Announcement of 2014 Interim Results

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement. DATANG INTERNATIONAL POWER GENERATION CO., LTD. (a sino-foreign joint stock limited company incorporated in the People's Republic of China) (Stock Code: 00991) ANNOUNCEMENT OF 2014 INTERIM RESULTS OPERATING AND FINANCIAL HIGHLIGHTS: * Operating revenue amounted to approximately RMB34,843 million, representing a decrease of approximately 5.86% over the first half of 2013. * Total profit before tax amounted to approximately RMB4,136 million, representing an increase of approximately 3.05% over the first half of 2013. * Net profit attributable to equity holders of the Company amounted to approximately RMB2,029 million, representing an increase of approximately 0.47% over the first half of 2013. * Basic earnings per share attributable to equity holders of the Company amounted to approximately RMB0.1524, representing an increase of RMB0.0007 per share over the first half of 2013. I. COMPANY RESULTS 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 International Financial Reporting Standards ("IFRS") for the six months ended 30 June 2014 (the "Period"), together with the unaudited consolidated operating results of the first half of 2013 (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 RMB34,843 million, representing a decrease of approximately 5.86% as compared to the Corresponding Period Last Year. Total profit before tax amounted to approximately RMB4,136 million, representing an increase of approximately 3.05% over the Corresponding Period Last Year. Net profit attributable to equity holders of the Company was approximately RMB2,029 million, representing an increase of approximately 0.47% as compared to the Corresponding Period Last Year. Basic earnings per share attributable to equity holders of the Company amounted to approximately RMB0.1524, representing an increase of RMB0.0007 per share as compared to the Corresponding Period Last Year. II. MANAGEMENT DISCUSSION AND ANALYSIS The Company is one of the largest independent power generation companies in the People's Republic of China (the "PRC") and primarily engages in power generation businesses with its main focus on coal-fired power generation. In the first half of 2014, the Company firmly adhered to the value-focused and results-oriented principles. With safety and stability as basis and economic effectiveness as core value, the Company put development and implementation as its priority to consolidate its leading position in power generation sector while accelerated the optimisation of its business structure. As the production and operation were excellent in the first half of the year, a sustainable and healthy development was accomplished. A. Review of Businesses 1. Power Generation Business The power generation businesses of the Company and its subsidiaries are primarily distributed across Beijing, Tianjin, Hebei Province, the Inner Mongolia Autonomous Region, Shanxi Province, Liaoning Province, Gansu Province, Jiangsu Province, Zhejiang Province, Yunnan Province, Fujian Province, Guangdong Province, Chongqing, Jiangxi Province, the Ningxia Autonomous Region, Qinghai Province and Sichuan Province. (1) Maintenance of safe and stable power production. During the Period, total power generation of the Company and its subsidiaries amounted to 90.9270 billion kWh, representing a year-on-year decrease of approximately 2.08%. The accumulative on-grid power generation amounted to 85.8820 billion kWh, representing a year-on-year decrease of approximately 2.16%. Utilisation hours of generating units accumulated to 2,300 hours, representing a year-on-year decrease of 121 hours. During the Period, no casualties or material damage to the facilities occurred to the Company and its subsidiaries during the course of power production. The equivalent availability coefficient of the operational generating units amounted to 91.81%. (2) The power generation structure showed a continuous improvement. Installed capacity increased by 474.7 MW during the Period. As of 30 June 2014, the installed capacity of generating units managed by the Company amounted to approximately 39,661.7 MW, among which coal-fired power accounted for 32,890.8 MW or 82.93%, hydropower accounted for 4,934.8 MW or 12.44%, wind power accounted for 1,676.1 MW or 4.23%, and photovoltaic power accounted for 160 MW or 0.40%. The proportion of clean energy increased by 0.55 percentage point over the end of the previous year. (3) Projects have been approved and the economy of scale further enhanced. During the Period, 3 power generation projects of the Company were approved by the State with details below: Coal-fired power project: Hebei Wei County 2×600 MW power plant; Wind power project: Ningxia Hongsibao phase I 100 MW wind power project; Hydropower capacity expansion project: Chongqing Haokou 10 MW hydropower capacity expansion project, proposed capacity after expansion is 135 MW. (4) Continuous development in energy conservation and emission reduction. During the Period, total coal consumption of the Company for power supply was 309.95 g/kWh, representing a year-on-year decrease of 3.69 g/kWh. Electricity consumption rate of power plants was 5.59%, representing a year-on-year increase of 0.09 percentage point. The total operation rate of desulfurisation facilities and the total overall desulfurisation efficiency rate amounted to 99.94% and 95.13%, respectively. The emission rate of sulfur dioxide, nitrogen oxides, waste water and smoke ash were 0.28g/kWh, 0.42g/kWh, 21.73g/kWh and 0.08g/kWh, representing a year-on-year decrease of 24.32%, 56.25%, 56.54% and 27.27%, respectively. (5) Profitability of the power generation segment was strong. During the Period, gross profit of electric heating sales of the Group amounted to 31.31%, representing a year-on-year increase of 4.83%. The power generation segment realised a total profit of RMB5,513 million, representing a year-on-year increase of 46.90% and maintaining a good trend of the Company's sustainable profitability. 