve into
share capital in the past three years(with the reporting period inclusive):
The dividend plan for year 2018 was basing on the total capital share of 754,010,400, RMB 2.00 and 0 bonus
share will be distributed to each 10 shares. No capitalization of common reserves will be carried out. Totally
RMB150,802,080.00(tax included) will be distributed.
The dividend plan for year 2017 was basing on the total capital share of 754,010,400, RMB 0.5 and 0 bonus
share will be distributed to each 10 shares. No capitalization of common reserves will be carried out. Totally
RMB37,700,520.00 will be distributed.
The dividend plan for year 2016 was basing on the total capital share of 754,010,400, RMB 0 and 0 bonus
share(tax included) will be distributed to each 10 shares. No capitalization of common reserves will be carried out.
Totally RMB0 will be distributed.
Dividend distribution of the latest three years
In RMB
Ratio of the
total cash
bonus (other
Amount
ways
Ratio in net of cash
included) in
Net profit profit dividend
Proportion of cash net profit
Amount for attributable to the attributable to s from Amount for
dividends from attributable
cash bonus over of the parent the parent cash cash bonus
Year cash offer to to common
(tax company in the company in the offer to (tax
repurchase shares stock
included) consolidated consolidated repurcha included)
of the funds shareholders
financial statements financial se shares
of listed
statements of the
company
funds
contained in
consolidation
statement
2018 150,802,080.00 345,824,339.47 43.61% 0.00 0.00% 150,802,080.00 43.61%
2017 37,700,520.00 68,753,250.90 54.83% 0.00 0.00% 37,700,520.00 54.83%
2016 0.00 31,955,445.73 0.00% 0.00 0.00% 0.00 0.00%
In the reporting period, both the Company’s profit and the parent company’s retained earnings were positive
however not cash dividend distribution proposal has been put forward.
Notapplicable
II. Profit distribution for the report period.
Bonus shares distributed at the rate of _(share)for every 10 shares 0
Dividend distributed at the rate of CNY___ for every 10 shares
2.00
(with tax inclusive)
34
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Number of shares converted for every 10 shares (shares) 0
Share capital base for the dividend distribution preplan (shares) 754,010,400
Total cash dividend distributed (with tax inclusive) 150,802,080.00
Amount of cash dividend distributed in other way(s) (such as
0.00
shares repurchased)
Total amount of cash dividend (including other way(s)) 150,802,080.00
Profit available for distribution (CNY) 2,602,026,967.56
Proportion of the cash dividend in the total profit available for
100%
distribution (%)
Cash dividend distribution policy
Where the distribution of profits is carried out in the company's development stage that belongs to a mature stage and there is
significant capital expenditure arrangement, the proportion of cash dividends in this profit distribution shall be at least 40%.
Details of profit distribution or reserve capitalization plan
Not applicable
III. Commitments to fulfill the situation
1.The fulfilled commitments in the reporting period and under-fulfillment commitments by the end of the
reporting period made by the company, shareholder, actual controller, acquirer, director, supervisor, senior
management personnel and other related parities.
Nil
2.The existence of the company's assets or projects earnings forecasts and earnings reporting period is still in the
forecast period, the company has assets or projects meet the original profit forecast made and the reasons
explained
Not applicable
IV.Particulars about the non-operating occupation of funds by the controlling shareholder
Nil
V.Explanation of the Supervisory Committee and Independent Directors (If applicable)on the Qualified Auditor’s
Report Issued by the CPAs.
Not applicable
VI.Explain change of the accounting policy, accounting estimate and measurement methods as compared with the
financial reporting of last year.
1. The Company has prepared the 2018 financial statements as required in the Notice of the Ministry of
Finance on Revising and Issuing the Format of 2018 General Enterprise Financial Statements (CK [2018] No. 15)
and its interpretation as well as the Accounting Standards for Business Enterprises, and the retroactive adjustment
approach has been applied in the changes in accounting policies. The report items and amounts in 2017 financial
statements subject to great influence are listed below:
In RMB
35
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Items and amounts of the original statements Items and amounts of the new statements
Notes receivable 715,410,887.68 Notes receivable % Account
2,410,628,336.14
Account receivable 1,695,217,448.46 receivable
Dividend receivable 6,900,000.00
Other receivable 23,805,005.57
Other receivable 16,905,005.57
Notes payable 215,409,958.92 Notes payable & account
1,098,125,424.57
Account payble 882,715,465.65 payable
Interest payable 268,860.77
Other payable 28,128,478.10
Other payable 27,859,617.33
Long-term payable 209,633,466.66
Long-term payable 447,292,297.73
Special payable 237,658,831.07
Administration exprenses 433,151,164.67
Administration exprenses 644,178,931.78
R & D cost 211,027,767.11
2. The Ministry of Finance issued the Interpretation of Accounting Standards for Business Enterprises No. 9 -
Accounting Treatment of Net Investment Losses Under Equity Method, Interpretation of Accounting Standards for
Business Enterprises No. 10 - Depreciation Method Based on Income from Use of Fixed Assets, Interpretation of
Accounting Standards for Business Enterprises No. 11 - Amortization Method Based on Income from Use of
Intangible Assets and Interpretation of Accounting Standards for Business Enterprises No. 12 - Whether the
Provider and Receiver of Key Manager Services Are Related Parties in 2017. Since January 1, 2018, the Company
has executed the above interpretations of the Accounting Standards for Business Enterprises without any influence
on the initial financial data of the Company.
VII.Explain retrospective restatement due to correction of significant accounting errors in the reporting period
Nil
VIII.Explain change of the consolidation scope as compared with the financial reporting of last year.
Nil
IX. Engagement/Disengagement of CPAs
CPAs currently engaged
Pan-China Certified Public Accountants (Special
Name of the domestic CPAs
common partnership)
Remuneration for domestic accounting firm（In RMB 10,000） 116
Successive years of the domestic CPAs offering auditing services 20
Names of the certified public accountants from the domestic CPAs Jiang Xiaodong , Ye Xiaobin
Successive years of the domestic CPAs offering auditing
2
services
Name of the Overseas CPAs No
36
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Remuneration for overseas accounting firm（Ten thousands） 0
Successive years of the overseas CPAs offering auditing services No
Names of the certified public accountants from the overseas CPAs No
Successive years of the overseas CPAs offering auditing services No
Has the CPAs been changed in the current period
No
Engaging of CPA for internal auditing, financial consultants or sponsors
Pan-China Certified Public Accountants is engaged the auditor of internal control system for the current year.
With payment of RMB 0.26 million for its service.
X.Situation of Facing Listing Suspension and Listing Termination after the Disclosure of the Yearly Report
Not applicable
XI. Receivership and bankruptcy
No bankruptcy or capital reorganizing issues occurred in the report period.
XII. Major lawsuits and arbitrations
Till the end of the report period, the Company's sum involved in other proceedings that did not hit the standard for
disclosure of major proceedings was RMB 57.5385 million .
XIII. Punishment and improvement
Nil
XIV.Credit Condition of the Company and its Controlling Shareholders and Actual Controllers
Nil
XV. Implementation Situation of Stock Incentive Plan of the Company, Employee Stock Ownership Plan or
Other Employee Incentive Measures
Nil
37
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
XVI. Material related transactions
1. Related transactions in connection with daily operation
Wheth
er over
Principle Trading
the
of limit Market
Index of
Subjects of pricing Amount of Ratio in approv price of
Price of Way of informatio
Related parties Relationship Type of trade the related the trade similar approved similar Date of disclosure
trade payment n
transactions related RMB0’000 trades ed trade
disclosure
transacti （RMB10 available
ons limited
,000)
or not
(Y/N)
Hangzhou Hangfa 16,375.1 Not
Affiliate of the Purchase of Fair and Market
Power Generating Generator 17,347.26 Yes Bank transfer January 29,2019 2019-08
Group goods just price 9
Equipment Co., Ltd. applicable
Hangzhou Steam
Freight, repair Not
Turbine Automobile Affiliate of the Fair and Market
Sales Service Co., Group Labor services cost, Rental just price
5,589.24 5,567.18 Yes Bank transfer January 29,2019 2019-08
fee applicable
Ltd.
SteamTurbine
Hangzhou Steam
, parts,
Turbine Affiliate of the Labor services/ Fair and Market Not
compressor, just price
5,089.19 5,089.19 No Bank transfer January 29,2019 2019-08
Engineering Co., Group selling goods applicable
Installation
Ltd.
services
27,031.5
Total -- -- 28,025.69 -- -- -- -- --
6 --
Details of any sales return of a large amount No
Give the actual situation in the report period where a forecast had
No
been made for the total amounts of routine related-party
38
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
transactions by type to occur in the current period(if any)
Reason for any significant difference between the transaction price
No
and the market refernce price (if applicable)
2. Related transactions in terms of acquisition or disposal of assets:
Not applicable
3. Related transactions in term of collective external investment
Not applicable
39
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
4. Debts and credits with related parties
Nil
5. Other material related transactions
1.The company and Hangzhou Steam Turbine Power Group Co., Ltd. and Shanghai Relian Steel Trading Co., Ltd.
jointly invested Hangzhou Juyuan Asset Management Co., Ltd., signed the "Jianyuan Xinxing No.9 Private Equity
Fund" fund contract, and used its own funds to subscribe the fund-share of Jianyuan Xinxing No.9 Private Equity
Fund.
The website to disclose the interim announcements on significant related-party transactions
Inquiry on the website for disclosing the provisional report concerning significant related transactions
Inquiry on the website for
disclosing the provisional report
Date of disclosure Disclosure website
concerning significant related
transactions
(www.cninfo.com.cn)
Announcement on Overseas April 26,2018
（Announcement No.2018-35）
Investment Subscription Contract
(www.cninfo.com.cn)
Fund and Related Transactions May 23,2018
（Announcement No.2018-41）
XVII. Material contracts and execution
1. Entrustment, contracting, and leasing issues
(1) Trusteeship
No trusteeship in the report period.
(2) Contracting
No contracting in the report period.
(3) Leasing
No Leasing in the report period.
2.Guarantees
（1）Guarantees
In RMB 10,000
Outward guarantees offered by the Company and its subsidiaries (Excluding guarantee to the subsidiaries）
Actual
Amount of Amount of Actual date of amount Related
Guarantee Type of Complet
guarantee and date the occurring (signing of Term guarant
provided to guarantee ed or not
of disclosure guarantee date of agreements guarant ee
ee
Hangzhou Steam Two years from the
Turbine Power October 22,2016 20,800 December 28,2016 20,800 Mortgage, date of expiration of No Yes
Group Co., Ltd. the principal debt
40
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Total amount of
Total amount of outward
outward
guaranteeapproved in the report period 0 20,800
guaranteeapproved in
（A1）
the report period（A1）
Total of external
Total of external guarantee guarantee
20,800 20,800
approved at Period-end(A3) approved at
Period-end(A3)
Guarantee of the Company for the controlling subsidiaries
Guarant
Compl
Relevant ee
Date of Actual ete
disclosure Amount for
Name of the happening mount imple
date/No. of of Guarantee associat
Company (Date o of Guarantee term mentat
the guarante type ed
guaranteed signing guarante ion
guaranteed e parties
agreement) e or
amount (Yes or
not
no)
Two years from the
Hangzhou Steam
The joint date after the
Turbine Auxiliary
January 27,2018 2,000 January 29,2018 1,900 liability expiration of the loan No No
Machinery Co.,
guaranty period under the
Ltd main contract
Hangzhou Steam The joint Two years from the
Turbine Casting June 26,2018 3,000 April 4,2018 3,000 liability date of expiration of No No
Co., Ltd. guaranty the principal debt
Hangzhou Steam The joint Two years from the
Turbine Casting June 26,2018 2,000 June 29,2018 1870 liability date of expiration of No No
Co., Ltd. guaranty the principal debt
Total of actual guarantee
Total of guarantee for subsidiaries
7,000 for subsidiaries in the 6,770
approved in the Period (B1)
Period (B2)
Total of actual guarantee
Total of guarantee for subsidiaries
7,000 for subsidiaries at 6,770
approved at Period-end (B3)
Period-end (B4)
Guarantee of the subsidiaries for the controlling subsidiaries
Guarant
Compl
Relevant ee
Date of ete
disclosure Amount for
Name of the happening Actual imple
date/No. of of Guarantee associat
Company (Date o mount of Guarantee term mentat
the guarante type ed
guaranteed signing guarantee ion
guaranteed e parties
agreement) or
amount (Yes or
not
no)
Hangzhou Joint liability Two years from
June 12,2018 7,000 March 28,2018 4,561.54 No No
Guoneng Steam quaranty the date of
41
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Turbine expiration of the
Engineering Co., principal debt
Ltd.
Hangzhou Two years from
Guoneng Steam the date after the
Joint liability
Turbine June 12,2018 10,000 May 23,2018 6,326.06 expiration of the No No
quaranty
Engineering Co., loan period under
Ltd. the main contract
Total amount of guarantee to
Total guarantee quota to the subsidiaries the subsidiaries actually
17,000 10,887.59
approved in the reporting period (C1) incurred in the reporting
period (C2)
Total balance of actual
Total guarantee quota to the subsidiaries
guarantee to the subsidiaries
approved at the end of the reporting 17,000 10,887.59
at the end of the reporting
period (C3)
period (C4)
Total of Company’s guarantee（namely total of the large three aforementioned）
Total of guarantee in the Period Total of actual guarantee in
24,000 17,657.59
（A1+B1+C1） the Period（A2+B2+C2）
Total of actual guarantee at
Total of guarantee at Period-end
44,800 Period-end 38,457.59
（A3+B3+C3）
（A4+B4+C4）
The proportion of the total amount of actually guarantee in the net
6.4%
assets of the company(A4+B4+C4)
Including ：
Amount of guarantee for shareholders, actual controller and its
associated parties（D） 20,800
The debts guarantee amount provided for the
Guaranteed parties whose assets-liability ratio exceed
70% directly or indirectly（E） 10,887.59
Proportion of total amount of guarantee in net assets of the company
exceed 50%（F） 0
Total guarantee Amount of the abovementioned guarantees（D+E+F） 31,687.59
Explanations on possibly bearing joint and several liquidating
No
responsibilities for undue guarantees ( If any)
Explanations on external guarantee against regulated procedures(If any) No
Description of the guarantee with complex method
Hangzhou Heavy Machinery Co., Ltd, which is the company's subsidiary, had made an application of special
construction funds of 208 million to China Development Fund Co.,Ltd, and it has signed the four-party China
Development Fund Investment Contract with China Development Fund ,the company and Hangzhou Steam
Turbine Group Co.,Ltd. In order to ensure the performance of the "Investment contract" by Hangzhou steam
group, the company and the Heavy Machinery Co., Ltd provide guarantee for Hangzhou Steam Group in the
forms of pledge and mortgage. The contents is detailed in the Announcement on External Guarantee of Hangzhou
Steam Turbine Co., Ltd. announced on October 22, 2016 at the website designated by the Shenzhen Stock
Exchange (http // www.cninfo.com.cn). (Announcement No. 2016-75)
42
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
（2）Illegal providing of external guarantees
No illegal providing of external guarantees in the report period.
43
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
3.Situation of Entrusting Others for Managing Spot Asset
(1)Situation of Entrusted Finance
In RMB 10,000
Type Source Amount Unexpired balance Overdue amount
Bank financing
Idle own funds 110,756.8 91,567 0
product
Trust financing
Idle own funds 28,620 24,120 0
product
Total 139,376.8 115,687 0
Specific Circumstance of Trust Investment which is large in single amount, low in security, poor in liquidity or unguaranteed in high risk
In RMB 10,000
Whe
Actual
ther
recovery Summar
or
Way Referent Actual of Is there y of
Name of Type of Provisio not
Type of ial profit or profits a matters
Trustees Trustees Prospectiv n for due
of Date of Date of Confir Annuali loss for and commiss and
(or (or Amount Source Capital Investment Orientation e Yield impairm proc
Produc Beginning Expiry ming zed the losses ion plan related
Entrustees Entruste (if any) ent (if ess
tion Rewar Yield reporting during in the query
) es) any) has
ds Rate period the future Index (if
been
reportin any)
follo
g period
wed
Trust Funds with dispersed investment
Investm will be invested for real estate
Hangzhou ent claims,other claims;publicly-raising
Disposal Floatin
Industrial manage July March bond, privately-raising bond;debt funds;
Trust 5,000 of own g 6.50% 228.84 229.95 229.95 Yes No
&Commer ment 6,2017 20,2018 publicly-raising equity instrument,
capital profit
cial Trust compan privately-raising equity instrument;
y short-term debt instrument ,
high-liquidity debt instrument
44
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
The trust capital will be invested for the
Investm
contribution for Shanghai Jin Mu Yuan
ent
Disposal Investment Partnership(Limited Floatin
Zhongron manage June June
Trust 5,000 of own Partnership), contributing the g 7.20% 360 360 360.00 Yes No
g Trust ment 22,2017 22,2018
capital partnership shares of priority to become profit
compan
the partnership of priority of Shanghai
y
Jin Mu Yuan Investment
Trust Funds with dispersed investment
Investm will be invested for real estate
Hangzhou ent claims,other claims;publicly-raising
Disposal Floatin
Industrial manage March March bond, privately-raising bond;debt funds;
Trust 10,000 of own g 7.50% 729.45 0 0 No No
&Commer ment 30,2018 20,2019 publicly-raising equity instrument,
capital profit
cial Trust compan privately-raising equity instrument;
y short-term debt instrument ,
high-liquidity debt instrument
Mainly through equity investment and
right of return on equity among other
methods, trust funds are invested in good
Investm
enterprises and projects in minerals,
ent
Disposal energy, and policies and Floatin
Zhongron manage February2 April
Trust 5,000 of own g 7.60% 380 0 0 Yes No
g Trust ment 4,2018 24,2019 countermeasures for people's livelihood
capital profit
compan
and as funds are idled, trust funds can be
y
used through claims, convertible bonds,
and investment in the beneficiary right
of trust.
Disposal Money market, fixed income, Floatin
CITIC Financ August February2
Bank 7,000 of own non-standardized creditor's assets and g 4.90% 171.03 171.03 171.03 Yes No
Bank ing 25,2017 3,2018
capital other categories profit
Disposal Floatin
Hangzhou Financ December March Highly liquid assets , bond assetsand
Bank 8,000 of own g 4.90% 96.66 96.66 96.66 Yes No
Bank ing 18,2017 8,2018 Equity assets
capital profit
Disposal Financial instruments with a sound Floatin
Everbright Financ January April
Bank 10,000 of own return and liquidity include bank g 5.10% 131.34 131.34 131.34 Yes No
Bank ing 5,2018 9,2018
capital deposits, monetary market instruments, profit
45
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
bond products, other income assets and
initial public offerings among others
Financial instruments with a sound
Disposal return and liquidity includebank Floatin
Everbright Financ March June
Bank 10,000 of own deposits, monetary market instruments, g 5.10% 131.34 131.34 131.34 Yes No
Bank ing 2,2018 4,2018
capital bond products, other income assets and profit
initial public offerings among others
Disposal Floatin
Hangzhou Financ March June Highly liquid assets , bond assetsand
Bank 10,000 of own g 5.25% 130.89 130.89 130.89 Yes No
Bak ing 7,2018 6,2018 Equity assets
capital profit
Financial instruments with a sound
Disposal return and liquidity includebank Floatin
Everbright Financ March June
Bank 10,000 of own deposits, monetary market instruments, g 5.10% 128.55 128.55 128.55 Yes No
Bank ing 13,2018 13,2018
capital bond products, other income assets and profit
initial public offerings among others
Disposal Floatin
Hangzhou Financ March June Highly liquid assets , bond assetsand
Bank 9,000 of own g 5.20% 116.68 116.68 116.68 Yes No
Bank ing 14,2018 13,2018 Equity assets
capital profit
Financial instruments with a sound
Disposal return and liquidity includebank Floatin
Everbright Financ April July
Bank 10,000 of own deposits, monetary market instruments, g 5.10% 127.15 127.15 127.15 Yes No
Bank ing 10,2018 10,2018
capital bond products, other income assets and profit
initial public offerings among others
Disposal Floatin
Hangzhou Financ December March Highly liquid assets , bond assetsand
Bank 7,000 of own g 4.35% 75.92 0 0 Yes No
Bank ing 28,2018 29,2019 Equity assets
capital profit
Bonds, monetary market instruments,
Disposal interbank deposits, trust plans in Floatin
Financ November November
CZB Bank 7,000 of own compliance with requirements of g 4.85% 337.64 0 0 No No
ing 20,2018 18,2019
capital regulators, rights of return on assets, profit
monetary market funds, bond funds and
46
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
other fixed income instruments, asset
securitization products, asset
management plans matching the above
orientations of investment and other
financial instruments for investment
allowed by policies and regulations
Total 113,000 -- -- -- -- -- -- 3,145.49 1,623.59 -- 0 -- -- --
47
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Situation with the appearance of principals which can not be recovered expectedly or other existing situations
which may lead to impairment
Not applicable
(2)Situation of Entrusted Loans
Nil
4. Other significant contract
Nil
XVIII. Social responsibility
1. Execution of social responsibility
The Company has disclosed the full text of the social responsibility report, as detailed in (www.cninfo.com.cn)
(Announcement No.:2019-).
2.Implementation of the social responsibility of precise poverty relief
(1) Precision poverty alleviation planning
The company participates in the “Lianxiangjiecun” helping and supporting activities in Hangzhou, from
2017 to 2021 for 5 years, with an annual funding of RMB 150,000 to assist Zitong Township in Chun’an County.
(2) Annual Precision Poverty Alleviation Summary
In 2018, the Company funded RMB 150,000/year in the support and relief activity for Zitong Town, Chun'an
County again to implement targeted poverty alleviation in the method of cash relief.
（3）Precision poverty alleviation effect
Index Measurement unit Quantity / Status
I. General situation —— ——
Thereinto： 1.Capital In RMB 10,000 15
II. Itemized input —— ——
8. Social poverty alleviation —— ——
8.2 Amount invested in targeted poverty
Ten thousands 15
alleviation work
（4）Subsequent targeted poverty alleviation program
The follow-up plan of the company will follow up the “Lianxiangjie Village” assistance activities as planned.
The next year will continue to implement accurate poverty alleviation in the form of 150,000 cash grants at
Wutong Town, Pan’an County.
3.Environmental protection
Listed company and its subsidiary belongs to the key pollution enterprise listed by Department of Environmental
Protection
No
Neither the company nor its subsidiaries belong to the key pollutant discharge units announced by the
environmental protection department. The company has formulated and perfected the environmental management
systems and control procedures for various types of waste water, waste gas, waste slag, and noise in accordance
with relevant environmental laws and regulations and relevant standards promulgated by the national and local
governments. The company has imported ISO14001 environmental management system since 2006 and the
48
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
system has been operated effectively for more than ten years. Currently, the company has adopted the clean
production management and launched the clean production audits, which not only reduces consumption and
increases efficiency, but also reduces the pressure and cost of end-of-pipe management. In terms of environmental
greening, after years of meticulous maintenance, the company has become a garden-style enterprise.
The company's environmental management system has been in operation for many years, and it has been
strictly abiding by the relevant laws and regulations of the state and the principle of continuous improvement.
Each year, the company formulates the annual environmental protection goals and formulates the environmental
management plans. The company also has a complete and effective management system for waste water, waste
gas, waste residue and noise and other waste management. Over the years, there has been no incident of
environmental pollution and emissions exceeding the standard.
XIX. Explanation on other significant events
1.Follow-up progress of the relocation of land in Hangzhou Steam Turbine Plant Area
The company signed the “Compensation Agreement for the Relocation of Non-residential Houses on
State-owned Land” with Hangzhou Xiacheng City Construction Investment Development Group Co., Ltd. The
company received a total of RMB 1,299,324,850 for relocation compensation; the company’s holding subsidiary
Hangzhou Steam Turbine Machinery Equipment Co., Ltd. received a total of compensation of RMB 6,625,450.
The complete report is available as Announcement No.2018-1,Announcement No.2018-10 and Announcement
2018-57 with Securities Times, Shanghai Securities Daily, Hong Kong Commercial Daily and at
www.cninfo.com.cn dated January 4,2018 ,March 21, 2018 and August 7, 2018.
2. The company waived the preemptive right of the capital contribution in the capital increase of the casting
company.
The casting company, a holding subsidiary to the company, planed to increase the registered capital from 22
million yuan to 29.50 million yuan. The company waived the preemptive right of the capital contribution in the
capital increase.The complete report is available as Announcement 2018-05 with Securities Times, Shanghai
Securities Daily, Hong Kong Commercial Daily and at www.cninfo.com.cn dated May 26,2018.
3. Matters of the Company’s signing of important project contracts
（1）The company recently signed an annual contract for producing 1.5 million tons of ethylene steam turbine
units with Hengli Petrochemical (Dalian) Refining & Chemical Co., Ltd., and is currently the largest single-line
ethylene plant in China；（2）Hangzhou Steam Turbine Co., Ltd recently signed a contract of 3.2 million tons/year
light hydrocarbon comprehensive processing and utilization project with Lianyungang Petrochemical Co., Ltd,The
signing of the two major project contracts has enhanced the competitiveness of the company in the ethylene
market .The complete report is available as Announcement No.2018-42 and Announcement 2018-72 with
Securities Times, Shanghai Securities Daily, Hong Kong Commercial Daily and at www.cninfo.com.cn dated
May 26,2018 and November 1, 2018.
4.Matters concerning changes in the company's directors, supervisors and senior management personnel
Mr. Zhang Shutan resigned as the deputy general manager of the company due to the legal retirement age. The
complete report is available as Announcement 2018-53 with Securities Times, Shanghai Securities Daily, Hong
Kong Commercial Daily and at www.cninfo.com.cn dated July 21,2018.
Mr. Yan Jianhua applied for resignation from the company's vice chairman and the related duties in the special
committee of the board of directors due to reaching his legal retirement age. The complete report is available as
Announcement 2018-73 with Securities Times, Shanghai Securities Daily, Hong Kong Commercial Daily and at
www.cninfo.com.cn dated November 20,2018.
XX. Material issues of the subsidiaries
49
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
1.The matter of intending to increase capital and expand shares by the holding subsidiary
The casting & forging company, a company's holding subsidiary, is affected by the overall sluggish market
situation of the equipment manufacturing industry and the intensified market competition, therefore it will not
have sufficient profitability in the future. The casting & forging company plans to increase its capital and expand
its shares and introduce new strategic investors to upgrade its production capacity and enhance its comprehensive
competitiveness.The complete report is available as Announcement 2018-05 with Securities Times, Shanghai
Securities Daily, Hong Kong Commercial Daily and at www.cninfo.com.cn dated May 26,2018.
50
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
VI. Change of share capital and shareholding of Principal Shareholders
1.Changes in share capital
1.Changes in share capital
In shares
Before the change Increase/decrease（+，-） After the Change
Amount Proportion Capitaliz
Share ation of
Bonus Subt
allotm common Other Quantity Proportion
shares otal
ent reserve
fund
I. Unlisted shares 479,824,800 63.64% 0 0 0 0 0 479,824,800 63.64%
1. Founder's stock 479,824,800 63.64% 0 0 0 0 0 479,824,800 63.64%
Including：State-owned shares 479,824,800 63.64% 0 0 0 0 0 479,824,800 63.64%
Domestic Legal person shares 0 0.00% 0 0 0 0 0 0 0.00%
Overseas legal person shares 0 0.00% 0 0 0 0 0 0 0.00%
Other 0 0.00% 0 0 0 0 0 0 0.00%
2.Raising legal periosn shares 0 0.00% 0 0 0 0 0 0 0.00%
3.Internal staff shares 0 0.00% 0 0 0 0 0 0 0.00%
4.Preferred shares and other 0 0.00% 0 0 0 0 0 0 0.00%
II.Non-restricted shares 274,185,600 36.36% 0 0 0 0 0 274,185,600 36.36%
1.RMB common shares 0 0.00% 0 0 0 0 0 0 0.00%
2.Domestically listed foreign
274,185,600 36.36% 0 0 0 0 0 274,185,600 36.36%
shares
3.Overseas listed foreign shares 0 0.00% 0 0 0 0 0 0 0.00%
4.Other 0 0.00% 0 0 0 0 0 0 0.00%
III. Total of capital shares 754,010,400 100.00% 0 0 0 0 0 754,010,400 100.00%
Causes of Change of shares
Not applicable
Approval of change of the shares
Not applicable
Transfer in change of shares
Not applicable
Influence of the change of the shares upon such financial indicators as the basic EPS and diluted EPS, net asset
value per share attributable to the common stockholders in the past year and the latest period
Not applicable
51
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Other information the Company considers it necessary or required by the securities regulatory authority to be
disclosed
Not applicable
2. Change of Restricted Shares
Not applicable
II. Securities issue and listing
1.Explanation of the Situation of the Security Issue(No Preferred Shares) in the Report Period
Not applicable
2.Change of asset and liability structure caused by change of total capital shares and structure
Not applicable
3.About the existing employees’ shares
Not applicable
III. Particulars about the shareholders and substantial controller
1. Amount of shareholders and their shareholding position
In shares
Total number of
Total shareholders Total
common The total number of pref
at the end of the preferred shareholders at
erred shareholders votin
shareholders at the end 14,270 month from the 14,157 0 the end of the month from 0
g rights restored at perio
of the date of disclosing the date of disclosing the
d-end
the annual report annual report
reporting period
Particulars about shares held above 5% by shareholders or top ten shareholders
Number or
share
Proporti pledged/froz
Number of Changes in Amount of Amount of
Shareholders Nature of on of en
shares held at reporting restricted un-restricted
shareholder shares State
period -end period shares held shares held
held（%） of Amou
shar nt
e
Hangzhou Steam Turbine Power State-owned
Group Co., Ltd. legal person 63.64% 479,824,800 0 479,824,800 0
VANGUARD EMERGING Foreign legal
0.63% 4,722,804 0 0 4,722,804
MARKETS STOCK INDEX FUND person
Domestic
Zhou Jie 0.56% 4,200,000 1,524,000 0 4,200,000
Natural person
ISHARES CORE MSCI Foreign legal
0.50% 3,779,554 1,033,653 0 3,779,554
EMERGING MARKETS ETF person
52
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
VANGUARD TOTAL
Foreign legal
INTERNATIONAL STOCK 0.46% 3,499,046 45,000 0 3,499,046
person
INDEX FUND
China Merchants State-owned
0.44% 3,319,441 919,292 0 3,319,441
Secutities(HK)Co., Ltd. legal person
GUOTAIJUNANSECURITIES(HO Foreign legal
0.36% 2,693,363 231,483 0 2,693,363
NGKONG) LIMITED person
Foreign legal
NORGES BANK 0.33% 2,514,529 -1,789,146 0 2,514,529
person
Domestic
Xia Zulin 0.30% 2,280,000 90,000 0 2,280,000
Natural person
Domestic
Wang Yihu 0.19% 1,441,324 109,000 0 1,441,324
Natural person
Particulars about strategic investors or general
corporations becoming among the top 10 Not applicable
shareholders due to share placing
(1) Hangzhou Steam Turbine Power Group Co., Ltd. is the holder of state-shares of
the Company, all other shareholders’ are holders of domestic listed foreign shares
(B shares)
(2) There is no relationship between Hangzhou Steam Turbine Power Group Co.,
Explanation on associated relationship among the
Ltd. and other shareholders;
aforesaid shareholders
(3) Hangzhou Steam Turbine Power Group Co., Ltd. is not an “action-in-concert”
party with any of other shareholders as described by the “Administration Rules of
Informational Disclosure about Change of Shareholding Statues of PLCs”.
Top 10 holders of shares without trading limited conditions
Amount of Category of shares
Name of the shareholder unconditional shares
Category Amount
held at end of period
Foreign shares
VANGUARD EMERGING MARKETS STOCK INDEX FUND 4,722,804 placed in domestic 4,722,804
exchange
Foreign shares
Zhou Jie 4,200,000 placed in domestic 4,200,000
exchange
Foreign shares
ISHARES CORE MSCI EMERGING MARKETS ETF 3,779,554 placed in domestic 3,779,554
exchange
Foreign shares
VANGUARD TOTAL INTERNATIONAL STOCK INDEX FUND 3,499,046 placed in domestic 3,499,046
exchange
Foreign shares
China Merchants Secutities(HK)Co., Ltd. 3,319,441 placed in domestic 3,319,441
exchange
Foreign shares
GUOTAI JUNAN SECURITIES(HONGKONG) LIMITED 2,693,363 placed in domestic 2,693,363
exchange
Foreign shares
NORGES BANK 2,514,529 placed in domestic 2,514,529
exchange
Foreign shares
Xia Zulin 2,280,000 placed in domestic 2,280,000
exchange
53
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Foreign shares
Wang Yihu 1,441,324 placed in domestic 1,441,324
exchange
Foreign shares
Haitong International Securities Company Limited-Account Client 1,320,496 placed in domestic 1,320,496
exchange
1）It is unknown to the Company if there is any relationship
Explanation on associated relationship or consistent action among the top among the top 10 common share holders without restriction;
10 shareholders of non-restricted negotiable shares and that between the (2) Hangzhou Steam Turbine Group Co., Ltd. is not an
top 10 shareholders of non-restricted negotiable shares and top 10 action-in-concert” party with any of other shareholders as
shareholders described by the “Administration Rules of Informational
Disclosure about Change of Shareholding Statues of PLCs”.
Notes to the shareholders involved in financing securities (if any)(See
Not applicable
Notes 4)
Whether top ten common shareholders or top ten common shareholders with un-restrict shares held have a
buy-back agreement dealing in reporting period.
