2011 Interim Report
DATANG INTERNATIONAL POWER GENERATION CO., LTD.
(Stock Code: 00991)
2011 Interim Report
Focus in Power Generation,
Pursue Synergistic Diversifications,
Brighten Tomorrow with Clean Energy.
All these years, Datang Power has been steadfastly implementing its development strategy
of "focusing in the power generation business whilst seeking synergistic
diversifications". It has gone a long way towards achieving diversified expansion of its
power sources structure as well as its assets structure: concurrent developments on
coal-fired power, hydropower and wind power; continued capacity growth on clean and
renewable energies; and continuous growth on various business segments including power
generation, coal, coal-to-chemical, transport and recycling economy.
During the Twelfth Five-year Plan period, Datang Power will continue to focus in the
power generation business whilst capitalising on the complementary advantages of various
power sources, and will rely on the coal operations as a foundation for strengthening
the Group's risk-aversion capability. It will build the coal-to-chemical business into
a new profit platform, and develop railway, port and shipping into a transportation
backbone to link up the Group's upstream-downstream assets chain. In fully leveraging
the synergy of its diversified businesses, Datang Power aims to enhance its
competitiveness and profitability in various energy sectors, building itself into a
brighter tomorrow.
Contents
-- Company Results
-- Management Discussion and Analysis
-- Share Capital and Dividends
-- Significant Events
-- Purchase, Sale and Redemption of the Company's Listed Securities
-- Compliance with the Code on Corporate Governance Practices
-- Compliance with the Model Code for Securities Transactions by Directors of
Listed Issuers
-- Audit Committee
-- Condensed Consolidated Statement of Comprehensive Income
-- Condensed Consolidated Statement of Financial Position
-- Condensed Consolidated Statement of Changes in Equity
-- Condensed Consolidated Statement of Cash Flows
-- Notes to the Condensed Financial Statements
-- Difference between Financial Statements
Company Results
OPERATING AND FINANCIAL HIGHLIGHTS:
-- Operating revenue amounted to approximately RMB33,322 million, representing an
increase of approximately 15.12% over the first half of 2010.
-- Net profit attributable to equity holders of the Company amounted to approximately
RMB932 million, representing an increase of approximately 2.17% over the first half
of 2010.
-- Basic earnings per share attributable to equity holders of the Company amounted to
approximately RMB0.0747, representing a decrease of approximately RMB0.001 per share
over the first half of 2010.
The board of directors (the "Board") of Datang International Power Generation Co., Ltd.
(the "Company") hereby announces the unaudited consolidated operating results of the
Company and its subsidiaries (the "Group") prepared in conformity with the International
Financial Reporting Standards ("IFRS") for the six months ended 30 June 2011 (the
"Period"), together with the unaudited consolidated operating results of the first half
of 2010 (the "Corresponding Period Last Year") for comparison. Such operating results
have been reviewed and confirmed by the Company's audit committee (the "Audit
Committee").
Operating revenue of the Group for the Period was approximately RMB33,322 million,
representing an increase of approximately 15.12% as compared to the Corresponding Period
Last Year. Net profit attributable to equity holders of the Company was approximately
RMB932 million, representing an increase of approximately 2.17% as compared to the
Corresponding Period Last Year. Basic earnings per share attributable to equity holders
of the Company amounted to approximately RMB0.0747, representing a decrease of
approximately RMB0.001 per share as compared to the Corresponding Period Last Year.
The Board does not recommend any payment of interim dividend for 2011.
Please refer to the unaudited financial information for details of the consolidated
operating results of the Group.
Management Discussion and Analysis
The Group is one of the largest independent power generation companies in the People's
Republic of China (the "PRC"), which is primarily engaged in power generation businesses
with its main focus on coal-fired power generation. In the first half of 2011, the
Company continued to steadfastly implement the strategy of "focusing in the power
generation business whilst complementing with synergistic diversifications". The
Company, having consolidated its strengths in the power generation business, continued
pushing forward power-related upstream and downstream projects such as coal mining,
coal chemical, railway construction and shipping at a steady pace in accordance with
plans. The Group, with reference to changes in the State policies and the market
environment, took initiatives in tackling the changes and making prompt responses, while
ensuring steady, safe and orderly production and operation management. As a result, the
Group achieved a year-on-year steady growth in profits despite a number of unfavourable
factors such as increases in fuel price and loan interest rate.
A. Management's Review on the Operating Results of Various Businesses
(Financial information is shown according to China Accounting Standards for Business
Enterprises ("PRC GAAP"). For segment information, please refer to Note 4 to the
unaudited financial information below.)
1. The Power Generation Business
(1) Business Review
The Company is one of the largest independent power producers in the PRC. As
at 30 June 2011, the Group managed a total installed capacity of
approximately 37,258MW. The power generation businesses of the Group are
primarily distributed in the North China Power Grid, the Gansu Power Grid,
the Zhejiang Power Grid, the Yunnan Power Grid, the Fujian Power Grid, the
Guangdong Power Grid, the Chongqing Power Grid, the Jiangxi Power Grid, the
Liaoning Power Grid, the Ningxia Power Grid, the Jiangsu Power Grid and the
Qinghai Power Grid.
In the first half of 2011, the macro-economy performed satisfactorily as a
whole, which was demonstrated by an overall robust demand for power
nationwide. The power consumption of the society increased relatively fast
by undergoing an year-on-year increase of more than 12%; and power
consumption in various provinces recorded positive growth. However, the
problem regarding structural power shortage remained, competition in the
power market was as intense as before, and the continuously rising thermal
coal prices stayed at high levels, thereby exerting tremendous pressure on
power enterprises for their production operation and power supply. Under the
market conditions where opportunities co-existed with pressures, the
employees of the Group at all levels stood in unity and worked together,
leveraged their management advantages, and adopted pragmatic and effective
measures to overcome to the maximum degree the impact of the unfavourable
factors, thereby having succeeded in maintaining safe and stable operation
and sound development of the Group's power generation businesses.
(i) Maintained Stable and Safe Power Production
During the Period, total power generation of the Group amounted to
approximately 96.1569 billion kWh, representing an increase of
approximately 19.05% as compared to the Corresponding Period Last
Year. Total on-grid power generation of the Group amounted to
approximately 90.6614 billion kWh, representing an increase of
approximately 19.27% over the Corresponding Period Last Year.
Significant year-on-year increases in both total power generation and
on-grid power generation were mainly attributable to a continued sound
macro-economy of the country, an increase in power consumption of the
whole society, and an increase in the capacity of the Group's
operational generating units and their safe and steady operation.
During the Period, the Group added new installed capacity of
approximately 1,208.14 MW. The average utilisation hours of power
generation facilities increased by 253 hours as compared to the
Corresponding Period Last Year. Operational generating units were
operated safely and steadily. No casualties or incidents occurred in
connection with power generation. The equivalent availability factor
of the operational generating units stood at a high level of 91.46%.
(ii) Energy Saving and Emissions Reduction Reaped Remarkable Results
During the Period, coal consumption of the Group amounted to
approximately 319.67g/kWh, representing a decrease of approximately
5.25g/kWh over the Corresponding Period Last Year, while the
consolidated electricity consumption rate of power plants amounted to
approximately 5.80%. The coal-fired generating units of the Group
continued to achieve a desulphurisation facilities installation rate
of 100%. Emission rates of sulphur dioxide, nitrogen oxides, smoke ash
and waste water amounted to approximately 0.382g/kWh, 1.329g/kWh,
0.118g/kWh and 65.91g/kWh respectively, representing decreases of
approximately 17%, 5.7%, 9.9% and 23% respectively. Emission rates of
various pollutants were lower than the national average levels.
