杭汽轮Ｂ(200771)2005年年度报告摘要（英文版）

Hangzhou Steam Turbine Co., Ltd. Summary of Annual Report 2005 Stock Code: 200771 Stock ID: Hangqilun B Announcement No. Provisional 2006-6 Hangzhou Steam Turbine Co., Ltd. Summary of Annual Report 2005 §1 Important Statement 1.1 The Board of Directors 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. This summary is abstracted from the completed text of Annual Report 2005, for details of the report please go to the complete text. 1.2 None of the directors, supervisors, nor senior executives is holding uncertain opinion or disagreement over the truthfulness, accuracy, and completeness over the Annual Report. 1.3 Director(s) absented the board meeting Name of the Director Reason of absent Consignee Zhang Mingguang (Independent Director) Travel abroad Zou Zhaoxue (Independent director) Jin Fujuan Business travel Nie Zhonghai 1.4 PriceWaterHouseCoopers Zhongtian CPA and Zhejiang Orient CPA issued standard auditing report on the Financial Report 2005 with neither emphasis issues nor qualified opinion. 1.5 The Chairman Mr. Nie Zhonghai, the General Manager Mr. Yan Jianhuan, the Chief Accountant Mr. Bo Ronghua, and the Chief Director of Accounting Department Mr. Wu Guomei hereby declares: the Financial Statement in the report is guaranteed to be truthful and complete. 1 Hangzhou Steam Turbine Co., Ltd. Summary of Annual Report 2005 §2 Company Profile 2.1 Company Profile Stock ID Hangqilun B Stock Code 200771 Stock Exchange Shenzhen Stock Exchange Registered address Registered address: 357 Shiqiao Road Hangzhou and office address Office address: 357 Shiqiao Road Hangzhou For registered address: 310022 Post Code For office address: 310022 Website http://www.cninfo.com.cn Email. ychq@htc.net.cn 2.2 Liaison people Secretary of the Board Representative of Stock Affairs Name Yu Changquan Zhou Yongmei Address 357 Shiqiao Road Hangzhou 357 Shiqiao Road Hangzhou Tel. （0571）85780432 （0571）85780198 Fax. (0571）85780433 （0571）85780433 Email. ychq@htc.net.cn zzym@htc.net.cn §3 Financial Highlights 3.1 Major accounting data In RMB Yuan Increase/decrease Year 2005 Year 2004 2003 (%) Major business income 1,931,776,219.27 977,825,970.01 97.56% 439,936,177.99 Total profit 533,079,123.10 254,621,928.02 109.36% 70,276,850.57 Net profit 348,833,046.05 174,190,581.58 100.26% 44,002,529.98 Net profit deducted non-recurring 336,674,058.45 168,628,088.41 99.65% 40,899,956.88 gain/loss Cash flow generated by business 191,436,072.72 441,511,505.85 -56.64% 223,689,202.06 operation, net Increase/decrease End of 2005 End of 2004 End of 2003 (%) Gross Assets 2,064,225,197.431,754,500,766.93 17.65% 1,022,375,377.57 Shareholders’ Equity (Exclude 847,278,626.80 646,394,236.62 31.08% 512,745,380.16 Minority Shareholders’ Equity) 2 Hangzhou Steam Turbine Co., Ltd. Summary of Annual Report 2005 3.2 Major financial indices In RMB Yuan Year Year Increase/decrease 2003 2005 2004 (%) Earnings per share 1.586 0.792 100.25% 0.20 Earnings per share (Note) 1.586 - - - Net earnings / capital ratio 41.17% 26.95% 14.22% 8.58% Net earnings / capital ratio basing on net profit after 39.74% 26.09% 13.65% 7.98% deducting of non-recurring gain/loss (%) Net Cash flow per share generated by business operation 0.87 2.01 -56.72% 1.02 End of End of Increase/decrease End of 2005 2004 (%) 2003 Net asset per share 3.85 2.94 30.95% 2.33 Net asset per share, adjusted 3.82 2.90 31.72% 2.25 Note: In case of the capital share was changed during the period between the report date and the date when it is disclosed, then the new capital share will be adopted as the basis of earnings per share. Non-recurring gain and loss items √ applicable □ not applicable In RMB Yuan Non-recurring gain and loss items Amount Gain/loss from disposal of long-term equity investment, fixed assets, construction in process, 179,449.11 intangible asset, and other long-term assets. Other none-business gain/loss after deducting of impairment provisions according to enterprise 12,024,389.27 accounting standard Write back of impairment provisions provided in previous years 2,768,462.05 Various of governmental allowances 858,000.00 Impact of income tax -3,351,719.35 Influence of eliminating the minor shareholders’ equity -319,593.48 Total 12,158,987.60 3.3 Diversity between the international and domestic accounting standards √ applicable □ not applicable In RMB Yuan Domestic Accounting Standard Overseas accounting standard: Net profit 348,833,046.05 367,214,046.05 Influence of the adjustment - Deferred tax 10,807,000.00 - Difference between the appraisal increment/devalue of property, plant and equipment and the depreciation after the appraise 10,807,000.00 - Difference in depreciation and disposal of properties, plants and equipment - Value increasing / decreasing in appraisal of properties, plants and equipment Statement about -916,000.00 the diversity - Income from waiving of debts 615,000.00 - Deferred income recognized from governmental fund 5,492,000.00 - Recognition of investment gains from affiliates 2,412,000.00 - Difference between the payment for purchasing of subsidiaries and the attributable equity 549,000.00 - Variation of minor shareholders’ equity due to deferred income tax of subsidiaries -578,000.00 3 Hangzhou Steam Turbine Co., Ltd. Summary of Annual Report 2005 §4 Changes in Share Capital & Particulars about Shareholders 4.1. Statement of Changes in Shares In shares Before the change Changed (+,-) After the change Amount Proportion Sub-total Amount Proportion I. None negotiable shares 140,000,000 63.64% 0 140,000,000 63.64% 1. Promoter’s shares 140,000,000 63.64% 0 140,000,000 63.64% Incl. State-owned shares 140,000,000 63.64% 0 140,000,000 63.64% Domestic legal person shares 0 0.00% 0 0 0.00% Overseas legal person shares 0 0.00% 0 0 0.00% Others 0 0.00% 0 0 0.00% 2. Legal person shares placed 0 0.00% 0 0 0.00% 3. Employees’ shares 0 0.00% 0 0 0.00% 4. Preference shares or others 0 0.00% 0 0 0.00% II. Negotiable shares 80,000,000 36.36% 0 80,000,000 36.36% 1. Common shares in RMB 0 0.00% 0 0 0.00% 2. Foreign shares in domestic market 80,000,000 36.36% 0 80,000,000 36.36% 3. Foreign shares in overseas market 0 0.00% 0 0 0.00% 4. Others 0 0.00% 0 0 0.00% III. Total of capital shares 220,000,000 100.00% 0 220,000,000 100.00% 4.2 List of top 10 shareholders and current share holders. In Shares Total