29th Sep 2010 07:00
DATANG INTERNATIONAL POWER GENERATION CO., LTD. 2010 Interim Report
Focus in Power Generation,
Pursue Synergistic Diversifications,
Grow into an Energy Conglomerate.
Datang Power has always been committed to its diversification developmentstrategy throughout the years. The Company has witnessed its generationstructure evolving from single-mode thermal generation into a strategicallybalanced deployment of thermal power, hydropower, wind power and nuclear power.Its business structure has also extended from a pure power generation operationto a chain of upstream and downstream businesses related to power generation.In the future, based on various successful initiatives in its diversificationstrategy, Datang Power will further the development of its generation structureand business structure. It will continue to enhance its coal-fired power;aggressively expand its hydropower; continuously develop wind power; activelypursue nuclear power; focus on suitable coal operations; steadily developcoal-to-chemical projects; and secure a complementary development of railway,port and shipping. Through furthering its diversifications, Datang Powermarches towards all-encompassing synergistic developments, endeavouring todevelop into an integrated energy company that enjoys a domestic leadershipposition and international reputation.
Contents
Company Results
Management Discussion and Analysis
Share Capital and Dividends
Significant Events
Purchase, Sale and Redemption of the Company's Listed Securities
Compliance with the Code on Corporate Governance Practices
Compliance with the Model Code for Securities Transactions by Directors of Listed Issuers
Audit Committee
Condensed Consolidated Statement of Comprehensive Income
Condensed Consolidated Statement of Financial Position
Condensed Consolidated Statement of Changes in Equity
Condensed Consolidated Statement of Cash Flows
Notes to the Condensed Financial Statements
Supplemental Information
Company Results
OPERATING AND FINANCIAL HIGHLIGHTS:
* Operating revenue amounted to approximately RMB28,946 million, representing
an increase of approximately 39.66% over the first half of 2009.
* Net profit attributable to equity holders of the Company amounted to
approximately RMB912 million, representing an increase of approximately 27.91%
over the first half of 2009.
* Basic earnings per share attributable to equity holders of the Company
amounted to approximately RMB0.0757, representing an increase of approximately
RMB0.0151 per share over the first half of 2009.
The board of directors (the "Board") of Datang International Power GenerationCo., Ltd. (the "Company") hereby announces the unaudited consolidated operatingresults of the Company and its subsidiaries (the "Group") prepared inconformity with the International Financial Reporting Standards ("IFRS") forthe six months ended 30 June 2010 (the "Period"), together with the unauditedconsolidated operating results of the first half of 2009 (the "CorrespondingPeriod Last Year") for comparison. Such operating results have been reviewedand confirmed by the Company's audit committee (the "Audit Committee").
Operating revenue of the Group for the Period was approximately RMB28,946 million, representing an increase of approximately 39.66% as compared to the Corresponding Period Last Year.
Net profit attributable to equity holders of the Company was approximatelyRMB912 million, representing an increase of approximately 27.91% as compared tothe Corresponding Period Last Year. Basic earnings per share attributable toequity holders of the Company amounted to approximately RMB0.0757, representingan increase of approximately RMB0.0151 per share as compared to theCorresponding Period Last Year.
The Board does not recommend any payment of interim dividend for 2010.
Please refer to the unaudited financial information for details of the consolidated operating results of the Group.
Management Discussion and Analysis
The Group is one of the largest independent power generation companies in thePeople's Republic of China (the "PRC"), which is primarily engaged in powergeneration businesses with its main focus on coal-fired power generation. As at30 June 2010, the Group managed a total installed capacity of 34,252.8MW. Thepower generation businesses of the Group are primarily distributed in the NorthChina Power Grid, the Gansu Power Grid, the Zhejiang Power Grid, the YunnanPower Grid, the Fujian Power Grid, the Guangdong Power Grid, the ChongqingPower Grid, the Jiangxi Power Grid, the Liaoning Power Grid, the Ningxia PowerGrid, the Jiangsu Power Grid and the Qinghai Power Grid.During the Period, the PRC's economy maintained steady rapid growth, with ayear-on-year 11.1% growth on Gross Domestic Product (GDP) reported. Both powergeneration and power consumption nationwide showed accelerated growth. Newlyinstalled generating units continued to be of relatively large scale and theirstructure continued to improve; nationwide capability to supply power wassufficient; and the cumulative average utilisation hours of power generatingfacilities was 190 hours higher as compared to the Corresponding Period LastYear. Overally speaking, power supply and demand in the PRC was balanced ingeneral. According to relevant information, during the Period, nationwideinstalled capacity of power plants with generation capacity of6,000 kW or above grew by approximately 11.6% year-on-year; social powerconsumption increased by approximately 21.57% over the previous year, whilenationwide power generation increased by approximately 19.3% over the previousyear.During the Period, the Group seized the opportunities of the upward economictrend and the recovery of the power market, while continuing steadfastly theimplementation of the development strategy of "pursuing the power generationbusiness as its core development whilst complementing with synergisticdiversifications", and pushed forward power-related upstream and downstreamprojects such as coal mining, coal chemical, railway construction and shippingat a steady pace in accordance with plans. The Group, with reference to changesin the State policies and the market environment, took initiatives in tacklingthe changes and making prompt responses, while ensuring steady, safe andorderly production and operation management. As a result, the Group achieved asignificant growth in profit over the Corresponding Period Last Year.
Management's Review on the Operating Results of Various Businesses
Power Generation Businesses
1. Business Review
(1) Maintained Stable Power Production
During the Period, the operational generating units of the Group maintained safe and stable operation. No casualties or incidents regarding the production facilities occurred to the Group during the course of power production. The equivalent availability factor of operational generating units amounted to 94.17%, maintaining at relatively high levels.
During the Period, primarily due to the impact of the positive macro-economy ofthe PRC, the utilisation hours of the Group's power generation facilitiesincreased considerably as compared to the Corresponding Period Last Year. Totalpower generation of the Group amounted to approximately 80.768 billion kWh,representing a significant increase of approximately 31.75% as compared to theCorresponding Period Last Year. Total on-grid power generation of the Groupamounted to approximately 76.013 billion kWh, representing an increase ofapproximately 31.65% over the Corresponding Period Last Year. Both total powergeneration and on-grid power generation saw significant year-on-year increases,which were mainly attributable to the buoyant macro-economy of the country, thecontinuously strong demand of social power consumption, a growth in capacity ofthe operational generating units and an increase in average utilisation hoursof the coal-fired generating units of the Company and its subsidiaries.Details of the power generation of the Group during the Period (Unit: billion kWh): Power Power generation generation for the for the first half first half GrowthPower plant/company of 2010 of 2009 (%)Gao Jing Thermal Power Plant 1.6835 1.3539 24.34%Dou He Power Plant 4.2014 3.5957 16.85%Xia Hua Yuan Power Plant 0.5145 0.6924 -25.69%Zhang Jia Kou Power Plant 6.6552 6.2422 6.62%
Tianjin Datang International Panshan Power Generation
Company Limited ("Panshan Power Company")　 3.4132
3.1573 8.11%
Inner Mongolia Datang International Tuoketuo Power
Generation Company Limited ("Tuoketuo Power Company") 10.1039 8.8999 13.53%
Shanxi Datang International Yungang Thermal Power
Company Limited ("Yungang Thermal Power Company") 3.1472 2.1242 48.16%
Hebei Datang International Tangshan Thermal Power
Company Limited ("Tangshan Thermal Power Company") 1.6580 1.9276 -13.99%
Shanxi Datang International Shentou Power Generation
Company Limited ("Shentou Power Company") 2.4540
2.3104 6.22%
Gansu Datang International Liancheng Power Generation
Company Limited ("Liancheng Power Company") 1.5835
1.4367 10.22%
Hebei Datang International Wangtan Power Generation
Company Limited ("Wangtan Power Company") 3.4390
3.2426 6.06%
Zhejiang Datang International Wushashan Power
Generation Company Limited ("Wushashan Power Company") 6.5222 5.9703 9.24%
Guangdong Datang International Chaozhou Power Generation
Company Limited ("Chaozhou Power Company") 3.1931
3.3272 -4.03%
Fujian Datang International Ningde Power Generation
Company Limited ("Ningde Power Company") 4.0524
3.4914 16.07%
Yunnan Datang International Honghe Power Generation
Company Limited ("Honghe Power Company") 2.2281
1.5756 41.41% Power Power generation generation for the for the first half first half GrowthPower plant/company of 2010 of 2009 (%)
Jiangxi Datang International Xinyu Power Generation
Company Limited ("Xinyu Power Company") 0.8051
0.8181 -1.59%
Shanxi Datang International Yuncheng Power Generation
Company Limited ("Yuncheng Power Company") 3.0133
2.9647 1.64%
Inner Mongolia Datang International Hohhot Thermal Power
Generation Company Limited
("Hohhot Thermal Power Company") 1.3820
0.4586 201.35%
Chongqing Datang International Pengshui Hydropower
Development Company Limited
("Pengshui Hydropower Company") 2.0980
2.6167 -19.82%
Yunnan Datang International Nalan Hydropower
Development Company Limited
("Nalan Hydropower Company") 0.1321
0.2045 -35.40%
Yunnan Datang International Lixianjiang
Hydropower Development Company
Limited ("Lixianjiang Hydropower Company") 0.9230
1.2857 -28.21%