The top ten common shareholders or top ten common shareholders with un-restrict shares held of the Company
have no buy –back agreement dealing in reporting period.
2.Controlling shareholder
Nature of Controlling Shareholders: Local state holding
Type of Controlling Shareholders: Legal person
Name of the
Legal
holding Incorporated in Organization code Registered capital
representative
shareholder
Business scope: Manufacturing and
processing: textile machinery, Manufacturing
machines,paper-making machinery, pump,
casting products, electrical tools, gear box,
thermal transmitter, digital controlling device,
and spare parts of the above (limited to the
Hangzhou Steam subsidiaries); Contracting of domestic and
Turbine Power Zheng Bin Dec 14, 1992 91330100143071842L
Group Co., Ltd. overseas machinery engineering projects,
export of above equipments and materials,
provide labor services for above overseas
projects. Thermal power plant project and
equipment engineering; wholesale and retail:
products and spare parts manufactured by
members of the group, and technical research,
54
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
consulting, and service of above products;
Provide materials, equipments, and
spare parts to members of the Group, water
and power supply (other than installation and
maintaining of power supply equipment);
Including the business scope of
subsidiaries.
Shareholding
status of the
holding
shareholder in
Nil
other PLCs in the
country and
abroad during the
report period
Change of holding shareholder
No change of holding shareholder in the report period.
3．Information about the controlling shareholder of the Company
Actual controller nature：Local state owned Assets Management
Actual controller type：Legal person
Legal Date of
Name of the substantial Organization
representati incorpo Principal business activitie
controller code
ve ration
In the light of the municipal government authorization, perform the
investor’s responsibilities, supervise the municipal
operational state-owned assets and strengthen the
management of state-owned assets in accordance with
the laws and regulations of Corporate Law of the
People's Republic of China , Enterprise State-Owned
Assets Law of the People's Republic of China .
State-owned Assets
(II) Execute the laws, regulations and policies of the
Supervision and
management of state-owned assets; be entrusted with
Administration Commission Wang Xi 776637527
drafting local regulations regarding the management of
of Hangzhou Municipal state-owned assets, and enact relevant rules and
Government regulations, supervise and examine the implementation;
guide and supervise the management of the state-owned
assets at the district, county (city) level pursuant to the
laws.
(III) Make proposals regarding the municipal state-owned
economic layout and strategic adjustment to promote
the strategic adjustment of the municipal state-owned
55
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
economic structure and layout; guide and propel the
reform and restructuring of state-owned enterprises;
instruct and promote the construction of modern
enterprise system in state-owned enterprises,
consummate the corporate governance structure, and
form a governance mechanism characterized by clear
duty, well-coordination and effective balances.
(IV) Pursuant to the provisions of the relevant documents of
the municipal Party committee, investigate, appoint and
remove the supervised principles of enterprises
according to the legal procedures; establish a
employment mechanism that is in line with the socialist
market economic system and the requirements of
modern enterprise system, consummate the incentive
and restraint system for the operators; assess the
business performance of the principles of the enterprises
that are supervised and implement the rewards and
penalties system. Take charge of the management and
building work of the Party organization of the
supervised enterprises.
(V) Dispatch directors, supervisors or CFO to the
supervised enterprises on behalf of the municipal
government; and take charge of the daily management
of directors, supervisors or CFO.
(VI) Take charge of organizing the supervised enterprises to
turn over the state-owned capital gains; participate in
enacting management system and solutions for the
state-owned capital operating budget; take charge of the
preparation and implementation of the state-owned
operating budget of the supervised enterprises. Take
charge of the comprehensive budget management of the
supervised enterprises.
(VII) Establish and consummate the preservation and
appreciation index system of the state-owned assets, and
develop the assessment criteria; take charge of the
supervision and assessment of the preservation and
appreciation of the state-owned assets; enact and
organize the implementation of the income distribution
policy of the supervised enterprises and state-owned
enterprises. Take charge of the fundamental
management work, namely, the authentication of
property rights, registration of property rights, asset
56
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
evaluation monitoring, property liquidation and
verification, asset statistics, comprehensive evaluation;
safeguard rights and interests of the investors of
state-owned assets
(VIII) Take charge of directing and supervising the
implementation of national and provincial and
municipal safety laws, regulations, rules and standards,
etc.
(IX) Undertake other matters assigned by the municipal Party
committee and government.
The equity of the controlling
shareholder in other
domestic and foreign listed Hangyang Co., Ltd.(SZ.002430) held 54.4% shares, Hangzhou Jiebai (SH.600814) held 68.26% shares
companies held or partly and Digital Source Technology Co., Ltd.（SZ.000909）held 45.33% .
held by it in the report
period
Change of the actual controller in the reporting period
Nil
公司与实际控制人之间的产权及控制关系的方框图
The actual controller controls the company by means of trust or managing the assets in other way
Not applicable
4.Other corporate shareholder holding over 10% of the Company’s shares
Not applicable
5.Situation of Share Limitation Reduction of Controlling Shareholders, Actual Controllers, Restructuring Party
and Other Commitment Subjects
Not applicable
57
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
VII. Situation of the Preferred Shares
No preference shares in the Company.
58
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
VIII. Information about Directors, Supervisors and Senior Executives
I. Change in shares held by directors, supervisors and senior executives
Amoun Amoun
t of t of
shares shares
Shares Shares
increas decreas Other
Offic held at held at
Starting date of ed at ed at changes
Name Positions e Sex Age Expiry date of tenure the the
tenure the the increase/
status year-begi year-gegi
reportin reportin decrease
n(share) n(share)
g g
period( period(
share) share)
Zheng In
Chairman
Bin office Male 54 December 5,2014 May 18,2019 0 0 0 0 0
Yang
Vice In
Yongmi Chairman office Male 54 June 24,2013 May 18,2019 0 0 0 0 0
ng
Ye In
Director, GM
Zhong office Male 50 June 25,2001 May 18,2019 0 0 0 0 0
Director,
Wang In
secretary of office Male 46 June 30,2017 May 18,2019 0 0 0 0 0
Gang
the board
Director,
Kong Deputy
In
Jianqia General office Male 47 June 24,2013 May 18,2019 0 0 0 0 0
ng Director,Chi
ef engineer
Gu Independent In
Male 62 May 18,2016 May 18,2019 0 0 0 0 0
Xinjian Director office
Ma Independent In
Lihong Director office Male 65 May 18,2016 May 18,2019 0 0 0 0 0
Zhang
Independent In Fema
Xiaoy office le 46 December 4,2015 May 18,2019 0 0 0 0 0
Director
an
Chen
Independent In Fema
Danhon office le 54 May 18,2016 May 18,2019 0 0 0 0 0
Director
g
Chairman of
Li the In
Male 49 June 24,2013 May 18,2019 0 0 0 0 0
Shijie Supervisory office
Committee
Wang In
Supervisor
Xiaohui office Male 51 June 24,2013 May 18,2019 97,576 3,100 0 0 100,676
Liu
In
Zhiyon Supervisor office Male 59 June 30,2017 May 18,2019 16,600 0 0 0 16,600
g
Employee In
Lu Supervisor office Male 57 August 15,2004 May 18,2019 0 0 0 0 0
59
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Jianhua
Fang Employee In
Yin Supervisor office Male 56 February 16,2012 May 18,2019 0 0 0 0 0
Deputy
Zhao General In
Male 43 January 1,2018 May 18,2019 0 0 0 0 0
Jiamao Manger, Chief office
accounantant
Li Deputy
In
Jianshe General office Male 55 December 5,2014 May 18,2019 0 0 0 0 0
ng Manger
Wang Deputy
In
Zhengr General office Male 48 June 9,2017 May 18,2019 0 0 0 0 0
ong Manger
Li In Fema
Director 48 January 9,2019 May 18,2019 0 0 0 0 0
Guiwen office le
Yan Vice Dimi
ssion Male 60 June 24,2013 November 20,2018 0 0 0 0 0
Jianhua Chairman
Zhang Deputy
Dimi
Shuta General ssion Male 60 February 16,2009 July 20,2018 66,924 0 0 0 66,924
n Manager
Total -- -- -- -- -- -- 181,100 3,100 0 0 184,200
II. Change in shares held by directors, supervisors and senior executives
Name Positions Types Date Reason
Zhang Deputy General Due to reaching legal age, applied for resignation from the
Dimission July 20,2018
company’s Deputy General Manager.
Shutan Manager
Due to reaching legal age, applied for resignation from the
Yan Jianhua Vice Chairman Dimission November 20,2018 company’s vice chairman and the related duties in the
special committee of the board of directors.
III.Posts holding
The professional background, working experience and main responsibilities of the current board members,
supervisors and senior managers in the company
（1）Director
Mr. Zheng Bin, born in November 1964, CCP member, university graduate, senior economics professional
certification. He served as vice chairman and Vice General Manager of Hangzhou Steam Turbine Power Group
Co., Ltd. He used to be chairman and General Manager of Hangzhou Dongfeng Shipyard Co., Ltd. He was
engaged the vice Chairman at the 4th term of Board on March 2009 ,Vice Chairman at the 5th term of Board on
June 2010, He was engaged the Director and General Manager of the Company on June 2013, He was engaged
the Chairman at the 6th term of Board on December 2014. He was elected as Chairman of the 7th term of board of
directors on May 18, 2016.
Mr. Yang Yongming, born in November 1964, CCP member, university graduate, certified senior economist.
Currently he’s the vice general manager of Hangzhou Steam Turbine Power Group Co., Ltd. He used to be the
60
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
vice director and director of Sales Administration Departments of the Company; Since 2013, he served as vice
general manager, general manager, and vice chairman of Hangzhou Dongfeng Shipyard Ltd. Currently he’s the
vice general manager of Hangzhou Steam Turbine Power Group Co., Ltd . and the Vice Chairman of the 6th term
of Board of the Company. He was elected as Vice Chairman of the 7th term of board of directors on May 18,
2016.
Ms. Li Guiwen, born in September 1970, member of the Communist Party of China, postgraduate degree, senior
engineer. In 1992 the company entered the company, She served as Deputy director General office and Deputy
Minister of Economic Management of Hangzhou Steam turbine Power Group, Since August 2007, She Served as
Minister of Strategic Development of Hangzhou Steam turbine Power Group, Since November 2017,She served
as Secretary of the Board of Directors and Minister of Strategic Development of Hangzhou Steam turbine Power
Group. Since January 2019, She served as Director of the Company.
Mr. Ye Zhong: born in April 1968, CCP member; bachelor degree; professor and senior engineer. Started
working in July 1990. he was the director of the 2nd term of Board, Chief Engineer; director of the 3rd term of
Board, Vice General Manager; Director of the 4th and 5th terms of Board, Vice General Manager, and Chief
Engineer. He’s the Standing Vice General Manager, director and Chief Engineer of the 6th term of Board of the
Company, and General Manager of the 4 Company since December 2014. He was elected as director and
General Manager of the 7th term of board of directors on May 18, 2016.
Mr. Wang Gang, born in February 1972, member of the Communist Party of China, postgraduate degree,
Zhejiang University MBA, senior engineer. In 1993 the company entered the company, served as the company
organization personnel, a steam shop, security, securities laws and regulations, operation and management
department and other department heads. The current party secretary of the party committee, discipline appoint
secretary, trade union chairman. He passed the qualification certificate of the board of directors of Shenzhen Stock
Exchange in June 2009 and obtained the certificate of secretary of the board of directors. From July 2009 to April
2016, He served as the representative of securities affairs of the Company. He was engaged the secretary of the
board of the Company on June 10,2017. He was elected as director of the 7th term of board of directors on June
30, 2017.
Mr. Kong Jianqiang, born in May 1970, CCP member, Master of Engineering, certified senior engineer.
Started working in July 1992. He used to be technician, head of workshop, vice director, and director of Steam
Turbine Institute of the company. He’s the director of the 6th term of Board since June 2013, and Engineer
General of the Company since December 2014. He was elected as director of the 7th term of board of directors on
May 18, 2016. Appointed as deputy general manager and Chief engineer of the company.
Ms Zhang Xiaoyan, was born in March 1973. Since 1994, she successively worked in Zhejiang Securities Co.,
Ltd, Zhejiang Senhe Seed Co., Ltd, Shanghai AllBright Law Offices (Hangzhou), Beijing Gaopeng & Partners
Hangzhou Office, Beijing Kangda Law Firm (Hangzhou). She currently holds the post of the partner of Beijing
Kangda (Hangzhou) Law FirmNot only being skilled at reformation, listing, floatation, m&a and refinancing for
listed company, but also at venture capital, industrial fund, shares incentive, shares option including its contract’s
negotiation,signing and litigation,etc. Currently he’s the independent director of the 6th term of Board. He was
elected as Independent director of the 7th term of board of directors on May 18, 2016.
Ms Chen Danhong, born in October 1964, was graduated from Hangzhou Business College, majoring statistics.
She was former assistant in Shanghai Economic Management College, section chief in accounting section of
financial department from Zhejiang Gongshang University, General Manager in Planning and Finance Department
and HR Manager of New China Life Insurance Co., Ltd.Zhejiang Branch, Executive Vice President of Zhejiang
Zhongye Holdings Group Co., Ltd., CEO of Daodao Group Co., Ltd., and Deputy General Manager and Chief
Financial Officer of Zhejiang Arch of Triumph Macao Doulao Holding Group Co., Ltd. She was special
professional ethos supervisor in Zhejiang Provincial Office,SAT, CPPCC member in West Lake District, and
Special Auditor of Audit Bureau in West Lake District. In April 1997, she obtained qualification of National
Registered Accountant, and she was chosen as senior accountant by domestic Ministry of Trade in December,
1997. On May 18, 2016, she was elected as the seventh Board of Directors Independent Director of the company.
Mr Ma Lihong, born in October 1953, as professor, got management PhD from Fudan University. He
worked in Hohhot No.3 Middle School in Inner Mongolia, county party committee propaganda department of
huangyan in Zhejiang Province, and Zhejiang Administration College. He worked as the chief of teaching and
research section in Zhejiang Administration College, Deputy Inspector in Party School of Zhejiang Provincial
Committee of CPC, and Vice Dean of Zhejiang Administration College. He was Vice President of Zhejiang Social
Science League, subject review group expert in National Social Science Fund, and he was approved to share
special allowance of the State Council in 2010. He repeatedly was responsible to hold national social science fund
project and important social sciences issues in Zhejiang Province. On May 18, 2016, she was elected as the
61
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
seventh Board of Directors Independent Director of the company.
Mr Gu Xinjian, born in July 1956, was doctor of engineering, as a professor in Modern Manufacturing
Technology Research Institute of Zhejiang University, and a doctoral supervisor. He was the Deputy Director in
Center for Innovation Management and Sustainable Competitiveness of Zhejiang University, and Director of
Patents And Standards Strategic Institute. He was as assistant engineer in Ministry of Electronics Industry 1051
Institute from January, 1982 to September, 1984. From August, 1987 until now, he devoted himself to research
and education work in Mechanical Engineering Department of Zhejiang University, primarily engaged in
researching manufacturing informatization, enterprise modeling, networked manufacturing, advanced
manufacturing systems mode, and mechanical manufacturing systems engineering. On May 18, 2016, he was
elected as the seventh Board of Directors Independent Director of the company.
(II) The Supervisors
Mr. Li Shijie, born in July 1969, CCP member, university graduate, certified senior engineer. head of supplying
department of the Company, general manager and chief secretary of CCP committee of Hangzhou Steam Turbine
Auxiliary Machinery Co., Ltd. Currently he’s the vice chief secretary of CCP committee and chief secretary of
discipline committee of Hangzhou Steam Turbine Power Group Co., Ltd. Currently he’s the Chairman of the 6th
term of Supervisory Committee. He was elected as Chairman of the 7th term of Supervisory Committee on May
18, 2016.
Mr. Wang Xiaohui, born in December 1967, CCP member, university degree, certified senior accountant, certified
taxation accountant, certified internal auditor. External Chief Finance Officer of Hangzhou State-owned Property;
Chief Accountant and Director of Accounting Dept. of Hangzhou Dongfeng Shipyard Co., Ltd. Currently he’s the
vice director of Accounting Dept. of Hangzhou Steam Turbine Power Group Co., Ltd. Currently he’s the
supervisor of the 6th term of Supervisory Committee. She was elected as supervisor of the 7th term of
Supervisory Committee on May 18, 2016.
Mr. Liu Zhiyong, born in January 1960, member of the Communist Party of China, university degree, senior
engineer, deputy secretary of the company Commission for Discipline Inspection. He served as Director of the
Office of the Chief Engineer of the Company, Deputy Director of the Second Automobile Workshop, Director of
the Integrated Management Department and Secretary of the Comprehensive Party Branch. June 2014 as the
company blade factory director, leaf party branch secretary. He was elected as supervisor of the 7th term of
Supervisory Committee on June 30, 2017.
Mr. Lu Jianhua, born in March 1962, CCP member, university graduate. Once he was the clerk and office manager
of the Trade Union, elected vice chairman of the Trade Union and supervisor; He assumed employees’ supervisor
for the 3rd, 4th, and 5th term of the Supervisory Committee. He was elected as supervisor of the 7th term of
Supervisory Committee on May 12, 2016.
Mr. Fang Yin, born in December 1962, CCP member, senior engineer, master degree. Graduated from Zhejiang
University of Industry in February 1982, and started working in technical area in Hangzhou Steam Turbine Co.,
Ltd. (former Hangzhou Steam Turbine Factory); Since September 1988, he has been working on R&D in the
Industrial Turbine Research Institute of the Company; Mr. Fang was elected supervisor of the 6th term of
Supervisory Committee by the Employees’ Congress on February 28, 2013. He was elected as supervisor of the
7th term of Supervisory Committee on May 12, 2016.
(III) Senior Executives
Profiles of General Manager Ye Zhong, secretary of the board Wang Gang and Deputy General Manager ,Chief
Engineer are available among the directors above.
Mr. Li Jiansheng,born January 1963, CCP member, master of engineering, certified senior engineer of
professor level.Mr. Li started working for the Company in February 1982. He has been in the positions of chief of
No.4 section, vice head of the Institution, and vice head of the Industrial Turbine Institute. He has been the
assistant of Deputy general manager and head of production unit of Hangzhou Steam Turbine Co., Ltd. Mr. Li was
engaged the Deputy general manager of the Company since December 2014.
Mr. Wang Zhengrong, born in October 1970, member of the Communist Party of China, university degree,
Bachelor of Engineering, Zhejiang University, senior engineer. In 1992 to enter the company work, served as
deputy director of the company sales, director, marketing party branch secretary. Since March 2010, he has been a
member of the Party Committee of the Company. He has been Assistant General Manager of the Company and
62
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Director of Steam Turbine Marketing since June 2015. Mr. Wang was engaged the Deputy general manager of the
Company since June 2017.
Mr. Zhao Jiamao, born in March 1975, member of the Communist Party of China, university degree, certified
public accountant and senior accountant. He joined Hangzhou Steam Turbine Power Group Co., Ltd. Finance
Office in 1995 and was once the Vice Minister of Finance of Hangzhou Steam Turbine Power Group Co., Ltd.,
Chief Accountant, Deputy General Manager and General Manager of Hangzhou Steam Turbine Power Technology
Co., Ltd. In December 2014, he was the Deputy Chief Accountant and Chief Financial Officer of the Company.
Since March 2016, he has been the General Manager Assistant, the Director of Asset Management Department
and the Finance Department and the Contract Department. Mr. Zhao was engaged the Deputy general manager
and Chief accountang of the Company since January 2018.
Jobs taken in shareholding parties
Take
remunerations
Job
Names Name of the shareholder Job taken Job started from the
ended
shareholding
party
Chief secretary of CCP,
Hangzhou Steam Turbine Power
Zheng Bin Chairman, Legal September 28,2017 Yes
Group Co., Ltd.
Representative
Yang Hangzhou Steam Turbine Power Commissioner of CCP, Vice
Yongming Group Co., Ltd. May 1,2013 Yes
GM
Secretary of the Boardof
Hangzhou Steam Turbine Power directors, Director of staff,
Li Guiwen Group Co., Ltd. August 1,2007 Yes
Director of strategic
Development Dept.
Hangzhou Steam Turbine Power
Ye Zhong Group Co., Ltd. CCP Commissioner, director May 1,2001 No
Vice Secretary of CCP
Commission, Secretary of
Hangzhou Steam Turbine Power Discipline Committee, Vice
Li Shijie May 1,2013 Yes
Group Co., Ltd. Chairman of Supervisory
Committee, Chairman of Trade
Union
Wang Hangzhou Steam Turbine Power Director of financial
Group Co., Ltd. department September 22,2014 Yes
Xiaohui
Jobs taken in other parties
Take
Names Name of the parties Positions Job started Job ended remunerations
from the party
Chairman, Legal
Hangzhou Relian Group Co., Ltd.
Zheng Bin representative September 28,2017 February 18,2019 No
Zheng Bin Bank of Hangzhou Co., Ltd. Director February 10,2017 No
Yang
Hangzhou Relian Group Co., Ltd. Director May 1,2013 February 18,2019 No
Yongming
Yang Hangzhou Steam Turbine Auto Sales Chairman, Legal
June 29,2017 No
Yongming service Co., Ltd. representative
Yang
Guangdong Huaxing Bank Co., Ltd. Director September 28,2017 No
Yongming
63
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Hangzhou Wandong Electronics Co., Chairman, Legal
Li Guiwen December 1,2014 No
Ltd. representative
Hangzhou Steam Turbine Engineering
Li Guiwen Director September 1,2009 No
Co., Ltd.
Hangzhou Steam Turbine Investment
Li Guiwen Chairman December 1,2014 February 18,2019 No
Co., Ltd.
Li Guiwen Hangzhou Relian Group Co., Ltd. Director May 1,2015 February 18,2019 No
Hangzhou Zhongneng Steam Turbine Chairman, Legal
Ye Zhong February 1,2010 No
Power Co., Ltd. representative
Hangzhou Steam Turbine Engineering Chairman, Legal
Ye Zhong December 23,2014 No
Co., Ltd. representative
Wang Hangzhou Zhongneng Steam Turbine
Supervisor June 21,2017 No
Gang Power Co., Ltd.
Wang Hangzhou Steam Turbine Casting
Director June 21,2017 No
Gang Co.,ltd.
Kong Zhejiang Steam Turbine Packaged Chairman, Legal
June 21,2017 No
Jianqiang Technology Development Co., Ltd. representative
Kong Hangzhou Steam Turbine Auxiliary Chairman, Legal
June 21,2017 No
Jianqiang Machine Co., Ltd. representative
Kong Hangzhou Guoneng Steam Turbine Chairman, Legal
June 21,2017 No
Jianqiang Engineering Co., Ltd. representative
Chen Independent
Zheshang Development Co., Ltd. April 29,2016 Yes
Danhong director
Chen Independent
Huijishan Shaoxing Wine Co., Ltd. September 27,2016 Yes
director
Danhong
Chen Independent
Hangzhou Electric Cable Co., ltd. April 19,2017 Yes
director
Danhong
Professor,
Zhejiang University. Institute of modern
Gu Xinjian Supervisor of a December 1,1999 Yes
manufacturing engineering
ph.D Student
Zhang
Beijing Kangda（Hangzhou）Law Firm Partner May 1,2012 Yes
Xiaoyan
Chairman of the
Li Shijie Hangzhou Relian Group Co., Ltd. Supervisory May 1,2013 February 18,2019 No
Committee
Wang Hangzhou Nanfangtongda Gears Co.,
Supervisor April 1,2009 April 17,2018 No
Xiaohui Ltd.
Wang Hangzhou Xiangjiang Technology
Supervisor June 29,2017 No
Xiaohui Co.,Ltd.
64
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Wang Zhejiang Steam Turbine Packaged
Supervisor January 1,2015 No
Xiaohui Technology Development Co., Ltd.
Liu Zhejiang Steam Turbine Packaged
Supervisor June 21,2017 No
Zhiyong Technology Development Co., Ltd.
Liu Hangzhou Steam Turbine Heavy
Supervisor June 21,2017 No
Zhiyong Industry Co., Ltd.
Li Hangzhou Steam Turbine Auxiliary
Director April 3,2014 No
Jianshang Machine Co., Ltd.
Li Hangzhou Steam Turbine Casting Co.,
Director July 15,2014 No
Jiansheng Ltd.
Legal
Li Hangzhou Steam Turbine Heavy representative,
June 21,2017 No
Jiansheng Industry Co., Ltd. executive
director
Wang Hangzhou Steam Turbine Machinery & Chairman, Legal
June 21,2017 No
Zhengrong Equipment Co., Ltd. representative
Wang Hangzhou Zhongneng Steam Turbine
Director July 1,2013 No
Zhengrong Power Co., Ltd.
Legal
Wang Zhejiang Turbine Import & Export Co., representative,
April 3,2014 No
Zhengrong Ltd. executive
director
Zhao Zhejiang Steam Turbine Packaged
Director March 12,2018 No
Jiamao Technology Development Co., Ltd.
Zhao Hangzhou Steam Turbine Casting Co.,
Director June 21,2017 No
Jiamao Ltd.
Zhao Hangzhou Zhongneng Steam Turbine
Director March 12,2018 No
Jiamao Power Co., Ltd.
Zhao （India）Gelin Shaoer Power Installation
Director March 12,2018 No
Jiamao Privately Co., Ltd.
Punishments to the current and leaving board directors, supervisors and senior managers during the report period
by securities regulators in the recent three years
Not applicable
65
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
IV. Remuneration to directors, supervisors and senior executives in the reporting period
Decision-making procedures, basis for determination and actual payment of the remuneration to directors ,
supervisors and senior executives
1. Decision-making and basis of remunerations to directors, supervisors, and executives
The 4th meeting of the 7th Remuneration Committee was held on March 18, 2019. The remuneration plan for
directors and executives was examined at the meeting. The Remuneration and Assessment Committee of the
Board conducted assessment on the performances of the directors and executives, and the remuneration plan was
produced according to the Administration Rules of Remuneration and Assessment of Directors of the 7th Term of
Board and Executives（2016-2018）. The plan is subject to examination of the 31th meeting of the 7th term of
Board.
Allowances for independent directors and supervisors are subject to approval by the Board and the Shareholders’
Meeting thereafter. The proposal of allowances for the 7th term of independent directors and supervisors was
adopted at the 1st Provisional Shareholders’ Meeting held on December 28, 2016, and the allowance for
independent directors is RMB150 thousand (tax included) per year, while it is RMB36,000 for supervisors for the
period of three years (tax included). Non employee supervisors do not enjoy the allowance
2. Actual payment
Basic wages are prepaid on monthly basis and the overall remunerations are paid upon completion of the annual
assessment. Allowances for independent directors and supervisors are paid according to the scheme approved by
the Shareholders’ Meeting.
Remuneration of directors, supervisors, and executives in the report period
In RMB 10,000
Total of reward
Actual reward in
from the
Name Position Sex Age Statue of duty total at end of
Company(Pre-tax
report term
)
Zheng Bin Chairman Male 54 In Office 0 Yes
Yang
Vice Chairman Male 54 In Office 0 Yes
Yongming
Ye Zhong Director, GM Male 50 In Office 118.09 No
Wang Gang Director, secretary of the board Male 46 In Office 78.17 No
Kong Director, Deputy GM, Chief
Male 48 In Office 82.02 No
Jianqiang engineer
Ma Lihong Independent Director Male 65 In Office 0 No
Gu Xinjian Independent Director Male 62 In Office 15 No
Chen
Independent Director Male 54 In Office 15 No
Danhong
Zhang
Independent Director Female 46 In Office 15 No
Xiaoyan
Chairman of the Supervisory
Li Shijie Male 48 In Office 0 Yes
Committee
Wang
Supervisor Male 51 In Office 0 Yes
Xiaohui
Liu Zhiyong Supervisor Male 58 In Office 59.55 No
66
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Lu Jianhua Employee Supervisor Male 57 In Office 36.34 No
Fang Yin Employee Supervisor Male 56 In Office 31.34 No
Li Jiansheng Deputy GM Male 55 In Office 81.43 No
Wang
Deputy GM, Male 48 In Office 77.01 No
Zhengrong
Deputy General Manger, Chief
Zhao Jiamao Male 44 In Office 70.21 No
accounantant
Yan Jinhua Vice Chairman Male 60 Dimission Yes
Zhang Shutan Deputy General Manager Male 60 Dimission 60.18 No
Total -- -- -- -- 739.34 --
Incentive equity to directors, supervisors or/and senior executives in the reporting period
Not applicable
V. Particulars about employees.
1.Number of staff, professional structure and educational background
Number of in-service staff of the parent company(person) 2,270
Number of in-service staff of the main subsidiaries(person) 1,393
The total number of the in-service staff(person) 3,663
The total number of staff receiving remuneration in the current period(person) 3,663
Retired staff with charges paid by the parent company and main subsidiaries
0
(person)
Professional
Category Number of persons（person）
Production
2,070
Sales
434
Tech
650
Finance
64
Administration
445
Total 3,663
Education
Category Number of persons（person）
Master’s Degree
204
Bachelor
1,224
College diploma
688
High school and below 1,547
Total 3,663
67
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
2.Particulars about the employees:
Under the premise of considering the annual benefit, with the level of competition, the ability to pay of
enterprises, price levels and other factors, in 2018 the company adequate remuneration be adjusted according to
the value of the unpaid position, according to the performance of the performance fee, adhere to labor distribution,
taking into account efficiency and equity, the maximum level of protection of the interests of employees, to
achieve a win-win business and employees. Company on a monthly basis, full and timely payment of wages,
overtime pay in accordance with national regulations, on a monthly basis.
3. Educational training for employees:
In 2018, the staff education and training work strived for realize the goal of “Talents invigorate enterprises”,
and set the work objectives of training and optimizing the “the three teams namely the management team, the
professional and technical personnel team and the high-skilled personnel team”, and upon combining with the
company’s strategic goals and the departmental performance targets and the employees’ development goals, it
well did the annual training work, formulated the “2018 Company Education and training Plan”, implemented
various training programs in an orderly manner as required, continuously improved the staff's business level and
comprehensive capabilities and made contributions to the company’s stable operation. In terms of the funding, the
company drew 2.5% of the total salary as the staff education fund, which effectively guaranteed the expenditure of
the training program. According to statistics, 169 training classes were held in 2018, the person-time of staff
received trainings reached 5,170. For 2019, the company plans to carry out 151 training programs in aspects of
management, engineering technology, operation skills, quality, environment and safety education.
4. Outsourcing situation
Not applicable
68
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
IX. Administrative structure
I. General situation
1 .Standardized operation of corporate governance structure
In accordance with the "company law" provisions, The Company has its executive, decision making and
supervisory bodies operated strictly according to the Articles of Association, Shareholders’ Meeting Criteria,
Board Meeting Criteria, and Supervisory Committee Criteria. Meetings were held by legal procedures, Corporate
governance in accordance with the relevant provisions of the laws and regulations of China Securities Regulatory
Commission and the Shenzhen Stock Exchange.
2. Effectiveness of organization
The Board of Directors is the executive body of the decisions made by the Shareholders’ Meeting. The Board is
also responsible to establish and improve the internal control system of the Company, and make it works
effectively. Chairman of the Board is the caller of the Board. Strategy, Investment, Remuneration, and Auditing
Committees were established within the Board, and were supporting the decision-making of the Board. The
Supervisory Committee is responsible to report to the Shareholders’ Meeting and supervise the legal performance
of duties of directors, managers, and executives. The management is responsible to the Board, and take charge of
daily operation of the Company. Functional departments were deployed according to the needs of business with
clear responsibilities.
3. Basis for material decisions
The Company has setup practical rules for all material aspects of management, including but not limited to,
external investment, trusteeship, related transactions, information disclosure, investors’ relationship, information
insider, executive shares, and management of controlled subsidiaries. These documents of rules were constantly
revised and improved to maintain effectiveness upon changing situation.
In the report period, the Company adjusted the limit of authorization for financial management delegated by the
Board of Directors and General Meeting of Shareholders and revised relevant terms in Financial Management
Agent Management System (revised in 2016) to further meet the need for efficiency of use of funds while giving a
consideration to the need for risk control in asset management to ensure that incomes and risks are under control. In
the corresponding period, Measures for Management of Share Holding of Directors, Supervisors and Senior
Executives and Variation (revised in 2018) was revised subject to Company Law, Securities Law, Rules for
Management of Directors, Supervisors and Senior Executives of Listed Companies Holding Shares of Their Own
Companies and Variation of China Securities Regulatory Commission (hereinafter referred to as CSRC), Some
Regulations on Directors, Supervisors and Senior Executives of Listed Companies Reducing Shares of CSRC,
Rules for Implementation of Shareholders, Directors, Supervisors and Senior Executives of Listed Companies
Reducing Shares of Shenzhen Stock Exchange, Business Guide to Management of Share Holding of Directors,
Supervisors and Senior Executives of Listed Companies and Variation of Shenzhen Stock Exchange and other laws,
69
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
regulations departmental regulations and regulatory documents and in conjunction with Company's Articles of
Association and relevant provisions of the Company to tighten management of directors, supervisors and senior
executives of the Company holding shares of the Company and variation, standardize directors and supervisors
buying and selling shares of the Company and derivative products at a high price and further give a clarity to
operating procedures and liabilities for violation.
4. Establishing of internal control system
The Company kept close observation on the whole business process identifying risk points according to Enterprise
Internal Control Standards, Internal Control Guidelines, Internal Assessment Guidelines, and Internal Control
Guidelines for PLCs issued by Shenzhen Stock Exchange. Effective mechanisms on risk control and internal
auditing were conducted. The Auditing Committee of the Board was responsible to supervise the internal control
practices.