of shareholders 7,083 Top 10 Shareholders Properties of Share Total Non-negotiable Pledged or Name of the shareholder shareholder proportion % shares shares held frozen Hangzhou Steam Turbine Power Group State-owned 63.64%140,000,000 1,400,000,000 70,000,000 Co., Ltd. DRAGON BILLION CHINA Foreign shares 2.71% 5,962,583 0 FUND GUOTAI JUNAN SECURIES HONG Foreign shares 2.49% 5,486,563 0 KONG LIMITED PRUDENTAL UNIT TRUSIS-DRAGON PEACOCK Foreign shares 1.14% 2,514,861 0 FUND HTHK-VALUE PARTERS Foreign shares 1.04% 2,297,797 0 INTELLIGENT FD-CHINA B SHS FD BBH BOS S/.A MST TST BK OF JP RE:JF CN ACTIVE OPEN MOTHER Foreign shares 0.84% 1,839,900 0 FD China Merchants Securities Hong Kong Foreign shares 0.81% 1,786,803 0 Ltd. SKAN IA GLOBAL FUNDS PLC Foreign shares 0.77% 1,703,326 0 GSI S/A GLODEN CHINA MASTER Foreign shares 0.76% 1,669,156 0 FUND BBH BOS S/.A MAT TST BK OF JP-JF MTB GREATER CH OPEN Foreign shares 0.73% 1,594,200 0 MOTHER F 4 Hangzhou Steam Turbine Co., Ltd. Summary of Annual Report 2005 Top 10 Current Share Holders Current shares Name of the shareholder Category of shares held Foreign shares listed DRAGON BILLION CHINA FUND 5,962,583 abroad Foreign shares listed GUOTAI JUNAN SECURIES HONG KONG LIMITED 5,486,563 abroad Foreign shares listed PRUDENTAL UNIT TRUSIS-DRAGON PEACOCK FUND 2,514,861 abroad Foreign shares listed HTHK-VALUE PARTERS INTELLIGENT FD-CHINA B SHS FD 2,297,797 abroad BBH BOS S/.A MST TST BK OF JP RE:JF CN ACTIVE OPEN Foreign shares listed 1,839,900 MOTHER FD abroad Foreign shares listed China Merchants Securities Hong Kong Ltd. 1,786,803 abroad Foreign shares listed SKAN IA GLOBAL FUNDS PLC 1,703,326 abroad Foreign shares listed GSI S/A GLODEN CHINA MASTER FUND 1,669,156 abroad BBH BOS S/.A MAT TST BK OF JP-JF MTB GREATER CH Foreign shares listed 1,594,200 OPEN MOTHER F abroad Foreign shares listed TOYO SECURITIES ASIA LIMITED –A/C CLIENT 1,523,458 abroad Note: (1) No changes have been made on the controlling shareholder. (2) No shareholders hold over 5% of the Company’s shares except for Hangzhou Turbine Power Group Co., Ltd. (3) Hangzhou Steam Turbine Group Co., Ltd. is not related to any of the other 9 shareholders. It is unknown whether there is any relationship among the 10 shareholders. It is unknown whether there is any action in concert among the Notes to relationship or other shareholders as set out by the Information Disclosing Rules on Changing “action in concert” of Shareholding Status for Listed Company. among the top ten (4) Hangzhou Steam Turbine Group Co., Ltd. has put 70 million shares of shareholders. promoter’s state-owned shares (takes 50% of the total shares it is holding in the Company, and takes 31.82% of the total share capital of the Company) into pledge to Shanghai Pudong Development Bank Hangzhou – Zhongshan Branch for the loan credit up to RMB100 million. The pledge will expire at the end of October 2007. (For details about this issue please go to the announcement about the pledging of controlling shareholder published on October 13th 2005 issue of Security Times.) 4.3 Change in Controlling Shareholder and the Actual Controller 4.3.1 Change in Controlling Shareholder and the Actual Controller □applicable √ not applicable 4.3.2 Particulars about Controlling Shareholder and the Actual Controller Company Name: Hangzhou Steam Turbine Power Group Co., Ltd Legal Representative: Nie Zhonghai Registered Capital: RMB 156,850,000 Established Date: Dec. 1992 Business Type: State-owned and sole proprietorship company authorized by the Hangzhou Government Registered address: No. 357 Shiqiao Road Hangzhou City Major Business: textile machine, paper-making machine, pump, casting, changing speed gear, heat exchanging 5 Hangzhou Steam Turbine Co., Ltd. Summary of Annual Report 2005 instrument, digital and display system and their manufacturing and processing. Original material, equipment and parts for groups’ purchasing and making, providing services of water, electricity and gas for their owning enterprises. (2) Changing of controlling shareholder and practical controller of the Company The controlling shareholder and practical controller of the Company havn’t been changed during the report term. 4.3.3 Controlling relationship chart The Municipal Government of Hang Zhou 100% Hangzhou Steam Turbine Power Group Co., Ltd. 63.64% Hangzhou Steam Turbine Co., Ltd. 6 Hangzhou Steam Turbine Co., Ltd. Summary of Annual Report 2005 §5 Directors, Supervisors and Senior Executives 5.1 Changing in shareholding and remuneration of the directors, supervisors and senior executives Shares Remuneration accepted Shares held at Accept remuneration held at the Cause of from the company in Name Position SexAge Job term the beginning from shareholding or end of change report term of term related parties term (RMB0’000) Nie 2005.6.28. - Chairman M 48 0 0 0 98.75 No Zhonghai 2007.6.28. Wang Vice 2004.6.28. - M 53 0 0 0 93.84 No Hongkang Chairman 2007.6.28. Vice 2004.6.28. - Jin Fujuan F 52 0 0 0 89.92 No Chairman 2007.6.28. 2004.6.28. - Yan Jianhua Director, GM M 47 0 0 0 93.84 No 2007.6.28. Director, 2004.6.28. - Li Lie M 57 0 0 0 91.88 No standing GM 2007.6.28. Director, Vice 2004.6.28. - Ye Zhong M 37 0 0 0 85.01 No GM 2007.6.28. Director, Zhou 2004.6.28. - Chief M 54 0 0 0 85.01 No Shaohua 2007.6.28. accountant Zhang Independent 2004.6.28. - M 67 0 0 0 10.00 No Mingguang Director 2007.6.28. Zhou Independent 2004.6.28. - M 67 0 0 0 10.00 No Zhaoxue Director 2007.6.28. Independent 2004.6.28. - 华小宁 M 42 0 0 0 10.00 No Director 2007.6.28. Independent 2004.6.28. - Qi Guoning M 56 0 0 0 10.00 No Director 2007.6.28. Chu Chief 2004.6.28. - M 53 0 0 0 89.92 No Shuilong Supervisor 2007.6.28. 2004.6.28. - Shao Linna Supervisor F 51 0 0 0 0.00 Yes 2007.6.28. Zhang 2004.6.28. - Supervisor M 48 0 0 0 20.59 No Yougen 2007.6.28. 2004.8.15. - Lu Jianhua Supervisor M 43 0 0 0 17.71 No 2007.6.28. 