Interim Results
Datang Intl Power Generation Co Ld
10 August 2006
Datang International Power Generation Co., Ltd.
(a sino-foreign joint stock limited company incorporated in the People's
Republic of China)
(Stock Code: 991)
Announcement of 2006 Interim Results
OPERATING AND FINANCIAL HIGHLIGHTS
* Consolidated operating revenue amounted to approximately RMB10,829 million,
representing an increase of 26.08% as compared to the corresponding period
of the previous year.
* Consolidated profit attributable to the equity holders of the Company
amounted to approximately RMB1,274 million, representing an increase of
13.86% as compared to the corresponding period of the previous year.
* Basic earnings per share attributable to the equity holders of the Company
amounted to approximately RMB0.25, representing an increase of approximately
RMB0.03 per share as compared to the corresponding period of the previous
year.
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 and a jointly controlled entity
(hereinafter referred to as the 'Company and its Subsidiaries') prepared in
conformity with the International Financial Reporting Standards ('IFRS') for the
six months ended 30 June 2006 (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 was approximately RMB10,829 million, representing an increase of
approximately 26.08% as compared to the corresponding period of the previous
year. Consolidated profit attributable to the equity holders of the Company for
the Period was approximately RMB1,274 million, representing an increase of
approximately 13.86% as compared to the corresponding period of the previous
year. Basic earnings per share attributable to the equity holders of the Company
for the Period was approximately RMB0.25, representing an increase of
approximately RMB0.03 per share as compared to the corresponding period of the
previous year.
Please refer to the unaudited financial statements set out below for details of
the consolidated operating results of the Company and its Subsidiaries.
CONDENSED CONSOLIDATED INTERIM BALANCE SHEET (UNAUDITED)
AS AT 30 JUNE 2006
(Amounts expressed in thousands of Renminbi ('Rmb'))
30 June 31 December
Note 2006 2005
ASSETS
Non-current assets
Property, plant and equipment, net 66,707,643 59,376,557
Investments in associates 985,672 793,316
Available-for-sale investments 498,294 306,294
Intangible assets 81,557 62,304
Deferred housing benefits 157,969 188,467
Deferred income tax assets 86,483 119,303
68,517,618 60,846,241
Current assets
Inventories 892,014 693,019
Other receivables and current assets 635,535 493,081
Accounts receivable 2 2,169,896 1,409,528
Notes receivable 10,891 64,829
Short-term bank deposits over three months 20,000 -
Cash and cash equivalents 1,239,637 1,029,339
4,967,973 3,689,796
Total assets 73,485,591 64,536,037
EQUITY AND LIABILITIES
Capital and reserves attributable to
the Company's equity holders
Share capital 5,162,849 5,162,849
Reserves 13,259,265 13,162,613
18,422,114 18,325,462
Minority interests 2,515,501 2,403,475
Total equity 20,937,615 20,728,937
Non-current liabilities
Long-term loans 3 33,579,554 29,215,217
Convertible bond 4 1,113,184 1,098,758
Government grants 210,942 210,942
Deferred income tax liabilities 104,112 152,498
35,007,792 30,677,415
Current liabilities
Accounts payable and accrued liabilities 5 6,972,287 4,558,556
Short-term loans 3 8,003,766 5,717,280
Current portion of long-term loans 3 2,159,715 2,488,884
Taxes payable 398,055 358,359
Deferred income 6,361 6,606
17,540,184 13,129,685
Total liabilities 52,547,976 43,807,100
Total equity and liabilities 73,485,591 64,536,037
CONDENSED CONSOLIDATED INTERIM INCOME STATEMENT (UNAUDITED)
FOR THE SIX MONTHS ENDED 30 JUNE 2006
(Amounts expressed in thousands of Rmb, except per share data)
Six months ended 30 June
Note 2006 2005
Operating revenue 6 10,828,881 8,588,707
Operating costs 10 (8,058,868 ) (6,438,097 )
Operating profit 2,770,013 2,150,610
Share of result of associates, net (3,426 ) (3,953 )
Interest income 14,463 24,429
Finance costs 10 (560,936 ) (371,495 )
Profit before taxation 2,220,114 1,799,591
