Interim Report 2008

RNS Number : 1036D

Datang Intl Power Generation Co Ld

10 September 2008

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Diversifying To Enhance Power

Datang Power is committed to its diversification development strategy. Its generation structure has evolved from a single-mode thermal generation into a strategically balanced deployment of thermal power, hydropower, wind power and nuclear power. Its business structure has also extended from a pure power generation operation to a chain of upstream and downstream businesses related to power generation, forming a structure of integrated 'coal-power-railway' operation.

Datang Power firmly believes that diversification on the one hand leverages the complementary advantages of various resources, thereby facilitating a sustainable development of the Company; and on the other hand allows the Company to take full advantage of the opportunities presented by the State's promotion of renewable energy development. As such, Datang Power has gained all the competitive advantages and has much enhanced its power among its peers.

CONTENTS

Results of the Company 2

Management Discussion and Analysis 3

Share Capital and Dividends 9

Significant Events 11

Purchase, Sale and Redemption of the Company’s Listed Securities 12

Compliance with the Code on Corporate Governance Practices 13

Compliance with the Model Code 14

Audit Committee 15

Condensed Consolidated Interim Balance Sheet (Unaudited) 16

Condensed Consolidated Interim Income Statement (Unaudited) 17

Condensed Consolidated Interim Statement of Changes in Equity (Unaudited) 18

Condensed Consolidated Interim Cash Flow Statement (Unaudited) 20

Notes to the Condensed Consolidated Interim Financial Information (Unaudited) 21

results OF THE Company

FINANCIAL HIGHLIGHTS

• Consolidated operating revenue amounted to approximately RMB17,652 million, representing an increase of 14.14% over the first half of 2007.

• Consolidated net profit attributable to equity holders of the Company amounted to approximately RMB406 million, representing a decrease of 77.52% over the first half of 2007.

• Basic earnings per share attributable to equity holders of the Company amounted to approximately RMB0.03, representing a decrease of approximately RMB0.13 per share over the first half of 2007.

The board of directors (the 'Board') of Datang International Power Generation Co., Ltd. (the 'Company') hereby announces the unaudited consolidated operating results of the Company, its subsidiaries and jointly-controlled entities (the 'Company and its Subsidiaries') prepared in accordance with the International Financial Reporting Standards ('IFRS') for the six months ended 30 June 2008 (the 'Period'), together with the unaudited consolidated operating results of the first half of 2007 (the 'Corresponding Period Last Year') for comparison. Such operating results have been reviewed and confirmed by the Company's audit committee (the 'Audit Committee').

Consolidated operating revenue of the Company and its Subsidiaries for the Period was approximately RMB17,652 million, representing an increase of approximately 14.14% as compared to the Corresponding Period Last Year. Consolidated net profit attributable to equity holders of the Company was approximately RMB406 million, representing a decrease of approximately 77.52% as compared to the Corresponding Period Last Year. Basic earnings per share attributable to equity holders of the Company for the Period amounted to approximately RMB0.03, representing a decrease of approximately RMB0.13 per share as compared to the Corresponding Period Last Year.

The Board does not recommend any payment of interim dividend for 2008.

Please refer to the unaudited condensed consolidated interim financial information set out in the Appendix for details of the consolidated operating results of the Company and its Subsidiaries.

MANAGEMENT DISCUSSION AND ANALYSIS

The Company is one of the largest independent power companies in the People's Republic of China (the 'PRC'), which is primarily engaged in power generation businesses with its main focus on coal-fired power generation. As at 30 June 2008, the Company managed a total installed capacity of 22,896.7MW. The power generated by the Company and its Subsidiaries is primarily distributed in the Northern China Power Grid, the Gansu Power Grid, the Zhejiang Power Grid, the Yunnan Power Grid, the Fujian Power Grid, the Guangdong Power Grid, the Chongqing Power Grid and the Jiangxi Power Grid.

During the Period, the PRC's economy maintained steadily rapid growth, with a growth rate of the gross domestic product ('GDP') of 10.4%, down 1.8 percentage-points over the Corresponding Period Last Year. Power consumption continued to rise but at a slowing pace. Newly installed generation units increased but utilisation hours of power generation facilities were lower than that in the Corresponding Period Last Year. The imbalance in demand and supply of thermal coal was further aggravated by other negative factors including the domestic snowstorm, earthquake and suspension and safety rectifications of small coal mines. Thermal coal prices continued to surge to high levels with a marked deterioration in thermal coal quality, which severely undermined the profitability of power generation companies.

(A) Business Review

During the Period, the Company and its Subsidiaries were confronted with unprecedented challenges in its operation and development under a grim operating environment. Facing such enormous operating pressure, the Company and its Subsidiaries took initiatives in planning budgets, rigorously enhancing production and operation, and stringently controlling costs and expenses, with a view to conscientiously mitigating the impact of various factors that depressed profits and ensuring steady, safe and orderly production and operation management of the Company, thereby maintaining profitability for the Company.

1. Maintained stable growth in power production

During the Period, total power generation of the Company and its Subsidiaries amounted to 62.2529 billion kWh, representing an increase of 11.08% when compared to the Corresponding Period Last Year. Total on-grid power generation amounted to 58.5987 billion kWh, representing an increase of 10.96% over the Corresponding Period Last Year.

The increases in total power generation and on-grid power generation were mainly attributable to an increase in capacity of operational generating units of the Company and its Subsidiaries as well as the safe and stable operation of the generating units. (1) Compared to the Corresponding Period Last Year, the Company and its Subsidiaries' newly installed capacity increased by 3,816.7MW. Given the shutdown of a 200MW generating unit at Xia Hua Yuan Power Plant and the shutdown of a 150MW generating unit at Hebei Datang International Tangshan Thermal Power Company Limited ('Tangshan Thermal Power Company'), the Company and its Subsidiaries had a net capacity increase of 3,466.7MW. (2) During the Period, no casualties or material damages to the above-mentioned production facilities occurred to the Company and its Subsidiaries during the course of power production. The equivalent availability factor of operational generating units stood at a relatively high level of 93.25%.

Details of power generation of the Company and its Subsidiaries during the Period were as follows:

(Unit: billion kWh)

Power

Generation

for the first half Growth

Power Plant/Company Name of 2008 (%)

