2005 Interim Results

Datang Intl Power Generation Co Ld 31 August 2005 Datang International Power Generation Company Limited (a sino-foreign joint stock limited company incorporated in the People's Republic of China) (Stock Code: 991) ANNOUNCEMENT OF 2005 INTERIM RESULTS * On-grid electricity amounted to approximately 32.842 million MWh, representing an increase of approximately 39.29% as compared to the corresponding period of the previous year. * Consolidated operating revenue amounted to approximately RMB8,589 million, representing an increase of approximately 42.16% as compared to the corresponding period of the previous year. * Consolidated net profit* amounted to approximately RMB1,119 million, representing an increase of approximately 0.55% as compared to the corresponding period of the previous year. * Basic earnings per share amounted to approximately RMB0.22. I. COMPANY RESULTS The board of directors (the 'Board') of Datang International Power Generation Company Limited (the 'Company') hereby announces the unaudited operating results of the Company and its subsidiaries prepared in conformity with the International Financial Reporting Standards for the six months ended 30 June 2005 (the 'Period'), together with the unaudited consolidated operating results of the corresponding period of the previous year for comparison. Such operating results have been reviewed and confirmed by the audit committee of the Company (the 'Audit Committee'). Consolidated operating revenue of the Company and its subsidiaries for the Period amounted to approximately RMB8,589 million, representing an increase of approximately 42.16% as compared to the corresponding period of the previous year. Consolidated net profit for the Period amounted to approximately RMB1,119 million, representing an increase of approximately 0.55% as compared to the corresponding period of the previous year. Basic earnings per share for the Period was approximately RMB0.22, at the same level as that of the corresponding period of the previous year. Please refer to the unaudited financial information set out below for details of the operating results of the Company. *Note: Consolidated net profit represents net profit attributable to shareholders of the Company. CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) AS AT 30 JUNE 2005 (Amounts expressed in thousands of Renminbi ('RMB')) 30 June 31 December Note 2005 2004 ASSETS Non-current assets Property, plant and equipment, net 49,829,366 42,635,793 Investments in associates 785,178 514,415 Available-for-sale investments 313,023 336,700 Goodwill 33,561 33,561 Deferred housing benefits 214,055 149,385 Long-term deposit 100,000 100,000 Deferred tax assets 95,220 75,547 51,370,403 43,845,401 Current assets Inventories 515,521 442,615 Other receivables and current assets 397,557 224,372 Accounts receivable 1,658,506 1,289,931 Short-term bank deposits over three months 20,000 210,409 Cash and cash equivalents 2,786,195 3,462,019 5,377,779 5,629,346 Total assets 56,748,182 49,474,747 EQUITY AND LIABILITIES Capital and reserves attributable to the Company's equity holders Share capital 5,162,849 5,162,849 Reserves 11,930,633 11,947,568 17,093,482 17,110,417 Minority interest 2,307,289 1,968,309 Total equity 19,400,771 19,078,726 Non-current liabilities Long-term loans 18,707,805 17,949,062 Convertible bonds 3 1,102,116 1,078,027 Deferred tax liabilities 181,204 155,328 19,991,125 19,182,417 Current liabilities Accounts payable and accrued 2 4,129,553 3,625,869 liabilities Short-term loans 4 11,618,760 5,979,560 Current portion of long-term loans 1,378,001 1,106,875 Taxes payable 229,972 501,300 17,356,286 11,213,604 Total liabilities 37,347,411 30,396,021 Total equity and liabilities 56,748,182 49,474,747 CONDENSED CONSOLIDATED INCOME STATEMENT (UNAUDITED) FOR THE SIX MONTHS ENDED 30 JUNE 2005 (Amounts expressed in thousands of RMB, except per share data) Six months ended 30 June Note 2005 2004 Operating revenue 5 8,588,707 6,041,467 Operating costs 9 (6,438,097) (4,137,151) Operating profit 2,150,610 1,904,316 Share of loss of associates, net (3,953) (6,633) Interest income 24,429 19,362 Finance costs 9 (371,495) (158,386) Profit before taxation 1,799,591 1,758,659 Taxation 6 (353,436) (484,395) Profit for the period 1,446,155 1,274,264 Attributable to: Equity holders of the Company 1,118,892 1,112,780 Minority interest 327,263 161,484 1,446,155 1,274,264 Earnings per share for profit attributable to the equity holders of the Company during the period - basic (RMB) 7 0.22 0.22 - diluted (RMB) 7 0.21 0.21 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED) FOR THE SIX MONTHS ENDED 30 JUNE 2005 (Amounts expressed in thousands of RMB) Attributable to equity holders of the Company Statutory Statutory public Discretionary Share Capital surplus welfare surplus capital reserve reserve fund reserve Balance as at 1 January 2004, as previously reported as equity 5,162,849 3,653,421 1,312,067 256,981 3,032,863 Balance as at 1 January 2004, as previously separately reported as minority interest - - - - - Balance as at 1 January 2004, as restated 5,162,849 3,653,421 1,312,067 256,981 3,032,863 Capital injection from minority shareholders of subsidiaries - - - - - Dividends declared - - - - - Net profit - - - - - Transfer between reserves - - - (7,860) 516,937 Balance as at 30 5,162,849 3,653,421 1,312,067 249,121 3,549,800 June 2004 CONTINUATION OF ABOVE TABLE Minority interest Total Attributable to equity holders of the Company (Note 1) equity Restricted Other Retained Total reserve reserve earnings reserves Balance as at 1 January 2004, as previously reported as equity 161,801 149,796 1,991,554 10,558,483 - 15,721,332 Balance as at 1 January 2004, as previously separately reported as minority interest - - - - 1,240,427 1,240,427 Balance as at 1 January 2004, as restated 161,801 149,796 1,991,554 10,558,483 1,240,427 16,961,759 Capital injection from minority shareholders of subsidiaries - - - - 70,000 70,000 Dividends declared - - (903,499) (903,499) (43,362) (946,861) Net profit - - 1,112,780 1,112,780 161,484 1,274,264 Transfer between reserves (16,180) - (492,897) - - - Balance as at 30 June 2004 145,621 149,796 1,707,938 10,767,764 1,428,549 17,359,162 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED) FOR THE SIX MONTHS ENDED 30 JUNE 2005 (Amounts expressed in thousands of RMB) Attributable to equity holders of the Company Statutory Statutory public Discretionary Share Capital surplus welfare surplus capital reserve reserve fund reserve Balance as at 1 January 2005, as previously reported as equity 5,162,849 3,653,421 1,619,555 464,488 3,593,485 Balance as at 1 January 2005, as previously separately reported as minority interest - - - - - Balance as at 1 January 2005, as restated 5,162,849 3,653,421 1,619,555 464,488 3,593,485 Capital injection from minority shareholders of subsidiaries - - - - - Dividends declared (Note 8) - - - - - Net profit - - - - - Transfer between reserves (Note 8) - - - - 1,281,770 Balance as at 30 June 2005 5,162,849 3,653,421 1,619,555 464,488 4,875,255 CONTINUATION OF ABOVE TABLE Minority interest Total Attributable to equity holders of the Company (Note 1) equity Restricted Other Retained Total reserve reserve earnings reserves Balance as at 1 January 2005, as previously reported as equity 129,441 149,796 2,337,382 11,947,568 - 17,110,417 Balance as at 1 January 2005, as previously separately reported as minority interest - - - - 1,968,309 1,968,309 Balance as at 1 January 2005, as restated 129,441 149,796 2,337,382 11,947,568 1,968,309 19,078,726 Capital injection from minority shareholders of subsidiaries - - - - 95,600 95,600 Dividends declared (Note 8) - - (1,135,827) (1,135,827) (83,883) (1,219,710) Net profit - - 1,118,892 1,118,892 327,263 1,446,155 Transfer between reserves (Note 8) (16,180) - (1,265,590) - - - Balance as at 30 June 2005 113,261 149,796 1,054,857 11,930,633 2,307,289 19,400,771 NOTES TO THE CONDENSED FINANCIAL STATEMENTS (UNAUDITED) FOR THE SIX MONTHS ENDED 30 JUNE 2005 (Amounts expressed in RMB) 1. Principal accounting policies The unaudited condensed consolidated financial statements have been prepared in accordance with International Accounting Standard ('IAS') 34 'Interim Financial Reporting' promulgated by the International Accounting Standards Board and Appendix 16 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the 'Listing Rules'). The principal accounting policies applied in the preparation of these condensed consolidated interim financial statements are consistent with those applied in the preparation of the annual financial statements as at and for the year ended 31 December 2004 except that the Company and its subsidiaries have adopted the International Financial Reporting Standards ('IFRSs') which are effective for accounting period commencing on 1 January 2005. The list of the new/revised IASs and IFRSs which are relevant to the operations of the Company and its subsidiaries is as follows. The 2004 comparatives have been amended as required, in