Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 Stock Code: 200771 Stock ID: Hangqilun B Announcement No. 2014-09
HANGZHOU STEAM TURBINE CO.,LTD.
Financial Report 2013
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 Chapter X. Financial Report
I.Auditors’ Report
|||
|-|-|
|Type of auditing opinion|Standard report without qualified opinion|
|Date of issue of the Auditors’ Report|Mar 27 2014|
||Pan-China Certified Public Accountants (Special common|
|Name of the CPA||
||partnership)|
|Name of the certified accountants|Lv Lihua, Zhang Qizhi|

Auditors’ Report
To the entire shareholders of Hangzhou Steam Turbine Co., Ltd.
We have audited the Financial Statements of Hangzhou Steam Turbine Co., Ltd. (the Company) attached hereafter, including the Balance Sheet and Consolidated Balance Sheet ended December 31, 2013, Income Statement and Consolidated Income Statement, Cash Flow Statement and Consolidated Cash Flow Statement, Statement of Change in Share Equities and Consolidated Statement of Change in Share Equities of year 2013, as well as the notes to the Financial Statements.
I.Executives’ responsibilities on the Financial Statements
Preparing and appropriately presenting of the Financial Statements are the responsibilities of the management of The Company. This responsibilities are including: (1) Preparing the financial statements according to Enterprise Accounting Standards and make them reflecting a fair basis. (2) Design, implement and maintain the internal control system related to producing of the Financial Statements, to prevent the Financial Statements from major false presentation due to cheating or error.
II. Responsibilities of the CPA
Our responsibilities are to issue auditing opinions on the Financial Statements basing on the auditing workswe’ve done on them. We carried out the auditing works with compliance to Chinese CPA Auditing Standard, which requires us to plan and implement our works on the basis of professional ethic standards, and obtain reasonable guarantee that the Financial Statements are free of major false statements.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on theauditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider the internal control relevant to theentity’s preparation of financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of thecompany’s internal control. An audit also includes evaluating the appropriateness of the accounting polices used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
III.Auditors’ Opinions
We believe that the Company has been following with the Enterprise Accounting Standard in preparing of the Financial Statements. The Financial Statements is reflecting, both of the Company and the consolidated, in all
important aspects, the financial situation of Hangzhou Steam Turbine Co., Ltd. as of December 31, 2013 and the
business performance and cash flow of year 2013 both of the Company and the consolidated.
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 Pan-China Certified Public Accountants
(Special general partnership) CPA China
Hangzhou China CPA China
March 27, 2014
II. The Financial Statements
All figures in the Notes to the Financial Statements are in RMB Yuan
1. Consolidated Balance Sheet
Prepared by: Hangzhou Steam Turbine Co., Ltd
In RMB Yuan
||||
|-|-|-|
|Items|Closing balance|Opening balance|
|Current asset:|||
|Monetary capital|883,141,568.17|1,100,640,580.62|
|Settlement provision|||
|Outgoing call loan|||
|Transactional financial assets|||
|Notes receivable|921,474,660.68|803,384,920.81|
|Account receivable|2,116,165,121.01|1,946,840,383.15|
|Prepayment|221,002,418.39|275,397,188.58|
|Insurance receivable|||
|Reinsurance receivable|||
|Provisions of Reinsurance contracts receivable|||
|Interest receivable|||
|Dividend receivable||435,586.13|
|Other account receivable|31,299,637.50|179,863,895.91|
|Repurchasing of financial assets|||
|Inventories|1,522,662,268.44|1,451,289,045.64|
|Non-current asset due in 1 year|||
|Other current asset|318,647,045.27|150,724,250.00|
|Total of current asset|6,014,392,719.46|5,908,575,850.84|
|Non-current assets|||
|Disburse of consigned loans|||
|Sellable financial asset|||
|Expired investment in possess|||
|Long-term receivable|||
|Long-term share equity investment|472,349,826.87|462,088,813.22|
|Investment real estates|||
|Fixed assets|609,425,345.52|652,753,812.70|
|Construction in process|166,904,606.60|108,252,291.56|
|Engineering goods|||
|Fixed asset disposal|||
|Production physical assets|||
|Gas & petrol|||
|Intangible assets|225,562,108.26|210,185,683.85|
|R&D expense|||
|Goodwill|||
|Long-term amortizable expenses|36,748.58|2,618,841.58|
|Deferred income tax asset|90,477,451.14|93,040,744.20|
|Other non-current asset|66,500,000.00|10,200,000.00|
|Total of non-current assets|1,631,256,086.97|1,539,140,187.11|
|Total of assets|7,645,648,806.43|7,447,716,037.95|
|Current liabilities|||
|Short-term loans|376,900,000.00|250,400,000.00|

Hangzhou Steam Turbine Co., Ltd. Annual Report 2013
||||
|-|-|-|
|Loan from Central Bank|||
|Deposit received and hold for others|||
|Call loan received|||
|Transactional financial liabilities|||
|Notes payable|168,751,198.95|133,505,278.70|
|Account payable|778,441,385.31|608,127,982.09|
|Advances received|1,480,588,499.90|1,632,856,815.04|
|Selling of repurchased financial assets|||
|Fees and commissions receivable|||
|Employees’ wage payable|63,401,599.09|27,384,846.15|
|Tax payable|107,956,056.99|85,182,827.55|
|Interest payable||228,197.26|
|Dividend payable||9,800,000.00|
|Other account payable|46,941,539.40|259,432,035.81|
|Reinsurance fee payable|||
|Insurance contract provision|||
|Entrusted trading of securities|||
|Entrusted selling of securities|||
|Non-current liability due in 1 year||100,000,000.00|
|Other current liability|||
|Total of current liability|3,022,980,279.64|3,106,917,982.60|
|Non-current liabilities|||
|Long-term borrowings|||
|Bond payable|||
|Long-term payable|330,000.00|330,000.00|
|Special payable|||
|Expected liabilities|||
|Deferred income tax liability|1,017,473.05|1,037,517.08|
|Other non-recurring liabilities|9,700,985.00|11,149,265.00|
|Total of non-current liabilities|11,048,458.05|12,516,782.08|
|Total of liability|3,034,028,737.69|3,119,434,764.68|
|Owners’ equity (or shareholders’ equity)|||
|Capital paid in (or share capital)|754,010,400.00|754,010,400.00|
|Capital reserves|139,590,345.09|139,590,345.09|
|Less: Shares in stock|||
|Special reserves|17,276,201.15|10,294,548.34|
|Surplus reserves|583,824,678.05|518,540,739.23|
|Common risk provision|||
|Retained profit|2,736,802,630.30|2,449,720,889.86|
|Different of foreign currency translation|-562,143.85||
|Total of owner’s equity belong to the parent company|4,230,942,110.74|3,872,156,922.52|
|Minor shareholders’ equity|380,677,958.00|456,124,350.75|
|Total of owners’ equity (or shareholders’ equity)|4,611,620,068.74|4,328,281,273.27|
|Total of liability and shareholders’ equity (or owners’ equity)|7,645,648,806.43|7,447,716,037.95|

 Legal representative: Nie Zhonghai CFO: Pu Yangshuo Accounting Manager: Jiang Rong
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 2. Balance Sheet of the Parent Company
Prepared by: Hangzhou Steam Turbine Co., Ltd
In RMB Yuan
||||
|-|-|-|
|Items|Closing balance|Opening balance|
|Current asset:|||
|Monetary capital|295,292,983.14|654,577,030.60|
|Transactional financial assets|||
|Notes receivable|601,340,832.00|555,963,481.26|
|Account receivable|1,788,860,441.94|1,447,088,649.71|
|Prepayment|142,783,696.27|148,589,241.50|
|Interest receivable|||
|Dividend receivable||10,635,586.13|
|Other account receivable|25,065,309.78|22,772,249.70|
|Inventories|1,119,933,842.22|1,025,077,300.24|
|Non-current asset due in 1 year|||
|Other current asset||100,000,000.00|
|Total of current asset|3,973,277,105.35|3,964,703,539.14|
|Non-current assets|||
|Sellable financial asset|||
|Expired investment in possess|||
|Long-term receivable|||
|Long-term share equity investment|949,669,204.90|516,782,461.07|
|Investment real estates|||
|Fixed assets|316,182,652.53|331,961,743.27|
|Construction in process|124,088,852.72|78,827,759.37|
|Engineering goods|||
|Fixed asset disposal|||
|Production physical assets|||
|Gas & petrol|||
|Intangible assets|181,668,119.33|44,366,863.73|
|R&D expense|||
|Goodwill|||
|Long-term amortizable expenses|0.00|1,352,509.28|
|Deferred income tax asset|61,066,646.31|55,106,028.33|
|Other non-current asset|||
|Total of non-current assets|1,632,675,475.79|1,028,397,365.05|
|Total of assets|5,605,952,581.14|4,993,100,904.19|
|Current liabilities|||
|Short-term loans|260,000,000.00||
|Transactional financial liabilities|||
|Notes payable|||
|Account payable|469,018,283.68|286,310,510.70|
|Advances received|1,060,240,346.99|1,219,358,402.37|
|Employees’ wage payable|49,561,769.28|15,910,246.38|
|Tax payable|63,656,915.72|36,696,777.46|
|Interest payable|||
|Dividend payable|||
|Other account payable|31,407,616.90|16,507,901.29|
|Non-current liability due in 1 year||100,000,000.00|
|Other current liability|||
|Total of current liability|1,933,884,932.57|1,674,783,838.20|
|Non-current liabilities|||
|Long-term borrowings|||
|Bond payable|||
|Long-term payable|||
|Special payable|||
|Expected liabilities|||
|Deferred income tax liability|1,017,473.05|1,037,517.08|
|Other non-recurring liabilities|200,250.00|289,250.00|
|Total of non-current liabilities|1,217,723.05|1,326,767.08|
|Total of liability|1,935,102,655.62|1,676,110,605.28|

Hangzhou Steam Turbine Co., Ltd. Annual Report 2013
||||
|-|-|-|
|Owners’ equity (or shareholders’ equity)|||
|Capital paid in (or share capital)|754,010,400.00|754,010,400.00|
|Capital reserves|138,953,250.09|138,953,250.09|
|Less: Shares in stock|||
|Special reserves|7,295,765.20|4,671,366.80|
|Surplus reserves|565,068,272.92|499,784,334.10|
|Common risk provision|||
|Retained profit|2,205,522,237.31|1,919,570,947.92|
|Different of foreign currency translation|||
|Total of owners’ equity (or shareholders’ equity)|3,670,849,925.52|3,316,990,298.91|
|Total of liability and shareholders’ equity (or owners’ equity)|5,605,952,581.14|4,993,100,904.19|

 Legal representative: Nie Zhonghai CFO: Pu Yangshuo Accounting Manager: Jiang Rong
3. Consolidated Income Statement
Prepared by: Hangzhou Steam Turbine Co., Ltd In RMB Yuan
||||
|-|-|-|
||Amount of the Current|Amount of the Previous|
|Items|||
||Term|Term|
|I. Total revenue|5,064,643,686.67|4,575,383,435.46|
|Incl. Business income|5,064,643,686.67|4,575,383,435.46|
|Interest income|||
|Insurance fee earned|||
|Fee and commission received|||
|II. Total business cost|4,279,668,780.40|3,734,815,099.32|
|Incl. Business cost|3,411,549,649.25|2,909,231,231.97|
|Interest expense|||
|Fee and commission paid|||
|Insurance discharge payment|||
|Net claim amount paid|||
|Net insurance policy reserves provided|||
|Insurance policy dividend paid|||
|Reinsurance expenses|||
|Business tax and surcharge|39,489,864.78|43,267,781.08|
|Sales expense|189,379,007.03|176,392,823.30|
|Administrative expense|562,638,390.77|512,196,553.19|
|Financial expenses|9,713,220.64|43,779,974.72|
|Asset impairment loss|66,898,647.93|49,946,735.06|
|Plus: gains from change of fair value (“-“ for loss)|||
|Investment gains (“-“ for loss)|69,771,886.60|163,618,696.35|
|Incl. Investment gains from affiliates|||
|Exchange gains (“-“ for loss)|||
|III. Operational profit (“-“ for loss)|854,746,792.87|1,004,187,032.49|
|Plus: Non business income|21,848,937.68|19,140,525.57|
|Less: Non-business expenses|10,625,481.54|10,510,805.52|
|Incl. Loss from disposal of non-current assets|13,319.33|3,047,116.27|
|IV. Gross profit (“-“ for loss)|865,970,249.01|1,012,816,752.54|
|Less: Income tax expenses|131,146,615.15|151,456,577.99|
|V. Net profit (“-“ for net loss)|734,823,633.86|861,360,174.55|
|Including: Net profit realized by the entity taken over before the|||
|takeover|||
|Net profit attributable to the owners of parent company|653,356,182.05|735,102,032.17|
|Minor shareholders’ equity|81,467,451.81|126,258,142.38|
|VI. Earnings per share:|--|--|
|(I) Basic earnings per share|0.87|0.97|
|(II) Diluted earnings per share|0.87|0.97|
|VII. Other misc. incomes|-1,320,218.73||
|VIII. Total of misc. incomes|733,503,415.13|861,360,174.55|
|Total of misc. incomes attributable to the owners of the parent|||
||652,794,038.20|735,102,032.17|
|company|||
|Total misc gains attributable to the minor shareholders|80,709,376.93|126,258,142.38|

Legal representative: Nie Zhonghai CFO: Pu Yangshuo Accounting Manager: Jiang Rong
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 4. Income Statement of the Parent Co.
Prepared by: Hangzhou Steam Turbine Co., Ltd
In RMB Yuan
||||
|-|-|-|
|Items|Amount of the Current Term|Amount of the Previous Term|
|I. Turnover|3,430,910,953.10|2,932,002,887.95|
|Less: Operation cost|2,335,815,522.20|1,904,307,455.95|
|Business tax and surcharge|28,588,902.84|27,264,471.92|
|Sales expense|130,140,081.01|121,462,744.22|
|Administrative expense|335,282,543.42|308,075,528.40|
|Financial expenses|4,611,152.12|9,028,157.63|
|Asset impairment loss|38,718,126.58|2,087,879.33|
|Plus: gains from change of fair value (“-“ for loss)||0.00|
|Investment gains (“-“ for loss)|179,738,358.40|172,601,916.72|
|Incl. Investment gains from affiliates|||
|II. Operational profit (“-“ for loss)|737,492,983.33|732,378,567.22|
|Plus: Non business income|7,909,281.22|11,412,428.99|
|Less: Non-business expenses|6,516,458.28|4,375,325.12|
|Incl. Loss from disposal of non-current assets|6,485.84|2,316,043.83|
|III. Total profit (“-“ for loss)|738,885,806.27|739,415,671.09|
|Less: Income tax expenses|86,046,418.07|85,841,980.76|
|IV. Net profit (“-“ for net loss)|652,839,388.20|653,573,690.33|
|V. Earnings per share|--|--|
|(I) Basic earnings per share|0.87|0.87|
|(II) Diluted earnings per share|0.87|0.87|
|VI. Other misc gains|||
|VII. Total of integrated income|652,839,388.20|653,573,690.33|

