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Stock Code: 200771 Stock ID: Hangqilun B Announcement No. 2016-59

Announcement of Hangzhou Steam Turbine Co., Ltd.

on External Guarantee

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.

¢ñ. Overview of the Guarantee

Hangzhou Steam Turbine Heavy Industry Co., Ltd. a wholly-owned subsidiary of the company,

has made an application of special fund to China Development Bank Zhejiang Branch in respect

of its project-Annual output of 450 units (sets) of industrial steam turbine, gas turbine and

compressor and the matching engineering base construction(Please see details of Hangzhou Heavy

Machinery Company¡¯s application for special fund in the Announcement on the Resolution of the

first Meeting of the Company¡¯s Seventh Board of Directors(Announcement No:2016-55), with

the amount applied for is RMB 0.208 billion). China Development Bank required the company to

provide guarantee for Hangzhou Heavy Machinery Co., Ltd. The company planned to provide

guarantee in the form of equity pledge for Hangzhou Heavy Machinery Co., Ltd that the company

shall pledge part of its holding shares of Bank of Hangzhou. As of the date of this announcement,

the company holds 138.71184 million shares of Bank of Hangzhou, of which the company

planned to pledge 23 million shares to China Development Bank with the pledging period of three

years.

The Proposal on the Guarantee Provided by the Company for Hangzhou Steam Turbine Heavy

Industry Co., Ltd. was approved in the 2nd meeting of the 7th term of board of directors on August

1, 2016, and there were 11 company¡¯s directors participated in the vote, resulted in 11 votes of

assent, 0 dissenting vote and 0 vote of abstention.

According to the Stock Listing Rules on Shenzhen Stock Exchange and relevant regulations, the

above-said guarantee provided by the Company for Heavy Industry Company is not an included

situation that needed to be examined and approved in the general shareholder meeting, and does

not constitute a related transaction, The company, in respect of the pledging of part of its holding

shares of Bank of Hangzhou to China Development Bank, needs to complete the relevant business

registration procedures.

¢ò. Basic Information about the Guaranteed

Company Name£ºHangzhou Steam Turbine Heavy Industry Co., Ltd.

Date of establishment£ºOctober 25,2013

Place of registration£ºFloor 3, Building 3 No. 503 Xingguo Road, Hangzhou Qianjiang Economic

Development Zone

Legal representative£ºZheng Bin

Registered capital£ºRMB 360 million

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Main business: production, manufacturing: Industrial Turbomachinery equipment. Services: gas

turbines, compressors, rotating machinery and auxiliary equipment class technology development

and after-sales service; wholesale: steel, building materials.

Relationship with the Company: Heavy Industries company is the wholly owned subsidiary

company.

The main financial indicators for the latest year and the latest period are as follows(In RMB£©£º

Period Assets Liability Net assets Total profit Net profit

Year of 2015 374,617,490.11 2,683,783.83 371,933,706.28 5,949,094.22 4,438,387.04

The first half 378,307,416.93 1,858,212.74 376,449,204.19 6,020,665.55 4,515,497.91

year of 2016

¢ó.The main contents of the guarantee agreement

The main contents of the equity pledge contract for guarantee signed between the company and

China Development Bank are as follows:

1. The number of shares pledged: 23 million shares (shares of Bank of Hangzhou)

2. Duration of the equity pledge:3 years

3. The purpose of the equity pledge: providing guarantee for Hangzhou Heavy Machinery Co., Ltd

in respect of its application of special fund to China Development Bank

IV. Opinions from Board of Directors

Wholly owned subsidiary Heavy Industries company to apply for special funds to the State

Development Bank is required in order to meet its liquidity needs pre-construction and subsequent

production operations, the company Heavy Industries Company to provide guarantee to help it get

a special fund in order to address liquidity needs, to meet the heavy the company's production and

business development needs. The board of directors executes the deliberation procedure per the

rules and regulations and ensures that the guarantee is legitimate. The board holds that

guaranteeing it won¡¯t have any negative effect on the company.

V. Cumulative Amount of External Guarantee and Amount of Overdue Guarantee

By this announcement date, the accumulative amount of external company by the company and its

holding subsidiary is RMB 308 million, taking up 6.71% of the audited net capital in 2015Which

amounts to RMB 4,589,137,018.15.

The company has not provided guarantee for controlling shareholders, other affiliated party, any

other legal or non-legal entities or individuals, neither has it had any past external guarantee by

this notice day. The company has no overdue guarantee. And it has no litigation-involved

guarantee amount or amount of loss resulting from failing guarantee-related litigation.

VI. Documents available for inspection

1. Resolutions of the 2nd Meeting of the 7th Term of Board;

2. The equity pledge contract signed between the company and China Development Bank.

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The Board of Directors of Hangzhou Steam Turbine Co., Ltd.

August 2, 2016

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