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Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong KongLimited take no responsibility for the contents of this announcement, make norepresentation as to its accuracy or completeness and expressly disclaim anyliability whatsoever for any loss howsoever arising from or in reliance uponthe 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 GenerationCo., Ltd. (the "Company") hereby announces the consolidated operating resultsof the audited financial statements of the Company and its subsidiaries (the"Group") prepared in conformity with International Financial ReportingStandards ("IFRS") for the year ended 31 December 2010 (the "Year"), togetherwith the audited consolidated operating results of the year of 2009 (the"Previous Year") for comparison. Such operating results have been reviewed andconfirmed by the Company's audit committee (the "Audit Committee").Consolidated operating revenue of the Group for the Year was approximatelyRMB60,672 million, representing an increase of 26.55% as compared to thePrevious Year. Net profit attributable to equity holders of the Company wasapproximately RMB2,570 million, representing an increase of approximately67.24% as compared to the Previous Year. Basic earnings per share attributableto equity holders of the Company amounted to approximately RMB0.21,representing an increase of approximately RMB0.08 per share as compared to thePrevious Year.In view of the operating results of the Group during the Year, the Board hasrecommended the distribution of a final dividend of RMB0.07 per share (taxincluded) for the Year (please refer to item 3 under section III set out belowfor 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 oncoal-fired power generation, is one of the largest independent power producersin the People's Republic of China (the "PRC"). In 2010, the Group adhered toimplementing the strategy of "focusing in the power generation business whilstcomplementing with synergistic diversifications". It steadily enhanced itsmanagement and control capabilities; increased economic efficiency andshareholders' returns; placed emphasis on resources saving and environmentalprotection; fulfilled social responsibilities; and seized businessopportunities and overcame difficulties, thereby achieving the business targetsfor the Year.
1. Safe Production was Stably Maintained
The Company aims to build a fundamentally safe enterprise. The Company hasexperienced no significant incidents at its facilities and no casualties forthe Year. It has fulfilled its roles of securing power supply for the ShanghaiWorld 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 wholeyear, representing an increase of 25.81% year-on-year. Operating revenueamounted to approximately RMB60,672 million, representing an increase of 26.55%over the Previous Year. Net profit attributable to equity holders of theCompany amounted to approximately RMB2,570 million, representing an increase ofapproximately 67.24% over the Previous Year. As at 31 December 2010, totalconsolidated assets of the Group amounted to RMB212,915 million, representingan increase of 15.62% year-on-year. Net assets attributable to the equityholders of the Company amounted to RMB30,850 million, representing an increaseof 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 to5,558.5MW. As at 31 December 2010, the Group's installed capacity amounted to36,300.3 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%; hydropoweramounts to 3,855.9 MW, accounting for 10.62%; and wind power amounts to 434.3MW, 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 of2.92 g/kWh year-on-year. The emission rates of sulphur dioxide, nitrogenoxides, 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 averagelevels.
6. More Effective Capital Operation
In 2010, the Company completed the acquisition of 70% equity interests in theInner Mongolia Baoli Coal Company Limited and achieved a profit in the sameyear of acquisition. The Company acquired the entire equity interests in FuxinJinshilun Wind Power Company, which has been renamed as Datang InternationalFuxin Wind Power Company Limited, and has basically completed the acquisitionof 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 thePublic 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. Theresponsibility body at each level has obviously enhanced its capability of dutyfulfillment. By means of effective integration of management resources of theenterprise, the Company has formulated a new scheme of online managementfeaturing "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, andranked 16th among the world's fastest growing energy corporations. The Companywas 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 BusinessEnterprise ("PRC GAAP"). For segment information, please refer to Note 5 to theaudited 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 atthe end of 2010, the Group managed a total installed capacity of approximately36,300.3MW. The power generation business of the Group is mainly distributedacross 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 ayear-on-year 10.3% Gross Domestic Product (GDP) growth. Both power generationand power consumption nationwide re-climbed at an accelerated rate. Accordingto relevant statistics, during the Year, the nationwide installed capacity grewby approximately 10.07% year-on-year. Social power consumption increased by14.56% over the Previous Year, while nationwide power generation increased byapproximately 13.3% over the Previous Year. Utilisation hours of powergeneration facilities were on the rise as a whole, but prices of coal for powergeneration increased significantly and remained at high levels. Meanwhile, dueto exceptionally serious droughts in the southwestern regions in spring, theprofitability of hydropower enterprises has been affected significantly. Underthe market conditions of the co-existence of opportunities and challenges, theCompany's power generation business has been developing at a stable and fastpace, 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 178.4781billion kWh, representing an increase of 25.81% over the Previous Year. Theaccumulative on-grid power generation amounted to 168.2278 billion kWh,representing an increase of 25.96% over the Previous Year. The increases inpower generation and on-grid power generation were mainly attributable to anincrease in the capacity of operational generating units of the Group, safe andstable operation of the generating units and a steadily increasing power demandin the service territories. During the Year, the Group added new installedcapacity 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 theproduction facilities occurred to the Group during the course of powerproduction. The equivalent availability coefficient of the operationalgenerating units amounted to 95.31%, representing an increase of 0.55percentage point over the Previous Year.
