Interim Results 2011 29th August 2011 Hong Kong. Results Summary in 1H Business Performance by...

Interim Results 2011Interim Results 201129th August 201129th August 2011

Hong KongHong Kong

Results Summary in 1H

Business Performance by Sector in 1H

Market and Policy Review in 1H

Operation Outlook in 2H

The Corporate 12th Five-Year Plan

1H 2011 Results Highlights – Operating Data

3

34252.837258.4

2010-06-30 2011-06-30

90.661

76.013

1H 2010 1H 2011

5.805.95

1H 2010 1H 2011

324.92

319.67

1H 2010 1H 2011

2304

2557

1H 2010 1H 2011

94.17

91.46

1H 2010 1H 2011

Installed Capacity

Utilization Hours

Gross Generation

Unit Coal Consumption Rate

Internal UsageEquivalent Availability Factor

(MW)

(%)(%)

(g/KWh)(Hours)

(Billion KWh)

8.8%

253

2.71

19.3%

5.25

0.15

Source: Corporate Interim Results 2011

1H 2011 Results Highlights – Financial Data

4Note: Basic earnings per share has been taken into account the impact of A-share non-public offering in May.

289.5

333.2

1H 2010 1H 2011

9.12 9.32

1H 2010 1H 2011

384

309

2010-12-31 2011-06-30

81.95 80.5

2010-12-31 2011-06-30

0.0757 0.0747

1H 2010 1H 2011

2129

2374

2010-12-31 2011-06-30

Operating Revenue

Basic Earnings Per Share

Net Profit

Debt to Asset Ratio

Shareholder’s EquityTotal Assets

(100 million RMB)

( 100 million RMB)( 100 million RMB)

(%)(RMB/Share)

(100 million RMB)

15.1%

0.001

11.5%

2.2%

1.45

24.5%

Source: Corporate Interim Results 2011

0.76%

63.61%13.17%

3.22%

3.05%

7.36%10.47%

0.61%

56.66%

14.43%

3.40%

3.65%

10.90%

10.35%

Cost Structure and Change Analysis

Company Cost Breakdown YoY Changes (Calculated in cost per unit generation)

Source: Corporate Interim Results 2011 5

Cost Breakdown in 1H 2010

Cost Breakdown in 1H 2011

33.89%

16.33%

-2.25%

1.51%

-10.50%

8.27%

-25.04%-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

Local Government Surcharges Fuel Cost

Depreciation Repair and Maintenance

Labor Cost Others and S,G&A

Financial Expense

2.0%11.2%

86.8%

Power Business: Capacity Grew and Structure Optimized

7

▼In 1H, the Company has 1208.1MW new capacity coming on stream and the generation capacity has been raised successively. In the meantime, the capacity structure has been further optimized by higher proportion of new energy.

24957.4

36300.3

25755.1

37258.4

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

Equity Attributable (MW) Under Management (MW)

By 30 June 2011 By 31 December 2010

Capacity Growth in 1H 2011

2.6%

3.2%

Capacity Structure (by 30 June 2011)

1.2%10.6%

88.2%

Thermal Power Hydro Power Wind Power

Capacity Structure (by 31 December 2010)

Source: Corporate Data and Information

Power Business: Power Generation Increased Steadily

8

961.57

807.68

1H 2010 1H 2011

Gross Generation(100 million KWH)

19.1%

899.87

762.6

1H 2010 1H 2011

Thermal Power Generation(100 million KWH)

18%

55.14

41.06

1H 2010 1H 2011

Hydro Power Generation(100 million KWH)

34.3%9.33

3.99

1H 2010 1H 2011

Wind Power Generation(100 million KWH)

134.5%


Power Business: Utilization Further Raised

9

2306

2557

National Average Datang Power

Corporate Average Utilization Hour Thermal Units Average Utilization Hour

▼In 1H, the Company has achieved average utilization of 2557 hours, with a yoy increase of 253 hours.

Compared with

National Average

Compared with 1H

2010

251

2304

2557

1H 2010 1H 2011

253

25922750

National Average Datang Power

158

2504

2750

1H 2010 1H 2011

246


Power Business: New Energy Project Contribution Raised Greatly

10

1676

6299

1H 2010 1H 2011

-4101

1242

1H 2010 1H 2011

157441

89681

1H 2010 1H 2011

EBT From Thermal Power （ 10 thousand RMB）

EBT From Hydro Power （ 10 thousand RMB）

43%276%

130%

▼Thermal power business still plays as the major contributor of profit. However, due to the hiking coal price, its profitability has been lowered.

▼The contribution of new energy like hydro and wind power have been raised remarkably.


EBT From Wind Power（ 10 thousand RMB）

To strengthen the security management of operational nuclear facilities. All the units of nuclear facilities need to strictly abide by the operational guidance and strengthen operational management. The regulating authorities need to strengthen inspection and guide the enterprises to find and eliminate those potential dangers.

