Announcement of 2010 Annual Results
Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong
Limited take no responsibility for the contents of this announcement, make no
representation as to its accuracy or completeness and expressly disclaim any
liability whatsoever for any loss howsoever arising from or in reliance upon
the whole or any part of the contents of this announcement.
DATANG INTERNATIONAL POWER GENERATION CO., LTD.
(a sino-foreign joint stock limited company incorporated in the People's
Republic of China)
(Stock Code: 991)
ANNOUNCEMENT OF 2010 ANNUAL RESULTS
OPERATING AND FINANCIAL HIGHLIGHTS:
* Operating revenue amounted to approximately RMB60,672 million, representing
an increase of approximately 26.55% over 2009.
* Net profit attributable to equity holders of the Company amounted to
approximately RMB2,570 million, representing an increase of approximately
67.24% over 2009.
* Basic earnings per share attributable to equity holders of the Company
amounted to approximately RMB0.21, representing an increase of approximately
RMB0.08 per share over 2009.
* The Board has recommended the distribution of a final dividend of RMB0.07 per
share (tax included) for the year of 2010.
I. COMPANY RESULTS
The board of directors (the "Board") of Datang International Power Generation
Co., Ltd. (the "Company") hereby announces the consolidated operating results
of the audited financial statements of the Company and its subsidiaries (the
"Group") prepared in conformity with International Financial Reporting
Standards ("IFRS") for the year ended 31 December 2010 (the "Year"), together
with the audited consolidated operating results of the year of 2009 (the
"Previous 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 Group for the Year was approximately
RMB60,672 million, representing an increase of 26.55% as compared to the
Previous Year. Net profit attributable to equity holders of the Company was
approximately RMB2,570 million, representing an increase of approximately
67.24% as compared to the Previous Year. Basic earnings per share attributable
to equity holders of the Company amounted to approximately RMB0.21,
representing an increase of approximately RMB0.08 per share as compared to the
Previous Year.
In view of the operating results of the Group during the Year, the Board has
recommended the distribution of a final dividend of RMB0.07 per share (tax
included) for the Year (please refer to item 3 under section III set out below
for details).
Please refer to the audited financial statements set out in the Appendix for
details of the consolidated operating results.
II. MANAGEMENT DISCUSSION AND ANALYSIS
A. Overview
The Company, principally engaged in power generation business focusing on
coal-fired power generation, is one of the largest independent power producers
in the People's Republic of China (the "PRC"). In 2010, the Group adhered to
implementing the strategy of "focusing in the power generation business whilst
complementing with synergistic diversifications". It steadily enhanced its
management and control capabilities; increased economic efficiency and
shareholders' returns; placed emphasis on resources saving and environmental
protection; fulfilled social responsibilities; and seized business
opportunities and overcame difficulties, thereby achieving the business targets
for the Year.
1. Safe Production was Stably Maintained
The Company aims to build a fundamentally safe enterprise. The Company has
experienced no significant incidents at its facilities and no casualties for
the Year. It has fulfilled its roles of securing power supply for the Shanghai
World Expo and the Guangzhou Asia Games.
2. Overall Accomplishment of Operation Targets
The Company's power generation amounted to 178.478 billion kWh for the whole
year, representing an increase of 25.81% year-on-year. Operating revenue
amounted to approximately RMB60,672 million, representing an increase of 26.55%
over the Previous Year. Net profit attributable to equity holders of the
Company amounted to approximately RMB2,570 million, representing an increase of
approximately 67.24% over the Previous Year. As at 31 December 2010, total
consolidated assets of the Group amounted to RMB212,915 million, representing
an increase of 15.62% year-on-year. Net assets attributable to the equity
holders of the Company amounted to RMB30,850 million, representing an increase
of 18.10% year-on-year. The assets-to-liabilities ratio was 81.95%,
representing a decrease of 0.25 percentage point year-on-year.
3. Breakthrough on Preliminary Works
For the Year, seven power generation projects were approved with total
generation capacity of 6,093.5 MW. The Fuxin Coal-based Natural Gas Project
with an annual output of 4 billion cubic meters was approved. The Phase 2
project of Shengli Coal Mine East Unit 2, with the construction scale of 20
million tonnes per year, was approved in March 2011.
4. Projects Construction Commenced Operations and Achieved Good Results
Total capacity for generation units which commenced operation amounted to
5,558.5MW. As at 31 December 2010, the Group's installed capacity amounted to
36,300.3 MW, representing an increase of 18.08% year-on-year. Of such capacity,
coal-fired power amounts to 32,010 MW, accounting for 88.18%; hydropower
amounts to 3,855.9 MW, accounting for 10.62%; and wind power amounts to 434.3
MW, accounting for 1.20%.
5. Continuously Intensifying Energy Conservation and Emissions Reduction
In 2010, the Group achieved coal consumption of 323.59 g/kWh, a decrease of
2.92 g/kWh year-on-year. The emission rates of sulphur dioxide, nitrogen
oxides, smoke ash and waste water of the Group have decreased by 5.34%, 9.40%,
14.52% and 43.44% year-on-year to 0.420g/kWh, 1.396g/kWh, 0.126g/kWh and 75g/
kWh, respectively, which are substantially lower than the national average
levels.
6. More Effective Capital Operation
In 2010, the Company completed the acquisition of 70% equity interests in the
Inner Mongolia Baoli Coal Company Limited and achieved a profit in the same
year of acquisition. The Company acquired the entire equity interests in Fuxin
Jinshilun Wind Power Company, which has been renamed as Datang International
Fuxin Wind Power Company Limited, and has basically completed the acquisition
of the hydropower stations at the Jintang River Basin in Sichuan. The proceeds
(net: RMB3,248,246,600) from the 2009 non-public issue of A shares were booked.
The new proposal of non-public issue has been unconditionally approved by the
Public Offering Review Committee of the China Securities Regulatory Commission.
7. Steady Enhancement of Management and Control Capabilities
The three-level management system of the Company basically operated well. The
responsibility body at each level has obviously enhanced its capability of duty
fulfillment. By means of effective integration of management resources of the
enterprise, the Company has formulated a new scheme of online management
featuring "four in one", that is, mechanisms and systems, codes and standards,
operation flows and appraisals of results.
8. Winning Honours in the Capital Market
The Company won the "Top 100 Listed Companies in China - Gold Ox Award" again,
ranking 1st in the public utilities sector. It was named again among the
"Global Top 250 Global Energy Enterprises" by Platts Energy Information, and
ranked 16th among the world's fastest growing energy corporations. The Company
was on the lists of "Fifth China Investor Relations Management Top 100" and
"Contribution to Social Responsibility Top 10".
B. Review by the Management on the Performance of Various Business Operations
(Financial data are shown according to China Accounting Standards for Business
Enterprise ("PRC GAAP"). For segment information, please refer to Note 5 to the
audited financial information below:)
1. The Power Generation Business
(1) Business Review
The Company is one of the largest independent power producers in the PRC. As at
the end of 2010, the Group managed a total installed capacity of approximately
36,300.3MW. The power generation business of the Group is mainly distributed
across the power grids of North China, Gansu, Jiangsu, Zhejiang, Yunnan,
Fujian, Guangdong, Chongqing, Jiangxi , Liaoning, Ningxia, and Qinghai.
In 2010, the PRC's overall economy operated with a good momentum, reaching a
year-on-year 10.3% Gross Domestic Product (GDP) growth. Both power generation
and power consumption nationwide re-climbed at an accelerated rate. According
to relevant statistics, during the Year, the nationwide installed capacity grew
by approximately 10.07% year-on-year. Social power consumption increased by
14.56% over the Previous Year, while nationwide power generation increased by
approximately 13.3% over the Previous Year. Utilisation hours of power
generation facilities were on the rise as a whole, but prices of coal for power
generation increased significantly and remained at high levels. Meanwhile, due
to exceptionally serious droughts in the southwestern regions in spring, the
profitability of hydropower enterprises has been affected significantly. Under
the market conditions of the co-existence of opportunities and challenges, the
Company's power generation business has been developing at a stable and fast
pace, thereby enabling its profit to maintain significant growth.
(i) Maintenance of Safe and Stable Power Production
During the Year, total power generation of the Group amounted to 178.4781
billion kWh, representing an increase of 25.81% over the Previous Year. The
accumulative on-grid power generation amounted to 168.2278 billion kWh,
representing an increase of 25.96% over the Previous Year. The increases in
power generation and on-grid power generation were mainly attributable to an
increase in the capacity of operational generating units of the Group, safe and
stable operation of the generating units and a steadily increasing power demand
in the service territories. During the Year, the Group added new installed
capacity of 5,558.5 MW. Consolidated utilisation hours amounted to 4,998 hours,
an increase of 91 hours year-on-year. No casualties or material damage to the
production facilities occurred to the Group during the course of power
production. The equivalent availability coefficient of the operational
generating units amounted to 95.31%, representing an increase of 0.55
percentage point over the Previous Year.
(ii) Steady Progress in Energy Conservation and Emissions Reduction
During the Year, the Company adhered to management by objective, program
control, dynamic benchmarking and monitoring; enhanced management on energy
conservation; focused on economic operation of power generation facilities; and
intensified technological renovation on energy conservation and facilities
treatment, thereby enhancing the utilisation efficiency of generating units.
During the Year, coal consumption for power supply was 323.59 g/kWh,
representing a decrease of approximately 2.92 g/kWh over the Previous Year.
Consolidated electricity consumption rate of power plants was 5.82%,
representing a decrease of 0.03 percentage-point year-on-year. The
desulphurisation facilities operation rate and an overall desulphurisation
efficiency rate amounted to 99.20% and 93.61%, respectively. The coal-fired
generating units of the Group continued to achieve a desulphurisation
facilities installation rate of 100%. The emission rates of sulphur dioxide,
nitrogen oxides, smoke ash and waste water decreased by 5.34%, 9.40%, 14.52%
and 43.44% year-on-year to 0.420g/kWh, 1.396g/kWh, 0.126g/kWh and 75g/kWh,
respectively, which are lower than the national average levels.