5.Corporate Information Disclosure and Transparency
The company attaches great importance to the information disclosure and the investor relations
management, and it has designated Securities Times, Hong Kong Commercial Daily and
http://www.cninfo.com.cn as its statutory information disclosure media and website. With fair treatment to all
investors, the company in a timely manner discloses the information with truthfulness, accuracy and completeness,
which well ensures the transparency of the company and the legitimate rights and interests of all shareholders.
Does there exist any difference in compliance with the corporate governance , the PRC Company Law and the
relevant provisions of CSRC,
There exist no difference in compliance with the corporate governance , the PRC Company Law and the relevant
provisions of CSRC.
II. Independence and Completeness in business, personnel , assets, organization and finance
The Company kept independence and separated with holding shareholders on the aspects of business, human
resource, capital, organization, and accounting. And the Company established independent and complete business
operating systems.
1. On business operations
The Company’s majors of design, manufacture, sale business of industrial steam turbine was independent from the
holding company (Hangzhou Steam Turbine Power Group). The controlling shareholder in the subsidiary
engineering company to undertake the project in，Some of the holding subsidiaries of the Group are selling the
Company’s steam turbine products and spare parts, which are at market prices; The Company and the Group are
not sharing any office site.
2. On personnel management
The Company kept independence with the holding shareholders on the aspects of human resource and
remuneration management. Although the Company’s chairman of the Board and the vice chairman of the Board
were part-time by the parent company’s (Hang Steam Turbine Group) chairman of the Board and the vice
chairman of the Board; the Company’s management was employed and gotten salary exclusively in the Company
instead of any management duty in the holding-share share holders except the duty of chairman of the Board. The
Company’s accountant shad no part-time job in their parent company or related companies.
3. On capital operation
70
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
The property relationship between the Company and the holding-share shareholders was clear and explicit. The
capital and business injected by the holding-share shareholders was independent and complete. And at the same
time, the Company owned system of manufacturing and operation, sale, accessorial manufacturing and relevant
equipments which independent from holding shareholder.
4. On organization structure
The Company kept total independence from the controlling shareholder on the organization configuration. The
Company owned separate and independent manufacturing, supplying, and sales system, there was no horizontal
competition with the controlling shareholder, and the Company owned independent management and operation
systems. The Company signed related trading agreements with the subsidiaries of the share-holding company. The
Company’s intermediate managers are employed by the Company’s executives, and was evaluated under the
economic responsibility system.
5. On accounting management
The Company had independent accounting department, and established independent account re-calculation system
and accounting system; the Company also had the regulated and independent finance management on the
share-holding and subsidiaries; the Company had independent finance policies and bank account and its tax, there
was no joint account with controlling shareholder.
6. In legal aspect
Department of Securities and Law – the special legal department was founded in the report term, and performs
duties according to Administration Rules for Legal Consultancy to State-owned Enterprises. Along with Zhejiang
Tianche Law Firm – the public legal consultancy employed by the Company, the Department aims to regulate the
legal affairs and day-to-day administrations .
III. Competition situations of the industry
Not applicable
IV. Annual General Meeting and Extraordinary Shareholders’ Meetings in the Reporting Period
1.Annual General Meeting
Investor
Sessions Type participation Meeting Date Disclosure date Disclosure index
ratio
Resolutions of the Shareholders’
Annual Meeting 2017
2017
(Announcement No. 2018-36)
Shareholders’ Shareholders’
69.46% April 26,2018 April 27,2018 released by Securities Times,
general Meetin
Shanghai Securities Daily, Hong
meeting
Kong Commercial Daily, and
Http://www.cninfo.com.cn
71
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Resolutions of the 1st Provisioanal
1st Shareholders’ Annual Meeting 2018
Provisional Provisional (Announcement No. 2018-54)
Shareholders’ Shareholders’ 72.34% July 20,2018 July 21,2018 released by Securities Times,
Meeting 2018
Meetin Shanghai Securities Daily, Hong
Kong Commercial Daily, and
Http://www.cninfo.com.cn
2. Request for extraordinary general meeting by preferred stockholders whose voting rights restore
Not applicable
V. Responsibility performance of independent directors in report period
1. The attending of independent directors to board meetings and shareholders’ general meeting
The attending of independent directors
Number of Failure to Number of
Number of
Board meetings Number of Number of Number personally attend
Independent meetings attended attendance at
necessary to be spot attendances by of board meetings
Directors by
attended in the attendances representative absence successively twice general meetings
Communication
reporting period (Yes/No) of shareholders
Zhang
10 4 6 0 0 No 2
Xiaoyan
Ma Lihong 10 4 6 0 0 No 2
Gu Xinjian 10 4 6 0 0 No 2
Chen Danhong 10 4 6 0 0 No 2
2.Objection of independent directors on some relevant issues
Independent directors proposed no objection against the relevant matters in the reporting period.
3. Other statement for performance of independent directors
Adoption of suggestion proposed by independent directors
Yes
Statement for suggestion adopted or not by the Company
(1) The independent directors debriefed the managers about the business condition in 2017, and suggested the
Company to enhance communication with government sectors and to obtain government subsidy support from the
research and development of products. the independent directors suggested the Company to coordinate the
product structure and constantly improve the gas turbine business, to seize the market strategic position and
actively expand the international market, to control the risk in contracts and intensify the collection for receivables,
to strengthen the salary management and performance assessment as well as enhancing staffs and administrators’
72
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
initiative.
(2) At the 1st communication meeting between the independent directors and the accounting firm, the
independent directors debriefed the accounting firm, and suggested the Company to attach importance to the
recovery of receivables and the inventory of units to grasp risks.
(3)At the 2nd communication meeting between the independent directors and the accounting firm,the
independent directors suggested the Company to confirm revenue recognition principle and keep the
precautionary principle as always, to respond risks for partial suspended projects, to keep the the construction
progress of important issues up with the market condition changes, and to actively disclose relevant information to
minority shareholders and maintain their interests
(4) It was recognized at the third meeting of the seventh Compensation Committee that the Company's directors and
senior executives performed their duties diligently and made significant contribution to the Company's business
development during their tenure, hence greater compensation assessment incentive should be given and
compensation should be increased to create an effective incentive. Since the State-owned Assets Supervision and
Administration Commission has restrictions on compensation assessment on directors and senior executives of
state-owned enterprises, an adjustment shall be done to the compensation proposal for directors and senior
executives of the Company subject to corresponding reference standards.
(5) At the meeting of the Board of Directors on deliberation of routine related transactions of the Company,
independent directors advised the Company to sort out related transactions and enhance communication with
minority shareholders for holding that the Company has legitimate deliberation procedures for deliberation of
routine related transactions.
The management accepted the above suggestions.
VI. Fulfilling of duties by the Special Committees under the Board of Directors
(I) The Auditing Committee
The Auditing Committee was performing its duties strictly according to the Working Criteria of Auditing
Committee and was mainly in charge of supervising, verification and communication of internal and external
auditing works. It was also performing the duties to satisfy the requirement of China Securities Regulatory
Commission as well as Shenzhen Stock Exchange. In the report period, the Company adjusted the composition of
the Auditing Committee and its members in the report period, and the main works performed by the Auditing
Committee were:
1. To call the 3rd meeting of the 7th term of Auditing Committee at which the annual auditing work was discussed
and suggestions were provided on problems in the auditing process.
2. The 4th meeting of the 7th term of Auditing Committee was held to examine the Annual Report 2017, the
General Manager’s Report, Financial Report, Dividend Plan, Proposal of Routine Related Transactions, Providing
of Inventory Provision and Bad Debt Provision, Internal Control Manual, Internal Control Introspective Report,
Internal Control Annual Report and Plan. Statements and were provided on the auditing works of the CPA, and
opinions were issued about extending of the CPA’s service. Improvement suggestions were provided on internal
control. Opinions were provided on the Annual Report and Financial Report which were about to be submitted to
the Board.
73
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
(II) The Remuneration and Assessment Committee
The Remuneration and Assessment Committee was established to set up standard for assessing the performance
and deciding the remuneration of the directors and executives. Detailed plans were produced and submitted to the
Board. In the report period, the Board refined the composition of the Remuneration Committee according to the
composition of the new term of Board. The Committee conducted the following works in the report period:
1.The 3rd meeting of the 7th term of Remuneration and Assessment Committee was held to examine the
assessment outcome of the directors and executives for year 2017, and produced the remuneration plan for the
examination of the Board.
VII. Fulfilling of duties of the Supervisory Committee
Is there any risk in the supervisory activities of the board of supervisors during the reporting period
Nol
No disagreement with supervisory issues by the Supervisory Committee during the report period.
VIII. Assessment and incentive Mechanism for Senior executives
The Company adopts the annual remuneration scheme for directors (excluding independent directors) and senior
executives (including Chairman of the Supervisory Committee) which is a combination of basic wages and
performance wages. According to the “Remuneration and Assessment Scheme for the 5th term of the 7th term of
Board and the 1st shareholders’ provisional meeting 2016(2016-2018), the Remuneration & Assessment
Committee is responsible to assess the performances of the directors and senior executives according to stipulated
procedures. Directors and senior executives are scored and assessed one after another and comes out with a plan
subject to approval of the Board and the Shareholders’ Meeting. Basic wages are distributed on monthly basis and
the overall remunerations are paid upon completion of the annual assessment.
In the report term, the Directors (exclude independent directors) and senior executives (including the Chairman of
Supervisory Committee) are scored and assessed one after another and comes out with a plan decided by the 2nd
meeting of the 7th term of Remuneration Committee, which was subject to approval of the Board.
The Assessment and Remuneration Scheme was produced through legal procedures and has been monitoring and
motivating the directors and senior executives.
The Company hadn’t conducted any share incentive program to any directors or senior executives as of the end of
report period.
IX. Internal control situations
1. Major problems in internal control discovered in the report period
No
2. Self-evaluation report on internal control
Disclosure date of appraisal report on internal control March 29,2019
Disclosed by http://www.cninfo.com.cn dated March 29, 2019 (Announcement
Disclosure index of appraisal report on internal control
2019- )
74
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Proportion of total unit assets covered by appraisal in
the total assets of the consolidated financial statements 100.00%
of the company
Proportion of total unit incomes covered by appraisal in
the total business incomes of the consolidated financial 100.00%
statements of the company
Standards of Defects Evaluation
Type Financial Report Non-financial Report
Deficiency characterized as below will be treated (1) Punishment received by governments
as fatal defects: To correct the fatal errors already below provincial level ( including provincial
published in the financial report （except for the level) but no negative effects for our
retrospection and adjustments of previous years company’s periodic report disclosure will
because of policies changing and other objective be considered as a general deficiency; (2) or
factors changing);fatal errors already discovered punishments from national governments
by auditor, unidentified in the current financial above provincial level but no negative
Standard report; any fraud among top management; invalid effects for our company’s periodic report
monitoring to the financial report from audit disclosure will be considered as a significant
committee and internal audit department. deficiency; (3) external official disclosure
has been already carried out and brought
certain negative effects to our company’s
periodic report disclosure will be considered
as a fatal deficiency.
In accordance with the degree of importance of 1) Losses < consolidating 3% of pre-tax
deficiency that may cause financial report profit, will be asserted as general
errors, our company defined quantitative deficiencies; (2) 3% of combined pre-tax
identification standard of financial report internal profit ≤ losses < 5% of combined pre-tax
deficiency control as per the average of the last profit, will be asserted as significant
three-year total profit. (1) errors reported deficiencies; (3) losses ≥5% of combined
Standards of Quantization indicator < 3% of total profit, will be asserted as pre-tax profit, will be asserted as fatal
general deficiencies; (2) 3% of total profit ≤ deficiencies.
errors reported indicator < 5% of total profit, will
be asserted as significant deficiencies; (3) errors
reported indicator ≥ 5% of total profit, will be
asserted as fatal deficiencies.
Number of major defects in financial
0
reporting（a）
Number of major defects in non
0
financial reporting (a)
Number of important defects in
0
financial reporting（a）
Number of important defects in non
0
financial reporting（a）
75
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
X. Internal Control audit report
Review opinions in the internal control audit report
As far as our best understanding, Hangzhou Steam Turbine Co., Ltd. has been conducting effective internal control over its financial
reporting system in all material aspects we observed as of December 31, 2018, and has been following with the Enterprise Internal
Control Criteria.
Disclosure of internal audit report Disclosure
Disclosure date of audit report
March 29,2019
of internal control (full-text)
Index of audit report of Disclosed by http://www.cninfo.com.cn dated March 29, 2019 (Announcement No.
internal control (full-text)
2019-22 )
Internal audit report’s opinion Unqualified audit opinion
Non-financial reporting the existence of significant
No
deficiencies
Has the CPAs issued a qualified auditor’s report of internal control .
No
Does the internal control audit report issued by the CPAs agree with the self-assessment report of the Board of
Directors
Yes
76
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
X. Corporation bonds
Whether or not the Company public offering corporation bonds in stock exchange, which undue or without
payment in full at maturity on the approval date for annual report disclosed
No
XI. Financial Report
I. Audit report
Type of audit opinion Standard Unqualified opinion
Date of signing this report March 27,2019
Pan-China Certified Public Accountants (Special common
Name of audit firm
partnership)
Reference number of auditor's report Tian Jian Shen No.〔2019〕1468
Name of the certified public accounts Jiang Xiaodong ,Ye Xianbin
Auditors’ Report
To the entire shareholders of Hangzhou Steam Turbine Co., Ltd.
I. Opinion
We have audited the financial statements of Hangzhou Steam Turbine Co., Ltd..(hereinafter referred to as "the
Company"), which comprise the balance sheet as at December 31, 2018, and the income statement, the statement
of cash flows and the statement of changes in owners' equity for the year then ended and notes to the financial
statements.
In our opinion, the attached financial statements are prepared, in all material respects, in accordance with
Accounting Standards for Business Enterprises and present fairly the financial position of the Company as at
December 31, 2018 and its operating results and cash flows for the year then ended.
II. Basis for Our Opinion
We conducted our audit in accordance with the Auditing Standards for Certified Public Accountants in China. Our
responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the
Financial Statements section of our report. According to the Code of Ethics for Chinese CPA, we are independent
of the Company in accordance with the Code of Ethics for Chinese CPA and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our audit opinion.
III. Key Audit Matters
77
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of
the financial statements of the current period. These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters.
(1) Recognition of income
Description of the matter
For details of the relevant information disclosure, please refer to Note III (21), Note V (2) 1 and Note XII (1)
in the financial statements.
The operating income of Hangzhou Steam Turbine Co., Ltd. mainly comes from the production and sales of
industrial steam turbines and other products. In 2018, the amount of operating income items shown in the
consolidated financial statements of Hangzhou Steam Turbine Co., Ltd. was RMB 4,642,807,589.69, of which the
operating income of the industrial steam turbine business was RMB 3,745,445,441.72, accounting for 80.67% of
the operating income.
According to the sales contract of Hangzhou Steam Turbine Co., Ltd. and its customers, where the
domestic-sales products have been delivered and the receipts confirmed by the purchaser have been obtained, and
where the related products for export have been declared for export and the export goods declaration and freight
bill of lading have been obtained treated as the major risk and reward transfer timing point of the ownership of the
goods, and where the economic benefits related to the transaction are likely to flow into the Company with the
relevant costs can be reliably measured, then the realization of income is recognized.
As the operating income is one of the key performance indicators of Hangzhou Steam Turbine Co., there may
be inherent risks that management may achieve a specific goal or expectation through inappropriate revenue
recognition. Therefore, we identify the revenue recognition as a key audit matter.
2. Audit Countermeasures
For revenue recognition, the audit procedures we have implemented mainly include:
(1) Understand key internal controls related to revenue recognition, evaluate the design of these controls,
determine whether they are implemented, and test the operational effectiveness of relevant internal controls;
(2) Examine the main sales contracts, identify the terms related to the main risks and rewards of transfer of
ownership of the goods, and evaluate whether the revenue recognition policies are in compliance with the
Accounting Standards for Business Enterprises;
(3) Implementing substantive analysis procedures for operating income and gross profit margin according to
products and customers to identify whether there are material or abnormal fluctuations, and to identify the causes
of such fluctuations;
(4) For domestic sales income, by sampling method check the supporting documents related to revenue
recognition, including sales contracts, sales invoices, shipment bills and receipts; for export income, by sampling
method check the supporting documents including sales contracts, export declarations, freight bills of lading and
sales invoices;
(5) In conjunction with the letter confirmation of accounts receivable, the sales amount of the current period
for major customers are letter confirmed by sampling method;
(6) By sampling method check the support documents including the invoices, receipts, and bills of lading
corresponding to the operating income confirmed before and after the balance sheet date, and evaluate whether the
operating income is recognized during the appropriate period;
(7) Check that the information related to the operating income whether has been properly presented and
disclosed in the financial statements.
(II) Impairment of accounts receivable
1. Description of the matter
For related information disclosure, please refer to Note III (10) and Note V (1) 2 (3) of the financial
statements.
As of December 31, 2018, the book balance of accounts receivable items shown in the consolidated financial
statements of Hangzhou Steam Turbine Co., Ltd. was RMB 3,012,706,824.47, the bad debt provision was RMB
1,071,908,569.21, and the book value was RMB 1,940,798,255.26.
For accounts receivable that are individually tested for impairment, when there is objective evidence that it is
impaired, the management considers the debtor’s industry status, operating conditions, financial status, lawsuits
involvements, repayment records and so on to estimate the present value of future cash flows and determine the
provision for bad debts that should be accrued; for accounts receivable that are tested for impairment using a
combination method, the management divides the combination according to the age of the accounts and adjusts
78
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
based on a historical loss rate of a similar combination with the similar credit risk characteristics and the actual
situation to estimate the present value of future cash flow and determine the provision for bad debts that should be
accrued.
Due to the significant amount of accounts receivable and the impairment test of accounts receivable
involving significant management judgment, we determine the impairment of accounts receivable as a key audit
matter.
2. Audit Countermeasures
For the impairment of accounts receivable, the audit procedures we have implemented mainly include:
(1) Understand the key internal controls related to the impairment of accounts receivable, evaluate the design
of these controls, determine whether they have been implemented, and test the operational effectiveness of the
relevant internal controls;
(2) Review the subsequent actual write-off or reversal of accounts receivable with provision for bad debts in
previous years, and evaluate the accuracy of the management's past forecasts;
(3) Review the management's relevant considerations and the objective evidence for the impairment test of
the accounts receivable, and evaluate whether the management fully recognizes the accounts receivable that have
been impaired;
(4) For accounts receivable that are individually tested for impairment, obtain and examine the management's
forecast on the present value of future cash flows, evaluate the rationality of the key assumptions and the accuracy
of the data used in the forecast, and verify with the external evidence obtained;
(5) For the accounts receivable that are tested for impairment using the combination method, evaluate the
rationality of the management's combination dividing according to the credit risk characteristics; based on the
historical loss rate of a combination with similar credit risk characteristics and the relevant observable data
reflecting the current situation and so on to evaluate the rationality of the management's impairment test method
(including the proportion of the provision for bad debts of each combination); test the accuracy and completeness
of the data used by the management (including the accounts receivable combination with aging as the risk
characteristics, checking the accuracy of the ageing of accounts receivable by sampling method) and test whether
the calculation of the corresponding provision for bad debts is accurate;
(6) Checking the post-payments of accounts receivable and evaluating the reasonableness of the
management's provision for bad debts of accounts receivable;
(7) Check whether the information related to the impairment of accounts receivable has been properly
presented and disclosed in the financial statements.
(III) Net realizable value of inventories
1. Description of the matter
For details of relevant information disclosure, please refer to Note III (11) and Note V (1) 5 of the financial
statements.
As of December 31, 2018, the book balance of the inventory items shown in the consolidated financial
statements of Hangzhou Steam Turbine Co., Ltd. was RMB 2,411,100,538.02, the provision for price falling was
RMB 222,979,195.15, and the book value was RMB 2,188,121,342.87.
On the balance sheet date, the inventories are measured at the lower of the cost and net realizable value, and
the provision for inventory falling price is made based on the difference that the cost of a single inventory
exceeding the net realizable value. On the basis of considering the purpose of holding the inventory, the
management determines the estimated selling price according to the contract price, the market price of the same or
similar products, the advance receipt, the estimated disposal income, etc., and determines the net realizable value
of the inventory by the estimated sales price subtracting the estimated occurrence cost will be happened at the
time of completion and subtracting the estimated sales expenses and related taxes and fees
Due to the significant amount of inventories and the determination of the net realizable value of inventories
involving significant management judgment, we determine the net realizable value of inventories as a key audit
item.
2. Audit Countermeasures
For the net realizable value of inventories, the audit procedures we have implemented mainly include:
(1) Understand the key internal controls related to the net realizable value of inventory, evaluate the design of
these controls, determine whether they have been implemented, and test the operational effectiveness of the
relevant internal controls;
(2) Review management's forecast of the net realizable value of inventory and the actual operating results in
previous years, and evaluate the accuracy of management's past forecasts;
(3) by sampling method review the management's forecast of the estimated selling price of the inventory, and
compare the estimated selling price with the post-event situation, the contracted selling price, the advance receipt,
79
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
and the valuation value;
(4) evaluate the management's reasonableness for the estimation on the costs, sales expenses and related
taxes and fees that will occur from the inventory to its completion sales;
(5) test the accuracy of the management's calculation on the net realizable value of inventory;
(6) In combination with the inventory monitoring, check whether the ending inventory has long storage age,
obsolete models, project suspension or termination situation, and evaluate whether the management has
reasonably estimated the net realizable value;
(7) Check whether the information related to the net realizable value of the inventory has been properly
presented and disclosed in the financial statements.
IV. Other information
The management of the Company is responsible for the other information. The other information comprises
information of the Company's annual report, but excludes the financial statements and our auditor's report.
Our opinion on the financial statements does not cover the other information and we do not and will not express
any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information
identified above and, in doing so, consider whether the other information is materially inconsistent with the
financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of this
auditor's report, we conclude that there is a material misstatement of this other information, we are required to
report that fact. We have nothing to report in this regard
V. Responsibilities of Management and Those Charged with Governance for the Financial Statements
The Company's management is responsible for preparing the financial statements in accordance with the
requirements of Accounting Standards for Business Enterprises to achieve a fair presentation, and for designing,
implementing and maintaining internal control that is necessary to ensure that the financial statements are free
from material misstatements, whether due to frauds or errors.
In preparing the financial statements, management of the Company is responsible for assessing the Company's
ability to continue as a going concern, disclosing matters related to going concern and using the going concern
basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no
realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company's financial reporting process.
VI. Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with the audit standards will always detect a material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional
scepticism throughout the audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, omissions,
misrepresentations, or the override of internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by management of the Company.
(4) Conclude on the appropriateness of using the going concern assumption by the management of the Company,
and conclude, based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude
80
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures
in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based
on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may
cause the Company to cease to continue as a going concern.
(5) Evaluate the overall presentation, structure and content of the financial statements, including the disclosures,
and whether the financial statements represent the underlying transactions and events in a manner that achieves
fair presentation.
(6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Company to express an opinion on the financial statements and bear all liability for the
opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and
timing of the audit and significant audit matters, including any significant deficiencies in internal control that we
identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of
most significance in the audit of the financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure
about the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication.
II. The Financial Statements
All figures in the Notes to the Financial Statements are in RMB.
1. Consolidated Balance Sheet
Prepared by: Hangzhou Steam Turbine Co., Ltd
December 31,2018
In RMB
Items At the end of term Beginning of term
Current asset：
Monetary fund 1,382,392,009.59 1,222,677,495.94
Settlement provision
Outgoing call loan
Financial assets measured at fair value with variations accounted into
current income account
Derivative financial assets
Notes receivable & Account receivable 2,535,887,430.48 2,410,628,336.14
Including:Notes receivable 595,089,175.22 715,410,887.68
Account receivable 1,940,798,255.26 1,695,217,448.46
Prepayments 370,958,990.74 446,166,710.77
Insurance receivable
Reinsurance receivable
Provisions of Reinsurance contracts receivable
Other account receivable 32,552,458.76 23,805,005.57
Including：Interest receivable
Dividend receivable 16,557,292.60 6,900,000.00
Repurchasing of financial assets
Inventories 2,188,121,342.87 2,092,575,691.92
Assets held for sales
Non-current asset due within 1 year
81
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Other current asset 1,188,747,955.74 904,426,265.79
Total of current assets 7,698,660,188.18 7,100,279,506.13
Non-current assets：
Loans and payment on other’s behalf disbursed
Available-for-sale financial assets 2,130,076,555.20 2,417,780,984.08
Held-to-maturity investments
Long-term receivable
Long term share equity investment 8,221,439.29 5,800,000.00
Property investment
Fixed assets 783,740,928.49 566,710,937.10
Construction in progress 454,767,328.93 255,921,660.09
Productive biological assets
Oil and natural gas assets
Intangible assets 279,740,756.49 285,670,638.55
R & D costs
Goodwill
Long-germ expenses to be amortized 253,886.90
Deferred tax assets 213,962,707.23 198,179,569.53
Other non-current asset
Total of non-current assets 3,870,509,715.63 3,730,317,676.25
Total of assets 11,569,169,903.81 10,830,597,182.38
Current liabilities
Short-term loans 139,600,000.00 115,500,000.00
Loan from Central Bank
Deposit received and hold for others
Borrowingf funds
Financial liabilities measured at fair value with variations accounted into
current income account
Derivative financial liabilities
Notes payable & account payable 1,350,583,381.53 1,098,125,424.57
Advance payment 2,582,234,158.36 2,419,751,405.08
Selling of repurchased financial assets
Fees and commissions receivable
Employees’ wage payable 86,390,955.29 79,525,773.69
Tax payable 62,405,200.62 34,920,073.37
Other account payable 36,904,303.01 28,128,478.10
Including：Interest payable 437,314.72 268,860.77
Dividend payable
Reinsurance fee payable
Insurance contract provision
Entrusted trading of securities
Entrusted selling of securities
Liabilities held for sales
Non-current liability due within 1 year 100,100,000.00 4,900,000.00
Other current liability
Total of current liability 4,358,217,998.81 3,780,851,154.81
Non-current liabilities：
Long-term loan 22,700,000.00 100,000,000.00
Bond payable
Including：preferred stock
Sustainable debt
Long-term payable 474,876,451.26 447,292,297.73
Long-term payable employees’s remuneration
Expected liabilities
82
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Deferred income 44,675,128.30 4,063,615.00
Deferred income tax liability 244,169,946.57 278,217,667.94
Other non-current liabilities
Total non-current liabilities 786,421,526.13 829,573,580.67
Total of liability 5,144,639,524.94 4,610,424,735.48
Owners’ equity
Share capital 754,010,400.00 754,010,400.00
Other equity instruments
Including：preferred stock
Sustainable debt
Capital reserves 151,684,419.65 139,545,089.02
Less：Shares in stock
Other comprehensive income 1,377,168,522.74 1,570,358,510.09
Special reserves 21,020,671.47 25,369,714.61
Surplus reserves 621,112,807.78 621,112,807.78
Common risk provision
Retained profit 3,082,544,107.52 2,774,420,288.05
Total of owner’s equity belong to the parent company 6,007,540,929.16 5,884,816,809.55
Minority shareholders’ equity 416,989,449.71 335,355,637.35
Total of owners’ equity 6,424,530,378.87 6,220,172,446.90
Total of liabilities and owners’ equity 11,569,169,903.81 10,830,597,182.38
Legal Representative: Zheng Bin
Person in charge of accounting：Zhao Jiamao
Accounting Dept Leader: Jin Can
83
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
2.Parent Company Balance Sheet
In RMB
Items At the end of term Beginning of term
Current asset：
Monetary fund 877,357,020.98 654,407,180.33
Financial assets measured at fair value with variations accounted into
current income account
Derivative financial assets
Notes receivable & Account receivable 1,676,913,196.88 1,553,594,608.07
Including: Notes receivable 302,284,986.43 357,644,500.75
Account receivable 1,374,628,210.45 1,195,950,107.32
Prepayments 208,498,421.20 163,701,036.86
Other account receivable 19,984,760.06 11,211,538.86
Including：Interest receivable
Dividend receivable 16,557,292.60 6,900,000.00
Inventories 1,584,030,951.83 1,598,522,597.27
Assets held for sales
Non-current asset due within 1 year
Other current asset 890,000,000.00 737,474,571.12
Total of current assets 5,256,784,350.95 4,718,911,532.51
Non-current assets：
Available-for-sale financial assets 2,090,631,297.62 2,377,021,294.50
Held-to-maturity investments
Long-term receivable
Long term share equity investment 502,919,378.03 502,919,378.03
Property investment
Fixed assets 448,890,495.75 265,423,321.11
Construction in progress 142,310,055.48 151,569,540.89
Productive biological assets
Oil and natural gas assets
Intangible assets 165,734,347.73 169,780,320.65
R & D costs
Goodwill
Long-germ expenses to be amortized 253,886.90
Deferred tax assets 163,871,631.81 146,802,178.11
Other non-current asset
Total of non-current assets 3,514,357,206.42 3,613,769,920.19
Total of assets 8,771,141,557.37 8,332,681,452.70
Current liabilities
84
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Short-term loans
Financial liabilities measured at fair value with variations accounted into
current income account
Derivative financial liabilities
Notes payable and account payable 654,853,099.86 462,704,271.86
Advance payment 1,877,069,335.29 1,817,869,660.07
Employees’ wage payable 43,332,523.01 42,770,536.86
Tax payable 37,809,874.53 3,918,864.69
Other account payable 24,708,959.22 15,628,537.39
Including：Interest payable 212,010.69 112,597.22
Dividend payable
Liabilities held for sales
Non-current liability due within 1 year 100,000,000.00
Other current liability
Total of current liability 2,737,773,791.91 2,342,891,870.87
Non-current liabilities：
Long-term loan 100,000,000.00
Bond payable
Including：preferred stock
Sustainable debt
Long-term payable 264,512,388.24 237,067,491.46
Employees’ wage payable
Expected liabilities
Deferred income 41,944,793.30
Deferred income tax liability 244,169,946.57 278,217,667.94
Other non-current liabilities
Total of Non-current liabilities 550,627,128.11 615,285,159.40
Total of liability 3,288,400,920.02 2,958,177,030.27
Owners’ equity
Share capital 754,010,400.00 754,010,400.00
Other equity instrument
Including：preferred stock
Sustainable debt
Capital reserves 138,953,250.09 138,953,250.09
Less：Shares in stock
Other comprehensive income 1,377,784,111.74 1,570,912,609.09
Special reserves 7,609,505.31 9,629,800.19
Surplus reserves 602,356,402.65 602,356,402.65
Retained profit 2,602,026,967.56 2,298,641,960.41
Total of owners’ equity 5,482,740,637.35 5,374,504,422.43
Total of liabilities and owners’ equity 8,771,141,557.37 8,332,681,452.70
85
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Legal Representative: Zheng Bin
Person in charge of accounting：Zhao Jiamao
Accounting Dept Leader: Jin Can
86
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
3.Consolidated Income statement
In RMB
Same period of the
Items Report period
previous year
I. Income from the key business 4,642,807,589.69 3,447,142,669.49
Incl：Business income 4,642,807,589.69 3,447,142,669.49
Interest income
Insurance fee earned
Fee and commission received
II. Total business cost 4,321,036,104.54 3,454,428,905.88
Incl：Business cost 3,220,021,819.91 2,450,587,325.79
Interest expense
Fee and commission paid
Insurance discharge payment
Net claim amount paid
Net amount of withdrawal of insurance contract reserve
Insurance policy dividend paid
Reinsurance expenses
Business tax and surcharge 41,953,531.94 31,221,773.02
Sales expense 174,205,763.02 169,520,147.67
Administrative expense 453,278,171.52 433,151,164.67
R & D costs 264,643,888.76 211,027,767.11
Financial expenses -17,422,889.91 24,287,127.82
Including：Interest expense 13,540,383.97 9,972,261.98
Interest income 16,327,538.73 8,249,739.28
Asset impairment loss 184,355,819.30 134,633,599.80
Add：Other incme 25,802,658.17 10,195,671.25
Investment gain（“-”for loss） 117,535,765.44 120,565,851.26
Incl: investment gains from affiliates -585,160.71
Changing income of fair value
Gains from currency exchange
Income on disposal of assets -9,843.23 2,740,865.13
III. Operational profit（“-”for loss） 465,100,065.53 126,216,151.25
Add ：Non-operational income 12,138,431.92 8,075,659.19
Less: Non-operating expense 7,169,435.39 1,635,679.94
IV.Total profit(“-”for loss) 470,069,062.06 132,656,130.50
Less：Income tax expenses 55,928,956.18 10,835,754.48
V. Net profit 414,140,105.88 121,820,376.02
1.Net continuing operating profit 414,140,105.88 121,820,376.02
2.Termination of operating net profit
Net profit attributable to the owners of parent company 345,824,339.47 68,753,250.90
Minority shareholders’ equity 68,315,766.41 53,067,125.12
VI. Net after-tax of other comprehensive income -193,272,909.22 -567,294,413.99
Net of profit of other comprehensive income attributable to owners of the par
-193,189,987.35 -567,060,789.75
ent company.
（I）Other comprehensive income items that will not be reclassified into
gains/losses in the subsequent accounting period
1.Re-measurement of defined benefit plans of changes in net debt or net asset
s
2.Other comprehensive income under the equity method investee can not be r
eclassified into profit or loss.
（II）
-193,189,987.35 -567,060,789.75
Other comprehensive income that will be reclassified into profit or loss.
1.Other comprehensive income under the equity method investee can be recla
ssified into profit or loss.
