diff --git "a/China/16.China Shenhua Energy_$103.81 B_Energy/2015/results.txt" "b/China/16.China Shenhua Energy_$103.81 B_Energy/2015/results.txt"
new file mode 100644--- /dev/null
+++ "b/China/16.China Shenhua Energy_$103.81 B_Energy/2015/results.txt"
@@ -0,0 +1,100497 @@
+Changes in Share Capital and Shareholders
+Section XII
+128
+Investor Relations
+Section XI
+126
+Supervisory Committee's Report
+Section X
+Corporate Governance Report
+116
+Corporate Governance and
+Section IX
+99
+Directors, Supervisors, Senior Management and
+Employees
+Section VII|
+93
+Total debt to total debt
+and total equity ratio
+Section VII
+75
+Significant Events
+Section VI
+21
+Management Discussion and Analysis
+Section V
+Index to Information Disclosure
+130
+Section XIII
+Independent Auditor's Report and Consolidated
+Financial Statements
+Zhunge'er Group
+Coal Liquefaction and
+Chemical Company
+Shendong Power Company
+Shenhua Guoneng Group
+Guohua Power Company
+Shendong Coal Group Corporation
+The Group
+China Shenhua/the Company
+Shenhua Group
+Shenhua Group Corporation
+Unless the context otherwise requires, the following terms used in this report have the following meanings:
+14
+I
+the Recent Five Years
+233
+Summary of Major Financial Information for
+Section XVI
+231
+Signing Page for Opinions
+Section XV
+230
+Documents Available for Inspection
+Section XIV
+137
+Section | Definitions
+Zhunge'er Energy Company
+Chairman's Statement
+12
+XI.
+X.
+IX.
+VIII.
+VII.
+VI.
+V.
+IV.
+III.
+II.
+I.
+Important Notice
+ANNUAL REPORT
+2015
+0-0000
+T
+XXXXXX
+Shenhua's Transportation
+Business Opening Up
+Stock Code: 01088
+People's Republic of China with limited liability)
+(a joint stock limited company incorporated in the
+CHINA SHENHUA ENERGY COMPANY LIMITED
+中国神华能源股份有限公司
+The Board, supervisory committee and directors, supervisors and senior management of the Company
+warrant that this report does not contain any misrepresentations, misleading statements or material
+omissions, and are jointly and severally liable for the authenticity, accuracy and completeness of the
+information contained in this report.
+This report was approved at the 15th meeting of the third session of the Board of the Company, all the
+directors of the Company were present at the meeting of the Board.
+Deloitte Touche Tohmatsu has issued a standard unqualified independent auditor's report to the Company
+under the International Financial Report Standards for Certified Public Accountants, in connection with the
+Company's 2015 consolidated financial statements prepared under the Hong Kong Accounting Standards.
+Zhang Yuzhuo, Chairman of the Company, Zhang Kehui, Chief Financial Officer, and Hao Jianxin, General
+Manager of the Finance Department of the Company, warrant the authenticity, accuracy and completeness
+of the financial statements contained in this report.
+Business Overview of the Company
+Section III
+8
+Company Profile and Major Financial Indicators
+Section II
+Definitions
+Section I
+Contents
+---->
+031
+XXXXXX
+Section IV
+0-0000
+4
+031
+<<
+E
+2015 Annual Report 1
+The content of "2015 Directors' Report" of the Company includes Section V headed "Management
+Discussion and Analysis" (Major Operation during the Reporting Period, Discussion and Analysis on the
+Company's Future Plans) and Section VI headed "Significant Events" (Profit Distribution Plan) of this report.
+Are there any situations of violation of decision-making procedures for external guarantee provision? No
+Warning on Major Risks: Impacted by the supply and demand of coal and electricity and the implementation
+of industrial policies, the Group is exposed to some uncertainties on achieving the business targets for 2016.
+In addition, investors please note that the Company has illustrated risks including market competition,
+industrial policies, change in cost, environmental protection and safety production, etc. in the section
+headed "Management Discussion and Analysis".
+Are there any situations of non-operating appropriation of funds by controlling shareholder(s) and its
+subsidiaries? No
+Disclaimer of forward-looking statements: There are forward-looking statements in this report made on
+the basis of subjective assumptions and judgments on future policies and economic conditions, which
+are subject to risks, uncertainties and assumptions. The actual outcome may differ materially from the
+forward-looking statements. Such statements do not constitute actual commitments to investors. Investors
+should be aware undue reliance on or use of such information may lead to risks of investment.
+Restatement: in October 2015, the Company acquired 100% equity interests in Ningdong Power Plant,
+100% equity interests in Xuzhou Power Plant and 51% equity interests in Zhoushan Power Plant held by
+Shenhua Group Corporation through consolidation under common control. This report has correspondingly
+restated the financial and business data disclosed in 2013, 2014 and 2015.
+The Board proposed a final dividend distribution for 2015: RMB0.32 per share (inclusive of tax) of cash
+dividend will be distributed based on the total share capital of 19,889,620,455 shares of the Company as at
+31 December 2015, totaling approximately RMB6,365 million (inclusive of tax). The above profit distribution
+proposal is pending the approval of the general meeting.
+A
+Zhunchi Railway
+Shuohuang Railway Company
+Shenhua Trading Group
+Hebei Guohua Cangdong Power Co., Ltd.
+Guangdong Guohua Yudean Taishan Power Co., Ltd.
+CLP Guohua Shenmu Power Co., Ltd.
+Zhejiang Guohua Zheneng Power Generation Co., Ltd.
+Power-generating division controlled and operated by Zhunge'er Energy
+Company
+Inner Mongolia Guohua Zhunge'er Power Generation Co., Ltd.
+Jiujiang Power
+Yuyao Power
+Mengjin Power
+Taicang Power
+Guohua Hulunbeier Power
+Dingzhou Power
+Jinjie Energy
+Suizhong Power
+Cangdong Power
+Taishan Power
+Shenmu Power
+Zheneng Power
+Zhunge'er Power
+Guohua Zhunge'er
+Section I Definitions (Continued)
+2015 Annual Report 5
+Sanhe Power Co., Ltd.
+Suizhong Power Co., Ltd.
+Shaanxi Guohua Jinjie Energy Co., Ltd.
+Hebei Guohua Dingzhou Power Generation Co., Ltd.
+Inner Mongolia Guohua Hulunbeier Power Generation Co., Ltd.
+International Financial Reporting
+Standards
+Accounting Standards for Business
+Enterprises
+Hong Kong Listing Rules
+Shanghai Listing Rules
+Hong Kong Stock Exchange or
+Stock Exchange
+Shanghai Stock Exchange
+JORC
+Beijing Gas
+Section Definitions (Continued)
+I
+6 China Shenhua Energy Company Limited
+Tianjin Guohua Panshan Power Generation Co., Ltd.
+Shenhua Guohua (Zhoushan) Power Generation Co., Ltd.
+Ningxia Guohua Ningdong Power Generation Co., Ltd.
+Guohua Xuzhou Power Generation Company Limited
+Xuzhou Power
+Ningdong Power
+Guohua Huizhou Thermal Power Branch of the Company
+Huizhou Thermal
+Zhuhai Guohua Huidafeng Wind Energy Development Co., Ltd.
+Zhuhai Wind Energy
+Shenhua Guohua Jiujiang Power Co., Ltd.
+Zhejiang Guohua Yuyao Gas-fired Power Co., Ltd.
+Shenhua Guohua Mengjin Power Generation Co., Ltd.
+Guohua Taicang Power Generation Co., Ltd.
+Zhoushan Power
+Shenhua Guohua International Power Company Limited Beijing Thermal
+Power Branch
+PT.GH EMM INDONESIA
+Shenhua Watermark Coal Pty Limited
+Overseas Company
+Zhuhai Coal Dock
+Tianjin Coal Dock
+Beidian Shengli Energy
+Shenbao Energy Company
+Section Definitions (Continued)
+I
+4 China Shenhua Energy Company Limited
+Shenhua Baotou Coal Chemical Co., Ltd.
+Shenhua Baotou Energy Co., Ltd.
+Shenhua Baoshen Railway Co., Ltd.
+Shenhua Xinzhun Railway Co., Ltd.
+Shenhua Baoshen Railway Group Co., Ltd., which holds 88.16% equity
+interest in Baoshen Railway Company, 88.46% equity interest in Ganquan
+Railway Company and 90% equity interest in Xinzhun Railway Company
+Yu Shen Energy Company
+Baotou Coal Chemical Company
+Baoshen Railway Company
+Xinzhun Railway Company
+Shenhua Huanghua Harbour Administration Co., Ltd.
+Shenhua Zhunge'er Energy Co., Ltd.
+Shenhua Zhunchi Railway Company Limited
+Shuohuang Railway Development Co., Ltd.
+Shenhua Trading Group Limited
+Shenhua Zhunge'er Group Co., Ltd.
+China Shenhua Coal Liquefaction and Chemical Co., Ltd.
+Shenhua Shendong Power Co., Ltd.
+China Shenhua Energy Company Limited
+The Company and its controlling subsidiaries
+Shenhua Shendong Coal Group Co., Ltd.
+Beijing Guohua Power Company Limited
+Shenhua Guoneng Group Co., Ltd.
+Shenhua Group Corporation Limited and its controlling subsidiaries
+Shenhua Group Corporation Limited
+Baoshen Railway Group
+Huanghua Harbour Administration
+Company
+Baotou Energy Company
+---->
+Xinjie Energy Company
+Ganquan Railway Company
+Shenhua Australia Holdings Pty Limited
+Shenhua Geological Exploration Co., Ltd.
+Shenhua Hong Kong Limited
+Shenhua Finance Co., Ltd.
+Shenhua Xinjie Energy Co., Ltd
+Shenhua Zhonghai Shipping Co., Ltd.
+Shenhua Ganquan Railway Co., Ltd.
+Shenwan Energy Company Limited
+Shenhua Fujian Energy Co., Ltd.
+Shenhua Sichuan Energy Company Limited
+Shenhua Logistics Group Corporation Limited
+Yulin Shenhua Energy Co., Ltd.
+China Shenhua Overseas Development & Investment Co., Ltd.
+Shenhua Yudean Zhuhai Port Coal Dock Co., Ltd.
+Shenhua Tianjin Coal Dock Co., Ltd.
+Shenhua Beidian Shengli Energy Co., Ltd
+Shenhua Baorixile Energy Co., Ltd.
+Shipping Company
+Sanhe Power
+Beijing Thermal
+EMM Indonesia
+Watermark
+Australia Pty
+Geological Exploration Company
+Shenhua HK Company
+Shenhua Finance Company
+Logistics Group
+Shenhua Sichuan Energy Company
+Fujian Energy Company
+Shenwan Energy Company
+Panshan Power
+Articles of Association
+EBITDA
+Section II Company Profile and Major Financial Indicators
+Fax
+III.
+IV.
+PARTICULARS
+Secretary to the Board
+Huang Qing
+(8610) 5813 3399
+(8610) 5813 1804/1814
+1088@shenhua.cc
+Board Affairs and Investor Relations
+Department of the Company
+22 Andingmen Xibinhe Road,
+Dongcheng District, Beijing
+(Postal Code: 100011)
+(8610) 5813 1088/3399/3355
+(8610) 5813 1804/1814
+Registered Address of the Company
+Tel
+Postal Code of Registered Address of the Company
+Office Address of the Company
+E-mail
+中國神華能源股份有限公司
+中國神華
+China Shenhua Energy Company Limited
+CSEC/China Shenhua
+Zhang Yuzhuo
+Han Jianguo, Huang Qing
+Representative of Securities Affairs
+Chen Guangshui
+22 Andingmen Xibinhe Road,
+Dongcheng District, Beijing
+(Postal Code: 100011)
+(8610) 5813 3355
+(8610) 5813 1804/1814
+ir@shenhua.cc
+Hong Kong Office of the Company
+Room B, 60th Floor,
+Postal Code of Office Address of the Company
+Company Website
+Address
+E-mail
+Fax
+Shanghai-Hong Kong Stock Connect
+RMB
+Shenhua Guohua (Beijing) Gas Thermal Power Co., Ltd.
+Australasian Code for Reporting of Mineral Resources and Ore Reserves
+Shanghai Stock Exchange
+The Stock Exchange of Hong Kong Limited
+Rules Governing the Listing of Stocks on Shanghai Stock Exchange
+Rules Governing the Listing of Securities on The Stock Exchange of Hong
+Kong Limited
+the latest Accounting Standards for Business Enterprises issued by the
+Ministry of Finance of the People's Republic of China and the related
+application guidance, interpretations and other related requirements
+International Financial Reporting Standards issued by the International
+Accounting Standards Committee
+Articles of Association of China Shenhua Energy Company Limited
+Profit for the year + net finance costs + income tax expenses +
+depreciation and amortisation - shares of results of associates
+[Long-term interest bearing debts + short-term interest bearing debts
+(including bills payable)]/[Long-term interest bearing debts + short-term
+interest bearing debts (including bills payable) + total equity]
+A mutual access mechanism between Shanghai and Hong Kong stock
+markets under which Shanghai Stock Exchange and Hong Kong Stock
+Exchange allow investors from Shanghai and Hong Kong to trade eligible
+shares listed on the other's market through local securities firms (or
+brokers), which comprises Shanghai Stock Connect and Hong Kong Stock
+Connect
+Renminbi unless otherwise specified
+2015 Annual Report 7
+I.
+II.
+INFORMATION OF THE COMPANY
+Chinese Name of the Company
+Abbreviation of Chinese Name of the Company
+English Name of the Company
+Abbreviation of English Name of the Company
+Legal Representative of the Company
+Authorised Representatives of the Company under the
+Hong Kong Listing Rules
+CONTACTS AND CONTACT DETAILS
+Name
+Address
+Tel
+Bank of China Tower,
+1 Garden Road, Central, Hong Kong
+(852) 2578 1635
+22 Andingmen Xibinhe Road,
+Dongcheng District, Beijing
+(Postal Code: 100011)
+22 Andingmen Xibinhe Road,
+Dongcheng District, Beijing
+100011
+Office Address
+Sponsor with continuing
+supervisory duty during
+the reporting period
+Share Registrar and
+Name
+Transfer Office
+Name
+Office Address
+Deloitte Touche Tohmatsu Certified Public
+Accountants LLP
+8th Floor, Tower W2, The Towers,
+Oriental Plaza, 1 East Chang An Avenue, Beijing
+Xu Bin, Yu Chunhui
+Deloitte Touche Tohmatsu
+35th Floor, One Pacific Place, 88 Queensway,
+Hong Kong
+China International Capital Corporation Limited
+27th and 28th Floor, China World Tower Two,
+No. 1 Jianguomenwai Avenue, Chaoyang District,
+Beijing
+Sponsor Representatives Long Liang, Xu Jia
+Name
+Office Address
+Sponsor Representatives
+Continuing supervisory
+period
+Address
+(852) 2915 0638
+China Galaxy Securities Co., Ltd.
+2-6/F, Tower C, Corporate Square,
+No. 35 Finance Street, Xicheng District, Beijing
+Wang Fei, Lu Yu
+October to December of 2007, the year of 2008
+and 2009. Pursuant to the relevant regulations,
+the continuing supervisory period of the above
+Sponsors and Sponsor Representatives in relation
+to the initial public offering of A Shares of
+the Company will continue until the aforesaid
+proceeds are fully utilized. As of the end of 2015,
+the aforesaid proceeds were fully utilitzed.
+H Share/Hong Kong
+China Securities Depository and
+Clearing Corporation Limited
+Shanghai Branch
+36th Floor, China Insurance
+Building, 166 Lu Jia Zui Dong Lu,
+Pudong New Area, Shanghai
+Computershare Hong Kong
+Investor Services Limited
+Rooms 1712-1716, 17th Floor,
+Hopewell Centre, 183 Queen's
+Road East, Wanchai, Hong Kong
+2015 Annual Report 9
+Name
+Auditor engaged by the
+Company (Hong Kong)
+A Share/the PRC
+Office Address
+Signing Auditor
+22 Andingmen Xibinhe Road,
+Dongcheng District, Beijing
+100011
+http://www.csec.com or
+http://www.shenhuachina.com
+ir@shenhua.cc
+Designated Media for Information Disclosure
+Internet website designated by CSRC for publishing
+annual report
+Annual report is available at
+China Securities Journal, Shanghai Securities News,
+Securities Times and Securities Daily
+http://www.sse.com.cn and
+http://www.hkex.com.hk
+Board Affairs and Investor Relations Department
+of the Company, Hong Kong Office of the
+Company
+8 China Shenhua Energy Company Limited
+Section II Company Profile and Major Financial Indicators (Continued)
+V. BASIC INFORMATION ON SHARES
+INFORMATION DISCLOSURE AND PLACE FOR DOCUMENT INSPECTION
+601088
+01088
+Listing Place
+A Share
+H Share
+Abbreviation
+Stock Code
+Shanghai Stock Exchange
+Hong Kong Stock Exchange
+China Shenhua
+China Shenhua
+Name
+VI. OTHER RELEVANT INFORMATION
+Auditor engaged by the
+Company (the PRC)
+Type
+Company during
+Position before
+Date of
+(2)
+including:
+performance
+remuneration
+resignation or
+Date of
+resignation or
+the reporting
+before tax
+received from the
+100 | China Shenhua Energy Company Limited
+Senior Management resigned or being dismissed during the reporting period
+3.
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+The age of the personnel was calculated as at 31 December 2015.
+(3)
+The personnel mentioned above did not hold any shares of the Company during the reporting period;
+period (RMB ten
+The remuneration package of the above director for the year 2015 is subject to approval by the Company at the
+2015 annual general meeting;
+Total
+remuneration
+received for
+Hao Gui
+Xue Jilian
+Wang Pingang
+remuneration
+from shareholders
+(1)
+No
+17.0
+49.6
+21 August 2015
+24 May 2011
+53
+Male
+Senior Vice President
+Whether received
+reporting period
+thousand)
+dismissal
+appointment
+Age
+Gender
+dismissal
+Name
+during the
+of the Company
+previous years
+Note:
+RMB ordinary
+25.1
+The 2014 first extraordinary general meeting of the Company approved the term of service of the third session
+of the Board and the supervisory committee to be three years (22 August 2014 to 21 August 2017).
+(4)
+The personnel mentioned above did not hold any shares in the Company during the reporting period;
+(3)
+Mr. Han Jianguo, Mr. Li Dong and Mr. Wang Jinli, members of the senior management of the Company, served
+concurrently in Shenhua Group Corporation; their remunerations were implemented pursuant to the Reform
+Plan of Remuneration System of Person-in-Charge in State-Controlled Enterprises which took effect in 2015.
+There was a magnitude of decrease in remuneration level in 2015. Other senior management's remunerations
+were implemented in accordance with the remuneration system of the Company.
+(2)
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+2015 Annual Report 99
+The remuneration package of Directors and supervisors for 2015 is subject to approval by the Company at the
+2015 annual general meeting; the remuneration package of the senior management was approved by the Board;
+the remunerations payable include salaries, allowances, social benefit payment, income tax and retirement
+scheme contributions;
+(1)
+Note:
+158.3
+696.4
+Total
+No
+No
+No
+No
+Senior Vice President
+(5)
+Ages of the personnel were calculated as at 31 December 2015.
+2.
+Director resigned during the porting period
+54.3
+20 August 2015
+22 August 2014
+24 May 2011
+Male 52
+Executive Director
+Senior Vice President
+Wang Xiaolin
+during the
+reporting period
+of the Company
+National Social Security Fund 105 Portfolio
+No
+Including:
+Performance
+remuneration
+received for
+previous years
+Date of
+resignation or
+dismissal
+Date of
+appointment
+Age
+resignation or dismissal Gender
+Name
+Position before
+Whether
+remuneration
+before tax
+received from the
+Total
+Company during
+the reporting
+period (RMB ten
+thousand)
+Male
+Mr. Guo has served as an independent non-executive director of the third
+session of the Board of the Company since August 2014 and independent
+non-executive directorof China Railway Group Limited since June 2014.
+24 May 2011
+110,027,300
+shares
+Bank of China Limited - China Merchants
+Fengqing Flexible Configuration Hybrid
+Initiated Securities Investment Fund
+National Social Security Fund 503 Portfolio
+National Social Security Fund 504 Portfolio
+104 China Shenhua Energy Company Limited
+Prior to the foregoing, Mr. Guo had served in various capacities, including
+deputy director and director of the Department of Regional Economic
+Development of State Development and Planning Commission, and deputy
+supervisor of the Planning Committee of Xinjiang Autonomous Region.
+Mr. Guo served as an independent Non-executive Director of the second
+session of the Board of China Shenhua from 2010 to 2014, party member
+and head of disciplinary inspection panel of China Guodian Corporation
+from 2005 to 2010, chairman of the supervisory committee of Guodian
+Power Development Co., Ltd. from 2009 to 2010, and external director of
+Dongfang Electric Corporation from 2010 to 2015.
+No
+Born in August 1949, Chinese, a senior economist, Mr. Guo has extensive
+experience in macroeconomics and enterprise management. He graduated
+from Renmin University of China in 1982 with a bachelor's degree.
+GUO Peizhang Independent Non-executive Director
+Prior to the foregoing, Mr. Gong had served in various capacities, including
+chief accountant of China National Petroleum Corporation, director of
+Petrochina Company Limited and chairman of China Petroleum Finance Co.,
+Ltd.
+Mr. Gong served as an independent non-executive director of the first
+and second sessions of the Board of the Company from 2009 to 2014,
+independent non-executive director of China Southern Airlines Company
+Limited from 2007 to 2013, independent non-executive director of China
+Railway Group Limited from 2007 to 2014, and external director of
+Dongfang Electric Corporation from 2009 to 2015.
+Mr. Gong has served as an independent non-executive director of the third
+session of the Board of the Company since August 2014, independent
+non-executive director of Nanyang Commercial Bank (China) Limited
+since December 2007 and external director of China National Cereals,
+Oils and Foodstuffs Corporation since April 2011. Mr. Gong is also a
+member of China Valuation Standards Committee, special councilor of
+China Appraisal Society and consultant of the Accounting Society of China
+and the Pricing Association of China. Mr. Gong is a part-time professor
+at Tsinghua University, Nankai University, Xiamen University, Shanghai
+National Accounting Institute, Xiamen National Accounting Institute and
+China University of Petroleum (Beijing) and a professor at Beijing National
+Accounting Institute.
+Born in February 1946, Chinese, a professor-level senior accountant. Mr.
+Gong graduated from Jiangsu Yangzhou Business School in 1965 and has
+over 40 years' experience in accounting.
+GONG Huazhang Independent Non-executive Director
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+2015 Annual Report 103
+Prior to the foregoing, Ms. Fan had served in various capacities, including
+deputy to the ninth and tenth National People's Congress of China,
+member of the Standing Committee of the 11th National People's Congress,
+member of Preliminary Working Committee for Preparatory Committee,
+member of Preparatory Committee, president of the Legislative Council of
+the Hong Kong Special Administrative Region, director of Career Centre of
+the University of Hong Kong, and assistant dean of Hong Kong Polytechnic
+Institute.
+Ms. Fan served as an independent non-executive director of the second
+session of the Board of the Company from 2010 to 2014.
+RMB ordinary
+110,027,300
+shares
+556,048,233
+Section VII Changes in Share Capital and Shareholders (Continued)
+Shareholdings of top ten shareholers without selling restrictions
+Number of shares
+with selling
+Type and number of shares
+Name of shareholders
+restrictions Type
+Number
+Shenhua Group Corporation Limited
+Ms. Fan has served as an independent non-executive director of the third
+session of the Board of the Company since August 2014, independent
+non-executive director of China COSCO Holdings Company Limited since
+January 2009, independent non-executive director of China Overseas Land
+& Investment Ltd. since February 2009, independent non-executive director
+of COSCO Pacific Limited since May 2011, and a member of the Standing
+Committee of the 12th National People's Congress of China since March
+2013.
+14,530,574,452
+HKSCC NOMINEES LIMITED
+3,390,058,476
+shares
+Overseas listed
+3,390,058,476
+foreign
+shares
+China Securities Finance Corporation Limited
+Central Huijin Asset Management Ltd.
+556,048,233
+RMB ordinary
+RMB ordinary 14,530,574,452
+61
+Born in September 1945, Chinese, Ms. Fan has extensive experience in
+legislative and supervision affairs. She received a master's degree from the
+University of Hong Kong in 1973.
+Prior to the foregoing, Mr. Han had served in various capacities, including
+chairman and general manager of Shenhua Coal Trading Company Limited,
+and division head of the State Development and Planning Commission.
+(2)
+The remuneration package of the senior management was approved by the Board;
+57.9
+132.9
+(1)
+Note:
+Total
+No
+24.1
+56.7
+29 October 2015
+24 May 2011
+54
+Male
+Senior Vice President
+No
+16.8
+26.6
+10 March 2015
+The personnel mentioned above did not hold any shares of the Company during the reporting period;
+(3)
+The age of Wang Pingang was calculated as at 29 October 2015, while ages of other personnel were calculated as
+at 31 December 2015.
+2015 Annual Report 101
+He served as a non-executive director of the first session and second session
+of the Board of the Company from 2004 to 2011, executive director of the
+second session of the Board of the Company from 2011 to 2014, and senior
+vice president of the Company from 2011 to 2014.
+Mr. Han has served as the president of the Company since June 2014, an
+executive director of the third session of the Board of the Company since
+August 2014, deputy general manager of Shenhua Group Corporation since
+August 2003, chief information officer of Shenhua Group Corporation since
+March 2009, and director of Shenhua Group Corporation since July 2014.
+Born in April 1958, Chinese, a researcher, Mr. Han has extensive experience
+in the Chinese coal industry, macroeconomics and corporate management.
+He received a master's degree from Tongji University in 1999.
+HAN Jianguo Executive Director and President
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+102 | China Shenhua Energy Company Limited
+Prior to the foregoing, Dr. Ling had served in various capacities, including
+executive director of the first session of the Board, executive vice president
+and chief financial officer of the Company, deputy general manager of
+the International Business Department of the Industrial and Commercial
+Bank of China, deputy general manager of Industrial and Commercial Bank
+of China (Asia) Limited and chairman of UB China Business Management
+Company Limited.
+Dr. Ling served as director and deputy general manager of Shenhua Group
+Corporation from 2010 to 2014, chairman of the Board of Shenhua Finance
+Company from 2002 to 2014, president of the Company from 2006 to 2014,
+executive director of the second session of the Board of the Company from
+2010 to 2014, and vice chairman of the second session of the Board of the
+Company from June to August 2014.
+Dr. Ling has served as a vice chairman and an executive director of the
+third session of the Board of the Company since August 2014, director of
+Shenhua Group Corporation since April 2010, and general manager of
+Shenhua Group Corporation since May 2014. Dr. Ling is also a professor
+and mentor for doctoral students at Renmin University of China and China
+University of Mining and Technology.
+FAN Hsu Lai Tai Independent Non-executive Director
+1994.
+LING Wen Vice Chairman and Executive Director
+Prior to the foregoing, Dr. Zhang had served in various capacities, including
+non-executive director of the first session of the Board of the Company,
+deputy general manager of Shenhua Group Corporation, president of
+the China Coal Research Institute, chairman of China Coal Technology
+Corporation, chairman of Tiandi Science & Technology Co., Ltd. and deputy
+general manager of Shandong Yankuang Group Co., Ltd.
+Dr. Zhang served as the chairman of China Shenhua Coal Liquefaction
+Company Limited from 2003 to 2010, chairman of Shenhua Hong Kong
+Limited from 2005 to 2010, general manager of Shenhua Group Corporation
+from 2008 to 2014, non-executive director of the second session of the
+Board of the Company from 2004 to 2010, vice chairman of the second
+session of the Board of the Company from 2011 to 2014, executive director
+of the second session of the Board of the Company from 2010 to 2014, and
+chairman of the second session of the Board of the Company from June to
+August 2014.
+Dr. Zhang has served as the chairman and an executive director of the
+third session of the Board of the Company since August 2014, director
+of Shenhua Group Corporation since December 2008, and chairman for
+Shenhua Group Corporation since May 2014.
+Born in January 1962, Chinese, a researcher and Academician of the Chinese
+Academy of Engineering, Dr. Zhang has extensive experience in corporate
+management and professional management in the coal industry in China.
+He received a Ph.D. degree from the University of Science and Technology
+of Beijing in 1989, and conducted postdoctoral studies and research in clean
+coal technology at the University of Southampton in the UK and Southern
+Illinois University in the USA from 1992 to 1996.
+ZHANG Yuzhuo Chairman and Executive Director
+Biographical details of the directors, supervisors and senior management as at the end of the
+reporting period
+4.
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+Born in February 1963, Chinese, a professor and Academician of Chinese
+Academy of Engineering, Dr. Ling has extensive management experience
+in financial institutions and enterprises. He received a Ph.D. degree from
+Harbin Institute of Technology in 1991, and conducted postdoctoral
+research in macroeconomics in Shanghai Jiao Tong University from 1992 to
+No
+received from
+shareholders
+2 2 2 2 2 2 2 2 2 2
+Index and date of changes in controlling shareholders during the reporting period
+3
+There was no change in the controlling shareholder of the Company during the reporting
+period.
+Diagram of the equity and controlling relationship between the Company and the controlling
+shareholder
+Shenhua Group
+Corporation Limited
+73.06%
+China Shenhua Energy
+Company Limited
+(II)
+De facto controller
+1
+Name of legal person
+State-owned Assets Supervision and Administration Commission of the State Council
+2
+Index and date of changes in de facto controller during the reporting period
+3
+2
+There was no change in de facto controller of the Company during the reporting period.
+Section VII Changes in Share Capital and Shareholders (Continued)
+State-owned assets operating activities within the scope authorized
+by the State Council; investment and management activities
+in various sectors, including resource products (such as coal),
+coal liquefaction, coal chemical, power, thermal, port, various
+transportation, finance, domestic and international trade and
+logistics, real estate, advanced technology and information
+consultation and etc; planning, organizing, coordinating and
+managing the production and operating activities of the companies
+in the Shenhua Group in such sectors; and sales of chemical
+materials and chemical products (excluding hazardous chemicals),
+textiles, construction materials, machinery, electronic equipment
+and office equipment. (For projects that are subject to approval
+pursuant to the law, business operations shall commence in
+accordance with the business scope approved upon receipt of the
+approval from revenant authorities.)
+Save as disclosed above, as at 31 December 2015, no other person held any interest and/or short
+position in the shares or underlying shares of the Company which is required to be recorded in the
+register to be kept thereunder, or was a substantial shareholder of the Company pursuant to section
+336 of Part XV of the SFO.
+CHANGES IN CONTROLLING SHAREHOLDER AND DE FACTO CONTROLLER
+Controlling shareholder
+IV.
+(I)
+1.
+Legal person
+Name
+Legal representative
+Date of incorporation
+Principal business
+Shareholdings in other
+domestic and overseas
+listed subsidiaries and
+associates during the
+reporting period
+96 China Shenhua Energy Company Limited
+Shenhua Group Corporation Limited
+Zhang Yuzhuo
+23 October 1995
+As at the end of the reporting period, Shenhua Group Corporation
+held 143,068,000 shares in China National Chemical Engineering
+Co., Ltd., representing 2.90% of its total shares.
+(www.hkex.com.hk).
+Diagram of the equity and controlling relationship between the Company and the de facto
+controller
+Administration Commission of the State Council
+(1) Changes in shareholding and remuneration
+1.
+Directors, Supervisors and Senior Management as at the end of the reporting period
+Total
+remuneration
+before tax
+received from
+Whether
+received
+remuneration
+from
+Position as
+at the end of
+Date of
+appointment
+(from the first
+the Company
+including
+shareholders of
+during the
+performance
+CHANGES IN SHAREHOLDING AND REMUNERATION
+State-owned Assets Supervision and
+Section VIII Directors, Supervisors, Senior Management and Employees
+98 China Shenhua Energy Company Limited
+100.00%
+No
+73.06%
+China Shenhua Energy
+Company Limited
+2015 Annual Report 97
+Section VII Changes in Share Capital and Shareholders (Continued)
+V. OTHER CORPORATE SHAREHOLDERS WITH MORE THAN 10% SHAREHOLDING IN THE
+COMPANY
+VI.
+As at the end of the reporting period, there was no other corporate shareholder with more than 10%
+shareholding in the Company.
+RESTRICTIONS ON THE REDUCTION IN THE SHAREHOLDING
+✓ Applicable
+Not applicable
+On 8 July 2015, Shenhua Group Corporation increased its shareholding of 8,024,505 A shares in the
+Company via the trading system of the Shanghai Stock Exchange, and proposed to continue to increase
+its shareholding of A shares in the Company in its own name via the trading system of the Shanghai Stock
+Exchange within the 12 months starting from 8 July 2015 by up to an aggregate number of A shares not
+exceeding 2% of the total issued share capital of the Company (including those shares purchased on 8 July).
+Shenhua Group Corporation undertakes that it will not dispose of any share it holds in the Company during
+the period of the implementation of the shareholding increase plan and within the statutory period.
+During the reporting period, Shenhua Group Corporation has increased its shareholding in the Company by
+8,727,892 A shares in aggregate, representing 0.04% of the total issued share capital of the Company.
+I.
+Note: Information disclosed above is based on the information availalble on the website of the Hong Kong Stock Exchange
+0.01
+0.04
+Statement on holders of preference shares
+with voting rights restored and number of
+shares held
+N/A
+Note:
+HKSCC Nominees Limited holds H shares on behalf of a number of clients.
+2015 Annual Report 95
+Section VII Changes in Share Capital and Shareholders (Continued)
+(III)
+Substantial shareholders' interests and short positions in the shares of the Company
+As at 31 December 2015, persons disclosed in the table below had an interest and/or short position
+in the shares or underlying shares of the Company which is required to be recorded in the register
+of equity interests and/or short positions pursuant to section 336 of Part XV of the Securities and
+Futures Ordinance (the "SFO", Chapter 571 of the Laws of Hong Kong):
+H share/
+No.
+Name of shareholders
+Capacity
+Nature
+domestic share of interest
+Number of H
+shares/domestic
+shares held
+The de facto controller of National Social Security
+Fund 503 Portfolio, National Social Security Fund
+504 Portfolio and National Social Security Fund 105
+Portfolio is the National Social Security Fund. The
+custodian bank of Industrial & Commercial Bank
+of China Shanghai Index 50 Trading Open-end
+Index Securities Investment Fund and Industrial &
+Commercial Bank of China Limited - China Southern
+Consumption Vitality Flexible Allocation Hybrid
+Initiated Securities Investment Fund is the Industrial &
+Commercial Bank of China Limited. Saved as disclosed
+above, the Company is not aware of any connected
+relationships betweenthe top ten shareholders
+not subject to selling restrictions and the top ten
+shareholders, and whether they are parties acting in
+concert as defined in the Measures for Administration
+of Acquisition of Listed Companies.
+Percentage of H
+shares/domestic
+shares over total
+issued H shares/
+domestic shares
+respectively
+-
+14,014,887
+8,890,491
+25,159,394
+16,880,000
+shares
+25,159,394
+RMB ordinary
+16,880,000
+shares
+15,000,000
+RMB ordinary
+15,000,000
+shares
+14,496,433
+RMB ordinary
+shares
+14,496,433
+14,014,887
+8,890,491
+RMB ordinary
+shares
+RMB ordinary
+shares
+Statement on the connected relationships
+among the above shareholders or whether
+they are parties acting in concert
+Percentage of
+total issued share
+capital of the
+Company
+0%
+117,373,047
+3.45
+0.59
+lending agent
+for lending
+3
+BlackRock, Inc.
+Interest of corporation controlled by H shares
+Long position
+264,591,604
+7.79
+1.33
+the substantial shareholders
+Short position
+1,313,500
+Shares available
+Custodian-corporation/Approved
+0.05
+0.26
+1
+2
+Shenhua Group Corporation
+JPMorgan Chase & Co.
+Beneficial owner
+Beneficial owner; Investment manager;
+Domestic shares
+H shares
+N/A
+Long position
+the Company
+14,530,574,452
+73.06
+273,872,894
+8.05
+1.38
+Trustee (other than a bare trustee);
+Short position
+8,995,999
+88.11
+Name
+Shenhua Group
+Corporation Limited
+appointment
+Li Dong
+Senior Vice President
+Male
+55
+24 May 2011
+65.3
+25.1
+Wang Jinli
+Senior Vice President
+Male
+56
+27 September 2013
+73.0
+34.6
+the reporting
+period
+No
+Vice President
+8.0
+22 August 2014
+0
+0
+Yes
+Supervisory
+Committee
+Tang Ning
+Supervisor
+Male
+60
+18 June 2010
+41.0
+7.8
+Shen Lin
+Supervisor
+Male 55
+85.1
+Male
+49
+25 November 2015
+6.2
+0
+Huang Qing
+Secretary to the Board
+Male
+50
+6 November 2004
+101.4
+27.7
+Zhang Kehui
+Chief Financial Officer Female
+52
+22 January 2007
+97.1
+25.3
+25 November 2015
+53
+Male
+Vice President
+6.6
+0
+Wang Yongcheng Vice President
+Male
+53
+25 November 2015
+6.4
+Industrial & Commercial Bank of China -
+Shanghai Index 50 Trading Open-end Index
+Securities Investment Fund
+Industrial & Commercial Bank of China Limited
+-China Southern Consumption Vitality
+Flexible Allocation Hybrid Initiated Securities
+Investment Fund
+0
+Vice President
+Male
+57
+25 November 2015
+6.2
+0
+Wang Shumin
+Zhang Zifei
+51
+Wu Xiuzhang
+Chairman of the
+18 June 2010
+Ling Wen
+Vice Chairman
+Male
+52
+27 June 2014
+0
+0
+Yes
+Executive Director
+6 November 2004
+Han Jianguo
+Executive Director
+President
+Male
+57
+Executive Director
+24 May 2011
+Yes
+0
+Gender
+Male
+date)
+Scheduled
+expiration of
+term of office
+reporting
+period (RMB
+remuneration
+received for
+or associates
+ten thousand)
+previous years
+during the
+reporting period
+Zhang Yuzhuo
+Chairman
+Male
+53
+27 June 2014
+0
+73.1
+Age
+No
+99
+66
+18 June 2010
+45.0
+150
+No
+executive Director
+Independent Non- Male
+Chen Hongsheng
+65
+25 May 2012
+0
+0
+Yes
+Zhai Richeng
+29.8
+Non-executive Director Male
+Guo Peizhang
+22 August 2014
+No
+executive Director
+Fan Hsu Lai Tai
+Independent Non-
+Female
+executive Director
+Gong Huazhang Independent Non-
+Male
+70
+27 June 2014
+70
+18 June 2010
+45.0
+No
+69
+5 June 2009
+69
+45.0
+The securities transactions of the directors of the Company have been carried out in accordance with
+the "Model Code for Securities Transactions by Directors of Listed Issuers" (the "Model Code") set out in
+Appendix 10 of the Hong Kong Listing Rules. The Model Code is also applicable to the supervisors and
+senior management of the Company. The directors, supervisors or senior management have confirmed that
+they have fully complied with the Model Code in 2015 or during their terms of office.
+As at 31 December 2015, none of the directors, supervisors or member of the senior management had
+any interest or short position in the shares or underlying shares of the Company or of any its associated
+corporations within the meaning of Part XV of the SFO (Chapter 571 of the Laws of Hong Kong).
+VI. OTHER SIGNIFICANT MATTERS
+✓ Not applicable
+Applicable
+YEARS
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+V.
+2015 Annual Report 113
+Mr. Wu Xiuzhang resigned his position as a vice president of the Company on 23 March 2016 due to
+adjustment of work arrangement.
+Dismissed by the Board
+Retired due to age
+Deceased
+Resigned due to work
+change
+All the directors and supervisors have provided relevant training records to the Company and have
+participated in training programs in accordance with relevant requirements by regulatory authorities.
+The Secretary to the Board of the Company has participated in training programs organized by a number
+of institutions including the stock exchanges where the shares are listed and The Hong Kong Institute of
+Chartered Secretaries for more than 15 hours in accordance with relevant requirements.
+PUNISHMENT FROM SECURITY REGULATORY INSTITUTIONS IN THE RECENT THREE
+Reason for the change
+Number of current employees of the headquarter of the Company
+(Number of person)
+The Company has entered into service contracts with all of its directors and supervisors. None of the
+directors or supervisors has entered into or proposed to enter into any service contract with members of the
+Group which cannot be terminated by the Group within one year without any compensation (other than
+the statutory compensation). The Company has maintained appropriate liability insurance for its directors,
+supervisors and senior management. The permitted indemnity provisions are set out in such liability
+insurances.
+CHEN Hongsheng Non-executive Director
+114 | China Shenhua Energy Company Limited
+which the Company and subsidiaries bore cost (Number of person)
+12,185
+95,498
+Total number of current employees of the Group (Number of person)
+Number of retired employees in respect of
+94,806
+Number of current employees of the branches/subsidiaries of the Company
+(Number of person)
+692
+Senior vice president
+Employees
+(1)
+VII.
+EMPLOYEES OF THE GROUP
+Other than their working relationships in the Company, none of the directors, supervisors or the senior
+management has any financial, business or family relationship or any relationship in other material aspects
+with each other. For the year ended 31 December 2015, the Company had not granted any equity securities
+or warrants to its directors, supervisors and senior management or their respective spouses or children
+under the age of 18.
+When considering any matters or transactions at any board meeting, the directors are required to declare
+any direct or indirect interests and recuse themselves where appropriate. Save for their service contracts
+with the Company and Ningdong Power Equity Transfer Agreement, Xuzhou Power Equity Transfer
+Agreement and Zhoushan Power Equity Transfer Agreement entered between Shenhua Group Corporation
+and the Company on 23 October 2015, none of the directors and supervisors of the Company has any
+material personal interests, directly or indirectly, in material contracts entered into by the Company or
+any of its subsidiaries in 2015 and subsisting during or at the end of the year of 2015; the directors and
+supervisors of the Company have confirmed that they and their associates have not entered into any
+connected transaction with the Company and its subsidiaries.
+Senior vice president
+Vice president
+Vice president
+senior vice president
+Please refer to "Changes in shareholding and remuneration" in
+this section
+Please refer to "Changes in shareholding and remuneration” in
+this section
+The remuneration package of senior management of the
+Company was formulated by the Company in accordance with
+Provisional Measures for the Administration of the Annual
+Remuneration of the Senior Management.
+The remuneration package of relevant directors and supervisors
+was proposed by the Company in accordance with international
+and domestic practices and with reference to the remuneration
+of directors and supervisors of large-scale listed companies in
+China.
+The remuneration package of directors and supervisors
+was submitted to the general meeting for approval after
+consideration and approval by the Remuneration Committee and
+the Board, and the remuneration package of senior management
+was submitted to the Board for approval after consideration and
+approval by the Remuneration Committee
+Total remuneration actually obtained
+by all directors, supervisors and
+senior management at the end of the
+reporting period
+IV. CHANGES OF DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT DURING THE
+REPORTING PERIOD
+Remuneration payable for remuneration
+of directors, supervisors and senior
+management
+Decision-making procedures for the
+remuneration of directors, supervisors
+and senior management
+III. REMUNERATION OF DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+112 | China Shenhua Energy Company Limited
+2012-04
+External director
+Basis for determining the remuneration
+of directors, supervisors and senior
+management
+Senior vice president
+Name
+Wang Shumin
+Executive Director and
+Position held after
+the change
+the change
+Position held before
+Appointed by the Board
+Appointed by the Board
+Appointed by the Board
+Appointed by the Board
+Vice president
+Vice president
+Wu Xiuzhang
+Wang Yongcheng
+Reason for the change
+Position held before
+the change
+Wang Pingang
+Xue Jilian
+Hao Gui
+Wang Xiaolin
+Name
+Position held after
+the change
+Zhang Zifei
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+2011-12
+The directors and supervisors of the Company have commenced relevant tasks in accordance with
+the requirements of the Articles of Association, Rules of Procedures for the Board and Rules of
+Procedures for the Supervisory Committee.
+(II)
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+II.
+110 | China Shenhua Energy Company Limited
+Prior to the foregoing, Dr. Zhang had served in various capacities, including
+head of internal control and audit department of the Company, deputy
+manager of the financial department of Shenhua Group Corporation and
+assistant to the general manager of Shuohuang Railway Development
+Company Limited.
+Dr. Zhang has served as the chief financial officer of the Company since
+January 2007, and chairman of Shenhua Finance Company, a subsidiary of
+the Company, since August 2014.
+Born in February 1963, a researcher, a certified accountant in China as well as
+a fellow of certified public accountants of Australia (FCPA), Dr. Zhang has
+extensive experience in financial management and received a Ph.D. degree
+from Research Institute for Fiscal Science, Ministry of Finance of the PRC in
+2014.
+ZHANG Kehui Chief Financial Officer
+The senior management has reached decisions under the leadership of the Board and is responsible
+for operational tasks of the Company. President Han Jianguo is responsible for the Board and
+exercises his function as the President in accordance with the requirements of the Articles of
+Association. Senior Vice President Li Dong is in charge of coal production, safety supervision as well
+as environmental protection and energy conservation. Senior Vice President Wang Jinli is in charge
+of production operations and organization, sale of coal as well as the management of railways,
+ports and shipment transportation. Vice President Wu Xiuzhang is in charge of the coal chemical
+business. Vice President Wang Yongcheng is in charge of the materials procurement business.
+Vice President Zhang Zifei is assisting Li Dong in the management of coal production and safety
+supervision. Vice President Wang Shumin is in charge of the power generation business and tasks on
+social responsibilities. Secretary to the Board Huang Qing is in charge of duties of the secretary to
+the Board; and Chief Financial Officer Zhang Kehui is in charge of the duties of the Chief Financial
+Officer.
+Prior to the foregoing, Mr. Huang had served in various capacities,
+including secretary to the chairman of Shenhua Group corporation, deputy
+director of the General Office of Shenhua Group Corporation, deputy
+general manager of Hubei Provincial Railway Company and secretary to the
+deputy governor of the Hubei provincial government.
+Born in November 1965, Chinese, a senior engineer, Mr. Huang obtained
+a board secretary certification from the Shanghai Stock Exchange in 2004.
+Mr. Huang is a member of the Hong Kong Institute of Chartered Secretaries
+and a senior visiting scholar of the Eisenhower Foundation. Mr. Huang
+received a master's degree from Guangxi University in 1991.
+HUANG Qing Secretary of the Board
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+2015 Annual Report 109
+Mr. Wang had previously served as the deputy general manager of Guohua
+Power Branch of the Company as well as the deputy manager of the
+integrated planning department of North China Power Group Company.
+Prior to the foregoing, Mr. Wang served as the general manager of Guohua
+Power Branch of the Company from December 2010 to November 2015.
+From December 2010 to March 2013, he served as general manager of
+Beijing Guohua Power Company Limited. From March 2013 to November
+2015, he served as the chairman of Beijing Guohua Power Company Limited.
+Mr. Wang has been serving as a vice president of the Company since
+November 2015.
+Born in November 1962, Chinese, a senior engineer with the qualification
+as a professor. Mr. Wang has extensive experience in power business
+management. He graduated from Northeast Dianli University with a
+bachelor's degree in 1985 and obtained an MBA degree from China Europe
+International Business School in 2005.
+WANG Shumin Vice President
+Mr. Huang has served as secretary to the Board of the Company and
+company secretary of the Company since November 2004.
+Prior to the foregoing, Mr. Zhang had previously served as, among others,
+the chairman of Shenhua Xinjiang Energy Co., Ltd., the assistant to
+general manager and deputy general manager of Shenhua Shendong Coal
+Company and deputy director of its business development and coordination
+division, as well as the chief at Dahaize Mine and Bulianta Mine.
