Stock Code: 200771 Stock ID: Hangqilun B Announcement No. 2017-09 Hangzhou Steam Turbine Co., Ltd.
Auditors’ Report 2016
Table of Contents
I. TheAuditors’ Report
II. Financial Statements
(I) Consolidated Balance Sheet
(II) Balance Sheet of the Parent Co.
(III) Consolidated Income Statement
(IV) Income Statement of the Parent Co.
(V) Consolidated Cash Flow Statement
(VI) Cash Flow Statement of the Parent Co.
(VII) Consolidated Statement of Change inShareholders’ Equity
(VIII) Statement of Change inShareholders’ Equity (Parent Co.)
III. Notes to the Financial Statements
Auditors’ Report
Tian Jian ShenNo.〔2017〕1028
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, 2016, 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 2016, 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. 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, 2016 and the business performance and cash flow of year 2016 both of the Company and the consolidated.
Pan-China Certified Public Accountants (Special common partnership) CPA China : Zhu Guogang
Hangzhou China CPA China : Jiang Xiaodong
March 16, 2017
All figures in the Notes to the Financial Statements are in RMB.
1. Consolidated Balance Sheet
Prepared by: Hangzhou Steam Turbine Co., Ltd
In RMB
||||
|-|-|-|
|Items|At the end of term|Beginning of term|
|Current asset：|||
|Monetary fund|895,037,559.34|751,596,796.24|
|Settlement provision|||
|Outgoing call loan|||
|Financial assets measured at fair value with variations accounted into|||
|current income account|||
|Derivative financial assets|||
|Bill receivable|479,716,321.62|680,518,943.49|
|Account receivable|1,870,173,348.32|2,096,090,157.61|
|Prepayments|202,184,858.83|139,267,324.65|
|Insurance receivable|||
|Reinsurance receivable|||
|Provisions of Reinsurance contracts receivable|||
|Interest receivable|||
|Dividend receivable|||
|Other account receivable|31,024,707.72|25,574,057.29|
|Repurchasing of financial assets|||
|Inventories|1,901,544,358.26|1,826,869,838.60|
|Assets held for sales|||
|Non-current asset due in 1 year|||
|Other current asset|863,018,479.59|427,203,835.44|
|Total of current assets|6,242,699,633.68|5,947,120,953.32|
|Non-current assets：|||
|Loans and payment on other’s behalf disbursed|||
|Disposable financial asset|3,060,865,862.60|509,409,741.77|
|Expired investment in possess|||
|Long-term receivable|||
|Long term share equity investment|||
|Property investment|||
|Fixed assets|615,922,109.91|642,155,636.34|
|Construction in progress|153,743,889.41|119,187,107.52|
|Engineering material|||
|Fixed asset disposal|||
|Production physical assets|||
|Gas & petrol|||
|Intangible assets|297,405,434.08|304,949,207.18|
|R & D petrol|||
|Goodwill|||
|Long-germ expenses to be amortized|1,430,968.81|2,029,471.80|
|Deferred income tax asset|178,831,809.85|158,924,887.70|
|Other non-current asset|||
|Total of non-current assets|4,308,200,074.66|1,736,656,052.31|
|Total of assets|10,550,899,708.34|7,683,777,005.63|
|Current liabilities|||

||||
|-|-|-|
|Short-term loans|173,000,000.00|85,350,000.00|
|Loan from Central Bank|||
|Deposit received and hold for others|||
|Call loan received|||
|Financial liabilities measured at fair value with variations accounted into|||
|current income account|||
|Derivative financial liabilities|||
|Bill payable|143,007,715.10|194,226,049.73|
|Account payable|853,452,589.51|810,420,381.45|
|Advance payment|1,827,959,793.62|1,736,820,949.19|
|Selling of repurchased financial assets|||
|Fees and commissions receivable|||
|Employees’ wage payable|71,224,634.03|70,257,474.46|
|Tax payable|90,239,673.16|36,008,109.09|
|Interest payable|134,376.32||
|Dividend payable|||
|Other account payable|30,820,980.80|29,705,125.51|
|Reinsurance fee payable|||
|Insurance contract provision|||
|Entrusted trading of securities|||
|Entrusted selling of securities|||
|Liabilities held for sales|||
|Non-current liability due in 1 year|18,500,000.00|300,000.00|
|Other current liability|||
|Total of current liability|3,208,339,762.54|2,963,088,089.43|
|Non-current liabilities：|||
|Long-term loan|4,900,000.00|123,400,000.00|
|Bond payable|||
|Including：preferred stock|||
|Sustainable debt|||
|Long-term payable|208,357,733.33|330,000.00|
|Long-term payable employees’s remuneration|||
|Special payable|||
|Expected liabilities|||
|Deferred income|5,422,895.00|6,804,425.00|
|Deferred income tax liability|378,256,646.95|1,017,473.05|
|Other non-current liabilities|||
|Total non-current liabilities|596,937,275.28|131,551,898.05|
|Total of liability|3,805,277,037.82|3,094,639,987.48|
|Owners’ equity|||
|Share capital|754,010,400.00|754,010,400.00|
|Other equity instrument|||
|Including：preferred stock|||
|Sustainable debt|||
|Capital reserves|139,590,345.09|139,590,345.09|
|Less：Shares in stock|||
|Other comprehensive income|2,137,419,299.84|-852,752.00|
|Special reserves|27,546,353.37|31,764,920.51|
|Surplus reserves|621,112,807.78|621,112,807.78|
|Common risk provision|||
|Undistributed profit|2,705,667,037.15|2,673,711,591.42|
|Total of owner’s equity belong to the parent company|6,385,346,243.23|4,219,337,312.80|
|Minority shareholders’ equity|360,276,427.29|369,799,705.35|

||||
|-|-|-|
|Total of owners’ equity|6,745,622,670.52|4,589,137,018.15|
|Total of liabilities and owners’ equity|10,550,899,708.34|7,683,777,005.63|

 Legal Representative: Zheng Bin Person in charge ofaccounting：Pu Yangshuo Accounting Dept Leader: Zhao Jiamao
2.Parent Company Balance Sheet
In RMB
||||
|-|-|-|
|Items|At the end of term|Beginning of term|
|Current asset：|||
|Monetary fund|293,454,126.93|387,916,202.79|
|Financial assets measured at fair value with variations accounted into|||
|current income account|||
|Derivative financial assets|||
|Bill receivable|269,527,716.22|365,504,827.88|
|Account receivable|1,424,950,696.58|1,637,391,672.98|
|Prepayments|115,383,408.34|53,440,645.95|
|Interest receivable|||
|Dividend receivable|||
|Other account receivable|68,004,706.24|12,245,371.97|
|Inventories|1,446,652,799.71|1,454,420,457.64|
|Assets held for sales|||
|Non-current asset due in 1 year|||
|Other current asset|600,000,000.00|170,653,680.58|
|Total of current assets|4,217,973,454.02|4,081,572,859.79|
|Non-current assets：|||
|Disposable financial asset|3,020,106,173.02|465,604,378.26|
|Expired investment in possess|||
|Long-term receivable|||
|Long term share equity investment|502,919,378.03|502,919,378.03|
|Property investment|||
|Fixed assets|315,900,380.66|334,677,256.20|
|Construction in progress|94,170,909.99|79,982,551.34|
|Engineering material|||
|Fixed asset disposal|||
|Production physical assets|||
|Gas & petrol|||
|Intangible assets|173,826,293.57|177,872,266.49|
|R & D petrol|||
|Goodwill|||
|Long-germ expenses to be amortized|507,773.78|761,660.66|
|Deferred income tax asset|133,581,773.70|120,771,991.85|
|Other non-current asset|||
|Total of non-current assets|4,241,012,682.75|1,682,589,482.83|
|Total of assets|8,458,986,136.77|5,764,162,342.62|
|Current liabilities|||
|Short-term loans|100,000,000.00||

||||
|-|-|-|
|Financial liabilities measured at fair value with variations accounted into|||
|current income account|||
|Derivative financial liabilities|||
|Bill payable||13,500,000.00|
|Account payable|486,810,046.42|436,004,535.90|
|Advance payment|1,476,780,338.78|1,428,724,224.76|
|Employees’ wage payable|44,035,408.19|51,373,858.57|
|Tax payable|64,247,326.24|3,538,126.39|
|Interest payable|||
|Dividend payable|||
|Other account payable|21,562,998.72|20,338,742.44|
|Classified as held for sale debt|||
|Non-current liability due in 1 year|||
|Other current liability|||
|Total of current liability|2,193,436,118.35|1,953,479,488.06|
|Non-current liabilities：|||
|Long-term loan||100,000,000.00|
|Bond payable|||
|Including：preferred stock|||
|Sustainable debt|||
|Long-term payable|||
|Long-term payable to employees|||
|Special payable|||
|Expected liabilities|||
|Deferred income||22,250.00|
|Deferred income tax liability|378,256,646.95|1,017,473.05|
|Other non-current liabilities|||
|Total of Non-current liabilities|378,256,646.95|101,039,723.05|
|Total of liability|2,571,692,765.30|2,054,519,211.11|
|Owners’ equity|||
|Share capital|754,010,400.00|754,010,400.00|
|Other equity instrument|||
|Including：preferred stock|||
|Sustainable debt|||
|Capital reserves|138,953,250.09|138,953,250.09|
|Less：Shares in stock|||
|Other comprehensive income|2,137,800,156.80||
|Special reserves|10,874,033.85|13,098,989.67|
|Surplus reserves|602,356,402.65|602,356,402.65|
|Undistributed profit|2,243,299,128.08|2,201,224,089.10|
|Total of owners’ equity|5,887,293,371.47|3,709,643,131.51|
|Total of liabilities and owners’ equity|8,458,986,136.77|5,764,162,342.62|

Legal Representative: Zheng Bin Person in charge ofaccounting：Pu Yangshuo Accounting Dept Leader: Zhao Jiamao 3.Consolidated Income statement
In RMB
||||
|-|-|-|
|||Same period of the|
|Items|Report period||
|||previous year|
|I. Income from the key business|3,235,303,379.24|2,600,072,151.63|
|Incl：Business income|3,235,303,379.24|2,600,072,151.63|
|Interest income|||
|Insurance fee earned|||
|Fee and commission received|||
|II. Total business cost|3,211,913,936.08|2,820,446,852.60|
|Incl：Business cost|2,204,578,781.07|1,805,941,522.77|
|Interest expense|||
|Fee and commission paid|||
|Insurance discharge payment|||
|Net claim amount paid|||
|Insurance policy dividend paid|||
|Insurance policy dividend paid|||
|Reinsurance expenses|||
|Business tax and surcharge|32,563,426.16|12,014,265.08|
|Sales expense|164,610,410.65|156,702,806.61|
|Administrative expense|623,684,537.46|608,221,129.48|
|Financial expenses|-14,837,853.07|-7,563,749.45|
|Asset impairment loss|201,314,633.81|245,130,878.11|
|Add：Gains from change of fir value （“-”for loss）|||
|Investment gain（“-”for loss）|32,136,337.57|48,366,797.30|
|Incl: investment gains from affiliates|||
|Gains from currency exchange（“-”for loss）|||
|III. Operational profit（“-”for loss）|55,525,780.73|-172,007,903.67|
|Add ：Non-operational income|26,168,216.69|29,025,777.14|
|Including：Income from disposal of non-current assets|387,292.53|55,683.00|
|Less：Non business expenses|4,274,955.35|5,206,380.51|
|Incl：Loss from disposal of non-current assets|60,839.23|497,599.66|
|IV.Total profit(“-”for loss)|77,419,042.07|-148,188,507.04|
|Less：Income tax expenses|10,507,672.15|-24,157,778.85|
|V. Net profit|66,911,369.92|-124,030,728.19|
|Net profit attributable to the owners of parent company|31,955,445.73|-162,809,311.79|
|Minority shareholders’ equity|34,955,924.19|38,778,583.60|
|VI. Other comprehensive income|2,138,908,422.36|-498,713.66|
|Net of profit of other comprehensive income attributable to owners of the parent company.|2,138,272,051.84|-212,350.28|
|（I）Other comprehensive income items that will not be reclassified into gains/losses in the|||
|subsequent accounting period|||
|1.Re-measurement of defined benefit plans of changes in net debt or net assets|||
|2.Other comprehensive income under the equity method investee can not be reclassified int|||
|o profit or loss.|||
|（II）|||
||2,138,272,051.84|-212,350.28|
|Other comprehensive income that will be reclassified into profit or loss.|||
|1.Other comprehensive income under the equity method investee can be reclassified into pr|||
|ofit or loss.|||
|2.Gains and losses from changes in fair value available for sale financial assets|2,137,800,156.80||
|3.Held-to-maturity investments reclassified to gains and losses of available for sale financi|||
|al assets|||
|4.The effective portion of cash flow hedges and losses|||

||||
|-|-|-|
|5.Translation differences in currency financial statements|471,895.04|-212,350.28|
|6.Other|||
|Net of profit of other comprehensive income attributable to Minority shareholders’|||
||636,370.52|-286,363.38|
|equity|||
|||-124,529,441.8|
|VII. Total comprehensive income|2,205,819,792.28||
|||5|
|||-163,021,662.0|
|Total comprehensive income attributable to the owner of the parent company|2,170,227,497.57||
|||7|
|Total comprehensive income attributable minority shareholders|35,592,294.71|38,492,220.22|
|VIII. Earnings per share|||
|（I）Basic earnings per share|0.04|-0.22|
|(II)Diluted earnings per share|0.04|-0.22|

 If there are entities merged under common control, their net profit realized before the merger were totaled toRMB***. While it wasRMB*** previous period.
Legal Representative: Zheng Bin rson in charge ofaccounting：Pu Yangshuo ccounting Dept Leader: Zhao Jiamao
4. Income statement of the Parent Company
In RMB
||||
|-|-|-|
|||Same period of the previous|
|Items|Report period||
|||year|
|I. Income from the key business|2,143,474,150.58|1,555,496,371.53|
|Incl：Business cost|1,556,832,738.33|1,178,553,025.63|
|Business tax and surcharge|19,958,750.71|1,398,294.87|
|Sales expense|104,810,547.64|106,769,296.56|
|Administrative expense|387,271,046.69|381,197,193.85|
|Financial expenses|-12,303,571.04|-2,524,709.34|
|Asset impairment loss|171,652,812.43|210,969,678.28|
|Add：Gains from change of fir value （“-”for loss）|||
|Investment gain（“-”for loss）|102,446,490.02|149,604,635.99|
|Incl: investment gains from affiliates|||
|II. Operational profit（“-”for loss）|17,698,315.84|-171,261,772.33|
|Add ：Non-operational income|13,504,412.78|12,361,410.34|
|Including：Income from disposal of non-current assets|353,762.44|10,283.00|
|Less：Non business expenses|1,957,148.79|1,955,547.08|
|Incl：Loss from disposal of non-current assets||41,138.39|
|III.Total profit(“-”for loss)|29,245,579.83|-160,855,909.07|
|Less：Income tax expenses|-12,829,459.15|-47,167,713.28|
|IV. Net profit（“-”for net loss）|42,075,038.98|-113,688,195.79|
|V.Net of profit of other comprehensive income|2,137,800,156.80||
|（I）Other comprehensive income items that will not be reclassified into|||
|gains/losses in the subsequent accounting period|||
|1.Re-measurement of defined benefit plans of changes in net debt or net assets|||
|2.Other comprehensive income under the equity method investee can not be re|||
|classified into profit or loss.|||
|（II）Other comprehensive income that will be reclassified into profit or loss.|2,137,800,156.80||

||||
|-|-|-|
|1.Other comprehensive income under the equity method investee can be reclas|||
|sified into profit or loss.|||
|2.Gains and losses from changes in fair value available for sale financial assets|2,137,800,156.80||
|3.Held-to-maturity investments reclassified to gains and losses of available for|||
|sale financial assets|||
|4.The effective portion of cash flow hedges and losses|||
|5.Translation differences in currency financial statements|||
|6.Other|||
|VI. Total comprehensive income|2,179,875,195.78|-113,688,195.79|
|VII. Earnings per share：|||
|（I）Basic earnings per share|0.06|-0.15|
|(II)Diluted earnings per share|0.06|-0.15|

 Legal Representative: Zheng Bin Person in charge ofaccounting：Pu Yangshuo Accounting Dept Leader: Zhao Jiamao
5. Consolidated Cash flow statement
In RMB
||||
|-|-|-|
|||Same period of the|
|Items|Report period||
|||previous year|
|I.Cash flows from operating activities|||
|Cash received from sales of goods or rending of services|3,117,828,975.19|2,631,164,968.80|
|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|9,575,551.67|11,497,951.32|
|Other cash received from business operation|36,339,734.29|30,394,059.57|
|Sub-total of cash inflow|3,163,744,261.15|2,673,056,979.69|
|Cash paid for purchasing of merchandise and services|1,592,178,163.15|1,231,551,085.85|
|Net increase of client trade and advance|||
|Net increase of savings n 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|660,847,474.75|667,800,831.48|
|Taxes paid|186,151,888.55|235,921,800.21|
|Other cash paid for business activities|218,407,306.28|182,105,489.10|
|Sub-total of cash outflow from business activities|2,657,584,832.73|2,317,379,206.64|
|Cash flow generated by business operation, net|506,159,428.42|355,677,773.05|
|II.Cash flow generated by investing|||
|Cash received from investment retrieving|3,045,673.93|1,174,636.49|
|Cash received as investment gains|32,136,337.57|48,366,797.30|
|Net cash retrieved from disposal of fixed assets, intangible assets, and other|||
||1,047,802.29|478,632.20|
|long-term assets|||
|Net cash received from disposal of subsidiaries or other operational units|||
|Other investment-related cash received|1,765,932,662.00|1,744,805,999.95|
|Sub-total of cash inflow due to investment activities|1,802,162,475.79|1,794,826,065.94|
|Cash paid for construction of fixed assets, intangible assets and other long-term|||
||83,386,401.14|87,236,497.77|
|assets|||
|Cash paid as investment|39,442,786.76|11,593,515.32|
|Net increase of loan against pledge|||
|Net cash received from subsidiaries and other operational units|||
|Other cash paid for investment activities|2,193,700,000.00|1,792,005,999.95|
|Sub-total of cash outflow due to investment activities|2,316,529,187.90|1,890,836,013.04|
|Net cash flow generated by investment|-514,366,712.11|-96,009,947.10|
|III.Cash flow generated by financing|||
|Cash received as investment||1 1 ,7 4 0 , 0 0 0 .0 0|
|Incl: Cash received as investment from minor shareholders||1 1 ,7 4 0 , 0 0 0 .0 0|
|Cash received as loans|202,000,000.00|200,650,000.00|
|Cash received from bond placing|||
|Other financing –related ash received|208,000,000.00||
|Sub-total of cash inflow from financing activities|410,000,000.00|212,390,000.00|
|Cash to repay debts|214,650,000.00|208,700,000.00|
|Cash paid as dividend, profit, or interests|53,367,075.65|143,465,665.55|
|Incl: Dividend and profit paid by subsidiaries to minor shareholders|44,221,187.50|56,211,585.00|
|Other cash paid for financing activities|||
|Sub-total of cash outflow due to financing activities|268,017,075.65|352,165,665.55|
|Net cash flow generated by financing|141,982,924.35|-139,775,665.55|
|IV. Influence of exchange rate alternation on cash and cash equivalents|8,236,681.66|6,568,940.63|

||||
|-|-|-|
|V.Net increase of cash and cash equivalents|142,012,322.32|126,461,101.03|
|Add: balance of cash and cash equivalents at the beginning of term|689,224,662.53|562,763,561.50|
|VI ..Balance of cash and cash equivalents at the end of term|831,236,984.85|689,224,662.53|

