RNS Number:3348J
Zhejiang Southeast Elec Power Co Ld
28 March 2003
PART 3
15 TRADING INVESTMENTS
The trading investments are traded in active markets and are valued at market value at the close of business
on 31 December by the quoted market prices. Trading investments are classified as current assets because they
are expected to be realised within twelve months of the balance sheet date.
In the cash flow statement, trading investments are presented within the section on operating activities as
part of changes in working capital.
Changes in fair values of trading investments are recorded in the income statement.
15 TRADING INVESTMENTS (CONTINUED)
2002 2001
National debt 44,793 -
Other 273 524
45,066 524
16 Cash and cash equivalents
2002 2001
Cash at bank and in hand 313,877 358,507
Short term bank deposits (Note 20) 997,026 1,100,904
1,310,903 1,459,411
17 TRADE AND OTHER PAYABLES
2002 2001
Payables for construction projects 388,252 144,506
Staff welfare payable and accrued payroll 189,838 135,912
Sundry creditors 47,188 60,672
625,278 341,090
18 Borrowings
2002 2001
Current:
Bank loans 550,000 200,000
Other loan 3,390 -
553,390 200,000
Current portion of long-term liabilities 326,060 326,060
879,450 526,060
Non-current:
Borrowings 776,060 672,120
1,655,510 1,198,180
All the loans are unsecured.
Short-term loans bear interest at rates ranging from 5.04% to 6.12% per annum (2001: 5.85%). The other loan
was borrowed by the Company from Zhejiang environment Protection Bureau through Zhejiang Trust and Investment
Co., Ltd. and was guaranteed by Hangzhou Xiaoshan Xuxian Construction Co., Ltd..
18 BORROWINGS (CONTINUED)
At the balance sheet date, long-term borrowings were as follows:
2002 2001
Southeast Power Group Finance Co., Ltd. 493,174 739,761
Shanghai Pudong Development Bank Hangzhou Branch 158,946 238,419
China Construction Bank Zhejiang Branch 450,000 20,000
Total long-term borrowings, current and non-current 1,102,120 998,180
Of the Rmb 493,174 borrowed from Southeast Power Group Finance Co., Ltd., Rmb 246,587 is due in 2003 and the
remaining balance is payable in 2004. This loan bears interest at a rate of 7.2% per annum (2001: 7.2%).
Of the Rmb 158,946 borrowed from Pudong Development Bank, Rmb 79,473 is due in 2003 and the remaining balance
is payable in 2004. This loan bears interest at a rate of 7.2% per annum (2001: 7.2%).
The loan of Rmb 450,000 borrowed from China Construction Bank Zhejiang Branch is due from 2004 through 2019.
This loan bears interest at a rate of 5.76% per annum (2001: 6.21%). 30% of the principal is guaranteed by
Zhejiang Development.
Principal payments of long-term loans due from the balance sheet date were as follows:
2002 2001
Not later than 1 year 326,060 326,060
Later than 1 year and not later than 5 years 422,489 672,120
Later than 5 years 353,571 -
1,102,120 998,180
The carrying amounts and fair values of non-current borrowings at the balance sheet date are as follows:
Carrying amounts Fair values
2002 2001 2002 2001
Long-term borrowings 776,060 672,120 784,661 687,128
Fair values are based on discounted cash flows using a discount rate based upon the borrowing rate which the
directors expect would be available to the Group at the balance sheet date. The carrying amounts of short-term
borrowings approximate their fair value.
19 Deferred income taxes
Deferred income taxes are calculated in full on temporary differences under the liability method using a
principal tax rate of 33% (2001: 33%).
The movement on the deferred tax assets is as follows:
2002 2001
At beginning of year - -
Credited to net profit (Note 5) 25,778 -
At end of year 25,778 -
The movement in deferred tax assets during the period is as follows:
Pre-operating expenses in Housing remedial Relevant tax for
Changxing expenses overhaul materials
Total
At 1 January 2002 - - - -
Credited to net profit 17,564 6,293 1,921 25,778
At 31 December 2002 17,564 6,293 1,921 25,778
At 31 December 2002, deferred tax assets of Rmb 10,285 will be recovered in one year (2001: nil).
20 Financial instruments
The Company participated in certain foreign currency deposit arrangements with two banks. The Company
deposited US$ 40,000 with the banks for a period started from 5 November 2002. According to the deposit
agreement, the banks set up a quarterly interest determination interval from 5 November 2002 thereafter, and
the interest was calculated on daily basis. The daily interest was eligible to the annual interest rate of 5%
if the LIBOR for the six month US dollar loans at the previous London working day did not exceed the relevant
interest determination interval of the day. Otherwise, the daily interest was eligible to the annual interest
rate of 0%. At 31 December 2002, short-term bank deposits included US$ 40,000 subject to these arrangements
(2001: US$ 47,000).
