Interim Results
RNS Number : 0908C
Datang Intl Power Generation Co Ld
27 August 2008
(Stock Code: 991)
ANNOUNCEMENT OF 2008 INTERIM RESULTS
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FINANCIAL HIGHLIGHTS
• Consolidated operating revenue amounted to approximately RMB17,652 million, representing an increase of 14.14% over the first half of 2007.
• Consolidated net profit attributable to equity holders of the Company amounted to approximately RMB406 million, representing a decrease of 77.52% over the first half of 2007.
• Basic earnings per share attributable to equity holders of the Company amounted to approximately RMB0.03, representing a decrease of approximately RMB0.13 per share over the first half of 2007.
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I. RESULTS of the Company
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, its subsidiaries and jointly-controlled entities (the “Company and its Subsidiaries”) prepared in accordance with the International Financial Reporting Standards (“IFRS”) for the six months ended 30 June 2008 (the “Period”), together with the unaudited consolidated operating results of the first half of 2007 (the “Corresponding Period Last Year”) for comparison. Such operating results have been reviewed and confirmed by the Company’s audit committee (the “Audit Committee”).
Consolidated operating revenue of the Company and its Subsidiaries for the Period was approximately RMB17,652 million, representing an increase of approximately 14.14% as compared to the Corresponding Period Last Year. Consolidated net profit attributable to equity holders of the Company was approximately RMB406 million, representing a decrease of approximately 77.52% as compared to the Corresponding Period Last Year. Basic earnings per share attributable to equity holders of the Company for the Period amounted to approximately RMB0.03, representing a decrease of approximately RMB0.13 per share as compared to the Corresponding Period Last Year.
The Board does not recommend any payment of interim dividend for 2008.
Please refer to the unaudited condensed consolidated interim financial information set out in the Appendix for details of the consolidated operating results of the Company and its Subsidiaries.
II. MANAGEMENT DISCUSSION AND ANALYSIS
The Company is one of the largest independent power 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. As at 30 June 2008, the Company managed a total installed capacity of 22,896.7MW. The power generated by the Company and its Subsidiaries is primarily distributed in the Northern 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 and the Jiangxi Power Grid.
During the Period, the PRC’s economy maintained steadily rapid growth, with a growth rate of the gross domestic product (“GDP”) of 10.4%, down 1.8 percentage-points over the Corresponding Period Last Year. Power consumption continued to rise but at a slowing pace. Newly installed generation units increased but utilisation hours of power generation facilities were lower than that in the Corresponding Period Last Year. The imbalance in demand and supply of thermal coal was further aggravated by other negative factors including the domestic snowstorm, earthquake and suspension and safety rectifications of small coal mines. Thermal coal prices continued to surge to high levels with a marked deterioration in thermal coal quality, which severely undermined the profitability of power generation companies.
(A) Business Review
During the Period, the Company and its Subsidiaries were confronted with unprecedented challenges in its operation and development under a grim operating environment. Facing such enormous operating pressure, the Company and its Subsidiaries took initiatives in planning budgets, rigorously enhancing production and operation, and stringently controlling costs and expenses, with a view to conscientiously mitigating the impact of various factors that depressed profits and ensuring steady, safe and orderly production and operation management of the Company, thereby maintaining profitability for the Company.
1. Maintained stable growth in power production
During the Period, total power generation of the Company and its Subsidiaries amounted to 62.2529 billion kWh, representing an increase of 11.08% when compared to the Corresponding Period Last Year. Total on-grid power generation amounted to 58.5987 billion kWh, representing an increase of 10.96% over the Corresponding Period Last Year.
The increases in total power generation and on-grid power generation were mainly attributable to an increase in capacity of operational generating units of the Company and its Subsidiaries as well as the safe and stable operation of the generating units. (1) Compared to the Corresponding Period Last Year, the Company and its Subsidiaries’ newly installed capacity increased by 3,816.7MW. Given the shutdown of a 200MW generating unit at Xia Hua Yuan Power Plant and the shutdown of a 150MW generating unit at Hebei Datang International Tangshan Thermal Power Company Limited (“Tangshan Thermal Power Company”), the Company and its Subsidiaries had a net capacity increase of 3,466.7MW. (2) During the Period, no casualties or material damages to the above-mentioned production facilities occurred to the Company and its Subsidiaries during the course of power production. The equivalent availability factor of operational generating units stood at a relatively high level of 93.25%.