+Equity incentive plan awarded to directors, supervisors and senior management during
+the reporting period
+POSITIONS OF EXISTING DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
+DURING THE REPORTING PERIOD
+Deputy general manager
+2014-07
+2014-05
+General manager
+Director
+Shenhua Group Corporation
+Han Jianguo
+2010-04
+Director
+2014-05
+Applicable ✓ Not applicable
+Chairman
+Zhang Yuzhuo
+Ling Wen
+Expiry of term
+of office
+of term of office
+Commencement
+Position
+Name of shareholder
+Name
+Positions held in the shareholders of the Company
+(1)
+Shenhua Group Corporation
+Shenhua Group Corporation
+2003-08
+Mr. Zhang served as the chairman of Shenhua Shendong Coal Group Co.,
+Ltd. from June 2011 to November 2015 and the chairman of Shenhua Xinjie
+Energy Co., Ltd. from January 2015 to November 2015.
+Born in May 1958, Chinese, a senior engineer with the qualification
+as a professor, Mr. Zhang has extensive experience in coal business
+management. He graduated from Taiyuan University of Technology with a
+master's degree in 2004.
+106 China Shenhua Energy Company Limited
+Prior to the foregoing, Mr. Shen had served for Shenhua Baoshen Railway
+Co., Ltd. in various positions such as human resource manager, deputy chief
+economist, chief economist, deputy secretary to the Party committee and
+secretary to the commission for discipline inspection.
+Mr. Shen served as a deputy chief of the Department of Enterprise Culture
+of the Company and deputy chief of the Department of Party Building of
+the Shenhua Group Corporation from 2009 to 2010.
+Mr. Shen has served as an employee representative supervisor of the third
+session of the supervisory committee of the Company since August 2014,
+chief of the Department of Enterprise Culture of the Company since July
+2010 and chief of the Department of Party Building of Shenhua Group since
+July 2010.
+Born in May 1960, Chinese, a senior economist, Mr. Shen graduated from
+Harbin Institute of Technology in 2005 with a master's degree.
+SHEN Lin Supervisor
+Prior to the foregoing, Mr. Tang had served in various capacities, including
+director and general manager of Shenhua Hong Kong Limited, and head
+of board office, deputy supervisor and office supervisor of Shenhua Group
+Corporation.
+Mr. Tang has served as a supervisor of the third session of the Supervisory
+Committee of the Company since August 2014. Mr. Tang served as a
+supervisor of the second session of the supervisory committee of the
+Company from 2010 to 2014, deputy director of Property Ownership
+Administration of Shenhua Group Corporation from 2010 to 2011, general
+manager of the first division of the delegated Supervisory Committee of
+Shenhua Group Corporation from 2011 to 2013 and general manager of the
+delegated Supervisory Committee of Shenhua Group Corporation from June
+2013 to April 2015.
+TANG Ning Supervisor
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+Prior to the foregoing, Mr. Zhai had served in various capacities, including
+deputy manager of the financial department of Shenhua Group, director
+of financial division and chief accountant of Shenhua Zhunge'er Coal
+Company.
+Mr. Zhai served as a general manager of the financial department of
+Shenhua Group Corporation from November 2004 to June 2015.
+Mr. Zhai has served as the chairman of the third session of the supervisory
+committee of the Company since August 2014 and the director of Property
+Ownership Administration of the Company and Shenhua Group since June
+2015.
+Born in July 1964, Chinese, a senior accountant, Mr. Zhai received a master's
+degree from China University of Mining and Technology in 2003.
+ZHAI Richeng Chairman of the Supervisory Committee
+Prior to the foregoing, Mr. Chen had served in various capacities, including
+chairman of COSCO Shipping Co., Ltd., executive director and general
+manager of China COSCO Holdings Company Limited, vice president of
+China Ocean Shipping (Group) Company and general manager of COSCO
+International Freight Co. Ltd.
+Mr. Chen served as a non-executive director of the second session of the
+Board of the Company from 2012 to 2014, executive director, chairman of
+the Board and non-executive director of COSCO Pacific Limited from 2003
+to 2010, and non-executive director of China COSCO Holdings Company
+Limited from 2009 to 2010.
+Mr. Chen has served as a non-executive director of the third session of the
+Company since August 2014, external director of Sinotrans & CSC Holdings
+Corporation Limited since December 2011, of Shenhua Group Corporation
+since February 2012 and of State Development and Investment Corporation
+since April 2012.
+Born in March 1950, Chinese, a senior economist, Mr. Chen has extensive
+experience in the production, operation and management in the shipping
+industry. He graduated from Capital University of Economics and Business in
+2001 with a postgraduate diploma in business administration.
+2015 Annual Report 105
+Mr. Zhang has been serving as a vice president of the Company since
+November 2015 and employee representative director of Shenhua Group
+Corporation Limited since July 2014.
+LI Dong Senior Vice President
+Dr. Li has served as a senior vice president of the Company since May 2011,
+vice general manager of Shenhua Group Corporation since August 2006
+and general counsel of Shenhua Group Corporation since December 2011.
+Prior to the foregoing, Dr. Li had served in various capacities, including
+deputy chief engineer of Shenhua Group Corporation, chairman of Shenhua
+Zhunge'er Energy Co., Ltd., and head of General Manager's Office of
+Shenhua Group Corporation Limited.
+ZHANG Zifei Vice President
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+108 | China Shenhua Energy Company Limited
+Prior to the foregoing, Mr. Wang had previously served as the deputy
+manager of the human resources department, the deputy manager in
+charge of the business development department of Shenhua Group
+Corporation Limited and the deputy manager of the management
+administration department of Huaneng Fine Coal Company.
+Mr. Wang was the chairman of Shenhua Tianhong Trading Co., Ltd. from
+August 2002 to November 2011. From November 2011 to November 2015,
+he served as the chairman of Shenhua Logistics Group Corporation Limited.
+Mr. Wang has been serving as a vice president of the Company since
+November 2015.
+Born in April 1962, Chinese, a senior economist, Mr. Wang has extensive
+experience in business management. He obtained an EMBA degree from
+Nankai University in 2006.
+WANG Yongcheng Vice President
+Prior to the foregoing, Dr. Wu had previously served as the deputy general
+manager and vice chairman of China Shenhua Coal Liquefaction and
+Chemical Co., Ltd., the director of the research institute of China Shenhua
+Coal Liquefaction and Chemical Co., Ltd., the deputy manager of the coal
+liquefaction and chemical engineering department of Shenhua Group
+Corporation Limited and the deputy chief engineer of Beijing Yanshan
+Petrochemical Company.
+Born in January 1960, Chinese, a senior engineer with the qualification
+as a professor, Dr. Li has extensive experience in the management of coal
+enterprises in China. He obtained a master's degree from China Europe
+International Business School in 2005 and a Ph.D. degree from Liaoning
+Technical University in 2005.
+Dr. Wu served as the deputy chief engineer in Shenhua Group Corporation
+Limited from January 2005 to November 2015 and as the chairman of
+China Shenhua Coal Liquefaction and Chemical Co., Ltd. from April 2010
+to November 2015. From May 2009 to March 2013, Dr. Wu was the deputy
+director of National Institute of Clean-and-Low-Carbon Energy, a research
+institute set up by Shenhua Group Corporation Limited in Beijing.
+Born in July 1966, Chinese, a senior engineer with the qualification
+as a professor, Dr. Wu has extensive experience in chemical business
+management. He graduated from Shandong University in 1986 with a
+bachelor's degree and obtained a master's degree in applied chemistry
+from China University of Petroleum in 1989 and a Ph.D. degree in chemical
+engineering and technology in 2010.
+WU Xiuzhang Vice President
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+2015 Annual Report 107
+Prior to the foregoing, Dr. Wang had served in various capacities, including
+chairman of Shenhua Australia Holdings Pty Limited, chairman, general
+manager and deputy general manager of Shenhua Shendong Coal
+Company, director of the Changchun Coal Technology Centre, director of
+the Huichun Coal Mining Bureau.
+Dr. Wang had served as a vice president of the Company between 2004
+and 2013, and chairman of Shenhua Coal Trading Co., Ltd., a subsidiary
+of Shenhua Group, and chairman of Shenhua Trading Group Limited, a
+subsidiary of the Company between 2010 and 2014.
+Dr. Wang has served as a senior vice president of the Company since
+September 2013 and deputy general manager of Shenhua Group
+Corporation Limited since July 2013.
+Born in March 1959, Chinese, a researcher and senior engineer, Dr. Wang
+has approximately 30 years of operational and managerial experience in the
+coal industry in China. Dr. Wang received an EMBA Degree from Tsinghua
+University in 2009 and graduated from Liaoning University of Engineering
+and Technology with a Ph.D. degree in 2006.
+WANG Jinli Senior Vice President
+Dr. Wu has been serving as a vice president of the Company since
+November 2015.
+Chief information officer
+Born in April 1955, Chinese, Mr. Tang graduated from the Party School of
+the Central Committee of CPC in 1998.
+Chen Hongsheng
+Zhai Richeng
+2009-02
+Independent non-executive
+director
+China Overseas Land &
+Investment Limited
+China COSCO Holdings
+Company Limited
+Nanyang Commercial Bank
+(China) Limited
+Gong Huazhang
+2009-01
+Independent non-executive
+director
+COSCO Pacific Limited
+Fan Hsu Lai Tai
+Expiry of term
+of office
+Independent non-executive 2011-05
+director
+Commencement
+of term of office
+Name of other entities
+Name
+Positions held in other entities
+(II)
+2015-11
+2013-03
+Chairman
+Beijing Guohua Power
+Company Limited
+Wang Shumin
+Position
+director
+Independent non-executive
+director
+director
+External director
+2009-03
+SINOTRANS & CSC Holdings
+Co., Ltd.
+State Development &
+Investment Corp.
+Chen Hongsheng
+2014-06
+Independent non-executive
+China Railway Group Limited
+2015-11
+2010-12
+2007-12
+External director
+Guo Peizhang
+2011-04
+External director
+COFCO Corporation
+Corporation Limited
+2015-11
+2009-04
+External director
+Dongfang Electric
+Dongfang Electric
+2014-07
+Corporation Limited
+Shenhua Group Corporation
+Name
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+2015 Annual Report | 111
+2010-07
+2015-04
+2013-06
+Ownership Administration
+General manager of the
+division of delegated
+Supervisory Committee
+General manager of the
+division of Party
+Construction
+Shenhua Group Corporation
+Shen Lin
+Name of shareholder
+Shenhua Group Corporation
+2015-06
+Director of Property
+of Financial Department
+2015-05
+General manager
+2012-02
+Employee representative
+Shenhua Group Corporation
+Shenhua Group Corporation
+External director
+Tang Ning
+Position
+2003-01
+Expiry of term
+of office
+Commencement
+of term of office
+Chemical Co., Ltd.
+2015-11
+2015-11
+2005-01
+Zhang Zifei
+Deputy chief engineer
+Chairman
+Shenhua Group Corporation
+China Shenhua Coal
+Wu Xiuzhang
+2013-07
+2010-04
+Shenhua Group Corporation
+Li Dong
+Deputy general manager
+Deputy general manager
+2006-08
+Liquefaction and
+2011-12
+Wang Jinli
+Shenhua Group Corporation
+General counsel
+The Company ensured that proper conditions are in place for independent directors to perform
+their duties and proactively adopted opinions and suggestions from independent directors. The
+Company formulated the independent directors system to provide, in a systematic way, guarantee
+for the independent directors to perform their duties, and designated departments to undertake
+work related to independent directors' affairs and independent board committee, assisting the
+independent directors in conducting research and investigation, convening meetings and expressing
+independent opinions.
+2
+General Meeting
+2014 Annual
+1
+General Meeting
+No.
+Subject Matter
+Implementation of resolutions passed at the general meetings by the Board in 2015:
+✓ Not applicable
+Others
+Applicable
+Dissenting views of independent directors on matters of the Company:
+For the attendance of independent directors at Board meetings and general meetings, please refer
+to the sections on the attendance at Board meetings and general meetings of the Company.
+2014 Annual
+Status
+During the reporting period, the Company had three independent non-executive directors, among
+whom Mr. Gong Huazhang is an accounting professional. The Company has received written
+confirmations from each of the independent non-executive directors confirming their independence.
+The Company is of the view that all of the independent non-executive directors are independent.
+The number and background of the independent directors are in compliance with the requirements
+of the listing rules of the places of listing. During the reporting period, the independent directors
+of the Company strictly complied with the requirements of relevant laws and regulations, the
+Articles of Association of China Shenhua, relevant rules of procedure and the independent directors
+system of China Shenhua. They maintained their independence of being independent directors,
+performed their functions of supervision, participated in the making of various important decisions
+of the Company and reviewed regular reports and financial reports of the Company. Therefore the
+independent directors of the Company played an important role in the regulated operation of the
+Company and protected the legitimate interests of minority shareholders.
+120
+To approve the profit distribution plan
+of the Company for the year 2014 and
+authorize a committee comprising of
+Zhang Yuzhuo, Ling Wen and Han
+Jianguo, all being directors of the
+Company, to implement the profit
+distribution plan
+the 2015 first
+class meeting of
+the holders of H
+shares
+2014 Annual
+General Meeting,
+the 2015 first
+class meeting of
+the holders of
+A shares, and
+(III)
+2014 Annual
+General Meeting
+Status
+4
+3
+Subject Matter
+General Meeting
+General Meeting
+IV.
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+2015 Annual Report 119
+appointment and
+remuneration of auditors
+for the year 2015, please
+refer to the section
+"Significant Events" of
+this report.
+For details of the
+profit distribution plan
+was completed in the third
+quarter of 2015.
+Implementation of 2014
+To approve the appointment of auditors
+for the year 2015 and authorize a
+committee comprising of Zhang
+Yuzhuo, Ling Wen, Han Jianguo and
+Gong Huazhang, all being directors
+of the Company, to determine the
+remuneration of the auditors.
+No.
+(II) Performance of duties of independent directors
+4
+118 | China Shenhua Energy Company Limited
+The 5th meeting of the third session of the Board
+The 6th meeting of the third session of the Board
+2
+1
+Mehods
+Date
+Name
+No.
+In 2015, the Board of the Company convened a total of nine meetings, at which all the resolutions
+were passed after consideration. Details of the meetings are as follows:
+2342
+9
+Number of meetings held on-site with correspondence
+Number of meetings held by correspondence
+year
+including: Number of meetings held on-site
+Number of Board meetings held during the
+To approve a general mandate to the
+Board to, by reference to market
+conditions and in accordance with
+needs of the Company, issue additional
+A shares and H shares of the Company.
+Due to work arrangement, Mr. Wang Xiaolin resigned from the positions of an executive director, a member of the
+Safety, Health and Environment Committee and the senior vice president of the Company on 20 August 2015.
+16 February 2015
+20 March 2015
+3
+5
+On-site
+correspondence
+Correspondence
+Correspondence
+On-site
+On-site with
+Correspondence
+On-site
+Correspondence
+On-site with
+correspondence
+26 November 2015
+25 November 2015
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+21 August 2015
+23 October 2015
+24 April 2015
+17 December 2015
+The 11th meeting of the third session of the Board
+The 12th meeting of the third session of the Board
+The 13th meeting of the third session of the Board
+9
+8
+7
+The 7th meeting of the third session of the Board
+The 8th meeting of the third session of the Board
+The 9th meeting of the third session of the Board
+The 10th meeting of the third session of the Board
+6
+8 May 2015
+To approve a general mandate to the
+Board to, by reference to market
+conditions and in accordance with
+needs of the Company, repurchase A
+shares and H shares of the Company.
+3.
+Such mandates have not
+been exercised during the
+reporting period.
+Nomination Committee
+5.
+4.
+VI.
+V.
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+122 China Shenhua Energy Company Limited
+The Remuneration Committee is of the view that the Company has a well-established remuneration
+management system which reflects the economic benefit-oriented philosophy of a listed company
+and political, social and economic responsibility of a state-owned enterprise. The Remuneration
+Committee agrees to the remuneration management systems of the Company.
+In 2015, the Remuneration Committee held two meetings to consider resolutions including the
+remuneration packages of directors, supervisors and senior management for the year 2014, all of
+which were approved at the meeting. All members of the Committee attended all the meetings
+in person. During the reporting period, the Remuneration Committee reviewed the remuneration
+management system of the Company and the remuneration level for directors, supervisors, the
+president and other senior management for the relevant period.
+The main duties of the Remuneration Committee are to make recommendations to the Board on
+formulation of the remuneration plan or proposal for directors, supervisors, the president and other
+senior management, including but not limited to the criteria, procedures and the major systems
+of performance assessment, key incentive and punishment plans and systems; to examine how
+directors, supervisors, the president and other senior management of the Company perform their
+duties and carry out annual performance assessment on them; and to supervise the implementation
+of the remuneration system of the Company. The Remuneration Committee is delegated by the
+Board to determine the specific remuneration package, including non-monetary benefits, pension
+and compensation (including compensation for loss or termination of office or appointment) for all
+executive directors, supervisors, the president and other senior management, to ensure that none of
+the directors or any of their associates can determine their own remuneration; and to carry out other
+matters as authorised by the Board.
+Remuneration Committee
+The Audit Committee discussed separately. with the external auditors and no inconsistency was
+found in the briefings by the management
+Deloitte completed all audit procedures within the agreed time and intended to issue a
+standard unqualified audit report for 2015 to the Audit Committee. On 16 March 2016, the
+Audit Committee voted on the audited financial statements, the assessment report on internal
+control and the corporate social responsibility report for the year 2015 and agreed to submit
+such reports to the Board for consideration.
+The Audit Committee received briefings by the management to understand the overall
+operation of the Company during the reporting period. On 16 March 2016, the Audit
+Committee received a briefing given by Dr. Zhang Kehui, the Chief Financial Officer of the
+Company, on the accounting policies and the preparation of the financial statements.
+(4)
+(3)
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+The main duties of the Nomination Committee are to formulate the board diversity policy, regularly
+review the structure, size and diversity of the Board, and to make recommendations to the
+Board with regard to any proposed changes; assess and verify the independence of independent
+non-executive directors; draft procedures and criteria for election and appointment of directors,
+the president and other senior management and make recommendations to the Board; extensively
+seek for qualified candidates of directors, the president and other senior management; examine the
+aforementioned candidates and make recommendations; nominate candidates for members of the
+Board Committees (other than members of the Nomination Committee and the chairman of any
+Board Committee); draft development plans for the president, other senior management and key
+reserve talents; review the board diversity policy where appropriate, and review the quantitative
+objectives set up by the Board to implement the board diversity policy and their progress of
+achievement, as well as disclose the results of review in the Corporate Governance Report annually;
+and carry out any other matters as authorised by the Board.
+2015 Annual Report 121
+In 2015, the Nomination Committee held two meetings to consider resolutions including those in
+relation to the appointment of Wu Xiuzhang and three other persons as the vice presidents of the
+Company, all of which were approved at the meetings. All members of the Committee attended all
+meetings in person.
+The principal duties of the Safety, Health and Environment Committee are to supervise the
+implementation of health, safety and environmental protection plans of the Company; make
+recommendations to the Board or the president on material issues in respect of health, safety
+and environmental protection of the Company; inquire into the material incidents regarding the
+Company's production, operations, property assets, staff or other facilities; as well as review and
+supervise the resolution of such incidents and carry out other matters as authorised by the Board.
+Note:
+124 China Shenhua Energy Company Limited
+The remuneration of the management is determined in accordance with the Provisional Measures for the
+Administration of the Annual Remuneration of the Senior Management. In addition to the basic salary,
+the Board of the Company conducts appraisal based on the performance of the management, and a
+performance bonus is determined based on the results of such appraisal.
+The Company established the remuneration package of the senior management in accordance with the
+Provisional Measures for the Administration of the Annual Remuneration of the Senior Management
+of China Shenhua Energy Company Limited. The Company has adopted a performance appraisal system
+for senior management which combines annual appraisal of operational performance and appraisal of
+operational performance over the terms of office. Such annual appraisal and appraisal over the terms of
+office are conducted based on the letter of responsibility of operational performance signed by the Board
+and the management.
+VII. THE EXAMINATION AND EVALUATION AND THE INCENTIVE MECHANISM FOR THE
+SENIOR MANAGEMENT
+On 28 June 2014, China Shenhua disclosed the Announcement on the Performance of Non-competition
+Undertaking: China Shenhua will commence the acquisition of 14 assets of Shenhua Group and its
+subsidiaries before 30 June 2019 (submitting the asset acquisition proposal to the internal competent
+authorities of China Shenhua for approval procedure). In October 2015, the Company completed the
+acquisition of the equity interests of three power companies controlled by Shenhua Group Corporation.
+Target assets mainly included clean coal-fired generators equipped with "ultra-low emission" technology
+and with high capacity.
+The Company and Shenhua Group Corporation entered into a Non-competition Agreement in 2005.
+Pursuant to the agreement, Shenhua Group has committed not to compete with the Company in respect of
+the Company's principal businesses whether in or outside of the PRC, and granted the Company an option
+and pre-emptive right to acquire from Shenhua Group any potential competing business. In 2015, Shenhua
+Group Corporation strictly abided by its undertakings, and there was no violation of such undertakings.
+The Company is principally engaged in the production and sale of coal and power, as well as railway, port,
+shipping transportation and coal-to-olefins. Currently, the major coal, power and olefins products produced
+by enterprises such as Shenhua Ningxia Coal Co., Ltd. and Shenhua Guoneng Group Company Limited which
+are the existing and continuing assets of Shenhua Group Corporation, the controlling shareholder of the
+Company, are similar to those produced by the Company in terms of type and quality, but each company
+also has its relatively independent regional markets.
+While preserving the independent and complete business system and the market-oriented self-operation
+capability, the Company will further regulate related party transactions, minimize possible competition and
+strive to maximize the interest of the shareholders.
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+2015 Annual Report 123
+As a transitional measure for the prevention of competition, the Company was entrusted by Shenhua Group
+Corporation upon the completion of relevant procedures to provide daily operation management services
+for existing assets and businesses of Shenhua Group. As at the end of the reporting period, the Company
+engaged three deputy general managers of Shenhua Group Corporation as president and senior vice
+presidents of the Company.
+China Shenhua has an independent and complete business system as well as a market-oriented
+self-operation capability. The Company is independent from its controlling shareholder in terms of business,
+personnel, assets, organization and finance.
+INDEPENDENCE AND COMPETITION
+During the reporting period, the Supervisory Committee did not have any dissenting view over the matters
+supervised by the Supervisory Committee.
+THE SUPERVISION OPINION OF THE SUPERVISORY COMMITTEE
+In 2015, the Safety, Health and Environment Committee held one meeting to consider the 2014 CSR
+Report, and the resolution was approved at the meeting. All members of the Committee attended
+the meeting in person.
+Safety, Health and Environment Committee
+Such mandates have not
+been exercised during the
+reporting period.
+After Deloitte had issued its preliminary audit opinions, the Audit Committee reviewed the
+draft financial statements for 2015. On 25 February 2016, the Audit Committee reviewed the
+2015 Assessment Report on Internal Control (Draft) and 2015 Financial Statements (Draft) of
+China Shenhua prepared by the Company.
+(2)
+Fan Hsu Lai Tai, Gong Huazhang
+Gong Huazhang, Fan Hsu Lai Tai, Guo Peizhang, Chen
+Hongsheng
+Zhang Yuzhuo, Ling Wen, Han Jianguo
+Zhang Yuzhuo
+Gong Huazhang
+Members
+Chairman
+Audit Committee
+Strategy Committee
+Committee
+The third session
+The Company has established five committees under the Board, and the details are as follows:
+THE PERFORMANCE OF DUTIES OF THE COMMITTEES UNDER THE BOARD DURING THE
+REPORTING PERIOD
+In accordance with the
+mandate, the Company
+issued super short-term
+financial debentures and
+medium-term notes for
+several times during the
+reporting period, and one
+of its subsidiaries issued
+bonds of USD1.5 billion.
+To approve the mandate to the Board
+of the Company to determine the
+proposed issue of debt financing
+instruments of the Company within
+the limit of issuance; to delegate
+the mandate to the president of the
+Company, and the Chief Financial
+Officer, within the scope of this
+mandate for determining other
+matters related to such issuance and
+implementing specific measures upon
+determining the type, principal, term
+and use of proceeds of each issuance
+of the debt financing instruments by
+the Board of the Company.
+General Meeting
+2014 Annual
+5
+Guo Peizhang, Zhang Yuzhuo, Fan Hsu Lai Tai
+Before the accounting firms for 2015, namely Deloitte Touche Tohmatsu Certified Public
+Accountants LLP and Deloitte Touche Tohmatsu ("Deloitte"), proceeded with on-site auditing,
+the Audit Committee had consulted with Deloitte to determine the timing of the Company's
+2015 audit. On 19 October 2015, the Audit Committee reviewed the Company's plans for the
+audit plan for the year 2015; on 5 November 2015, the Audit Committee reviewed the internal
+control assessment plan for the year 2015.
+Guo Peizhang, Ling Wen, Han Jianguo
+Fan Hsu Lai Tai
+(1)
+The Audit Committee has performed necessary procedures for the preparation of the 2015 annual
+report of the Company:
+In 2015, the Audit Committee held nine meetings to consider resolutions such as the financial reports
+and internal control reports of the Company. Suggestions were made on improving the management
+of accounts receivable and enhancing the clearance of spare parts. All resolutions were approved at
+the meetings and all members of the Committee attended all meetings in person.
+The principal duties of the Audit Committee were: to supervise and assess the work of the external
+audit institutions; to guide the internal audit work; to review and provide opinions on the financial
+reports of the Company; to evaluate the effectiveness of risk management and internal control;
+to coordinate communications between the management, internal audit department and relevant
+departments, and the external audit institutions; other duties authorized by the Board and
+other issues related to the relevant laws and regulations. During the reporting period, the Audit
+Committee carried out its duties strictly in accordance with the Rules of Procedure of Meetings of the
+Audit Committee of the Board, Rules on Work of the Audit Committee of the Board and Rules on
+Work of Annual Reports of the Audit Committee of the Board of China Shenhua.
+Audit Committee
+2.
+In 2015, the Strategy Committee of the Board held two meetings to consider resolutions such as the
+acquisition of certain equity interests held by Shenhua Group (being the controlling shareholder), the
+2016 annual capital expenditure plan of China Shenhua, all of which were approved at the meetings.
+All members of the Committee attended all meetings in person.
+The principal duties of the Strategy Committee are to conduct researches and to submit proposals
+regarding the long-term development strategies and material investment decisions of the Company;
+conduct researches and submit proposals regarding material investments and financing plans which
+require approval from the Board; conduct researches and submit proposals regarding material capital
+operations and assets operation projects which require approval from the Board; conduct researches
+and submit proposals regarding other material matters that may affect the Company's development;
+carry out examination on the implementation of the above matters; and carry out other matters as
+authorised by the Board.
+Strategy Committee
+1.
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+|| China Shenhua Energy Company Limited
+Note: Due to work arrangement, Mr. Wang Xiaolin resigned from the positions as an executive director, member of the Safety, Health
+and Environment Committee under the Board and senior vice president of the Company on 20 August 2015.
+Guo Peizhang
+Guo Peizhang
+Environment Committee
+Safety, Health and
+Nomination Committee
+Remuneration Committee
+3/3
+Chen Hongsheng
+3/3
+For further details of the information required to be disclosed in accordance with the requirements
+as set out in Appendix 14 of the Hong Kong Listing Rules, please refer to the relevant sections of this
+report.
+The Board of the Company has set out the board diversity policy and members of the Board
+constituted in the Company are from a variety of backgrounds, which guarantees the rationality and
+reasonableness of decisions made by the Board. Members of the Board are individuals from various
+domestic and overseas industries, including one female director. The number of non-executive
+directors is over half of all directors. Each director's knowledge base and field of expertise are
+professional and complementary in the overall board structure.
+The convening, voting and disclosure procedures of board meetings of the Company, rules of
+procedure of the Board and procedures for nomination and appointment of directors are in
+compliance with relevant requirements. The Board is a standing decision-making body of the
+Company. The Articles of Association sets out the respective duties of the Chairman of the Board and
+the President in detail.
+The Board is responsible for corporate governance of the Company. The Company has been in
+compliance with the requirements of corporate governance policies as set out in Appendix 14 of the
+Hong Kong Listing Rules to establish its own system of corporate governance. As of 31 December
+2015, the Company has been in full compliance with the provisions and most of the recommended
+best practices as specified therein. For the terms of reference of the Board and the Board Committees
+to perform duties under the Corporate Governance Code, please refer to the Articles of Association,
+Rules of Procedure of the Board and rules of procedure of the Board Committees, which have been
+published on the websites of the stock exchanges where the Company is listed and on the Company's
+website.
+Compliance with the Corporate Governance Code
+During the reporting period, there was no material difference between the corporate governance of
+the Company and the relevant rules and requirements of the CSRC.
+Compliance with domestic regulatory requirements
+II.
+(1)
+No
+I.
+Section IX Corporate Governance and Corporate Governance Report
+2015 Annual Report 115
+Approximately 61.912 million hours
+RMB2.67 billion
+Total number of working hours of outsourced work
+Total remuneration paid for outsourced work
+(IV) Outsourced Work
+The Company has established a training system with different levels and channels to provide the
+employees with appropriate training in job skills, safe production and group management etc.
+During 2015, the accrued capital used for training was approximately RMB0.14 billion. The number
+of attendances in training was approximately 2.25 million with training hours of approximately 43
+hour/person for average. For details, please refer to the 2015 CSR Report of the Group.
+GENERAL MEETINGS
+(III) Training program
+Shareholders' rights
+II.
+The Company accepted registration of shareholders' attendance, and arranged a special session
+for shareholders for effective consideration of proposals in the meeting. Shareholders actively
+participated in such meetings and were entitled to exercise their various rights, such as the right
+to know, the right of speech, the right to question and the right to vote. Directors, supervisors and
+senior management of the Company attended the meeting. Arranging special Q&A session in the
+meeting enabled interactions between shareholders and the management.
+All the resolutions at the shareholder meeting mentioned above were passed. The voting results
+were disclosed on the website of the Hong Kong Stock Exchange on 29 May 2015 and the website of
+the Shanghai Stock Exchange on 30 May 2015.
+29 May 2015
+29 May 2015
+29 May 2015
+Date
+General Meetings:
+1st Shareholders' Meeting of H Shares of 2015
+1st Shareholders' Meeting of A Shares of 2015
+2014 Annual General Meeting
+Meetings
+Convening of General Meetings during the Reporting Period
+The Company discloses information in strict compliance with the listing rules of its places of listing.
+The Company makes its investor relations hotline, fax and email available. The Company has
+established an effective communication channel with shareholders through an information disclosure
+system and an investor reception system.
+Pursuant to Articles 68 and 74 of the Articles of Association of China Shenhua, shareholders may
+submit written request to the Board for the convening of extraordinary general meetings or class
+meetings and submit proposals to the Company at general meetings. Upon providing the Company
+with written evidence of the class and number of shares of the Company held, and following
+verification of the shareholders' identity by the Company, shareholders are entitled to inspect the
+relevant information of the Company or obtain the Articles of Association, the register of members,
+minutes of general meetings, resolutions of meetings of the Board and the supervisory committee,
+regular reports and financial and accounting reports, etc.
+2.
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+116 China Shenhua Energy Company Limited
+1.
+As owners of the Company, the shareholders of the Company are entitled to the rights as
+stipulated in laws, administrative regulations and the Articles of Association of China Shenhua. The
+shareholders' general meeting is the highest authority of the Company, through which shareholders
+can exercise their rights. The controlling shareholder takes part in the Company's operations and
+decisions through shareholders' general meetings and the Board.
+The shareholders' representative, supervisors' representative, witness lawyers and the representative
+of Computershare Hong Kong Investor Services Limited acted as scrutineers at general meetings. The
+PRC legal advisor of the Company issued the legal opinion. Representatives of the auditors of the
+Company for 2014 were present at the Annual General Meeting and announced their audit opinions.
+In accordance with the law, the Company has established a social security system for payment of
+the corporate's part of the social insurance costs for social welfare protection, including employee
+pensions and health care benefits. In accordance with the national policy, the Company has also
+established a corporate annuities and supplementary medical insurance policy to supplement the
+basic employee pension and medical benefits. The Company has concerned about staff's production
+and living, and actively organized "warmth and care delivery" activities, and provided support and
+help for staff in need.
+95,498
+College graduate
+University graduate
+Postgraduate and above
+Education level
+Education Level
+Total
+Others
+Sales and marketing
+Technical support
+Research and development
+Finance
+Management and administration
+Operation and repair
+Function
+Function
+(II)
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+Specialized secondary school graduate
+The Company has formulated a remuneration policy comprising basic salary and performance
+assessment. The remuneration policy is competitive within the industry and is favoring the front-line
+employees.
+Graduate of technical school, high school and below
+Remuneration policy and social welfare
+23,766
+14,888
+25,512
+28,202
+3,130
+person
+Number of
+95,498
+7,217
+2,312
+12,081
+2,911
+1,620
+13,372
+55,985
+person
+Number of
+Total
+2015 Annual Report 117
+CORPORATE GOVERNANCE
+III.
+4
+9
+0
+0
+4
+9
+0
+0
+6
+9
+0
+0
+2
+4
+0
+0
+0
+0
+0
+0
+9
+No
+3/3
+No
+3/3
+No
+3/3
+No
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+No
+3/3
+No
+3/3
+No
+2 2 2 2 2 2 2 2
+0
+0
+4
+9
+0
+3/3
+454
+Gong Huazhang
+Yes
+Fan Hsu Lai Tai
+No
+Wang Xiaolin
+No
+Han Jianguo
+No
+No
+Zhang Yuzhuo
+Ling Wen
+director or not
+Name of director
+at Board
+Required
+attendance
+(1) Attendance at Board meetings and general meetings
+PERFORMANCE OF DUTIES OF THE BOARD
+0
+Yes
+Guo Peizhang
+Independent meetings this
+6604966
+9
+9
+9
+row
+meetings in a
+Absence
+Attendance
+by proxy
+by written
+resolution
+at two
+year
+Attendance
+meetings
+Absent
+Attendance
+at general
+Attendance at Board meetings
+No
+Attendance
+in Person
+Yes
+Voluntary Announcement Change in the Senior Management
+2015/03/03
+22
+Notice of Board Meeting
+2015/03/10
+23
+16
+24
+Announcement on the Major Operational Data of February 2015
+2015/03/16
+25
+Overseas Regulatory Announcement
+2015/03/18
+2015/03/11
+Monthly Return of Equity Issuer on Movements in Securities for the month ended 28
+February 2015
+Overseas Regulatory Announcement
+2015/02/16
+Announcement on the 2015 Business Targets and Capital Expenditure Plan
+20
+2015/02/16
+Announcement on the Major Operational Data of January 2015
+19
+2015/02/16
+18
+2015/02/13
+Overseas Regulatory Announcement
+17
+2015/02/10
+Overseas Regulatory Announcement
+26
+21
+Overseas Regulatory Announcement
+33
+27
+2015/02/10
+134 China Shenhua Energy Company Limited
+2015/04/10
+Notification Letter and Request Form to Non Registered Holder
+36
+2015/04/07
+Overseas Regulatory Announcement
+35
+2015/04/07
+Overseas Regulatory Announcement
+34
+2015
+2015/03/31
+Monthly Return of Equity Issuer on Movements in Securities for the month ended 31 March
+2015/03/22
+2014 Annual Report
+32
+Overseas Regulatory Announcement
+2015/03/20
+28
+Overseas Regulatory Announcement
+2015/03/20
+29
+2015/03/20
+Overseas Regulatory Announcement
+30
+Announcement of Annual Results for the Year Ended 31 December 2014
+2015/03/20
+31
+2014 CSR Report
+2015/03/22
+2015/03/20
+Announcement on Preliminary Financial Data for the Year 2014
+No. Disclosure document for A Shares (published on the website of Shanghai Stock Exchange)
+2015/02/09
+2015/03/21
+34 2014 Annual Financial Statement and Audit Report of China Shenhua
+2015/03/21
+2015/03/21
+Work Report of the independent directors of China Shenhua for the Year 2014
+Special Report of China Shenhua on Deposit and Actual Use of Proceeds for 2014
+33
+15
+32
+Special Explanation of China Shenhua on the Appropriation of Funds by the Controlling
+Shareholder and Other Related Parties of the Company in 2014
+31
+Announcement on Resolutions of the 6th Meeting of the third Session of the Board of China 2015/03/21
+Shenhua
+30
+2015/03/21
+Annual Report of China Shenhua
+2015/03/21
+Section XII Index to Information Disclosure (Continued)
+No. Disclosure document for A Shares (published on the website of Shanghai Stock Exchange)
+Date of
+publication
+40
+40
+Announcement of China Shenhua the Proposed Signing of the Agreement for Persons Acting 2015/04/04
+in Concert with Zhuhai Port Co., Ltd.
+39
+2015/03/21
+2015/03/21
+2015/03/21
+2015/03/21
+China Shenhua: Special Audit Report on Deposit and Actual Use of Proceeds of China
+Shenhua Energy Company Limited for 2014
+38
+Audit Report of China Shenhua on Internal Control for 2014
+37
+2014 Assessment Report on Internal Control of China Shenhua
+2014 CSR Report of China Shenhua
+36
+35
+29
+2015/03/21
+Announcement of China Shenhua on the Closure of the Coal-fired Generating Unit of
+Guohua Beijing Thermal Power Plant
+28
+Announcement on the Major Operational Data of China Shenhua for February 2015
+Announcement of China Shenhua on the Redemption of Ultra Short-term Financing
+Debentures at Maturity
+21
+20
+2015/03/12
+Announcement of China Shenhua on the 2015 Business Targets and Capital Expenditure Plan 2015/02/17
+Announcement of China Shenhua on Changes in Senior Management
+19
+18
+Announcement of China Shenhua on the Completion of the 168-hour Trial Run of Generator 2015/02/17
+No. 1 of the Wanzhou Port and Power Integration Project in Chongqing
+17
+2015/02/17
+Announcement on the Major Operational Data of China Shenhua for January 2015
+16
+17
+Ultra Short-term Financing Debentures for 2015
+2015/02/17
+2015/03/17
+Announcement of China Shenhua on the Completion of the 168-hour Trial Run of Generator 2015/04/08
+No. 3 of Fujian Hongshan
+2015/03/19
+Highlights of the Annual Report of China Shenhua (Updated)
+2015/03/21
+Announcement on Resolutions of the 3rd Meeting of the third Session of the Supervisory
+Committee of China Shenhua
+27
+2015/03/21
+2015/03/21
+Report on the Performance of Duties by the Audit Committee of China Shenhua for 2014
+Special Explanation and Independent Opinion on the Company's External Guarantee by
+independent non-executive directors of China Shenhua
+26
+25
+2015/03/21
+Special Report and Audit Report of China Shenhua on Deposit and Actual Use of Proceeds
+for 2014
+24
+2015/03/21
+Highlights of the Annual Report of China Shenhua
+23
+2015/03/21
+22
+Announcement of China Shenhua on the Results of the Issuance of the Second Tranche of
+14
+Notice of the 2014 Annual General Meeting and the 2015 First Class Meeting of the Holders
+of A Shares of China Shenhua
+2015/05/19
+Announcement on the Major Operational Data of China Shenhua for April 2015
+58
+Announcement of China Shenhua on the Completion of the 168-hour Trial Run of Generator 2015/05/15
+No. 4 of Fujian Hongshan
+57
+2015/05/09
+59
+Information on the 2014 Annual General Meeting of China Shenhua
+559
+Annual General Meeting
+2015/05/09
+Announcement of China Shenhua on the Addition of Ex Tempore Motions at the 2014
+55
+2015/05/09
+56
+Announcement of China Shenhua Regarding the Progress in Obtaining Exploration Rights of 2015/05/29
+Coal Resources at Taigemiao
+60
+60
+66
+Announcement of China Shenhua on the Change of the Representatives of the Sponsor
+65 Announcement of China Shenhua on Final Dividend Distribution for 2014
+Announcement on Resolutions of 2014 Annual General Meeting, 2015 First Class Meeting of 2015/05/30
+the Holders of A Shares and 2015 First Class Meeting of the Holders of H Shares of China
+Shenhua
+Date of
+publication
+64
+63
+663
+No. Disclosure document for A Shares (published on the website of Shanghai Stock Exchange)
+Section XII Index to Information Disclosure (Continued)
+2015 Annual Report 131
+2015/05/30
+Legal Opinion on 2014 Annual General Meeting, 2015 First Class Meeting of the Holders of A 2015/05/30
+Shares and 2015 First Class Meeting of the Holders of H Shares of China Shenhua
+Announcement of China Shenhua on the Notice to Creditors in Relation to a General
+Mandate Obtained by the Board to Repurchase Shares of the Company
+Announcement of China Shenhua Regarding the Approval for the Construction of the Project 2015/05/29
+of Golmud Thermal Power Plant in Qinghai
+62
+61
+Information on the 2015 First Class Meeting of the Holders of A Shares of China Shenhua
+Announcement on Resolutions of the 8th Meeting of the third Session of the Board of China 2015/05/09
+Shenhua
+54
+53
+2015/05/07
+46
+2015/04/25
+Announcement of China Shenhua Regarding Online Discussion Forum for Investors
+45
+44
+2015/04/25
+2015/04/21
+Announcement on the Major Operational Data of China Shenhua for March 2015
+Announcement of China Shenhua on Idle Proceeds Used for Temporary Replenishment of
+Working Capital
+44
+43
+2015/04/11
+H Share Circular of China Shenhua
+42
+224
+2015/04/11
+Announcement on Resolutions of the 7th Meeting of the third Session of the Board of China 2015/04/25
+Shenhua
+41
+44
+Announcement of China Shenhua on Adjustments to Electricity Tariffs
+Announcement of China Shenhua on the Approval Obtained for the New Construction
+Project of Shengli Power Plant
+52
+Replenishment of Working Capital upon Expiration
+2015/04/28
+2015/04/25
+China Shenhua - Audit Opinion from China International Capital Corporation Limited and
+China Galaxy Securities Co., Ltd. in Relation to the Idle Proceeds Used for Temporary
+Replenishment of Working Capital by China Shenhua Energy Company Limited
+Announcement of China Shenhua on Repayment of Idle Proceeds Used for Temporary
+51
+50
+2015/04/25
+First Quarterly Report of China Shenhua
+49
+2015/04/25
+Announcement on Resolutions of the 4th Meeting of the third Session of the Supervisory
+Committee of China Shenhua
+48
+2015/04/25
+47
+15
+2015/02/11
+2015/02/10
+Company
+Resolution on the 2015 first quarterly report of the
+Company for the year 2014
+Resolution on the Supervisory Committee's report of the
+Control of the Company
+Resolution on the 2014 Assessment Report on Internal
+Resolution on the 2015 first quarterly financial report of
+the Company
+of the Proceeds of the Company
+Company
+Resolution on the 2014 annual report of the Company
+Resolution on the 2014 CSR report of the Company
+Resolution on the 2014 financial report of the Company
+Resolution on the 2014 profit distribution plan of the
+Subject matter
+Committee
+Supervisory
+session of the
+Resolution on the Special Report on Deposit and Actual Use
+Resolution on the provisional use of raised funds as working
+capital
+II.
+The 5th meeting 21 August Beijing
+Resolution on the Special Report on Deposit and Actual Use
+of the Proceeds of the Company
+All
+Supervisory
+session of the
+of the third
+The 6th meeting 23 October Beijing On-site
+Company
+Resolution on the 2015 interim financial report of the
+Resolution on the 2015 interim report of the Company
+All
+On-site
+Committee
+Supervisory
+session of the
+of the third
+of the third
+All
+On-site
+Beijing
+The Supervisory Committee of the Company had, based on the attitude of being responsible to all shareholders,
+performed their supervisory duties faithfully and carried out their work proactively and effectively to protect the
+lawful interests of the Company and its shareholders in accordance with the relevant requirements under the
+"Company Law of the People's Republic of China" and the "Articles of Association”
+Section X Supervisory Committee's Report
+2015 Annual Report 125
+Please refer to the relevant announcement disclosed by the Company on the website of the Shanghai
+Stock Exchange on 25 March 2016 for the 2015 Assessment Report on Internal Control and Audit Report on
+Internal Control.
+Deloitte Touche Tohmatsu Certified Public Accountants LLP, engaged by the Company, has issued the
+standard unqualified Audit Report on Internal Control. The Audit Report on Internal Control is of the
+opinion that as at 31 December 2015, China Shenhua had maintained effective internal control over its
+financial reporting in all material aspects in accordance with the Basic Standard for Enterprise Internal
+Control and the relevant requirements. The above audit opinions are in line with the opinions set out in the
+Self-assessment Report of the Board.
+EXPLANATION ON THE AUDIT REPORT ON INTERNAL CONTROL
+Applicable ✓ Not applicable
+Material defects in the internal control during the reporting period:
+Based on the identification of material defects in the internal control over non-financial reporting of the
+Company, no material defects were identified by the Company in the internal control over non-financial
+reporting as at the base date of the Assessment Report on Internal Control. Nothing that would affect the
+evaluation result of the effectiveness of internal control occurred from the base date of the Assessment
+Report on Internal Control to the date of issuance of the Assessment Report on Internal Control.
+As presented in the 2015 Annual Self-assessment Report on Internal Control of the Board of the Company,
+no material defects were found in the internal control of financial reporting as at the base date of the
+Assessment Report on Internal Control, pursuant to the identification of material defects in the internal
+control over the financial reporting of the Company. The Board is of the opinion that the Company has
+maintained effective internal control over its financial reporting in all material aspects in accordance with
+the requirements under the Enterprise Internal Control Normative System and relevant regulations and its
+supplementary guidelines as well as other regulatory requirements on internal control.
+Not applicable
+✓ Applicable
+IX.
+VIII. SELF-ASSESSMENT REPORT ON INTERNAL CONTROL
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+I.
+Resolution on the 2015 third quarterly report of the
+PERFORMANCE OF DUTIES OF THE SUPERVISORY COMMITTEE
+In 2015, the Supervisory Committee held four meetings in total and all the resolutions had been approved.
+The 4th meeting 24 April
+Committee
+Supervisory
+session of the
+of the third
+All
+On-site
+Beijing
+The 3rd meeting 20 March
+Meeting
+Venue
+Date
+supervisors
+Method of Attendance of
+Meeting
+During the reporting period, in compliance with the requirements of the "Articles of Association" and the
+"Rules of Procedures of Meetings of the Supervisory Committee", the Supervisory Committee conducted
+strict supervisions on the lawful operations, financial position and the performance of duties of the Board
+and the management of the Company.
+Company
+Resolution on the 2015 third quarterly financial report of
+the Company
+Committee
+H Share Announcement of China Shenhua
+69
+Announcement of China Shenhua on the Results of the Issuance of the First Tranche of Ultra 2015/01/10
+Short-Term Financing Debentures for 2015
+5
+Announcement of China Shenhua on the Approval Obtained for Phase II Construction Project 2015/01/10
+of Shishi Hongshan Thermal Power Plant
+2015/01/07
+2015/01/07
+H Share Announcement of China Shenhua
+2 3 4
+1 Announcement of China Shenhua on Mining Concessions Obtained for Coal Mines Located in 2015/01/06
+Guojiawan and Qinglongsi.
+Date of
+publication
+Announcement on International Credit Rating of China Shenhua
+Section XII Index to Information Disclosure
+2015 Annual Report 129
+In 2015, by virtue of its professional investor relations services, China Shenhua was awarded the 2015 Best
+Investor Relations of the Energy Sector in the Greater China Award by IR Magazine in the UK.
+In 2015, the Company constantly embarked on investor relations tasks with the focus on expectation
+management. The Company preliminarily determined the disclosure model of annual operating information
+to be "annual plan + monthly refinement + adjustments during the year", which has laid a relatively
+solid foundation for expectation management. At the same time, the Company streamlined work and
+reorganized as well as consolidated market feedbacks on a quarterly basis in order to disclose information
+on changes in results in a timely manner, in turn leading the synchronization between market valuation
+and operating results of the Company.
