Zhejiang Southeast Electric Power Company Limited 900949

Annual Report 2010

Contents

Section I. Important Notice 1

Section II. About the Company 1

Section III. Main Accounting Figures and Business Data 3

Section IV. Changes in Share Capital and Shareholders 5

Section V. Directors, Supervisors and Senior Management 9

Section VI. Corporate Governance Structure 15

Section VII. Shareholders’ General Meetings 20

Section VIII. Report of Board of Directors 21

Section XI. Financial Report 47

Section XII. Documents Available for Inspection 207

Section I. Important Notice

1. The Board of Directors, the Supervisory Committee, the directors, the supervisors and the senior management of Zhejiang Southeast Electric Power Company Limited (the Company) confirm that there is no false representation, misleading statement or material omission in this report, and that they jointly and severally accept full responsibility for the authenticity, accuracy and completeness of the information contained herein.

2. All the directors of the Company attended the meeting.

3. Zhejiang Pan-China Oriental Certified Public Accountants and PricewaterhouseCoopers Zhong Tian CPAs Co. Ltd produced the Auditor’s Reports in their standard forms with no reservations.

4. Board Chairman of the Company Mao Jianhong, General Manager Shou Desheng, Chief Accountant Hu Senjian and Manager of Finance Department Yang Xiaodong state with assurance that the financial statements contained herein are true and complete. 5. There are no cases of occupation of non-operating capital by the controlling shareholders and related parties of the Company.

6. There are no cases of providing guarantees for other companies in contravention of the prescribed decision procedure in the Company.

Section II. About the Company

1. Particulars of the Company

Registered Name in Chinese 浙江东南发电股份有限公司

Registered Abbreviation of the Chinese Name 东南发电

Zhejiang Southeast Electric Power Company Registered Name in English Limited Registered Abbreviation of the English Name ZSEPC Legal Representative Mao Jianhong

2. Person for Contact Secretary to Board of Directors Name Zhu Weiming

Floor 8-10, Zheneng Tower, 152 Tianmushan Road, Contact Address Hangzhou, China Telephone Number 86-571-85774566 Fax Number 86-571-85774321 E-mail Address [email protected]

3. Basic Information about the Company

Floor 22-23, Biao Li Tower, 528 Yanan Road, Registered Address Hangzhou, Zhejiang Province, P.R. China

Postal Code of Registered Address 310006 Floor 8-10, Zheneng Tower, 152 Tianmushan Road, Office Address Hangzhou, China Postal Code of Office Address 310007 Website http://www.zsepc.com/ E-mail Address [email protected]

4. Information Disclosure China Securities Journal, Shanghai Securities News, Designated Press for Information Release South China Morning Post (Hong Kong), Wen Wei Po (Hong Kong) Website for Publication of Annual Reports as designated by the China Securities Regulatory http://www.sse.com.cn/ Commission The domicile of the Company, Herbert Smith Hong Venues for Perusal of Annual Report Kong Office and London Office

5. About Shares of The Company About Shares of The Company Share Name Listing Place of Share Name Type of Share Code of Share Abbreviation Shares Abbreviation Before Change Shanghai Stock B Share ZSEPC B 900949 - Exchange Global Depository London Stock ZHEJIANG GDR S 0949QLT - Receipt (GDR) Exchange

6. Other Related Information Initial Registration Date 15 May 1997 Fengqi Building, 451 Fengqi Road, Hangzhou, Initially Registered Address China Initial Alteration Date of Re-registration 8 July 2002 Re-registered Address Floor 22-23, Biao Li Tower, 528 Yanan Road

Registration No. of Legal Person Qi Gu Zhe Zong Zi No.002189 Business License State (Local) Tax Registration No. Taxation Registration Number 330000142943450 Code of Organization 14294345-0 Name of Domestic Accountant Appointed by the Zhejiang Pan-China Oriental Certified Public Company Accountants Name of International Accountant Appointed by the PricewaterhouseCoopers Zhong Tian CPAs Co., Ltd Company: Address of Domestic Accountant Appointed by the Yaojiang Jinding Plaza, 128 Xixi Road, Hangzhou, Company China Address of International Accountant Appointed by PricewaterhouseCoopers Center, 202 Hu Bin Road, the Company: Shanghai, China

Section III. Main Accounting Figures and Business Data

1. Main Accounting Figures

Unit: RMB yuan

Item Amount Operating Profit 621,453,189.67 Total Profit 614,775,726.39 Net Profit Belonging to Shareholders of the Company 531,131,527.29 Net Profit Belonging to Shareholders of the Company After 524,168,315.85 Deducting Non-recurring Gains and Losses Net Cash Flow Generated from Operating Activities 1,084,521,026.82

2. Reconciliation between Net Profit/Net Assets in Financial Statements By Chinese and International Accounting Standards:

Unit: RMB’000 yuan

Net Profit Net Asset Current Prior Ending Beginning Amount Amount Amount Amount Based on the Chinese accounting standards 543,354 545,650 9,531,357 9,907,549 Adjustment based on the international accounting standards Amortization of deferred government subsidy 5,814 5,814 Deferred income tax liability 9,159 10,699 Deferred government subsidy recognized prior -40,871 -46,685 to 1 January 2007 not yet fully amortized Others -1,140 -1,141 2,500 2,100

Based on the international accounting standards 548,028 550,323 9,502,145 9,873,663

3. Items and Amounts of Non-recurring Gains and Losses

Unit: RMB yuan

Items of Non-recurring Gains and Losses Amount Note Gains and losses from disposal of non-current assets 571,403.52 Government subsidies recorded as current gains and losses (except those in close connection with the Company’s 5,666,820.93 normal operations continuously provided in accordance with the government policy and standards) Capital use fee collected from non-financial enterprises 1,950,143.93 recorded as current gains and losses Other non-operating income and expenses than the above -423,319.06 Subtotal 7,765,049.32 Less: Impact of corporate income tax (with decrease in 1,990,461.39 [Note] income tax denoted by “-”) Impact of minority shareholders’ shares (after tax) -1,188,623.51 Total 6,963,211.44

[Note]: As the donation expenditure of RMB 160,000.00 yuan and the penalty expenditure of RMB 36,796.21 yuan cannot be stated as expenditure before tax, the impact of corporate income tax is as follows: (7,765,049.32+160,000.00+36,796.21)×25%=1,990,461.39 (yuan)

4. Main Accounting Figures and Financial Indicators in Past Three Years

Unit: RMB yuan

Increase/decrease in Main Accounting Figures Year 2010 Year 2009 current year as against Year 2008 prior year (%) Operating income 7,780,814,338.27 7,484,541,758.83 3.96 7,170,397,363.54 Total profit 614,775,726.39 637,672,196.17 -3.59 -175,819,126.23 Net profit belonging to 531,131,527.29 485,204,559.20 9.47 27,046,056.67 shareholders of the Company Net profit belonging to shareholders of the Company 524,168,315.85 497,179,282.58 5.43 -429,148,393.00 after deducting non-recurring gains and losses Net cash flow per share generated 1,084,521,026.82 2,161,253,051.65 -49.82 164,525,801.72 from operating activities Increase/decrease at current year end as At End of 2010 At End of 2009 At End of 2008 against prior year end (%) Total assets 15,165,703,347.68 16,430,629,347.62 -7.70 15,637,758,966.04 Owner’s equity (or shareholders’ 9,116,747,831.60 9,508,311,850.94 -4.12 7,463,832,556.96 equity)

Increase/decrease in Main Financial Indicators Year 2010 Year 2009 current year as against Year 2008 prior year (%)

Basic Earnings per share 0.2642 0.2414 9.44 0.0135 (yuan/share) Diluted earnings per share 0.2642 0.2414 9.44 0.0135 (yuan/share) Basic Earnings per share after deducting non-recurring gains and 0.2608 0.2474 5.42 -0.2135 losses (yuan/share) Weighted average yield on net 5.6425 5.7177 Decreased by 0.0752% 0.2873 assets (%) Weighted average yield on net assets after deducting 5.5685 5.8588 Decreased by 0.2903% -4.5589 non-recurring gains and losses (%) Net cash flow generated from operating activities per share 0.5396 1.0753 -49.82 0.0819 (yuan/share) Increase/decrease at current year end as At End of 2010 At End of 2009 At End of 2008 against prior year end (%) Net asset value per share belonging to shareholders of the 4.5357 4.7305 -4.12 3.7133 Company (yuan/share)

5. Items Measured by Fair Value Unit: RMB yuan

Change in Current Impact on Item Beginning Amount Ending Amount Period Current Profit Available-for-sale financial assts 3,806,841,809.50 3,448,404,024.76 -358,437,784.74 0.00 Total 3,806,841,809.50 3,448,404,024.76 -358,437,784.74 0.00

Section IV. Changes in Share Capital and Shareholders

1. Changes in Share Capital There was no change in total number of shares and the share capital structure of the Company in the current reporting period. 2. Issuance and Listing of Shares (1) Issuance of shares in past three years No issuance of shares had been conducted in the past three years up to the end of the current reporting period.

(2) Changes in total number of shares and share structure There was no change in the total number of shares or the share structure of the Company due to bonus shares or allotment of shares during the current reporting period. (3) Internal employee shares The Company has no internal employee share as at the end of the current period. 3. Profile of Shareholders and De facto Controllers (1) Number of Shareholders and Shareholding Unit: Share

Total Number of Shareholders at End of This Reporting Period 85,269 Shareholding of Top 10 Shareholders Ownership Percentage of Total Number of Increase/ Number of Number of Shares Name of Shareholder Structure of Shareholding Shares Held Decease in Non-listed Shares in Pledge or shareholders Current Period Held Freeze Zhejiang Provincial Electric State-owned Nil 39.80 799,963,200.00 0.00 799,963,200.00 Power Development Co. legal person China Huaneng Group State-owned 25.57 514,036,800.00 0.00 514,036,800.00 Nil NAITO SECURITIES CO., Foreign 0.33 6,706,824.00 -602,350.00 0.00 Unknown LTD. legal person Domestic Zhou Jie natural 0.27 5,470,000.00 287,100.00 0.00 Unknown person Domestic Jiang Rongfang natural 0.27 5,326,529.00 143,600.00 0.00 Unknown person TOYO SECURITIES ASIA Foreign 0.26 5,176,985.00 -217,250.00 0.00 Unknown LTD. A/C CLIENT legal person

SHENYIN WANGUO Foreign 0.25 4,997,042.00 -602,200.00 0.00 Unknown NOMINEES (H.K.) LTD legal person Foreign NORGES BANK 0.22 4,400,790.00 4,237,990.00 0.00 Unknown legal person Domestic non-state- Zhejiang Bada Company Ltd 0.20 4,000,000.00 0.00 4,000,000.00 Nil owned legal person Hongkong Xingyuan Foreign Investment & Trade Company 0.18 3,569,960.00 3,224,360.00 0.00 Nil legal person Ltd

Shareholding of Top 10 Holders of Listed Shares Name of Shareholder Number of Listed Shares Held Type of Shares NAITO SECURITIES CO., LTD. 6,706,824.00 B share Zhou Jie 5,470,000.00 B share Jiang Rongfang 5,326,529.00 B share TOYO SECURITIES ASIA LTD. A/C CLIENT 5,176,985.00 B share SHENYIN WANGUO NOMINEES (H.K.) LTD. 4,997,042.00 B share

NORGES BANK 4,400,790.00 B share Hongkong Xingyuan Investment & Trade Company Ltd 3,569,960.00 B share STICHTING PGGM DEPOSITARY 3,410,590.00 B share LIM CHINA MASTER FUND SPC LTD-ABSOLUTE 3,100,370.00 B share RETURN SEGREGATED PORTFOLIO CREDIT SUISSE AG ZURICH BRANCH 2,608,000.00 B share Hongkong Xingyuan Investment & Trade Company Ltd has no connection or joint Note on whether the above shareholders have connection action with the above other holders of listed shares. Apart from that, the Company or joint action is unaware whether the above shareholders have any connection or joint action. Number of Shares with Restriction on Sale Held by Shareholders and Conditions of Restriction

Unit: Share

Number of Shares Status of Tradability of Shares with Restriction on Sale Conditions Name of Shareholder With Restriction with Restriction on Time of Getting Number of Newly-tradable of on Share Sale Sale Tradable Shares Restriction Zhejiang Provincial Electric Power Non-listed 799,963,200.00 Development Co. Shares Non-listed China Huaneng Group 514,036,800.00 Shares Non-listed Zhejiang Bada Company Ltd 4,000,000.00 Shares Zhejiang Provincial Electric Power Non-listed Equipment & Material Supply 1,000,000.00 Shares Company Zhejiang Zhedian Property Company Non-listed 1,000,000.00 Ltd Shares Zhejiang Provincial Electric Power Development Company has no connection or joint action with the above other shareholders. Zhejiang Provincial Electric Power Equipment & Material Supply Company Note on whether the above shareholders have connection or and Zhejiang Zhedian Property Company Ltd are both controlled by joint action the same company, i.e. Zhejiang Provincial Electric Power Co. Apart from that, the Company is unaware whether the above shareholders have any connection or joint action.

(2) Profiles of Controlling Shareholder and De Facto Controller a. About Controlling Shareholder and De Facto Controller Zhejiang Provincial Electric Power Development Company (ZPEPDC) is a wholly-owned subsidiary of Zhejiang Provincial Energy Group Corp. (ZPEGC). After being restructured, ZPEPDC’s staff and organization were wholly merged into ZPEGC. Therefore, the rights and power of ZPEPDC as a controlling shareholder will be exercised directly by ZPEGC. b. The Controlling Shareholder

Unit: RMB billion yuan

Name Zhejiang Provincial Electric Power

Development Company Limited Legal Representative Wu Guochao Date of establishment 14 March 1992 Registered Capital 3.30 Electric power project development and management, energy saving technique development and consulting, sale of energy saving products, construction and supervision Principal operating activities of power project and power environmental protection project, power equipment maintenance, industrial investment and asset management

c. The De facto Controller

Unit: RMB billion yuan

Name Zhejiang Provincial Energy Group Corp. Legal Representative Wu Guochao Date of establishment 21 March 2001 Registered Capital 10.00 State-authorized operations of the stated-owned assets and stocks of group corporations and Principal operating activities enterprises, investment in industrial development and technical consulting services

d. Change in Controlling Shareholder and De facto Controller The controlling shareholder and the de facto controller of the Company remained unchanged during the current reporting period.

Diagram reflecting relationship between ZSEPC and its de facto controllers

Zhejiang Provincial State-owned Assets Supervision & Administration Commission

100%

ZPEGC 100%

100%

ZPEPDC Zhejiang Xingyuan Investment Co. Ltd

100% 39.80%

Hongkong Xingyuan Investment & Trade Co.

0.18% ZSEPC

(3) Other Legal Person Shareholders Holding more than 10% of the Company’s Shares Unit: RMB billion yuan

Name of Legal Date of Registered Principal Operating Activities Shareholder Representative Establishment Capital Industrial investment and management; power generation development, investment, construction, operation and management; organization of electric power (heat) China Huaneng 31 March production and sales, and engagement in the Cao Peixi 20.000 Group (CHNG) 1989 development, investment, construction, production and sales of the information, transportation, new energies and environmental protection, industries and products

Section V. Directors, Supervisors and Senior Management 1. Change in Shareholding of and Remuneration for Directors, Supervisors and Senior Management Unit: share

Name Position Gender Age Tenure Start Tenure End Shareholding Shareholding Remuneration Whether taking Date Date at Year at Year End Collected from remuneration from Beginning the Company shareholder (in RMB 10,000 companies or other yuan) (Before affiliated companies tax)

Mao Board Chairman Male 46 10/04/2009 09/04/2012 0 0 Yes Jianhong Gu Biquan Vice Board Chairman Male 53 10/04/2009 09/04/2012 0 0 Yes Sun Director Male 48 10/04/2009 09/04/2012 0 0 49.49 Yes[Note 1] Weiheng Cao Lu Director Male 45 10/04/2009 09/04/2012 0 0 Yes

Wang Lina Director Female 47 10/04/2009 09/04/2012 0 0 Yes Xia Director Female 41 25/10/2010 09/04/2012 23.14 Yes[Note 2] Jinghan Shou Director, General Male 53 10/04/2009 09/04/2012 0 0 43.68 No Desheng Manager Xing Director Male 52 10/04/2009 09/04/2012 0 0 Yes Junjie Fu Qiyang Director Male 47 10/04/2009 09/04/2012 0 0 Yes

Liu Hong Director Male 51 10/04/2009 09/04/2012 Yes Chen Independent Director Male 67 10/04/2009 09/04/2012 6.32 No Jimin Yao Independent Director Male 57 10/04/2009 09/04/2012 0 0 6.32 No Xianguo Wo Jian Independent Director Male 50 10/04/2009 09/04/2012 0 0 6.32 No

Qiu Guofu Independent Director Male 64 10/04/2009 09/04/2012 0 0 6.32 No Yan Independent Director Male 47 10/04/2009 09/04/2012 0 0 6.32 No Weimin Huang Supervisory Male 44 10/04/2009 09/04/2012 0 0 Yes Lixin Committee Chairman Hu Supervisor Male 53 10/04/2009 09/04/2012 0 0 Yes Xing’er Shi Jiwen Supervisor Male 44 10/04/2009 09/04/2012 0 0 Yes Tian Supervisor Female 47 10/04/2009 09/04/2012 0 0 Yes Shuying Huang Employee Supervisor Female 50 10/04/2009 09/04/2012 28.30 No Huafen Huang Employee Supervisor Male 52 10/04/2009 09/04/2012 0 0 3503 No Guanlin Jiang Employee Supervisor Male 55 10/04/2009 09/04/2012 0 0 34.10 No Pingzhou Jin Secretary of Male 43 13/09/2010 0 0 4.65 No Changmao Disciplinary Inspection Committee, Director of Trade Union Committee Zhu Deputy General Male 41 30/09/2010 09/04/2012 0 0 4.65 No Weiming Manager, Secretary to Board of Directors Hu Senjian Chief Accountant Male 55 10/04/2009 09/04/2012 0 0 33.74 No

Total / / / / / 0 0 288.38 /

[Note 1]: Sun Weiheng was assigned to be Deputy General Manager of ZPEGC in December 2010.

[Note 2]: Xia Jinghan was assigned to be Head of Department of Strategic Research & Legal Affairs, ZPEGC in September 2010.

Main work experience of the directors, supervisors and senior management personnel in the past five years: Mao Jianhong, currently working as Deputy General Manager of ZPEGC, formerly working as Assistant General Manager of ZPEGC

Gu Biquan, currently working as Deputy General Manager of Huaneng International Electric Power Company Ltd, formerly working as Deputy General Manager of Huaneng International Electric Power Development Company Ltd Sun Weiheng, currently working as Deputy General Manager of ZPEGC, formerly working as Director of Taizhou Power Plant Cao Lu, currently working as Head of Asset Operation Department of ZPEGC, formerly working as Deputy Head of Service Price Management Division of Zhejiang Provincial Commodity Pricing Bureau Wang Lina, currently working as Head of Finance Department of ZPEGC, formerly working as Deputy Head of Finance Department of ZPEGC Xia Jinghan, currently working as Head of Department of Strategic Research & Legal Affairs of ZPEGC, formerly working as Deputy General Manager and Secretary to Board of Directors of the Company Shou Desheng, currently working as General Manager of the Company, formerly working as Deputy General Manager of the Company Xing Junjie, currently working Deputy Head of Planning Department of China Huaneng Group, formerly working as Deputy Manager of Planning & Development Department of Huaneng International Electric Power Co. Ltd. Fu Qiyang, currently working as Manager of Marketing Department of Huaneng International Electric Power Co. Ltd, formerly working as Deputy Manager of Marketing Department of Huaneng International Electric Power Co. Ltd Liu Hong, currently working as Deputy Manager of Stock Management Department of Huaneng International Electric Power Co. Ltd, formerly working as Secretary General at Manager’s Office of Huaneng International Electric Power Co. Ltd Chen Jimin, currently working as Honorary Chairman of Zhejiang Power Industry Association, formerly working as Director (General Manager) of Zhejiang Provincial Electric Power Bureau (Company) Yao Xianguo, currently working as Dean of Public Administration College of Zhejiang University, formerly working as Executive Deputy Dean of Economics College of Zhejiang University Wo Jian, currently working as Head of Dean’s Office of Zhejiang Financial & Economic College, formerly working as Deputy Dean of Accounting Department and Deputy Head of Dean’s Office of Zhejiang Financial & Economic College Qiu Guofu, now retired, formerly working as Deputy General Manager of East China Power Grid Co. Yan Weimin, currently working as Vice Chairperson and Secretary General of Shenzhen Municipal Securities Association and Shenzhen Listed Company Association, formerly working as Deputy General Manager of Merchant Securities

Company Huang Lixin, currently working as Manager of Finance Department of Huaneng International Electric Power Co. Ltd, formerly working as Deputy Manager of Finance Department of Huaneng International Electric Power Co. Ltd Hu Xing’er, currently working as Deputy Director of Finance Department of ZPEGC, formerly working as Deputy Chief Accountant of Taizhou Power Plant Shi Jiwen, currently working as Deputy General Manager of Zhonghai Ningbo LNG Company Ltd, formerly working as Leading Engineer of Planning & Development Dept. of ZPEGC Tian Shuying, currently working as Head of First Capital Division of Finance Department of Huaneng International Electric Power Co. Ltd, formerly working as Deputy Head of First Capital Division of Finance Department of Huaneng International Electric Power Co. Ltd Huang Huafen, currently working as Chairman of Trade Union of Taizhou Power Plant, formerly working as Deputy Secretary of Disciplinary Inspection Committee and Head of Disciplinary Inspection Dept. of Taizhou Power Plant Huang Guanlin, currently working as Secretary of Disciplinary Inspection Committee and Chairman of Trade Union of Xiaoshan Power Plant, formerly working as Assistant Director of Xiaoshan Power Plant Jiang Pingzhou, currently working as Chairman of Trade Union of Zhejiang Zheneng Changxing Power Generation Company Ltd (ZCPGC), formerly working as Chairman of Trade Union of Zhejiang Power Generation Engineering Corp. Jin Changmao, currently working as Secretary of Disciplinary Inspection Committee of the Company and Director of Trade Union Committee, formerly working as Leading Economist of Human Resources Dept. of ZPEGC Zhu Weiming, currently working as Deputy General Manager and Secretary to Board of Directors, formerly working as Deputy Head and Head of General Manager’s Office of Zhejiang Zheneng Jiaxing Power Generation Co. Ltd Hu Senjian, currently working as Chief Accountant of the Company, formerly working as Leading Accountant of Finance Department of Zhejiang Provincial Electric Power Company (ZPEPC). 2. Positions Held in Shareholder Companies

Name Shareholder Position Tenure Whether taking Company remuneration from the shareholder company Mao ZPEGC Deputy General Manager Yes Jianhong Gu Huaneng Deputy General Manager Yes Biquan International Electric

Power Company Sun ZPEGC Deputy General Manager Yes Weiheng Cao Lu ZPEGC Head of Asset Operation Yes Department Wang ZPEGC Head of Finance Yes Lina Department Xing China Huaneng Deputy Head of Planning Yes Junjie Group Department Fu Huaneng Manager of Marketing Yes Qiyang International Electric Department Power Co. Ltd Liu Hong Huaneng Deputy Manager of Stock Yes International Electric Management Department Power Co. Ltd Huang Huaneng Manager of Finance Yes Lixin International Electric Department Power Co. Ltd Hu ZPEGC Deputy Director of Finance Yes Xing’er Department Tian Huaneng Head of First Capital Yes Shuying International Electric Division of Finance Dept. Power Co. Ltd [Note]: Based on the Agreement on Trust Management of Thermal Power Generating Assets signed between them, China Huaneng Group Co. entrusted Huaneng International Electric Power Co. Ltd to assign people to be directors and supervisors of the Company. Positions Held in Other Organizations

Whether Taking Name Name of Other Organizations Position Tenure Remuneration from the organization Deputy General Yes Shi Jiwen Zhonghai Ningbo LNG Co. Ltd Manager Yao Dean of Public Yes Zhejiang University Xianguo Administration College Zhejiang Financial & Economic Yes Wo Jian Head of Dean’s Office College Shenzhen Municipal Securities Yes Vice Chairperson and Yan Weimin Association and Shenzhen Listed Secretary General Company Association

3. Remuneration for Directors, Supervisors and Senior Management

The principles for paying The directors and supervisors not taking remuneration from remuneration to directors, ZSEPC will be paid by the shareholder companies or affiliated supervisors and senior enterprises of the shareholder companies that employ them, management personnel without getting any additional salaries or benefits from ZSEPC; the annual remuneration for the non-independent directors, supervisors and other senior management personnel taking remuneration from

ZSEPC is subject to review and consent of the Board of Directors and the Remuneration & Appraisal Committee under the Board based on the management responsibility appraisal method. The annual remuneration for the independent directors is subject to review and approval of the shareholders’ general meeting.

Basis for Determining The annual allowance for each independent supervisor of ZSEPC Remuneration for Directors, amounts to RMB 50,000 yuan (after tax). The annual remuneration Supervisors and Senior for the non-independent directors, supervisors and senior Management Personnel management personnel taking remuneration from ZSEPC is subject to the appraisal of the management responsibility system of the Company.

Actual Payment to Directors Payment was made in accordance with the basis for determining and Supervisors remuneration for directors, supervisors and senior management personnel.

4. Change of Directors, Supervisors and Senior Management Personnel

Status of Change Reason for Name Position Held Change Director Zhang Qian left Xia Jinghan Director office. Xia Jinghan was elected Job needs Director Xia Jinghan left office of Deputy General Manager and Secretary to Board of Deputy General Manager, Zhu Weiming Directors. Zhu Weiming was Job needs Secretary to Board of Directors appointed Deputy General Manager and Secretary to Board of Directors

5. Employees

Total Number of Employees 3,390 Number of retirees taking pension from the 475 Company

Discipline Discipline Category Number of people involved Intermediate and senior production 203 management personnel Ordinary managerial and technical personnel 715 Production frontline personnel 2,472 Educational Level By Educational Level Number of people involved With university bachelor’s degrees and above 905 With college diplomas 1,314

With technical secondary school education 306 With senior secondary school education and 865 below

Section VI. Corporate Governance Structure

1. Corporate Governance (1) Establishment and Enforcement of Internal Control of Financial Statements In strict accordance with the accounting laws, regulations and standards, the Company prepared financial statements based on complete and verified bookkeeping entries and other related materials to give complete account, truthful data and accurate calculation. Its financial statements were audited by both the domestic and overseas accounting firms, both producing the Auditor’s Report in standard form without reservation. Great importance was attached to analysis of financial statements and regular financial analysis meetings were held to fully utilize the information revealed in the financial statements, analyze the operations of the Company and constantly enhance its operation management. Up to the end of the current reporting period, no material defect was found in the internal control of the financial statements of the Company. (2) Peer Competition and Regulation of Related Party Transaction Many member companies of ZPEGC are engaged in power generation, selling all their electricity generated to the power grid company. Under the current power regulatory regime and the power grid dispatching mode, neither the Company nor the other power generating companies can decide on their shares of electricity sale to the grid or influence the grid company over the dispatching of power generating units. Nor can they have any say on the power tariff, thus constituting no substantive peer competition nor bringing adverse effect on the Company and its shareholders. The related party transactions between the Company and its related parties had positive effects on the Company’s effort to save cost, ensure supply and improve synergic results, and contributed to the Company’s business development and financial management. The related party transactions between them conformed to the principle of “openness, fairness and justice”, with equitable pricing and reasonable conditions of contracts. The decision-making procedures of related party transactions complied with the relevant laws and regulations and the Articles of Association of the Company, with all the important related party transactions submitted to independent directors for review before making decisions. The Company closely followed the Rules for Listed Shares of Shanghai Stock Exchange to implement its obligations for information disclosure and ensure the regulation of related party transactions.

(3) Consolidating Effect of Special-purpose Activity to Improve Corporate Governance The Company closely complied with the Company Law, the Security Law, the regulatory documents on governance of listed companies issued by China Securities Regulatory Commission (CSRC) and the Rules for Listed Shares of Shanghai Stock Exchange to constantly refine the corporate governance of the Company and regularize corporate operations. The effect of the Special-purpose Activity Aimed at Improving Corporate Governance was consolidated, and the various corrective measures were well implemented. (4) Implementation of Corporate Social Responsibility While pursuing economic returns, based on its sector and operational characteristics, the Company paid attention to making non-commercial contribution to the benefits of the stakeholders, the society, the environmental protection and resource utilization. By means of ensuring power supply, optimizing industrial structure and taking measures to save energy and reduce emissions, it assumed its due social responsibility and obligation, thus making significant contribution to attaining the provincial target of energy saving and emission reduction in the 11th Five-year Plan period. 2. Discharge of Duties by Directors (1) Directors’ Attendances of Board Meetings

Whether or Required Whether or not Attendance via attending in Name of not Attendances at Attendance Attendance tele- Absence person two Directors Independent Board Meetings in Person by proxy communication consecutive Director in the Year meetings Mao No 12 12 9 0 0 No Jianhong Gu No 12 11 9 1 0 No Biquan Sun No 12 11 9 1 0 No Weiheng Cao Lu No 12 11 9 1 0 No Wang No 12 11 9 1 0 No Lina Xia No 2 2 2 0 0 No Jinghan Shou No 12 12 9 0 0 No Desheng Xing No 12 11 9 1 0 No Junjie Fu No 12 11 9 1 0 No Qiyang Liu Hong No 12 12 9 0 0 No Chen Yes 12 12 9 0 0 No Jimin Yao Yes 12 10 9 2 0 No Xianguo

Wo Jian Yes 12 11 9 1 0 No Qiu Yes 12 12 9 0 0 No Guofu Yan Yes 12 12 9 0 0 No Weimin

Note: There was no directors who failed to attend the Board meetings in person for two consecutive times in the current reporting period.

Number of Board meetings in the year 12 Including: number of field meetings 3 number of meetings via telecommunication 9 number of field-cum-telecommunication meetings 0

(2) Independent Directors Raising Objection to Matters Concerning the Company

Name of Independent Important matters to which independent Content of Remarks Director directors raised objection objection

Chen Jimin Nil

Yao Xianguo Nil

Wo Jian Nil

Qiu Guofu Nil

Yan Weimin Nil

(3) Establishment and Main Content of Independent Directors’ Work Rules and Their Discharge of Duties In accordance with the relevant laws and regulations, the Company set forth and constantly refined the Independent Directors’ Work Rules of the Company. It is stipulated that independent directors shall constitute a majority in the Auditing Committee and the Remuneration & Appraisal Committee, and act as convenors. Apart from the rights and power specified in the laws/regulations and the Company’s Articles of Association, independent directors should give their independent opinions on such matters as important connected transactions, nomination for appointment and removal of directors, employment or dismissal of senior management personnel and remuneration to directors and senior management personnel. In the meantime, the Rules further specify the annual report system for independent directors so as to make use of their supervisory roles in the annual report. In 2010, the independent directors performed in earnest their duties and obligations in accordance with the laws, regulations and the Articles of

Association of the Company, attended meetings of Board of Directors, ad hoc committees under the Board and the shareholders’ general meetings, and expressed their independent opinions, thus safeguarding the overall interest of the Company. In the process of preparing the Company’s Annual Report, the independent directors earnestly heard the management’s report on the operations, financial position and progress of important events of the Company, and met with the accounting firm to discuss the preliminary audit comments before the Board of Directors met to review the annual report, thereby playing their roles as independent directors. 3. The Company’s Independence of Its Controlling Shareholders in Respects of Operations, Staffing, Assets, Organization and Finance

Whether having Description Impact on Corrective complete the measures independence Company

Independence in Yes The Company operates respect of business independently, responsible for its operations own profits or losses with self-contained operational structure

Independence in Yes The Company is independent in respect of staffing terms of management of personnel. All the senior management personnel of the Company are full time employees and receive remuneration from the Company, without taking payment or holding positions in controlling shareholder companies. It promoted Independence in Yes The Company possesses the regular respect of assets independent production system, the operation of auxiliary production system and the ancillary facilities. Intangible assets Company. including the land use rights, industrial properties, trade marks and non-patented technology all belong to the Company

Independence in Yes The Company has an independent respect of organization with the Board of organization Directors, the Supervisory Committee and the internal organs of the Company operating independently.

Independence in Yes The Company has an independent respect of financial Finance Department, formulated an

affairs independent accounting system and financial management system and opened an independent bank account.

4. Formulation and Refinement of Internal Control Systems of the Company

General Plan for Construction of Based on the Basic Code for Enterprise Internal Control and the Guideline for Internal Control Enterprise Internal Control, the Company formulated the Basic Code for Internal Control of ZSEPC. In accordance with this Code and the relevant rules and requirements of some government departments, the Company constantly tries to develop and improve the internal control management system, put it in place and ensure its effectiveness.

Internal Control System The Company invited PricewaterhouseCoopers Zhong Tian CPAs Co. Ltd to give Development Plan and training on the internal control and risk management. In accordance with the Implementation requirements of the five ministries including the Ministry of Finance, starting from 1 January 2012, the Basic Code for Enterprise Internal Control and the Guideline for Enterprise Internal Control will be brought into practice in the Company. A self-appraisal of the effectiveness of the internal control will be made, and the annual self-appraisal report will be released. Meanwhile, an accounting firm will appointed to audit the effectiveness of the internal control of the financial statements and produce the auditor’s report.