(ii) Steady Progress in Energy Conservation and Emissions Reduction
During the Year, the Company adhered to management by objective, programcontrol, dynamic benchmarking and monitoring; enhanced management on energyconservation; focused on economic operation of power generation facilities; andintensified technological renovation on energy conservation and facilitiestreatment, 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. Thedesulphurisation facilities operation rate and an overall desulphurisationefficiency rate amounted to 99.20% and 93.61%, respectively. The coal-firedgenerating units of the Group continued to achieve a desulphurisationfacilities 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 assoaring coal prices lingering at high levels and inability to realize tariffadjustments. Faced with such a continuously tough operating environment, theCompany kept abreast of the market trend while taking initiatives in planningbudgets, strengthening internal management and at the same time creating afavourable external environment, thereby rigorously enhancing production andoperation: (1) Management accountability has been implemented gradually, andtargets of power generation were achieved. Consolidated utilisation hours ofgenerating units amounted to 4,998 hours, an increase of 91 hours year-on-year.(2) Through measurements such as developing economical coal to ensure fuelsupply, enhancing coal blended burning and setting up an improvement platformon fuel management indices, fuel costs were effectively controlled. (3) Throughvarious measures such as proper cash allocation, distribution of capitalaccording to needs, prompt repayment of loans, reduction of capitalsedimentation 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 theState including two coal-fired power generation projects with an approved totalcapacity of 3,320 MW, one hydropower project with an approved total capacity of2,600 MW, and four wind power projects with an approved total capacity of173.5MW. As for nuclear power, the National Development and Reform Commissionapproved in writing the commencement of preliminary works on Phase 1 of theLiaoning Xudabao Nuclear Power Project, of which 20% equity interests are heldby 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 theCompany'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 salesaccounted for approximately 89.22% of the total operating revenue, of whichrevenue from electricity sales accounted for approximately 88.33% of the totaloperating revenue.During the Year, the Group achieved revenues of approximately RMB53,594 millionand RMB540 million from electricity sales and heat sales, respectively,representing increases of approximately 27.47% and 40.92% over the PreviousYear, respectively. In particular, the increase in revenue from electricitysales was mainly due to the increases in on-grid power generation and averagetariff of on-grid power. During the Year, the commencements of operation of theGroup's generating units in coastal regions optimised the power generationstructure of the Group and raised the average on-grid power tariff. The averageon-grid power tariff of the Group increased by 1.2% over the Previous Year, andthe operating revenue from electricity increased by approximately RMB831million accordingly. The increase in on-grid power generation resulted in theincrease 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 toRMB32,143 million comparing with the Previous Year. The increase is mainlyattributable to: 1) an increase in fuel costs due to an increase of 32.192billion 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 costover the Previous Year.During the Year, depreciation expenses of the Group for the year decreased byapproximately RMB1,800 million, which was mainly attributed to changes inaccounting estimates of fixed assets made by the Group in order to enhance thecomparability of accounting information among listed companies of the sameindustry.
