Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 Stock Code: 200771 Stock ID: Hangqilun B Announcement No. 2018-13
Hangzhou Steam Turbine Co., Ltd.
Annual Report 2017
March 2018
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 I.Important Remarks, Table of Contents, and Definitions
The Board of Directors, The Supervisory Committee, the supervisors and the directors of the Company guarantee that there are no significant omissions, fictitious or misleading statements carried in the Report and we will accept individual and joint responsibilities for the truthfulness, accuracy and completeness of the Report.
Chairman Mr. Zheng Bin, Chief Financial Officer Zhao Jiamao, and the Chief of Accounting Department Mr. Zhao Jiamao hereby declare: the Financial Statement in the report is guaranteed to be truthful and complete. All of the directors attended the board meeting on which this report was examined.
This Report contains prospective descriptions, whichdoesn’t constitute substantial commitment to investors. Investors are requested to be aware of the risks attached to their investment decisions.
The profit distribution proposal reviewed and approved by the boarding meeting was summarized as follows: 754,010,400 for the base, the Company would distribute cash dividend to all the shareholders at the rate of CNY 0.5 for every 10 shares (with tax inclusive) , 0 bonusshare（s includingtax）and no reserve would be converted into share capital.
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 Table of Contents
I.Important Notice, Table of contents and Definitions
II. Basic Information of the Company and Financial index
III. Outline of Company Business
IV.Management’s Discussion and Analysis
V. Important Events
VI. Change of share capital and shareholding of Principal Shareholders
VII. Situation of the Preferred Shares
VIII. Information about Directors, Supervisors and Senior Executives
IX. Administrative structure
X. Corporate Bond
XI. Financial Report
XII. Documents available for inspection
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 Definition
||||
|-|-|-|
||Refers||
|Terms to be defined||Definition|
||to||
||Define||
|Company, the Company||Hangzhou Steam Turbine Co., Ltd.|
||d as||
||Define||
|The Group, Hangqi Group||Hangzhou Steam Turbine Power Group Co., Ltd.|
||d as||
|the report period, the current period, the current|Define||
|||January 1 – December 31 2017|
|year|d as||
||Refers||
|||Hangzhou Zhongneng Steam Turbine Power Co., Ltd. – the holding|
|Zhongneng Co.|||
||to|subsidiary of the Company|
||Define|Hangzhou Steam Turbine Casting Co., Ltd. – the holding subsidiary of the|
|Casting Co.|||
||d as|Company|
||Define|Zhejiang Steam Turbine Packaged Technology Development Co., Ltd. –|
|Packaged Tech. Co.|||
||d as|the holding subsidiary of the Company|
||Define|Hangzhou Steam Turbine Machinery Equipment Co., Ltd. - the holding|
|Machinery Co.|||
||d as|subsidiary of the Company|
||Define|Hangzhou Steam Turbine Auxiliary Machinery Co., Ltd. - the holding|
|Auxiliary Machine Co.|||
||d as|subsidiary of the Company|
||Refers||
|||Zhejiang Turbine Import & Export Co., Ltd. – the holding subsidiary of|
|Turbine Co.|||
||to|the Company|
||Define|Hangzhou Steam Turbine Heavy Industry Co., Ltd. - the holding|
|Heavy Industry Co.|||
||d as|subsidiary of the Company|
||Define||
|The Board of Directors||The Board of Directors of Hangzhou Steam Turbine Co., Ltd.|
||d as||
||Define||
|The Supervisory Committee||The Supervisory Committee of Hangzhou Steam Turbine Co., Ltd.|
||d as||
||Define||
|The Shareholders’ Meeting||The Board of Directors of Hangzhou Steam Turbine Co., Ltd.|
||d as||
||Refers||
|RMB, RMB0’000, RMB000’000’000||RMB Yuan, RMB10 thousand Yuan, RMB100 million Yuan|
||to||
|MW|Define||
|||Unit of power: 1000KW|
||d as||
|PLM|Define||
|||Product life circle management information system|
||d as||
|BFPT|Define||
|||Boiler Feeding Pump Turbine|
||d as||
|MES|Define||
|||Manufacturing execution system|
||d as||

Prompt of Risks
Risks in theCompany’s business operation are described in theDirectors’ Report in Chapter IV.
TheCompany’s official disclosure presses: Hong Kong Commercial Daily (English), Shanghai Securities Daily (Chinese), Securities Times (Chinese), and http://www.cninfo.com.cn (Chinese& English). Please refer to these medias for the official disclosure of the Company and be aware of investment risks.
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 II. Basic Information of the Company and Financial index
I. Basic Information
|||||
|-|-|-|-|
|Stock ID|Hangqilun B|Stock Code|200771|
|Stock Exchange Listed in|Shenzhen Stock Exchange|||
|Company Name in Chinese|杭州汽轮机股份有限公司|||
|Short form of Company Name in Chinese|杭汽轮|||
|Name in English|HANGZHOU STEAM TURBINE CO.,LTD|||
|Abbreviation in English|HTC|||
|Legal representative:|Zheng Bin|||
|Reg. Add.|No. 357 Shiqiao Rd. Hangzhou|||
|Post Code|310022|||
|Office address|No. 357 Shiqiao Rd. Hangzhou|||
|Post Code:|310022|||
|Web Address|www.htc.cn|||
|Email.|wg@htc.net.cn|||

II. Contacts
||||
|-|-|-|
||Secretary of the Board|Representative of Stock Affairs|
|Name|Wang Gang|Wang Caihua|
|Address|No. 357 Shiqiao Rd. Hangzhou|No. 357 Shiqiao Rd. Hangzhou|
|Tel.|0571-85780198|0571-85780438|
|Fax.|0571-85780433|0571-85780433|
|Email.|wg@htc.cn|wangch@htc.cn|

III. Place for information disclosure
|||
|-|-|
|Press media for information disclosure|Securities Times, Shanghai Securities Daily, Hong Kong Commercial Daily|
|Web address for the annual report as assigned by||
||http://www.cninfo.com.cn|
|CSRC.||
|Place for inquiry of the annual report|The Board of Directors’ Office of Hangzhou Steam Turbine Co., Ltd.|

 IV. Change of Business Registration
|||
|-|-|
|Organization code 9|13300007042026204|
|Ts|he original scope of main businesses of the Company: The design and manufacturing of|
||team turbine, gas turbine, other rotating and to-and-fro machinery and auxiliary|
|eChange of main business since listed p|quipment, and spare parts and components, sales of self-manufactured products and the|
||roviding of relevant after-sales service and import & export service.|
|It|n July 2008, the business scope was modified to: Design and manufacturing of steam|
||urbine, gas turbine, other rotating and to-and-fro machinery and auxiliary equipment, and|

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
|||
|-|-|
||spare parts and components, sales of self-manufactured products and the providing of|
||relevant after-sales service; sales and import & export of power plant, industrial driving,|
||industrial turbine equipment and complete equipment. For those involve in quota or|
||licensing shall follow legal procedures.|
||In March 2009, the business scope was modified to: Design and manufacturing of steam|
||turbine, gas turbine, other rotating and to-and-fro machinery and auxiliary equipment, and|
||spare parts and components, sales of self-manufactured products and the providing of|
||relevant after-sales service; sales and import & export of power plant, industrial driving,|
||industrial turbine equipment and complete equipment.|
||In December 2016, the business scope was modified to: Design and manufacturing of|
||steam turbine, gas turbine, other rotating and to-and-fro machinery and auxiliary|
||equipment, and spare parts and components, sales of self-manufactured products and the|
||providing of relevant after-sales service; sales and import & export of power plant,|
||industrial driving, industrial turbine equipment ,complete equipment and Energy|
||conservation and environmental protection projects.|
|Change of holding shareholder (if any)|No change|

V. Miscellaneous information
CPA hired by the Company
|||
|-|-|
|Name of the CPA|Pan-China Certified Public Accountants (Special general partnership)|
|Address of the CPA|B Unit, Huarun Building, No.1366, Qianjiang Road, Jianggan District Hangzhou|
|Name of CPA signed on the||
||Jiang Xiaodong,, Ye Xianbin|
|auditors’ report||

The sponsor performing persist ant supervision duties engaged by the Company in the reporting period.
Not applicable
The Financial advisor performing persist ant supervision duties engaged by the Company in the reporting period Not applicable
VI.Summary of Accounting data and Financial index
May the Company make retroactive adjustment or restatement of the accounting data of the previous years due to change of the accounting policy and correction of accounting errors.
No
||||||
|-|-|-|-|-|
||||Changed over last year||
||2017|2016||2015|
||||（％）||
|Operating Gross income（RMB）|3,447,142,669.49|3,235,303,379.24|6.55%|2,600,072,151.63|
|Net profit attributable to the shareholders of|68,753,250.90|31,955,445.73|||
||||115.15%|-162,809,311.79|
|the listed company（RMB）|||||
|Net profit after deducting of non-recurring|||||
||-1,460,504.46|-8,366,688.71|82.54%|-196,163,971.66|
|gain/loss attributable to the shareholders of|||||

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
||||||
|-|-|-|-|-|
|listed company（RMB）|||||
|Cash flow generated by business operation,|205,302,791.77|506,159,428.42|||
||||-59.44%|355,677,773.05|
|net（RMB）|||||
|Basic earning per share(RMB/Share)|0.09|0.04|125.00%|-0.22|
|Diluted gains per|0.09|0.04|||
||||125.00%|-0.22|
|share(RMB/Share)(RMB/Share)|||||
|Net asset earning ratio（%）|1.12%|0.60%|0.52%|-3.77%|
||||Changed over last year||
||End of 2017|End of 2016||End of 2015|
||||（％）||
|Gross assets（RMB）|10,830,597,182.38|10,550,899,708.34|2.65%|7,683,777,005.63|
|Net assets attributable to shareholders of the|5,884,816,809.55|6,385,346,243.23|||
||||-7.84%|4,219,337,312.80|
|listed company（RMB）|||||

VII.The differences between domestic and international accounting standards
1. Differences between the net profit and net asset in the financial reports prepared under IAS and Chinese Accounting Standard
Nil
2. Differences between the net profit and net asset in the financial reports prepared under IAS and Chinese Accounting Standard
Nil
VIII.Main Financial Index by Quarters
In RMB
||||||
|-|-|-|-|-|
||First quarter|Second quarter|Third quarter|Fourth quarter|
|Operating income|748,344,237.44|915,380,464.82|925,501,518.37|857,916,448.86|
|Net profit attributable to the|||||
||16,752,601.64|27,243,202.74|19,997,776.79|4,759,669.73|
|shareholders of the listed company|||||
|Net profit after deducting of|||||
|non-recurring gain/loss attributable to|-15,980,860.17|19,541,078.56|9,699,270.59|-14,719,993.44|
|the shareholders of listed company|||||
|Net Cash flow generated by business|||||
||-200,738,208.12|190,427,852.54|210,235,136.96|5,378,010.39|
|operation|||||

Not exist between the above financial index or the index with its sum and the financial index of the quarterly report as well as semi-annual report index disclosed by the Company.
IX.Items and amount of non-current gains and losses
In RMB
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
||||||
|-|-|-|-|-|
|Items|Amount (2017)|Amount (2016)|Amount (2015)|Notes|
|Non-current asset disposal gain/loss(including the write-off part|6,608,574.41||||
|||326,453.30|-441,916.66||
|for which assets impairment provision is made)|||||
|Tax refund, deduction and exemption that is examined and|1,250,418.38||||
|approved by authority exceeding or has no official approval|||||
|document.|||||
|Governmental Subsidy accounted as current gain/loss, except for|8,945,252.87||||
|those subsidies at with amount or quantity fixed by the national|||||
|||16,968,792.22|15,752,977.27||
|government and closely related to the Company’s business|||||
|operation.|||||
|In addition to normal business with the company effective|62,623,000.27||||
|hedging related business, holders of tradable financial assets,|||||
|transactions and financial liabilities arising from changes in fair|||||
|||28,548,677.87|19,624,429.30||
|value gains and losses, as well as the disposal of trading of|||||
|financial assets, trading financial liabilities and available-for-sale|||||
|financial assets gains return on investment;|||||
|Other non-operating income and expenditure beside for the above|6,505,882.53||||
|||7,345,994.24|12,164,381.63||
|items|||||
|Less: Influenced amount of income tax|11,777,992.62|8,701,193.64|8,553,255.35||
|Amount of influence of minority interests（After tax）|3,941,380.48|4,166,589.55|5,191,956.32||
|Total|70,213,755.36|40,322,134.44|33,354,659.87|--|

 None of Non-recurring gain /loss items recognized as recurring gain /loss/items as defined by the information disclosure explanatory Announcement No.1- Non–recurring gain/loss in the report period.
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 III. Outline of Company Business
I. Main Business the Company is Engaged in During the Report Period
Whether the company needs to comply with the disclosure requirements of the particular industry
No
As the leading provider of turbo machinery equipment and relevant service in China, our company is mainly famous for designing and producing rotating turbo machinery like industrial steam turbines and gas turbines. Our company, one of the major companies drafting the industrial standard in Chinese domestic industry of industrial steam turbine, has developed into the biggest base to research, develop and produce industrial steam turbines in China and ranks first among industrial steam turbine producers in terms of the market occupancy. Holding the principle “our products should be based onclients’ demands” as our business mode and characteristic, our company designs and produces in accordance with everyclient’s personal demands so as to meet personalized needs in engineering projects to the utmost. To realize the fast research and development of our products, our company has adopted the advanced modular design technique and, on the other hand, introduces information technique to assist the collaborative production to achieve the resource saving and flexible production. In addition, our company also provides our clients with relevant service such as engineering programs, general engineering contracting, operation and maintenance of our products as well as remote control and so on.
Industrial steam turbines use the steam featuring high temperature and high pressure as their working medium so as to convert the thermal energy into mechanical energy to drive various industrial equipments through the rotating steam turbines. As for different objects driven by industrial steam turbines, the steam turbines could be divided into industrial driving steam turbines and industrial power-generation steam turbines. Mainly driving rotating machines like compressors, air blowers, pumps and squeezers, industrial driving steam turbines, as the core power part in numerous large-scale industrial equipments, are always introduced into some industries like oil refining, chemical engineering, chemical fertilizer, building materials, metallurgy, electric power, light industry and environmental production. The industrial power-generation steam turbines, mainly utilized to drive electric generators and provide thermal energy, are mainly adopted in private stations, regional projects of combined heat and power generation, power generation by recycling waste heat in industrial production, urban waster power plants and gas-steam combined cyclepower stations in various industrial sectors. The gas turbines produced by our company are mainly used by metallurgical industry to recycle the waste heat from the blast furnace exhaust to generate power.
In the gas turbine business, the Company has cooperated with Siemens on the advanced natural gas turbine SGT-800 model-with features of high efficiency, high reliability and low emission, thus to enter the distributed natural gas field. As the general whole-set maker of SGT-800 in China, the company has launched the gas turbine business in respect of the project procurement and the integrated implementation. Hangzhou Steam Turbine has the type selection ability for the distributed energy combined cycle project, has established a complete system of supporting standard and material system, and it can complete the independent processing or matching work for the equipment besides the gas turbine body. In the industrial fields including the cogeneration /combined cycle power plant and the oil& gas project with distributed energy projects that adopt the small and medium gas turbines, the Company not only can provide gas turbine equipment for customers, but also can provide customers with
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 complete sets of equipment for gas turbine power plant and the efficient integrated solutions. Especially, it can provide customers with operational support services throughout the product life, and this service model is conductive for the establishment of long-term business cooperation relationships between the company and its customers.
As the major producer of industrial equipments in China during the report period, our company is mainly benefited from the following factors in terms of the elements driving our business performance:
1. On the basis of market demands. The relevant market demands fluctuate differently due to various business condition and investment cycles in different industrial fields. The company further made more specified positions toward the market for the products, implemented the differentiated marketing strategy, and integrated the business sectors and tapped into the potential. During the reporting period, the domestic oil refining and chemical investment projects started at multiple points and drove the demand for related equipment manufacturing. The company grasped the growth opportunities in the petrochemical sector, and formulated the flexible price strategies for the fields of low-end and mid-end drive, ensured the market share and continuously consolidated and strengthened the existing market advantages. Adhering to the "Go global" strategy, the Company continued to expand the overseas markets, establish overseas offices and increase its market influence.
2. Innovation and further reform in difficult areas of product technology.
Our company continuously improves product technical performance and tackles hard issues in the scientific researches of product structure, core parts, basic design, manufacturing technology, material technology, etc. In addition, basing onclients’ demands, our company launches the study “The Demonstration and Application Project for Packaging Technology of Steam Turbine” to push forward the intelligence of our products and the development of the integration technology. Meantime, the company cooperated with universities, scientific research institutes to build the technological exchange and cooperation platform.
3. Upgrading and transformation of industrial structure transformation.
The company jointed with Siemens to enter the distributed energy market and enhance the development and utilization of natural gas distributed energy. In the industrial fields including the cogeneration /combined cycle power plant and the oil& gas project with distributed energy projects that adopt the small and medium gas turbines, the Company not only can provide gas turbine equipment for customers, but also can provide customers with complete sets of equipment for gas turbine power plant and the efficient integrated solutions.
4. Brand and market position. Thecompany’s products have a good reputation and extensive brand influence in the domestic market, The company has maintained a leading market share in the domestic industrial drive. The company's products have a high reputation and brand influence in the domestic market.
5.Cost controlling level. As domestic labor costs continue to rise and the price of industrial products continue to decline, the product profitability is facing a severe test. In recent years, the company continuously improves the level of costs controlling by improving the organizational structure, optimizing business processes, enhancing the supply chain controlling, strengthening risk management, raising the efficiency of all the staff and so on. 6.Emphasis on quality engineering and services: promote the key project management, meticulously plan key projects, implement dynamic quality supervision; attach importance toproducts’ after-sales service market, integrate existing resources to increase after-sales service initiative, extend product value chain, and promote thecompany’s transformation from manufacturing to service.
II. Major Changes in Main Assets
1.Major Changes in Main Assets
|||
|-|-|
|Main assets|Major changes|

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
|||
|-|-|
||Mainly caused by the volatility in share price of Hangzhou Bank with the Company’s investment and|
|Equity assets||
||participation|
|Fixed assets|No major changes|
|Intangible assets|No major changes|
||Mainly caused by the new investment at the current period which resulted from the parent company’s scientific|
|Construction in progress||
||research building and from the promotion of the progress of steam turbine project|

2. Main Conditions of Overseas Assets
Not applicable
III. Analysis On core Competitiveness
Whether the company needs to comply with the disclosure requirements of the particular industry
No
Firstly. A complete technical innovation system was established. The Company has under its possession of national, provincial, and municipal grade technical centers, a doctorial workstation, and an academician workstation. Close co-operations were carried out with institutions and universities from throughout the country. As the main drafter of national standard on industrial steam turbine, the Company has the newest technical trend under its close observation. The Company is now providing nearly 600 different models of steam turbines to the customers and hold the newest technical system covering the product lines up to 150 MW.Cooperating with SIEMENS in the field of gas turbine, our company has been capable of selecting the model of the combined recycling project of distributed energy. In addition, our company has also been able to finish the independent processing or supporting work whichdoesn’t need to depend on the gas turbine machine.
Secondly .The advantages of solutions. The modular design of industrial steam turbine and the production pattern featuring parallelization production enable our company to give considerations to the cost, date of delivery andclients’ demands in the process of production in accordance withclients’ personalized designs, thereby making our company capable of advancing with the development trend of individual requirements. Our company has always been devoting to the localization in terms of the gas turbine business so as to achieve the localized one-stop service step by step including the sale, production, installation, debugging, operation, training and after-sale service. Our company has always been striving to provide clients with the complete equipment of gas turbine power station and the efficient total solutions.
Thirdly, the Company has established strategic co-operations with main customers in the country. Further marketing approaches were carried on by involving itself in thecustomers’ value. A sound and steady image has been set up in the domestic steam turbine market. In the global market, the Company has acquired multiple important certifications and has established a primary global recognition.
Fourthly, the Company has its complete service providing system. The Company is not only capable to provide onsite 24-hour service for theCompany’s own products, but also accumulated rich experiences in technical maintenance and reengineering of othermanufacturers’ products.
Fifthly, the Company has cultivated a significant advantage in human resources. Great importance has been attached to construction of work teams with collection of high-end workforce in the areas of research&
development, At the same time, our company values the cooperation with universities. “Zhejiang Technical
Association for Gas Turbines in Equipment Manufacturing Industry” was officially founded jointly by our
company and Zhejiang University and other scientific research institutions to build a new platform for integration
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 of production and research in terms of gas turbine technology.The Company has cultivated a significant advantage in human resources. Great importance has been attached to construction of work teams with collection of high-end workforce in the areas of research& development, designing, technique, testing, and quality control. An excellent workforce provides a sound foundation to lift quality and services.
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 IV.Management’s Discussion and Analysis
I. General
In 2017, the world economy showed a clear momentum of recovery.China’s supply-side structural reforms continued to deepen, the “Three cuts, one reduction, one subsidy” work was steadily promoted, and the policy dividends continued to be released, hence the effectiveness of policies gradually became apparent and the Chinese economy maintained a steady and positive trend.
The company actively seized the development opportunities of the gradual recovery of end demand, and promoted the implementation of the company's “13th Five-Year Plan” strategy in accordance with the annual work principle of “steadily advancing, continuous innovation, deeply plowing the market, lean management and enhancing risk control”: increased technological innovation and enhanced the company's core competitiveness; actively explored new markets and actively grabbed market orders; promoted the “lean production” and “integrated management”; strengthened the prevention and control of major risks in key business areas, and enhanced the business efficiency of enterprises, thus successfully realized the company's annual business goal. Under the background of the decline in the operating income of the overall domestic steam turbine industry, thecompany’s operating income realized the counter-trend growth, with the rank of total profit returned to the forefront.
For the report period, the Company has realized turnover of RMB 3447.1427 million, a increase of6.55%; Total profit of RMB132.6561 million , a increase of71.35%, net profit attributable to owners of the parent company of RMB68.7533 million, a increase of115.15%%.
Operating quality was well enhanced. During the reporting period, the company's total profit, net profit attributable to the shareholders of the listed company, the amount of new orders, the amount of export contract orders and so forth all showed significant growth. The indicators including the company's main business income, product output value and product market share increased slightly, and the accounts receivable and finished goods inventory had been controlled well, showing that the company's sustainable development quality has been further strengthened. In order to realize the transformation and upgrading of the company, during the reporting period, the company continued to promote the construction of two projects of steam turbine heavy industry and scientific research building, creating a good environment for the company's development.
Shengeng market obtained good results.During the reporting period, thecompany’s major target market was significantly differentiated. Facing the complicate situation with the strong rebound in investment in refining and chemical industry, the rapid growth of thermoelectricity industry and some chemical industries and a slow decline in the power industry, the company has seized the opportunities and has realized the contract of 281sets /3.865 billion yuan (including tax, similarly hereinafter) in the whole year, reached the second highest level in the company's historical contract amount. Thereinto, the total contract amount of steam turbine was RMB 3.281 billion, which exceeded the RMB 3.269 billion in 2011 and hit the historical high. In particular, the company competed against the international industry giants at the same price level for the same project, and successfully obtained two mega-projects-namely Dalian Hengli project and Zhejiang Petrochemical project-with a total of 94 sets and the amount of RMB1.13 billion, and the company obtained a number of orders of excellent projects including Yantai Wanhua 1 million tons ethylene project, Zhongke Zhanjiang 10 million tons oil refining and 0.8 million tons ethylene project and Changshu Pufa garbage power plant(15MW+30MW), as well as the Company
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 concluded and signed contract for four sets of
SGT-8OO
gas turbine unit, which fully demonstrated the excellent technological ability and good reputation of the company in the high-end market of the industry.
During the reporting period, the company's "going out" strategy took new steps. The 120,000 air-to-air combined cycle unit of the Iranian Cavi Group smoothly connected to the grid, enabling the company to once again qualify as a major Iranian supplier to customers; the establishment of an office in Thailand expanded thecompany’s influence in the power generation market in Southeast Asia, and played an active market fulcrum. Features. Strengthen communication with overseas customers in overseas power generation market, closely contact with domestic general contractors, and expand the company's overseas influence by “borrowing to sea” The awareness of risk control has increased significantly. During the reporting period, the company further perfected the “Detailed Rules for Internal Control of Steam Turbine Business Contracts in Foreign Trade” and “Detailed Rules for Internal Control of Steam Turbine Business Contracts in the Industry-Drive Industry”, and the working mechanism of accounts receivable regular meetings and risk control regular meetings was effectively operated, which focused on contract review and legal proceedings, key project contract execution, inventory unit disposal, large parts delivery specifications, compressor project disposal, long aging accounts receivable processing and other issues, carried out the risk point identification and preplan assessment, and paid attention to the completeness of contract performance, thus evidently improved thecompany’s management ability to deal with business risks.
||
|-|
|Continuous breakthroughs in technological innovation. During the reporting period, the company continued to|
|increase its efforts in scientific research and achieved important breakthroughs in the development of the efficient|
|blade type and high-efficiency models. The new straight blade T8/T9 type has fully entered the stage of promotion|
|for popularized use, and the newly-developed high-efficiency GK2.1 and GK1.3 twisted-blade blades have once|
|again successfully improved the overall performance of the steam turbine, as well as there were a number of new|
|product development projects such as “Development of NK63 /2.2 Low-Pressure Residual-Heat Efficient|
|Condensing Steam Turbine and “Development of NK80/2.8 Low-Pressure Residual-Heat Efficient Condensing|
|Steam Turbine”, thus further ensured the Company's technological superiority in the market competition. Relying|
|on large projects, the achievement of integrated assemble technology has been further applicated. PLM (Product|
|Life Cycle Management) Phase II, MES (Production Execution System) Phase I Project, and Smart|
|Manufacturing Demonstration Project achieved substantive results. The company and its 5 holding subsidiaries|
|have passed the review for the qualification of national high-tech enterprise. The company's major technology|
|research project "Key Technology Development and Application of 1000MW Grade Power Station Boiler Feed|
|Pump Turbine" won the Second Prize of Science and Technology of China Machinery Industry Federation and the|
|first prize of Zhejiang Science and Technology Progress Award, and the "Key Technology Research and|
|Application of Low Pressure Long Blade for Industrial Steam Turbine ” won the first prize of Science and|
|Technology of China Machinery Industry Federation. The company took the lead in setting up the Zhejiang Steam|
|Turbine & Gas Turbine Machinery Innovation Center. In 2017, the company obtained 12 invention patents, 17|
|utility model patents and 5 software copyrights; in 2017, it applied for 3 invention patents and 9 utility models.|

 Steady improvement in manufacturing capabilities. During the reporting period, in the face of new blowout pressures of new orders in a stage, the company adhered to the concept of market-oriented and customer supremacy, adopted the lean production and sales routes, coordinated the internal and external resource allocation, expanded manufacturing capabilities, and spared no efforts to cope with the short product delivery cycle and the large fluctuations in production capacity demand. The company optimized the production planning management, rationally allocated the scheduling of unit production, set up safety stocks for key parts, ensured that the key
outsourcing kits and imported parts were put in place in a timely manner, so that there was smooth connection of
production and sales and the company maximumly met thecustomers’ requirements of delivery dates, product
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 quality, and service response.
||
|-|
|Substantive achievements in management enhancement. During the reporting period, the company, through|
|optimizing the organization of production line, almost fully established the production mode of steam turbine|
|heavy industry after relocation and reconstructing. The company launched the implementation of an integrated|
|management system project to create a process-oriented organization and initiated a lean production project to|
|create great profitable tools in the meager profit-making era, resulting in a number of outstanding management|
|innovations and: “Big data platform project for construction process of discrete manufacturing industry” won the|
|second prize of National Advanced Productivity Outstanding Contribution, and that project and the “Carrying out|
|craftsman training project to shape the great quality of heavy equipment in the country” respectively won the first|
|and second prizes of the modernization and innovation of enterprise management in Zhejiang and Hangzhou, and|
|the three projects namely “The first set of exquisite projects” and “Risk control system construction” and|
|“Construction of management platform for flexible installation for steam turbines” respectively won the second|
|and third prizes of the modernization and innovation of Hangzhou Enterprise Management. According to the|
|requirements of the higher authorities, the company sorts out the "small and weak" holding subsidiaries, reduces|
|the company's management level, writes off some subsidiaries, and improves asset quality.|

II. Main business analysis
1. General
Refer to relevant contents of “1.Summarization” in “Discussion and Analysis of Management”.
2. Revenue and cost
(1)Component of Business Income
In RMB
|||||||
|-|-|-|-|-|-|
||2017||2016|||
||||||2015|
||Amount|Proportion|Amount|Proportion||
|Total operating revenue|3,447,142,669.49|100%|3,235,303,379.24|100%|6.55%|
|Industry||||||
|Boiler and power machine||||||
|manufacture|3,030,946,418.89|87.93%|3,028,204,569.52|93.60%|0.09%|
|Nonferrous metal alloy||||||
|manufacture|91,384,682.32|2.65%|53,823,584.94|1.66%|69.79%|
|Other|324,811,568.28|9.42%|153,275,224.78|4.74%|111.91%|
|On Products||||||
|Industrial steam turbine|2,692,843,753.69|78.12%|2,760,361,876.91|85.32%|-2.45%|
|Casting products|91,384,682.32|2.65%|53,823,584.94|1.66%|69.79%|
|Auxiliary machinery|118,292,027.16|3.43%|39,019,819.50|1.21%|203.16%|
|Part|219,810,638.04|6.38%|228,822,873.11|7.07%|-3.94%|
|Other|324,811,568.28|9.42%|153,275,224.78|4.74%|111.91%|

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
|||||||
|-|-|-|-|-|-|
|District||||||
|Domestic|3,240,202,391.60|94.00%|2,862,034,367.48|88.46%|13.21%|
|Overseas|206,940,277.89|6.00%|373,269,011.76|11.54%|-44.56%|

 (2)Situation of Industry, Product and District Occupying theCompany’s Business Income and Operating Profit with Profit over10%
Whether the company needs to comply with the disclosure requirements of the particular industry
No
In RMB
||||||||
|-|-|-|-|-|-|-|
|||||||Increase/decreas|
||||||Increase/decrease||
|||||Increase/decrease||e of gross profit|
||||Gross||of business cost||
|||||of revenue in the||rate over the|
||Turnover|Operation cost|profit||over the same||
|||||same period of the||same period of|
||||rate(%)||period of previous||
|||||previous year(%)||the previous|
||||||year (%)||
|||||||year (%)|
|On Industries|||||||
|Boiler and power machine|||||||
|manufacture|3,030,946,418.89|2,195,702,974.74|27.56%|-2.56%|5.18%|-3.50%|
|On Products|||||||
|Industrial steam turbine|2,692,843,753.69|1,989,579,236.24|26.12%|-2.45%|2.69%|-3.70%|
|District|||||||

Under circumstances of adjustment in reporting period for statistic scope of main business data, adjusted main business based on latest onyear’s scope of period-end.
Not applicable
(3)Whether theCompany’s Physical Sales Income Exceeded Service Income
|||||||
|-|-|-|-|-|-|
||||||Change over same|
|Business categories|Items|Unit|2017|2016||
||||||period last year|
||Sales|Set/package|388|391|-0.77%|
|Steam turbine|Output|Set/package|361|425|-15.06%|
||Inventory|Set/package|171|198|-13.64%|
||Sales|Set/package|3|0||
|Gas turbine,||||||
||Output|Set/package|4|2|100.00%|
|compressor||||||
||Inventory|Set/package|9|8|12.50%|

 Statement on change of amounts for over30% YoY.
Not Applicable
(4)Major orders in hand.
Not Applicable
(5)Component of business cost
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 Product category
In RMB
||||||||
|-|-|-|-|-|-|-|
|||2017||2016|||
|||||||Increase/Decrea|
|Category|Items||Proportion in the||Proportion in the||
|||Amount||Amount||se (%)|
||||operating costs (%)||operating costs (%)||
|Industrial steam|||||||
|||1,989,579,236.24|81.19%|1,937,421,703.51|87.88%|2.69%|
|turbine|||||||
|Casting||68,739,724.43|2.81%|40,832,489.79|1.85%|68.35%|
|Auxiliary|||||||
|||91,269,179.11|3.72%|30,795,266.61|1.40%|196.37%|
|machinery|||||||
|Part||114,854,559.39|4.69%|119,437,803.71|5.42%|-3.84%|
|Other||186,144,626.62|7.59%|76,091,517.45|3.45%|144.63%|
|Subtotal||2,450,587,325.79|100.00%|2,204,578,781.07|100.00%|11.16%|

 (6)Whether Changes Occurred in Consolidation Scope in the Report Period
The number of subsidiaries included in the scope of the consolidated financial statements for the reporting year was reduced by five.
In which ,1. Due to the cancellation of Zhejiang Runhong Gas Turbine Engineering Co., Ltd, its holding equity of its subsidiary Zhejiang Zhongrun Gas Turbine Technology Co., Ltd (10 million yuan) was transferred to Zhejiang Touping Import& Export Trade Co., Ltd (a wholly-owned subsidiary to the company) and Ningbo Daxie Development Zone Huashun Industry& Trade Co., Ltd. After the equity disposal was completed, Zhejiang Turbine Import& Export Co., Ltd. held32.22% stake of Zhejiang Zhongrun Gas Turbine Technology Co., Ltd, so the company lost the control right of Zhejiang Zhongrun Gas Turbine Technology Co., Ltd, and thus it was no longer included in the consolidation scope.
2.The other four subsidiaries were not included because of the liquidation and cancellation
In RMB
||||||
|-|-|-|-|-|
|Name|Way of EquityDisposition|Time Point of EquityDisposition|Net Assets on theDate of Disposition|Net Profits from theBeginning of the Period tothe Date of Disposition|
|Xinjiang Taifeng Hangzhou Steam TurbineComplete Technology Development Co., Ltd.|Chearing|April 25,2017|17,061,690.18|181,238.78|
|Hangzhou steam turbine Boiler Co.,Ltd.|Chearing|April 27,2017|19,665,256.43|1,130,995.08|
|Hangzhou Pangtong ElectromechanicalEquipment Co., Ltd.|Chearing|December 21,2017|1,086,391.89|-115,873.20|
|Zhejiang Runhong Gas Trubine Engineering Co.,Ltd.|Chearing|December 22,2017|34,953,788.30|2,813,561.91|

(7)Relevant Situation of Significant Changes or Adjustment of the Business, Product or Service in theCompany’s
Report Period
Not applicable
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 (8)Situation of Main Customers and Main Supplier
Information of Main customers
|||
|-|-|
|Total sales amount to top 5 customers (RMB)|710,056,597.98|
|Proportion of sales to top 5 customers in the annual sales(%)|20.60%|
|Proportion of the sales volume to the top five customers in the total sales to the||
||2.24%|
|related parties in the year||

Information of theCompany’s top 5 customers
|||||
|-|-|-|-|
|No|Name|Amount（RMB）|Proportion|
|1|Customer 1|272,232,507.66|7.90%|
|2|Customer 2|241,504,273.56|7.01%|
|3|Customer 3|77,325,688.70|2.24%|
|4|Customer 4|62,222,222.10|1.81%|
|5|Customer 5|56,771,905.96|1.65%|
|Total|--|710,056,597.98|20.60%|

 Notes
Not applicable
Principal suppliers
|||
|-|-|
|Total purchase of top 5 Suppliers（RMB）|615,931,510.28|
|Percentage of total purchase of top 5 suppliers In total annual purchase(%)|22.00%|
|Proportion of purchase amount from the top 5 suppliers in the total purchase||
||6.70%|
|amount from the related parties in the year||

Information about the top 5 suppliers
|||||
|-|-|-|-|
|No|Name|Amount（RMB）|Proportion|
|1|Supplier 1|276,866,634.17|9.89%|
|2|Supplier 2|137,886,068.57|4.92%|
|3|Supplier 3|87,273,378.38|3.12%|
|4|Supplier 4|64,306,092.35|2.30%|
|5|Supplier 5|49,599,336.81|1.77%|
|Total|--|615,931,510.28|22.00%|

 Notes
Not applicable
3.Expenses
In RMB
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
||||||
|-|-|-|-|-|
||||Increase/Decr||
||2017|2016||Notes|
||||ease(%)||
|Sale expenses|169,520,147.67|164,610,410.65|2.98%||
|Administration expenses|644,178,931.78|623,684,537.46|3.29%||
||24,287,127.82|-14,837,853.07||Mainly due to exchange rate|
|Financial expenses|||263.68%||
|||||fluctuations in the current period|

 4. Research and Development
In 2017, the company continued to increase the efforts inR&D, developed a series of new products and made major achievements in new technologies. The new straight blade T8/T9 type has fully entered the stage of promotion for popularized use, and the newly-developed high-efficiency GK2.1 and GK1.3 twisted-blade blades have once again successfully improved the overall performance of the steam turbine, as well as there were a number of new product development projects such as “Development of NK63 /2.2 Low-Pressure Residual-Heat Efficient Condensing Steam Turbine and “Development of NK80/2.8 Low-Pressure Residual-Heat Efficient Condensing Steam Turbine”, thus further ensured the Company's technological superiority in the market competition. Relying on large projects, the achievement of integrated assemble technology has been further applicated. PLM (Product Life Cycle Management) Phase II, MES (Production Execution System) Phase I Project, and Smart Manufacturing Demonstration Project achieved substantive results. The development and application and the promotion for wide use of the above new products and new technologies will further consolidate thecompany’s leading position and competitive advantages in the industry.
R& D investment situation
|||||
|-|-|-|-|
||2017|2016|Increase/Decrease(%)|
|Number of Research and Development persons||||
||887|899|-1.33%|
|(persons)||||
|Proportion of Research and Development persons|24.43%|23.97%|0.46%|
|Amount of Research and Development||||
||211,027,767.11|197,406,076.77|6.90%|
|Investment (In RMB)||||
|Proportion of Research and Development||||
||6.12%|6.10%|0.02%|
|Investment of Operation Revenue||||
|Amount of Research and Development||||
||0.00|0.00||
|Investment Capitalization (In RMB)||||
|Proportion of Capitalization Research and||||
|Development Investment of Research and|0.00%|0.00%||
|Development Investment||||

The Reason of the Prominent Change in Total Amount of Research and Development Input Occupying the Business Income Year on Year
Not applicable
Explanation of the Reason for Substantial Changes in the Research and DevelopmentInput’s Capitalization Rate
and Its Reasonableness
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 Not applicable
5.Cash Flow
In RMB
|||||
|-|-|-|-|
||||Increase/Decrease(|
|Items|2017|2016||
||||%)|
|Subtotal of cash inflow received from|3,645,358,287.67|3,163,744,261.15||
||||15.22%|
|operation activities||||
|Subtotal of cash outflow received from|3,440,055,495.90|2,657,584,832.73||
||||29.44%|
|operation activities||||
|Net cash flow arising from operating|205,302,791.77|506,159,428.42||
||||-59.44%|
|activities||||
|Subtotal of cash inflow received from|4,340,596,720.83|1,802,162,475.79||
||||140.85%|
|investing activities||||
|Subtotal of cash outflow for investment|4,183,532,647.57|2,316,529,187.90||
||||80.59%|
|activities||||
|Net cash flow arising from investment|157,064,073.26|-514,366,712.11||
||||130.54%|
|activities||||
|Subtotal cash inflow received from|232,500,000.00|410,000,000.00||
||||-43.29%|
|financing activities||||
|Subtotal cash outflow for financing|281,399,925.68|268,017,075.65||
||||4.99%|
|activities||||
|Net cash flow arising from financing|-48,899,925.68|141,982,924.35||
||||-134.44%|
|activities||||
|Net increase in cash and cash equivalents|306,255,849.98|142,012,322.32|115.65%|