+2015/01/15
+CONSTANTLY OPTIMIZING INVESTOR RELATIONS AND IMPROVING EXPECTATION
+MANAGEMENT
+7
+2015/01/15
+Announcement of China Shenhua on the Change of the Representatives of the Sponsor
+Preliminary Financial Data of China Shenhua for 2014
+14
+13
+Announcement of Shenhua Regarding the Progress of the Watermark Phase I Open-cut Coal 2015/02/10
+Mine Project
+12
+2015/01/22
+Announcement on the Major Operating Data of China Shenhua for December 2014
+Announcement of China Shenhua on the Approval for the Zhundong Wucaiwan Power Plant 2015/01/29
+(Phase II) of Shenhua Shendong Power
+11
+10
+2015/01/21
+H Share Announcement of China Shenhua
+9
+2015/01/21
+Announcement of China Shenhua on the Progress of the Issuance of USD-denominated
+Bonds
+8
+Announcement of China Shenhua on the 2014 unaudited balance sheet and income
+statement of Shenhua Finance Company
+66
+In 2015, the Company continued to improve its communication with the capital markets and have
+sufficient communication therewith pursuant to the laws and regulations. While insisting on deploying the
+Company's major leaders in the senior management to directly participate in investor relations campaigns
+person, the Company has focused on the further involvement of each of its departments. In 2015, the
+finance, strategy, sales, corporate management and other departments of the Company continued to
+complete the collection of information and data and meanwhile, the Company engaged in face-to-face
+conversations with investors, which has further enhanced the Company's understanding about the demand
+for information about the capital markets, and ensured that further investor relations tasks can be
+proceeded with.
+IV.
+INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON CONNECTED
+TRANSACTIONS OF THE COMPANY
+During the reporting period, the Resolution in Relation to the Acquisition of Certain Equity Interests Held
+by Shenhua Group (being the Controlling Shareholder) was approved at the 10th meeting of the third
+session of the Board of the Company on 23 October 2015. It was agreed that the Company would acquire
+the 100% equity interests in Ningxia Guohua Ningdong Power (), the 100% equity interests in
+Guohua Xuzhou Power () and the 51% equity interests in Zhoushan Power (ш) held by
+Shenhua Group, the controlling shareholder. The transaction price is fair and reasonable and no insider
+trading has been identified. The transactions do not prejudice the interests of shareholders and do not incur
+any loss of assets of the Company.
+INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON THE ACQUISITIONS OR
+DISPOSALS OF ASSETS BY THE COMPANY
+The Supervisory Committee is of the opinion that apart from the change of use of a portion of proceeds
+by the Company after performing relevant procedures, the actual use of proceeds was in line with that
+disclosed in the prospectus
+INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON THE ACTUAL USE OF
+THE PROCEEDS FROM THE LATEST FUND-RAISING EXERCISE OF THE COMPANY
+The Supervisory Committee is of the opinion that the financial statements of the Company give an objective,
+true and fair view of the financial position and the operating results of the Company in all material aspects
+and are true and reliable with its regulated financial audit and sound internal control system.
+INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON THE FINANCIAL
+POSITION OF THE COMPANY
+VI.
+V.
+IV.
+III.
+Section X Supervisory Committee's Report (Continued)
+126 |China Shenhua Energy Company Limited
+The Supervisory Committee is of the opinion that the Board and the management of the Company have
+acted in strict accordance with the Company Law, the Articles of Association and the relevant regulations
+of the jurisdiction where the Company is listed, performed their duties with integrity and diligence and
+conscientiously implemented the resolutions of, and exercised the power granted by the general meetings;
+and that the decisions and operations are in compliance with the laws and regulations and the Articles of
+Association. During the reporting period, the Supervisory Committee is not aware of any act committed by
+the Board and the management of the Company during their performance of duties which were in breach
+of laws, regulations and the Articles of Association or prejudicial to the interests of the Company.
+INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON THE LAWFUL
+OPERATION OF THE COMPANY
+The Supervisory Committee is of the opinion that the connected transactions of the Company have
+been carried out in strict compliance with the principles of fairness, equality and openness under the
+statutory decision-making procedures, the connected transactions carried out are in accordance with the
+requirements of the listing rules, and the disclosure of information is standardized and transparent. The
+Supervisory Committee is not aware of any act prejudicial to the interest of the Company.
+in
+VII. INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON THE SELF-ASSESSMENT
+REPORT ON INTERNAL CONTROL OF THE COMPANY
+VIII. INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON THE ESTABLISHMENT
+AND IMPLEMENTATION OF THE MEASURES ON INSIDER MANAGEMENT
+III. FOSTERING THE PARTICIPATION OF THE COMPANY IN ALL ASPECTS OF INVESTOR
+RELATIONS TASKS
+Section XI Investor Relations (Continued)
+128 | China Shenhua Energy Company Limited
+During its communication with investors, the Company has on one hand kept on attaching paramount
+significance to clean development measures including its commitment to green mining, provision of
+eco-friendly coal products to society and implementation of ultra-low emission for coal-fired power
+generation. On the other hand, the Company has identified the development pattern of the industry and
+thus highlighted its development potential in the future from the development perspective that takes
+into account the structural features of the energy in China and the industry as a whole, thereby inspiring
+investors' confidence.
+Since 2015, there have been distinctly different opinions on the future of the industry, and some investors
+has been lacking confidence in the future development of the coal industry and the Company. In this
+regard, China Shenhua has proactively introduced newly-established development strategies for clean
+energy to the market, actively conveyed its vision of clean utilization of coal to the market, further cultivate
+the capital markets' positive perception of the Company and the coal industry, and spread positive energy
+with regard to the transition and improvement of the industry.
+HIGHLIGHTING CLEAN ENERGY STRATEGIES AND UNEARTHING INVESTMENT VALUE
+The Company has been committed to the mission of being proactive and transparent, having actively
+strengthened investor relations, continuously engaged in sincere and sufficient communication with
+investors and analysts through result presentations, roadshows, online conferences and other events. All
+such endeavors have resulted in communication with more than 700 analysts and fund managers, and
+generally speaking, The Company is able to attain the goal of "weekly on-site surveys and daily phone
+calls" except for during the black-out period. In particular, the Company communicated with more than
+220 individuals through roadshows, more than 200 individuals through investment forums and more than
+270 individuals through company visits and teleconferences and answered nearly 100 questions raised by
+shareholders during the online conferences.
+KEEPING ON MAINTAINING FREQUENT COMMUNICATION AND ESTABLISHING
+EFFECTIVE COMMUNICATION CHANNELS
+II.
+I.
+In 2015, with the continued downturn in the coal market and the drastic fluctuations in the capital markets, China
+Shenhua, in the face of the new scenario, made proactive efforts to optimize investor relations to further improve
+an effective communication channel between the Company and the market.
+Section XI Investor Relations
+2015 Annual Report 127
+The Supervisory Committee will continue to perform its duties with due care to facilitate the standardized
+operation of the Company and to safeguard the lawful interests of the Company and its shareholders in
+strict compliance with the Company Law, the Articles of Association and the relevant laws and regulations
+of the PRC.
+The insider management system is sound and comprehensive, effective in its implementation and able to
+keep all insider information confidential.
+The self-assessment report on internal control of the Company has truthfully reflected the establishment
+and implementation of the internal control of the Company and its internal control system is sound and
+effective.
+Announcement of China Shenhua Regarding Judicial Investigation Against Senior Vice
+President Hao Gui
+130 | China Shenhua Energy Company Limited
+68
+Announcement of China Shenhua on the Approval Obtained for the New Construction
+Project of Shenwan Lujiang Power Plant
+2015/11/17
+105
+Announcement of China Shenhua Regarding the Progress of the Tendering for the Sumsel-1 2015/11/21
+IPP Project in Indonesia
+106
+Announcement on Resolutions of the 11th Meeting of the third Session of the Board of
+67 Clarification Announcement of China Shenhua
+China Shenhua and Changes in Senior Management
+107
+Announcement of China Shenhua on Early Repayment of Idle Proceeds Used for Temporary
+Replenishment of Working Capital
+2015/12/02
+108
+Announcement of China Shenhua on the Approval Obtained for the Project of Shenhua
+Guohua Huarong Power Plant
+2015/12/10
+109
+Announcement on Resolutions of the 13th Meeting of the third Session of the Board of
+China Shenhua
+2015/12/18
+104
+110
+2015/11/17
+Announcement of China Shenhua on Early Repayment of Idle Proceeds Used for Temporary 2015/11/03
+Replenishment of Working Capital
+2015/10/24
+97
+Third Quarterly Report of China Shenhua
+2015/10/24
+98
+Announcement of China Shenhua on the Provision of Guarantee to Investees by the Wholly- 2015/10/24
+owned Subsidiary
+99
+China Shenhua: Asset Evaluation Report for the Proposed Transfer Project of the Equity
+Interests in Shenhua Guohua Zhoushan (Power Generation) Co., Ltd. held by Shenhua
+Group Corporation Limited
+2015/10/24
+100
+China Shenhua: Financial Statements and Audit Reports of Guohua Xuzhou Power
+2015/10/24
+Generation Co., Ltd. (for the period between 1 January 2015 and 30 June 2015 and for the
+year ended 2014)
+101
+Announcement of China Shenhua on the Passing Away of Senior Vice President
+2015/10/30
+102
+103 Announcement on the Major Operational Data of China Shenhua for October 2015
+Announcement of China Shenhua on 2016 Annual Business Plan for Financial Derivatives
+111 Announcement on the Major Operational Data of China Shenhua for November 2015
+112 Announcement of China Shenhua Regarding the Tender Progress of Jawa-7 IPP Project in
+Indonesia
+2015/12/29
+2015/12/18
+Notice of Listing on the Stock Exchange of Hong Kong Limited
+Overseas Regulatory Announcement
+10
+Announcement on the Major Operational Data of December 2014
+2015/01/14
+2015/01/20
+2015/01/20
+2015/01/21
+11
+Overseas Regulatory Announcement
+2015/01/28
+12 Monthly Return of Equity Issuer on Movements in Securities for the month ended 31 January 2015/02/02
+2015
+13
+Overseas Regulatory Announcement
+2015/02/09
+14
+Overseas Regulatory Announcement
+Overseas Regulatory Announcement
+US$500,000,000 3.875% Bonds due 2025
+US$500,000,000 3.125% Bonds due 2020;
+US$500,000,000 2.500% Bonds due 2018;
+2015/12/18
+2015 Annual Report 133
+Section XII Index to Information Disclosure (Continued)
+No. Disclosure documents for H Shares (published on the website of Hong Kong Stock Exchange)
+123456
+Overseas Regulatory Announcement
+Voluntary Announcement Credit Rating of China Shenhua Energy Company Limited
+Proposed Issuance of US$ Denominated Unsecured Bonds
+Overseas Regulatory Announcement
+2015/10/24
+2015/10/24
+Overseas Regulatory Announcement
+2015/01/05
+2015/01/06
+2015/01/06
+2015/01/09
+2015/01/09
+2015/01/14
+9
+782222
+Date of
+publication
+Announcement of China Shenhua on the Acquisition of Assets and Connected Transactions
+Announcement of China Shenhua Regarding Online Discussion Forum for Investors
+Announcement on Resolutions of the 6th Meeting of the third Session of the Supervisory
+Committee of China Shenhua
+2015/11/26
+96
+78 Announcement on the Major Operational Data of China Shenhua for July 2015
+79 Announcement of China Shenhua on the Resignation of Executive Director
+2015/08/18
+2015/08/21
+80
+Announcement on Resolutions of the 9th Meeting of the third Session of the Board of China 2015/08/22
+Shenhua
+81
+Special Report of China Shenhua on Deposit and Actual Use of Proceeds for the First Half of
+2015
+2015/08/22
+82
+Half-yearly Report of China Shenhua
+2015/08/22
+83
+Highlights of the Half-yearly Report of China Shenhua
+2015/08/22
+28
+84
+2015/08/22
+85
+85
+Announcement of China Shenhua Regarding the Approval for the Construction of Shenhua
+2015/08/26
+Guohua Qingyuan Power Generation Project
+86
+87
+88
+Announcement on the Major Operational Data of China Shenhua for August 2015
+Announcement on the Major Operational Data of China Shenhua for September 2015
+Announcement on Resolutions of the 10th Meeting of the third Session of the Board of
+China Shenhua
+2015/09/16
+89
+Independent Opinion of the independent non-executive directors of China Shenhua on
+Connected Transactions Arising from the Acquisition by the Company of Certain Equity
+Interests Held by Shenhua Group (Being the Company's Controlling Shareholder)
+2015/10/20
+2015/10/24
+Announcement on Resolutions of the 5th Meeting of the third Session of the Supervisory
+Committee of China Shenhua
+2015/10/24
+2015/08/15
+77
+88
+Announcement on the Major Operational Data of China Shenhua for May 2015
+69 Announcement of China Shenhua on the Completion of the 168-hour Trial Run of No. 3
+Generator of Expansion Project of Shenwan Energy Anqing Power Plant Phase II
+70
+70
+71
+2015/06/02
+2015/06/06
+2015/06/08
+2015/06/10
+China Shenhua: Financial Statements and Audit Reports of Ningxia Guohua Ningdong Power 2015/10/24
+Generation Co., Ltd. (for the period between 1 January 2015 and 30 June 2015 and for the
+year ended 2014)
+2015/06/16
+Announcement of China Shenhua on the Results of the Issuance of the Third Tranche of Ultra 2015/06/18
+Short-Term Financing Debentures for 2015
+Announcement of China Shenhua Regarding the Increase in Shareholding of the Controlling 2015/07/09
+Shareholder in the Company
+Announcement of China Shenhua on the Completion of the 168-hour Trial Run of the
+Generator of Shenhua Guohua Beijing Thermal Power Project
+72
+2015/07/15
+cut Coal Mine Project
+73
+Announcement of China Shenhua on the Unaudited Balance Sheet and Income Statement of 2015/07/15
+Shenhua Finance Company for the First Half of 2015
+74
+Announcement of China Shenhua on the Approval Obtained for the New Construction
+Project of Shenhua Tianming Power Plant
+2015/07/16
+367
+75
+76
+Announcement on the Major Operational Data of China Shenhua for June 2015
+Preliminary Financial Data of China Shenhua for the first half of 2015
+2015/07/21
+2015/07/30
+Announcement of China Shenhua Regarding the Progress of the Watermark Phase I Open-
+132 China Shenhua Energy Company Limited
+2015/06/16
+90
+95
+94
+93
+33
+2015/10/24
+China Shenhua: Financial Statements and Audit Reports of Shenhua Guohua (Zhoushan)
+Power Generation Co., Ltd. (for the period between 1 January 2015 and 30 June 2015 and
+for the year ended 2014)
+2015/10/24
+Date of
+publication
+2015/10/24
+China Shenhua: Asset Evaluation Report for the Proposed Transfer Project of the Equity
+Interests in Guohua Xuzhou Power Generation Co., Ltd. held by Shenhua Group
+Corporation Limited
+China Shenhua: Asset Evaluation Report for the Proposed Transfer Project of the Equity
+Interests in Ningxia Guohua Ningdong Power Generation Co., Ltd. held by Shenhua Group
+Corporation Limited
+91
+No. Disclosure document for A Shares (published on the website of Shanghai Stock Exchange)
+Section XII Index to Information Disclosure (Continued)
+92
+Overseas Regulatory Announcement
+108
+107 Monthly Return of Equity Issuer on Movements in Securities for the month ended 31 October 2015/11/02
+2015
+106 Overseas Regulatory Announcement
+Overseas Regulatory Announcement
+2015/11/02
+109
+2015/11/16
+110
+Announcement on the Major Operational Data of October 2015
+118
+2015/12/17
+2016 Annual Business Plan for Financial Derivatives
+117
+2015/12/09
+Overseas Regulatory Announcement
+116
+2015/12/01
+Overseas Regulatory Announcement
+115
+2015/10/30
+2015/12/01
+114
+2015/11/25
+Changes in Senior Management
+113
+2015/11/25
+112 Overseas Regulatory Announcement
+2015/11/20
+Overseas Regulatory Announcement
+111
+2015/11/16
+Monthly Return of Equity Issuer on Movements in Securities for the month ended 30
+November 2015
+2015/10/23
+2015/04/30
+105
+2015/09/08
+2015/09/08
+Notification Letter and Request Form to Non Registered Holder
+Notification Letter and Request Form to Registered Holder
+Announcement on the Major Operational Data of August 2015
+85 ༄⪜8
+99
+98
+2015/09/15
+95 Monthly Return of Equity Issuer on Movements in Securities for the month ended 31 August 2015/09/01
+2015
+2015/08/23
+2015/08/21
+2015/08/21
+2015/08/21
+2015/08/21
+2015/08/20
+2015/08/25
+Monthly Return of Equity Issuer on Movements in Securities for the month ended 30
+September 2015
+2015/09/30
+100
+2015/10/23
+Overseas Regulatory Announcement
+104
+Announcement on the Major Operational Data of November 2015
+2015/10/23
+Third Quarterly Report for the Year 2015
+103
+Xuzhou Power Plant and 51% Equity Interest in Zhoushan Power Plant
+2015/10/23
+102 Acquisitions of 100% Equity Interest in Ningdong Power Plant, 100% Equity Interest in
+2015/10/19
+Announcement on the Major Operational Data of September 2015
+101
+2015/10/13
+Notice of Board Meeting
+Overseas Regulatory Announcement
+2015/12/17
+119 Overseas Regulatory Announcement
+2015/12/17
+34,520
+Income tax expense
+Profit before income tax
+410
+428
+(4,459)
+803
+608
+(5,123)
+61,847
+88
+(626)
+Share of results of associates
+Finance costs
+Interest income
+Other expenses
+939
+1,659
+Other income
+(419)
+(770)
+9
+(12,784)
+net of income tax
+Other comprehensive income (loss) for the year,
+(301)
+170
+(22)
+Share of other comprehensive income of associate
+(301)
+192
+(9,561)
+Items that may be reclassified subsequently to profit or loss:
+Exchange differences
+(21)
+Remeasurement of defined benefit obligations
+Item that will not be reclassified to profit or loss:
+Other comprehensive income (loss) for the year
+Profit for the year
+49,063
+24,959
+10
+(18)
+(5,856)
+10
+Other gains and losses
+In our opinion, the consolidated financial statements give a true and fair view of the financial position of the
+Group as at 31 December 2015, and of its financial performance and cash flows for the year then ended in
+accordance with International Financial Reporting Standards and have been properly prepared in compliance with
+the disclosure requirements of the Hong Kong Companies Ordinance.
+Opinion
+We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
+opinion.
+An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
+consolidated financial statements. The procedures selected depend on the auditor's judgment, including the
+assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or
+error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation
+of the consolidated financial statements that give a true and fair view in order to design audit procedures that
+are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
+entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the
+reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the
+consolidated financial statements.
+Our responsibility is to express an opinion on these consolidated financial statements based on our audit and to
+report our opinion solely to you, as a body, in accordance with our agreed terms of engagement, and for no other
+purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this
+report. We conducted our audit in accordance with Hong Kong Standards on Auditing issued by the Hong Kong
+Institute of Certified Public Accountants. Those standards require that we comply with ethical requirements and
+plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements
+are free from material misstatement.
+Auditor's Responsibility
+The directors of the Company are responsible for the preparation of consolidated financial statements that give a
+true and fair view in accordance with International Financial Reporting Standards and the disclosure requirements
+of the Hong Kong Companies Ordinance, and for such internal control as the directors determine is necessary to
+enable the preparation of consolidated financial statements that are free from material misstatement, whether
+due to fraud or error.
+Directors' Responsibility for the Consolidated Financial Statements
+Deloitte Touche Tohmatsu
+We have audited the consolidated financial statements of China Shenhua Energy Company Limited (the
+"Company") and its subsidiaries (collectively referred to as the "Group") set out on pages 138 to 229, which
+comprise the consolidated statement of financial position as at 31 December 2015, and the consolidated statement
+of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated
+statement of cash flows for the year then ended, and a summary of significant accounting policies and other
+explanatory information.
+To The Shareholders Of China Shenhua Energy Company Limited
+Section XIII Independent Auditor's Report and Consolidated Financial Statements
+136 | China Shenhua Energy Company Limited
+2015/12/31
+Monthly Return of Equity Issuer on Movements in Securities for the month ended 31
+December 2015
+121
+2015/12/28
+120 Overseas Regulatory Announcement
+(Incorporated in The People's Republic of China with limited liability)
+Certified Public Accountants
+Hong Kong
+24 March 2016
+(8,835)
+(9,714)
+General and administrative expenses
+(794)
+(584)
+Selling expenses
+74,972
+53,728
+Gross profit
+253,081
+(178,109)
+177,069
+(123,341)
+6 9
+Cost of sales
+Revenue
+2014
+RMB million
+(Restated)
+Year ended 31 December
+2015
+RMB million
+NOTES
+CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
+For the year ended 31 December 2015
+2015 Annual Report 137
+2015/08/20
+2015/08/17
+94
+2015/08/11
+2015/06/15
+Overseas Regulatory Announcement
+72
+2015/06/09
+2015/06/07
+Announcement Regarding Judicial Investigation Against Senior Vice President Hao Gui
+Clarification Announcement
+71
+73
+70
+Overseas Regulatory Announcement
+69
+2015/06/01
+Overseas Regulatory Announcement
+68
+2015/06/01
+Monthly Return of Equity Issuer on Movements in Securities for the month ended 31 May
+2015
+2015/06/05
+67
+Announcement on the Major Operational Data of May 2015
+74 Overseas Regulatory Announcement
+No. Disclosure documents for H Shares (published on the website of Hong Kong Stock Exchange)
+Section XII Index to Information Disclosure (Continued)
+2015 Annual Report 135
+2015/07/15
+Overseas Regulatory Announcement
+79
+2015/07/14
+2015/06/15
+Overseas Regulatory Announcement
+2015/07/14
+2015/07/08
+Announcement on Increase of Shareholding in the Company by the Controlling Shareholder
+Overseas Regulatory Announcement
+6707
+2015/06/30
+75 Monthly Return of Equity Issuer on Movements in Securities for the month ended 30 June
+2015
+2015/06/17
+78
+Date of
+publication
+40
+2015/05/29
+59
+2015/05/08
+Second Form of Proxy for Annual General Meeting
+58
+2015/05/08
+Notification Letter and Request Form to Registered Holder
+57
+Supplemental Notice of Annual General Meeting
+2015/05/08
+56
+2015/05/08
+Overseas Regulatory Announcement
+55
+2015/05/06
+Overseas Regulatory Announcement
+54
+Notification Letter and Request Form to Non Registered Holder
+2015/05/29
+2015/05/08
+Overseas Regulatory Announcement
+Notice to Creditors in Relation to a General Mandate to Repurchase of Shares of the
+Company
+66
+Overseas Regulatory Announcement
+65
+Voting Results of 2014 Annual General Meeting, 2015 First Class Meeting of the Holders of A 2015/05/29
+Shares and 2015 First Class Meeting of the Holders of H Shares
+Announcement Regarding the Progress in Obtaining Exploration Rights of Coal Resources at 2015/05/28
+Taigemiao
+64
+60
+टु
+2015/05/28
+Overseas Regulatory Announcement
+62
+2015/05/18
+Announcement on the Major Operational Data of April 2015
+61
+2015/05/14
+63
+8 8 8 80
+53
+2015/04/27
+85
+84 Notice of Board Meeting
+Monthly Return of Equity Issuer on Movements in Securities for the month ended 31 July
+2015
+Announcement on Preliminary Financial Data for the First Half of 2015
+83
+82
+Overseas Regulatory Announcement
+Overseas Regulatory Announcement
+81
+Section XII Index to Information Disclosure (Continued)
+No. Disclosure documents for H Shares (published on the website of Hong Kong Stock Exchange)
+Date of
+publication
+37
+Notification Letter and Request Form to Registered Holder
+2015/04/10
+38
+Announcement on the Major Operational Data of June 2015
+39
+86
+87 Positions Held by Current Directors at the Board and the Board Committees
+Resignation of an Executive Director
+2015/07/31
+2015/07/29
+2015/07/29
+2015/07/20
+Overseas Regulatory Announcement
+Monthly Return of Equity Issuer on Movements in Securities for the month ended 30 April
+2015
+2015 Interim Report
+Announcement on the Major Operational Data of July 2015
+93
+92
+91 Overseas Regulatory Announcement
+Overseas Regulatory Announcement
+90
+12-2325
+89 Dismissal of a Senior Vice President
+88
+Announcement of Interim Results for the Six Months Ended 30 June 2015
+Proposal for General Mandate to Repurchase A Shares and H Shares
+Reply Slip Class Meeting of the Holders of H Shares
+2015/04/10
+2015/04/10
+Announcement on the Major Operational Data of March 2015
+2015/04/20
+48
+Overseas Regulatory Announcement
+2015/04/24
+49
+Overseas Regulatory Announcement
+47
+2015/04/24
+First Quarterly Report for the Year 2015
+2015/04/24
+51
+Announcement Regarding Adjustments to Electricity Tariffs
+2015/04/24
+52
+Overseas Regulatory Announcement
+50
+2015/04/14
+2015/04/10
+Notice of Board Meeting
+40
+41
+Form of proxy for 2015 First Class Meeting of the Holder of H Shares
+Notice of 2015 First Class Meeting of the Holders of H Shares
+2015/04/10
+2015/04/10
+42
+Reply Slip Annual General Meeting
+2015/04/10
+43
+Form of proxy for Annual General Meeting
+2015/04/10
+44
+Notice of Annual General Meeting
+2015/04/10
+45
+46
+Overseas Regulatory Announcement
+2015/08/14
+149
+(5,996)
+Short-term debenture
+million
+million
+million
+million
+million
+RMB
+RMB
+RMB
+million
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+equity
+interests
+Total
+RMB
+million
+million
+million
+3,568
+358
+3,210
+175
+3,035
+A subsidiaries under common
+control (Note 5)
+Adjustments for acquisitions
+57,739 334,642
+(11,290) 164,711 276,903
+15,031
+(52)
+3,612
+85,001
+19,890
+as originally reported
+At 1 January 2014
+(note (iii)) (note (iv))
+(Note 35) (note (i)) (note (ii))
+million
+earnings
+reserves
+reserves
+reserve
+64,872
+65,853
+280,113
+300,698
+298,068
+260,223
+280,808
+278,178
+19,890
+19,890
+19,890
+35
+Total equity
+Non-controlling interests
+of the Company
+Equity attributable to equity holders
+Reserves
+Share capital
+Equity
+58,097
+At 1 January 2014 (restated)
+363,921
+338,210
+reserve
+Total
+controlling
+Retained
+Other
+Capital Exchange Statutory
+Share
+premium
+capital
+Share
+Non-
+Equity attributable to equity holders of the Company
+For the Year Ended 31 December 2015
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
+2015 Annual Report 141
+Director and President
+Chairman
+HAN Jianguo
+ZHANG Yuzhuo
+The consolidated financial statements on pages 138 to 229 were approved and authorised for issue by the Board
+of Directors on 24 March 2016, and are signed on its behalf by:
+365,570
+338,210
+19,890
+3,612
+19,890
+At 31 December 2014 (restated)
+34
+(19)
+53
+53
+Others
+(4,047)
+85,001
+shareholders
+1,079
+1,079
+--------
+shareholders
+Contributions from non-controlling
+112
+112
+112
+Distributions to non-controlling
+3,612
+(353) 16,071 (8,570) 185,047 300,698 64,872
+365,570
+earnings
+reserves
+reserves
+reserve
+reserve
+premium
+capital
+Total
+controlling
+Retained
+Other
+Capital Exchange Statutory
+Share
+Share
+Non-
+Equity attributable to equity holders of the Company
+For the Year Ended 31 December 2015
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
+142 | China Shenhua Energy Company Limited
+subsidiaries under common control ....112
+in relation to acquisition of
+Contribution from Shenhua Group
+(462)
+(301)
+income for the year (restated)
+Total comprehensive (expense)
+(319)
+(319)
+(18)
+(301)
+Other comprehensive expense
+for the year (restated)
+49,063
+9,762
+39,301
+39,301
+Profit for the year (restated)
+338,210
+58,097
+280,113
+(8,255) 164,886
+15,031
+(52)
+(18) 39,301 38,982
+85,001
+9,762
+Dividend declared (Note 13)
+(462)
+(462)
+subsidiaries under common control
+Group arising from acquisition of
+Deemed distribution to Shenhua
+(72)
+72
+reserve (note (iii))
+Appropriation of general
+5,028
+(5,028)
+and production funds (note (iii))
+Utilisation of maintenance
+5,996
+production funds (note (iii))
+Appropriation of maintenance and
+(18,100)
+(18,100)
+(18,100)
+48,744
+365,570
+363,921
+53,115
+24
+Accounts and bills receivable
+17,937
+15,980
+12,816
+23
+Inventories
+Current assets
+41,019
+402,759
+438,755
+Total non-current assets
+1,766
+2,084
+2,674
+28
+Deferred tax assets
+14,375
+431,226
+30,850
+28,016
+Prepaid expenses and
+42,323
+27
+27
+Cash and cash equivalents
+1,292
+1,275
+916
+over three months
+Time deposits with original maturity
+6,648
+6,271
+4,611
+26
+Restricted bank deposits
+30,336
+29,308
+19,351
+25
+other current assets
+14,963
+16,535
+22
+Lease prepayments
+17
+76,707
+78,988
+33,610
+272,276
+292,262
+339,326
+15
+567
+Exploration and evaluation assets
+16
+Construction in progress
+Property, plant and equipment
+Non-current assets
+(Restated)
+RMB million
+2014
+1 January
+(319)
+2,176
+35,962
+2,212
+Intangible assets
+28,009
+32,366
+34,562
+21
+Other non-current assets
+1,032
+1,795
+1,795
+20
+Available-for-sale investments
+4,866
+5,016
+5,113
+19
+Interest in associates
+1,477
+1,540
+2,964
+18
+2,251
+38,338
+Total current assets
+121,036
+24,933
+24,955
+30
+Medium-term notes
+42,854
+44,619
+54,179
+29
+Borrowings
+(Restated)
+RMB million
+2014
+1 January
+RMB million
+(Restated)
+RMB million
+31 December
+2014
+2015
+NOTES
+31 December
+4,958
+Non-current liabilities
+Bonds
+9,651
+74,524
+94,383
+Net assets
+Total non-current liabilities
+1,302
+1,165
+878
+28
+Deferred tax liabilities
+1,973
+2,102
+2,197
+34
+Accrued reclamation obligations
+2,028
+1,705
+2,523
+33
+Long-term liabilities
+30
+Total interests
+At 31 December 2015
+140 | China Shenhua Energy Company Limited
+39,011
+33,990
+31
+9,982
+9,994
+4,998
+30
+40,105
+18,441
+12,812
+233
+Current portion of long-term liabilities
+Accrued expenses and other payables
+Accounts and bills payable
+29
+Borrowings
+Current liabilities
+122,567
+119,646
+38,664
+CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONTINUED)
+32
+40,366
+391,325
+440,094
+458,304
+Total assets less current liabilities
+(11,434)
+8,868
+19,549
+Net current assets (liabilities)
+134,001
+110,778
+101,487
+Total current liabilities
+2,274
+311
+280
+2,686
+203
+1,965
+Income tax payable
+33
+42,665
+47,519
+equity
+(4,047)
+million
+(Note 35) (note (i))
+Statutory reserves
+Statutory surplus reserve
+According to the PRC Company Law and the Company's Articles of Association, the Company is required to transfer 10% of its net profit
+as determined in accordance with the China Accounting Standards for Business Enterprises to its statutory surplus reserve until the reserve
+balance reaches 50% of the registered capital. The transfer to this reserve must be made before distribution of a dividend to shareholders.
+The statutory surplus reserve has reached 50% of the registered capital in 2009. Accordingly, no appropriation of net profit to the
+statutory surplus reserve has been proposed since 1 January 2010.
+At 31 December 2015
+Specific reserve for production and maintenance funds
+Pursuant to the relevant PRC regulations, the Group is required to transfer maintain expenses, production safety expenses and relevant
+expenses ("production and maintenance funds") at fixed rates based on relevant bases to a specific reserve accounts. The production and
+maintenance funds could be utilised when expenses or capital expenditures on production maintenance and safety measures are incurred.
+The amount of production and maintenance funds utilised would be transferred from the specific reserve account to retained earnings.
+General reserve
+Pursuant to relevant regulations issued by the Ministry of Finance, the Company's subsidiary, Shenhua Finance, is required to set aside
+a general reserve by the end of the financial year through appropriations of profit after tax as determined in accordance with China
+Accounting Standards for Business Enterprises at a certain ratio of the ending balance of gross risk-bearing assets to cover potential losses
+against such assets.
+The directors of the Company (the "Directors") have proposed appropriation to the general reserve of RMB250 million for the year ended
+31 December 2015 (2014: RMB72 million).
+Discretionary surplus reserve
+The appropriation to the discretionary surplus reserve is subject to the shareholders' approval. The utilisation of the reserve is similar to
+that of the statutory surplus reserve.
+The Directors have not proposed any appropriation to the discretionary surplus reserve in 2015 and 2014.
+(iv)
+Other reserves
+(iii)
+Notes: (Continued)
+For the Year Ended 31 December 2015
+CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
+19,890
+85,001
+3,612
+(176)
+18,003
+(14,308) 186,046
+298,068
+Other reserves mainly represents the consideration paid for acquisition of subsidiaries under common control.
+65,853
+Distributions to non-controlling
+Notes:
+(i)
+(ii)
+Share premium represents the difference between the total amount of the par value of shares issued and the amount of the net proceeds
+received upon the global initial public offering of H shares in 2005 and the issue of A shares in 2007.
+The capital reserve represents the difference between the total amount of the par value of shares issued and the amount of the net assets,
+net of other reserves, transferred from Shenhua Group Corporation Limited ("Shenhua Group") in connection with the Restructuring (as
+defined in Note 1).
+2015 Annual Report 143
+363,921
+At 31 December 2015
+144 China Shenhua Energy Company Limited
+25,108
+24,959
+49,063
+17,783
+38,982
+7,325
+9,762
+25,108
+48,744
+Earnings per share (RMB)
+- Basic
+14
+0.887
+1.976
+2015 Annual Report 139
+CONSOLIDATED STATEMENT OF FINANCIAL POSITION
+9,762
+7,310
+39,301
+17,649
+RMB
+(Restated)
+RMB million
+2014
+31 December
+RMB million
+2015
+Total comprehensive income for the year
+NOTES
+138 China Shenhua Energy Company Limited
+CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME (CONTINUED)
+For the year ended 31 December 2015
+Profit for the year attributable to:
+Equity holders of the Company
+Non-controlling interests
+Total comprehensive income
+for the year attributable to:
+Equity holders of the Company
+Non-controlling interests
+NOTES
+Year ended 31 December
+2015
+RMB million
+2014
+RMB million
+(Restated)
+48,744
+(8,628)
+Statutory surplus reserve can be used to make up losses, if any, or to expand the Company's business, and may be converted into share
+capital by the issue of new shares to shareholders in proportion to their existing shareholdings or by increasing the par value of the shares
+currently held by them, provided that the balance after such issue is not less than 25% of the registered capital of the Company. The
+statutory surplus reserve is not distributable.
+shareholders
+85,001
+3,612
+(353)
+16,071
+(8,570) 185,047
+300,698
+64,872
+365,570
+17,649 17,649
+7,310
+24,959
+Other comprehensive income
+177
+31
+(43)
+19,890
+At 1 January 2015 (restated)
+(note (iii)) (note (iv))
+million
+RMB
+million
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+134
+RMB
+million
+(note (ii))
+million
+million
+million
+million
+million
+million
+RMB
+(8,628)
+31 December
+- - - 177
+(43) 17,649 17,783
+shareholders
+Contributions from non-controlling
+15
+common control (Note 5)
+149
+Acquisiton of subsidiaries under
+interest in a subsidiary
+Profit for the year
+Acquisition of non-controlling
+reserve (note (iii))
+and production funds (note (iii))
+Appropriation of general
+and production funds (note (iii))
+Utilisation of maintenance
+Dividend declared (Note 13)
+Appropriation of maintenance
+Total comprehensive income
+(expense) for the year
+7,325
+(expense) for the year
+25,108
+(14,718)
+2,288
+2,288
+(5,695)
+(5,695)
+(5,695)
+(4)
+(4)
+I
+(250)
+3,699
+(3,699)
+(5,381)
+5,381
+(14,718)
+(14,718)
+250
+2015
+RMB million
+2014
+For the Year Ended 31 December 2015
+Cash generated from operations
+Income tax paid
+RMB million
+(Restated)
+81,909
+CONSOLIDATED STATEMENT OF CASH FLOWS
+OPERATING ACTIVITIES
+Adjustments for:
+66,166
+(56)
+(70)
+Operating cash flows before movements in working capital
+Decrease in inventories
+68,412
+87,136
+2,214
+1,658
+Increase in accounts and bills receivable
+Other income
+(10,309)
+Decrease (increase) in prepaid expenses and other receivables
+(Decrease) increase in accounts and bills payable
+5,116
+(3,099)
+(5,021)
+403
+Increase (decrease) in accrued expenses and other payables
+5,754
+(1,388)
+(2,801)
+Profit before income tax
+(328)
+5
+Depreciation and amortisation (Note 10)
+Other gains and losses (Note 10)
+34,520
+61,847
+23,990
+21,343
+5,856
+770
+649
+Interest income
+(803)
+Share of results of associates
+(428)
+(410)
+Interest expense
+4,483
+Fair value changes on financial instruments (Note 8)
+Exchange loss (gain), net
+6
+(608)
+4,782
+For the year ended 31 December 2015
+Amendments to IAS 12
+All recognised financial assets that are within the scope of IAS 39 Financial Instruments: Recognition
+and Measurement are required to be subsequently measured at amortised cost or fair value.
+Specifically, debt investments that are held within a business model whose objective is to collect the
+contractual cash flows, and that have contractual cash flows that are solely payments of principal
+and interest on the principal outstanding are generally measured at amortised cost at the end of
+subsequent accounting periods. Debt instruments that are held within a business model whose
+objective is achieved both by collecting contractual cash flows and selling financial assets, and have
+contractual terms that give rise on specified dates to cash flows that are solely payments of principal
+and interest on the principal amount outstanding, are generally measured at fair value through
+other comprehensive income. All other debt investments and equity investments are measured at
+their fair value at the end of subsequent accounting periods. In addition, under IFRS 9, entities may
+make an irrevocable election to present subsequent changes in the fair value of an equity investment
+(that is not held for trading) in other comprehensive income, with only dividend income generally
+recognised in profit or loss.
+With regard to the measurement of financial liabilities designated as at fair value through profit
+or loss, IFRS 9 requires that the amount of change in the fair value of the financial liability that is
+attributable to changes in the credit risk of that liability is presented in other comprehensive income,
+unless the recognition of the effects of changes in the liability's credit risk in other comprehensive
+income would create or enlarge an accounting mismatch in profit or loss. Changes in fair value
+attributable to a financial liability's credit risk are not subsequently reclassified to profit or loss.
+Under IAS 39, the entire amount of the change in the fair value of the financial liability designated as
+at fair value through profit or loss is presented in profit or loss.
+In the relation to the impairment of financial assets, IFRS 9 requires an expected credit loss model,
+as opposed to an incurred credit loss model under IAS 39. The expected credit loss model requires
+an entity to account for expected credit losses and changes in those expected credit losses at each
+reporting date to reflect changes in credit risk since initial recognition. In other words, it is no longer
+necessary for a credit event to have occurred before credit losses are recognised.
+Other than the available-for-sale equity investment currently measured at cost less impairment and the
+potential early recognition of credit losses based on the expected loss model in relation to the Group's
+financial assets measured at amortised cost, the Directors do not expect IFRS 9 will have a material impact
+on the results and financial position of the Group.
+2015 Annual Report 149
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+(10,760)
+2.
+APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING
+STANDARDS ("IFRSS") (Continued)
+New and revised IFRSS not yet effective and not early adopted (Continued)
+IFRS 15 Revenue from Contracts with Customer
+IFRS 15 was issued which establishes a single comprehensive model for entities to use in accounting for
+revenue arising from contracts with customers. IFRS 15 will supersede the current revenue recognition
+guidance including IAS 18 Revenue, IAS 11 Construction Contracts and the related Interpretations when it
+becomes effective.
+The core principle of IFRS 15 is that an entity should recognise revenue to depict the transfer of promised
+goods or services to customers in an amount that reflects the consideration to which the entity expects to
+be entitled in exchange for those goods or services. Specifically, the Standard introduces a 5-step approach
+to revenue recognition:
+Key requirements of IFRS 9:
+•
+•
+Step 2: Identify the performance obligations in the contract
+•
+Step 3: Determine the transaction price
+•
+Step 4: Allocate the transaction price to the performance obligations in the contract
+Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation
+Under IFRS 15, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when
+"control" of the goods or services underlying the particular performance obligation is transferred to
+the customer. Far more prescriptive guidance has been added in IFRS 15 to deal with specific scenarios.
+Furthermore, extensive disclosures are required by IFRS 15.
+The Directors anticipate that the application of IFRS 15 in the future may have a material impact on the
+amounts reported and disclosures made in the Group's consolidated financial statements. However, it is not
+practicable to provide a reasonable estimate of the effect of IFRS 15 until the Group performs a detailed
+review.
+IFRS 16 Leases
+IFRS 16, which upon the effective date will supersede IAS 17 Leases, introduces a single lessee accounting
+model and requires a lessee to recognise assets and liabilities for all leases with a term of more than 12
+months, unless the underlying asset is of low value. Specifically, under IFRS 16, a lessee is required to
+recognise a right-of-use asset representing its right to use the underlying leased asset and a lease liability
+representing its obligation to make lease payments. Accordingly, a lessee should recognise depreciation
+of the right-of-use asset and interest on the lease liability, and also classifies cash repayments of the lease
+liability into a principal portion and an interest portion and presents them in the statement of cash flows.
+Also, the right-of-use asset and the lease liability are initially measured on a present value basis. The
+measurement includes non-cancellable lease payments and also includes payments to be made in optional
+periods if the lessee is reasonably certain to exercise an option to extend the lease, or not to exercise
+an option to terminate the lease. This accounting treatment is significantly different from the lessee
+accounting for leases that are classified as operating leases under the predecessor standard, IAS 17.
+In respect of the lessor accounting, IFRS 16 substantially carries forward the lessor accounting requirements
+in IAS 17. Accordingly, a lessor continues to classify its leases as operating leases or finance leases, and to
+account for those two types of leases differently.
+As disclosed in Note 39.2, total operating lease commitments for the Group as at 31 December 2015
+amounted to RMB66 million, the Directors do not expect the applicable of IFRS 16 would result in
+significant impact on the Group's results but it is expected that these lease commitments will be required to
+be recognised in the consolidated statement of financial position as right-of-use assets and lease liabilities.
+Step 1: Identify the contract(s) with a customer
+Amendments to IAS 7
+IFRS 9 introduced new requirements, among others, for the classification and measurement of financial assets
+and financial liabilities as well as for derecognition, impairment for financial assets and general hedge
+accounting. Key requirements of IFRS 9 applicable to the Group are:
+New and revised IFRSS not yet effective and not early adopted (Continued)
+Revenue from Contracts with Customers 1
+Lease 2
+3
+Accounting for Acquisitions of Interests in Joint Operation ³
+Disclosure Initiative ³
+Clarification of Acceptable Methods of Depreciation
+and Amortisation ³
+Annual Improvements to IFRSS 2012-2014 Cycle ³
+Agriculture: Bearer Plants 3
+Sale or Contribution of Assets between an Investor
+and its Associate or Joint Venture 4
+Investment Entities: Applying the Consolidation Exception ³
+Disclosure Initiative 5
+Recognition of Deferred Tax Assets for Unrealised Losses
+5
+1
+IFRS 9 Financial Instruments
+Effective for annual periods beginning on or after 1 January 2018
+Effective for annual periods beginning on or after 1 January 2019
+3
+Effective for annual periods beginning on or after 1 January 2016
+4
+Effective for annual periods beginning on or after a date to be determined
+5
+Effective for annual periods beginning on or after 1 January 2017
+Other than as further explained below, the Directors do not anticipate that the application of the new and
+revised IFRSS above will have a material effect on the Group's consolidated financial statements and the
+disclosure.
+148 | China Shenhua Energy Company Limited
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2015
+2.
+APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING
+STANDARDS ("IFRSS") (Continued)
+2
+(12,840)
+2015
+55,406
+Deemed capital contribution in a subsidiary under common
+control acquired from Shenhua Group
+112
+Net cash used in financing activities
+(23,157)
+(27,707)
+Net increase (decrease) in cash and cash equivalents
+6,126
+(2,374)
+Cash and cash equivalents, at the beginning of the year
+35,962
+38,338
+Effect of foreign exchange rate changes
+235
+(2)
+(4)
+Acquisition of minority interests
+(5,386)
+common control (Note 5)
+(20,000)
+Contributions from non-controlling shareholders
+2,288
+1,079
+Contributions from equity holders of the Company
+53
+Distributions to non-controlling shareholders
+Cash and cash equivalents, at the end of the year
+(7,343)
+Dividend paid to equity holders of the Company
+(14,718)
+(18,100)
+Deemed distribution to Shenhua Group arising from acquisition
+of subsidiaries under common control
+(462)
+Cash paid for acquisition of a subsidiary under
+(5,083)
+42,323
+35,962
+146 | China Shenhua Energy Company Limited
+Amendments to IAS 19
+Amendments to IFRSS
+Amendments to IFRSS
+Defined Benefit Plans: Employee Contributions
+Annual Improvements to IFRSS 2010-2012 Cycle
+Annual Improvements to IFRSS 2011-2013 Cycle
+The application of the amendments to IFRSS during the accounting period has had no material impact on
+the Group's consolidated statements and the disclosures.
+New and revised IFRSS not yet effective and not early adopted
+IFRS 9
+In the current year, the Group has applied, for the first time, the following amendments to IFRSS that are
+mandatorily effective for the current year.
+Financial Instruments 1
+IFRS 16
+Amendments to IFRS 11
+Amendments to IAS 1
+Amendments to IAS 16 and IAS 38
+Amendments to IFRSS
+Amendments to IAS 16 and IAS 41
+Amendments to IAS 10 and IAS 28
+Amendments to IFRS 10,
+150 |China Shenhua Energy Company Limited
+IFRS 15
+(20,000)
+APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING
+STANDARDS ("IFRSS")
+For the year ended 31 December 2015
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
+For the year ended 31 December 2015
+1.
+PRINCIPAL ACTIVITIES AND ORGANISATION
+Principal activities
+China Shenhua Energy Company Limited (the "Company") and its subsidiaries (hereinafter collectively
+referred to as the "Group") are principally engaged in: (i) the production and sale of coal; and (ii) the
+generation and sale of coal-based power in the People's Republic of China (the "PRC"). The Group operates
+an integrated railway network and seaports that are primarily used to transport the Group's coal sales from
+its mines. The primary customers of the Group's coal sales include power plants, metallurgical and coal
+chemical producers to provincial/regional electric grid companies in the PRC.
+Organisation
+2.
+The Company was established in the PRC on 8 November 2004 as a joint stock limited company as part
+of the Restructuring (as defined below) of Shenhua Group, a state-owned enterprise under the direct
+supervision of the State Council of the PRC.
+On 8 November 2004, in consideration for Shenhua Group transferring the coal mining and power
+generating assets and liabilities to the Company, the Company issued 15,000,000,000 domestic state-owned
+ordinary shares with a par value of RMB1.00 each to Shenhua Group. The shares issued to Shenhua Group
+represented the entire registered and paid-up share capital of the Company at that date.