(iii) Reinforced Economic Analysis and Improved Operational Management
Efficiency
During the Year, the Company was still impacted by unfavourable factors such as
soaring coal prices lingering at high levels and inability to realize tariff
adjustments. Faced with such a continuously tough operating environment, the
Company kept abreast of the market trend while taking initiatives in planning
budgets, strengthening internal management and at the same time creating a
favourable external environment, thereby rigorously enhancing production and
operation: (1) Management accountability has been implemented gradually, and
targets of power generation were achieved. Consolidated utilisation hours of
generating units amounted to 4,998 hours, an increase of 91 hours year-on-year.
(2) Through measurements such as developing economical coal to ensure fuel
supply, enhancing coal blended burning and setting up an improvement platform
on fuel management indices, fuel costs were effectively controlled. (3) Through
various measures such as proper cash allocation, distribution of capital
according to needs, prompt repayment of loans, reduction of capital
sedimentation and optimisation of loan structure, capital costs were lowered.
(iv) Actively Pushed Forward Projects Construction and Increased Green Energy
Capacity
During the Year, seven power projects of the Company have been approved by the
State including two coal-fired power generation projects with an approved total
capacity of 3,320 MW, one hydropower project with an approved total capacity of
2,600 MW, and four wind power projects with an approved total capacity of
173.5MW. As for nuclear power, the National Development and Reform Commission
approved in writing the commencement of preliminary works on Phase 1 of the
Liaoning Xudabao Nuclear Power Project, of which 20% equity interests are held
by the Company. Details on the approved projects are as follows:
* Coal-fired power projects: The Phase 2 project for two 1,000MW generating
units at Chaozhou Power Generation in Guangdong and the Phase 2 project for two
660MW generating units at Ningde Power Generation in Fujian.
* Hydropower project: 2,600MW generating units at the Changheba Hydropower
Station Project in Sichuan (in the first quarter of 2011, the 850MW operating
unit at Huangjingping Hydropower Station in Sichuan was approved).
* Wind power projects: The Phase 1 project for 28MW generating units at the
Changle Wind Power Station in Fujian; the Phase 1 project for 48MW generating
units at Fuzhoucheng Wind Power in Liaoning; the Phase 2 project for 49.5MW
generating units at Manjing Wind Power in Liaoning; and the project for 48MW
generating units at Zhao'an Meiling Wind Power in Fujian.
In 2010, a number of major power generation projects of the Company commenced
operation one after another, with newly installed capacity amounting to
5,558.5MW:
* Coal-fired power projects: Newly installed capacity of 4,940MW, including two
1,000MW generating units at Chaozhou Power Generation Company, one 300MW
generating unit at Zhangjiakou Thermal Power Company and four 660MW generating
units at Lvsigang Power Company.
* Hydropower projects: Newly installed capacity of 474.23MW, including two
100MW hydropower generating units at Wenshan Hydropower Development Company and
274.23MW hydropower generating units at Yuneng Group Company.
* Wind power projects: Newly installed capacity of 144.25MW, including 49.5MW
generating units at Zuoyun Wind Power Company, 48MW generating units at Inner
Mongolia Wind Power Company and 46.75MW generating units at Wulong Wind Power
Company.
As at the end of 2010, the generation capacities of coal-fired power,
hydropower and wind power accounted for 88.18%, 10.62% and 1.20% of the
Company's installed capacity, respectively. As compared to the Previous Year,
the proportion of capacity in clean and renewable energy increased to 11.82%.
The Company's power generation structure was further optimised.
(2) Major Financial Indicators and Analysis
(i) Operating Revenue
During the Year, revenues of the Group from electricity sales and heat sales
accounted for approximately 89.22% of the total operating revenue, of which
revenue from electricity sales accounted for approximately 88.33% of the total
operating revenue.
During the Year, the Group achieved revenues of approximately RMB53,594 million
and RMB540 million from electricity sales and heat sales, respectively,
representing increases of approximately 27.47% and 40.92% over the Previous
Year, respectively. In particular, the increase in revenue from electricity
sales was mainly due to the increases in on-grid power generation and average
tariff of on-grid power. During the Year, the commencements of operation of the
Group's generating units in coastal regions optimised the power generation
structure of the Group and raised the average on-grid power tariff. The average
on-grid power tariff of the Group increased by 1.2% over the Previous Year, and
the operating revenue from electricity increased by approximately RMB831
million accordingly. The increase in on-grid power generation resulted in the
increase of approximately RMB10,719 million in the Group's revenue.
(ii) Operating Costs
During the Year, the power and thermal fuel costs of the Group increased to
RMB32,143 million comparing with the Previous Year. The increase is mainly
attributable to: 1) an increase in fuel costs due to an increase of 32.192
billion kWh in on-grid coal-fired power generation over the Previous Year; 2)
an increase in fuel costs due to an increase of RMB25.99/MWh in unit fuel cost
over the Previous Year.
During the Year, depreciation expenses of the Group for the year decreased by
approximately RMB1,800 million, which was mainly attributed to changes in
accounting estimates of fixed assets made by the Group in order to enhance the
comparability of accounting information among listed companies of the same
industry.
(iii) Operating Profit
During the Year, operating profit from electricity sales and heat sales
amounted to approximately RMB10,690 million, while the gross profit margin was
approximately 19.75%, representing an increase of approximately 30.86% over the
Previous Year.
2. Coal Chemical Business
(1) The Duolun Coal Chemical Project, developed and constructed by the Group as
a controlling interest is located at Duolun County, Xilinguole Pledge, Inner
Mongolia. It uses lignite coal from the Inner Mongolia Shengli Coal Mine as raw
materials; and it applies internationally advanced technologies including the
technology of vaporising coal ash, the syngas purification technology, the
large-scale ethanol synthesis technology, the technology to convert methanol to
propylene, and the propylene polymerisation technology to produce coal chemical
products. The final product of the project is 460,000 tonnes/year of
polypropylene and other by-products.
The coal chemical project is under construction and has succeeded in the first
trial run at two gasifiers. The successful conduct of critical phases such as
the successful operation of the response system of the methanol-to-propylene
(MTP) facility in one go and the production of alkene with qualified
constituents marked a significant breakthrough on the core technologies of the
Duolun Coal Chemical Project. This has laid a solid foundation for openning up
the whole-line process flows and ensuring a stable production of polypropylene
products. It is expected that upon its successful development and construction,
the project will become a new income base for the Group.
(2) The Keqi Coal-based Natural Gas Project with an annual output of 4 billion
cubic meters, developed and constructed by the Group with controlling
interests, is located in Kesheketeng Qi, Chifeng City, the Inner Mongolia
Autonomous Region. Upon its completion, the major supply targets of the project
are Beijing and cities along the gas transmission pipeline. As a political,
cultural and financial centre of the PRC, Beijing has a strong demand for clean
energy such as natural gas, given the city's higher requirement for the quality
of the air environment. The Company believes that following the completion of
the Keqi Coal-based Natural Gas Project, it will benefit from the growing
demand for clean energy in Beijing and the cities along the gas transmission
pipeline, thereby increasing the overall profitability of the Company.
During the Year, the power plants at the Keqi Coal-based Natural Gas Project
were completed and delivered for operation before the Year end. Other
construction works are proceeding at an accelerated speed, with the project
aiming to commence operation in 2012.
(3) The Fuxin Coal-based Natural Gas Project in Liaoning with an annual output
of 4 billion cubic meters, developed and constructed by the Group with
controlling interests, is located in Fuxin City, Liaoning Province. The project
was approved and commenced construction in 2010. Upon its completion, the
project aims to supply natural gas largely to Shenyang City in Liaoning
Province and nearby cities such as Tieling, Fushun, Benxi and Fuxin. Liaoning
Province has experienced fast economic growth. With the acceleration of
urbanisation, the reform in coal-fired boilers and the development of gas buses
and industries using natural gas as raw material, the supply gap of natural gas
in the above cities will grow bigger and bigger. Following the completion of
the Fuxin Coal-based Natural Gas Project, the Company will benefit from the
growing demand for clean energy in Shenyang and nearby cities which have
experienced rapid economic development, thereby increasing the overall
profitability of the Company. The Fuxin Coal-based Natural Gas Project is
expediting its construction with the target to commence production in 2012.
(4) The High-Aluminium Pulverised Fuel Ash Project of Inner Mongolia Renewable
Energy Resource Development Company Limited, constructed by the Company with
controlling interests, proceeded smoothly. During the Year, the project opened
up process flows involving the extraction of alumina from high-aluminium
pulverised fuel ash, providing technical support to the Group's deployment of
its recycle economy businesses. .
3. The Coal Business
(1) Business Review
The Shengli Coal Mine East Unit 2, developed and constructed by the Group, is
located in the central part of Shengli Coal Mine in Inner Mongolia with a
planned construction scale of 60 million tonnes. Its coal products will mainly
be supplied as raw materials to the coal chemical and coal-based natural gas
projects including the Duolun Coal Chemical Project, the Keshiketeng Qi
Coal-based Natural Gas Project and Fuxin Coal-based Natural Gas Project. For
such projects, the annual production capacity of Phase 1 project amounted to 10
million tonnes, and the Phase 2 project was approved by the National
Development and Reform Commission in March 2011 with an annual production
capacity of 20 million tonnes.
During the Year, the Company completed the acquisition of 70% equity interests
in Inner Mongolia Baoli Coal Company Limited, thereby further increasing the
self-supply ratio of coal. The Inner Mongolia Baoli Coal Company Limited,
located in E'erduosi City, Inner Mongolia, produced 1.92 million tonnes of coal
products in 2010. Meanwhile, the Company is currently engaged in preliminary
development works on the Wujianfang Coal Mine, the Kongduigou Coal Mine and the
Changtan Coal Mine. The successful developments of the above-said coal mine
projects will enhance the coal consumption self-sufficiency of the Company's
power plants.
During the Year, the Tashan Coal Mine and the Yuzhou Coal Mine, constructed by
the Company with holding interests, supplied the Company with 9.57 million
tonnes and 3.92 million tonnes of coal, respectively, thereby assuring stable
coal sources for the Company.
(2) Major Financial Indicators and Analysis
(i) Operating Revenue
During the Year, the coal self-sufficiency ratio of the Group was further
increased.
During the Year, operating revenue from the coal business after consolidation
elimination amounted to approximately RMB2,823 million, accounting for 4.66% of
the total revenue of the Group, representing a decrease of approximately 45.11%
over the Previous Year.