2. Coal Chemical and Coal Business During the Period, the production and development status of the Group's Duolun Coal Chemical Project with an annual output of 460,000 tonnes of polypropylene, the Keqi Coal-based Natural Gas Project with an annual output of 4 billion cubic meters of natural gas, and the Fuxin Coal-based Natural Gas Project with annual production scale of 4 billion cubic metres of natural gas, Datang Hulunbeier Fertiliser Company Limited ("Hulunbeier Fertiliser Company") and Inner Mongolia Datang International Xilinhaote Mining Company Limited ("Xilinhaote Mining Company") were as follows: (1) The Duolun Coal Chemical Project: During the Period, 68,200 tonnes of polypropylene were produced. (2) The Keqi Coal-based Natural Gas Project: A series of works for the project was still in trial production stage. As at 30 June 2014, 216 million standard cubic metres of natural gas were produced. (3) The Fuxin Coal-based Natural Gas Project: The project was approved and commenced construction in 2010. As at 30 June 2014, 90% of the land construction of the Fuxin Coal-based Natural Gas Project was completed, 95% of the equipment installation was completed; and 89% of the pipeline network was installed. (4) Hulunbeier Fertiliser Company: The company is mainly engaged in the development, construction and operation of energy and chemical projects such as urea and synthetic ammonia. The project has commenced production on 1 October 2013. During the Period, a total of 132,100 tonnes of urea was produced. (5) Xilinhaote Mining Company: The company is mainly engaged in the development, construction and operation of Shengli Open-pit Coal Mine East Unit 2 Project. The coal extracted from the project was mainly used as the raw coal for the chemical projects of the Company. During the Period, a total of 3.4652 million tonnes of coal was produced. B. Major Financial Indicators and Analysis 1. Operating Revenue During the Period, the Group realised an operating revenue of approximately RMB34,843 million, representing a decrease of approximately 5.86% over the Corresponding Period Last Year, among which revenue from electricity sales was approximately RMB30,365 million, decreased by approximately RMB821 million or approximately 2.63% over the Corresponding Period Last Year. The decrease in electricity sales revenue was mainly attributable to year-on-year decrease of on-grid power generation, and such decrease caused the operating revenue to decrease by approximately RMB670 million. 2. Operating Costs During the Period, total operating costs of the Group amounted to approximately RMB26,786 million, representing a decrease of approximately RMB2,952 million or approximately 9.93% over the Corresponding Period Last Year. Among which, fuel cost accounted for approximately 56.46% of the operating costs, and depreciation cost accounted for approximately 19.70%. Since the unit price of standard coal for power generation decreased by approximately RMB58.26/tonne over the Corresponding Period Last Year, the fuel cost decreased by approximately RMB1,427 million as a result. 3. Net Finance Costs During the Period, finance costs of the Group amounted to approximately RMB4,233 million, representing an increase of approximately RMB150 million or approximately 3.68% over the Corresponding Period Last Year. The increase in finance costs was mainly due to the expensing of interest costs of newly commenced projects transformation into fixed assets in 2013. 4. Profit and Net Profit During the Period, total profit before tax of the Group amounted to approximately RMB4,136 million, representing an increase of approximately 3.05% over the Corresponding Period Last Year. Among which, the power generation segment registered an accumulated profit of RMB5,513 million, representing a year-on-year increase of approximately 46.90%. The steady year-on-year increase in the Group's profit of the power generation business was mainly due to the continuous year-on-year decrease in unit price of standard coal. During the Period, net profit attributable to equity holders of the Company amounted to approximately RMB2,029 million, representing an increase of approximately 0.47% over the Corresponding Period Last Year. 5. Financial Position As at 30 June 2014, total assets of the Group amounted to approximately RMB301,744 million, representing an increase of approximately RMB3,264 million as compared to the end of 2013. The increase in total assets was primarily attributable to the increased investments in projects under construction and fixed assets by the Group. Total liabilities of the Group amounted to approximately RMB238,329 million, representing an increase of approximately RMB4,392 million over the end of 2013. Of the total liabilities, non-current liabilities decreased by approximately RMB547 million over the end of 2013. The increase in total liabilities was mainly due to the dividend declared by the Group pending for payment as well as the issuance of super short-term debentures by the Company. Equity attributable to equity holders of the Company amounted to approximately RMB44,519 million, representing an increase of approximately RMB351 million over the end of 2013. Net asset value per share attributable to equity holders of the Company amounted to approximately RMB3.34, representing an increase of approximately RMB0.02 per share over the end of 2013. 