Stock Code: 200771 Stock ID: Hangqilun B Announcement No. 2018-46
Hangzhou Steam Turbine Co., Ltd.
Announcement on Reviewing the Estimated Amount of Daily Related Transactions in 2018
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. Profiles of the routine related transactions
(I) Introduction of the related transaction
Routine related transactions of the Company are mainly purchasing of materials and fuel from related parties; sales of products to related parties; and receiving or providing of services to the related parties. For profiles of the related parties please go to part II of this report.
The routine related transactions to be made in year 2018 is project to RMB 345.004 million, and that actually occurred in 2017 was RMB340.0046 million.
The 23rd meeting of the 7th term of Board was held on June 25, 2018. The proposal about routine related transactions occurred in 2018 was examined at the meeting. Director Zheng Bin, Yan Jianhua, Yang Yongming and Ye Zhong waived from the voting. As the resolution, the proposal was passed with all 6 votes in favor, 0 objection and 0 waive.
This proposal is subject to examination of theShareholders’ Meeting and Hangzhou Steam Turbine Power Group Co., Ltd. shall waive from voting of this proposal.
（II）Expected daily transaction type and amount
In RMB
||||||||
|-|-|-|-|-|-|-|
|Type of relatedtransaction|Related parties|Content|Price principia|Estimated amount in|Amount as of the|Occurred amount|

||||||||
|-|-|-|-|-|-|-|
|||||2018|date of disclosure( January- May2018)|2017|
|Purchasing ofmaterial fromrelated party|Hangzhou Nanhua Wooden Packaging Co., Ltd.|Packing box|Fair|10,350,000.00|5,011,930.48|11,412,748.09|
||Hangzhou Nanfang Tongda Gears Co., Ltd.|Gear case|Fair|6,560,000.00|1,863,034.19|6,526,922.23|
||Hangzhou Hangfa Power Generating Equipment Co., Ltd.|Generator|Fair|145,840,000.00|57,131,226.12|137,886,068.57|
||Hangzhou Steam Turbine Engineering Co., Ltd.|Turbine parts|Fair|2,560,000.00|427,350.43|2,658,119.67|
||Hangzhou Steam Turbine Industrial Co., Ltd.（Material）|Raw material, industrialcooperation|Fair|1,077,000.00|337,664.39|1,079,184.92|
||China mechanical and Electrical Institute -HSTG(Hangzhou) United Institutes Co., Ltd.|Raw material|Fair|1,120,000.00|998,507.96|1,375,633.56|
||Subtotal|||167,507,000.00|65,769,713.56|160,938,677.04|
|Purchasing of fueland power fromthe related parties|Hangzhou Steam Turbine Power Group Co., Ltd.|Water and electricity|Fair|13,247,000.00|6,095,789.99|13,218,180.11|
||Subtotal|||13,247,000.00|6,095,789.99|13,218,180.11|
|Sales of productsor merchandisesof the Companyto related parties|Hangzhou Steam Turbine Engineering Co., Ltd.|Turbine, compressor|Fair|68,000,000.00|17,739,316.24|70,842,034.18|
||Hangzhou Steam Turbine Automobile Sales Service Co., Ltd.|Odd material|Fair|20,000.00|302.06|24,393.29|
||Hangzhou Hangfa Power Generating Equipment Co., Ltd.|Forging|Fair|11,900,000.00|6,714,309.64|11,378,353.36|
||India greenesol Company|Turbine parts|Fair|1,000,000.00|201,528.39|984,273.41|
||Subtotal|||80,920,000.00|24,655,456.33|83,229,054.24|
|Labor service torelated parties|Hangzhou Steam Turbine Engineering Co., Ltd.|Installation services, etc.|Fair|3,000,000.00|0.00|6,483,654.52|
||Hangzhou Steam Turbine Power Group Co., Ltd.|Information services|Fair|140,000.00|0.00|139,622.64|
||Subtotal|||3,140,000.00|0.00|6,623,277.16|
|Labour & servicesaccepted from therelated parties|Hangzhou Steam Turbine Engineering Co., Ltd.|Technical services|Fair|3,200,000.00|0.00|3,157,164.71|
||Hangzhou Steam Turbine Industrial Co., Ltd.|Cleaning fee|Fair|1,100,000.00|542,452.87|1,100,628.92|
||China mechanical and Electrical Institute -HSTG(Hangzhou) United Institutes Co., Ltd.|Development design|Fair|150,000.00|0.00|145,631.07|
||Hangzhou Steam Turbine Power Group Co., Ltd.|Rental fees, trademark fees, etc.|Fair|14,850,000.00|728,170.38|14,531,203.42|
||Hangzhou Steam Turbine Automobile Sales Service Co., Ltd.|Freight, repair, rental|Fair|60,540,000.00|20,298,025.20|56,556,677.67|
||Hangzhou Steam Turbine Compressor Co., Ltd.|Technical service|Fair|350,000.00|339,622.64|0.00|
||Subtotal|||80,190,000.00|21,908,271.09|75,491,305.79|