 Legal representative: Nie Zhonghai CFO: Pu Yangshuo Accounting Manager: Jiang Rong
5. Consolidated Cash Flow Statement
Prepared by: Hangzhou Steam Turbine Co., Ltd
In RMB Yuan
||||
|-|-|-|
||Amount of the Current|Amount of the Previous|
|Items|||
||Term|Term|
|I. Net cash flow from business operation|||
|Cash received from sales of products and providing of services|4,354,432,396.28|4,114,411,605.32|
|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|||
|Net increase of client deposit and investment|||
|Net increase of trade financial asset disposal|||
|Cash received as interest, processing fee, and commission|||
|Net increase of inter-bank fund received|||
|Net increase of repurchasing business|||
|Tax returned|11,819,714.06|43,298,472.14|
|Other cash received from business operation|29,450,077.87|27,113,577.82|
|Sub-total of cash inflow from business activities|4,395,702,188.21|4,184,823,655.28|
|Cash paid for purchasing of merchandise and services|2,724,149,674.24|2,015,637,313.48|
|Net increase of client trade and advance|||
|Net increase of savings in central bank and brother company|||
|Cash paid for original contract claim|||
|Cash paid for interest, processing fee and commission|||
|Cash paid for policy dividend|||
|Cash paid to staffs or paid for staffs|642,971,428.46|662,847,540.67|
|Taxes paid|455,142,683.16|529,307,094.45|

Hangzhou Steam Turbine Co., Ltd. Annual Report 2013
||||
|-|-|-|
|Other cash paid for business activities|203,773,870.42|199,342,074.43|
|Sub-total of cash outflow from business activities|4,026,037,656.28|3,407,134,023.03|
|Cash flow generated by business operation, net|369,664,531.93|777,689,632.25|
|II. Cash flow generated by investing|||
|Cash received from investment retrieving|||
|Cash received as investment profit|41,579,116.39|42,088,536.14|
|Net cash retrieved from disposal of fixed assets, intangible assets, and|||
||1,126,727.68|4,839,279.57|
|other long-term assets|||
|Net cash received from disposal of subsidiaries or other operational units|78,569,542.05|95,653,463.95|
|Other investment-related cash received|2,500,701,303.45|1,700,000,000.00|
|Sub-total of cash inflow due to investment activities|2,621,976,689.57|1,842,581,279.66|
|Cash paid for construction of fixed assets, intangible assets and other|||
||320,307,042.75|103,739,255.20|
|long-term assets|||
|Cash paid as investment|13,332,463.65|10,200,000.00|
|Net increase of loan against pledge|||
|Net cash received from subsidiaries and other operational units|||
|Other cash paid for investment activities|2,666,000,000.00|1,800,610,000.00|
|Sub-total of cash outflow due to investment activities|2,999,639,506.40|1,914,549,255.20|
|Net cash flow generated by investment|-377,662,816.83|-71,967,975.54|
|III. Cash flow generated by financing|||
|Cash received as investment|24,607,175.00|16,400,000.00|
|Incl. Cash received as investment from minor shareholders|14,407,175.00|15,200,000.00|
|Cash received as loans|487,300,000.00|280,400,000.00|
|Cash received from bond placing|||
|Other financing-related cash received|123,517,707.64|325,397,021.00|
|Subtotal of cash inflow from financing activities|635,424,882.64|622,197,021.00|
|Cash to repay debts|340,800,000.00|344,317,423.50|
|Cash paid as dividend, profit, or interests|429,478,521.63|324,872,064.04|
|Incl. Dividend and profit paid by subsidiaries to minor shareholders|116,763,952.00|127,434,902.42|
|Other cash paid for financing activities|98,655,730.18|193,085,577.41|
|Subtotal of cash outflow due to financing activities|868,934,251.81|862,275,064.95|
|Net cash flow generated by financing|-233,509,369.17|-240,078,043.95|
|IV. Influence of exchange rate alternation on cash and cash equivalents|-2,693,759.81|-1,302,075.16|
|V. Net increase of cash and cash equivalents|-244,201,413.88|464,341,537.60|
|Plus: Balance of cash and cash equivalents at the beginning of term|1,055,130,058.35|590,788,520.75|
|VI. Balance of cash and cash equivalents at the end of term|810,928,644.47|1,055,130,058.35|

 Legal representative: Nie Zhonghai CFO: Pu Yangshuo Accounting Manager: Jiang Rong
6. Cash Flow Statement of the Parent Co.
Prepared by: Hangzhou Steam Turbine Co., Ltd
In RMB Yuan
||||
|-|-|-|
||Amount of the Current|Amount of the Previous|
|Items|||
||Term|Term|
|I. Net cash flow from business operation|||
|Cash received from sales of products and providing of services|2,531,933,737.51|2,687,458,009.55|
|Tax returned|2,846,579.73|1,267,849.50|
|Other cash received from business operation|9,108,036.72|11,497,724.19|
|Sub-total of cash inflow from business activities|2,543,888,353.96|2,700,223,583.24|
|Cash paid for purchasing of merchandise and services|1,496,021,531.29|1,251,453,663.59|
|Cash paid to staffs or paid for staffs|459,983,481.24|471,116,600.76|
|Taxes paid|290,759,748.18|331,590,577.98|
|Other cash paid for business activities|98,212,968.87|107,730,182.69|
|Sub-total of cash outflow from business activities|2,344,977,729.58|2,161,891,025.02|
|Cash flow generated by business operation, net|198,910,624.38|538,332,558.22|
|II. Cash flow generated by investing|||
|Cash received from investment retrieving|||
|Cash received as investment profit|190,373,944.53|161,966,330.59|
|Net cash retrieved from disposal of fixed assets, intangible assets, and|||
||1,123,953.55|3,887,603.42|
|other long-term assets|||
|Net cash received from disposal of subsidiaries or other operational units|||
|Other investment-related cash received|2,120,000,000.00|1,080,656,000.00|
|Sub-total of cash inflow due to investment activities|2,311,497,898.08|1,246,509,934.01|

Hangzhou Steam Turbine Co., Ltd. Annual Report 2013
||||
|-|-|-|
|Cash paid for construction of fixed assets, intangible assets and other|||
||230,385,502.50|57,700,205.78|
|long-term assets|||
|Cash paid as investment|432,886,743.83||
|Net cash received from subsidiaries and other operational units|||
|Other cash paid for investment activities|2,060,000,000.00|1,180,000,000.00|
|Sub-total of cash outflow due to investment activities|2,723,272,246.33|1,237,700,205.78|
|Net cash flow generated by investment|-411,774,348.25|8,809,728.23|
|III. Cash flow generated by financing|||
|Cash received as investment|||
|Cash received as loans|260,000,000.00||
|Cash received from bond placing|||
|Other financing-related cash received|||
|Subtotal of cash inflow from financing activities|260,000,000.00||
|Cash to repay debts|100,000,000.00|16,317,423.50|
|Cash paid as dividend, profit, or interests|304,172,493.33|193,676,742.13|
|Other cash paid for financing activities|||
|Subtotal of cash outflow due to financing activities|404,172,493.33|209,994,165.63|
|Net cash flow generated by financing|-144,172,493.33|-209,994,165.63|
|IV. Influence of exchange rate alternation on cash and cash equivalents|-2,247,830.26|-1,502,015.98|
|V. Net increase of cash and cash equivalents|-359,284,047.46|335,646,104.84|
|Plus: Balance of cash and cash equivalents at the beginning of term|654,577,030.60|318,930,925.76|
|VI. Balance of cash and cash equivalents at the end of term|295,292,983.14|654,577,030.60|

 Legal representative: Nie Zhonghai CFO: Pu Yangshuo Accounting Manager: Jiang Rong
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 7. Statement of Change inOwners’ Equity (Consolidated)
Prepared by: Hangzhou Steam Turbine Co., Ltd
Amount of the Current Term
In RMB Yuan
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
||Amount of the Current Term||||||||||
||Owners’ Equity Attributable to the Parent Company||||||||||
|Items|||||||||Minor shareholders’||
||Capital paid in (or share|Capital|Less: Shares in|Special|Surplus|Common risk|Retained profit|Others|equity|Total of owners’ equity|
||capital)|reserves|stock|reserves|reserves|provision|||||
|I. Balance at the end of last year|754,010,400.00|139,590,345.09||10,294,548.34|518,540,739.23||2,449,720,889.86||456,124,350.75|4,328,281,273.27|
|Plus: Change of accounting policy|||||||||||
|Correcting of previous errors|||||||||||
|Others|||||||||||
|II. Balance at the beginning of current year|754,010,400.00|139,590,345.09||10,294,548.34|518,540,739.23||2,449,720,889.86||456,124,350.75|4,328,281,273.27|
|III. Amount of change in current term (“-“ for|||||||||||
|||||6,981,652.81|65,283,938.82||287,081,740.44|-562,143.85|-75,446,392.75|283,338,795.47|
|decrease)|||||||||||
|(I) Net profit|||||||653,356,182.05||81,467,451.81|734,823,633.86|
|(II) Other misc. income||||||||-562,143.85|-758,074.88|-1,320,218.73|
|Total of (I) and (II)|||||||653,356,182.05|-562,143.85|80,709,376.93|733,503,415.13|
|(III) Investment or decreasing of capital by owners|||||||||-50,207,922.63|-50,207,922.63|
|1. Capital inputted by owners|||||||||-50,207,922.63|-50,207,922.63|
|2. Amount of shares paid and accounted as owners’|||||||||||
|equity|||||||||||
|3. Others|||||||||||
|(IV) Profit allotment|||||65,283,938.82||-366,888,098.81||-106,963,952.00|-408,568,111.99|
|1. Providing of surplus reserves|||||65,283,938.82||-65,283,938.82||||
|2. Common risk provision|||||||||||
|3. Allotment to the owners (or shareholders)|||||||-301,604,159.99||-106,963,952.00|-408,568,111.99|
|4. Others|||||||||||
|(V) Internal transferring of owners’ equity|||||||||-1,886,977.19|-1,886,977.19|
|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. Others|||||||||-1,886,977.19|-1,886,977.19|
|(VI) Special reserves||||7,595,310.01|||||2,507,899.34|10,103,209.35|
|1. Provided this year||||10,042,022.97|||||3,231,339.45|13,273,362.42|
|2. Used this term||||2,446,712.96|||||723,440.11|3,170,153.07|
|(VII) Others||||-613,657.20|||613,657.20||395,182.80|395,182.80|
|IV. Balance at the end of this term|754,010,400.00|139,590,345.09||17,276,201.15|583,824,678.05||2,736,802,630.30|-562,143.85|380,677,958.00|4,611,620,068.74|

Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 Amount of Last Year
In RMB Yuan
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
||Amount of Last Year||||||||||
||Owners’ Equity Attributable to the Parent Company||||||||||
|Items|||||||||Minor shareholders’|Total of owners’|
||Capital paid in (or share|Capital|Less: Shares in|Special|Surplus|Common risk|Retained profit|Others|equity|equity|
||capital)|reserves|stock|reserves|reserves|provision|||||
|I. Balance at the end of last year|628,342,000.00|139,590,345.09|||453,183,370.20||2,094,147,226.72||447,821,000.94|3,763,083,942.95|
|Plus: Retrospective adjustment caused by merger of entities|||||||||||
|under common control|||||||||||
|Plus: Change of accounting policy|||||||||||
|Correcting of previous errors|||||||||||
|Others|||||||||||
|II. Balance at the beginning of current year|628,342,000.00|139,590,345.09|||453,183,370.20||2,094,147,226.72||447,821,000.94|3,763,083,942.95|
|III. Amount of change in current term (“-“ for decrease)|125,668,400.00|||10,294,548.34|65,357,369.03||355,573,663.14||8,303,349.81|565,197,330.32|
|(I) Net profit|||||||735,102,032.17||126,258,142.38|861,360,174.55|
|(II) Other misc. income|||||||||||
|Total of (I) and (II)|||||||735,102,032.17||126,258,142.38|861,360,174.55|
|(III) Investment or decreasing of capital by owners|||||||||15,200,000.00|15,200,000.00|
|1. Capital inputted by owners|||||||||15,200,000.00|15,200,000.00|
|2. Amount of shares paid and accounted as owners’ equity|||||||||||
|3. Others|||||||||||
|(IV) Profit allotment|125,668,400.00||||65,357,369.03||-379,528,369.03||-137,932,820.69|-326,435,420.69|
|1. Providing of surplus reserves|||||65,357,369.03||-65,357,369.03||||
|2. Common risk provision|||||||||||
|3. Allotment to the owners (or shareholders)|125,668,400.00||||||-314,171,000.00||-119,486,887.82|-307,989,487.82|
|4. Others|||||||||-18,445,932.87|-18,445,932.87|
|(V) 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. Others|||||||||||
|(VI) Special reserves||||10,294,548.34|||||4,778,028.12|15,072,576.46|
|1. Provided this year||||10,835,589.65|||||5,285,183.46|16,120,773.11|
|2. Used this term||||541,041.31|||||507,155.34|1,048,196.65|
|(VII) Others|||||||||||
|IV. Balance at the end of this term|754,010,400.00|139,590,345.09||10,294,548.34|518,540,739.23||2,449,720,889.86||456,124,350.75|4,328,281,273.27|

 Legal representative: Nie Zhonghai CFO: Pu Yangshuo Accounting Manager: Jiang Rong
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 8. Statement of Change inOwners’ Equity (Parent Co.)
Prepared by: Hangzhou Steam Turbine Co., Ltd
Amount of the Current Term
In RMB Yuan
||||||||||
|-|-|-|-|-|-|-|-|-|
||Amount of the Current Term||||||||
|Items|Capital paid in (or share|Capital|Less: Shares in|Special|Surplus|Common risk|||
||||||||Retained profit|Total of owners’ equity|
||capital)|reserves|stock|reserves|reserves|provision|||
|I. Balance at the end of last year|754,010,400.00|138,953,250.09||4,671,366.80|499,784,334.10||1,919,570,947.92|3,316,990,298.91|
|Plus: Change of accounting policy|||||||||
|Correcting of previous errors|||||||||
|Others|||||||||
|II. Balance at the beginning of current year|754,010,400.00|138,953,250.09||4,671,366.80|499,784,334.10||1,919,570,947.92|3,316,990,298.91|
|III. Amount of change in current term (“-“ for decrease)||||2,624,398.40|65,283,938.82||285,951,289.39|353,859,626.61|
|(I) Net profit|||||||652,839,388.20|652,839,388.20|
|(II) Other misc. income|||||||||
|Total of (I) and (II)|||||||652,839,388.20|652,839,388.20|
|(III) Investment or decreasing of capital by owners|||||||||
|1. Capital inputted by owners|||||||||
|2. Amount of shares paid and accounted as owners’|||||||||
|equity|||||||||
|3. Others|||||||||
|(IV) Profit allotment|||||65,283,938.82||-366,888,098.81|-301,604,159.99|
|1. Providing of surplus reserves|||||65,283,938.82||-65,283,938.82||
|2. Common risk provision|||||||||
|3. Allotment to the owners (or shareholders)|||||||-301,604,159.99|-301,604,159.99|
|4. Others|||||||||
|(V) 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. Others|||||||||
|(VI) Special reserves||||2,624,398.40||||2,624,398.40|
|1. Provided this year||||4,832,002.89||||4,832,002.89|
|2. Used this term||||2,207,604.49||||2,207,604.49|
|(VII) Others|||||||||
|IV. Balance at the end of this term|754,010,400.00|138,953,250.09||7,295,765.20|565,068,272.92||2,205,522,237.31|3,670,849,925.52|

Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 Amount of Last Year
In RMB Yuan
||||||||||
|-|-|-|-|-|-|-|-|-|
||Amount of Last Year||||||||
|Items|Capital paid in (or share|Capital|Less: Shares in|Special|Surplus|Common risk|||
||||||||Retained profit|Total of owners’ equity|
||capital)|reserves|stock|reserves|reserves|provision|||
|I. Balance at the end of last year|628,342,000.00|138,953,250.09|||434,426,965.07||1,645,525,626.62|2,847,247,841.78|
|Plus: Change of accounting policy|||||||||
|Correcting of previous errors|||||||||
|Others|||||||||
|II. Balance at the beginning of current year|628,342,000.00|138,953,250.09|||434,426,965.07||1,645,525,626.62|2,847,247,841.78|
|III. Amount of change in current term (“-“ for decrease)|125,668,400.00|||4,671,366.80|65,357,369.03||274,045,321.30|469,742,457.13|
|(I) Net profit|||||||653,573,690.33|653,573,690.33|
|(II) Other misc. income|||||||||
|Total of (I) and (II)|||||||653,573,690.33|653,573,690.33|
|(III) Investment or decreasing of capital by owners|||||||||
|1. Capital inputted by owners|||||||||
|2. Amount of shares paid and accounted as owners’|||||||||
|equity|||||||||
|3. Others|||||||||
|(IV) Profit allotment|125,668,400.00||||65,357,369.03||-379,528,369.03|-188,502,600.00|
|1. Providing of surplus reserves|||||65,357,369.03||-65,357,369.03||
|2. Common risk provision|||||||||
|3. Allotment to the owners (or shareholders)|125,668,400.00||||||-314,171,000.00|-188,502,600.00|
|4. Others|||||||||
|(V) 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. Others|||||||||
|(VI) Special reserves||||4,671,366.80||||4,671,366.80|
|1. Provided this year||||4,671,366.80||||4,671,366.80|
|2. Used this term|||||||||
|(VII) Others|||||||||
|IV. Balance at the end of this term|754,010,400.00|138,953,250.09||4,671,366.80|499,784,334.10||1,919,570,947.92|3,316,990,298.91|

 Legal representative: Nie Zhonghai CFO: Pu Yangshuo Accounting Manager: Jiang Rong
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 Hangzhou Steam Turbine Co., Ltd.
Notes to Financial Statements
Year 2013
In RMB I. Company Profile
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, legal entity business license No.:企股浙总字第002150号. The number of Business License was changed to 330000400001023 on May 6, 2009. TheCompany’s registered capital is now 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 scope of main businesses of the Company: The design, manufacturing, and service of steam turbine, gas turbine, other rotating and reciprocate machinery and auxiliary equipment, and spare parts and components. Wholesale, import& export, and service of packaged equipment in electric power supply, industrial driving, and industrial turbine.
II. The main accounting policies and accounting estimations adopted
(I) Basis of compiling the finance report
The Company adopts perpetual operation as the basis of financial statements.
(II) Statement of compliance to the Enterprise Accounting Standard
The finance report produced by the Company is accordance with the Enterprise Accounting Standard, and reflects theCompany’s financial state, business performance and cash flow frankly and completely.
(III) Accounting period
The Company uses the calendar year for its fiscal year. A fiscal year is from January 1 to December 31.
(IV) Standard currency for bookkeeping
The Company uses Renminbi (RMB) as the standard currency for book keeping.
(V) 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.
Page 11 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 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 account.
(VI) 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.
(VII) 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.
(VIII) 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 theowners’ equity in the balance sheet.
(IX) Financial instruments
1. Type of finance asset and finance debt
Finance assets are divided initially into four types of financial asset appointed to be measured at fair value with their changes are accounted into current gain/loss accounts(including transactional finance asset and financial asset appointed to be measured at fair value with their changes are accounted into current gain/loss accounts), transactional financial assets, debt and account receivable, finance asset saleable.
Finance debts are divided initially into two types of financial debt appointed to be measured at fair value with their changes are accounted into current gain/loss accounts(including transactional finance debt and financial debt appointed to be measured at fair value with their changes are accounted into current gain/loss accounts), other finance debt.
2. Basis of recognition and accounting of finance asset and finance debt
When the Company is one part of the finance instrument contract, one finance asset or debt is recognized. When on recognizing initially finance asset or debt, it is measured by fair value, for the finance asset or debt which appointed to be measured at fair value with their changes are accounted into current gain/loss accounts, the related transaction expenses are directly accounted into current gain and loss; for other finance asset and debt, the related transaction expenses accounted into the initial recognition account.
The Company future measures finance asset by fair value without deducting future possible transaction fee but with exception: (1) Due investment, debt and account receivable are measured by actual interest rate according to the amortized costs. (2) Equity instrument investment which have no quote in active market and which fair valuecan’t be measured reliably, and its derived finance assets which are connected with the equity instrument and which are summarized through the equity instrument, are measured by cost.
The Company conduct successive measure of finance debt according to amortized cost by actual interest rate with exception as following: (1) finance debt which appointed to be measured at fair value with their changes are accounted into current gain/loss accounts, is measured at fir value without deducting possible future transactional
Page 12 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 fee at settlement; (2) Equity instrument investment which have no quote in active market and which fair valuecan’t be measured reliably, and its derived finance assets which are connected with the equity instrument and which are closed off through the equity instrument, are measured by cost. (3) finance debt sponsorship contracts which are not appointed to be measured at fair value with their changes are accounted into current gain/loss accounts, or debt agreements at rate lower than market rate and which are not appointed to be measured at fair value with their changes are accounted into current gain/loss accounts, are measured at the higher value between the optimal estimated value payable according to current obligations and the surplus value from which the initial recognition value deduct the accumulated amortized amount according to the actual interest rate.
Gain or loss from fluctuation of financial assets or liabilities are handled at the following ways, except for relating to hedge instrument.
(1) Gain or loss from fluctuation of fair value of financial assets or liabilities and accounted into current gain/loss account, are accounted into gain/loss of fluctuation of fair value. Interests or cash dividend received in the period of holding these assets are recognized as investment gains. When they are disposed, the difference between the amount actually received and initially booked value is recognized as investment gains, and adjust the gain/loss from fair value fluctuation.
(2) Fluctuation of fair value of sellable financial assets accounted into capital reserves; interests gained at actual interest rate are accounting into investment gains; the cash dividend received from sellable instrument investment, are accounted into investment gains when distributed; At disposal of these investment, the difference between actual amount received and book value are recognized as investment gains after deducting of accumulated change of fair value which are originally accounted into capital reserves.
As soon as the contract rights of acquiring the cash flow of particular financial asset have been terminated or almost all of the risks and rewards attached to the financial asset have been transferred, recognition of the financial asset is terminated; as soon as the current liabilities attached to the financial liability have been completely or partially relieved, recognition of the financial liability or part of is terminated.
3. Basis of recognition and accounting of financial asset transferring
The Company stop recognizing the finance asset which risks and remuneration of ownership are transferred to the receiver; and continue to recognize the transferred finance asset which risks and remuneration of ownership are kept, and recognize the value as one finance debt. For the finance assets which risks and remuneration of ownership are not transferred or kept, the Company recognize them as following: (1) stop recognizing the finance asset which are given up the control; (2) continue to recognize the finance asset and related finance debt according to the extend which involved into the transferred finance asset for the finance asset which are not given up control. The Company measured the surplus between the following two values for the transferred finance assets which fulfill the stop recognition requirements into current gain or loss: (1) Account value of the transferred finance asset; (2) Consideration plus the accumulated fair value changes which were accounted directed into ownership rights. For the transferred finance assets which partly fulfill the stop recognition requirements the Company amortized the stopped recognition part and the not-stopped recognition part of the account value of the whole transferred finance asset, and account the surplus between the following two values into current gain or loss: (1) Account value of the stopped recognition part; (2) consideration plus the corresponding stopped recognition part of the accumulated fair value changes which were accounted directed into ownership rights.
4. Basis of recognition and accounting of fair value for the main finance asset and finance debt
For the finance asset or debt which active market exists, the Company recognize the fair value according to the quote on the active market; for the finance asset or debt which active market not exists, the Company recognized the fair value using estimation technology (including reference of the latest market prices from freewill transactions by persons familiar with conditions, reference of the current fair value of other similar finance instrument in characteristics, discounted cash flow models and Option Pricing Model); for the initially acquired or initial finance asset or finance debt, the Company recognize the fair value basis on the market trading price.
5. Impairment test and impairment reserves plan
(1) The Company conduct impairment test to the finance asset other than which appointed to be measured at fair value with their changes are accounted into current gain/loss accounts on balance sheet day. Impairment provision is provided as long as evidence showing that impairment has happened to the financial asset.
(2) The Company conduct independently impairment test for single finance asset with large value for single finance asset with little value the Company conduct the impairment test with those of the finance asset composition which have similar credit risk characteristics; for the non impairment assets which are tested independently, the Company conduct the impairment test with those of the finance asset composition which have similar credit risk characteristics.
(3) For the finance asset accounted by amortized cost which have subject impairment evidence at the end term, the impairment loss was recognized according to the difference between the account value and the anticipating future
Page 13 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 cash flow, for the finance asset which have little difference between its short term account receivable anticipating future cash flow and its current value, the Companydon’t discount the future cash flow when recognizing related impairment loss. When there is impairment loss for the Equity instrument investment which have no quote in active market and which fair valuecan’t be measured reliably and its derived finance assets which are connected with the equity instrument and which are calculated through the equity instrument, are measured by cost, the difference is recognized as impairment loss between the account value of the equity instrument investment and its derived finance asset and the current value discounted by the future cash flow according to the market profit rate of the similar finance asset. The Company recognize the impairment loss for the saleable finance asset which fair value have sharp decreasing and the anticipating decreasing trend is not temporary, and account it into impairment loss together with the accumulated fair vale loss which was accounted intoowner’s equity directly.
When impairment occurred with a sellable financial asset, the accumulated losses caused by decreasing of fair value which have originally been written intoowners’ equity shall be carried over to current gain/loss account. If practical evidence showing that the value of a particular financial asset has recovered in value after a impairment loss has been recognized and practically related to the issues occurred after recognition of the loss, the impairment loss recognized shall be restored and accounted into current gain/loss. Impairment loss of sellable equity investment instrument will be restored toowners’ equity when the fair value has increased afterward.
(X) Receivable accounts
1. Recognition and providing of bad debt provision on individual receivable account with large amount
Basis of recognition or standard
Accounts take over10% of the book balance of receivable amount of individual account with
accounts
large amount
Impairment test performed individually, bad debt provision Basis of bad debt provision will be provided at the difference of expected cash flow lower than the book value.
2. Recognition and providing basis of bad debt reserves for group of receivable accounts with similar
characteristics of credit risks
(1) Basis of recognition and providing of bad debt provision
Basis of recognition for groups
Group by age analysis With similar characteristics of credit risks
Basis of bad debt provision
Group by age analysis Age analysis method
(2) Age analysis
||
|-|
|Provision rate forreceivables (%)|
|5|
|20|
|40|
|60|

