Stock Code: 200771 Stock ID: Hangqilun B Announcement No. 2017-52
Hangzhou Steam Turbine Co., Ltd.
Announcement of the Proposal on the Company's Capital Increase of
Hangzhou Jushi Investment Partnership and Related Transaction
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.
Ⅰ. Overview
1. In order to improve the company's use efficiency of funds, the company uses its self-owned funds to increase capital to Hangzhou Jushi Investment Partnership (Limited partnership), and the amount of such capital increase is RMB 50 million.
2. The associated relationship: among the limited partners of Jushi Investment, Hangzhou Steam Turbine Group Co., Ltd is the company's controlling shareholder, thus it is a related party to the company.
Another limited partner-Zhejiang Hanglian Iron& Steel Co., Ltd-is share-controlled by Hangzhou Heat Group Co., Ltd, yet both the company and Hangzhou Heat Group Co., Ltd are share-controlled by Steam Turbine Group, thus Hanglian Iron& Steel Co., Ltd is a related party to the Company.
Jushi Investment's general partner-Hangzhou Juyuan Asset Management Co.,Ltd-is actually controlled by Hangzhou Heat Group, thus Hangzhou Juyuan Asset Management Co.,Ltd is a related party to the Company.
According to the "Shenzhen Stock Exchange Listing Rules" and the relevant provisions, this capital increase is a joint investment action by the company and the related parties, thus constituting a related transaction.
3. The 12th meeting of the 7th term of Board was held on July 14, 2017 by means of telecommunication. Director Nie Zhonghai, Yan Jianhua, Yang Yongming, Ye Zhong, and Zheng Bin waived from the voting. As the resolution, the proposal was passed with all 6 votes in favor, 0 objection and 0 waive. The meeting examined the Proposal on the Company's Capital Increase of Hangzhou Jushi Investment Partnership and Related Transaction. The independent directors of the company made the prior approval and expressed the independent opinions in connection to such related transaction.
4. The transaction neither constitutes a major asset restructuring nor constitutes a backdoor listing according to Measures for the Administration of Major Asset Restructuring of Listed Companies. The proposal does not need to be submitted to the company's shareholders' general meeting for deliberation, Therefore none of them are subject to approval by the authorities.
II. Introduction of related parties and relationship
(1) Professional Institutional Investor
Hangzhou Juyuan Asset Management Co.,Ltd.
1. Date of establishment: July 4,2016
2. Place of Registration: Room 101, No.1 Building, Xintiandi Business Center Xiacheng District Hangzhou City, Zhejiang Province
3. Legalrepresentative：Ye Zhijun
4.Type: Limited Liability Company(natural personal investment or sole proprietorship of legal person in share-controlled)
5. Registered capital: RMB 11.50 million
6.Main business: Service: Asset management (Unless permitted by the supervision department such as financial department, it's not allowed to engage in the financial services such as financing and deposits from the public, financing guarantee and wealth management on behalf of clients), Investment management (Unless permitted by the supervision department such as financial department, it's not allowed to engage in the financial services such as financing and deposits from the public, financing guarantee and wealth management on behalf of clients)
7. Recent financial information:
In RMB
||||||
|-|-|-|-|-|
|Period|Operating income|Net profit|Total assets|Net profit|
|2016|0|-1,101,664.23|11,737,542.72|10,673,751.83|
|June 2017|0|6,070,800.10|26,068,136.27|16,744,559.93|

 (II)Limited partner
1. Hangzhou Steam Turbine Power Group Co., Ltd.
(1) Date of establishment:December 14, 1992
(2) Place of Registration: No. 357 Shiqiao Road Hangzhou City
(3) Office address: Block A, 68 Qingchun Road East, Hangzhou
(4) Enterprise property: Sole state-owned corporation
(5) Legal representative: Nie Zhonghai
(6) Registered capital: RMB 800 million
（7）Business scope: Manufacturing and processing: textile machinery, paper-making machinery, pump, casting products, electrical tools, gear box, thermal transmitter, digital controlling device, and spare parts of the above (limited to the subsidiaries); Contracting of domestic and overseas machinery engineering
projects, export of above equipments and materials, provide labor services for above overseas projects.
Thermal power plant project and equipment engineering; wholesale and retail: products and spare parts
manufactured by members of the group, and technical research, consulting, and service of above products;
Provide materials, equipments, and spare parts to members of the Group, water and power supply (other than installation and maintaining of power supply equipment); Including the business scope of subsidiaries.
(8) Actual holder: Hangzhou State-owned Asset Administration Committee
(9) Recent financial information (on consolidated range)
In RMB
||||||
|-|-|-|-|-|
|Period|Operating income|Net profit|Total assets|Net profit|
|2015|57,011,318,873.16|356,172,459.98|28,676,683,075.59|8,062,853,737.67|
|2016|72,003,681,905.10|651,160,879.41|34,584,194,181.72|10,584,617,894.02|