 Legal Representative: Zheng Bin Person in charge ofaccounting：Pu Yangshuo Accounting Dept Leader: Zhao Jiamao
6. Cash Flow Statement of the Parent Company
In RMB
||||
|-|-|-|
|Items|Amount in this period|Amount in last period|
|I.Cash flows from operating activities|||
|Cash received from sales of goods or rending of services|1,692,166,949.58|1,635,853,743.22|
|Tax returned|2,971,055.45|9,328,982.41|
|Other cash received from business operation|14,110,015.18|3,889,695.82|
|Sub-total of cash inflow|1,709,248,020.21|1,649,072,421.45|
|Cash paid for purchasing of merchandise and services|757,987,965.11|703,949,384.41|
|Cash paid to staffs or paid for staffs|450,219,508.05|458,460,020.00|
|Taxes paid|62,701,978.23|97,136,615.44|
|Other cash paid for business activities|112,929,726.69|113,710,360.58|
|Sub-total of cash outflow from business activities|1,383,839,178.08|1,373,256,380.43|
|Cash flow generated by business operation, net|325,408,842.13|275,816,041.02|
|II.Cash flow generated by investing|||
|Cash received from investment retrieving|||
|Cash received as investment gains|102,446,490.02|149,604,635.99|
|Net cash retrieved from disposal of fixed assets, intangible assets, and other|||
||47,893,364.87|296,808.00|
|long-term assets|||
|Net cash received from disposal of subsidiaries or other operational units|||
|Other investment-related cash received|980,000,000.00|440,000,000.00|
|Sub-total of cash inflow due to investment activities|1,130,339,854.89|589,901,443.99|
|Cash paid for construction of fixed assets, intangible assets and other long-term|||
||53,123,444.54|58,565,139.10|
|assets|||
|Cash paid as investment|39,442,786.76|11,593,515.32|
|Net cash received from subsidiaries and other operational units|||
|Other cash paid for investment activities|1,410,000,000.00|580,000,000.00|
|Sub-total of cash outflow due to investment activities|1,502,566,231.30|650,158,654.42|
|Net cash flow generated by investment|-372,226,376.41|-60,257,210.43|
|III.Cash flow generated by financing|||
|Cash received as investment|||
|Cash received as loans|100,000,000.00|100,000,000.00|
|Cash received from bond placing|||
|Other financing –related ash received|||
|Sub-total of cash inflow from financing activities|100,000,000.00|100,000,000.00|
|Cash to repay debts|100,000,000.00|100,000,000.00|
|Cash paid as dividend, profit, or interests|3,448,007.34|80,041,734.46|
|Other cash paid for financing activities|60,000,000.00||
|Sub-total of cash outflow due to financing activities|163,448,007.34|180,041,734.46|
|Net cash flow generated by financing|-63,448,007.34|-80,041,734.46|
|IV. Influence of exchange rate alternation on cash and cash equivalents|6,279,861.59|3,889,695.82|

||||
|-|-|-|
|V.Net increase of cash and cash equivalents|-103,985,680.03|139,406,791.95|
|Add: balance of cash and cash equivalents at the beginning of term|387,916,202.79|248,509,410.84|
|VI ..Balance of cash and cash equivalents at the end of term|283,930,522.76|387,916,202.79|

 Legal Representative: Zheng Bin Person in charge ofaccounting：Pu Yangshuo Accounting Dept Leader: Zhao Jiamao
7. Consolidated Statement on Change inOwners’ Equity
Amount in this period
In RMB
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
||Amount in this period|||||||||||||
||Owner’s equity Attributable to the Parent Company|||||||||||||
|||Other Equity||||||||||||
|||instrument||||||||||||
|||||||||||||Minor||
|Items||pref||||Less:|Other||||||Total of owners’|
||||Sus||Capital|||Specialized|Surplus|Common risk|Attributable|shareholders’||
||Share Capital|erre||||Shares|Comprehensive||||||equity|
||||tain|Oth|reserves|||reserve|reserves|provision|profit|equity||
|||d||||in stock|Income|||||||
||||able|er||||||||||
|||stoc||||||||||||
||||deb|||||||||||
|||k||||||||||||
||||t|||||||||||
||||||139,590,345.||||621,112,807.||2,673,711,59||4,589,137,018.1|
|I.Balance at the end of last year|754,010,400.00||||||-852,752.00|31,764,920.51||||369,799,705.35||
||||||09||||78||1.42||5|
|Add: Change of accounting||||||||||||||
|policy||||||||||||||
|Correcting of previous errors||||||||||||||
|Merger of entities under||||||||||||||
|common control||||||||||||||
|Other||||||||||||||
|II.Balance at the beginning of|||||139,590,345.||||621,112,807.||2,673,711,59||4,589,137,018.1|
||754,010,400.00||||||-852,752.00|31,764,920.51||||369,799,705.35||
|current year|||||09||||78||1.42||5|
||||||||||||31,955,445.7||2,156,485,652.3|
|III.Changed in the current year|||||||2,138,272,051.84|-4,218,567.14||||-9,523,278.06||
||||||||||||3||7|
|（1）Total comprehensive|||||||||||31,955,445.7||2,205,819,792.2|
||||||||2,138,272,051.84|||||35,592,294.71||
|income|||||||||||3||8|
|（II）Investment or decreasing||||||||||||||
|of capital by owners||||||||||||||
|1．Ordinary Shares invested b||||||||||||||
|y Shareholders||||||||||||||
|2．Holders of other equity inst||||||||||||||
|ruments invested capital||||||||||||||
|3．Amount of shares paid and||||||||||||||
|accounted as owners’ equity||||||||||||||
|4．Other||||||||||||||
|（III）Profit allotment||||||||||||-44,221,187.50|-44,221,187.50|
|1.Providing of surplus reserves||||||||||||||
|2.Providing of common risk||||||||||||||
|provisions||||||||||||||

||||||||||
|-|-|-|-|-|-|-|-|-|
|3．Allotment to the owners (or|||||||||
||||||||-44,221,187.50|-44,221,187.50|
|shareholders)|||||||||
|4．Other|||||||||
|(IV) Internal transferring of|||||||||
|owners’ equity|||||||||
|1. Capitalizing of capital|||||||||
|reserves (or to capital shares)|||||||||
|2. Capitalizing of surplus|||||||||
|reserves (or to capital shares)|||||||||
|3．Making up losses by surplus|||||||||
|reserves.|||||||||
|4. Other|||||||||
|(V). Special reserves||||-4,218,567.14|||-894,385.27|-5,112,952.41|
|1. Provided this year||||160,572.72|||147,453.68|308,026.40|
|2．Used this term||||-4,379,139.86|||-1,041,838.95|-5,420,978.81|
|（VI）Other|||||||||
|IV. Balance at the end of this||139,590,345.|||621,112,807.|2,705,667,03||6,745,622,670.52|
||754,010,400.00||2,137,419,299.84|27,546,353.37|||360,276,427.29||
|term||09|||78|7.15|||

 Legal Representative: Zheng Bin Person in charge ofaccounting：Pu Yangshuo Accounting Dept Leader: Zhao Jiamao
Amount in last year
In RMB
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
||Amount in last year|||||||||||||
||Owner’s equity Attributable to the Parent Company|||||||||||||
|||Other Equity||||||||||||
|||instrument||||||||||||
|||||||||||||Minor||
|Items||pref||||Less:|Other|||Common|||Total of owners’|
||||Sus||Capital||||Surplus||Attributable|shareholders’||
||Share Capital|erre||||Shares|Comprehensive|Specialized reserve||risk|||equity|
||||tain|Oth|reserves||||reserves||profit|equity||
|||d||||in stock|Income|||provision||||
||||able|er||||||||||
|||stoc||||||||||||
||||deb|||||||||||
|||k||||||||||||
||||t|||||||||||
|I.Balance at the end of last year|754,010,400.00||||1 3 9 ,590,345.||-6 4 0,401.72|24,603,149.96|621,112,807.||2 ,9 1 1 , 9 21,943.2|364,813,287.98||
||||||||||||||4,815,411,532.30|
||||||09||||78||1|||
|Add: Change of accounting||||||||||||||
|policy||||||||||||||
|Correcting of previous errors||||||||||||||
|Merger of entities under common||||||||||||||
|control||||||||||||||
|Other||||||||||||||
|II.Balance at the beginning of||||||||||||||
||754,010,400.00||||1 3 9 ,590,345.||-6 4 0,401.72|24,603,149.96|621,112,807.||2 ,9 1 1 , 9 21,943.2|364,813,287.98||
|current year|||||||||||||4,815,411,532.30|
||||||09||||78||1|||
|III.Changed in the current year|||||||-2 1 2 , 350.28|7,161,770.55||||4,986,417.37||
||||||||||||-238,210,351.79||-226,274,514.15|
|（1）Total comprehensive income|||||||-2 1 2 , 350.28|||||38,492,220.22||
||||||||||||-162,809,311.79||-124,529,441.85|
|（II）Investment or decreasing of||||||||||||||
|||||||||||||1 9 , 7 4 0 ,0 0 0 . 0 0||
|capital by owners|||||||||||||19,740,000.00|
|1．Ordinary Shares invested by S||||||||||||||
|||||||||||||1 9 , 7 4 0 ,0 0 0 . 0 0||
|hereholders|||||||||||||19,740,000.00|
|2．Holders of other equity instru||||||||||||||
|ments invested capital||||||||||||||
|3．Allotment to the owners (or||||||||||||||
|shareholders)||||||||||||||
|4．Other||||||||||||||
|（III）Profit allotment||||||||||||-56,211,585.00||
||||||||||||-75,401,040.00||-131,612,625.00|
|1.Providing of surplus reserves||||||||||||||

||||||||||
|-|-|-|-|-|-|-|-|-|
|2.Providing of common risk|||||||||
|provisions|||||||||
|3．Allotment to the owners (or|||||||||
||||||||-56,211,585.00||
|shareholders)||||||-75,401,040.00||-131,612,625.00|
|4．Other|||||||||
|(IV) Internal transferring of|||||||||
|owners’ equity|||||||||
|1. Capitalizing of capital reserves|||||||||
|(or to capital shares)|||||||||
|2. Capitalizing of surplus reserves|||||||||
|(or to capital shares)|||||||||
|3．Making up losses by surplus|||||||||
|reserves.|||||||||
|4. Other|||||||||
|(V). Special reserves||||7 ,1 6 1 , 7 70.55|||2 , 9 6 5 ,7 8 2 . 1 5||
|||||||||10,127,552.70|
|1. Provided this year||||1 0 ,0 3 8 , 7 58.63|||3 , 5 9 1 ,9 7 6 . 1 8||
|||||||||13,630,734.81|
|2．Used this term||||- 2 ,8 7 6 , 9 88.08|||- 6 2 6 ,1 9 4 . 0 3||
|||||||||-3,503,182.11|
|（VI）Other|||||||||
|IV. Balance at the end of this term|754,010,400.00|1 3 9 ,590,345.|-8 5 2,752.00|31,764,920.51|621,112,807.|2 ,6 7 3 , 7 11,591.4|369,799,705.35||
|||||||||4,589,137,018.15|
|||09|||78|2|||

Legal Representative: Zheng Bin Person in charge ofaccounting：Pu Yangshuo Accounting Dept Leader: Zhao Jiamao
8.Statement of change inowner’s Equity of the Parent Company
Amount in this period
In RMB
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
||Amount in this period|||||||||||
|||Other Equity||||||||||
|||instrument||||||||||
|||||||Less:||||||
|Items||||||Shares|Other||Common risk||Total of owners’|
||Share Capital||||Capital reserves||Comprehensive|Surplus reserves||Attributable profit||
|||preferred|Sustai|||in|||provision||equity|
|||||Other|||Income|||||
|||stock|nable|||stock||||||
||||debt|||||||||
||||||||||||3,709,643,131.5|
|I.Balance at the end of last year|754,010,400.00||||138,953,250.09|||13,098,989.67|602,356,402.65|2,201,224,089.10||
||||||||||||1|
|Add: Change of accounting policy||||||||||||
|Correcting of previous errors||||||||||||
|Other||||||||||||
|II.Balance at the beginning of current|||||||||||3,709,643,131.5|
||754,010,400.00||||138,953,250.09|||13,098,989.67|602,356,402.65|2,201,224,089.10||
|year|||||||||||1|
||||||||||||2,177,650,239.9|
|III.Changed in the current year|||||||2,137,800,156.80|-2,224,955.82||42,075,038.98||
||||||||||||6|
||||||||||||2,179,875,195.7|
|（I）Total comprehensive income|||||||2,137,800,156.80|||42,075,038.98||
||||||||||||8|
|(II) Investment or decreasing of capital||||||||||||
|by owners||||||||||||
|1．Ordinary Shares invested by sharehol||||||||||||
|ders||||||||||||
|2．Holders of other equity instruments i||||||||||||
|nvested capital||||||||||||
|3.Amount of shares paid and accounted||||||||||||
|as owners’ equity||||||||||||
|4．Other||||||||||||
|（III）Profit allotment||||||||||||
|1.Providing of surplus reserves||||||||||||
|2．Allotment to the owners (or||||||||||||
|shareholders)||||||||||||
|3．Other||||||||||||

|||||||||
|-|-|-|-|-|-|-|-|
|(IV) Internal transferring of owners’||||||||
|equity||||||||
|1. Capitalizing of capital reserves (or to||||||||
|capital shares)||||||||
|2. Capitalizing of surplus reserves (or to||||||||
|capital shares)||||||||
|3．Making up losses by surplus reserves.||||||||
|4. Other||||||||
|(V). Special reserves||||-2,224,955.82|||-2,224,955.82|
|1. Provided this year||||||||
|2．Used this term||||-2,224,955.82|||-2,224,955.82|
|（VI）Other||||||||
||||||||5,887,293,371.47|
|IV. Balance at the end of this term|754,010,400.00|138,953,250.09|2,137,800,156.80|10,874,033.85|602,356,402.65|2,243,299,128.08||

 Legal Representative: Zheng Bin Person in charge ofaccounting：Pu Yangshuo Accounting Dept Leader: Zhao Jiamao
Amount in last year
In RMB
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
||Amount in last year|||||||||||
|||Other Equity||||||||||
|||instrument||||Less:|Other|||||
||||||||||Common risk||Total of owners’|
|Items||||||||||||
||Share Capital||||Capital reserves|Shares in|Comprehensive|Surplus reserves||Attributable profit||
||||||||||provision||equity|
|||preferred|Sustai|||||||||
|||||Other||stock|Income|||||
|||stock|nable|||||||||
||||debt|||||||||
|I.Balance at the end of last year|754,010,400.00||||138,953,250.09|||10,511,915.73|602,356,402.65|2,390,313,324.89|3,896,145,293.36|
|Add: Change of accounting policy||||||||||||
|Correcting of previous errors||||||||||||
|Other||||||||||||
|II.Balance at the beginning of current||||||||||||
||754,010,400.00||||138,953,250.09|||10,511,915.73|602,356,402.65|2,390,313,324.89|3,896,145,293.36|
|year||||||||||||
|III.Changed in the current year||||||||2,587,073.94||-189,089,235.79|-186,502,161.85|
|（I）Total comprehensive income||||||||||-113,688,195.79|-113,688,195.79|
|(II) Investment or decreasing of capital||||||||||||
|by owners||||||||||||
|1．Ordinary Shares invested by sharehol||||||||||||
|ders||||||||||||
|2．Holders of other equity instruments i||||||||||||
|nvested capital||||||||||||
|3.Amount of shares paid and accounted||||||||||||
|as owners’ equity||||||||||||
|4．Other||||||||||||
|（III）Profit allotment||||||||||-75,401,040.00|-75,401,040.00|
|1.Providing of surplus reserves||||||||||||

||||||||
|-|-|-|-|-|-|-|
|2．Allotment to the owners (or|||||||
||||||-75,401,040.00|-75,401,040.00|
|shareholders)|||||||
|3．Other|||||||
|(IV)Internal transferring of owners’|||||||
|equity|||||||
|1. Capitalizing of capital reserves (or to|||||||
|capital shares)|||||||
|2. Capitalizing of surplus reserves (or to|||||||
|capital shares)|||||||
|3．Making up losses by surplus reserves.|||||||
|4. Other|||||||
|(V) Special reserves|||2,587,073.94|||2,587,073.94|
|1. Provided this year|||4,484,209.97|||4,484,209.97|
|2．Used this term|||-1,897,136.03|||-1,897,136.03|
|（VI）Other|||||||
|IV. Balance at the end of this term|754,010,400.00|138,953,250.09|13,098,989.67|602,356,402.65|2,201,224,089.10|3,709,643,131.51|

 Legal Representative: Zheng Bin Person in charge ofaccounting：Pu Yangshuo Accounting Dept Leader: Zhao Jiama
Hangzhou Steam Turbine Co., Ltd.
Notes to the Financial Statements
Year 2016
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, Headquartered in Hangzhou, Zhejiang Province. The company now holds a unified social credit code for the 913300007042026204 business license,TheCompany’s registered capital is increased to RMB754.0104 million with total capital share of 754.0104 million shares (face value RMB1.00). Among which state-owned legal person shares were 479.8248 million shares and 274.1856 million shares of current B shares. The shares were issued and listed for trading in Shenzhen Stock Exchange on April 28, 1998.
The 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, Energy Conservation and environmental protection project general contracting.
These Financial Statements are released upon approval at the 7th meeting of the 7th term of Board held on March 16, 2017.
24 subsidiaries including Zhejiang Steam Turbine Packaged Technologies Co., Ltd., Hangzhou Zhongneng Steam Turbine Power Co., Ltd., Hangzhou Steam Turbine Casting Co., Hangzhou Steam Turbine Auxiliary Co., Ltd., Hangzhou Steam Turbine Machinery& Equipment Co., Ltd., Zhejiang Turbine Import& Export Co., Ltd., and Hangzhou Steam Turbine Industry Co., Ltd., were consolidated to the Financial Statements. For details of changing consolidation range and equity position please go to the Notes to the Financial Statements.
II. Basis of compiling the finance report
(I) Basis of compiling
The Company adopts perpetual operation as the basis of financial statements.
(II) Assessment on perpetuation
No issue or situation, in 12 months since the end of report period, composes major doubt on the
perpetuation assumption of the Company.
III. Principal Accounting Policies and Estimations
Important prompt: The Company utilized detailed accounting polices and estimations on providing of bad debt provisions, fixed asset depreciation, intangible asset amortization, recognition of
revenue, and so forth, according to its business practices.
1. Statement of compliance to the Enterprise Accounting Standard
The finance report produced by the Company is accordance with the Enterprise Accounting Standard, and reflects theCompany’s financial state, business performance and cash flow frankly and completely.
2. Fiscal year
The Company uses the calendar year for its fiscal year. A fiscal year is from January 1 to
December 31.
3. Operational period
TheCompany’s relatively shorter operational period, which is 12 months, and is used as division
of liquidity of assets and liabilities.
4. Standard currency for bookkeeping
The Company uses Renminbi (RMB) as the standard currency for book keeping.
5. Accounting treatment of the entities under common control and different control
1. Treatment of entities under common control
Assets and liabilities acquired in merger of entities are measured at book values at the date of merger. The difference between the net book value of asset and the offered price (or total of face value of shares issued) will be adjusted into capital reserves; when the capital reserves is not enough to reduce, it will be adjusted into retained profit.
2. Treatment of entities under different control
The difference of takeover cost over the fair value of recognizable net asset of the acquired entity is recognized as goodwill at the day of takeover; in case the takeover cost is lower than the fair value of recognizable net asset of the acquired entity, the measuring process over the recognizable asset, liabilities, contingent liabilities, and takeover cost, shall be repeated, if comes out the same result, the difference shall be recorded into current income account.
6. Method for preparing the consolidated financial statements
The parent company puts all of its subsidiaries under its control into the consolidated financial statements. The consolidated financial statements are prepared according to the “Enterprise Accounting Standard No. 33– Consolidated Financial Statements”, basing on the accounts of the parent company and the subsidiaries, and after adjusting the long-term investment equity in the subsidiary on equity basis.
7. 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.
8. 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.
9. Financial instruments
1. Type of finance asset and finance debt Finance assets fall into four categories at initial recognition: 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 fall into two types at initial recognition: 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.
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 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. Recognition of fair value of financial assets and liabilities
The Company utilizes evaluation technologies supported by sufficient data and information to recognize the fair values of financial assets and liabilities. Values inputted to the evaluation
technology are divided into following levels and used in sequence:
(1) Level 1 input: unadjusted quotations obtained from an active market of the similar asset or liability at the date of measurement;
(2) Level 2 input: values of the asset or liability observable, directly or indirectly, other than level 1 input, including: quotation of similar asset or liability in an active market; quotation of similar asset or liability in an non-active market; other observable value other than quotations, i.e. observable interest or gain curves in normal intervals of quotations.
(3) Level 3 input: non-observable input value of the asset or liability, including interest rates which are not observable or not testified by observable market data, fluctuation of stock prices, future cash flow of disposal liabilities undertaken from merger of entities, or financial predictions upon data itself.
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) In dealing with major financial assets such as investment hold-to-mature, loans, and receivables, the Company conduct independently impairment test for single finance asset. Impairment tests are conducted 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. The balance of book value over current value of expected future cash flow is recognized as impairment loss.
(3) Objective evidences of impairment on sellable financial assets 1) Objective evidences supporting the impairment of investment on sellable liability instruments are: a. Material financial dilemma with the debtor; b. Violating of the contract by the debtor, e.g. overdue of payment for interests or principal; c. Compromise made to the debtor who is in financial crisis with consideration of financial or legal factors; d. Possible bankruptcy or financial restructuring of the debtor; e. The liability instrument is not able to be traded in an active market for the debtor is in material financial dilemma; f. Other circumstances that are showing that impairment has already occurred.
2) Objective evidence showing that impairment has already occurred on sellable equity instruments are: significant or non-temporary fall of fair value, the invested entities suffers from material negative situations in aspects of technical, market, economy, or legislation environment. The Company performs tests on investments on sellable equity instruments individually on the balance sheet day. For investment on equity instruments measured on fair value, if the fair value on the balance sheet day is lower than the cost by50% (included), or lower than the costs for successively 12 months (included), impairment is recognized; If the fair value is lower than the cost by more than20% (included), but higher than50%, or lower than the cost for successively 6 months (included) but not more than 12 months, the Company will determine if impairment occurred with consideration of other factors, e.g. fluctuation of prices. For those equity instruments on cost basis, the Company will decided about impairment with consideration of the investedentities’ situations in aspects of technical, market, economy, or legislation environment.
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. When impairment occurs on sellable equity instrument on cost basis, the balance between its book value and the current value of the predictable future cash flow upon current market gain rate, is recognized as impairment loss and recorded to current gain/loss account. It will not be written back in subsequent years.
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.
10. Receivable accounts
1. Recognition and providing of bad debt provision on individual receivable account with large amount
Basis of recognition or standard amount of
Accounts take over10% of the book balance of receivable accounts individual account with large amount
Impairment test performed individually, bad debt provision will be provided at Basis of bad debt provision
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
|||
|-|-|
|Name of the Group|Basis of bad debt provision|
|Group by age analysis|Age analysis method|
||For the inclusion of the company's consolidated financial|
||statements within the scope of the company's accounts receivable|
|Combined range of association|and other receivables separately for the impairment test, if the|
||combination of the impairment test, no impairment, not to|
||mention the provision for bad debts|