Taxation 7 (598,386 ) (353,436 )
Profit for the period 1,621,728 1,446,155
Attributable to:
- Equity holders of the Company 1,273,947 1,118,892
- Minority interests 347,781 327,263
1,621,728 1,446,155
Earnings per share for profit attributable to
the equity holders of the Company during the period
- basic (Rmb) 8 0.25 0.22
- diluted (Rmb) 8 0.24 0.21
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
FOR THE SIX MONTHS ENDED 30 JUNE 2006
(Amounts expressed in thousands of Rmb)
Attributable to equity holders of the Company
Statutory
Statutory public Discretionary
Share Capital surplus welfare Surplus Restricted Other
Note capital reserve reserve fund reserve reserve reserve
Balance as at
1 January
2005 5,162,849 3,653,421 1,619,555 464,488 3,593,485 129,441 149,796
Capital - - - - - - -
injection
Dividends 9 - - - - - - -
declared
Net profit - - - - - - -
Transfer from
restricted
reserve 9 - - - - - (16,180) -
Transfer to
discretionary
surplus 9 - - - - 1,281,777 - -
reserve
Balance as at
30 June
2005 5,162,849 3,653,421 1,619,555 464,488 4,875,262 113,261 149,796
Retained Total Minority
Note earnings reserves Interests Total equity
Balance as at 1
January
2005 2,337,382 11,947,568 1,968,309 19,078,726
Capital injection - - 95,600 95,600
Dividends 9 (1,135,827) (1,135,827) (83,883) (1,219,710)
declared
Net profit 1,118,892 1,118,892 327,263 1,446,155
Transfer from
restricted
reserve 9 16,180 - - -
Transfer to
discretionary
surplus reserve 9 (1,281,777) - - -
Balance as at 30
June
2005 1,054,850 11,930,633 2,307,289 19,400,771
Attributable to equity holders of the Company
Statutory
Statutory public Discretionary
Share Capital surplus welfare surplus Restricted
Note capital reserve reserve fund reserve reserve
Balance as at
1 January
2006 5,162,849 3,653,421 1,977,048 559,456 4,981,377 173,510
Minority
interests
arising
from business - - - - - -
combination
Capital - - - - - -
injection
Dividends 9 - - - - - -
declared
Currency - - - - - -
translation
differences
Net profit - - - - - -
Transfer 9 - - 559,456 (559,456) - -
between
reserves
Transfer from 9 - - - - - (28,005)
restricted
reserve
Transfer to
discretionary
surplus 9 - - - - 759,910 -
reserve
Balance as at 5,162,849 3,653,421 2,536,504 - 5,741,287 145,505
30 June 2006
Currency
translation Other Retained Total Minority
Note difference reserve earnings reserves interests Total equity
Balance as at
1 January
2006 (184) 149,796 1,668,189 13,162,613 2,403,475 20,728,937
Minority
interests
arising
from business - - - - 64,263 64,263
combination
Capital - - - - 251,000 251,000
injection
Dividends 9 - - (1,177,130) (1,177,130) (551,018) (1,728,148)
declared
Currency (165) - - (165) - (165)
translation
differences
Net profit - - 1,273,947 1,273,947 347,781 1,621,728
Transfer 9 - - - - - -
between
reserves
Transfer from 9 - - 28,005 - - -
restricted
reserve
Transfer to
discretionary
surplus 9 - - (759,910) - - -
reserve
Balance as at (349) 149,796 1,033,101 13,259,265 2,515,501 20,937,615
30 June 2006
1. Principal accounting policies
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 2005 except that the Company and its Subsidiaries have adopted the
revised/new International Financial Reporting Standards ('IFRS') which are
effective for accounting period commencing on or after 1 January 2006.
Standards, interpretations and amendments to published standards effective in
2006
In 2006, the Company and its Subsidiaries adopted the revised/new standards and
interpretations of IFRS below, which are relevant to the operations of the
Company and its Subsidiaries.
IAS 39 and IFRS 4 Amendments Financial guarantee contracts
IFRIC Interpretation 4 Determining whether an arrangement
contains a lease
Management assessed the relevance of the adoption of IAS 39, IFRS 4 and IFRIC
Interpretation 4 with respect to the operation of the Company and its
Subsidiaries and concluded that these revised/new standards have no material
impact on the Company and its Subsidiaries' accounting policy and the management
will continue assessing the impact of this standard in the future.
