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RNS Number:3340J
Zhejiang Southeast Elec Power Co Ld
28 March 2003
PART 2
(g) Long-term equity investment Ending balance 1,208,550,000.00
i. Details
Ending Amount Beginning Amount
Item Book Devalua-tion Book Book Devalua-tion Book
Balance Reserve Value Balance Reserve Value
Investment 133,250,000.00 133,250,000.00 133,250,000.00 133,250,000.00
in
affiliated
enterprises
Other 1,075,300,000.00 1,075,300,000.00 1,075,300,000.00 1,075,300,000.00
equity
investment
Total 1,208,550,000.00 1,208,550,000.00 1,208,550,000.00 1,208,550,000.00
ii. Long-term equity investment-stock investment
i. Details
Investee Type of Numbers of Shareholding Cost of original Total at year end Market
Company stock shares percentage investment price
at year
end
China Ordinary 176,000,000 2.14% 312,000,000.00 312,000,000.00 nil.
Everbright Bank stock shares
Communication Ordinary 150,000,000 0.94% 285,000,000.00 285,000,000.00 nil
Bank stock shares
China Southern Ordinary 200,000,000 5.78% 220,000,000.00 220,000,000.00 nil
Securities Co., stock shares
Ltd
China Merchants Ordinary 30,000,000 0.53% 105,000,000.00 105,000,000.00 nil
Bank stock shares
Fujian Ordinary 40,000,000 1.33% 82,400,000.00 82,400,000.00 nil
Industrial Bank stock shares
Subtotal 1,004,400,000.00 1,004,400,000.00
ii) There were no equity investment differences.
iii. Long-term equity investment - other equity investment
i) Details
Investee Company Investment Term Investment Amount Percentage of registered capital
occupied
Zhejiang Jiahua Power Generating 25 years 133,250,000.00 24.00%
Company Limited
Zhejiang Provincial Natural Gas Not specified 50,000,000.00 10.00%
Development Company Limited
Zhejiang Venture Capital Co., Ltd Not specified 10,000,000.00 10.00%
Zhejiang Fuxing Electric Fuel Co., Not specified 5,900,000.00 3.93%
Ltd
Jiaojiang Phoenix Villa Company Not specified 5,000,000.00 14.28%
Limited
Subtotal 204,150,000.00
Other equity investment with equity accounting
Investee Company Original Investment Accumulated Equity Cash dividend Accumulated
supplementary increase and shared this increase and
investment decrease of year decrease this
investee year
company during
this year
Zhejiang Jiahua 133,250,000.00
Power Generating
Company Limited
Subtotal 133,250,000.00
(h) Original cost of fixed assets Ending balance: 8,262,163,609.22
i. Details
Beginning Amount Increase during this year Decrease during this Ending Amount
Category year
Housing and 1,824,738,199.84 602,568,437.21 14,861,515.00 2,412,445,122.05
buildings
General Equipment 494,078,307.14 263,963,620.48 36,749,982.35 721,291,945.27
Special Equipment 4,237,615,236.85 867,612,351.89 73,514,653.23 5,031,712,935.51
Vehicles 42,766,070.13 6,930,472.67 3,117,250.00 46,579,292.80
Other Equipment 44,898,142.81 5,989,309.92 753,139.14 50,134,313.59
Total 6,644,095.77 1,747,064,192.17 128,996,539.72 8,262,163,609.22
ii. The increase during this year includes the amount of RMB 1,725,772,734.66 yuan transferred from completion of the
construction in progress.
iii. The decrease during this year includes the amount of RMB 12,955,478.00 yuan resulting from sale of fixed assets.
There was no swap of fixed assets with other organizations.
iv. There was no fixed assets rented on financial lease in the above fixed assets.
v. There was no fixed assets rented out on operation.
vi. There was no temporarily idle fixed assets.
vii. Fixed assets having finished depreciation and remaining in use
Category Original cost Accumulated depreciation Reserve for devaluation Book value
Housing and buildings 76,374,776.00 74,100,515.84 2,274,260.16
General Equipment 79,931,065.25 79,818,451.25 112,614.00
Special Equipment 701,721,075.00 694,977,365.70 6,743,709.30
Vehicles 4,243,720.00 4,243,720.00
Other Equipment 5,614,840.01 5,614,840.01
Total 867,885,476.26 858,754,892.80 9,130,583.46
viii. There was no retired fixed assets pending disposal.
ix. There was no fixed assets subject to debt guarantee.
x. Explanation about whether formalities relating to property right transfer of the fixed assets newly added at
beginning or in current period have been completed
The certificate of property right for the fixed asset of RMB 1,582,508,300.00 yuan of the subsidiary Zhejiang
Changxing Power Generation Co. Ltd newly acquired in current period from incoming asset transfer valued at the actual
project cost was not obtained because the final accounting of the project had not been done. In addition, the
certificate of land use right for 713.2736 mu of plant house land for this company had not been acquired up to 31
Dec. 2002.
(i) Accumulated Depreciation Ending amount 3,315,214,904.61
Category Beginning Amount Increase this year Decrease this year Ending Amount
Housing and 576,777,138.24 90,323,549.45 3,702,494.79 663,398,192.90
buildings
General
equipment 250,994,934.86 50,806,001.96 27,342,553.64 274,458,383.18
Special
equipment 2,107,859,067.03 292,398,954.51 59,949,511.02 2,340,308,510.52
Vehicles 20,240,289.84 5,732,183.25 3,075,134.39 22,897,338.70
Other equipment 10,893,818.63 3,823,345.35 564,684.67 14,152,479.31
Total 2,966,765,248.60 443,084,034.52 94,634,378.51 3,315,214,904.61
(j) Net value of fixed assets
i. Details
Category Ending Amount Beginning Amount
Housing and buildings 1,749,046,929.15 1,247,961,061.60
General equipment 446,833,562.09 243,083,372.28
Special equipment 2,691,404,424.99 2,129,756,169.82
Vehicles 23,681,954.10 22,525,780.29
Other equipment 35,981,834.28 34,004,324.18
Total 4,946,948,704.61 3,677,330,708.17
ii. Analysis indicates that the above fixed assets bore no visible signs of devaluation, hence no allocation of the
devaluation reserve.
(k) Project equipment & materials Ending balance 32,013,043.90
Category Ending Amount Beginning Amount
Materials prepared for project 48,361.50 4,066.00
Prepayment for large-scale equipment 31,964,682.40 41,552,45 1.00
Total 32,013,043.90 41,556,517.00
(l) Construction in progress Ending balance 458,328,216.40
i. Details
Name of Ending Amount Beginning Amount
project
Book Balance Devaluation Book Book Balance Devaluation Book
reserve value reserve value
Taizhou Power 66,132,030.27 66,132,030.27 29,765,893.12 29,765,893.12
Plant
Xiaoshan 14,148,174.40 14,148,174.40 22,651,677.25 22,651,677.25
Power Plant
Phase IV 378,048,011.73 378,048,011.73 918,153,901.01 918,153,901.01
project of
Changxing
Power Plant
Total 458,328,216.40 458,328,216.40 970,571,471.38 970,571,471.38
Changes in construction in progress
i) Projects in connection with Taizhou Power Plant
Name of Beginning Increase in Transferred Other Ending Source Budget Ratio of
Project Amount the year to fixed decrease in Amount of Investment
assets in the year financing (RMB
the year '0,000 /budget
yuan)
Renovation 22,687,096.73 22,687,096.73 other 2,410 94.14%
of No.3
turbine
steam path
Renovation 11,407,741.04 11,407,741.04 other 1,600 71.30%
of DCS, DEH
for Unit 3
High 598,070.00 7,440,943.79 8,039,013.79 other 1,230 65.36%
pressure ash
pipe for
Phases 1-3
Renovation 5,256,581.93 5,256,581.93 other 580 90.63%
of air
preheater
for Unit 3
Central 3,753,909.32 3,753,909.32 other 500 75.08%
air-condition
er in old
plant
110kv low 2,024,098.46 2,024,098.46 other 210 96.39%
oil circuit
breakers
Renovation 1,817,523.00 1,817,523.00 other 750 24.23%
of dust
collector
for Unit 3
Waste water 171,669.00 1,367,259.28 1,538,928.28 other 155 99.29%
treatment
Renovation 1,354,312.19 1,354,312.19 other 140 96.74%
of bypass of
Unit 3
Renovation 1,033,724.78 1,033,724.78 other 2,400 4.31%
of No.4
turbine
steam path
No. 7 ash 14,920,204.05 10,169,773.94 179,254.00 24,910,723.99 other 4,895 100%
silo
No. 1 2,803,354.95 1,165,937.63 3,969,292.58 other 356 100%
transfer
station
Renovation 1,424,420.81 8,040,820.61 9,465,241.42 other 100%
of old 1,321
buildings in
the plant
Low pressure 2,326,939.29 2,070,433.50 4,397,372.79 other 639 100%
pipes for
phases 1-3
Minor 858,000.00 8,367,627.67 2,006,526.92 7,219,100.75 other
projects
Other 6,663,235.02 146,514,400.99 86,576,161.05 66,601,474.96 other
completed
projects
Subtotal 29,765,893.12 234,472,184.86 106,593,848.76 91,512,198.95 66,132,030.27
ii) Projects in connection with Xiaoshan Power Plant
Name of Beginning Increase in Transferred Other Ending Source Budget Ratio of
project Amount the year to fixed decrease in Amount of investment
assets in the year financing (RMB /budget
the year '0,000
yuan)
Renovation 4,265,000.00 4,265,000.00 Other 850 50.18%
of turbine
steam path
for Unit 2
Fire 123,410.00 2,300,000.00 2,423,410.00 Other 308 78.68%
protection &
maintenance
building
Renovation 1,578,970.37 1,578,970.37 Other 1,600 10.43%
of DCS
system for
Unit 2
Circuit 2,884,876.95 90,000.00 1,553,022.29 1,421,854.66 Other 300 99.16%
breaker for
Unit 1
Desulfurizati 516,045.57 433,633.92 949,679.49 Other
on project
Renovation 12,013,293.38 3,057,622.00 15,070,915.38 Other 1,460 100%
of DCS
system for
Unit 1
Phase II 1,687,998.22 1,687,998.22 Other
project
Minor 50,964.95 1,770,296.71 1,821,261.66 Other
projects
Other 7,063,086.40 43,169,399.59 20,046,648.23 30,185,837.76
completed
projects
Sub-total 22,651,677.25 58,352,920.81 36,670,585.90 30,185,837.76 14,148,174.40
iii) Other projects
Name of Project Beginning Amount Increase in the year Transferred to fixed Other decrease in the
assets in the year year
Phase IV project 918,153,901.01 1,134,486,665.03 1,582,508,300.00 92,084,254.31
of Changxing
Power Plant
(Note)
Subtotal 918,153,901.01 1,134,486,665.03 1,582,508,300.00 92,084,254.31
Total 970,571,471.38 1,427,311,770.70 1,725,772,734.66 213,782,291.02
Name of Project Ending Amount Source of financing Budget Ratio of investment
(RMB '0,000 yuan) /budget
Phase IV project of 378,048,011.73 Loan 241,022 83.75%
Changxing Power Plant
(Note)
Subtotal 378,048,011.73
Total 458,328,216.40
(Note): Unit 1 of the subsidiary Zhejiang Changxing Power Generation Co. Ltd (i.e. Changxing Project Phase IV) was
put into commercial operation at zero o'clock on 15 Dec. 2002 after completing 168 hours of trial operation. The
actual cost of Unit 1 and the common facilities for Units 1-2 of Changxing Co. was transferred to the fixed assets.
iii. Borrowing expenses capitalized
Name of Beginning Amount Increase in the Transferred to Other Ending Amount Capitalization
project year fixed assets in decrease rate
the year in the (per annum)
year
Changxing 12,846,503.74 38,890,584.40 24,810,600.00 26,926,488.14 5.67%
Power Plant
Phase IV
Subtotal 12,846,503.74 38,890,584.40 24,810,600.00 26,926,488.14
iv. Analysis indicates that the above projects in construction bore no visible signs of devaluation, hence no
allocation of the devaluation reserve.