Institution of Internal Control The Board of Directors is responsible for the institution, development and Examination and Supervision implementation of the internal control. The Auditing Committee under the Board Department is responsible for auditing the internal control. The Supervisory Committee plays its supervisory role in the process. The management team is responsible for daily operation of the internal control. The internal examination departments of the Company are responsible for organization and coordination for implementation and routine work of the internal control.

Self-appraisal of internal A sound and well-regulated corporate governance structure and rules of procedure supervision and internal control were instituted, which are characterized by clear-defined responsibilities for decision, execution and supervision, scientific division of duty and a check-and-balance system. In the light of the Company’s own conditions, such control measures as different posts control, authorization and approval control, accounting system control, property protection control, budget control, operation analysis control, performance appraisal mechanism and emergency handling mechanism were adopted so as to keep control of risks at acceptable level. The information system fit for the management of the Company was established and brought into operation in order to achieve integration of the internal control procedure and the information system, enable automatic control of business transactions and events, and reduce or eliminate manual operations.

Work Related to Internal Control The Board of Directors takes the overall responsibility for the establishment, Arranged by Board of Directors development and effective operation of the internal control of the Company. It will follow the Basic Code for Enterprise Internal Control and the Guideline, take into account the Company’s operational characteristics and management requirement, make comprehensive plan and elaborate arrangements to construct a

sound internal control. It will effectively implement internal supervision, self-appraisal, internal control audit and information disclosure, strengthen and regularize internal control, and enhance the Company’s operational management and risk control capabilities.

Internal Control System Related to The financial management system of the Company was formulated in strict Financial Accounting conformity with the various internal control codes of the relevant government departments, with such internal control procedures as approval and signature stringently practised and the non-compatible posts completely separated. The accounting system of the Company was established and developed in accordance with the relevant stipulations such as the Accounting Law and the Enterprise Accounting Standards taking into account the Company’s operational characteristics. The various financial control systems ensure that the accounting of the Company is true, accurate and complete.

Defect in Internal Control and The development of the internal control and management system of the Company Rectification will be a long and continuous process, requiring constant effort to improve it. At present, the various internal control systems of the Company can basically meet the needs of the daily operations and management. With the development of the corporate business and the improvement of the corporate governance, the Board of Directors, the Supervisory Committee and the management team of the Company will endeavour to continuously develop the various internal control systems and ensure regularity and efficiency of the Company’s daily operation and management.

5. Assessment of and Incentive for Senior Management A performance assessment method focusing on the operational responsibility system as its core and based on the safe production and clean administration as its support was established. The annual salary system was practiced for the senior management of the Company and the directors of the power plants. 6. The Company would not disclose the Self-appraisal Report on Internal control or the Social Responsibility Report. 7. Establishment of Responsibility Tracking System for Major Error in Information Disclosure in Annual Report The Company revised the Rules for Information Disclosure Management to further develop the responsibility tracking system for major error in information disclosure and increase intensity of responsibility tracking to those responsible for information disclosure. For those held responsible, the Company will penalize them by means of warning, giving orders to correct, fines, removal from office, etc. depending on severity of the errors. In the current reporting period, no cases of correction of major accounting errors, major omission makeup and correction of operating result announcement occurred.

Section VII. Shareholders’ General Meetings

1. Annual Shareholders’ General Meeting

Date of Name of Meeting Date of Meeting Newspaper for Publication of Resolutions Publication China Securities Journal, Shanghai Shareholders’ General Securities News, Hongkong-based South 9 April 2010 10 April 2010 Meeting 2009 China Morning Post and Hongkong-based Wen Wei Po Description of Shareholders’ General Meeting The meeting reviewed and approved the Work Report of the Board of Directors for 2009, the Supervisory Committee’s Work Report 2009, the Independent Director’s Work Report 2009, the Final Accounting Statements for 2009, the Profit Distribution Proposal for 2009, the Auditing Work Summary Report for 2009 and Proposal to Renew Appointment of the Accounting Firms for 2010, the Budgetary Report for 2010 and the Proposal to Revise Articles of Association of the Company. 2. Extraordinary Shareholders’ General Meeting

Newspaper for Publication of Name of Meeting Date of Meeting Date of Publication Resolutions China Securities Journal, Shanghai The First Extraordinary Securities News, Hongkong-based Shareholders’ General 25 October 2010 26 October 2010 South China Morning Post and Meeting in 2010 Hongkong-based Wen Wei Po Description of Extraordinary Shareholders’ General Meeting The meeting reviewed and approved the Proposal to Change Directors.

Section VIII. Report of Board of Directors

1. The Management’s Discussion and Analysis (1) Retrospection of Business Operations of the Company in Current Period In 2010, in response to the complex changing domestic and overseas economic environment, the Board of Directors of the Company took stock of the situation, laid emphasis on the major work, united with the management team and relied on the whole staff to earnestly carry out the various resolutions of shareholders’ general meetings, improve the corporate governance, regularize corporate operations, proactively promote industrial upgrading and corporate development, oversee the management team to enhance operation management and fulfil every operating target and mission. In 2010, the Company completed power generation of 18.956 billion kWh and electricity sales of 17.668 billion kWh, achieved operating income amounting to RMB 7.781 billion yuan, net profit belonging to the parent company amounting to RMB 531 million yuan which increased by 9.47% compared with that in the prior period, and realized earnings per share amounting to RMB 0.2642 yuan/share. a. Exploring market and tapping potential to increase corporate profitability with every effort Focusing on budgetary targets set in the shareholders’ general meeting, using the

operational responsibility system as a means, the Board of Directors oversaw the management team to overcome such adverse factors as price rise of coal, oil and gas and shutdown of small-capacity power generating units, enhance internal management, try to increase income and save cost, and maintain stable operation and development of the Company. (a) Consolidating production safety Focusing on the activity of “Year of Safe Production” and the secure power supply for the World Expo in Shanghai, the Company did well in the planned maintenance and operation management of the generating units to ensure equipment health and reliability, and secured continuous steady production safety. In the past one year, there was no occurrence of light and above-light personal injury. Nor was there any occurrence of above-ordinary-level equipment fault, traffic accident or fire disaster. All the power plants under the Company kept continuous long cycles of safe production. (b) Making every effort to increase power generation and heat supply The power plants under the Company took advantage of the favourable time when the social power demand rallied and some regions experienced tight power supply, stepped up communication and coordination with the power grid dispatcher, tried their best to seek additional power generation quota on top of fulfilment of their annual power generation plans. In response to shutdown of small-capacity generating units of Taizhou Power Plant and shortfall of natural gas supply for Xiaoshan Power Plant, great effort was made to gain support of the relevant government departments and major shareholders to properly arrange replacement power generation. Over the year, the replacement power generating companies generated electricity sale to the grid amounting to 1.861 billion kWh, earning income from replacement generation amounting to RMB 225 million yuan. Meanwhile, Taizhou Lianyuan Heat Supply Company Ltd and Zhejiang Changxing Southeast Heat Supply Company Ltd proactively explored the heat supply market, rendering the heat generating units to yield more heat production and better income. In the year, the income from steam sale reached RMB 131 million yuan increasing by 92.43% in comparison with that in the prior year. (c) Further Strengthening and Enhancing Corporate Management The budget management was deepened in every way in an effort to step up analysis and pre-warning during budget implementation, put in place an interaction mechanism between the Finance Department and the operation departments, and let budget management and the operational responsibility system play their roles in improving corporate management. Efforts were made to strengthen fuel cost control, taking such measure as the coal consumption equilibrium test in order to keep track of all-the-way coal consumption from the coal yard pickup to the boiler combustion, find out the critical points of high coal consumption, rectify them from the beginning, improve overall fuel management

and reduce coal consumption. Benchmarking management with regard to reliability, safety and cost management was continued, gradually forming a benchmarking mechanism featuring “comparing with the advanced companies, finding and rectifying their own errors or deficiencies and surpassing themselves”. In addition, the energy conservation management was strengthened to save energy, reduce emission, propagate application of energy-saving techniques, and optimize operation management of generating units for enhanced equipment economics. In 2010, the main economic and technical indicators of the Company recorded remarkable improvement, with the net coal consumption equal to 331.59 g/kWh, dropping by 9.18 g/kWh. As one of “National 1,000 Enterprises with Energy Conservation Commitment” during the 11th Five-year Plan period, Taizhou Power Plant successfully completed the energy-saving mission in the 11th Five-year Plan period. b. Making Breakthrough in Corporate Transformation and Development with Scientific Planning Investment for corporate development is the top priority of the Board of Directors of the Company. In the past year, the Board seized the opportunities for development, tackled difficulties and endeavoured to push forward the corporate transformation and upgrading. (a) Making every effort to advance the pre-construction work for projects, expand the room for corporate development and increase potential for further growth. Shutdown of small-capacity generators in Taizhou Power Plant was expedited, closing down Unit 1 and 6 of Taizhou Power Plant ahead of schedule in accordance with the arrangement of the provincial government. Specialized agencies and manufacturers were engaged to evaluate the equipment of the decommissioned generating units so as to pave the way for subsequent proper disposal of the assets. While closing down small-capacity units, great effort continued to make preparation for large-capacity unit projects. After painstaking effort, the green light for start of the pre-construction work for projects was obtained from the National Development and Restructuring Commission. (b) Increasing investment in renovation for heat supply On the basis of sufficient prior research, after gaining government approval, the heat supply renovation for Xiaoshan Power Plant was under way; the third heat supply pipeline of Zhejiang Changxing Southeast Heat Supply Company Ltd was under construction; and the feasibility study for the second heat supply pipeline of Taizhou Lianyuan Heat Supply Company Ltd was conducted. So far, the laying of heat supply piping of Xiaoshan Power Plant was commenced; the third pipeline of Zhejiang Changxing Southeast Heat Supply Company Ltd was made through. (c) Further Improving Investment Management In the past year, the Company made additional equity investment in Zhejiang

Zheneng Jiahua Power Generation Co. Ltd (ZJPGC) and Zhejiang Zheneng Beihai Hydropower Generation Co. Ltd (ZBHGC) totalling RMB 144 million yuan, contributed RMB 292 million yuan to subscribe for allotment of shares of China Merchants Bank, Industrial Bank and Bank of Communications, assisted China Everbright Bank in listing of its shares and supported Zhejiang Provincial Venture Capital Investment Co. Ltd to invest in the equity of companies to be listed. Up to the end of 2010, the Company held the shares of listed banks with market value totalling RMB 3.448 billion yuan and floating profit totalling RMB 2.411 billion yuan. Over the year, the Company acquired returns on investment amounting to RMB 326 million yuan. (2) Disclosure of Profit Forecast or Business Plan of the Company The shareholders’ general meeting for 2009 of the Company reviewed and approved the Financial Budget 2010 of ZSEPC. In 2010, the Company realized RMB 531 million yuan of net profit belonging to the parent company, completing 206.22% of the annual budget. Note on the reason why the gap between the Company’s actual operating result and its profit forecast or business plan for the same year exceeds ±20%: this is mainly because the income from power generation and investment returns grew remarkably over the budgetary amount. (3) Principal Business and Its Operational Status a. Principal Business by Sector and by Product

Unit: RMB yuan

Increase/decrease Increase/decrease Increase/decrease in Operating in Operating By Sector or Operating in Operating Cost Operating Profit Operating Cost Profit Rate Income Compared By Product Income Compared with Rate Compared with (%) with Prior Year Prior Year (%) Prior Year (%) (%) By Sector Power 7,560,773,519.07 6,752,343,730.43 10.69 3.96 10.79 Decreased by 6.59% generation Heat supply 130,982,000.32 87,456,846.49 33.23 92.43 80.79 Increased by 4.30% By Product Electricity 7,560,773,519.07 6,752,343,730.43 10.69 3.96 10.79 Decreased by 6.59% Heat 130,982,000.32 87,456,846.49 33.23 92.43 80.79 Increased by 4.30%

b. Principal Business by Area

Unit: RMB yuan

Operating income Increase/decrease in Operating Income By Area Compared with Prior Year (%) East China area 7,560,773,519.07 3.96

c. Major Suppliers and Customers of the Company

Unit: RMB yuan

Total sales to top 5 7,526,052,418.48 Percentage out of 96.74 customers annual total sales (%) Total purchase from 5,162,146,978.65 Percentage out of 93.25 top 5 suppliers annual total sales (%)

(4) Changes in Items of Main Accounting Statement and Causes of Changes

Balance Sheet Ending Beginning Range of Cause of Change Items Amount Amount Change Accounts This is mainly because the immature bills were collected at the period 850.49 487.00 74.64% receivable end. This is mainly because the prepayment for the project expenses of the Prepayment 3,382.43 853.80 296.16% heat supply renovation for 2 x 130MW coal-fired generating units of Xiaoshan Power Plant increased. This is mainly because the fair value of the available-for-sale financial assets dropped by RMB 962.2607 million yuan due to fluctuation in the security market in the current period; and the listing of China Available-for-sale 344,840.40 380,684.18 -9.42% Everbright Bank and the Company’s subscription for share allotment financial assets of China Merchants Bank, Industrial Bank and Bank of Communications increased the available-for-sale financial assets by RMB 603.8229 million yuan. This is mainly because of allocation of accumulated depreciation of Fixed assets 785,578.52 875,041.07 -10.22% the fixed assets in the current period. This is mainly because the unfinished part of technical renovation of Construction in Taizhou Power Plant was carried over and the ending balance of the 2,754.29 1,087.68 153.23% progress heat supply renovation project for Xiaoshan Power Plant 2*130 MW coal-fired units increased. This is mainly because the project goods for the heat supply Project goods 402.19 109.12 268.58% renovation project for Xiaoshan Power Plant 2*130 MW coal-fired units increased. Disposal of fixed This is mainly because the scrapped assets of Unit 1 and 6 of Taizhou 1,918.13 1,355.07 41.55% assets Power Plant were transferred to the disposal of fixed assets. Long-term This is mainly because the long-term operation & maintenance cost of 2,514.05 100.00% deferred expenses the natural gas units of Xiaoshan Power Plant increased. Bills payable 10,000.00 -100.00% This is mainly because of the payment of matured bills. This is mainly because Taizhou Power Plant Phase V and Xiaoshan Other payable 7,266.76 18,854.12 -61.46% Power Plant Natural Gas Project paid for project expenses and quality deposit. Non-current This is mainly because the payable long-term borrowings due within 1 liabilities due 48,000.00 36,000.00 33.33% year increased. within 1 year This is mainly because the Company had no new large Long-term 300,430.00 361,330.00 -16.85% capital-construction project or new loan, and the previous loans were borrowing repaid in the current period in accordance with loan agreements. This is mainly because the ending fair value of the available-for-sale Deferred income financial assets held by the Company decreased substantially, and 61,198.94 85,409.61 -28.35% tax liability accordingly the recognized deferred income tax liability decreased substantially. This is mainly because the ending amount of fair value of the Capital reserve 374,151.91 446,321.46 -16.17% available-for-sale financial assets decreased substantially compared with the beginning amount.

Profit Statement Current Prior Range of Cause of Change Items Amount Amount Change This is mainly because the coal price went up and the power Operating cost 687,302.77 618,062.13 11.20% generation by the natural gas units increased in the current period, and the corresponding cost went up. Asset devaluation This is mainly because the devaluation reserve for the assets of Unit -133.53 28,920.67 -100.46% loss 1~6 of Taizhou Power Plant was allocated in the prior period.

(5) Operations of Major Subsidiaries and Non-holding Subsidiaries Unit: in RMB million yuan

Name of Company Range of Ending Ending Current Current Net Shareholding Business Amount of Amount of Operating Profit Ratio (%) Total Asset Net Asset Income ZCPGC Thermal power 3,458.5250 1,164.9661 2,745.2319 32.9831 65.00 generation ZBHGC Hydropower 6,347.1399 1,626.6963 811.9315 282.1890 25.00 generation ZJPGC Thermal power 10,140.2469 3,558.3577 5,252.7316 501.7678 24.00 generation Zhejiang Zheneng Thermal power 7,118.5701 2,023.5777 5,275.7392 234.1503 25.00 Lanxi Power generation Generation Co. Ltd (ZLPGC)

(6) Outlook for Future Development of the Company a. Current Situation Faced by The Company and Work Plan for 2011 In 2011, the Company will continue to sustain steady development, with many favourable conditions and some difficulties as well. The rate of growth of the social power demand will decline but the generator utilization hours will continue to increase; the contractual coal price will be regulated but the pressure of coal price rise is still prevalent; the pressure of energy saving and emission reduction will increase further but there are many favourable conditions for multiple measures for energy conservation; the tightened monetary position and rising interest rate will increase the Company’s financial expenses but prudent operations and good asset/liability structure will be conducive to improvement of the financial environment. The Company will lay emphasis on the following jobs: (a) to further strengthen the internal control of the Company and improve the corporate governance; (b) to focus on investment to increase the development potential of the Company; (c) to rely on safe production in an effort to keep stable profitability of the Company; (d) to push forward construction of corporate culture and reinforce corporate

cohesion for further development In 2011, the major operating targets of the Company are to complete electricity sale to the grid amounting to 17.443 billion kWh, and gain operating income amounting to RMB 8.081 billion yuan. b. The Company would not prepare or release the profit forecast for the new year. c. Capital Demand and Source The operating capital and the capital needed for external investment of the generating companies under the Company were mainly sourced from the Company’s equity capital and bank loans. (7) Major Risks and Countermeasures a. Fuel price risk The cost of coal constitutes a major part of the Company’s cost. The coal price fluctuation will have a significant effect on the Company’s profitability. Countermeasures: The Company will take advantage of the long term cooperation with the coal suppliers to circumvent the risk associated with the coal price fluctuation to the greatest extent possible. b. Market risks The power demand is closely related to the macro-economic development; the growth of the installed capacity will raise the power supply capability. The movement of the power supply/demand relationship has a direct bearing on number of utilization hours of the Company’s generating units, which in turn affect the Company’s energy sales, sales income and profit level. Countermeasures: The Company will follow the trends of macro-economic development and market supply/demand fluctuation and work out countermeasures taking into account the characteristics of the Company. In the meantime, the Company will endeavour to accelerate its own development, expand its operational scale and increase its competitive strength. 2. Investment by the Company Unit: in RMB million yuan

Amount of Investment by the Company in the 435.9185 Reporting Period

Increase/decrease in investment 311.6062

Investment in the same period in prior year 124.3123

Rate of increase/decrease in investment (%) 2.5066

Particulars of the investees

Name of Investee Principal Operations Equity Investment Remarks Company Ratio (%)

ZJPGC Thermal power generation 24.00 ZBHGC Hydropower generation 25.00 China Merchants Banking 0.2809 Bank Co. Ltd Bank of Banking Communication Co. 0.2989 Ltd Industrial Bank Co. Banking 0.7309 Ltd

(1) Use of Proceeds Raised Through Public Offering In the current reporting period, the Company made no offering for capital raising, nor use of the proceeds raised in prior periods through public offering. (2) Projects Using Capital Not Raised from Public Offering a. Zhejiang Jiaxing Power Plant Phase III “Replacing Small-capacity Generators With Large-capacity Generators” Project Zhejiang Jiaxing Power Plant Phase III “Replacing Small-capacity Generators With Large-capacity Generators” Project will erect 2 x 1,000 MW coal-fired generating units for ZJPGC. The Company holds 24% of ZJPGC’s equity. Based on Document Fa Gai Neng Yuan [2009] 1338 “NDRC’s Consent to Zhejiang Jiaxing Power Plant Phase III Replacing Small-capacity Generators With Large-capacity Generators Project” issued by the National Development & Restructuring Commission (NDRC), the dynamic total investment of the project amounts to RMB 7,890 million yuan, of which the registered capital of the project amounts to RMB 1,580 million yuan, accounting for about 20% of the total dynamic investment, to be contributed by the shareholders of ZJPGC in proportion to their shareholding ratios. The remaining amount of RMB 6,310 million yuan needs to be financed with the bank loans. As reviewed and approved in the 3rd meeting of the 5th board of directors and the 1st extraordinary shareholders’ general meeting, the Company will make additional investment up to RMB 379.2 million yuan in ZJPGC in proportion to its shareholding ratio to co-finance the construction of Jiaxing Power Plant Phase III “Replacing Small-capacity With Large-capacity Generators” Project. Meanwhile, the management team of the Company was authorized to inject additional capital in instalments into ZJPGC in keeping with the projection construction schedule based on the resolutions of the board meetings and the shareholders’ general meetings of ZJPGC up to a ceiling of RMB 379.2 million yuan. In the current period, the Company paid in RMB 81.5956 million yuan as its additional contribution to the equity capital of ZJPGC. Up to the end of the current

period, the Company had cumulatively paid in equity contribution of RMB 170.3956 million yuan for the project. b. ZBHGC ZBHGC is the project company responsible for investment in construction and operation of Zhejiang Tankeng Hydropower Station. The Company holds 25% of its equity. During the construction period, due to changes in government policies and the actual project construction conditions, the cost for land requisition and resident resettlement increased substantially. As approved in “NDRC’s Consent to Adjusted Total Investment of Zhejiang Tankeng Hydropower Station Project” (Document Fa Gai Neng Yuan Ban [2010]753), the total investment of Tankeng Hydropower Station Project was adjusted from RMB 4.719 billion yuan determined in 2004 to RMB 6.586 billion yuan. The increase of RMB 1.867 billion yuan will be financed with ZBHGC’s equity capital and bank loans. In consideration of the above circumstances, ZBHGC intends to increase its registered capital from RMB 1.252 billion yuan to RMB 1.976 billion yuan, with the adjusted registered capital accounting for 30% of the adjusted total investment. The increased registered capital of RMB 724 million yuan will be contributed in instalments by the various shareholders in proportion to their shareholding ratios. As approved in the 16th meeting of 5th Board of Directors of the Company, the Company will make additional equity investment in ZBHGC up to RMB 181 million yuan. Meanwhile, the management team of the Company was authorized to inject additional capital in instalments into ZBHGC based on the resolutions of the board meetings and the shareholders’ general meetings of ZBHGC up to a ceiling of RMB 181 million yuan. In the current reporting period, the Company made additional equity investment in ZBHGC amounting to RMB 62.50 million yuan. c. In the current reporting period, the Company had cumulatively paid RMB 292 million yuan to subscribe for allotment of shares of China Merchants Bank, Bank of Communication and Industrial Bank, and acquired allotted shares of China Merchants Bank totalling 6.9736 million, Bank of Communication totalling 21.9348 million and Industrial Bank totalling 7.3 million. Up to the end of the current reporting period, the Company holds a total of 60.6168 million shares of China Merchants Bank, 168.1665 million shares of Bank of Communication and 43.80 million shares of Industrial Bank. 3. In the current reporting period, the Company had no change in accounting policies, change in accounting assumptions, correction of material accounting errors, supplement to important information omission or correction to forecast of operating result. 4. Day-to-day Work of Board of Directors

(1) Board meetings and resolutions

Newspaper for Date of Date of Name of Meeting Resolutions Publication of Meeting Publication Resolutions The 9th meeting of Reviewed and approved the Proposal to Allocate 10 February 11 February the 5th Board of Devaluation Reserve for Fixed Assets of Unit 1~6 of 2010 2010 Directors Tazhou Power Plant The 10th meeting Reviewed and approved the Proposal to Subscribe for of the 5th Board of 9 March 2010 10 March 2010 Allotment of Shares of China Merchants Bank Directors China Securities Reviewed and approved the Work Report of the Board Journal, Shanghai of Directors for 2009, the General Manager’s Work Report for 2009, the Independent Directors’ Work Securities News, Report for 2009, the Proposal to Revise Rules for Hongkong-based Information Disclosure Management, the Proposal to South China Establish Basic Code for Internal Control, the Proposal to Subscribe for Allotment of Shares of Industrial Bank, Morning Post and the Final Accounting Statements for 2009, the Profit Hongkong-based The 11th Meeting 18 March Distribution Proposal for 2009, the Annual Report 2009 of the 5th Board of Wen Wei Po 20 March 2010 2010 and its Summary, the Report on Appraisal of Directors Management Responsibility System for 2009, the Report on Technical Renovation in 2009 and Technical Renovation Plan for 2010, the Auditing Work Summary Report for 2009 and Proposal to Renew Appointment of the Accounting Firms for 2010, the Budgetary Report for 2010, the Proposal to Amend Articles of Association of the Company and the Proposal to Hold Shareholders’ General Meeting for 2009 Reviewed and approved the 1st Quarterly Report 2010 of the Company, the Proposal to Establish Rules for The 12th Meeting Management of Holding and Trading of the Company's of the 5th Board of 22 April 2010 Shares by Directors, Supervisors and Senior 24 April 2010 Directors Management and the Proposal to Arrange Replacement Generation in Place of Decommissioned Units of Taizhou Power Plant The 13th Meeting Reviewed and approved the Proposal to Subscribe for of the 5th Board of 3 June 2010 4 June 2010 Allotment of Shares of Bank of Communication Directors The 15th Meeting Reviewed and approved the Proposal to Transfer Shares of the 5th Board of 23 June 2010 of Zhejiang Provincial Natural Gas Development Co. 24 June 2010 Directors Ltd held by the Company The 16th Meeting Reviewed and approved the Proposal to Make of the 5th Board of 9 July 2010 10 July 2010 Additional Equity Investment in ZBHGC Directors Reviewed and approved the Interim Report 2010 of the The 17th Meeting 12 August Company, the Proposal to Amend Rules for Information 26 August of the 5th Board of 2010 Disclosure Management and the Proposal to Set forth 2010 Directors Emergency Tackling Management Method th The 18 Meeting 30 September Reviewed and approved the Proposal to Change 8 October of the 5th Board of Directors and the Proposal to Change Deputy General 2010 2010 Directors Manager and Secretary to Board of Directors The 19th Meeting 25 October Reviewed and approved the 3rd Quarterly Report 2010 26 October of the 5th Board of 2010 of the Company 2010 Directors

The 20th Meeting 17 November Reviewed and approved the Proposal to Sign Agreement 18 November of the 5th Board of 2010 on Replacement Generation by Zhejiang East Gas Units 2010 Directors

(2) Implementation of Resolutions of Shareholders’ General Meeting by the Board of Directors All resolutions of the shareholders’ general meetings were well implemented in the current reporting period. (3) Report on Establishment of Work Rules for Auditing Committee under Board of Directors and Their Performance In accordance with the Implementation Rules for Auditing Committee under Board of the Company, the Auditing Committee earnestly examined the periodical financial statements of the Company, followed the work procedure closely. Before the auditing firms stepped in, the Auditing Committee examined the financial statements prepared by the Company, and gave written comments. After the accounting firms stepped in and produced the preliminary auditing opinion, the Auditing Committee re-examined the financial statements of the Company, and re-presented written comments. While submitting the annual financial statements to the Board for review, the Auditing Committee made a comprehensive objective assessment of the audit work of the accounting firms and put forward a proposal to renew appointment of the accounting firms for the next year. (4) Report on Performance of Remuneration & Appraisal Committee under Board of Directors The Remuneration & Appraisal Committee under the Board of Directors heard the Report on Appraisal of Management-Responsibility System. In accordance with management-responsibility appraisal method, it determined the salary for the current year and the salary base for the next year for the senior management personnel. (5) Establishment of Outside Information User Management System In accordance with the Rules for Information Disclosure Management, the provision of annual report information to the specific outside information users in accordance with relevant laws and regulations shall not be earlier than the release of the Company’s annual results report, and the information disclosed in the annual results report shall not be less than that provided to the outside information users. In specific cases where annual accounting statements need to be submitted to such government departments as tax bureaus or statistics bureaus and banks ahead of time, a letter informing them of their confidentiality obligation shall be sent. (6) Board of Directors’ Statement on Responsibility for Internal Control

It is the responsibility of the Board of Directors and the management of the Company to establish, refine and effectively implement internal control. The aim of internal control is to put in place a complete and effectively-operating internal control system centred around risk management and covering the various aspects of corporate operations, which will ensure lawful operation management, secure assets and complete financial statements and related information, enhance operating efficiency and result, and provide reasonable safeguard for the corporate development. However, the internal control has inherent limitation, and can only provide reasonable assurance for the above aim. Moreover, the effectiveness of the internal control will probably vary as the internal/external environment and the operating status of the Company vary. Once the defect of the internal control is identified, the Company will take immediate corrective measures. (7) Implementation of Insider Management System The Company formulated the Rules for Management of Information Disclosure to improve information confidentiality management. It established the Insider File Management System to regulate the internal information flow procedure for important information, intensify the internal examination, collection, transmission and disclosure of sensitive information, and pinpoint the responsibility for management of information disclosure. It set up a written inquiry mechanism for important information between the Company and its controlling shareholders and actual controllers to guard against insiders’ trading of the Company’s shares taking advantage of the inside information. It formulated the Rules for Management of Holding and Trading of the Company's Shares by Directors, Supervisors and Senior Management to further strengthen management of directors, supervisors and senior management’s trading of the Company’s shares. It intensified management of information release to outside organizations to place the scope of insiders under strict control. In the current reporting period, no cases of insider trading before disclosure of important sensitive information affecting share price was found. 5. Proposal for Profit Distribution or Conversion of Capital Reserve into Share Capital Based on the Profit Distribution Proposal for 2010 approved in the 21st meeting of the 5th Board of Directors of the Company, the after-tax profit of the parent company as audited by the Chinese accounting firm amounted to RMB 471,534,926.26 yuan. After allocating 10% statutory surplus reserve amounting to RMB 47,153,492.63 yuan, the distributable profit in 2010 amounted to RMB 424,381,433.63 yuan. Up to the end of 2010, the Company’s cumulative distributable profit amounted to RMB 1,911,040,175.43 yuan, with the undistributed profit before 2008 amounting to RMB 1,556,543,446.34 yuan. For 2010, the undistributed profit before 2008 will be distributed in cash at RMB 1.30 yuan per 10 shares (including tax) to all shareholders, totalling RMB 261,300,000.00 yuan. The above profit distribution proposal is pending the

approval of the shareholders’ general meeting. 6. Profit Distribution in Previous Three Years Unit: RMB yuan Net Profit Belonging to Percentage out of Net Shareholders of Parent Profit Belonging to Profit Distribution Amount of Profit Company in Consolidated Shareholders of Parent Year Distribution (including tax) Financial Statements Company in Consolidated Realized in Profit Financial Statements (%) Distribution Year 2007 462,300,000.00 663,214,614.34 69.71 2008 0.00 27,046,056.67 0.00 2009 201,000,000.00 485,204,559.20 41.43

Section IX. Report of Supervisory Committee

1. Work Performed by Supervisory Committee

Number of Supervisory Committee Meetings 4 Name of Supervisory Committee Meeting Subjects of Meetings Reviewed and approved the Work Report of the Supervisory Committee for 2009, the Proposal to Amend Rules for Information Disclosure The 5th Meeting of 5th Supervisory Management, the Proposal to Establish Basic Code for Corporate Internal Committee on 18 March 2010 Control, the Final Accounting Statements for 2009, the Annual Report 2009 and its Summary, the Proposal on Daily Related Party Transactions and the Budgetary Report for 2010 The 6th Meeting of 5th Supervisory Reviewed and approved the First Quarterly Report 2010 of the Company Committee on 22 April 2010 The 7th Meeting of 5th Supervisory Reviewed and approved the Interim Report 2010 of the Company Committee on 24 August 2010 The 8th Meeting of 5th Supervisory Reviewed and approved the Third Quarterly Report 2010 of the Company Committee on 25 October 2010

2. Independent Opinion of Supervisory Committee on ZSEPC’s Operation in Accordance with Law The procedure for convening and holding the Board meetings and the shareholders’ general meetings of the Company in 2010 conformed to the Company Law, the Articles of Association of the Company and other relevant regulations; the qualification of the attendees were lawful and valid; the voting procedure conformed to the Company Law, the Articles of Association of the Company and other relevant regulations; and the various resolutions adopted in meetings have legal effect. The Board of Directors and the management team of the Company acted in strict accordance with relevant laws, regulations and the stipulations of the Company. No actions in violation of laws, disciplines and the Articles of Association or

detrimental to the interest of the Company and its shareholders were found on the part of the directors and the managerial personnel of the Company in performance of their duties. 3. Supervisory Committee’s Independent Opinion on Examination of Financial Position of the Company The Financial Statements of the Company for 2010 give a true reflection of the financial position and operating results of ZSEPC, without any false records, misleading statements or material omissions. Both Zhejiang Pan-China Certified Public Accountants and PricewaterhouseCoopers Zhong Tian CPAs Co. Ltd produced the Auditor’s Reports in their standard forms with no reservations 4. Supervisory Committee’s Independent Opinion on Asset Sale Based on the resolution of the 1st meeting and the approval in the 15th meeting of the 5th Board of Directors, the Company and China Petroleum Natural Gas Corp. (Sinopec NG) signed Agreement on Stock Transfer of Zhejiang Provincial Natural Gas Development Company Ltd (ZPNGDC). The decision procedure of this transaction conforms to the relevant laws and regulations, and the obligation of information disclosure was fulfilled. 5. Supervisory Committee’s Independent Opinion on the Company’s Related Party Transaction The Supervisory Committee reviewed and supervised the related party transactions of the Company in 2010. In the process of reviewing related party transactions, related directors or related shareholders avoided voting; the independent directors gave their independent opinions; the decision procedure conforms to the relevant laws, regulations and the Articles of Association. The Supervisory Committee considers that the Company’s related party transactions in 2010 were fair and reasonable, with no action detrimental to the interest of the shareholders.

