Stock Code: 200771 Stock ID: Hangqilun B Announcement No. 2018-39
Hangzhou Steam Turbine Co., Ltd.
Announcement on Confirming Occurrence of Daily Related
Transactions in January to April of 2018
The members of the Board and the Company acknowledge being responsible for the truthfulness, accuracy, and completeness of the announcement. Not any false record, misleading statement or significant omission carried in this announcement.
I. Profiles of the routine related transactions
(I) Introduction of the related transaction
Routine related transactions of the Company are mainly purchasing of materials and fuel from related parties; sales of products to related parties; and receiving or providing of services to the related parties. For profiles of the related parties please go to part II of this report.
(II) Confirmation of the deliberation of the meeting on the occurrence of daily related transactions from January to April of 2018
The 22nd meeting of the 7th term of Board was held on May 14, 2018. The proposal about routine related transactions occurred in 2016 and project for year 2017 was examined at the meeting. Director Zheng Bin, Yan Jianhua, Yang Yongming and Ye Zhong waived from the voting. As the resolution, the proposal was passed with all 6 votes in favor, 0 objection and 0 waive.
(III) Actual occurrence of daily related transactions from January to April of 2018
The actual amount of daily related transactions from January to April of 2018 was RMB 105.3332 million (accounting for1.69% of the company's 2017 audited net assets).
(IV) Category and amount of daily related party transactions in January to April of 2018
In RMB
||||||
|-|-|-|-|-|
|Type of relatedtransaction|Related parties|Content|Price principia|2018 January - Aprilactual amount|
|To the relatedpersonPurchasing ofmaterial fromrelated party|Hangzhou Nanhua Wooden Packaging Co., Ltd.|Packing box|Fair|3,898,195.33|
||Hangzhou Hangfa Power Generating EquipmentCo., Ltd.|Generator|Fair|54,111,111.17|
||Hangzhou Nanfang Tongda Gears Co., Ltd.|Gear case|Fair|1,863,034.19|
||Hangzhou Steam Turbine Engineering Co., Ltd.|Turbine parts|Fair|427,350.43|

||||||
|-|-|-|-|-|
||Hangzhou Steam Turbine Industrial Co., Ltd.（Material）|Raw material, industrialcooperation|Fair|237,613.14|
||China mechanical and Electrical Institute -HSTG(Hangzhou) United Institutes Co., Ltd.|Raw material|Fair|310,576.92|
||Subtotal|||60,847,881.18|
|Purchasing offuel and powerfrom the relatedparties|Hangzhou Steam Turbine Power Group Co., Ltd.|Water and electricity|Fair|4,899,429.48|
||Subtotal|||4,899,429.48|
|Sales of products ormerchandises of theCompany to relatedparties|Hangzhou Steam Turbine Engineering Co., Ltd.|Turbine, compressor|Fair|17,739,316.24|
||Hangzhou Steam Turbine Automobile Sales ServiceCo., Ltd.|Odd material|Fair|152.23|
||Hangzhou Hangfa Power Generating EquipmentCo., Ltd.|Forging|Fair|5,261,552.91|
||India greenesol Company|Turbine parts|Fair|178,770.17|
||Subtotal|||23,179,791.55|
|Labour & servicesaccepted from therelated parties|Hangzhou Steam Turbine Industrial Co., Ltd.|Cleaning fee|Fair|361,635.25|
||Hangzhou Steam Turbine Power Group Co., Ltd.|Rental fees, trademarkfees, etc.|Fair|683,313.05|
||Hangzhou Steam Turbine Automobile Sales ServiceCo., Ltd.|Freight, repair, rental|Fair|15,021,542.88|
||Hangzhou Steam Turbine Compressor Co., Ltd.|Technical service|Fair|339,622.64|
||Subtotal|||16,406,113.81|

 II. Introduction of related parties and relationship
(I) Hangzhou Steam Turbine Power Group Co., Ltd.
1. Profiles
(1) Date of incorporation: December 14, 1992
(2) Registered address: No. 357 Shiqiao Road Hangzhou City
(3) Office address: Block A, 68 Qingchun Road East, Hangzhou
(4) Enterprise property: sole state-owned corporation
(5) Legal representative: Mr. Zheng Bin
(6) Registered capital: RMB800 million
(7) Business scope: Manufacturing and processing: textile machinery, paper-making machinery, pump, casting products, electrical tools, gear box, thermal transmitter, digital controlling device, and spare parts of the above (limited to the subsidiaries); Contracting of domestic and overseas machinery engineering projects, export of above equipments and materials, provide labor services for above overseas projects. Thermal power plant project and equipment engineering; wholesale and retail: products and spare parts manufactured by members of the group, and technical research, consulting, and service of above products; Provide materials, equipments, and spare parts to
members of the Group, water and power supply (other than installation and maintaining of power
supply equipment); Including the business scope of subsidiaries.
(8) Actual holder: Hangzhou State-owned Asset Administration Committee
2. Recent financial information (on consolidated range)
In RMB
||||||
|-|-|-|-|-|
|Periods|Turnover|Net profit|Gross Assets|Net asset|
|Year 2017|102,930,921,802.47|641,624,652.28|38,769,187,457.55|9,941,197,000.88|
|January-March 2018|21,168,700,669.63|110,033,282.97|39,912,449,512.85|9,745,089,186.11|