(m) Intangible assets Ending balance 221,098,737.29
i. Details
Ending amount Beginning amount
Category
Book Balance Devaluation Book Book Balance Devaluation Book
reserve value reserve value
Land use 217,368,234.41 217,368,234.41 223,842,298.07 223,842,298.07
right
Computer 2,956,752.72 2,956,752.72 2,731,400.12 2,731,400.12
software
Others 773,750.16 773,750.16 928,500.12 928,500.12
Total 221,098,737.29 221,098,737.29 227,502,198.31 227,502,198.31
ii. Changes in intangible assets
Acquisition Original amount Beginning amount Increase in Transferred Amortization
Category method current year from current in current
amount year
Land use Outsourcing 245,290,510.57 223,842,298.07 1,582,601.34 4,891,462.32
right
(Note)
Computer Outsourcing 5,925,736.09 2,731,400.12 502,398.62 831,497.62 1,122,647.40
software
Others Outsourcing 1,547,500.00 928,500.12 154,749.96
Total 252,763,746.66 227,502,198.31 1,348,000.00 1,582,601.34 6,168,859.68
Ending amount Accumulated amortization Residual amortization term (years)
Category
Land use right 217,368,234.41 27,922,276.16 44-65
(Note)
Computer software 2,956,752.72 2,968,983.37 1.7-4.95
Others 773,750.16 773,749.84 5
Total 221,098,737.29 31,665,009.37
(Note): The original amount of land use right was RMB 246,969,027.20 yuan, which was decreased by an amount of RMB
1,678,516.63 yuan due to sale of part of land for living areas in current period, hence the residual value amounting
to RMB 1,582,601.34 yuan.
iii. There were no obvious signs of devaluation of the intangible assets, hence no allocation of the devaluation
reserve.
(n) Long-term deferred expenses Ending balance 27,265,487.90
Original Beginning Increase Amortization Ending amount Accumulated Residual
Item amount amount this year in current amortization amortization
year term
Lease 24,910,723.99 24,910,723.99 345,982.28 24,564,741.71 345,982.28 5.92 years
expenses
for No. 7
ash silo
Production 2,700,746.19 2,700,746.19 2,700,746.19
preparatory
expenses
for Unit 2
of
Changxing
Project
Phase IV
Expenses 1,185,700.00 444,637.46 444,637.46 1,185,700.00
for land
lease
Organization 53,225,601.22 3,114,558.06 50,111,043.16 53,225,601.22 53,225,601.22
cost
(Note)
Total 82,022,771.40 3,559,195.52 77,722,513.34 54,016,220.96 27,265,487.90 54,757,283.50
(Note): This is the organization cost of the subsidiary company, namely Zhejiang Changxing Power Generating Company
Ltd. Since Unit 1 of this company was put into operation after completing 168 hours of trial operation at zero
o'clock on 15 Dec.2002, its organization cost was transferred to the current gains & losses as a lump sum.
(o) Short-term borrowings Ending balance 553,390,000.00
Category Ending Amount Beginning Amount
Credit borrowing 550,000,000.00 (Note) 200,000,000.00
Guarantee borrowing 3,390,000.00
Total 553,390,000.00 200,000,000.00
(Note): of which a trust loan in amount of RMB 320,000,000.00 yuan was supplied by ZPEPDC to the subsidiary namely
Zhejiang Changxing Power Generating Company Ltd through China Construction Bank Hangzhou Zhijiang Branch. Refer to
Item (8)-c-(j) of the Notes to Financial Statements herein for details.
(p) Bills payable Ending balance 56,963,000.00
i. Details:
Category Ending Amount Beginning Amount
Bank acceptance bill 56,963,000.00
Total 56,963,000.00
ii. There were no accounts payable to major shareholders holding 5% or more of the Company's share capital.
(q) Accounts payable Ending balance 456,384,684.26
There were no accounts payable to major shareholders holding 5% or more of the Company's share capital.
(r) Wages payable Ending balance 86,668,618.65
i. There was no wages payment in arrears.
ii. The ending balance is the merit-linked wage allocated as determined by Zhejiang Provincial Wage System Reform
Office but not yet paid.
(s) Dividends payable Ending balance: -498,480,000.00
i. Details
Name of Investors Ending Amount Beginning Amount
ZPEPDC 198,390,873.60 199,990,800.00
ZPEPC 127,481,126.40 128,509,200.00
Zhejiang Bada Company Limited 992,000.00 1,000,000.00
Zhejiang Electric Power Equipment and Materials Supply Company 248,000.00 250,000.00
Zhejiang Electric Power Real Estate Development Company Limited 248,000.00 250,000.00
Shareholders of B shares 171,120,000.00 172,500,000.00
Total 498,480,000.00 502,500,000.00
ii. The ending amount of RMB 498,480.00 yuan is the cash dividends payable to shareholders based on the profit
distribution proposal 2002 determined in the Board meeting on 26 Mar. 2003. For details, please refer to Item (5) of
Notes to of Financial Statements herein.
(t) Tax payable Ending balance 153,980.49
Category Ending Amount Beginning Amount Statutory Tax Rate
VAT 29,207,888.79 48,154,514.35 At a rate of 17%
Business tax 277,600.41 At a rate of 5%
Urban maintenance and construction tax 2,458,163.00 8,473,698.27 Refer to Item (3)-c of the Notes
herein
Corporate income tax 84,758,935.80 81,904,600.13 At a rate of 33%
Individual income tax withheld and -967,542.87 -1,568,622.83 At a stipulated applicable rate
paid in advance (Note)
Real estate tax 2,363.90 At a rate equal to 12% of the rent
income
Total 115,737,409.03 136,964,189.92
(Note): This is the advance payment on behalf of employees, but yet unsettled.
(u) Other payment due Ending balance 1,584,804.17
Category Ending Amount Beginning Amount Tax Rate
1,490,573.52 4,851,621.04 Refer to Item (3)-d of the Notes
Education surtax herein
Housing reserve for employees 77,112.00 11,626.00 At a stipulated applicable rate
Water conservancy construction fund 17,118.65 At a rate equal to 0.1% of the
principal operating income
Total 1,584,804.17 4,863,247.04
(v) Other accounts payable Ending balance 122,446,669.53
Accounts due to major shareholders holding 5% or more of the Company's share capital.
Name of Shareholder Ending Amount Beginning Amount
ZPEPDC 1,058,581.44
ZPEPC 680,218.56
Subtotal 1,738,800.00
Description of other large-amount accounts payable
Name of Organization Description Amount
Subsidy for employee housing Housing subsidy payable 76,742,750.69
(Note)
Corporate medical insurance premium Unpaid insurance premium payable 18,684,282.44
Changxing Changfeng Energy Company Ltd. Current accounts 2,803,873.66
Educational funds for employees Balance 2,505,406.82
Subtotal 100,736,313.61
(Note): Refer to Item (12)-d-(a) of the Notes to Financial Statements herein.
(w) Pre-allocated expenses Ending balance 934,800.00
Item Ending Amount Beginning Amount Causes of Ending Balance
Overhaul expenses for generating units 7,079,293.09 Unpaid accruals at year end
Interest 934,800.00 325,000.00 Unpaid accruals at year end
Total 934,800.00 7,404,293.09
(x) Long-term liabilities due within 1 year Ending balance 326,060,000.00
i. Details
Category Ending Amount Beginning Amount
Long-term borrowings 326,060,000.00 326,060,000.00
Total 326,060,000.00 326,060,000.00
ii. Long-term liabilities due within 1 year-long-term borrowings
Borrowing Conditions Ending Amount
Borrowing on Credit 326,060,000.00
Subtotal 326,060,000.00
The ending balance is the portion of long-term trust loans that needs to be repaid in 2003 pursuant to the Debt
Repayment Agreement in 2001 and Thereafter between the Company and ZPEPC, ZPEPDC. The amount of the long-term trust
loans is determined pursuant to the Trust Loan Agreement between the Company, ZPEPC and East China Electric Power
Finance Company Ltd, as well as the Trust Loan Contract between the Company, ZPEPDC and Shanghai Pudong Development
Bank Hangzhou Branch. Refer to Notes to Financial Statements (8)-c-(f).
(y) Long-term borrowings Ending balance 776,763,450.00
Borrowing Conditions Ending Amount Beginning Amount
Credit loan 326,060,000.00 (Note 1) 652,120,000.00
Guarantee loan 450,703,450.00 (Note 2) 20,006,900.00
Total 776,763,450.00 672,126,900.00
(Note 1): The ending balance of long-term borrowings is the original amount of the long-term debt of Taizhou Power
Plant Phase IV extension project under the Company. Pursuant to Trust Loan Agreement signed by the Company, ZPEPC and
East China Electric Power Finance Company Ltd in Dec. 1999, the debt owing to ZPEPC is converted to the Company trust
loan borrowings totaling RMB 1,706,380,000.00 yuan. Up to the end of this year, the amount of RMB 1,213,206,000.00
yuan was repaid. Pursuant to Debt Repayment Agreement in 2001 and Thereafter, the amount of RMB 246,587,000.00 yuan
due in 2003 was transferred to "long term liabilities due within 1 year", and the balance of RMB 246,587,000.00 yuan
was stated as "long term borrowings". Pursuant to Trust Loan Contract signed by the Company, ZPEPDC and Shanghai
Pudong Development Bank Hangzhou Branch on 29 Dec. 2000, the remaining debt owing to ZPEPDC as of the end of 2000 was
converted to the Company's 4-year-term trust loan borrowings totaling RMB 317,892,000.00 yuan. Up to end of this
year, the amount of RMB 158,946,000.00 yuan was repaid. Pursuant to Debt Repayment Agreement in 2001 and Thereafter,
the amount of RMB 794,730,000.00 yuan due in 2003 was transferred to "long term liabilities due within 1 year", and
the balance of RMB 79,473,000.00 yuan was stated as "long term borrowings". As at the end of the year, the balance of
above two trust loans totaled RMB 652,120,000.00 yuan, of which RMB 326,060,000.00 yuan payable in 2003 was
transferred to "long-term liabilities due within 1 year", and the balance of RMB 326,060,000.00 yuan was stated as
"long term borrowings". For details, refer to the Notes to Financial Statements (8)-c-(f).
(Note 2): The subsidiary of the Company, namely Zhejiang Changxing Power Generation Company Ltd planned to borrow RMB
1,500,000,000.00 yuan from the bank on guarantee. As at Dec. 31, 2002, the actual borrowing amounted to RMB
450,000,000.00 yuan (in addition, RMB 703,450.00 yuan is the interest payable not yet paid at the period end). Refer
to Notes to Financial Statements (9)-a.
(z) Share Capital Ending Balance: 2,010,000,000.00
Beginning Increase/decrease during the year Ending Amount
Amount (+,-)
Item
Allotment Bonus Shares Others Sub-total
shares shares converted from
reserve
(1) 1. Promoters' State-owned
Non- Shares shares 1,315,000,000.00 1,315,000,000.00
negotiable
shares Shares held by
domestic legal
persons
5,000,000.00 5,000,000.00
Shares held by
foreign legal
persons
Others
2. Legal person shares by
subscription
3. Employee shares
4.Preference shares or
others
Total number of 1,320,000,000.00 1,320,000,000.00
on-negotiable shares
(2) 1.Domestically listed
Outstanding ordinary shares in RMB
shares
2.Domestically listed 690,000,000.00 690,000,000.00
foreign investment shares
3.Overseas listed foreign
investment shares
4.Others
Total number of 690,000,000.00 690,000,000.00
outstanding shares
(3) Total number of shares 2,010,000,00.00 2,010,000,000.00
(za) Capital Reserve Ending Balance : 1,863,272,079.51
i. Details
Item Beginning Amount Increase during the year Decrease during the Ending Amount
year
Share premium 1,859,977,258.75 1,859,977,258.75
Provision for non-cash 294,820.76 294,820.76
donations
Differences of foreign 3,000,000.00 3,000,000.00
captial conversion
Total 1,863,272,079.51 - - 1,863,272,079.51
ii. No change occurred to the capital reserve in the reporting year.
