Stock Code: 200771 Stock ID: Hangqilun B Announcement No. 2015-13
Hangzhou Steam Turbine Co., Ltd.
Related Transactions Occurred in 2014 and Projected for
Year 2015
The members of the Board and the Company acknowledge being responsible for the truthfulness, accuracy, and completeness of the announcement. Not any false record, misleading statement or significant omission carried in this announcement.
I. Profiles of the routine related transactions
(I) Introduction of the related transaction
Routine related transactions of the Company are mainly purchasing of materials and fuel from related parties; sales of products to related parties; and receiving or providing of services to the related parties. For profiles of the related parties please go to part III of this report.
The routine related transactions to be made in year 2015 is project to RMB633,381,000, and that actually occurred in 2014 was RMB329,732,000.
The 19th meeting of the 6th term of Board was held on March 26, 2015. The proposal about routine related transactions occurred in 2014 and project for year 2015 was examined at the meeting. Director Nie Zhonghai, Yan Jianhua, Yang Yongming, Ye Zhong, and Zhen Bin waived from the voting. As the resolution, the proposal was passed with all 6 votes in favor.
This proposal is subject to examination of theShareholders’ Meeting 2014, and Hangzhou Steam Turbine Power Group Co., Ltd. shall waive from voting of this proposal.
(II) Categories and amounts of the related transactions predicted
In RMB10 thousand
|||||||||||
|-|-|-|-|-|-|-|-|-|-|
||||||||Occurred last year|||
||||||Contract|||||
||Type of related||||amount or|||||
||||Related parties||||||Percentage in|
||transaction||||projected||Amount|||
||||||||||similar|
||||||amount||occurred|||
||||||||||business %|
|Purchasing of materialfrom related party||Hangzhou NanfangtongdaGears Co., Ltd.||1,600.00||1,625.29||1.12%||
|||Hangzhou NanhuaWooden Packaging Co.,Ltd.||1,200.00||1,252.69||0.86%||
|||Hangzhou Hangfa PowerGenerating EquipmentCo., Ltd.||12,000.00||11,983.40||8.26%||
|||Greensol Co.||5,000.00||4,986.83||3.44%||
|||HSTG (Hangzhou) UnitedInstitutes Co., Ltd.||-||1.14||||
|||Sub-total||19,800.00||19,849.35||13.68%||
|Purchasing of fuel andpower from the relatedparties||Hangzhou Steam TurbinePower Group Co., Ltd.||1,380.00||1,377.35||25.14%||
|||Sub-total||1,380.00||1,377.35||25.14%||
|Sales of products ormerchandises of theCompany to relatedparties||Greensol Co.||200.00||219.90||0.06%||
|||Hangzhou Hangfa PowerGenerating EquipmentCo., Ltd.||1,000.00||1,052.78||0.29%||
|||Hangzhou Steam TurbineEngineering Co., Ltd.||30,000.00||2,504.07||0.68%||
|||Hangzhou Steam TurbineAutomobile Sales ServiceCo., Ltd.||0.1||0.10||||
|||Hangzhou Steam TurbineCompressor Co., Ltd.||3,000||||||
|||Sub-total||34,200.10||3,776.85||1.03%||
|Labor service to relatedparties||Hangzhou Steam TurbinePower Group Co., Ltd.||10.00||9.43||0.21%||
|||Hangzhou Steam TurbineCompressor Co., Ltd.||50.00||||||
|||Sub-total||60.00||9.43||0.21%||
|Labour & servicesaccepted from the relatedparties||Hangzhou Steam TurbineAutomobile Sales ServiceCo., Ltd.||6,400.00||6,449.21||19.69%||
|||Hangzhou Steam TurbinePower Group Co., Ltd.||1,300.00||1,312.48||4.01%||
|||HSTG TechnologyAssociation||-||0.38||||
|||Hangzhou Steam TurbineIndustrial Co.||198.00||198.15||0.60%||
|||Sub-total||7,898.00||7,960.22||24.30%||
|Products andmerchandises sold byrelated parties as agency||||||||||
|||Sub-total||0||0||0||
|Sales of products onbehalf of the relatedparties||||||||||
|||Sub-total||0||0||0||
|||Total||63,388.10||32,973.20||||

