Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Stock Code: 200771 Stock ID: Hangqilun B Announcement No. :2020-45 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 (Stock Code:200771) August 2020 1 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 I. Important Remarks, Table of Contents, and Definitions The Board of Directors, the Supervisory Committee, the directors, the supervisors, and executives 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. Mr. Zheng Bin,Chairman of the Company, Mr. Zhao Jiamao, Person in charge of accounting and Mr. Jin Chan, Person in charge of Accounting institute(accountant in charge)hereby confirm that the financial Report of Semi-Annual Report is authentic, accurate and complete. All of the directors attended the board meeting on which this report was examined. For risks in company's operations, please refer to Article X "Risks Faced by Company and The Countermeasures" in Section IV "Discussion and Analysis on Business Conditions". 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 Company will not distribute cash dividend or bonus shares, neither capitalizing of common reserves for the report period. 2 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 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. Performance 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 convertible corporate bonds IX. Corporate Bond XI. Financial Report XII. Documents available for inspection 3 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 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, In the report period Defined to January 1,2020-June 30,2020 Hangzhou Zhongneng Steam Turbine Power Co., Ltd. – the holding Zhongneng Co. Refers to subsidiary of 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. – Packaged Tech. Co. Refers to the 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 Auxiliary Machine Co. Refers to subsidiary of the Company Zhejiang Turbine Import & Export Co., Ltd. – the holding subsidiary of Turbine Co. Refers to the Company Hangzhou Steam Turbine Heavy Industry Co., Ltd. - the holding Heavy Industry Co. Refers to subsidiary of the 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 WMS Refers to Warehouse management system 4 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 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 II. Contact person and contact manner Secretary of the Board Representative of Stock Affairs Name Li Guiwen Wang Caihua Address No. 357 Shiqiao Rd. Hangzhou No. 357 Shiqiao Rd. Hangzhou Tel. 0571-85780058 0571-85780438 Fax. 0571-85780433 0571-85780433 Email. lgw@htc.cn wangch@htc.cn III. Other info. 1. Contacts No change to the registered address, office address, postal code, official website, and email address of the Company. For details please find the Annual Report 2019. 2. Information inquiry None of the official presses, website, and place of enquiry has been changed in the semi report period. For details please find the Annual Report 2019. IV. Summary of Accounting Data and Financial Index Are there any retrospective adjustment or restatement of financial information of previous year No Increase/decrease This report term Same period last year (%) Turnover (yuan) 2,021,667,426.27 1,920,181,703.03 5.29% 5 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Net profit attributable to shareholders of the 230,908,137.72 160,325,133.00 44.02% listed company (yuan) Net profit attributable to the shareholders of the listed company and after deducting of 165,508,020.80 131,574,189.68 25.79% non-recurring gain/loss(yuan) Net Cash flow generated by business operation 326,964,692.03 -9,340,596.37 3,600.47% (yuan) Basic earnings per share (Yuan/share) 0.31 0.21 47.62% Diluted earnings per share (Yuan/share) 0.31 0.21 47.62% Net income on asset, weighted 3.53% 2.62% 0.91% As at the end of the reporting As at the end of last year YoY+/-(%) period Gross assets (yuan) 13,190,384,302.57 12,600,115,579.96 4.68% Shareholders’ equity attributable to shareholders 6,493,586,472.40 6,607,496,148.58 -1.72% of the listed company(yuan) V. 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 Not existent 2. Differences between the net profit and net asset in the financial reports prepared under IAS and Chinese Accounting Standard Not existent VI. Non-recurring gain/loss items and amounts In RMB Items Amount Remarks Non-current asset disposal gain/loss(including the write-off part for which assets -148,212.10 impairment provision is made) Governmental Subsidy accounted as current gain/loss, except for those subsidies at with amount or quantity fixed by the national government and closely related to the 55,716,643.40 Company’s business operation. Debt restructuring profit or loss -115,229.71 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 disposal of 22,861,806.76 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 items 2,547,807.55 6 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Less: Influenced amount of income tax 12,626,321.11 Amount of influence of minority interests(After tax) 2,836,377.87 Total 65,400,116.92 -- 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. None of Non-recurring gain /loss items recorgnized as recurring gain /loss/items as defined by the information disclosure explanatory Announcement No.1- Non –recurring gain/loss in the report period. 7 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 III. Outline of Company Business I. Main Business the Company is Engaged in During the Report Period 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 cycle power 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 complete sets of equipment for gas turbine power plant and the efficient integrated solutions. Especially, it can provide customers with operational 8 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 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 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 9 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 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 Fixed assets Mainly due to the company‘s fixed assets depreciation 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 1. 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. 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. 10 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 IV. Performance Discussion and Analysis 1.General During reporting period, based on the annual work policy of "decisively relocate and rebuild, intensively study market, develop culture-based company, and strive to be the first-class", while focusing on the prevention and control of the pandemic, the company also promotes the relocation in an orderly manner to ensure production capacity, execute precise marketing to grasp orders from key projects and emerging markets, continuously research technology to make competitive products with craftsmanship spirit, and lead the company with culture and drive it's growth through management improvement. In the first half of 2020, the company realized operating income of 2021.6674 million yuan, total profit of 299.8415 million yuan and net profit of 269.296 million yuan, of which net profit attributable to shareholders of listed companies was 230.9081 million yuan. Compared with the same period of last year, the operating income increased by 5.29% year on year, total profit increased by 35.40% year on year, net profit increased by 45.83% year on year, and net profit attributable to shareholders of listed companies increased by 44.02% year on year. Good results have been achieved. 1. Decisive relocation and rebuilding to ensure productivity During the reporting period, the company lists relocation work as "Project No. 1", emphasizing on construction and equipment relocation. The company started a full relocation on May 8, 2020. At present, major production workshops such as stator workshop, rotor workshop, assembly workshop, joint workshop, and distribution center have been relocated and the steam turbine no-load test bench is already equipped with on-site commissioning capability. More than 100 sets of devices are relocated and enter into full installation and commissioning stage. 2. Precise marketing and intensive market research In petrochemical field, the company successfully signed 30 sets of devices for Shenghong Petrochemical Group's large-scale refining and chemical integration project, and ethylene compressors with 1.2 million tons/year capacity for SINOPEC Zhenhai Refining & Chemical Company. In coal chemical industry, the company signed orders of 21 sets of steam turbines from Shanxi Coal and Chemical Group's 1.8 million tons of ethylene glycol project (Phase I). In new thermal power market, the company obtained air compressor contracts with Hengming Chemical Fiber Company, Taiaisi Company and Xinzhonggang Company. Affected by the global pandemic, as the company's main overseas client projects are in suspension or postponement, a total of 15 sets devices have been ordered from overseas markets. 3. Continue to innovate and strive to be first-class 11 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 In reporting period, the company have overall established 22 new product development (5) and scientific research projects (17). The company promoted the ethylene unit project of Zhenhai Refinery and Chemical as planned, completed the trial production of the subcritical unit regulating-stage moving blade pin, and completed technical development for Hong Kong Garbage Power Station, Dalian Hengli Flash Unit, Jieyang 1.4 million tons/year ethylene cracking gas turbine, and Sanjiang ethylene unit, etc. 4. Develop culture-based company and improve management The Company issued the "Corporate Culture Construction Implementation Outline for 2020-2022" to start the corporate culture journey, promoted the solid implementation of corporate culture construction projects, and continuously promoted the deep integration of corporate cultural soft power and corporate management hard power. The Company continued to promote the MES system, the blade production management multi-system, supply chain system,thetridimensional WMS system adoption application research, and the quality inspection process information management and control research projects, and it continued to promote the construction of the Company's industrial Internet application service platform, user service platform, and continuously improved the Company’s Product "smart manufacturing" ability, comprehensively promoted the "lean production" and continuously improved the "lean production" evaluation system. II.Main business analysis Refer to relevant contents of “1.Summarization” in “Discussion and Analysis of Management”. Changes in the financial data In RMB YOY change This report period Same period last year Cause change (%) Turnover 2,021,667,426.27 1,920,181,703.03 5.29% Operating cost 1,387,814,297.42 1,366,404,401.26 1.57% Sale expenses 83,979,396.90 86,895,939.32 -3.36% Administrative expenses 261,099,800.18 235,168,325.98 11.03% Mainly due to the decrease of interest Financial expenses -19,214,436.12 -4,254,503.16 -351.63% expenses and the increase of exchange earnings in the current period. Income tax expenses 30,545,431.68 36,775,399.29 -16.94% R & D Investment 103,228,915.93 116,760,942.52 -11.59% Mainly due to the year-on-year increase in Cash flow generated by 326,964,692.03 -9,340,596.37 3,600.47% cash receipts for goods sales the decrease business operation, net of paid taxes in the current period Mainly due to the increase in new Net cash flow generated by purchases of wealth-management during -459,136,704.20 682,424,067.27 -167.28% investment the current period and the decrease in redemption of due wealth-management. Net cash flow generated by -58,479,245.83 -248,157,520.13 76.43% Mainly due to the dividends temporarily 12 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 financing not be distributed during the current period but in the same periodlast year the dividends paid out and the increased short-term borrowings. Mainly due to the decrease of net cash Net increasing of cash and -183,903,994.56 424,218,280.91 -143.35% flow from investment activities in the cash equivalents current period. Transactional Financial Mainly due to the increase of financing 1,233,985,614.62 854,210,990.44 44.46% Assets products holding at the end of the period. Mainly due to the increase of holding Note receivable 71,054,030.62 46,484,259.65 52.86% unexpired trade acceptance bills. Mainly due to the confirmation that Bank Dividend receivable 122,983,614.70 27,827,292.60 341.95% of Hangzhou has announced that it has not issued dividends. Mainly due to the decrease in the balance Other current assets 47,586,554.02 71,592,063.09 -33.53% of value-added tax to be deducted at the end of the period. It is mainly due to the continuous investment in the new factory Construction in process 1,077,342,567.61 799,410,358.84 34.77% construction project of heavy industry in the current period. Other non-current Financial Mainly due to the sale of non-current 87,445,986.77 142,244,014.16 -38.52% assets financial assets in the current period. Mainly due to the fact that original Short-term borrowing 197,700,000.00 97,840,187.21 102.06% long-term loan funds have changed into short-term loans. Mainly due to the fact that year-end Payroll payable 68,418,984.73 96,205,949.57 -28.88% bonuses for the last period is issued in the current period. Mainly due to the increase of corporate Tax payable 46,909,288.66 34,521,756.98 35.88% income tax payable at the end of the period. Mainly due to the fact that accrued and Dividend payable 148,760,495.00 0.00 distributed dividends have not issued yet. Mainly due to the repurchase of treasury Treasury stock 73,364,395.79 0.00 stocks in the current period. Mainly due to the impact of new coronavirus, customer account period is Credit impairment losses -69,862,741.38 6,225,948.82 -1,222.12% extended and the accrued bad debts increase. Income from changes in fair Mainly due to changes in the fair value of -597,375.82 -1,474,755.34 59.49% value stocks obtained through debt repayment. 13 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Mainly due to the increase of other Other income 55,716,643.40 15,761,589.03 253.50% income from relocation compensation in the current period. Mainly due to the increase of supplier Non-operating income 6,216,124.18 744,839.16 734.56% quality compensation and liquidated damages in the current period. It is mainly because the gross profit Total profit 299,841,472.57 221,442,313.03 35.40% margin of sales increased by 2.51% year on year. It is mainly because the gross profit Net profit 269,296,040.89 184,666,913.74 45.83% margin of sales increased by 2.51% year on year. Major changes to the profit structure or sources of the Company in the reporting period □ Applicable √Not applicable The profit composition or sources of the Company have remained largely unchanged during the report period. Component of Business Income In RMB This report period Same period last year Changed over last Amount Proportion Amount Proportion year(%) Total operating revenue 2,021,667,426.27 100% 1,920,181,703.03 100% 5.29% On Industries Boiler and power machine 1,860,877,423.66 92.05% 1,728,016,908.35 89.99% 7.69% manufacture Nonferrous metal alloy 78,346,262.00 3.88% 84,257,416.72 4.39% -7.02% manufacture Other 82,443,740.61 4.07% 107,907,377.96 5.62% -23.60% On Products Industrial steam turbine 1,445,493,683.04 71.50% 1,465,469,922.92 76.32% -1.36% Casting products 78,346,262.00 3.88% 84,257,416.72 4.39% -7.02% Auxiliary machinery 182,399,905.43 9.02% 78,122,117.16 4.07% 133.48% Complete sets of waste 49,710,081.27 2.46% 49,244,940.88 2.56% 0.94% heat power stations Part 183,273,753.92 9.07% 135,179,927.39 7.04% 35.58% Other 82,443,740.61 4.07% 107,907,377.96 5.62% -23.60% District Domestic 1,991,733,306.63 98.52% 1,711,280,921.02 89.12% 16.39% 14 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Overseas 29,934,119.64 1.48% 208,900,782.01 10.88% -85.67% (2)Situation of Industry, Product and District Occupying the Company’s Business Income and Operating Profit with Profit over 10% In RMB Increase/decr Increase/decreas Increase/decreas ease of gross e of business Gross e of revenue in profit rate cost over the Turnover Operation cost profit the same period over the same same period of rate(%) of the previous period of the previous year year(%) previous year (%) (%) On Industries Boiler and power machine 1,860,877,423.66 1,288,875,035.35 30.74% 7.69% 4.52% 2.10% manufacture On Products Industrial steam turbine 1,445,493,683.04 1,015,618,424.48 29.74% -1.36% -3.04% 1.21% District Domestic 1,991,733,306.63 1,361,662,881.45 31.63% 16.39% 13.72% 1.61% 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 Reasons for y-o-y relevant data with over 30% changes 1.The YOY increase in sales of auxiliary machinery products was mainly due to the increase in the number of sales units of auxiliary machinery products in this period compared with the previous period; 2. The YOY increase in sales of spare parts was mainly due to the increase in the number of overhaulgas turbine this year compared to the previous year, and the corresponding sales of gas turbine spare partsincreased; 3. The significant YOY decrease in overseas sales was mainly due to the decrease in export orders and the delayed delivery due to the impact of the new coronavirus epidemic. III.Non-core business analysis In RMB Sustainable Amount Proportion in total profit Explanation of cause (yes or no) Mainly due to the investment income of Investment income 118,388,068.47 39.48% wealth management products and dividends of Hangzhou Bank this year Fair value changes income -597,375.82 -0.20% It is mainly due to the change in fair value 15 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 of the shares held in the current period. Impairment of assets 0.00% It is mainly due to the contract Non-operating income 6,216,124.18 2.07% compensation paid by the supplier received in the current period. Mainly due to the compensation paid to Non-operating expenses 4,178,810.71 1.39% customers. Mainly due to the bad debt losses accrued Credit impairment losses -69,862,741.38 -23.30% in the current period. Mainly due to the recognition of other Other income 55,716,643.40 18.58% income in the relocation compensation during the current period. 16 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 IV. Condition of Asset and Liabilities 1.Condition of Asset Causing Significant Change In RMB End of Reporting period End of same period of last year Change in As a percentage of total As a percentage of total Reason for significant change Amount Amount percentage(%) assets(%) assets(%) Monetary fund 1,531,835,132.63 11.61% 1,819,859,022.91 15.08% -3.47% Accounts receivable 2,054,003,687.68 15.57% 2,060,368,351.36 17.08% -1.51% Inventories 2,258,594,388.00 17.12% 2,222,781,933.26 18.42% -1.30% Long-term equity 21,185,168.49 0.16% 10,261,439.29 0.09% 0.07% investment Fixed assets 692,659,233.28 5.25% 761,603,992.58 6.31% -1.06% Construction in process 1,077,342,567.61 8.17% 659,588,447.28 5.47% 2.70% Short-term-Borrowing 197,700,000.00 1.50% 97,500,000.00 0.81% 0.69% Long-term borrowing 22,400,000.00 0.17% 22,600,000.00 0.19% -0.02% 2.Asset and Liabilities Measured by Fair Value In RMB Profit/loss on fair Impairment Cumulative fair value value changes in provided in Purchased in this Sold in this Financial assets Opening balance changes charged to Other changes Closing balance this reporting this Reporting reporting period reporting period equity period period Financial assets 1.Transactional financial 854,210,990.44 -325,375.82 -1,153,605.18 1,913,998,000.00 1,533,898,000.00 1,233,985,614.62 17 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 assets(Excluding Derivative financial assets) 4.Other Equity Instrument 2,490,376,886.96 -144,093,859.18 1,955,328,987.78 2,346,283,027.78 Investment Subtotal 3,486,831,891.56 -140,254,211.62 1,951,103,789.34 1,913,998,000.00 1,592,861,050.77 3,667,714,629.17 5.Other non-current financial 142,244,014.16 4,165,023.38 -3,071,593.26 58,963,050.77 87,445,986.77 assets 6. Financing receivable 680,279,893.94 -16,849,595.09 663,430,298.85 Subtotal of financial assets 4,167,111,785.50 -140,254,211.62 1,951,103,789.34 - 1,913,998,000.00 1,592,861,050.77 -16,849,595.09 4,331,144,928.02 Total of the above 4,167,111,785.50 -140,254,211.62 1,951,103,789.34 - 1,913,998,000.00 1,592,861,050.77 -16,849,595.09 4,331,144,928.02 Financial Liabilities 0.00 0.00 0.00 0.00 0.00 0.00 Significant changes in the measurement attributes of the main assets in this Reporting Period No 3. Restricted asset rights as of the end of this Reporting Period Items End of Book value Reason Monetary fund 69,831,476.27 Utilized for issuing bank acceptance bill and L/G. Fixed assets 114,535,863.69 Utilized for pledging to obtain the bank loan and guaranteeing the investment loan for China Development Funds Invisible assets 82,929,877.00 Utilized for pledging to obtain the bank loan and guaranteeing the investment loan for China Development Funds Transactional Financial Assets 1,715,614.62 In the lock-up period Dividend receivable 43,605,292.60 Utilized for guaranteeing the investment loan for China Development Funds Other equity Instrument investment 389,040,400.00 Utilized for guaranteeing the investment loan for China Development Funds Construction in process 619,207,141.72 Utilized for guaranteeing the investment loan for China Development Funds Receivables financing 125,299,879.99 Utilized for issuing bank acceptance bill 18 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Total 1,446,165,545.89 -- V. Investment situation 1. General Investments made in same period of last Investments made in the reporting period +/- % year 288,571,709.12 229,114,374.05 25.95% 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 Accrued Reasons for Accrued Actual Antici Realized not Reaching Turbine New plant General equipment Investment Amount Capital Project pated Income up the Planned Disclosure Disclosure heavy Self-built Yes date Index project manufacturing up to the End of Source schedule incom to the End of Schedule and industry Reporting Period e Reporting Anticipated Period Income General equipment Total Self-built Yes 255,849,977.65 1,078,891,174.28 Self fund 59.68% 0.00 0.00 No manufacturing Total -- -- -- 255,849,977.65 1,078,891,174.28 -- -- 0.00 0.00 -- -- -- 4. Financial assets at fair value √ Applicable □ Not applicable In RMB 19 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Changes in fair Cumulative fair Purchase amount in the Sale amount in the this Gain/loss of the Source of the Category Initial investment cost value of the this value changes in Accounting items this period period reporting period shares period equity Other 852,170,000.00 1,913,998,000.00 1,533,898,000.00 19,022,159.20 1,232,270,000.00 Self-fund Debt Stock 2,869,219.80 -325,375.82 -1,153,605.18 1,715,614.62 restructuting Fund 16,000,000.00 -272,000.00 -7,776,000.00 8,224,000.00 Self-fund Stock 390,954,040.00 -144,093,859.18 1,955,328,987.78 513,680,156.40 2,346,283,027.78 Self-fund Total 1,261,993,259.80 -144,691,235.00 1,946,399,382.60 1,913,998,000.00 1,533,898,000.00 532,702,315.60 3,588,492,642.40 5.Investment of Financial Asset (1)Securities investment Mode of Purchase Sale Sauc Stock accounti Book value balance Changes in fair Cumulative fair amount amount Book value balance e of Security Security Initial investment Gain/loss of the Accountin Abbreviatio ng at the beginning of value of the this value changes in in the in the at the end of the the category code cost reporting period g items n: measure the reporting period period equity this this reporting period shar ment period period es Other Self Domestic and Hangzhou equity 600926 390,954,040.00 FVM 2,490,376,886.96 -144,093,859.18 1,955,328,987.78 95,156,322.10 2,346,283,027.78 fund foreign stocks Bank Instrument s investment Financial Debt Domestic and LUTIANHU assets instr 000912 2,869,219.80 FVM 2,040,990.44 -325,375.82 -1,153,605.18 -325,375.82 1,715,614.62 foreign stocks A available ume for sale nt Total 393,823,259.80 -- 2,492,417,877.40 -144,419,235.00 1,954,175,382.60 0.00 0.00 94,830,946.28 2,347,998,642.40 -- -- 20 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 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) (2)Investment in Derivatives □ Applicable √ Not applicable The Company had no investment in derivatives in the reporting period. VI. Sales of major assets and equity 1. Sales of major assets The Company had no sales of major assets in the reporting period. 2.Sales of major equity Not applicable Ⅶ. Analysis of the Main Share Holding Companies and Share Participating Companies √ Applicable □ Not applicable Situation of Main Subsidiaries and the Joint-stock Company with over 10% net profit influencing to the Company In RMB Company Leading Company Name Registered capital Total assets Net assets Operating Income Operating profit Net Profit type products and 21 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 services Trade of Zhejiang Steam Turbine Packaged Subsidiaries packaged 51,000,000.00 345,503,014.02 121,683,766.83 88,950,190.73 21,176,212.04 18,180,159.42 Technology Development Co., Ltd. equipment Hangzhou Zhongneng Steam Turbine Manufacturi Subsidiaries 92,500,000.00 1,253,476,418.68 276,031,305.09 463,773,371.54 29,311,510.78 26,262,274.43 Power Co., Ltd. ng Hangzhou Steam Turbine Casting Co., Subsidiaries Casting 29,500,000.00 567,046,220.37 263,952,094.43 188,039,370.62 16,463,133.96 13,810,994.94 Ltd. Hangzhou Steam Turbine Machinery & Manufacturi Subsidiaries 30,000,000.00 293,129,755.38 135,403,747.47 131,998,141.54 30,806,884.79 26,242,201.36 Equipment Co., Ltd. ng Hangzhou Steam Turbine Auxiliary Manufacturi Subsidiaries 80,000,000.00 795,598,838.19 267,715,113.99 307,652,062.40 29,975,261.07 25,359,176.36 Machine Co., Ltd. ng Zhejiang Turbine Import & Export Co., Commerce Subsidiaries 20,000,000.00 184,075,324.41 54,609,421.18 73,541,913.79 244,596.66 461,496.10 Ltd. & trade Hangzhou Steam Turbine Heavy Industry Manufacturi Subsidiaries 1,000,000,000.00 964,011,228.25 950,860,157.38 886,935.44 665,201.58 Co., Ltd. ng Subsidiaries obtained or disposed in the reporting period Not applicable VIII.Structured vehicle controlled by the Company Not applicable IX. Prediction of business performance for January -September 2020 Estimation of accumulative net profit from the beginning of the year to the end of next report period to be loss probably or the warning of its material change compared with the corresponding period of the last year and explanation of reason. Not applicable 22 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 X. Risks facing the Company and countermeasures 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 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 Along with adjustments and changes of market structure, the company's product mix is altered which may leads to possible business sales decline and product profitability fluctuation. The Company will strive to improve the internal management, reduce the operating costs and increase the operational efficiency to resolve the risk of declining 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 23 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 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. 