Should the format of the tables in the announcement be corrupted or difficult to read, please follow the link below:
http://www.rns-pdf.londonstockexchange.com/rns/0908C_-2008-8-27.pdf
Details of power generation of the Company and its Subsidiaries during the Period were as follows:
(Unit: billion kWh)
Power
Generation
for the first half Growth
Power Plant/Company Name of 2008 (%)
1. Gao Jing Thermal Power Plant 1.7534 -4.45
2. Dou He Power Plant 5.4406 0.92
3. Xia Hua Yuan Power Plant 0.7091 -45.95
4. Zhang Jia Kou Power Plant 7.5100 -1.89
5. Tianjin Datang International Panshan Power Generation
Company Limited (“Panshan Power Company”) 3.4899 3.53
6. Inner Mongolia Datang International Tuoketuo Power
Generation Company Limited (“Tuoketuo Power Company”) 9.8743 0.23
7. Shanxi Datang International Yungang Thermal Power
Company Limited (“Yungang Thermal Power Company”) 1.4713 2.24
8. Tangshan Thermal PowerCompany 2.3143 14.97
9. Shanxi Datang International Shentou Power Generation
Company Limited (“Shentou Power Company”) 3.1894 22.81
10. Gansu Datang International Liancheng Power Generation Company Limited
(“Liancheng Power Company”) 2.1554 5.50
11. Hebei Datang International Wangtan Power Generation
Company Limited (“Wangtan Power Company”) 3.7226 5.13
12. Zhejiang Datang Wushashan
Power Generation Company Limited (“Wushashan Power Company”) 6.3198 -1.24
(Unit: billion kWh)
Power
Generation
for the first half Growth
Power Plant/Company Name of 2008 (%)
13. Guangdong Datang International Chaozhou
Power Generation Company Limited (“Chaozhou Power Company”) 3.4878 22.08
14. Yunnan Datang International Honghe Power Generation
Company Limited (“Honghe Power Company”) 2.0877 -5.92
15. Fujian Datang International Ningde Power Generation
Company Limited (“Ningde Power Company”) 3.5054 9.34
16. Shanxi Datang International Yuncheng Power Generation Company Limited
(“Yuncheng Power Company”) 2.2051 –
17. Jiangxi Datang International Xinyu Power Generation Company Limited
(“Xinyu Power Company”) 0.8735 –
18. Inner Mongolia Datang International Hohhot Thermal
Power Generation Company Limited (“Hohhot Thermal Power Company”) 0.2092 –
19. Hebei Datang International Huaze Hydropower Development Company Limited
(“Huaze Hydropower Company”) 0.0088 -16.19
20. Yunnan Datang International Nalan Hydropower Development Company Limited
(“Nalan Hydropower Company”) 0.1726 -9.16
21. Yunnan Datang International Lixianjiang Hydropower
Development Company Limited (“Lixianjiang Hydropower Company”) 0.4571 311.80
22. Inner Mongolia Datang International Duolun Hydropower
Multiple Development Company Limited (“Duolun Hydropower Company”) 0.003216 -21.04
23. Chongqing Datang International Pengshui
Hydropower Development Company Limited
(“Pengshui Hydropower Company”) 1.0178 –
24. Qinghai Zhenxing-Aiyisi Power Company Limited
(“Qinghai Zhenxing Power Company”) 0.2258 –
25. Inner Mongolia Datang International Zhuozi Windpower Company Limited
(“Zhuozi Windpower Company”) 0.0488 –
2. Achieved remarkable results in energy savings and consumption reduction
During the Period, coal consumption of the Company was 332.47g/kWh, representing a decrease of approximately 4.5g/kWh over the Corresponding Period Last Year. The consolidated electricity consumption rate was 5.9%. The Company completed the desulphurisation upgrade projects for a capacity of 3,900MW in total for its 15 generating units, thus enabling the installed capacity with desulphurisation facilities to account for 97.10% of the coal-fired generating units of the Company and its Subsidiaries, or 100% of the coal-fired generation plants in the Beijing-Tianjin-Tangshan region.
3. Overcame various unfavourable factors, striving to realise profits for the Company
During the Period, the Company witnessed a sharp decline in profitability due to the combined effects of the skyrocketing fuel prices and other factors. To cope with the enormous operating pressure, the Company kept abreast of the trends of the market while taking initiatives in planning budgets, rigorously enhancing production and operation, and stringently controlling costs and expenses, with a view to conscientiously mitigating the impact of various factors such as surging fuel prices and rising financial costs that depressed profits, thereby maintaining profitability for the Company. During the Period, the Company and its Subsidiaries achieved a net profit attributable to equity holders of the Company of RMB406 million, representing a decrease of 77.52% from the Corresponding Period Last Year.
4. Kept overall construction of projects under control and achieved a breakthrough in preliminary works
During the Period, the Company continued to implement its development strategy with good progress in its preliminary projects, including coal-fired power, hydropower, nuclear power and wind power. Six projects were approved by the State’s relevant authorities, including:
Coal-fired power projects: Two 600MW generating units at Phase 4 of the Tuoketuo Power Generation Project; two 300MW generating units at the Jinzhou Thermal Power Project. (In addition, two 300MW generating units at the Zhang Jia Kou Thermal Power Project and two 300MW generating units at Phase 2 of the Yungang Thermal Power Project were approved in July of 2008).
Nuclear power project: Four 1,000MW generating units at Phase 1 of the Ningde Nuclear Power Project.
Wind power projects: Phase 2 of the Shanxi Zuoyun Wind Power Project with a generating capacity of 49.5MW; Phase 1 of the Hebei Fengning Luotuogou Wind Power Project with a generating capacity of 48MW; Shandong Dongying Wind Power Project with a generating capacity of 49.5MW. (In addition, Phase 1 of the Inner Mongolia Hongmu Wing Power Project with a generating capacity of 48MW was approved in July of 2008).
Meanwhile, the power-related upstream and downstream projects of the Company such as coal mining, coal chemical and railway construction progressed at a steady pace as scheduled.
