Annual Report and Accounts

RNS Number:9172W
Zhejiang Southeast Elec Power Co Ld
25 March 2004

         Zhejiang Southeast Electric Power Company Limited

                              Annual Results 2003



1.  MAIN ACCOUNTING DATA AND INDICATORS

                   Unit: RMB

                             Year 2003                 Year 2002         Increase/Decrease in         Year 2001
                                                                         current year compared
                                                                         with previous year
Principal Operating           4,738,196,944.73          3,320,944,888.62                   42.68     3,370,277,286.61
Income
Gross Profit1,076,967,843.80            812,753,137.31                   32.51       958,949,587.73
Net Profit                      609,283,351.82            545,515,105.11                   11.69       707,945,727.20
Earnings per Share         0.30                      0.27                   11.11                 0.35
Yield on Net Assets                      10.14                      9.27                    9.39                11.95
(%)



2.  RECONCILIATION OF DIFFERENCES IN NET PROFIT BASED ON PRC AND INTERNATIONAL ACCOUNTING STANDARDS

                                                               Unit: RMB million

                  By the PRC accounting standards                            By the internationalaccounting
                                                                             standards
Net profit                                                            609.28                                   609.88
Reconciliation    By the PRC accounting standards                                                              609.28
                  1.    Reversal of prepaid corporate income tax/(increase)                                    (3.12)
                  2.    Deferred income tax     (9.05)
                  3.    Transferred to capital reserve                                                          12.77
                  4.    Offsetting against retroactive adjustment to                                                -
                  corporate income tax
                  5.    Offsetting against other retroactive adjustment                                             -
                  By the internationalaccounting standards                                                    609.88



3.  DISCUSSION AND ANALYSIS OF THE OVERALL OPERATIONS DURING THE REPORTING PERIOD





3.1              Business Scope

The principal business of the Company is investment in, development and
operation of the power business. As of the end of the current reporting period,
the installed generating capacity which has commenced production owned by the
Company on consolidated basis amounts to 2,300 MW, of which the capacity owned
by the Company on equity basis amounts to 2,090 MW.



3.2              Status of Business Operations

In 2003, in line with the continuous rapid development of the national economy,
the power demand in Zhejiang registered asignificant growth, with the
provincial power consumption and unified dispatch power consumption and the
maximum load reaching a record high. Against the backdrop of the persistent
power shortage, the generating units of the Company sustained continuous high
load operation in a safe and stable manner all year around and the production
potentials were brought into full play. Based on the consolidated statements,
the generation totalled 15.896 billion kwh and the electricity sales amounted to
14.813 billion kwh, increasing by 47.79% and 49.57% respectively in comparison
with those in the previous year.



In 2003, the operating results of the Company recorded a rapid growth. Its
annual principal operating income and principal operating profit went up by
42.68% and 43.68% respectively to RMB 4.738 billion and RMB 1.556 billion
respectively. After allocating the devaluation reserves for long-term investment
in China Southern Securities Co., Ltd. ("Southern Securities") of RMB 180
million, the profit realized by the Company in 2003 totalled RMB 1,076 million,
an increase of 32.51% when compared with that of 2002. The net profit realized
by the Company amounted to RMB 609 million, up by 11.69% when compared with that
of 2002. Its earnings per share reached RMB 0.30.



4.     ANALYSIS OF REASONS FOR SIGNIFICANT CHANGES IN OPERATING RESULTS AND 
PROFIT COMPOSITION IN COMPARISON WITH THOSE IN PREVIOUS YEAR

4.1              Principal Operating Income

The principal operating income achieved by the Company in this reporting period
increased by 42.68% to RMB 4.738 billion when compared with that of 2002, which
is mainly attributable to the increase in the Company's electricity sales by
49.57% when compared with that inthe previous year.



The increase in the electricity sales resulted from the following factors:



4.1.1        Unit 1 of Zhejiang Changxing Power Generation Company Limited
(ZCPGC) commenced operation on 15 December 2002 and Unit 2 commencedoperation
on 22 May, thereby increasing ZCPGC's electricity sales by 3.427 billion kwh
when compared with that in the previous year;

4.1.2        Against the backdrop of continuous rapid economic development, heat
wave and drought resulting in unprecedented power shortage in Zhejiang, the
Company seized the market opportunity to fully utilize the production potential
of the generating units to achieve increase in power generation on the premise
of ensuring production safety.