(iii) Operating Profit
During the Year, operating profit from electricity sales and heat salesamounted to approximately RMB10,690 million, while the gross profit margin wasapproximately 19.75%, representing an increase of approximately 30.86% over
thePrevious Year.2. Coal Chemical Business(1) The Duolun Coal Chemical Project, developed and constructed by the Group asa controlling interest is located at Duolun County, Xilinguole Pledge, InnerMongolia. It uses lignite coal from the Inner Mongolia Shengli Coal Mine as rawmaterials; and it applies internationally advanced technologies including thetechnology of vaporising coal ash, the syngas purification technology, thelarge-scale ethanol synthesis technology, the technology to convert methanol topropylene, and the propylene polymerisation technology to produce coal chemicalproducts. The final product of the project is 460,000 tonnes/year ofpolypropylene and other by-products.The coal chemical project is under construction and has succeeded in the firsttrial run at two gasifiers. The successful conduct of critical phases such asthe successful operation of the response system of the methanol-to-propylene(MTP) facility in one go and the production of alkene with qualifiedconstituents marked a significant breakthrough on the core technologies of theDuolun Coal Chemical Project. This has laid a solid foundation for openning upthe whole-line process flows and ensuring a stable production of polypropyleneproducts. 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 billioncubic meters, developed and constructed by the Group with controllinginterests, is located in Kesheketeng Qi, Chifeng City, the Inner MongoliaAutonomous Region. Upon its completion, the major supply targets of the projectare Beijing and cities along the gas transmission pipeline. As a political,cultural and financial centre of the PRC, Beijing has a strong demand for cleanenergy such as natural gas, given the city's higher requirement for the qualityof the air environment. The Company believes that following the completion ofthe Keqi Coal-based Natural Gas Project, it will benefit from the growingdemand for clean energy in Beijing and the cities along the gas transmissionpipeline, 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 outputof 4 billion cubic meters, developed and constructed by the Group withcontrolling interests, is located in Fuxin City, Liaoning Province. The projectwas approved and commenced construction in 2010. Upon its completion, theproject aims to supply natural gas largely to Shenyang City in LiaoningProvince and nearby cities such as Tieling, Fushun, Benxi and Fuxin. LiaoningProvince has experienced fast economic growth. With the acceleration ofurbanisation, the reform in coal-fired boilers and the development of gas busesand industries using natural gas as raw material, the supply gap of natural gasin the above cities will grow bigger and bigger. Following the completion ofthe Fuxin Coal-based Natural Gas Project, the Company will benefit from thegrowing demand for clean energy in Shenyang and nearby cities which haveexperienced rapid economic development, thereby increasing the overallprofitability of the Company. The Fuxin Coal-based Natural Gas Project isexpediting its construction with the target to commence production in 2012.(4) The High-Aluminium Pulverised Fuel Ash Project of Inner Mongolia RenewableEnergy Resource Development Company Limited, constructed by the Company withcontrolling interests, proceeded smoothly. During the Year, the project openedup process flows involving the extraction of alumina from high-aluminiumpulverised fuel ash, providing technical support to the Group's deployment ofits recycle economy businesses. .
3. The Coal Business
(1) Business Review
The Shengli Coal Mine East Unit 2, developed and constructed by the Group, islocated in the central part of Shengli Coal Mine in Inner Mongolia with aplanned construction scale of 60 million tonnes. Its coal products will mainlybe supplied as raw materials to the coal chemical and coal-based natural gasprojects including the Duolun Coal Chemical Project, the Keshiketeng QiCoal-based Natural Gas Project and Fuxin Coal-based Natural Gas Project. Forsuch projects, the annual production capacity of Phase 1 project amounted to 10million tonnes, and the Phase 2 project was approved by the NationalDevelopment and Reform Commission in March 2011 with an annual productioncapacity of 20 million tonnes.During the Year, the Company completed the acquisition of 70% equity interestsin Inner Mongolia Baoli Coal Company Limited, thereby further increasing theself-supply ratio of coal. The Inner Mongolia Baoli Coal Company Limited,located in E'erduosi City, Inner Mongolia, produced 1.92 million tonnes of coalproducts in 2010. Meanwhile, the Company is currently engaged in preliminarydevelopment works on the Wujianfang Coal Mine, the Kongduigou Coal Mine and theChangtan Coal Mine. The successful developments of the above-said coal mineprojects will enhance the coal consumption self-sufficiency of the Company'spower plants.During the Year, the Tashan Coal Mine and the Yuzhou Coal Mine, constructed bythe Company with holding interests, supplied the Company with 9.57 milliontonnes and 3.92 million tonnes of coal, respectively, thereby assuring stablecoal 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 consolidationelimination amounted to approximately RMB2,823 million, accounting for 4.66% ofthe total revenue of the Group, representing a decrease of approximately 45.11%over the Previous Year.