Section X. Important Events

1. Major Events of Litigation or Arbitration The Company was free from any major events of litigation or arbitration during the year. Nor was it involved in any litigation in connection with pirated software. 2. Bankruptcy and Restructuring The Company had no events of bankruptcy or restructuring in the year. 3. Shares of Other Listed Companies and Financial Companies Held by the Company (1) Shares of Other Listed Companies Held

Unit: RMB yuan

Code of Name of Initial Percentage of Ending Book Gains & Losses in Changes in Owner’s Accounting Title Source of

Security Security Investment Total Shares Value Current Period Equity in Current Period Stock Bank of 376,546,805.50 31,439,830.50 Available-for-sale 601328 0.2989 921,552,611.80 -408,315,660.15 Subscription Communication [Note 1] [Note 2] financial assets 206,590,000.00 18,250,000.00 Available-for-sale 601166 Industrial Bank 0.7309 1,053,390,000.00 -411,993,750.00 Subscription [Note 1] [Note 2] financial assets China Merchants 141,938,726.39 12,729,531.36 Available-for-sale 600036 0.2809 776,501,412.96 -190,106,136.48 Subscription Bank [Note 1] [Note 2] financial assets China Everbright 7,185,261.37 Available-for-sale 601818 312,000,000.00 0.4353 696,960,000.00 288,720,000.00 Subscription Bank [Note 2] financial assets Total 1,037,075,531.89 - 3,448,404,024.76 69,604,623.23 -721,695,546.63 - -

[Note 1]: Due to allotment of shares, Bank of Communication increased its investment cost by RMB 98,706,442.50 yuan, Industrial Bank increased its investment cost by RMB 131,400,000.00 yuan, and China Merchants Bank increased its investment cost by RMB 61,716,501.60 yuan

[Note 2]: which is dividends paid by Bank of Communication, Industrial Bank, China Merchants Bank and China Everbright Bank. (2) Shares of Non-listed Financial Institutions

Gains & Losses Initial Ending Book Changes in Owner’s Name of Number of Percentage of Total in Reporting Accounting Source of Investment Value (RMB Equity in Reporting Financial Shares Held Shares Period (RMB Entry Stock (RMB yuan) yuan) Period (RMB yuan) Institution yuan) Long-term China Southern 220,000,000.00 200,000,000 5.78 0.00 0.00 0.00 equity Subscription Securities Co. investment Total 220,000,000.00 200,000,000 5.78 0.00 0.00 0.00 －－

4. Asset Sale

Unit: RMB yuan

Transaction Asset on Transaction Net profit Gains and Whether it Asset sale Whether asset Whether Percentage of net Party Sale Price contributed by losses from is related pricing ownership asset-related profit contribution this asset from the sale party principle transfer has been credit and debit of the asset sale out current year transaction completed transfer have of total profit (%) beginning to been completed date of sale Sinopec 10% of 0.00 Based on No No 0.00 [Note] 0.00 No NG ZPNGDC [Note] valuation [Note]

[Note]: The registered capital of ZPNGDC amounts to RMB 1,130,000.00 yuan. The Company contributed RMB 113,000,000.00 yuan to hold 10% of ZPNGDC’s shares. As audited by Zhejiang Pan-China Oriental Certified Public Accountants, the owner’s equity of ZPNGDC stood at RMB 1,091,772.331.30 yuan on the auditing date (30 June 2009). As audited by Zhejiang Wanbang Asset Valuation Co. Ltd, the shareholders’ equity of ZPNGDC stood at RMB 1,586,228,917.14 yuan on the valuation date (30 June 2009).

Based on Agreement on Stock Transfer of ZPNGDC between the Company and Sinopec NG, the 10% share of ZPNGDC held by the Company valued at RMB 158,622,891.70 yuan will be transferred to Sinopec NG. The changes in 10% of the owner’s equity of ZPNGDC from the auditing valuation date to the stock clearing date (i.e. the date on which Sinopec NG pays up the above amount for stock transfer) will be owned by the Company and settled between the Company and Sinopec NG after auditing.

As of the end of the current reporting period, Sinopec NG had not yet paid for the stock transfer to the Company. Hence, the Company had not obtained the investment return on stock transfer in the current period. 5. Important Related Party Transactions of the Company in Current Period (1) Important related party transactions in connection with daily operations

a. Purchase of Commodities (a) Purchase of Coal

Unit: RMB yuan

Related Party Relationship Type Related Transaction Transaction Transaction Transaction Cost Percentage out Settlement Pricing Price of same type of Method Principle transaction (%)

Zhejiang Zheneng Holding Purchase Purchase of coal [Note] Contract Based on Fuxing Fuel Co. Ltd subsidiary of of needed for power Price 4,597,557,263.88 100.00 actual cost (ZNFFC) parent company commodity generation Note on Related Party The Company entered into the Fuel Supply Agreement valid for 20 years with Zhejiang Electric Power Fuel Supply Co. in 1997, based on which Transaction Zhejiang Electric Power Fuel Supply Co. shall supply the coal needed for power generation to the Company. Due to power industry restructuring and reorganization, the above agreement was taken over and executed by ZNFFC at present. Necessity, Continuity The coal supplier of the Company enjoys preferential price of bulk purchase and stable supply/transportation channels, which ensure the normal and Reason of Related operations of the power plants under the Company. This related party transaction was approved in the 2nd extraordinary shareholders’ general meeting Party Transaction of the Company in 2008. Impact on This related party transaction has no impact on the independence of the Company. Independence of the Company

[Note]: Pursuant to the Fuel Supply Agreement, the Company and the coal supplier shall enter into an Annual Coal Supply Contract every year to determine the quality, specifications, quantity and price of the coal supply for that year. The coal supplier 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) Purchase of Natural Gas

Unit: RMB yuan

Related Party Relationship Type Related Transaction Transaction Transaction Transaction Cost Percentage out Settlement Pricing Price of same type of Method Principle transaction (%) ZPNGDC Holding Purchase Purchase of natural Government- RMB 2.41 530,043,378.62 100.00 Based on subsidiary of of utilities gas needed for approved yuan/m3 actual cost parent power generation price (including tax) company Necessity, Continuity ZPNGDC is the single buyer and seller of natural gas within Zhejiang province designated by the Zhejiang provincial government. The Company and Reason of Related purchases gas from it as a downstream entity in the natural gas industry chain, which has necessity and continuity. Party Transaction Impact on Independence This related party transaction has no impact on the independence of the Company. of the Company

b. Replacement Power Generation

Unit: RMB yuan

Related Party Relationship Type of Related Transaction Transaction Amount Percentage out Settlement transaction Transaction Pricing Price (yuan/MW, of same type of Method Principle tax included) transaction (%) Zhejiang Zheneng Beilun Holding Sale of Replacement To be agreed 148.90 [Note 1] Based on 59,540,338.00 26.43 Power Generation Co. Ltd subsidiary of commodities power based on 135.50 [Note 2] actual cost parent generation Zhejiang Zheneng Jiahua 148.90 [Note 1] company [Note1], 65,998,661.00 29.30 Power Generation Co. Ltd 141.00 [Note 2] [Note 2] Zhejiang Zheneng Jiaxing 138.90 [Note 1] Power Generation Co. Ltd 24,646,963.00 10.94 164.80 [Note 2]

Zhejiang Zheneng Yueqing Power 148.90 [Note 1] 40,073,092.00 17.79 Generation Co. Ltd Zhejiang Zheneng Wenzhou Power 138.90 [Note 1] 11,436,519.00 5.08 Generation Co. Ltd ZLPGC 128.90 [Note 1] 23,539,328.00 10.45 Total 225,234,901.00 - -

Note on related party transaction [Note 1]：Based on Document ZJXDL[2009]468 “Notice on Power Generation Plan for 2010 for Power Plants under Unified Dispatch” issued by Zhejiang Provincial Economic & Information Commission and Document ZJMDL[2007]435 “Management Method for Replacement Power Generation of De-commissioned Small Thermal Power Generating Units Retaining Generating Quota”, as approved in the 12th meeting of the 5th Board of Directors, the Company and the replacement power plants entered into Replacement Power Generation Agreement for Decommissioned Units in Taizhou Power Plant for 2010. [Note 2]: Based on Document ZJXDL[2009]499 “Notice on Transfer of Power Generation Quota of Natural Gas Units in Some Power Plant under Unified Dispatch” issued by Zhejiang Provincial Economic & Information Commission and Zhejiang Provincial Commodity Pricing Bureau, as approved in the 20th meeting of the 5th Board of Directors, the Company and the replacement power plants entered into Agreement on Replacement Power Generation by Zhejiang East Gas Units, by which the remaining power generation quota of the natural gas units of Xiaoshan Power Plant is transferred to the replacement generators. Necessity, Continuity and Reason of Based on Document ZJMDL[2007]435 and Document ZJXDL[2009]499, the order of priority for replacement power Related Party Transaction generation is as follows: firstly, the units in the same power plant; secondly, the other power plants in the same enterprise group. The units eligible for replacement power generation are high-efficiency desulfurized generating units, sub-critical and above. Impact on Independence of the Company This related party transaction has no impact on the independence of the Company.

c. Acquisition of Energy Services

Unit: RMB yuan

Related Party Relationship Type of Related Transaction Transaction Transaction Amount Percentage out Settlement transaction Pricing Price (yuan/MW, of same type of Method Principle tax included) transaction (%) Zhejiang Tianda Holding Supply of Purchase of lime stone [Note 2] Environmental Protection subsidiary energy Agreed price 13,977,576.12 Co. Ltd of Zhejiang service to Zhejiang Tianhong Goods Xingyuan the Purchase of Trading Co. Ltd Investment Company equipment, project Agreed price 9,568,973.58 Co. Ltd and its goods and raw material Zhejiang Tiangong Zixin holding Purchase of equipment Sci-tech Project Co. Ltd subsidiaries and project goods Agreed price 239,777.78 [Note 1] Zhejiang Tiangong Zixin System service charges Sci-tech Project Co. Ltd Agreed price 3,123,880.35

Zhejiang Tiandi Purchase of equipment Environmental Protection Agreed price 1,438,143.59 Based on 100.00 Project Co. Ltd actual cost Zhejiang Changxing Coal unloading, Jietong Logistics Co. Ltd barging, coal storage Agreed price 24,324,360.00 service Zhejiang Changxing Rent of jetty and coal Agreed price 9,020,000.00 Jietong Logistics Co. Ltd yard Zhejiang Dongfa Waste water treatment Environmental Protection Agreed price 10,370,000.00 Project Co. Ltd Zhejiang Dongfa Purchase of petty Environmental Protection goods Agreed price 1,103,532.99 Project Co. Ltd Shanghai Guoneng Agency service for Agreed price 4,943,211.49 Logistics Co. Ltd equipment import Total 78,109,455.90 - - Note on related party transaction Zhejiang Xingyuan Investment Co. Ltd (Zhejiang Xingyuan) is a wholly-owned subsidiary of ZPEGC. As approved in the 11th meeting of the 5th Board of Directors, the Company signed Framework Agreement on Energy Service Cooperation with Zhejiang Xingyuan.

Necessity, Continuity and Reason of The specialized, structured and informatized energy service provided by Zhejiang Xingyuan and its holding subsidiaries is Related Party Transaction advantageous for the Company to reduce operating cost and improve service quality. Impact on Independence of the Company This related party transaction has no impact on the independence of the Company.

[Note 1]: which include (i) supply of goods necessary for operation of the Company’s generating units, such as spare parts and consumables (ii) supply all or part of logistic services for the above goods, including procurement, tendering agency, supplier management, expediting goods delivery, processing, packaging, transport, distribution, loading/unloading, warehousing, dock and field rent, etc. (iii) supply of environmental protection services including disposal of waste water and solid, design, construction and maintenance of environmental protection facilities.

[Note 2]: The payment for the services shall be agreed by both sides based on the prevailing market price and the principle of fair trade, which shall be neither higher than the price at which it charges other power plants for the same type of service or goods, nor higher than the price available in the open market at the time of the price negotiation between both sides.

d. Supply of Labour Service

Unit: RMB yuan

Related Party Relationship Type of Related Transaction Transaction Amount Percentage out Settlement transaction Transaction Pricing Price (yuan/MW, of same type of Method Principle tax included) transaction (%) Zhejiang Zheneng Holding Sale of Contracting Based on Agreed price Based on Wenzhou Power subsidiary of labour for operation market price 887,777.77 1.14 actual cost Generation Co. Ltd parent services & since this kind ZLPGC company maintenance of service is 2,121,296.58 2.73 services open to market Zhejiang Dongfa competition Environmental Protection 1,950,000.00 2.51 Project Co. Ltd Zhejiang Tiandi Environmental Protection 1,110,000.00 1.43 Project Co. Ltd Zhejiang Zheneng Qianqing Power 1,052,256.41 1.35 Generation Co. Ltd Huaizhe Coal & Electric 27,443,228.31 35.34 Power Co. Ltd Zhejiang Zheneng Yueqing Power 11,397,515.38 14.68 Generation Co. Ltd Zhejiang Zheneng Jinhua Gas Turbine Power 474,803.44 0.61 Generation Co. Ltd Total 46,436,877.89 - - Necessity, Continuity and Reason of As the provincial largest state-owned energy enterprise in Zhejiang, ZPEGC controls and manages 50% of the provincial total Related Party Transaction installed capacity. To improve profit and increase market share, it is necessary for the Company’s wholly-owned subsidiaries Taizhou Haitian Electric Power Project Co. (THEPP) and Zhejiang Hualong Electric Power Project Co. (ZHEPP) to undertake part of operation and maintenance activities of the energy companies and environmental protection companies under ZPEGC. This related party transaction was approved in the 11th meeting of the 5th board of directors of the Company. Impact on Independence of the Company This related party transaction has no impact on the independence of the Company.

(2) Related Party Transactions in Connection With Financial Service

Related Party Relationship Type of Transaction Related Transaction Transaction Transaction Percentage out Settlement Transaction Pricing Price Cost of same type of Method Principle transaction (%)

Zhejiang Provincial Holding Supply of financial [Note 1] [Note 2] [Note 3] 100.00 Based on Energy Group subsidiary of service for the actual cost parent company Company and its Financial Co. (ZEFL) holding subsidiaries Note on Related Party Founded with the approval of China Banking Regulatory Commission, ZEFL is non-bank financial institution to provide financial management services Transaction to members of enterprise group. Necessity, Continuity Capital settlement through ZEFL is beneficial for the Company to improve capital management and raise capital use efficiency with other member and Reason of companies. This related party transaction was approved in the shareholders’ general meeting 2008 of the Company. Related Party Transaction Impact on This related party transaction has no impact on the independence of the Company. Independence of the Company

[Note 1]: ZEFL’s service covers financial advisory service for member companies, credit appraisal and related consulting and agency services, assisting member companies in collecting and making payment, taking in member companies’ deposit and providing loans and financial lease to member companies.

[Note 2]: Based on the Financial Service Cooperation Agreement, the interest rate on deposit offered by ZEFL to the Company and its holding subsidiaries shall be not lower than the benchmark rate for the same type of loan published by the People’s Bank of China; at the same time, the preferential terms for loans offered by ZEFL based on the benchmark rate shall neither be inferior to those offered by other financial institutions to the Company and its holding subsidiaries, nor inferior to those offered by ZEFL to other customers.

[Note 3]: As at 31 December 2010, the cash deposited by the Company and its subsidiary ZCPGC in ZEFL amounted to RMB 403,056,298.69 yuan; the loans provided by ZEFL to the Company and ZCPGC totalled RMB 1,200.00 million yuan; the Company received income of interest on deposit at ZEFL totalling RMB 5,020,315.16 yuan, and paid expenses of interest on borrowings totalling RMB 66,603,579.75 yuan.

(3) Related Party Transaction in Connection with Joint Investment

Unit: RMB million yuan

Co-investor Relationship Investee Investee’s Principal Investee’s Investee’s Investee’s Investee’s Major Note on Business Registered Production Net Profit Construction in Progress Related Party Capital Vo l u me Transaction ZPEPDC Controlling ZJPGC Production and sale of Zhejiang Jiaxing Power [Note 1] shareholder electricity and related Plant Phase III “Replacing industries 2,765.1900 10,140.2469 501.7678 Small-capacity With Large- capacity Generators” Project is under construction. ZPEGC De facto ZBHGC Construction and Tankeng Hydropower [Note 2] controller operation of Tankeng Station was put into Hydropower Station, 1,502.0000 6,347.1399 282.1890 operation and stated power tapping of hydraulic and generation in July 2009. hydropower resources

[Note 1]: ZPEPDC and ZSEPC hold 53% and 24% of ZJPGC’s equity respectively. As needed for construction of Zhejiang Jiaxing Power Plant Phase III “Replacing Small-capacity Generators With Large-capacity Generators” Project, ZPEPDC and the Company will jointly make additional equity investment in

ZJPGC. For details, refer to Para. 2 “Investment by the Company” under the section entitled “Report of Board of Directors” herein. [Note 2]: ZPEGC and ZSEPC hold 65% and 25% of ZBHGC’s equity respectively. Based on “NDRC’s Consent to Adjusted Total Investment of Zhejiang Tankeng Hydropower Station Project” (Document Fa Gai Neng Yuan Ban [2010]753), ZPEGC and the Company will jointly make additional equity investment in ZBHGC. For details, refer to Para. 2 “Investment by the Company” under the section entitled “Report of Board of Directors” herein. (4) Related Credits and Debts

Unit: RMB yuan

Item Related Party Ending Amount Beginning Amount ZJPGC 11,792,878.11 18,508,304.88 Zhejiang Zheneng Beilun Power 11,484,321.03 6,955,696.80 Generation Co. Ltd Zhejiang Zheneng Yueqing Power 7,870,543.83 3,602,222.08 Generation Co. Ltd Zhejiang Zheneng Wenzhou Power 2,877,621.64 2,776,398.66 Generation Co. Ltd Zhejiang Zheneng Qianqing Power 519,435.00 4,348,940.00 Accounts receivable Generation Co. Ltd Zhejiang Dongfa Environmental 1,950,000.00 1,140,750.00 Protection Project Co. Ltd Huaizhe Coal & Electric Power Co. Ltd 6,091,665.00 15,992.00 Zhejiang Zheneng Jiaxing Power 74,388.80 Generation Co. Zhejiang Zheneng Jinhua Gas Turbine Power Generation Co. Ltd 70,000.00 88,280.00 ZLPGC 124,696.00 269,841.00 Subtotal 42,781,160.61 37,780,814.22 ZPNGDC 1,694,074.65 160,307.12 Prepayment Zhejiang Dongfa Environmental 1,071,000.00 Protection Project Co. Ltd Subtotal 2,765,074.65 160,307.12 Zhejiang Dongfa Environmental Protection Project Co. Ltd 155,610.00 248,656.46 Zhejiang Zheneng Qianqing Power Generation Co. Ltd 2,000.00 11,289.00 Zhejiang Tiandi Environmental Protection Project Co. Ltd 52,600.00 234,800.00 Zhejiang Zheneng Jinhua Gas Turbine Other receivables Power Generation Co. Ltd 117,806.00 275,270.00 ZLPGC 13,492.00 35,258.00 Huaizhe Coal & Electric Power Co. Ltd 897,590.00 285,650.00 Zhejiang Tianyin Management Consulting Co. Ltd 460,000.00 Zhejiang Zheneng Yueqing Power Generation Co. Ltd 40,000.00 Subtotal 1,739,098.00 1,090,923.46 Bills payable ZNFFC 100,000,000.00

Subtotal 100,000,000.00 Zhejiang Tiangong Zixin Sci-tech 120,314.00 1,481,691.00 Project Co. Zhejiang Dongfa Environmental 525,000.00 1,103,958.00 Protection Project Co. Ltd ZNFFC 226,115,416.99 237,015,035.38 Zhejiang Tianhong Goods Trading Co. 484,730.00 2,524,489.92 Ltd Accounts payable Zhejiang Tiandi Environmental 84,131.00 Protection Project Co. Ltd Shanghai Guoneng Logistics Co. Ltd 384,701.00 Zhejiang Tianda Environmental 555,336.29 Protection Co. Ltd Zhejiang Zheneng Energy Technical Co. 280,000.00 Ltd Subtotal 228,549,629.28 242,125,174.30 Advance-received Zhejiang Tiandi Environmental 97,200.00 accounts Protection Project Co. Ltd Subtotal 97,200.00 Zhejiang Tiangong Zixin Sci-tech 142,396.00 1,270,752.20 Project Co. Zhejiang Tiandi Environmental 4,415,200.36 Protection Project Co. Ltd Other payables Zhejiang Dongfa Environmental 360,852.00 359,802.00 Protection Project Co. Ltd Shanghai Guoneng Logistics Co. Ltd 51,600.00 Zhejiang Tianhong Goods Trading Co. 11,850.00 Ltd Subtotal 554,848.00 6,057,604.56

6. Important Contracts and Execution (1) Trust Management, Contracting and Lease Yielding Profit Accounting for 10% and above of The Company’s Net Profit The Company had no major events of trust management, contracting or lease yielding profit accounting for 10% and above of the Company’s net profit. (2) Guarantee

Unit: in RMB million yuan

Guarantees Provided by the Company (excluding guarantees for holding subsidiaries) Relationship Whether Whether Whether There Whether Providing Guaranteed Amount of Guarantee Guarantee Type of Relationship with Guarantor between Guarantor Guarantee Guarantee Exists Guarantee for Party Guarantee Start Date End Date Guarantee Related Party and the Company is Fulfilled is Overdue Counter-guarantee Related Parties Head Office of the Ordinary ZSEPC ZJPGC 84.00 17-12-2001 16-12-2026 No No No. Yes Affiliated Company Company guarantee Total amount of guarantee in current reporting period (excluding guarantees for subsidiaries) -60.0360 Total amount of balance of guarantee at current period end (excluding guarantees for subsidiaries) (A) 84.0000

The Company’s Guarantees for Holding Subsidiaries

Total amount of guarantee for subsidiaries in current reporting period 0 Total amount of balance of guarantee for subsidiaries at current period end (B) 0

Total Amount of Guarantee of the Company (including guarantees for holding subsidiaries)

Total amount of guarantee (A+B) 84.0000 Percentage of total amount of guarantee out of net assets of the Company (%) 0.92 Including: Amount of guarantees for shareholder, de facto controller and related parties (C) 84.0000 Amount of direct or indirect debt guarantees for companies with debt ratio greater than 70% (D) 0 Amount of guarantees exceeding 50% of net assets (E) 0 Sum of the above three types of guarantees (C+D+E) 84.0000 There appears no sign of potential joint liability Note on potential joint liability with the guarantees not yet reaching maturity on the part of the Company.

Note on Guarantees a. The Company holds 24% of ZJPGC’s equity. As needed for ZJPGC to construct Jiaxing Power Plant Phase II 4 x 600 MW and approved in the extraordinary shareholders’ general meeting of the Company in 2001, the Company provided ZJPGC with share-proportional shareholder’s guarantee. The relevant resolutions of the shareholders’ meeting were announced in Shanghai Securities News, Hongkong-based South China Morning Post and Hongkong-based Wen Wei Po dated 11 December 2001 separately. Based on Document Ji Ji Chu [2002]2349 “State Planning Commission’s Approval of Adjusted Construction Plan of Zhejiang Jiaxing Power Plant Phase II” issued by the State Development Planning Commission, the adjusted dynamic investment of the project totals RMB 10.28 billion yuan. The project equity amounts to RMB 2.57 billion yuan, accounting for 25% of the total investment. The capital needed for the project other than the equity will be sourced from Industrial & Commercial Bank of China (ICBC) providing a loan up to a ceiling of RMB 4.5 billion yuan and China Construction Bank (CCB) providing a loan up to a ceiling of RMB 3.21 billion yuan separately. In 2001, ZJPGC applied to ICBC Zhejiang Branch and CCB Zhejiang Branch for a loan up to a ceiling of RMB 4.5 billion yuan and RMB 3.2 billion yuan. The Company shall have the joint liability for the part of ZJPGC’s loan in the loan contract in proportion to the Company’s investment ratio, without joint liability between shareholders. In December 2006, ICBC Zhejiang Branch changed the loan on shareholders’ guarantee to the loan on credit, thus releasing the Company and other shareholders from their guarantee obligation. As at the end of the current reporting period, the balance of ZJPGC’s loan from CCB Zhejiang Branch amounted to RMB 350 million yuan. Correspondingly, the Company’s guarantee amounted to RMB 84 million yuan. b. The share-proportional shareholder’s guarantee amounting to RMB 12.0360 million yuan provided by the Company’s subsidiary ZCPGC to Zhejiang Changxing Jietong Logistics Co. Ltd matured on 2 December 2010, thus releasing ZCPGC from its guarantee obligation. (3) Trust Fund Management The Company had no trust fund management during the current year. (4) Other Important Contract Xiaoshan Power Plant uses gas turbines manufactured by German Siemens for its natural-gas-fired power generation. In order to ensure safe and stable operation of the gas-fired units, as approved in the 11th meeting of the 5th board of directors of the Company, the Company signed Long-term Maintenance Contract with

German Siemens and its wholly-owned subsidiary China Siemens, based on which Siemens will provide long-term maintenance service for the gas turbines in Xiaoshan Power Plant. 7. Implementation of Commitment (1) As approved in the 3rd meeting of the 5th Board of Directors and the 1st extraordinary shareholders’ general meeting 2009, the Company will make additional investment up to RMB 379.2 million yuan in ZJPGC for construction of Zhejiang Jiaxing Power Plant Phase III “Replacing Small-capacity With Large-capacity Generators” Project. As at the end of the current reporting period, the Company had made cumulative equity investment amounting to RMB 170.3956 million yuan. (2) As approved in the 16th meeting of the 5th Board of Directors, the Company will make additional investment up to RMB 181 million yuan. As at the end of the current reporting period, the Company had made equity investment amounting to RMB 62.50 million yuan. (3) As approved in the 5th meeting of the 5th board of directors of the Company and consented in Document Zhe Jing Xin Dian Li [2009]253, it is scheduled that the Company will decommission Unit 1 and 6 by the end of 2010. Based on Minutes of Meeting on Shutdown of Six 125 MW Units in Three Power Plants as Huaneng Changxing Power Plant (Document ZJXDL[2009]419) and Consent to Decommission Two 135 MW Coal-fired Generating Units of Taizhou Power Plant Ahead of Time (Document ZJXDL[2010]501) issued by Zhejiang Provincial Economic & Informatization Commission, in order to expedite optimization of the power generation structure and promote power generation companies’ effort in energy conservation and emission reduction, Unit 1 and 6 of Taizhou Power Plant were officially decommissioned before 24:00 on 8 August 2010, and were permanently disconnected from the power grid.

(4) Hongkong Xingyuan Investment & Trade Company Ltd (HXITC), the wholly-owned subsidiary of the Company’s de facto controller ZPEGC, increased shareholding of the Company with an increment of 345,600 shares through the trading system of Shanghai Stock Exchange on 25 August 2009, accounting for 0.02% of the Company’s total number of shares.. It continued to increase its shareholding of the Company depending on the market conditions in the next 12 months starting from 25 August 2009 through the trading system of Shanghai Stock Exchange at a price not higher than USD 0.50/share and up to a cap of 2% of the Company’s total shares (including the increment in the initial increase). This shareholding increase plan terminated on 24 August 2010. During the shareholding increase period, HXITC increased its shareholding of the Company with a cumulative increment of 3,569,960 shares through the trading system of Shanghai Stock Exchange, accounting for 0.18% of the Company’s total number of shares. Before the shareholding increase, HXITC held no shares

of the Company. After the shareholding increase, ZPEGC, via the Company’s first largest shareholder Zhejiang Provincial Electric Power Development Company Ltd and HXITC, holds 803,533,160 shares of the Company in total, accounting for 39.98% of the Company’s total shares. (5) As approved in the 12th meeting of the 4th Board of Directors of the Company, the Company and Trading Emission PLC signed “CER Trading Agreement for CDM Project of Xiaoshan Power Plant Natural Gas Power Generation Project”, based on which the Company will sell CERs (certified emission reduction) to Trading Emission PLC during the period from the date of project registration up to 31 December 2012. In the current period, the CERs transaction settled between the Company and Trading Emission PLC belonging to Year 2008 amounted to 48,844 tons. 8. Appointment of Accountants Unit: in RMB million yuan

Whether Changing No Accounting Firms Prior Appointment Current Appointment Name of Domestic Pan-China Certified Public Pan-China Certified Public Accounting Firm Accountants Accountants Remuneration for Domestic 1.15 1.15 Accounting Firm No. of Years of Audit by 13 years 14 years Domestic Accounting Firm Name of International PricewaterhouseCoopers PricewaterhouseCoopers Accounting Firm Zhong Tian CPAs Co. Ltd Zhong Tian CPAs Co. Ltd Remuneration for 1.20 1.20 International Accounting Firm No. of Years of Audit by 13 years 14 years International Accounting Firm 9. Punishment on the Company and Its Directors, Supervisors, Senior Management, Shareholders and De facto Controllers and Rectification The Company and its directors, supervisors, senior management, shareholders and de facto controllers were free from any audit, administrative punishment or open criticism by CSRC, or open accusation by the stock exchanges during the year. 10. Whether the Company was listed by the environmental protection authorities as one of the enterprises of severe pollution: No 11. Other Important Matters The 2 x 350 MW gas-steam combined cycle units of Xiaoshan Power Plant was put into commercial operation on 16 January and 14 April 2008, with provisionally estimated cumulative completed fixed assets amounting to RMB 2,134.5334 million yuan. The final accounting on completion of the project was

completed in the current period, with the final accounted project investment amounting to RMB 2,082.3658 million yuan. Accordingly, the corresponding fixed assets were adjusted. 12. Index of Information Disclosure

Name of Press Date of Contents Publication Websites Publishing Publication Announcements Announcement on Predicted Growth of China Securities 27-01-2010 http://www.zsepc.com/ Annual Results 2009 Journal, Shanghai Announcement of Resolutions of 9th http://www.sse.com.cn/ th Securities News, South 11-02-2010 Meeting of 5 Board of Directors Announcement of Resolutions of 10th China Morning Post th 10-03-2010 Meeting of 5 Board of Directors (Hong Kong) and Wen Announcement of Resolutions of 11th Wei Po (Hong Kong) th 20-03-2010 Meeting of 5 Board of Directors Announcement on Holding of Shareholders’ 20-03-2010 General Meeting for 2009 Announcement on Daily Related Party 20-03-2010 Transactions Announcement of Resolutions of 5th th 20-03-2010 Meeting of 5 Supervisory Committee Annual Report 2010 20-03-2010 Announcement of Resolutions of 10-04-2010 Shareholders’ General Meeting 2009 Announcement of Resolutions of 12th Meeting of 5th Board of Directors and Related 24-04-2010 Party Transactions The 1st Quarterly Report 2010 24-04-2010 Announcement on Range of Price of ZSEPC’s Shares Increased by De Facto Controller and 30-04-2010 Joint Action Takers Announcement on Dividend Distribution for 07-05-2010 2009 Announcement of Resolutions of 13th th 4-06-2010 Meeting of 5 Board of Directors Announcement of Resolutions of 15th th 24-06-2010 Meeting of 5 Board of Directors Announcement of Resolutions of 16th Meeting of 5th Board of Directors and Related 10-07-2010 Party Transactions Announcement on Shutdown of Unit 1 and 6 07-08-2010 of Taizhou Power Plant Announcement of Resolutions of 17th th 26-08-2010 Meeting of 5 Board of Directors Interim Report 2010 26-08-2010 Announcement on Completion of ZSEPC’s Shares Increase Performed by De Facto 26-08-2010 Controller and Joint Action Takers Announcement of Resolutions of 18th th 08-10-2010 Meeting of 5 Board of Directors Announcement on Holding of 1st Extraordinary Shareholders’ General Meeting 08-10-2010 for 2010 Announcement of Resolutions of 1st Extraordinary Shareholders’ General Meeting 26-10-2010 for 2010

3rd Quarterly Report 2009 26-10-2010 Announcement of Resolutions of 20th th 18-11-2010 Meeting of 5 Board of Directors Announcement on Related Party Transactions 18-11-2010

Section XI. Financial Report

Part I Domestic Financial Report Auditor’s Report

Tian Jian Shen (2011) 408

To: The Shareholders of Zhejiang Southeast Electric Power Company Limited

We have audited the financial statements of Zhejiang Southeast Electric Power Company Limited (the Company) attached hereunder, including the Balance Sheet and the Consolidated Balance Sheet as at 31 December 2010, the Profit Statement and the Consolidated Profit Statement for 2010, the Cash Flow Statement and the Consolidated Cash Flow Statement for 2010, and the notes to the financial statements.

