14th May 2012 08:51
DATANG INTERNATIONAL POWER GENERATION CO., LTD. (Stock Code: 00991) 2011 Annual ReportACHIEVING SUSTAINABLE DEVELOPMENTTHROUGH THE SYNERGY IN DIVERSITYContents -- Company Profile -- Distribution of Projects -- Major Events in 2011-- Financial and Operating Highlights -- Chairman's Statement -- Management Discussion and Analysis -- Fulfillment of Social Responsibilities -- Human Resources Overview -- Management of Investor Relations -- Investor Q&A -- Corporate Governance Report -- Report of the Directors -- Report of the Supervisory Committee -- Taxation in the United Kingdom -- Independent Auditor's Report -- Consolidated Statement of Comprehensive Income -- Consolidated Statement of Financial Position -- Consolidated Statement of Changes in Equity -- Consolidated Statement of Cash Flows -- Notes to the Financial Statements -- Differences between Financial Statements -- Corporate Information -- Glossary of Terms The year 2011 was the year in which China's "Twelfth Five-year Plan" was launched. During the year, Datang Power continued to intensify the adjustment of its business structure. While further optimising the structure of its principal business of power generation, the Company constantly pushed forward the development of non-power businesses - including coal, coal to chemical and transport - thereby achieving the complementary development of diversified power sources, ensuring coal supply, stabilising the transport of coal, expanding the profit platform and shaping a diversified business model. The advantages of synergy are set to be gradually realized.In 2012, Datang Power will accelerate the implementation of its strategy aimed at focusing on its power generation business whilst complementing it with synergistic diversifications. It will focus its strengths on developing the integrated and clustered projects that combine profitability, advanced technology, integrated innovations and synergetic diversifications, with a view to building long-term competitiveness and achieving sustainable development for the Company and stable returns for its shareholders.
Company Profile
STRATEGIC POSITIONINGThe Company focuses in the power generation business whilst deploying diversifications; and strives for profitability as a priority whilst seeking synergistic developments. Datang Power aims to develop itself into a company with an operation-cum-holding orientation, an integrated energy company that enjoys a domestic leadership position and international reputation having strong development capabilities, profitability and competitiveness.DEVELOPMENT STRATEGIESThe Company will enhance its coal-fired power; aggressively expand its hydropower; continuously develop wind power; safely and effectively develop nuclear power; appropriately develop solarenergy; focus on suitable coal operations; steadily develop coal-to-chemical; accelerate the development of metallurgy; and secure a complementary development of railway, port and shipping.
MISSION
To be a responsible power enterprise with quality, talent and efficiency.
COMPANY INTRODUCTIONDatang International Power Generation Company Limited ("Datang Power" or the "Company", formerly Beijing Datang Power Generation Company Limited) was incorporated as a joint stock limited company and registered with the State Administration for Industry and Commerce of the People's Republic of China (the "PRC") on 13 December 1994. As one of the largest independent power producers in China, Datang Power develops various businesses including coal, coal-to-chemical, transportation and recycling economy according to its strategy of "focusing in the power generation business whilst complementing with synergistic diversifications". As at 31 December 2011, the total consolidated assets of the Company and its subsidiaries amounted to approximately RMB247.697 billion. Total installed capacity in operation of the Company amounted to 38,484 MW. The businesses in power generation, coal-to-chemical, transportation and recycling economy of the Company spread across 18 provinces (municipalities and autonomous regions) throughout the country.
EQUITY STRUCTURE AND SHAREHOLDING OF THE COMPANY
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Distribution of Projects
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Major Events in 201101 JANUARY
-- Units 1 and 2 (2 x 300MW) at Shanxi Datang International Linfen Thermal Power Company Limited
were launched for commercial operation.
02 FEBRUARY
-- The National Development and Reform Commission sent an official reply to the Company granting
approval for the Phase 2 project (with a capacity of 20 million tonnes/year) of the Shengli
open-pit Coal Mine East Unit 2 at Datang Power and the Dadu River Huangjinping Hydropower
Project (850MW) of Sichuan Datang International Ganzi Hydropower Development Company Limited.
03 MARCH
-- Datang Power received a Titanium Award from The Asset, a Hong Kong-based magazine, for
corporate governance, social and environmental responsibility and investor relations
management for 2010, making it the only award-winning large-scale power generation company
under the category of Chinese power/utilities enterprises.
-- Datang Power ranked 17th among the "Top 50 Chinese Domestic Companies" in the first-ever
"China Corporate Social Responsibility Top 100 Rankings" released by Fortune (Chinese Edition).
05 MAY
-- Jiangsu Datang International Lvsigang Power Generation Company Limited and Guangdong Datang
International Chaozhou Power Generation Company Limited received the 2011 China Quality Power
Project Silver Award for the 4 x 600MW new project and units 3 and 4 (2 x 1,000MW),
respectively, from the China Electric Power Construction Association.
-- The Company successfully completed the non-public issue of 1 billion A shares, raising funds
amounting to RMB6,740 million.
-- Datang No. 6, Datang No. 7, Datang No. 8 and Datang No. 10 (bulk carriers with loading
capacity of 45,000-tonnes each) of Jiangsu Datang Shipping Company Limited were delivered
upon completion of their construction.
06 JUNE
-- The Faku Wulongshan Wind Power Project (48MW) in Liaoning, the Qingtongxia (Shashidunliang)
Wind Farm Project (48MW) in Ningxia, Phase 2 of the Qingtongxia Photovoltaic Grid Power
Station (20MWp) in Ningxia and the Golmud Grid Photovoltaic Power Generation Project (20MWp)
in Qinghai were approved by the Development and Reform Commissions of Liaoning Province, the
Ningxia Hui Autonomous Region and Qinghai Province, respectively.
07 JULY
-- Datang International Fengning Wanshengyong Wind Farm Project, with a capacity of 150MW, was
approved by the National Development and Reform Commission.
08 AUGUST
-- The Series A Gasifier 8 at the gasification plant of Inner Mongolia Datang International
Keshiketeng Qi Coal-based Gas Company Limited was successfully launched after the first
ignition at 22:58.
-- Datang Inner Mongolia Duolun Coal Chemical Company Limited achieved a breakthrough at the
methanol-to-propylene ("MTP") plant in the production of propylene products, marking the
successful large-scale industrial application of MTP at the Duolun Coal Chemical Project.
-- The Jishan Wind Farm Project (48MW) in Jiangxi was approved by the Development and Reform
Commission of Jiangxi Province.
09 SEPTEMBER
-- Thirty-three stand-alone wind turbines at the Xiqiaoliang Wind Farm of Hebei Datang
International Wind Power Development Company Limited were launched for commercial operation.
10 OCTOBER
-- Units 1 and 2 (total capacity of 130MW) at the Shimenkan Hydropower Station of Yunnan Datang
International Lixianjiang Hydropower Development Company Limited were launched for commercial
operation upon the successful completion of a 72-hour test run.
11 NOVEMBER
-- The 49.5MW Xiqiaoliang Phase 1 Project of Hebei Datang International Chongli Wind Power
Company Limited and the 49.5MW Dahexi Phase 1 Project of Hebei Datang International Fengning
Wind Power Company Limited were launched for commercial operation.
-- Datang Power was rated the 162nd overall by Platts, a provider of energy information, in
the "Top 250 Global Energy Companies for 2011 Rankings".
-- At the China Securities Golden Bauhinia Awards ceremony hosted by Hong Kong-based Ta Kung Pao,
Datang Power's Chairman Liu Shunda received "The Most Influential Leader Award", while Datang
Power was named the "Listed Companies with the Most Investment Value during the Twelfth
Five-year Plan".12 DECEMBER
-- The 48MW Luotuogou Phase 1 Project of Hebei Datang International Fengning Wind Power Company
Limited was launched for commercial operation.
-- Units 1, 2, 3 and 4 at the Wujiang Yinpan Hydropower Station of Chongqing Datang International
Wulong Hydropower Development Company Limited, with a total installed capacity of 600MW, were
launched for commercial operation, having achieved the annual construction project target of
"launching four units into operation within one year".
-- Two 350MW coal-fired generating units at Chongqing Datang International Shizhu Power Generation
Company Limited were approved by the National Development and Reform Commission.
-- The Development and Reform Commission of Zhejiang Province sent an official reply to the
Company granting approval for the two sets of 452MW gas-steam combined cycle thermal
cogeneration units at the Datang Shaoxing Jiangbin Natural Gas Thermal Cogeneration Project
and the two sets of 115MW gas-steam combined cycle thermal cogeneration units at the Datang
Jiangshan Natural Gas Thermal Cogeneration Project.
-- The Development and Reform Commission of Jiangxi Province sent an official reply to the
Company granting approval for the Jiangxi Songmenshan Wind Farm Project (48MW) of
Datang International Wind Power Development Company Limited.
-- Phase 1 of the 20MWp photovoltaic array at the Golmud Photovoltaic Power Station of Qinghai
Datang International Golmud Photovoltaic Power Generation Company Limited was formally
connected to the grid for power generation.
Financial and Operating Highlights
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Note)
(Amounts expressed in millions of RMB)
For the year ended 31 December 2007 2008 2009 2010 2011
(Restated)
_______________________________________________________________________________
Operating revenue 32,763 36,900 47,943 60,672
72,382
_______________________________________________________________________________
Profit before tax 6,063 600 3,132 4,700 3,710 Income tax expense (1,498) (72) (615) (871) (668)
_______________________________________________________________________________
Profit for the year attributable to: - Owners of the Company 3,564 749 1,537 2,570 1,971 - Non-controlling interests 1,001 (221) 980 1,259 1,071
_______________________________________________________________________________
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Chairman's Statement
Looking forward to 2012, the Chinese government will continue to focus on the macroeconomic policy on accelerating economic restructuring and improving the quality of development and the profitability. Datang Power will continue to remain focused on economic benefits as the core basis of the theme of scientific development, and will accelerate the pace of restructuring to ensure that the objectives in the second phase of its medium-term development plan could be achieved.To all shareholders,In 2011, domestic thermal coal prices remained high and surged dramatically. The upward adjustment to on-grid tariffs was far from enough to offset the higher prices. The unfavorable situation of an imbalance in thermal coal prices remained fundamentally unchanged. As a result of the implementation of a tight monetary policy in China, the cost of borrowing rose alongside increasing finance costs borne by power generation companies. In these challenging market conditions and the pressure exerted on operations, we pushed forward the full-scale implementation of our strategy, which was aimed at focusing on the power generation business whilst being complemented by synergistic diversifications, and launched the campaign on "Two Increases and Two Reductions, Pursuit of Profits and Conquest of Difficulties" in a profound manner. Despite a decline in benefits, we managed to make some hard-won achievements.
As at 31 December 2011 (the "Year"), the total installed capacity of the Company and its subsidiaries was 38,484MW, while consolidated assets amounted to approximately RMB247,697 million,
representing an increase of 16.34% as compared to the corresponding period of 2010 (the "Previous Year"). Consolidated operating revenue amounted to approximately RMB72,382 million, representing an increase of approximately 19.30% as compared to the Previous Year. Profit attributable to equity holders of the Company amounted to approximately RMB1,971 million, representing a decrease of approximately 23.29% as compared to the Previous Year. Earnings per share were approximately RMB0.15, representing a decrease of approximately RMB0.06 per share ascompared to the Previous Year.The Company continued to maintain good production safety in 2011, achieving an overall equivalent availability factor of all operating units of 93.64% for the Company and its subsidiaries. Power generated by the Company and its subsidiaries amounted to 203.72 billion kWh, an increase of 14.14% as compared to the Previous Year. Coal consumption per unit production of power supply was approximately 319.69 g/kWh, a decrease of approximately 3.90 g/kWh as compared to the Previous Year.Looking forward to 2012, the Chinese government will continue to focus on the macroeconomic policy on accelerating economic restructuring and improving the quality of development and the profitability. Against this backdrop, Datang Power will still be exposed to challenges and opportunities. With respect to challenges, firstly, China's economic growth will slow down due to the impact of the structural adjustment of the macro economy. Secondly, the development of enterprises will be limited due to lack of funds. Thirdly, the State issued higher standards on energy conservation and emissions reduction. With respect to opportunities, firstly, pressure on the Company's operations is expected to be alleviated. Secondly, the advantage of diversified businesses will be revealed gradually. Thirdly, the efficiency of management will be further improved.In 2012, Datang Power will enter the final year of the second phase of its medium-term development plan, which primarily focuses on reinforcing Datang Power's dominant position in the power generation industry, the successive commencement of production of its coal chemical and metallurgy projects, further assuring the availability of the Company's own coal, the initialcreation of a logistics industry value chain and the shaping of a diversified industrial pattern. Datang Power will continue to remain focused on economic benefits as the core basis of the themeof scientific development, and will accelerate the pace of restructuring to ensure that the objectives in the second phase of its medium-term development plan could be achieved.In the new year, Datang Power will continue to implement its core mechanisms - the comprehensive accountability management system and the performance appraisal system for all staff - and will take advantage of the opportunities arising from the "Year of Primary Level Organizational Setup" and the "Year of Management Enhancement" to carry out benchmarking, overcome weaknesses and strengthen internal management. We will manage our staff according to such systems, discipline our staff according to established procedures and handle our business according to proven processes. We will rely on scientific and accurate data and will offer rewards or impose penalties according to these mechanisms. We will complete our projects in progress to best possible standards and will generate returns for our shareholders and the community by delivering top-notch achievements, top-notch standards and top-notch development models.
Last but not least, I wish to express my sincere gratitude to all shareholders, various organizations and friends for their trust and support.
Liu Shunda Chairman 23 March 2012
Management Discussion and Analysis
The Company is one of the largest independent power generation companies in the PRC. As at the end of 2011, the Group managed a total installed capacity of approximately 38,484.2 MW. The power generation business of the Group is mainly distributed across the power grids of North China, Gansu, Jiangsu, Zhejiang, Yunnan, Fujian, Guangdong, Chongqing, Jiangxi, Liaoning, Ningxia, Qinghai, and Sichuan.
A. OVERVIEW
The Company, principally engaged in power generation business focusing on coal-fired power generation, is one of the largest independent power generation company in the People's Republic of China (the "PRC"). In 2011, the Company and its subsidiaries (the "Group") adhered to implementing the strategy of "focusing in the power generation business whilst complementing with synergistic diversifications". It established an innovative management mechanism to enhance its control capabilities. Faced with a challenging situation in its production and operation, it unleashed its potential according to its benchmarks, created excellence and improved efficiency, constantly enhanced economic benefits and shareholder returns of the Company as well as resource conservation and environmental protection, and earnestly fulfilled its social responsibilities, thereby successfully achieving the business targets set for the Year.
1. Safe Production was Stably Maintained
The Company aims to build a fundamentally safe enterprise and to further deepen the
establishment of a long-term mechanism for safe production. The Company has experienced no
significant incidents at its facilities and no casualties during the Year. It has fulfilled
its role of securing power supply during the Year.2. Overall Accomplishment of Operation Targets
The Company's power generation amounted to 203.7156 billion kWh for the Year, representing
an increase of 14.14% year-on-year. Consolidated operating revenue amounted to approximately
RMB72,382 million, representing an increase of approximately 19.30% over the Previous Year.
Net profit attributable to equity holders of the Company amounted to approximately RMB1,971
million, representing a decrease of approximately 23.29% over the Previous Year. As at 31
December 2011, total consolidated assets of the Group amounted to RMB247,697 million,
representing an increase of 16.34% year-on-year. Net assets attributable to the parent
company of the Company amounted to RMB38,941 million, representing an increase of 26.23%
year-on-year. The assets-to-liabilities ratio was 79.52%, representing a decrease of 2.43
percentage points year-on-year. 3. Breakthrough on Preliminary Works
For the Year, fourteen power generation projects were approved, including three coal-fired
power projects, four hydropower projects, five wind power projects and two photovoltaic power
projects, with total approved generation capacity of 3,270.6 MW. Phase 2 of Shengli Coal
Mine East Unit 2, with a capacity of 20 million tonnes per year, was approved and was also
the first approved largest single open-pit coal mine in the PRC.4. Frequent Reports of Success in Commencement of Project Construction
Total generating capacity recorded an increase of 2,183.9 MW. As at 31 December 2011, the
Group's installed capacity amounted to 38,484.2 MW, representing an increase of 6.02%
year-on-year. Of such capacity, coal-fired power amounts to 32,360 MW, accounting for
84.08%; hydropower amounts to 4,825.6 MW, accounting for 12.54%; wind power amounts to
1,268.6 MW, accounting for 3.30%; and photovoltaic power amounts to 30 MW, accounting for 0.08%.
5. Energy Conservation and Emissions Reduction Proceeded in an Orderly Manner
In 2011, the Group achieved coal consumption for power supply of 319.69 g/kWh, a decrease
of 3.90 g/kWh year-on-year. The emission rates of sulphur dioxide, nitrogen oxides, smoke
ash and waste water of the Group have decreased by 9.90%, 5.01%, 6.06% and 20.48% year-on-year
to 0.38 g/kWh, 1.33 g/kWh, 0.12 g/kWh and 60 g/kWh respectively, which are substantially
lower than the national average levels.
6. Capital Operation Reaped Better Results
In 2011, the Company completed the acquisition of equity interests in Sichuan Jinkang
Hydropower Development Co., Ltd., increasing its installed hydropower capacity in operation
and under construction by 380 MW. The Company successfully completed the non-public issuance
of an additional one billion A shares, with net proceeds raised from the issue amounting to
RMB6,740 million. The Company successfully issued RMB3,000 million of corporate bonds
carrying a rate of 23% lower than the lending rate during the same period, the lowest
level against comparable interest rates during the same period in China.
7. Ongoing Innovation of Management Mechanism
The Company's management system "overall accountability management and all-staff performance
appraisal" officially came online in 2011 which realized the coverage of performance
orientation and accountability management. The Company established its internal controls in
full swing by systematically making smooth the business processes in various fields,
identifying various types of risks at all levels and setting up an information management
platform for internal controls in a regulated manner. The concept of project-based
management was introduced to the Company by establishing a regular scheduling mechanism
that shaped a unique pattern of project-based management.8. Winning Honours in the Capital Market
The Company once again ranked among the "Top 250 Global Energy Company Rankings" by Platts
Energy Information, ranking 162th in the general ranking and 8th among independent power
generation enterprises around the world. It ranked 17th among the "Top 50 Chinese Domestic
Companies" in the rankings of the "Top 100 Chinese Corporations' Corporate Social
Responsibility", published by Fortune, the only independent power generation company in the
rankings. It received a "Titanium Award for Corporate Governance, Social and Environmental
Responsibility and Investor Relations Management" from The Asset Magazine, the only
large-scale power generation company in the PRC that ever won this award.
B. REVIEW BY THE MANAGEMENT ON THE PERFORMANCE OF VARIOUS BUSINESS OPERATIONS
(Financial data are shown according to China Accounting Standards for Business Enterprises
("PRC GAAP"). For segment information, please refer to Note 8 to the Financial Statements.)
1. The Power Generation Business
(1) Business Review
The Company is one of the largest independent power generation companies in the PRC. As at
the end of 2011, the Group managed a total installed capacity of approximately 38,484.2 MW.
The power generation business of the Group is mainly distributed across the power grids of
North China, Gansu, Jiangsu, Zhejiang, Yunnan, Fujian, Guangdong, Chongqing, Jiangxi, Liaoning,
Ningxia, Qinghai, and Sichuan.
In 2011, the PRC's overall economy operated with a good momentum, reaching a year-on-year
9.2% Gross Domestic Product (GDP) growth. Both power generation and power consumption
nationwide continued to grow in a stable manner. According to the relevant statistics, during
the Year, the nationwide capacity of power generating facilities grew by approximately 9.2%
year-on-year. Social power consumption increased by 11.7% over the Previous Year, while
nationwide power generation increased by approximately 11.7% over the Previous Year. Overall,
the power supply was tight across the country in 2011, with shortages more severe in certain
areas and during certain periods primarily due to a number of factors such as the decline in
hydropower output, tension in the supply of thermal coal, imbalance in the structure of power
resources and power grid as well as rapid growth in the economy and power demand. Although the
utilisation hours of power generating facilities continued to rise, the profitability of
coal-fired power enterprises was significantly undermined as the prices of coal for power
generation increased substantially and stayed high. The Group maintained a certain level of
profitability despite the impact on its power generation business under such a challenging
business environment.
(i) Maintenance of Safe and Stable Power Production
During the Year, total power generation of the Group amounted to 203.7156 billion kWh,
representing an increase of 14.14% over the Previous Year. The accumulative on-grid power
generation amounted to 192.1434 billion kWh, representing an increase of 14.22% over the
Previous Year. The increases in power generation and on-grid power generation were mainly
attributable to an increase in the capacity of operational generating units of the Group,
safe and stable operation of the generating units and a steadily increasing power demand
in the service territories. During the Year, the Group added new installed capacity of
2,183.9 MW. Utilisation hours of power generation amounted to 5,376 hours, an increase of
379 hours year-on-year. No casualties or material damage to the facilities occurred to the
Group during the course of power production during the Year. The equivalent availability
coefficient of the operational generating units amounted to 93.64%.
(ii) Steady Progress in Energy Conservation and Emissions Reduction
During the Year, the Company adhered to management by objective, program control, dynamic
benchmarking and monitoring; enhanced management on energy conservation; focused on economic
operation of power generating facilities; and intensified technological renovation on energy
conservation and facilities treatment, thereby enhancing the utilisation efficiency of
generating units. During the Year, coal consumption for power supply was 319.69 g/kWh,
representing a decrease of approximately 3.90 g/kWh over the Previous Year.
Consolidated electricity consumption rate of power plants was 5.74%, representing a decrease
of 0.08 percentage-point year-on-year. The desulphurisation facilities operation rate and an
overall desulphurisation efficiency rate amounted to 99.54% and 93.76%, respectively.
The coal-fired generating units of the Group continued to achieve a desulphurisation
facilities installation rate of 100%. The emission rates of sulphur dioxide, nitrogen oxides,
smoke ash and waste water decreased by 9.90%, 5.01%, 6.06% and 20.48% year-on-year
to 0.38 g/kWh, 1.33 g/kWh, 0.12 g/kWh and 60 g/kWh, respectively, which were lower than the
national average levels.
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(iii) Reinforced Economic Analysis and Improved Operational Management Efficiency
During the Year, the Company continued to encounter various unfavourable situations such as
rising and high coal prices and inability to realize tariff adjustments target. Faced with
such an ongoing challenging operating environment, the Company closely monitored the market
situation, actively conducted researches on budget plans, strengthened internal management
and adjusted its strategies to adapt the external environment for pushing forward production
and operation in a rigorous manner: (1) Management accountability was implemented
level-by-level, and targets of power generation were achieved.The accumulated utilisation
hours of generating units amounted to 5,376 hours, an increase of 379 hours year-on-year;
(2) Through measurements such as developing economical coal to secure fuel supply,
enhancing coal blending and mixed burning and setting up an improved platform on fuel
management indices, fuel costs were effectively controlled; (3) Cash allocation and capital
availability according to needs were improved, loans were repaid on a timely basis to
reduce capital sedimentation, optimise loan portfolio and lower capital costs.
(iv) Actively Pushed Forward Projects Construction and Increased Green Energy Capacity
During the Year, 14 power projects of the Company were approved by the State including three
coal-fired power projects with an approved total capacity of 1,834 MW, four hydropower
projects with an approved total capacity of 1,054.6 MW, five wind power projects with an
approved total capacity of 342 MW, and two photovoltaic power projects with an approved
total capacity of 40 MW. Details on the approved projects are as follows:
-- Coal-fired power projects: two 350 MW generating units at Shizhu Coal-fired Power
Project in Chongqing; two 452 MW generating units at Jiangbin Gas Thermal Power
Project in Shaoxing; and two 115 MW generating units at Xincheng Gas Thermal Power
Project in Jiangshan.
-- Hydropower projects: 850 MW generating units at Huangjinping Hydropower Station
Project in Sichuan; 9.6 MW generating units at Bodui Hydropower Station Project in
Tibet; 125 MW generating units at Haokou Hydropower Station Project in Chongqing;
and 70 MW generating units at Jiaomutang Hydropower Station Project in Guizhou.
-- Wind power projects: 150 MW generating units at Wanshengyong Wind Power Project in
Hebei; the Phase 3 project for 48 MW generating units at Faku Wind Power in Liaoning;
the Phase 1 project for 48 MW generating units at Shengjiadun Wind Power in Qingtongxia,
Ningxia; the Phase 1 project for 48 MW generating units at Jishang Wind Power in
Jiangxi; and 48 MW generating units at Songmenshan Wind Power Project in Jiangxi.
-- Photovoltaic power projects: the Phase 2 project for 20 MW generating units at
Qingtongxia Photovoltaic Power in Ningxia and the Phase 1 project for 20 MW generating
units at Golmud Photovoltaic Power in Qinghai.
-- Coal mine projects: Phase 2 project with annual output of 20 million tonnes for
Shengli Coal Mine East Unit 2 in Xilinhaote, Inner Mongolia.
In 2011, a number of major power generation projects of the Company commenced operation
one after another, with newly installed capacity amounting to approximately 2,183.9 MW:
-- Coal-fired power project: newly installed capacity of 600 MW, including two 300 MW
generating units at Linfen Thermal Power Company;
-- Hydropower projects: newly installed capacity of 989.7 MW, including four 150 MW
hydropower generating units at Yinpan Hydropower Station in Chongqing, 150 MW
hydropower generating units at Liguo, in Chengdu, one 100 MW hydropower generating
units at Malutang and two 65 MW hydropower generating units at Shimenkan of Yunnan
Electric Power Company Limited and a 9.7 MW hydropower generating units at Yuneng Group;
-- Wind power projects: newly installed capacity of 834.2 MW, including 345 MW generating
units at Hebei Wind Power Company, 194.25 MW generating units at Inner Mongolia Wind
Power Company, 246 MW generating units at Liaoning Wind Power Company, 28 MW
generating units at Fujian Wind Power Company, and 21 MW generating units at Shanxi
Zuoyun Wind Power Company; and
-- Photovoltaic power projects: newly installed capacity of 30 MW, including 30 MW
generating units at Qingtongxia Photovoltaic Power Project in Ningxia.
As at the end of 2011, the generation capacities of coal-fired power, hydropower, wind
power and photovoltaic power accounted for 84.08%, 12.54%, 3.30% and 0.08% of the
Company's installed power generation capacity, respectively. As compared to the Previous
Year, the proportion of capacity in clean and renewable energy increased to 15.92%,
representing an increase of 4.10 percentage points year-on-year, making the Company's
power generation structure further optimised.
(2) Major Financial Indicators and Analysis
(i) Operating Revenue
During the Year, revenues from electricity sales and heat sales of the Group accounted for
approximately 89.92% of the consolidated operating revenue of the Group. Of which, revenue
from electricity sales accounted for 88.93% of the consolidated operating revenue.
During the Year, revenues from electricity sales and heat sales of the Group amounted
to approximately RMB64,367 million and RMB719 million, respectively, representing
increases of approximately 20.10% and 33.23% over the Previous Year, respectively. In
particular, the increase in revenue from electricity sales was mainly due to the
increases in on-grid power generation and average tariff of on-grid power. During the
Year, the commencements of operation of the Group's generating units in coastal regions
optimised the power generation structure of the Group and raised the average on-grid power
tariff. The average on-grid power tariff of the Group increased by 5.1% over the Previous
Year, and the operating revenue from electricity increased by approximately RMB3,150 million
accordingly. The increase in on-grid power generation resulted in the increase of
approximately RMB7,623 million in the Group's revenue.
(ii) Operating Costs
During the Year, the power fuel expenses incurred by the Group amounted to RMB41,160
million, representing an increase of RMB9,695 million as compared to RMB31,465 million
in the Previous Year. The increase is mainly due to: 1) an increase of RMB4,435 million
in fuel cost caused by the increase of 21.946 billion kWh in on-grid coal-fired power
generation over the Previous Year; 2) an increase of RMB5,260 million in fuel cost caused
by the increase of RMB29.61/MWh in unit fuel cost over the Previous Year.
(iii) Operating Profit
During the Year, operating profit from electricity and heat amounted to approximately
RMB11,022 million, while the gross profit margin was approximately 16.93%, representing a
decrease of approximately 2.82% over the Previous Year.
2. Coal Chemical Business
(1) The Duolun Coal Chemical Project, developed and constructed by the Group as a controlling
interest is located at Duolun County, Xilinguole Pledge, Inner Mongolia. It uses lignite
coal from the Inner Mongolia Shengli Coal Mine as raw materials; and it applies advanced
technologies in the world including the technology of vaporising coal ash, the
syngas purification technology, the large-scale ethanol synthesis technology, the technology
to convert methanol to propylene, and the propylene polymerisation technology to produce
chemical products. The final product of the project is 460,000 tonnes/year of polypropylene
and other by-products.
In the first half of 2011, the Duolun Coal Chemical Project succeeded in the first trial
run of two gasifiers. The accomplishment of certain critical phases such as the successful
operation of the response system of the methanolto-propylene (MTP) facility on the first
attempt and the production of alkene with qualified constituents marked significant
breakthroughs in the development of the core technologies of the Duolun Coal Chemical
Project. In June 2011, the project produced qualified methanol, and on 28 September 2011,
the project's entire device was ready for full operation to produce qualified polypropylene
end-product. On 16 March 2012, the Duolun Coal Chemical Project underwent trial production.
It is expected that the project will become a new profit growth point of the Group upon
its successful development and operation.
(2) The Keqi Coal-based Natural Gas Project with an annual output of 4 billion cubic meters,
developed and constructed by the Group with controlling interests, is located in
Keshiketeng Qi, Chifeng City, the Inner Mongolia Autonomous Region. Upon its completion,
the major supply targets of the project are Beijing City and cities along the gas
transmission pipeline. As a political, cultural and financial centre of the PRC,
Beijing City has a strong demand for clean energy such as natural gas, given the city's
higher requirement for the quality of the air environment. The Company believes that
following the completion of the Keqi Coal-based Natural Gas Project, it will benefit from
the growing demand for clean energy in Beijing City and the cities along the gas
transmission pipeline, thereby increasing the overal profitability of the Company.
During the Year, the Keqi Coal-based Natural Gas Project achieved its targets for the
trial operation of air separation and ignition of the first gasifier. On 26 August 2011,
the No. 8 gasifier at gasification plant was ignited successfully on its first attempt,
and on 28 November 2011, the air separation plant made a successful test run and
produced oxygen and nitrogen that met the required standards. Other construction works
are proceeding at an accelerated speed, with the aim of launching the project for
operation in 2012.
(3) The Fuxin Coal-based Natural Gas Project in Liaoning with an annual output of 4 billion
cubic meters, developed and constructed by the Group with controlling interests, is
located in Fuxin City, Liaoning Province. The project was approved and commenced
construction in 2010. Upon its completion, the project aims to supply natural gas
largely to Shenyang City in Liaoning Province and nearby cities such as Tieling, Fushun,
Benxi and Fuxin. Liaoning Province has experienced fast economic growth. With the
acceleration of urbanisation, the reform in coal-fired boilers and the development of
gas buses and industries using natural gas as raw material, the supply gap of natural
gas in the above cities will grow bigger and bigger. Following the completion of the
Fuxin Coal-based Natural Gas Project, the Company will benefit from the growing
demand for clean energy in Shenyang and nearby cities which have experienced rapid
economic development, thereby increasing the overall profitability of the Company.
During the Year, the Fuxin Coal-based Natural Gas Project successfully hoisted its
first gasifier. Other construction works are proceeding at an accelerated speed, with
the aim of launching the project for operation in 2013.
(4) The High-Aluminium Pulverised Fuel Ash Project of Inner Mongolia Renewable Energy Resource
Development Company Limited, constructed by the Company with controlling interests,
proceeded smoothly. During the Year, the project was fully completed and is currently
achieving continuous production of alumina and the quality of product has been
verified by a professional assessment institution. The project provides technical
support to the Group's deployment of its recycling economy businesses.
3. The Coal Business(1) Business Review
The Shengli Coal Mine East Unit 2, developed and constructed by the Group, is located
in the central part of Shengli Coal Mine in Inner Mongolia with a planned construction
scale of 60 million tonnes. Its coal products will mainly be supplied as raw materials to
the coal chemical and coal-based natural gas projects including the Duolun Coal Chemical
Project, the Keshiketeng Qi Coal-based Natural Gas Project and Fuxin Coal-based Natural
Gas Project. In particular, the annual production capacity of Phase 1 project amounted
to 10 million tonnes. The Phase 2 project with an annual production capacity of 20 million
tonnes was approved by the National Development and Reform Commission in March 2011,
and was the first approved largest single open-pit coal mine in the PRC. During the
Year, the raw coal output of the Shengli Coal Mine East Unit 2 reached 10.71 million tonnes.
During the Year, Inner Mongolia Baoli Coal Mine, in which the Company has controlling
interests, produced 1.31 million tonnes of coal. Meanwhile, the Company is currently
engaged in preliminary development works on the Wujianfang Coal Mine, the Kongduigou Coal
Mine and the Changtan Coal Mine. The successful developments of the above-said coal mine
projects will increase the self-sufficiency ratio of coal consumption of the Company's
power plants.
The Tashan Coal Mine and the Yuzhou Coal Mine, constructed by the Company with holding
interests, produced 23 million tonnes and 7.2 million tonnes of raw coal, respectively,
thereby assuring stable coal sources for the Company.
(2) Major Financial Indicators and Analysis
(i) Operating Revenue
During the Year, the coal self-sufficiency ratio of the Group further increased. During the
Year, operating revenue from the coal business after consolidation elimination amounted to
approximately RMB2,938 million, accounting for 4.06% of the Group's total operating revenue,
representing an increase of approximately 4.05% over the Previous Year.
(ii) Operating Costs
During the Year, operating costs in the coal business amounted to approximately RMB2,331
million, representing a decrease of approximately RMB363 million over the Previous Year.
The decrease in operating costs was mainly attributable to the increase in coal exports of
its self-owned coal mines and the decrease in the unit cost of coal per tonne.
(iii) Operating Profit
During the Year, operating profit from the coal business amounted to approximately RMB606
million, while the gross profit margin was approximately 20.63%, representing an increase
of approximately 16.05% over the Previous Year.
C. MANAGEMENT'S REVIEW ON CONSOLIDATED OPERATING RESULTS
1. Operating Revenue
During the Year, consolidated operating revenues of the Group amounted to approximately
RMB72,382 million, representing an increase of approximately 19.30% over the Previous Year.
Of the operating revenue, revenue from electricity sales increased by approximately
RMB10,773 million.2. Operating Costs
During the Year, total operating costs of the Group amounted to approximately RMB62,829
million, representing an increase of approximately RMB11,360 million, or approximately
22.07%, over the Previous Year. Among the operating costs, fuel costs accounted for approximately 70.80%, and depreciation accounted for approximately 13.70% of the operating costs.3. Net Finance Costs
During the Year, the Group's finance costs amounted to approximately RMB7,102 million,
representing an increase of approximately RMB1,729 million or approximately 32.17% over the
Previous Year. The significant increase was mainly due to an increase in borrowings and the
cessation of capitalisation of interest for newly operated generating units.
4. Profit before Tax and Net Profit
During the Year, the Group reported a profit before tax amounting to approximately
RMB3,710 million, representing a decrease of approximately 21.07% over the Previous Year.
Net profit attributable to equity holders of the Company amounted to approximately
RMB1,971 million, representing a decrease of 23.29% over the Previous Year. The decrease
in the Group's profit was mainly due to the increase in fuel costs and finance costs.
5. Financial Position
As at 31 December 2011, total assets of the Group amounted to approximately RMB247,697
million, representing an increase of approximately RMB34,782 million as compared to the
end of 2010. The increase in total assets mainly resulted from the implementation of the
expansion strategy by the Group which led to a corresponding increase in investments
in projects under construction.
Total liabilities of the Group amounted to approximately RMB196,965 million, representing
an increase of approximately RMB22,483 million over the end of the Previous Year. Of the
total liabilities, non-current liabilities increased by approximately RMB13,351 million
over the end of the PreviousYear.The increase in total liabilities was mainly due to an
increase in the Group's borrowings so as to meet the needs of daily operations and
infrastructure construction. Equity attributable to equity holders of the
Company amounted to approximately RMB38,941 million, representing an increase of
approximately RMB8,091 million over the end of the Previous Year. Net asset value per
share attributable to equity holders of the Company amounted to RMB2.93, representing
an increase of approximately RMB0.42 per share over the end of the Previous Year.
6. Liquidity
As at 31 December 2011, the asset-to-liability ratio of the Group was approximately
79.52%. The net debt-to-equity ratio [i.e. (loans + short-term bonds + long-term bonds
- cash and cash equivalents)/ total equity] was approximately 315.88%.
As at 31 December 2011, the cash and cash equivalents held by the Group amounted to
approximately RMB4,467 million, of which deposits equivalent to approximately
RMB308 million were foreign currency deposits. During the Year, the Group had no
entrusted deposits or overdue fixed deposits. As at 31 December 2011, short-term loans
of the Group amounted to approximately RMB21,524 million, bearing annual interest rates
ranging from 1.31% to 8.50%. Long-term loans (excluding those repayable within one
year) amounted to approximately RMB117,654 million and long-term loans repayable within
one year amounted to approximately RMB15,202 million. Long-term loans (including
those repayable within one year) were at annual interest rates ranging from 1% to
7.76%. Loans of approximately RMB1,570 million were denominated in US dollar, and
loans equivalent of approximately RMB563 million were denominated in HK dollar
("HK$"). The Group constantly pays close
attention to foreign exchange market fluctuations and cautiously assesses foreign
currency risks.7. Welfare Policy
As at 31 December 2011, the number of staff of the Group totalled 19,365. During the Year,
the costs of salaries and staff welfare of the Group amounted to RMB2,367 million. The
Group adopts the basic salary system on the basis of position-points salary distribution.
The Group carries out comprehensive accountability management and the performance appraisal
for all staff of its subordinated enterprises based on a profit accountability system.
The Group is concerned about personal growth and occupational training of its staff,
and implements a reward mechanism of "unification of training, usage and remuneration".
Led by the strategy of developing a strong corporation with talents, the Group relies on
a three-tier management organizational structure and implements an all-staff training
scheme for various levels.D. OUTLOOK FOR 2012
The year 2012 marks the final year for the Company to achieve the targets for the second
phase of its medium-term development plan, a year for both opportunities and
challenges. The Company will meet new challenges and make new strides by leveraging new
opportunities under new situations.
Looking forward to 2012, the Company will encounter opportunities while facing challenges
at the same time. With respect to challenges, firstly, China's economic growth will slow
down due to the impact of the structural adjustment of the macro economy. Secondly,
the development of enterprises will be limited due to lack of funds. Thirdly, the State
issued higher standards on energy conservation and emissions reduction. With respect to
opportunities, firstly, pressure on the Company's operations is expected to be alleviated.
Secondly, the advantage of diversified businesses will be revealed gradually. Thirdly,
the efficiency of management will be further improved.
The Company will continue to adhere to the strategy of "focusing in the power generation
business whilst complementing with synergistic diversifications", and will keep on
implementing the development strategy of "optimising its coal-fired power, aggressively
expanding its hydropower, continuously developing wind power, strategically developing
nuclear power, appropriately developing solar power, focusing on suitable coal operations,
actively and steadily developing coal-to-chemical business, pushing forward the development
of alumina, and securing a complementary development of railway, port and shipping".
The Company will commit effort into the following six areas to reach its annual
work targets.
1. Deepen the Building of a "Four-feature" Enterprise
The Company will accelerate the establishment of a new type of enterprise featuring
fundamental safety, resources conservation, green environment and technology innovation.
It will continue to further implement a comprehensive accountability management system
and a performance appraisal system for all staff, building a "four-feature" enterprise
with a focus on fundamental safety.
2. Enhance Profitability
The Company will strive to increase power generation, strictly control the price of thermal
coal, strengthen cost controls, strive for policy concessions and to turn loss into profit
for loss-making enterprises. It will further improve the comprehensive budget management,
with the objective of enhancing profits. Focusing on capital flows and emphasising cost
controls, it will increase power generation with all efforts and to control coal prices
by applying various measures, with an aim to enhance the profitability of the Company.
In 2012, the Company will strive to accomplish a power generation of 205 billion kWh and
realize an increase in sales revenue of more than 15% year-on-year.