Age analyze basis
||||
|-|-|-|
|Age|Rate of provision onreceivable account|Rate of provision onother receivableaccount|
|Within 1 year)included)|5|5|
|1－2 years|10|10|
|2－3 years|30|30|

||||
|-|-|-|
|3－4 years|60|60|
|4－5 years|80|80|
|Over 5 years|100|100|

Receivable accounts with minor amount but bad debt provisions are provided individually
|||
|-|-|
||When there is significant difference between the current value of future cash flow of|
|Basis of providing bad debt individually||
||the receivable account and the current value of future cash flow of the group|
||Impairment test performed individually, bad debt provision will be provided at the|
|Basis of bad debt provision||
||difference of expected cash flow lower than the book value.|

For the receivables, interest receivables, long-term receivables and other receivables, according to its future cash flow present value is lower than its book value of the difference between collective bad debt provision.
11.Inventories
(1) Inventory classification
Inventories include saleable finished goods or merchandise, product-in-process , consumption material and goods in manufacturing procedure or working procedure.
(2) Pricing of inventory to be delivered
Pricing basis:
Delivered out materials are accounted by weighted average method, issued out finished products are accounted at individual price.
(3) Recognition of realizable net value of inventory and providing of inventory impairment provision
At the balance sheet day, inventories are measured at the lower of costs and cashable net values, the individual difference between the cashable net value and cost are provided as inventory impairment provision. For finished product, merchandise, saleable material and other saleable merchandise inventory, their cashable net values are recognized by their estimated sale price in normal operation deducting estimated sale expenses and related taxes; for material inventory which need processing, it cashable net value are recognized by the estimated sale prices of its finished products in normal operation deducting the estimated cost, sale expenses and related taxes due to the end of processing; At the balance sheet day, for inventory item which part has contract price and part has no contract price, the cashable net value is accounted separately, and recognize the inventory impairment provision or returnable cash..
(4) Inventory system
Inventory system: perpetual inventory system
(5) Amortization of low-value consumables and packaging materials
1.Low price consumable
Basis of amortizing: one-off
2.Packaging materials
Basis of amortizing: one-off
12. Long-term equity investment
1. Recognition of common control and substantial 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 substantial influence.
2. Recognition of initial investment costs
(1) For the long-term equity investment formed by corporate merger under common control, if it is the long-term equity investment obtained from the corporate merger by paying cash, transferring non-cash asset, bear liability and issuing equity securities, the share of book value of owner's equity of the merged party on the merger date shall be taken as the initial investment cost. The asset reserve is adjusted according to the difference between the initial investment cost of long-term equity investment and the book value of paid combined consideration or issued securities; if the capital is not enough for deduction, the remain earnings are adjusted.
Recognition of “one-off” trade when long-term equity investment is composed by merger of entities under common control by multiple steps.
Transactions under an “one-off” trade are accounted as a common trade of ownership.
Transactions which are not “one-off” trades are recognized for their initial investment cost basing on the share of book value of net asset in the consolidated financial statement of the entities acquired. Balance between the initial investment cost and the book value of the long-term equity investment before merger and the premium paid for the new shares after merger, is adjusted to capital reserves; when the capital reserve is not enough to offset, retained profit shall be adjusted thereof.
(2) For the long-term equity investments formed by merger of enterprises under different control, the initial investment cost is recognized by the fair value of combined consideration on purchasing day and related expenses.
Long-term equity investment formed by acquisition of entities under different control by trade in multiple stages are accounted separately in the financial statements and consolidated financial statements.
1) In individual financial account, the sum of book value of original equity investment plus new
investment cost is recognized as the initial investment cost on cost basis.
2) Recognition of “one-off” trade in consolidated financial statements
Transactions under an “one-off” trade are accounted as a common trade of ownership. Transactions which are not “one-off” trades are re-measured for their fair value at the day of acquisition. Balance between the fair value and the book value of the long-term equity investment is adjusted to current investment gains; other gains from equity on equity basis before the acquisition day are written over to current gains of at the day of acquisition, but not the gains from re-calculating of changes in net liability or asset by the invested entity.
(3) Formed by means other than entity merger:
Acquired by cash payment– initial investment cost is the actual amount of payment;
Acquired by issuing of equity certificates– initial investment cost is the fair value of equity certificate issued;
Acquired by debtor restructuring– initial cost recognized as according to the Enterprise Accounting Standard No.12– Debtor restructuring;
Acquired by trading of non-monetary asset - initial cost recognized as according to the Enterprise Accounting Standard No.7– Trade of non-monetary assets;
3. Subsequent measurement and recognition of gain/loss
Cost basis is adopted in accounting of long-term equity investment in entities under substantial control of the Company; while equity basis is adopted in accounting of investment in affiliates and joint-ventures.
4. Treatment of disposal of subsidiaries by stages till losing of control power
(1) Individual account
At disposal of equity shares, the balance between book value and actual consideration received is recorded to current gain/loss account.
When the retained share equity is composing major influence or joint control with other parties on the invested entity, accounting will be on equity basis;
When none of substantial control, joint control, or major influence on the entity, it will be
recognized as sellable financial asset and accounted on fair value.
(2) Basis of Consolidated Financial Statements
1) Losing of controlling power on a subsidiary through disposal of equity by multiple trades, and not recognized as “one-off” trade:
Before losing of control power, the balance of disposal consideration and the share of net asset attributable to the Company on continued basis since purchasing or merger, is adjusted to capital reserves (capital premium), whereas if the capital premium is not enough to offset the amount, retained profit will be offset at corresponding amount.
At losing of control power over a former subsidiary, the retained equity shares shall be re-calculated according to the fair value at the day of losing power. Sum of the consideration obtained from disposal and fair value of the retained equity shares, less the share of net asset attributable to the Company on continued basis since purchasing or merger, is accounted into investment gains of the period when the control power is disposed, and goodwill shall be offset meanwhile. Other gains related to the equities in formal subsidiary shall be written over to current investment gains at the period when control power was disposed.
2) Losing of controlling power on a subsidiary through disposal of equity by multiple trades, and recognized as “one-off” trade:
The multiple trades are treated as one trade that causes losing of control power on a subsidiary. However, the balance between the consideration received from each trade and corresponding share of net asset is recognized as other gains in the consolidated accounts, and transferred collectively to gain/loss account of the period in which the control power was lost.
13. Fixed assets
1. Conditions for fixed asset recognition
Fixed assets is defined as the tangible assets which are held for the purpose of producing goods, providing services, lease or for operation& management, and have more than one year of service
life. Fixed assets are recognized at satisfying of great possibility of benefit inflow and costs are accountable.
2. Depreciation
||||||
|-|-|-|-|-|
|Categories|Basis ofdepreciation|Depreciation age(year)|Retain value rate|Annualdepreciation ratio|
|Houses & buildings|Straight averageon period|20-30|4|4.8-3.2|
|Equipment &machinery|Straight averageon period|8-15|4|12-6.4|
|Transportationequipment|Straight averageon period|4-8|4|24-12|
|Office equipment|Straight averageon period|5|4|19.2|

14. 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.
15. Loan expenses
1. Capitalizing of loan expenses
Loan expenses occurred in the Company, which can be categorized to purchasing or construction of assets satisfying the conditions of capitalization, shall be capitalized and accounted into capital costs; while other loan expenses are recognized as expenses and recorded into current income account.
2. Capitalization period of loan expenses
(1) Capitalization started as soon as all of these conditions are satisfied: 1) Capital expenditures have occurred; 2) Loan expenses have occurred; 3) Necessary purchasing or construction processes have been started to make the asset usable or sellable.
(2) If irregular interruption occurred in the purchasing or construction process of the assets satisfying the capitalizing conditions, and suspended for over successive three months, capitalizing of loan expenses is suspended; loan expenses occurred during the suspension period are recognized as current expenses until the purchasing or construction process resumes.
(3) Capitalizing of loan expenses is terminated as soon as the asset satisfying the capitalizing conditions reaches the state of usable or sellable as expected.
3. Rates and amounts of loan expense capitalization
Special loans raised for purchasing or construction of assets satisfying the conditions of
capitalization, interest to be capitalized will be the actual interest expenses occurred in the current period of loan (including the discount, premium, or amortizing decided on actual interest rate basis), less the interest income from the unused loans in bank account or provisional investment gains; common loans used for purchasing or construction of assets satisfying the conditions of capitalization, the interest to be capitalized will be the weighted average of balance over special loans multiply capitalization rate of common loans.
16. Intangible assets
（1）Pricing Method, service life and impairment test
1. Intangible assets are land using rights, patents, and non-patent technologies, which are measured at cost basis.
2. For intangible assets with limited useful life, during the use life it is amortized according to the anticipating implementation method of the economic benefit of the intangible asset systematically and reasonably. Ifcan’t recognize the anticipating implementation method, the straight basis is deployed.
|||
|-|-|
|Items|Amortiing years|
|Land using right|50|
|Patents and Proprietarytechnology|5-20|
|Software|5|

(2) Accounting policy for internal research and development expenditure
Expenditures of internal researching projects are accounted into current term gain and loss when happens. The development period expenditures are recognized as intangible assets when fulfill following conditions: (1) The intangible asset is completed and technically possible to be used or sold; (2) With intention to complete the intangible asset for purpose of use or sale; (3) Evidence showing that there are markets or the products produced with using of the intangible asset, or markets of the intangible asset itself, by which the intangible asset may produce financial benefits. 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.
17. Impairment of partial long-term assets
For those long-term assets such as equity investment, fixed assets measured on cost basis, construction-in-process, intangible assets with limited service life, their recoverable amount shall be evaluated as soon as there was evidence indicating impairment at the balance sheet day. For intangible assets such as goodwill from merger or intangible assets with uncertain service lives, impairment test is performed each year whatever there is evidence of impairment or not. Impairment test on goodwill is performed on combination of related assets.
When the result of prediction shows that the recoverable amount is lower than its book value, the balance shall be provided impairment provision and accounted into current gain/loss.
18. Long-term amortizable expenses
Long-term amortizable expenses which have been paid but with amortizing period over 1 year (not included). 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.
19.Employees’ wage
1.Employees’ wage composes of short-term wages, after-job welfare, dismiss welfare, and other long-term welfares.
2. Accounting of short-term wages
In the fiscal period when an employee is providing services, short-term wages actually occurred is recognized as liability, and recorded into current gain/loss account or cost of related asset.
3.Accounting of stipulated beneficiary plan is on following steps:
1) On basis of expected accumulation of welfare, estimations on population variables and financial variables, calculating of liabilities from stipulated beneficiary plan, and recognition of the period of related liabilities, are performed on basis of non-bias and accordance actuary. Meanwhile, discount is performed on the liabilities from stipulated beneficiary plan to recognize the current value and service cost of the liabilities from the stipulated beneficiary plan.
2) When there is asset involved in the stipulated beneficiary asset, the deficit or premium from the balance of the current value of liabilities of stipulated beneficiary plan over their fair values is recognized as its net liability or net asset. When there is a premium with a stipulated beneficiary plan, the lower one between the premium and the upper limit of the asset is recognized as the net asset of such stipulated beneficiary asset;
3) At end of period,employees’ wages from stipulated beneficiary plan are recognized by three parts including service cost, net interest of net liability or net asset, and recalculated net asset or liability variation. The first two are recorded into current gain/loss or related asset cost, the third is recorded to other gains, which will not be written back to gain/loss in successive fiscal periods, but the amount can be transferred with the range of equity.
4. Accounting of dismissing welfare
Welfares for employees who are dismissed, the earlier one of the following is recognized as employee wage liability, and recorded to current gain /loss:
(1) When the Company cannot, on its own call only, retrieve the dismissing welfare provided by dismissing of service plan or suggestion;
(2) When the costs or expenses related to restructuring involved in the dismissing welfare are recognized by the Company.
5. Accounting of other long-termemployees’ welfares
As of long-term welfares provided to the employees, those which satisfy conditions of the stipulated saving plan are treated according to related regulations of stipulated saving plan; those which other than the aforesaid, are treated according to the stipulated beneficiary plan. In viewing of simplifying accounting treatment, employee wage costs are recognized as service costs, the net amounts of interests of other long-term welfare net liability or asset, along with recalculated variations of the both are recorded to the related gain/loss or cost of related asset.
20. Expected liabilities
(1) When it is very much likely to cause economic interests which can be reliably calculated outflow from the company to fulfill the obligation which is due to giving security outside, contentious matter, quality guarantee of products, onerous contract and other contingency, the company will regard the obligation as anticipation liabilities.
(2) The company will make an initial measurement of anticipation liabilities according to needed expense of best estimation when fulfilling related obligations and check the book value of anticipation liabilities on the balance sheet date.
21.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
Particular methods 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 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.
22. Government subsidy
1. Recognition basis and accounting of asset-related government subsidy
Government subsidies to the Company for purchasing or acquiring by other means of long-term asset are asset-related government subsidies. They are recognized as deferred income and amortized straightly to their service lives and accounted in current gain/loss. Whereas government subsidy measured by nominal amount are recorded to current gain/loss account.
2. Recognition basis and accounting of income-related government subsidy
Government subsidies other than asset-related subsidies are recognized as income-related government subsidies. Those, which are used to cover costs or losses in subsequent periods, are recognized as deferred income and accounted to current gain/loss to the periods of related expenses. Those, which are used to makeup expenses or losses already occurred, are recorded to current gain/loss account.
23. 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.
24. Lease
Accounting of operational lease
When the Company is the leasee, the amount is recorded to asset cost or recognized as gain/loss of current period on straight basis to the periods of lease. Initial direct expenses are accounted into current gain/loss. Contingent rentals are recorded to current gain/loss at actual occurrence.
When the Company is the leaser, the amount is recorded to current gain/loss at straight basis to the periods of lease. Initial direct expenses are recorded to current gain/loss other than those with greater amount which are capitalized and recorded to gain/loss of different periods. Contingent rentals are recorded to current gain/loss at actual occurrence.
25. Safety production cost
The safety production cost collected by the Company in accordance with the provisions of the Measures for the Administration of the Collection and Use of Enterprise Safety Production Cost (Accounting[2012] No.16) jointly issued by the Ministry of Finance (MOF) and the State Administration of Work Safety (SAWS), shall be included in the costs of the relevant products or the current profit and loss, and also be included in the “special reserve” item. The use of the collection of safety production cost, belonging to the cost of expenditure, should be directly included in the special reserves, that, belonging to the fixed assets, the expenditure incurred through the “construction in progress” item, when the safety project is completed and reaches the usable status, should be identified as fixed assets;Meanwhile, the special reserve is deducted by the costs which compose part of the fixed asset, and accumulative depreciation is recognized at the same amount. This fixed asset is not subject to depreciation in successive periods.
IV. Taxation
1. Main categories and rates of taxes
||||
|-|-|-|
|Category of taxes|Tax base|Tax rate|
|VAT|Sales of goods or providing of taxable labor service|17%|
|House tax|For those on price basis, taxes are paid at 1.2% ofthe balance of original value of the property afterdeducting of 30%; for those on rental basis, taxesare paid at 12% of the rental.|1.2%、12%|
|City maintenance andconstruction tax|Turnover tax payable|7%|

||||
|-|-|-|
|Educational surcharge|Turnover tax payable|3%|
|Local educationadditional|Turnover tax payable|2%|
|Enterprise income tax|Amount of income taxable|15%、25%[Notes]|

Notes：Hangzhou Zhongneng Steam Turbine Power (Indonesia) Co., Ltd. registered in Indonesia overseas subsidiaries, the applicable local relevant tax laws and regulations.
The Company and its subsidiaries Hangzhou Zhongneng Steam Turbine Power Co., Ltd., Zhejiang Packaged Technologies Development Co., Ltd., Hangzhou Steam Turbine Casting Co., Ltd.,Zhejiang Huayuan Steam Turbine Mechinery Co., Ltd., Hangzhou Guoneng Steam Tubine Engineering Co., Ltd., at15% Payment, other subsidiaries (territory) at25% tax rate.
(II) Preferential tax
1. According to the document “Notice for Qualification of High-tech Enterprises” (GKHZD〔2015〕No.29) issued by Department of Science and Technology High-tech Development Center, the Company along with Hangzhou Zhongneng Steam Turbine Power Co., Ltd. and Zhejiang Packaged Technologies Development Co., Ltd.– subsidies of the Company, were qualified as high-tech enterprises for term of three years. Therefore they enjoy15% of tax for 2016.
2. According to the document “Notice for Qualification of High-tech Enterprises” (GKHZD〔2016〕No.149) issued by Department of Science and Technology High-tech Development Center, Hangzhou Steam Turbine Casting Co.,Ltd– subsidies of the Company, were qualified as high-tech enterprises for term of three years. Therefore they enjoy15% of tax for 2016.
3. According to the document “Notice for Qualification of High-tech Enterprises” (GKHZD〔2015〕No.36) issued by Department of Science and Technology High-tech Development Center, Zhejiang Huayuan Steam Turbine Machinery Co., Ltd. and Hangzhou Guoneng Steam Turbine Engineering Co., Ltd.– subsidies of the Company, were renewed or their qualifications as high-tech enterprises. Therefore they enjoy15% of tax for 2016.
V. Notes to the Consolidated Financial Statements
(1)Notes to the Consolidated Balance sheet
1.Monetary Capital
||||
|-|-|-|
|Items|End of term|Beginning of term|
|Cash in stock|326,226.09|391,106.17|
|Bank deposit|830,910,758.76|688,833,556.36|
|Other monetary fund|63,800,574.49|62,372,133.71|
|Total|895,037,559.34|751,596,796.24|
|Incl:Total of accounts saved overseas|4,796,746.67|9,182,145.32|