(iii) Strengthened Economic Analysis and Improved Business Management
Efficiency
During the Period, the Group continued to encounter various
unfavourable situations such as rising and high coal prices and
increases in loan interest rate. Faced with such an ongoing
challenging operation environment, the Group closely tracked the
market, actively conducted researches on budget plans, strengthened
internal management and created a favourable external environment for
pushing forward production and operation work in a solid manner: (1)
Capital operation proceeded in a solid manner. During the Period, the
Group made full use of the functions of resources allocation in the
capital market by issuing 1 billion A shares by way of non-public
issue to nine specific investors including the parent company China
Datang Corporation. Net proceeds of approximately RMB6,671 million
were raised to replenish the capital needs of the Group during the
process of its development, facilitate a smooth implementation of
investment projects and further improve the Group's profitability.
During the Period, the Group also successfully issued 10-year
corporate bonds in a total amount of RMB3,000 million bearing a coupon
rate of 5.25%, thereby having effectively optimised the debt structure
and reduced the financing costs of the Group. (2) Management
responsibilities were executed level-by-level to achieve the targets
of power generation. Aggregate utilisation hours of power generating
units amounted to approximately 2,557 hours, representing a
year-on-year increase of approximately 253 hours. (3) Various types of
economical coal were developed to secure fuel supply; coal blending
and mixed burning were enhanced, so that fuel costs were kept under
control effectively. (4) Cash allocation and capital availability
according to needs were improved; and loans were repaid on a timely
basis to minimise idle funds and optimise loan portfolio.
(iv) Pushed forward Infrastructure Construction and Optimised Power
Generation Structure
During the Period, the Group achieved prominent results in
construction and preliminary works through delegating management
responsibilities level-by-level according to specific production
targets for various power projects, thereby enabling new generating
units with a total capacity of approximately 1,208.14MW to commence
power generation successfully. Among the new capacity added:
-- Newly installed 600MW of coal-fired power units, mainly including
two 300MW thermal power co-generating units at Linfen Hexi Thermal
Power Company;
-- Newly installed 301.89MW of hydropower units, including 150MW
hydropower generating units at Chongqing Wulong Hydropower Company,
1.89MW hydropower generating units at Yuneng Group and 150MW
hydropower generating units at Sichuan Jinkang Electricity
Development Co., Ltd. (owned through acquisitions); and
-- Newly installed 306.25MW of wind power and photovoltaic generating
units, including 97.5MW wind power generating units at Liaoning
Wind Power Generation Company, 177.75MW wind power generating units
at Inner Mongolia Wind Power Company, 21MW wind power generating
units at Zuoyun Wind Power Company and 10MW photovoltaic generating
units at Qingtongxia Photovoltaic Co. Ltd.
As at 30 June 2011, the generation capacities of coal-fired power,
hydropower and wind power accounted for 86.62%, 11.40% and 1.96% of
the Group's installed power generation capacity, respectively. As
compared to the Corresponding Period Last Year, the proportion of
capacity in clean and renewable energy increased to 13.36%, making the
power generation structure further optimised on an ongoing basis.
(v) Preliminary Works on Projects Proceeded Steadfastly
During the Period, five power projects of the Group have been approved
by the State, including a hydropower project with an approved total
capacity of 850MW, two wind power projects with an approved total
capacity of 96MW, and two photovoltaic power generation projects with
an approved total capacity of 40MW. Details of the aforesaid power
projects are:
-- Hydropower project: 850MW generating units at Huangjinping
Hydropower Station in Dadu River, Sichuan.
-- Wind power project: The Phase 3 project for 48MW generating units
at Faku Wind Power Station in Liaoning, and the Phase 1 project for
48MW generating units at Shengjiadun, Qingtongxia in Ningxia.
-- Photovoltaic power generation project: The Phase 2 project for 20MW
generating units at Qingtongxia photovoltaic power generation in
Ningxia, and 20MW generating units at Golmud photovoltaic power
generation project in Qinghai.
(2) Major Financial Indicators and Analysis
(i) Operating Revenue
During the Period, revenues from electricity and heat sales of the
Group accounted for approximately 92.05% of the total operating
revenue of the Group of the Period. Revenue from electricity sales
accounted for 90.82% of the total operating revenue.
During the Period, revenues from electricity and heat sales of the
Group amounted to approximately RMB30,264 million and RMB410 million,
respectively, representing respective increases of approximately
26.09% and 29.59% over the Corresponding Period Last Year. Of such
revenues, the increase in revenue from electricity sales was primarily
attributable to the combined effects of an increase in the capacity of
operational generating units, a growth in on-grid power generation due
to increased power demand, and a rise in average on-grid tariffs.
During the Period, the increase in on-grid power generation led to an
increase of approximately RMB4,497 million in the Group's revenue; the
Group's average on-grid tariffs increased by approximately
RMB22.80/MWh over the Corresponding Period Last Year, resulting in an
increase of approximately RMB1,765 million in revenue. Of such revenue
increase, an increase of approximately RMB769 million in the first
half of the year was owing to the State's adjustments of power tariff
levels in some areas.
(ii) Operating Costs
During the Period, power fuel expenses incurred by the Group amounted
to approximately RMB18,871 million, representing an increase of
approximately RMB4,814 million from approximately RMB14,057 million
for the Corresponding Period Last Year, which was primarily
attributable to firstly an increase of approximately 12.963 billion
kWh in on-grid coal-fired power generation as compared to the
Corresponding Period Last Year, and secondly a rise of approximately
RMB26.83/MWh in unit fuel costs as compared to the Corresponding
Period Last Year due to rising and high coal prices.
(iii) Operating Profit
During the Period, operating gross profit from power generation
amounted to approximately RMB5,406 million, representing an increase
of approximately 23.03% over the Corresponding Period Last Year while
gross profit margin was approximately 17.86%.
2. The Chemical Business
During the Period, the Duolun Coal Chemical Project with a production scale of
460,000 tonnes of polypropylene per annum, the Keqi Coal-based Natural Gas
Project with a production scale of 4 billion cubic meters of natural gas per
annum, the Fuxin Coal-based Natural Gas Project with a production scale of 4
billion cubic meters of natural gas per annum, and the High-Aluminium Pulverised
Fuel Ash Integrated Use Project of Inner Mongolia Datang International Renewable
Energy Resource Development Company Limited, being controlled and constructed by
the Group, proceeded smoothly. Of these projects:
(1) The Duolun Coal Chemical Project is located at Duolun County, Xilinguole
Pledge, Inner Mongolia Autonomous Region. It uses lignite coal from the
Shengli Open-cut Coal Mine East Unit 2 in Shengli area of Inner Mongolia as
raw materials; and it applies internationally advanced technologies
including the technology of vaporising coal ash, the syngas purification
technology, the large-scale methanol synthesis technology, the technology to
convert methanol to propylene, and the propylene polymerisation technology
to produce coal chemical products. The final products of the project is
460,000 tonnes/year of polypropylene and other by-products.
During the Period, the coal chemical project was under smooth construction
and has succeeded in the first trial run of two gasifiers. The successful
conduct of critical phases such as the successful operation of the response
system of the methanol-to-propylene (MTP) facility in one go and the
production of alkene with qualified constituents marked a significant
breakthrough on the core technologies of the Duolun Coal Chemical Project.
This has laid a solid foundation for opening up the whole-line process flows
and ensuring a stable production of polypropylene products. The Duolun Coal
Chemical Project produced qualified methanol at the end of June 2011. The
project was planned to produce qualified end-product of polypropylene before
the end of 2011, and to carry out continuous production and operation. It is
expected that upon its successful development and construction, the project
will become a new point of profit growth for the Group.