1. Gao Jing Thermal Power Plant 1.7534 -4.45

2. Dou He Power Plant 5.4406 0.92

3. Xia Hua Yuan Power Plant 0.7091 -45.95

4. Zhang Jia Kou Power Plant 7.5100 -1.89

5. Tianjin Datang International Panshan Power Generation

Company Limited (“Panshan Power Company”) 3.4899 3.53

6. Inner Mongolia Datang International Tuoketuo Power

Generation Company Limited (“Tuoketuo Power Company”) 9.8743 0.23

7. Shanxi Datang International Yungang Thermal Power

Company Limited (“Yungang Thermal Power Company”) 1.4713 2.24

8. Tangshan Thermal Power Company 2.3143 14.97

9. Shanxi Datang International Shentou Power Generation

Company Limited (“Shentou Power Company”) 3.1894 22.81

10. Gansu Datang International Liancheng Power Generation Company Limited

(“Liancheng Power Company”) 2.1554 5.50

11. Hebei Datang International Wangtan Power Generation

Company Limited (“Wangtan Power Company”) 3.7226 5.13

12. Zhejiang Datang Wushashan

Power Generation Company Limited (“Wushashan Power Company”) 6.3198 -1.24

13. Guangdong Datang International Chaozhou

Power Generation Company Limited (“Chaozhou Power Company”) 3.4878 22.08

14. Yunnan Datang International Honghe Power Generation

Company Limited (“Honghe Power Company”) 2.0877 -5.92

15. Fujian Datang International Ningde Power Generation

Company Limited (“Ningde Power Company”) 3.5054 9.34

16. Shanxi Datang International Yuncheng Power Generation Company Limited

(“Yuncheng Power Company”) 2.2051 –

17. Jiangxi Datang International Xinyu Power Generation Company Limited

(“Xinyu Power Company”) 0.8735 –

18. Inner Mongolia Datang International Hohhot Thermal

Power Generation Company Limited (“Hohhot Thermal Power Company”) 0.2092 –

19. Hebei Datang International Huaze Hydropower Development Company

Limited (“Huaze Hydropower Company”) 0.0088 -16.19

20. Yunnan Datang International Nalan Hydropower Development Company

Limited (“Nalan Hydropower Company”) 0.1726 -9.16

21. Yunnan Datang International Lixianjiang Hydropower

Development Company Limited (“Lixianjiang Hydropower Company”) 0.4571 311.80

22. Inner Mongolia Datang International Duolun Hydropower

Multiple Development Company Limited

(“Duolun Hydropower Company”) 0.003216 -21.04

23. Chongqing Datang International Pengshui

Hydropower Development Company Limited

(“Pengshui Hydropower Company”) 1.0178 –

24. Qinghai Zhenxing-Aiyisi Power Company Limited

(“Qinghai Zhenxing Power Company”) 0.2258 –

25. Inner Mongolia Datang International Zhuozi Windpower Company Limited

(“Zhuozi Windpower Company”) 0.0488 –

2. Achieved remarkable results in energy savings and consumption reduction

During the Period, coal consumption of the Company was 332.47g/kWh, representing a decrease of approximately 4.5g/kWh over the Corresponding Period Last Year. The consolidated electricity consumption rate was 5.9%. The Company completed the desulphurisation upgrade projects for a capacity of 3,900MW in total for its 15 generating units, thus enabling the installed capacity with desulphurisation facilities to account for 97.10% of the coal-fired generating units of the Company and its Subsidiaries, or 100% of the coal-fired generation plants in the Beijing-Tianjin-Tangshan region.

3. Overcame various unfavourable factors, striving to realise profits for the Company

During the Period, the Company witnessed a sharp decline in profitability due to the combined effects of the skyrocketing fuel prices and other factors. To cope with the enormous operating pressure, the Company kept abreast of the trends of the market while taking initiatives in planning budgets, rigorously enhancing production and operation, and stringently controlling costs and expenses, with a view to conscientiously mitigating the impact of various factors such as surging fuel prices and rising financial costs that depressed profits, thereby maintaining profitability for the Company. During the Period, the Company and its Subsidiaries achieved a net profit attributable to equity holders of the Company of RMB406 million, representing a decrease of 77.52% from the Corresponding Period Last Year.

4. Kept overall construction of projects under control and achieved a breakthrough in preliminary works

During the Period, the Company continued to implement its development strategy with good progress in its preliminary projects, including coal-fired power, hydropower, nuclear power and wind power. Six projects were approved by the State's relevant authorities, including:

Coal-fired power projects: Two 600MW generating units at Phase 4 of the Tuoketuo Power Generation Project; two 300MW generating units at the Jinzhou Thermal Power Project. (In addition, two 300MW generating units at the Zhang Jia Kou Thermal Power Project and two 300MW generating units at Phase 2 of the Yungang Thermal Power Project were approved in July of 2008).

Nuclear power project: Four 1,000MW generating units at Phase 1 of the Ningde Nuclear Power Project.

Wind power projects: Phase 2 of the Shanxi Zuoyun Wind Power Project with a generating capacity of 49.5MW; Phase 1 of the Hebei Fengning Luotuogou Wind Power Project with a generating capacity of 48MW; Shandong Dongying Wind Power Project with a generating capacity of 49.5MW. (In addition, Phase 1 of the Inner Mongolia Hongmu Wing Power Project with a generating capacity of 48MW was approved in July of 2008).

Meanwhile, the power-related upstream and downstream projects of the Company such as coal mining, coal chemical and railway construction progressed at a steady pace as scheduled.

During the Period, the staff of the Company and its Subsidiaries overcame various challenges such as frequent natural disasters and difficulties in securing delivery of generation facilities and in carrying out construction works. They worked diligently, thereby keeping the Company's schedule of construction-in-progress largely under control. During the Period, a total of 2,962MW generating units commenced operation successfully.

(B) Major Financial Indicators and Analysis

During the Period, the Company and its Subsidiaries achieved an operating revenue of RMB17,652 million, representing an increase of 14.14% over the Corresponding Period Last Year. Net profit attributable to the equity holders of the Company was RMB406 million, representing a decrease of 77.52% over the Corresponding Period Last Year. Basic earnings per share was approximately RMB0.03, representing a decrease of RMB0.13 per share over the Corresponding Period Last Year.

1. Operating revenue

The revenues from principal activities of the Company and its Subsidiaries mainly comprise revenues from electricity sales and heat sales.

During the Period, the Company and its Subsidiaries achieved a consolidated operating revenue of RMB17,652 million, representing an increase of 14.14% over the Corresponding Period Last Year. Of the operating revenue of RMB17,652 million, revenue from electricity sales increased by RMB1,611 million.

2. Operating costs

During the Period, total operating costs of the Company and its Subsidiaries amounted to RMB15,675 million, representing an increase of approximately RMB4,130 million or approximately 35.78% over the Corresponding Period Last Year.

During the Period, fuel costs accounted for 63.33% of operating costs of the Company and its subsidiaries. As a result of the increase in the commencement of operation of newly installed generating units and the increase in power generation of the Company and its Subsidiaries, as well as surging fuel prices, particularly, fuel costs rose by approximately RMB2,748 million or approximately 38.28% over the Corresponding Period Last Year, exceeding the growth rate of operating revenue.

3. Net financing costs

During the Period, the financing costs of the Company and its Subsidiaries amounted to RMB1,613 million, representing an increase of approximately RMB640 million or 65.78% over the Corresponding Period Last Year. The increase was mainly due to the termination of capitalisation of interests for newly installed generating units and the rise in interest expenses caused by an increase in lending rates during the Period.

4. Profit before tax and net profit

During the Period, the Company and its Subsidiaries reported a total consolidated profit before tax amounting to RMB525 million, representing a decrease of 82.42% over the Corresponding Period Last Year. Consolidated net profit attributable to shareholders of the Company and its Subsidiaries amounted to approximately RMB406 million, representing a decrease of 77.52% over the Corresponding Period Last Year. The decrease in profit of the Company and its Subsidiaries was mainly attributable to a sharp increase in fuel costs.

5. Financial position

As at 30 June 2008, total consolidated assets of the Company and its Subsidiaries amounted to approximately RMB144,182 million, representing an increase of approximately RMB22,408 million as compared to the end of 2007. Total liabilities of the Company and its Subsidiaries amounted to approximately RMB112,478 million, representing an increase of approximately RMB24,946 million over the end of 2007. Minority interests amounted to approximately RMB4,798 million, representing an increase of approximately RMB155 million over the end of 2007. Total equity amounted to approximately RMB31,703 million, representing a decrease of approximately RMB2,538 million over the end of 2007. The increase in total assets was primarily caused by the implementation of the expansion strategy by the Company and its Subsidiaries, which led to a corresponding increase in investments in construction-in-progress.

6. Liquidity

As at 30 June 2008, the asset-to-liability ratio for the Company and its Subsidiaries was approximately 78.01%. The net debt-to-equity ratio (i.e. (loans + convertible bonds + short-term commercial papers - cash and cash equivalents - short-term bank deposits with a maturity of over 3 months)/total equity) was approximately 268.30%.