(2) Other statements
Other monetary fund composes of RMB52,821,970.32 of security for bank acceptance notes RMB9,823,604.17 of security for Letter of credit, RMB1,155,000.00 of security for bank guarantee letter.Both under limitation of using.
2. Bills receivable
(1) Notes receivable listed by category
||||||||
|-|-|-|-|-|-|-|
|Items|End of term|||Beginning of term|||
||Book balance B|ad debt provision|Book value|Book balanceprov|Bad debtision|Book value|
|Bankacceptance|424,613,558.62||424,613,558.62|637,528,943.49||637,528,943.49|
|Commercialacceptance|55,102,763.00||55,102,763.00|42,990,000.00||42,990,000.00|
|Total|479,716,321.62||479,716,321.62|680,518,943.49||680,518,943.49|

 (2) Notes receivable pledged by the Company at the period-end
|||
|-|-|
|Items|Amount on pledge|
|Bank acceptance|24,402,755.20|
|Total|24,402,755.20|

（3）Notes receivable which had endorsed by the Company or had discounted and had not due on the balance sheet date at the period-end
||||
|-|-|-|
|Items|Amount of recognitiontermination at theperiod-end|Amount of notterminated recognitionat the preriod -end|
|Bank acceptance|444,091,600.64||
|Total|444,091,600.64||

Bank acceptance bill acceptor is a commercial bank, because commercial banks with higher credit, bank acceptance bill is not paid due the possibility is low, so the company will have the endorsement or discounted bank acceptance bill shall terminate confirmation. But if the maturity is not paid, on the basis of negotiable instruments law , Ltd. will be jointly and severally liable to the holder.
3. Account receivable
（1）Detailed categories
In RMB
|||
|-|-|
|Category|End of term|

|||||||
|-|-|-|-|-|-|
||Book balance||Bad debt provision||Book value|
||Amount|Proportion|Amount|Proportion||
|Account receivablesprovided bad debtprovision in creditrisk groups|2,812,043,945.50|98.95|941,870,597.18|33.49|1,870,173,348.32|
|Account receivablewith minorindividual amountbut bad debtprovision isprovided|29,819,607.69|1.05|29,819,607.69|100.00||
|Total|2,841,863,553.19|100.00|971,690,204.87|34.19|1,870,173,348.32|

 (Continued)
|||||||
|-|-|-|-|-|-|
|Category|Beginning of term|||||
||Book balance||Bad debt provision||Book value|
||Amount|Proportion|Amount|Proportion||
|Account receivablesprovided bad debtprovision in creditrisk groups|2,861,049,700.73|98.97|764,959,543.12|26.74|2,096,090,157.61|
|Account receivablewith minorindividual amountbut bad debtprovision isprovided|29,819,607.69|1.03|29,819,607.69|100.00||
|Total|2,890,869,308.42|100.00|794,779,150.81|27.49|2,096,090,157.61|

 (2)Receivable accounts in the group on which bad debt provisions are provided on age basis
|||||
|-|-|-|-|
|Age|End of term|||
||Book balance|Bad debt provision|Proportion|
|Within 1 year|870,114,718.02|43,505,735.91|5.00|
|1-2 Years|517,044,063.12|51,704,406.34|10.00|
|2-3 years|515,824,115.01|154,747,234.51|30.00|
|3-4 years|420,175,308.23|252,105,184.94|60.00|
|4-5 years|245,388,528.28|196,310,822.64|80.00|

|||||
|-|-|-|-|
|Over 5 years|243,497,212.84|243,497,212.84|100.00|
|Subtoal|2,812,043,945.50|941,870,597.18|33.49|

(2) Provision of allowance for doubtful debts within this year is RMB 184,594,273.47 and no recovery or reversal of provision during the year.
(3) Receivable accounts actually written off in the report period
1. The current accounts receivable write-offs was RMB 7,683,219.41.
2) The significant actual write-off accounts receivable:
|||||||
|-|-|-|-|-|-|
|Name|Nature ofaccountreceivable|Amount writtenoff|Reason forwritten off|Verification procedures|Arising fromrelatedtransactions(Y/N)|
|Shenyang ToupingMechanical Co., Ltd.|Goods|5,400,055.35|Difficult torecover|The examined and adopted toBoard of directors|No|
|Hangzhou Steam TurbineEngineering Co., Ltd.|Goods|752,500.00|Difficult torecover|The examined and adopted toBoard of directors|Yes|
|Jiaxing Ninjia AisiThermoelectric Co., Ltd.|Goods|485,000.00|Difficult torecover|The examined and adopted toBoard of directors|No|
|Shaoxing GaobuThermoelectric Co., Ltd.|Goods|190,000.00|Difficult torecover|The examined and adopted toBoard of directors|No|
|China PetrochemicalCo.,Ltd.Jinling office|Goods|159,000.00|Difficult torecover|The examined and adopted toBoard of directors|No|
|Shanghai JuanninEnvironmental ProtectionEquipment Engineering Co.,Ltd.|Goods|150,000.00|Difficult torecover|The examined and adopted toBoard of directors|No|
|Shenyang PumpPetrochemical Co., ltd.|Goods|122,050.00|Difficult torecover|The examined and adopted toBoard of directors|No|
|Other|Goods|424,614.06|Difficult torecover|The examined and adopted toBoard of directors|No|
|Subtotal||7,683,219.41||||

（4）Receivables account of the top five parties
|||||
|-|-|-|-|
|Name|Amount|Proportion(%)|Bad debt provision|

|||||
|-|-|-|-|
|Client 1|751,163,106.92|26.43|276,237,220.34|
|Client 2|309,742,954.20|10.90|161,262,818.92|
|Client 3|47,288,000.00|1.66|2,364,400.00|
|Client 4|52,898,295.99|1.86|6,117,053.80|
|Client 5|26,642,157.99|0.94|3,226,889.40|
|Subtotal|1,187,734,515.10|41.79|449,208,382.46|

4. Prepayments
（1）Age analysis
In RMB
||||||||||
|-|-|-|-|-|-|-|-|-|
|Age|Balance in year-end||||Balance in year-begin||||
||Book balance|Proportion(%)|Bad debtprovision|Book value|Book balance|Proportion(%)|Bad debtprovision|Book value|
|Within 1year|169,302,923.28|83.74||169,302,923.28|107,708,874.45|77.34||107,708,874.45|
|1-2years|10,874,142.27|5.38||10,874,142.27|25,792,370.60|18.52||25,792,370.60|
|2-3years|17,195,603.48|8.50||17,195,603.48|2,763,347.80|1.98||2,763,347.80|
|Over 3years|4,812,189.80|2.38||4,812,189.80|3,002,731.80|2.16||3,002,731.80|
|Total|202,184,858.83|100.00||202,184,858.83|139,267,324.65|100.00||139,267,324.65|

 (2) Top 5 of the closing balance of the prepayment colleted according to the prepayment target
||||
|-|-|-|
|Name|Amount|Proportion(%)|
|Siemens Industrial Turbomachinery AB|55,440,619.13|27.42|
|Hangzhou Boiler Group Co., Ltd.|13,815,500.00|6.83|

||||
|-|-|-|
|Jinling International Co., Ltd.|11,200,460.78|5.54|
|GEA Batyneo Heat-energyTechnology(Changshu) Co., Ltd.|9,297,000.00|4.60|
|Shanghai Lelu Technology Co., Ltd.|4,847,612.00|2.40|
|Subtotal|94,601,191.91|46.79|

5. Other account receivable
1) Detailed categories
|||||||
|-|-|-|-|-|-|
|Category|End of term|||||
||Book balance||Bad debt provision||Book value|
||Amount|Proportion %|Amount|Proportion %||
|Bad debt provision providedon risk groups|42,152,338.08|100.00|11,127,630.36|26.40|31,024,707.72|
|Total|42,152,338.08|100.00|11,127,630.36|26.40|31,024,707.72|

 (Continued)
|||||||
|-|-|-|-|-|-|
|Category|Beginning of term|||||
||Book balance||Bad debt provision||Book value|
||Amount|Proportion %|Amount|Proportion %||
|Major single amount and baddebt provision providedindividually|3,710,320.94|10.97|3,710,320.94|100.00||
|Bad debt provision providedon risk groups|30,117,186.12|89.03|4,543,128.83|15.08|25,574,057.29|
|Total|33,827,507.06|100.00|8,253,449.77|24.40|25,574,057.29|

 2)Other receivable accounts in the group on which bad debt provisions are provided on age basis
|||||
|-|-|-|-|
|Age|End of term|||
||Book balance|Bad debt provision|Providing rate %|
|Within 1 year|21,187,112.25|1,059,355.63|5.00|
|1-2 years|5,755,037.22|575,503.73|10.00|
|2-3 years|5,402,955.67|1,620,886.70|30.00|
|3-4 years|4,483,121.60|2,689,872.96|60.00|
|4-5 years|710,500.00|568,400.00|80.00|
|Over 5 years|4,613,611.34|4,613,611.34|100.00|
|Subtotal|42,152,338.08|11,127,630.36|26.40|

(2) The current amount of provision for bad debts is 2,874,180.59, and no recovery or reversal of provision during the year.
(3) Other receivables not written off this period.
(4) Other accounts receivable classified by the nature of accounts
||||
|-|-|-|
|Nature|Closing book balance|Opening book balance|
|Export tax refund receivable|13,234,170.89|2,581,750.03|
|Deposit|19,810,421.19|21,439,653.49|
|Provisional payment receivalbe|4,957,646.21|5,862,759.48|
|Petty cash|1,156,796.99|1,371,901.86|
|Other|2,993,302.80|2,571,442.2|
|Total|42,152,338.08|33,827,507.06|

 (5) Top 5 of of the other accounts receivable
||||||||
|-|-|-|-|-|-|-|
|Name|Nature|Book balance|Age|Proportion(%)|Bad debt provision|Whether therelated party|
|Exportdrawbackreceivable|ExportRebates|13,234,170.89|Within 1year|31.40|661,708.54|No|
|ShanghaiCustomsWaigaoqiaoOffice|Currrentaccount|3,710,320.94|Over 5years|8.80|3,710,320.94|No|
|Investmentfrom IndonesiaCompanyreceivable|Investment|3,468,500.00|3-4 years|8.23|2,081,100.00|No|
|GuoxinBiddingGroupCo.,Ltd.|Biddingdeposit|1,485,788.00|[Notes]|3.52|193,128.80|No|
|Guodian TrustBidding Co.,Ltd.|Biddingdeposit|1,294,500.00|[Notes]|3.07|439,725.00|No|

|||||
|-|-|-|-|
|Subtoal|23,193,279.83|55.02|7,085,983.28|

Notes: Detailed
||||
|-|-|-|
|Within 1 year|1-2 years|4-5 years|
||1,436,288.00||
|794,500.00||500,000.00|

6. Inventories
(1) Details
||||||||
|-|-|-|-|-|-|-|
|Items|End of term|||Beginning of term|||
||Book balance|Impairment|Book value|Book balance|Impairment|Book value|
|Rawmaterials|568,639,726.41|provision3 09,803.19|568,329,923.22|458,779,130.89|provision|458,779,130.89|
|Product inprocess|400,195,046.11|10,345,866.48|389,849,179.63|564,392,004.76||564,392,004.76|
|Products instock|998,661,308.19|55,296,052.78|943,365,255.41|856,686,717.61|52,988,014.66|803,698,702.95|
|Total|1,967,496,080.71|65,951,722.45|1,901,544,358.26|1,879,857,853.26|52,988,014.66|1,826,869,838.60|

 (2) Inventory depreciation provision
(1) Details
||||||||
|-|-|-|-|-|-|-|
|Items|Beginning of term|Increased this period||Decreased this period||End of term|
|||Provided|Others|Written back|Others||
|Raw materials||309,803.19||or off||309,803.19|
|Product in process||10,345,866.48||||10,345,866.48|
|Products in stock|52,988,014.66|3,190,510.08||882,471.96||55,296,052.78|
|Total|52,988,014.66|13,846,179.75||882,471.96||65,951,722.45|

 (2)The specific basis for determining the net realizable value, and the reasons for the reversal of the inventory depreciation reserve for the current period
At the end of the period, for the finished products which are directly to be sold and the raw materials that need further process, the estimated selling price of the finished products after the completion of the production reduces the expected cost incurring at the time of completion, the estimated selling expenses and the relevant taxes and fees, which determines the amount of net
realizable value. According to the balance between the net realizable value and the cost of single
inventory, the inventory depreciation reserve is extracted. The reduction of the inventory depreciation reserve for the current period is RMB 882,471.96, which is the provision for the inventory depreciation reserve due to the use or sale of inventory.
7. Other current asset
||||
|-|-|-|
|Items|End of term|Beginning of term|
|Bank financing products[Notes]|853,767,338.00|426,000,000.00|
|Input tax deductible|6,410,137.62|1,089,566.15|
|To verify the input tax|995,153.86||
|Prepaid income tax|1,845,850.11|113,279.98|
|Prepayment of other tax||989.31|
|Total|863,018,479.59|427,203,835.44|

[Note]: Financial products are financial products and trust financial products, are in
non-guaranteed floating-income short-term (or short-term redeemable) financial products, and no
active market price.
8. Sellable financial asset
(1) Details
||||||||
|-|-|-|-|-|-|-|
|Items|End of term|||Beginning of term|||
||Book balance|Impairmentprovision|Book value|Book balance|Impairmentprovision|Book value|
|Available-for-saleequity instruments|||||||
|Including ：Measured by fairvalue|2,906,013,048.00||2,906,013,048.00||||
|Measured by cost|154,852,814.60||154,852,814.60|509,409,741.77||509,409,741.77|
|Total|3,060,865,862.60||3,060,865,862.60|509,409,741.77||509,409,741.77|

 (2) Available-for-sale financial assets measured by vair value at the period-end
|||||
|-|-|-|-|
|Type|Available-for-sale equityinstruments|Available-for –saleLiabilities instruments|Subtotal|
|Vair value|2,906,013,048.00||2,906,013,048.00|

 (3) Available-for-sale financial assets measured by cost at the period-end
||||||
|-|-|-|-|-|
|Investee|Book balance||||
||Period-begin|Increase|Decrease|Period-end|
|Bank of HangzhouCo.,Ltd.|390,954,040.00||390,954,040.00||

||||||
|-|-|-|-|-|
|Hangzhou ChangdiEquity InvestmentPartnership(Limitedliability)|39,115,565.04|9,442,786.76||48,558,351.80|
|Hangzhou SteamTurbine EngineeringCo., Ltd.|30,000,000.00|||30,000,000.00|
|Hangzhou JushiInvestment Partnership（Limited partnership）||30,000,000.00||30,000,000.00|
|Wuxi Xinchang SteelBube Co., ltd.|18,205,363.51||3,045,673.93|15,159,689.58|
|Zhejiang ZhongkongSolar EnergyTechnology Co., Ltd.|15,000,000.00|||15,000,000.00|
|Zhejiang TianhangSteam Turbine AuxiliaryMachinery Co., Ltd.|10,000,000.00|||10,000,000.00|
|Greenesol Co.(India)|5,534,773.22|||5,534,773.22|
|Zhejiang SanxinAutomatic EngineeringCo., Ltd.|600,000.00|||600,000.00|
|Subtotal|509,409,741.77|39,442,786.76|393,999,713.93|154,852,814.60|

 (Continued)
||||||
|-|-|-|-|-|
|Investee|Impairment provision||Shareholdingproportionamong theinvestees|Cash bonus ofthe reportingperiod|
||Period-begin|Period-end|||
|Bank of HangzhouCo.,Ltd.|||5.30||
|Hangzhou ChangdiEquity InvestmentPartnership(Limitedliability)|||2.97|2,587,659.70|
|Hangzhou SteamTurbine EngineeringCo., Ltd.|||15.00||
|Hangzhou JushiInvestment Partnership（ Limited|||33.33||

||||
|-|-|-|
|partnership）|||
|Wuxi Xinchang SteelBube Co., ltd.|18.00||
|Zhejiang ZhongkongSolar EnergyTechnology Co., Ltd.|5.27||
|Zhejiang TianhangSteam TurbineAuxiliary MachineryCo., Ltd.|33.33|1,000,000.00|
|Greenesol Co.(India)|37.00||
|Zhejiang SanxinAutomatic EngineeringCo., Ltd.|6.00||
|Subtotal||3,587,659.70|

 (4) Other Notes
1) As the Hangzhou Bank Co., Ltd. was listed on October 27, 2016, the shares of Hangzhou Bank Co., Ltd. held by the Company at the end of the period are shifted from cost measurement to fair value measurement.
2) According to the agreement signed by Hangzhou Steam Turbine Auxiliary Equipment Co., Ltd. and Wuxi Xinchang Steel Pipe Co., Ltd., if the later one fails to realize the expected profits, it shall make the cash compensation for the former one. In 2015 Wuxi Xinchang Steel Pipe Co., Ltd. failed to achieve the expected profits, so Hangzhou Steam Turbine Auxiliary Co., Ltd. received cash compensation of RMB 3,045,673.93 for the current period.
9. Fixed assets
|||||||
|-|-|-|-|-|-|
|Items|Houses &buildings|Machineryequipment|Transportationequipment|Office equipment|Total|
|1. Original book value||||||
|1.Beginning of term|430,839,912.93|969,905,790.70|29,785,975.08|99,549,945.71|1,530,081,624.42|
|2.Increasedcurrentperiod|15,606,885.67|36,394,711.12|529,156.76|4,875,589.92|57,406,343.47|
|（1）Purchase||21,223,850.01|431,720.86|1,232,414.70|22,887,985.57|
|（ 2 ）Transferredinfromconstruction in process|15,606,885.67|15,170,861.11|97,435.90|3,643,175.22|34,518,357.90|
|Decreasedcurrentperiod||7,315,351.22|565,800.00|8,581,158.28|16,462,309.50|

|||||||
|-|-|-|-|-|-|
|（1）Disposal||7,315,351.22|565,800.00|8,581,158.28|16,462,309.50|
|End of term|446,446,798.60|998,985,150.60|29,749,331.84|95,844,377.35|1,571,025,658.39|
|Accumulateddepreciation||||||
|Beginning of term|163,529,319.75|620,466,561.64|18,904,719.96|78,242,233.07|881,142,834.42|
|Increased currentofterm|12,860,723.17|59,783,374.43|2,083,099.74|8,191,323.57|82,918,520.91|
|1) Provision|12,860,723.17|59,783,374.43|2,083,099.74|8,191,323.57|82,918,520.91|
|Decreased currentperiod||6,967,337.48|433,991.56|8,208,449.48|15,609,778.52|
|1) Disposal||6,967,337.48|433,991.56|8,208,449.48|15,609,778.52|
|End of term|176,390,042.92|673,282,598.59|20,553,828.14|78,225,107.16|948,451,576.81|
|Impairment provision||||||
|Beginning of term|1,504,928.24|4,074,858.43||1,203,366.99|6,783,153.66|
|Increased current period||||||
|Decreased currentperiod||41,338.01||89,843.98|131,181.99|
|End of term|1,504,928.24|4,033,520.42||1,113,523.01|6,651,971.67|
|Book value||||||
|Closing book value|268,551,827.44|321,669,031.59|9,195,503.70|16,505,747.18|615,922,109.91|
|Opening book value|265,805,664.94|345,364,370.63|10,881,255.12|20,104,345.65|642,155,636.34|