(ii) Operating CostsDuring the Year, operating costs in the coal business amounted to approximatelyRMB2,694 million, representing a decrease of approximately RMB2,166 millionover the Previous Year. The decrease in operating costs was mainly due to thedecreased 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 approximatelyRMB51,469 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 accountedfor approximately 14.34%. Since the standard coal unit price of the Companyincreased by RMB85.54/tonne over the Previous Year, the power fuel cost of theCompany 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 thePrevious Year. The significant increase was mainly due to an increase ininterest expenses during the Year caused by an increase in the borrowings andthe 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 approximatelyRMB212,915 million, representing an increase of approximately RMB28,768 millionas compared to the end of 2009. The increase in total assets mainly resultedfrom the implementation of the expansion strategy by the Group which led to acorresponding 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 of2009. Of the total liabilities, long-term liabilities increased byapproximately RMB10,218 million over the end of 2009. The increase in totalliabilities was mainly due to an increase in the Group's borrowing level so asto meet the needs of daily operations and infrastructure construction. Equityattributable to equity holders of the Company amounted to approximatelyRMB30,850 million, representing an increase of approximately RMB4,727 millionover the end of 2009. Net asset value per share attributable to equity holdersof the Company amounted to RMB2.51, representing an increase of RMB0.29 pershare 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 approximatelyRMB19,375 million, bearing annual interest rates ranging from 1.31% to 5.56%.Long-term loans (excluding those repayable within 1 year) amounted toapproximately RMB109,585 million and long-term loans repayable within 1 yearamounted to approximately RMB14,470 million. All long-term loans (includingthose 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 wereloans denominated in US dollar, and loan balances equivalent to approximatelyRMB616 million were loans denominated in HK dollar. The Group constantly paysclose attention to foreign exchange market fluctuations and cautiously assessesforeign currency risks.7. Welfare PolicyAs 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 amountedto RMB2,048 million. The Group adopts the basic salary system on the basis ofposition-points salary distribution. The Group carries out evaluation of itssubordinated enterprises based on a profit accountability system. The Group isconcerned about personal growth and occupational training, and implements areward mechanism of "unification of training, usage and remuneration". Based onthe basic principles of "identifying targets scientifically and providingtraining depending on actual needs", and led by the strategy of developingtalents and strong corporations, the Group relies on a three-tier managementorganisational structure and implements an all-staff training scheme forvarious 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 externalenvironments.As far as opportunities are concerned, firstly, the long-term development ofthe domestic economy remains favourable. As indicated by relevant forecasts,the GDP growth rate is likely to be approximately 9% in 2011, and the growthrate of social power consumption is expected to exceed 10%. Secondly, thenational growth rate of installed generating units is expected to reachapproximately 9.5% in 2011, which is slightly lower than the growth rate ofsocial power consumption. Utilisation hours of generating units are likely toremain basically stable or undergo a slight increase. Thirdly, the Group hasachieved leadership positions in the PRC in various aspects such as reliabilityof generating units and facilities, indices of energy conservation andemissions reduction, and technical skills and qualifications of personnel.Owing to its outstanding advantages of having expanding capacity in generatingunits located along the southeastern coastal region and having large-capacitygenerating units, the Company is in a favourable position amidst the fiercecompetition in the electricity market. Fourthly, given the successivecommencements of operation and developments in the Company's non-powerbusinesses such as coal, railway, port, shipping, petrochemical and recycleeconomy, achievements of the Company's diversified developments will graduallybe seen.As far as challenges are concerned, firstly, the impact of the global financialcrisis is profound and long-lasting, and the post-financial-crisis era willbring about various risks. Secondly, the current successive implementation ofpolicies regarding upward adjustments of the deposit-reserve ratio andincreases of interest rates has further tightened the availability of funds forpower generation enterprises. Thirdly, there are uncertainties in the coal andelectricity markets, and fuel coal prices are still expected to rise and toremain at a high level, thus rendering the operating situation severe for powerenterprises which have coal-fired generating units as their major assets.Fourthly, the pressure on energy conservation and emissions reduction willcontinuously increase.Faced with the above-mentioned complicated and volatile situations, the Companywill continue to adhere to the strategy of "focusing in the power generationbusiness whilst complementing with synergistic diversifications", and will keepon 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 developingcoal-to-chemical business, pushing forward the development of alumina, andsecuring a complementary development of railway, port and shipping". It willseize 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 andemphasising cost controls, and through advance analysis and forecast,on-the-spot control and post-incident appraisals, the Company will effectivelycontrol and monitor budget execution and promptly discover and rectify anyexisting deviations in the course of execution. It will increase powergeneration with all efforts and to control coal prices by applying variousmeasures, with an aim to enhance the profitability of the Company. In 2011, theCompany will strive to accomplish a power generation of 190 billion kWh andrealize 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 inits non-power businesses and promote synergistic diversification. In respect ofits power generation business, the Company will actively take part in thedevelopment of low-carbon power generation, integrated utilisation, distributedenergy sources and construction of high-efficiency power plants. In respect ofits non-power businesses, it will strive to obtain coal resources through allmeans, and achieve the target of realising continued profits throughstabilising coal sources. In particular, it will speed up the promotion andapplication of the core coal-to-chemical technology, push forward thedeployment of the coal-to-chemical business with full efforts, and furtherexpand the room of development for the Company in the regions with resourceadvantages.