To strictly approve the new applied nuclear power projects. To promote the nuclear security plan and adjust the mid-to-long term nuclear development plan. Before the nuclear security plan approved, pause the approvals of nuclear power projects including those under planning.

Security Inspection

Security Management

of Operational Facilities

Inspection on Projects under Construction

Strictly Approve New

Projects

The Policy Announced by the State Council of

China after Nuclear Accident in Japan

To organize complete security inspection on the nuclear facilities within our territory right way. Through delicate security assessment, to take measures to smooth away any security loopholes so as to guarantee absolute security.

To inspect the nuclear projects under construction. To make the security evaluation on all the nuclear power projects under construction with the most advanced standard. To those projects not reaching the standard, it must be stopped from construction.

The inspection on Ningde Nuclear Power Project has been finished and there is no impact to the commencement time and investment budget.

The Progress of Datang’s Nuclear Power Projects

There is a little bit impact to the construction schedule of Liaoning Xudapu Nuclear Power Project because the technology need to be re-determined by the government.

11

Power Business: Nuclear Projects Progressed Smoothly

Source: Corporate Information

12

Sichuan Huangjinping Hydro Power (850MW

Hebei Wanshengyong

Wind Power (150MW)

Inner Mongolia Shengli Coal Mine (20million tons/year)Ⅱ Liaoning Faku Wind

Power (48MW)Ⅲ

Sichuan Huangjinping Hydro Power (850MW)

Ningxia Qingtongxia Wind Power Ⅰ (48MW)

▼In 1H, the company has five power projects with total capacity of 1116MW approved by the government, as well as one coal project with capacity of 20million tons per year.

Hydro-power Wind Power Solar Power Coal Mine


Ningxia Qingtongxia Solar Power (20MW)Ⅱ

Power Business: Projects Acquired Approvals

Power Business: Energy Saving & Emission Cuts Achieved

▼In 1H, the Company has strengthened its environmental protection management. The emission indicators of major pollutants had been further improved and now perform far better than the industry’s average standards.

0.63

0.31 0.2870.215

0.147 0.126 0.118

0

0.2

0.4

0.6

0.8

1

1.2

2005 2006 2007 2008 2009 2010 1H2011

3.30

2.78 2.61

2.06

1.541 1.396 1.329

0

1

2

3

4

2005 2006 2007 2008 2009 2010 1H2011

6.14

4.69

2.79

1.0350.444 0.42 0.382

0

1

2

3

4

5

6

7

2005 2006 2007 2008 2009 2010 1H2011

344

241206 202

133

75 65.91

0

100

200

300

400

2005 2006 2007 2008 2009 2010 1H2011

350.62343.30

336.33331.4

326.51 323.59319.67

300

310

320

330

340

350

360

370

2005 2006 2007 2008 2009 2010 1H2011

13Source: Corporate Data and Information

Unit SO2 Emission (g/KWh)

Unit NOX Emission (g/KWh)

Unit Ash Emission (g/KWh)

Unit Waste Water Emission (g/KWh)

Unit Coal Consumption (g/KWh)

14

The Company’s Coal Production in Recent YearsThe Company’s Coal Production in Recent Years

Coal Mine Raw Coal Production(10thousand tons)

2008 2009 2010 1H 2011

Yuzhou 500 645 690 358

Tashan 1000 1700 2020 1140

Shengli 300 300 1000 435

Baoli -- -- 118 62

Total 1800 2645 3828 1995

▼In 1H, the Company’s four coal mines have produced about 20million tons of raw coal. Besides, the profit from coal mines also increased. e.g. the investment benefit in 1H from Tashan and Yuzhou Coal Mines were RMB 221million and RMB 45million separately.

Coal & Transport Business: Coal output and Earnings Increased


15

RailwayThe company was prepared to invest to construct the Huzhun’e Railway(249km);By the end of June 2011, the company has invested to operate and construct railway which are over 4000km long

The company has invested to construct the port in Huludao, Liaoning Province;The company has locked up 20million tons of coal turnover in four important coal ports in North China

The four 45000 DWT vessels of Jiangsu Datang Shipping Company were put into commercial operation in 1H;By 30th June, the company’s total shipping capacity has reached 400000 DWT and the whole year shipping volume is expected to reach 7million DWT

Coal & Transport Business: Transport Projects in Progress


Port

Shipping

16

2# & 3# Gasifier and MTP Facilities

Technique Renovation and repair

Output Qualified Methanol

February - July

January

End of June

At Current

Integrated TrialOperation

Produce Qualified PP and Keep Stable Operation

The Updated Progress of Duolun Project

Coal-Chemical Business: The Updated Progress of Duolun Project


Beforethe end of 2011

2. From February to July, the company made complete

technique renovation and repairs to the flaws appeared in

the proliferation period and laid firm foundation for the

whole process trial operation;

1. In January 2011, the 2# & 3# gasifiers and the MTP

facilities have successfully passed through trial

operation;

3. By the end of June, the qualified methanol (99% purity)

has been produced and all the working section has been

broken through individually;

4. Currently, the facilities are in process to be put into

integrated trial operation;

5. Before the end of 2011, qualified end product PP

will be produced and the facilities will achieve

stable operation.