Inner Mongolia Datang International Duolun
Hydropower Multiple Development Company
Limited ("Duolun Hydropower Company") 0.0026
0.0041 -36.59%
Qinghai Datang International Zhiganglaka Hydropower
Generation Development Company Limited
("Zhiganglaka Hydropower Company") 0.3457
0.357 -3.17%
Hebei Datang International Huaze Hydropower Development
Company Limited ("Huaze Hydropower Company") 0.0097
0.009 7.78%
Inner Mongolia Datang International Windpower Development
Company Limited ("Inner Mongolia Windpower Company") 0.1014 0.0549 84.70%
Inner Mongolia Datang International Tuoketuo
No. 2 Power Generation Company Limited
("Tuoketuo No. 2 Power Company") 3.3591
2.9386 14.31%
Liaoning Datang International Jinzhou Thermal Power
Generation Company Limited
("Jinzhou Thermal Power Company") 1.6656
0.1967 746.77%
Shanxi Datang International Zuoyun Windpower Company
Limited
("Zuoyun Windpower Company") 0.0843
0.048 75.63% Power Power generation generation for the for the first half first half GrowthPower plant/company of 2010 of 2009 (%)
Hebei Datang International Fengrun
Thermal Power Company Limited Not Not ("Fengrun Thermal Power Company") 1.7015
Applicable Applicable
Ningxia Datang International Daba Power
Generation Company Limited ("Daba Not Not Power Company") 3.9021
Applicable Applicable
Hebei Datang International Zhangjiakou
Thermal Power Company Limited Not Not ("Zhangjiakou Thermal Power Company") 1.3965
Applicable Applicable
Qian'an Datang Thermal Power Company
Limited (Qianan Datang Thermal Not Not Power Company") 0.5593
Applicable Applicable
Liaoning Datang International Windpower
Development Company Limited Not Not ("Liaoning Windpower Company") 0.1143
Applicable Applicable
Fujian Datang International Windpower
Development Company Limited Not Not ("Fujian Windpower Company") 0.0880
Applicable Applicable
Jiangsu Datang International Lvsigang
Power Generation Company Limited Not Not ("Lvsigang Power Company") 3.6375
Applicable Applicable
Yunnan Datang International Wenshan
Hydropower Development Company Limited
("Wenshan Hydropower Not Not Development Company") 0.2019 Applicable Applicable
Yuneng (Group) Company Limited
Not Not ("Yuneng Group Company") 0.3960 Applicable ApplicableTotal 80.768 61.304 31.75%
(2) Advanced Steadily on Energy Savings and Emissions Reduction
During the Period, coal consumption of the Group amounted to approximately324.92g/kWh, representing a decrease of approximately 1.88g/kWh over theCorresponding Period Last Year, while the consolidated electricity consumptionrate of power plants amounted to approximately 5.95%. The coal-fired generatingunits of the Company and its subsidiaries continued to achieve adesulphurisation facilities installation rate of 100%. Emission rates ofsulphur dioxide, nitrogen oxides, smoke ash and waste water amounted toapproximately 0.459g/kWh, 1.41g/kWh, 0.131g/kWh and 86g/kWh, respectively.Emission rates of various pollutants were lower than the national averagelevels.
(3) Achieved Prominent Results in Project Construction
During the Period, the Group achieved prominent results in construction andpreliminary works through delegating management responsibilities level-by-levelaccording to specific production targets for power projects, thereby enablingnew generating units with a total capacity of approximately 3,511MW to commenceproduction successfully for power generation. Among the new capacity added:
-- 2,940MW of coal-fired power units, mainly including: four 660MW generating
units at Lvsigang Power Company; and one 300MW generating unit at Zhangjiakou
Thermal Power Company.
-- 473.5MW of hydropower units, including: 200MW hydropower generating units at
Wenshan Hydropower Development Company; and 273.5MW hydropower generating units
at Yuneng Group Company (obtained through acquisition).
-- 97.5MW of windpower units, including: 48MW windpower generating units at
Inner Mongolia Windpower Company; and 49.5MW windpower generating units at
Zuoyun Windpower Company.
2. Major Financial Indicators and Analysis
(1) Operating Revenue
Revenues from power and heat sales of the Group accounted for approximately84.01% of the total operating revenue of the Group. Among such revenues, salesrevenue from the principal power generation business accounted for 82.92% ofthe total operating revenue.During the Period, revenues from power and heat sales of the Group amounted toapproximately RMB24,002 million and RMB316 million, respectively, representingincreases of approximately 30.93% and 79.89% over the Corresponding Period LastYear. Among such revenues, the increase in revenue from power sales was mainlyattributable to the significant year-on-year increases in power generation andon-grid power generation during the Period; the increase in revenue from heatsales was mainly attributable to an increase in co-generation units and theimpact of climate change during the Period, resulting in a substantialyear-on-year increase in heat sales.
(2) Operating Costs
During the Period, the operating costs of power and heat generation of theGroup were approximately RMB19,608 million and RMB516 million, respectively,representing respective increases of approximately RMB5,078 million and RMB255million as compared to the Corresponding Period Last Year, representingincreases of approximately 34.94% and 97.66%, respectively.
(3) Operating Profit
During the Period, operating profit from power generation amounted to approximately RMB4,394 million, representing an increase of approximately 15.60% over the Corresponding Period Last Year while gross profit margin was approximately 18.31%.
Coal Chemical BusinessDuring the Period, smooth progress was made on the following projectscontrolled and constructed by the Group: the Duolun Coal Chemical Project witha production scale of 460,000 tonnes of polypropylene per annum, the KeqiCoal-based Gas Project with a production scale of 4 billion cubic meters ofnatural gas per annum, and the Fuxin Coal-based Gas Project with a productionscale of 4 billion cubic meters of natural gas per annum. Of these projects:
1 The Duolun Coal Chemical Project is located in Duolun County, Xilinguole
Pledge, Inner Mongolia. It uses lignite coal from East Unit 2 of Shengli Coal
Mine in Inner Mongolia (which is controlled and constructed by the Company) as
raw materials; and it applies advanced technologies including the technology of
vaporising coal ash, the syngas purification technology, the large-scale
methanol synthesis technology, the technology to convert methanol to propylene,
and the propylene polymerisation technology to produce coal chemical products.
The final products of the project are 460,000 tonnes/year of polypropylene and
other by-products. The project is still under construction at present. It is
expected that the successful development and construction of this project will
be a new point of profit growth for the Group.
2 Keqi Coal-based Natural Gas Project is located in Kesheketeng Qi, Chifeng
City, Inner Mongolia. The project will use brown coal from East Unit 2 of
Shengli Coal Mine in Inner Mongolia (which is controlled and constructed by the
Company) as raw materials and fuels. It will be a coal conversion project
making clean, efficient and high value-added use of coal through the adoption
of internationally advanced technologies such as pressurised fixed bed
gasification, synthesis gas purification and synthesis gas methanation. Natural
gas, the principal product, will be transmitted by a long-distance pipeline
covering 359 km in total which runs from the project site (Kesheketeng Qi
station) to the final destination in Miyun, Beijing, the PRC. The Keqi
Coal-based Natural Gas Project will be constructed in three stages. The Phase I
project is expected to commence operation by 2012. The project is expected to
produce 4 billion cubic meters of natural gas per annum upon completion of the
entire project and commencement of production.
3 The Fuxin Coal-based Natural Gas Project is located in Changyingzi Town,
Xinqiu District, Fuxin City, Liaoning Province and is a new coal conversion
project using brown coal from East Unit 2 of Shengli Coal Mine in Inner
Mongolia (which is controlled and constructed by the Company) as its raw
materials. It will be a coal conversion project making clean, efficient and
high value-added use of coal through the adoption of internationally advanced
technologies such as pressurised fixed bed gasification, synthesised gas purification and synthesised gas methanation. The natural gas produced is supplied via long-distance pipelines to cities such as Shenyang, Tieling, Fushun, Benxi and Fuxin. Its pipeline covers 334 km in total. The Fuxin
Coal-based Natural Gas Project will be constructed in three stages. The Phase I
project is expected to commence operation by 2013. The project is expected to
produce 4 billion cubic meters of natural gas per annum upon completion of the
entire project and commencement of production.
Coal Business
1. Business Review
The East Unit 2 coal mine of Shengli Coal Mine was developed and constructed bythe Group and is located in the central area of Shengli Coal Mine in InnerMongolia. The coal produced will be mainly used as raw materials for coalchemical projects and coal-based natural gas projects including the Duolun CoalChemical Project, the Keqi Coal-based Natural Gas Project and the FuxinCoal-based Natural Gas Project. Among these, the Phase 1 project reaches aproduction scale of 10 million tonnes.During the Period, the Group has completed the acquisition of 70% interest inInner Mongolia Baoli Coal Company Limited ("Baoli Company"). The open-cut coalmine owned by Baoli Company is located in E'erduosi City, Inner Mongolia. Itsdesigned production scale is 1.2 million tonnes per annum.The successful developments and acquisitions of the above-said coal mineprojects will enhance the coal consumption self-sufficiency ratio of theCompany's power plants. Meanwhile, the Group is also proceeding with thepreliminary development works on the Phase 2 project of the East Unit 2 coalmine of Shengli Coal Mine in Inner Mongolia, Wujianfang Coal Mine andKongduigou Coal Mine. The successful development of the above-mentioned coalmine projects will increase the coal self-sufficiency ratio of the Group'spower plants.To further secure coal supply and lower fuel costs, Beijing Datang Fuel CompanyLimited ("Fuel Company"), a wholly-owned subsidiary of the Company, activelyexpanded its coal sales business and increased its coal sales during thePeriod.