（III）Daily Related transactions actually situations last year(As of December 31, 2017 ).
In RMB
||||||||
|-|-|-|-|-|-|-|
|Type of relatedtransaction|Related parties|Content|Price principia|Estimated amount2017|Percentage insimilarbusiness %|Differenceproportion（%）|
|Purchasing of|Hangzhou Nanhua Wooden Packaging Co., Ltd.|Packing box|11,412,748.09|15,708,000.00|0.52%|-27.34%|

||||||||
|-|-|-|-|-|-|-|
|material fromrelated party|Hangzhou Nanfang Tongda Gears Co., Ltd.|Gear case|6,526,922.23|10,550,000.00|0.30%|-38.13%|
||Hangzhou Steam Turbine Industrial Co., Ltd.|Raw material|1,079,184.92|2,024,000.00|0.05%|-46.68%|
||China mechanical and Electrical Institute -HSTG(Hangzhou) United Institutes Co., Ltd.|Raw material|1,375,633.56|1,500,000.00|0.06%|-8.29%|
||Hangzhou Hangfa Power Generating Equipment Co., Ltd.|Generator|137,886,068.57|141,000,000.00|6.33%|-2.21%|
||Hangzhou Steam Turbine Engineering Co., Ltd.|Raw material|2,658,119.67|4,000,000.00|0.12%|-33.55%|
||India greenesol Company|Couplings|34,045.00|0.00|0.00%||
||Subtotal||160,972,722.04|174,782,000.00|||
|Purchasing of fueland power fromthe related parties|Hangzhou Steam Turbine Power Group Co., Ltd.|Water and electricity|13,218,180.11|13,490,000.00|25.92%|-2.01%|
||Subtotal||13,218,180.11|13,490,000.00|||
|Sales of productsor merchandisesof the Companyto related parties|Hangzhou Steam Turbine Engineering Co., Ltd.|Steam turbine|70,842,034.18|42,000,000.00|2.15%|68.67%|
||Hangzhou Hangfa Power Generating Equipment Co., Ltd.|Forging|11,378,353.36|9,200,000.00|0.35%|23.68%|
||India greenesol Company|Steam turbine|984,273.41|2,600,000.00|0.03%|-62.14%|
||Hangzhou Steam Turbine Automobile Sales Service Co.,Ltd.|Odd Material|24,393.29|31,000.00|0.00%|-21.31%|
||Hangzhou Steam Turbine Compressor Co., Ltd.|Parts|382,017.01|10,000.00|0.01%|3720.17%|
||Subtotal||83,611,071.25|53,841,000.00|||
|Labor service torelated parties|Hangzhou Steam Turbine Power Group Co., Ltd.|Service charge|139,622.64|100,000.00|0.22%|39.62%|
||Hangzhou Steam Turbine Compressor Co., Ltd.|Industrial Cooperation|88,000.00|120,000.00|0.14%|-26.67%|
||Hangzhou Hangfa Power Generating Equipment Co., Ltd.|Industrial Cooperation|-|550,000.00|||
||Hangzhou Steam Turbine Engineering Co., Ltd.|Industrial Cooperation|6,483,654.52|-|10.32%||
||Subtotal||6,711,277.16|770,000.00|||
|Labour & servicesaccepted from therelated parties|Hangzhou Steam Turbine Automobile Sales Service Co.,Ltd.|Freight, repair, rental|56,556,677.67|67,900,000.00|14.87%|-16.71%|
||Hangzhou Steam Turbine Power Group Co., Ltd.|Rental fees, trademark fees, etc.|14,531,203.42|12,480,000.00|3.82%|16.44%|
||Hangzhou Steam Turbine Industrial Co., Ltd.|Cleaning fee|1,100,628.92|1,400,000.00|0.29%|-21.38%|
||Hangzhou Steam Turbine Engineering Co., Ltd.|design fee|3,157,164.71|2,000,000.00|0.83%|57.86%|
||Hangzhou Wandong Electric Co., Ltd.|Industry Cooperation|-|50,000.00|||
||China mechanical and Electrical Institute -HSTG(Hangzhou) United Institutes Co., Ltd.|Development design|145,631.07|-|0.04%||
||Subtotal||75,491,305.79|83,830,000.00|||