2.Gains and losses from changes in fair value available for sale financial asset
-193,128,497.35 -566,887,547.71
s
3.Held-to-maturity investments reclassified to gains and losses of available fo
87
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
r sale financial assets
4.The effective portion of cash flow hedges and losses
5.Translation differences in currency financial statements -61,490.00 -173,242.04
6.Other
Net of profit of other comprehensive income attributable to Minority
-82,921.87 -233,624.24
shareholders’ equity
VII. Total comprehensive income 220,867,196.66 -445,474,037.97
Total comprehensive income attributable to the owner of the parent company 152,634,352.12 -498,307,538.85
Total comprehensive income attributable minority shareholders 68,232,844.54 52,833,500.88
VIII. Earnings per share
（I）Basic earnings per share 0.46 0.09
(II)Diluted earnings per share 0.46 0.09
Legal Representative: Zheng Bin
Person in charge of accounting：Zhao Jiamao
Accounting Dept Leader: Jin Can
88
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
4. Income statement of the Parent Company
In RMB
Same period of the
Items Report period
previous year
I. Income from the key business 2,929,805,668.71 2,196,716,474.74
Incl：Business cost 2,071,053,547.88 1,694,306,219.84
Business tax and surcharge 24,329,202.98 10,973,986.81
Sales expense 103,094,916.72 105,694,953.84
Administrative expense 282,726,613.74 275,760,628.45
R & D costs 166,413,462.10 133,401,508.33
Financial expenses -16,013,179.60 13,375,506.45
Including：Interest expenses 4,888,997.17 3,519,361.10
Interest income 11,240,684.14 5,138,097.48
Asset impairment loss 163,896,062.98 97,887,620.88
Add：Other income 21,212,334.73 3,890,400.53
Investment gain（“-”for loss） 205,883,243.16 167,830,820.86
Incl: investment gains from affiliates
Gains from change of fir value （“-”for loss）
Assets disposal income 2,555,740.94
II. Operational profit（“-”for loss） 361,400,619.80 39,593,012.47
Add ：Non-operational income 11,384,845.48 4,030,380.36
Less：Non business expenses 5,376,965.13 1,307,587.69
III.Total profit(“-”for loss) 367,408,500.15 42,315,805.14
Less：Income tax expenses 26,322,973.00 -13,027,027.19
IV. Net profit 341,085,527.15 55,342,832.33
1.Net continuing operating profit 341,085,527.15 55,342,832.33
2.Termination of operating net profit
V. Net after-tax of other comprehensive income -193,128,497.35 -566,887,547.71
（I）Other comprehensive income items that will not be reclassified into
gains/losses in the subsequent accounting period
1.Re-measurement of defined benefit plans of changes in net debt or net asset
s
2.Other comprehensive income under the equity method investee can not be r
eclassified into profit or loss.
（II）
Other comprehensive income that will be reclassified into profit or loss. -193,128,497.35 -566,887,547.71
1.Other comprehensive income under the equity method investee can be recla
ssified into profit or loss.
2.Gains and losses from changes in fair value available for sale financial asset
s -193,128,497.35 -566,887,547.71
3.Held-to-maturity investments reclassified to gains and losses of available fo
r sale financial assets
4.The effective portion of cash flow hedges and losses
5.Translation differences in currency financial statements
6.Other
VI. Total comprehensive income 147,957,029.80 -511,544,715.38
89
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
VII. Earnings per share
（I）Basic earnings per share 0.45 0.07
(II)Diluted earnings per share 0.45 0.07
Legal Representative: Zheng Bin
Person in charge of accounting：Zhao Jiamao
Accounting Dept Leader: Jin Can
5. Consolidated Cash flow statement
In RMB
Same period of the previous
Items Report period
year
I.Cash flows from operating activities
Cash received from sales of goods or rending of services 4,150,843,538.52 3,494,692,256.02
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 amount from disposal financial assets that
measured by fair value and with variation reckoned into current
gains/losses
Cash received from interest, commission charge and
commission
Net increase of inter-bank fund received
Net increase of repurchasing business
Tax returned 8,126,697.11 13,672,821.64
Other cash received from business operation 223,948,786.76 136,993,210.01
Sub-total of cash inflow 4,382,919,022.39 3,645,358,287.67
Cash paid for purchasing of merchandise and services 2,317,958,643.70 2,188,106,830.33
Net increase of client trade and advance
Net increase of savings n 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 709,795,993.52 675,225,336.13
Taxes paid 330,799,484.51 237,999,779.64
90
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Other cash paid for business activities 379,931,733.46 338,723,549.80
Sub-total of cash outflow from business activities 3,738,485,855.19 3,440,055,495.90
Cash flow generated by business operation, net 644,433,167.20 205,302,791.77
II.Cash flow generated by investing
Cash received from investment retrieving 101,314,432.00 103,680,000.00
Cash received as investment gains 108,463,633.55 84,616,250.54
Net cash retrieved from disposal of fixed assets, intangible
assets, and other long-term assets 136,785.20 16,494,301.22
Net cash received from disposal of subsidiaries or other
operational units
Other investment-related cash received 4,507,668,985.20 4,135,806,169.07
Sub-total of cash inflow due to investment activities 4,717,583,835.95 4,340,596,720.83
Cash paid for construction of
fixed assets, intangible assets 482,008,267.16 149,836,385.82
and other long-term assets
Cash paid as investment 68,040,000.00 102,400,000.00
Net increase of loan against pledge
Net cash received from subsidiaries and other operational units
Other cash paid for investment activities 4,707,907,000.00 3,931,296,261.75
Sub-total of cash outflow due to investment activities 5,257,955,267.16 4,183,532,647.57
Net cash flow generated by investment -540,371,431.21 157,064,073.26
III.Cash flow generated by financing
Cash received as investment 84,075,000.00
Incl: Cash received as investment from minor shareholders 84,075,000.00
Cash received as loans 162,800,000.00 232,500,000.00
Cash received from bond placing
Other financing –related cash received
Sub-total of cash inflow from financing activities 246,875,000.00 232,500,000.00
Cash to repay debts 120,800,000.00 208,500,000.00
Cash paid as dividend, profit, or interests 109,705,436.02 49,845,493.76
Incl: Dividend and profit paid by subsidiaries to minor
shareholders 60,092,795.00 41,161,592.50
Other cash paid for financing activities 2,530,666.67 23,054,431.92
Sub-total of cash outflow due to financing activities 233,036,102.69 281,399,925.68
Net cash flow generated by financing 13,838,897.31 -48,899,925.68
IV. Influence of exchange rate alternation on cash and cash
equivalents 6,793,349.07 -7,211,089.37
V.Net increase of cash and cash equivalents 124,693,982.37 306,255,849.98
Add: balance of cash and cash equivalents at the beginning of
term 1,137,492,834.83 831,236,984.85
VI ..Balance of cash and cash equivalents at the end of term 1,262,186,817.20 1,137,492,834.83
Legal Representative: Zheng Bin
91
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Person in charge of accounting：Zhao Jiamao
Accounting Dept Leader: Jin Can
92
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
6. Cash Flow Statement of the Parent Company
In RMB
Items Amount in this period Amount in last period
I.Cash flows from operating activities
Cash received from sales of goods or rending of services 2,201,529,921.02 2,123,033,690.29
Tax returned 1,879,838.88 1,250,418.38
Other cash received from business operation 39,876,451.63 20,481,813.79
Sub-total of cash inflow 2,243,286,211.53 2,144,765,922.46
Cash paid for purchasing of merchandise and services 1,148,104,039.15 1,199,591,051.02
Cash paid to staffs or paid for staffs 464,351,072.55 457,506,060.50
Taxes paid 187,542,833.21 106,962,139.60
Other cash paid for business activities 161,062,408.27 123,920,412.74
Sub-total of cash outflow from business activities 1,961,060,353.18 1,887,979,663.86
Cash flow generated by business operation, net 282,225,858.35 256,786,258.60
II.Cash flow generated by investing
Cash received from investment retrieving 100,000,000.00 103,680,000.00
Cash received as investment gains 196,225,950.56 135,809,172.66
Net cash retrieved from disposal of fixed assets, intangible assets,
and other long-term assets 16,038,777.07
Net cash received from disposal of subsidiaries or other
operational units
Other investment-related cash received 2,979,772,279.69 2,713,003,714.00
Sub-total of cash inflow due to investment activities 3,275,998,230.25 2,968,531,663.73
Cash paid for construction of
fixed assets, intangible assets 192,468,557.01 70,439,655.26
and other long-term assets
Cash paid as investment 66,000,000.00 102,400,000.00
Net cash received from subsidiaries and other operational units
Other cash paid for investment activities 3,070,000,000.00 2,676,530,440.00
Sub-total of cash outflow due to investment activities 3,328,468,557.01 2,849,370,095.26
Net cash flow generated by investment -52,470,326.76 119,161,568.47
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 ash received
Sub-total of cash inflow from financing activities 100,000,000.00
Cash to repay debts 100,000,000.00
Cash paid as dividend, profit, or interests 42,490,103.70 3,406,763.88
Other cash paid for financing activities
Sub-total of cash outflow due to financing activities 42,490,103.70 103,406,763.88
Net cash flow generated by financing -42,490,103.70 -3,406,763.88
IV. Influence of exchange rate alternation on cash and cash
equivalents 4,535,234.41 -5,925,130.42
V.Net increase of cash and cash equivalents 191,800,662.30 366,615,932.77
Add: balance of cash and cash equivalents at the beginning of
term 650,546,455.53 283,930,522.76
VI ..Balance of cash and cash equivalents at the end of term 842,347,117.83 650,546,455.53
93
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Legal Representative: Zheng Bin
Person in charge of accounting：Zhao Jiamao
Accounting Dept Leader: Jin Can
94
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
7. Consolidated Statement on Change in Owners’ Equity
Amount in this period
In RMB
Amount in this period
Owner’s equity Attributable to the Parent Company
Other Equity instrument Minor
Other Common Total of
Items preferr Capital Less: Shares Specialized Surplus Retained
Share shareholders
Comprehens risk owners’ equity
Capital ed Sustaina Other reserves in stock reserve reserves profit ’ equity
ive Income provision
stock ble debt
I.Balance at the end of last 754,010,4 139,545,0 1,570,358,5 25,369,714. 621,112,807.7 2,774,420,288 335,355,637. 6,220,172,446
year 00.00 89.02 10.09 61 8 .05 35 .90
Add: Change of accounting
policy
Correcting of previous errors
Merger of entities under
common control
Other
II.Balance at the beginning of 754,010,4 139,545,0 1,570,358,5 25,369,714. 621,112,807.7 2,774,420,288 335,355,637. 6,220,172,446
current year 00.00 89.02 10.09 61 8 .05 35 .90
III.Changed in the current 12,139,33 -193,189,98 -4,349,043.1 308,123,819.4 81,633,812.3 204,357,931.9
year 0.63 7.35 4 7 6 7
（1）Total comprehensive -193,189,98 345,824,339.4 68,232,844.5 220,867,196.6
income 7.35 7 4 6
（II）Investment or decreasing 84,795,000.0
84,795,000.00
of capital by owners 0
84,795,000.0
1 ． Ordinary Shares invested 84,795,000.00
0
95
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
by shareholders
2．Holders of other equity ins
truments invested capital
3．Amount of shares paid and
accounted as owners’ equity
4．Other
-37,700,520.0 -60,812,795. -98,513,315.0
（III）Profit allotment
0 00 0
1.Providing of surplus
reserves
2.Providing of common risk
provisions
3．Allotment to the owners (or -37,700,520.0 -60,812,795. -98,513,315.0
shareholders) 0 00 0
4．Other
(IV) Internal transferring of
owners’ equity
1. Capitalizing of capital
reserves (or to capital shares)
2. Capitalizing of surplus
reserves (or to capital shares)
3．Making up losses by
surplus reserves.
4.Change amount of defined
benefit plans that carry
forward
96
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Retained earnings
5．Other
-3,207,751.2
(V). Special reserves -549,798.43 -3,757,549.69
6
1. Provided this year
-3,207,751.2
2．Used this term -549,798.43 -3,757,549.69
6
12,139,33 -1,141,291.8 -10,031,438.
（VI）Other 966,600.00
0.63 8 75
IV. Balance at the end of this 754,010,4 151,684,4 1,377,168,5 21,020,671. 621,112,807.7 3,082,544,107 416,989,449. 6,424,530,378
term 00.00 19.65 22.74 47 8 .52 71 .87
Legal Representative: Zheng Bin Person in charge of accounting：Zhao Jiamao Accounting Dept Leader: Jin Can
Amount in last year
InRMB
Amount in last year
Owner’s equity Attributable to the Parent Company
Other Equity
instrument
Minor
Less: Other Total of
Items Capital Specialized Surplus Common risk Retained
Share shareholders’
preferr Sust Shares in Comprehens owners’ equity
Capital reserves reserve reserves provision profit equity
ed aina Other stock ive Income
stock ble
debt
I.Balance at the end of last 754,010,4 139,590, 2,137,419,2 621,112,807 2,705,667,037 6,745,622,670
27,546,353.37 360,276,427.29
year 00.00 345.09 99.84 .78 .15 .52
Add: Change of accounting
97
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
policy
Correcting of previous errors
Merger of entities under
common control
Other
II.Balance at the beginning of 754,010,4 139,590, 2,137,419,2 621,112,807 2,705,667,037 6,745,622,670
27,546,353.37 360,276,427.29
current year 00.00 345.09 99.84 .78 .15 .52
III.Changed in the current -45,256. -567,060,78 -525,450,223.
-2,176,638.76 68,753,250.90 -24,920,789.94
year 07 9.75 62
（1）Total comprehensive -567,060,78 -445,474,037.
68,753,250.90 52,833,500.88
income 9.75 97
（II）Investment or decreasing
of capital by owners
1 ． Ordinary Shares invested
by shareholders
2．Holders of other equity ins
truments invested capital
3．Amount of shares paid and
accounted as owners’ equity
4．Other
-41,161,592.5
（III）Profit allotment -41,161,592.50
0
1.Providing of surplus
reserves
2.Providing of common risk
provisions
98
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
3．Allotment to the owners (or -41,161,592.5
-41,161,592.50
shareholders) 0
4．Other
(IV) Internal transferring of
owners’ equity
1. Capitalizing of capital
reserves (or to capital shares)
2. Capitalizing of surplus
reserves (or to capital shares)
3．Making up losses by
surplus reserves.
4.Change amount of defined
benefit plans that carry
forward
Retained earnings
5．Other
(V). Special reserves -2,176,638.76 -378,458.25 -2,555,097.01
1. Provided this year
2．Used this term -2,176,638.76 -378,458.25 -2,555,097.01
-45,256. -36,259,496.1
（VI）Other -36,214,240.07
07 4
IV. Balance at the end of this 754,010,4 139,545, 1,570,358,5 621,112,807 2,774,420,288 6,220,172,446
25,369,714.61 335,355,637.35
term 00.00 089.02 10.09 .78 .05 .90
Legal Representative: Zheng Bin Person in charge of accounting：Zhao Jiamao Accounting Dept Leader: Jin Can
99
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
8.Statement of change in owner’s Equity of the Parent Company
Amountinthisperiod InRMB
100
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Amount in this period
Other Equity
instrument
Less:
Other
Items Capital Shares Specialized Total of owners’
Share Capital preferr Sust Comprehensive Surplus reserves Retained profit
reserves in reserve equity
ed aina Other Income
stock
stock ble
debt
138,953,250.0 5,374,504,422.4
I.Balance at the end of last year 754,010,400.00 1,570,912,609.09 9,629,800.19 602,356,402.65 2,298,641,960.41
9 3
Add: Change of accounting policy
Correcting of previous errors
Other
II.Balance at the beginning of 138,953,250.0 5,374,504,422.4
754,010,400.00 1,570,912,609.09 9,629,800.19 602,356,402.65 2,298,641,960.41
current year 9 3
III.Changed in the current year -193,128,497.35 -2,020,294.88 303,385,007.15 108,236,214.92
（I）Total comprehensive income -193,128,497.35 341,085,527.15 147,957,029.80
(II) Investment or decreasing of
capital by owners
1 ． Ordinary Shares invested by s
hareholders
2 ． Holders of other equity instru
ments invested capital
3.Amount of shares paid and
101
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
accounted as owners’ equity
4．Other
（III）Profit allotment -37,700,520.00 -37,700,520.00
1.Providing of surplus reserves
2．Allotment to the owners (or
-37,700,520.00 -37,700,520.00
shareholders)
3．Other
(IV) Internal transferring of
owners’ equity
1. Capitalizing of capital reserves
(or to capital shares)
2. Capitalizing of surplus reserves
(or to capital shares)
3．Making up losses by surplus
reserves.
4.Change amount of defined
benefit plans that carry forward
Retained earnings
5．Other
(V) Special reserves -2,020,294.88 -2,020,294.88
1. Provided this year
2．Used this term -2,020,294.88 -2,020,294.88
（VI）Other
138,953,250.0 5,482,740,637.3
IV. Balance at the end of this term 754,010,400.00 1,377,784,111.74 7,609,505.31 602,356,402.65 2,602,026,967.56
9 5
102
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Legal Representative: Zheng Bin Person in charge of accounting：Zhao Jiamao Accounting Dept Leader: Jin Can
Amountinlastyear
In RMB
Amount in last year
Other Equity
instrument Less: Other
Items Capital Specialized Total of owners’
Share Capital preferr Shares in Comprehensiv Surplus reserves Retained profit
Sustai Oth reserves reserve equity
ed stock e Income
nable er
stock
debt
138,953,2 2,137,800,156 5,887,293,371.4
I.Balance at the end of last year 754,010,400.00 10,874,033.85 602,356,402.65 2,243,299,128.08
50.09 .80 7
Add: Change of accounting policy
Correcting of previous errors
Other
II.Balance at the beginning of current 138,953,2 2,137,800,156 5,887,293,371.4
754,010,400.00 10,874,033.85 602,356,402.65 2,243,299,128.08
year 50.09 .80 7
-566,887,547.
III.Changed in the current year -1,244,233.66 55,342,832.33 -512,788,949.04
71
-566,887,547.
（I）Total comprehensive income 55,342,832.33 -511,544,715.38
71
(II) Investment or decreasing of
capital by owners
1 ． Ordinary Shares invested by share
holders
2．Holders of other equity instrument
103
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
s invested capital
3.Amount of shares paid and
accounted as owners’ equity
4．Other
（III）Profit allotment
1.Providing of surplus reserves
2．Allotment to the owners (or
shareholders)
3．Other
(IV) Internal transferring of owners’
equity
1. Capitalizing of capital reserves (or
to capital shares)
2. Capitalizing of surplus reserves (or
to capital shares)
3．Making up losses by surplus
reserves.
4.Change amount of defined benefit
plans that carry forward
Retained earnings
5．Other
(V) Special reserves -1,244,233.66 -1,244,233.66
1. Provided this year
2．Used this term -1,244,233.66 -1,244,233.66
（VI）Other
IV. Balance at the end of this term 754,010,400.00 138,953,2 1,570,912,609 9,629,800.19 602,356,402.65 2,298,641,960.41 5,374,504,422.4
104
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
50.09 .09 3
Legal Representative: Zheng Bin Person in charge of accounting：Zhao Jiamao Accounting Dept Leader: Jin Can
105
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Hangzhou Steam Turbine Co.,Ltd.
Notes to Financial Statement
Year 2018
I.Company Profile
Hangzhou Steam Turbine Co., Ltd. (the Company) was incorporated as a joint stock limited
company exclusively promoted by Hangzhou Steam Turbine & Power Group Company Limited
(“HSTG”) approved by the Securities Regulatory Commission of the State Council with the
Document SRC [1998] No. 8 by offering domestically listed foreign currency ordinary shares (B
Shares), with registration date: April 23, 1998, Headquartered in Hangzhou, Zhejiang Province.
The company now holds a unified social credit code for the 913300007042026204 business
license, The Company’s registered capital is increased to RMB754.0104 million with total capital
share of 754.0104 million shares (face value RMB1.00). Among which state-owned legal person
shares were 479.8248 million shares and 274.1856 million shares of current B shares. The shares
were issued and listed for trading in Shenzhen Stock Exchange on April 28, 1998.
The design, manufacturing, Main Business Activities: R&D, Production and Sales of Industrial
Steam Turbine. Main Products: Industrial Steam Turbine
These Financial Statements are released upon approval at the 31st
meeting of the 7th term of Board held on March 27, 2019.
19 subsidiaries including Zhejiang Steam Turbine Packaged Technologies Co., Ltd., Hangzhou
Zhongneng Steam Turbine Power Co., Ltd., Hangzhou Steam Turbine Casting Co.,Ltd. Hangzhou
Steam Turbine Auxiliary Co., Ltd., Hangzhou Steam Turbine Machinery & Equipment Co., Ltd.,
Zhejiang Turbine Import & Export Co., Ltd., and Hangzhou Steam Turbine Heavy Industry Co.,
Ltd., were consolidated to the Financial Statements. For details Notes of equity in other subjects of
this annual report
II. Basis of compiling the financial statement
(1) Basis of compiling
The Company adopts perpetual operation as the basis of financial statements.
(II) Assessment on perpetuation
No issue or situation, in 12 months since the end of report period, composes major doubt on the
perpetuation assumption of the Company.
III. Principal Accounting Policies and Estimations
Important prompt: The Company utilized detailed accounting polices and estimations on
providing of bad debt provisions, fixed asset depreciation, intangible asset amortization,
recognition of revenue, and so forth, according to its business practices.
1. Statement of compliance to the Enterprise Accounting Standard
The finance report produced by the Company is accordance with the Enterprise Accounting
Standard, and reflects the Company’s financial state, business performance and cash flow frankly
and completely.
2. Fiscal year
The Company uses the calendar year for its fiscal year. A fiscal year is from January 1 to
December 31.
106
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
3. Operational period
The Company’s relatively shorter operational period, which is 12 months, and is used as division
of liquidity of assets and liabilities.
4. Standard currency for bookkeeping
The Company uses Renminbi (RMB) as the standard currency for book keeping.
5. Accounting treatment of the entities under common control and different control
1. Treatment of entities under common control
Assets and liabilities acquired in merger of entities are measured at book values at the date of
merger. The difference between the net book value of asset and the offered price (or total of face
value of shares issued) will be adjusted into capital reserves; when the capital reserves is not
enough to reduce, it will be adjusted into retained profit.
2. Treatment of entities under different control
The difference of takeover cost over the fair value of recognizable net asset of the acquired entity
is recognized as goodwill at the day of takeover; in case the takeover cost is lower than the fair
value of recognizable net asset of the acquired entity, the measuring process over the recognizable
asset, liabilities, contingent liabilities, and takeover cost, shall be repeated, if comes out the same
result, the difference shall be recorded into current income account.
6. Method for preparing the consolidated financial statements
The parent company puts all of its subsidiaries under its control into the consolidated financial
statements. The consolidated financial statements are prepared according to the “Enterprise
Accounting Standard No. 33 – Consolidated Financial Statements”, basing on the accounts of the
parent company and the subsidiaries, and after adjusting the long-term investment equity in the
subsidiary on equity basis.
7. Recognition of cash and cash equivalents
Cash equivalent refers to the investment held by the Company with short term, strong liquidity
and lower risk of value fluctuation that is easy to be converted into cash of known amount.
8. Foreign currency trade and translation of foreign currencies
1. Translation of foreign currency
Foreign currency trades are translated into RMB at the rate of the day when the trades are made.
Those balances of foreign currencies and monetary items in foreign currencies are accounted at
the exchange rate of the balance sheet date. Exchange differences, other than special loans
satisfying the conditions of capitalization, are accounted into current income account.
Non-monetary items in foreign currencies and on historical cost are translated at the rate of the
trade day. Non-monetary items in foreign currencies and on fair value are translated at the rate
of the day when the fair value is recognized, where the differences are accounted as gain/loss from
change of fair value.
2. Translation of foreign currency financial statements
Asset and liability items in the balance sheet are translated basing on the exchange rate of the
balance sheet date; Owners’ equities other than Retained Profit are translated at the exchange rate
of the date when the trade happened. Income and expense items in the income statement are
translated at the similar rate of the date when the trade happened. Differences generated by the
above translating of foreign currencies are demonstrated separately under the owners’ equity in
the balance sheet.
107
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
9. Financial instruments
1. Type of finance asset and finance debt Finance assets fall into four categories at initial
recognition: financial asset appointed to be measured at fair value with their changes are
accounted into current gain/loss accounts(including transactional finance asset and financial asset
appointed to be measured at fair value with their changes are accounted into current gain/loss
accounts), transactional financial assets, debt and account receivable, finance asset saleable.
Finance debts fall into two types at initial recognition: financial debt appointed to be measured at
fair value with their changes are accounted into current gain/loss accounts(including transactional
finance debt and financial debt appointed to be measured at fair value with their changes are
accounted into current gain/loss accounts), other finance debt.
2. Basis of recognition and accounting of finance asset and finance debt When the Company is
one part of the finance instrument contract, one finance asset or debt is recognized. When on
recognizing initially finance asset or debt, it is measured by fair value, for the finance asset or debt
which appointed to be measured at fair value with their changes are accounted into current
gain/loss accounts, the related transaction expenses are directly accounted into current gain and
loss; for other finance asset and debt, the related transaction expenses accounted into the initial
recognition account. The Company future measures finance asset by fair value without deducting
future possible transaction fee but with exception: (1) Due investment, debt and account
receivable are measured by actual interest rate according to the amortized costs. (2) Equity
instrument investment which have no quote in active market and which fair value can’t be
measured reliably, and its derived finance assets which are connected with the equity instrument
and which are summarized through the equity instrument, are measured by cost.
2. Basis of recognition and accounting of finance asset and finance debt When the Company is
one part of the finance instrument contract, one finance asset or debt is recognized. When on
recognizing initially finance asset or debt, it is measured by fair value, for the finance asset or debt
which appointed to be measured at fair value with their changes are accounted into current
gain/loss accounts, the related transaction expenses are directly accounted into current gain and
loss; for other finance asset and debt, the related transaction expenses accounted into the initial
recognition account. The Company future measures finance asset by fair value without deducting
future possible transaction fee but with exception: (1) Due investment, debt and account
receivable are measured by actual interest rate according to the amortized costs. (2) Equity
instrument investment which have no quote in active market and which fair value can’t be
measured reliably, and its derived finance assets which are connected with the equity instrument
and which are summarized through the equity instrument, are measured by cost.
The Company conduct successive measure of finance debt according to amortized cost by actual
interest rate with exception as following: (1) finance debt which appointed to be measured at fair
value with their changes are accounted into current gain/loss accounts, is measured at fir value
without deducting possible future transactional fee at settlement; (2) Equity instrument investment
which have no quote in active market and which fair value can’t be measured reliably, and its
derived finance assets which are connected with the equity instrument and which are closed off
through the equity instrument, are measured by cost. (3) finance debt sponsorship contracts which
are not appointed to be measured at fair value with their changes are accounted into current
gain/loss accounts, or debt agreements at rate lower than market rate and which are not appointed
to be measured at fair value with their changes are accounted into current gain/loss accounts, are
measured at the higher value between the optimal estimated value payable according to current
obligations and the surplus value from which the initial recognition value deduct the accumulated
amortized amount according to the actual interest rate.
Gain or loss from fluctuation of financial assets or liabilities are handled at the following ways,
except for relating to hedge instrument.
(1) Gain or loss from fluctuation of fair value of financial assets or liabilities and accounted into
current gain/loss account, are accounted into gain/loss of fluctuation of fair value. Interests or cash
dividend received in the period of holding these assets are recognized as investment gains. When
108
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
they are disposed, the difference between the amount actually received and initially booked value
is recognized as investment gains, and adjust the gain/loss from fair value fluctuation.
(2) Fluctuation of fair value of sellable financial assets accounted into capital reserves; interests
gained at actual interest rate are accounting into investment gains; the cash dividend received from
sellable instrument investment, are accounted into investment gains when distributed; At disposal
of these investment, the difference between actual amount received and book value are recognized
as investment gains after deducting of accumulated change of fair value which are originally
accounted into capital reserves.
As soon as the contract rights of acquiring the cash flow of particular financial asset have been
terminated or almost all of the risks and rewards attached to the financial asset have been
transferred, recognition of the financial asset is terminated; as soon as the current liabilities
attached to the financial liability have been completely or partially relieved, recognition of the
financial liability or part of is terminated.
3. Basis of recognition and accounting of financial asset transferring
The Company stop recognizing the finance asset which risks and remuneration of ownership are
transferred to the receiver; and continue to recognize the transferred finance asset which risks and
remuneration of ownership are kept, and recognize the value as one finance debt. For the finance
assets which risks and remuneration of ownership are not transferred or kept, the Company
recognize them as following: (1) stop recognizing the finance asset which are given up the control;
(2) continue to recognize the finance asset and related finance debt according to the extend which
involved into the transferred finance asset for the finance asset which are not given up control.
The Company measured the surplus between the following two values for the transferred finance
assets which fulfill the stop recognition requirements into current gain or loss: (1) Account value
of the transferred finance asset; (2) Consideration plus the accumulated fair value changes which
were accounted directed into ownership rights. For the transferred finance assets which partly
fulfill the stop recognition requirements the Company amortized the stopped recognition part and
the not-stopped recognition part of the account value of the whole transferred finance asset, and
account the surplus between the following two values into current gain or loss: (1) Account value
of the stopped recognition part; (2) consideration plus the corresponding stopped recognition part
of the accumulated fair value changes which were accounted directed into ownership rights.
4. Recognition of fair value of financial assets and liabilities
The Company utilizes evaluation technologies supported by sufficient
data and information to recognize the fair values of financial assets
and liabilities. Values inputted to the evaluation technology are
divided into following levels and used in sequence:
(1) Level 1 input: unadjusted quotations obtained from an active market
of the similar asset or liability at the date of measurement;
(2) Level 2 input: values of the asset or liability observable, directly
or indirectly, other than level 1 input, including: quotation of
similar asset or liability in an active market; quotation of similar
asset or liability in an non-active market; other observable value
other than quotations, i.e. observable interest or gain curves in
normal intervals of quotations.
(3) Level 3 input: non-observable input value of the asset or liability,
including interest rates which are not observable or not testified
by observable market data, fluctuation of stock prices, future cash
flow of disposal liabilities undertaken from merger of entities, or
financial predictions upon data itself.
5. Impairment test and impairment reserves plan
(1) The Company conduct impairment test to the finance asset other than which appointed to be
109
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
measured at fair value with their changes are accounted into current gain/loss accounts on balance
sheet day. Impairment provision is provided as long as evidence showing that impairment has
happened to the financial asset.
(2) In dealing with major financial assets such as investment hold-to-mature, loans, and
receivables, the Company conduct independently impairment test for single finance asset.
Impairment tests are conducted with those of the finance asset composition which have similar
credit risk characteristics; for the non impairment assets which are tested independently, the
Company conduct the impairment test with those of the finance asset composition which have
similar credit risk characteristics. The balance of book value over current value of expected future
cash flow is recognized as impairment loss.
(3) Objective evidences of impairment on sellable financial assets 1) Objective evidences
supporting the impairment of investment on sellable liability instruments are: a. Material financial
dilemma with the debtor; b. Violating of the contract by the debtor, e.g. overdue of payment for
interests or principal; c. Compromise made to the debtor who is in financial crisis with
consideration of financial or legal factors; d. Possible bankruptcy or financial restructuring of the
debtor; e. The liability instrument is not able to be traded in an active market for the debtor is in
material financial dilemma; f. Other circumstances that are showing that impairment has already
occurred.
2) Objective evidence showing that impairment has already occurred on sellable equity
instruments are: significant or non-temporary fall of fair value, the invested entities suffers from
material negative situations in aspects of technical, market, economy, or legislation environment.
The Company performs tests on investments on sellable equity instruments individually on the
balance sheet day. For investment on equity instruments measured on fair value, if the fair value
on the balance sheet day is lower than the cost by 50% (included), or lower than the costs for
successively 12 months (included), impairment is recognized; If the fair value is lower than the
cost by more than 20% (included), but higher than 50%, or lower than the cost for successively 6
months (included) but not more than 12 months, the Company will determine if impairment
occurred with consideration of other factors, e.g. fluctuation of prices. For those equity
instruments on cost basis, the Company will decided about impairment with consideration of the
invested entities’ situations in aspects of technical, market, economy, or legislation environment.
When impairment occurred with a sellable financial asset, the accumulated losses caused by
decreasing of fair value which have originally been written into owners’ equity shall be carried
over to current gain/loss account. If practical evidence showing that the value of a particular
financial asset has recovered in value after a impairment loss has been recognized and practically
related to the issues occurred after recognition of the loss, the impairment loss recognized shall be
restored and accounted into current gain/loss. Impairment loss of sellable equity investment
instrument will be restored to owners’ equity when the fair value has increased afterward. When
impairment occurs on sellable equity instrument on cost basis, the balance between its book value
and the current value of the predictable future cash flow upon current market gain rate, is
recognized as impairment loss and recorded to current gain/loss account. It will not be written
back in subsequent years.
When impairment occurred with a sellable financial asset, the accumulated losses caused by
decreasing of fair value which have originally been written into owners’ equity shall be carried
over to current gain/loss account. If practical evidence showing that the value of a particular
financial asset has recovered in value after a impairment loss has been recognized and practically
related to the issues occurred after recognition of the loss, the impairment loss recognized shall be
restored and accounted into current gain/loss. Impairment loss of sellable equity investment
instrument will be restored to owners’ equity when the fair value has increased afterward.