2. Major Financial Indicators and Analysis
(1) Operating Revenue
Operating revenue from the coal business amounted to approximately RMB2,930million, accounting for approximately 10.12% of the total operating revenue ofthe Group, representing an increase of approximately RMB813 million over theCorresponding Period Last Year.
(2) Operating Costs
During the Period, operating costs of the coal business amounted to approximately RMB2,435 million, representing an increase of approximately RMB391 million over the Corresponding Period Last Year.
(3) Operating Profit
During the Period, operating profit from the coal business amounted to approximately RMB495 million, representing an increase of approximately 582.00% over the Corresponding Period Last Year while gross profit margin was approximately 16.88%.
Other Businesses
Jiangsu Datang Shipping Company Limited ("Datang Shipping Company"), in whichthe Group holds 97.54% interest, was registered and established on 6 September2007 by the Group. Currently, Datang Shipping Company has two 70,000-tonne bulkcargo vessels, namely "Datang Power #1" and "Datang Power #2", which areengaged in thermal coal transportation from Qinhuangdao (or other ports inNorth China) to Chaozhou, Guangdong (or Ningde, Fujian). Shipping companies,which the Group controls or has interest in, achieved 2.22 million tonnes ofcoal transportation in the first half of 2010.
Datang Shipping Company actively commenced shipbuilding works and has entered into relevant agreements on planned construction of four 45,000-tonne bulk cargo vessels and two 76,000-tonne bulk cargo vessels, thereby further expanding the fleet scale of the Group.
The development and strengthening of Datang Shipping Company will help to easethe tense situation being faced by the Group's coastal power plants in regardto transportation of thermal coal, stabilise transportation costs for thermalcoal, and enhance its transportation self-sufficiency.
Management's Review on the Consolidated Operating Results
Improved Effectiveness in Operational Management
During the Period, the Company was still under the impact of unfavourable factors such as persistently high fuel coal prices. Faced with such tough operating environment, the Company kept abreast of the trends of the market while taking initiatives in planning budgets, strengthening internal management and at the same time creating a favourable external environment, thereby rigorously enhancing production and operation:
1 Through timely adjustments of the power generation evaluation system,
management accountability was implemented level-by-level, and the target of
power generation was achieved. Consolidated utilisation hours accumulated to
2,304 hours, representing a year-on-year increase of 66 hours;
2 The Company executed its development strategies through strengthening its
capital operation. The non-public issuance of A shares to specific parties was
completed by 23 March 2010. After completion of the issuance, the total share
capital of the Company increased from 11,780,037,578 shares to 12,310,037,578
shares and the net funds raised amounted to RMB3,248,246,600. During the
Period, the Group successfully acquired Baoli Company, which pertains to a
designed production capacity of 1.2 million tonnes per year, thereby increasing
the self-sufficiency ratio for coal consumption for the Company's power plants;
3 In order to effectively utilise the functions of resources allocation in the
capital market, satisfy the capital needs arising from the rapid development of
the Company and foster a successful implementation of the investment projects
of the Company so as to enhance the Company's profitability, the Company
planned to issue not more than 1 billion non-public A-shares within the current
year, with an issue price not lower than RMB6.74 per share (as the Company has
distributed the 2009 final dividend of RMB0.07 per share in July 2010, the
issue price was adjusted from RMB6.81 per share to RMB6.74 per share). To date,
such proposal has been considered and approved by the Board and the general
meeting of the Company as well as the State-Owned Asset Supervisory and
Administration Commission of the PRC (the "SASAC"), and the China Securities
Regulatory Commission has accepted the application of the current non-public
issue of A shares and is undergoing its approval procedures at present.
Operating Revenue
During the Period, the Group realised an operating revenue of approximatelyRMB28,946 million, representing an increase of approximately 39.66% over theCorresponding Period Last Year. Of the operating revenue, revenue from powersales increased by approximately RMB5,671 million.
Operating Costs
During the Period, total operating costs of the Group amounted to approximatelyRMB25,033 million, representing an increase of approximately RMB7,335 millionor approximately 41.42% over the Corresponding Period Last Year.
Net Finance Costs
During the Period, finance costs of the Group amounted to approximatelyRMB2,563 million, representing an increase of approximately RMB532 million orapproximately 26.22% over the Corresponding Period Last Year. The significantincrease was mainly due to an increase of remaining borrowing balance, anincrease in expensed interests and the construction-in-progress beingsuccessively converted into fixed assets.
Profit Before Tax and Net Profit
During the Period, the Group reported a total profit before income tax of approximately RMB1,742 million, representing an increase of approximately 30.24% over the Corresponding Period Last Year. Net profit attributable to equity holders of the Company amounted to approximately RMB912 million, representing an increase of approximately 27.91% over the Corresponding Period Last Year.
Financial PositionAs at 30 June 2010, total assets of the Group amounted to approximatelyRMB202,819 million, representing an increase of approximately RMB18,596 millionover the end of 2009. The increase in total assets resulted mainly from theimplementation of the Group's expansion strategy which led to a correspondingincrease in investments in construction-in-progress, property and equipment.Total liabilities of the Group amounted to approximately RMB166,815 million,representing an increase of approximately RMB15,439 million over the end of2009. Of the total liabilities, long-term liabilities increased byapproximately RMB10,163 million over the end of 2009. The increase in totalliabilities was mainly due to an increase in the Group's borrowing level so asto meet the needs of daily operations and infrastructure construction.Equity attributable to owners of the Company amounted to approximatelyRMB29,241 million, representing an increase of approximately RMB3,042 millionover the end of 2009. Net asset value per share attributable to equity holdersof the Company amounted to approximately RMB2.38, representing an increase ofapproximately RMB0.16 per share over the end of 2009.
Liquidity
As at 30 June 2010, the asset-to-liability ratio of the Group was approximately82.25%. The net debt-to-equity ratio (i.e. (loans + medium-term notes +short-term bonds - cash and cash equivalents - bank deposits with a maturity ofover 3 months)/total equity) was approximately 375.75%.As at 30 June 2010, cash and cash equivalents and bank deposits with a maturityof over 3 months of the Group amounted to approximately RMB7,452 million, ofwhich deposits equivalent to approximately RMB199 million were foreign currencydeposits. The Group had no entrusted deposits and overdue fixed deposits duringthe Period.As at 30 June 2010, short-term loans of the Group amounted to approximatelyRMB19,967 million, bearing annual interest rates ranging from 2.10% to 7.47%.Long-term loans (excluding those repayable within one year) amounted toapproximately RMB110,108 million and long-term loans repayable within one yearamounted to approximately RMB6,719 million. All long-term loans (includingthose repayable within 1 year) were at annual interest rates ranging from 1.13%to 7.83%.Loans of approximately RMB1,011 million were denominated in US dollar. TheGroup paid close attention to foreign exchange market fluctuations constantlyand cautiously assessed foreign currency risks. Part of the borrowings of theGroup was pledged against assets including accounts receivable, property, plantand equipment, etc, totalling approximately RMB32,850 million.
Welfare Policy
As at 30 June 2010, the staff of the Group totalled 17,120. The Group adoptsthe basic salary system on the basis of position-points salary distribution.The Group carries out evaluation of its subordinated enterprises based on aprofit accountability system, and adopts an incentive system for the seniormanagement of its subordinated enterprises based on assessments of capitaloperations, safe production and improved CPS's anti-corruption work. The Groupis concerned about personal growth and occupational training. It implements areward mechanism of "unification of training, usage and remuneration". Based onthe basic principles of "identifying targets scientifically and providingtraining depending on actual needs", and led by the strategy of developing astrong corporation with strong talents, the Group relies on a three-tiermanagement organisational structure and implements an all-staff training schemefor various levels.
Outlook for the Second Half of 2010
In the second half of 2010, the aftermath of the global financial crisis willstill linger. Although the domestic economy has been developing along theexpected direction of the State's macro-economic controls, it still faces therisk of a relapse. The Group, therefore, has a daunting task on maintainingstable and healthy development and is faced with both opportunities andchallenges.In the first half of the year, as the macro-economy of the PRC was graduallyrecovering, power demand has shown a rapid growth after recovery. The growthrate for the whole year is expected to maintain at a high level. In view of thecurrent tough energy-saving environment, continued implementation of strictenergy-saving and consumption lowering policies, and the State's adjustment ofthe energy structure, the growth rate of power demand by high-energyconsumption industries such as the iron and steel and cement industries mayslow. However, there is still hope that the growth rate for the whole year willmaintain at a relatively high level. Although social power consumption willexperience a first-high-then-low growth trend, thermal coal supply is expectedto remain basically stable. However, there remains uncertain factors such ascoal supply shortage and a surge in thermal coal prices.Faced with a difficult operating environment, the Group will continue toimplement an overall strategy that focuses on "pursuing the power generationbusiness as its core development whilst complementing with synergisticdiversifications". The Company will do its utmost to achieve the production andoperation targets for 2010 with a persistent focus on profitability and safeproduction. It will actively expand its room for development and strengthen itsmarketing and sales efforts by fully leveraging its advantages in resources,scale, geographical distribution and costs. While pursuing success in its corepower business, it will also pursue excellence in non-power businesses. It willexercise stringent cost controls and strive to contain unit fuel cost increase,with a view to enhancing the profitability of the Company.