17

Keqi Coal to Gas ProjectThe process of gasification, air separation, purification,

methanation, polluted water purification, etc. have been

constructed and installed according to schedule;The water pipeline from Dashimen Reservoir to Keqi

Project has been finalized;By the end of June, 297.63km of the gas pipeline with total

length of 316km has been finished.

Fuxin Coal to Gas Project

The main facilities like gasification, air separation, low

temperature methanol wash, thermal power island have

started construction since May;The concreting of the units in air separation section has

been finalized;The railway has been in construction according to schedule.

Coal-chemical Business: The Updated Progress of Coal-gas Projects


8.82%

15.82%

13.41%

11.23%10.79%

13%

11.81%

January February March April May June July

2011 National Power Consumpation YOY Growth Rate(%)

National power demand remain strong. In 1H, the national power demand reached 2251.5 billion KWh, with yoy growth of 12.2%.

In 1H, power shortage took place in East, North and Central China and the impact is becoming spreading out, earlier and severe.

19

The power demand in major heavy industries like metallurgical, construction material and chemicals grew fast with total power consumed of 748.2billion KWh in 1H, adding 3.8pt in power demand growth.

Strong Power Demand & Worsening Power Shortage

Source: China Electricity Council

▼Entering into the 12th Five-Year Plan period, the industrialization and urbanization of our country will be promoted and heavy industries will remain in high proportion in national economy. Therefore, the power supply shortage is expected to be further enlarged.

Coal Price Continued Hiking

Coal Supply and Demand and Price Trend The Company’s Contract Coal Fulfillment

In 1Q, the coal price was stable at high level. While since the late March, the spot coal price started to hike and kept hiking for 14 weeks.In 1H, the coal inventory of power plants were normal in general. However, due to coal price, transport and supply issues, the coal supply became a problem in certain region periodically.

.

In 1H, the company has 17.78million tons of contract coal delivered, with the delivery ratio of 88%,which is about 6 percent higher than 1H 2010. The average standardized contract coal price was 533.62RMB/ton, rising 5.2% yoy basis.

20Source: www.China5e.com , The Company data and information

http://www.china5e.com/

http://www.china5e.com/

Tariff Adjustment in Favor of the IPPs

21

Recent On-grid Tariff Adjustment (Fen/KWh)

Main Reasons for on-grid Tariff Increase:

▼The country has raised the thermal power on-grid tariff in certain

provinces separately since 1st January 2010, 10th April 2011 and 1st

June 2011;

▼The commencement of new units in 2H 2010 in provinces like

Jiangsu and Guangdong with higher on-grid tariff has driven up the

company’s average on-grid tariff

368.04390.84

1H 2010 1H 2011

6.2%

Corporate Average On-grid Tariff (RMB/MWh)

Source: The Company Data and Information, Corporate Announcement

General Power Shortage

Thermal Utilization Enjoys High Growth

It is expected the national average utilization hours in 2011 will reach 4650; the utilization hour of thermal units will reach 5250, about 200 hours higher than that of 2010.

It is expected the national peak load in this summer will increase 14% and the capacity shortage will total around 30-40GW in North China , East China, Central China and Southern Grid. While, in Northeast, Northwest and West Inner Mongolia Grid, there is 20GW surplus in capacity. It is expected the national capacity shortage will be around 25-30GW in the winter peak season.

In 2H, the power demand will remain high growth. Affected by the uneven location of new added capacity, imbalanced construction of power plant versus power grid, less new added thermal power capacity, the general power supply compared to demand will be in shortage.

1. Well done in market analysis and forecast and coordinate alternative power generation plan;

2. Well organize the production of hydro and wind power projects to avoid water and wind rejection;

3. Keep on coordination with the grid company after Huhhot Thermal Power Plant return as internal power plant;

4. Try hard to lower the internal electricity usage ratio.

Power Demand Will Maintain Strong Growth

23Source: China Electricity Council, The Company’s Data and Information

Power Supply Trends in Shortage in 2HPower Supply Trends in Shortage in 2H

Measures to raise Electricity Generations in 2HMeasures to raise Electricity Generations in 2H

Structural Power Shortage

Structural Power Shortage

Coal Coal

PricePrice

In 4Q, the coal price will rebound

Since the 2H, the coal price has been dropping for over 5 weeks

In 2H, the BSPI average price

has experienced slight

dropping over 5 weeks. It is

expected to continue till the

end of September without

contingent occurrence.