(zb) Surplus Reserve Ending Balance: 763,152,307.26
i. Details
Item Beginning Amount Increase during the year Decrease during the year Ending Amount
Statutory surplus reserve 327,028,705.62 54,547,448.01 381,576,153.63
Statutory common welfare 327,028,705.62 54,547,448.01 381,576,153.63
reserve
Total 654,057,411.24 109,094,896.02 763,152,307.26
ii. Explanations
i) The beginning amount was RMB 659,279,834.68 yuan. Pursuant to Document Ji Bian Han No. (2002)11 Notice about
Self-examination of Tax Payment by Province-owned Enterprises issued by the Inspection Office of the State Taxation
Bureau Zhejiang Branch, the Company made a self-examination of its tax payment for 2001. After self-examination, the
Company offset overstatement of expenses in 2001 and made up for payment of income tax for 2001. In addition, based
on the conclusion made by the Inspection Office under the State Taxation Bureau Zhejiang Branch, the Company made up
for payment of VAT for 2001. Treated as significant accounting errors, the above have been corrected by making
retroactive deduction of RMB26,112,117.17 yuan in the net profit for 2001 and a corresponding deduction of RMB
5,222,423.44 yuan in surplus reserve, arriving at the beginning amount of the surplus reserve of RMB 654,057,411.24
yuan after the adjustment. Refer to Item (12)-d-(b) of the Notes to Financial Statements hereof for details.
iii. The increase in this year was due to the 10% statutory common reserve and 10% statutory common welfare reserve
allocated separately from the net profit realized by the Parent Company this year amounting to RMB 545,474,480.11
yuan based on Profit Distribution Proposal 2002 made in the 24th meeting of the second Board of Directors of the
Company.
(zc) Undistributed Profit Ending Balance:750,357,340.23
i. Details:
Beginning amount 812,417,131.14
Add: Increase during the year 545,515,105.11
Less: Decrease during the year 607,574,896.02
Balance at year end 750,357,340.23
ii. Explanations
About profit distribution and in/de-crease in undistributed profit in current period
Based on the Profit Distribution Proposal 2002 made by the 2nd Board of Directors of the Company in the 24th meeting,
the after-tax profit gained by Parent Company in 2002 amounted to RMB 545,474,480.11 yuan. After separately
allocating 10% statutory surplus reserve and 10% statutory common welfare reserve totaling RMB 109,094,896.02 yuan,
and taking 2.01 billion shares at the year end as the base number, the distributable cash dividend per 10 shares will
be RMB 2.48 yuan (inclusive of tax), totaling RMB 498,480,000.00 yuan.
About profit/loss adjustment in preceding year leading to in/de-creases in current beginning amount of the
undistributed profit and causes/effects thereof
The beginning amount of undistributed profit was RMB 833,306,824.87 yuan. Pursuant to Document Ji Bian Han No.
(2002)11 Notice about Self-examination of Tax Payment by Province-owned Enterprises issued by the Inspection Office
of the State Taxation Bureau Zhejiang Branch, the Company made a self-examination of its tax payment for 2001. After
self-examination, the Company offset overstatement of expenses in 2001 and made up for payment of income tax for
2001. In addition, based on the conclusion made by the Inspection Office under the State Taxation Bureau Zhejiang
Branch, the Company made up for payment of VAT for 2001. Treated as significant accounting errors, the above have
been corrected by making retroactive deduction of RMB26,112,117.17 yuan in the net profit for 2001, a corresponding
deduction of RMB 5,222,423.44 yuan in surplus reserve, and a corresponding deduction of RMB 20,889,693.73 yuan in the
beginning undistributed profit. After the adjustment, the beginning amount of the undistributed profit was RMB
812,417,131.14 yuan. Refer to Item (12)-d-(b) of the Notes to Financial Statements hereof for details.
b. Notes to Consolidated Statement of Profit and Profit Distribution
(a) Income/cost from principal operating activities
Amount incurred during the year 3,320,944,888.62/2,208,191,596.44
Classified by operating activities
Item Amount of this year Amount of the preceding year
Income from principal
operating activities
Sale of electricity 3,320,944,888.62 3,370,277,286.61
Total 3,320,944,888.62 3,370,277,286.61
Cost of principal operating
activities
Cost of electricity sale 2,208,191,596.44 2,192,944,444.73
Total 2,208,191,596.44 2,192,944,444.73
Classified by operating regions
Item Amount of this year Amount of the preceding year
Income from principal
operating activities
East China region (Note) 3,320,944,888.62 33,370,277,286.61
Total 3,320,944,888.62 33,370,277,286.61
Cost of principal operating activities
East China region (Note) 2,208,191,596.44 2,192,944,444.73
Total 2,208,191,596.44 2,192,944,444.73
(Note): The electricity generated by the Company was transmitted into the electric power system of the East China
region.
iii. There was only 1 customer this year, namely ZPEPC. The sale income amounted to RMB 3,320,944,888.62 yuan,
accounting for 100% of the Company income gained from principal operating activities.
(b) Tax and surtax from principal operating activities
Amount incurred during the year 29,631,064.15
Item Amount of Amount of Tax rate
this year the preceding year
Urban maintenance & construction tax 18,744,094.44 26,406,317.60 Refer to Notes to Financial Statements
(3)-c
Educational surtax 10,886,969.71 15,160,792.08 Refer to Notes to Financial Statements
(3)-d
Total 29,631,064.15 41,567,109.68
(c) Profit from Other Operating Activities
Amount gained during the year 489,090.01
Activities Amount of this year Amount of the preceding year
Operating Operating Profit Operating Operating Profit
income expenses income expenses
Sale of 285,136.53 184,475.57 100,660.96 2,517,186.36 1,309,942.54 1,207,243.82
materials
Leasehold 19,699.20 2,363.90 17,335.30 90,318.76 4,922.38 85,396.38
activities
Others 599,706.31 228,612.56 371,093.75 590,948.26 216,021.40 374,926.86
Total 904,542.04 415,452.03 489,090.01 3,198,453.38 1,530,886.32 1,667,567.06
(d) Financial Expenses Amount incurred during the year: 41,228,922.57
Item Amount of this year Amount of preceding year
Interest expenses 63,687,122.45 95,813,659.20
Less: interest income 24,346,752.95 66,294,518.97
Exchange losses 256,339.44 270,490.14
Less: exchange gains
Others 1,632,213.63 834,381.66
Total 41,228,922.57 30,624,012.03
(e) Investment Income Amount gained during current year: 33,459,111.29
i. Details
Item Amount of this year Amount of the preceding year
Stock investment income 209,988.23 811,772.06
Profit distributed from affiliated or joint venture companies 17,123,633.06 228,600.00
Income from trust fund management 16,363,090.00 15,505,400.00
Income transferred from equity acquisition 4,601,683.38
Allocated devaluation reserve for short-term and long-term -237,600.00 -69,300.00
investment
Total 33,459,111.29 21,078,155.44
ii. There was no significant limitation to remittance of investment income back to the Company.
(f) Non-operating Income Amount realized during current year: 399,756.67
Item Amount of this year Amount of the preceding year
Income from penalty and confiscation 26,787.00 18,507.02
Net income on disposal of fixed assets 211,379.50 2,055.00
Others 161,590.17 67,075.88
Total 399,756.67 87,637.90
(g) Non-operating Expenses Amount incurred during current year: 34,312,683.64
Item Amount of this year Amount of the preceding year
Net loss on disposal of fixed assets 28,867,919.89 4,301,208.75
Water conservancy fund 3,387,395.94 6,199,118.75
Donation expenditure 1,500.00 586,600.00
Penalty expenditure 2,011,780.67 551,080.58
Others 44,087.14 308,583.26
Total 34,312,683.64 1,946,591.34
c. Notes to Statement of Cash Flow
(a) Other significant cash payment in relation to operating activities
Item Amount of this year Amount of the preceding year
Payment of expenses to intermediary agencies 3,211,589.74 3,455,874.10
Expenses of public announcements in the press 1,517,239.50 1,560,782.78
Insurance premium 5,715,005.91 6,339,130.77
Reception expenses 2,971,056.76 2,434,891.90
Research & development expenses 2,421,541.16 5,754,314.59
Office expenses 2,065,812.66 1,965,483.13
Traveling expenses 1,329,829.12 826,720.90
Subtotal 19,232,074.58 22,337,198.17
(7) Notes to the Financial Statement of Parent Company
a. Notes to the Balance Sheet of Parent Company
(a) Short-term investment Ending Balance: 245,339,100.00
i. Details
Item Ending Amount Beginning Amount
Book balance Reserve for Book value Book balance Reserve for Book value
devaluation devaluation
Stock 373,000.00 99,900.00 273,100.00 552,190.00 69,300.00 482,890.00
Investment
Bond 45,000,000.00 207,000.00 44,793,000.00
Investment
Other 200,273,000.00 200,273,000.00 50,040,625.00 50,040,625.00
Investment
Total 245,646,000.00 306,900.00 245,339,100.00 50,592,815.00 69,300.00 50,523,515.00
ii. Short-term investment - stock investment
Name of Stock Number of Shares Ending Amount Market Price at End
Sinopec (A share) 90,000 270,900.00 270,900.00
Wantong Highway 1,000 2,200.00 (Note)
Subtotal 273,100.00
(Note): This stock had no market price on 31 Dec. 2002. It went public on Shanghai Stock Exchange on 7 Jan. 2003 with
a closing price of RMB 4.33 yuan.
iii. Short-term investment - bond investment
Name of Bond Par Value Ending Amount Market Price at End
02 Treasury bonds (13 ) 45,000,000.00 44,793,000.00 44,793,000.00
Subtotal 45,000,000.00 44,793,000.00 44,793,000.00
iv. Short-term investment - other investment
i) Trust loan due within 1 year
Trustee Principal Interest Reserve for devaluation Ending amount
ICBC Hangzhou Qingchun Road Branch 200,000,000.00 273,000.00 200,273,000.00
Subtotal 200,000,000.00 273,000.00 200,273,000.00
ii) Short-term investment accounting for above 10% (inclusive) of Total
Borrower Injection date Amount Income
Zhejiang Changxing Power Generation Co. Ltd. (ZCPGC) 30/01/2003 50,000,000.00 2,542,732.92
ZCPGC 25/09/2003 50,000,000.00 673,172.24
ZCPGC 25/10/2003 50,000,000.00 467,099.11
ZCPGC 25/10/2003 50,000,000.00 48,083.57
Subtotal 200,000,000.00 3,731,087.84
v. Reserve for devaluation of short-term investment
a) Increase and decrease
Item Beginning Amount Increase in the Period Decrease in the Period Ending Amount
Stock Investment 69,300.00 30,600.00 99,900.00
Bond Investment 207,000.00 207,000.00
Subtotal 69,300.00 237,600.00 306,900.00
ii) Explanation of the source of the market price at period end for allocating reserve for devaluation of
short-term investment
According to the closing price at Shanghai Stock Exchange on 31st December 2002, an amount of RMB 306,900.00 yuan was
allocated for reserve for devaluation of short-term investment following the principle of lower of short-term
investment or the market price.
vi. There was no significant limitation to realization of short-term investment of the Company.