 Notes to the year-on-year change of the relevant data
|||||||
|-|-|-|-|-|-|
|Items|2017|2016||Proportion|Reason|
|||||%||
|Net cash flow arising from operatingactivities|205,302,791.77|506,159,428.42|-59.44%||Mainly caused by the year-on-year increasein the amount of cash payment for goodspurchase at the current period|
|Net cash flow arising frominvestment activities|157,064,073.26|-514,366,712.11|130.54%||Mainly caused by the decrease in the netexpenditure of financial products at thecurrent period, as well as the relocationcompensation received|
|Net cash flow arising from financingactivities|-48,899,925.68|141,982,924.35|-134.44%||Mainly caused by RMB208 million of suminvested by the China Development Bankfor the subsidiary’s steam turbine last year.|

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 Notes to the big difference between cash flow from operating activities and net profit in the reporting year Not applicable
III.Analysis of Non-core Business
In RMB
||||||
|-|-|-|-|-|
|||Proportion|||
|||||Sustainable|
||Amount|in total|Explanation of cause||
|||||(yes or no)|
|||profit|||
||||Mainly for the dividend of this year of Hangzhou Bank, the||
||||disposal for Hangzhou Changti Equidi Investment Partnership||
|Investment income|120,565,851.26|90.89%|||
||||(Limited Partnership) and the investment income of financing||
||||products||
|Changes in fair value|||Mainly caused by the volatility in share price of Hangzhou||
||-566,887,547.71|-427.34%|||
|gains and losses|||Bank with the Company’s investment and participation||
|||101.49%|It is mainly due to the provision for bad debts of accountsreceivable with relatively long aging.In addition, it is mainlyfor the falling price reserves of corresponding withdrawalwhich is resulted from that the inventory cost occurred is higherthan net realizable value due to the termination of partialprojects||
|Impairment of assets|134,633,599.80||||
|Non-operating income|8,075,659.19|6.09%|Mainly for the income from the contract compensation||
|Non-operating expenses|1,635,679.94|1.23%|Mainly for the expenditure of the contract compensation||

IV.Condition of Asset and Liabilities
1.Condition of Asset Causing Significant Change
In RMB
||||||||
|-|-|-|-|-|-|-|
||End of 2017||End of 2016|||Notes to|
||||||Proportion|the|
|||Proportion in the||Proportion in the|increase/dec|significa|
||Amount||Amount||||
|||total assets(%)||total assets(%)|rease|nt|
|||||||change|
|Monetary fund|1,222,677,495.94|11.29%|895,037,559.34|8.48%|2.81%||
|Accounts|1,695,217,448.46||1,870,173,348.32||||
|||15.65%||17.73%|-2.08%||
|receivable|||||||
|Inventories|2,092,575,691.92|19.32%|1,901,544,358.26|18.02%|1.30%||
|Long-term equity|5,800,000.00||||||
|||0.05%|||0.05%||
|investment|||||||

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
|||||||
|-|-|-|-|-|-|
|Fixed assets|566,710,937.10|5.23%|615,922,109.91|5.84%|-0.61%|
|Construction in|255,921,660.09||153,743,889.41|||
|||2.36%||1.46%|0.90%|
|process||||||
|Short-term loans|115,500,000.00|1.07%|173,000,000.00|1.64%|-0.57%|
|Long-term loans|100,000,000.00|0.92%|4,900,000.00|0.05%|0.87%|

2.Asset and Liabilities Measured by Fair Value
In RMB
|||||||||
|-|-|-|-|-|-|-|-|
||||Cumulative|Impairmen||Sold||
||||||Purchased|||
|||Profit/losson fair|fairvalue|t provided||inthis||
||||||in this|||
|Items|Opening balance|value changes in this|changes|in this||reporti|Closing balance|
||||||reporting|||
|||reporting period|charged to|Reporting||ng||
||||||period|||
||||equity|period||period||
|Financial assets||||||||
|3.Available-for –sale||||||||
||2,906,013,048.00|-666,926,526.72|||||2,239,086,521.28|
|financial assets||||||||
|Total of the above|2,906,013,048.00|-666,926,526.72|||||2,239,086,521.28|
|Financial Liabilities|2,906,013,048.00|-666,926,526.72|||||2,239,086,521.28|

 Significant changes in the measurement attributes of the main assets in this Reporting Period
No
3. Restricted asset rights as of the end of this Reporting Period
||||
|-|-|-|
|Items|End of Book value|Reason|
|Monetary fund|85,184,661.11|Utilized for issuing bank acceptance bill, L/C and L/G.|
|Bill receivable|40,000,000.00|Utilized for issuing bank acceptance bill|
|Dividend receivable|6,900,000.00|Utilized for guaranteeing to obtain bank loan|
|Available for salefinancialassets|371,266,000.00|Utilized for guaranteeing the investment loan for China Development Funds|
|Fixed assets|112,955,316.32|Utilized for guaranteeing to obtain bank loan|
|Invisible assets|87,909,828.11|Utilized for pledging to obtain the bank loan and guaranteeing the investmentloan for China Development Funds|
|Total|704,215,805.54||

V.Investment situation
1. General
||||
|-|-|-|
|Investment Amount in 2017(RMB)|Investment Amount in 2016(RMB)|Change rate|
|102,400,000.00|39,442,786.76|159.62%|

2.Condition of Acquiring Significant Share Right Investment during the Report Period
Not applicable
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 3.Situation of the Significant Non-equity Investment Undergoing in the Report Period
Not applicable
4.Investment of Financial Asset
（1）Securities investment
Nil.
（2）Investment in Derivatives
Nil.
5.Application of the raised capital
Nil
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 VI.Significant Asset and Right Offering
1.Situation of Significant Asset Sale
||||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|||||Net profit|||||||||||
|||||constributi|||||||||||
|||||on to the||Ratio of the|||||||||
|||||Company||net profit||||Relevant||Carried out on|||
||||||||Pricing||||Relevant||||
||||Transaction|form the||contribution to||Related||equity||schedule or not if|||
||||||Effect of disposal||basis of||Relationship||debt||||
||Equity interest||consideratio|beginning||the Company||party||interest||not, the reasons|Disclosure|Disclosure|
|Counterparty||Disposal date|||on the Company||disposal of||with||fully||||
||disposed of||n(RMB’000|of the||of disposal of||transacti||fully||and measures|date|index|
||||||（Notes3）||equity||counterparty||transferr||||
||||0)|period up||equity interest||on or not||transferred||taken by the|||
||||||||interest||||ed or not||||
|||||to the||over total net||||or not||company|||
|||||disposal||profit(%)|||||||||
|||||date(RMB|||||||||||
|||||’0000)|||||||||||
||||||It optimized the||Not less|||||||Securities|
||||||company's asset||than the|||||||Times,|
||Hangzhou||||||||||||||
||||||structure, so as to||evaluation|||||||Shanghai|
||Changdi Equity||||||||||||||
|Zhejiang Juqing||January|||meet the||value||Not||||January|Securities|
||Investment||7,368|2,512.16||42.06%||Yes||Yes|Yes|Yes|||
|Investment Co., Ltd.||3,2017|||company's||confirmed||applicable||||12,2017|Daily, and|
||Partnership||||||||||||||
||||||operating capital||by the|||||||http://www.cnin|
||（LP）||||||||||||||
||||||needs. Not having||state-owne|||||||fo.com.cn|
||||||an adverse impact||d assets|||||||（Announceme|

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
||||
|-|-|-|
|on the company's|supervisio|nt|
|production and|n|No.:2017-01）|
|operation and after|departmen||
|the sale, it would|t's||
|achieve the|file-record||
|investment|.||
|income and have a|||
|positive impact on|||
|the company's|||
|financial situation|||
|and operating|||
|results.|||

2.Sales of major equity
Not applicable
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017Ⅶ.Analysis of the Main Share Holding Companies and Share Participating Companies
Situation of Main Subsidiaries and the Joint-stock Company with over10% net profit influencing to the Company
In RMB
||||||||||
|-|-|-|-|-|-|-|-|-|
|||Sectors engaged|||||||
|Name|Company type||Registered capital|Total assets|Net assets|Turnover|Operating profit|Net Profit|
|||in|||||||
|Zhejiang Steam Turbine Packaged||Trade of|51,000,000.00|243,667,362.78|83,092,449.10|241,699,214.69|11,901,757.68|10,676,500.39|
||Subsidiaries||||||||
|Technology Development Co., Ltd.||packadged|||||||
|Hangzhou Zhongneng Steam Turbine|||92,500,000.00|1,112,564,074.22|339,924,011.43|833,201,191.68|25,031,034.68|25,173,217.92|
||Subsidiaries|Manufacturing|||||||
|Power Co., Ltd.|||||||||
|Hangzhou Steam Turbine Casting Co.,|||22,000,000.00|489,452,244.02|173,136,786.15|357,558,102.11|32,043,541.11|27,727,923.66|
||Subsidiaries|Casting|||||||
|Ltd.|||||||||
|Hangzhou Steam Turbine Machinery &|||30,000,000.00|226,945,835.71|148,459,289.75|220,887,783.34|56,520,499.10|46,032,691.93|
||Subsidiaries|Manufacturing|||||||
|Equipment Co., Ltd.|||||||||
|Hangzhou Steam Turbine Auxiliary|||80,000,000.00|663,561,134.43|235,212,755.23|394,136,946.17|43,466,840.02|36,761,943.86|
||Subsidiaries|Manufacturing|||||||
|Machine Co., Ltd.|||||||||
|Zhejiang Turbine Import & Export Co.,||Commerce &|20,000,000.00|201,206,819.10|45,595,009.59|96,577,693.72|-7,303,705.73|-5,928,245.25|
||Subsidiaries||||||||
|Ltd.||trade|||||||
|Hangzhou Steam Turbine Heavy Industry|||558,966,865.00|593,199,894.85|583,870,247.69|0.00|2,621,277.68|1,944,162.19|
||Subsidiaries|Manufacturing|||||||
|Co., Ltd.|||||||||

 Subsidiaries obtained or disposed in the reporting period
||||
|-|-|-|
||Acquisition and disposal of subsidiaries during||
|Name||Influence|
||the reporting period||
|Xinjiang Taifeng Hangzhou Steam turbine complete|||
||Write off|Nil|
|technology development Co., Ltd.|||
|Hangzhou Hangqi Boiler Co., Ltd|Write off|Nil|
|Hangzhou Pangtong Electromechanical Equipment Co.,|||
||Write off|Nil|
|Ltd.|||
|Zhejiang Runhong Gas turbine Engineering Co., Ltd.|Write off|Nil|

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 VIII.Special purpose vehicle controlled by the Company
Not applicable
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 IX. Development prospect
(I) Development and competition of the whole industry
The company, which is a leading domestic industrial turbomachinery equipment and service provider, mainly designs, manufactures and sells rotary industrial turbines such as industrial steam turbines and gas turbines. From the perspective of the development of the machinery industry in recent years in our country, the entire industry still has the problem of insufficient and imbalance development and is still in the tough period of transition and upgrading. According to the exchange data of the Steam Turbine Industry Association, in 2017 China's steam turbine industry achieved a total industrial output value of 31.54 billion yuan, an decrease of8.6% year-on-year, and achieved the operating income of 33.63 billion yuan, a year-on-year decrease of2.2%, and achieved the total profit of 330 million yuan, an increase of114.3% year-on-year, indicating that the industry is in the trend of recovery.
For 2018, as the country will continue to deepen the reform of de-capacity, deleveraging and destocking, industrial consolidation will further be intensified. The industries related to the application of the company's products are mainly distributed in the fields of energy, chemical engineering and power generation. In the segments market, the petrochemical sector is thriving, and the recovery of coal chemical industry, oil refining, metallurgy, nitric acid, and PTA shows an obvious trend. However, with the development of the new energy industry revolution and the continuous advancement of the national energy strategy for clean production and energy conservation and emission reduction policies, the stopped construction and the suspended or postponed construction of thecountry’s large-scale thermal power projects and the investment in the traditional power generation market will continue to be sluggish. Constrained by unfavorable factors such as the continuous rise in the international crude oil prices, adjustments in production capacity in the domestic energy industry and overcapacity in the overall industry, it remains to be seen whether the positive situation driving the segment market will continue.
Currently, the company faces competition not only from domestic manufacturers such as Dongfang Turbine Co., Ltd, Shanghai Steam Turbine Works, Harbin Steam Turbine Works and Nanjing Turbine& Motor Co., Ltd, but also from international giants such as Siemens, GE, MITSUBISHI (Mitsubishi), MAN (Man Turbo), etc. With the continued advancement of strategic orientations such as the “Energy Development Strategic Action Plan (2014-2020)” and “Made in China 2025”, the new market demand will continue to emerge. Only by speeding up the transformation and upgrading, increasing efforts in technological innovation, accelerating the market development and expanding the cooperation in the field of distributed energy of gas turbines, promoting the industrialization of intelligent manufacturing and manufacturing services and making high-quality products and building up brand advantages, the company can become a world-class provider for turbo machinery and services.
(II) Development strategy
The core of thecompany’s “13th Five-Year Plan” development strategy is to speed up the transformation of the company and, in overall, to achieve the technological model innovation and business model innovation. In the technological model innovation, the company will further increase the strength of innovation-driven, combine independent innovation and technology introduction and advance in multiple lines in industrial turbines, gas turbines, distributed energy, and nuclear power fields, and the company will actively capture the market demand and strive to realize the major technology and market breakthroughs in the fields of gas turbines and nuclear power.
In terms of business model innovation, the company will realize the extension from the enterprise value management process to the customer value creation process and realize the transition from production-oriented manufacturing to service-oriented manufacturing, and upgrade the company to become a whole-set equipment
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 manufacturer and a system operator from the single product manufacturer, thus to finally shape the ability of providing and implementing the comprehensive overall solutions.
On the basis of consolidating the position in the industrial steam turbine market, the Company will accelerate the gas turbine business, strengthen the nuclear power business, expand the service and engineering business, and form four major business sectors. At the same time, the company will rely on the five major supporting projects namely the quality project, the resource integration, process reengineering, management improvement and informatization project to shape the company's new core competitiveness.
(III) Business plan
The year of 2018 is a key year for the company to implement the “13th Five-Year Plan” strategy. The company will be guided by its strategic development plan and adhere to the principle of “Continuous Innovation, collaborative advancement, cultural guidance, and preeminent management”, stick to the technological innovation and independent research and development, strive to develop the market and actively fight for orders, well plan and coordinate to ensure the smooth relocation and production, fully promote and implement the company's various management measures, thus to steadily improve each business indicator in 2018 and achieve the growth both in the company's operating income and profits.
1. Innovation-driven transformation and upgrading
The company will adhere to the continuous technological innovation and independent research and development, constantly improve the production process and improve the typical models of high-efficiency condensing power generation series and twisted blades, spare no efforts to do a good work in the design, manufacturing and the follow-up technical services for the units of the key projects including Dalian Hengli, Zhejiang Petrochemical, and Zhongkong Solar Energy project, actively promote the finalized development of gas-turbine combined cycle turbine type and strive to enhance the competitiveness of gas-turbine combined cycle projects.
Seize the opportunity of the “Phoenix Action Plan” of the Zhejiang Provincial Government, actively participate in industry consolidation and reorganization, and take the market as the orientation to promote the development of holding subsidiaries. Strengthen its ability to independently undertake the market business, consolidate and develop its core business competitiveness, improve internal incentive mechanisms and enhance the company's innovation dynamics to become a giant one in the industry.
2. Implement the relocation and ensure the production
In 2018, the company will start the relocation and construction work, fully promote the construction of steam turbine heavy engineering projects, ensure the construction progress and construction quality, and achieve the completion acceptance of the research building construction projects.
In order to reduce the adverse impact of the relocation of the company on production, the company will expand the scale of outsourcing production, rationally balance production and sales, and maximumly satisfy customers' requirements on delivery time.
Plus, the company will strengthen the company's supply chain management, improve the supplier system, deepen the centralized procurement management, explore and establish a strategic procurement negotiation mechanism, increase the scope of product procurement bidding and reduce thecompany’s production and procurement costs.
3. Enhance marketing and build up brand
By upgrading the marketing strategic thinking and carrying out more specified market analysis, the company will strengthen the study and judgement for the competitors and end users, and implement the differentiated precision marketing strategies. In addition, the company will speed up the integration of domestic and foreign trade teams to actively adapt to the requirements of joint sales for power generation drive.
Furthermore, the company will continuously consolidate the domestic market position, strive to achieve
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 breakthroughs in the new energy market, closely follow the national strategic layout, strengthen the attention of countries along the “Belt and Road”, promote cooperation with foreign OEMs, and use thecompany’s brand advantages and product performance advantages to expand thecompany’s influence in the international market. By strengthening the breadth and depth of cooperation with Siemens in the field of gas turbines distributed energy, the company will strive for more orders for distributed energy. And the company will actively follow up the GCL gas turbine project and win more gas turbine contracts, as well as the company will continue to tap into the market opportunities in the western region, the Yangtze River Delta region and the southeastern coastal area. 4. Refine the culture and coherepeople’s hearts
Adhering to the "people-oriented" concept, the company will promote the full development of employees. Also, the company will constantly enrich the connotation of corporate culture, use corporate culture to cohere people's hearts, and build a harmonious relationship between the company and its employees.
Taking the 60th anniversary of the founding of the company and the 20th anniversary of being publicly listed as the opportunity, the company will vigorously promote the “artful, exquisite and fine” craftsman spirit of Hangzhou SteamTurbine’s characteristic culture in the new era with being “respecting the market, respecting customers, respecting rules, and be the enterprise and employees respected by the society”.
5. Deeply enhance the management and enhance the risk prevention and control
The company will continue to promote innovation in management processes, improve thecompany’s management efficiency, and build a complete, scientific, standardized, and effective management system. Also, it will promote management integration projects, optimize organizational systems and business processes, and improve thecompany’s operating efficiency.
Furthermore, the company will comprehensively enhance the risk prevention and control management, strengthen front-end review of sales and procurement contracts, explore accounts receivable risk management mechanism, pay close attention to the progress of contract projects, take timely measures to reduce and activate inventory, and effectively reduce business risks.
(IV) Risks analysis
1. Market Risks
As the investment demand in domestic heavy chemical industry declines and the demand for the steam turbine in the market of drive field is insipid, the market competition will be further intensified and thecompany’s product sales will be further impacted. Relying on technological innovation, the company will actively highlight the core technology advantages, expand the marketing channels, improve the product quality, enhance the end service capabilities, continuously increase the added-value of products and vigorously tap into the potential demands to positively respond to the market and defuse the market risks.
2. Contract execution risk
As the market volatility becomes more intensified, there are more frequent changes in the contract during the execution of the contract for the company, and delays and suspensions of the project schedule happen from time to time, which will have a large impact on the internal realization process of production of the company, and meanwhile it also increases the cost of thecompany’s contract performance and the contract risk. The company will further strengthen the connection between production and sales, improve the speed and level of the company's response to the market, and well control the contract execution risk.
3. Accounts receivable risk
With the increasing risk in the business downturns and investment projects in some customers of the downstream industry, the company's receivables recovery has more risk, and the average age of accounts tends to increase, which will have a large impact on the company's operating results. The company will implement the customer credit management, strengthen the contract signing and perform the risk control, increase the
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 assessment of accounts receivable, and reduce the adverse impact of overdue receivables.
4. Exchange rate risk
The expansion of the company's international procurement and international sales business will cause the company's international balance of payments to be affected by exchange rate fluctuations, and there is a certain risk of exchange loss. With the increase in the two-way volatility of the RMB exchange rate, the uncertainty of foreign exchange gains and losses has been increased. The company will refer to the exchange rate volatility cycle and adopt appropriate exchange rate risk management tools to minimize exchange loss.
5. The company's profitability decline risk
As the market structure has undergone adjustments and changes, the company's product structure has undergone major changes in 2017, and the proportion of products with low gross profit margins has increased significantly, which will have an adverse effect on the overall gross profit margin of the company's products. At the same time, due to the fierce market competition, the product prices continued to decline, and thecompany’s sales profit rate also showed a downward trend. However, the Company will strive to improve the internal management, reduce the operating costs and increase the operational efficiency to resolve the risk of declining profitability.
6. Overseas market risk
During the "Thirteenth Five-Year Plan" period, the company will vigorously implement the "go global" strategy, further expand overseas target markets, and increase the company's share and influence in the international market. However, at present, the overseas target market is affected by geopolitical conflicts, unpredictable changes of internal political and economic situation and trade barrier policies in the region, thus there is great uncertainty in the implementation of overseas market strategies. The company will increase market research efforts, actively demonstrate countermeasures, and explore the development path of business localization.
7. Operating environment change risk
In 2018, the company will fully initiate the relocation project, and the company will implement the overall planning and coordination for the production tasks of 2018, with the holding subsidiaries and strategic cooperation companies or units making good cooperation in the relocation and construction work, thus to minimize the impact of the early relocation on production. Although the company will formulate the plans of relocation safety, security and emergency countermeasures to avoid various issues arising from the equipment disassembly, cargo transportation and storage, turnover and so on, the possibility of various types of personnel injuries, loss of goods and instability incidents will still exist in the relocation process. Therefore, the company will ensure the smooth and orderly implementation of all aspects of comprehensive security, safety production and logistical support in the relocation and reconstruction process.
X. Particulars about researches, visits and interviews received in this reporting period
1.Particulars about researches, visits and interviews received in this reporting period
|||||
|-|-|-|-|
|Reception time|Way of reception|Types of visitors|Basic index|
||||Details are the relevant information disclosure|
|June 20,2017|Onsite investigation|Organization||
||||（http://www.cninfo.com.cn/）|
||||Details are the relevant information disclosure|
|June 27,2017|Onsite investigation|Organization||
||||（http://www.cninfo.com.cn/）|

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
|||||
|-|-|-|-|
||||Details are the relevant information disclosure|
|August 31,2017|Onsite investigation|Individual||
||||（http://www.cninfo.com.cn/）|
|Reception times||3||
|Reception agency amount||2||
|Reception personal number||1||
|Others||0||
|Whether to disclose, reveal or disclose non-public||||
|||No||
|material information||||

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 V. Important Events
I. Specification of profit distribution of common shares and capitalizing of common reserves
Formulation, implementation and adjustment of profit distribution policy of common shares especially cash dividend policy during the reporting period
1.[Dividend sharingprinciple]: Keep profit distribution policy continuous and stable, pay enough attention to the ROI of investors, and give reasonable consideration to our long-term profits, overall profits of all shareholders and sustainable development;
2.[Prioritized cashdividend]: Dividend can be allotted either in cash, stock or in combination of cash and stock, the precondition of which is the company is in profitable state, plentiful in cash flow, and sustaining operation and long-range development are well guaranteed;
3.[Solicit suggestions and demands of independent director and medium and smallshareholders]: The board of directors will work out a specific dividend sharing plan by giving sufficient consideration to business operation, development stage, earning performance, cash flow and current capital requirements and taking medium and smallshareholders’ views into account. Later, the plan is submitted to theshareholders’ general meeting for deliberation after listening to opinions of independent directors. The general meeting is supposed to take advantage of varieties of channels to contact and exchange ideas with shareholders, especially with medium and small shareholders, give ear to their suggestions and demands and get well prepared for answering the problems they are concerned about
4.[Dividend sharingcycle]: Dividend is distributed among shareholders based on an annual cycle as a general rule. We will publish the dividend sharing plan within four months after accounting year and put the plan into practice within two months after deliberation of the shareholders meeting;
5.[Ration of dividendsharing]: The profits accumulated in cash in the last three years are not less than30% of annual average distributable profits in the same year;
6.【Decision-making procedure of dividendsharing】: In the light of Articles of Association, the dividend sharing plan is proposed by the board of directors, and submitted to the shareholders meeting for consideration after being deliberated and approved by the board of directors and commented by the independent directors; 7.【Adjustment process of dividendpolicies】: For the profit distribution policies that need to be adjusted according to the business operation, investment planning and long-term development, the adjusted profit distribution policies shall not violate the relevant provisions of CSRC (China Securities Regulatory Commission) and the stock exchange. The proposals regarding the adjustment of profit distribution policies should seek advice from the independent directors and board of supervisors, and they shall be deliberated by the board of directors and then submitted to the general meetings. The proposals need to receive more than 2/3 of the voting rights held by the shareholders attending the general meetings before implementation.
|||
|-|-|
|Special cash dividend policy description||
|Whether meets the requirements of the provisions of the articles of association or shareholders' meeting||
||Yes|
|resolutions:||
|Whether dividends standard and proportion are clear|Yes|
|Whether decision making and supervision mechanism for profit distribution are completed|Yes|

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
|||
|-|-|
|Whether independent directors perform their duties responsibly and play its due role:|Yes|
|Whether the Minority shareholders have adequate opportunity to express their views and aspirations and Their||
||Yes|
|legitimate rights and interests have been fully protected||
|Whether the Cash dividend policy to adjust or change the conditions and procedures are compliant and||
||Yes|
|transparent||

The profit distribution preplan or proposal and the preplan or proposal of conversion of the capital reserve into share capital in the past three years(with the reporting period inclusive):
The dividend plan for year 2017 was basing on the total capital share of 754,010,400, RMB 0.5 and 0 bonus share will be distributed to each 10 shares. No capitalization of common reserves will be carried out. Totally RMB37,700,520.00 will be distributed.
The dividend plan for year 2016 was basing on the total capital share of 754,010,400, RMB 0 and 0 bonus share(tax included) will be distributed to each 10 shares. No capitalization of common reserves will be carried out. Totally RMB0 will be distributed.
The dividend plan for year 2015 was basing on the total capital share of 754,010,400, RMB 0 and 0 bonus share(tax included) will be distributed to each 10 shares. No capitalization of common reserves will be carried out. Totally RMB0 will be distributed.
Dividend distribution of the latest three years
In RMB
|||||||
|-|-|-|-|-|-|
|||Net profit attributable to|Ratio in net profit|Amount of cash|Proportion of cash|
|||the over of the parent|attributable to the parent|dividends from|dividends from|
||Cash dividend (Including|||||
|Year||company in the|company in the|cash offer to|cash offer to|
||Tax)|||||
|||consolidated financial|consolidated financial|repurchase shares|repurchase shares|
|||statements|statements|of the funds|of the funds|
|2017|37,700,520.00|68,753,250.90|54.83%|0.00|0.00%|
|2016|0.00|31,955,445.73|0.00%|0.00|0.00%|
|2015|0.00|-162,809,311.79|0.00%|0.00|0.00%|

 In the reporting period, both theCompany’s profit and the parentcompany’s retained earnings were positive however not cash dividend distribution proposal has been put forward.
Not applicable
II. Profit distribution for the report period.
|||
|-|-|
|Bonus shares for every ten shares(Shares)|NoN|
|Cash dividend for everty ten shares||
||0.5|
|(Yuan)(Tax-included)||
|Distribute additional (shares)for 10 shares|0|
|A total number of shares as the distribution||
||754,010,400|
|basis(shares)||
|Total cash dividend (Yuan)(Tax-included)|37,700,520.00|
|Profit dividend (Yuan)|2,298,641,960.41|

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
|||
|-|-|
|Proportion of cash dividend in the distributable||
||100%|
|profit (%)||
|Cash dividend distribution policy||
|Where the distribution of profits is carried out in the company's development stage that belongs to a mature stage and there is||
|significant capital expenditure arrangement, the proportion of cash dividends in this profit distribution shall be at least 40%.||
|Details of profit distribution or reserve capitalization plan||
|Not applicable||

III. Commitments to fulfill the situation
1.The fulfilled commitments in the reporting period and under-fulfillment commitments by the end of the reporting period made by the company, shareholder, actual controller, acquirer, director, supervisor, senior management personnel and other related parities.
Nil
2.The existence of the company's assets or projects earnings forecasts and earnings reporting period is still in the forecast period, the company has assets or projects meet the original profit forecast made and the reasons explained
Not applicable
IV.Particulars about the non-operating occupation of funds by the controlling shareholder
Nil
V.Explanation of the Supervisory Committee and Independent Directors (If applicable)on the QualifiedAuditor’s Report Issued by the CPAs.
Not applicable
VI.Explain change of the accounting policy, accounting estimate and measurement methods as compared with the financial reporting of last year.
1. Since May 28, 2017, the company has implemented the “No. 42 Accounting Standards for Business Enterprises-Non-current assets for Sale, disposal Group, and termination of operation” formulated by the Ministry of Finance, and since June 12, 2017, the company has implemented the revised “No. 16 Accounting Standards for Enterprises-Government Grants”. The change of accounting policy is handled by the future applicable method.
2. The Company implemented the “Notice on the Issuance of the Revised Format of Financial Statements for General Enterprises (Caihui[2017] No. 30)” in the preparation of the 2017 annual statement, so that the gains and losses on the disposal of non-current assets and the gains and losses of non-monetary asset exchange previously stated in "Non-operating income" and "Non-operating expenses" were presented in the “Assets disposal income". This change in accounting policy adopted the retrospective adjustment method, which reduced the 2016 non-operating income by RMB 387,292.53 and increased the asset disposal income by RMB
387,292.53.
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 VII.Explain retrospective restatement due to correction of significant accounting errors in the reporting period Nil
VIII.Explain change of the consolidation scope as compared with the financial reporting of last year.
The number of subsidiaries included in the scope of the consolidated financial statements for the reporting year was reduced by five.
In which, 1. Due to the cancellation of Zhejiang Runhong Gas Turbine Engineering Co., Ltd, its holding equity of its subsidiary Zhejiang Zhongrun Gas Turbine Technology Co., Ltd (10 million yuan) was transferred to Zhejiang Touping Import& Export Trade Co., Ltd (a wholly-owned subsidiary to the company) and Ningbo Daxie Development Zone Huashun Industry& Trade Co., Ltd. After the equity disposal was completed, Zhejiang Turbine Import& Export Co., Ltd. held32.22% stake of Zhejiang Zhongrun Gas Turbine Technology Co., Ltd, so the company lost the control right of Zhejiang Zhongrun Gas Turbine Technology Co., Ltd, and thus it was no longer included in the consolidation scope.
2. The other four subsidiaries were not included because of the liquidation and cancellation.
In RMB
||||||
|-|-|-|-|-|
|Company Name|Way of EquityDisposition|Time Point of EquityDisposition|Net Assets on theDate of Disposition|Net Profits from theBeginning of the Period tothe Date of Disposition|
|Xinjiang Taifeng Hangzhou SteamTurbine Complete TechnologyDevelopment Co., Ltd.|Chearing|April 25,2017|17,061,690.18|181,238.78|
|Hangzhou Steam Turbine BoilerCo.,Ltd.|Chearing|April 27,2017|19,665,256.43|1,130,995.08|
|Hangzhou PangtongElectromechanical Equipment Co.,Ltd.|Chearing|December 21,2017|1,086,391.89|-115,873.20|
|Zhejiang Runhong Gas TurbineEngineering Co., Ltd.|Chearing|December 22,2017|34,953,788.30|2,813,561.91|

IX. Engagement/Disengagement of CPAs
CPAs currently engaged
|||
|-|-|
||Pan-China Certified Public Accountants (Special commonpartnership)|
|Name of the domestic CPAs||
|Remuneration for domestic accounting firm (RMB’0000)|116|
|Successive years of the domestic CPAs offering auditing services|19|
|Names of the certified public accountants from the domestic CPAs|Jiang Xiaodong , Ye Xiaobin|
|Name of the Overseas CPAs（If any）|Nil|
|Remuneration for overseas accounting firm (RMB’0000)(If any)|0|
|Successive years of the overseas CPAs offering auditing services|Nil|

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
|||
|-|-|
|Names of the certified public accountants from the overseas CPAs|Nil|

Has the CPAs been changed in the current period
No
Engaging of CPA for internal auditing, financial consultants or sponsors
Pan-China Certified Public Accountants is engaged the auditor of internal control system for the current year. With payment of RMB 0.26 million for its service.
X.Situation of Facing Listing Suspension and Listing Termination after the Disclosure of the Yearly Report Not applicable
XI. Receivership and bankruptcy
No bankruptcy or capital reorganizing issues occurred in the report period.
XII. Major lawsuits and arbitrations
Nil
XIII. Punishment and improvement
Nil
XIV.Credit Condition of the Company and its Controlling Shareholders and Actual Controllers
Nil
XV. Implementation Situation of Stock Incentive Plan of the Company, Employee Stock Ownership Plan or Other Employee Incentive Measures
Nil
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 XVI. Material related transactions
1. Related transactions in connection with daily operation
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
||||||||||Whether|||||
|||||||||Trading limit|over the|||||
|||||Principle of|||||||Market price||Index of|
||||Subjects of the|||Amount of||||||||
|Related parties|Relationship|Type of trade|related|pricing the|Price of|trade|Ratio in|approved|approved|Way of|of similar|Date of|informatio|
|||||related|trade||similar trades|||payment|trade|disclosure|n|
||||transactions|transactions||RMB0’000||（RMB’0000）|limited or||available||disclosure|
||||||||||not (Y/N)|||||
|Hangzhou Steam||||||||||Bank||||
|||||||||||||January||
|Turbine Automobile|Affiliate of the||freight, repairing||Market|||||||||
|||Accept labor||Fair and just||5,418.86||6,790|No||5500||2018-06|
|Sales Service Co.,|Group||fee||price|||||transfer||26,2018||
|Ltd.||||||||||||||
|Hangzhou Hangfa||||||||||Bank|Not|January||
||Affiliate of the|Purchase of|||Market|||||||||
|Power Generating|||Generators|Fair and just||13,788.61||14,100|No||||2018-06|
||Group|goods|||price|||||transfer|applicable|26,2018||
|Equipment Co., Ltd.||||||||||||||
|Hangzhou Steam||||||||||||||
|Turbine|Affiliate of the|||||||||Bank||||
||||||||||||Not|January||
|||Sale goods|SteamTurbine|Fair and just|Market|7,732.57||4,200|Yes||||2018-06|
|Engineering Co.,|Group||||price|||||transfer|applicable|26,2018||
|Ltd.||||||||||||||
|Total||||--|--|26,940.04|--|25,090|--|--|--|--|--|
|Details of any sales return of a large amount||||Nil||||||||||
|Give the actual situation in the report period where a forecast had been||||Pursuant to the “Stock Listing Rules”, as the actual controller of the related party is the same that is Hangzhou Steam Turbine Power||||||||||
|||||Group Co., Ltd, the estimate is combined based on the same actual controller. Although the total actually-occurred amount of routine||||||||||
|made for the total amounts of routine related-party transactions by type to||||||||||||||
|||||related party transactions in 2017 exceeded the estimated amount of 2017, the exceeding part did not reach the par.，||||||||||
|occur in the current period(if any)||||||||||||||
|||||Refer to the announcement of the http://www.cninfo.com.cn disclosure on January 27, 2018(Accouncement No.:2018-06）||||||||||
|Reason for any significant difference between the transaction price and||||||||||||||
|||||Nil||||||||||
|the market refernce price (if applicable)||||||||||||||

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 2. Related transactions in terms of acquisition or disposal of assets:
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
||||||||Transfer||Gains and losses|||
||||||Book value of|Valuation of||Transaction||||
|||Related party|Related party||||price||on|Date of|Index of|
|The related party|Relationship|||Pricing|assets transferred|transferred assets||settlement||||
|||transaction type|transaction content||||(RMB’0000||transaction(RM|disclosure|Disclosure|
|||||principle|(RMB’0000)|(RMB’0000)||method||||
||||||||)||B’0000)|||
|||||||||Payment||||
|Hangzhou Steam|||R&D Project of|||||||||
||Parent|Transfer of R & D||||||through||August||
|Turbine Power|||50MW Power Grade|Impartial, fair|5603.06|6131.29|6131.29||14.74||2017-62|
||company|project||||||transfer of||18,2017||
|Group Co., Ltd|||Gas Turbine|||||||||
|||||||||accounts||||
||The|||||||||||
||subsidiary||full equity of|||||||||
|||||||||Payment||||
||enterprise of|Outward|Hangzhou Changdi|||||||||
|Zhejiang Juqin||||||||through||January||
||Hangzhou|investment|equity investment|Impartial, fair|4,855.84|7,368|7,368||2,512.16||2017-01|
|Investment||||||||transfer of||17,2017||
||steam|transfer|partnership (limited|||||||||
|||||||||accounts||||
||turbine||partnership)|||||||||
||group|||||||||||
|Reasons for large differences between transfer price and book value or||||||||||||
|||||Nil||||||||
|valuation value (if any)||||||||||||
|Impact on the company's operating results and financial situation||||Increase the company's profits||||||||
|Achievement of performance during the reporting period if the relevant||||||||||||
|||||Nil||||||||
|transaction involves performance agreement||||||||||||

3. Related transactions in term of collective external investment
|||||||||
|-|-|-|-|-|-|-|-|
|||||The registered|Total assets of the|Net assets of the|Net profit of the|
||Related||The main business of the invested|||||
|Co – investor||The name of the investee||capital of the|invested enterprise|invested enterprise|invested enterprise|
||Relrelationship||enterprise|||||
|||||invested enterprise|（RMB’0000）|（RMB’0000）|（RMB’0000）|
|Hangzhou Steam Turbine|The controlling|Hangzhou Jushi Investment|Services: investment management,|310（million）|18,252.81|18,193.71|-1.71|

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
|||||
|-|-|-|-|
|Power Group Co., Ltd|shareholder of the|Partnership（Limited|industrial investment, investment|
||company|parnership）|advice (except securities, futures)|
|Progress of major construction projects under||||
|||Nil||
|construction (if any)||||