As at 30 June 2008, total cash and cash equivalents and bank deposits with a maturity of over 3 months of the Company and its Subsidiaries amounted to approximately RMB9,257 million, of which the deposits equivalent to approximately RMB104 million were in foreign currencies. The Company and its Subsidiaries had no entrusted deposits or overdue fixed deposits during the Period.

As at 30 June 2008, short-term loans of the Company and its Subsidiaries amounted to approximately RMB34,946 million, bearing annual interest rates ranging from 3.08% to 9.71%. Long-term loans (excluding those due within 1 year) amounted to approximately RMB55,846 million and long-term loans due within 1 year amounted to approximately RMB3,441 million, at annual interest rates ranging from 3.60% to 7.83%, of which a loan equivalent to approximately RMB1,881 million was denominated in US dollar. The Company and its Subsidiaries paid close attention to foreign exchange market fluctuations and cautiously assessed foreign currency risks on a regular basis.

As at 30 June 2008, North China Grid Company Limited ('NCG', originally North China Power (Group) Corp. and its subsidiaries) and some minority shareholders of the Company's subsidiaries provided guarantees for the loans of the Company and its Subsidiaries amounting to approximately RMB5,059 million. According to the Transfer Agreement entered into between the NCG and China Datang Corporation, China Datang Corporation shall undertake the commitment for NCG to provide guarantee for the loans. The Company had not provided any guarantee in whatever forms for any other company apart from its subsidiaries, jointly controlled entities and associates.

In 2008, the Company has a daunting task on maintaining stable and healthy development under a mixed condition with opportunities and challenges. Recently, the State raised the tariffs twice and made a temporary intervention in thermal coal prices, thereby effectively easing the pressure on the operations of the Company and its Subsidiaries. However, the continuously tight supply and the significant increase in thermal coal prices still affected the production and profitability of the Company and its Subsidiaries considerably. In addition, the financing of the Company and its Subsidiaries will face a challenging situation due to the State's tightening monetary policies as part of the macro-economic control measures. Furthermore, the drop in utilisation hours of generating units has further imposed pressure on the operations of the Company and its Subsidiaries.

Facing a difficult operating environment, the Company and its Subsidiaries will actively expand its room for development and strengthen its marketing and sales efforts, by fully utilising its advantages in resources, scale, geographical distribution and costs. The Company plans to realise power generation of 140 billion kWh, while exercising stringent cost controls and striving to contain the increase in unit fuel cost increase, with a view to enhancing the profitability of the Company.

In the second half of 2008, the Company will focus on the following tasks:

1. Strengthening production safety and management and ensuring stable operation of its generating units;

2. Implementing the power generation increment plan supported by a guaranteed fuel supply: The Company will increase revenues and reduce expenses at the same time with a view to boosting economic efficiency;

3. Fulfilling its social obligation of environmental protection by achieving its objectives of energy-saving and consumption reduction, as well as ensuring that the Company and its Subsidiaries achieve a 100% rate of desulphurisation facility installation for all coal-fired units, with the desulphurisation facility operation rate and desulphurisation efficiency both reaching 95%;

4. Promoting preliminary works in an orderly manner: The Company will have a proper control in different phases of its construction-in-progress to commence operation safely and successfully, by adhering to the principle of ensuring synchronised advancement in safety, quality, progress and production preparation;

5. Continuing the implementation of the Company's diversified development strategy, by actively pursuing the expansion of the Company in projects such as coal-fired power, hydropower, wind power and nuclear power as well as pursuing the development of power-related upstream and downstream projects such as coal mining, coal chemical and railway, so as to ensure the Company's sustainable development;

6. Actively expanding financing channels to secure fundings for the Company's development in scale.

SHARE CAPITAL AND DIVIDENDS

1. Share capital

As at 30 June 2008, the total share capital of the Company amounted to 11,743,355,283 shares, divided into 11,743,355,283 shares with a nominal value of RMB1.00 each.

2. Shareholding of substantial shareholders

So far as the directors of the Company are aware, as at 30 June 2008, the following persons hold the interests or short positions in the shares or underlying shares of the Company which are required to be disclosed to the Company under section 336 of the Securities and Futures Ordinance (the 'SFO') (Chapter 571 of the Law of Hong Kong):

Approximate Approximate Approximate

percentage percentage percentage

to total issued to total issued to total issued

Number of share capital of A Shares of H Shares of

Name of shareholder Class of shares shares held the Company the Company the Company

(%) (%) (%)

China Datang Corporation A Shares 3,959,241,160 33.71 46.78 –

Beijing Energy Investment

(Group) Company Limited A Shares 1,343,584,800 11.44 15.87 –

Hebei Construction Investment

Company A Shares 1,303,878,100 11.10 15.40 –

Tianjin Jinneng Investment

Company A Shares 1,212,012,600 10.32 14.32 –

JPMorgan Chase & Co. H Shares 385,052,344(L) 3.28(L) – 11.74(L)

43,756,362(S) 0.37(S) 1.33(S)

255,897,360(P) 2.18(P) 7.80(P)

Morgan Stanley H Shares 318,280,940(L) 2.71(L) – 9.71(L)

145,499,195(S) 1.24(S) 4.44(S)

T.Rowe Price Associates, Inc.

and its affiliates H Shares 191,046,000(L) 1.63(L) – 5.83(L)

UBS AG H Shares 170,678,364(L) 1.45(L) – 5.21(L)

98,696,789(S) 0.84(S) 3.01(S)

(L)means long position (S) means short position(P) means lending pool

3. Dividends

The distribution proposal on the payment of dividends for the year ended 2007 in cash was considered and approved at the 2007 annual general meeting of the Company held on 30 May 2008. The above distribution arrangement was completed before the date of this announcement.

The Board does not recommend the payment of any interim dividend for 2008.

4. Shareholding of the directors and supervisors

As at 30 June 2008, Mr. Fang Qinghai, a director of the Company, was interested in 24,000 A Shares of the Company. Save as disclosed above, none of the directors, supervisors and chief executives of the Company nor their associates had any interest and short positions in the shares, underlying shares and debentures of the Company or any of its associated corporation (within the meaning of SFO) that were required to be notified to the Company and The Stock Exchange of Hong Kong Limited (the 'Hong Kong Stock Exchange') under the provisions of Divisions 7 and 8 of Part XV of the SFO, or required to be recorded in the register mentioned in the SFO pursuant to section 352 or otherwise required to be notified to the Company and the Hong Kong Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers (the 'Model Code') in Appendix 10 of the Rules Governing the Listing of Securities on the Hong Kong Stock Exchange (the 'Listing Rules').

SIGNIFICANT EVENTS

1. Pursuant to the resolutions of the 2007 annual general meeting held on 30 May 2008, it was resolved that:

(1) Mr. Cao Jingshan was appointed as an executive director of the Company, with term of office from 30 May 2008 to 30 June 2010; and that Mr. Zhang Yi ceased to be an executive director of the Company.

(2) Mr. Li Hengyuan was appointed as an independent non-executive director of the Company, with term of office from 30 May 2008 to 30 June 2010.

(3) Mr. Zhang Xiaoxu was appointed as a supervisor of the Company, with term of office from 30 May 2008 to 30 June 2010; Mr. Zhang Wantuo ceased to be a supervisor of the Company.

2. Pursuant to the resolutions passed at the seventh meeting of the sixth session of the Board on 14 April 2008, Mr. Cao Jingshan was appointed as the President of the Company, with term of office from 14 April 2008, while Mr. Zhang Yi ceased to be the President of the Company.

