Stock Code: 200771 Stock ID: Hangqilun B Announcement No.: 2021-17
Hangzhou Steam Turbine Co., Ltd.
Board of Directors Reports in 2020
The members of the Board and the Company acknowledge being responsible for the truthfulness,
accuracy, and completeness of the announcement. Not any false record, misleading statement or
significant omission carried in this announcement.
In 2020, in strict accordance with laws and regulations such as the Company Law, Securities
Law, Stock Listing Rules of Shenzhen Stock Exchange, and Guidelines for Standardized Operation
of Listed Companies of Shenzhen Stock Exchange, as well as the Articles of Association, the Board
of Directors of the company is responsible to all shareholders, diligently and effectively exercising its
functions and powers, conscientiously implementing the resolutions of the shareholders' meeting,
diligently carrying out all the work of the Board of Directors, and promoting the improvement of
corporate governance and the development of all business operations of the company. The main work
of the Board of Directors in 2020 is reported as follows:
I. Business operations of the company in 2020
During the reporting period, against the sudden global COVID-19 epidemic and the adverse
impact of comprehensive relocation, the company focused on the economic work policy of "winning
the relocation, intensively cultivating the market, revitalizing the enterprise by culture and striving
for first class", and achieved good business performance through the joint efforts of the company's
management and all employees.
The annual business performance showed a trend of low and then high, with the completion of
various business indicators better than expected, highlights in the driving market, fruitful
achievements in scientific and technological progress, successful completion of relocation,
accelerated informatization construction and initial improvement of management. During the
reporting period, the company realized operating income of 4,496.4452 million yuan, with a
year-on-year increase of 5.06%; The total profit was 620.933 million yuan, with a year-on-year
increase of 30.07%; Net profit attributable to shareholders of listed companies was 459.3454 million
yuan, with a year-on-year increase of 33.09%. The company's business objectives were achieved
smoothly. The main work carried out during the reporting period and the operating results obtained
are as follows:
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(I) Grasp the opportunity, intensively cultivate the market and occupy the driving
commanding heights
During the reporting period, the refining and chemical market in the domestic driving sector
continued, the coal chemical industry market tended to recover, the competition in the traditional
thermoelectric field in the industrial power generation sector intensified, the development of the feed
water pump market was still limited, the overseas market share was limited, and the overall new
orders received by the company rose steadily.
The company continued to seize the high-quality orders of domestic large-scale
refining-chemical integration and ethylene plant projects by virtue of its competitive advantages, and
signed contracts for Shenghong Petrochemical's 16 million tons/year refining-chemical integration
project, PetroChina Jieyang's 20 million tons refining and 1.4 million tons ethylene project, Zhenhai
Refining and Chemical's 1.2 million tons ethylene project, CNOOC Huizhou Refining and Chemical
Phase 2.5 project, and Sinopec Hainan Refining and Chemical's 1 million tons ethylene and
supporting refining units.
With the help of the recovery trend of coal chemical market, the company successfully signed a
contract for the steam turbine for phase I project of 1.8 million tons of ethylene glycol of Shaanxi
Coal Group, and successfully obtained the coal chemical projects such as Yulin Energy Ethylene
Glycol and Ningxia Baofeng Energy Coal-to-Olefin Phase III.
Competition in the power generation market is becoming more and more fierce, and orders in
the traditional thermoelectric field are declining. Although the market of feed water pump and
induced draft fan has achieved better results than in previous years, the market development space in
this field is limited.
The company has deepened cooperation with Siemens in an all-round way, covering SGT-800,
SGT-700, SGT-300, SGT-2000E and other models, effectively improving the sales, design and
after-sales service management capabilities of gas turbines, and further expanding the market
influence. In the field of gas turbine market, the company signed contracts for CGNPC Wuhan
Hanergy Distributed Energy Project and Anhui Shanneng Fanchang Economic Development Zone
Cogeneration Project.