（Continued）
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|-|-|
|Supplementary notes:|(1) As of December 31, 2017,Hangzhou Nanhua Wooden PackagingCo., Ltd., Hangzhou Hangfa Power Generating Equipment Co., Ltd.Hangzhou Nanfang Tongda Gears Co., Ltd., Hangzhou Steam TurbineEngineering Co., Ltd., Hangzhou Steam Turbine Industrial Co., Ltd.,China mechanical and Electrical Institute -HSTG (Hangzhou) UnitedInstitutes Co., Ltd., Hangzhou Steam Turbine Automobile SalesService Co., Ltd and Hangzhou Hang Steam Turbine Compressor Co.,Ltd are both controlled by Hangzhou Steam Turbine Power Group Co.,Ltd (hereinafter referred to as Hangzhou Steam Turbine Group") orhave the actual control relationship as "associated person under thesame control”.(2) In accordance with the Stock Listing Rules, the total amount ofrelated party transactions actually occurred between the company andits associates (Hangzhou Steam Turbine Group and its subsidiaries)under the same control in 2017 is RMB 338.9862 Million , whichexceeds the expected amount of 2017-that was RMB 324.113 million,and the exceeding amount accounts for 0.239% of the audited netassets of 2017, which does not require the related review proceduresand the fulfillment of disclosure obligation.|
|Date and index of disclosure|See March 18th 2017, the Related Party Transaction Amount of 2016and the Estimated Related Party Transaction Amount of 2017(Announcement No.2017-21)disclosed on cninfo.com.cn.|
|An explanation by the board of directors for therelatively big difference between the actual occurredamount of daily related transactions and the estimatedamount|The reason for the relatively big difference between the estimatedamount of daily related party transactions and the actual amountoccurred in 2017 is: The amount of daily related party transactionsestimated by the company is the upper limit that may occur betweenthe transaction parties, including: the amount expected to occur in asigned contract, the amount of a supplementary agreement that may besigned for a signed contract, and the amount that may be expected to besigned in not-yet-signed contract. The actually occurred amount isdetermined according to the actual contract amount signed by bothparties and the progress of implementation, which has a biguncertainty, resulting in a big difference between the actual occurredamount and the expected amount.|
|An explanation by the independent directors for therelatively big difference between the actual occurredamount of daily related transactions and the expected|The actual amount of daily related transactions in 2017 is lower thanthe estimated amount because the daily related transaction amountestimated by the Company is the upper limit of the amount of the|

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|-|-|
|amount|related transaction that may occur between transaction parties. Theactual occurred amount is determined according to the actual contractamount signed by both parties and the progress of implementation,which has a big uncertainty, resulting in a big difference between theactual occurred amount and the expected amount. Although the actualamount of occurrence between the company and Hangzhou steamturbine group and its subsidiaries exceeded the expected amount, theexcess portion accounted for 0.239% of the audited net assets in 2017,The actual occurred amount does not exceed the expected amount,which is in line with the needs of the actual production and operationof the company and the future development, the transaction is pricedaccording to market principles, fair and reasonable, and does not harmthe interests of the company and small-and-medium sized shareholders,which is conducive to the company's sustained and steadydevelopment.|