4. Debts and credits with related parties
Nil
5. Other material related transactions
Nil
XVII. Material contracts and execution
1. Entrustment, contracting, and leasing issues
(1) Trusteeship
No trusteeship in the report period.
(2) Contracting
No contracting in the report period.
(3) Leasing
No Leasing in the report period.
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 2.Guarantees
（1）Guarantees
InRMB’0000
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|Outward guarantees offered by the Company and its subsidiaries (Excluding guarantee to the subsidiaries）||||||||||||
|||||Actual||||||||
|||Amount||||||||||
||||Actual date of occurring|amount|||||Compl||Related|
|Guarantee|Amount of guarantee|of the|||Type of|||||||
||||(signing date of|of||Term|||eted or||guarante|
|provided to|and date of disclosure|guarante|||guarantee|||||||
||||agreements|guarante|||||not||e|
|||e||||||||||
|||||e||||||||
|Hangzhou Steam||||||Two years from the||||||
|Turbine Power|October 22,2016|20,800|October 28,2016|20,800|Mortgage,|date of expiration of|||No||Yes|
|Group Co., Ltd.||||||the principal debt||||||
|||||Total amount ofoutward||||||||
|Total amount of outward||||||||||||
|||||guarantee actuaily||||||||
|guaranteeapproved in the report period||0||||20,800||||||
|||||incurred in the report||||||||
|（A1）||||||||||||
|||||period（A2）||||||||
|||||Total balance of actual||||||||
|Total of external guarantee||||||||||||
|||20,800||external guarantee at||20,800||||||
|approved at Period-end(A3)||||||||||||
|||||Period-end(A4)||||||||
|Guarantee of the subsidiaries for the controlling subsidiaries||||||||||||
||Relevant|||||||Complet||||
||||Date of|||||||Guarantee||
||disclosure|Amount||Actual||||e||||
|Name of the|||happening|||||||for||
||date/No. of|of||mount of|Guarantee||Guarantee|impleme||||
|Company|||(Date o|||||||associated||
||the|guarante||guarante|type||term|ntation||||
|guaranteed|||signing|||||||parties||
||guaranteed|e||e||||or||||
||||agreement)|||||||(Yes or no)||
||amount|||||||not||||
|Hangzhou||||||||||||
|Guoneng Steam||||||||||||
||||||Joint liability|||||||
|Turbine|January 21,2017|2,000|January 20,2017|2,000|||1 year|Yes||No||
||||||quaranty|||||||
|Engineering Co.,||||||||||||
|Ltd.||||||||||||
|Hangzhou Steam||||||||||||
||||||Joint liability|||||||
|Turbine Casting|July 15,2017|3,000|November 16,2017|3,000|||1 year|No||No||
||||||quaranty|||||||
|Co., Ltd.||||||||||||
|||||Total of actual guarantee||||||||
|Total of guarantee for subsidiaries||||||||||||
|||5,000||for subsidiaries in the|||5,000|||||
|approved in the Period (B1)||||||||||||
|||||Period (B2)||||||||
|||||Total of actual guarantee||||||||
|Total of guarantee for subsidiaries||||||||||||
|||5,000||for subsidiaries at|||5,000|||||
|approved at Period-end (B3)||||||||||||
|||||Period-end (B4)||||||||
|Guarantee of the subsidiaries for the controlling subsidiaries||||||||||||

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|
||Relevant||||||||||Complet||
|||||Date of||||||||Guarantee|
||disclosure||Amount||||||||e||
|Name of the||||happening||Actual||||||for|
||date/No. of||of||||Guarantee|||Guarant|impleme||
|Company||||(Date o||mount of||||||associated|
||the||guarante||||type|||ee term|ntation||
|guaranteed||||signing||guarantee||||||parties|
||guaranteed||e||||||||or||
|||||agreement)||||||||(Yes or no)|
||amount||||||||||not||
|Hangzhou|||||||||||||
|Guoneng Steam|||||||||||||
||||||||Joint liability||||||
|Turbine|January 21,2017||5,000|January 20,2017||3,779.55||||1 year|Yes|No|
||||||||quaranty||||||
|Engineering Co.,|||||||||||||
|Ltd.|||||||||||||
|Hangzhou|||||||||||||
|Guoneng Steam|||||||||||||
||||||||Joint liability||||||
|Turbine|April 26,2017||10,000|April 26,2017||4,520.05||||1 year|No|No|
||||||||quaranty||||||
|Engineering Co.,|||||||||||||
|Ltd.|||||||||||||
|||||||Total amount of guarantee to the|||||||
|Total guarantee quota to the subsidiaries|||||||||||||
|||15,000||||subsidiaries actually incurred in||||8,299.6|||
|approved in the reporting period (C1)|||||||||||||
|||||||the reporting period (C2)|||||||
|||||||Total balance of actual|||||||
|Total guarantee quota to the subsidiaries|||||||||||||
|||||||guarantee to the subsidiaries at|||||||
|approved at the end of the reporting||15,000||||||||8,299.6|||
|||||||the end of the reporting period|||||||
|period (C3)|||||||||||||
|||||||(C4)|||||||
|Total of Company’s guarantee（namely total of the large three aforementioned）|||||||||||||
|Total of guarantee in the Period|||||Total of actual guarantee in||||||||
|||20,000||||||34,099.6|||||
|（A1+B1+C1）|||||the Period（A2+B2+C2）||||||||
||||||Total of actual guarantee at||||||||
|Total of guarantee at Period-end|||||||||||||
|||40,800|||Period-end|||34,099.6|||||
|（A3+B3+C3）|||||||||||||
||||||（A4+B4+C4）||||||||
|The proportion of the total amount of actually guarantee in the net|||||||||||||
||||||5.79%||||||||
|assets of the company(A4+B4+C4)|||||||||||||
|Including ：|||||||||||||
|Amount of guarantee for shareholders, actual controller and its associated parties（D）|||||||||20,800||||
|The debts guarantee amount provided for the|||||||||||||
|Guaranteed parties whose assets-liability ratio exceed|||||||||0||||
|70% directly or indirectly（E）|||||||||||||
|Proportion of total amount of guarantee in net assets of the company exceed 50%（F）|||||||||0||||
|Total guarantee Amount of the abovementioned guarantees（D+E+F）|||||||||20,800||||
|Explanations on possibly bearing joint and several liquidating responsibilities for undue guarantees ( If any)|||||||||Nil||||
|Explanations on external guarantee against regulated procedures(If any)|||||||||Nil||||

Description of the guarantee with complex method
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 (Hangzhou Heavy Machinery Co., Ltd, which is the company's subsidiary, had made an application of special construction funds of RMB 0.208 billion to China Development Fund Co.,Ltd, and it has signed the four-party China Development Fund Investment Contract with China Development Fund ,the company and Hangzhou Steam Turbine Group Co.,Ltd. In order to ensure the performance of the "Investment contract" by Hangzhou steam group, the company and the Heavy Machinery Co., Ltd provide guarantee for Hangzhou Steam Group in the forms of pledge and mortgage. The contents is detailed in the Announcement on External Guarantee of Hangzhou Steam Turbine Co., Ltd. announced on October 22, 2016 at the website designated by the Shenzhen Stock Exchange (http // www.cninfo.com.cn). (Announcement No. 2016-75)
（2）Illegal providing of external guarantees
No illegal providing of external guarantees in the report period.
3.Situation of Entrusting Others for Managing Spot Asset
(1)Situation of Entrusted Finance
InRMB’0000
||||||
|-|-|-|-|-|
|Type|Source|Amount|Unexpired balance|Overdue amount|
|Bank financing product|Idle own funds|100,955|76,657|0|
|Trust financing product|Idle own funds|32,876.73|12,016.23|0|
|Total||133,831.73|88,673.23|0|

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 Specific Circumstance of Trust Investment which is large in single amount, low in security, poor in liquidity or unguaranteed in high risk InRMB’0000
||||||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|||||||||||||Actual|||||
||||||||||Referent||Actual|||Whether||Summary|
|||Type||||||||||recovery|||||
||||||||||ial||profit or||Provision|or not|Is there a|of matters|
||Type of|of||||||Way of||Prospect||of profits|||||
|Name of Trustees|||||Date of|Date of|||Annuali||loss for||for|due|commissio|and related|
||Trustees (or|Prod|Amount|Source|||Capital Investment Orientation|Confirmin||ive Yield||and losses|||||
|(or Entrustees)|||||Beginning|Expiry|||zed||the||impairmen|process|n plan in|query|
||Entrustees)|uctio||||||g Rewards||(if any)||during the|||||
||||||||||Yield||reportin||t (if any)|has been|the future|Index (if|
|||n||||||||||reporting|||||
||||||||||Rate||g period|||followed||any)|
|||||||||||||period|||||
||Investment|||Disposal|||This trust is invested for||||||||||
|||Trus|||September|March||Floating|||||||||
|Hengtian Weath|management||3,000|of own|||Zhongyuan-Chuangyuan No.4||7.20%|110.07|110.07|110.07||Yes|No||
|||t|||16,2016|21,2017||profit|||||||||
||company|||capital|||Special Asset Management Plan||||||||||
||||||||Invested for bond assets such as||||||||||
||||||||government bond, enterprise bond,||||||||||
||||||||asset management plan; cash assets||||||||||
||Investment|||Disposal|||||||||||||
|||Trus|||October|January|such as cash deposit, bank deposit,|Floating|||||||||
|Hengtian Weath|management||5,000|of own|||||6.30%|78.63|78.63|78.63||Yes|No||
|||t|||25,2016|24,2017|bond reserve repo; equity assets|profit|||||||||
||company|||capital|||||||||||||
||||||||such as privately-raising equity||||||||||
||||||||investment fund, equity of||||||||||
||||||||non-listed company||||||||||
||||||||This trust will be specially used for||||||||||
||Investment|||Disposal|||||||||||||
|||Trus|||December|March|the production scale expansion of|Floating|||||||||
|Hengtian Weath|management||3,000|of own|||||6.70%|53.42|53.42|53.42||Yes|No||
|||t|||1,2016|8,2017|Shenzhen Qianhai Yuhai Building|profit|||||||||
||company|||capital|||||||||||||
||||||||Eco-technology Co., Ltd.||||||||||
||Investment|||Disposal|||The orientation of this trust||||||||||
|||Trus|||November|May||Floating|||||||||
|Changan Trust|management||5,000|of own|||investment is centered on liquid||5.10%|127.5|118.77|118.77||Yes|No||
|||t|||22,2016|11,2017||profit|||||||||
||company|||capital|||assets and earning assets||||||||||
||||||||The trust capital will be invested for||||||||||
||||||||the contribution for Shanghai Jin||||||||||
||||||||Mu Yuan Investment||||||||||
||Investment|||Disposal|||||||||||||
|||Trus|||June|June|Partnership(Limited Partnership),|Floating|||||||||
|Zhongrong Trust|management||5,000|of own|||||6.30%|315|315|315.00||Yes|No||
|||t|||16,2016|16,2017|contributing the partnership shares|profit|||||||||
||company|||capital|||||||||||||
||||||||of priority to become the||||||||||
||||||||partnership of priority of Shanghai||||||||||
||||||||Jin Mu Yuan Investment||||||||||
||Investment|||Disposal|||Invested for bond assets such as||||||||||
|||Trus|||January|April||Floating|||||||||
|HT Cathay Rock|management||5,000|of own|||government bond, enterprise bond,||6.70%|83.76|83.76|83.76||Yes|No||
|||t|||25,2017|25,2017||profit|||||||||
||company|||capital|||asset management plan; cash assets||||||||||

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
||||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
||||||||such as cash deposit, bank deposit,||||||||
||||||||bond reserve repo; equity assets||||||||
||||||||such as privately-raising equity||||||||
||||||||investment fund, equity of||||||||
||||||||non-listed company||||||||
||||||||Trust Funds with dispersed||||||||
||||||||investment will be invested for real||||||||
||||||||estate claims,other||||||||
|Hangzhou|Investment|||Disposal|||claims;publicly-raising bond,||||||||
|||Trus|||July|March||Floating|||||||
|Industrial&Comm|management||5,000|of own|||privately-raising bond;debt funds;||6.50%|228.8|0|0|Yes|Yes|
|||t|||6,2017|20,2018||profit|||||||
|ercial Trust|company|||capital|||publicly-raising equity instrument,||||||||
||||||||privately-raising equity instrument;||||||||
||||||||short-term debt instrument ,||||||||
||||||||high-liquidity debt instrument||||||||
||||||||The trust capital will be invested for||||||||
||||||||the contribution for Shanghai Jin||||||||
||||||||Mu Yuan Investment||||||||
||Investment|||Disposal|||||||||||
|||Trus|||June|June|Partnership(Limited Partnership),|Floating|||||||
|Zhongrong Trust|management||5,000|of own|||||7.20%|360|0|0|Yes|No|
|||t|||22,2017|22,2018|contributing the partnership shares|profit|||||||
||company|||capital|||||||||||
||||||||of priority to become the||||||||
||||||||partnership of priority of Shanghai||||||||
||||||||Jin Mu Yuan Investment||||||||
|||Fina||Disposal|||Money market, fixed income,||||||||
||||||August|February2||Floating|||||||
|CITIC Bank|Bank|ncin|7,000|of own|||non-standardized creditor's assets||4.90%|171|0|0|Yes|Yes|
||||||25,2017|3,2018||profit|||||||
|||g||capital|||and other categories||||||||
||||||||Invested for 1.beneficial rights of||||||||
||||||||trust plan, income right of equity,||||||||
||||||||income right of assets, income right||||||||
||||||||of claims and entrusted loans which||||||||
||||||||are held by the plan of asset||||||||
||Investment|||Disposal|||management or the third party||||||||
|||Trus|||May|March||Floating|||||||
|Hengtian Weath|management||5,000|of own|||(including other funds managed by||8.50%|360.07|359.79|359.79|Yes|No|
|||t|||11,2016|11,2017||profit|||||||
||company|||capital|||the managers) 2.bank deposit,||||||||
||||||||money market funds and bank||||||||
||||||||financing plans as well as the||||||||
||||||||low-risk and high-liquidity financial||||||||
||||||||products which are approved by||||||||
||||||||CSRC or are filed by SAC||||||||

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|||||||||1,888.25|1,119.44|||||
|Total|48,000|--|--|--|--|--|--|||--|--|--|--|

 Situation with the appearance of principals which can not be recovered expectedly or other existing situations which may lead to impairment Not applicable
(2)Situation of Entrusted Loans
Nil
4. Other significant contract
Nil
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 XVIII. Social responsibility
1. Execution of social responsibility
1.While committed to long-term development and the realization ofshareholders’ value, the company pays close attention to the natural environment and resources and assumes corresponding responsibilities in connection to relevant stakeholders such as shareholders, employees, customers, suppliers and the community, thus to achieve thecompany’s sustainable, harmonious and united development with the society.
2. The company developed the "Social responsibility management standards", which specifies thecompany’s responsibilities and regulatory requirements in terms of protection of shareholders andcreditors’ interests, safeguarding the interests of workers, production safety, environmental protection, energy saving and emission reduction and social welfare, as well as clarifies the importance of social responsibility.
3. The company further strengthened the protection work for small investors, enhanced the management of investor relations and established multi communication channels. For the news which may have big impact on thecompany’s stock price, the company actively checked and verified the contents and clarified with the real facts, even issued announcements whenit’s necessary, thus to soundly protect the legitimate rights and interests of small investors.
4.The
company honestly dealt with suppliers and customers and always maintained the good commercial credit and excellent contract performance level. The company built up strategic cooperative relationships with suppliers, established the convenient platform for information communication and continuously enhanced the level of cooperation. Moreover, the company provides customers with quality products and professional services and can offer individualized business solution to cater for different application environments, thus the company had received good comments from customers.
5.The
company actively promoted the vocational development for employees, constantly improved the vocational environment for employees and well protected the physical and mental health of employees. The company has national technical experts and a number of high skilled talents proved by province-or-city level competitions. Besides, the company has established a number of skilled Master Studios in the manufacturing sites and promoted to build a golden blue team of modern manufacturing. The company further raised the medical expenses subsidies for employees and made the employees have the critical illness insurance and anti-cancer insurance. The company used the labor dispatch service with strictly in accordance with the national provisions and regulations, and the company had signed the “Special collective wage contract" and “Special collective contract for labor safety and health” with the union. Besides, the company established the “three-dimensional and one-whole” safety production management system. In addition, the company carried out many mass cultural activities throughout the year, implemented the expansion work forstaffs’ sports venues, supported the employees to create various types of cultural organizations and created a vibrant business atmosphere.
6.The
company valued the importance of environmental protection, energy-saving and emission-reduction. The company set up special assessment indicators and strictly regulated thecompany’s various types of environmental behaviors during the operation process. Strengthened the management of hazardous waste and strictly control the transfer, storage and other processes of hazardous waste, thus thecompany’s safe disposal rate of hazardous waste achieved100%. During the reporting period, the company's whole-year emissions detection items including waste water, waste gas and noise were all in line with national standards. The company set up energy consumption indicators for each department and included the energy consumption indicators in the annual assessment system, greatly carried out the promotion of energy-saving, regularly organized the inspections for energy-saving and implemented a number of energy-saving projects, thus the total annual comprehensive energy-consumption decreased from the last year.
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
||
|-|
|7. The company continues to support and carry out public welfare undertakings. The company organized|
|employees to participate in voluntary blood donation activities. The “Spring Breeze Action” donation and the visit|
|of the Panan Jieye to the elderly showed that the company valued and supported the social public welfare|
|undertaking while pursuing the business development of the company.|

2.Implementation of the social responsibility of precise poverty relief
||
|-|
|(1) Precision poverty alleviation planning|
|The company participates in the “Lianxiangjiecun” helping and supporting activities in Hangzhou, from|
|2017 to 2021 for 5 years, with an annual funding of RMB 150,000 to assist Zitong Township in Chun’an County.|

 (2) Annual Precision Poverty Alleviation Summary
Under the leadership of the Hangzhou CPPCC, the company went to Wutong Town,Pan’an County, from December 23 to 24 to launch the “Send Education, Send Health, Send Culture, Send Science,” to the countryside and help the villagers in the village of Lianxiang. In conjunction with the Wutong Town Calligraphy and Culture Festival, experts in organizational education, health care, culture, and science popularization launched the “Four Gets Sending” event to listen to reports on the progress of assisting work in Lianxiangjie Village in 2016, and assisted the 2017 project. Conduct research.
（3）Precision poverty alleviation effect
||||
|-|-|-|
|Index|Measurement unit|Quantity / Status|
|I. General situation|——|——|
|Thereinto： 1.Capital|RMB’0000|15|
|II. Itemized input|——|——|
|8. Social poverty alleviation|——|——|
|8.2 Amount invested in targeted povertyalleviation work|RMB’0000|15|

（4）Subsequent targeted poverty alleviation program
The follow-up plan of the company will follow up the “Lianxiangjie Village” assistance activities as planned. The next year will continue to implement accurate poverty alleviation in the form of 150,000 cash grants at Wutong Town,Pan’an County.
3.Environmental protection
Listed company and its subsidiary belongs to the key pollution enterprise listed by Department of Environmental Protection
No
Neither the company nor its subsidiaries belong to the key pollutant discharge units announced by the environmental protection department. The company has formulated and perfected the environmental management systems and control procedures for various types of waste water, waste gas, waste slag, and noise in accordance with relevant environmental laws and regulations and relevant standards promulgated by the national and local governments. The company has imported ISO14001 environmental management system since 2006 and the system has been operated effectively for more than ten years. Currently, the company has adopted the clean production management and launched the clean production audits, which not only reduces consumption and
increases efficiency, but also reduces the pressure and cost of end-of-pipe management. In terms of environmental
greening, after years of meticulous maintenance, the company has become a garden-style enterprise.
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 The company's environmental management system has been in operation for many years, and it has been strictly abiding by the relevant laws and regulations of the state and the principle of continuous improvement. Each year, the company formulates the annual environmental protection goals and formulates the environmental management plans. The company also has a complete and effective management system for waste water, waste gas, waste residue and noise and other waste management. Over the years, there has been no incident of environmental pollution and emissions exceeding the standard.
XIX. Explanation on other significant events
1. Matters concerning starting the relocation work of Hangzhou Steam Turbine Plant Area
Hangzhou Municipal Government will include the Steam Turbine Shiqiao Road plant area and its surrounding areas into the reconstruction and development scope of Lighthouse Unit City of Xiacheng District of Hangzhou City, and the company will start the relocation of the Shiqiao Road plant area according to relevant requirements. As for the compensation for the relocation of Hangzhou Steam Turbine Shiqiao Road factory area, the government of Xiacheng District of Hangzhou City is responsible for paying the compensation for the relocation to Hangzhou Steam Turbine Group, which will be taken as the compensation for the whole relocation of Hangzhou Steam Turbine Shiqiao Road factory area.The complete report is available as Announcement 2017-31 and Announcement 2017-54 with Securities Times, Shanghai Securities Daily, Hong Kong Commercial Daily and at www.cninfo.com.cn dated April 21, 2017, and August 7, 2017.
2. The Matter-that the company has been recognized as the high-tech enterprise
The company has been listed in the “List of the first batch of High-tech Companies in Zhejiang Province in 2017”, and the company will enjoy the preferential policies for high-tech enterprises from 2017 to 2019, that is to pay corporate income tax at the rate of15%.The complete report is available as Announcement 2017-76 with Securities Times, Shanghai Securities Daily, Hong Kong Commercial Daily and at www.cninfo.com.cn dated December 28, 2017.
3. Matters concerning the change of directors, supervisors and senior management personnel of the company Mr. Yu Changquan resigned from the company's deputy general manager and secretary of the Board of Directors due to approaching the statutory retirement age. The Company held the meeting of the Board of Directors, which passed the appointment of Mr. Wang Zhengrong as the deputy general manager of the company and the appointment of Mr. Wang Gang as the secretary of the seventh Board of Directors of the Company.The complete report is available as Announcement 2017-41 with Securities Times, Shanghai Securities Daily, Hong Kong Commercial Daily and at www.cninfo.com.cn dated June 10,2017.
Mr. Liu Guoqiang resigned from the company's director post due to approaching the statutory retirement age. The Company held the meeting of the Board of Directors, which passed the appointment of Mr. Wang Gang as the non-independent director of the company's seventh Board of Directors, and that had been submitted to the 2016 annual general meeting of shareholders for deliberation with an approval result. The complete report is available as Announcement 2017-48 with Securities Times, Shanghai Securities Daily, Hong Kong Commercial Daily and at www.cninfo.com.cn dated June 30,, 2017.
Mr. Zhang Yougen resigned from thecompany’s supervisor post due to approaching the staturory retirement age. The Company held the meeting of the Board of supervisors, which passed the appointment of Mr.Liu Zhiyong as supervisor of the company's seventh Board of supervisors , and that had been submitted to the 2016 annual general meeting of shareholders for deliberation with an approval result. The complete report is available as Announcement 2017-48 with Securities Times, Shanghai Securities Daily, Hong Kong Commercial Daily and at www.cninfo.com.cn dated June 30,, 2017.
Mr. Nie Zhonghai resigned from thecompany’s director post due to approaching the staturory retirement age. The complete report is available as Announcement 2017-65 with Securities Times, Shanghai Securities Daily, Hong Kong Commercial Daily and at www.cninfo.com.cn dated June 30,, 2017.
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 Ms. Pu Yangshuo submitted her resignation to the company due to personal reasons and resigned from the position of deputy general manager and chief accountant of the company. The Company held the meeting of the Board of Directors, which passed the appointment of Mr. Zhao Jiamao as the deputy general manager and chief accountant of the company, with the term starting from January 1, 2018.The complete report is available as Announcement 2017-78 with Securities Times, Shanghai Securities Daily, Hong Kong Commercial Daily and at www.cninfo.com.cn dated December 30, 2017.
4. Matters concerning the revision of the "Articles of Association of the Company"
In order to thoroughly implement the spirit of the important speeches of the Sixth Central Committee of the 18th CPC Central Committee and General Secretary XiJinping’s party building work conference on state-owned enterprises, and to integrate theparty’s leadership into all aspects of corporate governance, embed the party organization into the corporate governance structure and to specify and implement the statutory status of the party organization in the corporate legal person governance structure, the company had proposed amendments to the contents of the "Articles of Association of the Company" and submitted it to the 2016 Annual general meeting of shareholders for deliberation with an approval result.The complete report is available as Announcement 2017-48 with Securities Times, Shanghai Securities Daily, Hong Kong Commercial Daily and at www.cninfo.com.cn dated June 30,, 2017. 5. Matters of theCompany’s signing of important project contracts
At the beginning of the year, the company and Hengli Petrochemical (Dalian) Refining and Chemical Co., Ltd signed a contract of steam turbines generator sets and drive compressor and steam turbines for feed pump in connection to the 20 million tons refinery-chemical integration project. At the end of the year, the company won the big contract of steam turbines for the Phase I project of the 40-million-ton/year refinery project of Zhejiang Petrochemical. The signing of the two major orders further consolidated the company's domestic leading position in the industry.The complete report is available as Announcement 2017-26, 2017-75 with Securities Times, Shanghai Securities Daily, Hong Kong Commercial Daily and at www.cninfo.com.cn dated March 31, 2017 and December 7, 2017.
XX. Material issues of the subsidiaries
1. Matters of theCompany’s Holding Subsidiaries recognized as High-tech Enterprises
The company's holding subsidiary Hangzhou Steam Turbine Casting Co., Ltd was re-reviewed and recognized as one of the first batch of high-tech enterprises in Zhejiang province in 2016, and thecompany’s holding subsidiaries Zhejiang Steam Turbine Whole-set Technology Development Co., Ltd, Hangzhou Zhongneng Steam Turbine Power Co., Ltd, Zhejiang Huayuan Steam Turbine Machinery Equipment Co., Ltd and Hangzhou Guoneng Steam Turbine Engineering Co., Ltd were included in the "List of the first batch of High-tech Enterprises in Zhejiang Province in 2017". The afore-said five companies will enjoy the preferential policies for high-tech enterprises from 2017 to 2019, that is, they will pay the corporate income tax at the rate of15%.The complete report is available as Announcement 2017-04, 2017-76 with Securities Times, Shanghai Securities Daily, Hong Kong Commercial Daily and at www.cninfo.com.cn dated March 1, 2017 and December 28, 2017.
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 VI. Change of share capital and shareholding of Principal Shareholders
1.Changes in share capital
In shares
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
||Before the change||Increase/decrease（+，-）|||||After the Change||
||Amount|Proportion|||Capitaliz|||||
||||Share|Bonus|ation of|||||
||||allotmen||common|Other|Subtotal|Quantity|Proportion|
|||||shares||||||
||||t||reserve|||||
||||||fund|||||
|I. Shares with trade||||||||||
||479,944,281|63.65%|0|0|0|16,344|16,344|479,960,625|63.65%|
|restriction conditions||||||||||
|2. State-owned shares|479,824,800|63.64%|0|0|0|0|0|479,824,800|63.64%|
|3. Other domestic shares|119,481|0.01%|0|0|0|16,344|16,344|135,825|0.01%|
|Domestic natural person||||||||||
||119,481|0.01%|0|0|0|16,344|16,344|135,825|0.01%|
|shares||||||||||
|II. Shares without trading||||||||||
||274,066,119|36.35%|0|0|0|-16,344|-16,344|274,049,775|36.35%|
|limited conditions||||||||||
|2. Foreign invested shares||||||||||
|listed|274,066,119|36.35%|0|0|0|-16,344|-16,344|274,049,775|36.35%|
|in Mainland China||||||||||
|III. Total of capital shares|754,010,400|100.00%|0|0|0|0|0|754,010,400|100.00%|

 Causes of Change of shares
Not applicable
Approval of change of the shares
Not applicable
Transfer in change of shares
Not applicable
Influence of the change of the shares upon such financial indicators as the basic EPS and diluted EPS, net asset value per share attributable to the common stockholders in the past year and the latest period
Not applicable
Other information the Company considers it necessary or required by the securities regulatory authority to be disclosed
Not applicable
2. Change of Restricted Shares
Not applicable
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 II. Securities issue and listing
1.Explanation of the Situation of the Security Issue(No Preferred Shares) in the Report Period
Not applicable
2.Change of asset and liability structure caused by change of total capital shares and structure
Not applicable
3.About the existingemployees’ shares
Not applicable
III. Particulars about the shareholders and substantial controller
1. Amount of shareholders and their shareholding position
in shares
||||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Total number of|||||||||||||||
|||||||||||Total|||||
|common||Total shareholders at the end of||||The total number of prefer||||preferred shareholders at|||||
|shareholders at the|14,748|the month from the date of||14,551||red shareholders voting ri||0||the end of the month from|||0||
|end of the||disclosing the annual report||||ghts restored at period-end||||the date of disclosing the|||||
|||||||||||annual report|||||
|reporting period|||||||||||||||
|Particulars about shares held above 5% by shareholders or top ten shareholders|||||||||||||||
|||||||||||||Number or|||
|||||||||||||share|||
||||||Proporti||||||||||
|||||||Number of|Changes in||Amount of||Amount of|pledged/froz|||
|Shareholders|||Nature of||on of||||||||||
|||||||shares held at|reporting||restricted||un-restricted|en|||
||||shareholder||shares||||||||||
|||||||period -end|period||shares held||shares held|State|||
||||||held（%）|||||||||Amo|
|||||||||||||of|||
|||||||||||||||unt|
|||||||||||||share|||
|Hangzhou Steam Turbine Power Group Co., Ltd.|||State-ownedlegal person||63.64%|479,824,800|0||479,824,800||0||||
|VANGUARD EMERGING MARKETS STOCKINDEX FUND|||Foreignlegal person||0.63%|4,722,804|0||0||4,722,804||||
|NORGES BANK|||Foreignlegal person||0.57%|4,303,675|0||0||4,303,675||||
|VANGUARD TOTAL INTERNATIONAL STOCKINDEX FUND|||Foreignlegal person||0.46%|3,454,046|83900||0||3,454,046||||
|ISHARES CORE MSCI EMERGING MARKETSETF|||Foreignlegal person||0.36%|2,745,901|933,501||0||2,745,901||||
|Zhou Jie|||DomesticNaturalperson||0.35%|2,676,000|2,366,000||0||2,676,000||||
|GUOTAIJUNANSECURITIES(HONGKONG)LIMITED|||Foreignlegal person||0.33%|2,461,880|-1,522,288||0||2,461,880||||
|China Merchants Secutities(HK)Co., Ltd.|||State-owned||0.32%|2,400,149|258,169||0||2,400,149||||

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
||legal person|||||||||
|Xia Zulin|DomesticNaturalperson||0.29%|2,190,000|90,000||0|2,190,000||
|CREDIT SUISSE AG HONG KONG BRANCH|Foreignlegal person||0.23%|1,729,759|0||0|1,729,759||
|Particulars about strategic investors or general corporations||||||||||
||||Not applicable|||||||
|becoming among the top 10 shareholders due to share placing||||||||||
||||(1) Hangzhou Steam Turbine Power Group Co., Ltd. is the holder of state-shares|||||||
||||of the Company, all other shareholders’ are holders of domestic listed foreign|||||||
||||shares (B shares)|||||||
|Explanation on associated relationship among the aforesaid|||(2) There is no relationship between Hangzhou Steam Turbine Power Group Co.,|||||||
||||Ltd. and other shareholders;|||||||
|shareholders||||||||||
||||(3) Hangzhou Steam Turbine Power Group Co., Ltd. is not an “action-in-concert”|||||||
||||party with any of other shareholders as described by the “Administration Rules of|||||||
||||Informational Disclosure about Change of Shareholding Statues of PLCs”.|||||||
|Top 10 holders of shares without trading limited conditions||||||||||
|||Amount of unconditional shares||||Category of shares||||
|Name of the shareholder||||||||||
|||held at end of period||||Category of shares|||Amount|
|VANGUARD EMERGING MARKETS STOCK INDEXFUND||4,722,804||||Foreign shares placed in||||
||||||||||4,722,804|
|||||||domestic exchange||||
|NORGES BANK||4,303,675||||Foreign shares placed in||||
||||||||||4,303,675|
|||||||domestic exchange||||
|VANGUARD TOTAL INTERNATIONAL STOCK INDEXFUND||3,454,046||||Foreign shares placed in||||
||||||||||3,454,046|
|||||||domestic exchange||||
|ISHARES CORE MSCI EMERGING MARKETS ETF||2,745,901||||Foreign shares placed in||||
||||||||||2,745,901|
|||||||domestic exchange||||
|Zhou Jie||2,676,000||||Foreign shares placed in||||
||||||||||2,676,000|
|||||||domestic exchange||||
|GUOTAI JUNAN SECURITIES(HONGKONG) LIMITED||2,461,880||||Foreign shares placed in||||
||||||||||2,461,880|
|||||||domestic exchange||||
|China Merchants Secutities(HK)Co., Ltd.||2,400,149||||Foreign shares placed in||||
||||||||||2,400,149|
|||||||domestic exchange||||
|Xia Zulin||2,190,000||||Foreign shares placed in||||
||||||||||2,190,000|
|||||||domestic exchange||||
|CREDIT SUISSE AG HONG KONG BRANCH||1,729,759||||Foreign shares placed in||||
||||||||||1,729,759|
|||||||domestic exchange||||
|Shanwan Hongyuan Securities (HK) Co.,Ltd.||1,368,900||||Foreign shares placed in||||
||||||||||1,368,900|
|||||||domestic exchange||||
|||1）It is unknown to the Company if there is any relationship among the top 10 common||||||||
|Explanation on associated relationship or consistent action||||||||||
|||share holders without restriction;||||||||
|among the top 10 shareholders of non-restricted negotiable||||||||||
|||(2) Hangzhou Steam Turbine Group Co., Ltd. is not an action-in-concert” party with||||||||
|shares and that between the top 10 shareholders of||||||||||
|||any of other shareholders as described by the “Administration Rules of Informational||||||||
|non-restricted negotiable shares and top 10 shareholders||||||||||
|||Disclosure about Change of Shareholding Statues of PLCs”.||||||||
|Notes to the shareholders involved in financing securities (if||||||||||
|||Not applicable||||||||
|any)(See Notes 4)||||||||||

Whether top ten common shareholders or top ten common shareholders with un-restrict shares held have a
buy-back agreement dealing in reporting period.
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 The top ten common shareholders or top ten common shareholders with un-restrict shares held of the Company have no buy–back agreement dealing in reporting period.
2.Controlling shareholder
Nature of Controlling Shareholders: Local state holding
Type of Controlling Shareholders: Legal person
||||||
|-|-|-|-|-|
|Name of the holding|Legal||||
|||Incorporated in|Organization code|Registered capital|
|shareholder|representative||||
|||||Business scope: Manufacturing and processing:|
|||||textile machinery, Manufacturing|
|||||machines,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|
|Hangzhou Steam Turbine|||91330100143071842L|above overseas projects. Thermal power plant|
||Zheng Bin|Dec 14, 1992|||
|Power Group Co., Ltd.|||||
|||||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.|
|Shareholding status of the|||||
|holding shareholder in|||||
|other PLCs in the country|Nil||||
|and abroad during the|||||
|report period|||||

Change of holding shareholder
No change of holding shareholder in the report period.
3．Information about the controlling shareholder of the Company
Actual controllernature：Local state owned Assets Management
Actual controllertype：Legal person
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
||||||
|-|-|-|-|-|
||Legal||||
|Name of the substantial||Date of|||
||representativ||Organization code|Principal business activitie|
|controller||incorporation|||
||e||||
|||||In the light of the municipal government authorization,|
|||||perform the investor’s responsibilities, supervise|
|||||the municipal operational state-owned assets|
|||||and strengthen the management of state-owned|
|||||assets in accordance with the laws and|
|||||regulations of Corporate Law of the People's|
|||||Republic of China , Enterprise State-Owned|
|||||Assets Law of the People's Republic of China .|
|||||(II) Execute the laws, regulations and policies of the|
|||||management of state-owned assets; be entrusted|
|||||with drafting local regulations regarding the|
|||||management of state-owned assets, and enact|
|||||relevant rules and regulations, supervise and|
|||||examine the implementation; guide and|
|||||supervise the management of the state-owned|
|||||assets at the district, county (city) level pursuant|
|||||to the laws.|
|State-owned Assets Supervision|||||
|||||(III) Make proposals regarding the municipal|
|and Administration Commission|||||
||Wang Xi||776637527|state-owned economic layout and strategic|
|of Hangzhou Municipal|||||
|||||adjustment to promote the strategic adjustment|
|Government||||of the municipal state-owned economic|
|||||structure and layout; guide and propel the|
|||||reform and restructuring of state-owned|
|||||enterprises; instruct and promote the|
|||||construction of modern enterprise system in|
|||||state-owned enterprises, consummate the|
|||||corporate governance structure, and form a|
|||||governance mechanism characterized by clear|
|||||duty, well-coordination and effective balances.|
|||||(IV) Pursuant to the provisions of the relevant|
|||||documents of the municipal Party committee,|
|||||investigate, appoint and remove the supervised|
|||||principles of enterprises according to the legal|
|||||procedures; establish a employment mechanism|
|||||that is in line with the socialist market economic|
|||||system and the requirements of modern|
|||||enterprise system, consummate the incentive|
|||||and restraint system for the operators; assess the|

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
||
|-|
|business performance of the principles of the|
|enterprises that are supervised and implement|
|the rewards and penalties system. Take charge|
|of the management and building work of the|
|Party organization of the supervised enterprises.|
|(V) Dispatch directors, supervisors or CFO to the|
|supervised enterprises on behalf of the|
|municipal government; and take charge of the|
|daily management of directors, supervisors or|
|CFO.|
|(VI) Take charge of organizing the supervised|
|enterprises to turn over the state-owned capital|
|gains; participate in enacting management|
|system and solutions for the state-owned capital|
|operating budget; take charge of the preparation|
|and implementation of the state-owned|
|operating budget of the supervised enterprises.|
|Take charge of the comprehensive budget|
|management of the supervised enterprises.|
|(VII) Establish and consummate the preservation and|
|appreciation index system of the state-owned|
|assets, and develop the assessment criteria; take|
|charge of the supervision and assessment of the|
|preservation and appreciation of the|
|state-owned assets; enact and organize the|
|implementation of the income distribution|
|policy of the supervised enterprises and|
|state-owned enterprises. Take charge of the|
|fundamental management work, namely, the|
|authentication of property rights, registration of|
|property rights, asset evaluation monitoring,|
|property liquidation and verification, asset|
|statistics, comprehensive evaluation; safeguard|
|rights and interests of the investors of|
|state-owned assets|
|(VIII) Take charge of directing and supervising the|
|implementation of national and provincial and|
|municipal safety laws, regulations, rules and|
|standards, etc.|
|(IX) Undertake other matters assigned by the municipal|
|Party committee and government.|

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
|||
|-|-|
|The equity of the controlling||
|shareholder in other domestic|Until the end period of the reporting, Hangyang Co., Ltd.(SZ.002430) held 61.49% shares, and Hangzhou Jiebai|
|and foreign listed companies|(SH.600814) held 68.03% shares until the end period of the reporting.|
|held or partly held by it in the||
|report period||