PURCHASE, SALE AND REDEMPTION OF THE COMPANY'S LISTED SECURITIES

During the Period, the Company and its Subsidiaries have not purchased, sold or redeemed any of its listed securities.

COMPLIANCE WITH THE CODE ON CORPORATE GOVERNANCE PRACTICES

To the knowledge of the Board, the Company has complied with the code provisions under the Code on Corporate Governance Practices as set out in Appendix 14 of the Listing Rules during the Period.

COMPLIANCE WITH THE MODEL CODE

Upon specific enquiries made to all the directors of the Company and to the information of the Board, the Board confirmed that all directors of the Company have complied with the provisions under the Model Code as set out in Appendix 10 of the Listing Rules during the Period.

AUDIT COMMITTEE

The Audit Committee has reviewed the accounting principles and methods adopted by the Company and its Subsidiaries with the management of the Company. It has also discussed matters regarding internal controls and the financial statements, including the review of the unaudited condensed consolidated interim financial information for the six months ended 30 June 2008.

The Audit Committee considers that the financial information of the Company and its Subsidiaries for the first half year of 2008 has complied with the applicable accounting standards, and that the Company has made appropriate disclosures thereof.

By Order of the Board

Zhai Ruoyu

Chairman

Beijing, the PRC, 26 August 2008

CONDENSED CONSOLIDATED INTERIM BALANCE SHEET (UNAUDITED)

AS AT 30 JUNE 2008

(Amounts expressed in thousands of Renminbi ('Rmb'))

Note 30 June 2008 31 December 2007

ASSETS

Non-current assets

Property, plant and equipment 3 117,862,977 102,585,084

Investments in associates 1,231,691 1,341,906

Available-for-sale investments 4 2,724,742 4,733,764

Land use right 812,446 813,935

Deferred housing benefits 227,259 260,945

Intangible assets 5 2,230,567 202,190

Other long-term assets 2,156 170,000

Deferred income tax assets 378,715 156,792

125,470,553 110,264,616

Current assets

Short-term entrusted loans to subsidiaries and associates 50,086 47,751

Inventories 1,430,257 1,051,181

Prepayments and other receivables 3,148,923 1,018,112

Accounts receivable 6 4,767,653 4,945,475

Notes receivable 56,621 747,917

Short-term bank deposits over three months 7 104,610 49,500

Cash and cash equivalents 7 9,152,828 3,648,823

18,710,978 11,508,759

Total assets 144,181,531 121,773,375

EQUITY AND LIABILITIES

Capital and reserves attributable to the

Company’s equity holders

Share capital 11,743,355 11,734,083

Reserves 15,161,958 17,863,420

26,905,313 29,597,503

Minority interests 4,797,928 4,643,359

Total equity 31,703,241 34,240,862

Non-current liabilities

Long-term loans 8 55,846,384 44,272,875

Deferred income 384,940 387,056

Deferred income tax liabilities 970,007 1,141,953

Other long term liabilities 9 3,957,917 98,667

61,159,248 45,900,551

Current liabilities

Accounts payable and accrued liabilities 10 12,016,862 10,743,690

Taxes payable 247,092 942,917

Dividend payable 449,498 40,757

Short-term loans 8 34,946,449 22,608,530

Short-term bonds – 3,000,000

Current portion of long-term liabilities 11 3,659,141 4,296,068

51,319,042 41,631,962

Total liabilities 112,478,290 87,532,513

Total equity and liabilities 144,181,531 121,773,375

The accompanying notes are an integral part of this unaudited condensed consolidated interim financial information. CONDENSED CONSOLIDATED INTERIM INCOME STATEMENT (UNAUDITED)

For The Six Months Ended 30 June 2008

(Amounts expressed in thousands of Rmb, except per share data)

Six months ended 30 June

Note 2008 2007

Operating revenue 12 17,651,951 15,465,022

Operating costs 18(b) (15,674,724 ) (11,544,567 )

Operating profit 1,977,227 3,920,455

Share of profit of associates 128,010 6,905

Interest income 32,645 31,121

Finance costs 18(b) (1,613,055 ) (973,005 )

Profit before taxation 524,827 2,985,476

Taxation 13 28,075 (732,806 )

Profit for the period 552,902 2,252,670

Attributable to:

－ Equity holders of the Company 406,225 1,807,257

－ Minority interests 146,677 445,413

552,902 2,252,670

Earnings per share for profit attributable to the equity

holders of the Company during the period

－ basic (Rmb) 14 0.03 0.16

－ diluted (Rmb) 14 0.03 0.16

The accompanying notes are an integral part of this unaudited condensed consolidated interim financial information.

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

For The Six Months Ended 30 June 2008

(Amounts expressed in thousands of Rmb)

	Attributable to equity holders of the Company
		Reserves
				Statutory	Discretionary			Currency
		Share	Capital	surplus	surplus	Restricted		translation		Other		Retained		Total		Minority		Total
	Note	capital	reserve	reserve	reserve	reserve		differences		reserve		earnings		reserves		interests		equity

Balance as at
01-Jan-07		5,662,849	6,432,245	2,292,203	5,741,287	181,244		422		840,304		2,745,497		18,233,202		3,304,667		27,200,718

Fair value gains, net of tax:
available-for-sale
financial assets		-	-	-	-	-		-		912,354		-		912,354		-		912,354

Profit for the period		-	-	-	-	-		-		-		1,807,257		1,807,257		445,413		2,252,670

Currency translation
differences		-	-	-	-	-		(2,426	)	-		-		(2,426	)	-		(2,426)

Total recognised income
and expense for
the period		-	-	-	-	-		(2,426	)	912,354		1,807,257		2,717,185		445,413		3,162,598

Conversion of convertible
bonds		170,230	796,394	-	-	-		-		(112,673	)	-		683,721		-		853,951

Capital injection from
minority shareholders
of subsidiaries		-	-	-	-	-		-		-		-		-		1,006,010		1,006,010

Dividends declared		-	-	-	-	-		-		-		(1,348,714	)	(1,348,714	)	(176,771	)	(1,525,485	)

Release of restricted reserve		-	-	-	-	(34,162	)	-		-		34,162		-		-		-

Transfer to discretionary
surplus reserve		-	-	-	1,020,774	-		-		-		(1,020,774	)	-		-		-

Balance as at
30-Jun-07		5,833,079	7,228,639	2,292,203	6,762,061	147,082		(2,004	)	1,639,985		2,217,428		20,285,394		4,579,319		30,697,792

Attributable to equity holders of the Company
		Reserves
				Statutory	Discretionary			Currency
		Share	Capital	surplus	surplus	Restricted		translation		Other		Retained		Total		Minority		Total
	Note	capital	reserve	reserve	reserve	reserve		differences		reserve		earnings		reserves		interests		equity

Balance as at
1 January 2008		11,734,083	1,519,014	2,602,239	6,762,061	124,625		(2,844	)	3,329,500		3,528,825		17,863,420		4,643,359		34,240,862

Fair value gains, net
of tax available-for-
sale financial assets		-	-	-	-	-		-		(1,742,229	)	-		(1,742,229	)	-		(1,742,229	)

Profit for the period		-	-	-	-	-		-		-		406,225		406,225		146,677		552,902

Currency translation
differences		-	-	-	-	-		25,828		-		-		25,828		-		25,828

Total recognised income
and expense
for the period		-	-	-	-	-		25,828		(1,742,229	)	406,225		(1,310,176	)	146,677		(1,163,499	)

Government grant
received in subsidiary		-	-	-	-	-		-		10,880		-		10,880		-		10,880

Impact of acquisition
of minority interests		-	-	-	-	-		-		-		(5,552	)	(5,552	)	(57,038	)	(62,590	)

Acquisition of subsidiaries		-	-	-	-	-		-		-		-		-		781,143		781,143

Capital injection from
minority shareholders
of subsidiaries		-	-	-	-	-		-		-		-		-		96,520		96,520

Conversion of
convertible bonds	11	9,272	14,979	-	-	-		-		(3,011	)	-		11,968		-		21,240

Dividends declared	15	-	-	-	-	-		-		-		(1,408,582	)	(1,408,582	)	(812,733	)	(2,221,315	)

Release of restricted reserve	15	-	-	-	-	(20,553	)	-		-		20,553		-		-		-

Profit appropriations	15	-	-	-	38,631	-		-		-		(38,631	)	-		-		-

Balance as at 30 June 2008		11,743,355	1,533,993	2,602,239	6,800,692	104,072		22,984		1,595,140		2,502,838		15,161,958		4,797,928		31,703,241

The accompanying notes are an integral part of this unaudited condensed consolidated interim financial information.