(II) Continue to innovate, keep improving, and make break-through in new technological
fields
The company continued to increase investment in research and development, independently
innovated and developed new products, and tackled key technical problems. During the reporting
period, 33 scientific research projects were established in the company's headquarters, including 9
new products and 24 scientific research projects. 29 scientific research projects have been completed
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and accepted. Where, the project "Key Technology and Application of High Efficiency and High
Reliability Variable Speed Industrial Steam Turbine for Driving" won the first prize of China
Machinery Industry Science and Technology Award. The project "Industrial Steam Turbine for Core
Plant of Ultra-large Ethylene Project with an Annual Output of 1.2-1.5 million tons" was selected as
the first equipment engineering key project in Zhejiang Province in 2020. "1.5 million tons/year
Industrial Steam Turbine for Ethylene Plant Drive" won the first international product (set) in the key
field of equipment manufacturing industry in Zhejiang Province in 2020. The company won the
honorary title of "Single Champion Model Enterprise in Manufacturing Industry (Fifth Batch)" by
Ministry of Industry and Information Technology and China Federation of Industrial Economics.
The company completed the construction of the overall technical framework of the
100,000-class industrial steam turbine, and formed a complete product map of the 120,000-kilowatt
industrial-driven steam turbine. The unit efficiency was steadily improved, and the models were
more abundant. The successful development of Dalian Hengli 1.5 million tons steam turbine for
ethylene plant indicates that the company's products and technology have reached the world leading
level. The delivery of the first subcritical unit shows that the company's technical design capability,
material standard system and process manufacturing capability have entered a new level and have
been widely recognized by the market.
The company's "Industrial Internet Application Service Platform Construction Project" has been
put into trial operation. The company completed the docking of supply chain system and WMS
system of stereo library, continuously promoted MES system, promoted digital factory research and
hybrid cloud project, and built a more favorable platform for the company's intelligent
manufacturing.
The company and its holding subsidiaries have obtained 3 invention patents, 38 utility model
patents and 5 software copyrights. Where, the company's "Last Blade of Low Pressure Group of
Large Flow Air-cooled Steam Turbine" won the Chinese Patent Excellence Award for the first time.
The company and its holding subsidiaries, Hangzhou Zhongneng Steam Turbine Power Co., Ltd.,
Hangzhou Guoneng Steam Turbine Engineering Co., Ltd., Zhejiang Turbine Complete Technology
Development Co., Ltd., Zhejiang Huayuan Steam Turbine Machinery Co., Ltd. and Hangzhou
Turbine Casting Co., Ltd., have all been appraised as "high-tech enterprises".
(III) Relocate in an all-round way, ensure supply and win the tough battle of production
The main production workshops of the company, such as assembly workshop and rotor
workshop, have been successfully completed and accepted, and the steam turbine manufacturing base
has already met the production conditions. In November 2020, the company's production workshop,
personnel and equipment were all moved to Hangzhou Turbine Manufacturing Base, and the
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company's relocation work was successfully completed.
Affected by objective factors such as epidemic situation and relocation, the company faces
many difficulties such as shrinking production capacity and hindering the progress of outsourced
processing. In the face of difficulties, the company coordinated the production workshops to organize
the division of labor, and created favorable conditions for reducing the output backlog and realizing
goods delivery through the close cooperation and continuous production and overtime work of each
production workshop. In order to ensure production capacity, the company constantly improved
supply chain management, developed supplier cooperation units, strengthened communication and
cooperation with suppliers, and ensured that the production and processing of important products of
the company were completed on time.
The company continuously optimized the production and process management processes, and
further strengthened the company's complete process capacity building. The painting workshop is
stationed in Jingzi Workshop to perform the functions of parts cleaning and primer application, and
further improve the professional management of production process. A distribution center is set up to
perform digital management of all parts, so as to realize the continuous change of intelligent factory.
Through the integration of resources and process reengineering, the production efficiency has been
greatly improved.