1. The Management’s Responsibility with Regard to Financial Statements

It is the responsibility of the management team of the Company to prepare the financial statements in accordance with the enterprise accounting standards. Their responsibility includes: (1) design, enforcement and maintenance of internal control in connection with the preparation of the financial statements in order that the financial statements are free from material misrepresentation, whether due to fraud or error; (2) selection and application of appropriate accounting policies; and (3) making reasonable accounting estimation.

2. The Certified Public Accountant’s Responsibility

It is our responsibility to form audit opinion on these accounting statements based on our auditing. We planned and conducted our audit with professional ethics in accordance with the auditing standards of the certified public accountant in China to reasonably ascertain whether there is major misrepresentation in the financial statements.

The auditing work involves adoption of an auditing procedure to obtain audit evidences of input data of the financial statements. The selection of the auditing procedure depends on the judgment of the certified accountant, including assessment of the risks of material misrepresentation whether due to fraud or error. In making risk

assessment, we take into consideration the internal control in connection with the preparation of the financial statements in order to design appropriate auditing procedure. But it is not our purpose to give opinion on the effectiveness of the internal control. The auditing work also includes appraisal of the appropriateness of the accounting policies and the reasonableness of the accounting estimation adopted by the management, and appraisal of the overall presentation of the financial statements on the whole.

We believe the audit evidences obtained by us are adequate and appropriate, providing a sound basis for forming our audit opinion.

3. Audit Opinion

In our opinion, the preparation of the financial statements of the Company has complied with the enterprise accounting standards. The statements give a fair view, in all material respects, of the state of financial affairs of the Company as at 31st December 2010 and of its operating results and cash flows for 2010.

Zhejiang Pan-China Certified Public Accountants Company Limited Hangzhou, China PRC Certified Public Accountant Huang Yuanxi PRC Certified Public Accountant Ye Weimin PRC Certified Public Accountant Chi Zhenbo

Dated: 25 February 2011

Consolidated Balance Sheet 31st December 2010 Prepared by: Zhejiang Southeast Electric Power Company Limited Unit: RMB yuan Item Note Ending Amount Beginning Amount Current assets: Monetary assets 1 496,430,826.93 626,279,349.63 Provisions for account settlement Loaned capital Transactional financial assets Bills receivable 2 8,504,853.47 4,870,001.00 Accounts receivable 3 638,992,547.31 511,430,701.50 Prepayment 4 33,824,262.01 8,537,994.03 Insurance premium receivable Re-insurance accounts receivable Re-insurance contract reserve

receivable Interest receivable Dividend receivable 5 199,668.00 199,668.00 Other receivable 6 15,237,896.26 15,853,568.21 Purchase of resold financial assets Inventories 7 196,818,334.23 152,201,307.62 Non-current assets due within 1 year Other current assets Total current assets 1,390,008,388.21 1,319,372,589.99 Non-current assets: Loans and advances provided Available-for-sale financial assets 8 3,448,404,024.76 3,806,841,809.50 Hold-up-to-maturity investment Long term accounts receivable Long term equity investments 10 1,991,906,462.19 2,112,040,489.31 Investing real estate 11 21,617,708.86 22,658,871.82 Fixed assets 12 7,855,785,194.18 8,750,410,698.86 Construction in progress 13 27,542,892.65 10,876,769.99 Project equipment and materials 14 4,021,852.13 1,091,168.40 Disposal of fixed assets 15 19,181,316.10 13,550,665.72 Productive assets Oil and gas assets Intangible assets 16 263,505,343.07 257,328,108.79 Development cost Goodwill

Long-term deferred expenses 17 25,140,505.23 Deferred income tax asset 18 118,589,660.30 136,458,175.24 Other non-current assets Total non-current assets 13,775,694,959.47 15,111,256,757.63 Total assets 15,165,703,347.68 16,430,629,347.62 Current liabilities: Short term borrowings 20 840,000,000.00 715,000,000.00 Borrowings from central bank Absorbed deposit and enterprise

deposit Borrowed capital Transactional financial liabilities Bills payable 100,000,000.00 Accounts payable 21 363,497,503.51 374,054,006.10 Accounts received in advance 22 272,583.99 267,200.00 Sale of repurchased financial assets Service charges and commission

payable Wages payable 23 120,679,261.87 151,710,549.34 Tax payable 24 87,897,301.31 99,887,731.43 Interest payable 25 7,131,370.08 7,535,055.95 Dividend payable 26 10,212,354.17 19,928,385.26 Other payables 27 72,667,590.70 188,541,195.59 Reinsurance accounts payable Reinsurance contract reserves Agency fee for dealing in securities Agency fee for underwriting sale of

securities Non-current liabilities due within one 28 480,000,000.00 360,000,000.00 year Other current liabilities Total current liabilities 1,982,357,965.63 2,016,924,123.67 Non-current liabilities: Long term borrowings 29 3,004,300,000.00 3,613,300,000.00 Bonds payable Long term payables Special payables Anticipated liabilities Deferred income tax liabilities 18 611,989,414.88 854,096,055.42 Other non-current liabilities 30 35,698,228.99 38,759,749.92 Total non-current liabilities 3,651,987,643.87 4,506,155,805.34 Total liabilities 5,634,345,609.50 6,523,079,929.01 Owners’ equity (Shareholders’ equity)

Paid-in capital (Share capital) 31 2,010,000,000.00 2,010,000,000.00 Capital reserve 32 3,741,519,072.50 4,463,214,619.13 Less: shares in stock Special reserve Surplus reserve 33 1,383,386,949.84 1,336,233,457.21 General risk allowance Undistributed profits 34 1,981,841,809.26 1,698,863,774.60 Foreign currency statement conversion

variance Total owners’ equity belonging to 9,116,747,831.60 9,508,311,850.94 owners of parent company Minority shareholders’ equity 414,609,906.58 399,237,567.67 Total owners’ equity 9,531,357,738.18 9,907,549,418.61 Total liabilities and owners’ equity 15,165,703,347.68 16,430,629,347.62

Parent Company’s Balance Sheet 31st December 2010 Prepared by: Zhejiang Southeast Electric Power Company Limited Unit: RMB yuan Item Note Ending Amount Beginning Amount Current assets: Monetary assets 356,975,808.12 444,285,045.14 Transactional financial assets Bills receivable 6,874,853.47 2,870,001.00 Accounts receivable 1 295,540,472.71 223,437,166.74 Prepayment 28,308,433.95 4,693,742.82 Interest receivable Dividend receivable 199,668.00 199,668.00 Other receivable 2 12,640,764.00 13,411,103.64 Inventories 122,559,696.34 98,631,479.64 Non-current assets due within 1 year Other current assets Total current assets 823,099,696.59 787,528,206.98 Non-current assets: Available-for-sale financial assets 3,448,404,024.76 3,806,841,809.50 Hold-up-to-maturity investment Long term accounts receivable Long term equity investments 3 2,650,670,756.31 2,770,362,288.98 Investing real estate 21,617,708.86 22,658,871.82 Fixed assets 5,001,833,498.20 5,602,639,513.91 Construction in progress 18,572,468.39 7,159,664.31 Project equipment and materials 4,021,852.13 1,091,168.40 Disposal of fixed assets 19,181,316.10 13,550,665.72 Productive assets Oil and gas assets Intangible assets 254,415,833.75 255,420,297.49 Development cost Goodwill Long-term deferred expenses 25,140,505.23 Deferred income tax asset 90,583,155.00 97,648,037.77 Other non-current assets Total non-current assets 11,534,441,118.73 12,577,372,317.90 Total assets 12,357,540,815.32 13,364,900,524.88 Current liabilities: Short term borrowings 200,000,000.00 100,000,000.00 Transactional financial liabilities

Bills payable 100,000,000.00 Accounts payable 237,490,738.78 215,927,969.94 Accounts received in advance 100,000.00 Wages payable 117,561,805.89 142,881,562.02 Tax payable 52,184,765.87 73,490,196.87 Interest payable 3,513,999.40 3,598,927.20 Dividend payable Other payables 57,830,663.74 174,614,245.37 Non-current liabilities due within one 190,000,000.00 year Other current liabilities Total current liabilities 858,581,973.68 810,612,901.40 Non-current liabilities: Long term borrowings 1,819,300,000.00 2,178,300,000.00 Bonds payable Long term payables Special payables Anticipated liabilities Deferred income tax liabilities 611,989,414.88 854,096,055.42 Other non-current liabilities 35,698,228.99 38,759,749.92 Total non-current liabilities 2,466,987,643.87 3,071,155,805.34 Total liabilities 3,325,569,617.55 3,881,768,706.74 Owners’ equity (Shareholders’ equity) Paid-in capital (Share capital) 2,010,000,000.00 2,010,000,000.00 Capital reserve 3,727,544,072.50 4,449,239,619.13 Less: shares in stock Special reserve Surplus reserve 1,383,386,949.84 1,336,233,457.21 General risk allowance Undistributed profits 1,911,040,175.43 1,687,658,741.80 Total owners’ equity (shareholders’ 9,031,971,197.77 9,483,131,818.14 equity) Total liabilities and owners’ 12,357,540,815.32 13,364,900,524.88 (shareholders’) equity

Consolidated Statement of Profit January – December 2010 Prepared by: Zhejiang Southeast Electric Power Company Limited Unit: RMB Yuan

Item Note Current Amount Prior Amount

1. Total operating income 1 7,780,814,338.27 7,484,541,758.83 Including: operating income 1 7,780,814,338.27 7,484,541,758.83 Interest income Insurance premium income Service charges and commission income 2. Total operating cost 7,485,445,476.84 7,148,379,207.08 Including: operating cost 1 6,873,027,708.20 6,180,621,339.46 Interest expenditure Service charges and commission expenditure Refunded insurance premium Net value of compensation expenditure Net value of insurance contract allowance Payment of insurance policy dividends Reinsurance expenses Operating tax and surcharges 2 39,335,673.72 49,753,679.45 Marketing expenses Administrative expenses 3 336,654,218.09 307,686,058.19 Financial expenses 4 237,763,163.75 321,111,451.38 Asset devaluation loss 5 -1,335,286.92 289,206,678.60 Add: gains from changes in fair values (with loss denoted by “-”) Return on investment (with loss denoted by “-”) 6 326,084,328.24 328,829,975.22 Including: returns on investment in affiliated enterprises and joint 252,739,705.01 265,547,320.23 ventures Foreign exchange income (with loss denoted by “-”) 3. Operating profit (with loss denoted by “-”) 621,453,189.67 664,992,526.97 Add: non-operating income 7 15,183,079.93 7,724,677.30 Less: non-operating expenses 8 21,860,543.21 35,045,008.10 Including: loss on disposal of non-current assets 8,235,766.33 17,054,817.29 4. Total profit (with loss denoted by “-”) 614,775,726.39 637,672,196.17 Less: income tax expenditure 9 71,421,860.19 92,022,056.25 5. Net profit (with net loss denoted by “-”) 543,353,866.20 545,650,139.92 Net profit belonging to owners of the parent company 531,131,527.29 485,204,559.20 Minority shareholders’ equity 12,222,338.91 60,445,580.72 6. Earnings per Share (1) Basic earnings per share 10 0.2642 0.2414 (2) Diluted earnings per share 10 0.2642 0.2414 7. Other comprehensive income 11 -721,695,546.63 1,559,274,734.78 8. Total comprehensive income -178,341,680.43 2,104,924,874.70

Total comprehensive income belonging to owners of parent company -190,564,019.34 2,044,479,293.98 Total comprehensive income belonging to minority shareholders 12,222,338.91 60,445,580.72

Parent Company’s Statement of Profit January – December 2010 Prepared by: Zhejiang Southeast Electric Power Company Limited Unit: RMB Yuan

Item Note Current Amount Prior Amount

1. Operating income 1 4,943,354,624.04 4,700,092,741.85 Less: operating cost 1 4,358,595,290.93 3,862,832,329.16 Operating tax and surcharge 24,399,185.79 32,184,957.39 Marketing expenses Administrative expenses 255,841,312.51 242,034,852.48 Financial expenses 116,677,005.64 170,557,882.60 Asset devaluation loss -2,640,302.72 289,183,411.44 Add: gains from changes in fair values (with loss denoted by “-”) Return on investment (with loss denoted by “-”) 324,614,022.68 322,831,532.27 Including: return on investment in affiliated enterprises and joint ventures 251,269,399.45 259,548,877.28 2. Operating profit (with loss denoted by “-”) 515,096,154.57 426,130,841.05 Add: non-operating income 13,187,346.79 7,240,688.30 Less: non-operating expenses 10,698,137.74 26,674,040.65 Including: loss on disposal of non-current assets 2,037,656.35 13,599,701.07 3. Total profit (with loss denoted by “-”) 517,585,363.62 406,697,488.70 Less: income tax expenditure 46,050,437.36 34,742,777.35 4. Net profit (with net loss denoted by “-”) 471,534,926.26 371,954,711.35 5. Earnings per Share (1) Basic earnings per share (2) Diluted earnings per share 6. Other comprehensive income -721,695,546.63 1,559,274,734.78 7. Total comprehensive income -250,160,620.37 1,931,229,446.13

Consolidated Statement of Cash Flow

January-December 2010

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

Item Note Current Amount Prior Amount

1.Cash flow generated from operating activities

Cash received from sale of goods and supply of labour service 8,972,417,644.70 8,773,145,342.07 Net increase in customer deposit and enterprise deposit Net increase in borrowings from the central bank Net increase in borrowed capital from other financial institutions Cash gained from receipt of insurance premium Net cash received from reinsurance Net increase in deposit and investment of the insured Net increase on disposal of transactional financial assets Cash gained from receipt of interest, service charges and

commission Net increase in borrowed capital Net increase in repurchase Cash received from refund of taxes Other cash received relating to operating activities 1 39,386,971.29 15,235,019.68 Sub-total of cash inflow 9,011,804,615.99 8,788,380,361.75 Cash paid for purchase of goods and labour services 6,676,156,735.74 5,405,892,384.71 Net increase in customer loan and advance Net increase in deposit in central bank and in enterprise of same

trade Cash payment of insurance compensation Cash payment of interest, service charges and commission Cash payment of insurance policy dividend Cash paid to and for the employees 561,041,805.58 475,379,257.64 Taxes paid 537,503,309.64 619,087,074.58 Other cash paid relating to operating activities 2 152,581,738.21 126,768,593.17 Sub-total of cash outflow 7,927,283,589.17 6,627,127,310.10 Net cash flow generated from operating activities 1,084,521,026.82 2,161,253,051.65

2.Cash flow generated from investment activities

Cash received from investment recovery Cash received from investment return 279,113,955.36 69,989,462.57 Net cash received from disposal of fixed assets, intangible assets 10,135,639.16 356,683.35 and other long-term assets Net cash received from disposal of subsidiaries and other business

units Other cash received relating to investment activities 3 7,601,893.52 8,465,131.84 Sub-total of cash inflow 296,851,488.04 78,811,277.76 Cash paid for acquisition of fixed assets, intangible assets and 254,379,820.85 415,954,068.64

other long-term assets Cash paid for investment 436,718,544.10 106,087,885.00 Net increase in pledged loans Net cash paid for acquisition of subsidiaries and other business 3,283,257.61 11,884,422.52 units Other cash paid relating to investment activities 25,036,432.82 Sub-total of cash outflow 694,381,622.56 558,962,808.98 Net cash flow generated from investment activities -397,530,134.52 -480,151,531.22

3. Cash flow from financing activities

Cash received by absorbing investment 406,560.00 Including: cash received by subsidiaries absorbing minority 406,560.00 shareholders’ investment Cash received from borrowing 1,040,000,000.00 850,000,000.00 Cash received from issuance of bonds Other cash received relating to financing activities Sub-total of cash inflow 1,040,406,560.00 850,000,000.00 Cash paid for debt service 1,404,000,000.00 2,445,920,000.00 Cash paid for distribution of dividend, profit or repayment of 454,210,079.21 351,339,594.91 interest Including: subsidiaries’ distribution of minority shareholders’

dividends Other cash paid relating to financing activities Sub-total of cash outflow 1,858,210,079.21 2,797,259,594.91 Net cash flow generated from financing activities -817,803,519.21 -1,947,259,594.91 4. Impact of foreign exchange rate fluctuation on cash and cash 964,104.21 -12,423.14 equivalents 5. Net increase in cash and cash equivalents -129,848,522.70 -266,170,497.62

Add: beginning amount of cash and cash equivalents 626,279,349.63 892,449,847.25 6. Ending amount of cash and cash equivalents 496,430,826.93 626,279,349.63

Parent Company’s Statement of Cash Flow

January-December 2010

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

Item Note Current Amount Prior Amount

1.Cash flow generated from operating activities

Cash received from sale of goods and supply of labour service 5,700,879,833.43 5,553,810,751.29 Cash received from refund of taxes Other cash received relating to operating activities 27,622,129.45 10,798,894.88 Sub-total of cash inflow 5,728,501,962.88 5,564,609,646.17 Cash paid for purchase of goods and labour services 4,132,300,644.84 3,339,296,762.94 Cash paid to and for the employees 450,280,271.45 359,000,338.44 Taxes paid 376,572,299.42 451,407,081.85 Other cash paid relating to operating activities 110,062,555.02 93,644,952.15 Sub-total of cash outflow 5,069,215,770.73 4,243,349,135.38 Net cash flow generated from operating activities 659,286,192.15 1,321,260,510.79

2.Cash flow generated from investment activities

Cash received from investment recovery Cash received from investment return 276,401,155.36 63,282,654.99 Net cash received from disposal of fixed assets, intangible assets 8,865,106.02 295,883.35 and other long-term assets Net cash received from disposal of subsidiaries and other business

units Other cash received relating to investment activities 5,904,091.38 5,404,282.79 Sub-total of cash inflow 291,170,352.76 68,982,821.13 Cash paid for acquisition of fixed assets, intangible assets and 206,395,359.43 352,880,164.95 other long-term assets Cash paid for investment 435,918,544.10 88,800,000.00 Net cash paid for acquisition of subsidiaries and other business 3,283,257.61 21,700,135.42 units Other cash paid relating to investment activities Sub-total of cash outflow 645,597,161.14 463,380,300.37 Net cash flow generated from investment activities -354,426,808.38 -394,397,479.24

3. Cash flow from financing activities

Cash received by absorbing investment Cash received from borrowing 400,000,000.00 100,000,000.00 Cash received from issuance of bonds Other cash received relating to financing activities Sub-total of cash inflow 400,000,000.00 100,000,000.00 Cash paid for debt service 469,000,000.00 1,141,920,000.00 Cash paid for distribution of dividend, profit or repayment of 324,132,725.00 177,651,271.33 interest Other cash paid relating to financing activities

Sub-total of cash outflow 793,132,725.00 1,319,571,271.33 Net cash flow generated from financing activities -393,132,725.00 -1,219,571,271.33 4. Impact of foreign exchange rate fluctuation on cash and cash 964,104.21 -12,423.14 equivalents 5. Net increase in cash and cash equivalents -87,309,237.02 -292,720,662.92

Add: beginning amount of cash and cash equivalents 444,285,045.14 737,005,708.06 6. Ending amount of cash and cash equivalents 356,975,808.12 444,285,045.14

Consolidated Statement of Changes in Owner’s Equity January-December 2010

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

Item Current Amount

Equity Belonging to Owners of Parent Company Minority Total owner’s equity shareholders’

Paid-in capital Capital reserve Less: shares Special Surplus reserve General risk Undistributed profit Others equity (share capital) in stock reserve allowance 1. Ending amount at end of last year 2,010,000,000.00 4,463,214,619.13 1,336,233,457.21 1,698,863,774.60 399,237,567.67 9,907,549,418.61

Add: changes in accounting policies

Correction of prior errors

Other

2. Beginning amount at beginning 2,010,000,000.00 4,463,214,619.13 1,336,233,457.21 1,698,863,774.60 399,237,567.67 9,907,549,418.61 of current year 3. Increase/decrease in current year -721,695,546.63 47,153,492.63 282,978,034.66 15,372,338.91 -376,191,680.43 （with decrease denoted by “-”） (1) Net profit 531,131,527.29 12,222,338.91 543,353,866.20

(2) Other comprehensive income -721,695,546.63 -721,695,546.63

Sum of foregoing (1) and (2) -721,695,546.63 531,131,527.29 12,222,338.91 -178,341,680.43

(3) Owner’s investment and 3,150,000.00 3,150,000.00 decreasing capital a. Owner’s injection of capital 3,150,000.00 3,150,000.00 b. Amount of shares disbursement

incorporated into owner’s equity c. Others

(4) Profit distribution 47,153,492.63 -248,153,492.63 -201,000,000.00 a. Allocation of surplus reserve 47,153,492.63 -47,153,492.63 b. Allocation of General risk

allowance c. Distribution to owners (or -201,000,000.00 -201,000,000.00 shareholders) d. Others

(5) Internal transfer of owner’s

equity a. Capital reserve transferred to

equity (or share capital) b. Surplus reserve transferred to

equity (or share capital) c. Surplus reserve offsetting loss d. Others

（6）Special reserve a. Allocated in current period b. Used in current period

(7) Other

4. Ending Amount 2,010,000,000.00 3,741,519,072.50 1,383,386,949.84 1,981,841,809.26 414,609,906.58 9,531,357,738.18 Unit: RMB yuan Item Prior Amount

Equity Belonging to Owners of Parent Company Minority Total owner’s equity shareholders’ Paid-in capital Capital reserve Less: shares Special General risk Undistributed profit Others equity in stock reserve Surplus reserve allowance (share capital) 1. Ending amount at end of last year 2,010,000,000.00 2,903,939,884.35 1,299,037,986.07 1,250,854,686.54 393,679,809.83 7,857,512,366.79

Add: changes in accounting policies

Correction of prior errors

Other

2. Beginning amount at beginning 2,010,000,000.00 2,903,939,884.35 1,299,037,986.07 1,250,854,686.54 393,679,809.83 7,857,512,366.79 of current year 3. Increase/decrease in current year 1,559,274,734.78 37,195,471.14 448,009,088.06 5,557,757.84 2,050,037,051.82 (with decrease denoted by “-”) (1) Net profit 485,204,559.20 60,445,580.72 545,650,139.92

(2) Other comprehensive income 1,559,274,734.78 1,559,274,734.78

Sum of foregoing (1) and (2) 1,559,274,734.78 485,204,559.20 60,445,580.72 2,104,924,874.70

(3) Owner’s investment and -54,887,822.88 -54,887,822.88 decreasing capital a. Owner’s injection of capital b. Amount of shares disbursement

incorporated into owner’s equity c. Others -54,887,822.88 -54,887,822.88

(4) Profit distribution 37,195,471.14 -37,195,471.14 a. Allocation of surplus reserve 37,195,471.14 -37,195,471.14 b. Allocation of General risk

allowance c. Distribution to owners (or

shareholders) d. Others

(5) Internal transfer of owner’s

equity a. Capital reserve transferred to

equity (or share capital) b. Surplus reserve transferred to

equity (or share capital) c. Surplus reserve offsetting loss d. Others

（6）Special reserve a. Allocated in current period b. Used in current period

(7) Other

4. Ending Amount 2,010,000,000.00 4,463,214,619.13 1,336,233,457.21 1,698,863,774.60 399,237,567.67 9,907,549,418.61

Parent Company’s Statement of Changes in Owner’s Equity January-December 2010

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

Item Current Amount Paid-in capital Capital reserve Less: shares in Special Surplus reserve General risk Total owner’s equity stock reserve Undistributed profit (share capital) allowance 1. Ending amount at end of last year 2,010,000,000.00 4,449,239,619.13 1,336,233,457.21 1,687,658,741.80 9,483,131,818.14 Add: changes in accounting policies Correction of prior errors Other

2. Beginning amount at beginning 2,010,000,000.00 4,449,239,619.13 1,336,233,457.21 1,687,658,741.80 9,483,131,818.14 of current year 3. Increase/decrease in current year -721,695,546.63 47,153,492.63 223,381,433.63 -451,160,620.37 (with decreased denoted by “-”) (1) Net profit 471,534,926.26 471,534,926.26 (2) Other comprehensive income -721,695,546.63 -721,695,546.63 Sum of foregoing (1) and (2) -721,695,546.63 471,534,926.26 -250,160,620.37

(3) Owner’s investment and decreasing capital a. Owner’s injection of capital b. Amount of shares disbursement incorporated into owner’s equity c. Others (4) Profit distribution 47,153,492.63 -248,153,492.63 -201,000,000.00 a. Allocation of surplus reserve 47,153,492.63 -47,153,492.63 b. Allocation of general risk allowance c. Distribution to owners (or -201,000,000.00 -201,000,000.00

shareholders) d. Others

(5) Internal transfer of owner’s equity a. Capital reserve transferred to equity (or share capital) b. Surplus reserve transferred to equity (or share capital) c. Surplus reserve offsetting loss d. Others （6）Special reserve a. Allocated in current period b. Used in current period (7) Other 4. Ending Amount 2,010,000,000.00 3,727,544,072.50 1,383,386,949.84 1,911,040,175.43 9,031,971,197.77

Unit: RMB yuan Item Prior Amount Paid-in capital Capital reserve Less: shares in Special General risk Total owner’s equity stock reserve Surplus reserve Undistributed profit, (share capital) allowance 1. Ending amount at end of last year 2,010,000,000.00 2,889,964,884.35 1,299,037,986.07 1,352,899,501.59 7,551,902,372.01 Add: changes in accounting policies Correction of prior errors Other

2. Beginning amount at beginning 2,010,000,000.00 2,889,964,884.35 1,299,037,986.07 1,352,899,501.59 7,551,902,372.01 of current year 3. Increase/decrease in current year 1,559,274,734.78 37,195,471.14 334,759,240.21 1,931,229,446.13 (with decrease denoted by “-”) (1) Net profit 371,954,711.35 371,954,711.35 (2) Other comprehensive income 1,559,274,734.78 1,559,274,734.78 Sum of foregoing (1) and (2) 1,559,274,734.78 371,954,711.35 1,931,229,446.13

(3) Owner’s investment and decreasing capital a. Owner’s injection of capital b. Amount of shares disbursement incorporated into owner’s equity c. Others (4) Profit distribution 37,195,471.14 -37,195,471.14 a. Allocation of surplus reserve 37,195,471.14 -37,195,471.14 b. Allocation of general risk allowance c. Distribution to owners (or shareholders) d. Others

(5) Internal transfer of owner’s equity

a. Capital reserve transferred to equity (or share capital) b. Surplus reserve transferred to equity (or share capital) c. Surplus reserve offsetting loss d. Others （6）Special reserve a. Allocated in current period b. Used in current period (7) Other 4. Ending Amount 2,010,000,000.00 4,449,239,619.13 1,336,233,457.21 1,687,658,741.80 9,483,131,818.14

Notes to Financial Statements 2010

Unit: RMB yuan I. Company Profile

Zhejiang Southeast Electric Power Company Limited (the Company) is a joint stock limited company established by Zhejiang Provincial Electric Power Company (ZPEPC), Zhejiang Provincial Electric Power Development Company Limited (ZPEPDC) (previously named Zhejiang Provincial Electric Power Development Company), Zhejiang Bada Company Limited, Zhejiang Electric Power Equipment & Materials Supply Company and Zhejiang Electric Power Real Estate Development Company Limited as the promoters in accordance with Document Zhe Zheng Wei (1997) 49 entitled “Approval for Establishment of Zhejiang Southeast Electric Power Company Limited” released by the Securities Commission of Zhejiang Provincial Government and Document (1997) 4 entitled “Reply to the Proposal of Zhejiang Southeast Electric Power Company Limited (Preparation Office) to Issue New Shares Right After Its Incorporation” released by Division of International Affairs of China Securities Regulatory Commission. The registration of the Company with the local industrial and commercial administration authority was made on 15th May 1997, and the Business License No. 14294345 was obtained. It now has a registered capital of RMB 2,010 million yuan, and a total of 2,010 million shares (with a par value of RMB 1 yuan per share) including listed shares amounting to 690 million B shares. The Company’s shares went public on Shanghai Stock Exchange on 23 September 1997.

The Company was transformed to a stock limited company with foreign investment on 23 May 2000 upon the approval by the Ministry of Foreign Trade & Economic Cooperation with Document Wai Jing Mao Zi Er Han Zi (2000)373. The procedure relating to the re-registration with the industrial and commercial administration was then completed on 18 April 2001, and the Business License Qi Gu Zhe Zong No.002189 was obtained.

In accordance with Document Ji Ji Chu [2002]2704 “The State Planning Commission’s Approval of the Plan for Restructuring of the Generation Assets of the State Power Corp.” issued by the State Planning Commission, the 514,036,800 state-owned legal person shares of the Company originally held by ZPEPC were decreed to be transferred to China Huaneng Group Corporation (CHNG) at no cost, which was approved by the State-owned Assets Supervision & Administration Commission under the State Council of China with Document Guo Zi Chan Quan [2005]161 on 7 February 2005 and by the Ministry of Commerce with Document Shang Zi Pi [2006]1361 on 21 June 2006. The procedure relating to the

re-registration with the industrial and commercial administration was then completed on 14 December 2007, and the altered Business License for Enterprise Legal Person No.330000400000852 was obtained.

The Company belongs to the power sector, with its business scope covering investment in, development and operation of the electric power projects.

II. Main Accounting Policies and Assumptions Adopted by the Company

1. Basis for Preparation of Financial Statements

The preparation of the Company’s financial statements is based on a going concern.

2. Statement on Conformity with Enterprise Accounting Standards

The financial statements prepared by the Company conform to the enterprise accounting standards, giving a true and complete representation of the Company’s financial position, operating results and cash flow.

3. Accounting Period

The accounting year starts from 1 January and ends on 31 December of the Gregorian calendar year.

4. Bookkeeping Base Currency

RMB is adopted as the bookkeeping base currency.

5. Accounting of Consolidation of Enterprises Under and Not Under Same Control

(1) Accounting of Consolidation of Enterprises Under Same Control

The assets and liabilities obtained by the Company in process of enterprise consolidation are measured as per the book values of the consolidated party on the date of consolidation. The difference between the book values of the net assets obtained by the Company and the book value (or the total book value of issued shares) of the consideration for consolidation paid by the Company is to be covered in the capital reserve; if the capital reserve is not sufficient, the retained earnings are to be used to cover it.

(2) Accounting of Consolidation of Enterprise Not Under Same Control

If the cost of consolidation on the acquisition date is greater than the fair value of the identifiable net asset of the acquired party obtained in process of consolidation,

the difference between them is treated as goodwill; if the cost of consolidation on the acquisition date is less than the identifiable fair value of the net asset of the acquired party obtained in process of consolidation, firstly the measurement of the fair values of the various obtained identifiable assets, liabilities, contingent liabilities and the consolidation cost will be re-checked. If the re-checked consolidation cost is still less than the identifiable fair value of the net asset of the acquired party obtained in process of consolidation, the difference between them will be treated as current gains and losses.

6. Method for Preparation of Consolidated Financial Statement

The parent company incorporated all the subsidiaries under its control into the scope of consolidation of financial statements. The consolidated financial statements are prepared by the parent company based on the financial statements of the parent company and its subsidiaries in conjunction with other relevant documents in accordance with “No.33 Rule for Enterprise Accounting – Preparation of Financial Statements” after having made adjustment to long-term equity investment in subsidiaries on equity accounting basis.

7. Identification of Cash and Cash Equivalents

Cash as listed in the Statement of Cash Flow refers to cash on hand and cash in bank ready at any time for payment. Cash equivalents refer to the investment held by the Company with a short maturity, strong liquidity, ready convertibility to cash of known amount and low volatility in value. 8. Foreign Currency Conversion

The accounting of the foreign currency transaction is based on RMB converted as per the spot exchange rate on the transaction date. For the foreign currency monetary items, the ending balances of the various foreign currency accounts are converted at the spot exchange rate on the balance sheet date, with the variance recorded as current gains and losses except the variance from the principal and interest of special loan in connection with purchase of assets open to capitalization; for the foreign currency non-monetary items measured at historical cost, the ending balances are converted at the spot exchange rate on the transaction date; for the foreign currency non-monetary items measured at fair value, the ending balances are converted at the spot exchange rate on the date of determination of fair value with variance recorded at the gains and losses from change in fair value.

9. Financial Instruments

(1) Classification of financial assets and liabilities

Financial assets, when initially recognized, are classified into the following four

categories: financial assets measured at fair values with their changes recorded as current gains & losses (including transactional financial assets and financial assets determined to be measured at fair values with changes recorded as current gains & losses), hold-up-to-maturity investment, loans and accounts receivable, and available-for-sale financial assets.

Financial liabilities, when initially recognized, are classified into the following two categories: financial liabilities measured at fair values with changes recorded as current gains & losses (including transactional financial liabilities and financial liabilities determined to be measured at fair values with changes recorded as current gains & losses), and other financial liabilities.

(2) Recognition basis, measurement method and recognition cease condition for financial assets and liabilities

When the Company becomes one party to the financial instrument contract, a financial asset or liability is recognized. When initially recognized as financial asset or liability, they are measured at fair values; for financial assets and liabilities measured at fair values with their changes recorded as current gains & losses, the related transaction expenses are directly recorded as current gains & losses; for other financial assets or liabilities, the related transaction expenses are incorporated into the initially recognized values.