In the second half of 2010, the Group will focus on the following tasks:
1 To strengthen production safety as the foundation of the Company and
endeavour to be a company with safety as its character.
2 To expand income while reducing expenditures so as to enhance the
profitability of the Company.
3 To actively pursue structural adjustments so as to raise quality and
profitability throughout the Company.
4 To step up efforts in improving management and focus on the construction of
excellent infrastructures.
5 To further push forward the development of capital operations and fully
leverage the financing capacity of the Company.
6 To implement a lean management, thus further improving the Company's
management performance.
7 To push forward the work on energy conservation and emissions reduction in
order to maintain a leadership position of the Company in the industry.
Share Capital and Dividends
Share Capital
As at 30 June 2010, the total share capital of the Company amounted to 12,310,037,578 shares, divided into 12,310,037,578 shares carrying a nominal value of RMB1.00 each.
Shareholding of Substantial Shareholders
So far as the directors of the Company are aware, as at 30 June 2010, thepersons below held the interests or short positions in the shares or underlyingshares of the Company which were required to be disclosed to the Company undersection 336 of the Securities and Futures Ordinance (the "SFO") (Chapter 571 ofthe Laws of Hong Kong): Approximate percentage to Approximate Approximate total issued percentage to percentage to share capital total issued A total issued HName of Class of Number of of the Shares of the Shares of theshareholder shares shares held Company Company Company (%) (%) (%)China Datang Corporation A shares 3,959,241,160 32.16 44.02 -- H shares 480,680,000(L) 3.90(L) -- 14.50(L)Hebei Construction Investment 　Group Company Limited A shares 1,299,872,927 10.56 14.45 --Beijing Energy Investment 　(Group) Company Limited A shares 1,278,988,672 10.39 14.22 --Tianjin Jinneng Investment 　Company A shares 1,212,012,600 9.85 13.48 --Blackrock, Inc. H shares 265,591,753(L) 2.16(L)
-- 8.01(L) 20,663,351(S) 0.17(S) -- 0.62(S)
(L) means Long Position　　(S) means Short Position　　(P) means Lending Pool
Dividends
The distribution proposal on the payment of cash dividends of RMB 0.07 per share (tax included) for the year of 2009 was considered and approved at the 2009 annual general meeting of the Company held on 11 June 2010. The above distribution proposal was completed before the date of this interim report.
The Board does not recommend the payment of any interim dividend for 2010.
Shareholding of the Directors and Supervisors
As at 30 June 2010, Mr. Fang Qinghai, a director of the Company, was interestedin 24,000 A shares of the Company. Save as disclosed above, none of thedirectors, supervisors and chief executives of the Company nor their associateshad any interests or short positions in the shares, underlying shares anddebentures of the Company or any of its associated corporation (within themeaning of the SFO) that were required to be notified to the Company and TheStock Exchange of Hong Kong Limited (the "Hong Kong Stock Exchange") under theprovisions of Divisions 7 and 8 of Part XV of the SFO, or required to berecorded in the register mentioned in the SFO pursuant to section 352 orotherwise required to be notified to the Company and the Hong Kong StockExchange pursuant to the Model Code for Securities Transactions by Directors ofListed Issuers (the "Model Code") in Appendix 10 of the Rules Governing theListing of Securities on the Hong Kong Stock Exchange (the "Listing Rules").
Significant Events
Pursuant to the resolutions passed at the thirty-seventh meeting of the sixthsession of the Board held on 29 June 2010, the Board agreed to nominate LiuShunda, Hu Shengmu, Cao Jingshan, Fang Qinghai, Zhou Gang, Liu Haixia, GuanTiangang, Su Tiegang, Ye Yonghui and Li Gengsheng as candidates fornon-independent directors of the seventh session of the Board of the Company;and to nominate Li Yanmeng, Zhao Zunlian, Li Hengyuan, Zhao Jie and JiangGuohua as candidates for independent directors of the seventh session of theBoard of the Company. The afore-mentioned election matters relating to thechange of the session of the Board were submitted to the Second ExtraordinaryGeneral Meeting of 2010 of the Company for consideration and approved on 19August 2010. The term of office of the seventh session of the Board commencedfrom 20 August 2010 and will end on 30 June 2013.Pursuant to the resolutions passed at the seventeenth meeting of the sixthsession of the Supervisory Committee held on 29 June 2010, it was agreed tonominate Zhang Xiaoxu and Fu Guoqiang as candidates for supervisorsrepresenting the shareholders for the seventh session of the SupervisoryCommittee of the Company. Mr. Qiao Xinyi and Mr. Guan Zhenquan were elected atthe Staff Representatives Congress as the supervisors representing the stafffor the seventh session of the Supervisory Committee. The afore-mentionedelection matters relating to the change of the session of the SupervisoryCommittee were submitted to the Second Extraordinary General Meeting of 2010 ofthe Company for consideration and approved on 19 August 2010. The term ofoffice of the seventh session of the Supervisory Committee commenced from 20August 2010 and will end on 30 June 2013.
Purchase, Sale and Redemption of the Company's Listed Securities
During the Period, the Group has not purchased, sold or redeemed any of the listed securities of the Company.
Compliance with the Code on Corporate Governance Practices
To the knowledge of the Board, the Company has complied with all the code provisions under the Code on Corporate Governance Practices as set out in Appendix 14 of the Listing Rules during the Period.
Compliance with the Model Code for Securities Transactions by Directors of Listed Issuers
The Company has adopted the Model Code as the Code of Conducts for SecuritiesTransactions by all directors of the Company. Upon specific enquiries made toall the directors of the Company and in accordance with the informationprovided, the Board confirmed that all directors of the Company have compliedwith the provisions under the Model Code during the Period.
Audit Committee
The Audit Committee has reviewed the accounting principles and methods adopted by the Group with the management of the Company. They have also discussed matters regarding internal controls and the annual financial statements, including the review of the financial information for the Period.
The Audit Committee considers that the 2010 interim financial report of the Group has complied with the applicable accounting standards, and that the Group has made appropriate disclosures thereof.