6. Liquidity As at 30 June 2014, the assets-to-liabilities ratio of the Group was approximately 78.98%. The net debt-to-equity ratio (i.e. (loans + short-term bonds + long-term bonds - cash and cash equivalents)/total equity) was approximately 291.2%. As at 30 June 2014, cash and cash equivalents of the Group amounted to approximately RMB7,526 million, among which deposits equivalent to approximately RMB96 million were foreign currency deposits. The Group had no entrusted deposits and overdue fixed deposits during the Period. As at 30 June 2014, short-term loans of the Group amounted to approximately RMB16,357 million, bearing annual interest rates ranging from 1.71% to 7.00%. Long-term loans (excluding those repayable within one year) amounted to approximately RMB141,681 million and long-term loans repayable within one year amounted to approximately RMB9,319 million. Long-term loans (including those repayable within one year) were at annual interest rates ranging from 1.13% to 6.55%. Loans equivalent to approximately RMB1,141 million were denominated in US dollar. The Group paid close attention to foreign exchange market fluctuations and cautiously assessed risks. 7. Welfare Policy As at 30 June 2014, the staff engaged in the major businesses of the Group totalled 22,914. The Group adopted the basic salary system on the basis of position-points salary distribution, and a variety of incentive mechanisms such as granting of allowances to employees working in remote areas with poor working conditions, long-term incentive policies for talented employees, as well as granting of allowances to employees and professionals working in special regions, in order to create a desirable environment that can attract and retain talents. Concerned about personal growth and occupational training as well as led by the strategy of developing a strong corporation with talents, the Group relied on a three-tier management organisational structure and implemented an all-staff training scheme for various levels. During the Period, 194,762 employees from various tiers attended trainings arranged by the Group, among which 2,803 employees attended professional skill training and on-the-job qualifications and certification training programmes hosted by China Datang Corporation; 1,044 employees attended professional skill training sessions hosted by the Company; and 190,915 employees attended various kinds of training sessions hosted by basic-level enterprises. C. Outlook for the Second Half of 2014 In the second half of 2014, China's economy is expected to maintain steady growth and development momentum, and it is expected that the nationwide power demand and supply would remain in overall balance. With surplus balance in certain regions and a tight balance in others, the electricity consumption would accelerate steadily. The Company will continue to adhere to the value-focused and result-oriented principles; consolidate the basis for safe production; compete in power generation; control its costs strictly; and enhance its profitability, so as to ensure it could accomplish the operation target of the entire year as planned. The Company will also firmly optimise its business structure; enhance internal management; deepen its system reform; and adjust its development strategies, in order to enhance its core competitiveness. 1. Practise safe production - continue to uphold the target of "Prevention of Nine Types of casualties and equipment failures for production safety" targets to facilitate the stability of the Company and boost performance with safe production. 2. Focus on the competition in power generation expansion - continue to put power generation expansion as the priority for operational breakthrough and boosting results; and strive to meet the target that the utilisation hours of power generation units of the Company not less than the higher performance of the comparable units within the same regions. 3. Control operating costs - place emphasis on both exploring revenue sources and saving costs as well as upscale the management on costs and expenses to ensure the achievement of the profit target for the entire year. 4. Optimise business structure - place emphasis on consolidating and enhancing the competitive edges of the electricity segment, accelerate the optimisation and adjustment of business structure, and disposal of lowly efficient and inefficient assets as well as foster the approval of quality power projects. 5. Commence construction of infrastructures - continue to build premium infrastructure projects; intensify the expenses control and target management for key construction projects; implement the accountability for project construction; enhance safety control and management of generating units for which construction has commenced; and improve the Company's portfolio structure of power generation units via optimisation and expansion. 