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Stock Code: 200771 Stock ID: Hangqilun B Announcement No. 2018-05
Hangzhou Steam Turbine Co., Ltd.
Announcement on the abandonment of the priority
subscription rights
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.
Special Notice:
1. Hangzhou Steam Turbine Casting Co., Ltd, which is the holding subsidiary of Hangzhou Steam
Turbine Co., Ltd (hereinafter referred to as “the Company “), plans to increase the registered
capital from RMB 22 million to RMB 30 million, with the company waives the preemptive
subscription right of capital contribution in this capital increase.
2. This matter is not a major asset restructuring, nor is a related party transaction. In accordance
with the relevant laws and regulations such as the Stock Listing Rules of the Shenzhen Stock
Exchange and the Articles of Association of the Company, this matter, which is within the
authorized right scope of decision-making to the Board of Directors, does not need to be submitted
to the shareholders’ general meeting of the company for consideration and approval, however shall
be reported and filed to the management department of state-owned assets for approval.
3.The Casting company needs to complete the works including the related assets evaluation and
audit to carry out the capital increase and share enlarging, and the company will fulfill the relevant
procedures according to the relevant regulations and timely fulfill the obligations of information
disclosure.
I. Overview of the matter
Due to the impact of the overall weak market of equipment manufacturing industry and the
intensified market competition, the casting company lacks a sustained future profitability. In order
to further strengthen the market competitiveness and ensure the sustainable development of
business, the casting company plans to introduce new strategic investors by the means of capital
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increase and share enlarging, thus to upgrade its production capacity and enhance its
comprehensive competitiveness.
As of now, the registered capital of the casting company is RMB 22 million, which will be
changed to be RMB 30 million after the completion of the capital increase. The price of per share
for capital increase shall be determined through the asset assessment and audit by the engaged
intermediary institution in accordance with the measures for the management of state-owned
assets and be listed on the public property exchange market to carry out the transaction, with the
transaction price shall not be lower than the assessment value after being confirmed and filed by
the state asset regulatory authority, and the transaction price will be determined on the basis of the
results of the open listing.
II. Casting company profile
1.Company name: Hangzhou Steam Turbine Casting Co., Ltd.
2.Date of establishment: March 1, 2004
3.Registered capital: RMB 22 million
4.Place of registration: No.2 Road, Tangxi Industry Area, Yuhang District, Hangzhou
5.Legal rerpesentaqtive: Yu Junming
6. Business scope: Production: resin sand cast steel, resin sand cast iron, organic fat glass of water
glass castings, forgings; Installation, maintenance: Casting equipment; Sales: The company's
products; import and export goods
7.The past three year's major financial indicators:
January-September 2017 December 31, 2016 December 31,2015
Total assets 454,304,355.88 406,270,109.45 423,235,786.63
Net assets 161,238,668.91 165,559,715.66 168,816,708.11
January-September 2017 2016 2015
Operating income 229,722,305.24 286,947,144.79 293,407,553.21
Operating profit 11,618,828.26 17,925,093.55 4,821,660.73
Net profit 10,781,546.52 17,095,623.20 5,944,783.76
8. Ownership structure
Shareholders Shareholding ratio
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Hangzhou Steam Turbine Co., Ltd. 51%
Yang Lianrong 40%
Casting company management team 9%
III. Deliberations by the Board
On 26 January 2018, the Company held the 18th meeting of the 7th Board of Directors of the
Company ended up with 10 votes consent, 0 votes objection and 0 votes abstention, approved the
“Proposal about the holding subsidiary planning to increase capital and share enlarging and the
company waiving the preemptive subscription right of capital increase” and agreed that the
company waives the preemptive subscription right of capital increase in the casting company’s
capital increase.
IV. The reasons why the Company gives up the preemptive subscription right of capital
increase
The decision to give up the preemptive subscription right of the capital increase is mainly
based on the status quo and future development of the casting company. This is conducive for the
casting company to fully use the social capital and enhance the market competitiveness and capital
financing capacity.
Meanwhile, the capital increase is conducive to further improve the casting company’s
management capabilities, making full use of the advantages of its resources in the foundry
industry, utilizing the opportunity of market access of Foundry Industry, speeding up the
transformation and upgrading through technological innovation, enhancing the core
competitiveness of casting company, thus to achieve multi-win-win situation.
The name of shareholders after Capital
increase
Shareholding ratio after capital
increase
Yang Lianrong 40%
Hangzhou Steam Turbine Co., Ltd. 37.4%
New strategic investors 13.6%
Casting company management team 9%
V. The impact on the listed Company
(1) If this capital increase is completed, the stake of the casting company held by the Company
will decreased to 37.4% from 51%.
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(2) After the completion of this capital increase, the Company will still retain a certain number of
board seats in the casting company and shall have binding provisions in the Company’s Articles of
Association, which can effectively control the risk. There is no situation of harming the interests
of the small and medium shareholders and the investors, and it will not have a significant impact
on the company's financial position and operating results.
VI. Special Opinions of Independent Directors
The independent directors of the Company reckoned that: The company’s giving-up of its
preemptive subscription right to the capital increase under the same conditions of the transaction
in this matter is the decision based on the status quo of the operation of the involved subsidiary,
and the preemptive subscription right to be waived will be confirmed on the basis of audits and
evaluations conducted by the third-party evaluation agency and will be submitted to the State
Assets Administration Department for filing and approval for pricing, which is in line with the
relevant provisions of relevant laws and regulations, and there is no circumstance of harming the
interests of the company or its shareholders. The board of directors of the company has deliberated
on this matter., and the procedure for convening the meeting of the board of directors and the
voting procedures are in accordance with the relevant laws, regulations and the Articles of
Association of the Company.
VII. Documents available for inspection
1. Resolutions of the 18 Meeting of the seventh Board of Directors
2. Independent opinions issued by the independent directors of the Company on the above issues
of waiver of rights.
The Board of Directors of Hangzhou Steam Turbine Co., Ltd.
January 27, 2018