3. Continuously Optimise the Business Structure
The Company will continue to strengthen its power generation business, excel in its non-power
businesses and promote synergistic diversification. In its power generation business,
the Company will step up the development and exploration of alternative energy,
clean energy and renewable energy to increase their proportion in the total installed
capacity. In respect of its non-power businesses, it will strive to obtain coal resources
through all means, and achieve the target of realising continued profits through
stabilising coal sources. The Company will accelerate the commercial operation of the
Duolun Coal Chemical Project, Keqi Coal-based Natural Gas Project and the project of
alumina-extraction from high-aluminium pulverised fuel ash by the renewable energy
company, to increase their contribution to the overall profitability of the Company and
further propel the Company into the regions with resources advantages.
4. Actively Push Forward Capital Operation
The Company will further leverage its financing platform as a listed company, strengthen
the direct financing function, step up efforts in the integration of the Company's
internal assets, further optimise the Company's equity structure and actively pursue
acquisitions of quality assets, with a view to achieving maximum investment returns
for the Company.
5. Continuously Intensify Energy Conservation and Emissions Reduction
Adapting the plan of energy conservation and emissions reduction during the
"Twelfth Five-year" period, the Company is accelerating the construction of key projects,
enhancing the comparison and selection of technologies in environmental protection
and efficiency improvement, and participating in market research with regard to the
trading of carbon emission and pollution discharge rights. Focusing on the denitration
transformation, the Company will manage and schedule energy conservation for
coal-fired generating units, basins for hydropower stations and regional optimization
for wind farms.
6. Establish Comprehensive Internal Control System
In 2012, the Company will comprehensively implement the State's "Basic Standards for
Enterprise Internal Control", as well as its application guidelines, evaluation guidelines
and auditing guidelines. According to the principle of integrating of "job duties,
mechanisms and systems, standards and criteria, operation flows, evaluation and auditing
and performance appraisal", the Company will complete the establishment of operation
flow management system to optimise the flow, and will complete the compilation of the
"Internal Control Management Manual", "Risk Control Manual" and "Internal Control
Evaluation Manual" to carry out comprehensive internal control evaluations and audits
so as to carry out a transformation from external supervision to internal supervision.
Fulfillment of Social Responsibilities
MAINTAINING SAFE PRODUCTION IN A STABLE MANNER
Enhancing the Production Safety SystemThe Company consistently adheres to the production safety policy that treats "safety and prevention as top priorities complemented with comprehensive maintenance". It continued to promote the long-term production safety mechanism with its own characteristics, conduct comprehensive safety supervision as well as investigation and government of potential risks, strengthen the training of all staff in safety knowledge, create a safe environment and steadily promote the building of a fundamentally safe enterprise, thereby laying a solid foundation for sustainable, stable and rapid development of the Company.
Safety Philosophy:
-- All accidents can be avoided.
-- Hazards can be eliminated, risk can be prevented, errors should be controlled, and
accidents can be avoided.
-- Safe production depends on everyone at a worksite.
-- Safe production is everyone's responsibility, regardless of position.
-- There will always be someone accountable for every matter, some documents to support
every matter, someone to supervise every matter and some rules to follow for every matter.
Safety Methodology:
-- Three Evaluations and One Control: Safety evaluation, economic evaluation, environmental
protection evaluation, and control and analysis of hazards.
-- Three Highlights and One Implementation: highlights of work tasks, risks, and measures;
safety risk control measures are properly implemented.
-- Information management: The network platform is used to achieve standardization,
digitalisation and institutionalization of data and information, so any incident is
recorded immediately and checked as it occurs, realize real-time control and process
management.
-- Safety Interview: Senior leaders will have a warning interview with the responsible
person of the Company if there is great potential hazards in safe production.
Safety Mechanism:
-- Two Databases and Two Systems: Safe production issue database, and safe production
expert database; case closure system and supervision system for production safety issues.
-- Performance Management: compile and analyze operational data and data on equipment
reliability indicators carry out production safety assessments. Results are incorporated
into the "Two Databases" and are linked to personal compensation rates and promotions.
-- Emergency Management: The Company has strengthened the preparation of its emergency plans
and training, and enhanced the building of emergency rescue teams. Emergency Case
Management Rules and emergency plans for coal chemicals, shipping, and coal mining
businesses, as well as the information network incidents system have also been prepared.
Management System:
-- Spot Inspection and Regular Maintenance: An equipment responsibility system is
implemented through a whole-life and whole-process management approach, where each spot
inspector is accountable for each piece of equipment.
-- Centralized Control and Operations System: Operations, and control of equipment and
systems are centralized.
-- Project Management System: Each maintenance item is treated as a project, where each item
is carefully planned beforehand, process management is implemented during performance,
and a summarization is made afterwards. By doing "Five Confirmations and One Honoring",
we change from planned maintenance to condition-based maintenance.
Building a Safe Production Environment
The Company has built and implemented an effective investigation mechanism to identify and eliminate potential safety hazards, promoted 6S production team management, and improvedsafety facilities. By means of monthly routine inspections and irregular special inspections, we have prevented and controlled occurrence of accidents effectively throughstrengthening the management of all production elements including people, equipments, materials, methods and environment to build a company with safe production environment.In 2011, the Company concentrated on creating an intrinsically safe enterprise, and carried out the work in accordance with three levels of compliance, i.e., indicator compliance,management compliance, and culture compliance. Twenty-one enterprises took the lead to pass the indicator compliance inspection, and the Douhe Power Plant and the Pengshui Hydropower Station satisfied the "management compliance" level. The Company also launched the standardization production of safe production by establishing a long-standing potential hazard inspection and governance mechanism. The Company strengthened the management andcontrol of high-risk operations, and throughout the year no accident of negligence has occurred, keeping the good and steady situation of safe production.
Enhancing Production Equipment Management
In equipment management, the Company has formed a spot inspection-based management model supplemented by operations management and maintenance management. Tools, methods, and standards are specified to carry out the whole dynamic management of equipment.
AWARDS IN THE NATIONAL LARGE COAL-FIRED POWER UNIT CONTEST
Category Level Unit Proportion600MW class Third prize Unit #1, 1/30 supercritical Wushashan Power units Generation Company600MW class First prize Unit #4 Tuoketuo 3/24 subcritical Power Generation units Company Second prize Unit #1, Wangtan Power Generation Company Third prize Unit #1, Tuoketuo Power Generation Company600MW class Second prize Unit #8, Tuoketuo 2/11 air-cooling Power Generation units Company Third prize Unit #6 Tuoketuo Power Generation Company600MW class Second prize Unit #3, Shentou 1/2 Russia Power Generation (Eastern Company Europe) made units300MW class First prize Unit #1, Hohhot 8/43 condensing Thermal Power units Company Unit #2, Zhangjiakou Power Plant Second prize Unit #4 and Unit #5, Zhangjiakou Power Plant Third prize Unit #2, Hohhot Thermal Power Company Unit #1, Unit #6 and Unit #8, Zhangjiakou Power Plant300MW class Second prize Unit #3 and Unit 2/5 air-cooling #4, Yungang Thermal units Power CompanyIn 2011, the Company revised its Equipment Defect Management Rules to improve the maintenancequality of equipment, reduce the incidence of equipment defects, and improve the prevention and control of equipment failures. The Company firmly established the "zero defect" management philosophy, actively carried out technological innovation for equipment, implemented reliability information management of auxiliary equipment in addition to of the implementation of the reliability management of main machines, constantly improved the multi-dimensional statistical analysis of equipment, and effectively propelled the equipment maintenance process.
Improving Production Safety Quality
The Company considers safety education and training as a policy of strengthening the foundation of safe production, uses safety warnings every time and everywhere and visual systems to create a safe atmosphere and improve the quality of the safety of all personnel. In 2011, the Company organized the "a case every week" campaign, the communication on typical experience and the discussion of "four responsibilities" in safe production, and through these efforts staff at all levels have obtained a more in-depth understanding and knowledge of safety management responsibilities. Professionals from the China Academy of Safety Science and Technology and the State Administration of Coal Mine Safety were invited to carry out professional training for registered safety engineers and coal mine safety qualifications.
Please visit http://www.prnasia.com/sa/attachment/2012/05/20120504141417147816.pdf for the circle chart.
CONTINUOUSLY PUSHING FORWARD GREEN OPERATION
Responsibility
Faced with global warming, frequent abnormal weather and the depletion of fossil fuels, exploring energy-conserving development, clean development and sustainable developmenthave become a global consensus. The power industry, as major player in resource consumption and pollutant emissions, is assuming an extremely important responsibility. In promoting a structural adjustment of energy conservation and emissions reduction as the major task, the Company has responsibilities in actively carrying out energy-saving research in the low-carbon economy technologies, implementing various ecological and environmental protection measures, and achieving conservation-based development and clean development.
Philosophy
We have always adhered to the corporate mission of "providing clean power to light a better life", and the construction of an intrinsically safe, resource-saving, environmentally-friendlyand technically-innovative enterprise. We make great efforts to promote the "Two-type" socialconstruction, incorporate energy saving and omission reducing policy into the Company's production, operations and management and strive to achieve the coordinated development of economic efficiency and environmental protection.
Strategy
We implement the national energy saving and emission reduction policy strictly, promote the Energy Conservation and Low-carbon Actions of Ten Thousand Enterprises, continuously optimize the industrial structure, make efforts to strengthen environmental management and ecological protection, actively adopt energy saving and environmental protection technologies, implement energy saving and emission reducing equipment modifications, and steadily improve the Company's comprehensive energy efficiency levels.
Deepening Environmental Protection Management
From the perspectives of production environment assessments, environmental protection audits and building a "four-type" enterprise, the Company continues to make great efforts to build long-standing environment protection management mechanisms, to set up an energy saving and emissions reduction work system, and to set up supervision and performance assessment systems that cover all production sectors. We have strengthened environment protection data online supervision, field audits and technical monitoring work, implemented whole-process, digitalized, normalized environmental management, and achieved a dynamic correction and proactive prevention system for environmental issues, thus continuously improving the environmental protection level.In 2011, the Company prepared and distributed "Datang Power Pollutant Emissions Reduction Planduring the 12th Five-year Plan", conducted environmental protection audits in 40 subordinate enterprises, implemented field environmental assessment of eight enterprises, and included the problems found into the question bank for closed-loop corrections. We established an environmental information communication and supervision mechanism, prepared "Environmental Protection Dynamics" periodically, and released environmental policy and management requirements and environmental dynamics of basic-level enterprises in a timely manner. In 2011, the Zhangjiakou Power Plant, Yuncheng Power Generation Company, Tuoketuo Power Generation Company, Honghe Power Generation Company and Daba Power Generation Company were awarded the title of "provincial-level advanced enterprise" in energy saving during the 11th Five-year Plan.Conserving Resource UseThe Company emphasises on the rational allocation and the comprehensive use of resources and energy, actively introduced new energy-saving and emissions-reducing technologies and equipment, and pays special attention to recycling ash, coal ash, desulfurized plaster, and wastewater.In 2011, combined with the Company's production and operation characteristics and the environmental protection situation, we promoted the implementation of the Ten Thousand Enterprises Energy Conservation and Low-carbon Actions Plan of effectively control energy consumption in operations, while actively seek new ways of conserving energy and reducing emissions. Through the introduction of heat pump technology, waste heat use and other new technologies and contracted energy management and other new methods, we strengthened the comprehensive utilization of renewable resources and further reduced the Company's energy consumption levels.
Reducing Pollution Emissions
In strict compliance with the relevant national provisions on pollutant emission, the Company developed the "Major Pollutants Emission Reduction Plan for the 12th Five-year Plan", prepared the "Total Volume Auditing and Verification Manual", established weekly desulfurization reports to announce the operating conditions of desulphurization facilities and emissions compliance of the Company, and took the control of the total volume of major pollutants as a key task.In 2011, the Company continued to promote the retrofitting of low-nitrogen burners and denitrification and desulfurization systems, and strengthened the performance evaluation of pollutant emissions. The Company further promoted desulfurization, wastewater treatment, and other environmental technology research and project implementation in its non-power-generation division. Pollutant emission rates, including that of dusts, sulfur dioxide, nitrous oxide and wastewater, are far below the national average. The Company has not encountered any environmental pollution incidents or fines. Among which the Tuoketuo Power Generation Company in Inner Mongolia reduced emission of carbon dioxide of 110,000 tonnes in 2011, and was awarded the title of "Asia's Power Plant with Best Environmental Performance".
Strengthening Ecological Protection
The Company fully implements international conventions and resolutely implements national environmental policies. It integrates industrial engineering, production operations, and ecological protection. The Company diligently carries out environmental impact assessments prior to the commencement of construction project and environmental protection reviews upon completion, focuses on water and soil conservation, biodiversity, and vegetation protection during construction, while making great efforts to balance the utilization of resources and environmental protection in all-win harmony. For example:
-- The Inner Mongolia Xilinhaote Mining Company strengthened its water and soil preservation
in mining areas, implemented turning immature soil into cultivated land measures, optimized
the ecological system structure, and built an eco-tourism mine.
-- The Inner Mongolia Duolun Coal Chemical Company, located in the heart of a grassland,
paid great attention to ecologic protection during construction and operations, and built
an environmentally-friendly demonstration project.
-- The Yunnan Power Company strictly implemented the water and soil conservation and
protection of rare species, trying to minimize its impacts on the environment.Human Resources OverviewTALENT CULTIVATION1. Composition of Employees 2011Total number of in-service employees 19,365Number of departed/retired employees for 5,467 which the Company has to bear costs Specialty Number ofCategory EmployeesEconomics and management 2,616Science and technology 11,855Literature and history 622Others 4,272 Educational Background Number ofCategory EmployeesDoctoral graduate and above 31Postgraduate 392Undergraduate 7,296College graduate 5,436Secondary technical school 1,964Vocational school 806Senior high school 1,711Junior high school 1,7292. ManagementThe Company has established a scientific view towards talented personnel which emphasizes that "human resources are the Company's most valuable resources"; remains committed to its "people-focused" approach; and carries forward the concept that "Datang Power is a platform on which staff can showcase their sense of responsibility and talents". The Company continues to improve its organizational structure, strengthen innovation in its management mechanism, optimize the allocation of human resources, revitalize talented personnel and strengthen different training programmes for various levels so as to offer smooth career paths for staff development that would enable individual growth among staff alongside the growth of the Company and sharing the achievements in the Company's development. These provide organizational assurance and talented staff support for the implementation of the Company's strategy of "focusing on the power generation business as its core development, complemented by synergistic diversifications".The Company has completed the compilation of its "Twelfth Five-year Plan" for human resources, launched the "talent forest" plan in a profound way and improved the second-grade reserve talent pool comprising ten categories. It continued to select experts to build a pool of experts comprising "112" talented staff from the Corporation, safe production experts from the Company and experts from the power plants with technical skills. It deepened the policy for the selection of "chief staff"; further expanded the paths of growth of talented staff; continued to care about the vital interests of all staff; and continued to improve remuneration management and strengthen the incentive and pay schemes to fully mobilize thework enthusiasm of staff.3. TrainingThe Company vigorously implemented a strategy which focuses on talent development to ensure that the business continues to thrive with the establishment of three teams of talented staff. It employed training programmes as an important tool to improve the overall quality of employees, enhance corporate cohesion and shape an excellent corporate culture. By taking a number of initiatives such as the compilation and the implementation of third-grade training programmes, the development of well-targeted professional training and the establishment of a platform to attract a pool of talented staff, and by adopting a number of supporting measures such as the establishment of an ongoing training mechanism, the constant reinforcement of the training infrastructure and the increased commitment to training, the Company pushed forward the development of its vocational training programmes in a comprehensive and vigorous manner. These initiatives have helped ensure that there is enough talented staff to drive the implementation of the Company's strategy to a deeper level to achieve synergistic diversifications. In 2011, the Company invested a total of RMB38.4763 million in training. Its training courses were cumulatively attended by 253,808 man-times, of which 32,439 were on corporate management and professional skills; 164,017 on production skills; and 9,544 on other skills. A total of 1,925 employees of the Company achieved professional and technical qualification assessments during the year, of whom 101 received senior titles; 313, intermediate titles; and 1,511, junior titles. 60 employees acquired professional skill qualifications from the National Unified Entrance Examinations; 2,288 obtained occupational skill appraisals through the Company's system, of whom 59 acquired senior technician qualifications; 256, technician qualifications; and638, senior engineer qualifications. During the year, 362 employees attended the Corporation's training programmes for on-the-job qualifications.
4. Implementing Measures
Incentive mechanism. The Company adopted various incentive mechanisms to attract, retainand inspire talented staff. It applied a differentiated salary allocation policy and continued to implement a subsidy policy by providing allowances for staff working in nuclear power plants, remote areas, harsh environment as well as the chemical industry as an incentive to lure professional and talented technicians to join the nuclear power industry. It also helps retain staff working in remote areas or under harsh conditions as well as those working in the coal chemical industry. The Company implemented a comprehensive accountability management system and a performance appraisal system covering all staff. Through the systems the Company can enhance the appraisal and evaluation process so that "accurate positioning,delicacy management and precise assessment" can be achieved. They also help make the objectives and responsibilities of staff more specific, more clearly defined and more visible. Results of the performance appraisals are linked to salary and career advancement as a way to motivate staff.5. Achievements and AwardsTitle of OutstandingIndividual Granted byGovernment's Special 1 Ministry of Human Allowances Receiver Resources and Social SecurityTechnical Expert of Central 8 State-owned Assets Enterprise Supervision and Administration CommissionSpecial Award for New Star 1 China Electricityin Power Education Training CouncilTechnical Expert of the 36 China DatangCorporation CorporationOutstanding Technical 54 China DatangContestants of the CorporationCorporation
BOARD, SUPERVISORY COMMITTEE AND SENIOR MANAGEMENT
Liu Shunda Aged 56, is a professor grade senior engineer with a post-graduateChairman and Non-executive degree. He is currently Chairman and Party Secretary of China DatangDirector Corporation. Mr. Liu has served as Deputy Head
of the General
Services Department of the Electric Power
Division of the Ministry
of Energy; Deputy Director of the Office of the Minister of Electricity; Party Committee Member, Assistant to the Chief and Deputy Chief (Deputy General Manager) of the Electric Power Bureau (Power Company) of Hunan Province; Party
Committee Member and Deputy
Chief (Deputy General Manager) of the East
China Power Administration
Bureau (Power Corporation); Party Secretary and Chief (Chairman cum General Manager) of the Electric Power Bureau (Power Company Limited) of Fujian Province; and Party Committee Member and Vice President of China Datang Corporation. Mr. Liu has long been engaged in electricity production, the management of
production and technology,
administration management and enterprise
operation and management.
Mr. Liu possesses extensive knowledge and diversed experience.Hu Shengmu Aged 51, university graduate, is a senior accountant. He is Non-executive Director currently the Party Committee Member and Chief Accountant of China Datang Corporation. Mr. Hu joined North China Power Corporation as he worked in Beijing Power Supply Bureau in 1981. He had been the Deputy Head and the Deputy Manager of the Finance Department of the North China Power
Administration Bureau (NCPGC),
the Chief Accountant (Financial Manager) of the Company and the Chief Accountant of NCPGC. Mr. Hu was appointed Chief Accountant of China Datang Corporation in January 2003. Mr. Hu has long been involved in financial management of power system. He is knowledgeable in financial management and has extensive experience in financial practices.Cao Jingshan Aged 49, graduated from Dalian University of Technology majoring Vice Chairman, in technical economics and management. He holds a doctorate degree Executive Director and is a senior economist. He is currently President of the Company.and President Mr. Cao commenced his career in 1981 in Yuanbaoshan Power Plant and of the Company successively held the office of Assistant to
Plant Manager, Chairman
of the Labour Union, Deputy Plant Manager and Plant Manager of Yuanbaoshan Power Plant. From January 2003, he became Deputy Head of the President's Office (Person-in-Charge), and has been the Head of the President's Office cum Head of the
International Cooperation
Department of China Datang Corporation since December 2003. Since April 2008, Mr. Cao has been the President of the Company, and he has been the Executive Director and Vice Chairman of the Company since 30 May 2008. From September 2010, he has been a member of the Party Committee of China Datang Corporation. Mr. Cao has long been engaged in electricity production, technical and operation management, with extensive knowledge and practical experience in electricity production and operation and management.Fang Qinghai Aged 57, post-graduate, is a senior engineer. He is currently the Non-executive Director Head of the Planning, Investment and Financing Department of China Datang Corporation. Mr. Fang joined Anshan Power Plant in 1974 and since then took up various positions including Head of the Boiler Office of Anshan Power Plant, Director of the Fund Raising Office of Northeast Power Administration Bureau, Deputy Head of the Integrated Planning Department, Deputy Head and Head of the Development and Planning Department of the State Power Corporation (Northeast Company), Head of the Power Exchange Centre of Northeast China Power Grid, Deputy Chief Engineer and Head of the Development and Planning Department of Northeast China Power Grid Company Ltd. He became Deputy Chief of the Development and Planning Department of China Datang Corporation in April 2005, and has become Head of the Planning, Investment and Financing
Department of China Datang
Corporation since November 2006. Mr. Fang has been involved in the power system for many years and is well experienced in power generation and operation.Zhou Gang Aged 48, graduated from East China Institute of Water Conservancy Executive Director, Vice (currently known as Hehai University) with a master degree of President of the technology and a master degree of business administration, is a Company and senior engineer. He is currently Vice President of the Company and Secretary to the Board Secretary to the Board. Mr. Zhou started his career in 1985 in Fu Chun Jiang Hydropower Plant of East China
Electricity Administrative
Bureau. Mr. Zhou later worked for China
National Water Resources &
Electric Power Materials & Equipment
Corporation as Deputy Manager
of the Information Department, Deputy Director and then Director of the General Manager's Office, Deputy General Engineer and Deputy General Manager; Deputy General Manager of China National Water Resources & Electric Power Materials & Equipment Co., Ltd. and General Manager of its Shanghai company as well as Deputy Director of the International Cooperation Division of the General Manager's Office of China Datang Corporation. Mr. Zhou has become Vice President of the Company since June 2007. Mr. Zhou has extensive experience in international cooperation, power resources management and power generation enterprise operation and management.Liu Haixia Aged 51, graduated from North China Power College majoring in power Non-executive Director plant thermal energy. He subsequently pursued a postgraduate degree in Business Administration in Renmin University of China. He is a senior engineer and Vice President of Beijing Energy Investment Holding Company Limited. Mr. Liu joined Beijing Electric Power Company in 1983 and since then took up
positions of Technician,
Engineer and Assistant to Manager and Deputy Manager. He has been Assistant to President of Beijing International Power Development and Investment Company since 1998. He has been Assistant to President of Beijing Energy Investment (Group) Company Limited since December 2004. He has been Vice President of Beijing Energy Investment (Group) Company Limited since May 2009. With his long-standing involvement in corporate
management and planning
management of power companies, Mr. Liu has
acquired extensive
experience in corporate management and
industrial planning and
investment.Guan Tiangang Aged 45, graduated from North China Power
College majoring in Non-executive Director thermal dynamics and received a master degree in Finance from the
Renmin University of China. She is a senior
engineer and currently
the Chief Engineer of Beijing Energy Investment (Group) Company Limited. She started her career in 1990, and had worked as a teacher in Shijingshan Thermal Power Plant Education Centre and as Project Manager of the Investment Department of Beijing International Power Development and Investment Company. She then became the Deputy Manager of the Power
Investment and Management
Department of Beijing International Power Development and Investment Company and Manager of the Power Generation and Operation Department of Beijing International Power Development and Investment Company. She has become the Manager of the Power Generation and Operation Department of Beijing Energy Investment (Group) Company since December 2004. Since January 2007, she has become the Vice President and the Secretary to the Board of Directors of Beijing Jingneng International Energy Company Limited. She has been the Chief Engineer of Beijing
Energy Investment (Group)
Company Limited since May 2009. Ms. Guan has long been engaged in the work of power investment operation, and has extensive experience in power investment and finance
planning and management.
Su Tiegang Aged 64, university graduate, is a senior
engineer. He is currently Non-executive Director the Consultant of Hebei Construction & Investment Group Co., Ltd.
He started his career in 1968 and had
successively worked in the
County Commission of Zeku of Qinghai Province, the Provincial Construction Commission of Qinghai Province and Qinghai No. 3 Construction Engineering Company. Mr. Su became Head of the Raw Materials and Projects Division of Hebei
Construction Investment
Company since October 1989. Since December
1990, he served in Hebei
Provincial Planning Committee as Head of the
Investment Department.
He has become Vice President of Hebei
Construction Investment
Company since October 1993. With his
longstanding involvement in '
corporate management and planning management,
Mr. Su is well
experienced in corporate management and
industrial planning and
investment.Ye Yonghui Aged 60, is presently the Deputy Chief
Economist of Hebei Non-executive Director Construction & Investment Group Co., Ltd. Mr. Ye started his
career in 1969 and joined the Energy Branch of
Hebei Construction
Investment Company in 1990, holding positions
such as Administrative
Officer, Deputy Manager and Manager of the
Jibei Branch. From
September 1999 to January 2004, he was the
Manager of the Energy
Branch of Hebei Construction Investment
Company. From January 2004
to March 2006, he was the Manager of the Energy Business Department I of Hebei Construction Investment Company. From March 2006 to March 2007, he served as Deputy Chief Economist and Manager of the Energy Business Department I of Hebei
Construction Investment
Company. From March 2007 up to present, he was the Deputy Chief Economist of Hebei Construction & Investment Group Co., Ltd. With his long-standing involvement in corporate
management and planning
management, Mr. Ye has acquired extensive
experience in corporate
management and industrial planning and investment.Li Gengsheng Aged 52, a holder of MBA, graduated from
Northeast Power College Non-executive Director with a bachelor's degree in thermal dynamic and from China Europe
International Business School with a MBA
degree. Mr. Li is a
professor grade senior engineer and he is
currently the General
Manager of Tianjin Jinneng Investment Company.
Mr. Li joined Hebei
Electric Construction Company in 1983, and
subsequently worked as
Deputy Head of the Thermal Control Office of Tianjin Power Scientific Institute, Deputy Manager of Tianjin Power Infrastructure Subcontracting Company, Deputy General Manager of Huaneng Yangliuqing Thermal Power Co., Ltd.,
Deputy General Manager
of Tianjin Jinneng Investment Company, and has
been General Manager
of Tianjin Jinneng Investment Company since
2007. Mr. Li has been
engaged in power corporate management and
corporate investment for
a long time, and has rich experience in
corporate management and
investment.Li Yanmeng Aged 67, graduated from the Wuhan University of Hydraulic and Independent Non-executive Electric Engineering majoring in power plants and power systems, Director is a senior engineer. Mr. Li is currently the External Director of China National Coal Group Corporation and the Independent Non-executive Director of China Coal Energy Company Limited. Mr. Li previously held various positions at Shandong Power Construction Group, including Deputy Secretary to the Youth League Committee of the First Project Office, Head of the
Publicity Section, Deputy
Party Secretary, and Deputy Manager, Manager and Party Secretary of the Second Engineering Company. He was Plant Manager and Party Secretary of Shandong Huangtai Power Plant, and then Chief of Shandong Electric Power Industry Bureau. Since 1994, he has held various positions, including Deputy Head of the Division of Construction Coordination of the Ministry of Electric Power Industry, Deputy Director of the Division of Key Constructions, Deputy Director of the Division of Investments and Director of the Division of Development of Primary
Industries (Director of
the Office of the Working Group on National
Power System Reform)
of the State Planning Commission. From December 2002 to December 2004, he served as Deputy General Manager and Party Member of State Grid Corporation. Mr Li has long been
engaged in production,
management and construction in the power
industry, with extensive
experience in electricity production,
management and construction.
Zhao Zunlian Aged 65, a professor grade senior engineer and a master degree Independent Non-executive holder in engineering, is a doctoral supervisor. Mr. Zhao is Director currently the Independent Director of Hezong Science & Technology Co., Ltd. Mr. Zhao graduated from Wuhan Institute of Hydraulic and Electric Engineering in 1969, and served as Dispatching Deputy Head, Deputy Chief and Chief of Central China Power Grid since 1981, Chief Engineer of Central China Power Corporation in 1995, Director of State Power Dispatching Center in 1999. Director of State Power Dispatching Center and Chief Engineer of State Grid Corporation of China in 2003, Chief Engineer of State Grid Corporation of China in 2005 and Consultant of State Grid Corporation of China from 2006 to 2009. He has long been engaged in production and management of the power industry, with extensive experience in power generation and management.Li Hengyuan Aged 69, graduated from the School of Mathematics, Physics and Independent Non-executive Chemistry of Chengdu University of Technology, majoring in Director Analytical Chemistry. He is a senior engineer and currently Vice President of Technology Standards Committee of All-China Environment Federation. Mr. Li started working in Mining and Metallurgical Research Institute of Chinese Academy of Sciences in 1965. He took the office of Head of Environmental Protection Bureau of Zigong City, Sichuan Province and then the Chief Director of the Laws and Regulations Department in the State Environmental Protection Administration. Mr. Li has become a part-time professor and guest professor of Jilin University and a part-time professor of Beijing Normal University since 1994. He has been Deputy Secretary-general of All-China Environment Federation since 2004. Mr. Li has long been engaged in environmental protection studies including environment capacity and pollution prevention. He has extensive academic knowledge and years of practical experience in environmental protection. He, through his research results, has won the National Scientific and Technological Progress Award (Second Prize), the Ministerial and Provincial Scientific and Technological Progress Award (Second Prize) and the Ministerial and Provincial Scientific and Technological Progress Award (Third Prize), and has presented a considerable number of academic papers at international academic conferences and in national academic journals. Mr. Li has also participated in drafting various laws, regulations and codes in relation to environmental protection.Zhao Jie Aged 56, holder of a bachelor's degree from Tsinghua University,Independent Non-executive is currently Deputy General Manager of China Energy Construction Director Group Corporation. Ms. Zhao joined the North China Electric Power Design Institute after graduating with a bachelor's degree from the Department of Electrical Engineering of Tsinghua University Branch Campus in 1983, and has previously served as Deputy Head, Deputy Chief Design Engineer, Deputy Director, Project Manager, Deputy Chief Engineer and Deputy Dean. Ms. Zhao served as Deputy Dean of the Electric Power Planning and Design Institute in 1998, General Manager of China Power Engineering Consulting Corporation in 1999, and Deputy General Manager of China Power Engineering Consulting Group Corporation in 2003 and Deputy General Manager of China Energy Construction Group Corporation and Dean of its Electric Power Planning and Design Institute. She has long been engaged in electric power design and planning, with extensive experience in electric power design and planning.Jiang Guohua Jiang Guohua, aged 41, graduated from University of California, Independent Non-executive Berkeley, with a doctorate degree in accountancy, is currentlyDirector Professor of Accountancy of the Guanghua School of Management at Peking University, as well as a doctoral supervisor, Vice President of Graduate School of Peking University, Deputy Head of Account Department of Guanghua School of Management at Peking University, Executive Director of MPACC Project, Executive Director of the Sixth and Seventh Session of Branch of Financial cost of Accounting Society of China, and Committee Member of Education Committee of Accounting Society of China. Dr. Jiang has long been engaged in theoretical and practice researches in the field of accountancy, and analysis of issues regarding investor protection, corporate governance and the regulation of the stock market.Qiao Xinyi Aged 59, graduated from North China Power Institute majoring in Chairman of the Supervisory thermal power equipment. He is university educated and a senior Committee economist. He is currently the Head of the Disciplinary Division and Chairman of the Labour Union of the Company. Mr. Qiao joined North China Power Corporation in 1969. He worked successively as Head of the Cadre Office, Assistant to Manager and Deputy Manager of the Personnel Department of North China Power Corporation, and Party Secretary and Deputy Chief of Qinhuangdao Electric Power Bureau. He has been Deputy Chief Political Engineer cum Head of the Corporate Culture Department, Director of the Work Assignment Committee, Chairman of the Labour Union, and Head of the Disciplinary Division of the Company since February 2000. He has become Chairman of the Supervisory Committee of the Company since May 2009. Mr. Qiao has long been engaged in the management of power generation companies and has extensive experience in human resources management and corporate management in power generation companies.Zhang Xiaoxu Zhang Xiaoxu, aged 49, university graduate, is a senior Vice Chairman of the accountant. He is currently Manager of Financial Department of Supervisory Committee Tianjin Jinneng Investment Company. He used to serve as Chief Accountant of Finance Department of Liaoning Power Plant; and Deputy Head and Head of Finance Department, Deputy Chief Accountant, Chief Accountant of Liaoning Nenggang Power Generation Co., Ltd., Chief Financial Officer of Tianjin SDIC Jinneng Electric Power Co., LTD., and Deputy Manager of Financial Department of Tianjin Jinneng Investment Company. He has long been engaged in financial management and has extensive
practical working experience.
Zhou Xinnong Zhou Xinnong, aged 43, university graduate, is a senior accountant. Member of the Supervisory He is currently Deputy Director of the Finance Management Committee Department of China Datang Corporation (Person-in-Charge). Mr. Zhou used to serve as Chief Accountant and Deputy Manager of the Finance Department of the Company, Head of the Price General Services Office of the Finance and Assets Management Department and Deputy Director of the Finance and Assets Management Department of China Datang Corporation.Guan Zhenquan Aged 47, graduated from University of Fuzhou majoring in power Member of the Supervisory system. He is university educated and a senior economist. He is Committee currently Deputy Director of the Human
Resources Department of the
Company. Mr. Guan joined North China Power Corporation in 1988. He served successively as Deputy Director of the Personnel and Education Department of Beijing General Power Equipment Plant, Deputy Head of the Administrative Office of Leaders and Cadres, and Head of the Labour Administrative Office of the Personnel Department of North China Power Corporation; and Deputy Party Secretary cum Secretary of the Disciplinary Committee as well as Chairman of the Labour Union of Tianjin Datang International Panshan Power Generation Company Limited. He has served as Deputy Head and Deputy Director of the Human Resources Department of the Company since March 2002. He has become member of the Supervisory Committee of the Company since May 2009. Mr. Guan is familiar with the development and management of human resources in power generation companies and has extensive experience in human resources management in power generation companies.Fu Guoqiang Fu Guoqiang, aged 49, university graduate, is a senior accountant Vice President and a Certified Public Accountant. He is currently Deputy General of the Company Manager of the Company. He was previously Head of the Finance and Assets Management Department of Hebei Power Company and Manager of the Finance Department of North China Power Generation Corporation. Mr. Fu has been Head of the Finance and Assets Management Department of China Datang Corporation since December 2003. Mr. Fu has long been engaged in finance management in power system and has extensive practical experience in operation and management. Mr. Fu is concurrently serving as Director of Guangxi Guiguan Electric Power Company Limited.An Hongguang Aged 53, graduated from Wuhan University majoring in AdministrationVice President of Science and Engineering with a master degree. He is a seniorthe Company engineer and currently the Vice President of the Company. Mr. An joined North China Power Corporation in 1982 and since then held various positions including Deputy Head of the Chemical Workshop of Xia Hua Yuan Power Plant, Deputy Head and Head of the Chemical Workshop of Dou He Power Plant, Division Chief of the Biotechnology Unit of Dou He Power Plant, Assistant to Plant Manager of Tangshan General Power Plant, Assistant to Plant Manager of Dou He Power Plant, Deputy Manager of the Production
Department of the Company
and Plant Manager of Zhangjiakou Power Plant.
From June 2005 to
December 2005, he served as Assistant to
President of the Company.
He has become Vice President of the Company since December 2005. Mr. An has been long engaged in power plant production and administration management. He is well experienced in power generation and operation, with specific expertise in production safety management of power plants.Liu Lizhi Aged 46, graduated from Northeast Power Institute majoring in Vice President of power system and engineering automation. He is a senior economist the Company and senior engineer with a post-graduate degree. He is currently the Deputy General Manager of the Company. In July 1994, he became Deputy Chief of the Dynamics and Economics Research Office at the Beijing Power Scientific Research Institute. He has been working at the Company since September 1999 and has successively held the positions of Manager of the Planning and Development Department and Manager of the Development and Planning Department of the Company. He also served as General Manager of Hebei Datang International Huaze Hydropower Development Company Limited; Director of the Preparation Division of Hebei Yuzhou Energy Multiple Development Company Limited; General Manager of Datang International Chemical Technology Research Institute Company Limited; and then Secretary to the Communist Party Committee cum General Manager of Inner Mongolia Branch of the Company. He has been Chief Economist of the Company since December 2005, and Deputy General Manager of the Company since March 2009. Mr. Liu is familiar with power system project
management, investment and
financing management. He has extensive experience in capital operation and corporate management.Wang Zhenbiao Aged 48, graduated from North China Power Institute majoring in Vice President thermal dynamics. He is a senior engineer with a post-graduate of the Company degree. He is currently the Deputy General Manager of the Company. Mr. Wang joined Beijing Power Construction Company in 1984. He successively held the positions of Deputy Chief and Engineer Director of the Production and Technology Department of North China Power Corporation, and then Chief
Engineer of Inner Mongolia
Datang International Tuoketuo Power Generation Company Limited. He was Deputy Manager and Manager of the Engineering and Construction Department of the Company since February 2001, and then served as Deputy Chief Engineer of the Company. He has been Chief Engineer of the Company since September 2007, and Deputy General Manager of the Company since March 2009. Mr. Wang Zhenbiao has extensive working experience and is familiar with the management of power system infrastructure construction as well as the management of production and technology.Wang Xianzhou Aged 58, graduated from Beijing Broadcast and Television Chief Financial Officer University majoring in industrial statistics. He is a senior Company accountant and currently the Chief Financial Officer of the Company. Mr. Wang joined North China Power Corporation in 1970 and had held various positions including Head of the Financial Department of Xia Hua Yuan Power Plant and Deputy Chief Accountant and Head of the Financial Division of Zhangjiakou Power Plant. Since 1995, Mr. Wang had held various positions including Deputy Financial Manager and Manager of the Finance Department of North China Power Generation Corporation, Financial Manager and Chief Accountant of the Company. He has been Chief Financial Officer of the Company since August 2000. Mr. Wang has acquired extensive experience in the financial management of power companies from his longstanding focus in this area.
Management of Investor Relations
The philosophy of Datang Power's investor relations practice hinges on integrity as the basisand communication as the means. In order to maintain smooth communication with investors, a special office has been set up and staff has been assigned to be responsible for the management of investor relations work, and various channels have been set up to enable investors to establish contact with the Company. During 2011, the Company conducted active and sincere communication with investors at large and analysts by various channels including results presentation, domestic and overseas roadshows, reverse roadshows, investor forums, company visits and telephone conferences as well as through answering enquiry phone calls and replying to emails. In particular:The Company met analysts and fund managers 539 man-times through results presentations and domestic and overseas roadshows; met analysts and fund managers 258 man-times at investor forums; and met analysts and fund managers 303 man-times through company visits and telephoneconferences.
MAJOR INVESTOR RELATIONS ACTIVITIES CONDUCTED IN 2011:
Month Information on Being a No. of No. of Investor Relations speaker at One-on-one People Met Activities the Conference MeetingJanuary Deutsche Bank Access No 12 31 China Conference UBS 11th Greater China No 13 32 ConferenceMarch Annual Results Yes - 68 Presentation Annual Results Telephone Yes - 45 Conference Annual Results Domestic No - 97 Roadshow Annual Results Hong Kong No 9 27 RoadshowApril Annual Results Singapore No 11 17 Roadshow Nomura China Conference No 9 23 Company's First Quarterly Yes - 75 Results Telephone ConferenceMay Bank of China International No 7 13 Investors Conference Deutsche Bank 2nd Access No 15 26 Asia ConferenceJune JP Morgan China Conference No 13 29August Company's Interim Results Yes - 35 Domestic Presentation Company's Interim Results Yes - 54 Overseas Presentation Company's Interim Results No 8 16 Hong Kong RoadshowSeptember Company's Interim Results No 7 27 Domestic Roadshow October Third Quarterly Results Yes - 78 Telephone Conference BNP China Economic Forum No 9 27 Goldman Gao Hua Annual No 9 19 Investment ConferenceNovember Bank of America Merrill No 13 38 Lynch China Investment SummitDecember Haitong Securities Annual Yes - 15 Strategic Conference Investor Q&A1. What is the Company's view towards nationwide power supply and demand in 2012?