(ii) Operating Costs
During the Year, operating costs in the coal business amounted to approximately
RMB2,694 million, representing a decrease of approximately RMB2,166 million
over the Previous Year. The decrease in operating costs was mainly due to the
decreased coal sales business of fuel company.
(iii) Operating Profit
During the Year, operating profit from the coal business was approximately
RMB129 million, while the gross profit margin was approximately 4.58%,
representing a decrease of approximately 54.37% over the Previous Year.
C. Management's Review on Consolidated Operating Results
1. Operating Revenue
During the Year, operating revenues of the Group amounted to approximately
RMB60,672 million, representing an increase of approximately 26.55% over the
Previous Year, of which the increase in electricity sales amounted to
approximately RMB11,551 million.
2. Operating Costs
During the Year, total operating costs of the Group amounted to approximately
RMB51,469 million, representing an increase of approximately RMB10,171 million,
or approximately 24.63%, over the Previous Year. Among the operating costs,
fuel cost accounted for approximately 66.49%, and depreciation cost accounted
for approximately 14.34%. Since the standard coal unit price of the Company
increased by RMB85.54/tonne over the Previous Year, the power fuel cost of the
Company increased RMB4,335 million.
3. Net Finance Costs
During the Year, finance costs of the Group amounted to RMB5,373 million,
representing an increase of approximately RMB1,263 million or 30.72% over the
Previous Year. The significant increase was mainly due to an increase in
interest expenses during the Year caused by an increase in the borrowings and
the ending of capitalisation of interest for newly operated generating units.
4. Profit before Tax and Net Profit
During the Year, the Group reported a profit before tax amounting to
approximately RMB4,700 million, representing an increase of 50.10% over the
Previous Year. Net profit attributable to equity holders of the Company
amounted to approximately RMB2,570 million, representing an increase of 67.24%
over the Previous Year. The increase in profits of the Group was mainly
attributable to the increase in sales revenue.
5. Financial Position
As at 31 December 2010, total assets of the Group amounted to approximately
RMB212,915 million, representing an increase of approximately RMB28,768 million
as compared to the end of 2009. The increase in total assets mainly resulted
from the implementation of the expansion strategy by the Group which led to a
corresponding increase in investments in projects under construction.
Total liabilities of the Group amounted to approximately RMB174,483 million,
representing an increase of approximately RMB23,107 million over the end of
2009. Of the total liabilities, long-term liabilities increased by
approximately RMB10,218 million over the end of 2009. The increase in total
liabilities was mainly due to an increase in the Group's borrowing level so as
to meet the needs of daily operations and infrastructure construction. Equity
attributable to equity holders of the Company amounted to approximately
RMB30,850 million, representing an increase of approximately RMB4,727 million
over the end of 2009. Net asset value per share attributable to equity holders
of the Company amounted to RMB2.51, representing an increase of RMB0.29 per
share over the end of 2009.
6. Liquidity
As at 31 December 2010, the gearing ratio for the Group was approximately
81.95%. The net debt-to-equity ratio (i.e. (loans + long-term bonds - cash and
cash equivalents)/total equity) was approximately 379.72%.
As at 31 December 2010, the cash and cash equivalents held by the Group
amounted to approximately RMB3,443 million, of which deposits equivalent to
approximately RMB211 million were foreign currency deposits. During the Year,
the Group had no entrusted deposits or overdue fixed deposits.
As at 31 December 2010, short-term loans of the Group amounted to approximately
RMB19,375 million, bearing annual interest rates ranging from 1.31% to 5.56%.
Long-term loans (excluding those repayable within 1 year) amounted to
approximately RMB109,585 million and long-term loans repayable within 1 year
amounted to approximately RMB14,470 million. All long-term loans (including
those repayable within 1 year) were at annual interest rates ranging from 1.13%
to 8%, of which loan balances equivalent to approximately RMB1,051 million were
loans denominated in US dollar, and loan balances equivalent to approximately
RMB616 million were loans denominated in HK dollar. The Group constantly pays
close attention to foreign exchange market fluctuations and cautiously assesses
foreign currency risks.
7. Welfare Policy
As at 31 December 2010, the number of staff of the Group totalled 17,307.
During the Year, the costs of salaries and staff welfare of the Group amounted
to RMB2,048 million. The Group adopts the basic salary system on the basis of
position-points salary distribution. The Group carries out evaluation of its
subordinated enterprises based on a profit accountability system. The Group is
concerned about personal growth and occupational training, and implements a
reward mechanism of "unification of training, usage and remuneration". Based on
the basic principles of "identifying targets scientifically and providing
training depending on actual needs", and led by the strategy of developing
talents and strong corporations, the Group relies on a three-tier management
organisational structure and implements an all-staff training scheme for
various levels.
D. Outlook for 2011
2011 is the first year of the Twelfth Five-year Plan implemented by the State.
It is full of opportunities and challenges in both the internal and external
environments.
As far as opportunities are concerned, firstly, the long-term development of
the domestic economy remains favourable. As indicated by relevant forecasts,
the GDP growth rate is likely to be approximately 9% in 2011, and the growth
rate of social power consumption is expected to exceed 10%. Secondly, the
national growth rate of installed generating units is expected to reach
approximately 9.5% in 2011, which is slightly lower than the growth rate of
social power consumption. Utilisation hours of generating units are likely to
remain basically stable or undergo a slight increase. Thirdly, the Group has
achieved leadership positions in the PRC in various aspects such as reliability
of generating units and facilities, indices of energy conservation and
emissions reduction, and technical skills and qualifications of personnel.
Owing to its outstanding advantages of having expanding capacity in generating
units located along the southeastern coastal region and having large-capacity
generating units, the Company is in a favourable position amidst the fierce
competition in the electricity market. Fourthly, given the successive
commencements of operation and developments in the Company's non-power
businesses such as coal, railway, port, shipping, petrochemical and recycle
economy, achievements of the Company's diversified developments will gradually
be seen.
As far as challenges are concerned, firstly, the impact of the global financial
crisis is profound and long-lasting, and the post-financial-crisis era will
bring about various risks. Secondly, the current successive implementation of
policies regarding upward adjustments of the deposit-reserve ratio and
increases of interest rates has further tightened the availability of funds for
power generation enterprises. Thirdly, there are uncertainties in the coal and
electricity markets, and fuel coal prices are still expected to rise and to
remain at a high level, thus rendering the operating situation severe for power
enterprises which have coal-fired generating units as their major assets.
Fourthly, the pressure on energy conservation and emissions reduction will
continuously increase.
Faced with the above-mentioned complicated and volatile situations, the Company
will continue to adhere to the strategy of "focusing in the power generation
business whilst complementing with synergistic diversifications", and will keep
on implementing the development strategy of "enhancing its coal-fired power,
aggressively expanding its hydropower, continuously developing wind power,
strategically developing nuclear power, appropriately developing solar power,
focusing on suitable coal operations, actively and steadily developing
coal-to-chemical business, pushing forward the development of alumina, and
securing a complementary development of railway, port and shipping". It will
seize new opportunities, overcome new challenges, realize new breakthroughs,
stride ahead and build up new strengths.
1. Endeavour to be a "Four-feature Enterprise"
The Company will place emphasis on establishing a new type of enterprise
featuring fundamental safety, resources conservation, green environment and
technology innovation. It will continue to further implement a comprehensive
accountability management system and a performance appraisal system for all
staff, building a "four-feature" enterprise with a focus on fundamental safety.
2. Enhance Profitability
The Company will further improve the comprehensive budget management system,
with the objective of enhancing profits. Focusing on capital flows and
emphasising cost controls, and through advance analysis and forecast,
on-the-spot control and post-incident appraisals, the Company will effectively
control and monitor budget execution and promptly discover and rectify any
existing deviations in the course of execution. It will increase power
generation with all efforts and to control coal prices by applying various
measures, with an aim to enhance the profitability of the Company. In 2011, the
Company will strive to accomplish a power generation of 190 billion kWh and
realize an increase in sales revenue of more than 15% year-on-year.
3. Continuously Adjust and Optimise the Development Structure
The Company will continue to strengthen its power generation business, excel in
its non-power businesses and promote synergistic diversification. In respect of
its power generation business, the Company will actively take part in the
development of low-carbon power generation, integrated utilisation, distributed
energy sources and construction of high-efficiency power plants. In respect of
its non-power businesses, it will strive to obtain coal resources through all
means, and achieve the target of realising continued profits through
stabilising coal sources. In particular, it will speed up the promotion and
application of the core coal-to-chemical technology, push forward the
deployment of the coal-to-chemical business with full efforts, and further
expand the room of development for the Company in the regions with resource
advantages.
4. Actively Push Forward Capital Operation
The Company will further leverage its financing platform as a listed company,
strengthen the direct financing function and actively pursue acquisitions of
good-quality assets, with a view to achieving maximum investment returns for
the Company.
5. Continuously Intensify Energy Conservation and Emissions Reduction
The Company will further enhance the benchmark management of energy
consumption, strive to enable more than 20% of the economic indices for
generating units to be in leading positions nationwide. The Company will
further enhance environmental protection and supervision to realise a
normalised management of environmental protection assessments.
6. Comprehensively Strengthen Risks Prevention and Control
In 2011, the Company will comprehensively implement the State's "Basic
Standards for Enterprise Internal Control", as well as its application
guidelines, evaluation guidelines and auditing guidelines. According to the
principle of integrating "job duties, mechanisms and systems, standards and
criteria, operation flows, evaluation and auditing and performance appraisal",
the Company will accomplish the top-level design and ensure advancement in good
order, so as to fully implement the comprehensive accountability management
system, the comprehensive budget management system and the comprehensive risk
management system.
III. SHARE CAPITAL AND DIVIDENDS
1. Share Capital
As at 31 December 2010, the total share capital of the Company amounted to
12,310,037,578 shares, divided into 12,310,037,578 shares carrying a nominal
value of RMB 1.00 each.