In 4Q, the North part of China will

step into heating season, and the

inelastic coal demand will drive

the spot coal price up. However,

the coal price hike will not be

remarkable and unlikely be over

the high rate in June.

Focusing on Fuel Cost ControlTo fulfill whole process fuel management and optimize the fuel structurePromote coal blending and increase import coalLower fuel cost by managing the time lag between coal procurement and storageStrengthen coal delivery by active communications between coal mines and railwayTry to raise the thermal coal contract fulfillment ratio

24

Coal Price will drop followed by rising in 2H

Source: China Electricity Council, www.china5e.com

Main Factors affecting the Earnings in 2H

25

In 2H, the coal price will maintain at high level with high probability of further hiking and this will impact the profitability of coal-fired power plants.

Coal Price

Tariff

Interest Rate

Fuel cost-tariff pass through mechanism is still the best way to ease the conflicts between coal price liberalization and tariff regulation. The China Electricity Council suggested the government to adjust the on-gird tariff timely.

To control the high inflation, there is still high possibility for the central bank to raise the interest rate in 2H. This will bring more pressure for the fund raising and financial expense control.

Factors

Source: The Company’s Information

Various Ways to tackle the Headaches of the IPPs

Reduce the income tax rate

for the IPPs

The government authorities help find more

ways to raise money

Increase the capital fund injection into the

IPPs

Raise the on-grid tariff at the right

time

26Source: China Electricity Council

The China Electricity Council suggested to use multiple ways to ease the difficulties

of the IPPs

The Guidelines for the Company’s 12th Five-Year Plan

2828

StrategyStrategy

Sticking on the company’s Development Strategies of focusing on the power generation business whilst deploying diversifications. Taking power business as core, coal business as fundamental, coal-chemical and metallurgical (integrated use of high-alumina fly ash) as new profit source, railway, port and shipping as bond to position each industry.

To develop a batch of sector basis with core competitiveness, good profitability, advanced technology, summarized innovation and diversified synergy in regions with resource advantage, market advantage or policy advantage so as to building up the company’s benefit and brand name.

To develop a batch of sector basis with core competitiveness, good profitability, advanced technology, summarized innovation and diversified synergy in regions with resource advantage, market advantage or policy advantage so as to building up the company’s benefit and brand name.

Continue to enhance coal-fired power; aggressively expand its hydropower; continuously develop wind power; strategically develop nuclear power; moderately develop solar energy; focus on suitable coal operations; aggressively and steadily develop coal-to-chemical projects; speedily develop the integrated use of high-alumina fly ash; and secure a complementary development of railway, port and shipping.

Continue to enhance coal-fired power; aggressively expand its hydropower; continuously develop wind power; strategically develop nuclear power; moderately develop solar energy; focus on suitable coal operations; aggressively and steadily develop coal-to-chemical projects; speedily develop the integrated use of high-alumina fly ash; and secure a complementary development of railway, port and shipping.


SchemeScheme

ModeMode

The Strategic Devise of the Six Profit Basis

29

In the 12th five-year plan period, the company is focused on building six profit basis that can integrate the projects with synergistic effects as well as geographic interfaces.

福建

广东

山西

四川

云南

西藏江苏

Western Inner Mongolia Coal-Electricity-Aluminum Profit Base

Western Inner Mongolia Coal-Electricity-Aluminum Profit Base

Eastern Inner Mongolia Energy Chemical Profit Base

Eastern Inner Mongolia Energy Chemical Profit Base

New Energy Profit Base

New Energy Profit Base

South East China Hydro

Power Profit Base

South East China Hydro

Power Profit Base

内蒙古辽宁

河北北京

Southeast Coastal Coal-fire Power Profit Base

Southeast Coastal Coal-fire Power Profit Base

托克托

Pan-Bohai Power Profit Base

Pan-Bohai Power Profit Base

锡林浩特


30

The Duolun project will break through its production process and step into stable production period

The Phase Ⅲ of Fuxin Coal-to-gas project will be put into commercial operation

Promote the Coal-chemical Projects to set up a Good Layout


The Phase Ⅲ of Keqi and the Phase of Fuxin Coal-to-gas Ⅱprojects will be put into commercial operation

The Duolun project will reach its full load; the Phase of Keqi Ⅱand the Phase of Fuxin Coal-to-gas projectsⅠ will be put into commercial operation

The Duolun project will raise its load factor; the Phase of ⅠKeqi Coal-to-gas project will be put into commercial operation

Thanks!

31

Interim Results 2011 29th August 2011 Hong Kong. Results Summary in 1H Business Performance by...

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