(2) The Keqi Coal-based Natural Gas Project is located in Keshiketeng Qi,
Chifeng City, Inner Mongolia. Upon its completion, the major supply targets
of the project are Beijing and cities along the gas transmission pipeline.
As a political, cultural and financial centre of the PRC, Beijing has a
strong demand for clean energy such as natural gas, given the city's high
requirement for the quality of the air environment. The Group believes that
following the completion of the Keqi Coal-based Natural Gas Project, it will
meet the increasing demand for clean energy in Beijing and the cities along
the gas transmission pipeline, thereby increasing the overall profitability
of the Group.
During the Period, as for the Keqi Coal-based Natural Gas Project, No. 2
power furnace was ignited and on-grid commissioning for No. 1 unit was
conducted; stand-alone test runs and pipeline pressure tests were carried
out for Phase 1 of the air separation project; gasification of all dynamic
and static facilities was completed; lifting of large purification towers
and lifting of the methanation PSA facilities were completed; assembly and
installation of the torch project for the whole plant were all completed;
and construction of water pipelines was all completed and ready for water
supplies. All works are proceeding at an accelerated speed with a target
for commencement of operation in 2012.
(3) The Fuxin Coal-based Natural Gas Project is located in Changyingzi Town,
Xinqiu District, Fuxin City, Liaoning Province. Upon its completion, the
project aims to supply natural gas mainly to Shenyang 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 Group 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 Group.
As at the end of the Period, for the Fuxin Coal- based Natural Gas Project,
invitation of tenders for long-cycle facilities was completed; construction
of major plant zones for gasification, air separation, rectisol and power
island has commenced successively; the chimney shaft in the power zone was
built up to 94.5 metres; and concrete pouring for various units in the air
separation zone was completed. Construction of these projects is being
stepped up, with a target for commencement of operation in 2013.
(4) The High-Aluminium Pulverised Fuel Ash Integrated Use Project of Inner
Mongolia Datang International Renewable Energy Resource Development Company
Limited makes use of the resource characteristic of high-aluminium
pulverised fuel ash from the Inner Mongolia Autonomous Region and
independently developed a technological process for extracting alumina from
high-aluminium pulverised fuel ash. Such process uses industrial solid waste
such as high-aluminium pulverised fuel ash to produce alumina, electrolytic
aluminum and other related products by means of the sintering technology.
2011 is the first year that the alumina segment of the High-Aluminium
Pulverised Fuel Ash Integrated Use Project commenced operation on a trial
basis. Considering the fact that the whole set of technology and equipment
of the project is the first case in China, and that the design is still
being enhanced during the commissioning and testing stage, it is expected
that a long-cycle and stable operation will commence before the end of 2011.
3. The Coal Business
(1) Business Review
The Shengli Open-cut Coal Mine East Unit 2 in Shengli area of Inner
Mongolia, 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 be primarily supplied as
raw materials to the coal chemical and coal-based natural gas projects such
as the Duolun Coal Chemical Project, the Keqi Coal-based Natural Gas Project
and the Fuxin Coal-based Natural Gas Project. In particular, Phase 1 project
(with a construction scale of 10 million tonnes/year) has commenced
operation; Phase 2 project with an annual production capacity of 20 million
tonnes was approved by the National Development and Reform Commission in
March 2011.
During the Period, coal for power generation sourced from coal companies in
which the Company has controlling interests amounted to 2.29 million tonnes
(including 1.67 million tonnes from Shengli Coal Mine East Unit 2 and 0.62
million tonnes from Baoli Coal Mine); coal for power generation sourced from
coal companies in which the Company has equity interests amounted to 6.97
million tonnes (including 4.97 million tonnes from the Tashan Coal Mine and
2.00 million tonnes from Yuzhou Mining). These made up a total amount of
9.26 million tonnes of coal in the first half of 2011, thereby assuring
stable coal sources for the Group. The Group is carrying out preliminary
development works on various projects such as 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 Group's power plants.
(2) Major Financial Indicators and Analysis
(i) Operating Revenue
During the Period, operating revenue from the coal business after
consolidation and offset amounted to approximately RMB788 million,
accounting for approximately 2.37% of the Group's total operating
revenue, representing a decrease of approximately 73.09% over the
Corresponding Period Last Year.
The relatively substantial change in the operating revenue was
primarily attributable to the Group's further increase in the
self-sufficiency of coal consumption and a decrease in sales of
exported coal.
(ii) Operating Costs
During the Period, operating costs from the coal business after
consolidation offset amounted to approximately RMB652 million,
representing a decrease of and approximately RMB1,783 million over
the Corresponding Period Last Year. The decrease in the operating
costs was primarily attributable to reduced business in coal exports.
(iii) Operating Profit
During the Period, operating gross profit from the coal business
amounted to approximately RMB136 million. Gross profit margin was
approximately 17.28%, representing an increase of approximately 0.40%
over the Corresponding Period Last Year.
4. Other Businesses
(1) Jiangsu Datang Shipping Company Limited ("Datang Shipping Company"), in
which the Group holds 97.54% interests, was registered and established in
2007 by the Group. Currently, Datang Shipping Company has two 70,000-tonne
bulk cargo vessels, namely "Datang #1" and "Datang #2", and four
45,000-tonne bulk cargo vessels, namely "Datang #6", "Datang #7", "Datang
#8" and "Datang #10", which are engaged in thermal coal transportation from
Qinhuangdao (or other ports in North China) to southeastern coasts. During
the Period, the shipping companies which the Group controlled or had
interests in achieved 2.16 million tonnes of coal transportation.
Datang Shipping Company actively commenced shipbuilding works and has
entered into relevant agreements on proposed construction of two
76,000-tonne bulk cargo vessels, thereby further expanding the fleet scale
of the Group. The development and expansion of Datang Shipping Company will
help to ease the tense situation being faced with by the Group's coastal
power plants in regard to transportation of thermal coal, to stabilise
transportation costs for thermal coal, and to enhance its transportation
self-sufficiency.
(2) The Board of Directors of the Company considered and approved the Group's
equity investments in various port projects such as the construction of the
Third Phase 3 of the Coal Terminal Project in the Caofeidian Port Area in
Tangshan Port, and the First Phase of the Coal Terminal Project in the
Suizhong Port Area in Huludao Port. These projects aimed to implement the
development strategy of "Securing the Complementary Development of Railway,
Port and Shipping", and further extending the assets chain in order to
secure the Group's outbound shipment of coal resources and to meet coal
supply needed by the power plants located along the southeastern coast,
thereby enhancing the Group's overall profitability.
B. Management's Review on the Consolidated Operating Results
1. Operating Revenue
During the Period, the Group realised an operating revenue of approximately
RMB33,322 million, representing an increase of approximately 15.12% over the
Corresponding Period Last Year. Of the operating revenue, revenue from
electricity sales increased by approximately RMB6,262 million, representing a
year-on-year increase of approximately 26.09%.
2. Operating Costs
During the Period, total operating costs of the Group amounted to approximately
RMB28,861 million, representing an increase of approximately RMB3,829 million or
approximately 15.29% over the Corresponding Period Last Year. Among the operating
costs, fuel cost for power generation and heat generation increased by
approximately 34.43% year-on-year, accounting for approximately 67.31% of the
operating costs, and depreciation cost accounted for approximately 14.40% of the
operating costs. Since the standard coal unit price of the Group for power
generation increased by RMB92.50/tonne over the Corresponding Period Last Year,
the fuel cost for power generation of the Group increased by RMB2,520 million as
a result.