The rate of economic and electricity growth will decline, though "pursuing progress while
ensuring stability" - China's objective for 2012 - as well as effective macro-control
initiatives will ensure that the economy will maintain a steady and relatively rapid pace
of development. According to forecasts by the China Electricity Council, power consumption
across the society is expected to grow at a rate of approximately 9.5%, and annual power
consumption is estimated at 5.14 trillion kWh, possibly demonstrating "a rise in the rate
after a fall". On the supply side, newly-added installed capacity is expected to be
approximately 85,000MW, of which approximately 20,000MW is newly added by hydropower,
and approximately 50,000MW is newly contributed by thermal power on a reduced scale.
Overall nationwide power-generating installed capacity will reach approximately 1,140,000
MW by the end of 2012.
Judging from the current situation, it is likely that in 2012, water flow for hydropower
generation will dry up before the flood season arrives; the tension in the supply of thermal
coal in certain regions and during certain periods will remain a prominent issue; and the
external environment for supply will remain relatively challenging. Our overall analysis
suggests that overall national power supply and demand is anticipated to remain tense in
2012 as it will be characterized by a prominent shortage of power in certain regions and
during certain periods and seasons, with a maximum power shortfall of approximately
30,000MW to 40,000MW. Annual utilization hours of power generation facilities will be
around 4,750 hours, while utilization hours of coal-fired power generation facilities will
be around 5,300-5,400 hours.
2. What is the Company's estimate for coal contracts to be signed up in 2012?
According to the Company's power generation plan for 2012, it is estimated that the Company
will consume approximately 100 million tonnes of natural coal in 2012. Up to now, the
Company has signed up contracts for 40.52 million tonnes of coal, and other contracts
currently are under negotiation. The prices of coal under the contracts which already been
signed up have risen by 5% against the 2011 level.
3. What progress did the Company make in its coal operations in 2011?
In 2011, the Company made significant progress in the approval and construction of coal
mines as well as in coal production.
As for project approval, the Phase 2 project of the Shengli Coal Mine East Unit 2 in
Xilinhaote was approved by the State in 2011, providing an additional approved capacity of
20 million tonnes of raw coal.
With respect to project construction, construction of the Phase 2 project of Shengli Coal
Mine East Unit 2 in Xilinhaote formally commenced in 2011.
On the production side, the Shengli Coal Mine East Unit 2 and the Baoli Coal Mine, both of
which the Company has controlling interests, produced 10.71 million tonnes and 1.31 million
tonnes of raw coal, respectively, while Tashan Coal Mine and Yuzhou Coal Mine, both of
which the Company owns holding interests, achieved an output of 23 million tonnes and
7.2 million tonnes of raw coal, respectively, in 2011.
In 2011, the capacity contributed by the coal mines in which the Company owns controlling
interests and holding interests provided a strong support to the Company's core power
generation business.
4. What progress did the Company make in its coal-to-chemical projects in 2011 and what
are the Company's work targets for 2012?
The Company has made significant progress in the three super-large coal-to-chemical
projects under construction in 2011. The progress made in 2011 and the work targets for
2012 are outlined below: Duolun Coal Polypropylene Project:
In January 2011, gasification plants No. 2 and No. 3 and the MTP plant conducted successful
test runs, having overcome the problems in core and technical aspects of the plants.
From February to July 2011, comprehensive technological improvement, inspection and repair
were carried out to solve the problems and defects exposed during the debugging process
of the plants.
At the end of June 2011, up-to-standard methanol (with a purity of 99.9%) was produced,
having opened up the entire technological process by battery limit.
In the beginning of September 2011, up-to- standard propylene was produced.
At the end of September 2011, up-to-standard polypropylene was produced.
From October to December 2011, a transformation project was carried at the MTP plant.
On 16 March 2012, it underwent trial production.
The Company's objectives for 2012 are to achieve a loading rate of 70% for its equipment
within the year. Keqi Coal-based Natural Gas Project:
On 26 August 2011, Gasifier No. 8 of Series 1 at the gasification plant was successfully
launched after first ignition.
On 28 November 2011, the air separation plant produced up-to-standard oxygen and nitrogen
following a successful trial run. On 31 December 2011, the laying of the gas pipeline was completed.
The work objective for 2012 are to launch the first production line into commercial
operation. Fuxin Coal-based Natural Gas Project: The lifting of the first gasifier was completed in 2011.
The Company's objective for 2012 is to complete the ignition of the gasifier and the
trial run of the air separation plant.
5. What are the Company capital expenditure plans and structures for 2012?
The capital expenditure on a consolidated basis to be incurred in 2012 is expected to
be approximately RMB22,550 million, of which the non-power business segment will account
for more than half of the total capital expenditure. Details of the structure are set out
in the table below.
Table showing the percentages of capital expenditure of the Company by business sector for 2012 Proportion of the Capital Expenditure of the Company Investment sector in 2012 Company's total (on a consolidated basis) 100% Coal-fired projects 20.78% Hydropower projects 20.94% Wind power projects 6.94% Coal projects 10.46% Coal-to-chemical projects 38.62% Other projects 2.26%
6. What are the main missions and objectives under the Company's "Twelfth Five-year Development
Plan"?
The general mission under the Company's "Twelfth Five-year Development Plan" is based on
the strategy which is "focusing in the power generation business whilst deploying
diversifications, and striving for profitability as a priority whilst seeking synergistic
development". The Company will uphold an integrated-assets positioning: with the power
generation business as its core development; with coal operations as its foundation;
with coal-to-chemical and alumina projects as a new source of profits; and with railway,
port, and shipping as a transportation backbone. The Company will enhance its coal-fired
power; aggressively expand its hydropower; continuously develop wind power; strategically
develop nuclear power; appropriately develop solar energy; focus on suitable coal
operations; actively and steadily develop coal-to-chemical projects; accelerate the
development of alumina projects; and secure a complementary development of railway, port
and shipping operations.
In the regions where the Company has resources and market advantages, the Company will
optimize the deployment, carry out innovative development and dwell on its advantages
to build a batch of industrial bases with core competitiveness, strengthening the
capabilities of the regional operations and enhancing the Company's brand and
profitability. During the period of the "Twelfth Five-year Development Plan", the Company
will focus on designing the following six profit bases with distinct assets
characteristics and synergistic efficiencies as well as strong development capacity
and profitability.
(1) The Western Inner Mongolia Coal-Electricity-Aluminium Profit Base with the Tuoketuo
Power Plant as the centre;
(2) The Eastern Inner Mongolia Energy Chemical Profit Base with "Xiduoke" as the centre;
(3) The Pan-Bohai Co-generation Profit Base with Beijing-Tianjing-Liaoning-Hebei as the
centre;
(4) The Southwestern Hydropower Profit Base with Yunnan-Chongqing-Sichuan-Tibet as the centre;
(5) The Southeastern Coastal Coal-Fired Power Profit Base with
Jiangsu-Zhejiang-Fujian-Guangdong as the centre;
(6) The New Energy Profit Base with the "Three North Areas" as the centre.
Corporate Governance Report
The Company was incorporated in December 1994. Its H shares were listed in both Hong Kong and London in March 1997, while its A shares were listed on the Shanghai Stock Exchange in December 2006. Since its incorporated, the Company has established a standardised and soundcorporate governance structure under the "Company Law", "Securities Law" and the Articles of Association of the Company ("Articles of Association"). Shareholders' general meetingis the highest authority of the Company; the Board is the business decision-making body of the Company; and the Supervisory Committee is the supervisory body of the Company. The Board and the Supervisory Committee are accountable to shareholders' general meetingsand execute the resolutions made at shareholders' general meetings. The management is specifically responsible for conducting day-to-day production and business activities of the Company, and implementing the decision schemes of the Board. Over the years, the shareholders' general meetings, the Board, the Supervisory Committee and the management have been operating according to the laws and protecting the interests of shareholders, having received high recognition from the capital market.
COMPLIANCE WITH CORPORATE GOVERNANCE PRINCIPLES
In 2011, the actual situation of corporate governance of the Company did not deviate substantially from the rules and requirements under the China Securities Regulatory Commission (the "CSRC") and relevant regulatory authorities. None of the Company, the Board or the directors of the Company was subject to the inspection, administrative punishment or criticism by means of circular by the CSRC, nor were they penalised by any other regulators or reprimanded by any other stock exchanges.During 2011, the Company fully complied with the principles as set out in the Code on Corporate Governance Practices in Appendix 14 to the Rules Governing the Listing of Securities (the "Listing Rules") on The Stock Exchange of Hong Kong Limited
(the "Hong Kong Stock Exchange") and reached or even exceeded the best recommended practices in the Code on Corporate Governance Practices in certain aspects.
The Company places great importance in fulfilling its corporate responsibilities. The Directors and the staff of the Company are fully dedicated to discharging their duties in ways to ensure that the Company is operating in compliance with the principle of maintaining fairness and impartiality as well as safeguarding the interests of all shareholders.
CORPORATE GOVERNANCE ORGANIZATION AND ITS OPERATION
1. Shareholders and Shareholders' General Meeting
For years, apart from committing itself to the operation and expansion of its businesses in order to attain appropriate returns for shareholders, the Company also provides details on the Company's operations management and relevant information to shareholders in a timelyand accurate manner through a variety of channels and methods, including: convening and holding shareholders' general meetings in strict compliance with the Articles of Association, the Listing Rules and relevant regulations stipulated by the Securities and Futures Commission (the "SFC"), and timely announcing relevant information to shareholders on an irregular basis according to the requirements of the Listing Rules. During the reporting period, the Company held a total of five shareholders' general meetings and a professional lawyer was invited to each shareholders' general meeting as a witness to ensure all shareholders were treated equally and exercised their rights adequately.
The following matters were considered at the shareholders' general meetings of the Company
in 2011:
(1) work reports of the Board and the Supervisory Committee of the Company;
(2) final accounts;
(3) profit distribution plan for 2010 which approved cash dividends of RMB0.07/share to
the shareholders recorded on the register of members as of 31 May 2011;
(4) changes in supervisors as approved by representatives of the Company's shareholders
-- Mr. Zhou Xinnong shall serve as a supervisor from 6 December 2011 until 30 June
2013, as approved by representatives of the Company's shareholders, and Mr. Fu
Guoqiang would no longer serve as supervisor of the Company from 6 December 2011 due
to work adjustment;
(5) the provision of a guarantee for the financing of Duolun Coal Chemical Company, a
subsidiary of the Company, based on its actual needs for the construction of certain
major projects;
(6) certain connected transactions approved by independent shareholders in relation to
the Company's provision of entrusted loans to connected parties;
(7) approval of the issue of RMB10,000 million super short-term commercial papers by the
Company and the non-public offering of RMB10,000 million in debt financing
instruments to specific target investors.
For details about the resolutions made at shareholders' general meetings in 2011, please
refer to the announcements on such resolutions made at previous shareholders' general
meetings published by the Company on the Hong Kong Stock Exchange's website.
In 2011, the Company placed particular emphasis on shareholders' relations, specifically
to maintain communication with shareholders through various channels to facilitate mutual
understanding between the Company and its shareholders. In particular, the Company
established a division to assign designated staff to receive visitors, making its contact
numbers available to the public, to answer telephone enquiries at any time. In addition,
the Company's website was set up to provide updates and past results on the Company, as
well as an organisational map of the Company's management, so as to facilitate a
comprehensive understanding of the Company by its shareholders and investors.
For details about the Company's communication with shareholders and investors in 2011,
please refer to the "Management of Investor Relations" section of this Annual Report.
2. Directors and the Board
The Company has established a Board whose members come from diverse backgrounds. The
Board members possess remarkable professional characteristics. In the overall composition
of the Board, the knowledge mix and the area of expertise of each of the directors are
both specialised and complementary, thus ensuring the Board makes decisions in a
scientific manner. Pursuant to the Articles of Association, the Board currently comprises
15 members, including five independent non-executive directors (i.e. Independent
Directors). The respective non-executive directors have extensive experiences in various
areas such as macroeconomic management, power industry management and financial accounting
management, thus ensuring the Company makes major decisions in an effective and scientific
way.
The Directors fully understood their responsibilities, powers and obligations, and managed
to discharge their duties with truthfulness, integrity and diligence. In order to enhance
the decision-making mechanism, increase the scientific nature of decision-making and
improve the quality of substantial decisions, the Board has established three specialised
committees, namely the Audit Committee, the Strategy and Investment Committee and the
Remuneration and Appraisal Committee, with detailed work rules devised for the respective
committees. The conveners of the three specialised committees are Independent Directors.
In particular, Independent Directors make up a majority in the Audit Committee and the
Remuneration and Appraisal Committee.
Pursuant to the resolution made at the twenty-third meeting of the seventh session of the
Board of the Company held on 23 March 2012, the duties of the aforementioned three
specialized committees were replenished and revised. The Strategy and Investment Committee
was renamed as the "Strategic Development and Risk Control Committee" to further clarify
the responsibilities of the committee in terms of risk management. Moreover, the Board set
up the Nomination Committee to clarify the duties of the committee responsible for the
appointment and dismissal of the Company's directors. The specialized committees under the
Board carried out their work in accordance with their respective work rules.
The Board formulated the "Rules of Proceedings for Board Meetings", which clarify the
matters to be decided by the Board as well as the terms of reference and the rules of
proceedings for the Board. During the reporting period, the Board held 18 meetings. The
convening and voting procedures of the meetings were in compliance with the requirements
under the Articles of Association and the "Rules of Proceedings for Board Meetings".
Major particulars of the resolutions made at the previous Board meetings include:
(1) consideration of matters related to the operating results of the Company, which
primarily includes the annual budget and final accounting plans as well as the annual
profit distribution plan of the Company;
(2) consideration of financing plans, which primarily includes the corporate bond
issuance plan, super short-term commercial paper issuance plan and non-public offering
of debt financing instruments to specific target investors;
(3) consideration of investment plans, which primarily includes capital contributions to
the development and construction of various power projects such as wind power,
photovoltaic power and gas thermal power projects, and equity investment in the
construction of non-power projects such as specialized coal terminal and railway
projects;
(4) consideration of equity adjustment plans for subsidiaries, which primarily includes
the transfer of part of the equity interest in Daba Power Generation Co. to the
Company; the adjustment of the equity interest in Chaozhou Power Generation Co.,
Ganzi Hydropower Co. and Beijing Datang Fuel Co.; and the acquisition of part of
the equity interest in Baxin Railway Co. and 100% equity interest in Erdos Ruidefeng
Mining Co. Ltd.;
(5) consideration of the plans of the Company and its subsidiaries for the provision of
guarantees to external parties;
(6) consideration of significant connected transaction plans, which primarily includes
continuing connected transactions such as those for the centralized purchase of
production materials, ash disposal services, entrusted loans and capacity indexes of
small generating units; and connected transactions in relation to capital
contributions to the establishment of companies and adjustment of equity interests
in subsidiaries;
(7) consideration of the corporate governance report, which primarily includes the "Work
Rules for the Secretary to the Board", "Self-assessment Report on the Company's
Internal Control" and "Specialized Policy for Preventing Substantial Shareholders and
Connected Parties from Taking up the Funds of Listed Companies";
(8) consideration of plans for changes to certain directors, supervisors and senior
management members of the Company;
(9) consideration of the "2011 Social Responsibility Report" of the Company;
(10) consideration of the plan for the engagement of the Company's accountant for 2011.
In 2011, 18 Board meetings were held, of which 5 were on-site meetings and 13 were meetings
held through various means of communication. All directors attended all the meetings
either in person or by authorizing proxies to attend the meetings on their behalf. Details
about the directors' attendance of the meetings are set out in the following table:
Executive Directors Attendance (%) Cao Jingshan (Vice-chairman) 100 Zhou Gang 100 Non-executive Directors Attendance (%) Liu Shunda (Chairman) 100 Hu Shengmu 100 Fang Qinghai 100 Liu Haixia 100 Guan Tiangang 100 Su Tiegang 100 Ye Yonghui 100 Li Gengsheng 100 Independent Non-executive Directors Attendance (%) Li Yanmeng 100 Zhao Zunlian 100 Li Hengyuan 100 Zhao Jie 100 Jiang Guohua 100
3. Supervisors and the Supervisory Committee
Pursuant to the Articles of Association, the Company's Supervisory Committee comprises four
members, of whom two are supervisors representing the staff. The membership and composition
of the Supervisory Committee comply with the requirements of the laws and regulations.
Supervisory Committee members shall exercise their supervisory duty as mandated by the
laws, regulations, the Articles of Association and the rights granted by the shareholders'
general meeting, and shall be accountable to the shareholders' general meeting in order to
ensure that shareholders' interests, the Company's interests and the staff's lawful
interests are not violated. During the reporting period, the Supervisory Committee held
five meetings and attended all Board meetings and Audit Committee meetings. Through various
channels and methods, the Supervisory Committee carried out regular inspections on the
Company's finances and substantial matters, as well as supervising the lawfulness and
compliance of the Directors, the President and other management members in discharging
their duties.
During 2011, attendances of the Supervisory Committee are set out in the following
table: Shareholder Representative Supervisor Attendance (%) Zhang Xiaoxu (Vice-chairman of the Supervisory Committee) 100 *Zhou Xinnong 100 *Fu Guoqiang 100 Employee Representative Supervisor Attendance (%) Qiao Xinyi (Chairman of the Supervisory Committee) 100 Guan Zhenquan 100
* Mr Zhou Xinnong was elected as a shareholder representative supervisor at the general
meeting since 6 December 2011; Due to the work arrangement, Mr. Fu Guoqiang would no
longer assume the office of shareholder representative supervisor of the Company after
the approval from the general meeting on 6 December 2011.
4. Non-executive Directors and Independent Non-executive Directors
The Company has a total of 13 non-executive directors, of whom five are independent
non-executive directors. According to the Articles of Association, the term of service of
each of the directors (including non-executive directors) shall not exceed three years,
and the directors are eligible for re-election and reappointment upon the expiry of their
terms of service. Any new director shall take office only after being elected and approved
at a shareholders' general meeting. The consecutive term of service of each of the
independent non-executive directors (i.e. Independent Directors) shall not exceed six
years.
Pursuant to the rules of the CSRC, the Company has formulated a "Work System for
Independent Directors" and an "Annual Report Work System for Independent Directors" to
govern a number of areas such as the requirements and procedures for Independent Directors,
the principles of the exercise of their functions and powers, the rights to which they are
entitled and their corresponding responsibilities and obligations. The systems contain
explicit rules specifying the duties, responsibilities and other aspects of Independent
Directors during the preparation and review of the Company's annual reports.
The Independent Directors of the Company discharged the relevant duties faithfully with
integrity and diligence towards the Company and all shareholders (especially small and
medium shareholders). During the reporting period, the Independent Directors proactively
attended the shareholders' general meetings, Board meetings and relevant meetings of the
specialized committees; discharged their duties conscientiously; offered positive
recommendations on the business development and operational management of the Company
making full use of their expertise and experience in financial, corporate management and
other aspects; and conducted cautious review and presented independent opinions on the
material connected transactions, external guarantees and other matters of the Company.
During the preparation of the 2011 Annual Report, the Independent Directors played an
active role in the Company as they listened to and inspected carefully details of the
Company's annual production and operations in strict compliance with the requirements of
the securities regulatory authorities and the "Annual Report Work System for Independent
Directors"; maintained communication with the accountants for the annual audit to acquire
a comprehensive understanding of the Company's annual audit arrangements and process; and
carried out supervision and inspection duties.
5. Chairman and Chief Executive Officer (President)
The positions of Chairman (chairman of the Board) and President of the Company are held by
two different persons, respectively. Mr. Liu Shunda and Mr. Cao Jingshan are the Chairman
and the President of the Company, respectively. The power of the Chairman and the
President is expressly provided in the Articles of Association. The main duties of the
Chairman include presiding over the shareholders' general meetings, convening and
presiding over Board meetings and reviewing the status of the implementation of the Board's
resolutions. The main duties of the President include: (1) to take charge of the production
and operation management of the Company, and coordinate the implementation of the Board
resolutions; (2) to coordinate the implementation of the Company's annual operation plans
and investment proposals; (3) to formulate the plan for establishing the Company's
internal management institutions; (4) to lay down the Company's fundamental management
system; (5) to formulate the fundamental constitution of the Company; (6) to propose the
appointments or dismissals of the Vice President and the person in charge of finance; and
(7) to appoint or dismiss other officers who are not appointed or dismissed by the Board.
Pursuant to the Articles of Association, the general manager of the Company shall draft a
special "Work Report of General Manager" on details of the implementation of the Board
resolutions and the operation of the Company, and shall present the same to the Board for
consideration; the Chairman (Chairman of the Board) shall draft a special "Work Report of
the Board" on behalf of the Board regarding the details of the Board's work and present it
to the Company's annual general meeting for consideration.
DUTIES AND OPERATION OF SPECIALIZED COMMITTEES UNDER THE BOARD
1. Strategic Development and Risk Control Committee (formerly known as Strategy and
Investment Committee)
(1) Composition: Pursuant to the resolution made at the twenty-third meeting of the seventh
session of the Board of the Company held on 23 March 2012, the Board has renamed the
Strategy and Investment Committee as the "Strategic Development and Risk Control
Committee" ("Committee"), which consists of eight directors (formerly seven directors.
At the meeting, it was decided that Zhao Jie would be added as a member to the Committee
as a Director), two of whom are Independent Directors. The Committee has a convener to
be selected and appointed by the Board. The convener is an Independent Director of the
Company who is in charge of the work of the Committee.
(2) Rules of Proceedings: The Committee convenes a meeting at least once every year and
holds irregular meetings based on the needs of work. Committee meetings can be held as
on-site meetings or through other means of communication (including teleconference,
facsimile or otherwise).(3) Major Duties:
(i) To conduct research and make recommendations on the Company's long-term strategic
development plan;
(ii) to conduct research and make recommendations on major investment and financing plans
which are subject to the Board's approval as according to the Articles of Association;
(iii) to conduct research and make recommendations on major capital operations and asset
management projects which are subject to the Board's approval as according to the
Articles of Association;
(iv) to conduct research and make recommendations on other significant matters that may have
an impact on the development of the Company;
(v) to conduct prior risk assessments and discussions on matters set out in (i) to (iv)
above, and recommend corresponding control and preventive measures;
(vi) to conduct risk assessment and make recommendations on the sectors or industries in
which Company intends to operate;
(vii) to inspect the execution of the above matters, and to conduct follow-up research on
the risk factors that may exist or occur during the execution process, and to make
recommendations accordingly;
(viii) the Committee is accountable to the Board. Any proposals made by the Committee shall
be submitted to the Board for consideration and decision.
(4) Meetings: The former Strategy and Investment Committee held a meeting in March 2012 at
which the progress of the Company's corporate strategy for 2011 and the major investment
plans that the Company intended to present to the Board for consideration were
considered. Five of the seven former members of the Committee attended the meeting, and
two members did not attend the meeting for business reasons. Details about each member's
attendance of the meetings are as follows: Committee Members Attendance (%) Li Yanmeng (Convener and 100 Independent Director) Zhao Zunlian (Independent Director) 100 Fang Qinghai (Non-executive Director) 100 Li Gengsheng (Non-executive Director) 100 Cao Jingshan (Executive Director) 100 Zhou Gang (Executive Director)* 0 Ye Yonghui (Non-executive Director) 100 Liu Haixia (Non-executive Director)* 0
* Zhou Gang and Liu Haixia, both Directors, did not attend the meeting due to business
engagement.
2. Remuneration and Appraisal Committee
During the year, the Company implemented a basic salary policy based on the pay points of
positions for its executive directors and senior management members who were also covered
under the Company's "comprehensive account ability management system" and "performance
appraisal system for all staff". Upon preliminary review by the Remuneration and Appraisal
Committee and decision made by the Board, the annual remuneration of an independent
non-executive director was RMB60,000 (after tax). The remuneration of other non-executive
directors of the Company was paid under the salary policies of their respective work units
at which they are working, and was paid by such work units.
(1) Composition: The Board has established a Remuneration and Appraisal Committee that
comprises five directors, three of whom are Independent Directors, making up more than
half of the Committee. The committee has a convener selected and appointed by the Board.
The convener is an Independent Director of the Company who is in charge of the work of
the Committee.
(2) Rules of Proceedings: The committee shall convene at least one meeting each year and hold
irregular meetings according to work requirements. Committee meetings may be convened by
way of on-site meetings or through other means of communications (including
teleconference, facsimile, etc).(3) Major Duties:
(i) To be accountable to the Board; proposals of the committee shall be submitted to the
Board for consideration and approval;
(ii) to make remuneration plan or proposal according to the major scopes of work, duties and
significance of the directors, supervisors and senior management positions as well as
the remuneration levels of comparable positions in other comparable companies;
remuneration plan or proposal include but not limited to performance appraisal
criteria, procedures and key appraisal system, and major incentive and penalty plans
and systems;
(iii)to review the fulfillment of the responsibilities of the Company's directors,
supervisors and senior management and to conduct annual performance appraisal thereon;
(iv) to supervise the implementation of the remuneration system of the Company's directors,
supervisors and senior management; (v) to execute other matters as authorised by the Board.
(4) Meeting: The Remuneration and Appraisal Committee held a meeting in March 2011 to review
the work performance and level of remuneration for the Company's executive directors and
members of the senior management for 2010. The composition and level of remuneration were
disclosed in this annual report (please refer to the Financial
Report for details about the remuneration of directors, supervisors and senior management
members). The attendance of the meeting by each of the members was as follows:
Committee Members Attendance Convener (Chairman): Zhao Jie (Independent Non-executive 100% Director) Members: Jiang Guohua (Independent Non-executive 100% Director) Li Hengyuan (Independent Non-executive 100% Director) Hu Shengmu (Non-executive Director) 100% Zhou Gang (Executive Director) 100%
3. Nomination Committee
According to the Articles of Association, directors are elected and formed by the
shareholders' general meeting of the Company, with each term of the directors' service not
exceeding three years, renewable upon re-election and re-appointment.
Pursuant to the resolution made at the twenty-third meeting of the seventh session of the
Board of the Company held on 23 March 2012, the Board decided to establish a Nomination
Committee under the Board to clarify the duties of the committee for the appointment and
removal of directors.
(1) Composition: The Nomination Committee comprises five directors, which Independent
Directors make up more than half of the membership. The committee has a convener selected
and appointed by the Board.The convener is an Independent Director of the Company who is
in charge of the work of the Committee. The composition of the Nomination Committee is as follows: Convener (Chairman): Zhao Jie (Independent Non-executive Director) Members: Li Hengyuan (Independent Non-executive Director) Jiang Guohua (Independent Non-executive Director) Hu Shengmu (Non-executive Director) Zhou Gang (Executive Director)
(2) Rules of Proceedings: The committee shall convene at least one meeting each year and hold
irregular meetings based on work requirements. Committee meetings may be convened by way
of on-site meetings or through other means of communication (including teleconference,
facsimile, etc).(3) Major Duties:
(i) To make recommendations to the Board with respect to the scale, constitution and
composition (including skills, knowledge and experience) of the Board based on the of
operating activities, asset scale and shareholding structure of the Company;
(ii) to examine the selection criteria and procedures of directors and managers and to make
recommendations to the Board;
(iii) to identify broadly candidates suitably qualified to become directors and managers;
(iv) to investigate the candidates of directors and managers and other senior management
staff, and to make recommendations;
(v) to assess the independence of Independent Directors.
(vi) to execute other matters as authorised by the Board.
In 2011, the Nomination Committee was not yet established. The duty of appointment and
dismissal of Directors was borne by the Board. The Board reviews the qualifications of the
directors proposed to be appointed or dismissed and submits proposal to the shareholders'
general meetings for shareholders' approval. In 2011, there was no appointment or dismissal
of Director.4. Audit Committee
(1) Composition: The Board has established an Audit Committee that currently comprises five
directors, three of whom are Independent Directors, making up more than half of the
membership. The committee has a convener selected and appointed by the
Board. The
convener is an independent director of the Company who is in charge of the committee's
work.
(2) Rules of Proceedings: The committee shall convene at least one meeting each year and hold
irregular meetings according to work requirements. Committee meetings may be convened by
way of on-site meetings or through other means of communication (including
teleconference, facsimile, etc).(3) Major Duties:
(i) to be accountable to the Board; the proposals of the committee shall be submitted to
the Board for consideration and approval;
(ii) to make recommendations on the appointment and replacement of external audit firms;
(iii) to supervise the Company's internal audit system and its implementation;
(iv) to be responsible for the communication between internal and external auditors;
(v) to review the Company's financial information and its disclosures;
(vi) to complement with the supervisory committee and the supervisors in reviewing the
Company's financial matters;
(vii) to review the establishment of the comprehensive internal control system;
(viii) to review the "Internal Control Evaluation Report" and the "Internal Control Assessment
Report";
(ix) to inspect the completeness of the establishment of the comprehensive internal control
system;
(x) to coordinate the audit of the internal controls and other related matters.
(4) Meetings: In 2011, the Audit Committee performed its work mainly through convening of
meetings. The Audit Committee held two meetings in 2011. The Company's Directors,
supervisors, chief financial officer and other members of the senior management as well
as the external auditors of the Company were invited to attend the Audit Committee
meetings. Conscientious reviews of the Company's interim and annual results and related
financial matters as well as the Company's internal control system were conducted. It
also duly assessed the auditors' work. Pursuant to the "Annual Report Work System for the
Audit Committee" considered and approved by the Board, members of the Audit Committee
participated in the process of the preparation of the Company's 2011 Annual Report.
The Company communicated in writing with Independent Directors and members of the Audit
Committee during the annual review of the 2011 results announcement and financial
position. According to the annual audit plan determined in consultation with the
accountants, the Audit Committee tracked and supervised the entire annual audit. After
the accountants presented the preliminary audit opinion, the Company held a meeting of
the Audit Committee and a meeting with Independent Directors, at which the Independent
Directors and members of the Audit Committee communicated with the senior management of
the Company and the accountants over the Company's 2011 results and financial statements
as well as the work of the accountants and the internal control status of the Company,
and opinions and resolutions were formed accordingly. In response to the establishment
situation of the internal control of the Company, the Audit Committee is of the view that
the Company's internal control systems were effectively implemented, have achieved
significant results and have effectively controlled the production and operation risks of
the Company. Based on the work of the accountants during the Year, the Audit Committee
has recommended to the Board the reappointment of RSM China Certified Public Accountants
(Special General Partnership) and RSM Nelson Wheeler as domestic and international
auditors of the Company for 2012, subject to approval at the 2011 annual general meeting.
The attendance of the meeting by each of the Audit Committee members was as follows:
Convener (Chairman): Attendance Jiang Guohua (Independent Non-executive 100% Director, financial management expert) Members: Li Yanmeng (Independent Non-executive 100% Director) Li Hengyuan (Independent Non-executive 100% Director) Ye Yonghui (Non-executive Director) 100% Guan Tiangang (Non-executive Director)* 50%
* Guan Tiangang did not attend the Audit Committee meeting on March 2011 due to business
engagement.
ESTABLISHMENT OF THE COMPANY'S INTERNAL CONTROL SYSTEM
Improving and effectively implementing the internal control is an ongoing responsibility ofthe Board and the management of the Company. The objectives of the Company's internal controlare to provide reasonable assurances that the Company's operations management is lawful and compliant, the assets are safe, the financial statements and related information are truthfuland complete, and operational efficiency and effectiveness are enhanced, thereby promoting theachievement of the development strategy of the Company. Since its incorporation, the Companyhas been continuously building and improving the risk management-oriented internal control system to safeguard its sustainable, rapid, healthy, stable and orderly development, and to protect the interests of its shareholders pursuant to the requirements of the "Company Law of the People's Republic of China", the "Securities Law of the People's Republic of China", the "Governance Standards for Listed Companies", the "Basic Standards for Internal Control", the "Rules Governing the Listing of Stocks on Shanghai Stock Exchange", and "Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited" as well as other relevant laws, regulations, rules and normative documents, and in line with any changes in the internaland external environments.
The Board has conducted a review of the effectiveness of the internal control system of the Company and its subsidiaries and consider that its internal control system is effective.
1. Established a specialized internal control setup office. In 2011, the Company established a
specialized office responsible for setting up, improving and implementing an internal
control system, as well as compiling an internal control management manual in accordance
with the requirements of the "Basic Standards for Corporate Internal Control" and related
guidelines, and also in accordance with the five major components of internal control as a
framework, which contains various particulars such as the definitions of internal control,
internal control framework, principle of compilation, scope of applicability, division of
responsibility, updates and maintenance mechanism. Moreover, a risk control manual
containing a risk control matrix, flow chart and description of processes was compiled on
the basis of the outcome of the smoothening of business processes to identify the critical
control points with particular emphasis on risks in combination with the external legal
requirements and management needs, and to follow communications with all business
departments and various modifications.
2. Build-up of internal control system. From the perspectives of business management, job
functions management and job positions management, the Company established various basic
corporate management systems that comprise a financial management internal control system,
a financial accounting system, an internal audit system, an administration management
system, an information management system and a production management system. In 2011,
according to its work schedule, the Company smoothened its existing internal control system
by making necessary changes with the aim to establish a sound internal control system so
that the internal control system covers all levels and all aspects of the operation and
management activities.
3. Internal control supervision and inspection. The internal control setup office established
by the company is responsible for organizing and conducting internal control assessment to
assess high-risk areas and work units which fall within the scope of assessment. In 2011,
the Company engaged Deloitte & Touche to assist in the compilation of an internal control
assessment manual and the formulation of an internal control self-assessment proposal and
plan, as well as to assist the internal control assessment department to undertake a
comprehensive assessment of the effectiveness of the internal control of the Company's
headquarters. The Company has set up a specialized internal audit office -- the Supervisory
and Audit Department -- staffed by four full-time internal auditing officers specifically
responsible for the monitoring and inspection of production and business activities as well
as the enforcement of internal control to ensure the implementation of the internal control
system and the normal conduct of production and business activities.
4. Internal control self-assessment. In 2011, the Company set up an independent internal
control assessment working group responsible for carrying out the Company's internal
control self-assessment. The enterprises under the Company deployed the key business staff
of their relevant departments to form an internal control self-assessment team to conduct
internal control assessments for themselves. Deloitte Touche Tohmatsu CPA supervised in the.
internal control self-assessment of the Company.
In 2011, the scope of the Company's internal control assessment covered seven branches and
44 directly invested subsidiaries (including enterprises directly under such subsidiaries)
included in the consolidated statements. The enterprises which fell into the scope of
assessment were those engaged in the power generation (coal-fired power, hydropower and
wind power), coal chemical, coal, transportation (shipping), metallurgy and other sectors.
During the establishment of the internal control system, 46 first-level processes were
smoothened, including the corporate governance structure, organizational structure,
strategic management, major decisions and human resources, and an assessment of 841 control
measures identified in 262 final-level processes was conducted, covering the major aspects
of the Company's business management.
Various methods were employed during the internal control assessment process, including
individual interviews, survey questionnaires, seminars, walkthrough tests, site inspections,
sampling and comparative analysis to collect evidence so as to determine whether or not
the design and operation of internal control were effective. This was completed in the
working papers on assessment tests for analyzing and identifying any internal control
defects. During the internal control assessment process, the quality of the assessment test
was assured by cross-checking the working papers on the assessment test and supplementary
verification of the assessment test results.
After a detailed and thorough internal control assessment, the Board of the Company
believes that in 2011, the internal control system pertaining to the Company's operations
and financial accounting was in compliance with the requirements of the relevant regulators
in all material respects, and that it played a role in the control and prevention of the
loss of control over major risks, serious management malpractices, errors in crucial
processes and so forth. During the implementation of the internal control system, the
Company has not identified any loss of control over major risks, serious management
malpractices or errors in crucial processes. Therefore, the Board believes that no major
defects were identified in the design or implementation of the internal control system of
the Company during 2011.
The Company has engaged RSM China Certified Public Accountants (Special General
Partnership) ("RSM China") to present the "Audit Report on the Self-assessment Report of
the Board of Directors of Datang International Power Generation Co., Ltd. on the Internal
Control of the Company (2011)" (the "Audit Report") with respect to the "Self-assessment
Report of the Board of Directors of Datang International Power Generation Co., Ltd. on the
Internal Control of the Company (2011)" (the "Self-assessment Report"). The Audit Report
says that based on the work of RSM China in 2011, RSM China did not discover any
discrepancies in all material respects between the details of the assessment of the
internal control pertaining to the preparation of financial statements in the
Self-assessment Report prepared by the Board and in the audit findings by RSM China on the
Company's financial statements.
Please refer to the relevant announcements of the Company dated 26 March 2012 on the
websites of the Shanghai Stock Exchange and the Hong Kong Stock Exchange regarding the
"Self-assessment Report" and the "Audit Report".
5. Work arrangements for internal control build-up
The Board has considered and approved the "Implementation Scheme on Internal Control
Standards" devised by the Company. The Company will further accelerate the standardization
of corporate finance and related business and management activities in line with
continuously accumulated management experience, shareholders' recommendations, trends in
the development of internal control at home and abroad as well as changes in internal and
external risks with reference to the regulatory rules and requirements and in accordance
with a set implementation scheme. The Company will continue to build up the internal
control system by transforming text-based internal control management into online-based
internal control management. The Company plans to further deepen and optimize the internal
control system in 2012 in the following areas:
(1) continuing to keep abreast of China's relevant requirements on internal control and risk
management for improving the internal control system of the Company in a timely manner
to guard against operational risks.
(2) optimizing the internal control management platform and further carrying out the
down-to-earth operation of the internal control system. The Company will optimize the
internal control management platform to make its interface more friendly and convenient
to use. Moreover, the Company will continue to carry out the down-to-earth operation of
its internal control system by selecting key business processes for applying information
technology and by strengthening the connection of the internal control management
platform with the business system so that the internal control management platform can
play a role as the "central nervous system" of the Company's management system.
(3) deepening and improving the comprehensive internal control systems of specialized
(regional) companies and grass-roots enterprises. The Company will deepen and improve the
implementation of its internal control systems of enterprises under the Company and urge
the coal-fired power, hydropower, wind power, coal chemical and coal enterprises to
further improve their risk control manuals.
COMPANY'S AUDITORS
In 2011, the Company engaged RSM China Certified Public Accountants (Special General Partnership) and RSM Nelson Wheeler to be its domestic and international auditors respectively, making them responsible for providing impartial and objective advice on the Company's financial statements. The Company's Audit Committee has confirmed the independence and objectivity of the auditors. In 2011, the fee payable to RSM China Certified Public Accountants (Special General Partnership) and RSM Nelson Wheeler for the provision of audit service amounted to RMB13.78 million. The sum of HK$10,000 was paid by the Company as non-audit service fee, which was professional services fee in relation to taxation filing for a subsidiary of the Company.Report of the Directors
The Directors are pleased to present the audited results of the Company for the year ended 31 December 2011.
COMPANY RESULTSDuring the Year, consolidated operating revenue of the Group was approximately RMB72,382 million, representing an increase of approximately 19.30% as compared to the Previous Year. Net profit attributable to shareholders of the Company was approximately RMB1,971 million, representing a decrease of approximately 23.29% as compared to the Previous Year. Basic earnings per share attributable to shareholders of the Company amounted to approximately RMB0.15, representing a decrease of approximately RMB0.06 per share as compared to the Previous Year. Please refer to the "Management Discussion and Analysis" section for details of the Company's results.In view of the operating results of the Group during the Year, the Board has recommended the distribution of a final dividend of RMB0.11 per share (tax included) for the Year, and such profit distribution plan is subject to the approval by the shareholders at the annual general meeting.ISSUE AND LISTINGS OF SHARESThe Company's H shares have been listed on the Hong Kong Stock Exchange and the London Stock Exchange Limited since 21 March 1997. On 9 September 2003, the Company issued 5-year US Dollarconvertible bonds of US$153.8 million, which have been listed on the Luxembourg Stock Exchange, at 0.75% interest rate and a conversion premium of 30%. The Company's A shares have been listed on the Shanghai Stock Exchange since 20 December 2006. Pursuant to the resolution passed at the 2006 annual general meeting, the Company implemented the share capital expansion proposal by utilising its capital reserve fund to issue 10 bonus shares for every 10 shares held by the shareholders of the Company in 2007. The Company completed the non-public offering of A shares in March 2010, with newly-issued A shares of 530,000,000 shares. Further, the Company had non-public offering of A shares in May 2011, with newly-issued A shares of 1,000,000,000 shares. Due to above-mentioned changes, as at 31 December 2011, the total number of shares of the Company was 13,310,037,578 shares. Apart from that, the Company did not issue any new shares.