3. Recognition and providing methods of receivable account with minor amount and under individual impairment test
When there is significant difference between the current value of future Basis of providing bad
cash flow of the receivable account and the current value of future cash debt individually
flow of the group
Impairment test performed individually, bad debt provision will be
Basis of bad debt
provided at the difference of expected cash flow lower than the book
provision
value.
Page 14 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 As for other receivable accounts such as notes, prepayments, interests, and long-term receivables, bad debt provisions will be provided upon the differences of expectable cash flow lower than the booked value.
No bad debt provisions are provided for receivable accounts among the companies that are included in the consolidating range.
(XI) Inventories
1. Categorizing of inventories
Inventories include saleable finished goods or merchandise, product-in-process , consumption material and goods in manufacturing procedure or working procedure.
2. Pricing of delivering inventory
Delivered out materials are accounted by weighted average method, issued out finished products are accounted at individual price.
3. Recognition of inventory realizable value and providing of 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 is inventoried by perpetual inventory system
5. Amortizing of low-value consumables and packaging materials
Low-value consumables and packaging materials are amortized on one-off basis.
(XII) Long-term equity investment
1. 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.
The initial investment costs of those long-term equity investment which was formed by acquisition of entities under common control by stages are booked at the share of the book value of theowners’ equity of the entities at the date of acquisition in the individual and consolidated financial statements. Capital reserve is adjusted by the difference between the sum of book value of equity investment in the entities acquired and the newly increased investment cost and the initial cost of the long-term equity; retained income shall be adjusted in case the capital reserve is not enough to be deducted.
(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.
1) In individual financial statements, initial cost of an investment is the sum of book value of the equity in the acquired entity before the acquisition day and the newly increased investment cost at the acquisition day. In case the share equity of the acquired entity before the acquisition day was involved in other gains, they shall be transferred to current investment gains when the investment is disposed.
2) In the consolidated financial statements, the equity held before the acquisition day shall be recalculated on fair value basis at the acquisition day. The differences between the book value and fair value shall be accounted into current investment gains. In case the share equity of the acquired entity before the acquisition day was involved in other gains, they shall be transferred to current investment gains of the current period.
Page 15 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 (3) For the long-term equity investments formed by other than merger of enterprises: if it is gotten by paying cash, the initial investment cost is recognized by purchasing price when buy; if it is gotten by issuing equity securities, the initial investment cost is recognized by the fair value of the securities; if it is gotten byinvestor’s investment, the initial investment cost is recognized by investment contract or agreed value in contract (except the not fair contract value).
2. Subsequent measurement and recognition of gain/loss
Cost basis is adopted in accounting of those long-term equity investments by which the Company has substantial control, and is adjusted in composing combined finance report according to equity basis; and those has no common control or major influence without quotation in an active market and the fair value cannot be reliably measured is also recalculated by cost basis. And equity basis is adopted in accounting of those long-term equity investments by which the Company has joint control or major influence on the invested enterprise.
3. Basis of recognizing common control and significant influence
According to the contract, if the investedenterprise’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 investedenterprise’s main finance and operation policy but have no own control or common control with other investing part, the investment is investment with major influence.
4. Impairment examination and providing of impairment provision
When physical evidence showing that the investment in subsidiaries, affiliates, and joint ventures are impaired, impairment provision shall be provided upon the balance between the book value and retrievable value; where the long term equity investment with no control power or significant influence and has no quotation in an active market and the fair value cannot be reliably measured, long-term investment impairment provision will be provided according to “Enterprise Accounting Standard No.22– Recognition and measure of financial instrument. 5. Treatment of disposal of subsidiaries by stages till losing of control power
(1) When the Company is disposing subsidiaries by stages till losing of control power, the following steps shall be followed unless the different stages were under the same contract.
1) Treatment of partial investment prior to losing of control power
When the Company is disposing investment in a subsidiary, but is not losing the control power on it, treatments will be done in individual financial statements and consolidated financial statements: in the individual financial statements, the book value of the relative long-term investment shall be transferred, the difference between the disposal gain and book value of the investment shall be recognized as disposal gain/loss. In the consolidated financial statements, the difference between the disposal gains and the share of net asset of the disposed entity shall be adjusted to capital reserves (capital premium). In case the capital premium is not enough for deduction, it will be deducted from retained profit.
2) If control power is lost due to disposal of partial share equity, it shall be treated separately in individual financial statements and consolidated financial statements:
In individual financial statements, the book value of the long-term equity investment to be disposed shall be transferred, and the difference between the disposal gain and book value of the investment shall be recognized as disposal gain/loss. Meanwhile, the book value of the reserved share equities shall be recognized as long-term equity investment or other relative financial assets at their book values, and shall be changed from cost basis to equity basis in accounting.
In the consolidated financial statements, the reserved equity shall be recalculated for fair value at the date of such change was happened. The sum of consideration obtained from disposal of equity and the fair value of retained equities less the share of net asset since the acquisition date shall be accounted into investment gains of the term when the disposal was happened (Goodwill shall be deducted if there is). Other gains related to the investment shall be transferred to investment gains of the term.
(2) In case the different stages of a disposal is under a common contract, it is treated in the same way as those not under a common contract in the individual financial statements. While in the consolidated financial statements, each stage of the trade shall be treated as a single disposal of subsidiary with losing of control power. However the differences between the gain of each disposal and the share of net asset in the disposed entity shall be recognized as other income in the consolidated financial statements, and shall be transferred to current gain/loss of the current period when the losing of power was happened.
When any or some of the following conditions were satisfied, a disposal in multiple stages shall be regarded as under a common contract:
1) The trades are engaged simultaneously or with consideration of impacts on each other; 2) The trades are conducted as necessary parts of a same business target; 3) Occurring of one particular trade is dependent on
Page 16 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 occurring of at least one another trade; 4) A trade is considered not economically appropriate unless combined with other trade(s).
(XIII) Fixed assets
1. Recognition, pricing and depreciation of fixed assets
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 booked at practical cost. Depreciation started at the next month of the asset become usable on age average basis.
2. Depreciation of fixed assets
Salvage value
Items Depreciation age (yrs) Annual depreciation ratio(%)
rate%
Houses& buildings 20-30 4 4.8-3.2
Equipment &
8-15 4 12-6.4
machinery
Office equipment 5 4 19.2
3. Impairment testing and impairment provisions
At the balance sheet day, if there is evidence of impairment occurred to the construction in process, impairment provision would be provided at the balance between the book value and retrievable value.
4. Recognition and pricing basis of fixed asset from financed leasing
Financed lease is recognized when one or several of the following conditions is satisfied:
(1) The ownership over the leased asset is transferred to the lessee on expiration of the leasing period;
(2) It is thelessee’s option to, or not to, buy the leased asset. However the predicted final consideration of the asset will far lower than its original fair value. Therefore it can be rationally determined that the lessee will use its option to buy off the asset.
(3) The ownership is not transferred, but the leasing period is taking most of the service life (usually75% or over of the service life of the leased asset).
(4) The current value of the lowest payment made by the lessee at the commencing date of the lease is almost equal to(90% or over of) the fair value of the asset at the same date; or the current value of the lowest amount received by the leaser at the commencing date of the lease is almost equal to(90% or over of) the fair value of the asset at the same day;
(5) The asset to be leased is specialized for the use of the lessee, namely could not be used by others without major reconstruction.
Fixed asset leased on finance is booked at the lower one of the fair value at the commencing date and the current value of the lowest rental.
(XIV) 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.
3. When there is evidence showing that the construction-in-process has impaired at the balance sheet day, impairment provision shall be provided at the balance of the book value over the retrievable amount.
(XV) Loan expenses
1. Capitalizing of loan expenses
Page 17 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 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 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. Amount 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.
(XVI) Intangible assets
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. Ifcan’t recognize the anticipating implementation method, the straight basis is deployed.
Items Amortizing years
Land using right 50
Operation rights of waste heat power plant on actual operation term
Others 5
3. In case evidence of impairment exists on balance sheet day on intangible assets with definite useful life, impairment provision shall be provided on the balance of book value over the recoverable amount of the intangible asset. Whereas for intangible assets without definite useful life or not usable yet, impairment tests shall be conducted whether or not there is evidence of impairment.
4. 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. 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.
(XVII) Long-term amortizable expenses
Long-term amortizable expenses are recorded at actual amount occurred, and straight amortized to stipulated periods. In case a long-term expense was not benefiting the succeeding periods, then the balance of the account shall be transferred over to current income account.
Page 18 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 (XVIII) Revenue
1. Recognizing of revenue
(1) Sales of goods
Sales income is recognized when all of these conditions are satisfied: (1) Major risks and rewards attached to the goods have been transferred to the purchaser; (2) The Company holds neither successive management power which is normally attached to ownership, nor effective control, over the goods which have been sold out; (4) Amount of income may be reliably measured; (5) when the costs, occurred or will occur, may be measured reliably.
(2) Providing of services
At balance sheet day, those service trades (simultaneously satisfying the requirements of those: income can be measured reliably, related economic benefit will flow in very possibly, transaction procedure can be confirmed reliably, happened and happening cost can be measured reliably) which can be reliably estimated are recognized at the percentage of completion, and progress of completion of service is decided by the portion of costs occurred over the estimated total costs. At balance sheet day, those service trades which can not be reliably estimated, if the happened services cost will be compensated, the services income are recognized according to happened service cost and transited to service cost according to same amount; if the happened services cost will not be compensated, the happened services cost are accounted into currentterm’s gain or loss and the services income will not be recognized.
(3) Giving of asset using rights
Income from giving of assets is recognized when satisfying requirements: related economic benefit flows in very possibly, income can be measured reliably. Amount of interest income is calculated according to the time and actual interest rate of the monetary capital is used by other party. Income of using fee is calculated upon the charge period and calculation provided by the related contract or agreement.
(4) Construction contracts
1) When the result of the construction contract is able to be evaluated reliably at the balance sheet date, the income and cost of the contract are recognized on completion percentage basis. If the result of the construction contract is not able to be evaluated reliably, but the contract cost may be recovered, the income is recognized at the cost actually recovered, and the cost of the contract is recognized as contract expenses of the current period when it is occurred.
2) When all of the following conditions were satisfied, the result of a fix-amount contract is regarded as can be evaluated reliably: the total income of the contract may be measured reliably, there is great possibility that the financial benefit in relation with the contract will inflow, the actual contract costs may be identified and measured clearly and reliably, the construction progress and the cost to occur are able to be measured reliably. When all of the following conditions are satisfied, the result of a cost-plus-commission contract is regarded as can be evaluated reliably: there is great possibility that the financial benefit in relation with the contract will inflow, the actual costs may be identified and measured clearly and reliably.
3) Contract progress is recognized at the ratio of accumulative actual cost on the predicted complete cost.
4) In case the expected total cost is greater than the total income, the expected loss will be recognized as expense of the current period. If the construction is in process, the balance is accounted as inventory impairment provision; if the contract is not executed, the balance is accounted as expected liability.
2. Practical basis for recognition of revenue
The Company is mainly engaged in designing, manufacturing, sales, and service of steam turbines and gas turbines falling in the range of rotating and reciprocating machinery, and parts. Recognition of sales in the country shall satisfy: products had been delivered to the buyer and the amount had been fixed. Payment was received or documents received with great possibility of cash inflow. And the cost of the products is able to be measured appropriately. Recognition of sales outside the country shall satisfy: The goods had been filed by the custom and departed with bill of lading obtained. The amount had been fixed, and payment was received or documents received with great possibility of cash inflow. And the cost of the products is able to be measured appropriately.
(XIX) Government subsidy
1. Government subsidies are divided into asset-related subsidies and income-related subsidies. Government subsidies the Company obtained for purchasing, or by other ways, of long-term assets are categorized as asset-related subsidies. Government subsidies other than the aforesaid are categorized as income-related subsidies. 2. Receivable government subsidy is recognized when there is evidence showing that the Company is complying
Page 19 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 with the regulations and relative conditions to obtain the subsidy, and the subsidy is able to inflow. Subsidies are recognized at receiving other than the aforesaid.
3. Monetary government subsidies are measured on actual amount or receivable amount; non-monetary subsidies are measured at fair value; when no fair value is available, measured at named amount.
4. Asset-related government subsidies are recognized as deferred income, amortized straight to its useful life and recorded into current income account. Those income-related government subsidies used to makeup expenses or losses in succeeding periods are recognized as deferred income and recorded in current income account at the related expenses is recognized; those used to makeup expenses or losses already occurred are recorded into current income account instantly.
(XX) 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 inowners’ equity.
Page 20 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 III. Taxations
(I) Main taxes and rates
||
|-|
|Tax basis|
|sales of goods or providing of taxable labor service|
|Taxable turnover|
|For those on price basis, taxes are paid at 1.2% of the balance oforiginal value of the property after deducting of 30%; for those onrental basis, taxes are paid at 12% of the rental.|
|Turnover tax payable|
|Turnover tax payable|
|Turnover tax payable|
|Amount of income taxable|

[Note] Hangzhou Zhongneng Steam Turbine Power (Indonesia) Co., Ltd. is a subsidiary incorporated in Indonesia. It is subject to local tax regulations. The Company and its subsidiaries– Hangzhou Zhongneng Steam Turbine Power Co., Ltd., Hangzhou Steam Turbine Casting Co., Ltd., Zhejiang Huayuan Steam Turbine Machinery Co., Ltd., and Hangzhou Guoneng Steam Turbine Engineering Co., Ltd. are subject to15% of tax, and the rest of subsidiaries (domestic) are subject to25% of tax.
(II) Preferable tax policies and approving documents
1. According to the document “Notice for Qualification of 1125 Enterprises as High-tech Enterprises”(浙科发高〔2011〕263号) issued by Zhejiang Department of Science and Technology, Zhejiang Department of Finance, Zhejiang National Tax Bureau, and Zhejiang Local Tax Bureau, the Company and Hangzhou Zhongneng Steam Turbine Power Co., Ltd.– subsidy of the Company, were qualified as high-tech enterprises for term of three years. Therefore we enjoy15% of tax for 2011-2013.
2. According to the document浙科发高〔2013〕294号 titled “Notice for Recognition of 491 High-tech Enterprises” issued jointly by Zhejiang Bureau of Science and Technology, Zhejiang Bureau of Finance, Zhejiang National Tax Bureau, and Zhenjiang Local Tax Bureau, Hangzhou Steam Turbine Casting Co., Ltd. was recognized as a High-Tech Enterprise, therefore enjoys15% of income tax rate from 2013 to 2015.
3. According todocument浙科发高[2011]262号 issued by Zhejiang Department of Science and Technology, Zhejiang Huayuan Steam Turbine Machinery Co., Ltd. and Hangzhou Guoneng Steam Turbine Engineering Co., Ltd. were recognized as High-tech Enterprises of 2011. Hangzhou Steam Turbine Auxiliary Machinery Co., Ltd. are enjoying the preferential tax rate of15% for the years 2011-2013.
Page 21 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 IV. Enterprise consolidation and consolidated financial statements
(I) Profiles of subsidiaries
Subsidiaries obtained through incorporation or investment (Share proportion in the table refers to the share of the parent company).
||||||
|-|-|-|-|-|
|SubsidiariesType|Reg. Add.|BusinessProperty|Registeredcapital|Business Scope|
|Controlledsubsidiaries|HangzhouZhejiang|Manufacturing|51 mil|Development of electrical & mechanical equipment control unit andtechnical consulting service|
|Controlledsubsidiaries|HangzhouZhejiang|Manufacturing|92.5 mil|Designing and manufacturing of steam turbines and supplementaryequipment and parts; sales of the Company’s products; contracting andconsulting of mid-small size power plants|
|Controlledsubsidiaries|HangzhouZhejiang|Manufacturing|22 mil|Manufacturing of cast iron and steel products; installation andmaintenance of casting equipments; sales of the Company’s products|
|Controlledsubsidiaries|HangzhouZhejiang|Manufacturing|30 mil|Manufacturing and processing of steam turbine auxiliary parts andother machinery auxiliary parts|
|Controlledsubsidiaries|HangzhouZhejiang|Manufacturing|80 mil|Manufacturing of auxiliary equipment of steam turbine|
|Fully-ownedsubsidiary of thePackaged EngineeringCo.|HangzhouZhejiang|Commerce|20 mil|Steam turbine, gass turbine, generator, gear box, boiler, air cooler,condensator, power plant auxiliary equipment, water turbine, aircompressor, fan, controlling equipment, spare parts, and materials.Sales and assembling of the above, import and export.|
|Fully-ownedsubsidiary|HangzhouZhejiang|Manufacturing|36,000万元|Production: rotator machinery including steam turbines, gas turbines,compressors, and auxiliary equipment; Service: technical developingand after service of steam turbines, gas turbines, compressors;Wholesaling: steel, construction materials|
|Subsidiary ofPackaged Tech. Co.|XinjiangUrumuqi|Manufacturing|20 mil|Technical promotion and interchange service; production, installation,maintaining, and selling of compressors, steam turbines and auxiliaryequipment|

Page 11 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013
||||||
|-|-|-|-|-|
|Holding subsidiary ofZhongneng Co.|HangzhouZhejiang|Manufacturing|1 mil|Designing of cooling and depressurizing equipment and accessories;manufacturing (assembling only): cooling and depressurizingequipment; wholesale and retailing: cooling and depressurizingequipment and related equipment|
|Holding subsidiary ofZhongneng Co.|ShijiazhuangHebei|Serviceindustry|3 mil|Sales, technical consulting, service, adjusting, and maintaining of steamturbines and auxiliary facilities and parts|
|Holding subsidiary ofZhongneng Co.|KunmingYunnan|Serviceindustry|1.2 mil|Installation, testing, and technical consulting of steam turbines, electricgenerators, and power equipment; sales of parts of steam turbine,electric generator, and power equipment|
|Holding subsidiary ofZhongneng Co.|WulumuqiXinjiang|Serviceindustry|3 mil|Sales of steam turbines, steam machine, generator set, and parts;developing, promotion, service of energy-saving technologies,maintaining, reconstruction of high-tech products|
|Holding subsidiary ofZhongneng Co.|TangshanHebei|Serviceindustry|2 mil|Technical service, installation, and maintaining of steam turbines; salesof steam turbine and auxiliary equipment, and parts|
|Holding subsidiary ofZhongneng Co.|Jilin|Serviceindustry|2 mil|Steam turbine and auxiliary equipment, spare parts, testing, repairing,technical consultancy and service; design of electro-mechanicalprojects, chemical projects, environment projects; installation ofchemical equipment and electro-mechanical equipment|
|Holding subsidiary ofZhongneng Co.|NanningGuangxi|Serviceindustry|2 mil|Installation, repairing, technical reconstruction, technical service, ofsteam turbine; sales of steam turbine parts|
|Holding subsidiary ofZhongneng Co.|ChengduSichuan|Serviceindustry|2 mil|Development of steam turbine; sales, installation, testing, maintenance,technical consultancy and service of machinery, chemical products(exclude hazard products), and steam turbine|
|Holding subsidiary ofZhongneng Co.|LuoyangHenan|Serviceindustry|2 mil|Technical consultancy, installation, maintenance of steam turbine; salesof steam turbine and parts|
|Subsidiary ofZhongneng Co.|HangzhouZhejiang|Manufacturing|20 mil|Production of boilers and products; design and technical service ofboiler, boiler parts, pressure tanks, energy products, environmentprotection products; whole sale and retailing of boilers;|
|Holding subsidiary ofZhongneng Co.|Indonesia|Manufacturing|IndonesiaRupiah 24bil.|Industrial activities, production of steam turbine and industrial boilers|

Page 12 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013
||||||
|-|-|-|-|-|
|Holding subsidiary ofCasting Co.|HangzhouZhejiang|Manufacturing|2 mil|Cast, forge materials|
|Holding subsidiary ofthe Machinery Co.|HuzhouZhejiang|Manufacturing|21 mil|Manufacturing and processing of steam turbine parts|
|Holding subsidiary ofthe Auxiliary MachineCo.|HangzhouZhejiang|Manufacturing|40 mil|Production: steam turbine auxiliary machine; Service: assembling,designing, installation, and technical consulting of packaged thermalpower projects|

Page 13 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 (Continue)
|||||
|-|-|-|-|
|Actual investment atend of term|Balance of other itemsactually formed netinvestment in thesubsidiaries|Shareproportion %|Votingpower %|
|RMB29.8004 mil||70.86|70.86|
|RMB27.6445 mil.||60.83|60.83|
|RMB11.22 mil.||51.00|51.00|
|RMB7.9680 mil.||52.00|52.00|
|RMB46.2865 mil.||87.53|87.53|
|RMB20 mil||100.00|100.00|
|RMB360 mil||100.00|100.00|
|RMB10.20 mil.||51.00|51.00|
|RMB700 thousand||70.00|70.00|
|1.2 mil||60.00|60.00|
|0.72 mil||60.00|60.00|
|1.8 mil||60.00|60.00|
|1.2 mil||60.00|60.00|
|1.2 mil||60.00|60.00|
|1.2 mil||60.00|60.00|
|1.2 mil||60.00|60.00|
|1.2 mil||60.00|60.00|
|10 mil||50.00|70.00[Note]|
|USD1.75 mil.||70.00|70.00|
|2 mil||100.00|100.00|
|RMB15.75 mil.||75.00|75.00|
|30 mil||75.00|75.00|