By Order of the Board Zhai Ruoyu Chairman
Beijing, the PRC, 19 August 2010
Condensed Consolidated Statement of Comprehensive Income For The Six Months Ended 30 June 2010 (Amounts expressed in thousands of Renminbi, except earnings per share)
Six months ended 30 June Note 2010 2009 (unaudited) (unaudited and restated)Operating revenue 4 28,946,006 20,726,435Operating costs Fuel for power generation (14,027,483) (9,349,287) Fuel for coal sales (2,840,373) (1,978,614) Depreciation (3,571,794) (3,587,262) Repairs and maintenance (539,261) (762,237)
Salaries and staff welfares (902,658)
(902,705)
Local government surcharges (149,909)
(186,361) Others (3,001,467) (934,123) (25,032,945) (17,700,589)Operating profit 3,913,061 3,025,846
Share of profits/(losses) of
jointly controlled entities 6,806
(7,495)
Share of profits of associates 352,712
185,747 Other gains 8,212 144,633 Interest income 24,437 19,550 Finance costs 6 (2,563,386) (2,030,894)Profit before tax 1,741,842 1,337,387 Income tax expense 7 (312,707) (225,109)Profit for the period 8 1,429,135 1,112,278
Other comprehensive income after tax:
Disposal of available-for-sale investments, net of tax (10,954) -- Share of other comprehensive income of associates, net of tax (7,745)
50,110
Currency translation differences 1,303
(148)
Other comprehensive income for the
period, net of tax (17,396)
49,962
Total comprehensive income for the
period 1,411,739
1,162,240
Profit for the period attributable
to: Owners of the Company 911,878 713,407 Non-controlling interests 517,257 398,871 1,429,135 1,112,278
Total comprehensive income for the
period attributable to: Owners of the Company 896,673 763,369 Non-controlling interests 515,066 398,871 1,411,739 1,162,240Earnings per share 10Basic (RMB) 0.0757 0.0606
Condensed Consolidated Statement of Financial Position At 30 June 2010 (Amounts expressed in thousands of Renminbi)
At At 30 June 31 December Note 2010 2009 (unaudited) (audited and restated)ASSETSNon-current assets Property, plant and equipment 11 165,963,171 157,524,940 Investment properties 210,652 -- Investments in jointly controlled entities 2,354,049 1,636,674 Investments in associates 4,260,782 3,772,537
Available-for-sale investments 2,022,983
1,339,829 Deferred housing benefits 148,233 163,384 Intangible assets 2,331,513 2,122,836
Long-term entrusted loans to
associates 100,135
130,194
Deferred income tax assets 834,425
744,114 Other long-term assets 57,801 109,422 178,283,744 167,543,930Current assets Inventories 3,480,244 1,855,177
Short-term entrusted loans to
ultimate parent company --
17,000
Prepayments and other receivables 6,501,684
6,574,901
Accounts and notes receivable 12 7,037,067
6,634,917 Income tax recoverables 64,342 91,216 Cash and cash equivalents 7,452,246 1,506,435 24,535,583 16,679,646TOTAL ASSETS 202,819,327 184,223,576EQUITY AND LIABILITIESCapital and reserves Share capital 13 12,310,038 11,780,038 Reserves 15,189,173 12,700,049 Retained earnings -- Proposed dividend -- 861,703 -- Others 1,741,427 856,695
Equity attributable to owners
of the Company 29,240,638 26,198,485 Non-controlling interests 6,763,713 6,649,510Total equity 36,004,351 32,847,995Non-current liabilities Long-term loans 110,107,701 99,506,545 Long-term bonds 5,943,689 5,938,544 Deferred income 479,769 475,788
Deferred income tax liabilities 397,948
323,789
Provision 41,554
36,008
Other long-term liabilities 3,173,937
3,701,165 120,144,598 109,981,839Current liabilities
Accounts payable and accrued
liabilities 14 18,243,709 14,040,020 Taxes payable 448,991 380,778 Dividends payable 986,346 36,909 Short-term loans 19,966,552 19,569,023
Current portion of long-term
liabilities 7,024,780 7,367,012 46,670,378 41,393,742Total liabilities 166,814,976 151,375,581TOTAL EQUITY AND LIABILITIES 202,819,327 184,223,576Net current liabilities 22,134,795 24,714,096Total assets less current liabilities 156,148,949
142,829,834
Condensed Consolidated Statement of Changes in Equity For the six months ended 30 June 2010 (Amounts expressed in thousands of Renminbi)
Attributable to owners of the Company Statutory Discretionary Share Capital surplus surplus capital reserve reserve reserve (Unaudited)At 1 January 2009 11,780,038 1,878,578 2,886,134 6,800,692Total comprehensive income for the period -- -- -- --Capital injection into subsidiaries from non-controlling shareholders -- -- -- --Disposal of a subsidiary -- -- -- --Others -- -- -- --Transfer to restricted reserve -- -- -- --Transfer to surplus reserve -- -- -- 1,065,496Dividends paid -- -- -- --At 30 June 2009 11,780,038 1,878,578 2,886,134 7,866,188(Continued) Available- for-sale Currency investment Restricted translation revaluation Other reserve differences reserve reserves (Unaudited)At 1 January 2009 115,656 17,036 126,435 (55,168)Total comprehensive income for the period -- (148) 50,110 --Capital injection into subsidiaries from non-controlling shareholders -- -- -- --Disposal of a subsidiary -- -- -- --Others -- -- -- 9,196Transfer to restricted reserve 11,975 -- -- --Transfer to surplus reserve -- -- -- --Dividends paid -- -- -- --At 30 June 2009 127,631 16,888 176,545 (45,972)(Continued) Non- Retained controlling Total earnings Total interests Equity (Unaudited)At 1 January 2009 2,702,110 26,251,511 4,654,462 30,905,973Total comprehensive income for the period 713,407 763,369 398,871 1,162,240Capital injection into subsidiaries from non-controlling shareholders -- -- 234,826 234,826Disposal of a subsidiary -- -- (443,198) (443,198)Others -- 9,196 3,033 12,229Transfer to restricted reserve (11,975) -- -- --Transfer to surplus reserve (1,065,496) -- -- --Dividends paid (1,295,804) (1,295,804) (175,802) (1,471,606)At 30 June 2009 1,042,242 25,728,272 4,672,192 30,400,464 Attributable to owners of the Company Statutory Discretionary Share Capital surplus surplus capital reserve reserve reserve (Unaudited)At 1 January 2010 11,780,038 1,521,516 3,079,440 7,866,188Total comprehensive income for the period -- -- -- --Issue of shares 530,000 2,718,246 -- --Capital injection into subsidiaries from non-controlling shareholders -- -- -- --Non-controlling interests arising from business combinations -- -- -- --Acquisition of non- controlling interests of subsidiaries -- -- -- --Others -- 125 -- --Transfer to restricted reserve -- -- -- --Dividends paid -- -- -- --At 30 June 2010 12,310,038 4,239,887 3,079,440 7,866,188(Continued) Available- for-sale Currency investment Restricted translation revaluation Other reserve differences reserve reserves (Unaudited)At 1 January 2010 153,864 17,691 105,705 (44,355)Total comprehensive income for the period -- 1,303 (16,508) --Issue of shares -- -- -- --Capital injection into subsidiaries from non-controlling shareholders -- -- -- --Non-controlling interests arising from business combinations -- -- -- --Acquisition of non- controlling interests of subsidiaries -- -- -- (240,412)Others -- -- -- (4,543)Transfer to restricted reserve 30,913 -- -- --Dividends paid -- -- -- --At 30 June 2010 184,777 18,994 89,197 (289,310)(Continued) Non- Retained controlling Total earnings Total interests Equity (Unaudited)At 1 January 2010 1,718,398 26,198,485 6,649,510 32,847,995Total comprehensive income for the period 911,878 896,673 515,066 1,411,739Issue of shares -- 3,248,246 -- 3,248,246Capital injection into subsidiaries from non-controlling shareholders -- -- 528,417 528,417Non-controlling interests arising from business combinations -- -- 217,773 217,773Acquisition of non- controlling interests of subsidiaries -- (240,412) (310,003) (550,415)Others 3,767 (651) (13,292) (13,943)Transfer to restricted reserve (30,913) -- -- -- Dividends paid (861,703) (861,703) (823,758) (1,685,461)At 30 June 2010 1,741,427 29,240,638 6,763,713 36,004,351Condensed Consolidated Statement of Cash FlowsFor the six months ended 30 June 2010(Amounts expressed in thousands of Renminbi) Six months ended 30 June 2009 2010 (unaudited (unaudited) and restated)
NET CASH GENERATED FROM OPERATING ACTIVITIES 7,996,035
5,962,346
NET CASH USED IN INVESTING ACTIVITIES (7,682,868)
(12,743,373)
NET CASH GENERATED FROM FINANCING ACTIVITIES 5,633,184
3,661,088
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 5,946,351 (3,119,939)
CASH AND CASH EQUIVALENTS AT 1 JANUARY 1,506,435
4,979,535
EFFECT OF FOREIGN EXCHANGE RATE CHANGES (540)
3,487
CASH AND CASH EQUIVALENTS AT 30 JUNE 7,452,246
1,863,083
Notes to the Condensed Financial Statements For the six months ended 30 June 2010(Amounts expressed in thousands of Renminbi unless otherwise stated)
1. BASIS OF PREPARATION
These condensed financial statements have been prepared in accordance with
International Accounting Standard 34 "Interim Financial Reporting" issued by the
International Accounting Standards Board and the applicable disclosures required by
the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong
Limited.
At 30 June 2010, a significant portion of the funding requirements of the Company
and its subsidiaries (collectively referred to as the "Group") for capital
expenditures was satisfied by short-term borrowings. Consequently, at 30 June 2010,
the Group had a net current liabilities of approximately RMB22,135 million (At 31
December 2009: RMB24,714 million). The Group had significant undrawn borrowing
facilities, subject to certain conditions, amounting to approximately RMB192.12
billion (At 31 December 2009: RMB169.00 billion) and may refinance and/or
restructure certain short-term borrowings into long-term borrowings and will also
consider alternative sources of financing, where applicable. The directors of the
Company are of the opinion that the Group will be able to meet its liabilities as
and when they fall due within the next twelve months and have prepared these
financial statements on a going concern basis.
These condensed financial statements should be read in conjunction with the 2009
annual financial statements. The accounting policies and methods of computation
used in the preparation of these condensed financial statements are consistent with
those used in the annual financial statements for the year ended 31 December 2009
except as stated below.2. ADOPTION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS
In the current period, the Group has adopted all the new and revised International
Financial Reporting Standards ("IFRSs") issued by the International Accounting
Standards Board that are relevant to its operations and effective for its
accounting year beginning on 1 January 2010. IFRSs comprise International
Financial Reporting Standards ("IFRS"); International Accounting Standards ("IAS");
and Interpretations. The adoption of these new and revised IFRSs did not result in
significant changes to the Group’s accounting policies, presentation of the Group's
financial statements and amounts reported for the current period and prior years
except as stated below. a. Business Combinations
IFRS 3 (Revised) "Business Combinations" continues to require acquisition method to
be applied to business combinations with some significant changes:
- Contingent consideration is recognised at its acquisition-date fair value and
forms part of the cost of acquisition. The previous IFRS 3 requires that a
contingent consideration be recognised if it is probable and can be measured
reliably.
- In a business combination achieved in stages, the previously held equity interest
in the subsidiary is remeasured at its acquisition-date fair value and the
resulting gain or loss is recognised in consolidated profit or loss. The fair
value is added to the cost of acquisition to calculate goodwill. The previous
IFRS 3 does not have a requirement for such fair value measurement.