8. Impact of the epidemic Affected by the epidemic, the company's overseas market orders decreased, the delivery of some imported supporting parts was delayed, the company's project execution was affected to a certain extent. In combination with the development and changes of the epidemic, the company continuously ADAPTS to and reduces the adverse effects brought by the epidemic. V. Important Events 1. Annual General Meeting and Extraordinary Shareholders’ Meetings in the Reporting Period 1.Annual General Meeting Investor Meeting Type participation Convened date Disclosure date Index to disclosed information ratio Resolutions of the Shareholders’ Annual Meeting 2019 (Announcement No. Annual 2019 Shareholders’ 2020-38) released by Securities Times, Shareholders’ 72.59% June 5,2020 June 6,2020 general meeting Shanghai Securities Daily, Hong Kong General Meeting Commercial Daily, and Http://www.cninfo.com.cn 2. Preferred stockholders restored voting rights to request to convene Provisional Shareholders’ Meeting. Not applicable II. Proposal for profit distribution and converting capital Reserve into share actual for the reporting period For the reporting period, the Company plans not to distribute cash dividends or bonus shares or convert capital reserve into share capital. III. 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. Not existent 24 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 IV. Particulars about engagement and disengagement of CPAs firm Whether the semi-annual financial report had been audited? The semi-annual report was not audited. V. Explanations given by board of directors and supervisory board regarding “ Modified auditor’s” Issued by CPAs firm for the reporting period Not applicable VI. Explanations given by Board of Directors regarding “ Modified auditor’s Report” Issued for last year Not applicable VII. Bankruptcy and restructuring No such cases in the reporting period. VIII. Lawsuit Significant lawsuits or arbitrations No such cases in the reporting period. Other legal matters Litigation Litigation Date Index Amount involved Forming of Litigation (arbitration) Basic conditions of litigation (arbitration) of of (Ten thousand the predicted (arbitration) judgement (arbitration) judgement result disclos disclos yuan ) debt progress execution and influence ure ure condition See section 11, 14, 2 See section 11, 14, 2 for details 13,220.25 No Not applicable Not applicable for details IX. Doubt6s from media □ Applicable √Not applicable The Company had no issues about which media generally raised doubts in the reporting period. X. Punishments and rectifications □ Applicable √ Not applicable No such cases in the reporting period. XI. Credit conditions of the Company as well as its Controlling shareholder and actual Controller Not existent 25 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 XII. Equity incentive plans, employee stock ownership plans or other incentive measures for employees □ Applicable √ Not applicable No such cases in the reporting period. 26 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 XIII. Material related transactions 1. Related transactions in connection with daily operation Whether Principle of Amount of Trading limit over the Market price Index of Subjects of the Ratio in Date of pricing the Price of Way of of similar informatio Related parties Relationship Type of trade related trade ( Ten approved(Ten approved disclosur related trade payment trade n transactions similar trades e transactions available disclosure thousand) thousand) limited or not (Y/N) Hangzhou Hangfa Power Generating Affiliate of the Purchase of Market Bank Not August Generators Fair and just 8,078.74 8,078.74 No 2020-50 Equipment Co., Group goods price 28,2020 Ltd. transfer applicable Related Hangzhou Steam Turbine Affiliate of the transactions to freight, repairing Market Bank Not August Fair and just 3,167.83 3,167.83 No 2020-50 Automobile Sales Group fee price 28,2020 Service Co., Ltd. procure goods / transfer applicable services Hangzhou Steam Turbine Affiliate of the Market Bank Not August Sale goods Steam Turbine Fair and just 3,624.88 3,624.88 No 2020-50 price 28,2020 Engineering Co., Group transfer applicable Ltd. Total -- -- 14,871.45 -- 14,871.45 -- -- -- -- Details of any sales return of a large amount No Give the actual situation in the report period where a forecast had been made for the total amounts of routine related-party transactions by type Not applicable to occur in the current period(if any) 27 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Reason for any significant difference between the transaction price and No applicable the market reference price (if applicable) 2. Related-party transactions arising from asset acquisition or sold □Applicable √ Not applicable No such cases in the reporting period. 3. Related-party transitions with joint investments No such cases in the reporting period. 4. Credits and liabilities with related parties No such cases in the reporting period. No such cases in the reporting period. 5. Other material related transactions XIV. Particulars about the non-operating occupation of funds by the Controlling shareholder and other related parties of the Company The company was not involved in the non-operating occupation of funds by the controlling shareholder and other related parties during the reporting period. 28 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 XV. Significant contracts and execution 1.Entrustments, contracting and leasing (1)Entrustment No such cases in the reporting period. (2) Contract No any contract for the Company in the reporting period. (3)Leasing No such cases in the reporting period. 2.Significant guarantees (1)Guarantees In RMB 10,000 Guarantee of the Company for the controlling subsidiaries (Exclude controlled subsidiaries) Relevant Date of Guarantee disclosure happening Complete Actual for Name of the date/No. of Amount of (Date of implementat mount of Guarantee type Guarantee term associated Company the Guarantee signing ion guarantee parties guaranteed agreement or not (Yes or no) amount ) Hangzhou Two years from Steam Turbine December the date of October 22,2016 20,800 20,800 Mortgage No Yes Power Group 28,2016 expiration of the Co., Ltd principal debt Total amount of outward Total amount of outward guarantee approved in 0 guarantee actually incurred in 0 the report period(A1) the report period(A2) Total of external guarantee approved at Total balance of actual external 20,800 20,800 Period-end(A3) guarantee at Period-end(A4) Guarantee of the Company for the controlling subsidiaries 29 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Relevant Date of Complete Guarantee disclosure Name of the Amount happening Actual implement for date/No. of Guarantee Company of (Date o mount of Guarantee term ation associated the type guaranteed guarantee signing guarantee or parties guaranteed agreement) not (Yes or no) amount Zhejiang Steam Turbine Two years from The joint Packaged the date of April 24,2020 5,000 0 liability No No Technology expiration of the guaranty Development principal debt Co., Ltd. Hangzhou Two years from The joint Steam Turbine May 29, the date of May 27,2020 2,000 1,870 liability No No Casting Co., 2020 expiration of the guaranty Ltd. principal debt Total of guarantee for Total of actual guarantee for subsidiaries approved in the 7,000 1870 subsidiaries in the period (B2) period(B1) Total of guarantee for Total of actual guarantee for subsidiaries approved at 7,000 1870 subsidiaries at period-end(B4) period-end(B3) Guarantee of the subsidiaries for the controlling subsidiaries Relevant Date of Complete Guarantee disclosure Name of the Amount happening Actual implement for date/No. of Guarantee Company of (Date o mount of Guarantee term ation associated the type guaranteed guarantee signing guarantee or parties guaranteed agreement) not (Yes or no) amount Hangzhou Three years from Guoneng The joint June 20, the date of Steam Turbine June 25,2019 10,000 6,192.24 liability No No 2019 expiration of the Engineering guaranty Co., Ltd. principal debt Hangzhou Two years from Guoneng The joint July 25, the date of Steam Turbine July 25,2019 7,000 3,702.39 liability No No 2019 expiration of the Engineering guaranty Co., Ltd. principal debt Total guarantee quota to the Total amount of guarantee to the subsidiaries actually subsidiaries approved in the 0 5,522.51 incurred in the reporting period (C2) reporting period (C1) 30 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Total guarantee quota to the Total balance of actual guarantee to the subsidiaries at the end subsidiaries approved at the end 17,000 9,894.63 of the reporting period (C4) of the reporting period (C3) Total of Company’s guarantee(namely total of the large three aforementioned) Total of actual guarantee in the Period Total of guarantee in the Period(A1+B1+C1) 7,000 7,392.51 (A2+B2+C2) Total of actual guarantee at Period-end Total of guarantee at Period-end(A3+B3+C3) 44,800 32,564.63 A4+B4+C4) The proportion of the total amount of actually guarantee in the net 5.01% assets of the Company (that is 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 17,000 70% directly or indirectly(E) 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) 37,800 Explanations about joint and several liability for repayment in respect of undue guarantee(if any) Not applicable Explanation about external guarantee violating established procedure if any) Not applicable 31 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 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) (2)Illegal providing of external guarantees No illegal providing of external guarantees in the report period. 3Situation of Entrusted Finance Summary of entrusted finance during the reporting period In RMB 10,000 Source Amount Unexpired balance Overdue amount Type Bank financing product Idle own funds 136,527 123,227 0 Trust financing product Idle own funds 2,000 0 0 Total 138,527 123,227 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 Actual Actual Whether Referentia Prospe recovery of Provisio Summary of Way of profit or or not Is there a Name of Type of Capital l ctive profits and n for matters and Type of Date of Date of Confirm loss for due commission Trustees (or Trustees (or Amount Source Investment Annualize Yield losses impairm related Production Beginning Expiry ing the process plan in the Entrustees) Entrustees) Orientation d Yield (if during the ent (if query Index Rewards reportin has been future Rate any) reporting any) (if any) g period followed period 32 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Treasury bonds, Bank corporate bonds, non-capital-pres inter-bank Bank of erving and Idle own January March Floating Bank 6,000 lending, 3.00% 27.62 27.62 27.62 Yes No China interest-saving funds 20,2020 16,2020 profit medium-term financial notes, financing products bonds, etc. Total 6,000 -- -- -- -- -- -- 27.62 27.62 -- -- -- -- Situation with the appearance of principals which cannot be recovered expectedly or other existing situations which may lead to impairment Not applicable 33 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 4. Other significant contract No other significant contracts for the Company in reporting period. XVI.Social responsibilities 1.Major 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 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. 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. (4)Subsequent targeted poverty alleviation program In the future, the company will follow up the assistance activities of "linking and connecting villages" as planned. In 2021, we will continue to implement targeted poverty alleviation through cash funding to Zitong Town, Chun'an County. 34 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 XVII.Other material events 1.The company's estimated amount of daily related transactions in 2019 was not approved in shareholders meeting The "Proposal on the Estimated Amount of Daily Related Transactions of the Company in 2019" has been submitted to the Company's 2019 Annual General Meeting of Shareholders for deliberation. The related party Hangzhou Steam Turbine Power Group abstains from voting and the proposal failed to pass approval. The complete report is available as Announcement 2020-38 with Securities Times, Shanghai Securities Daily, Hong Kong Commercial Daily and at www.cninfo.com.cn dated June 6,2020. XVIII. Material events of subsidiaries Not applicable VI. Change of share capital and shareholding of Principal Shareholders I.Changes in share capital 1. Changes in share capital In shares Before the change Increase/decrease(+,-) After the Change Amount Proportion Capitalizat ion of Share Bonus common Other Subtotal Quantity Proportion allotment shares reserve fund 479,824,80 I. Unlisted shares 479,824,800 63.64% 0 0 0 0 0 63.64% 0 479,824,80 1. Founder's stock 479,824,800 63.64% 0 0 0 0 0 63.64% 0 Including : State-owned 479,824,80 479,824,800 63.64% 0 0 0 0 0 63.64% 0 shares 274,185,60 II.Non-restricted shares 274,185,600 36.36% 0 0 0 0 0 36.36% 0 2. Overseas listed foreign 274,185,60 274,185,600 36.36% 0 0 0 0 0 36.36% shares 0 III. Total of capital shares 754,010,400 100.00% 0 0 0 0 0 754,010,40 100.00% 35 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 0 Causes of Change of shares Not applicable Approval of change of the shares Not applicable Ownership transfer of share changes Not applicable Progress on any share repurchase: The company held the second 2019 extraordinary general meeting of shareholders on December 10, 2019, and reviewed and passed the "Proposal on Repurchase of Company Shares". On February 18, 2020, the company implemented share repurchase for the first time. As of June 30, 2020, through a special securities account repurchase, the company has obtained 10,207,925 shares of the company based on a centralized auction transaction, accounting for 1.35% of the company's current total share capital, with the highest transaction price 8.52 HKD/share and the lowest price of 7.22 HKD/share. The total transaction amount is HKD 81,081,099.84. Progress on reducing the repurchased shares by means of centralized bidding: Not applicable Influence on the basic EPS and diluted EPS as well as other financial indexes of net assets per share attributable to common shareholders of Company in latest year and period Not applicable Other information necessary to disclose for the company or need to disclosed under requirement from security regulators Not applicable 2. Change of shares with limited sales condition Not applicable II. Shareholders and shareholding In Shares Total number of preferred shareholders that had Total number of common shareholders at 12,533 restored the voting right at the end of the reporting 0 the end of the reporting period period Particulars about shares held above 5% by shareholders or top ten shareholders Shareholders Nature of Proporti Number of Changes in Amount of Amount of Number or 36 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 shareholder on of shares held at reporting restricted shares un-restricted share shares period -end period held shares held pledged/froz held(%) en State Amo of unt share Hangzhou Steam Turbine Power Group Co., State-owned legal person 63.64% 479,824,800 0 479,824,800 0 Ltd. VANGUARD TOTAL INTERNATIONAL Foreign legal 0.80% 6,036,036 481,600 0 6,036,036 STOCK INDEX FUND person Domestic Zhou Jie 0.58% 4,341,100 2,400 0 4,341,100 Natural person VANGUARD EMERGING MARKETS Foreign legal 0.56% 4,198,304 -524,500 0 4,198,304 STOCK INDEX FUND person State-owned China Merchants Securities (HK)Co., Ltd. 0.49% 3,705,777 -130,500 0 3,705,777 legal person GUOTAI JUNAN Foreign legal 0.49% 3,667,054 -1,280,618 0 3,667,054 SECURITIES(HONGKONG) LIMITED person ISHARES CORE MSCI EMERGING Foreign legal 0.41% 3,054,577 -608,500 0 3,054,577 MARKETS ETF person Foreign legal NORGES BANK 0.33% 2,514,529 0 0 2,514,529 person Domestic Xia Zulin 0.31% 2,301,000 0 0 2,301,000 Natural person Domestic Gu Yang 0.20% 1,504,552 76,100 0 1,504,552 Natural person Particulars about strategic investors or general corporations becoming among the top 10 shareholders due to share Not applicable 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., Ltd. Explanation on associated relationship among the aforesaid and other shareholders; 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 of shares Amount held at end of period Foreign shares placed in VANGUARD TOTAL INTERNATIONAL STOCK INDEX FUND 6,036,036 6,036,036 domestic exchange Foreign shares placed in Zhou Jie 4,341,100 4,341,100 domestic exchange 37 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Foreign shares placed in VANGUARD EMERGING MARKETS STOCK INDEX FUND 4,198,304 4,198,304 domestic exchange Foreign shares placed in China Merchants Securities(HK)Co., Ltd. 3,705,777 3,705,777 domestic exchange Foreign shares placed in GUOTAI JUNAN SECURITIES(HONGKONG) LIMITED 3,667,054 3,667,054 domestic exchange Foreign shares placed in ISHARES CORE MSCI EMERGING MARKETS ETF 3,054,577 3,054,577 domestic exchange Foreign shares placed in NORGES BANK 2,514,529 2,514,529 domestic exchange Foreign shares placed in Xia Zulin 2,301,000 2,301,000 domestic exchange Foreign shares placed in Gu Yang 1,504,552 1,504,552 domestic exchange Foreign shares placed in Wang Yihu 1,488,524 1,488,524 domestic exchange 1)It is unknown to the Company if there is any relationship among the top 10 common share holders without restriction; Explanation on associated relationship or consistent action among the top 10 (2) Hangzhou Steam Turbine Group Co., Ltd. is not an shareholders of non-restricted negotiable shares and that between the top 10 action-in-concert” party with any of other shareholders as described shareholders of non-restricted negotiable shares and top 10 shareholders by the “Administration Rules of Informational Disclosure about Change of Shareholding Statues of PLCs”. Top ten ordinary shareholders conducting securities margin trading Not applicable 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. III. Change of the controlling shareholder or the actual controller Change of the controlling shareholder in the reporting period There was no any change of the controlling shareholder of the Company in the reporting period. Change of the actual controller in the reporting period There was no any change of the actual controller of the Company in the reporting period. 38 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 VII. Situation of the Preferred Shares The Company had no preferred shares in the reporting period 39 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 VIII Information about convertible corporate bonds During the reporting period, the company did not have convertible corporate bonds. IX. Information about Directors, Supervisors and Senior Executives I. Change of shareholding of directors, supervisors and senior executives Share held by directors, supervisors and senior executive of the Company had no changes, more details can be seen in annual report 2019. II. Changes in directors, supervisors and senior management staffs □Applicable √Not applicable No change has taken place in directors, supervisors and senior executives of the Company during the reporting period. For the detail, refer to 2019 Annual Report. X. Corporate Bond Whether the company has corporate bonds that have been publicly issued and listed on the stock exchange, and not yet due or due but not folly cashed on the approval date of annual report No XI. Financial Report I. Auditors’ Report Whether the semi-annual financial report had been audited? The Semi-annual Financial Report is not audited. 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 In RMB Items June 30,2020 December 31,2019 40 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Current asset: Monetary fund 1,531,835,132.63 1,756,320,237.50 Settlement provision Outgoing call loan Transactional financial assets 1,233,985,614.62 854,210,990.44 Derivative financial assets Notes receivable 71,054,030.62 46,484,259.65 Account receivable 2,054,003,687.68 2,025,081,342.74 Financing of receivables 663,430,298.85 680,279,893.94 Prepayments 453,228,749.94 388,562,447.80 Insurance receivable Reinsurance receivable Provisions of Reinsurance contracts receivable Other account receivable 142,054,905.86 45,520,789.89 Including:Interest receivable Dividend receivable 122,983,614.70 27,827,292.60 Repurchasing of financial assets Inventories 2,258,594,388.00 2,051,290,269.07 Contract assets Assets held for sales Non-current asset due within 1 year Other current asset 47,586,554.02 71,592,063.09 Total of current assets 8,455,773,362.22 7,919,342,294.12 Non-current assets: Loans and payment on other’s behalf disbursed Creditor's right investment Other investment on bonds Long-term receivable Long term share equity investment 21,185,168.49 22,129,585.83 Other equity instruments investment 2,346,283,027.78 2,490,376,886.96 Other non-current financial assets 87,445,986.77 142,244,014.16 Property investment Fixed assets 692,659,233.28 724,702,558.18 Construction in progress 1,077,342,567.61 799,410,358.84 Production physical assets 41 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Oil & gas assets Use right assets Intangible assets 272,005,020.25 275,140,367.22 Development expenses Goodwill Long-germ expenses to be amortized Deferred income tax asset 237,689,936.17 226,769,514.65 Other non-current asset Total of non-current assets 4,734,610,940.35 4,680,773,285.84 Total of assets 13,190,384,302.57 12,600,115,579.96 Current liabilities Short-term loans 197,700,000.00 97,840,187.21 Loan from Central Bank Borrowing funds Transactional financial liabilities Derivative financial liabilities Notes payable 240,170,034.62 227,961,541.12 Account payable 1,334,931,698.36 1,030,408,716.74 Advance receipts 2,818,130,397.17 Contract liabilities 3,099,833,164.03 Selling of repurchased financial assets Deposit taking and interbank deposit Entrusted trading of securities Entrusted selling of securities Employees’ wage payable 68,418,984.73 96,205,949.57 Tax payable 46,909,288.66 34,521,756.98 Other account payable 217,709,036.28 82,148,405.19 Including:Interest payable 93,150.68 Dividend payable 148,760,495.00 Fees and commissions payable Reinsurance fee payable Liabilities held for sales Non-current liability due within 1 year 100,000.00 200,319.30 Other current liability Total of current liability 5,205,772,206.68 4,387,417,273.28 42 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Non-current liabilities: Reserve fund for insurance contracts Long-term loan 22,400,000.00 22,435,762.23 Bond payable Including:preferred stock Sustainable debt Lease liability Long-term payable 682,651,713.17 730,460,508.59 Long-term remuneration payable to staff Expected liabilities 32,202,504.57 32,202,504.57 Deferred income 50,522,553.07 51,713,417.61 Deferred income tax liability 294,641,275.32 316,910,472.07 Other non-current liabilities Total non-current liabilities 1,082,418,046.13 1,153,722,665.07 Total of liability 6,288,190,252.81 5,541,139,938.35 Owners’ equity Share capital 754,010,400.00 754,010,400.00 Other equity instruments Including:preferred stock Sustainable debt Capital reserves 152,973,219.65 152,973,219.65 Less:Shares in stock 73,364,395.79 Other comprehensive income 1,661,720,375.63 1,784,195,156.34 Special reserve 18,106,330.88 18,324,473.28 Surplus reserves 621,112,807.78 621,112,807.78 Common risk provision Retained profit 3,359,027,734.25 3,276,880,091.53 Total of owner’s equity belong to the parent 6,493,586,472.40 6,607,496,148.58 company Minority shareholders’ equity 408,607,577.36 451,479,493.03 Total of owners’ equity 6,902,194,049.76 7,058,975,641.61 Total of liabilities and owners’ equity 13,190,384,302.57 12,600,115,579.96 Legal Representative: Zheng Bin Person in charge of accounting:Zhao Jiamao Person in charge of Accounting institute: Jin Chan 43 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 2.Parent Company Balance Sheet In RMB Items June 30,2020 December 31,2019 Current asset: Monetary fund 935,342,495.72 1,017,072,165.81 Transactional financial assets 951,715,614.62 532,040,990.44 Derivative financial assets Notes receivable 31,559,000.00 4,712,981.35 Account receivable 1,382,426,967.39 1,470,224,608.96 Financing of receivables 399,963,786.26 376,974,822.75 Prepayments 299,162,731.52 222,187,452.27 Other account receivable 127,042,515.71 31,067,688.80 Including:Interest receivable Dividend receivable 122,983,614.70 27,827,292.60 Inventories 1,569,151,168.52 1,402,933,995.29 Contract assets Assets held for sales Non-current asset due within 1 year Other current asset 100,631.70 30,332,464.25 Total of current assets 5,696,464,911.44 5,087,547,169.92 Non-current assets: Creditor's rights investment Other creditor's rights investment Long-term receivable Long term share equity investment 897,034,001.41 897,978,418.75 Other equity instruments investment 2,346,283,027.78 2,490,376,886.96 Other non-current financial assets 64,547,865.74 119,345,893.13 Property investment Fixed assets 388,908,028.03 413,089,308.63 Construction in progress 458,129,713.38 246,387,266.69 Production physical assets Oil & gas assets Use right assets Intangible assets 159,665,388.35 161,688,374.81 Development expenses Goodwill 44 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Long-germ expenses to be amortized Deferred income tax asset 183,734,008.93 174,060,251.09 Other non-current asset Total of non-current assets 4,498,302,033.62 4,502,926,400.06 Total of assets 10,194,766,945.06 9,590,473,569.98 Current liabilities Short-term loans 100,000,000.00 Transactional financial liabilities Derivative financial liabilities Notes payable 