Standards, interpretations and amendments to published standards that are not
yet effective
Certain new standards, amendments and interpretations to existing standards have
been published that are relevant to the Company and its Subsidiaries and are
mandatory for accounting periods of the Company and its Subsidiaries beginning
on or after 1 July 2006 or later periods but which the Company and its
Subsidiaries have not early adopted, as follows:
* IFRS 7, Financial Instruments: Disclosures, and a complementary Amendment to
IAS 1, Presentation of Financial Statements - Capital Disclosures (effective
from 1 January 2007). IFRS 7 introduces new disclosures to improve the
information about financial instruments. It requires the disclosure of
qualitative and quantitative information about exposure to risks arising from
financial instruments, including specified minimum disclosures about credit
risk, liquidity risk and market risk, including sensitivity analysis to
market risk. It replaces IAS 30, Disclosures in the Financial Statements of
Banks and Similar Financial Institutions, and disclosure requirements in IAS
32, Financial Instruments: Disclosure and Presentation. It is applicable to
all entities that report under IFRS. The amendment to IAS 1 introduces
disclosures about the level of an entity's capital and how it manages
capital. The Company and its Subsidiaries assessed the impact of IFRS 7 and
the amendment to IAS 1 and concluded that the main additional disclosures
will be the sensitivity analysis to market risk and the capital disclosures
required by the amendment of IAS 1. The Company and its Subsidiaries will
apply IFRS 7 and the amendment to IAS 1 from annual periods beginning 1
January 2007.
* IFRIC 9, 'Reassessment of Embedded Derivatives', effective for annual periods
beginning on or after 1 June 2006. Management believes that this
interpretation should not have a significant impact on the reassessment of
embedded derivatives as the Company and its Subsidiaries already assess if
embedded derivative should be separated using principles consistent with
IFRIC 9.
2. Accounts receivable
Accounts receivable of the Company and its Subsidiaries mainly represents the
receivable from the respective regional or provincial grid companies for tariff
revenue. This receivable is unsecured and non-interest bearing. The tariff
revenue is settled on a monthly basis according to the payment provisions in the
power purchase agreements. As at 30 June 2006, all tariff revenues receivable
from the respective grid companies were aged within three months, and no
doubtful debt provisions were made thereof.
3. Loans
As at 30 June 2006, the Company and its Subsidiaries had short term and long
term loans payable to China Datang Group Finance Company Limited totalling
approximately Rmb1,380,000,000 and 101,000,000 respectively (31 December 2005 -
Rmb187,000,000 and nil).
4. Convertible bond
The liability component of convertible bond as at 30 June 2006 was as follows:
Liability component at 1 January 2006 1,098,758
Interest expense 29,180
Interest payment (4,643 )
Exchange rate adjustment (10,111 )
Liability component at 30 June 2006 1,113,184
The carrying amount of the liability component at 30 June 2006 of the
convertible bond approximated its fair value.
5. Accounts payable and accrued liabilities
30 June 31 December
2006 2005
Construction costs and deposits payable to 4,361,328 3,231,715
contractors
Fuel and material costs payable 1,637,493 927,648
Salary and welfare payable 164,858 93,669
Interest rate swap liability - 69,079
Others 808,608 236,445
6,972,287 4,558,556
As at 30 June 2006, other than certain deposits for construction which were aged
between one and two years, substantially all accounts payable were aged within
one year.
As at 30 June 2006, the notional principal amount of the outstanding interest
rate swap contract of Inner Mongolia Datang International Tuoketuo Power
Generation Company Limited ('Tuoketuo Power Company') was USD207,155,000 (31
December 2005 - USD219,675,000), and the fixed rate and floating rate were 5.15%
(31 December 2005 - 5.15%) and 4.73% (31 December 2005 - 3.82%) (LIBOR offered
by British Bankers' Association as at 13 January 2006), respectively.
6. Operating revenue
Six months ended 30 June
2006 2005
Electricity 10,755,244 8,541,200
Heat 73,637 47,507
10,828,881 8,588,707
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 an approved tariff rate. For the six months ended 30
June 2006, most of the electricity generated by the Company and its Subsidiaries
was sold to North China Grid Company ('NCG') and its subsidiaries.