+In 2005, the Company issued 3,089,620,455 H shares with a par value of RMB1.00 each, at a price of
+HKD7.50 per H share by way of a global initial public offering. In addition, 308,962,045 domestic state-
+owned ordinary shares of RMB1.00 each owned by Shenhua Group were converted into H shares. A total of
+3,398,582,500 H shares were listed on The Stock Exchange of Hong Kong Limited.
+In 2007, the Company issued 1,800,000,000 A shares with a par value of RMB1.00 each, at a price of
+RMB36.99 per A share in the PRC. The A shares were listed on the Shanghai Stock Exchange.
+Immediate parent and ultimate controlling party
+At 31 December 2015, the Directors consider the immediate parent and ultimate holding company of the
+Group to be Shenhua Group.
+2015 Annual Report 147
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Effective on 31 December 2003, the coal production and power generation operations previously
+operated by various entities wholly-owned or controlled by Shenhua Group were restructured and
+managed separately (the "Restructuring"), and those assets and liabilities related to the operations and
+businesses that were transferred to the Company were revalued by China Enterprise Appraisal Co., Ltd.,
+an independent valuer registered in the PRC, as at 31 December 2003 as required by the PRC rules and
+regulations.
+NET CASH GENERATED FROM OPERATING ACTIVITIES
+Repayments of short-term debentures and medium-term notes
+Net proceeds from bonds
+3
+40
+400
+19
+(160)
+(48)
+(197)
+Purchase of available-for-sale investments
+(913)
+Dividend received from associates
+309
+357
+Interest received
+590
+841
+735
+640
+(1,306)
+(191)
+69,069
+IFRS 12 and IAS 28
+INVESTING ACTIVITIES
+Acquisition of property, plant and equipment, intangible assets,
+exploration and evaluation assets, additions to the construction
+in progress and other non-current assets
+(29,685)
+Investment income from debt securities
+(43,845)
+Proceeds from disposal of property, plant and equipment,
+and lease prepayments
+Proceeds from disposal of an associate
+Proceeds from disposal of debt securities
+Proceeds from disposal of a subsidiary
+Investments in financial products
+Investments in associates
+Increase in lease prepayments
+146
+Decrease in restricted bank deposits
+1,660
+FINANCING ACTIVITIES
+Interest paid
+Proceeds from borrowings
+Repayments of borrowings
+(26,123)
+(43,736)
+(5,730)
+NET CASH USED IN INVESTING ACTIVITIES
+(5,600)
+46,347
+(22,756)
+(65,968)
+Net proceeds from short-term debentures and medium-term
+notes
+14,985
+39,915
+26,458
+9,049
+RMB million
+(Restated)
+RMB million
+377
+Increase in time deposits with original maturity
+over three months
+(1,265)
+(1,547)
+Maturity of time deposits with original maturity
+over three months
+2014
+1,624
+Entrusted loan to a third party
+(37)
+Repayment of entrusted loans
+30
+2015 Annual Report 145
+CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
+For the Year Ended 31 December 2015
+1,564
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+152 China Shenhua Energy Company Limited
+3.
+For the year ended 31 December 2015
+3.
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Basis of consolidation (Continued)
+Profit or loss and each item of other comprehensive income are attributed to equity holders of the Company
+and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to equity
+holders of the Company and to the non-controlling interests even if this results in the non-controlling
+interests having a deficit balance.
+Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting
+policies into line with the Group's accounting policies.
+All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transaction between
+members of the Group are eliminated in full on consolidation.
+Changes in the Group's ownership interest in existing subsidiaries that do not result in the Group losing
+control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group's
+interests and non-controlling interests are adjusted to reflect the changes in their relative interests in the
+subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and
+the fair value of the consideration paid or received is recognised directly in equity and attributed to owners
+of the Company.
+Business combinations
+Except for business combination involving entities under common control, acquisitions of businesses are
+accounted for using the acquisition method. The consideration transferred in a business combination
+is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets
+transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the
+equity interests issued by the Group in exchange for control of the acquiree. Acquisition-related costs are
+generally recognised in profit or loss as incurred.
+At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their
+fair value, except that deferred tax assets or liabilities, and assets or liabilities related to employee benefit
+arrangements are recognised and measured in accordance with IAS 12 Income Taxes and IAS 19 Employee
+benefits respectively.
+Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-
+controlling interests in the acquiree, and the fair value of the acquirer's previously held equity interest in
+the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and
+the liabilities assumed. If, after re-assessment, the net of the acquisition-date amounts of the identifiable
+assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any
+non-controlling interests in the acquiree and the fair value of the acquirer's previously held interest in the
+acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.
+Non-controlling interests that are present ownership interests and entitle their holders to a proportionate
+share of the entity's net assets in the event of liquidation may be initially measured either at fair value or at
+the non-controlling interests' proportionate share of the recognised amounts of the acquiree's identifiable
+net assets. The choice of measurement basis is made on a transaction-by-transaction basis. Other types of
+non-controlling interests are measured at their fair value or, when applicable, on the basis specified in
+another IFRS.
+2015 Annual Report 153
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2015
+3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Business combinations (Continued)
+Merger accounting for business combination involving entities under common control
+The consolidated financial statements incorporate the financial statements items of the combining
+businesses in which the common control combination occurs as if they had been combined from the date
+when the combining businesses first came under the control of the controlling party.
+The net assets of the combining businesses are consolidated using the existing book values from the
+controlling party's perspective. No amount is recognised in respect of goodwill or excess of acquirer's
+interest in the net fair value of acquiree's identifiable assets, liabilities and contingent liabilities over cost
+at the time of common control combination, to the extent of the continuation of the controlling party's
+interest.
+The consolidated statement of profit or loss and other comprehensive income includes the results of each of
+the combining businesses from the earliest date presented or since the date when the combining businesses
+first came under the common control, where this is a shorter period.
+The comparative amounts in the consolidated financial statements are presented as if the businesses had
+been combined at the end of the previous reporting period or when they first came under common control,
+whichever is shorter.
+Goodwill
+Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of
+the business less accumulated impairment losses, if any.
+For the purposes of impairment testing, goodwill is allocated to each of the Group's cash-generating-units (or
+groups of cash-generating-units) that is expected to benefit from the synergies of the combination.
+A cash-generating unit to which goodwill has been allocated is tested for impairment annually or more
+frequently when there is indication that the unit may be impaired. For goodwill arising on an acquisition in
+a reporting period, the cash-generating unit to which goodwill has been allocated is tested for impairment
+before the end of that reporting period. If the recoverable amount of the cash-generating unit is less than
+its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill
+allocated to the unit and then to the other assets of the unit on a pro rata basis based on the carrying
+amount of each asset in the unit. Any impairment loss for goodwill is recognised directly in profit or loss. An
+impairment loss recognised for goodwill is not reversed in subsequent periods.
+On disposal of the relevant cash-generating-units, the attributable amount of goodwill is included in the
+determination of the amount of profit or loss on disposal.
+154 China Shenhua Energy Company Limited
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when
+the Group loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired
+or disposed of during the year are included in the consolidated statement of profit or loss and other
+comprehensive income from the date the Group gains control until the date when the Group ceases to
+control the subsidiary.
+For the year ended 31 December 2015
+rights arising from other contractual arrangements; and
+any additional facts and circumstances that indicate that the Group has, or does not have, the current
+ability to direct the relevant activities at the time that decisions need to be made, including voting
+patterns at previous shareholders' meetings.
+SIGNIFICANT ACCOUNTING POLICIES
+Basis of preparation
+The consolidated financial statements have been prepared in accordance with International Financial
+Reporting Standards issued by the International Accounting Standards Board. They are presented in
+RMB and all values are rounded to the nearest million (RMB' million) except when otherwise indicated.
+In addition, the consolidated financial statements include applicable disclosures required by the Rules
+Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited ("Listing Rules") and by
+the Hong Kong Companies Ordinance ("CO").
+The provisions of the new CO (Cap. 622) regarding preparation of accounts and directors' reports and
+audits became effective for the Company for the financial year ended 31 December 2015. Further, the
+disclosure requirements set out in the Listing Rules regarding annual accounts have been amended with
+reference to the new CO. Accordingly the presentation and disclosure of information in the consolidated
+financial statements for the financial year ended 31 December 2015 have been changed to comply with
+these new requirements. Comparative information in respect of the financial year ended 31 December
+2014 are presented or disclosed in the consolidated financial statements based on the new requirements.
+Information previously required to be disclosed under predecessor CO or Listing Rules but not under the
+new CO or amended Listing Rules are not disclosed in these consolidated financial statements.
+The consolidated financial statements have been prepared on the historical cost basis, except for certain
+financial instruments as disclosed in Note 37.3, which have been measured at fair value at the end of each
+reporting period.
+Historical cost is generally based on the fair value of the consideration given in exchange for goods and
+services.
+In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3
+based on the degree to which the inputs to the fair value measurements are observable and the significance
+of the inputs to the fair value measurement in its entirety, which are described as follows:
+Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that
+the entity can access at the measurement date;
+Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for
+the asset or liability, either directly or indirectly; and
+.
+Level 3 inputs are unobservable inputs for the asset or liability.
+2015 Annual Report | 151
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2015
+Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
+transaction between market participants at the measurement date, regardless of whether that price is
+directly observable or estimated using another valuation technique. In estimating the fair value of an asset
+or a liability, the Group takes into account the characteristics of the asset or liability if market participants
+would take those characteristics into account when pricing the asset or liability at the measurement date.
+Fair value for measurement and/or disclosure purposes in the Group's consolidated financial statements is
+determined on such a basis, except for share-based payment transactions that are within the scope of IFRS
+2 Share-based Payment, leasing transactions that are within the scope of IAS 17 Leases, and measurements
+that have some similarities to fair value but are not fair value, such as net realisable value in IAS 2
+Inventories or value in use in IAS 36 Impairment of Assets.
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+•
+3.
+potential voting rights held by the Group, other vote holders or other parties;
+•
+the size of the Group's holding of voting rights relative to the size and dispersion of holdings of the
+other vote holders;
+The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there
+are changes to one or more of the three elements of control listed above.
+has the ability to use its power to affect its returns.
+When the Group has less than a majority of the voting rights of an investee, it has power over the investee
+when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the
+investee unilaterally. The Group considers all relevant facts and circumstances in assessing whether or not
+the Group's voting rights in an investee are sufficient to give it power, including:
+is exposed, or has rights, to variable returns from its involvement with the investee; and
+has power over the investee;
+•
+The consolidated financial statements incorporate the financial statements of the Company and entities
+controlled by the Company and its subsidiaries. Control is achieved where the Company:
+Basis of consolidation
+The principal accounting policies are set out below.
+2015 Annual Report 161
+the ability to use or sell the intangible asset;
+how the intangible asset will generate probable future economic benefits;
+the availability of adequate technical, financial and other resources to complete the development
+and to use or sell the intangible asset; and
+the ability to measure reliably the expenditure attributable to the intangible asset during its
+development.
+•
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Intangible assets acquired in a business combination not under common control
+3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Intangible assets (Continued)
+Internally-generated intangible assets - research and development expenditure (Continued)
+The amount initially recognised for internally-generated intangible asset is the sum of the expenditure
+incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no
+internally-generated intangible asset can be recognised, development expenditure is recognised in profit or
+loss in the period in which it is incurred.
+Subsequent to initial recognition, internally-generated intangible asset is measured at cost less accumulated
+amortisation and accumulated impairment losses (if any), on the same basis as intangible assets acquired
+separately.
+Intangible assets acquired in a business combination are recognised separately from goodwill and are
+initially recognised at their fair value at the acquisition date (which is regarded as their cost).
+the intention to complete the intangible asset and use or sell it;
+For the year ended 31 December 2015
+the technical feasibility of completing the intangible asset so that it will be available for use or sale;
+For the year ended 31 December 2015
+•
+Capitalized expenses are classified as exploration and evaluation assets depending on the nature of the
+assets. The exploration and evaluation assets that reach usable condition are charged or amortized over
+the useful life. When the project is abandoned, relevant costs that are not collectible will be immediately
+charged to the profit and loss.
+160 | China Shenhua Energy Company Limited
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Subsequent to initial recognition, intangible assets acquired in a business combination with finite useful
+lives are reported at cost less accumulated amortisation and any accumulated impairment losses, on the
+same basis as intangible assets that are acquired separately.
+3.
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Obligations for land reclamation
+•
+The Group's obligations for land reclamation consist of spending estimates at both surface and
+underground mines in accordance with the PRC rules and regulations. The Group estimates its liabilities
+for land reclamation and mine closure based upon detailed calculations of the amount and timing of the
+future cash spending to perform the required work. Spending estimates are escalated for inflation, then
+discounted at a discount rate that reflects current market assessments of the time value of money and the
+risks specific to the liability such that the amount of provision reflects the present value of the expenditures
+expected to be required to settle the obligation. The Group records a corresponding asset associated with
+the liability for final reclamation and mine closure. The obligation and corresponding asset are recognised
+in the period in which the liability is incurred. The asset is depreciated on the units-of-production method
+over its expected life and the liability is accreted to the projected spending date. As changes in estimates
+occur (such as mine plan revisions, changes in estimated costs, or changes in timing of the performance of
+reclamation activities), the revisions to the obligation and the corresponding asset are recognised at the
+appropriate discount rate.
+Intangible assets
+Intangible assets acquired separately
+Intangible assets with finite useful lives that are acquired separately are carried at costs less accumulated
+amortisation and any accumulated impairment losses. Amortisation for intangible assets with finite useful
+lives is recognised on a straight-line basis over their estimated useful lives. The estimated useful life and
+amortisation method are reviewed at the end of each reporting period, with the effect of any changes in
+estimate being accounted for on a prospective basis.
+Internally-generated intangible assets - research and development expenditure
+Expenditure on research activities is recognised as an expense in the period in which it is incurred.
+An internally-generated intangible asset arising from development activities (or from the development
+phase of an internal project) is recognised if, and only if, all of the following have been demonstrated:
+Where rehabilitation is conducted systematically over the life of the operation, rather than at the time
+of closure, provision is made for the estimated outstanding continuous rehabilitation work at each
+reporting date and the cost is charged to the profit or loss. In case that the exploration evaluation area
+was abandoned or the management is of the view that it is unfeasible for commercial development, the
+accumulated expenditure of such area will be set off in the period when the decision is made.
+Derecognition of intangible assets
+Financial assets within the scope of IAS 39 are classified into the following specific categories: financial
+assets at fair value through profit or loss ("FVTPL"), held-to-maturity investments, loans and receivables and
+available-for-sale financial assets ("AFS"). The Group determines the classification of its financial assets at
+initial recognition based on their nature and purpose. All regular way purchases or sales of financial assets
+are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases and
+sales of financial assets that require delivery of assets within the time frame established by regulation or
+convention in the marketplace.
+Inventories
+3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Financial instruments (Continued)
+Financial assets (Continued)
+Financial assets at FVTPL
+Financial assets are classified as at FVTPL when the financial asset is either held for trading or it is
+designated as at FVTPL. The Group's debt securities are classified as held for trading as it has been acquired
+for the purpose of selling in the near term. They are stated at fair values, with any gains or losses arising
+on remeasurement, net of interest earned, recognised in profit or loss and are included in other gains and
+losses line item.
+A financial asset is classified as held for trading if:
+.
+For the year ended 31 December 2015
+it has been acquired principally for the purpose of selling it in the near term; or
+it is a derivative that is not designated and effective as a hedging instrument.
+Loans and receivables
+Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
+quoted in an active market. Subsequent to initial recognition, loans and receivables (including accounts and
+bills receivable, other receivables, loans and advances to Shenhua Group and fellow subsidiaries, entrusted
+loans, restricted bank deposits, time deposits with original maturity over three months and cash and
+cash equivalents) are measured at amortised cost using the effective interest method, less any identified
+impairment.
+Interest income is recognised by applying the effective interest rate, except for short-term receivables where
+the recognition of interest would be immaterial.
+AFS financial assets
+AFS financial assets are non-derivatives that are either designated as available-for-sale or are not classified
+as other categories of financial assets. The Group designated its investments in unlisted shares that are not
+traded in an active market as AFS financial assets.
+As the unlisted equity investments do not have a quoted market price in an active market and whose fair
+value cannot be reliably measured, it is measured at cost less any identified impairment losses at end of
+each reporting period. Dividends on the unlisted equity investment are recognised in profit or loss when
+the Group's right to receive the dividends is established in accordance with the policies set out for "Revenue
+recognition".
+on initial recognition it is part of a portfolio of identified financial instruments that the Group
+manages together and has a recent actual pattern of short-term profit-taking; or
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+2015 Annual Report 163
+The Group's financial assets include financial assets at FVTPL, loans and receivables and AFS financial assets.
+The subsequent measurement of financial assets depends on their classification as follows:
+Inventories are stated at the lower of cost and net realisable value. Costs of inventories are calculated using
+the weighted average method. Net realisable value represents the estimated selling price for inventories
+less all estimated costs of completion and costs necessary to make the sale.
+Provisions
+Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a
+past event, it is probable that the Group will be required to settle that obligation, and a reliable estimate
+can be made of the amount of the obligation.
+Provisions are measured at the best estimate of the consideration required to settle the present obligation
+at the end of the reporting period, taking into account the risks and uncertainties surrounding the
+obligation. When a provision is measured using the cash flows estimated to settle the present obligation,
+its carrying amount is the present value of those cash flows (where the effect of the time value of money is
+material).
+When some or all of the economic benefits required to settle a provision are expected to be recovered
+from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be
+received and the amount of the receivable can be measured reliably.
+162 China Shenhua Energy Company Limited
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2015
+3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Financial instruments
+Financial assets and financial liabilities are recognised when a group entity becomes a party to the contractual
+provisions of the instruments.
+Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly
+attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets
+and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of
+the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly
+attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss
+are recognised immediately in profit or loss.
+Financial assets
+Expenditure during the initial exploration preparation stage of a project is charged to profit or loss as
+incurred. Exploration and evaluation costs, including the costs of acquiring licenses, are capitalised as
+exploration and evaluation assets on a project-by-project basis pending determination of the technical
+feasibility and commercial viability of the project.
+Effective interest method
+The effective interest method is a method of calculating the amortised cost of a financial instrument and
+of allocating interest income or expense over the relevant period. The effective interest rate is the rate that
+exactly discounts estimated future cash receipts or payments (including all fees and points paid or received
+that form an integral part of the effective interest rate, transaction costs and other premiums or discounts)
+through the expected life of the financial instrument, or, where appropriate, a shorter period, to the net
+carrying amount on initial recognition.
+Interest income is recognised on an effective interest basis for debt instruments.
+An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use
+or disposal. Gains or losses arising from derecognition of an intangible asset are measured at the difference
+between the net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss
+in the period when the asset is derecognised.
+surveying transportation and infrastructure requirements; and
+conducting market and finance studies.
+Mining structures and mining rights (Continued)
+determining and examining the volume and grade of the resource;
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2015
+3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Taxation
+Income tax expense represents the sum of the tax currently payable and deferred tax.
+The tax currently payable is based on taxable profit for the year. Taxable profit differs from "profit before
+income tax" as reported in the consolidated statement of profit or loss and other comprehensive income
+because of income or expense that are taxable or deductible in other years and items that are never taxable
+or deductible. The Group's current tax is calculated using tax rates that have been enacted or substantively
+enacted by the end of the reporting period.
+Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities
+in the consolidated financial statements and the corresponding tax base used in the computation of taxable
+profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax
+assets are generally recognised for all deductible temporary difference to the extent that it is probable
+that taxable profits will be available against which those deductible temporary differences can be utilised.
+Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial
+recognition (other than in a business combination) of assets and liabilities in a transaction that affects
+neither the taxable profit nor the accounting profit. In addition, deferred tax liabilities are not recognised if
+the temporary difference arises from the initial recognition of goodwill.
+Deferred tax liabilities are recognised for taxable temporary differences associated with investments
+in subsidiaries and associates, except where the Group is able to control the reversal of the temporary
+difference and it is probable that the temporary difference will not reverse in the foreseeable future.
+Deferred tax assets arising from deductible temporary differences associated with such investments and
+interests are only recognised to the extent that it is probable that there will be sufficient taxable profits
+against which to utilise the benefits of the temporary differences and they are expected to reverse in the
+foreseeable future.
+2015 Annual Report 157
+The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to
+the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of
+the asset to be recovered. Unrecognised deferred tax assets are reassessed at the end of each reporting year
+and are recognised to the extent that it has become probable that future taxable profit will be available to
+allow all or part of the deferred tax asset to be recovered.
+The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from
+the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying
+amount of its assets and liabilities.
+Current and deferred tax are recognised in profit or loss, except when they relate to items that are
+recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax
+are also recognised in other comprehensive income or directly in equity respectively. Where current tax or
+deferred tax arises from the initial accounting for a business combination, the tax effect is included in the
+accounting for the business combination.
+158 China Shenhua Energy Company Limited
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2015
+3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Property, plant and equipment
+Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in
+which the liability is settled or the asset is realised, based on tax rate (and tax laws) that have been enacted
+or substantively enacted by the end of the reporting period.
+Property, plant and equipment, which consists of freehold land and buildings, mining structures and mining
+rights, mining related machinery and equipment, and others, held for use in the production or supply of
+goods or services, or for administrative purposes, are stated in the consolidated statement of financial
+position at cost less subsequent accumulated depreciation and subsequent accumulated impairment losses,
+if
+any.
+Payments to state-managed retirement benefit schemes and a supplemental defined contribution pension
+plan approved by the government are recognised as an expense when employees have rendered service
+entitling them to the contributions.
+Government grants that are receivable as compensation for expenses or losses already incurred or for the
+purpose of giving immediate financial support to the Group with no future related costs are recognised in
+profit or loss in the period in which they become receivable.
+Leasing
+Leases where substantially all the rewards and risks of ownership of assets remain with the lessor are
+accounted for as operating leases. Where the Group is the lessor, assets leased by the Group under
+operating leases are included in non-current assets, and rentals receivable under the operating leases are
+credited to profit or loss on the straight-line basis over the lease terms. Where the Group is the lessee,
+rentals payable under operating leases are charged to the profit or loss on the straight-line basis over the
+lease terms.
+Land using rights under operating leases are presented as lease prepayments in the consolidated statement
+of financial position and are initially stated at cost and subsequently charged to the profit or loss on the
+straight-line basis over the lease terms.
+156 China Shenhua Energy Company Limited
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2015
+3.
+Retirement benefit costs
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Foreign currencies are translated at the rates of exchange prevailing on the dates of the transactions. At
+the end of the reporting period, monetary items denominated in foreign currencies are retranslated at the
+rates prevailing at that date. Non-monetary items that are measured in terms of historical cost in a foreign
+currency are not retranslated. Exchange differences on monetary items are recognised in profit or loss in
+the period in which they arise.
+For the purpose of presenting the consolidated financial statements, the assets and liabilities of the
+Group's foreign operations are translated into the presentation currency of the Group (i.e. RMB) using
+exchange rates prevailing at the end of each reporting period. Income and expenses items are translated
+at the average exchange rates for the period. Exchange differences arising, if any, are recognised in other
+comprehensive income and accumulated in equity under the heading of exchange reserve, attributed to
+non-controlling interests as appropriate.
+Borrowing costs
+Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets,
+which are assets that necessarily take a substantial period of time to get ready for their intended use or
+sale, are added to as part of the cost of those assets, until such time as the assets are substantially ready for
+their intended use or sale. All other borrowing costs are expensed in the year in which they are incurred.
+Government grants
+Government grants are not recognised until there is reasonable assurance that the Group will comply with
+the conditions attaching to them and that the grants will be received.
+Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group
+recognises as expenses the related costs for which the grants are intended to compensate. Specifically,
+government grants whose primary condition is that the Group should purchase, construct or otherwise
+acquire non-current assets are recognised as deferred income in the consolidated statement of financial
+position and transferred to profit or loss on a systematic and rational basis over the useful lives of the
+related assets.
+Foreign currencies
+•
+Depreciation is recognised so as to write off the cost of items of property, plant and equipment (other than
+freehold land and construction in progress, which are subject to impairment assessment) less their residual
+values over their estimated useful lives. The estimated useful lives, residual values and depreciation method
+are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for
+on a prospective basis.
+Category
+For the year ended 31 December 2015
+3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Property, plant and equipment (Continued)
+Mining structures and mining rights are depreciated on a units-of-production basis utilising only proved and
+probable coal reserves in the depletion base.
+The Group's mining rights are of sufficient duration (or convey a legal right to renew for sufficient
+duration) to enable all reserves to be mined in accordance with current production schedules.
+Stripping costs incurred to develop a mine (or pit) before the production commences or to improve
+access to the component of the ore body during the production stage are capitalised as part of the cost
+of constructing the mine (or pit) and subsequently amortised over the life of the mine (or pit) on a units-
+of-production basis. Stripping costs and secondary development expenditure, mainly comprising costs on
+blasting, haulage, excavation, etc. incurred during the production stage of the ore body are charged to
+profit or loss as incurred.
+Commercial reserves are proved and probable reserves. Changes in the commercial reserves affecting unit
+of production calculations are dealt with prospectively over the revised remaining reserves.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Exploration and evaluation assets
+.
+researching and analysing historical exploration data;
+•
+gathering exploration data through topographical, geochemical and geophysical studies;
+•
+exploratory drilling, trenching and sampling;
+.
+Exploration and evaluation assets comprise costs which are directly attributable to the search for mineral
+resources, the determination of technical feasibility and the assessment of commercial viability of an
+identified resource:
+Property, plant and equipment, except for freehold land, and mining structures and mining rights, are
+depreciated on a straight-line basis at the following rates per annum:
+2015 Annual Report 159
+Mining structures and mining rights
+Buildings
+Mining related machinery and equipment
+Generators related machinery and equipment
+Railway and port
+Vessel
+Coal chemical related machinery and equipment
+Furniture, fixtures, motor vehicles and other equipment
+Term for deprecation (year)
+10-50 years
+The costs of mining structures and mining rights, which include the costs of acquiring and developing
+mining structures and mining rights, are firstly capitalised as "construction in progress" in the year in which
+they are incurred and then reclassified to "Mining structures and mining rights" under property, plant and
+equipment when they are ready for commercial production.
+164 China Shenhua Energy Company Limited
+30-45 years
+10-25 years
+10-20 years
+5-20 years
+The Directors reviewed the estimated useful lives of the assets annually based on the Group's historical
+experience with similar assets and taking into account anticipated technological changes.
+Construction in progress intended to be used for production, supply or administrative purposes are carried
+at cost, less any recognised impairment loss. Costs include professional fees and, for qualifying assets,
+borrowing costs capitalised in accordance with the Group's accounting policy. Such properties are classified
+to the appropriate categories of property, plant and equipment when completed and ready for intended use.
+Depreciation of these assets, on the same basis as other property, plant and equipment, commences when
+the assets are ready for their intended use.
+An item of property, plant and equipment is derecognised upon disposal or when no future economic
+benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal
+or retirement of an item of property, plant and equipment is determined as the difference between the
+sales proceeds and the carrying amount of the asset and is recognised in profit or loss.
+20 years
+5-20 years
+Dividend income from investments is recognised when the shareholders' rights to receive payment have
+been established (provided that it is probable that the economic benefits will flow to the Group and the
+amount of income can be measured reliably). Interest income is accrued on a time basis, by reference to
+the principal outstanding and at the effective interest rate applicable, which is the rate that discounts the
+estimated future cash inflow through the expected life of the financial asset to the discount rate of the net
+present value on initial recognition.
+An associate is an entity over which the Group has significant influence. Significant influence is the power
+to participate in the financial and operating policy decisions of the investee but is not control or joint
+control over those policies.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2015
+3.
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Investments in associates
+The results and assets and liabilities of associates are incorporated in these consolidated financial
+statements using the equity method of accounting. The financial statements of associates used for equity
+accounting purposes are prepared using uniform accounting policies as those of the Group for like
+transactions and events in similar circumstances. Under the equity method, an investment in an associate
+is initially recognised in the consolidated statement of financial position at cost and adjusted thereafter to
+recognise the Group's share of the profit or loss and other comprehensive income of the associate. When
+the Group's share of losses of an associate exceeds the Group's interest in that associate (which includes any
+long-term interests that, in substance, form part of the Group's net investment in the associate), the Group
+discontinues recognising its share of further losses. Additional losses are recognised only to the extent that
+the Group has incurred legal or constructive obligations or made payments on behalf of that associate.
+On acquisition of the investment in an associate, any excess of the cost of acquisition over the Group's share
+of the net fair value of the identifiable assets, liabilities of the investee is recognised as goodwill, which
+is included within the carrying amount of the investment. Any excess of the Group's share of the net fair
+value of the identifiable assets and liabilities over the cost of investment, after reassessment, is recognised
+immediately in profit or loss in the period in which the investment is acquired.
+The requirements of IAS 39 are applied to determine whether it is necessary to recognise any impairment
+loss with respect to the Group's investment in an associate. When necessary, the entire carrying amount
+of the investment (including goodwill) is tested for impairment in accordance with IAS 36 as a single asset
+by comparing its recoverable amount (higher of value in use and fair value less costs of disposal) with its
+carrying amount. Any impairment loss recognised forms part of the carrying amount of the investment. Any
+reversal of that impairment loss is recognised in accordance with IAS 36 to the extent that the recoverable
+amount of the investment subsequently increases.
+When the Group reduces its ownership interest in an associate but the Group continues to use the equity
+method, the Group reclassifies to profit or loss the proportion of the gain or loss that had previously been
+recognised in other comprehensive income relating to that reduction in ownership interest if that gain or
+loss would be reclassified to profit or loss on the disposal of the related assets or liabilities.
+When a group entity transacts with an associate, profits and losses resulting from the transactions with the
+associate are recognised in the Group' consolidated financial statements only to the extent of interests in
+the associate that are not related to the Group.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2015
+3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Revenue recognition
+2015 Annual Report | 155
+Revenue from the sale of goods is recognised when the goods are delivered and titles have passed, at which
+time all the following conditions are satisfied:
+Interest income from a financial asset is recognised when it is probable that the economic benefits will flow
+to the Group and the amount of income can be measured reliably. Interest income is accrued on a time
+basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the
+rate that exactly discounts the estimated future cash receipts through the expected life of the financial asset
+to that asset's net carrying amount on initial recognition.
+Income from rendering of railway, port, shipping and other services is recognised upon the provision of the
+services.
+Revenue from sale of power is recognised upon the transmission of electric power to the power grid
+companies, as determined based on the volume of electric power transmitted and the applicable fixed tariff
+rates agreed with the respective electric power grid companies annually.
+Revenue is measured at the fair value of the consideration received or receivable and represents amounts
+receivable for goods sold and services provided in the normal course of business, net of discounts and sales
+related taxes.
+it is probable that the economic benefits associated with the transaction will flow to the Group; and
+•
+the costs incurred or to be incurred in respect of the transaction can be measured reliably.
+the amount of revenue can be measured reliably;
+•
+the Group retains neither continuing managerial involvement to the degree usually associated with
+ownership nor effective control over the goods sold;
+the Group has transferred to the buyer the significant risks and rewards of ownership of the goods;
+•
+•
+40,105
+Accrued expenses and other payables
+Short-term debenture
+9,982
+9,982
+Accounts and bills payable
+37,800
+864
+38,664
+42,692
+31
+42,665
+Current portion of long-term liabilities due
+within one year
+311
+311
+Income tax payable
+2,221
+53
+1,602
+(27)
+38,503
+6,648
+Current liabilities
+28,016
+Prepaid expenses and other current assets
+30,274
+62
+30,336
+Restricted bank deposits
+2,274
+6,648
+Time deposits with original maturity
+Borrowings
+over three months
+Cash and cash equivalents
+38,332
+16
+1,292
+38,338
+Total current assets
+121,408
+1,159
+122,567
+1,292
+Total current liabilities
+Accrued reclamation obligations
+2,492
+Net assets
+334,642
+3,568
+338,210
+Equity attributable to equity holders
+of the Company
+276,903
+3,210
+280,113
+53,115
+Non-controlling interests
+358
+58,097
+Total equity
+334,642
+3,568
+338,210
+Note:
+Effect of 2015 Acquisitions also included the effect of elimination of intra-group transactions, balances, income and expenses
+arising from the 2015 Acquisitions.
+174 China Shenhua Energy Company Limited
+57,739
+131,509
+5,968
+Total non-current liabilities
+134,001
+Non-current liabilities
+Borrowings
+37,084
+5,770
+42,854
+Medium-term notes
+4,958
+4,958
+47,147
+Long-term liabilities
+161
+2,028
+795
+1,973
+1,973
+Deferred tax liabilities
+1,265
+37
+1,302
+1,867
+1,477
+27,221
+17,937
+297,244
+of the Company
+Equity attributable to equity holders
+365,570
+3,971
+361,599
+Net assets
+74,524
+6,087
+68,437
+Total non-current liabilities
+1,165
+35
+1,130
+Deferred tax liabilities
+2,102
+2,102
+Accrued reclamation obligations
+1,705
+159
+1,546
+Long-term liabilities
+24,933
+24,933
+Medium-term notes
+44,619
+5,893
+3,454
+38,726
+300,698
+64,355
+1,446
+2,251
+2,251
+76,707
+642
+76,065
+272,276
+10,160
+262,116
+Deferred tax assets
+Lease prepayments
+4,866
+Available-for-sale investments
+Interest in associates
+Intangible assets
+Exploration and evaluation assets
+Construction in progress
+Property, plant and equipment
+Non-current assets
+as at 1 January 2014
+Consolidated statement of financial position
+365,570
+3,971
+361,599
+Total equity
+64,872
+517
+Non-controlling interests
+Borrowings
+Non-current liabilities
+reported)
+14,243
+132
+14,375
+1,723
+43
+1,766
+Total non-current assets
+391,890
+10,869
+402,759
+2015 Annual Report 173
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2015
+5.
+RESTATEMENTS ARISING FROM ACQUISITION OF SUBSIDIARIES UNDER COMMON
+CONTROL (CONTINUED)
+Consolidated statement of financial position
+The Group
+RMB million
+(as previously
+Effect of 2015
+Acquisitions
+RMB million
+(Note)
+The Group
+RMB million
+(Restated)
+reported)
+as at 1 January 2014 (Continued)
+Current assets
+Inventories
+17,641
+296
+28,009
+(139)
+28,148
+1,032
+(Restated)
+The Group
+RMB million
+Effect of 2015
+Acquisitions
+RMB million
+(Note)
+(as previously
+RMB million
+The Group
+as at 31 December 2014
+Consolidated statement of financial position
+RESTATEMENTS ARISING FROM ACQUISITION OF SUBSIDIARIES UNDER COMMON
+CONTROL (CONTINUED)
+5.
+For the year ended 31 December 2015
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+172 | China Shenhua Energy Company Limited
+Accounts and bills receivable
+110,778
+108,861
+Total current liabilities
+2,686
+69
+2,617
+Income tax payable
+280
+280
+Current portion of long-term liabilities
+40,366
+12
+4,866
+1,032
+1,917
+Other non-current assets
+10,966
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+662
+48,744
+2015 Annual Report 171
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2015
+5.
+RESTATEMENTS ARISING FROM ACQUISITION OF SUBSIDIARIES UNDER COMMON
+CONTROL (CONTINUED)
+Consolidated statement of financial position
+as at 31 December 2014
+Non-current assets
+Property, plant and equipment
+Construction in progress
+Exploration and evaluation assets
+Intangible assets
+Interest in associates
+Available-for-sale investments
+Other non-current assets
+Lease prepayments
+Deferred tax assets
+Total non-current assets
+The Group
+RMB million
+(as previously
+Effect of 2015
+Acquisitions
+RMB million
+(Note)
+The Group
+RMB million
+(Restated)
+reported)
+281,514
+78,924
+48,082
+10,748
+Total comprehensive income for the year
+(18)
+Share of results of associates
+804
+(4,094)
+(1)
+803
+(365)
+(4,459)
+410
+410
+Profit before income tax
+Income tax expense
+Profit for the year
+Other comprehensive loss for the year
+Item that will not be reclassified to profit or loss:
+Remeasurement of defined benefit obligations
+Items that may be reclassified subsequently
+to profit or loss:
+60,945
+(12,562)
+902
+61,847
+(222)
+(12,784)
+48,383
+680
+49,063
+(18)
+(18)
+Exchange differences
+(301)
+(301)
+Other comprehensive income (loss) for the year
+(301)
+(319)
+2,212
+1,509
+5,016
+118,637
+Total current assets
+35,962
+6
+35,956
+Cash and cash equivalents
+1,275
+1,275
+over three months
+Time deposits with original maturity
+6,271
+6,271
+Restricted bank deposits
+29,308
+(123)
+29,431
+Prepaid expenses and other current assets
+30,850
+936
+29,914
+Accounts and bills receivable
+15,980
+190
+15,790
+Inventories
+Current assets
+431,226
+1,009
+119,646
+Current liabilities
+Borrowings
+1,795
+32,423
+14,825
+138
+2,042
+ལྦ་་རྐ་ ་8སྐྱག
+292,262
+78,988
+2,212
+1,540
+5,016
+1,795
+(57)
+Finance costs
+32,366
+42
+2,084
+420,260
+39,011
+725
+38,286
+Accounts and bills payable
+9,994
+9,994
+Short-term debenture
+18,441
+1,111
+17,330
+14,963
+Interest income
+(419)
+(2)
+Derivative financial instruments
+The Group's derivative financial instruments represent cross-currency interest rate swaps, and are initially
+recognised at fair value at the date when the derivative contracts are entered into, are remeasured at fair
+value at the end of the reporting period, with any gains or losses recognised in profit or loss.
+166 China Shenhua Energy Company Limited
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2015
+3.
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Impairment of tangible and intangible assets other than goodwill
+4.
+Where an indication of impairment exists, the asset's recoverable amount is estimated. An asset's
+recoverable amount is the higher of the asset's value in use and its fair value less costs of disposal, and
+is determined for an individual asset, unless the asset does not generate cash inflows that are largely
+independent of those from other assets or groups of assets, in which case the recoverable amount is
+determined for the cash-generating unit to which the asset belongs.
+An impairment loss is recognised only if the carrying amount of an asset exceeds its recoverable amount. In
+assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax
+discount rate that reflects current market assessments of the time value of money and the risks specific to
+the asset for which the future cash flow estimates have not been adjusted. An impairment loss is charged to
+the profit or loss as other gains and losses.
+An assessment is made at the end of each reporting year as to whether there is any indication that
+previously recognised impairment losses may no longer exist or may have decreased. If such an indication
+exists, the recoverable amount is estimated. A previously recognised impairment loss of an asset is reversed
+only if there has been a change in the estimates used to determine the recoverable amount of that asset,
+but not to an amount higher than the carrying amount that would have been determined (net of any
+depreciation/amortisation), had no impairment loss been recognised for the asset in prior years. A reversal
+of such an impairment loss is credited to the profit or loss in the year in which it arises.
+CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
+UNCERTAINTY
+In the application of the Group's accounting policies, which are described in Note 3, the Directors are
+required to make judgements, estimates and assumptions about the carrying amounts of assets and
+liabilities that are not readily apparent from other sources. The estimates and associated assumptions are
+based on historical experience and other factors that are considered to be relevant. Actual results may differ
+from these estimates.
+The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting
+estimates are recognised in the period in which the estimate is revised if the revision affects only that period
+or in the period of the revision and future periods if the revision affects both current and future periods.
+2015 Annual Report 167
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2015
+4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
+UNCERTAINTY (CONTINUED)
+4.1 Critical judgements in applying accounting policies
+4.2
+The following are critical judgements, apart from those involving estimation (see Note 4.2 below),
+that the Directors have made in the process of applying the Group's accounting policies and that
+have the most significant effect on the amounts recognised in the consolidated financial statements.
+Control over Hebei Guohua Dingzhou Power Co., Ltd. ("Dingzhou Power")
+Note 43 describes that Dingzhou Power is a subsidiary of the Company although the Company has
+only 41% ownership interest and voting rights in Dingzhou Power. The remaining 59% of ownership
+interest and voting rights are owned by two shareholders that are unrelated to the Group as to 19%
+and 40%, respectively. Details of Dingzhou Power are set out in Note 43.
+In making their judgement, the Directors considered that the other shareholders of Dingzhou Power
+offered the Company, for the right on appointment of the majority members of the board of directors
+which is the governing body of most of the relevant activities of Dingzhou Power whilst some
+relevant activities require shareholders' approval. The Company considers it has the practical ability to
+direct the relevant activities that most significantly affect Dingzhou Power's returns unilaterally. After
+assessment, the Directors concluded that the Company has sufficiently dominant power over the
+board of directors of Dingzhou Power and therefore the Company has control over Dingzhou Power.
+Key sources of estimation uncertainty
+The following are the key assumptions concerning the future, and other key sources of estimation
+uncertainty at the end of the reporting period that have a significant risk of causing a material
+adjustment to the carrying amounts of assets and liabilities within the next financial year.
+Coal reserves
+Engineering estimates of the Group's coal reserves are inherently imprecise and represent only
+approximate amounts because of the subjective judgements involved in developing such information.
+There are authoritative guidelines regarding the engineering criteria that have to be met before
+estimated coal reserves can be designated as "proved" and "probable". Proved and probable coal
+reserve estimates are updated at regular basis and have taken into account recent production
+and technical information of each mine. In addition, as prices and cost levels change from year to
+year, the estimate of proved and probable coal reserves also changes. This change is considered
+as a change in estimate for accounting purposes and is reflected on a prospective basis in related
+depreciation rates.
+The Group derecognises financial liabilities when, and only when, the Group's obligations are discharged,
+cancelled or expire. The difference between the carrying amount of the financial liability derecognised and
+the consideration paid and payable is recognised in profit or loss.
+Deregconition of financial liabilities
+After initial recognition, financial liabilities at amortised cost are subsequently measured at amortised cost,
+using the effective interest rate method unless the effect of discounting would be immaterial, in which
+case they are stated at cost. Gains and losses are recognised in the profit or loss when the liabilities are
+derecognised. The effective interest rate amortisation is included in finance costs in the profit or loss.
+Financial liabilities within the scope of IAS 39 are classified as financial liabilities at fair value through profit
+or loss and financial liabilities at amortised cost. The Group determines the classification of its financial
+liabilities at initial recognition. The Group's financial liabilities including borrowings, accounts and bills
+payable, other payables, long-term liabilities, short-term debentures, medium-term notes and bonds, are
+recognised initially at fair value, net of directly attributable transaction costs (if any).
+For the year ended 31 December 2015
+3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Financial instruments (Continued)
+Financial assets (Continued)
+Derecognition of financial assets
+The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset
+expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of
+the asset to another entity. If the Group retains substantially all the risks and rewards of ownership of
+a transferred financial asset, the Group continues to recognise the financial asset and also recognises a
+collateralised borrowing for the proceeds received.
+On derecognition of a financial asset, the difference between the asset's carrying amount and the sum of
+the consideration received and receivable and the cumulative gain or loss that had been recognised in other
+comprehensive income and accumulated in equity is recognised in profit or loss.
+Impairment of financial assets
+Financial assets, other than those at FVTPL, are assessed for indicators of impairment by the Group at the
+end of each reporting period by the Group. Financial assets are considered to be impaired when there is
+objective evidence that, as a result of one or more events that occurred after the initial recognition of the
+financial asset, the estimated future cash flows of the financial assets have been affected. The objective
+evidence of impairment could include:
+significant financial difficulty of the issuer or counterparty; or
+•
+breach of contract, such as default or delinquency in interest and principal payments; or
+•
+Despite the inherent imprecision in these engineering estimates, these estimates are used in
+determining depreciation expenses and impairment loss. Depreciation rates are determined based
+on estimated proved and probable coal reserve quantity (the denominator) and capitalised costs of
+mining structures and mining rights (the numerator). The capitalised cost of mining structures and
+mining rights are amortised based on the units of coal produced.
+it becoming probable that the borrower will enter bankruptcy or financial re-organisation.
+For financial assets carried at amortised cost, the amount of the impairment loss recognised is the difference
+between the asset's carrying amount and the present value of the estimated future cash flows discounted
+at the financial asset's original effective interest rate.
+2015 Annual Report 165
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2015
+3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Financial instruments (Continued)
+Financial assets (Continued)
+Impairment of financial assets (Continued)
+The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets
+with the exception of accounts receivables, other receivables, loans and advances to Shenhua Group and
+fellow subsidiaries and entrusted loans, where the carrying amount is reduced through the use of an
+allowance account. When accounts receivables, other receivables, loans and advances to Shenhua Group
+and fellow subsidiaries and entrusted loans are considered uncollectible, it is written off against the
+allowance account. Subsequent recoveries of amounts previously written off are credited to profit or loss.
+Financial liabilities and equity instruments
+Equity instruments
+An equity instrument is any contract that evidences a residual interest in the assets of the group after
+deducting all of its liabilities. Equity instruments issued by the Group are recognised at the proceeds
+received, net of direct issue costs.
+Financial liabilities
+For financial assets carried at cost, the amount of the impairment loss is measured as the difference
+between the asset's carrying amount and the present value of the estimated future cash flows discounted
+at the current market rate of return for a similar financial asset. Such impairment loss will not be reversed
+in subsequent periods.
+40,354
+168 China Shenhua Energy Company Limited
+For the year ended 31 December 2015
+(Restated)
+Consolidated statement of profit or loss
+and other comprehensive income
+for the year ended 31 December 2014
+Revenue
+Cost of sales
+248,360
+(174,843)
+4,721
+(3,266)
+253,081
+(178,109)
+Gross profit
+73,517
+1,455
+74,972
+Selling expenses
+(794)
+General and administrative expenses
+(8,665)
+(170)
+(794)
+(8,835)
+Other gains and losses
+(749)
+(21)
+(770)
+Other income
+933
+6
+939
+Other expenses
+(417)
+RMB million
+The Group
+Effect of 2015
+Acquisitions
+RMB million
+(Note)
+(as previously
+reported)
+4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
+UNCERTAINTY (CONTINUED)
+4.2 Key sources of estimation uncertainty (Continued)
+Impairment losses
+In considering the impairment losses that may be required for certain of the Group's assets which
+include property, plant and equipment, construction in progress and interest in associates, the
+recoverable amount of the asset needs to be determined. The recoverable amount is the higher
+of its fair value less costs of disposal and value in use. It is difficult to precisely estimate fair value
+because quoted market prices for these assets may not be readily available. In determining the value
+in use, expected cash flows generated by the cash-generating unit to which the asset belongs are
+discounted to their present value, which requires significant judgement relating to items such as level
+of sale volume, selling price, amount of operating costs and future returns. The Group uses all readily
+available information in determining an amount that is reasonable approximation of recoverable
+amount, including estimates based on reasonable and supportable assumptions and projections of
+items such as sale volume, selling price and amount of operating costs.
+In considering the impairment losses that may be required for current receivables and other financial
+assets, future cash flows need to be determined. One of the key assumptions that has to be applied is
+about the ability of the debtors to settle the receivables.
+Notwithstanding that the Group has used all available information to make this estimation, inherent
+uncertainty exists and actual write-offs may be higher or lower than the amount estimated. The
+carrying amounts of the property, plant and equipment, construction in progress and interest in
+associates are disclosed in Notes 15, 16 and 19, respectively.
+Depreciation
+Other than the freehold land and mining structures and mining rights, property, plant and
+equipment are depreciated on a straight-line basis over the estimated useful lives of the assets, after
+taking into account the estimated residual value. The Group reviews the estimated useful lives and
+residual value of the assets regularly based on the Group's historical experience with similar assets
+and taking into account anticipated technological changes. The depreciation expense for future
+periods is adjusted if there are significant changes from previous estimates. The carrying amounts of
+the property, plant and equipment is disclosed in Note 15.