59,855,000.00 10,000,000.00 Account payable 870,541,884.64 623,426,940.99 Advance receipts 1,908,382,258.12 Contract Liabilities 2,093,277,784.86 Employees’ wage payable 43,161,622.57 49,620,330.21 Tax payable 21,462,612.64 3,776,368.66 Other account payable 199,571,747.54 54,954,443.47 Including:Interest payable 93,150.68 0.00 Dividend payable 148,760,495.00 0.00 Liabilities held for sales Non-current liability due within 1 year Other current liability Total of current liability 3,387,870,652.25 2,650,160,341.45 Non-current liabilities: Long-term loan Bond payable Including:preferred stock Sustainable debt Lease liability Long-term payable 498,773,794.77 545,357,990.20 Long-term remuneration payable to staff Expected liabilities 32,202,504.57 32,202,504.57 Deferred income 49,125,498.07 50,316,362.61 Deferred income tax liability 294,641,275.32 316,910,472.07 Other non-current liabilities Total non-current liabilities 874,743,072.73 944,787,329.45 45 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Total of liability 4,262,613,724.98 3,594,947,670.90 Owners’ equity Share capital 754,010,400.00 754,010,400.00 Other equity instruments Including:preferred stock Sustainable debt Capital reserves 138,953,250.09 138,953,250.09 Less:Shares in stock 73,364,395.79 Other comprehensive income 1,662,029,639.60 1,784,509,419.91 Special reserve 6,000,000.00 6,000,000.00 Surplus reserves 602,356,402.65 602,356,402.65 Retained profit 2,842,167,923.53 2,709,696,426.43 Total of owners’ equity 5,932,153,220.08 5,995,525,899.08 Total of liabilities and owners’ equity 10,194,766,945.06 9,590,473,569.98 Legal Representative: Zheng Bin Person in charge of accounting:Zhao Jiamao Person in charge of Accounting institute: Jin Chan 3.Consolidated Income Statement In RMB Items The first half year of 2020 The first half year of 2019 I. Income from the key business 2,021,667,426.27 1,920,181,703.03 Incl:Business income 2,021,667,426.27 1,920,181,703.03 Interest income Insurance fee earned Fee and commission received II. Total business cost 1,827,754,914.11 1,814,433,246.91 Incl:Business cost 1,387,814,297.42 1,366,404,401.26 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 46 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Business tax and surcharge 10,846,939.80 13,458,140.99 Sales expense 83,979,396.90 86,895,939.32 Administrative expense 261,099,800.18 235,168,325.98 R & D costs 103,228,915.93 116,760,942.52 Financial expenses -19,214,436.12 -4,254,503.16 Including:Interest expense 3,356,373.45 7,163,329.72 Interest income 14,883,294.02 13,686,150.29 Add: Other income 55,716,643.40 15,761,589.03 Investment gain(“-”for loss) 118,388,068.47 99,460,322.66 Incl: investment gains from affiliates Financial assets measured at amortized cost cease to be recognized as income Gains from currency exchange Net exposure hedging income Changing income of fair value -597,375.82 -1,474,755.34 Credit impairment loss -69,862,741.38 6,225,948.82 Impairment loss of assets 197,857.88 Assets disposal income 247,052.27 -1,183.02 III. Operational profit(“-”for loss) 297,804,159.10 225,918,236.15 Add :Non-operational income 6,216,124.18 744,839.16 Less: Non-operating expense 4,178,810.71 5,220,762.28 IV. Total profit(“-”for loss) 299,841,472.57 221,442,313.03 Less:Income tax expenses 30,545,431.68 36,775,399.29 V. Net profit 269,296,040.89 184,666,913.74 (I) Classification by business continuity 1.Net continuing operating profit 269,296,040.89 184,666,913.74 2.Termination of operating net profit (II) Classification by ownership 1.Net profit attributable to the owners of parent company 230,908,137.72 160,325,133.00 2.Minority shareholders’ equity 38,387,903.17 24,341,780.74 VI. Net after-tax of other comprehensive income -122,468,038.54 215,462,868.76 Net of profit of other comprehensive income attributable to owners -122,474,780.71 215,149,629.90 of the parent company. (I)Other comprehensive income items that will not be reclassified -122,479,780.31 214,917,350.34 47 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 into gains/losses in the subsequent accounting period 1.Re-measurement of defined benefit plans of changes in net debt o r net assets 2.Other comprehensive income under the equity method investee ca n not be reclassified into profit or loss. 3. Changes in the fair value of investments in other equity -122,479,780.31 214,917,350.34 instruments 4. Changes in the fair value of the company’s credit risks 5.Other (II) Other comprehensive income that will be reclassified into profit or l 4,999.60 232,279.56 oss. 1.Other comprehensive income under the equity method investee ca n be reclassified into profit or loss. 2. Changes in the fair value of investments in other debt obligations 3. Other comprehensive income arising from the reclassification of financial assets 4.Allowance for credit impairments in investments in other debt obligations 5. Reserve for cash flow hedges 6.Translation differences in currency financial statements 4,999.60 232,279.56 7.Other Net of profit of other comprehensive income attributable to Minorit 6,742.17 313,238.86 y shareholders’ equity VII. Total comprehensive income 146,828,002.35 400,129,782.50 Total comprehensive income attributable to the owner of the parent 108,433,357.01 375,474,762.90 company Total comprehensive income attributable minority shareholders 38,394,645.34 24,655,019.60 VIII. Earnings per share (I)Basic earnings per share 0.31 0.21 (II)Diluted earnings per share 0.31 0.21 Legal Representative: Zheng Bin Person in charge of accounting:Zhao Jiamao Person in charge of Accounting institute: Jin Chan 4. Income statement of the Parent Company In RMB 48 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Items The first half year of 2020 The first half year of 2019 I. Income from the key business 1,148,712,572.64 1,201,433,732.23 Incl:Business cost 791,758,011.88 868,692,769.43 Business tax and surcharge 4,568,531.98 6,969,423.29 Sales expense 49,068,995.79 48,049,960.92 Administrative expense 194,237,408.24 159,919,647.14 R & D expense 56,990,534.25 72,044,163.87 Financial expenses -18,514,981.66 -7,258,639.20 Including:Interest expenses 628,468.93 3,304,641.54 Interest income 11,826,317.27 12,022,468.87 Add:Other income 52,463,135.32 5,455,874.12 Investment gain(“-”for loss) 230,963,096.02 152,548,740.20 Including: investment gains from affiliates Financial assets measured at amortized cost cease to be recognized as income Net exposure hedging income Changing income of fair value -597,375.82 -1,474,755.34 Credit impairment loss -61,473,384.29 1,997,481.94 Impairment loss of assets 0.00 197,857.88 Assets disposal income 247,056.74 0.00 II. Operational profit(“-”for loss) 292,206,600.13 211,741,605.58 Add :Non-operational income 1,978,691.24 631,962.46 Less:Non -operational expenses 2,656,166.56 2,904,084.35 III. Total profit(“-”for loss) 291,529,124.81 209,469,483.69 Less:Income tax expenses 10,297,132.71 11,979,726.29 IV. Net profit 281,231,992.10 197,489,757.40 1.Net continuing operating profit 281,231,992.10 197,489,757.40 2.Termination of operating net profit V. Net after-tax of other comprehensive income -122,479,780.31 214,917,350.34 (I)Other comprehensive income items that will not be reclassified into -122,479,780.31 214,917,350.34 gains/losses in the subsequent accounting period 1.Re-measurement of defined benefit plans of changes in net debt or net a ssets 2.Other comprehensive income under the equity method investee can not be reclassified into profit or loss. 49 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 3. Changes in the fair value of investments in other equity instruments -122,479,780.31 214,917,350.34 4. Changes in the fair value of the company’s credit risks 5.Other (II)Other comprehensive income that will be reclassified into profit or los s 1.Other comprehensive income under the equity method investee can be r eclassified into profit or loss. 2. Changes in the fair value of investments in other debt obligations 3. Other comprehensive income arising from the reclassification of financial assets 4.Allowance for credit impairments in investments in other debt obligations 5. Reserve for cash flow hedges 6.Translation differences in currency financial statements 7.Other VI. Total comprehensive income 158,752,211.79 412,407,107.74 VII. Earnings per share (I)Basic earnings per share (II)Diluted earnings per share Legal Representative: Zheng Bin Person in charge of accounting:Zhao Jiamao Person in charge of Accounting institute: Jin Chan 5. Consolidated Cash flow statement In RMB Items The first half year of 2020 The first half year of 2019 I.Cash flows from operating activities Cash received from sales of goods or rending of services 1,728,815,809.43 1,518,810,866.20 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 50 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Net increase of client deposit and investment Cash received from interest, commission charge and commission Net increase of inter-bank fund received Net increase of repurchasing business Net cash received by agent in securities trading Tax returned 5,387,680.16 5,744,179.17 Other cash received from business operation 65,325,817.64 26,127,131.84 Sub-total of cash inflow 1,799,529,307.23 1,550,682,177.21 Cash paid for purchasing of merchandise and services 862,580,281.24 898,280,785.94 Net increase of client trade and advance Net increase of savings in central bank and brother company Cash paid for original contract claim Net increase in financial assets held for trading purposes Net increase for Outgoing call loan Cash paid for interest, processing fee and commission Cash paid to staffs or paid for staffs 418,895,651.22 379,575,581.35 Taxes paid 106,510,146.66 180,054,533.44 Other cash paid for business activities 84,578,536.08 102,111,872.85 Sub-total of cash outflow from business activities 1,472,564,615.20 1,560,022,773.58 Net cash generated from /used in operating activities 326,964,692.03 -9,340,596.37 II. Cash flow generated by investing Cash received from investment retrieving 50,000,000.00 Cash received as investment gains 28,996,731.18 31,491,521.16 Net cash retrieved from disposal of fixed assets, intangible 17,924.42 24,493.28 assets, and other long-term assets Net cash received from disposal of subsidiaries or other operational units Other investment-related cash received 1,533,898,000.00 2,050,778,164.28 Sub-total of cash inflow due to investment activities 1,612,912,655.60 2,082,294,178.72 Cash paid for construction of fixed assets, intangible assets and 158,051,359.80 228,526,111.45 other long-term assets Cash paid as investment 13,440,000.00 Net increase of loan against pledge Net cash received from subsidiaries and other operational units 51 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Other cash paid for investment activities 1,913,998,000.00 1,157,904,000.00 Sub-total of cash outflow due to investment activities 2,072,049,359.80 1,399,870,111.45 Net cash flow generated by investment -459,136,704.20 682,424,067.27 III.Cash flow generated by financing Cash received as investment Including: Cash received as investment from minor shareholders Cash received as loans 177,700,000.00 77,700,000.00 Other financing –related cash received Sub-total of cash inflow from financing activities 177,700,000.00 77,700,000.00 Cash to repay debts 77,800,000.00 119,900,000.00 Cash paid as dividend, profit, or interests 82,634,116.70 203,426,853.46 Including: Dividend and profit paid by subsidiaries to minor shareholders Other cash paid for financing activities 75,745,129.13 2,530,666.67 Sub-total of cash outflow due to financing activities 236,179,245.83 325,857,520.13 Net cash flow generated by financing -58,479,245.83 -248,157,520.13 IV. Influence of exchange rate alternation on cash and cash 6,747,263.44 -707,669.86 equivalents V.Net increase of cash and cash equivalents -183,903,994.56 424,218,280.91 Add: balance of cash and cash equivalents at the beginning of 1,645,907,650.92 1,262,186,817.20 term VI ..Balance of cash and cash equivalents at the end of term 1,462,003,656.36 1,686,405,098.11 Legal Representative: Zheng Bin Person in charge of accounting:Zhao Jiamao Person in charge of Accounting institute: Jin Chan 6. Cash flow statement of the Parent Company In RMB Items The first half year of 2020 The first half year of 2019 I.Cash flows from operating activities Cash received from sales of goods or rending of services 1,009,834,279.72 771,903,511.87 Tax returned 4,056.54 0.00 Other cash received from business operation 49,456,848.95 13,952,892.56 Sub-total of cash inflow 1,059,295,185.21 785,856,404.43 Cash paid for purchasing of merchandise and services 502,853,109.86 469,234,191.52 52 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Cash paid to staffs or paid for staffs 285,820,623.95 246,224,211.20 Taxes paid 25,792,568.08 109,451,334.92 Other cash paid for business activities 26,431,269.07 43,083,180.34 Sub-total of cash outflow from business activities 840,897,570.96 867,992,917.98 Net cash generated from /used in operating activities 218,397,614.25 -82,136,513.55 II. Cash flow generated by investing Cash received from investment retrieving 50,000,000.00 0.00 Cash received as investment gains 141,288,093.65 84,579,938.70 Net cash retrieved from disposal of fixed assets, intangible 0.00 0.00 assets, and other long-term assets Net cash received from disposal of subsidiaries or other 0.00 0.00 operational units Other investment-related cash received 625,000,000.00 1,236,201,629.52 Sub-total of cash inflow due to investment activities 816,288,093.65 1,320,781,568.22 Cash paid for construction of fixed assets, intangible assets and 70,383,582.14 102,779,580.07 other long-term assets Cash paid as investment 0.00 369,212,943.59 Net cash received from subsidiaries and other operational units 0.00 0.00 Other cash paid for investment activities 1,045,000,000.00 302,000,000.00 Sub-total of cash outflow due to investment activities 1,115,383,582.14 773,992,523.66 Net cash flow generated by investment -299,095,488.49 546,789,044.56 III. Cash flow generated by financing Cash received as investment Cash received as loans 100,000,000.00 0.00 Other financing –related ash received Sub-total of cash inflow from financing activities 100,000,000.00 Cash to repay debts Cash paid as dividend, profit, or interests 535,318.25 154,217,773.32 Other cash paid for financing activities 73,364,395.79 0.00 Sub-total of cash outflow due to financing activities 73,899,714.04 154,217,773.32 Net cash flow generated by financing 26,100,285.96 -154,217,773.32 IV. Influence of exchange rate alternation on cash and cash 6,556,443.98 -976,692.26 equivalents V.Net increase of cash and cash equivalents -48,041,144.30 309,458,065.43 Add: balance of cash and cash equivalents at the beginning of 967,501,994.48 842,347,117.83 53 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 term VI ..Balance of cash and cash equivalents at the end of term 919,460,850.18 1,151,805,183.26 Legal Representative: Zheng Bin Person in charge of accounting:Zhao Jiamao Person in charge of Accounting institute: Jin Chan 54 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 7. Consolidated Statement on Change in Owners’ Equity Amount in this period In RMB The first half year of 2020 Owner’s equity Attributable to the Parent Company Other Equity instrument Other Minor Pref Common Total of owners’ Items Share Capital Less: Shares Comprehe Specialized Surplus Retained shareholders’ erre risk Other Subtotal equity Capital Sustai Othe reserves in stock nsive reserve reserves profit equity d provision nable r Income stoc debt k 754,010, 152,973,2 1,784,195, 621,112, 3,276,880,0 6,607,496,1 I.Balance at the end of last year 18,324,473.28 451,479,493.03 7,058,975,641.61 400.00 19.65 156.34 807.78 91.53 48.58 Add: Change of accounting policy Correcting of previous errors Merger of entities under common control Other II.Balance at the beginning of current 754,010, 152,973,2 1,784,195, 621,112, 3,276,880,0 6,607,496,1 18,324,473.28 451,479,493.03 7,058,975,641.61 year 400.00 19.65 156.34 807.78 91.53 48.58 73,364,395. -122,474,7 82,147,642. -113,909,67 III.Changed in the current year -218,142.40 -42,871,915.67 -156,781,591.85 79 80.71 72 6.18 -122,474,7 230,908,137 108,433,357 (1)Total comprehensive income 38,394,645.34 146,828,002.35 80.71 .72 .01 (II)Investment or decreasing of capital 73,364,395. -73,364,395. -73,364,395.79 by owners 79 79 1.Ordinary Shares invested by shareho 73,364,395. -73,364,395. -73,364,395.79 lders 79 79 2 . Holders of other equity instruments invested capital 55 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 3.Amount of shares paid and accounted as owners’ equity 4.Other -148,760,49 -148,760,49 (III)Profit allotment -81,063,160.00 -229,823,655.00 5.00 5.00 1.Providing of surplus reserves 2.Providing of common risk provisions 3.Allotment to the owners (or -148,760,49 -148,760,49 -81,063,160.00 -229,823,655.00 shareholders) 5.00 5.00 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 comprehensive income carry-over retained earnings 6.Other (V). Special reserves -218,142.40 -218,142.40 -203,401.01 -421,543.41 1. Provided this year 838,616.00 838,616.00 19,739.28 858,355.28 -1,056,758.4 2.Used this term -1,056,758.40 -223,140.29 -1,279,898.69 0 (VI)Other IV. Balance at the end of this term 754,010, 152,973,2 73,364,395. 1,661,720, 18,106,330.88 621,112, 3,359,027,7 6,493,586,4 408,607,577.36 6,902,194,049.76 56 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 400.00 19.65 79 375.63 807.78 34.25 72.40 Legal Representative: Zheng Bin Person in charge of accounting:Zhao Jiamao Person in charge of Accounting institute: Jin Chan Amount in last year In RMB The first half year of 2019 Owner’s equity Attributable to the Parent Company Other Equity instrument Pref Minor Items Less: Other Common Total of owners’ Share Capital Specialized Surplus Retained shareholders’ erre Sust Shares Comprehensiv risk Other Subtotal Othe reserves equity Capital reserve reserves profit equity d aina in stock e Income provision r stoc ble k debt 754,010, 151,684, 1,377,168,522 621,112, 3,082,544,107 6,007,540,929 I.Balance at the end of last year 21,020,671.47 416,989,449.71 6,424,530,378.87 400.00 419.65 .74 807.78 .52 .16 Add: Change of accounting policy Correcting of previous errors Merger of entities under common control Other II.Balance at the beginning of current 754,010, 151,684, 1,377,168,522 621,112, 3,082,544,107 6,007,540,929 21,020,671.47 416,989,449.71 6,424,530,378.87 year 400.00 419.65 .74 807.78 .52 .16 215,149,629.9 223,888,645.2 III.Changed in the current year -784,037.71 9,523,053.01 -22,025,528.44 201,863,116.76 0 0 215,149,629.9 160,325,133.0 375,474,762.9 (1)Total comprehensive income 24,655,019.60 400,129,782.50 0 0 0 (II)Investment or decreasing of capital by owners 1.Ordinary Shares invested by shareho lders 57 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 2 . Holders of other equity instruments invested capital 3.Amount of shares paid and accounted as owners’ equity 4.Other -150,802,079. -150,802,079. (III)Profit allotment -46,358,790.00 -197,160,869.99 99 99 1.Providing of surplus reserves 2.Providing of common risk provisions 3.Allotment to the owners (or -150,802,079. -150,802,079. -46,358,790.00 -197,160,869.99 shareholders) 99 99 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 comprehensive income carry-over retained earnings 6.Other (V). Special reserves -784,037.71 -784,037.71 -321,758.04 -1,105,795.75 1. Provided this year 434,456.69 434,456.69 434,456.69 2.Used this term 1,218,494.40 1,218,494.40 321,758.04 1,540,252.44 58 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 (VI)Other 754,010, 151,684, 1,592,318,152 621,112, 3,092,067,160 6,231,429,574 IV. Balance at the end of this term 20,236,633.76 394,963,921.27 6,626,393,495.63 400.00 419.65 .64 807.78 .53 .36 Legal Representative: Zheng Bin Person in charge of accounting:Zhao Jiamao Person in charge of Accounting institute: Jin Chan 8.Statement of change in owner’s Equity of the Parent Company Amount in this period In RMB The first half year of 2020 Other Equity instrument Other Items Pref Capital Less: Shares Specialized Total of owners’ Share capital Sust Comprehensive Surplus reserves Retained profit Other erred reserves in stock reserve equity aina Other Income stoc ble k debt 138,953,250 2,709,696,426.4 I.Balance at the end of last year 754,010,400.00 1,784,509,419.91 6,000,000.00 602,356,402.65 5,995,525,899.08 .09 3 Add: Change of accounting policy Correcting of previous errors Other II.Balance at the beginning of current 138,953,250 2,709,696,426.4 754,010,400.00 1,784,509,419.91 6,000,000.00 602,356,402.65 5,995,525,899.08 year .09 3 73,364,395. III.Changed in the current year -122,479,780.31 132,471,497.10 -63,372,679.00 79 (I)Total comprehensive income -122,479,780.31 281,231,992.10 158,752,211.79 (II) Investment or decreasing of capital 73,364,395. -73,364,395.79 by owners 79 1.Ordinary Shares invested by shareho 73,364,395. -73,364,395.79 lders 79 59 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 2 . Holders of other equity instruments invested capital 3.Amount of shares paid and accounted as owners’ equity 4.Other (III)Profit allotment -148,760,495.00 -148,760,495.00 1.Providing of surplus reserves 2.Allotment to the owners (or -148,760,495.00 -148,760,495.00 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 comprehensive income carry-over retained earnings 6.Other (V) Special reserves 1. Provided this year 700,061.12 700,061.12 2.Used this term 700,061.12 700,061.12 (VI)Other 60 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 138,953,250 73,364,395. 2,842,167,923.5 IV. Balance at the end of this term 754,010,400.00 1,662,029,639.60 6,000,000.00 602,356,402.65 5,932,153,220.08 .09 79 3 Legal Representative: Zheng Bin Person in charge of accounting:Zhao Jiamao Person in charge of Accounting institute: Jin Chan Amount in last year In RMB The first half year of 2019 Other Equity instrument Less: Other Items Capital Specialized Retained Share Capital Shares in Comprehensive Surplus reserves Other Total of owners’ equity Preferr Sust reserves reserve profit ed aina Other stock Income stock ble debt 138,953,250.0 2,602,026,967 I.Balance at the end of last year 754,010,400.00 1,377,784,111.74 7,609,505.31 602,356,402.65 5,482,740,637.35 9 .56 Add: Change of accounting policy Correcting of previous errors Other II.Balance at the beginning of 138,953,250.0 2,602,026,967 754,010,400.00 1,377,784,111.74 7,609,505.31 602,356,402.65 5,482,740,637.35 current year 9 .56 III.Changed in the current year 214,917,350.34 -218,275.51 46,687,677.41 261,386,752.24 197,489,757.4 (I)Total comprehensive income 214,917,350.34 412,407,107.74 0 (II) Investment or decreasing of capital by owners 1 . Ordinary Shares invested by sha reholders 2.Holders of other equity instrume nts invested capital 3.Amount of shares paid and accounted as owners’ equity 61 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 4.Other -150,802,079. (III)Profit allotment -150,802,079.99 99 1.Providing of surplus reserves 2.Allotment to the owners (or -150,802,079. -150,802,079.99 shareholders) 99 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 comprehensive income carry-over retained earnings 6.Other (V) Special reserves -218,275.51 -218,275.51 1. Provided this year 434,456.69 434,456.69 2.Used this term 652,732.20 652,732.20 (VI)Other 138,953,250.0 2,648,714,644 IV. Balance at the end of this term 754,010,400.00 1,592,701,462.08 7,391,229.80 602,356,402.65 5,744,127,389.59 9 .97 Legal Representative: Zheng Bin Person in charge of accounting:Zhao Jiamao Person in charge of Accounting institute: Jin Chan 62 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 III.Basic Information of the Company 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 7th meeting of the 8th term of Board held on August 27, 2020. 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 Note VI of Financial statement notes IV. Basis of compiling the finance report (I) 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. V. Principal Accounting Policies and Estimations 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. 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 63 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 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 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. Joint venture arrangements classification and Co-operation accounting treatment None 8. 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. 9. 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’ 64 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 equity in the balance sheet. 10.Financial instruments (1) Classification of financial assets and financial liabilities Financial assets are divided into the following three categories upon initial recognition: 1) Financial assets measured in amortized cost; 2) Financial assets measured at fair value, whose changes are included in other comprehensive income; 3) Financial assets measured at fair value, whose changes are included in current profits and losses. Financial liabilities are divided into the following four categories upon initial recognition: 1) Financial liabilities measured at fair value, whose changes are included in current profits and losses; 2) Financial liabilities resulting from the transfer of financial assets that do not meet the conditions for derecognition or continue to be involved in the transferred financial assets; 3) Financial guarantee contracts that do not belong to the above 1) or 2), and loan commitments that do not belong to the above 1) and lend at a lower than market interest rate; 4) Financial liabilities measured in amortized cost. (2) Recognition basis, measurement methods and conditions for derecognition of financial assets and financial liabilities However, if the accounts receivable initially recognized by the company do not contain significant financing components or the company does not consider the financing components in the contract for less than one year, the initial measurement shall be made according to the transaction price. 