2. Shareholding of Substantial Shareholders
So far as the directors of the Company are aware, as at 31 December 2010, the
persons listed below hold the interests or underlying shares or short positions
in the 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):
Name of Shareholder Class of Number of Approximate Approximate Approximate
Shares shares held percentage percentage percentage
to total to total to total
issued issued A issued H
share shares of shares of
capital of the Company the Company
the Company
(share) (%) (%) (%)
China Datang A shares 3,959,241,160 32.16 44.02 -
Corporation
H shares 480,680,000 (L) 3.91(L) - 14.50(L)
Hebei Construction A shares 1,299,872,927 10.56 14.45 -
Investment (Group)
Company Limited
Beijing Energy A shares 1,278,988,672 10.39 14.22 -
Investment (Group)
Company Limited
Tianjin Jinneng A shares 1,212,012,600 9.85 13.48 -
Investment Company
(L) means long position
3. Dividends
The Board recommends the proposed distribution of cash dividends totalling
approximately RMB861.703 million. Based on the total of 12,310,037,578 shares
of the Company as at 31 December 2010, the proposed distribution of cash
dividends is approximately RMB0.07 per share (tax included).
Further details about the distribution of dividends will be announced by the
Company in due course.
4. Shareholding of the directors and supervisors
As at 31 December 2010, 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, underlying shares and equity and short positions
in the debentures of the Company or any of its associated corporation (within
the meaning of Part XV of the SFO) that were required to be notified to the
Company and The Stock Exchange of Hong Kong Limited (the "Hong Kong Stock
Exchange") under the provisions of Divisions 7 and 8 of Part XV of the SFO, or
required to be recorded in the register mentioned in the SFO pursuant to
section 352 or otherwise required to be notified to the Company and the Hong
Kong Stock Exchange pursuant to the Model Code for Securities Transactions by
Directors of Listed Issuers (the "Model Code") in Appendix 10 of the Rules
Governing the Listing of Securities on the Hong Kong Stock Exchange (the
"Listing Rules").
IV. SIGNIFICANT EVENTS
1. Pursuant to the resolutions passed at the 2009 annual general meeting of the
Company held on 11 June 2010, the Company distributed a 2009 cash dividend of
RMB0.07 per share (tax included) to all shareholders on the basis of the total
share capital of 12,310,037,578 shares as at 19 April 2010.
2. Pursuant to the resolutions passed at the thirty-seventh meeting of the
sixth session of the Board held on 29 June 2010, the Board approved the
nominations of Liu Shunda, Cao Jingshan, Hu Shengmu, Fang Qinghai, Zhou Gang,
Liu Haixia, Guan Tiangang, Su Tiegang, Ye Yonghui and Li Gengsheng as
candidates of non-independent directors of the seventh session of the Board of
the Company; the nominations of Li Yanmeng, Zhao Zunlian, Li Hengyuan, Zhao Jie
and Jiang Guohua as candidates of independent directors of the seventh session
of the Board of the Company; the afore-mentioned matters regarding the election
of the new session of the Board were submitted to the 2010 second extraordinary
general meeting of the Company held on 19 August 2010 for consideration and
approval; the afore-mentioned candidates were approved by the shareholders to
form the seventh session of the Board and the term of office of the seventh
session of the Board commenced from 20 August 2010 to 30 June 2013.
3. Pursuant to the resolutions passed at the seventeenth meeting of the sixth
session of the supervisory committee held on 29 June 2010, the supervisory
committee approved the nominations of Zhang Xiaoxu and Fu Guoqiang as
candidates of shareholders' representatives of the seventh session of the
supervisory committee of the Company. Mr. Qiao Xinyi and Mr. Guan Zhenquan were
elected as supervisors representing staff of the seventh session of the
supervisory committee of the Company at the staff representatives meeting; the
afore-mentioned matters regarding the election of the new session of the
supervisory committee were submitted to the 2010 second extraordinary general
meeting of the Company held on 19 August 2010 for consideration and approval;
the nominated supervisors as shareholders' representatives were approved by the
shareholders and the term of office of the seventh session of the supervisory
committee commenced from 20 August 2010 to 30 June 2013.
4. Pursuant to the approval by "Reply on the Approval of Non-public Offering of
Shares by Datang International Power Generation Co., Ltd." (CSRC Approval No.
[2009]1492) issued by the China Securities Regulatory Commission, the Company
completed the non-public offering of A shares in March 2010. Upon completion of
the non-public issue of A shares, the total issued share capital of the Company
amounted to 12,310,037,578 shares with newly issued A shares of 530,000,000
shares.
V. PURCHASE, SALE AND REDEMPTION OF THE COMPANY'S LISTED SECURITIES
During the Year, the Group has 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 all the code
provisions under the Code on Corporate Governance Practices as set out in
Appendix 14 of the Listing Rules during the Year.
VII. COMPLIANCE WITH THE MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS OF
LISTED ISSUERS
Upon specific enquiries made to all the directors of the Company and in
accordance with the information provided, the Board confirmed that all
directors of the Company have complied with the provisions under the Model Code
for Securities Transactions by Directors of Listed Issuers as set out in
Appendix 10 to the Listing Rules during the Year.
VIII. AUDIT COMMITTEE
In accordance with the Listing Rules, the Company has set up an Audit
Committee, comprising 3 independent non-executive directors and 2 non-executive
directors. The committee is responsible for, amongst other things, reviewing
the Company's financial reporting procedures and internal controls.
The Audit Committee has reviewed the accounting principles and methods adopted
by the Group with the management of the Company. They have also discussed
matters regarding internal controls and the annual financial statements,
including the review of the financial statements for the 12 months ended 31
December 2010.
The Audit Committee considers that the 2010 annual financial report of the
Group has complied with the applicable accounting standards, and that the
Company has made appropriate disclosure thereof.
By Order of the Board
Liu Shunda
Chairman
Beijing, the PRC, 22 March 2011
As at the date of this announcement, the directors of the Company are:
Liu Shunda, Hu Shengmu, Cao Jingshan, Fang Qinghai, Zhou Gang, Liu Haixia, Guan
Tiangang, Su Tiegang, Ye Yonghui, Li Gengsheng, Li Yanmeng*, Zhao Zunlian*, Li
Hengyuan*, Zhao Jie*, Jiang Guohua*
* independent non-executive directors
A. FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL STATEMENTS PREPARED UNDER IFRS
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2010
Note 2010 2009
---------- ----------
RMB'000 RMB'000
(restated)
Operating revenue 4 60,672,375 47,942,923
Operating costs
Fuel for power generation (32,143,481) (22,147,443)
Fuel for coal sales (2,693,996) (4,860,370)
Depreciation (7,381,972) (7,521,873)
Repairs and maintenance (1,897,715) (1,809,210)
Salaries and staff welfare (2,047,788) (1,822,231)
Local government surcharges (395,380) (382,296)
Others (4,908,348) (2,754,701)
---------- ----------
Total operating costs (51,468,680) (41,298,124)
---------- ----------
Operating profit 9,203,695 6,644,799
Shares of profits of associates 718,231 462,112
Shares of profits/(losses) of jointly 1,104 (52,685)
controlled entities
Investment income 10,015 6,245
Other gains 102,377 148,441
Interest income 38,215 33,124
Finance costs 6 (5,373,337) (4,110,557)
---------- ----------
Profit before tax 4,700,300 3,131,479
Income tax expense 7 (871,355) (614,926)
---------- ----------
Profit for the year 3,828,945 2,516,553
---------- ----------
Other comprehensive income after tax:
Reclassification adjustments for amounts (10,955) -
transferred to profit or loss upon disposal
of available-for-sale investments, net of tax
Fair value (loss)/gain on available-for-sale (41,340) 10,955
investments, net of tax
Share of other comprehensive income of (25,900) (29,494)
associates, net of tax
Foreign currency translation differences 17,610 655
---------- ----------
Other comprehensive income for the year, net (60,585) (17,884)
of tax
---------- ----------
Total comprehensive income for the year 3,768,360 2,498,669
========== ==========
Profit for the year attributable to:
Owners of the Company 2,569,734 1,536,554
Non-controlling interests 1,259,211 979,999
---------- ----------
3,828,945 2,516,553
========== ==========
Total comprehensive income for the year
attributable to:
Owners of the Company 2,513,417 1,516,479
Non-controlling interests 1,254,943 982,190
---------- ----------
3,768,360 2,498,669
========== ==========
Proposed dividends 8 861,703 861,703
========== ==========
Dividends paid 861,703 1,295,804
========== ==========
RMB RMB
(restated)
Earnings per share
Basic 9 0.21 0.13
========== ==========
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AT 31 DECEMBER 2010
Note At At At
31 December 31 December 1 January
2010 2009 2009
RMB'000 RMB'000 RMB'000
(restated) (restated)
ASSETS
Non-current assets
Property, plant and equipment 179,233,770 157,440,059 136,090,312
Investment properties 211,866 - -
Intangible assets 2,498,329 2,122,836 2,031,470
Investments in associates 4,591,838 3,772,537 2,050,393
Investments in jointly controlled 2,649,778 1,636,674 1,302,097
entities
Available-for-sale investments 2,304,158 1,339,829 675,849
Deferred housing benefits 132,530 163,384 193,469
Long-term entrusted loans to - 130,194 50,104
associates
Deferred tax assets 972,760 767,899 711,096
Other long-term assets 428,477 109,422 80,170
----------- ----------- -----------
193,023,506 167,482,834 143,184,960
----------- ----------- -----------
Current assets
Inventories 4,011,713 1,840,510 2,142,781
Accounts and notes receivable 10 8,158,622 6,634,917 4,312,697
Prepayments and other receivables 4,101,545 6,574,901 2,486,512
Short-term entrusted loans to 100,153 17,000 31,330
related parties
Tax recoverable 76,820 91,216 -
Restricted cash - - 460,477
Fixed deposits over three months - - 30,000
Cash and cash equivalents 3,442,976 1,506,435 5,078,032
Assets of disposal group - - 992,146
classified as held for sale
----------- ----------- -----------
19,891,829 16,664,979 15,533,975
----------- ----------- -----------
TOTAL ASSETS 212,915,335 184,147,813 158,718,935
=========== =========== ===========
EQUITY AND LIABILITIES
Capital and reserves
Share capital 11 12,310,038 11,780,038 11,780,038
Reserves 15,343,804 12,692,473 11,769,363
Retained earnings
Proposed dividends 8 861,703 861,703 1,295,804
Others 2,334,526 788,508 1,406,306
----------- ----------- -----------
Equity attributable to owners of 30,850,071 26,122,722 26,251,511
the Company
Non-controlling interests 7,582,760 6,649,510 4,654,462
----------- ----------- -----------
Total equity 38,432,831 32,772,232 30,905,973
----------- ----------- -----------
Non-current liabilities
Long-term loans 109,585,377 99,506,545 69,026,422
Long-term bonds 5,949,018 5,938,544 -
Deferred income 460,989 475,788 499,328
Deferred tax liabilities 439,226 323,789 395,549
Provisions 41,603 36,008 -
Other long-term liabilities 3,723,182 3,701,165 4,170,097
----------- ----------- -----------
120,199,395 109,981,839 74,091,396
----------- ----------- -----------
Current liabilities
Accounts payable and accrued 12 18,930,066 14,040,020 131,229,560
liabilities
Taxes payable 1,165,696 380,778 382,216
Dividends payable 2,336 36,909 145
Short-term loans 19,374,828 19,569,023 29,604,108
Short-term bonds - - 3,500,000
Current portion of non-current 14,810,183 7,367,012 6,861,589
liabilities
Liabilities of disposal group - - 143,948
classified as held for sale
54,283,109 41,393,742 53,721,566
----------- ----------- -----------
Total liabilities 174,482,504 151,375,581 127,812,962
----------- ----------- -----------
TOTAL EQUITY AND LIABILITIES 212,915,335 184,147,813 158,718,935
=========== =========== ===========
Net current liabilities (34,391,280) (24,728,763) (38,187,591)
=========== =========== ===========
Total assets less current 158,632,226 142,754,071 104,997,369
liabilities =========== =========== ===========
Note:
1. BASIS OF PREPARATION
The consolidated financial statements of Datang International Power Generation
Co., Ltd. (the "Company") and its subsidiaries (collectively referred to as the
"Group") have been prepared in accordance with International Financial
Reporting Standards and the applicable disclosures required by the Rules
Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited
and by the Hong Kong Companies Ordinance. These financial statements have been
prepared under the historical cost convention, as modified by the revaluation
of certain available-for-sale investments.