Change of the actual controller in the reporting period
Nil
Block Diagram of the ownership and control relations between the company and the actual controller
The actual controller controls the company by means of trust or managing the assets in other way
Not applicable
4.Other corporate shareholder holding over10% of theCompany’s shares
Not applicable
5.Situation of Share Limitation Reduction of Controlling Shareholders, Actual Controllers, Restructuring Party and Other Commitment Subjects
Not applicable
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 VII. Situation of the Preferred Shares
No preference shares in the Company.
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 VIII. Information about Directors, Supervisors and Senior Executives
I. Change in shares held by directors, supervisors and senior executives
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|||||||||Amount of||||
||||||||Shares held||Amount of|Other|Shares held|
|||||||||shares||||
||||||||at the||shares decreased|changes|at the|
|Name|Positions|Office status|Sex|Age|Starting date of tenure|Expiry date of tenure||increased at||||
||||||||year-begin(s||at the reporting|increase/dec|year-gegin(|
|||||||||the reporting||||
||||||||hare)||period(share)|rease|share)|
|||||||||period(share)||||
|Zhen Bin|Chairman|In office|Male|53|December 5,2014|May 18,2019|0|0|0|0|0|
|Yan||||||||||||
||Vice Chairman|In office|Male|59|June 24,2013|May 18,2019|0|0|0|0|0|
|Jinhua||||||||||||
|Yang||||||||||||
|Yongmin|Vice Chairman|In office|Male|53|June 24,2013|May 18,2019|0|0|0|0|0|
|g||||||||||||
|Ye Zhong|Director, GM|In office|Male|49|June 25,2001|May 18,2019|0|0|0|0|0|
|Wang||||||||||||
||Director, secretary of the board|In office|Male|45|June 30,2017|May 18,2019|0|0|0|0|0|
|Gang||||||||||||
|Kong|Director, Deputy General|||||||||||
|||In office|Male|47|June 24,2013|May 18,2019|0|0|0|0|0|
|Jianqiang|Director,Chief engineer|||||||||||
|Gu||||||||||||
||Independent Director|In office|Male|Male|May 18,2016|May 18,2019|0|0|0|0|0|
|Xinjian||||||||||||
|Ma||||||||||||
||Independent Director|In office|Male|64|May 18,2016|May 18,2019|0|0|0|0|0|
|Lihong||||||||||||
|ZhangXia|||Femal|||||||||
||Independent Director|In office||45|December 4,2015|May 18,2019|0|0|0|0|0|
|oyan|||e|||||||||
|Chen|||Femal|||||||||
||Independent Director|In office||53|May 18,2016|May 18,2019|0|0|0|0|0|
|Danhong|||e|||||||||

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
||Chairman of the Supervisory|||||||||||
|Li Shijie||In office|Male|48|June 24,2013|May 18,2019|0|0|0|0|0|
||Committee|||||||||||
|Wang||||||||||||
||Supervisor|In office|Male|50|June 24,2013|May 18,2019|70,076|27,500|0|0|97,576|
|Xiaohui||||||||||||
|Liu||||||||||||
||Supervisor|In office|Male|57|June 30,2017|May 18,2019|15,400|1,200|0|0|16,600|
|Zhiyong||||||||||||
|Lu Jianhua|Employee Supervisor|In office|Male|56|August 15,2004|May 18,2019|0|0|0|0|0|
|Fang Yin|Employee Supervisor|In office|Male|55|February 16,2012|May 18,2019|0|0|0|0|0|
|Zhang||||||||||||
||Deputy General Manager|In office|Male|59|February 16,2009|May 18,2019|66,924|0|0|0|66,924|
|Shutan||||||||||||
|Zhao|Deputy General Manger, Chief|||||||||||
|||In office|Male|42|January 1,2018|May 18,2019|0|0|0|0|0|
|Jiamao|accounantant|||||||||||
|Li||||||||||||
||Deputy General Manger|In office|Male|54|December 5,2014|May 18,2019|0|0|0|0|0|
|Jiansheng||||||||||||
|Wang||||||||||||
||Deputy General Manger|In office|Male|47|June 9,2017|May 18,2019|0|0|0|0|0|
|Zhengrong||||||||||||
|Liu||||||||||||
||Director|Dimission|Male|60|June 24,2013|June 9,2017|0|0|0|0|0|
|Guoqiang||||||||||||
|Zhang||||||||||||
||Supervisor|Dimission|Male|60|June 19,2004|June 9,2017|0|0|0|0|0|
|Yougen||||||||||||
|Yu||||||||||||
||Deputy General Manger, secretary|||||||||||
|Changqua||Dimission|Male|60|June 25,2001|June 9,2017|0|0|0|0|0|
||of the board|||||||||||
|n||||||||||||
|Nie||||||||||||
||Director|Dimission|Male|60|June 19,2004|October 21,2017|0|0|0|0|0|
|Zhonghai||||||||||||
|Pu|Deputy General Manager,Chief,||Femal|||||||||
|||Dimission||42|June 3,2013|December 28,2017|0|0|0|0|0|
|Yangshuo|accountant||e|||||||||
|Total|--|--|--|--|--|--|152,400|28,700|0|0|181,100|

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 II. Change in shares held by directors, supervisors and senior executives
||||||
|-|-|-|-|-|
|Name|Positions|Types|Date|Reason|
|||Dimissio||Due to the legal retirement age, apply for|
|Liu Guoqiang|Director||June 8,2017||
|||n||resignation of director.|
|||||Due to the legal retirement age, apply for|
|||Dimissio|||
||Deputy General Manger, secretary|||resignation of Deputy General Manager and|
|Yu Changquan|||June 8,2017|secretary of the board|
||of the board|n|||
|||Dimissio||Due to the legal retirement age, apply for|
|Zhang Yougen|Supervisor||June 88,2017||
|||n||resignation of Supervisor.|
|||Dimissio||Due to the legal retirement age, apply for|
|Nie Zhonghai|Director||October 20,2017||
|||n||resignation of director.|
|||||For personal reason, I will voluntarily resign|
|||Resignat|||
||Deputy General Manager,Chief,||||
|Pu Yangshuo|||December 28,2017|from the post of deputy general manager and the|
||accountant|ion|||
|||||chief accountant.|

III.Posts holding
The professional background, working experience and main responsibilities of the current board members, supervisors and senior managers in the company
（1）Director
Mr. Zheng Bin, born in November 1964, CCP member, university graduate, senior economics professional certification. He served as vice chairman and Vice General Manager of Hangzhou Steam Turbine Power Group Co., Ltd. He used to be chairman and General Manager of Hangzhou Dongfeng Shipyard Co., Ltd. He was engaged the vice Chairman at the 4th term of Board on March 2009 ,Vice Chairman at the 5th term of Board on June 2010, He was engaged the Director and General Manager of the Company on June 2013, He was engaged the Chairman at the 6th term of Board on December 2014. He was elected as Chairman of the 7th term of board of directors on May 18, 2016.
Mr. Yan Jianhua: born in September 1958, CCP member; college degree; Professorial Senior Engineer. He took the position of vice Chairman and General Manager of Hangzhou Steam Turbine Power Group Co., Ltd. When the Board of Directors changed on June 2001, Mr. Yan was elected as the Director of the 2nd term of Board and General Manager of the Company. Since then he has been the director of the 3rd, 4th, and 5th terms of the Board. Currentlyhe’s the Vice Chairman of the 6th term of Board of the Company. He was elected as Vice Chairman of the 7th term of board of directors on May 18, 2016.
Mr. Yang Yongming, born in November 1964, CCP member, university graduate, certified senior economist. Currentlyhe’s the vice general manager of Hangzhou Steam Turbine Power Group Co., Ltd. He used to be the vice director and director of Sales Administration Departments of the Company; Since 2013, he served as vice general manager, general manager, and vice chairman of Hangzhou Dongfeng Shipyard Ltd. Currentlyhe’s the vice general manager of Hangzhou Steam Turbine Power Group Co., Ltd . and the Vice Chairman of the 6th term of Board of the Company. He was elected as Vice Chairman of the 7th term of board of directors on May 18, 2016.
Mr. Ye Zhong: born in April 1968, CCP member; bachelor degree; professor and senior engineer. Started
working in July 1990. he was the director of the 2nd term of Board, Chief Engineer; director of the 3rd term of
Board, Vice General Manager; Director of the 4th and 5th terms of Board, Vice General Manager, and Chief
Engineer.He’s the Standing Vice General Manager, director and Chief Engineer of the 6th term of Board of the
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 Company, and General Manager of the 4 Company since December 2014. He was elected as director and Deputy General Manager of the 7th term of board of directors on May 18, 2016.
Mr. Wang Gang, born in February 1972, member of the Communist Party of China, postgraduate degree, Zhejiang University MBA, senior engineer. In 1993 the company entered the company, served as the company organization personnel, a steam shop, security, securities laws and regulations, operation and management department and other department heads. The current party secretary of the party committee, discipline appoint secretary, trade union chairman. He passed the qualification certificate of the board of directors of Shenzhen Stock Exchange in June 2009 and obtained the certificate of secretary of the board of directors. From July 2009 to April 2016, He served as the representative of securities affairs of the Company. He was engaged the secretary of the board of the Company on June 10,2017. He was elected as director of the 7th term of board of directors on June 30, 2017.
Mr. Kong Jianqiang, born in May 1970, CCP member, Master of Engineering, certified senior engineer. Started working in July 1992. He used to be technician, head of workshop, vice director, and director of Steam Turbine Institute of the company.He’s the director of the 6th term of Board since June 2013, and Engineer General of the Company since December 2014. He was elected as director of the 7th term of board of directors on May 18, 2016. Appointed as deputy general manager and Chief engineer of the company.
Ms Zhang Xiaoyan, was born in March 1973. Since 1994, she successively worked in Zhejiang Securities Co., Ltd, Zhejiang Senhe Seed Co., Ltd, Shanghai AllBright Law Offices (Hangzhou), Beijing Gaopeng& Partners Hangzhou Office, Beijing Kangda Law Firm (Hangzhou). She currently holds the post of the partner of Beijing Kangda (Hangzhou) Law FirmNot only being skilled at reformation, listing, floatation,m&a and refinancing for listed company, but also at venture capital, industrial fund, shares incentive, shares option including itscontract’s negotiation,signing and litigation,etc. Currentlyhe’s the independent director of the 6th term of Board. He was elected as Independent director of the 7th term of board of directors on May 18, 2016.
Ms Chen Danhong, born in October 1964, was graduated from Hangzhou Business College, majoring statistics. She was former assistant in Shanghai Economic Management College, section chief in accounting section of financial department from Zhejiang Gongshang University, General Manager in Planning and Finance Department and HR Manager of New China Life Insurance Co., Ltd.Zhejiang Branch, Executive Vice President of Zhejiang Zhongye Holdings Group Co., Ltd., CEO of Daodao Group Co., Ltd., and Deputy General Manager and Chief Financial Officer of Zhejiang Arch of Triumph Macao Doulao Holding Group Co., Ltd. She was special professional ethos supervisor in Zhejiang Provincial Office,SAT, CPPCC member in West Lake District, and Special Auditor of Audit Bureau in West Lake District. In April 1997, she obtained qualification of National Registered Accountant, and she was chosen as senior accountant by domestic Ministry of Trade in December, 1997. On May 18, 2016, she was elected as the seventh Board of Directors Independent Director of the company. Mr Ma Lihong, born in October 1953, as professor, got management PhD from Fudan University. He worked in Hohhot No.3 Middle School in Inner Mongolia, county party committee propaganda department of huangyan in Zhejiang Province, and Zhejiang Administration College. He worked as the chief of teaching and research section in Zhejiang Administration College, Deputy Inspector in Party School of Zhejiang Provincial Committee of CPC, and Vice Dean of Zhejiang Administration College. He was Vice President of Zhejiang Social Science League, subject review group expert in National Social Science Fund, and he was approved to share special allowance of the State Council in 2010. He repeatedly was responsible to hold national social science fund project and important social sciences issues in Zhejiang Province. On May 18, 2016, she was elected as the seventh Board of Directors Independent Director of the company.
Mr Gu Xinjian, born in July 1956, was doctor of engineering, as a professor in Modern Manufacturing Technology Research Institute of Zhejiang University, and a doctoral supervisor. He was the Deputy Director in Center for Innovation Management and Sustainable Competitiveness of Zhejiang University, and Director of Patents And Standards Strategic Institute. He was as assistant engineer in Ministry of Electronics Industry 1051 Institute from January, 1982 to September, 1984. From August, 1987 until now, he devoted himself to research and education work in Mechanical Engineering Department of Zhejiang University, primarily engaged in researching manufacturing informatization, enterprise modeling, networked manufacturing, advanced manufacturing systems mode, and mechanical manufacturing systems engineering. On May 18, 2016, he was elected as the seventh Board of Directors Independent Director of the company.
(II) The Supervisors
Mr. Li Shijie, born in July 1969, CCP member, university graduate, certified senior engineer. head of supplying department of the Company, general manager and chief secretary of CCP committee of Hangzhou Steam Turbine Auxiliary Machinery Co., Ltd. Currentlyhe’s the vice chief secretary of CCP committee and chief secretary of
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 discipline committee of Hangzhou Steam Turbine Power Group Co., Ltd. Currentlyhe’s the Chairman of the 6th term of Supervisory Committee. He was elected as Chairman of the 7th term of Supervisory Committee on May 18, 2016.
Mr. Wang Xiaohui, born in December 1967, CCP member, university degree, certified senior accountant, certified taxation accountant, certified internal auditor. External Chief Finance Officer of Hangzhou State-owned Property; Chief Accountant and Director of Accounting Dept. of Hangzhou Dongfeng Shipyard Co., Ltd. Currentlyhe’s the vice director of Accounting Dept. of Hangzhou Steam Turbine Power Group Co., Ltd. Currentlyhe’s the supervisor of the 6th term of Supervisory Committee. She was elected as supervisor of the 7th term of Supervisory Committee on May 18, 2016.
Mr. Liu Zhiyong, born in January 1960, member of the Communist Party of China, university degree, senior engineer, deputy secretary of the company Commission for Discipline Inspection. He served as Director of the Office of the Chief Engineer of the Company, Deputy Director of the Second Automobile Workshop, Director of the Integrated Management Department and Secretary of the Comprehensive Party Branch. June 2014 as the company blade factory director, leaf party branch secretary. He was elected as supervisor of the 7th term of Supervisory Committee on June 30, 2017.
Mr. Lu Jianhua, born in March 1962, CCP member, university graduate. Once he was the clerk and office manager of the Trade Union, elected vice chairman of the Trade Union and supervisor; He assumedemployees’ supervisor for the 3rd, 4th, and 5th term of the Supervisory Committee. He was elected as supervisor of the 7th term of Supervisory Committee on May 12, 2016.
Mr. Fang Yin, born in December 1962, CCP member, senior engineer, master degree. Graduated from Zhejiang University of Industry in February 1982, and started working in technical area in Hangzhou Steam Turbine Co., Ltd. (former Hangzhou Steam Turbine Factory); Since September 1988, he has been working onR&D in the Industrial Turbine Research Institute of the Company; Mr. Fang was elected supervisor of the 6th term of Supervisory Committee by theEmployees’ Congress on February 28, 2013. He was elected as supervisor of the 7th term of Supervisory Committee on May 12, 2016.
(III) Senior Executives
Profiles of General Manager Ye Zhong, secretary of the board Wang Gang and Deputy General Manager ,Chief Engineer are available among the directors above.
Mr. Zhang Shutan, born in March 1959, CCP member,bachelor’s degree, certified senior engineer. In 1979 to enter the company work, Once he was the teacher of HSTG Education Center, salesman of export division, vice director of export division, director of export division and assistant to general manager. He was engaged the vice general manager on February 2009.
Mr. Li Jiansheng,born January 1963, CCP member, master of engineering, certified senior engineer of professor level.Mr. Li started working for the Company in February 1982. He has been in the positions of chief of No.4 section, vice head of the Institution, and vice head of the Industrial Turbine Institute. He has been the assistant of Deputy general manager and head of production unit of Hangzhou Steam Turbine Co., Ltd. Mr. Li was engaged the Deputy general manager of the Company since December 2014.
Mr. Wang Zhengrong, born in October 1970, member of the Communist Party of China, university degree, Bachelor of Engineering, Zhejiang University, senior engineer. In 1992 to enter the company work, served as deputy director of the company sales, director, marketing party branch secretary. Since March 2010, he has been a member of the Party Committee of the Company. He has been Assistant General Manager of the Company and Director of Steam Turbine Marketing since June 2015. Mr. Wang was engaged the Deputy general manager of the Company since June 2017.
Mr. Zhao Jiamao, born in March 1975, member of the Communist Party of China, university degree, certified public accountant and senior accountant. He joined Hangzhou Steam Turbine Power Group Co., Ltd. Finance Office in 1995 and was once the Vice Minister of Finance of Hangzhou Steam Turbine Power Group Co., Ltd., Chief Accountant, Deputy General Manager and General Manager of Hangzhou Steam Turbine Power Technology Co., Ltd. In December 2014, he was the Deputy Chief Accountant and Chief Financial Officer of the Company. Since March 2016, he has been the General Manager Assistant, the Director of Asset Management Department and the Finance Department and the Contract Department. Mr. Zhao was engaged the Deputy general manager and Chief accountang of the Company since January 2018.
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 Jobs taken in shareholding parties
|||||||
|-|-|-|-|-|-|
||||||Take remunerations|
|||||Job||
|Names|Name of the shareholder|Job taken|Job started||from the|
|||||ended||
||||||shareholding party|
|||Chief secretary of CCP, Chairman, Legal||||
||Hangzhou Steam Turbine Power||September 28,2017|||
|Zhen Bin||||||
||Group Co., Ltd.|Representative||||
|Yan|Hangzhou Steam Turbine Power|Commissioner of CCP, Vice Chairman,|May 1,2013||Yes|
|Jianhua|Group Co., Ltd.|GM||||
|Yang|Hangzhou Steam Turbine Power|Commissioner of CCP, Vice GM|May 1,2013||Yes|
|Yongming|Group Co., Ltd.|||||
||Hangzhou Steam Turbine Power||May 1,2001||No|
|Ye Zhong||CCP Commissioner, director||||
||Group Co., Ltd.|||||
|||Vice Secretary of CCP Commission,||||
||Hangzhou Steam Turbine Power|Secretary of Discipline Committee, Vice|May 1,2013||Yes|
|Li Shijie||||||
||Group Co., Ltd.|Chairman of Supervisory Committee,||||
|||Chairman of Trade Union||||
|Wang||||||
||Hangzhou Steam Turbine Power||September 22,2014||Yes|
|||Director of financial department||||
|Xiaohui|Group Co., Ltd.|||||

Jobs taken in other parties
|||||||
|-|-|-|-|-|-|
||||||Take|
|||||Job||
|Names|Name of the parties|Positions|Job started||remunerations|
|||||ended||
||||||from the party|
|Zheng Bin||Chairman, Legal|September 28,2017||No|
||Hangzhou Relian Group Co., Ltd.|||||
|||representative||||
|Zheng Bin|||February 10,2017||No|
||Bank of Hangzhou Co., Ltd.|Director||||
||Hangzhou Hangfa Power Generating Equipment|Chairman, Legal||||
|Yan||||||
||||November 1,2013||No|
|Jianhua|Co., Ltd.|representative||||
|||Chairman, Legal||||
|Yan||||||
||||June 1,2014||No|
||Hangzhou Steam Turbine Compressor Co., Ltd.|||||
|Jianhua||representative||||
|Yang||||||
||Hangzhou Relian Group Co., Ltd.|Director|May 1,2013||No|
|Yongming||||||
|Yang|Hangzhou Steam Turbine Auto Sales service Co.,|Chairman, Legal||||
||||June 29,2017||No|
|Yongming|Ltd.|representative||||
|Yang||||||
||||September 28,2017||No|
||Guangdong Huaxing Bank Co., Ltd.|Director||||
|Yongming||||||
||Hangzhou Zhongneng Steam Turbine Power Co.,|Chairman, Legal||||
|Ye Zhong|||February 1,2010||No|
||Ltd.|representative||||
|||Chairman, Legal||||
|Ye Zhong|Hangzhou Steam Turbine Engineering Co., Ltd.||December 23,2014||No|
|||representative||||
|Wang|Hangzhou Zhongneng Steam Turbine Power Co.,|||||
|||Supervisor|June 21,2017||No|
|Gang|Ltd.|||||
|Wang||||||
||Hangzhou Steam Turbine Casting Co.,ltd.|Director|June 21,2017||No|
|Gang||||||
|Wang|Hangzhou Kaineng Casting Co., Ltd.|Director|June 21,2017||No|

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
||||||
|-|-|-|-|-|
|Gang|||||
|||Chairman, Legal|||
|Kong|Zhejiang Steam Turbine Packaged Technology||||
||||June 21,2017|No|
|Jianqiang|Development Co., Ltd.|representative|||
|Kong|Hangzhou Steam Turbine Auxiliary Machine Co.,|Chairman, Legal|||
||||June 21,2017|No|
|Jianqiang|Ltd.|representative|||
|Kong|Hangzhou Guoneng Steam Turbine Engineering|Chairman, Legal|||
||||June 21,2017|No|
|Jianqiang|Co., Ltd.|representative|||
|Chen|||||
||Tianma Bearing Group Co., Ltd.|Independent director|March 2,2015|Yes|
|Danhong|||||
|Chen|||||
||Zheshang Zhongtou Co., Ltd.|Independent director|April 29,2016|Yes|
|Danhong|||||
|Chen|||||
||Huijishan Shaoxing Wine Co., Ltd.|Independent director|September 27,2016|Yes|
|Danhong|||||
|Chen|||||
||Hangzhou Electric Cable Co., ltd.|Independent director|April 19,2017|Yes|
|Danhong|||||
|Gu|Zhejiang University. Institute of modern|Professor, Supervisor of a|||
||||December 1,1999|Yes|
|Xinjian|manufacturing engineering|ph.D Student|||
|Zhang|||||
||Beijing Kangda（Hangzhou）Law Firm|Partner|May 1,2012|Yes|
|Xiaoyan|||||
|||Chairman of the Supervisory|||
|Li Shijie|Hangzhou Relian Group Co., Ltd.||May 1,2013|No|
|||Committee|||
|Wang|||||
||Hangzhou Nanfangtongda Gears Co., Ltd.|Supervisor|April 1,2009|No|
|Xiaohui|||||
|Wang|||||
||Hangzhou Xiangjiang Technology Co.,Ltd.|Supervisor|June 29,2017|No|
|Xiaohui|||||
|Wang|Zhejiang Steam Turbine Packaged Technology||||
|||Supervisor|January 1,2015|No|
|Xiaohui|Development Co., Ltd.||||
|Liu|Zhejiang Steam Turbine Packaged Technology||||
|||Supervisor|June 21,2017|No|
|Zhiyong|Development Co., Ltd.||||
|Liu|||||
||Hangzhou Steam Turbine Heavy Industry Co., Ltd.|Supervisor|June 21,2017|No|
|Zhiyong|||||
|Zhang|（India）Gelin Shaoer Power Installation Privately||||
|||Director|November 1,2009|No|
|Shutan|Co., Ltd.||||
|Zhang|Hangzhou Steam Turbine Auxiliary Machine Co.,||||
|||Director|October 1,2004|No|
|Shutan|Ltd.||||
|Li|Hangzhou Steam Turbine Auxiliary Machine Co.,|Director|April 3,2014|No|

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
||||||
|-|-|-|-|-|
|Jianshang|Ltd.||||
|Li|||||
||Hangzhou Steam Turbine Casting Co., Ltd.|Director|July 15,2014|No|
|Jiansheng|||||
|Li||Legal representative,|||
||Hangzhou Steam Turbine Heavy Industry Co., Ltd.||June 21,2017|No|
|Jiansheng||executive director|||
|Wang|Hangzhou Zhongneng Steam Turbine Power Co.,||||
|||Director|July 1,2013|No|
|Zhengrong|Ltd.||||
|Wang||Legal representative,|||
||Zhejiang Turbine Import & Export Co., Ltd.||April 3,2014|No|
|Zhengrong||executive director|||
|Wang|Hangzhou Steam Turbine Machinery & Equipment|Chairman, Legal|||
||||June 21,2017||
|Zhengrong|Co., Ltd.|representative|||
|Zhao|Hangzhou Steam Turbine Machinery & Equipment||||
|||Supervisor|April 15,2015|No|
|Jiamao|Co., Ltd.||||
|Zhao|||||
||Hangzhou Steam Turbine Casting Co., Ltd.|Director|June 21,2017|No|
|Jiamao|||||
|Zhao|||||
||Hangzhou Kaineng Casting Co., ltd.|Director|June 21,2017|No|
|Jiamao|||||

Punishments to the current and leaving board directors, supervisors and senior managers during the report period by securities regulators in the recent three years
Not applicable
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 IV. Remuneration to directors, supervisors and senior executives in the reporting period
Decision-making procedures, basis for determination and actual payment of the remuneration to directors , supervisors and senior executives
1. Decision-making and basis of remunerations to directors, supervisors, and executives
The 3rd meeting of the 7th Remuneration Committee was held on March 16, 2018. The remuneration plan for directors and executives was examined at the meeting. The Remuneration and Assessment Committee of the Board conducted assessment on the performances of the directors and executives, and the remuneration plan was produced according to the Administration Rules of Remuneration and Assessment of Directors of the 7th Term of Board andExecutive（s2016-2018）. The plan is subject to examination of the 20th meeting of the 7th term of Board. Allowances for independent directors and supervisors are subject to approval by the Board and theShareholders’ Meeting thereafter. The proposal of allowances for the 7th term of independent directors and supervisors was adopted at the 1st ProvisionalShareholders’ Meeting held on December 28, 2016, and the allowance for independent directors is RMB150 thousand (tax included) per year, while it is RMB36 thousand for supervisors for the period of three years (tax included). Non employee supervisors do not enjoy the allowance
2. Actual payment
Basic wages are prepaid on monthly basis and the overall remunerations are paid upon completion of the annual assessment. Allowances for independent directors and supervisors are paid according to the scheme approved by theShareholders’ Meeting.
Remuneration of directors, supervisors, and executives in the report period
InRMB’0000
||||||||
|-|-|-|-|-|-|-|
||||||Total of reward from|Actual reward in|
|Name|Position|Sex|Age|Statue of duty|the|total at end of|
||||||Company(Pre-tax)|report term|
|Zheng Bin|Chairman|Male|53|In Office|67.5|Yes|
|Yan Jianhua|Vice Chairman|Male|59|In Office|0|Yes|
|Yang|||||||
||Vice Chairman|Male|53|In Office|0|Yes|
|Yongming|||||||
|Ye Zhong|Director, GM|Male|48|In Office|80.08|No|
|Wang Gang|Director, secretary of the board|Male|45|In Office|51.05|No|
|Kong|||||||
||Director, Deputy GM, Chief engineer|Male|47|In Office|68.82|No|
|Jianqiang|||||||
|Ma Lihong|Independent Director|Male|64|In Office|5.00|No|
|Gu Xinjian|Independent Director|Male|61|In Office|15.00|No|
|Chen|||||||
||Independent Director|Male|53|In Office|15.00|No|
|Danhong|||||||
|Zhang|||||||
||Independent Director|Female|45|In Office|15.00|No|
|Xiaoyan|||||||
||Chairman of the Supervisory||||||
|Li Shijie||Male|48|In Office|0|Yes|
||Committee||||||
|Wang Xiaohui|Supervisor|Male|50|In Office|0|Yes|
|Liu Zhiyong|Supervisor|Male|57|In Office|37.53|No|
|Lu Jianhua|Employee Supervisor|Male|56|In Office|31.85|No|

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
||||||||
|-|-|-|-|-|-|-|
|Fang Yin|Employee Supervisor|Male|55|In Office|36.30|No|
|Zhang Shutan|Deputy GM|Male|59|In Office|69.04|No|
|Li Jiansheng|Deputy GM|Male|54|In Office|68.96|No|
|Wang|||||||
||Deputy GM,|Male|47|In Office|55.40|No|
|Zhengrong|||||||
|Liu Guoqiang|Director|Male|60|Dimission|43.80|No|
|Zhang Yougen|Supervisor|Male|60|Dimission|34.35|No|
|Yu Changquan|Deputy GM, secretary of the board|Male|60|Dimission|47.85|No|
|Nie Zhonghai|Director|Male|60|Dimission|0|Yes|
|Pu Yangshuo|Deputy GM,Chief accountant|Female|42|Dimission|68.92|No|

 Incentive equity to directors, supervisors or/and senior executives in the reporting period
Not applicable
V. Particulars about employees.
1.Number of staff, professional structure and educational background
||||
|-|-|-|
|Number of in-service staff of the parent company(person)||2,279|
|Number of in-service staff of the main subsidiaries(person)||1,352|
|The total number of the in-service staff(person)||3,631|
|The total number of staff receiving remuneration in the current period(person)||3,631|
|Retired staff with charges paid by the parent company and main subsidiaries|||
|||0|
|(person)|||
|Professional|||
|Category|Number of persons（person）||
|Production|2,112||
|Sales|396||
|Tech|652||
|Finance|67||
|Administration|404||
|Total|3,631||
|Education|||
|Category|Number of persons（person）||
|Master’s Degree|190||
|Bachelor|1,181||
|College diploma|663||
|High school and below|1,597||

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
|||
|-|-|
|Total|3,631|

2.Particulars about the employees:
Under the premise of considering the annual benefit, with the level of competition, the ability to pay of enterprises, price levels and other factors, in 2017 the company adequate remuneration be adjusted according to the value of the unpaid position, according to the performance of the performance fee, adhere to labor distribution, taking into account efficiency and equity, the maximum level of protection of the interests of employees, to achieve a win-win business and employees. Company on a monthly basis, full and timely payment of wages, overtime pay in accordance with national regulations, on a monthly basis.
3. Educational training for employees:
In 2017, the staff education and training work strived for realize the goal of “Talents invigorate enterprises”, and set the work objectives of training and optimizing the “the three teams namely the management team, the professional and technical personnel team and the high-skilled personnel team”, and upon combining with thecompany’s strategic goals and the departmental performance targets and theemployees’ development goals, it well did the annual training work, formulated the “2017 Company Education and training Plan”, implemented various training programs in an orderly manner as required, continuously improved the staff's business level and comprehensive capabilities and made contributions to thecompany’s stable operation. In terms of the funding, the company drew2% of the total salary as the staff education fund, which effectively guaranteed the expenditure of the training program. According to statistics, 151 training classes were held in 2017, the person-time of staff received trainings reached 5,687. For 2018, the company plans to carry out 141 training programs in aspects of management, engineering technology, operation skills, quality, environment and safety education.
4. Outsourcing situation
||||
|-|-|-|
|Total hours of labor outsourcing (hours)||1,228,525.02|
|Total remuneration paid for service outsourcing (yuan)|9,828,200.16||

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 IX. Administrative structure
I. General situation
(1) Standardized operation of corporate governance structure
In accordance with the "company law" provisions, The Company has its executive, decision making and supervisory bodies operated strictly according to the Articles of Association,Shareholders’ Meeting Criteria, Board Meeting Criteria, and Supervisory Committee Criteria. Meetings were held by legal procedures, Corporate governance in accordance with the relevant provisions of the laws and regulations of China Securities Regulatory Commission and the Shenzhen Stock Exchange.
2. Effectiveness of organization
The Board of Directors is the executive body of the decisions made by theShareholders’ Meeting. The Board is also responsible to establish and improve the internal control system of the Company, and make it works effectively. Chairman of the Board is the caller of the Board. Strategy, Investment, Remuneration, and Auditing Committees were established within the Board, and were supporting the decision-making of the Board. The Supervisory Committee is responsible to report to theShareholders’ Meeting and supervise the legal performance of duties of directors, managers, and executives. The management is responsible to the Board, and take charge of daily operation of the Company. Functional departments were deployed according to the needs of business with clear responsibilities. In the report period, According to the strategic planning objectives and business transformation needs, the marketing organization to optimize and adjust, so that the organization of the company to run more scientific, efficient and standardized.
3. Basis for material decisions
The Company has setup practical rules for all material aspects of management, including but not limited to, external investment, trusteeship, related transactions, information disclosure,investors’ relationship, information insider, executive shares, and management of controlled subsidiaries. These documents of rules were constantly revised and improved to maintain effectiveness upon changing situation. During the report period, The company revised the "external guarantee system" to strengthen the external guarantee process. Meanwhile, The company added “The Party Committee” section in thecompany’s articles of association to clarify and implement the statutory status of the party organization in the corporate governance structure of the legal person.
4. Establishing of internal control system
The Company kept close observation on the whole business process identifying risk points according to Enterprise Internal Control Standards, Internal Control Guidelines, Internal Assessment Guidelines, and Internal Control Guidelines for PLCs issued by Shenzhen Stock Exchange. Effective mechanisms on risk control and internal auditing were conducted. The Auditing Committee of the Board was responsible to supervise the internal control practices.
5.rporate Information Disclosure and Transparency
The company attaches great importance to the information disclosure and the investor relations management, and it has designated Securities Times, Hong Kong Commercial Daily and
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 http://www.cninfo.com.cn as its statutory information disclosure media and website. With fair treatment to all investors, the company in a timely manner discloses the information with truthfulness, accuracy and completeness, which well ensures the transparency of the company and the legitimate rights and interests of all shareholders. Does there exist any difference in compliance with the corporate governance , the PRC Company Law and the relevant provisions of CSRC,
There exist no difference in compliance with the corporate governance , the PRC Company Law and the relevant provisions of CSRC.
II. Independence and Completeness in business, personnel , assets, organization and finance
The Company kept independence and separated with holding shareholders on the aspects of business, human resource, capital, organization, and accounting. And the Company established independent and complete business operating systems.
1. On business operations
TheCompany’s majors of design, manufacture, sale business of industrial steam turbine was independent from the holding company (Hangzhou Steam Turbine Power Group). The controlling shareholder in the subsidiary engineering company to undertake the projectin，Some of the holding subsidiaries of the Group are selling theCompany’s steam turbine products and spare parts, which are at market prices; The Company and the Group are not sharing any office site.
2. On personnel management
The Company kept independence with the holding shareholders on the aspects of human resource and remuneration management. Although theCompany’s chairman of the Board and the vice chairman of the Board were part-time by the parentcompany’s (Hang Steam Turbine Group) chairman of the Board and the vice chairman of the Board; theCompany’s management was employed and gotten salary exclusively in the Company instead of any management duty in the holding-share share holders except the duty of chairman of the Board. TheCompany’s accountant shad no part-time job in their parent company or related companies.
3. On capital operation
The property relationship between the Company and the holding-share shareholders was clear and explicit. The capital and business injected by the holding-share shareholders was independent and complete. And at the same time, the Company owned system of manufacturing and operation, sale, accessorial manufacturing and relevant equipments which independent from holding shareholder.
4. On organization structure
The Company kept total independence from the controlling shareholder on the organization configuration. The Company owned separate and independent manufacturing, supplying, and sales system, there was no horizontal competition with the controlling shareholder, and the Company owned independent management and operation systems. The Company signed related trading agreements with the subsidiaries of the share-holding company. TheCompany’s intermediate managers are employed by theCompany’s executives, and was evaluated under the economic responsibility system.
5. On accounting management
The Company had independent accounting department, and established independent account re-calculation system and accounting system; the Company also had the regulated and independent finance management on the share-holding and subsidiaries; the Company had independent finance policies and bank account and its tax, there was no joint account with controlling shareholder.
6. In legal aspect
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 Department of Securities and Law– the special legal department was founded in the report term, and performs duties according to Administration Rules for Legal Consultancy to State-owned Enterprises. Along with Zhejiang Tianche Law Firm– the public legal consultancy employed by the Company, the Department aims to regulate the legal affairs and day-to-day administrations .
III. Competition situations of the industry
Not applicable
IV. Annual General Meeting and ExtraordinaryShareholders’ Meetings in the Reporting Period
1.Annual General Meeting
|||||||
|-|-|-|-|-|-|
|||Investor||||
|Sessions|Type|participation|Meeting Date|Disclosure date|Disclosure index|
|||ratio||||
||||||Resolutions of the Shareholders’|
||||||Annual Meeting 2016|
||||||(Announcement No. 2017-48)|
||Annual|||||
|2016 Shareholders’||||||
||Shareholders’|69.41%|June 30,2017|July 1,2017|released by Securities Times,|
|general meeting||||||
||General Meeting||||Shanghai Securities Daily, Hong|
||||||Kong Commercial Daily, and|
||||||Http://www.cninfo.com.cn|

 2. Request for extraordinary general meeting by preferred stockholders whose voting rights restore
Not applicable
V. Responsibility performance of independent directors in report period
1. The attending of independent directors to board meetings andshareholders’ general meeting
|||||||||
|-|-|-|-|-|-|-|-|
|The attending of independent directors||||||||
||||Number of||||Number of|
||||||||attendance|
||Number of Board|||||||
|||||||Failure to personally||
||||||||at general|
||meetings|||Number of||||
|Independent||Number of spot|meetings||Number of|attend board meetings||
||necessary to be|||attendances by|||meetings|
|Directors||attendances|attended by||absence|successively twice||
||attended in the|||representative|||of|
||||Communication|||(Yes/No)||
||reporting period|||||||
||||||||shareholde|
||||||||rs|

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
|||||||||
|-|-|-|-|-|-|-|-|
|Zhang Xiaoyan|12|4|8|0|0|No|1|
|Ma Lihong|12|4|8|0|0|No|1|
|Gu Xinjian|12|4|8|0|0|No|1|
|Chen Danhong|12|4|8|0|0|No|1|