7. Taxation
Six months ended 30 June
2006 2005
PRC enterprise income tax
- Current tax 613,951 347,233
- Deferred tax (15,565 ) 6,203
598,386 353,436
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, Gansu Datang International Liancheng Power Generation Company Limited
('Liancheng Power Company') and Yunnan Datang International Nalan Hydropower
Development Company Limited ('Nalan Hydropower Company'), the applicable PRC
enterprise income tax rate for the Company and its Subsidiaries is 33%.
Pursuant to document Guo Ban Fa (2001) 73 issued by State Council of PRC and
document Cai Shui (2001) 202 issued by the State Administration of Taxation of
PRC, Tuoketuo Power Company, Liancheng Power Company and Nalan Hydropower
Company, as enterprises set up in the western area of PRC and engaged in a
business encouraged by the government, have been granted a tax concession to pay
PRC income tax at a preferential rate of 15% from 2001 to 2010. As newly set up
domestic invested enterprises engaged in power generation in the western area of
PRC, Tuoketuo Power Company, Liancheng Power Company and Nalan Hydropower
Company are exempted from PRC enterprise income tax during the first and second
years of operation and have been granted a tax concession to pay PRC enterprise
income tax at 50% of the preferential rate during the third to fifth year of
operation.
Tuoketuo Power Company commenced commercial operation in 2003. The applicable
PRC enterprise income tax rates approved by the local tax authority in 2005 and
2006 are 0% and 7.5% respectively.
Liancheng Power Company commenced commercial operation in 2005. The applicable
PRC enterprise income tax rates approved by the local tax authority in 2005 and
2006 are 0%.
Nalan Hydropower Company commenced commercial operation in 2006. The applicable
PRC enterprise income tax rate approved by the local tax authority in 2006 is
0%.
8. Earnings per share
The calculation of basic earnings per share for profit attributable to the
equity holders of the Company for the six months ended 30 June 2006 was based on
net profit attributable to equity holders of the Company of approximately
Rmb1,273,947,000 (2005 - Rmb1,118,892,000) and on the weighted average number of
5,162,849,000 shares (2005 - 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. 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
2006 2005
Profit attributable to equity holders of Company (Rmb 1,273,947 1,118,892
'000)
Interest expense on convertible debt (net of tax) (Rmb 19,551 19,338
'000)
Profit used to determine diluted earnings per share 1,293,498 1,138,230
(Rmb '000)
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) 222,127 222,127
Weighted average number of ordinary shares for
diluted earnings per share (shares in thousand) 5,384,976 5,384,976
Diluted earnings per share for profit attributable
to the equity holders of the Company (Rmb) 0.24 0.21
9. Profit appropriations
Dividends
On 27 March 2006, the Board of Directors proposed a dividend of Rmb0.228 per
share, totalling approximately Rmb1,177,130,000 for the year ended 31 December
2005 (2004 - Rmb1,135,827,000).The proposed dividend distribution was approved
by the shareholders in their general meeting dated 20 June 2006 and was paid
prior to 30 June 2006.
Reserves
During the period, approximately Rmb28,005,000 has been transferred from the
restricted reserve (2005 - Rmb16,180,000) , which is specifically set up to
reflect the reduction of the statutory public welfare fund under PRC GAAP, to
retained earnings. This amount represented amortisation of deferred housing
benefits for the six months ended 30 June 2006.
On 27 March 2006, the Board of Directors proposed an appropriation of
approximately Rmb759,910,000 to the discretionary surplus reserve for the year
ended 31 December 2005 (2004 - Rmb1,281,777,000). The proposed profit
appropriation was approved by the shareholders in their general meeting dated 20
June 2006.
Pursuant to the revised Company Law of the PRC, effective since 1 January 2006,
statutory public welfare fund was abolished and accordingly, the Company
transferred the balance of statutory public welfare fund to statutory surplus
reserve.