3. Net Finance Costs
During the Period, finance costs of the Group amounted to approximately RMB3,304
million, representing an increase of approximately RMB741 million or
approximately 28.90% over the Corresponding Period Last Year. The significant
increase was mainly due to increases in interest rates and interest-bearing
debts.
4. Net Profit
During the Period, net profit attributable to equity holders of the Group
amounted to approximately RMB932 million, representing an increase of
approximately 2.17% over the Corresponding Period Last Year. The steady
year-on-year growth in the Group's profits was mainly attributable to the
optimised power structure and the profit contributions by hydropower, wind power
and other clean energy projects as well as non-power projects.
5. Financial Position
As at 30 June 2011, total assets of the Group amounted to approximately
RMB237,435 million, representing an increase of approximately RMB24,519 million
as compared to the end of 2010. The increase in total assets was primarily
attributable to increased investments in projects under construction, properties,
equipment and so forth as a result of the Group's implementation of its
development strategies as well as the Company's issue of 1 billion
Renminbi-denominated ordinary shares to specific investors by way of non-public
issue in May 2011. The actual net proceeds from the issue amounted to
approximately RMB6,671 million.
Total liabilities of the Group amounted to approximately RMB191,135 million,
representing an increase of approximately RMB16,652 million over the end of 2010.
Of the total liabilities, long- term borrowings increased by approximately
RMB12,793 million over the end of 2010. The increase in total liabilities was
mainly due to an increase in the Group's borrowings so as to meet the capital
needs of day-to-day operations and infrastructure construction. Equity
attributable to equity holders of the Company amounted to approximately
RMB38,405 million, representing an increase of approximately RMB7,555 million
over the end of 2010. Net asset value per share attributable to equity holders of
the Company amounted to approximately RMB2.89, representing an increase of
approximately RMB0.38 per share over the end of 2010.
6. Liquidity
As at 30 June 2011, the asset-to-liability ratio of the Group was approximately
80.50%. The net debt-to-equity ratio (i.e. (loans + long-term bonds - cash and
cash equivalents)/total equity) was approximately 317.20%.
As at 30 June 2011, cash and cash equivalents of the Group amounted to
approximately RMB15,782 million, of which deposits equivalent to approximately
RMB223 million were foreign currency deposits. The Group had no entrusted
deposits and overdue fixed deposits during the Period.
As at 30 June 2011, short-term loans of the Group amounted to approximately
RMB20,934 million, bearing annual interest rates ranging from 1.26% to 6.31%.
Long-term loans (excluding those repayable within one year) amounted to
approximately RMB122,378 million and long-term loans repayable within one year
amounted to approximately RMB10,401 million. Long-term loans (including those
repayable within 1 year) were at annual interest rates ranging from 1.00% to
6.80%.
Loans of approximately RMB1,027 million were denominated in US dollar. The Group
paid close attention to foreign exchange market fluctuations constantly and
cautiously assessed foreign currency risks. Part of the borrowings of the Group
was pledged against assets including accounts receivable, property, plant and
equipment, etc, totalling approximately RMB53,140 million.
7. Welfare Policy
As at 30 June 2011, the staff of the Group totalled 24,081. The Group adopts the
basic salary system on the basis of position-points salary distribution. The
Group is concerned about personal growth and occupational training. It implements
a reward mechanism of "unification of training, usage and remuneration". Based on
the basic principles of "identifying targets scientifically and providing
training depending on actual needs", and led by the strategy of developing a
strong corporation with strong talents, the Group relies on a three-tier
management organisational structure and implements an all-staff training scheme
for various levels.
During the Period, the Group focused on stepping up the system establishment for
a training base and organised 24 corporate training sessions, attracting 1,539
attendances. More than 520 employees were arranged to attend professional skills
training and on-the-job qualification and certification training programmes
hosted by China Datang Corporation. 130 employees were selected as production
safety experts. 1,907 employees were arranged to undertake professional skills
qualification assessments, and accreditation was conducted. 2,713 employees were
arranged to participate in vocational skills appraisals.
C. Outlook for the Second Half of 2011
Nationwide power demand will maintain a relatively rapid growth momentum under the
impact of a steady and relatively rapid development of the national economy. Power
generation is anticipated to increase by more than 12% for the year, while nationwide
power supply and demand for the year will be tight as a whole, especially for some
areas. Thermal coal supply will remain tight in some areas and will even be tense in
some areas and during certain intervals. The overall price of coal will stay high and
is very likely to soar further. This will create a great impact on power generation and
supply as well as on the profitability of the enterprise. Meanwhile, the State has
adjusted the energy structure by devoting more efforts to the promotion of clean and
renewable energy development, which has imposed more stringent requirements on the
development of new projects of the Group.
In the second half of 2011, the government will continue to maintain continuity and
stability of the macro-economic policies, and will continuously enhance the pertinence,
flexibility and effectiveness of these policies. The People's Bank of China made six
consecutive raises in the reserve requirement ratio and three times of increase in loan
interest during the year following the government's switch of its "moderately relaxed"
monetary policy to a "prudent" one. Various banks have further enhanced risk control and
as a result, enterprises are facing increased difficulties in financing and rising
financing costs.
Faced with such complex and volatile situations, the Group will continue to adhere to
the strategy of "focusing in the power generation business whilst complementing with
synergistic diversifications", and will continue implementing the development strategy
of "enhancing 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
chemical business; speedily developing the high-aluminium pulverised fuel ash integrated
utilisation projects; and securing a complementary development of railway, port and
shipping". It will seize new opportunities, overcome new challenges, achieve new
breakthroughs, stride ahead and build up new strengths. The Group will take proactive
initiatives to cope with market changes with a committed focus on profitability to
ensure that the operation objectives for the whole year will be accomplished as planned:
1. Further reinforce the management of production safety. Prevent casualties and
equipment failures of large generating units to ensure that power generation will
not be affected by production safety issues.
2. Strive to enhance the Group's profitability. With the enhancement of enterprise
profitability as an ongoing objective, strengthen capital management, rationalise
the portfolio for the use of funds and save financial costs. Increase power
generation with all efforts and contain coal prices by applying various measures
with an aim to enhance the profitability of the Group.
3. Seize strategic opportunities, step up the development of the Group's business
resources, continue improving the rational assets deployment, and optimise the
development structure. Continue strengthening the power generation business, excel
in the non-power businesses and promote synergistic diversifications.
4. Actively push forward capital operation. Make full use of the financing platform to
expand financing channels, and improve the rational allocation of capital and
resources to meet the Group's capital demand for development. Actively pursue
acquisitions of good-quality assets with a view to maximising investment returns
for the Group.
5. Continuously intensify energy saving and emissions reduction. Further enhance the
benchmark management of energy consumption; actively carry out sophisticated
management of energy consumption indices and optimise operation of generating units
to further enhance the level of energy consumption indices; and continuously
improve the operation rate and comprehensive efficiency of environmental protection
facilities. Speed up the progress of desulphurisation transformation of coal-fired
generating units, and strengthen the management of the operation of environmental
protection facilities for operational generating units, with a view to effectively
reducing the discharge of pollutants and controlling energy-saving and
environmental costs.
6. Comprehensively strengthen risk prevention and control. The Group will
comprehensively implement the State's "Basic Standards for Enterprise Internal
Control" as well as its guidelines, so as to fully implement comprehensive
accountability management, comprehensive budget management and comprehensive risk
management with a view to raising the management to a more advanced level.
Share Capital and Dividends
1. Share Capital
As at 30 June 2011, the total share capital of the Company amounted to
13,310,037,578 shares, divided into 13,310,037,578 shares carrying a nominal value
of RMB1.00 each.