+Deferred tax asset
+As at 31 December 2015, deferred tax assets of RMB2,674 million (2014: RMB2,084 million) have
+been recognised in the Group's consolidated statement of financial position. No deferred tax asset
+has been recognised on the tax losses of RMB5,604 million (2014: RMB3,285 million) and deductible
+temporary differences of RMB5,128 million (2014: RMB833 million) due to the unpredictability of
+future profit streams. The realisation of the deferred tax assets mainly depends on whether sufficient
+future profits or taxable temporary differences will be available in the future. In cases where
+the actual future profits generated are less or more than expected, a material reversal or further
+provision of deferred tax assets may arise, which will be recognised in profit or loss in the period in
+which such a reversal takes place.
+2015 Annual Report 169
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2015
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
+UNCERTAINTY (CONTINUED)
+4.2 Key sources of estimation uncertainty (Continued)
+Obligations for land reclamation
+The estimation of the liabilities for final reclamation and mine closure involves the estimates of
+the amount and timing for the future cash spending as well as the discount rate used for reflecting
+current market assessments of the time value of money and the risks specific to the liability. The
+Group considers the factors including development plan of the mines, the geological structure of
+the mining regions and reserve volume to determine the scope, amount and timing of reclamation
+and mine closure works to be performed. Determination of the effect of these factors involves
+judgements from the Group and the estimated liabilities may turn out to be different from the actual
+expenditure to be incurred. The discount rate used by the Group may also be altered to reflect the
+changes in the market assessments of the time value of money and the risks specific to the liability,
+such as change of the borrowing rate and inflation rate in the market. As changes in estimates occur
+(such as mine plan revisions, changes in estimated costs, or changes in timing of the performance of
+reclamation activities), the revisions to the obligation will be recognised at the appropriate discount
+rate. The carrying amounts of the obligations are disclosed in Note 34.
+RESTATEMENTS ARISING FROM ACQUISITION OF SUBSIDIARIES UNDER COMMON
+CONTROL
+On 31 October 2015, the Company completed the acquisition from Shenhua Group the 100% equity interest
+in Ningdong Power Plant ("Ningdong Power"), 100% equity interest in Xuzhou Power Plant ("Xuzhou
+Power") and 51% equity interest in Zhoushan Power Plant ("Zhoushan Power") (collectively referred to as
+"2015 Acquisitions") for a cash consideration of RMB522 million, RMB3,997 million and RMB867 million,
+respectively.
+During the year ended 31 December 2015, the Company has paid RMB5,386 million based on the valuation
+of the acquired business as at 30 June 2015 (the "Valuation Date"). The Company has to pay an additional
+consideration of RMB309 million to Shenhua Group, being the excess of the net assets as at the completion
+date of the 2015 Acquisitions over that of the Valuation Date, for the acquired business.
+As the Company, Ningdong Power, Xuzhou Power and Zhoushan Power were under common control of
+Shenhua Group before and after the 2015 Acquisitions, the acquisitions are considered as a combination of
+businesses under common control. The principle of merger accounting for business combination involving
+entities under common control has therefore been applied, pursuant to which the consolidated financial
+statements of the Group have been prepared from 1 January 2015 as if Ningdong Power, Xuzhou Power and
+Zhoushan Power have been subsidiaries of the Company since they first came under the common control.
+Accordingly, the consolidated statements of financial position as at 1 January 2014 and 31 December 2014
+have been restated to include the assets and liabilities of Ningdong Power, Xuzhou Power and Zhoushan
+Power at carrying amounts in the books of Shenhua Group and the consolidated statement of profit or
+loss and other comprehensive income, consolidated statement of changes in equity and consolidated
+statement of cash flows of the Group prior to this acquisition have been restated to include the results of
+operations and cash flows of Ningdong Power, Xuzhou Power and Zhoushan Power on a combined basis.
+The consideration paid and payable by the Company for Ningdong Power, Xuzhou Power and Zhoushan
+Power has been accounted for as an equity transaction in the consolidated statement of changes in equity.
+Respective notes to the consolidated financial statements have also been restated. All significant intra-
+group transactions, balances, income and expenses are eliminated on combination.
+170 | China Shenhua Energy Company Limited
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2015
+5.
+RESTATEMENTS ARISING FROM ACQUISITION OF SUBSIDIARIES UNDER COMMON
+CONTROL (CONTINUED)
+As a result of 2015 Acquisitions, the relevant line items in the consolidated statement of profit or loss and
+other comprehensive income for the year ended 31 December 2014 and the consolidated statements of
+financial position at 31 December 2014 and 1 January 2014 have been restated as follows:
+The Group
+RMB million
+5.
+Accrued expenses and other payables
+583
+137,383
+2
+- impairment of loans receivable
+651
+– impairment in respect of construction in progress
+209
+3,834
+– impairment in respect of properties and equipment
+(19)
+(54)
+122
+- gains on disposal of available-for-sale investments
+- gains on disposal of a subsidiary
+83
+- losses on disposal of property, plant and equipment
+Other gains and losses, represent
+Depreciation and amortisation
+21,343
+23,990
+1,318
+1,626
+370
+222
+396
+- allowance for doubtful debts
+58
+DIRECTORS', SUPERVISORS' AND CHIEF EXECUTIVE'S EMOLUMENTS
+11.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2015
+178 | China Shenhua Energy Company Limited
+21
+22
+- audit service
+355
+219
+300
+Operating lease in respect of properties and equipment
+Auditors' remuneration
+82,673
+Carrying amount of inventories sold
+770
+5,856
+36
+- impairment in respect of other non-current assets
+232
+950
+- write down of inventories
+132,644
+Executive Directors' and chief executives' remuneration for the year, disclosed pursuant to the applicable
+Listing Rules and CO, is as follows:
+224
+19,431
+Australia
+%
+%
+2014
+2015
+Year ended 31 December
+The applicable tax rates of the Group's overseas subsidiaries are as follows:
+INCOME TAX (CONTINUED)
+9.
+Indonesia
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2015
+Under the Law of the PRC on Enterprise Income Tax (the "EIT Law") and Implementation Regulation of
+the EIT Law, the tax rate applicable for PRC group entities is 25% (2014: 25%) except for Group's overseas
+subsidiaries and branches as well as subsidiaries operating in the western developing region of the PRC
+which are entitled to a preferential tax rate of 15% from 2011 to 2020.
+12,784
+9,561
+year
+Income tax expense for the
+(104)
+(18)
+589
+224
+2015 Annual Report 177
+329
+Russia
+30.0
+21,639
+20,165
+20,067
+Depreciation of property, plant and equipment
+Amortisation of intangible assets, included in cost of sales
+Amortisation of lease prepayments, included in cost of sales
+Amortisation of other non-current assets
+of RMB2,791 million (2014: RMB2,656 million)
+- contributions to defined contribution plans
+Personnel expenses, including
+2014
+RMB million
+(Restated)
+Year ended 31 December
+2015
+RMB million
+Hong Kong
+Profit for the year has been arrived at after charging (crediting):
+10.
+During the year ended 31 December 2015 and 2014, there was no significant assessable profit and provision
+for profit tax for the overseas subsidiaries.
+16.5
+16.5
+20.0
+20.0
+25.0
+25.0
+30.0
+PROFIT FOR THE YEAR
+- additional tax in respect of prior years
+- Others
+Chief executive
+Sub-total
+Supervisors
+scheme
+Retirement
+Discretionary
+and benefits
+allowance
+and other
+housing
+Basic salaries,
+Zhai Richeng (note (i))
+Year ended 31 December 2015
+11.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2015
+2015 Annual Report 179
+1.35
+1.35
+Sub-total
+0.45
+0.45
+Guo Peizhang
+DIRECTORS', SUPERVISORS' AND CHIEF EXECUTIVE'S EMOLUMENTS (CONTINUED)
+0.45
+Tang Ning
+Sub-total
+RMB million
+Fees
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+Total
+contributions
+Shen Lin
+bonuses
+Fees
+Sub-total
+Han Jianguo
+Wang Xiaolin
+Ling Wen
+Executive directors
+Sub-total
+Zhang Yuzhuo (note (i))
+Chief executive
+Total
+in kind
+Zhang Yuzhuo (note (i))
+0.45
+0.45
+Executive directors
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+Total
+in kind
+Fees
+Ling Wen (note (ii))
+contributions
+Retirement
+bonuses
+Discretionary
+and benefits
+allowance
+and other
+housing
+Basic salaries,
+Year ended 31 December 2015
+scheme
+Gong Huazhang
+Han Jianguo
+Wang Xiaolin (note (iii)) , -0.13
+0.45
+Fan Hsulaitai
+non-executive directors
+Independent
+1.27
+0.16
+0.79
+0.32
+0.54
+|||
+0.06
+0.73
+0.10
+0.44
+0.19
+Sub-total
+(note (i))
+Chen Hongsheng
+Non-executive directors
+Sub-total
+0.35
+180 | China Shenhua Energy Company Limited
+384
+- tax losses and deductible temporary difference not recognised
+other loans and receivables
+bank deposits
+Interest income from:
+INTEREST INCOME/FINANCE COSTS
+8.
+Other operating costs
+Taxes and surcharges
+Transportation charges
+Repairs and maintenance
+debt securities
+Materials, fuel and power
+Personnel expenses
+Depreciation and amortisation
+COST OF SALES
+7.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2015
+2015 Annual Report 175
+253,081
+177,069
+34,556
+14,164
+218,525
+Coal purchased
+162,905
+Total interest income
+RMB million
+178,109
+123,341
+51,780
+30,608
+4,100
+5,833
+14,369
+12,193
+9,505
+Year ended 31 December
+2015
+8,619
+21,134
+11,417
+11,874
+24,109
+15,816
+43,545
+17,264
+(Restated)
+2014
+RMB million
+19,284
+Year ended 31 December
+5,368
+4,323
+(985)
+(26,722)
+(43,736)
+(573)
+(43,163)
+69,069
+1,558
+67,511
+Net cash generated from operating activities
+Net cash used in investing activities
+Net cash used in financing activities
+(27,707)
+(Restated)
+The Group
+Effect of 2015
+Acquisitions
+RMB million
+(Note)
+The Group
+RMB million
+(as previously
+reported)
+for the year ended 31 December 2014
+Consolidated statement of cash flows
+RESTATEMENTS ARISING FROM ACQUISITION OF SUBSIDIARIES UNDER COMMON
+CONTROL (CONTINUED)
+5.
+For the year ended 31 December 2015
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+RMB million
+5,005
+Net decrease in cash and cash equivalents
+(2,374)
+3,827
+78,288
+71,347
+130,546
+82,726
+(Restated)
+2014
+RMB million
+RMB million
+Year ended 31 December
+2015
+(2,374)
+Other revenue
+Transportation revenue
+Coal revenue
+Power revenue
+REVENUE
+6.
+1.976
+0.031
+1.945
+- Basic
+Earnings per share (RMB)
+Coal chemical revenue
+1,798
+2015
+2014
+RMB million
+(Restated)
+2015
+Year ended 31 December
+The tax charge for the year can be reconciled to the profit before income tax per consolidated statement of
+profit or loss and other comprehensive income as follows:
+12,784
+9,561
+(455)
+(877)
+589
+224
+RMB million
+12,650
+2014
+RMB million
+(Restated)
+RMB million
+Year ended 31 December
+2015
+Over provision in respect of prior years
+Deferred tax
+For the year
+Current income tax
+INCOME TAX
+9.
+Borrowing costs capitalised during the year arose on the general borrowing pools and were calculated by
+applying a capitalisation rate from 2.55% to 6.20% (2014: from 3.57% to 6.40%) per annum to expenditure
+on qualifying assets.
+10,214
+INTEREST INCOME/FINANCE COSTS (CONTINUED)
+2014
+RMB million
+Profit before income tax
+(69)
+(24)
+- utilisation of tax losses previously not recognised
+(102)
+(107)
+- share of results of associate
+(248)
+(32)
+- income not taxable
+(Restated)
+250
+- non-deductible expenses
+(3,377)
+(1,235)
+- different tax rates of branches and subsidiaries
+15,461
+8,630
+61,847
+34,520
+Tax at PRC income tax rate of 25% (2014: 25%)
+Tax effects of:
+325
+RMB million
+8.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Total finance costs on financial liabilities not
+310
+330
+1,311
+773
+5,007
+3,638
+bonds
+medium-term notes
+at fair value through profit or loss
+short-term debenture
+Interest on:
+803
+608
+16
+4
+159
+156
+628
+448
+borrowings
+For the year ended 31 December 2015
+5,842
+Less: amount capitalised
+176 |China Shenhua Energy Company Limited
+3,656
+4,515
+Net finance costs
+4,459
+5,123
+Total finance costs
+5
+6
+6,110
+Fair value changes on financial instruments
+649
+Exchange loss (gain), net
+161
+144
+Unwinding of discount
+4,621
+4,324
+1,489
+1,518
+(328)
+184 China Shenhua Energy Company Limited
+| | |
+0.20
+in progress, for overall
+Transferred to construction
+I'm
+(4,266)
+(207)
+(33)
+(721)
+(387)
+(569)
+technical enhancement
+(2,034)
+23
+341
+4
+(40)
+(275)
+Disposals or write-off
+Transferred from intangible asset
+341
+prepayments
+23
+Transferred from lease
+(2,705)
+At 31 December 2014 (restated)
+57
+16
+699
+287
+576
+362
+249
+Additions
+123
+(2,705)
+(66)
+429,645
+17,498
+13,007
+6,239
+102,470
+138,834
+64,775
+30,574
+56,248
+Exchange adjustment
+52
+32,861
+354
+12,078
+4,746
+86,682
+136,295
+62,029
+29,991
+49,724
+At 1 January 2014 (restated)
+COST
+13,657
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+Total
+equipment
+RMB million
+3,714
+395,202
+(91)
+2,117
+10,667
+5,617
+3,732
+310
+6,350
+in progress
+Transferred from construction
+8,273
+Exchange adjustment
+311
+97
+5,508
+189
+1,048
+313
+199
+Additions
+(84)
+7
+608
+equipment
+2,231
+in progress
+178
+1
+4
+2
+2
+-
+9
+9
+in progress, for overall
+18
+Transferred to construction
+Impairment losses
+Transferred from intangible asset
+prepayments
+Transferred from lease
+19,431
+657
+246
+2,645
+6,234
+Disposals or write-off
+5,211
+8
+(159)
+9,042
+2,767
+119
+26,099
+43,984
+31,756
+8,763
+14,853
+At 31 December 2014 (restated)
+209
+(1,804)
+technical enhancement
+(3,391)
+(143)
+(17)
+(538)
+(318)
+(424)
+(1,756)
+(36)
+(1,804)
+Transferred from construction
+1,114
+Charge for the year
+At 31 December 2015
+(1,830)
+(39)
+(15)
+(289)
+(283)
+(517)
+(281)
+(232)
+76,977
+(174)
+70,515
+205
+122
+903
+18,348
+29,075
+970
+172
+20,720
+Disposals or write-off
+1,967
+30,876
+167,802
+1
+1
+Exchange adjustment
+122,926
+7,818
+2,127
+411
+23,754
+39,799
+66,040
+28,300
+13,032
+At 1 January 2014 (restated)
+IMPAIRMENT
+DEPRECIATION AND
+500,618
+17,716
+13,120
+6,853
+121,234
+7,685
+0.18
+Vessels
+equipment
+Fan Hsulaitai
+Gong Huazhang
+non-executive directors
+Independent
+Sub-total
+(note (i) and note (iii))
+Wu Ruosi
+(note (i))
+Chen Hongsheng
+Guo Peizhang
+(note (i) and note (iii))
+Non-executive directors
+RMB million
+Total
+RMB million
+Retirement
+scheme
+contributions
+Discretionary
+bonuses
+RMB million
+in kind
+RMB million
+and benefits
+allowance
+Kong Dong
+and other
+Sub-total
+0.45
+0.09
+0.47
+0.43
+Tang Ning
+0.44
+0.03
+0.27
+0.14
+Shen Lin
+0.45
+Zhai Richeng (note (i))
+Sun Wenjian
+Supervisors
+1.35
+0.45
+0.45
+0.45
+I
+1.35
+0.45
+(note (i) and note (iii))
+0.99
+housing
+Year ended 31 December 2014
+Total
+contributions
+Retirement
+scheme
+bonuses
+Discretionary
+in kind
+RMB million
+and other
+allowance
+and benefits
+Basic salaries,
+housing
+Year ended 31 December 2014
+RMB million
+3.88
+0.11
+0.56
+0.59
+0.85
+0.08
+0.36
+0.41
+0.41
+0.03
+1.26
+Basic salaries,
+RMB million
+0.09
+RMB million
+Fees
+11. DIRECTORS', SUPERVISORS' AND CHIEF EXECUTIVE'S EMOLUMENTS (CONTINUED)
+For the year ended 31 December 2015
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+3.00
+0.23
+1.69
+1.08
+RMB million
+1.13
+0.55
+0.49
+1.24
+0.10
+0.64
+0.50
+0.63
+0.04
+0.50
+0.09
+and port
+Zhao Shibin (note (iii))
+0.28
+No diluted earnings per share is presented as there were no potential ordinary shares in existence during
+both years.
+The calculation of basic earnings per share is based on the profit attributable to ordinary equity holders of
+the Company of RMB17,649 million (2014: RMB39,301 million) and the number of shares in issue during the
+year of 19,890 million shares (2014: 19,890 million shares).
+EARNINGS PER SHARE
+Subsequent to the end of the reporting period, a final dividend in respect of the year ended 31 December
+2015 of RMB0.32 (final dividend in respect of the year ended 31 December 2014: RMB0.74) per ordinary
+share has been proposed by the Directors of the Company and is subject to approval by the shareholders in
+the following general meeting.
+18,100
+14,718
+2014 final - RMB0.74 (2014: 2013 final of RMB0.91) per
+ordinary share
+Dividend approved and paid during the year:
+14.
+2015 Annual Report 183
+RMB million
+Year ended 31 December
+2015
+RMB million
+13. DIVIDENDS
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2015
+3
+3
+1
+182 China Shenhua Energy Company Limited
+HK$1,000,001 to HK$1,500,000
+HK$500,001 to HK$1,000,000
+2014
+2014
+RMB million
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2015
+Furniture,
+equipment
+rights
+buildings
+and other
+and
+Railway
+and
+and
+vehicles
+15. PROPERTY, PLANT AND EQUIPMENT
+machinery
+fixtures,
+Coal chemical
+related
+related
+machinery
+machinery
+structures
+and mining
+Land and
+Mining related
+Generators,
+Mining
+motor
+0.32
+RMB million
+Year ended 31 December
+(iii)
+(ii)
+(i)
+Notes:
+12.
+DIRECTORS', SUPERVISORS' AND CHIEF EXECUTIVE'S EMOLUMENTS (CONTINUED)
+11.
+For the year ended 31 December 2015
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+The emoluments of these directors and supervisors were borne by Shenhua Group during the years ended 31 December 2015 and
+2014.
+2015 Annual Report 181
+6.43
+Total
+2.08
+0.17
+1.02
+0.89
+Sub-total
+0.65
+0.05
+Discretionary bonuses were determined by the remuneration committee in accordance with the relevant
+human resources policies.
+2015
+The emolument of Mr. Ling Wen was borne by Shenhua Group during the year ended 31 December 2015.
+Mr. Kong Dong resigned as non-executive director of the Group on 22 August 2014.
+Mr. Wu Ruosi resigned as non-executive director of the Group on 21 November 2014.
+Mr. Sun Wenjian resigned as supervisor of the Group on 22 August 2014.
+Their emoluments were within the following band:
+3.31
+3.49
+0.26
+0.36
+1.68
+1.38
+1.37
+1.75
+Mr. Wang Xiaolin resigned as executive director of the Group on 20 August 2015.
+RMB million
+2014
+Year ended 31 December
+2015
+Retirement scheme contributions
+Basic salaries, housing and other allowances and benefits in kind
+Discretionary bonuses
+Of the five individuals with the highest emoluments within the Group, one (2014: two) was director of the
+Company whose emolument is disclosed in Note 11. The emoluments of the remaining four (2014: three)
+individuals were as follows:
+INDIVIDUALS WITH THE HIGHEST EMPLOYEES' EMOLUMENTS
+The independent non-executive directors' emoluments shown above were mainly for their services as
+directors of the Company.
+Except for those emoluments of directors or supervisors whose emoluments were borne by Shenhua
+Group, the executive directors' and supervisors' emoluments shown above were mainly for their services in
+connection with the management of the affairs of the Company and the Group.
+Mr. Zhao Shibin resigned as supervisor of the Group on 22 August 2014.
+RMB million
+1,357
+66,991
+63,060
+19.
+21.
+OTHER NON-CURRENT ASSETS
+Prepayments in connection with construction work, equipment
+31 December 2015 31 December 2014
+RMB million
+RMB million
+(Restated)
+purchases and others (note (i))
+8,493
+9,760
+For the year ended 31 December 2015
+Prepayment for mining projects
+8,000
+Long-term receivable
+2,500
+2,500
+Loans to Shenhua Group and fellow subsidiaries (note (ii))
+Long-term entrusted loans (note (iii))
+11,473
+7,212
+627
+627
+8,000
+Goodwill
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Available-for-sale investments represent investment in unlisted equity securities issued by private entities
+incorporated in the PRC. They are measured at cost less impairment at end of the reporting period because
+the range of reasonable fair value measurement is significant and the probabilities of the various estimates
+cannot be reasonably assessed that the Directors are of the opinion that their fair values cannot be
+measured reliably.
+Limited company
+Limited company
+Limited company
+22222
+20
+20
+20
+25
+44
+25
+188 | China Shenhua Energy Company Limited
+22222
+Coal production
+20
+Generation and sale of electricity
+20
+25
+44
+25
+Generation and sale of electricity
+Generation and sale of electricity
+Provision of transportation service
+Production and sale of chemicals
+AVAILABLE-FOR-SALE INVESTMENTS
+20
+987
+987
+Others
+1,727
+12,816
+15,980
+2015 Annual Report 189
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2015
+24. ACCOUNTS AND BILLS RECEIVABLE
+Accounts receivable
+- Shenhua Group and fellow subsidiaries
+- Associates
+1,682
+– Third parties
+Bills receivable
+- Shenhua Group and fellow subsidiaries
+- Associates
+- Third parties
+31 December
+2015
+RMB million
+31 December
+2014
+RMB million
+(Restated)
+Less: allowance for doubtful debts
+9,900
+7,982
+4,353
+2,482
+3,280
+34,562
+32,366
+Notes:
+(i)
+At 31 December 2015, the Group had prepayments to fellow subsidiaries amounting to RMB28 million (2014: RMB84 million).
+(ii)
+The loans to Shenhua Group and fellow subsidiaries bear interest at rates ranging from 4.28% to 4.41% per annum (2014: 5.04%
+to 5.54% per annum) and are receivable within two to ten years.
+(iii)
+The Group has long-term entrusted loan to an associate through a PRC state-owned bank, which bears interest at rates 6.15% per
+annum (2014: 6.40% per annum) and are receivable within two years.
+22. LEASE PREPAYMENTS
+Lease prepayments represent land use rights paid to the PRC's government authorities. The Group is in the
+process of applying for the title certificates of certain land use rights with an aggregate carrying amount of
+RMB2,247 million as at 31 December 2015 (2014: RMB1,477 million), of which RMB1,136 million were newly
+acquired in 2015. The Directors are of the opinion that the Group is entitled to lawfully and validly occupy
+or use the above mentioned lands.
+23. INVENTORIES
+Coal
+Materials and supplies
+Others (note)
+31 December 2015 31 December 2014
+RMB million
+RMB million
+(Restated)
+Note: Others mainly represent properties held for sale and properties under development.
+3,152
+Guohua (Hebei) Renewables Co., Ltd.
+Tianjin Yuanhua Shipping Co., Ltd.
+Inner Mongolia Yili Chemical
+Industry Co., Ltd.
+3,049
+770
+Limited company
+Limited company
+Limited company
+Balance at the beginning of the year
+Exchange adjustments
+Additions
+At the end of the year
+INTANGIBLE ASSETS
+2,212
+2,251
+(119)
+(168)
+RMB million
+83
+2,176
+2,212
+The movement of intangible assets, mainly licenses, software and franchises, is as follows:
+Balance at the beginning of the year
+Exchange adjustment
+Additions
+Transferred from construction in progress
+Amortisation
+Transferred to property, plant and equipment
+24,688
+At the end of the year
+RMB million
+2015
+(2,263)
+(45)
+Disposal
+(228)
+Impairment losses (Note 15 (i))
+(651)
+Impairment write-off
+98
+25
+2014
+At the end of the year
+78,988
+As at 31 December 2015, the Group is in the process of obtaining requisite permits of certain of its
+construction in progress from the relevant government authorities. The Directors are of the opinion that
+the Group will be able to obtain the requisite permits in due course.
+186 | China Shenhua Energy Company Limited
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2015
+17.
+EXPLORATION AND EVALUATION ASSETS
+The movement of the exploration and evaluation assets is as follows:
+18.
+Year ended 31 December
+33,610
+19.
+INTEREST IN ASSOCIATES
+Unlisted shares, at cost
+1,877
+5,113
+5,016
+2015 Annual Report 187
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2015
+INTEREST IN ASSOCIATES (CONTINUED)
+20.
+The Group's interests in associates are individually and in aggregate not material to the Group's financial
+position or results of operations for both years. The Group's associates are unlisted and established in the
+PRC. The following list contains only the particulars of associates, which principally affect the results or assets
+of the Group:
+Name of associate
+1,929
+Type of legal entity
+31 December
+2015
+Proportion of ownership
+interest and voting power
+31 December
+2014
+%
+%
+Principal activities
+Shendong Tianlong Group Co., Ltd.
+Zhejiang Zheneng Jiahua Power Co., Ltd.
+held by the Group
+3,139
+3,184
+RMB million
+Share of net assets
+Year ended 31 December
+2015
+RMB million
+2014
+RMB million
+(Restated)
+1,540
+1,477
+5
+(1)
+255
+309
+1,493
+(329)
+(224)
+(21)
+2,964
+1,540
+31 December
+2015
+RMB million
+31 December
+2014
+Sichuan Guangan Power Co., Ltd.
+2,613
+328
+19,745
+The Group's freehold land with a carrying amount of RMB1,047 million (2014: RMB1,088 million) are located in Australia.
+(iii)
+(iv)
+16.
+The Group was in the process of applying for the title certificates of certain of its properties with an aggregate carrying amount
+of RMB9,690 million as at 31 December 2015 (2014: RMB8,284 million). The Directors are of the opinion that the Group is entitled
+to lawfully and validly occupy or use the above mentioned properties.
+As at 31 December 2015, bank loans secured by the assets with carrying amount of RMB1,174 million (2014: RMB1,270 million).
+CONSTRUCTION IN PROGRESS
+Year ended 31 December
+2015
+RMB million
+2014
+RMB million
+(ii)
+(Restated)
+year
+78,988
+76,707
+Additions
+29,674
+34,261
+Transferred from property, plant and equipment for
+overall technical enhancement
+901
+At the beginning of the
+Transferred to property, plant and equipment
+15. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+At 1 January 2014 (restated)
+36,692
+22,306
+33,729
+96,496
+62,928
+4,335
+9,951
+5,839
+For the year ended 31 December 2015
+272,276
+(i)
+Impairment loss
+Impairment loss for cash-generating units
+In view of the extended decline in coal prices in 2015, which is considered as an impairment indicator, the Directors performed impairment assessment on certain cash-
+generating units within the Group's coal and railway segments, which results have been adversely affected and considering each subsidiary as a cash-generating unit
+("CGU"). The recoverable amount is determined based on discounted cash flow model covering the shorter of economic and legal useful life, and pre-tax discount rate
+ranging from 8.07% to 11.87%. Cash flows beyond the five-year approved management's budgets are prepared based on zero growth rate.
+As a result of the impairment assessment, the Directors recognised an impairment loss of RMB 1,378 million and RMB876 million in 2015 against the non-current assets
+in coal and railway segments, respectively, including an impairment loss of RMB651 million on coal construction in progress. The impairment charge is recorded within
+"other gains and losses" in profit or loss.
+Impairment loss for individual assets
+The Group has been upgrading its power plants in 2015 for energy conservation and environment protection which rendered certain non-current asset obsolete.
+Besides, pursuant to the Notice to Close Coal-fired Generators at Guohua Beijing Thermal Power Plant (Jing Fa Gai [2015] No. 510) issued by Beijing Municipal
+Commission of Development and Reform, the coal-fired generators at Guohua Beijing Thermal Power Plant was discontinued from power generation in March 2015.
+Both events are impairment indicators.
+The Company assessed the recoverable amounts of those non-current assets and generators which belong to power segment and as a result the carrying amount of the
+machineries and the generators was written down by RMB985 million and RMB595 million, respectively, to their recoverable amount as at 31 December 2015, with
+such impairment losses recorded in "other gains or losses" in profit or loss. The estimates of recoverable amount were based on the machines' and generators' fair
+values less costs of disposal, using market comparison approach by reference to recent sales price of similar assets within the same industry, adjusted for differences
+such as remaining useful lives. The fair value on which the recoverable amount is based on is categorised as a Level 3 measurement.
+2015 Annual Report 185
+Notes:
+(70,515)
+8
+48
+Two to three years
+One to two years
+Less than one year
+The following is an analysis of accounts receivable by age, net of allowance for doubtful debts, presented
+based on the date of delivery of goods or services which approximated the revenue recognition date:
+As at December 2015, the Group has no bills receivable (2014: RMB200 million) pledged to secure bank
+borrowing.
+Bills receivable were issued by PRC banks and are expiring within six months. As at 31 December 2015, the
+bills receivable with the carrying amounts of RMB36 million (2014: RMB1,086 million) pledged to secure bills
+payable.
+30,850
+41,019
+6,216
+More than three years
+17,649
+17,446
+-
+162
+16
+41
+24,634
+23,370
+(54)
+(194)
+6,200
+31 December 2015 31 December 2014
+RMB million
+RMB million
+(Restated)
+21,756
+1,401
+24,311
+140
+54
+(Restated)
+2014
+RMB million
+RMB million
+Year ended 31 December
+2015
+At the end of the year
+Impairment loss recognised
+Written off
+At the beginning of the year
+The movement of allowance for doubtful debts was as follows:
+ACCOUNTS AND BILLS RECEIVABLE (Continued)
+24.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2015
+24,634
+23,370
+190 | China Shenhua Energy Company Limited
+1
+51
+55
+162
+267
+292,262
+8,456
+10,240
+6,120
+equipment
+Total
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+equipment
+RMB million
+23
+23
+Charge for the year
+1,930
+1,339
+4,234
+7,900
+4,343
+290
+Exchange adjustment
+Vessels
+and port
+equipment
+21,747
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2015
+15. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
+Furniture,
+Mining related
+structures machinery
+Mining Generators,
+related
+Coal chemical
+related
+fixtures,
+motor
+machinery
+machinery
+vehicles
+Land and
+buildings
+RMB million
+and mining
+and
+and
+Railway
+and
+and other
+rights
+equipment
+688
+Transferred to lease prepayments
+915
+Impairment losses (note (i))
+3,900
+9,934
+161,292
+Carrying values
+At 31 December 2015
+59,826
+20,970
+30,021
+114,706
+157
+90,105
+9,220
+7,782
+339,326
+At 31 December 2014 (restated)
+41,395
+21,811
+33,019
+94,850
+76,371
+6,696
+31,129
+53,096
+36,019
+462
+9
+273
+1,697
+929
+458
+6
+3,834
+Disposals or write-off
+(94)
+(205)
+(244)
+(508)
+(242)
+(252)
+(13)
+(29)
+(1,587)
+At 31 December 2015
+17,151
+9,906
+21,639
+(1,493)
+129
+(32,861)
+(Restated)
+RMB million
+RMB million
+31 December 2015 31 December 2014
+Deferred tax liabilities
+Deferred tax assets
+For the purpose of the presentation in the consolidated statement of financial position, certain deferred tax
+assets and liabilities have been offset. The following is the analysis of the deferred tax balances for financial
+reporting purpose.
+21
+27
+2,674
+(878)
+11
+1
+1
+4
+220
+31 December 2015 31 December 2014
+RMB million
+RMB million
+DEFERRED TAXATION
+28.
+EUR
+Hong Kong Dollars ("HKD")
+Indonesian Rupiah
+3
+USD
+2,084
+(1,165)
+919
+Tax losses carried forward
+(171)
+4
+(175)
+Lease prepayments
+427
+423
+4
+417
+1,796
+113
+Property, plant and equipment
+Allowances, primarily for receivables and inventories
+2015
+RMB million
+in profit or loss
+RMB million
+RMB million
+At 31
+December
+(Charged)
+credited
+At 1 January
+2015
+The following are the major deferred tax assets and liabilities recognised and movements thereon during
+the current and prior year:
+304
+Included in cash and cash equivalents are the following amounts denominated in foreign currencies are set
+out below:
+Cash and cash equivalents in the consolidated statement of financial position and the consolidated
+statement of cash flows comprise cash at bank and in hand, and time deposits with original maturity within
+three months.
+CASH AND CASH EQUIVALENTS
+9,573
+7,889
+Prepaid expenses and deposits
+442
+172
+160
+399
+43
+12
+Loans and advances to Shenhua Group and
+12
+Debt securities
+Derivative financial instruments
+Financial assets at FVTPL
+26.
+RMB million
+(Restated)
+31 December 2015 31 December 2014
+RMB million
+25. PREPAID EXPENSES AND OTHER CURRENT ASSETS
+The maximum exposure to loss from the Group's continuing involvement, if any, in the endorsed and
+discounted bills receivable equals to their carrying amounts. In the opinion of the Directors, the fair values
+of the Group's continuing involvement in the derecognised bills receivable are not significant.
+As at 31 December 2015, the Group endorsed bills receivable amounting to RMB2,478 million (2014:
+RMB5,461 million) to suppliers to settle the accounts payable of same amounts and discounted bills
+receivables amounting to RMB229 million (2014: RMB170 million) to banks. In accordance to the relevant
+laws in the PRC, the holders of the bills receivable have a right of recourse against the Group if the issuing
+banks default payment. In the opinion of the Directors, the Group has transferred substantially all the risks
+and rewards of ownership relating to these bills receivable, and accordingly derecognised the full carrying
+amounts of the bills receivable and associated accounts payables, in case of bills receivable endorsed to
+suppliers and recognised the cash received, in case of bills receivables discounted to banks.
+Investments in financial products
+fellow subsidiaries (note)
+3,645
+9,922
+27.
+For the year ended 31 December 2015
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+192 China Shenhua Energy Company Limited
+Restricted bank deposits as at 31 December 2015 represent statutory deposit reserves at The People's Bank
+of China ("PBOC"), collaterals for bills payable and collaterals related to the operating of mines and ports.
+RESTRICTED BANK DEPOSITS
+As at 31 December 2015, the Group had loans to Shenhua Group and fellow subsidiaries amounting to RMB3,217 million (2014:
+RMB9,557 million), which bear interest at rates ranging from 4.14% to 5.04% per annum (2014: 5.04% to 5.40% per annum). The
+remaining balances are unsecured, interest-free and have no fixed terms of repayment.
+Note:
+29,308
+19,351
+Transferred to intangible assets
+2,784
+Other receivables
+4,695
+4,483
+Deductible VAT and other tax
+1
+Advances to staff
+92
+378
+Amounts due from associates
+200
+Transfers of financial assets
+184
+Tax allowable expenses not yet incurred
+29. BORROWINGS
+At the end of the reporting period, the Group have unused tax losses of RMB7,141 million (31 December
+2014: RMB4,086 million) and unrecognised deductible temporary differences of RMB 5,128 million (2014:
+RMB 833 million) available for offset against future profits. A deferred tax assets has been recognised in
+respect of RMB1,537 million (31 December 2014: RMB801 million) of such losses. No deferred tax assets has
+been recognised in respect of the remaining RMB5,604 million (31 December 2014: RMB3,285 million) due
+to the unpredictability of future profit streams. Included in unrecognised tax losses are losses of RMB356
+million (31 December 2014: RMB454 million) that will expired in 2016.
+919
+455
+464
+Net deferred tax assets
+45
+45
+140
+An analysis of the Group's borrowings is as follows:
+(89)
+Accrued salaries and other expenses not yet paid
+Others
+730
+182
+548
+Unrealised profits from sales within the Group
+(329)
+190
+(519)
+Tax allowable expenses not yet incurred
+229
+200
+31 December 2015 31 December 2014
+RMB million
+Current borrowings:
+53,240
+55,397
+9,820
+11,594
+194 China Shenhua Energy Company Limited
+Unsecured
+Secured
+63,060
+66,991
+RMB million
+(Restated)
+44,619
+Long-term borrowings, less current portion
+Non-current borrowings:
+18,441
+12,812
+5,484
+6,377
+12,957
+6,435
+Short-term bank and other borrowings
+Current portion of long-term borrowings
+54,179
+(37)
+237
+Tax losses carried forward
+193
+2015 Annual Report
+1,796
+877
+919
+Net deferred tax assets
+73
+28
+45
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2015
+170
+140
+Accrued salaries and other expenses not yet paid
+Others
+558
+(172)
+730
+Unrealised profits from sales within the Group
+(62)
+267
+(329)
+30
+28.
+DEFERRED TAXATION (CONTINUED)
+At 1 January
+2014
+(175)
+14
+(189)
+Lease prepayments
+4
+136
+(132)
+304
+59
+245
+Property, plant and equipment
+Allowances, primarily for receivables and inventories
+(Restated)
+RMB million
+2014
+At 31
+December
+RMB million
+in profit or loss
+(Charged)
+credited
+(Restated)
+RMB million
+384
+24. ACCOUNTS AND BILLS RECEIVABLE (Continued)
+4,583
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+5,942
+(Restated)
+RMB million
+RMB million
+31 December 2015 31 December 2014
+More than three years
+1,401
+Two to three years
+Less than one year
+The aging analysis of accounts receivable that are past due but not impaired are as follows:
+54
+194
+(2)
+For the year ended 31 December 2015
+One to two years
+6,365
+23,564
+162
+267
+215
+119
+31 December 2015 31 December 2014
+RMB million
+RMB million
+European Dollars ("EUR")
+United States Dollars ("USD")
+Included in accounts receivable are the following amounts denominated in foreign currencies are set out
+below:
+332
+Receivables that were not overdue or unimpaired relate to a wide range of customers for whom there was
+no recent history of default.
+55
+Receivables that were past due but not impaired relate to a number of independent customers that have a
+good track record with the Group, which the Group does not hold any collateral over these balances. Based
+on past experience, the management believes that no impairment is necessary in respect of these balances
+as there has not been a significant change in credit quality and the balances are still considered fully
+recoverable.
+51
+2015 Annual Report 191
+7,556
+6,688
+1
+Change
+(%)
+RMB million
+46,341
+70,026
+As at
+As at
+31 December
+31 December
+Unit
+2015
+2014
+(Restated)
+(33.8)
+RMB million
+RMB million
+559,791
+550,872
+1.6
+Total liabilities
+activities excluding the effect from
+Shenhua Finance Company
+195,870
+185,302
+5.7
+Total equity
+RMB million
+Total assets
+Net cash generated from operating
+0.887
+69,069
+(%)
+Revenue
+RMB million
+177,069
+253,081
+(30.0)
+Profit for the year
+RMB million
+24,959
+49,063
+(49.1)
+Profit for the year attributable to equity
+holders of the Company
+RMB million
+17,649
+39,301
+(55.1)
+Basic earnings per share
+RMB/share
+363,921
+1.976
+(55.1)
+Net cash generated from operating
+activities
+RMB million
+55,406
+(19.8)
+365,570
+(0.9)
+Equity attributable to equity holders
+the year
+Last year
+(Restated)
+This year
+last year
+(Restated)
+end of
+At the
+end of
+At the
+the Company
+equity holders of
+Net assets attributable to
+Unit: RMB million
+16,144
+Net profit attributable to
+equity holders of
+the Company
+with International Financial Reporting
+Standards:
+Adjusted items and amount in accordance
+Under China Accounting Standards for
+Business Enterprises
+VIII. DIFFERENCES IN ACCOUNTING DATA UNDER DOMESTIC AND FOREIGN ACCOUNTING
+STANDARDS
+(0.9)
+15.12
+14.99
+RMB/share
+share
+Equity attributable to equity holders per
+0.0
+19,890
+Adjustment: simple production maintenance,
+(0.5)
+37,419
+295,243
+of the Company
+RMB million
+298,068
+300,698
+Change
+Total share capital at the end of
+the period
+RMB million
+19,890
+Unit: RMB million
+IX. MAJOR FINANCIAL DATA OF EACH QUARTER OF 2015
+Explanation on differences in domestic and overseas accounting standards: Pursuant to the relevant
+regulations of the related government authorities in the PRC, the Group accrued provisions for simple
+production maintenance, safety production and other related expenditures, recognised as expenses in
+profit or loss and separately recorded as a specific reserve in shareholders' equity. On utilisation of the
+specific reserve as fixed assets within the stipulated scope, the full amount of accumulated depreciation is
+recognised at the same time when the cost of the relevant assets is recorded. Under International Financial
+Reporting Standards, these expenses on production maintenance and safety facilities are recognised in
+profit or loss as and when incurred. Relevant capital expenditure is recognised as property, plant and
+equipment and depreciated according to the relevant depreciation method. The effect on deferred tax
+arising from such difference is also reflected.
+292,790
+Section II Company Profile and Major Financial Indicators (Continued)
+300,698
+298,068
+39,301
+17,649
+Standards
+Under International Financial Reporting
+5,455
+5,278
+1,882
+1,505
+related expenditure
+safety production and other
+10 China Shenhua Energy Company Limited
+2014
+(Restated)
+quarter
+Unit
+Producing significant positive results in cost management and control
+For the coal chemical segment, stable efficiency is ensured through optimizing production plans, enabling
+technological innovations, enhancing marketing efforts and other measures. During the year, sales volume of
+coal-to-olefins products reached 632.1 thousand tonnes, representing an increase of 18.5% as compared with the
+same period last year.
+Section IV Chairman's Statement (Continued)
+16 China Shenhua Energy Company Limited
+For the transportation business, the transportation schedule was reasonably arranged and the management
+of the convergence of the up-and-down-streams plans were enhanced. The impact of market fluctuation on
+transportation and sales was reduced to the minimum. The Company actively explored new businesses in the
+transportation and logistics industry, gradually opened the surplus transportation capacity to the general
+public and improved the economic efficiency of transportation business. During the whole year, the Company's
+self-owned railway completed a transportation turnover of 200.1 billion tonne km; seaborne coal volume of the
+Company's self-owned ports reached 158.5 million tonnes; and the shipping segment's freight volume amounted
+to 79.8 million tonnes. The transportation revenue earned by the railway segment from third parties increased by
+6.1% year on year.
+For the power generation business, China Shenhua enhanced the operation management of generators, strived
+for a higher amount of power generation, increased the consumption of self-produced coal on the basis of
+ensuring stable income from the power generation business, and effectively achieved the mutual insurance of the
+coal industry and power generation industry. Gross power generation amounted to 225.79 billion kWh, and total
+power output dispatch reached 210.45 billion kWh.
+The production and organization of the coal business have been constantly optimized and efforts in improving
+the production and organization of high quality coal resources have been increased, while the production of the
+few mines which are of low quality coal resources, high costs and low profitability was suspended or reduced, and
+the production of the mines which are of high quality coal resources and high efficiency increased on the basis of
+reasonable control on the production volume. The Company strengthened management on coal quality, focused
+on improving additional value of products and created conditions for market expansion.
+Delicately refining the organization and operations of business units to improve the integrated
+operating efficiency
+Against the backdrop of declining growth of demand and abundant supply, the Company enhanced marketing
+efforts in the power segment, actively participated in the market competition of direct power purchase by large
+power users and strived to expand into regional power markets. The average utilization hours of coal-fired power
+generators reached 4,631 hours, surpassing the national average utilization hours of thermal power generators by
+302 hours.
+Determined to implement the sales strategy of securing the quality while stabilizing the prices, the Company
+actively expanded markets in the southern areas along the three railway lines and in the shipping route from
+the sea to the Yangtze River. The tasks on clean coal replacement in key areas had proceeded smoothly. The
+exploration of overseas market had shown initial results, and the first batch of semi-coal had been exported to
+Korea smoothly. The Company had also continuously increased the sales proportion of seaborne coal, which was
+of the highest economic efficiency, to ensure maximization of sales efficiency. The sales volume of seaborne coal
+amounted to 203.8 million tonnes for the whole year, and the proportion of the sales volume of seaborne coal
+over the total sales volume increased by 2.7 percentage points as compared with that of 2014. The sales volume of
+clean coal in the newly explored Beijing-Tianjin-Hebei region market was 8 million tonnes.
+Enhancing marketing efforts in coal and power segments to actively expand the market
+Section IV Chairman's Statement (Continued)
+2015 Annual Report 15
+Facing significant changes in the coal and power sector, the management of the Company made proactive
+response, timely refined strategic decisions and effectively promoted the structural business improvement through
+adjusting the capital expenditure and other methods to further augment the overall risk resistance capacity. The
+power generation business amounted to RMB18,810 million and the transportation business realized RMB11,553
+million for the whole year, representing 81% in total as calculated based on the profit from operations of all
+business segments before elimination on consolidation under the International Financial Reporting Standards,
+becoming the main profit-making business segments. The stability of the profits from the two business segments
+mitigated significantly the impact of the continuous downward trend of the coal market.
+Proactively accommodating the industry changes to expedite the adjustment of structural business
+improvement
+2015: BEING DETERMINED TO FOLLOW STRATEGIC GUIDANCE, ACCELERATING STRUCTURAL
+ADJUSTMENTS, OPTIMIZING OPERATION UNITS AND REALIZING CLEAN DEVELOPMENT
+China Shenhua was ranked ninth in the "Platts' Top 250 Global Energy Company Rankings", being the only coal
+enterprise among the top ten companies. On 31 December 2015, the total market capitalization of China Shenhua
+reached USD43.4 billion, ranking the first among all listed coal companies worldwide and the fifth among all listed
+integrated mining companies worldwide.
+The year 2015 saw the global economic slump and the slower growth of the domestic economy. Demand in
+the coal market exceeded supply, coal prices continued to decline and the exposure to losses in coal enterprises
+expanded. As the growth in the demand of electricity consumption throughout the entire society decreased and
+power supply remained sufficient, thermal power enterprises were under increasing pressure in their operations.
+The staff at all levels of China Shenhua have worked together and the Company has been committed to creating
+value as its key target, proactively implemented the development strategy of clean energy and focused on
+reducing the adverse impact on the Company from the downturn of the coal industry. It has strengthened
+strategic management, promoted structural adjustments to and transformation and upgrading of business,
+implemented income growth and cost reduction strategies simultaneously, enhanced marketing efforts in coal
+and power segments, improved the management of and control over costs, optimized the operation units of each
+of the business segments to achieve better operating results. In 2015, the Group realized the profit for the year
+of RMB24,959 million for the year and the profit for the year attributable to the equity holders of the Company
+amounted to RMB17,649 million and basic earnings per share were RMB0.887.
+On behalf of the Board, I am delighted to present the 2015 annual report of China Shenhua and to report to all
+shareholders on the Company's performance for the period.
+Dear Shareholders,
+Section IV Chairman's Statement (Continued)
+Chairman
+Zhang Yuzhuo
+China Shenhua Energy Company Limited
+14
+China Shenhua strictly executed cost and expense control measures, optimized the accountability system on
+review of cost and the incentive mechanism and strengthened the cost management and control on throughout
+the entire process and business chain to brace itself. Throughout the year, the Group's unit production cost of
+self-produced coal was RMB123.2/tonne, representing a year-on-year decrease of 6.7%. The unit cost of power sale
+decreased by 8.5% year-on-year to RMB229.4/MWh.