 10. Construction in process
（1）Details
||||||||
|-|-|-|-|-|-|-|
|Items|End of term|||Beginning of term|||
||Boook balance|Impairmentprovision|Book value|Boook balance|Impairmentprovision|Book value|

||||||
|-|-|-|-|-|
|Construction in process ofparent Company|94,170,909.99|94,170,909.99|79,982,551.34|79,982,551.34|
|Tangxi Workshop PhaseII,Gouneng Company|16,246,978.15|16,246,978.15|19,540,353.62|19,540,353.62|
|Project of steamturbine heavy industry|32,654,575.18|32,654,575.18|18,177,025.86|18,177,025.86|
|Casting companies toclean up cross project|4,870,579.64|4,870,579.64|||
|Casting companynetworking system project|1,517,473.06|1,517,473.06|||
|Prepayment for equipmentor projects|4,283,373.39|4,283,373.39|1,487,176.70|1,487,176.70|
|Total|153,743,889.41|153,743,889.41|119,187,107.52|119,187,107.52|

 (2) Changes of significant construction in progress
||||||||
|-|-|-|-|-|-|-|
|Project|Budget RMBx10000|Beginning of term|Increased thisperiod|Transferred intofixed assets|Otherdecreases|End of term|
|Constructionin process ofparentCompany|13,497.14|61,381,905.79|32,789,004.20|||94,170,909.99|
|Completedproject ofparentCompany|2,935.06|18,600,645.55|2,359,855.40|20,960,500.95|||
|TangxiWorkshopPhaseII,GounengCompany|3,000.00|19,540,353.62|8,043,587.43|11,336,962.90||16,246,978.15|
|Project ofsteam turbineheavyindustry|179,410.00|18,177,025.86|14,477,549.32|||32,654,575.18|
|Castingcompanies to|1,000.00||4,870,579.64|||4,870,579.64|

||||||||
|-|-|-|-|-|-|-|
|clean up crossproject|||||||
|Castingcarbon arcgouging anddarkroom|133.60||1,335,964.05|1,335,964.05|||
|Castingcompanynetworkingsystemproject|400.00||1,517,473.06|||1,517,473.06|
|Prepaymentfor equipmentor projects||1,487,176.70|3,695,607.69|884,930.00|14,481.00|4,283,373.39|
|Subtotal|200375.8|119,187,107.52|69,089,620.79|34,518,357.90|14,481.00|153,743,889.41|

 (Continued )
||||||||
|-|-|-|-|-|-|-|
|Project|AccumulateinvestmentProportion(%)|Progress(%)|Accumulate ofinterestcapitalized|Interestcapitalized thisterm|Ratio ofinterestcapitalizingthis term %|Fundrecourse|
|Construction inprocess of parentCompany|69.77|UnderConstruction||||Self|
|Completed project ofparent Company|71.41|Completed||||Self|
|Tangxi WorkshopPhaseII, GounengCompany|91.95|UnderConstruction||||Self|
|Project of steamturbine heavyindustry|1.82|UnderConstruction||||Self|
|Casting companies toclean up cross project|48.71|UnderConstruction||||Self|
|Casting carbon arcgouging anddarkroom|100.00|Completed||||Self|
|Casting company|37.94|Under||||Self|

||||
|-|-|-|
|networking systemproject|Construction||
|Minor purchasing ofequipment bysubsidiaries|Completed|Self|
|Prepayment forequipment or projects|Under Construction|Self|
|Subtotal|||

11. Intangible assets
||||||
|-|-|-|-|-|
|Items|Land using right|Patent|Software|Total|
|Original price|||||
|Opening balance|332,298,312.33|8,200,000.00|328,376.07|340,826,688.40|
|Increased amount ofthe period||9,433.96||9,433.96|
|1) Purchase||9,433.96||9,433.96|
|Decreased amount of theperiod|||||
|1) Disposal|||||
|Closing balance|332,298,312.33|8,209,433.96|328,376.07|340,836,122.36|
|Accumulated amortization|||||
|Opening balance|35,119,224.60|552,666.67|205,589.95|35,877,481.22|
|Increased amount of theperiod|6,662,865.37|828,000.04|62,341.65|7,553,207.06|
|1) Withdrawal|6,662,865.37|828,000.04|62,341.65|7,553,207.06|
|Decreased amount of theperiod|||||
|1) Disposal|||||
|Closing balance|41,782,089.97|1,380,666.71|267,931.60|43,430,688.28|
|Impairment provision|||||
|Opening balance|||||

||||||
|-|-|-|-|-|
|Increased amount of theperiod|||||
|1) Withdrawal|||||
|Decreased amount of theperiod|||||
|1) Disposal|||||
|Closing balance|||||
|Book value|||||
|Closing book value|290,516,222.36|6,828,767.25|60,444.47|297,405,434.08|
|Opening book value|297,179,087.73|7,647,333.33|122,786.12|304,949,207.18|

 12. Long-term amortize expenses
|||||||
|-|-|-|-|-|-|
|Items|Balance inyear-begin|Increase inthis period|Amortizedexpenses|Other loss|Balance in year-end|
|Redecoration|1,781,295.80|54,677.11|529,092.10||1,306,880.81|
|Afforestationfees|248,176.00||124,088.00||124,088.00|
|Total|2,029,471.80|54,677.11|653,180.10||1,430,968.81|

 13. Deferred income tax assets/deferred income tax liabilities
(1) Deferred income tax assets had not been off-set
||||||
|-|-|-|-|-|
|Items|Balance in year-end||Balance in year-begin||
||Deductible temporarydifference|Deferred incometax assets|Deductible temporarydifference|Deferred incometax assets|
|Bad debtprovision|981,341,256.69|153,377,711.38|802,894,660.68|125,122,208.04|
|Inventoryimpairmentprovision|65,951,722.45|9,892,758.36|52,988,014.66|7,948,202.21|

||||||
|-|-|-|-|-|
|Fixed assetsdepreciationreserves|6,651,971.67|997,795.75|6,783,153.67|1,017,473.05|
|Unrealized profitof internaltransaction|58,099,229.91|9,500,467.96|51,540,875.71|7,731,131.35|
|Temporarydifference suchas amortizing ofsoftware expense|3,751,710.39|562,756.56|4,521,435.59|678,215.34|
|Deductible loss|30,002,132.26|4,500,319.84|109,318,315.61|16,427,657.71|
|Total|1,145,798,023.37|178,831,809.85|1,028,046,455.92|158,924,887.70|

 (2) Deferred income tax liabilities had not been off-set
||||||
|-|-|-|-|-|
|Items|Balance in year-end||Balance in year-begin||
||Deductible temporarydifference|Deferred incometax liabilities|Deductibletemporarydifference|Deferred incometax liabilities|
|Changes in fair value oftradable financial assets|2,515,059,008.00|377,258,851.20|||
|Accumulateddepreciation|6,651,971.67|997,795.75|6,783,153.67|1,017,473.05|
|Total|2,521,710,979.67|378,256,646.95|6,783,153.67|1,017,473.05|

 (3) Details of income tax assets not recognized
||||
|-|-|-|
|Items|End of term|Beginning of term|
|Deductible provisional differences|1,476,578.54|137,939.89|
|Recoverable losses|12,315,626.29|5,606,704.52|
|Subtotal|13,792,204.83|5,744,644.41|

 (4) The un-recognized deductible losses of deferred income tax assets will due in the following
years:
||||
|-|-|-|
|Year|End of term|Beginning of term|
|2018|684,308.39|1,088,275.32|
|2019|1,037,052.28|903,272.74|
|2020|3,113,580.77|3,615,156.46|

||||
|-|-|-|
|2021|7,480,684.85||
|Subtotal|12,315,626.29|5,606,704.52|

14.Short-term loans
||||
|-|-|-|
|Items|End of term|Beginning of term|
|Guarantee loan|100,000,000.00||
|Loan by pledge||10,000,000.00|
|Mortgage loan|73,000,000.00|75,350,000.00|
|Total|173,000,000.00|85,350,000.00|

 15.Bill payable
||||
|-|-|-|
|Items|End of term|Beginning of term|
|Bank acceptance|143,007,715.10|194,226,049.73|
|Total|143,007,715.10|194,226,049.73|

 16. Account payable
||||
|-|-|-|
|Items|End of term|Beginning of term|
|Goods|832,264,375.15|796,106,637.10|
|Payment for equipment and projects|21,188,214.36|14,313,744.35|
|Total|853,452,589.51|810,420,381.45|

 17. Advances received
||||
|-|-|-|
|Items|End of term|Beginning of term|
|Goods|1,827,959,793.62|1,736,820,949.19|
|Total|1,827,959,793.62|1,736,820,949.19|

 18.Employees’ wage payable
(1) Details
||||||
|-|-|-|-|-|
|Items|Beginning of term|Increased thisperiod|Decreased thisperiod|End of term|
|Short-term wages|46,643,490.68|587,817,273.45|586,187,202.51|48,273,561.62|
|Welfare afterleaving ofposition-fixed provision scheme|23,613,983.78|73,456,459.91|74,119,371.28|22,951,072.41|

||||||
|-|-|-|-|-|
|Total|70,257,474.46|661,273,733.36|660,306,573.79|71,224,634.03|

 (2) Details of short term wages
||||||
|-|-|-|-|-|
|Items|Beginning of term|Increased thisperiod|Decreased thisperiod|End of term|
|Wage, bonus, allowance andsubsidies|34,671,757.54|451,536,325.41|450,676,976.01|35,531,106.94|
|Employee welfare||34,177,277.02|34,177,277.02||
|Social insurance|5,385,672.94|44,335,865.97|43,858,594.27|5,862,944.64|
|Incl. Medical insurance|4,746,884.21|39,060,235.20|38,383,224.47|5,423,894.94|
|Labor injury insurance|219,035.19|1,596,147.51|1,691,109.25|124,073.45|
|Maternity insurance|419,753.54|3,679,483.26|3,784,260.55|314,976.25|
|Housing fund|110,894.96|46,000,781.00|46,002,655.00|109,020.96|
|Labour union fee and employeeeducation fee|6,475,165.24|11,767,024.05|11,471,700.21|6,770,489.08|
|Subtotal|46,643,490.68|587,817,273.45|586,187,202.51|48,273,561.62|

 (3) Details of fixed provision scheme
||||||
|-|-|-|-|-|
|Items|Beginning of term|Increased thisperiod|Decreased thisperiod|End of term|
|1.Basic pension insurance|4,967,070.00|50,934,179.56|51,470,914.88|4,430,334.68|
|2. Unemploymentinsurance|532,115.91|4,189,113.10|4,407,110.25|314,118.76|
|3. Enterprise annual fee|18,114,797.87|18,333,167.25|18,241,346.15|18,206,618.97|
|Subtotal|23,613,983.78|73,456,459.91|74,119,371.28|22,951,072.41|

 19. Tax payable
||||
|-|-|-|
|Items|End of term|Beginning of term|
|VAT|59,676,617.21|14,415,685.85|
|Operational tax||26,734.00|
|Enterprise income tax|16,338,759.59|13,503,170.56|
|Individual income tax|2,035,807.07|2,576,708.03|

||||
|-|-|-|
|City maintenance and construction tax|4,224,180.62|1,039,687.83|
|Education surtax|1,822,362.43|453,914.47|
|Locality Education subjoin|1,202,457.87|303,713.60|
|Property tax||39,647.76|
|Stamp tax|56,823.07|19,236.84|
|Local water source foundation|1,767,814.88|2,382,364.75|
|Land use tax|3,112,763.00|1,245,105.20|
|Disabled security fund|2,087.42|2,140.20|
|Total|90,239,673.16|36,008,109.09|

 20. Interest payable
||||
|-|-|-|
|Items|End of term|Beginning of term|
|Long term interest on borrowings due in installments|41,750.63||
|Interest on short-term borrowings|92,625.69||
|Total|134,376.32||

21.Other account payable
||||
|-|-|-|
|Items|End of term|Beginning of term|
|Deposite|3,607,868.79|1,462,038.45|
|Provisional account payable|23,344,791.25|22,729,311.10|
|Other|3,868,320.76|5,513,775.96|
|Total|30,820,980.80|29,705,125.51|

 22. Non-current liabilities due within 1 year
||||
|-|-|-|
|Items|End of term|Beginning of term|
|Long-term loans due within 1 year|18,500,000.00|300,000.00|
|Total|18,500,000.00|300,000.00|

 22. Long-term loan
||||
|-|-|-|
|Items|End of term|Beginning of term|

||||
|-|-|-|
|Mortgage loan|4,900,000.00|23,400,000.00|
|Guaranteed loans||100,000,000.00|
|Total|4,900,000.00|123,400,000.00|

 24.Long term account payable
(1) Details
||||
|-|-|-|
|Items|End of term|Beginning of term|
|CDB investment fund|208,000,000.00||
|Income payable of CDB|27,733.33||
|Drawing in administrative restructuring|330,000.00|330,000.00|
|Total|208,357,733.33|330,000.00|

（2）Other notes
According to the relevant agreement of the National Development Fund Investment Contract (hereinafter referred to as the Investment Contract) jointly signed by the Company, National Development Fund Co., Ltd. (hereinafter referred to as the NDF), Hangzhou Steam Turbine Industry Co., Ltd. and Hangzhou Steam Turbine Group, the NDF invested RMB 208,000,000.00 in Hangzhou Steam Turbine Industry Co., Ltd., the subsidiary, The NDF obtains1.2% of the proceeds through dividends or repurchasing premium each year for the above investment; under the investment contract, Hangzhou Steam Turbine Group will transfer its shares of Steam Turbine Industry Co., Ltd from 2019 to the NDF by installment. Hangzhou Steam Turbine Industry Co., Ltd has received the above investment on December 27, 2016, according to the agreement of the investment contract on the relevant investment returns, the current accrued income is RMB 27,733.33.
25. Deferred income
(1) Details
|||||||
|-|-|-|-|-|-|
|Items|Beginning of term|Increasedthis period|Decreased thisperiod|End of term|Reason|
|Governmentsubsidy|6,804,425.00||1,381,530.00|5,422,895.00|Governmentsubsidy|
|Total|6,804,425.00||1,381,530.00|5,422,895.00||

(2) Details of government subsidies
||||||||
|-|-|-|-|-|-|-|
|Items|Beginning ofterm|Newsubsidyin currentperiod|Amount transferredto non-operationalincome|Otherchanges|End of term|Asset-related orincome-related|
|Financial support forindustrial projects|316,580.00||28,780.00||287,800.00|Asset-related|
|Government subsidy forcasting project|316,580.00||28,780.00||287,800.00|Asset-related|
|Circular economyfinancial subsidy|125,510.00||11,410.00||114,100.00|Asset-related|
|Projects of technologicaltransformation|52,000.00||26,000.00||26,000.00|Asset-related|
|Subsidy for industrialupgrading by provincialgovernment|640,000.00||160,000.00||480,000.00|Asset-related|
|Finance for casting project|4,903,785.00||997,380.00||3,906,405.00|Asset-related|
|Financial allocation ofadvanced manufacturingbase|22,250.00||22,250.00|||Asset-related|
|Government subsidy forindustrial entities fromYuhang DistrictGovernment in the 2ndhalf of 2009|427,720.00||106,930.00||320,790.00|Asset-related|
|Subtotal|6,804,425.00||1,381,530.00||5,422,895.00||

26. Stock capital
|||||||||
|-|-|-|-|-|-|-|-|
|Items|BalanceYear-beginning|Increase/decrease this time (+ , - )|||||Balance year-end|
|||Issuingof newshare|Bonusshares|Transferredfromreserves|Other|Subtotal||

||||
|-|-|-|
|Total ofcapitalshares|754,010,400.00|754,010,400.00|

27. Capital reserves
||||||
|-|-|-|-|-|
|Items|Year-beginningbalance|Increase in thecurrent period|Decrease in thecurrent period|Year-end balance|
|Share premium|81,815,220.00|||81,815,220.00|
|Other capital reserves|57,775,125.09|||57,775,125.09|
|Total|139,590,345.09|||139,590,345.09|

 28. Other comprehensive income
|||||||||
|-|-|-|-|-|-|-|-|
|Items|Beginningof term|Occurred current term|||||End of term|
|||Amount occurredbefore income taxof the period|Less:accountedas othergainspreviouslybuttransferredto gain/lossthis period|Less: Incometax expenses|Attributable to theparent co. after tax|Attributableto minorityshareholdersafter tax||
|Later reclassified into profit and loss ofother comprehensive income|-852,752.00|2,516,167,273.56||377,258,851.20|2,138,272,051.84|636,370.52|2,137,419,299.84|
|Gains or losses onchanges in fairvalue ofavailable-for-salefinancial assets||2,515,059,008.00||377,258,851.20|2,137,800,156.80||2,137,800,156.80|
|Difference oftranslating offoreign currencyaccounts|-852,752.00|1,108,265.56|||471,895.04|636,370.52|-380,856.96|
|Total of othercomprehensive|-852,752.00|2,516,167,273.56||377,258,851.20|2,138,272,051.84|636,370.52|2,137,419,|

|||
|-|-|
|income|299.84|

 29.Special reserves
(1) Details
||||||
|-|-|-|-|-|
|Items|Beginning ofterm|Increased thisperiod|Decreased thisperiod|End of term|
|Labor safety expenses|31,764,920.51|160,572.72|4,379,139.86|27,546,353.37|
|Total|31,764,920.51|160,572.72|4,379,139.86|27,546,353.37|

(2) On December 5, 2016,Upon the application of the Company and the approval of Hangzhou Safety Production Supervision and Administration Bureau (HSPSAB), the minimum reserved amount for the collection and use of the safety production cost of the Company and its subsidiaries is RMB 20 million. If the safety production costs that have been withdrawn in previous years have exceeded the minimum reserved amount, it will no longer be reduced; if the safety production costs for the subsequent years are less than the above-mentioned minimum reserved amount, withdraw in the current year to compensate up to the minimum reserved amount. 30. Surplus reserves
||||||
|-|-|-|-|-|
|Items|Beginning of term|Increased thisperiod|Decreased thisperiod|End of term|
|Statutory surplus reserves|621,112,807.78|||621,112,807.78|
|Total|621,112,807.78|||621,112,807.78|

 31. Retained profit
||||
|-|-|-|
|Items|Current term|Same period of lastterm|
|Amount of retained profit at beginning of period|2,673,711,591.42|2,911,921,943.21|
|Plus: Net profit attributable to owners of the parent company|31,955,445.73|-162,809,311.79|
|Common share dividend payable||75,401,040.00|
|Retained profit at the end of term|2,705,667,037.15|2,673,711,591.42|

 (II)Consolidated income statement
1. Business income and Business cost
(1) Details
||||||
|-|-|-|-|-|
|Items|Occurred current term||Occurred in previous term||
||Income|Cost|Income|Cost|
|Main Business|3,230,906,525.12|2,203,424,343.46|2,590,940,234.32|1,801,566,917.72|

||||||
|-|-|-|-|-|
|Other|4,396,854.12|1,154,437.61|9,131,917.31|4,374,605.05|
|Total|3,235,303,379.24|2,204,578,781.07|2,600,072,151.63|1,805,941,522.77|

 (2)Main Business income/Main Business cost(Product)
||||||
|-|-|-|-|-|
|Name|Occurred current term||Occurred in previous term||
||Income|Cost|Income|Cost|
|Industrial steam turbine|2,760,361,876.91|1,937,421,703.51|2,135,628,506.22|1,551,730,293.95|
|Casting|53,823,584.94|40,832,489.79|63,703,960.06|52,584,471.30|
|Auxiliary|39,019,819.50|30,795,266.61|76,766,636.28|59,872,907.95|
|Spare part|228,822,873.11|119,437,803.71|172,137,117.89|77,526,212.60|
|Other|148,878,370.66|74,937,079.84|142,704,013.87|59,853,031.92|
|Subtotal|3,230,906,525.12|2,203,424,343.46|2,590,940,234.32|1,801,566,917.72|