(III) Accumulation of related transactions from the beginning of year to the date of disclosure
In RMB Yuan
||||
|-|-|-|
|No.|Name of the parties|Total of relatedtransactionsoccurred|
|1|Hangzhou Hangfa Power Generating Equipment Co., Ltd.|6,015,384.62|
|2|Hangzhou Nanfangtongda Gears Co., Ltd.|51,175.21|
|3|Hangzhou Nanhua Wooden Packaging Co., Ltd.|1,611,450.71|
|4|Hangzhou Steam Turbine Electronic Valve Co., Ltd.|770,000.00|
|5|Hangzhou Steam Turbine Power Group Co., Ltd.|2,522,384.38|
|6|Hangzhou Steam Turbine Automobile Sales Service Co., Ltd.|9,571,543.65|
|Sum of above||20,541,938.57|

Note: tax is not included here above.
II. Introduction of related parties and relationship
(I) Hangzhou Steam Turbine Power Group Co., Ltd.
1. Profiles
(1) Date of incorporation: December 14, 1992
(2) Registered address: No. 357 Shiqiao Road Hangzhou City
(3) Office address: Block A, 68 Qingchun Road East, Hangzhou
(4) Enterprise property: sole state-owned corporation
(5) Legal representative: Mr. Nie Zhonghai
(6) Registered capital: RMB800 million
(7) Taxation registration No. 330191143071842
(8) Business scope: Manufacturing and processing: textile machinery, paper-making machinery, pump, casting products, electrical tools, gear box, thermal transmitter, digital controlling device, and spare parts of the above (limited to the subsidiaries); Contracting of domestic and overseas machinery engineering projects, export of above equipments and materials, provide labor services for above overseas projects. Thermal power plant project and equipment engineering; wholesale and retail: products and spare parts manufactured by members of the group, and technical research, consulting, and service of above products; Provide materials, equipments, and spare parts to members of the Group, water and power supply (other than installation and maintaining of power supply equipment); Including the business scope of subsidiaries.
(9) Actual holder: Hangzhou State-owned Asset Administration Committee
2. Recent financial information (on consolidated range)
In RMB Yuan
||||||
|-|-|-|-|-|
|Periods|Turnover|Net profit|Gross Assets|Net asset|
|Year 2013|59,137,492,906|1,053,139,836|26,472,605,683|7,391,351,617|
|Year 2014|58,068,355,651|748,352,118|27,672,690,939|8,007,459,421|

 3. Relationship with the Company
Hangzhou Steam Turbine Power Group Co., Ltd. (“HSTG” or “the Group”) is holding 479,824,800 state-owned shares account for63.64% of the capital shares of the Company, and is the holding shareholder of the Company. It is complying with Article 10.1.3 (I) of Share Listing Rules of Shenzhen Stock Exchange. HSTG is the related legal person of the Company. This is a related transaction.
4. Description of related transactions and their necessity
The Company rents lands, office spaces, workshops, warehouses from HSTG; the water and power supply were provided by HSTG; the trade mark was authorized by HSTG. For these have been the basic conditions the Company needs for production and operation, these transactions will exist constantly.
(II) Hangzhou Hangfa Generator Equipment Co., Ltd.
1. Profiles
(1) Incorporated on: March 22, 1993
(2) Registered address: Tonger Village, Linpu, Xiaoshan
(3) Office address: 128 Shixinzhong Road, Xiaosha
(4) Enterprise property: state-owned shareholding corporation
(5) Legal representative: Yan Jianhua
(6) Registered capital: RMB 80 million
(7) Taxation registration No. 330181142915193
(8) Business scope: hydropower station equipment, parts of steam turbine generators, electric motor, power plant and mining equipment, automatic control parts, export of products and technologies,
(9) The controlling shareholder: Hangzhou Steam Turbine Power Group Co., Ltd.
2. Recent financial information
In RMB Yuan
||||||
|-|-|-|-|-|
|Periods|Turnover|Net profit|Gross Assets|Net asset|
|Year 2013|252,824,966|1,811,671|416,128,675|105,456,644|
|Year 2014|232,010,314|1,065,603|392,660,285|102,522,247|