accordance with the relevant requirements. IAS 1 Presentation of Financial Statements IAS 2 Inventories IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors IAS 10 Events after the Balance Sheet Date IAS 16 Property, Plant, and Equipment IAS 17 Leases IAS 21 The Effects of Changes in Foreign Exchange Rates IAS 24 Related Party Disclosures IAS 27 Consolidated and Separate Financial Statements IAS 28 Investments in Associates IAS 32 Financial Instruments: Disclosure and Presentation IAS 33 Earnings per Share IAS 39 Financial Instruments: Recognition and Measurement The adoption of IASs 1, 2, 8, 10, 16, 17, 21, 32, 33 and 39 did not result in substantial changes to the accounting policies of the Company and its subsidiaries. IAS 1 has affected the presentation of minority interest and other disclosures. IAS 24 has extended the identification and disclosure of related parties to include state-owned enterprises and key management personnel of the Company as well as their close family members. The adoptions of IASs 27 and 28 have resulted in changes in accounting policies for investments in subsidiaries and associates at company level. Until 31 December 2004, investments in subsidiaries and associates at company level are accounted for using the equity method. Subsequent to that date, the Company and its subsidiaries, at the Company level, restated such investments at cost less any accumulated impairment losses. All changes in the accounting policies have been made in accordance with the transition provisions in the respective standards. All standards adopted by the Company and its subsidiaries require retrospective application other than IAS 16-the exchange of property, plant and equipment is accounted at fair value prospectively. 2. Accounts payable and accrued liabilities 30 June 31 December 2005 2004 '000 '000 Construction costs and deposits payable to contractors 2,173,828 2,290,647 Fuel and material costs payable 1,146,004 678,689 Salary and welfare payable 184,507 148,090 Interest rate swap liability 116,376 119,885 Government grants 174,277 170,177 Others 334,561 218,381 4,129,553 3,625,869 As at 30 June 2005, other than certain deposits for construction which were due between one and two years, substantially all accounts payable were due within one year. As at 30 June 2005, the notional principal amount of the outstanding interest rate swap contracts of Inner Mongolia Datang International Tuoketuo Power Generation Company Limited ('Tuoketuo Power Company') was USD219,675,000 (2004 - USD213,911,000) and the related fixed rate and floating rate were 5.15% (2004 - 5.15%) and 2.89% (2004 - 1.86%) (LIBOR offered by British Bankers' Association as at 13 January 2005), respectively. 3. Convertible bonds The liability component of convertible bonds as at 30 June 2005 was as follows: '000 Liability component as at 1 January 2005 1,078,027 Interest expense 28,863 Interest payment (4,774) Liability component as at 30 June 2005 1,102,116 The carrying amount of the liability component as at 30 June 2005 of the convertible bonds approximated its fair value. 4. Short-term Loans The Company and its subsidiaries had short-term loans payable to North China Power Group Finance Company Ltd. totalling approximately RMB1,065,400,000 as at 30 June 2005 (2004 - RMB104,000,000). 5. Operating revenue Six months ended 30 June 2005 2004 '000 '000 Electricity 8,541,200 6,035,508 Heat 47,507 5,959 8,588,707 6,041,467 Pursuant to the power purchase agreements entered into between the Company and its subsidiaries and the regional or provincial grid companies, the Company and its subsidiaries are required to sell their entire net generation of electricity to these grid companies at approved tariff rates. For the six months ended 30 June 2005, most of the electricity generated by the Company and its subsidiaries was sold to North China Grid Company ('NCG') and its subsidiaries. 