The Company makes follow-up measurement of financial assets at their fair values, not deducting possible transaction expenses when disposing of financial assets in future, with the exception of the following cases: 1) Hold-up-to-maturity investment, loans and accounts receivable will be measured at their residual cost based on actual interest rate; 2) The equity instrument investment with no quotation in active market and no reliably measurable fair value as well as the derivative financial asset associated with this equity instrument and settled via this equity instrument will be measured at their costs.

The Company adopts the actual interest rate method to make follow-up measurement of financial liabilities based residual cost, within the exception of the following cases: 1) For financial liabilities measured at fair values with changes recorded as current gains & losses, they are measured at fair values, without deducting possible transaction expenses incurred when settling financial liabilities in future; 2) The derivative financial liabilities associated with equity instrument with no quotation in active market and no reliably measurable fair value and settled via this equity instrument will be measured at their costs; 3) The financial guarantee contract not belonging to financial liabilities determined to be measured at fair values with changes recorded as current gains & losses, or the loan commitment not determined to be measured at fair values with changes recorded as current gains & losses committing to lend at an interest rate lower

than market rate, will be measured at the best estimated amount of expenditure in performance of relevant obligations or the initially recognized value after deducting amount of amortization based on the actual interest rate, whichever is higher.

The gains or losses arising from changes in fair values of financial assets or financial liabilities, except in connection with hedging, will be treated as follows: 1) the gains or losses arising from the changes in fair values of financial assets or financial liabilities measured as per fair values with changes recorded as current gains and losses are treated as gains and losses from changes in fair values; the interest or cash dividends obtained during the assets holding period are treated as investment returns; at the time of such treatment, the difference between the received amount and the initial booking value are recognized as investment returns, and at the same time adjust the gains and losses from changes in fair values. 2) the change in the fair value of available-for-sale financial assets is recorded as capital reserve; the interest accruing during the asset holding period is recorded as investment return; its cash dividends are recorded as investment return at the time of the investee’s announcement of dividends distribution; at the time of such treatment, the difference between the received amount and the book value deducting the accumulated changes in fair value directly recorded as capital reserve is recorded as investment returns.

When the contractual right to receive the cash flow from a certain item of financial asset terminates or virtually all risks and remuneration with this financial asset ownership are transferred, the recognition of this financial asset is ceased; when the obligation of a financial liability is wholly or partially released, the recognition of this financial liability is wholly or partially ceased correspondingly.

(3) Recognition basis and measurement method for transfer of financial assets

Those whose risks and returns on ownership have nearly all been transferred by the Company to the transferee will cease to be recognized as financial asset; those whose risks and returns on ownership have nearly all been retained will continue to be recognized as financial asset, and the consideration received will be identified as a financial asset; those whose nearly all risks and returns on ownership have neither been transferred nor retained will be treated as follows: 1) in case of giving up control of financial asset, it will cease to be recognized as financial asset; 2) in case of not giving up control of financial asset, it will continue to be recognized as financial asset to the extent of transfer, and the related financial liability will be recognized.

If the whole transfer of financial asset satisfies conditions for cease of its recognition, the difference between the following two amounts will be recorded

as current gains and losses: 1) the book value of the transferred financial asset; 2) the sum of the consideration received from transfer and cumulative changes in fair values of the owner’s equity directly recorded. If the partial transfer of the financial asset satisfies conditions for cease of its recognition, the book value of the transferred financial asset will be apportioned at fair values between those ceased to be recognized as such and those not ceased to be recognized as such, and the difference between the following two amounts will be recorded as the current gains and losses: (1) the book value of the portion ceased to be recognized as financial asset; (2) the sum of the consideration received from the portion ceased to be recognized as financial asset and cumulative changes in fair values of the corresponding owner’s equity directly recorded.

(4) Ways of determining fair values of main financial assets and liabilities

For the financial assets and liabilities with active markets, the quotations in active markets will be their fair values; for those without active markets, valuation techniques (including referring to market prices of recently-concluded transactions, referring to current fair values of other financial instruments of same substance, cash flow discount method and option pricing model, etc) will be employed to determine their fair values; for initially acquired or newly-formed financial assets or liabilities, their market transaction prices will be used as basis for determining fair values.

(5) Devaluation test and devaluation reserve allocation method for financial assets

On the balance sheet date, the book value examination will be done to the financial assets other than the financial assets measured at fair values with changes recorded as current gains and losses. If it is evidenced that this financial asset devalues, the devaluation reserve will be allocated.

A single significant-value financial asset will undergo devaluation test singly; a single non-significant-value financial asset can undergo devaluation test singly, or can be included in the financial asset portfolio with similar credit risks for devaluation test; the financial assets singly tested without devaluation (including those with significant value and non-significant value) will be included in the financial asset portfolio with similar credit risks for a second devaluation test.

For financial assets measured at residual values, if objective evidences indicate they are devaluated, the devaluation loss will be computed based on the difference between the book value and the present value of anticipated future cash flow; for equity instrument investment with no quotation in active market and no reliably measurable fair value, or the derivative financial assets associated with such equity instrument and settled via such equity instrument, if they are devaluated, their devaluation loss will be computed based on the differences between their

book values and the present values of the similar financial assets with their future cash flow discounted at the market rate of return. For the available-for-sale financial assets, if their fair values decrease significantly and the trend of decrease is non-temporary, their devaluation loss will be recognized, and their cumulative loss on the fair values directly incorporated into owner’s equity will be transferred out and recorded as devaluation loss.

10. Accounts Receivable

(1) Account Receivable with Single Significant Value and Single Allowance for Bad Debt

Single significant value Account receivable amounting to RMB 5 million and above accounting recognition criteria for over 10% of the book balance of accounts receivable Method for allocation It will singly undergo devaluation test. The allowance for bad debt will be of single allowance for allocated as per the difference between the present value of its future cash bad debt flow and its book value;

(2) Account Receivable with Portfolio Allowance for Bad Debt

a. Portfolio Recognition Criteria and Allocation Method for Allowance for Bad Debt Portfolio Recognition Criteria Portfolio based on account age The accounts receivable with the same account ages have analysis similar credit risk characteristics Method for Allocation of Portfolio Allowance for Bad Debt Portfolio based on account age Account age analysis method analysis

b. Account Age Analysis Account Age Percentage of Allocation of Percentage of Allocation of Other Accounts Receivable (%) Accounts Receivable (%) Within 1 year (including 1 year) 0.5 0.5 1-2 years 20 20 2-3 years 50 50 More than 3 years 80 80 Grouping accounts receivable into portfolios based on account Note on allocation of allowance age as the credit risk feature and taking into consideration the for bad debt actual loss rate to determine the ratio of bad debt allowance allocation for different portfolios

(3) Account Receivable with Single Non-significant Value but Single Allowance for Bad Debt

Reason for There are significant differences between the present value of the future cash allocation of single flow of the account receivable and the present value of the future cash flow of allowance for bad the account receivable portfolio based on account age as credit risk debt characteristics.

Allocation method It will singly undergo devaluation test and the allowance for bad debt will be for allowance for allocated as per the difference between the present value of its future cash bad debt flow and its book value.

For other accounts receivable such as bills receivable, prepayment, interest receivable and long-term receivable, the allowance for bad debt will be allocated as per the difference between the present value of their future cash flow and their book values.

11. Inventories

(1) Classification of Inventories

The inventories include the fuel, auxiliary materials, spare parts for repair, low-cost consumables, etc. stored for the purposes of sale or consumption in the process of production and operation.

(2) Pricing Method for Delivered Inventories

The outgoing fuel is accounted for based on weighted average cost method; the spare parts for repair in warehouse and auxiliary materials such as cement, steel and wood are accounted for based on moving weighted average method.

(3) Recognition Criteria for Net Realizable Value of Inventories and Allocation Method for Devaluation Reserve for Inventories

On the balance sheet date, the inventories will be measured at its cost or its net realizable value, whichever is lower. For inventories of saleable goods such as finished products, goods and saleable materials, their net realizable values equal to their estimated selling prices minus their estimated sales expenses and taxes; for inventories of materials to be processed, their net realizable values equal to the estimated selling prices of the finished products produced in the normal production process minus their estimated sales expenses and taxes; on the balance sheet date, for the same item of inventory with some parts contractually priced and some parts not priced, their net realizable values are separately measured and compared with their corresponding cost so as to separately determine the amount of devaluation reserve to be allocated or the amount to be reversed.

(4) The inventories are taken using the perpetual inventory method.

(5) The low-cost consumables are amortized based on lump-sum write-off method. 12. Long-term Equity Investment

(1) Determination of Investment Cost

a. For those formed on consolidation of the enterprises under the same control, the consolidating party makes cash payment, transfers non-cash assets, takes liabilities or issues equity securities as consideration for consolidation, the book value of the owner’s equity of the consolidated party on the consolidation date will be taken as the initial investment cost. The capital reserve will be adjusted based on the difference between the initial investment cost of the long-term equity investment and the book value of the paid consideration upon consolidation or the aggregate value of the issued shares; in the event that the capital reserve is insufficient for deduction, the retained earnings will be adjusted. b. For those formed on consolidation of enterprises not under the same control, the fair value of the consideration paid on the acquisition date will be stated as the initial investment cost. c. For those not formed on consolidation of enterprises: in case of acquisition by cash payment, the purchasing price actually paid will be stated as the initial investment cost; in case of acquisition by issuing equity securities, the fair value of the issued equity securities will be stated as the initial investment cost; in case of investment by investors, the value agreed in the Investment Contract or Agreement will be stated as the initial investment cost (except that the contractual or agreed value is not the fair value).

(2) Subsequent Measurement and Gains & Losses Recognition Method

The long-term equity investment under control is accounted for based on the cost, and adjusted based on equity when preparing consolidated financial statements. For the investment without joint control or significant influence, and with no quotation in the active market nor reliably measurable fair value, it is accounted for using the cost method; for the investment with joint control or significant influence, it is accounted for using the equity method.

(3) Basis for Identifying Joint Control and Significant Influence over Investees

Based on the contractual agreement, if important financial and business decisions concerning the investees require the agreement of the investors, it is identified as joint control; if important financial and business decisions concerning the investees involve investors’ participation but no control or joint control, it is identified as significant influence.

(4) Devaluation Test Method and Devaluation Reserve Allocation Method

On the balance sheet date, for the investment in subsidiaries, affiliated companies and joint ventures having objective evidence of devaluation, the devaluation reserves will be allocated based on the difference between their book values and their recoverable amount; for the long-term equity investment with no joint

control of the investee or significant influence, no quotation in active market and no reliably measurable fair value, the devaluation reserve will be allocated based on Accounting Rule No. 22—Recognition and Measurement of Financial Instruments.

13. Investing Real Estate

(1) The investing real estate includes the leased land use right, the land use right held to be transferred after appreciation and the leased buildings.

(2) The initial valuation of the investing real estate is based on cost, and the follow-up valuation based on the cost model. Its depreciation or amortization will be allocated in the same way as the fixed assets and the intangible assets. In the event that there are signs of devaluation on the balance sheet date, the devaluation reserve will be allocated based on the difference between its book value and its recoverable amount.

14. Fixed Assets

(1) Conditions of Recognition, Measurement and Depreciation Method

The fixed assets refer to tangible assets with significant unit values and their useful lives more than 1 accounting year, which are held for production of commodity, supply of labour service, lease or operation management.

The fixed assets are booked at their actual costs at the time of acquisition, and are depreciated on a yearly average basis starting from the next month after reaching their predetermined usable state.

(2) Depreciation Method for Different Types of Fixed Assets

Classification of Fixed Assets Depreciation Term Rate of Residual Value (%) Annual Depreciation Rate (year) (%) Housing and Buildings 8-35 0-3 12.50-2.86 General Equipment 4-18 0-3 25.00-5.56 Special Equipment 7-18 0-3 14.29-5.56 Vehicles 6 0-3 16.67-16.17 Other Equipment 5-9 0-3 20.00-11.11 Decoration of Fixed Assets 5 0 20.00

(3) Devaluation Test Method and Devaluation Reserve Allocation Method

On the balance sheet date, if there is sign of devaluation, the devaluation reserve

for the fixed assets will be allocated based on the difference between their book values and their recoverable amount.

15. Construction in Progress

(1) The construction in progress is identified when the economic benefits in connection therewith will very likely flow into the enterprise and the cost thereof can be reliably measured. The construction in progress will be accounted for based on its actual cost incurred before reaching readiness for use.

(2) When reaching readiness for use, the actual cost of the construction in progress is transferred into the fixed assets. If reaching readiness for use but final accounting upon completion not yet done, it will be transferred into the fixed assets per its estimated value. Adjustment will be made after the actual value is determined after the final accounting. Yet the allocated depreciation will not be adjusted.

(3) On the balance sheet date, if there is sign of devaluation, the devaluation reserve for the construction in progress will be allocated based on the difference between its book value and its recoverable amount.

16. Borrowing Expenses

(1) Recognition Principles for capitalization of borrowing expenses

The borrowing expenses meeting conditions of capitalization for asset purchase or production will be capitalized and stated as cost of assets; other borrowing expenses will be recognized as expenses at the time of occurrence and stated as current gains and losses.

(2) Borrowing expenses capitalization period

a. When the borrowing expenses meet the following conditions at the same time, the capitalization begins: (i) the expenditure has occurred; (ii) the borrowing expenses have occurred; (iii) the activities to bring the fixed assets to readiness for use or sale have started. b. In case the purchase/building of fixed assets is interrupted for more than 3 consecutive months, the capitalization of borrowing expenses will be suspended with the borrowing expenses being recognized as current expenses until the asset purchase/building activities are resumed. c. When the purchased fixed assets reach readiness for use or sale, the capitalization terminates.

(3) Amount of borrowing expense capitalization

In case of borrowing special loan for purchase or production of assets meeting capitalization conditions, the actual interest accrued (including amortization of discount or premium determined at the actual interest rate) less interest income on deposit of unused capital or investment returns on short-term investment will be the amount of capitalization; in case of borrowing ordinary loan for purchase or production of assets meeting capitalization conditions, the amount of interest capitalization will be computed by multiplying the weighted average asset expenditures and the capitalization rate of ordinary loan (weighted average interest rate).

17. Intangible Assets

(1) The intangible assets include land use right, patent right, non-patent right, etc. which are initially stated at the actual cost.

(2) The intangible assets with limited life will be reasonably amortized over its useful life in the manner that the economic benefits in connection with the intangible assets are foreseeably realized, or amortized on straight line basis in case of no foreseeable realization manner as follows:

Item Term of Amortization (year)

Land Use Right Based on the term of Land Use Certificate

Computer Software 5

(3) On the balance sheet date, for the intangible assets with certain useful lives, the devaluation reserve for them will be allocated based on their book values and their recoverable amount; for the intangible assets with uncertain useful lives or not yet reaching usable state, they are subject to annual devaluation test, regardless of whether there are signs of devaluation.

(4) The outlays for internal research and development projects during the research stage are stated as current gains and losses at the time of occurrence. The outlays for internal research and development projects during the development stage are identified as intangible assets if meeting the following conditions simultaneously: (a) the use or sale of the intangible asset is technically feasible; (b) there is intention to complete, use and sell the intangible asset; (c) the manner that the intangible asset makes economic benefits can verify that the intangible asset or the product produced with the intangible asset have a market, or that the intangible asset for internal use has utility; (d) there are sufficient technical, financial and other support to enable completion of the development, use or sale of the intangible asset; (e) the outlays incurred during the development stage in

connection with the intangible asset can be reliably measured.

18．Long-term Deferred Expenses

The long-term deferred expenses are stated at their actual costs and amortized over their beneficiary periods or specified terms. If the long-term deferred expenses cannot benefit the future accounting periods, the residual values of the deferred expenses not yet amortized will be wholly transferred to the current gains and losses.

19. Income

(1) Sale of Commodities

The income from sale of commodities is recognized when meeting the following conditions: (i) the significant risk and the remuneration in connection with the ownership of the commodity have transferred to the buyer; (ii) the Company no longer has ownership-related custody and control of the commodity; (iii) the amount of the received income can be reliably measured; (iv) the related economic benefit is very likely to flow in; and (v) the related cost that have occurred or is about to occur can be measured reliably.

(2) Supply of Labour Service

For the labour service whose transaction result can be reliably estimated (i.e. reaching a state whereby the received income can be reliably measured, the related economic benefit is very likely to flow in, the transaction progress can be reliably measured, and the cost of transaction having occurred or about to occur can be reliably measured) on the balance sheet date, the income from the labour service will be recognized based on the percentage of progress completion to be determined as per the percentage of the incurred cost out of the estimated total cost. For the labour service whose transaction result cannot be reliably estimated on the balance sheet date, in the event that the incurred labour cost can be presumably reimbursed, the income from the labour service will be recognized based on the incurred labour cost, and the same amount of cost will be settled and transferred; in the event that the incurred labour cost cannot be presumably reimbursed, the cost will be stated as current gains and losses with no labour service income recognized.

(3) Assignment of Asset Use Right

The income from assignment of asset use right is recognized when the related economic benefit can flow in and the amount of income can be reliably measured.

Interest income is computed based on the time of other companies using the Company’s cash and the actual interest rate; the income from the usage fees is computed based on the charging time and method specified in related contract or agreement.

20. Government Subsidy

(1) Government subsidy includes asset-related government subsidy and income-related government subsidy. (2) If the government subsidy is in the form of monetary assets, it will be measured based on its received or receivable amount; if the government subsidy is in the form of non-monetary assets, it will be measured based on its fair value; in case the fair value is unable to be obtained, it will be measured based on its nominal value. (3) The asset-related government subsidy is recognized as deferred income; if evenly distributed in the useful life of the asset, it will be stated as current gains and losses. The income-related government subsidy, if used for compensating for relevant expenses or losses in later periods, will be recognized as deferred income; during the period of recognition of relevant expenses, it will be stated as current gains and losses; if used for compensating for relevant expenses or losses, it will be directly stated as current gains and losses.

21. Deferred Income Tax Asset/Deferred Income Tax Liability

(1) Based on the difference between the book value of asset and liability and the taxation base (the difference between the taxation base and the book value for items not recognized as asset and liability whose taxation base can be determined per the Tax Law), the deferred income tax asset or liability will be calculated using the applicable tax rate during the anticipated time to recover the asset or repay the liability.

(2) The recognition of deferred income tax asset is limited to the taxable income deducting deductible temporary variance. On the balance sheet date, if there is firm evidence indicating sufficient taxable income can be used to deduct deductible temporary variance, the deferred income tax asset not recognized in previous accounting period will be recognized.

(3) On the balance sheet date, the book value of the deferred income tax will be re-checked. If it is highly likely not to be able to obtain sufficient taxable income to deduct the benefit of the deferred income tax, the book value of the deferred income tax will be reduced; otherwise, the reduced amount is reversed.

(4) The Company’s current income tax and deferred income tax will be treated as income tax expense or income and stated as current gains and losses, but exclude

the income tax in the following cases: (i) enterprise consolidation; (ii) the transaction or event directly recognized in the shareholders’ equity

III. Taxation

Tax Type Taxation Basis Tax Rate

Sale of commodity or supply of VAT 17%, 13% taxable labour service

Service industry per 5%, building and Operating tax Business volume taxable installation industry per 3%

If based on property price, it is to be taxed per 1.2% of the remainder of Property tax the original property value deducting 1.2%, 12% 30%; if based on property rent, it is to be taxed per 12% of the rent.

Urban Construction Turnover tax payable 7%, 5% & Maintenance Tax

Education Surtax Turnover tax payable 3%

Local Education Turnover tax payable 2% Surtax

Corporate Income Income taxable 25% Tax

IV. Consolidation of Enterprises and Consolidated Financial Statements

About Subsidiaries

1. Subsidiaries Acquired by Establishment or Investment Full Name of Type of Registered Address Type of Business Registered Capital Scope of Business Subsidiary Subsidiary (RMB million yuan) Zhejiang Zheneng Holding Fucheng Building, Coal-fired power 1,096 Production and sale of Changxing Power subsidiary North of Central generation electricity Generation Co. Ltd Square, Huzhou City (continued) Name of Code of Actual Investment Balance of Other Shareholding Percentage Whether Within Enterprise Organization Up to Current Items Making Net Percentage of Voting Scope of Period End Investment in (%) Share (%) Consolidated (RMB yuan) Subsidiary Financial Statements (RMB yuan) Zhejiang Zheneng 73033805-4 712,400,000.00 65 65 Yes Changxing Power Generation Co. Ltd (continued) Full Name of Minority Shareholders’ Amount in minority Residual amount form parent company owner’s equity

Subsidiary Equity shareholders’ equity used to deducting its subsidiary’s minority shareholders’ share offset minority shareholders’ of current loss in excess of minority shareholders’ equity share of the subsidiary’s beginning owner’s equity Zhejiang Zheneng 407,738,134.48 Changxing Power Generation Co. Ltd

2. Subsidiary Acquired through Consolidation of an Enterprise Not Controlled by the Same Shareholder Full Name of Type of Registered Address Type of Registered Capital Scope of Business Subsidiary Subsidiary Business (RMB million yuan) Taizhou Haitian Wholly-owned 1 Jiandian Road, Project 25 Installation, repair, operation and Electric Power subsidiary Qiansuo Street, construction maintenance of power equipment Project Co. Jiaojiang District, and electrical equipment; testing Taizhou City of safety tools and motorized tools Taizhou Holding Xiapu, Duqiao Town, Service 10 Wholesale and retail of steam heat Lianyuan Heat subsidiary Linhai City industry supply equipment, electrical Supply Co. Ltd equipment and chemical equipment; Installation and repair of electrical machinery, piping and hydroelectric equipment Zhejiang Wholly-owned Tanjiadai Village, Project 6 Electrical facility installation Hualong Power subsidiary Linpu Town, construction (Grade 4), repair (Grade 4) and Project Co. Ltd Xiaoshan District testing (Grade 5); installation, renovation and repair of lifting equipment, boilers and pressure piping; power project consulting and technical service Zhejiang Holding No. 1-4, Building 4, Service 31 Heat supply service; investment Changxing subsidiary of Xinduhui District, Industry [Note] and development of cogeneration Southeast Heat holding Zhicheng Town, project; installation and Supply Co. Ltd subsidiary Changxing County maintenance of heat supply equipment; laying, repair and maintenance of pressure piping; ad space rent; labour service supply (continued) Full Name of Code of Actual Investment Balance of Other Items Shareholding Percentage Whether Within Enterprise Organization Up to Current Making Net Investment Percentage of Voting Scope of Period End in Subsidiary (%) Share (%) Consolidated (RMB yuan) (RMB yuan) Financial Statements Taizhou Haitian Yes Electric Power 73528709-X 29,088,414.80 100 100 Project Co. Taizhou Lianyuan 75116149-7 18,416,877.81 95 95 Yes Heat Supply Co. Ltd Zhejiang Hualong Yes Power Project Co. 78530326-2 6,566,515.21 100 100 Ltd Zhejiang Changxing Yes Southeast Heat 74901933-6 28,378,852.61 85 85 Supply Co. Ltd (continued) Full Name of Amount in minority Residual amount form parent company owner’s equity Subsidiary Minority shareholders’ equity used to deducting its subsidiary’s minority shareholders’ share Shareholders’ Equity offset minority shareholders’ of current loss in excess of minority shareholders’ equity share of the subsidiary’s beginning owner’s equity

Taizhou Haitian Electric Power Project Co.

Taizhou Lianyuan Heat 1,438,972.58 Supply Co. Ltd

Zhejiang Hualong

Power Project Co. Ltd

Zhejiang Changxing 5,432,799.52 Southeast Heat Supply Co. Ltd [Note]: With its original registered capital amounting to RMB 10 million yuan, the registered capital of this company was increased to RMB 31 million yuan in the current period.

V. Notes to the Consolidated Financial Statements

(I) Notes to the Consolidated Balance Sheet 1. Monetary Assets

(1) Details Ending Amount Beginning Amount Item Amount in Exchange rate Equivalent Amount in Exchange rate Equivalent to RMB Original Currency to RMB yuan Original Currency yuan Cash on hand RMB 21,994.58 16,998.74 Subtotal 21,994.58 16,998.74 Cash in bank RMB 492,512,490.43 612,137,974.81 US dollars 36,064.60 6.6227 238,845.03 1,941,990.91 6.8282 13,260,302.33 Euros 300,634.28 8.8065 2,647,535.79 Subtotal 495,398,871.25 625,398,277.14 Other monetary assets RMB 1,009,961.10 864,073.75 Subtotal 1,009,961.10 864,073.75 Total 496,430,826.93 626,279,349.63 (2) Other note: the ending cash in bank included the cash deposited at ZEFL amounting to RMB 403,056,298.65 yuan. Refer to Section VI-(II)-4-(1) of this Notes to Financial Statements herein for details.

2. Bills Receivable

Ending Amount Beginning Amount Category Book balance Allowance for bad Book value Book balance Allowance for bad Book value debt debt Draft accepted by 8,504,853.47 8,504,853.47 4,870,001.00 4,870,001.00 bank Total 8,504,853.47 8,504,853.47 4,870,001.00 4,870,001.00

3. Accounts Receivable (1) Details

1) Category Details

Ending Amount Beginning Amount Book balance Allowance for bad debt Book balance Allowance for bad debt Category Percentage Percentage Percentage Amount Amount Amount Percentage Amount (%) (%) (%) (%) Receivable with single significant value and single allowance for bad debt Portfolio based on account age 643,734,702.56 100.00 4,742,155.25 0.74 514,418,362.61 100.00 2,987,661.11 0.58 analysis Receivable with single insignificant value but single allowance for bad debt

Total 643,734,702.56 100.00 4,742,155.25 0.74 514,418,362.61 100.00 2,987,661.11 0.58

2) Account receivables with allocation of allowance for bad debt based on account age analysis

Ending Amount Beginning Amount Book balance Book balance Account Age Allowance for Percentage Percentage Allowance for bad debt Amount Amount (%) bad debt (%) Within 1 year 636,292,936.66 98.84 3,181,464.68 512,287,237.97 99.59 2,561,436.18 1~2 years 7,200,641.26 1.12 1,440,128.25 2,131,124.64 0.41 426,224.93 2~3 years 241,124.64 0.04 120,562.32 Total 643,734,702.56 100.00 4,742,155.25 514,418,362.61 100.00 2,987,661.11

(2) There were no accounts due from the shareholders holding 5% and above of the Company’s voting shares. (3) Accounts receivable from top 5 debtors

Percentage Out of Relationship with the Name of Organization Book balance Account Age Balance of Accounts Company Receivable (%) ZPEPC Non-related party 566,657,792.04 Within 1 year 88.03 Wenzhou Gas Turbine Power Non-related party 20,735,600.00 [Note] 3.22 Generation Company Ltd ZJPGC Related party 11,792,878.11 Within 1 year 1.83 Zhejiang Zheneng Beilun Power Related party 11,484,321.03 Within 1 year 1.78 Generation Co. Ltd Zhejiang Zheneng Yueqing Power Related party 7,870,543.83 Within 1 year 1.22 Generation Co. Ltd Subtotal 618,541,135.01 96.08 [Note]: of which the balance with account age less than 1 year amounted to RMB 15,955,600.00 yuan, the balance with account age between 1 and 2 years amounted to RMB 4,780,000.00 yuan.

(4) For details of other accounts receivable from related parties, refer to Section VI-(III)-1 of this Notes to Financial Statements herein

4. Prepayments

(1) Classified by account age Ending Amount Beginning Amount Account Book balance Percentage Allowance for Book value Book balance Percentage Allowance Book value age (%) bad debt (%) for bad debt Within 1 98.20 7,850,534.92 91.95 7,850,534.92 year 33,215,928.01 33,215,928.01 1~2 years 258,100.00 0.76 258,100.00 337,459.11 3.95 337,459.11 2~3 years 234.00 0.01 234.00 350,000.00 4.10 350,000.00 Above 3 1.03 years 350,000.00 350,000.00 Total 33,824,262.01 100.00 33,824,262.01 8,537,994.03 100.00 8,537,994.03

(2) Top 5 companies with largest amount of prepayment

Relationship with the Account Name of Company Ending Amount Reason for Non Settlement Company Age Zhejiang Provincial Thermal Power Non-related Party Within 1 Prepayment for heat supply 22,450,000.00 Construction Co. year renovation project expenses Hangzhou Haitai Goods Company Ltd Non-related Party Within 1 Prepayment for heat supply 2,157,420.10 year renovation equipment cost Jiangsu Yuheng Equipment Assembly Non-related Party Within 1 Prepayment for project 1,794,262.12 Engineering Co. Ltd year expenses ZPNGDC Related Party Within 1 Prepayment for purchase of 1,694,074.65 year natural gas Zhejiang Dongfa Environmental Related Party Within 1 Prepayment for heat supply 1,071,000.00 Protection Project Co. Ltd year renovation equipment cost Subtotal 29,166,756.87

(3) There were no prepayment to main shareholders holding 5% and above of the Company’s voting shares.

5. Dividends Receivable Details Decrease in Whether Increase in Ending Reason for failure Item Beginning Amount Current Devaluation Current Period Amount to recover Period Occurred With account age above 199,668.00 199,668.00 1 year Including: Taizhou The counterpart 199,668.00 199,668.00 [Note] Phoenix Hotel Co. Ltd companies are

financially strained Total 199,668.00 199,668.00 [Note]: The dividends receivable from Taizhou Phoenix Hotel Co. amount to RMB 998,340.00 yuan, with the account age more than 3 years. As Phoenix Hotel is financially strained, this amount cannot be recovered by the Company. The allowance for bad debt amounting to RMB 798,672.00 yuan was allocated for such dividends receivable based on the method described in Section II herein.

6. Other receivables (1) Details 1) Category Details Ending Amount Beginning Amount Book balance Allowance for bad debt Book balance Allowance for bad debt Category Percent Percent Percent Percent Amount Amount Amount Amount (%) (%) (%) (%) Receivable with single significant value and single allowance for bad debt Portfolio based on account 15,474,204.83 100.00 236,308.57 1.53 19,179,657.84 100.00 3,326,089.63 17.34 age analysis Receivable with single insignificant value but single allowance for bad debt Total 15,474,204.83 100.00 236,308.57 1.53 19,179,657.84 100.00 3,326,089.63 17.34

2) Account receivables with allocation of allowance for bad debt based on account age analysis

Ending Amount Beginning Amount Book balance Book balance Account Age Allowance for Allowance for Percentage Percentage Amount bad debt Amount bad debt (%) (%) Within 1 year 14,746,217.41 95.29 73,731.09 7,807,078.82 40.71 39,035.39 1~2 years 671,387.42 4.34 134,277.48 8,077,029.11 42.11 1,615,405.82 2~3 years 56,600.00 0.37 28,300.00 3,215,971.70 16.77 1,607,985.85 Above 3 years 79,578.21 0.41 63,662.57 Total 15,474,204.83 100.00 236,308.57 19,179,657.84 100.00 3,326,089.63

(2) There were no accounts due from main shareholders holding 5% and above of the Company’s voting shares.

(3) Top 5 debtors of other receivables

[Note] Huaizhe Coal & Electric Co. Ltd Related party 897,590.00 5.80 Quality deposit

Housing Fund Management Within 1 Housing fund and Non-related party 855,081.89 5.53 Centre year maintenance fund Compensation for marine beacon Within 1 Compensation Non-related party 634,000.00 4.10 year receivable Zhejiang Tianyin Management Within 1 Bid bond Related party 460,000.00 2.97 Consulting Co. Ltd year Subtotal 13,298,020.50 85.94 [Note]: of which the balance with account age less than 1 year amounted to RMB 611,940.00 yuan, the balance with account age between 1 and 2 years amounted to RMB 285,650.00 yuan.

(4) For details of other receivables from related parties, refer to Section VI-(III)-1 of this Notes to Financial Statements herein

7. Inventories

Ending Amount Beginning Amount Item Book Devalua- Book Value Book Devalua- Book Balance tion Reserve Balance tion Reserve Value Raw materials 121,152,853.91 121,152,853.91 119,269,539.60 119,269,539.60 Fuel 75,496,165.62 75,496,165.62 32,864,378.53 32,864,378.53 Low-cost consumables 169,314.70 169,314.70 67,389.49 67,389.49 Total 196,818,334.23 196,818,334.23 152,201,307.62 152,201,307.62

8. Available-for-sale Financial Assets

(1) Standing of available-for-sale financial assets Item Ending Amount Beginning Amount Available-for-sale equity 3,448,404,024.76 3,806,841,809.50 instrument Total 3,448,404,024.76 3,806,841,809.50

(2) Other notes 1) Available-for-sale equity instruments—composition of ending amount of long term equity investment

Name of Share Type of Number of Shares Shareholding Investment Cost Changes in Fair Value Ending Amount Ending Share Ratio (%) Market Price China Merchants Listed shares 60,616,816.00 0.2809 141,938,726.39 634,562,686.57 776,501,412.96 12.81 Bank Bank of Listed shares 168,166,535.00 0.2989 376,546,805.50 545,005,806.30 921,552,611.80 5.48 Communication Industrial Bank Listed shares 43,800,000.00 0.7309 206,590,000.00 846,800,000.00 1,053,390,000.00 24.05 China Everbright Listed shares 176,000,000.00 0.4353 312,000,000.00 384,960,000.00 696,960,000.00 3.96

Bank Subtotal 1,037,075,531.89 2,411,328,492.87 3,448,404,024.76 [Note]: The ending market price is the closing price of this share on Shanghai Stock Exchange on 31 December 2010.