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 ofgood-quality assets, with a view to achieving maximum investment returns forthe 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 "BasicStandards for Enterprise Internal Control", as well as its applicationguidelines, evaluation guidelines and auditing guidelines. According to theprinciple of integrating "job duties, mechanisms and systems, standards andcriteria, operation flows, evaluation and auditing and performance appraisal",the Company will accomplish the top-level design and ensure advancement in goodorder, so as to fully implement the comprehensive accountability managementsystem, the comprehensive budget management system and the comprehensive riskmanagement 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, thepersons listed below hold the interests or underlying shares or short positionsin the shares of the Company which are required to be disclosed to the Companyunder section 336 of the Securities and Futures Ordinance (the "SFO") (Chapter571 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 position3. 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, wasinterested in 24,000 A shares of the Company. Save as disclosed above, none ofthe directors, supervisors and chief executives of the Company nor theirassociates had any interest, underlying shares and equity and short positionsin the debentures of the Company or any of its associated corporation (withinthe meaning of Part XV of the SFO) that were required to be notified to theCompany and The Stock Exchange of Hong Kong Limited (the "Hong Kong StockExchange") under the provisions of Divisions 7 and 8 of Part XV of the SFO, orrequired to be recorded in the register mentioned in the SFO pursuant tosection 352 or otherwise required to be notified to the Company and the HongKong Stock Exchange pursuant to the Model Code for Securities Transactions byDirectors of Listed Issuers (the "Model Code") in Appendix 10 of the RulesGoverning 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 theCompany held on 11 June 2010, the Company distributed a 2009 cash dividend ofRMB0.07 per share (tax included) to all shareholders on the basis of the totalshare capital of 12,310,037,578 shares as at 19 April 2010.2. Pursuant to the resolutions passed at the thirty-seventh meeting of thesixth session of the Board held on 29 June 2010, the Board approved thenominations of Liu Shunda, Cao Jingshan, Hu Shengmu, Fang Qinghai, Zhou Gang,Liu Haixia, Guan Tiangang, Su Tiegang, Ye Yonghui and Li Gengsheng ascandidates of non-independent directors of the seventh session of the Board ofthe Company; the nominations of Li Yanmeng, Zhao Zunlian, Li Hengyuan, Zhao Jieand Jiang Guohua as candidates of independent directors of the seventh sessionof the Board of the Company; the afore-mentioned matters regarding the electionof the new session of the Board were submitted to the 2010 second extraordinarygeneral meeting of the Company held on 19 August 2010 for consideration andapproval; the afore-mentioned candidates were approved by the shareholders toform the seventh session of the Board and the term of office of the seventhsession of the Board commenced from 20 August 2010 to 30 June 2013.3. Pursuant to the resolutions passed at the seventeenth meeting of the sixthsession of the supervisory committee held on 29 June 2010, the supervisorycommittee approved the nominations of Zhang Xiaoxu and Fu Guoqiang ascandidates of shareholders' representatives of the seventh session of thesupervisory committee of the Company. Mr. Qiao Xinyi and Mr. Guan Zhenquan wereelected as supervisors representing staff of the seventh session of thesupervisory committee of the Company at the staff representatives meeting; theafore-mentioned matters regarding the election of the new session of thesupervisory committee were submitted to the 2010 second extraordinary generalmeeting of the Company held on 19 August 2010 for consideration and approval;the nominated supervisors as shareholders' representatives were approved by theshareholders and the term of office of the seventh session of the supervisorycommittee commenced from 20 August 2010 to 30 June 2013.4. Pursuant to the approval by "Reply on the Approval of Non-public Offering ofShares by Datang International Power Generation Co., Ltd." (CSRC Approval No.[2009]1492) issued by the China Securities Regulatory Commission, the Companycompleted the non-public offering of A shares in March 2010. Upon completion ofthe non-public issue of A shares, the total issued share capital of the Companyamounted to 12,310,037,578 shares with newly issued A shares of 530,000,000shares.