 2.Zhejiang Hanglian Iron& Steel Co., Ltd.
(1) Date of establishment: July 10,2006
（2）Place of Registration: No. 8 Sanliyang Road Gongshu District Hangzhou City (No. 609&610, 6F, Complex Building Sanliyang Steel Market)
(3) Legal representative: Wu Xiaowei
(4)Type: Limited Liability Company (Natural personal investment or sole proprietorship of legal person in share-controlled)
(5) Registered capital: RMB 80 million
(6)Main business: steel, non-ferrous metals, coal (no storage), coke, building materials, plastics, rubber, asphalt, woods, cement, minerals, mineral products (except the items related to the afore-said two items that require pre-approval), knitwear sales; import and export of goods (except the items prohibited by laws and administrative regulations, and for items restricted by laws and administrative regulations, it shall operate after getting permission); Financial advisory services; Investment consultation (excluding securities, futures); Industrial investment (the above businesses scope shall be operated in the valid operation term registered in the Registration Certificate of Name of the Market).
(7) Recent financial information
In RMB
||||||
|-|-|-|-|-|
|Period|Operating income|Net profit|Total assets|Net profit|
|2015|3,299,136,590.19|15,265,791.79|1,676,586,280.19|92,167,479.35|
|2016|1,269,645,917.43|11,297,652.61|433,302,460.09|104,635,131.96|
|June 2017|508,106,837.48|16,308,786.93|572,145,248.57|123,829,918.89|

 III. The basic situation of investment subject-matter
1. Name of the partnership enterprise: Hangzhou Jushi investment Partnership (Limited partnership)
2. Type: Limited partnership
3. The managing partner: Hangzhou Juyuan Asset Management Co.,Ltd.
4. Duration of the partnership: from March 2, 2016 to March 1, 2026
5. The main place of business: Room 109, No. 149 Ganshui Lane Shangcheng District Hangzhou City
6. Scope of business: services: investment management, industrial investment, investment consultation (excluding securities, futures)
7. Recent financial information
In RMB
||||||
|-|-|-|-|-|
|Period|Operating income|Net profit|Total assets|Net profit|
|2016|0|-45,789.43|89,999,210.57|89,954,210.57|
|June 2017|0|-6,308.48|102,218,056.10|189,947,902.09|

 IV.The main content of the related transaction
1. Investment orientation: investment management, industrial investment, investment consultation
2. Information of registration of capital-contribution by partners after the capital increase:
|||||||
|-|-|-|-|-|-|
|No|Name of partner|Type|Amount ofcontribution(RMB’0000)|Forms ofcontribution|Proportion ofcapital-contribution|
|1|HangzhouSteam TurbineCo., Ltd.|Limitedpartner|10000|Currency|32.26%|
|2|ZhejiangHanglian Iron &Steel Co., Ltd.|Limitedpartner|10000|Currency|32.26%|
|3|HangzhouSteam TurbineGroup Co., ltd.|Limitedpartner|10000|Currency|32.26%|
|4|HangzhouJuyuan AssetManagementCo.,Ltd.|Generalpartner|1000|Currency|3.22%|