2004.8.15. - Zhao Ying Supervisor F 49 0 0 0 6.78 No 2007.6.28. Vice General 2004.6.28. - Yan Jinghe M 51 0 0 0 87.95 No Manager 2007.6.28. Liu Vice General 2005.6.23. - M 48 0 0 0 42.50 No Guoqiang Manager 2007.6.28. Yu Secretary of 2005.6.23. - M 48 0 0 0 83.05 No Changquan the Board 2007.6.28. Total - - - - 0 0 - 1,026.75 - 7 Hangzhou Steam Turbine Co., Ltd. Summary of Annual Report 2005 §6 Report of the Board 6.1 Report of the Executives (I) Operation Review In the year 2005, the Board of Directors and the whole entire staff worked together, forged ahead and achieved rapid and sound progress in terms of composite economic index, corporate culture molding and harmonious enterprise construction. specially in big growth in production output and turnover. The Company broke a new historical record again and successfully realized the target of double of the turnover specified by the Board of Directors at the year beginning. The company realized a turnover of RMB 1,931.78 million, a 97.56% growth over the same period of the previous year; fulfilled an output value of 360 steam turbines/2.8228 million KW/RMB 2.307 billion, 32.35%, 72.8% and 105.1% growth respectively over the same period of the previous year; newly contract order received amounting to RMB 1.96 billion, an 8.1% drop over the same period of the previous year; the export contract executed amounting to USD 50.1181 million, a 105.14% growth over the same period of the previous year; foreign exchange earned through export amounting to USD 24.49 million, a 1260% growth over the same period of the previous year; loan recovered amounting to RMB 1.76 billion, a 33.3% growth over the same period of the previous year; total profit amounting to RMB 53,307.91, a 109.36% growth over the same period of the previous year. (II) The Central Government’s Enhancement on Macroeconomic Adjustment and Control, Especially Implementation of Industrial Structural Adjustment and Control Countermeasures and Prospect of the Company’s Future Development 1. Development trend of the industry in which the Company is engaged and market influence Influenced by national policy on macroeconomic control, overheated electric power equipment demand rapidly will surely cool down. Electric power equipment manufacturing industry will inevitably meet the situation of production capacity surplus. The problem of excess of supply over demand will be increasingly serious. Horizontal competition will be continuously intensified. This change of external environment of the Company will surely exert important and far-reaching influence on the financial position and operating results of the Company. The board of directors specially asks investors to pay attention to the risks caused by the following matters that have occurred, are occurring or will occur to which the Company's operation is exposed though the Company obtained good operating results in the report period: The board of directors of the Company should specially ask investors to pay attention to the following: (1) The strengthening of macroeconomic control, especially the implementation of the pertinent measures for regulation and control of industry structure, by the state, has generated big influence on the Company's order receiving so that the order volume of electric power equipment products has decreased sharply. (2) The factors including the change in the price of energy and raw materials, enlargement of subcontracted processing of parts to increase production capacity, increase in employees' wage and depreciation of new fixed assets will surely have negative influence on the growth of the gross profit rate of the Company's products. (3) After creation of the miracle of doubling output and sales volume for two consecutive years, all economic indicators have been on high level. The possibility of doubling output and sales volume again no longer exists. However, the management of the Company will still spare no efforts to ensure continuous and stable growth of its economic results. For this reason, the board of directors specially reminds investors to fully consider the above uncertainty factors and pay close attention to investment risks when investing in the stocks of the Company. 8 Hangzhou Steam Turbine Co., Ltd. Summary of Annual Report 2005 2. Strategic planning of the Company's future development During Eleventh Five-year Plan period, the market demand of products of domestic investment kind will generally decrease due to national macroeconomic adjustment. Besides, transnational companies will actively enter domestic steam turbine manufacturing field and other domestic enterprises engaged in the same industry will try every means to enter the field of industrial driving steam turbine production. As a result, the Company will face great challenges in respect of operation and development. After doubling output and sales volume for two consecutive years, the Company needs to make greater efforts to keep continuous and stable development. The board of directors of the Company is still fully confident in the Company's development prospect after fully analyzing national industry policies, domestic and foreign market situation and the internal conditions of the Company. Under new situation, the Company will continue to adhere to the operation strategy of "seeking existence with technology and seeking development with innovation", continue to closely follow international advanced level of industrial turbine wheel in respect of product development, consolidate its leading position in the field of industrial driving in China and actively enter the field of manufacturing of high-end products of industrial turbine plant such as gas turbine. Through incessant independent innovation, the Company will realize the change in the mode of technological development from the mode of technology introduction to the mode of independent innovation. The Company will make efforts to grasp and improve the technologies and ability for the design, manufacturing and marketing of upstream and downstream products of industrial turbine plant and relevant services, strive to become a powerful competitor in domestic industrial turbine manufacturing industry, an important provider of major technical equipment needed by the state to "develop cycle economy and construct resource-saving and environment-friendly society and an advantageous enterprise with "independent innovation ability and strength of sustainable development strength in 5 years and create satisfactory working conditions and opportunities for personal development and progress for employees. The Company is implementing the strategy of "industrial turbine business globalization" and striving to become a powerful competitor in the international industrial turbine field and make overseas sales amount reach about 50% of total sales volume within 5 years and to rank as one of the top five among enterprises engaged in the same industry in the world in terms of sales volume and profit within 10 years. 