6. Taxation Six months ended 30 June 2005 2004 '000 '000 PRC enterprise income tax - Current tax 347,233 469,356 - Deferred tax 6,203 15,039 353,436 484,395 Enterprise 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. Except for Tuoketuo Power Company and Hebei Datang International Huaze Hydropower Development Company Limited ('Huaze Hydropower Company'), the applicable enterprise income tax rate for the Company and its subsidiaries in the People's Republic of China (the 'PRC') is 33%. Pursuant to document Guo Ban Fa (2001) 73 issued by State Council of PRC and document Cai Shui (2001) 202 issued by State Administration of Taxation of the PRC, Tuoketuo Power Company, as an enterprise set up in western area of the PRC and engaged in a business encouraged by the State, has been granted a tax concession to pay PRC income tax at a preferential rate of 15% from 2001 to 2010. As a newly set up domestic invested enterprise engaged in power generation in western area of PRC, Tuoketuo Power Company is also exempted from PRC enterprise income tax during the first and second years of operations and has been granted a tax concession to pay PRC enterprise income tax at 50% of preferential rate during the third to fifth years of operations. Tuoketuo Power Company started commercial operations in 2003. The applicable PRC enterprise income tax rates approved by the local tax authority in 2004 and 2005 are 0%. Pursuant to document Ji Zheng Han (2003) 126 issued by People's Government of Hebei Province and document Ji Guo Shui Fa (2003) 179 issued by State Administration of Taxation of Hebei Province, Huaze Hydropower Company, as an enterprise set up in the autonomous county started from 1 January 2003, is exempted from PRC enterprise income tax during the first to third years since the first tax profit year and has been granted a tax concession to pay PRC enterprise income tax at 50% of the tax rate during the fourth to sixth year. Huaze Hydropower Company has the tax profit since the year 2003. The applicable PRC enterprise income tax rates approved by the local tax authority in 2004 and 2005 are 0%. 7. Earnings per share The calculation of basic earnings per share for the six months ended 30 June 2005 was based on net profit attributable to equity holders of the Company of approximately RMB1,118,892,000 (2004 - RMB1,112,780,000) and on the weighted average number of 5,162,849,000 shares (2004 - 5,162,849,000 shares) outstanding during the Period. The diluted earnings per share is calculated adjusting the weighted average number of ordinary share outstanding to assume conversion of all dilutive potential ordinary shares of the Company. The convertible bonds are assumed to have been converted into ordinary shares of the Company and the net profit is adjusted to eliminate the interest expenses less the tax effect. Six months ended 30 June 2005 2004 Net profit attributable to shareholders (RMB '000) 1,118,892 1,112,780 Interest expense on convertible debt (net of tax) (RMB '000) 19,338 18,502 Net profit used to determine diluted earnings per share (RMB '000) 1,138,230 1,131,282 Weighted average number of ordinary shares in issue (shares in thousand) 5,162,849 5,162,849 Adjustments for assumed conversion of convertible debt (shares in thousand) 215,813 215,813 Weighted average number of ordinary shares for diluted earnings per share (shares in thousand) 5,378,662 5,378,662 Diluted earnings per share (RMB) 0.21 0.21 8. Profit appropriations Dividends On 28 March 2005, the Board proposed a dividend of RMB0.22 per share, totalling approximately RMB1,135,827,000 for the year ended 31 December 2004. The proposed dividend distribution was approved by the shareholders of the Company in the general meeting dated 21 June 2005. During the Period, dividends of approximately RMB1,135,827,000 were paid, which represents RMB0.22 dividends paid per share. Reserves During the Period, approximately RMB16,180,000 has been transferred from the restricted reserve, which is specifically set up to reflect the reduction of the statutory public welfare fund under PRC GAAP, to retained earnings. This amount represented amortization of deferred housing benefits for the six months ended 30 June 2005. Pursuant to the Accounting System for Business Enterprises of the PRC, statutory public welfare fund is transferred to discretionary surplus reserve upon utilisation for the collective benefits of the employees. For the six months ended 30 June 2005, approximately RMB Nil (2004 - RMB7,860,000) of the statutory public welfare fund was transferred to discretionary surplus reserve. On 28 March 2005, the Board proposed an appropriation of approximately RMB1,281,770,000 to the discretionary reserve for the year ended 31 December 2004. The proposed profit appropriation was approved by the shareholders of the Company in the general meeting dated 21 June 2005. 