II. Introduction of related parties and relationship
(I) Hangzhou Steam Turbine Power Group Co., Ltd.
1. Profiles
(1) Date of incorporation: December 14, 1992
(2) Registered address: 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: Mr. Zheng Bin
(6) Registered capital: RMB800 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
2. Recent financial information (on consolidated range)
In RMB
||||||
|-|-|-|-|-|
|Periods|Turnover|Net profit|Gross Assets|Net asset|
|Year 2017|102,930,921,802.47|641,624,652.28|38,769,187,457.55|9,941,197,000.88|
|January-March 2018|21,168,700,669.63|110,033,282.97|39,912,449,512.85|9,745,089,186.11|

3. Relationship with the Company
Hangzhou Steam Turbine Power Group Co., Ltd. (“HSTG” or “the Group”) is holding 479,824,800 state-owned shares account for63.64% of the capital shares of the Company, and is the holding shareholder of the Company. It is complying with Article 10.1.3 (I) of Share Listing Rules of Shenzhen Stock Exchange. HSTG is the related legal person of the Company. This is a related transaction.
4. Description of related transactions and their necessity
The Company rents lands, office spaces, workshops, warehouses from HSTG; the water and power supply were provided by HSTG; the trade mark was authorized by HSTG. For these have been the basic conditions the Company needs for production and operation, these transactions will exist constantly.
(II) Hangzhou Hangfa Generator Equipment Co., Ltd.
1. Profiles
(1) Incorporated on: March 22, 1993
(2) Registered address: Tonger Village, Linpu, Xiaoshan
(3) Office address: 128 Shixinzhong Road, Xiaosha
(4) Enterprise property: state-owned shareholding corporation
(5) Legal representative: Yan Jianhua
(6) Registered capital: RMB 80 million
(7) Business scope: hydropower station equipment, parts of steam turbine generators, electric motor, power plant and mining equipment, automatic control parts, export of products and technologies.
(8) The controlling shareholder: Hangzhou Steam Turbine Power Group Co., Ltd.
2. Recent financial information
In RMB
||||||
|-|-|-|-|-|
|Periods|Turnover|Net profit|Gross Assets|Net asset|
|Year 2017|279,803,946.31|22,459,703.33|616,473,257.76|118,749,927.34|
|January-March 2018|66,106,401.73|-456,594.19|695,539,714.09|118,293,333.15|

 3. Relationship with the Company
Hangzhou Hangfa Generator Equipment Co., Ltd. is a holding subsidiary of HSTG, in which HSTG is holding85% of share equity. For Hangfa is under the common control with the Company, it is regarded as related legal person according to Article 10.1.3 (II)– “Entity or other organizations directly or indirectly controlled by aforesaid legal entity other than the PLC and its holding subsidiaries;” of the Share Listing Rules of Shenzhen Stock Exchange. Therefore it is recognized as the related entity of the Company. This is a related transaction.
4. Description of related transactions and their necessity
The major related transactions with Hangzhou Hangfa Generator Equipment Co., Ltd. were purchasing of steam turbine generators. It was to satisfy the demand of customers. Some customers require the Company to provide generators along with the steam turbines. Hangfa has
been providing products to the Company since long before it was given to HSTG.
(III) Hangzhou Nanhua Wooden Packaging Co., Ltd.
1. Profiles
(1) Incorporation date: December 31, 2003
(2) Registered address: 62 Xingqiao Road North, Xingqiao, Yuhang, Hangzhou
(3) Office address: 62 Xingqiao Road North, Xingqiao, Yuhang, Hangzhou
(4) Enterprise property: state-participated limited company
(5) Legal representative: Wang Zhenfeng
(6) Registered capital: RMB 2 million
(7) Business scope: manufacturing, processing, and sales of wooden products (wooden packaging material); sales of construction material, decoration material; all legal items not subject to approval of authorities.
(8) The controlling shareholder: Hangzhou Steam Turbine Power Group Co., Ltd.
2. Recent financial information
In RMB
||||||
|-|-|-|-|-|
|Periods|Turnover|Net profit|Gross Assets|Net asset|
|Year 2017|12,612,643.75|451,468.87|5,746,283.31|3,167,498.92|
|January-March 2018|2,897,160.63|-234,789.59|5,253,504.39|2,932,709.33|

