Stock code：200771 Stock ID：Hangqilun B Announcement No. 2016-29
Hangzhou Steam Turbine Co., Ltd.
Announcement about Extending Engaging of Routine related Transaction
Contracts
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. Summary of the related transaction
1. For the previous contracts about the related transactions have expired. The company is about to
reengage the Routine related transaction contracts to satisfy the needs of normal operation. The
contracts will be involved with the followings: (1) Purchasing generator unit from Hangzhou
Hangfa Generator Equipment Co., Ltd.; (2) Purchasing packing boxes from Hangzhou Nanhua
Wooden Packaging Co., Ltd.; (3)Purchasing gear boxes and turning gears from Hangzhou
Nanfang Tongda Gears Co., Ltd.
Hangfa Power Equipment Company and Nanhua Wood Packing-box Company and Nanfang
Tongda Gear Company are the companies controlled by the company’s controlling
shareholder-Hangzhou Steam Turbine Incorporation , therefore the transaction constitutes a related
transaction.
2. The 28th meeting of the 6th term of Board was held on March 17, 2016，on which the
proposal of routine related transactions was examined，The company has 11 directors，It was
adopted by the non-related directors with 6 votes in favor, 0 objection, and 0 waive.Thereinto, Nie
Zhonghai, Yan Jianhua, Yang Yongming, Zheng Bin and Ye Zhong, the Company’s controlling
board of shareholders who are the part of affiliated directors, withdrew from voting for this
proposal.The Company’s independent directors declared prior approval and independent opinions
for this related transaction.
This proposal is subject to examination of the Shareholders’ Meeting 2015, and Hangzhou Steam
Turbine Power Group Co., Ltd. shall waive from voting of this proposal.
3．None of the aforesaid routine transactions is constituting major asset reorganizing and backdoor
listing as described by “ Criteria of Major asset Reorganizing of listed companies”. Therefore
none of them are subject to approval by the authorities.
II. Profiles of the leated parties
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1.Profiles
(1) 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
Periods Turnover Net profit Gross Assets Net asset
Year 2015 190,138,389.93 -7,966,023.73 484,318,791.46 103,544,831.49
Year 2014 232,010,314.56 1,054,776.15 402,705,958.09 111,511,420.14
3. Relationship with the Company
Hangzhou Hangfa Generator Equipment Co., Ltd. is a holding subsidiary of HSTG, in which
HSTG is holding 85% 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.
(II) 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
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(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
Periods Turnover Net profit Gross Assets Net asset
Year 2015 13,432,890.17 1,337,221.53 16,195,754.22 15,260,109.17
Year 2014 13,009,097.29 1,753,430.66 17,104,881.97 16,422,887.64
3. Relationship with the Company
Hangzhou Nanhua Wooden Package Co., Ltd. is a holding subsidiary of HSTG, in which HSTG is
holding 30% 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.
(III) 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
Periods Turnover Net profit Gross Assets Net asset
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Year 2015 36,426,025.63 4,194,733.50 52,859,340.06 28,844,792.27
Year 2014 64,726,158.79 4,611,531.15 62,661,251.91 29,650,058.77
3. Relationship with the Company
Hangzhou Nanfang Tongda Gears Co., Ltd. is a holding subsidiary of HSTG, 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 the Company’s product. Some of the industrial steam turbines are required to
maintain certain speed by using of gear boxes.
III. Descriptions of the related transactions
No Title of the agreement Related Subjects of the Price of the trade Term of agreement
parties related
transactions
1 Agreement purchasing Hangzhou To purchase steam The price pertaining January 1,
generators Hangfa turbine generators to the specific items 2016-December 31,
Generator form related party signed in the 2018
Equipment contract of the
Co., Ltd. related transaction
with in accordance
with the agreement
2 Agreement of Hangzhou Purchasing The price pertaining January 1,
purchasing packaging Nanhua packaging to the specific items 2016-December 31,
material Wooden material from signed in the 2016
Packaging related party contract of the
Co., Ltd. related transaction
with in accordance
with the agreement
3 Agreement of Hangzhou Purchasing of The price pertaining January 1,
purchasing gearboxes Nanfang gearboxes and to the specific items 2016-December 31,
Tongda Gears
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Co., Ltd. jiggers signed in the 2016
contract of the
related transaction
with in accordance
with the agreement
IV. Pricing policies and basis
Pricing principles：It is under the principles of voluntary, air, and beneficiary. Pricing strategy is
also fair and reasonable. It is for the goodies of the Company’s operation and the interests of the
shareholders. The legal procedures are complying with the regulations and laws, and no illegal
action or those harmful to the benefit of shareholders, especially small-mid shareholders.
Basis of pricing ：Government instructive prices are adopted wherever available, and upon
negotiation when they are not available. Besides, Hangzhou Hangfa Power Equipment Co.,Ltd
guaranteed that the price of the turbine generators supplied to the company shall not be higher
than the price of the same kind of generator supplied to any other parties during the same period;
Nanhua Wood Packing-box Company and Nanfang Tongda Gear Company guaranteed that the
transaction conditions or preferential transaction terms provided to a third party shall apply to the
company.
V. Influence of related transactions
For the needs of business operation, The company’s purchasing of generators, gearboxes, turning
gears and packing boxes from the related parties is for matching sales of the company’s
product-the steam turbine. The related transaction shall optimize the allocation of the production
resources, effectively raise the company’s operating efficiency and make the company better doing
the company’s major business.Pricing procedures are on fair basis without impairing interest of
the Company nor any shareholder’s.No significant impact will be constituted to the Company’s
financial condition, operating result, and cash flow by this related transaction.
VI. Amount of related transactions already occurred since the opening of current year to present
In RMB
No Related parties Amount occurred
2 Hangzhou Hangfa Power Generating 20,668,763.74
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Equipment Co., Ltd.
3 Hangzhou Nanfang Tongda Gears Co.,
94,358.97
Ltd.
4 Hangzhou Nanhua Wooden Packaging
454,916.03
Co., Ltd.
Total： 21,218,038.74
VII. Consent of independent directors in advance and their opoinions
The Company’s independent directors has reviewed the relevant information of related
transaction above, and provided prior-approval submissions, which agree to submit the relevant
information to be examined by the 28th meeting of the 6th board of directors.
The Company’s independent directors has declared independent opinions to this proposal,
considering that the content of the above related transaction agreement is specific and explicit and
the transaction pricing principle is fair, reasonable and complying with the market pricing
principle, which is conforming to the benefit of both listed companies and all shareholders, and no
benefit damaging situation of listed companies and minority shareholders exists. When the
Company’s board of directors was examining the related transaction agreement, the affiliated
directors withdrew from voting, which made the examination procedure of the related transaction
lawful and compliant.
VIII. Documents for reference
1. Resolutions of the 28th meeting of the 6th Term of Board;
2. Independent Opinions of Independent Directors
3.Daily Related Transaction Agreement of the Company signed with the Above Related Parties
The Board of Directors of
Hangzhou Steam Turbine Co., Ltd.
March 19, 2016
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