(b)Accounts receivable Ending balance: 101,911,910.02
i. Classified by account age
Ending Amount Beginning Amount
Account Book Percentage Allowance for Book Book Percentage Allowance Book
age balance (%) bad debt value balance (%) for bad debt value
Within 108,416,925.55 100.00 6,505,015.53 101,911,910.02 94,216,175.64 100.00 5,652,970.53 88,563,205.11
1 year
Total 108,416,925.55 100.00 6,505,015.53 101,911,910.02 94,216,175.64 100.00 5,652,970.53 88,563,205.11
ii. The book balances were the amount receivable from ZPEPC for sale of electricity in the last 10 days of December,
representing 100% of the accounts receivables.
iii. Due from major shareholders holding 5% or more of the Company's share capital with voting right
Name of organization Ending Amount Beginning Amount
ZPEPC 108,416,925.55 94,216,175.64
Subtotal 108,416,925.55 94,216,175.64
(c) Other receivables Ending balance 34,336,919.77
i. Classified by account age
Ending Amount Beginning Amount
Account Book Percentage Allowance for Book Book Percentage Allowance for Book
age balance (%) bad debt value balance (%) bad debt value
Within 33,349,203.97 91.30 2,000,952.24 31,348,251.73 19,444,141,38 84.32 1,166,648.48 18,277,492.90
1 year
1-2 years 6,000.00 0.01 360.00 5,640.00 715,277.20 3.10 42,916.63 672,360.57
2-3 years 360,573.50 0.99 21,634.41 338,939.09 2,607,667.58 11.31 156,460.06 2,451,207.52
More
than 2,812,860.58 7.70 168,771.63 2,644,088.95 291,551.77 1.27 17,493.11 274,058.66
3 years
Total 36,528,638.05 100.00 2,191,718.28 34,336,919.77 23,058,637.93 100.00 1,383,518.28 21,675,119.65
Other large-amount receivables
Name of Organization Ending Amount Account Description
Subsidy for employees housing 26,302,005.38 Prepaid housing subsidy for employees with service
length less than 20 years
Interest on time deposit at bank 3,436,846.28 Accruals unsettled upon maturity
PICC Life Insurance Company Taizhou Branch 2,7000,000.00 Insurance deposit unsettled
Subtotal 32,438,851.66
iii. The amount of receivables due from the top 5 debtors totals RMB 33,857,802.47 yuan, accounting for 92.69% of the
book balance of other receivables.
iv. There were no accounts due from main shareholders holding 5% or more of the Company's voting share capital with
voting right.
Other receivables written-off during this Period and the explanations
Name of organization Amount Account Description and Explanations
Taizhou Municipal People's Intermediate Court 29,549.77 Advanced legal cost with account age more than 5 years,
and confirmed irrecoverable
Mou Jiamin 1,800.00 Advanced legal cost with account age more than 5 years,
and confirmed irrecoverable
Subtotal 31,349.77
vi. Other receivables --- foreign currency receivables
Account Age Ending Amount Beginning Amount
Original Exchange Equivalent to Original Exchange Equivalent to
currency rate RMB yuan currency (USD) rate to RMB yuan
(USD)
Within 1 year 388,724.76 8.2773 3,217,591.46 2,088,580.23 8.2766 17,286,343.14
Subtotal 3,217,591.46 17,286,343.14
(d) Long-term equity investment Ending balance 1,567,688,293.33
i. Details
Ending Amount Beginning Amount
Item Account Devalua-tion Account Account Devalua-tion Account
Balance Reserve Value Balance Reserve Value
Investment 359,138,293.33 359,138,293.33 396,500,000.00 396,500,000.00
in
subsidiary 133,250,000.00 133,250,000.00 133,250,000.00 133,250,000.00
Companies
Investment
in
affiliated
enterprises
Other 1,075,300,000.00 1,075,300,000.00 1,025,794,000.00 1,025,794,000.00
equity
investment
Total 1,567,688,293.33 1,567,688,293.33 1,605,050,000.00 1,605,050,000.00
ii. Long-term equity investment-Stock investment
i) Details
Investee Type of Numbers of Shareholding Cost of original Total at year end Market
Company stock shares percentage investment price
at year
end
China Ordinary 176,000,000 2.14% 312,000,000.00 312,000,000.00 nil.
Everbright Bank stock shares
Communication Ordinary 150,000,000 0.94% 285,000,000.00 285,000,000.00 nil
Bank stock shares
China Southern Ordinary 200,000,000 5.8% 220,000,000.00 220,000,000.00 nil
Securities Co., stock shares
Ltd
China Merchants Ordinary 30,000,000 0.53% 105,000,000.00 105,000,000.00 nil
Bank stock shares
Fujian Ordinary 40,000,000 1.33% 82,400,000.00 82,400,000.00 nil
Industrial Bank stock shares
Subtotal 1,004,400,000.00 1,004,400,000.00
iii. Long-term equity investment - other equity investment
i) Details
Investee Company Investment term Investment amount Percentage out of registered
capital
Zhejiang Changxing Power Generating 25 years 396,500,000.00 65.00%
Company Limited
Zhejiang Jiahua Power Generating 25 years 133,250,000.00 24.00%
Company Limited
Zhejiang Provincial Natural Gas Not specified 50,000,000.00 10.00%
Development Comapny
Zhejiang Venture Capital Co., Ltd Not specified 10,000,000.00 10.00%
Zhejiang Fuxing Electric Fuel Co., Not specified 5,900,000.00 3.93%
Ltd
Jiaojiang Phoenix Villa Company Not specified 5,000,000.00 14.28%
Limited
Subtotal 600,650,000.00
Other equity investment using the equity accounting method
Investee Original investment Accumulated Equity increase and Cash Accumulated
Company supplementary decrease of dividend increase and
investment investee company shared this decrease this year
during this year year
Zhejiang 396,500,000.00 -37,361,706.67 -37,361,706.67
Changxing
Power
Generating Co.
Ltd
Zhejiang 133,250,000.00
Jiahua Power
Generating Co.
Ltd
Subtotal 529,750,000.00 -37,361,706.67 -37,361,706.67
b. Notes to Statement of Profit and Profit Distribution of Parent Company
(a) Income/cost from principal operating activities
Amount incurred during the year 3,303,121,784.34/2,197,760,669.91
i. Classified by operating activities
Item Amount of this year Amount of the preceding year
Income from principal
operating activities
Sale of electricity 3,303,121,784.34 3,370,277,286.61
Total 3,303,121,784.34 3,370,277,286.61
Cost of principal operating
activities
Cost of electricity sale 2,197,760,669.91 2,192,944,444.73
Total 2,197,760,669.91 2,192,944,444.73
i. Classified by operating regions
Item Amount of this year Amount of the preceding year
Income from principal
operating activities
East China region (Note) 3,303,121,784.34 3,370,277,286.61
Total 3,303,121,784.34 3,370,277,286.61
Cost of principal operating
activities
East China region (Note) 2,197,760,669.91 2,192,944,444.73
Total 2,197,760,669.91 2,192,944,444.73
(Note): The electricity generated by Company was transmitted into the electric power system of the East China region.
iii. There was only 1 customer this year, namely ZPEPC. The income amounted to RMB 3,303,121,784.34 yuan,
accounting for 100% of the Company income gained from principal operating activities.
(b) Investment Income Amount gained during current year: 2,552,849.05
i. Details
Item Amount of this year Amount of the preceding year
Stock investment income 209,988.23 811,772.06
Profit distribution from affiliated or joint venture companies 17,123,633.06 228,600.00
Income from trust fund management 16,363,090.00 15,505,400.00
Income from transfer of equity acquisition 4,601,683.38
Devaluation reserve allocated for short-term and long-term -237,600.00 -69,300.00
investment
Income from trust loan 6,455,444.43 40,625.00
Net in/de-crease in investee companies' equity at year end -37,361,706.67
Total 2,552,849.05 21,118,780.44
ii. There was no significant limitation to remittance of investment incomes back to the Company.
(8) The Relationship and Transactions with Related Parties
a. Relationship with Related Parties
Related Parties with Controlling Relationship
i. Related parties with controlling relationship
Name of Registered Principal Operating Relationship Ownership or Legal
Enterprise Address Activities with the Company Type of Business Representative
ZPEPDC 2 Jinzhu Road Raising capital for Main shareholder State-owned Shen Zhiyun
(south), power construction
Hangzhou and development,
generation and sale
of electricity in
excess of plan
ZPEPC Jinzhu Road Production and Main shareholder State-owned Chen Jimin
(south), provision of
Hangzhou electricity,
organizing the
design,
construction of
power generation,
transmission and
transformation
projects
ZCPGC Fucheng Production and sale Subsidiary Limited Company Wei Guozhong
Commercial of electricity
Building at
North Side of
Central Square,
Huzhou
ii. Registered capital of related parties with controlling relationship and their movements
Name of Enterprise Beginning Amount In/de-crease Ending Amount
in Current year
ZPEPDC 2,545,000,000.00 2,545,000,000.00
ZPEPC 4,275,160,000.00 1,609,341,000.00 5,884,501,000.00
610,000,000.00 610,000,000.00
iii. Shares held by related parties with controlling relationship and their movements
Name of Beginning Amount Increase in current Decrease in current Ending Amount
Enterprise year year
Amount % Amount % Amount % Amount %
ZPEPDC 799,963,200.00 39.80 799,963,200.00 39.80
ZPEPC 514,036,800.00 25.57 514,036,800.00 25.57
ZCPGC 396,500,000.00 65.00 396,500,000.00
(b) Nature of Relationship with Related parties Without Controlling Relationship
Name of Enterprise Relationship with the Company
Zhejiang Fuxing Electric Fuel Co. Ltd. A subsidiary of a major shareholder of the Company
Ningbo Fuxing Electric Fuel Co. Ltd. A subsidiary of a subsidiary of a major shareholder of
the Company
Zhejiang Provincial Electric Equipment & Materials A subsidiary of a major shareholder of the Company
Supply Co.
Taizhou Power Plant Industrial Company Taizhou Power Plant is involved in its day-to-day
management.
Hangzhou Xiaoshan Linjiang Industrial & Trade Co. Xiaoshan Power Plant is involved in its day-to-day
Limited management.
Changxing Changfeng Energy Co. Ltd. The subsidiary of the Company, namely Zhejiang Changxing
Power Generation Company Ltd. is involved in its
day-to-day management.
b. Transactions between Related parties
(a) Purchase of commodities
Name of Current Year Previous Year
Enterprise
Amount Percentage out of Pricing policy Amount Percentage out of Pricing
annual purchase (%) annual purchase (%) policy
Zhejiang Fuxing 428,731,263.86 31.89 (Note) 1,342,873,027.41 100 (Note 1)
Electric Fuel
Co. Ltd.
Ningbo Fuxing 915,622,685.53 68.11 (Note)
Electric Fuel
Co. Ltd.
Note 1: The fuel needed by the Company for power generation is supplied by ZPEPC's subsidiary Zhejiang Fuxing
Electric Power Fuel Company Limited and its subsidiary Ningbo Fuxing Electric Fuel Co. Ltd, who entered into the Fuel
Supply Agreement with the Company in May 1997. The Agreement is valid for 20 years. Pursuant to the Agreement, both
parties shall set down an Annual Coal Supply Contract every year to determine the quality, specifications, quantity
and price of the coal supply for the current year. Zhejiang Fuxing Electric Fuel Co. and Ningbo Fuxing Electric Fuel
Co. shall supply fuel to the Company at a price neither higher than the price at which it charges other power plants
for the same type of fuel, nor higher than the price at which the Company can purchase the same type of fuel in the
open market at the time of the price negotiation between both sides. Otherwise, the Company shall have the right to
purchase fuel at its own discretion.