10. Receivable accounts
(1) Recognition and providing of bad debt provision on individual receivable account with
large amount
110
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Basis of recognition or standard amount of
Accounts take over 10% of the book balance of receivable accounts
individual account with large amount
Provision method for account receivable Impairment test performed individually, bad debt provision will be
with major individual amount and bad debt provided at the difference of expected cash flow lower than the book
provision provided individually value.
(2)Recognition and providing basis of bad debt reserves for group of receivable accounts
with similar characteristics of credit risks
(1) The specific combination and providing basis of bad debt reserves
Recognition and providing of bad debt provisions on groups
Group by age analysis Age analysis method
Combination of associated transactions Impairment test performed individually, bad debt provision will be
provided at the difference of expected cash flow lower than the book
within the scope of consolidation value.
(2) Age analysis method
Rate of provision on
Rate of provision on
Age other receivable
receivable account
account
Within 1 year(included) 5 5
1－2 years 10 10
2－3 years 30 30
3－4 years 60 60
4－5 years 80 80
Over 5 years 100 100
3.Receivables with not major individual amount and bad debt provision provided individually
When there is significant difference between the current value of future cash
Basis of providing bad debt individually flow of the receivable account and the current value of future cash flow of the
group
Impairment test performed individually, bad debt provision will be provided at
Basis of bad debt provision
the difference of expected cash flow lower than the book value.
Provision for bad debt shall be withdrawn for notes receivable, interests receivable, long-term
receivables and other receivables subject to the balance between the present value and book value of
their future cash flow.
11.Inventories
(1) Inventory classification
111
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Inventories include saleable finished goods or merchandise, product-in-process , consumption
material and goods in manufacturing procedure or working procedure.
(2) Pricing of inventory to be delivered
Pricing basis:
Delivered out materials are accounted by weighted average method, issued out finished products
are accounted at individual price.
(3) Recognition of realizable net value of inventory and providing of inventory impairment
provision
At the balance sheet day, inventories are measured at the lower of costs and cashable net values,
the individual difference between the cashable net value and cost are provided as inventory
impairment provision. For finished product, merchandise, saleable material and other saleable
merchandise inventory, their cashable net values are recognized by their estimated sale price in
normal operation deducting estimated sale expenses and related taxes; for material inventory
which need processing, it cashable net value are recognized by the estimated sale prices of its
finished products in normal operation deducting the estimated cost, sale expenses and related taxes
due to the end of processing; At the balance sheet day, for inventory item which part has contract
price and part has no contract price, the cashable net value is accounted separately, and recognize
the inventory impairment provision or returnable cash..
(4) Inventory system
Inventory system: perpetual inventory system
(5) Amortization of low-value consumables and packaging materials
1.Low price consumable
Basis of amortizing: one-off
2.Packaging materials
Basis of amortizing: one-off
12. Long-term equity investment
1. Recognition of common control and substantial influence
According to the contract, if the invested enterprise’s main finance and operation policy need to be
agreed by the other investing party, the investment is common control investment; if only have
participating decision rights in invested enterprise’s main finance and operation policy but have no
own control or common control with other investing part, the investment is investment with
substantial influence.
2. Recognition of initial investment costs
(1) For the long-term equity investment formed by corporate merger under common control, if it is
the long-term equity investment obtained from the corporate merger by paying cash, transferring
non-cash asset, bear liability and issuing equity securities, the share of book value of owner's
equity of the merged party on the merger date shall be taken as the initial investment cost. The
112
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
asset reserve is adjusted according to the difference between the initial investment cost of
long-term equity investment and the book value of paid combined consideration or issued
securities; if the capital is not enough for deduction, the remain earnings are adjusted.
Recognition of “one-off” trade when long-term equity investment is composed by merger of
entities under common control by multiple steps.
Transactions under an “one-off” trade are accounted as a common trade of ownership.
Transactions which are not “one-off” trades are recognized for their initial investment cost basing
on the share of book value of net asset in the consolidated financial statement of the entities
acquired. Balance between the initial investment cost and the book value of the long-term equity
investment before merger and the premium paid for the new shares after merger, is adjusted to
capital reserves; when the capital reserve is not enough to offset, retained profit shall be adjusted
thereof.
(2) For the long-term equity investments formed by merger of enterprises under different control,
the initial investment cost is recognized by the fair value of combined consideration on purchasing
day and related expenses.
Long-term equity investment formed by acquisition of entities under different control by trade in
multiple stages are accounted separately in the financial statements and consolidated financial
statements.
1) In individual financial account, the sum of book value of original equity investment plus new
investment cost is recognized as the initial investment cost on cost basis.
2) Recognition of “one-off” trade in consolidated financial statements
Transactions under an “one-off” trade are accounted as a common trade of ownership.
Transactions which are not “one-off” trades are re-measured for their fair value at the day of
acquisition. Balance between the fair value and the book value of the long-term equity investment
is adjusted to current investment gains; other gains from equity on equity basis before the
acquisition day are written over to current gains of at the day of acquisition, but not the gains from
re-calculating of changes in net liability or asset by the invested entity.
(3) Formed by means other than entity merger:
Acquired by cash payment – initial investment cost is the actual amount of payment;
Acquired by issuing of equity certificates – initial investment cost is the fair value of equity
certificate issued;
Acquired by debtor restructuring – initial cost recognized as according to the Enterprise
Accounting Standard No.12 – Debtor restructuring;
Acquired by trading of non-monetary asset - initial cost recognized as according to the Enterprise
Accounting Standard No.7 – Trade of non-monetary assets;
3. Subsequent measurement and recognition of gain/loss
Cost basis is adopted in accounting of long-term equity investment in entities under substantial
control of the Company; while equity basis is adopted in accounting of investment in affiliates and
joint-ventures.
4. Treatment of disposal of subsidiaries by stages till losing of control power
(1) Individual account
At disposal of equity shares, the balance between book value and actual consideration received is
recorded to current gain/loss account.
When the retained share equity is composing major influence or joint control with other parties on
113
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
the invested entity, accounting will be on equity basis;
When none of substantial control, joint control, or major influence on the entity, it will be
recognized as sellable financial asset and accounted on fair value.
(2) Basis of Consolidated Financial Statements
1) Losing of controlling power on a subsidiary through disposal of equity by multiple trades, and
not recognized as “one-off” trade:
Before losing of control power, the balance of disposal consideration and the share of net asset
attributable to the Company on continued basis since purchasing or merger, is adjusted to capital
reserves (capital premium), whereas if the capital premium is not enough to offset the amount,
retained profit will be offset at corresponding amount.
At losing of control power over a former subsidiary, the retained equity shares shall be
re-calculated according to the fair value at the day of losing power. Sum of the consideration
obtained from disposal and fair value of the retained equity shares, less the share of net asset
attributable to the Company on continued basis since purchasing or merger, is accounted into
investment gains of the period when the control power is disposed, and goodwill shall be offset
meanwhile. Other gains related to the equities in formal subsidiary shall be written over to current
investment gains at the period when control power was disposed.
2) Losing of controlling power on a subsidiary through disposal of equity by multiple trades, and
recognized as “one-off” trade:
The multiple trades are treated as one trade that causes losing of control power on a subsidiary.
However, the balance between the consideration received from each trade and corresponding
share of net asset is recognized as other gains in the consolidated accounts, and transferred
collectively to gain/loss account of the period in which the control power was lost.
13. Fixed assets
1. Conditions for fixed asset recognition
Fixed assets is defined as the tangible assets which are held for the purpose of producing goods,
providing services, lease or for operation & management, and have more than one year of service
life. Fixed assets are recognized at satisfying of great possibility of benefit inflow and costs are
accountable.
2. Depreciation methods
Basis of Depreciation age Annual
Categories Retain value rate
depreciation (year) depreciation ratio
Straight average
Houses & buildings 20-30 4 4.8-3.2
on period
Equipment & Straight average
8-15 4 12-6.4
machinery on period
Transportation Straight average 4-8 4 24-12
equipment on period
Straight average
Office equipment 5 4 19.2
on period
14. Construction in process
114
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Whether the company needs to comply with the disclosure requirements of the particular industry
No
1. Construction in process is recognized on the basis of characteristics: very possible economic
benefit flow in, cost can be measured reliably. Since the date when the construction in process
reaches its useful status as expected, the construction in process is measured by the happened cost
Since the date when the construction in process reaches its useful status as expected.
2. When the construction in process reaches its useful status as expected, it is transferred into fixed
asset at actual cost. If the construction in process has reached useful status but with completion of
project settlement process, it is transferred to fixed asset at the value estimated, and adjustment
will happen after completion of project settlement process but no adjustment on depreciation
provided previously.
15. Loan expenses
1. Capitalizing of loan expenses
Loan expenses occurred in the Company, which can be categorized to purchasing or construction
of assets satisfying the conditions of capitalization, shall be capitalized and accounted into capital
costs; while other loan expenses are recognized as expenses and recorded into current income
account.
2. Capitalization period of loan expenses
(1) Capitalization started as soon as all of these conditions are satisfied: 1) Capital expenditures
have occurred; 2) Loan expenses have occurred; 3) Necessary purchasing or construction
processes have been started to make the asset usable or sellable.
(2) If irregular interruption occurred in the purchasing or construction process of the assets
satisfying the capitalizing conditions, and suspended for over successive three months,
capitalizing of loan expenses is suspended; loan expenses occurred during the suspension period
are recognized as current expenses until the purchasing or construction process resumes.
(3) Capitalizing of loan expenses is terminated as soon as the asset satisfying the capitalizing
conditions reaches the state of usable or sellable as expected.
3. Rates and amounts of loan expense capitalization
Special loans raised for purchasing or construction of assets satisfying the conditions of
capitalization, interest to be capitalized will be the actual interest expenses occurred in the current
period of loan (including the discount, premium, or amortizing decided on actual interest rate
basis), less the interest income from the unused loans in bank account or provisional investment
gains; common loans used for purchasing or construction of assets satisfying the conditions of
capitalization, the interest to be capitalized will be the weighted average of balance over special
loans multiply capitalization rate of common loans.
16. Intangible assets
（1）Pricing Method, service life and impairment test
1. Intangible assets are land using rights, patents, and non-patent technologies, which are
measured at cost basis.
2. For intangible assets with limited useful life, during the use life it is amortized according to the
anticipating implementation method of the economic benefit of the intangible asset systematically
and reasonably. If can’t recognize the anticipating implementation method, the straight basis is
deployed.
115
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Items Amortiing years(Year)
Land use right 50
Patent and Special technology 5-20
Softward 5
(2) Accounting policy for internal research and development expenditure
Expenditures of internal researching projects are accounted into current term gain and loss when
happens. The development period expenditures are recognized as intangible assets when fulfill
following conditions: (1) The intangible asset is completed and technically possible to be used or
sold; (2) With intention to complete the intangible asset for purpose of use or sale; (3) Evidence
showing that there are markets or the products produced with using of the intangible asset, or
markets of the intangible asset itself, by which the intangible asset may produce financial benefits.
Intangible assets used inside the Company must be approved for their usable characters. (4)
Developing of the intangible assets are supported by sufficient technical, financial, and other
resources, and the intangible assets can be used or sold. (5) Expenditures occurred in developing
of the intangible asset may be reliably measured.
17. Impairment of partial long-term assets
For those long-term assets such as equity investment, fixed assets measured on cost basis,
construction-in-process, intangible assets with limited service life, their recoverable amount shall
be evaluated as soon as there was evidence indicating impairment at the balance sheet day. For
intangible assets such as goodwill from merger or intangible assets with uncertain service lives,
impairment test is performed each year whatever there is evidence of impairment or not.
Impairment test on goodwill is performed on combination of related assets.
When the result of prediction shows that the recoverable amount is lower than its book value, the
balance shall be provided impairment provision and accounted into current gain/loss.
18. Long-term amortizable expenses
Long-term amortizable expenses which have been paid but with amortizing period over 1 year
(not included). Long-term amortizable expenses are recorded at actual amount occurred, and
straight amortized to stipulated periods. In case a long-term expense was not benefiting the
succeeding periods, then the balance of the account shall be transferred over to current income
account.
19. Employees’ wage
1. Employee compensation comprises short-term compensation, post-service benefit, resignation
benefit and other long-term employee benefits.
2. Accounting of short-term wages
In the fiscal period when an employee is providing services, short-term wages actually occurred is
recognized as liability, and recorded into current gain/loss account or cost of related asset.
3.Accounting of stipulated beneficiary plan is on following steps:
1) On basis of expected accumulation of welfare, estimations on population variables and financial
variables, calculating of liabilities from stipulated beneficiary plan, and recognition of the period
of related liabilities, are performed on basis of non-bias and accordance actuary. Meanwhile,
116
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
discount is performed on the liabilities from stipulated beneficiary plan to recognize the current
value and service cost of the liabilities from the stipulated beneficiary plan.
2) When there is asset involved in the stipulated beneficiary asset, the deficit or premium from the
balance of the current value of liabilities of stipulated beneficiary plan over their fair values is
recognized as its net liability or net asset. When there is a premium with a stipulated beneficiary
plan, the lower one between the premium and the upper limit of the asset is recognized as the net
asset of such stipulated beneficiary asset;
3) At end of period, employees’ wages from stipulated beneficiary plan are recognized by three
parts including service cost, net interest of net liability or net asset, and recalculated net asset or
liability variation. The first two are recorded into current gain/loss or related asset cost, the third is
recorded to other gains, which will not be written back to gain/loss in successive fiscal periods,
but the amount can be transferred with the range of equity.
4. Accounting of dismissing welfare
Welfares for employees who are dismissed, the earlier one of the following is recognized as
employee wage liability, and recorded to current gain /loss:
(1) When the Company cannot, on its own call only, retrieve the dismissing welfare provided by
dismissing of service plan or suggestion;
(2) When the costs or expenses related to restructuring involved in the dismissing welfare are
recognized by the Company.
5. Accounting of other long-term employees’ welfares
As of long-term welfares provided to the employees, those which satisfy conditions of the
stipulated saving plan are treated according to related regulations of stipulated saving plan; those
which other than the aforesaid, are treated according to the stipulated beneficiary plan. In viewing
of simplifying accounting treatment, employee wage costs are recognized as service costs, the net
amounts of interests of other long-term welfare net liability or asset, along with recalculated
variations of the both are recorded to the related gain/loss or cost of related asset.
20. Expected liabilities
(1) When it is very much likely to cause economic interests which can be reliably calculated
outflow from the company to fulfill the obligation which is due to giving security outside,
contentious matter, quality guarantee of products, onerous contract and other contingency, the
company will regard the obligation as anticipation liabilities.
(2) The company will make an initial measurement of anticipation liabilities according to
needed expense of best estimation when fulfilling related obligations and check the book value of
anticipation liabilities on the balance sheet date.
21.Revenue
1. Recognizing of revenue
(1) Sales of goods
Sales income is recognized when all of these conditions are satisfied: (1) Major risks and rewards
attached to the goods have been transferred to the purchaser; (2) The Company holds neither
successive management power which is normally attached to ownership, nor effective control,
over the goods which have been sold out; (4) Amount of income may be reliably measured; (5)
when the costs, occurred or will occur, may be measured reliably.
117
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
(2) Providing of services
At balance sheet day, those service trades (simultaneously satisfying the requirements of those:
income can be measured reliably, related economic benefit will flow in very possibly, transaction
procedure can be confirmed reliably, happened and happening cost can be measured reliably)
which can be reliably estimated are recognized at the percentage of completion, and progress of
completion of service is decided by the portion of costs occurred over the estimated total costs. At
balance sheet day, those service trades which can not be reliably estimated, if the happened
services cost will be compensated, the services income are recognized according to happened
service cost and transited to service cost according to same amount; if the happened services cost
will not be compensated, the happened services cost are accounted into current term’s gain or loss
and the services income will not be recognized.
(3) Giving of asset using rights
Income from giving of assets is recognized when satisfying requirements: related economic
benefit flows in very possibly, income can be measured reliably. Amount of interest income is
calculated according to the time and actual interest rate of the monetary capital is used by other
party. Income of using fee is calculated upon the charge period and calculation provided by the
related contract or agreement.
2. Practical basis for recognition of revenue
Particular methods for recognition of revenue. The Company is mainly engaged in designing,
manufacturing, sales, and service of steam turbines and gas turbines falling in the range of rotating
and reciprocating machinery, and parts. Recognition of sales in the country shall satisfy: products
had been delivered to the buyer and the amount had been fixed. Payment was received or
documents received with great possibility of cash inflow. And the cost of the products is able to be
measured appropriately. Recognition of sales outside the country shall satisfy: The goods had been
filed by the custom with bill of lading obtained. The amount had been fixed, and payment was
received or documents received with great possibility of cash inflow. And the cost of the products
is able to be measured appropriately.
22. Government subsidy
1. Government subsidies are recognized while they meet the following conditions at the same time:
(1) the Company can meet the conditions attached to the government subsidies; (2) the Company
can receive government subsidies. Where government subsidies are monetary assets, they shall be
measured by the amount received or receivable. Where government subsidies are non-monetary
assets, they shall be measured by the fair value; if the fair value cannot be reliably obtained, they
shall be measured by the nominal amount.
2. Recognition basis and accounting of asset-related government subsidy
Government subsidies used for formation of long-term assets through purchase, construction
or any other method as stipulated by government documents fall into the category of asset-related
government subsidies. If government subsidies are not defined in the government documents, a
judgment shall be made on the ground of essential conditions for obtaining the subsidies, among
which, ones with an essential condition of formation of long-term assets through purchase,
construction or any other method shall be asset-related government subsidies. For government
subsidies related to assets, the book value of the relevant assets is deducted or the deferred income
118
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
is recognized. Where such subsidies are recognized as deferred income, the relevant assets shall,
within the useful life of the relevant assets, be reasonably recognized, The method of the system
shall be recorded into profit and loss by stages. The government subsidy measured according to
the nominal amount shall be directly accounted for in the profits and losses of the current period.
Where the relevant assets are sold, transferred, scrapped or damaged before the end of their useful
life, Transfer the undistributed balance of deferred income to the current profit or loss of asset
disposal.
3. Recognition basis and accounting of income-related government subsidy
A government subsidy other than an asset-related government subsidy is divided into
profit-related government subsidies. It is difficult to distinguish between asset-related and
revenue-related government subsidies that include both asset-related and revenue-related
components. Overall classification as government subvention related to income.Than asset-related
subsidies are recognized as income-related government subsidies. Those, which are used to cover
costs or losses in subsequent periods, are recognized as deferred income and accounted to current
gain/loss to the periods of related expenses. Those, which are used to makeup expenses or losses
already occurred, are recorded to current gain/loss account.
4. Government subsidies related to routine business activities of the Company shall be included into
other incomes or offset relevant costs and expenses by nature of economic business. Government
subsidies irrelevant to routine activities of the Company shall be included into the non-operating
receipt and disbursement.
5. Accounting treatment method for interest subsidies for policy-based preferential loans
(1) If the finance allocates interest subsidy funds to a lending banks that serves a loan to the
Company at a policy-based preferential rate, the actual debit amount received shall be seen as the
entry value of loan and relevant loan costs shall be worked out pursuant to the loan principal and the
policy-based preferential rate.
(2) If the finance directly allocates interest subsidy funds to the Company, corresponding
interest subsidies shall offset relevant loan costs.
23. Deferred income tax assets/ deferred income tax liabilities
1. Deferred income tax liabilities or assets are recognized at proper rate in the term of retrieving
the assets or paying the liabilities according to difference (for not recognized assets and liabilities
which tax basis can be recognized, the difference is between the tax basis and the book value)
between book value of the assets or liabilities and the tax basis.
2. Deferred income tax assets are recognized limitedly by the income tax which very possibly
deduct deductible temporary difference. At balance sheet day, the not-yet recognized deferred
income tax assets in previous fiscal term are recognized if have evidence to prove there is enough
income tax very possibly to deduct deductible temporary difference.
3. At the balance sheet day, verification will be performed on the book value of differed income
tax assets. If it is not possible to obtain enough taxable income to neutralize the benefit of differed
income tax assets, then the book value of the differed income tax assets shall be reduced.
Whenever obtaining of taxable income became possible, the reduced amount shall be restored.
4. Current income tax and differed income tax are accounted into current gain/loss account as
income tax expenditures or gains, but exclude the following income taxes: (1) Merger of
enterprises; (2) Transactions or events recognized directly in owners’ equity.
119
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
24. Lease
When the Company is the leasee, the amount is recorded to asset cost or recognized as gain/loss of
current period on straight basis to the periods of lease. Initial direct expenses are accounted into
current gain/loss. Contingent rentals are recorded to current gain/loss at actual occurrence.
When the Company is the leaser, the amount is recorded to current gain/loss at straight basis to the
periods of lease. Initial direct expenses are recorded to current gain/loss other than those with
greater amount which are capitalized and recorded to gain/loss of different periods. Contingent
rentals are recorded to current gain/loss at actual occurrence.
25. Work safety costs
The Company withdraws and includes work safety costs into relevant product costs or current
profits and loss and the subject of "special reserve" as per Measures for Management of Enterprise
Withdrawal and Use of Work Safety Costs (Cai Qi [2012] No.16) jointly promulgated by Ministry
of Finance and State Administration of Work Safety. As work safety costs withdrawn are used, ones
attributable to the cost disbursement shall directly offset special reserve. To form fixed assets, the
disbursement incurred for inclusion into the subject of "construction in progress" shall be
recognized as fixed assets when safety projects are completed and available for use as expected;
meanwhile, costs for forming fixed assets shall offset special reserve, cumulative depreciation in the
corresponding amount shall be recognized and depreciation shall no longer be withdrawn for the
fixed assets in the following period.
26. Significant accounting policy changes
1. The Company has prepared the 2018 financial statements as required in the Notice of the
Ministry of Finance on Revising and Issuing the Format of 2018 General Enterprise Financial
Statements (CK [2018] No. 15) and its interpretation as well as the Accounting Standards for
Business Enterprises, and the retroactive adjustment approach has been applied in the changes in
accounting policies. The report items and amounts in 2017 financial statements subject to great
influence are listed below:
Items and amounts of the original statements Items and amounts of the new statements
Notes receivable 715,410,887.68 Notes receivable &
2,410,628,336.14
Account receivable 1,695,217,448.46 Account receivable
Dividend receivable 6,900,000.00
Other receivable 23,805,005.57
Other receivable 16,905,005.57
Notes payable 215,409,958.92 Notes payable & Account
1,098,125,424.57
Account payable 882,715,465.65 payable
Interest payable 268,860.77
Other payable 28,128,478.10
Other payable 27,859,617.33
Long-term payable 209,633,466.66 Long-term payable 447,292,297.73
120
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Special payalbe 237,658,831.07
Management expenses 433,151,164.67
Management expenses 644,178,931.78
R & D expenses 211,027,767.11
2. The Ministry of Finance issued the Interpretation of Accounting Standards for Business
Enterprises No. 9 - Accounting Treatment of Net Investment Losses Under Equity Method,
Interpretation of Accounting Standards for Business Enterprises No. 10 - Depreciation Method
Based on Income from Use of Fixed Assets, Interpretation of Accounting Standards for Business
Enterprises No. 11 - Amortization Method Based on Income from Use of Intangible Assets and
Interpretation of Accounting Standards for Business Enterprises No. 12 - Whether the Provider and
Receiver of Key Manager Services Are Related Parties in 2017. Since January 1, 2018, the
Company has executed the above interpretations of the Accounting Standards for Business
Enterprises without any influence on the initial financial data of the Company.
IV. Taxation
1. Main categories and rates of taxes
Category of taxes Tax base Tax rate
Sales of goods or providing of taxable labor
VAT 17%、16%、6%
service
For those on price basis, taxes
are paid at 1.2% of the balance
of original value of the property
House tax 1.2%、12%
after deducting of 30%; for those
on rental basis, taxes are paid
at 12% of the rental.
City maintenance and
Turnover tax payable 5%、7%
construction tax
Educational surcharge Turnover tax payable 3%
Local education additional Turnover tax payable 2%
Enterprise income tax Amount of income taxable 15%、25%
Notes of the disclosure situation of the taxpaying bodies with different enterprises income tax rate
Name Income tax rate
The Company , Zhongneng Company, Packaged Tech. Company,Casting
Company, Zhejiang Huayuan Steam Turbine Machinery Co.,Ltd. and 15%
Hangzhou Guoneng Steam Turbine Engineering Co.,Ltd.
angzhou Zhongneng Steam Turbine Power (Indonesia) Co., Ltd. [Note ]
Other Subsidiary（Domestic） 25%
Note :Hangzhou Zhongneng Steam Turbine Power (Indonesia) Co., Ltd. registered in
121
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Indonesia overseas subsidiaries, the applicable local relevant tax laws and regulations.
2. Preferential tax
1. According to the document “Notice for Qualification of High-tech Enterprises” (GKHZD
〔2017〕No.201) issued by Department of Science and Technology High-tech Development
Center, the Company along with Hangzhou Zhongneng Steam Turbine Power Co., Ltd. ,Zhejiang
Packaged Technologies Development Co., Ltd., Zhejiang Huayuan Steam Turbine Machinery
Co.,Ltd. and Hangzhou Guoneng Steam Turbine Engineering Co.,Ltd. – subsidies of the Company,
were qualified as high-tech enterprises for term of three years. Therefore they enjoy 15% of tax
for 2017.
2. According to the document “Notice for Qualification of High-tech Enterprises” (GKHZD
〔2016〕No.149) issued by Department of Science and Technology High-tech Development
Center, Hangzhou Steam Turbine Casting Co., Ltd– subsidies of the Company, were qualified as
high-tech enterprises for term of three years. Therefore they enjoy 15% of tax for 2018.
V. Notes to the Consolidated Financial Statements
(I) Notes to the Consolidated Financial Statements
1.Monetary Capital
(1)The detail situation
Items End of term Beginning of term
Cash in stock 128,198.82 208,763.32
Bank deposit 1,297,059,605.97 1,137,284,071.51
Other monetary fund 85,204,204.80 85,184,661.11
Total 1,382,392,009.59 1,222,677,495.94
Incl:Total of accounts saved overseas 4,535,870.05 3,770,731.56
Other notes：
The ending bank deposits include a court-blocked deposit with a restricted usage of RMB
35,000,000.00, ETC margin of RMB 2,000.00 ； Other monetary fund composes of
RMB74,201,389.54 of security for bank acceptance notes RMB10,683,802.85 of security for
Letter of credit, RMB318,000.00 of security for bank guarantee letter and refundable deposit
without a restricted usage of RMB 1,012.41.
2.Notes receivable & Account receivable
(1)The detail situation
Items End of term Beginning of term
Notes receivable 595,089,175.22 715,410,887.68
122
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Account receivable 1,940,798,255.26 1,695,217,448.46
Total 2,535,887,430.48 2,410,628,336.14
(2) Notes receivable
1)The detail situation
End of term Beginning of term
Items Bad debt Bad debt
Book balance Book value Book balance Book value
provision provision
Bank
574,532,175.22 574,532,175.22 691,199,387.68 691,199,387.68
acceptance
Commercial
20,557,000.00 20,557,000.00 24,211,500.00 24,211,500.00
acceptance
Total 595,089,175.22 595,089,175.22 715,410,887.68 715,410,887.68
(2) Notes receivable pledged by the Company at the period-end
Amount on pledge
Items
Bank acceptance 88,112,807.60
Total 88,112,807.60
（3）Notes receivable which had endorsed by the Company or had discounted and had not due on
the balance sheet date at the period-end
Amount of recognition Amount of not
Items termination at the terminated recognition
period-end at the preriod -end
Bank acceptance 607,704,623.69
Total 607,704,623.69
The acceptor of the bank acceptance bill is a commercial bank, because the commercial bank
has high credit, the possibility of the bank acceptance bill not being paid at maturity is low, so the
company has endorsed or discounted the bank acceptance bill to terminate the confirmation.
However, if the bill is not paid at maturity, the company shall remain jointly and severally liable to
the holder under the provisions of the bill act.
3. Account receivable
(1)The detail situation
①Detailed categories
123
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
End of term
Category Book balance Bad debt provision
Book value
Amount Proportion Amount Proportion
Account
receivables
provided bad debt 2,982,887,216.78 99.01 1,042,088,961.52 34.94 1,940,798,255.26
provision in
credit risk groups
Accounts
receivable of
individually
withdrawing bad
debt provision 29,819,607.69 0.99 29,819,607.69 100.00
with
non-significant
individual
amount
Total 3,012,706,824.47 100.00 1,071,908,569.21 35.58 1,940,798,255.26
(Continued)
Beginning of term
Category Book balance Bad debt provision
Book value
Amount Proportion Amount Proportion
Account
receivables
provided bad debt 2,695,568,129.24 98.91 1,000,350,680.78 37.11 1,695,217,448.46
provision in
credit risk groups
Accounts
receivable of
individually
withdrawing bad
debt provision 29,819,607.69 1.09 29,819,607.69 100.00
with
non-significant
individual
amount
Total 2,725,387,736.93 100.00 1,030,170,288.47 37.80 1,695,217,448.46
② Receivable accounts in the group on which bad debt provisions are provided on age basis
124
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
End of term
Aging
Book balance Bad debt provision Proportion
Within 1 year 1,277,800,662.60 63,890,033.12 5.00
1-2 years 418,616,365.94 41,861,636.59 10.00
2-3 years 306,732,722.96 92,019,816.90 30.00
3-4 years 223,862,853.79 134,317,712.27 60.00
4-5 years 229,374,244.26 183,499,395.41 80.00
Over 5 years 526,500,367.23 526,500,367.23 100.00
Total 2,982,887,216.78 1,042,088,961.52 34.94
2) The current amount of provision for bad debts is RMB42,755,890.74 ; recovery or payback
for bad debts Amount is RMB0.00.
(3)The current accounts receivable write-offs situation
①Actual write-off of accounts receivable for the current period is RMB 1,017,610.00.
② The significant actual write-off accounts receivable for the current period
Arising from
Nature of
Reason for related
Name account Amount written off Verification procedures
written off transactions
receivable
(Y/N)
Guangxi Ningming Fenghao Sugar 399,206.80 The examined and adopted to
Uncollectible
Goods No
Technology Co., ltd. amount General Manager Office
Chengdu Haote New Energy Co.,Ltd. 225,000.00 The examined and adopted to
Uncollectible
Goods No
amount General Manager Office
Tangshan Jianlong Iron & Steel Co., 362,000.00 The examined and adopted to
Uncollectible
Goods No
Ltd. amount General Manager Office
Yangpu Chutian Technology 31,403.20 The examined and adopted to
Uncollectible
Goods No
Development Co., Ltd. amount General Manager Office
Subtotal 1,017,610.00
（4）Receivables account of the top five parties
Name Amount Proportion(%) Bad debt provision
Client 1 664,163,157.69 22.05 320,289,498.85
125
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Client 2 244,356,995.05 8.11 176,039,745.72
Client 3 179,184,689.73 5.95 8,959,234.49
Client 4 63,427,500.00 2.11 3,171,375.00
Client 5 56,048,293.87 1.86 23,796,436.58
Subtotal 1,207,180,636.34 40.08 532,256,290.64
4. Prepayments
（1）Age analysis
1)The detail situation
Balance in year-end Balance in year-begin
Provision Provision
Age
Book balance Proportion(%) for bad Book value Book balance Proportion(%) for bad Book value
debt debt
Within 1
339,805,990.35 91.60 339,805,990.35 414,480,174.64 92.90 414,480,174.64
year
1-2
22,067,247.82 5.95 22,067,247.82 10,312,288.25 2.31 10,312,288.25
years
2-3
1,208,614.00 0.33 1,208,614.00 4,033,538.38 0.90 4,033,538.38
years
Over 3
7,877,138.57 2.12 7,877,138.57 17,340,709.50 3.89 17,340,709.50
years
Total 370,958,990.74 100.00 370,958,990.74 446,166,710.77 100.00 446,166,710.77
(2) Top 5 of the prepayment amount
Name Amount Proportion(%)
Hangzhou Hangfa Power generation Equipment Co., ltd. 51,691,853.97 13.93
Jinling International Co., Ltd. 40,361,122.85 10.88
Shanghai pujiang customs of the People's Republic of China 17,050,557.25 4.60
FORMOSA ELECTRIC POWER SYSTEM CO.,LTD. 16,711,942.43 4.51
Kailuowen thermal Power technology (jiangsu) Co., Ltd. 16,609,627.00 4.48
126
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Subtotal 142,425,103.50 38.40
4. Other account receivable
1)The detail situation
Items End ofterm Beginning of term
Dividend receivable 16,557,292.60 6,900,000.00
Other receivable 15,995,166.16 16,905,005.57
Total 32,552,458.76 23,805,005.57
(2) Dividend receivable
1)The detail situation
Items End ofterm Beginning of term
Hangzhou Bank 16,557,292.60 6,900,000.00
Subtotal 16,557,292.60 6,900,000.00
2) Important dividend receivable over 1 year of age
Whether the
Reasons for not impairment
Items End ofterm Age
repossessing occurs and its
judgment basis
Hangzhou Bank 6,900,000.00 1-2 years Stock right pledge No
Subtotal 6,900,000.00
(3) Other receivable
1)The detail situation
① Detailed categories
End of term
Category Book balance Bad debt provision
Book value
Amount Proportion % Amount Proportion %
Other Accounts
receivable portfolio
29,400,276.21 100.00 13,405,110.05 45.60 15,995,166.16
subject to impairment
by credit risk
Total 29,400,276.21 100.00 13,405,110.05 45.60 15,995,166.16
(Continued)
Category Beginning of term
127
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Book balance Bad debt provision
Book value
Amount Proportion % Amount Proportion %
Other Accounts
receivable portfolio
28,165,573.86 100.00 11,260,568.29 39.98 16,905,005.57
subject to impairment
by credit risk
Total 28,165,573.86 100.00 11,260,568.29 39.98 16,905,005.57
② Other receivable accounts in the group on which bad debt provisions are provided on age
basis
End of term
Aging
Other receivable Bad debt provision Proportion
Within 1 year 11,640,599.16 582,029.96 5.00
1-2 years 2,978,522.14 297,852.21 10.00
2-3 years 1,127,566.07 338,269.82 30.00
3-4 years 2,525,398.00 1,515,238.80 60.00
4-5 years 2,282,357.90 1,825,886.32 80.00
Over 5 years 8,845,832.94 8,845,832.94 100.00
Total 29,400,276.21 13,405,110.05 45.60
2) The withdrawal amount of the bad debt provision during the reporting period was of
RMB2,144,541.76；the amount of the reversed or collected part during the reporting period was of
RMB 0.00.