[Note] Shares of Hangqilun Boiler Co., Ltd.: Zhongneng Co.50%, Hangzhou Steam Turbine Engineering Co., Ltd.30%, Tang Yuchun15%, Jin Hongwei5%. The two natural person shareholders have committed to give supporting votes to Zhongneng Co. atshareholders’ meeting.
Page 11 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 (Continue)
|||
|-|-|
|Minor shareholders’ equity|Amount for deducting minorshareholder’s equity in the minorshareholder’s equity|
|23,520,222.12||
|139,748,220.39||
|81,135,808.02||
|67,202,127.16||
|38,022,122.72||
|9,445,551.94||
|489,895.61||
|1,028,775.72||
|701,466.85||
|1,161,954.27||
|696,303.25||
|807,332.09||
|704,719.88||
|566,112.12||
|740,899.39||
|10,768,295.80||
|3,938,150.67||

[Note1]: According to the Articles of Association of Huayuan Co., Hong Kong Ruiyun Enterprise Co., Ltd. will stop enjoying the equity of the co-operation company as soon as its reward had accumulated to RMB10.50 million. As of December 31, 2012, Hong Kong Ruiyun Enterprise Co., Ltd. has received the dividend of RMB10.50 by accumulation, therefore its minorityshareholders’ equity is reduced to zero.
[Note2]: According to the Articles of Association of Guoneng Co., Hong Kong Ruiyun Enterprise Co., Ltd., the foreign partner, will not enjoy the rights as a partner as soon as its reward has accumulated to RMB20 million. As of December 31, 2011, the reward to Hong Kong Ruiyun Enterprise has reached to RMB20 million, and the accountable minorityshareholders’ equity was zero.
Page 12 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 (II) Change on scope of consolidated financial statements.
1. Subsidiaries newly included in the consolidated financial statements
Particulars about subsidiaries added by means of direct incorporation or investment:
(1) The Packaged Tech Co. invested along with Huang Zemin and Wu Zhiyan to incorporate Xinjiang Hangzhou Steam Turbine Packaged Technology Development Co., Ltd. It was registered on January 6, 2013 with RMB20 million, in which RMB10.20 million was invested by the Packaged Tech Co. with51% of shares. It was included in the consolidating range since the date of incorporation as long as the Company has substantial control power over it.
(2) Zhongneng Co. invested to establish PT. HANGZHOU CHINEN TURBINE INDONESIA in Indonesia. It was registered on December 21, 2012 with registered capital of 24 billion Indonesia Rupiah. Zhongneng input USD1.75 million in June 2013 and took70% of the share equity of the company and therefore holds the control power. It was included in the consolidation range.
(3) The Company invested to establish Steam Turbine Heavy Industry Co., Ltd., which was registered on October 25, 2013 with the Business License No. 330100000187883. The company has registered capital of RMB360 million, which was wholly invested by the Company. Therefore it was included in the consolidation range since incorporation for the Company has complete control power over it.
2. Subsidiaries excluded in the consolidated accounts in the report term
According to the Share Equity Transferring Agreement engaged on January 24, 2013 by Zhongneng Co., Hangzhou Steam Turbine Technologies Co., Ltd., and Hangzhou Steam Turbine Engineering Co., Ltd., Zhongneng Co., sold the70% share equity it held in Hangzhou Steam Turbine Power Group Packaged Equipment Engineering Co., Ltd. (Packaged Engineering of the Group) to Hangzhou Steam Turbine Engineering Co., Ltd. with consideration of RMB30.94 million. Zhongneng Co. received the payment on February 19, 2013 and legal procedures had completed. Therefore the cash flow statement and income statement of January 2013 were consolidated, whereas the balance sheet was not.
(III) Entities newly included or excluded in the consolidated accounts
1. Subsidiaries newly included in the consolidated accounts
||
|-|
|Net asset at end of term|
|19,276,636.61|
|13,127,168.91|
|361,309,285,03|

2. Subsidiaries no longer included in the consolidated account
||
|-|
|Net asset at day of disposal|
|6,289,924.30|

Page 11 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 V. Notes to the Consolidated Financial Statements
(I) Notes to Consolidated Balance Sheet
1. Monetary capital
(1) Details
||||||
|-|-|-|-|-|
|End of term|||||
|Original currency|Exchangerate|Translated to RMB|Originalcurrency|Exchangerate|

Cash in stock
||||||
|-|-|-|-|-|
|||608,406.82|||
||||2,000.00|6.2855|
|67,087,185.00|0.0005|33,543.59|||
|||641,950.41|||

 Bank account:
||||||
|-|-|-|-|-|
|||770,202,664.56|||
|6,525,097.69|6.0969|39,782,868.13|3,812,445.34|6.2855|
|3,460.00|0.0578|199.99|3,459.00|0.073049|
|6.67|8.4189|56.15|26,307.60|8.3176|
||||8,879.18|0.81085|
|601,810,455.00|0.0005|300,905.23|||
|||810,286,694.06|||

 Other monetary capital
||
|-|
|72,212,923.70|
|72,212,923.70|
|883,141,568.17|

 (2) Statement on accounts on pledge, mortgage, freezing, constrain to use, saved overseas, or with potential risks
In the other monetary capital at end of period, there was RMB69,880,576.70 of security deposit for bank accepted drafts, and RMB2,332,347.00 of security deposit for guarantee letters.
2. Notes receivable
(1) Details
||||||
|-|-|-|-|-|
|End of term|||||
|Book balance|Bad debt provision|Book value|Book balance B|ad debt provision|
|920,551,630.68||920,551,630.68|800,194,449.81||
|923,030.00||923,030.00|3,190,471.00||
|921,474,660.68||921,474,660.68|803,384,920.81||

 (2) Notes receivable on pledge at end of term (top 5 in amount)
||||
|-|-|-|
|Date of issue|Expired on|Amount|
|2013/10/09|2014/04/09|10,000,000.00|
|2013/07/19|2014/01/19|10,000,000.00|
|2013/08/21|2014/02/21|10,000,000.00|
|2013/09/02|2014/03/02|10,000,000.00|
|2013/08/21|2014/02/21|6,000,000.00|
|||46,000,000.00|

Page 12 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 (3) Notes endorsed to other parties but not due at end of term(top 5 in amount)
||||
|-|-|-|
|Date of issue|Expired on|Amount|
|2013/12/18|2014/04/18|16,000,000.00|
|2013/12/24|2014/03/24|12,000,000.00|
|2013/09/03|2014/03/03|10,000,000.00|
|2013/10/17|2014/04/09|10,000,000.00|
|2013/12/17|2014/06/17|10,000,000.00|
|||58,000,000.00|

3. Account receivable
(1) Details
1) Detailed categories
||||||||
|-|-|-|-|-|-|-|
|End of term|||||||
|Book balance||Bad debt provision||Book balance|||
|Amount|Proportion %|Amount|Proportion %|Amount|Proportion %|Amount|
|2,573,237,853.86|98.73|457,072,732.85|17.76|2,329,165,332.79|97.19|437,343,734.16|
|33,020,480.19|1.27|33,020,480.19|100.00|67,407,500.67|2.81|12,388,716.15|
|2,606,258,334.05|100.00|490,093,213.04|18.80|2,396,572,833.46|100.00|449,732,450.31|

 2) Receivable accounts on which bad debt provisions are provided on age basis in the group
||||||
|-|-|-|-|-|
|End of term|||||
|Book balance||Bad debt provision|Book balance||
|Amount|Proportion %||Amount|Proportion %|
|1,472,034,979.92|57.20|73,601,749.00|1,242,442,508.43|53.34|
|552,657,917.48|21.48|110,531,583.50|545,859,269.77|23.44|
|280,937,867.60|10.92|112,375,147.04|292,341,890.00|12.55|
|267,607,088.86|10.40|160,564,253.31|248,521,664.59|10.67|
|2,573,237,853.86|100.00|457,072,732.85|2,329,165,332.79|100.00|

3) Receivable accounts with minor amount but bad debt provision provided individually at end of period
||||
|-|-|-|
|Book balance|Bad debt provision|Providing rate %|
|33,020,480.19|33,020,480.19|100.00|

Page 13 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013
|||
|-|-|
|33,020,480.19|33,020,480.19|

(2) Receivable accounts actually neutralized in the term
||||
|-|-|-|
|Property of thereceivable account|Amount writtenoff|Reason ofwriting off|
|Trade|1,513,543.95|Hard torecover|
|Trade|50,000.00|Hard torecover|
|Trade|42,465.00|Hard torecover|
|Trade|40,000.00|Hard torecover|
|Trade|32,238.75|Hard torecover|
|Trade|30,845.00|Hard torecover|
||1,709,092.70||

(3) Receivable accounts due from shareholders with5% of shares or over
||||
|-|-|-|
|End of term|||
|Book balance|Bad debt provision|Book balance|
|691,500.00|226,800.00|2,507,500.00|
|691,500.00|226,800.00|2,507,500.00|

 (4) Receivable accounts top 5 on amounts
||||
|-|-|-|
|Relation with theCompany|Book balance|Age|
|Non-related|550,725,012.75|[Note]|
|Non-related|417,344,287.60|[Note]|
|Non-related|160,980,000.00|within 1year|
|Non-related|59,860,000.00|within 1year|
|Non-related|39,486,174.38|[Note]|
||1,228,395,474.73||

[Note]: Account age breakdown
||||
|-|-|-|
|within 1 yr|1-2 yrs|2-3 yrs|
|389,477,025.98|140,184,628.77|16,617,700.00|
|228,927,200.00|69,614,080.56|42,201,070.04|
|16,889,937.50|22,596,236.88||

(5) Other receivable accounts of related parties
|||
|-|-|
|Relation with theCompany|Book balance|
|Shares held by theCompany|14,528,739.91|
|Affiliate of the Group|9,179,071.38|
|Affiliate of the Group|9,172,143.24|
|Affiliate of the Group|6,429,790.00|
|Affiliate of the Group|2,631,260.00|

Page 14 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013
|||
|-|-|
|Affiliate of the Group|4,434.00|
||41,945,438.53|

4. Prepayment
(1) Age analysis
||||||||
|-|-|-|-|-|-|-|
|End of term|||||||
|Book balance|Proportion %|Bad debtprovision|Book value|Book balance|Proportion %|Bad debtprovision|
|180,881,123.19|81.85||180,881,123.19|253,962,166.02|92.22||
|36,324,675.54|16.44||36,324,675.54|12,991,204.30|4.72||
|1,985,200.20|0.90||1,985,200.20|6,960,340.50|2.53||
|1,811,419.46|0.81||1,811,419.46|1,483,477.76|0.53||
|221,002,418.39|100.00||221,002,418.39|275,397,188.58|100.00||

(2) Top 5 prepayment accounts in amount
||||
|-|-|-|
|Relation with theCompany|End of term|Age|
|Affiliate of theGroup|32,299,825.00|[Note]|
|Non-related|29,538,855.82|within 1year|
|Non-related|25,899,020.00|within 1year|
|Non-related|19,061,261.25|[Note]|
|Non-related|8,850,000.00|within 1year|
||115,648,962.07||

[Note]: Account age breakdown
||||
|-|-|-|
|within 1 yr|1-2 yrs|2-3 yrs|
|31,579,825.00|540,000.00|180,000.00|
|17,761,200.00|1,300,061.25||

(3) No prepayment made to shareholding parities with5% or over of theCompany’s shares.
5. Dividend receivable
|||||
|-|-|-|-|
|Beginning of term|Increased this period|Decreased this period|End of term|
|435,586.13||435,586.13||
|435,586.13||435,586.13||

Page 15 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013
Page 16 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 6. Other account receivable
(1) Details
1) Detailed categories
||||||||
|-|-|-|-|-|-|-|
|End of term|||||||
|Book balance||Bad debt provision||Book balance|||
|Amount|Proportion %|Amount|Proportion %|Amount|Proportion %|Amount|
|||||96,267,737.18|48.82|4,813,386.86|
|35,520,308.28|90.54|4,220,670.78|11.88|97,221,214.63|49.30|8,811,669.04|
|3,710,320.94|9.46|3,710,320.94|100.00|3,710,320.94|1.88|3,710,320.94|
|39,230,629.22|100.00|7,930,991.72|20.22|197,199,272.75|100.00|17,335,376.84|

 2) Other receivable accounts in the group on which bad debt provisions are provided on age basis
||||||
|-|-|-|-|-|
|End of term|||||
|Book balance||Bad debtprovision|Book balance||
|Amount|Proportion%||Amount|Proportion%|
|26,836,337.77|75.55|1,341,816.89|77,956,851.63|80.19|
|5,088,625.18|14.33|1,017,725.04|15,428,271.40|15.87|
|1,480,391.73|4.17|592,156.69|2,367,414.00|2.44|
|2,114,953.60|5.95|1,268,972.16|1,468,677.60|1.50|
|35,520,308.28|100.00|4,220,670.78|97,221,214.63|100.00|

3) Other receivable accounts with minor amount but bad debt provided individually at end of term
||||
|-|-|-|
|Book balance|Bad debt provision|Providing rate %|
|3,710,320.94|3,710,320.94|100.00|
|3,710,320.94|3,710,320.94||

(2) No receivable account due from shareholding parties holding over5% of theCompany’s shares.
(3) Top 5 other receivables
|||||
|-|-|-|-|
|Relation with theCompany|Book balance|Age|Percentage in totalother receivable %|
|Non-related|3,710,320.94|Over 3years|9.46|
|Non-related|3,504,493.50|within 1year|8.93|
|Non-related|2,501,375.89|[Note]|5.62|
|Non-related|1,383,575.63|within 1year|3.53|
||13,305,565.96||30.34|

Page 17 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013[Note]: Account age breakdown
||||
|-|-|-|
|within 1 yr|1-2 yrs|2-3 yrs|
|1,144,000.00|820,000.00||

 (4) Account receivable from related parties at end of period
|||
|-|-|
|Relation with the Company|Book balance|
|Controlled by Shijiazhuang Service Co.,the minority shareholder|2,501,375.89|
||2,501,375.89|

7. Inventories
(1) Details
||||||
|-|-|-|-|-|
|End of term|||||
|Book balance|Impairmentprovision|Book value|Book balance|Impairmentprovision|
|387,687,751.95||387,687,751.95|464,273,966.44||
|687,934,341.77||687,934,341.77|566,567,300.58|8,910,665.94|
|447,198,419.30|158,244.58|447,040,174.72|429,516,689.14|158,244.58|
|1,522,820,513.02|158,244.58|1,522,662,268.44|1,460,357,956.16|9,068,910.52|

 (2) Inventory depreciation provision
||||||
|-|-|-|-|-|
|Beginning of term|Increased thisperiod|Decreased this period|||
|||Written back|Transferred|Others|
|8,910,665.94||||8,910,665.94|
|158,244.58|||||
|9,068,910.52||||8,910,665.94|

 Inventory impairment provision reduced by RMB8,910,665.94 for disposal of Group Packaged Tech Co. by Zhongneng Co. 8. Other current asset
||
|-|
|End of term|
|318,000,000.00|
|513,038.47|
|133,151.82|
|854.98|

Page 18 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 Total 318,647,045.27 150,724,250.00
Page 19 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 9. Long-term share equity investment
(1) Details
|||||
|-|-|-|-|
|Calculatingbasis|Investment cost|Beginning ofterm|Changed by|
|Cost basis|10,000,000.00|10,000,000.00||
|Cost basis|600,000.00|600,000.00||
|Cost basis|5,534,773.22|5,534,773.22||
|Cost basis|390,954,040.00|390,954,040.00||
|Cost basis|30,000,000.00|30,000,000.00||
|Cost basis|20,261,013.65|10,000,000.00|10,261,013.65|
|Cost basis|15,000,000.00|15,000,000.00||
||472,349,826.87|462,088,813.22|10,261,013.65|