 Notes to failure to personally attend Board Meetings Successively Twice
Not applicable
2.Objection of independent directors on some relevant issues
Independent directors proposed no objection against the relevant matters in the reporting period.
3. Other instructions for independent directors to perform their duties
Explanation of the Independent Directors to the Company on Adopted Advice and Unadopted Advice (1) The independent directors debriefed the managers about the business condition in 2016, and suggested the Company to enhance communication with government sectors and to obtain government subsidy support from the research and development of products. Under a circumstance where the economic environment is gradually in downturn, the independent directors suggested the Company to coordinate the product structure and constantly improve the gas turbine business, to seize the market strategic position and actively expand the international market, to control the risk in contracts and intensify the collection for receivables, to strengthen the salary management and performance assessment as well as enhancing staffs andadministrators’ initiative, and to lay a foundation to seek for long-term development at the beginning year of the Thirteen-Five Year Plan
(2) At the 1st communication meeting between the independent directors and the accounting firm, the independent directors debriefed the accounting firm, and suggested the Company to attach importance to the recovery of receivables and the inventory of units to grasp risks.
(3)At the 2nd communication meeting between the independent directors and the accounting firm,the independent directors suggested the Company to confirm revenue recognition principle and keep the precautionary principle as always, to respond risks for partial suspended projects, to keep the the construction progress of important issues up with the market condition changes, and to actively disclose relevant information to minority shareholders and maintain their interests
（4）In the second meeting of the seventh Remuneration Committee, taking into account that under the severe situation in the industry in 2016, thecompany’s management led all employees in solidly implementing of the major measures for transformation and upgrading and the “Thirteenth Five-Year Plan” achieved a good start and the operating result turned losses into gains, which was not an easy to come result, soit’s advised the board of directors of the company to raise the bonuses from the basis of management's 2016 salary, thus to better reflect the incentive effect of salary assessment.
The management accepted the above suggestions.
VI. Fulfilling of duties by the Special Committees under the Board of Directors
(I) The Auditing Committee
The Auditing Committee was performing its duties strictly according to the Working Criteria of Auditing
Committee and was mainly in charge of supervising, verification and communication of internal and external
auditing works. It was also performing the duties to satisfy the requirement of China Securities Regulatory
Commission as well as Shenzhen Stock Exchange. In the report period, the Company adjusted the composition of
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 the Auditing Committee and its members in the report period, and the main works performed by the Auditing Committee were:
1. To call the 1st meeting of the 7th term of Auditing Committee at which the annual auditing work was discussed and suggestions were provided on problems in the auditing process.
2. The 1st meeting of the 7th term of Auditing Committee was held to examine the Annual Report 2015, the GeneralManager’s Report, Financial Report, Dividend Plan, Proposal of Routine Related Transactions, Providing of Inventory Provision and Bad Debt Provision, Internal Control Manual, Internal Control Introspective Report, Internal Control Annual Report and Plan. Statements and were provided on the auditing works of the CPA, and opinions were issued about extending of theCPA’s service. Improvement suggestions were provided on internal control. Opinions were provided on the Annual Report and Financial Report which were about to be submitted to the Board.
(II) The Remuneration and Assessment Committee
The Remuneration and Assessment Committee was established to set up standard for assessing the performance and deciding the remuneration of the directors and executives. Detailed plans were produced and submitted to the Board. In the report period, the Board refined the composition of the Remuneration Committee according to the composition of the new term of Board. The Committee conducted the following works in the report period: 1.The 2nd meeting of the 7th term of Remuneration and Assessment Committee was held to examine the assessment outcome of the directors and executives for year 2016, and produced the remuneration plan for the examination of the Board.
(IV) The Nomination Committee
The Nomination Committee was established to provide suggestions to the Board on the composition of the Board, and to examine the qualifications of candidates for directors and executives. In the report period, Some directors and senior executives of the 7th Board of Directors have improved their corporate governance structure to ensure the smooth development of thecompany’s business decision-making, and the nomination committee has nominated the list of candidates for directors and senior managers from the company due to the approaching statutory retirement age. During the reporting period, the company made adjustments to members of the Nomination Committee and members of the working group based on changes in the board of directors. In the report period, the relevant work of transition carried out by the nomination committee was as follow:
1.The 2nd meeting of the 7th nomination committed was convened , As some of the directors and senior executives approached the statutory retirement age, the nomination committee submitted the list of candidates for directors, deputy general manager, secretary of the board of directors and senior executives to the company, and that was submitted to the board of directors for deliberation.
The company held the third meeting of the seventh Nomination Committee, which nominated the candidates and submitted the list of candidates for deputy general manager and chief accountant to the company.
VII. Fulfilling of duties of the Supervisory Committee
Is there any risk in the supervisory activities of the board of supervisors during the reporting period
Nil
VIII. Assessment and incentive Mechanism for Senior executives
The Company adopts the annual remuneration scheme for directors (excluding independent directors) and senior executives (including Chairman of the Supervisory Committee) which is a combination of basic wages and performance wages. According to the “Remuneration and Assessment Scheme for the 5th term of the 7th term of
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 Board and the 1stshareholders’ provisional meeting 2016(2016-2018), the Remuneration& Assessment Committee is responsible to assess the performances of the directors and senior executives according to stipulated procedures. Directors and senior executives are scored and assessed one after another and comes out with a plan subject to approval of the Board and theShareholders’ Meeting. Basic wages are distributed on monthly basis and the overall remunerations are paid upon completion of the annual assessment.
In the report term, the Directors (exclude independent directors) and senior executives (including the Chairman of Supervisory Committee) are scored and assessed one after another and comes out with a plan decided by the 2nd meeting of the 7th term of Remuneration Committee, which was subject to approval of the Board.
The Assessment and Remuneration Scheme was produced through legal procedures and has been monitoring and motivating the directors and senior executives.
The Companyhadn’t conducted any share incentive program to any directors or senior executives as of the end of report period.
IX. Internal control situations
1. Specific situations on major defects of internal control discovered during report period
2. Self-evaluation report on internal control
|||||
|-|-|-|-|
|Disclosure date of appraisal report on internal control||March 28,2018||
|||Disclosed by http://www.cninfo.com.cn dated March||
|Disclosure index of appraisal report on internal control||||
|||28, 2018 (Announcement 2018-25 )||
|Proportion of total unit assets covered by appraisal in the total assets of the||||
|||100.00%||
|consolidated financial statements of the company||||
|Proportion of total unit incomes covered by appraisal in the total business||||
|||100.00%||
|incomes of the consolidated financial statements of the company||||
|Standards of Defects Evaluation||||
|Type|Financial Report||Non-financial Report|
||Deficiency characterized as below will be treated||(1) Punishment received by governments|
||as fatal defects: To correct the fatal errors already||below provincial level ( including provincial|
||published in the financial report （except for the||level) but no negative effects for our|
||retrospection and adjustments of previous years||company’s periodic report disclosure will be|
||because of policies changing and other objective||considered as a general deficiency; (2) or|
||factors changing);fatal errors already discovered||punishments from national governments|
||by auditor, unidentified in the current financial||above provincial level but no negative effects|
|Standard||||
||report; any fraud among top management; invalid||for our company’s periodic report disclosure|
||monitoring to the financial report from audit||will be considered as a significant deficiency;|
||committee and internal audit department.||(3) external official disclosure has been|
||||already carried out and brought certain|
||||negative effects to our company’s periodic|
||||report disclosure will be considered as a fatal|
||||deficiency.|
|Standards of Quantization|In accordance with the degree of importance of||1) Losses < consolidating 3% of pre-tax|

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
||||
|-|-|-|
||deficiency that may cause financial report|profit, will be asserted as general deficiencies;|
||errors, our company defined quantitative|(2) 3% of combined pre-tax profit ≤ losses <|
||identification standard of financial report internal|5% of combined pre-tax profit, will be|
||deficiency control as per the average of the last|asserted as significant deficiencies; (3) losses|
||three-year total profit. (1) errors reported|≥5% of combined pre-tax profit, will be|
||indicator < 3% of total profit, will be asserted as|asserted as fatal deficiencies.|
||general deficiencies; (2) 3% of total profit ≤||
||errors reported indicator < 5% of total profit, will||
||be asserted as significant deficiencies; (3) errors||
||reported indicator ≥ 5% of total profit, will be||
||asserted as fatal deficiencies.||
|Number of major defects in financial|||
||0||
|reporting（a）|||
|Number of major defects in non|||
||0||
|financial reporting (a)|||
|Number of important defects in|||
||0||
|financial reporting（a）|||
|Number of important defects in non|||
||0||
|financial reporting（a）|||

X. Internal Control audit report
|||
|-|-|
|Review opinions in the internal control audit report||
|As far as our best understanding, Hangzhou Steam Turbine Co., Ltd. has been conducting effective internal control over its||
|financial reporting system in all material aspects we observed as of December 31, 2017, and has been following with the Enterprise||
|Internal Control Criteria.||
|Disclosure of internal audit report|Disclosure|
|Disclosure date of audit report||
||March 28,2018|
|of internal control (full-text)||
|Index of audit report of|Disclosed by http://www.cninfo.com.cn dated March 18, 2018|
|internal control (full-text)|(Announcement No. 2018-25 )|
|Internal audit report’s opinion|Unqualified audit opinion|
|Non-financial reporting the existence of significant||
||No|
|deficiencies||

Has the CPAs issued a qualifiedauditor’s report of internal control .
No
Does the internal control audit report issued by the CPAs agree with the self-assessment report of the Board of
Directors
Yes□No
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 X. Corporation bonds
Whether or not the Company public offering corporation bonds in stock exchange, which undue or without payment in full at maturity on the approval date for annual report disclosed
No
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 XI.Financial Report
1.Auditors’ Report
|||
|-|-|
|Type of auditing opinion|Standard report without qualified opinion|
|Date of issue of the Auditors’ Report|March 26,2018|
||Pan-China Certified Public Accountants (Special common|
|Name of the CPA||
||partnership)|
|Ref. No. of the Auditors’ Report|TIANJIANSHEN〔2018〕No.1268|
|Name of the certified accountants|Jiang Xiaodong,Ye Xianbin|

Auditors’ Report
To the entire shareholders of Hangzhou Steam Turbine Co., Ltd.
I. Opinion
We have audited the financial statements of Hangzhou Steam Turbine Co., Ltd.. (hereinafter referred to as "the Company"), which comprise the balance sheet as at December 31, 2017, and the income statement, the statement of cash flows and the statement of changes in owners' equity for the year then ended and notes to the financial statements.
In our opinion, the attached financial statements are prepared, in all material respects, in accordance with Accounting Standards for Business Enterprises and present fairly the financial position of the Company as at December 31, 2017 and its operating results and cash flows for the year then ended.
II. Basis for Our Opinion
We conducted our audit in accordance with the Auditing Standards for Certified Public Accountants in China. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. According to the Code of Ethics for Chinese CPA, we are independent of the Company in accordance with the Code of Ethics for Chinese CPA and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
III. KeyAudit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
(I) Bad debt provision for accounts receivable
1. Description of the matter
See Note 3 (X) and Note 5 (I) 3 of the financial report. As of December 31, 2017, the book balance of accounts receivable in the consolidated financial statements of Hangzhou Steam Turbine Co., Ltd. was RMB 2,725,387,736.93 and the balance of bad debt provisions was RMB 1,030,170,288.47. The management conducts the individual impairment test to the accounts receivable with a single significant amount and the accounts receivable with not significant amount but with objective-evidence demonstrated impairment, and the provision for bad debt is made according to the difference of the present value of the future cash flow lower than its book value; In addition to the receivables that have been separately accrued for bad debt provision, the accrued provision for bad debts shall, based on the actual loss rate of the same or similar receivables with similar credit risk characteristics in previous years, be determined by combining with the consideration of the current situation. The calculation of the recoverable amount of accounts receivable requires management's judgment and estimation. If there are bad debts caused by the accounts receivable that cannot be recovered on time or are unable to be
recovered, then there will be a great impact on the financial report. Therefore, we make the bad debt provision for
accounts receivable as a key audit matter.
2. Countermeasures in the audit
(1) Evaluate and test the design and operation effectiveness of the internal control related to the credit policy
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 and accounts receivable management of Hangzhou Steam Turbine Co.,Ltd;
(2) Analyze the reasonableness of the accounting estimates for bad debts provision of accounts receivable of Hangzhou Steam Turbine Co., Ltd, including the judging of significant amount and the judgment of separate provision for bad debts;
(3) Through the analysis of the aging of accounts receivable of Hangzhou Steam Turbine Co., Ltd and the creditworthiness of customers and by the implementation of confirmation procedure for accounts receivable and the examination of the information of collection after the period, to assess the reasonableness of the bad debt provision for accounts receivable;
(4) Analyze and calculate the ratio of bad debt provision amount and the balance of accounts receivable on the balance sheet date of Hangzhou Steam Turbine Co., Ltd, compare the provision amount for bad debt and the actual occurrences in the previous period, and analyze whether the provision for bad debts of accounts receivable is sufficient;
(5) Acquire the statement of bad debts provision of Hangzhou Steam Turbine Co., Ltd and check whether the accrual method is implemented according to the bad debt policy and recalculate whether the amount of the provision for bad debt is accurate.
(II) Inventory falling prices
1. Description of the matter
See Note 3 (XI) and Note 5 (I) 7 to the financial report. As of December 31, 2017, the book value of inventories in the consolidated financial statements was RMB 2,092,575,691.92, and the provision for the inventory falling prices after deducting the already-accrued was RMB 113,473,653.11. The provision for inventory falling prices is determined based on the net realizable value of inventories, and for the suspended or postponed project requiring the possibility of termination of estimates, the recovered compensation for the terminated project is determined as the basis of net realizable value. The significant accounting estimates and judgments on the afore-said net realizable value will affect the book value of inventories. In view of that the determination of the book value of inventories at the end of the year requires the management to identify the items and objective evidence that have been impaired and assess the expected future cash flows available and determine its present value-which involves the significant accounting estimates and judgments by the management, therefore, we make the provision for inventory falling prices as a key audit matter.
2. Countermeasures in the audit
(1) Understand the progress of each project, and understand product characteristics, production and processing, warehousing, sales and delivery;
(2) Evaluate and test the effectiveness of the design and operation of internal controls related to the inventory management of Hangzhou Steam Turbine Co., Ltd.;
(3) Analyze the reasonableness of the accounting estimates of provision for the inventory falling prices of Hangzhou Steam Turbine Co.,Ltd, including the judgments of the depreciation items and the determination of the net realizable value;
(4) Perform the inventory overseeing and inventory age analysis for the inventory at the end of the period, understand the progress and status of the project, and evaluate the reasonableness of the provision for inventory falling prices by taking into account the collection status of the project after the period;
(5) Acquire the list and basis for the provision for inventory falling price for the item of the company of each year, and review and recalculate the provision for inventory falling prices according to the accounting policy for the provision for inventory falling prices.
(III) Recognition of income
1. Description of the matter
See Note 3 (XXI,), Note 5 (II) 1. The main business of Hangzhou Steam Turbine Co., Ltd is the production and sales of industrial steam turbines and other products. The operating income for 2017 was RMB 3,447,142,669.49. The identification for the transfer of the main risk and reward of the commodity ownership shall be at the time when the income from domestic sales products obtains the signing receipt confirmed by the purchaser and when the income of the exported products obtains the customs declaration or bill of lading. As the income is one of the key performance indicators of the Hangzhou Steam Turbine Co.,Ltd, thus there is inherent risk that the management will manipulate the timing of income recognition in order to achieve specific goals or expectations. Therefore, we recognize the income recognition of the Huangzhou Steam Turbine Co., Ltd as a key audit matter.
2. Countermeasures in the audit
Our audit procedures for the above key audit matter related to the recognition of income mainly include: (1) Evaluate and test the effectiveness of the design and operation of internal control related to income recognition of Hangzhou Steam Turbine Co.,Ltd;
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 (2) Analyze the income and gross profit information according to the product type and sales quantity, and judge whether there is any abnormal fluctuation in the income amount in the current period;
(3) Select samples from the accounting records and shipment records of sales income, cross-check the sales-related contracts, invoices, and receipts, customs declarations, and bills of lading confirmed by the purchaser, and pay particular attention to whether the samples before and after the balance sheet date are included in the correct accounting period;
||
|-|
|(4) The income certification process is implemented to evaluate the reasonableness of the timing of revenue|
|recognition.|

IV. Other information
The management of the Company is responsible for the other information. The other information comprises information of the Company's annual report in 2017, but excludes the financial statements and our auditor's report. Our opinion on the financial statements does not cover the other information and we do not and will not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the other information that we obtained prior to the date of this auditor's report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard
V. Responsibilities of Management and Those Charged with Governance for the Financial Statements The Company's management is responsible for preparing the financial statements in accordance with the requirements of Accounting Standards for Business Enterprises to achieve a fair presentation, and for designing, implementing and maintaining internal control that is necessary to ensure that the financial statements are free from material misstatements, whether due to frauds or errors.
In preparing the financial statements, management of the Company is responsible for assessing the Company's ability to continue as a going concern, disclosing matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company's financial reporting process. VI. Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the audit standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
(1) Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, omissions, misrepresentations, or the override of internal control.
(2) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances.
(3) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by management of the Company.
(4) Conclude on the appropriateness of using the going concern assumption by the management of the Company,
and conclude, based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
(5) Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
(6) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the financial statements and bear all liability for the opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit matters, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
II. The Financial Statements
All figures in the Notes to the Financial Statements are in RMB.
1. Consolidated Balance Sheet
Prepared by: Hangzhou Steam Turbine Co., Ltd
December 31,2017
In RMB
||||
|-|-|-|
|Items|At the end of term|Beginning of term|
|Current asset：|||
|Monetary fund|1,222,677,495.94|895,037,559.34|
|Settlement provision|||
|Outgoing call loan|||
|Financial assets measured at fair value with variations accounted into|||
|current income account|||
|Derivative financial assets|||
|Bill receivable|715,410,887.68|479,716,321.62|
|Account receivable|1,695,217,448.46|1,870,173,348.32|
|Prepayments|446,166,710.77|202,184,858.83|
|Insurance receivable|||
|Reinsurance receivable|||
|Provisions of Reinsurance contracts receivable|||
|Interest receivable|||
|Dividend receivable|6,900,000.00||
|Other account receivable|16,905,005.57|31,024,707.72|
|Repurchasing of financial assets|||
|Inventories|2,092,575,691.92|1,901,544,358.26|

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
||||
|-|-|-|
|Assets held for sales|||
|Non-current asset due in 1 year|||
|Other current asset|904,426,265.79|863,018,479.59|
|Total of current assets|7,100,279,506.13|6,242,699,633.68|
|Non-current assets：|||
|Loans and payment on other’s behalf disbursed|||
|Disposable financial asset|2,417,780,984.08|3,060,865,862.60|
|Expired investment in possess|||
|Long-term receivable|||
|Long term share equity investment|5,800,000.00||
|Property investment|||
|Fixed assets|566,710,937.10|615,922,109.91|
|Construction in progress|255,921,660.09|153,743,889.41|
|Engineering material|||
|Fixed asset disposal|||
|Production physical assets|||
|Gas & petrol|||
|Intangible assets|285,670,638.55|297,405,434.08|
|R & D petrol|||
|Goodwill|||
|Long-germ expenses to be amortized|253,886.90|1,430,968.81|
|Deferred income tax asset|198,179,569.53|178,831,809.85|
|Other non-current asset|||
|Total of non-current assets|3,730,317,676.25|4,308,200,074.66|
|Total of assets|10,830,597,182.38|10,550,899,708.34|
|Current liabilities|||
|Short-term loans|115,500,000.00|173,000,000.00|
|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|215,409,958.92|143,007,715.10|
|Account payable|882,715,465.65|853,452,589.51|
|Advance payment|2,419,751,405.08|1,827,959,793.62|
|Selling of repurchased financial assets|||
|Fees and commissions receivable|||
|Employees’ wage payable|79,525,773.69|71,224,634.03|
|Tax payable|34,920,073.37|90,239,673.16|
|Interest payable|268,860.77|134,376.32|
|Dividend payable|||
|Other account payable|27,859,617.33|30,820,980.80|
|Reinsurance fee payable|||
|Insurance contract provision|||
|Entrusted trading of securities|||

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
||||
|-|-|-|
|Entrusted selling of securities|||
|Liabilities held for sales|||
|Non-current liability due in 1 year|4,900,000.00|18,500,000.00|
|Other current liability|||
|Total of current liability|3,780,851,154.81|3,208,339,762.54|
|Non-current liabilities：|||
|Long-term loan|100,000,000.00|4,900,000.00|
|Bond payable|||
|Including：preferred stock|||
|Sustainable debt|||
|Long-term payable|209,633,466.66|208,357,733.33|
|Long-term payable employees’s remuneration|||
|Special payable|237,658,831.07||
|Expected liabilities|||
|Deferred income|4,063,615.00|5,422,895.00|
|Deferred income tax liability|278,217,667.94|378,256,646.95|
|Other non-current liabilities|||
|Total non-current liabilities|829,573,580.67|596,937,275.28|
|Total of liability|4,610,424,735.48|3,805,277,037.82|
|Owners’ equity|||
|Share capital|754,010,400.00|754,010,400.00|
|Other equity instrument|||
|Including：preferred stock|||
|Sustainable debt|||
|Capital reserves|139,545,089.02|139,590,345.09|
|Less：Shares in stock|||
|Other comprehensive income|1,570,358,510.09|2,137,419,299.84|
|Special reserves|25,369,714.61|27,546,353.37|
|Surplus reserves|621,112,807.78|621,112,807.78|
|Common risk provision|||
|Undistributed profit|2,774,420,288.05|2,705,667,037.15|
|Total of owner’s equity belong to the parent company|5,884,816,809.55|6,385,346,243.23|
|Minority shareholders’ equity|335,355,637.35|360,276,427.29|
|Total of owners’ equity|6,220,172,446.90|6,745,622,670.52|
|Total of liabilities and owners’ equity|10,830,597,182.38|10,550,899,708.34|

 Legal Representative: Zheng Bin Person in charge ofaccounting：Zhao Jiamao Accounting Dept Leader: Zhao Jiamao
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 2.Parent Company Balance Sheet
In RMB
||||
|-|-|-|
|Items|At the end of term|Beginning of term|
|Current asset：|||
|Monetary fund|654,407,180.33|293,454,126.93|
|Financial assets measured at fair value with variations accounted into|||
|current income account|||
|Derivative financial assets|||
|Bill receivable|357,644,500.75|269,527,716.22|
|Account receivable|1,195,950,107.32|1,424,950,696.58|
|Prepayments|163,701,036.86|115,383,408.34|
|Interest receivable|||
|Dividend receivable|6,900,000.00||
|Other account receivable|4,311,538.86|68,004,706.24|
|Inventories|1,598,522,597.27|1,446,652,799.71|
|Assets held for sales|||
|Non-current asset due in 1 year|||
|Other current asset|737,474,571.12|600,000,000.00|
|Total of current assets|4,718,911,532.51|4,217,973,454.02|
|Non-current assets：|||
|Disposable financial asset|2,377,021,294.50|3,020,106,173.02|
|Expired investment in possess|||
|Long-term receivable|||
|Long term share equity investment|502,919,378.03|502,919,378.03|
|Property investment|||
|Fixed assets|265,423,321.11|315,900,380.66|
|Construction in progress|151,569,540.89|94,170,909.99|
|Engineering material|||
|Fixed asset disposal|||
|Production physical assets|||
|Gas & petrol|||
|Intangible assets|169,780,320.65|173,826,293.57|
|R & D petrol|||
|Goodwill|||
|Long-germ expenses to be amortized|253,886.90|507,773.78|
|Deferred income tax asset|146,802,178.11|133,581,773.70|
|Other non-current asset|||
|Total of non-current assets|3,613,769,920.19|4,241,012,682.75|
|Total of assets|8,332,681,452.70|8,458,986,136.77|
|Current liabilities|||
|Short-term loans||100,000,000.00|

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
||||
|-|-|-|
|Financial liabilities measured at fair value with variations accounted into|||
|current income account|||
|Derivative financial liabilities|||
|Bill payable|5,400,000.00||
|Account payable|457,304,271.86|486,810,046.42|
|Advance payment|1,817,869,660.07|1,476,780,338.78|
|Employees’ wage payable|42,770,536.86|44,035,408.19|
|Tax payable|3,918,864.69|64,247,326.24|
|Interest payable|112,597.22||
|Dividend payable|||
|Other account payable|15,515,940.17|21,562,998.72|
|Classified as held for sale debt|||
|Non-current liability due in 1 year|||
|Other current liability|||
|Total of current liability|2,342,891,870.87|2,193,436,118.35|
|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|237,067,491.46||
|Expected liabilities|||
|Deferred income|||
|Deferred income tax liability|278,217,667.94|378,256,646.95|
|Other non-current liabilities|||
|Total of Non-current liabilities|615,285,159.40|378,256,646.95|
|Total of liability|2,958,177,030.27|2,571,692,765.30|
|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|1,570,912,609.09|2,137,800,156.80|
|Special reserves|9,629,800.19|10,874,033.85|
|Surplus reserves|602,356,402.65|602,356,402.65|
|Undistributed profit|2,298,641,960.41|2,243,299,128.08|
|Total of owners’ equity|5,374,504,422.43|5,887,293,371.47|
|Total of liabilities and owners’ equity|8,332,681,452.70|8,458,986,136.77|

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 Legal Representative: Zheng Bin Person in charge ofaccounting：Zhao Jiamao Accounting Dept Leader: Zhao Jiamao
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 3.Consolidated Income statement
In RMB
||||
|-|-|-|
|||Same period of the previous|
|Items|Report period||
|||year|
|I. Income from the key business|3,447,142,669.49|3,235,303,379.24|
|Incl：Business income|3,447,142,669.49|3,235,303,379.24|
|Interest income|||
|Insurance fee earned|||
|Fee and commission received|||
|II. Total business cost|3,454,428,905.88|3,211,913,936.08|
|Incl：Business cost|2,450,587,325.79|2,204,578,781.07|
|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|31,221,773.02|32,563,426.16|
|Sales expense|169,520,147.67|164,610,410.65|
|Administrative expense|644,178,931.78|623,684,537.46|
|Financial expenses|24,287,127.82|-14,837,853.07|
|Asset impairment loss|134,633,599.80|201,314,633.81|
|Add：Gains from change of fir value （“-”for loss）|||
|Investment gain（“-”for loss）|120,565,851.26|32,136,337.57|
|Incl: investment gains from affiliates|||
|Gains from currency exchange（“-”for loss）|||
|Assets disposal income|2,740,865.13|387,292.53|
|Other income|10,195,671.25||
|III. Operational profit（“-”for loss）|126,216,151.25|55,913,073.26|
|Add ：Non-operational income|8,075,659.19|25,780,924.16|
|Less：Non business expenses|1,635,679.94|4,274,955.35|
|IV.Total profit(“-”for loss)|132,656,130.50|77,419,042.07|
|Less：Income tax expenses|10,835,754.48|10,507,672.15|
|V. Net profit|121,820,376.02|66,911,369.92|
|(1) Categorized by going concern|121,820,376.02|66,911,369.92|
|(2) Termination of operating net profit|||
|Net profit attributable to the owners of parent company|68,753,250.90|31,955,445.73|
|Minority shareholders’ equity|53,067,125.12|34,955,924.19|
|VI. Other comprehensive income|-567,294,413.99|2,138,908,422.36|
|Net of profit of other comprehensive income attributable to owners of the|||
||-567,060,789.75|2,138,272,051.84|
|parent company.|||
|（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 a|||
|ssets|||

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
||||
|-|-|-|
|2.Other comprehensive income under the equity method investee can not|||
|be reclassified into profit or loss.|||
|（II）|||
||-567,060,789.75|2,138,272,051.84|
|Other comprehensive income that will be reclassified into profit or loss.|||
|1.Other comprehensive income under the equity method investee can be r|||
|eclassified into profit or loss.|||
|2.Gains and losses from changes in fair value available for sale financial|||
||-566,887,547.71|2,137,800,156.80|
|assets|||
|3.Held-to-maturity investments reclassified to gains and losses of availabl|||
|e for sale financial assets|||
|4.The effective portion of cash flow hedges and losses|||
|5.Translation differences in currency financial statements|-173,242.04|471,895.04|
|6.Other|||
|Net of profit of other comprehensive income attributable to Minority|||
||-233,624.24|636,370.52|
|shareholders’ equity|||
|VII. Total comprehensive income|-445,474,037.97|2,205,819,792.28|
|Total comprehensive income attributable to the owner of the parent|||
||-498,307,538.85|2,170,227,497.57|
|company|||
|Total comprehensive income attributable minority shareholders|52,833,500.88|35,592,294.71|
|VIII. Earnings per share|||
|（I）Basic earnings per share|0.09|0.04|
|(II)Diluted earnings per share|0.09|0.04|

 Legal Representative: Zheng Bin Person in charge ofaccounting：Zhao Jiamao Accounting Dept Leader: Zhao Jiamao
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 4. Income statement of the Parent Company
In RMB
||||
|-|-|-|
|||Same period of the previous|
|Items|Report period||
|||year|
|I. Income from the key business|2,196,716,474.74|2,143,474,150.58|
|Less：Business cost|1,694,306,219.84|1,556,832,738.33|
|Business tax and surcharge|10,973,986.81|19,958,750.71|
|Sales expense|105,694,953.84|104,810,547.64|
|Administrative expense|409,162,136.78|387,271,046.69|
|Financial expenses|13,375,506.45|-12,303,571.04|
|Asset impairment loss|97,887,620.88|171,652,812.43|
|Add：Gains from change of fir value （“-”for loss）|||
|Investment gain（“-”for loss）|167,830,820.86|102,446,490.02|
|Incl: investment gains from affiliates|||
|Assets disposal income|2,555,740.94|353,762.44|
|Other income|3,890,400.53||
|II. Operational profit（“-”for loss）|39,593,012.47|18,052,078.28|
|Add ：Non-operational income|4,030,380.36|13,150,650.34|
|Less：Non business expenses|1,307,587.69|1,957,148.79|
|III.Total profit(“-”for loss)|42,315,805.14|29,245,579.83|
|Less：Income tax expenses|-13,027,027.19|-12,829,459.15|
|IV. Net profit|55,342,832.33|42,075,038.98|
|(1) Categorized by going concern|55,342,832.33|42,075,038.98|
|(2) Termination of operating net profit|||
|V.Net of profit of other comprehensive income|-566,887,547.71|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 n|||
|ot be reclassified into profit or loss.|||
|（ II ）|||
||-566,887,547.71|2,137,800,156.80|
|Other comprehensive income that will be reclassified into profit or loss.|||
|1.Other comprehensive income under the equity method investee can b|||
|e reclassified into profit or loss.|||
|2.Gains and losses from changes in fair value available for sale financia|||
||-566,887,547.71|2,137,800,156.80|
|l assets|||
|3.Held-to-maturity investments reclassified to gains and losses of availa|||
|ble 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|-511,544,715.38|2,179,875,195.78|
|VII. Earnings per share：|||

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
||||
|-|-|-|
|（I）Basic earnings per share|0.07|0.06|
|(II)Diluted earnings per share|0.07|0.06|

 Legal Representative: Zheng Bin Person in charge ofaccounting：Zhao Jiamao Accounting Dept Leader: Zhao Jiamao
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 5. Consolidated Cash flow statement
In RMB
||||
|-|-|-|
|||Same period of the previous|
|Items|Report period||
|||year|
|I.Cash flows from operating activities|||
|Cash received from sales of goods or rending of services|3,494,692,256.02|3,117,828,975.19|
|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|13,672,821.64|9,575,551.67|
|Other cash received from business operation|136,993,210.01|36,339,734.29|
|Sub-total of cash inflow|3,645,358,287.67|3,163,744,261.15|
|Cash paid for purchasing of merchandise and services|2,188,106,830.33|1,592,178,163.15|
|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|675,225,336.13|660,847,474.75|
|Taxes paid|237,999,779.64|186,151,888.55|
|Other cash paid for business activities|338,723,549.80|218,407,306.28|
|Sub-total of cash outflow from business activities|3,440,055,495.90|2,657,584,832.73|
|Cash flow generated by business operation, net|205,302,791.77|506,159,428.42|
|II.Cash flow generated by investing|||
|Cash received from investment retrieving|103,680,000.00|3,045,673.93|
|Cash received as investment gains|84,616,250.54|32,136,337.57|
|Net cash retrieved from disposal of fixed assets, intangible assets, and|||
||16,494,301.22|1,047,802.29|
|other long-term assets|||
|Net cash received from disposal of subsidiaries or other operational units|||
|Other investment-related cash received|4,135,806,169.07|1,765,932,662.00|

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
||||
|-|-|-|
|Sub-total of cash inflow due to investment activities|4,340,596,720.83|1,802,162,475.79|
|Cash paid for construction of fixed assets, intangible assets and other|||
||149,836,385.82|83,386,401.14|
|long-term assets|||
|Cash paid as investment|102,400,000.00|39,442,786.76|
|Net increase of loan against pledge|||
|Net cash received from subsidiaries and other operational units|||
|Other cash paid for investment activities|3,931,296,261.75|2,193,700,000.00|
|Sub-total of cash outflow due to investment activities|4,183,532,647.57|2,316,529,187.90|
|Net cash flow generated by investment|157,064,073.26|-514,366,712.11|
|III.Cash flow generated by financing|||
|Cash received as investment|||
|Incl: Cash received as investment from minor shareholders|||
|Cash received as loans|232,500,000.00|202,000,000.00|
|Cash received from bond placing|||
|Other financing –related ash received||208,000,000.00|
|Sub-total of cash inflow from financing activities|232,500,000.00|410,000,000.00|
|Cash to repay debts|208,500,000.00|214,650,000.00|
|Cash paid as dividend, profit, or interests|49,845,493.76|53,367,075.65|
|Incl: Dividend and profit paid by subsidiaries to minor shareholders|41,161,592.50|44,221,187.50|
|Other cash paid for financing activities|23,054,431.92||
|Sub-total of cash outflow due to financing activities|281,399,925.68|268,017,075.65|
|Net cash flow generated by financing|-48,899,925.68|141,982,924.35|
|IV. Influence of exchange rate alternation on cash and cash equivalents|-7,211,089.37|8,236,681.66|
|V.Net increase of cash and cash equivalents|306,255,849.98|142,012,322.32|
|Add: balance of cash and cash equivalents at the beginning of term|831,236,984.85|689,224,662.53|
|VI ..Balance of cash and cash equivalents at the end of term|1,137,492,834.83|831,236,984.85|

 Legal Representative: Zheng Bin Person in charge ofaccounting：Zhao Jiamao Accounting Dept Leader: Zhao Jiamao
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 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|2,123,033,690.29|1,692,166,949.58|
|Tax returned|1,250,418.38|2,971,055.45|
|Other cash received from business operation|20,481,813.79|14,110,015.18|
|Sub-total of cash inflow|2,144,765,922.46|1,709,248,020.21|
|Cash paid for purchasing of merchandise and services|1,199,591,051.02|757,987,965.11|
|Cash paid to staffs or paid for staffs|457,506,060.50|450,219,508.05|
|Taxes paid|106,962,139.60|62,701,978.23|
|Other cash paid for business activities|123,920,412.74|112,929,726.69|
|Sub-total of cash outflow from business activities|1,887,979,663.86|1,383,839,178.08|
|Cash flow generated by business operation, net|256,786,258.60|325,408,842.13|
|II.Cash flow generated by investing|||
|Cash received from investment retrieving|103,680,000.00||
|Cash received as investment gains|135,809,172.66|102,446,490.02|
|Net cash retrieved from disposal of fixed assets, intangible assets, and other|||
||16,038,777.07|47,893,364.87|
|long-term assets|||
|Net cash received from disposal of subsidiaries or other operational units|||
|Other investment-related cash received|2,713,003,714.00|980,000,000.00|
|Sub-total of cash inflow due to investment activities|2,968,531,663.73|1,130,339,854.89|
|Cash paid for construction of fixed assets, intangible assets and other|||
||70,439,655.26|53,123,444.54|
|long-term assets|||
|Cash paid as investment|102,400,000.00|39,442,786.76|
|Net cash received from subsidiaries and other operational units|||
|Other cash paid for investment activities|2,676,530,440.00|1,470,000,000.00|
|Sub-total of cash outflow due to investment activities|2,849,370,095.26|1,562,566,231.30|
|Net cash flow generated by investment|119,161,568.47|-432,226,376.41|
|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|3,406,763.88|3,448,007.34|
|Other cash paid for financing activities|||
|Sub-total of cash outflow due to financing activities|103,406,763.88|103,448,007.34|
|Net cash flow generated by financing|-3,406,763.88|-3,448,007.34|
|IV. Influence of exchange rate alternation on cash and cash equivalents|-5,925,130.42|6,279,861.59|
|V.Net increase of cash and cash equivalents|366,615,932.77|-103,985,680.03|
|Add: balance of cash and cash equivalents at the beginning of term|283,930,522.76|387,916,202.79|
|VI ..Balance of cash and cash equivalents at the end of term|650,546,455.53|283,930,522.76|

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 Legal Representative: Zheng Bin Person in charge ofaccounting：Zhao Jiamao Accounting Dept Leader: Zhao Jiamao
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 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||Less||||||||
|||||||||Com||||
|||instrument||:||||||Minor||
||||||Other|||mon|||Total of|
|Items||prefe||Shar||Specialized|Surplus|||shareholders’||
||Share Capital||Capital reserves||Comprehensive|||risk|Attributable profit||owners’ equity|
|||rred||es in||reserve|reserves|||equity||
|||stoc||stoc|Income|||prov||||
|||||||||ision||||
|||k||k||||||||
|I.Balance at the end of last year|||||||621,112,807.7||||6,745,622,670.|
||754,010,400.00||139,590,345.09||2,137,419,299.84|27,546,353.37|||2,705,667,037.15|360,276,427.29||
||||||||8||||52|
|Add: Change of accounting policy||||||||||||
|Correcting of previous errors||||||||||||
|Merger of entities under common||||||||||||
|control||||||||||||
|Other||||||||||||
|II.Balance at the beginning of||||||||||||
||||||||621,112,807.7||||6,745,622,670.|
||754,010,400.00||139,590,345.09||2,137,419,299.84|27,546,353.37|||2,705,667,037.15|360,276,427.29||
|current year|||||||8||||52|
|III.Changed in the current year|||||||||||-525,450,223.|
||||-45,256.07||-567,060,789.75|-2,176,638.76|||68,753,250.90|-24,920,789.94||
||||||||||||62|
|（1）Total comprehensive income|||||||||||-445,474,037.|
||||||-567,060,789.75||||68,753,250.90|52,833,500.88||
||||||||||||97|
|（II）Investment or decreasing of||||||||||||
|capital by owners||||||||||||
|1．Ordinary Shares invested by Sh||||||||||||
|areholders||||||||||||

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
|||||
|-|-|-|-|
|2．Holders of other equity instrum||||
|ents invested capital||||
|3．Amount of shares paid and||||
|accounted as owners’ equity||||
|4．Other||||
|（III）Profit allotment|||-41,161,592.5|
|||-41,161,592.50||
||||0|
|1.Providing of surplus reserves||||
|2.Providing of common risk||||
|provisions||||
|3．Allotment to the owners (or||||
||||-41,161,592.5|
|||-41,161,592.50||
|shareholders)|||0|
|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||||
||-2,176,638.76|-378,458.25|-2,555,097.01|
|1. Provided this year||||
|2．Used this term||||
||-2,176,638.76|-378,458.25|-2,555,097.01|

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
|||||||||
|-|-|-|-|-|-|-|-|
|（VI）Other||||||||
|||-45,256.07|||||-36,214,240.07|
|IV. Balance at the end of this term|||||621,112,807.7|||
||754,010,400.00|139,545,089.02|1,570,358,510.09|25,369,714.61||2,774,420,288.05|335,355,637.35|
||||||8|||

 Legal Representative: Zheng Bin Person in charge ofaccounting：Zhao Jiamao Accounting Dept Leader: Zhao Jiamao
Amount in last year
In RMB
|||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|-|
||Amount in last year|||||||||||||
|||Other Equity||||||||||||
|||||||Less||||||||
|||instrument||||||||Com||||
|||||||:||||||Minor||
||||||||Other|||mon|||Total of|
|Items||prefe||||Shar||Specialized|Surplus|||shareholders’||
||Share Capital||Sust||Capital reserves||Comprehensive|||risk|Attributable profit||owners’ equity|
|||rred||Othe||es in||reserve|reserves|||equity||
||||aina||||Income|||prov||||
|||stoc||r||stoc||||||||
||||ble|||||||ision||||
|||k||||k||||||||
||||debt|||||||||||
|I.Balance at the end of last year|||||||||621,112,807.7||||4,589,137,018.1|
||754,010,400.00||||139,590,345.09||-852,752.00|31,764,920.51|||2,673,711,591.42|369,799,705.35||
||||||||||8||||5|
|Add: Change of accounting policy||||||||||||||
|Correcting of previous errors||||||||||||||
|Merger of entities under common||||||||||||||
|control||||||||||||||
|Other||||||||||||||
|II.Balance at the beginning of||||||||||||||
||||||||||621,112,807.7||||4,589,137,018.1|
||754,010,400.00||||139,590,345.09||-852,752.00|31,764,920.51|||2,673,711,591.42|369,799,705.35||
|current year|||||||||8||||5|
|III.Changed in the current year|||||||||||||2,156,485,652.3|
||||||||2,138,272,051.84|-4,218,567.14|||31,955,445.73|-9,523,278.06||
||||||||||||||7|