3) No write-off of other receivables for the current period
4) Other accounts receivable classified by the nature of accounts
Nature Closing book balance Opening book balance
Export tax refund receivable 2,153,878.45 465,230.69
Deposit 16,937,448.95 16,917,313.03
Provisional payment receivalbe 5,251,040.00 5,232,037.20
Petty cash 1,327,534.34 2,803,540.63
Other 3,730,374.47 2,747,452.31
Total 29,400,276.21 28,165,573.86
5) Top 5 of Other accounts receivable
128
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Whether
Account Bad debt it is a
Name of the company Book balance Age Proportion(%)
property provision related
party
Shanghai Customs Waigaoqiao 3,710,320.94
Deposit 3,710,320.94 Over 5 years 12.62 No
Office
Investment from 3,431,600.00
Indonesia Company Investment 3,431,600.00 Over 5 years 11.67 No
receivable
Export rebate receivable The export tax Within 1 107,693.92
2,153,878.45 7.33 No
rebate year
Lianyungang Petrochemical Co.. Within 1 60,000.00
Deposit 1,200,000.00 4.08 No
Ltd. year
Shanghai pujiang customs of the Within 1 48,953.07
Deposit 979,061.42 3.33 No
People's Republic of China year
Subtotal 11,474,860.81 39.03 7,358,567.93
5. Inventories
(1) Details
Items End of term Beginning of term
Book balance Impairment Book value Book balance Impairment Book value
Raw 585,528,478.85 53,187,189.03 532,341,289.82 522,590,238.59 309,803.19 522,280,435.40
materials
Product in 731,748,385.18 25,188,298.67 706,560,086.51 584,647,307.67 15,617,324.99 569,029,982.68
process
Products in 1,093,823,673.99 144,603,707.45 949,219,966.54 1,098,811,798.77 97,546,524.93 1,001,265,273.84
stock
Total 2,411,100,538.02 222,979,195.15 2,188,121,342.87 2,206,049,345.03 113,473,653.11 2,092,575,691.92
(2) Inventory depreciation provision
1) Details
Increased this Decreased this
Items Beginning of term period period End of term
Provided Others Written Others
Raw 309,803.19 53,187,189.03 309,803.19 53,187,189.03
materials
Product in 15,617,324.99 9,570,973.68 25,188,298.67
129
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
process
Products in 97,546,524.93 51,517,224.09 4,460,041.57 144,603,707.45
stock
Total 113,473,653.11 114,275,386.80 4,769,844.76 222,979,195.15
2) The specific basis for determining the net realizable value, and the reasons for the reversal of
the inventory depreciation reserve for the current period
Current write-off
Items Specific basis for recognition of net realizable value Reason for provision for
inventory
The net realizable value shall be recognized by the amount of
Used for current production
Raw materials the estimated selling prices minus the estimated selling costs
and use
and relevant taxes and dues
The net realizable value shall be recognized by the amount of
the estimated selling prices minus the estimated selling costs
Goods in process and and relevant taxes and dues, wherein regarding suspended
Current realized sales
commodity stocks projects expected not be to be recovered or projects whose sales
agreements are released, the net realizable value shall be
recognized by the expected recoverable compensation
6. Other current asset
End of Beginning
Items
term of term
Bank financing products[Notes] 1,156,870,000.00 886,732,329.00
28,260,278.71 16,473,990.55
Input tax deductible
To verify the input tax 261,538.46
Prepaid income tax 2,804,366.47 354,357.59
Rent charge 813,310.56 604,050.19
Total 1,188,747,955.74 904,426,265.79
[Note]: Financial products are financial products and trust financial products, are in
non-guaranteed floating-income short-term financial products, and no active market price.
7. Available for sale of financial assets
(1) Detail
End of term Beginning of term
Items mpairme
Book balance mpairment provision Book value Book balance Book value
on
130
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Available-for-sale
equity instruments
Including ：
Measured by fair 2,011,876,524.40 2,011,876,524.40 2,239,086,521.28 2,239,086,521.28
value
Measured by
143,380,030.80 25,180,000.00 118,200,030.80 178,694,462.80 178,694,462.80
cost
Total 2,155,256,555.20 25,180,000.00 2,130,076,555.20 2,417,780,984.08 2,417,780,984.08
(2) Available-for-sale financial assets measured by fair value at the period-end
Available-for-sale
Type equity instruments
Equity instruments cost 390,954,040.00
Fair value 2,011,876,524.40
The amount of change in the fair value that is accumulated
1,620,922,484.40
into other comprehensive income
Note: Shares of Bank of Hangzhou Co., Ltd. held by the Company.
(3)Available-for-sale financial assets measured by cost at the period-end
Book balance
Investee
Period-begin Increase Decrease Period-end
Hangzhou Jushi Investment Partnership 50,000,000.00 100,000,000.00 50,000,000.00
100,000,000.00
（Limited partnership）
Hangzhou Steam Turbine Engineering Co., 30,000,000.00
30,000,000.00
Ltd.
Wuxi Xinchang Steel Bube Co., ltd. 15,159,689.58 1,314,432.00 13,845,257.58
Zhejiang Zhongkong Solar Energy 15,000,000.00
15,000,000.00
Technology Co., Ltd.
Zhejiang Tianhang Steam Turbine 10,000,000.00
10,000,000.00
Auxiliary Machinery Co., Ltd.
Greenesol power systems PVT Ltd. 5,534,773.22 5,534,773.22
Zhejiang Hangzhou Steam Turbine Gas 2,400,000.00
2,400,000.00
turbine machinery innovation center
Zhejiang Sanxin Automation Engineering 600,000.00
600,000.00
Co., ltd.
Juyuan Xinxing No.9 Private Funds 16,000,000.00 16,000,000.00
Subtotal 178,694,462.80 66,000,000.00 101,314,432.00 143,380,030.80
(Continued)
Impairment provision Proportion % Cash dividend
Investee
131
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Period-begin Increase Decrease Period-end
Hangzhou Jushi Investment 10,428,418.13
Partnership （ Limited 82.64
partnership）
Hangzhou Steam Turbine 25,180,000.00 25,180,000.00 15.00
Engineering Co., Ltd.
Wuxi Xinchang Steel Bube
18.00
Co., ltd.
Zhejiang Zhongkong Solar
Energy Technology Co., 3.84
Ltd.
Zhejiang Tianhang Steam 1,000,000.00
Turbine Auxiliary 33.33
Machinery Co., Ltd.
Greenesol power systems
35.62
PVT Ltd.
Zhejiang Hangzhou Steam
Turbine Gas turbine 48.00
machinery innovation center
Zhejiang Sanxin
Automation Engineering 6.00
Co., ltd.
Juyuan Xinxing No.9
-
Private Funds
Subtotal 25,180,000.00 25,180,000.00 11,428,418.13
(4) Other note
1) The company, as an investor, does not have the power to participate in the
decision-making of financial and operational policies of the invested units including Hangzhou
Jushi Investment Partnership (Limited Partnership), Zhejiang Tianhang Steam Turbine Auxiliary
Machinery Co., Ltd, Zhejiang Gas Turbine & Turbomachinery Innovation Center, Greenesol
power systems PVT Ltd. Therefore, the cost method is used to make the accounting treatment on
this kind of equity investment, with in accordance with the criteria for the recognition and
measurement of financial instruments.
2) According to the agreement made by and between the subsidiary Auxiliary Machinery
Company and Wuxi Xinchang Steel Pipe Co., Ltd. (hereinafter referred to as Wuxi Xinchang
Company), if Wuxi Xinchang Company fails to realize the expected profit, it shall give a cash
compensation to Auxiliary Machinery Company. Since Wuxi Xinchang Company failed to realize
the expected profit in 2016, it should give a cash compensation of RMB 3,930,471.59 to Auxiliary
Machinery Company. Auxiliary Machinery Company received the first sum of cash compensation
of RMB 1,314,432.00 in the current period and is expected to receive the remaining compensation
in the following two years.
8. Long-term equity investments
132
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
(1)Classification
End of term Beginning of term
Investees
Book Impairment Book Impairment
Book value Book value
balance provision balance provision
Joint venture
8,221,439.29 8,221,439.29 5,800,000.00 5,800,000.00
investment
Total 8,221,439.29 8,221,439.29 5,800,000.00 5,800,000.00
(2) Detail
Increase /decrease
Investment
gains and Adjustment of
Investees Opening balance Additional Decrease losses other
investment investment recognized comprehensive
under the income
equity method
Affiliated Company
Zhejiang Zhongrun Gas turbine 5,800,000.00 2,040,000.00 -585,160.71
technology Co., Ltd.
Total 5,800,000.00 2,040,000.00 -585,160.71
(Continued)
Increase /decrease
Closing
Cash bonus Withdrawal
balance of
Investees Changes of or profits of Closing balance
Other impairment
other equity announced to impairment
provision
issue provision
Affiliated Company
Zhejiang Zhongrun Gas turbine 966,600.00 8,221,439.29
technology Co., Ltd.
Total 966,600.00 8,221,439.29
9. Fixed assets
(1) Details
Houses & Machinery Transportation
Items Office equipment Total
buildings equipment equipment
133
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
I. Original price
1. Balance at period-beginning 463,997,001.86 1,002,701,532.72 28,655,573.48 98,322,465.88 1,593,676,573.94
2.Increase in the current period 268,381,842.95 20,361,089.24 425,491.38 2,794,017.10 291,962,440.67
(1) Purchase 1,374,467.79 425,491.38 815,748.09 2,615,707.26
(2)Transferred from construction in progress 268,381,842.95 18,986,621.45 1,978,269.01 289,346,733.41
Decreased amount of the period 160,528.75 1,146,300.81 446,325.21 1,753,154.77
Dispose 160,528.75 1,146,300.81 446,325.21 1,753,154.77
Balance at period-end 732,378,844.81 1,022,902,093.21 27,934,764.05 100,670,157.77 1,883,885,859.84
II.Accumulated amortization
1.Opening balance 190,878,065.10 725,830,773.54 20,917,542.82 82,687,283.71 1,020,313,665.17
2.Increased amount ofthe period 14,866,607.64 56,231,871.20 1,795,896.84 1,860,964.61 74,755,340.29
(1) Withdrawal 14,866,607.64 56,231,871.20 1,795,896.84 1,860,964.61 74,755,340.29
3.Decrease in the reporting period 60,834.96 1,087,023.72 428,187.10 1,576,045.78
（1）Disposal 60,834.96 1,087,023.72 428,187.10 1,576,045.78
4.Closing balance 205,744,672.74 782,001,809.78 21,626,415.94 84,120,061.22 1,093,492,959.68
III. Impairment provision
1.Opening balance 1,504,928.24 4,033,520.42 1,113,523.01 6,651,971.67
2.Increase in the reporting period
3.Decrease the reporting period
4. Closing balance 1,504,928.24 4,033,520.42 1,113,523.01 6,651,971.67
IV. Book value
1.Book value ofthe period-end 525,129,243.83 236,866,763.01 6,308,348.11 15,436,573.54 783,740,928.49
2.Book value of the period-begin 271,614,008.52 272,837,238.76 7,738,030.66 14,521,659.16 566,710,937.10
(2)Details of fixed assets failed to accomplish certification of property
Items Book value Reason
Steam turbine power Building 222,083,722.00 In process
Complete sets of factory 41,944,793.30 In process
Subtotal 264,028,515.30
134
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
10. Construction in process
（1）Details
End of term Beginning of term
Items Impairment Impairment
Boook balance Book value Boook balance Book value
sion sion
New Plant project 429,609,053.59 429,609,053.59 120,402,096.57 120,402,096.57
Steam turbine power
121,431,247.76 121,431,247.76
Building
Software project 7,779,939.24 7,779,939.24 4,788,559.92 4,788,559.92
Casting company
1,213,675.18 1,213,675.18
networking system project
Other project 8,457,875.95 8,457,875.95 4,609,323.41 4,609,323.41
Prepayment for equipment
8,920,460.15 8,920,460.15 3,476,757.25 3,476,757.25
or projects
Total 454,767,328.93 454,767,328.93 255,921,660.09 255,921,660.09
(1) Changes of significant construction in progress
Transferred to
Name of Budget(In RMB
Opening balance Increase fixed Other decrease End balance
project 10,000)
assets(Note )
New Plant project 173,328.76 120,402,096.57 362,129,955.27 52,922,998.25 429,609,053.59
Steam turbine
23,142.53 121,431,247.76 109,994,014.28 231,425,262.04
power Building
Software project 797.00 4,788,559.92 2,991,379.32 7,779,939.24
Casting company
networking 170.35 1,213,675.18 489,783.64 519,698.14 1,183,760.68
system project
Other project 4,609,323.41 7,626,368.59 3,777,816.05 8,457,875.95
Prepayment for
equipment or 3,476,757.25 6,144,661.83 700,958.93 8,920,460.15
projects
Subtotal 197,438.64 255,921,660.09 489,376,162.93 289,346,733.41 1,183,760.68 454,767,328.93
(Continued)
Capitaliz Includin Capitaliz Source
Project
Name of project Proportion % ation of g: ation of of
process
interest capitaliz interest funding
135
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
ation of rate (%)
interest
this
period
New Plant project 27.84 Under 4,171,926.54 2,267,236.13 1.20
Other
Construction
Steam turbine power Building 100.00 Completed Other
97.62 Under
Software project Other
Construction
Casting company networking 100.00
Completed Other
system project
Under
Other project Other
Construction
Prepayment for equipment or Under
Other
projects Construction
Total 4,171,926.54 2,267,236.13
Note：Other reduction refers to the original value of intangible assets transferred from the
completion of the current period to 1,183,760.68 yuan
11. Intangible assets
（1）Details
Items Landusing right Patent Software Total
I. Original price
1. Balance at period-beginning 332,298,312.33 309,433.96 1,979,342.11 334,587,088.40
2.Increase in the current period 1,260,683.76 1,260,683.76
(1) Purchase 76,923.08 76,923.08
2)
1,183,760.68 1,183,760.68
Transferred from construction in progress
Decreased amount of the period
4.Closing balance 332,298,312.33 309,433.96 3,240,025.87 335,847,772.16
II.Accumulated amortization
1.Opening balance 48,444,955.34 242,000.00 229,494.51 48,916,449.85
136
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
2.Increased amount of the period 6,661,885.22 16,450.38 512,230.22 7,190,565.82
(1) Withdrawal 6,661,885.22 16,450.38 512,230.22 7,190,565.82
3.Decreased amount of the period
4.Closing balance 55,106,840.56 258,450.38 741,724.73 56,107,015.67
III. Impairment provision
1.Opening balance
2.Increased amount of the period
3.Decreased amount of the period
4.Closing balance
IV. Book value
1.Closing book value 277,191,471.77 50,983.58 2,498,301.14 279,740,756.49
2.Opening book value 283,853,356.99 67,433.96 1,749,847.60 285,670,638.55
12. Long-term amortize expenses
Amortized
Balance in Increase in this expenses Balance in
year-begin period Other loss
year-end
Redecoration 253,886.90 253,886.90
Total 253,886.90 253,886.90
13. Deferred income tax assets/deferred income tax liabilities
(1) Deferred income tax assets had not been off-set
Balance in year-end Balance in year-begin
Items Deductible temporary Deferred income tax Deductible temporary Deferred income tax
difference assets difference assets
Provision for Asset
1,339,474,275.36 207,199,125.83 1,160,614,665.91 179,875,205.01
Impairment
Internal trade profit not
41,572,138.74 6,430,832.03 68,494,522.27 10,934,321.24
realized
Deductible loss 46,151,636.66 6,922,745.50
Temporary
difference such as 2,218,329.11 332,749.37 2,981,985.19 447,297.78
amortizing of
137
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
software expense
Total 1,383,264,743.21 213,962,707.23 1,278,242,810.03 198,179,569.53
(2) Deferred income tax liabilities had not been off-set
Balance in year-end Balance in year-begin
Items Deductible temporary Deferred income tax Deductible temporary Deferred income tax
difference liabilities difference liabilities
Changes in fair value of
1,620,922,484.40 243,138,372.66 1,848,132,481.28 277,219,872.19
tradable financial assets
Accumulated depreciation 6,651,971.67 997,795.75 6,651,971.67 997,795.75
Deferred income 225,187.70 33,778.16
Total 1,627,799,643.77 244,169,946.57 1,854,784,452.95 278,217,667.94
(3)Details of income tax assets not recognized
Items End of term Beginning of term
Deductible provisional 650,570.73 941,815.63
differences
Deductible losses 25,565,760.83 9,998,963.52
Subtotal 26,216,331.56 10,940,779.15
(4) The un-recognized deductible losses of deferred income tax assets will due in the following
years:
Year End of term Beginning of term
2020 439,625.66 579,693.92
2021 712,938.27 712,938.27
2022 5,953,854.74 8,706,331.33
2023 18,459,342.16
Subtotal 25,565,760.83 9,998,963.52
14.Short-term loans
Items Balance in year-end Balance in year-begin
Mortgage loan 47,900,000.00 96,500,000.00
Guarantee loan 37,700,000.00 19,000,000.00
Mortgage loan & Guarantee loan 54,000,000.00
138
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Total 139,600,000.00 115,500,000.00
15. Notes payable & Account payable
(1) Detail
Items Balance in year-end Balance in year-begin
Notes payable 263,897,462.79 215,409,958.92
Account payable 1,086,685,918.74 882,715,465.65
Total 1,350,583,381.53 1,098,125,424.57
(2) Notes payable
Items Balance in year-end Balance in year-begin
Bank acceptance 263,897,462.79 215,409,958.92
Subtotal 263,897,462.79 215,409,958.92
(3) Account payable
Items Balance in year-end Balance in year-begin
Goods 1,009,733,728.93 848,717,013.62
Equipment and projects 60,410,063.35 22,045,737.27
Other 16,542,126.46 11,952,714.76
Subtotal 1,086,685,918.74 882,715,465.65
16. Advances received
Items Balance in year-end Balance in year-begin
Goods 2,582,234,158.36 2,419,751,405.08
Total 2,582,234,158.36 2,419,751,405.08
17. Employees’ wage payable
(1) Details
Increased this Decreased this
Items Beginning of term End of term
period period
I. Short-term wages 56,866,150.55 639,945,732.82 633,388,551.78 63,423,331.59
II. Welfare after leaving of 22,659,623.14 75,563,470.81 75,255,470.25 22,967,623.70
position-fixed provision scheme
III.Termination benefits 44,974.70 44,974.70
Total 79,525,773.69 715,554,178.33 708,688,996.73 86,390,955.29
139
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
(2) Details of short term wages
Increased this Decreased this
Items Beginning of term End of term
period period
1.Wage, bonus, allowance and 43,714,190.74 499,302,495.69 494,857,626.94 48,159,059.49
subsidies
2. Employee welfare 32,400,702.76 32,400,702.76
3. Social insurance 5,917,986.12 47,730,355.04 46,786,785.87 6,861,555.29
Incl. Medical insurance 5,505,850.79 41,755,844.73 40,854,799.89 6,406,895.63
Labor injury insurance
122,710.40 1,435,735.69 1,462,058.18 96,387.91
Maternity insurance 289,424.93 4,538,774.62 4,469,927.80 358,271.75
4. Housing fund 113,749.96 47,542,992.00 47,545,320.00 111,421.96
5. Labour union fee and employee 7,120,223.73 12,969,187.33 11,798,116.21 8,291,294.85
education fee
Subtotal 56,866,150.55 639,945,732.82 633,388,551.78 63,423,331.59
(3) Details of fixed provision scheme
Increased this Decreased this
Items Beginning of term End of term
period period
1.Basic pension insurance 3,985,531.77 54,744,525.50 54,649,668.61 4,080,388.66
2. Unemployment insurance 140,443.92 1,962,993.27 1,957,498.92 145,938.27
3. Enterprise annual fee 18,533,647.45 18,855,952.04 18,648,302.72 18,741,296.77
Subtotal 22,659,623.14 75,563,470.81 75,255,470.25 22,967,623.70
18. Tax Payable
Items Balance in year-end Balance in year-begin
VAT 29,776,940.88 10,970,877.80
23,909,724.68 14,396,733.29
Enterprise Income tax
Individual Income tax 1,043,483.57 2,150,480.36
City Construction tax 2,366,801.27 1,731,728.51
Property tax 1,520,839.72 2,123,319.46
Land use tax 1,654,687.31 2,099,991.11
Education subjoin 1,014,509.41 745,239.69
140
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Locality Education subjoin 676,339.74 496,821.48
Local water source foundation 172.38
Other 441,874.04 204,709.29
Total 62,405,200.62 34,920,073.37
19.Other account payable
(1) Details
Items End of term Beginning of term
Interest payable 437,314.72 268,860.77
Other payable 36,466,988.29 27,859,617.33
Total 36,904,303.01 28,128,478.10
(2) Interest payable
Items End of term Beginning of term
Long term interest on borrowings due in installments 245,102.36 121,172.22
Interest on short-term borrowings 192,212.36 147,688.55
Subtotal 437,314.72 268,860.77
(3) Other payable
Items End of term Beginning of term
Deposite 12,075,403.25 3,029,922.35
Provisional account payable 22,537,821.34 21,345,148.72
Other 1,853,763.70 3,484,546.26
Subtotal 36,466,988.29 27,859,617.33
20. Non-current liabilities due within 1 year
Items End of term Beginning of term
Long-term loans due within 1 year 100,100,000.00 4,900,000.00
Total 100,100,000.00 4,900,000.00
21. Long-term loan
Items End of term Beginning of term
141
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Mortgage loan 12,700,000.00
Guarantee loan 100,000,000.00
Mortgage loan & Guarantee loan 10,000,000.00
Total 22,700,000.00 100,000,000.00
22.Long term account payable
(1) Details
Items End of term Beginning of term
Long term account payable 209,598,799.99 209,633,466.66
Special Payable 265,277,651.27 237,658,831.07
Total 474,876,451.26 447,292,297.73
(2) Long term account payable
(1) Details
Items End of term Beginning of term
CDB investment fund 208,000,000.00 208,000,000.00
Income payable of CDB 1,268,799.99 1,303,466.66
Drawing in administrative restructuring 330,000.00 330,000.00
Subtotal 209,598,799.99 209,633,466.66
2) Other note
According to the relevant agreement of the National Development Fund Investment Contract
(hereinafter referred to as the Investment Contract) jointly signed by the Company, National
Development Fund Co., Ltd. (hereinafter referred to as the NDF), Hangzhou Steam Turbine
Industry Co., Ltd. and Hangzhou Steam Turbine Group, the NDF invested RMB 208,000,000.00
in Hangzhou Steam Turbine Industry Co., Ltd., the subsidiary, The NDF obtains 1.2% of the
proceeds through dividends or repurchasing premium each year for the above investment; under
the investment contract, Hangzhou Steam Turbine Group will transfer its shares of Steam Turbine
Industry Co., Ltd from 2019 to the NDF by installment. Hangzhou Steam Turbine Industry Co.,
Ltd has received the above investment on December 27, 2016, according to the agreement of the
investment contract on the relevant investment returns, The Company reports it as a long-term
payables,the current accrued income is RMB2,496,000.00. Cumulative recognized income
payable is RMB 5,019,733.33.
(3) Special Payable
1) Detail
Items Beginning of term Increased this period Decreased this End of term
142
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
period
Compensation for 237,658,831.07 69,899,656.20 42,280,836.00 265,277,651.27
relocation
Subtotal 237,658,831.07 69,899,656.20 42,280,836.00 265,277,651.27
2) Other note
The current increase is attributable to the second sum of land requisition and demolishing
compensation received by the Company subject to the overall removal plan of Hangzhou Municipal
Government; the current decrease includes the Company's current removal cost of RMB 110,855.00
transferred to other incomes and complete plant cost of RMB 42,169,981.00 paid to Steam Turbine
Heavy Industry Company upon the current construction and conversion to fixed assets and
transferred to the deferred income.For details, please refer to note XII 2 of this financial statement.
23. Deferred income
Beginning of Increased this Decreased this
Items End of term Reaseon
term period period
Government 4,063,615.00 42,169,981.00 1,558,467.70 44,675,128.30 收到政府补助
Subsidy
Total 4,063,615.00 42,169,981.00 1,558,467.70 44,675,128.30
Note: For the government subsidy of this period counted into the current profit and loss, see
details at government subsidy statements at additional notes of project notes annotated under of
this combined financial statement
24. Stock capital
Increase/decrease this time (+ , - )
Balance Issuing Transferred
Items Bonus Balance year-end
Year-beginning of new from Other Subtotal
shares
share reserves
Total of capital
754,010,400.00 754,010,400.00
shares
25. Capital reserves
(1) Detail
Items Year-beginning Increase in the Decrease in the Year-end balance
143
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
balance current period current period
Share premium 81,769,963.93 12,139,330.63 93,909,294.56
Other capital reserves 57,775,125.09 57,775,125.09
Total 139,545,089.02 12,139,330.63 151,684,419.65
(2) Other note
1) In September 2018, the subsidiary Touping Company increased capital of its affiliated joint
venture Zhejiang Zhongrun Turbine Technology Co., Ltd., leading to a balance of RMB 966,600.00
between the due fair value share of recognizable net assets of invested organizations calculated by
the former shareholding ratio and the former book value of investment, which is recognized by the
subsidiary as capital reserve-capital stock premium.
2) In December 2018, minority shareholders of the subsidiary Casting & Forging
Company unilaterally increased capital in the premium, leading to an increase of RMB
11,172,730.63 in the due equity of the Company, which is recognized as capital reserve-capital
stock premium at the level of consolidated financial statements.
26. Other comprehensive income
Occurred current term
Less:
accounted as
Amount occurred
other gains
Items Beginning of term before income
previously but
tax of the
transferred to
period
gain/loss this
period
Other Comprehensive income
that will be reclassified 1,570,358,510.09 -227,354,408.75
subsequently to profit or loss
Gains or losses on changes in
fair value of available-for-sale 1,570,912,609.09 -227,209,996.88
financial assets
Difference of translating of
-554,099.00 -144,411.87
foreign currency accounts
Total of other comprehensive
1,570,358,510.09 -227,354,408.75
income
144
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
（Continued）
Occurred current term End of term
Attributable
Less: Attributable
Items to minority
Income tax to the parent
shareholders
expenses co. after tax
after tax
Other Comprehensive income
that will be reclassified -34,081,499.53 -193,189,987.35 -82,921.87 1,377,168,522.74
subsequently to profit or loss
Gains or losses on changes in
fair value of available-for-sale -34,081,499.53 -193,128,497.35 1,377,784,111.74
financial assets
Difference of translating of
-61,490.00 -82,921.87 -615,589.00
foreign currency accounts
Total of other comprehensive
-34,081,499.53 -193,189,987.35 -82,921.87 1,377,168,522.74
income
27.Special reserves
(1)Detail
Increased this Decreased this
Items Beginning of term End of term
period period(Note)
Labor safety expenses 25,369,714.61 4,349,043.14 21,020,671.47
Total 25,369,714.61 4,349,043.14 21,020,671.47
Note: The current decrease covers the work safety costs paid by the Company for buying safety
protection articles and equipment and the work safety costs of RMB 1,141,291.88 offsetting the
decrease of special reserve of the subsidiary entitled to the Company caused by unilateral capital
increase of minority shareholders of the subsidiary Casting Company.
(2) Other note
On December 5, 2016, Upon the application of the Company and the approval of Hangzhou
Safety Production Supervision and Administration Bureau (HSPSAB), the minimum reserved
amount for the collection and use of the safety production cost of the Company and its subsidiaries
is RMB 20 million. If the safety production costs that have been withdrawn in previous years have
exceeded the minimum reserved amount, it will no longer be reduced; if the safety production
costs for the subsequent years are less than the above-mentioned minimum reserved amount,
withdraw in the current year to compensate up to the minimum reserved amount.
28. Surplus reserves
Increased this Decreased this
Beginning of term End of term
Items period period
145
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Statutory surplus reserves 621,112,807.78 621,112,807.78
Total 621,112,807.78 621,112,807.78
29. Retained profit
Same period of last
Items Current term
term
Amount of retained profit at beginning of period 2,774,420,288.05 2,705,667,037.15
Add: Net profit attributable to owners of the parent 345,824,339.47 68,753,250.90
company
Less：Common stock dividend payable 37,700,520.00
Retained profit at the end of term 3,082,544,107.52 2,774,420,288.05
(II) Notes to items in the consolidated income statement
1. Business income and Business cost
Occurred current term Occurred in previous term
Items
Income Cost Income Cost
Main Business 4,506,238,820.34 3,090,243,038.00 3,309,136,671.06 2,358,901,850.83
Other 136,568,769.35 129,778,781.91 138,005,998.43 91,685,474.96
Total 4,642,807,589.69 3,220,021,819.91 3,447,142,669.49 2,450,587,325.79
2. Business tax and surcharge
Occurred in previous
Items Occurred current term
term
City maintenance and construction tax 18,079,695.53 10,155,742.58
Education surtax 7,861,289.45 4,439,101.66
Locality Education surcharge 5,239,921.16 2,959,342.83
Stamp tax 1,952,496.87 2,104,891.99
House tax 4,944,097.41 6,993,445.59
Land use tax 3,811,689.17 4,501,181.12
vehicle and vessel tax 64,342.35 68,067.25
Total 41,953,531.94 31,221,773.02
3. Sales expense
146
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Items Amount of this period Amount of last period
Employees’ remunerations 67,589,535.09 63,636,827.69
Transportation 40,177,043.84 35,709,099.81
Business trips 25,828,561.22 29,740,328.24
8,954,165.29 6,357,490.28
Business reception expenses
Consulting service fee 17,644,059.53 15,791,855.22
Registration fee 2,677,505.58 3,319,154.10
Three charge 3,572,369.51 6,303,572.33
Advertising fee 2,119,639.04 2,096,391.38
Office expenses 1,006,512.46 1,138,787.78
Unit premium 599,743.29 912,304.99
Other 4,036,628.17 4,514,335.85
Total 174,205,763.02 169,520,147.67
4. Administrative expense
Items Amount of this period Amount of last period
Employees’ remunerations 337,675,591.39 317,730,349.96
Asset depreciation and amortizing 18,248,724.80 18,290,071.64
Business reception expenses 8,088,099.28 13,882,376.16
Rental fee, House rental, property management, water and
26,203,998.25 22,417,308.94
power
Traveling fees 9,677,236.03 9,341,935.98
Material, low-value-consumable 3,945,766.48 4,214,778.82
Office expenses
8,815,990.20 8,034,059.34
Repair expenses 2,792,473.27 4,889,036.67
Other 37,830,291.82 34,351,247.16
Total 453,278,171.52 433,151,164.67
5. R & D cost
Items Amount of this period Amount of last period
Labor cost 106,515,148.37 95,809,297.53
147
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Direct materials 134,162,422.65 83,796,667.73
Depreciation expenses 13,280,416.04 16,147,252.46
Test and inspection fee 5,920,537.16 6,779,917.21
Commissioned research & development 2,084,603.76 4,392,904.15
Other 2,680,760.78 4,101,728.03
Total 264,643,888.76 211,027,767.11
6. Financial expenses
Items Amount of this period Amount of last period
Interest expense
13,540,383.97 9,972,261.98
Less: Incoming interests
16,327,538.73 8,249,739.28
Exchange gains/losses
-16,756,166.26 19,433,536.68
Commission 2,120,431.11 3,131,068.44
Total -17,422,889.91 24,287,127.82
7. Asset impairment loss
Items Amount of this period Amount of last period
Losses for bad debts 44,900,432.50 68,620,803.42
Losses for falling price of inventory 114,275,386.80 66,012,796.38
Impairment losses on financial assets available for sale 25,180,000.00
Total 184,355,819.30 134,633,599.80
8. Other income
The amount included
Amount of this Amount of last in the current
Items
period period non-recurring profit
and loss
Government subsidies related to assets 1,558,467.70 1,359,280.00 1,558,467.70
Government subsidies related to income 23,882,536.14 8,836,391.25 23,882,536.14
Individual tax commission refunds 361,654.33 361,654.33
Total 25,802,658.17 10,195,671.25 25,802,658.17
Refer to Notes of the Financial Statements in conjunction with notes of the consolidated
financial statements-others-government subsidies for current government subsidies included into
148
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
other incomes.