(b) Sales of commodities
Name of Current Year Previous Year
Enterprise
Amount Percentage of annual Pricing Amount Percentage of annual Pricing
sale (%) policy sale policy
(%)
ZPEPC 3,320,944,888.62 100 (Note) 3,370,277,286.61 100 (Note)
Note: Pursuant to the Power Purchase Agreement entered into between the Company and ZPEPC, ZPEPC shall purchase all
the electricity produced by the Company for 20 years starting from the effectiveness of the Agreement. Based on
Document Zhe Dian Ji No. (2002) 150 "Notice about Power Production Plan of ZPEPC in 2002" issued by ZPEPC,
the Company continued to participate in the competitive bidding in the power market in 2002 with the bidding quantity
accounting for approximately 20% of the total generation and the contractual quantity approximately 80%. The bidding
quantity was settled at market price; and the contractual quantity was settled at prices approved by Zhejiang
Provincial Commodity Pricing Bureau (ZPCPB) in Document Zhe Jia Gong No.(2000) 39 dated 28 Jan. 2000, i.e. RMB
357.415 yuan/MWh (excluding tax) for Taizhou Power Plant Units 1-8 and RMB 320 yuan/MWh (excluding tax) for Xiaoshan
Power Plant Units 1-2 in 2002. In addition, based on Document Zhe Jia Shang (2002) 342 "Notice about Tariff of
Excess Generation in 2002" issued by ZPCPB, the excess generation generated from 80% of the annual mean
utilization hours of a power plant in excess of the contractual base quantity of 4,800 hours was settled at prices
for excess generation, i.e. RMB 200 yuan/MWh (excluding tax) for Taizhou Power Plant and RMB 197 yuan/MWh (excluding
tax) for Xiaoshan Power Plant in 2002.
The installed capacity of the Company's subsidiary Zhejiang Changxing Power Generation Co. Ltd (ZCPGC) was 600 MW. At
zero o'clock on 15 Dec. 2002, Unit 1 with 300 MW in capacity was put into commercial operation after completing 168
hours of trial operation. Based on ZPCPB Document Zhe Jia Shang No.(2003)15 "Approval of Electricity Sale
Tariff Applicable to ZCPGC", the tariff applicable to ZCPGC from the generation start date to the end of 2003 will
be 380 yuan/MWh (including tax), which was applied to ZCPGC for settlement in the current period as ZCPGC has not
entered into Power Purchase Agreement with ZPEPC.
(c) Balance of receivables and payables of related parties
Item and Name of Enterprise Balance Percentage out of Total Receivables
(Payables)(%)
Ending Amount Beginning Amount Ending Amount Beginning Amount
Account receivable
ZPEPC 201,394,641.95 94,216,175.64 100.00 100.00
Subtotal 201,394,641.95 94,216,175.64 100.00 100.00
Account payable
Zhejiang Fuxing Electric Fuel 90,113,250.71 87,262,500.75 19.75 37.38
Company Limited
Ningbo Fuxing Electric Fuel 46,894,535.71 10.28
Company Limited
Zhejiang Provincial Electric 2,582,225.55 1.11
Power Equipment & Materials
Supply Company
Taizhou Electric Power Plant 1,255,000.00 837,000.00 0.27 0.36
Industrial Company
Changxing Changfeng Energy 2,760,000.00 0.60
Company Ltd.
Subtotal 141,022,786.42 90,681,726.30 30.90 38.85
Other payables
ZPEPDC 1,058,581.44 0.86
ZPEPC 680,218.56 0.56
Changxing Changfeng Energy 2,803,873.66 2.29
Company Ltd.
Subtotal 4,542,673.66 3.71
c. Other Related Matters
(a) In the current reporting period, the Company paid Taizhou Power Plant Industrial Co. for labor borrowing,
commuting buses to/from work and waste ash disposal totaling RMB 16,978,526.88 yuan based on the Labor Borrowing
Agreement, Transportation Service Agreement and Boiler Ash and Pyrite Transport Contract. The amount for the
preceding year was RMB 5,438,824.88 yuan.
(b) In the current reporting period, the Company paid Xiaoshan Linjiang Industrial & Trade Co. Ltd for rental and
logistic service charges totaling RMB 10,435,238.00 yuan based on the Vehicle Transport Contract and Logistic Service
Contract, as opposed to RMB 4,165,374.00 yuan for the preceding year.
(c) The Company transferred the buildings of the employee dormitory, the employee training center and their annexes
together with their land use rights in Xiaoshan Power Plant with a book value of RMB 11,933,200 yuan to Hangzhou
Xiaoshan Linjiang Industrial & Trade Co. Ltd at a valuation price of RMB 5,478,200 yuan in the current reporting
period..
(d) In the current reporting period, ZCPGC paid Changxing Changfeng Energy Co. Ltd for goods purchase, etc. amounting
to RMB 32,165,270.62 yuan.
(e) Based on the Agreement on Lease of Divested Asset signed between the Company and ZPEPC, ZPEPDC on 8 Nov.2000, the
Company rented the non-operating assets divested from Taizhou Power Plant at the time of restructuring. The rental
paid by the Company in the current reporting period was the same as in the preceding period amounting to RMB
1,738,800.00 yuan.
(f) The Company signed a Liabilities Contract with two creditors, namely, ZPEPC and ZPEPDC in 1997, whereby the
Company borrowed a loan for construction of the Phase IV Project (Units 7 and 8) for 10 years. It is specified in the
Contract that the Company shall repay the principal and interest in installments to the above two companies after
completion of the trial production of the new generating units. Then the Company and two creditors amended some terms
and conditions of Liabilities Contract in March 1999. And they signed Supplementary Agreement to Liabilities Contract
subsequently on 22nd March 1999, which re-adjusted and confirmed the actual investment, liabilities and liability
ratio of two creditors. In December 1999, the Company, ZPEPC and East China Electric Power Group Finance Co. Ltd
entered in Trust Loan Contract, by which the debt owing to ZPEPC was transformed to trust borrowings totaling RMB
1,706,380,000 yuan. On 29 Dec. 2000, the Company, ZPEPDC and Shanghai Pudong Development Bank Hangzhou Branch entered
into Trust Loan Contract, by which the remaining debt owing to ZPEPDC up to the end of 2000 was transformed to
4-year-term trust borrowing totaling RMB 317,892,000 yuan. After repayment, the amount of this long term liability as
at the end of 2001 was RMB 978,180,000.00 yuan. Based on Agreement on Liabilities Repayment in 2001 and Thereafter
signed by the 3 partis on 28 Feb. 2001, the amount of the repayment in 2002 and the changes are as follows:
Creditor (Accounting Shanghai Pudong Development Bank East China Electric Power Group Total
Title) Hangzhou Branch Finance Co. Ltd
(Long-term borrowings) (long-term borrowings)
Item
Total debt amount at end of 238,419,000.00 739,761,000.00 978,180,000.00
2001
Amount repaid in 2002 79,473,000.00 246,587,000.00 326,060,000.00
Transferred to long-term 79,473,000.00 246,587,000.00 326,060,000.00
liabilities due within 1 year
Amount of long-term 79,473,000.00 246,587,000.00 326,060,000.00
liabilities as at end of 2002
(g) The subsidiary Zhejiang Changxing Power Generation Limited Liability Company (ZCPGC) applied to China
Construction Bank Changxing County Branch for a long-term borrowing of RMB 1,500,000,000 yuan, of which RMB
1,070,000,000 yuan is guaranteed by the Company. Ending on 31 Dec. 2002, the balance of the borrowings of ZCPGC stood
at RMB 450 million yuan (refer to Item (9)-a of Notes to Financial Statements herein for details).
(h) The Company provided a guarantee for ZCPGC's accepted bank draft in amount of RMB 39,696,000 yuan among the
balance of bills payable. (Refer to Item (9)-b of the Notes to Financial Statements herein for details)
(i) The Company provided guarantees for the long-term borrowings that its affiliated company Zhejiang Jiahua Power
Generation Co. Ltd (ZJPGC) borrowed from the Industrial & Commercial Bank of China Zhejiang Branch and China
Construction Bank Zhejiang Branch amounting RMB 4.5 billion yuan and RMB 3.2 billion yuan respectively. Ending on 31
Dec. 2002, the balance of ZJPGC's loans stood at 100 million yuan, of which the Company had joint liability for RMB
24 million yuan or 24% of ZJPGC's equity equal to the Company's ratio of investment in ZJPGC, based on the contract.
(Refer to Item (9)-c of the Notes to Financial Statements herein for details)
(j) ZPEPDC provided the subsidiary of the Company, Zhejiang Changxing Power Generation Co. Ltd (ZCPGC) with trust
loan amounting to RMB 320 million yuan with the term of the loan from 26 July 2002 to 17 Dec. 2003 through China
Construction Bank Hangzhou Zhijiang Branch. The trust loan of RMB 200 million yuan provided by ZPEPDC to the
Company's subsidiary ZCPGC in the preceding period was recovered in the current period.
(k) Remuneation to Key Management Personnel of the CompanyThere were 17 key managerial persons in the Company in
2002, of which 9 got paid from the Company, their annual remuneration totaling RMB 1.4568 million yuan. In 2001,
there were 17 key managerial persons in the Company, of which 9 got paid from the Company, their annual remuneration
totaling RMB 1.3397 million yuan.
Year 2002
Remuneration Range Below Between RMB 100,000 and 150,000 Between RMB 150,000 and 200,000
RMB 100,000 yuan yuan yuan
No. of People 3 6
Year 2001
Remuneration Range Below Between RMB 100,000 and 150,000 Between RMB 150,000 and 200,000
RMB 100,000 yuan yuan yuan
No. of People 1 5 3
(10) Contingent Events
a. Of the long-term borrowing of RMB 1,500,000,000 yuan that the subsidiary of the Company, Zhejiang Changxing Power
Generation Co. Ltd (ZCPGC) got from China Construction Bank Changxing County Branch in December 2001, the Company
provided a guarantee for RMB 1,070,000,000 yuan, and ZPEPDC provided a guarantee for RMB 430,000,000 yuan. The term
of guarantee is from 18 Dec.2001 to17 June 2019. Ending on 31 Dec. 2002, the balance of the borrowings of ZCPGC
amounted to RMB 450 million yuan, of which RMB 329 million was guaranteed by the Company. There had been no signs of
anticipated liabilities up to end of this reporting period.
b. The affiliate of the Company, Zhejiang Jiahua Power Generation Limited Liability Company (ZJPGC) applied to
Industrial & Commercial Bank of China (ICBC) Zhejiang Branch and China Construction Bank (CCB) Zhejiang Branch for a
long term borrowing of RMB 4,500 million yuan and RMB 3,200 million yuan respectively. The Company entered into
corresponding guarantee contracts with ICBC Zhejiang Branch and CCB Zhejiang Branch separately. Such guarantee
contracts are guarantees up to a ceiling, below which the guarantee will cover the actual amount of principal and
interest of the borrowing. Based on the guarantee contracts, the Company has joint liabilities for the amount of debt
under the borrowing contracts corresponding to its investment ratio of 24% in the investee ZJPGC for the guarantee
period from 17 Dec. 2001 to 16 Dec. 2026. Ending on 31 Dec. 2002, the balance of ZJPGC's borrowings amounted to RMB
100 million yuan. So the Company has a joint liability for an amount of RMB 24 million yuan corresponding to its
investment ratio of 24% in the investee ZJPGC. There had been no signs of corresponding anticipated debt up to end of
this reporting period.
c. The Company's subsidiary ZCPGC produced accepted bank draft amounting to RMB 56,963,000.00 yuan not yet due in the
current reporting period, of which RMB 33,926,400.00 was on a guarantee provided by the Company, and RMB
17,267,000.00 yuan was on a guarantee provided by ZPEPDC, the term of the guarantees being from 6 Aug. 2002 to 28
Apr. 2003. As at the end of the current reporting period, there existed no signs of corresponding anticipated
liabilities.