3. Relationship with the Company
Hangzhou Hangfa Generator Equipment Co., Ltd. is a holding subsidiary of HSTG, in which HSTG is holding85% of share equity. For Hangfa is under the common control with the Company, it is regarded as related legal person according to Article 10.1.3 (II)– “Entity or other organizations directly or indirectly controlled by aforesaid legal entity other than the PLC and its holding subsidiaries;” of the Share Listing Rules of Shenzhen Stock Exchange. Therefore it is recognized as the related entity of the Company. This is a related transaction.
4. Description of related transactions and their necessity
The major related transactions with Hangzhou Hangfa Generator Equipment Co., Ltd. were purchasing of steam turbine generators. It was to satisfy the demand of customers. Some customers require the Company to provide generators along with the steam turbines. Hangfa has been providing products to the Company since long before it was given to HSTG.
(III) Hangzhou Nanhua Wooden Packaging Co., Ltd.
1. Profiles
(1) Incorporation date: December 31, 2003
(2) Registered address: 62 Xingqiao Road North, Xingqiao, Yuhang, Hangzhou
(3) Office address: 62 Xingqiao Road North, Xingqiao, Yuhang, Hangzhou
(4) Enterprise property: state-participated limited company
(5) Legal representative: Jiang Yonggen
(6) Registered capital: RMB2 million
(7) Taxation registration No. 330125143326331
(8) Business scope: manufacturing, processing, and sales of wooden products (wooden packaging material); sales of construction material, decoration material; all legal items not subject to approval of authorities.
(9) The controlling shareholder: Hangzhou Steam Turbine Power Group Co., Ltd.
2. Recent financial information
In RMB Yuan
||||||
|-|-|-|-|-|
|Periods|Turnover|Net profit|Gross Assets|Net asset|
|Year 2013|15,592,130|1,978,144|18,083,298|17,069,456|
|Year 2014|13,009,097|1,753,431|17,104,882|16,422,888|

3. Relationship with the Company
Hangzhou Nanhua Wooden Package Co., Ltd. is a holding subsidiary of HSTG, in which HSTG is holding30% of share equity. For it is under the common control with the Company, it is regarded as related legal person according to Article 10.1.3 (II)– “Entity or other organizations directly or indirectly controlled by aforesaid legal entity other than the PLC and its holding subsidiaries;” of the Share Listing Rules of Shenzhen Stock Exchange. Therefore it is recognized as the related entity of the Company, and this is a related transaction.
4. Description of related transactions and their necessity
Related transactions with Hangzhou Nanhua Wooden Packaging Co., Ltd. were mainly purchasing
of wooden packaging material which were necessary for shipping of the products.
(IV) Hangzhou Nanfang Tongda Gears Co., Ltd.
1. Profiles
(1) Date of incorporation: January 25, 2005
(2) Registered address: 130 Stadium Road, Xiacheng District, Hangzhou
(3) Office address: 601, Block B, Lingjun World, 10 Chaowang Road
(4) Enterprise property: state-participated limited company
(5) Legal representative: Mr. Wang Zhenfeng
(6) Registered capital: RMB6 million
(7) Taxation registration No. 330103770809041
(8) Business scope: whole selling and retailing of gear boxes, gear speed reducer, steam turbine and parts, steel, electro-mechanism equipment (exclude cars), common machinery, hardware& electric materials.
(9) The controlling shareholder: Hangzhou Steam Turbine Power Group Co., Ltd.
2. Recent financial information
In RMB Yuan
||||||
|-|-|-|-|-|
|Periods|Turnover|Net profit|Gross Assets|Net asset|
|Year 2013|92,637,358|7,473,131|68,861,616|32,028,528|
|Year 2014|64,726,159|6,128,619|62,661,252|29,650,059|

 3. Relationship with the Company
Hangzhou Nanfang Tongda Gears Co., Ltd. is a holding subsidiary of HSTG, in which HSTG is holding30% of share equity. For Hangfa is under the common control with the Company, it is regarded as related legal person according to Article 10.1.3 (II)– “Entity or other organizations directly or indirectly controlled by aforesaid legal entity other than the PLC and its holding subsidiaries;” of the Share Listing Rules of Shenzhen Stock Exchange. Therefore it is recognized as the related entity of the Company, and this is a related transaction.
4. Description of related transactions and their necessity
The Company is mainly purchasing gear boxes and jigger devices from Nanfang Tongda. These are essential to theCompany’s product. Some of the industrial steam turbines are required to maintain certain speed by using of gear boxes.
(V) Hangzhou Steam Turbine Industrial Co., Ltd.
1. Profiles
(1) Date of incorporation: February 11, 2004
(2) Registered address: No. 357 Shiqiao Road Hangzhou City
(3) Office address: No. 357 Shiqiao Road Hangzhou City
(4) Enterprise property: state-participated limited company
(5) Legal representatives: Qiu Jinyong
(6) Registered capital: RMB2.5 million
(7) Taxation registration No. 330103757237210
(8) Business scope: manufacturing and processing of: steam turbine parts, electronic tool parts, mining equipment parts; wholesaling and retailing of: home electric appliances, grocery, food, agriculture products (other than those under national control), stationery; service: restaurant, out-campus education and training programs, residential services. All legal items not subject to approval of authorities.
(9) The controlling shareholder: Hangzhou Steam Turbine Power Group Co., Ltd.
2. Recent financial information
In RMB Yuan
||||||
|-|-|-|-|-|
|Periods|Turnover|Net profit|Gross Assets|Net asset|
|Year 2013|7,235,834|-1,695,443|13,265,099|6,905,466|
|Year 2014|14,147,312|4,975,786|15,662,091|9,381,252|