 (Continue)
||||||
|-|-|-|-|-|
|ShareholdingProportion %|VotingProportion %|Statement on differencesbetween the shareholdingand voting rights|Impairmentprovision|Providedcurrent termImpairmentprovision|
|33.33|33.33||||
|6.00|6.00||||
|37.00|37.00||||
|6.92|6.92||||
|15.00|15.00||||
|2.974|2.974||||
|4.2|4.2||||

 (2) Other statements
1) The Auxiliary Machine Co.– the controlled subsidiary of the Company has invested RMB10,000,000 in Zhejiang Tianhang Steam Turbine Auxiliary Machinery Co., Ltd. and take33.33% of the share equities. According to the agreement, the Company adopts fixed return in accounting of this long-term equity investment. In case of the revenue of the company is lower than RMB80 million, the return rate after tax will be10%, ie. RMB1,000,000; in case of the revenue is over RMB80 million, the return rate after tax will be12%, ie. RMB1,200,000. For the above long-term equity investment adopts agreement
rewarding scheme, the Auxiliary Machinery Co. accounts the long-term equity investment on cost basis.
2) The Company has no major influence on India Greeesol Co., therefore cost basis is adopted in accounting of this long-term
equity investment
Page 20 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 10. Fixed assets
(1) Details
|||||
|-|-|-|-|
|Beginning of term|Increased this period||Decreased thisperiod|
|1,310,010,573.34|54,527,559.81||14,988,995.44|
|374,229,968.21|9,427,306.13|||
|808,705,498.38|38,910,906.87||5,648,477.40|
|127,075,106.75|6,189,346.81||9,340,518.04|
||Transferred incurrent term|Provided currentterm||
|650,339,980.11||89,321,670.62|11,963,701.86|
|126,824,000.55||12,216,885.04||
|445,822,410.38||64,947,585.46|5,313,329.34|
|77,693,569.18||12,157,200.12|6,650,372.52|
|659,670,593.23||||
|247,405,967.66||||
|362,883,088.00||||
|49,381,537.57||||
|6,916,780.53|5,642,689.66||133,626.87|
|1,504,928.24||||
|4,112,095.75|5,642,689.66||37,237.32|
|1,299,756.54|||96,389.55|
|652,753,812.70||||
|245,901,039.42||||
|358,770,992.25||||
|48,081,781.03||||

 Depreciation of the period was RMB89,321,670.62; the original value of construction-in-process transferred to fixed asset was RMB54,527,559.81.
(2) Other statements
1) At the end of period, the Casting Company had RMB102,123,892.16 (book value) of fixed assets under obligation for loan guarantee.
2) Due to disposal of share equity in Group Packaged Engineering Co., Ltd. by Zhongneng Co., the original value of fixed asset was reduced by RMB5,198,921.18, and the accumulative depreciation was RMB2,782,740.28.
Page 21 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 11. Construction in process
(1) Details
||||||
|-|-|-|-|-|
|End of term|||||
|Book balance|Impairmentprovision|Book value|Book balance|Impairmentprovision|
|122,508,059.62||122,508,059.62|48,645,662.80||
|41,721,346.13||41,721,346.13|26,758,273.23||
|1,094,407.75||1,094,407.75|||
||||513,517.96||
|1,580,793.10||1,580,793.10|32,334,837.57||
|166,904,606.60||166,904,606.60|108,252,291.56||

 (2) Changes and alternations
||||||
|-|-|-|-|-|
|BudgetRMBx10000|Beginning ofterm|Increased thisperiod|Transferred intofixed assets|Other decreases|
|15206|29,351,308.74|96,993,662.38|3,836,911.50||
|4417|19,294,354.06|23,371,999.97|42,666,354.03||
|6950|26,758,273.23|16,760,087.84|1,797,014.94||
|3000||1,094,407.75|||
|92|513,517.96||513,517.96||
|||5,713,761.38|5,713,761.38||
||32,334,837.57|1,580,793.10||32,334,837.57|
||108,252,291.56|145,514,712.42|54,527,559.81|32,334,837.57|

(Continue)
||||||
|-|-|-|-|-|
|Progress|Capitalizing ofinterestsacumulated|Amount ofinterestcapitalized incurrent period|Interestcapitalized rateof this term %|Fund recourse|
|underconstruction||||Independent|
|Completed||||Independent|
|underconstruction||||Independent|
|underconstruction||||Independent|

Page 22 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013
|||
|-|-|
|Completed|Independent|
|Completed|Independent|
|underconstruction|Independent|

 (3) Other statements
At end of term, there was RMB30,132,953.96 of book value of fixed assets under Casting Co. was used to pledge for loan. 12. Intangible assets
(1) Details
||||
|-|-|-|
|Beginning of term|Increased this period|Decreased this period|
|301,701,848.25|145,253,387.08|199,478,300.00|
|101,883,548.25|145,133,387.08||
|199,420,000.00||199,420,000.00|
|398,300.00|120,000.00|58,300.00|
|68,716,164.40|5,484,085.36|52,285,422.69|
|18,856,506.67|2,936,987.14||
|49,785,701.43|2,476,190.00|52,261,891.43|
|73,956.30|70,908.22|23,531.26|
|232,985,683.85|||
|83,027,041.58|||
|149,634,298.57|||
|324,343.70|||
|22,800,000.00||22,800,000.00|
|22,800,000.00||22,800,000.00|
|210,185,683.85|||
|83,027,041.58|||
|126,834,298.57|||
|324,343.70|||

RMB5,484,085.36 amortized this period.
(2) Other statements
1) At the end of period, the Casting Company had RMB21,801,957.94 (book value) of fixed assets under obligation for loan guarantee.
2) Original value of intangible asset decreased by RMB199,478,300.00 due to disposal of share equity of Group Packaged Engineering Co. by Zhongneng Co. Accumulated amortization was RMB52,285,422.69 and impairment provision was RMB22,800,000.00.
Page 23 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 13. Long-term amortizable expenses
||||||
|-|-|-|-|-|
|Beginning ofterm|Increased thisperiod|Amortized thisterm|Otherdecreases|End ofterm|
|2,422,246.22||1,363,008.88|1,022,488.76|36,748.58|
|196,595.36|||196,595.36||
|2,618,841.58||1,363,008.88|1,219,084.12|36,748.58|

14. Deferred income tax asset and deferred income tax liabilities
(1) Deferred income tax assets and deferred income tax liabilities recognized
||
|-|
|End of term|
|79,384,735.23|
|23,736.69|
|1,863,876.50|
|7,872,349.21|
|1,332,753.51|
|90,477,451.14|
|1,017,473.05|
|1,017,473.05|

 (2) Provisional differences correspondent to the asset or liability items
Items Amount Differences in taxable items
Temporary differences of other tax payables 6,783,153.66 Sub-total 6,783,153.66 Neutralizable different items
Bad debt provision 497,939,275.94 Inventory impairment provision 158,244.58 Fixed asset impairment provision 12,425,843.32 Unrealized profit in consolidated accounts 47,695,840.27 Other deductible provisional difference 8,885,023.42 Sub-total 567,104,227.53 15. Other non-current asset
||
|-|
|End of term|
|66,500,000.00|
|66,500,000.00|

Page 24 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 16. Details of asset impairment provision
||||||
|-|-|-|-|-|
|Beginning ofterm|Provided currentterm|Decreased this period|||
|||Writtenback|Transferred|Other decreases|
|467,067,827.15|61,255,958.27||1,709,092.70|28,590,487.96|
|9,068,910.52||||8,910,665.94|
|6,916,780.53|5,642,689.66||133,626.87||
|22,800,000.00||||22,800,000.00|
|505,853,518.20|66,898,647.93||1,842,719.57|60,301,153.90|

 Bad debt provision reduced by RMB28,590,487.96, inventory impairment provision reduced by RMB8,910,665.94, and intangible asset impairment provision reduced by RMB22,800,000.00 due to disposal of Group Packaged Tech Co. by Zhongneng Co.
17. Short-term loans
||
|-|
|End of term|
|160,000,000.00|
|106,900,000.00|
|100,000,000.00|
|10,000,000.00|
|376,900,000.00|

18. Notes payable
||
|-|
|End of term|
|168,751,198.95|
|168,751,198.95|

RMB168,751,198.95 will become mature in the next period.
19. Account payable
(1) Details
||
|-|
|End of term|
|763,402,630.49|
|15,038,754.82|
|778,441,385.31|

Page 25 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 (2) Account payable to shareholders with5% or over of theCompany’s voting shares and other related parties
||
|-|
|End of term|
|93,056,053.50|
|5,266,718.60|
|2,446,593.87|
|247,576.00|
|114,763.46|
|101,131,705.43|

20. Advances received
(1) Details
||
|-|
|End of term|
|1,480,588,499.90|
|1,480,588,499.90|

(2) Account received in advance from shareholders with5% or over of theCompany’s voting shares and other related parties
||
|-|
|End of term|
|8,188,000.00|
|8,188,000.00|

 21.Employees’ wage payable
(1) Details
||||
|-|-|-|
|Beginning of term|Increased this period|Decreased this period|
|1,615,266.50|483,416,874.15|454,380,674.40|
||37,460,022.26|37,460,022.26|
|9,256,632.37|89,448,583.88|88,274,732.18|
|2,442,841.59|25,084,527.33|24,103,527.73|
|3,593,615.90|36,942,497.41|36,674,899.73|
|531,635.72|5,322,091.17|5,261,541.98|
|173,863.73|1,610,301.07|1,609,351.34|
|203,996.12|2,943,331.51|2,783,125.67|
|2,310,679.31|17,545,835.39|17,842,285.73|
|11,768,169.36|16,738,890.43|12,407,609.96|
|133,813.76|45,188,853.00|45,049,088.00|
|1,382,767.57|9,025,562.82|8,804,511.67|
|3,228,196.59|2,296,005.63|1,181,400.76|
||183,184.09|183,184.09|
|27,384,846.15|683,757,976.26|647,741,223.32|

No invalid delay of payment in the wage payable.
(2) Wage and bonus payable at end of period have been delivered before the end of February 2014.
Page 26 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 22. Tax payable
||
|-|
|End of term|
|37,144,403.03|
|2,783,816.23|
|270,524.70|
|53,143,683.58|
|9,879,947.49|
|1,205,531.61|
|789,567.91|
|94,049.34|
|2,642,286.53|
|2,246.57|
|107,956,056.99|

23. Interest payable
||
|-|
|End of term|

24. Dividend payable
||
|-|
|End of term|

25. Other account payable
(1) Details
||
|-|
|End of term|
|500,000.00|
|41,690,238.16|
|4,751,301.24|
|46,941,539.40|

Page 27 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 (2) Account payable to shareholders with5% or over of theCompany’s voting shares and other related parties
||
|-|
|End of term|
|18,545,102.14|
|100,000.00|
|18,645,102.14|

 (3) No large amount other payable aged over 1 year.
(4) Remarks on other payable accounts with large amount
||
|-|
|End of term|
|18,545,102.14|
|18,545,102.14|

26. Non-current liability due in 1 year
(1) Details
||
|-|
|End of term|

 (2) Long-term loans due in 1 year
||
|-|
|End of term|

27. Long-term payable
||
|-|
|End of term|
|330,000.00|
|330,000.00|

Page 28 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 28. Other non-recurring liabilities
(1) Details
||
|-|
|End of term|
|9,700,985.00|
|9,700,985.00|

 (2) Details of deferred income (government subsidy)
||||||
|-|-|-|-|-|
|Openingbalance|Newsubsidyincurrentperiod|Amounttransferred tonon-operationalincome|Otherchanges|Closingbalance|
|7,895,925.00||997,380.00||6,898,545.00|
|1,120,000.00||160,000.00||960,000.00|
|748,510.00||106,930.00||641,580.00|
|402,920.00||28,780.00||374,140.00|
|402,920.00||28,780.00||374,140.00|
|289,250.00||89,000.00||200,250.00|
|159,740.00||11,410.00||148,330.00|
|130,000.00||26,000.00||104,000.00|
|11,149,265.00||1,448,280.00||9,700,985.00|

29. Share capital
||||
|-|-|-|
|Beginning of term|Increased this period|Decreased this period|
|754,010,400.00|||

 30. Capital reserves
||||
|-|-|-|
|Beginning of term|Increased this period|Decreased this period|
|81,815,220.00|||
|57,775,125.09|||
|139,590,345.09|||

Page 29 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 31. Special reserves
(1) Details
||||
|-|-|-|
|Beginning of term|Increased this period|Decreased this period|
|10,294,548.34|1 0 , 0 4 2 ,022.97|3,060,370.16|
|10,294,548.34|1 0 ,042,022.97|3,060,370.16|

(2) According to the “Notice for Provision of Labor Safety Fund”(财企〔2012〕16号) issued by the Department of Finance and Safety Inspection Bureau General on February 14, 2012, the labor safety fund provided this period was RMB10,042,022.97, and RMB2,446,712.96 was used. Meanwhile the fund reduced by RMB613,657.20 due to disposal of Group Packaged Engineering Co.
32. Surplus reserves
||||
|-|-|-|
|Beginning of term|Increased this period|Decreased this period|
|518,540,739.23|65,283,938.82||
|518,540,739.23|65,283,938.82||

33. Retained profit
(1) Details
||
|-|
|Amount|
|2,449,720,889.86|
|653,356,182.05|
|65,283,938.82|
|301,604,159.99|
|613,657.20|
|2,736,802,630.30|

(2) Remarks on other transferred in
RMB613,657.20 was transferred to special reserves attributable to the parent company due to disposal of the Group Packaged Engineering Co.
Page 30 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 (II) Notes to consolidated income statement
1. Turnover / cost
(1) Details
||
|-|
|Current term|
|5,047,122,811.06|
|17,520,875.61|
|3,411,549,649.25|

(2) Main business income / costs (on business segments)
||||
|-|-|-|
|Current term|||
|Revenue|Cost|Revenue|
|4,629,779,994.33|2,959,865,518.22|4,561,438,789.95|
|417,342,816.73|415,084,215.84||
|5,047,122,811.06|3,374,949,734.06|4,561,438,789.95|

 (3) Main business turnover/ cost (categorized by products)
||||
|-|-|-|
|Current term|||
|Revenue|Cost|Revenue|
|4,301,834,488.07|2,751,888,012.36|3,700,386,014.61|
|79,892,975.80|68,042,266.64|67,752,149.54|
|88,996,057.49|65,227,670.39|113,048,678.69|
|2,605,175.17|2,216,685.46|188,136,219.93|
|||208,899,498.84|
|110,103,805.50|52,400,341.25|253,529,834.43|
|417,342,816.73|415,084,215.84||
|46,347,492.30|20,090,542.12|29,686,393.91|
|5,047,122,811.06|3,374,949,734.06|4,561,438,789.95|

Page 31 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 (4) Main business turnover / cost (on territories)
||||
|-|-|-|
|Current term|||
|Revenue|Cost|Revenue|
|4,676,937,195.37|3,052,717,049.91|4,109,439,564.55|
|370,185,615.69|322,232,684.15|451,999,225.40|
|5,047,122,811.06|3,374,949,734.06|4,561,438,789.95|

 (5) Business turnover from top 5 clients
||
|-|
|Turnover|
|834,173,751.99|
|585,564,273.39|
|373,600,000.00|
|209,111,111.01|
|194,937,048.79|
|2,197,386,185.18|

2. Business tax and surcharge
|||
|-|-|
|Current term|Same period of lastterm|
|728,011.20|2,612,878.70|
|22,527,806.42|23,554,907.39|
|9,738,028.46|10,260,395.46|
|6,496,018.70|6,839,599.53|
|39,489,864.78|43,267,781.08|

3. Sales expense
||
|-|
|Current term|
|66,831,609.67|
|56,688,288.91|
|23,957,259.21|
|9,549,238.85|
|4,933,422.46|
|10,565,239.75|
|2,377,282.79|
|357,037.63|
|943,322.50|
|1,351,813.08|
|11,824,492.18|
|189,379,007.03|

