StockCode:200771 StockID:HangqilunB AnnouncementNo.2017-72 HangzhouSteamTurbineCo.,Ltd. Announcementontheprovisionforimpairmentofassets ThemembersoftheBoardandtheCompanyacknowledgebeingresponsibleforthe truthfulness,accuracy,andcompletenessoftheannouncement.Notanyfalserecord,misleading statementorsignificantomissioncarriedinthisannouncement. The15thtermofBoardheldits7thMeetingonOctober25,2017,Themeetingexaminedthe Proposaloftheprovisionforimpairmentofassets,Thisproposalwasadoptedwith10votesin favor,0objectionand0waive.Theamountoftheprovisionforimpairmentofassetsofthe companyisRMB56.2579million,thedetailofwhichisannouncedasfollows: I.Theoverviewoftheprovisionforimpairmentofassets Forfairlyreflectingthecompany’sassetsvalue,accordingtotheAccountingStandardsfor EnterprisesandRegulationsonProvisionofAssertsImpairmentandWrite-offofAssetsfor Enterprises(Revisedin2016）,andbasedontheprincipleofprudence,thecompanyhaschecked eachassetoftheconsolidatedfinancialstatementsbytheendofthereportingperiodandhas assessedthattherewouldbesomeimpairmentofassets,thendeterminedtheneedforthe provisionforimpairmentofassets.Theassetsoftheprovisionforimpairmentofassetmainly includedinventory.whichwasdetailedasfollows: OnDecember28,2012,thecompanysignedasupplycontractwithInnerMongoliaHongyu TechnologyCo.,Ltd.Aftersigningthecontract,thecompanyhasproducedsteamturbines, compressors,withpurchasingtherelatedauxiliaryequipmentforsupportingtheproject.Afterthe projectsuspensionbyInnerMongoliaHongyu,thecompany'sprojectrelatedequipmentcostshad occurred.ThecompanyrecentlycontactedInnerMongoliaHongyu,andtheprojectresumingtime wasuncertain.Uponinquiry,thiscompanyhasanumberofactsofdishonestrecord.Throughthe communicationbythecompanyandtheaccountingfirm,intheprincipleofprudence,andinorder toobjectivelyreflectthecompany'sfinancialsituation,theCompanymadeaprovisionofRMB 56.2579millionfortheimpairmentofassetsofthefinishedproductinventoryproducedunderthe contractoftheInnerMongoliaHongyuProject. II.Theconfirmationstandardandmethodofprovisionontheprovisionforimpairmentof assetsThemethodoftheprovisionforimpairmentofinventories:theinventoriesweremeasuredatlowerofcostornetrealizablevalue,andtheprovisionforinventoryfallingpricewasmadeaccording to the difference of the costs higher than the net realizable value of singleinventory/inventorycategory.Namely,asofSeptember30,2017,theInnerMongoliaHongyuprojecthasproducedatotalcostofRMB95.5407million,andafterthedeductionofRMB1millionofthereceivedgoodsandtheestimatedresidualvalueoftheaboveequipmentofRMB7.7million,theprovisionforthebaddebtonimpairmentofassetsofInnerMongoliaHongyuprojectshouldbeRMB86.8407million,ofwhichRMB30.5828millionwasmadeforprovisionin2015.III.Theinfluenceoftheprovisionforimpairmentofassetsonthecompany’sfinancialstatus Thecompany’sprovisionfortheimpairmentofassetsleadstothedecreaseofRMB56.2579milliononthetotalprofitsinthecompany'sconsolidatedfinancialstatementsofthe3rdQuarterlyReport2017IV.Thereviewprocessoftheprovisionforimpairmentofassets Theitemoftheprovisionforimpairmentofassetshasbeenexaminedandadoptedinthecompany’s15thboardmeetingofthe7thsessionboardofdirectors.Duetotheamountoftheprovisionforimpairmentofassetsexceedthe50%auditednetprofitsofthecompanyofyear2016,accordingtotheregulationsoftheStockListingRulesstipulatedbytheShenzhenstockexchange,theitemofprovisionshallbeexaminedandadoptedinthegeneralshareholdermeeting.V.Thereasonablenessexplanationoftheprovisionforimpairmentofassetsbytheboardofdirectors The board of directors reckoned that: the provision for impairment of assets was inaccordance with the Accounting Standards for Enterprises and the company’s managementinstitutiononprovisionfor impairmentofassets,and thatwasinlinewiththeprinciple ofprudenceandwasreasonable,objectivelyandfairlyreflectedthecompany’sfinancialstatus,sotheboardagreedtheprovisionforimpairmentofassets.ThecompanyshallperformancethereviewprocessbystrictlyconformingtotheprovisionsstipulatedbytheRegulationsonProvisionofAssertsImpairmentandWrite-offofAssetsforEnterprises.VI.TheindependentopinionsontheprovisionforimpairmentofassetsfromindependentdirectorsThe company hascarried out theprovisionfor impairment ofassets byconforming tothe Accounting Standards for Enterprises and relevant regulations, whichwas in line withthe company’sactualsituationandthecompanylaw,thearticlesofassociationandrelevantregulation andlaws,withstandardizedprocedurefor reviewing,and therewasnosituationthatwould jeopardize the interests of the company and the minority shareholders. The provision for impairmentofassetswasagreed. VII.Theexaminationopinionsonthecompany’sprovisionforimpairmentofassetsbythe boardofsupervisors Theboardofsupervisorsreckonedthat:thecompany'sprovisionforimpairmentofassetswasin accordancewiththeAccountingStandardsforEnterprisesandrelevantregulations,whichfairly reflectedthecompany’sassetsvalueandoperatingresults.Thedecisionmakingprocedureofthe proposalonprovisionforimpairmentofassetswasinlinewiththelaw,andtheprovisionfor impairmentofassetswasagreed. VIII.Documentsforreference 1. Resolutionsofthe15thmeetingofthe7thTermofBoard; 2.Resolutionsofthe8thMeetingofthe7thSupervisoryCommittee 3.IndependentOpinionsofIndependentDirectors Thisannouncementisherebymade. TheBoardofDirectorsofHangzhouSteamTurbineCo.,Ltd. October26,2017