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 AuditCommittee, comprising 3 independent non-executive directors and 2 non-executivedirectors. The committee is responsible for, amongst other things, reviewingthe 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, GuanTiangang, Su Tiegang, Ye Yonghui, Li Gengsheng, Li Yanmeng*, Zhao Zunlian*, LiHengyuan*, 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)
10,955investments, 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 1,302,097entities
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
50,104associates 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 31,330related 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 - - 992,146classified 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 26,251,511the 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 14,040,020 131,229,560liabilities 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 6,861,589liabilities
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 158,632,226 142,754,071 104,997,369liabilities =========== =========== =========== Note:1. BASIS OF PREPARATIONThe consolidated financial statements of Datang International Power GenerationCo., Ltd. (the "Company") and its subsidiaries (collectively referred to as the"Group") have been prepared in accordance with International FinancialReporting Standards and the applicable disclosures required by the RulesGoverning the Listing of Securities on The Stock Exchange of Hong Kong Limitedand by the Hong Kong Companies Ordinance. These financial statements have beenprepared under the historical cost convention, as modified by the revaluationof certain available-for-sale investments.At 31 December 2010, a significant portion of the funding requirements of theGroup for capital expenditures was satisfied by short-term borrowings.Consequently, at 31 December 2010, the Group had net current liabilities ofapproximately RMB34.39 billion (2009, as restated: RMB24.73 billion). The Grouphad significant undrawn borrowing facilities, subject to certain conditions,amounting to approximately RMB145.98 billion (2009: RMB169.00 billion) and mayrefinance and/or restructure certain short-term borrowings into long-termborrowings and will also consider alternative sources of financing, whereapplicable. The directors of the Company are of the opinion that the Group willbe able to meet its liabilities as and when they fall due within the nexttwelve months and have prepared these financial statements on a going concernbasis.
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 revisedInternational Financial Reporting Standards ("IFRSs") that are relevant to itsoperations 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 adoptionof these new and revised IFRSs did not result in significant changes to theGroup's accounting policies and amounts reported for the current year and prioryears 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 andforms part of the cost of acquisition. The previous IFRS 3 requires that acontingent consideration be recognised if it is probable and can be measuredreliably.-- In a business combination achieved in stages, the previously held equityinterest in the subsidiary is remeasured at its acquisition-date fair value andthe resulting gain or loss is recognised in consolidated profit or loss. Thefair value is added to the cost of acquisition to calculate goodwill. Theprevious IFRS 3 does not have a requirement for such fair value measurement.-- There is a choice to measure initially the non-controlling interests in asubsidiary either at their acquisition-date fair value or the non-controllingshareholders' proportionate share of the net fair value of the subsidiary'sidentifiable assets and liabilities at the acquisition date. The previous IFRS3 only allows the latter choice.-- If a business combination is accounted for using provisional amounts, themeasurement period that the provisional amounts can be adjusted retrospectivelyis limited to one year from the acquisition date to reflect new informationobtained about facts and circumstances that existed as of the acquisition dateand, if known, would have affected the measurement of the amounts recognised asof that date. The previous IFRS 3 does not have a time limit for adjustments inrelation to contingent considerations and deferred tax assets. Subsequentadjustments to contingent considerations and deferred tax assets will adjustgoodwill.
-- 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 forwhich the acquisition date is on or after 1 January 2010 and resulted inchanges in the consolidated amounts reported in the financial statements asfollows: 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 landhas an indefinite economic life, the land element is normally classified as anoperating lease unless title is expected to pass to the lessee by the end ofthe lease term.The adoption of the amendments to IAS 17 has resulted in a change in accountingpolicy for the classification of leasehold land of the Group. Previously,leasehold land was classified as an operating lease and stated at cost lessaccumulated amortisation. In accordance with the amendments, leasehold land isclassified as a finance lease and stated at cost less accumulated depreciationif substantially all risks and rewards of the leasehold land have beentransferred 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 tosubstantially all of the fair value of the land as if it were freehold, theleasehold land of the Group has been classified as a finance lease. Theamendments have been applied retrospectively to unexpired leases at the date ofadoption of the amendments on the basis of information existing at theinception of the leases.Amendments to IAS 17 has been applied retrospectively and resulted in changesin 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 yeteffective. The Group has already commenced an assessment of the impact of thesenew IFRSs but is not yet in a position to state whether these new IFRSs wouldhave 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 YunengGroup for a cash consideration of RMB1,345,000 thousand, of which RMB549,318thousand was paid for acquisition of non-controlling shareholders of twosubsidiaries of the Company held by Yuneng Group. Yuneng Group and itssubsidiaries were engaged in power generation, mining and metallurgy