Performance of the Company's H shares during 2011:
Closing price of H shares as at31 December 2011 HK$2.57 per shareHighest trading price of H shares between1 January and 31 December 2011 HK$3.12 per shareLowest trading price of H shares between1 January and 31 December 2011 HK$1.80 per shareTotal number of H shares traded between1 January and 31 December 2011 3.652 billion sharesPerformance of the Company's A shares during 2011:Closing price of A shares as at31 December 2011 RMB5.16 per shareHighest trading price of A shares between1 January and 31 December 2011 RMB7.63 per shareLowest trading price of A shares between1 January and 31 December 2011 RMB4.34 per shareTotal number of A shares traded between1 January and 31 December 2011 2.502 billion sharesPUBLIC FLOATBased on information that is publicly available to the Company and within the knowledge of theDirectors as at the latest practicable date prior to the issue of the annual report, i.e. 27 April 2012 the Company confirms that the public float of the Company's H shares and A shares has complied with the requirements under the Listing Rules.
ACCOUNTS
The Company and its subsidiaries' audited results for the year ended 31 December 2011 are setout in the Consolidated Statement of Comprehensive Income. The financial positionof the Company and its subsidiaries as at 31 December 2011 is set out in the Consolidated Statement of Financial Position.
The Company and its subsidiaries' consolidated cash flows for the year ended 31 December 2011 are set out in the Consolidated Statement of Cash Flows.
PRINCIPAL BUSINESSES
The Company is principally engaged in the development and operation of power plants, the saleof electricity and thermal power, the repair and testing of power equipment, and power relatedtechnical services, the sale and development of coal and the production and sale of chemical products.MAJOR SUPPLIERS AND CUSTOMERS
The percentage of purchases and sales attributable to the Company's suppliers and customers for the Year are as follows:
2011 2010Purchases The largest supplier 16.68% 16% Top five suppliers 27.23% 37%Sales The largest customer 27.16% 29.58% Top five customers 60.90% 59.84%To the knowledge of the Directors, none of the Directors, supervisors, their respective associates or shareholders (owning 5% or more of the Company's issued share capital of the same class) owned any direct or indirect interest in the Company's suppliers and customers mentioned above during the Year.
SUBSIDIARIES, JOINTLY CONTROLLED ENTITIES AND ASSOCIATES
Details of subsidiaries, jointly controlled entities and associates of the Company are set out in Note 45 to the Financial Statements, Note 20 to the Financial Statements and Note 19 to the Financial Statements respectively.
DIVIDEND, EARNINGS PER SHARE
The Board recommended the distribution of a proposed final dividend of RMB0.11 per share (tax inclusive) for the Year. Dividends to be distributed to domestic shareholders will be declared in and paid by RMB, while those to be distributed to foreign shareholders will be declared in RMB but paid in Hong Kong dollar. The Hong Kong dollar exchange rate for the purpose of dividend payment shall be based on the average of the closing rates of the Hong Kong dollar/RMB exchange rates announced by the People's Bank of China on each business day within the week immediately prior to payment.
Details of dividends and earnings per share are set out in Notes 14 and 15 to the Financial Statements.
RESERVES
Movements in reserves during the Year are set out in Note 30 to the Financial Statements, among which distributable reserves attributable to the shareholders amounted to approximately RMB11.734 billion.
PROPERTY, PLANT AND EQUIPMENT
Details of movements in property, plant and equipment during the Year are set out in Note 16 to the Financial Statements.
DONATION
During the Year, the Company and its subsidiaries have made charitable and relief donations of approximately RMB1.537 million.
SHARE CAPITAL
As at 31 December 2011, total share capital of the Company amounted to 13,310,037,578 shares, divided into 13,310,037,578 shares of a nominal value of RMB1.00 each. Movements in share capital during the Year are set out in Note 28 to the Financial Statements.
SHARE CAPITAL STRUCTURE
As at 31 December 2011, total number of shares issued by the Company was 13,310,037,578. The Company's shareholders were China Datang Corporation ("CDC"), Tianjin Jinneng Investment Company, Hebei Construction & Investment Group Co., Ltd., Beijing Energy Investment (Group) Company, and other shareholders of A shares and H shares, holding 4,138,977,414 A shares, 1,296,012,600 A shares, 1,281,872,927 A shares, 1,260,988,672 A shares, 2,016,508,387 A sharesand 3,315,677,578 H shares, respectively, representing 31.10%, 9.74%, 9.63%, 9.47%, 15.15% and24.91%, respectively, of the total issued share capital of the Company.Among the H shares, CDC's controlling subsidiary, China Datang Overseas (Hong Kong) Co., Limited, held 480,680,000 H shares, and therefore CDC and China Datang Overseas (Hong Kong) Co., Limited held a total of 4,619,657,414 shares in the Company, representing 34.71% of the total share capital of the Company.
NUMBER OF SHAREHOLDERS
Details of the shareholders as recorded in the register of members of the Company as at 31 December 2011 were as follows:_______________________________________Total number of shareholders 218,785_______________________________________Holders of domestic shares 218,077_______________________________________Holders of H shares 708
_______________________________________
SUBSTANTIAL SHAREHOLDERS OF THE COMPANY
So far as the Directors of the Company are aware, as at 31 December 2011, the interests or short positions of the persons in the shares or underlying shares of the Company as required to be disclosed under section 336 of the Securities and Futures Ordinance (the "SFO") (Chapter 571 of the Law of Hong Kong), were as follows:
_________________________________________________________________________________________
Approximate Approximate Approximate percentage percentage percentage of Total of Total of Total Issued Shared Issued A Issued H Class of No. of Capital of the Shares of the Shares of theName of Shareholder Shares Shares Held Company Company Company (%) (%) (%)
_________________________________________________________________________________________
CDC A shares 4,138,977,414 31.10 41.41 - H shares 480,680,000 (L) 3.61 (L) -
14.50 (L) _________________________________________________________________________________________ Tianjin Jinneng
Investment Company A shares 1,296,012,600 9.74 12.97
-
_________________________________________________________________________________________
Hebei Construction
& Investment Group
Co., Ltd. A shares 1,281,872,927 9.63 12.83 -
_________________________________________________________________________________________
Beijing Energy Investment (Group) Company Limited A shares 1,260,988,672 9.47 12.62 -
(L) = Long positions (S) = Short positions (P) = Lending pool
Notes:
(1) Mr. Liu Shunda, Mr. Hu Shengmu and Mr. Fang Qinghai, all non-executive Directors, are
employees of CDC.
(2) Mr. Liu Haixia and Ms. Guan Tiangang, both non-executive Directors, are employees of
Beijing Energy Investment (Group) Company Limited.
(3) Mr. Su Tiegang and Mr. Ye Yonghui, both non-executive Directors, are employees of Hebei
Construction & Investment Group Co., Ltd.
(4) Mr. Li Gengsheng, a non-executive Director, is an employee of Tianjin Jinneng Investment
Company.
INTERESTS OF DIRECTORS AND SUPERVISORS IN SHARE CAPITAL
As at 31 December 2011, Director Mr. Fang Qinghai held 24,000 A shares of the Company. Apart from this, none of the Directors, supervisors and chief executives of the Company or their respective associates had any interests and short positions in the shares, underlying shares or debentures of the Company or any of its associated corporation (as defined in the SFO) that were required to notify the Company and the Hong Kong Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO; or required to be recorded in the register mentioned in the SFO pursuant to section 352 of the SFO or otherwise required to notify the Company and the Hong Kong Stock Exchange pursuant to the Model Code in Appendix 10 to the Listing Rules.
DIRECTORS' AND SUPERVISORS' SERVICE CONTRACTS
As at 31 December 2011, the Company has not entered into any service contracts with its Directors and supervisors. Therefore, none of the Directors and supervisors have or proposed to have any service contracts with the Company which is not determinable by the Company within one year without payment of compensation (other than statutory compensation).
INTERESTS OF DIRECTORS AND SUPERVISORS IN CONTRACTS
No contracts of significance in relation to the Company's business to which the Company or anyof its subsidiaries was a party, and in which any Director or supervisor had a material interest, either directly or indirectly, subsisted at the end of the Year or during any time of the Year.
DIRECTORS AND SUPERVISORS' BENEFITS FROM ACQUISITION OF SHARES OR DEBENTURES
No arrangements were made by the Company or its subsidiaries at any time during the Year for any Director or supervisor to acquire any shares or debentures of the Company or any of its subsidiaries.
INTERESTS OF SUBSTANTIAL SHAREHOLDERS IN CONTRACTS
Save as disclosed in this annual report, none of the Company or its subsidiaries have entered into any material contracts or material service contracts with the Company's substantial shareholders or its subsidiaries.
HIGHEST PAID INDIVIDUALS
During the Year, the Group implemented a basic salary policy based on the post salary points for the Company's Directors, supervisors and members of senior management, and appraisals werecarried out in accordance with the "comprehensive accountability management system and the performance appraisal system for all staff". The Remuneration and Appraisal Committee reviewedthe work performance and remuneration level of each individual.All of the highest paid individuals of the Company during the Year included Directors, supervisors and members of senior management. Details of their remunerations are set out in Note 12 to the Financial Statements.
PURCHASE, SALE OR REDEMPTION OF THE COMPANY'S LISTED SECURITIES
There was no purchase, sale or redemption of the Company's listed securities by the Company or its subsidiaries during the Year.
BANK BORROWINGS, OVERDRAFTS AND OTHER BORROWINGS
Apart from the loans from China Datang Group Finance Company Limited, short-term bank loans, other short-term loans, long-term bank loans, other long-term loans and short-term bonds set out in Note 38 to the Financial Statements, Note 31 to the Financial Statements and Note 39 to the Financial Statements there were no other loans of the Company and its subsidiariesas at 31 December 2011.
MEDIUM-TERM NOTES AND CORPORATE BONDS
(1) In March 2009, the Company completed the issue of the first tranche of the 2009
medium-term notes. The principal amount was RMB3 billion with a term of issue of five
years. The nominal value of the medium-term notes was RMB100 and the fixed coupon
interest rate was 4.1%.
(2) In August 2009, the Company issued corporate bonds of RMB3 billion, carrying a fixed
coupon interest rate of 5% with a term of 10 years.
(3) In April 2011, the Company issued corporate bonds of RMB3 billion, carrying a fixed
coupon interest rate of 5.25% with a term of 10 years.
PRE-EMPTIVE RIGHTS
There are no provisions for pre-emptive rights under the Articles of Association and applicable PRC Laws that require the Company to offer new shares to the existing shareholders in proportion to their shareholdings.
CONNECTED TRANSACTIONS
During the Year, the Company or its subsidiaries carried out the following major continuing connected transactions (as defined in Chapter 14A of the Listing Rules) with its connected parties as defined by the Listing Rules, and such transactions were in compliance with the requirements on connected transactions under Chapter 14A of the Listing Rules.
___________________________________________________________________________
Connected Parties Major Details of Transactions Transaction Amount (RMB'000)
___________________________________________________________________________
CDC Coal ash processing 57,890
___________________________________________________________________________
China National Water Resources &
Electric Power Materials & Procurement of equipment
Equipment Corporation and materials, etc. 83,576
___________________________________________________________________________
China Datang Group Finance
Company Limited Interest expenses 234,492
___________________________________________________________________________
China Datang Group Finance
Company Limited Interest income 44,296
___________________________________________________________________________
Note 1: Pursuant to the "Financial Services Agreement" entered into by the Company and China
Datang Group Finance Company Limited ("Datang Finance Company"), a controlled company
of China Datang Corporation ("CDC"), the balance of deposit of the Company and its
subsidiaries in Datang Finance Company was RMB1,719 million as at 31 December 2011,
which did not exceed the cap on the average daily deposit balance of RMB8,000 million
as set out in the agreement.
Continuing Connected Transactions in 2011
(1) On 26 October 2010, the Company and Datang Finance Company entered into the "Financial
Services Agreement" which was effective from 1 January 2011 to 31 December 2013. Within
the effective term of the agreement, Datang Finance Company provided deposit services,
loan services and other relevant financial services to the Company and its subsidiaries;
while the daily maximum balance for the deposit of the Group in Datang Finance Company
shall not exceed RMB8,000 million. Within the effective term of the agreement, the
transaction amount did not exceed the cap as set out in the agreement. For details of
the transaction, please refer to the announcement of the Company dated 26 October 2010.
(2) On 22 March 2011, the Company entered into the "Supplemental Agreement to the Ash
Disposal Agreement" with CDC, the controlling shareholder of the Company, which was
effective from 22 March 2011 to 31 December 2013. Within the effective term of the
agreement, CDC agreed to provide disposal services for ash generated by the power plants
which are wholly-owned, operated and managed by the Company. The annual cap on the fees
for ash disposal services payable to CDC by the Company for each year shall be
RMB57,890,000. Within the effective term of the agreement, the transaction amount did not
exceed the cap as set out in the agreement. For details, please refer to the announcement
of the Company dated 22 March 2011.
(3) On 22 March 2011, the Company and China National Water Resources & Electric Power
Materials & Equipment Corporation ("China Water Resources and Power"),
a subsidiary of
the Company's controlling shareholder, CDC, entered into the "Framework Agreement for
Centralised Purchase of Materials" which was effective from 1 January 2011 to 31
December 2013. Within the effective term of the agreement, China Water Resources and
Power was commissioned to plan and organize group purchases based on the demands for
production materials of the Company and its subsidiaries. The annual cap on the purchase
amount shall be approximately RMB200 million. Within the effective term of the
agreement, the transaction amount did not exceed the cap as set out in the agreement.
For details of the transaction, please refer to the announcement of the Company dated
22 March 2011.
Other Connected Transactions in 2011
(4) On 28 April 2011, the Company entered into the Framework Agreement on the Transfer of
Shut-down Capacity Indices in Hunan ("Framework Agreement") with the Company's
controlling shareholder CDC's Hunan Branch ("Hunan Branch"), pursuant to which Hunan
Branch (and the enterprises managed by it) agreed to transfer to the Company the total
capacity indices of 600 MW of the shut-down small generating units to accelerate the
development, construction and approval of large-scale coal-fired power projects of the
Company, and the Company had to pay Hunan Branch a compensation fee of RMB600 million
for the small-capacity units. For details of the transaction, please refer to the
announcement of the Company dated 28 April 2011.
(5) On 28 April 2011, the Company entered into the Compensation Agreement on the Acquisition
by Lvsigang of shut-down capacity indices with Datang International Lvsigang Power
Generation Company Limited ("Lvsigang Power Generation Company"). In order to facilitate
project construction, Lvsigang Power Generation Company acquired the generating unit with
125 MW shut-down capacity at Douhe Power Plant from the Company in accordance with the
State's replacing "small units with large units" policy. Lvsigang Power Generation
Company had to pay the Company a compensation fee for the small-capacity unit in an
aggregate sum of RMB100 million. The compensation fee is mainly for arrangement of the
personnel of the shut-down units.
As CDC is the controlling shareholder of the Company, and CDC also holds 35% of the
equity interests of Lvsigang Power Generation Company, therefore CDC and Lvsigang Power
Generation Company are connected persons of the Company, and the agreement(s) constitutes
connected transaction of the Company. For details of the transaction, please refer to the
announcement of the Company dated 28 April 2011.
(6) On 14 August 2009, Inner Mongolia Datang International Zhuozi Windpower Company Limited
("Zhuozi Windpower Company"), a wholly-owned subsidiary of the Company, entered into the
"General Project Contracting Agreement for Inner Mongolia Datang International Zhuozi
Windpower Mill Phase IV (48.75MW)" with China Datang Technologies and Engineering Company
Limited ("Datang Technologies"), a subsidiary of the Company's controlling Shareholder,
CDC. Datang Technologies would provide general contracting services for Phase IV project
of the Zhuozi Windpower Company. The contract amount was approximately RMB382 million.
In 2011, both parties to the agreement continued to execute the agreement. The
transaction amount was approximately RMB35.5 million. For details of the transaction,
please refer to the announcement of the Company dated 17 August 2009.
(7) On 24 October 2011, the Company entered into the "Entrusted Loan Framework Agreement"
("Framework Agreement") with Datang Energy and Chemical Company Limited ("Energy and
Chemical Company"), a wholly-owned subsidiary of the Company, Datang Inner Mongolia
Duolun Coal Chemical Company Limited ("Duolun Coal Chemical Company"), in which Energy
and Chemical Company and CDC hold 60% and 40% equity interests respectively, and Diao Yu
Tai Branch of China Construction Bank ("CCB Diao Yu Tai Branch"). The term for the
Framework Agreement commenced from 12 October 2011 to 11 October 2014, pursuant to which
the Company, or Energy and Chemical Company, provided an entrusted loan in several
tranches to Duolun Coal Chemical Company through the Entrusted Loan Framework Agreement
arrangement in which CCB Diao Yu Tai Branch acted as a lending agent. The principal of
the entrusted loan totalled approximately RMB2 billion. In 2011, the entrusted loan
granted under the Framework Agreement amounted to RMB500 million. For details of the
transaction, please refer to the announcement of the Company dated 24 October 2011.
(8) On 28 January 2011, the Company provided a counter guarantee in favour of China Datang
Overseas (Hong Kong) Co., Limited ("Datang Overseas"), a wholly-owned subsidiary of the
Company's controlling shareholder, CDC. In consideration of the pledge agreed by Datang
Overseas of H shares of the Company to the Bank of China (Hong Kong) Limited for the
provision of a guarantee for a loan facility not exceeding HK$690 million by the bank to
Datang International (Hong Kong) Ltd. ("Datang Hong Kong"), a wholly-owned subsidiary of
the Company, and the Company agreed and confirmed that it voluntarily provided the
counter guarantee in favour of Datang Overseas in the capacity of counter guarantor. The
counter guarantee was provided in favour of Datang Overseas against all amounts incurred
by Datang Hong Kong under the Deed of Guarantee. The term of the counter guarantee
commenced from the effective date of the Deed of Guarantee to the expiry date of the
Deed of Guarantee and the two-year period thereafter. The counter guarantee was provided
on a joint liability basis. For details of the transaction, please refer to the
announcement of the Company dated 28 January 2011.
(9) On 17 May 2011, the Company entered into the Entrusted Loan Agreement with the Xuanwu
Branch of Industrial and Commercial Bank of China Limited and Duolun Coal Chemical
Company, in which the Company indirectly holds 60% equity interests and the Company's
controlling Shareholder, CDC, holds 40% equity interests, in relation to the provision
of a RMB600 million entrusted loan by the Company according to the Entrusted Loan
Agreement to Duolun Coal Chemical Company through the Entrusted Loan Arrangement, in
which the Xuanwu Branch of Industrial and Commercial Bank of China Limited acted as a
lending agent. The lending rate is in line with the benchmark interest rate to be
charged by the People's Bank of China for the same period, and to be adjusted every
twelve months commencing from the actual drawdown date. The term for the entrusted loan
is 36 months. For details of the transaction, please refer to the announcement of the
Company dated 17 May 2011.
(10) On 6 May 2011, the Board of Directors of the Company considered and approved that the
Company, CDC, the controlling shareholder of the Company, Datang Huayin Electric Power.,
Ltd., a controlling subsidiary of CDC, and Guangxi Guiguan Electric Power Co., Ltd., a
controlling subsidiary of CDC, would participate in the increase in capital contribution
to Datang Finance Company by further contributing RMB280 million to Datang Finance
Company according to the Company's percentage of shareholding in Datang Finance Company.
Upon the completion of the increase in capital contribution, the Company's aggregate
contribution to Datang Finance Company amounted to RMB600 million and the equity
interests held by the Company in Datang Finance Company remained at 20%. The increase
in capital contribution was completed on 24 May 2011. For details of the transaction,
please refer to the announcement of the Company dated 6 May 2011.
(11) On 26 August 2011, the Company entered into the Entrusted Loan Agreement with CCB Diao
Yu Tai Branch and Lvsigang Power Generation Company in relation to the provision of the
first tranche of an entrusted loan amounting to RMB400 million commencing from 31 August
2011 to 30 August 2012 (the Board considered and approved to provide Lvsigang Power
Generation Company with an entrusted loan of not more than RMB600 million) by the
Company to Lvsigang Power Generation Company through the Entrusted Loan Arrangement, in
which the CCB Diao Yu Tai Branch acted as a lending agent. The lending rate is the
benchmark interest rate to be charged for the same level of loans in RMB by the People's
Bank of China for the same period as announced by the People's Bank of China on the date
when each batch of borrowing is withdrawn. For details of the transaction, please refer
to the announcement of the Company dated 2 September 2011.
(12) On 24 August 2011, the Company entered into the Entrusted Loan Agreement with CCB Diao
Yu Tai Branch and Duolun Coal Chemical Company, in which the Company indirectly holds
60% equity interests and CDC holds 40% equity interests, in relation to the provision of
the first tranche of an entrusted loan amounting to RMB400 million commencing from 24
August 2011 to 23 August 2014 (the Board considered and approved to provide Duolun Coal
Chemical Company with an entrusted loan of not more than RMB700 million) by the Company
to Duolun Coal Chemical Company through the Entrusted Loan Arrangement, in which CCB
Diao Yu Tai Branch acted as a lending agent. For details of the transaction, please refer
to the announcement of the Company dated 24 August 2011.
(13) On 21 September 2011, the Company entered into the Capital Contribution Agreement for
Guangdong Datang International Chaozhou Power Generation Company Limited ("Chaozhou Power
Company") ("Capital Contribution Agreement") with CDC, Beijing China Power Huaze
Investment Company Limited ("China Power Huaze"), Wenshan Guoneng Investment Company
Limited ("Wenshan Guoneng") and Chaozhou Xinghua Energy Investment Company Limited
("Chaozhou Xinghua"). Pursuant to the Capital Contribution Agreement, CDC agreed to make
a capital contribution in the sum of approximately RMB874 million to Chaozhou Power
Company, a controlled subsidiary of the Company, to secure 22.5% of the shares in
Chaozhou Power Company, whereas China Power Huaze, Wenshan Guoneng and Chaozhou Xinghua
agreed to make corresponding capital contributions to Chaozhou Power Company in
proportion to their respective original shareholding in Chaozhou Power Company. The
Company did not participate in this capital contribution. Upon the completion of the
increase in capital contribution, the shareholders and the shareholding structure of
Chaozhou Power Company were adjusted as follows: the Company holds 52.5% (originally
75%), CDC holds 22.5%, China Power Huaze holds 12%, Wenshan Guoneng holds 8% and
Chaozhou Xinghua holds 5%. Chaozhou Power Company remains a controlled subsidiary of
the Company. As CDC is a controlling shareholder of the Company, Chaozhou Power Company
is a subsidiary of the Company, CDC holds 22.5% equity interests in Chaozhou Power
Company and China Power Huaze holds 12% equity interests in Chaozhou Power Company,
therefore CDC and China Power Huaze are connected persons of the Company, and the
Capital Contribution Agreement constitutes a connected transaction of the Company. For
details of the transaction, please refer to the announcement of the Company dated 21
September 2011.
(14) On 29 September 2011, the Company entered into the Capital Contribution Agreement
("Capital Contribution Agreement") with CDC, Ganzi County Gantou Hydropower Development
Company Limited ("Gantou Hydropower") and Sichuan Datang International Ganzi Hydropower
Development Co., Ltd. ("Ganzi Hydropower Company"). Pursuant to the Capital Contribution
Agreement, CDC agreed to make a capital contribution in the sum of approximately
RMB220.1 million to Ganzi Hydropower Company; Gantou Hydropower agreed to increase its
capital contribution in the sum of approximately RMB148.7 million to Ganzi Hydropower
Company in proportion to its original shareholding in Ganzi Hydropower Company; the
Company did not participate in this capital contribution. Upon the completion of the
increase in capital contribution, the Company remains the controlling shareholder of
Ganzi Hydropower Company, and the shareholders and shareholding structure of Ganzi
Hydropower Company were adjusted as follows: the Company holds 52.5% (originally 80%),
CDC holds 27.5% and Gantou Hydropower holds 20%. Ganzi Hydropower Company remains a
controlled subsidiary of the Company. As CDC is a controlling shareholder of the
Company, Ganzi Hydropower Company is a subsidiary of the Company and CDC holds 27.5%
equity interests in Ganzi Hydropower Company, therefore CDC and Ganzi Hydropower Company
are connected persons of the Company, and the Capital Contribution Agreement constitutes
a connected transaction of the Company. For details of the transaction, please refer to
the announcement of the Company dated 29 September 2011.
(15) On 15 September 2011, the Company entered into the Entrusted Loan Agreement with CCB Diao
Yu Tai Branch and Ganzi Hydropower Company in relation to the provision of the first
tranche of an entrusted loan amounting to RMB500 million (the Board considered and
approved to provide Ganzi Hydropower Company with an entrusted loan of not more than
RMB1,000 million) by the Company to Ganzi Hydropower Company through the Entrusted Loan
Arrangement commencing from 15 September 2011 to 14 September 2016, in which CCB Diao Yu
Tai Branch acted as a lending agent. The lending rate is the benchmark interest rate to
be charged for the same level of loans in RMB by the People's Bank of China for the same
period as announced by the People's Bank of China on the date when each batch of
borrowing is withdrawn. For details of the transaction, please refer to the announcement
of the Company dated 15 September 2011.
As CDC is a controlling shareholder of the Company, Ganzi Hydropower Company is a
subsidiary of the Company and CDC holds 27.5% equity interests in Ganzi Hydropower
Company, therefore CDC is a connected person of the Company, and the Capital Contribution
Agreement constitutes a connected transaction of the Company.
(16) On 12 October 2011, the Company and Beijing Datang Fuel Company Limited ("Datang Fuel
Company"), a wholly-owned subsidiary of the Company, entered into the Capital
Contribution Agreement for Datang Fuel Company ("Capital Contribution Agreement") with
Datang Power Fuel Company Limited ("Group Fuel Company"), a wholly-owned subsidiary of
CDC, the controlling shareholder of the Company. Pursuant to the Capital Contribution
Agreement, Group Fuel Company agreed to make a capital contribution in the sum of
approximately RMB557 million to Datang Fuel Company to secure a 49% equity interest in
Datang Fuel Company. The Company did not participate in this capital contribution. Upon
the completion of the increase in capital contribution, Datang Fuel Company remains a
controlled subsidiary of the Company and the shareholders and the shareholding structure
of Datang Fuel Company was adjusted as follows: the Company holds 51% (originally 100%)
and Group Fuel Company holds 49% equity interest in Datang Fuel Company. For details of
the transaction, please refer to the announcement of the Company dated 12 October 2011.
(17) On 17 October 2011, the Company entered into the Capital Contribution Agreement with
China Datang Coal Industry Company Limited ("Datang Coal Industry Company"), a
wholly-owned subsidiary of CDC, the controlling shareholder of the Company, to set up
Inner Mongolia Datang Da Ta Energy Company Limited ("Da Ta Energy Company") for the
purposes of the construction and operation of the Da Ta Coal Logistics Park Zone. The
Company and Datang Coal Industry Company agreed to make capital contributions in the sum
of approximately RMB65.03 million and approximately RMB120.75 million, respectively, to
set up Da Ta Energy Company in the proportions of 35% and 65%, respectively. Da Ta Energy
Company was established in 2011. For details of the transaction, please refer to the
announcement of the Company dated 17 October 2011.
(18) On 21 December 2011, the Company entered into a transfer agreement with Datang Shandong
Power Generation Company ("Datang Shandong Company"), a wholly-owned subsidiary of CDC,
the controlling shareholder of the Company, in relation to the transfer of the shutdown
capacity indices of small coal-fired power generating units, pursuant to which the
Company agreed to acquire the shut-down capacity indices of small coal-fired power
generating units owned by Datang Shandong Company in order to accelerate the construction
of Phase 2 of the Company's Wushashan Power Plant Project. The transaction amount was
RMB144 million. For details of the transaction, please refer to the announcement of the
Company dated 21 December 2011.
The relevant procedures for reporting, announcement and approval by independent shareholders have been carried out for the aforesaid connected transactions and continuing connected transactions in compliance with the requirements under Chapter 14A of the Listing Rules in relation to connected transactions.
The independent non-executive Directors have discussed the aforesaid transactions and confirmed such transactions are:
(1) in the ordinary and usual course of business of the Company;
(2) based on the following terms: (a) normal commercial terms (i.e. terms and conditions
applied to similar transactions made by similar domestic business entities) or (b)
if there are no comparable terms, on terms that are fair and reasonable and in the
interests of the shareholders of the Company;
(3) based on the following terms: (a) under the terms of the agreements governing such
transactions or (b) if there are no such agreements, on terms no less favourable to
the Company than terms available to or from the third parties.
In accordance with Rule 14A.38 of the Listing Rules, the Board engaged the auditors of the Company to perform certain factual finding procedures on the above continuing connected transactions on a sample basis in accordance with Hong Kong Standard on Related Services 4400 "Engagements to perform Agreed-Upon Procedures Regarding Financial Information" issued by the Hong Kong Institute of Certified Public Accountants. The auditors have reported their factual findings on the selected samples based on the agreed procedures to the Board. It stated that:
(1) the said transactions have been approved by the Board;
(2) the said transactions were made in accordance with the pricing policy of the
Company, if applicable;
(3) the said transactions were conducted pursuant to the relevant agreement governing
those transactions;
(4) the said transactions did not exceed their respective caps applicable to such
transactions.MATERIAL LITIGATION
The Company was not involved in any material litigation during the Year.
RETIREMENT SCHEME
In accordance with the State's employee retirement scheme, the Company has to pay a basic pension insurance premium on behalf of the employees at a rate of 20% of the staff's salaries whereby the employees would receive a monthly pension payment after retirement. In addition, the Company has also implemented an enterprise annuity plan, whereby employees will make monthly contributions at fixed amounts as individual savings pension insurance funds, while the Company will contribute proportionate amounts of contributions as supplementary pension insurance funds. The Company may at its discretion provide additional non-recurring individual savings pension insurance funds depending on the operating results of the year. When retired, an employee will receive individual savings pension insurance fund and corporate supplemental savings pension insurance fund contributed by the Company. Apart from such contributions, the Company has no other liabilities towards the staff retirement scheme.
INTEREST CAPITALISATION
During the Year, the interest capitalised in respect of construction-in-progress amounted to approximately RMB2,469.120 million.
OTHER SIGNIFICANT MATTERS
1. Pursuant to the resolutions passed at the 2011 second extraordinary general meeting
of the Company held on 26 August 2011, the Company distributed cash dividend of
RMB0.07 per share (tax included) to all shareholders for the year of 2010 on the
basis of the total share capital of 13,310,037,578 shares as at 31 May 2011.
2. Pursuant to the resolutions passed at the seventh meeting of the seventh session
of the Supervisory Committee held on 25 October 2011, the Supervisory
Committee approved the nomination of Mr. Zhou Xinnong as a candidate for a supervisor
representing shareholders of the seventh session of the Supervisory Committee
of the Company; Mr. Fu Guoqiang would no longer assume the office of supervisor
due to work adjustment; The afore-mentioned matter regarding the adjustment of
supervisors was submitted to the 2011 fourth extraordinary general meeting of the
Company held on 6 December 2011 for consideration and approval.
3. On 16 December 2010, pursuant to the "Reply on the Approval of Non-public Offering
of Shares by Datang International Power Generation Co., Ltd."
(CSRC Approval No. [2010] 1842) issued by the China Securities Regulatory
Commission, the Company completed the non-public offering of A shares in May
2011. Total issued share capital of the Company amounted to 13,310,037,578 shares with
newly-issued A shares of 1 billion shares.
COMPLIANCE OF THE CODE ON CORPORATE GOVERNANCE PRACTICES
To the knowledge of the Board, the Company has complied with the Code on Corporate Governance Practices (the "Code") as set out in Appendix 14 to the Listing Rules during the Year.
COMPLIANCE OF THE MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS
Upon specific enquiries made to all Directors and in accordance with information provided,the Board confirmed that all Directors have complied with the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 of the Listing Rules during the Year.
INDEPENDENT NON-EXECUTIVE DIRECTORS
After making queries and reviewing the annual confirmation letters from all independent non-executive Directors in respect of their independence according to Rule 3.13 of the Listing Rules, the Company confirms that all independent non-executive Directors are independent individuals.AUDITOR
The Company's financial statements for the year ended 31 December 2011 prepared under International Financial Reporting Standards were audited by RSM Nelson Wheeler.
PricewaterhouseCoopers Zhong Tian CPAs Limited Company and PricewaterhouseCoopers were the Company's domestic and international auditors for carrying out the audit work for year 2009,and their respective term of service ended on the date of the 2009 annual general meeting. On the 2009 annual general meeting, RSM China Certified Public Accountants (Special General Partnership) and RSM Nelson Wheeler have been appointed as the Company's domestic and international auditors for carrying out the audit work for year 2010, and their respective term of service was further extended on the 2010 annual general meeting. For details of the change of auditors of the Company, please refer to the announcement of the Company dated 11 June 2010. By Order of the Board Liu Shunda Chairman 23 March 2012
Report of the Supervisory Committee
Mr Qiao Xinyi During 2011, in compliance with the principle of being accountableChairman of the to all shareholders of the Company and in accordance with theSupervisory Committee Company Law of the PRC (the "Company Law"), the Articles of Association of Datang International Power Generation Co., Ltd. (the "Articles of Association"), the Order of Meeting of the Supervisory Committee of Datang International Power Generation Co., Ltd. (the "Order of Meeting of the
Supervisory Committee")
and the relevant requirements of the listing
rules of the Company's
listing jurisdictions, members of the
Supervisory Committee of the
Company dutifully and conscientiously discharged their monitoring duty. In 2011, the Supervisory Committee attended all general meetings, Board meetings and meetings of the specialised committees of the Board held during the Year. Meanwhile, it actively participated in the review of the Company's major decisions and examined the Company's operation and financial position periodically. It also strove to protect the rights of the shareholders, the benefits of the Company as well as the legal interests of staff. The detailed report on the work of the Supervisory Committee for 2011 is as follows:
A. SUPERVISORY COMMITTEE MEETING
Convening of Supervisory Details Details of the Subjects Discussed at the Supervisory of the Subjects Discussed at the Committee Meetings Supervisory Committee Meetings
On 22 March 2011, the 3rd meeting Considered and approved "Work Report of the Supervisory
of the seventh session of Committee for Year 2010", "Proposal of Final Accounts for
Supervisory Committee of the Year 2010"," 2011 Financial Budget Report", "2010 Profit Company was held Distribution Proposal", and "Full Text of the 2010 Annual Report and Summary of the Annual Report", "Results Announcement" and "Resolution on the Correction of Accounting Errors for Year 2010"
On 26 April 2011, the 4th meeting Considered and approved the "Resolution on the Explanation
of the seventh session of on the 2011 First Quarterly Report" Supervisory Committee of the Company was held by way of written correspondence
On 8 July 2011, the 5th meeting Considered and approved the "Resolution on the Company's
of the seventh session of Replacement of Self-financing Funds Already Committed in
Supervisory Committee of the Advance to Fund-raising Projects with Raised Funds" Company was held by way of written correspondenceOn 26 August 2011, the 6th Considered and approved the "Resolutions on the Explanation
meeting of the seventh session on the Disclosure of 2011 Interim Results" and the "Specific
of Supervisory Committee of the Report on the Deposit and the Actual Application of the Fund Company was held Raised by the Company during the First Half of 2011".On 25 October 2011, the 7th Considered and approved the "Resolution on the Explanation on
meeting of the seventh session the 2011 Third Quarterly Report" and the "Resolution on
of Supervisory Committee of the Adjusting Shareholders Representative Supervisor".
Company was held
B. INDEPENDENT OPINIONS OF THE SUPERVISORY COMMITTEE ON THE COMPANY'S RELEVANT MATTERS
1. The Company's Operation in Compliance with Laws
During the reporting period, members of the Supervisory Committee participated in the
discussions on major operating decisions through attending Board meetings and general
meetings of the Company, and monitored the financial position and the operation of the
Company. The Supervisory Committee is of the view that the Company's business was regulated
and operating in strict compliance with the Company Law and the Articles of Association and
other relevant regulations and systems in 2011 and its operation and decisions were
scientific and rational. Meanwhile, the Company enhanced its internal management and internal
control systems and established sound internal control mechanisms. In fulfilling their duties,
Directors and senior management of the Company acted diligently and dutifully, abiding by the
State laws and regulations and the Articles of Association and systems as well as safeguarding
the interests of the Company. No act which violated laws and regulations or contravened the
Company's interests and minority shareholders' lawful interests were discovered.
2. Financial Activities of the Company
During the reporting period, the Supervisory Committee conscientiously and carefully examined
and reviewed the Company's accounting statements and financial information. The Supervisory
Committee also took part in reviewing the auditor's report and offered opinions and
recommendations on the auditor's work. The Supervisory Committee is of the view that the
preparation of the Company's financial statements complies with the relevant requirements of
the Accounting Systems for Business Enterprises and Accounting Standards for Business
Enterprises, and that the Company's 2011 financial report and the standard unqualified audit
report issued by the accountants truthfully reflect the financial position and operating
results of the Company.
3. Actual Application of the Latest Fundraising Proceeds by the Company
In May 2011, the Company raised proceeds amounting to RMB6,740,000,000 (a net amount of
RMB6,670,950,000) from the non-public offering of 1 billion A shares in total. These proceeds
had been fully utilised as at the end of 2011.
4. Acquisition and Disposal of Assets by the Company
In 2011, the Company mainly carried out the acquisition of a 30% equity interest in Baxin
Railway and the sale of a 90.43% equity interest in Huaze Hydropower. The details are as
follows:
(1) Pursuant to the agreement signed, the Company acquired a 20% equity interest in Baxin
Railway Company at a price of RMB533 million. Baxin Railway is an important channel for
the external transport of coal of Ximeng, which transports the coal of Ximeng to
Liaoning Province or to sea routes via Fuxin. The Company's investment in the equity
interest in Baxin Railway may help the Company further establish the external transport of
coal from the Ximeng region while guaranteeing that the coal required in the Fuxin project
is delivered, carrying significant strategic implications.
(2) Pursuant to the agreement signed, the Company transferred its 90.43% (equivalent to a
transfer price of approximately RMB126,300,800) equity interest in Huaze Hydropower to
Hebei Feng Ning Pumped Storage Company Limited based on the valuation of net assets at
RMB139,666,900.
The above-mentioned acquisitions and disposals were considered and approved by the Board and among those acquisitions and disposals which constitute connected transactions, the Independent Directors have expressed independent opinions. The Supervisory Committee is of the view that theconsiderations of the relevant acquisitions and disposals were reasonable, and did not harm the interests of the Company's shareholders.
5. The Connected Transactions Engaged by the Company
In 2011, continuing connected transactions of the Company mainly carried out included:
pursuant to the Ash Disposal Agreement and the "2011 Supplemental Agreement entered into with
China Datang Corporation ("CDC"), the Company paid a coal ash disposal fee of RMB57,890,000;
pursuant to the Framework Agreement for Centralised Materials Purchase entered into with China
National Water Resources & Electric Power Materials & Equipment Corporation, a subsidiary of
CDC, during the period from 1 January 2011 to 31 December 2013, the annual cap for purchases
is RMB200 million; pursuant to the Financial Services Agreement entered into with China
Datang Group Finance Co., Ltd., a subsidiary of CDC, interest expenses of approximately
RMB234,490,000 and interest income of RMB44,300,000 were incurred through deposit services
and loan services, plus an average daily maximum deposit balance of RMB1.512 billion (the
agreed maximum average daily deposit balance was RMB6.643 billion). After checking, all the
said transactions did not exceed the agreed upon caps of transaction amount.