 2. Business tax and surcharge
(1) Details
||||
|-|-|-|
|Items|Occurred current term|Occurred in previousterm|
|City maintenance and construction tax|14,706,240.33|6,811,793.17|
|Education surtax|6,398,546.53|3,020,314.16|
|Local education surcharges|4,265,697.76|2,013,702.28|
|Business tax|36,467.22|168,455.47|
|House tax|2,434,567.60||
|Land use tax|3,303,802.70||
|Stamp tax|1,374,990.22||
|vehicle and vessel tax|43,113.80||
|Total|32,563,426.16|12,014,265.08|

 (2) According to the interpretation on the accounting issues of the Value-added Tax Accounting Regulations (Accounting[2016] No. 22) and On the Value-added Tax Accounting Regulations of the Ministry of Finance, the amount of property tax, land use tax, stamp duty, and travel tax from May 1, 2016,, which are originally included in the management expense, are now listed and included in the "tax and additional tax", and the amount incurred before May 2016 is still listed and included in the "management expense".
3. Sales expense
||||
|-|-|-|
|Items|Amount of this period|Amount of last period|
|Employees’ remunerations|55,699,101.44|55,578,994.47|
|Transportation|48,927,596.36|46,831,719.53|
|Business trips|26,265,496.47|21,738,647.26|
|Business reception expenses|6,849,411.37|6,581,264.62|
|Consulting service fee|13,131,824.03|12,052,251.77|
|Registration fee|2,108,171.81|3,090,197.44|
|Three charge|4,206,989.36|3,092,751.43|
|Advertising fee|2,306,256.87|1,262,003.93|
|Office expenses|525,955.82|887,755.72|
|Unit premium|363,654.18|513,268.74|
|Other|4,225,952.94|5,073,951.70|
|Total|164,610,410.65|156,702,806.61|

 4. Administrative expense
||||
|-|-|-|
|Items|Amount of this period|Amount of last period|
|Employees’ remunerations|307,082,891.10|310,949,457.62|
|R&D expenses|197,406,076.77|179,039,951.91|
|Asset depreciation and amortizing|23,492,146.53|21,438,092.85|
|Business reception expenses|14,669,707.28|14,480,442.18|
|Rental fee, House rental, property management, water andpower|18,201,093.27|14,901,746.04|
|Traveling fees|8,907,858.29|7,094,343.92|
|Material, low-value-consumable|4,484,248.27|4,181,569.01|
|Office expenses|6,540,689.49|4,877,897.81|
|Taxes|3,946,865.23|9,623,889.66|
|Warranty expense|3,447,185.46|2,811,447.33|
|Other|35,505,775.77|38,822,291.15|
|Total|623,684,537.46|608,221,129.48|

5. Financial expenses
||||
|-|-|-|
|Items|Amount of this period|Amount of last period|
|Interest expense|9,308,017.80|11,853,040.55|
|Less: Incoming interests|5,744,431.75|7,263,343.36|
|Exchange gains/losses|-20,850,372.53|-14,356,533.14|
|Commission|2,448,933.41|2,203,086.50|
|Total|-14,837,853.07|-7,563,749.45|

 6. Asset impairment loss
||||
|-|-|-|
|Items|Amount of this period|Amount of last period|
|Losses for bad debts|187,468,454.06|190,102,123.40|
|Losses for falling price of inventory|13,846,179.75|55,028,754.71|
|Total|201,314,633.81|245,130,878.11|

 7. Investment income
||||
|-|-|-|
|Items|Occurred currentterm|Occurred inprevious term|
|Investment gains from holding of sellable financial assets|3,587,659.70|28,742,368.00|
|Gains from financing products|28,548,677.87|19,624,429.30|
|Total|32,136,337.57|48,366,797.30|

 8. Non-operational income
(1) Details
|||||
|-|-|-|-|
|Items|Current term|Same period of last term|Amount accountedinto non-recurringgain/loss of currentterm|
|Total of gains from disposal ofnon-current assets|387,292.53|55,683.00|387,292.53|
|Incl. Gains from disposal of fixedassets|387,292.53|55,683.00|387,292.53|
|Government subsidy|16,968,792.22|15,752,977.27|16,968,792.22|

|||||
|-|-|-|-|
|Compensation income|7,706,669.41|11,181,491.50|7,706,669.41|
|Payment not to be paid|96,487.12|1,462,564.00|96,487.12|
|Others|1,008,975.41|573,061.37|1,008,975.41|
|Total|26,168,216.69|29,025,777.14|26,168,216.69|

 (2) Government subsidy Details
1)Year 2016
||||
|-|-|-|
|Subsidy items|Amount of this period|Asset-related orincome-related|
|Transferred from deferred income|1,381,530.00|Asset-related|
|Stable employment social security subsidies|6,208,662.99|Income related|
|2016 provincial industrial and information technology developmentspecial funds|3,000,000.00|Income related|
|Water Funds returned|2,853,493.64|Income related|
|Property tax return|1,362,413.59|Income related|
|Enterprise R & D investment subsidy|714,200.00|Income related|
|Hangzhou "115" in 1995 to introduce foreign intelligence program|600,000.00|Income related|
|Financial subsidy|366,930.00|Income related|
|Land use tax refund|153,244.00|Income related|
|Quality Award Financial Award|131,600.00|Income related|
|Training subsidy|100,608.00|Income related|
|Other small amount subsidies|96,110.00|Income related|
|Total|16,968,792.22||

1) Year 2015
||||
|-|-|-|
|Subsidy items|Amount of this period|Asset-related orincome-related|
|Transferred from deferrecd income|1,448,280.00|Asset-related|
|Coal chemical industry, iron and steel industry COGEN 50MWsteam turbine series development level|5,060,000.00|Income related|
|Enterprise Funding by Hangzhou Economy & TechnologyDevelopment Zone Finance office|1,330,900.00|Income related|

||||
|-|-|-|
|Refunding of property tax|1,253,825.27|Income related|
|Award for Enterprise R&D Investment 2013|971,000.00|Income related|
|Land use tax return|868,205.00|Income related|
|Water fund return|786,093.91|Income related|
|Science and technology overall plan fund robot project|635,000.00|Income related|
|Financial support fund|635,000.00|Income related|
|2015 FINANCIAL Subsidy|500,000.00|Income related|
|Hangzhou Industrial and fiscal 2015 financial informationdevelopment funding|500,000.00|Income related|
|2015 Quality and Technical Supervision grant funds|300,000.00|Income related|
|Yuhang District 2013 annual enterprise training the first batch offinancial support fund|287,700.00|Income related|
|Quality award financial incentives|200,000.00|Income related|
|2013 second batch of quality and technical supervision grants|120,000.00|Income related|
|Stable employment social securitysubsidies|116,589.42|Income related|
|Financial support for production safety|100,000.00|Income related|
|Production safety standards of financial reward fund|100,000.00|Income related|
|2014 The first safety standardization standards (re-evaluation)enterprise financial assistance|100,000.00|Income related|
|Other small amount subsidies|440,383.67|Income related|
|Subtotal|15,752,977.27||

9. Non-operational expenditure
|||||
|-|-|-|-|
|Items|Current term|Same period of last term|Amount accountedinto non-recurringgain/loss of currentterm|
|Total of loss from disposal ofnon-current assets|60,839.23|497,599.66|60,839.23|
|Incl. Loss from disposal of fixedassets|60,839.23|497,599.66|60,839.23|
|Donations|270,000.00|370,000.00|270,000.00|

|||||
|-|-|-|-|
|Penalty paid out|383,192.05|506,973.23|383,192.05|
|Local water source foundation|2,747,978.42|3,656,045.61||
|Penalties|343,895.38|37,457.69|343,895.38|
|Loss damage|196,627.26|138,304.32|196,627.26|
|Other|272,423.01||272,423.01|
|Total|4,274,955.35|5,206,380.51|1,526,976.93|

 10. Income tax expenses
(1) Details
||||
|-|-|-|
|Items|Current term|Same period of lastterm|
|Income tax of current term|30,434,271.60|31,881,180.92|
|Deferred income tax|-19,926,599.45|-56,038,959.77|
|Total|10,507,672.15|-24,157,778.85|

 (2) Adjustment process of accounting profit and income tax expenses
||||
|-|-|-|
|Items|Current term|Same period of lastterm|
|Total profit|77,419,042.07|-148,188,507.04|
|Income tax expenses calculated at parent Company tax rate|11,612,856.31|-22,228,276.06|
|Impact from tax preferential rate|1,915,035.40|3,160,197.56|
|Adjustment for income tax in prior year|1,830,003.86|1,235,288.54|
|Income not subject to tax|-638,148.95|-4,411,355.20|
|Expenses not deductible for tax purposes|1,248,605.91|2,978,439.52|
|Super deduction of R&D expenses|-7,523,630.14|-5,665,533.49|
|Changes in the balance of deferred income tax assets at thebeginning of the tax rate adjustment|19,042.97||
|Taxation influence by using unrecognized deductible loss anddeductible temporary difference of prior periods||-4,905.28|
|Taxation influence of unrecognized deductible loss anddeductible temporary difference|-26,533.82|-116,838.71|
|Impact of deductible temporary difference of un-recognizeddeferred income tax asset of current period|2,070,440.61|895,204.27|

||||
|-|-|-|
|Income tax expenses|10,507,672.15|-24,157,778.85|

 11.Other Comprehensive income
Please find the statement in the notes of consolidated balance sheet.
3. Notes Cash flow statement
(1) Other cash received from business operation
||||
|-|-|-|
|Items|Occurred current term|Occurred in previousterm|
|Deposit interest|5,744,431.75|7,263,343.36|
|Government subsidies received|11,218,110.99|11,396,573.09|
|Deposit for bidding and other|16,391,878.63|9,164,486.54|
|Compensation income|789,904.00|204,038.50|
|Other|2,195,408.92|2,365,618.08|
|Total|36,339,734.29|30,394,059.57|

 2. Other cash paid for business activities
|||||
|-|-|-|-|
|Items|Occurred current term||Occurred in previousterm|
|Transportation|57,287,872.01||48,696,007.83|
|Travel expenses||28,307,013.51|27,665,861.80|
|Business trips|21,519,087.20||21,637,189.33|
|Maintaining|3,447,165.85||2,824,225.05|
|Property management and civil services|16,621,718.05||15,113,839.76|
|Deposit for bidding and others|23,512,159.15||1,086,259.96|
|Office expenses||7,066,554.79|5,767,669.91|
|Conferences|2,401,978.53||3,308,152.54|
|Consulting service fee|13,131,824.03||12,970,940.60|
|Transportation and vehicles|4,823,801.30||7,467,278.69|
|Other|40,288,131.86||35,568,063.63|
|Total|218,407,306.28||182,105,489.10|

3. Other investment-related cash received
||||
|-|-|-|
|Items|Occurred current term|Occurred in previousterm|
|Repurchasing of trusteeship|1,765,932,662.00|1,744,805,999.95|
|Total|1,765,932,662.00|1,744,805,999.95|

 4. Other cash paid for investment activities
||||
|-|-|-|
|Items|Occurred current term|Occurred in previousterm|
|Purchasing of financial products|2,193,700,000.00|1,792,005,999.95|
|Total|2,193,700,000.00|1,792,005,999.95|

 5. Other financing-related cash received
||||
|-|-|-|
|Items|Occurred current term|Occurred in previousterm|
|CDB investment fund|208,000,000.00||
|Total|208,000,000.00||

6. Supplementary data of cash flow statement
(1) Supplementary data of cash flow statement
||||
|-|-|-|
|Supplementary Info.|Amount of the CurrentTerm|Amount of thePrevious Term|
|I. Adjusting net profit to cash flow from operating activities|||
|Net profit|66,911,369.92|-124,030,728.19|
|Add: Impairment loss provision of assets|201,314,633.81|245,130,878.11|
|Depreciation of fixed assets, oil and gas assets andconsumable biological assets|82,918,520.91|85,829,041.11|
|Amortization of intangible assets|7,553,207.06|7,219,788.66|
|Amortization of Long-term deferred expenses|653,180.10|434,759.72|
|Loss on disposal of fixed assets, intangible assets and otherlong-term deferred assets|-326,453.30|435,942.14|
|Loss on scrap of fixed assets||5,974.52|
|Losson fair value changes|||
|Financial cost|936,959.82|5,284,099.92|
|Loss on investment|-32,136,337.57|-48,366,797.30|

||||
|-|-|-|
|Decrease of deferred income tax assets|-19,906,922.15|-56,038,959.77|
|Increased of deferred income tax liabilities|-19,677.30||
|Decrease of inventories|-89,815,466.67|-287,824,364.62|
|Decease of operating receivables|118,336,896.84|135,158,915.99|
|Increased of operating Payable|174,852,469.36|382,311,670.05|
|Other|-5,112,952.41|10,127,552.71|
|Net cash flows arising from operating activities|506,159,428.42|355,677,773.05|
|II. Significant investment and financing activities that withoutcash flows:|||
|Debt-to-capital conversion|||
|Convertible loan due within 1 year|||
|Fixed assets acquired under fianancial lease|||
|3．Movement of cash and cash equivalents：|||
|Ending balance of cash|831,236,984.85|689,224,662.53|
|Less: Beginning balance of cash equivalents|689,224,662.53|562,763,561.50|
|Add：Ending balance of cash equivalents|||
|Less: Beginning balance of cash equivalents|||
|Net increase of cash and cash equivalents|142,012,322.32|126,461,101.03|

（2）Composition of cash and cash equivalents
||||
|-|-|-|
|Items|Amount of currentperiod|Amount of previousperiod|
|I. Cash|831,236,984.85|689,224,662.53|
|Of which: Cash in stock|326,226.09|391,106.17|
|Demand bank deposit|830,910,758.76|688,833,556.36|
|Demand other monetary funds|||
|Demanddeposit in the Central Bank|||
|II. Cash equivalents|||

||||
|-|-|-|
|Including：Debt instrument maturedwithin three months|||
|III. Balance of cash and cash equivalents at the period end|831,236,984.85|689,224,662.53|

 (3) Monetary capital not categorized as cash or cash equivalents
||||
|-|-|-|
|Items|End of term|Begubbubg if tern|
|Bank acceptance bond|52,821,970.32|59,872,133.71|
|LC|9,823,604.17||
|Guarantee bond|1,145,000.00||
|bid bond|10,000.00|2,500,000.00|
|Subtotal|63,800,574.49|62,372,133.71|

 4. Other
1. Assets with limitation on ownership or using rights
||||
|-|-|-|
|Items|Closing book value|Causation o limitation|
|Monetary capital|63,800,574.49|Used as security for issuing ofacceptance drafts and bill ofguarantees|
|Bill receivable|24,402,755.20|Used as security for issuing ofacceptance drafts|
|Fixed assets|127,364,125.62|Used to obtain bank loans|
|Intangible assets|94,361,034.82|Collateral for obtaining bank loansand investment funds from CDB|
|Available for sale financial assets|481,850,000.00|Investment funds for thedevelopment of the State Fund|
|Total|791,778,490.13||

2. Monetary items in foreign currencies
|||||
|-|-|-|-|
|Items|Balance at end of period|Exchange rate|Translated to RMB at end of period|
|Monetary capital|||155,814,806.49|
|Incl. USD|20,461,011.98|6.9370|141,938,040.11|
|EURO|1,242,130.66|7.3068|9,076,000.31|
|HKD|5.51|0.8945|4.93|
|JPY|9,031.00|0.0596|538.25|
|Buble|10,650.00|0.1151|1,225.82|

|||||
|-|-|-|-|
|Won|388,000.00|0.0058|2,250.40|
|Indonesia Rubi|9,296,020,689.00|0.000516|4,796,746.67|
|Account receibable|||230,028,793.81|
|Incl：USD|30,329,767.14|6.9370|210,397,594.65|
|Euro|2,025,615.40|7.3068|14,800,766.60|
|Indonesia rubi|8,917,385,752.00|0.000516|4,601,371.05|
|Singapore dollar|47,726.12|4.7995|229,061.51|
|Account payable|||6,208,318.14|
|Incl：USD|518,256.56|6.9370|3,595,145.76|
|Euro|99,048.74|7.3068|723,729.33|
|Indonesia rubi|3,068,784,010.00|0.000516|1,583,492.55|
|Swing franc|45,000.00|6.7989|305,950.50|
|Other receivable|||3,489,758.93|
|Incl：USD|500,000.00|6.9370|3,468,500.00|
|Indonesia rubi|41,199,474.00|0.000516|21,258.93|
|Other payable|||1,541.42|
|Indonesia rubi|2,987,250.00|0.000516|1,541.42|

 VI. Equities in Other Entities
(I) Equity in major subsidiaries
1. Composition of major subsidiaries
||||||||
|-|-|-|-|-|-|-|
|Name of the subsidiaries|Main businesslocation|Reg. Add.|Businessproperty|Share proportion %||Way of obtain|
|||||Direct|Indirect||
|Zhejiang Steam TrubinePackaged TechnologiesDevelopment Co., Ltd.|HangzhouZhejiang|HangzhouZhejiang|Manufacturing|70.86||Incorporation|
|Hangzhou Zhongneng SteamTurbine Power Co., Ltd.(Zhongneng Co.)|HangzhouZhejiang|HangzhouZhejiang|Manufacturing|60.83||Incorporation|

|||||||
|-|-|-|-|-|-|
|Hangzhou Steam TurbineCasting Co., Ltd.|HangzhouZhejiang|HangzhouZhejiang|Manufacturing|51.00|Incorporation|
|Hangzhou Steam TurbineMachinery Equipment Co., Ltd.|HangzhouZhejiang|HangzhouZhejiang|Manufacturing|52.00|Incorporation|
|Hangzhou Steam TurbineAuxiliary Machinery Co., Ltd.(Auxiliary Machinery Co.)|HangzhouZhejiang|HangzhouZhejiang|Manufacturing|87.53|Incorporation|
|Zhejiang Turbine Import &Export Co., Ltd. (Turbine Co.)|HangzhouZhejiang|HangzhouZhejiang|Commerce|100.00|Incorporation|
|Hangzhou Steam TurbineHeavy Industry Co., Ltd.(Steam Turbine HeavyIndustry)|HangzhouZhejiang|HangzhouZhejiang|Manufacturing|100.00|Incorporation|

（2）Major non-fully-Owned subsidiaries
||||||
|-|-|-|-|-|
|Name of the subsidiaries|Share protion ofminor shareholders|Gains/loss of theperiod attributableto minorshareholders|Dividendannounced in theperiod to minorshareholders|Balance of eqiuty ofminor shareholdersat end of period|
|Zhejiang Steam TrubinePackaged TechnologiesDevelopment Co., Ltd.|29.14%|2,326,268.23|3,715,987.50|31,632,507.15|
|Hangzhou ZhongnengSteam turbine Power Co.,Ltd.|39.17%|3,197,452.17|4,117,200.00|145,116,390.68|
|Hangzhou Steam TurbineCasting Co., Ltd.|49.00%|8,376,855.37|9,800,000.00|71,024,830.88|
|Hangzhou Steam TurbineMachinery EquipmentCo., Ltd.|48.00%|21,980,953.62|21,600,000.00|70,764,766.94|
|Hangzhou Steam TurbineAuxiliary Machinery Co.,Ltd.|12.47%|3,147,889.03|4,988,000.00|25,063,433.88|

3 Material financial information of major non-fully-owned subsidiaries
(1) Assets and liabilities
||||||||
|-|-|-|-|-|-|-|
|SubsidiariesName|End of term||||||
||Current assets|Non-currentassets|Total of assets|Currentliabilities|Non-currentliabilities|Total of liability|

||||||||
|-|-|-|-|-|-|-|
|Zhejiang Steamtrubine PackagedTechnologyDevelopmentCo., Ltd.|255,821,238.00|24,056,533.07|279,877,771.07|191,451,594.17||191,451,594.17|
|HangzhouZhongnengSteam turbinePowerCo., Ltd.|884,998,690.44|75,131,310.55|960,130,000.99|623,195,514.10|330,000.00|623,525,514.10|
|Hangzhou SteamTurbine CastingCo., Ltd.|211,392,397.15|194,877,712.30|406,270,109.45|230,708,288.79|10,002,105.00|240,710,393.79|
|Hangzhou SteamTurbineMachineryEquipment Co.,Ltd.|200,333,215.84|22,497,721.65|222,830,937.49|75,404,339.67||75,404,339.67|
|Hangzhou SteamTurbine AuxiliaryMachinery Co.,Ltd.|432,548,733.64|115,456,043.82|548,004,777.46|324,598,336.06|320,790.00|324,919,126.06|