2) Subsequent measurement methods of financial assets ①Financial assets measured at amortized cost The actual interest rate method is adopted for subsequent measurement according to amortized cost. Gains or losses arising from financial assets measured in amortized cost that are not part of any hedging relationship are included in current profits and losses when derecognition, reclassification, amortization according to the effective interest rate method, or impairment recognition. ② Debt instruments investment measured at fair value, whose changes are included in other comprehensive income Fair value is adopted for subsequent measurement. Interest, impairment losses or gains and exchange gains and losses calculated by the effective interest rate method are included in the current profits and losses, while other gains or losses are included in other comprehensive income. Upon termination of recognition, the accumulated gains or losses previously included in other comprehensive income shall be transferred out of other comprehensive income and included in current profits and losses. ③ Equity instrument investments measured at fair value, whose changes are included in other comprehensive income Fair value is adopted for subsequent measurement. Dividends received (except those that belong to the part of investment cost recovery) are included in current profits and losses, and other gains or losses are included in other comprehensive income. Upon termination of recognition, the accumulated gains or losses previously included in other comprehensive income shall be transferred out of other comprehensive income and included in retained income. ④ Financial assets measured at fair value and changes included in current profits and losses The fair value is adopted for subsequent measurement, and the resulting gains or losses (including interest and dividend income) are included in the current profits and losses unless the financial asset is part of the hedging relationship. 3) Subsequent measurement methods of financial liabilities ① Financial liabilities measured at fair value, whose changes are included in current profits and losses 65 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Such financial liabilities include transactional financial liabilities (including derivatives of financial liabilities) and financial liabilities designated to be measured at fair value, whose changes are included in current profits and losses. Such financial liabilities are subsequently measured at fair value. Changes in the fair value of financial liabilities designated to be measured at fair value, whose changes are included in the profits and losses of the current period due to changes in the company's own credit risk are included in other comprehensive income, unless such treatment will cause or expand accounting mismatch in profits and losses. Other gains or losses arising from such financial liabilities (including interest expenses and changes in fair value except for changes in the company's own credit risk) are included in the current profits and losses unless the financial liabilities are part of the hedging relationship. Upon termination of recognition, the accumulated gains or losses previously included in other comprehensive income shall be transferred out of other comprehensive income and included in retained income. ② Financial liabilities resulting from the transfer of financial assets that do not meet the conditions for derecognition or continue to be involved in the transferred financial assets B. Financial assets have been transferred, and the transfer meets the provisions of the Accounting Standards for Business Enterprises No.23-Transfer of Financial Assets on the derecognition of financial assets. ② When the current obligation of a financial liability (or part thereof) has been discharged, the financial liability (or part thereof) shall be derecognized accordingly. (3) Recognition basis and measurement method of financial asset transfer If the company has transferred almost all risks and rewards in the ownership of financial assets, it shall terminate the recognition of the financial assets and separately recognize the rights and obligations arising from or retained in the transfer as assets or liabilities; If almost all risks and rewards on the ownership of financial assets are retained, the transferred financial assets shall continue to be recognized. If the company neither transfers nor retains almost all risks and rewards in the ownership of the financial asset, the following situations shall be handled respectively: 1) If the control over the financial asset is not retained, the recognition of the financial asset shall be terminated, and the rights and obligations generated or retained in the transfer shall be separately recognized as assets or liabilities; 2) If the control over the financial assets is retained, the relevant financial assets shall be recognized according to the extent of continuing involvement in the transferred financial assets, and the relevant liabilities shall be recognized accordingly. If the overall transfer of financial assets meets the conditions for derecognition, the difference between the following two amounts shall be included in the current profits and losses: 1) The book value of the transferred financial assets on the derecognition date; 2) The sum of the consideration received for the transfer of financial assets and the amount of the corresponding derecognized portion of the accumulated amount of changes in fair value originally directly included in other comprehensive income (the financial assets involved in the transfer are debt instrument investments measured at fair value, whose changes are included in other comprehensive income). If a part of the financial asset is transferred and the transferred part meets the conditions for derecognition as a whole, the book value of the financial asset before transfer shall be apportioned between the derecognition part and the continuing recognition part according to their respective relative fair values on the transfer date, and the difference between the following two amounts shall be included in the current profits and losses: 1) The book value of the derecognition part; 2) The sum of the consideration of the derecognized portion and the amount of the corresponding derecognized portion of the cumulative amount of changes in fair value originally directly included in other comprehensive income (financial assets involved in transfer are debt instrument investments measured at fair value, whose changes are included in other comprehensive income). (5) Impairment of financial instruments 1) Impairment measurement and accounting treatment of financial instruments On the basis of expected credit losses, the company carries out impairment treatment on financial assets measured at amortized cost, debt instrument investments measured at fair value whose changes are included in other 66 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 comprehensive income, lease receivables, loan commitments other than financial liabilities classified as financial liabilities measured at fair value, whose changes are included in current profits and losses, financial liabilities not measured at fair value, whose changes are included in current profits and losses, or financial guarantee contracts that are not financial asset transfers which do not meet the conditions for derecognition or which continue to be involved in financial liabilities formed by transferred financial assets, and recognize loss provisions. Expected credit loss refers to the weighted average of the credit losses of financial instruments weighted by the risk of default. Credit loss refers to the difference between the cash flow of all contracts discounted according to the original real interest rate and the expected cash flow of all contracts receivable according to the contract, that is, the present value of all cash shortages. Among them, the Company discounts the financial assets purchased or originated with credit impairment at the actual interest rate adjusted by credit. For financial assets purchased or originated that have suffered credit impairment, the company will only recognize the accumulated changes in expected credit losses during the entire duration since initial recognition as loss reserves on the balance sheet date. For accounts receivable that do not contain significant financing components or that the company does not consider financing components in contracts of not more than one year, the company uses simplified measurement methods to measure the loss reserve according to the expected credit loss amount equivalent to the entire duration. For lease receivables and receivables containing significant financing components, the company uses simplified measurement methods to measure the loss reserve according to the expected credit loss amount equivalent to the entire duration. For financial assets other than the above measurement methods, the company evaluates whether its credit risk has increased significantly since the initial recognition on each balance sheet date. If the credit risk has increased significantly since the initial recognition, the company shall measure the loss reserve according to the amount of expected credit loss during the whole duration. If the credit risk has not increased significantly since the initial recognition, the company shall measure the loss reserve according to the expected credit loss amount of the financial instrument within the next 12 months. The company uses the available reasonable and reliable information, including forward-looking information, to determine whether the credit risk of financial instruments has increased significantly since the initial recognition by comparing the risk of default on the balance sheet date with the risk of default on the initial recognition date. The company evaluates expected credit risks and measures expected credit losses on the basis of individual financial instruments or combinations of financial instruments. When based on the combination of financial instruments, the company divides financial instruments into different combinations based on common risk characteristics. For financial assets measured in amortized cost, the loss reserve shall be offset against the book value of the financial assets listed in the balance sheet; For creditor's rights investments measured at fair value, whose changes are included in other comprehensive income, the company recognizes its loss reserve in other comprehensive income, which does not offset the book value of the financial asset. (2) Financial instruments for assessing expected credit risks and measuring expected credit losses by combination Items Basis for determining combination Methods of measuring expected credit loss Other receivables-associated Taking related parties within the scope Refer to the historical credit loss experience, combine the transaction combinations within the of consolidated financial statements as current situation with the forecast of future economic scope of consolidated financial credit risk characteristics, other situation, and calculate the expected credit loss through statements receivables are combined default risk exposure and the expected credit loss rate within 67 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 the next 12 months or the whole duration. Taking aging as the credit risk Refer to the historical credit loss experience, combine the characteristic, combine other current situation with the forecast of future economic Other receivables-aging combination receivables except the related party situation, and calculate the expected credit loss through receivables within the scope of the default risk exposure and the expected credit loss rate within consolidated financial statements the next 12 months or the whole duration. (3) Expected credit risks and measuring expected credit losses by combination 1) Methods of specific combination and measurement of expected credit loss Items Basis for determining combination Methods of measuring expected credit loss Bank acceptance bills receivable Refer to the historical credit loss experience, combine the current situation and the forecast of the future economic Bill type situation, compile a comparison table between the aging of Commercial acceptance bills accounts receivable and the expected credit loss rate during receivable the whole duration, and calculate the expected credit loss. Refer to the historical credit loss experience, combine the Accounts receivable-associated Taking related parties within the scope of current situation and the forecast of the future economic transaction combinations within consolidated financial statements as credit situation, compile a comparison table between the aging of the scope of consolidated risk characteristics, receivables are accounts receivable and the expected credit loss rate during financial statements combined the whole duration, and calculate the expected credit loss. Refer to the historical credit loss experience, combine the Taking aging as the credit risk characteristic, Accounts receivable-aging current situation and the forecast of the future economic combine receivables except the related party situation, compile a comparison table between the aging of combination receivables within the scope of the accounts receivable and the expected credit loss rate during consolidated financial statements the whole duration, and calculate the expected credit loss. 2) Account receivable——Table of Aging of Aging Combination and Expected Credit Loss Rate for the Whole Duration Receivables Aging Expected credit loss rate (%) Within 1 year (inclusive, the same below) 5.00 1-2 years 10.00 2-3 years 30.00 3-4 years 60.00 4-5 years 80.00 Over 5 years 100.00 (6) Setoff of Financial Assets and Liabilities The financial assets and liabilities of the company are shown separately in the balance sheet which do not offset 68 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 each other. However, when the following conditions are met at the same time, the net amount after mutual offset is shown on the balance sheet. 1. The company has the legal right to offset the recognized amount, and this legal right is currently enforceable. 2. The company plans to settle the financial assets or liquidate the financial liabilities at the same time for netting settlement. If the transfer of financial assets does not meet the conditions for the termination of recognition, the company shall not set off the transferred financial assets and related liabilities. 11.Notes receivable For details, please refer to Section XI(5)-10 Financial instrument of this report. 12.Account receivable For details, please refer to Section XI(5)-10 Financial instrument of this report. 13. Financing of receivables For details, please refer to Section XI(5)-10 Financial instrument of this report. 14.Other account receivable Methods for determining expected credit losses of other receivables and accounting treatment For details, please refer to Section XI(5)-10 Financial instrument of this report. 15..Inventories (1) Inventory classification 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 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 69 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Basis of amortizing: one-off 2.Packaging materials Basis of amortizing: one-off 16.Contract assets 17.Constract cost 18.Held-for-sale asset None 19.Creditor's rights investment None 20.Other Creditor's rights investment None 21.Long-term account receivable None 22. 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 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. 70 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 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 The difference between the book value and the actual purchase price of the disposed equity is recorded into the current profit and loss. With regard to the remaining equity, which still has a significant impact on the invested entity or exercises joint control with other parties, it shall be converted to equity accounting; if the entity under investment can no longer be controlled, jointly controlled or significantly affected, it shall be recognized as a financial asset, Accounting shall be carried out in accordance with the relevant provisions of Accounting Standards for Enterprises No. 22-recognition and Measurement of Financial Instruments. (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. 71 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 23. Investment property The measurement mode of investment property Not applicable 24. 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 Categories Basis of depreciation Depreciation age (year) Retain value rate Annual depreciation ratio Straight average on Houses & buildings 20-30 4 4.8-3.2 period Straight average on Equipment & machinery 8-15 4 12-6.4 period Straight average on Transportation equipment 4-8 4 24-12 period Straight average on Office equipment 5 4 19.2 period (3)Recognition basis, valuation and depreciation method for financing leased fixed assets None 25. Construction in process 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. 26. 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 72 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 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. 27. Biological assets None 28. Oil-gas assets None 29. Assets of the right to use None 30. 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. Items Amortiing years Land using right 50 Patent 5-20 Software 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. 73 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 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. 31. 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. 32. Long-term amortizable expenses None 33.Constract Liabilities Before transferring goods to the customer, if the customer has already paid the contract consideration or the company has obtained the right to unconditionally receive the contract consideration, the company shall, at the earlier of the time between the actual payment by the customer and the payment due, make the paid or receivable sums of money the contract liabilities. 34. 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, 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. 74 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 3. 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. 4. 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. 35. Lease liabilities None 36. 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. 37.Share-based Payment None 38 . Other financial instruments such as preferred shares and perpetual capital securities None 39.Revenues 1. Recognizing of revenue Since the starting date of the contract, the company shall evaluate the contract, identifies each individual performance obligation contained in, and determines whether each individual performance obligation is performed within a certain period of time or at a certain point of time. The performance obligation is defined as fulfillment within a certain period of time if one of the following conditions is met, otherwise, it is defined as fulfilled at a certain point in time: (1) The customer obtains and consumes the economic benefits brought by the company's performance while the company performs the contract; 2) The 75 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 customer can control the goods under manufacturing or services during the company's performance; (3) The goods or services produced during the company's performance have irreplaceable uses, and the company has the right to accumulate for the completed performances during the entire contract period. For obligations performed within a certain period of time, the company recognizes revenue in accordance with the performance progress in that period. If the performance progress cannot be reasonably determined, and the cost incurred is expected to be compensated, the revenue shall be recognized according to the amount of the cost incurred until the performance progress can be reasonably determined. For obligations performed at a certain point in time, revenue shall be recognized at the point when the customer obtains control of the relevant goods or services. When judging whether the customer has obtained control of the product, the company shall consider the following points: (1) The company has the current right to receive payment for the product, that is, the customer has the current payment obligation for the product; (2) The company has transferred the legal ownership of the product to the customer, that is, the customer has the legal ownership of the product; (3) The company has transferred the physical product to the customer, that is, the customer has physically taken possession of the product; (4) The company has transferred the main risks and rewards on the ownership of the product to the customer, that is, the customer has obtained the main risks and rewards on the ownership of the product; (5) the customer has accepted the product; (6) other signs that the customer has obtained control of the product. 2. Principle of income measurement (1) The company shall measure revenue based on the transaction price allocated to each individual performance obligation. The transaction price is the amount of consideration that the company expects to be entitled to receive due to the transfer of goods or services to customers, while does not include payments received on behalf of third parties and payments expected to be returned to customers. (2) If there is variable consideration in the contract, the company shall determine its best estimate according to the expected value or the most likely amount, but the transaction price including the variable consideration shall not exceed the accumulated amount that, if relevant uncertainty is eliminated, will most likely have no significant reversal. (3) If there is any significant financing component in the contract, the company shall determine the transaction price based on the amount payable in cash when the customer assumes control of the goods or services. The difference between transaction price and contract consideration shall be amortized through effective interest method during the contract period. (4) If the contract contains two or more performance obligations, the company shall, on date of the contract, allocate the transaction price to each individual obligation item in accordance with the relative proportion of the separate selling price of promised goods. 3. Specific methods of revenue recognition The company's selling of steam turbines, gas turbine or spare parts shall belong to the performance of obligation at a certain point in time. Recognition of domestic product revenue shall meet the following conditions: The company has 76 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 delivered the product to the customer in accordance with the contract and the customer has accepted the product. the payment has been recovered or the receipt of payment has been obtained and the relevant economic benefits are likely to flow in, the main risk and remuneration on ownership of the product has been transferred, and the legal ownership of the goods has been transferred. Recognition of export product revenue shall meet the following conditions: The company has declared the product in accordance with the contract, obtained the bill of lading, recovered the payment or obtained the receipt of payment and related economic benefits are likely to flow in, the main risks and rewards on the ownership of the product have been transferred, and the legal ownership of the goods has been transferred. 40. 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 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 77 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 offset relevant loan costs. 41. 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. 42. Lease (1)Accounting of operational 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. (2) Accounting Method for Financing Leases None 78 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 43. Other significant accounting policies and estimates 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. 44.Change of main accounting policies and estimations (1)Change of main accounting policies Contents and causes of changes in accounting policies Approval procedure Remarks In July 2017, the Ministry of Finance issued the "Notice on the Amendment and Issuance of the 'Accounting Standards for Business Enterprises No. 14-Revenue' (Cai Kuai [2017] No. 22)" targeting companies that are listed both at home and abroad or those are listed abroad and adopt international finance reporting standards or corporate accounting standards to prepare financial statements, effected on January 1, 2018. For other domestic listed companies, effected on January 1, 2020. The new The fourth resolution of the revenue standard incorporates the original standards on revenue and construction eighth meeting of board of contract into a unified model. Replace the transfer of control rights to the transfer of directors risk rewards as the time of revenue recognition. Identify individual performance obligations contained in the contract and recognize revenue at each performance. Provide clearer guidance for the accounting treatment of contracts that include multiple transaction arrangements. Provide clear rules for revenue recognition and measurement of certain specific transactions (or events). 