During 2011, the Company entered into the following major connected transaction agreements as
defined by the Listing Rules with CDC and the relevant subsidiaries: the Company provided a
counter-guarantee for the guarantee provided by China Datang Overseas (Hong Kong) Co.,
Limited for the loan of the Hong Kong branch of the Company; the Company carried out a
transfer in the volume ratio of the closure of small-scale thermal power units with Datang
Shandong Company, a subsidiary of CDC, and CDC Hunan Branch Company, a branch of CDC; CDC
increased its capital contributions and enlarged its shareholding in Chaozhou Power
Generation and Ganzi Hydropower, both of them subsidiaries of the Company; Datang Electric
Power Fuel Co., Ltd., a subsidiary of CDC, increased its capital contributions and enlarged
its shareholding in Beijing Datang Fuel Company Limited; the Company increased its capital
contributions in China Datang Finance Co., Ltd., a subsidiary of CDC.
The Supervisory Committee was of the view that the material connected transactions engaged by
the Company and its connected persons (including those related to daily operation, assets
acquisition or disposal, joint external investment and related debts and liabilities) during
Year 2011 complied with normal commercial terms. Such transactions complied with the
requirements of the State laws, regulations and the Articles of Association, while the
information disclosure and related obligations were timely and thoroughly fulfilled in
accordance with the requirements of the listing rules of the Shanghai Stock Exchange and the
Hong Kong Stock Exchange.C. WORK PLAN FOR 2012
In 2012, members of the Supervisory Committee of the Company will conscientiously learn the
relevant State laws and regulations in order to enhance its political quality and business
ability, and to raise the awareness of strengthening supervision and diligently and dutifully
fulfilling obligations. With a spirit of being accountable to shareholders and the staff of
the enterprise, as well as aligning with the Company's operating activities, members of the
Supervisory Committee exercise effective supervision over the Company's major decisions
through attending Board meetings and relevant important business meetings of the Company,
with a view to raising the Company's awareness of risk-prevention. They will also improve
the internal control system of the Company and continuously enhance the corporate governance
structure, with a view to further upgrading the regulated operation standards of the Company. Supervisory Committee Datang International Power Generation Co., Ltd. 23 March 2012
Taxation in the United Kingdom
The comments below are a general guide only, based on the tax law and practice in force as at the date of this document which may be subject to changes or revisions. They relate only to certain limited aspects of the tax position of shareholders of the Company who are United Kingdom ("UK") resident, and (if an individual) who are also UK ordinarily resident and domiciled and who hold shares in the Company as an investment, not as a share dealer or financial trader ("Relevant Shareholders"). This section is not intended to be and should not beconstrued as legal or tax advice to any particular shareholder. If you are in any doubt as to your tax position you should consult an appropriate professional advisor.Relevant Shareholders will generally be subject to UK income tax or corporation tax on the grossamount of dividends paid by the Company, but will normally be entitled to a credit against suchUK income tax or corporation tax for any PRC withholding tax charged on the dividend.Under the current double taxation treaty between the PRC and the UK, Relevant Shareholders will generally be entitled to a reduced rate of PRC withholding tax on dividends paid to them by the Company (details of which can be obtained from HM Revenue & Customs). Individual shareholders will also be entitled to a non-payable tax credit of one ninth of the distribution.A corporate Relevant Shareholder should generally be exempt from UK Corporation tax in respect of dividends paid to them by the Company. Where this is not the case, corporate Relevant Shareholders who control (directly or indirectly) at least 10% of the voting rights of the Company may be entitled to credit against UK corporation tax chargeable in respect of dividends paid to them by the Company for any underlying PRC tax payable by the Company in respect of the profits out of which dividends were paid.
Relevant Shareholders will generally be subject to UK tax on chargeable gains on any gain on a disposal of shares, as computed for the purposes of such tax.
Independent Auditor's Report
TO THE SHAREHOLDERS OF DATANG INTERNATIONAL POWER GENERATION CO., LTD. (Incorporated in the People's Republic of China with limited liability)
We have audited the consolidated financial statements of Datang International Power GenerationCo., Ltd. (the "Company") and its subsidiaries (collectively referred to as the "Group"), which comprise the consolidated statement of financial position as at 31 December 2011, and the consolidated statement of comprehensive income, consolidated statementof changes in equity and consolidated statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.
Directors' responsibility for the consolidated financial statements
The directors of the Company are responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards and the disclosure requirements of the Hong Kong Companies Ordinance, and for such internal control as the directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.Auditor's responsibilityOur responsibility is to express an opinion on these consolidated financial statements based on our audit and to report our opinion solely to you, as a body, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation of consolidated financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OpinionIn our opinion, the consolidated financial statements give a true and fair view of the state of affairs of the Group as at 31 December 2011, and of the Group's results and cash flows for the year then ended in accordance with International Financial Reporting Standards and have been properly prepared in accordance with the disclosure requirements of the Hong Kong Companies Ordinance.RSM Nelson Wheeler Certified Public Accountants Hong Kong23 March 2012
___________________________________________________________________________________________
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2011
___________________________________________________________________________________________
Note 2011
2010
RMB'000
RMB'000
___________________________________________________________________________________________
Operating revenue 6 72,381,865 60,672,375Operating costs Fuel for power and heat generation (42,152,791) (32,143,481) Fuel for coal sales (2,331,552) (2,693,996) Depreciation (8,604,808) (7,381,972) Repairs and maintenance (1,898,832) (1,897,715) Salaries and staff welfare (2,367,473) (2,047,788) Local government surcharges (568,654) (395,380) Others (4,904,592) (4,908,348)
___________________________________________________________________________________________
Total operating costs (62,828,702)
(51,468,680)
___________________________________________________________________________________________
Operating profit 9,553,163 9,203,695 Shares of profits of associates 19 945,970 718,231 Shares of profits of jointly controlled entities 94,229 1,104 Investment income 50,191 10,015 Other gains 7 58,564 102,377 Interest income 109,820 38,215 Finance costs 9 (7,102,002) (5,373,337)
___________________________________________________________________________________________
Profit before tax 3,709,935
4,700,300
Income tax expense 10 (667,786) (871,355) ___________________________________________________________________________________________Profit for the year 11 3,042,149
3,828,945 ___________________________________________________________________________________________ Other comprehensive income after tax:
Reclassification adjustments for amounts transferred to profit or loss upon disposals of available-for-sale investments (4) (14,605) Fair value loss on available-for-sale investments (28,519) (55,120) Share of other comprehensive income of associates (63,516) (25,900) Foreign currency translation differences 21,825 17,610 Income tax relating to components of other comprehensive income 7,131 17,430
___________________________________________________________________________________________
Other comprehensive income for the year, net of tax (63,083)
(60,585)
___________________________________________________________________________________________
Total comprehensive income for the year 2,979,066
3,768,360
___________________________________________________________________________________________
Profit for the year attributable to:
Owners of the Company 1,971,200 2,569,734 Non-controlling interests 1,070,949 1,259,211
___________________________________________________________________________________________
3,042,149
3,828,945
___________________________________________________________________________________________
Total comprehensive income for the year attributable to:
Owners of the Company 1,908,050 2,513,417 Non-controlling interests 1,071,016 1,254,943
___________________________________________________________________________________________
2,979,066
3,768,360
___________________________________________________________________________________________
RMB RMBEarnings per share Basic and diluted 15 0.15 0.21
___________________________________________________________________________________________
Consolidated Statement of Financial PositionAt 31 December 2011___________________________________________________________________________________________ Note 2011 2010 RMB'000 RMB'000ASSETSNon-current assets
Property, plant and equipment 16 200,923,064 179,233,770 Investment properties 17 502,302 211,866 Intangible assets 18 2,644,303 2,498,329 Investments in associates 19 5,289,166 4,591,838 Investments in jointly controlled entities 20 3,585,867 2,649,778 Available-for-sale investments 21 2,710,073 2,304,158 Deferred housing benefits 22 102,839 132,530 Deferred tax assets 34 1,453,359 972,760 Other non-current assets 412,628 428,477
___________________________________________________________________________________________
217,623,601
193,023,506
___________________________________________________________________________________________
Current assets
Inventories 23 6,093,786 4,011,713 Accounts and notes receivables 24 10,208,546 8,158,622 Prepayments and other receivables 25 8,877,100 4,101,545 Short-term entrusted loans to a jointly controlled entity 26 365,198 100,153 Tax recoverable 61,586 76,820 Cash and cash equivalents 27 4,467,372 3,442,976
___________________________________________________________________________________________
30,073,588
19,891,829
___________________________________________________________________________________________
TOTAL ASSETS 247,697,189
212,915,335
___________________________________________________________________________________________
Consolidated Statement of Financial PositionAt 31 December 2011
___________________________________________________________________________________________
Note 2011 2010 RMB'000
RMB'000
___________________________________________________________________________________________
EQUITY AND LIABILITIESCapital and reserves Share capital 28 13,310,038 12,310,038 Reserves 30 23,037,968 15,343,804 Retained earnings Proposed dividends 14 1,464,104 861,703 Others 1,128,582 2,334,526
___________________________________________________________________________________________
Equity attributable to owners of the Company 38,940,692
30,850,071
Non-controlling interests 11,791,362
7,582,760
___________________________________________________________________________________________
Total equity 50,732,054
38,432,831
___________________________________________________________________________________________
Non-current liabilities Long-term loans 31 117,654,356 109,585,377 Long-term bonds 32 8,937,277 5,949,018 Deferred income 33 504,071 460,989 Deferred tax liabilities 34 585,488 439,226 Provisions 35 41,680 41,603 Other non-current liabilities 36 5,827,268 3,723,182
___________________________________________________________________________________________
133,550,140
120,199,395
___________________________________________________________________________________________
Current liabilities
Accounts payables and accrued liabilities 37 23,940,013 18,930,066 Taxes payables 771,475 1,165,696 Dividends payables 154,881 2,336 Short-term loans 38 21,523,709 19,374,828 Short-term bonds 39 1,400,000 - Current portion of non-current liabilities 31, 36 15,624,917 14,810,183
___________________________________________________________________________________________
63,414,995
54,283,109
___________________________________________________________________________________________
Total liabilities 196,965,135 174,482,504 ___________________________________________________________________________________________TOTAL EQUITY AND LIABILITIES 247,697,189 212,915,335 ___________________________________________________________________________________________Net current liabilities (33,341,407) (34,391,280) ___________________________________________________________________________________________Total assets less current liabilities 184,282,194 158,632,226 ___________________________________________________________________________________________
Approved by the Board of Directors on 23 March 2012
Cao Jingshan Zhou Gang Director DirectorPlease visit http://www.prnasia.com/sa/attachment/2012/05/20120508200711183480.80 Consolidated Statement.pdffor the Consolidated Statement of Changes in Equity. Consolidated Statement of Cash FlowsFor the year ended 31 December 2011
_________________________________________________________________________________________
Note 2011
2010
RMB'000
RMB'000 _________________________________________________________________________________________ CASH FLOWS FROM OPERATING ACTIVITIES
Cash generated from operations 40(a) 14,104,378 18,352,813 Interest received 109,820 38,215 Income tax paid (1,279,484) (881,439) _________________________________________________________________________________________Net cash generated from operating activities 12,934,714
17,509,589
_________________________________________________________________________________________
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (26,010,097)
(22,717,180)
Additions to intangible assets (43,062)
(127,031)
Acquisitions of subsidiaries (929,602)
458,211
Additional investments in jointly controlled entities (841,359)
(1,012,000)
Establishments of associates (26,000) - Additional investments in associates (334,300)
(276,860)
Investments in available-for-sale investments (430,327)
(786,686)
Acquisitions of non-controlling interests (33,279)
(590,039)
Prepayments for investments (378,592)
(350,000)
Additional entrusted loans made (364,500)
(274,000)
Deposits for land development (242,540) -
Proceeds from disposals of property, plant
and equipment 8,025
209,690
Proceeds from disposals of investment
properties -
10,800
Disposal of a subsidiary 40(c) 122,137 - Proceeds from disposals of associates -
319,848
Proceeds from disposals of available-for-sale
investments 1,336
62,734
Repayments of entrusted loans 100,000
191,000
Dividends received 581,213
264,413
Increase in security deposits for notes
payables -
(29,562)
Others 66,603
(141,054)
_________________________________________________________________________________________
Net cash used in investing activities (28,754,344)
(24,787,716)
_________________________________________________________________________________________
CASH FLOWS FROM FINANCING ACTIVITIES
Capital injections from non-controlling interests 2,405,626
671,982
Disposal of ownership interests in
subsidiaries without loss of control 40(d) 1,763,576
- Drawdown of short-term loans 40,231,192
46,051,309
Drawdown of long-term loans 27,006,551
32,397,025
Issuance of short-term bonds 1,400,000 - Proceeds from issue of shares, net of expenses 6,670,950
3,248,372
Issuance of long-term bonds, net of issuance
costs 2,976,000 - Proceeds from sale and leaseback transactions 2,187,173
415,977
Repayment of short-term loans (38,082,311)
(46,047,517)
Repayment of long-term loans (18,232,728)
(17,204,614)
Repayment of finance lease payables (505,998)
(1,319,845)
Interest paid (9,001,178)
(7,237,519)
Dividends paid to owners of the Company (931,703)
(861,703)
Dividends paid to non-controlling interests (1,067,213)
(942,526)
Others (1,949)
21,824
_________________________________________________________________________________________
Net cash generated from financing activities 16,817,988
9,192,765
_________________________________________________________________________________________
NET INCREASE IN CASH AND CASH EQUIVALENTS 998,358
1,914,638
Effect of foreign exchange rate changes 26,038
21,903
CASH AND CASH EQUIVALENTS AT 1 JANUARY 3,442,976
1,506,435
_________________________________________________________________________________________
CASH AND CASH EQUIVALENTS AT 31 DECEMBER 27 4,467,372
3,442,976
_________________________________________________________________________________________
Notes to the Financial Statements
For the year ended 31 December 2011
1. GENERAL INFORMATION
Datang International Power Generation Co., Ltd. (the "Company") was incorporated in the People's Republic of China (the "PRC") as a joint stock limited liability company. The Company's H shares are listed on the Main Board of The Stock Exchange of Hong Kong Limited (the "Hong Kong Stock Exchange") and the London Stock Exchange Limited while the Company's A shares are listed on the Shanghai Stock Exchange. The address of its registered office is No. 482, Guanganmennei Avenue, Xuanwu District, Beijing 100053, the PRC. The addresses of its principal place of business in the PRC and the Hong Kong Special Administrative Region of the PRC ("Hong Kong") are No. 9 Guangningbo Street, Xicheng District, Beijing 100033, the PRC and 21/F., Gloucester Tower, 15 Queen's Road Central, Hong Kong respectively.The principal activities of the Company and its subsidiaries (collectively referred to asthe "Group") are power generation and power plant development in the PRC. The Group alsoengaged in coal trading, chemical products manufacturing and selling, etc..
In the opinion of the directors of the Company, China Datang Corporation ("China Datang"), a company incorporated in the PRC, is the ultimate parent of the Company.
2. ADOPTION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS
In the current year, the Group has adopted all the new and revised International Financial Reporting Standards ("IFRSs") that are relevant to its operations and effective for its accounting year beginning on 1 January 2011. 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 and amounts reported for thecurrent year and prior years except as stated below.
Related party disclosures
IAS 24 (Revised) "Related Party Disclosures" revises the definition of a related party and provides a partial exemption of disclosing related party transactions for government-related entities.
A related party is a person or entity that is related to the Group.
(A) A person or a close member of that person's family is related to the Group
if that person:
(i) has control or joint control over the Group;
(ii) has significant influence over the Group; or
(iii) is a member of the key management personnel of the Company or of a
parent of the Company.
(B) An entity is related to the Group (reporting entity) if any of the following
conditions applies:(i) The entity and the Company are members of the same group (which means that
each parent, subsidiary and fellow subsidiary is related to the others).
(ii) One entity is an associate or joint venture of the other entity (or an
associate or joint venture of a member of a group of which the other entity
is a member).
(iii) Both entities are joint ventures of the same third party.
(iv) One entity is a joint venture of a third entity and the other entity is an
associate of the third entity.
(v) The entity is a post-employment benefit plan for the benefit of employees of
either the Group or an entity related to the Group. If the Group is itself
such a plan, the sponsoring employers are also related to the Group.
(vi) The entity is controlled or jointly controlled by a person identified
in (A).
(vii) A person identified in (A)(i) has significant influence over the entity
or is a member of the key management personnel of the entity (or of a parent of
the entity).
IAS 24 (Revised) exempts an entity from the disclosure requirements in relationto related party transactions and outstanding balances, including commitments, with
-- a government that has control, joint control or significant influence over
the entity; and
-- another entity that is a related party because the same government has control,
joint control or significant influence over both entities.
The entity that applies the exemption is required to disclose the following:
-- the name of the government and the nature of its relationship with the
entity (i.e. control, joint control or significant influence); and
-- the following information in sufficient detail to enable users of the entity's
financial statements to understand the effect of related party transactions on
its financial statements:
i. the nature and amount of each individually significant transaction; and
ii. for other transactions that are collectively, but not individually,
significant, a qualitative or quantitative indication of their extent.
The revision of the definition of a related party has no material impact on the financial statements of the Group. The partial disclosure exemption relating to transactions between the Group and government-related entities has been applied retrospectively. The Group discloses only individually or collectively significant transactions with government-related entities.The Group has not applied the 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. SIGNIFICANT ACCOUNTING POLICIES
These financial statements have been prepared in accordance with IFRSs and the applicable disclosures required by the Rules Governing the Listing of Securities on The Hong Kong Stock Exchange and by the Hong Kong Companies Ordinance.
These financial statements have been prepared under the historical cost convention, as modified by the revaluation of certain available-for-sale investments.
At 31 December 2011, a significant portion of the funding requirements of the Group for capital expenditures was satisfied by short- term borrowings.
Consequently, at 31 December 2011, the Group had net current liabilities of approximately RMB33.34 billion. The Group had significant undrawn borrowing
facilities, subject to certain conditions, amounting to approximately RMB145.35 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.The preparation of financial statements in conformity with IFRSs requires the use of certain key assumptions and estimates. It also requires the directorsto exercise their judgements in the process of applying the accounting policies. The areas involving critical judgements and areas where assumptions and estimates are significant to these financial statements, are disclosed in note 4 to the financial statements.
The significant accounting policies applied in the preparation of these financial statements are set out below.
(a) Consolidation
The consolidated financial statements include the financial statements of the
Company and all its subsidiaries made up to 31 December. Subsidiaries are
entities over which the Group has control. Control is the power to govern
the financial and operating policies of an entity so as to obtain benefits
from its activities. The existence and effect of potential voting rights that
are currently exercisable or convertible are considered when assessing whether
the Group has control.
Subsidiaries are consolidated from the date on which control is transferred to
the Group. They are de-consolidated from the date the control ceases.
The gain or loss on the disposal of a subsidiary that results in a loss of control
represents the difference between (i) the fair value of the consideration of the
sale plus the fair value of any investment retained in that subsidiary and (ii)
the Company's share of the net assets of that subsidiary plus any remaining
goodwill relating to that subsidiary and any related accumulated foreign currency
translation reserve.
Intragroup transactions, balances and unrealised profits are eliminated. Unrealised
losses are also eliminated unless the transaction provides evidence of an
impairment of the asset transferred. Accounting policies of subsidiaries have been
changed where necessary to ensure consistency with the policies adopted by the Group.
Non-controlling interests represent the equity in subsidiaries not attributable,
directly or indirectly, to the Company. Non- controlling interests are presented in
the consolidated statement of financial position and consolidated statement of changes
in equity within equity. Non-controlling interests are presented in the consolidated
statement of comprehensive income as an allocation of profit or loss and total
comprehensive income for the year between the non-controlling shareholders and owners
of the Company.
Profit or loss and each component of other comprehensive income are attributed
to the owners of the Company and to the non-controlling shareholders even if this
results in the non-controlling interests having a deficit balance.
Changes in the Company's ownership interest in a subsidiary that do not result in a
loss of control are accounted for as equity transactions (i.e. transactions with
owners in their capacity as owners). The carrying amounts of the controlling
and non-controlling interests are adjusted to reflect the changes in their relative
interests in the subsidiary. Any difference between the amount by which the
non-controlling interests are adjusted and the fair value of the consideration
paid or received is recognised directly in equity and attributed to the owners
of the Company.
(b) Business combination under common control
The consolidated financial statements incorporate the financial statements of the
combining entities as if they had been combined from the date when they first came
under the control of the controlling party.
The consolidated statements of comprehensive income and consolidated statements
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.
The consolidated statements of financial position have been prepared to present
the assets and liabilities of the combining entities as if the Group structure as
at 31 December 2011 had been in existence at the end of each reporting period. The
net assets of the combining entities are combined using the existing book values
from the controlling party's perspective. No amount is recognised in respect of
goodwill or gain on bargain purchase at the time of common control combination,
to the extent of the continuation of the controlling party's interest.
There was no adjustment made to the net assets nor the net profit or loss of any
combining entities in order to achieve consistency of the Group's accounting
policies.
(c) Business combination other than under common control
The acquisition method is used to account for the acquisition of a subsidiary
in a business combination. The cost of acquisition is measured at the
acquisition-date fair value of the assets given, equity instruments issued,
liabilities incurred and contingent consideration. Acquisition-related costs
are recognised as expenses in the periods in which the costs are incurred and
the services are received. Identifiable assets and liabilities of the subsidiary
in the acquisition are measured at their acquisition-date fair values.
The excess of the cost of acquisition over the Company's share of the net fair
value of the subsidiary's identifiable assets and liabilities is recorded as
goodwill. Any excess of the Company's share of the net fair value of the
identifiable assets and liabilities over the cost of acquisition is recognised
in consolidated profit or loss as a gain on bargain purchase which is attributed
to the Company.
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 the goodwill.
If the changes in the value of the previously held equity interest in the
subsidiary were recognised in other comprehensive income (for example,
available-for-sale investments), the amount that was recognised in other
comprehensive income is recognised on the same basis as would be required
if the previously held equity interest were disposed of.
Goodwill is tested annually for impairment or more frequently if events or
changes in circumstances indicate that it might be impaired. Goodwill is measured
at cost less accumulated impairment losses. The method of measuring impairment
losses of goodwill is the same as that of other assets as stated in the accounting
policy (ab) below. Impairment losses of goodwill are recognised in consolidated
profit or loss and are not subsequently reversed. Goodwill is allocated to
cash-generating units that are expected to benefit from the synergies of the
acquisition for the purpose of impairment testing.
The non-controlling interests in the subsidiary are initially measured at
the non-controlling shareholders' proportionate share of the net fair value of
the subsidiary's identifiable assets and liabilities at the acquisition date.
(d) Associates
Associates are entities over which the Group has significant influence. Significant
influence is the power to participate in the financial and operating policies of an
entity but is not control or joint control over those policies. The existence and
effect of potential voting rights that are currently exercisable or convertible are
considered when assessing whether the Group has significant influence.
Investments in associates are accounted for in the consolidated financial statements
by the equity method and are initially recognised at cost. Identifiable assets and
liabilities of the associate in an acquisition are measured at their fair values
at the acquisition date. The excess of the cost of acquisition over the Group's
share of the net fair value of the associate's identifiable assets and liabilities
is recorded as goodwill. The goodwill is included in the carrying amount of the
investment and is tested for impairment together with the investment at the end of
each reporting period when there is objective evidence that the investment is
impaired. Any excess of the Group's share of the net fair value of the
identifiable assets and liabilities over the cost of acquisition is recognised
in consolidated profit or loss.
The Group's share of an associate's post-acquisition profits or losses is recognised
in consolidated profit or loss, and its share of the post-acquisition movements in
reserves is recognised in the consolidated reserves. The cumulative post-acquisition
movements are adjusted against the carrying amount of the investment. When the
Group's share of losses in an associate equals or exceeds its interest in the
associate, including any other unsecured receivables, the Group does not recognise
further losses, unless it has incurred obligations or made payments on behalf of
the associate. If the associate subsequently reports profits, the Group resumes
recognising its share of those profits only after its share of the profits equals
the share of losses not recognised. The gain or loss on the disposal of an associate that results in a loss of
significant influence represents the difference between (i) the fair value of
the consideration of the sale plus the fair value of any investment retained in
that associate and (ii) the Group's share of the net assets of that associate plus
any remaining goodwill relating to that associate and any related accumulated
foreign currency translation reserve.
Unrealised profits on transactions between the Group and its associates are
eliminated to the extent of the Group's interests in the associates.
Unrealised losses are also eliminated unless the transaction provides evidence
of an impairment of the asset transferred. Accounting policies of associates
have been changed where necessary to ensure consistency with the policies
adopted by the Group.(e) Joint venture
A joint venture is a contractual arrangement whereby the Group and other parties
undertake an economic activity that is subject to joint control. Joint control
is the contractually agreed sharing of control over the economic activity when
the strategic financial and operating decisions relating to the activity require
the unanimous consent of the parties sharing control (the "venturers").
A jointly controlled entity is a joint venture that involves the establishment
of a separate entity in which each venturer has an interest.
Investments in jointly controlled entities are accounted for in the consolidated
financial statements by the equity method and are initially recognised at cost.
Identifiable assets and liabilities of a jointly controlled entity in an
acquisition are measured at their fair values at the acquisition date. The excess
of the cost of acquisition over the Group's share of the net fair value of the
jointly controlled entity's identifiable assets and liabilities is recorded as
goodwill. The goodwill is included in the carrying amount of the investment and
is tested for impairment together with the investment at the end of each reporting
period when there is objective evidence that the investment is impaired. Any
excess of the Group's share of the net fair value of the identifiable assets and liabilities over the cost of acquisition is recognised in consolidated profit or loss.
The Group's share of the jointly controlled entities' post-acquisition profits
or losses is recognised in consolidated profit or loss, and its share of the
post-acquisition movements in reserves is recognised in the consolidated
reserves. The cumulative post-acquisition movements are adjusted against the
carrying amount of the investments. When the Group's share of losses in the
jointly controlled entities equals or exceeds its interest in the jointly
controlled entities, including any other unsecured receivables, the Group
does not recognise further losses, unless it has incurred obligations or
made payments on behalf of the jointly controlled entities. If the jointly
controlled entities subsequently report profits, the Group resumes
recognising its share of those profits only after its share of the profits
equals the share of losses not recognised.
The gain or loss on the disposal of a jointly controlled entity that results
in a loss of joint control represents the difference between (i) the fair
value of the consideration of the sale plus the fair value of any investment
retained in that jointly controlled entity and (ii) the Group's share of the
net assets of that jointly controlled entity plus any remaining goodwill
relating to that jointly controlled entity and any related accumulated
foreign currency translation reserve.
Unrealised profits on transactions between the Group and its jointly controlled
entities are eliminated to the extent of the Group's interests in the jointly
controlled entities. Unrealised losses are also eliminated unless the transaction
provides evidence of an impairment of the asset transferred. Accounting policies
of jointly controlled entities have been changed where necessary to ensure
consistency with the policies adopted by the Group.
(f) Foreign currency translation (i) Functional and presentation currency Items included in the financial statements of each of the
Group's entities
are measured using the currency of the primary economic
environment in which
the entity operates (the "functional currency"). The
consolidated financial
statements are presented in Renminbi ("RMB"), which is the
Company's functional
and presentation currency, and all values are rounded to the
nearest thousand
("RMB'000"), unless otherwise stated. (ii) Transactions and balances in each entity's financial statements Transactions in foreign currencies are translated into the
functional currency
on initial recognition using the exchange rates prevailing on
the transaction
dates. Monetary assets and liabilities in foreign currencies
are translated
at the exchange rates at the end of each reporting period.
Gains and losses
resulting from this translation policy are recognised in profit
or loss.
Non-monetary items that are measured at fair values in foreign
currencies are
translated using the exchange rates at the dates when the fair
values are
determined. When a gain or loss on a non-monetary item is recognised in
other comprehensive
income, any exchange component of that gain or loss is
recognised in other
comprehensive income. When a gain or loss on a non-monetary
item is recognised
in profit or loss, any exchange component of that gain or loss
is recognised
in profit or loss. (iii) Translation on consolidation The results and financial position of all the Group entities
that have a
functional currency different from the Company's presentation
currency are
translated into the Company's presentation currency as follows: -- Assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position; -- Income and expenses for each statement of comprehensive income are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the
rates prevailing
on the transaction dates, in which case income and expenses
are translated
at the exchange rates on the transaction dates); and -- All resulting exchange differences are recognised in the
foreign currency
translation reserve. On consolidation, exchange differences arising from the
translation of the net
investment in foreign entities and of borrowings are recognised
in the foreign
currency translation reserve. When a foreign operation is sold,
such exchange
differences are recognised in consolidated profit or loss as
part of the gain or
loss on disposal. Goodwill and fair value adjustments arising on the acquisition
of a foreign entity
are treated as assets and liabilities of the foreign entity and
translated at the
closing rate.(g) Property, plant and equipment
Property, plant and equipment, other than construction in progress, are stated
at cost less accumulated depreciation and impairment losses.
Subsequent costs are included in the asset's carrying amount or recognised as
a separate asset, as appropriate, only when it is probable that future economic
benefits associated with the item will flow to the Group and the cost of the
item can be measured reliably. All other repairs and maintenance are recognised
in profit or loss during the period in which they are incurred.
Depreciation of property, plant and equipment is calculated at rates sufficient
to write off their cost less their residual values over the estimated useful lives
on a straight-line basis. The principal useful lives are as follows: Land use rights 10 - 70 years Buildings and structures 8 - 45 years Electricity utility plants 4 - 35 years Transportation facilities 6 - 12 years Others 5 - 22 years
The residual values, useful lives and depreciation method are reviewed and
adjusted, if appropriate, at the end of each reporting period.
Construction in progress represents buildings and structures under construction
and plant and machinery pending installation, and is stated at cost less
impairment losses. Depreciation begins when the relevant assets are available
for use.
The gain or loss on disposal of property, plant and equipment is the difference
between the net sales proceeds and the carrying amount of the relevant asset,
and is recognised in profit or loss.(h) Investment properties
Investment properties are land and/or buildings held to earn rentals and/or for
capital appreciation. An investment property is measured initially at its cost
including all direct costs attributable to the property. After initial recognition, the investment property is stated at cost less
accumulated depreciation and impairment losses. The depreciation is calculated
using the straight line method to allocate the cost to the residual value over
its estimated useful life of 30 years.
The gain or loss on disposal of an investment property is the difference between
the net sales proceeds and the carrying amount of the property, and is recognised in profit or loss.(i) Leases The Group as lessee (i) Operating leases Leases that do not substantially transfer to the Group all the
risks and rewards
of ownership of assets are accounted for as operating leases.
Lease payments (net
of any incentives received from the lessor) are recognised as an
expense on a
straight-line basis over the lease term. (ii) Finance leases Leases that substantially transfer to the Group all the risks
and rewards of
ownership of assets are accounted for as finance leases. At the
commencement of
the lease term, a finance lease is capitalised at the lower of
the fair value
of the leased asset and the present value of the minimum lease
payments, each
determined at the inception of the lease. The corresponding liability to the lessor is included in the
statement of
financial position as finance lease payable. Lease payments are
apportioned between
the finance charge and the reduction of the outstanding
liability. The finance
constant charge is allocated to each period during the lease
term so as to produce a
periodic rate of interest on the remaining balance of the
liability.
Assets under finance leases are depreciated the same as owned
assets.
A sale and leaseback transaction involves the sale of an asset
and the leasing back
of the same asset. The lease payment and the sale price are
usually interdependent
because they are negotiated as a package. If a sale and
leaseback transaction
results in a finance lease, any excess of sales proceeds over
the carrying amount
shall be deferred and amortised over the lease term. The Group as lessor (i) Operating leases
Leases that do not substantially transfer to the lessees all the risks and
rewards of ownership of assets are accounted for as operating leases. Rental
income from operating leases is recognised on a straight-line basis over the
term of the relevant lease. (ii) Finance leases
Leases that substantially transfer to the lessees all the risks and rewards
of ownership of assets are accounted for as finance leases. Amounts due from
lessees under finance leases are recognised as receivables at the amount of
the Group's net investment in the leases. Finance lease income is allocated
to accounting periods so as to reflect a constant periodic rate of return on
the Group's net investment outstanding in respect of the leases.(j) Intangible assets other than goodwill
Intangible assets, other than goodwill, are stated at cost less accumulated
amortisation and impairment losses. Amortisation of intangible assets is
calculated either at rates sufficient to write off their cost over the estimated
useful lives on a straight-line basis or on a systematic and proper method to
reflect the pattern in which the asset's future economic benefits are expected
to be realised by the Group. Mining rights are amortised on the systematic and
proper method while the principal useful lives of other intangible assets are as follows: Resource use rights 10 years Technology know-how 10 years or over the beneficial period upon commencement of commercial production Computer software 2 - 9 years Others 14 months(k) Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is
determined using weighted average method. Costs of inventories include direct
material cost and transportation expenses incurred in bringing them to the working
locations. Net realisable value is the estimated selling price in the ordinary
course of business, less the estimated costs in power generation and selling expenses.(I) Recognition and derecognition of financial instruments
Financial assets and financial liabilities are recognised in the statement
of financial position when the Group becomes a party to the contractual provisions
of the instruments.
Financial assets are derecognised when the contractual rights to receive cash
flows from the assets expire; the Group transfers substantially all the risks
and rewards of ownership of the assets; or the Group neither transfers nor retains
substantially all the risks and rewards of ownership of the assets but has not
retained control on the assets. On derecognition of a financial asset, the
difference between the asset's carrying amount and the sum of the consideration
received and the cumulative gain or loss that had been recognised in other
comprehensive income is recognised in profit or loss.
Financial liabilities are derecognised when the obligation specified in the
relevant contract is discharged, cancelled or expires. The difference between the
carrying amount of the financial liability derecognised and the consideration
paid is recognised in profit or loss.(m) Investments
Investments are recognised and derecognised on a trade date basis where the purchase
or sale of an investment is under a contract whose terms require delivery of the
investment within the timeframe established by the market concerned, and are initially
measured at fair value, plus directly attributable transaction costs except in the
case of financial assets at fair value through profit or loss.
Investments are classified as either financial assets at fair value through profit or
loss or available-for-sale investments. (i) Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss are either
investments
classified as held for trading or designated as at fair value
through profit
or loss upon initial recognition. These investments are
subsequently measured
at fair value. Gains or losses arising from changes in fair
value of these
investments are recognised in profit or loss. (ii) Available-for-sale investments Available-for-sale investments are non-derivative financial
assets not
classified as loans and receivables or financial assets at fair
value through
profit or loss. Available-for-sale investments are subsequently
measured at
fair value. Gains or losses arising from changes in fair value of these investments are recognised in other comprehensive income, until the investments are disposed of or there is objective evidence that
the investments
are impaired, at which time the cumulative gains or losses
previously recognised
in other comprehensive income are recognised in profit or loss.
Interest
calculated using the effective interest method is recognised in
profit or loss.
Impairment losses recognised in profit or loss for equity
investments classified
as available-for-sale investments are not subsequently reversed
through profit
or loss. Impairment losses recognised in profit or loss for debt
instruments
classified as available-for-sale investments are subsequently
reversed and
recognised in profit or loss if an increase in the fair value of
the instruments
can be objectively related to an event occurring after the
recognition of the
impairment loss.(n) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market and are recognised initially
at fair value and subsequently measured at amortised cost using the effective
interest method, less allowance for impairment. Loans and receivables primarily
include short-term entrusted loans, other receivables, accounts and notes receivable
and cash and cash equivalents in the statement of financial position. An allowance
for impairment of loans and receivables is established when there is objective
evidence that the Group will not be able to collect all amounts due according to the
original terms of loans and receivables. The amount of the allowance is the
difference between the loans and receivables' carrying amount and the present value
of estimated future cash flows, discounted at the effective interest rate computed
at initial recognition. The amount of the allowance is recognised in profit or loss.
Impairment losses are reversed in subsequent periods and recognised in profit or loss
when an increase in the loans and receivables' recoverable amount can be related
objectively to an event occurring after the impairment was recognised, subject to the
restriction that the carrying amount of the loans and receivables at the date the
impairment is reversed shall not exceed what the amortised cost would have been had
the impairment not been recognised.
(o) Cash and cash equivalents
For the purpose of the statement of cash flows, cash and cash equivalents represent
cash at bank and on hand, demand deposits with banks and other financial
institutions, and short-term highly liquid investments which are readily
convertible into known amounts of cash and subject to an insignificant risk of
change in value. Bank overdrafts which are repayable on demand and form an integral
part of the Group's cash management are also included as a component of cash and cash
equivalents.(p) Financial liabilities and equity instruments
Financial liabilities and equity instruments are classified according to the
substance of the contractual arrangements entered into and the definitions of a
financial liability and an equity instrument under IFRSs. An equity instrument
is any contract that evidences a residual interest in the assets of the Group
after deducting all of its liabilities. The accounting policies adopted for
specific financial liabilities and equity instruments are set out below.
(q) Borrowings
Borrowings are recognised initially at fair value, net of transaction costs
incurred, and subsequently measured at amortised cost using the effective interest
method.
Borrowings are classified as current liabilities unless the Group has an unconditional
right to defer settlement of the liability for at least 12 months after the reporting
period.(r) Financial guarantee contract liabilities
The Group issues financial guarantee contracts that transfer significant
insurance risk. Financial guarantee contracts are those contracts that require the
issuer to make specified payments to reimburse the holders for losses they incur
because specified debtors fail to make payments when due in accordance with the
original or modified terms of debt instruments.
At the end of each reporting period, liability adequacy tests are performed to
ensure the adequacy of the contract liabilities. In performing these tests,
current best estimates of future contractual cash flows and related administrative
expenses are used. Any deficiency is immediately charged to the profit or loss
by establishing a provision for losses arising from these tests.(s) Accounts payables and accrued liabilities
Accounts payables and accrued liabilities are stated initially at their fair
values and subsequently measured at amortised cost using the effective interest
method unless the effect of discounting would be immaterial, in which case they
are stated at cost.(t) Equity instruments
Equity instruments issued by the Company are recorded at the proceeds
received, net of direct issue costs.
(u) Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable
and is recognised when it is probable that the economic benefits will flow to the
Group and the amount of revenue can be measured reliably. Revenue is shown net of
value-added tax, returns, rebates and discounts.
Revenue from sales of electricity and heat represents the amount of tariffs billed
for electricity and heat generated and transmitted to the respective power
companies and heat supply companies.
Revenue associated with sales of coal and other goods is recognised when the title
to the goods has been passed to customers, which is the date when the goods are
either picked up at site or free on board, or delivered to the designated locations
and accepted by the customers.
Interest income is recognised on a time-proportion basis using the effective
interest method.
Dividend income is recognised when the shareholders' rights to receive payment
are established.(v) Employee benefits (i) Pension and other social obligations The Group contributes to defined contribution schemes including
pension and/or
other social benefits in accordance with the local conditions
and practices in
the municipalities and provinces in which it operates.
Contributions to the
schemes by the Group and employees are calculated as a
percentage of employees'
basic salaries. The scheme cost charged to profit or loss
represents
contributions payable by the Group to the funds. (ii) Staff housing benefits The Company provides housing to its employees at preferential
prices. The
difference between the selling price and the cost of housing is
considered a
housing benefit to the employees and is recorded as deferred
housing benefits
which are amortised on a straight-line basis over the estimated
remaining average
service lives of the relevant employees and included in
salaries and staff
welfare expenses. During 2005 to 2007, the Company and some of its subsidiaries
also started
to provide monetary housing subsidies to their employees. These
subsidies are
considered housing benefits and are recorded as deferred
housing benefits which
are amortised on a straight-line basis over the estimated
remaining average
service lives of the relevant employees and included in
salaries and staff
welfare expenses. In addition, the Group also contributes to the state-prescribed
housing fund.
Such costs are charged to the profit or loss as incurred. (iii) Termination benefits Termination benefits are recognised when, and only when, the
Group demonstrably
commits itself to terminate employment or to provide benefits
as a result of
voluntary redundancy by having a detailed formal plan which is
without realistic
possibility of withdrawal.(w) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production
of qualifying assets, which are assets that necessarily take a substantial period of
time to get ready for their intended use or sale, are capitalised as part of the cost
of those assets, until such time as the assets are substantially ready for their
intended use or sale. Investment income earned on the temporary investment of specific
borrowings pending their expenditure on qualifying assets is deducted from the borrowing
costs eligible for capitalisation.
To the extent that funds are borrowed generally and used for the purpose of obtaining
a qualifying asset, the amount of borrowing costs eligible for capitalisation is
determined by applying a capitalisation rate to the expenditures on that asset. The
capitalisation rate is the weighted average of the borrowing costs applicable to the
borrowings of the Group that are outstanding during the period, other than borrowings
made specifically for the purpose of obtaining a qualifying asset.