(Continued)
||||||||
|-|-|-|-|-|-|-|
|SubsidiariesName|Beginning of term||||||
||Current assets|Non-current assets|Total of assets|Current liabilities|Non-currentliabilities|Total of liability|
|Zhejiang Steamtrubine PackagedTechnologyDevelopmentCo., Ltd.|260,227,660.63|22,709,089.71|282,936,750.34|190,272,137.49||190,272,137.49|
|HangzhouZhongnengSteam turbinePowerCo., Ltd.|804,557,533.77|81,590,268.49|886,147,802.26|548,736,452.55|330,000.00|549,066,452.55|
|Hangzhou SteamTurbine Casting|223,797,190.85|199,438,595.78|423,235,786.63|224,664,623.52|29,754,455.00|254,419,078.52|

||||||||
|-|-|-|-|-|-|-|
|Co., Ltd.|||||||
|Hangzhou SteamTurbineMachineryEquipment Co.,Ltd.|185,381,983.06|21,333,275.97|206,715,259.03|59,276,595.83||59,276,595.83|
|Hangzhou SteamTurbine AuxiliaryMachinery Co.,Ltd.|400,114,948.24|112,067,629.68|512,182,577.92|272,629,536.63|427,720.00|273,057,256.63|

(2) Income and cash flow statement
||||||
|-|-|-|-|-|
|SubsidiariesName|Amount of current period||||
||Turnover|Net profit|Total Misc Gains|Cash flow for businessactivities|
|Zhejiang Steamtrubine PackagedTechnologyDevelopmentCo., Ltd.|219,104,132.13|8,511,564.05|8,511,564.05|17,053,194.85|
|HangzhouZhongnengSteam turbinePowerCo., Ltd.|726,019,174.47|9,061,166.79|10,169,432.35|57,021,017.72|
|Hangzhou SteamTurbine CastingCo., Ltd.|286,947,144.79|17,095,623.20|17,095,623.20|44,737,383.72|
|Hangzhou SteamTurbineMachineryEquipment Co.,Ltd.|203,232,692.33|45,793,653.38|45,793,653.38|61,976,772.66|
|Hangzhou SteamTurbine AuxiliaryMachinery Co.,Ltd.|362,840,873.07|25,243,697.12|25,243,697.12|24,381,581.78|

(Continued)
||||||
|-|-|-|-|-|
|SubsidiariesName|Amount of current period||||
||Turnover|Net profit|Total Misc Gains|Cash flow for businessactivities|
|Zhejiang Steamtrubine PackagedTechnologyDevelopmentCo., Ltd.|216,220,744.25|10,511,797.60|10,511,797.60|16,070,589.71|
|HangzhouZhongnengSteam turbinePowerCo., Ltd.|704,991,946.83|20,863,372.38|19,240,043.27|39,621,832.18|
|Hangzhou SteamTurbine CastingCo., Ltd.|293,407,553.21|5,944,783.76|5,944,783.76|36,007,460.88|
|Hangzhou SteamTurbineMachineryEquipment Co.,Ltd.|190,469,672.28|47,834,255.49|47,834,255.49|26,726,329.69|
|Hangzhou SteamTurbine AuxiliaryMachinery Co.,Ltd.|393,879,695.72|33,520,334.09|33,520,334.09|78,733,368.09|

VII. Risks related to financial instruments
The objective of theCompany’s risk management is to achieve a balance between the risk and gains. Constrain the negative influence on business operation to the lowest limit, and maximum the interests of shareholders and other equity holders. With regard to this target, the basic policies of the Company are; locate and analyse the risks, set appropriate bottom line for risks, and manage and monitor on each risk and constrain them in a certain extent.
Risks attached to financial instruments are mainly credit risks, liquidity risks, and market risks.
The following risk managing policies have been examined and approved by the management:
(I) Credit risks
Credit risks are introduced when one party of the financial instrument failed to exercise its
liabilities and then caused financial loss to another.
The credit risks of the Company are mainly composed by bank savings and receivable accounts.
Following measurements are adopted to control these risks:
1. Bank deposit
The Company puts its bank savings in financial institutions with higher credit ranks, therefore
with lower risks.
2. Account receivable
The Company performs credit assessment on the clients on periodic and constant basis. Results
suggested by the assessment are used by the Company to determine clients with higher ranks and
to overlook the rest. This was conducted to avoid risks brought by material bad debts.
As the Company only does business with recognized and reputable third parties, so no collateral is needed. Credit risks are centralized managed in accordance with customers. As of December 31, 2016, the Company has a characteristic of specific credit risk concentration.41.79% (December 31, 2015:45.07%) of the Company's accounts receivable comes from the top five customers. The Company does not hold any collateral or other credit enhancement for the balance of accounts receivable.
(1) Analyzing of receivable accounts neither due nor impaired, and those have due but not impaired:
|||||||
|-|-|-|-|-|-|
|Items|End of term|||||
||Not overdue andnot impaired|Overdue but not impaired|||Total|
|||Within 1 year|1-2 years|Over 2 years||
|Billreceivable|479,716,321.62||||479,716,321.62|
|Subtotal|479,716,321.62||||479,716,321.62|

 (Continued)
|||||||
|-|-|-|-|-|-|
|Items|Beginning of term|||||
||Not overdue andnot impaired|Overdue but not impaired|||Total|
|||Within 1 year|1-2 years|Over 2 years||
|Bill receivable|680,518,943.49||||680,518,943.49|
|Subtotal|680,518,943.49||||680,518,943.49|

 (2) See the accounts receivable of the individual impairment losses in the notes to the financial statement, the explanation for the accounts receivable of the financial statement item.
(II) Liquidation risks
Liquidation risks are the possibilities of short in cash at fulfilling liabilities of payment or settlement for financial assets. They may be caused by failing to cash financial assets at fair value instantly;debtors’ failing of paying debts due; debts due before schedule; or failing of generating expected cash flow.
To handle these risks, the Company adopted multiple measures such as note clearance and bank loans. Long-term and short-term financing approaches were used to maintain balance between constancy and flexibility. The Company has obtained credit from multiple banks to satisfy the needs of business operation and capital output.
Categorizing of financial liabilities on remained period to due
|||||||
|-|-|-|-|-|-|
|Items|End of term|||||
||Book value|Contract amount notdiscounted|within 1 year|1-3 years|Over 3 years|
|Financialliabilities||||||
|Short-term loans|173,000,000.00|177,681,933.75|177,681,933.75|||
|Notes payable|143,007,715.10|143,007,715.10|143,007,715.10|||
|Non-currentliabilities due to 1year|18,500,000.00|19,583,120.86|19,583,120.86|||
|Long-term loan|4,900,000.00|5,145,034.03||5,145,034.03||
|Long-termpayable|208,027,733.33|223,972,000.00||26,000,000.00|197,972,000.00|
|Accountpayable|853,452,589.51|853,452,589.51|853,452,589.51|||
|Other accountpayable|30,820,980.80|30,820,980.80|30,820,980.80|||
|Subtotal|1,431,709,018.74|1,453,663,374.05|1,224,546,340.02|31,145,034.03|197,972,000.00|

(Continued)
|||||||
|-|-|-|-|-|-|
|Items|Beginning of term|||||
||Book value|Contract amount notdiscounted|within 1 year|1-3 years|Over 3 years|
|Financialliabilities||||||
|Short-term loans|85,350,000.00|89,602,537.84|89,602,537.84|||
|Notes payable|194,226,049.73|194,226,049.73|194,226,049.73|||
|Non-currentliabilities due to 1year|300,000.00|331,550.05|331,550.05|||
|Long-term loan|123,400,000.00|142,672,805.36||142,672,805.36||
|Account payable|810,420,381.45|810,420,381.45|810,420,381.45|||
|Other accountpayable|29,705,125.51|29,705,125.51|29,705,125.51|||

||||||
|-|-|-|-|-|
|Subtotal|1,243,401,556.69|1,266,958,449.94|1,124,285,644.58|142,672,805.36|

(III) Market risks
Market risks are those brought by change of fair value or expectable cash flow of financial instruments due to change of market prices, mainly interest risks and exchange rate risks.
1. Interest risks
Interest risks are those brought by change of fair value or expectable cash flow of financial instruments due to change of interest rates, mainly regards the loans at floating interest rates.
As of December 31, 2016, the Company had raised RMB78,100,000.00 (Dec 31 2015: RMB83,850,000.00) on floating interest rates. In case of other variables remain unchanged, if the interest rates change, reasonably and possibly, for50% of the benchmark, the total profit andshareholders’ equity will be free of major impact.
2. Foreign currency risks
Foreign currency risks (exchange rate risks) are those caused by change of fair value or expectable cash flow of financial instruments due to fluctuation of exchange rates. These risks are mainly related to foreign currency assets and liabilities. The Company operates in mainland China and mostly uses RMB as standard currency, therefore no major risks regarding exchange rates. For details of foreign currency assets and liabilities, please go to the descriptions in the notes to the consolidated financial statements.
VIII.Fair value disclosure
(I)Closing balance of assets and liabilities measured at fair value
||||||
|-|-|-|-|-|
|Items|December 31, 2016||||
||Level 1|Level 2|Level 3|Total|
|Assets measured at fair valueon acontinued basis|||||
|Available for sale financialassetsfinancial product|2,906,013,048.00|||2,906,013,048.00|
|Equity instrument investment|2,906,013,048.00|||2,906,013,048.00|
|Assets measured at fair valueon|2,906,013,048.00|||2,906,013,048.00|

 (II) Market price basis at fair value by level 1 on a continued and non-continued basis
The shares of Hangzhou Bank Co., Ltd. held by the Company have active market quotations, so it is measured in accordance with the first level of fair value.
IX. Related parties and related transactions
(I) Related parties
1. Parent company of the Company
|||||||
|-|-|-|-|-|-|
|Name of the parentco.|Reg. Add.|Businessproperty|Registered capital|Shareholdingof the parentco.|Votingrights ofthe parentco. %|
|Hangzhou SteamTurbine Group|HangzhouChina|Manufacturing|RMB 800 milllion|63.64|63.64|

Hangzhou Municipal Government State-owned Asset Supervisory Committee is the ultimate
controller of theCompany.。
2. For details of subsidiaries please go to the statement of equities in other entities.
3. Other related parties
|||
|-|-|
|Name of the related parties|Relationship with the Company|
|Hangzhou Steam turbine Automobile sales service Co.,Ltd.|Affiliate of the Group|
|Hangzhou Hangfa Power Generating Equipment Co.,Ltd.|Affiliate of the Group|
|Hangzhou Nanfangtongda Gears Co., Ltd.|Affiliate of the Group|
|Hangzhou Nanhua Wooden Packaging Co., Ltd.|Affiliate of the Group|
|Hangzhou Steam Turbine Industrical Co., Ltd.|Affiliate of the Group|
|Hangzhou Steam Turbine Power Technologies Co., Ltd.|Affiliate of the Group|
|Hangzhou Steam Turbine Engineering Co., Ltd.|Affiliate of the Group|
|Hangzhou Steam Turbine Power Group Equipment Co.,Ltd.|Affiliate of the Group|
|Hangzhou Steam Turbine Electronic Valve Co., Ltd.|Affiliate of the Group|
|Hangzhou Steam Turbine Compressor Co., Ltd.|Affiliate of the Group|
|HSTG(Hangzhou )Union Research Co., Ltd|Affiliate of the Group|
|Hangzhou Wandong Electric Co., Ltd|Affiliate of the Group|
|Greenesol Co.(India)|Affiliates of the auxiliary Co|
|Zhejiang Juqing Investment Co., Ltd.|Affiliate of the Group|

2..Related transaction
(1) Sale of goods/rendering of labor services/labor service offering
Purchase of goods and service
|||||
|-|-|-|-|
|Ralated parties|Content|Reporting period|Prior period|
|Hangzhou Steam turbine Automobile salesservice Co., Ltd.|Transportation , repair ,etc.|51,271,023.35|58,984,034.85|
|Hangzhou Hangfa Power GeneratingEquipment Co., Ltd.|Generators|140,548,615.67|126,685,952.21|
|Hangzhou Nanhua Wooden Packaging Co.,Ltd.|Packaging|14,615,668.53|11,948,339.94|
|Hangzhou Nanfang Tongda Gears Co.,Ltd.|Gear boxes|6,758,649.55|5,421,380.35|
|Hangzhou Steam Turbine Industrial Co.,Ltd.|Raw materialsprocessing , cleaning fees,etc.|1,489,051.67|1,286,863.61|
|Hangzhou Steam Turbine Group|Equipment maintenance||331,131.48|
|HSTG Technology Association|Industrial cooperation||16,923.08|
|Greenesol Co. (India)|Generators||25,924,364.86|
|HSTG (Hangzhou) United Institutes Co.,Ltd.|Technical service|1,377,742.72|200,000.00|
|Hangzhou Steam Turbine Engineering Co.,Ltd.|Law material|6,539,280.97|1,538,461.54|
|Hangzhou Steam Turbine Electronic TubeCo., Ltd.|Law material||770,000.03|
|Hangzhou Wandong Electric Co., Ltd.|Industrial cooperation|30,974.36|13,743.59|
|Subtotal||222,631,006.82|233,121,195.54|

 (2)Related transactions regarding sales of goods or providing of services
|||||
|-|-|-|-|
|Related parties|Subjects of the relatedtransactions|Current term|Same period of last term|
|Hangzhou Steam Turbine EngineeringCo., Ltd.|Steam turbine|41,776,752.14|188,034,438.04|
|Hangzhou Hangfa Power GeneratingEquipment Co., Ltd.|Cast parts, industrialco-operation|11,774,255.82|11,111,122.55|
|Hangzhou Steam Turbine Group|Industrial cooperation|94,339.62|94,339.62|
|Hangzhou Steam Turbine AutomobileSales Service Co., Ltd.|Small amount materials|841.62|408.87|
|Hangzhou Nanhua Wooden PackagingCo., Ltd.|Small amount materials||854.70|

|||||
|-|-|-|-|
|Greenesol Co.(India)|Steam turbine|2,472,014.43|1,885,925.23|
|Hangzhou Steam Turbine Compressor Co.,Ltd.|Compressor,Industrialcooperation|115,384.62|620,733.76|
|Subtotal||56,233,588.25|201,747,822.77|

（2）Information of related lease
The Company was lessor
|||||
|-|-|-|-|
|Name of lessee|Category of lease assets|The lease incomeconfirmed in this year|The lease incomeconfirmed in last year|
|HSTG|House and Building|3,394,797.92|3,241,447.16|
|HSTG|Engineering Equipment|1,760,683.76|1,760,683.76|
|HSTG|Land use right|3,194,406.32|3,545,791.00|
|Hangzhou Steam Turbine AutomobileSales Service Co., Ltd.|Site leasing|4,229,857.79|5,464,123.22|
|Subtotal||12,579,745.79|14,012,045.14|

（3）Related-party guarantee
The Company was guarantor
As stated in Note 5 (I) 24 of the financial statement, in accordance with the National Development Fund Investment Contract, jointly signed by the Company, NDF, Turbine Industry Company and Hangzhou Steam Turbine Group, the investment of the NDF on Turbine Industry Company, RMB 208,000,000.00, is repurchased by the Hangzhou Steam Turbine Group, and the NDF asks the Company and Hangzhou Steam Turbine Group to provide guarantee for the fulfillment of Hangzhou Steam Turbine Group of the transferee equity obligations. The Company and Steam Turbine Company pledge to the NDF with a total of 23 million shares of Hangzhou Bank Co., Ltd. with book value of RMB 481,850,000.00 and the land use right with book value of RMB 69,631,244.57.
3. Guarantees among the related parties
The Company as the provider
||||||
|-|-|-|-|-|
|The beneficiary|Amount guaranteed|GuaranteeStart date|GuaranteeExpired on|Completed ornot|
|Hangzhou Steam TurbineGroup|100,000,000.00|2017/12/18|2019/12/18|No|

4. Remunerations of key managements
||||
|-|-|-|
|Items|Current term|Same period of last|

||||
|-|-|-|
|||term|
|Remunerations of key managements|7,774,385.21|7,621,482.40|

 5. Other related transactions
(1) Service and power supply
HSTG supplies water and power to the Company and some of the subsidiaries amounted to RMB13,281,760.66 this period.
Hangzhou Steam Turbine Automobile Sales& Service Co., Ltd. provided transportation to theCompany’s employees and RMB2,288,645.00 was paid this period.
Hangzhou Steam Turbine Industry Co., Ltd. provided cleaning services to the Company and RMB1,239,620.99 was paid this period.
Hangzhou Steam Turbine Power Group Co., Ltd. provides property management services for its subsidiary which is Complete Technology Corporation, of which the fee of this period incurred in the property management is RMB43,050.22.
HSTC pay the wages on behalf of the company , this period occurred RMB 837,831.90; The company received the current HSTG issued a management innovation project award costs RMB 410,000.00 .
(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
Hangzhou Steam Turbine Automobile Sales& Service Co., Ltd. paid RMB6,456,212.32 of tarrif on behalf of Turbine Co. during the period.
3. Receivables and payables of related parties
（1）Receivables
|||||||
|-|-|-|-|-|-|
|Name|Related party|End of term||Beginning of term||
|||Book balance|Bad debtprovision|Book balance|Bad debtprovision|
|Accountreceivable||||||
||Hangzhou Steam TurbineEngineering Co., Ltd.|52,898,295.99|6,117,053.80|49,710,305.99|3,657,185.10|
||Hangzhou Hangfa PowerGenerating Equipment Co.,Ltd.|17,950,170.60|1,146,223.10|16,174,291.35|972,428.47|

|||||||
|-|-|-|-|-|-|
||Hangzhou Steam TurbinePower Group EngineeringCo., Ltd.|305,000.00|244,000.00|310,060.00|186,036.00|
||Hangzhou Steam TurbineCompressor Co., Ltd’|59,000.00|5,900.00|236,000.00|11,800.00|
||Hangzhou Steam TurbineGroup|158,500.00|158,500.00|258,500.00|163,500.00|
||Hangzhou Steam TurbineAutomobile Sales ServiceCo., Ltd.|544.67|27.23|16.48|0.82|
||Greenesol Co.(India)|15,642,523.36|12,514,018.69|14,642,682.67|8,785,609.60|
|Subtotal||87,014,034.62|20,185,722.82|81,331,856.49|13,776,559.99|
|Prepayment|Hangzhou Steam TurbineEngineering Co., Ltd.|||2,270,000.00||
||Hangzhou Hangfa PowerGenerating Equipment Co.,Ltd.|21,515,346.37||26,834,825.00||
|Subtotal||21,515,346.37||29,104,825.00||