4.2          Principal Operating Profit

The principal operating profit of the Company increased by 43.68% to RMB 1.556
billion in the current reporting period when compared with that of 2002, which
is mainly attributable to the increase in the principal operating income.



4.3              Returns on Investment

The returns on investment of the Company decreased by RMB 180 million to RMB -
147 million in this reporting period when compared with that of 2002, which is
mainly due to the allocation of devaluation reserves for long-term investment of
RMB 180 million after Southern Securities was put under administrative
receivership.



4.4              Net Profit

The net profit realized by the Company in this reporting period increased by
11.69% to RMB 609 million when compared with that of 2002. The increase in net
profit is less than the increase in principal operating profit mainly because of
the allocation of the devaluation reserves for long-term investment and the
deduction ofminority shareholders' profit and loss.



5.              PROFIT DISTRIBUTION PROPOSAL OF BOARD OF DIRECTORS

Based on the Profit Distribution Proposal confirmed in the 7th meeting of the
3rd Board of Directors of the Company on 23 March 2004, the after-tax profit of
the Parent Company as audited by the PRC accounting firm amounts to RMB
609,283,351.82, less allocation of 10% statutory common reserve fund and 10%
statutory public welfare fund each amounting to RMB 60,928,335.18 totalling RMB
121,856,670.36, the profit of the Company distributable to the shareholders
amounts to RMB 1,736,264,021.69. After having distributed the cash dividend for
2002 totalling RMB 498,480,000.00, the undistributed profit of the Company in
2003 amountsto RMB 1,237,784.021.69.



Based on the accounting statements as audited by the PRC and international
accounting firms and according to the principle of whichever is the lower and
taking 2.01 billion shares of the total share capital at the end of 2003 as a
base number, it is proposed to distribute cash dividends of RMB 2.50 (including
tax) per 10 shares, totalling RMB 502,500,000.00.







                               Board of Directors

               Zhejiang Southeast Electric Power Company Limited

                                 25 March 2004




                              Statement of Profit

                                   Year 2003

Prepared by: Zhejiang Southeast Electric Power Company Limited      Unit: RMB

               Item                          Consolidated                     Parent Company

                                   Amount at the    Amount at the    Amount at the    Amount at the
                                   endof the       beginning of the end of the       beginning of the
                                   period           period           period           period

1. Income from principal operating 4,738,196,944.73 3,320,944,888.62 3,670,972,684.16 3,303,121,784.34
activities
Less: Principal operating costs    3,130,675,914.14 2,208,191,596.44 2,440,007,934.01 2,197,760,669.91
              Principal operating     51,268,220.09    29,631,064.15    39,821,558.24    29,518,549.61
              tax and surtax
2. Profit from principal operating 1,556,252,810.50 1,083,122,228.03 1,191,143,191.91 1,075,842,564.82
activities
Add: Profit from other activities        759,658.17       489,090.01       759,658.17       489,090.01
Less: Operating expenses
              Administrative         235,580,541.51   229,175,442.48   197,755,599.64   173,026,072.79
              expenses
              Financial expenses      62,620,319.32    41,228,922.57    13,110,622.12    40,081,923.83
3.Operating profit1,258,811,607.84   813,206,952.99   981,036,628.32   863,223,658.21
Add: Investment income              -146,757,285.34    33,459,111.29   -19,335,916.62     2,552,849.05
              Subsidy income
              Non-operating income       668,046.95       399,756.67       668,046.95       399,756.67
Less: Non-operating expenses          35,754,525.65    34,312,683.64    34,578,096.95    34,295,269.99
4.Gross profit                     1,076,967,843.80   812,753,137.31   927,790,661.70   831,880,993.94
Less: Income tax                     406,140,478.72   287,355,874.26   318,507,309.88   286,406,513.83
Minority shareholders' gains and      61,544,013.26   -20,117,842.06
losses
5.Net profit                         609,283,351.82   545,515,105.11   609,283,351.82   545,474,480.11








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