At 31 December 2010, a significant portion of the funding requirements of the
Group for capital expenditures was satisfied by short-term borrowings.
Consequently, at 31 December 2010, the Group had net current liabilities of
approximately RMB34.39 billion (2009, as restated: RMB24.73 billion). The Group
had significant undrawn borrowing facilities, subject to certain conditions,
amounting to approximately RMB145.98 billion (2009: RMB169.00 billion) and may
refinance and/or restructure certain short-term borrowings into long-term
borrowings and will also consider alternative sources of financing, where
applicable. The directors of the Company are of the opinion that the Group will
be able to meet its liabilities as and when they fall due within the next
twelve months and have prepared these financial statements on a going concern
basis.
2. SIGNIFICANT ACCOUNTING POLICIES
The accounting policies have been consistently applied to all the years
presented, unless otherwise stated.
In the current year, the Group has adopted all the new and revised
International Financial Reporting Standards ("IFRSs") that are relevant to its
operations and effective for its accounting year beginning on 1 January 2010.
IFRSs comprise International Financial Reporting Standards ("IFRS");
International Accounting Standards ("IAS"); and Interpretations. The adoption
of these new and revised IFRSs did not result in significant changes to the
Group's accounting policies and amounts reported for the current year and prior
years except as stated below.
* Business combinations
IFRS 3 (Revised) "Business Combinations" continues to require acquisition
method to be applied to business combinations with some significant changes:
-- Contingent consideration is recognised at its acquisition-date fair value and
forms part of the cost of acquisition. The previous IFRS 3 requires that a
contingent consideration be recognised if it is probable and can be measured
reliably.
-- In a business combination achieved in stages, the previously held equity
interest in the subsidiary is remeasured at its acquisition-date fair value and
the resulting gain or loss is recognised in consolidated profit or loss. The
fair value is added to the cost of acquisition to calculate goodwill. The
previous IFRS 3 does not have a requirement for such fair value measurement.
-- There is a choice to measure initially the non-controlling interests in a
subsidiary either at their acquisition-date fair value or the non-controlling
shareholders' proportionate share of the net fair value of the subsidiary's
identifiable assets and liabilities at the acquisition date. The previous IFRS
3 only allows the latter choice.
-- If a business combination is accounted for using provisional amounts, the
measurement period that the provisional amounts can be adjusted retrospectively
is limited to one year from the acquisition date to reflect new information
obtained about facts and circumstances that existed as of the acquisition date
and, if known, would have affected the measurement of the amounts recognised as
of that date. The previous IFRS 3 does not have a time limit for adjustments in
relation to contingent considerations and deferred tax assets. Subsequent
adjustments to contingent considerations and deferred tax assets will adjust
goodwill.
-- Acquisition-related costs are recognised as expenses in the periods in which
the costs are incurred and the services are received. The previous IFRS 3
requires that acquisition-related costs form part of the cost of a business
combination.
IFRS 3 (Revised) has been applied prospectively to business combinations for
which the acquisition date is on or after 1 January 2010 and resulted in
changes in the consolidated amounts reported in the financial statements as
follows:
2010 2009
--------- ---------
RMB'000 RMB'000
unless
otherwise
stated
Decrease in goodwill (7,860) -
Increase in operating expenses - others 7,860 -
Decrease in earnings per share (RMB) - -
* Classification of land leases
Amendments to IAS 17 "Leases" deleted the guidance in IAS 17 that when the land
has an indefinite economic life, the land element is normally classified as an
operating lease unless title is expected to pass to the lessee by the end of
the lease term.
The adoption of the amendments to IAS 17 has resulted in a change in accounting
policy for the classification of leasehold land of the Group. Previously,
leasehold land was classified as an operating lease and stated at cost less
accumulated amortisation. In accordance with the amendments, leasehold land is
classified as a finance lease and stated at cost less accumulated depreciation
if substantially all risks and rewards of the leasehold land have been
transferred to the Group. As the present value of the minimum lease payments
(i.e. the transaction price) of the land held by the Group amounted to
substantially all of the fair value of the land as if it were freehold, the
leasehold land of the Group has been classified as a finance lease. The
amendments have been applied retrospectively to unexpired leases at the date of
adoption of the amendments on the basis of information existing at the
inception of the leases.
Amendments to IAS 17 has been applied retrospectively and resulted in changes
in the consolidated amounts reported in the financial statements as follows:
At At At
31 December 31 December 1 January
2010 2009 2009
----------- ----------- -----------
RMB'000 RMB'000 RMB'000
Increase in property, plant and equipment 1,990,989 1,523,509 1,269,909
Decrease in land use rights (1,990,989) (1,523,509) (1,269,909)
The Group has not applied new IFRSs that have been issued but are not yet
effective. The Group has already commenced an assessment of the impact of these
new IFRSs but is not yet in a position to state whether these new IFRSs would
have a material impact on its results of operations and financial position.
3. Material business combinations other than under common control
Acquisitions of Yuneng (Group) Company Limited ("Yuneng Group")
On 1 January 2010, the Group acquired 100% of the issued capital of Yuneng
Group for a cash consideration of RMB1,345,000 thousand, of which RMB549,318
thousand was paid for acquisition of non-controlling shareholders of two
subsidiaries of the Company held by Yuneng Group. Yuneng Group and its
subsidiaries were engaged in power generation, mining and metallurgy as well as
property development during the year.
The carrying amount and the fair value of the identifiable assets and
liabilities of Yuneng Group and its subsidiaries acquired as at its date of
acquisition are as follows:
Carrying Fair value Fair value
amount adjustments
RMB'000 RMB'000 RMB'000
Net assets acquired:
Property, plant and equipment 2,077,687 17,793 2,095,480
Other non-current assets 457,084 231,882 688,966
Cash and cash equivalents 1,419,070 (33) 1,419,037
Other current assets 1,168,879 347,235 1,516,114
Loans (2,270,840) - (2,270,840)
Other non-current liabilities (61,820) (100,027) (161,847)
Current liabilities (2,301,832) 120 (2,301,712)
----------- ----------- -----------
488,228 496,970 985,198
Non-controlling interests (102,864) (104,692) (207,556)
----------- ----------- -----------
Goodwill 18,040
-----------
Satisfied by:
Cash 795,682
===========
Net cash inflow arising on acquisition:
Cash consideration paid (795,682)
Cash and cash equivalents acquired 1,419,037
-----------
623,355
===========
Acquisitions of Yunnan Datang International Deqin Hydropower Development
Company Limited ("Datang Deqin")
At 1 January 2010, Datang Deqin was an associate of the Company in which the
Company held 40% equity interests. On 4 March 2010, the Group further acquired
30% of the issued share capital of Datang Deqin for a cash consideration of
RMB613 thousand. Datang Deqin is engaged in hydropower generation construction
during the year.
The fair value of the identifiable assets and liabilities of Datang Deqin
acquired as at its date of acquisition, which has no significant difference
from its carrying amount, is as follows:
RMB'000
Net assets acquired:
Property, plant and equipment 44,127
Cash and cash equivalents 7,797
Other current assets 355
Long-term loans (30,000)
Current liabilities (12,162)
---------
10,117
Net assets attributable to the owners of the Company before (8,917)
acquisition of additional interest
Non-controlling interests (605)
Goodwill 18
---------
Satisfied by:
Cash 613
=========
Net cash inflow arising on acquisition:
Cash consideration paid (613)
Cash and cash equivalents acquired 7,797
---------
7,184
=========
Acquisitions of Liaoning Datang International Fuxin Wind Power Company Limited
("Datang Fuxin")
On 23 March 2010, the Group acquired 100% of the issued share capital of Datang
Fuxin for a cash consideration of RMB32,942 thousand. Datang Fuxin is engaged
in wind power generation construction during the year.
The carrying amount and the fair value of the identifiable assets and
liabilities of Datang Fuxin acquired as at its date of acquisition are as
follows:
Carrying Fair value Fair
amount adjustments value
RMB'000 RMB'000 RMB'000
Net assets acquired:
Property, plant and equipment 1,065 - 1,065
Intangible assets - 14,590 14,590
Cash and cash equivalents 197 - 197
Other current assets 20,738 - 20,738
Other non-current liabilities - (3,648) (3,648)
-------- -------- --------
22,000 10,942
======== ======== ========
Satisfied by:
Cash 32,942
========
Net cash outflow arising on acquisition:
Cash consideration paid (32,942)
Cash and cash equivalents acquired 197
--------
(32,745)
========
Acquisitions of Inner Mongolia Baoli Coal Company Limited ("Baoli Company")
On 30 April 2010, the Group acquired 70% of the issued share capital of Baoli
Company for a cash consideration of RMB188,889 thousand. Baoli Company is
engaged in coal mining during the year.