The Company had collected all of the principal in February 2003.
At the balance sheet date, carrying amounts of current assets and current liabilities approximated their fair
values due to the short-term maturities of these assets and liabilities.
21 Contingencies
At 31 December 2002, the Group provided bank guarantees of Rmb 24,000 (2001: 24,000) to Jiahua from which
management anticipates that no material liabilities will arise.
22 Commitments
(a) Capital commitments
Capital expenditure contracted for at the balance sheet date but not recognised in the financial statements is
as follows:
2002 2001
Property, plant and equipment 172,049 1,067,447
(b) Operating lease commitments
At the balance sheet date, future minimum lease payments under non-cancellable operating leases are as follows:
2002 2001
Within 1 year 10,394 1,792
2 to 5 years 15,600 1,792
25,994 3,584
23 Share capital
Number of shares 2002 2001
Domestic shares of Rmb 1.00
per share:
Zhejiang Development 799,963,000 799,963 799,963
Zhejiang Power 514,037,000 514,037 514,037
Minority Promoters 6,000,000 6,000 6,000
B shares of Rmb 1.00 per 690,000,000 690,000 690,000
share
2,010,000,000 2,010,000 2,010,000
On 15 May 1997, 1,320,000,000 domestic shares were issued to Zhejiang Development, Zhejiang Power and the
Minority Promoters in consideration for the assets and liabilities contributed to the Company.
On 18 July 1997, the Company obtained the approval of the State Council Securities Regulatory Commission of the
PRC to issue 690,000,000 B shares.
23 Share capital (continued)
On 23 September 1997, the B shares were listed on the Shanghai Stock Exchange and the GDRs were listed on the
London Stock Exchange.
The domestic shares and B shares rank para passu in all respects.
24 Reserves
Capital Statutory reserve Statutory Discretionary Retained earnings
Reserve fund welfare fund reserve fund Total
fund
At 1 1,863,272 255,432 255,432 - 1,188,344 3,562,480
January
2001
Dividend - - - - (438,180) (438,180)
relating to
2000
Profit - - - - 734,058 734,058
after
taxation
Appropriation - 73,410 73,410 - (146,820) -
At 31 1,863,272 328,842 328,842 - 1,337,402 3,858,358
December
2001
Dividend - - - - (502,500) (502,500)
relating to
2001
Profit - - - - 551,523 551,523
after
taxation
Proposed - 52,734 52,734 - (105,468) -
appropriation
At 31 1,863,272 381,576 381,576 - 1,280,957 3,907,381
December
2002
(a) According to PRC Company Law, the Company is required to transfer 10 percent of its profit after
taxation computed in accordance with the PRC accounting regulations (after offsetting prior years' losses) to
its statutory reserve fund until the reserve reaches 50 percent of its registered share capital.
The statutory reserve fund can be utilized to offset prior years' losses or for issue of bonus share; however,
the fund shall be maintained at a minimum of 25% of the registered share capital after any such issue.
(b) According to PRC Company Law, the Company is required to transfer 5 to 10 percent of its profit after taxation
computed in accordance with the PRC accounting regulations (after offsetting prior years' losses) to its
statutory welfare fund.
The Company's statutory welfare fund can only be used for the collective benefits and facilities of the
Company's employees. Employees are only entitled to use these facilities. The title and ownership of the
facilities will remain with the Company. The fund forms part of the shareholders' equity and is not
distributable other than on liquidation. The transfer to this fund must be made before the distribution of
dividend to shareholders.
(c) Proposed transfer to the discretionary reserve fund is subject to approval by the shareholders at general
meetings. Its usage is similar to that of statutory reserve fund. No transfer to the discretionary reserve fund
has been proposed by the Board of Directors.
25 Minority interest
2002 2001
At beginning of year 213,500 -
Acquisition (Note 11) - 213,500
Share of net loss of subsidiary (13,970) -
At end of year 199,530 213,500
26 Related party transactions
Zhejiang Power, together with Zhejiang Development, exercised direct supervision and control of the
operations of the Company. Significant transactions with Zhejiang Power, Zhejiang Development and other
related parties for the periods indicated below were as follows:
(1) Sales revenues for electricity sold to Zhejiang Power amounted to Rmb 3,382,590 for the year ended 31
December 2002 (2001: Rmb 3,370,278). The revenues of Rmb 61,645 in the testing period for the unit 1 power
generating facilities in Changxing had been offset the construction cost of the unit 1 power generating
facilities.