(11) Commitment
The Company and other 5 investors, namely ZPEPDC, ZPEPC, Beijing Guohua Electric Power Co. Ltd, the State Power Corp.
East China Company and Zhejiang Provincial Electric Power Construction Co. signed Shareholders' Agreement on 21 Nov.
2000 to jointly invest in Zhejiang Jiahua Power Generation Co. Ltd.(ZJPGC) for construction of Jiaxing Power Plant
Phase II (4 x 600 MW coal-fired units). Based on the Document Ji Ji Chu (2002)2349 "Approval of Adjusted Plan
for Construction of Zhejiang Jiaxing Power Plant Phase II" issued by the State Power Corp., the dynamic total
investment of the Project amounted to RMB 10.28 billion yuan, of which the equity amounted to RMB 2.57 billion yuan,
the financing from the domestic commercial banks amounted to RMB 7.71 billion yuan. In accordance with the Articles
of Association of ZJPGC, the investment ratio of the Company is equal to 24%, i.e. the Company's total investment in
ZJPGC amounting to RMB 616.8 million yuan.
ZJPGC was founded on 9 July 2001, with its registered capital amounting to RMB 284,830,000 yuan and its Business
License No. 3300001007989.. In October of the same year, its registered capital was increased to RMB 555,190,000
yuan, with the corresponding business re-registration completed on 30 Dec. 2002 bearing the same license number. The
Company made full injection of capital based on its investment ratio of 24%. Ending on 31 Dec. 2002, the paid-in
registered capital of ZJPGC amounted to RMB 555,190,000 yuan. And the Company's accumulated capital injection
amounted to RMB 133,250,000 yuan, equal to 24% of the ZJPGC's total registered capital. Based on the Resolution on
Increasing Registered Capital adopted in shareholders' general meeting 2001 of ZJPGC held on 28 Nov. 2002, all the
shareholders unanimously agreed to increase the registered capital of ZJPGC to RMB 1,555,190,000 yuan. Each
shareholder will inject the additional amount in proportion to his equity investment ratio and in conformity with
ZJPGC's Equity Capital Injection Plan 2003 in 4 installments in 2003. Based on the above resolution, the Company will
inject additional equity capital amounting to RMB 240 million yuan to ZJPGC, and paid RMB 60 million yuan on 17 Mar.
2003.
(12) Events Subsequent to Balance Sheet Date Not Requiring Account Adjustment
Except the events described in Item (10) and Item (12)-e of Notes to Financial Statements herein, there is no
significant events not requiring account adjustment subsequent to the Balance Sheet Date.
(13) Other Important Events
a. The Company was not subjected to any significant events of liability restructuring.
b. The Company had no non-currency transactions.
c. The Company made no asset swap, transfer or sale.
d. Other Important Events Having Impact on Investors' Decisions
(a) Pursuant to Document Zhe Dian Xing (2002)1364 Notice about Methods for Implementation of Monetarized House
Allotment in Organizations in Hangzhou Under ZPEPB issued by Zhejiang Provincial Electric Power Bureau (ZPEPB),
Document Tai Fang Gai (2001)47 Approval of House Subsidization Plan of Taizhou Power Plant issued by Taizhou
Municipal Housing Committee and the resolution approved in the 23rd meeting of the 2nd board of directors on 31 Dec.
2002, the Company allocated lump-sum housing subsidy and service length subsidy totaling RMB 76,742,750.69 yuan in
the current reporting period. As stipulated in relevant documents, the employee should have a service length of 20
years to qualify for application for the lump-sum housing subsidy. The subsidy for those whose service length fall
short of 20 years will be allocated based on their actual number of years of service; the subsidy for the service
years shortfall can be withdrawn in advance as provisional borrowing after entering into Agreement on Borrowing of
Housing Subsidy with the Company. After calculation, the lump-sum housing subsidy for the service length short of 20
years amounting to RMB 26,302,005.38 yuan was treated as employees' provisional borrowing and stated as "other
receivables". The other amount of RMB 50,440,745.31 yuan was stated as the current gains and losses. (b) Pursuant
to Document Ji Bian Han No. (2002)11 Notice about Self-examination of Tax Payment by Province-owned Enterprises
issued by the Inspection Office of the State Taxation Bureau Zhejiang Branch, the Company made a self-examination of
its tax payment for 2001.
1) It is not permitted to account for the overhaul cost of RMB 47,310,582.22 yuan for Unit 1 of Taizhou Power Plant
under the Company as a lump-sum cost before tax because it belongs to the asset renovation cost, hence the additional
payment for corporate income tax of RMB 15,612,492.13 yuan. With the consent of the taxation authorities, the
overhaul cost will be written off before tax over 5 years from 2002; it is not permitted by the tax law to account
for the Company's payment for the supplementary pension for 2001 and the pre-construction cost for Xiaoshan Power
Plant Phase II totaling RMB 15,650,345.95 yuan before tax, hence the additional payment for corporate income tax of
RMB 5,164,614.17 yuan; the Company made over-allocation of RMB 3,725,853.19 yuan for unemployment insurance premium
and retiree management expense, which was reversed upon self-examination, hence the additional payment for corporate
income tax of RMB 1,229,531.55 yuan. To sum up, the above 3 adjustments ended up with the Company making additional
payment for the corporate income tax for 2001 totaling RMB 22,006,637.85 yuan.
2) The input tax on special equipment of RMB 340,699.82 yuan stated as overhaul cost by the Company was
transferred out, hence the additional payment for VAT amounting to RMB 340,699.82 yuan.
In addition, pursuant to Document Ji Chu Zi No. (2002)0057 Notice about Taxation Treatment Decision issued by the
Inspection Office under the State Taxation Bureau Zhejiang Branch, the input tax amounting to RMB 7,490,632.69 yuan
was offset by the material delivery for overhaul of Unit 1 of Taizhou Power Plant under the Company and other
non-taxable purchases, hence the Company's additional payment for VAT of RMB 7,490,632.69 yuan.
Treated as significant accounting errors, the above have been corrected by making retroactive deduction of RMB
26,112,117.17 yuan in the net profit for 2001, a corresponding deduction of RMB 5,222,423.44 yuan in surplus reserve
and a corresponding deduction of RMB 20,889,693.73 in beginning undistributed profit of 2002 in addition to other
corresponding adjustment in the beginning amount of the balance sheet and the entries in the income statement for the
preceding year.
(c) In line with Document Zhe Cai Qi Yi (2002)49 Reply about Refund of Income Tax to ZSEPC issued by Zhejiang
Provincial Finance Bureau, the Company received the refund of the local income tax on 2 July 2002 amounting to RMB
16,525,600 yuan, i.e. 18% of the income tax of RMB 30,297,000 yuan paid in October-December 2001. It offset the
current income tax accordingly.
(d) Unit 1 of the Company's subsidiary Zhejiang Changxing Power Generation Co. was put into commercial operation at
zero o'clock on 15 Dec. 2002 after finishing 168 hours of trial operation. The income from electricity sale realized
in the current reporting period amounted to RMB 17,823,104.28 yuan.
(e) In line with the resolution adopted in the 1st meeting of the 2nd board of the Company, the Board authorized the
management team to invest in state treasury bonds and other securities up to a ceiling of RMB 300 million yuan. The
Company entered into three agreements on trust fund management with Zhejiang International Trust Investment Corp.
(ZITIC) in the current reporting period as follows:
Trustee Amount Term
(in RMB yuan)
ZITIC 100,000,000.00 04/01/2002-04/01/2003
ZITIC 100,000,000.00 22/04/2002-22/04/2003
ZITIC 100,000,000.00 23/06/2002-23/06/2003
The above agreements have all be terminated ahead of time, with the principal of RMB 200 million yuan recovered on 20
Dec. 2002, the principal of RMB 100 million yuan recovered on 24 Dec. 2002 and the recovery of trust loan management
income amounting to RMB 16.3631 million.
The Company again signed Agreement on Trust Fund Management on 22 Jan.2003 amounting to RMB 300 million yuan with the
trust term starting from the date of the trust fund arriving at the account designated by ZITIC and ending on 21 Jan.
2004. Pursuant to this Agreement, the Company delivered trust fund of RMB 100 million yuan on 22 Jan. and RMB 50
million yuan on 28 Jan. 2003.
4. Supplementary Information
(1) Statement of Reconciliation of Differences between Domestic Audit and International Audit:
Unit: RMB'000 yuan
Net Assets Net Profit
By the international accounting standards 5,917,381 551,523
1. Offset against retroactive adjustment of corporate income tax - 22,007
2. Prepayment for corporate income tax 12,490 12,490
3. Deferred income tax 19,630 19,630
4. Offset against other retroactive adjustment - 4,105
5. Offset against dividends allocation intended for distribution in 2001 - -
6. Offset against dividends allocation intended for distribution in 2002 498,480 -
By the domestic Enterprise Accounting System 5,386,781 545,515
(2) Yield on net asset value and earnings per share calculated in compliance with Regulations (No.9) on Compilation &
Release of Information about Public Listed Companies issued by China Securities Regulatory Commission:
Yield on Net Assets (%) Earnings per Share (yuan/share)
Diluted Weighted Average Diluted Weighted
Average
Principal Operating Profit 20.11 19.30 0.53 0.53
Operating Profit 15.10 14.49 0.40 0.40
Net Profit 10.13 9.72 0.27 0.27
Net Profit After Deducting 10.24 9.83 0.27 0.27
Non-recurring Gains & Losses
Note: The weighted average earnings per share are the same as the diluted earnings per share because the number of
the Company's shares did not change in this reporting period.
(3) Statement of asset devaluation
Unit: RMB yuan
Item Beginning Balance Increase Reversed Ending Balance
in the year in the year
1. Total allowance for bad debt 7,070,661.25 7,240,186.00 - 14,310,847.25
including: accounts receivable 5,652,970.53 6,430,707.98 - 12,083,678.51
other receivables 1,417,690.72 809,478.02 - 2,227,168.74
2.Total reserve for devaluation of short-term 69,300.00 237,600.00 - 306,900.00
investment
including: stock investment 69,300.00 30,600.00 - 99,900.00
bond investment - 207,000.00 - 207,000.00
3. Total reserve for devaluation of inventory - - - -
including: stock commodity - - - -
raw materials - - - -
4.Total reserve for devaluation of long-term - - - -
investment
including: long-term equity investment - - - -
long-term debt investment - - - -
5. Total devaluation reserve for fixed assets - - - -
including: houses & buildings - - - -
Machine & equipment - - - -
6. Total devaluation reserve for intangible - - - -
assets
including: patent right - - - -
trade mark right - - - -
7. Devaluation reserve for construction in - - - -
progress
8. Devaluation reserve for trust loan - - - -
XI. Financial Statements 2
(based on international accounting standards)
ZHEJIANG SOUTHEAST ELECTRIC POWER CO., LTD.
(Incorporated in the People's Republic of China with limited liability)
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2002
PricewaterhouseCoopers
12th Floor, Shui On Plaza
333 Huai Hai Zhong Lu
Shanghai 200021
People's Republic of China
Telephone 86 (21) 6386 3388
Facsimile 86 (21) 6386 3300
AUDITORS' REPORT TO THE SHAREHOLDERS OF
ZHEJIANG SOUTHEAST ELECTRIC POWER CO., LTD.