The carrying amount and the fair value of the identifiable assets and
liabilities of Baoli Company acquired as at its date of acquisition are as
follows:
Carrying Fair value Fair
amount adjustments value
RMB'000 RMB'000 RMB'000
Net assets acquired:
Property, plant and equipment 275,974 6,283 282,257
Cash and cash equivalents 67,496 - 67,496
Other non-current assets 50,264 172,044 222,308
Other current assets 202,018 - 202,018
Non-current liabilities - (44,582) (44,582)
Current liabilities (476,136) - (476,136)
-------- -------- --------
119,616 133,745 253,361
Non-controlling interests (43,061) (40,123) (83,184)
========= ========= =========
Goodwill 18,712
--------
Satisfied by:
Cash 188,889
=========
Net cash outflow arising on acquisition:
Cash consideration paid (188,889)
Cash and cash equivalents acquired 67,496
--------
(121,393)
=========
The goodwill arising on the acquisition of Yuneng Group, Datang Deqin and Baoli
Company is attributable to the anticipated profitability of their power
generation or coal mining operations and the anticipated future operating
synergies from the combination.
Yuneng Group, Datang Deqin, Datang Fuxin and Baoli Company increased the
Group's profit for the year by RMB30,355 thousand, nil, nil and RMB25,101
thousand respectively between the respective dates of acquisition and the end
of the reporting period.
If all the above acquisitions had been completed on 1 January 2010, total Group
revenue for the year would have been RMB60,748,663 thousand, and profit for the
year would have been RMB3,835,570 thousand. The proforma information is for
illustrative purposes only and is not necessarily an indication of the turnover
and results of operations of the Group that actually would have been achieved
had the acquisition been completed on 1 January 2010, nor is intended to be a
projection of future results.
4. OPERATING REVENUE
The Group's operating revenue which primarily represents sales of electricity,
heat, coal and chemical products and transportation service fees is as follows:
2010 2009
RMB'000 RMB'000
Sales of electricity 53,593,750 42,043,163
Heat supply 539,680 382,982
Sales of coal 2,823,291 5,143,707
Transportation service fees 28,444 -
Sales of chemical products 2,692,513 198,817
Others 994,697 174,254
-------- --------
60,672,375 47,942,923
========== ==========
5. Segment information
Executive directors and certain senior management (including chief accountant)
of the Company perform the function as chief operating decision makers
(collectively referred to as the "Senior Management"). The Senior Management
reviews the internal reporting of the Group in order to assess performance and
allocate resources. Senior Management has determined the operating segments
based on these reports.
Senior Management considers the business from a product perspective. Senior
Management primarily assesses the performance of power generation, coal and
chemical separately. Other operating activities primarily include sales of
properties and cement products, transportation services, etc., and are included
in "other segments".
Senior Management assesses the performance of the operating segments based on a
measure of profit before tax prepared under PRC GAAP.
Segment profits or losses do not include dividend income from listed
available-for-sale investments and gain on disposals of available-for-sale
investments. Segment assets exclude deferred tax assets and available-for-sale
investments. Segment liabilities exclude the current tax liabilities and
deferred tax liabilities. Sales between operating segments are marked to market
or contracted close to market price and have been eliminated at consolidation
level. Unless otherwise noted below, all such financial information in the
segment tables below is prepared under PRC GAAP.
Information about reportable segment profit or loss, assets and liabilities:
Power Coal Chemical Other Total Total Total
generation segment segment segments continuing discontinued
segment operations operations
(coal
segment)
--------- --------- --------- --------- --------- --------- ---------
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
Year ended 31
December 2010
Revenue from 54,122,551 2,825,178 2,712,214 1,012,432 60,672,375 - 60,672,375
external
customers
Intersegment 74,030 21,770,917 - 95,186 21,940,133 - 21,940,133
revenue ========= ========= ========= ========= ========= ========= =========
Segment 3,786,483 369,415 331,707 141,885 4,629,490 - 4,629,490
profit ========= ========= ========= ========= ========= ========= =========
Depreciation 7,036,509 189,173 101,466 102,770 7,429,918 - 7,429,918
and
amortisation
Net gain on 47,810 - 27 10,084 57,921 - 57,921
disposals of
property,
plant and
equipment
Gain on - - - 26,813 26,813 26,813
disposals of
investment
properties
Gain on 11 - - 93,800 93,811 - 93,811
disposals of
long-term
investments
Interest 29,211 1,347 1,670 5,987 38,215 - 38,215
income
Interest 4,800,594 238,386 37,986 126,053 5,203,019 - 5,203,019
expense
Share of 7,653 474,427 - 109,179 591,259 - 591,259
profits of
associates
Shares of (14,384) (2,657) - - (17,041) - (17,041)
losses of
jointly
controlled
entities
Income tax 715,456 87,872 83,219 57,906 944,453 - 944,453
expense ========= ========= ========= ========= ========= ========= =========
Year ended 31
December 2009
Revenue from 42,553,948 5,190,158 198,817 - 47,942,923 - 47,942,923
external ========= ========= ========= ========= ========= ========= =========
customers
Intersegment 5,160 4,824,816 - - 4,829,976 - 4,829,976
revenue ========= ========= ========= ========= ========= ========= =========
Segment 2,572,761 213,915 20,174 146,553 2,953,403 40,000 2,993,403
profit, as ========= ========= ========= ========= ========= ========= =========
restated
Depreciation 7,473,828 48,074 9,426 - 7,531,328 - 7,531,328
and
amortisation,
as restated
Net gain on 32,692 - - - 32,692 - 32,692
disposals of
property,
plant and
equipment
Gain on 78,316 - - 30,125 108,441 - 108,441
disposals of
long-term
investments
Gain on - - - - - 40,000 40,000
disposals of
assets and
liabilities
held for sale
Impairment of 80,473 - - - 80,473 - 80,473
property,
plant and
equipment, as
restated
Allowance for 14,667 - - - 14,667 - 14,667
inventories,
as restated
Interest 26,079 1,739 5,306 - 33,124 - 33,124
income
Interest 3,997,440 45,876 - - 4,043,316 - 4,043,316
expense
Share of (29,167) 286,125 (359) 115,523 372,122 - 372,122
(losses)/
profits of
associates
Shares of (60,366) (18,622) - - (78,988) - (78,988)
losses of
jointly
controlled
entities
Income tax 640,512 (4,375) (7,475) - 628,662 - 628,662
expense/ ========= ========= ========= ========= ========= ========= =========
(credit), as
restated
Power Coal Chemical Other Total Total Total
generation segment segment segments continuing discontinued
segment operations operations
(coal
segment)
---------- ---------- ---------- ---------- ---------- ---------- ----------
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
At 31
December
2010
Segment 152,509,810 16,058,293 39,345,040 10,625,419 218,538,562 - 218,538,562
assets
Including:
Investments 490,467 1,682,565 - 2,447,088 4,620,120 - 4,620,120
in
associates
Investments 1,693,442 845,959 - - 2,539,401 - 2,539,401
in jointly
controlled
entities
Additions 22,657,532 1,191,307 10,084,264 148,405 34,081,508 - 34,081,508
to ========== ========== ========== ========== ========== ========== ==========
non-current
assets
(other than
financial
assets and
deferred
tax assets)
Segment 134,105,377 10,067,614 29,220,166 3,473,751 176,866,908 - 176,866,908
liabilities ========== ========== ========== ========== ========== ========== ==========
At 31
December
2009
Segment 148,230,130 13,517,801 25,056,663 1,923,390 188,727,984 - 188,727,984
assets, as
restated
Including:
Investments 484,763 2,694,556 2,278 602,260 3,783,857 - 3,783,857
in
associates
Investments 695,825 846,237 - - 1,542,062 - 1,542,062
in jointly
controlled
entities
Additions 22,960,322 1,759,230 7,743,357 100,000 32,562,909 - 32,562,909
to ========== ========== ========== ========== ========== ========== ==========
non-current
assets
(other than
financial
assets and
deferred
tax assets)
Segment 128,519,824 7,877,910 19,983,705 - 156,381,439 - 156,381,439
liabilities ========== ========== ========== ========== ========== ========== ==========
Reconciliations of reportable segment revenue, profit or loss, assets,
liabilities and other material items:
2010 2009
RMB'000 RMB'000
(restated)
Revenue
Total revenue of reportable segments 82,612,508 52,772,899
Elimination of intersegment revenue (21,940,133) (4,829,976)
------------- -------------
Consolidated revenue 60,672,375 47,942,923
============= =============
Profit or loss
Total profit or loss of reportable segments 4,629,490 2,993,403
Gain on disposals of available-for-sale investments 8,212 -
Dividend income from available-for-sale investments 40 200
Elimination of intersegment profits (13,861) 4,851
IFRS adjustment on reversal of general provision on 107,273 163,109
mining funds
Other IFRS adjustments (30,854) (30,084)
------------- -------------
Consolidated profit before tax 4,700,300 3,131,479
============= =============
Assets
Total assets of reportable segments 218,538,562 188,727,984
Deferred tax assets 944,269 739,868
Available-for-sale investments 91,043 18,700
Elimination of intersegment assets (8,818,003) (7,498,008)
Reclassification of non-income taxes recoverable 2,022,816 1,991,030
IFRS adjustment on reversal of general provision on 82,095 83,291
mining funds
Other IFRS adjustments 54,553 84,948
------------- -------------
Consolidated total assets 212,915,335 184,147,813
============= =============
Liabilities
Total liabilities of reportable segments (176,866,908) (156,381,439)
Current tax liabilities (339,967) (48,359)
Deferred tax liabilities (414,377) (286,600)
Elimination of intersegment liabilities 5,186,413 7,369,035
Reclassification of non-income taxes recoverable (2,022,816) (1,991,030)
Other IFRS adjustments (24,849) (37,188)
------------- -------------
Consolidated total liabilities (174,482,504) (151,375,581)
============= =============
Other material items
Total of Elimination IFRS Other IFRS Total per
reportable of adjustment adjustments consolidated
segments intersegment on statement of
reversal financial
of general position /
provision statement of
on mining comprehensive
funds income
RMB'000 RMB'000 RMB'000 RMB'000 RMB'000
Year ended 31 December 2010
Share of profits of 591,259 - 126,972 - 718,231
associates
Shares of (losses)/profits (17,041) - 18,145 - 1,104
of jointly controlled
entities
Income tax expense 944,453 (60,294) (9,389) (3,415) 871,355
========= ========= ========= ========= =========
Year ended 31 December 2009
Share of profits of 372,122 - 89,990 - 462,112
associates
Shares of losses of jointly (78,988) - 26,303 - (52,685)
controlled entities
Income tax expense, as 628,662 (21,545) 11,703 (3,894) 614,926
restated ========= ========= ========= ========= =========
At 31 December 2010
Investments in associates 4,620,120 - (28,282) - 4,591,838
Investments in jointly 2,539,401 - 110,377 - 2,649,778
controlled entities ========= ========= ========= ========= =========
At 31 December 2009
Investments in associates 3,783,857 - (11,320) - 3,772,537
Investments in jointly 1,542,062 - 94,612 - 1,636,674
controlled entities ========= ========= ========= ========= =========
Geographical information (under IFRS):
During the years ended 31 December 2010 and 2009, all revenues from external
customers are generated domestically. At 31 December 2010, non-current assets
(excluding financial assets and deferred tax assets) amounted to RMB189,360,741
thousand (2009, as restated: RMB165,092,040 thousand) and RMB47,444 thousand
(2009: RMB83,348 thousand) are located in the PRC and foreign countries,
respectively.