3. Management mode of the limited partnership:
(1) All partners jointly entrust a partner-Hangzhou Juyuan Asset Management Co., Ltd as the managing partner of the partnership enterprise, and other partners shall no longer execute partnership affairs;
(2) The managing partner shall act on behalf of the partnership enterprise in dealing with outside parties; (3) A partner who does not manage the partnership affairs is entitled to supervise the managing partner and to examine the circumstances of affairs managed by the managing partner;
(4) Upon the request of the partner, the managing partner shall report to other partners about the performance status of affairs execution and the operating status and financial status of the partnership;
(5) The proceeds from the execution of the partnership affairs by the managing partner shall be owned by
the partnership, and the costs incurred and losses incurred from such execution shall be borne by the
partnership;
(6)Where the partner who entrusts the managing of the partnership affairs does not carry out the business in accordance with the partnership agreement or the decision of all the partners, then the other partners may decide to withdraw the entrustment;
(7) Where the partners make a resolution of the matters related to the partnership enterprise, each partner shall have one vote; unless otherwise provided by laws and administrative rules and regulations and this agreement, a resolution shall be adopted by a majority of the partners; However, the following matters shall be agreed upon by all the partners: alteration of the name of the partnership, alteration of the business scope of the partnership, alteration of the location of the principal place of business; dispose of the immovable property of the partnership; transferring or disposing of intellectual property rights and other property rights of the partnership enterprise; providing guarantee for others in the name of the partnership; the appointment of the personal other than the partners as the management personnel of the partnership; amendment of the contents of the partnership agreement.
(8) Where the debt of the partnership caused by purposeful act or gross negligence of the managing partner, the managing partner shall bear the liability of compensation.
4. Profits distribution or Losses sharing:
(1) The profits and losses of the enterprise shall be distributed and shared by the partners in proportion to the capital-contribution.
(2) The enterprise carries out a profit distribution or the loss sharing at the end of each year.
(3) Where the partnership property is insufficient to settle the partnership debt, the general partner shall be jointly and severally liable to the partnership enterprise, and the limited partner shall be liable to the partnership debts within the amount of its capital contribution.
5. Statements of the associated relationship and other relations of interests:
For the associated relationship between Hangzhou Juyuan Asset Management Co., Ltd and the company's controlling shareholder, please see the above description; there is no associated relationship to Hangzhou Juyuan Asset Management Co., Ltd and the company's directors, supervisors and senior management personnel.
There is no interest arrangement between Hangzhou Juyuan Asset Management Co., Ltd and the Company; and there is no interest arrangement between Hangzhou Juyuan Asset Management Co., Ltd and the company's controlling shareholder, the actual controller, directors, supervisors and senior management personnel; there is no concerted action relationship with other investors involved in the establishment of the partnership enterprise; and Hangzhou Juyuan Asset Management Co., Ltd does not hold the shares of the listed company in a direct or indirect form.
6. The company's controlling shareholder-Hangzhou Steam Turbine Group Co., Ltd, as a limited partner, participates in the investment. The directors, supervisors and senior management personnel of the Company did not participate in the investment of the partnership enterprise and did not serve in the partnership enterprise.
7. Whether the cooperative investment matter may lead to horizontal competition:
The cooperative investment matter will not lead to horizontal competition.
8. The company will make timely disclosure of the progress status of the investment cooperating with the professional institutional investor in accordance with the regulations.
V.The purpose of the transaction, the risks and the impact on the company
1. The purpose of this investment: the company, under the premise of ensuring the funds safety and the liquidity, uses its self-owned funds to improve the efficiency of funds use and capital gains.
2. The source of funds: the company's self-owned funds
3. The assessment of the risks existed in the subject-matter of the investment: In view of the investment process will be affected by the macroeconomic, industry cycles, the operating management and the transaction scheme of the company to be invested and other factors, it may face the risk that the investment will not reach the expected rate of return, thus please pay attention to the investment risk.
4. The impact on the company: The capital increase to Hangzhou Jushi investment Partnership (Limited partnership) will not affect the funds needs in the normal operation of the company and will not have a significant impact on the company's profits.
VI.The total amount of all kinds of related transactions occurred with the related party from the beginning of the year to the disclosure date
The total amount of all kinds of related transactions occurred with the related party from the beginning of the year to the disclosure date is RMB 218.3853 million(Including the amount of RMB 208 million of this related transaction).; the amount of related transactions of the company and related parties namely Hangzhou Juyuan Asset Management Co., Ltd and Zhejiang Hanglian Iron& Steel Co., Ltd was RMB 0 .
VII. Consent of independent directors in advance and their opinions
The independent directors of the Company conducted an ex-ante review of the investment-namely the related transaction matter and agreed to submit the matter to the Board of directors for deliberation.
The independent directors reckoned that: the procedures and the process for the deliberation of this investment matter-namely the related transaction-of the company is in line with the relevant laws and regulations, the Articles of Association of the Company and the relevant provisions and rules, without prejudice to the interests of the Company and the small and medium-sized shareholders, without violations of the principle of openness, fairness and impartiality, and it will not have an impact on the independence of the company. The investment is in line with the company's development plan and is conducive to increase the company's operating income. Agreed to the "Proposal about Increasing Capital to Hangzhou Jushi investment Partnership Namely the Related Transaction".
VIII. Documents for reference
1. Resolutions of the 12th Meeting of the seventh Board of Directors;
2.The prior approval of the independent directors
3.Hangzhou Jushi investment Partnership (Limited partnership) partnership agreement.
The Board of Directors of Hangzhou Steam Turbine Co., Ltd.
July 14, 2017