2. Shareholding of Substantial Shareholders
So far as the directors of the Company are aware, as at 30 June 2011, the persons
listed below held the interests or underlying shares or short positions in the
shares of the Company which were required to be disclosed to the Company under
section 336 of the Securities and Futures Ordinance (the "SFO") (Chapter 571 of the
Laws of Hong Kong):
Approximate Approximate Approximate
percentage to percentage percentage
total issued to total issued to total issued
Name of Class of Number of share capital of A Shares of H Shares of
shareholder shares shares held the Company the Company the Company
(%) (%) (%)
China Datang A shares 4,138,977,414 31.10 41.41 -
Corporation 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)
Company Limited 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 -
Deutsche Bank H shares 210,277,701(L) 1.58(L) - 6.34(L)
Aktiengesellschaft 123,055,686(S) 0.92(S) - 3.71(S)
(L) means Long Position (S) means Short Position (P) means Lending Pool
3. Dividends
The Board does not recommend the payment of any interim dividend for 2011.
4. Shareholding of the Directors and Supervisors
As at 30 June 2011, Mr. Fang Qinghai, a director of the Company, was interested in
24,000 A shares of the Company. Save as disclosed above, none of the directors,
supervisors and chief executives of the Company nor their associates had any
interests or short positions in the shares, underlying shares and debentures of the
Company or any of its associated corporation (within the meaning of the SFO) that
were required to be notified to the Company and The Stock Exchange of Hong Kong
Limited (the "Hong Kong Stock Exchange") under the provisions of 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 or otherwise required to be notified to the Company and
the Hong Kong Stock Exchange pursuant to the Model Code for Securities Transactions
by Directors of Listed Issuers (the "Model Code") in Appendix 10 of the Rules
Governing the Listing of Securities on the Hong Kong Stock Exchange (the "Listing
Rules").
Significant Events
During the Period, the Company issued 1 billion Renminbi-denominated ordinary shares (A
shares) to nine specific investors including China Datang Corporation by way of
non-public issue at the issue price of RMB6.74 per share. The net proceeds from the
issue amounted to RMB6,670,950,000. Upon completion of the issue, the Company's total
share capital increased from 12,310,037,578 shares to 13,310,037,578 shares.
The non-public issue contributes to optimising the Group's structure of assets and
liabilities and reducing the Group's financial risks, ensuring the Company's subsequent
financing and sustainable development. In addition, the repayment of bank loans by the
proceeds from the issue will help reduce finance costs and improve the Group's overall
profitability. The proceeds, net of costs in relation to the issue, will be mainly used
in construction project related to coal chemical, nuclear power, hydropower and wind
power projects as well as to the upstream and downstream industries. Upon commencement
of operation of these projects in which the proceeds are invested, the Group's
equity-based installed capacity can be effectively enhanced, its power generation source
structure can be improved and its generating capacity can be strengthened. Meanwhile,
certain progress will be made in power-related upstream and downstream industries such
as coal exploration, and as a result, the Group's industry chain deployment will be
optimised on an ongoing basis.
Purchase, Sale and Redemption of the Company's Listed Securities
During the Period, the Group has not purchased, sold or redeemed any of the listed
securities of the Company.
Compliance with the Code on Corporate Governance Practices
To the knowledge of the Board, the Company has complied with all the code provisions
under the Code on Corporate Governance Practices as set out in Appendix 14 of the
Listing Rules during the Period.
Compliance with the Model Code for Securities Transactions by Directors of Listed Issuers
Upon specific enquiries made to all the directors of the Company and in accordance with
the information provided, the Board confirmed that all directors of the Company have
complied with the provisions under the Model Code for Securities Transactions by
Directors of Listed Issuers as set out in Appendix 10 to the Listing Rules during the
Period.
Audit Committee
The Audit Committee has reviewed the accounting principles and methods adopted by the
Group with the management of the Company. They have also discussed matters regarding
internal controls and the annual financial statements, including the review of the
financial information for the Period.
The Audit Committee considers that the 2011 interim financial report of the Group has
complied with the applicable accounting standards, and that the Group has made
appropriate disclosures thereof.
By Order of the Board
Liu Shunda
Chairman
Beijing, the PRC, 26 August 2011
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2011
Six months ended 30 June
Note 2011 2010
RMB'000 RMB'000
(unaudited) (unaudited)
Operating revenue 3 33,321,564 28,946,006
Operating costs
Fuel for power and heat generation (19,426,036) (14,450,381)
Fuel for coal sales (652,211) (2,840,373)
Depreciation (4,156,572) (3,571,794)
Repairs and maintenance (1,017,673) (842,101)
Salaries and staff welfares (961,783) (902,658)
Local government surcharges (238,945) (149,909)
Others (2,408,268) (2,275,729)
------------ ------------
Total operating costs (28,861,488) (25,032,945)
------------ ------------
Operating profit 4,460,076 3,913,061
Share of profits of associates 345,286 352,712
Share of profits of jointly controlled
entities 56,379 6,806
Investment income 18,571 -
Other gains 5 8,212
Interest income 46,456 24,437
Finance costs 5 (3,304,196) (2,563,386)
------------ ------------
Profit before tax 1,622,577 1,741,842
Income tax expense 6 (306,909) (312,707)
------------ ------------
Profit for the period 7 1,315,668 1,429,135
------------ ------------
Other comprehensive income after tax:
Reclassification adjustments for
amounts transferred to profit or
loss upon disposals of
available-for-sale investments (5) (14,606)
Fair value gain on available-for-sale
investments 1,505 -
Share of other comprehensive
income of associates (62,322) (7,745)
Foreign currency translation
differences 11,680 1,303
Income tax relating to components of
other comprehensive income (375) 3,652
------------ ------------
Other comprehensive income for the period,
net of tax (49,517) (17,396)
------------ ------------
Total comprehensive income for the period 1,266,151 1,411,739
============ ============
Profit for the period attributable to:
Owners of the Company 931,658 911,878
Non-controlling interests 384,010 517,257
------------ ------------
1,315,668 1,429,135
============ ============
Total comprehensive income for the period
attributable to:
Owners of the Company 882,074 896,673
Non-controlling interests 384,077 515,066
------------ ------------
1,266,151 1,411,739
============ ============
RMB RMB
(unaudited) (unaudited)
Earnings per share 9
Basic and diluted 0.0747 0.0757
============ ============
Condensed Consolidated Statement of Financial Position
At 30 June 2011
Note At At
30 June 31 December
2011 2010
RMB'000 RMB'000
(unaudited) (audited)
ASSETS
Non-current assets
Property, plant and equipment 10 186,490,958 179,233,770
Investment properties 241,499 211,866
Intangible assets 2,607,318 2,498,329
Investments in associates 5,124,098 4,591,838
Investments in jointly controlled
entities 3,254,097 2,649,778
Available-for-sale investments 2,343,049 2,304,158
Deferred housing benefits 118,394 132,530
Deferred tax assets 1,189,036 972,760
Other long-term assets 635,526 428,477
------------- -------------
202,003,975 193,023,506
------------- -------------
Current assets
Inventories 5,334,512 4,011,713
Accounts and notes receivable 11 8,287,012 8,158,622