6. Strengthen energy conservation and emission reduction - guarantee that the Company could complete environment protection-related modifications as planned and greatly foster modifications for reduction in energy consumption and energy conservation management, so as to ensure the energy consumption would continuously decline and the discharge of various pollutants could meet requirements. III. SHARE CAPITAL AND DIVIDENDS 1. Share Capital As at 30 June 2014, the 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. 2. Shareholding of Substantial Shareholders To the best knowledge of the directors of the Company, the persons below held the interests or short positions in the shares or underlying 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) as at 30 June 2014: Approximate percentage Approximate Approximate to total percentage to percentage to issued share total issued total issued Class of Number of capital of A shares of H shares of Name of Shares shares held the Company the Company the Company Shareholder (shares) (%) (%) (%) 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 A shares 1,296,012,600 9.74 12.97 - Jinneng Investment Company Hebei A shares 1,281,872,927 9.63 12.83 - Construction & Investment Group Co., Ltd. Beijing A shares 1,260,988,672 9.47 12.62 - Energy Investment (Group) Co., Ltd. Guo H shares 233,308,000(L) 1.75(L) - 7.04(L) Guangchang (Note) Fosun H shares 233,308,000(L) 1.75(L) - 7.04(L) Holdings Limited (Note) Fosun H shares 233,308,000(L) 1.75(L) - 7.04(L) International Holdings Limited (Note) Fosun H shares 233,308,000(L) 1.75(L) - 7.04(L) International Limited (Note) (L) = Long Position (S) = Short Position (P) = Lending Pool Note: The 233,308,000 shares represent the same block of shares 3. Dividends The Board does not recommend the payment of any interim dividend for 2014. 4. Shareholding of the Directors and Supervisors As at 30 June 2014, Mr. Fang Qinghai, a director of the Company, was interested in 24,000 A shares of the Company, and Mr. Meng Fankui, a vice president of the Company, was interested in 5,000 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 or debentures of the Company or any of its associated corporation (as defined in SFO) that were required to be notified to the Company and The Stock Exchange of Hong Kong Limited (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 be notified to the Company and the Hong Kong Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 of the Rules Governing the Listing of Securities (the "Model Code") on the Hong Kong Stock Exchange (the "Listing Rules"). IV. SIGNIFICANT EVENTS 1. In accordance with the "Resolution on the Adjustments of Directors" which was considered and approved at the 2014 first extraordinary general meeting of the Company convened on 24 January 2014, Mr. Wu Jing holds the office as an executive director of the eighth session of the Board of the Company, and Mr. Cao Jingshan no longer serves as a director of the eighth session of the Board of the Company. In accordance with the "Resolution on the Election of the Vice-Chairperson of the Eighth Session of the Board" which was considered and approved at the seventh meeting of the eighth session of the Board of the Company convened on 24 January 2014, Mr. Wu Jing has been elected as the vice-chairperson of the eighth session of the Board. 2. The Company completed the issuance of "The First Tranche of Datang International Power Generation Co., Ltd.'s Super Short-term Debentures in 2014" (the "First Tranche Super Short-term Debentures") on 28 February 2014. The issuance amount for the First Tranche Super Short-term Debentures was RMB3 billion with a maturity of 180 days. The unit nominal value is RMB100 and the issuance interest rate is at 5.00%. 3. The Company completed the issuance of "The Second Tranche of Datang International Power Generation Co., Ltd.'s Super Short-term Debentures in 2014" (the "Second Tranche Super Short-term Debentures") on 10 April 2014. The issuance amount for the Second Tranche Super Short-term Debentures was RMB4 billion with a maturity of 100 days. The unit nominal value is RMB100 and the issuance interest rate is at 4.95%. 4. In accordance with the resolution of the first meeting of the enlarged group leaders of the second meeting of the fifth session of staff representative meeting of the Company held on 3 April 2014, Mr. Guan Zhenquan would cease to serve as the staff representative's supervisor of the Company due to job reassignment. It was unanimously resolved at the meeting that Ms. Guo Hong would serve as the staff representative's supervisor of the eighth session of the supervisory committee of the Company. 5. The Company completed the issuance of "The Third Tranche of Datang International Power Generation Co., Ltd.'s Super Short-term Debentures in 2014" (the "Third Tranche Super Short-term Debentures") on 25 April 2014. The issuance amount for the Third Tranche Super Short-term Debentures was RMB3 billion with a maturity of 180 days. The unit nominal value is RMB100 and the issuance interest rate is at 4.76%. 6. In accordance with the 2013 annual profit distribution plan of the Company which was considered and approved at the 2013 annual general meeting convened on 12 June 2014, the Company completed the payment of dividends for the year of 2013 on 8 August 2014. The cash dividends per share paid was RMB0.12 (including tax), and the cash dividends per 10 shares paid was RMB1.2 (including tax). 