3. The operation objective and main task of the Company for 2006 2006 is the first year for implementing the Eleventh Five-year Plan of the Company and a year of hard work to keep thriving production and sales and set new record. Therefore, the Company's main operation strategy is as follows: To oriented toward market demand and realize the change in growth mode, enhance core competitiveness mainly through independent innovation, create harmony, keep strong development and fully enhance product quality and create conditions for promoting the all-round development of employees' quality and enhancing their living quality. (1) The Company's main operation objective: To complete the production of about 380 steam turbines/steam turbines with 3 million kw, keep the record of no personal, equipment and quality accident, averagely increase employees' income by over 15% while ensuring profit growth. (2) Main task of the Company for 2006 2.1 The focal point of work of the Company will be changed from capacity expansion in the past several years to "market development". The Company will try to cover the order gap generated after the decrease in domestic generating equipment demand, focus on "industrial driving" in domestic market, meet new market demand arising in cycle economy and try to obtain more product orders. 2.2 To strengthen overseas market operation, open up and develop potential markets. To continue to explore overseas marketing mode and try every means enlarge international market share through seeking world-famous agents, BOT, joint venture or cooperation. As for overseas user service, the Company should properly handle the equilibrium relationship between supply and demand, provide long-range technical 9 Hangzhou Steam Turbine Co., Ltd. Summary of Annual Report 2005 consulting services, perfect customer service demand management and enhance the overall level of overseas user services. 2.3 To encourage independent innovation and attain the objective of continuously keeping ahead in respect of technology. To make all-out efforts to promote new product development according to market demand, especially mainly develop applicable products in cycle economy and products with market demand. Meanwhile, the Company should conduct independent innovation of introduced technology such as development and application of three-in-one stator blade and convert the research subject of "low pressure bent blade level efficiency into productivity as soon as possible. 2.4 To stress product manufacturing and meet user demands. The production task of the Company in 2006 is very hard. It is absolutely uneasy to increase steam turbine output and sales volume based on consecutive doubling. In addition, the Company is to produce combustion engines and 1000MW feed pump unit and meet users' demand of urgent repair and overhaul. So the production and manufacturing department needs to make greater efforts this year. 2.5 To refine management and strengthen cost management. To make full use of available resources, deeply tap potential, realize full-load and efficient operation of newly purchased equipment and facilities, attach importance to application and popularization of new technologies, new processes and new materials, enhance output efficiency and lower manufacturing cost through scientific and technical progress, stress quality management, control nonconforming rate of parts, improve raw material purchasing procedure and lower purchasing cost. To sum up, the Company should strive to conduct effective control and management and realize radical change in economic growth mode. (III) Investment in the report period 1. The utilization of raised funds In the report period, the Company did not raise funds. The funds previously raised were used up in 2002. 2. Progress of and profit from major projects using non-raised funds (1) In the report period, the Company invested RMB 14,021.57 in technical renovation, which increased by 32.46% year on year. The main purpose of the investment project is to enlarge the production capacity of industrial steam turbine. The concrete contents include new construction of factory building covering 2440 square meters, boiler room of 20 tons, testing bench and increase of 16 large-sized production equipment. The Company introduced key equipment including German D160 numerically controlled rotor lathe, Italian D160 numerically controlled rotor milling center, German Φ 3.5-meter numerically controlled vertical lathe and Czech Φ200 numerically controlled boring-mill work center. The said equipment was put into trial production in the second and third quarter of 2005. It is expected that the new 20-ton boiler room will be put into normal use in June 2006. (2) In the report period, the Company invested USD 0.13 million in equity participation in an Indian company and invested RMB 240 million in acquiring 100 million shares of Hangzhou Commercial Bank Co., Ltd. The particulars are as follows: 2.1 The Company invested USD 0.13 million din equity participation in Indian GREENESOL Company ("GPSPL") In order to further open up overseas market of steam turbine through cooperative sales and consolidate and develop steam turbine delivery, installation and after-sales service with GPSPL, the 7 meeting of the third board of directors of the Company agreed to equity participation in GPSPL in the form of share capital increase and purchase of 37% of its total share capital with cash of Rupee 5.8730 million, equivalent to USD 0.13 million or RMB 1.0505 million. GREENESOL has been established in India with registered capital of Rupee 10 million, equivalent to RMB 1.95 million. The number of original shares is 1 million. The par value per share is Rupee 10. It fully invested the above share capital, which is equivalent to 63% equity. (Refer to Lin 2005-15 announcement of the Company published on Securities Times, Shanghai Stock News and Hong Kong Commercial Daily 10 Hangzhou Steam Turbine Co., Ltd. Summary of Annual Report 2005 on August 25, 2005 for details). This overseas investment was completed after examination and approval by relevant provincial and municipal foreign trade and economic cooperation offices and bureaus and foreign exchange control department. 