(2) Purchase of coal
Coal supply for the Group was solely sourced from Zhejiang Fuxing Electricity Fuel Co., Ltd. and Ningbo
Fuxing Electricity Fuel Co., Ltd.. Coal purchased from Zhejiang Fuxing Electricity Fuels Co., Ltd. and
Ningbo Fuxing Electricity Fuel Co., Ltd. for the year ended 31 December 2002 amounted to Rmb 429,884 and
915,623, respectively (2001: Rmb 1,342,873 and nil, respectively).
(3) Payments to Taizhou Power Generating Industrial Company
Support, ash disposal and other operating services for the Company were performed by an affiliate, Taizhou
Power Generating Industrial Company. Payments for the year ended 31 December 2002 amounted to Rmb 16,978
(2001: Rmb 5,438).
(4) Transactions with Hangzhou Xiaoshan Linjiang Industrial Trading Co., Ltd. ('Linjiang Industrial
Trading')
Support and other operating services for the Company were performed by Linjiang Industrial Trading. Payments
for the year ended 31 December 2002 amounted to Rmb 10,435 (2001: Rmb 4,165).
In 2002, the Company sold certain fixed assets and land use right with the carrying amount of Rmb 11,868 at
the prices of Rmb 5,478 to Linjiang Industrial Trading (2001: nil).
26 Related party transactions (continued)
(5) Transactions with Changxing Changfeng Energy Co., Ltd. ("Changfeng Energy")
Support, ash disposal and other operating services for the Group were performed by Changfeng Energy.
Payments for the year ended 31 December 2002 amounted to Rmb 2,760 (2001: Rmb nil).
The Group purchased the oil and other materials from Changfeng Energy for the year ended 31 December 2002
amounted to Rmb 29,405 (2001: nil).
(6) Lease payments to Zhejiang Power and Zhejiang Development
Certain non-operating assets were leased from Zhejiang Power and Zhejiang Development. Payments for the year
ended 31 December 2002 amounted to Rmb 680 and Rmb 1,059, respectively (2001: Rmb 680 and Rmb 1,059,
respectively).
(7) Except for those disclosed in Note 18:
Short-term loans include Rmb 320,000 borrowed by Changxing from China Construction Bank Hangzhou Zhijiang
Sub-branch through Zhejiang Development. The interest rate ranged from 5,04% to 5.1% (2001: 5.85%).
Long-term loans include Rmb 493,174 borrowed by the Company from Southeast Power Group Finance Co., Ltd.
through Zhejiang Power and Rmb 158,946 borrowed from Pudong Development Bank through Zhejiang Development.
(8) Balances with related parties at the balance date were as follows:
2002 2001
Amount due from (due to):
Zhejiang Power 201,395 94,216
Zhejiang Fuxing Electricity Fuels Co. Ltd. (86,817) (22,564)
Ningbo Fuxing Electricity Fuels Co. Ltd. (35,475) (64,699)
Other (4,542) (836)
74,561 6,117
27 Comparative figures
Certain comparative figures have been reclassified to conform with the current year presentation.
Adjustments to net profit and net assets to conform with IFRS:
(1) Net profit
2002 2001
Net profit under PRC accounting standards 545,515 734,058
Adjustments to conform with IFRS:
(a) Reverse income tax retrospective adjustment (22,007) -
(b) Prepaid income tax (Note 13) 12,490 -
(c) Deferred income tax 19,630 -
(d) Reverse other retrospective adjustment (4,105) -
Net profit in accordance with IFRS 551,523 734,058
(2) Net assets
2002 2001
Net assets under PRC accounting standards 5,386,781 5,365,858
Adjustments to conform with IFRS:
(a) Prepaid income tax (Note 13) 12,490 -
(b) Deferred income tax 19,630 -
(c) Overstatement of cash dividend of 2001 - 502,500
(d) Overstatement of cash dividend of 2002 498,480 -
Net assets in accordance with IFRS 5,917,381 5,868,358
XII. Documents Available for Inspection
1. Financial Statements affixed therewith the signatures and stamps of the Legal Representative, Chief
Accountant and Accounting Department Manager;
2. Originals of Financial Statements affixed therewith the stamps of the accounting firms, the signatures and
stamps of the certified public accountants;
3. Originals of all the documents and announcements published on the press designated by China Securities
Regulatory Commission during the reporting period;
4. Annual Report published on London Stock Exchange
Board of Directors
Zhejiang Southeast Electric Power Co.
26 Mar. 2003
This information is provided by RNS
The company news service from the London Stock Exchange
END
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