1. Changes in important accounting policies (1) Changes in accounting policies caused from amendment of corporate accounting standards 1) The company will, since January 1, 2020, implement the "Accounting Standards for Business Enterprises No. 14-Revenue" revised by the Ministry of Finance (hereinafter referred to as the new revenue standards). In accordance with relevant regulations for convergence of the old and new standards, the comparable period information is not adjusted, and the cumulative impact from new standards on the first implementation date is retrospectively adjusted to the amount of retained earnings and other related items in the financial statements at the beginning of the reporting 79 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 period. ① The main impact of the implementation of the new financial instrument standards on the company's financial statements on January 1, 2020 is as follows: Items Balance sheet December 31,2019 Impact of the adjustment of new January 1,2020 financial instrument Advance payment 2,818,130,397.17 -2,818,130,397.17 Contract liabilities 2,818,130,397.17 2,818,130,397.17 (2) Change of main accounting estimations Not applicable (3)Adjustments to the Financial Statements at the Beginning of the First Execution Year of any New Standards Governing Financial Instruments, Revenue or Leases from year 2020 Applicable Whether need to adjust the balance sheet account at the beginning of the year Consolidated balance sheet In RMB Amount involved in the Items December 31,2019 January 1,2020 adjustment Current asset: Monetary fund 1,756,320,237.50 1,756,320,237.50 Settlement provision Outgoing call loan Transactional financial assets 854,210,990.44 854,210,990.44 Derivative financial assets Notes receivable 46,484,259.65 46,484,259.65 Account receivable 2,025,081,342.74 2,025,081,342.74 Financing of receivables 680,279,893.94 680,279,893.94 Prepayments 388,562,447.80 388,562,447.80 Insurance receivable Reinsurance receivable Provisions of Reinsurance contracts receivable 80 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Other account receivable 45,520,789.89 45,520,789.89 Including:Interest receivable Dividend receivable 27,827,292.60 27,827,292.60 Repurchasing of financial assets Inventories 2,051,290,269.07 2,051,290,269.07 Contract assets Assets held for sales Non-current asset due within 1 year Other current asset 71,592,063.09 71,592,063.09 Total of current assets 7,919,342,294.12 7,919,342,294.12 Non-current assets Loans and payment on other’s behalf disbursed Creditor' rights investment Other creditor's rights investment Long-term receivable Long term share equity investment 22,129,585.83 22,129,585.83 Other equity instruments investment 2,490,376,886.96 2,490,376,886.96 Other non-current financial assets 142,244,014.16 142,244,014.16 Property investment Fixed assets 724,702,558.18 724,702,558.18 Construction in progress 799,410,358.84 799,410,358.84 Production physical assets Oil & gas assets Use right assets Intangible assets 275,140,367.22 275,140,367.22 Development expenses Goodwill Long-germ expenses to be amortized Deferred income tax asset 226,769,514.65 226,769,514.65 Other non-current asset Total of non-current assets 4,680,773,285.84 4,680,773,285.84 Total of assets 12,600,115,579.96 12,600,115,579.96 Current liabilities 81 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Short-term loans 97,840,187.21 97,840,187.21 Loan from Central Bank Borrowing funds Transactional financial liabilities Derivative financial liabilities Notes payable 227,961,541.12 227,961,541.12 Account payable 1,030,408,716.74 1,030,408,716.74 Advance receipts 2,818,130,397.17 -2,818,130,397.17 Contract liabilities 2,818,130,397.17 2,818,130,397.17 Selling of repurchased financial assets Deposit taking and interbank deposit Entrusted trading of securities Entrusted selling of securities Employees’ wage payable 96,205,949.57 96,205,949.57 Tax payable 34,521,756.98 34,521,756.98 Other account payable 82,148,405.19 82,148,405.19 Including:Interest payable Dividend payable Fees and commissions payable Reinsurance fee payable Liabilities held for sales Non-current liability due within 1 year 200,319.30 200,319.30 Other current liability Total of current liability 4,387,417,273.28 4,387,417,273.28 Non-current liabilities: Reserve fund for insurance contracts Long-term loan 22,435,762.23 22,435,762.23 Bond payable Including:preferred stock Sustainable debt Lease liability Long-term payable 730,460,508.59 730,460,508.59 Long-term remuneration payable to staff Expected liabilities 32,202,504.57 32,202,504.57 82 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Deferred income 51,713,417.61 51,713,417.61 Deferred income tax liability 316,910,472.07 316,910,472.07 Other non-current liabilities Total non-current liabilities 1,153,722,665.07 1,153,722,665.07 Total of liability 5,541,139,938.35 5,541,139,938.35 Owners’ equity Share capital 754,010,400.00 754,010,400.00 Other equity instruments Including:preferred stock Sustainable debt Capital reserves 152,973,219.65 152,973,219.65 Less:Shares in stock Other comprehensive income 1,784,195,156.34 1,784,195,156.34 Special reserve 18,324,473.28 18,324,473.28 Surplus reserves 621,112,807.78 621,112,807.78 Common risk provision Retained profit 3,276,880,091.53 3,276,880,091.53 Total of owner’s equity belong to the parent 6,607,496,148.58 6,607,496,148.58 company Minority shareholders’ equity 451,479,493.03 451,479,493.03 Total of owners’ equity 7,058,975,641.61 7,058,975,641.61 Total of liabilities and owners’ equity 12,600,115,579.96 12,600,115,579.96 Parent Company Balance Sheet In RMB Amount involved in the Items December 31,2019 January 1,2020 adjustment Current asset: Monetary fund 1,017,072,165.81 1,017,072,165.81 Transactional financial assets 532,040,990.44 532,040,990.44 Derivative financial assets Notes receivable 4,712,981.35 4,712,981.35 Account receivable 1,470,224,608.96 1,470,224,608.96 Financing of receivables 376,974,822.75 376,974,822.75 83 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Prepayments 222,187,452.27 222,187,452.27 Other account receivable 31,067,688.80 31,067,688.80 Including:Interest receivable Dividend receivable 27,827,292.60 27,827,292.60 Inventories 1,402,933,995.29 1,402,933,995.29 Contract assets Assets held for sales Non-current asset due within 1 year Other current asset 30,332,464.25 30,332,464.25 Total of current assets 5,087,547,169.92 5,087,547,169.92 Non-current assets: Creditor's rights investment Other Creditor's rights investment Long-term receivable Long term share equity investment 897,978,418.75 897,978,418.75 Other equity instruments investment 2,490,376,886.96 2,490,376,886.96 Other non-current financial assets 119,345,893.13 119,345,893.13 Property investment Fixed assets 413,089,308.63 413,089,308.63 Construction in progress 246,387,266.69 246,387,266.69 Production physical assets Oil & gas assets Use right assets Intangible assets 161,688,374.81 161,688,374.81 Development expenses Goodwill Long-germ expenses to be amortized Deferred income tax asset 174,060,251.09 174,060,251.09 Other non-current asset Total of non-current assets 4,502,926,400.06 4,502,926,400.06 Total of assets 9,590,473,569.98 9,590,473,569.98 Current liabilities Short-term loans Transactional financial liabilities 84 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Derivative financial liabilities Notes payable 10,000,000.00 10,000,000.00 Account payable 623,426,940.99 623,426,940.99 Advance receipts 1,908,382,258.12 -1,908,382,258.12 Contract Liabilities 1,908,382,258.12 1,908,382,258.12 Employees’ wage payable 49,620,330.21 49,620,330.21 Tax payable 3,776,368.66 3,776,368.66 Other account payable 54,954,443.47 54,954,443.47 Including:Interest payable 0.00 0.00 Dividend payable 0.00 0.00 Liabilities held for sales Non-current liability due within 1 year Other current liability Total of current liability 2,650,160,341.45 2,650,160,341.45 Non-current liabilities: Long-term loan Bond payable Including:preferred stock Sustainable debt Lease liability Long-term payable 545,357,990.20 545,357,990.20 Long-term remuneration payable to staff Expected liabilities 32,202,504.57 32,202,504.57 Deferred income 50,316,362.61 50,316,362.61 Deferred income tax liability 316,910,472.07 316,910,472.07 Other non-current liabilities Total non-current liabilities 944,787,329.45 944,787,329.45 Total of liability 3,594,947,670.90 3,594,947,670.90 Owners’ equity Share capital 754,010,400.00 754,010,400.00 Other equity instruments Including:preferred stock Sustainable debt Capital reserves 138,953,250.09 138,953,250.09 85 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Less:Shares in stock Other comprehensive income 1,784,509,419.91 1,784,509,419.91 Special reserve 6,000,000.00 6,000,000.00 Surplus reserves 602,356,402.65 602,356,402.65 Retained profit 2,709,696,426.43 2,709,696,426.43 Total of owners’ equity 5,995,525,899.08 5,995,525,899.08 Total of liabilities and owners’ equity 9,590,473,569.98 9,590,473,569.98 (4)Retrospective Restatement of Previous Comparative Data due to the First Execution of any New Standards Governing Financial Instruments or Leases from year 2020 Not applicable 45.Other:None VI. Taxation 1. Main categories and rates of taxes Category of taxes Tax base Tax rate VAT Sales of goods or providing of taxable labor service 13%,6% City maintenance and Turnover tax payable 5%,7% construction tax Enterprise income tax Amount of income taxable 15%,25% For those on price basis, taxes are paid at 1.2% of the balance of House tax original value of the property after deducting of 30%; for those on 1.2%,12% rental basis, taxes are paid at 12% of the rental. Educational surcharge Turnover tax payable 3% Local education additional Turnover tax payable 2% 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 Hangzhou Guoneng 15% Steam Turbine Engineering Co.,Ltd. Hangzhou Zhongneng Steam Turbine Power Hangzhou Zhongneng Steam Turbine Power (Indonesia) Co., Ltd. (Indonesia) Co., Ltd. registered in Indonesia 86 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 overseas subsidiaries, the applicable local relevant tax laws and regulations. Other Subsidiary(Domestic) 25% 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. As the result of the re-examination on 2020 high-tech enterprises has not yet been determined, the corporate income tax is temporarily reduced at a 15% tax rate. 2. According to the document “Notice for Qualification of High-tech Enterprises” (GKHZD〔2020〕No.32) issued by Department of Science and Technology High-tech Development Center, the Company along with The Casting Company – subsidies of the Company, were qualified as high-tech enterprises for term of three years. Therefore they enjoy 15% of tax for 2020. 3. According to the Notice on Implementing the Policy of Inclusive Tax Relief for Small and Micro Enterprises (CS [2019] No.13) of the Ministry of Finance and the State Administration of Taxation, the subsidiary companies Kunming Hangzhonneng Steam Turbine Power Technology Service Co., Ltd., Guangxi Hangzhonneng Steam Turbine Technology Service Co., Ltd., Tangshan Hangneng Steam Turbine Power Technology Service Co., Ltd., Jilin Hangzhongneng Steam Turbine Power Technology Service Co., Ltd., Urumqi Hangzhonneng Steam Turbine Technology Service Co., Ltd. and Luoyang Hangqi Steam Turbine Technology Service Co., Ltd. shall adopt preferential tax policies for small profit-making enterprises in 2020. For the part of annual taxable income not exceeding 1 million yuan, it shall be included in the taxable income by 20%,% and the enterprise income tax shall be calculated and paid at 20%; For the part with an annual taxable income over 1 million yuan but less than 3 million yuan, it shall be included in the taxable income by 50%, and the enterprise income tax shall be calculated and paid at 20%. 3.Other None VII. Notes to the Consolidated Financial Statements 1.Monetary funds In RMB Items End of term Beginning of term Cash in stock 81,043.96 272,578.83 Bank deposit 1,388,051,822.12 1,680,635,443.37 Other monetary fund 143,702,266.55 75,412,215.30 Total 1,531,835,132.63 1,756,320,237.50 87 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Incl: Total of accounts saved overseas 7,359,628.75 11,220,811.11 The total amount of money that has restrictions on use due to 69,831,476.27 110,412,586.58 mortgage , pledge or freezing Other note: The bank deposits at the end of the period include the use of restricted guarantee deposit of RMB 92,000.00; the other currency funds at the end of the period include the use of restricted bank acceptance deposit of RMB 68,856,676.27, the guarantee deposit of RMB 882,800.00, and the use of unrestricted repurchase of treasury stock special account funds RMB 72,761,124.46 he can transfer out the payment of RMB 1,201,665.82 due to the acceptance bill at any time. 2. Transactional financial assets In RMB Items End of term Beginning of term Financial assets measured at fair value through profit or loss 1,233,985,614.62 854,210,990.44 Of which : Equity instrument investment 1,715,614.62 2,040,990.44 Financing product 1,232,270,000.00 852,170,000.00 Of which: Total 1,233,985,614.62 854,210,990.44 3. Derivative financial assets None 4. Notes receivable (1) Notes receivable listed by category In RMB Items End of term Beginning of term Bank acceptance bill 25,322,344.94 30,437,261.72 Trade acceptance bill 45,731,685.68 16,046,997.93 Total 71,054,030.62 46,484,259.65 88 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 In RMB End of term Beginning of term Book balance Bad debt provision Book balance Bad debt provision Category Proportion( Proportion( Book value Proportion Proportion( Book Value Amount Amount Amount Amount %) %) (%) %) Accrual of bad debt provision by portfolio 82,460,961.46 100.00% 11,406,930.84 13.83% 71,054,030.62 47,328,838.49 100.00% 844,578.84 1.78% 46,484,259.65 Of which: Bank acceptance 25,322,344.94 31.00% 0.00 25,322,344.94 30,437,261.72 64.31% 30,437,261.72 Commercial acceptance 57,138,616.52 69.00% 11,406,930.84 19.96% 45,731,685.68 16,891,576.77 35.69% 844,578.84 5.00% 16,046,997.93 Total 82,460,961.46 100.00% 11,406,930.84 13.83% 71,054,030.62 47,328,838.49 100.00% 844,578.84 1.78% 46,484,259.65 Accrual of bad debt provision by portfolio: 11,406,930.84yuan In RMB End of term Name Book balance Bad debt provision Proportion% Commercial acceptance by 57,138,616.52 11,406,930.84 19.96% portfolio term Total 57,138,616.52 11,406,930.84 -- 89 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Relevant information of the provision for bad debts will be disclosed with reference to the disclosure method of other receivables if the provision for bad debts of bills receivable is accrued according to the general model of expected credit loss: □ Applicable √ Not applicable (2) Accounts receivable withdraw, reversed or collected during the reporting period The withdrawal amount of the bad debt provision: In RMB Amount of change in the current period Opening Reversed or Category Closing balance balance Accrual collected Write-off Other amount Commercial acceptance 844,578.84 10,740,824.20 178,472.20 0.00 0.00 11,406,930.84 by portfolio term Total 844,578.84 10,740,824.20 178,472.20 11,406,930.84 Of which the significant actual write-off accounts receivable: Not applicable (3)Notes receivable pledged by the Company at the end of the period None (4)Notes receivable which had endorsed by the Company or had discounted and had not due on the balance sheet date at the period-end In RMB Amount of recognition termination at the Amount of not terminated recognition at the Items period-end period-end Bank acceptance bill 15,647,625.54 Total 15,647,625.54 (5)Notes transferred to accounts receivable because drawer of the notes fails to executed the contract or agreement None (6) The actual write-off accounts receivable None 90 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 5. Accounts receivable (1) Accounts receivable disclosed by category In RMB End of term Beginning of term Book balance Bad debt provision Book balance Bad debt provision Category Proportion Proporti Book value Proportion Book value Amount Amount Amount Proportion % Amount % on % % Accrual of bad debt 3,047,721.94 0.10% 3,047,721.94 100.00% provision by single item Including: Accrual of bad debt 3,149,069,584.24 100.00% 1,095,065,896.56 34.77% 2,054,003,687.68 3,056,135,168.07 99.90% 1,031,053,825.33 33.74% 2,025,081,342.74 provision by portfolio Including: Total 3,149,069,584.24 100.00% 1,095,065,896.56 34.77% 2,054,003,687.68 3,059,182,890.01 100.00% 1,034,101,547.27 33.80% 2,025,081,342.74 Accrual of bad debt provision by portfolio: 1,095,065,896.56 yuan In RMB Closing balance Name Book balance Bad debt provision Proportion Accrual of bad debt provision 3,149,069,584.24 1,095,065,896.56 34.77% by portfolio Total 3,149,069,584.24 1,095,065,896.56 -- 91 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Relevant information of the provision for bad debts will be disclosed with reference to the disclosure method of other receivables if the provision for bad debts of bills receivable is accrued according to the general model of expected credit loss: Not applicable Disclosure by aging In RMB Aging Closing balance Within 1 year(Including 1 year) 1,064,517,972.95 1-2 years 742,589,235.91 2-3 years 373,245,355.16 Over 3 years 968,717,020.22 3-4 years 199,679,718.64 4-5 years 166,188,325.66 Over 5 years 602,848,975.92 Total 3,149,069,584.24 (2) Accounts receivable withdraw, reversed or collected during the reporting period The withdrawal amount of the bad debt provision: In RMB Amount of change in the current period Category Opening balance Reversed or Closing balance Accrual Write-off Other collected amount Provision for bad debts shall 3,047,721.94 3,047,721.94 be withdrawn on an individual basis Accrual of bad debt provision 1,031,006,728.47 71,127,520.77 7,068,352.68 1,095,065,896.56 by portfolio Total 1,031,006,728.47 71,127,520.77 10,116,074.62 1,095,065,896.56 (3) The actual write-off accounts receivable None 92 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 (4)The ending balance of account receivables owed by the imputation of the top five parties In RMB Name Amount Proportion(%) Bad debt provision Client 1 717,819,306.07 22.79% 312,265,318.85 Client 2 218,722,248.37 6.95% 148,431,273.75 Client 3 102,167,200.56 3.24% 6,537,862.02 Client 4 80,455,224.36 2.55% 11,647,977.91 Client 5 67,863,644.77 2.16% 67,863,644.77 Total 1,187,027,624.13 37.69% (5)Account receivable which terminate the recognition owning to the transfer of the financial assets None (6)The amount of the assets and liabilities formed by the transfer and the continues involvement of accounts receivable None 6. Financing of receivables In RMB Items End of term Beginning of term Notes receivable 663,430,298.85 680,279,893.94 Total 663,430,298.85 680,279,893.94 Changes in the current period of receivables financing and fair value □ Applicable √ Not applicable Relevant information of the financing provision for bad debts will be disclosed with reference to the disclosure method of other receivables if the provision for bad debts of bills receivable is accrued according to the general model of expected credit loss: Not applicable 7. Prepayments (1)Aging analysis In RMB End of term Beginning of term Aging Book balance Proportion(%) Book balance Proportion(%) 93 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Within 1 year 407,653,650.74 89.94% 350,460,871.05 90.19% 1-2 years 27,977,000.00 6.17% 29,444,937.03 7.58% 2-3 years 11,844,055.00 2.61% 3,055,563.05 0.79% Over 3 years 5,754,044.20 1.28% 5,601,076.67 1.44% Total 453,228,749.94 -- 388,562,447.80 -- Notes of the reasons of the prepayment ages over 1 year with significant amount but failed settled in time (2) Top 5 of the closing balance of the prepayment collected according to the prepayment target Name Amount Proportion(%) SIEMENS (CHINA) LIMITED 127,678,790.00 28.17% Shanghai Xiji Generator Co., Ltd. 37,408,095.58 8.25% Siemens Industrial Turbo machinery AB 23,674,974.26 5.22% Kailuowen thermal Power technology (Jiangsu) Co., Ltd. 19,364,627.00 4.27% Mitsubishi Hitachi Electric Gas Engine Service (Nanjing) 16,363,851.14 3.61% Co., Ltd Total 224,490,337.98 49.53% 8. Other account receivable In RMB Nature Closing balance Opening balance Dividend receivable 122,983,614.70 27,827,292.60 Other 19,071,291.16 17,693,497.29 Total 142,054,905.86 45,520,789.89 (1)Interest receivable :None 2) Significant overdue interest None 3)Bad-debt provision Not applicable (2)Dividend receivable (1)Dividend receivable In RMB Items End of term Beginning of term Hangzhou Bank 122,983,614.70 27,827,292.60 Total 122,983,614.70 27,827,292.60 94 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 2) Significant dividend receivable aged over 1 year In RMB Whether occurred Items Closing balance Aging Reason impairment and its judgment basis Hangzhou Bank 27,827,292.60 1-4 years Equity pledge No Total 27,827,292.60 -- -- -- 3)Bad-debt provision Not applicable (3) Other accounts receivable 1) Other accounts receivable classified by the nature of accounts In RMB Nature Closing book balance Opening book balance Accrual of bad debt provision by portfolio: 33,551,927.96 32,955,532.35 Total 33,551,927.96 32,955,532.35 2)Bad-debt provision In RMB Stage 1 Stage 2 Stage 3 Expected credit Expected credit losses for the Bad Debt Reserves Expected credit loss over life Total losses over the next entire duration (credit (no credit impairment) 12 months impairment occurred) Balance as at January 1, 2020 724,820.99 254,659.24 14,282,554.83 15,262,035.06 Balance as at January 1, 2020 in —— —— —— —— current --Transfer to Stage 2 -321,894.20 321,894.20 --Transfer to Stage 3 -186,179.70 186,179.70 --Transfer to Stage 2 --Transfer to Stage 1 Provision in the current period 403,985.52 35,200.21 132,353.69 571,539.42 Turn back in the current period 110,792.87 82,713.92 1,159,430.89 1,352,937.68 Reseller in the current period Write - off in the current period 95 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Other Balance as at June 30, 2020 696,119.44 342,860.03 13,441,657.33 14,480,636.80 Loss provision changes in current period, change in book balance with significant amount Not applicable Disclosure by aging In RMB Aging Closing balance Within 1 year(Including 1 year) 14,546,253.61 1-2 years 4,247,456.70 2-3 years 1,039,713.21 Over 3 years 13,718,504.44 3-4 years 1,298,936.82 4-5 years 910,852.25 Over 5 years 11,508,715.37 Total 33,551,927.96 3) Accounts receivable withdraw, reversed or collected during the reporting period The withdrawal amount of the bad debt provision: In RMB Amount of change in the current period Category Opening balance Reversed or collected Closing balance Accrual Write-off Other amount Accrual of bad debt provision by 15,262,035.06 571,539.42 1,352,937.68 14,480,636.80 portfolio: Total 15,262,035.06 571,539.42 1,352,937.68 14,480,636.80 4) The actual write-off accounts receivable None 96 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 5) Top 5 of the closing balance of the other accounts receivable collated according to the arrears party In RMB Proportion of the total year end balance of Closing balance of Name Nature Closing balance Aging the accounts bad debt provision receivable Shanghai Customs Waigaoqiao Office Deposit 3,710,320.94 Over 5 years 11.06% 3,710,320.94 Temporary Shandong Jinan Power Generation Equipment payment 1,360,000.00 Over 5 years 4.05% 1,360,000.00 Plant Co., ltd. receivable Temporary Hangzhou Boiler Group Co., Ltd. payment 1,000,000.00 Over 5 years 2.98% 1,000,000.00 receivable Within 1 Nantong Jiaxing Thermal Power Co., Ltd. Deposit 700,000.00 2.09% 35,000.00 year Hangzhou Yuhang District Finance Bureau Deposit 567,423.00 Over 3 years 1.69% 387,854.80 non-tax income settlement account Total -- 7,337,743.94 -- 21.87% 6,493,175.74 6) Accounts receivable involved with government subsidies None 7) Other account receivable which terminate the recognition owning to the transfer of the financial assets None 8) The amount of the assets and liabilities formed by the transfer and the continues involvement of other accounts receivable None 9. Inventories Whether the company need to comply with the disclosure requirements of the real estate industry No (1)Category of Inventory In RMB 97 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Closing book balance Opening book balance Provision for Provision for Items inventory inventory Book balance Book value Book balance Book value impairment impairment Raw materials 453,367,537.48 102,764,892.58 350,602,644.90 496,493,898.48 102,764,892.58 393,729,005.89 Goods in progress 780,364,308.68 62,335,747.40 718,028,561.28 777,309,981.82 62,335,747.40 714,974,234.42 Stock goods 1,313,451,640.66 123,488,458.84 1,189,963,181.82 1,067,164,081.98 124,577,053.23 942,587,028.76 Total 2,547,183,486.82 288,589,098.82 2,258,594,388.00 2,340,967,962.28 289,677,693.21 2,051,290,269.07 (2) Falling price reserves of inventory In RMB Increased amount Decreased amount Reverse Items Opening balance Reverse or Closing balance Withdrawal or Other write-off write-off Raw materials 102,764,892.58 102,764,892.58 Goods in progress 62,335,747.40 62,335,747.40 Stock goods 124,577,053.23 1,088,594.39 123,488,458.84 Total 289,677,693.21 1,088,594.39 288,589,098.82 (3) Notes of the closing balance of the inventory which includes capitalized borrowing expenses (4) Completed unsettled assets formed from the construction contact at the period-end 10.Contact assets None 11. Assets divided as held-to-sold None 12. Non-current assets due within 1 year None 13. Other current assets In RMB 98 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Items End of term Beginning of term Bank financing product Input tax deductible 45,412,042.24 65,719,458.12 To verify the input tax Prepaid income tax 1,167,776.62 1,771,366.76 Rent charge 915,551.87 4,101,238.21 Property losses pending disposal 91,183.29 Total 47,586,554.02 71,592,063.09 14.Creditor's right investment:None 15.Other Creditor's right investment: None 16. Long-term accounts receivable : None 99 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 17. Long-term equity investment In RMB Increase /decrease Closing Withdrawa Addition Decreas Profits and losses Other Cash bonus or balance of Investees Opening balance Closing balance al e in on investments comprehensi Changes l of impairment in other profits announced Other investme investme Recognized under ve impairmen equity to issue provision nt nt the equity method income t provision 2. Affiliated Company Zhejiang Zhongrun Gas turbine 10,883,488.70 10,883,488.70 technology Co., Ltd. Zhejiang Ranchuang Touping Machinery 11,246,097.13 -944,417.34 10,301,679.79 Co., Ltd. Subtotal 22,129,585.83 -944,417.34 21,185,168.49 Total 22,129,585.83 -944,417.34 21,185,168.49 18. Other equity instruments investment In RMB Items End of term Beginning of term Hangzhou Bank 2,346,283,027.78 2,490,376,886.96 Total 2,346,283,027.78 2,490,376,886.96 Itemized disclosure of the current non - trading equity instrument investment In RMB 100 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Amount of other Reasons for other Accumu Reasons for being measured at fair value and whose Recognized Accumulat comprehensive income comprehensive Name lating changes are included in other comprehensive dividend income ing profit transferred to retained income transferred to profit income earnings retained earnings The company's intention to hold this equity i nstrument is not to sell or repurchase it in the near f Hangzhou Bank 95,156,322.10 uture, but to hold it for a long time to obtain stable dividends. 