(IV) Led by culture, driven by strategy, focus on transformation by management
The company started the construction of corporate culture in an all-round way, produced
"Hangzhou Turbine's Passionate Youth" by organizing a series of activities of "Corporate Culture
Tour", and held the Artisan Quality Month with the theme of "Artisan Spirit", which continuously
promoted the deep integration of soft power of corporate culture and hard power of corporate
management, and formed a good atmosphere of "everyone respects culture and lives in culture",
which enabled the broad masses of cadres and employees to deeply understand the core values of
enterprises and effectively enhanced the cohesion, combat effectiveness and soft power of the
company.
The company promoted the strategic planning in an orderly manner, looked forward to the
future market and industry pattern by analyzing the changes of internal and external environment and
combining with its own business situation, and formulated the "Fourteenth Five-Year Plan" strategic
plan and preliminary strategic decomposition plan for Hangzhou Turbine in the new era.
During the reporting period, focusing on the "Top Ten Management Key Tasks", the company
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continuously improved its management level, paid attention to relocation and construction to ensure
production capacity, focused on innovation promoted by orders, refined culture and educated talents,
and prevented risks and controlled quality. It continuously strengthened and improved property rights
management, further standardized the equity incentive mechanism of holding subsidiaries, and
effectively motivated the management and technical backbone of subsidiaries; optimized
organizational adjustment and continuously promoted process integration and lean production
management; strengthened the construction of talents, and introduced high-level talents and skilled
personnel evaluation mechanism. Through a series of management work, the management level is
continuously improved.
During the reporting period, the company won the title of "National Excellent Quality
Management Team of Machinery Industry"; and successfully passed the "Made in Zhejiang"
certification audit; The company's "Dynamic Profit Management Model of Order-based Customized
Manufacturing Enterprises" project won the second prize of national enterprise management
modernization innovation achievement and the first prize of Zhejiang and Hangzhou enterprise
management modernization innovation achievement.
II. Performance of the Board of Directors according to law during the reporting period
(I) Perform work duties according to law and improve the level of scientific
decision-making
(1) About Board Meetings
In 2020, a total of 7 Board meetings. According to regulations, the Board of Directors of the
company deliberated to purchase convertible bonds of Hangzhou Bank, provided guarantees and
daily related transactions for subsidiaries, entrusted financial management, applied for credit loans
from banks, provided remuneration of directors and executives, made changes in accounting policies,
revision of articles of association, and profit distribution, and re-employed accounting firms.
(2) Information about the Independent Directors' Duty Performance
Independent directors of the company attended relevant meetings in strict accordance with the
Company Law, Guidelines for Standardized Operation of Listed Companies of Shenzhen Stock
Exchange, Guiding Opinions on Establishing Independent Director System in Listed Companies and
other relevant laws and regulations, carefully reviewed all proposals of the Board of Directors,
diligently and responsibly expressed independent opinions, and fully played the role of independent
directors.
(3) Information about the Duty Performance of Special Committees
The Board of Directors set up strategy, remuneration and assessment, audit and nomination
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committees. During the reporting period, the Company organized 3 special committees of the Board
of Directors and annual review communication meetings. The Audit Committee played a professional
role in communicating with independent directors and audit institutions and deliberating major
financial matters of the Company. The Remuneration and Assessment Committee put forward a
remuneration plan that was conducive to long-term incentives for directors and senior executives of
the Company according to the company's remuneration assessment methods and assessment
settlement.
II. Continuously improve the corporate governance system and ensure the company’s
compliance in operation
1. Revise the Articles of Association and further improve the Rules of Procedure of
Shareholders' Meeting, Rules of Procedure of Board of Directors and Rules of Procedure of Board of
Supervisors.
2. Strengthen the supervision and management of the standardized operation of holding
subsidiaries, and establish a long-term working communication mechanism. According to the
regulations and documents such as Administrative Measures for Holding (Participating) Companies,
Administrative Measures for Expatriate Directors and Supervisors of the Company, and Notice on
Regulating the Work of Board of Directors (Supervisory Committee) and Board of Shareholders of
Holding Subsidiaries, the matters considered by the Board of Directors and Board of Shareholders of
the holding subsidiaries shall be reviewed in advance to fully protect the rights and interests of the
Company.