Prepayments and other receivables 5,739,478 4,101,545
Short-term entrusted loans to a
jointly controlled entity 100,139 100,153
Tax recoverable 187,188 76,820
Cash and cash equivalents 15,782,314 3,442,976
------------- -------------
35,430,643 19,891,829
------------- -------------
TOTAL ASSETS 237,434,618 212,915,335
============= =============
EQUITY AND LIABILITIES
Capital and reserves
Share capital 12 13,310,038 12,310,038
Reserves 20,991,471 15,343,804
Retained earnings
Proposed dividends 931,703 861,703
Others 3,171,508 2,334,526
------------- -------------
Equity attributable to owners of the
Company 38,404,720 30,850,071
Non-controlling interests 7,895,216 7,582,760
------------- -------------
Total equity 46,299,936 38,432,831
------------- -------------
Non-current liabilities
Long-term loans 122,378,246 109,585,377
Long-term bonds 8,930,666 5,949,018
Deferred income 472,789 460,989
Deferred tax liabilities 648,142 439,226
Provisions 41,603 41,603
Other non-current liabilities 5,949,351 3,723,182
------------- -------------
138,420,797 120,199,395
------------- -------------
Current liabilities
Accounts payable and accrued liabilities 13 19,069,373 18,930,066
Taxes payable 1,046,497 1,165,696
Dividends payable 921,178 2,336
Short-term loans 20,933,966 19,374,828
Current portion of non-current
liabilities 10,742,871 14,810,183
------------- -------------
52,713,885 54,283,109
------------- -------------
Total liabilities 191,134,682 174,482,504
------------- -------------
TOTAL EQUITY AND LIABILITIES 237,434,618 212,915,335
============= =============
Net current liabilities (17,283,242) (34,391,280)
============= =============
Total assets less current liabilities 184,720,733 158,632,226
============= =============
Approved by the Board of Directors on 26 August 2011
Cao Jingshan Zhou Gang
Director Director
Condensed Consolidated Statement of Changes in Equity
For the six months ended 30 June 2011
Attributable to owners of the Company
Statutory Discretionary
Share Capital surplus surplus Restricted
capital reserve reserve reserve reserve
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
At 1 January 2010, as restated 11,780,038 1,521,516 3,071,864 7,866,188 153,864
Total comprehensive income for
the period - - - - -
Issue of shares 530,000 2,718,246 - - -
Capital injection from
non-controlling interests - - - - -
Non-common control business
combinations - - - - -
Acquisition of non-controlling
interests - - - - -
Others - 125 - - -
Transfer to restricted reserve - - - - 30,913
Dividends paid - - - - -
------------ ------------ ------------ ------------ ------------
At 30 June 2010, as restated 12,310,038 4,239,887 3,071,864 7,866,188 184,777
============ ============ ============ ============ ============
At 1 January 2011 12,310,038 4,239,888 3,279,458 7,866,188 107,887
Total comprehensive income for
the period - - - - -
Issue of shares 1,000,000 5,670,950 - - -
Capital injection from
non-controlling interests - - - - -
Non-common control business
combinations - - - - -
Acquisition of non-controlling
interests - - - - -
Others - - - - -
Transfer to restricted reserve - - - - 24,676
Dividends paid - - - - -
------------ ------------ ------------ ------------ ------------
At 30 June 2011 13,310,038 9,910,838 3,279,458 7,866,188 132,563
============ ============ ============ ============ ============
(Cont'd)
Attributable to owners of the Company
Available-
Foreign for-sale
currency investment
translation revaluation Other Retained
reserve reserve reserves earnings Total
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
At 1 January 2010, as restated 17,691 105,705 (44,355) 1,650,211 26,122,722
Total comprehensive income for
the period 1,303 (16,508) - 911,878 896,673
Issue of shares - - - - 3,248,246
Capital injection from
non-controlling interests - - - - -
Non-common control business
combinations - - - - -
Acquisition of non-controlling
interests - - (240,412) - (240,412)
Others - - (4,543) 3,767 (651)
Transfer to restricted reserve - - - (30,913) -
Dividends paid - - - (861,703) (861,703)
------------ ------------ ------------ ------------ ------------
At 30 June 2010, as restated 18,994 89,197 (289,310) 1,673,240 29,164,875
============ ============ ============ ============ ============
At 1 January 2011 35,301 31,778 (216,696) 3,196,229 30,850,071
Total comprehensive income for
the period 11,669 (61,253) - 931,658 882,074
Issue of shares - - - - 6,670,950
Capital injection from
non-controlling interests - - - - -
Non-common control business
combinations - - - - -
Acquisition of non-controlling
interests - - 173 - 173
Others - - 1,452 - 1,452
Transfer to restricted reserve - - - (24,676) -
Dividends paid - - - - -
------------ ------------ ------------ ------------ ------------
At 30 June 2011 46,970 (29,475) (215,071) 4,103,211 38,404,720
============ ============ ============ ============ ============
(Cont'd)
Non-
controlling Total
interests equity
RMB'000 RMB'000
(unaudited) (unaudited)
At 1 January 2010, as restated 6,649,510 32,772,232
Total comprehensive income for
the period 515,066 1,411,739
Issue of shares - 3,248,246
Capital injection from
non-controlling interests 528,417 528,417
Non-common control business
combinations 217,773 217,773
Acquisition of non-controlling
interests (310,003) (550,415)
Others (13,292) (13,943)
Transfer to restricted reserve - -
Dividends paid (823,758) (1,685,461)
------------ ------------
At 30 June 2010, as restated 6,763,713 35,928,588
============ ============
At 1 January 2011 7,582,760 38,432,831
Total comprehensive income for
the period 384,077 1,266,151
Issue of shares - 6,670,950
Capital injection from
non-controlling interests 397,638 397,638
Non-common control business
combinations 687,489 687,489
Acquisition of non-controlling
interests (33,452) (33,279)
Others 1,188 2,640
Transfer to restricted reserve - -
Dividends paid (1,124,484) (1,124,484)
------------ ------------
At 30 June 2011 7,895,216 46,299,936
============ ============
Condensed Consolidated Statement of Cash Flows
For the six months ended 30 June 2011
Six months ended 30 June
2011 2010
RMB'000 RMB'000
(unaudited) (unaudited)
NET CASH GENERATED FROM OPERATING ACTIVITIES 5,187,339 7,996,035
NET CASH USED IN INVESTING ACTIVITIES (9,493,320) (7,682,868)
NET CASH GENERATED FROM FINANCING ACTIVITIES 16,653,577 5,633,184
------------ ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 12,347,596 5,946,351
CASH AND CASH EQUIVALENTS AT 1 JANUARY 3,442,976 1,506,435
EFFECT OF FOREIGN EXCHANGE RATE CHANGES (8,258) (540)
------------ ------------
CASH AND CASH EQUIVALENTS AT 30 JUNE 15,782,314 7,452,246
============ ============
Notes to the Condensed Financial Statements
For the six months ended 30 June 2011
1. BASIS OF PREPARATION
These condensed financial statements have been prepared in accordance with
International Accounting Standard 34 "Interim Financial Reporting" issued by the
International Accounting Standards Board and the applicable disclosures required
by the Rules Governing the Listing of Securities on The Stock Exchange of Hong
Kong Limited.
At 30 June 2011, a significant portion of the funding requirements of the Company
and its subsidiaries (collectively referred to as the "Group") for capital
expenditures was satisfied by short-term borrowings. Consequently, at 30 June 2011,
the Group had net current liabilities of approximately RMB17.28 billion. The Group
had significant undrawn borrowing facilities, subject to certain conditions,
amounting to approximately RMB145.67 billion and may refinance and/or restructure
certain short-term borrowings into long-term borrowings and will also consider
alternative sources of financing, where applicable. The directors of the Company
are of the opinion that the Group will be able to meet its liabilities as and when
they fall due within the next twelve months and have prepared these financial
statements on a going concern basis.