2) Available-for-sale equity instruments—increase/decrease in long term equity investment in current period

Increase/Decrease Increase/Decrease in Other Name of Share Beginning Amount in Cost in Current Fair Value in Current Increase/Decrease in Ending Amount Period Period Current Period China Merchants Bank 968,259,760.00 61,716,501.60 -253,474,848.64 776,501,412.96 Bank of Communication 1,367,267,049.50 98,706,442.50 -544,420,880.20 921,552,611.80 Industrial Bank 1,471,315,000.00 131,400,000.00 -549,325,000.00 1,053,390,000.00 China Everbright Bank 312,000,000.00 384,960,000.00 696,960,000.00 Subtotal 3,806,841,809.50 603,822,944.10 -962,260,728.84 3,448,404,024.76

9. Investment in Affiliated Enterprises Unit: RMB million yuan Shareholding Voting Right Ending Total Ending Total Ending Total Current Total Current Net Investee Ratio (%) Ratio (%) Assets Liabilities Net Assets Operating Income Profit ZJPGC 24 24 10,140.2469 6,581.8892 3,558.3577 5,252.7316 501.7678 ZBHGC 25 25 6,347.1399 4,720.4436 1,626.6963 811.9315 282.1890 ZLPGC 25 25 7,118.5701 5,094.9924 2,023.5777 5,275.7392 234.1503 Anhui Xingwan Mining 30 30 48.7933 0.1717 48.6216 0.9169 2.1106 Co. Ltd Zhejiang Zheneng 25 25 156.4354 2.8601 153.5753 28.6921 -2.9381 Transport & Trade Co. Ltd Zhejiang Changxing 42.05 42.05 215.1806 71.2478 143.9328 61.7621 3.8432 Jietong Logistics Co. Ltd Changxing Yuanda Energy 20 20 9.5445 4.7773 4.7672 -0.2221 Service Co. Ltd

10. Long-term Equity Investment Accounting Investee Company Investment Cost Beginning Amount Increase/Decrease Ending Amount Method ZJPGC Based on 663,645,600.00 795,413,202.82 58,592,650.29 854,005,853.11 equity Based on ZBHGC 378,600,174.16 273,733,860.48 134,440,299.28 408,174,159.76 equity Based on ZLPGC 411,375,000.00 487,421,989.29 -724,482.25 486,697,507.04 equity Anhui Xingwan Mining Co. Based on 13,500,000.00 13,953,311.96 633,165.02 14,586,476.98 Ltd equity Zhejiang Zheneng Transport Based on 37,500,000.00 41,841,126.22 -3,447,320.07 38,393,806.15 & Trade Co. Ltd equity Zhejiang Changxing Jietong Based on 54,967,343.99 58,907,703.19 1,616,070.78 60,523,773.97 Logistics Co. Ltd equity Changxing Yuanda Energy Based on 1,000,000.00 197,866.78 755,589.83 953,456.61

Service Co. Ltd equity Based on China Everbright Bank Co. 312,000,000.00 -312,000,000.00 cost China Southern Securities Based on 220,000,000.00 Co. Ltd cost Based on ZPNGDC 113,000,000.00 113,000,000.00 113,000,000.00 cost Zhejiang Venture Investment Based on 10,571,428.57 10,571,428.57 10,571,428.57 Group Co. Ltd cost Taizhou Phoenix Hotel Co. Based on 5,000,000.00 5,000,000.00 5,000,000.00 Ltd cost Total 1,909,159,546.72 2,112,040,489.31 -120,134,027.12 1,991,906,462.19 (Continued) Note on Discrepancy Devaluation Cash Dividend Shareholding Voting Right between Shareholding Devaluation Reserve Investee Company in Current ratio (%) Ratio (%) Ratio and Voting Right Reserve Allocated in Period Ratio Current Period ZJPGC 24 24 143,427,219.83 ZBHGC 25 25 ZLPGC 25 25 59,629,312.30 Anhui Xingwan Mining Co. 30 30 Ltd Zhejiang Zheneng Transport 25 25 2,712,800.00 & Trade Co. Ltd Zhejiang Changxing Jietong 42.05 42.05 Logistics Co. Ltd Changxing Yuanda Energy 20 20 Service Co. Ltd China Everbright Bank Co. 7,185,261.37 China Southern Securities 5.78 5.78 220,000,000.00 Co. Ltd ZPNGDC 10 10 Zhejiang Venture Investment 11 11 3,740,000.00 Group Co. Ltd Taizhou Phoenix Hotel Co. 14.28 14.28 Ltd Total 220,000,000.00 216,694,593.50

11. Investing Real Estate Beginning Increase in Decrease in Item Ending Amount Amount current period current period 1) Subtotal of original book value 31,234,888.00 31,234,888.00 Housing and building 31,234,888.00 31,234,888.00 2) Subtotal of accumulated depreciation 8,576,016.18 1,041,162.96 9,617,179.14 Housing and building 8,576,016.18 1,041,162.96 9,617,179.14 3) Total book value 22,658,871.82 1,041,162.96 21,617,708.86 Housing and building 22,658,871.82 1,041,162.96 21,617,708.86 The depreciation in the current period amounted to RMB 1,041,162.96 yuan.

12. Fixed Assets

(1) Details

Category Beginning Amount Increase in Current Period Decrease in Ending Amount Current Period 1) Subtotal of Original 15,993,127,655.70 165,753,199.80 904,618,270.73 15,254,262,584.77 Book Value Housing and Buildings 3,665,353,063.49 1,450,181.32 151,704,533.34 3,515,098,711.47 General Equipment 1,373,519,641.08 91,318,785.68 5,365,557.71 1,459,472,869.05 Special Equipment 10,813,028,129.71 66,958,729.07 734,083,127.34 10,145,903,731.44 Vehicles 75,917,973.62 3,812,134.02 4,363,404.24 75,366,703.40 Other Equipment 55,101,249.80 2,213,369.71 9,101,648.10 48,212,971.41 Decoration of Fixed Assets 10,207,598.00 10,207,598.00 Transferred Allocated in in current current period Period 2) Subtotal of Accumulated 7,096,530,556.84 909,620,987.53 656,179,253.78 7,349,972,290.59 Depreciation Housing and Buildings 1,571,355,087.44 151,308,086.46 131,133,963.03 1,591,529,210.87 General Equipment 766,780,172.06 106,453,935.60 5,021,133.16 868,212,974.50 Special Equipment 4,663,535,799.97 639,580,068.19 513,062,752.03 4,790,053,116.13 Vehicles 55,589,384.66 5,752,689.53 3,281,484.44 58,060,589.75 Other Equipment 32,465,047.42 4,459,447.93 3,679,921.12 33,244,574.23 Decoration of Fixed Assets 6,805,065.29 2,066,759.82 8,871,825.11 3) Subtotal of Net Book 8,896,597,098.86 —— —— 7,904,290,294.18 Value Housing and Buildings 2,093,997,976.05 —— —— 1,923,569,500.60 General Equipment 606,739,469.02 —— —— 591,259,894.55 Special Equipment 6,149,492,329.74 —— —— 5,355,850,615.31 Vehicles 20,328,588.96 —— —— 17,306,113.65 Other Equipment 22,636,202.38 —— —— 14,968,397.18 Decoration of Fixed Assets 3,402,532.71 1,335,772.89 4) Subtotal of Devaluation 146,186,400.00 —— —— 48,505,100.00 Reserve Housing and Buildings 49,873,239.19 —— —— 43,171,833.37 General Equipment 2,263,986.35 —— —— 2,216,390.49 Special Equipment 90,938,838.29 —— —— 6,539.97 Vehicles 1,318,881.55 —— —— 1,318,881.55 Other Equipment 1,791,454.62 —— —— 1,791,454.62 Decoration of Fixed Assets 5) Total Book Value 8,750,410,698.86 —— —— 7,855,785,194.18 Housing and Buildings 2,044,124,736.86 —— —— 1,880,397,667.23 General Equipment 604,475,482.67 —— —— 589,043,504.06 Special Equipment 6,058,553,491.45 —— —— 5,355,844,075.34 Vehicles 19,009,707.41 —— —— 15,987,232.10 Other Equipment 20,844,747.76 —— —— 13,176,942.56 Decoration of Fixed Assets 3,402,532.71 1,335,772.89

The depreciation in the current period amounted to RMB 909,620,987.53 yuan; the construction in progress transferred into the original cost of fixed assets in the current period amounted to RMB 80,825,400.68 yuan. Other notes: The increase in the original book value of the fixed assets in the current period

included project final accounting variance adjustment of RMB 80,270,232.18 yuan. The decrease in the original book value of the fixed assets in the current period included project final accounting variance adjustment of RMB 132,437,830.93 yuan.

(2) Fixed assets leased out Item Book Value General equipment 250,124.13 Special equipment 1,650,318.13 Subtotal 1,900,442.26

(3) Fixed assets with property certificates not yet obtained

Item Reason for property certificate not Anticipated time of property yet obtained certificate acquisition

Housing and buildings of Taizhou Formalities not yet handled Not yet clear Power Plant with original book value of RMB 218,763,237.15 yuan

Housing and buildings of Taizhou Formalities relating to property Not yet clear Power Plant with original worth of transfer not yet completed RMB 129,158,109.72 yuan

Housing and buildings of Xiaoshan Formalities not yet handled Not yet clear Power Plant with original book value of RMB 140,392,015.60 yuan

313.2736 mu of land use right Formalities not yet handled Not yet clear requisitioned for house of Changxing Power Plant Phase I

30.236 mu of land use right Formalities not yet handled Not yet clear requisitioned for house of Changxing Power Plant Phase II

Housing and buildings of Formalities not yet handled Not yet clear Changxing Power Plant with original book value of RMB 500,138,064.78 yuan

13. Construction in Progress (1) Details Ending Amount Beginning Amount Name of project Book Balance Devaluation Devaluation Book value Book Balance Book value reserve reserve Taizhou Power Plant 8,298,129.91 8,298,129.91 4,735,433.07 4,735,433.07

Xiaoshan Power Plant 10,274,338.48 10,274,338.48 2,424,231.24 2,424,231.24 Projects related to subsidiaries 8,970,424.26 8,970,424.26 3,717,105.68 3,717,105.68 Total 27,542,892.65 27,542,892.65 10,876,769.99 10,876,769.99

(2) Increase/decrease in construction in progress 1) Projects in connection with Taizhou Power Plant Ratio of Budget Beginning Increase in Transferred to Project Description Other Decrease Investment Amount Current Period Fixed Assets To Budget (%) Renovation of 220 kV Switchyard of 6,980,000.00 2,600,667.22 3,355,518.75 5,956,185.97 85.33 Phase IV Capacity raising renovation for 220 1,680,000.00 1,497,592.73 1,497,592.73 89.14 kV tie line Unit 8 bypass control oil system valve 2,500,000.00 2,104,556.19 2,104,556.19 84.18 renovation Renovation of Oil Cooler #1 and #2 for 1,150,000.00 1,052,564.64 1,052,564.64 91.53 Unit 8 Coal mill primary air flow measurement 1,908,000.00 1,676,010.73 1,676,010.73 87.84 for Unit 9 and 10 Addition of 1 condenser for Unit 9 2,500,000.00 2,482,228.55 2,482,228.55 99.29 and 10 each Variable-frequency/ speed renovation of 3,500,000.00 3,168,483.73 3,168,483.73 90.53 condensate pumps for Unit 9 and 10 Variable-frequency/ speed renovation of 6,100,000.00 2,716,867.56 44.54 primary air fans for Unit 9 and 10 Purchase of precious instruments and 1,500,000.00 1,149,533.33 1,149,533.33 76.64 maintenance tools Other minor projects 2,134,765.85 23,197,339.42 19,750,842.92

Total 4,735,433.07 42,400,695.63 38,837,998.79

(Continued)

Project Accumulated Capitalized Annual Interest Source of Ending Project Description Progress Capitalized Interest in Current Capitalization Rate in Financing Amount (%) Interest Period Current Period (%) Renovation of 220 kV 100.00 Switchyard of Phase IV Capacity raising renovation 100.00 for 220 kV tie line

Unit 8 bypass control oil 100.00 system valve renovation Renovation of Oil Cooler #1 100.00 and #2 for Unit 8 Coal mill primary air flow measurement for Unit 9 and 100.00 10 Addition of 1 condenser for 100.00 Unit 9 and 10 each Variable-frequency/ speed renovation of condensate 100.00 pumps for Unit 9 and 10 Variable-frequency/ speed renovation of primary air 44.54 Other 2,716,867.56 fans for Unit 9 and 10 Purchase of precious instruments and maintenance 100.00 tools Other minor projects Other 5,581,262.35

Total 8,298,129.91

2) Projects in connection with Xiaoshan Power Plant Ratio of Budget Beginning Increase in Current Transferred to Other Project Description Investment Amount Period Fixed Assets Decrease to Budget (%) Heat supply renovation in power 50,000,000.00 1,190,547.18 8,157,028.90 18.70 plant Other minor projects 1,233,684.06 12,766,846.58 12,810,725.51 263,042.73

Subtotal 2,424,231.24 20,923,875.48 12,810,725.51 263,042.73

(Continued)

Project Accumulated Capitalized Annual Interest Source of Ending Project Description Progress Capitalized Interest in Current Capitalization Rate in Financing Amount (%) Interest Period Current Period (%) Heat supply renovation 18.70 Other 9,347,576.08 in power plant

Other minor projects Other 926,762.40

Subtotal 10,274,338.48

3) Projects in connection with subsidiaries Ratio of Budget Beginning Increase in Transferred to Project Description Other Decrease Investment Amount Current Period Fixed Assets to Budget (%) Technical renovation of 192,307.69 23,379,748.83 23,234,153.09 Changxing Power Plant

Southeast heat supply 1,422,770.43 8,176,808.91 5,279,368.60 piping project Lianyuan heat supply 2,102,027.56 2,873,437.22 663,154.69 piping project

Subtotal 3,717,105.68 34,429,994.96 29,176,676.38

(Continued)

Project Accumulated Capitalized Annual Interest Source of Ending Project Description Progress Capitalized Interest in Current Capitalization Rate in Financing Amount (%) Interest Period Current Period (%) Technical renovation of Other 337,903.43 Changxing Power Plant Southeast heat supply Other 4,320,210.74 piping project Lianyuan heat supply Other 4,312,310.09 piping project

Subtotal Other 8,970,424.26

14. Project Equipment & Materials Increase in Current Decrease in Current Item Beginning Amount Ending Amount Period Period Special materials 1,091,168.40 4,055,272.13 1,124,588.40 4,021,852.13 Special equipment 2,525,378.00 2,525,378.00 Total 1,091,168.40 6,580,650.13 3,649,966.40 4,021,852.13

15. Disposal of Fixed Assets

Beginning Item Ending Amount Reason for Disposal Amount Unit 1-6 of Taizhou Power Plant Scrapped assets of 19,181,316.10 13,550,665.72 were decommissioned and their Unit 1~6 assets were scrapped. Total 19,181,316.10 13,550,665.72

16. Intangible Assets (1) Details Increase during this Decrease during this Item Beginning Amount Ending Amount period period (a) Subtotal of original book 346,937,485.72 17,143,613.13 364,081,098.85 value

Land use right of Taizhou 183,318,704.68 183,318,704.68 Power Plant Land use right of Xiaoshan 133,430,240.74 8,926,703.01 142,356,943.75 Power Plant 6,463,440.00 6,463,440.00 Land use right of Changxing 30,188,540.30 1,753,470.12 31,942,010.42 Computer software (b) Subtotal of accumulated 89,609,376.93 10,966,378.85 100,575,755.78 amortization Land use right of Taizhou 45,315,003.91 3,678,647.16 48,993,651.07 Power Plant Land use right of Xiaoshan 19,952,957.07 4,102,656.13 24,055,613.20 Power Plant 29,062.00 29,062.00 Land use right of Changxing 24,341,415.95 3,156,013.56 27,497,429.51 Computer software (c) Total book values 257,328,108.79 263,505,343.07 Land use right of Taizhou 138,003,700.77 134,325,053.61 Power Plant Land use right of Xiaoshan 113,477,283.67 118,301,330.55 Power Plant 6,434,378.00 Land use right of Changxing Computer software 5,847,124.35 4,444,580.91

The amortization in the current period amounted to RMB 10,966,378.85 yuan.

(2) Note on intangible asset with property certificate not yet acquired The property certificate for 15,629 square meters of land use right (with an original book value of RMB 3,720,000.00 yuan and a current book value of RMB 3,713,800.00 yuan) bought by the Company’s subsidiary ZCPGC in the current period was being applied.

17. Long-term Deferred Expenses

Details Other decrease Reason for Beginning Increase in Amortization in Ending Item in current other decrease Amount current period current period Amount period Long-term operation & maintenance cost of 25,891,354.51 750,849.28 25,140,505.23 natural gas units Total 25,891,354.51 750,849.28 25,140,505.23

18. Deferred Income Tax Asset/Liability (1) Recognized deferred income tax asset/liability

Item Ending Amount Beginning Amount Deferred income tax asset Coverable loss 26,458,927.86 36,240,152.55 Performance-related wage not yet 18,981,563.83 27,349,181.47 paid out Asset devaluation reserve 72,993,206.41 72,556,916.82 Organization cost 155,962.20 311,924.40 Total 118,589,660.30 136,458,175.24 Deferred income tax liability Changes in fair value 602,832,123.21 843,397,305.42 Assets formed from tax-free income 9,157,291.67 10,698,750.00 Total 611,989,414.88 854,096,055.42

(2) Details of taxable variances and deductible variances

Item Amount Item of deductible variance Coverable loss 105,835,711.39 Performance-related wage not yet paid out 75,926,255.30 Asset devaluation reserve 291,972,825.67 Organization cost 623,848.80 Subtotal 474,358,641.16 Item of taxable variance Gains from changes in fair value 2,411,328,492.87 Assets formed from tax-free income 36,629,166.68 Subtotal 2,447,957,659.55

19. Details of Reserves for Asset Devaluation

Beginning Allocation in Decrease in Current Period Item Ending Amount Amount Current Period Reversal Write-off Allowance for bad debt 7,112,422.74 -1,335,286.92 5,777,135.82 Devaluation reserve for long-term 220,000,000.00 220,000,000.00 equity investment [Note 1] Fixed asset devaluation reserve 146,186,400.00 97,681,300.00 48,505,100.00 [Note 2] Total 373,298,822.74 -1,335,286.92 97,681,300.00 274,282,235.82

[Note 1]：The Company invested RMB 220 million yuan in China Southern Securities Co. Ltd (Southern Securities), holding 5.78% of its equity. Since Southern Securities has gone into liquidation on bankruptcy, as approved in the 28th meeting of the 4th Board of Directors dated 2 December 2008 and the 2nd extraordinary shareholders’ meeting for 2008 dated 19 December 2008, it was agreed to write off the long term investment in Southern Securities and

submit it to Zhejiang Provincial State-owned Assets Administrative Commission for approval on 10 December 2008. Up to 31 December 2010, the Company had not got the approval and thus retained the full amount of devaluation reserve for the long term equity investment. [Note 2]: The written-off amount of RMB 97,681,300.00 yuan of devaluation reserve for fixed assets was due to the outgoing transfer of the devaluation reserve for the fixed assets of Unit 1 and 6 of Taizou Power Plant, which was transferred into the disposal of fixed assets.

20. Short-term Borrowings

Item Ending Amount Beginning Amount Borrowing on pledge 5,000,000.00 Borrowing on credit 835,000,000.00 715,000,000.00 Total 840,000,000.00 715,000,000.00 In the ending amount of borrowings, RMB 400 million is the loan provided by ZEFL and RMB 400 million yuan is the loan that ZPEGC entrusted ZEFL to provide.

21. Accounts Payable (1) Details Item Ending Amount Beginning Amount Payment for materials 55,140,647.53 53,862,124.18 Payment for coal 226,115,416.99 237,015,035.38 Project expenses and equipment cost 79,679,315.02 82,654,026.54 Others 2,562,123.97 522,820.00 Total 363,497,503.51 374,054,006.10

(2) Accounts payable to the shareholders or related parties holding 5% and above of the Company’s voting shares

Name of Company Ending Amount Beginning Amount Zhejiang Zheneng Fuxing Fuel Co. Ltd 226,115,416.99 237,015,035.38 Zhejiang Tianda Environmental Protection Co. Ltd 555,336.29 Zhejiang Dongfa Environmental Protection Project Co. 525,000.00 1,103,958.00 Ltd Zhejiang Tianhong Goods Trading Co. Ltd 484,730.00 2,524,489.92 Shanghai Guoneng Logistics Co. Ltd 384,701.00 Zhejiang Zheneng Energy Technical Co. Ltd 280,000.00 Zhejiang Tiangong Zixin Sci-tech Project Co. Ltd 120,314.00 1,481,691.00 Zhejiang Tiandi Environmental Protection Project Co. 84,131.00

Ltd Subtotal 228,549,629.28 242,125,174.30

(3) Large-amount account payable with account age exceeding 1 year The accounts payable to Shanghai Electrical Machinery Group Co. Ltd at the period end amounting to RMB 54,607,302.00 yuan with an account age of more than 3 years is the residual payment for the generating equipment not yet settled.

22. Advance-received Accounts

(1) Details Item Ending Amount Beginning Amount Payment for advance-sold water coupons 202,583.99 Advance-received payment for material 70,000.00 70,000.00 Advance-received payment for heat 100,000.00 supply Advance-received payment for project 97,200.00 expenses Total 272,583.99 267,200.00 (2) The Company had no advance-received accounts from the shareholders or other related parties holding 5% and above of the Company’s voting shares.

22. Remuneration Payable to Employees (1) Details Item Beginning Increase in Decrease in Ending Amount Amount current period current period Wages, bonus and allowances 110,332,708.77 324,814,454.55 359,220,908.02 75,926,255.30 Employee welfare 48,061,275.09 48,061,275.09 Insurance premium 35,821,902.06 95,728,161.81 93,369,845.51 38,180,218.36 Including: medical insurance 32,484,707.80 27,397,133.39 24,488,241.92 35,393,599.27 premium Endowment insurance premium 3,826,790.24 43,300,858.13 44,044,985.29 3,082,663.08 Unemployment insurance 116,708.09 2,156,911.39 2,156,791.83 116,827.65 premium Work injury insurance premium 72,448.24 1,519,406.92 1,554,303.05 37,552.11 Birth insurance premium 33,173.85 1,530,809.98 1,583,397.38 -19,413.55 Enterprise annuities -711,926.16 19,823,042.00 19,542,126.04 -431,010.20 Housing reserve 1,926,665.30 44,757,699.78 44,727,180.78 1,957,184.30 Others 3,629,273.21 16,282,278.73 15,295,948.03 4,615,603.91 Total 151,710,549.34 529,643,869.96 560,675,157.43 120,679,261.87

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The ending amount of remuneration payable to employees had no amount of payment in arrears. The trade union fee amounted to RMB 1,360,001.20 yuan, and employee education fee amounted to RMB 3,255,602.71 yuan. (2) Note on performance-related wage to employees

The performance-related wage system was practiced in the Company. The amount of salary for 2010 was proposed by the Company’s de facto controller ZPEGC to the State-owned Assets Supervision & Administration Commission under Zhejiang provincial government for approval.

24. Tax Payable

Item Ending Amount Beginning Amount

VAT 35,755,567.74 45,218,150.00

Corporate income tax 27,751,972.39 34,645,528.96

Property tax 8,588,029.41 6,202,015.66

Land usage tax 6,396,785.56 4,676,511.52

Urban construction and maintenance tax 3,732,731.61 3,452,747.22

Education surtax 1,580,522.72 1,527,980.89

Withholding personal income tax 1,295,271.44 1,661,919.59

Local education surtax 1,182,702.28 1,191,438.71

Property deed tax 729,504.00

Special fund for water conservation construction 446,044.92 304,259.35

Stamp duty 332,526.24 857,243.25

Operating tax 103,368.80 32,495.70

Comprehensive dues 2,274.20 117,440.58

Total 87,897,301.31 99,887,731.43

25. Interest Payable

Item Ending Amount Beginning Amount

Interest on short-term loans 1,679,545.68 1,110,421.25

Interest on long-term loans due within 1 year 750,361.50 673,860.00

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Interest on long-term loans 4,701,462.90 5,750,774.70

Total 7,131,370.08 7,535,055.95

26. Dividends Payable Name of Organization Ending Amount Beginning Amount Taizhou Fengyuan Industrial Tade Development 8,031,700.55 8,031,700.55 Co. Ltd Zhejiang Chemical Material Medicine Base Linhai 1,412,693.25 1,412,693.25 Investment Development Co. Ltd Changxing County Economic & Technical 767,960.37 1,174,520.37 Development Corp. Taizhou Xinkaiyuan Building Materials 9,309,471.09 Development Co. Ltd Total 10,212,354.17 19,928,385.26

27. Other Payable (1) Details

Item Ending Amount Beginning Amount

Deposit and bond 23,064,563.71 70,090,795.51

Provisional sums for project 33,319,767.53 102,859,426.03

Others 16,283,259.46 15,590,974.05

Total 72,667,590.70 188,541,195.59

(2) Accounts payable to the shareholders or related parties holding 5% and above of the Company’s voting shares

Name of Company Ending Amount Beginning Amount Zhejiang Dongfa Environmental 360,852.00 359,802.00 Protection Project Co. Ltd Zhejiang Tiangong Zixin 142,396.00 1,270,752.20 Technological Project Co. Ltd Zhejiang Tiandi Environmental 4,415,200.36 Protection Project Co. Ltd Zhejiang Tianhong Goods Trading 11,850.00 Co. Ltd Shanghai Guoneng Logistics Co. Ltd 51,600.00 Subtotal 554,848.00 6,057,604.56

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(3) Description of other large-amount payable

Name of Organization Ending Amount Description Dongfang Turbine Co. Ltd under Equipment quality deposit Dongfang Electrical Group 12,000,000.00 payable but not yet paid

Subtotal 12,000,000.00

28. Non-current Liabilities Due Within One Year (1) Details Item Ending Amount Beginning Amount Long-term liabilities due within one year 480,000,000.00 360,000,000.00 Total 480,000,000.00 360,000,000.00 (2) Long-term liabilities due within one year

1) Details

Item Ending Amount Beginning Amount

Borrowing on pledge 290,000,000.00 230,000,000.00

Borrowing on credit 190,000,000.00 130,000,000.00

Subtotal 480,000,000.00 360,000,000.00

2) Top 5 largest amount long-term borrowings due within 1 year

Annual Interest Beginning Lender Start Date Maturity Date Currency Ending Amount Rate (%) Amount China Construction Bank 17-10-2002 [Note 1] RMB 5.5080 90,000,000.00 80,000,000.00 (CCB) Changxing Branch Industrial & Commercial 11-05-2004 10-05-2011 RMB 5.3460 55,000,000.00 Bank of China (ICBC) Changxing Branch 29-06-2204 31-12-2011 RMB 5.3460 45,000,000.00

China Agricultural Bank 08-04-2005 05-04-2011 RMB 5.3460 50,000,000.00 (CAB) Changxing Branch 50,000,000.00 ZEFL 20-12-2007 21-12-2011 RMB 5.9400 [Note 2] Subtotal 290,000,000.00

[Note 1]：which is the amount of next-year’s repayment for the long-term borrowing from

CCB Changxing Branch with a term of 17 years starting from the date of first drawing on 17 October 2002, to be determined by the Company based the budget for the next year.

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[Note 2]：which is the loan that ZPEGC entrusted ZEFL to provide。

29. Long-term Borrowings (1) Details

Item Ending Amount Beginning Amount Borrowings on pledge 2,434,300,000.00 2,893,300,000.00 [Note 1] Borrowings on credit 570,000,000.00 720,000,000.00 [Note 2] Total 3,004,300,000.00 3,613,300,000.00

[Note 1]：of which RMB 300 million are the loans provided by ZEFL.

[Note 2]：of which RMB 50 million are the loans that ZCPGC entrusted ZEFL to provide

(2) Top 5 largest amount long-term borrowings

Annual Interest Beginning Lender Start Date Maturity Date Currency Ending Amount Rate (%) Amount ICBC Hangzhou Fengqi 16-11-2006 16-08-2013 RMB 5.3640 771,800,000.00 889,100,000.00 Road Branch

CAB Hangzhou East Branch 13-07-2006 11-09-2013 RMB 5.1840 621,500,000.00 737,200,000.00

CAB Changxing Branch 23-02-2004 15-06-2017 RMB 5.3460 410,000,000.00 460,000,000.00

CCB Changxing Branch 17-10-2002 17-10-2019 RMB 5.5080 370,000,000.00 420,000,000.00

ICBC Changxing Branch 11-05-2004 20-06-2018 RMB 5.3460 255,000,000.00 355,000,000.00

Subtotal 2,428,300,000.00 2,861,300,000.00

30. Other Non-current Liabilities (1) Details

Item Ending Amount Beginning Amount

Deferred income 35,698,228.99 38,759,749.92

Total 35,698,228.99 38,759,749.92

(2) Other notes

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1) Based on Document Zhe Cai Jian Zi [2006]254 “Notice on Appropriation of Provincial Special Subsidy for Environmental Protection for 2006”, Zhe Cai Jian Zi [2007]232 “Notice on Appropriation of Provincial Special Subsidy for Environmental Protection for 2007” co-issued by Zhejiang Provincial Financial Dept. and Zhejiang Provincial Environmental Protection Bureau as well as Document Tai Cai Jing Fa [2007]27 “Notice on Plan for Appropriation of Taizhou Municipal Special Subsidy for Environmental Protection for 2007”, Document Tai Cai Jing Fa [2008]19 “Notice on Plan for Appropriation of Taizhou Municipal Special Subsidy for Environmental Protection for 2008” co-issued by Taizhou Municipal Finance Bureau and Taizhou Environmental Protection Bureau, Taizhou Power Plant received the special subsidy amounting to RMB 42 million yuan in previous years. Since the desulfurization project for Phase IV 2 x 330 MW generating units had been completed, it was treated as the asset-related government subsidy and recorded as deferred income. It was amortized per its estimated life term and recorded as gains and losses. In the current period, the amortization amounted to RMB 3,500,000.04 yuan, the accumulated amortization amounting to RMB 10,500,000.12 yuan. 2) Taizhou Power Plant received the special subsidy for the on-line pollutant monitoring project amounting to RMB 5 million yuan in previous years. Since the flue gas monitoring project had been completed, it was treated as the asset-related government subsidy and recorded as deferred income. It was amortized per its estimated life term and recorded as gains and losses. In the current period, the amortization amounted to RMB 625,000.00 yuan, the accumulated amortization amounting to RMB 1,875,000.00 yuan. As the on-line pollutant monitoring equipment was shut down in the current period, Taizhou Power Plant wrote off the residual amount of deferred income of RMB 3,125,000.00 yuan at the period end. 3) Taizhou Power Plant received the special subsidy for the on-line waste water monitoring project amounting to RMB 13,000 yuan in previous years. Since the flue gas monitoring project had been completed, it was treated as the asset-related government subsidy and recorded as deferred income. It was amortized per its estimated life term and recorded as gains and losses. In the current period, the amortization amounts to RMB 1,625.00 yuan, the accumulated amortization amounting to RMB 4,875.00 yuan. 4) Based on Document Tai Cai Jing Fa [2009]18 “Notice on Appropriation of Taizhou Municipal Special Subsidy for Environmental Protection for 2009” co-issued by Taizhou Municipal Finance Bureau and Taizhou Municipal Environmental Protection Bureau, Taizhou Power Plant received the special subsidy amounting to RMB 3.5 million yuan in April 2010 for the plant noise treatment project to reduce noise pollution for Phase V by such means of noise silencing and tree planting. Since the project for Phase IV 2 x 330 MW generating units had been completed, it was treated as the asset-related government subsidy and recorded as deferred income. It was amortized per its estimated life term and recorded as gains and losses. In the current period, the amortization amounted to RMB 309,895.89 yuan,

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the accumulated amortization amounting to RMB 309,895.89 yuan. 5) Based on Document Tai Cai Jing Fa [2008]19 “Notice on Appropriation of Taizhou Municipal Special Subsidy for Environmental Protection for 2008” co-issued by Taizhou Municipal Finance Bureau and Taizhou Municipal Environmental Protection Bureau, Taizhou Power Plant received the special subsidy amounting to RMB 1 million yuan in April 2010 for the waste water treatment project to treat waste water for Phase IV.

31. Share Capital

Item Beginning Increase in Decrease in Ending Amount Amount Current Period Current Period Number of shares 2,010,000,000.00 2,010,000,000.00

32. Capital Reserve (1) Details Beginning Increase in Current Decrease in Ending Amount Item Amount Period Current Period Share capital premium 1,859,977,258.75 1,859,977,258.75

Other capital reserve 2,603,237,360.38 721,695,546.63 1,881,541,813.75

Total 4,463,214,619.13 721,695,546.63 3,741,519,072.50

(2) The other capital reserve decreased in the current period by RMB 721,695,546.63 yuan, which is the residual amount obtained by deducting the deferred income tax liability of RMB 240,565,182.21 yuan from the RMB 962,260,728.84 yuan of decrease in fair value of the available-for-sale financial assets.