During the Period, the staff of the Company and its Subsidiaries overcame various challenges such as frequent natural disasters and difficulties in securing delivery of generation facilities and in carrying out construction works. They worked diligently, thereby keeping the Company’s schedule of construction-in-progress largely under control. During the Period, a total of 2,962MW generating units commenced operation successfully.
(B) Major Financial Indicators and Analysis
During the Period, the Company and its Subsidiaries achieved an operating revenue of RMB17,652 million, representing an increase of 14.14% over the Corresponding Period Last Year. Net profit attributable to the equity holders of the Company was RMB406 million, representing a decrease of 77.52% over the Corresponding Period Last Year. Basic earnings per share was approximately RMB0.03, representing a decrease of RMB0.13 over the Corresponding Period Last Year.
1. Operating revenue
The revenues from principal activities of the Company and its Subsidiaries mainly comprise revenues from electricity sales and heat sales.
During the Period, the Company and its Subsidiaries achieved a consolidated operating revenue of RMB17,652 million, representing an increase of 14.14% over the Corresponding Period Last Year. Of the operating revenue of RMB17,652 million, revenue from electricity sales increased by RMB1,611 million.
2. Operating costs
During the Period, total operating costs of the Company and its Subsidiaries amounted to RMB15,675 million, representing an increase of approximately RMB4,130 million or approximately 35.78% over the Corresponding Period Last Year.
During the Period, fuel costs accounted for 63.33% of operating costs of the Company and its subsidiaries. As a result of the increase in the commencement of operation of newly installed generating units and the increase in power generation of the Company and its Subsidiaries, as well as surging fuel prices, particularly, fuel costs rose by approximately RMB2,748 million or approximately 38.28% over the Corresponding Period Last Year, exceeding the growth rate of operating revenue.
3. Net financing costs
During the Period, the financing costs of the Company and its Subsidiaries amounted to RMB1,613 million, representing an increase of approximately RMB640 million or 65.78% over the Corresponding Period Last Year. The increase was mainly due to the termination of capitalisation of interests for newly installed generating units and the rise in interest expenses caused by an increase in lending rates during the Period.
4. Profit before tax and net profit
During the Period, the Company and its Subsidiaries reported a total consolidated profit before tax amounting to RMB525 million, representing a decrease of 82.42% over the Corresponding Period Last Year. Consolidated net profit attributable to shareholders of the Company and its Subsidiaries amounted to approximately RMB406 million, representing a decrease of 77.52% over the Corresponding Period Last Year. The decrease in profit of the Company and its Subsidiaries was mainly attributable to a sharp increase in fuel costs.
5. Financial position
As at 30 June 2008, total consolidated assets of the Company and its Subsidiaries amounted to approximately RMB144,182 million, representing an increase of approximately RMB22,408 million as compared to the end of 2007. Total liabilities of the Company and its Subsidiaries amounted to approximately RMB112,478 million, representing an increase of approximately RMB24,946 million over the end of 2007. Minority interests amounted to approximately RMB4,798 million, representing an increase of approximately RMB155 million over the end of 2007. Total equity amounted to approximately RMB31,703 million, representing a decrease of approximately RMB2,538 million over the end of 2007. The increase in total assets was primarily caused by the implementation of the expansion strategy by the Company and its Subsidiaries, which led to a corresponding increase in investments in construction-in-progress.
6. Liquidity
As at 30 June 2008, the asset-to-liability ratio for the Company and its Subsidiaries was approximately 78.01%. The net debt-to-equity ratio (i.e. (loans + convertible bonds + short-term commercial papers – cash and cash equivalents – short-term bank deposits with a maturity of over 3 months)/total equity) was approximately 268.30%.
As at 30 June 2008, total cash and cash equivalents and bank deposits with a maturity of over 3 months of the Company and its Subsidiaries amounted to approximately RMB9,257 million, of which the deposits equivalent to approximately RMB104 million were in foreign currencies. The Company and its Subsidiaries had no entrusted deposits or overdue fixed deposits during the Period.
As at 30 June 2008, short-term loans of the Company and its Subsidiaries amounted to approximately RMB34,946 million, bearing annual interest rates ranging from 3.08% to 9.71%. Long-term loans (excluding those due within 1 year) amounted to approximately RMB55,846 million and long-term loans due within 1 year amounted to approximately RMB3,441 million, at annual interest rates ranging from 3.06% to 7.83%, of which a loan equivalent to approximately RMB1,881 million was denominated in US dollar. The Company and its Subsidiaries paid close attention to foreign exchange market fluctuations and cautiously assessed foreign currency risks on a regular basis.
As at 30 June 2008, North China Grid Company Limited (“NCG”, originally North China Power (Group) Corp. and its subsidiaries) and some minority shareholders of the Company’s subsidiaries provided guarantees for the loans of the Company and its Subsidiaries amounting to approximately RMB5,059 million. According to the Transfer Agreement entered into between the NCG and China Datang Corporation, China Datang Corporation shall undertake the commitment for NCG to provide guarantee for the loans. The Company had not provided any guarantee in whatever forms for any other company apart from its subsidiaries, jointly controlled entities and associates.