(Incorporated in the People's Republic of China with limited liability)
We have audited the accompanying consolidated balance sheet of Zhejiang Southeast Electric Power Co., Ltd. (the
"Company") and its subsidiaries (the "Group") as of 31 December 2002 and the related consolidated
income and cash flow statements for the year then ended. These financial statements set out on page 2 to 24 are the
responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements
based on our audit.
We conducted our audit in accordance with International Standards on Auditing. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides
a reasonable basis for our opinion.
In our opinion, the financial statements give a true and fair view of the financial position of the Group as of 31
December 2002 and of the results of its operations and its cash flows for the year then ended in accordance with
International Financial Reporting Standards, including International Accounting Standards and Interpretations issued
by the International Accounting Standards Board.
PricewaterhouseCoopers Zhong Tian CPAs Co., Ltd.
26 March 2003
ZHEJIANG SOUTHEAST ELECTRIC POWER CO., LTD.
CONSOLIDATED INCOME STATEMENT
(Amounts in Rmb thousands unless otherwise stated)
Year ended 31 December
Notes 2002 2001
Operating revenues 3,320,945 3,370,277
Investment income 39,915 20,940
Operating costs and expenses:
Fuel cost 1,334,685 1,336,479
Depreciation and land use rights amortization 448,036 461,734
Wages and other employee costs 3 342,167 244,254
Maintenance 95,354 132,421
Other 290,741 222,650
2,510,983 2,397,538
Operating profit 849,877 993,679
Finance costs - net 4 (41,229) (30,624)
Profit before tax 808,648 963,055
Income tax expense 5 (271,095) (228,997)
Profit before minority interest 537,553 734,058
Minority interest 25 13,970 -
Net profit 551,523 734,058
Basic and diluted earnings per share 6 Rmb 0.27 Rmb 0.37
The accompanying notes form an integral part of these financial statements.
ZHEJIANG SOUTHEAST ELECTRIC POWER CO., LTD.
CONSOLIDATED BALANCE SHEET
(Amounts in Rmb thousands unless otherwise stated)
As at 31 December
Notes 2002 2001
ASSETS
Non-current assets
Property, plant and equipment 8 5,447,749 4,689,050
Land use rights 9 217,767 224,250
Investments in an associated company 10 133,250 133,250
Available-for-sale investments 12 1,075,300 1,075,300
Other long-term assets 13 32,627 7,219
Deferred tax assets 19 25,778 -
6,932,471 6,129,069
Current assets
Inventories 14 109,882 106,429
Due from related parties 26 201,395 94,216
Receivables and prepayments 40,970 26,705
Trading investments 15 45,066 524
Cash and cash equivalents 16 1,310,903 1,459,411
1,708,216 1,687,285
Total assets 8,640,687 7,816,354
Capital and reserves
Share capital 23 2,010,000 2,010,000
Reserves 24 3,907,381 3,858,358
5,917,381 5,868,358
Minority interest 25 199,530 213,500
Non-current liabilities
Borrowings 18 776,060 672,120
Current liabilities
Due to related parties 26 126,834 88,099
Trade and other payables 17 625,278 341,090
Taxes payable 116,154 107,127
Short-term loans 18 553,390 200,000
Current portion of long-term borrowings 18 326,060 326,060
1,747,716 1,062,376
Total liabilities 2,523,776 1,734,496
Total equity and liabilities 8,640,687 7,816,354
The accompanying notes form an integral part of these financial statements.
ZHEJIANG SOUTHEAST ELECTRIC POWER CO., LTD.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(Amounts in Rmb thousands unless otherwise stated)
Share Statutory reserves Retained earnings
capital Total
Balance at 31 December 2000 2,010,000 2,374,136 1,188,344 5,572,480
Dividend relating to 2000 - - (438,180) (438,180)
Net profit - - 734,058 734,058
Appropriation - 146,820 (146,820) -
Balance at 31 December 2001 2,010,000 2,520,956 1,337,402 5,868,358
Dividend relating to 2001 - - (502,500) (502,500)
Net profit - - 551,523 551,523
Appropriation - 105,468 (105,468) -
Balance at 31 December 2002 2,010,000 2,626,424 1,280,957 5,917,381
The accompanying notes form an integral part of these financial statements.
ZHEJIANG SOUTHEAST ELECTRIC POWER CO., LTD.
CONSOLIDATED CASH FLOW STATEMENT
(Amounts in Rmb thousands unless otherwise stated)
Year ended 31 December
2002 2001
Cash flows from operating activities
Profit before taxation 808,648 963,055
Adjustments for:
Depreciation 443,135 456,813
Land use rights amortization 4,901 4,921
Other long-term assets amortisation 2,328 381
Loss on disposal of land use rights, property, plant and equipment 27,830 4,323
Net interest expense 38,623 29,568
Investment income (39,915) (20,940)
Operating profit before working capital changes 1,285,550 1,438,121
(Increase) decrease in inventories (3,453) 9,651
Increase in amounts due from related parties (45,534) (27,432)
(Increase) decrease in other receivables (12,393) 20,814
Increase in trading investments (44,789) -
Increase (decrease) in amounts due to related parties 6,139 (19,940)
Increase in accounts payable and other payables 38,401 119,932
Increase (decrease) in taxes payable (16,248) 6,635
Cash generated from operations 1,207,673 1,547,781
Interest received 22,424 71,625
Interest paid (99,192) (94,394)
Tax refund received 16,525 100,813
Tax paid (300,611) (303,026)
Net cash from operating activities 846,819 1,322,799
The accompanying notes form an integral part of these financial statements.
ZHEJIANG SOUTHEAST ELECTRIC POWER CO., LTD.
CONSOLIDATED CASH FLOW STATEMENT (continued)
(Amounts in Rmb thousands unless otherwise stated)
Year ended 31 December
2002 2001
Cash flows from investing activities
Purchase of property, plant and equipment (998,326) (683,382)
Acquisition of subsidiary, net of cash acquired (Note 11) - (100,109)
Investment in an associated company (Note 10) - (133,250)
Purchase of available-for-sale investments - (50,000)
Proceeds from sales of land use rights, property, plant and equipment 8,008 -
Proceeds from investment income 40,161 20,682
Net cash used in investing activities (950,157) (946,059)
Cash flows from financing activities
Proceeds from borrowings 783,390 220,000
Payments of borrowings (326,060) (326,060)
Payments of dividends (502,500) (438,180)
Net cash used in financing activities (45,170) (544,240)
Decrease in cash and cash equivalents (148,508) (167,500)
Cash and cash equivalents
Beginning of year 1,459,411 1,626,911
End of year 1,310,903 1,459,411
The accompanying notes form an integral part of these financial statements
ZHEJIANG SOUTHEAST ELECTRIC POWER CO., LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands unless otherwise stated)
1 Business and organization
Zhejiang Southeast Electric Power Co., Ltd. (the "Company") is a joint stock limited company
incorporated in the People's Republic of China (the "PRC") on 15 May 1997 to operate, develop and
invest in power plants in Zhejiang province. The Company took over, as from the date of incorporation, the
business undertakings and related assets and liabilities of Taizhou Power Plant. Effective 1 January 1998,
the Company acquired the total assets less current liabilities of the Xiaoshan Power Plant.
The Company issued 1,320,000,000 domestic shares of Rmb 1.00 each to the promoters of the Company, Zhejiang
Provincial Power Company ("Zhejiang Power"), Zhejiang Provincial Power Development Company
("Zhejiang Development"), Zhejiang Bada Company Limited, Zhejiang Provincial Power Materials
Supply Company and Zhejiang Power Property Development Company Limited (the latter three are referred to as
the "Minority Promoters").
Electricity generated by the Company and its subsidiary (the "Group") and supplied to the
transmission facilities is sold to Zhejiang Power.
2 Basis of preparation and principal accounting policies
(1) Basis of preparation
The consolidated financial statements have been prepared in accordance with International Financial
Reporting Standards ("IFRS"), including International Accounting Standards and Interpretations
issued by the International Accounting Standard board (the "IASB").
(2) Tariff rates
Tariff rates for electricity generated by the Company and delivered to the grid are determined based on the
power purchase agreement entered into between the Company and Zhejiang Power. Based on the power purchase
agreement, the tariff rates are determined annually. In addition, the rates are to be approved by Zhejiang
Price Bureau or other relevant agencies, including the State Planning Commission.
According to the Notice on the Production and Operation Plan for Power Generation of Zhejiang Power in 2002
issued by Zhejiang Power on 7 February 2002, the Company shall sell 80% (2001: 80%) of its power volume to
be generated in 2002 as the contractual quantity, to which the tariff approved by the Zhejiang Price Bureau
will apply. The remaining volume of power is sold at market settlement prices. Accordingly, the settlement
for electricity sold by the Company to Zhejiang Power for the year ended 31 December 2002 was based on the
contractual rates set in the approval and market settlement prices.
In addition, the Company's subsidiary, Zhejiang Changxing Electric Power Co., Ltd. ("Changxing")
sold all its power generated in 2002 to Zhejiang Power at the contractual quantity, to which the tariff
approved by the Zhejiang Price Bureau applied.
2 Basis of preparation and principal accounting policies (continued)
(2) Tariff rates (continued)
For the year ended 31 December 2002, approximately 20% (2001: 20%) of the electricity sold by the Company to
Zhejiang Power was based on market settlement prices. The contractual rates, approved by Zhejiang Price
Bureau, were as follows:
Electricity generated within Electricity generated beyond
4,800 utilisation hours 4,800 utilisation hours
Rmb per KWH Rmb per KWH
Units 1 through 8 of Taizhou Power 0.357415 0.20
Plant
Units 1 and 2 of Xiaoshan Power 0.32 0.197
Plant
In addition, the contractual rate of electricity sold by Changxing, approved by Zhejiang Price Bureau, was
Rmb 0.324786 per KWH (2001: no commercial operation).
(3) Subsidiaries
Subsidiaries, which are those entities in which the Company directly or indirectly owns more than 50% of the
voting rights or otherwise has the power to exercise control over their operations are consolidated.
Intercompany transactions and balances are eliminated.
The Group's subsidiary is set out in Note 11.
(4) Associated companies
Investments in associated companies are accounted for using the equity method. These are entities over which
the Group generally has between 20% and 50% of the voting rights, or over which the Group has significant
influence.
The Group's associated company is set out in Note 10.
(5) Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation is calculated
to write off the cost of property, plant and equipment, after taking into account their estimated residual
values, over their estimated useful lives on a straight-line basis:
Buildings 8-45 years
Electricity generating facilities 4-18 years
Motor vehicles 5 years
Furniture, fixtures, and other equipment 10 years
2 Basis of preparation and principal accounting policies (continued)
(5) Property, plant and equipment (continued)
Gains and losses on disposals are determined by comparing proceeds with carrying amount and are included in
operating profit.
Interest costs on borrowings to finance the construction of property, plant and equipment are capitalised,
during the period of time that is required to complete and prepare the asset for its intended use. All other
borrowing costs are expensed.
The cost of routine maintenance, repairs and replacements of minor items of property, plant and equipment is
charged to repairs and maintenance expense of income statement during the financial period in which they are
incurred. The cost of major renovations is included in the carrying amount of the asset when it is probable
that future economic benefits in excess of the originally assessed standard of performance of the existing
asset will flow to the Group. Major renovations are depreciated over the remaining useful life of the
related asset.
(6) Construction-in-progress
All direct and indirect costs relating to the acquisition or construction of property, plant and equipment,
including interest costs on related borrowings during the periods of construction, installation and testing,
are capitalized as costs of construction-in-progress.
(7) Land use rights
Land use rights are stated at cost less accumulated amortization. Amortization is provided to write off the
cost of land use rights over the term of the land use rights on a straight-line basis.
(8) Impairment of long lived assets
Property, plant and equipment and other non-current assets are reviewed for impairment losses whenever
events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment
loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount
which is the higher of an asset's net selling price and value in use.