+Section IV Chairman's Statement
+Accelerating transformation and upgrading to lead clean development
+The approval for "Water Resources Preservation and Utilization in Coal Mining", a national key laboratory, was
+granted; "Restoration Technology and Demonstration thereof for the Ecology of Large-scale Energy Base", "Key
+Technologies for and Application Studies on Digital Mine" as well as a number of other important technological
+projects proved to be a success, forming a clean exploitation system for coal.
+2015 Annual Report 19
+24 March 2016
+Zhang Yuzhuo
+Chairman
+3₤2.$
+In 2016, China Shenhua will be confident under the guidance of clean energy strategies, devote efforts to market
+expansion, optimize operating management, seize market opportunities, embrace market challenges, prevent
+operating risks and endeavor to accomplish sound and sustainable development to create greater value for public
+investors.
+Strengthening cost management and control to lower operating risks. China Shenhua will strengthen, re-evaluate
+and re-improve the efficiency of new construction projects, reduce expenses from the source, optimize investment
+direction and structure, establish the accountability assessment mechanism of cost-reduction, strengthen the
+incentives for revenue allocation, continuously improve the allocation of remnant assets, endeavor to implement
+light asset operations and strengthen cash flow management to ensure the safety of the flow of funds.
+Increasing safety and environmental efforts to deepen technological innovations. China Shenhua will continue
+to optimize the risk pre-control management system, stringently implement safety production responsibility to
+ensure safety production, continuously optimize assessment and accountability mechanisms of environmental
+safety, improve the work in ecological environmental protection, increase investments in scientific research,
+accelerate the commercialization of achievement, and promote transformation and development of traditional
+industries with the new achievement in scientific innovations.
+Exploring the market to ensure operating efficiency. China Shenhua will continue to devote more resources to the
+sale of seaborne coal, which is of the highest economic efficiency, exploring new markets unearthing clean coal
+replacement and pushing forward the export of coal. It will also improve the marketing system and mechanism for
+electricity as its endeavors to enable the utilization hours of its generating units to exceed the average level of the
+same type of generating units in the same region. On the basis of ensuring its self-operated coal transportation,
+China Shenhua will leverage abundant capacity of transportation and adopt an open business model and foster
+the collaboration with key enterprises in a bid to increase the inventries and categories of products and augment
+efficiency.
+Implementing structural adjustments to stimulate clean development. China Shenhua will continue to speed up
+the "ultra-low emission" renovation of coal-fired units, with a plan to complete ultra-low emission renovation
+for 26 units, with total capacity of 14,550MW throughout the year. The Company will also further optimize the
+coal production and project structure. By achieving safe, clean and highly efficient production at mines with a
+high level of performance, efficiency, modernization and safety, China Shenhua is committed to offering high
+value-added products. It will proactively promote the implementation of international energy cooperation projects
+through responding to the national policy of "the Belt and Road". China Shenhua will expedite the construction
+of Sumsel-1, Jawa-7 and other projects as well, all the while making proactive efforts to explore the development
+in terms of new energy.
+China Shenhua will further push forward the adoptation of clean energy development strategies. Meanwhile,
+it will speed up the structural adjustments, seek the market share in the coal power sector, keep on improving
+the operation quality, impose stringent control over cost increment and effectively leverage its core competitive
+strength from its integrated operations as its endeavors to achieve operational targets. Main focus will be laid on
+the following tasks:
+Section IV Chairman's Statement (Continued)
+18 China Shenhua Energy Company Limited
+In 2016, with the expectedly slow recovery of the overseas economies, the downward pressure will emerge the
+domestic economy. The pace of the adjustments to the global energy structure will speed up and the trend of
+lowering the consuming proportion of fossil fuel energy will be obvious and the demand of fossil fuel energy
+including coal will steadily decrease. It is foreseeable that the Chinese coal market will see continued over-
+supply in the short term, and such trend will further manifest itself in the thermal power market. As the Chinese
+government devotes constant efforts to facilitating the supply-side structural reform and even greater ones to
+resolving the excess capacity and fostering the reform in the electricity system, the structural adjustments to the
+coal and electricity sectors will accelerate even further.
+2016: PROMOTING CLEAN DEVELOPMENT AS OUR ENDEAVORS TO ACCOMPLISH IMPRESSIVE
+RESULTS
+For more information about our social responsibility efforts, please refer to the "2015 Corporate Social
+Responsibility Report” of the Group.
+Through setting up a comprehensive on-line monitoring platform, and accelerating the implementation of
+key construction projects concerning energy saving and environmental protection, the Company ensured the
+fundamental safety of energy saving and environmental protection. In 2015, the Company invested a total amount
+of RMB3.8 billion in energy conservation and environmental protection projects, which were mainly used in energy
+conservation projects such as boiler improvement and environmental protection projects such as comprehensive
+utilization of water resources. The total investment in ecological construction amounted to RMB0.24 billion million
+and additional green area amounted to 19.99 million m².
+The Company solidly promoted the construction of fundamental safety system by devoting more efforts to checks
+and rectification of hidden safety hazards in order to continuously enhance the capability of safety control and
+management. The fatality rate per million tonnes of raw coal production was 0.003 in 2015, for which China
+Shenhua maintained an advanced level in respect of safety production in the worldwide coal industry.
+The Company has been adhering to the social responsibility philosophy of "striving for the accomplishment in
+production safety, high efficiency, clean development, environmental protection, harmony and win-win results" in
+order to build a socially responsible Shenhua.
+Persisting in safe and green development to build a socially responsible Shenhua
+The Company vigorously expanded overseas markets in order to create a good start through setting up an
+international layout. The operation of the PT.GH EMM Indonesia Project was running steadily and efficiently. The
+bids for Sumsel-1 Coal Power (2×300 MW) project and Jawa-7 Coal Power (2×1,000 MW) Project in Indonesia were
+won. The Watermark Coal Project in Australia and the project in Russia proceeded orderly.
+The Company smoothly completed the acquisitions of the clean coal-fired generators of Ningdong Power, Xuzhou
+Power and Zhoushan Power under Shenhua Group. In 2015, the three power plants in total generated 19.27
+billion kWh, which reinvigorated the clean and highly-efficient development of the Company's power generation
+business.
+Section IV Chairman's Statement (Continued)
+2015 Annual Report 17
+In view of the in-depth changes in the coal and the electricity market, guided by economic efficiency and clean
+production, the Company implemented the re-evaluation on projects under construction and proposed. For
+projects such as Phase I of the construction of Shouguang Power Plant which showed significant improvement
+in integrated operation efficiency and value creation, the Company expedited the construction progress and
+further optimized the relevant plans. Some construction projects with worse economic efficiency were terminated
+or suspended in order to avoid inefficient investment at the source. The Company enhanced the Company's
+competitiveness through scientific decision for project construction and investments.
+Optimizing project decision to strengthen sustainable development capacity
+The Company took the lead in promoting the development and application of "ultra-low emission" technologies
+in coal-fired generating units to allow the actual emission level such as those of flue gas, sulfur dioxide and
+nitrogen oxides to reach the same or a lower level as compared with the emission standards for air pollutants
+produced by gas-fired power generators. National policies including the tariff subsidies lent support to "ultra-low
+emission" generator which established the Company's first-mover advantage in clean development of thermal
+power generation, and expanded room for efficiency development in respect of power generation for the
+Company. Additional and renovated "ultra-low emission" coal-fired power generators amounted to 17,960MW
+throughout the year, and the aggregate total installed capacity of "ultra-low emission" generators was 20,310
+MW, representing 38.9% of the total installed capacity of coal-fired power generators of the Company.
+2015
+2015 Annual Report | 13
+Advanced technology and innovation capabilities: With consistent efforts in advancing its technology
+and innovation capabilities, China Shenhua's technology in coal exploitation, safe production has
+secured a leading position in the global market, while that of clean coal-fired power generation and
+heavy-loaded transportation has secured a leading position in domestic market, basically establishing
+a unified operation system of technology and resources and a technological innovation-driven
+development model comprising decision-making, system management, research and development,
+and transformation of achievements. In 2015, the implementation of industrial technology was
+continued, including digital mines and ultra-low emission reform. During the reporting period, the
+Group was granted 489 patents in total, in which 111 patents were invention patents. The invention
+patent on "a dispersive utilization method of underground water in shafts" ("-#TKS
+") under the Group won the China Patent Gold Award at the 17th WIPO-SIPO Award for
+Chinese Outstanding Patented Invention and Industrial Design.
+Note:
+18,381
+5,536
+21,007
+(1,458)
+5,688
+6,803
+6,616
+10,482
+Net cash generated from operating activities
+Profit for the period attributable to equity
+holders of the Company
+42,255
+44,813
+41,292
+Revenue
+(October-
+December)
+Forth
+quarter
+quarter
+(July-
+September)
+(Restated)
+March) (April-June)
+(Restated) (Restated)
+Second
+quarter
+(January-
+Third
+First
+Section II Company Profile and Major Financial Indicators (Continued)
+VII. MAJOR ACCOUNTING DATA AND FINANCIAL INDICATORS
+(I) Major Accounting Data
+According to the result of the asset impairment test conducted at the end of 2015, the Company made a provision for impairment
+for certain fixed assets, constructions in progress, parts and components in the fourth quarter. For details, please refer to the
+announcement of the Company dated 29 January 2016.
+Option and pre-emptive right to acquire: Pursuant to the Non-competition Agreement signed
+between the Company and its controlling shareholder Shenhua Group Corporation, the Company
+is granted an option and pre-emptive right to acquire retained businesses and certain potential
+businesses from Shenhua Group Corporation. In June 2014, the Company publicly announced:
+The Company intended to commence acquisition of 14 retained assets of Shenhua Group and its
+subsidiaries by 30 June 2019 (the proposal for the acquisition of assets was presented to internal
+authorities of China Shenhua in respect of completing the consideration and approval procedures). In
+2015, China Shenhua acquired clean coal-fired generators with an installed capacity of approximately
+3,570MW from Shenhua Group.
+Explanation on the differences between quarterly data and disclosed regular reporting data:
+Not applicable
+Management team focusing on core business and cutting-edge operating principles: The
+management team of China Shenhua has profound knowledge and management experience in the
+industry, attaches great importance to enhancement of the Company's capabilities in value creation,
+conducts operation with a focus on the principal businesses of the Company, and persistently focuses
+on clean generation and utilization in energy sector. In 2015, the management team of the Company
+proactively implemented the development strategies of clean energy for China Shenhua and pushed
+forward the Company's endeavor towards building itself into a world-class supplier of clean energy,
+leading the industry in clean development.
+Coal mining rights: The Group possesses an abundant pool of high-quality coal resources which
+are suitable for modern high-quality and high-efficient shaft mining. As of the end of 2015, under
+the coal mining rights possessed and controlled by China Shenhua, it had coal retained resources
+of 24.313 billion tonnes and the recoverable coal reserves of 15.742 billion tonnes under the PRC
+Standard; the marketable coal reserves of the Group was 8.141 billion tonnes under the JORC
+Standard. The coal reserves of the Group is among the top of listed coal companies in China.
+Unique operation and profitability model: The vertical integration into one unified operation
+the Group enables deepened cooperation, shared resources, synergy, low-cost operation, and a
+standardized, professional and all-rounded development, as well as maximizes profits driven by
+every stage of coal-based production. A unified operation chain ensures a stable and reliable supply
+and internal demand contributing to lower operation costs and enhance competitiveness. In 2015,
+under the general downfall in coal industry, the Company continued to optimize the linkage among
+production, transportation and sales, and thus effectively safeguard against the adverse effects
+brought by the weakening demand and descending coal and electricity prices.
+5.
+4.
+3.
+2.
+1.
+The core competitiveness of the Group mainly in:
+3. ANALYSIS ON CORE COMPETITIVENESS DURING THE REPORTING PERIOD
+Section III Business Overview of the Company (Continued)
+12 China Shenhua Energy Company Limited
+✓ Applicable
+As of 31 December 2015, the Group's total assets amounted to RMB559,791 million, representing an
+increase of 1.6% as compared with that at the end of last year, and the equity attributable to equity holders
+of the Company amounted to RMB298,068 million, representing a decrease of 0.9% as compared with that
+at the end of last year. Among which, offshore assets (including Hong Kong, Macau and Taiwan) amounted
+to RMB19,619 million, representing 3.5% to total assets, mainly of which are assets from USD bonds issued
+in Hong Kong, PRC, and coal mine and power generation assets in Australia and Indonesia.
+EXPLANATION ON MATERIAL CHANGES IN MAJOR ASSETS OF THE COMPANY DURING
+THE REPORTING PERIOD
+For industry conditions of the Company, please refer to the section "Management Discussion & Analysis" in
+the report.
+During the reporting period, the Group made no significant change in the scope of its principal businesses.
+In terms of sales, the Group is the largest listed coal company in China and the rest of the world with
+the sales volume of coal reaching 370.5 million tonnes in 2015. In terms of installed capacity of power
+generators, the Group holds a leading position among the listed electricity companies in China with the
+installed capacity of its controlled and operated power generators reaching 54,128 MW. The Group controls
+and operates a network of concentric transportation railways around the major coal production bases in
+western Shanxi, northern Shaanxi and southern Inner Mongolia, and at the end of 2015, it controlled and
+operated railway trade with a length of approximately 2,155 km. The Group also operates a number of
+ports and berths with approximately 180 million tonnes/year seaborne operation capability, possesses the
+shipping transportation team comprising its own vessels with approximately 2.2 million tonnes of loading
+capacity; and operates 0.6 million tonnes/year coal-to-olefins chemical processing businesses.
+The Group is principally engaged in the production and sale of coal and electricity, railway, port and
+shipping transportation, and coal-based chemical processing businesses. The integration of coal, power,
+railway, port, shipping and coal chemical into one unified operation chain is the Group's unique operation
+and profitability model. The Group's development strategy is to "transforming into a world first-class
+supplier of clean energy".
+China Shenhua Energy Company Limited was solely established by Shenhua Group Company Limited in
+Beijing in November 2004. China Shenhua was listed on the Hong Kong Stock Exchange and Shanghai Stock
+Exchange in June 2005 and October 2007, respectively.
+EXPLANATION ON PRINCIPAL BUSINESSES AND OPERATION MODEL OF THE COMPANY
+AND INDUSTRY CONDITIONS DURING THE REPORTING PERIOD
+2.
+1.
+Section III Business Overview of the Company
+2015 Annual Report 11
+In October 2015, the Company completed the acquisition of 100% equity interest in Ningdong Power, 100%
+equity interest in Xuzhou Power and 51% equity interest in Zhoushan Power through consolidation under
+common control. This report restated the abovementioned data disclosed in the 2015 first quarterly report,
+interim report and third quarterly report under the International Financial Report Standards.
+In 2015, the changes in the major assets of the Company included: completion of acquisition of 100% equity
+interest in Nindong Power, 100% equity interest in Xuzhou Power and 51% equity interest in Zhoushan
+Power by mergers under the same controller; provisions for impairment was RMB5,773 million during the
+reporting period; as the strategic adjustments made by the Company to the capital expenditure structure
+were previously affected for certain years, at the end of the reporting period, the asset proportion of
+power-generating division increased compared with that at the beginning of the reporting period.
+48,709
+99,989
+399
+43
+12
+160
+For the year ended 31 December 2015
+19,890
+3,399
+16,491
+16,491
+3,399
+RMB million
+RMB million
+31 December 2015 31 December 2014
+2,102
+19,890
+2,197
+(42)
+156
+137
+1,973
+2,102
+RMB million
+2014
+RMB million
+(27)
+The Group's policy is to maintain a strong capital base so as to maintain investor, creditor and market
+confidence and to sustain future development of the business.
+The Group manages the capital structure and makes adjustments to it in the light of changes in economic
+conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the
+capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to
+shareholders or issue new shares to reduce debts.
+The Group monitors capital using a gearing ratio which is total liabilities divided by total assets. The Group
+aims to maintain the gearing ratio at a reasonable level. The Group's gearing ratio as at 31 December 2015
+was 35% (2014: 34%).
+112,701
+and cash equivalents)
+- Loans and receivables (including cash
+1,795
+1,795
+- Available-for-sale investments
+Financial assets
+(Restated)
+RMB million
+RMB million
+31 December 2015 31 December 2014
+The carrying amounts of each of the following categories of financial assets and financial liabilities at
+the end of the reporting period are set out as follows:
+37.1 Categories of financial instruments
+FINANCIAL INSTRUMENTS
+37.
+For the year ended 31 December 2015
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+200 | China Shenhua Energy Company Limited
+There were no changes in the Group's approach to capital management compared with previous years.
+Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements.
+Year ended 31 December
+2015
+- Derivative financial instruments
+36. CAPITAL RISK MANAGEMENT
+16,491,037,955 domestic listed A shares of RMB1.00 each
+3,398,582,500 H shares of RMB1.00 each
+156
+171
+212
+1,213
+1,527
+1,263
+(Restated)
+RMB million
+79
+31 December 2015 31 December 2014
+RMB million
+(i)
+Note:
+Non-current liabilities
+Current liabilities
+Analysed for reporting purpose as:
+Others
+Defined benefit plans
+Deferred income (note (ii))
+(ii)
+90
+2,726
+1,985
+Registered, issued and fully paid:
+year
+35. SHARE CAPITAL
+At the end of the year
+Accretion expense
+Decrease
+At the beginning of the
+ACCRUED RECLAMATION OBLIGATIONS
+34.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2015
+2015 Annual Report 199
+non-current assets.
+Deferred income mainly represents grants provided by several local governments in the PRC to encourage the construction of
+The balances mainly represent payables for acquisition of mining rights which are to be settled over the period of production set
+out in the contracts on an annual basis. The annual payment is determined by fixed rates on a per tonne basis with reference to
+the annual production volume of the acquired mines in the acquisition agreements.
+1,985
+2,726
+1,705
+2,523
+280
+203
+All A shares and H shares rank pari passu in all material aspects.
+- Investments in financial products
+Financial liabilities
+- Amortised cost
+2014
+RMB million
+897
+2,448
+267
+1,314
+2,561
+435
+336
+199
+150
+33
+31 December
+2015
+RMB million
+Sensitivity analysis
+(Decrease) increase in profit for the
+year:
+USD
+JPY
+Year ended 31 December
+2015
+RMB million
+2014
+RMB million
+Year ended 31 December
+2015
+RMB million
+The following table details the Group's sensitivity to a 10% increase or decrease in exchange
+rate of each foreign currency against RMB, while all other variables are held constant. The
+sensitivity analysis includes only outstanding foreign currency denominated monetary items at
+the end of the reporting period.
+2014
+RMB million
+RMB million
+2015
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+182,172
+170,808
+37.2 Financial risk management objectives and policies
+The Group's major financial instruments include accounts and bills receivable, loans and advances
+to/deposits from/amounts due to Shenhua Group and fellow subsidiaries, amounts due from/
+to associates, other receivables, accounts and bills liabilities, borrowings, short-term debentures,
+medium-term notes and bonds. Details of the financial instruments are disclosed in the respective
+notes. The risks associated with these financial instruments include market risk (interest rate and
+currency risks), credit risk and liquidity risk. The policies on how to mitigate these risks are set out
+below. The management manages and monitors these exposures to ensure appropriate measures are
+implemented on a timely and effective manner.
+2015 Annual Report 201
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2015
+37. FINANCIAL INSTRUMENTS (CONTINUED)
+37.2 Financial risk management objectives and policies (Continued)
+Market risk
+(i)
+Currency risk
+The functional currency of most of the group entities is RMB in which most of the transactions
+are denominated. However, certain of the Group's borrowings, receivables, bank balances
+and payables are denominated in foreign currencies. The Group entered into cross currency
+interest rate swaps with bank with good reputation in respect of its certain interest payments
+of borrowings denominated in JPY in order to mitigate the risk from the fluctuation of JPY
+against RMB, and the carrying amounts are set out in Note 29.
+The carrying amounts of the Group's foreign currency denominated monetary assets and
+monetary liabilities at the end of the reporting period are as follows:
+USD
+JPY
+Other currencies
+Liabilities
+Assets
+31 December
+2014
+RMB million
+Other currencies
+Year ended 31 December
+2015
+RMB million
+2014
+RMB million
+- if RMB weakens against foreign currencies
+The sensitivity analyses below have been determined based on the exposure to interest
+rates for variable-rate borrowings and variable-rate loans and receivables at the end of the
+reporting period. No sensitivity analysis has been presented for the exposure to interest rates
+for bank balances as the management of the Group considers that, taking into account that
+the fluctuation in interest rates on bank balances is minimal, the impact of profit or loss for
+the year is insignificant.
+The analysis is prepared assuming variable-rate borrowings and variable-rate loans and
+receivables outstanding at the end of the reporting period were outstanding for the whole
+year.
+If interest rates had been 100 basis points (2014: 100 basis points) higher/lower and all other
+variables were held constant, the Group's profit for the year ended 31 December 2015 would
+decrease/increase by RMB223 million (2014: increase/decrease by RMB146 million).
+2015 Annual Report 203
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2015
+37. FINANCIAL INSTRUMENTS (CONTINUED)
+37.2 Financial risk management objectives and policies (Continued)
+Credit risk
+As at 31 December 2015, the Group's maximum exposure to credit risk which will cause a financial
+loss to the Group due to failure to discharge an obligation by the counterparties and financial
+guarantees provided by the Group is arising from:
+the carrying amount of the respective recognised financial assets as stated in the consolidated
+statement of financial position;
+the Group's continuing involvement in the derecognised bills receivables equal to their
+carrying amounts as disclosed in Note 24; and
+the amount of contingent liability in relation to the financial guarantees provided by the
+Group's as disclosed in Note 39.3.
+In order to minimise the credit risk, the management of the Group has delegated a team responsible
+for determination of credit limits, credit approvals and other monitoring procedures to ensure that
+follow-up action is taken to recover overdue debts. In addition, the Group reviews the recoverable
+amount of each individual trade debt on regular basis and at the end of the reporting period to
+ensure that adequate impairment losses are made for irrecoverable amounts. In respect of the risk
+arising from the provision of financial guarantees, the management of the Group continuously
+monitors the credit quality and financial conditions of the guaranteed parties that the Group issued
+financial guarantee contracts in favor of to ensure that the Group will not suffer significant credit
+losses as a result of the failure of the guaranteed parties on the repayment of the relevant loans. In
+this regard, the Directors consider that the Group's credit risk is significantly reduced.
+The credit risk on liquid funds is limited because the counterparties are banks with good reputation.
+Other than concentration of credit risk on liquid funds which are deposited with several banks
+with good reputation, the Group does not have any other significant concentration of credit risk.
+Accounts receivables consist of a large number of customers, which spread across diverse industries
+and located in the PRC.
+Liquidity risk
+Liquidity risk is the risk that the Group will not be able to meet its financial obligation as they fall
+due. The approach to managing liquidity is to ensure, as far as possible, that it will always have
+sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions,
+without incurring unacceptable losses or risk damage to the Group's reputation.
+The Group closely monitors cash flow requirements and optimising its cash return. The Group
+prepares cash flow forecasts and ensures it has sufficient cash for the servicing of operation,
+financial, and capital obligations; this excludes the potential impact of extreme circumstances that
+cannot reasonably be predicted, such as natural disasters.
+204 China Shenhua Energy Company Limited
+Sensitivity analysis
+Payables for acquisition of mining rights (note (i))
+The Group's exposures to interest rates on financial liabilities are detailed in the liquidity risk
+management section of this note.
+The Group is exposed to fair value interest rate risk in relation to fixed-rate loan and
+receivables, borrowings, short-term debenture, medium-term notes and bonds (Notes 25, 29
+and 30). The Group has entered into cross currency interest rate swaps to hedge against its
+exposures to changes in fair values of its certain interest payments of borrowings (see Note
+29).
+(35)
+(73)
+(184)
+(192)
+-if RMB strengthens against foreign currencies
+35
+73
+184
+192
+19
+(9)
+(12)
+12
+202 China Shenhua Energy Company Limited
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2015
+37. FINANCIAL INSTRUMENTS (CONTINUED)
+37.2 Financial risk management objectives and policies (Continued)
+Market risk (Continued)
+(ii) Interest rate risk
+The Group is also exposed to cash flow interest rate risk in relation to variable-rate borrowings
+and variable-rate loans and receivables (see Notes 29 and 21). Other than the concentration
+of interest rate risk related to the movements in London Interbank Offered Rate and the loan
+interest published by the PBOC, the Group has no significant concentration of interest rate
+risk.
+33. LONG-TERM LIABILITIES
+- Debt securities
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+On 6 January 2015, the Company issued short-term debentures bearing interest rate of 4.55% per annum
+with proceeds of approximately RMB5,000 million, and were paid together with accrued interest on 4
+October 2015.
+On 16 June 2014, the Company issued short-term debentures bearing interest rate of 4.73% per annum
+with proceeds of approximately RMB10,000 million, and were paid together with accrued interest on 14
+March 2015.
+On 11 September 2013, the Company was granted approvals to issue unsecured short-term debentures up
+to a maximum outstanding amount of RMB20,000 million and unsecured medium-term debentures up to
+a maximum outstanding amount of RMB25,000 million. Both are available for issuance under the similar
+terms at the Company's decision, for the purpose of repayment of the borrowings and replenishment of
+working capital, before 11 September 2015.
+DEBENTURES, MEDIUM-TERM NOTES AND BONDS
+30.
+2,561
+98
+2,448
+69
+953
+On 10 February 2015, the Company issued short-term debentures bearing interest rate of 4.39% per annum
+with proceeds of approximately RMB5,000 million, and were paid together with accrued interest on 8
+November 2015.
+484
+RMB million
+31 December 2015 31 December 2014
+USD
+JPY
+EUR
+Included in borrowings are the following amounts denominated foreign currencies are set out below:
+BORROWINGS (CONTINUED)
+29.
+For the year ended 31 December 2015
+2015 Annual Report 195
+RMB million
+On 11 June 2015, the Company issued short-term debentures bearing interest rate of 3.40% per annum with
+proceeds of approximately RMB5,000 million, and payable together with accrued interest on 7 February
+2016.
+The effective interest rate of the short-term debentures as at 31 December 2015 is 3.42% (2014: 4.74%) per
+annum.
+RMB million
+(Restated)
+31 December 2015 31 December 2014
+RMB million
+Bills payable
+- Third parties
+- Associates
+– Shenhua Group, an associate of Shenhua Group
+and fellow subsidiaries
+Accounts payable
+31. ACCOUNTS AND BILLS PAYABLE
+The net proceeds of the Dollar bonds issued is mainly used for the repayment of loans of subsidiaries.
+On 20 January 2015, Shenhua Overseas Capital issued Dollar bonds with proceeds of approximately
+RMB3,061 million and are payable on 19 January 2025. The bonds bear interest rate of 3.88% per annum,
+repayable semi-annually. Its effective interest rate is 4.10% per annum.
+On 20 January 2015, Shenhua Overseas Capital issued Dollar bonds with proceeds of approximately
+RMB3,061 million and are payable on 19 January 2020. The bonds bear interest rate of 3.13% per annum,
+repayable semi-annually. Its effective interest rate is 3.35% per annum.
+On 20 January 2015, China Shenhua Overseas Capital Company Limited ("Shenhua Overseas Capital") issued
+Dollar bonds with proceeds of approximately RMB3,061 million and are payable on 19 January 2018. The
+bonds bear interest rate of 2.50% per annum, repayable semi-annually. Its effective interest rate is 2.84%
+per annum.
+DEBENTURES, MEDIUM-TERM NOTES AND BONDS (CONTINUED)
+30.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2015
+196 | China Shenhua Energy Company Limited
+On 16 September 2014, the Company issued medium-term notes with proceeds of approximately RMB 10,000
+million and are payable on 18 September 2017. The notes bear interest rate of 5.04% per annum, repayable
+annually. Its effective interest rate is 5.11% per annum.
+On 19 August 2014, the Company issued medium-term notes with proceeds of approximately RMB10,000
+million and are payable on 21 August 2017. The notes bear interest rate of 5.10% per annum, repayable
+annually. The effective interest rate is 5.17% per annum.
+On 7 November 2013, the Company issued medium-term notes with proceeds of approximately RMB5,000
+million and are repayable on 11 November 2018. The notes bear interest rate of 5.49% per annum,
+repayable annually. The effective interest rate is 5.69% per annum.
+Certain borrowings are secured over certain property, plant and equipment with a carrying amount of
+RMB1,174 million (2014: RMB1,270 million) (see Note 15), inter-group long-term receivable of RMB1,245
+million (2014: Nil) where were fully eliminated against relevant payables in the consolidated financial
+statement, bills receivables of RMB Nil (2014: RMB200 million) (see Note 24), certain future power revenue
+to be generated by the Group and a guarantee by a non-controlling shareholder of a subsidiary.
+1,847
+As at 31 December 2015, the Group had entrusted loans from Shenhua Group and fellow subsidiaries
+amounting to RMB7,424 million (2014: RMB8,513 million).
+54,179
+31 December 2015 31 December 2014
+RMB million
+RMB million
+(Restated)
+The Group's long-term borrowings comprise:
+50,103
+60,556
+23,714
+32,108
+13,944
+15,599
+Loans from banks and other institutions
+6,961
+5,484
+6,377
+More than one year, but not exceeding two years
+More than two years, but not exceeding five years
+More than five years
+Within one year
+The exposure of the long-term borrowings and the contractual maturity dates:
+The Group's short-term borrowings are unsecured and bear interest at rates ranging from 3.92% to 5.35%
+per annum (2014: 2.43% to 6.50% per annum).
+For the year ended 31 December 2015
+BORROWINGS (CONTINUED)
+6,472
+Renminbi denominated
+USD denominated
+Interest rates ranging from
+50,103
+5,484
+6,377
+60,556
+Less: current portion of long-term borrowings
+98
+69
+annum with maturities
+through 22 June 2017
+Interest rate at 2.85% per
+EUR denominated
+2,561
+2,448
+Interest rates ranging from
+1.80% to 2.60% per annum
+with maturities through 20
+March 2031
+Japanese Yen ("JPY")
+denominated
+2,348
+484
+45,096
+57,555
+Interest rates at LIBOR+0.7%
+per annum with maturities
+through 20 November 2018
+1.08% to 6.55% per annum
+with maturities through 3
+December 2035
+44,619
+398
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+2,167
+357
+32,100
+Deposits from Shenhua Group and fellow subsidiaries (note (i))
+Other accrued expenses and payables (note (ii))
+4,384
+Receipts in advances
+1,501
+2,786
+Dividends payable
+3,699
+3,571
+Taxes payable other than income tax
+789
+784
+Accrued interest payable
+3,364
+3,397
+Accrued staff wages and welfare benefits
+RMB million
+(Restated)
+31 December 2015 31 December 2014
+RMB million
+15
+18
+24,500
+1
+18,752
+7,877
+1,006
+1,906
+29,272
+968
+38
+44
+1,862
+198 China Shenhua Energy Company Limited
+The above balances are unsecured, interest-free and has no fixed terms of repayment.
+31 December 2014
+RMB million
+31 December 2015
+RMB million
+Amounts due to associates
+Amounts due to Shenhua Group and fellow subsidiaries
+Other accrued expenses and payables of the Group and the Company include:
+(ii)
+As at 31 December 2015, deposits from Shenhua Group and fellow subsidiaries bore interest at 0.42% to 1.62% per annum (2014:
+0.42% to 1.62% per annum).
+(i)
+Notes:
+40,366
+47,519
+8,857
+1
+3,624
+179
+3,305
+7,253
+3,922
+30,198
+25,585
+31 December 2015 31 December 2014
+RMB million
+RMB million
+(Restated)
+More than three years
+Two to three years
+One to two years
+Less than one year
+The following is an aging analysis of accounts payable, presented based on invoice date:
+As at 31 December 2015, certain bills payable were secured by bills receivable held by the Group (see Note
+24).
+39,011
+33,990
+4,387
+2,473
+85
+31,517
+29.
+958
+1,178
+34,624
+33,990
+602
+413
+(Restated)
+RMB million
+31 December 2015 31 December 2014
+RMB million
+ACCRUED EXPENSES AND OTHER PAYABLES
+32.
+Great British Pounds ("GBP")
+HKD
+361
+USD
+Included in accounts and bills payable are the following amounts denominated in foreign currencies are set
+out below:
+31. ACCOUNTS AND BILLS PAYABLE (CONTINUED)
+For the year ended 31 December 2015
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+2015 Annual Report 197
+39,011
+EUR
+11,643 32,386 823
+978 2,025 1,898
+million million million million million million million million million million
+140
+4,182
+3,745
+205
+584 1,276
+196
+500
+196
+210
+(8,299) (10,212) 40,666 45,327
+(300) (368) 3,882 3,377
+15,949 37,453
+Total cost of sales
+107,493 161,517 49,788 56,517 14,595
+'
+1,995 1,760
+14,742 2,026
+538
+Cost of coal chemical production
+Others
+43,545
+Power cost
+760
+2015 2014
+RMB RMB
+2015 2014
+RMB RMB
+million million
+(Restated)
+(Restated)
+(Restated)
+(Restated)
+Total
+48,965 55,539
+2015 2014
+RMB RMB
+million million
+(Restated)
+Cost of coal production
+17,264
+40,098 42,163 3
+Cost of coal transportation
+38,488 43,423
+12,570 12,844 1,886 1,790 1,176 1,294
+17,264 43,545
+-------- (9,318) (10,109) 30,780 32,054
+(39,320) (42,998) 14,800 16,353
+Coal purchased
+550
+(i)
+4,720
+531
+794
+35
+337
+35,426 45,456
+Total assets (note (ii))
+Total liabilities (note (ii))
+246,972 245,452 229,773 212,231 124,661 122,033 22,303
+(115,814) (115,876) (131,373) (118,995) (61,284) (59,965) (10,950)
+21,974
+8,189
+8,247 12,564
+(9,917)
+(2,363)
+(2,449)
+(5,593)
+13,529 348,720 343,060 (433,391) (415,654) 559,791 550,872
+(7,007) (185,478) (175,444) 316,985 304,351 (195,870) (185,302)
+Notes:
+RMB RMB
+(ii)
+138 1,097
+2,570
+1,533
+8,653 19,805 18,173 6,529 14,869
+4,245
+16
+196
+210 (57,237) (63,687) 123,341 178,109
+Profit (loss) from operations
+(note (iii))
+Additions to non-current
+6,433
+26,049 18,810 20,933 10,070
+14,298
+1,350
+1,729
+133
+361
+649
+1,410
+808
+1,209
+(596) (1,267) 37,657 64,722
+assets (note (i))
+7,001
+1,387
+RMB RMB RMB RMB RMB
+(57,833)
+2015 2014 2015 2014 2015 2014
+RMB
+Depreciation and
+amortization
+23,754
+21,204
+236
+139
+23,990
+21,343
+4,782
+Share of results of associates
+377
+॰
+33
+428
+410
+Impairment loss
+5,774
+499
+422
+4,468
+(1,982)
+(2,871)
+1,838
+(iii)
+2,075
+(64,954) 177,069
+253,081
+Profit before income tax
+34,631
+62,457
+(215)
+368
+104
+(978)
+34,520
+61,847
+Interest expenses
+4,856
+3,853
+2,483
+2,911
+(1)
+122
+5,773
+621
+38.4 Major customers
+Revenue from any individual customer of the Group does not exceed 10% of the Group's revenue.
+Certain of the Group's customers are government-related entities in the PRC and collectively
+considered as the Group's major customer. Revenue from major customer of the Group's coal and
+power segments represents RMB132,736 million (2014: RMB161,190 million) of the Group's revenue.
+2015 Annual Report 209
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2015
+38.
+SEGMENT AND OTHER INFORMATION (CONTINUED)
+38.5 Other information
+Certain other information of the Group's segments for the years ended 31 December 2015 and 2014 is
+set out below:
+Coal
+Power
+Railway
+Port
+Shipping
+Coal chemical
+Unallocated items
+Eliminations
+2015
+2014 2015 2014
+RMB RMB RMB RMB
+million million million million
+417,008
+2015 2014
+419,686
+177,069
+208 | China Shenhua Energy Company Limited
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2015
+38. SEGMENT AND OTHER INFORMATION (CONTINUED)
+38.3 Geographical information
+The following table sets out information about geographical location of (i) the Group's revenue from
+external customers and (ii) the Group's property, plant and equipment, construction in progress,
+exploration and evaluation assets, intangible assets, interest in associates, other non-current assets
+and lease prepayments ("specified non-current assets"). The geographical location of customers is
+based on the location at which the services were provided or the goods delivered. The geographical
+location of the specified non-current assets is based on the physical location of the asset, in the case
+of property, plant and equipment, construction in progress and lease prepayments, and the location
+of operations, in the case of exploration and evaluation assets, intangible assets, other non-current
+assets and interest in associates.
+Domestic markets
+Overseas markets
+Revenue from
+external customers
+Specified
+non-current assets
+Year ended
+31 December
+2015
+RMB million
+Year ended
+31 December
+2014
+RMB million
+(Restated)
+31 December
+2015
+RMB million
+31 December
+2014
+RMB million
+(Restated)
+175,129
+1,940
+247,848
+5,233
+414,513
+5,173
+411,710
+5,298
+253,081
+Non-current assets exclude financial instruments and deferred tax assets.
+(xiii) Coal export agency expense represents expense related to coal export agency services
+provided by a fellow subsidiary.
+Profit (loss) from operation is calculated as revenue minus cost of sales, selling expenses, general and administrative
+expenses and impairment loss.
+(xv)
+3,104
+2,288
+Other income
+(xvi)
+2,365
+4,150
+Granting of loans from Shenhua Finance
+Sale of coal chemical product
+(xvii)
+18,527
+Repayment of loans from Shenhua Finance
+(xviii)
+11,159
+18,411
+Granting of entrusted loan
+(xix)
+Repayment of entrusted loan
+9,082
+2,477
+1,753
+(xiv)
+4,188
+4,839
+Purchase of coal
+(x)
+3,697
+8,117
+Property leasing
+(xi)
+48
+42
+Repairs and maintenance services expense
+(xii)
+7
+47
+Coal export agency expense
+(xiii)
+4
+8
+Purchase of equipment and construction work
+(xx)
+30
+Receipt of deposits by Shenhua Finance
+(xxi)
+Income from entrusted loans represents interest earned from entrusted loans to an associate
+of the Group. The applicable interest rate is determined in accordance with the prevailing
+interest rates published by the PBOC.
+Interest expense represents interest incurred from deposits placed and loans from Shenhua
+Group and fellow subsidiaries. The applicable interest rate is determined in accordance with
+the prevailing interest rates published by the PBOC.
+Purchases of ancillary materials and spare parts represent purchase of materials and utility
+supplies related to the Group's operations from fellow subsidiaries.
+Mining service income represents income earned from coal mining services to fellow
+subsidiaries.
+Ancillary and social services represent expenditures for social welfare and support services such
+as property management, water and electricity supply, and canteen expense paid to Shenhua
+Group, fellow subsidiaries and associates of the Group.
+Transportation service income represents income earned from Shenhua Group and fellow
+subsidiaries in respect of coal transportation services.
+(viii) Transportation service expense represents expense related to coal transportation service
+provided by a fellow subsidiary of Shenhua Group and associates of the Group.
+(ix)
+Sale of coal represents income from sale of coal to fellow subsidiaries.
+(x)
+(xi)
+(xii)
+Purchase of coal represents coal purchased from associates of the Group and fellow
+subsidiaries.
+Property leasing represents rental paid or payable in respect of properties leased from fellow
+subsidiaries.
+Repairs and maintenance services expense represents expense related to machinery repairs
+and maintenance services provided by fellow subsidiaries and an associate of the Group.
+315,960
+(xiv) Purchase of equipment and construction work represents expenditure related to equipment
+and construction service provided by fellow subsidiaries.
+(xv)
+Sale of coal chemical product represents income from sale of coal chemical product to fellow
+subsidiaries.
+(vii)
+(ix)
+(vi)
+(iv)
+5,748
+(1,964)
+Loans from Shenhua Group
+(xxii)
+2,235
+1,747
+Repayment of loans from Shenhua Group
+(xxiii)
+3,324
+6,772
+(i) Interest income represents interest earned from loans to Shenhua Group and fellow
+subsidiaries. The applicable interest rate is determined in accordance with the prevailing
+interest rates published by the PBOC.
+2015 Annual Report 213
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2015
+41.
+RELATED PARTY TRANSACTIONS (CONTINUED)
+41.1 Transactions with Shenhua Group, an associate of Shenhua Group, fellow subsidiaries,
+and associates of the Group (Continued)
+(ii)
+(iii)
+(v)
+Sale of coal
+(viii)
+Transportation service expense
+After one year but within five
+After five years
+years
+RMB million
+31 December 2015 31 December 2014
+RMB million
+46
+40
+17
+25
+3
+9
+66
+74
+39.3 Financial guarantees issued
+At 31 December 2015, the Group had issued certain guarantees in respect of certain banking facilities
+granted to an entity which the Group held less than 20% equity interest. The maximum amount
+guaranteed is RMB 197 million (2014: RMB200 million).
+39.4 Legal contingencies
+The Group is the defendant in certain lawsuits as well as the plaintiff in other proceedings arising
+in the ordinary course of business. While the outcomes of such contingencies, lawsuits or other
+proceedings cannot be determined at present, management believes that any resulting liabilities will
+not have a material adverse effect on the financial position or operating results of the Group.
+2015 Annual Report | 211
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2015
+Within one year
+39.
+Operating lease commitments mainly represent business premises leased through non-cancellable
+operating leases. These operating leases do not contain provisions for contingent lease rentals. As at
+31 December, future minimum lease payments under non-cancellable operating leases on business
+premises having initial or remaining lease terms of more than one year are payable as follows:
+54,945
+210 China Shenhua Energy Company Limited
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2015
+39.
+COMMITMENTS AND CONTINGENT LIABILITIES
+39.1 Capital commitments
+As at 31 December, the Group had capital commitments for land and buildings and equipment as
+follows:
+Contracted for but not provided
+- Land and buildings
+- Equipment
+31 December 2015 31 December 2014
+RMB million
+RMB million
+(Restated)
+26,623
+29,800
+21,170
+25,145
+47,793
+39.2 Operating lease commitments
+Unallocated items of total assets include deferred tax assets and other unallocated corporate assets. Unallocated items of
+total liabilities include deferred tax liabilities and other unallocated corporate liabilities.
+COMMITMENTS AND CONTINGENT LIABILITIES (CONTINUED)
+To date, the Group has not incurred any significant expenditure for environmental remediation,
+is currently not involved in any environmental remediation, and apart from the provision for land
+reclamation costs, has not accrued any further amounts for environmental remediation relating
+to its operations. Under the existing legislation, management believes that there are no probable
+liabilities that will have a material adverse effect on the financial position or operating results of the
+Group. The regulatory bodies, however, have moved, and may move further towards the adoption
+of more stringent environmental standards. Environmental liabilities are subject to considerable
+uncertainties which affect the Group's ability to estimate the ultimate cost of remediation efforts.
+These uncertainties include (i) the exact nature and extent of the contamination at various sites
+including, but not limited to coal mines and land development areas, whether operating, closed
+or sold; (ii) the extent of required cleanup efforts; (iii) varying costs of alternative remediation
+strategies; (iv) changes in environmental remediation requirements; and (v) the identification of
+new remediation sites. The amount of such future cost is indeterminable due to such factors as
+the unknown magnitude of possible contamination and the unknown timing and extent of the
+corrective actions that may be required. Accordingly, the outcome of environmental liabilities under
+future environmental legislation cannot reasonably be estimated at present, and could be material.
+Interest expense
+(iii)
+290
+364
+Purchases of ancillary materials and spare parts
+(iv)
+1,385
+2,255
+Mining service income
+(v)
+812
+1,262
+Ancillary and social services
+585
+173
+Transportation service income
+(vii)
+189
+360
+43
+39.5 Environmental contingencies
+39
+Income from entrusted loans
+40. EMPLOYEE BENEFITS PLAN
+In addition to a minimal defined benefit plan operated by its subsidiary, the Group participates, in line
+with the regulations of the PRC, mainly in various defined contribution retirement plans organised by
+municipal and provincial governments for its employees. The Group is required to make contributions to
+the retirement plans at 20% of the salaries, bonuses and certain allowances of the employees. In addition,
+as approved by the government, the Group makes contribution to a supplemental defined contribution
+pension plan for its employees. The fund is managed by a qualified fund manager. The Group has no other
+material obligation for the payment of pension benefits associated with these plans beyond the annual
+contributions described above. The Group's contributions for the year ended 31 December 2015 were
+RMB2,791 million (2014: RMB2,656 million).
+41. RELATED PARTY TRANSACTIONS
+41.1 Transactions with Shenhua Group, an associate of Shenhua Group, fellow subsidiaries,
+and associates of the Group
+The Group is controlled by Shenhua Group and has significant transactions and relationships
+with Shenhua Group, an associate of Shenhua Group and subsidiaries of Shenhua Group ("fellow
+subsidiaries"). Related parties refer to enterprises over which Shenhua Group is able to exercise
+significant influence or control. The Group also has entered into transactions with its associates, over
+which the Group can exercise significant influence. Because of the above relationships, it is possible
+that the terms of these transactions are not the same as those that would result from transactions
+among wholly unrelated parties.
+212 China Shenhua Energy Company Limited
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2015
+41.
+RELATED PARTY TRANSACTIONS (CONTINUED)
+41.1 Transactions with Shenhua Group, an associate of Shenhua Group, fellow subsidiaries,
+and associates of the Group (Continued)
+The Group had the following transactions with Shenhua Group, an associate of Shenhua Group,
+fellow subsidiaries, and associates of the Group that were carried out in the normal course of
+business during both years except for the 2015 Acquisitions as detailed in Note 5:
+2015
+RMB million
+2014
+RMB million
+(Restated)
+Interest income
+(i)
+819
+1,010
+(ii)
+233,064
+Coal
+(Restated)
+As of 31 December 2015, the Group has cross currency interest rate swaps, investments in financial
+products and debt securities which are measured at fair value of RMB12 million (2014: RMB43
+million), RMB160 million (2014: nil) and nil (2014: RMB399 million), respectively.
+At 31
+December
+2015
+RMB million
+At 31
+December
+2014
+RMB million
+Fair value
+Valuation technique(s)
+hierarchy and key input(s)
+Financial asset:
+Fair value of the Group's financial assets that are measured at fair value on a recurring basis
+Cross currency interest rate swaps
+financial instruments
+12
+43
+Level 2
+Discounted cash flow. Future cash flows are
+estimated based on forward exchange rates and
+interest rates from observable yield curves at
+the end of the reporting period and contracted
+exchange rate and interest rate discounted at
+a rate that reflects the credit risk of various
+counterparties.
+Investments in financial products
+Debt securities
+160
+Level 2
+classified as derivate
+37.3 Fair value measurements
+37. FINANCIAL INSTRUMENTS (CONTINUED)
+For the year ended 31 December 2015
+3,206
+19,602
+17,205
+Debentures and notes
+5.03
+11,644
+1,289
+26,184
+39,117
+34,927
+106,461
+12,482
+42,643
+30,133 191,719
+170,808
+Saved as discussed above, the Group also makes use of banks and financial institutions facilities as
+one of the effective sources of liquidity.
+The maximum liability of financial guarantees issued by the Group is disclosed in Note 39.3.
+2015 Annual Report 205
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Quoted price by banks.
+399
+Level 1
+Quoted price in an active market.
+38.
+SEGMENT AND OTHER INFORMATION
+The Group manages its businesses by divisions, which are organised by business lines (products and services).
+In a manner consistent with the way in which information is reported internally to the Group's chief
+operating decision maker ("CODM"), including president, senior vice president and chief financial officer,
+for the purposes of resource allocation and performance assessment, the Group has presented the following
+six (2014:six) reportable segments. No operating segments have been aggregated to form the following
+reportable segments.
+(1)
+(2)
+(3)
+(4)
+(5)
+(6)
+Coal operations - which produce coal from surface and underground mines, and the sale of coal to
+external customers, the power operations segment and the coal chemical operations segment. The
+Group sells its coal under long-term supply contracts, which allow periodical price adjustments, and
+at spot market.