10. Supplemental financial information
(a) Condensed consolidated balance sheet
30 June 31 December
2006 2005
Net current liabilities (12,572,211 ) (9,439,889 )
Total assets less current liabilities 55,945,407 51,406,352
Six months ended 30 June
2006 2005
Additions to property, plant and equipment 9,153,993 8,488,241
(b) Condensed consolidated income statement
Six months ended 30 June
2006 2005
Interest expenses 1,190,821 724,612
Less: amount capitalised in property, plant and (559,979 ) (381,275 )
equipment
630,842 343,337
Exchange (gain)/loss, net (25,656 ) 1,411
Fair value (gain)/loss on an interest rate swap (44,250 ) 26,747
Finance costs 560,936 371,495
Cost of inventories
- Fuel 4,557,820 3,730,166
- Spare parts and consumable supplies 55,967 38,071
Depreciation 1,785,011 1,294,391
Dividend income (28,052 ) (27,261 )
Donation to State Environmental Bureau 34,000 66,000
Amortisation of deferred housing benefits 30,498 36,753
II. MANAGEMENT DISCUSSION AND ANALYSIS
The Company and its Subsidiaries are principally engaged in the development,
construction and operation of power plants and sale of electricity and thermal
power.
As at 30 June 2006, the Company and its Subsidiaries had a total of 16 operating
power plants, with total capacity in operation amounting to 15,410MW and total
assets amounting to approximately RMB73,486 million.
1. Production and environmental protection
During the Period, total power generation of the Company and its Subsidiaries
amounted to 41.345 billion kWh, representing an increase of 18.58% as compared
to the corresponding period of the previous year. Total on-grid electricity
amounted to 38.893 billion kWh, an increase of 18.42% over the corresponding
period of the previous year. The increase in power generation and on-grid
electricity was not only attributable to the continued growth of the national
economy and power demand in the People's Republic of China (the 'PRC'), but also
due to the increase in the Company and its Subsidiaries' installed capacity and
the safe and stable operation of the generation units. During the Period, the
Company and its Subsidiaries had a total of 5 hydropower generation units and
coal-fired generation units successively put into operation. Taking into account
of the generation units which commenced operation during the second half of
2005, the operation capacity of the Company and its Subsidiaries increased by
4,050MW as compared to the corresponding period of the previous year. The
equivalent availability factor of generation units reached 92.75%, representing
a rise of approximately 1.16 percentage point as compared to the corresponding
period of the previous year.
During the Period, the operations of the major power plants of the Company and
its Subsidiaries are set out as follows:
Power Power
generation generation
for for
No. Name of power the first No. Name of power plant the first
plant half of 2006 half of
2006
(billion kWh) (billion
kWh)
1. Gao Jing Power 1.712 9. Hebei Datang 2.322
Plant International Tangshan
Thermal Power Company
Limited
('Tangshan Thermal Power
Company')
2. Dou He Power Plant 5.248 10. Gansu Datang 1.768
International Liancheng
Power Generation
Company Limited
('Liancheng Power
Company')
3. Zhang Jia Kou 7.623 11. Shanxi Datang 1.406
Power Plant International Yungang
Thermal Power
Company Limited ('Yungang
Thermal Power Company')
4. Xia Hua Yuan Power 1.324 12. Shanxi Datang 2.621
Plant International Shentou
Power Generation
Company Limited ('Shentou
Power Company')
5. Tianjin Datang 3.545 13. Yunnan Datang 0.099
International International Honghe
Panshan Power Power Generation Company
Generation Limited
Company Limited ('Honghe Power Company')
('Panshan Power
Company')
6. Inner Mongolia 10.596 14. Guangdong Datang 0.244
Datang International Chaozhou
International Power Generation Company
Tuoketuo Power Limited
Generation
Company Limited ('Chaozhou Power
('Tuoketuo Power Company')
Company')
7. Hebei Datang 1.887 15. Hebei Datang 0.01
International International Huaze
Wangtan Power Hydropower Development
Generation
Company Limited Company Limited ('Huaze
('Wangtan Power Hydropower Company')
Company')
8. Wushashan Power 0.804 16. Yunnan Datang 0.137
Plant International Nalan
Hydropower Development
Company Limited ('Nalan
Hydropower Company')
While endeavouring to increase power generation, the Company also placed strong
emphasis on the implementation of environmental protection programmes in
accordance with the PRC State's environmental protection requirements. As at 30
June 2006, the Company and its Subsidiaries completed the desulphurisation
upgrade projects for generation units totalling approximately 1,650MW. The
desulphurisation upgrade projects for generation units totalling approximately
1,600MW, are expected to be completed before the end of this year.