CONDENSED CONSOLIDATED INTERIM CASH FLOW STATEMENT (UNAUDITED)

For The Six Months Ended 30 June 2008

(Amounts expressed in thousands of Rmb)

Six months ended 30 June

Note 2008 2007

Net cash provided by operating activities 3,520,144 6,817,751

Net cash used in investing activities 18 (16,062,936 ) (9,380,255 )

Net cash provided by financing activities 18 18,052,841 3,727,161

Net increase in cash and cash equivalents 5,510,049 1,164,657

Cash and cash equivalents, beginning of period 3,648,823 4,451,284

Exchange losses on cash and cash equivalents (6,044 ) (2,504 )

Cash and cash equivalents, end of period 9,152,828 5,613,437

The accompanying notes are an integral part of this unaudited condensed consolidated interim financial information.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION (UNAUDITED)

For The Six Months Ended 30 June 2008

(Amounts expressed in thousands of Rmb unless otherwise stated)

1. Company organisation and principal activities

Datang International Power Generation Co., Ltd. (the 'Company') was incorporated in Beijing, the People's Republic of China (the 'PRC'), on 13 December 1994 as a joint stock limited company. The Company listed its H Shares on the Stock Exchange of Hong Kong Limited and the London Stock Exchange Limited on 21 March 1997 and was registered as a sino-foreign joint stock limited company on 13 May 1998. On 20 December 2006, the Company listed its A Shares on the Shanghai Stock Exchange.

The principal activity of the Company and its subsidiaries and jointly controlled entities (the 'Company and its Subsidiaries') is power generation and power plant development in the PRC. Substantially all of the businesses of the Company and its Subsidiaries are conducted within one industry segment.

The directors consider that the significant shareholder of the Company is China Datang Corporation ('China Datang'), which is incorporated in the PRC and does not produce financial statements available for public use.

2. Principal accounting policies

The unaudited condensed consolidated interim financial information for the six months ended 30 June 2008 has been prepared in accordance with International Accounting Standard ('IAS') 34 'Interim Financial Reporting' promulgated by the International Accounting Standards Board. The unaudited condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 31 December 2007. The accounting policies adopted are consistent with those of the annual financial statements for the year ended 31 December 2007, as described in those annual financial statements.

A significant portion of the Company and its Subsidiaries' funding requirements for capital expenditure was satisfied by short-term borrowings. Consequently, as at 30 June 2008, the Company and its Subsidiaries had a negative working capital balance of approximately Rmb32,608 million (31 December 2007 - Rmb30,123 million). The Company and its Subsidiaries had undrawn borrowing facilities, subject to certain conditions, amounting to approximately Rmb51,402 million (31 December 2007 - Rmb55,069 million) and may refinance and/or restructure certain short-term loans into long-term loans and will also consider alternative sources of financing, where applicable. The directors of the Company are of the opinion that the Company and its Subsidiaries will be able to meet its liabilities as and when they fall due within the next twelve months and have prepared these financial statements on a going concern basis.

There are no standards, interpretations or amendments to published standard or interpretations that are mandatory for the first time for the financial year beginning 1 January 2008 and are relevant to the operations of the Company and its Subsidiaries.

The new standards, interpretations or amendments to published standards or interpretations that have been issued but are not effective for the financial year beginning 1 January 2008 have not been early adopted by the Company and its Subsidiaries.

3. Property, plant and equipment, net

30 June 31 December

2008 2007

Beginning of the period / year 102,585,084 77,505,966

Acquisition 2,208,071 2,081,320

Additions 16,575,300 28,094,871

Finance lease 4,138,949 –

Sold for lease-back (4,040,474 ) –

Disposals (653,910 ) (136,682 )

Depreciation (2,950,043 ) (4,960,391 )

End of the period / year 117,862,977 102,585,084

Equipment includes the following amounts where the Company and its Subsidiaries are the lessees under finance leases:

30 June

2008

Cost – capitalised finance leases 4,138,949

Accumulated depreciation (66,740 )

Net book value 4,072,209

4. Available-for-sale investments

Six months ended

30 June 2008

Beginning of the period 4,733,764

Additional investments 1,800

Change in fair value* (2,010,822 )

End of the period 2,724,742

* Change in fair value of available-for-sale investments mainly represents the decrease of the share price of Daqin Railway Company Limited's A shares, which are listed in the Shanghai Stock Exchange.

5. Intangible assets

Coal mine

exploration

rights and Resource Computer

Goodwill * mining rights ** use rights software Total

Six months ended

30 June 2008

Beginning of period 148,707 – 24,595 28,888 202,190

Additions 498,263 1,527,731 – 8,907 2,034,901

Transfer out – – (210 ) – (210 )

Amortisation for the period – – (1,832 ) (4,482 ) (6,314 )

End of period 646,970 1,527,731 22,553 33,313 2,230,567

At 30 June 2008

Cost 646,970 1,527,731 30,549 48,208 2,253,458

Accumulated amortisation – – (7,996 ) (14,895 ) (22,891 )

Net book amount 646,970 1,527,731 22,553 33,313 2,230,567

* The additions of goodwill in current period were recognised based on provisional purchase price allocation, which may need to be revised when a full and reliable fair value exercise of each acquisition is completed.

** Coal mine exploration rights and mining rights will be amortised on the units of production method after the coal mines commence operation.

6. Accounts receivable

Accounts receivable of the Company and its Subsidiaries mainly represents the receivables from North China Grid Company Limited ('NCG'), State Grid Corporation of China and other provincial grid companies for tariff revenue. The tariff revenue is settled on a monthly basis according to the payment provisions in the power purchase agreements. These receivables are unsecured and non-interest bearing. As at 30 June 2008 and 31 December 2007, all tariff revenue receivables from the respective grid companies were aged within three months, and no doubtful debts were considered necessary.

As at 30 June 2008, receivables amounting to Rmb 278,000,000 (the book value of which is Rmb 278,000,000, aged within one year, and no doubtful debt provision was considered necessary) are pledged for short-term bank loan amounting to Rmb278,000,000.

Ageing analysis of accounts receivable is as follows:

30 June 31 December

2008 2007

Within 1 year 4,767,653 4,928,268

Between 1 to 2 years – 17,207

4,767,653 4,945,475

7. Cash and cash equivalents

30 June 31 December

2008 2007

Bank deposits 7,319,861 2,989,547

Deposits with China Datang Group Finance

Company Limited (“Datang Finance”) 1,796,970 600,296

Cash on hand 804 838

Other monetary assets 35,193 58,142

Cash and cash equivalent 9,152,828 3,648,823

Short-term bank deposits with original maturity over 3 months 104,610 49,500

9,257,438 3,698,323

8. Loans

As at 30 June 2008, the Company and its Subsidiaries had short-term and long-term loans payable to Datang Finance totalling Rmb1,410,000,000 and Rmb203,500,000 (31 December 2007 - Rmb1,926,500,000 and Rmb203,500,000), respectively.