+Power operations - which use coal from the coal operations segment and external suppliers, wind
+power, water power and gas power to generate electric power for the sale to coal operations
+segment and external customers. Electric power is sold to the power grid companies in accordance
+with planned power output at the tariff rates as approved by the relevant government authorities.
+Electric power produced in excess of the planned power output is sold at the tariff rate as agreed
+upon with the respective power grid companies which are generally lower than the tariff rates for
+planned power output.
+-
+Railway operations – which provide railway transportation services to the coal operations segment,
+the power operations segment, the coal chemical operations segment and external customers. The
+rates of freight charges billed to the coal operations segment, the power operations segment, the
+coal chemical operations segment and external customers are consistent and do not exceed the
+maximum amounts approved by the relevant government authorities.
+Port operations - which provide loading, transportation and storage services to the coal operations
+segment and external customers. The Group charges service fees and other expenses, which are
+reviewed and approved by the relevant government authorities.
+Shipping operations - which provide shipment transportation services to the power operations
+segment, the coal operations segment and external customers. The rates of freight charges billed to
+the power operations segment, the coal operations segment and external customers are consistent.
+Coal chemical operations which use coal from the coal operations segment to first produce
+methanol and further process into polyethylene and polypropylene, together with other by-products,
+for sale to external customers.
+38.1 Segment results
+For the purposes of assessing segment performance and allocating resources between segments, the
+Group's CODM monitors the results attributable to each reportable segment based on profit before
+income tax ("reportable segment profit"). Segment profit represents the profit earned by each
+segment without allocation of head office and corporate items. Inter-segment sales are primarily
+charged at prevailing market rate which are the same as those charged to external customers. The
+accounting policies of the operating segments are the same as the Group's accounting policies
+described in Note 3.
+2015 Annual Report 207
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2015
+3,151
+206 China Shenhua Energy Company Limited
+The fair value of fixed rate bank borrowings above in the Level 2 category is measured using
+discounted cash flow method where the future cash flows are estimated based on the contract and
+discounted at a rate that reflects the credit risk of various relevant counter parties.
+Fair value of financial assets and financial liabilities that are not measured at fair value on a recurring
+basis
+Except as detailed in the following table, the Directors consider that the carrying amounts of
+financial assets and financial liabilities recorded at amortised cost in the consolidated financial
+statements approximate their fair values:
+At 31 December 2015
+Carrying amount
+RMB million
+Fair value
+RMB million
+At 31 December 2014
+Carrying amount
+RMB million
+Fair value
+RMB million
+Financial liabilities:
+Fixed rate bank borrowings
+Fixed rate medium-term notes
+4,020
+24,955
+4,387
+26,008
+14,670
+24,933
+15,202
+25,290
+Fixed rate bonds
+9,651
+9,660
+The fair values of medium-term notes and bonds are included in the Level 1 category, which have
+been derived from the quoted prices (unadjusted) in an active market.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+5,723
+4.41
+535
+75,934
+75,577
+Borrowings variable interest rate
+4.98
+13,936
+9,199
+21,107
+532
+39,946
+61,311
+Borrowings fixed interest rate
+3.66
+2,239
+594
+1,321
+2,440
+6,594
+84,188
+265
+74,602
+long-term liabilities
+(xvi) Other income includes agency income, repairs and maintenance service income, sales of
+ancillary materials and spare parts, management fee income, sales of water and electricity,
+financial service income, etc.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2015
+37. FINANCIAL INSTRUMENTS (CONTINUED)
+37.2 Financial risk management objectives and policies (Continued)
+Liquidity risk (Continued)
+The following table details the remaining contractual maturity of the Group's financial liabilities at
+the end of the reporting period, which are based on contractual undiscounted cash flows (including
+interest payments computed using contractual rates or, if floating, based on rates current at the end
+of the reporting period) and the earliest date the Group can be required to pay:
+Financial liabilities
+Accounts and bills payable, accrued
+31 December 2015
+Weighted
+average On demand
+interest or less than
+rate
+1 year 1-2 years
+Total
+More than undiscounted
+2-5 years
+% RMB million RMB million RMB million
+Total
+carrying
+5 years cash flows amount
+RMB million RMB million RMB million
+expenses, other payables and
+5,680
+Debentures, notes and bonds
+4.45
+6,614
+amount
+More than undiscounted
+5 years cash flows
+RMB million RMB million RMB million
+expenses, other payables and
+long-term liabilities
+71,574
+279
+552
+649
+73,054
+72,821
+Borrowings variable interest rate
+5.57
+15,721
+5,191
+12,756
+26,278
+59,946
+45,855
+Borrowings fixed interest rate
+carrying
+7,522
+Total
+2-5 years
+RMB million RMB million
+21,266
+12,320
+3,757
+43,957
+39,604
+97,391
+31,324
+35,280
+46,678
+210,673
+182,172
+Financial liabilities
+Accounts and bills payable, accrued
+31 December 2014 (Restated)
+Weighted
+average On demand
+interest or less than
+rate
+1-2 years
+% RMB million
+Total
+Revenue
+For the year ended 31 December 2015
+SEGMENT AND OTHER INFORMATION (CONTINUED)
+8,085
+8,477
+7,992
+3,887
+3,260
+922
+800
+285
+9,280
+242
+825
+23,754
+21,204
+Share of results of associates
+24
+59
+391
+307
+903
+Depreciation and amortisation
+3,853
+4,856
+341
+342
+1,142
+142
+34,631 62,457
+Including:
+Interest expenses
+1,320
+1,025
+2,048
+1,824
+637
+240
+473
+432
+103
+57
+275
+275
+7
+11
+422
+377
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+million
+million
+million
+million
+million
+million
+million
+million
+(Restated)
+(Restated)
+(Restated)
+2014
+11
+2015
+2015
+Impairment loss
+3,076
+261
+1,819
+222
+879
+16
+5,774
+499
+38.2 Reconciliations of reportable segment revenue, segment profit and other items of profit
+or loss for the years ended 31 December 2015 and 2014
+Reportable segment
+amounts
+Unallocated head office
+and corporate items
+Elimination of
+inter-segment amounts
+Consolidated
+2015
+2014
+2015
+2014
+2014
+38.
+48
+1,344
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+million million million
+million
+million
+million
+million million
+RMB
+2014
+2015
+2014
+38.1 Segment results (Continued)
+Information regarding the Group's reportable segments as provided to the Group's CODM for the
+purposes of resource allocation and assessment of segment performance for the years ended 31
+December 2015 and 2014 is set out below:
+Power
+Railway
+Port
+Shipping
+Coal chemical
+Segment total
+2015
+2014
+2015
+2014
+2015
+2014
+2015
+2014
+2015
+2014
+2015
+million
+million
+million
+million million million
+Reportable segment revenue
+121,458 192,094 73,053
+80,150
+27,232
+30,626
+3,769
+4,176
+2,002
+3,034
+5,550
+5,880 233,064 315,960
+Reportable segment profit
+5,883
+25,465
+17,628
+19,502
+9,862
+14,663
+868
+2 56,969 64,060
+48
+3
+1,461
+(Restated)
+(Restated)
+(Restated)
+Revenue from external customers
+Inter-segment revenue
+93,502 161,409 72,768 79,792
+27,956 30,685 285
+3,420
+3,222
+317
+299
+541
+1,300
+5,547
+5,878 176,095 251,900
+358
+23,812
+27,404
+3,452
+3,877
+1,734
+214 | China Shenhua Energy Company Limited
+1 year
+40
+1
+8
+2014
+RMB million
+RMB million
+2015
+Short-term employee benefits
+Post-employment benefits
+Key management personnel compensation of the Group is summarised as follows:
+Key management personnel receive compensation in the form of fees, basic salaries, housing and
+other allowances, benefits in kind, discretionary bonuses and retirement scheme contributions.
+41.2 Key management personnel emoluments
+Total remuneration is included in "personnel expenses" as disclosed in Note 10.
+Other than those disclosed in Notes 21, 25, 29 and 32, amounts due from/to Shenhua Group, an
+associate of Shenhua Group, fellow subsidiaries, and associates of the Group bear no interest, are
+unsecured and are repayable in accordance with normal commercial terms.
+36,075
+19,758
+26,406
+32
+2,524
+2,245
+31
+8,513
+7,424
+30,795
+13
+1
+9
+14
+41. RELATED PARTY TRANSACTIONS (CONTINUED)
+For the year ended 31 December 2015
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+218 China Shenhua Energy Company Limited
+These transactions are conducted in the ordinary course of the Group's business on terms comparable
+to those with other entities that are not government-related. The Group has established its pricing
+policies in respect of sale of goods and provision of services, and approval process for purchases of
+products and services. Such policies and approval process apply to all counter-parties regardless of
+whether the counterparty is government-related or not.
+Financial services arrangements.
+Ancillary and social services; and
+Purchases of ancillary materials and spare parts;
+Construction work;
+Transportation services;
+Sales and purchases of coal;
+Power sales;
+Other than those transactions with Shenhua Group, an associate of Shenhua Group, fellow
+subsidiaries and associate of the Group as disclosed above, the Group conducts business with other
+government-related entities which include but are not limited to the following:
+The Company is ultimately controlled by the PRC government and the Group operates in an economic
+environment currently predominated by entities controlled, jointly controlled or significantly
+influence by the PRC government ("government-related entities").
+41.4 Transactions with other government-related entities in the PRC
+The Group participates in various defined contribution post-employment benefit plans organised
+by municipal and provincial governments and a supplemental defined contribution pension plan
+approved by the government for its employees. Further details of the Group's post-employment
+benefit plans are disclosed in Note 40.
+41.3 Contributions to post-employment benefit plans
+41. RELATED PARTY TRANSACTIONS (CONTINUED)
+For the year ended 31 December 2015
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+2015 Annual Report 217
+29
+41.4 Transactions with other government-related entities in the PRC (Continued)
+21,293
+Total amounts due to Shenhua Group, an
+associate of Shenhua Group and fellow
+subsidiaries, and associates of the Group
+216 | China Shenhua Energy Company Limited
+(viii) The Group has entered into agreements with fellow subsidiaries under which the Group has
+been granted the right to use certain trademarks. Fellow subsidiaries bear its own cost for
+the registration of such trademarks during the term of the trademarks license agreement
+and expenses for enforcement against any infringement of the licensed trademarks by third
+parties.
+The Group entered into an agency agreement for the sale of coal with fellow subsidiaries.
+The Group is appointed as the exclusive sales agent of fellow subsidiaries for thermal coal
+and non-exclusive sales agent for coking coal. The Group is entitled to receive an agency fee,
+which is based on its related costs incurred plus a profit margin of 5% for sales of coal outside
+the Inner Mongolia Autonomous Region. No agency fee is charged for sales of coal within the
+Inner Mongolia Autonomous Region.
+The Group has entered into an agency agreement for the export of coal with a fellow
+subsidiary. The fellow subsidiary is appointed as a non-exclusive export agent of the Group
+and is entitled to receive an agency fee based on the relevant market rates or lower rates.
+Currently, the rate is 0.7% of the free on board sales price of coal exported.
+The Group has entered into a land leasing agreement with fellow subsidiaries. The annual
+rent is determined based on the local market rate. The Group is not allowed to sub-let the
+leased land.
+The Group has entered into a property leasing agreement with fellow subsidiaries for leasing
+of certain properties to each other. No rent is payable by the Group before fellow subsidiaries
+obtains the relevant property ownership certificate. The rental charges are based on
+comparable market rates. If fellow subsidiaries negotiate to sell a leased property to a third
+party, the Company has a pre-emptive right to purchase such property under terms no less
+favorable than other third party.
+The Group, through Shenhua Finance, has entered into a financial services agreement with
+Shenhua Group and fellow subsidiaries. Pursuant to the agreement, Shenhua Finance provides
+financial services to Shenhua Group and fellow subsidiaries. The interest rate for the deposits
+with Shenhua Finance from Shenhua Group and fellow subsidiaries should not be lower
+than the lowest limit published by the PBOC for the same type of deposit. The interest rate
+for loans made by Shenhua Finance to Shenhua Group and fellow subsidiaries should not be
+higher than the highest limit published by the PBOC for the same type of loan. The above
+interest rates should be determined by reference to the rate charged by normal commercial
+banks in the PRC for comparable deposits and loans on normal commercial terms. The fees
+charged by Shenhua Finance for the provision of other financial services shall be determined
+according to the rates chargeable by the PBOC or the China Banking Regulatory Commission.
+(vii)
+(vi)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+(v)
+(iii)
+(ii) The Group has entered into coal supply agreements with fellow subsidiaries and associates of
+the Group. The coal supplied is charged at the prevailing market price.
+41.1 Transactions with Shenhua Group, an associate of Shenhua Group, fellow subsidiaries,
+and associates of the Group (Continued)
+RELATED PARTY TRANSACTIONS (CONTINUED)
+41.
+For the year ended 31 December 2015
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+2015 Annual Report 215
+where none of the above is applicable or where it is not practical to apply the above
+pricing policies in reality, the price to be agreed between the relevant parties shall
+be based on reasonable costs incurred in providing the goods or services plus a profit
+margin of 5% of such costs.
+(iv)
+For the year ended 31 December 2015
+41.
+RELATED PARTY TRANSACTIONS (CONTINUED)
+Accrued expenses and other payables
+Borrowings
+an associate of Shenhua Group, fellow
+subsidiaries and associates of the Group
+Total amounts due from Shenhua Group,
+7,923
+12,128
+21
+Other non-current assets
+10,413
+4,023
+25
+Prepaid expenses and other current assets
+2,957
+3,959
+24
+Accounts and bills receivable
+31 December
+2014
+RMB million
+(Restated)
+31 December
+2015
+RMB million
+Note
+Amounts due from/to Shenhua Group, an associate of Shenhua Group, fellow subsidiaries, and
+associates of the Group:
+41.1 Transactions with Shenhua Group, an associate of Shenhua Group, fellow subsidiaries,
+and associates of the Group (Continued)
+20,110
+Having considered the potential for transactions to be impacted by related party relationships, the
+Group's buying, pricing strategy and approval processes, and what information would be necessary
+for an understanding of the potential effect of the relationship on the financial statements, the
+Directors are of the opinion that the following transactions with other government -related entities
+require disclosure:
+-
+Transactions with other government – related entities, including state-controlled banks in the PRC
+Shenwan Energy Co., Ltd.
+Group Co., Ltd.
+100 Trading of coal
+10
+100
+RMB1,705 million
+Limited company
+PRC
+Shenhua Sales
+PRC
+%
+%
+2015
+31 December
+31 December
+Principal activities
+and voting rights held by
+the Group
+Particulars of
+registered capital
+incorporation Type of
+and operation legal entity
+Name of the subsidiary
+2014
+Limited company
+RMB4,696 million
+51
+RMB1,169 million
+Limited company
+PRC
+Shenhua Baorixile
+sale of electricity
+58 Coal mining and development;
+generation and
+Energy Co., Ltd.
+58
+RMB7,102 million
+Limited company
+PRC
+Shenhua Zhunge'er
+of integrated services
+Coal Group Co., Ltd.
+100 Trading of coal; provision
+100
+RMB4,690 million
+Limited company
+PRC
+Shenhua Shendong
+51 Trading of coal
+Proportion of ownership interest
+Place of
+The Company's subsidiaries are unlisted. Details of the Company's material subsidiaries at the end of the
+reporting period are set out below:
+SUBSIDIARIES
+RMB million
+31 December
+2015
+Balances with other government-related entities, including state-controlled banks in the PRC
+5,907
+5,696
+628
+448
+13,321
+10,427
+69,830
+69,389
+91,360
+63,347
+2014
+RMB million
+(Restated)
+RMB million
+2015
+Interest expenses (including amount capitalised)
+Interest income
+Transportation costs
+Power revenue
+Coal revenue
+31 December
+2014
+RMB million
+(Restated)
+where there is neither a state-prescribed price nor a state-guidance price, the market
+price; or
+Accounts and bills receivable
+Cash and time deposits at banks
+43.
+For the year ended 31 December 2015
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+2015 Annual Report 219
+On 24 March 2016, the Board of Directors proposed a final dividend of RMB0.32 per ordinary share totaling
+RMB6,365 million to the equity holders of the Company. Further details are disclosed in Note 13.
+4,534
+2,725
+54,547
+59,567
+6,271
+4,611
+37,223
+43,233
+1,878
+17,439
+16,606
+1,396
+EVENTS AFTER THE REPORTING PERIOD
+42.
+Accrued expenses and other payables
+Borrowings
+Restricted bank deposits
+Prepaid expenses and other current assets
+57
+where there is no state-prescribed price but where there is a state-guidance price, then
+the state-guidance price;
+The products and services provided under the agreement, other than the sharing of use of
+the information network system which is free of charge, are provided in accordance with the
+following pricing policy:
+3,266
+2,535
+2,557
+5,839
+5,695
+1,672
+3,001
+Current liabilities
+6,286
+3,518
+6,183
+4,885
+18,991
+18,181
+10,909
+12,437
+Non-current assets
+1,332
+1,047
+1,982
+4,872
+Non-current liabilities
+2,769
+3,602
+RMB million
+2015
+Year ended 31 December
+Year ended 31 December
+Year ended 31 December
+Year ended 31 December
+3,165
+3,030
+4,163
+4,286
+22,453
+23,739
+6,366
+7,729
+Equity
+935
+934
+156
+18
+447
+427
+1,976
+2014
+RMB million
+9,748
+731
+Shenhua Baorixile Energy
+Industrial Co., Ltd.
+Shenhua Zhunge'er Energy
+Co., Ltd.
+Shenwan Energy Co., Ltd.
+Details of non-wholly owned subsidiaries that have material non-controlling interests (Continued)
+SUBSIDIARIES (CONTINUED)
+43.
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2015
+2015 Annual Report 223
+64,872
+Hebei Guohua Cangdong
+65,853
+44,993
+45,699
+Individually immaterial subsidiaries with
+Power Generation Co., Ltd.
+2,409
+2,381
+751
+3,253
+3,168
+non-controlling interests
+Power Co., Ltd.
+31 December
+2015
+1,062
+Current assets
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+2014
+2015
+2014
+2015
+31 December
+31 December
+31 December
+31 December
+31 December
+2014
+31 December
+2015
+31 December
+2014
+11,680
+2015
+RMB million
+2014
+RMB million
+2015
+RMB million
+(1,314)
+(1,234)
+151
+(54)
+12
+(3)
+1,389
+(942)
+financing activities
+Net cash (outflow) inflow
+Net cash (outflow) inflow from
+171
+(97)
+(295)
+(2,946)
+(962)
+(2,853)
+(1,457)
+investing activities
+Net cash (outflow) inflow from
+(429)
+(5)
+(29)
+(9)
+The Group has entered into a mutual supply agreement for the mutual provision of production
+supplies and ancillary services with an associate of Shenhua Group and fellow subsidiaries.
+Pursuant to the agreement, an associate of Shenhua Group and fellow subsidiaries provide
+the Group with the production supplies and services, ancillary production services including
+the use of the information network system and ancillary administrative services. On the other
+hand, the Group provides fellow subsidiaries with water supplies, rolling stock management,
+railway management, railway transportation and other related or similar production supplies
+or services and use of the information network system.
+(i)
+The Group entered into a number of agreements with Shenhua Group, an associate of Shenhua
+Group, fellow subsidiaries, and associates of the Group. The terms of the principal agreements are
+summarised as follows:
+The Directors are of the opinion that the above transactions with related parties were conducted in
+the ordinary course of business and in accordance with the agreements governing such transactions.
+(xxiii) Repayment of loans from Shenhua Group and fellow subsidiaries by the Group.
+(xxii) Loans obtained by the Group from Shenhua Group and fellow subsidiaries.
+(xxi) Receipt of deposits by Shenhua Finance represents net deposits received by Shenhua Finance
+from Shenhua Group and fellow subsidiaries.
+(xx)
+(xix) Granting of entrusted loan represents an entrusted loan granted to an associate of the Group.
+Repayment of entrusted loan represents an entrusted loan repaid by an associate of the
+Group.
+(xviii) Repayment of loans from Shenhua Finance represents loans repaid by fellow subsidiaries to
+Shenhua Finance.
+(xvii) Granting of loans from Shenhua Finance represents loans granted by Shenhua Finance to
+fellow subsidiaries.
+41.1 Transactions with Shenhua Group, an associate of Shenhua Group, fellow subsidiaries,
+and associates of the Group (Continued)
+41. RELATED PARTY TRANSACTIONS (CONTINUED)
+For the year ended 31 December 2015
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+440
+224 China Shenhua Energy Company Limited
+(203)
+(105)
+41
+16
+1,540
+1,063
+(159)
+390
+2,853
+2,082
+8,554
+7,948
+3,875
+4,174
+Expenses
+5,036
+4,092
+3,789
+2,972
+10,233
+9,234
+4,898
+5,859
+Revenue
+RMB million
+RMB million
+2014
+2015
+2014
+RMB million
+2,998
+price prescribed by the state (including any price prescribed by any relevant local
+government), if applicable;
+3,617
+income for the year
+2,950
+956
+1,435
+2,394
+operating activities
+Net cash inflow (outflow) from
+377
+471
+448
+254
+interests
+Dividend paid to non-controlling
+1,068
+826
+30
+836
+634
+1,647
+1,196
+888
+1,212
+Profit and total comprehensive
+57 Coal mining; provision
+Accounts payable
+of transportation services
+Year ended
+31 December
+31 December
+Profit allocated to
+non-controlling interests
+non-controlling interests
+voting rights held by
+incorporation
+and operation
+Name of the subsidiary
+interest and
+31 December
+Proportion of ownership
+Summarised financial information in respect of each of the Group's subsidiaries that has material non-
+controlling interests is set out below. The summarised financial information below represents amounts
+before intragroup eliminations.
+Details of non-wholly owned subsidiaries that have material non-controlling interests
+SUBSIDIARIES (CONTINUED)
+43.
+For the year ended 31 December 2015
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+222 China Shenhua Energy Company Limited
+The Company obtained the control over Dingzhou Power through its right to appoint majority members of the board of directors,
+details of which are set out in Note 4.1.
+(ii)
+Place of
+2015
+2014
+2015
+42
+PRC
+Shenhua Zhunge'er Energy
+Co., Ltd.
+3,119
+3,787
+435
+594
+49
+49
+10
+PRC
+Shenwan Energy Co., Ltd.
+2014
+RMB million
+(Restated)
+RMB million
+RMB million
+RMB million
+%
+%
+31 December
+Accumulated
+non-controlling interests
+31 December
+2015
+2014
+In addition to 15% equity interest held by the Company, the Company's subsidiary owned 50% equity interest in Suizhong Power
+Co., Ltd.
+(i)
+Notes:
+The above table lists subsidiaries of the Group which, in the opinion of the Directors, principally affected
+the results or assets of the Group. To give details of other subsidiaries would, in the opinion of the
+Directors, result in particulars of excessive length.
+lease services
+Provision of financial
+51
+RMB1,000 million
+Limited company
+(Tianjin) Finance Lease Co., Ltd. PRC
+services
+100 Provision of transportation
+100
+RMB10,000 million
+Limited company
+PRC
+Shenhua Baoshen Railway
+Group Co., Ltd.
+generation and sale of
+electricity
+70 Coal mining and development;
+sale of electricity
+generation and
+100 Coal mining and development;
+generation and sale of
+electricity
+100 Coal mining and development;
+70
+Shenhua Zhunneng
+42
+PRC
+RMB500 million
+sale of electricity
+Generation and
+sale of electricity
+Generation and
+51
+100
+RMB755 million
+Limited company
+PRC
+Zhoushan Power (note 5)
+of inferior coal resources
+100 Comprehensive utilization
+100
+RMB1,790 million
+Limited company
+PRC
+Xuzhou Power (note 5)
+Utilization Co., Ltd.
+Resources Development &
+10
+100
+Limited company
+USD63 million
+505
+662
+1,700
+1,625
+451
+55T
+35
+335
+20
+20
+20
+7.00
+PRC
+Shipping Co., Ltd.
+2,899
+2,870
+11331
+18
+49
+49
+PRC
+Energy Industrial Co., Ltd.
+Guangdong Guohua Yuedian
+Taishan Power Co., Ltd.
+Shenhua Huanghua Harbour.
+PRC
+447
+3
+647
+40
+40
+PRC
+Zhejiang Guohua Zheneng
+International Power Co., Ltd.
+183
+30
+30
+PRC
+Shenhua Guohua
+Administration Co., Ltd.
+2,746
+2,610
+257
+56
+156
+30
+30
+Development Co., Ltd.
+13,080
+12,343
+2,879
+1,485
+523
+905
+405
+49
+49
+PRC
+Hebei Guohua Cangdong
+Industrial Co., Ltd.
+1,654
+1,860
+360
+75
+275
+ច
+43
+43
+PRC
+Shenhua Baorixile Energy
+9,357
+10,027
+1,551
+692
+151
+Dingzhou Power
+2,388
+47
+47
+PRC
+Shuohuang Railway
+Co., Ltd.
+1,499
+1,588
+72
+72
+49
+49
+PRC
+Shenhua Sichuan Energy
+1,726
+1,955
+595
+575
+59
+59
+PRC
+Power Co., Ltd.
+Limited company
+Shenhua Zhonghai
+PT GH EMM Indonesia
+Name of the subsidiary
+Place of
+43. SUBSIDIARIES (CONTINUED)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2015
+220 China Shenhua Energy Company Limited
+sale of electricity
+Power Co., Ltd.
+51 Generation and
+51
+incorporation Type of
+and operation legal entity
+RMB1,834 million
+PRC
+Hebei Guohua Cangdong
+sale of electricity
+Co., Ltd. (note (i))
+65 Generation and
+65
+RMB4,029 million
+Limited company
+PRC
+Limited company
+Particulars of
+registered capital
+Proportion of ownership interest
+and voting rights held by
+the Group
+Principal activities
+Limited company
+PRC
+Shenhua Sichuan Energy
+Co., Ltd.
+50 Generation and
+sale of electricity
+50
+RMB2,000 million
+Limited company
+PRC
+Guohua Taicang Power
+Co., Ltd.
+41 Generation and
+sale of electricity
+41
+RMB1,561 million
+Limited company
+PRC
+Dingzhou Power (note (ii))
+%
+2014
+%
+2015
+31 December
+31 December
+Suizhong Power
+sale of electricity
+Power Generation Co., Ltd.
+60 Generation and
+Limited company
+PRC
+Shenhua Guohua
+mining and development
+of electricity; coal
+Jinjie Energy Co., Ltd.
+70 Generation and sale
+70
+RMB2,278 million
+Limited company
+PRC
+Shanxi Guohua
+of transportation services
+Energy Co., Ltd.
+63 Coal mining; provision
+63
+RMB2,532 million
+Limited company
+PRC
+Shenhua Beidian Shengli
+Indonesia
+RMB4,010 million
+RMB2,152 million
+70
+sale of electricity
+60
+60
+RMB3,255 million
+Limited company
+PRC
+Zhejiang Guohua Zheneng
+sale of electricity
+Taishan Power Co., Ltd.
+80 Generation and
+80
+RMB4,670 million
+Limited company
+PRC
+Guangdong Guohua Yuedian
+100 Generation and
+sale of electricity
+Power Co., Ltd.
+100
+RMB3,024 million
+Limited company
+PRC
+Shenhua Shendong
+International Power Co., Ltd.
+51
+70 Generation and
+sale of electricity;
+trading of coal
+Principal activities
+31 December
+Proportion of ownership interest
+and voting rights held by
+the Group
+31 December
+Particulars of
+registered capital
+Place of
+incorporation Type of
+and operation legal entity
+Name of the subsidiary
+43. SUBSIDIARIES (CONTINUED)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2015
+2015
+221
+("Shenhua Finance")
+100 Provision of financial services
+100 Provision of transportation
+100
+10
+100
+RMB5,000 million
+Limited company
+PRC
+2015 Annual Report|
+2014
+%
+%
+100
+51 Generation and
+100
+AUD350 million
+Limited company
+Australia
+Shenhua Watermark
+Coal Pty Ltd.
+Holding Pty Ltd.
+00
+100
+AUD400 million
+Limited company
+Australia
+Co., Ltd.
+Development & Investment
+China Shenhua Overseas
+100 Investment holding
+100
+HKD4,500 million
+Limited company
+Hong Kong
+Shenhua Finance Co., Ltd.
+Transpotation Co., Ltd.
+Shenhua Australia
+RMB4,701 million
+85 Provision of transportation
+services
+Railway Co., Ltd.
+85
+RMB4,710 million
+Limited company
+PRC
+Shenhua Zhunchi
+53 Provision of transportation
+services
+Development Co., Ltd.
+53
+RMB5,880 million
+Limited company
+Shuohuang Railway
+100 Generation and
+sale of electricity
+00
+100
+RMB2,098 million
+Limited company
+100
+Shenhua Fujian Energy
+Co., Ltd.
+PRC
+Shenhua Huanghua Harbour
+PRC
+PRC
+Limited company
+Limited company
+Shenhua Railway
+Coal Chemical Co., Ltd.
+100 Coal chemical
+RMB5,132 million
+Limited company
+PRC
+Shenhua Baotou Company
+51 Provision of transportation
+services
+Shipping Co., Ltd.
+100
+51
+RMB4,113 million
+70
+Administration Co., Ltd.
+70 Provision of harbour
+and port services
+PRC
+PRC
+Limited company
+RMB5,180 million
+Shenhua Zhonghai
+1,332
+1,661
+1,869
+1,310
+Current assets
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+2014
+RMB million
+2014
+2015
+RMB million
+RMB million
+14,268
+1,898
+5,559
+2015
+4,913
+Current liabilities
+10,817
+10,527
+19,862
+18,340
+1,698
+14,366
+12,688
+12,004
+2,202
+1,251
+3,017
+3,677
+2014
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+2014
+(78)
+(9)
+343
+(179)
+778
+(697)
+Net cash inflow (outflow)
+1,558
+(88)
+(1,147)
+(2,653)
+(171)
+9,291
+(394)
+(1,273)
+2015 Annual Report 225
+For the year ended 31 December 2015
+43.
+SUBSIDIARIES (CONTINUED)
+2015
+31 December
+31 December
+31 December
+31 December
+31 December
+31 December
+2015
+31 December
+Administration Co., Ltd.
+Taishan Power Co., Ltd.
+Zhejiang Guohua Zheneng
+Power Generation Co., Ltd.
+Shenhua Guohua
+International Power Co., Ltd.
+Shenhua Huanghua Harbour
+Guangdong Guohua Yuedian
+Details of non-wholly owned subsidiaries that have material non-controlling interests (Continued)
+31 December
+9,645
+6,446
+4,305
+2,253
+1,677
+income for the year
+Profit and total comprehensive
+6,660
+5,111
+9,765
+10,728
+1,990
+2,022
+5,300
+Expenses
+9,194
+7,275
+12,596
+520
+10,758
+20
+609
+753
+(985)
+676
+83
+115
+115
+455
+420
+410
+interests
+Dividend paid to non-controlling
+1,877
+1,618
+1,465
+09
+858
+3,120
+2,780
+9,455
+10,559
+9,154
+8,699
+8,498
+8,123
+Total equity
+2,691
+2,595
+2,392
+2,167
+4,548
+5,630
+500
+278
+Non-current liabilities
+10,842
+5,953
+6,023
+Year ended 31 December
+7,607
+Revenue
+RMB million
+RMB million
+2014
+2015
+2014
+RMB million
+3,230
+2015
+RMB million
+2015
+RMB million
+2014
+RMB million
+RMB million
+2015
+Year ended 31 December
+Year ended 31 December
+Year ended 31 December
+2014
+RMB million
+financing activities
+383
+(2,335)
+8,571
+1,486
+598
+2,251
+2,072
+Current liabilities
+7,066
+6,803
+27,847
+29,320
+4,295
+4,457
+5,437
+5,568
+Non-current assets
+4,359
+1,315
+1,964
+1,139
+5,857
+27,972
+26,107
+3,103
+3,241
+2,926
+3,286
+Total equity
+500
+1,999
+2,483
+2,117
+1,737
+1,961
+1,117
+Non-current liabilities
+1,436
+6,967
+7,475
+31 December
+31 December
+2014
+RMB million
+RMB million
+2015
+31 December
+Shenhua Zhonghai
+Shipping Co., Ltd.
+Shuohuang Railway
+Development Co., Ltd.
+Shenhua Sichuan
+Energy Co., Ltd.
+Dingzhou Power
+Details of non-wholly owned subsidiaries that have material non-controlling interests (Continued)
+SUBSIDIARIES (CONTINUED)
+43.
+For the year ended 31 December 2015
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+Net cash inflow from operating
+2015
+31 December
+2014
+31 December
+2015
+31 December
+2,031
+1,343
+857
+929
+Current assets
+RMB million
+RMB million
+5,917
+RMB million
+RMB million
+RMB million
+2014
+2015
+2014
+31 December
+31 December
+RMB million
+Net cash (outflow) inflow from
+Year ended 31 December
+Year ended 31 December
+Net cash inflow from operating
+529
+75
+75
+3,457
+2
+2
+597
+540
+interests
+Dividend paid to non-controlling
+267
+36
+6,140
+5,051
+activities
+660
+1,197
+463
+(393)
+(2,249)
+(2,010)
+293
+(766)
+(54)
+(212)
+investing activities
+Net cash (outflow) inflow from
+699
+669
+472
+3,739
+4,484
+656
+1,327
+160
+147
+1,008
+4,099
+Revenue
+RMB million
+RMB million
+2014
+2015
+2014
+RMB million
+2015
+RMB million
+2014
+RMB million
+RMB million
+2015
+2014
+RMB million
+RMB million
+2015
+Year ended 31 December
+4,451
+1,594
+1,986
+13,386
+967
+661
+income for the year
+Profit and total comprehensive
+3,080
+1,971
+7,928
+Year ended 31 December
+7,234
+1,449
+3,108
+2,780
+Expenses
+3,381
+2,002
+15,912
+1,895
+activities
+Non-current assets
+3,376
+administrative expenses
+General and
+(584)
+(794)
+(1,031)
+(881)
+(1,149)
+Selling expenses
+53,728
+74,972
+82,871
+80,978
+(6,888)
+78,808
+177,069
+(123,341)
+253,081
+(178,109)
+(206,359)
+(178,407)
+289,230
+259,385
+215,689
+(136,881)
+Cost of sales
+Revenue
+2015
+RMB Million
+RMB Million
+(Restated*)
+(Restated*)
+Gross profit
+2014
+(8,458)
+(8,835)
+(3,638)
+Finance costs
+803
+758
+776
+979
+Interest income
+(626)
+(419)
+(382)
+(494)
+(904)
+(9,285)
+Other expenses
+939
+534
+1,242
+458
+Other income
+(5,856)
+(770)
+(888)
+(474)
+(333)
+Other gains and losses
+(9,714)
+1,659
+2013
+RMB Million
+For the year ended 31 December
+2012
+RMB Million
+(Restated*)
+CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
+(Guo Peizhang)
+(Gong Huazhang)
+(Han Jianguo)
+韩建国
+(Ling Wen)
+凌文
+Supervisors
+(Chen Hongsheng)
+陈定
+(Fan Hsu Lai Tai)
+觉徐丽泰
+(Zhang Yuzhuo)
+(Zhai Richeng)
+張玉单
+Pursuant to Article 68 of the Securities Law of the People's Republic of China and Article 14 of the Standards
+Concerning the Contents and Formats of Information Disclosure by Companies Offering Securities to the Public No.
+2 – The Contents and Formats of Annual Report (Revised edition 2015) of the CSRC, having fully understood and
+reviewed the 2015 Annual Report of the Company, the Board and all directors are of the opinion that information
+disclosed in the 2015 Annual Report of the Company is true, accurate and complete. We hereby guarantee that
+the information stated in this report does not contain any false representation, misleading statement or material
+omission, and jointly and severally accept full responsibility for the truthfulness, accuracy and completeness of the
+content thereof.
+Section XV Signing Page for Opinions
+230 China Shenhua Energy Company Limited
+Zhang Yuzhuo, Chairman
+Approved by the Board for submission on: 24 March 2016
+The annual report for the year 2015 published on the Shanghai Stock
+Exchange and the Hong Kong Stock Exchange
+The original copies of all documents and announcements of the Company
+publicly disclosed in the newspapers designated by the CSRC during the
+reporting period
+The annual report for the year 2015 signed by the chairman
+The financial statements signed and sealed by the chairman, the Chief
+Financial Officer and the General Manager of the Financial Department
+The original copies of all documents sealed by the accounting firm and
+signed and sealed by the certified public accountant
+Documents Available for Inspection
+Section XIV Documents Available for Inspection
+2015 Annual Report 229
+At 31 December 2015, the aggregate amount of retained earnings determined in accordance with the China
+Accounting Standards for Business Enterprises available for distribution to equity holders of the Company
+was RMB 104,992 million (2014: RMB103,614 million).
+According to the Company's Articles of Association, the amount of retained earnings available for
+distribution to equity holders of the Company is the lower of the amount determined in accordance with
+the China Accounting Standards for Business Enterprises and the amount determined in accordance with
+IFRSS after the appropriation to reserves as detailed in Note (iii) to the consolidated statement of changes in
+equity.
+Directors
+。
+挂子
+(Tang Ning)
+The finance information below is from the financial statement prepared by the Group in accordance with
+International Financial Reporting Standards.
+RMB Million
+(Restated*)
+2011
+Section XVI Summary of Major Financial Information for the Recent Five Years
+232 | China Shenhua Energy Company Limited
+Note: Mr. Wu Xiuzhang resigned his position as a vice president of the Company on 23 March 2016 due to adjustment of work arrangement.
+China Shenhua Energy Company Limited
+24 March 2016
+(Zhang Kehui)
+(Huang Qing)
+(Wang Shumin)
+张楚
+IME
+(Zhang Zifei)
+(Wang Yongcheng)
+(Wu Xiuzhang) (Note)
+张飞
+呈
+(Wang Jinli)
+(Li Dong)
+(Han Jianguo)
+韩建国
+韩建国仙
+Senior Management
+Section XV Signing Page for Opinions (Continued)
+2015 Annual Report | 231
+(Shen Lin)
+申林
+(3,568)
+Share of results of associates
+346
+477
+158,669
+Total liabilities
+94,383
+74,524
+53,115
+58,679
+63,318
+Total non-current liabilities
+101,487
+110,778
+134,001
+109,377
+168,056
+95,351
+550,872
+525,326
+484,326
+434,634
+Total assets
+121,036
+119,646
+122,567
+114,753
+112,741
+Total current assets
+438,755
+559,791
+187,116
+185,302
+195,870
+2,832
+234 China Shenhua Energy Company Limited
+The above financial data of the Group for 2011, 2012, 2013 and 2014, was restated in accordance with Note 5 of the consolidated financial
+statements.
+363,921
+365,570
+338,210
+316,270
+275,965
+Total equity
+65,853
+64,872
+58,097
+50,257
+40,168
+298,068
+300,698
+280,113
+266,013
+235,797
+equity holders of the Company
+Non-controlling interests
+Equity attributable to
+363,921
+365,570
+338,210
+316,270
+275,965
+Net assets
+431,226
+213,124
+402,759
+321,893
+39,301
+45,706
+50,264
+46,652
+Equity holders of the Company
+Profit for the year attributable to:
+24,959
+49,063
+55,932
+58,482
+53,617
+Profit for the year
+17,649
+(9,561)
+61,847
+(12,784)
+69,844
+(13,912)
+(11,116)
+(14,062)
+69,598
+67,679
+Profit before income tax
+Income tax
+428
+410
+608
+(5,123)
+(4,459)
+(3,321)
+588
+34,520
+Non-controlling interests
+6,965
+8,218
+Total non-current assets
+(Restated*)
+RMB Million
+RMB Million
+2015
+2014
+RMB Million
+(Restated*)
+(Restated*)
+2012
+(Restated*)
+RMB Million
+As at 31 December
+2013
+RMB Million
+2011
+CONSOLIDATED STATEMENT OF FINANCIAL POSITION
+Section XVI Summary of Major Financial Information for the Recent Five Years (Continued)
+2015 Annual Report 233
+0.887
+1.976
+2.298
+2.527
+2.346
+- Basic
+Earnings per share (RMB)
+7,310
+9,762
+10,226
+369,573
+110,455
+Total current liabilities
+(4,281)
+267
+649
+Restricted bank deposits
+55,704
+64,923
+Prepaid expenses and other current assets
+16,131
+19,385
+Accounts and bills receivable
+5,416
+4,436
+Inventories
+Time deposits with original maturity over three
+Current assets
+225,728
+58
+2,728
+3,245
+50,539
+31,796
+1,647
+1,647
+1,065
+1,065
+115,497
+127,264
+236,767
+127
+months
+10,480
+Total current liabilities
+835
+630
+Income tax payable
+236
+200
+Current portion of long-term liabilities
+52,806
+57,364
+Accrued expenses and other payables
+10,297
+8,693
+9,500
+Accounts and bills payable
+4,998
+Short-term debenture
+14,246
+9,038
+Borrowings
+Current liabilities
+113,446
+119,307
+Total current assets
+25,448
+20,414
+Cash and cash equivalents
+9,994
+1,780
+9,408
+3,469
+(2,712)
+(3,453)
+(1,344)
+(2,180)
+(2,999)
+(2,600)
+financing activities
+Net cash (outflow) inflow from
+(396)
+25
+(612)
+(470)
+(2,063)
+(1,709)
+(380)
+(230)
+investing activities
+Net cash (outflow) inflow from
+2,460
+2,687
+4,048
+1,860
+171
+2,840
+1,251
+719
+1,434
+3
+Net cash inflow (outflow)
+2
+55,756
+55,404
+RMB million
+2014
+31 December
+31 December
+2015
+RMB million
+NOTES
+Total non-current assets
+Deferred tax assets
+Lease prepayments
+Other non-current assets
+Available-for-sale investments
+Investments in associates
+Investments in subsidiaries
+Intangible assets
+Construction in progress
+Property, plant and equipment
+Non-current assets
+44. INFORMATION ABOUT THE FINANCIAL POSITION OF THE COMPANY
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2015
+226 China Shenhua Energy Company Limited
+1
+(17)
+46
+(55)
+(27)
+(3)
+80,923
+88,414
+403
+38,384
+228 | China Shenhua Energy Company Limited
+210,447
+109,219
+1,681
+14,546
+85,001
+At 31 December 2014
+53
+53
+- (3,991) 3,991
+(4,701)
+(18,100)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2015
+(18,100)
+16,164
+16,164
+16,164
+212,330
+111,865
+4,701
+1,628
+13,836
+85,001
+Total
+RMB million
+RMB million
+RMB million
+16,164
+44. INFORMATION ABOUT THE FINANCIAL POSITION OF THE COMPANY (CONTINUED)
+Statutory
+reserves
+Share
+premium
+17,395
+(14,718)
+Net current assets
+(14,718)
+17,395
+17,395
+17,395
+1,681
+15,987
+(2,840)
+4,281
+85,001
+At 31 December 2015
+maintenance and
+production funds
+production funds
+maintenance and
+Appropriation of
+(Note 13)
+Dividend declared
+Total comprehensive
+income for the year
+Profit for the year
+RMB million
+Total
+Retained
+earnings
+RMB million
+Capital and
+other reserves
+RMB million
+RMB million
+RMB million
+RMB million
+Retained
+earnings
+Utilisation of
+reserves
+Profit for the year
+At 1 January 2014
+Total equity
+Share capital
+Reserves
+Equity
+Net assets
+Total non-current liabilities
+Deferred tax liabilities
+Accrued reclamation obligations
+Long-term liabilities
+Medium-term notes
+Borrowings
+Total comprehensive
+Non-current liabilities
+RMB million
+NOTES
+2015
+31 December
+44. INFORMATION ABOUT THE FINANCIAL POSITION OF THE COMPANY (CONTINUED)
+NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
+For the year ended 31 December 2015
+2015 Annual Report 227
+25,032
+Capital and
+other reserves
+Total assets less current liabilities
+261,799
+264,112
+2014
+RMB million
+income for the year
+31 December
+(Note 13)
+210,447
+230,337
+Dividend declared
+Share
+premium
+RMB million
+Statutory
+19,890
+19,890
+213,124
+233,014
+230,337
+233,014
+31,462
+31,098
+265
+1,106
+35
+maintenance and
+1,150
+1,115
+24,933
+24,955
+4,008
+3,872
+Others
+Appropriation of
+maintenance and
+production funds
+production funds
+Utilisation of
+1,156
+中国神华能源股份有限公司
+CHINA SHENHUA ENERGY COMPANY LIMITED
+100.0 292.6
+356.9
+365.8
+0.4
+-
+370.5
+Total sales volume/weighted average price
+200.0
+100.0
+351.0
+(17.9) (166)
+101.0
+354.3
+Including: Sales to external customers
+81.1
+281.6
+76.0 293.8
+451.1
+(75.6) (43.7)
+(4.1)
+1.7
+2.1
+05
+100 3
+83.7
+(23.0) (17.7)
+(9.5) (16.6)
+Shendong Mines
+166.57
+168.59
+(1.2)
+636.6
+97.60
+(1.3)
+41.85
+43.62
+Under trial operation or under
+Planned annual
+Estimated
+(0) Re-export trade
+1.9
+0.5 358.3
+78
+98.86
+Sales to internal power segment
+11.0
+22.8 291.5 81.5
+14.22
+14.31
+(0.6)
+7.31
+7.43
+(1.6)
+railways
+Length
+capacity
+Date
+Date
+14.58
+14.79
+(1.4)
+12.43
+12.63
+(1.6)
+0.5
+12.77
+(1.9)
+13.02
+(0.4)
+84.6
+20.77
+47.1
+18.1 326.7
+3.8 (10.8)
+Zhunge'er Mines
+Shengli Mines
+Baorixile Mines
+40.76
+41.38
+(1.5)
+32.79
+33.37
+(1.7)
+19.35
+19.98
+3.21
+Shenhua Zhonghai Shipping Company
+construction of self-owned
+transportation
+Commencement
+completion
+The Group's internal customers
+52.3
+20.68
+19
+1.5
+(10.4)
+Zhunchi Railway
+14
+-
+NA
+26.5
+5.9 380.1
+(57.7) (163)
+Shipping
+1.2
+1.4
+Sales of imported coal
+0.2
+0.1
+412.7
+6.9
+458.8
+(97.1) (10.0)
+As at 31
+As at 31
+As at 31
+As at 31
+Marketable reserve (under JORC standard)
+Export sales
+Recoverable reserve (under PRC standard)
+318.0
+235.8
+(13.6)
+Sales to internal coal chemical segment
+Bazhun Railway
+0.4
+-
+NA
+2. Seaborne
+202.6
+54.7
+345.3
+234.3
+51.9
+408.9
+(13.5) (15.6)
+Port
+0.9
+13.9
+Sales of domestic trading coal
+11.2
+3.0
+Coal Resources (under PRC standard)
+EMM
+1.2
+1.6
+1.0
+218.1
+9.9
+22
+524.3
+(61.6) (58.4)
+100 million tonnes 100 million tonnes
+%
+100 million tonnes 100 million tonnes
+2015
+2014 Restated)
+Change
+%
+100 million tonnes 100 million tonnes
+%
+million tonnes
+million tonnes
+%
+Total railway turnover
+2414
+269.3
+3.8
+0.3 442.9
+IL Overseas coal sales
+1.6
+0.4 557.0
+(25.0) (20.5)
+Mines
+December 2015 December 2014
+Change
+December 2015 December 2014
+Change
+As at 31
+December 2015
+As at 31
+December 2014
+Table 16 Shipping Volume
+Tahan Railway
+-
+Changes
+State-owned railways
+41.3
+45.5
+(93)
+4. Coal chemical
+segment
+5. Others
+Total
+53
+43
+吉林
+38
+B2. 三河電力
+Shendong Mines
+A2.准格爾礦區
+Zhungeler Mines
+A3.勝利礦區
+Shengli Mines
+A4.寶日希勒礦區
+AS.