7. The Company completed the issuance of "The Fourth Tranche of Datang International Power Generation Co., Ltd.'s Super Short-term Debentures in 2014" (the "Fourth Tranche Super Short-term Debentures") on 17 July 2014. The issuance amount for the Fourth Tranche Super Short-term Debentures was RMB3 billion with a maturity of 270 days. The unit nominal value is RMB100 and the issuance interest rate is at 4.58%. 8. On 7 July 2014, the Company entered into the Framework Agreement for Reorganisation of Coal-to-chemical Segment and Related Projects (the "Reorganisation Framework Agreement") with China Reform Holdings Corporation Ltd. ("China Reform Corporation") for the proposed reorganisation of the Company's coal-to-chemical business segment and related projects. The scope of the reorganisation includes Datang Inner Mongolia Duolun Coal Chemical Company Limited, Inner Mongolia Datang International Keshiketeng Qi Coal-based Gas Company Limited, Liaoning Datang International Fuxin Coal-to-gas Company Ltd., Hulunbeier Fertiliser Company, Xilinhaote Mining Company and the respective ancillary facilities and affiliated projects. As at the date of this announcement, the reorganisation is in progress in a steady manner. 9. The Company completed the issuance of the First Tranche of Medium-Term Notes of Datang International Power Generation Co., Ltd. (the "First Tranche Medium-Term Notes 2014") on 22 August 2014. The issuance amount of the First Tranche Medium-Term Notes 2014 was RMB3.5 billion with a maturity of 5 years. The nominal value is RMB100 and the interest rate is at 5.20% per annum. V. PURCHASE, SALE AND REDEMPTION OF THE COMPANY'S LISTED SECURITIES During the Period, the Group did not purchase, sell or redeem any of the listed securities of the Company. VI. COMPLIANCE WITH THE CODE ON CORPORATE GOVERNANCE PRACTICES To the knowledge of the Board, the Company complied with all the code provisions under the Corporate Governance Code (the "Code") as set out in Appendix 14 to the Listing Rules for the Period, with the exception of the following: During the Period, the legal action which the directors may face is covered in the internal risk management and control of the Company, and therefore insurance arrangements for directors have not been made. During the Period, the Nomination Committee, the Remuneration and Appraisal Committee, the Audit Committee and the Strategic Development and Risk Control Committee set up by the Company carried out their work in accordance with their respective terms of reference. Their terms of reference have covered the responsibilities to be performed as required by the code provisions A.5.2, B.1.2 and C.3.3 of the Code. Only differences in expressions or sequence exist between such terms of reference and the afore-said code provisions. VII. COMPLIANCE WITH THE MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS OF LISTED ISSUERS The Company has adopted a code of conduct regarding directors' securities transaction on terms no less exacting than the required standard set out in the Model Code. 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 as set out in Appendix 10 to the Listing Rules during the Period. VIII. AUDIT COMMITTEE The Audit Committee has reviewed the accounting standards adopted by the Group with the management of the Company. They have also discussed matters regarding internal controls and the interim financial statements, including the review of the financial and accounting information of the Group for the Period. The Audit Committee considers that the 2014 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 Zhou Gang Secretary to the Board Beijing, the PRC, 27 August 2014 As at the date of this announcement, the directors of the Company are: Chen Jinhang, Hu Shengmu, Wu Jing, Fang Qinghai, Zhou Gang, Cao Xin, Cai Shuwen, Liu Haixia, Guan Tiangang, Yang Wenchun, Dong Heyi*, Ye Yansheng*, Zhao Jie*, Jiang Guohua*, Feng Genfu* * independent non-executive directors CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For the six months ended 30 June 2014 Six months ended 30 June ------------------------ Note 2014 2013 ------------ ----------- RMB'000 RMB'000 (unaudited) (unaudited) Operating revenue 4 34,842,547 37,010,016 Operating costs Fuel for power and heat generation (13,728,261) (15,774,146) Fuel for coal sales (1,395,840) (2,366,751) Depreciation (5,277,807) (4,882,352) Repairs and maintenance (996,675) (1,025,691) Salaries and staff welfare (1,277,592) (1,593,483) Local government surcharges (361,069) (366,275) Others (3,748,593) (3,729,257) ------------ ----------- Total operating costs (26,785,837) (29,737,955) ------------ ----------- Operating profit 8,056,710 7,272,061 Share of profits of associates 338,811 531,154 Share of (losses)/profits of joint (154,465) 46,630 ventures Investment income 86,226 223,429 Other losses - (16,653) Interest income 41,855 39,958 Finance costs 6 (4,233,209) (4,083,093) ------------ ----------- Profit before tax 4,135,928 4,013,486 Income tax expense 7 (1,272,833) (876,890) ------------ ----------- Profit for the period 2,863,095 3,136,596 ------------ ----------- Six months ended 30 June ------------------------- Note 2014 2013 ----------- ---------- RMB'000 RMB'000 (unaudited) (unaudited) Other comprehensive income: Items that may be reclassified to profit or loss: Fair value loss on available-for-sale