（2）Payables
|||||
|-|-|-|-|
|Name|Related party|Amount at year|Amount at year beginning|
|Accountpayable|Hangzhou Hangfa PowerGenerating Equipment Co., Ltd.|115,744,578.95|100,434,643.05|
||Greenesol Co.(India)|3,595,145.76|8,495,882.02|
||Hangzhou Steam Turbine Group|3,395,546.79|5,251,995.90|
||Hangzhou Steam TurbineAutomobile Sales Service Co., Ltd|7,504,708.74|2,737,416.93|
||Hangzhou Nanhua WoodenPackaging Co., Ltd.|963,509.03|404,433.00|
||Hangzhou Steam TurbineEngineering Co., Ltd.|1,780,566.04|380,000.00|

|||||
|-|-|-|-|
||HSTG (Hangzhou) United InstitutesCo., Ltd.|597,075.00|153,000.00|
||Hangzhou Nanfang Tongda GearsCo., Ltd.|2,464,950.00|112,273.00|
||Hangzhou Steam Turbine IndustrialCo., Ltd.|212,294.57|8,440.00|
||Hangzhou Wandong Electric Co.,Ltd.|20,640.00||
|Subtotal||136,279,014.88|117,978,083.90|
|Advancesreceived|Hangzhou Steam TurbineEngineering Co., Ltd.|38,972,720.00|55,573,740.00|
||Hangzhou Steam TurbineCompressor Co., Ltd.|14,190,000.00|14,235,000.00|
|Subtotal||53,162,720.00|69,808,740.00|
|Other accountpayable|Hangzhou Steam Turbine Group|5,731,384.50|6,050,024.82|
||Hangzhou Steam TurbineAutomobile Sales Service Co., Ltd.|100,000.00||
|Subtotal||5,831,384.50|6,050,024.82|

 X. Commitment and Contingency Issues
(I) Material commitment issues
1. External investment contracts engaged but not exercised or not fully exercised and related
financial outflow
As stated in Note 5 (I) 24 of the financial statement, Hangzhou Turbine Group will transfer its holding equity of Hangzhou Turbine Heavy Industry Co., Ltd. by stages to China Development Funds since 2019. After transfer, Hangzhou Turbine Group will transfer the transferred equity of Hangzhou Turbine Heavy Industry Co., Ltd to our Company at the same price.
2. Outsourcing contracts engaged with large amounts and are under processing or preparation
Capital commitment related to construction of workshops or purchasing of equipment by the Company or subsidiaries is amounted to RMB181.893 million.
XI. Events after balance sheet datee
1.Major non adjusting events
According to relevant appointments of Transfer Agreement signed with Zhejiang Juqing
Investment Co., Ltd. by the Company on January 3, 2017, the Company will transfer all its
holding equity of Zhejiang Changti Equity Investment Partnership Enterprise(Limited Partnership) to Zhejiang Juqing Investment Co., Ltd. at 73,680,000 RMB. When completed, the Company will confirm to transfer the profit of investment at 25,121,648.20 RMB. Up to the date of issuing this financial report, the Company has received all the transfer amount of the equity.
2.Profit distribution after balance sheet date
|||
|-|-|
|Proposed profits or dividends|According to the 2016 Annual Profit Distribution Planadopted by the 7th session of the 7th meeting of theBoard of Directors of the Company on March 16, 2017,the statutory surplus reserve was RMB 0.00, and nocash distribution was made. No bonus shares were paidand no share capital was transferred. The above profitdistribution plan has yet to be approved by theshareholders' meeting.|

XII. Other Material Issues
Segment information
1. Recognition of segments and accounting policies
Business segments are determined according to the administration structure, management requirement, and internal reporting mechanism. Segments are parts of theCompany’s business satisfying all of the following conditions:
(1) Generate revenue and expenses in daily operations;
(2) Operational results can be assessed by the management to decide the resources to be allocated; (3) Financial position, business results, and cash flow of the part is accessible through analyzing.
2. Reasons of not being able to report about the segments
TheCompany’s business range is relatively narrow and mainly involved in producing and selling of steam turbines, gas turbines and auxiliary machinery and parts. It is regarded as an integral business by the management. Therefore segment report is not included in this report.
XIII. Notes to the Financial Statements of the Parent Co.
(I) Notes to items of parent company financial statements
1. Account receivable
（1）Detailed categories
|||||||
|-|-|-|-|-|-|
|Category|End of term|||||
||Book balance||Bad debt provision||Book value|
||Amount|Proportion %|Amount|Providingrate%||
|Receivablesprovided bad debtprovision in criditrisk groups|2,177,424,114.16|98.65|752,473,417.58|34.56|1,424,950,696.58|
|Account receivablewith minorindividual amount|29,819,607.69|1.35|29,819,607.69|100.00||

|||||||
|-|-|-|-|-|-|
|but bad debtprovision is provided||||||
|Total|2,207,243,721.85|100.00|782,293,025.27|35.44|1,424,950,696.58|

 (Continued)
|||||||
|-|-|-|-|-|-|
|Category|Beginning of term|||||
||Book balance||Bad debt provision||Book value|
||Amount|Proportion %|Amount|Providingrate%||
|Receivablesprovided bad debtprovision in criditrisk groups|2,236,823,799.21|98.68|599,432,126.23|26.80|1,637,391,672.98|
|Account receivablewith minorindividual amountbut bad debtprovision isprovided|29,819,607.69|1.32|29,819,607.69|100.00||
|Total|2,266,643,406.90|100．00|629,251,733.92|27.76|1,637,391,672.98|

 2) Account reveivable on which bad debt proisions are provided on age basis in the group
|||||
|-|-|-|-|
|Age|End of term|||
||Book balance|Bad debt provision|Providing rate%|
|Within 1 year|570,847,123.01|28,542,356.15|5.00|
|1-2 years|364,721,608.35|36,472,160.84|10.00|
|2-3 years|365,283,917.27|109,585,175.18|30.00|
|3-4 years|389,669,764.35|233,801,858.61|60.00|
|4-5 years|176,348,739.87|141,078,991.90|80.00|
|Over 5 years|202,992,874.90|202,992,874.90|100.00|
|Subtotal|2,069,864,027.75|752,473,417.58|36.35|

3) Receivable accounts combined within consolidating range for providing of bad debt provisions
|||||
|-|-|-|-|
|Name|End of term|||
||Book valance|Bad debt provision|Providing rate(%)|
|Combinations ofrelated transactions|107,560,086.41|||

|||
|-|-|
|in consolidationrange||
|Subtotal|107,560,086.41|

Remarks on deciding of combinations: Receivable accounts and other receivable accounts within the consolidation range are tested for impairment individually. No bad debt provision is provided in case there is no impairment occurred.
(2) Provision of allowance for doubtful debts within this year is RMB 159,377,571.21 and no recovery or reversal of provision during the year.
(3) Receivable accounts actually written off in the report period
1. The current accounts receivable write-offs was RMB 6,336,279.86.
2) The significant actual write-off accounts receivable:
|||||||
|-|-|-|-|-|-|
|Name|Nature ofaccountreceivable|Amount writtenoff|Reason forwritten-off|Verification procedures|Arising fromrelatedtransactions(Y/N)|
|ShenyangToupingMachanicalCo., Ltd.|Goods|5,400,055.35|Difficult torecover|The examined and adopted toGeneral manager of the officemeeting|No|
|Jiaxing Ninjia AisiThermoelectric Co., Ltd.|Goods|485,000.00|Difficult torecover|The examined and adopted toGeneral manager of the officemeeting|No|
|Shenyang PumpPetrochemical Co., ltd.|Goods|122,050.00|Difficult torecover|The examined and adopted toGeneral manager of the officemeeting|No|
|Other|Goods|329,174.51|Difficult torecover|The examined and adopted toGeneral manager of the officemeeting|No|
|Subtotal||6,336,279.86||||

（4）Receivables account of the top five parties
|||||
|-|-|-|-|
|Name|Amount|Proportion(%)|Bad debt provision|
|Client 1|692,410,789.92|31.37|252,816,458.39|
|Client 2|309,742,954.20|14.03|161,262,818.92|
|Client 3|47,288,000.00|2.14|2,364,400.00|
|Client 4|46,629,245.99|2.11|4,464,018.80|
|Client 5|48,750,684.51|2.21||
|Subtotal|1,144,821,674.62|51.86|420,907,696.11|

 2. Other account receivable
（1）Detailed categories
|||||||
|-|-|-|-|-|-|
|Category|End of term|||||
||Book balance||Bad debt provision||Book value|
||Amount|Proportion %|Amount|Providingrate%||
|Other receivables providedbad debt provision in creditrisk groups|74,189,903.93|100.00|6,185,197.69|8.34|68,004,706.24|
|Total|74,189,903.93|100.00|6,185,197.69|8.34|68,004,706.24|

 (Continued)
|||||||
|-|-|-|-|-|-|
|Category|Beginning of term|||||
||Book balance||Bad debt provision||Book value|
||Amount|Proportion %|Amount|Providingrate%||
|Other receivables providedbad debt provision in creditrisk groups|14,390,560.25|79.50|2,145,188.28|14.91|12,245,371.97|
|Other account receivable withminor individual amount butbad debt provision is provided|3,710,320.94|20.50|3,710,320.94|100.00||
|Total|18,100,881.19|100.00|5,855,509.22|32.35|12,245,371.97|

 2) Other receivable accounts in the group on which bad debt provisions are provided on age basis
|||||
|-|-|-|-|
|Age|End of term|||
||Book balance|Bad debt provision|Proportion%|
|Within 1 year|3,212,874.29|160,643.72|5.00|

|||||
|-|-|-|-|
|1-2 years|2,081,346.61|208,134.66|10.00|
|2-3 years|2,463,065.90|738,919.77|30.00|
|3-4 years|681,692.00|409,015.20|60.00|
|4-5 years|500,000.00|400,000.00|80.00|
|Over 5 years|4,268,484.34|4,268,484.34|100.00|
|Subtotal|13,207,463.14|6,185,197.69|46.83|

3) Receivable accounts combined within consolidating range for providing of bad debt provisions
|||||
|-|-|-|-|
|Name|End of term|||
||Book balance|Bad debt provision|Proportion%|
|Combinations ofrelated transactionsin consolidationrange|60,982,440.79|||
|Subtotal|60,982,440.79|||

Remarks on deciding of combinations: Receivable accounts and other receivable accounts within the consolidation range are tested for impairment individually.
No bad debt provision is provided in case there is no impairment occurred. Other receivables with provision for bad and doubtful debts based on the balance percentage method in the portfolio (2) Provision of allowance for doubtful debts within this year is RMB 329,688.47 and no recovery or reversal of provision during the year.
(3) Receivable accounts actually written off in the report period
(4) Combination of other receivable accounts
||||
|-|-|-|
|Property|End of term|Beginning of term|
|Related party funds|60,000,000.00||
|Deposit|13,039,563.14|15,557,676.02|
|Petty cash|167,900.00|66,000.00|
|Provisional payment receivable|982,440.79|2,461,541.57|
|Other||15,663.60|
|Total|74,189,903.93|18,100,881.19|

(5) Top 5 of the closing balance of Other accounts receivable
|||||||
|-|-|-|-|-|-|
|Name of the company|Account property|Book balance|Age|Percentage intotal otherreceivable %|Bad debtprovision|
|Hangzhou GuonengSteam TurbineEngineering Co., Ltd.|Related party funds|50,000,000.00|Within 1 year|67.39||
|Hangzhou SteamTurbine Casting Co.,Ltd.|Related party funds|10,564,062.02|Within 1 year|14.24||
|Shanghai CustomsWaigaoqiao Office|Deposit in custom|3,710,320.94|Over 5 years|5.00|3,710,320.94|
|Guoxin BiddingGroup Co., Ltd.|Deposit in custom|1,485,788.00|[Notes]|2.00|193,128.80|
|Guodian Trust BiddingCo., Ltd.|Deposit in custom|1,294,500.00|[Notes]|1.75|439,725.00|
|Subtotal||67,054,670.96||90.38|4,343,174.74|

[Notes]：Detail
||||||
|-|-|-|-|-|
|Name|Within 1 year|1-2 years|4-5 years|Over 5 years|
|Guoxin Bidding Group Co., Ltd.||1,436,288.00||49,500.00|
|Guodian Trust Bidding Co., Ltd.|794,500.00||500,000.00||

3. Long-term share equity investment
(1) Detail
||||||||
|-|-|-|-|-|-|-|
|Items|End of term|||Beginning of term|||
||Book balance|Impairmentprovision|Book value|Book balance|Impairmentprovision|Book value|
|Investment onsubsidiaries|502,919,378.03||502,919,378.03|502,919,378.03||502,919,378.03|
|Total|502,919,378.03||502,919,378.03|502,919,378.03||502,919,378.03|

 (2) Investment on subsidiaries
||||||||
|-|-|-|-|-|-|-|
|Companyinvested in|Beginning ofterm|Increasedthis period|Currenttermdecrease|End of term|Providedcurrent termImpairmentprovision|ImpairmentprovisionEnd of term|

||||
|-|-|-|
|ToupingCompany|20,000,000.00|20,000,000.00|
|HangzhouHeavyIndustry|360,000,000.00|360,000,000.00|
|HangzhouAuxiliaryMachine Co.|46,286,513.41|46,286,513.41|
|ZhejiangTurbinePackaged Co.|29,800,389.56|29,800,389.56|
|ZhongnengCo.|27,644,475.06|27,644,475.06|
|Machinery Co.|7,968,000.00|7,968,000.00|
|Casting Co.|11,220,000.00|11,220,000.00|
|Subtotal|502,919,378.03|502,919,378.03|

(II) Notes to the Income Statements of the Parent Co.
1. Business income and Business cost
||||||
|-|-|-|-|-|
|Items|Amount of current period||Amount of previous period||
||Income|Cost|Income|Cost|
|Main business|2,128,910,906.33|1,546,003,243.12|1,530,893,344.10|1,156,064,562.33|
|Other business|14,563,244.25|10,829,495.21|24,603,027.43|22,488,463.30|
|Total|2,143,474,150.58|1,556,832,738.33|1,555,496,371.53|1,178,553,025.63|

 2. Administrative expense
||||
|-|-|-|
|Items|Occurred current term|Occurred in previousterm|
|Employees’ remunerations|194,189,438.91|205,449,114.96|
|R&D expenses|121,876,226.43|110,790,297.26|

||||
|-|-|-|
|Asset depreciation and amortizing|13,401,410.62|11,717,101.72|
|Business reception expenses|9,158,551.99|9,245,985.13|
|House rental, property management, water and power|12,469,375.11|8,274,504.84|
|Material, low-value-consumable|4,202,771.54|3,985,084.75|
|Traveling fees|3,361,181.43|3,195,892.22|
|Maintaining|2,335,774.67|1,453,825.77|
|Taxes|1,221,352.11|3,579,237.74|
|Office expenses|242,336.21|195,374.66|
|Other|24,812,627.67|23,310,774.80|
|Total|387,271,046.69|381,197,193.85|

 3..Investment income
||||
|-|-|-|
|Items|Amount of currentperiod|Amount of previousperiod|
|Long-term equity investment income by Cost method|83,728,812.50|118,708,415.00|
|Gains from financing products|16,130,017.82|3,153,852.99|
|Investment income received from holding of available-for–sale financial assets|2,587,659.70|27,742,368.00|
|Total|102,446,490.02|149,604,635.99|

 XIV. Other Supplementary Information
(I) Non-recurring gain/loss
|||
|-|-|
|Items|Amount|
|Gain/loss from disposal of non-working capital, including the neutralizedpart of the impairment provision provided already|326,453.30|
|Refunding and exemption of taxes in excess of authority or withoutofficial approval documents||
|Government subsidies accounted into current income account (except forthose government subsidies closely related to the Company’s business,|16,968,792.22|

|||
|-|-|
|and received at national statutory standard and amount)||
|Capital adoption fee collected from non-financial organizations andaccounted into current gain/loss||
|Income from the exceeding part between investment cost of theCompany paid for obtaining subsidiaries , associates and joint-venturesand recognizable net assets fair value attributable to the Company whenacquiring the investment||
|Gains and losses from exchange of non-monetary assets||
|Gains and losses from assets under trusted investment or management||
|Various provision for impairment of assets withdrew duetoact of God,such as nutural disaster||
|Gains and losses from debt restructuring||
|Enterprise reorganization expense(eg.expenditure of staffreplacementand integration change)||
|Gains and losses of the part arising from transaction in which price is notfair and exceeding fair value||
|Current net gains and losses occurred from period-begin tocombinationday by subsidiaries resulting from business combination under commoncontrol||
|Gains and losses arising from contingent proceedings irrelevant tonormal operation of the Company||
|Gains and losses from change of fair values of held-for-transactionfinancial assets and financial liabilities except for the effective hedgebusiness related to normal business of the Company, and investmentincome from disposal of transactional financial assets and liabilities andfinancial assets available for sale|28,548,677.87|
|Switch-back of provision of impairment of account receivable which aretreated with separate depreciation test||
|Gains and losses obtained from external trusted loans||
|Gains and losses arising from change of fair value of investment realestate whose follow-up measurement are conducted according to fairvalue pattern.||
|Affect on current gains and losses after an one-time adjustment||

|||
|-|-|
|according to requirements of laws and regulations regarding to taxationand accounting||
|Trust fee obtained from trust operation||
|Other non-operating income and expenditure except for theaforementioned items|7,345,994.24|
|Other non-business income and expenditures other than the above||
|Subtotal|53,189,917.63|
|Less: Influenced amount of income tax|8,701,193.64|
|Amount of influence of minority interests(after tax)|4,166,589.55|
|Net profit attributable to owners of the parent company|40,322,134.44|

(II) Net income on asset ratio and earning per share
1. Details
|||||
|-|-|-|-|
|Profit of the report period|Weighted average netincome on asset %|Earnings per share (yuan/share)||
|||Basic earnings pershare|Diluted earnings pershare|
|Net profit attributable to commonshareholders of the Company|0.60|0.04|0.04|
|Net profit attributable to thecommon owners of the PLC afterdeducting of non-recurringgains/losses|-0.16|-0.01|-0.01|

2. Calculation process of weighted average net income on asset
||||
|-|-|-|
|Items|No.|Current term|
|Net profit attributable to common shareholders of theCompany|A|31,955,445.73|
|Non-recurring gain/loss|B|40,322,134.44|
|Net profit attributable to common shareholders of theCompany after deducting of non-recurring gain/loss|C=A-B|-8,366,688.71|
|Net asset attributable to the common shareholders of theCompany at beginning of term|D|4,219,337,312.80|
|Net asset increased by issuing of new shares or converting ofdebt to shares, and attributable to the common shareholders ofthe Company|E||

|||||
|-|-|-|-|
|Total number of months from the next month of when the assetwas newly added to the end of report term||F||
|Net asset decreased by repurchasing or cash dividend andattributable to common shareholders of the Company||G||
|Total number of months from the next month of when the assetis decreased to the end of report term||H||
|Others|Change of other misc. gains|I1|2,138,272,051.84|
||Accumulative number of months from the nextmonth when the change of net asset to the endof report term|J1|6|
||Change of special reserves|I2|-4,218,567.14|
||Accumulative number of months from the nextmonth when the change of net asset to the endof report term|J2|6|
|Number of months in the report term||K|12|
|Weighted average net asset||L= D+A/2+E×F/K-G×H/K±I×J/K|5,302,341,778.02|
|Net income on asset, weighted||M=A/L|0.60|
|Weighted average net income on asset after deducting ofnon-recurring gain/loss||N=C/L|-0.16|

3. Calculation formula of basic earnings per share and diluted earnings per share
(1) Calculation process of basic earning per share
||||
|-|-|-|
|Items|No.|Currentterm|
|Net profit attributable to common shareholders of the Company|A|31,955,445.73|
|Non-recurring gain/loss|B|40,322,134.44|
|Net profit attributable to common shareholders of the Company after deducting of non-recurringgain/loss|C=A-B|-8,366,688.71|
|Total of shares at beginning of shares|D|754,010,400.00|
|Shares increased due to capitalizing of reserves or share dividend|E||
|Increasing of shares by issuing of new shares or converting of debt to shares|F||
|Total number of months from the next month of when the shares are increased to the end of report term|G||
|Decrease of shares caused by repurchasing|H||

||||
|-|-|-|
|Total number of months from the next month of when the shares are decreased to the end of report term|I||
|Amount of shares reduced|J||
|Number of months in the report term|K|12|
|Weighted average of common shares issued to the outside|L=D+E+F×G/K-H×I/K-J|754,010,400.00|
|Basic earnings per share|M=A/L|0.04|
|Basic earning per share after deducting of non-recurring gain/loss|N=C/L|-0.01|

 (2) Calculation process of diluted earnings per share is the same as that of the earnings per share
Hangzhou Steam Turbine Co., Ltd.
March 16, 2017