 3. Relationship with the Company
Hangzhou Nanhua Wooden Package Co., Ltd. is a holding subsidiary of HSTG, in which HSTG is holding30% of share equity. For it is under the common control with the Company, it is regarded as related legal person according to Article 10.1.3 (II)– “Entity or other organizations directly or indirectly controlled by aforesaid legal entity other than the PLC and its holding subsidiaries;” of the Share Listing Rules of Shenzhen Stock Exchange. Therefore it is recognized as the related entity of the Company, and this is a related transaction.
4. Description of related transactions and their necessity
Related transactions with Hangzhou Nanhua Wooden Packaging Co., Ltd. were mainly purchasing of wooden packaging material which were necessary for shipping of the products.
(IV) Hangzhou Nanfang Tongda Gears Co., Ltd.
1. Profiles
(1) Date of incorporation: January 25, 2005
(2) Registered address: 130 Stadium Road, Xiacheng District, Hangzhou
(3) Office address: 601, Block B, Lingjun World, 10 Chaowang Road
(4) Enterprise property: state-participated limited company
(5) Legal representative: Wang Zhenfeng
(6) Registered capital: RMB6 million
(7)Business scope: whole selling and retailing of gear boxes, gear speed reducer, steam turbine and parts, steel, electro-mechanism equipment (exclude cars), common machinery, hardware& electric materials.
2. Recent financial information
In RMB
||||||
|-|-|-|-|-|
|Periods|Turnover|Net profit|Gross Assets|Net asset|
|Year 2017|29,754,376.10|1,188,854.98|47,087,370.98|11,734,326.75|
|January-March 2018|6,979,456.94|519,652.23|42,974,534.69|8,622,161.07|

 3. Relationship with the Company
On March 28, 2018, The equity transfer of the gears company (registered capital of 6 million yuan, accounting for30% of the group company) held by Hangzhou Steam Turbine Power Group Co., Ltd. was publicly listed through the Hangzhou Exchange and various equity transfer procedures had been completed. After completion of the equity transfer, the Hangzhou Steam Turbine Group no longer holds any equity in the gear company.
According to the relevant provisions of Article 10.1.6 of the "Stock Exchange Listing Rules of Shenzhen Stock Exchange", the gear company is regarded as a company affiliate, and the nature of the transaction between the company and the gear company still belongs to the related transaction.
4. Description of related transactions and their necessity
The Company is mainly purchasing gear boxes and jigger devices from Nanfang Tongda. These are essential to theCompany’s product. Some of the industrial steam turbines are required to maintain certain speed by using of gear boxes.
(V) Hangzhou Steam Turbine Industrial Co., Ltd.
1. Profiles
(1) Date of incorporation: February 11, 2004
(2) Registered address: No. 357 Shiqiao Road Hangzhou City
(3) Office address: No. 357 Shiqiao Road Hangzhou City
(4) Enterprise property: state-participated limited company
(5) Legal representatives: Qiu Jinyong
(6) Registered capital: RMB2.5 million
(7) Business scope: manufacturing and processing of: steam turbine parts, electronic tool parts, mining equipment parts; wholesaling and retailing of: home electric appliances, grocery, food, agriculture products (other than those under national control), stationery; service: restaurant, out-campus education and training programs, residential services. All legal items not subject to approval of authorities.
(8) The controlling shareholder: Hangzhou Steam Turbine Power Group Co., Ltd.
2. Recent financial information
In RMB
||||||
|-|-|-|-|-|
|Periods|Turnover|Net profit|Gross Assets|Net asset|
|Year 2017|6,068,908.64|-3,021,276.34|11,487,364.69|5,707,871.99|
|January-March 2018|850,829.14|-1,301,978.30|10,062,481.63|4,406,474.89|