2. Operational management
During the Period, the Company and its Subsidiaries achieved consolidated
operating revenue of approximately RMB10,829 million, representing an increase
of 26.08% as compared to the corresponding period of the previous year, and
consolidated profit before taxation was approximately RMB2,220 million,
representing an increase of 23.37% as compared to the corresponding period of
the previous year. Consolidated profit attributable to the equity holders of the
Company amounted to approximately RMB1,274 million, representing an increase of
approximately 13.86% as compared to the corresponding period of the previous
year.
During the Period, the Company and its Subsidiaries faced an unfavourable
operational environment characterised by a decline in utilisation hours for the
generation units in the power market, persistent high fuel prices, and
continuous rises in charges for environmental protection and water supply.
Despite the above unfavourable factors, the Company and its Subsidiaries
continued to maintain the profit growth momentum by conscientiously carrying out
measures to increase revenues and reduce expenses. Increases in operating
revenue and profit were mainly attributable to the following factors: (1)
Increase in on-grid electricity: As compared to the corresponding period of the
previous year, on-grid electricity rose by about 6.051 billion kWh. (2) Increase
in average on-grid tariffs: Average on-grid tariffs (tax inclusive) increased by
approximately RMB16.86/MWh as compared to the corresponding period of the
previous year. (3) Strengthening of control on fuel costs and endeaveour in
energy conservation and consumption reduction: During the Period, the Company
and its Subsidiaries' fuel consumption for power generation was 345 g/kWh,
representing a decrease of 5.57 g/kWh as compared to the corresponding period of
the previous year. The magnitude of unit fuel cost increase was controlled at a
comparatively low level, with only a rise of RMB2.56/MWh as compared to the
corresponding period of the previous year, of which the unit fuel cost of 4
wholly-owned power plants of the Company was reduced by RMB1.12/MWh as compared
to the corresponding period of the previous year.
3. Business expansion
During the Period, the construction of the Company and its Subsidiaries'
coal-fired and hydropower projects progressed smoothly, with a total capacity of
1,600MW hydropower and coal-fired generation units having successively commenced
operation. Meanwhile, the Company continued to actively expand into the realms
of renewable or environmentally-friendly energy such as wind power and nuclear
power, as well as into power-related upstream and downstream projects such as
coal mining and railways.
(1) Coal-fired projects : During the Period, newly constructed coal-fired
generation units of the Company and its Subsidiaries, with a total capacity
of approximately 1,500MW successively put into operation. These include Unit
1 (600MW) at Wushashan Power Plant, Unit 1 (600MW) at Chaozhou Power Company
and Unit 1 (300MW) at Honghe Power Company. To date, total capacity of
coal-fired generation units of the Company and its Subsidiaries having
commenced operation reached 15,240MW.
During the Period, after obtaining approvals from the relevant PRC
authorities, the construction of 2 x 600MW generation units at Yuncheng
Power Company, in which the Company has controlling interests, commenced.
During the Period, the Company entered into an investment agreement with
Datong Coal Mine Group Co., Ltd. to invest (with minority interests) in the
proposed construction of 2 x 600MW coal-fired generation units.
(2) Hydropower projects: During the Period, 2 x 50MW hydropower generation units
at Nalan Hydropower Company successively put into operation. To date, total
capacity of hydropower generation units of the Company and its Subsidiaries
having commenced operation reached 170MW.
During the Period, the Company entered into an investment agreement with
Ganzi Prefecture Gantou Hydropower Development Co., Ltd. to invest (with
controlling interests) in the proposed construction of 4 x 650MW hydropower
generation units in Sichuan Province.
(3) Nuclear power projects: During the Period, the Company entered into an
investment agreement with Guangdong Nuclear Investment Company Limited,
which proposed to participate in the construction of two nuclear power
generation units of 1,000MW each. To date, the relevant project company has
been established and preliminary work on the nuclear project has commenced.
(4) Wind power projects: The Board reviewed and approved the Company to
construct Bayin Wind Power Plant Phase I in Zhuozi County, Inner Mongolia, a
project to be wholly-owned by the Company. The installed capacity of the
project is 40MW. Currently, the project has been approved by the Development
and Reform Commission of Inner Mongolia and the Company is making
preparations for the construction of the project.