3. Continue to improve the construction of internal control standards of the company in
combination with the actual operation of the company according to the Basic Standards for Internal
Control of Enterprises, Supporting Guidelines for Internal Control Standards and Guidelines for
Internal Control of Listed Companies and other relevant regulations.
(III) Strengthen the management of information disclosure and well ensure the control of
insider information circulation
In 2020, the company issued a total of 73 announcements, faithfully fulfilled its information
disclosure obligations, and strengthened active information disclosure. The company's information
disclosure was true, accurate, complete, timely and fair, which ensured that investors acquired the
major issues of the company in time and protected the interests of investors to the greatest extent.
The Board of Directors attached great importance to insider information management,
formulated and effectively implemented the insider information management system, clarified the
scope of insiders of insider information, and strengthened the accountability of insider information
disclosure. Relevant staff strictly complied with the system requirements in the actual work process,
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controlled the scope of insider information transmission, and strengthened the confidentiality of
insider information.
(IV) Strengthen the management of investor relations and earnestly protect the rights and
interests of investors
The company provided a convenient communication platform for investors and answered
investors' questions on the "Interaction Platform" of Shenzhen Stock Exchange. It paid attention to
public opinion monitoring, acquired the reports and evaluations of investors, capital markets and
media on the company, and actively fed back investors' attention to the company. The company held
online collective reception day activity for investors to establish a good interactive relationship with
investors.
(V) Effectively implement the resolutions of the shareholders' meeting and implement a
prudent dividend policy
In 2020, the Board of Directors of the company convened 2 general meetings of shareholders,
and reviewed 11 proposals, mainly including major issues such as profit distribution, re-employment
of accounting firms, daily related transactions, subscription of convertible bonds of Hangzhou Bank,
and revision of the articles of association. The Board of Directors timely implemented the resolutions
of the shareholders' meeting, and carried out all the work authorized by the shareholders' meeting.
The company's profit distribution policy maintained continuity and stability, with total dividends
reaching RMB 627 million in the three years from 2018 to 2020, and an average annual cash
dividend which accounted for more than 40% of the net profit. In 2020, 19,551,800 shares were
repurchased with a repurchase fund of RMB 144 million. According to the Detailed Rules for the
Implementation of Share Repurchase of Shenzhen Stock Exchange, the amount of the repurchased
shares is regarded as cash dividends, so the total cash dividends of the company in 2020 accounted
for more than 70% of the net profit.
III. Development prospect
(I) Development Strategic Planning
During the "Fourteenth Five-Year Plan" period, the company will set up a vision of "becoming
a world-class industrial drive service provider", insist on high-quality development, firmly seize the
opportunity of the national "double-cycle" strategic transformation, and strive to stimulate innovation
potential and build a new pattern of steam turbine and gas turbine industry. Meanwhile, the company
will take the construction of "big service framework" and the promotion of "big customer
management" as the starting point, and complete the transformation to manufacturing service
industry in an all-round way. In order to achieve the above goals, the company will focus on nine
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aspects during the "Fourteenth Five-Year Plan" period:
1. Promote strategic management and enhance development momentum
Adhere to the development concept of "strategy as the key link" and define the programmatic
role of strategy in the scientific development and high-quality development of enterprises. Promote
strategic management, define the development direction, improve strategic strength, and enhance
leading ability. Through the reform of system and mechanism, stimulate the endogenous motivation
of enterprises and enhance the development momentum.
2. Strengthen organizational management and improve governance ability
Optimize organizational structure, strengthen assessment and evaluation, and further enhance
organizational strength. Build a digital, flat and efficient management platform, improve the
integration, lean and institutionalized level of organization and management, improve the corporate
governance system and enhance the corporate governance capacity.
3. Strengthen operation management and improve operation quality
Reduce operating costs and improve operating quality through measures such as digital
construction, intelligent manufacturing promotion, supply chain management optimization, lean
production deepening, and quality system construction improvement.
4. Deepen technological innovation and enhance value creation
Adhere to the policy of "high efficiency, intelligence, integration and light weight", and
continue to promote the technological research and development, iterative upgrading and innovation
capacity building of engineering application of products. Provide strong technical guarantee and
support for realizing intelligent manufacturing, accelerating business transformation, consolidating
market position and opening up market areas.