as well asproperty development during the year.The carrying amount and the fair value of the identifiable assets andliabilities of Yuneng Group and its subsidiaries acquired as at its date ofacquisition 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 theCompany held 40% equity interests. On 4 March 2010, the Group further acquired30% of the issued share capital of Datang Deqin for a cash consideration ofRMB613 thousand. Datang Deqin is engaged in hydropower generation constructionduring 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 DatangFuxin for a cash consideration of RMB32,942 thousand. Datang Fuxin is engagedin wind power generation construction during the year.The carrying amount and the fair value of the identifiable assets andliabilities of Datang Fuxin acquired as at its date of acquisition are asfollows: 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 andliabilities of Baoli Company acquired as at its date of acquisition are asfollows: 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 Grouprevenue for the year would have been RMB60,748,663 thousand, and profit for theyear would have been RMB3,835,570 thousand. The proforma information is forillustrative purposes only and is not necessarily an indication of the turnoverand results of operations of the Group that actually would have been achievedhad the acquisition been completed on 1 January 2010, nor is intended to be aprojection 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 informationExecutive 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 Managementreviews the internal reporting of the Group in order to assess performance andallocate resources. Senior Management has determined the operating segmentsbased 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 listedavailable-for-sale investments and gain on disposals of available-for-saleinvestments. Segment assets exclude deferred tax assets and available-for-saleinvestments. Segment liabilities exclude the current tax liabilities anddeferred tax liabilities. Sales between operating segments are marked to marketor contracted close to market price and have been eliminated at consolidationlevel. Unless otherwise noted below, all such financial information in thesegment 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 - 176,866,908liabilities ========== ========== ========== ========== ========== ========== ========== 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 externalcustomers are generated domestically. At 31 December 2010, non-current assets(excluding financial assets and deferred tax assets) amounted to RMB189,360,741thousand (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 ofthe PRC (the "State Council") and document Cai Shui [2001] 202 issued by theState Administration of Taxation of the PRC, certain subsidiaries set up in thewestern area of the PRC and engaged in a business encouraged by the State havebeen granted a tax concession to pay PRC Enterprise Income Tax at apreferential rate of 15% from 2001 to 2010.(ii) As newly set up domestic invested enterprises engaged in power generationin the western area of the PRC, certain subsidiaries are exempted from PRCEnterprise Income Tax during the first and second years of operation and havebeen granted a tax concession to pay PRC Enterprise Income Tax at 50% of thepreferential rate of 15% from the third to fifth year of operation. Thispreferential income tax treatment will expire from 31 December 2010 to 31December 2012.(iii) Pursuant to document Guo Shui Han [2006] 804 issued by the YunnanProvincial Office of the State Administration of Taxation, a subsidiary of theCompany, as a newly set up domestic invested enterprise engaged in powergeneration in the western area of the PRC, started to enjoy the exemption fromPRC Enterprise Income Tax during the first and second years of operation andthe grant of a tax concession to pay PRC Enterprise Income Tax at 50% of thepreferential rate of 15% from the third to fifth year of operation since theyear 2007.(iv) Pursuant to document Cai Shui Zi [2006] 88 issued by the Ministry ofFinance of the PRC (the "MOF"), a subsidiary of the Company, being a high andnew technology industrial development enterprise set up in the high and newtechnology industrial development zone approved by the State Council, and asapproved by Tax Bureau of Beijing Fengtai District, is exempted from PRCEnterprise Income Tax in the first two operating years and then applies 15%being the preferential rate from the third year, counting from the first yearwhen 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 generationin the western area of the PRC approved by the local tax authority, asubsidiary of the Company is exempted from PRC Enterprise Income Tax during thefirst and second years of operation and has been granted a tax concession topay PRC Enterprise Income Tax at 50% of the preferential rate of 15% from thethird to fifth year of operation since the year 2008.(viii) Pursuant to documents Cai Shui [2008] 46 and [2008] 116 issued by theMOF, certain subsidiaries are exempted from PRC Enterprise Income Tax duringthe first three years of operation commencing from the year of assessment inwhich the first sale transaction is reported and have been granted a taxconcession 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 profitderived from investments in new wind power generation projects approved bygovernment investment task forces after 1 January 2008. This preferential taxtreatment will expire after 31 December 2014.8. PROFIT APPROPRIATIONDIVIDENDS 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 thearticles of association of the Company, it is required to appropriate 10% oftheir net profit under PRC GAAP, after offsetting any prior years' losses, tothe 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 ofprofit to the discretionary surplus reserve and its utilisation are made inaccordance with the recommendation of the Board of Directors and is subject toshareholders' approval at their general meeting.The discretionary surplus reserve can be used to offset prior years' losses, ifany, and may be converted into share capital by issuing new shares toshareholders in proportion to their existing shareholding or by increasing thepar value of the shares currently held by them. The discretionary surplusreserve is distributable.