4. Financial results and position
(1) Operating results
During the Period, the Company and its Subsidiaries achieved consolidated profit
before taxation of approximately RMB2,220 million, representing an increase of
approximately 23.37% as compared to the corresponding period of the previous
year. Profit attributable to the equity holders of the Company was RMB1,274
million, representing an increase of approximately 13.86% as compared to the
corresponding period of the previous year. Major factors for the increase or
decrease of profits were as follows:
* Power sale revenue was RMB10,755 million, representing an increase of
approximately 25.92% as compared to the corresponding period of the previous
year, which was mainly attributable to the increases in power generation and
tariffs.
* Operating costs increased by 25.17% as compared to the corresponding period
of the previous year, which was mainly attributable to increases in
depreciation costs, maintenance costs, and material costs brought by the
commencement of operation of new generation units during the Period and
during the second half of the previous year. Of such increases, fuel costs
increased by RMB828 million, representing an increase of approximately 22.19%
as compared to the corresponding period of the previous year.
* Net expense of finance costs increased by RMB189 million as compared to the
corresponding period of the previous year, which was mainly due to increase
in interest expenses of long and short-term loans during the Period.
(2) Financial position
As at 30 June 2006, total consolidated assets of the Company and its
Subsidiaries amounted to approximately RMB73,486 million. Total consolidated
liabilities amounted to approximately RMB52,548 million. Minority interests
amounted to approximately RMB2,516 million. Total equity attributable to the
Company's equity holders amounted to approximately RMB18,422 million. 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 2006, the asset-to-liability ratio (i.e. the ratio between total
liabilities and total assets) for the Company and its Subsidiaries was
approximately 71.51%. The net debt-to-equity ratio (i.e. (loans + convertible
bonds - cash and cash equivalents - bank deposits - marketable securities)/total
equity, excluding minority interests) was approximately 236.65%.
As at 30 June 2006, total cash and cash equivalents and bank deposits with a
maturity of over 3 months of the Company and its Subsidiaries amounted to
approximately RMB1,260 million, of which an amount equivalent to approximately
RMB433 million was deposits in foreign currencies. The Company and its
Subsidiaries had no entrusted deposits or overdue fixed deposits during the
Period.
As at 30 June 2006, short-term loans of the Company and its Subsidiaries
amounted to approximately RMB8,004 million which bore annual interest rates
ranging from 4.70% to 5.43%. Long-term loans (excluding those due within 1 year)
amounted to approximately RMB33,580 million and long-term loans due within 1
year amounted to approximately RMB2,160 million, with annual interest rates
ranging from 3.60% to 6.12%, of which an amount equivalent to approximately
RMB3,573 million was denominated in US dollar. The Company and its Subsidiaries
pay regular and active attention to foreign exchange market movements and
conscientiously assess foreign currency risks.
As at 30 June 2006, NCG and some minority shareholders of the Company's
subsidiaries provided guarantees for the loans of the Company and its
Subsidiaries amounting to approximately RMB4,130 million. The Company had not
provided any guarantee in whatever forms for any other companies apart from its
subsidiaries, jointly controlled entity and associates.
5. Outlook for the second half of 2006
During the second half of this year, the economy and electricity production in
the PRC is expected to continue to maintain a relatively fast growth.
Implementation of the fuel-tariff pass-through mechanism of the National
Development and Reform Commission has already started, enabling further business
development and a stable increase in the profitability of the Company and its
Subsidiaries. However, the operating results of the Company and its Subsidiaries
is expected to be affected by high fuel prices, higher requirements for
environmental protection and more new generation units coming on stream which
will result in a decline in average utilisation hours of the generation units in
operation. As such, the Company and its Subsidiaries will endeavour to
strengthen its management, overcome unfavourable factors and implement various
measures to increase revenue and reduce expenses and to strive for achieving
better economic performance:
(1) To ensure production safety, striving for more and stable power generation;
(2) To implement the tariff policy, to appropriately adjust the power generation
structure, striving for better generation efficiency;
(3) To continue the strengthening of fuel management and ensure the quality and
supply of coal;
(4) To implement measures on energy conservation and consumption reduction,
strengthening overall cost controls and striving for increase in production
and revenue;
(5) To implement the financing plans of the Company so as to ensure funds for
the Company's development; and
(6) To continue an effective management over project construction to ensure
completion of production schedules for the full year.