All other borrowing costs are recognised in profit or loss in the period in which they
are incurred.(x) Government grants
A government grant is recognised when there is reasonable assurance that the Group
will comply with the conditions attaching to it and that the grant will be received.
Government grants relating to income are deferred and recognised in profit or
loss over the period to match them with the costs they are intended to compensate.
Government grants that become receivable as compensation for expenses or losses
already incurred or for the purpose of giving immediate financial support to the
Group with no future related costs are recognised in profit or loss in the period
in which they become receivable.(y) Taxation Income tax represents the sum of the current tax and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit
differs from profit recognised in profit or loss because it excludes items of income
or expense that are taxable or deductible in other years and it further excludes
items that are never taxable or deductible. The Group's liability for current tax
is calculated using tax rates that have been enacted or substantively enacted by the
end of the reporting period.
Deferred tax is recognised on differences between the carrying amounts of assets and
liabilities in the financial statements and the corresponding tax bases used in the
computation of taxable profit. Deferred tax liabilities are generally recognised for
all taxable temporary differences and deferred tax assets are recognised to the extent
that it is probable that taxable profits will be available against which deductible
temporary differences, unused tax losses or unused tax credits can be utilised. Such
assets and liabilities are not recognised if the temporary difference arises from
goodwill or from the initial recognition (other than in a business combination) of
other assets and liabilities in a transaction that affects neither the taxable profit
nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising
on investments in subsidiaries, associates and joint controlled entities, except where
the Group is able to control the reversal of the temporary difference and it is probable
that the temporary difference will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of each reporting
period and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period
when the liability is settled or the asset is realised, based on tax rates that have
been enacted or substantively enacted by the end of the reporting period. Deferred tax
is recognised in profit or loss, except when it relates to items recognised in other
comprehensive income or directly in equity, in which case the deferred tax is also
recognised in other comprehensive income or directly in equity.
Deferred tax assets and liabilities are offset when there is a legally enforceable
right to set off current tax assets against current tax liabilities and when they
relate to income taxes levied by the same taxation authority and the Group intends
to settle its current tax assets and liabilities on a net basis.
(z) Value-added tax ("VAT")
Revenue from sales of electricity and heat and revenue associated with sales
of coal and other goods are subjected to VAT in the PRC. VAT payables are determined
by applying 17% or 13% or 6% on the taxable revenue after offsetting deductible input
VAT of the period.(aa) Related parties A related party is a person or entity that is related to the Group.
(A) A person or a close member of that person's family is related to the Group
if that person: (i) has control or joint control over the Group; (ii) has significant influence over the Group; or (iii) is a member of the key management personnel of the Company or of a parent of the Company. (B) An entity is related to the Group (reporting entity) if any of the following conditions applies: (i) The entity and the Company are members of the same group (which means that each parent, subsidiary and fellow subsidiary is related to the others). (ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member). (iii) Both entities are joint ventures of the same third party.
(iv) One entity is a joint venture of a third entity and the other entity is
an associate of the third entity. (v) The entity is a post-employment benefit plan for the benefit of employees of either the Group or an entity related to
the Group.
If the Group is itself such a plan, the sponsoring
employers are also
related to the Group. (vi) The entity is controlled or jointly controlled by a person identified in (A). (vii) A person identified in (A)(i) has significant influence over the entity or is a member of the key management personnel of the entity (or of a parent of the entity).
Government-related entities, other than entities under China Datang which
is a state-owned enterprise and its subsidiaries, directly or indirectly
controlled by the Central People's Government of the PRC ("Government-Related
Entities") are also regarded as related parties of the Group.
For the purpose of the related party transactions disclosure, the Group has
established procedures for determination, to the extent possible, of the
identification of the ownership structure of its customers and suppliers as to
whether they are Government-Related Entities to ensure the adequacy of disclosure
for all material related party transactions given that many Government-Related
Entities have multi-layered corporate structures and the ownership structures
change over time as a result of transfers and privatisation programs.
(ab) Impairment of assets
At the end of each reporting period, the Group reviews the carrying amounts of its
tangible and intangible assets except goodwill, deferred tax assets, investments,
inventories and receivables to determine whether there is any indication that those
assets have suffered an impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent of any impairment
loss. Where it is not possible to estimate the recoverable amount of an individual
asset, the Group estimates the recoverable amount of the cash-generating unit to
which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use.
In assessing value in use, the estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects current market assessments
of the time value of money and the risks specific to the asset.
If the recoverable amount of an asset or cash-generating unit is estimated to be less
than its carrying amount, the carrying amount of the asset or cash-generating unit is
reduced to its recoverable amount. An impairment loss is recognised immediately in
profit or loss, unless the relevant asset is carried at a revalued amount, in which
case the impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset or
cash-generating unit is increased to the revised estimate of its recoverable amount,
but so that the increased carrying amount does not exceed the carrying amount that
would have been determined (net of amortisation or depreciation) had no impairment
loss been recognised for the asset or cash-generating unit in prior years. A reversal
of an impairment loss is recognised immediately in profit or loss, unless the relevant
asset is carried at a revalued amount, in which case the reversal of the impairment
loss is treated as a revaluation increase.(ac) Provisions and contingent liabilities
Provisions are recognised for liabilities of uncertain timing or amount when the
Group has a present legal or constructive obligation arising as a result of a past
event, it is probable that an outflow of economic benefits will be required to
settle the obligation and a reliable estimate can be made. Where the time value
of money is material, provisions are stated at the present value of the expenditures
expected to settle the obligation.
Where it is not probable that an outflow of economic benefits will be required,
or the amount cannot be estimated reliably, the obligation is disclosed as a
contingent liability, unless the probability of outflow is remote. Possible
obligations, whose existence will only be confirmed by the occurrence or
non-occurrence of one or more future events are also disclosed as contingent
liabilities unless the probability of outflow is remote.
(ad) Events after the reporting period
Events after the reporting period that provide additional information about the
Group's position at the end of the reporting period or those that indicate the going
concern assumption is not appropriate are adjusting events and are reflected in the
financial statements. Events after the reporting period that are not adjusting events
are disclosed in the notes to the financial statements when material.
4. CRITICAL JUDGEMENT AND KEY ESTIMATES
Critical judgement in applying accounting policies
In the process of applying the accounting policies, the directors have made the following judgement that has the most significant effect on the amounts recognised in the financial statements (apart from those involving estimations, which are dealt with below).
Going concern basis
These financial statements have been prepared on a going concern basis, the validity of which depends upon the availability of funding from various sources to enable the Group to operate as a going concern and meet its liabilities as they fall due. Details are explained in note 3 to financial statements.
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below.
(a) Depreciation of property, plant and equipment
The Group determines the estimated useful lives, residual values and related
depreciation charges for its property, plant and equipment. This estimate is
based on the projected wear and tear incurred during power generation. This
could change significantly as a result of technical renovations on power
generators. The Group will revise the depreciation charge where useful lives
and residual values are different to those previously estimated, or it will
write-off or write-down technically obsolete or non-strategic assets that have
been abandoned or sold.
(b) Impairment of property, plant and equipment
The Group tests annually whether property, plant and equipment have suffered any
impairment in accordance with the accounting policy stated in note 3 (ab) to the
financial statements. An impairment loss is recognised when the carrying amount
of property, plant and equipment exceeds their recoverable amount which has been
determined based on value in use calculations. These calculations require the use
of estimates such as electricity and heat tariffs and fuel prices. Changes of
assumptions in electricity and heat tariffs and fuel prices could affect the
result of property, plant and equipment impairment assessment.
(c) Approval of construction in new power plants
The Group has not received relevant government approvals from the National
Development and Reform Commission (the "NDRC") for its certain power plant
construction projects. The ultimate approval from the NDRC on these projects
is a critical estimate and judgement of the directors. Such an estimate and
judgement are based on initial approval documents received as well as their
understanding of the projects. Based on historical experience, the directors
believe that the Group will receive final approval from the NDRC on the related
power plant projects. Deviation from this estimate and judgement could result
in material adjustments to the carrying amount of property, plant and equipment.
(d) Impairment of goodwill
Determining whether goodwill is impaired requires an estimation of the value in
use of the cash-generating unit to which goodwill has been allocated. The value
in use calculation requires the Group to estimate the future cash flows expected
to arise from the cash-generating unit and a suitable discount rate in order to
calculate the present value, of which details are provided in note 18 to financial
statements.(e) Deferred tax assets
The estimates of deferred tax assets require estimates over future taxable profit
and corresponding applicable income tax rates of respective years. The change in
future income tax rates and timing would affect income tax expense or credit, as
well as deferred tax balance. The realisation of deferred tax assets also depends
on the realisation of sufficient future taxable profits of the Group. Deviation of
future profitability from the estimate could result in material adjustments to the
carrying amount of deferred tax assets.
(f) Income taxes
The Group is subject to income taxes in various regions. Significant estimates are
required in determining the provision for income taxes. There are many transactions
and calculations for which the ultimate tax determination is uncertain during the
ordinary course of business, overall assets transfers and corporate restructuring.
Where the final tax outcome of these matters is different from the amounts that
were initially recorded, such differences will impact the income tax and deferred
tax provisions in the period in which such determination is made.
5. FINANCIAL RISK MANAGEMENT
The Group's activities expose it to a variety of financial risks: foreign currency risk, price risk, credit risk, liquidity risk and interest rate risk. The Group's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance.
(a) Foreign currency risk
Foreign currency risk of the Group primarily arises from certain loans denominated in
Hong Kong dollar ("HKD"), United States dollar ("USD") and Euro dollar ("EUR"). The
Group currently does not have a foreign currency hedging policy in respect of foreign
currency debts. The Group maintains a close look at the international foreign
currency market on the changing exchange rates and takes these into consideration
when raising foreign currency loans and investing in foreign currency deposits.
At 31 December 2011, if RMB had weakened by 5 per cent (2010: 5 per cent) against
HKD, USD or EUR with all other variables held constant, consolidated profit after
tax for the year would have been RMB69,982 thousand (2010: RMB67,134 thousand)
lower, arising as a result of the foreign exchange loss on HKD, USD and EUR loans
and deposits. If RMB had strengthened by 5 per cent (2010: 5 per cent) against
HKD, USD or EUR with all other variables held constant, consolidated profit after
tax for the year would have been RMB69,982 thousand (2010: RMB67,134 thousand)
higher, arising as a result of the foreign exchange gain on HKD, USD and EUR
loans and deposits.(b) Price risk
The Group's certain available-for-sale investments amounted to RMB67,531
thousand (2010: RMB91,043 thousand) as disclosed in note 21 to the financial
statements are measured at fair value at the end of each reporting period.
Therefore, the Group is exposed to equity security price risk. Since the amounts
of such investments are insignificant to the Group, the directors of the Company
are of opinion that the Group is not exposed to any significant equity security
price risk as at 31 December 2011 and 2010. The Group closely monitors the pricing
trends in the open market in determining their long-term strategic stakeholding
decisions.(c) Credit risk
The carrying amount of the bank deposits, accounts receivables, other receivables
and short-term entrusted loans included in the statement of financial position
represents the Group's maximum exposure to credit risk in relation to the Group's
financial assets.
The Group maintains most of its bank deposits in several major government-related
financial institutions in the PRC and a non-bank financial institution
which is
a related party of the Group. With strong State support provided to those
government-related financial institutions and the holding of directorship in the
board of the related party non-bank financial institution, the directors are of the
opinion that there is no significant credit risk on such assets being exposed.
With regard to accounts receivables arising from power sales, most of the power
plants of the Group sell electricity to their sole customers, the power grid
companies of their respective provinces or regions where the power plants operate.
These power plants of the Group communicate with their individual grid companies
periodically and believe that adequate allowance for doubtful accounts has been
made in the financial statements. For accounts receivables arising from coal and
chemical product sales, the Group assesses the credit quality of the customers,
taking into account their financial positions, past experience and other factors.
It will also collect advanced payments from their customers. The Group performs
periodic credit evaluations of its customers and believes that adequate allowance
for doubtful debts has been made in the financial statements. The Group does not
hold any collateral as security for all the receivables.
At 31 December 2011, accounts and notes receivables due from the top five debtors
amounted to RMB5,010,677 thousand (2010: RMB4,604,734 thousand), representing
49.08% (2010: 56.44%) of the total accounts and notes receivables. Except for
accounts and notes receivables, the Group has no significant concentrations of
credit risk.
Other receivables primarily include amounts due from related parties while all
short-term entrusted loans are lent to a jointly controlled entity. The Group assesses
the credibility of the related parties by reviewing their operating results and
gearing ratios periodically.
(d) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and cash
equivalents, the availability of funding from an adequate amount of committed
credit facilities and the ability to close out market positions. Due to the dynamic
nature of the underlying businesses, the Group aims to maintain flexibility in funding
by maintaining availability under committed credit facilities.
The Group monitors the cash flow rolling forecasts of the Group's undrawn borrowing
facility and cash and cash equivalents available as at each month end in meeting
its liabilities.
The maturity analysis of the Group's financial liabilities is as follows:
_______________________________________________________________________________
Between Between Less than 1 and 2 and 1 year 2 years 5 years Over 5 years RMB'000 RMB'000 RMB'000 RMB'000
_______________________________________________________________________________
At 31 December 2011 Long-term loans 15,202,156 12,873,116 35,211,628 69,569,612 Long-term bonds - - 3,000,000 6,000,000 Finance lease payables 695,443 914,261 2,844,305 3,513,856
Other non-current liabilities, excluding finance lease payables 82,774 9,000 - - Accounts payables and accrued liabilities 23,940,013 - - - Short-term loans 21,523,709 - - -
Interest payables for loans 9,212,198 7,160,909 16,887,477 45,611,358
Interest payables for bonds 439,500 439,500 1,045,500 1,237,500
_______________________________________________________________________________
At 31 December 2010 Long-term loans 14,470,442 19,198,585 31,355,750 59,031,042 Long-term bonds - - 3,000,000 3.000,000 Finance lease payables 536,556 544,434 2,102,055 2,535,871
Other non-current liabilities, excluding finance lease payables 76,468 24,987 9,000 - Accounts payables and accrued liabilities 18,930,066 - - - Short-term loans 19,374,828 - - -
Interest payables for loans 6,772,063 5,174,062 14,162,498 16,722,868
Interest payables for bonds 282,000 282,000 555,000 750,000
_______________________________________________________________________________
(e) Interest rate risk
As the Group has no significant interest-bearing assets except for bank deposits, the
Group's operating cash flows are substantially independent of changes in market interest
rates.
Most of the bank deposits are maintained in the savings and fixed deposits accounts in the
PRC. The interest rates are regulated by the People's Bank of China while the Group closely
monitors the fluctuation on such rates periodically. As the average interest rates applied
to the deposits are relatively low, the directors are of the opinion that the Group is not
exposed to any significant interest rate risk for these assets held as at 31 December 2011
and 2010.
The Group's exposure to interest rate risk arises from its loans. Certain loans bear
interests at variable rates varied with the then prevailing market condition, thus
exposing the Group to cash flow interest rate risk. The Group analyses interest rate
exposures on a dynamic basis. Various scenarios are simulated taking into consideration
refinancing, renewal of existing positions and alternative financing.
At 31 December 2011, if interest rates on RMB, HKD and USD denominated loans had been 50
basis points (2010: 50 basis points) lower respectively with all other variables held
constant, consolidated profit after tax for the year would have been RMB526,324 thousand
(2010: RMB503,604 thousand), RMB2,110 thousand (2010: RMB2,311 thousand) and RMB5,887
thousand (2010: RMB4,275 thousand) higher, respectively, arising as a result of a decrease
in interest expense on the loans. If interest rates on RMB, HKD and USD denominated loans
had been 50 basis points (2010: 50 basis points) higher respectively with all other
variables held constant, consolidated profit after tax for the year would have been
RMB526,324 thousand (2010: RMB503,604 thousand), RMB2,110 thousand (2010: RMB2,311 thousand)
and RMB5,887 thousand (2010: RMB4,275 thousand) lower, respectively, arising as a result of
an increase in interest expense on the loans.
(f) Categories of financial instruments at 31 December 2011
______________________________________________________________________ 2011 2010 RMB'000 RMB'000 ______________________________________________________________________ Financial assets: Loans and receivables (including cash and cash equivalents) 15,827,117 12,337,868 Available-for-sale investments 2,710,073 2,304,158 Financial liabilities: Financial liabilities at amortised cost 195,062,421 172,374,990 ______________________________________________________________________
(g) Fair values
Except as disclosed in notes 21, 31 and 32 to the financial statements, the carrying amounts
of the Group's financial assets and financial liabilities as reflected in the consolidated
statement of financial position approximate their respective fair values.
The following disclosures of fair value measurements use a fair value hierarchy
which has 3 levels:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included within Level 1 that are observable for
the asset or liability, either directly (i.e. as prices) or
indirectly
(i.e. derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market
data (unobservable inputs). Disclosures of level in fair value hierarchy at 31 December 2011: ______________________________________________________________________ Description Fair value measurement using Level 1: ______________________________________________________________________ 2011 2010 RMB'000 RMB'000 ______________________________________________________________________ Available-for-sale investments Equity securities 67,531 91,043 ______________________________________________________________________
6. OPERATING REVENUE
The Group's operating revenue which primarily represents sales of electricity,
heat, coal and chemical products is as follows: ______________________________________________________________________ 2011 2010 RMB'000 RMB'000 ______________________________________________________________________ Sales of electricity 64,367,360 53,593,750 Heat supply 719,013 539,680 Sales of coal 2,937,638 2,823,291 Sales of chemical products 3,070,651 2,692,513 Others 1,287,203 1,023,141 ______________________________________________________________________ 72,381,865 60,672,375 ______________________________________________________________________
7. OTHER GAINS
______________________________________________________________________ 2011 2010 RMB'000 RMB'000 ______________________________________________________________________ Gain on disposal of a subsidiary 58,239 - Gain on disposals of associates - 93,811 Gain on disposals of available-for-sale investments 325 8,212 Others - 354 ______________________________________________________________________ 58,564 102,377 ______________________________________________________________________
8. SEGMENT INFORMATION
Executive directors and certain senior management (including chief accountant) of the
Company (collectively referred to as the "Senior Management") perform the function as
chief operating decision makers. 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 primarily include sales of properties and cement products and
sales of coal ash, 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 China Accounting Standards for Business Enterprises
("PRC GAAP").
The accounting policies of the operating segments are the same as those described in note
3 to the financial statements. Segment profits or losses do not include dividend income
from available-for-sale investments and gain on disposals of available-for-sale investments.
Segment assets exclude deferred tax assets and available-for-sale investments. Segment
liabilities exclude the current tax liabilities and deferred 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 PRC GAAP.
Information about reportable segment profit or loss, assets and liabilities:
________________________________________________________________________________________
Power generation Coal Chemical Other segment segment segment segments Total RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
________________________________________________________________________________________
Year ended 31 December 2011
Revenue from external customers 65,275,284 2,986,809 3,100,132 1,019,640 72,381,865 Intersegment revenue 425,307 23,512,906 4,500 156,728 24,099,441
________________________________________________________________________________________
Segment profit 1,329,805 1,658,588 471,600
197,314 3,657,307
________________________________________________________________________________________
Depreciation and amortisation 8,425,131 56,425 71,490 98,129 8,651,175
Gain/(loss) on disposals of property, plant and equipment 13,004 - 14 (3) 13,015 Loss on disposal of intangible assets - - -
(419) (419)
Gain on disposals of long-term
investments 58,239 - - - 58,239 Interest income 97,324 4,558 4,695 3,243 109,820 Interest expense 6,594,829 315,227 48,755 119,409 7,078,220
Share of profits of associates 2,396 663,761 - 202,760 868,917
Shares of (losses)/profits of
jointly controlled entities (9,076) 57,190 -
- 48,114
Income tax expense 346,797 248,745 49,909
20,356 665,807
________________________________________________________________________________________
Year ended 31 December 2010
Revenue from external customers 54,122,551 2,825,178 2,712,214 1,012,432 60,672,375
Intersegment revenue 74,030 21,770,917 -
95,186 21,940,133
________________________________________________________________________________________
Segment profit 3,314,713 841,185 331,707
141,885 4,629,490
________________________________________________________________________________________
Depreciation and amortisation 7,036,509 189,173 101,466 102,770 7,429,918
Net gain on disposals of
property, plant and equipment 47,810 - 27 10,084 57,921
Gain on disposals of investment
properties - - -
26,813 26,813
Gain on disposals of long-term
investments 11 - - 93,800 93,811 Interest income 29,211 1,347 1,670 5,987 38,215 Interest expense 4,800,594 238,386 37,986 126,053 5,203,019
Share of profits of associates 7,653 474,427 - 109,179 591,259
Shares of losses of jointly
controlled entities (14,384) (2,657) - - (17,041) Income tax expense 715,456 87,872 83,219 57,906 944,453
________________________________________________________________________________________
__________________________________________________________________________________________
Power generation Coal Chemical Other segment segment segment segments Total RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
__________________________________________________________________________________________
At 31 December 2011 Segment assets Including: 173,575,788 22,574,026 49,088,856 11,223,724 256,462,394 Investments in associates 505,662 1,927,786 - 2,817,723 5,251,171 Investments in jointly controlled entities 2,506,286 942,342 - - 3,448,628 Additions to non-current assets (other than financial assets and deferred tax assets) 14,882,988 2,485,568 17,125,982
140,152 34,634,690
__________________________________________________________________________________________
Segment liabilities 148,527,057 15,622,773 37,287,079
3,440,531 204,877,440
__________________________________________________________________________________________
At 31 December 2010 Segment assets Including: 152,509,810 16,058,293 39,345,040 10,625,419 218,538,562 Investments in associates 490,467 1,682,565 - 2,447,088 4,620,120 Investments in jointly controlled entities 1,693,442 845,959 - - 2,539,401 Additions to non-current assets (other than financial assets and deferred tax assets) 22,657,532 1,191,307 10,084,264
148,405 34,081,508
__________________________________________________________________________________________
Segment liabilities 134,105,377 10,067,614 29,220,166
3,473,751 176,866,908
__________________________________________________________________________________________
Reconciliations of reportable segment revenue, profit or loss, assets, liabilities and
other material items:
____________________________________________________________________________
2011 2010 RMB'000 RMB'000
____________________________________________________________________________
Revenue
Total revenue of reportable segments 96,481,306 82,612,508
Elimination of intersegment revenue (24,099,441) (21,940,133)
____________________________________________________________________________
Consolidated revenue 72,381,865
60,672,375
____________________________________________________________________________
Profit or loss
Total profit or loss of reportable segments 3,657,307 4,629,490
Gain on disposals of available-for-sale
investments 5
8,212
Dividend income from available-for-sale investments 4,940 40 Elimination of intersegment profits (9,463)
(13,861)
IFRS adjustment on reversal of general
provision on mining funds 86,837 107,273 Other IFRS adjustments (29,691) (30,854)
____________________________________________________________________________
Consolidated profit before tax 3,709,935
4,700,300
____________________________________________________________________________
Assets
Total assets of reportable segments 256,462,394 218,538,562 Deferred tax assets 1,425,210 944,269 Available-for-sale investments 67,531
91,043
Elimination of intersegment assets (13,885,059) (8,818,003)
Reclassification of non-income taxes
recoverable 3,426,857
2,022,816
IFRS adjustment on reversal of general
provision on mining funds 175,734 82,095 Other IFRS adjustments 24,522 54,553
____________________________________________________________________________
Consolidated total assets 247,697,189
212,915,335
____________________________________________________________________________
Liabilities
Total liabilities of reportable segments (204,877,440) (176,866,908) Current tax liabilities (318,588) (339,967) Deferred tax liabilities (556,624) (414,377)
Elimination of intersegment liabilities 12,243,238 5,186,413
Reclassification of non-income taxes
recoverable (3,426,857) (2,022,816) Other IFRS adjustments (28,864) (24,849)
____________________________________________________________________________
Consolidated total liabilities (196,965,135)
(174,482,504)
____________________________________________________________________________
Other material items
______________________________________________________________________________________________
Total per consolidated IFRS statement of adjustment financial on reversal position/ Total of of general statement of reportable Elimination of provision on Other IFRS comprehensive segments intersegment mining funds adjustments income RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
______________________________________________________________________________________________
Year ended 31 December 2011 Share of profits of associates 868,917 - 77,053 - 945,970 Shares of profits of jointly controlled entities 48,114 - 46,115 - 94,229 Income tax expense 665,807 (2,377) 7,601 (3,245) 667,786
______________________________________________________________________________________________
Year ended 31 December 2010 Share of profits of associates 591,259 - 126,972 - 718,231 Shares of (losses)/profits of jointly controlled entities (17,041) - 18,145 - 1,104 Income tax expense 944,453 (60,294) (9,389) (3,415) 871,355
______________________________________________________________________________________________
At 31 December 2011 Investments in associates 5,251,171 - 37,995 - 5,289,166 Investments in jointly controlled entities 3,448,628 - 137,239 - 3,585,867
______________________________________________________________________________________________
At 31 December 2010 Investments in associates 4,620,120 - (28,282) - 4,591,838 Investments in jointly controlled entities 2,539,401 - 110,377 - 2,649,778
______________________________________________________________________________________________
Geographical information (under IFRS):
During the years ended 31 December 2011 and 2010, all revenues from external customers are
generated domestically. At 31 December 2011, non-current assets (excluding financial assets
and deferred tax assets) amounted to RMB213,318,898 thousand (2010: RMB189,360,741 thousand)
and RMB44,904 thousand (2010: RMB47,444 thousand) are located in the PRC and foreign
countries, respectively.
In presenting the geographical information, revenue is based on the locations of the
customers. Revenue from major customers: ______________________________________________________________________ 2011 2010 RMB'000 RMB'000 ______________________________________________________________________ Power generation segment North China Grid Company Limited 19,658,707 17,948,672 Guangdong Power Grid Corporation 8,298,202 4,822,035 State Grid Corporation of China 6,029,222 5,495,123 ______________________________________________________________________
9. FINANCE COSTS
______________________________________________________________________ 2011 2010 RMB'000 RMB'000 ______________________________________________________________________ Interest expense on: Short-term bank loans 885,719 844,812 Other short-term loans 210,303 194,894 Short-term entrusted loans - 361 Long-term bank loans - Wholly repayable within five years 1,523,851 1,376,004 - Not wholly repayable within five years 5,822,812 4,283,599 Other long-term loans - Wholly repayable within five years 174,387 211,696 - Not wholly repayable within five years 89,290 24,674 Short-term bonds 13,975 - Long-term bonds 394,993 283,474 Finance leases 354,683 190,243 Acquisitions of property, plant and equipment by instalments 1,650 3,354 Discounted notes receivables 52,173 50,092 Others 23,504 - ______________________________________________________________________ Total borrowing costs 9,547,340 7,463,203 Amount capitalised (2,469,120) (2,083,847) ______________________________________________________________________ 7,078,220 5,379,356 Exchange gain, net (38,107) (28,069) Others 61,889 22,050 ______________________________________________________________________ 7,102,002 5,373,337 ______________________________________________________________________ Borrowing costs on funds borrowed generally are capitalised at a rate of 6.06% (2010: 5.33%) per annum.
10. INCOME TAX EXPENSE
______________________________________________________________________ 2011 2010 RMB'000 RMB'000 ______________________________________________________________________ Current tax - PRC Enterprise Income Tax Provision for the year 1,193,292 1,125,789 Under/(over)-provision in prior years 9,826 (833) ______________________________________________________________________ 1,203,118 1,124,956 ______________________________________________________________________ Deferred tax (note 34) (535,332) (253,601) ______________________________________________________________________ 667,786 871,355 ______________________________________________________________________
The Company and its subsidiaries, other than as stated below, are generally subject to
PRC Enterprise Income Tax statutory rate of 25% (2010: 25%).
(i) As newly set up domestic invested enterprises engaged in power generation in the
western area of the PRC, certain subsidiaries are exempted from PRC Enterprise Income
Tax during the first and second years of operation and have been granted a tax
concession to pay PRC Enterprise Income Tax at 50% of the preferential rate of 15%
from the third to fifth year of operation. This preferential income tax treatment will
expire from 31 December 2010 to 31 December 2012.
(ii) Pursuant to document Cai Shui Zi [2006]88 issued by the Ministry of Finance of the
PRC (the "MOF"), a subsidiary of the Company, being a high and new technology industrial
development enterprise set up in the high and new technology industrial development
zone approved by the State Council, and as approved by Tax Bureau of Beijing Fengtai
District, is exempted from PRC Enterprise Income Tax in the first two operating years
and then applies 15% being the preferential rate from the third year, counting from the
first year when this subsidiary starts to make profit.
(iii) As a newly set up foreign invested enterprise engaged in power generation in the western
area of the PRC approved by the local tax authority, a subsidiary of the Company is
exempted from PRC Enterprise Income Tax during the first and second years of operation
and has been granted a tax concession to pay PRC Enterprise Income Tax at 50% of the
preferential rate of 15% from the third to fifth year of operation since the year 2008.
(iv) Pursuant to documents Cai Shui [2008]46 and [2008]116 issued by the MOF, certain
subsidiaries are exempted from PRC Enterprise Income Tax during the first three years
of operation commencing from the year of assessment in which the first sale transaction
is reported and have been granted a tax concession to pay PRC Enterprise Income Tax at
50% of the statutory rate of 25% from the fourth to sixth year of operation in respect
of their operating profit derived from investments in new wind power generation
projects approved by government investment task forces after 1 January 2008. This
preferential tax treatment will expire after 31 December 2014.
(v) Pursuant to document Cai Shui [2011]58 "Further Implementing the Western China
Development Strategy" issued by the MOF, the General Administration of Customs and
the State Administration of Taxation of the PRC, certain subsidiaries set up in the
western area of the PRC and engaged in a business encouraged by the State are eligible
to pay PRC Enterprise Income Tax at a preferential rate of 15% from 1 January 2011 to
31 December 2020.
The reconciliation between the income tax expense and the product of profit before tax
multiplied by the PRC Enterprise Income Tax rate is as follows: ______________________________________________________________________ 2011 2010 RMB'000 RMB'000 ______________________________________________________________________ Profit before tax 3,709,935 4,700,300 Tax at the domestic income tax rate of 25% (2010: 25%) 927,484 1,175,075 Tax effect of income that is not taxable (331,779) (137,611) Tax effect of expenses that are not deductible 34,554 24,769 Tax effect of utilisation of tax losses not previously recognised (4,189) (5,078) Tax effect of temporary differences not recognised 269,839 155,186 Reversal of tax losses previously recognised 33,359 - Under/(over)-provision in prior years 9,826 (833) Tax effect of tax concession (264,995) (350,486) Others (6,313) 10,333 ______________________________________________________________________ Income tax expense 667,786 871,355 ______________________________________________________________________
11. PROFIT FOR THE YEAR
The Group's profit for the year is stated after charging/(crediting) the following:
______________________________________________________________________ 2011 2010 RMB'000 RMB'000 ______________________________________________________________________ Auditors' remuneration 13,780 11,800 Acquisition-related costs (included in operating costs) 100 7,860 Amortisation of deferred income (33,760) (48,238) Amortisation of intangible assets (included in operating costs) 18,335 23,409 Cost of major inventories sold and consumed - Fuel 44,484,343 34,837,477 - Spare parts and consumable supplies 494,000 589,106 Rental income generated from investment properties (15,714) (9,260) Dividend income from available-for-sale investments - Listed investments (4,985) (450) - Unlisted investments (37,369) (8,877) Net gains on disposals of property, plant and equipment (13,015) (58,867) Gain on disposals of investment properties - (26,813) Reversal of allowance for accounts receivables (70) (130) Reversal of allowance for other receivables (88) (41,685) Reversal of allowance for inventories (97) - Staff costs excluding directors' and supervisors' emoluments - Salaries and welfares 1,646,675 1,416,413 - Retirement benefits 265,339 229,138 - Housing benefits 185,137 168,102 - Other costs 270,322 234,135 ______________________________________________________________________
12. DIRECTORS', SUPERVISORS' AND EMPLOYEES' EMOLUMENTS
The emoluments of each director and supervisor were as follows:
________________________________________________________________________________________
Basic salaries and Retirement Other Fee allowances Bonus benefits benefits Total RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
________________________________________________________________________________________
Name of director Liu Shunda - - - - - - Cao Jingshan - 200 358 39 34 631 Hu Shengmu - - - - - - Fang Qinghai - - - - - - Zhou Gang - 179 350 31 34 594 Liu Haixia - - - - - - Guan Tiangang - - - - - - Su Tiegang - - - - - - Ye Yonghui - - - - - - Li Gengsheng - - - - - - Li Hengyuan 75 - - - - 75 Li Yanmeng 75 - - - - 75 Zhao Zunlian 75 - - - - 75 Zhao Jie 75 - - - - 75 Jiang Guohua 75 - - - - 75
________________________________________________________________________________________
375 379 708 70
68 1,600
________________________________________________________________________________________
Name of supervisor Fu Guoqiang (i) - - - - - - Qiao Xinyi - 187 327 36 34 584 Zhang Xiaoxu - - - - - - Guan Zhenquan - 167 255 21 29 472 Zhou Xinnong (ii) - - - - - -
________________________________________________________________________________________
- 354 582 57
63 1,056
________________________________________________________________________________________
Total for 2011 375 733 1,290 127
131 2,656
________________________________________________________________________________________
Notes: (i) Retired on 6 December 2011 (ii) Appointed on 6 December 2011
_______________________________________________________________________________
Basic salaries and Retirement Other Fees allowances Bonus benefits benefits Total RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
_______________________________________________________________________________
Name of director Zhai Ruoyu (i) - - - - - - Liu Shunda - - - - - - Cao Jingshan - 176 430 44 17 667 Hu Shengmu - - - - - - Fang Qinghai - - - - - - Zhou Gang - 175 319 41 17 552 Liu Haixia - - - - - - Guan Tiangang - - - - - - Su Tiegang - - - - - - Ye Yonghui - - - - - - Li Gengsheng - - - - - - Xie Songlin (i) - - - - - - Yu Changchun (i) - - - - - - Liu Chaoan (i) - - - - - - Li Hengyuan 75 - - - - 75 Xia Qing (i) - - - - - - Li Yanmeng 75 - - - - 75 Zhao Zunlian 75 - - - - 75 Zhao Jie 75 - - - - 75 Jiang Guohua 75 - - - - 75
_______________________________________________________________________________
375 351 749 85 34
1,594
_______________________________________________________________________________
Name of supervisor Fu Guoqiang - - - - - - Qiao Xinyi - 183 307 45 17 552 Zhang Xiaoxu - - - - - - Guan Zhenquan - 164 195 37 17 413
_______________________________________________________________________________
- 347 502 82 34
965
_______________________________________________________________________________
Total for 2010 375 698 1,251 167 68
2,559
_______________________________________________________________________________
Note: (i) Retired on 19 August 2010
There was no arrangement under which a director or a supervisor waived or agreed to waive
any emoluments during the years ended 31 December 2011 and 2010.
The five highest paid individuals in the Group during the year included 2 (2010: 1)
director(s) and no (2010: 1) supervisor whose emoluments are reflected in the analysis
presented above. The emoluments of the remaining 3 (2010: 3) individuals are set out below:
______________________________________________________________________ 2011 2010 RMB'000 RMB'000 ______________________________________________________________________ Basic salaries and allowances 541 543 Bonus 1,053 943 Retirement benefits 98 126 Other benefits 102 51 ______________________________________________________________________ 1,794 1,663 ______________________________________________________________________
The emoluments of the five highest paid individuals in the Group fell within the
following band: ______________________________________________________________________ Number of individuals ______________________________________________________________________ 2011 2010 ______________________________________________________________________ Nil to RMB810,700 (2010: RMB850,900) (equivalent to HKD1,000,000) 5 5 ______________________________________________________________________
During the years ended 31 December 2011 and 2010, no emoluments were paid by the Group to
any of the directors or the supervisors or the highest paid individuals as an inducement
to join or upon joining the Group or as compensation for loss of office.
13. EMPLOYEE BENEFITS Retirement benefits
The Group is required to make specific contributions to the state-sponsored retirement
plan at a rate of 20% (2010: 20%) of the specified salaries of the PRC employees. The PRC
government is responsible for the pension liability to the retired employees. The PRC
employees of the Group are entitled to a monthly pension upon their retirements.
In addition, the Group has implemented a supplementary defined contribution retirement
scheme. Under this scheme, the employees of the Group make a specified contribution based
on their service duration. The Group is required to make a contribution equal to
2 to 3 times of the staff's contributions. The Group may, at their discretion, provide
additional contributions to the retirement fund depending on the operating results of
the year. The employees will receive the total contributions and any returns thereon,
upon their retirements.
The total retirement costs incurred by the Group during the year ended 31 December 2011
pursuant to these arrangements amounted to RMB334,820 thousand (2010: RMB284,816 thousand).
Housing benefits
Apart from the housing benefits and monetary subsidies as stated in note 22 to the financial
statements, in accordance with the PRC housing reform regulations, the Group is required
to make contributions to the state-sponsored housing fund at rates 10% to 20% (2010: 10% to
20%) of the specified salaries of the PRC employees. At the same time, the employees are
required to make a contribution based on certain percentages. The employees are entitled to
claim the entire sum of the fund under certain specified withdrawal circumstances. The Group
has no further obligations for housing benefits beyond the contributions made above. During
the year ended 31 December 2011, the Group provided RMB189,805 thousand (2010: RMB168,980
thousand) to the fund.14. DIVIDENDS ______________________________________________________________________ 2011 2010 RMB'000 RMB'000 ______________________________________________________________________ Proposed final of RMB0.11 (2010: RMB0.07) per share 1,464,104 861,703 ______________________________________________________________________
Pursuant to the PRC Enterprise Income Tax Law, the Company is required to withhold 10% PRC
enterprise income tax when it distributes dividends to its non-PRC resident enterprise
shareholders.15. EARNINGS PER SHARE
Basic earnings per share
The calculation of basic earnings per share attributable to owners of the Company is
based on the profit for the year attributable to owners of the Company of RMB1,971,200
thousand (2010: RMB2,569,734 thousand) and the weighted average number of ordinary shares
of 12,893,371 thousand (2010: 12,192,421 thousand) in issue during the year.
Diluted earnings per share
During the years ended 31 December 2011 and 2010, the Company did not have any dilutive
potential ordinary shares. Therefore, diluted earnings per share is equal to basic earnings
per share.
16. PROPERTY, PLANT AND EQUIPMENT
__________________________________________________________________________________________________________________
Buildings Electricity Land and utility Transportation Construction use rights structures plants facilities Others in progress Total RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
__________________________________________________________________________________________________________________
Cost At 1 January 2010 1,646,555 40,387,840 87,184,739 2,183,924 1,335,316 59,435,514 192,173,888 Transfer in/(out) - 8,684,099 18,959,387 40,208 984,385 (28,879,501) (211,422) Additions 490,214 219,338 125,956 104,665 35,873 26,383,303 27,359,349 Acquisition of subsidiaries 9,992 1,675,160 354,287 28,790 11,019 234,387 2,313,635 Disposals - (77,274) (17,573) (114,022) (2,871) (84,261) (296,001) Write-offs - - - - (134) - (134)
__________________________________________________________________________________________________________________
At 31 December 2010 and
1 January 2011 2,146,761 50,889,163 106,606,796 2,243,565 2,363,588 57,089,442 221,339,315
Transfer in/(out) - 5,681,552 7,358,919 700,575 481,847 (14,496,226) (273,333) Additions 133,210 115,441 178,379 116,042 67,843 27,505,023 28,115,938 Acquisition of subsidiaries - 813,100 428,393 6,618 64,999 1,536,161 2,849,271 Disposals (3,179) (207,240) (40,622) (25,810) (28) - (276,879) Disposal of a subsidiary (960) (167,046) (39,178) (456) - - (207,640)
__________________________________________________________________________________________________________________
At 31 December 2011 2,275,832 57,124,970 114,492,687 3,040,534 2,978,249 71,634,400 251,546,672
__________________________________________________________________________________________________________________
Accumulated depreciation and impairment losses At 1 January 2010 123,046 6,048,825 27,701,968 492,410 367,580 - 34,733,829 Charge for the year 32,726 1,631,857 5,385,519 182,148 186,980 - 7,419,230 Disposals - (26,736) (16,810) (2,589) (1,274) - (47,409) Write-offs - - - - (105) - (105)
__________________________________________________________________________________________________________________
At 31 December 2010 and 1 January 2011 155,772 7,653,946 33,070,677 671,969 553,181 - 42,105,545 Charge for the year 38,652 1,890,291 6,281,599 232,142 203,098 - 8,645,782 Disposals (110) (44,881) (12,648) (6,350) (26) - (64,015) Disposal of a subsidiary (22) (38,515) (25,087) (80) - - (63,704)
__________________________________________________________________________________________________________________
At 31 December 2011 194,292 9,460,841 39,314,541 897,681 756,253
- 50,623,608
__________________________________________________________________________________________________________________
Carrying amount At 31 December 2011 2,081,540 47,664,129 75,178,146 2,142,853 2,221,996 71,634,400 200,923,064
__________________________________________________________________________________________________________________
At 31 December 2010 1,990,989 43,235,217 73,536,119 1,571,596 1,810,407 57,089,442 179,233,770
__________________________________________________________________________________________________________________
During the year, depreciation expenses charged into operating costs and construction in
progress amounted to RMB8,588,644 thousand (2010: RMB7,376,954 thousand) and RMB57,138
thousand (2010: RMB42,276 thousand), respectively.