101 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 19.Other non-current assets In RMB Items End of term Beginning of term Classified as financial assets measured by fair value and whose changes are included 87,445,986.77 142,244,014.16 in the current profit and loss Total 87,445,986.77 142,244,014.16 20. Investment property (1) Investment property adopted the cost measurement mode Not applicable (2) Investment property adopted fair value measurement mode Not applicable (3) Details of investment property failed to accomplish certification of property None 21. Fixed assets In RMB Items End of term Beginning of term Fixed assets 692,659,233.28 724,702,558.18 Total 692,659,233.28 724,702,558.18 (1) Details In RMB Transportation Items Houses & buildings Machinery equipment Office equipment Total equipment I. Original price 1. Balance at 723,688,582.73 1,017,986,468.77 27,373,257.78 98,848,619.12 1,867,896,928.40 period-beginning 2.Increase in the current 0.00 3,614,300.92 346,866.82 2,447,593.23 6,408,760.97 period (1) Purchase 0.00 3,614,300.92 346,866.82 1,271,552.58 5,232,720.32 102 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 ( 2 ) Transferred from constru 0.00 0.00 0.00 1,176,040.65 1,176,040.65 ction in progress (3)Increased of 0.00 0.00 0.00 0.00 0.00 Enterprise Combination 3.Decreased amount of 3,855,956.51 2,899,770.36 627,118.00 1,453,706.35 8,836,551.22 the period (1)Dispose 3,855,956.51 2,899,770.36 627,118.00 1,453,706.35 8,836,551.22 4. Balance at period-end 719,832,626.22 1,018,700,999.33 27,093,006.60 99,842,506.00 1,865,469,138.15 II.Accumulated amortization 1.Opening balance 223,930,021.17 811,201,684.42 20,847,765.51 81,033,928.62 1,137,013,399.72 2.Increased amount of 10,794,157.09 22,244,367.55 272,845.70 681,057.59 33,992,427.93 the period (1) Withdrawal 10,794,157.09 22,244,367.55 272,845.70 681,057.59 33,992,427.93 3.Decrease in the 154,238.25 2,260,007.51 567,349.64 1,386,377.64 4,367,973.04 reporting period (1)Disposal 154,238.25 2,260,007.51 567,349.64 1,386,377.64 4,367,973.04 4.Closing balance 234,569,940.01 831,186,044.46 20,553,261.57 80,328,608.57 1,166,637,854.61 III. Impairment provision 1.Opening balance 1,504,928.24 3,600,121.12 1,075,921.14 6,180,970.50 2.Increase in the reporting period (1)Withdrawal 3.Decrease the reporting 0.00 0.00 0.00 8,920.24 8,920.24 period (1)Disposal 0.00 0.00 0.00 8,920.24 8,920.24 4. Closing balance 1,504,928.24 3,600,121.12 0.00 1,067,000.90 6,172,050.26 IV. Book value 1.Book value of the 483,757,757.97 183,914,833.75 6,539,745.03 18,446,896.53 692,659,233.28 period-end 2.Book value of the 498,253,633.32 203,184,663.23 6,525,492.27 16,738,769.36 724,702,558.18 period-begin 103 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 (2) List of temporarily idle fixed assets None (3) Fixed assets leased in from financing lease None (4) Fixed assets leased out from operation lease None (5) Details of fixed assets failed to accomplish certification of property In RMB Items Book value Reason Steam turbine power Building 210,830,073.49 In process Complete sets of factory 39,920,071.94 In process (6)Liquidation of fixed assets None 22. Construction in progress In RMB Items End of term Beginning of term Construction in progress 1,077,342,567.61 799,410,358.84 Total 1,077,342,567.61 799,410,358.84 (1) List of construction in progress In RMB End of term Beginning of term Provision Provision Items Book balance for Book value Book balance for Book value impairment impairment New Plant project 1,025,968,176.03 1,025,968,176.03 770,118,198.38 770,118,198.38 104 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Software project 7,779,939.24 7,779,939.24 7,779,939.24 7,779,939.24 Other project 35,161,210.08 35,161,210.08 13,337,401.59 13,337,401.59 Prepayment for 8,433,242.26 8,433,242.26 8,174,819.63 8,174,819.63 equipment or projects Total 1,077,342,567.61 1,077,342,567.61 799,410,358.84 799,410,358.84 105 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 (2)Changes of significant construction in progress In RMB Including g: Capitaliz Source Capitaliz capitaliz Name of Transferred to Proportion Project ation of of Budget Opening balance Increase Other decrease End balance ation of ation of project fixed assets % process interest fundin interest interest rate (%) g this period New Plant 173,328.76 770,118,198.38 255,849,977.65 1,025,968,176.03 59.19% 59.68% 7,806,913.54 1,155,487.14 1.20% Other project Software 797.00 7,779,939.24 7,779,939.24 97.62% 95.00% Other project Other project 13,337,401.59 24,648,440.91 1,176,040.65 1,648,591.77 35,161,210.08 Other Prepayment for equipment 8,174,819.63 8,073,290.56 7,814,867.93 8,433,242.26 Other or projects Total 174,125.76 799,410,358.84 288,571,709.12 1,176,040.65 9,463,459.70 1,077,342,567.61 -- -- 7,806,913.54 1,155,487.14 -- (3) List of the withdrawal of the impairment provision of the construction in progress None (4)Engineering material None 106 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 23. Productive biological assets (1) Productive biological assets measured at cost methods Not applicable (2) Productive biological assets measured at fair value Not applicable 24. Oil and gas assets Not applicable 25. Right to use assets None 107 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 26. Intangible assets (1) Information In RMB Non patent Items Land using right Patent Software Total technology I. Original price 1. Balance at 332,298,312.33 309,433.96 0.00 6,203,204.75 338,810,951.04 period-beginning 2.Increase in the current 0.00 0.00 0.00 853,300.84 853,300.84 period (1) Purchase 853,300.84 853,300.84 (2)Internal Development (3)Increased of Enterprise Combination 3.Decreased amount of the period (1)Disposal 4.Closing balance 332,298,312.33 309,433.96 0.00 7,056,505.59 339,664,251.88 II.Accumulated amortization 1.Opening balance 61,769,705.92 263,920.58 0.00 1,636,957.32 63,670,583.82 2.Increased amount of 3,331,432.68 2,735.10 0.00 654,480.03 3,988,647.81 the period (1) Withdrawal 3,331,432.68 2,735.10 0.00 654,480.03 3,988,647.81 3.Decreased amount of the period (1)Disposal 4.Closing balance 65,101,138.60 266,655.68 0.00 2,291,437.35 67,659,231.63 III. Impairment provision 1.Opening balance 2.Increased amount of the 108 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 period (1) Withdrawal 3.Decreased amount of the period (1)Disposal 4.Closing balance IV. Book value 1.Closing book value 267,197,173.73 42,778.28 0.00 4,765,068.24 272,005,020.25 2.Opening book 270,528,606.41 45,513.38 0.00 4,566,247.43 275,140,367.22 value (2) Details of fixed assets failed to accomplish certification of land use right None 27. R&D expenses None 28. Goodwill None 29. Long-term amortized expenses None 30. Deferred income tax assets/deferred income tax liabilities (1) Deferred income tax assets had not been off-set In RMB End of term Beginning of term Items Deductible temporary Deferred income tax Deductible temporary Deferred income tax difference assets difference assets Provision for Asset Impairment 1,409,447,153.05 217,427,661.47 1,342,544,151.28 207,111,114.23 Internal trade profit not realized 51,940,784.12 9,292,438.63 49,610,648.35 8,942,918.26 Deductible loss Revenue from changes in fair value 39,466,566.08 5,919,984.91 37,770,873.39 5,665,631.00 generated by financial assets 109 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 classified at fair value through profit or loss Estimated liabilities 32,202,504.57 4,830,375.69 32,202,504.57 4,830,375.69 Temporary difference such as 1,463,169.81 219,475.47 1,463,169.81 219,475.47 amortizing of software expense Total 1,534,520,177.63 237,689,936.17 1,463,591,347.40 226,769,514.65 (2) Deferred income tax liabilities had not been off-set In RMB End of term Beginning of term Items Deductible temporary Deferred income tax Deductible temporary Deferred income tax difference liabilities difference liabilities Appraisal and appreciation of combined assets of companies not under the same control Changes in fair value of investments in other creditor's rights Changes in fair value of investments 1,955,328,987.78 293,299,348.17 2,099,422,846.96 314,913,427.04 in other equity instruments Revenue from changes in fair value generated by financial assets 4,526,027.39 678,904.11 classified at fair value through profit or loss Accumulated depreciation 6,180,970.50 927,145.58 6,180,970.50 927,145.57 Deferred income 2,765,210.50 414,781.57 1,574,345.96 390,995.35 Total 1,964,275,168.78 294,641,275.32 2,111,704,190.81 316,910,472.07 Note: The opening balance and closing balance of unoffset deferred income tax assets or deferred income tax liabilities are presented according to the category of temporary differences, and the corresponding amount of temporary differences. (3)Deferred income tax assets and liabilities are presented as net amount after neutralization In RMB Deferred Income Tax Temporarily Deductable or Deferred Income Tax Temporarily Deductable or Items Assets or Liabilities at Taxable Difference at the Assets or Liabilities at Taxable Difference at the the End of Report End of Report Period the Beginning of Beginning of Report Period 110 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Period Report Period Deferred income tax 237,689,936.17 226,769,514.65 assets Deferred income tax 294,641,275.32 316,910,472.07 liabilities (4)Details of income tax assets not recognized In RMB Items End of term Beginning of term Deductible provisional differences 6,276,380.47 3,522,673.60 Deductible losses 3,869,065.70 3,363,565.02 Total 10,145,446.17 6,886,238.62 (5) The un-recognized deductible losses of deferred income tax assets will due in the following years In RMB Year End of term Beginning of term Remark 2021 507,583.48 507,583.48 2022 2,762,296.57 2,762,296.57 2023 93,489.37 93,489.37 2024 195.60 195.60 2025 505,500.68 Total 3,869,065.70 3,363,565.02 -- 31. Other non-current assets None 32. Short-term borrowings (1) Category of short-term borrowings In RMB Items End of term Beginning of term Mortgage Borrowings 60,000,000.00 60,085,066.67 Guarantee Borrowing 137,700,000.00 37,755,120.54 Total 197,700,000.00 97,840,187.21 Note: 111 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 (2) List of the short-term borrowings overdue but not return None 33. Transactional financial liabilities None 34. Derivative financial liability None 35.Notes payable In RMB Items End of term Beginning of term Bank acceptance bill 240,170,034.62 227,961,541.12 Total 240,170,034.62 227,961,541.12 36. Accounts payable (1) List of accounts payable In RMB Items End of term Beginning of term Goods 1,237,895,913.72 976,932,194.16 Equipment and Engineering 97,035,784.64 53,476,522.58 Total 1,334,931,698.36 1,030,408,716.74 (2) Notes of the accounts payable aging over one year None 37. Advances received (1) List of Advances received None (2) Notes of the accounts payable aging over one year None 112 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 38.Contract liabilities In RMB Items End of term Beginning of term Goods 3,099,833,164.03 2,818,130,397.17 Total 3,099,833,164.03 2,818,130,397.17 39. Payroll payable (1) List of Payroll payable In RMB Items Beginning of term Increased this period Decreased this period End of term Short-term compensation 71,207,361.75 351,348,653.30 371,917,120.47 50,638,894.58 Post-employment benefits - defined contribution plans 24,998,587.82 35,354,803.41 42,573,301.08 17,780,090.15 Dismissal welfare 18,678.00 18,678.00 Total 96,205,949.57 386,722,134.71 414,509,099.55 68,418,984.73 (2)Presentation of short-term compensation In RMB Items Opening balance Increase Decrease Closing balance (1) Salary, bonus, allowance and subsidy 53,459,703.08 281,526,390.60 311,371,037.89 23,615,055.79 (2) Employee benefits 16,415,741.25 9,133,138.48 7,282,602.77 (3) Social insurance expenses 7,315,733.29 18,930,218.11 19,097,217.83 7,148,733.57 Including: medical insurance premium 6,806,787.26 18,203,750.80 17,965,805.39 7,044,732.67 Work-related injury insurance premium 106,621.82 479,887.61 483,048.53 103,460.90 Maternity insurance premium 402,324.21 246,579.70 648,363.91 540.00 (4) Housing fund 104,323.96 27,175,999.00 27,180,689.00 99,633.96 (5) Labor union expenditures and 10,327,601.42 7,300,304.34 5,135,037.27 12,492,868.49 employee education expenses Total 71,207,361.75 351,348,653.30 371,917,120.47 50,638,894.58 (3) List of drawing scheme In RMB Items Opening balance Increase Decrease Closing balance 113 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 1.Basic pension 4,734,914.56 20,128,512.71 20,388,644.52 4,474,782.75 insurance 2. Unemployment 171,523.17 719,828.70 728,676.20 162,675.67 insurance 3. Enterprise annual fee 20,092,150.09 14,506,462.00 21,455,980.36 13,142,631.73 Total 24,998,587.82 35,354,803.41 42,573,301.08 17,780,090.15 40. Taxes Payable In RMB Items End of term Beginning of term VAT 11,926,489.68 7,102,002.57 Enterprise Income tax 32,029,014.71 16,168,061.29 Individual Income tax 847,846.85 1,471,876.19 City Construction tax 854,907.02 702,531.26 Property tax 348,901.25 5,020,068.01 Land use tax 98,643.50 3,152,220.40 Education subjoin 367,175.72 312,788.18 Locality Education subjoin 244,764.03 208,525.44 Other 191,545.90 383,683.64 Total 46,909,288.66 34,521,756.98 41.Other account payable In RMB Items End of term Beginning of term Interest payable 93,150.68 Dividend payable 148,760,495.00 Other account payable 68,855,390.60 82,148,405.19 Total 217,709,036.28 82,148,405.19 (1) Interest payable In RMB Items End of term Beginning of term Interest on short-term borrowings 93,150.68 114 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Total 93,150.68 Particulars of significant overdue unpaid interest: None (2) Dividends payable In RMB Items End of term Beginning of term Common dividends 148,760,495.00 Total 148,760,495.00 (3) Other accounts payable (1) Other accounts payable listed by nature of the account In RMB Items End of term Beginning of term Deposit 14,466,786.31 13,661,447.55 Provisional account payable 53,035,769.01 66,817,647.74 Other 1,352,835.28 1,669,309.90 Total 68,855,390.60 82,148,405.19 ② Significant other payables for over 1 year None 42. Liabilities classified as holding for sale None 43. Non-current liabilities due within 1 year In RMB Items End of term Beginning of term Long-term Borrowing loans due within 1 100,000.00 200,319.30 year Total 100,000.00 200,319.30 115 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 44. Other current-liabilities None 45. Long-term borrowing (1) Category of long-term loan In RMB Items End of term Beginning of term Mortgage loan 12,500,000.00 12,519,956.60 Guarantee loan 9,900,000.00 9,915,805.63 Total 22,400,000.00 22,435,762.23 46. Bonds payable None 47. Lease liability None 48. Long-term payable In RMB Items End of term Beginning of term Long term account payable 182,330,000.00 183,554,599.99 Special Payable 500,321,713.17 546,905,908.60 Total 682,651,713.17 730,460,508.59 (1) Long-term payable listed by nature of the account In RMB Items End of term Beginning of term CDB investment fund 182,000,000.00 182,000,000.00 Income payable of CDB 1,224,599.99 Drawing in administrative restructuring 330,000.00 330,000.00 Total 182,330,000.00 183,554,599.99 Other notes: According to the relevant agreement of the National Development Fund Investment Contract (hereinafter referred 116 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 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; According to the investment contract, Hangzhou Turbine Group will buy back its stake in the turbine heavy industry company by stages from 2019 to the national development fund. In addition, according to the share transfer agreement in the buyback stage, Hangzhou Turbine Group will resell the shares to the company at the same price after buyback. Hangzhou Turbine Group has bought back the investment of 26,000,000.00 yuan from the national development fund and resold it to the company at the same price. Turbine Heavy Industry Company received the above-mentioned investment from CDI Development Fund on December 27, 2016. According to the relevant investment return agreement in the investment contract, the Company will report it as long-term payables when preparing the consolidated financial statements. As of June 30, 2020, the accumulated recognized income payable for this investment is 8,662,333.35 yuan, of which the current recognized income payable is 1,156,133.35 yuan. (2) Special Payable In RMB Items Beginning of term Increased this period Decreased this period End of term Reason Compensation for 545,401,106.60 47,297,399.04 498,103,707.56 relocation Funding for Personnel 1,504,802.00 1,220,000.00 506,796.39 2,218,005.61 Training Subtotal 546,905,908.60 1,220,000.00 47,804,195.43 500,321,713.17 -- Other note: The decrease of relocation compensation in the current period is mainly because RMB 47,297,399.04 is transferred into other income. 49. Long term payroll payable None 50. Estimated liabilities In RMB 117 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Items End of term Beginning of term Reason Proceedings without judgement 32,202,504.57 32,202,504.57 Total 32,202,504.57 32,202,504.57 -- 51. Deferred income In RMB Decreased this Items Beginning of term Increased this period End of term Reason period Receive government Government Subsidy 51,713,417.61 47,297,399.04 48,488,263.58 50,522,553.07 subsidies Total 51,713,417.61 47,297,399.04 48,488,263.58 50,522,553.07 -- Details of government subsidies In RMB Amount Amount of transferred Asset-related Other income cost Other Beginning of New subsidy in to or Items recorded in the deducted in change End of term term current period non-operat income-relate ional current period the current s d income period Financial support for Related to 201,460.00 201,460.00 industrial projects assets Government subsidy for Related to 201,460.00 201,460.00 casting project assets Circular economy Related to 79,870.00 79,870.00 financial subsidy assets Related to Finance for casting project 914,265.00 914,265.00 assets Compensation for requisition and Related to 40,595,635.04 674,719.70 39,920,915.34 relocation-newly built assets complete plant Compensation for Related to requisition and relocation- 9,720,727.57 516,144.84 9,204,582.73 assets Heavy Equipment 118 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Compensation for requisition and Related to 0.00 47,297,399.04 47,297,399.04 0.00 relocation-- Relocation earnings expenditure Total 51,713,417.61 47,297,399.04 0.00 48,488,263.58 0.00 0.00 50,522,553.07 52. Other non-current liabilities None 53. Stock capital In RMB Increase/decrease this time (+ , - ) Transferre Balance Year-beginning Issuing of new Bonus Balance year-end d from Other Subtotal share shares reserves Total of capital 754,010,400.00 754,010,400.00 shares 54. Other equity instruments None 55. Capital reserves In RMB Year-beginning balance Increase in Decrease in the current Year-end balance Items the current period period Capital premium 92,942,694.56 92,942,694.56 Other capital reserves 60,030,525.09 60,030,525.09 Total 152,973,219.65 152,973,219.65 56. Treasury stock Year-beginning balance Increase in the current Decrease in the current Year-end balance Items period period 119 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Treasury stock 0.00 73,364,395.79 73,364,395.79 Total 73,364,395.79 73,364,395.79 120 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 57. Other comprehensive income In RMB Occurred current term Less:Amount transferred into Less:Prior period profit and loss in included in other After-tax the current period Items Opening balance Amount incurred composite income Less:Income tax After-tax attribute to attribute to Closing balance that recognied into before income tax transfer to retained expenses the parent company minority other income in the shareholder comprehensive current period income in prior period 1. Other comprehensive income that cannot be reclassified in the 1,784,509,419.91 -144,093,859.18 0.00 0.00 -21,614,078.87 -122,479,780.31 0.00 1,662,029,639.60 loss and gain in the future Changes in fair value of investments in other equity 1,784,509,419.91 -144,093,859.18 -21,614,078.87 -122,479,780.31 0.00 1,662,029,639.60 instruments II. Other Comprehensive income that will be reclassified -314,263.57 11,741.77 0.00 0.00 0.00 4,999.60 6,742.17 -309,263.97 subsequently to profit or loss Difference of translating of -314,263.57 11,741.77 4,999.60 6,742.17 -309,263.97 foreign currency accounts Total of other comprehensive 1,784,195,156.34 -144,082,117.41 0.00 0.00 -21,614,078.87 -122,474,780.71 6,742.17 1,661,720,375.63 121 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 income 58.Special reserves In RMB Items Beginning of term Increased this period Decreased this period End of term Labor safety expenses 18,324,473.28 838,616.00 1,056,758.40 18,106,330.88 Total 18,324,473.28 838,616.00 1,056,758.40 18,106,330.88 Other note, including changes and reason of change: 1) The decrease in the current period is due to the safety production expenses extracted by the company for the purchase of safety protection articles and equipment. 2) 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. 122 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 59. Surplus reserves In RMB Items Beginning of term Increased this period Decreased this period End of term Statutory surplus reserves 621,112,807.78 621,112,807.78 Total 621,112,807.78 621,112,807.78 60. Retained profit In RMB Items Amount of this period Amount of last period After adjustments: Retained profits at the period 3,082,544,107.52 3,276,880,091.53 beginning Add:Net profit belonging to the owner of the parent 345,138,064.00 230,908,137.72 company Common stock dividend payable 148,760,495.00 150,802,079.99 Retained profit at the end of this term 3,359,027,734.25 3,276,880,091.53 As regards the details of adjusted the beginning undistributed profits (1)As the retroactive adjustment on Enterprise Accounting Standards and its related new regulations, the affected beginning undistributed profits are RMB 0.00. (2) As the change of the accounting policy, the affected beginning undistributed profits are RMB 0.00. (3) As the correction of significant accounting error, the affected beginning undistributed profits are RMB 0.00 . (4) As the change of consolidation scope caused by the same control, the affected beginning undistributed profits are RMB 0.00. 61. Business income and Business cost In RMB Amount of this period Amount of last period Items Income Cost Income Cost Main Business 2,014,106,118.81 1,383,031,333.07 1,911,865,806.20 1,364,677,904.22 Other 7,561,307.46 4,782,964.35 8,315,896.83 1,726,497.04 Total 2,021,667,426.27 1,387,814,297.42 1,920,181,703.03 1,366,404,401.26 Information related to performance obligations: The Company’s sales segment has entered into legal and effective sales contracts/orders with the customers. The 123 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 contract/order clarifies the terms of the subject product, specification and model, transaction quantity, unit price, settlement method, delivery obligation, etc. The performance obligation is clear, and it is a single performance obligationat a single time point. The Company's various product contracts/orders have clear transaction prices, and the Company will confirm revenue after fulfilling the relevant performance obligations in accordance with the contract/order related agreements. Information related to the transaction price apportioned to the residual performance obligation: The income corresponding to the performance obligations that have not been performed or have been performed incompletely but the contract has been signed at the end of the reporting period is RMB5,578,080,000.00. 