In presenting the geographical information, revenue is based on the locations
of the customers.
Revenue from major customers:
2010 2009
RMB'000 RMB'000
Power generation segment
North China Grid Company Limited 17,948,672 17,088,967
State Grid Corporation of China 5,495,123 5,405,739
Guangdong Power Grid Corporation 4,822,035 2,741,184
========= =========
6. FINANCE COSTS
2010 2009
RMB'000 RMB'000
Interest expense on:
Short-term bank loans 844,812 1,040,391
Other short-term loans 194,894 157,244
Short-term entrusted loans 361 2,651
Long-term bank loans
- Wholly repayable within five years 1,376,004 1,734,212
- Not wholly repayable within five years 4,283,599 2,997,829
Other long-term loans
- Wholly repayable within five years 211,696 316,311
- Not wholly repayable within five years 24,674 17,993
Long-term entrusted loan
- Wholly repayable within five years - 1,668
Short-term bonds - 124,215
Long-term bonds 283,474 165,541
Finance leases 190,243 240,162
Acquisitions of property, plant and equipment by 3,354 8,515
instalments
Discounted notes receivable 50,092 35,423
--------- ---------
Total borrowing costs 7,463,203 6,842,155
Amount capitalised (2,083,847) (2,798,839)
--------- ---------
5,379,356 4,043,316
Exchange gain, net (28,069) (262)
Loan commitment fees - 23,865
Others 22,050 43,638
--------- ---------
5,373,337 4,110,557
========= =========
Borrowing costs on funds borrowed generally are capitalised at a rate of 5.33%
(2009: 5.52%) per annum.
7. INCOME TAX EXPENSE
2010 2009
RMB'000 RMB'000
(restated)
Current tax - PRC Enterprise Income Tax
Provision for the year 1,125,789 652,055
(Over)/under-provision in prior years (833) 59,809
--------- ---------
1,124,956 711,864
--------- ---------
Deferred tax (253,601) (96,938)
--------- ---------
871,355 614,926
========= =========
The Company and its subsidiaries, other than as stated below, are generally
subject to PRC Enterprise Income Tax statutory rate of 25% (2009: 25%).
(i) Pursuant to document Guo Ban Fa [2001] 73 issued by the State Council of
the PRC (the "State Council") and document Cai Shui [2001] 202 issued by the
State Administration of Taxation of the PRC, certain subsidiaries set up in the
western area of the PRC and engaged in a business encouraged by the State have
been granted a tax concession to pay PRC Enterprise Income Tax at a
preferential rate of 15% from 2001 to 2010.
(ii) As newly set up domestic invested enterprises engaged in power generation
in the western area of the PRC, certain subsidiaries 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 of 15% from the third to fifth year of operation. This
preferential income tax treatment will expire from 31 December 2010 to 31
December 2012.
(iii) Pursuant to document Guo Shui Han [2006] 804 issued by the Yunnan
Provincial Office of the State Administration of Taxation, a subsidiary of the
Company, as a newly set up domestic invested enterprise engaged in power
generation in the western area of the PRC, started to enjoy the exemption from
PRC Enterprise Income Tax during the first and second years of operation and
the grant of a tax concession to pay PRC Enterprise Income Tax at 50% of the
preferential rate of 15% from the third to fifth year of operation since the
year 2007.
(iv) Pursuant to document Cai Shui Zi [2006] 88 issued by the Ministry of
Finance of the PRC (the "MOF"), a subsidiary of the Company, being a high and
new technology industrial development enterprise set up in the high and new
technology industrial development zone approved by the State Council, and as
approved by Tax Bureau of Beijing Fengtai District, is exempted from PRC
Enterprise Income Tax in the first two operating years and then applies 15%
being the preferential rate from the third year, counting from the first year
when this subsidiary starts to make profit.
(v) A subsidiary of the Company set up in Hong Kong is subject to Hong Kong
Profits Tax levied at 16.5% (2009: 16.5%).
(vi) A subsidiary of the Company set up in the British Virgin Islands is
subject to local income tax levied at 0% (2009: 0%).
(vii) As a newly set up foreign invested enterprise engaged in power generation
in the western area of the PRC approved by the local tax authority, a
subsidiary of the Company is exempted from PRC Enterprise Income Tax during the
first and second years of operation and has been granted a tax concession to
pay PRC Enterprise Income Tax at 50% of the preferential rate of 15% from the
third to fifth year of operation since the year 2008.
(viii) Pursuant to documents Cai Shui [2008] 46 and [2008] 116 issued by the
MOF, certain subsidiaries are exempted from PRC Enterprise Income Tax during
the first three years of operation commencing from the year of assessment in
which the first sale transaction is reported and have been granted a tax
concession to pay PRC Enterprise Income Tax at 50% of the statutory rate of 25%
from the fourth to sixth year of operation in respect of their operating profit
derived from investments in new wind power generation projects approved by
government investment task forces after 1 January 2008. This preferential tax
treatment will expire after 31 December 2014.
8. PROFIT APPROPRIATION
DIVIDENDS
2010 2009
RMB'000 RMB'000
Proposed final of RMB0.07 (2009: RMB0.07) per share 861,703 861,703
======== ========
Pursuant to the PRC Enterprise Income Tax Law, the Company is required to
withhold 10% PRC enterprise income tax when it distributes dividends to its
non-PRC resident enterprise shareholders.
Statutory surplus reserve
In accordance with the relevant laws and regulations of the PRC and the
articles of association of the Company, it is required to appropriate 10% of
their net profit under PRC GAAP, after offsetting any prior years' losses, to
the statutory surplus reserve. When the balance of such a reserve reaches 50%
of the Company's share capital, any further appropriation is optional.
The statutory surplus reserve can be used to offset prior years' losses, if
any, and may be converted into share capital by issuing new shares to
shareholders in proportion to their existing shareholding or by increasing the
par value of the shares currently held by them, provided that the remaining
balance of the reserve after such an issue is not less than 25% of share
capital. The statutory surplus reserve is non-distributable.
Discretionary surplus reserve
Pursuant to the articles of association of the Company, the appropriation of
profit to the discretionary surplus reserve and its utilisation are made in
accordance with the recommendation of the Board of Directors and is subject to
shareholders' approval at their general meeting.
The discretionary surplus reserve can be used to offset prior years' losses, if
any, and may be converted into share capital by issuing new shares to
shareholders in proportion to their existing shareholding or by increasing the
par value of the shares currently held by them. The discretionary surplus
reserve is distributable.
Restricted reserve
Pursuant to relevant regulations and guidance issued by the MOF, certain
deferred housing benefits are charged to equity directly when incurred under
PRC GAAP. In order to reflect such undistributable retained earnings in these
financial statements prepared under IFRS, a restricted reserve is set up to
reduce the balance of retained earnings with an amount equals to the residual
balance of deferred housing benefits, net of tax.
Pursuant to relevant PRC regulations, coal mining companies are required to set
aside an amount to a fund for future development and work safety which they
transferred certain amounts from retained earnings to restricted reserve. The
fund can then be used for future development and work safety of the coal mining
operations, and is not available for distribution to shareholders. When
qualifying development expenditure and improvements of safety incurred, an
equivalent amount is transferred from restricted reserve to retained earnings.
9. EARNINGS PER SHARE
Basic earnings per share
The calculation of basic earnings per share attributable to owners of the
Company is based on the profit for the year attributable to owners of the
Company of RMB2,569,734 thousand (2009, as restated: RMB1,536,554 thousand) and
the weighted average number of ordinary shares of 12,192,421 thousand (2009:
11,780,038 thousand) in issue during the year.
Diluted earnings per share
No diluted earnings per share are presented as the Company did not have any
dilutive potential ordinary shares during the years ended 31 December 2010 and
2009.
10. ACCOUNTS AND NOTES RECEIVABLE
Accounts and notes receivable of the Group primarily represent receivables from
regional or provincial grid companies for tariff revenue and coal sales
customers and comprise the following:
2010 2009
RMB'000 RMB'000
Accounts receivable from third parties 7,966,699 6,459,139
Notes receivables from third parties 190,185 140,273
Accounts receivable from related parties 1,738 35,505
--------- ---------
8,158,622 6,634,917
========= =========
The Group usually grants credit period of approximately 1 month to local power
grid customers and coal purchase customers from the month end after sales and
sale transactions made, respectively.