33. Surplus Reserve (1) Details Increase in Decrease in Item Beginning Amount Current Period Current Period Ending Amount Statutory surplus reserve 1,336,233,457.21 47,153,492.63 1,383,386,949.84

Total 1,336,233,457.21 47,153,492.63 1,383,386,949.84

(2) Other note

The increase in the current period amounted to RMB 47,153,492.63 yuan, which

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is the statutory surplus reserve allocated at 10% of the parent company’s profit amounting to RMB 47,153,492.63 yuan, according to the Profit Distribution Proposal for 2010 approved in the 11th meeting of the 5th Board of Directors of the Company.

34. Undistributed Profit

Item Amount Ratio of Allocation or Distribution

Undistributed profit at the period end 1,698,863,774.60

Add: current net profit belonging to owners of 531,131,527.29 parent company Less: Allocation of statutory surplus reserve 47,153,492.63 10%

Allocation of discretionary surplus reserve

Allocation of general risk reserve

Dividends of ordinary shares payable Distribution of dividends 201,000,000.00 in cash at RMB 1.00 yuan per 10 shares Dividends of ordinary shares converted to share capital Ending amount of undistributed profit 1,981,841,809.26

(II) Notes to Consolidated Statement of Profit

1. Principal Operating Income/Cost (1) Details Item Current Amount Prior Amount Principal operating income 7,691,755,519.39 7,436,140,354.94 Other operating income 89,058,818.88 48,401,403.89 Operating cost 6,873,027,708.20 6,180,621,339.46

(2) Principal operating income/principal operating cost（by product）

Current Amount Prior Amount Product Name Income Cost Income Cost

Income from power sale 7,560,773,519.07 6,752,343,730.43 7,368,072,362.54 6,094,950,718.65

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Income from heat supply 130,982,000.32 87,456,846.49 68,067,992.40 48,374,989.50

Subtotal 7,691,755,519.39 6,839,800,576.92 7,436,140,354.94 6,143,325,708.15

(3) Operating income from the top 5 customers of the Company

Percentage out of the Company’s Customer Name Operating Income Total Operating Income (%) ZPEPC 7,335,538,618.08 94.28

ZJPGC 65,998,661.00 0.85 Zhejiang Zheneng Beilun Power 59,540,338.00 0.77 Generation Company Ltd Zhejiang Zheneng Yueqing Power 51,470,607.38 0.66 Generation Company Ltd Huaizhe Coal & Electric Co. Ltd 27,443,228.31 0.35

Subtotal 7,539,991,452.77 96.91

2. Tax and Surtax Item Current Amount Prior Amount Taxation Standard Refer to Section III “Taxation” hereof Operating tax 2,276,349.97 1,424,249.05 for details Urban Refer to Section III “Taxation” hereof construction & 19,658,011.76 26,100,214.18 for details maintenance tax Refer to Section III “Taxation” hereof Education surtax 9,392,834.01 12,783,235.15 for details Local education Refer to Section III “Taxation” hereof 8,008,477.98 9,445,981.07 surtax for details Total 39,335,673.72 49,753,679.45

3. Overhead Expenses

Item Current Amount Prior Amount

Employee wages and social insurance premium 168,249,840.28 155,555,735.50

Various taxes and fees 26,489,131.89 24,330,599.00

Office expenses 21,311,628.01 19,948,525.32

Transportation expenses 16,977,015.91 16,495,334.04

Labour service fee 13,804,360.77 10,760,907.92

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Travelling expenses 13,364,192.06 11,911,175.87

Labour protection fee 10,158,479.37 10,038,879.59

Amortization of long-term asset depreciation 8,928,412.93 7,143,484.76

Business entertainment fee 7,502,494.46 6,864,539.23

Rental expenses 7,457,958.11 8,940,178.44

Agency and consulting fees 6,200,778.08 4,851,543.50

Conference fee 5,236,344.29 5,114,258.75

Security guard and fire protection fee 4,839,616.86 4,550,395.92

Landscaping expense 4,304,414.05 4,196,724.90

Other 21,829,551.02 16,983,775.45

Total 336,654,218.09 307,686,058.19

4. Financial Expenses

Item Current Amount Prior Amount Interest expenditure 243,090,362.25 326,052,828.49 Discount interest 2,597,075.00 3,206,073.33 Interest income -7,601,893.52 -8,465,131.84 Gains and losses from foreign exchange conversion -964,104.21 12,423.14 Service charges 641,724.23 305,258.26 Total 237,763,163.75 321,111,451.38

5. Reserve for Asset Devaluation

Item Current Amount Prior Amount Loss on bad debt -1,335,286.92 1,571,778.60 Loss on devaluation of fixed assets 287,634,900.00 Total -1,335,286.92 289,206,678.60

6. Returns on Investment (1) Details

Item Current Amount Prior Amount

Returns on long-term equity investment accounted for on 10,925,261.37 13,484,900.99 cost basis

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Returns on long-term equity investment accounted for on 265,547,320.23 equity basis 252,739,705.01 Investment returns obtained during holding of 62,419,361.86 49,797,754.00 available-for-sale financial assets

Total 326,084,328.24 328,829,975.22

(2) Returns on long-term equity investment accounted for on cost basis

Investee Company Current Amount Prior Amount Reason for Increase/decrease China Everbright Bank 7,185,261.37 13,484,900.99 Dividend payment Company Ltd Zhejiang Venture Investment 3,740,000.00 Dividend payment Group Corp. Subtotal 10,925,261.37 13,484,900.99

(3) Returns on long-term equity investment accounted for on equity basis

Investee Company Current Amount Prior Amount Reason for Increase/decrease ZJPGC 120,424,270.12 176,889,869.18 Change in net profit of investee ZBHGC 71,940,299.28 -35,359,045.95 Change in net profit of investee ZLPGC 58,904,830.05 118,018,054.05 Change in net profit of investee Zhejiang Changxing Jietong Change in net profit of investee Logistics Co. Ltd 1,616,070.78 2,950,272.43 Changxing Yuanda Energy Change in net profit of investee Service Company Ltd -44,410.17 -2,133.22 Zhejiang Zheneng Transport & Change in net profit of investee Trade Company Ltd -734,520.07 2,955,568.41 Anhui Xingwan Mining Co. Change in net profit of investee Ltd 633,165.02 94,735.33 Subtotal 252,739,705.01 265,547,320.23 Change in net profit of investee

7. Non-operating Income

(1) Details Amount Recorded as Non-recurring Gains & Item Current Amount Prior Amount Losses in Current Period Total income from disposal of non-current assets 8,807,169.85 1,283,238.66 8,807,169.85

Including: Income from disposal of fixed assets 8,807,169.85 1,283,238.66 8,807,169.85

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Government subsidy 5,666,820.93 4,466,625.12 5,666,820.93

Fines and confiscation income 19,821.85 100.00 19,821.85

Insurance indemnity 389,989.00 Policy treatment compensation for Taizhou Power 1,481,000.00 Plant Phase V Others 689,267.30 103,724.52 689,267.30

Total 15,183,079.93 7,724,677.30 15,183,079.93

(2) Details about Government subsidies

Current Item Prior Amount Remarks Amount Special fund for flue gas Asset-related government subsidy to be amortized per desulfurization project of 3,500,000.04 3,750,000.12 anticipated useful life of the asset. Refer to Section V Taizhou Power Plant “Other Non-current Liabilities” hereof for details Special fund for on-line Asset-related government subsidy to be amortized per pollutant monitoring project of 625,000.00 625,000.00 anticipated useful life of the asset. Refer to Section V Taizhou Power Plant “Other Non-current Liabilities” hereof for details Special fund for on-line waste Asset-related government subsidy to be amortized per water monitoring project of 1,625.00 1,625.00 anticipated useful life of the asset. Refer to Section V Taizhou Power Plant “Other Non-current Liabilities” hereof for details Document Tai Cai Jing Fa [2009]18 “Notice on Special subsidy for operation & Appropriation of Taizhou Municipal Special Subsidy maintenance of flue gas on-line 500,000.00 for Environmental Protection for 2009” co-issued by monitoring system of Taizhou Taizhou Municipal Finance Bureau and Taizhou Power Plant Municipal Environmental Protection Bureau Special subsidy for plant noise Asset-related government subsidy to be amortized per treatment project of Taizhou 309,895.89 anticipated useful life of the asset. Refer to Section V Power Plant Phase V “Other Non-current Liabilities” hereof for details Notice on Appropriation of Provincial Special Provincial special fund for Subsidy for Environmental Protection for 2009 environmental protection of 500,000.00 co-issued by Changxing Finance Bureau and Changxing Power Plant Changxing Environmental Protection Bureau Report on Application for Government Bonus by Government bonus for Project 1217 Target Management Enterprises in 230,300.00 Lianyuan heat supply Linhai City submitted by Linhai Municipal Finance Bureau Document Chang Huai [2009]38 “Notice on Special subsidy for operation & Appropriation of Subsidy for Operation & maintenance of on-line 90,000.00 Maintenance of Main Pollutant On-line Monitoring monitoring equipment of Equipment for 2008” issued by Changxing County Changxing Power Plant Environmental Protection Bureau Subtotal 5,666,820.93 4,466,625.12

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8. Non-operating Expenses (1) Details Amount Recorded as Item Current Amount Prior Amount Non-recurring Gains & Losses in Current Period

Total loss on disposal of non-current assets 8,235,766.33 17,054,817.29 8,235,766.33 Including: Loss on disposal of fixed assets 8,235,766.33 17,054,817.29 8,235,766.33 Water conservation construction fund 8,164,652.69 7,868,018.99

Retiree subsidy 2,945,760.00 2,305,690.00

Donation 700,000.00 399,500.00 700,000.00

Comprehensive dues 1,381,955.98 1,387,311.22 Payment of fines 36,796.21 3,816,065.33 36,796.21 Compensation payment 28,000.00 225,000.00 28,000.00 Others 367,612.00 1,988,605.27 367,612.00 Total 21,860,543.21 35,045,008.10 9,368,174.54

9. Income Tax

Item Current Amount Prior Amount Current income tax as per the tax law and relevant 114,425,737.03 stipulations 53,553,345.25 Adjustment of deferred income tax 17,868,514.94 -22,403,680.78

Total 71,421,860.19 92,022,056.25

10. Computation of Basic Earnings per Share and Diluted Earnings per Share

(1) Computation Process of Basic Earnings per Share

Item Denotation Year 2010

Net profit belonging to ordinary shareholders of the Company A 531,131,527.29

Non-recurring gains and losses B 6,963,211.44

Net profit belonging to ordinary shareholders of the Company C=A-B 524,168,315.85 after deducting non-recurring gains and losses

Total number of shares at period beginning D 2,010,000,000.00

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Increase in number of shares resulting from conversion of capital

reserve to share capital or distribution of share dividends E

Increase in number of shares resulting from issuance of new

shares or conversion of bonds to shares F

Number of months from the next month following share number

increase up to the reporting period end G

Decrease in number of shares resulting from share repurchase H

Number of months from the next month following share number I decrease up to the reporting period end

Reduction of share number in the reporting period J

Number of months in the reporting period K 12

Weighted average number of ordinary shares listed L=D+E+F×G/K-H×I/K-J 2,010,000,000.00

Basic earnings per share M=A/L 0.2642

Basic earnings per share after deducting non-recurring gains and 0.2608 losses N=C/L

(2) The computation process of the diluted earnings per share is the same as the computation process of the basic earnings per share

11. Other Comprehensive income Item Current Amount Prior Amount Gains (losses) generated from available-for-sale -962,260,728.84 2,079,032,979.70 financial assets Less: Impact of income tax from available-for-sale -240,565,182.21 519,758,244.92 financial assets Total -721,695,546.63 1,559,274,734.78

(III) Notes to Consolidated Statement of Cash Flow

1. Other Cash Received in Relation to Operating Activities Item Current Amount Government subsidy 5,730,300.00 Income from lease 3,679,430.99 Receipt of deposits 4,155,125.82 Recovery of advance payment 25,776,457.27 Others 45,657.21

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Total 39,386,971.29

2. Other Cash Paid in Relation to Operating Activities Item Current Amount Office expenses 21,311,628.01 Transportation expenses 16,977,015.91 Payment for amount received on trust 15,115,796.52 Outsourced labour service charges 13,804,360.77 Travelling expenses 13,364,192.06 Labour protection expenses 10,158,479.37 Preconstruction expenses for Xinjiang project 10,451,348.61 Business entertainment fee 7,502,494.46 Lease fee 7,457,958.11 Intermediary Agency and Consulting fees 6,200,778.08 Conference fee 5,236,344.29 Security guard and fire fighting fees 4,839,616.86 Landscaping fee 4,304,414.05 Others 15,857,311.11 Total 152,581,738.21

3．Other Cash Received in Relation to Investment Activities

All the amount in the current period was the received interest on deposit in banks. 4. Information Supplementary to Statement of Cash Flow (1) Information Supplementary to Statement of Cash Flow

Supplementary Information Current Amount Prior Amount (1) Net profit converted to cash flow from operating activities Net profit 543,353,866.20 545,650,139.92 Add: asset devaluation reserve -1,335,286.92 289,206,678.60 Depreciation of fixed assets, oil and gas assets, and productive 910,662,150.49 922,213,331.38 assets Amortization of intangible assets 10,966,378.85 10,657,608.71 Amortization of long-term deferred expenses 750,849.28 1,941,462.00 Loss on disposal of fixed assets, intangible assets and other -571,403.52 15,771,578.63 long-term assets (with income denoted by “-”) Loss on retirement of fixed assets (with income denoted by “-”) Loss from changes in fair values (with income denoted by “-”) Financial expenses (with income denoted by “-”) 234,524,364.52 317,600,119.79 Loss on investment (with income denoted by “-”) -326,084,328.24 -328,829,975.22

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Decrease in deferred tax asset (with increase denoted by “-”) 17,868,514.94 -20,862,214.11 Increase in deferred tax liability (with decrease denoted by “-”) -1,541,458.33 -1,541,466.67 Decrease in inventory (with increase denoted by “-”) -43,525,858.21 140,319,570.51 Decrease in operational receivables (with increase denoted by “-”) -131,397,816.94 116,523,308.77 Increase in operational payables (with decrease denoted by “-”) -129,148,945.30 152,602,909.34 Others Net cash flow generated from operating activities 1,084,521,026.82 2,161,253,051.65 (2) Important Investment and financing activities not involving cash income and expenditure Debt converted to capital Convertible corporate bonds due within 1 year Fixed assets leased in by financing lease (3) Net change in cash and cash equivalents: Ending balance of cash 496,430,826.93 626,279,349.63 Less: Beginning balance of cash 626,279,349.63 892,449,847.25 Add: Ending balance of cash equivalents Less: Beginning balance of cash equivalents Net increase in cash and cash equivalents -129,848,522.70 -266,170,497.62

(2)Information about Acquisition or Disposal of Subsidiaries and Other Business Organizations

Item Current Amount Prior Amount 1) Acquisition of subsidiaries and other business organizations a. Prices for acquisition of subsidiaries and other business 35,512,245.64 organizations b. Cash and cash equivalents paid for acquisition of 3,283,257.61 32,228,988.03 subsidiaries and other business organizations Less: Cash and cash equivalents held by subsidiaries and 20,344,565.51 other business organizations c. Net cash paid for acquisition of subsidiaries and other 11,884,422.52 business organizations d. Net assets of the acquired subsidiaries 34,946,025.34 Current assets 41,029,973.62 Non-current assets 49,671,898.51 Current Liabilities 55,755,846.79 Non-current liabilities 2) Disposal of subsidiaries and other business organizations a. Prices for disposal of subsidiaries and other business organizations b. Cash and cash equivalents paid for disposal of subsidiaries and other business organizations Less: Cash and cash equivalents held by subsidiaries and other business organizations c. Net cash paid for disposal of subsidiaries and other business organizations d. Net assets of the disposed subsidiaries

115

Current assets Non-current assets Current Liabilities Non-current liabilities (3) Composition of Cash and Cash Equivalent

Item Ending Amount Beginning Amount

1) Cash 496,430,826.93 626,279,349.63

Including: cash on hand 21,994.58 16,998.74

Cash in bank available for ready payment 495,398,871.25 625,398,277.14

Other cash in bank available for ready payment 1,009,961.10 864,073.75

Cash deposited in central bank available for payment

Cash deposited in other banks

Cash loaned to other banks

2) Cash equivalent

Including: investment in bonds due within 3 months

3) Ending amount of cash and cash equivalent 496,430,826.93 626,279,349.63

VI. Related Parties and Related Party Transaction (I) About Related Parties 1. About Parent Companies of the Company

Name of Parent Relationship with Type of Legal Registered Address Business Sector Company the Company Company Representative Investment in The 1st largest Limited liability 152 Tianmushan ZPEPDC Wu Guochao electric power shareholder company Road, Hangzhou projects De facto Limited liability 152 Tianmushan Investment in ZPEGC Wu Guochao controller company Road, Hangzhou industries

(Continued)

Shares of the Voting Shares Ultimate Name of Parent Code of Registered Capital Company Held by Held by Parent Controller of Company Organization Parent Co. (%) Co. (%) the Company

ZPEPDC 3.3 billion yuan 39.80 39.80 14291200-5

ZPEGC 10 billion yuan [Note] 72760376-9

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[Note]：As approved by Zhejiang Provincial Government, effective from February 2001, the

first largest shareholder of the Company, ZPEPDC （ now renamed Zhejiang

Provincial Electric Power Development Co. Ltd）, was wholly transferred to ZPEGC

and became a wholly-owned subsidiary of ZPEGC. The whole staff and organization of ZPEPC were merged into ZPEGC. The rights of the controlling shareholder of the Company are directly exercised by ZPEGC. Hence, ZPEGC is the de factor controller of the Company.

2. For details of subsidiaries, refer to the section entitled “Enterprise consolidation” hereof and the consolidated financial statements.

3. About Joint Venture Enterprises and Affiliated Enterprises Legal Name of Investee Type of Enterprise Registered Address Type of Business Representative ZBHGC Limited liability Mao Jianhong Hydropower company 22 Chaowang Road, Hangzhou generation ZJPGC Limited liability Cai Jianping Thermal power Rm 1401, 1501, 1601, company generation 85 Jiefang Road, Hangzhou ZLPGC Limited liability Zhang Qian Thermal power 37 Danxi Avenue, Lanxi company generation Zhejiang Zheneng Transport & Limited liability Zhang Jibiao Transport service Room 304, Building 3, 1197 Trade Co. Ltd company Bin’an Road, Hangzhou Anhui Xingwan Mining Co. Limited liability Pan Beilai Mining Niutoushan Village, Liutong Ltd company Town, Guangde County Zhejiang Changxing Jietong Limited liability Erhutou Bridge, Zhicheng Town, Meng Wei Service industry Logistics Co. Ltd company Changxing County Changxing Yuanda Energy Limited liability 15 Hailu Xinduhui Building #1, Lu Hu Service industry Service Co. Ltd company Changxing County Economic Development Zone (Continued)

Registered Relation with the Company Capital Shareholding Voting Share Code of Name of Investee (in RMB million Ratio (%) Ratio (%) Organization yuan ZBHGC 1,502 25 25 Affiliated enterprise 73380940-5 ZJPGC 2,765.19 24 24 Affiliated enterprise 73031859-8 ZLPGC 1,645.50 25 25 Affiliated enterprise 75492287-X Zhejiang Zheneng Transport 150 25 25 Affiliated enterprise of the 78828114-2 & Trade Co. Ltd subsidiary Anhui Xingwan Mining Co. 45 30 30 Affiliated enterprise 77497210-2 Ltd Zhejiang Changxing Jietong 127 42.05 42.05 Affiliated enterprise of the 76963664-9 Logistics Co. Ltd subsidiary Changxing Yuanda Energy 5 20 20 Affiliated enterprise of the 69237599-6

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Service Co. Ltd subsidiary

4. Other Related Parties of the Company

Name of Other Related Party Relationship with the Code of Organization Company Controlled by the same de 71786668-8 ZEFL facto controller Zhejiang Zheneng Fuxing Fuel Co. Ltd Controlled by the same de 76450393-5 facto controller Zhejiang Fuxing Electric Power Fuel Co. Controlled by the same de 72588307-4 facto controller Controlled by the same de ZPNGDC 73451696-2 facto controller Controlled by the same de Zhejiang Xingyuan Investment Co. Ltd 75304575-6 facto controller Controlled by Zhejiang Zhejiang Tianhong Goods Trade Co. Ltd 75491070-5 Xingyuan Investment Co. Ltd Zhejiang Dongfa Environmental Controlled by Zhejiang Protection Project Co. Ltd Xingyuan Investment Co. Ltd 73842452-0 Zhejiang Tiangong Zixin Technical Controlled by Zhejiang Project Co. Xingyuan Investment Co. Ltd 75720973-8 Zhejiang Tiandi Environmental Controlled by Zhejiang Protection Project Co. Ltd Xingyuan Investment Co. Ltd 74413501-2 Zhejiang Tianda Environmental Controlled by Zhejiang Protection Co. Ltd Xingyuan Investment Co. Ltd 76390167-5 Shanghai Guoneng Logistics Co. Ltd Controlled by Zhejiang 79569698-7 Xingyuan Investment Co. Ltd Zhejiang Tianyin Management Controlled by Zhejiang 75808777-9 Consulting Co. Ltd Xingyuan Investment Co. Ltd Changxing Tianda Environmental Controlled by Zhejiang 78048034-X Protection Building Materials Co. Ltd Xingyuan Investment Co. Ltd Fanchang County Ronghua Limestone Controlled by Zhejiang 75489269-0 Mining Co. Ltd Xingyuan Investment Co. Ltd Zhejiang Zheneng Jiaxing Power Controlled by the same de Generation Co. facto controller 72008537-2 Zhejiang Zheneng Wenzhou Power Controlled by the same de Generation Co. Ltd facto controller 84504177-9 Zhejiang Zheneng Beilun Power Controlled by the same de 14294285-3 Generation Co. Ltd facto controller Zhejiang Zheneng Yueqing Power Controlled by the same de 77570367-6 Generation Co. Ltd facto controller

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Co-controlled by the de facto 77737427-1 Huaizhe Coal & Electric Co. Ltd controller Zhejiang Zheneng Qianqing Power Controlled by the same de 71618190-0 Generation Co. Ltd facto controller Zhejiang Zheneng Zhenhai Natural Gas Controlled by the same de 76854398-5 Power Generation Co. Ltd facto controller Zhejiang Zhenneng Jinhua Gas Turbine Controlled by the same de 70453245-1 Power Generation Co. Ltd facto controller Zhejiang Zheneng Energy Technical Co. Controlled by the same de 69458662-3 Ltd facto controller

(II) Related Party Transactions

1. Related Party Transactions in Connection with Purchase/Sale of Commodities and Supply/Acceptance of Labour Service

(1) Details

1) Related Party Transactions in Connection with Purchase of Commodities and Acceptance of Labour Service

Current Amount Prior Amount Pricing Mode Percentage out Subject of Percentage out Related Party and Decision of Same Type Transaction Amount Amount of Same Type of Procedure of Transaction Transaction (%) (%) Zhejiang Zheneng Coal Agreed price 4,597,557,263.88 100.00 4,318,924,860.79 100.00 Fuxing Fuel Co. Ltd ZPNGDC Natural gas Agreed price 530,043,378.62 100.00 26,937,781.31 100.00 Zhejiang Fuxing Electric Power Fuel Diesel Agreed price 11,164,284.45 100.00 6,704,110.07 100.00 Company Ltd Fanchang County Ronghua Limestone Limestone Agreed price 17,948,264.68 47.37 16,458,648.03 38.95 Mining Co. Ltd Zhejiang Tianda Environmental Limestone Agreed price 13,977,576.12 36.89 14,601,010.79 34.55 Protection Co. Ltd Equipment, project Zhejiang Tianhong goods and raw Agreed price 9,568,973.58 4.76 8,832,839.97 3.95 Goods Trade Co. Ltd material Zhejiang Tiangong Equipment and Zixin Technical Project Agreed price 239,777.78 0.12 5,056,908.69 2.26 project materials Co. Zhejiang Tiangong System service Zixin Technical Project Agreed price 3,123,880.35 3.32 3,885,870.00 100.00 charges Co.

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Zhejiang Tiandi Environmental Payment for project Agreed price 22,359,280.89 100.00 Protection Project Co. expense Ltd Zhejiang Tiandi Environmental Equipment Agreed price 1,438,143.59 1.53 Protection Project Co. Ltd Management service Zhejiang Changxing charge for coal Jietong Logistics Co. Agreed price 24,324,360.00 100.00 24,777,105.00 100.00 unloading, barging Ltd and storage Zhejiang Dongfa Environmental Waste water Agreed price 10,370,000.00 100.00 10,639,999.98 100.00 Protection Project Co. treatment Ltd Zhejiang Dongfa Environmental Petty goods Agreed price 1,103,532.99 0.55 729,383.06 0.33 Protection Project Co. Ltd Zhejiang Dongfa Environmental Cost of fixed asset Agreed price 497,756.00 0.26 Protection Project Co. maintenance Ltd Shanghai Guoneng Equipment Agreed price 4,943,211.49 5.25 Logistics Co. Ltd Zhejiang Zheneng Energy Technical Co. Consulting service Agreed price 2,020,000.00 100.00 Ltd

2) Related Party Transactions in Connection with Sale of Commodities and Supply of Labour Service Current Amount Prior Amount Pricing Mode Percentage out Subject of Percentage out Related Party and Decision of Same Type Transaction Amount Amount of Same Type of Procedure of Transaction Transaction (%) (%) Zhejiang Zheneng Replacement power Beilun Power Agreed price 59,540,338.00 26.43 35,612,280.00 19.61 generation Generation Co. Ltd Replacement power ZJPGC Agreed price 65,998,661.00 29.30 94,058,244.00 51.81 generation Zhejiang Zheneng Replacement power Jiaxing Power Agreed price 24,646,963.00 10.94 23,740,575.00 13.08 generation Generation Co. Ltd Zhejiang Zheneng Replacement power Yueqing Power Agreed price 40,073,092.00 17.79 14,816,700.00 8.16 generation Generation Co. Zhejiang Zheneng Replacement power Wenzhou Power Agreed price 11,436,519.00 5.08 13,327,455.00 7.34 generation Generation Co. ZLPGC Replacement power Agreed price 23,539,328.00 10.45

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generation Zhejiang Zheneng Payment for project Wenzhou Power Agreed price 887,777.77 1.14 563,333.34 1.47 expense Generation Co. Zhejiang Tianda Environmental Steam Agreed price 2,204,742.83 1.68 331,956.64 0.49 Protection Co. Ltd Payment for project ZLPGC Agreed price 2,121,296.58 2.73 expense Zhejiang Zheneng Replacement power Zhenhai Natural Gas Agreed price 28,325,320.00 100.00 generation Power Generation Co. Zhejiang Dongfa Payment for project Environmental Agreed price 1,950,000.00 2.51 1,950,000.00 5.10 expense Protection Project Co. Zhejiang Tiandi Payment for project Environmental Agreed price 1,110,000.00 1.43 expense Protection Project Co. Zhejiang Zheneng Payment for project Qianqing Power Agreed price 1,052,256.41 1.35 4,013,365.82 10.49 expense Generation Co. Ltd Huaizhe Coal & Payment for project Agreed price 27,443,228.31 35.34 273,365.81 0.71 Electric Company Ltd expense Payment for project ZJPGC Agreed price 588,170.94 1.54 expense Zhejiang Zheneng Payment for project Jiaxing Power Agreed price 635,801.71 1.66 expense Generation Co. Zhejiang Zheneng Payment for project Yueqing Power Agreed price 11,397,515.38 14.68 1,895,758.42 4.95 expense Generation Co. Zhejiang Zheneng Payment for project Jinhua Gas Turbine Agreed price 474,803.44 0.61 expense Power Generation Co.

2. Related Leases (1) Details 1) Lease supplied by the Company Contractual Lease Basis for Lease End Annual Lease Name of Lessor Name of Lessee Leased Asset Annual Start Lease Income Date Income Rent Date Determination Floor 22-23 of Biaoli Tower, ZSEPC ZPEGC 1-6-2006 31-5-2020 Agreed price 1,500,000.00 528 Yan’an Road Waste water Zhejiang Dongfa treatment Taizhou Power Environmental facilities and 1-1-2010 31-12-2010 Agreed price 676,227.79 Plant Protection Project land in power Co. Ltd plant

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Zhejiang Tianda Taizhou Power Environmental Weighbridge 1-1-2009 31-12-2011 Agreed price 25,000.00 Plant Protection Co. system Ltd 2) Lease taken by the Company

Lease Start Lease End Annual Name of Lessor Name of Lessee Subject on Lease Date Date Contractual Rent Floor 8-10 of 1,500,000.00 ZPEGC ZSEPC 1-6-2006 31-5-2020 Zheneng Tower Zhejiang Changxing Jietong Jetty and jetty coal 9,880,000.00 ZCPGC 1-1-2010 31-12-2010 Logistics Co. Ltd yard

3. Related Party Guarantees

Whether Guaranteed Guarantee Guarantee Guarantor Guaranteed Amount guarantee has Party Start Date Expiry Date been fulfilled RMB 84 million yuan ZSEPC ZJPGC 17-12-2001 16-12-2026 No [Note ]

[Note]：In 2001, the affiliated enterprise of the Company ZJPGC applied to CCB Zhejiang

Branch for a loan ceiling of RMB 3,200 million yuan. The Company is to provide guarantee in proportion to the Company’s equity contribution ratio for the 24% of the loan to ZJPGC, with the term of guarantee being from 17 December 2001 up to 16 December 2026. As of 31 December 2010, the actual balance of ZJPGC’s loan from CCB Zhejiang Branch stood at RMB 350 million yuan, of which 24% of the loan, i.e. RMB 84 million yuan was guaranteed by the Company.

4. Related Party Lending/Borrowing (1) As approved by China Banking Regulatory Commission, ZPEGC and other investors co-established ZPEGC Finance Co. Ltd (ZEFL), with the scope of business of ZEFL covering financial advisory service for member companies, credit appraisal and related consulting and agency services, assisting member companies in collecting and making payment, taking in member companies’ deposit and providing loans and financial lease to member companies. The Company signed “Financial Service Cooperation Agreement” with ZEFL, which permits ZEFL to provide financial services within its business scope to the Company and the Company’s subsidiary power plants including deposit, lending and account settlement. As at 31 December 2010, the balance of cash deposited by the Company in ZEFL amounted to RMB 403,056,298.69 yuan, with details as follows:

Name of Organization Amount ZSEPC Headquarters 306,631,066.46

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Taizhou Power Plant 27,120,177.85 Xiaoshan Power Plant 5,661,492.13 ZCPGC 63,643,562.25 Total 403,056,298.69

(2) As at 31 December 2010, the loans provided by ZEFL to the Company and its subsidiary ZCPGC totalled RMB 1,200 million yuan, with details as follows: Unit: in RMB million yuan

Loan Annual Related Loan Start Borrower Principal of Loan Repayment Interest Date Party Date Rate (%) 100.00 [Note 1] 22-03-2010 21-03-2011 4.7790

200.00[Note 1] 2-7-2010 1-7-2011 4.7790

100.00 [Note 1] 6-7-2010 5-7-2011 4.7790 ZCPGC 200.00 2-12-2010 1-12-2011 5.0040

50.00[Note 1] 20-12-2007 21-12-2011 5.9400

50.00[Note 1] 20-12-2007 21-12-2012 5.9400

200.00 21-5-2010 20-5-2011 4.7790

89.00[Note 2] 20-12-2006 20-12-2016 5.7600 ZEFL 29.30 [Note 2] 26-12-2006 26-12-2016 5.7600

30.00[Note 2] 9-1-2007 9-1-2017 5.7600 ZSEPC 22.00[Note 2] 17-1-2007 17-1-2017 5.7600

19.50[Note 2] 24-1-2007 24-1-2017 5.7600

42.00[Note 2] 13-2-2007 13-2-2017 5.7600

10.00[Note 2] 28-2-2007 28-2-2017 5.7600

19.30[Note 2] 6-3-2007 6-3-2017 5.7600

35.00[Note 2] 20-3-2007 20-3-2017 5.7600

3.90 [Note 2] 10-4-2007 10-4-2017 5.7600

Subtotal 1,200.00

[Note 1]: all of which are the loans ZPEGC entrusted ZEFL to provide.

[Note 2]: all of which are borrowings on pledge. For details, refer to Section VII (III) 3 hereof for details.

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(3) As at 31 December 2010, the Company received income of interest on deposit at ZEFL totalling RMB 5,020,315.16 yuan, and paid expenses of interest on borrowings totalling RMB 66,603,579.75 yuan. 5. Asset Transfer between Related Parties Based on Agreement on Land Use Right Compensation between the Company’s subsidiary ZCPGC and Changxing Tianda Environmental Protection Building Materials Co. Ltd (Tianda), ZCPGC transferred the land use right of 7,074.62 square meters of land at Wuliqiao Village, Zhicheng Town, Changxing County Development Zone to Changxing Tianda at a price of RMB 1,386,630.00 yuan. As at 31 December 2010, the payment for the above transfer had been received.

