Stock Code: 200771 Stock ID: Hangqilun B Announcement No. 2016-37
Hangzhou Steam Turbine Co., Ltd.
Announcement on the provision for impairment of
assets of 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.
The 6th term of Board held its 28th Meeting on March 17, 2016, The meeting examined the
Proposal of the provision for impairment of assets, This proposal was adopted with 11 votes in
favor, 0 objection and 0 waive.
The amount of the provision for impairment of assets of year 2015 of the company is
RMB245,130,878.11, the detail of which is announced as follows:
I.The overview of the provision for impairment of assets
For fairly reflecting the company’s assets value, according to the Accounting Standards for
Enterprises and Regulations on Provision of Asserts Impairment and Write-off of Assets for
Enterprises, and based on the principle of prudence, the company has checked each asset of the
consolidated financial statements by the end of the reporting period and has assessed that there
would be some impairment of assets, then determined the need for the provision for impairment of
assets. The assets of the provision for impairment of asset mainly included accounts receivable,
other receivables and inventory. The total amount of the provision of for impairment of assets is
RMB 245,130,878.11, which was detailed as follows:
The information table of the company’s provision for impairment of assets for year 2015
In RMB
Amount of each corresponding item
Lessen in the current
Items on impairment
Beginning Provision in the period
of assets Ending balance
balance current period
Reco
Write off
very
Provision for bad
1 610,307,568.28 190,166,947.80 5,695,365.27 794,779,150.81
debts( accounts
1
receivable)
Provision for bad
2 debts( other 8,603,524.17 -64,824.40 285,250.00 8,253,449.77
receivables)
Provision for
3 inventory price 158,244.58 55,028,754.71 2,198,984.63 52,988,014.66
falling
Total 625,852,490.69 245,130,878.11 - 8,179,599.90 862,803,768.90
II. The confirmation standard and method of provision on the provision for impairment of
assets
The main assets of the provision for the impairment of assets included accounts receivable,
other receivables and inventory.
I. The amount of the provision for bad debts of accounts receivable of year 2015 is RMB
190,102,123.40. The confirmation standard and method of provision on the provision for bad
debts of accounts receivable are:
(1)Recognition and providing of bad debt provision on individual receivable account with large
amount
Basis of recognition or standard amount of
Accounts take over 10% 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
Combined range of association Other method
Bad debt provisions are provided on age analyze basis in the group
Rate of provision on receivable Rate of provision on other receivable
Age
account account
Within 1 year)included) 5.00% 5.00%
1－2 years 10.00% 10.00%
2－3 years 30.00% 30.00%
3－4 years 60.00% 60.00%
4－5 years 80.00% 80.00%
Over 5 years 100.00% 100.00%
(3) Receivable accounts with minor amount but bad debt provisions are provided individually
Basis of providing bad debt individually When there is significant difference between the current
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value of future cash flow of the receivable account and
the current value of future cash flow of the group
Impairment test performed individually, bad debt
Basis of bad debt provision provision will be provided at the difference of expected
cash flow lower than the book value.
2. The amount of the provision for inventory falling price of year 2015 is RMB
55,028,754.71, and the confirmation standard and method of provision on the
inventory falling price are:
On the balance sheet date, the inventory was the lower result between the results calculated
by cost and net realized value, and according to single inventory/inventory category, the balance
of the costs that was higher than the net realized value is the amount of the provision for inventory
falling price. As to the inventory directly used for sales, under the normal production and
operation process, the net realized value of the inventory shall be determined by the amount that
calculated by the estimated sales price of the inventory minus the estimated sales expenses and
relevant taxes and fees; as to the inventory needed processing, under the normal production and
operation process, the net realized value of the inventory shall be determined by the amount that
calculated by the estimated sales price of the final products minus the related processing costs and
the estimated sales expenses and relevant taxes and fees; on the balance sheet date, under one item
inventory that part have contacted price and the other part have no contracted price, the net
realized value of the inventory shall be determined respectively and be compared with the
corresponding costs, and the amount of provision for inventory price falling and the amount of
recovery shall be respectively determined.
III. The influence of the provision for impairment of assets on the company’s financial status
The company’s provision for the impairment of assets leads to the decrease of
RMB245,130,878.11 on the net profits in the company's consolidated financial statements of year
2015, so that there was a decrease of RMB 245,130,878.11 on the net profits of year 2015 that are
attributable to the company’s shareholders.
IV.The review process of the provision for impairment of assets
The item of the provision for impairment of assets has been examined and adopted in the
company’s 28th board meeting of the 6th session board of directors. Due to the amount of the
provision for impairment of assets exceed the 50% audited net profits of the company of year
2015, according to the regulations of the Stock Listing Rules stipulated by the Shenzhen stock
exchange, the item of provision shall be examined and adopted in the general shareholder meeting.
V.The reasonableness explanation of the provision for impairment of assets by the board of
directors
The board of directors reckoned that: the provision for impairment of assets was in
accordance with the Accounting Standards for Enterprises and the company’s management
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institution on provision for impairment of assets, and that was in line with the principle of
prudence and was reasonable, objectively and fairly reflected the company’s financial status, so
the board agreed the provision for impairment of assets. The company shall performance the
review process by strictly conforming to the provisions stipulated by the Regulations on Provision
of Asserts Impairment and Write-off of Assets for Enterprises (Revised in 2015).
VI.The independent opinions on the provision for impairment of assets from independent
directors
The company has carried out the provision for impairment of assets of year 2015 by
conforming to the Accounting Standards for Enterprises and relevant regulations, which was in
line with the company’s actual situation and the company law, the articles of association and
relevant regulation and laws, with standardized procedure for reviewing, and there was no
situation that would jeopardize the interests of the company and the minority shareholders. The
provision for impairment of assets was agreed.
VII.The examination opinions on the company’s provision for impairment of
assets by the board of supervisors
The board of supervisors reckoned that: the company's provision for impairment of assets was in
accordance with the Accounting Standards for Enterprises and relevant regulations, which fairly
reflected the company’s assets value and operating results. The decision making procedure of the
proposal on provision for impairment of assets was in line with the law, and the provision for
impairment of assets was agreed.
VIII. Documents for reference
1. Resolutions of the 28th meeting of the 6th Term of Board;
2. Resolutions of the 14th Meeting of the 6th Supervisory Committee
3. Independent Opinions of Independent Directors
The Board of Directors of
Hangzhou Steam Turbine Co., Ltd.
March 19, 2016
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