9. Other long term liabilities

30 June 31 December

2008 2007

Finance lease payables* 3,987,912 –

Others 104,809 98,667

4,092,721 98,667

Less: Amounts due within one year included under current liabilities (134,804 ) –

3,957,917 98,667

* Finance lease payables

Finance lease payables are the present value of the minimum lease payment for the financial lease of fixed assets.

Gross finance lease liabilities - minimum lease payments:

30 June

2008

Within one year 416,241

Between one and two years 701,271

Between two and five years 2,103,814

Over five years 2,367,132

5,588,458

The present value of finance lease liabilities is as follows:

30 June

2008

Within one year 134,804

Between one and two years 430,019

Between two and five years 1,430,531

Over five years 1,992,558

3,987,912

10. Accounts payable and accrued liabilities

2008 2007

Construction costs and deposits payable to contractors 5,110,894 6,350,445

Fuel and material costs payable 5,209,495 2,983,131

Salary and welfare payable 272,990 337,995

Interest rate swap liability 86,621 51,970

Interest payable 237,893 247,128

Assets acquisition payable 131,770 361,184

Others 967,199 411,837

12,016,862 10,743,690

As at 30 June 2008 and 31 December 2007, other than certain deposits for construction which were aged between one to three years, substantially all accounts payable were aged within one year.

As at 30 June 2008, the notional principal amount of the outstanding interest rate swap contract of Inner Mongolia Datang International Tuoketuo Power Generation Company Limited was USD179,825,486 (31 December 2007 -
USD186,955,486), and the fixed rate and floating rate were 5.15% (31 December 2007 - 5.15%) and 4.08% (31 December 2007 - 5.39%) (LIBOR offered by British Bankers' Association on 14 January 2008), respectively.

11. Current portion of long-term liabilities

30 June 31 December

2008 2007

Long-term loans due within one year 3,441,091 4,187,569

Convertible bonds due within one year* 83,246 108,499

Long term liabilities due within one year (Note 9) 134,804 –

3,659,141 4,296,068

* Convertible bonds due within one year

The movement of the liability component of the convertible bonds during the six months ended 30 June 2008 is as follows:

Liability component at beginning of the period 108,499

Convert into ordinary share (21,157 )

Interest expense 2,728

Interest payments (408 )

Exchange rate adjustment (6,416 )

Liability component at end of the period 83,246

Less: Amounts due within one year included under current liabilities (83,246 )

The carrying amount of the liability component as at 30 June 2008 of the convertible bonds approximated its fair value.

Interest expense on the bonds is calculated on the effective yield basis of 5.51% (2007 - 5.51%) per annum by applying the effective interest rate for an equivalent non-convertible bonds to the liability component of the convertible bond after considering the effect of issuance cost.

12. Operating revenue

Six months ended

30 June

2008 2007

Sales of electricity 16,959,162 15,347,761

Heat supply 113,794 78,182

Sales of coal 379,636 –

Transportation service fees 84,990 –

Sales of material 72,378 26,005

Others 41,991 13,074

17,651,951 15,465,022

Pursuant to the Power Purchase Agreements entered into between the Company and its Subsidiaries and the regional or provincial grid companies, the Company and its Subsidiaries sell their entire net generation of electricity to these grid companies at approved tariff rates.

13. Taxation

Six months ended

30 June

2008 2007

Current tax 193,057 794,005

Deferred tax (221,132 ) (61,199 )

(28,075 ) 732,806

Income tax is provided on the basis of the statutory profit for financial reporting purposes, adjusted for income and expense items, which are not assessable or deductible for income tax purposes.

In March 2007, the PRC government promulgated the Corporate Income Tax Law (the 'CIT Law') which is effective from 1 January 2008. The CIT Law imposes a single income tax rate of 25% for both domestic and foreign invested enterprise. Except the subsidiaries subject to tax exemption, the Company and its Subsidiaries applied the tax rate of 25% under the CIT Law from 1 January 2008.

Income tax has been provided on the estimated assessable profit for the period at their prevailing rates of taxation. Certain subsidiaries, being located in specially designated regions, are subject to preferential income tax rates. In addition, certain subsidiaries are exempted from the PRC income tax for two years starting from the first year of operation followed by a 50% exemption of the applicable tax rate for the next three years.

14. Earnings per share

(i) Basic earnings per share

The calculation of basic earnings per share for profit attributable to the equity holders of the Company was based on profit attributable to equity holders of the Company and on the weighted average amount of shares outstanding during the period.

Six months ended

30 June

2008 2007

Profit attributable to equity holders of Company(Rmb ’000) 406,225 1,807,257

Weighted average number of ordinary

shares in issue(shares in thousand) 11,735,810 5,763,261

Impact of bonus issue(shares in thousand) – 5,763,261

Weighted average number of ordinary shares for

basic earnings per share(shares in thousand) 11,735,810 11,526,522

Basic earnings per share for profit attributable to

the equity holders of the Company (Rmb) 0.03 0.16

14. Earnings per share (Continued)

(ii) Diluted earnings per share

The diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The convertible bond is assumed to have been converted into ordinary shares and the net profit is adjusted to eliminate the interest expenses less the tax effect.

Six months ended

30 June

2008 2007

Profit attributable to equity holders of Company (Rmb ‘000) 406,225 1,807,257

Interest expense on convertible debt (net of tax)(Rmb ‘000) 1,762 3,328

Profit used to determine diluted earnings per share(Rmb ‘000) 407,987 1,810,585

Weighted average number of ordinary shares for basic

earnings per share(shares in thousand) 11,735,810 11,526,522

Adjustments for assumed conversion of convertible

bonds (including the impact of share capital expansion*)

(shares in thousand) 36,682 112,176

Weighted average number of ordinary shares for

diluted earnings per share (shares in thousand) 11,772,492 11,638,698

Diluted earnings per share for profit attributable to

the equity holders of the Company (Rmb) 0.03 0.16

* According to the terms and conditions of the convertible bonds, if the Company makes a bonus issue (in either case credited as fully paid by way of capitalisation of profits or reserves), the conversion price will be adjusted to mirror the change of outstanding ordinary shares due to the bonus issue, hence the assumed conversion of convertible bonds have been adjusted retrospectively according to the bonus issue approved in the general meeting held on 29 June 2007.

15. Profit appropriations

Dividends

In the general meeting held on 30 May 2008, the shareholders approved a cash dividend amounting to Rmb 1,408,582,000 in respect of the year ended 31 December 2007. The amounts have been reflected as an appropriation of retained earnings for the six months ended 30 June 2008.

On 16 June 2008, the Company announced the payment of cash dividends of Rmb 1,408,582,000, with reference to the total 11,738,183,947 outstanding ordinary shares as at 30 April 2008 representing the cash dividend per share of Rmb 0.12.

Reserves

During the period, approximately Rmb20,553,000 have been transferred from the restricted reserve to retained earnings. This amount represented amortisation of deferred housing benefits for the six months ended 30 June 2008, net of the additional deferred housing benefits incurred during the same period.

An appropriation of approximately Rmb38,631,000 to the discretionary surplus reserve for the year ended 31 December 2007 was approved by the shareholders on the general meeting held on 30 May 2008.