(III) Related Parties’ Accounts Payable/Receivable

1. Account Receivable from Related Parties

Ending Amount Beginning Amount Item Related Parties Allowance for Allowance for Book Balance Book Balance Bad Debt Bad Debt

ZJPGC 11,792,878.11 58,964.39 18,508,304.88 92,541.52

Zhejiang Zheneng Beilun Power Generation Co. Ltd 11,484,321.03 57,421.61 6,955,696.80 34,778.48

Zhejiang Zheneng Yueqing Power Generation Co. Ltd 7,870,543.83 39,352.72 3,602,222.08 18,011.11

Zhejiang Zheneng Wenzhou Power Generation Co. Ltd 2,877,621.64 14,388.11 2,776,398.66 13,881.99

Zhejiang Zheneng Qianqing Power Generation Co. Ltd 519,435.00 81,494.18 4,348,940.00 21,744.70 Accounts Zhejiang Dongfa Environmental Protection Project Co. 1,950,000.00 9,750.00 1,140,750.00 receivable Ltd 5,703.75

Huaizhe Coal & Electric Company Ltd 6,091,665.00 30,458.33 15,992.00 79.96

Zhejiang Zheneng Jiaxing Power Generation Co. Ltd 74,388.80 371.94

Zhejiang Zheneng Jinhua Gas Turbine Power Generation 70,000.00 35,000.00 Co. Ltd 88,280.00 441.40

ZLPGC 124,696.00 623.48 269,841.00 1,349.21

Subtotal 42,781,160.61 327,452.82 37,780,814.22 188,904.06

ZPNGDC 1,694,074.65 160,307.12

Prepayment Zhejiang Dongfa Environmental Protection Project Co. 1,071,000.00 Ltd

Subtotal 2,765,074.65 160,307.12

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Zhejiang Dongfa Environmental Protection Project Co. 155,610.00 31,122.00 1,243.28 Ltd 248,656.46

Zhejiang Zheneng Qianqing Power Generation Co. Ltd 2,000.00 400.00 11,289.00 1,867.80

Zhejiang Tiandi Environmental Protection Project Co. 52,600.00 10,520.00 1,174.00 Ltd 234,800.00

Other Zhejiang Zheneng Jinhua Gas Turbine Power Generation 117,806.00 13,187.20 275,270.00 42,457.00 receivable Co. Ltd ZLPGC 13,492.00 67.46 35,258.00 7,051.60

Huaizhe Coal & Electric Company Ltd 897,590.00 60,189.70 285,650.00 1,428.25

Zhejiang Tianyin Management Consulting Co. Ltd 460,000.00 2,300.00

Zhejiang Zheneng Yueqing Power Generation Co. Ltd 40,000.00 200.00

Subtotal 1,739,098.00 117,986.36 1,090,923.46 55,221.93

2. Accounts Payable to Related Parties Item Related Parties Ending Amount Beginning Amount Bills payable Zhejiang Zheneng Fuxing Fuel Co. Ltd 100,000,000.00 Subtotal 100,000,000.00 Zhejiang Tiangong Zixin Sci-tech Project Co. Ltd 120,314.00 1,481,691.00 Zhejiang Dongfa Environmental Protection Project 525,000.00 1,103,958.00 Co. Ltd Zhejiang Zheneng Fuxing Fuel Co. Ltd 226,115,416.99 237,015,035.38 Accounts Zhejiang Tianhong Goods Trading Co. Ltd 484,730.00 2,524,489.92 payable Zhejiang Tiandi Environmental Protection Project Co. 84,131.00 Ltd Shanghai Guoneng Logistics Co. Ltd 384,701.00 Zhejiang Tianda Environmental Protection Co. Ltd 555,336.29 Zhejiang Zheneng Energy Technical Co. Ltd 280,000.00 Subtotal 228,549,629.28 242,125,174.3 Amount Zhejiang Tiandi Environmental Protection Project Co. received in 97,200.00 advance Ltd Subtotal 97,200.00 Zhejiang Tiangong Zixin Sci-tech Project Co. Ltd 142,396.00 1,270,752.20 Zhejiang Tiandi Environmental Protection Project Co. 4,415,200.36 Ltd Other payable Zhejiang Dongfa Environmental Protection Project 360,852.00 359,802.00 Co. Ltd Shanghai Guoneng Logistics Co. Ltd 51,600.00 Zhejiang Tianhong Goods Trading Co. Ltd 11,850.00 Subtotal 554,848.00 6,057,604.56

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(IV) Remuneration for key management personnel In 2010 and 2009, the remuneration for the key management personnel of the Company totalled RMB 3.1132 million yuan and RMB 2.7653 million yuan respectively. VII. Contingent Events (I) The Company has no contingent liabilities arising from unsettled litigation or arbitration. (II) Contingent Liabilities Arising from Debt Guarantee for Other Organizations and Their Financial Impact 1. For details of guarantees for related parties, refer to the section entitled “Related Parties and Related Party Transactions” hereof. 2. The Company made no provision of guarantee for organizations other than related parties. (III) Other Contingent Liabilities and Their Financial Impact 1. For construction of the Xiaoshan Power Plant Phase II Natural Gas Power Generation Project, the Company applied to ICBC Hangzhou Qingchun Lu Branch for a long-term loan ceiling up to RMB 1,500 million yuan on 16 May 2005. The title to the energy sale revenue after project completion was pledged to the banks with their pledge ratio equal to the banks’ percentages of share of the project loan. As at 31 December 2010, the Company had cumulatively obtained loans amounting to RMB 989.10 million yuan under the contract, with the ending loan balance standing at RMB 879.10 million yuan. 2. For construction of Taizhou Power Plant Phase V Extension Project, the Company applied to China Agricultural Bank Hangzhou East Branch for a loan ceiling up to RMB 1,987 million yuan on 28 March 2006 and applied to China Minsheng Bank Hangzhou Branch for a loan ceiling up to RMB 500 million yuan on 6 July 2006. The titles to the energy sale revenue after project completion were pledged to the banks with their pledge ratio equal to the banks’ percentages of share of the project loan. As at 31 December 2010, the Company cumulatively obtained loans under the contracts amounting to RMB 889.15 million yuan and 193 million yuan respectively, with the ending balances of the loans standing at RMB 637.20 million yuan and 193 million yuan. 3. For construction of Taizhou Power Plant Phase V Extension Project, the Company applied to ZEFL for a loan ceiling up to RMB 300 million yuan on 28 November 2006. The title to the energy sale revenue after project completion was pledged to ZEFL with its pledge ratio equal to ZEFL’s percentage of share of the project loan. As at 31 December 2010, the Company cumulatively obtained loan under the contract amounting to RMB 300 million yuan, with the ending balance of the loan standing at RMB 300 million yuan.

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4. For construction of its coal-fired power generation project, the Company’s subsidiary ZCPGC applied to China Agricultural Bank Changxing County Branch in 2004 - 2005 for long-term loans up to a total of RMB 1,900 million yuan, with the commitment that the title to the energy sale revenue after project completion corresponding to the loan would be pledged to the Bank. As at 31 December 2010, whilst the formalities relating to the registration of the pledge for the contract had not been completed, the balance of the loan under the contract at the period end stood at RMB 360.00 million yuan. 5. For construction of its coal-fired power generation project, the Company’s subsidiary ZCPGC applied to ICBC Changxing County Branch in 2004-2005 for long-term loans up to a total of RMB 2,400 million yuan, with the commitment that the title to the energy sale revenue after project completion corresponding to the loan would be pledged to the Bank. As at 31 December 2010, the Company’s ending balance of the loan under the contract stood at RMB 355 million yuan. 6. With the title to the steam sale revenue as a pledge, the Company’s subsidiary Zhejiang Changxing Southeast Heat Supply Co. Ltd entered into a contract with Zhejiang Changxing Rural Cooperative Bank to obtain a loan of RMB 5 million yuan with a term from 2 December 2010 to 20 November 2011.

VIII. Committed Events (I) Important Committed Events 1. As approved in the 12th meeting of the 4th board of directors of the Company, the Company and Trading Emission PLC signed “CER Trading Agreement for CDM Project of Xiaoshan Power Plant Natural Gas Power Generation Project”, based on which the Company will sell CERs (certified emission reduction) during the period from 1 January 2008 to 31 December 2012 as follows:

Contract Year Maximum Annual Minimum Annual Quantity (ton) Quantity (ton) 2008 870,000 0 2009 870,000 0 2010 870,000 565,500 2011 870,000 565,500 2012 870,000 565,500

In the current period, the CERs transaction settled between the Company and Trading Emission PLC belonging to Year 2008 amounted to 48,844 tons. 2. As approved in the 1st extraordinary shareholders’ general meeting in 2003, the Company was assigned 25% of ZBHGC’s equity in September 2004 to participate in the construction for three 200 MW Francis type hydraulic generating units. Based on Document Fa Gai Neng Yuan [2004]1614 issued by National Development & Restructuring Commission (NDRC), the dynamic total investment of the project amounts to RMB 4,719 million yuan, of which the

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registered capital of the project accounts for 26.50%, amounting to approximately RMB 1,251 million yuan. In proportion to its investment ratio of 25%, the made cumulative equity contributions amounting to RMB 313 million yuan. As approved in “NDRC’s Consent to Adjusted Total Investment of Zhejiang Tankeng Hydropower Station Project” (Document Fa Gai Neng Yuan Ban [2010]753), the total investment of Tankeng Hydropower Station Project was adjusted to RMB 6.586 billion yuan, with the addition to be financed with ZBHGC’s equity capital and bank loans. In this context, ZBHGC intends to increase its registered capital from RMB 1.252 billion yuan to RMB 1.976 billion yuan, with the adjusted registered capital accounting for 30% of the adjusted total investment. As approved in the 16th meeting of 5th Board of the Company on 9 July 2010, the Company will make additional equity investment in ZBHGC up to RMB 181 million yuan. As at 31 December 2010, the Company made additional equity investment in ZBHGC amounting to RMB 62.50 million yuan. (II) Fulfilment of Prior Commitment As approved in the 1st interim shareholders’ general meeting 2009, the Company will make additional investment in ZJPGC in proportion to its shareholding ratio to co-finance the construction of Jiaxing Power Plant Phase III “Replacing Small-capacity With Large-capacity Generators” Project. Based on Document Fa Gai Neng Yuan [2009] 1338 issued by NDRC, the dynamic total investment of the project amounts to RMB 7,890 million yuan, of which the registered capital of the project amounts to RMB 1,580 million yuan, accounting for about 20% of the total dynamic investment, to be contributed by the shareholders of ZJPGC in proportion to their shareholding ratios. The Company shall make additional equity investment up to RMB 379.2 million yuan in proportion to its shareholding ratio of 24%. As at 31 December 2010, the Company had made cumulative incremental payment totalling RMB 170.3956 million yuan in ZJPGC. IX. Post Balance Sheet Events (I) Distribution of Profit after Balance Sheet Date

Profit or dividends proposed to be Based on the Profit Distribution Proposal distributed for 2010 approved in the 21st meeting of the 5th Board of Directors of the Company on 25 February 2011, after allocating 10% statutory surplus reserve amounting to RMB 47,153,492.63 yuan, the dividend will be distributed in cash at RMB 1.30 yuan per 10 shares (including tax), totalling RMB 261,300,000.00 yuan. The above profit distribution proposal is pending the approval of the shareholders’ general meeting.

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(II) Post Balance Sheet Events Requiring No Adjustment Based on the resolution of the 15th meeting of the 5th Board of Directors, it was agreed to transfer the Company’s 10% stock of ZPNGDC to China Petroleum Natural Gas Corp. (Sinopec NG), and signed Agreement on Stock Transfer in January 2011, with the transfer price based on the asset value of ZPNGDC evaluated on 30 June 2009 as the valuation date to be RMB 158,622,891.70 yuan. The income received by ZPNGDC from the valuation date to the stock clearing date will be shared by the Company as per its investment ratio, to be separately paid by Sinopec NG. The Company received the payment for stock transfer amounting to RMB 158,622,891.70 yuan on 10 February 2011. As of the date of this Financial Statement being approved for release, the formalities relating to the stock transfer had not been completed; nor had the Company received its proportional share of the income of ZPNGDC from the valuation date to the stock clearing date.

X. Other Important Events

(I) Enterprise Consolidation For details of enterprise consolidation, refer to the section entitled “Consolidation of Enterprises and Consolidated Financial Statements” hereof.

(II) Asset Lease For details of lease of fixed assets, refer to the section entitled “Fixed Assets” hereof. (III) Assets and Liabilities Measured in Fair Value

Gains and Losses Cumulative Changes Devaluation Reserve Beginning Item from Changes in in Fair Value Allocated in Current Ending Amount Amount Fair Value Recorded as Equity Period Financial asset Available-for-sale 3,806,841,809.50 -962,260,728.84 1,808,496,369.66 3,448,404,024.76 financial assets Subtotal of financial 3,806,841,809.50 -962,260,728.84 1,808,496,369.66 3,448,404,024.76 assets

(IV) Main Points of Enterprise Annuity Plan and Significant Changes In addition to the legal basic endowment insurance, the Company took out supplementary endowment insurance for its employees in accordance with the national Enterprise Annuity System and entrusted ZEPGC with the management of the insurance. The premium payment method is as follows: Taking [Employee’s performance-cum-seniority-related monthly pay +

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[(Employee’s post rating－1)×3] ] as 1 share, the Company will pay 10 shares and the employee will pay 2 shares. The full amount of enterprise annuity borne by the Company will be recorded as the current gains and losses. (V) Other 1. The two 2x 350 MW gas-steam combined-cycle power generating units, Unit 3 and 4 of Xiaoshan Power Plant Phase II were put into commercial operation on 16 January and 14 April 2008 separately. The estimated cumulative completion of fixed assets amounted to RMB 2,134.5334 million yuan. The final accounting for the project was completed in the current period, amounting to RMB 2,082.3658 million yuan. The corresponding fixed assets were adjusted. 2. Based on “State Council’s Approval of NDRC and Energy Office’s Proposal to Expedite Shutdown of Small Fossil-Fuel Generating Units” (Document Guo Fa[2007]2) and “Zhejiang Provincial Government’s Comment on Shutdown of Small Fossil-fuel Generating Units”(Document Zhe Zheng Fa [2007]32), the Company reviewed and approved the Proposal to Adjust Plan for Shutdown of Unit 1~6 of Taizhou Power Plant in the 5th meeting of the 5th Board of Directors on 19 August 2009. With the approval of Zhejiang Provincial Economic & Informatization Commission with Document ZJXDL [2009]253, it was planned to decommission the six coal-fired 135 MW units of Taizhou Power Plant in two phases as follows: in Phase I, Unit 2, 3, 4 and 5 to be shut down starting from 2 September 2009; in Phase II, Unit 1 and 6 to be shut down by the end of 2010. The Company shut down Unit 2, 3, 4 and 5 on 2 September 2009 and Unit 1 and 6 on 8 August 2010. As at 31 December 2010, Unit 1~6 of the Company had been decommissioned but not yet demolished.

XI. Notes to Financial Statements of Parent Company (I) Notes to Balance Sheet of Parent Company 1. Accounts Receivable (1) Details 1) Category Details

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Portfolio based account age 297,025,600.71 100.00 1,485,128.00 0.50 224,559,966.57 100.00 1,122,799.83 0.50 analysis Receivable with single insignificant value but single allowance for bad debt

Total 297,025,600.71 100.00 1,485,128.00 0.50 224,559,966.57 100.00 1,122,799.83 0.50

2) Account receivables with allocation of allowance for bad debt based on account age analysis

Ending Amount Beginning Amount Book balance Book balance Account Age Allowance for Percentage Percentage Allowance for bad debt Amount Amount (%) bad debt (%)

Within 1 year 297,025,600.71 100.00 1,485,128.00 224,559,966.57 100.00 1,122,799.83

Subtotal 297,025,600.71 100.00 1,485,128.00 224,559,966.57 100.00 1,122,799.83

(2) There were no accounts due from the shareholders holding 5% and above of the Company’s voting shares. (3) Accounts receivable from top 5 debtors

Percentage Out of Relationship with the Name of Organization Book Balance Account Age Balance of Accounts Company Receivable (%) ZPEPC Non-related party Within 1 year 261,216,246.65 87.94 ZJPGC Related party Within 1 year 11,792,878.11 3.97 Zhejiang Zheneng Beilun Power Related party Within 1 year 11,484,321.03 3.87 Generation Co. Ltd Zhejiang Zheneng Yueqing Power Related party Within 1 year 6,537,034.53 2.20 Generation Co. Ltd Zhejiang Zheneng Wenzhou Related party Within 1 year 2,380,121.64 0.80 Power Generation Co. Ltd Subtotal 293,410,601.96 98.78

(4) Other accounts receivable from related parties

Percentage Out of Name of Organization Relationship with the Company Book Balance Balance of Accounts Receivable (%) ZCPGC Related party 1,621,923.03 0.55

Subtotal 1,621,923.03 0.55

2. Other Receivables

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(1) Details 1) Category Details

Ending Amount Beginning Amount Book balance Allowance for bad debt Book balance Allowance for bad debt Category Percent Percent Percent Percent Amount Amount Amount Amount (%) (%) (%) (%) Receivable with single significant value and single allowance for bad debt Portfolio based account age 12,733,878.65 100.00 93,114.65 0.73 16,506,849.18 100.00 3,095,745.54 18.75 analysis Receivable with single insignificant value but single allowance for bad debt Total 12,733,878.65 100.00 93,114.65 0.73 16,506,849.18 100.00 3,095,745.54 18.75

2) Account receivables with allocation of allowance for bad debt based on account age analysis

Ending Amount Beginning Amount Book balance Book balance Account Age Allowance for Allowance for Percentage Percentage Amount bad debt Amount bad debt (%) (%)

Within 1 year 12,662,261.95 99.44 63,311.31 5,986,759.17 36.27 29,933.80

1~2 years 20,016.70 0.16 4,003.34 7,375,142.10 44.68 1,475,028.42

2~3 years 51,600.00 0.40 25,800.00 3,083,916.70 18.68 1,541,958.35

Over 3 years 61,031.21 0.37 48,824.97

Subtotal 12,733,878.65 100.00 93,114.65 16,506,849.18 100.00 3,095,745.54

(2) There were no accounts due from main shareholders holding 5% and above of the Company’s voting shares.

(3) Top 5 debtors of other receivables

Percentage Out Relationship with Account of Balance of Name of Organization Book Balance Purpose of Accounts the Company Age Other Receivable (%) Preconstruction expenses for Within 1 Advance payment for Non-related party 10,451,348.61 82.08 Xinjiang project year pre-construction fee Housing Fund Management Within 1 Housing fund and Non-related party 855,081.89 6.72 Centre year maintenance fund Compensation for the marine Within 1 Compensation Non-related party 634,000.00 4.98 beacon year receivable Hangzhou Xiaoshan Puyang Within 1 Deposit Non-related party 300,000.00 2.36 River Valley Management Office year

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Within 1 Provisional sum Zhou Xianming Non-related party 221,565.69 1.74 year

Subtotal 12,461,996.19 97.88

(4) There was no other receivables due from related parties. 3. Long-term Equity Investment

(1) Details Accounting Initial Investment Investee Company Beginning Amount Increase/Decrease Ending Amount Method Cost ZJPGC Based on 663,645,600.00 795,413,202.82 58,592,650.29 854,005,853.11 equity Based on ZBHGC 378,600,174.16 273,733,860.48 134,440,299.28 408,174,159.76 equity Based on ZLPGC 411,375,000.00 487,421,989.29 -724,482.25 486,697,507.04 equity Based on ZCPGC 712,400,000.00 712,400,000.00 712,400,000.00 cost Taizhou Haitian Electric Based on 29,088,414.80 29,088,414.80 29,088,414.80 Power Project Co. Ltd cost Taizhou Lianyuan Heat Based on 18,416,877.81 18,416,877.81 18,416,877.81 Supply Co. Ltd cost Zhejiang Hualong Power Based on 6,566,515.22 6,566,515.21 0.01 6,566,515.22 Project Co. Ltd cost Anhui Xingwan Mining Co. Based on 6,750,000.00 6,750,000.00 6,750,000.00 Ltd cost Based on China Everbright Bank Co. 312,000,000.00 -312,000,000.00 cost China Southern Securities Based on 220,000,000.00 Co. Ltd cost Based on ZPNGDC 113,000,000.00 113,000,000.00 113,000,000.00 cost Zhejiang Venture Investment Based on 10,571,428.57 10,571,428.57 10,571,428.57 Group Co. Ltd cost Taizhou Phoenix Hotel Co. Based on 5,000,000.00 5,000,000.00 5,000,000.00 Ltd cost Total 2,575,414,010.56 2,770,362,288.98 -119,691,532.67 2,650,670,756.31

(Continued) Note on discrepancy Devaluation Percentage of Cash Dividend Shareholding between shareholding Devaluation Reserve Investee Company Voting Right in Current ratio percentage and voting Reserve Allocated in (%) Period right percentage Current Period ZJPGC 24 24 143,427,219.83

ZBHGC 25 25

ZLPGC 25 25 59,629,312.30

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ZCPGC 65 65

Taizhou Haitian Electric 100 100 Power Project Co. Ltd Taizhou Lianyuan Heat 95 95 Supply Co. Ltd Zhejiang Hualong Power 100 100 Project Co. Ltd Anhui Xingwan Mining Co. 15 15 Ltd

China Everbright Bank Co. 7,185,261.37

China Southern Securities 5.78 5.78 220,000,000.00 Co. Ltd

ZPNGDC 10 10

Zhejiang Venture Investment 11 11 3,740,000.00 Group Co. Ltd Taizhou Phoenix Hotel Co. 14.28 14.28 Ltd Total 220,000,000.00 213,981,793.50

(II) Notes to Profit Statement of Parent Company 1. Operating Income/Operating Cost

(1) Details Item Current Amount Prior Amount Principal operating income 4,932,731,870.73 4,692,479,798.22

Other operating income 10,622,753.31 7,612,943.63

Operating cost 4,358,595,290.93 3,862,832,329.16

(2) Principal operating income/principal operating cost（by product）

Current Amount Prior Amount Product Name Income Cost Income Cost Income from power sale 4,873,404,592.77 4,310,060,983.36 4,646,934,006.83 3,828,462,527.20 Income from heat supply 59,327,277.96 46,261,029.20 45,545,791.39 32,225,008.55 Subtotal 4,932,731,870.73 4,356,322,012.56 4,692,479,798.22 3,860,687,535.75

(3) Operating income from the top 5 customers of the Company

Percentage out of the Company’s Customer Name Operating Income Total Operating Income (%)

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ZPEPC 4,636,959,183.78 94.00 ZJPGC 65,998,661.00 1.34 Zhejiang Zheneng Beilun Power 59,540,338.00 1.21 Generation Company Ltd Taizhou Lianyuan Heat Supply Co. 49,049,105.11 0.99 Ltd Zhejiang Zheneng Yueqing Power 40,073,092.00 0.81 Generation Company Ltd Subtotal 4,851,620,379.89 98.35

2. Returns on Investment

(1) Details

Item Current Amount Prior Amount

Income from long-term equity investment accounted 10,925,261.37 13,484,900.99 for on cost basis Income from long-term equity investment accounted 251,269,399.45 259,548,877.28 for on equity basis Investment returns obtained during ownership of 62,419,361.86 49,797,754.00 available-for-sale financial assets

Total 324,614,022.68 322,831,532.27

(2) Income from long-term equity investment accounted for on cost basis

Investee Company Current Amount Prior Amount Reason for Increase/Decrease China Everbright Bank Dividend payment 7,185,261.37 13,484,900.99 Company Ltd Zhejiang Venture Dividend payment 3,740,000.00 Investment Group Corp. Subtotal 10,925,261.37 13,484,900.99

(3) Income from long-term equity investment accounted for on equity basis

Investee Company Current Amount Prior Amount Reason for Increase/Decrease

ZJPGC 120,424,270.12 176,889,869.18 Change in net profit of investee

ZBHGC 71,940,299.28 -35,359,045.95 Change in net profit of investee ZLPGC 58,904,830.05 118,018,054.05 Change in net profit of investee

Subtotal 251,269,399.45 259,548,877.28

(III) Supplementary Information for Parent Company’s Statement of Cash Flow

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Supplementary Information Current Amount Prior Amount

(1) Net profit converted to cash flow from operating activities

Net profit 471,534,926.26 371,954,711.35 Add: asset devaluation reserve -2,640,302.72 289,183,411.44 Depreciation of fixed assets, oil and gas assets, and productive 590,984,935.00 608,563,471.62 assets Amortization of intangible assets 10,194,209.48 9,968,601.38 Amortization of long-term deferred expenses 750,849.28 1,941,462.00 Loss on disposal of fixed assets, intangible assets and other -5,505,080.36 12,316,462.41 long-term assets (with income denoted by “-”) Loss on retirement of fixed assets (with income denoted by “-”) Loss from changes in fair values (with income denoted by “-”) Financial expenses (with income denoted by “-”) 116,179,601.61 168,946,435.34 Loss on investment (with income denoted by “-”) -324,614,022.68 -322,831,532.27 Decrease in deferred tax asset (with increase denoted by “-”) 7,064,882.77 -76,324,308.82 Increase in deferred tax liability (with decrease denoted by “-”) -1,541,458.33 -1,541,466.67 Decrease in inventory (with increase denoted by “-”) -22,837,048.30 55,599,191.58 Decrease in operational receivables (with increase denoted by “-”) -75,123,636.81 147,524,975.60 Increase in operational payables (with decrease denoted by “-”) -105,161,663.05 55,959,095.83 Others Net cash flow generated from operating activities 659,286,192.15 1,321,260,510.79 (2) Important Investment and financing activities not involving cash

income and expenditure Debt converted to capital Convertible corporate bonds due within 1 year Fixed assets leased in by financing lease

(3) Net change in cash and cash equivalents:

Ending balance of cash 356,975,808.12 444,285,045.14 Less: Beginning balance of cash 444,285,045.14 737,005,708.06 Add: Ending balance of cash equivalents Less: Beginning balance of cash equivalents Net increase in cash and cash equivalents -87,309,237.02 -292,720,662.92

XII. Other Supplementary Information (I) Non-recurring gains and losses 1. Details of Current Non-recurring Gains and Losses

Item Amount Remarks Gains and losses from disposal of non-current assets, including write-off 571,403.52 of allocated reserves for asset devaluation Refund, reduction or exemption of tax without valid approvals or approving documents or occurring occasionally

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Government subsidies recorded as current gains and losses (except those in close connection with the Company’s normal business continuously 5,666,820.93 provided in accordance with the national standards) Capital use fee charged to the non-financial enterprises recorded as 1,950,143.93 current gains and losses Gains resulting from cost of investment in acquiring subsidiaries, affiliated enterprises and joint ventures less than fair value of recognizable net asset at the time of making investment Gains and losses from swap of non-monetary assets Returns from trust investment or trust asset management Various asset devaluation reserves allocated due to force majeure such as natural calamities Gains and losses from debt restructuring Expenses arising from enterprise reorganization, such as expenses for employee re-employment Gains and losses resulting from unfair transaction price exceeding fair value Current net gains and losses of subsidiaries formed from consolidation of the enterprises under the same control from period beginning to consolidation date Gains and losses from contingent events irrelevant to normal operations of the Company Gains and losses from changes in fair values of transactional financial assets and liabilities, and investment returns from disposal of transactional financial assets, liabilities and available-for-sale financial assets, except the effective hedging transactions related to normal operations of the Company Reversal of the devaluation reserve for accounts receivable that undergo single devaluation test Gains and losses from external trust loans Gains and losses from changes in fair values of investing properties that are subsequently measured taking the fair value mode Impact of one-off adjustment on current gains and losses in accordance with laws and regulations pertaining to taxation and accounting Trust fee income from trust operations as a trustee Other non-operating income and expense than the above items -423,319.06 Other gains and losses in accordance with the definition of non-recurring gains and losses Subtotal 7,765,049.32 Less: Impact of corporate income tax (with decrease in income tax 1,990,461.39[Note] denoted by “-”) Impact of minority shareholders’ equity (after tax) -1,188,623.51 Net value of non-recurring gains and losses belonging to shareholders of 6,963,211.44 the parent company

[Note]: As the donation expenditure of RMB 160,000.00 yuan and the penalty expenditure of RMB 36,796.21 yuan cannot be allocated before tax, the impact of corporate income tax is as follows:

(7,765,049.32+160,000.00+36,796.21)×25%＝1,990,461.39 (yuan)

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(II) Discrepancies Between Accounting Figures By Chinese Accounting Standards and By International Accounting Standards Discrepancies in net profits and net assets by Chinese/international standards:

Unit: RMB ’000 yuan

Net Profit Net Assets Current Amount Prior Amount Ending Amount Beginning Amount By the Chinese 543,354 545,650 9,531,357 9,907,549 accounting standards Reconciled by the international accounting standards: Amortization of deferred government 5,814 5,814 subsidy Deferred income tax 9,159 10,699 liability Deferred government subsidy recognized -40,871 -46,685 before 1 Jan. 2007 not yet fully amortized Other -1,140 -1,141 2,500 2,100

By the international 548,028 550,323 9,502,145 9,873,663 accounting standards (III) Yield on Net Assets and Earnings per Share 1. Details

Weighted Average Earnings per Share (yuan/share) Profit in Current Period Yield on Net Asset Basic Diluted (%) Net profit belonging to ordinary 5.6425 0.2642 0.2642 shareholders Net profit belonging to ordinary shareholders after deducting 5.5685 0.2608 0.2608 non-recurring gains and losses

2. Computation Process of Weighted Average Yield on Net Assets

Item Denotation Current Amount

Net profit belonging to ordinary shareholders of the Company A 531,131,527.29

Non-recurring gains and losses B 6,963,211.44

Net profit belonging to ordinary shareholders of the Company after 524,168,315.85 deducting non-recurring gains and losses C=A-B

Beginning net assets belonging to ordinary shareholders of the 9,508,311,850.94 Company D

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Increase in net assets belonging to ordinary shareholders of the Company resulting from issuance of new shares and conversion of bonds to shares E

Number of months from the next month following new asset increase

up to the reporting period end F

Decrease in net assets belonging to ordinary shareholders of the Company resulting from share repurchase or cash dividend distribution G

Number of months from the next month following new asset

decrease up to the reporting period end H

Change in fair value of available-for-sale financial assets -721,695,546.63 1,559,274,734.78 [Note] recorded as capital reserve Other Number of months from the next month following new asset J 6 [Note] increase/decrease up to the reporting period end 1

Number of months in the reporting period K 12

L= D+A×1/2 Weighted average net assets + 9,413,029,841.27 E×F/K-G×H/K±I×J/K

Weighted average yield on net assets M=A/L 5.6425%

Weighted average yield on net assets after deducting non-recurring 5.5685% gains and losses N=C/L [Note]: The weighted average net assets is computed per the amount of current change/2.

(IV) Anomalies in Items of Main Accounting Statement and Causes of Anomalies

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Long-term This is mainly because the long-term operation & maintenance cost of 2,514.05 100.00% deferred expenses the natural gas units of Xiaoshan Power Plant increased. Bills payable 10,000.00 -100.00% This is mainly because of the payment of matured bills. This is mainly because Taizhou Power Plant Phase V and Xiaoshan Other payable 7,266.76 18,854.12 -61.46% Power Plant Natural Gas Project paid for project expenses and quality deposit. Non-current This is mainly because the payable long-term borrowings due within 1 liabilities due 48,000.00 36,000.00 33.33% year increased. within 1 year This is mainly because the Company had no new large Long-term 300,430.00 361,330.00 -16.85% capital-construction project or new loan, and the previous loans were borrowing repaid in the current period in accordance with loan agreements. This is mainly because the ending fair value of the available-for-sale Deferred income financial assets held by the Company decreased substantially, and 61,198.94 85,409.61 -28.35% tax liability accordingly the recognized deferred income tax liability decreased substantially. This is mainly because the ending amount of fair value of the Capital reserve 374,151.91 446,321.46 -16.17% available-for-sale financial assets decreased substantially compared with the beginning amount. Profit Statement Current Prior Range of Cause of Change Items Amount Amount Change This is mainly because the coal price went up and the power Operating cost 687,302.77 618,062.13 11.20% generation by the natural gas units increased in the current period, and the corresponding cost went up. Asset devaluation This is mainly because the devaluation reserve for the assets of Unit -133.53 28,920.67 -100.46% loss 1~6 of Taizhou Power Plant was allocated in the prior period.

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Section XII. Documents Available for Inspection

1. Financial Statements affixed with the signatures and stamps of the Legal Representative, Chief Accountant and Accounting Department Manager; 2. Originals of Auditor’s Reports affixed with the stamps of the accounting firms, and the signatures and stamps of the public certified accountants; 3. Originals of all the documents and announcements published in the newspaper designated by CSRC during the reporting period; 4. Annual Report published on London Stock Exchange.

Chairman of Board of Directors: Mao Jianhong Zhejiang Southeast Electric Power Company Limited Dated: 25 February 2011

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