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
||||||
|-|-|-|-|-|
|（1）Total comprehensive income||||2,205,819,792.2|
||2,138,272,051.84|31,955,445.73|35,592,294.71||
|||||8|
|（II）Investment or decreasing of|||||
|capital by owners|||||
|1．Ordinary Shares invested by Sh|||||
|ereholders|||||
|2．Holders of other equity instrum|||||
|ents invested capital|||||
|3．Allotment to the owners (or|||||
|shareholders)|||||
|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.|||||

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
||||||||||
|-|-|-|-|-|-|-|-|-|
|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 term|||||621,112,807.7|||6,745,622,670.5|
||754,010,400.00|139,590,345.09|2,137,419,299.84|27,546,353.37||2,705,667,037.15|360,276,427.29||
||||||8|||2|

 Legal Representative: Zheng Bin Person in charge ofaccounting：Zhao Jiamao 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|||||Other|||||
|||||||Less: Shares|||Common risk||Total of owners’|
|Items|Share Capital||||Capital reserves||Comprehensive|Surplus reserves||Attributable profit||
|||preferr||||in stock|||provision||equity|
|||ed|Sustai|Othe|||Income|||||
||||nable|r||||||||
|||stock||||||||||
||||debt|||||||||
|I.Balance at the end of last year||||||||||||
||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|5,887,293,371.47|
|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||2,137,800,156.80|10,874,033.85|602,356,402.65|2,243,299,128.08|5,887,293,371.47|
|year||||||||||||

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
||||||
|-|-|-|-|-|
|III.Changed in the current year|||||
||-566,887,547.71|-1,244,233.66|55,342,832.33|-512,788,949.04|
|（I）Total comprehensive income|||||
||-566,887,547.71||55,342,832.33|-511,544,715.38|
|(II) Investment or decreasing of|||||
|capital by owners|||||
|1．Ordinary Shares invested by share|||||
|holders|||||
|2．Holders of other equity instrument|||||
|s invested 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|||||

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
|||||||||
|-|-|-|-|-|-|-|-|
|V). Special reserves||||||||
|||||-1,244,233.66|||-1,244,233.66|
|1. Provided this year||||||||
|2．Used this term||||||||
|||||-1,244,233.66|||-1,244,233.66|
|（VI）Other||||||||
|V. Balance at the end of this term|754,010,400.00||||||5,374,504,422.43|
|||138,953,250.09|1,570,912,609.09|9,629,800.19|602,356,402.65|2,298,641,960.41||

 Legal Representative: Zheng Bin Person in charge ofaccounting：Zhao Jiamao Accounting Dept Leader: Zhao Jiamao
Amount in last year
In RMB
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
||Amount in last year|||||||||||
|||Other Equity||||||||||
|||instrument|||||Other|||||
|||||||Less: Shares|||Common risk||Total of owners’|
|Items||||||||||||
||Share Capital||||Capital reserves||Comprehensive|Surplus reserves||Attributable profit||
|||preferr||||in stock|||provision||equity|
|||ed|Sustai|Othe|||Income|||||
||||nable|r||||||||
|||stock||||||||||
||||debt|||||||||
|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|3,709,643,131.51|
|Add: Change of accounting policy||||||||||||
|Correcting of previous errors||||||||||||
|Other||||||||||||
|II.Balance at the beginning of||||||||||||
||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|
|current year||||||||||||
|III.Changed in the current year||||||||||||
||||||||2,137,800,156.80|-2,224,955.82||42,075,038.98|2,177,650,239.96|
|（I）Total comprehensive income||||||||||||
||||||||2,137,800,156.80|||42,075,038.98|2,179,875,195.78|
|(II) Investment or decreasing of||||||||||||

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
||||
|-|-|-|
|capital by owners|||
|1．Ordinary Shares invested by sha|||
|reholders|||
|2．Holders of other equity instrum|||
|ents invested 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|

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
|||||||||
|-|-|-|-|-|-|-|-|
|（VI）Other||||||||
|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|5,887,293,371.47|

 Legal Representative: Zheng Bin Person in charge ofaccounting：Zhao Jiamao Accounting Dept Leader: Zhao Jiamao
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 III.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 design, manufacturing, Main Business Activities:R&D, Production and Sales of Industrial Steam Turbine. Main Products: Industrial Steam Turbine
These Financial Statements are released upon approval at the 20th meeting of the 7th term of Board held on March 26, 2018.
19 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.
IV. Basis of compiling the finance report
(1) 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.
V. Principal Accounting Policies and Estimations
Whether the company needs to comply with the disclosure requirements of the particular industry
No
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
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 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
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 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
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 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
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 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|
|The association unit within the scope of the merger is a credit risk f||
||Impairment test performed individually, bad debt provision|
|eature that is matched against the income from the related transacti||
||will be provided at the difference of expected cash flow lower|
||than the book value.|
|ons.||

Bad debt profisions are provided on age analyze basis in the protfolio
||||
|-|-|-|
|||Rate of provision on other receivable|
|Age|Rate of provision on receivable 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%|

 Bad debt provisions are provided on percentage basis in the portfolio
Not applicable
Bad debt provisions are provided on other basis in the portfolio
Not applicable
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 (3)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.|

11.Inventories
Whether the company needs to comply with the disclosure requirements of the particular industry
No
(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
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 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:
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 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 of depreciation|Depreciation age (year)|Retain value rate|Annual depreciation ratio|
||Straight average on||||
|Houses & buildings||20-30|4|4.8-3.2|
||period||||
||Straight average on||||
|Equipment & machinery||8-15|4|12-6.4|
||period||||
|Transportation|Straight average on||||
|||4-8|4|24-12|
|equipment|period||||
||Straight average on||||
|Office equipment||5|4|19.2|
||period||||

14. Construction in process
Whether the company needs to comply with the disclosure requirements of the particular industry
No
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.
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 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 use right|50|
|Patent and Special technology|5-20|
|Unpatent technology|10|
|Softward|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.
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 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. 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.
2.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. 3. 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.
4. 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.
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 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
Whether the company needs to comply with the disclosure requirements of the particular industry
No
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
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 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. For government subsidies related to assets, the book value of the relevant assets is deducted or the deferred income is recognized. Where such subsidies are recognized as deferred income, the relevant assets shall, within the useful life of the relevant assets, be reasonably recognized, The method of the system shall be recorded into profit and loss by stages. The government subsidy measured according to the nominal amount shall be directly accounted for in the profits and losses of the current period. Where the relevant assets are sold, transferred, scrapped or damaged before the end of their useful life, Transfer the undistributed balance of deferred income to the current profit or loss of asset disposal.
2. Recognition basis and accounting of income-related government subsidy
A government subsidy other than an asset-related government subsidy is divided into profit-related government subsidies. It is difficult to distinguish between asset-related and revenue-related government subsidies that include both asset-related and revenue-related components. Overall classification as government subvention related to income.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,
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 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
(1)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.Other important accounting policies and accounting estimates
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.
26. Significant accounting policy and changes in accounting estimates
（1）Significant accounting policy changes
1. Since May 28, 2017, the company has implemented the “No. 42 Accounting Standards for Business Enterprises-Non-current assets for Sale, disposal Group, and termination of operation” formulated by the Ministry of Finance, and since June 12, 2017, the company has implemented the revised “No. 16 Accounting Standards for Enterprises-Government Grants”. The change of accounting policy is handled by the future applicable method. 2. The Company implemented the “Notice on the Issuance of the Revised Format of Financial Statements for General Enterprises (Caihui[2017] No. 30)” in the preparation of the 2017 annual statement, so that the gains and losses on the disposal of non-current assets and the gains and losses of non-monetary asset exchange previously stated in "Non-operating income" and "Non-operating expenses" were presented in the “Assets disposal income". This change in accounting policy adopted the retrospective adjustment method, which reduced the 2016 non-operating income by RMB 387,292.53 and increased the asset disposal income by RMB 387,292.53.
（2）Significant accounting estimates change
Not applicable
VI. Taxation
1. Main categories and rates of taxes
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
||||
|-|-|-|
|Category of taxes|Tax base|Tax rate|
|VAT|Sales of goods or providing of taxable labor service|17%|
|City maintenance and|||
||Turnover tax payable|5%、7%|
|construction tax|||
|Enterprise income tax|Amount of income taxable|15%、25%|
|Educational surcharge|Turnover tax payable||
|||3%|
|Local education additional|Turnover tax payable||
|||2%|
||For those on price basis, taxes are paid at 1.2% of the balance of||
|House tax|original value of the property after deducting of 30%; for those on|1.2%、12%|
||rental basis, taxes are paid at 12% of the rental.||

Notes of the disclosure situation of the taxpaying bodies with different enterprises income tax rate
|||
|-|-|
|Name|Income tax rate|
|The Company , Zhongneng Company, Packaged Tech. Company,Casting||
|Company, Zhejiang Huayuan Steam Turbine Machinery Co.,Ltd. and|15%|
|Hangzhou Guoneng Steam Turbine Engineering Co.,Ltd.||
||Hangzhou Zhongneng Steam Turbine Power|
||(Indonesia) Co., Ltd. registered in Indonesia|
|Hangzhou Zhongneng Steam Turbine Power (Indonesia) Co., Ltd.|(Indonesia)|
||overseas subsidiaries, the applicable local relevant|
||overseas subsidiaries, the applicable local relevant|
||tax laws and regulations|
|Other Subsidiary（Domestic）|25%|

2. Preferential tax
1. According to the document “Notice for Qualification of High-tech Enterprises”(GKHZD〔2017〕No.201) issued by Department of Science and Technology High-tech Development Center, the Company along with Hangzhou Zhongneng Steam Turbine Power Co., Ltd. ,Zhejiang Packaged Technologies Development Co., Ltd., Zhejiang Huayuan Steam Turbine Machinery Co.,Ltd. and Hangzhou Guoneng Steam Turbine Engineering Co.,Ltd.– subsidies of the Company, were qualified as high-tech enterprises for term of three years. Therefore they enjoy15% of tax for 2017.
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 2017.
VII. Notes to the Consolidated Financial Statements
1.Monetary Capital
In RMB
||||
|-|-|-|
|Items|End of term|Beginning of term|

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
||||
|-|-|-|
|Cash in stock|208,763.32|326,226.09|
|Bank deposit|1,137,284,071.51|830,910,758.76|
|Other monetary fund|85,184,661.11|63,800,574.49|
|Total|1,222,677,495.94|895,037,559.34|
|Incl:Total of accounts saved overseas|3,770,731.56|4,796,746.67|

 Othernotes：
Other monetary fund composes of RMB74,446,322.46 of security for bank acceptance notes RMB3,860,724.80 of security for Letter of credit, RMB6,877,613.85 of security for bank guarantee letter. Both under limitation of using.
2. Bills receivable
(1) Notes receivable listed by category
In RMB
||||
|-|-|-|
||End of term|Beginning of term|
|Items|||
|Bank acceptance|691,199,387.68|424,613,558.62|
|Commercial acceptance|24,211,500.00|55,102,763.00|
|Total|715,410,887.68|479,716,321.62|

 (2) Notes receivable pledged by the Company at the period-end
In RMB
|||
|-|-|
|Items|Amount on pledge|
|Bank acceptance|40,000,000.00|
|Total|40,000,000.00|

（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
In RMB
||||
|-|-|-|
||Amount of recognition termination at the|Amount of not terminated recognition at|
|Items|||
||period-end|the preriod -end|
|Bank acceptance|490,980,239.67||
|Total|490,980,239.67||

（4）Bills
transferred to accounts receivable because drawer of the Bills fails to execute the contract or agreement, and undue Bills endorsed to other parties at the end of the period.
In RMB
|||
|-|-|
|Items|End of the period amounts derecognizing|

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
|||
|-|-|
|Trade acceptance|3,200,000.00|
|Total|3,200,000.00|

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 3. Account receivable
（1）Detailed categories
In RMB
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
||End of term|||||Beginning of term|||||
||Book balance||Bad debt provision|||Book balance||Bad debt provision|||
|Category|||||||||||
||||||Book value|||||Book value|
||Amount|Proportion|Amount|Proportion||Amount|Proportion|Amount|Proportion||
|Account receivables|||||||||||
|provided bad debt|||||||||||
||2,695,568,129.24|98.91%|1,000,350,680.78|37.11%|1,695,217,448.46|2,812,043,945.50|98.95%|941,870,597.18|33.49%|1,870,173,348.32|
|provision in credit|||||||||||
|risk groups|||||||||||
|Accounts receivable|||||||||||
|of individually|||||||||||
|withdrawing bad|||||||||||
||29,819,607.69|1.09%|29,819,607.69|100.00%||29,819,607.69|1.05%|29,819,607.69|100.00%||
|debt provision with|||||||||||
|non-significant|||||||||||
|individual amount|||||||||||
|Total|2,725,387,736.93|100.00%|1,030,170,288.47|37.80%|1,695,217,448.46|2,841,863,553.19|100.00%|971,690,204.87|34.19%|1,870,173,348.32|

 Receivable accounts with large amount individually and bad debt provisions were provided
Not applicable
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 Receivable accounts in the group on which bad debt provisions are provided on age basis
√ Applicable□Not applicable
In RMB
|||||
|-|-|-|-|
||End of term|||
|Age||||
||Book balance|Bad debt provision|Proportion|
|Subitem Within 1 year||||
|Subtotal within 1 year|819,351,925.82|40,967,596.30|5.00%|
|1-2 years|537,175,692.05|53,717,569.20|10.00%|
|2-3 years|359,554,782.76|107,866,434.84|30.00%|
|Over 3 years|979,485,728.61|797,799,080.44||
|3-4 years|322,567,118.79|193,540,271.27|60.00%|
|4-5 years|263,299,003.24|210,639,202.59|80.00%|
|Over 5 years|393,619,606.58|393,619,606.58|100.00%|
|Total|2,695,568,129.24|1,000,350,680.78|37.11%|

 In the groups, accounts receivable adopting balance percentage method to withdraw bad debtprovision： Not applicable
In the groups, accounts receivable adopting other methods to accrue bad debtprovision:：
（2）Accrual period, recovery or reversal of bad debts situation
The current amount of provision for bad debts is RMB68,484,778.81 ; recovery or payback for bad debts Amount is RMB0.00.
(3)The current accounts receivable write-offs situation
In RMB
|||
|-|-|
|Items|Amount|
|Uncollectible amount|10,004,695.21|

Of which the significant actual write-off accounts receivable:
In RMB
|||||||
|-|-|-|-|-|-|
||||||Arising from|
||Nature of|||||
||||Reason for||related|
|Name|account|Amount written off||Verification procedures||
||||written off||transactions|
||receivable|||||
||||||(Y/N)|
||||Uncollectible|The examined and adopted to||
|Shenyang Touping Mechanical Co., Ltd.|Goods|3,301,440.00|||No|
||||amount|Board of directors||
||||Uncollectible|The examined and adopted to||
|China Air Separation Engineering Co., Ltd.|Goods|1,674,643.00|||No|
||||amount|Board of directors||

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
|||||||
|-|-|-|-|-|-|
|Huaneng Energy saving Powergeneration Co.,|||Uncollectible|The examined and adopted to||
||Goods|760,000.00|||No|
|Ltd.|||amount|Board of directors||
|China Metallurgical Sadie Engineering &|||Uncollectible|The examined and adopted to||
||Goods|758,160.00|||No|
|Technology Co., Ltd.|||amount|Board of directors||
|Hebei Iron and Steel Group Yanshan Iron and|||Uncollectible|The examined and adopted to||
||Goods|623,280.00|||No|
|Steel Co., Ltd.|||amount|Board of directors||
||||Uncollectible|The examined and adopted to||
|Nei Monggol Runbang Biotechnology Co., Ltd.|Goods|620,000.00|||No|
||||amount|Board of directors||
||||Uncollectible|The examined and adopted to||
|Other|Goods|2,267,172.21|||No|
||||amount|Board of directors||
|Total|--|10,004,695.21|--|--|--|

（4）Receivables account of the top five parties
|||||
|-|-|-|-|
|Name|Amount|Proportion(%)|Bad debt provision|
|Client 1|644,733,586.92|23.66|316,242,613.17|
|Client 2|280,098,730.82|10.28|191,312,225.82|
|Client 3|60,048,003.87|2.20|12,214,467.99|
|Client 4|46,363,500.00|1.70|2,318,175.00|
|Client 5|43,680,000.00|1.60|2,184,000.00|
|Subtotal|1,074,923,821.61|39.44|524,271,481.98|

 4. Prepayments
（1）Age analysis
In RMB
||||||
|-|-|-|-|-|
||Balance in year-end||Balance in year-begin||
|Age|||||
||Book balance|Proportion(%)|Book balance|Proportion(%)|
|Within 1 year|414,480,174.64|92.90%|169,302,923.28|83.74%|
|1-2 years|10,312,288.25|2.31%|10,874,142.27|5.38%|
|2-3 years|4,033,538.38|0.90%|17,195,603.48|8.50%|
|Over 3 years|17,340,709.50|3.89%|4,812,189.80|2.38%|
|Total|446,166,710.77|--|202,184,858.83|--|

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 (2) Top 5 of the closing balance of the prepayment colleted according to the prepayment target
||||
|-|-|-|
|Name|Amount|Proportion(%)|
|Xingji Aosen Iron & Steel Co., Ltd.|141,645,000.00|31.75|
|Hangzhou Hangfa Power generation Equipment Co., ltd.|43,741,785.00|9.80|
|Jinling International Co., Ltd.|34,540,113.23|7.74|
|Siemens Industrial Turbomachinery AB|23,853,360.13|5.35|
|Yizheng Haitian Aluminum co., Ltd.|12,566,426.27|2.82|
|Subtotal|256,346,684.63|57.46|

 5.Dividend receivable
（1）Dividend receivabl
In RMB
||||
|-|-|-|
|Items|Balance in year-end|Balance in year-begin|
|Hangzhou Bank|6,900,000.00||
|Total|6,900,000.00||

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 6. Other account receivable
1) Detailed categories
In RMB
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
||End of term|||||Beginning of term|||||
||Book balance||Bad debt provision|||Book balance||Bad debt provision|||
|Category|||||||||||
|||||Proportion|Book value||Proportion|||Book value|
||Amount|Proportion %|Amount|||Amount||Amount|Proportion %||
|||||%|||%||||
|Other Accounts|||||||||||
|receivable portfolio|||||||||||
||28,165,573.86|100.00%|11,260,568.29|39.98%|16,905,005.57|42,152,338.08|100.00%|11,127,630.36|26.40%|31,024,707.72|
|subject to impairment|||||||||||
|by credit risk|||||||||||
|Total|28,165,573.86|100.00%|11,260,568.29|39.98%|16,905,005.57|42,152,338.08|100.00%|11,127,630.36|26.40%|31,024,707.72|

 Other Receivable accounts with large amount individually and bad debt provisions were provided
Not applicable
Other receivable accounts in the group on which bad debt provisions are provided on age basis
In RMB
|||||
|-|-|-|-|
||Closing balance|||
|Aging||||
||Other receivable|Bad debt provision|Proportion|
|Subitem within 1 year||||
|Subtotal within 1 year|10,792,930.67|539,646.56|5.00%|
|1-2 years|2,584,741.62|258,474.15|10.00%|
|2-3 years|3,363,340.73|1,009,002.22|30.00%|
|Over 3 years|11,424,560.84|9,453,445.36||

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
|||||
|-|-|-|-|
|3-4 years|2,947,427.90|1,768,456.74|60.00%|
|4-5 years|3,960,721.60|3,168,577.28|80.00%|
|Over 5 years|4,516,411.34|4,516,411.34|100.00%|
|Total||||
||28,165,573.86|11,260,568.29|39.98%|

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 Other receivable account in Group on which bad debt provisions were provided on percentagebasis：
Not applicable
Other Receivable accounts on which bad debt provisions are provided by other ways in theportfolio：
Not applicable
(2) Accounts receivable withdraw, reversed or collected during the reporting period
The withdrawal amount of the bad debt provision during the reporting period was ofRMB136,024.61；the amount of the reversed or collected part during the reporting period was of RMB 0.00.
(3)The current accounts receivable write-offs situation
|||
|-|-|
|Items|Amount|
|Deposit|3,000.00|

(4)Other accounts receivable classified by the nature of accounts
In RMB
||||
|-|-|-|
|Nature|Closing book balance|Opening book balance|
|Export tax refund receivable|465,230.69|13,234,170.89|
|Deposit|16,917,313.03|19,810,421.19|
|Provisional payment receivalbe|5,232,037.20|4,957,646.21|
|Petty cash|2,803,540.63|1,156,796.99|
|Other|2,747,452.31|2,993,302.80|
|Total|28,165,573.86|42,152,338.08|

（4）Top 5 of the closing balance of Other accounts receivable collated according to the arrears party
In RMB
|||||||
|-|-|-|-|-|-|
|||||Percentage in total other|Bad debt|
|Name of the company|Account property|Book balance|Age|||
|||||receivable %|provision|
|Shanghai Customs Waigaoqiao Office|Deposit|3,710,320.94|Over 5 years|13.17%|3,710,320.94|
|Investment from Indonesia Company||||||
||Investment|3,267,100.00|4-5 years|11.60%|2,613,680.00|
|receivable||||||
|Guoxin Bidding Group Co.,Ltd.|Bidding deposit|800,000.00|2-3 years|2.84%|240,000.00|
|Guodian Trust Bidding Co., Ltd.|Deposit|800,000.00|Within 1 year|2.84%|40,000.00|
|Shanghai Pujiang customs|Deposit|767,197.78|Within 1 year|2.72%|38,359.89|
|Total|--|9,344,618.72|--|33.17%|6,642,360.83|

 7. Inventories
Whether the company needs to comply with the disclosure requirements of the particular industry
No
(1) Details
In RMB
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
||||||||
|-|-|-|-|-|-|-|
||End of term|||Beginning of term|||
|Items|||||||
|||Impairment|||Impairment||
||Book balance||Book value|Book balance||Book value|
|||provision|||provision||
|Raw|||||||
||522,590,238.59|309,803.19|522,280,435.40|568,639,726.41|309,803.19|568,329,923.22|
|materials|||||||
|Product in|||||||
||584,647,307.67|15,617,324.99|569,029,982.68|400,195,046.11|10,345,866.48|389,849,179.63|
|process|||||||
|Products in|||||||
||1,098,811,798.77|97,546,524.93|1,001,265,273.84|998,661,308.19|55,296,052.78|943,365,255.41|
|stock|||||||
|Total|2,206,049,345.03|113,473,653.11|2,092,575,691.92|1,967,496,080.71|65,951,722.45|1,901,544,358.26|

 Whether the company is required to comply with the "Shenzhen Stock Exchange Industry Information Disclosure Guidelines No. 4 - listed companies engaged in seed industry, planting business" disclosure requirements
No
(2) Inventory depreciation provision
In RMB
||||||||
|-|-|-|-|-|-|-|
|||Increased this period||Decreased this period|||
|Items|Beginning of term|||||End of term|
|||Provided|Others|Written back or off|Others||
|Raw materials|309,803.19|309,803.19||||309,803.19|
|Product in|||||||
||10,345,866.48|11,731,845.24||6,460,386.73||15,617,324.99|
|process|||||||
|Products in|||||||
||55,296,052.78|54,280,951.14||12,030,478.99||97,546,524.93|
|stock|||||||
|Total|65,951,722.45|66,012,796.38||18,490,865.72||113,473,653.11|

 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 18,490,865.72, which is the provision for the inventory depreciation reserve due to the use or sale of inventory.
（3）Statement of the capitalized amount of the borrowing costs included in the end of the inventory balance Nil
8. Other current asset
In RMB
||||
|-|-|-|
|Items|End of term|Beginning of term|
|Bank financing products[Notes]|886,732,329.00|853,767,338.00|

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
||||
|-|-|-|
|Input tax deductible|||
||16,473,990.55|6,410,137.62|
|To verify the input tax|261,538.46|995,153.86|
|Prepaid income tax|354,357.59|1,845,850.11|
|Rent charge|604,050.19||
|Total|904,426,265.79|863,018,479.59|

 Othernotes：
[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.
9 Sellable financial asset
(1) Details
In RMB
||||||||
|-|-|-|-|-|-|-|
||End of term|||Beginning of term|||
|Items||Impairmentprovision|||Impairment||
||Book balance||Book value|Book balance||Book value|
||||||provision||
|Available-for-sale equity|||||||
||2,417,780,984.08||2,417,780,984.08|3,060,865,862.60||3,060,865,862.60|
|instruments|||||||
|Measured by fair value|2,239,086,521.28||2,239,086,521.28|2,906,013,048.00||2,906,013,048.00|
|Measured by cost|178,694,462.80||178,694,462.80|154,852,814.60||154,852,814.60|
|Total|2,417,780,984.08||2,417,780,984.08|3,060,865,862.60||3,060,865,862.60|

 (2) Available-for-sale financial assets measured by vair value at the period-end
In RMB
|||||
|-|-|-|-|
|Type|Available-for-sale equity instruments|Available-for –sale||
||||Total|
|||Liabilities instruments||
|Fair value|2,239,086,521.28||2,239,086,521.28|

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 (3)Available-for-sale financial assets measured by cost at the period-end
In RMB
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
||Book balance||||Impairment provision||||||
|Investee|||||Period-b||||Proportion %|Cash dividend|
||Period-begin|Increase|Decrease|Period-end||Increase|Decrease|Period-end|||
||||||egin||||||
|Hangzhou Changdi|||||||||||
|Equity Investment|||||||||||
||48,558,351.80||48,558,351.80||||||||
|Partnership(Limited|||||||||||
|liability)|||||||||||
|Hangzhou Jushi|||||||||||
|Investment|||||||||||
||30,000,000.00|100,000,000.00|30,000,000.00|100,000,000.00|||||32.26%|9,810,990.23|
|Partnership（Limited|||||||||||
|partnership）|||||||||||
|Hangzhou Steam|||||||||||
|Turbine Engineering|30,000,000.00|||30,000,000.00|||||15.00%||
|Co., Ltd.|||||||||||
|Wuxi Xinchang Steel|||||||||||
||15,159,689.58|||15,159,689.58|||||18.00%||
|Bube Co., ltd.|||||||||||
|Zhejiang Zhongkong|||||||||||
|Solar Energy|15,000,000.00|||15,000,000.00|||||3.84%||
|Technology Co., Ltd.|||||||||||
|Zhejiang Tianhang|||||||||||
|Steam Turbine|||||||||||
||10,000,000.00|||10,000,000.00|||||33.33%|1,000,000.00|
|Auxiliary Machinery|||||||||||
|Co., Ltd.|||||||||||
|Greenesolpower|||||||||||
||5,534,773.22|||5,534,773.22|||||37.00%|1,590,356.24|
|systems PVT Ltd.|||||||||||

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
||||||||
|-|-|-|-|-|-|-|
|Zhejiang Hangzhou|||||||
|Steam Turbine Gas|||||||
|||2,400,000.00||2,400,000.00|48.00%||
|turbine machinery|||||||
|innovation center|||||||
|Zhejiang Sanxin|||||||
|AUTOMATION|600,000.00|||600,000.00|6.00%||
|Engineering Co., ltd.|||||||
|Total|154,852,814.60|102,400,000.00|78,558,351.80|178,694,462.80|--|12,401,346.47|

 Other notes:
The company, as an investor, does not have the power to participate in the decision-making of financial and operational policies of the invested units including Hangzhou Jushi Investment Partnership (Limited Partnership), Zhejiang Tianhang Steam Turbine Auxiliary Machinery Co., Ltd, Greenesol power systems PVT Ltd. Therefore, the cost method is used to make the accounting treatment on this kind of equity investment, with in accordance with the criteria for the recognition and measurement of financial instruments.
10. Long-term equity investments
In RMB
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|||Increase /decrease||||||||||
|||||Investment||||||||
|||Additiona||gains and|Adjustment of||Cash bonus|Withdrawal||||
||Opening||Decrease|||||||Closing|Closing balance of impairment|
|Investees||l||losses|other|Changes of other|or profits|of||||
||balance||investmen||||||Other|balance|provision|
|||investmen||recognized|comprehensiv|equity|announced to|impairment||||
||||t|||||||||
|||t||under the|e income||issue|provision||||
|||||equity method||||||||
|I. Joint venture||||||||||||
|2. Affiliated Company||||||||||||
|Zhejiang|||5,800,000|||||||||
|||||||||||5,800,000.00||
|Zhongrun Gas|||.00|||||||||

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
||||
|-|-|-|
|turbine|||
|technology|||
|Co., Ltd.|||
||5,800,000||
|Subtotal||5,800,000.00|
||.00||
||5,800,000||
|Total||5,800,000.00|
||.00||

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 11. Fixed assets
(1) Details
In RMB
|||||||
|-|-|-|-|-|-|
||||Transportation|||
|Items|Houses & buildings|Machinery equipment||Office equipment|Total|
||||equipment|||
|I. Original price||||||
|1. Balance at||||||
||446,446,798.60|998,376,141.69|29,547,916.82|96,654,801.28|1,571,025,658.39|
|period-beginning||||||
|2.Increase in the current||||||
||17,550,203.26|21,156,629.93|807,058.66|2,808,557.83|42,322,449.68|
|period||||||
|(1) Purchase||937,406.53|576,555.80|1,257,414.12|2,771,376.45|
|（ 2 ）||||||
|Transferred from construct|17,550,203.26|20,219,223.40|230,502.86|1,551,143.71|39,551,073.23|
|ion in progress||||||
|(3)Increased of||||||
|Enterprise Combination||||||
|3.Decreased amount of the||||||
|||16,831,238.90|1,699,402.00|1,140,893.23|19,671,534.13|
|period||||||
|（1）Dispose||15,546,510.00|1,699,402.00|975,491.78|18,221,403.78|
|（2）Other decrease||1,284,728.90||165,401.45|1,450,130.35|
|4. Balance at period-end|463,997,001.86|1,002,701,532.72|28,655,573.48|98,322,465.88|1,593,676,573.94|
|II.Accumulated||||||
|amortization||||||
|1.Opening balance|176,390,042.92|672,647,889.34|20,536,349.06|78,877,295.49|948,451,576.81|
|2.Increased amount ofthe||||||
||14,488,022.18|55,469,475.82|1,830,809.30|4,767,231.67|76,555,538.97|
|period||||||
|(1) Withdrawal|14,488,022.18|55,469,475.82|1,830,809.30|4,767,231.67|76,555,538.97|
|3.Decrease in the reporting||||||
|||2,286,591.62|1,449,615.54|957,243.45|4,693,450.61|
|period||||||
|（1）Disposal||2,059,929.00|1,449,615.54|898,179.91|4,407,724.45|
|（2）Other decrease||226,662.62||59,063.54|285,726.16|
|4.Closing balance|190,878,065.10|725,830,773.54|20,917,542.82|82,687,283.71|1,020,313,665.17|
|III. Impairment provision||||||
|1.Opening balance|1,504,928.24|4,033,520.42||1,113,523.01|6,651,971.67|
|2.Increase in the reporting||||||
|period||||||

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
|||||||
|-|-|-|-|-|-|
|（1）Withdrawl||||||
|3.Decrease the reporting||||||
|period||||||
|（1）Disposal||||||
|4. Closing balance|1,504,928.24|4,033,520.42||1,113,523.01|6,651,971.67|
|IV. Book value||||||
|1.Book value ofthe||||||
||271,614,008.52|272,837,238.76|7,738,030.66|14,521,659.16|566,710,937.10|
|period-end||||||
|2.Book value of the||||||
||268,551,827.44|321,694,731.93|9,011,567.76|16,663,982.78|615,922,109.91|
|period-begin||||||

12. Construction in process
（1）Details
In RMB
||||||||
|-|-|-|-|-|-|-|
||End of term|||Beginning of term|||
|Items||Impairment|||Impairment||
||Boook balance||Book value|Boook balance||Book value|
|||provision|||provision||
|Construction in process of|||||||
||151,569,540.89||151,569,540.89|94,170,909.99||94,170,909.99|
|parent Company|||||||
|Tangxi Workshop PhaseII,|||||||
||1,662,571.56||1,662,571.56|14,699,709.48||14,699,709.48|
|Gouneng Company|||||||
|Project of steam turbine heavy|||||||
||99,071,621.77||99,071,621.77|32,654,575.18||32,654,575.18|
|industry|||||||
|Casting companies to clean up|||||||
|||||5,011,998.64||5,011,998.64|
|cross project|||||||
|Casting company networking|||||||
||1,213,675.18||1,213,675.18|1,517,473.06||1,517,473.06|
|system project|||||||
|other project|3,285,135.25||3,285,135.25|1,547,268.67||1,547,268.67|
|Prepayment for equipment or|||||||
||781,687.00||781,687.00|4,141,954.39||4,141,954.39|
|projects|||||||
|Total|255,921,660.09||255,921,660.09|153,743,889.41||153,743,889.41|

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 (2) Changes of significant construction in progress
In RMB
||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|
|||||||||||Includin|||
|||||||||||g:|||
||||||||||||Capitaliz|Source|
|||||||||Project|Capitaliz|capitaliz|||
||Budget(’000|||Transferred to|||||||ation of|of|
|Name of project||Opening balance|Increase||Other decrease|End balance|Proportion %|proces|ation of|ation of|||
||0)|||fixed assets|||||||interest|fundin|
|||||||||s|interest|interest|||
||||||||||||rate (%)|g|
|||||||||||this|||
|||||||||||period|||
|||||||||Under|||||
|Construction in process of|||||||||||||
||19,237.54|83,608,096.30|67,961,444.59|||151,569,540.89|78.79%|Constr||||Other|
|parent Company|||||||||||||
|||||||||uction|||||
|Completed project of parent|||||||||||||
|||||||||Compl|||||
||1,261.92|10,562,813.69|2,056,403.18|12,619,216.87|||100.00%|||||Other|
|Company||||||||eted|||||
|Tangxi Workshop PhaseII,|||||||100.00%||||||
|||||||||Compl|||||
||1,690.55|14,699,709.48|2,205,802.60|16,905,512.08||||||||Other|
|Gouneng Company||||||||eted|||||
|Project of steam turbine heavy||||||||Under|||||
||179,410.00|32,654,575.18|66,417,046.59|||99,071,621.77|5.52%|Constr|1,904,690.41|1,904,690.41|1.20%|Other|
|industry|||||||||||||
|||||||||uction|||||
|Casting companies to clean up|||||||||||||
|||||||||Compl|||||
||616.22|5,011,998.64|1,150,173.65|6,162,172.29|||100.00%|||||Other|
|cross project||||||||eted|||||
|Casting company networking|||||||||||||
|||||||||Compl|||||
||158.87|1,517,473.06|71,196.58||1,588,669.64||100.00%|||||Other|
|system project I||||||||eted|||||
|||||||||Under|||||
|Casting company networking|||||||||||||
||241.13||1,213,675.18|||1,213,675.18|50.33%|Constr||||Other|
|system project II|||||||||||||
|||||||||uction|||||

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
|||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|
|||||||||Under||||
|other project||1,547,268.67|4,884,848.571|3,146,981.99||3,285,135.25||Constr|||Other|
|||||||||uction||||
|Prepayment for equipment or||||||||Under||||
|||4,141,954.39|1,506,687.00|717,190.00|4,149,764.39|781,687.00||Constr|||Other|
|projects||||||||||||
|||||||||uction||||
|Total|202,616.23|153,743,889.41|147,467,277.94|39,551,073.23|5,738,434.03|255,921,660.09|--|--|1,904,690.41|1,904,690.41|--|

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 13 Intangible assets
（1）Details
In RMB
|||||||
|-|-|-|-|-|-|
||||Non patent|||
|Items|Landusing right|Patent||Software|Total|
||||technology|||
|I. Original price||||||
|1. Balance at||309,433.96|8,000,000.00|||
||332,298,312.33|||228,376.07|340,836,122.36|
|period-beginning||||||
|2.Increase in the current||||||
|||||1,750,966.04|1,750,966.04|
|period||||||
|(1) Purchase||||162,296.40|162,296.40|
|(2)Internal Development||||||
|(3)Increased of||||||
|Enterprise Combination||||||
|（ 4 ）||||||
|Transferred from constru||||1,588,669.64|1,588,669.64|
|ction in progress||||||
|3.Decreased amount of|||8,000,000.00|||
||||||8,000,000.00|
|the period||||||
|（1）Disposal||||||
|（2）Other decrease|||8,000,000.00||8,000,000.00|
|4.Closing balance|332,298,312.33|309,433.96||1,979,342.11|334,587,088.40|
|II.Accumulated||||||
|amortization||||||
|1.Opening balance|41,782,089.97|214,000.00|1,266,666.71|167,931.60|43,430,688.28|
|2.Increased amount of||28,000.00|800,000.04|||
||6,662,865.37|||61,562.91|7,552,428.32|
|the period||||||
|(1) Withdrawal|6,662,865.37|28,000.00|800,000.04|61,562.91|7,552,428.32|
|3.Decreased amount of|||2,066,666.75|||
||||||2,066,666.75|
|the period||||||
|（1）Disposal||||||
|（2）Other decrease|||2,066,666.75||2,066,666.75|
|4.Closing balance|48,444,955.34|242,000.00||229,494.51|48,916,449.85|
|III. Impairment||||||
|provision||||||

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
|||||||
|-|-|-|-|-|-|
|1.Opening balance||||||
|2.Increased amount of||||||
|the period||||||
|(1) Withdrawal||||||
|3.Decreased amount of||||||
|the period||||||
|（1）Disposal||||||
|4.Closing balance||||||
|IV. Book value||||||
|1.Closing book||67,433.96||||
||283,853,356.99|||1,749,847.60|285,670,638.55|
|value||||||
|2.Opening book||95,433.96|6,733,333.29|||
||290,516,222.36|||60,444.47|297,405,434.08|
|value||||||

14 Long-term amortize expenses
In RMB
|||||||
|-|-|-|-|-|-|
||||Amortized expenses|||
|Items|Balance in|Increase in this||Other loss|Balance in year-end|
||year-begin|period||||
|Redecoration|1,306,880.81||524,300.42|528,693.49|253,886.90|
|Afforestation fees|124,088.00||124,088.00|||
|Total|1,430,968.81||648,388.42|528,693.49|253,886.90|

 Other notes
Note: For RMB 528,693.49 of the long-term unamortized expenses transferred out at the end of period for no longer being consolidated with Zhejiang Zhongrun Gas Turbine Technology Co., Ltd.
15. Deferred income tax assets/deferred income tax liabilities
(1) Deferred income tax assets had not been off-set
In RMB
||||||
|-|-|-|-|-|
||Balance in year-end||Balance in year-begin||
|Items|Deductible temporary|Deferred income tax|Deductible temporary|Deferred income tax|
||difference|assets|difference|assets|
|Provision for Asset Impairment|1,160,614,665.91|179,875,205.01|1,053,944,950.81|164,268,265.49|
|Internal trade profit not realized|68,494,522.27|10,934,321.24|58,099,229.91|9,500,467.96|
|Deductible loss|46,151,636.66|6,922,745.50|30,002,132.26|4,500,319.84|
|Temporary difference such as|2,981,985.19|447,297.78|3,751,710.39|562,756.56|