9. Supplemental financial information (a) Condensed consolidated balance sheet 30 June 31 December 2005 2004 '000 '000 Net current liabilities (11,978,507) (5,584,258) Total assets less current liabilities 39,391,896 38,261,143 Six months ended 30 June 2005 2004 '000 '000 Additions to property, plant and equipment 8,488,241 6,886,757 (b) Condensed consolidated income statement Six months ended 30 June 2005 2004 '000 '000 Interest expenses 724,612 406,271 Less: amount capitalised in property, plant and equipment (381,275) (213,778) 343,337 192,493 Exchange loss, net 1,411 1,840 Fair value loss/(gain) on an interest rate swap 26,747 (35,947) Finance costs 371,495 158,386 Cost of inventories - Fuel 3,730,166 2,060,780 - Spare parts and consumable supplies 38,071 29,450 Depreciation and amortisation 1,294,391 993,906 Dividend income (27,261) (18,702) Donation to State Environmental Bureau 66,000 - Amortisation of deferred housing benefits 36,753 18,673 II. MANAGEMENT DISCUSSION AND ANALYSIS The Company and its subsidiaries are engaged in the development, construction and operation of power plants and the sale of electricity and thermal power. For the six months ended 30 June 2005, net profit of the Company and its subsidiaries amounted to approximately RMB1,119 million, representing an increase of approximately 0.55% as compared to the corresponding period of the previous year. Earnings per share was approximately RMB0.22, at the same level as that of the corresponding period of the previous year. 1. Production During the Period, the installed capacity (managed capacity) of operating units owned by the Company and its subsidiaries totalled 11,360MW. During the Period, total power generation of the Company and its subsidiaries amounted to approximately 34.868 million MWh, representing an increase of approximately 38.79% as compared to the corresponding period of the previous year. Total on-grid electricity amounted to approximately 32.842 million MWh, representing an increase of approximately 39.29% as compared to the corresponding period of the previous year. The increase in power generation and on-grid electricity was mainly attributable to: (1) Continued increase in power demand: The increase of nationwide power consumption by approximately 13.91% for the Period; (2) Increase in power generation capacity: With two operating units of the Company's subsidiaries put into commercial operation during the Period, together with the operating units put into operation in the second half of last year, the managed capacity of the Company has increased by 3,250MW as compared to the corresponding period of the previous year; (3) Safe and stable operation of existing operating units at high operation levels: The equivalent availability factor reached approximately 91.59% during the Period; and (4) Secured fuel supply: During the Period, due to the tight supply of coal and substantial growth in power generation, the Company has actively explored coal resources and entered into sincere cooperation with coal mines. In addition, the Company has taken pro-active steps to smoothen the coordination on coal transportation with relevant railway departments, so as to ensure continuous coal supply for the operation of the power plants of the Company and its subsidiaries. Power generation of the Company's major power plants during the Period was as follows: Power Name of power plant generation (MWh) Power plants wholly-owned by the Company (Gaojing Thermal Power Plant, Douhe Power Plant, Zhangjiakou Power Plant and Xiahuayuan Power Plant) 16.598 Tianjin Datang International Panshan Power Generation Company Limited 3.950 Tuoketuo Power Company 7.984 Hebei Datang International Tangshan Thermal Power Company Limited 2.175 Huaze Hydropower Company 0.011 Gansu Datang International Liancheng Power Generation Company Limited ('Liancheng Power Company') 1.632 Shanxi Datang International Yungang Thermal Power Company Limited 1.540 Shanxi Datang International Shentou Power Generation Company Limited ('Shentou Power Company') 0.98 2. Operational Management The Company and its subsidiaries achieved consolidated operating revenue of approximately RMB8,589 million during the Period, representing an increase of approximately 42.16% as compared to the corresponding period of the previous year, and consolidated net profit of approximately RMB1,119 million, representing an increase of approximately 0.55% as compared to the corresponding period of the previous year. The increases in consolidated operating revenue and consolidated net profit were attributable to the following: (1) Increase in on-grid electricity and upward adjustments of electricity tariffs - During the Period, total installed capacity of the Company increased by 3,250MW as compared to the corresponding period