investments (114,022) (135,011) Share of other comprehensive income of associates (895) 970 Exchange differences on translating foreign operations 2,227 (7,677) Income tax on items that may be reclassified to profit or loss 1,481 7,219 ----------- ---------- Other comprehensive income for the period, net of tax (111,209) (134,499) ----------- ---------- Total comprehensive income for the period 2,751,886 3,002,097 =========== ========== Profit for the period attributable to: Owners of the Company 2,028,713 2,019,283 Non-controlling interests 834,382 1,117,313 ----------- ---------- 2,863,095 3,136,596 =========== ========== Total comprehensive income for the period attributable to: Owners of the Company 1,917,504 1,884,784 Non-controlling interests 834,382 1,117,313 ----------- ---------- 2,751,886 3,002,097 =========== ========== RMB RMB (unaudited) (unaudited) Earnings per share Basic and diluted 8 0.1524 0.1517 =========== ========== CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION At 30 June 2014 At At 30 June 31 December Note 2014 2013 ------------ ----------- RMB'000 RMB'000 (unaudited) (audited) ASSETS Non-current assets Property, plant and equipment 246,667,001 243,436,494 Investment properties 461,812 467,267 Intangible assets 2,860,120 2,882,391 Development costs 11 51 Investments in associates 7,477,416 6,900,077 Investments in joint ventures 5,249,109 5,262,631 Available-for-sale investments 4,157,315 4,267,757 Deferred housing benefits 36,840 49,027 Long-term entrusted loans to an associate 100,171 335,977 Deferred tax assets 1,774,629 1,658,693 Other non-current assets 1,028,485 1,138,301 ------------ ----------- 269,812,909 266,398,666 ------------ ----------- Current assets Inventories 3,326,814 3,682,099 Accounts and notes receivables 9 9,699,535 10,101,400 Prepayments and other receivables 9,927,513 9,579,892 Short-term entrusted loans to related parties 551,232 616,381 Tax recoverable 30,464 35,330 Current portion of long-term entrusted loans to an associate 335,000 185,000 Cash and cash equivalents 7,525,592 7,880,844 Restricted bank deposits 534,857 - ------------ ----------- 31,931,007 32,080,946 ------------ ----------- TOTAL ASSETS 301,743,916 298,479,612 ============ =========== At At 30 June 31 December Note 2014 2013 ------------ ----------- RMB'000 RMB'000 (unaudited) (audited) EQUITY AND LIABILITIES Capital and reserves Share capital 10 13,310,038 13,310,038 Reserves 27,298,452 25,768,061 Retained earnings Proposed dividends - 1,597,205 Others 3,910,693 3,492,494 ------------ ----------- Equity attributable to owners of the Company 44,519,183 44,167,798 Non-controlling interests 18,895,247 20,374,790 ------------ ----------- Total equity 63,414,430 64,542,588 ------------ ----------- Non-current liabilities Long-term loans 141,681,422 138,054,247 Long-term bonds 9,430,395 14,417,779 Deferred income 1,997,935 1,796,663 Deferred tax liabilities 626,264 622,415 Provisions 40,875 40,875 Other non-current liabilities 9,606,963 8,998,875 ------------ ----------- 163,383,854 163,930,854 ------------ ----------- Current liabilities Accounts payables and accrued 11 27,519,780 27,518,624 liabilities Taxes payables 1,075,694 1,109,441 Dividends payables 3,303,767 147,273 Short-term loans 16,357,242 18,239,234 Short-term bonds 10,400,000 5,700,000 Current portion of non-current liabilities 16,289,149 17,291,598 ------------ ----------- 74,945,632 70,006,170 ------------ ----------- Total liabilities 238,329,486 233,937,024 ------------ ----------- TOTAL EQUITY AND LIABILITIES 301,743,916 298,479,612 ============ =========== Net current liabilities (43,014,625) (37,925,224) ============ =========== Total assets less current liabilities 226,798,284 228,473,442 ============ =========== NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the six months ended 30 June 2014 1. BASIS OF PREPARATION These condensed consolidated 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 2014, 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 2014, the Group had net current liabilities of approximately RMB43.01 billion. The Group had significant undrawn borrowing facilities, subject to certain conditions, amounting to approximately RMB247.88 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 consolidated financial statements should be read in conjunction with the 2013 annual financial statements. The accounting policies and methods of computation used in the preparation of these condensed consolidated financial statements are consistent with those used in the annual financial statements for the year ended 31 December 2013. These condensed 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. 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 2014. IFRSs comprise International Financial Reporting Standards; International Accounting Standards; 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. 