(C) Outlook for the Second Half of 2008
In 2008, the Company has a daunting task on maintaining stable and healthy development under a mixed condition with opportunities and challenges. Recently, the State raised the tariffs twice and made a temporary intervention in thermal coal prices, thereby effectively easing the pressure on the operations of the Company and its Subsidiaries. However, the continuously tight supply and the significant increase in thermal coal prices still affected the production and profitability of the Company and its Subsidiaries considerably. In addition, the financing of the Company and its Subsidiaries will face a challenging situation due to the State’s tightening monetary policies as part of the macro-economic control measures. Furthermore, the drop in utilisation hours of generating units has further imposed pressure on the operations of the Company and its Subsidiaries.
Facing a difficult operating environment, the Company and its Subsidiaries will actively expand its room for development and strengthen its marketing and sales efforts, by fully utilising its advantages in resources, scale, geographical distribution and costs. The Company plans to realise power generation of 140 billion kWh, while exercising stringent cost controls and striving to contain the increase in unit fuel cost increase, with a view to enhancing the profitability of the Company.
In the second half of 2008, the Company will focus on the following tasks:
1. Strengthening production safety and management and ensuring stable operation of its generating units;
2. Implementing the power generation increment plan supported by a guaranteed fuel supply: The Company will increase revenues and reduce expenses at the same time with a view to boosting economic efficiency;
3. Fulfilling its social obligation of environmental protection by achieving its objectives of energy-saving and consumption reduction, as well as ensuring that the Company and its Subsidiaries achieve a 100% rate of desulphurisation facility installation for all coal-fired units, with the desulphurisation facility operation rate and desulphurisation efficiency both reaching 95%;
4. Promoting preliminary works in an orderly manner: The Company will have a proper control in different phases of its construction-in-progress to commence operation safely and successfully, by adhering to the principle of ensuring synchronised advancement in safety, quality, progress and production preparation;
5. Continuing the implementation of the Company’s diversified development strategy, by actively pursuing the expansion of the Company in projects such as coal-fired power, hydropower, wind power and nuclear power as well as pursuing the development of power-related upstream and downstream projects such as coal mining, coal chemical and railway, so as to ensure the Company’s sustainable development;
6. Actively expanding financing channels to secure fundings for the Company’s development in scale.
III. SHARE CAPITAL AND DIVIDENDS
1. Share capital
As at 30 June 2008, the total share capital of the Company amounted to 11,743,355,283 shares, divided into 11,743,355,283 shares with 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 2008, the following persons hold the interests or short positions in the shares or underlying shares of the Company which are required to be disclosed to the Company under section 336 of the Securities and Futures Ordinance (the “SFO”) (Chapter 571 of the Law of Hong Kong):
Approximate Approximate Approximate
percentage percentage percentage
to total issued to total issued to total issued
Number of share capital of A Shares of H Shares of
Name of shareholder Class of shares shares held the Company the Company the Company
(%) (%) (%)
China Datang Corporation A Shares 3,959,241,160 33.71 46.78 –
Beijing Energy Investment
(Group) Company A Shares 1,343,584,800 11.44 15.87 –
Hebei Construction Investment
Company A Shares 1,303,878,100 11.10 15.40 –
Tianjin Jinneng Investment
Company A Shares 1,212,012,600 10.32 14.32 –
JPMorgan Chase & Co. H Shares 385,052,344(L) 3.28(L) – 11.74(L)
43,756,362(S) 0.37(S) 1.33(S)
255,897,360(P) 2.18(P) 7.80(P)
Morgan Stanley H Shares 318,280,940(L) 2.71(L) – 9.71(L)
145,499,195(S) 1.24(S) 4.44(S)
T.Rowe Price Associates, Inc.
and its affiliates H Shares 191,046,000(L) 1.63(L) – 5.83(L)
UBS AG H Shares 170,678,364(L) 1.45(L) – 5.21(L)
98,696,789(S) 0.84(S) 3.01(S)
(L)means long position (S) means short position (P) means lending pool
3. Dividends
The distribution proposal on the payment of dividends for the year ended 2007 in cash was considered and approved at the 2007 annual general meeting of the Company held on 30 May 2008. The above distribution arrangement was completed before the date of this announcement.
The Board does not recommend the payment of any interim dividend for 2008.
4. Shareholding of the directors and supervisors
As at 30 June 2008, 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 interest and short positions in the shares, underlying shares and debentures of the Company or any of its associated corporation (within the meaning of 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”).
IV. SIGNIFICANT EVENTS
1. Pursuant to the resolutions of the 2007 annual general meeting held on 30 May 2008, it was resolved that:
(1) Mr. Cao Jingshan was appointed as an executive director of the Company, with term of office from 30 May 2008 to 30 June 2010; and that Mr. Zhang Yi ceased to be an executive director of the Company.
(2) Mr. Li Hengyuan was appointed as an independent non-executive director of the Company, with term of office from 30 May 2008 to 30 June 2010.
(3) Mr. Zhang Xiaoxu was appointed as a supervisor of the Company, with term of office from 30 May 2008 to 30 June 2010; Mr. Zhang Wantuo ceased to be a supervisor of the Company.
2. Pursuant to the resolutions passed at the seventh meeting of the sixth session of the Board on 14 April 2008, Mr. Cao Jingshan was appointed as the President of the Company, with term of office from 14 April 2008, while Mr. Zhang Yi ceased to be the President of the Company.