of the previous year. Accordingly, on-grid electricity increased by approximately 39.29% as compared to the corresponding period of the previous year. As a result of the new tariff policy announced by the government of the PRC, including the implementation of Coal-electricity Price Linkage Mechanisms, the average on-grid tariff (tax included) of the Company's operating power units has increased as compared to the corresponding period of the previous year. (2) Commitment to stringent cost controls and energy conservation measures - Compared to the corresponding period of the previous year, due to surging coal prices and a decrease in thermal output, the unit fuel cost of power generation increased by approximately 28.48% and this was the main factor affecting the Company's profits growth. Facing the severe pressure from fuel supply and costs, the Company has intensified its work on energy conservation, while exercising stringent controls on all cost components. During the Period, coal consumption for power generation of the operating units was 350.57g/kWh, a decrease of 3.61g/kWh from the corresponding period of the previous year. With a significant increase in on-grid power generation, controllable costs were effectively contained, and the operating pressure of lowered profits due to the significant increase in fuel costs was relieved. 3. Business Expansion During the Period, business expansion of the Company and its subsidiaries was as follows: 1. Unit 2 (300MW) of Liancheng Power Company was put into commercial operation in February; Units 1 and 2 (2 x 500MW) of Shentou Power Company were put into commercial operation in February and July, respectively; 2. The following construction projects will commence operation during 2005: * Units 5 and 6 (2 x 600MW) of Tuoketuo Power Company; * Unit 1 (50MW) of Yunnan Nalan Hydropower Project, which is being constructed by Yunnan Datang International Nalan Hydropower development Company Limited; * The Board has approved the development and construction of Wangtan Power Generation Project. Wangtan Power Generation Project planned to construct two 600MW coal-fired units and approval has been obtained from the National Development and Reform Commission (the 'NDRC'). Wangtan Power Generation Project is located in Tangshan of Hebei Province, nearby Bohai Bay. 3. Projects under construction and pre-construction works progressed effectively: * Units 1 and 2 (2 x 300MW) of Yunnan Datang International Honghe Power Generation Company Limited ('Honghe Power Company'), which are under construction and are expected to commence operation in 2006; * Unit 1 (60MW) of Yayangshan Hydropower Project, which is developed, constructed and operated by Yunnan Datang International Lixianjiang Hydropower Development Company Limited ('Lixianjiang Hydropower Company'), is under construction and is expected to commence operation in 2006; * The Zhejiang Wushashan Power Generation Project, which is located in Wushashan of Zhejiang Province, has been approved by the NDRC. The project plans to construct four 600MW coal-fired units and has commenced construction. * Guangdong Chaozhou Power Generation Project, which is controlled and developed by the Company, has been approved by the NDRC. The project comprises two 600MW coal-fired units and is located in Chaozhou of Guangdong Province. At present, the project has commenced construction. * Fujian Ningde Power Generation Project, which is controlled and developed by the Company, has been approved by the NDRC. The project comprises two 600MW coal-fired units and is located in Ningde of Fujian Province. At present, the project has commenced construction. * Chongqing Datang Pengshui Hydropower Development Company Limited planned to construct five 350MW hydropower units in the downstream area of Wujiang, Pengshui County, Chongqing City, in the east of the main Chongqing Grid. The project is pending approval from the NDRC. Relevant preparations for the construction are underway. 