9. Investment income
Items Amount of this period Amount of last period
Long-term equity investment income by equity method -585,160.71
Investment income from disposal of Long-term equity
3,927,952.52
investment
Investment gains from holding of sellable
69,687,390.93 54,014,898.47
financial assets
Investment income from disposal of available for sale
25,121,648.20
financial assets
Gains from financing products 48,433,535.22 37,501,352.07
Total 117,535,765.44 120,565,851.26
10.Assets disposal income
Recorded in the
Amount of this Amount of last amount of the
Items
period period non-recurring gains
and losses
Income form disposal of fixed assets -9,843.23 2,740,865.13 -9,843.23
Total -9,843.23 2,740,865.13 -9,843.23
11. Non-Operation income
Recorded in the amount of
Amount of this Amount of last
Items the non-recurring gains and
period period
losses
Loss of non-current assets: 2,798.00 2,798.00
obsolescence gain
Compensation income 4,697,324.21 7,101,662.20 4,697,324.21
Payment not to be paid 254,099.61
Gains from debt restructuring 7,064,832.00 7,064,832.00
Other 373,477.71 719,897.38 373,477.71
Total 12,138,431.92 8,075,659.19 12,138,431.92
149
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
12. Non-operational expenditure
Amount of this Amount of last Recorded in the amount of the
Items
period period non-recurring gains and losses
Non-current assets scrapping loss 33,432.93 60,243.24 33,432.93
Donations 170,000.00 160,000.00 170,000.00
Penalty paid out 6,179,774.33 1,017,449.18 6,179,774.33
Local water source foundation 5,660.04
Fine, late payment 217,852.65 386,417.98 217,852.65
Other 568,375.48 5,909.50 568,375.48
Total 7,169,435.39 1,635,679.94 7,169,435.39
13. Income tax expenses
(1) Details
Items Amount of this period Amount of last period
Income tax of current term 71,678,315.72 30,183,514.16
-15,749,359.54 -19,347,759.68
Deferred income tax
55,928,956.18 10,835,754.48
Total
(2) Adjustment process of accounting profit and income tax expenses
Items Amount of this period Amount of last period
Total profit 470,069,062.06 132,656,130.50
Income tax expense at statutory / applicable tax rates 68,651,882.72 19,898,419.58
Effect of different tax rates applicable to subsidiaries 6,032,485.73 2,362,974.46
Adjustment for income tax in prior year 2,838,746.17 498,194.56
Income not subject to tax -9,270,055.74 -6,730,586.23
Expenses not deductible for tax purposes 1,213,881.52 1,682,033.95
Super deduction of R&D expenses -15,405,319.57 -7,868,394.27
Impact of additional deductions for persons with disabilities -188,829.45 -195,000.00
Changes in the balance of deferred income tax assets at the 52,453.21
150
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
beginning of the tax rate adjustment
Affect the use of deferred tax assets early unconfirmed
-732,453.30 -499,495.29
deductible losses
The current period does not affect the deferred tax assets
recognized deductible temporary differences or deductible 2,736,164.89 2,896,366.84
loss
Consolidation of the effect of offset profits -1,208,759.12
Income tax expenses 55,928,956.18 10,835,754.48
14. Other Comprehensive income
Please find the statement in the notes of consolidated balance sheet.
(III) Notes to consolidated cash flow statement items
(1) Other cash received from operating activities
Items Amount of this period Amount of last period
Deposit interest(Notes) 16,437,522.61 8,841,048.87
Government subsidies received 4,920,547.56 7,585,972.87
Recovery of operating bank deposits 195,099,239.74 117,753,826.61
Compensation income 17,968.60 2,004,464.28
Receipt of operating current account 6,617,872.95
Other 855,635.30 807,897.38
Total 223,948,786.76 136,993,210.01
Notes：Interest of deposit received from the sum invested of China Development Fund in the year
of 2018 is included.
2. Other cash paid for Operating activities
Items Amount of this period Amount of last period
Payment cash sales expenses 102,943,029.61 101,809,501.01
Payment cash Management expenses 90,399,413.49 87,677,458.56
Payment cash R & D cost 10,685,901.70 12,591,241.82
Payment cash financial expenses 2,120,431.11 3,150,789.33
Payment of operational bank deposits 136,776,129.79 128,402,810.43
Court freezes deposits 35,000,000.00
Payment of business transactions 970,622.48 4,387,075.08
Other 1,036,205.28 704,673.57
151
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Total 379,931,733.46 338,723,549.80
3.Other investment-related cash received
Items Amount of this period Amount of last period
Repurchasing of trusteeship 4,437,769,329.00 3,898,147,338.00
Receipt of levy and relocation compensation 69,899,656.20 237,658,831.07
Total 4,507,668,985.20 4,135,806,169.07
4. Other cash paid for investment activities
Items Amount of this period Amount of last period
Purchasing of financial products 4,707,907,000.00 3,931,112,329.00
Sales of subsidiary ending cash 183,932.75
Total 4,707,907,000.00 3,931,296,261.75
5. Other financing-related cash received
Items Amount of this period Amount of last period
Return the investment fund to minority shareholders of the 21,591,054.08
subsidiary
Payment of CDB investment interest 2,530,666.67 1,220,266.67
The purchase of minority equity in a subsidiary 243,111.17
Total 2,530,666.67 23,054,431.92
6. Supplement Information for cash flow statement
（1）Supplement Information for cash flow statement
Supplement Information Amount of this period Amount of last period
I. Adjusting net profit to cash flow from operating activities
Net profit 414,140,105.88 121,820,376.02
Add: Impairment loss provision of assets 184,355,819.30 134,633,599.80
Depreciation of fixed assets, oil and gas assets and
74,755,340.29 76,555,538.97
consumable biological assets
Amortization of intangible assets 7,190,565.82 7,552,428.32
Amortization of Long-term deferred expenses 253,886.90 648,388.42
Loss on disposal of fixed assets, intangible assets and other
9,843.23 -2,740,865.13
long-term deferred assets
152
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Loss on scrap of fixed assets 30,634.93 60,243.24
Loss to changes in fair value
Financial cost -4,446,827.42 28,843,231.98
Loss on investment -117,535,765.44 -120,565,851.26
Decrease of deferred income tax assets -15,783,137.70 -19,347,759.68
Increased of deferred income tax liabilities 33,778.16
Decrease of inventories -209,828,327.48 -257,216,765.22
Decease of operating receivables -137,083,068.76 -411,587,570.47
Increased of operating Payable 452,097,869.18 649,202,893.79
Other [Note] -3,757,549.69 -2,555,097.01
Net cash flows arising from operating activities 644,433,167.20 205,302,791.77
II. Significant investment and financing activities that without
cash flows:
Debts converted to capital
Convertible debts mature within one year
Fixed assets acquired under finance leases
III. Net changes in cash and cash equivalents:
Cash at end of year 1,262,186,817.20 1,137,492,834.83
Less: cash at beginning of year 1,137,492,834.83 831,236,984.85
Add：cash equivalents at end of year
Less: cash equivalents at beginning of year
Net increase of cash and cash equivalents 124,693,982.37 306,255,849.98
Note：It is special reserve current period net add amount
（2）Composition of cash and cash equivalents
Balance in Balance in
Items
year-end year-Beginning
1,262,186,817.2 1,137,492,834.8
0 3
I. Cash
128,198.82 208,763.32
Of which: Cash in stock
153
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
1,262,057,605.9 1,137,284,071.5
Bank savings could be used at any time
7 1
Other monetary capital could be used at any time 1,012.41
A central bank deposit available for payment
Deposit of inter-bank funds
Debit and release of interbank money
2) Cash equivalents
Including: Bond investment due in three months
1,262,186,817.2 1,137,492,834.8
III. Balance of cash and cash equivalents at the period end
0 3
Including ：
Use of restricted cash and cash equivalents by parent or group subsidiarie
s
(3) Monetary funds other than cash and cash equivalents
Balance in
Items Balance in year-end
year-Beginning
Bank acceptance margin 74,201,389.54 74,446,322.46
L/C security 10,683,802.85 3,860,724.80
Court freezes deposits 35,000,000.00
Guarantee 318,000.00 6,877,613.85
ETC service 2,000.00
Subtotal 120,205,192.39 85,184,661.11
(4) Amount of transfer by endorsement of commercial bills not related to cash receipt and
disbursement
Balance in
Items Balance in year-end
year-Beginning
Amount of commercial bills with transfer by endorsement 1,334,082,169.12 1,065,580,557.09
Including: payment for goods 1,331,582,169.12 1,062,372,164.09
Paid sum for purchase of fixed assets and other 1,700,000.00 3,208,393.00
long-term assets
Paid compensation for release of contracts 800,000.00
154
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
(IV)Other
1. Assets with limitation on ownership or using rights
Items Closing book value Causation o limitation
Monetary funds 120,205,192.39 Used as security for issuing of acceptance drafts and
bill of guarantees and court freeze funds
Notes receivable 88,112,807.60 Used as security for issuing of acceptance drafts
Dividend receivable 16,557,292.60 Collateral for obtaining bank loans and investment funds from CDB
Available for sale 333,592,000.00 Collateral for obtaining bank loans and investment funds from CDB
financial assets
Fixed assets 121,500,420.99 Used for mortgage to obtain bank loan and guarantee investment fund for
CDB
Construction in process 293,963,202.50 Collateral for obtaining bank loans and investment funds from CDB
85,918,827.81 Used for mortgage to obtain bank loan and guarantee investment fund for
Intangible assets
CDB
Total 1,059,849,743.89
2. Monetary items in foreign currencies
Items Balance at end of period Exchange rate Translated to RMB at end of period
Monetary Funds 151,728,476.35
Incl：USD 21,453,930.49 6.8632 147,242,615.73
Euro 134,543.67 7.8473 1,055,804.54
HKD 5.51 0.8762 4.83
JPY 30,055.00 0.061887 1,860.01
Rupiah 7,247,761,625.85 0.000473 3,428,191.24
Notes receivable & 211,549,864.77
account receivable
Incl：USD 29,160,574.90 6.8632 200,134,857.68
Euro 550,828.43 7.8473 4,322,515.95
Rupiah 14,489,565,804.00 0.000473 6,853,564.63
155
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
SGD 47,726.12 5.0062 238,926.51
Other receivable 3,443,370.95
Incl：USD 500,000.00 6.8632 3,431,600.00
Euro 1,500.00 7.8473 11,770.95
Note payable & account 7,142,807.78
payable
Incl：USD 570,979.96 6.8632 3,918,749.66
Euro 22,100.86 7.8473 173,432.07
Rupiah 6,449,526,536.00 0.000473 3,050,626.05
3. Government subsidy
(1) Detail
1) Government subsidies related to assets
New
subsidy Amortization Asset-related
Beginning End of
Items in for the current or
of term term
current period income-related
period
Financial support for 259,020.00
28,780.00 230,240.00 Other income
industrial projects
Government 259,020.00
subsidy for 28,780.00 230,240.00 Other income
casting project
Circular economy 102,690.00
11,410.00 91,280.00 Other income
financial subsidy
Subsidy for industrial 320,000.00
upgrading by provincial 160,000.00 160,000.00 Other income
government
Finance for casting 2,909,025.00
997,380.00 1,911,645.00 Other income
project
Government subsidy for
213,860.00 106,930.00 106,930.00 Other income
industrial entities from
156
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Yuhang District
Government in the 2nd
half of 2009
Compensation for
requisition - new 42,169,981.00 225,187.70 41,944,793.30 Other income
complete plant
Subtotal 4,063,615.00 42,169,981.00 1,558,467.70 44,675,128.30
2) Income-related government subsidies used for compensation of relevant costs and expenses
or losses incurred in the Company
Items Amount Item presentation
Value-added tax exemption for military
16,710,609.09 Other income
projects
Subsidy for enterprise investment in
2,207,200.00 Other income
research and development
Social insurance subsidy for post
1,694,108.44 Other income
stabilization and employment
Refund for property tax 1,512,446.88 Other income
Refund for land use tax 628,077.61 Other income
Special fund for economic development 344,300.00 Other income
Incentive for scientific and technological
298,610.24 Other income
innovation
Subsidy for patent projects 272,500.00 Other income
Land requisition and demolishing
110,855.00 Other income
compensation-removal cost
Other incidental government subsidies 103,828.88 Other income
Subtotal 23,882,536.14
(2)The current amount of government subsidies included into the current profits and loss is
RMB 25,441,003.84.
157
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
VI. Equities in Other Entities
(I) Equity in major subsidiaries
1. Composition of major subsidiaries
(1) Basic situation
Main Share
Name of
busine proporti
the Reg. Business
ss on % Way of obtain
subsidiar Add. property
locati
ies Direct Indirect
on
Zhejiang Steam
Trubine Hangzh Hangzh
Packaged ou ou Manufactur Incorporat
70.86
Technologies Zhejia Zhejia ing
ion
Development ng ng
Co., Ltd.
Hangzhou
Zhongneng
Steam Hangzho Hangzho
Turbine u u Manufacturin Incorporat
60.83
Power Co.,
Zhejian Zhejian g ion
Ltd.
(Zhongnen g g
g Co.)
Hangzhou
Hangzh Hangzh
Steam
ou ou Manufacturin Incorporat
Turbine 38.03
Zhejia Zhejia
Casting g ion
ng ng
Co., Ltd.
Hangzhou
Steam Hangzh Hangzh
Turbine ou ou Manufacturin Incorporat
52.00
Machinery Zhejia Zhejia
g ion
Equipment ng ng
Co., Ltd.
Hangzhou
Hangzh Hangzh
Steam Manufactur Incorporat
ou ou 87.53
Turbine ing ion
Zhejia Zhejia
Auxiliary
158
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Machinery ng ng
Co., Ltd.
(Auxiliar
y
Machinery
Co.)
Zhejiang
Turbine Hangzh Hangzh
Import & ou ou Incorporat
Export Co., Zhejia Zhejia
Commerce 100.00
Ltd. ng ng
ion
(Turbine
Co.)
Hangzh Hangzh
Hangzhou
ou ou Manufacturin Incorporat
Steam Turbine 100.00
Zhejia Zhejia
Heavy Industry g ion
ng ng
Co., Ltd.
(2) Basis for holding 50% or less than 50% of the voting power but still controlling the
invested organizations
In December 2018, the subsidiary Casting Company introduced external strategic investors,
leading to a decrease in the shareholding ratio of the Company from 51% to 38.03%. Since the
Company still held more than 1/3 of shares and took four seats in the board of seven directors, it still
had power of control over the Casting & Forging Company.
2.Major non-fully-Owned subsidiaries
(1) Detail
Gains/loss of the Dividend
Balance of eqiuty of
Name of the Share protion of period attributable announced in the
minor shareholders
subsidiaries minor shareholders to minor period to minor
at end of period
shareholders shareholders
Zhejiang Steam
Trubine
Packaged
Technologies
Development
Co., Ltd.
159
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Hangzhou 39.17% 29,643,193.06 21,486,000.00 150,284,014.40
Zhongneng Steam
turbine PowerCo.,
Ltd.
Hangzhou Steam 61.97% 6,272,269.92 12,250,000.00 143,226,125.70
Turbine Casting
Co., Ltd.
Hangzhou Steam 48.00% 24,260,684.80 21,600,000.00 73,921,143.87
Turbine Machinery
Equipment Co., Ltd.
Hangzhou Steam 12.47% 135,632.87 3,990,400.00 23,588,205.49
Turbine Auxiliary
Machinery Co., Ltd.
(2) Description of difference between the shareholding ratio and voting power of minority
shareholders of subsidiaries
Refer to the current notes to financial statements-VI (I) 1(2) description.
3. Material financial information of major non-fully-owned subsidiaries
(1) Assets and liabilities
End of term
Subsidiaries
Name Non-current
Current assets Non-current assets Total of assets Current liabilities Total of liability
liabilities
Zhejiang 248,134,781.83 24,640,726.05 272,775,507.88 183,669,390.74 183,669,390.74
Steam
trubine
Packaged
Technology
Development
Co., Ltd.
Hangzhou 1,105,955,992.17 71,963,602.76 1,177,919,594.93 819,218,843.06 330,000.00 819,548,843.06
Zhongneng
Steam
turbine
PowerCo.,
Ltd.
Hangzhou 441,396,913.82 172,078,042.91 613,474,956.73 343,698,819.51 25,323,405.00 369,022,224.51
Steam
160
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Turbine
Casting Co.,
Ltd.
Hangzhou 232,419,338.54 21,258,598.11 253,677,936.65 98,910,290.54 765,263.03 99,675,553.57
Steam
Turbine
Machinery
Equipment
Co., Ltd.
Hangzhou 642,467,713.41 110,484,194.28 752,951,907.69 549,240,066.20 106,930.00 549,346,996.20
Steam
Turbine
Auxiliary
Machinery
Co., Ltd.
(Continued)
Beginning of term
Subsidiaries
Name Non-current Non-current
Current assets Total of assets Current liabilities Total of liability
assets liabilities
Zhejiang 219,292,216.34 24,375,146.44 243,667,362.78 160,574,913.68 160,574,913.68
Steam
trubine
Packaged
Technology
Development
Co., Ltd.
Hangzhou 1,037,373,643.65 75,190,430.57 1,112,564,074.22 772,310,062.79 330,000.00 772,640,062.79
Zhongneng
Steam
turbine
PowerCo.,
Ltd.
Hangzhou 304,833,240.88 184,619,003.14 489,452,244.02 312,465,702.87 3,849,755.00 316,315,457.87
Steam
Turbine
Casting Co.,
Ltd.
161
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Hangzhou 205,163,731.11 21,782,104.60 226,945,835.71 77,895,206.35 591,339.61 78,486,545.96
Steam
Turbine
Machinery
Equipment
Co., Ltd.
Hangzhou 548,200,286.67 115,360,847.76 663,561,134.43 428,134,519.20 213,860.00 428,348,379.20
Steam
Turbine
Auxiliary
Machinery
Co., Ltd.
(2) Profit and loss and cash flow
Amount of current period
Subsidiaries Name Cash flow for business
Turnover Net profit Total Misc Gains
activities
Zhejiang Steam 220,230,100.85 11,113,668.04 11,113,668.04 -9,991,503.09
Turbine Packaged
Technology
Development Co.,
Ltd
Hangzhou 988,083,271.30 70,253,285.20 70,108,873.33 126,794,159.56
Zhongneng Steam
turbine Power Co.,
Ltd.
Hangzhou Steam 446,900,632.40 12,800,550.85 12,800,550.85 -18,672,949.72
Turbine Casting Co.,
Ltd.
Hangzhou Steam 242,356,767.43 50,543,093.33 50,543,093.33 71,811,506.52
Turbine Machinery
Equipment Co., Ltd.
Hangzhou Steam 568,575,713.37 1,087,673.40 1,087,673.40 44,200,815.32
Turbine Auxiliary
Machinery Co., Ltd.
(Continued)
Amount of previous period
Subsidiaries Name Cash flow for business
Turnover Net profit Total Misc Gains
activities
Zhejiang Steam 241,699,214.69 10,676,500.39 10,676,500.39 -8,604,753.23
Turbine Packaged
162
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Technology
Development Co.,
Ltd
Hangzhou 833,201,191.68 25,173,217.92 24,766,351.64 24,579,646.69
Zhongneng Steam
turbine Power Co.,
Ltd.
Hangzhou Steam 357,558,102.11 27,727,923.66 27,727,923.66 18,380,178.48
Turbine Casting Co.,
Ltd.
Hangzhou Steam 220,887,783.34 46,032,691.93 46,032,691.93 46,087,103.01
Turbine Machinery
Equipment Co., Ltd.
Hangzhou Steam 394,136,946.17 36,761,943.86 36,761,943.86 16,117,349.92
Turbine Auxiliary
Machinery Co., Ltd.
(II) Transactions where the Company sustains a variation of share of owners' equity in
subsidiaries but still controls the subsidiaries
1. Description of variation in the share of owners' equity of subsidiaries
Shareholding ratio before Shareholding ratio after
Subsidiary Variation
variation variation
Casting Company 2018.12.29 51.00% 38.03%
2. Effects of transactions on minority shareholders' equity attributable to owners' equity of the
parent company
Items Casting Company
Disposal of consideration [Note]
Less: share of net assets of the subsidiary
11,172,730.63
calculated by the disposed shareholding ratio
Balance -11,172,730.63
Including: adjustment of capital reserve -11,172,730.63
Note: increase of the share of equity entitled to the Company caused by the unilateral capital
increase of minority shareholders of the subsidiary Casting Company.
(III) Equity in the joint venture
Insignificant financial information of Associated Enterprises
Items Ending amount/current Beginning amount/amount in
amount the corresponding period of
163
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
the prior year
Associated Enterprises
Total book value of investment 8,221,439.29 5,800,000.00
Totals calculated by shareholding ratio are as -585,160.71
follows
Net profit -585,160.71
Total comprehensive income -585,160.71
VII. Risks related to financial instruments
The objective of the Company’s risk management is to achieve a balance between the risk and
gains. Constrain the negative influence on business operation to the lowest limit, and maximum
the interests of shareholders and other equity holders. With regard to this target, the basic policies
of the Company are; locate and analyse the risks, set appropriate bottom line for risks, and manage
and monitor on each risk and constrain them in a certain extent.
Risks attached to financial instruments are mainly credit risks, liquidity risks, and market risks.
The following risk managing policies have been examined and approved by the management:
(I) Credit risks
Credit risks are introduced when one party of the financial instrument failed to exercise its
liabilities and then caused financial loss to another.
The credit risks of the Company are mainly composed by bank savings and receivable accounts.
Following measurements are adopted to control these risks:
1. Bank deposit
The Company puts its bank savings in financial institutions with higher credit ranks, therefore
with lower risks.
2. Account receivable
The Company performs credit assessment on the clients on periodic and constant basis. Results
suggested by the assessment are used by the Company to determine clients with higher ranks and
to overlook the rest. This was conducted to avoid risks brought by material bad debts.
As the Company only does business with recognized and reputable third parties, so no
collateral is needed. Credit risks are centralized managed in accordance with customers. As of
December 31, 2018, the Company has a characteristic of specific credit risk concentration.
40.08% (December 31, 2017: 39.44%) of the Company's accounts receivable comes from the top
five customers. The Company does not hold any collateral or other credit enhancement for the
balance of accounts receivable.
(1) Analyzing of receivable accounts neither due nor impaired, and those have due but not
impaired:
End of term
Items Overdue but not impaired
Not overdue and not
Within 1 year 1-2 years Over 2 Total
impaired
164
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
years
Notes
595,089,175.22 595,089,175.22
receivable
Subtotal 595,089,175.22 595,089,175.22
(Continued)
Beginning of term
Overdue but not impaired
Items Not overdue and not
Within 1 year 1-2 years Over 2 Total
impaired
years
Notes
715,410,887.68 715,410,887.68
receivable
Subtotal 715,410,887.68 715,410,887.68
(2) Refer to Notes of the Financial Statements in conjunction with notes of the consolidated
financial statements-accounts receivable for individual accounts receivable with provision for
impairment.
(II) Liquidation risks
Liquidation risks are the possibilities of short in cash at fulfilling liabilities of payment or
settlement for financial assets. They may be caused by failing to cash financial assets at fair value
instantly; debtors’ failing of paying debts due; debts due before schedule; or failing of generating
expected cash flow.
To handle these risks, the Company adopted multiple measures such as note clearance and bank
loans. Long-term and short-term financing approaches were used to maintain balance between
constancy and flexibility. The Company has obtained credit from multiple banks to satisfy the
needs of business operation and capital output.
Categorizing of financial liabilities on remained period to due
End of term
Book value Contract within 1 year 1-3 years Over 3 years
Items
amount not
discounted
Short-term
139,600,000.00 141,968,522.53 141,968,522.53
loans
Notes payable &
1,350,583,381.53 1,350,583,381.53 1,350,583,381.53
Account payable
Non-current
liabilities due to 1 100,100,000.00 103,512,427.64 103,512,427.64
year
Long-term loan 22,700,000.00 25,297,942.57 25,297,942.57
165
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Long-term
209,598,799.99 220,248,799.99 29,764,799.99 58,044,000.00 132,440,000.00
payable(Note)
Other account
36,904,303.01 36,904,303.01 36,904,303.01
payable
Subtotal 1,859,486,484.53 1,878,515,377.27 1,662,733,434.70 83,341,942.57 132,440,000.00
(Continued)
Beginning of term
Book value Contract within 1 year 1-3 years Over 3 years
Items
amount not
discounted
Short-term
115,500,000.00 117,664,804.32 117,664,804.32
loans
Notes payable &
1,098,125,424.57 1,098,125,424.57 1,098,125,424.57
Account payable
Non-current
liabilities due to 1 4,900,000.00 4,903,383.01 4,903,383.01
year
Long-term loan 100,000,000.00 107,057,027.40 3,685,000.00 103,372,027.40
Long-term
209,633,466.66 222,751,733.33 53,000,000.00 169,751,733.33
payable(Note)
Other account
28,128,478.10 28,128,478.10 28,128,478.10
payable
Subtotal 1,556,287,369.33 1,578,630,850.73 1,252,507,090.00 156,372,027.40 169,751,733.33
Note: Exclusive of special accounts receivable-land requisition and demolishing compensation cost.
(III) Market risks
Market risks are those brought by change of fair value or expectable
cash flow of financial instruments due to change of market prices,
mainly interest risks and exchange rate risks.
1. Interest risks
Interest risks are those brought by change of fair value or expectable
cash flow of financial instruments due to change of interest rates,
mainly regards the loans at floating interest rates.
166
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
As of December 31, 2018, the Company had raised RMB19,000,000.00 (Dec 31
2017: RMB0.00) on floating interest rates. In case of other variables
remain unchanged, if the interest rates change, reasonably and possibly,
for 50% of the benchmark, the total profit and shareholders’ equity
will be free of major impact.
2. Foreign currency risks
Foreign currency risks (exchange rate risks) are those caused by change of fair value or
expectable cash flow of financial instruments due to fluctuation of exchange rates. These risks are
mainly related to foreign currency assets and liabilities. The Company operates in mainland China
and mostly uses RMB as standard currency, therefore no major risks regarding exchange rates. For
details of foreign currency assets and liabilities, please go to the descriptions in the notes to the
consolidated financial statements.
VIII.Fair value disclosure
(I)Closing balance of assets and liabilities measured at fair value
Closing fair value
（II）
Items
Available-for-sale Level 2 Level 3 Total
Financial Assets
（2）Equity
Consistent fair value
instrument
measurement
investment
Available-for-sale Financial Assets 2,011,876,524.40 2,011,876,524.40
Equity instrument investment 2,011,876,524.40 2,011,876,524.40
Total of Consistent fair value 2,011,876,524.40 2,011,876,524.40
measurement
(II) Market price basis at fair value by level 1 on a continued and non-continued basis
The shares of Hangzhou Bank Co., Ltd. held by the Company have active market quotations,
so it is measured in accordance with the first level of fair value.
XII. Related parties and related-party transactions
(I)Related parties
1. Parent company information of the enterprise
1. Parent company of the Company
Shareholding Voting rights of
Name of the Business Registered
Reg. Add. of the parent the parent co. %
parent co. property capital
co.
167
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Hangzhou Steam Hangzhou Manufacturin
RMB 800 milllion 63.64% 63.64%
Turbine Group China g
(2) Hangzhou Municipal Government State-owned Asset Supervisory Committee is the
ultimate controller of the Company.
2.Subsidiaries of the enterprise
For details of subsidiaries please go to the statement of equities in other entities.
3. Situation of joint ventures and associated enterprises
For details of the important joint venture or joint venture of the enterprise, see the description of
the rights and interests in other parties in the notes
4. Other related parties
Name of the related parties Relationship with the Company
Hangzhou Steam turbine Automobile sales service Co., Ltd. Affiliate of the Group
Hangzhou Hangfa Power Generating Equipment Co., Ltd. Affiliate of the Group
Hangzhou Nanfangtongda Gears Co., Ltd.(Note) Affiliate of the Group
Hangzhou Nanhua Wooden Packaging Co., Ltd. Affiliate of the Group
Hangzhou Steam Turbine Industrical Co., Ltd. Affiliate of the Group
Hangzhou Steam Turbine Engineering Co., Ltd. Affiliate of the Group
Hangzhou Steam Turbine Power Group Equipment Co., Ltd. Affiliate of the Group
Hangzhou Steam Turbine Compressor Co., Ltd. Affiliate of the Group
China Electrical and Mechanical Institute-Hangzhou Turbine
Affiliate of the Group
Group (Hangzhou) United Research Institute Co., Ltd.
Hangzhou Steam Turbine Industry & Trade Co., Ltd. Affiliate of the Group
Shanghai Relian steel Trade Co., Ltd. Affiliate of the Group
Greenesol power systems PVT Ltd. Shareholding enterprise
Hangzhou Bank Shareholding enterprise
Note: It has been no longer a related party to the Company as of the equity transfer in June 2018.
(II)Related transaction
1. Sale of goods/rendering of labor services/labor service offering
(1)Purchase of goods and service
Content of related Amount of current Amount of
Ralated parties
transaction
period previous period
Hangzhou Hangfa Power Generating 173,472,628.12 137,886,068.57
Generators
Equipment Co., Ltd.
Hangzhou Steam turbine Automobile sales Transportation , repair , 49,397,713.70 49,793,145.26
service Co., Ltd. etc.
168
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Hangzhou Nanhua Wooden Packaging Co., Ltd. Packaging 17,204,942.74 11,412,748.09
Hangzhou Nanfang Tongda Gears Co., Ltd. Gear boxes 1,863,034.17 6,526,922.23
China Electrical and Mechanical
Institute-Hangzhou Turbine Group (Hangzhou) Development ,design 1,468,929.24 1,521,264.63
United Research Institute Co., Ltd.
Hangzhou Steam Turbine Industry & Trade Grind fee 1,096,475.08
Co., Ltd.
Hangzhou Steam Turbine Industrial Co., Ltd. Raw materials, 983,861.03 1,079,184.92
processing fees
Zhejiang Zhongrun Gas Turbine Technology Part 940,170.90
Co., Ltd.
Hangzhou Steam Turbine Engineering Co., Ltd. Raw material,Technical 833,010.81 5,815,284.38
service
Hangzhou Steam turbine Compressor Co., Ltd. Service 339,622.64
Greenesol power systems PVT Ltd. Coupler 34,045.00
Subtotal 247,600,388.43 214,068,663.08
(2) Related transactions regarding sales of goods or providing of
services
Subjects of the Same
Current
Related parties related period of
term
transactions last term
Steam
Hangzhou Steam Turbine
turbine,compressor, 50,891,902.45 77,325,688.70
Engineering Co., Ltd.
Installation service
Hangzhou Hangfa Power Cast parts 12,803,285.29 11,378,353.36
Generating Equipment
Co., Ltd.
Greenesol power systems PVT Ltd. Part 806,596.80 984,273.41
Hangzhou Steam Turbine Group Infornation service 28,674.03 139,622.64
Hangzhou Steam Turbine Automobile Sales 803.44 24,393.29
Small amount materials
Service Co., Ltd.
Hangzhou Steam Turbine Compressor Co., Part, Industrial cooperation 382,017.01
169
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Ltd.
Subtotal 64,531,262.01 90,234,348.41
2.Information of related lease
(1)The Company was lessor
The lease income
Category of lease The lease income
Name of lessee confirmed in this
assets confirmed in last year
year
Hangzhou Steam Turbine Compressor House and Building 88,000.00
Co., Ltd.
(2) The company was lessee：
The lease income
Category of leased Category of leased
Lessor confirmed in this
assets assets
year
HSTG House and Building 3,926,912.32 3,725,637.47
Engineering 1,775,862.07 1,760,683.76
HSTG
Equipment
HSTG Land use right 4,835,169.55 3,194,406.31
Hangzhou Steam Turbine Automobile 4,148,921.29 4,007,541.21
Site leasing
Sales Service Co., Ltd.
Hangzhou Steam Turbine Automobile Car rental 245,172.41
Sales Service Co., Ltd.
Hangzhou Steam Turbine Industry & House &Building 476,525.45
Trade Co., Ltd.
Subtotal 15,408,563.09 12,688,268.75
3. Related-party guarantee
(1) The company and its subsidiaries as guarantors
As stated in Note 5 (I) 22 of the financial statement, In accordance with the National Development
Fund Investment Contract, jointly signed by the Company, NDF, Turbine Industry Company and
Hangzhou Steam Turbine Group, the investment of the NDF on Turbine Industry Company, RMB
208,000,000.00, is repurchased by the Hangzhou Steam Turbine Group, and the NDF asks the
Company and Hangzhou Steam Turbine Group to provide guarantee for the fulfillment of
Hangzhou Steam Turbine Group of the transferee equity obligations. The Company and Steam
Turbine Company pledge to the NDF with a total of 45.08 million shares of Hangzhou Bank Co.,
Ltd. with book value of RMB 333,592,000.00,Dividend Receiviable of RMB16,557,292.60,
Steam Turbine heavy Industry Co., Ltd. mortgaged the book value of66,668,212.97 yuan of land
use rights and book value of 41,944,793.30 yuan of fixed assets and book value of 293,963,202.50
170
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
yuan of construction in progress to the National Development Fund.
(2) The company and its subsidiaries are the guaranteed parties
Execution
Guarantor Guarantee amount Start date End date accomplished
or not
Hangzhou Steam 100,000,000.00 November 30,2017 December 30,2019 No
Turbine Group
4.Related party asset transfer
Same period of
Related party Content Current term
last term
Hangzhou Steam Turbine
Automobile Sales Service Purchase fixed assets 77,413.79 307,094.02
Co., Ltd.
5. Remunerations of key managements
Items Current term Same period of
last term
Remunerations of key managements 8,133,290.02 8,114,522.61
6. Other related transactions
(1) Service and power supply
(1)HSTG supplies water and power to the Company and some of the
subsidiaries amounted to RMB14,664,638.25 this period.
2）HSTG. provides property management services for its subsidiary which is Complete
Technology Corporation, of which the fee of this period incurred in the property
management is RMB42,083.06.
3) Hangzhou Steam Turbine Automobile Sales & Service Co., Ltd.
provided transportation to the Company’s employees and
RMB2,100,564.00 was paid this period.