Restricted reserve
Pursuant to relevant regulations and guidance issued by the MOF, certaindeferred housing benefits are charged to equity directly when incurred underPRC GAAP. In order to reflect such undistributable retained earnings in thesefinancial statements prepared under IFRS, a restricted reserve is set up toreduce the balance of retained earnings with an amount equals to the residualbalance of deferred housing benefits, net of tax.Pursuant to relevant PRC regulations, coal mining companies are required to setaside an amount to a fund for future development and work safety which theytransferred certain amounts from retained earnings to restricted reserve. Thefund can then be used for future development and work safety of the coal miningoperations, and is not available for distribution to shareholders. Whenqualifying development expenditure and improvements of safety incurred, anequivalent amount is transferred from restricted reserve to retained earnings.9. EARNINGS PER SHAREBasic earnings per shareThe calculation of basic earnings per share attributable to owners of theCompany is based on the profit for the year attributable to owners of theCompany of RMB2,569,734 thousand (2009, as restated: RMB1,536,554 thousand) andthe 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 powergrid customers and coal purchase customers from the month end after sales andsale 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 specificinvestors by way of non-public offering at a subscription price of RMB6.23 pershare for a total cash consideration of RMB3,301,900 thousand. The premium onthe issues of shares, amounting to RMB2,718,372 thousand, net of share issueexpenses, 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 toFinancial Affairs of Income and Expenditure of China Datang for the Year 2009"dated 31 December 2010 issued by National Audit Office of the PRC, impairmentlosses on property, plant and equipment, allowance for inventories anddepreciation of property, plant and equipment of the Company for the year ended31 December 2009 were understated by RMB80,473 thousand, RMB14,667 thousand andRMB4,408 thousand respectively mainly resulting from closure of certain powergenerating units and their spare parts or delay in transferring certainconstruction in progress to property, plant and equipment (collectivelyreferred to as the "Prior Year Errors"). The Group has made retrospectiveadjustments of the comparative figures for the year ended 31 December 2010 tocorrect the Prior Year Errors.After retrospective adjustments, operating costs of the Group for the yearended 31 December 2009 increased by RMB99,548 thousand while income tax expenseand profit for the year of the Group for the year ended 31 December 2009decreased by RMB23,785 thousand and RMB75,763 thousand respectively; anddeferred tax assets of the Group at 1 January 2010 increased by RMB23,785thousand while inventories, property, plant and equipment, statutory surplusreserve and retained earnings of the Group at 1 January 2010 decreased byRMB14,667 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 DatangInternational Power Generation Co., Ltd." (Zheng Jian Xu Ke [2009] No.654) fromthe China Securities Regulatory Commission in July 2009 whereby the Company waspermitted to issue corporate bonds not exceeding RMB6 billion, the Companyissued first tranche of the corporate bonds amounting to RMB3 billion on 19August 2009.In view of the status of the capital market and the capital needs of theCompany, the Company intended to complete the issue of the remaining corporatebonds in the amount of RMB3 billion within the valid period (i.e. before 21July 2011) of the authorised document. Up to the date of approval of thesefinancial statements for issue, the Company is actively planning the issue of2011 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 startedwork before 31 December 1998 were directly deducted from the retained earningsand statutory public welfare fund after approval by the general meeting of theCompany 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 areincluded in respective product cost or current period profit or loss andrecorded in a specific reserve accordingly. When such future development andwork safety expenses are applied and related to revenue expenditures, specificreserve is directly offset when expenses incurred. When capital expendituresare incurred, they are included in construction in progress and transferred tofixed assets when the related assets reach the expected use condition. They arethen offset against specific reserve based on the amount included in fixedassets 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 fundfor future development and work safety through transferring from retainedearnings to restricted reserve. When qualifying revenue expenditures areincurred, such expenses are recorded in the profit or loss as incurred. Whencapital expenditures are incurred, an amount is transferred to property, plantand equipment and is depreciated in accordance with the depreciation policy ofthe Group. Internal equity items transfers take place based on the actualapplication amount of future development and work safety expenses whereasrestricted 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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