4. Financial Analysis (1) Operating Results During the Period, the Company and its subsidiaries achieved consolidated net profit of approximately RMB1,119 million, representing an increase of approximately 0.55% as compared to the corresponding period of the previous year. Basic earnings per share was approximately RMB0.22, at the same level as that of the corresponding period of the previous year. * Operating revenue: The consolidated operating revenue of the Company and its subsidiaries for the Period amounted to approximately RMB8,598 million, representing an increase of approximately RMB2,547 million or 42.16% as compared to the corresponding period of the previous year. The increase in operating revenue was mainly resulted from increasing on-grid electricity and average on-grid tariffs. On-grid electricity rose approximately 39.29% as compared to the corresponding period of the previous year. As the government of the PRC announced a new tariff policy, including the implementation of the Coal-electricity Price Linkage Mechanisms, the average on-grid tariff (tax included) of the commercially operating units of the Company increased by approximately RMB5/MWh as compared to the corresponding period of the previous year. * Operating costs: Consolidated operating costs of the Company and its subsidiaries for the Period amounted to approximately RMB6,438 million, representing an increase of approximately RMB2,301 million or 55.62% as compared to the corresponding period of the previous year. Among such increase, actual fuel costs were approximately RMB3,730 million, representing an increase of approximately RMB1,669 million or approximately 81.01% as compared to the corresponding period of the previous year. * Finance costs: Finance costs for the Period increased by approximately RMB213 million, or an increase of approximately 134.55% as compared to the corresponding period of the previous year. (2) Financial Position As at 30 June 2005, total consolidated assets of the Company and its subsidiaries amounted to approximately RMB56,748 million, representing an increase of approximately RMB7,273 million as compared to 31 December 2004. Total consolidated liabilities amounted to approximately RMB37,347 million, representing an increase of approximately RMB6,951 million as compared to 31 December 2004. Minority interests amounted to approximately RMB2,307 million, representing an increase of approximately RMB339 million as compared to 31 December 2004. The Company's shareholders' equity amounted to approximately RMB17,093 million, representing a decrease of approximately RMB17 million as compared to 31 December 2004. The increase in total assets was mainly resulted from the implementation of the expansion strategy by the Company and its subsidiaries and the corresponding increase in investments in construction-in-progress. (3) Liquidity As at 30 June 2005, the asset-to-liability ratio (i.e. the ratio between total liabilities and total assets, excluding minority interests) for the Company and its subsidiaries was approximately 65.81%. The net debt-to-equity ratio (i.e. (loans + convertible bonds - cash and cash equivalents - short-term bank deposits with a maturity over three months - investments held for trading)/shareholders' equity excluding minority interests) was approximately 175.51%. As at 30 June 2005, total cash and cash equivalents and bank deposits with a maturity of over 3 months of the Company and its subsidiaries amounted to approximately RMB2,806 million, among which an equivalent of approximately RMB1,257 million was in foreign currencies. The Company and its subsidiaries had no entrusted deposits or overdue fixed deposits during the Period. As at 30 June 2005, short-term loans of the Company and its subsidiaries amounted to approximately RMB11,619 million which bore annual interest rates ranging from 4.52% to 5.84%. Long-term loans (excluding those due within 1 year) amounted to approximately RMB18,708 million and long-term loans due within 1 year amounted to approximately RMB1,378 million, at annual interest rates ranging from 2.88% to 6.12%, of which an amount equivalent to approximately RMB2,377 million was US dollars denominated loans. The convertible bond was US dollars denominated and is equivalent to RMB1,102 million. The Company and its subsidiaries pay regular and active attention to foreign exchange market fluctuations and prudently assess foreign currency risks. As at 30 June 2005, the Company has provided loan guarantees to its subsidiaries amounting to approximately RMB11,639 million; and loan guarantees to its associates amounting to approximately RMB621 million. Save as disclosed herein, the Company did not provide any guarantee to other companies. 