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
||||||
|-|-|-|-|-|
|amortizing of software expense|||||
|Total|1,278,242,810.03|198,179,569.53|1,145,798,023.37|178,831,809.85|

 (2) Deferred income tax liabilities had not been off-set
In RMB
||||||
|-|-|-|-|-|
||Balance in year-end||Balance in year-begin||
|Items|||||
||Deductible temporary|Deferred income tax|Deductible temporary|Deferred income tax|
||difference|liabilities|difference|liabilities|
|Changes in fair value of|||||
||1,848,132,481.28|277,219,872.19|2,515,059,008.00|377,258,851.20|
|tradable financial assets|||||
|Accumulated depreciation|6,651,971.67|997,795.75|6,651,971.67|997,795.75|
|Total|1,854,784,452.95|278,217,667.94|2,521,710,979.67|378,256,646.95|

（3）Deferred income tax assets and liabilities are presented as net amount after neutralization
In RMB
||||||
|-|-|-|-|-|
||||Deferred Income Tax||
||Deferred Income Tax|Temporarily Deductable or||Temporarily Deductable or|
||||Assets or Liabilities at the||
|Items|Assets or Liabilities at the|Taxable Difference at the End||Taxable Difference at the|
||||Beginning of Report||
||End of Report Period|of Report Period||Beginning of Report Period|
||||Period||
|Deferred income tax||198,179,569.53||178,831,809.85|
|assets|||||
|Deferred income tax||278,217,667.94||378,256,646.95|
|liabilities|||||

(4)Details of income tax assets not recognized
In RMB
||||
|-|-|-|
|Items|End of term|Beginning of term|
|Deductible provisional differences|941,815.63|1,476,578.54|
|Deductible losses|9,998,963.52|12,315,626.29|
|Subtotal|10,940,779.15|13,792,204.83|

 (5) The un-recognized deductible losses of deferred income tax assets will due in the following years:
In RMB
|||||
|-|-|-|-|
|Year|End of term|Beginning of term|Remark|
|2018||684,308.39||
|2019||1,037,052.28||

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
|||||
|-|-|-|-|
|2020|579,693.92|3,113,580.77||
|2021|712,938.27|7,480,684.85||
|2022|8,706,331.33|||
|Total|9,998,963.52|12,315,626.29|--|

16.Short-term loans
（1）Category of short-term loans
In RMB
||||
|-|-|-|
|Items|Balance in year-end|Balance in year-begin|
|Mortgage loan|96,500,000.00|73,000,000.00|
|Guarantee loan|19,000,000.00|100,000,000.00|
|Total|115,500,000.00|173,000,000.00|

 17.Bill payable
In RMB
||||
|-|-|-|
|Items|End of term|Beginning of term|
|Bank acceptance|215,409,958.92|143,007,715.10|
|Total|215,409,958.92|143,007,715.10|

 18. Account payable
（1）Category of Account payable
In RMB
||||
|-|-|-|
|Items|End of term|Beginning of term|
|Goods|860,669,728.38|832,264,375.15|
|Equipment and projects|22,045,737.27|21,188,214.36|
|Total|882,715,465.65|853,452,589.51|

 19. Advances received
（1）Category of Advances received
In RMB
||||
|-|-|-|
|Items|End of term|Beginning of term|
|Goods|2,419,751,405.08|1,827,959,793.62|
|Total|2,419,751,405.08|1,827,959,793.62|

20.Employees’ wage payable
(1) Details
In RMB
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
||||||
|-|-|-|-|-|
|Items|Beginning of term|Increased this period|Decreased this period|End of term|
|I. Short-term wages|48,273,561.62|610,078,774.60|601,486,185.66|56,866,150.56|
|II. Welfare after leaving of position-fixed|||||
||22,951,072.41|73,306,169.30|73,597,618.58|22,659,623.13|
|provision scheme|||||
|III.Termination benefits||115,910.73|115,910.73||
|Total|71,224,634.03|683,500,854.63|675,199,714.97|79,525,773.69|

 (2) Details of short term wages
In RMB
||||||
|-|-|-|-|-|
|Items|Beginning of term|Increased this period|Decreased this period|End of term|
|1.Wage, bonus, allowance and subsidies|35,531,106.94|473,188,038.39|465,004,954.59|43,714,190.74|
|2. Employee welfare||32,560,347.49|32,560,347.49||
|3. Social insurance|5,862,944.64|44,181,817.42|44,126,775.93|5,917,986.13|
|Incl. Medical insurance|5,423,894.94|38,852,729.35|38,770,773.50|5,505,850.79|
|Labor injury insurance|124,073.45|1,622,988.68|1,624,351.73|122,710.40|
|Maternity insurance|314,976.25|3,706,099.39|3,731,650.70|289,424.94|
|4. Housing fund|109,020.96|46,188,710.00|46,183,981.00|113,749.96|
|5. Labour union fee and employee|||||
||6,770,489.08|13,959,861.30|13,610,126.65|7,120,223.73|
|education fee|||||
|Total|48,273,561.62|610,078,774.60|601,486,185.66|56,866,150.56|

 (3) Details of fixed provision scheme
In RMB
||||||
|-|-|-|-|-|
|Items|Beginning of term|Increased this period|Decreased this period|End of term|
|1.Basic pension|||||
||4,430,334.68|52,193,407.26|52,638,210.18|3,985,531.76|
|insurance|||||
|2. Unemployment|||||
||314,118.76|2,416,111.33|2,589,786.17|140,443.92|
|insurance|||||
|3. Enterprise annual fee|18,206,618.97|18,696,650.71|18,369,622.23|18,533,647.45|
|Total|22,951,072.41|73,306,169.30|73,597,618.58|22,659,623.13|

 21. Tax Payable
In RMB
||||
|-|-|-|
|Items|Balance in year-end|Balance in year-begin|
|VAT|10,970,877.80|59,676,617.21|
|Enterprise Income tax|||
||14,396,733.29|16,338,759.59|
|Individual Income tax|2,150,480.36|2,035,807.07|
|City Construction tax|1,731,728.51|4,224,180.62|
|Property tax|2,123,319.46||

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
||||
|-|-|-|
|Land use tax|2,099,991.11|3,112,763.00|
|Education subjoin|745,239.69|1,822,362.43|
|Locality Education subjoin|496,821.48|1,202,457.87|
|Local water source foundation|172.38|1,767,814.88|
|Other|204,709.29|58,910.49|
|Total|34,920,073.37|90,239,673.16|

 22. Interest payable
In RMB
||||
|-|-|-|
|Items|End of term|Beginning of term|
|Long term interest on borrowings due in installments|121,172.22|41,750.63|
|Interest on short-term borrowings|147,688.55|92,625.69|
|Total|268,860.77|134,376.32|

 23.Other account payable
(1) Details
In RMB
||||
|-|-|-|
|Items|End of term|Beginning of term|
|Deposite|3,029,922.35|3,607,868.79|
|Provisional account payable|21,345,148.72|23,344,791.25|
|Other|3,484,546.26|3,868,320.76|
|Total|27,859,617.33|30,820,980.80|

 24. Non-current liabilities due within 1 year
In RMB
||||
|-|-|-|
|Items|End of term|Beginning of term|
|Long-term loans due within 1 year|4,900,000.00|18,500,000.00|
|Total|4,900,000.00|18,500,000.00|

 25.. Long-term loan
(1) Details
In RMB
||||
|-|-|-|
|Items|End of term|Beginning of term|
|Mortgage loan||4,900,000.00|
|Guarantee loan|100,000,000.00||

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
||||
|-|-|-|
|Total|100,000,000.00|4,900,000.00|

 26..Long term account payable
(1) Details
In RMN
||||
|-|-|-|
|Items|End of term|Beginning of term|
|CDB investment fund|208,000,000.00|208,000,000.00|
|Income payable of CDB|1,303,466.66|27,733.33|
|Drawing in administrative restructuring|330,000.00|330,000.00|
|Total|209,633,466.66|208,357,733.33|

 Othernotes：
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 Company reports it as a long-term payables,the current accrued income is RMB2,496,000.00.
Cumulative recognized income payable is RMB 2,523,733.33 yuan
27.Special Payable
In RMB
|||||||
|-|-|-|-|-|-|
||Beginning of||Decreased this|||
|Items||Increased this period||End of term|Reaseon|
||term||period|||
|Compensation for relocation of||||||
|||237,658,831.07||237,658,831.07||
|Shiqiao Road Factory area||||||
|Total||237,658,831.07||237,658,831.07|--|

Othernotes：
The Company and its subsidiary the Machinery Company received the first amount of compensation for the relocation due to planning to relocate the entire production base to Qianjiang Economic Development Zone Yuhang District Hangzhou City according to the planning of the Hangzhou Municipal Government. For details, please refer to note 13 (II) 2 of this financial statement.
28. Deferred income
In RMB
|||||||
|-|-|-|-|-|-|
||||Decreased this|||
|Items|Beginning of term|Increased this period||End of term|Reaseon|
||||period|||
||||||Receive government|
|Government Subsidy|5,422,895.00||1,359,280.00|4,063,615.00||
||||||subsidies|

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
||||||
|-|-|-|-|-|
|Total|5,422,895.00|1,359,280.00|4,063,615.00 -|-|

(2) Details of government subsidies
In RMB
||||||||
|-|-|-|-|-|-|-|
|||New subsidy|Amount transferred|Other|||
|||||||Asset-related or|
|Items|Beginning of term|in current|to non-operational|change|End of term||
|||||||income-related|
|||period|income|s|||
|Financial support for industrial|||||||
||287,800.00||28,780.00||259,020.00|Asset-related|
|projects|||||||
|Government subsidy for casting|||||||
||287,800.00||28,780.00||259,020.00|Asset-related|
|project|||||||
|Circular economy financial subsidy|||||||
||114,100.00||11,410.00||102,690.00|Asset-related|
|Projects of technological|||||||
||26,000.00||26,000.00|||Asset-related|
|transformation|||||||
|Subsidy for industrial upgrading by|||||||
||480,000.00||160,000.00||320,000.00|Asset-related|
|provincial government|||||||
|Finance for casting project|3,906,405.00||997,380.00||2,909,025.00|Asset-related|
|Government subsidy for industrial|||||||
|entities from Yuhang District|320,790.00||106,930.00||213,860.00|Asset-related|
|Government in the 2nd half of 2009|||||||
|Total|5,422,895.00||1,359,280.00||4,063,615.00|--|

Othernotes：
Notes：Note: For the government subsidy of this period counted into the current profit and loss, see details at government subsidy statements at additional notes of project notes annotated under of this combined financial statement
29. Stock capital
In RMB
|||||||||
|-|-|-|-|-|-|-|-|
|||Increase/decrease this time (+ , - )||||||
||||||||Balance|
||Balance Year-beginning|Issuing of new|Bonus|Transferred from||||
||||||Other|Subtotal|year-end|
|||share|shares|reserves||||
|Total of capital|754,010,400.00||||||754,010,400.00|
|shares||||||||

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 30. Capital reserves
In RMB
||||||
|-|-|-|-|-|
|Items|Year-beginning balance|Increase in the current|Decrease in the current|Year-end balance|
|||period|period||
|Share premium|81,815,220.00||45,256.07|81,769,963.93|
|Other capital reserves|57,775,125.09|||57,775,125.09|
|Total|139,590,345.09|||139,545,089.02|
||||45,256.07||

 Othernotes：
The decrease occurred at this period was for the subsidiary Chinen Company acquired40% of equity from minority shareholders of its subsidiary, Chengdu Hangzhou Chinen Science and Technology Co., Ltd, and the investment cost of the new long-term equity, counted according to new proportion of shareholding, shall be entitled to the balance among the fair value shares of thissubsidiary’s realizable net assets counted since date of purchase . When preparing the combined financial statement, share premium of RMB 45,265.07 in capital reserve was written down.
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 31. Other comprehensive income
In RMB
|||||||||
|-|-|-|-|-|-|-|-|
|||Occurred current term||||||
||||Less: accounted as other|||Attributable to||
|Items|Beginning of term|Amount occurred before|gains previously but|Less: Income tax|Attributable to the|minority|End of term|
|||income tax of the period|transferred to gain/loss|expenses|parent co. after tax|shareholders||
||||this period|||after tax||
|II. Other Comprehensive income that|||||-567,060,789.75|||
|will be reclassified subsequently to|2,137,419,299.84|-667,333,393.00||-100,038,979.01||-233,624.24|1,570,358,510.09|
|profit or loss||||||||
|Gains or losses on changes in fair|||||-566,887,547.71|||
|value of available-for-sale financial|2,137,800,156.80|-666,926,526.72||-100,038,979.01|||1,570,912,609.09|
|assets||||||||
|Difference of translating of foreign|||||-173,242.04|||
||-380,856.96|-406,866.28||||-233,624.24|-554,099.00|
|currency accounts||||||||
|Total of other comprehensive income|2,137,419,299.84|-667,333,393.00||-100,038,979.01|-567,060,789.75|-233,624.24|1,570,358,510.09|

 32.Special reserves
In RMB
||||||
|-|-|-|-|-|
|Items|Beginning of term|Increased this period|Decreased this period|End of term|
|Labor safety expenses|||||
||27,546,353.37||2,176,638.76|25,369,714.61|
|Total|27,546,353.37|||25,369,714.61|
||||2,176,638.76||

Othernotes：
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 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.
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 33. Surplus reserves
In RMB
||||||
|-|-|-|-|-|
||Beginning of term|Increased this period|Decreased this period|End of term|
|Items|||||
|Statutory surplus|||||
||621,112,807.78|||621,112,807.78|
|reserves|||||
|Total|621,112,807.78|||621,112,807.78|

 34. Retained profit
In RMB
||||
|-|-|-|
|Items|Current term|Same period of last term|
|Amount of retained profit at beginning of period|2,705,667,037.15|2,673,711,591.42|
|Add: Net profit attributable to owners of the paren|||
||68,753,250.90|31,955,445.73|
|company|||
|Retained profit at the end of term|2,774,420,288.05|2,705,667,037.15|

 As regards the details of adjusted the beginning undistributed profits
(1)As the retroactive adjustment on Enterprise Accounting Standards and its related new regulations, the affected beginning undistributed profits are RMB 0.00.
(2) As the change of the accounting policy, the affected beginning undistributed profits are RMB 0.00.
(3) As the correction of significant accounting error, the affected beginning undistributed profits are RMB 0.00 . (4) As the change of consolidation scope caused by the same control, the affected beginning undistributed profits are RMB 0.00.
(5) Other adjustment of the total affected beginning undistributed profits are RMB 0.00 .
35. Business income and Business cost
In RMB
||||||
|-|-|-|-|-|
||Occurred current term||Occurred in previous term||
|Items|||||
||Income|Cost|Income|Cost|
|Main Business|3,309,136,671.06|2,358,901,850.83|3,230,906,525.12|2,203,424,343.46|
|Other|138,005,998.43|91,685,474.96|4,396,854.12|1,154,437.61|
|Total|3,447,142,669.49|2,450,587,325.79|3,235,303,379.24|2,204,578,781.07|

36. Business tax and surcharge
In RMB
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
||||
|-|-|-|
|Items|Occurred current term|Occurred in previous term|
|City maintenance and construction tax|10,155,742.58|14,706,240.33|
|Education surtax|4,439,101.66|6,398,546.53|
|House tax|6,993,445.59|2,434,567.60|
|Land use tax|4,501,181.12|3,303,802.70|
|vehicle and vessel tax|68,067.25|43,113.80|
|Stamp tax|2,104,891.99|1,374,990.22|
|Locality Education surcharge|2,959,342.83|4,265,697.76|
|Business tax||36,467.22|
|Total|31,221,773.02|32,563,426.16|

 Othernotes：
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".
37. Sales expense
In RMB
||||
|-|-|-|
|Items|Amount of this period|Amount of last period|
|Employees’ remunerations|63,636,827.69|55,699,101.44|
||35,709,099.81|48,927,596.36|
|Transportation|||
|Business trips|29,740,328.24|26,265,496.47|
|Business reception expenses|||
||6,357,490.28|6,849,411.37|
|Consulting service fee|15,791,855.22|13,131,824.03|
|Registration fee|3,319,154.10|2,108,171.81|
|Three charge|6,303,572.33|4,206,989.36|
|Advertising fee|2,096,391.38|2,306,256.87|
|Office expenses|1,138,787.78|525,955.82|
|Unit premium|912,304.99|363,654.18|
|Other|4,514,335.85|4,225,952.94|
|Total|169,520,147.67|164,610,410.65|

38. Administrative expense
In RMB
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
||||
|-|-|-|
|Items|Amount of this period|Amount of last period|
|Employees’ remunerations|317,730,349.96|307,082,891.10|
|R&D expenses|211,027,767.11|197,406,076.77|
|Asset depreciation and amortizing|18,290,071.64|23,492,146.53|
|Business reception expenses|13,882,376.16|14,669,707.28|
|Rental fee, House rental, property|||
||22,417,308.94|18,201,093.27|
|management, water and power|||
|Traveling fees|9,341,935.98|8,907,858.29|
|Material, low-value-consumable|4,214,778.82|4,484,248.27|
|Office expenses|8,034,059.34|6,540,689.49|
|Repair expenses|4,889,036.67|3,447,185.46|
|Taxes|2,145,713.01|3,946,865.23|
|Other|32,205,534.15|35,505,775.77|
|Total|644,178,931.78|623,684,537.46|

 Othernotes：
Note: See details at 2. Taxation Expense and Additional Statements at Part 2 of Note V in this financial statement 39. Financial expenses
In RMB
||||
|-|-|-|
|Items|Occurred current term|Occurred in previous term|
|Interest expense|9,972,261.98|9,308,017.80|
|Less: Incoming interests|8,249,739.28|5,744,431.75|
|Exchange gains/losses|19,433,536.68|-20,850,372.53|
|Commission|3,131,068.44|2,448,933.41|
|Total|24,287,127.82|-14,837,853.07|

 40. Asset impairment loss
In RMB
||||
|-|-|-|
|Items|Occurred current term|Occurred in previous term|
|I .Losses for bad debts|68,620,803.42|187,468,454.06|
|II.Losses for falling price of inventory|||
||66,012,796.38|13,846,179.75|
|Total|134,633,599.80|201,314,633.81|

41. Investment income
In RMB
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
||||
|-|-|-|
|Items|Occurred current term|Occurred in previous term|
|Investment income from disposal of Long-term equity|||
||3,927,952.52||
|investment|||
|Investment gains from holding of sellable financial assets|54,014,898.47|3,587,659.70|
|Investment income from disposal of available for sale|||
||25,121,648.20||
|financial assets|||
|Gains from financing products|37,501,352.07|28,548,677.87|
|Total|120,565,851.26|32,136,337.57|

 42.Assets disposal income
In RMB
||||
|-|-|-|
|Items|Occurred current term|Occurred in previous term|
|Income form disposal of fixed assets|2,752,651.04|387,292.53|
|Loss form disposal of fixed assets|-11,785.91||
|Total|2,740,865.13|387,292.53|

 43.Other income
In RMB
||||
|-|-|-|
|Items|Occurred current term|Occurred in previous term|
|Government Subsidy|10,195,671.25||
|Total|10,195,671.25||

44.Non-Operation income
In RMB
|||||
|-|-|-|-|
||||Recorded in the amount of the|
|Items|Occurred current term|Occurred in previous term||
||||non-recurring gains and losses|
|Government Subsidy||16,968,792.22||
|Compensation income|7,101,662.20|7,706,669.41|7,101,662.20|
||254,099.61|96,487.12|254,099.61|
|Payment not to be paid||||
|Others|||719,897.38|
||719,897.38|1,008,975.41||
|Total|8,075,659.19|25,780,924.16|8,075,659.19|

- Government subsidy reckoned into current gains/losses
In RMB
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
||||||||||
|-|-|-|-|-|-|-|-|-|
|||||Whether the|||||
||||||Whhethe||||
|||||impact of||Amount of|||
|||Issuing|||r special||Amount of|Assets-related/in|
|Subsidy items|Issuing body||Nature|subsidies on the||current|||
|||reason|||subsidie||previous period|come –related|
|||||current profit and||period|||
||||||s||||
|||||loss|||||
|Transferred from deferred|||||||||
||||||||1,381,530.00|Related to assets|
|income|||||||||
|Stable employment social|||||||||
|||||||||Related to|
||||||||6,208,662.99||
|security subsidies||||||||income|
|2016 provincial industrial|||||||||
|||||||||Related to|
|and information technology|||||||3,000,000.00||
|||||||||income|
|development special funds|||||||||
|Water Funds returned||||||||Related to|
||||||||2,853,493.64||
|||||||||income|
|Property tax return||||||||Related to|
||||||||1,362,413.59||
|||||||||income|
|Enterprise R & D|||||||||
|||||||||Related to|
||||||||714,200.00||
|investment subsidy||||||||income|
|Hangzhou "115" in 1995 to|||||||||
|||||||||Related to|
|introduce foreign|||||||600,000.00||
|||||||||income|
|intelligence program|||||||||
|Financial subsidy||||||||Related to|
||||||||366,930.00||
|||||||||income|
|Land use tax refund||||||||Related to|
||||||||153,244.00||
|||||||||income|
|Quality Award Financial|||||||||
|||||||||Related to|
||||||||131,600.00||
|Award||||||||income|
|Training subsidy||||||||Related to|
||||||||100,608.00||
|||||||||income|
|Other small amount||||||||Related to|
||||||||96,110.00||
|subsidies||||||||income|
|Total|--|--|--|--|--||16,968,792.22|--|

45. Non-operational expenditure
In RMB
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
|||||
|-|-|-|-|
||||Amount accounted into non-recurring|
|Items|Current term|Same period of last term||
||||gain/loss of current term|
|Donations|160,000.00|270,000.00|160,000.00|
||1,017,449.18|383,192.05|1,017,449.18|
|Penalty paid out||||
||5,660.04|2,747,978.42|5,660.04|
|Local water source foundation||||
|Penalties|386,417.98|343,895.38|386,417.98|
|Loss damage||196,627.26||
|loss from disposal of non-current assets|60,243.24|60,839.23|60,243.24|
|Other|5,909.50|272,423.01|5,909.50|
|Total|1,635,679.94|4,274,955.35|1,630,019.90|

 46. Income tax expenses
(1) Details
In RMB
||||
|-|-|-|
|Items|Current term|Same period of last term|
|Income tax of current term|30,183,514.16|30,434,271.60|
|Deferred income tax|||
||-19,347,759.68|-19,926,599.45|
|Total|10,835,754.48|10,507,672.15|

 (2) Adjustment process of accounting profit and income tax expenses
In RMB
|||
|-|-|
|Items|Current term|
|Total profit|132,656,130.50|
|Income tax expense at statutory / applicable tax rates|19,898,419.58|
|Effect of different tax rates applicable to subsidiaries|2,362,974.46|
|Adjustment for income tax in prior year|498,194.56|
|Income not subject to tax|-6,730,586.23|
|Expenses not deductible for tax purposes|1,682,033.95|
|Changes in the balance of deferred income tax assets at the beginning of the tax rate adjustment||
||-499,495.29|
|Impact of deductible temporary difference of un-recognized deferred income tax asset of current||
||2,896,366.84|
|period||
|Super deduction of R&D expenses|-7,868,394.27|
|Impact of additional deductions for persons with disabilities|-195,000.00|

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
|||
|-|-|
|Consolidation of the effect of offset profits|-1,208,759.12|
|Income tax expenses|10,835,754.48|

 47.Other Comprehensive income
Please find the statement in the notes of consolidated balance sheet.
48. Notes Cash flow statement
(1) Other cash received from business operation
In RMB
||||
|-|-|-|
|Items|Occurred current term|Occurred in previous term|
|Deposit interest(Notes)|8,841,048.87|5,744,431.75|
|Government subsidies received|7,585,972.87|11,218,110.99|
|Deposit for bidding and other|117,753,826.61|16,391,878.63|
|Compensation income|2,004,464.28|789,904.00|
|Other|807,897.38|2,195,408.92|
|Total|136,993,210.01|36,339,734.29|

Notes：Interest of deposit received from the sum invested of China Development Fund in the year of 2017 is included.
2. Other cash paid for business activities
In RMB
||||
|-|-|-|
|Items|Occurred current term|Occurred in previous term|
|Transportation|46,333,097.00|57,287,872.01|
|Travel expenses|31,479,265.23|28,307,013.51|
|Business trips|20,239,866.44|21,519,087.20|
|Maintaining|4,889,036.67|3,447,165.85|
|Property management and civil services|26,288,452.59|16,621,718.05|
|Deposit for bidding and others|128,402,810.43|23,512,159.15|
|Office expenses|8,538,814.87|7,066,554.79|
|Conferences|3,953,186.35|2,401,978.53|
|Consulting service fee|13,960,995.20|13,131,824.03|
|Transportation and vehicles|7,132,162.29|4,823,801.30|
|Other|47,505,862.73|40,288,131.86|
|Total|338,723,549.80|218,407,306.28|

3.Other investment-related cash received
In RMB
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
||||
|-|-|-|
|Items|Occurred current term|Occurred in previous term|
|Repurchasing of trusteeship|3,898,147,338.00|1,765,932,662.00|
|Receipt of levy and relocation|||
||237,658,831.07||
|compensation|||
|Total|4,135,806,169.07|1,765,932,662.00|

 4. Other cash paid for investment activities
In RMB
||||
|-|-|-|
|Items|Current term|Same period of last term|
|Purchasing of financial products|3,931,112,329.00|2,193,700,000.00|
|Sales of subsidiary ending cash|183,932.75||
|Total|3,931,296,261.75|2,193,700,000.00|

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

 6.Other Cash payable related to financing activities
In RMB
||||
|-|-|-|
|Items|Occurred current term|Occurred in previous term|
|Return of minority investment funds to|||
||21,591,054.08||
|subsidiaries|||
|Payment of CDB investment interest|1,220,266.67||
|Purchase of minority shareholders|243,111.17||
|Total|23,054,431.92||

49. Supplementary data of cash flow statement
(1) Supplementary data of cash flow statement
In RMB
||||
|-|-|-|
|||Amount of the Previous|
|Supplementary Info.|Amount of the Current Term||
|||Term|
|I. Adjusting net profit to cash flow from operating activities|--|--|
|Net profit|121,820,376.02|66,911,369.92|
|Add: Impairment loss provision of assets|134,633,599.80|201,314,633.81|
|Depreciation of fixed assets, oil and gas assets and consumable biological|76,555,538.97|82,918,520.91|

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
||||
|-|-|-|
|assets|||
|Amortization of intangible assets|7,552,428.32|7,553,207.06|
|Amortization of Long-term deferred expenses|648,388.42|653,180.10|
|Loss on disposal of fixed assets, intangible assets and other long-term deferred|||
||-2,740,865.13|-326,453.30|
|assets|||
|Loss on scrap of fixed assets|60,243.24||
|Financial cost|28,843,231.98|936,959.82|
|Loss on investment|-120,565,851.26|-32,136,337.57|
|Decrease of deferred income tax assets|-19,347,759.68|-19,906,922.15|
|Increased of deferred income tax liabilities||-19,677.30|
|Decrease of inventories|-257,216,765.22|-89,815,466.67|
|Decease of operating receivables|-411,587,570.47|118,336,896.84|
|Increased of operating Payable|649,202,893.79|174,852,469.36|
|Other|-2,555,097.01|-5,112,952.41|
|Net cash flows arising from operating activities|205,302,791.77|506,159,428.42|
|II. Significant investment and financing activities that without cash flows:|--|--|
|3．Movement of cash and cash equivalents：|||
||--|--|
|Ending balance of cash|1,137,492,834.83|831,236,984.85|
|Less: Beginning balance of cash equivalents|831,236,984.85|689,224,662.53|
|Net increase of cash and cash equivalents|306,255,849.98|142,012,322.32|

 (2) Net Cash paid of obtaining the subsidiary
In RMB
|||
|-|-|
||Amount|
|including：|--|
|Less：Cash and cash equivalents held by the company on the date of loss of||
||183,932.75|
|control||
|Including：|--|
|Zhejiang ZhongrunGas turbine technology Co., Ltd.|183,932.75|
|Including：|--|
|Disposal of net cash received by subsidiaries|-183,932.75|

Othernotes：
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 Note: Cash amount reported for the payment for other related investment activities.
（3）Composition of cash and cash equivalents
In RMB
||||
|-|-|-|
|Items|End of term|Beginning of term|
|I. Cash|1,137,492,834.83|831,236,984.85|
|Of which: Cash in stock|||
||208,763.32|326,226.09|
|Demand bank deposit|1,137,284,071.51|830,910,758.76|
|III. Balance of cash and cash equivalents at|1,137,492,834.83|831,236,984.85|
|the period end|||

50. Assets with limitation on ownership or using rights
In RMB
||||
|-|-|-|
|Items|Closing book value|Causation o limitation|
|Monetary capital|85,184,661.11|Used as security for issuing of acceptance drafts and bill of guarantees|
|Bill receivable|40,000,000.00|Used as security for issuing of acceptance drafts|
|Fixed assets|||
||112,955,316.32|Used to obtain bank loans|
|Intangible assets|||
||87,909,828.11|Collateral for obtaining bank loans and investment funds from CDB|
|Dividend receivable|6,900,000.00|Investment funds for the development of the State Fund|
|Available for sale financial|||
||371,266,000.00|Investment funds for the development of the State Fund|
|assets|||
|Total|||
||704,215,805.54|--|

51. Monetary items in foreign currencies
(1) Foreign currency monetary items
In RMB
|||||
|-|-|-|-|
||||Translated to RMB at end of|
|Items|Balance at end of period|Exchange rate||
||||period|
|Monetary capital|--|--|161,660,934.80|
|Incl：USD|24,019,443.75|6.5342|156,947,849.32|
|Euro|161,691.71|7.8023|1,261,567.23|

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
|||||
|-|-|-|-|
|HKD|5.51|0.83591|4.61|
|JPY|24,409,542.00|0.057883|1,412,897.52|
|Rupiah|4,229,494,022.10|0.000482|2,038,616.12|
|Account receivable|--|--|208,535,159.46|
|Incl：USD|28,063,668.87|6.5342|183,373,625.13|
|Euro|2,794,843.40|7.8023|21,806,206.66|
|Rupiah|6,477,751,550.00|0.000482|3,122,276.25|
|Rupiah||||
|Singapore dollar|47,726.12|4.8831|233,051.42|
|Other receivable|||3,556,660.53|
|Incl：USD|536,562.00|6.5342|3,506,003.42|
|JPY|1,500.00|0.057883|86.82|
|Won|388,000.00|0.006109|2,370.29|
|Rupiah|100,000,000.00|0.000482|48,200.00|
|Account receivable|||7,323,197.63|
|Incl：USD|741,579.96|6.5342|4,845,631.77|
|Euro|177,440.86|7.8023|1,384,446.82|
|Rupiah|2,267,881,822.97|0.000482|1,093,119.04|
|Other payable|||267,054.71|
|Incl：USD|40,870.30|6.5342|267,054.71|

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 VIII.Changes of consolidation scope
1.Disposal of subsidiary
There is a single disposition to invest in the subsidiary that is the case of loss of control
In RMB
||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|
|||||||||||||The amount of|
|||||||The difference||||||other|
||||||||||||Determination||
|||||||between the disposal||||||comprehensiv|
||||||||Proportion|||Regaining gains|of the fair||
|||||||price and the share of||The book|The fair value|||e income|
||||||||of|||or losses arising|value of the||
|||||||the subsidiary's net||value of the|of the|||related to the|
|||Equity|||||remaining|||from|remaining||
||||Disposal|||assets at the level of||remaining|remaining|||atomic|
|Name|Equity disposal price|disposal||Loss of control|Determining the basis||stocks at|||re-measurement|equity at the||
||||of equity|||the consolidated||equity at the|equity at the|||company's|
|||ratio||point|for the loss of control||the date of|||of the remaining|date of loss of||
|||||||financial statement||date of loss of|date of loss of|||equity|
||||||||loss of|||equity at fair|control rights||
|||||||corresponding to the||control|control|||investment|
||||||||control|||value|and its main||
|||||||disposal of the||||||transferred to|
||||||||||||assumptions||
|||||||investment||||||investment|
|||||||||||||profit and loss|
|Zhejiang|||||||||||||
|Zhongrun Gas|||||||||||||
|||||October|Complete business||||||||
|engine|10,000,000.00|55.55%|Sell|||3,927,952.52|||||||
|||||26,2017|change registration||||||||
|technology|||||||||||||
|co., Ltd.|||||||||||||

Othernotes：
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 Zhejiang Runhong Gas Turbine Project Co., Ltd.( hereinafter referred to as Run Hong Company ), the original secondary subsidiary of the Company, disposed its holding equity of its subsidiary, Zhanjiang Zhongrun Gas Turbine Technology Co., Ltd. After the above-mentioned equity was done being disposed, Run Hong Company completed the liquidation cancellation on December 22, 2017.
Whether there is a case where the investment is made to the subsidiary and the loss of control in the current period
No
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 2.Other reasons for the merger scope change
Merger scope decrease
||||||
|-|-|-|-|-|
|Name|Way of EquityDisposition|Time Point of EquityDisposition|Net Assets on theDate of Disposition|Net Profits from theBeginning of the Period tothe Date of Disposition|
|Xinjiang TaiFeng Hangzhou Steam TurbineComplete Technology Development Co., Ltd.|Chearing|April 25,2017|17,061,690.18|181,238.78|
|Hangzhou steam turbine Boiler Co.,Ltd.|Chearing|April 27,2017|19,665,256.43|1,130,995.08|
|Hangzhou Pangtong ElectromechanicalEquipment Co., Ltd.|Chearing|December 21,2017|1,086,391.89|-115,873.20|
|Zhejiang Runhong Gas Trubine Engineering Co.,Ltd.|Chearing|December 22,2017|34,953,788.30|2,813,561.91|

IX. Equities in Other Entities
(I) Equity in major subsidiaries
1. Composition of major subsidiaries
||||||||
|-|-|-|-|-|-|-|
|||||Share proportion %|||
||Main business||||||
|Name of the subsidiaries||Reg. Add.|Business property|||Way of obtain|
||location|||Direct|Indirect||
|Zhejiang Steam Trubine|||||||
|||Hangzhou|||||
|Packaged Technologies|Hangzhou Zhejiang||Manufacturing|70.86%||Incorporation|
|||Zhejiang|||||
|Development Co., Ltd.|||||||
|Hangzhou Zhongneng|||||||
|Steam Turbine Power||Hangzhou|||||
||Hangzhou Zhejiang||Manufacturing|60.83%||Incorporation|
|Co., Ltd. (Zhongneng||Zhejiang|||||
|Co.)|||||||
|Hangzhou Steam|||||||
|||Hangzhou|||||
|Turbine Casting Co.,|Hangzhou Zhejiang||Manufacturing|51.00%||Incorporation|
|||Zhejiang|||||
|Ltd.|||||||
|Hangzhou Steam|||||||
|||Hangzhou|||||
|Turbine Machinery|Hangzhou Zhejiang||Manufacturing|52.00%||Incorporation|
|||Zhejiang|||||
|Equipment Co., Ltd.|||||||
|Hangzhou Steam|||||||
|Turbine Auxiliary|||||||
|||Hangzhou|||||
|Machinery Co., Ltd.|Hangzhou Zhejiang||Manufacturing|87.53%||Incorporation|
|||Zhejiang|||||
|(Auxiliary Machinery|||||||
|Co.)|||||||

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
|||||||
|-|-|-|-|-|-|
|Zhejiang Turbine||||||
|||Hangzhou||||
|Import & Export Co.,|Hangzhou Zhejiang||Commerce|100.00%|Incorporation|
|||Zhejiang||||
|Ltd. (Turbine Co.)||||||
|Hangzhou Steam||||||
|Turbine Heavy Industry||Hangzhou||||
||Hangzhou Zhejiang||Manufacturing|100.00%|Incorporation|
|||Zhejiang||||
|Co., Ltd.||||||

（2）Major non-fully-Owned subsidiaries
In RMB
||||||
|-|-|-|-|-|
|||Gains/loss of the period|Dividend announced in|Balance of eqiuty of minor|
||Share protion of minor||||
|Name of the subsidiaries||attributable to minor|the period to minor|shareholders at end of|
||shareholders||||
|||shareholders|shareholders|period|
|Zhejiang Steam Trubine|||||
|Packaged Technologies|29.14%|3,174,590.24|2,229,592.50|24,217,276.70|
|Development Co., Ltd.|||||
|Hangzhou Zhongneng|||||
|Steam turbine PowerCo.,|39.17%|11,916,814.40|4,637,200.00|141,678,604.31|
|Ltd.|||||
|Hangzhou Steam Turbine|||||
||49.00%|13,586,682.59|9,702,000.00|72,216,942.99|
|Casting Co., Ltd.|||||
|Hangzhou Steam Turbine|||||
|Machinery Equipment|48.00%|22,095,692.13|21,600,000.00|71,260,459.07|
|Co., Ltd.|||||
|Hangzhou Steam Turbine|||||
|Auxiliary Machinery Co.,|12.47%|4,584,214.40|2,992,800.00|25,982,354.28|
|Ltd.|||||

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 (3) Material financial information of major non-fully-owned subsidiaries
In RMB
||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|
||End of term||||||Beginning of term||||||
|Subsidiaries|||||||||||||
||||||Non-current|||Non-current|||Non-current|Total of|
|Name|Current assets|Non-current assets|Total of assets|Current liabilities||Total of liability|Current assets||Total of assets|Current liabilities|||
||||||liabilities|||assets|||liabilities|liability|
|Zhejiang|||||||||||||
|Steam|||||||||||||
|trubine|||||||||||||
|||||||160,574,913.6|255,821,238.0||279,877,771.0|||191,451,594.|
|Packaged|219,292,216.34|24,375,146.44|243,667,362.78|160,574,913.68||||24,056,533.07||191,451,594.17|||
|||||||8|0||7|||17|
|Technology|||||||||||||
|Developmen|||||||||||||
|t Co., Ltd.|||||||||||||
|Hangzhou|||||||||||||
|Zhongneng|||||||||||||
|Steam|||||||||||||
|||||||772,640,062.7|884,998,690.4||960,130,000.9|||623,525,514.|
||1,037,373,643.65|75,190,430.57|1,112,564,074.22|772,310,062.79|330,000.00|||75,131,310.55||623,195,514.10|330,000.00||
|turbine||||||9|4||9|||10|
|PowerCo.,|||||||||||||
|Ltd.|||||||||||||
|Hangzhou|||||||||||||
|Steam|||||||||||||
||||||3,849,755.0|316,315,457.8|211,392,397.1|194,877,712.3|406,270,109.4||10,002,105.|240,710,393.|
|Turbine|304,833,240.88|184,619,003.14|489,452,244.02|312,465,702.87||||||230,708,288.79|||
||||||0|7|5|0|5||00|79|
|Casting Co.,|||||||||||||
|Ltd.|||||||||||||
|Hangzhou|||||||||||||
||||||||200,333,215.8||222,830,937.4|||75,404,339.6|
||205,163,731.11|21,782,104.60|226,945,835.71|77,895,206.35|591,339.61|78,486,545.96||22,497,721.65||75,404,339.67|||
|Steam|||||||4||9|||7|