2.2 The Company invested RMB 240 million in holding 100 million shares of Hangzhou Commercial Bank Co., Ltd. According to the development strategy and planning formulated by the Company, the board of directors of the Company, after serious investigation and demonstration, held the opinion that it was a historic opportunity to invest in finance industry that could obtain big development opportunities with national opening of financial policies. The 8th meeting of the third board of directors of the Company adopted the proposal concerning important investment. The Company acquired 100 million shares of Hangzhou Commercial Bank Co., Ltd. ("Hangzhou Commercial Bank") held by Zhejiang Xinhu Group Co., Ltd. which account for 7.97% of total shares of Hangzhou Commercial Bank at the price of RMB 240 million. Hangzhou Commercial Bank Co., Ltd. was established on September 26, 1996. Its address: 432 Fengqi Road, Xiacheng District, Hangzhou City. Enterprise registration number: Qi He Zhe Hang Zong Zi No. 007144. In November 2005, the registered capital of the Company was RMB 1.255416 billion. Legal representative: Ma Shiyong. Enterprise type: Sino-foreign joint venture joint stock limited company. The source of funds for this investment of the Company is self-owned funds. The Company made this investment with self-owned funds. The Company's qualification for investing in banking industry has been approved by CBRC. The proposal concerning this investment has been examined and adopted by the second provisional shareholders' general meeting of the Company in 2005. (Refer to Lin 2005--26 announcement of the Company published on Securities Times, Shanghai Stock News and Hong Kong Commercial Daily on December 22, 2005 for details). The actual investment in this project was made according to relevant agreement. By the end of 2005, the actual amount of capital contribution was RMB 120 million. On January 5, 2006, the Company went through the procedure for transfer of title of Hangzhou Commercial Bank with Zhejiang Equity Trust and Consulting Service Co., Ltd. It has become a shareholder of Hangzhou Commercial Bank, holding 100 million shares of Hangzhou Commercial Bank. 11 Hangzhou Steam Turbine Co., Ltd. Summary of Annual Report 2005 6.2 Principal businesses classified based on industries/products In RMB 10 thousand Yuan Distribution on industries Major Decrease/ increase Major Major Increase/decrease of Major business cost On industry or business of major business business business major business increased/decreased over product profit ratio profit over income cost turnover (%) corresponding term (%) previous year Boiler and power 181,741.00 106,973.00 41.14% 95.16% 92.43% 0.84% machine manufacture Casting 1,339.00 938.00 29.95% 423.05% 307.83% 19.79% Petro chemicaland other special 555.00 431.00 22.34% 2,034.62% 2,294.22% -8.43% equipment manufacturing Other special 9,543.00 5,978.00 37.36% 117.98% 156.35% -9.37% equipment Distribution on products Industrial steam 181,741.00 106,973.00 41.14% 95.16% 92.43% 0.84% turbine Casting products 1,339.00 938.00 29.95% 423.05% 307.83% 19.79% Auxiliary machinery 555.00 431.00 22.34% 2,034.62% 2,294.44% -8.43% Others 9,543.00 5,978.00 37.36% 117.98% 156.35% -9.37% Total 193,177.00 114,320.00 40.82% 97.56% 96.53% 0.31% 6.3 Major businesses distribution on regions In RMB 10 thousand Yuan Regions Major business income Increase/decrease of major business turnover (%) Domestic 181,644.00 88.74% Overseas 11,534.00 648.48% Total 193,178.00 97.56% 6.4 Utilization of fund raised from financing actions □applicable √ not applicable Changing of projects □applicable √ not applicable 12 Hangzhou Steam Turbine Co., Ltd. Summary of Annual Report 2005 6.5 Utilizing of non-raised fund √ applicable □ not applicable In RMB 10 thousand Yuan Projects Amount of the projectProgress of the projectTurnover of the project 20T Oil Boiler 500.00 65% Under process 4 Meter stand lathe for No.1 Auto Company 420.00 80% Under process 2.5 Meter stand lathe 205.00 87% Under process Reforming of air compressor house 185.98 completed Ideal Temporary house for diesel generator 653.09 completed Ideal New construction of assembling shop 360.00 98.34% In use Test platform for 25000KW steam turbines 1,147.26 completed Ideal Monitor system of testing plat form in final assembling shop 190.85 completed Ideal Measuring facilitiesfor testing platform in final assembling 129.46 completed Ideal Electronic reforming in final assembling 120.00 97.84% Ideal Reforming of fuel engine assembling site 300.00 98.65% Ideal Digital lathe LF1700*7000 340.00 88% Under process TK6113C digital boring milling machine 262.90 completed Ideal TK6116 digital boring milling machine 647.88 completed Ideal CK5240B/1 digital dual pole stand crane 417.00 86% Under process CK5131B digital dual pole stand crane 318.00 88% Under process TK4200C-4000 digital bridge milling machine 291.00 95% Under process Z3080 rocker drill 178.21 completed Ideal Digital flat lathe 196.52 95% On trial VC3500/320SM German digital stand lathe 1,219.25 95 On trial Italian digital lathe 1,414.80 95 On trial Czechic digital boring milling machine 1,599.47 95 On trial WB Digital flat lathe 1,061.00 87% Under process Digital boring lathe 268.42 completed Ideal United 4 stage standing processing centre 169.97 completed Ideal Dia. 160 digital ground milling machine 1,665.03 completed Ideal 4 units of digital grinding machine 268.38 completed Ideal Digital flat lathe and milling machine center 548.0011% Under process Reforming of painting and packing site (former casting iron) 182.08completed Ideal T32/10 travelling crane 109.48completed Ideal Construction of Casting Co. 3,000.0078 Under process Construction of Zhongneng Co. 2,416.48completed In use Equipment of Zhongneng Co. 194.1295% On trial Total 20,979.63 - - 6.6 Statement on the “None-standard” opinion issued by the CPA □applicable √ not applicable 6.7 Profit distribution or capitalizing of common reserves adopted by the Board of Directors √ applicable □ not applicable The Profit Distribution and Capitalizing of Common Reserves Plan of Year 2005 was decided by the Board of Directors, which was: RMB5.00 (tax included) was about to be distributed as cash dividend upon each 10 