Page 32 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 4. Administrative expense
||
|-|
|Current term|
|363,006,810.10|
|77,418,067.17|
|19,353,051.39|
|16,047,995.20|
|13,124,383.51|
|8,460,260.69|
|8,212,409.11|
|4,687,758.48|
|4,241,037.03|
|3,885,150.64|
|44,201,467.45|
|562,638,390.77|

5. Financial expenses
||
|-|
|Current term|
|11,110,409.64|
|10,506,092.04|
|6,958,776.09|
|2,150,126.95|
|9,713,220.64|

6. Asset impairment loss
||
|-|
|Current term|
|61,255,958.27|
|5,642,689.66|
|66,898,647.93|

7. Investment income
(1) Details
||
|-|
|Current term|
|24,610,010.13|
|16,533,520.13|
|26,537,052.89|
|2,091,303.45|
|69,771,886.60|

Page 33 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 (2) Long-term investment income on cost basis
|||
|-|-|
|Current term|Same period of lastterm|
|23,118,640.00|23,118,640.00|
|491,370.13|435,586.13|
|1,000,000.00|1,200,000.00|
|24,610,010.13|24,754,226.13|

(3) Investment gains from disposal of long-term equity investment
Company invested in Gains from disposal
Packaged Equipment Co. of the Group
26,537,052.89
Total
26,537,052.89
(4) There was no major limitation on retrieving of investment gains.
8. Non-operational income
(1) Details
|||
|-|-|
|Current term|Same period of lastterm|
|664,561.20|2,569,259.43|
|664,561.20|2,569,259.43|
|16,517,582.75|13,931,213.71|
|4,287,876.85|2,212,031.23|
|364,211.51|13,646.54|
|14,705.37|414,374.66|
|21,848,937.68|19,140,525.57|

 (2) Details of government subsidies
1) Year 2013
|||
|-|-|
|Current term|Asset-related/Income-related|
|3,000,000.00|Income-related|
|1,614,997.04|Income-related|
|1,231,582.69|Income-related|
|1,000,000.00|Income-related|
|1,000,000.00|Income-related|
|997,380.00|Asset-related|

Page 34 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013
|||
|-|-|
|798,200.00|Income-related|
|600,000.00|Income-related|
|550,000.00|Income-related|
|550,000.00|Income-related|
|500,000.00|Income-related|
|490,068.02|Income-related|
|448,051.20|Income-related|
|322,643.45|Income-related|
|300,000.00|Income-related|
|271,378.80|Income-related|
|250,000.00|Income-related|
|239,779.96|Income-related|
|200,000.00|Income-related|
|196,032.30|Income-related|
|183,436.09|Income-related|
|160,000.00|Asset-related|
|150,000.00|Income-related|
|120,000.00|Income-related|
|106,930.00|Asset-related|
|104,224.97|Income-related|
|100,000.00|Income-related|
|100,000.00|Income-related|
|100,000.00|Income-related|
|99,407.12|Income-related|
|92,852.00|Income-related|

Page 35 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013
|||
|-|-|
|89,000.00|Asset-related|
|80,000.00|Income-related|
|72,276.00|Income-related|
|69,274.11|Income-related|
|52,000.00|Income-related|
|50,000.00|Income-related|
|30,000.00|Income-related|
|29,200.00|Income-related|
|28,780.00|Asset-related|
|28,780.00|Asset-related|
|26,000.00|Asset-related|
|20,000.00|Income-related|
|20,000.00|Income-related|
|11,410.00|Asset-related|
|10,000.00|Income-related|
|10,000.00|Income-related|
|5,000.00|Income-related|
|5,000.00|Income-related|
|3,899.00|Income-related|
|16,517,582.75||

Page 36 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 2) Year 2012
|||
|-|-|
|Current term|Asset-related/Income-related|
|89,000.00|Asset-related|
|400,000.00|Asset-related|
|123,690.00|Income-related|
|1,387,011.78|Income-related|
|10,000.00|Income-related|
|1,500,000.00|Income-related|
|1,000,000.00|Income-related|
|10,000.00|Income-related|
|1,000,000.00|Income-related|
|264,000.00|Income-related|
|500,000.00|Income-related|
|40,000.00|Income-related|
|13,200.00|Income-related|
|250,000.00|Income-related|
|352,000.00|Income-related|

Page 37 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013
|||
|-|-|
|1,200,000.00|Income-related|
|304,300.00|Income-related|
|650,000.00|Income-related|
|48,243.00|Income-related|
|415,789.47|Asset-related|
|150,000.00|Asset-related|
|1,516,339.16|Income-related|
|300,000.00|Income-related|
|61,889.42|Income-related|
|4,000.00|Income-related|
|150,000.00|Income-related|
|28,780.00|Asset-related|
|11,410.00|Asset-related|
|26,000.00|Asset-related|
|28,780.00|Asset-related|

Page 38 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013
|||
|-|-|
|160,000.00|Asset-related|
|997,380.00|Asset-related|
|40,470.88|Income-related|
|106,930.00|Income-related|
|110,000.00|Income-related|
|300,000.00|Income-related|
|300,000.00|Income-related|
|82,000.00|Income-related|
|13,931,213.71||

9. Non-operational expenditure
|||
|-|-|
|Current term|Same period of lastterm|
|13,319.33|3,047,116.27|
|13,319.33|3,047,116.27|
|3,623,248.00|1,800,847.50|
|197,164.48|1,427,092.51|
|6,193,600.52|3,789,583.71|
|206,279.28|216,788.63|
|391,869.93|229,376.90|
|10,625,481.54|10,510,805.52|

10. Income tax expenses
||
|-|
|Current term|
|144,917,052.65|
|-13,770,437.50|
|131,146,615.15|

Page 39 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 11. Calculation formula of basic earnings per share and diluted earnings per share
(1) Calculation process of basic earning per share
||
|-|
|No.|
|A|
|B|
|C=A-B|
|D|
|E|
|F|
|G|
|H|
|I|
|J|
|K|
|L=D+E+F×G/K-H×I/K-J|
|M=A/L|
|N=C/L|

(2) Calculation process of diluted earning per share is the same with that of the basic earning per share
12. Other misc. incomes
||
|-|
|Current term|
|-1,320,218.73|
|-1,320,218.73|

Page 40 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 (III) Notes to consolidated cash flow statement
1. Other operational cash received
Items Current term
Deposit interest 10,506,092.04
Government subsidies received 10,167,958.38
Security for bidding invitation 2,971,790.00
Compensation income 1,887,619.48
Others 3,916,617.97
Total 29,450,077.87
2. Other operational cash paid
Items Current term
Transportation 44,314,741.44
Business trips 32,113,709.72
Business reception expenses 25,607,800.05
Maintaining 25,413,690.91
Property management and civil services 13,848,452.65
Deposit for bidding and others 11,719,405.00
Office expenses 7,086,000.67
Conferences 5,291,185.67
Consulting service fee 5,039,598.87
Labor service 3,698,014.48
International traveling 2,669,123.90
Transportation and vehicles 2,563,966.37
Others 24,408,180.69
Total 203,773,870.42
3. Other cash related to investment activities received
Items Current term Repurchasing of trusteeship 2,498,610,000.00 Settlement of Zhongcheng Cement Co. received by Zhongneng Co. 2,091,303.45 Total 2,500,701,303.45
Page 41 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 4. Other cash paid related to investment activities
Items Current term
Purchasing of financial products 2,666,000,000.00
Total 2,666,000,000.00
5. Other cash related to financing activities received
Items Current term Repayment received from Zhongcheng Cement Co. by Zhongneng Co. 91,507,707.64 Repayment received from Hangzhou Steam Turbine Engineering Co., Ltd. by Group Packaged
32,010,000.00 Engineering Co.
Total 123,517,707.64 6. Other cash related to financing activities paid
Items Current term Repayment from Group Packaged Engineering Co. to Hangzhou Steam Turbine Engineering Co., Ltd. 34,030,000.00 Acquisition of minorityshareholders’ equity of Auxiliary Machine Co. 27,041,893.41 Acquisition of minorityshareholders’ equity of Zhongneng Co. 22,043,621.81 Acquisition of minorityshareholders’ equity of Packaged Engineering Co. 13,540,214.96 Acquisition of minorityshareholders’ equity of Hangzhou Steam Turbine Boiler Co. by Zhongneng Co. 2,000,000.00 Total 98,655,730.18
Page 42 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 7. Appendix of Cash Flow Statement
(1) Supplementary cash flow statement
||
|-|
|Current term|
|734,823,633.86|
|66,898,647.93|
|89,321,670.62|
|5,484,085.36|
|1,363,008.88|
|-779,839.03|
|128,597.16|
|12,483,950.71|
|-69,771,886.60|
|-13,750,393.47|
|-20,044.03|
|-177,798,638.19|
|-468,631,863.04|
|178,646,546.68|
|11,267,055.09|
|369,664,531.93|
|810,928,644.47|
|1,055,130,058.35|
|-244,201,413.88|

 (2) Particulars about disposal of subsidiaries and other entities
||
|-|
|Current term|
|30,940,000.00|
|80,940,000.00|
|2,370,457.95|
|78,569,542.05|
|6,289,924.30|
|308,750,553.62|
|144,316,408.34|
|446,777,037.66|

Page 43 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 (3) Composition of cash and cash equivalents
||
|-|
|End of term|
|810,928,644.47|
|641,950.41|
|810,286,694.06|
|810,928,644.47|

(4) Monetary capital not categorized as cash or cash equivalents
||
|-|
|End of term|
|72,212,923.70|
|72,212,923.70|

Page 44 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 VI. Related parties and transactions
(I) Related parties
1. The parent company of the Company
|||||
|-|-|-|-|
|Relationship|Ownership type|Reg. Add.|Legalrepresentative|
|Controllingshareholder|Solely nationalowned|HangzhouChina|Nie Zhonghai|

(Continue)
|||||
|-|-|-|-|
|RegisteredcapitalRMB*10000|Shareholding of theparent co.|Voting rights ofthe parent co. %|Substantial holder ofthe Company|
|80,000|63.64|63.64|Hangzhou StateAsset Committee|

2. Details of the subsidiaries are available with the Notes to the Consolidated Financial Statements
3. Other related parties
||
|-|
|Relationship with the Company|
|Affiliate of the Group|
|Affiliate of the Group|
|Affiliate of the Group|
|Affiliate of the Group|
|Affiliate of the Group|
|Affiliate of the Group|
|Affiliate of the Group|
|Affiliate of the Group|
|Affiliate of the Group|
|Affiliate of the Group|
|Shares held by the Company|
|Former subsidiary of Zhongneng Co.|
|Affiliate of the Group|
|Affiliate of the Group|
|Affiliate of the Group|

Page 45 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 (II) Related transactions
1. Trade of goods and services
(1) Details
1) Purchase of goods and services
||||||
|-|-|-|-|-|
|RelatedtransactionContents|Pricing policyand decisionmaking ofrelatedtransactions|Current term|||
|||Amount|Percentagein similartrades|Amount|
|Generators|Price onagreement|183,472,514.72|4.74|173,899,829.18|
|Steel|Price onagreement|170,553,863.32|4.40||
|freight,repairing fee|Price onagreement|70,362,245.98|1.82|70,436,341.89|
|Steel|Price onagreement|53,044,615.40|1.37||
|Packagingmaterials|Price onagreement|14,342,648.12|0.37|13,401,015.01|
|Gear boxes|Price onagreement|8,947,134.19|0.23|14,370,512.87|
|Rawmaterials|Price onagreement|1,369,049.55|0.04|1,195,742.28|
|Equipmentmaintanence|Price onagreement|14,150.94|||
|||502,106,222.22|12.97|273,303,441.23|

 2) Related transactions regarding sales of goods or providing of services
||||||
|-|-|-|-|-|
|RelatedtransactionContents|Pricing policyand decisionmaking ofrelatedtransactions|Current term|||
|||Amount|Percentage insimilar trades|Amount|
|Steam turbine|Price onagreement|81,797,147.77|1.62|27,134,017.14|
|forgingindustrycooperation|Price onagreement|21,396,752.61|0.42|6,368,733.03|
|Steam turbine|Price onagreement|6,869,160.55|0.14|11,002,646.50|

Page 46 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013
||||||
|-|-|-|-|-|
|steam turbine\auxiliarymachines|Price onagreement|1,056,418.86|0.02|1,264,957.26|
|Small amountmaterials|Price onagreement|23,205.13|||
|Small amountmaterials|Price onagreement|1,335.35||2,631.86|
|industrycooperation|Price onagreement|124,717.95||158,786.33|
|industrycooperation|Price onagreement|||38,461.54|
|||111,268,738.22|2.20|45,970,233.66|

2. Rental with related parties
||||||
|-|-|-|-|-|
|Name of thetenant|Category ofasset for rent|LeasesStart date|LeasesEnding date|RentalPricing basis|
|PackagedTech. Co.|Houses &plants|2013/01/01|2013/12/31|Price onagreement|
|Machinery Co.|Houses &plants|2013/01/01|2013/12/31|Price onagreement|
|The Company|Houses &plants|2013/01/01|2013/12/31|Price onagreement|
|The Company|Land usingright|2013/01/01|2013/12/31|Price onagreement|

 3. Related guarantee
|||||
|-|-|-|-|
|The beneficiary|Amount guaranteed|Start date|Due date|
|The Company|100,000,000.00|2013/11/05|2014/11/05|

 4. Other related transactions
(1) Service and power supply
HSTG provide civil services, property management, and employee training to the Company. The fees payable to HSTG was RMB277,337.50 in the current term. HSTG supplies water and power to the Company and some of the subsidiaries amounted to RMB12,971,803.29 this term.
HSTG Automobile Sales and Service Co., Ltd provided transportation services to the employees of the Company, the Company paid RMB1,280,285.00 for the service in the report term.
HSTG provide cleaning services to the Company and the fee was RMB774,883.00 for this term.
(2) Using of trademark
The Company pays RMB1,698,113.20 to HSTG for using of the registered trademark.
(3) Expenses paid on behalf the Company
HSTG paid the basic health insurance and supplementary health insurance on behalf of the Company and some subsidiaries,
they were totaled to RMB12,999,765.02 and paid to HSTG in the report term.
Page 47 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 (III) Payable and receivable accounts with the related parties
1. Receivable accounts due from related parties
|||||
|-|-|-|-|
|Related parties|End of term|||
||Book balance|Bad debtprovision|Book balance|
|Zhongcheng Cement Co., Ltd.|||57,914,510.02|
|Greenesol Co. (India)|14,528,739.91|2,788,659.15|14,169,210.82|
|Hangzhou Steam Turbine PowerTechnologies Co., Ltd.|9,179,071.38|1,835,814.28|13,217,871.38|
|Hangzhou Hangfa PowerGenerating Equipment Co., Ltd.|9,172,143.24|458,607.16|3,061,417.69|
|Hangzhou Steam TurbineEngineering Co., Ltd.|6,429,790.00|559,239.50|3,974,680.00|
|Packaged Equipment Co. of theGroup|2,631,260.00|720,252.00||
|Hangzhou Steam Turbine Group|691,500.00|226,800.00|2,507,500.00|
|Hangzhou Nanfangtongda GearsCo., Ltd.|4,434.00|1,773.60|4,434.00|
|HSTG Nanfang Sales Co.|||20,000.00|
|Hangzhou Nanfangtongda GearsCo., Ltd.|||4,434.00|
|Hangzhou Steam Turbine PowerSales Co., Ltd.|||2,571.96|
||42,636,938.53|6,591,145.69|94,872,195.87|
|Zhongcheng Cement Co., Ltd.|||96,267,737.18|
|Hangzhou Steam TurbineAutomobile Sales Service Co.,Ltd.|||3,572.36|
||||96,271,309.54|
|Hangzhou Hangfa PowerGenerating Equipment Co., Ltd.|32,299,825.00||31,875,325.00|
|Hangzhou Steam TurbineAutomobile Sales Service Co.,Ltd.|1,248,838.35|||
|Hangzhou Nanfangtongda GearsCo., Ltd.|47,400.00|||
|Hangzhou Relian Group Co., Ltd.|||128,160.00|
||33,596,063.35||32,003,485.00|