62.Taxes and surcharges In RMB Items Amount of this period Amount of last period City maintenance and construction tax 5,680,290.68 6,258,277.92 Education surtax 2,463,698.33 2,722,783.20 House tax 348,901.29 332,977.63 Land use tax 98,643.50 1,655,168.00 vehicle and vessel tax 23,420.08 26,793.80 Stamp tax 589,540.08 646,951.82 Locality Education surcharge 1,642,445.84 1,815,188.62 Total 10,846,939.80 13,458,140.99 63. Sales expense In RMB Items Amount of this period Amount of last period Employees’ remunerations 31,552,848.27 35,345,136.48 Transportation 19,931,848.17 17,358,879.72 Travel expenses 7,154,671.71 11,000,584.22 Business reception expenses 3,275,416.18 3,518,464.60 Consulting service fee 12,063,577.89 8,877,804.98 Conferences 497,005.86 857,979.45 Three charge 2,318,038.13 2,965,403.66 Advertising fee 213,848.82 645,456.86 Office expenses 434,985.47 294,547.52 Unit premium 199,193.37 443,566.81 Other 6,337,963.03 5,588,115.02 124 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Total 83,979,396.90 86,895,939.32 64. Administrative expense In RMB Items Amount of this period Amount of last period Employees’ remunerations 161,494,325.81 163,845,277.06 Enterprise relocation costs 50,087,508.78 1,960,436.28 Asset depreciation and amortizing 13,405,445.30 12,905,965.64 Business reception expenses 1,212,732.17 1,341,508.33 Rental fee, House rental, property management, water and power 8,307,176.25 11,812,826.37 Traveling fees 2,136,128.58 4,586,971.31 Material, low-value-consumable 1,004,457.29 1,755,846.28 Office expenses 1,343,574.69 1,171,344.18 Repair costs 4,308,076.64 1,822,902.87 Transpiration expenses 3,061,654.14 4,533,846.56 Other 14,738,720.53 29,431,401.10 Total 261,099,800.18 235,168,325.98 65. R&D Expense In RMB Items Amount of this period Amount of last period Labor cost 53,727,113.87 50,307,098.47 Direct materials 41,609,825.30 51,643,451.05 Depreciation expenses 6,079,964.29 6,273,507.75 Test and inspection fee 106,249.26 5,852,855.49 Commissioned research & development 0.00 906,393.74 Other 1,705,763.21 1,777,636.02 Total 103,228,915.93 116,760,942.52 66. Financial expenses In RMB Items Amount of this period Amount of last period 125 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Interest expense 3,356,373.45 7,163,329.72 Less: Incoming interests 14,883,294.02 13,686,150.29 Exchange gains/losses -8,469,678.49 1,120,184.65 Commission 1,027,188.78 1,072,945.23 Other -245,025.84 75,187.53 Total -19,214,436.12 -4,254,503.16 67. Other income In RMB Items Amount of this period Amount of last period Government subsidies 55,591,999.22 14,470,802.89 Individual tax commission refunds 124,644.18 1,290,786.14 Total 55,716,643.40 15,761,589.03 68. Investment income In RMB Items Amount of this period Amount of last period Long - term equity investment income calculated by the equity -944,417.34 method Revenue from changes in fair value generated by financial assets classified at fair value through Other comprehensive 716,981.13 2,763,749.82 income Other equity instrument investment during the holding period 95,156,322.10 67,968,801.50 of dividend income Revenue from changes in fair value generated by financial assets classified at fair value through Other comprehensive 23,459,182.58 28,727,771.34 income Total 118,388,068.47 99,460,322.66 69.Net exposure hedging income None 70. Gains on the changes in the fair value In RMB Source Amount of this period Amount of last period 126 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Revenue from changes in fair value generated by financial assets -597,375.82 -1,474,755.34 classified at fair value through profit or loss Total -597,375.82 -1,474,755.34 71. Credit impairment loss In RMB Source Amount of this period Amount of last period Losses on bad debt -69,862,741.38 6,225,948.82 Total -69,862,741.38 6,225,948.82 72. Losses from asset impairment In RMB Amount of this Items Amount of last period period II. Loss of inventory value and impairment of contract performance 197,857.88 costs Total 197,857.88 73. Asset disposal income In RMB Source Amount of this period Amount of last period Profits of disposal of fixed assets 247,052.27 -1,183.02 Total 247,052.27 -1,183.02 74. Non-operating income In RMB Recorded in the amount of the Items Amount of this period Amount of last period non-recurring gains and losses Compensation income 4,631,112.82 576,158.72 Payment not to be paid 1,240,080.10 127 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Others 344,931.26 168,680.44 Total 6,216,124.18 744,839.16 75. Non-operational expenditure In RMB Amount of last Recorded in the amount of the non-recurring Items Amount of this period period gains and losses Debt restructuring loss 115,229.71 526,315.79 115,229.71 Donations 77,709.00 70,000.00 77,709.00 Non-current assets scrapping loss 395,264.37 497,573.36 395,264.37 Compensation expenses 3,561,655.09 3,681,180.41 3,561,655.09 Fine, late payment 3,462.40 87,175.73 3,462.40 Special Fund for Water Conservancy 66.99 Construction Other 25,490.14 358,450.00 25,490.14 Total 4,178,810.71 5,220,762.28 4,178,810.71 76. Income tax expenses (1) Details In RMB Items Amount of this period Amount of last period Income tax of current term 40,874,307.40 37,570,544.94 Deferred income tax -10,328,875.72 -795,145.65 Total 30,545,431.68 36,775,399.29 (2) Adjustment process of accounting profit and income tax expenses In RMB Items Amount of this period Total profit 299,841,472.57 128 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Income tax expense at statutory / applicable tax rates 44,976,220.89 Effect of different tax rates applicable to subsidiaries 1,960,499.20 Adjustment for income tax in prior year 787,507.48 Income not subject to tax -16,910,365.81 Expenses not deductible for tax purposes 182,000.78 Affect the use of deferred tax assets early unconfirmed deductible losses -492,103.27 The current period does not affect the deferred tax assets recognized deductible temporary differences 41,672.41 or deductible loss Income tax expenses 30,545,431.68 77. Other Comprehensive income See note. 78. Notes Cash flow statement (1) Other cash received from business operation In RMB Items Amount of this period Amount of last period Court freezing of deposits 35,000,000.00 Deposit interest 14,883,294.02 12,657,033.86 Government subsidies received 7,103,735.64 8,849,942.78 Tender and other margin 6,080,914.51 3,376,150.00 Compensation income 63,697.10 Receipt of operating current account 1,229,295.31 900,072.19 Other 1,028,578.16 280,235.91 Total 65,325,817.64 26,127,131.84 2. Other cash paid for Operating activities In RMB Items Amount of this period Amount of last period Transportation 2,716,781.40 1,852,243.48 10,926,514.53 16,200,400.44 Travel expenses Business trips 4,510,515.68 4,675,551.83 129 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Maintaining 2,152,993.76 932,917.88 Property management and civil services 5,187,945.81 14,459,646.16 Deposit for bidding and others 9,105,081.51 7,002,407.01 Office expenses 2,045,990.41 1,125,869.55 Conferences 455,082.31 1,012,286.97 Consulting service fee 4,671,841.14 4,134,383.92 Transportation and vehicles 1,455,786.99 1,800,422.55 Other 41,350,002.54 48,915,743.06 Total 84,578,536.08 102,111,872.85 3.Other investment-related cash received In RMB Items Amount of this period Amount of last period Repurchasing of trusteeship 1,533,898,000.00 1,736,229,711.39 Receipt of levy and relocation 314,548,452.89 compensation Total 1,533,898,000.00 2,050,778,164.28 4. Other cash paid for investment activities In RMB Items Amount of this period Amount of last period Purchasing of financial products 1,913,998,000.00 1,157,904,000.00 Total 1,913,998,000.00 1,157,904,000.00 5. Other financing-related cash received None (6) Other cash paid relevant to financing activities In RMB Items Amount of this period Amount of last period Payment of CDB investment interest 2,380,733.34 2,530,666.67 Repurchase stocks 73,364,395.79 Total 75,745,129.13 2,530,666.67 130 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 79. Supplement Information for cash flow statement (1)Supplement Information for cash flow statement In RMB Supplementary Info. Amount of this period Amount of last period -- -- I. Adjusting net profit to cash flow from operating activities Net profit 269,296,040.89 184,666,913.74 Add: Impairment loss provision of assets 69,862,741.38 -6,423,806.70 Depreciation of fixed assets, oil and gas assets and consumable 33,992,427.93 30,399,548.46 biological assets Depreciation of use rights assets Amortization of intangible assets 3,988,647.81 3,642,170.34 Amortization of Long-term deferred expenses Loss on disposal of fixed assets, intangible assets and other -247,052.27 1,183.02 long-term deferred assets Loss on scrap of fixed assets 395,264.37 497,573.36 Loss to changes in fair value 597,375.82 1,474,755.34 Financial cost -5,113,305.04 8,467,221.60 Loss on investment -118,388,068.47 -99,460,322.66 Decrease of deferred income tax assets -10,920,421.52 -825,829.94 Increased of deferred income tax liabilities -22,269,196.75 37,957,275.53 Decrease of inventories -207,394,199.77 -28,264,852.32 Decease of operating receivables -167,471,610.97 -127,219,533.71 Increased of operating Payable 480,854,191.02 -12,688,968.55 Other -218,142.40 -1,563,923.88 Net cash flows arising from operating activities 326,964,692.03 -9,340,596.37 II. Significant investment and financing activities that without -- -- cash flows: Debts converted to capital Convertible debts mature within one year 131 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Fixed assets acquired under finance leases III. Net changes in cash and cash equivalents: -- -- Cash at end of year 1,462,003,656.36 1,686,405,098.11 Less: cash at beginning of year 1,645,907,650.92 1,262,186,817.20 Add:cash equivalents at end of year Less: cash equivalents at beginning of year Net increase of cash and cash equivalents -183,903,994.56 424,218,280.91 (2) Net Cash paid of obtaining the subsidiary None (3) Net Cash receive of disposal of the subsidiary None (4) Component of cash and cash equivalents In RMB Items End of term Beginning of term 1,462,003,656.36 1,645,907,650.92 I. Cash 81,043.96 272,578.83 Of which: Cash in stock Bank savings could be used at any time 1,645,633,443.37 1,387,959,822.12 Other monetary capital could be used at any time 1,628.72 73,962,790.28 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 III. Balance of cash and cash equivalents at the period end 1,462,003,656.36 1,645,907,650.92 132 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Including : Use of restricted cash and cash equivalents by parent or group sub sidiaries 80. Note of statement of changes in the owner's equity Explain "other" project name and adjustment amount of the adjustment of closing balance in previous year, etc. None 81. Assets with limitation on ownership or using rights In RMB Items Closing book value Causation o limitation Used as security for issuing of acceptance drafts and bill of Monetary capital 69,831,476.27 guarantees Collateral for obtaining bank loans and investment funds from Fixed assets 114,535,863.69 CDB Collateral for obtaining bank loans and investment funds from Intangible assets 82,929,877.00 CDB Transactional Financial Assets 1,715,614.62 In a lock-up period Collateral for obtaining bank loans and investment funds from Dividend receivable 43,605,292.60 CDB Collateral for obtaining bank loans and investment funds from Other equity instrument investment 389,040,400.00 CDB Collateral for obtaining bank loans and investment funds from Construction in process 619,207,141.72 CDB Financing receivable 125,299,879.99 Used as security for issuing of acceptance drafts and bill Total 1,446,165,545.89 -- 82. Monetary items in foreign currencies (1) Foreign currency monetary items In RMB Translated to RMB at end of Items Balance at end of period Exchange rate period Monetary capital -- -- 356,095,052.41 Incl:USD 48,874,318.87 7.0795 346,005,740.41 Euro 298,716.50 7.9610 2,378,082.06 133 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 HKD 5.51 0.9129 5.03 Yen 5,342,757.00 0.0658 351,596.16 Rupiah 15,929,932,352.59 0.0005 7,359,628.75 Account receivable -- -- 154,711,030.76 Incl:USD 20,414,411.55 7.0795 144,523,826.57 Euro 970,509.14 7.9610 7,726,223.26 HKD Rupiah 4,801,883,549.79 0.0005 2,218,470.20 SGD 47,726.12 5.0813 242,510.73 Long-term borrowing -- -- Incl:USD Euro HKD Account payable 26,465,651.62 Incl:USD 573,574.99 7.0795 4,060,624.14 Euro 2,385,626.86 7.9610 18,991,975.43 Rupiah 7,387,558,549.79 0.0005 3,413,052.05 Other receivable 3,539,750.00 Incl:USD 500,000.00 7.0795 3,539,750.00 (2) Note to overseas operating entities, including important overseas operating entities, which should be disclosed about its principal business place, function currency for bookkeeping and basis for the choice. In case of any change in function currency, the cause should be disclosed. Not applicable 83. Hedging None 84. Government subsidy 1) Government subsidies related to assets In RMB Amount included in current profit Items Amount Project and loss Compensation for requisition- Relocation costs 48,488,263.58 Other income 48,488,263.58 Social security fee refund 2,290,961.12 Other income 2,290,961.12 Hangzhou Economic and Technological Development 1,595,400.00 Other income 1,595,400.00 Zone promotes subsidies for scientific and 134 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 technological innovation & entrepreneurship Several policies for subsidies for the first (set) of 1,455,000.00 Other income 1,455,000.00 major technical equipment Awards for military-civilian integration industry 800,000.00 Other income 800,000.00 development Performance reward for high-level talents in Zhejiang 285,000.00 Other income 285,000.00 province Electricity subsidies for pandemic prevention and control to help companies resume work and 214,248.00 Other income 214,248.00 production Hero rewards for yield per unit area 200,000.00 Other income 200,000.00 Patent incentive rewards 120,600.00 Other income 120,600.00 Proportional employment subsidies for disabled 58,290.00 Other income 58,290.00 persons Financial subsidy for green enterprise development 50,000.00 Other income 50,000.00 Other 34,236.52 Other income 34,236.52 Total 55,591,999.22 55,591,999.22 (2)Government subsidy return Not applicable 85.Other :None VIII. Changes of merge scope 1. Business merger not under same control None 2. Business combination under the same control None 3. Counter purchase None 135 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 4. The disposal of subsidiary Whether there is a single disposal of the investment to subsidiary and lost control □ Yes √No Whether there are multiple transactions step by step dispose the investment to subsidiary and lost control in reporting period □ Yes √ No 5. Other reasons for the changes in combination scope None 6. Other None IX. Equity in other entities 1. Equity in subsidiary (1) The structure of the enterprise group Name of the Main business Share proportion % Reg. Add. Business property subsidiaries location Way of obtain Direct Indirect Zhejiang Steam Trubine Packaged Hangzhou Hangzhou Technologies Commerce 70.86% Incorporation Zhejiang Zhejiang Development Co., Ltd. Hangzhou Zhongneng Steam Hangzhou Hangzhou Manufacturing Turbine Power Co., 60.83% Incorporation Zhejiang Zhejiang Ltd. Hangzhou Steam Hangzhou Hangzhou Turbine Casting Co., Zhejiang Zhejiang Manufacturing 38.03% Incorporation Ltd. Hangzhou Steam Hangzhou Hangzhou Turbine Machinery Manufacturing Zhejiang Zhejiang 52.00% Incorporation Equipment Co., Ltd. 136 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Hangzhou Steam Turbine Auxiliary Hangzhou Hangzhou Machinery Co., Ltd. Zhejiang Zhejiang Manufacturing 87.53% Incorporation (Auxiliary Machinery Co.) Zhejiang Turbine Hangzhou Hangzhou Import & Export Co., Commerce 100.00% Incorporation Zhejiang Zhejiang Ltd. (Turbine Co.) Hangzhou Steam Hangzhou Hangzhou Turbine Heavy Zhejiang Zhejiang Manufacturing 100.00% Incorporation Industry Co., Ltd. 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 three seats in the board of five directors, it still had power of control over the Casting Company. 2.Major non-fully-Owned subsidiaries In RMB Gains/loss of the period Name of the Share portion of minor Dividend announced in the Balance of equity of minor attributable to minor subsidiaries shareholders period to minor shareholders shareholders at end of period shareholders Zhejiang Steam Turbine Packaged Technologies 29.14% 5,298,607.46 11,891,160.00 35,464,716.25 Development Co., Ltd. Hangzhou Zhongneng Steam 39.17% 9,593,156.54 40,372,000.00 118,900,238.50 turbine Power Co., Ltd. 137 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Hangzhou Steam Turbine Casting Co., 61.97% 8,558,134.94 159,213,425.42 Ltd. Hangzhou Steam Turbine Machinery 48.00% 12,596,256.65 28,800,000.00 64,993,798.78 Equipment Co., Ltd. Hangzhou Steam Turbine Auxiliary 12.47% 3,162,289.29 30,035,398.41 Machinery Co., Ltd. 138 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 3. Material financial information of major non-fully-owned subsidiaries In RMB End of term Beginning of term Subsidiaries Non-current Current Non-current Total of Non-current Current Non-current Total of Name Current assets Total of assets Current assets Total of assets assets liabilities liabilities liability assets liabilities liabilities liability Zhejiang Steam Turbine Packaged 336,710,841.28 223,819,247.1 223,819,247.1 325,685,155.5 333,894,411.2 189,590,803.8 189,590,803.8 Technologies 8,792,172.74 345,503,014.02 - 8,209,255.66 - 9 9 7 3 2 2 Development Co., Ltd. Hangzhou Zhongneng Steam turbine 1,183,766,254.68 977,115,113.5 977,445,113.5 1,168,147,686 1,238,717,046 887,176,126.3 887,506,126.3 69,710,164.00 1,253,476,418.68 330,000.00 70,569,360.17 330,000.00 9 9 .49 .66 7 7 Power Co., Ltd. Hangzhou Steam Turbine 415,751,268.77 151,294,951.6 279,297,070.9 303,094,125.9 387,332,497.0 158,618,200.3 545,950,697.3 271,808,868.6 295,641,685.8 Casting Co., 567,046,220.37 23,797,055.00 23,832,817.23 0 4 4 8 0 8 5 8 Ltd. Hangzhou Steam Turbine 264,845,211.12 156,178,089.5 157,726,007.9 275,472,861.6 305,708,203.7 134,998,739.2 136,546,657.6 28,284,544.26 293,129,755.38 1,547,918.40 30,235,342.07 1,547,918.40 Machinery 1 1 7 4 3 3 Equipment 139 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Co., Ltd. Hangzhou Steam Turbine Auxiliary 694,988,768.03 100,610,070.1 527,883,724.2 527,883,724.2 659,359,841.2 103,773,643.1 763,133,484.4 520,777,546.8 520,777,546.8 795,598,838.19 - - 6 0 0 9 8 7 4 4 Machinery Co., Ltd. In RMB Amount of current period Amount of previous period Subsidiaries Name Cash flow for Cash flow for business Turnover Net profit Total Misc Gains Turnover Net profit Total Misc Gains business activities activities Zhejiang Steam Turbine Packaged Technologies 88,950,190.73 18,180,159.42 18,180,159.42 50,678,440.33 132,931,775.76 14,770,529.69 14,770,529.69 16,677,677.17 Development Co., Ltd. Hangzhou Zhongneng Steam turbine Power 463,773,371.54 26,262,274.43 26,274,016.20 48,380,466.31 434,209,306.91 17,020,437.04 17,565,955.46 25,182,061.76 Co., Ltd. Hangzhou Steam Turbine Casting Co., 188,039,370.62 13,810,994.94 13,810,994.94 -2,650,207.83 201,953,546.36 -4,923,525.49 -4,923,525.49 -4,923,310.09 Ltd. Hangzhou Steam 131,998,141.54 26,242,201.36 26,242,201.36 10,784,295.08 134,372,561.91 31,959,387.07 31,959,387.07 34,542,152.34 Turbine Machinery 140 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Equipment Co., Ltd. Hangzhou Steam Turbine Auxiliary 307,652,062.40 25,359,176.36 25,359,176.36 3,444,358.68 238,328,136.56 6,346,621.51 6,346,621.51 1,340,271.89 Machinery Co., Ltd. 2. The transaction of the Company with its owner’s equity share changed but still controlling the subsidiary (1) Note to owner’s equity share changed in subsidiary None (2) The transaction’s influence to equity of minority shareholders and attributable to the owner's equity of the parent company None 3. Equity in joint venture arrangement or associated enterprise (1) Significant joint venture arrangement or associated enterprise None 141 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 (2)Major joint ventures and associates None (3) Main financial information of significant associated enterprise None (4) Summary financial information of insignificant joint venture or associated enterprise In RMB Amount of current period Amount of previous period Joint venture: -- -- The total of following items according to the shareholding proportions -- -- Associated enterprise: -- -- Total book value of investment 21,185,168.49 22,129,585.83 Totals calculated by shareholding ratio are -- -- as follows Net profit -944,417.34 Total comprehensive income -944,417.34 (5) Note to the significant restrictions of the ability of joint venture or associated enterprise transfer funds to the Company None (6) The excess loss of joint venture or associated enterprise None (7) The unrecognized commitment related to joint venture investment None (8) Contingent liabilities related to joint venture or associated enterprise investment None 4. Significant common operation None 142 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 5. Equity of structure entity not including in the scope of consolidated financial statements None 6.Other None X. The risk related 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. 1. Credit risk management practice (1) Evaluation method of credit risk On each balance sheet date, the company evaluates whether the credit risk of relevant financial instruments has increased significantly since the initial confirmation. When determining whether the credit risk has increased significantly since the initial confirmation, the company considers to obtain reasonable and reliable information without unnecessary extra costs or efforts, including qualitative and quantitative analysis based on historical data, external credit risk rating and forward-looking information. Based on a single financial instrument or a combination of financial instruments with similar credit risk characteristics, the company compares the risk of default of financial instruments on the balance sheet date with the risk of default on the initial confirmation date to determine the change of default risk of financial instruments during their expected duration. When one or more of the following quantitative and qualitative criteria are triggered, the company believes that the credit risk of financial instruments has increased significantly: 1) The quantitative standard is mainly that the probability of default for the remaining duration on the balance sheet date rises by more than a certain proportion compared with the initial confirmation; 2) Qualitative criteria mainly include significant adverse changes in the debtor's operation or financial situation, changes in existing or expected technology, market, economic or legal environment, and significant adverse effects on the debtor's repayment ability of the company. (2) Definition of default and credit impairment assets When a financial instrument meets one or more of the following conditions, the company defines the financial asset as having defaulted, and its criteria are consistent with the definition of having incurred credit impairment: 1) The debtor has major financial difficulties; 2) The debtor violates the binding provisions on the debtor in the contract; 3) The debtor is likely to go bankrupt or undergo other financial restructuring; 4) The creditor gives concessions that the debtor will not make under any other circumstances due to 143 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 economic or contractual considerations related to the debtor's financial difficulties. 2. Measurement of expected credit loss Key parameters of expected credit loss measurement include default probability, loss given default and default risk exposure. The company considers the quantitative analysis and forward-looking information of historical statistical data (such as counterparty rating, guarantee method, collateral type, repayment method, etc.) to establish default probability, loss given default and default risk exposure models. 3. Please refer to Notes V (I)3, V (I)4, V (I)5 and V (I)7 of these financial statements for details of the reconciliation statement of the opening balance and closing balance of the financial instrument loss reserve. 4. Credit risk exposure and credit risk concentration The company's credit risk mainly comes from monetary funds and receivables. In order to control the above-mentioned related risks, the company has taken the following measures respectively. (1) Monetary fund The company deposits bank deposits and other monetary funds in financial institutions with high credit rating, so its credit risk is low. (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 June 30, 2020, the Company has a characteristic of specific credit risk concentration. 37.69% (June 30, 2019: 38.08%) 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. The maximum credit risk exposure the company is subject to is the book value of each financial asset in the balance sheet. (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. Financial liabilities are classified by remaining maturity date Items Balance in year-end Book value Undiscounted contract Within 1 year 1-3 years Over 3 years amount Short-term loan 197,700,000.00 203,869,044.63 203,869,044.63 Note payable 240,170,034.62 240,170,034.62 240,170,034.62 Account payable 1,334,931,698.36 1,334,931,698.36 1,334,931,698.36 144 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Other account payable 217,709,036.28 217,709,036.28 217,709,036.28 Non-current liability 100,000.00 101,190.14 101,190.14 due within 1 year Long-term loan 22,400,000.00 23,184,940.14 23,184,940.14 Long-term payable 182,330,000.00 189,722,000.00 29,352,000.00 57,072,000.00 103,298,000.00 [Note] Subtotal 2,195,340,769.26 2,209,687,944.16 2,026,133,004.02 80,256,940.14 103,298,000.00 (Continued) Items Balance in year-Beginning Book value Undiscounted contract Within 1 year 1-3 years Over 3 years amount Short-term loan 97,840,187.21 99,448,165.24 99,448,165.24 Note payable 227,961,541.12 227,961,541.12 227,961,541.12 Account payable 1,030,408,716.74 1,030,408,716.74 1,030,408,716.74 Other account payable 82,148,405.19 82,148,405.19 82,148,405.19 Non-current liability 200,319.30 205,283.05 205,283.05 due within 1 year Long-term loan 22,435,762.23 23,820,343.69 23,820,343.69 Long-term payable 183,554,599.99 190,484,000.00 29,184,000.00 57,396,000.00 103,904,000.00 [Note] Subtotal 1,644,549,531.78 1,654,476,455.03 1,469,356,111.34 81,216,343.69 103,904,000.00 Note: Special payables are not included. (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. Fixed-rate interest-bearing financial instruments expose the Company to fair value interest rate risks, while floating-rate interest-bearing financial instruments expose the Company to cash flow interest rate risks. The Company determines the ratio of fixed interest rate to floating interest rate financial instruments according to the market environment, and maintains an appropriate portfolio of financial instruments through regular review and monitoring. The cash flow interest rate risk faced by the Company is mainly related to the bank borrowings with floating interest rates. As of June 30, 2020, the company's bank borrowings with floating interest rate were RMB 19,000,000.00 145 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 (December 31, 2019: RMB 19,000,000.00). Under the assumption that other variables remain unchanged, assuming that the interest rate changes by 50 benchmark points, there will be no significant impact on the company's total profits and shareholders' equity. 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. XI. The disclosure of the fair value 1. Closing fair value of assets and liabilities calculated by fair value In RMB Closing fair value Fair value Fair value Items Fair value measurement measuremen measurement items Total items at level 1 t items at at level 3 level 2 I. Consistent fair value measurement -- -- -- -- ( I ) Transactional financial assets and 1,715,614.62 1,319,715,986.77 1,321,431,601.39 other non-current financial assets 1.Financial assets classified as fair 1,715,614.62 1,319,715,986.77 1,321,431,601.39 value through profit or loss (1)Financing product 1,232,270,000.00 1,232,270,000.00 (2)Equity instrument investment 1,715,614.62 87,445,986.77 89,161,601.39 (II) Financing receivable 663,430,298.85 663,430,298.85 (III)Other equipment instrument 2,346,283,027.78 2,346,283,027.78 investment Total assets of consistent fair value 2,347,998,642.40 1,983,146,285.62 4,331,144,928.02 measurement Total liabilities of consistent fair value 1,715,614.62 1,319,715,986.77 1,321,431,601.39 measurement II. Non-continuous fair value measurement -- -- -- -- Total assets of inconsistent fair value measurement Total liabilities of inconsistent fair value measurement 146 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 2. Market price recognition basis for consistent and inconsistent fair value measurement items at level 1 The company adopts unadjusted quotations on active markets for the same assets that can be obtained on the measurement date. 3. Valuation technique adopted and nature and amount determination of important parameters for consistent and inconsistent fair value measurement items at level 2 4. Valuation technique adopted and nature and amount determination of important parameters for consistent and inconsistent fair value measurement items at level 3 1. For held short-term wealth management products with floating income and equity instrument investments, the company adopted valuation techniques for fair value measurement, mainly using a discounted future cash flow model. 