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
||||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|-|-|
|Turbine|||||||||||||
|Machinery|||||||||||||
|Equipment|||||||||||||
|Co., Ltd.|||||||||||||
|Hangzhou|||||||||||||
|Steam|||||||||||||
|Turbine|||||||||||||
|||||||428,348,379.2|432,548,733.6|115,456,043.8|548,004,777.4|||324,919,126.|
||548,200,286.67|115,360,847.76|663,561,134.43|428,134,519.20|213,860.00|||||324,598,336.06|320,790.00||
|Auxiliary||||||0|4|2|6|||06|
|Machinery|||||||||||||
|Co., Ltd.|||||||||||||

In RMB
||||||||||
|-|-|-|-|-|-|-|-|-|
||Amount of current period||||Amount of previous period||||
|Subsidiaries Name|||||||||
|||||Cash flow for business||||Cash flow for business|
||Turnover|Net profit|Total Misc Gains||Turnover|Net profit|Total Misc Gains||
|||||activities||||activities|
|Zhejiang Steam|||||||||
|Turbine Packaged|||||||||
|Technology|241,699,214.69|10,676,500.39|10,676,500.39|-8,604,753.23|219,104,132.13|8,511,564.05|8,511,564.05|17,053,194.85|
|Development Co.,|||||||||
|Ltd|||||||||
|Hangzhou|||||||||
|Zhongneng Steam|||||||||
||833,201,191.68|25,173,217.92|24,766,351.64|24,579,646.69|726,019,174.47|9,061,166.79|10,169,432.35|57,021,017.72|
|turbine Power Co.,|||||||||
|Ltd.|||||||||
|Hangzhou Steam|||||||||
||357,558,102.11|27,727,923.66|27,727,923.66|18,380,178.48|286,947,144.79|17,095,623.20|17,095,623.20|44,737,383.72|
|Turbine Casting|||||||||

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
||||||||||
|-|-|-|-|-|-|-|-|-|
|Co., Ltd.|||||||||
|Hangzhou Steam|||||||||
|Turbine Machinery|220,887,783.34|46,032,691.93|46,032,691.93|46,087,103.01|203,232,692.33|45,793,653.38|45,793,653.38|61,976,772.66|
|Equipment Co., Ltd.|||||||||
|Hangzhou Steam|||||||||
|Turbine Auxiliary|394,136,946.17|36,761,943.86|36,761,943.86|16,117,349.92|362,840,873.07|25,243,697.12|25,243,697.12|24,381,581.78|
|Machinery Co., Ltd.|||||||||

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 2. Rights and interests in joint venture arrangements or joint ventures
（1）Summary financial information of unimportant joint ventures and associated enterprises
In RMB
||||
|-|-|-|
||Year-end balance/ Amount of|Year-beginning balance/ Amount of|
||current period|previous period|
|Joint ventures|--|--|
|Total book value of investments|5,800,000.00||
|Total of the following by shareholding ratio|--|--|
|Associated enterprises|--|--|
|Total of the following by shareholding ratio|--|--|

Othernotes：
Zhejiang Runhong Gas Turbine Engineering Co., Ltd, which formerly was a second-tier holding subsidiary to the company, held55.55% stake of its subsidiary-Zhejiang Zhongrun Gas Turbine Technology Co., Ltd. However, after the equity transfer, Runhong transferred all its holding stake of Zhongrun to Turbo Company and Ningbo Daxie Development Zone Huashun Industry& Trade Co., Ltd-respectively acquired32.22% and23.33% by them, and the industrial and commercial change registration and the transfer of property rights were completed on December 26, 2017. Therefore, Runhong Company is no longer included in the scope of the consolidated financial statements from November 2017, and it is changed to an associated enterprise to the company.
X. 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, 2017, the Company has a
characteristic of specific credit risk concentration.41.79% (December 31, 2016:41.79%) 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.
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 (1) Analyzing of receivable accounts neither due nor impaired, and those have due but not impaired:
|||||||
|-|-|-|-|-|-|
|Items|End of term|||||
||Not overdue and notimpaired|Overdue but not impaired|||Total|
|||Within 1 year|1-2 years|Over 2 years||
|Bill receivable|715,410,887.68||||715,410,887.68|
|Subtotal|715,410,887.68||||715,410,887.68|

 (Continued)
|||||||
|-|-|-|-|-|-|
|Items|Beginning of term|||||
||Not overdue and not impaired|Overdue but not impaired|||Total|
|||Within 1 year|1-2 years|Over 2 years||
|Bill receivable|479,716,321.62||||479,716,321.62|
|Subtotal|479,716,321.62||||479,716,321.62|

 (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|
|Short-term loans|115,500,000.00|117,664,804.32|117,664,804.32|||
|Notes payable|215,409,958.92|215,409,958.92|215,409,958.92|||
|Non-current liabilities dueto 1 year|4,900,000.00|4,903,383.01|4,903,383.01|||
|Long-term loan|100,000,000.00|107,057,027.40|3,685,000.00|103,372,027.40||
|Long-term payable|209,633,466.66|222,751,733.33||53,000,000.00|169,751,733.33|
|Account payable|882,715,465.65|882,715,465.65|882,715,465.65|||
|Other account payable|27,859,617.33|27,859,617.33|27,859,617.33|||
|Subtotal|1,556,018,508.56|1,578,361,989.96|1,252,238,229.23|156,372,027.40|169,751,733.33|

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 (Continued)
|||||||
|-|-|-|-|-|-|
|Items|Beginning of term|||||
||Book value|Contract amount notdiscounted|within 1 year|1-3 years|Over 3 years|
|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-current liabilities dueto 1 year|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-term payable|208,027,733.33|223,972,000.00||26,000,000.00|197,972,000.00|
|Account payable|853,452,589.51|853,452,589.51|853,452,589.51|||
|Other account payable|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|

 (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, 2017, the Company had raised RMB78,100,000.00 (Dec 31 2016: 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
XI.Fair value disclosure
(I)Closing balance of assets and liabilities measured at fair value
In RMB
||||||
|-|-|-|-|-|
||December 31, 2017||||
|Items|||||
||Level 1|Level 2|Level 3|Total|
|I. Consistent fair value|||||
||--|--|--|--|
|measurement|||||

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
||||||
|-|-|-|-|-|
|（II）Available-for-sale Financial Assets|2,239,086,521.28|||2,239,086,521.28|
|（2）Equity instrument investment|2,239,086,521.28|||2,239,086,521.28|
|II.Non-continuous measurement fair|||||
||--|--|--|--|
|value|||||

(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.
XII. Related parties and related transactions
1. Parent company of the Company
|||||||
|-|-|-|-|-|-|
|||||Shareholding of the|Voting rights of the parent|
|Name of the parent co.|Reg. Add.|Business property|Registered capital|||
|||||parent co.|co. %|
|Hangzhou Steam||||||
||Hangzhou China|Manufacturing|RMB 800 milllion|63.64%|63.64%|
|Turbine Group||||||

Notes :Hangzhou Municipal Government State-owned Asset Supervisory Committee is the ultimate controller of theCompany.。
2.Subsidiaries of the enterprise
For details of subsidiaries please go to the statement of equities in other entities.
3. Situation of joint ventures and associated enterprises
For details of the important joint venture or joint venture of the enterprise, see the description of the rights and interests in other parties in the notes
4. 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 Power Group Equipment Co., Ltd.|Affiliate of the Group|
|Hangzhou Steam Turbine Compressor Co., Ltd.|Affiliate of the Group|
|Hangzhou Wandong Electric Co., Ltd|Affiliate of the Group|
|China Electrical and Mechanical Institute-Hangzhou Turbine Group||
||Affiliate of the Group|
|(Hangzhou) United Research Institute Co., Ltd.||

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
|||
|-|-|
|Hangzhou Steam Turbine Industry & Trade Co., Ltd.|Affiliate of the Group|
|Zhejiang Juqing Investment Co., Ltd.|Affiliate of the Group|
|Greenesol power systems PVT Ltd.|Shareholding enterprise|
|Hangzhou Bank|Shareholding enterprise|

4.Related transaction
(1) Sale of goods/rendering of labor services/labor service offering
Purchase of goods and service
In RMB
|||||||
|-|-|-|-|-|-|
|||Amount of current|Amount of previous|Over the||
||Content of related||||Amount of last|
|Ralated parties||||trading limit||
||transaction|period|period||period|
|||||or not?||
|Hangzhou Steam turbine Automobile sales||||||
||Transportation , repair , etc.|49,793,145.26|67,900,000.00|No|51,271,023.35|
|service Co., Ltd.||||||
|Hangzhou Hangfa Power Generating||||||
||Generators|137,886,068.57|141,000,000.00|No|140,548,615.67|
|Equipment Co., Ltd.||||||
|Hangzhou Nanhua Wooden Packaging Co.,||||||
||Packaging|11,412,748.09|15,708,000.00|No|14,615,668.53|
|Ltd.||||||
|Hangzhou Nanfang Tongda Gears Co., Ltd.|Gear boxes|6,526,922.23|10,550,000.00|No|6,758,649.55|
|Hangzhou Steam Turbine Engineering Co.,||||||
||Technical service|5,815,284.38|6,000,000.00|No|6,539,280.97|
|Ltd.||||||
|Hangzhou Steam Turbine Industrial Co.,||||||
||Industrial cooperation|1,079,184.92|2,024,000.00|No|1,489,051.67|
|Ltd.||||||
|China Electrical and Mechanical||||||
|Institute-Hangzhou Turbine Group||||||
||Development ,design|1,521,264.63|1,500,000.00|Yes|1,377,742.72|
|(Hangzhou) United Research Institute Co.,||||||
|Ltd.||||||
|Hangzhou Wandong Electric Co., Ltd.|||||30,974.36|
|Greenesol power systems PVT Ltd.|Coupler|34,045.00||||
|Subtotal||214,068,663.08|||222,631,006.82|

 Related transactions regarding sales of goods or providing of services
In RMB
|||||
|-|-|-|-|
|Related parties|Subjects of the related transactions|Current term|Same period of last term|
||Steam turbine,compressor, Installation|||
|Hangzhou Steam Turbine Engineering Co., Ltd.||77,325,688.70|41,776,752.14|
||service|||

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
|||||
|-|-|-|-|
|Hangzhou Hangfa Power Generating Equipment|Cast parts|||
|||11,378,353.36|11,774,255.82|
|Co., Ltd.||||
|Hangzhou Steam Turbine Group|Infornation service|139,622.64|94,339.62|
|Hangzhou Steam Turbine Automobile Sales||||
||Small amount materials|24,393.29|841.62|
|Service Co., Ltd.||||
|Greenesol power systems PVT Ltd.|Part|984,273.41|2,472,014.43|
|Hangzhou Steam Turbine Compressor Co., Ltd.|Part, Industrial cooperation|382,017.01|115,384.62|
|Subtotal||90,234,348.41|56,233,588.25|

 Notes
（2）Information of related lease
The Company was lessor
In RMB
|||||
|-|-|-|-|
|||The lease income confirmed in|The lease income confirmed in|
|Name of lessee|Category of lease assets|||
|||this year|last year|
|Hangzhou Steam Turbine Compressor Co.,|House and Building|||
|||88,000.00||
|Ltd.||||

- The company waslessee：
In RMB
|||||
|-|-|-|-|
||Category of leased|The lease income confirmed in||
|Lessor|||Category of leased assets|
||assets|this year||
|HSTG|House and Building|||
|||3,725,637.47|3,394,797.92|
||Engineering|||
|HSTG||||
|||1,760,683.76|1,760,683.76|
||Equipment|||
|HSTG|Land use right|||
|||3,194,406.31|3,194,406.32|
|Hangzhou Steam Turbine Automobile Sales||||
||Site leasing|||
|||4,007,541.21|4,229,857.79|
|Service Co., Ltd.||||
|Subtotal||12,688,268.75|12,579,745.79|

（3）Related-party guarantee
The Company was guarantor
In RMB
||||||
|-|-|-|-|-|
|||||Execution accomplished or|
|Guarantor|Guarantee amount|Start date|End date||
|||||not|
|HSTG|100,000,000.00|November 30,2017|November 30,2019|No|

Notes
As stated in Note 5 (I) 26 of the financial statement, in accordance with the National Development Fund
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 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 32.2 million shares of Hangzhou Bank Co., Ltd. with book value of RMB 371,266,000.00,Dividend Receiviable of RMB 6,900,000.00 and the land use right with book value of RMB68,149,728.77.
（4）Related party asset transfer and debt restructuring
In RMB
|||||
|-|-|-|-|
|Related party|Content|Current term|Same period of last term|
|Hangzhou Steam Turbine Automobile Sales Service||||
||Purchase fixed assets|307,094.02||
|Co., Ltd.||||

（5）
Remunerations of key managements
In RMB
||||
|-|-|-|
|Items|Current term|Same period of last term|
|Remunerations of key managements|8,114,522.61|7,774,385.21|

 5. Other related transactions
(1) Service and power supply
(1)HSTG supplies water and power to the Company and some of the subsidiaries amounted to RMB13,218,180.11 this period.
(2)HSTG Group provided technical services to the company. The company paid technical service fees of RMB 1, 099,056.6 in the current period
（3）HSTG. 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 RMB54,104.78.
（4）Hangzhou Steam Turbine Automobile Sales& Service Co., Ltd. provided transportation to theCompany’s employees and RMB2,174,272.75 was paid this period.
(5) Hangzhou Steam Turbine Industry Co., Ltd. provided cleaning services to the Company and RMB1,100,628.92 was paid this period.
(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
1) During the current period, Hangzhou Steam Turbine Group advanced the payment of RMB 748,407.97 salaries for the company, and advanced the payment of RMB 2,250,793.32 for newspapers and magazines for the
company.
2.Hangzhou Steam Turbine Automobile Sales& Service Co., Ltd. paid RMB6,456,212.32 of tarrif on behalf of
Turbine Co. during the period.
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 (4) Transfer of research and development projects
For details, please refer to Note XIII and (II) 1 of explanation in this financial statement.
(5) Transfer of external investment
In January 2017, the Company and Zhejiang JuQing Investment Co., Ltd signed the "Transfer Agreement", that the company transferred its entire holding equity of Hangzhou Changdi Equity Investment Partnership (Limited Partnership) to Zhejiang Juqiang at the price of RMB 73,680,000.00. Investment Co., Ltd. The confirmed investment gain was RMB 25,121,648.20.
(6) Bank credit and entrusted wealth-management
1) In the current period, the company applied for a credit line of RMB 300 million from the Shiqiao Sub-branch of Hangzhou Bank Co., Ltd to conduct business. As of December 31, 2017, the loan balance under this credit was nil.
2) In the current period, the company commissioned the wealth-management of RMB 1,125,000,000.00 to Bank of Hangzhou Co., Ltd. As of December 31, 2017, the balance of such wealth-management was RMB 230,000,000.00.
6. Receivables and payables of related parties
（1）Receivables
In RMB
|||||||
|-|-|-|-|-|-|
|||End of term||Beginning of term||
|Name|Related party|||||
|||Book balance|Bad debt provision|Book balance|Bad debt provision|
|Notes|Hangzhou Steam Turbine Engineering Co.,|||||
|||9,022,000.00||2,940,000.00||
|receivable|Ltd.|||||
||Hangzhou Hangfa Power Generating|||||
|||||2,000,000.00||
||Equipment Co., Ltd.|||||
|Subtotal||9,022,000.00||4,940,000.00||
|Account|Hangzhou Steam Turbine Engineering Co.,|||||
|||60,048,003.87|12,214,467.99|52,898,295.99|6,117,053.80|
|receivable|Ltd.|||||
||Hangzhou Hangfa Power Generating|||||
|||23,168,548.05|1,656,221.13|17,950,170.60|1,146,223.10|
||Equipment Co., Ltd.|||||
||Hangzhou Steam Turbine Power Group|||||
|||305,000.00|305,000.00|305,000.00|244,000.00|
||Complete Equipment Engineering Co., Ltd.|||||
||Hangzhou Steam Turbine Compressor Co.,|||||
|||59,000.00|17,700.00|59,000.00|5,900.00|
||Ltd.|||||
||Hangzhou Steam Turbine Group|158,500.00|158,500.00|158,500.00|158,500.00|
||Hangzhou Steam Turbine Automobile Sales|||||
|||||544.67|27.23|
||Service Co., Ltd.|||||
||Greenesol power systems PVT Ltd.|13,825,933.72|13,825,933.72|15,642,523.36|12,514,018.69|
|Subtotal||97,564,985.64|28,177,822.84|87,014,034.62|20,185,722.82|
|Prepayment|Hangzhou Hangfa Power Generating|43,741,785.00||21,515,346.37||

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
||||||
|-|-|-|-|-|
||Equipment Co., Ltd.||||
||Hangzhou Steam Turbine Engineering Co.,||||
|||2,022,000.00|||
||Ltd.||||
||Zhejiang Zongrun Gas turbine technology||||
|||715,000.00|||
||Co., Ltd.||||
||Hangzhou Nanfang Tongda Gears Co., Ltd.|50,000.00|||
|Subtotal||46,528,785.00||21,515,346.37|
|Other|Hangzhou Steam Turbine Compressor Co.,||||
|||346,200.00|17,310.00||
|receivable|Ltd’||||
||Hangzhou Steam Turbine Group|39,105.34|1,955.27||
|Subtotal||385,305.34|19,265.27||

（2）Payables
In RMB
|||||
|-|-|-|-|
|Name|Related party|Amount at year|Amount at year beginning|
|Notes Payable|Hangzhou Steam Turbine Automobile Sales Service Co., Ltd|1,350,000.00|180,000.00|
||Hangzhou Steam Turbine Engineering Co., Ltd.|180,000.00||
||Hangzhou Nanhua Wooden Packaging Co., Ltd.||100,000.00|
|Subtotal||1,530,000.00|280,000.00|
|Account payable|Hangzhou Hangfa Power Generating Equipment Co., Ltd.|133,726,506.11|115,744,578.95|
||Greenesol power systems PVT Ltd.|3,219,116.49|3,595,145.76|
||Hangzhou Steam Turbine Group|79,982.49|3,395,546.79|
||Hangzhou Steam Turbine Automobile Sales Service Co., Ltd|8,809,544.81|7,504,708.74|
||Hangzhou Nanhua Wooden Packaging Co., Ltd.|1,667,167.51|963,509.03|
||Hangzhou Steam Turbine Engineering Co., Ltd.|3,510,000.00|1,780,566.04|
||HSTG (Hangzhou) United Institutes Co., Ltd.|542,775.00|597,075.00|
||Hangzhou Nanfang Tongda Gears Co., Ltd.|1,147,694.00|2,464,950.00|
||Hangzhou Steam Turbine Industrial Co., Ltd.|128,042.88|212,294.57|
||Hangzhou Wandong Electric Co., Ltd.||20,640.00|
|Subtotal||152,830,829.29|136,279,014.88|
|Advances||||
||Hangzhou Steam Turbine Engineering Co., Ltd.|31,613,190.00|38,972,720.00|
|received||||
||Hangzhou Steam Turbine Compressor Co., Ltd’|14,190,000.00|14,190,000.00|
||Greenesol power systems PVT Ltd.|51,968.30||
|Subtotal||45,855,158.30|53,162,720.00|
|Other account||||
||Hangzhou Steam Turbine Group|221,351.95|5,731,384.50|
|payable||||

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
|||||
|-|-|-|-|
||Hangzhou Steam Turbine Automobile Sales Service Co., Ltd|100,000.00|100,000.00|
|Subtotal||321,351.95|5,831,384.50|

 XIII. 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) 26 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 RMB627.9077 million.
2. Contingency
(1) Material or contingent matters that exist at the date of the balance sheet
For details of guarantees provided for related parties, please refer to the notes for related parties and related transactions in the notes to this financial statement.
XIV. Enents after balance sheet date
(I) Important non-adjusting events
For details of that the company signed a relocation compensation agreement with Hangzhou Xiacheng District Urban Construction Investment Development Group Co., Ltd (hereinafter referred to as Xiacheng Urban Construction Investment Group) after the period, please refer to Note 13 (II) 2 of this financial statement.
(2) The Company have no significant contingency to disclose, also should be stated
1.Profit distribution
In RMB
|||
|-|-|
|Profit or dividend proposed to bedistributed|Based on the 2017 profit distribution plan reviewed and passed at the 20thmeeting of the 7th Board of Directors on March 26, 2018, and withoutdrawing up statutory surplus reserves, the company used a total of754,010,400 shares at the end of 2017 as the base to distribute cash to allshareholders for every 10 shares. The bonus is RMB 0.5 (including tax), and0 bonus shares will be sent to the company. Don't convert the public reservefund into share capital. The total profit distributed was RMB 37,700,520.00this time. The remaining undistributed profit was RMB 2,260,941,440.41.Theafore-said profit distribution plan still needs to be reviewed and approved bythe shareholders' general meeting.|

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 XV.Other significant events
1.Information of Division
(1) The companies,which have no report divisions or can not disclose the total assets and total liabilities of all report divisions, shall give explanations.
The Company is single in its business, which is mainly for production and sales of steam turbines, gas turbines and auxiliary turbines. Thecompany’s management regard these businesses as a whole to implement management so as to evaluate the business performance, thus there will be no report divisions. According to the product classifications of main business income and main business cost, the Company will make details for them as follows:
||||
|-|-|-|
|Items|Main Business Income|Main Business Cost|
|Industrial Steam Turbine|2,692,843,753.69|1,989,579,236.24|
|Castings and Forging|91,384,682.32|68,739,724.43|
|Auxiliary Engines|118,292,027.16|91,269,179.11|
|Part|219,810,638.04|114,854,559.39|
|Other|186,805,569.85|94,459,151.66|
|Subtotal|3,309,136,671.06|2,358,901,850.83|

2．Other Significant Transactions and Matters influencing theInvestors’ Decisions
1. Matter of Transferring Gas Turbine Research and Development Project
From September 1, 2014 and by August 11, 2017, the actual investment amount of up-front cost for distributed-resource gas turbine research and development was invested with RMB 61,312,900 by the Company, The above-mentioned situations had been in special audit, whose audit report, Special Audit Report on Up-front Cost for Distributed-resource Gas Turbine Research and Development of Hangzhou Turbine Co., Ltd. (Pan-China Audit〔2017〕No.7796), was issued by Pan-China Certified Public Accountant(special general partner) on August 12, 2017
In September 2017, the Company signed Agreement of Transfer of Up-front Cost for Distributed-Resource Gas Turbine Research and Development with Hangzhou Turbine Group, where the Company transferred Project of Research and Development for 50MW Gas Turbine to Hangzhou Turbine Group, of which the transfer price was RMB 61,312,900.00 including tax.
2.Matter of Relocation Compensation for Factories in Shiqiao Road of Hangzhou Turbine Group
According to the planning of the Hangzhou Municipal Government, the property right bodies of 6 companies including Hangzhou Steam Turbine Group and Hangzhou Steam Turbine Company within the plant area of Hangzhou Steam Shiqiao Road factory area were included in the scope of the Expropriation and Relocation Planning. According to the Hangzhou Municipal People's Government's Minutes (Hangfu Minutes[2016] No. 87) on the relevant issues concerning the compensation for the relocation of the Steam Turbine Shiqiao road plant area and the spirit of the minutes (Hangfu Minutes[2016] No. 47)of the special meeting of Hangzhou Municipal
people's Government on the relevant issues concerning speeding up the relocation of the Shiqiao Road Factory
area of Hangzhou Steam Turbine and the Construction of the Hangzhou Steam Turbine Heavy Industry Project,
Hangzhou Municipal Government, in accordance with the principle of "one factory, one policy", determines that
the compensation for the overall relocation of the plant area of Hangzhou Steam Turbine Shiqiao road plant is
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 RMB 1.815 billion, with the compensation contents include the compensation for physical assets such as buildings, structures, housing renovations, equipment, and land within the area of relocation, as well as personnel resettlement fees, compensation fees for shutdown loss and production stoppage loss and incentive fees, and the compensation agreement shall be signed by the Xiacheng Urban Construction Investment Group-the land-making main-body affiliated to Hangzhou Xiacheng District Municipal Government with each relocation unit. The property rights bodies within the scope of the relocation shall complete the relocation by December 31, 2019, and evacuate the houses and hand them over to the land-making main-body of the government, the houses shall not be demolished or damaged without authorization, and the residual value of the houses after the handing over shall be possessed by the Urban Construction Investment Group.
On March 21, 2018, based on the evaluation opinion of Kunyuan Assets Appraisal Co., Ltd (No. 606-2017 Kunnyuan Appraisal Report, No. 609-2017 Kunnyuan Appraisal Report, No. 18-2018 Kunnyuan Appraisal Report,), the company signed the “Relocation Compensation Agreement for Non-residential Buildings on State-owned Land” with Xiacheng Urban Construction Investment Group, and determined that Xiacheng Urban Construction Investment Group shall make full monetary relocation compensation for the Company and its subsidiary the Machinery Company, with the total amount of compensation for various physical assets and expenses is RMB 1,305,950,300.00 (Including the incentive fee of RMB 34,892,770.00), and this aforementioned compensation shall be firstly collected by Hangzhou Steam Turbine Group and then Hangzhou Steam Turbine Group pays such amount to the Company and the Machinery Company. The company and its subsidiary the Machinery Company received the first compensation of 237,658,831.07 transferred from Hangzhou Steam Turbine Group in December 2017, which was listed in the special account payable.
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 XVI. Notes to the Financial Statements of the Parent Co.
(I) Notes to items of parent company financial statements
1. Account receivable
（1）Detailed categories
In RMB
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
||End of term|||||Beginning of term|||||
||Book balance||Bad debt provision|||Book balance||Bad debt provision|||
|Category|||||||||||
|||Proportion||Proportion|Book value||Proportion||Proportion|Book value|
||Amount||Amount|||Amount||Amount|||
|||%||%|||%||%||
|Receivables provided bad|||||||||||
|debt provision in cridit|1,975,235,478.30|98.51%|779,285,370.98|39.45%|1,195,950,107.32|2,177,424,114.16|98.65%|752,473,417.58|34.56%|1,424,950,696.58|
|risk groups|||||||||||
|Account receivable with|||||||||||
|Not minor individual|||||||||||
||29,819,607.69|1.49%|29,819,607.69|100.00%||29,819,607.69|1.35%|29,819,607.69|100.00%||
|amount but bad debt|||||||||||
|provision is provided|||||||||||
|Total|2,005,055,085.99|100.00%|809,104,978.67|40.35%|1,195,950,107.32|2,207,243,721.85|100.00%|782,293,025.27|35.44%|1,424,950,696.58|

 Receivables with individually significant amount and provision for bad and doubtful debts individually provided at the end of the reporting period.
Not applicable
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 Receivable accounts in the group on which bad debt provisions are provided on age basis
In RMB
|||||
|-|-|-|-|
||End of term|||
|Aging||||
||Other receivable account|Bad debt provision|Proportion%|
|Subitem within 1 year||||
|Subtotal within 1 year|478,434,200.92|23,921,710.05|5.00%|
|1-2 years|374,762,394.59|37,476,239.46|10.00%|
|2-3 years|252,914,593.83|75,874,378.15|30.00%|
|Over 3 years|783,630,869.14|642,013,043.32||
|3-4 years|233,487,435.34|140,092,461.20|60.00%|
|4-5 years|241,114,258.39|192,891,406.71|80.00%|
|Over 5 years|309,029,175.41|309,029,175.41|100.00%|
|Total|1,889,742,058.48|779,285,370.98|41.24%|

 Receivable accounts combined within consolidating range for providing of bad debt provisions
|||||
|-|-|-|-|
|Name|End of term|||
||Book balance|Bad debt provision|Providing rate %|
|Combinations of related transactionsin consolidation range|85,493,419.82|||
|Subtotal|85,493,419.82|||

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.
Receivables with provision for bad and doubtful debts based on the balance percentage method in the portfolio Not applicable
(2) Provision of allowance for doubtful debts within this year is RMB35,924,444.57 and no recovery or reversal of provision during the year.
(3) Receivable accounts actually written off in the report period
In RMB
|||
|-|-|
|Items|Amount|
|Uncollectible amount|9,112,491.17|

The significant actual write-off accounts receivable:
In RMB
|||||||
|-|-|-|-|-|-|
||||||Arising from|
||Nature of|||||
||||Reason for||related|
|Name|account|Amount written off||Verification procedures||
||||written-off||transactions(Y/N|
||receivable|||||
||||||)|

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
|||||||
|-|-|-|-|-|-|
||||Uncollectible|The examined and adopted to||
|Shenyang Touping Machanical Co., Ltd.|Goods|3,301,440.00|||No|
||||amount|Board of directors||
||||Uncollectible|The examined and adopted to||
|China Air Separation Engineering Co., Ltd.|Goods|1,674,643.00|||No|
||||amount|Board of directors||
|Huaneng Energy saving Powergeneration Co.,|||Uncollectible|The examined and adopted to||
||Goods|760,000.00|||No|
|Ltd.|||amount|Board of directors||
|Zhongpye Saidi Engineering Technology Co.,|||Uncollectible|The examined and adopted to||
||Goods|758,160.00|||No|
|Ltd.|||amount|Board of directors||
|Hebei Iron and steel Group Yanshan Steel Co.,|||Uncollectible|The examined and adopted to||
||Goods|623,280.00|||No|
|Ltd.|||amount|Board of directors||
|Nei Monggol Runbang Biogechnology Co.,|||Uncollectible|The examined and adopted to||
||Goods|620,000.00|||No|
|Ltd.|||amount|Board of directors||
||||Uncollectible|The examined and adopted to||
|Other|Goods|1,374,968.17|||No|
||||amount|Board of directors||
|Total|--|9,112,491.17|--|--|--|

（4）Receivables account of the top five parties
|||||
|-|-|-|-|
|Name|Amount|Proportion(%)|Bad debt provision|
|Client 1|552,373,954.92|27.55|272,568,290.12|
|Client 2|278,524,230.82|13.89|190,839,875.82|
|Client 3|54,877,438.40|2.74|26,261,537.27|
|Client 4|46,363,500.00|2.31|2,318,175.00|
|Client 5|45,439,245.99|2.27|11,435,017.59|
|Subtotal|977,578,370.13|48.76|503,422,895.80|

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 2. Other account receivable
（1）Chassification
In RMB
||||||||||||
|-|-|-|-|-|-|-|-|-|-|-|
||End of term|||||Beginning of term|||||
||Book balance||Bad debt provision|||Book balance||Bad debt provision|||
|Category|||||||||||
|||Proportion|||Book value||Proportio|||Book value|
||Amount||Amount|Proportion %||Amount||Amount|Proportion %||
|||%|||||n %||||
|Other receivables provided bad|||||||||||
|debt provision in credit risk|9,976,732.52|100.00%|5,665,193.66|56.78%|4,311,538.86|74,189,903.93|100.00%|6,185,197.69|8.34%|68,004,706.24|
|groups|||||||||||
|Total|9,976,732.52|100.00%|5,665,193.66|56.78%|4,311,538.86|74,189,903.93|100.00%|6,185,197.69|8.34%|68,004,706.24|

 Other Receivable accounts with large amount individually and bad debt provisions were provided
Not applicable
Other receivable accounts in the group on which bad debt provisions are provided on age basis
In RMB
|||||
|-|-|-|-|
||End of term|||
|Age||||
||Other receivable account|Bad debt provision|Proportion%|
|Subitem within 1 year||||
|Subtotal within 1 year|1,930,445.58|96,522.28|5.00%|
|1-2 years|165,648.00|16,564.80|10.00%|
|2-3 years|937,097.00|281,129.10|30.00%|
|Over 3 years|5,982,942.24|5,270,977.48||
|3-4 years|1,543,565.90|926,139.54|60.00%|
|4-5 years|472,692.00|378,153.60|80.00%|

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
|||||
|-|-|-|-|
|Over 5 years|3,966,684.34|3,966,684.34|100.00%|
|Total|9,016,132.82|5,665,193.66|62.83%|

Notes：
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 Receivable accounts combined within consolidating range for providing of bad debt provisions
|||||
|-|-|-|-|
|Name|End of term|||
||Book balance|Bad debt provision|Providing rate %|
|Combinations of related transactionsin consolidation range|960,599.70|||
|Subtotal|960,599.70|||

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
Not applicable
Other receivables with provision for bad and doubtful debts based on the other method in the portfolio
Not applicable
（2）Bad debt provision withdrawal, reversed or recovered in the report period.
Provision of allowance for doubtful debts within this year is RMB -520,004.03 and no recovery or reversal of provision during the year.
(3) Other accounts receivable classified by the nature of accounts
In RMB
||||
|-|-|-|
|Nature|Closing book balance|Opening book balance|
|Related party funds||60,000,000.00|
|Deposit|8,081,489.08|13,039,563.14|
|Pretty cash|231,000.00|167,900.00|
|Provisional accounts receivable|1,006,799.70|982,440.79|
|Other|657,443.74||
|Total|9,976,732.52|74,189,903.93|

 (4) Top 5 of the closing balance of Other accounts receivable
In RMB
|||||||
|-|-|-|-|-|-|
|||||Percentage in total other||
|Name of the company|Account property|Book balance|Age||Bad debt provision|
|||||receivable %||
||Deposit in custom|||||
|Shanghai Customs Waigaoqiao Office||3,710,320.94|Over 5 years|37.19%|3,710,320.94|
|China Electric Power Complete||||||
||Deposit in custom|||||
|||800,000.00|Within 1 year|8.02%|40,000.00|
|Equipment Co., Ltd.||||||

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
|||||||
|-|-|-|-|-|-|
|Guoxin Bidding Group Co., Ltd.|Deposit in custom|800,000.00|2-3 years|8.02%|240,000.00|
|Hangzhou Steam Turbine Casting Co.,|Related party|||||
|||578,527.34|Within 1 year|5.80%||
|Ltd.|funds|||||
|Jian Group Co., Ltd.|Deposit in custom|500,000.00|3-4 years|5.01%|300,000.00|
|Total|--|6,388,848.28|--|64.04%|4,290,320.94|

 3. Long-term share equity investment
In RMB
||||||||
|-|-|-|-|-|-|-|
||End of term|||Beginning of term|||
|Items||Impairment|||Impairment||
||Book balance||Book value|Book balance||Book value|
|||provision|||provision||
|Investment on|||||||
||502,919,378.03||502,919,378.03|502,919,378.03||502,919,378.03|
|subsidiaries|||||||
|Total|502,919,378.03||502,919,378.03|502,919,378.03||502,919,378.03|

 (1) Investment on subsidiaries
In RMB
||||||||
|-|-|-|-|-|-|-|
||||||Provided||
|||||||Impairment|
|||Increased this|Current term||current term||
|Company invested in|Beginning of term|||End of term||provision|
|||period|decrease||Impairment||
|||||||End of term|
||||||provision||
|Touping Company|||||||
||20,000,000.00|||20,000,000.00|||
|Hangzhou Heavy|||||||
||360,000,000.00|||360,000,000.00|||
|Industry|||||||
|Hangzhou Auxiliary|||||||
||46,286,513.41|||46,286,513.41|||
|Machine Co.|||||||
|Zhejiang Turbine|||||||
||29,800,389.56|||29,800,389.56|||
|Packaged Co.|||||||
|Zhongneng Co.|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|||

4. Business income and Business cost
In RMB
Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017
||||||
|-|-|-|-|-|
||Amount of current period||Amount of previous period||
|Items|||||
||Income|Cost|Income|Cost|
|Main business|2,056,532,812.35|1,599,774,611.48|2,128,910,906.33|1,546,003,243.12|
|Other business|140,183,662.39|94,531,608.36|14,563,244.25|10,829,495.21|
|Total|2,196,716,474.74|1,694,306,219.84|2,143,474,150.58|1,556,832,738.33|

 5..Investment income
In RMB
||||
|-|-|-|
||Amount of current period|Amount of previous period|
|Items|||
|Long-term equity investment income by Cost method|66,008,407.50|83,728,812.50|
|Investment income received from holding of available-for –sale financial assets|53,014,898.47|2,587,659.70|
|Investment income from disposal of available for sale financial assets|25,121,648.20||
|Financing product investment inocme|23,685,866.69|16,130,017.82|
|Total|167,830,820.86|102,446,490.02|

 XVII. Supplementary Information
1. Particulars about current non-recurring gains and loss
In RMB
||||
|-|-|-|
|Items|Amount|Notes|
|Gains/losses from the disposal of non-current asset|6,608,574.41||
|Tax refund, deduction and exemption that is examined and approved by|||
||1,250,418.38||
|authority exceeding or has no official approval document.|||
|Governmental subsidy calculated into current gains and loess（while closely|||
|related with the normal business of the Company, excluding the fixed-amount|||
||8,945,252.87||
|or fixed-proportion governmental subsidy according to the unified national|||
|standard）|||
|Except the effective hedge business related to the normal operation business|||
|of the Company, the profit and loss in the changes of fair values caused by|||
|the holding of tradable financial assets and tradable financial liabilities as|62,623,000.27||
|well as the investment returns in disposal of tradable financial assets, tradable|||
|financial liabilities and saleable financial assets|||
|Other non-business income and expenditures other than the above|6,505,882.53||
|Less ：Influenced amount of income tax|11,777,992.62||
|Amount of influence of minority interests|3,941,380.48||
|Total|70,213,755.36|--|

Hangzhou Steam Turbine Co.,Ltd. Annual Report 2017 For theCompany’s non-recurring gain/loss items as defined in the Explanatory Announcement No.1 on information disclosure for Companies Offering their Securities to the Public-Non-recurring Gains and Losses and its non-recurring gain/loss items as illustrated in the Explanatory Announcement No.1 on information Disclosure for Companies offering their securities to the public-non-recurring Gains and losses which have been defined as recurring gains and losses, it is necessary to explain the reason.
Not applicable
(II) Net income on asset ratio and earning per share
|||||
|-|-|-|-|
||Weighted|Earnings per share (yuan/share)||
||average net|||
|Profit of the report period||Basic earnings per||
||||Diluted earnings per|
||income on|||
|||share|share|
||asset %|||
|Net profit attributable to common shareholders of the Company|1.12%|0.09|0.09|
|Net profit attributable to the common owners of the PLC after deducting of|-0.02%|-0.002|-0.002|
|non-recurring gains/losses||||

 XII. Documents available for inspection
I. Annual Report 2017 with signature of the Chairman;
II. Original copy of theAuditors’ Report with the seals and signatures of the legal representative, CFO, Accounting Manager of the Company, and the Pan-China CPA and signed by certified accountants.
III. All of the originals of theCompany’s documents and public notices publicized by the presses designated by China Securities Regulatory Commission in the report period;
IV.Original copy of Resolutions of the 20th Meeting of the 7th Term of Board with signatures of directors. Hangzhou Steam Turbine Co., Ltd.
Chairman of the Board: Zheng Bin
March 28, 2018