 3. Relationship with the Company
Hangzhou Steam Turbine Industrial Co., Ltd. is a holding subsidiary of HSTG, in which HSTG is holding10% of share equity. For it is under the common control with the Company, it is regarded as related legal person according to Article 10.1.3 (II)– “Entity or other organizations directly or indirectly controlled by aforesaid legal entity other than the PLC and its holding subsidiaries;” of the Share Listing Rules of Shenzhen Stock Exchange. Therefore it is recognized as the related entity of the Company, and this is a related transaction.
4. Description of related transactions and their necessity
Hangzhou Steam Turbine Industrial Co., Ltd. was reconstructed from infrastructure departments of HSTG. The related transactions with it are mainly supporting services and medical services which are necessary for the Companydoesn’t have these departments.
(VI) Hangzhou Steam Turbine Automobile Sales& Service Co., Ltd.
1. Profiles
(1) Date of incorporation: September 2, 1998
(2) Registered address: No. 357 Shiqiao Road Hangzhou City
(3) Office address: No. 357 Shiqiao Road Hangzhou City
(4) Enterprise property: state-participated limited company
(5) Legal representative: Yao Binglin
(6) Registered capital: RMB5 million
(7) Taxation registration No. 330103710976614
(8) Business scope: wholesaling and retailing of: automobiles (except for sedan cars) and parts,
metal material, construction material, electronic machine and instruments. Service: cargo
transportation, automobile repairing (class B), all legal items not subject to approval of authorities.
(9) The controlling shareholder: Hangzhou Steam Turbine Power Group Co., Ltd.
2. Recent financial information
In RMB Yuan
||||||
|-|-|-|-|-|
|Periods|Turnover|Net profit|Gross Assets|Net asset|
|Year 2013|336,444,474|8,807,933|39,496,319|24,540,529|
|Year 2014|78,043,407|8,445,352|42,424,592|27,985,880|

3. Relationship with the Company
Hangzhou Steam Turbine Automobile Sales Co., Ltd. is a holding subsidiary of HSTG, in which HSTG is holding30% of share equity. For it is under the common control with the Company, it is regarded as related legal person according to Article 10.1.3 (II)– “Entity or other organizations directly or indirectly controlled by aforesaid legal entity other than the PLC and its holding subsidiaries;” of the Share Listing Rules of Shenzhen Stock Exchange. Therefore it is recognized as the related entity of the Company, and this is a related transaction.
4. Description of related transactions and their necessity
Related transactions with Hangzhou Steam Turbine Automobile Sales& Service Co., Ltd. are mainly cargo transportation, international cargo agency, employee transportation, and vehicle repairing services.
The Company does not have transportation division, therefore accepting of these services are necessary.
(VII) Hangzhou Steam Turbine Engineering Co., Ltd.
1. Profiles
(1) Date of incorporation: September 30, 2011
(2) Registered address: 18 Street No. 22, Technical Development Zone, Hangzhou
(3) Office address: 29,30 Floor, Hongcheng International Building, 396 Juyuan Road, Xincheng, Qianjiang, Hangzhou
(4) Enterprise property: state-controlled company limited
(5) Legal representative: Ye Zhong
(6) Registered capital: RMB200 million.
(7) Taxation registration No. 330100583208910
(8) Main business scope: general contracting of power supply projects; design and installation of: electro-mechanical equipment, mid-small scale thermal powerplant, energy saving technical reconstruction and services, technical consultancy; import and export of goods; whole selling of: packaged equipment, metal material, electronic installations, wires, cables, instruments, fire-resistance materials. (as stipulated by the authority)
(9) The controlling shareholder: Hangzhou Steam Turbine Power Group Co., Ltd.
2. Recent financial information
In RMB Yuan
||||||
|-|-|-|-|-|
|Periods|Turnover|Net profit|Gross Assets|Net asset|
|Year 2013|487,855,239|-223,249|689,529,544|170,337,700|
|Year 2014|243,873,457|-1,023,900|705,908,866|169,313,800|