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. COMPLIANCE WITH THE CODE ON CORPORATE GOVERNANCE PRACTICES
To the knowledge of the Board, the Company has complied with the code provisions under the Code on Corporate Governance Practices as set out in Appendix 14 of the Listing Rules during the Period.
VII. COMPLIANCE WITH THE MODEL CODE
Upon specific enquiries made to all the directors of the Company and to the information of the Board, the Board confirmed that all directors of the Company have complied with the provisions under the Model Code as set out in Appendix 10 of the Listing Rules during the Period.
VIII. AUDIT COMMITTEE
The Audit Committee has reviewed the accounting principles and methods adopted by the Company and its Subsidiaries with the management of the Company. It has also discussed matters regarding internal controls and the financial statements, including the review of the unaudited condensed consolidated interim financial information for the six months ended 30 June 2008.
The Audit Committee considers that the financial information of the Company and its Subsidiaries for the first half year of 2008 has complied with the applicable accounting standards, and that the Company has made appropriate disclosures thereof.
By Order of the Board
Zhai Ruoyu
Chairman
Beijing, the PRC, 26 August 2008
As at the date of this announcement, the directors of the Company are:
Zhai Ruoyu, Hu Shengmu, Cao Jingshan, Fang Qinghai, Zhou Gang, Liu Haixia, Guan Tiangang,
Su Tiegang, Ye Yonghui, Li Gengsheng, Xie Songlin*, Liu Chaoan*, Yu Changchun*, Xia Qing* and Li Hengyuan*
*Independent non-executive directors
Encl.: The unaudited condensed consolidated interim financial information
CONDENSED CONSOLIDATED INTERIM BALANCE SHEET (Unaudited)
As At 30 June 2008
(Amounts expressed in thousands of Renminbi (“Rmb”))
Note 30 June 2008 31 December 2007
ASSETS
Non-current assets
Property, plant and equipment 117,862,977 102,585,084
Investments in associates 1,231,691 1,341,906
Available-for-sale investments 2,724,742 4,733,764
Land use right 812,446 813,935
Deferred housing benefits 227,259 260,945
Intangible assets 2,230,567 202,190
Other long-term assets 2,156 170,000
Deferred income tax assets 378,715 156,792
------------------ ------------------
125,470,553 110,264,616
------------------ ------------------
Current assets
Short-term entrusted loans to subsidiaries and associates 50,086 47,751
Inventories 1,430,257 1,051,181
Prepayments and other receivables 3,148,923 1,018,112
Accounts receivable 2 4,767,653 4,945,475
Notes receivable 56,621 747,917
Short-term bank deposits over three months 104,610 49,500
Cash and cash equivalents 9,152,828 3,648,823
------------------ ------------------
18,710,978 11,508,759
------------------ ------------------
Total assets 144,181,531 121,773,375
EQUITY AND LIABILITIES
Capital and reserves attributable to the
Company’s equity holders
Share capital 11,743,355 11,734,083
Reserves 15,161,958 17,863,420
------------------ ------------------
26,905,313 29,597,503
Minority interests 4,797,928 4,643,359
------------------ ------------------
Total equity 31,703,241 34,240,862
------------------ ------------------
Non-current liabilities
Long-term loans 3 55,846,384 44,272,875
Deferred income 384,940 387,056
Deferred income tax liabilities 970,007 1,141,953
Other long term liabilities 3,957,917 98,667
------------------ ------------------
61,159,248 45,900,551
------------------ ------------------
Current liabilities
Accounts payable and accrued liabilities 4 12,016,862 10,743,690
Taxes payable 247,092 942,917
Dividend payable 449,498 40,757
Short-term loans 3 34,946,449 22,608,530
Short-term bonds – 3,000,000
Current portion of long-term loans and bonds 3,659,141 4,296,068
------------------ ------------------
51,319,042 41,631,962
------------------ ------------------
Total liabilities 112,478,290 87,532,513
------------------ ------------------
Total equity and liabilities 144,181,531 121,773,375
=========== ===========
The accompanying notes are an integral part of this unaudited condensed consolidated interim financial information.
CONDENSED CONSOLIDATED INTERIM INCOME STATEMENT (Unaudited)
For the six months ended 30 June 2008
(Amounts expressed in thousands of Rmb, except per share data)
Six months ended 30 June
Note 2008 2007
Operating revenue 5 17,651,951 15,465,022
Operating costs 9(b) (15,674,724 ) (11,544,567 )
------------------ ------------------
Operating profit 1,977,227 3,920,455
Share of profit of associates 128,010 6,905
Interest income 32,645 31,121
Finance costs 9(b) (1,613,055 ) (973,005 )
------------------ ------------------
Profit before taxation 524,827 2,985,476
Taxation 6 28,075 (732,806 )
------------------ ------------------
Profit for the period 552,902 2,252,670
=========== ===========
Attributable to:
– Equity holders of the Company 406,225 1,807,257
– Minority interests 146,677 445,413
------------------ ------------------
552,902 2,252,670
=========== ===========
Earnings per share for profit attributable to the
equity holders of the Company during the period
– basic (RMB) 7 0.03 0.16
– diluted (RMB) 7 0.03 0.16
=========== ===========
The accompanying notes are an integral part of this unaudited condensed consolidated interim financial information.