3. Relationship with the Company
Hangzhou Steam Turbine Industrial Co., Ltd. is a holding subsidiary of HSTG, in which HSTG is
holding10% of share equity. For it is under the common control with the Company, it is regarded as related legal person according to Article 10.1.3 (II)– “Entity or other organizations directly or indirectly controlled by aforesaid legal entity other than the PLC and its holding subsidiaries;” of the Share Listing Rules of Shenzhen Stock Exchange. Therefore it is recognized as the related entity of the Company, and this is a related transaction.
4. Description of related transactions and their necessity
Hangzhou Steam Turbine Industrial Co., Ltd. was reconstructed from infrastructure departments of HSTG. The related transactions with it are mainly supporting services and medical services which are necessary for the Companydoesn’t have these departments.
(VI) Hangzhou Steam Turbine Automobile Sales& Service Co., Ltd.
1. Profiles
(1) Date of incorporation: September 2, 1998
(2) Registered address: No. 357 Shiqiao Road Hangzhou City
(3) Office address: No. 357 Shiqiao Road Hangzhou City
(4) Enterprise property: state-participated limited company
(5) Legal representative: Yang Yongming
(6) Registered capital: RMB5 million
(7) Business scope: wholesaling and retailing of: automobiles (except for sedan cars) and parts, metal material, construction material, electronic machine and instruments. Service: cargo transportation, automobile repairing (class B), all legal items not subject to approval of authorities. (8) The controlling shareholder: Hangzhou Steam Turbine Power Group Co., Ltd.
2. Recent financial information
In RMB
||||||
|-|-|-|-|-|
|Periods|Turnover|Net profit|Gross Assets|Net asset|
|Year 2017|95,500,677.65|6,031,385.14|50,911,613.76|31,422,413.04|
|January-March 2018|15,137,347.53|1,385,106.62|48,002,651.54|30,307,529.66|

 3. Relationship with the Company
Hangzhou Steam Turbine Automobile Sales Co., Ltd. is a holding subsidiary of HSTG, in which HSTG is holding30% of share equity. For it is under the common control with the Company, it is regarded as related legal person according to Article 10.1.3 (II)– “Entity or other organizations directly or indirectly controlled by aforesaid legal entity other than the PLC and its holding subsidiaries;” of the Share Listing Rules of Shenzhen Stock Exchange. Therefore it is recognized as the related entity of the Company, and this is a related transaction.
4. Description of related transactions and their necessity
Related transactions with Hangzhou Steam Turbine Automobile Sales& Service Co., Ltd. are mainly cargo transportation, international cargo agency, employee transportation, and vehicle repairing services.The Company does not have transportation division, therefore accepting of these services are necessary.
(VII) Hangzhou Steam Turbine Engineering Co., Ltd.
1. Profiles
(1) Date of incorporation: September 30, 2011
(2) Registered address: 18 Street No. 22, Technical Development Zone, Hangzhou
(3) Office address: 15-17 Floor, A Building, No.68, Qingchun Road, Hangzhou.
(4) Enterprise property: state-controlled company limited
(5) Legal representative: Ye Zhong
(6) Registered capital: RMB200 million.
(7) Main business scope: general contracting of power supply projects; design and installation of: electro-mechanical equipment, mid-small scale thermal power plant, energy saving technical reconstruction and services, technical consultancy; import and export of goods; whole selling of: packaged equipment, metal material, electronic installations, wires, cables, instruments, fire-resistance materials. (as stipulated by the authority)
(8) The controlling shareholder: Hangzhou Steam Turbine Power Group Co., Ltd.
2. Recent financial information
In RMB
||||||
|-|-|-|-|-|
|Periods|Turnover|Net profit|Gross Assets|Net asset|
|Year 2017|266,817,974.94|3,596,285.69|863,170,887.94|72,976,616.32|
|January-March 2018|33,867,578.63|403,348.32|844,431,884.01|73,379,964.64|