- There is a choice to measure initially the non-controlling interests in a
subsidiary either at their acquisition-date fair value or the non-controlling
shareholders' proportionate share of the net fair value of the subsidiary's
identifiable assets and liabilities at the acquisition date. The previous IFRS 3
only allows the latter choice.
- If a business combination is accounted for using provisional amounts, the
measurement period that the provisional amounts can be adjusted retrospectively
is limited to one year from the acquisition date to reflect new information
obtained about facts and circumstances that existed as of the acquisition date
and, if known, would have affected the measurement of the amounts recognised as
of that date. The previous IFRS 3 does not have a time limit for adjustments in
relation to contingent considerations and deferred tax assets. Subsequent
adjustments to contingent considerations and deferred tax assets will adjust
goodwill.
- Acquisition-related costs are recognised as expenses in the periods in which the
costs are incurred and the services are received. The previous IFRS 3 requires
that acquisition-related costs form part of the cost of a business combination.
IFRS 3 (Revised) has been applied prospectively to business combinations for which
the acquisition date is on or after 1 January 2010 and resulted in changes in the
consolidated amounts reported in the financial statements as follows: At 30 June 2010 At 31 December 2009 Decrease in goodwill (3,090) -- Six months ended 30 June 2010 2009 Increase in operating costs â€" others 3,090 -- Decrease in earnings per share (RMB) 0.0003 -- b. Classification of Land Leases
Amendments to IAS 17 "Leases" deleted the guidance in IAS 17 that when the land
has an indefinite economic life, the land element is normally classified as an
operating lease unless title is expected to pass to the lessee by the end of the
lease term.
The adoption of the amendments to IAS 17 has resulted in a change in accounting
policy for the classification of leasehold land of the Group. Previously, leasehold
land was classified as an operating lease and stated at cost less accumulated
amortisation. In accordance with the amendments, leasehold land is classified as a
finance lease and stated at cost less accumulated depreciation if substantially all
risks and rewards of the leasehold land have been transferred to the Group. As the
present value of the minimum lease payments (i.e. the transaction price) of the
land held by the Group amounted to substantially all of the fair value of the land
as if it were freehold, the leasehold land of the Group has been classified as a
finance lease. The amendments have been applied retrospectively to unexpired leases
at the date of adoption of the amendments on the basis of information existing at
the inception of the leases.
Amendments to IAS 17 have been applied retrospectively and resulted in changes in
the consolidated amounts reported in the financial statements as follows: At 30 June 2010 At 31 December 2009 Increase in property, plant and equipment 1,923,750 1,523,508 Decrease in land use rights (1,923,750) (1,523,508)
The Group has not applied the other new IFRSs that have been issued but are not yet
effective. The Group has already commenced an assessment of the impact of these new
IFRSs but is not yet in a position to state whether these new IFRSs would have a
material impact on its results of operations and financial position.3. COMMON CONTROL BUSINESS COMBINATIONS
On 30 November 2009, the Company acquired 100% equity interests of Datang Liaoning
New Energy Co., Ltd. ("Liaoning New Energy") and its subsidiary and Datang
Zhangzhou Wind Power Co., Ltd. ("Zhangzhou Wind Power") from China Datang
Corporation ("China Datang") for a cash consideration of RMB264.75 million while
Datang Energy and Chemical Company Limited ("Energy and Chemical Company"), one of
the Company's wholly-owned subsidiaries acquired 100% equity interest of Datang
Hulunbei'er Fertilizer Company Limited ("Hulunbei'er Fertilizer") from China Datang
for a cash consideration of RMB51.22 million (collectively referred to as "common
control entities acquired in 2009"). Such acquisitions became effective on 30
November 2009. Thereafter, the Group controlled 100% equity interests in the
common control entities acquired in 2009 and became their controlling shareholders.
As the Company, Energy and Chemical Company and the common control entities
acquired in 2009 above are under the common control of China Datang before and
after the acquisitions, these transactions were accounted for as common control
business combinations, using merger accounting for all periods presented herein.
The condensed consolidated statement of comprehensive income and condensed
consolidated statement of cash flows include the results and cash flows of the
combining entities from the earliest date presented or since the date when the
combining entities first came under the common control, where this is a shorter
period, regardless of the date of the common control combination. Equity interest Name of acquiree Principal activities acquired Liaoning New Energy and its subsidiary Wind power generation 100% Zhangzhou Wind Power Wind power generation 100% Hulunbei'er Fertilizer Production and sales of chemical materials 100%
As a result of business combinations of common control entities acquired in 2009,
profit for the period for the six months ended 30 June 2009 decreased by RMB8,553
thousand and the cash and cash equivalents as at 30 June 2009 increased by RMB16,746 thousand.4. OPERATING REVENUE Six months ended 30 June 2009 2010 (unaudited (unaudited) and restated) Sales of electricity 24,001,833 18,331,293 Heat supply 316,192 175,767 Sales of coal 2,930,001 2,117,230
Transportation service fees 125,437 24,751 Sales of chemical products 1,311,817 1,540 Others 260,726 75,854 28,946,006 20,726,4355. SEGMENT INFORMATION
Executive directors and certain senior management of the Company perform the
function as chief operating decision makers (collectively referred to as the
"senior management"). The senior management reviews the internal reporting of the
Group in order to assess performance and allocate resources. Senior management has
determined the operating segments based on these reports.
Senior management considers the business from a product perspective. Senior
management primarily assesses the performance of power generation, coal and
chemical separately. Other operating activities include investments in
transportation services, financial services, etc., and are included in "other
segments".
Senior management assesses the performance of the operating segments based on a
measure of profit before tax prepared under the People's Republic of China ("PRC")
accounting standards.
Segment assets exclude deferred income tax assets and available-for-sale
investments. Segment liabilities exclude the current income tax liabilities and
deferred income tax liabilities. Sales between operating segments are marked to
market or contracted close to market price and have been eliminated at
consolidation level. Unless otherwise noted below, all such financial information
in the segment tables below is prepared under China Accounting Standards for
Business Enterprises ("PRC GAAP"). Power generation Coal Chemical Other segment segment segment segments (unaudited) (unaudited) (unaudited) (unaudited) Six months ended 　 30 June 2010 Revenue from external customers 24,143,576 3,118,444 1,322,492 361,494 Intersegment revenue 36,731 8,446,414 -- 157,110 Segment profit/(loss) 1,626,658 122,767 35,987 (4,428) At 30 June 2010 Segment assets 186,225,012 12,002,513 31,874,594 6,719,048 (unaudited and restated) (unaudited) (unaudited) (unaudited) Six months ended 30 June 2009 Revenue from external customers 18,538,156 2,186,739 1,540 -- Intersegment revenue 2,648 168,633 -- -- Segment profit/(loss) 1,110,385 63,245 (31,599) 86,396 (audited) (audited) (audited) (audited) At 31 December 2009 Segment assets 148,329,678 13,517,801 25,056,663 1,923,390 (Continued) Total Total discontinued continuing operations operations (coal segment) Total (unaudited) (unaudited) (unaudited) Six months ended 　 30 June 2010 Revenue from external customers 28,946,006 -- 28,946,006 Intersegment revenue 8,640,255 -- 8,640,255 Segment profit/(loss) 1,780,984 -- 1,780,984 At 30 June 2010 Segment assets 236,821,167 -- 236,821,167 (unaudited (unaudited and restated) (unaudited) and restated) Six months ended 30 June 2009 Revenue from external customers 20,726,435 -- 20,726,435 Intersegment revenue 171,281 -- 171,281 Segment profit/(loss) 1,228,427 40,000 1,268,427 (audited) (audited) (audited) At 31 December 2009 Segment assets 188,827,532 -- 188,827,532 Six months ended 30 June 2009 2010 (unaudited (unaudited) and restated)
Reconciliations of segment profit or loss:
Total profit or loss of reportable segments 1,780,984
1,268,427
Elimination of intersegment profits (125,186) (2,525) IFRS adjustment on reversal of general provision on mining funds 101,195 86,491 IFRS adjustment on amortisation of deferred housing benefits (15,151) (15,006) Profit before tax 1,741,842 1,337,3876. FINANCE COSTS Six months ended 30 June 2009 2010 (unaudited (unaudited) and restated) Interest expense 3,625,688 3,359,480
Less: amount capitalised in property,
plant and equipment (1,072,552) (1,369,441) 2,553,136 1,990,039 Exchange gain, net (4,415) (222) Others 14,665 41,077 2,563,386 2,030,8947. INCOME TAX EXPENSE Six months ended 30 June 2010 2009 (unaudited) (unaudited) Current tax 429,866 128,421 Deferred tax (117,159) 96,688 312,707 225,109
Income tax is provided on the basis of the statutory profit for financial reporting
purposes, adjusted for income and expense items, which are not assessable or
deductible for income tax purposes.
The applicable PRC income tax rate of the Company is 25% (six months ended 30 June
2009: 25%). Those entities located in western region in the PRC enjoy income tax
rate of 15% before 2011 when such income tax rate will change to 25% thereafter.
