Stock Code: 200771 Stock ID: Hangqilun B           Announcement No. 2019-24




                    Hangzhou Steam Turbine Co., Ltd.
                    Announcement on Changes in Accounting Policy

The members of the Board and the Company acknowledge being responsible for the truthfulness,
accuracy, and completeness of the announcement. Not any false record, misleading statement or
significant omission carried in this announcement.


Important prompts
This change in accounting policy only will affect the presented contents in the statement and will

not cause changes in the Company's total assets, owner's equity and net profits.



     Hangzhou Steam Turbine Co., Ltd. held the 31st meeting of the 7th Meeting Board of

Directors and the 14th meeting of Board of Supervisors of the Company on March 27, 2019, in

which the “Proposal on the Changes in Accounting Policy” was reviewed and passed. This

accounting policy changes does not need to be submitted to the shareholders’ meeting for

consideration, and the details are announced as follows:

     I. Overview of this accounting policy changes

     (1) Reasons for the change in the accounting policy

     The Ministry of Finance of the People's Republic of China (hereinafter referred to as the

“Ministry of Finance”) issued the revised “No. 22 Accounting Standards for Business

Enterprises-Recognition and Measurement of Financial Instruments”, “ No. 23 Accounting

Standards for Business Enterprises – Transfer of Financial Assets”, " No. 24 Accounting Standards

for Business Enterprises-Hedging Accounting" and "No. 37 Accounting Standards for Business

Enterprises-Presentation of Financial Instruments" (the above four standards are hereinafter

referred to as "Guidelines for New Financial Instruments") in 2017, required the domestic listed

companies to implement the above accounting standards from January 1, 2019.

     (II) The accounting policy adopted before changes and the accounting policy adopted after

changes

     1. The Accounting Policy adopted before the changes
     Before the changes of the accounting policy, the Company implemented in accordance with

the "Enterprise Accounting Standards-Basic Standards" issued by the Ministry of Finance and the

various specific accounting standards, application guidelines for business accounting standards,

corporate accounting standards interpretation announcements and other relevant regulations.

     (II) The accounting policy adopted before changes and the accounting policy adopted after

changes

     1. The Accounting Policy adopted before the changes

     Before the changes of the accounting policy, the Company implemented in accordance with

the "Enterprise Accounting Standards-Basic Standards" issued by the Ministry of Finance and the

various specific accounting standards, application guidelines for business accounting standards,

corporate accounting standards interpretation announcements and other relevant regulations.

     II. The content changes in this accounting policy changes

     According to the new financial instrument guidelines revised and promulgated by the

Ministry of Finance in 2017, the main changes according to the new financial instrument

guidelines are as follows:

     1.   As the basis for judging the classification of financial assets uses the “business model” of

financial assets held by enterprises and the “cash flow characteristics of financial assets contracts”,

the financial assets are classified into three categories, namely “financial assets measured at

amortized costs”, “financial assets measured at fair value and its changes accounted into other

comprehensive income” and “financial assets measured at fair value and its changes accounted

into the current profits or losses”.

     2. The accounting treatment of financial assets impairment is revised from the

“already-incurred losses method” to the “expected loss method”, which requires consideration of

the future expected credit losses of financial assets, so that the provision for impairment of

financial assets can be made more timely and in full;

     3. Adjust the accounting treatment of non-trading equity instrument investments, allowing

enterprises to designate the non-trading equity instrument investments to be measured at fair value

and their changes are included in other comprehensive income, but the designation is irrevocable

and shall not make the accumulated fair value changes previously included in other

comprehensive income be included in the current profits or losses where making the disposal.
     4. Further clarify the judgment principle of financial asset transfer and its accounting

treatment;

     5. The hedging accounting standards emphasize more on the organic combination of hedging

accounting and enterprise risk management activities, so as to better reflect the risk management

activities of the enterprise.

     III. The impact of this accounting policy changes on the Company

     The company will implement the new financial instrument guidelines from January 1, 2019.

According to the commencement rules of the new financial instrument standards, the Company

does not make retrospective adjustments to the comparative statements for the same period of the

previous year, and only adjusts the retained earnings or other comprehensive income at the

beginning of the period. The implementation of the above new financial instrument standards is

not expected to have a significant impact on the Company's financial statements. The company

carries out the financial statements in accordance with the requirements of the new financial

instruments guidelines from the first quarter of 2019.

     IV. Explanation by the Board of Directors on the rationality of the accounting policy

change

     The Board of Directors considered that: this accounting policy changes is a reasonable

changes according to the latest accounting standards revised and promulgated by the Ministry of

Finance. The accounting policy after changes is in compliance with relevant regulations and can

objectively and fairly reflect the Company's financial status and operating results; The policy

change does not affect the Company's net profit and owner's equity in the current year, nor involve

retrospective adjustments in previous years, and there is no situation jeopardizing the interests of

the Company and all shareholders of the Company.

     V. Opinions by independent directors and board of supervisors

     The independent directors considered that: The Company makes corresponding changes to

the Company's accounting policy in accordance with the newly revised and promulgated corporate

accounting standards by the Ministry of Finance, and makes corresponding adjustments to related

items and their amounts, which is in line with the Company's actual situation and is in line with

the relevant provisions of the Ministry of Finance. The decision-making procedure for this

accounting policy change complies with relevant laws, regulations and the relevant provisions of
the Company's "Articles of Association", and it does not harm the interests of the Company and

the minority shareholders.

     The Board of Supervisors considered that: this accounting policy changes is a reasonable

change and adjustment according to the regulations promulgated by the Ministry of Finance, the

implementation of accounting policy changes can objectively and fairly reflect the Company's

financial status and operating results; the relevant decision-making procedures are in compliance

with relevant laws and regulations and the Company’s Articles of Association, with that there is no

situation jeopardizing the interests of the Company and its shareholders. The company's board of

supervisors agreed to this accounting policy changes.

     This announcement is hereby made.



          The Board of Directors of Hangzhou Steam Turbine Co., Ltd.

                             March 29, 2019