 3. Relationship with the Company
Hangzhou Steam Turbine Engineering Co., Ltd. is a holding subsidiary of HSTG, in which HSTG is holding
74.275%
of share equity. For it is under the common control with the Company, it is regarded as related legal person according to Article 10.1.3 (II)– “Entity or other organizations directly or indirectly controlled by aforesaid legal entity other than the PLC and its holding subsidiaries;” of the Share Listing Rules of Shenzhen Stock Exchange. Therefore it is recognized as the related entity of the Company, and this is a related transaction.
4. Description of related transactions and their necessity
To satisfy the needs of business operation of both parties, sales of steam turbines to Hangzhou Steam Turbine Engineering Co., Ltd. is a support to theCompany’s shares force.
(VIII) Hangzhou Hangqilun Compressor Co., Ltd.
1. Profiles:
(1) Date of incorporation: July 9, 2014
(2) Registered address: No. 357 Shiqiao Road Hangzhou City
(3) Office address: No. 357 Shiqiao Road Hangzhou City
(4) Type of enterprise: state-owned limited company
(5) Legal representative: Yan Jianhua
(6) Registered capital: RMB10 million
(7) Main business scope:
Licensed items: manufacturing of rotating machinery and equipment such as compressors (within expiration period). General items: services such as design, development, technical consulting, repairing, and reformation of compressors. Design of integrated compressor projects. Wholesale and retail of parts and material related to compressors.
(8) The main shareholder: Hangzhou Steam Turbine Power Group Co., Ltd.
In RMB
||||||
|-|-|-|-|-|
|Periods|Turnover|Net profit|Gross Assets|Net asset|
|Year 2017|4,633,297.79|-3,874,971.05|21,820,657.29|-3,043,383.61|
|January-March 2018|0|-150,042.00|21,358,957.87|-3,193,425.61|

 3. Relationship with the Company
HSTG is holding42.5% of theCompany’s share capital as the controlling shareholder. Therefore the Compressor Company is under the common control with the Company, it is regarded as related legal person according to Article 10.1.3 (II)– “Entity or other organizations directly or indirectly controlled by aforesaid legal entity other than the PLC and its holding subsidiaries;” of the Share Listing Rules of Shenzhen Stock Exchange. Therefore it is recognized as the related entity of the Company.
4. Description of related transactions and their necessity
The main content of the related transaction between the Company and Hangzhou Hangqilun Compressor Co., Ltd. Is accepting the technical services provided by the latter.
(IX) China mechanical and Electrical Institute -HSTG (Hangzhou) United Institutes Co., Ltd.
1. Profiles:
(1) Date of incorporation: October 22,2008
(2) Registered address: Room 1501, No.68-1 Qingchun East Road,Jianggan District,Hangzhou City
(3) Office address: No.68-1 Qingchun East Road,Jianggan District,Hangzhou City
(4) Type of enterprise: state-owned limited company
(5) Legal representative: Song Siyuan
(6) Registered capital: RMB1 million
(7) Main business scope: Services: Technology development, consulting, service and transfer of products, new materials, new products, new technology, new equipment, technology development, consulting, services and transfer of benefits, electronic computers and automation, environmental protection products and resource utilization products. (Including pre-approval projects); wholesale and retail: mechanical and electrical equipment and spare parts, metal materials, monitoring equipment and other non-cultural training, The import and export of goods, the import and export of goods, the import and export of goods (except for projects prohibited by laws and administrative regulations, except when the items subject to legal and administrative regulations are restricted); the business scope of the subordinate branches; Law project.
(8) The main shareholder: Hangzhou Steam Turbine Power Group Co., Ltd.
2. Recent financial information
In RMB
||||||
|-|-|-|-|-|
|Periods|Turnover|Net profit|Gross Assets|Net asset|
|Year 2017|1,543,175.73|178,018.72|2,298,759.27|1,378,416.33|
|January-March 2018|128,183.76|-42,253.87|2,126,810.23|1,336,162.46|