The ageing analysis of accounts and notes receivable is as follows:
2010 2009
RMB'000 RMB'000
Within one year 8,013,428 6,447,885
Between one to two years 143,990 186,396
Between two to three years 1,096 636
Over three years 108 -
--------- ---------
8,158,622 6,634,917
========= =========
11. SHARE CAPITAL
Number of shares Amount
A shares H shares Total A shares H shares Total
(i) (i)
'000 '000 '000 RMB'000 RMB'000 RMB'000
Registered, issued and
fully paid:
Shares of RMB1 (2009:
RMB1) each
At 1 January 2009, 31 8,464,360 3,315,678 11,780,038 8,464,360 3,315,678 11,780,038
December 2009 and 1
January 2010
Issue of shares (ii) 530,000 - 530,000 530,000 - 530,000
--------- --------- --------- --------- --------- ---------
At 31 December 2010 8,994,360 3,315,678 12,310,038 8,994,360 3,315,678 12,310,038
(iii) ========= ========= ========== ========= ========= ==========
Note:
(i) Both A shares and H shares rank pari passu to each other.
(ii) On 23 March 2010, the Company issued 530,000,000 A shares to specific
investors by way of non-public offering at a subscription price of RMB6.23 per
share for a total cash consideration of RMB3,301,900 thousand. The premium on
the issues of shares, amounting to RMB2,718,372 thousand, net of share issue
expenses, was credited to the Company's capital reserve account.
(iii) At 31 December 2010, 530,000,000 (2009: Nil) A shares were subject to
lock-up periods and were not freely tradable.
12. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
2010 2009
RMB'000 RMB'000
Accounts and notes payable 8,129,771 6,015,519
--------- ---------
Other payables and accrued liabilities 10,800,295 8,024,501
--------- ---------
18,930,066 14,040,020
========= =========
The ageing analysis of the accounts and notes payable is as follows:
2010 2009
RMB'000 RMB'000
Within one year 8,129,771 5,716,659
Between one to two years - 127,756
Between two to three years - 43,857
Over three years - 127,247
--------- ---------
8,129,771 6,015,519
========= =========
13. RETROSPECTIVE ADJUSTMENTS
According to document Shen Qi Jue [2010] 468 "Audit Decisions Relating to
Financial Affairs of Income and Expenditure of China Datang for the Year 2009"
dated 31 December 2010 issued by National Audit Office of the PRC, impairment
losses on property, plant and equipment, allowance for inventories and
depreciation of property, plant and equipment of the Company for the year ended
31 December 2009 were understated by RMB80,473 thousand, RMB14,667 thousand and
RMB4,408 thousand respectively mainly resulting from closure of certain power
generating units and their spare parts or delay in transferring certain
construction in progress to property, plant and equipment (collectively
referred to as the "Prior Year Errors"). The Group has made retrospective
adjustments of the comparative figures for the year ended 31 December 2010 to
correct the Prior Year Errors.
After retrospective adjustments, operating costs of the Group for the year
ended 31 December 2009 increased by RMB99,548 thousand while income tax expense
and profit for the year of the Group for the year ended 31 December 2009
decreased by RMB23,785 thousand and RMB75,763 thousand respectively; and
deferred tax assets of the Group at 1 January 2010 increased by RMB23,785
thousand while inventories, property, plant and equipment, statutory surplus
reserve and retained earnings of the Group at 1 January 2010 decreased by
RMB14,667 thousand, RMB84,881 thousand, RMBRMB7,576 and RMB68,187 respectively.
14. EVENTS AFTER THE REPORTING PERIOD
Having obtained the "Approval for the Public Issue of Corporate Bonds by Datang
International Power Generation Co., Ltd." (Zheng Jian Xu Ke [2009] No.654) from
the China Securities Regulatory Commission in July 2009 whereby the Company was
permitted to issue corporate bonds not exceeding RMB6 billion, the Company
issued first tranche of the corporate bonds amounting to RMB3 billion on 19
August 2009.
In view of the status of the capital market and the capital needs of the
Company, the Company intended to complete the issue of the remaining corporate
bonds in the amount of RMB3 billion within the valid period (i.e. before 21
July 2011) of the authorised document. Up to the date of approval of these
financial statements for issue, the Company is actively planning the issue of
2011 first tranche of the corporate bonds.
B. FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL STATEMENTS PREPARED UNDER PRC GAAP
1. FINANCIAL HIGHLIGHTS AND FINANCIAL RATIOS
2010 2009 Variance
RMB'000 RMB'000 %
(unless (unless
otherwise otherwise
stated) stated)
(restated)
Revenue from operations 60,672,375 47,942,923 26.55%
Profit before taxation and minority interests 4,623,881 2,998,454 54.21%
Net profit (attributable to equity holders of 2,473,684 1,403,706 76.23%
the Company)
Net profit/(loss) (attributable to equity 2,108,452 1,132,552 86.17%
holders of the Company and excluding
non-recurring items)
Earnings per share (weighted average) (RMB) 0.2031 0.1192 70.39%
Earnings/(loss) per share calculated based on 0.1731 0.0961 80.12%
net profit attributable to equity holders of
the Company and excluding non-recurring items
(weighted average) (RMB)
Return on net assets (weighted average) 8.37% 5.36% 3.01%
Return on net assets calculated based on net 7.13% 4.32% 2.81%
profit attributable to equity holders of the
Company and excluding non-recurring items
(weighted average)
Net cash flows from operating activities 17,509,589 11,744,853 49.08%
Net cash flows from operating activities per 1.42 1.00 42.00%
share (RMB)
Total assets 210,755,870 181,988,544 15.81%
Shareholders' equity (including minority 38,321,031 32,641,181 17.40%
interests)
Net assets (attributable to equity holders of 2.50 2.21 13.12%
the Company) per share (RMB)
2. PROFIT AND LOSS ACCOUNT
2010 2009
RMB'000 RMB'000
(restated)
Operating revenue 60,672,375 47,942,923
Less: Operating costs (49,427,960) (39,429,475)
Sales tax and surcharges (395,380) (382,296)
Selling expenses (192,259) (174,043)
General and administration expenses (1,846,469) (1,519,997)
Financial expenses, net (5,335,122) (4,077,433)
Asset impairment loss 41,815 (95,140)
Add: Investment income 686,610 447,820
----------- -----------
Operating profit 4,203,610 2,712,359
Add: Non-operating income 466,271 333,157
Less: Non-operating expenses (46,000) (47,062)
----------- -----------
Profit before taxation and minority interests 4,623,881 2,998,454
Less: Income tax expense (884,159) (607,117)
----------- -----------
Net profit 3,739,722 2,391,337
=========== ===========
Including: net loss attributable to acquirees before - (14,030)
business combinations under common control
Attributable to:
Equity holders of the Company 2,473,684 1,403,706
Non-controlling interests 1,266,038 987,631
Other comprehensive loss (60,585) (17,884)
Total comprehensive income 3,679,137 2,373,453
Attributable to:
Equity holders of the Company 2,417,368 1,383,631
Non-controlling interests 1,261,769 989,822
RMB RMB
(restated)
Earnings per share
Basic 0.2031 0.1192
Diluted 0.2031 0.1192
3. Differences between financial statements
The consolidated financial statements which are prepared by the Group in
conformity with PRC GAAP, differ in certain respects from IFRS. Major
differences between PRC GAAP and IFRS ("GAAP Differences"), which affect the
net assets and net profit of the Group, are summarised as follows:
Note: Net assets
-----------------------
2010 2009
RMB'000 RMB'000
(restated)
Net assets under PRC GAAP 30,737,256 25,997,682
IFRS adjustments:
Difference in the commencement of (a) (106,466) (106,466)
depreciation of property, plant and
equipment
Difference in accounting treatment on (b) 132,530 163,384
monetary housing benefits
Difference in accounting treatment on mining (c) 82,095 83,291
funds
Applicable deferred tax impact of the above (d) 3,641 (9,158)
GAAP Differences
Non-controlling interests' impact of the 1,015 (6,011)
above GAAP Differences after tax ------------ ---------
Net assets under IFRS 30,850,071 26,122,722
============ ==========
Net profit
-----------------------
2010 2009
RMB'000 RMB'000
(Restated)
Profit for the year attributable to owners 2,473,684 1,403,706
of the Company under PRC GAAP
IFRS adjustments:
Difference in accounting treatment on (b) (30,854) (30,084)
monetary housing benefits
Difference in accounting treatment on mining (c) 107,273 163,109
funds
Applicable deferred tax impact of the above (d) 12,804 (7,809)
GAAP Differences
Non-controlling interests' impact of the 6,827 7,632
above GAAP Differences after tax ---------- ----------
Net profit for the year attributable to 2,569,734 1,536,554
owners of the Company under IFRS ========== ==========
Note:
(a) Difference in the commencement of depreciation of property, plant and
equipment
This represents the depreciation difference arose from the different timing of
the start of depreciation charge in previous years
(b) Difference in accounting treatment on monetary housing benefits
Under PRC GAAP, the monetary housing benefits provided to employees who started
work before 31 December 1998 were directly deducted from the retained earnings
and statutory public welfare fund after approval by the general meeting of the
Company and its subsidiaries
Under IFRS, these benefits are recorded as deferred assets and amortised on a
straight-line basis over the estimated service lives of relevant employees.
(c) Difference in accounting treatment on mining funds
Under PRC GAAP, accrual of future development and work safety expenses are
included in respective product cost or current period profit or loss and
recorded in a specific reserve accordingly. When such future development and
work safety expenses are applied and related to revenue expenditures, specific
reserve is directly offset when expenses incurred. When capital expenditures
are incurred, they are included in construction in progress and transferred to
fixed assets when the related assets reach the expected use condition. They are
then offset against specific reserve based on the amount included in fixed
assets while corresponding amount is recognised in accumulated depreciation.
Such fixed assets are not depreciated in subsequent periods.
Under IFRS, coal mining companies are required to set aside an amount to a fund
for future development and work safety through transferring from retained
earnings to restricted reserve. When qualifying revenue expenditures are
incurred, such expenses are recorded in the profit or loss as incurred. When
capital expenditures are incurred, an amount is transferred to property, plant
and equipment and is depreciated in accordance with the depreciation policy of
the Group. Internal equity items transfers take place based on the actual
application amount of future development and work safety expenses whereas
restricted reserve is offset against retained earnings to the extent of zero.
(d) Applicable deferred tax impact on the above GAAP Differences
This represents the deferred tax effect on the above GAAP Differences where
applicable
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