16. Related parties and transactions

(i) The related parties of the Company and its Subsidiaries are as follows:

Names of related parties Nature of relationship

Related parties in which the Company has no equity interest:

China Datang Substantial Shareholder

Tianjin Jinneng Investment Company (“Tianjin Jinneng”) Shareholder

Datang Gansu Power Generation Co., Ltd. Liancheng Power Plant Subsidiary of the Substantial

(“Datang Gansu Liancheng Power”) Shareholder

China National Water Resources and Electric Power Materials Subsidiary of the Substantial

and Equipment Co., Ltd. (“China Water Resources and Power”) Shareholder

China Datang Technologies and Engineering Co., Ltd. Subsidiary of the Substantial

(“Datang Technologies”) Shareholder

Other State-controlled Enterprises Related parties of

the Company

Related parties in which the Company has equity interest:

North China Electric Power Research Institute Company Limited (“NCEPR”) Associate

Beijing Texin Datang Heat Company Limited (“Datang Texin”) Associate

Tongmei Datang Tashan Power Generation Company

Limited (“Tashan Power Company”) Associate

Datang Finance Associate

Inner Mongolia Datang Tongfang Silicon and Aluminium Technology

Company Limited (“Tongfang Silicon and Aluminium”) Associate

16. Related parties and transactions (Continued)

(ii) The following is a summary of the major related party transactions undertaken by the Company and its Subsidiaries during the period:

Six months ended

30 June

2008 2007

Ash disposal fee to China Datang 28,946 28,946

Rental fee to China Datang 3,614 3,614

Technical supervision, assistance and

testing service fee to NCEPR 18,255 21,096

Heat revenue from Datang Texin 58,053 28,045

Fuel management fee to China Datang 4,852 –

Interest expense to Datang Finance 76,186 49,681

Interest expense to Tianjin Jinneng – 1,425

Rental fee to Datang Gansu Liancheng Power – 7,500

Purchase of materials from Datang Gansu Liancheng Power 2,569 –

Purchase of power generation quota from

Datang Gansu Liancheng Power 2,392 –

Purchase of equipment from Datang Technologies – 25,962

Sales of equipment to China Water Resources and Power 68,371 –

Commission for equipment purchase from

China Water Resources and Power 7,850 90

Interest income from Tongfang Silicon and Aluminium 1,533 –

Interest income from Datang Finance 6,333 5

Transactions with other state-controlled entities

The PRC government controls a significant portion of the assets and a substantial number of entities in the PRC. The PRC government is considered to be the Company's ultimate controlling party. Apart from the transactions disclosed above, the Company and its Subsidiaries also conduct a majority of its business with state-controlled entities.

Many state-controlled entities have a multi-layered and complicated corporate structure and the ownership structures change over time as a result of transfers and privatisation programs. Nevertheless, management believes that the Company and its Subsidiaries have provided meaningful disclosures of related party transactions, with inclusion of the following disclosures of material transactions and balances with other state-controlled entities.

16. Related parties and transactions (Continued)

(ii) The following is a summary of the major related party transactions undertaken by the Company and its Subsidiaries during the period: (Continued)

Six months ended

30 June

2008 2007

Sales of electricity 16,959,162 15,347,761

Sales of heat 113,794 78,182

Interest income from state-controlled banks / non-bank

financial institution 32,645 31,121

Interest expense on loans borrowed from state-controlled

banks / non-bank financial institution 2,815,859 1,551,987

Purchases of property, plant and equipment

(including construction-in-progress) 11,803,520 4,920,848

Purchases of fuel 8,305,685 8,916,362

Purchases of spare parts and consumable supplies 366,193 538,763

Drawdown of short-term loans from state-controlled

banks / non-bank financial institution 28,365,935 10,343,967

Repayments of short-term loans from state-controlled

banks / non-bank financial institution 20,596,336 9,128,396

Drawdown of long-term loans borrowed from state-controlled

banks / non-bank financial institution 12,650,330 8,543,231

Repayments of long-term loans borrowed from state-controlled

banks / non-bank financial institution 2,844,803 6,363,745

Other charges

– Repairs and maintenance services 44,275 51,656

– Transportation expenses 17,711 9,284

30 June 31 December

2008 2007

Guaranteed loans

Loans guaranteed by

– NCG 727,357 804,634

– Other state-controlled entities 4,331,935 1,856,578

16. Related parties and transactions (Continued)

(iii) Key Management Compensation

Six months ended

30 June

2008 2007

Basic salaries and allowances 556 634

Bonus 806 1,820

Retirement benefits 54 149

Other benefits 806 476

17. Acquisition

(i) Acquisition of Zhenxing Power Co., Ltd. ('Zhenxing Power')

In January 2008, Datang International (Hong Kong) Limited entered into an agreement with Zhenxing Group Co., Ltd. and Zeng Wei to acquire 70% and 20% interest in Zhenxing Power, respectively, with a total consideration of Rmb652 million. This acquisition became effective on 10 March 2008.

The details of net assets acquired and the related cash flow arising from this acquisition are as follows:

Acquiree’s

carrying value Fair value

Cash and cash equivalents 3,446 3,446

Accounts receivable and other receivables 22,110 22,110

Other current assets 8,378 8,378

Property, plant and equipment 1,297,195 1,328,605

Loans (918,000 ) (918,000 )

Accounts payable and accrued liabilities (40,708 ) (40,708 )

Other liabilities (1,245 ) (9,097 )

Net assets 371,176 394,734

Net assets acquired (90%) 355,261

Add: goodwill (Note 5) 296,839

Total consideration 652,100

In which cash consideration paid (622,100 )

Cash inflow on acquisition 3,446

Net cash outflow on acquisition (618,654 )

17. Acquisition (Continued)

(i) Acquisition of Zhenxing Power Co., Ltd. ('Zhenxing Power') (Continued)

The acquired business contributed revenues of Rmb44 million and net profit of Rmb0.75 million to the consolidated operating results for the period from 10 March 2008 to 30 June 2008. If the acquisition had occurred on 1 January 2008, the consolidated revenue would have been Rmb17,671 million, and profit attributable to the equity holders of the Company would have been Rmb412million.

(ii) Acquisition of Erdos Linyang Resource Consulting Co., Ltd. ('Linyang Company')

In January 2008, the Company entered into an agreement with Inner Mongolia Changqing Coal Sales Co., Ltd. and some individual shareholders of Linyang Company to acquire 32% interest in Linyang Company, with a total consideration of Rmb256 million. This acquisition became effective on 1 February 2008. In addition, in February 2008, the Company entered into an agreement with Inner Mongolia Changqing Coal Sales Co., Ltd. to acquire 20% interest in Linyang Company, with a consideration of Rmb178 million. This acquisition became effective on 11 March 2008. Thereafter the Company controlled 52% interest in Linyang Company and became the controlling shareholder.

The details of net assets acquired and the related cash flow arising from this acquisition are as follows:

On the first acquisition date

Acquiree’s

carrying value Fair value

Cash and cash equivalents 4 4

Property, plant and equipment 300 360

Intangible assets 8,884 800,319

Tax payables (162 ) (162 )

Other liabilities – (197,369 )

Net assets 9,026 603,152

Net assets acquired (32%) 193,009

Add: goodwill (Note 5) 63,144

Total consideration 256,153

17. Acquisition (Continued)

(ii) Acquisition of Erdos Linyang Resource Consulting Co., Ltd. ('Linyang Company') (Continued)

On the second acquisition date

Acquiree’s

carrying value Fair value

Cash and cash equivalents 4 4

Property, plant and equipment 297 357

Intangible assets 8,884 800,319

Tax payables (162 ) (162 )

Other liabilities – (197,369 )

Net assets 9,023 603,149

Net assets acquired (20%) 120,629

Add: goodwill (Note 5) 57,033

Total consideration 177,662

Cash consideration paid for the first acquisition (256,153 )

Cash consideration paid for the second acquisition (177,662 )

Cash inflow on acquisition 4

Net cash outflow on acquisition (433,811 )

The acquired business contributed nil revenue and nil net profit to the consolidated operation results. If the acquisition had occurred on 1 January 2008, there would be nil impact to the consolidated revenue and net profit attributable to the equity holders of the Company.