Page 48 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 2. Accounts payable to related parties
|||
|-|-|
|Related parties|End of term|
|Hangzhou Hangfa Power Generating Equipment Co.,Ltd.|93,056,053.50|
|Hangzhou Steam Turbine Group|5,266,718.60|
|Hangzhou Steam Turbine Automobile Sales Service Co.,Ltd.|2,446,593.87|
|Hangzhou Nanhua Wooden Packaging Co., Ltd.|247,576.00|
|Hangzhou Steam Turbine Industrial Co.|114,763.46|
||101,131,705.43|
|Hangzhou Steam Turbine Engineering Co., Ltd.|8,188,000.00|
|Hangzhou Steam Turbine Group||
|Hangzhou Hangfa Power Generating Equipment Co.,Ltd.||
||8,188,000.00|
|Hangzhou Steam Turbine Group|18,545,102.14|
|Hangzhou Steam Turbine Automobile Sales Service Co.,Ltd.|100,000.00|
|Hangzhou Steam Turbine Engineering Co., Ltd.||
||18,645,102.14|

 (IV) Remunerations for key executives
Remunerations for key management personnel were totaled to RMB13.1457 million and RMB23.7195 million respectively in 2013 and 2012.
VII. Contingent Events
No major contingent event to be disclosed as of the date of Balance Sheet.
VIII. Commitment Events
(I) Capital commitment occurred due to construction of new factories or purchasing of equipment were totaled to RMB33.3762 million.
(II) The Company invested RMB10 million to be one of the partners of Hangzhou Changdi Share Investment Partnership (with limited liabilities) in 2011. This was the initial input of capital, and the Company committed to input supplementary capital when necessary according to the portion of interests, but not greater than RMB50 million accumulative in 8-11 years during the existing period of the firm.
Additional investment of RMB10.2610 million was invested to the entity this period, and accumulated to RMB20.2610 million.
Page 49 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 IX. Post-balance sheet issues
Statement on profit distribution in post-balance-sheet day
According to the Profit Distribution Plan 2013 passed at the 9th meeting of the 6th term of Board held on March 27, 2014, legal surplus reserve was provided at10% of the net profit of Proposed profit or dividend the parent company realized in 2013, and basing on 754,010,400 of total capital shares at end of 2013, RMB2.0 (tax included) of cash dividend will be distributed to each 10 shares. This pre-plan is subject to the approval of theShareholders’ Annual Meeting.
X. Other significant issues
Financial assets and liabilities in foreign currencies
|||||
|-|-|-|-|
|Beginning ofterm|Gain/loss fromchange of fair valuein the term|Accumulative change infair value accounted intoequities|Impairment provisionprovided this term|

Financial assets
|||
|-|-|
|217,881,127.07|27,850,889.56|
|217,881,127.07|27,850,889.56|
|494,552.85||

Page 50 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 XI. Notes to Financial Statements of the Parent Company
(I) Notes to items of parent company financial statements
1. Account receivable
(1) Details
1) Detailed categories
||||||||
|-|-|-|-|-|-|-|
|End of term|||||||
|Book balance||Bad debt provision||Book balance|||
|Amount|Proportion %|Amount|Proportion %|Amount|Proportion %|Amount|
|173,093,826.39|7.96|||152,258,065.32|8.48||
|1,968,050,175.85|90.52|352,283,560.30|17.90|1,633,823,795.86|90.99|338,993,211.47|
|2,141,144,002.24|98.48|352,283,560.30|16.45|1,786,081,861.18|99.47|338,993,211.47|
|33,020,480.19|1.52|33,020,480.19|100.00|9,492,990.65|0.53|9,492,990.65|
|2,174,164,482.43|100.00|385,304,040.49|17.72|1,795,574,851.83|100.00|348,486,202.12|

 2) Receivable accounts on which bad debt provisions are provided on age basis in the group
||||||
|-|-|-|-|-|
|End of term|||||
|Book balance||Bad debt provision|Book balance||
|Amount|Proportion %||Amount|Proportion %|
|1,165,637,194.37|59.23|58,281,859.72|794,190,457.53|48.61|
|368,681,471.42|18.73|73,736,294.28|401,716,379.61|24.59|
|199,867,498.67|10.16|79,946,999.47|219,048,812.81|13.41|
|233,864,011.39|11.88|140,318,406.83|218,868,145.91|13.39|
|1,968,050,175.85|100.00|352,283,560.30|1,633,823,795.86|100.00|

Page 51 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 (2) Receivable accounts actually neutralized in the term
||||
|-|-|-|
|Property of the receivableaccount|Amount writtenoff|Reason of writingoff|
|Trade|1,513,543.95|Hard to recover|
|Trade|136,000.00|Hard to recover|
|Trade|135,503.75|Hard to recover|
||1,785,047.70||

(3) Receivable accounts due from shareholders with5% of shares or over
||||
|-|-|-|
|End of term|||
|Book balance|Bad debt provision|Book balance|
|258,500.00|100,100.00|158,500.00|
|258,500.00|100,100.00|158,500.00|

(4) Receivable accounts top 5 on amounts
||||
|-|-|-|
|Relation with theCompany|Book balance|Age|
|Non-related|516,660,258.75|[Note]|
|Non-related|417,344,287.60|[Note]|
|Non-related|160,980,000.00|within 1year|
|Related parties|91,305,066.16|[Note]|
|Related parties|57,587,183.69|[Note]|
||1,243,876,796.20||

[Note]: Account age breakdown
||||
|-|-|-|
|within 1 yr|1-2 yrs|2-3 yrs|
|377,375,815.98|130,408,042.77|8,876,400.00|
|228,927,200.00|69,614,080.56|42,201,070.04|
|36,218,100.00|55,086,966.16||
|18,563,793.69|20,470,980.00|11,228,910.00|

Page 52 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 (5) Other receivable accounts of related parties
|||
|-|-|
|Relation with theCompany|Book balance|
|Subsidiaries|91,305,066.16|
|Subsidiaries|57,587,183.69|
|Subsidiaries|16,748,468.96|
|Affiliate of the Group|9,179,071.38|
|Subsidiaries|6,442,244.62|
|Subsidiaries|807,112.20|
|Subsidiaries|203,750.76|
||182,272,897.77|

 2. Other account receivable
(1) Details
1) Detailed categories
||||||||
|-|-|-|-|-|-|-|
|End of term|||||||
|Book balance||Bad debt provision||Book balance|||
|Amount|Proportion %|Amount|Proportion %|Amount|Proportion %|Amount|
|3,710,320.94|11.95|3,710,320.94|100.00|3,710,320.94|12.96|3,710,320.94|
|7,592,653.87|24.46|||6,377,931.30|22.27||
|19,742,848.23|63.59|2,270,192.32|11.50|18,549,315.21|64.77|2,154,996.81|
|27,335,502.10|88.05|2,270,192.32|7.31|24,927,246.51|87.04|2,154,996.81|
|31,045,823.04|100.00|5,980,513.26|19.26|28,637,567.45|100.00|5,865,317.75|

Page 53 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 2) Other receivable accounts with major amount and bad debt provisions provided individually
||||
|-|-|-|
|Book balance|Bad debt provision|Providing rate %|
|3,710,320.94|3,710,320.94|100.00|
|3,710,320.94|3,710,320.94|100.00|

3) Other receivable accounts in the group on which bad debt provisions are provided on age basis
||||||
|-|-|-|-|-|
|End of term|||||
|Book balance||Bad debt provision|Book balance||
|Amount|Proportion %||Amount|Proportion %|
|15,627,084.83|79.15|781,354.24|15,098,317.81|81.40|
|2,172,800.00|11.01|434,560.00|1,062,143.80|5.73|
|557,499.80|2.82|222,999.92|1,228,300.00|6.62|
|1,385,463.60|7.02|831,278.16|1,160,553.60|6.25|
|19,742,848.23|100.00|2,270,192.32|18,549,315.21|100.00|

 (2) Top 5 other receivables
|||||
|-|-|-|-|
|Relation with theCompany|Book balance|Age|Percentage in totalother receivable %|
|Non-related|3,710,320.94|Over 3years|11.95|
|Non-related|3,504,493.50|within 1year|11.29|
|Non-related|2,205,800.00|[Note]|7.1|
|Non-related|1,383,575.63|within 1year|4.46|
|Non-related|1,100,000.00|within 1year|3.54|
||11,904,190.07||38.34|

[Note]: Account age breakdown
||||
|-|-|-|
|within 1 yr|1-2 yrs|2-3 yrs|
|1,144,000.00|820,000.00||

 (3) Other related party receivable account
|||
|-|-|
|Relation with the Company|Book balance|
|Subsidiaries|7,298,286.30|
|Subsidiaries|281,543.56|
|Subsidiaries|12,824.01|
||7,592,653.87|

Page 54 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 3. Long-term share equity investment
|||||
|-|-|-|-|
|Calculatingbasis|Investment cost|Beginning ofterm|Changed by|
|Cost basis|29,800,389.56|16,260,174.60|13,540,214.96|
|Cost basis|27,644,475.06|5,600,853.25|22,043,621.81|
|Cost basis|11,220,000.00|11,220,000.00||
|Cost basis|46,286,513.41|19,244,620.00|27,041,893.41|
|Cost basis|7,968,000.00|7,968,000.00||
|Cost basis|5,534,773.22|5,534,773.22||
|Cost basis|390,954,040.00|390,954,040.00||
|Cost basis|20,000,000.00|20,000,000.00||
|Cost basis|30,000,000.00|30,000,000.00||
|Cost basis|20,261,013.65|10,000,000.00|10,261,013.65|
|Cost basis|360,000,000.00||360,000,000.00|
||949,669,204.90|516,782,461.07|432,886,743.83|

 (Continue)
||||||
|-|-|-|-|-|
|ShareProportion %|VotingProportion %|Statement on differencesbetween the shareholdingand voting rights|Impairmentprovision|Providedcurrent termImpairmentprovision|
|70.86|70.86||||
|60.83|60.83||||
|51.00|51.00||||
|87.53|87.53||||
|52.00|52.00||||
|37.00|37.00||||
|6.92|6.92||||
|100.00|100.00||||
|15.00|15.00||||
|2.974|2.974||||
|100.00|100.00||||

Page 55 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 (II) Notes to items of parent company income statements
1. Turnover / cost
(1) Details
||
|-|
|Current term|
|3,397,870,592.28|
|33,040,360.82|
|2,335,815,522.20|

 (2) Main business income / costs (on business segments)
||||
|-|-|-|
|Current term|||
|Revenue|Cost|Revenue|
|3,397,870,592.28|2,303,911,607.85|2,902,628,269.51|
|3,397,870,592.28|2,303,911,607.85|2,902,628,269.51|

 (3) Main business turnover/ cost (categorized by products)
||||
|-|-|-|
|Current term|||
|Revenue|Cost|Revenue|
|3,311,984,317.08|2,271,615,330.58|2,833,230,663.25|
|85,886,275.20|32,296,277.27|69,397,606.26|
|3,397,870,592.28|2,303,911,607.85|2,902,628,269.51|

 (4) Main business turnover / cost (on territories)
||||
|-|-|-|
|Current term|||
|Revenue|Cost|Revenue|
|3,076,335,258.84|2,028,510,410.98|2,614,218,901.86|
|321,535,333.44|275,401,196.87|288,409,367.65|
|3,397,870,592.28|2,303,911,607.85|2,902,628,269.51|

 (5) Business turnover from top 5 clients
||
|-|
|Turnover|
|782,483,034.12|
|585,239,316.13|
|373,600,000.00|
|178,769,230.80|
|133,119,070.00|

Page 56 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 Sub-total 2,053,210,651.05 59.85
2. Investment income
(1) Details
||
|-|
|Current term|
|171,046,058.13|
|8,692,300.27|
|179,738,358.40|

 (2) Long-term investment income on cost basis
|||
|-|-|
|Current term|Same period of lastterm|
|64,503,750.00|25,801,500.00|
|48,957,040.00|61,196,300.00|
|10,575,258.00|6,220,740.00|
|23,400,000.00|23,400,000.00|
|23,118,640.00|23,118,640.00|
|491,370.13|435,586.13|
||25,500,000.00|
|171,046,058.13|165,672,766.13|

(3) There was no major limitation on retrieving of investment gains.
Page 57 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 (III) Supplementary cash flow statement of the parent company
||
|-|
|Current term|
|652,839,388.20|
|38,718,126.58|
|61,816,478.08|
|1,425,531.48|
|1,352,509.28|
|-786,672.52|
|128,597.16|
|4,816,163.60|
|-179,738,358.40|
|-5,960,617.98|
|-20,044.03|
|-94,856,541.98|
|-375,059,833.28|
|91,611,499.79|
|2,624,398.40|
|198,910,624.38|
|295,292,983.14|
|654,577,030.60|
|-359,284,047.46|

Page 58 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 XII. Supplementary information
(I) Non-recurring gain/loss
||
|-|
|Amount|
|29,279,598.21|
|16,517,582.75|
|16,533,520.13|
|248,232.04|
|62,578,933.13|
|11,084,671.48|
|14,977,291.43|
|36,516,970.22|

(II) Net income on asset ratio and earning per share
1. Details
|||
|-|-|
|Weighted averagenet assetprofit ratio %||
||Basic earningsper share|
|16.13%|0.87|
|15.22%|0.82|

2. Calculation process of weighted average net income on asset
||
|-|
|No.|
|A|
|B|
|C=A-B|
|D|
|E|
|F|
|G|
|H|
|I|
|J|
|K|
|L= D+A/2+ E×F/K-G×H/K±I×J/K|
|M=A/L|
|N=C/L|

Page 59 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 (III) Statements on irregular items in the Financial Statements
||||
|-|-|-|
|End of term|Beginning of term|Scale ofchange|
|31,299,637.50|179,863,895.91|-82.60%|
|318,647,045.27|150,724,250.00|111.41%|
|166,904,606.60|108,252,291.56|54.18%|
|66,500,000.00|10,200,000.00|551.96%|
|376,900,000.00|250,400,000.00|50.52%|
|63,401,599.09|27,384,846.15|131.52%|
||9,800,000.00|-100.00%|
|46,941,539.40|259,432,035.81|-81.91%|
||100,000,000.00|-100.00%|
|Current term|Same period oflast term|Scale ofchange|
|5,064,643,686.67|4,575,383,435.46|10.69%|
|3,411,549,649.25|2,909,231,231.97|17.27%|
|9,713,220.64|43,779,974.72|-77.81%|
|66,898,647.93|49,946,735.06|33.94%|
|69,771,886.60|163,618,696.35|-57.36%|

Page 60 of 81
Hangzhou Steam Turbine Co., Ltd. Annual Report 2013 Chapter XI. Documents for Reference
I. Annual Report 2013 with signature of the Chairman
II. Original copy of theAuditors’ Report with the seals and signatures of of the legal representative, CFO, Accounting Manager of the Company, and the Pan-China CPA and signed by certified accountants.
III. All of the originals of theCompany’s documents and public notices publicized by the presses designated by China Securities Regulatory Commission in the report period;
IV. Original copy of the resolutions of the
9th
meeting of the
6th
term of Board with signatures of directors.
Hangzhou Steam Turbine Co., Ltd.
Chairman of the Board: Nie Zhonghai
March 29, 2014
Page 61 of 81