5. Strengthen the management of materials and ensure the appreciation of assets
Actively promote the integration of financial business and improve the energy efficiency of
financial management. Promote comprehensive budget management, enhance the refinement of cost
management, promote the integration of industry and finance, and realize the preservation and
appreciation of assets.
6. Strengthen risk management and control to ensure business safety
Actively respond to the increase of external risks, improve the construction of enterprise risk
control system, adhere to the combination of "prevention" and "control", and improve the awareness,
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ability and quality of enterprise risk prevention and control. Focus on the establishment of response
measures and tracking the effectiveness of measures, effectively prevent systemic risks, and enhance
the risk control ability of enterprises.
7. Implement the talent project and improve the employment mechanism
Advocate the idea of developing enterprises with talents, implement the talent strategy,
advocate the development of enterprises with talents, focus on promoting the implementation of
talent projects, strengthen the construction of talent teams, and create an integrated talent system of
"career navigation, skill training, talent evaluation, promotion incentive and value realization".
8. Accelerate information engineering and improve management energy efficiency
Deepen the informatization and intelligent construction of enterprises, and use digital means to
improve the informatization level, accuracy and efficiency of enterprise management, improve the
quality of enterprise management, and promote the improvement of enterprise management ability
and efficiency.
9. Promote cultural construction and enhance brand operation
Strengthen cultural guidance and provide strong cultural guarantee for creating first-class
enterprises. Enhance the creation and promotion of enterprise brand with culture, and carry out brand
planning and operation.
(II) Business plan of 2021
2021 is the first year of the company's "Fourteenth Five-Year Plan", the first year that
Hangzhou Turbine Manufacturing Base is fully put into operation, and the first year for the company
to start high-quality development. In the new year, the company will face many challenges in
deepening reform, innovation driving, expanding market share, efficient operation of manufacturing
base and ensuring market supply. In 2021, the company put forward the annual work policy of
"digital empowerment, transformation and upgrading, strengthening enterprises by talents and high
quality development".
1. Digital empowerment
With the commissioning and capacity recovery of Hangzhou Turbine Manufacturing Base as
an opportunity, improve the operation of PLM, MES and other systems. Continue to promote the
construction of WMS system, Internet of Things and other information projects, and accelerate the
construction of "Hangzhou Turbine" intelligent manufacturing system.
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Start ERP construction, optimize supply chain resource management, and promote the selection
and implementation of ERP system which is suitable for Hangzhou Turbine's manufacturing mode
with the guidance of lean production and total quality management.
Further improve the quality information platform and improve the coverage and depth of
product quality data control. Pay attention to the collection and management of unit life cycle service
data, and realize the continuous improvement of product quality driven by service data.
2. Transformation and upgrading
Build an integrated model of engineering, sales and service in an all-round way, and create a
"big service" format. Explore customer service demand, integrate service resources, extend service
stock market, promote service standardization and serialization construction, and accelerate
manufacturing service transformation.
Accelerate the integration of steam turbine marketing resources and deepen the linkage
between driving plate and power generation plate. Actively develop overseas business, seek external
resources to achieve its own purposes, and steadily push forward the localization strategy. Strengthen
the mutual promotion of steam turbine plate and gas turbine plate, and find a new business model for
gas turbine sales. Promote the key account management system and deepen the concept of "customer
engineering integration".
Continuously improve the workshop layout of the manufacturing base, optimize the processing
technology, explore the new mode of improving the storage efficiency with the intelligent
three-dimensional library as the center, and gradually improve the production capacity and efficiency.
Comprehensively promote the implementation of the overall plan of lean production, improve the
standard of lean field management, establish the evaluation standard of lean production, and build the
lean system of Hangzhou Turbine. Build the manufacturing base into a modern intelligent factory
that meets the requirements of lean production.
Establish a procurement integration process, strengthen the training of strategic suppliers, and
create a supply chain with value convergence, benefit sharing and risk sharing.