Hangzhou steam turbine group holds70% stake in China mechanical and Electrical Institute -HSTG (Hangzhou) United Institutes Co., Ltd ,For Compressor Company is under the common control with the Company, it is regarded as related legal person according to Article 10.1.3 (II)– “Entity or other organizations directly or indirectly controlled by aforesaid legal entity other than the PLC and its holding subsidiaries;” of the Share Listing Rules of Shenzhen Stock Exchange. Therefore it is recognized as the related entity of the Company. This is a related transaction.
4. Description of related transactions and their necessity
Related transactions with China mechanical and Electrical Institute -HSTG (Hangzhou) United Institutes Co., Ltd . were mainly purchasing of raw material.
（X）(India) greenesol power equipment private Co., Ltd.
1.Profiles：
（1）Date ofincorporation：October 19,2005
（2）Registeredaddress：Bangalore, India
（3）Registeredcapital：USD 2.20 million
（4）Main businessscope：Turbine engaged in power generation equipment supply, installation and commissioning.
（5）The mainshareholder： Hangzhou Steam Turbine Co.,Ltd:37%; the foreign shareholders:63%.
2. Recent financial information
In USD
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|Periods|Turnover|Net profit|Gross Assets|Net asset|
|March 2016-March 2017|6,287,206.34|214,569.55|34,779,319.69|8,375,363.96|
|March 2017-March 2018|10,150,418.59|146,158.79|21,667,655.90|8,497,094.60|

 3. Relationship with the Company
As the senior management of the company acts as director of that company and conforms to
the 10.1.5 clause of Listing Rules of Shenzhen Stock Exchange-"a natural person associated with a listed company directly or indirectly controls, or is a director or senior manager, a legal person
or other organization other than a listed company and its controlling subsidiary", is an associated legal person of a listed company.
4. Description of related transactions and their necessity
TheCompany’s related party transaction with (India) greenesol power equipment private Co., Ltd. is mainly related to the purchase of raw materials and the sales of products or commodity.
IV.Analysis of the contract-performance ability of related parties
The above related parties have formed a stable and efficient business operation mode in the
long-term business cooperation relationship with the company since the company was listed,
having strong contract-performance ability. The board of directors reckoned that the above all related parties can fulfill the contract and carry out the related business with the company.
V.The purpose of related transactions and the impact on the listed company
1. The impact of related party transactions on the company
Due to the need to produce and sell the company's products, the company sells some of its products to the related party and entrusts the related party to sell the company's products, accepting the related party service of transportation and packing related to the company's products in the course of sales, and the related party transaction optimizes the allocation of production resources, effectively improves the efficiency of the company's production and operation and is conducive to the main business of the company. The price of related party transactions between the company and the related party is fair and, the transaction does not harm the interests of the company.
2. The procedural legality of the related party transaction
The company has a pricing mechanism of related party transaction for daily related party transactions. All the related transactions are examined by the board of directors of the company in accordance with relevant regulations and are submitted to the shareholders' general meeting of the company for consideration in accordance with the standards. In the course of deliberation, the associated directors and associated shareholders withdraw from the voting, so the procedure is legal.
3.Pricing basis of related party transaction
Where the company and its holding subsidiaries carry out the above related party transaction, the price of related transaction is determined according to the market price and follows the principles of fairness, voluntariness and consensus in the pricing process.
VI.The Consent of independent directors in advance and their opinions
The Consent of independent directors inadvance：In the actual background of the company's daily related transactions in 2018, Strictly performing the examination and approval procedures belongs to the normal business needs of the company and will not affect the independence of the company. The transaction price follows the fair and reasonable pricing principle. The above-mentioned daily related transactions are in the interest of the company and all shareholders. There is no harm to the interests of the company's small and medium shareholders. We recognize the above related contents of the daily connected transactions and agree to submit the proposal to the company's board of directors for review.
The Independent Directors' Opinion: The related transactions of the company in relation to daily
operations are in line with the company's actual production and operation conditions and future
development needs. The transaction is priced according to market principles, fair and reasonable,
and does not harm the interests of the company and small and medium shareholders, and is
conducive to the company's continued steady development.
This announcement is hereby made.
The Board of Directors of Hangzhou Steam Turbine Co., Ltd. June 26, 2018