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

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

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

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

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

||||||
|-|-|-|-|-|
|January-March 2018|15,137,347.53|1,385,106.62|48,002,651.54|30,307,529.66|

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

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

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

 3. Relationship with the Company
Hangzhou steam turbine group holds63.64% of the shares of the company , and is the holding shareholder of the Company. Hangzhou steam turbine group holds70% stake in China mechanical and Electrical Institute -HSTG (Hangzhou) United Institutes Co., Ltd ,For Compressor Company is under the common control with the Company, it is regarded as related legal person according to Article 10.1.3 (II)– “Entity or other organizations directly or indirectly controlled by aforesaid legal entity other than the PLC and its holding subsidiaries;” of the Share Listing Rules of Shenzhen Stock Exchange. Therefore it is recognized as the related entity of the Company. This is a related transaction.
4. Description of related transactions and their necessity
Related transactions with China mechanical and Electrical Institute -HSTG (Hangzhou) United Institutes Co., Ltd . were mainly purchasing of raw material.
（X）(India) greenesol power equipment private Co., Ltd.
1.Profiles：
（1）Date ofincorporation：October 19,2005
（2）Registeredaddress：Bangalore, India
（3）Registeredcapital：USD 2.20 million
（4）Main businessscope：Turbine engaged in power generation equipment supply, installation
and commissioning.
（5）The mainshareholder： Hangzhou Steam Turbine Co.,Ltd:37%; the foreign shareholders:63%.
2. Recent financial information
In USD
||||||
|-|-|-|-|-|
|Periods|Turnover|Net profit|Gross Assets|Net asset|
|March 2016-March 2017|6,287,206.34|214,569.55|34,779,319.69|8,375,363.96|
|April –September 2017|2,576,372.37|-705,048.96|20,961,411.46|7,832,405.76|

 3. Relationship with the Company
As the senior management of the company acts as director of that company and conforms to
the 10.1.5 clause of Listing Rules of Shenzhen Stock Exchange-"a natural person associated with
a listed company directly or indirectly controls, or is a director or senior manager, a legal person
or other organization other than a listed company and its controlling subsidiary", is an associated
legal person of a listed company.
4. Description of related transactions and their necessity
TheCompany’s related party transaction with (India) greenesol power equipment private Co., Ltd. is mainly related to the purchase of raw materials and the sales of products or commodity.
IV.Analysis of the contract-performance ability of related parties
The above related parties have formed a stable and efficient business operation mode in the long-term business cooperation relationship with the company since the company was listed, having strong contract-performance ability. The board of directors reckoned that the above all related parties can fulfill the contract and carry out the related business with the company.
V.The purpose of related transactions and the impact on the listed company
1. The impact of related party transactions on the company
Due to the need to produce and sell the company's products, the company sells some of its products to the related party and entrusts the related party to sell the company's products, accepting the related party service of transportation and packing related to the company's products in the course of sales, and the related party transaction optimizes the allocation of production resources, effectively improves the efficiency of the company's production and operation and is conducive to the main business of the company. The price of related party transactions between the company and the related party is fair and, the transaction does not harm the interests of the company.
2. The procedural legality of the related party transaction
The company has a pricing mechanism of related party transaction for daily related party
transactions. All the related transactions are examined by the board of directors of the company ,In the course of deliberation, the associated directors and associated shareholders withdraw from the voting, so the procedure is legal.
3.Pricing basis of related party transaction
Where the company and its holding subsidiaries carry out the above related party transaction, the price of related transaction is determined according to the market price and follows the principles of fairness, voluntariness and consensus in the pricing process.
VI.The Consent of independent directors in advance and their opinions
The Consent of independent directors inadvance：In the actual background of the company's daily related transactions from January to April in 2018, Strictly performing the examination and approval procedures belongs to the normal business needs of the company and will not affect the independence of the company. The transaction price follows the fair and reasonable pricing principle. The above-mentioned daily related transactions are in the interest of the company and all shareholders. There is no harm to the interests of the company's small and medium shareholders. We recognize the above related contents of the daily connected transactions and agree to submit the proposal to the company's board of directors for review.
The Independent Directors' Opinion: the actual amount of daily related transactions from January
to April of the company and its subsidiaries in 2018 accounted for1.69% of the company's audited net assets in 2017. The matter has fulfilled the relevant review procedures and disclosure
obligations.The related transactions of the company in relation to daily operations are in line with
the company's actual production and operation conditions and future development needs. The
transaction is priced according to market principles, fair and reasonable, and does not harm the
interests of the company and small and medium shareholders, and is conducive to the company's continued steady development.
This announcement is hereby made.
The Board of Directors of Hangzhou Steam Turbine Co., Ltd. May 15, 2018