4) Hangzhou Steam Turbine Industry Co., Ltd. provided cleaning
services to the Company and RMB1,265,723.28 was paid this period.
(2) Using of trademark
The Company pays RMB1,698,113.21 to HSTG for using of the registered
trademark.
(3) Expenses paid on behalf the Company
1) During the current period, Hangzhou Steam Turbine Group advanced the payment of RMB
171
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
574,972.41 salaries for the company.
(4) Bank credit and entrusted wealth-management
1) The Company applied for a line of credit of RMB 300 million to Shiqiao Sub-branch, Bank
of Hangzhou Co., Ltd. in 2017 and till December 31, 2018, the balance of loan under the line of
credit was still RMB 0.
2) The Company entered into a financial management agent contract with Bank of Hangzhou
Co., Ltd. in the cumulative amount of financial management of RMB 1,490,000,000.00 and till
December 31, 2018, the balance of the financial management was RMB 470,000,000.00.
（5）Subscription of the Fund
In the period, the Company, together with Hangzhou Steam Turbine Group and Shanghai
Relian Steel Trading Co., Ltd. contributed funds to subscribe the shares of Juyuan Xinxing No. 9
Private Equity Fund, and they signed the contract with Hangzhou Juyuan Asset Management Co.,
Ltd. respectively. The Company made the share subscription of 16 million yuan.
(III) Receivables and payables of related parties
（1）Receivables
End of term Beginning of term
Name Related party Bad debt Bad debt
Book balance Book balance
provision provision
Notes Hangzhou Steam Turbine Engineering Co.,
1,033,180.00 9,022,000.00
receivable Ltd.
Hangzhou Hangfa Power Generating
4,000,000.00
Equipment Co., Ltd.
Subtotal 5,033,180.00 9,022,000.00
Account Hangzhou Steam Turbine Engineering Co.,
56,048,293.87 23,796,436.58 60,048,003.87 12,214,467.99
receivable Ltd.
Hangzhou Hangfa Power Generating
18,739,908.99 1,269,459.57 23,168,548.05 1,656,221.13
Equipment Co., Ltd.
Greenesol power systems PVT Ltd. 14,522,075.90 14,522,075.90 13,825,933.72 13,825,933.72
Hangzhou Steam Turbine Group 158,500.00 158,500.00 158,500.00 158,500.00
Hangzhou Steam Turbine Compressor Co.,
59,000.00 35,400.00 59,000.00 17,700.00
Ltd.
172
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Hangzhou Steam Turbine Power Group
305,000.00 305,000.00
Complete Equipment Engineering Co., Ltd.
Subtotal 89,527,778.76 39,781,872.05 97,564,985.64 28,177,822.84
Hangzhou Hangfa Power Generating
Prepayment 51,691,853.97 43,741,785.00
Equipment Co., Ltd.
Hangzhou Steam Turbine Engineering Co.,
5,820,000.00 2,022,000.00
Ltd.
Zhejiang Zongrun Gas turbine technology
792,022.20 715,000.00
Co., Ltd.
Hangzhou Steam Turbine Industrial Co., Ltd. 8,514.00 50,000.00
Subtotal 58,312,390.17 46,528,785.00
Other account Hangzhou Steam Turbine Compressor Co.,
300,000.00 30,000.00 346,200.00 17,310.00
payable Ltd’
Hangzhou Steam Turbine Group 39,105.34 3,910.53 39,105.34 1,955.27
Subtotal 339,105.34 33,910.53 385,305.34 19,265.27
2. Payables
Amount at year
Name Related party Amount at year
beginning
Hangzhou Hangfa Power Generating Equipment
Notes payable 11,500,000.00
Co., Ltd.
Hangzhou Steam Turbine Automobile Sales Service
1,650,000.00 1,350,000.00
Co., Ltd
Hangzhou Nanhua Wooden Packaging Co., Ltd. 1,660,000.00
Hangzhou Steam Turbine Engineering Co., Ltd. 180,000.00
Subtotal 14,810,000.00 1,530,000.00
Account Hangzhou Hangfa Power Generating Equipment
116,462,941.48 133,726,506.11
payable Co., Ltd.
Hangzhou Steam Turbine Automobile Sales Service
11,934,956.54 8,809,544.81
Co., Ltd
Greenesol power systems PVT Ltd. 3,381,200.50 3,219,116.49
Hangzhou Steam Turbine Engineering Co., Ltd. 2,040,000.00 3,510,000.00
173
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Hangzhou Nanhua Wooden Packaging Co., Ltd. 1,851,121.07 1,667,167.51
Hangzhou Nanfang Tongda Gears Co., Ltd. 1,147,694.00
Hangzhou Steam Turbine Group 1,652,987.82 79,982.49
Hangzhou Steam Turbine Industrial Co., Ltd. 537,981.70 128,042.88
China Electrical and Mechanical Institute-Hangzhou
Turbine Group (Hangzhou) United Research 427,500.00 542,775.00
Institute Co., Ltd.
Hangzhou Steam Turbine Industries & Trade Co.,
476,525.45
Ltd.
Subtotal 138,765,214.56 152,830,829.29
Advances
Hangzhou Steam Turbine Compressor Co., Ltd’ 14,190,000.00 14,190,000.00
received
Hangzhou Steam Turbine Engineering Co., Ltd. 10,543,300.00 31,613,190.00
Greenesol power systems PVT Ltd. 103,764.63 51,968.30
Subtotal 24,837,064.63 45,855,158.30
Other account Hangzhou Steam Turbine Automobile Sales Service
100,000.00 100,000.00
payable Co., Ltd
Hangzhou Steam Turbine Group 87,736.60 221,351.95
Subtotal 187,736.60 321,351.95
X. Commitment and Contingency Issues
(I) Material commitment issues
1. External investment contracts engaged but not exercised or not fully exercised and related
financial outflow
As stated in Note 5 (I) 22 of the financial statement, Hangzhou Turbine Group will transfer its
holding equity of Hangzhou Turbine Heavy Industry Co., Ltd. by stages to China Development
Funds since 2019. After transfer, Hangzhou Turbine Group will transfer the transferred equity of
Hangzhou Turbine Heavy Industry Co., Ltd to our Company at the same price.
2. Outsourcing contracts engaged with large amounts and are under processing or preparation
As of December 31, 2018, Construction contracts and contracts which are performed or ready
for being performed by the Company and its subsidiaries for the sake of plant construction are
valued about RMB 361,730,600.
3.With regard to bank letters of credit opened by the Company and its subsidiaries, the
outstanding balance till December 31, 2018 is as follows:
Name Bank Currency Amount Way of
guarantee
174
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
The Company ICBC Hangzhou Branch Euro 9,098,660.00 Credit
The Company ICBC Hangzhou Branch USD 579,338.00 Credit
The Company Bank of China Zhejiang Branch Euro 254,378.00 Credit
The Company Bank of China Zhejiang Branch USD 510,000.00 Credit
The Company China CITIC Bank Hangzhou Euro 7,784,600.00 Credit
Branch
Turbine Company China CITIC Bank Hangzhou Swing franc 1,368,448.68 Guarantee
Branch
4. With regard to bank letters of Guarantee opened by the Company and its subsidiaries, the
outstanding balance till December 31, 2018 is as follows:
Name Bank Currency Amount Way of
guarantee
The Company Bank of China Zhejiang Branch USD 8,504,725.00 Credit
The Company Bank of China Zhejiang Branch RMB 65,196,937.00 Credit
The Company ICBC Hangzhou Branch RMB 254,865,231.05 Credit
The Company Everbright Bank Hangzhou RMB 24,528,000.00 Credit
Qianjiang Branch
The Company China CITIC Bank Hangzhou RMB 26,345,021.00 Credit
Branch
Machinery Co. ICBC Banshan Branch RMB 4,963,506.60 Credit
Auxiliary Company ICBC Banshan Branch RMB 37,815,900.00 Credit
Turbine Co. ICBC Branch business department RMB 55,812.80 Credit
Turbine Co. China CITIC Bank Hangzhou RMB 800,000.00 Credit
Branch
Zhongneng Bank of China Ecomomic RMB 45,485,531.25 Credit
Company Development Zone Branch
Packaged Company ICBC Wulin Branch RMB 1,140,000.00 Guarantee
175
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
(II). Contingency
(1) For details of guarantees provided for related parties, please refer to the notes for related
parties and related transactions in the notes to this financial statement.
(2) Litigation matters
(1) On September 5, 2018, Henan Junhua Development Co., Ltd. sued the Company, Xi'an
Shaangu Power Co., Ltd. and the third party, China General Mechanical Engineering Co., Ltd. to
request the Company and Xi'an Shaangu Power Co., Ltd. to compensate the loss of RMB 44 million,
the equipment repair expense of RMB 2.2 million, all legal fares including the court acceptance fee
and property preservation fee of this case and other expenses for the plaintiff to realize the creditor's
rights to Henan Junhua Development Co., Ltd. The case is still pending up to the approval date of
the financial statements.
(2) On September 13, 2018, the subsidiary, Zhongneng Company sued China Machinery
Industry Construction Group Inc. failing to pay the commissioning amount and quality guarantee
deposit as agreed in the contract as scheduled and pay the expenses for the additional equipment
parts after purchasing the turbines and supporting equipment of spontaneous power plant from
Zhongneng Company. Zhongneng Company requested China Machinery Industry Construction
Group Inc. to pay the price of goods worth RMB 8.6813 million,Payment overdue is about 643,900
yuan . The case is still pending up to the approval date of the financial statements.
XI. Enents after balance sheet date
(I) Important non-adjusting events
1. The Company subsequently subscribed capital of RMB 11.40 million to found Zhejiang
Ranchuang Touping Machinery Co., Ltd. (hereinafter referred to as Ranchuang Company) and on
February 28, 2019, Ranchuang Company completed industrial and commercial registration
procedures and obtained the Business License issued by Hangzhou Municipal Administration for
Market Regulation. The equity structure of Ranchuang Company is as follows:
Shareholder Amount of subscribed Shareholding ratio
capital（RMB 10,000）
Hangzhou Steam Turbine Co., Ltd. 1,140.00 45.60%
176
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Hangzhou Steam Turbine Power Group Co., Ltd. 1,000.00 40.00%
Hunan Chongde Industry Technology Co.,Ltd. 100.00 4.00%
Hengfeng Tools Co., Ltd. 85.00 3.40%
Chinese mechanical academy of sciences zhejiang 75.00 3.00%
branch
50.00 2.00%
Hangzhou bohua laser technology Co., Ltd.
Zhejiang Hengying Power Technology Co.,Ltd. 50.00 2.00%
Total 2,500.00 100.00%
2. According to the resolution of the shareholders meeting of Hangzhou Guoneng Steam
Turbine Engineering Co., Ltd-a subsidiary to the Auxiliary Machinery Co., Ltd-on Dec 21, 2018,
Hong Kong Ruiyun Enterprise Co., Ltd., a shareholder of Guoneng Steam Turbine Co., Ltd.,
transferred a 25% equity held by the company to the Auxiliary Machinery Co., Ltd in a total of 10
million yuan. The business registration change procedure for the above-mentioned equity transfer
had been completed on January 10, 2019.
3. On November 20, 2018, the Company signed the “Debtitor’s Right and Debt Transfer
Agreement” with Shenyang Turbo Machinery Co., Ltd., Ningxia Baofeng Energy Group Co., Ltd.
and Ningxia Baofeng Real Estate Development Co., Ltd., and meanwhile signed the Agreement of
Compensation Using Building for Repaying Debt with Baofeng Real Estate. henyang Turbo
Company agreed to transfer some of its creditor’s rights on Baofeng Group of RMB
13,581,513.00 to the Company, and Baofeng Group transferred the afore-said debts to Baofeng
Real Estate synchronously. Baofeng Real Estate uses the 13 houses, underground parking spaces
and storage rooms located in Lanxigu Community, Lijing North Street, Yinchuan City-the disposal
rights of which was owned by Baofeng-as the compensation for transferring the debt to the
Company. Where the Company fails to obtain the “Certificate of immovable property right” for all
or part of the aforesaid real estate within 6 months from the date of signing the agreement due to
the reasons of the Company, Shenyang Turbo Company shall assume the repayment responsibility
for the part of the above repayable amount that the Company fails to obtain the real estate
compensation. The Company has obtained the “Certificate of immovable property righ” related to
the above-mentioned debt-compensation assets on March 21, 2019. So far, the creditor-debt
relationship of the amount of RMB 13,581,513.00 among the Company, Shenyang Turbo
Machinery and Baofeng Group has been settled as agreed upon.
(II) Profit distribution
Based on the 2018 profit distribution plan reviewed and passed at the
31st meeting of the 7th Board of Directors on March 27, 2018, and
Profit or dividend proposed to be without drawing up statutory surplus reserves, the company used a
distributed total of 754,010,400 shares at the end of 2018 as the base to distribute
cash to all shareholders for every 10 shares. The bonus is RMB 2.00
(including tax), and 0 bonus shares will be sent to the company. Don't
convert the public reserve fund into share capital. The total profit
177
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
distributed was RMB 150,802,080.00 this time.The afore-said profit
distribution plan still needs to be reviewed and approved by the
shareholders' general meeting.
XII.Other significant events
1.Information of Division
(1) The companies,which have no report divisions or can not disclose the total assets and total
liabilities of all report divisions, shall give explanations.
The Company is single in its business, which is mainly for production and sales of steam
turbines, gas turbines and auxiliary turbines. The company’s management regard these businesses
as a whole to implement management so as to evaluate the business performance, thus there will
be no report divisions. According to the product classifications of main business income and main
business cost, the Company will make details for them as follows:
Items Main Business Income Main Business Cost
Industrial Steam Turbine 3,745,445,441.72 2,584,502,463.97
Castings and Forging 133,291,110.39 109,373,524.81
Auxiliary Engines 248,879,821.14 220,254,043.83
Part 176,535,199.06 78,572,919.00
Other 202,087,248.03 97,540,086.39
Subtotal 4,506,238,820.34 3,090,243,038.00
(II)Other
According to the planning of the Hangzhou Municipal Government, the property right bodies
of 6 companies including Hangzhou Steam Turbine Group and Hangzhou Steam Turbine
Company within the plant area of Hangzhou Steam Shiqiao Road factory area were included in
the scope of the Expropriation and Relocation Planning. According to the Hangzhou Municipal
People's Government's Minutes (Hangfu Minutes [2016] No. 87) on the relevant issues concerning
the compensation for the relocation of the Steam Turbine Shiqiao road plant area and the spirit of
the minutes (Hangfu Minutes [2016] No. 47)of the special meeting of Hangzhou Municipal
people's Government on the relevant issues concerning speeding up the relocation of the Shiqiao
Road Factory area of Hangzhou Steam Turbine and the Construction of the Hangzhou Steam
Turbine Heavy Industry Project, Hangzhou Municipal Government, in accordance with the
principle of "one factory, one policy", determines that the compensation for the overall relocation
of the plant area of Hangzhou Steam Turbine Shiqiao road plant is RMB 1.815 billion, with the
compensation contents include the compensation for physical assets such as buildings, structures,
housing renovations, equipment, and land within the area of relocation, as well as personnel
resettlement fees, compensation fees for shutdown loss and production stoppage loss and incentive
178
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
fees, and the compensation agreement shall be signed by the Xiacheng Urban Construction
Investment Group-the land-making main-body affiliated to Hangzhou Xiacheng District
Municipal Government with each relocation unit. The property rights bodies within the scope of
the relocation shall complete the relocation by December 31, 2019, and evacuate the houses and
hand them over to the land-making main-body of the government, the houses shall not be
demolished or damaged without authorization, and the residual value of the houses after the
handing over shall be possessed by the Urban Construction Investment Group.
On March 21, 2018, based on the evaluation opinion of Kunyuan Assets Appraisal Co., Ltd
(No. 606-2017 Kunnyuan Appraisal Report, No. 609-2017 Kunnyuan Appraisal Report, No.
18-2018 Kunnyuan Appraisal Report,), the company signed the “Relocation Compensation
Agreement for Non-residential Buildings on State-owned Land” with Xiacheng Urban
Construction Investment Group, and determined that Xiacheng Urban Construction Investment
Group shall make full monetary relocation compensation for the Company and its subsidiary the
Machinery Company, with the total amount of compensation for various physical assets and
expenses is RMB 1,305,950,300.00 (Including the incentive fee of RMB 34,892,770.00), and this
aforementioned compensation shall be firstly collected by Hangzhou Steam Turbine Group.
As of December 31, 2018, the Company had received the second relocation compensation of
69,899,656.20 yuan. Together with the first compensation, the Company and its subsidiaries have
received the compensation for relocation compensation of 307,558,487.27 yuan, all of which are
accounted for by special payables. The relocation expenses incurred by the Company in the
current period amounted to RMB 110,855.00. The subsidiary company Steam Turbine Heavy
Industries Co., Ltd. incurred a total of RMB 42,169,981.00 for the purchase and construction of
complete sets of plants in the current period, which correspondingly wrote off the special
payables- the relocation compensation amount of RMB 42,280,836.00, respectively transferred to
other income of RMB 110,855.00 and transferred into the deferred income of RMB 42,169,981.00.
At the end of the period, there was still a balance of unused relocation compensation of RMB
265,277,651.27.
XIII. Notes to the Financial Statements of the Parent Co.
(I) Notes to items of parent company financial statements
1. Notes receivable & Account receivable
（1）Detail
Items End of term Beginning of term
Notes receivable 302,284,986.43 357,644,500.75
Account receivable 1,374,628,210.45 1,195,950,107.32
Total 1,676,913,196.88 1,553,594,608.07
(2)Notes receivable
1) Detail
End of term Beginning of term
Items
Book balance Bad debt Book value Book balance Bad debt Book value
179
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
sion sion
Bank acceptance 284,664,986.43 284,664,986.43 338,420,500.75 338,420,500.75
Commercial
17,620,000.00 17,620,000.00 19,224,000.00 19,224,000.00
acceptance
Subtotal 302,284,986.43 302,284,986.43 357,644,500.75 357,644,500.75
2) Notes receivable pledged by the Company at the period-end
Amount on pledge
Items
Bank acceptance 24,530,000.00
Total 24,530,000.00
3) Notes receivable which had endorsed by the Company or had discounted and had not due on
the balance sheet date at the period-end
Amount of recognition Amount of not
Items termination at the terminated recognition
period-end at the preriod -end
Bank acceptance 443,200,690.70
Total 443,200,690.70
The acceptor of the bank acceptance bill is a commercial bank, because the commercial bank
has high credit, the possibility of the bank acceptance bill not being paid at maturity is low, so the
company has endorsed or discounted the bank acceptance bill to terminate the confirmation.
However, if the bill is not paid at maturity, the company shall remain jointly and severally liable to
the holder under the provisions of the bill act.
3. Account receivable
(1)The detail situation
①Detailed categories
End of term
Category Book balance Bad debt provision
Book value
Amount Proportion Amount Proportion
Account receivables
provided bad debt
2,189,901,288.35 98.66 815,273,077.90 37.23 1,374,628,210.45
provision in credit
risk groups
Accounts receivable
of individually
withdrawing bad 29,819,607.69 1.34 29,819,607.69 100.00
debt provision with
non-significant
180
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
individual amount
Total 2,219,720,896.04 100.00 845,092,685.59 38.07 1,374,628,210.45
(Continued)
Beginning of term
Category Book balance Bad debt provision
Book value
Amount Proportion Amount Proportion
Account receivables
provided bad debt
1,975,235,478.30 98.51 779,285,370.98 39.45 1,195,950,107.32
provision in credit
risk groups
Accounts receivable
of individually
withdrawing bad
29,819,607.69 1.49 29,819,607.69 100.00
debt provision with
non-significant
individual amount
Total 2,005,055,085.99 100.00 809,104,978.67 40.35 1,195,950,107.32
② Receivable accounts in the group on which bad debt provisions are provided on age basis
End of term
Aging
Book balance Bad debt provision Proportion
Within 1 year 833,000,869.78 41,650,043.49 5.00
1-2 years 277,900,524.80 27,790,052.48 10.00
2-3 years 228,058,731.55 68,417,619.47 30.00
3-4 years 173,910,129.12 104,346,077.47 60.00
4-5 years 167,207,350.44 133,765,880.35 80.00
Over 5 years 439,303,404.64 439,303,404.64 100.00
Total 2,119,381,010.33 815,273,077.90 38.47
③ Notes receivable which had endorsed by the Company or had discounted and had not due on
the balance sheet date at the period-end
End of term
Name
Book balance Bad debt provision Proportion
Association current
combination within
70,520,278.02
the scope of
consolidation [Note]
181
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Subtotal 70,520,278.02
Note: At the end of period, the Company did a separate impairment test on the portfolio and
found no impairment incurred, hence no withdrawal of provision for bad debt was needed.
2) The current amount of provision for bad debts is RMB35,987,706.92 ; recovery or payback
for bad debts Amount is RMB0.00.
3) There is no write-off of accounts receivable in the current period
4) Receivables account of the top five parties
Name Amount Proportion(%) Bad debt provision
Client 1 592,784,981.17 26.71 279,081,699.58
Client 2 242,067,374.85 10.91 175,925,264.71
Client 3 112,363,538.46 5.06 5,618,176.92
Client 4 63,427,500.00 2.86 3,171,375.00
Client 5 52,129,523.04 2.35 2,606,476.15
Subtotal 1,062,772,917.52 47.89 466,402,992.36
2. Other account receivable
1)Detail
Items End ofterm Beginning of term
Dividend receivable 16,557,292.60 6,900,000.00
Other receivable 3,427,467.46 4,311,538.86
Total 19,984,760.06 11,211,538.86
(2) Dividend receivable
1) Detail
Items End ofterm Beginning of term
Hangzhou Bank 16,557,292.60 6,900,000.00
Subtotal 16,557,292.60 6,900,000.00
2) Important dividend receivable over 1 year of age
Whether the
Reasons for not impairment
Items End ofterm Age
repossessing occurs and its
judgment basis
182
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Hangzhou Bank 6,900,000.00 1-2 years Stock right pledge No
Subtotal 6,900,000.00
(3) Other receivable
1)The detail situation
① Detailed categories
End of term
Category Book balance Bad debt provision
Book value
Amount Proportion % Amount Proportion %
Other Accounts receivable
portfolio subject to 8,826,485.18 100.00 5,399,017.72 61.17 3,427,467.46
impairment by credit risk
Total 8,826,485.18 100.00 5,399,017.72 61.17 3,427,467.46
(Continued)
Beginning of term
Bad debt
Category Book balance
provision Book value
Amount Proportion % Amount Amount
Other Accounts receivable
portfolio subject to 9,976,732.52 100.00 5,665,193.66 56.78 4,311,538.86
impairment by credit risk
Total 9,976,732.52 100.00 5,665,193.66 56.78 4,311,538.86
② Other receivable accounts in the group on which bad debt provisions are provided on age
basis
End of term
Aging
Other receivable Bad debt provision Proportion
Within 1 year 1,767,885.91 88,394.30 5.00
1-2 years 167,447.59 16,744.76 10.00
2-3 years 158,158.00 47,447.40 30.00
3-4 years 827,097.00 496,258.20 60.00
4-5 years 943,495.90 754,796.72 80.00
Over 5 years 3,995,376.34 3,995,376.34 100.00
Total 7,859,460.74 5,399,017.72 68.69
③ Notes receivable which had endorsed by the Company or had discounted and had not due on
the balance sheet date at the period-end
183
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
End of term
Name
Book balance Bad debt provision Proportion
Association current
combination within
967,024.44
the scope of
consolidation [Note]
Subtotal 967,024.44
Note: At the end of period, the Company did a separate impairment test on the portfolio and
found no impairment incurred, hence no withdrawal of provision for bad debt was needed.
2) The withdrawal amount of the bad debt provision during the reporting period is
RMB-266,175.94；the amount of the reversed or collected part during the reporting period was of
RMB 0.00.
3) No write-off of other receivables for the current period
4) Other accounts receivable classified by the nature of accounts
Nature Closing book balance Opening book balance
Deposit 6,547,501.35 8,081,489.08
Petty cash 231,000.00
Provisional payment receivable 967,024.44 1,006,799.70
Other 1,311,959.39 657,443.74
Total 8,826,485.18 9,976,732.52
5) Top 5 of Other accounts receivable
Whether it
Account
Name of the company Book balance Age Proportion(%) Bad debt provision is a related
property party
Shanghai Customs
Deposit 3,710,320.94 Over 5 years 42.04 3,710,320.94 No
Waigaoqiao Office
Guoxin Bidding
Deposit 800,000.00 3-4 years 9.06 480,000.00 No
Group Co., Ltd.
Shanghai pujiang
customs of the
Deposit 632,983.48 Within 1 year 7.17 31,649.17 No
People's Republic of
China
Hangzhou Steam Provisional
Turbine Casting Co., 630,148.55 Within 1 year 7.14 Yes
Ltd. payment
184
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
receivable
Jian Group Co., Ltd. Deposit 500,000.00 4-5 years 5.66 400,000.00 No
Subtotal 6,273,452.97 71.07 4,621,970.11
3. Long-term share equity investment
(1) Detail
End of term Beginning of term
Items Impairment Impairment
Book balance Book value Book balance Book value
sion ision
Investment on
502,919,378.03 502,919,378.03 502,919,378.03 502,919,378.03
subsidiaries
Total 502,919,378.03 502,919,378.03 502,919,378.03 502,919,378.03
(2) Investment on subsidiaries
Company Provided current Impairment
Beginning of term Increase decrease End of term term impairment provision end of
invested provision term
Touping 20,000,000.00 20,000,000.00
Company
Hangzhou 360,000,000.00 360,000,000.00
Heavy Industry
Hangzhou 46,286,513.41 46,286,513.41
Auxiliary
Machine Co.
Zhejiang 29,800,389.56 29,800,389.56
Turbine
Packaged Co.
Zhongneng Co. 27,644,475.06 27,644,475.06
Machinery Co. 7,968,000.00 7,968,000.00
Casting Co. 11,220,000.00 11,220,000.00
Subtotal 502,919,378.03 502,919,378.03
(II) Notes to items in the parent company income statement
1. Business income and Business cost
Occurred current term Occurred in previous term
Items
Income Cost Income Cost
185
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Main Business 2,915,241,196.80 2,059,290,820.18 2,056,532,812.35 1,599,774,611.48
Other 14,564,471.91 11,762,727.70 140,183,662.39 94,531,608.36
Total 2,929,805,668.71 2,071,053,547.88 2,196,716,474.74 1,694,306,219.84
2. R & D cost
Items Amount of this period Amount of last period
Labor cost 72,790,629.36 61,634,982.15
Direct materials 79,835,016.55 52,086,212.81
Depreciation expenses 10,463,642.38 13,361,072.71
Test and inspection fee 13,723.80
Commissioned research & development 1,944,603.76 3,614,875.06
Other 1,379,570.05 2,690,641.81
Total 166,413,462.10 133,401,508.33
3. Investment income
Items Amount of this period Amount of last period
Long-term equity investment income by Cost method 98,187,205.00 66,008,407.50
Investment gains from holding of sellable
68,687,390.93 53,014,898.47
financial assets
Investment income from disposal of available for sale
25,121,648.20
financial assets
Gains from financing products 39,008,647.23 23,685,866.69
Total 205,883,243.16 167,830,820.86
XIV. Other Supplementary Information
1. Non-recurring gains and loss
Items Amount
Gains/losses from the disposal of non-current asset -40,478.16
Tax refund, deduction and exemption that is examined and approved by
2,140,524.49
authority exceeding or has no official approval document.
186
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Governmental subsidy calculated into current gains and loess（while
closely related with the normal business of the Company, excluding the
23,300,479.35
fixed-amount or fixed-proportion governmental subsidy according to the
unified national standard）
Capital occupation fee collected from non-financial organizations and
accounted as current gain/loss.
Income from the exceeding part between investment cost of the Company
paid for obtaining subsidiaries, associates and joint-ventures and
recognizable net assets fair value attributable to the Company when
acquiring the investment
Gains and losses from exchange of non-monetary assets
Gains and losses from assets under trusted investment or Management
Asset impairment provisions for force major such as natural disasters
Gain/loss from debt reorganization 7,064,832.00
Enterprise reorganization expenses, such as payment to stuff placement
and consolidation expenses
Gain/loss from trades obviously departed from fair value
Net gain/loss of current term from consolidation of subsidiaries under
common control from beginning of term to the consolidation date
Gain/loss from debt for casting without connection to the main business
operation
In addition to normal business with the company effective hedging related
business, holders of tradable financial assets, transactions and financial
liabilities arising from changes in fair value gains and losses, as well as the 48,433,535.22
disposal of trading of financial assets, trading financial liabilities and
available-for-sale financial assets gains return on investment;
Single impairment test for impairment of receivables transferred back to
preparation
Gains and losses obtained from external trusted loans
The use of fair value measurement model of follow-up to the fair value of
real estate investment gains and losses arising from changes
According to tax, accounting and other laws, regulations, the requirements
of the current Gain/loss for a one-time adjustment of the impact of the
current Gain/loss;
Entrusted with the operating of the trust to obtain fee income
Net amount of non-operating income and expense except the aforesaid
-1,703,546.21
items
Other non-recurring Gains/loss items
Subtotal 79,195,346.69
187
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Less: .Amount of influence of income tax 11,452,856.21
Less: Amount of influence of minority interests 1,993,252.49
Attributable to shareholders of the parent company total non-current gains
65,749,237.99
and losses
(II) Return on equity (ROE) and earnings per share (EPS)
1. Detail
EPS（Yuan/share）
Profit as of reporting period Weighted average ROE (%)
EPS-basic EPS-diluted
Net profit attributable to common
5.82 0.46 0.46
shareholders of the Company
Net profit attributable to common
shareholders of the Company after
4.72 0.37 0.37
deduction of non-recurring profit
and loss
2. Calculation of rate of return on weighted average net assets
Current
Items No
amount
345,824,3
Net profit attributable to common shareholders of the Company A
39.47
65,749,23
Non-recurring profit and loss B
7.99
Net profit attributable to common shareholders of the Company upon deduction 280,075,1
C=A-B
of non-recurring profit and loss 01.48
5,884,816,
Beginning net assets attributable to common shareholders of the Company D
809.55
Net assets increased and attributable to common shareholders of the Company
E
due to issue of new shares or debt-to-equity swap
Cumulative months from the month following the increase of net assets to the
F
end of the report period
Net assets decreased and attributable to common shareholders of the Company 37,700,52
G
due to repo or cash bonus 0.00
Cumulative months from the month following the decrease of net assets to the
H 7
end of the report period
-193,189,
Variation of other comprehensive incomes I1
987.35
Cumulative months from the month following the
J1 6
increase/decrease of net assets to the end of the report period
Other
-3,207,75
Variation of special reserve I2
1.26
Cumulative months from the month following the
J2 6
increase/decrease of net assets to the end of the report period
188
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Variation of consolidated capital reserve caused by
11,172,73
unilateral capital increase done by minority shareholders of I3
0.63
the subsidiary Casting Company
Cumulative months from the month following the
J3 0
increase/decrease of net assets to the end of the report period
Variation of consolidated special reserve caused by
-1,141,29
unilateral capital increase done by minority shareholders of I4
1.88
the subsidiary Casting Company
Cumulative months from the month following the
J4 0
increase/decrease of net assets to the end of the report period
Variation of capital reserve caused by capital increase of the
966,600.0
joint venture Zhejiang Zhongrun Turbine Technology Co., I5
0
Ltd.
Cumulative months from the month following the
J5 3
increase/decrease of net assets to the end of the report period
Months in the report period K 12
L= D+A/2+
5,937,779,
Weighted average net assets E×F/K-G×H/K±I×J/
789.98
K
Rate of return on weighted average net assets M=A/L 5.82%
Rate of return on weighted average net assets upon deduction of non-recurring
N=C/L 4.72%
profit and loss
3. Calculation of basic earnings per share and diluted earnings per share
(1) Calculation of basic earnings per share
Current
Items No
amount
345,824,3
Net profit attributable to common shareholders of the Company A
39.47
65,749,23
Non-recurring profit and loss B
7.99
Net profit attributable to common shareholders of the Company upon deduction of 280,075,1
C=A-B
non-recurring profit and loss 01.48
754,010,4
Beginning total shares D
00.00
Increased shares caused by increase of capital stock transferred from accumulation
E
fund or allocation fo stock dividend
Increased shares caused by issue of new shares or debt-to-equity swap F
Cumulative months from the month following the increase of shares to the end of
G
the report period
Decreased shares caused by repo H
189
Hangzhou Steam Turbine Co.,Ltd. 2018 Annual Report
Cumulative months from the month following the decrease of shares to the end of
I
the report period
Decreased shares in the report period J
Months in the report period K 12
L=D+E+F×G/K- 754,010,4
Weighted average of outstanding common shares
H×I/K-J 00.00
Basic earnings per share M=A/L 0.46
Basic earnings per share upon deduction of non-recurring profit and loss N=C/L 0.37
(2) Calculation of diluted earnings per share
Diluted earnings per share are calculated in the same method as that of basic earnings per
share.
XII.Documents for Reference
I. Annual Report 2018 with signature of the Chairman;
II. Original copy of the Auditors’ Report with the seals and signatures of the legal representative,
CFO, Accounting Manager of the Company, and the Pan-China CPA and signed by certified
accountants.
III. All of the originals of the Company’s documents and public notices publicized by the presses
designated by China Securities Regulatory Commission in the report period;
IV.Original copy of Resolutions of the 31st Meeting of the 7th Term of Board with signatures of
directors.
Hangzhou Steam Turbine Co., Ltd.
Chairman of the Board: Zheng Bin
March 29, 2019
190