2 Basis of preparation and principal accounting policies (continued)
(9) Investments
The Group classified its investments in debt and equity securities into the following categories: trading
and available-for-sale. The classification is dependent on the purpose for which the investments were
acquired. Management determines the classification of its investments at the time of the purchase and
re-evaluates such designation on a regular basis. Investments that are acquired principally for the purpose
of generating a profit from short-term fluctuations in price are classified as trading investments and
included in current assets; for the purpose of these financial statements short term is defined as 3
months. Investments intended to be held for an indefinite period of time, which may be sold in response to
needs for liquidity or changes in interest rates, are classified as available-for-sale; and are included in
non-current assets unless management has the express intention of holding the investment for less than 12
months from the balance sheet date or unless they will need to be sold to raise operating capital, in which
case they are included in current assets.
Purchases and sales of investments are recognised on the trade date, which is the date that the Group
commits to purchase or sell the asset. Cost of purchase includes transaction costs. Trading and
available-for-sale investments are subsequently carried at fair value. If the available-for-sale
investments do not have quoted market prices in active markets and whose fair values cannot be reliably
measured, these investments are carried at cost, and are subject to review for impairment. The fair value
of investments is based on quoted market prices. Realised and unrealised gains and losses arising from
changes in the fair value of trading investments and available-for-sale investments are included in the
income statement in the period in which they arise.
(10) Inventories
Inventories comprise principally coal and oil used in electricity generation and consumables used for
repairs and maintenance. Inventories are stated at the lower of cost or net realizable value. Cost is
determined using the weighted average costs.
(11) Cash and cash equivalents
Cash and cash equivalents are carried in the balance sheet at cost. For the purposes of the cash flow
statement, cash and cash equivalents comprise cash on hand, deposits held at call with banks, other
short-term highly liquid investments with original maturities of three months or less.
(12) Deferred income taxes
Deferred income tax is provided in full, using the liability method, on temporary differences arising
between the tax bases of assets and liabilities and their carrying amounts in the financial statements.
Currently enacted tax rates are used in the determination of deferred income tax.
2 Basis of preparation and principal accounting policies (continued)
(12) Deferred income taxes (continued)
Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be
available against which the temporary differences can be utilised.
(13) Operating revenues
Operating revenues represent revenues for electricity delivered to Zhejiang Power's grid.
(14) Fuel costs
The costs of fossil fuel are charged to operating costs and expenses based on actual inventory usage.
(15) Foreign currencies
Transactions in foreign currencies are translated into Renminbi at the exchange rates prevailing on the
first day of the month in which the transactions took place. Monetary assets and liabilities expressed in
foreign currencies at the balance sheet date are translated into Renminbi at the exchange rates at the
balance sheet date. Exchange differences arising in these cases are dealt with in the income statement.
(16) Financial instruments
Financial assets and financial liabilities comprise cash and cash equivalents, receivables and payables,
investments, borrowings and receivables and payables due to/from related parties. The accounting policies
for the recognition and measure of these financial assets and liabilities are presented respectively in
Note 2.
(17) Related parties
Related parties are the holding entities and subsidiaries and associated companies of the holding entities.
3 Wages and other employee costs
2002 2001
Wages and salaries 218,317 188,611
Other employee costs 123,850 55,643
342,167 244,254
Under PRC government regulations, the Group is required to participate in the National Unified Retirement Fund
by contributing a percentage of the annual wages paid to employees. Retirement benefits are paid by the
National Unified Retirement Fund. The Group has no further obligations beyond the annual contributions.
In addition, the Group participates in employee social security plans, including medical, housing and other
welfare benefits, organised by the government authorities pursuant to the relevant regulations.
In accordance with the approvals from Zhejiang Housing Reformation Committee and Taizhou Housing Reformation
Committee, the Company is obligated to make a one-off housing remedial payment of Rmb 50,441 (2001: nil) to
certain employees who have attained the required length of service. These housing remedial expenses are
included in the income statement of 2002. In addition, it is estimated that certain employees can participate
in the one-off housing remedial payment in the future along with their increased service at the Company. The
estimated expenditure for the remaining housing remedial payments is Rmb 26,302.
The average number of employees in 2002 was 4,094 (2001: 3,904), of whom 22 (2001: 20) were part-time.
4 Finance costs
2002 2001
Interest income (24,295) (66,224)
Interest expense 62,918 95,792
Other 2,606 1,056
41,229 30,624
5 Income tax expense
In accordance with an approval document issued by the Zhejiang Provincial Government (Zhe Zheng Fa (1997)
No.102) on 21 May 1997 and a notice issued by the Ministry of Finance ((2000) No.99), the income tax rate
applicable to the Company is 33%. The approval document also provides for the Company to apply for a tax
refund, through 31 December 2001, at a rate of 18% of the tax paid to the local government.
The calculation of the income tax for the year was based on the taxable income of the year and on the rate of
33%. Tax refunds received during the year were credited to the income tax.
5 Income tax expense (continued)
2002 2001
Profit before tax 808,648 963,055
Tax calculated at a tax rate of 33% 266,854 317,808
Investment income not subject to tax (5,561) (188)
Expenses not deductible for tax purposes 26,327 12,190
Tax refunds received (16,525) (100,813)
271,095 228,997
2002 2001
Current income tax 309,363 228,997
Prepaid income tax (Note 13) (12,490) -
Deferred income tax (Note 19) (25,778) -
271,095 228,997
6 Basic and diluted earnings per share
Basic and diluted earnings per share for the year ended 31 December 2002 have been calculated by dividing the
net profit after tax but before appropriation by the weighted average number of 2,010,000,000 shares (2001:
2,010,000,000 shares) issued and outstanding for the year.
There are no dilutive potential ordinary shares.
7 Dividend per share
The Board of Directors of the Company proposed on 26 March 2003 a dividend in respect of 2002 of Rmb 0.248
(2001: Rmb 0.25) per share amounting to a total of Rmb 498,480 (2001: Rmb 502,500) to holders of the Company's
domestic shares, B shares and GDRs. These financial statements do not reflect this dividend payable, which
will be accounted for in shareholders' equity as an appropriation of reserves for the year ending 31 December
2003.
8 Property, plant and equipment
Buildings Electricity Motor Furniture, Total
generating vehicles fixtures and
facilities other
equipment
Year ended 31 December 2001
Opening net book value 1,307,435 2,596,721 16,090 59,295 3,979,541
Additions 32,896 102,164 11,355 12,102 158,517
Disposals (749) (3,197) (70) (307) (4,323)
Depreciation charge (92,029) (351,158) (4,849) (8,777) (456,813)
Closing net book value 1,247,553 2,344,530 22,526 62,313 3,676,922
Construction-in-progress 1,012,128
4,689,050
At 31 December 2001
Cost or valuation 1,824,325 4,679,602 42,766 96,989 6,643,682
Accumulated depreciation (576,772) (2,335,072) (20,240) (34,676) (2,966,760)
Net book value 1,247,553 2,344,530 22,526 62,313 3,676,922
Construction-in-progress 1,012,128
4,689,050
Year ended 31 December 2002
Opening net book value 1,247,553 2,344,530 22,526 62,313 3,676,922
Additions 613,579 1,112,802 6,930 24,566 1,757,877
Disposals (11,159) (22,052) (42) (1,002) (34,255)
Depreciation charge (90,467) (337,510) (5,732) (9,426) (443,135)
Closing net book value 1,759,506 3,097,770 23,682 76,451 4,957,409
Construction-in-progress 490,340
5,447,749
At 31 December 2002
Cost or valuation 2,423,042 5,690,373 46,579 112,767 8,272,761
Accumulated depreciation (663,536) (2,592,603) (22,897) (36,316) (3,315,352)
Net book value 1,759,506 3,097,770 23,682 76,451 4,957,409
Construction-in-progress 490,340
5,447,749
Construction-in-progress at 31 December 2002 mainly included a construction project for a power plant in
Changxing, Zhejiang Province (Note 11). In addition, as of 31 December 2002, borrowing costs of Rmb 50,787
(2001: 12,474) were capitalised and included in the costs of construction-in-progress; the capitalisation rate
in 2002 was 5.67% (2001: 5.88%).
9 Land use rights
Year ended 31 December 2001
Opening net book value 229,171
Amortisation charge (4,921)
Closing net book value 224,250
At 31 December 2001
Cost 246,969
Accumulated amortisation (22,719)
Net book value 224,250
Year ended 31 December 2002
Opening net book value 224,250
Disposals (1,582)
Amortisation charge (4,901)
Closing net book value 217,767
At 31 December 2002
Cost 245,291
Accumulated amortisation (27,524)
Net book value 217,767
10 INVESTMENTS IN AN ASSOCIATED COMPANY
Zhejiang Jiahua Electric Power Co., Ltd. ("Jiahua") was established on 9 July 2001 by the Company
and five other PRC companies with registered capital of Rmb 2,552,140. The Company has committed to invest
Rmb 612,514 in cash as its capital contribution for a 24% ownership interest in Jiahua. As of 31 December
2002, the Company has contributed cash of Rmb 133,250 to Jiahua (2001: Rmb 133,250).
As of 31 December 2002, Jiahua is in the pre-operating stage whilst construction of power generating
facilities is in progress. Jiahua is expected to commence commercial operations in December 2004.
11 Subsidiaries
Zhejiang Changxing Electric Power Co., Ltd. ("Changxing") was established in Zhejiang Province PRC
on 25 July 2001 by the Company and Zhejiang Development with registered capital of Rmb 610,000. The Company
and Zhejiang Development hold 65% and 35% ownership interests in Changxing, respectively. After
establishment, Changxing took over an in-progress construction project for a power plant in Changxing,
Zhejiang Province.
The assets less liabilities arising from the takeover in 2001 are as follows:
Cash and cash equivalents 156,881
Other receivables 16,463
Property, plant and equipment, net 444,857
Other long-term assets 450
Accounts payable and other payables (8,651)
Minority interest (213,500)
396,500
Less: Prepayments and accounts receivable (139,510)
256,990
Less: Cash and cash equivalents in the takeover (156,881)
100,109
The unit 1 power generating facilities in Changxing commenced commercial operations on 15 December 2002; the
unit 2 power generating facilities is expected to commence commercial operations in May 2003.
12 AVAILABLE-FOR-SALE INVESTMENTS
2002 2001
At beginning of year 1,075,300 1,025,794
Addition - 50,000
Deduction - (494)
At end of year 1,075,300 1,075,300
12 AVAILABLE-FOR-SALE INVESTMENTS (CONTINUED)
At 31 December 2002, available-for-sale investments comprised the following:
Amount % of interest held
China Everbright Bank 312,000 2.14%
Bank of Communications 285,000 0.94%
China Southern Securities Co., Ltd. 220,000 5.78%
China Merchants Bank 105,000 0.53%
Fujian Industrial Bank 82,400 1.33%
Zhejiang Natural Gas Development Co., Ltd 50,000 10%
Zhejiang Venture Capital Co., Ltd. 10,000 10%
Zhejiang Fuxing Electricity Fuels Co. Ltd. 5,900 3.93%
Jiaojiang Phoenix Villa 5,000 14.28%
1,075,300
These available-for-sale investments do not have quoted market prices in active markets and whose fair values
cannot be reliably measured. As a result, these investments are carried at cost. At the balance sheet date,
available-for-sale investments don't have material impairment.
13 Other long-term assets
At the balance sheet date, other long-term assets include the prepaid income tax of Rmb 12,490, of which prepaid
income tax of Rmb 3,122 will be recovered in one year.
14 INVENTORIES
2002 2001
Coal 54,601 53,349
Oil 5,915 3,741
Consumables 49,366 49,339
109,882 106,429
This information is provided by RNS
The company news service from the London Stock Exchange
END
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