3. Strengthening enterprises by talents
Implement the strategy of strengthening enterprises by talents, formulate medium and
long-term plans for the construction of talent teams, and speed up the construction of a multi-level,
multi-channel and high-quality human resources management system.
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Analyze the talent development needs, investigate the talent management experience of
benchmark enterprises, sort out the company's talent selection system, and formulate and improve the
relevant policies for talent development in the new period and carry out implementation.
Improve the incentive mechanism of salary distribution, improve the secondary salary
distribution mechanism, and promote the optimization of salary system.
4. High quality development
According to the outline of the company's "Fourteenth Five-Year Plan", formulate detailed rules
for the implementation of strategic planning, organize relevant departments to break down strategic
measures, formulate implementation plans, form implementation manuals, study and formulate
strategic implementation evaluation plans and evaluation manuals, and effectively play a strategic
guiding role.
Deepen technological innovation and strengthen the supporting role of technology in the whole
business process. Accelerate the research and development of high-end drive and large-scale devices
such as supercritical carbon dioxide turbine, 1.5-2 million tons/year ethylene plant, 120,000-160,000
Nm3/h air separation plant, etc., explore the technical research depth, and improve the cycle
efficiency of steam turbine power generation.
Strengthen risk management and control, and identify, analyze and control risk points in
various fields. Continuously improve the business contract review mode, establish and improve the
market significant profit risk assessment mechanism, and strengthen the management of project
profitability. Improve the investment management and control system, standardize investment
decision-making procedures and investment processes, and improve the enterprise investment
management system.
Carry out budget management and improve the ability and level of financial management
through strategic comprehensive budget. Strengthen cost control. On the basis of comprehensive
budget, strengthen the control of manufacturing cost, project cost, procurement cost and management
cost, and improve the integration of finance and business. Strengthen the control of accounts
receivable and inventory, and improve the efficiency of capital turnover.
Improve the performance appraisal system, optimize the scheme of economic responsibility
system, strengthen the function appraisal and supervision over the implementation of system
documents, and ensure the operation of the Company. Further improve the level of corporate
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governance and establish good investor relations. Through scientific management and control,
system construction, improve the standard operation ability of holding subsidiaries.
In the new year, the company will continue to enhance its comprehensive competitiveness,
formulate the development strategy outline of the "Fourteenth Five-Year Plan", fully combine the
overall market environment and the company's strategic development goals to formulate
corresponding work ideas and major work plans, firmly grasp the opportunities of industrial
development, ensure the smooth progress of all work, and promote the healthy and sustainable
development of the company.
It will actively play the core role of the Board of Directors in corporate governance,
continuously improve the corporate governance structure and risk prevention mechanism, continue to
improve the company's standardized operation and governance level, further improve the company's
relevant rules and regulations, continuously optimize the corporate governance structure, and
strengthen the construction of internal control system to ensure the healthy, stable and sustainable
development of the company. Meanwhile, it will strengthen the study and training on all board
members' ability to perform their duties, improve the scientific and efficient decision-making of the
company, and ensure the healthy, stable and sustainable development of the company.
The Board of Directors of the company will continue to fulfill its information disclosure
obligations in strict accordance with the Company Law, Securities Law, Stock Listing Rules of
Shenzhen Stock Exchange, Guidelines for Standardized Operation of Listed Companies of Shenzhen
Stock Exchange and the Articles of Association, and effectively improve the standard operation level
of the company.
It will constantly strengthen the construction of investor relations management, promote the
company to maintain a good interactive relationship with investors, earnestly protect the investors'
participation rights, protect investors' legitimate rights and interests, improve corporate governance,
build market consensus, and establish a good image of the capital market.
The Board of Directors of the company will continue to work honestly, diligently, actively and
solidly, maintain its determination, focus on its core business, and promote the high-quality
development of the enterprise, so as to safeguard shareholders' interests, enhance investors'
confidence and provide a strong guarantee for the sustainable and healthy development of the
company!
Hangzhou Steam Turbine Co., Ltd.
April 17,2021
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