 3. Relationship with the Company
Hangzhou Steam Turbine Engineering Co., Ltd. is a holding subsidiary of HSTG, in which HSTG is holding72.25% of share equity. For it is under the common control with the Company, it is regarded as related legal person according to Article 10.1.3 (II)– “Entity or other organizations directly or indirectly controlled by aforesaid legal entity other than the PLC and its holding subsidiaries;” of the Share Listing Rules of Shenzhen Stock Exchange. Therefore it is recognized as the related entity of the Company, and this is a related transaction.
4. Description of related transactions and their necessity
To satisfy the needs of business operation of both parties, sales of steam turbines to Hangzhou Steam Turbine Engineering Co., Ltd. is a support to theCompany’s shares force.
(VIII) Hangzhou Hangqilun Compressor Co., Ltd.
1. Profiles:
(1) Date of incorporation: July 9, 2014
(2) Registered address: No. 357 Shiqiao Road Hangzhou City
(3) Office address: No. 357 Shiqiao Road Hangzhou City
(4) Type of enterprise: state-owned limited company
(5) Legal representative: Yan Jianhua
(6) Registered capital: RMB10 million
(7) Main business scope:
Licensed items: manufacturing of rotating machinery and equipment such as compressors (within expiration period). General items: services such as design, development, technical consulting, repairing, and reformation of compressors. Design of integrated compressor projects. Wholesale and retail of parts and material related to compressors.
(8) The main shareholder: Hangzhou Steam Turbine Power Group Co., Ltd.
2. Recent financial information
In RMB Yuan
||||||
|-|-|-|-|-|
|Periods|Turnover|Net profit|Gross Assets|Net asset|
|Year 2014|0|-4,942,423|21,888,851|2,145,732|

3. Relationship with the Company
HSTG is holding63.64% of theCompany’s share capital as the controlling shareholder. While it is
also holding40% of the share capital of the Compressor Company. Therefore the Compressor
Company is under the common control with the Company, it is regarded as related legal person
according to Article 10.1.3 (II)– “Entity or other organizations directly or indirectly controlled by
aforesaid legal entity other than the PLC and its holding subsidiaries;” of the Share Listing Rules
of Shenzhen Stock Exchange. Therefore it is recognized as the related entity of the Company.
4. Description of related transactions and their necessity
The Company is mainly providing steam turbine products and processing and installation to the Compressor Company.
Engaging of the contracts between the Company and the Compressor Company was for the expanding of theCompany’s market share. For compressors and steam turbines are at the same stream of production, the co-operation will benefit the competition of the both parties.
III. Ability of carrying out contract of the related parties
Steady and efficient business pattern have been built in relation to the above related parties. All of the above related parties are in good business and financial situation, and are capable to carry out the contracts engaged with the Company. The Board deems that all of the contracts engaged with the above parties are able to be carried out..
IV. Main contents of the related transactions
1. Pricing policies and basis of the transactions
The above related transactions were conducted under the principles of trustfulness, equality, and voluntary. All pricing are with reference to market prices. In case bidding invitation is required as market routine, the prices will be decided by open and legal procedures.
2. Entering of agreements
The Company has entered the general agreements with the above related parties, and detailed contracts were engaged on each particular transaction.
3. Payment and clearance
According to the agreement provided by the contracts.
V. Purposes and influences of the related transactions on the
company
1. For the necessity of the related transactions please go to the profiles of parties above.
2. Impact of the related transactions on the Company
The Company sells products to some of the related parties to increase demand of theCompany’s products, as well as increase the efficiency of sales process including transportation, packaging. This enables the Company to focusing on its main business. All prices are on fair prices without impairing theCompany’s interests.
3. Legality of the process of transactions
The pricing mechanisms of the related transactions are examined by the Board and subject to approval of theshareholders’ meeting. Related directors and shareholders have waived from voting of such proposals.
VI. Independentdirectors’ opinions
The above related transactions are complying with the Company Law, the Articles of Association,
and related laws and regulations. They were conducted through legal examining procedures and satisfying the needs of normal business operation of the Company. Pricing was on fair basis and no interests of the Company or the mid-small shareholders were impaired.
VII. Document Ready for Inquiring
1. Resolutions of the 19th meeting of the 6th term of Board;
2. Independent opinions of the independent directors on the routine related transactions.
The Board of Directors of
Hangzhou Steam Turbine Co., Ltd.
March 26, 2015