17. Acquisition (Continued)

(iii) Acquisition of Shanxi Zhongqiang Trade Co., Ltd. ('Zhongqiang Company')

In February 2008, the Company entered into an agreement with Fushan Jietong Industrial Co., Ltd. and Ji Hongping to make an investment of Rmb500 million to hold 48% interest in Zhongqiang Company and then acquire another 3% interest in Zhongqiang Company from Ji Hongping with a consideration of Rmb45 million. This acquisition became effective on 23 May 2008. The Company controlled 51% interest in Zhongqiang Company and became the controlling shareholder.

The details of net assets acquired and the related cash flow arising from this acquisition are as follows:

Acquiree’s

carrying value Fair value

Cash and cash equivalents 539,438 539,438

Other receivables and current assets 101,335 101,335

Property, plant and equipment 74,775 60,361

Intangible assets 12,284 557,412

Accounts payable and accrued liabilities (215,874 ) (215,874 )

Other liabilities (674 ) (133,353 )

Net assets 511,284 909,319

Net assets acquired (51%) 463,753

Add: goodwill (Note 5) 81,247

Total consideration 545,000

In which cash consideration paid (500,000 )

Cash inflow on acquisition 539,438

Net cash inflow on acquisition 39,438

18. Supplemental financial information

(a) Condensed consolidated balance sheet

30 June 31 December

2008 2007

Net current liabilities 32,608,064 30,123,203

Total assets less current liabilities 92,862,489 80,141,413

(b) Condensed consolidated income statement

Six months ended

30 June

2008 2007

Interest expense 2,978,606 1,639,636

Less: amount capitalised in property, plant

and equipment (1,306,798 ) (590,529 )

1,671,808 1,049,107

Exchange gain, net (138,136 ) (83,206 )

Fair value (loss)/gain on an interest rate swap 36,683 (17,051 )

Others 42,700 24,155

Finance costs 1,613,055 973,005

Cost of inventories

– Fuel 9,926,269 7,178,182

– Spare parts and consumable supplies 361,743 114,427

Depreciation 2,914,545 2,389,709

Amortisation

– Land use rights 8,969 8,262

– Intangible assets 6,314 4,145

Amortisation of deferred housing benefits 33,748 49,198

Dividend income – (51,699 )

Donation 3,000 –

18. Supplemental financial information (Continued)

Six months ended

30 June

2008 2007

Investing activities, included:

Additions to property, plant and equipment (15,072,231 ) (9,262,247 )

Financing activities, included:

Drawdown of short-term loans 28,365,935 10,655,760

Repayments of short-term loans (20,596,336 ) (9,456,686 )

Drawdown of long-term loans 13,945,290 6,793,549

Repayments of long-term loans (3,118,259 ) (6,450,995)

19. Commitments

(a) Capital commitments

As at 30 June 2008, the Company and its Subsidiaries had capital commitments of investments amounted to Rmb13,088 million (31 December - 2007 Rmb13,423million). In addition, capital commitments of the Company and its Subsidiaries in relation to the construction and renovation of the electric utility plants not provided for in the balance sheet were as follows:

30 June 31 December

2008 2007

Authorised and contracted for 22,409,586 34,619,857

Authorised but not contracted for 32,057,893 19,999,208

54,467,479 54,619,065

A substantial portion of the above capital commitment is in relation to a coal mining project for which the Company and its Subsidiaries has not yet obtained the relevant mining license. If the mining license is not obtained at the end of the exploration work, there will be no capital commitment for this coal mining project.

(b) Operating lease commitments

Operating lease commitments extending to November 2016 in relation to buildings were as follows:

30 June 31 December

2008 2007

Amounts repayable

Within one year 11,862 11,391

Between one to five years 32,837 37,273

Over five years 25,298 28,913

69,997 77,577

20. Financial Guarantees

30 June 31 December

2008 2007

Guarantee for loan facilities granted to associates 849,090 862,250

Based on historical experience, no claims have been made against the Company and its Subsidiaries since the dates of granting the financial guarantees described above.

21. Net assets and net profit reconciliation between PRC GAAP and IFRS

The consolidated financial statements, which are prepared by the Company and its Subsidiaries in conformity with PRC GAAP, differ in certain respects from IFRS. Major differences between PRC GAAP and IFRS, which affect the net assets and net profit of the Company and its Subsidiaries, are summarised as follows:

Net assets

30 June 31 December

2008 2007

Net assets under PRC GAAP 31,496,894 34,007,341

Impact of IFRS adjustments:

Difference in the recognition policy on

housing benefits to the employees (a) 18,673 37,346

Difference in the commencement of depreciation

of property, plant and equipment (b) (106,466 ) (106,466 )

Difference in accounting treatment on

monetary housing benefits (c) 208,586 223,598

Difference in negative goodwill arising from

acquisition of Yuzhou Mining Company (d) 57,957 57,957

Others 14,424 5,501

Applicable deferred tax impact of

the above GAAP differences (e) 13,173 15,585

Net assets under IFRS 31,703,241 34,240,862

Net profit

For six months ended

30 June

2008 2007

Net profit under PRC GAAP 580,139 2,303,804

Impact of IFRS adjustments:

Difference in the recognition policy on

housing benefits to the employees (a) (18,673 ) (18,673 )

Difference in accounting treatment on

monetary housing benefits (c) (15,075 ) (30,525 )

Others 8,923 –

Applicable deferred tax impact of

the above GAAP differences (e) (2,412 ) (1,936 )

Net profit under IFRS 552,902 2,252,670

21. Net assets and net profit reconciliation between PRC GAAP and IFRS (Continued)

(a) Difference in the recognition policy on housing benefits to the employees

The Company and its Subsidiaries provided housing to its employees at a discount price. The price difference between the selling price and the cost of housing is considered to be a housing benefit and is borne by the Company and its Subsidiaries.

For PRC statutory reporting purposes, in accordance with the relevant regulations issued by the Ministry of Finance of the PRC, the total housing benefits provided by the Company and its Subsidiaries before 6 September 2000 should be directly deducted from the statutory public welfare fund and those provided after 6 September 2000 are charged to non-operating expenses as incurred. Under IFRS, the housing benefits provided by the Company and its Subsidiaries are recognised on a straight-line basis over the estimated remaining average service lives of the employees.

(b) Difference in the commencement of depreciation of property, plant and equipment

Under PRC GAAP, depreciation of property, plant and equipment commences from one month after the relevant assets are completed and ready for their intended use. Under IFRS, depreciation commences immediately when the relevant assets are ready for its intended use.

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.

Under IFRS, these benefits are recorded as deferred assets and amortised on a straight-line basis over the estimated service lives of relevant employees.

(d) Difference in negative goodwill arising from acquisition of Yuzhou Mining Company

Under PRC GAAP, the fair value of the net assets of Yuzhou Mining Company that was acquired by the Company below the consideration therefore resulted in goodwill.

However, certain GAAP differences increased the fair value of the acquired net identifiable assets under IFRS to an amount exceeded the consideration, including reversal of provisions for unused safety fund and development fund of coal mines etc. Hence, under IFRS, a negative goodwill was recognised and credited to the income statement as non-operating income.

(e) Applicable deferred tax impact on the above GAAP differences

This represents the deferred tax effect on the above GAAP differences where applicable.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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