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. FAIR VALUE MEASUREMENTS Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following disclosures of fair value measurements use a fair value hierarchy that categorises into three levels the inputs to valuation techniques used to measure fair value: Level 1 inputs: quoted prices (unadjusted) in active markets for identical assets or liabilities that the Group can access at the measurement date. Level 2 inputs: inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs: unobservable inputs for the asset or liability. The Group's policy is to recognise transfers into and transfers out of any of the three levels as of the date of the event or change in circumstances that caused the transfer. The carrying amounts of the Group's financial assets and financial liabilities as reflected in the condensed consolidated statement of financial position approximate their respective fair values. Disclosures of level in fair value hierarchy at 30 June 2014: Description Fair value measurements using Level 1: At At 30 June 31 December 2014 2013 -------- -------- RMB'000 RMB'000 (unaudited) (audited) Recurring fair value measurements: Available-for-sale investments Equity securities listed in Hong Kong 276,511 374,262 Equity securities listed outside Hong Kong 75,438 88,129 -------- -------- Total recurring fair value measurements 351,949 462,391 ======== ======== 4. OPERATING REVENUE Six months ended 30 June --------------------------- 2014 2013 ----------- ----------- RMB'000 RMB'000 (unaudited) (unaudited) Sales of electricity 30,364,686 31,186,156 Heat supply 686,620 690,810 Sales of coal 1,445,638 2,496,282 Sales of chemical products 1,403,560 1,788,421 Others 942,043 848,347 ----------- ----------- 34,842,547 37,010,016 =========== =========== 5. 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 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 losses do not include dividend income from available-for-sale investments and gain or loss 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 2014 Revenue from external 31,231,502 1,451,423 1,409,422 750,200 34,842,547 customers Intersegment revenue 504,538 10,401,319 6,575 54,053 10,966,485 Segment profit/(loss) 5,513,299 110,133 (1,367,420) (158,195) 4,097,817 At 30 June 2014 Segment assets 203,222,903 27,584,838 75,125,283 11,049,836 316,982,860 Segment liabilities 167,637,130 20,083,476 63,620,990 1,779,489 253,121,085 =========== ========== ========== ========= =========== Six months ended 30 June 2013 Revenue from external 32,198,456 2,437,295 1,790,382 583,883 37,010,016 customers Intersegment revenue 389,091 9,723,034 81,312 77,979 10,271,416 Segment profit/(loss) 3,773,923 492,666 (519,031) 202,958 3,950,516 (audited) (audited) (audited) (audited) (audited) At 31 December 2013 Segment assets 197,049,059 29,266,061 73,422,380 10,459,325 310,196,825 Segment liabilities 163,790,164 20,049,043 59,735,252 1,648,032 245,222,491 =========== ========== ========== ========= =========== Six months ended 30 June ------------------------- 2014 2013 RMB'000 RMB'000 ---------- ---------- (unaudited) (unaudited) Reconciliations of segment profit or loss: Total profit or loss of reportable segments 4,097,817 3,950,516 Dividend income from available-for-sale - 22,539 investments Elimination of intersegment profits (17,125) (87,594) IFRS adjustment on amortisation of monetary (12,187) (12,486) housing benefits IFRS adjustment on reversal of general provision on mining funds 67,423 140,511 ---------- ---------- Consolidated profit before tax 4,135,928 4,013,486 ========== ========== Six months ended 30 June ------------------------- 2014 2013 ---------- ---------- RMB'000 RMB'000 (unaudited) (unaudited) Revenue from major customers: Power generation segment North China Branch of State Grid Corporation of 7,908,673 - China North China Grid Company Limited - 7,935,912 State Grid Zhejiang Electric Power Company 3,058,136 2,426,693 Guangdong Power Grid Corporation 3,018,124 3,124,055 Jibei Electric Power Company Limited 2,866,115 2,680,594 Jiangsu Electric Power Company 2,012,977 3,863,071 State Grid Corporation of China - 3,089,436 ========== ========== 6. FINANCE COSTS Six months ended 30 June ------------------------- 2014 2013 ---------- ---------- RMB'000 RMB'000 (unaudited) (unaudited) Interest expense 6,036,236 5,812,681 Less: amount capitalised in property, plant (1,841,669) (1,757,976) and equipment ---------- ---------- 4,194,567 4,054,705 Exchange loss/(gain), net 8,277 (14,021) Others 30,365 42,409 ---------- ---------- 4,233,209 4,083,093 ========== ========== 7. INCOME TAX EXPENSE Six months ended 30 June ------------------------ 2014 2013 ---------- ---------- RMB'000 RMB'000 (unaudited) (unaudited) Current tax 1,385,952 1,100,031 Deferred tax (113,119) (223,141) ---------- ---------- 1,272,833 876,890 ========== ========== 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 2013: 25%). Certain subsidiaries located in western region in the PRC enjoyed PRC Enterprise Income Tax rate of 15% before 2021 (six months ended 30 June 2013: 2021) when such income tax rate has changed to 25% thereafter. In addition, 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. 8. 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 RMB2,028,713 thousand (six months ended 30 June 2013: RMB2,019,283 thousand) and the weighted average number of ordinary shares of 13,310,038 thousand (six months ended 30 June 2013: 13,310,038 thousand) in issue during the period. Diluted earnings per share During the six months ended 30 June 2014 and 2013, the Company did not have any dilutive potential ordinary shares. Therefore, diluted earnings per share is equal to basic earnings per share. 