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY (Unaudited)
For the six months ended 30 June 2008
(Amounts expressed in thousands of Rmb)
Attributable to equity holders of the Company
Reserves
Statutory Discretionary Currency
Share Capital surplus surplus Restricted translation Other Retained Total Minority Total
Note capital reserve reserve reserve reserve differences reserve earnings reserves interests equity
Balance as at 1 January 2007 5,662,849 6,432,245 2,292,203 5,741,287 181,244 422 840,304 2,745,497 18,233,202 3,304,667 27,200,718
Fair value gains, net of tax:
available-for-sale financial assets – – – – – – 912,354 – 912,354 – 912,354
Profit for the period – – – – – – – 1,807,257 1,807,257 445,413 2,252,670
Currency translation differences – – – – – (2,426 ) – – (2,426 ) – (2,426)
------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
Total recognised income
and expense for the period – – – – – (2,426 ) 912,354 1,807,257 2,717,185 445,413 3,162,598
Conversion of convertible bonds 170,230 796,394 – – – – (112,673 ) – 683,721 – 853,951
Capital injection from minority
shareholders of subsidiaries – – – – – – – – – 1,006,010 1,006,010
Dividends declared – – – – – – – (1,348,714 ) (1,348,714 ) (176,771 ) (1,525,485)
Release of restricted reserve – – – – (34,162 ) – – 34,162 – – –
Transfer to discretionary
surplus reserve – – – 1,020,774 – – – (1,020,774 ) – – –
------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
Balance as at 30 June 2007 5,833,079 7,228,639 2,292,203 6,762,061 147,082 (2,004 ) 1,639,985 2,217,428 20,285,394 4,579,319 30,697,792
======== ======== ======== ======== ======== ======== ======== ======== ======== ======== ========
Balance as at 1 January 2008 11,734,083 1,519,014 2,602,239 6,762,061 124,625 (2,844 ) 3,329,500 3,528,825 17,863,420 4,643,359 34,240,862
Fair value gains, net of tax
available-for-sale financial assets – – – – – – (1,742,229 ) – (1,742,229 ) – (1,742,229)
Profit for the period – – – – – – – 406,225 406,225 146,677 552,902
Currency translation differences – – – – – 25,828 – – 25,828 – 25,828
------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
Total recognised income and
expense for the period – – – – – 25,828 (1,742,229 ) 406,225 (1,310,176 ) 146,677 (1,163,499)
Government grant received in subsidiary – – – – – – 10,880 – 10,880 – 10,880
Impact of acquisition of minority interests – – – – – – – (5,552 ) (5,552 ) (57,038 ) (62,590)
Acquisition of subsidiaries – – – – – – – – – 781,143 781,143
Capital injection from minority
shareholders of subsidiaries – – – – – – – – – 96,520 96,520
Conversion of convertible bonds 9,272 14,979 – – – – (3,011 ) – 11,968 – 21,240
Dividends declared 8 – – – – – – – (1,408,582 ) (1,408,582 ) (812,733 ) (2,221,315)
Release of restricted reserve 8 – – – – (20,553 ) – – 20,553 – – –
Profit appropriations 8 – – – 38,631 – – – (38,631 ) – – –
------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
Balance as at 30 June 2008 11,743,355 1,533,993 2,602,239 6,800,692 104,072 22,984 1,595,140 2,502,838 15,161,958 4,797,928 31,703,241
======== ======== ======== ======== ======== ======== ======== ======== ======== ======== ========
The accompanying notes are an integral part of this unaudited condensed consolidated interim financial information.
CONDENSED CONSOLIDATED INTERIM CASH FLOW STATEMENT (Unaudited)
For the six months ended 30 June 2008
(Amounts expressed in thousands of Rmb)
Six months ended 30 June
Note 2008 2007
Net cash provided by operating activities 3,520,144 6,817,751
Net cash used in investing activities 9 (16,062,936 ) (9,380,255 )
Net cash provided by financing activities 9 18,052,841 3,727,161
------------------ ------------------
Net increase in cash and cash equivalents 5,510,049 1,164,657
Cash and cash equivalents, beginning of period 3,648,823 4,451,284
Exchange losses on cash and cash equivalents (6,044 ) (2,504 )
------------------ ------------------
Cash and cash equivalents, end of period 9,152,828 5,613,437
=========== ===========
The accompanying notes are an integral part of this unaudited condensed consolidated interim financial information.
Notes:
1. Principal accounting policies
The unaudited condensed consolidated interim financial information for the six months ended 30 June 2008 has been prepared in accordance with International Accounting Standard (“IAS”) 34 “Interim Financial Reporting” promulgated by the International Accounting Standards Board. The unaudited condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 31 December 2007. The accounting policies adopted are consistent with those of the annual financial statements for the year ended 31 December 2007, as described in those annual financial statements.