shares. Totally RMB110,000,000.00 will be distributed. Capitalizing of common reserves will also be carried out as 3 new shares upon each 10 shares basing on the total shares of 220,000,000. The total capital shares of the Company will be increased from 220,000,000 up to 286,000,000. This plan is subject to the approval of the shareholders’ general meeting. No cash dividend proposal was raised though the Company is making profit for the report term. □applicable √ not applicable 13 Hangzhou Steam Turbine Co., Ltd. Summary of Annual Report 2005 §7 Significant Events 7.1 Acquisition □applicable √ not applicable 7.2 Selling of property □applicable √ not applicable 7.3 Significant guarantee √ applicable □ not applicable In RMB 10 thousand Yuan External Guarantee (Exclude controlled subsidiaries) Guarantee Amount Type of Completed or Related party or Date of contract Term provided to guaranteed guarantee not not Total occurred in the report term 0.00 Total of balance of guarantee at the end of report term 0.00 Guarantee provided to controlled subsidiaries Total of guarantee provide to controlled subsidiaries in the report term 1,000.00 Total of balance of guarantee provide to controlled subsidiaries in the report term 1,000.00 Total of guarantee (including controlled subsidiaries) Total of guarantees 1,000.00 Proportion of the total guarantee in the net asset of the Company 1.18% Including: Guarantee provided to shareholders, substantial controller and their related parties 0.00 Total of guarantee provided directly or indirectly to parties with liability/asset ratio over 70% 0.00 Guarantees totaled over 50% of the net asset 0.00 Total of the above 3 items 0.00 7.4 Significant Related Transactions 14 Hangzhou Steam Turbine Co., Ltd. Summary of Annual Report 2005 7.4.1 Related transactions regarding normal operation √ applicable □ not applicable In RMB 10 thousand Yuan Sales of products or labour service to Purchasing of products or labour services the related parties from the related parties Related parties Amount of Ratio in similar Amount of transaction Ratio in similar trades transaction trades Hangzhou Nanfangtongda Gears Co., Ltd. 0.00 0.00% 524.10 0.46% HSTG Sales Co., Ltd. 9,884.09 5.10% 80.00 0.07% Hangzhou Steam Turbine Automobile 0.64 0.00% 1,232.60 1.08% Sales Service Co., Ltd. Hangzhou Steam Turbine Wooden 0.00 0.00% 1,192.90 1.04% Packaging Co., Ltd. Hangzhou Steam Turbine Machinery & 18.08 0.01% 151.27 0.13% Equipment Co., Ltd. Hangzhou Steam Turbine Industrial Co. 1.19 0.00% 453.44 0.40% Hangzhou Hangfa Group 2.74 0.00% 5,494.00 4.81% Hangzhou Steam Turbine Power Group 26.76 0.01% 3,775.88 3.30% Co., Ltd. Hangzhou Relian International Trading 113.10 0.06% 0.00 0.00% Co. HSTG Technology Association 22.67 0.01% 0.00 0.00% HSTG Technology Association 22.01 0.01% 0.00 0.00% Total 10,091.28 5.20% 12,904.19 11.29% Including: The related transaction of RMB100,912,800 were of the sales of products or providing of services from the Company to the controlling shareholder and its subsidiaries. 7.4.2 Related credit and debt interchange √ applicable □ not applicable In RMB 10 thousand Yuan Provide money to the related Accept money from the related Related parties parties parties Amount occurred Balance Amount occurred Balance Hangzhou Steam Turbine Power Group Co., Ltd. 26.76 602.06 3,775.88 929.96 HSTG Nanfang Sales Co. 0.00 227.49 0.00 96.50 HSTG Sales Co., Ltd. 9,884.09 1,689.38 80.00 4,401.51 Hangzhou Hangfa Group 2.74 986.97 5,494.00 222.00 Hangzhou Relian International Trading Co. 113.10 639.38 0.00 0.00 Hangzhou Steam Turbine Industrial Co. 1.19 0.00 453.44 60.79 Hangzhou Steam Turbine Automobile Sales Service Co., 0.64 0.00 1,232.60 107.96 Ltd. Hangzhou Steam Turbine Wooden Packaging Co., Ltd. 0.00 0.00 1,192.90 9.36 Hangzhou Nanfangtongda Gears Co., Ltd. 0.00 109.00 524.10 0.72 Hangzhou Steam Turbine Machinery & Equipment Co., 18.08 0.00 151.27 0.00 Ltd. HSTG Technology Association 22.67 0.00 0.00 0.00 HSTG Technology Association 22.01 0.00 0.00 0.00 Total 10,091.28 4,254.28 12,904.19 5,828.80 Including: The capital of RMB0 was of the fund provided by the Company to the controlling shareholder and its subsidiaries in the report term, and the balance was RMB0 Capital adoption and returning plan □applicable √ not applicable 15 Hangzhou Steam Turbine Co., Ltd. Summary of Annual Report 2005 Whether or not the returning plan for the adopted capital is to be completed for certain. □ Yes □ No √ Not applicable 7.5 Financing proxy □applicable √ not applicable 7.6 Fulfilling of consent issues 7.6.1 Other commitments □applicable √ not applicable 7.7 Material Lawsuits/Arbitrations □applicable √ not applicable §8 Report of the Supervisory Committee √ applicable □ not applicable The Supervisory Committee takes for the Company was operating with abiding to the laws. There was no problem exists in the financial situation, the related transactions with controlling shareholder and capital adoption. §9 Financial Report 9.1 Auditor’s Opinion Standard auditing statement without qualified opinion 9.2 Financial Statements 16 Hangzhou Steam Turbine Co., Ltd. Summary of Annual Report 2005 9.2.1 Balance Sheet Prepared by: Hangzhou Steam Turbine Co., Ltd. Ended Dec. 31 2005 in RMB At the end of term Initial Items Consolidated Parent company Consolidated Parent company Current asset: Monetary fund 327,611,867.29 262,992,129.75 523,233,489.19 465,662,475.64 Short-term investment Notes receivable 53,046,427.41 38,374,068.41 119,013,135.91 112,093,058.91 Dividend receivable Interest receivable Account receivable 421,930,565.32 398,129,811.97 216,212,731.09 204,763,674.04 Other account receivable 29,947,544.94 13,547,516.88 30,880,571.13 54,303,484.52 Advance account 93,626,603.86 82,731,955.01 97,029,136.02 77,278,890.54 Allowance receivable Inventories 480,142,865.66 392,713,063.82 350,783,075.67 306,137,471.55 Expense to be amortized 48,133.33 Long-term credit invest expire in 1 year Other current asset Total of current asset 1,406,305,874.48 1,188,488,545.84 1,337,200,272.34 1,220,239,055.20 Long-term investment: Long-term share equity investment 48,205,784.23 147,342,534.31 47,244,850.52 110,390,115.75 Long-term credit investment Total of long-term investment 48,205,784.23 147,342,534.31 47,244,850.52 110,390,115.75 Consolidated price difference Fixed asset: Original value of fixed