Stock Code: 200771 Stock ID: Hangqilun B Announcement No. 2018-20
Hangzhou Steam Turbine Co., Ltd.
Announcement on the provision for impairment of
assets for year 2017
The members of the Board and the Company acknowledge being responsible for the truthfulness,
accuracy, and completeness of the announcement. Not any false record, misleading statement or
significant omission carried in this announcement.
The
20th
term of Board held its
7th
Meeting on March 26, 2018, The meeting examined the Proposal of the provision for impairment of assets, This proposal was adopted with 10 votes in favor, 0 objection and 0 waive. The amount of the provision for impairment of assets of year2017 of the company is RMB134,633,599.80, the detail of which is announced as follows:
I. The overview of the provision for impairment of assets
For fairly reflecting thecompany’s assets value, according to the Accounting Standards for Enterprises and Regulations on Provision of Asserts Impairment and Write-off of Assets for Enterprises (Revised in2016）, and based on the principle of prudence, the company has checked each asset of the consolidated financial statements by the end of the reporting period and has assessed that there would be some impairment of assets, then determined the need for the provision for impairment of assets. The assets of the provision for impairment of asset mainly included accounts receivable, other receivables and inventory. The total amount of the provision of for impairment of assets is RMB 134,633,599.80, which was detailed as follows:
The information table of thecompany’s provision for impairment of assets for year 2017 In RMB
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
||||||Amount of each corresponding item|||||||
||Items on impairment of assets||Beginningbalance|Provision in thecurrent period|||Lessen in the current period|||||
||||||||||||Ending balance|
|||||||Recovery||Write off|Other|||
|1||Bad debt provision foraccounts receivable|971,690,204.87|68,484,778.81||||10,004,695.21||1,030,170,288.47||
|2||Bad debt provision forother receivables|11,127,630.36|136,024.61||||3,000.00|86.68|11,260,568.29||
|3||Provision for inventoryprice falling|65,951,722.45|66,012,796.38||||18,490,865.72||113,473,653.11||

Impairment loss of fixed
4
assets 6,651,971.67 6,651,971.67
|||||||
|-|-|-|-|-|-|
|Total|1,055,421,529.35|134,633,599.80|28,498,560.93|86.68|1,161,556,481.54|

 Note: The write-off of bad debts of receivables is write-off of bad debts; the write-off of provision for inventory devaluation is the inventory depreciation provision for inventory use or sales of corresponding write-offs; other reductions are no longer consolidated at the end of the period Zhejiang Zhongrun Gas Turbine Technology Co., Ltd. The transfer of bad debts to prepare RMB 86.68 .
II. The confirmation standard and method of provision on the provision for impairment of assets
The main assets of the provision for the impairment of assets included accounts receivable, other receivables, inventory and fixed assets.
I. The amount of the provision for bad debts of accounts receivable of year 2017 is RMB 68,620,803.42. The confirmation standard and method of provision on the provision for bad debts of accounts receivable are:
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 Basis of bad debt provision provided at the difference of expected cash flow lower than the book value.
2.Recognition and providing basis of bad debt reserves for group of receivable accounts with
similar characteristics of credit risks
|||
|-|-|
|Name of the Group|Basis of bad debt provision|
|Group by age analysis|Age analysis method|
|The association unit within the scope of the merger is a credit ris|Impairment test performed individually, bad debt provision will|
|k feature that is matched against the income from the related tran|be provided at the difference of expected cash flow lower than|
|sactions.|the book value.|

Bad debt provisions are provided on age analyze basis in the group
||||
|-|-|-|
||Rate of provision on receivable|Rate of provision on other receivable|
|Age|||
||account|account|
|Within 1 year)included)|5.00%|5.00%|
|1－2 years|10.00%|10.00%|

||||
|-|-|-|
|2－3 years|30.00%|30.00%|
|3－4 years|60.00%|60.00%|
|4－5 years|80.00%|80.00%|
|Over 5 years|100.00%|100.00%|

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

||
|-|
|Ⅱ. The amount of the provision for inventory falling price of year 2017 is RMB|
|66,012,796.38, and the confirmation standard and method of provision on the inventory|
|falling price are:|

On the balance sheet date, the inventory was the lower result between the results calculated by cost and net realized value, and according to single inventory/inventory category, the balance of the costs that was higher than the net realized value is the amount of the provision for inventory falling price. As to the inventory directly used for sales, under the normal production and operation process, the net realized value of the inventory shall be determined by the amount that calculated by the estimated sales price of the inventory minus the estimated sales expenses and relevant taxes and fees; as to the inventory needed processing, under the normal production and operation process, the net realized value of the inventory shall be determined by the amount that calculated by the estimated sales price of the final products minus the related processing costs and the estimated sales expenses and relevant taxes and fees; on the balance sheet date, under one item inventory that part have contacted price and the other part have no contracted price, the net realized value of the inventory shall be determined respectively and be compared with the corresponding costs, and the amount of provision for inventory price falling and the amount of recovery shall be respectively determined.
III. The influence of the provision for impairment of assets on thecompany’s financial status Thecompany’s provision for the impairment of assets leads to the decrease of RMB134,633,599.80 on the total profits in the company's consolidated financial statements of year 2017.
IV.The review process of the provision for impairment of assets
The item of the provision for impairment of assets has been examined and adopted in thecompany’s 7th board meeting of the 20th session board of directors. Due to the amount of the
provision for impairment of assets exceed the50% audited net profits of the company of year
exchange, the item of provision shall be examined and adopted in the general shareholder meeting. V.The reasonableness explanation of the provision for impairment of assets by the board of
directors
The board of directors reckoned that: the provision for impairment of assets was in accordance with the Accounting Standards for Enterprises and thecompany’s management institution on provision for impairment of assets, and that was in line with the principle of prudence and was reasonable, objectively and fairly reflected thecompany’s financial status, so the board agreed the provision for impairment of assets. The company shall performance the review process by strictly conforming to the provisions stipulated by the Regulations on Provision of Asserts Impairment and Write-off of Assets for Enterprises .
VI.The independent opinions on the provision for impairment of assets from independent directors
The company has carried out the provision for impairment of assets of year 2017 by conforming to the Accounting Standards for Enterprises and relevant regulations, which was in line with thecompany’s actual situation and the company law, the articles of association and relevant regulation and laws, with standardized procedure for reviewing, and there was no situation that would jeopardize the interests of the company and the minority shareholders. The provision for impairment of assets was agreed.
VII.The examination opinions on thecompany’s provision for impairment of assets by the
board of supervisors
The board of supervisors reckoned that: the company's provision for impairment of assets was in accordance with the Accounting Standards for Enterprises and relevant regulations, which fairly reflected thecompany’s assets value and operating results. The decision making procedure of the proposal on provision for impairment of assets was in line with the law, and the provision for impairment of assets was agreed.
VIII. Documents for reference
1. Resolutions of the
20th
meeting of the
7th
Term of Board;
2. Resolutions of the 9th Meeting of the 7th Supervisory Committee
3. Independent Opinions of Independent Directors
The Board of Directors of Hangzhou Steam Turbine Co., Ltd. March 28, 2018