In addition, certain subsidiaries, being located in specially designated regions
in the PRC, are subject to preferential income tax rates. Moreover, certain
subsidiaries are exempted from the PRC income tax for two years starting from the
first year of commercial operation followed by a 50% exemption of the applicable
tax rate for the next three years.
The subsidiary of the Company registered in Hong Kong applies Hong Kong Profits
Tax rate of 16.5% (six months ended 30 June 2009: 16.5%).8. PROFIT FOR THE PERIOD The Group's profit for the period is arrived at after charging/(crediting): Six months ended 30 June 2009 2010 (unaudited (unaudited) and restated) Interest income (24,437) (19,550) Amortisation of intangible assets 5,996 4,125 Amortisation of deferred housing benefits 15,151 15,006 Depreciation 3,571,794
3,587,262
Gain on disposal of available-for-sale investments (8,212) (30,173) Gain on disposal of assets and liabilities held for sale -- (40,000) Gain on disposal of an associate -- (74,460) Reversal of allowance for trade receivables (1,134) -- Reversal of allowance for inventories (757) --
Since certain aged inventories were sold during the period, the allowance made in
prior years against the inventories of RMB757 thousand (six months ended 30 June
2009: RMBNil) was reversed during the period.9. DIVIDENDS Six months ended 30 June 2010 2009 (unaudited) (unaudited) Final dividend for the year ended 31 December 2009 (six months ended 30 June 2009: 2008) approved and paid -- RMB0.07 (six months ended 30 June 2009: RMB0.11) per share 861,703 1,295,80410. EARNINGS PER SHARE
(a) Basic earnings per share
The calculation of basic earnings per share is based on the profit for the period
attributable to owners of the Company of RMB911,878 thousand (six months ended 30
June 2009, as restated: RMB713,407 thousand) and the weighted average number of
ordinary shares of 12,045,038 thousand (six months ended 30 June 2009: 11,780,038
thousand) in issue during the period. (b) Diluted earnings per share
No diluted earnings per share are presented as the Company did not have any
dilutive potential ordinary shares during the six months ended 30 June 2010 and
2009.
11. PROPERTY, PLANT AND EQUIPMENT
During the six months ended 30 June 2010, the Group acquired property, plant and
equipment of RMB12,424,566 thousand (six months ended 30 June 2009, as restated:
RMB11,563,023 thousand).
In order to reflect the Group's financial position and operating results in a
fairer and more appropriate manner so that the depreciation periods for property,
plant and equipment is brought closer to their real useful lives, the Group has
made changes to the estimated useful lives and estimated net salvage values of the
property, plant and equipment pursuant to the accounting standards and other
related accounting and tax regulations in combination with the actual situation of
the Group. The changes to the estimated useful lives and estimated net salvage
values of the property, plant and equipment were considered and approved at the
thirty-fifth meeting of the sixth session of the Board of the Directors held on
29 April 2010. These changes in accounting estimates reduced the Group's
depreciation charges by approximately RMB900 million for the six months ended 30
June 2010.
12. ACCOUNTS AND NOTES RECEIVABLE
The Group usually grants about one month's credit period to local power grid
customers and coal purchase customers from the end of the month in which the sales
are made. Ageing analysis of accounts and notes receivable is as follows: At 30 June 2010 At 31 December 2009 (unaudited) (audited) Within 1 year 6,894,768 6,447,885 Between 1 to 2 years 48,046 186,396 Between 2 to 3 years 94,253 636 7,037,067 6,634,91713. SHARE CAPITAL At 30 June 2010 At 31 December 2009 (unaudited) (audited)
Registered, issued and fully paid:
8,994,360,000 (At 31 December 2009:
8,464,360,000) A shares of RMB1 each 8,994,360
8,464,360
3,315,677,578 (At 31 December 2009:
3,315,677,578) H shares of RMB1 each 3,315,678 3,315,678 12,310,038 11,780,038 A summary of the movements in the issued share capital of the Company is as follows: Nominal Number of value of shares issued shares issued Note '000 RMB'000 At 1 January 2009, 31 December 2009 and 1 January 2010 11,780,038 11,780,038 Shares issued (i) 530,000 530,000 At 30 June 2010 12,310,038 12,310,038 Note:
(i) On 23 March 2010, the Company issued 530,000,000 A shares at a subscription
price of RMB6.23 per share for a total cash consideration of approximately
RMB3,301,900 thousand.
14. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
At 30 June 2010 At 31 December 2009 (unaudited) (audited) Accounts and notes payable 7,791,458
6,015,519
Other payables and accrued liabilities 10,452,251 8,024,501 18,243,709 14,040,020 Ageing analysis of accounts and notes payable is as follows: At 30 June 2010 At 31 December 2009 (unaudited) (audited) Within 1 year 7,406,537 5,716,659 Between 1 to 2 years 196,566 127,756 Between 2 to 3 years 54,377 43,857 Over 3 years 133,978 127,247 7,791,458 6,015,519
15. ACQUISITION OF SUBSIDIARIES
On 1 January 2010, the Group acquired 100% of the issued capital of Yuneng (Group)
Company Limited for a cash consideration of RMB1,345 million, of which
approximately RMB550.4 million was paid for acquisition of non-controlling
interests of two subsidiaries of the Company held by Yuneng (Group) Company Limited.
Yuneng (Group) Company Limited and its subsidiaries (collectively referred to as
"Yuneng Group") were engaged in power generation, mining and metallurgy as well as
property development during the period.
The carrying amount and the fair value of the identifiable assets and liabilities
of Yuneng Group acquired as at its date of acquisition are as follows: Carrying Fair value amount adjustments Fair value
Net assets acquired:
Property, plant and equipment 2,149,858 (97,699)
2,052,159
Other non-current assets 914,916 (158,253)
756,663
Cash and cash equivalents 1,418,922 -- 1,418,922 Other current assets 1,169,255 148,470 1,317,725 Long-term loans (1,892,750) -- (1,892,750)
Other non-current liabilities (62,213) (26,823)
(89,036) Current liabilities (2,676,661) (14,996) (2,691,657) 1,021,327 (149,301) 872,026 Non-controlling interests (179,015) (38,145) (217,160) Goodwill 139,719 Satisfied by: Cash 794,585
Net cash inflow arising on
acquisition:
Cash consideration paid
(794,585)
Cash and cash equivalents
acquired 1,418,922 624,337
At 1 January 2010, Yunnan Datang International Deqin Hydropower Development Company
Limited ("Datang Deqin") was a 40% owned subsidiary of the Company. On 4 March 2010,
the Group further acquired 30% of the issued share capital of Datang Deqin for a
cash consideration of approximately RMB0.7 million. Datang Deqin is engaged in
hydropower generation construction during the period.
The fair value of the identifiable assets and liabilities of Datang Deqin acquired
as at its date of acquisition, which has no significant difference from its
carrying amount, is as follows: Net assets acquired: Property, plant and equipment 43,765 Cash and cash equivalents 8,156 Other current assets 197 Long-term loans (30,000) Current liabilities (11,974) 10,144 Net assets attributable to the owners of the Company before acquisition of additional interest (8,918) Non-controlling interests (613) Goodwill 70 Satisfied by: Cash 683 Net cash inflow arising on acquisition: Cash consideration paid (683) Cash and cash equivalents acquired 8,156 7,473
On 23 March 2010, the Group acquired 100% of the issued share capital of Liaoning
Datang International Fuxin Wind Power Company Limited ("Datang Fuxin") for a cash
consideration of approximately RMB33.2 million. Datang Fuxin is engaged in wind
power generation construction during the period.
The carrying amount and the fair value of the identifiable assets and liabilities
of Datang Fuxin acquired as at its date of acquisition are as follows: Carrying Fair value amount adjustments Fair value Net assets acquired: Property, plant and equipment 9,859 14,963 24,822 Cash and cash equivalents 20,654 -- 20,654 Other current assets 20 -- 20 Other non-current liabilities -- (3,741) (3,741) Current liabilities (8,533) -- (8,533) 22,000 11,222 Satisfied by: Cash 33,222 Net cash outflow arising on acquisition: Cash consideration paid (33,222) Cash and cash equivalents acquired 20,654 (12,568)
The goodwill arising on the acquisition of Yuneng Group and Datang Deqin is
attributable to the anticipated profitability of their power generation operations
and the anticipated future operating synergies from the combination.
Yuneng Group, Datang Deqin and Datang Fuxin reduced the Group's profit for the
period for the six months ended 30 June 2010 by approximately RMB31.5 million,
RMBNil and RMBNil respectively between the respective dates of acquisition and the
end of the reporting period.