assets 581,459,014.30 570,500,934.98 500,598,842.56 495,478,666.58 Less: Accumulated depreciation 286,205,026.41 284,675,387.22 268,942,431.88 268,699,119.77 Net fixed assets 295,253,987.89 285,825,547.76 231,656,410.68 226,779,546.81 Less: Fixed asset impairment provision 8,997,534.87 8,997,534.87 9,107,749.11 9,107,749.11 Net fixed asset 286,256,453.02 276,828,012.89 222,548,661.57 217,671,797.70 Engineering material 13,502,247.94 9,409,797.94 16,842,863.23 16,842,863.23 Construction in progress 154,452,138.14 108,469,690.49 94,163,534.04 86,531,128.44 -{}-Fixed asset disposal Total of fixed assets 454,210,839.10 394,707,501.32 333,555,058.84 321,045,789.37 Intangible and others: Intangible assets 35,502,699.62 35,502,699.62 36,500,585.23 36,500,585.23 Long-term expenses to be amortized Other long-term assets 120,000,000.00 120,000,000.00 Total of intangible and other assets 155,502,699.62 155,502,699.62 36,500,585.23 36,500,585.23 Deferred tax: Deferred tax debit Total of assets 2,064,225,197.43 1,886,041,281.09 1,754,500,766.93 1,688,175,545.55 17 Hangzhou Steam Turbine Co., Ltd. Summary of Annual Report 2005 Current liabilities Short-term loans 10,000,000.00 Notes payable Account payable 146,468,341.79 129,827,983.19 82,042,529.98 92,490,568.83 Account received in advance 872,689,330.06 802,224,329.20 954,238,208.72 900,426,454.27 Prepaid wages 7,834,180.30 1,500,000.00 Welfare payable 3,233,158.07 493,805.71 Dividend payable Tax payable 84,681,723.75 62,299,271.88 31,494,896.16 26,754,136.32 Other accounts to be delivered 210,192.21 315,195.45 261,958.32 Other account payable 31,730,195.80 24,900,349.61 10,319,039.13 9,344,045.37 Reserved expenses Expected liabilities Long-term liability expire in 1 year Other current liability Total of current liability 1,156,847,121.981,019,251,933.881,080,403,675.151,029,277,163.11 Long-term liabilities Long-term borrowings Bond payable Long-term payable Special payable 3,843,000.00 3,513,000.00 3,296,000.00 2,966,000.00 Other long-term liability Total of long-term liability 3,843,000.00 3,513,000.00 3,296,000.00 2,966,000.00 Deferred tax: Deferred tax credit Total of liability 1,160,690,121.981,022,764,933.881,083,699,675.151,032,243,163.11 Minor shareholders’ equity 56,256,448.65 24,406,855.16 Owners’ equity (or shareholders’ equity) Practical capital collected (or share capital) 220,000,000.00 220,000,000.00 220,000,000.00 220,000,000.00 Less: returned investment Practical capital (or share capital), net 220,000,000.00 220,000,000.00 220,000,000.00 220,000,000.00 Capital reserves 173,209,379.76 173,209,379.76 167,158,035.63 167,158,035.63 Surplus reserves 165,049,723.34 153,413,393.44 84,306,117.47 82,354,869.32 Incl. Statutory public welfare 82,274,923.05 76,706,696.72 42,080,036.30 41,177,434.66 Un-distributed profit 289,019,523.70 316,653,574.01 174,930,083.52 186,419,477.49 Incl. Cash dividend 11,000,000.00 11,000,000.00 154,000,000.00 154,000,000.00 Investment loss not recognized yet Different of foreign currency translation Total of owners’ equity (or shareholders’ equity) 847,278,626.80 863,276,347.21 646,394,236.62 655,932,382.44 Total of liabilities and owners’ equity (or shareholders’ 2,064,225,197.431,886,041,281.091,754,500,766.931,688,175,545.55 equity) Legal representative: Nie Zhonghai Financial Superior: Bo Ronghua Accounting Manager: Wu Guomei 18 Hangzhou Steam Turbine Co., Ltd. Summary of Annual Report 2005 9.2.2 Income statements Prepared by: Hangzhou Steam Turbine Co., Ltd. Jan - Dec 2005 in RMB Current term Same period last year Items Parent Consolidated Parent company Consolidated company I. Major business turnover 1,931,776,219.271,735,737,938.78977,825,970.01 899,528,978.97 Less: Major business cost 1,143,206,254.381,111,420,438.61581,696,871.68 535,939,148.96 Major business tax and surtax 3,865,387.59 1,451,219.41 1,732,810.17 1,348,996.54 II. Major business profit (“-“ for loss) 784,704,577.30 622,866,280.76394,396,288.16 362,240,833.47 Plus: Other business profit (“-“ for loss) 2,496,215.67 2,470,288.65 1,823,635.25 1,259,321.50 Less: Business expenses 42,391,020.84 33,679,383.15 19,955,450.89 18,368,857.16 Administrative expense 228,136,359.72 186,046,958.97131,657,401.80 113,289,479.63 Financial expenses -3,273,176.36 -2,583,396.10 -3,409,766.04 -2,844,448.20 III. Operational profit (“-“ for loss) 519,946,588.77 408,193,623.39248,016,836.76 234,686,266.38 Plus: Investment gains (“-“ for loss) -39,518.29 53,376,064.67 -1,959,580.58 6,217,690.44 Allowance income 858,000.00 4,245,322.82 4,245,322.82 Non-business income 13,618,721.26 13,608,142.79 5,004,990.99 5,004,990.99 Less: Non-business expenses 1,304,668.64 965,603.90 685,641.97 429,622.78 IV. Gross profit (“-“ for loss) 533,079,123.10 474,212,226.95254,621,928.02 249,724,647.85 Less: Income tax 159,150,299.23 118,919,606.31 75,731,227.81 65,995,920.45 Minor shareholders’ equity 25,095,777.82 4,700,118.63 Plus: Investment loss occurred this term but not recognized V. Net profit (“-“ for loss) 348,833,046.05 355,292,620.64174,190,581.58 183,728,727.40 Plus: Retained profit at the beginning of term 174,930,083.52 186,419,477.49 82,974,656.75 83,436,495.57 Other transferred in VI. Distributable profit 523,763,129.57 541,712,098.13257,165,238.33 267,165,222.97 Less: Statutory surplus reserves 40,548,719.12 35,529,262.06 19,190,599.84 18,372,872.74 Drawing of statutory public welfare 40,194,886.75 35,529,262.06 19,044,554.97 18,372,872.74 Employee award and welfare fund Reserves Enterprise development fund Profit returned to investment VII. Distributable profit 443,019,523.70 470,653,574.01218,930,083.52 230,419,477.49 Less: Preference share dividend payable Optional surplus reserves Common share dividend payable 154,000,000.00 154,000,000.00 44,000,000.00 44,000,000.00 Common share dividend transferred to capital (or share capital) VIII. Undistributed profit 289,019,523.70 316,653,574.01174,930,083.52 186,419,477.49 Income statement (Appendix) 1. Income from selling and disposal of department or invested entities 2. Loss from nature disasters 3. Increasing (or decreasing) of gross profit by changing of accounting policies 4. Increasing (or decreasing) of gross profit by changing of -14,200,013.51 -12,656,660.96 -6,013,587.72 -6,013,587.72 accounting estimation 5. Loss from debt reconstruction 6. Others Legal representative: Nie Zhonghai Financial Superior: Bo Ronghua Accounting Manager: Wu Guomei 19 Hangzhou Steam Turbine Co., Ltd. Summary of Annual Report 2005 9.2.3 Cash flow statement Prepared by: Hangzhou Steam Turbine Co., Ltd. Jan - Dec 2005 in RMB Current term Items Consolidated Parent company I. Net cash flow from business operation Cash received from sales of products or services 1,749,378,694.871,615,241,792.14 Tax returned 69,049.96 Other cash inflow related to operation 16,029,374.68 8,775,970.88 Subtotal of cash inflow 1,765,477,119.511,624,017,763.02 Cash paid for purchasing of merchandise and services 1,013,689,793.851,051,485,809.18 Cash paid to staffs or paid for staffs 207,175,291.89 167,591,833.96 Taxes paid 252,509,851.12 197,961,690.56 Other cash paid related to operation 100,666,109.93 67,906,362.25 Subtotal of cash outflow 1,574,041,046.791,484,945,695.95 Cash flow generated by business operation, net 191,436,072.72 139,072,067.07 II. Cash flow generated by investing Cash received from returning of investment 50,000.00 24,971,126.91 Cash received as investment profit 1,020,000.00 Net cash received from disposal of fixed assets, intangible assets and other long-term assets 822,900.00 809,400.00 Other cash received related to investment 11,369,890.03 747,200.00 Subtotal of cash inflow 12,242,790.03 27,547,726.91 Cash paid to acquire fixed assets, intangible assets and other long-term assets 140,215,717.96 93,345,430.24 Cash paid for investment 121,050,452.00 129,018,452.00 Other cash paid related to investment Subtotal of cash outflow 261,266,169.96 222,363,882.24 Net cash flow generated by investment -249,023,379.93 -194,816,155.33 III. Cash flow generated by financing Proceeds from investments Cash received from loans 10,000,000.00 Other cash received related to financing 7,487,000.00 7,487,000.00 Subtotal of cash inflow 17,487,000.00 7,487,000.00 Cash paid for recovering of debt Cash paid for dividend, profit or interest 154,980,000.00 154,000,000.00 Other cash paid related to financing 128,057.06 Subtotal of cash outflow 155,108,057.06 154,000,000.00 Net cash flow generated by financing -137,621,057.06 -146,513,000.00 IV. Influence of exchange rate movement -413,257.63 -413,257.63 V. Net increase of cash and cash equivalents -195,621,621.90 -202,670,345.89 20 Hangzhou Steam Turbine Co., Ltd. Summary of Annual Report 2005 Appendix of Cash Flow Statement 1. Net profit adjusted to cash flow of business operation Net profit 348,833,046.05 355,292,620.64 Plus: Asset impairment provision drawn 27,188,387.33 23,764,720.77 Depreciation of fixed assets 25,799,847.15 24,697,041.92 Amortizing of intangible assets 816,704.61 816,704.61 Amortizing of long-term expenses 189,669.38 Decrease of expenses to be amortized (Less: increase) 138,646.16 Increase of reserved expenses (Less: decrease) Cash lost from treatment of fixed assets, intangible assets and other long-term assets (less: -197,579.35 -187,801.88 gains) Loss of disposing fixed assets 18,130.24 Financial expenses -3,273,176.36 -2,583,396.10 Investment loss (less: gains) 39,518.29 -53,376,064.67 Credit of deferred tax (less: debit) Decreasing of inventories (less: increasing) -124,673,173.57 -83,883,223.46 Decrease (less: increase) in operating receivables -125,592,141.66 -118,176,187.55 Increase (less: decrease) in operating payables 14,245,029.68 -9,409,953.90 Others 2,807,386.95 2,117,606.69 Minor shareholders’ equity 25,095,777.82 Cash flow generated by business operation, net 191,436,072.72 139,072,067.07 2. Investment and financing activities not involving with cash Liabilities converted to capital Convertible bond expire in 1 year Fixed assets leased through financing 3. Net increasing of cash and cash equivalents Balance of cash at period end 327,611,867.29 262,992,129.75 Less: Initial balance of cash 523,233,489.19 465,662,475.64 Plus: Balance at the end of term of cash and equivalents Less: Balance at the beginning of term, cash and equivalents Net increasing of cash and cash equivalents -195,621,621.90 -202,670,345.89 Legal representative: Nie Zhonghai Financial Superior: Bo Ronghua Accounting Manager: Wu Guomei 9.3 Explanation on changes of accounting policies, accounting estimation, and accounting method √ applicable □ not applicable The Company adopts age method in accounting of bad debt provision. In viewing of monitoring the cash flow situation of the debtors, improve the capital quality, enforce the Company’s risk resistance, and the principle of cautious, as approved by the 8th meeting of the 3rd term of Board, the Company changed its accounting estimation policy on drawing of bad debt provisions. The followings are the contrast of the original and new policies. Age of account receivable Original rate New rate Within 1 year 5% 5% 1-2 years 10% 20% 2-3 years 30% 40% Beyond 3 years 60% 60% The above changing of accounting estimation was handled by future application method. It has increased the drawing of bad debt provisions upon account receivable by RMB11,966,078.64, the drawinf of bad debt provisions upon other receivables by RMB2,233,934.87, while drecreased the net profit of year 2005 by RMB14,200,013.51 9.4 Content, amount, reason and impact of major accounting errors 21 Hangzhou Steam Turbine Co., Ltd. Summary of Annual Report 2005 □applicable √ not applicable 9.5 Details about changing of consolidation range comparing with the previous annual report √ applicable □ not applicable Hangzhou Steam Turbine Machinery & Equipment Co., Ltd. is a company with limited liabilities sponsored by Hangzhou Steam Turbine Group Co., Ltd., Bian Jinxuan, and other 5 natural persons. It was incorporated on April 26th 2004, with registered capital of RMB5 million. In April 2005, as decided by the shareholders’ general meeting, the Company was about to buy out the share equity and increase the capital by RMB10 million. The registered capital was about to be increased to RMB15 million. The Company has put RMB2,100,000 to acquire the share equity and put another investment in the company amounted to RMB5,700,000. The Company is holding 52% of the share equity of the company thereafter. The re-registering procedures had been accomplished in May 2005. Hangzhou Steam Turbine Machinery & Equipment Co., Ltd. was included in the consolidating range of the Company’s financial statements since May 1st 2005. 22