A.
B.
Memorandum on Interpretation and Accounting Policies
Annex II
Introduction.
1.
2.
This Memorandum has been prepared to enable the provisions of the revised Scheme of Control ("the Scheme") to be interpreted and carried out in the sense in which the Scheme has been agreed by the Government of Hong Kong and China Light/Esso and approved by Executive Council in 1977. The Scheme will govern the financial affairs of China Light, PEPCO, the New Generating Co. and any other associated company or companies (jointly referred to as "the Companies") so far as they refer to "electricity-related" activities, i.e. activities directly or indirectly appertaining to the generation, transmission, distribution and sale of electricity.
The interpretations contained herein extend to the Scheme itself as well as to Annex I.
Interpretation.
1.
2.
3.
"Year" means the financial year adopted by the Companies in respect of their annual profit and loss accounts and balance sheets, i.e. the year ending 30th September.
"Fixed Assets" means the Companies' electricity-related investments in land, buildings, plant and equipment and, subject to C.1 below, includes assets in course of construction, payments on account, goods in transit and capital stores.
"Depreciation" means depreciation charged in accordance with section D. below.
4.
5.
"Net fixed assets" means cost of fixed assets less depreciation.
11
'Average net fixed assets" for any year means the average for that year of the opening and closing balances of net fixed assets.
6.
"Gross tariff revenues of China Light" means the total of the following :
a)
revenues from sales of electricity
including fuel clause revenues, rebates
from Rate Reduction Reserve not being taken into account;
b)
electricity-related fees and other
revenues derived from the use of the Companies' fixed assets.