9. ACCOUNTS AND NOTES RECEIVABLES 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 the accounts and notes receivables is as follows: At At 30 June 31 December 2014 2013 ---------- ---------- RMB'000 RMB'000 (unaudited) (audited) Within one year 8,760,849 9,809,030 Between one to two years 685,980 86,754 Between two to three years 130,485 180,101 Over three years 122,221 25,515 ---------- ---------- 9,699,535 10,101,400 ========== ========== 10. SHARE CAPITAL At At 30 June 31 December 2014 2013 ---------- ---------- RMB'000 RMB'000 (unaudited) (audited) Registered, issued and fully paid: 9,994,360,000 (At 31 December 2013: 9,994,360,000) A shares of RMB1 each 9,994,360 9,994,360 3,315,677,578 (At 31 December 2013: 3,315,677,578) H shares of RMB1 each 3,315,678 3,315,678 ---------- ---------- 13,310,038 13,310,038 ========== ========== 11. ACCOUNTS PAYABLES AND ACCRUED LIABILITIES At At 30 June 31 December 2014 2013 ---------- ---------- RMB'000 RMB'000 (unaudited) (audited) Accounts and notes payables 12,919,583 12,105,937 Other payables and accrued liabilities 14,600,197 15,412,687 ---------- ---------- 27,519,780 27,518,624 ========== ========== The ageing analysis of the accounts and notes payables is as follows: At At 30 June 31 December 2014 2013 ---------- ---------- RMB'000 RMB'000 (unaudited) (audited) Within one year 11,358,996 10,982,287 Between one to two years 1,364,396 557,375 Between two to three years 49,670 240,683 Over three years 146,521 325,592 ---------- ---------- 12,919,583 12,105,937 ========== ========== 12. EVENTS AFTER THE REPORTING PERIOD (a) On 7 July 2014, the Company entered into the Framework Agreement for Reorganisation with China Reform Holdings Corporation Ltd. ("China Reform Corporation") for the proposed reorganisation of the Company's coal-to-chemical business segment and related projects (the "Reorganisation"). The transaction price of the Reorganisation will be negotiated and determined pursuant to the State laws, regulations and the relevant requirements of the relevant government departments and based on the audit and asset evaluation result. China Reform Corporation will, through reorganisation cooperation or acquisition of equity interests, acquire assets or equity interests of the coal-to-chemical business segment and related projects of the Company. (b) The Company completed the issuance of "The Fourth Tranche of Datang International Power Generation Co., Ltd.'s Super Short-term Debentures in 2014" (the "Current Tranche Super Short-term Debentures") on 17 July 2014. The issuance amount for the Current Tranche Super Short-term Debentures was RMB3 billion with a maturity of 270 days. The unit nominal value is RMB100 and the issuance interest rate is at 4.58%. Bank of China Limited and Ping An Bank Co., Ltd. act as the joint lead underwriters for the Current Tranche Super Short-term Debentures. The proceeds from the Current Tranche Super Short-term Debentures will be used to replace part of the loans of the Company, adjust its debt structure, lower its financing costs and replenish the working capital of the Company. (c) The Company completed the issuance of "The First Tranche of Datang International Power Generation Co., Ltd.'s Medium-term Notes in 2014" (the "Current Tranche Medium-term Notes") on 22 August 2014. The issuance amount for the Current Tranche Medium-term Notes was RMB3.5 billion with a maturity of 5 years. The nominal value is RMB100 and the interest rate is at 5.20% per annum. Agricultural Bank of China Limited which acts as the lead underwriter and bookrunner and China Development Bank Corporation which acts as the joint lead underwriter, make a public offering of the Current Tranche Medium-term Notes in the nationwide interbank bond market by way of book building and centralised placement. The proceeds from the Current Tranche Medium-term Notes will be primarily used to replenish the working capital of the Company and repay the bank loans in order to adjust its debt structure and lower its financing costs. DIFFERENCES BETWEEN FINANCIAL STATEMENTS For the six months ended 30 June 2014 The condensed 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 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 2014 2013 ---------- ---------- RMB'000 RMB'000 (unaudited) (audited) Net assets attributable to owners of the Company under IFRS 44,519,183 44,167,798 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) (36,840) (49,027) Difference in accounting treatment on mining funds (c) (300,852) (300,117) Applicable deferred tax impact of the above GAAP Differences 6,245 (1,877) Non-controlling interests' impact of the above GAAP Differences after tax (22,921) (2,327) ---------- ---------- Net assets attributable to owners of the Company under PRC GAAP 44,271,281 43,920,916 ========= ========== - 27 - Net profit -------------------------- Six months ended 30 June ---------- ---------- Note 2014 2013 ---------- ---------- RMB'000 RMB'000 (unaudited) (unaudited) Profit for the period attributable to owners of the Company under IFRS 2,028,713 2,019,283 Impact of IFRS adjustments: Difference in accounting treatment on monetary housing benefits (b) 12,187 12,486 Difference in accounting treatment on mining funds (c) (67,423) (140,511) Applicable deferred tax impact of the above GAAP Differences 8,122 2,079 Non-controlling interests' impact of the above GAAP Differences after tax (6,666) (4,963) ---------- ---------- Net profit for the period attributable to owners of the Company under PRC GAAP 1,974,933 1,888,374 ========== ========== Notes: (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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