2. Financing of receivables means that the measurement mode held by the company is bills receivable that are measured at fair value and whose changes are included in other comprehensive income. Cost represents the best es timate of fair value, so the cost is used to confirm its fair value . 5. Sensitiveness analysis on unobservable parameters and adjustment information between opening and closing book value of consistent fair value measurement items at level 3 None 6. Explain the reason for conversion and the policy governing when the conversion happens if conversion happens among consistent fair value measurement items at different levels None 7. Changes in the valuation technique in the current period and the reason for change None 8. Fair value of financial assets and liabilities not measured at fair value None 9. Other None 147 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 XII. Related party and related Transaction 1. Information related to parent company of the Company Name of the parent Shareholding ratio in Voting ratio in the Registered place Business nature Registered capital company the Company (%) Company (%) Hangzhou Steam Hangzhou China Manufacturing 800 million yuan 63.64% 63.64% Turbine Group 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 joint ventures and associated enterprises please go to the statement of equities in other entities. 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 Nanhua Wooden Packaging 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 Group Affiliate of the Group (Hangzhou) United Research Institute Co., Ltd. Hangzhou Steam Turbine Industry & Trade Co., Ltd. Affiliate of the Group Greenesol power systems PVT Ltd. Shareholding enterprise Hangzhou Bank Shareholding enterprise 5.Related transaction (1) Sale of goods/rendering of labor services/labor service offering Purchase of goods and service In RMB Over the Content of related Amount of current Amount of previous Amount of last Related parties trading limit transaction period or not? period period 148 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Hangzhou Hangfa Generating Equipment 80,787,433.63 Generators 80,787,433.63 No 80,979,594.17 Co., Ltd. Hangzhou Steam turbine Automobile Transportation , 31,678,281.96 31,678,281.96 No 30,443,515.87 sales service Co., Ltd. repair , etc. Hangzhou Nanhua Wooden Packaging Packaging No 7,475,985.95 Co., Ltd. China Electrical and Mechanical 775,896.30 Institute-Hangzhou Turbine Group Raw material 775,896.30 No 171,982.76 (Hangzhou) United Research Institute Co., Ltd. Hangzhou Steam Turbine Industry & Grind fee, Bagging 7,148,374.71 7,148,374.71 No Trade Co., Ltd. Hangzhou Steam Turbine Engineering Raw material, 613,207.55 613,207.55 No 861,320.75 Co., Ltd. Technical service Subtotal 121,003,194.15 121,003,194.15 119,932,399.50 Related transactions regarding sales of goods or providing of services In RMB Same period of Related parties Subjects of the related transactions Current term last term Hangzhou Steam Turbine Engineering Co., Steam Turbine, Compressor, Installation 36,248,770.80 3,209,482.76 Ltd. service Hangzhou Hangfa Generating Equipment Co., Cast parts 5,135,196.02 3,902,039.33 Ltd. Greenesol power systems PVT Ltd. Part 114,322.52 315,180.53 Hangzhou Steam Turbine Power Group Co., Small amount materials 349.80 1,019.70 Ltd. Hangzhou Steam Turbine Automobile Sales Small amount materials 69.52 117.49 Service Co., Ltd. Subtotal 41,498,708.66 7,427,839.81 (2) Related trusteeship/contract None (3) Information of related lease - The company was lessee:None The Company was lessee: 149 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 In RMB Category of leased The lease income confirmed The lease income Name of lessee assets in this year confirmed in last year HSTG House and building 614,470.42 1,693,306.96 Hangzhou Steam Turbine Industry & Trade Co., House and building 958,376.15 Ltd. Hangzhou Steam Turbine Industry & Trade Co., Site leasing 153,250.00 Ltd. Hangzhou Steam Turbine Automobile Site leasing 1,032,514.68 Sales Service Co., Ltd. Hangzhou Steam Turbine Automobile Car rental 21,238.94 Sales Service Co., Ltd. Subtotal 1,747,335.51 2,725,821.64 (4)Related-party guarantee The Company was guarantor In RMB Execution Guarantor Guarantee amount Start date End date accomplished or not HSTG 208,000,000.00 December 28,2016 December 22,2026 No The company as guarantor: None The company and its subsidiaries as guarantors Guokai Development Fund's investment of 208,000,000.00 yuan to Steam Turbine Heavy Industries Co., Ltd. shall be repurchased by Hangzhou Steam Turbine Group from 2019. The Fund requires the Company and Steam Turbine Heavy Industries Co., Ltd. to provide guarantee for The performance of the equity obligation of the transferred shares by Hangzhou Steam Turbine Group. The company mortgaged to the Development Fund the 45.08 million shares of Hangzhou Bank Co., Ltd. with a carrying value of 389,040,400.00 yuan and dividends receivable of 43,605,292.60 yuan, and the land use right with a carrying value of 64,445,939.27 yuan, the fixed assets with a carrying value of 39,920,071.94 yuan and the on-going projects with a carrying value of 619,207,141.72 yuan held by Steamboat Heavy Industry. (5) Inter-bank lending of capital of related parties None (6)Related party asset transfer and debt restructuring In RMB 150 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Related party Content Current term Same period of last term Hangzhou Steam Turbine Automobile Sales Service Purchase fixed assets 225,663.72 131,110.93 Co., Ltd. (7) Remunerations of key managements In RMB Items Current term Same period of last term Remunerations of key managements 4,221,118.60 4,302,268.00 (8) Other related transactions (1) Service and power supply 1)HSTG supplies water and power to the Company and some of the subsidiaries amounted to RMB 5521043.12 this period. 2) Hangzhou Steam Turbine Automobile Sales & Service Co., Ltd. provided transportation to the Company’s employees and RMB 1050284 was paid this period. 3) Hangzhou Steam Turbine Industry & Trade Co., Ltd. provides garbage clearance services for the company. RMB 14,971.70 is paid in this regard for the current period. 4) Hangzhou Steam Turbine Industry & Trade Co., Ltd. provides site management services for the company. RMB 1,480,71.32 is paid in this regard for the current period. (2) Expenses paid on behalf the Company During the current period, Hangzhou Steam Turbine Group advanced the payment of RMB 541001.76 salaries for the company. (3) 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. and till June 30,2020, 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 550,000,000.00 and till June 30.ber 31, 2020, the balance of the financial management was RMB500,000,000.00. 3)The company applied to Hangzhou Bank Co., Ltd. for bill discount in the current period, with an accumulated discount amount of39,345,163.903 yuan, and a discount interest of 374,762.69 yuan. 6. Receivables and payables of related parties (1)Receivables In RMB 151 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 End of term Beginning of term Name Related party Book balance Bad debt provision Book balance Bad debt provision Hangzhou Steam Turbine Engineering Note receivable 2,000,000.00 3,000,000.00 Co., Ltd. Hangzhou Hangfa Generating Equipment 16,780,000.00 3,000,000.00 Co., Ltd. Subtotal 18,780,000.00 0.00 6,000,000.00 Account Hangzhou Steam Turbine Engineering 58,039,265.88 16,739,207.31 44,581,617.41 14,738,525.53 receivable Co., Ltd. Hangzhou Hangfa Generating Equipment 16,080,958.86 1,150,365.12 17,554,187.37 1,502,203.97 Co., Ltd. GreenesolpowersystemsPVTLtd. 14,761,176.40 14,761,176.40 14,761,176.40 14,761,176.40 Hangzhou Steam Turbine Power Group 158,500.00 158,500.00 158,936.29 158,521.81 Co., Ltd. Hangzhou Steam Turbine Compressor 59,000.00 47,200.00 59,000.00 47,200.00 Co., Ltd’ Subtotal 89,098,901.14 20,012,241.78 77,114,917.47 31,207,627.71 Contract Hangzhou Hangfa Generating Equipment 3,696,000.00 3,020,960.00 liability Co., Ltd. Hangzhou Steam Turbine Engineering 670,000.00 Co., Ltd. Subtotal 4,366,000.00 0.00 3,020,960.00 Other account Hangzhou Steam Turbine Compressor receivable Co., Ltd. Hangzhou Steam Turbine Power Group 78,221.03 13,687.39 Co., Ltd. Hangzhou Steam Turbine Industry & 27,841.00 1,392.05 Trade Co., Ltd. Hangzhou Steam Turbine Automobile 24,120.00 1,206.00 Sales Service Co., Ltd. Subtotal 51,961.00 2,598.05 78,221.03 13,687.39 (2)Payables In RMB Name Related party Amount at year Amount at year beginning Note payable Hangzhou Hangfa Generating Equipment Co., 7,000,000.00 6,810,000.00 152 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Ltd. Hangzhou Steam Turbine Industry & Trade Co., 300,000.00 Ltd. Hangzhou Steam Turbine Automobile Sales 135,000.00 195,000.00 Service Co., Ltd. Subtotal 7,135,000.00 7,305,000.00 Hangzhou Hangfa Generating Equipment Co., Account payable 127,709,355.52 81,467,799.85 Ltd. Hangzhou Steam Turbine Automobile Sales 23,530,484.71 16,258,569.66 Service Co., Ltd Hangzhou Steam Turbine Industry & Trade Co., 1,238,188.83 4,249,563.88 Ltd. Hangzhou Steam Turbine Engineering Co., Ltd. 1,769,000.00 2,955,000.00 Greeneso l power systems PVTLtd. 2,037,880.52 2,008,144.93 HSTG 6,581,873.05 886,447.75 Zhejiang Zhongrun Gas turbine technology Co., 292,907.12 555,637.12 Ltd. China Electrical and Mechanical Institute-Hangzhou Turbine Group (Hangzhou) 509,984.82 120,209.00 United Research Institute Co., Ltd. Subtotal 163,669,674.57 108,501,372.19 Contract liability Hangzhou Steam Turbine Compressor Co., Ltd. 12,760,000.00 12,760,000.00 Hangzhou Steam Turbine Industry & Trade Co., 21,007,300.00 12,024,769.03 Ltd. Hangzhou Steam Turbine Power Group 3,618,000.00 3,618,000.00 Greeneso l power systems PVTLtd. Subtotal 37,385,300.00 28,402,769.03 Other account Hangzhou Steam Turbine Automobile Sales 100,000.00 100,000.00 payable Service Co., Ltd HSTG 777,633.82 47,114.51 Subtotal 877,633.82 147,114.51 7. Related party commitment None 8.Other 153 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 XIII. Stock payment 1. The Stock payment overall situation Not applicable 2. The Stock payment settled by equity Not applicable 3. The Stock payment settled by cash Not applicable 4. Modification and termination of the stock payment 5.Other XIV. Commitments 1.Significant commitments Significant commitments at balance sheet date 2. Contingency (1) Significant contingency at balance sheet date Litigation matters (1) On September 5, 2018, due to tort liability, Henan Junhua Development Co., Ltd. sued the ompany and Xi'an Shangu Power Co., Ltd. in Zhumadian Intermediate People's Court of Henan Province. On May 22, 2019, the Intermediate People's Court of Zhumadian City in Henan Province ruled against the Company, involving a compensation amount of 32.225 million yuan. The Company appealed to Henan Higher People's Court. On April 30, 2020, the Higher People's Court of Henan Province ruled that it should be sent back for retrial and the first-instance judgment should be revoked. (2) In 2013, the subsidiary Turbine Company of the Company and Sinosteel Equipment Co., Ltd (hereinafter referred to as Sinosteel Equipment) signed the Supply Contract for M251S Gas Turbine Generator Unit, while the Company also signed a corresponding supply contract with the Turbine Company. In April 2019, the Company sued its subsidiary Turbine Company, requesting to cancel the above-mentioned supply contract and compensate the Company for its losses. On June 30, 2020, Hangzhou Intermediate People's Court ruled that Zhejiang Turbine Import and Export Trade Co., Ltd. would compensate the Company for the loss of 100 million 154 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 yuan. (2)The Company have no significant contingency to disclose, also should be stated None 3.Other XV. Events after balance sheet date As of July 31, 2020, the company repurchased 12,489,446 shares through the special securities account of share repurchase through centralized bidding, accounting for 1.66% of the company's current total share capital. The highest transaction price was HK $8.52 / share, while the lowest transaction price was HK $7.22 / share, and the total transaction amount was HK $99,687,219.93. XVI. Other significant events 1. The accounting errors correction in previous period None 2. Debt restructuring None 3. Replacement of assets None 4. Pension plan None 5. Discontinuing operation None 6. Segment information (1) Recognition basis and accounting policies of reportable segment None (2) The financial information of reportable segment None 155 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 (3) There was no reportable segment, or the total amount of assets and liabilities of each part of reportable segment, shall disclose the reason. The Company's business is relatively simple, mainly for the production and sale of steam turbines, gas turbines and their auxiliaries and accessories. The management regards this business as a whole to implement management and evaluate operating results, so there is no reporting division. The main business income and main business cost of the Company by product classification are as follows: Item Main business income Main business cost Industry steam turbine 1,445,493,683.04 1,015,618,424.48 Casting 78,346,262.00 59,318,994.79 Auxillaries 182,399,905.43 137,918,096.69 Complete set of waste heat power station 49,710,081.27 47,943,557.79 Spare parts 183,273,753.92 87,394,956.39 Other 74,882,433.15 34,837,302.93 Subtotal 2,014,106,118.81 1,383,031,333.07 (4) Other notes None 7. Other important transactions and events have an impact on investors’ decision-making None 8. Other None 156 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 XVII. Notes of main items in the financial statements of the Parent Company 1. Accounts receivable (1) Accounts receivable classified by category In RMB End of term Beginning of term Book balance Bad debt provision Book balance Bad debt provision Category Proportion Proportion Book value Proportion Proportion Book value Amount Amount Amount Amount % % % % Including Accrual of bad debt provision by 2,240,981,224.05 100.00% 858,554,256.66 38.31% 1,382,426,967.39 2,275,968,563.22 100.00% 805,743,954.26 35.40% 1,470,224,608.96 portfolio Including: Total 2,240,981,224.05 100.00% 858,554,256.66 38.31% 1,382,426,967.39 2,275,968,563.22 100.00% 805,743,954.26 35.40% 1,470,224,608.96 Accrual of bad debt provision by portfolio: 858,554,256.66 In RMB End of term Name Book balance Bad debt provision Proportion Associated transaction portfolio within the scope of consolidated 80,158,034.22 financial statement 157 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Aging portfolio 2,160,823,189.83 858,554,256.66 39.73% Total 2,240,981,224.05 858,554,256.66 -- 158 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Relevant information of the provision for bad debts will be disclosed with reference to the disclosure method of other receivables if the provision for bad debts of bills receivable is accrued according to the general model of expected credit loss: Bad debt provision Disclosure by aging In RMB Aging End of term Within 1 year(Including 1 year) 610,300,245.80 1-2 years 537,579,114.36 2-3 years 283,861,228.55 Over 3 years 809,240,635.34 3-4 years 164,746,625.04 4-5 years 134,792,614.38 Over 5 years 509,701,395.92 Total 2,240,981,224.05 (2) Accounts receivable withdraw, reversed or collected during the reporting period The withdrawal amount of the bad debt provision: In RMB Amount of change in the current period Reversed or Category Opening balance Write- Othe Closing balance Accrual collected off amount r Accrual of bad debt provision 805,743,954.26 52,810,302.40 858,554,256.66 by portfolio Total 805,743,954.26 52,810,302.40 858,554,256.66 (3) The actual write-off accounts receivable None (4)The ending balance of account receivables owed by the imputation of the top five parties In RMB Name Amount Proportion(%) Bad debt provision Client 1 673,249,693.90 30.05% 289,237,299.47 159 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Client 2 214,257,848.80 9.56% 146,657,818.26 Client 3 98,165,919.28 4.38% 6,337,797.96 Client 4 55,789,769.23 2.49% 9,188,932.39 Client 5 51,344,018.00 2.29% 51,344,018.00 Total 1,092,807,249.21 48.77% (5)Account receivable which terminate the recognition owning to the transfer of the financial assets None (6)The amount of the assets and liabilities formed by the transfer and the continues involvement of accounts receivable None 2. Other account receivable In RMB Nature End of term Beginning of term Dividend receivable 122,983,614.70 27,827,292.60 Other 4,058,901.01 3,240,396.20 Total 127,042,515.71 31,067,688.80 (1)Interest receivable :None (2)Dividend receivable (1)Dividend receivable In RMB Items End of term Beginning of term Hangzhou Bank 122,983,614.70 27,827,292.60 Total 122,983,614.70 27,827,292.60 2) Significant dividend receivable aged over 1 year In RMB Whether occurred Items Closing balance Aging Reason impairment and its judgment basis Hangzhou Bank 27,827,292.60 1-4 years Equity pledge Total 27,827,292.60 -- -- -- 3)Provision for bad debts 160 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Not applicable (3) Other accounts receivable (1) Other accounts receivable classified by the nature of accounts In RMB Nature Closing book balance Opening book balance Deposit 7,718,787.84 6,599,993.65 Provisional payment receivable 571,087.08 473,078.04 Other 253,663.60 1,079,186.43 Total 8,543,538.52 8,152,258.12 2)Bad-debt provision In RMB Stage 1 Stage 2 Stage 3 Expected credit Expected credit losses for the Bad Debt Reserves Expected credit loss over life Total losses over the entire duration (credit (no credit impairment) next 12 months impairment occurred) Balance as at January 1, 2020 122,993.39 29,895.89 4,758,972.64 4,911,861.92 Balance as at January 1, 2020 in —— —— —— —— current ——Transfer to stage II -45,884.20 45,884.20 0.00 ——Transfer to stage III -35,024.70 35,024.70 0.00 ——Transfer to stage II 0.00 ——Transfer to stage I 86,397.06 -14,298.84 -499,322.63 -427,224.41 Balance as at June 30, 2020 163,506.25 26,456.55 4,294,674.71 4,484,637.51 Loss provision changes in current period, change in book balance with significant amount Not applicable Disclosure by aging In RMB Aging Closing balance Within 1 year(Including 1 year) 3,841,212.00 1-2 years 264,565.50 2-3 years 149,763.58 Over 3 years 4,287,997.44 3-4 years 6,004.00 161 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 4-5 years 179,251.00 Over 5 years 4,102,742.44 Total 8,543,538.52 3) Accounts receivable withdraw, reversed or collected during the reporting period The withdrawal amount of the bad debt provision: In RMB Amount of change in the current period Category Opening balance Reversed or Closing balance Accrual Write-off Other collected amount Other receivables with -427,224.41 provision for bad debts 4,911,861.92 4,484,637.51 based on credit risk characteristics Total 4,911,861.92 -427,224.41 4,484,637.51 4) The actual write-off accounts receivable None (5) Top 5 of the closing balance of Other accounts receivable In RMB Account Percentage in total Bad debt Name of the company Book balance Age property other receivable % provision Deposit in Over 5 Shanghai Customs Waigaoqiao Office 3,710,320.94 3,710,320.94 custom years 43.43% Deposit in Nantong Jiaxing Thermal Power Co., Ltd. 500,000.00 1 year 25,000.00 custom 5.85% Zhejiang City Construction Gas Thermal Deposit in 300,000.00 1 year 15,000.00 custom Power Design Institute 3.51% Deposit in Huadian Tendering Co., Ltd. 300,000.00 1 year 15,000.00 custom 3.51% China Electric Power Complete Equipment Deposit in 300,000.00 1 year 15,000.00 custom Co., Ltd. 3.51% 162 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 59.82% Total -- 5,110,320.94 -- 3,780,320.94 (6)Account receivable involving government subsidies None (7)Other account receivable derecognized due to the transfer of financial assets None (8)Amount of transfer other account receivable and assets and liabilities formed by its continuous involvement. None 3. Long-term share equity investment In RMB End of term Beginning of term Items Impairment Impairment Book balance Book value Book balance Book value provision provision Investments in subsidiaries 886,732,321.62 886,732,321.62 886,732,321.62 886,732,321.62 Investments in associates and 10,301,679.79 944,417.34 10,301,679.79 11,246,097.13 11,246,097.13 joint ventures Total 897,034,001.41 944,417.34 897,034,001.41 897,978,418.75 897,978,418.75 (1) Investments in subsidiaries In RMB Increase /decrease Closing Company Withdrawn balance of Beginning of term Add Decreased Closing balance invested in impairment Other impairment investment investment provision provision Turbine 20,000,000.00 20,000,000.00 Company Hangzhou Heavy 743,812,943.59 743,812,943.59 Industry Hangzhou 46,286,513.41 46,286,513.41 Auxiliary 163 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 Machine Co. Zhejiang Turbine 29,800,389.56 29,800,389.56 Packaged Co. Zhongneng 27,644,475.06 27,644,475.06 Co. Machinery Co. 7,968,000.00 7,968,000.00 Casting Co. 11,220,000.00 11,220,000.00 Total 886,732,321.62 886,732,321.62 (2)Investments in associates and joint ventures In RMB Increase /decrease in reporting period Adjustm Withdra Closing Decre ent of Other Declaration wn Opening Add Closing balance of Name ased Gain/loss of other equity of cash impairm balance investme Other balance impairment invest Investment compreh change dividends or ent nt provision ment ensive s profit provisio income n I. Joint ventures II. Associated enterprises Zhejiang Ranchuang Turbine 11,246,097.13 -944,417.34 10,301,679.79 Machinery Co., Ltd. Subtotal 11,246,097.13 -944,417.34 10,301,679.79 Total 11,246,097.13 -944,417.34 10,301,679.79 4. Business income and Business cost In RMB Items Amount of current period Amount of previous period Income Cost Income Cost Main business 1,143,805,459.09 788,681,371.84 1,195,173,183.58 864,005,383.66 Other 4,907,113.55 3,076,640.04 6,260,548.65 4,687,385.77 Total 1,148,712,572.64 791,758,011.88 1,201,433,732.23 868,692,769.43 Information related to performance obligations: 164 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 The Company’s sales segment has entered into legal and effective sales contracts/orders with the customers. The contract/order clarifies the terms of the subject product, specification and model, transaction quantity, unit price, settlement method, delivery obligation, etc. The performance obligation is clear, and it is a single performance obligationat a single time point. The Company's various product contracts/orders have clear transaction prices, and the Company will confirm revenue after fulfilling the relevant performance obligations in accordance with the contract/order related agreements. Information related to the transaction price apportioned to the residual performance obligation: The income corresponding to the performance obligations that have not been performed or have been performed incompletely but the contract has been signed at the end of the reporting period is RMB4,108,390,000.00 5. Investment income In RMB Items Occurred current term Occurred in previous term Long-term equity investment income by Cost method 120,936,840.00 61,041,210.00 Investment income from disposal of Long-term equity investment -944,417.34 It is classified as the investment income during the holding period of financial assets measured at fair value and recorded into the 1,320,462.15 current profit and loss Disposal is classified as investment income of financial assets 15,814,351.26 22,218,266.55 measured at fair value and recorded into current profit and loss Dividend income from other equity instrument investments 95,156,322.10 67,968,801.50 during the holding period Total 230,963,096.02 152,548,740.20 6.Other XVIII. Supplement information 1. Particulars about current non-recurring gains and loss √ Applicable □Not applicable In RMB Items Amount Notes Gains/losses from the disposal of non-current asset -148,212.10 Governmental subsidy calculated into current gains and loess(while closely related with the normal business of the Company, excluding the fixed-amount or fixed-proportion 55,716,643.40 governmental subsidy according to the unified national standard) Gain/loss from debt reorganization -115,229.71 In addition to normal business with the company effective hedging related business, 22,861,806.76 holders of tradable financial assets, transactions and financial liabilities arising from 165 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 changes in fair 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-business income and expenditures other than the above 2,547,807.55 Less: Influenced amount of income tax 12,626,321.11 Amount of influence of minority interests 2,836,377.87 Total 65,400,116.92 -- 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 2. Return on equity (ROE) and earnings per share (EPS) Weighted average EPS(Yuan/share) Profit as of reporting period ROE (%) EPS-basic EPS-diluted Net profit attributable to common 3.53% 0.31 0.31 shareholders of the Company Net profit attributable to common shareholders of the Company after 2.53% 0.22 0.22 deduction of non-recurring profit and loss 166 Hangzhou Steam Turbine Co., Ltd. Semi-Annual Report 2020 3. Differences between accounting data under domestic and overseas accounting standards (1) Differences of net profit and net assets disclosed in financial reports prepared under international and Chinese accounting standards Not applicable (2) Differences of net profit and net assets disclosed in financial reports prepared under overseas and Chinese accounting standards Not applicable (3) Explain reasons for the differences between accounting data under domestic and overseas accounting standards, for audit data adjusting differences had been foreign audited, should indicate the name of the foreign institutions 4.Other XII. Documents available for inspection (I) Financial Statements signed and sealed by the Chairman of the Board , chief accountant and director of the financial division; (II) All the originals of the Company’s documents and public notices disclosed in the newspapers designated by China Securities Regulatory Commission in the report period; (III) Original copy of Resolutions of the 7th Meeting of the 8th Term of Board. Hangzhou Steam Turbine Co., Ltd. Chairman of the Board: Zheng Bin August 27, 2020 167