5. Major work to be completed for the second half of 2005 To date, the Company's investments in Units 5 and 6 of the Phase III project of Tuoketuo Power Company, the Chaozhou Power Project, the Wushashan Power Project and the Wangtan Power Generation Project, which comprise a total of twelve 600MW generation units for a total of 7,200MW, have been approved and their construction have commenced. However, the operating conditions of the Company are still difficult, given the fuel prices hovering at a high level and ever- increasing demand for environmental protection which will affect the earnings of the Company. As such, the Company will strengthen its management and overcome the unfavourable factors, aiming at increasing production and revenue and achieving greater economic efficiency. In the second half of 2005, the Company will focus on the following: 1. Implement the production safety accountability system to ensure safe and steady operation of power generating units of the Company and its subsidiaries; 2. Enhance fuel management to ensure fuel supply for power generation; 3. Enhance efforts in cost management, striving for revenue increase and cost saving; and 4. Focus on the management of the projects under construction, and ensure that the Phase III project of Tuoketuo Power Company (2 x 600MW), the Wangtan Power Generation Project (2 x 600MW), and Nalan Hydropower Project Unit 1 (50MW) will commence operation in accordance with schedule within the year. III. SHARE CAPITAL AND DIVIDENDS (1) Share Capital No new shares were issued by the Company during the Period. As at 30 June 2005, total share capital of the Company amounted to RMB5,162,849,000, consisting 5,162,849,000 shares of RMB1.00 each. (2) Dividends In accordance with the proposal made at the meeting of the Board held on 28 March 2005 and approved at the annual general meeting of the Company convened on 21 June 2005, an annual dividend of RMB0.22 per share for year 2004 was declared, and that the dividends concerned would be distributed to shareholders of the Company whose name appeared on the register of members of the Company on 20 May 2005. The above-mentioned dividends have been distributed before 30 June 2005, among which domestic-share dividends were distributed in and paid by Renminbi while H-share dividends were distributed in Renminbi and paid by Hong Kong dollars. The Board does not recommend the payment of any interim dividend for year 2005. IV. SIGNIFICANT EVENTS The relevant authorisation given to the Board in respect of the issue of not more than 1 billion A shares was renewed at the extraordinary general meeting, the H Shares Class Meeting and the Domestic Shares Class Meeting of the Company, which were held on 21 June 2005. V. PURCHASE, SALE AND REDEMPTION OF THE COMPANY'S LISTED SECURITIES During the Period, the Company and its subsidiaries have not purchased, sold or redeemed any of its listed securities. VI. THE CODE OF CORPORATE GOVERNANCE PRACTICES To the knowledge of the Board, the Company has complied with the Code of Corporate Governance Practices as set out in Appendix 14 of the Listing Rules during the Period. VII. 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 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 Appendix 10 of Listed Issuers as set out in the Listing Rules during the Period. VIII. AUDIT COMMITTEE In accordance with the Listing Rules, the Company has set up an Audit Committee which comprises three independent non- executive directors and two non-executive directors of the Company. The Audit Committee is responsible for reviewing the Company's financial reporting procedures and internal controls. The Audit Committee has reviewed with the management of the Company the accounting principles and methods adopted by the Company and its subsidiaries. It has also discussed matters regarding internal controls and the interim financial statements, including the review of the financial statements for the six months ended 30 June 2005. The Audit Committee considered that the interim financial reports of the Company and its subsidiaries complied with the applicable accounting standards, and that the Company has made appropriate disclosure thereof. By order of the Board Zhai Ruoyu Chairman Beijing, the PRC, 29 August 2005 As at the date of this announcement, the directors of the Company are:- Zhai Ruoyu, Zhang Yi, Hu Shengmu, Kou Bingen, Yang Hongming, Liu Haixia, Guan Tiangang, Su Tiegang, Ye Yonghui, Tong Yunshang, Xie Songlin*, Xu Daping*, Liu Chaoan*, Yu Changchun* and Xia Qing* * independent non-executive directors of the Company END This information is provided by RNS The company news service from the London Stock Exchange

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Datang International Power Generation Co Ltd. (DAT)
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