If all the above acquisitions had been completed on 1 January 2010, such
acquisitions will have no effect on total Group turnover for the period and profit
for the period. The proforma information is for illustrative purposes only and is
not necessarily an indication of the turnover and results of operations of the
Group that actually would have been achieved had the acquisition been completed on
1 January 2010, nor is intended to be a projection of future results.
16. RELATED PARTY TRANSACTIONS
(a) Significant transactions with China Datang and its subsidiaries Six months ended 30 June 2010 2009 (unaudited) (unaudited) Agency commission paid to a fellow subsidiary for equipment purchases 4,851 4,027 Ash disposal fee to ultimate parent company 28,946 28,946 Fuel management fee to ultimate parent company 8,210 -- Fuel management fee to a fellow subsidiary -- 1,260 Interest expense to an associate 87,596 53,315 Interest income from associates 13,517 5,568 Purchases of coal from a fellow subsidiary 9,896 -- Purchases of coal from a jointly controlled entity 124,045 153,904 Purchases of coal from associates 297,511 177,478 Purchases of materials and fuel from a fellow subsidiary -- 429 Purchases of equipment from fellow subsidiaries 243,037 3,789 Rental expense for buildings to ultimate parent company 3,614 3,614 Rental expense for public facility to a fellow subsidiary 1,250 7,500 Repairs expense to a fellow subsidiary 1,800 -- Sales of pre-project assets to a fellow subsidiary 80,726 -- Sales of heat to an associate 39,223 94,260 Sales of equipment to a fellow subsidiary -- 6,649 Sales of power to an associate 2,822 1,208 Technical support, assistance and testing service fee to an associate 20,599 26,864
At 30 June 2010, the ultimate parent company provided guarantees for loans of the
Group amounting to RMB3,234 million (At 31 December 2009: RMB1,537 million).
At 30 June 2010, a wholly owned subsidiary of the ultimate parent company's
provided guarantees for loans of the Group amounting to RMB611 million (At 31
December 2009: RMB616 million) which were counter-guaranteed by the Company.
At 30 June 2010, the Company provided guarantees for the loans borrowed by two
associates, proportionate to its shareholding percentage, amounting approximately
RMB456 million (At 31 December 2009: RMB456 million).
At 30 June 2010, the Company provided guarantees for the loans borrowed by a
jointly controlled entity, proportionate to its shareholding percentage, totalling
approximately RMB617 million (At 31 December 2009: RMB577 million).
At 30 June 2010, an associate of the Company provided borrowing facilities of
RMB4.5 billion (At 31 December 2009: RMB4.5 billion) to the Group. (b) Significant transactions with other state-owned enterprises
State-owned enterprises and their subsidiaries, other than entities under China
Datang (also a state-owned enterprise), directly or indirectly controlled by the
PRC government are also defined as related parties of the Group in accordance with
IAS 24 "Related Party Disclosures".
Given that the PRC government still owns a significant portion of the productive
assets in the PRC despite the continuous reform of the government structures, the
majority of the business activities of the Group are conducted with enterprises
directly or indirectly owned or controlled by the PRC government ("other
state-owned enterprises"), including China Datang and its subsidiaries, jointly
controlled entities and associates in the normal course of business.
For the purpose of the related party transactions disclosure, the Group has
established procedures to determine, to the extent possible, the identification of
the ownership structure of their customers and suppliers as to whether they are
state-owned enterprises. However, many state-owned enterprises have multi-layered
corporate structures and the ownership structures change over time as a result of
transfers and privatization programs. Nevertheless, management believes that all
material related party transactions have been adequately disclosed. Six months ended 30 June 2010 2009 (unaudited) (unaudited) Sales of electricity 19,839,888
18,414,462
Sales of heat 167,335 81,507 Interest income from state-controlled banks/non-bank financial institutions 14,926 19,882 Interest expense on loans borrowed from state-controlled banks/non-bank financial institutions 2,136,884
2,940,644
Purchases of property, plant and equipment
(including construction-in-progress) 2,603,205
6,418,170
Purchases of fuel 10,975,711
6,758,379
Purchases of spare parts and consumable supplies 41,626 96,068 Drawdown of short-term loans from state-controlled banks/non-bank financial institutions 20,394,129
12,960,448
Drawdown of long-term loans borrowed from
state-controlled banks/non-bank financial
institutions 16,212,417 24,901,821
At 30 June 2010, loans of RMB430 million (At 31 December 2009: RMB4,328 million)
were guaranteed by other state-controlled enterprises.
At 30 June 2010, the Company provided guarantees for the loans borrowed by an other
state-controlled enterprise of RMB132 million (At 31 December 2009: RMB326 million).
(c) Key management personnel compensation Six months ended 30 June 2010 2009 (unaudited) (unaudited) Basic salaries and allowances 795 554 Bonus 1,682 1,776 Retirement benefits 99 19 Other benefits 434 666 3,010 3,01517. CONTINGENT LIABILITIES
At the end of the reporting period, the Group has provided financial guarantees for
loan facilities granted to the following parties: At 30 June 2010 At 31 December 2009 (unaudited) (audited) Associates 455,880 455,880 A jointly controlled entity 616,500
576,500
Other investees 132,000
132,000
Other state-controlled enterprises -- 193,550 1,204,380 1,357,930
Based on historical experience, no claims have been made against the Group since
the dates of granting the financial guarantees described above.
18. COMMITMENTS
(a) Capital commitments
At 30 June 2010, the Company has capital commitments related to investments in
subsidiaries, jointly controlled entities, associates and other investees amounted
to approximately RMB94 million (At 31 December 2009: RMB2,030 million). In addition,
capital commitments of the Group in relation to the construction and renovation of
the electric utility plants and acquisition of intangible assets not provided for
in the condensed consolidated statement of financial position are as follows: At 30 June 2010 At 31 December 2009 (unaudited) (audited) Contracted but not provided for 17,918,627 18,337,718 (b) Lease commitments
At 30 June 2010 the total future minimum lease payments under non-cancellable
operating leases in relation to buildings are payable as follows: At 30 June 2010 At 31 December 2009 (unaudited) (audited) Within one year 40,732 20,578 In the second to fifth years inclusive 60,195 68,427 After five years 24,300 46,813 125,227 135,818
19. APPROVAL OF FINANCIAL STATEMENTS
The financial statements were approved and authorised for issue by the Board of
Directors on 19 August 2010.
Supplemental Information
Equity and net profit reconciliations between PRC GAAP and IFRS
For the six months ended 30 June 2010(Amount expressed in thousands of Renminbi, unless otherwise stated)The unaudited condensed financial statements, which are prepared by the Group in conformity with IFRS, differ in certain respects from PRC GAAP. Major differences between PRC GAAP and IFRS ("GAAP differences"), which affect the equity and net profit of the Group, are summarised as follows: Equity At 30 June 2010 At 31 December 2009 (unaudited) (audited and restated)
Equity attributable to owners of the
Company under IFRS 29,240,638
26,198,485
Impact of PRC GAAP adjustments:
Difference in the commencement of depreciation of property, plant and equipment (a) 106,466 106,466 Difference in accounting treatment on monetary housing benefits (b) (148,233) (163,384) Difference in accounting treatment on mining funds (c) (120,741) (83,291) Applicable deferred income tax impact of the above GAAP differences (d) 16,481 9,158 Non-controlling interests' impact of the above GAAP differences after tax 2,600 6,011
Equity attributable to owners of the
Company under PRC GAAP 29,097,211 26,073,445 Net profit for the six months ended 30 June 2009 2010 (unaudited (unaudited) and restated)
Profit for the period attributable to
owners of the Company under IFRS 911,878
713,407
Impact of PRC GAAP adjustments:
Difference in accounting treatment on monetary housing benefits (b) 15,151 15,006 Difference in accounting treatment on mining funds (c) (101,195) (86,491) Applicable deferred income tax impact of the above GAAP differences (d) 7,323 6,857 Non-controlling interests' impact of the above GAAP differences after tax (3,411) (4,961)
Net profit attributable to owners of the
Company under PRC GAAP 829,746 643,818
(a) Difference in the commencement of depreciation of property, plant and equipment
This represents the depreciation difference arose from the different timing of the
start of depreciation charge in previous years.
(b) Difference in accounting treatment on monetary housing benefits
Under PRC GAAP, the monetary housing benefits provided to employees who started
work before 31 December 1998 were directly deducted from the retained earnings and
statutory public welfare fund after approval by the general meeting of the Company
and its subsidiaries.
Under IFRS, these benefits are recorded as deferred assets and amortised on a
straight-line basis over the estimated service lives of relevant employees.
(c) Difference in accounting treatment on mining funds
Under PRC GAAP, accrual of future development and work safety expenses are included
in respective product cost or current period profit or loss and recorded in a
specific reserve accordingly. When such future development and work safety expenses
are applied and related to revenue expenditures, specific reserve is directly
offset when expenses incurred. When capital expenditures are incurred, they are
included in construction-in-progress and transferred to fixed assets when the
related assets reach the expected use condition. They are then offset against
specific reserve based on the amount included in fixed assets while corresponding
amount is recognised in accumulated depreciation. Such fixed assets are not
depreciated in subsequent periods.
Under IFRS, coal mining companies are required to set aside an amount to a fund for
future development and work safety through transferring from retained earnings to
restricted reserve. When qualifying revenue expenditures are incurred, such
expenses are recorded in statement of comprehensive income as incurred. When
capital expenditures are incurred, an amount is transferred to property, plant and
equipment and is depreciated in accordance with the depreciation policy of the
Group. Internal equity items transfers take place based on the actual application
amount of future development and work safety expenses whereas restricted reserve is
offset against retained earnings to the extent of zero.
(d) Applicable deferred income tax impact on the above GAAP differences
This represents the deferred income tax effect on the above GAAP differences where
applicable.
vendorRelated Shares:
Datang Intl H