At 31 December 2011 the carrying amount of property, plant and equipment pledged as
security for the Group's long-term loans amounted to RMB4,152,799 thousand (2010:
RMB546,550 thousand).
At 31 December 2011 the carrying amount of buildings and structures, electricity
utility plants, transportation facilities and construction in progress held by the
Group under finance leases amounted to RMB669,634 thousand (2010: RMB706,068 thousand),
RMB3,288,120 thousand (2010: RMB2,432,021 thousand), RMB777,328 thousand (2010:
RMB108,374 thousand) and RMB200,000 thousand (2010: RMB555,375 thousand) respectively.
The Group's land use rights are analysed as follows: ______________________________________________________________________ 2011 2010 RMB'000 RMB'000 ______________________________________________________________________ Outside Hong Kong: Long leases 138,415 231,435 Medium-term leases 1,943,125 1,759,554 ______________________________________________________________________ 2,081,540 1,990,989 ______________________________________________________________________
17. INVESTMENT PROPERTIES
______________________________________________________________________ RMB'000 ______________________________________________________________________ Cost At 1 January 2010 - Acquisition of subsidiaries 16,649 Transfer in 211,422 Disposals (11,792) ______________________________________________________________________ At 31 December 2010 and 1 January 2011 216,279 Transfer in 273,333 Additions 33,267 ______________________________________________________________________ At 31 December 2011 522,879 ______________________________________________________________________ Accumulated depreciation At 1 January 2010 - Charge for the year 5,018 Disposals (605) ______________________________________________________________________ At 31 December 2010 and 1 January 2011 4,413 Charge for the year 16,164 ______________________________________________________________________ At 31 December 2011 20,577 ______________________________________________________________________ Carrying amount At 31 December 2011 502,302 ______________________________________________________________________ At 31 December 2010 211,866 ______________________________________________________________________
The Group's investment properties are situated in the PRC and are held under
medium-term leases.
At 31 December 2011, the Group's total future minimum lease payments under
non-cancellable operating leases of investment properties are receivable as
follows: ______________________________________________________________________ 2011 2010 RMB'000 RMB'000 ______________________________________________________________________ Within one year 6,904 6,670 In the second to fifth years inclusive 9,794 14,577 After five years 15,418 9,000 ______________________________________________________________________ 32,116 30,247 ______________________________________________________________________
18. INTANGIBLE ASSETS
_____________________________________________________________________________________________________________
Mining Resource Technology Computer Goodwill rights use rights know-how software Others Total RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
_____________________________________________________________________________________________________________
Cost At 1 January 2010 533,745 1,032,406 28,646 488,590 81,259 - 2,164,646 Additions - - 8,000 105,719 13,312 - 127,031 Acquisition of subsidiaries 36,770 216,724 1,117 2,611 1,644 14,590 273,456 Transfer out - - - - (9,975) - (9,975)
_____________________________________________________________________________________________________________
At 31 December 2010
and 1 January 2011 570,515 1,249,130 37,763 596,920 86,240 14,590 2,555,158 Additions - - - 29,996 14,612 - 44,608 Acquisition of subsidiaries 130,830 - - - - - 130,830
_____________________________________________________________________________________________________________
At 31 December 2011 701,345 1,249,130 37,763 626,916 100,852 14,590 2,730,596
_____________________________________________________________________________________________________________
Accumulated amortisation At 1 January 2010 - - 13,176 - 28,634 - 41,810 Amortisation for the year - 2,050 5,960 273 7,332 9,379 24,994 Transfer out - - - - (9,975) - (9,975)
_____________________________________________________________________________________________________________
At 31 December 2010 and 1 January 2011 - 2,050 19,136 273 25,991 9,379 56,829 Amortisation for the year - 8,416 3,695 2,340 9,802 5,211 29,464
_____________________________________________________________________________________________________________
At 31 December 2011 - 10,466 22,831
2,613 35,793 14,590 86,293
_____________________________________________________________________________________________________________
Carrying amount
At 31 December 2011 701,345 1,238,664 14,932 624,303 65,059 - 2,644,303
_____________________________________________________________________________________________________________
At 31 December 2010 570,515 1,247,080 18,627 596,647 60,249 5,211 2,498,329
_____________________________________________________________________________________________________________
Goodwill
Goodwill acquired in a business combination is allocated, at acquisition, to the
cash-generating units ("CGUs") that are expected to benefit from that business
combination. Before recognition of impairment losses, the carrying amount of
goodwill had been allocated as follows: ______________________________________________________________________ 2011 2010 RMB'000 RMB'000 ______________________________________________________________________ Power generation segment Qinghai Datang International Zhiganglaka Hydropower Development 273,795 273,795 Jiangxi Datang International Xinyu Power Generation Company Limited 104,361 104,361 Zhangjiakou Power Plant No. 2 generator 33,561 33,561 Datang Tongzhou Technology Company Limited 949 949 Inner Mongolia Datang International Hohhot Thermal Power Generation Company Limited 902 902 Yunnan Datang International Deqin Hydropower Development Limited 18 18 Chengdu Liguo Energy Company Limited, Chengdu Qingjiangyuan Energy Company Limited and Chengdu Zhongfu Energy Company Limited 130,830 - ______________________________________________________________________ 544,416 413,586 ______________________________________________________________________ Coal segment Inner Mongolia Datang International Zhunge'er Mining Company Limited 120,177 120,177 Inner Mongolia Baoli Coal Company Limited 18,712 18,712 ______________________________________________________________________ 138,889 138,889 ______________________________________________________________________ Other segments Yuneng (Group) Company Limited 18,040 18,040 ______________________________________________________________________ 701,345 570,515 ______________________________________________________________________
The recoverable amounts of the CGUs are determined based on value in use calculations.
The key assumptions used for the value in use calculations of power generation units
include the expected tariff rates, demands of electricity in specific regions where
these power plants are located and fuel cost. The key assumptions used for the value
in use calculations of coal mining entity include the expected coal price and annual
production capacity. These key assumptions are based on past performance and expectations
on market development. The Group estimates discount rates using pre-tax rates that reflect
current market assessments of the time value of money and the risks specific to the CGUs.
The Group prepares cash flow forecasts derived from the most recent financial budgets
approved by the directors for a period covering no more than five years (the "Periods
Covered"). The Group expects cash flows beyond the respective forecast periods below will
be similar to that of last year of respective forecast based on existing production
capacity.
The Periods Covered and discount rates used in respective value in use calculations
are as follows:
__________________________________________________________________________
Periods Discount Covered rates used
__________________________________________________________________________
Qinghai Datang International Zhiganglaka
Hydropower Development Company Limited 5 years
6.93%
Jiangxi Datang International Xinyu Power
Generation Company Limited 3 years
7.03%
Inner Mongolia Datang International
Zhunge'er Mining Company Limited 3 years
21.04%
Chengdu Liguo Energy Company Limited,
Chengdu Qingjiangyuan Energy Company
Limited and Chengdu Zhongfu Energy
Company Limited 5 years 8.55% Others 3 - 5 years 5.42% - 9.87%
__________________________________________________________________________
Based on the assessments, the Group believes that there is no impairment of goodwill
at 31 December 2011 and 2010.
19. INVESTMENTS IN ASSOCIATES
______________________________________________________________________ 2011 2010 RMB'000 RMB'000 ______________________________________________________________________ Unlisted investments: Share of net assets 5,289,166 4,591,838 ______________________________________________________________________ Details of the Group's associates at 31 December 2011 are as follows:
_______________________________________________________________________________________________________________________
Place of Registered incorporation/ and paid Percentage of Name registration up capital equity interest Principal activities RMB'000 Direct Indirect unless otherwise stated
_______________________________________________________________________________________________________________________
North China Electric Power Research Institute Company Limited PRC 100,000 30% - Power related technology services
Tongfang Investment Company
Limited PRC 550,000 36% - Project investments and management
Tongmei Datang Tashan Power
Generation Company Limited PRC 410,000 40% - Power generation
Tongmei Datang Tashan Coal
Mine Company Limited PRC 2,072,540 28% - Coal construction and mining
Tangshan Huaxia Datang Power
Fuel Company Limited PRC 20,000 30% - Power fuel trading
China Datang Group Finance Company
Limited ("Datang Finance") * PRC 1,600,000 20% - Financial services
Inner Mongolia Bazhu Railway
Company Limited PRC 100,000 20% - Railway and highway construction and operational management CNNC Liaoning Nuclear Power Co., Ltd. PRC 100,000 20% - Nuclear power plant construction and operations Liaoning Diaobingshan Coal Gangue Power Generation Co., Ltd. ("Diaobingshan Power Company") PRC 603,400 40% - Power generation
Inner Mongolia Xiduo Railway
Company Limited PRC Registered 34% - Railway transportation capital: services 3,535,789; paid-up capital: 3,026,913 COSCO Datang Shipping Company Limited PRC 100,000 45% - Cargo shipping
Shantou Fengsheng Power Generation
Company Limited PRC Registered 41% - Power generation capital: 30,000; paid-up capital: 18,200 Inner Mongolia Datang Da Ta Energy Company Limited PRC 20,000 35% - Construction and operation of coal logistics park zone Datang Wealth Management Co., Ltd. PRC 50,000 30% - Investment management and advisory Fuxin Huanfa Wastage Disposal Company Limited PRC 20,000 - 20% Environmental greening Chongqing Panlong Pumped Storage Company Limited PRC 50,000 - 20% Power development Chongqing Fuling Water Resources Development Company Limited PRC 120,000 - 42% Hydropower technology development, construction, management, power generation and power supply Fujian Baima Harbour Railway Spur Line Company Limited PRC 150,000 - 33% Railway transportation Jinzhou City Thermal Power Company Limited PRC 145,000 - 26% Heat supply Macro Technologies Inc. (Vietnam) Limited Vietnam USD150,000 - 35% Electricity related technical services
_______________________________________________________________________________________________________________________
* Datang Finance is a non-bank financial institution.
Summarised financial information in respect of the Group's associates is set out below:
______________________________________________________________________ 2011 2010 RMB'000 RMB'000 ______________________________________________________________________ At 31 December Total assets 50,537,287 38,104,887 Total liabilities (32,968,578) (24,266,193) ______________________________________________________________________ Net assets 17,568,709 13,838,694 ______________________________________________________________________ The Group's share of associates' net assets 5,289,166 4,591,838 ______________________________________________________________________ Year ended 31 December Total revenue 12,718,759 9,599,931 ______________________________________________________________________ Total profit for the year 3,595,562 2,585,808 ______________________________________________________________________ The Group's share of associates' profit for the year 945,970 718,231 ______________________________________________________________________
20. INVESTMENTS IN JOINTLY CONTROLLED ENTITIES
______________________________________________________________________ 2011 2010 RMB'000 RMB'000 ______________________________________________________________________ Unlisted investments: Share of net assets 3,585,867 2,649,778 ______________________________________________________________________
Details of the jointly controlled entities at 31 December 2011 are as follows:
_____________________________________________________________________________________________________________
Place of Registered incorporation/ and paid
Percentage of
Name registration up capital equity interest Principal activities RMB'000 Direct Indirect
_____________________________________________________________________________________________________________
Hebei Yuzhou Energy Multiple Development Company Limited PRC 825,023 50% - Investment holding Kailuan (Group) Yuzhou Mining Company Limited PRC 812,254 34% 15% Coal mining and sales Inner Mongolia Huineng Datang Changtan Coal Mining Company Limited PRC 50,000 40% - Coal mining and sales Fujian Ningde Nuclear Power Company Limited PRC 1,900,000 44% - Nuclear power plant construction and operations
_____________________________________________________________________________________________________________
Summarised financial information in respect of the Group's jointly controlled entities is set out below:
______________________________________________________________________ 2011 2010 RMB'000 RMB'000 ______________________________________________________________________ At 31 December Current assets 4,615,813 5,941,178 Non-current assets 32,604,632 20,771,068 Current liabilities (7,109,347) (10,169,992) Non-current liabilities (21,552,514) (10,382,329) ______________________________________________________________________ Net assets 8,558,584 6,159,925 ______________________________________________________________________ Proportionate shares of capital commitments 8,553,986 2,701,533 ______________________________________________________________________ Year ended 31 December Revenue 7,893,688 4,492,671 ______________________________________________________________________ Expenses (7,835,417) (3,836,804) ______________________________________________________________________
21. AVAILABLE-FOR-SALE INVESTMENTS
______________________________________________________________________ 2011 2010 RMB'000 RMB'000 ______________________________________________________________________ Equity securities, at fair value Listed outside Hong Kong 67,531 91,043 Unlisted equity securities, at cost 2,642,542 2,213,115 ______________________________________________________________________ 2,710,073 2,304,158 ______________________________________________________________________ Market value of listed securities 67,531 91,043 ______________________________________________________________________
The fair values of listed securities are based on current bid prices. All the
unlisted equity were carried at cost as they do not have a quoted market price
in an active market and whose fair value cannot be reliably measured.
22. DEFERRED HOUSING BENEFITS
Pursuant to the "Proposal on Further Reform of Housing Policy in Urban Areas" of
the State and the implementation schemes for staff quarters issued by the relevant
provincial and municipal governments, the Company implemented a scheme for selling
staff quarters in 1999. Under the scheme, the Company provides housing benefits
to its staff to buy staff quarters from the Company at preferential prices. The
offer price is determined based on their length of services and positions pursuant
to the prevailing local regulations. The deferred housing benefits represent the
difference between the net book amount of the staff quarters sold and the proceeds
collected from the employees, and are amortised over the remaining average service
life of the relevant employees.
During 2005 to 2007, the Company and some of its subsidiaries carried out another
housing benefit scheme - "Monetary Housing Benefit Scheme" upon the approval from
Housing Reform Office of the local government. Under the Monetary Housing Benefit
Scheme, the Company and some of its subsidiaries provided monetary housing subsidies
to those employees whose houses did not meet the standard they should have enjoyed
based on their length of services and their positions and rankings. There is no
such subsidy payment in year 2011 (2010: nil). The benefits were amortised over
the remaining average service life of the relevant employees. ______________________________________________________________________ RMB'000 ______________________________________________________________________ Cost At 1 January 2010, 31 December 2010, 1 January 2011 and 31 December 2011 662,532 ______________________________________________________________________ Accumulated amortisation At 1 January 2010 499,148 Charge for the year 30,854 ______________________________________________________________________ At 31 December 2010 and 1 January 2011 530,002 Charge for the year 29,691 ______________________________________________________________________ At 31 December 2011 559,693 ______________________________________________________________________ Carrying amount At 31 December 2011 102,839 ______________________________________________________________________ At 31 December 2010 132,530 ______________________________________________________________________
23. INVENTORIES
______________________________________________________________________ 2011 2010 RMB'000 RMB'000 ______________________________________________________________________ Raw materials 4,579,700 2,352,979 Finished goods 522,591 915,437 Others 991,495 743,297 ______________________________________________________________________ 6,093,786 4,011,713 ______________________________________________________________________
The carrying amount of inventories pledged as security for banking facilities
granted to the Group amounted to RMB86,454 thousand (2010: RMB103,964 thousand)
(note 38).
24. ACCOUNTS AND NOTES RECEIVABLES
Accounts and notes receivables of the Group primarily represent receivables from
regional or provincial grid companies for tariff revenue and coal sales customers
and comprise the following: ______________________________________________________________________ 2011 2010 RMB'000 RMB'000 ______________________________________________________________________ Accounts receivables from third parties 9,872,875 7,966,699 Notes receivables from third parties 257,818 190,185 Accounts and notes receivables from related parties 77,853 1,738 ______________________________________________________________________ 10,208,546 8,158,622 ______________________________________________________________________
The Group usually grants credit period of approximately 1 month to local power
grid customers and coal purchase customers from the month end after sales and
sale transactions made, respectively. The ageing analysis of accounts and notes receivables is as follows: ______________________________________________________________________ 2011 2010 RMB'000 RMB'000 ______________________________________________________________________ Within one year 10,044,753 8,013,428 Between one to two years 74,133 143,990 Between two to three years 89,009 1,096 Over three years 651 108 ______________________________________________________________________ 10,208,546 8,158,622 ______________________________________________________________________
At 31 December 2011, the Group applied tariff collection rights in securing
loans, for which details please refer to notes 31 and 38 to the financial
statements. Reconciliation of allowance for accounts and notes receivables: ______________________________________________________________________ 2011 2010 RMB'000 RMB'000 ______________________________________________________________________ At 1 January 5,912 - Acquisition of subsidiaries - 6,042 Reversal of allowance (70) (130) ______________________________________________________________________ At 31 December 5,842 5,912 ______________________________________________________________________
At 31 December 2011, accounts and notes receivables of RMB163,793 thousand
(2010: RMB145,194 thousand) were past due but not impaired. The major portion
of the past due accounts and notes receivables were due from certain local
thermal power companies and customers of coal purchases, and the directors
believe that such receivables can be recovered because such local thermal
companies and customers of coal purchases had no recent history of default.
The ageing analysis of these accounts and notes receivables is as follows:
______________________________________________________________________ 2011 2010 RMB'000 RMB'000 ______________________________________________________________________ Between one to two years 74,133 143,990 Between two to three years 89,009 1,096 Over three years 651 108 ______________________________________________________________________ 163,793 145,194 ______________________________________________________________________
25. PREPAYMENTS AND OTHER RECEIVABLES
______________________________________________________________________ 2011 2010 RMB'000 RMB'000 ______________________________________________________________________ Prepayments Prepayments for fuel and materials 2,627,814 395,262 Prepayments for construction 46,444 63,890 Value added tax recoverable 3,425,846 1,914,234 Prepayment for an investment 578,592 350,000 Other taxes recoverable 20,604 31,761 Prepayments to related parties 168,566 1,324 Prepayments for transportation cost 239,159 95,023 Others 220,444 177,212 ______________________________________________________________________ 7,327,469 3,028,706 ______________________________________________________________________ Other receivables Advanced payments for construction 403,648 411,569 Receivables from disposals of property, plant and equipment 14,201 61,819 Staff advances 26,311 23,223 Staff housing maintenance fund deposits 25,217 25,153 Receivables from sales of materials 140,325 59,218 Receivables from related parties 11,685 64,172 Deposits for land development 334,763 92,223 Others 638,216 380,285 ______________________________________________________________________ 1,594,366 1,117,662 Allowance for doubtful debts (44,735) (44,823) ______________________________________________________________________ 1,549,631 1,072,839 ______________________________________________________________________ 8,877,100 4,101,545 ______________________________________________________________________ Reconciliation of allowance for other receivables: ______________________________________________________________________ 2011 2010 RMB'000 RMB'000 ______________________________________________________________________ At 1 January 44,823 4,203 Acquisition of subsidiaries - 88,273 Reversal of allowance (88) (41,685) Amounts written off - (5,968) ______________________________________________________________________ At 31 December 44,735 44,823 ______________________________________________________________________
At 31 December 2011, other receivables of RMB1,930 thousand (2010: RMB2,035
thousand) were past due but not impaired. These relate to a number of independent
customers for whom there is no recent history of default. The ageing analysis of
these other receivables is as follows: ______________________________________________________________________ 2011 2010 RMB'000 RMB'000 ______________________________________________________________________ Between two to three years - 90 Over three years 1,930 1,945 ______________________________________________________________________ 1,930 2,035 ______________________________________________________________________
26. SHORT-TERM ENTRUSTED LOANS TO A JOINTLY CONTROLLED ENTITY
At 31 December 2011, the short-term entrusted loans to a jointly controlled entity
carried interest rate ranging from 6.1% to 6.56% (2010: 5.00%) per annum and there
were neither pledges nor guarantees received on these loans.
The short-term entrusted loans to a jointly controlled entity are due within
12 months from the end of the reporting period.
27. CASH AND CASH EQUIVALENTS
______________________________________________________________________ 2011 2010 RMB'000 RMB'000 ______________________________________________________________________ Bank deposits 2,747,016 2,353,927 Deposits with Datang Finance 1,719,012 1,087,815 Cash on hand 1,344 1,234 ______________________________________________________________________ Cash and cash equivalents 4,467,372 3,442,976 ______________________________________________________________________
The carrying amounts of the Group's cash and cash equivalents are denominated
in the following currencies: ______________________________________________________________________ 2011 2010 RMB'000 RMB'000 ______________________________________________________________________ RMB 4,159,265 3,231,787 USD 307,833 210,613 HKD 98 442 EUR 23 126 Singapore dollar 153 8 ______________________________________________________________________ 4,467,372 3,442,976 ______________________________________________________________________28. SHARE CAPITAL Number of shares Amount A shares (i) H shares (i) Total A shares H shares Total '000 '000 '000 RMB'000 RMB'000 RMB'000_____________________________________________________________________________________________________________________
Registered, issued and fully paid:
Shares of RMB1 (2010: RMB1) each
At 1 January 2010 8,464,360 3,315,678
11,780,038 8,464,360 3,315,678 11,780,038
Issue of shares (ii) 530,000 - 530,000 530,000 - 530,000
_____________________________________________________________________________________________________________________
At 31 December 2010 and
1 January 2011 (iii) 8,994,360 3,315,678
12,310,038 8,994,360 3,315,678 12,310,038
Issue of shares (iv) 1,000,000 - 1,000,000 1,000,000 - 1,000,000
_____________________________________________________________________________________________________________________
At 31 December 2011 (v) 9,994,360 3,315,678 13,310,038 9,994,360 3,315,678 13,310,038_____________________________________________________________________________________________________________________ Notes: (i) Both A shares and H shares rank pari passu to each other.
(ii) In March 2010, the Company issued 530,000,000 A shares to specific
investors by way of non-public offering at a subscription price of RMB6.23 per share for a total cash consideration of RMB3,301,900 thousand. The premium on the issue of shares, amounting to RMB2,718,372 thousand, net of share issue expenses, was credited to the Company's capital reserve account. (iii) At 31 December 2010, 530,000,000 A shares were subject to lock-up periods and were not freely tradable.
(iv) In May 2011, the Company issued 1,000,000,000 A shares to specific
investors by way of non-public offering at a subscription price of RMB6.74 per share for a total cash consideration of RMB6,740,000
thousand. The premium on the issue of shares, amounting to RMB5,670,950
thousand, net of share issue expenses, was credited to the Company's
capital reserve account.
(v) At 31 December 2011, 1,000,000,000 A shares were subject to lock-up
periods and were not freely tradable.
The Group's objectives when managing capital are to safeguard the Group's ability
to continue as a going concern and to maximise the returns to the shareholders
through the optimisation of the capital structure.
The Group sets the amount of capital in proportion to risk. The Group manages
the capital structure and makes adjustments to it in the light of changes in
economic conditions and the risk characteristics of the underlying assets.
In order to maintain or adjust the capital structure, the Group may adjust the
payment of dividends, issue new shares, raise new debts or sell assets to reduce
debts.
The Group monitors capital on the basis of the assets-to-liabilities ratio.
This ratio is calculated as total liabilities divided by total assets. The assets-to-liabilities ratio of the Group as at 31 December 2011 was 79.52% (2010: 81.95%).
The decrease in the assets-to-liabilities ratio during 2011 was primarily due
to the increase of accounts and notes receivables accompanied by the growth in
operating revenue and the increase in cash and cash equivalents resulted from
issue of new shares. Taking into consideration of the expected operating cash
flows of the Group and the available banking facilities and their experience
in refinancing short-term borrowings, the directors believe the Group can meet
their current obligations when they fall due.
29. STATEMENT OF FINANCIAL POSITION OF THE COMPANY
______________________________________________________________________ 2011 2010 RMB'000 RMB'000 ______________________________________________________________________ Property, plant and equipment 11,326,953 10,131,643 Investments in subsidiaries 28,124,781 21,155,786 Other non-current assets 19,384,595 13,875,483 Cash and cash equivalents 2,302,521 2,145,796 Other current assets 5,032,978 4,406,609 ______________________________________________________________________ TOTAL ASSETS 66,171,828 51,715,317 ______________________________________________________________________ Share capital 13,310,038 12,310,038 Reserves 25,381,187 17,797,509 Long-term loans 10,510,800 12,135,200 Long-term bonds 8,937,277 5,949,018 Other non-current liabilities 309,916 334,317 Short-term loans 2,450,000 880,000 Other current liabilities 5,272,610 2,309,235 ______________________________________________________________________ TOTAL EQUITY AND LIABILITIES 66,171,828 51,715,317 ______________________________________________________________________
30. RESERVES
(a) Group
The amounts of the Group's reserves and movements therein are presented
in the consolidated statement of comprehensive income and consolidated
statement of changes in equity.
(b) Company
_____________________________________________________________________________________________________________________
Statutory Discretionary Capital surplus surplus Restricted Other Retained reserve reserve reserve reserve reserves earnings Total Note RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
_____________________________________________________________________________________________________________________
At 1 January 2010 1,592,988 3,109,298 7,866,188
37,473 4,020 1,656,924 14,266,891
Total comprehensive income
for the year - - - - - 1,673,949 1,673,949Issue of shares 28 2,718,372 - - - - - 2,718,372Transfer from restricted reserve - - - (7,931) - 7,931 -Transfer to surplus reserve - 207,594 -
- - (207,594) -
Dividends paid - - - - - (861,703) (861,703)_____________________________________________________________________________________________________________________At 31 December 2010 4,311,360 3,316,892 7,866,188 29,542 4,020 2,269,507 17,797,509_____________________________________________________________________________________________________________________At 1 January 2011 4,311,360 3,316,892 7,866,188
29,542 4,020 2,269,507 17,797,509
Total comprehensive income
for the year - - - - - 2,844,431 2,844,431Issue of shares 28 5,670,950 - - - - - 5,670,950Transfer from restricted - - - (8,531) - 8,531 - reserve Transfer to surplus reserve - 322,721 1,337,804
- - (1,660,525) -
Dividends paid - - - - - (931,703) (931,703)_____________________________________________________________________________________________________________________At 31 December 2011 9,982,310 3,639,613 9,203,992 21,011 4,020 2,530,241 25,381,187_____________________________________________________________________________________________________________________ (c) Nature and purpose of reserves (i) Capital reserve Capital reserve mainly comprised: (i) the difference
between the nominal amount
of the domestic shares issued and the fair value of the net
assets injected into
the Company during its formation and also proceeds from
the issue of H shares
and A shares in excess of their par value, net of issuance
expenses in 1997,
2006, 2010 and 2011; and (ii) the premium from convertible
bonds converted to
shares. The capital reserve is non-distributable. (ii) Statutory surplus reserve In accordance with the relevant laws and regulations of the
PRC and the articles
of association of the Company, it is required to
appropriate 10% of its net profit
under PRC GAAP, after offsetting any prior years' losses,
to the statutory surplus
reserve. When the balance of such a reserve reaches 50% of
the Company's share
capital, any further appropriation is optional. The statutory surplus reserve can be used to offset prior
years' losses, if any,
and may be converted into share capital by issuing new
shares to shareholders in
proportion to their existing shareholding or by increasing
the par value of the
shares currently held by them, provided that the remaining
balance of the reserve
after such an issue is not less than 25% of share capital.
The statutory surplus
reserve is non-distributable. (iii) Discretionary surplus reserve Pursuant to the articles of association of the Company, the
appropriation of profit
to the discretionary surplus reserve and its utilisation
are made in accordance with
the recommendation of the Board of Directors and is subject
to shareholders'
approval at their general meeting. The discretionary surplus reserve can be used to offset
prior years' losses, if any,
and may be converted into share capital by issuing new
shares to shareholders in
proportion to their existing shareholding or by increasing
the par value of the shares
currently held by them. The discretionary surplus reserve
is distributable.
(iv) Restricted reserve
Pursuant to relevant regulations and guidance issued by the
MOF, certain deferred
housing benefits are charged to equity directly when
incurred under PRC GAAP. In
order to reflect such undistributable retained earnings in
these financial
statements prepared under IFRS, a restricted reserve is set
up to reduce the
balance of retained earnings with an amount equals to the
residual balance of
deferred housing benefits, net of tax. Pursuant to relevant PRC regulations, coal mining companies
are required to set
aside an amount to a fund for future development and work
safety which they
transferred certain amounts from retained earnings to
restricted reserve. The
fund can then be used for future development and work
safety of the coal mining
operations, and is not available for distribution to
shareholders. When qualifying
development expenditure and improvements of safety
incurred, an equivalent amount
is transferred from restricted reserve to retained
earnings.
(d) Basis for profit appropriation
In accordance with the articles of association of the Company, distributable profit
of the Company is derived based on the lower of profit determined in accordance with
PRC GAAP and IFRS.31. LONG-TERM LOANS
______________________________________________________________________
2011 2010 RMB'000 RMB'000
______________________________________________________________________
Long-term bank loans 129,143,046 118,352,026Other long-term loans 3,713,466 5,703,793
______________________________________________________________________
132,856,512 124,055,819
______________________________________________________________________
Long-term loans are repayable as follows:
2011 2010 Other Other Long-term long-term Long-term long-term bank loans loans Total bank loans loans Total RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000__________________________________________________________________________________________________________________On demand or within one year 13,909,226 1,292,930 15,202,156 13,229,902 1,240,540 14,470,442In the second year 12,437,186 435,930 12,873,116 16,078,045 3,120,540 19,198,585
In the third to fifth year,
inclusive 34,452,838 758,790 35,211,628 30,714,130 641,620 31,355,750After five years 68,343,796 1,225,816 69,569,612 58,329,949 701,093 59,031,042__________________________________________________________________________________________________________________ 129,143,046 3,713,466 132,856,512
118,352,026 5,703,793 124,055,819
Less: Amount due for settlement
within 12 months
(shown under current
liabilities) (13,909,226) (1,292,930) (15,202,156)
(13,229,902) (1,240,540) (14,470,442)
__________________________________________________________________________________________________________________
Amount due for settlement
after 12 months 115,233,820 2,420,536 117,654,356 105,122,124 4,463,253 109,585,377__________________________________________________________________________________________________________________
Long-term loans are classified as follows:
2011 2010 Other Other Long-term long-term Long-term long-term bank loans loans Total bank loans loans Total RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000__________________________________________________________________________________________________________________Secured loans 48,178,194 - 48,178,194 46,196,300 - 46,196,300 Guaranteed loans 10,910,520 773,705 11,684,225 5,197,430 1,922,793 7,120,223Unsecured loans 70,054,332 2,939,761 72,994,093 66,958,296 3,781,000 70,739,296__________________________________________________________________________________________________________________ 129,143,046 3,713,466 132,856,512 118,352,026 5,703,793 124,055,819__________________________________________________________________________________________________________________
Less: Amount due for settlement
within 12 months (shown under current liabilities) Secured loans (3,505,710) - (3,505,710) (2,713,320) - (2,713,320) Guaranteed loans (785,737) (110,000) (895,737) (2,717,450) (1,120,540) (3,837,990) Unsecured loans (9,617,779) (1,182,930) (10,800,709) (7,799,132) (120,000) (7,919,132)__________________________________________________________________________________________________________________ (13,909,226) (1,292,930) (15,202,156) (13,229,902) (1,240,540) (14,470,442)__________________________________________________________________________________________________________________Non-current portionSecured loans 44,672,484 - 44,672,484 43,482,980 - 43,482,980Guaranteed loans 10,124,783 663,705 10,788,488 2,479,980 802,253 3,282,233Unsecured loans 60,436,553 1,756,831 62,193,384 59,159,164 3,661,000 62,820,164__________________________________________________________________________________________________________________ 115,233,820 2,420,536 117,654,356 105,122,124 4,463,253 109,585,377__________________________________________________________________________________________________________________The carrying amounts of the Group's long-term loans are denominated in the following currencies: 2011 2010 Other Other Long-term long-term Long-term long-term bank loans loans Total bank loans loans Total RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000__________________________________________________________________________________________________________________RMB 129,003,671 2,898,139 131,901,810 118,352,026 4,781,000 123,133,026USD 139,375 773,705 913,080 - 922,793 922,793EUR - 41,622 41,622 - - -
__________________________________________________________________________________________________________________
129,143,046 3,713,466 132,856,512 118,352,026 5,703,793 124,055,819__________________________________________________________________________________________________________________
The interest rates for long-term loans per annum at 31 December were as follows:
________________________________________________________________________
2011 2010 RMB'000 RMB'000
________________________________________________________________________
Long-term bank loans 4.99% - 7.76% 2.16% - 8%Other long-term loans 1% - 6.65% 1.13% - 6.32%
________________________________________________________________________
Long-term loans of RMB5,788,505 thousand (2010: RMB4,686,354 thousand) are arranged at fixed interest rates and expose the Group to fair value interest rate risk. The remaining long-term loans are arranged at floating rates, thus exposing the Group to cash flow interest rate risk.
The directors estimate the fair value of the Group's long-term loans (including amount due for settlement within 12 months) as at 31December 2011, by discounting their future cash flows at prevailing market rates offered to the Group for loans with substantially the same characteristics and maturity dates, to be RMB132,856,512 thousand (2010: RMB124,055,819 thousand). The discount rates applied as at 31 December 2011 were ranging from 1% to 7.76%(2010: 1.13% to 8%) per annum.
At 31 December 2011, long-term bank loans amounted to RMB2,151,000 thousand
(2010: RMB403,910 thousand) were secured by the following assets:
________________________________________________________________________
2011 2010 RMB'000 RMB'000
________________________________________________________________________
Inventories - 103,964Property, plant and equipment 4,152,799 546,550
________________________________________________________________________
4,152,799 650,514
________________________________________________________________________
At 31 December 2011, long-term bank loans amounted to RMB46,027,194 thousand (2010: RMB45,792,390 thousand) were secured by certain tariff collection rights of the Group.
At 31 December 2011, long-term bank loans amounted to RMB10,910,520 thousand (2010: RMB5,197,430 thousand) were guaranteed by the following parties:
________________________________________________________________________
2011 2010 RMB'000 RMB'000
________________________________________________________________________
The Company 6,930,902 3,967,706A subsidiary of the Company 141,500 -China Datang 99,500 794,500
Certain non-controlling shareholders
of subsidiaries 3,438,618 435,224Ex-shareholder of a subsidiary of the Company 300,000 -
________________________________________________________________________
10,910,520 5,197,430
________________________________________________________________________
In addition, at 31 December 2011, long-term bank loans amounted to nil (2010: RMB990,000 thousand) guaranteed by the Company were counter-guaranteed by non-controlling shareholders of a subsidiary.
At 31 December 2011, other long term loans amounted to RMB1,887,230 thousand (2010: RMB781,000 thousand) which were borrowed from Datang Finance were unsecured and interest-bearing at 5.04% to 6.35% (2010: 4.78% to 5.76%) per annum.At 31 December 2011, other long-term loans amounted to nil (2010: RMB4,000,000 thousand) were borrowed from non-bank financial institutions. Included in the amount was nil (2010: RMB1,000,000 thousand) which were guaranteed by the Company, of which nil (2010: RMB450,000 thousand) were counter-guaranteed by non-controlling shareholders of a subsidiary. The remaining balance amounted to nil (2010: RMB3,000,000 thousand) was unsecured.
At 31 December 2011, other long term loans included a loan amounted to RMB773,705 thousand (2010: RMB922,793 thousand) borrowed by the MOF from International
Bank for Reconstruction and Development ("World Bank") and on-lent to a subsidiary of the Company for the construction of electricity utility plant, with the maturities from 1998 to 2017. The effective annual interest rate was LIBOR Base Rate plus LIBOR Total Spread as defined in the loan agreement between MOF and World Bank. China Datang provided guarantees on 60% of the loan balance.32. LONG-TERM BONDS
________________________________________________________________________
2011 2010 RMB'000 RMB'000
________________________________________________________________________
Medium-term notes (i) 2,979,293 2,970,375 Corporate bonds (ii) 5,957,984 2,978,643
________________________________________________________________________
8,937,277
5,949,018
________________________________________________________________________
Notes:
(i) Medium-term notes represented unsecured notes issued by the Company in
inter-bank market on 3 March 2009 with par value of RMB100 each totalling
RMB3 billion. Such medium-term notes are of 5-year term with fixed annual
coupon and effective interest rates of 4.10% and 4.44%, respectively. At
31 December 2011, accrued interest for these notes amounted to RMB126,400
thousand (2010: RMB117,482 thousand).
(ii) Corporate bonds represented unsecured bonds issued by the Company on 19
August 2009 and 22 April 2011 with par value of RMB100 each totalling
RMB6 billion. Such bonds are of 10-year term with fixed annual coupon
and effective interest rates of 5.00%/5.25% and 5.10%/5.36%, respectively.
At 31 December 2011, accrued interest for these bonds amounted to RMB171,608
thousand (2010: RMB58,533 thousand). At 31 December 2011, the fair value of long term bonds is estimated to be
RMB9,179,816 thousand (2010: RMB6,085,663 thousand). The fair value of medium-term
notes is derived from discounted future cash flows using bond interest rate with
similar terms of 4.98% (2010: 4.17%) per annum while the fair value of corporate
bonds is derived from quoted price available in the market.
33. DEFERRED INCOME
The Group received government grants from local environmental protection authorities
for undertaking approved environmental protection projects.
34. DEFERRED TAX
The following are the major deferred tax assets (before offset) recognised by the Group:
Please visit
http://www.prnasia.com/sa/attachment/2012/05/20120508200525794535.134%20Deferred%20Tax.pdf
for the Deferred Tax table.
The following is the analysis of the deferred tax balances (after offset) for
consolidated statement of financial position purposes:
________________________________________________________________________
2011 2010 RMB'000 RMB'000
________________________________________________________________________
Deferred tax assets 1,453,359 972,760 Deferred tax liabilities (585,488) (439,226)
________________________________________________________________________
867,871
533,534
________________________________________________________________________
No deferred tax asset has been recognised in respect of certain unused tax losses of
RMB1,503,840 thousand (2010: RMB2,569,630 thousand) due to the unpredictability of
future profit streams. The related unrecognised tax losses will expire in the following
years ending 31 December:
________________________________________________________________________
2011 2010 RMB'000 RMB'000
________________________________________________________________________
2012 2,838 48,548 2013 319,830 923,885 2014 333,468 888,711 2015 445,420 708,486 2016 402,284 -
________________________________________________________________________
1,503,840
2,569,630
________________________________________________________________________
35. PROVISIONS Mine disposal and environmental Loss-making restoration contracts Total RMB'000 RMB'000 RMB'000
________________________________________________________________________________________
At 1 January 2011 37,167 4,436 41,603 Provisions used - (1,120) (1,120) Changes in present value 1,197 - 1,197
________________________________________________________________________________________
At 31 December 2011 38,364 3,316
41,680
________________________________________________________________________________________
The mine disposal and environmental restoration provision represents the Group's best
estimate of the Group's liability for remediation costs based on industry standards and
historical experience.
The loss-making contracts provision represents the Group's best estimated loss on a number
of fixed income and entrusted lease agreements signed between the buyers of certain
properties of the Group (the "Property Buyers") and the Group for the purpose of property
sales boosting, according to which the Group is required to locate tenants for the properties
acquired by the Property Buyers and to guarantee the Property Buyers a fixed rental return
during the whole entrusted leasing period ranging from two to ten years.