These condensed financial statements should be read in conjunction with the 2010
annual financial statements. The accounting policies and methods of computation
used in the preparation of these condensed financial statements are consistent
with those used in the annual financial statements for the year ended 31 December
2010 except as stated below.
These condensed 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.
2. ADOPTION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS
In the current period, the Group has adopted all the new and revised International
Financial Reporting Standards ("IFRSs") issued by the International Accounting
Standards Board that are relevant to its operations and effective for its
accounting year beginning on 1 January 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, presentation of the Group's
financial statements and amounts reported for the current period 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.
IAS 24 (Revised) exempts an entity from the disclosure requirements in relation to
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. OPERATING REVENUE
Six months ended 30 June
2011 2010
RMB'000 RMB'000
(unaudited) (unaudited)
Sales of electricity 30,263,584 24,001,833
Heat supply 409,758 316,192
Sales of coal 788,473 2,930,001
Transportation service fees 2,377 125,437
Sales of chemical products 1,305,080 1,311,817
Others 552,292 260,726
------------ ------------
33,321,564 28,946,006
============ ============
4. SEGMENT INFORMATION
Executive directors and certain senior management (including chief accountant)
(collectively referred to as the "Senior Management") of the Company 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, 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").
Segment profits or loss do not include dividend income from listed 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.
Power
generation Coal Chemical Other
segment segment segment segments Total
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Six months ended 30 June 2011
Revenue from external customers 30,585,742 867,778 1,433,560 434,484 33,321,564
Intersegment revenue 58,658 11,336,270 - 62,960 11,457,888
Segment profit 1,167,663 407,686 157,740 59,594 1,792,683
At 30 June 2011
Segment assets 184,002,732 19,705,944 41,617,718 10,078,071 255,404,465
============= ============ ============ ============ =============
Six months ended 30 June 2010
Revenue from external customers 24,143,576 3,118,444 1,322,492 361,494 28,946,006
Intersegment revenue 36,731 8,446,414 - 157,110 8,640,255
Segment profit/(loss) 1,626,658 122,767 35,987 (4,428) 1,780,984
(audited) (audited) (audited) (audited) (audited)
At 31 December 2010
Segment assets 152,509,810 16,058,293 39,345,040 10,625,419 218,538,562
============= ============ ============ ============ =============
Six months ended 30 June
2011 2010
RMB'000 RMB'000
(unaudited) (unaudited)
Reconciliations of segment profit or loss:
Total profit or loss of reportable segments 1,792,683 1,780,984
Gain on disposals of available-for-sale
investments 5 -
Elimination of intersegment profits (262,000) (125,186)
IFRS adjustment on amortisation of monetary
housing benefits (14,136) (15,151)
IFRS adjustment on reversal of general
provision on mining funds 106,025 101,195
------------ ------------
Consolidated profit before tax 1,622,577 1,741,842
============ ============
Six months ended 30 June
2011 2010
RMB'000 RMB'000
(unaudited) (unaudited)
Revenue from major customers:
Power generation segment
North China Grid Company Limited 9,322,726 8,088,081
Guangdong Power Grid Corporation 3,736,058 1,295,023
State Grid Corporation of China 3,004,947 4,959,990
============ ============
5. FINANCE COSTS
Six months ended 30 June
2011 2010
RMB'000 RMB'000
(unaudited) (unaudited)
Interest expense 4,414,551 3,625,688
Less: amount capitalised in property, plant
and equipment (1,115,183) (1,072,552)
------------ ------------
3,299,368 2,553,136
Exchange gain, net (17,443) (4,415)
Others 22,271 14,665
------------ ------------
3,304,196 2,563,386
============ ============
6. INCOME TAX EXPENSE
Six months ended 30 June
2011 2010
RMB'000 RMB'000
(unaudited) (unaudited)
Current tax 522,771 429,866
Deferred tax (215,862) (117,159)
------------ ------------
306,909 312,707
============ ============
Income tax is provided on the basis of the statutory profit for financial reporting
purposes, adjusted for income and expense items, which are not assessable or
deductible for income tax purposes.
The applicable People's Republic of China ("PRC") Enterprise Income Tax rate of the
Company and its subsidiaries is 25% (six months ended 30 June 2010: 25%). Certain
subsidiaries located in western region in the PRC enjoyed PRC Enterprise Income Tax
rate of 15% before 2011 when such income tax rate has changed to 25% thereafter.
In addition, certain subsidiaries, being located in specially designated regions in
the PRC, are subject to preferential income tax rates. Moreover, certain subsidiaries
are exempted from the PRC Enterprise Income Tax for two years starting from the first
year of commercial operation followed by a 50% exemption of the applicable tax rate
for the next three years.
7. PROFIT FOR THE PERIOD
The Group's profit for the period is arrived at after charging/(crediting):
Six months ended 30 June
2011 2010
RMB'000 RMB'000
(unaudited) (unaudited)
Interest income (46,456) (24,437)
Dividend income (16,250) -
Amortisation of intangible assets 17,115 5,996
Amortisation of deferred housing benefits 14,136 15,151
Depreciation 4,156,572 3,571,794
Gain on disposals of available-for-sale
investments (5) (8,212)
Reversal of allowance for accounts
receivable (56) (1,134)
Reversal of allowance for inventories - (757)
============ ============
8. DIVIDENDS
Six months ended 30 June
2011 2010
RMB'000 RMB'000
(unaudited) (unaudited)
Proposed final dividend for the year ended 31
December 2010 - RMB0.07 per share 931,703 -
Final dividend for the year ended 31 December
2009 approved and paid - RMB0.07 per share - 861,703
------------ ------------
931,703 861,703
============ ============
9. 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 period attributable to owners of the Company of
RMB931,658 thousand (six months ended 30 June 2010: RMB911,878 thousand) and the
weighted average number of ordinary shares of 12,476,704 thousand (six months ended
30 June 2010: 12,045,038 thousand) in issue during the period.
Diluted earnings per share
During the six months ended 30 June 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.
10. PROPERTY, PLANT AND EQUIPMENT
During the six months ended 30 June 2011, the Group acquired property, plant and
equipment of RMB10,521,227 thousand (six months ended 30 June 2010: RMB12,424,566
thousand).
11. ACCOUNTS AND NOTES RECEIVABLE
The Group usually grants credit period of approximately one 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 receivable
is as follows:
At At
30 June 31 December
2011 2010
RMB'000 RMB'000
(unaudited) (audited)
Within one year 8,221,683 8,013,428
Between one to two years 61,485 143,990
Between two to three years 3,758 1,096
Over three years 86 108
------------ ------------
8,287,012 8,158,622
============ ============
12. SHARE CAPITAL
At At
30 June 31 December
2011 2010
RMB'000 RMB'000
(unaudited) (audited)
Registered, issued and fully paid:
9,994,360,000 (At 31 December
2010: 8,994,360,000) A shares
of RMB1 each 9,994,360 8,994,360
3,315,677,578 (At 31 December
2010: 3,315,677,578) H shares
of RMB1 each 3,315,678 3,315,678
------------ ------------
13,310,038 12,310,038
============ ============
A summary of the movements in the issued share capital of the Company is as follows:
Nominal
Number of value of
Note shares issued shares issued
'000 RMB'000
At 1 January 2010 11,780,038 11,780,038
Shares issued 530,000 530,000
------------ ------------
At 31 December 2010 and
1 January 2011 12,310,038 12,310,038
Shares issued (i) 1,000,000 1,000,000
------------ ------------
At 30 June 2011 13,310,038 13,310,038
============ ============
Note:
(i) In May 2011, the Company issued 1,000,000,000 A shares at a subscription price
of RMB6.74 per share for a total cash consideration of RMB6,740,000 thousand.
13. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
At At
30 June 31 December
2011 2010
RMB'000 RMB'000
(unaudited) (audited)
Accounts and notes payable 7,200,922 8,129,771
Other payables and accrued liabilities 11,868,451 10,800,295
------------ ------------
19,069,373 18,930,066
============ ============
The ageing analysis of accounts and notes payable is as follows:
At At
30 June 31 December
2011 2010
RMB'000 RMB'000
(unaudited) (audited)
Within one year 6,913,248 8,129,711
Between one to two years 287,674 -
------------ ------------
7,200,922 8,129,711
============ ============
14. ACQUISITION OF SUBSIDIARIES
On 31 March 2011, the Group acquired 100% of the respective issued capital of
Chengdu Liguo Energy Co., Ltd., Chengdu Qingjiangyuan Energy Co., Ltd. and Chengdu
Zhongfu Energy Co., Ltd. in order to gain 54% indirect equity interest in Sichuan
Jinkang Electricity Development Co., Ltd. ("Jinkang Company") for a total cash
consideration of RMB974,870 thousand. Jinkang Company was engaged in hydropower
generation during the period.
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 108,865
------------
Satisfied by:
Cash 974,870
============
Net cash outflow arising on
acquisition:
Cash consideration paid (974,870)
Cash and cash equivalents acquired 86,798
------------
(888,072)
============
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 RMB3,680 thousand to the Group's profit for
the period for the period 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 turnover
for the period would have been RMB33,338,926 thousand, and profit for the period
would have been RMB1,311,267 thousand. The proforma information is for illustrative
purposes only and is not necessarily an indication of the turnover and results of
operations of the Group that actually would have been achieved had the acquisition
been completed on 1 January 2011, nor is intended to be a projection of future
results.
15. RELATED PARTY TRANSACTIONS
(a) Significant transactions with China Datang Corporation which is the ultimate
parent of the Company 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 subsidiaries
Six months ended 30 June
2011 2010
RMB'000 RMB'000
(unaudited) (unaudited)
China Datang Group
Receipt of equipment purchase agency
services 181 4,851
Receipt of coal ash disposal services 28,946 28,946
Receipt of fuel management services - 8,210
Purchases of fuel 132,527 9,896
Purchases of materials and equipment 51,685 243,037
Operating lease expenses for buildings
and facilities 11,114 4,864
Receipt of repairs and maintenance
services 4,077 1,800
Sales of pre-project assets - 80,726
Receipt of capital injection to
subsidiaries 332,540 -
Receipt of material management services 800 -
Associates of the Group
Interest expense on loans 98,970 87,596
Interest income on deposits 16,986 13,517
Purchases of fuel 37,840 5,941
Sales of electricity - 2,822
Sales of heat - 39,223
Receipt of technical support services 7,196 20,599
Drawdown of loans 4,810,000 8,123,000
Subsidiary of an associate of the Group
Purchases of fuel 258,561 291,570
Jointly controlled entities of the Group
Purchases of fuel 161,992 124,045
Interest income on entrusted loans 2,516 -
=========== ===========
(b) Financial guarantees and financing facilities with China Datang Group and
associates and jointly controlled entities of the Group
At At
30 June 31 December
2011 2010
RMB'000 RMB'000
(unaudited) (audited)
China Datang Group
Long-term loans of the Group
guaranteed by China Datang
Corporation 608,891 1,348,176
Short-term loans of the Group
guaranteed by a subsidiary of China
Datang Corporation 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 587,229 616,336
Associates of the Group
Long-term loans of the associates
guaranteed by the Company 490,000 170,000
Integrated credit facilities provided
by an associate 18,000,000 4,500,000
Jointly controlled entities of the Group
Long-term loans of the jointly
controlled entities guaranteed by the
Company 497,300 389,500
Short-term loans of a jointly
controlled entity guaranteed by the
Company 225,000 225,000
============ ============
(c) Significant transactions with government-related enterprises
Government-related entities, other than entities under China Datang
Corporation 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.
During the six months ended 30 June 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 4 to the
condensed 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 six months ended 30 June 2011 and 2010, other collectively
significant transactions with Government-Related Entities also included
purchases of fuel and property, plant and equipment.
(d) Compensation to key management personnel of the Group
Six months ended 30 June
2011 2010
RMB'000 RMB'000
(unaudited) (unaudited)
Basic salaries and allowances 1,476 795
Bonus 1,931 1,682
Retirement benefits 99 99
Other benefits 78 434
------------ ------------
3,584 3,010
============ ============
16. CONTINGENT LIABILITIES
At the end of the reporting period, the Group has provided financial guarantees
for loan facilities granted to the following parties:
At At
30 June 31 December
2011 2010
RMB'000 RMB'000
(unaudited) (audited)
Associates 490,000 170,000
Jointly controlled entities 722,300 614,500
Other investees 108,000 108,000
------------ ------------
1,320,300 892,500
============ ============
Based on historical experience, no claims have been made against the Group
since the date of granting the above financial guarantees.
17. CAPITAL COMMITMENTS
At 30 June 2011, the Group has capital commitments related to investments in
subsidiaries, associates, jointly controlled entities and other investees
amounted to RMB199,840 thousand (At 31 December 2010: RMB1,024,710 thousand).
In addition, capital commitments of the Group in relation to the construction
and renovation of the electricity utility plants and acquisition of intangible
assets not provided for in the condensed consolidated statement of financial
position are as follows:
At At
30 June 31 December
2011 2010
RMB'000 RMB'000
(unaudited) (audited)
Contracted but not provided for 15,163,216 19,052,087
============ ============
18. LEASE COMMITMENTS
At 30 June 2011 the total future minimum lease payments under non-cancellable
operating leases are payable as follows:
At At
30 June 31 December
2011 2010
RMB'000 RMB'000
(unaudited) (audited)
Within one year 41,524 26,158
In the second to fifth years inclusive 51,749 51,747
After five years 22,828 23,336
------------ ------------
116,101 101,241
============ ============
19. APPROVAL OF CONDENSED FINANCIAL STATEMENTS
The condensed financial statements were approved and authorised for issue by
the Board of Directors on 26 August 2011.
Differences Between Financial Statements
For the six months ended 30 June 2011
The condensed 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 IFRS and PRC GAAP ("GAAP Differences"), which affect the net assets and net
profit of the Group, are summarised as follows:
Net assets
At At
30 June 31 December
Note 2011 2010
RMB'000 RMB'000
(unaudited) (audited)
Net assets attributable to owners
of the Company under IFRS 38,404,720 30,850,071
Impact 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) (118,394) (132,530)
Difference in accounting
treatment on mining funds (c) (145,162) (82,095)
Applicable deferred tax impact
of the above GAAP Differences 23,466 (3,641)
Non-controlling interests'
impact of the above GAAP
Differences after tax (31,751) (1,015)
------------ ------------
Net assets attributable to owners
of the Company under PRC GAAP 38,239,345 30,737,256
============ ============
Net profit
Six months ended 30 June
Note 2011 2010
RMB'000 RMB'000
(unaudited) (unaudited)
Profit for the period attributable
to owners of the Company under IFRS 931,658 911,878
Impact of IFRS adjustments:
Difference in accounting treatment
on monetary housing benefits (b) 14,136 15,151
Difference in accounting treatment
on mining funds (c) (106,025) (101,195)
Applicable deferred tax impact of
the above GAAP Differences 27,107 7,323
Non-controlling interests' impact
of the above GAAP Differences after
tax (12,744) (3,411)
------------ ------------
Net profit for the period attributable
to owners of the Company under PRC
GAAP 854,132 829,746
============ ============
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.
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