III. SHARE CAPITAL AND DIVIDENDS
1. Share capital
No new shares were issued by the Company during the Period. As at 30 June 2006,
the total share capital of the Company amounted to 5,162,849,000 shares, divided
into 5,162,849,000 shares with a nominal value of RMB1.00 each.
2. Shareholding of substantial shareholders
As far as the directors of the Company (the 'Directors') are aware, as at 30
June 2006, the persons or entities with 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 Laws of Hong Kong) are as follows:
Percentage
to
total Percentage Percentage
issued to to
No. of share total total
capital of issued issued
Name of shareholder Class of shares held the Company domestic H shares
shares shares
(%) (%) (%)
China Datang Domestic 1,828,768,200 35.43 49 -
Corporation shares
Beijing Energy Domestic 671,792,400 13.01 18 -
Investment (Group) shares
Company
Hebei Construction Domestic 671,792,400 13.01 18 -
Investment Company shares
Tianjin Jinneng Domestic 559,827,000 10.84 15 -
Investment Company shares
Templeton Asset H shares 187,280,320(L) 3.63(L) 13.09(L)
Management Limited
HSBC Halbis H shares 119,236,000(L) 2.31(L) 8.33(L)
Partners (Hong
Kong) Limited
JP Morgan Chase & H shares 100,714,646(L) 1.95(L) 7.04(L)
Co.
70,250,000(P) 1.36(P) 4.91(P)
(L) = Long positions (S) = Short positions (P) = Lending pool
3. Dividends
In accordance with the proposal made at the meeting of the Board held on 27
March 2006 and approved at the annual general meeting of the Company held on 20
June 2006, an annual dividend of RMB0.228 per share for year 2005 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 19 May
2006. The above-mentioned dividends have been distributed before 30 June 2006,
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 2006.
4. Interests of directors and supervisors in share capital
As at 30 June 2006, none of the Directors, supervisors, chief executive of the
Company or their respective associates had any interests and short positions in
the shares, underlying shares or debentures of the Company or any of its
associated corporation (as defined in the SFO) that were required to be notified
to the Company and The Stock Exchange of Hong Kong Limited 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 Stock Exchange of Hong Kong Limited pursuant
to the Model Code for Securities Transactions by Directors of Listed Issuers
under the Listing Rules.
IV. PURCHASE, SALE AND REDEMPTION OF THE COMPANY'S LISTED SECURITIES
During the Period, the Company has not purchased, sold or redeemed any of its
listed securities.
V. SIGNIFICANT EVENTS
1. The relevant authorisation given to the Board in respect of the issue of not
more than 1 billion A shares of the Company was renewed for one more year at
the 2005 annual general meeting, the H shares class meeting and the domestic
shares class meeting of the Company, which were held on 20 June 2006.
2. At the 2005 annual general meeting held on 20 June 2006, it was approved by
the shareholders for the Company to issue short-term debentures with
principal amount of not more than RMB4 billion.
VI. COMPLIANCE WITH THE CODE ON CORPORATE GOVERNANCE PRACTICES
To the knowledge of the Board, the Company has complied with all the code
provisions in the Code on Corporate Governance Practices as set out in Appendix
14 of the Listing Rules of The Stock Exchange of Hong Kong Limited (the 'Listing
Rules') during the Period.
VII. COMPLIANCE WITH THE MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS OF
LISTED ISSUERS
The Company has adopted the Model Code for Securities Transactions by Directors
of Listed Issuers as set out in Appendix 10 of the Listing Rules (the 'Model
Code') as code of conduct for securities transactions by all Directors. Upon
specific enquiries made to the Directors and in accordance with information
provided, the Board confirmed that all Directors have complied with the
provisions under the Model Code during the Period.
VIII. AUDIT COMMITTEE
In accordance with the Listing Rules, the Company has set up an Audit Committee
which comprises 3 independent non-executive directors and 2 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 2006.
The Audit Committee considers that the 2006 interim financial reports of the
Company and its Subsidiaries have 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, 9 August 2006
As at the date of this announcement, the Directors are:
Zhai Ruoyu, Zhang Yi, Hu Shengmu, Fang Qinghai, 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
This information is provided by RNS
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