36. OTHER NON-CURRENT LIABILITIES
________________________________________________________________________
2011 2010 RMB'000 RMB'000
________________________________________________________________________
Finance lease payables 6,162,250 3,957,795 Others 87,779 105,128
________________________________________________________________________
6,250,029
4,062,923
Less: Amount due for settlement within
12 months (shown under current liabilities) (422,761) (339,741)
________________________________________________________________________
5,827,268
3,723,182
________________________________________________________________________
Finance lease payables Present value of minimum Minimum lease payments lease payments 2011 2010 2011 2010 RMB'000 RMB'000 RMB'000 RMB'000
_______________________________________________________________________________________________
Within one year 695,443 536,556
344,383 267,751
In the second to fifth years, inclusive 3,758,566 2,646,489 2,675,059 1,692,334
After five years 3,513,856 2,535,871
3,142,808 1,997,710
_______________________________________________________________________________________________
7,967,865 5,718,916
6,162,250 3,957,795
Less: Future finance charges (1,805,615) (1,761,121)
N/A N/A
_______________________________________________________________________________________________
Present value of lease obligations 6,162,250 3,957,795 6,162,250 3,957,795
_______________________________________________________________________________________________
Less: Amount due for settlement within
12 months (shown under current
liabilities)
(344,383) (267,751)
_______________________________________________________________________________________________
Amount due for settlement
after 12 months
5,817,867 3,690,044
_______________________________________________________________________________________________
It is the Group's policy to lease certain of its plant, property and equipment under
finance leases. The average lease term is 11 years (2010: 12 years). At 31 December 2011,
the average effective borrowing rate was 6.33% (2010: 5.39%) per annum. Interest rates
are fixed at the contract dates and thus expose the Group to fair value interest rate risk.
All leases are on a fixed repayment basis and no arrangements have been entered into for
contingent rental payments. At the end of each lease term, the Group has the option to
purchase the plant and machinery at nominal prices.
The Group's finance lease payables amounted to RMB411,152 thousand (2010:
RMB720,980 thousand) were guaranteed by the Company for the same amount while certain
the Group's finance lease payables amounted to RMB486,681 thousand (2010: RMB810,216
thousand) were secured by restricted deposits of RMB116,836 thousand (2010: RMB122,085
thousand), all of which will be refunded after settlements of last installments of
respective finance lease arrangements.
At 31 December 2011, the total future minimum sublease payments expected to be received
under non-cancellable subleases amounted to RMB93,693 thousand (2010: RMB115,995
thousand).
37. ACCOUNTS PAYABLES AND ACCRUED LIABILITIES
__________________________________________________________________________
2011 2010 RMB'000 RMB'000
__________________________________________________________________________
Accounts and notes payables
Fuel and materials payables to third parties 8,323,277 7,100,568
Fuel and materials payables to related parties 153,138 49,076
Notes payables to third parties 1,685,269
980,127
__________________________________________________________________________
10,161,684
8,129,771
Construction payables to third parties 9,462,257
8,132,531
Construction payables to related parties 341,430
209,902
Acquisition considerations payables 164,989
91,627
Receipts in advance from related parties 11,312
591
Receipts in advance from third parties 556,701
621,925
Salaries and welfares payables 64,346
51,444
Interests payables 580,359
390,087
Other payables to related parties 204,789
95,528
Others 2,392,146
1,206,660
__________________________________________________________________________
23,940,013
18,930,066
__________________________________________________________________________
The ageing analysis of the accounts and notes payables is as follows:
________________________________________________________________________
2011 2010 RMB'000 RMB'000
________________________________________________________________________
Within one year 9,537,844 8,129,771 Between one to two years 623,840 -
________________________________________________________________________
10,161,684
8,129,771
________________________________________________________________________
38. SHORT-TERM LOANS
________________________________________________________________________
2011 2010 RMB'000 RMB'000
________________________________________________________________________
Short-term bank loans 18,404,009 16,665,728 Other short-term loans 3,119,700 2,709,100
________________________________________________________________________
21,523,709
19,374,828
________________________________________________________________________
Short-term loans are classified as follows: 2011 2010 Other Other Short-term short-term Short-term short-term bank loans loans Total bank loans loans Total RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
___________________________________________________________________________________________________
Secured loans 1,082,940 - 1,082,940 669,370 - 669,370 Guaranteed loans 962,619 - 962,619 816,336 - 816,336 Unsecured loans 16,358,450 3,119,700 19,478,150 15,180,022 2,709,100 17,889,122
___________________________________________________________________________________________________
18,404,009 3,119,700 21,523,709
16,665,728 2,709,100 19,374,828
___________________________________________________________________________________________________
The carrying amounts of the Group's short-term loans are denominated in the following currencies: 2011 2010 Other Other Short-term short-term Short-term short-term bank loans loans Total bank loans loans Total RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
___________________________________________________________________________________________________
RMB 17,184,608 3,119,700 20,304,308 15,921,339 2,709,100 18,630,439 USD 656,782 - 656,782 128,053 - 128,053 HKD 562,619 - 562,619 616,336 - 616,336
___________________________________________________________________________________________________
18,404,009 3,119,700 21,523,709
16,665,728 2,709,100 19,374,828
___________________________________________________________________________________________________
The interest rates for short-term loans per annum at 31 December were as follows:
________________________________________________________________________
2011 2010 RMB'000 RMB'000
________________________________________________________________________
Short-term bank loans 1.31% - 8.50% 1.31% - 5.56% Other short-term loans 5.04% - 6.56% 3.89% - 5.23%
________________________________________________________________________
Short-term loans of RMB11,100,699 thousand (2010: RMB7,297,432 thousand) are
arranged at fixed interest rates and expose the Group to fair value interest
rate risk. The remaining short-term loans are arranged at floating rates,
thus exposing the Group to cash flow interest rate risk.
At 31 December 2011, short-term bank loans amounted to RMB1,032,940 thousand
(2010: RMB669,370 thousand) were secured by certain tariff collection rights
of the Group.
At 31 December 2011, short-term bank loans amounted to RMB50,000 thousand
(2010: nil) were secured by the inventories amounted to RMB86,454 thousand
(2010: nil).
At 31 December 2011, short-term bank loans amounted to RMB320,000 thousand
(2010: RMB200,000 thousand) and RMB80,000 thousand (2010: nil) were guaranteed
by the Company and a subsidiary of the Company respectively.
At 31 December 2011, short-term bank loans amounted to RMB562,619 thousand
(2010: RMB616,336 thousand) were guaranteed by a related party and secured
by a charge over 358,680,000 H shares of the Company executed by the related
party in favour of the bank and counter-guaranteed by the Company.
At 31 December 2011, other short-term loans amounted to RMB1,844,700 thousand
(2010: RMB2,709,100 thousand) which was borrowed from Datang Finance was unsecured
and interest-bearing at 5.04% to 6.35% (2010: 4.37% to 5.23%) per annum.
39. SHORT-TERM BONDS
At 31 December 2011, short-term bonds represented unsecured bonds issued by the Group
in October 2011 and November 2011 at par value of RMB100 each with annual coupon and
effective interest rate of ranging from 5.99% to 6.86% and matured within 12 months.
40. NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS
(a) Reconciliation from profit before tax to cash generated from operations
_______________________________________________________________________________
2011 2010 RMB'000 RMB'000
_______________________________________________________________________________
Profit before tax 3,709,935 4,700,300 Adjustments for: Depreciation of property, plant and equipment 8,588,644 7,376,954 Depreciation of investment properties 16,164 5,018 Amortisation of intangible assets 17,698 23,409 Amortisation of long-term deferred expenses 28,669 24,537 Amortisation of deferred income (33,760) (48,238) Amortisation of deferred housing benefits 29,691 30,854 Net gains on disposals of property, plant and equipment (13,045) (58,867) Loss on disposal of intangible assets 419 - Write-off of property, plant and equipment 4 29 Gain on disposals of investment properties - (26,813) Interest income (109,820) (38,215) Finance costs 7,102,002 5,323,245 Dividend income (42,221) (9,327) Interest income from entrusted loans lent to a jointly controlled entity (7,970) (688) Reversal of allowance for accounts receivables (70) (130) Reversal of allowance for other receivables (88) (41,685) Reversal of allowance for inventories (97) - Shares of profits of associates (945,970) (718,231) Shares of profits of jointly controlled entities (94,229) (1,104) Gain on disposals of available-for-sale investments (325) (8,212) Gain on disposals of associates - (93,811) Gain on disposal of a subsidiary (58,239) - Other gains - others - (354)
________________________________________________________________________________
Operating profit before working capital changes 18,187,392
16,438,671
Increase in inventories (2,081,976)
(1,004,442)
Increase in accounts and notes receivables (2,037,829)
(1,353,059)
(Increase)/decrease in prepayments and other
receivables (4,073,875)
1,702,471
Increase in accounts payables and accrued
liabilities 4,432,227
1,858,290
(Decrease)/increase in taxes payables (321,561)
710,882
________________________________________________________________________________
Cash generated from operations 14,104,378
18,352,813
________________________________________________________________________________
(b) Major business combinations other than under common control
On 31 March 2011, the Group acquired 100% of the respective issued capital of Chengdu
Liguo Energy Company Limited, Chengdu Qingjiangyuan Energy Company Limited and Chengdu
Zhongfu Energy Company Limited in order to gain 54.44% indirect equity interest in
Sichuan Jinkang Electricity Development Company Limited ("Jinkang Company") for a
total cash consideration of RMB996,835 thousand. Jinkang Company was engaged in
hydropower generation during the year.
The carrying amount and the fair value of the identifiable assets and liabilities
of the above subsidiaries acquired as at their date of acquisition are as follows:
_____________________________________________________________________________________
Carrying Fair value amount adjustments Fair value RMB'000 RMB'000 RMB'000
_____________________________________________________________________________________
Net assets acquired:
Property, plant and equipment 1,323,236
1,387,509 2,710,745
Cash and cash equivalents 86,798 - 86,798 Other current assets 182,415 - 182,415 Loans (1,140,000) - (1,140,000) Deferred tax liabilities -
(208,126) (208,126)
Other current liabilities (78,338)
- (78,338)
_____________________________________________________________________________________
374,111
1,179,383 1,553,494
Non-controlling interests (150,162)
(537,327) (687,489)
_______________________________________________________________________
Goodwill
130,830
_____________________________________________________________________________________
Satisfied by:
Cash
996,835
_____________________________________________________________________________________
Net cash outflow arising on acquisition: Cash consideration paid (996,835) Cash and cash equivalents acquired 86,798
_____________________________________________________________________________________
(910,037)
_____________________________________________________________________________________
The goodwill arising on the acquisition of above subsidiaries is attributable to
the anticipated profitability of their hydropower generation operations and the
anticipated future operating synergies from the combination.
The above subsidiaries contributed RMB4,835 thousand to the Group's profit for
the year between their date of acquisition and the end of the reporting period.
If the above acquisition had been completed on 1 January 2011, total Group revenue
for the year would have been RMB72,501,467 thousand, and profit for the year would
have been RMB3,044,420 thousand. The proforma information is for illustrative purposes
only and is not necessarily an indication of the revenue and results of operations of
the Group that actually would have been achieved had the acquisition been completed on
1 January 2011, nor is intended to be a projection of future results.
(c) Disposal of a subsidiary
On 1 January 2011, the Group disposed of all its 90.43% equity interest
in Hebei Datang International Huaze Hydropower Development Company Limited.
Net assets at the date of disposal were as follows:
_____________________________________________________________________________________
RMB'000
_____________________________________________________________________________________
Property, plant and equipment 143,936 Cash and cash equivalents 4,164 Other current assets 705 Long-term bank loans (72,500) Other current liabilities (1,040)
_____________________________________________________________________________________
Net assets disposed of 75,265 Non-controlling interests (7,203) Gain on disposal of a subsidiary 58,239
_____________________________________________________________________________________
Total consideration - satisfied by cash
126,301
_____________________________________________________________________________________
Net cash inflow arising on disposal: Cash consideration received 126,301 Cash and cash equivalents disposed of (4,164)
_____________________________________________________________________________________
122,137
_____________________________________________________________________________________
(d) Disposal of interests in subsidiaries without loss of control
During the year, the non-controlling shareholders of three subsidiaries of the Company
injected capital of RMB1,763,576 thousand into the subsidiaries and resulted in decrease
in ownership interests in the subsidiaries without loss of control. The ownership interests
in the three subsidiaries were reduced from 100%, 75% and 100% to 51%, 52.5% and 60%
respectively. The effect of the disposals on the equity attributable to the owners
of the Company is as follows:
_____________________________________________________________________________________
RMB'000
_____________________________________________________________________________________
Capital injection received 1,763,576 Share of net assets in the subsidiaries disposed of (1,329,843)
_____________________________________________________________________________________
Gain on disposal recognised directly in equity
433,733
_____________________________________________________________________________________
(e) Material non-cash transactions
Additions to property, plant and equipment during the year of RMB342,406 thousand
(2010: RMB556,056 thousand) were financed by finance leases.
41. FINANCIAL GUARANTEES
The Group issues financial guarantee contracts to its associates, jointly controlled entities
and other equity investees for their borrowings from financial institutions for business
developments that transfer significant insurance risk. The risk under any one financial
guarantee contract is the possibility that the insured event (default of a specified
debtor) occurs and the uncertainty of the amount of the resulting claims. By the nature
of such financial guarantee contracts, this risk is predictable.
Experience shows credit risks from specified debtors are relatively remote. The Group
maintains a close watch on the financial position and liquidity of the associates,
jointly controlled entities and other equity investees for which financial guarantees
have been granted in order to mitigate such risks. The Group takes all reasonable steps
to ensure that it has appropriate information regarding any claim exposure. Details of
financial guarantee contracts issued by the Group to the above-mentioned parties at the
end of the reporting period are as follows:
_______________________________________________________________________________
2011 2010 RMB'000 RMB'000
_______________________________________________________________________________
Associates 470,800
170,000
Jointly controlled entities 572,300
614,500
Other equity investees 84,000
108,000
_______________________________________________________________________________
1,127,100
892,500
_______________________________________________________________________________
Based on historical experience, no claims have been made against the Group since the
date of granting of the above financial guarantees.
42. CAPITAL COMMITMENTS
The Group's capital commitments at the end of the reporting period are as follows:
_______________________________________________________________________________
2011 2010 RMB'000 RMB'000
_______________________________________________________________________________
Property, plant and equipment Contracted but not provided for 26,468,785
15,800,987
Authorised but not contracted for 16,553,592
16,219,088
Equity investments Contracted but not provided for 390,000
1,024,710
Intangible assets
Contracted but not provided for -
3,251,100
_______________________________________________________________________________
43,412,377
36,295,885
_______________________________________________________________________________
43. LEASE COMMITMENTS
At 31 December 2011 the total future minimum lease payments under non-cancellable
operating leases are payable as follows:
_______________________________________________________________________________
2011 2010 RMB'000 RMB'000
_______________________________________________________________________________
Within one year 29,029
26,158
In the second to fifth years inclusive 41,446
51,747
After five years 21,230
23,336
_______________________________________________________________________________
91,705
101,241
_______________________________________________________________________________
44. RELATED PARTY TRANSACTIONS
In addition to those related party transactions and balances disclosed elsewhere
in the financial statements, the Group had the following significant transactions
and balances with its related parties in the normal course of business during the
year: (a) Significant transactions with related parties
(i) Significant transactions with China Datang and its subsidiaries other than the
Group (collectively referred to as "China Datang Group") and associates and
jointly controlled entities of the Group and their respective subsidiaries
_______________________________________________________________________________
2011 2010 RMB'000 RMB'000
_______________________________________________________________________________
China Datang Group Sales of electricity 91,493 - Clean development mechanism income 9,160 - Sales of coal 214,980 4,880 Receipt of coal ash disposal service 57,890 57,890 Purchases of materials and equipment 410,765 489,630 Purchases of fuel 142,199 25,763 Receipt of equipment purchase agency services - 3,078 Operating lease expenses for buildings and facilities 22,228 22,228 Receipt of repairs and maintenance services 16,270 12,047 Provision of entrusted loans - 24,000 Sales of pre-project assets - 92,670 Provision of technical support services 421 420 Receipt of transportation services 32,000 -
_______________________________________________________________________________
Associates of the Group Purchases of fuel 66,471 61,121 Receipt of technical support services 65,609 66,929 Drawdown of loans 9,051,500
14,641,600
Interest expense on loans 234,492 193,121 Interest income on deposits 44,296 15,407
_______________________________________________________________________________
Subsidiary of an associate of the Group Purchases of fuel 588,844 497,909 Jointly controlled entities of the Group Purchases of fuel 319,348 318,359 Provision of entrusted loans 364,500 250,000 Interest income on entrusted loans 7,970 688
_______________________________________________________________________________
During the year, the Company set up a 35% owned associate with a subsidiary of
China Datang for a capital injection of RMB7,000 thousand.
During the year, China Datang Group injected capital to three subsidiaries of
the Company amounted to RMB874,036 thousand, RMB557,000 thousand and RMB332,540
thousand respectively.
(ii) Financial guarantees and financing facilities with China Datang Group and associates and jointly controlled entities of the Group
_______________________________________________________________________________
2011 2010 RMB'000 RMB'000
_______________________________________________________________________________
China Datang Group Long-term loans of the Group guaranteed by China Datang 563,723 1,348,176 Short-term loans of the Group guaranteed by a subsidiary of China Datang and secured by a charge over 358,680,000 H shares of the Company executed by that subsidiary in favour of the bank and counter-guaranteed by the Company 562,619 616,336 Associates of the Group Long-term loans of the associates guaranteed by the Company 470,800 170,000 Integrated credit facilities provided by an associate 18,000,000 4,500,000 Jointly controlled entities of the Group Long-term loans of jointly controlled entities guaranteed by the Company 320,800 389,500 Short-term loans of a jointly controlled entity guaranteed by the Company 251,500 225,000
_______________________________________________________________________________
(iii) Significant transactions with Government-Related Enterprises
During the years ended 31 December 2011 and 2010, the Group
sold substantially
all of its electricity to local government-related power grid
companies. Please
refer the details of information of power generation revenue
to major power grid
companies to note 8 to the financial statements. The Group
maintained most of its
bank deposits in government-related financial institutions
while lenders of most
of the Group's loans are also government-related financial
institutions, associated
with the respective interest income or interest expense
incurred.
During the years ended 31 December 2011 and 2010, other
collectively significant
transactions with Government-Related Entities also included
purchases of fuel
and property, plant and equipment. (iv) Compensation to key management personnel of the Group
_______________________________________________________________________________
2011 2010 RMB'000 RMB'000
_______________________________________________________________________________
Basic salaries and allowances 1,958 1,965 Bonus 2,973 2,829 Retirement benefits 276 372 Other benefits 279 153
_______________________________________________________________________________
5,486 5,319
_______________________________________________________________________________
Further details of directors' and supervisors' emoluments are
included in note 12 to
the financial statements. (b) Significant balances with related parties
(i) Significant balances with China Datang Group and associates and jointly controlled
entities of the Group and their respective subsidiaries
_______________________________________________________________________________
2011 2010 RMB'000 RMB'000
_______________________________________________________________________________
China Datang Group Deposits paid for property, plant and equipment (included in property, plant and equipment) - 109,616 Accounts and notes receivables 77,853 1,738 Prepayments and other receivables 170,774 64,518 Accounts payables and accrued liabilities 575,679 268,960 Associates of the Group Prepayments and other receivables 6,168 978 Accounts payables and accrued liabilities 55,488 41,795 Other non-current liabilities 112,000 - Subsidiary of an associate of the Group Accounts payables and accrued liabilities 58,853 26,128 Jointly controlled entities of the Group Prepayments and other receivables 3,309 - Accounts payables and accrued liabilities 20,648 18,214 Short-term entrusted loans 365,198 100,153
_______________________________________________________________________________
Except for short-term entrusted loans stated above, all the
above balances are
unsecured, interest-free and due on demand. Terms of short-term entrusted loans are described in note 26
to the financial
statements. (ii) Significant balances with Government-Related Enterprises At 31 December 2011, the long-term loans (including current portion) and short-term loans payable to Government-Related Enterprises included in long-term loans (including current portion) and short-term
loans amounted
to RMB129,549,155 thousand (2010: RMB121,682,226 thousand)
and RMB19,644,010
thousand (2010: RMB16,651,488 thousand) respectively. The balances with Government-Related Entities also included
substantially all
the accounts receivables of local government-related power
grid companies, most
of the bank deposits which placed in government-related
financial institutions
as well as accounts payables and accrued liabilities arising
from the purchases
of coal and property, plant and equipment. These balances are
unsecured,
interest-free and due within 12 months.
45. PRINCIPAL SUBSIDIARIES
Particulars of the principal subsidiaries as at 31 December 2011
are as follows:
(a) Subsidiaries acquired from business combination under common control _________________________________________________________________________________________________________________
Place of incorporation/ registration Registered and Percentage ofName and operation paid up capital equity interest Principal activities RMB'000 Direct Indirect_________________________________________________________________________________________________________________Liaoning Datang International PRC 670,012 100% - Wind power generation
Wind Power Development
Company Limited
Liaoning Datang International PRC 117,170
- 100% Wind power generation
Changtu Wind Power
Company Limited
Datang Hulunbei'er Fertilizer PRC 493,470
- 100% Production and sales
Company Limited of chemical materialsDatang Zhangzhou Wind Power PRC 217,590
- 100% Wind power generation
Company Limited
_________________________________________________________________________________________________________________
(b) Subsidiaries acquired from business combination other than under common control and obtained
through other methods'
_________________________________________________________________________________________________________________
Place of incorporation/ registration Registered and Percentage ofName and operation paid up capital equity interest Principal activities RMB'000 Direct Indirect unless otherwise stated
_________________________________________________________________________________________________________________
Tianjin Datang International PRC 831,253 75% - Power generation
Panshan Power Generation
Company Limited
Inner Mongolia Datang PRC 1,714,020 60% - Power generation International Tuoketuo Power Generation Company LimitedShanxi Datang International PRC 749,000 60% - Power generation
Shentou Power Generation
Company Limited
Shanxi Datang International PRC 647,020 100% - Power generation and Yungang Thermal Power heat supply Company LimitedGansu Datang International PRC 275,500 55% - Power generation
Liancheng Power Generation
Company Limited
Hebei Datang International PRC 380,264 80% - Power generation and Tangshan Thermal Power heat supply Company LimitedJiangsu Datang International PRC 1,050,186 55% - Power generation
Lvsigang Power Generation
Company Limited
Shanxi Datang International PRC 162,125 80% - Power generation
Yuncheng Power Generation
Company Limited
Guangdong Datang International PRC 391,990 52.5% - Power generation
Chaozhou Power Generation
Company Limited
Fujian Datang International PRC 370,000 51% - Power generation
Ningde Power Generation
Company Limited
Chongqing Datang International PRC 1,098,170
40% 24% Hydropower generation
Pengshui Hydropower
Development Company Limited
Chongqing Datang International PRC 771,990
51% 24.5% Hydropower generation
Wulong Hydropower Development
Company Limited
Datang International Hong Kong USD2,900,000 100% - Import of power related (Hong Kong) Limited fuel and equipmentQinghai Datang International PRC 380,000
- 90% Hydropower generation
Zhiganglaka Hydropower Development Company Limited ("Zhiganglaka Company")Hebei Datang International PRC 450,000 70% - Power generation
Wangtan Power Generation
Company Limited
Chongqing Datang International PRC 143,330 70% - Power generation
Shizhu Power Generation
Company Limited
Sichuan Datang International PRC 50,000 80% - Hydropower generation
Ganzi Hydropower Development
Company Limited
Beijing Datang Fuel Company PRC 514,650 51% - Coal trading
Limited
Zhejiang Datang Wushashan PRC 1,700,000 51% - Power generation Power Generation Company LimitedInner Mongolia Datang PRC 1,066,050 60% - Coal mining International Xilinhaote Mining Company Limited Inner Mongolia Datang PRC Registered capital: 40% - Power generation International Tuoketuo II Power 500,000; Generation Company Limited paid-in capital: ("Tuoketuo II Power Company") (i) 100,000Hebei Datang International PRC 458,000 100% - Power generation and Zhangjiakou Thermal Power heat supply Generation
Company Limited
Shanxi Datang International PRC 150,000 100% - Wind power generation
Zuoyun Wind Power Generation
Company Limited
Jiangxi Datang International PRC 100,000 100% - Power generation
Fuzhou Power Generation
Company Limited
Liaoning Datang International PRC 368,000 100% - Power generation and Jinzhou Thermal Power heat supply
Generation Limited
Chongqing Datang International PRC 93,880 100% - Wind power generation
Wulongxingshun Wind
Power Company Limited
Hebei Datang International PRC 329,330 84% - Power generation and Fengrun Thermal Power heat supply Company LimitedDatang Energy and Chemical PRC 7,550,180 100% - Energy and chemical Company Limited developmentDatang Fuxin Energy and PRC 30,000
- 100% Maintenance of chemical
Chemical Engineering power equipment, Company Limited construction and mechanical subcontractingDatang Energy and Chemical PRC 50,000
- 100% Wholesale and retail of
Marketing Company Limited chemical productsDatang International Chemical PRC 50,000
- 100% Coal chemistry related
Technology Research consultation services
Institute Company Limited
Datang Inner Mongolia Erdos PRC 168,000
- 100% Silicon and aluminium
Silicon and Aluminium smelting
Technology Company Limited
Datang Inner Mongolia Duolun PRC 4,050,000
- 60% Coal chemical production
Coal Chemical Company Limited
Inner Mongolia Datang International PRC 110,000
- 26% Production and sale of
Renewable Energy Resource alumina
Development Company Limited
("Renewable Energy Resource
Development Company") (ii)
Inner Mongolia Datang International PRC 28,520
- 51% Hydropower generation
Duolun Hydropower Multiple and water supply
Development Company Limited
Inner Mongolia Datang Tongfang PRC 10,000
- 26% Development and
Silicon and Aluminum Technology production of silicon Company Limited and aluminum alloy
("Tongfang Silicon and
Aluminum") (iii)
Liaoning Datang International PRC 1,235,250
- 90% Coal-based natural gas
Fuxin Coal-based Gas generation
Company Limited
Inner Mongolia Datang International PRC 3,921,570
- 51% Coal-based natural gas
Keshiketeng Qi Coal-based generation
Gas Company Limited
Inner Mongolia Datang International PRC 60,000
- 100% Brown coal processing
Xilinhaote Brown Coal Integrated
Development Company Limited
Inner Mongolia Datang PRC 10,000
- 90% Hydropower generation
International Keshiketeng and water supply
Dashimen Hydropower
Development Company Limited PRC 1,300
- 80% Sewage disposal
Fuxin Qingyuan Sewage Disposal
Company Limited
Duolun County Huachuan PRC 7,000
- 100% Production of plastic
Zhuoyue Plastic Products products Company LimitedJiangsu Datang Shipping PRC 264,900 97.54% - Cargo shipping
Company Limited
Inner Mongolia Datang PRC 601,740 100% - Wind power generation
International Wind Power
Development Company Limited
Fujian Datang International PRC 314,670 100% - Wind power generation
Wind Power Development
Company Limited
Shanxi Datang International PRC 282,550 80% - Power generation and Linfen Thermal Power heat supply Company LimitedLiaoning Datang International PRC 244,950
- 100% Wind power generation
Fuxin Wind Power
Company Limited
Xizang Datang International PRC 100,000 100% - Hydropower generation
Nujiang Upstream Hydropower
Development Company Limited
Liaoning Datang International PRC 60,000 100% - Nuclear power generation
Zhuanghe Nuclear Power
Company Limited
Datang Tongzhou Technology PRC 165,000 60.61% - Sales of coal ash and Company Limited integrated application of solid wastesBeijing Tongzhou High Voltage PRC 2,000
- 80% Sales of ash
Environmental Protection
Technology Company Limited
Zhejiang Datang Tongzhou PRC 5,000
- 80% Sales of ash
Environmental Protection
Technology Company Limited
Tianjin Datang Tongzhou Tongxin PRC 5,000
- 80% Sales of ash
Technology Company Limited
Fujian Datang Tongzhou Yicai PRC 5,000
- 55% Sales of ash and
Environmental Protection comprehensive Technology Company Limited utilisation of solid emissionsBeijing Tongzhou Xinyuan PRC 2,000
- 70% Sales of ash and
Building Materials comprehensive Technological Development utilisation of Company Limited solid emissionsNantong Tongzhou Datong PRC 1,000
- 60% Cargo agent and
Logistics Company Limited sales of ashTangshan Haigang Datang PRC 15,000
- 52% Trading of construction
Tongzhou Construction materials Materials Company Limited Yunnan Datang International PRC 1,315,352 100% - Power plant construction Electric Power Company Limited and operationsYunnan Datang International PRC 414,550
- 70% Power generation
Honghe Power Generation
Company Limited
Yunnan Datang International PRC 173,370
- 51% Hydropower generation
Nalan Hydropower
Development Company Limited
Yunnan Datang International PRC 728,500
- 70% Hydropower generation
Lixianjiang Hydropower
Development Company Limited
Yunnan Datang International PRC 316,670
- 60% Hydropower generation
Wenshan Hydropower
Development Company Limited
Yunnan Datang International PRC 58,000
- 70% Hydropower generation
Hengjiang Hydropower
Development Company Limited
Yunnan Datang International PRC 89,044
- 70% Hydropower development
Biyuhe Hydropower
Development Company Limited
Yunnan Datang International PRC 57,270
- 100% Hydropower development
Mengyejiang Hydropower
Development Company Limited
Yunnan Datang International PRC Registered capital: - 70% Hydropower construction
Deqin Hydropower 54,591; and operations Development Company Limited paid-in capital: 10,100Hebei Datang International PRC 624,970 100% - Wind power generation
Wind Power Development
Company Limited
Liaoning Datang International PRC 40,000 100% - Power generation and Wafangdian Thermal Power heat supply
Company Limited
Inner Mongolia Datang International PRC 60,450 100% - Water conservancy Haibowan Water Conservancy hub construction Hub Development and management Company LimitedNingxia Datang International PRC 33,890 100% - Solar power generation
Qingtongxia Photovoltaic Power
Generation Company Limited
Inner Mongolia Datang International PRC 60,000 51% - Power generation and Hohhot Thermal Power heat supply Generation
Company Limited
Jiangxi Datang International PRC 583,912 100% - Power generation Xinyu Power Generation Company LimitedInner Mongolia Datang PRC 50,000 52% - Coal mining International Zhunge'er Mining Company LimitedNingxia Datang International PRC 40,000 45% - Power generation Daba Power Generation Company Limited ("Daba Power Company") (iv)Hebei Datang International PRC 33,334 57% - Power generation
Qian'an Thermal Power
Company Limited
Yuneng (Group) Company PRC 1,663,266 100% - Investment holding, power Limited generation and property developmentQinghai Datang International PRC 10,000 100% - Solar power generation
Golmud Photovoltaic Power
Generation Company Limited
Ningxia Datang International PRC 2,000 100% - Wind power generation
Qingtongxia Wind Power
Company Limited
Chengdu Liguo Energy Company PRC 45,211 100% - Hydropower generation
Limited
Chengdu Qingjiangyuan Energy PRC 38,950 100% - Marketing planning
Company Limited
Chengdu Zhongfu Energy PRC 26,297 100% - Hydropower generation
Company Limited
Inner Mongolia Baoli Coal PRC 50,000 70% - Coal mining
Company Limited
Sichuan Jinkang Electricity PRC 195,000
- 54.44% Hydropower generation
Development Company Limited___________________________________________________________________________________________________________________
All the above subsidiaries are limited liability companies except that Zhiganglaka Company
which is also a foreign investment enterprise.
The above list contains the particulars of subsidiaries which principally affected the
results, assets or liabilities of the Group.
(i) On 6 September 2006, the Company entered into an agreement with China Datang, one of
the shareholders of Tuoketuo II Power Company, which holds 20% equity interest in
Tuoketuo II Power Company. Pursuant to this agreement, the shareholder representative
and directors appointed from China Datang will act in concert with that of the Company's
when exercising voting rights in shareholders' and directors' meetings of Tuoketuo II
Power Company. Therefore, the Company obtained de facto control over Tuoketuo II Power
Company and accounted for it as a subsidiary onwards.
(ii) The Company entered into an agreement with one of the shareholders of Renewable Energy
Resource Development Company, which holds 25% equity interest of this subsidiary in
2007. Pursuant to this agreement, the shareholder representative and directors appointed
from this shareholder will act in concert with that of the Company's when exercising
voting rights in shareholders' and directors' meetings of Renewable Energy Resource
Development Company. Therefore, the Company obtained de facto control over Renewable
Energy Resource Development Company and accounted for it as a subsidiary onwards.
(iii) Energy and Chemical Company, the subsidiary of the Company entered into an agreement
with one of the shareholders of Tongfang Silicon and Aluminum, which holds 26% equity
interest of this subsidiary in 2010. Pursuant to this agreement, the shareholder
representative and directors appointed from this shareholder will act in concert
with that of Datang Energy and Chemical's when exercising voting rights in shareholders'
and directors' meetings of Tongfang Silicon and Aluminum. Therefore, the Company obtained
de facto control over Tongfang Silicon and Aluminum and accounted for it as a subsidiary
onwards.
(iv) On 1 July 2009, the Company entered into an agreement with another shareholder of Daba
Power Company, which holds 35% equity interest in Daba Power Company. Pursuant to this
agreement, the shareholder representative and directors appointed from this shareholder
will act in concert with that of the Company's when exercising voting rights in
shareholders' and directors' meetings of Daba Power Company. Therefore, the Company
obtained de facto control over Daba Power Company and accounted for it as a subsidiary
since 1 July 2009.
46. EVENTS AFTER THE REPORTING PERIOD
On 8 January 2012, the Company entered into the Zhong Rong - Qiantai Energy Equity
Interest Investment Single Trust Fund Agreement with Zhong Rong International Trust
Company Limited ("Zhong Rong Trust"), pursuant to which the Company agreed to
contribute RMB2 billion to invest in the specific trust scheme set up by Zhong Rong
Trust for a term of three years. During the term of the specific trust scheme, Zhong
Rong Trust agreed to use such trust fund to make capital contribution to the Inner
Mongolia Qiantai Energy Investment Company Limited ("Project Company") under the name
of the trustee for the purpose of integrating the relevant coal mines within Dalate
Qi in Erdos City. Zhong Rong Trust will hold 50% equity interest in the Project
Company on behalf of the Company upon completion of the increase in capital contribution
by the specific trust scheme to the Project Company. Upon expiration of the term of
the specific trust scheme and the completion of the integration of the relevant coal
mines, Zhong Rong Trust will transfer 50% equity interest in the Project Company to
the Company. The beneficiary and trustor of the specific trust scheme is the Company.
The trustee is Zhong Rong Trust. The annual income to be generated from the specific
trust scheme is expected to be RMB400 million.
47. APPROVAL OF FINANCIAL STATEMENTS
The financial statements were approved and authorised for issue by the Board of Directors
on 23 March 2012.
Differences between Financial Statements
For the year ended 31 December 2011
The consolidated financial statements which are prepared by the Group in conformity with International Financial Reporting Standards ("IFRS") differ in certain respects from China Accounting Standards for Business Enterprises ("PRC GAAP"). Major differences between IFRSand PRC GAAP ("GAAP Differences"), which affect the net assets and net profit of the Group, are summarised as follows:
_____________________________________________________________________________________________
Net assets Note 2011 2010 RMB'000 RMB'000
_____________________________________________________________________________________________
Net assets attributable to owners of the Company
under IFRS 38,940,692 30,850,071Impact of IFRS 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) (102,839) (132,530) Difference in accounting treatment on mining funds (c) (175,734) (82,095) Applicable deferred tax impact of the above GAAP Differences 715 (3,641) Non-controlling interests' impact of the above GAAP Differences after tax 18,564 (1,015)
_____________________________________________________________________________________________
Net assets attributable to owners of the Company
under PRC GAAP 38,787,864
30,737,256
_____________________________________________________________________________________________
_____________________________________________________________________________________________
Net profits Note 2011 2010 RMB'000 RMB'000
_____________________________________________________________________________________________
Profit for the year attributable to owners of
the Company under IFRS 1,971,200
2,569,734
Impact of IFRS adjustments:
Difference in accounting treatment on monetary housing benefits (b) 29,691 30,854 Difference in accounting treatment on mining funds (c) (86,838) (107,273) Applicable deferred tax impact of the above GAAP Differences 4,357 (12,804) Non-controlling interests' impact of the above GAAP Differences after tax (8,299) (6,827)
_____________________________________________________________________________________________
Net profit for the year attributable to owners
of the Company under PRC GAAP 1,910,111
2,473,684
_____________________________________________________________________________________________
Note:
(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 remaining average 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 the profit or loss 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.
Corporate InformationENGLISH NAME OF THE COMPANY
Datang International Power Generation Company Limited
OFFICE ADDRESS OF THE COMPANY
No. 9 Guangningbo StreetXicheng DistrictBeijingPeople's Republic of China
PRINCIPAL PLACE OF BUSINESS IN HONG KONG
Stephen Mok & Co in association with Eversheds21/F Gloucester Tower15 Queen's Road CentralHong KongLEGAL REPRESENTATIVELiu ShundaAUTHORISED REPRESENTATIVES Cao JingshanZhou GangSECRETARY TO THE BOARD Zhou GangPRINCIPAL BANKERS In the PRC:Industrial and Commercial Bank ofChina, Xuanwu BranchNo. 3 Nanbinhe RoadXuanwu DistrictBeijingPeople's Republic of ChinaOutside the PRC:Bank of China, Hong Kong BranchOne Garden RoadCentralHong KongDOMESTIC AUDITORRSM China Certified Public Accountants(Special General Partnership)8-9F, Block A, Corporate SquareNo. 35 Finance StreetXicheng DistrictBeijingPeople's Republic of ChinaINTERNATIONAL AUDITORRSM Nelson WheelerCertified Public Accountants29th Floor, Caroline CentreLee Gardens Two28 Yun Ping RoadHong KongLEGAL ADVISORSas to PRC law:Beijing Hylands Law Firm5A1 Hanwei PlazaNo. 7 Guanghua RoadChaoyang DistrictBeijingPeople's Republic of Chinaas to Hong Kong law:Stephen Mok & Co in association with Eversheds21/F, Gloucester Tower15 Queen's Road CentralHong KongLISTING INFORMATIONH SharesThe Stock Exchange of Hong Kong LimitedCode: 00991A SharesShanghai Stock ExchangeCode: 601991H SharesThe London Stock Exchange LimitedCode: DAT
SHARE REGISTER AND TRANSFER OFFICE
Computershare Hong Kong Investor Services Limited17/F, Hopewell Center183 Queen's Road EastWanchaiHong KongINFORMATION OF THE COMPANYAvailable at:The secretary office of the BoardDatang International Power Generation Company LimitedNo. 9 Guangningbo StreetXicheng DistrictBeijingPeople's Republic of ChinaandHill+Knowlton Strategies Asia36/F, PCCW Tower, Takioo Place979 King's RoadHong KongGlossary of Terms
The following terms have the following meaning in this annual report, unless otherwise required by the context.
"Equivalent availability factor" For a specified period and a given power plant, the ratio (usually expressed as a percentage) of the number of available hours in that period (reduced, in the case of hours in which the attainable generating capacity of such plant is less than the installed capacity, by the proportion of installed capacity not so attainable) to the total number of hours in that period"Gross generation" For a specified period, the total amount of electrical power produced by a power plant in that period including electrical power consumed in the operation of the power plant"Installed capacity" The highest level of electrical output which a power plant is designed to be able to maintain continuously without causing damage to the plant"kWh" A unit of power generation equivalent to the output generated by 1,000 watts of power in one hour"MW" 1,000,000 watts (equivalent to 1,000 kW)"MWh" A unit of power generation equivalent to the output generated by 1,000,000 watts of power in one hour"North China Power" The power transmission network covering Beijing, Tianjin, Hebei Province, Shanxi Province and Inner Mongolia Autonomous Region"Total on-grid generation" The amount of power transmitted to a power network from a power plant as measured by the grid meter"Utilisation hours" For a specified period, the number of hours it would take for a power plant operating at installed capacity to generate the amount of electricity actually produced in that period
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