A significant portion of the Company and its Subsidiaries’ funding requirements for capital expenditure was satisfied by short-term borrowings. Consequently, as at 30 June 2008, the Company and its Subsidiaries had a negative working capital balance of approximately Rmb32,608 million (31 December 2007 – Rmb30,123 million). The Company and its Subsidiaries had undrawn borrowing facilities, subject to certain conditions, amounting to approximately Rmb51,402 million (31 December 2007 – Rmb55,069 million) and may refinance and/or restructure certain short-term loans into long-term loans and will also consider alternative sources of financing, where applicable. The directors of the Company are of the opinion that the Company and its Subsidiaries 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.
There are no standards, interpretations or amendments to published standard or interpretations that are mandatory for the first time for the financial year beginning 1 January 2008 and are relevant to the operations of the Company and its Subsidiaries.
The new standards, interpretations or amendments to published standards or interpretations that have been issued but are not effective for the financial year beginning 1 January 2008 have not been early adopted by the Company and its Subsidiaries.
2. Accounts receivable
Accounts receivable of the Company and its Subsidiaries mainly represents the receivables from North China Grid Company Limited (“NCG”) and State Grid Corporation of China and the provincial grid companies for tariff revenue. The tariff revenue is settled on a monthly basis according to the payment provisions in the power purchase agreements. These receivables are unsecured and non-interest bearing. As at 30 June 2008 and 31 December 2007, all tariff revenue receivables from the respective grid companies were aged within three months, and no doubtful debts were considered necessary.
As at 30 June 2008, receivables amounting to Rmb 278,000,000 (the book value of which is Rmb 278,000,000, aged within one year, and no doubtful debt provision was considered necessary) are pledged for short-term bank loan amounting to Rmb278,000,000.
Ageing analysis of accounts receivable is as follows:
30 June 31 December
2008 2007
Within 1 year 4,767,653 4,928,268
Between 1 to 2 years – 17,207
------------------ ------------------
4,767,653 4,945,475
=========== ===========
3. Loans
As at 30 June 2008, the Company and its Subsidiaries had short-term and long-term loans payable to China Datang Group Finance Company Limited (“Datang Finance”) totalling Rmb1,410,000,000 and Rmb203,500,000 (31 December 2007 – Rmb1,926,500,000 and Rmb203,500,000).
4. Accounts payable and accrued liabilities
30 June 31 December
2008 2007
Construction costs and deposits payable to contractors 5,110,894 6,350,445
Fuel and material costs payable 5,209,495 2,983,131
Salary and welfare payable 272,990 337,995
Interest rate swap liability 86,621 51,970
Interest payable 237,893 247,128
Assets acquisition payable 131,770 361,184
Others 967,199 411,837
------------------ ------------------
12,016,862 10,743,690
=========== ===========
As at 30 June 2008 and 31 December 2007, other than certain deposits for construction which were aged between one and three years, substantially all accounts payable were aged within one year.
As at 30 June 2008, the notional principal amount of the outstanding interest rate swap contract of Inner Mongolia Datang International Tuoketuo Power Generation Company Limited was USD179,825,486 (31 December 2007 – USD186,955,486), and the fixed rate and floating rate were 5.15% (31 December 2007 – 5.15%) and 4.08% (31 December 2007 – 5.39%) (LIBOR offered by British Bankers’ Association on 14 January 2008), respectively.
5. Operating revenue
Six months ended 30 June
2008 2007
Sales of electricity 16,959,162 15,347,761
Heat supply 113,794 78,182
Sales of coal 379,636 –
Transportation service fees 84,990 –
Sales of material 72,378 26,005
Others 41,991 13,074
------------------ ------------------
17,651,951 15,465,022
=========== ===========
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 sell their entire net generation of electricity to these grid companies at approved tariff rates.
6. Taxation
Six months ended 30 June
2008 2007
Current tax 193,057 794,005
Deferred tax (221,132 ) (61,199 )
------------------ ------------------
(28,075 ) 732,806
=========== ===========
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.
In March 2007, the PRC government promulgated the Corporate Income Tax Law (the “CIT Law”) which is effective from 1 January 2008. The CIT Law imposes a single income tax rate of 25% for both domestic and foreign invested enterprise. Except the subsidiaries subject to tax exemption, the Company and its Subsidiaries applied the tax rate of 25% under the CIT Law from 1 January 2008.
Income tax has been provided on the estimated assessable profit for the period at their prevailing rates of taxation. Certain of the subsidiaries, being located in specially designated regions, are subject to preferential income tax rates. In addition, certain subsidiaries are exempted from the PRC income tax for two years starting from the first year of operation followed by a 50% exemption of the applicable tax rate for the next three years.
7. Earnings per share
(i) Basic earnings per share
The calculation of basic earnings per share for profit attributable to the equity holders of the Company was based on profit attributable to equity holders of the Company and on the weighted average amount of shares outstanding during the period.
Six months ended 30 June
2008 2007
Profit attributable to equity holders of Company (Rmb’000) 406,225 1,807,257
------------------ ------------------
Weighted average number of ordinary shares in issue (shares in thousand) 11,735,810 5,763,261
Impact of bonus issue (shares in thousand) – 5,763,261
------------------ ------------------
Weighted average number of ordinary shares for basic earnings per share (shares in thousand) 11,735,810 11,526,522
------------------ ------------------
Basic earnings per share for profit attributable to the equity holders of the Company (Rmb) 0.03 0.16
=========== ===========
(ii) Diluted earnings per share
The diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The convertible bond is assumed to have been converted into ordinary shares and the net profit is adjusted to eliminate the interest expenses less the tax effect.
Six months ended 30 June
2008 2007
Profit attributable to equity holders of Company (Rmb’000) 406,225 1,807,257
Interest expense on convertible debt (net of tax) (Rmb’000) 1,762 3,328
------------------ ------------------
Profit used to determine diluted earnings per share (Rmb’000) 407,987 1,810,585
------------------ ------------------
Weighted average number of ordinary shares for basic earnings per share
(shares in thousand) 11,735,810 11,526,522
Adjustments for assumed conversion of convertible bonds
(including the impact of share capital expansion) (shares in thousand) 36,682 112,176
------------------ ------------------
Weighted average number of ordinary shares for diluted earnings per share
(shares in thousand) &#
160; 11,772,492
11,638,698
------------------ ------------------
Diluted earnings per share for profit attributable to the equity holders of
the Company (Rmb) 0.03 0.16
=========== ===========
* According to the terms and conditions of the convertible bonds, if the Company makes a bonus issue (in either case credited as fully paid by way of capitalisation of profits or reserves), the conversion price will be adjusted to mirror the change of outstanding ordinary shares due to the bonus issue, hence the assumed conversion of convertible bonds have been adjusted retrospectively due to the bonus issue approved in the general meeting held on 29 June 2007.
8 Profit appropriations
Dividends
In the general meeting held on 30 May 2008, the shareholders approved a cash dividend amounting to Rmb1,408,582,000 in respect of the year ended 31 December 2007. The amounts have been reflected as an appropriation of retained earnings for the six months ended 30 June 2008.
On 16 June 2008, the Company announced the payment of cash dividends of Rmb1,408,582,000, with reference to the total 11,738,183,947 outstanding ordinary shares as at 30 April 2008 representing the cash dividend per share of Rmb0.12.
Reserves
During the period, approximately Rmb20,553,000 have been transferred from the restricted reserve to retained earnings. This amount represented amortization of deferred housing benefits for the six months ended 30 June 2008, net of the additional deferred housing benefits incurred during the same period.
An appropriation of approximately Rmb38,631,000 to the discretionary surplus reserve for the year ended 31 December 2007 was approved by the shareholders on the general meeting held on 30 May 2008.
9. Supplemental financial information
(a) Condensed consolidated balance sheet
30 June 31 December
2008 2007
Net current liabilities 32,608,064 30,123,203
Total assets less current liabilities 92,862,489 80,141,413
(b) Condensed consolidated income statement
Six months ended 30 June
2008 2007
Interest expense 2,978,606 1,639,636
Less: amount capitalised in property, plantand equipment (1,306,798 ) (590,529 )
------------------ ------------------
1,671,808 1,049,107
Exchange gain, net (138,136 ) (83,206 )
Fair value gain on an interest rate swap 36,683 (17,051 )
Others 42,700 24,155
------------------ ------------------
Finance costs 1,613,055 973,005
Cost of inventories sold
– Fuel 9,926,269 7,178,182
– Spare parts and consumable supplies 361,743 114,427
Depreciation 2,914,545 2,389,709
Amortisation
– Land use rights 8,969 8,262
– Intangible assets 6,314 4,145
Amortisation of deferred housing benefits 33,748 49,198
Dividend income – (51,699 )
Donation 3,000 –
9. Supplemental financial information (Continued)
(c) Condensed consolidated cash flow statement
Six months ended 30 June
2008 2007
Investing activities, included:
Additions to property, plant and equipment (15,072,231 ) (9,262,247 )
Financing activities, included:
Drawdown of short-term loans 28,365,935 10,655,760
Repayments of short-term loans (20,596,336 ) (9,456,686 )
Drawdown of long-term loans 13,945,290 6,793,549
Repayments of long-term loans (3,118,259 ) (6,450,995 )
10. Net assets and net profit reconciliation between PRC GAAP and IFRS
The consolidated financial statements, which are prepared by the Company and its Subsidiaries in conformity with PRC GAAP, differ in certain respects from IFRS. Major differences between PRC GAAP and IFRS, which affect the net assets and net profit of the Company and its Subsidiaries, are summarised as follows:
Net assets
30 June 31 December
Notes 2008 2007
Net assets under PRC GAAP 31,496,894 34,007,341
Impact of IFRS adjustments:
Difference in the recognition policy on housing benefits to the employees (a) 18,673 37,346
Difference in the commencement of depreciation of property, plant and equipment (b) (106,466 ) (106,466 )
Difference in accounting treatment on monetary housing benefits (c) 208,586 223,598
Difference in negative goodwill arising from acquisition of Yuzhou Mining Company (d) 57,957 57,957
Others 14,424 5,501
Applicable deferred tax impact of the above GAAP differences (e) 13,173 15,585
------------------ ------------------
Net assets under IFRS 31,703,241 34,240,862
=========== ===========
Net profit
For six months ended 30 June
2008 2007
Net profit under PRC GAAP 580,139 2,303,804
Impact of IFRS adjustments:
Difference in the recognition policy on housing benefits to the employees (a) (18,673 ) (18,673 )
Difference in accounting treatment on monetary housing benefits (c) (15,075 ) (30,525 )
Others 8,923 –
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