+Baorixile Mines
+包頭
+B1. 滄東電力
+A6、澳大利亞沃特馬克煤礦項目(規劃審查中)
+A7. 新街台格廟勘查區(前期工作階段)
+Xinjie Taigemiao Exploration Area (preliminary work in progress)
+Cangdong Power
+Sanhe Power
+B3.定洲電力
+Dingzhou Power
+Panshan Power
+B4.盤山電力
+B5. 准能電力
+Watermark Coal Project in Australia (plans under review)
+A1. 神東區
+煤礦 COAL MINE
+【電廠 POWER
+Hainan
+澳門
+Macau
+香港
+Hongkong
+山東
+Shandong
+安徽
+Anhui
+江蘇
+Jiangsu
+浙江
+Zhejiang
+遼寧
+Liaoning
+Jilin
+甘其毛都
+Ganqimaodu
+中国神华能源股份有限公司
+CHINA SHENHUA ENERGY COMPANY LIMITED
+主要資產分佈圖 Assets Distribution Map
+2016
+B6、神東電力
+Zhungeler Power
+Shendong Power
+B7. 國華准格爾
+港口 PORT
+Shuchuang Railway
+C1. 神朔鐵路
+Shenshuo Railway
+C2. 朔黃鐵路
+C3
+黃萬鐵路
+C4.大准鐵路
+C5. 包神鐵路
+Huangwan Railway
+Dazhun Railway
+D1. 黃驊港
+Huanghua Port
+D2.天津煤碼頭
+Tianjin Coal Dock
+D3.珠海煤碼頭
+Zhuhai Coal Dock
+D4.羅源灣項目(籌備中)
+Luoyuan Wan Project (under preparation)
+Baoshen Railway
+203.8
+C6.巴准鐵路
+鐵路 RAILWAY
+海南
+Beijing Gas Power
+Yuyao Power
+Guohua Zhungeler
+B8.國華呼電
+Guohua Hulunbeler Power
+B9. 北京熱電(已關停)
+Beijing Thermal (shut down)
+B10. 綏中電力
+Suizhong Power
+B11. 浙能電力
+Zheneng Power
+B12. 舟山電力
+Zhoushan Power
+B13. 錦界能源
+Jinjie Energy
+B14. 神木電力
+Shenmu Power
+B15. 台山電力
+Taishan Power
+B16.惠州熱電
+Huizhou Thermal
+B17. 孟津電力
+Mengjin Power
+B18.太倉電力
+Taicang Power
+B19.陳家港電力
+Chenjiagang Power
+B20.徐州電力
+Xuzhou Power
+B21. 神皖能源
+Shenwan Energy
+B22. 神華四川能源
+Shenhua Sichuan Energy
+B23. 神華福建能源
+Shenhua Fujian Energy
+B24.寧東電力
+Ningdong Power
+B25. 南蘇煤電
+EMM Nansu
+B26. 珠海風能
+Zhuhai Wind
+B27.余姚電力
+B28、北京燃氣
+Guangxi
+Guangdong
+廣西
+Amo Railway (under construction)
+97km
+10 million tonnes
+01/10/2014
+2018
+Total of China Shenhua
+243.13
+246.56
+(1.4)
+157.42
+159.79
+(1.5)
+81.41
+84.20
+3.31
+中國 CHINA
+西藏
+Tibet
+新疆
+Xinjiang
+青海
+(9.0)
+Qinghai
+87.7
+2017
+0.8 296.5
+13.2 (204)
+Baotou Mines
+0.54
+1.03
+(47.6)
+0.38
+0.62
+(38.7)
+0.13
+0.15
+(13.3)
+External customers
+Total of shipping volume
+27.5
+40.6
+(32.3)
+Huangda Railway (under construction)
+224km
+40 million tonnes
+01/09/2014
+79.8
+12 236.1
+圖例 Legend
+Provincial Boundary
+內蒙古自治區
+Inner Mongolia Autonomous Region
+山西
+Shanxi
+甘肅
+Gansu
+陝西
+河南
+Shaanxi
+Henan
+貴州
+Guizhou
+湖北
+Hubei
+河北
+Hebei
+湖南
+江西
+Hunan
+Jiangxi
+廣東
+Tavan Tolgoi
+省界線
+塔本陶勒盖
+Heilongjiang
+國有或地方鐵路線
+State-owned or Local Railway
+自有運營鐵路
+Self-owned Railway (in operation)
+自有在建鐵路
+Self-owned Railway (under construction)
+自有礦區
+Self-owned mines
+雲南
+Yunnan
+四川
+Sichuan
+Ningxia
+呼倫貝爾
+莫力達瓦旗
+Hulunbeier Molidawaqi
+C11
+阿莫旗
+黑龍江
+Amoqi
+齊齊哈爾
+Qiqihar
+Total seaborne coal
+NA
+0.5
+N/A
+NA
+N/A
+277
+(2.5)
+2,804
+3,135
+(10.6)
+101
+0.9
+32.7
+12
+16.7
+359
+(30.1)
+3,174
+2,661
+19.3
+743
+618
+14
+233
+9.8
+2,215
+%
+12,352 12,575
+(1.8)
+1.810
+1,773
+2.1
+1,147
+1,222
+(6.1)
+NA
+NA
+2,034
+2,437
+(16.5)
+290
+(11.0)
+308
+424
+(27.4)
+11.6
+2,433
+20.2
+168
+141
+19.1
+Cost of extemal transportation business
+1.867
+1.560
+19.7
+140
+160
+(12.5)
+612
+1,348
+(54.6
+NA
+N/A
+Cost of prime business
+14,219
+14,135
+0.6
+1,950
+1,933
+0.9
+1.759
+2,570
+13.5
+% RMB million RMB milion
+229
+220
+778
+11.6
+External transportation charges
+572
+505
+13.3
+N/A
+N/A
+424
+425
+(0.2)
+NA
+N/A
+Others
+1.335
+1,622
+(17.7)
+440
+531
+(17.1)
+233
+5.9
+RMB million
+% RMB million
+RMB milion
+1.9
+2.1
+(95
+Ningdong Power
+Northwest Power Grid
+Ningxia
+34.8
+31.4
+5,273
+352
+226
+660
+Table 11 Plan on Capital Expenditures for 2016
+PT.GH EMM
+PLN
+Indonesia
+19.8
+17.6
+6,600
+367
+405
+Overseas
+300
+2,000
+329
+Bazhun Railway
+Shaanxi
+92.1
+97.8
+84.1
+23.0
+112.2
+(25.0
+(5.8)
+(coal-fired power)
+Shanxi
+3.7
+45
+(17.8)
+Fujian Energy
+East China Power Grid
+Fujian
+94.9
+89.9
+3,503
+321
+1,240
+31.6
+Table 12
+Plan for 2016
+Port
+Cost of internal transportation business
+Materials, fuel and power
+Personnel expenses
+Repair and maintenance
+Depreciation and amortization
+ཝིཙྪཱ །ཇོཎྞཱཔོན
+Total cost of sales
+Shipping
+2014
+2014
+2014
+2015
+Change
+(Restated
+2015
+Change
+(Restated)
+Change
+RMB million
+RMB million
+% RMB million
+(Restated) Change
+Coal Sales Price
+2014
+and Coal Chemical Segments
+Completion in 2015
+Total for coal-fired power plants/weighted average
+2,217.5
+2,065.1
+4,631
+318
+331
+44,477
+7,780
+བྷ ཎྜ་བྷ ུ ཐུ བྷུ རྦབྷཝཿཎྜཋཱསྟྲ ུཎྜ3ཋཱཊྛོ
+ཆུགྷ་8༞ཝཿ8!བྷ⌘ཝཁཏྟཱརཱིཎྞཱ་བྷོཧིནྟཱིཊྛོ
+Total cost of sales
+107,493
+161,517
+Other operating costs
+Total cost of sales
+823
+978
+49,788
+56,517
+Table 10 Cost of Sales of Transportation
+Railway
+NA
+3,677
+Taxes and surcharges
+Huanghua Port
+111.6
+131.6
+(15.2)
+Shenshuo Railway
+45.6
+52.8
+(13.6)
+%
+950
+%
+Shenhua Tianjin Coal Dock
+40.3
+36.6
+10.0
+6.3
+80.6
+Yuyao Power
+East China Power Grid Zhejiang
+Shuchuang-Huangwan Railway
+% %
+950
+950
+-
+158.5
+174.0
+(8.9)
+Self-owned railways
+200.1
+223.8
+(10.6)
+80.2
+198.0
+tonnes sales volume
+tonne tonnes
+sales volume
+tonne
+volume Price
+Beijing Gas-fired Power
+North China Power Grid Beijing
+15.5
+15.1
+4.074
+227
+401
+118.7
+138.2
+(14.1)
+18.0
+Self-produced coal and purchased coal
+354.1
+95.6
+292.0 406.2
+90.0
+342.2
+(12.8) (14.7)
+Third-party ports
+45.3
+61.8
+(26.7)
+Including: Railway
+42
+65.3
+1. Direct arrival
+151.5
+40.9 220.7 171.9
+38.1 251.3
+(11.9) (122)
+Table 13 Coal Resources/Reserve
+Ganquan Railway
+(243)
+Self-owned ports
+10.3
+Baoshen Railway
+17.6
+2,308
+232
+698
+780
+624
+Shenhua Zhuhai Coal Dock
+6.6
+5.8
+13.8
+Dazhun Railway
+25.7
+22.5
+142
+L Domestic sales
+365.5
+98.7 292.9
+439.6
+97.4 346.3
+(16.9) (15.4)
+segment
+7.8
+Power Grid
+48
+%
+1,760
+2,570
+(31.5)
+4.245
+11.2
+(Restated)
+2015
+ཟུཙྩོ དྡྷི』་མཱཋབ་༌རྨསྒགྷཨོཾ རྨ བྷ
+2,034
+288.2
+Table 14 Seaborne Coal in Ports
+Including:
+2015
+2014 Restated
+Change
+Other power plants
+Table 15 Railway Turnover
+Total amount
+First batch
+Sales
+Total
+Sales
+1.6
+Total
+1,995
+(1.0)
+218
+295
+(26.1)
+16
+18
+(11.1)
+N/A
+68
+Other operating costs
+312
+(49.4)
+60
+44
+36.4
+N/A
+N/A
+N/A
+500
+7.6
+14.595
+14,742
+2,026
+6.6
+Zhuhai Wind
+0.2
+65
+5.364
+1
+232
+125
+125
+199
+2015
+16
+12
+2014 (Restated)
+Change
+2015
+2014
+(Restated)
+Change
+million tonnes
+million tonnes
+%
+billion tonne km
+billion tonne km
+67
+South China Power Grid Guangdong
+Sichuan
+Shenhua Sichuan Energy
+(hydropower)
+02
+1,478
+1
+598
+16
+volume percentage
+Price
+volume
+percentage
+Price
+1.Coal segment
+2. Power segment
+3. Transportation
+12.9
+70.0
+million account for
+RMB/
+million
+account for
+RMB/
+Sales
+Sichuan Provincial Local
+C7. 甘泉鐵路
+XXXXXX
+C8. 准池鐵路
+2. Total power output dispatch
+Billion kwh
+210.45
+218.42
+(3.6)
+229.55
+(III) Coal chemical
+1. Sales of polyethylene
+Thousand
+246.04
+319.2
+20.2
+262.4
+tonnes
+2. Sales of polypropylene
+Thousand
+312.9
+268.1
+16.7
+267.9
+265.5
+(3.7)
+234.38
+225.79
+318.1
+2. Coal sales
+Million tonnes
+370.5
+451.1
+(17.9)
+514.8
+Of which: Export
+Import
+Million tonnes
+1.2
+1.6
+(25.0)
+2.7
+Million tonnes
+0.2
+6.9
+(97.1)
+15.2
+(II) Power generation
+1. Gross power generation
+Billion kwh
+tonnes
+(IV) Transportation
+2.
+1. Turnover of self-owned railway Billion tonne km
+Seaborne coal
+5.8
+13.8
+1.5
+Coal Dock
+4.
+3. Shipping volume
+Shipment turnover
+Million tonnes
+79.8
+87.7
+(9.0)
+118.6
+Billion tonne
+64.1
+72.2
+(11.2)
+114.9
+nautical miles
+(11)
+Changes in costs
+Unit: RMB million
+Percentage to
+6.6
+(8.4)
+Million tonnes
+Coal Dock
+200.1
+223.8
+(10.6)
+211.6
+Million tonnes
+203.8
+235.8
+(13.6)
+227.3
+Of which: At Huanghua Port
+Million tonnes
+111.6
+131.6
+(15.2)
+127.4
+At Shenhua Tianjin
+Million tonnes
+40.3
+36.6
+10.1
+31.1
+At Shenhua Zhuhai
+306.6
+280.9
+Million tonnes
+(794)
+(26.4)
+General and administrative expenses
+(9,714)
+(8,835)
+9.9
+Other gains and losses
+(5,856)
+(770)
+660.5
+Other income
+1,659
+939
+76.7
+Other expenses
+Interest income
+Finance costs
+Income tax
+Net cash generated from operating activities
+(626)
+(419)
+49.4
+(584)
+608
+Selling expenses
+(178,109)
+points
+Total debt to total debt and total
+%
+equity ratio
+Note: Please refer to the part of "Definitions" of this report for the calculations of the above indicators.
+30 China Shenhua Energy Company Limited
+Section V Management Discussion and Analysis (Continued)
+(II) Analysis on principal business
+Analysis of the Changes in the Major Items in the Consolidated Statement of Profit or Loss and Other
+Comprehensive Income and Consolidated Statement of Cash Flows
+Unit: RMB million
+Items
+2015
+2014
+(Restated)
+Change
+(%)
+Revenue
+177,069
+253,081
+(30.0)
+Cost of sales
+(123,341)
+(30.7)
+Change
+803
+(5,123)
+As Shenhua Finance Company provides financial services including deposits and borrowings for entities other than the
+Group, the item represents the cash flows of deposits and borrowings and interest, fees and commission used by this
+business.
+1.
+Revenue and costs
+(1)
+Factors affecting the revenue
+The revenue of the Group in 2015 recorded a year-on-year decrease of 30.0%. The
+main reasons for such change are (1) the excessive of supply of coal, resulting in a
+year-on-year decrease of 17.9% in the Group's sales of coal to 370.5 million tonnes for
+the year 2015 (2014: 451.1 million tonnes (restated)); the average sales price of coal was
+RMB292.6 per tonne (2014: RMB351.0 per tonne (restated)), representing a year-on-year
+decrease of 16.6%; (2) being affected by an increase in the use of non-fossil fuels
+in power generation and the reduction in the utilization hours of coal-fired power
+generation units, the power output dispatch of the Group in 2015 was 210.45 billion
+kwh (2014: 218.42 billion kwh (restated)), representing a year-on-year decrease of 3.6%;
+average power tariff was RMB334/MWh (2014: RMB354/MWh (restated)), representing
+a year-on-year decrease of 5.6%; (3) a decrease in the materials trading business
+volume.
+2015 Annual Report 31
+Section V Management Discussion and Analysis (Continued)
+2015
+compared
+Major operating indicators
+Unit
+2015
+2014
+with 2014
+2013
+(Restated)
+%
+(Restated)
+(1) Coal
+1. Commercial coal production
+Note:
+(24.3)
+(16.4)
+(23,157)
+(4,459)
+14.9
+(9,561)
+(12,784)
+(25.2)
+55,406
+69,069
+(19.8)
+Of which: Net cash generated from operating
+activities of Shenhua Finance Company Note
+9,065
+(957)
+(1,047.2)
+Net cash generated from operating activities
+excluding the effect of Shenhua Finance Company
+Net cash used in investing activities
+46,341
+70,026
+(33.8)
+(26,123)
+(43,736)
+(40.3)
+Net cash used in financing activities
+(27,707)
+1.2 percentage
+in amount
+over that
+210.45
+211.40
+billion kwh
+Power output dispatch
+Revenue from intersegment
+equity holders of the Company
+tonnes
+161,409
+93,502
+05
+Revenue from external customers
+39,301
+17.649
+RMB million
+Profit for the year attributable to
+(8.2)
+3.705
+3.4
+100 million
+Coal sales volume
+(55.1)
+Basic eamings per share
+RMB/share
+0.887
+5.6
+8,667
+4.9
+8,019
+4.5
+7,928
+4.5
+45,878
+25.9
+%
+Return on net assets as at the end of
+(18.1)
+1,770.69
+1,451
+RMB100 million
+Revenue
+30.685
+27,956
+transactions
+(55.1)
+1.976
+tonnes
+RMB million
+RMB million
+(49.1)
+Actual amount
+Target for
+Business Data Master Table
+Table 3 Segment Results
+Table 2 Financial Indicators
+Table 1 Operation targets for 2016
+Overview of China Shenhua's Operating Results for the year of 2015
+K
+and Analysis
+Management Discussion
+Section V
+E
+T
+1,260
+<<
+୩
+±
+-----
+19.0
+L
+0-0000
+2015
+9,857
+2014 (restated)
+Coal
+49,063
+24,959
+RMB million
+Profit for the year
+(0.3)
+2.809
+2.8
+100 milion
+Commercial coal production
+2014 (Restated
+(30.0
+253,081
+177,069
+RMB million
+Revenue
+2015
+Change %
+for 2015
+2016
+Unit
+Item
+Change %
+6.4
+11,407
+%
+15,816
+12.8
+5.9
+13.5
+(34.4)
+Personnel expenses
+11,874
+9.6
+11,417
+6.4
+4.0
+Depreciation and amortization
+21,134
+17.1
+19,284
+10.8
+9.6
+Repairs and maintenance
+8,619
+7.0
+9,505
+Materials, fuel and power
+5.3
+(60.4)
+43,545
+Amount
+cost of sales
+Percentage
+for the same
+for the same
+Amount for to cost of sales
+period of the
+period of the
+of the same
+period of the
+Breakdown of cost items
+the period for the period
+previous year
+previous year
+previous year
+(%)
+(Restated)
+(%)
+(%)
+Coal purchased
+17,264
+14.0
+24.4
+for the period
+(9.3)
+12,193
+(III)
+Major customers
+No. Customer
+1
+The first
+2
+The second
+3
+The third
+4
+The fourth
+5
+The fifth
+Sub total
+(IV)
+Major suppliers
+Top five customers
+2015
+Percentage
+Revenue
+RMB million
+to revenue
+The cost of sales of the Group in 2015 represented a year-on-year decrease of 30.7%,
+of which (1) the cost of coal purchased represented a year-on-year decrease of 60.4%,
+which was mainly attributable to the decrease in the price of coal and the Group's
+reduction in the sales volume of purchased coal and overseas and domestic trading
+coal based on the demand and supply of the coal market; (2) materials, fuel and power
+represented a year-on-year decrease of 34.4%, which was mainly attributable to the
+decrease in coal production and the decrease in the prices of fuel and oil; (3) personnel
+expenses represented a year-on-year increase of 4.0%, which was mainly attributable
+to the increase in the employee's social security payment base; (4) depreciation and
+amortization costs represented a year-on-year increase of 9.6%, which was mainly
+attributable to the increase in fixed assets of power and transportation business; (5)
+transportation charges represented a year-on-year decrease of 15.1%, which was mainly
+attributable to the decrease in external transportation fees arising from decrease in
+sales amount of coal; (6) Taxes and surcharges represented a year-on-year increase
+of 42.3%, which was mainly attributable to the fact that coal price adjustment fund
+and mineral resources compensation fee were accounted for by the Group as resource
+tax as a result of the resource tax reform. The relevant amounts were adjusted from
+"other cost of sales" to "taxes and surcharges" for accounting;(7) other operating costs
+represented a year-on-year decrease in 40.9%, which was mainly attributable to the
+decrease in the materials trading business volume.
+Transportation charges
+Section V Management Discussion and Analysis (Continued)
+(30.7)
+9.9
+14,369
+8.1
+(15.1)
+Taxes and surcharges
+5,833
+4.7
+4,100
+2.3
+42.3
+Other operating costs
+30,608
+24.9
+51,780
+29.2
+(40.9)
+Total cost of sales
+123,341
+100.0
+178,109
+100.0
+32 China Shenhua Energy Company Limited
+Ganquan Railway
+points
+Increased by
+23.1
+Controlling
+Companies
+70.00%-
+PT GH EMM Indonesia
+73.06%
+92.00%-
+Shenhua Guohua Beijing Electric Power Research Institute Co., Ltd.
+60.00%-
+Shenhua Guohua Shouguang Power Generation Company Limited
+Coal Sales
+Limited
+Major Controlling Companies
+-100.00%-
+Shenhua Shendong Power Co., Ltd.
+-100.00%-
+Shenhua Fujian Energy Co., Ltd.
+Other A Share
+9.85%
+Power Generation
+Shareholders
+-51.00%-
+100.00% Shenhua Sales Group Co., Ltd.
+Shenhua Group
+Corporation
+Major
+Ha'erwusu Coal Branch
+Shareholders
+40.50%-
+56.61%-
+Shenhua Baorixile Energy Co., Ltd.
+80.00%-
+Hebei Guohua Dingzhou Power Generation Co., Ltd.
+Guangdong Guohua Yudean Taishan Power Co., Ltd.
+50.10%-
+Yulin Shenhua Energy Co., Ltd.
+70.00%-
+Shenhua Guohua International Power Co., Ltd.
+60.00%-
+Shenhua Bayannur Energy Co., Ltd.
+-70.00%-
+Shaanxi Guohua Jinjie Energy Co., Ltd.
+Shenhua Australia Holdings Pty Limited
+65.00%-
+Tianjin Guohua Jinneng Power Co., Ltd.
+Shendong Coal Branch
+Major Branches
+55.00%-
+Jiangsu Guohua Chenjiagang Power Co., Ltd.
+Shenwan Energy Co., Ltd.
+-100.00%
+Shenhua Baoshen Railway Group Co., Ltd.
+88.16%-
+Shenshuo Railway Branch
+Major Branches
+-100.00%-
+Shenhua Guohua Jiujiang Power Co., Ltd.
+Railway Track Mechanical Maintenance Branch
+-100.00%-
+Shenhua Guohua Yongzhou Power Co., Ltd.
+70.00%-
+Shenhua Huanghua Harbour Administration Co., Ltd.
+52.20%-
+55.00%-
+Shenhua Tianjin Coal Dock Co., Ltd.
+Port
+-100.00%-
+Shenhua Guohua Guangtou (Liuzhou) Power Generation Co., Ltd.
+Guohua Xuzhou Power Generation Co., Ltd.
+40.00%-
+Shenhua Yudean Zhuhai Port Coal Dock Co., Ltd.
+-100.00%-
+Ningxia Guohua Ningdong Power Generation Co., Ltd.
+51.00%-
+Shipping
+Guohua Taicang Power Co., Ltd.
+17.09%
+50.00%-
+-100.00%-
+Shenhua Baoshen Railway Co., Ltd.
+88.46%-
+51.00%-
+51.00%-
+- 80.00%-
+Shenhua Guohua Mengjin Power Generation Co., Ltd.
+Shenhua Guohua Zhangzhou Power Co., Ltd.
+Inner Mongolia Guohua Hulunbeier Power Generation Co., Ltd.
+Shenhua Sichuan Energy Co., Ltd.
+Shenhua Guohua Guangtou (Beihai) Power Generation Co., Ltd.
+Shenhua Guohua (Beijing) Gas Thermal Power Co., Ltd.
+China Shenhua
+Energy Company Limited
+52.72%-
+Major Controlling Companies
+85.00%-
+Shenhua Ganquan Railway Co., Ltd.
+90.00% Shenhua Xinzhun Railway Co., Ltd.
+Shuohuang Railway Development Co., Ltd.
+Shenhua Zhunchi Railway Company Limited
+51.00%-
+52.00%-
+-100.00%-
+Shenhua Mengdong Railway Co., Ltd.
+-100.00%-
+Railway
+Shenhua Railway Transportation Co., Ltd.
+Shenhua Baotou Energy Co., Ltd.
+-100.00%-
+H Share
+Zhunge'er
+巴圖塔
+Batuta
+台灣
+Taiwan
+A7 A
+神東站
+Shendong
+314
+神木业站
+Shenmu North
+陝西省
+SHAANXI
+外西溝
+Waxigou
+CA
+大秦鐵路
+Daqin Railway
+Datong East
+河北省
+端州西
+准格關
+HEBEI
+Dongsheng
+東勝
+Zhunchi Railway
+C9. 黃大鐵路(在建)
+Huangda Railway (under construction)
+C10. 塔轉鐵路
+Tahan Railway
+C11. 阿莫鐵路(在建)
+Amo Railway (under construction)
+內蒙古自治區
+INNER MONGOLIA AUTONOMOUS REGION
+FI
+包頭
+Baotou
+點拉测
+釣魚島
+① Diandaigou
+Diaoyu Islands
+塔然高勒
+韓家村
+Tarangaole
+Hanjiacun
+福建
+Fujian
+Shenhua Zhonghai Shipping Co., Ltd.
+Shuozhou West
+Note:This map as at 24 March 2016 is for illustrative purpose only.
+Dongying
+大家法
+Dajiawa
+Equity structure diagram
+51.00%-
+CLP Guohua Shenmu Power Co., Ltd.
+-100.00%-
+57.76%-
+Shenhua Shendong Coal Group Co., Ltd.
+Shenhua Zhunge'er Energy Co., Ltd.
+60.00%-
+Zhejiang Guohua Zheneng Power Generation Co., Ltd.
+-73.33%-
+Zhuhai Guohua Huidafeng Wind Energy Development Co., Ltd.
+62.82%-
+Shenhua Beidian Shengli Energy Co., Ltd.
+60.00% Shenhua Xinjie Energy Co., Ltd.
+80.00%-
+Zhejiang Guohua Yuyao Gas-fired Power Co., Ltd.
+Coal Production
+Major Controlling Companies
+51.00%-
+Hebei Guohua Cangdong Power Co., Ltd.
+東營
+註 於2016年3月24日之分佈圖,僅做示意。
+Caofeidian Port
+Qinhuangdao Port
+天津市
+STIANJIN
+神池
+Shenchi
+神池南
+Shenchi South
+C1
+定州西
+Huanghua
+Dingzhou West
+西寧北
+Suning North
+山西省
+SHANXI
+煤化工 COAL CHEMICAL
+F1. 包頭煤化工
+Baotou Coal Chemical
+6 航運 SHIPPING
+E1. 神華中海航運
+Shenhua Zhonghai Shipping Company
+秦皇島港
+˙曹妃甸港。
+21.9
+51.00%-
+Coal Chemical
+(8.9)
+31.8
+49,788
+73,053
+Power
+(33.4) Decreased by 4.4
+(36.8)
+11.5
+107,493
+percentage points
+(11.9) Increased by 2.3
+percentage points
+121,458
+(%)
+(%)
+(%)
+in gross profit margin as
+compared with last year
+Increase/decrease
+decrease in
+cost of sales
+as compared
+with last year
+margin with last year
+Cost of sales
+Revenue
+Coal
+Railway
+27,232
+14,595
+4,720
+5,550
+Coal chemical
+percentage points
+percentage points
+(31.5) Decreased by 3.2
+Decreased by 6.0
+percentage points
+(1.0) Decreased by 5.5
+(34.0)
+12.1
+1,760
+2,002
+Shipping
+1.6
+(9.7)
+46.2
+2,026
+3,769
+Port
+(11.1)
+46.4
+compared
+Gross profit
+Business
+segment
+revenue as
+Gearing ratio
+Decreased by
+7.2 percentage
+points
+(27.6)
+62,597
+86,436
+As at
+As at
+31 December
+2015
+31 December
+2014
+(Restated)
+Change
+(%)
+RMB/share
+14.99
+15.12
+(0.9)
+%
+35.0
+33.6
+Increased by
+1.4 percentage
+holders per share
+15.0
+Equity attributable to equity
+EBITDA
+Increase/
+Increase/
+decrease in
+Unit: RMB million
+(before eliminations)
+Major business segments in 2015
+The major operating model of the Group refers to one unified supply chain of coal
+production coal transportation (railway, port and shipping) use of coal (power
+and coal chemical), and there are business intercourses between each segment. The
+operation revenue and the costs of the following business segments are the data
+before eliminations on consolidation of each segment.
+-
+(V) Major Business segments
+Section V Management Discussion and Analysis (Continued)
+2015 Annual Report 33
+During the reporting period, the total procurement from the top five suppliers of
+the Company amounted to RMB14,562 million, accounting for 13.2% of the total
+procurement for the year. The purchases from the largest supplier were RMB5,892
+million, accounting for 5.3% of the total procurement for the year.
+Cost of sales
+192,094
+121,458
+Sub-total of segment revenue
+Decreased by 7.2
+13.1
+Return on total assets as at the end %
+of the period
+4.5
+Return on net assets as at the end
+of the period
+%
+RMB million
+(5.6)
+11.2
+Decreased by 12.8
+Suizhong Power Co., Ltd.
+-100.00% -
+Shenhua Hong Kong Limited
+65.00%-
+Inner Mongolia Guohua Zhunge'er Power Generation Co., Ltd.
+-100.00%-
+Shenhua Science and Technology Research Institute Co., Ltd.
+-100.00% Shenhua Training Center Co., Ltd.
+Guohua Power Branch
+-100.00%-
+Shenhua Zhunneng Group Co., Ltd.
+Major
+Branches
+Shengli Energy Branch
+51.00% -
+Shenhua (Tianjin) Financial Leasing Co., Ltd.
+Guohua Huizhou Thermal Power Branch
+51.00%-
+Shenhua Funeng Power Generation Co., Ltd.
+Section V Management Discussion and Analysis
+DISCUSSION AND ANALYSIS ON MAJOR OPERATION DURING THE REPORTING PERIOD
+I.
+50.00%-
+(I)
+China Shenhua Overseas Development and Investment Co., Ltd.
+Sanhe Power Co., Ltd.
+Major Controlling
+Companies
+100.00%
+Shenhua Baotou Coal
+Chemical Co., Ltd.
+-100.00%-
+(Directly and
+indirectly controlled)
+-100.00%-
+Shenhua Finance Co., Ltd.
+51.00%-
+Shenhua Guohua Qingyuan Power Generation Co., Ltd.
+Shenhua Logistics Group corporation Limited
+80.00%-
+Shenhua Hollysys Information Technology Co., Ltd.
+Others
+Major Controlling Companies
+-100.00%-
+Shenhua Information Technology Co., Ltd.
+-100.00%- Shenhua Geological Exploration Co., Ltd.
+Note: The equity structure diagram of China Shenhua (including major branches/
+subsidiaries) as at 31 December 2015 is for illustrative purpose only.
+75.00%-
+PT. Shenhua Guohua Lion Power Indonesia
+65.00%-
+Tianjin Guohua Panshan Power Generation Co., Ltd.
+100.00%
+55.00%-
+100.00%-
+Shenhua Guohua (Zhoushan) Power Generation Co., Ltd.
+Overview of operation
+2014
+(Restated)
+Selling costs, general and
+RMB million
+14,813
+13,285
+11.5
+administrative expenses and
+net finance costs
+In 2015, China Shenhua actively dealt with the adverse effect of the downturn in the industry,
+organized operation delicately, prioritized the arrangement of the sales of self-produced commercial
+coal, proactively reduced the business volume of purchased coal, and performed better in sales and
+marketing of power. Due to the impact of the weak coal market, the coal sales achieved in 2015
+were lower than the target set at the beginning of the year.
+The Group recorded a profit for the year attributable to equity holders of the Company of
+RMB17,649 million (2014: RMB39,301 million (restated)), and basic earnings per share of RMB0.887/
+share (2014: RMB1.976/share (restated)), representing a year-on-year decrease of 55.1%.
+Major financial indicators of the Group for 2015 are as follows:
+2015
+2014
+(Restated)
+Change
+(%)
+8.9
+Decreased by
+4.4 percentage
+points
+5.9
+13.1
+percentage points
+34 China Shenhua Energy Company Limited
+(30.7)
+2015
+178,109
+RMB million
+Change
+(%)
+Commercial coal production
+Coal sales
+Million tonnes
+280.9
+306.6
+(8.4)
+Million tonnes
+370.5
+451.1
+(17.9)
+Total power output dispatch
+Revenue
+Billion kwh
+210.45
+218.42
+(3.6)
+RMB million
+177,069
+253,081
+(30.0)
+Cost of sales
+123,341
+395
+95.8
+2,444
+Total installed Equity installed
+(decrease)
+Total installed
+consumption
+(5.2
+17.2
+16.3
+Yujialang
+(3.7)
+234.38
+225.79
+billion kwh
+Gross power generation
+Increase
+2014 Restated)
+Standard coal
+(7.8
+35.8
+33.0
+Daliuta-Huojitu
+2015
+Cost Volume Unit cost Cost
+Table 9 Cost of Sales of Power Segment
+Total power output dispatch
+210.45
+utilisation
+output
+Gross power
+(13)
+14.9
+14.7
+Halagou
+million
+capacity as at
+capacity as
+in installed
+capacity as at
+Average rate for power
+Total power
+(1.3
+15.0
+14.8
+Shangwan
+RMB million
+(3.6
+218.42
+billion kwh
+Table 8 Cost of Sales of Coal Segment
+Table 7 Power Generation Business
+(1.8
+316,985
+(433,391)
+RMB million
+(175,444)
+(185,478)
+343,060
+348,720
+13,529
+(7,007)
+12.564
+(5,593)
+8,247
+(2,449)
+8,189
+(2,363)
+(9,917)
+21,974
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+22,303
+(10,950)
+RMB million
+(415,654)
+304,351
+million tonnes
+28.2
+27.7
+Bulianta
+(7.5)
+165.8
+153.4
+Shendong Coal Group
+(97.1)
+6.9
+0.2
+output
+Import
+1.6
+1.2
+million tonnes
+Including: Export
+%
+million tonnes
+million tonnes
+(17.9)
+451.1
+370.5
+(25.0)
+31 December
+capacity for
+at 31 December
+5,949
+Materials, fuel and power
+1.1
+17.9
+18.1
+Bu'ertai
+(10.6)
+223.8
+200.1
+billion tonne km
+1,285
+2,520
+2,520
+340
+309
+4,933
+118.0
+124.3
+North China Power Grid Hebei
+Cangdong Power
+Transportation tumover of
+289.3
+Sanhe Power
+North China Power Grid Hebei
+64.9
+123.1
+133.9
+North China Power Grid Hebei
+Dingzhou Power
+(33.3
+3.3
+22
+Cuncaata No. 1 mine
+5.122 289.3
+Personnel expenses
+coal
+(21.1)
+3.0
+Liuta mine
+self-owned railway
+501
+1,300
+1,300
+333
+303
+4,992
+60.0
+3.8
+RMB million
+(47.3
+3.9
+2015
+2014
+Power tariff
+dispatch
+hours
+dispatch
+generation
+Location
+Regional grid
+Power plants
+(17.8
+45
+3.7
+Baode (Kangiatan)
+20.2
+265.5
+319.2
+thousand tonnes
+Polyethylene sales
+tonnes
+31 December
+2015
+2015
+Cost of coal purchased
+Polypropylene sales
+Wulanmulun
+289.3
+17,264 81.2
+35,654
+Production cost of self-produced
+MW
+MW
+MW
+MW
+RMB/mwh
+gkwh
+7.4
+hours
+100 million kwh
+(29)
+10.5
+10.2
+Shigetai
+335
+16.7
+268.1
+312.9
+thousand tonnes
+100 million kwh
+5,313
+(59,965)
+122,033
+RMB million
+2015
+2014 (Restated)
+2015
+2014 (Restated)
+2015
+2014 (Restated)
+2015
+2014 (Restated)
+མཎྜཎྜ་ཁཎྜཎྜ་པ་རོདྡྷི་པདྨེ
+(115,876)
+(115,814)
+Segment total liabilities
+Change
+2014 (Restated)
+2015
+245,452
+246,972
+Segment total assets
+(8.4)
+306.6
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+2014 (Restated
+2014 (Restated)
+2015
+2014 (Restated)
+Total
+Eliminations
+Unallocated items
+2015
+2014 (Restated)
+RMB million
+5.878
+5.547
+1.300
+541
+299
+317
+3,222
+3.420
+79,792
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+Table 5 Volume of Commercial Coal Production
+Change %
+2014 (Restated)
+flat year-on-year
+(19.8)
+69,069
+55.406
+RMB million
+Net cash generated from operating
+activities
+(5.5)
+148.13
+140
+(161,517)
+(107493)
+Segment cost of sales
+Changes in unit production costs of
+Selling, general and administrative RMB100 million
+expenses and net finance costs
+percentage point
+the period
+(7.7)
+1,233.41
+1,138
+RMB100 million
+year-on-year
+Segment profit/(loss) from
+operations
+6,433
+26.049
+2015
+280.9
+million tonnes
+Commercial coal production
+Coal sales
+31 December 2015
+As at
+Coal chemical
+Shipping
+Port
+Railway
+Power
+RMB million
+Finance Company
+activities excluding Shenhua
+(33.8)
+70,026
+46,341
+RMB million
+Net cash generated from operating
+decrease of 6.7%
+growth
+Table 4
+self-produced coal
+As at
+RMB million
+RMB million
+RMB million
+31 December 2015
+(118,995)
+212,231
+RMB million
+(Restated)
+31 December 2014
+RMB million
+RMB million
+(Restated 31 December 2015
+31 December 2014
+(131,373)
+As at
+As at
+As at
+As at
+As at
+As at
+As at
+(1,267)
+(596)
+1,209
+As at
+31 December 2014
+As at
+31 December 2014
+124,661
+RMB million
+RMB million
+(Restated) 31 December 2015
+31 December 2015
+(Restated)
+31 December 2015
+(Restated)
+31 December 2015
+(Restated)
+808
+31 December 2015
+31 December 2015
+(Restated)
+31 December 2014
+As at
+31 December 2014
+As at
+31 December 2014
+As at
+31 December 2014
+As at
+(Restated)
+(61,284)
+1,410
+361
+4,176
+3.769
+30,626
+27.232
+80,150
+(64,954)
+(57,833)
+894
+864
+2
+3
+1.734
+1,461
+3,877
+3,452
+27,404
+23,812
+358
+253,081
+1,181
+974
+2,002
+3.034
+5,550
+5,880
+133
+1,729
+1.350
+14,298
+10,070
+20,933
+63,687
+(64,954)
+(57,833)
+57,237
+(210)
+649
+(196)
+(4,720)
+(2,570)
+(1,760)
+(1,995)
+(2,026)
+(14,742)
+(14,595)
+56,517)
+2,075
+1.838
+(4,245)
+322
+24,109
+2,520
+Inner Mongola
+46.3
+414
+3.858
+332
+744
+1,200
+2015
+Proportion of
+2014
+Change
+Jinjie Energy Company
+18.0
+18.9
+(4.8
+Beijing Thermal
+North China Power
+Northeast Power Grid
+Grid
+Guohua Hulunbeer Power
+17.0
+30.3
+31.4
+(3.5
+Other operating costs
+11,645
+32,387
+Guchua Zhungeler
+North China Power Grid Inner Mongolia
+63.8
+57.8
+4.833
+316
+237
+1,320
+Table 6 Volume of Domestic Coal Sales
+Beidian Shengli Energy Company
+12.1
+(28.8
+Ha'erwusu Branch
+Beijing
+6.473
+million tonnes
+%
+million tonnes
+%
+Zheneng
+Baotou Energy Company
+6.8
+10.7
+36.4
+Power
+East China Power Grid
+Zhejiang
+197.4
+186.7
+4.486
+4400
+100
+3,000
+56
+160
+321
+169
+413
+400
+(400)
+domestic sales
+(Restated)
+Shenbao Energy Company
+25.1
+28.7
+(12.5)
+Suizhong Power
+Northeast Power Grid
+Liaoning
+149.0
+139.7
+4.104
+312
+3 600
+YYOU
+Power Grid
+696
+million tonnes
+79.8
+87.7
+(9.0)
+Zhunge'er Energy Company
+30.7
+30.4
+1.0
+Shendong Power
+Northwest/North China/ Inner Mongolia
+226.5
+207.9
+4,084
+347
+259
+4,167
+4,020
+Shipping volume
+8,187
+(15.6)
+7,816
+Personnel expenses
+3,526
+2,104.5
+16.8
+3,592 2,184.2
+(7.1)
+Repair and maintenance
+2,609
+2.104.5
+124
+2,677
+6,657 298.7 223
+13.0
+Depreciation and
+8.517
+2,104.5
+40.5
+17,863 298.7 59.8
+779
+7,534
+4.442
+35.8
+9.6
+༔་ གླུ་བྷའབའ་པ
+Shaanxi Provincial Local
+Shipment turnover
+billion tonnenm
+64.1
+72.2
+(11.2)
+Heidaigou
+30.7
+30.4
+10
+Cost of coal transportation
+38,488
+43,423
+Taxes and surcharges
+12.3
+Taxes and surcharges
+164
+250.7
+2,730
+amortization
+Others
+330
+9.2 2,109 2,184.2
+པརྞྞཎྜ་ཟླནྡྲ རི་རམ་ཎྜན་ སྐྱ་བྷཱ བྷཱབྷཱབྷཱབྷཱ བྷཱ
+253,081
+(178,109)
+64,722
+As at
+31 December 2014
+(Restated
+RMB million
+550,872
+(185,302)
+2014 Restated)
+Unit cost Change in
+unit cost
+RMB/mwh
+176.6
+38,566
+Zhoushan Power
+Domestic sales
+1.6
+625
+South China Power Grid Guangdong
+4,576
+329
+660
+1.9
+2.1
+(9.5
+Mengin Power
+Central China Power Grid Henan
+45.9
+4,058
+309
+347
+1,200
+Chenjiagang Power
+2.6
+East China Power Grid
+Huizhou Thermal
+1.6
+By usage
+Thermal coal
+244.2
+66.9
+285.5
+(145)
+Total production
+280.9
+Metallurgy
+6.0
+1.6
+7.5
+(20.0)
+Chemical (including
+By Regions
+བབ༔
+26
+625
+Indonesia Coal Power
+Jiangsu
+71.0
+174.8
+165.8
+5,079
+308
+342
+2,600
+2,000
+coal slurry)
+Others
+Inner Mongolia
+183.2
+202.2
+(9.4)
+Shenhua Sichuan Energy
+Sichuan Power Grid
+Sichuan
+30.8
+27.8
+Anhui
+74.6
+East China Power Grid
+(9.3
+5,652
+291
+1,320
+306.6
+(84)
+Xuzhou Power
+East China Power Grid
+Jiangsu
+119.0
+113.0
+5,950
+289
+337
+2,000
+31.2
+8.5
+34.4
+Shenwan Energy
+East China Power Grid
+125
+0.2
+Adachai Mine
+0.1
+0.9
+(88.9
+Taicang Power
+East China Power Grid
+Jiangsu
+65.4
+5.452
+1,260
+Eastern China
+26.2
+121.6
+21.2)
+Liiahao Mine
+5.6
+5.9
+(13.9
+(5.1
+244.7
+210.8
+365.5
+100.0
+439.6
+(169)
+Shuiquan Open-cut Mine
+1.1
+0.8
+37.5
+Zhejiang
+36.5
+4.275
+333
+910
+30:3
+30.3
+By region
+Northern China
+57.7
+0.8
+Jinjie Energy
+Shaanxi
+220
+Taishan Power
+Southern China
+Shendong Power Company
+South China Power Grid
+Guangdong
+196.9
+3,938
+5,000
+Northeaster China
+19.1
+52
+23.6
+(19.1)
+Huangyuchuan Mine
+Others
+0.9
+316
+North China Power Grid
+379
+9.5
+169.0
+1554
+7.042
+2,400
+203
+2,400
+Central China and
+38.9
+10.7
+48.9
+(20.4
+Wanli No.1 Mine
+3.1
+(100.0)
+Shenmu Power
+Northwest Power Grid
+Shaanxi
+4,318
+150.5
+1,941 2,104.5
+35.5
+960
+960
+554
+Others
+14,627
+289.3
+ཟླ་སྦེ་ ཟཋ་ཐ་
+milion
+Volume Unit cost Change in
+RMB million RMBA unit cost
+tonnes tonne
+2015
+Power
+output
+43,545 1524 285.7
+39,432 298.7 132.0
+%
+(25.6)
+(6.7)
+Cost dispatch
+Unit cost
+Cost
+2,104.5
+Materials, fuel and power 31,676
+14.9
+15.4
+99
+2,969 298.7
+4,586 298.7
+235
+dispatch
+229.4 54,760 2,184.2
+kwh RMB/mwh RMB million
+2,104.5
+Cost of power output
+million
+RMB 100 million
+7,357 298.7 24.6 (16.3)
+384
+48.269
+2,520
+4,281
+1,021
+Repair and maintenance
+2.674 289.3
+Seaborne coal
+million tonnes
+203.8
+(13.6)
+Cuncaata No. 2 mine
+52
+59
+(11.9
+Panshan Power
+North China Power Grid Tianjin
+54.1
+235.8
+5,104
+41.1
+50.6
+North China Power Grid Inner Mongolia
+Zhunge'er Power
+(57.1)
+0.6
+Others
+1.4
+Depreciation and amortization
+482
+1,060
+1,060
+350
+315
+7.282 289.3
+14.58
+40.76
+12.43
+7.31
+14.22
+20.68
+19.35
+32.79
+41.85
+coal reserve
+(under the PRC
+166.57
+JORC Standard)
+coal reserve
+(under the
+Marketable
+Standard)
+Recoverable
+Unit: '00 million tonnes
+12.77
+Standard)
+97.60
+0.54
+≤0.50%
+0.13
+Coal resources
+(under the PRC
+Approximately
+Long flame coal/
+Shendong Mines
+1
+Ash content
+(average)
+content
+Sulphur
+Calorific value
+of major
+commercial
+coal products
+0.38
+Major types of coal
+No.
+Characteristics of the commercial coal produced by the Company's major mines are as
+follows:
+In 2015, the Company's relevant capital expenditure of mining development and
+exploration amounted to approximately RMB3,539 million (2014: RMB5,647 million),
+which was mainly attributable to the development expenditure of Guojiawan Mine, as
+well as the coal-exploration related expenditure of various mines.
+In 2015, the Company's exploration expenses (which were incurred before the
+conclusion of feasibility study and represented the expenses related to exploration and
+evaluation of coal resources) amounted to approximately RMB96 million (2014: RMB33
+million), which was mainly attributable to the relevant exploration expenses of PT.GH
+EMM Indonesia Project and Watermark Coal Project in Australia.
+Section V Management Discussion and Analysis (Continued)
+2015 Annual Report 41
+81.41
+157.42
+243.13
+Mines
+(kcal/kg)
+Total
+Baorixile Mines
+451.1
+100.0
+351.0
+(17.9)
+(16.6)
+average price
+Note:
+Sales prices of coal in this report are all exclusive of tax.
+In 2015, the sales volume of the Company to the top five domestic customers of coal
+was 42.9 million tonnes, which accounted for 11.7% of the total domestic sales volume.
+In particular, the sales volume to the largest customer was 15.5 million tonnes, which
+accounted for 4.2% of the domestic sales volume. The top five domestic customers of
+coal were primarily coal, power and fuel companies.
+2 By internal and external customers
+2015
+292.6
+2014 (Restated)
+Sales
+Change
+volume Percentage
+Price
+volume Percentage
+Price
+in price
+million
+RMB/
+million
+RMBI
+Sales
+100.0
+370.5
+Total sales volume/weighted
+9.9
+1.9
+0.5
+83.7
+2.1
+1.9
+0.5
+358.3
+7.8
+22
+2.2
+524.3
+26
+(25.0)
+(20.5)
+(61.6)
+(58.4)
+0.5
+100.3
+(9.5)
+(16.6)
+1.7
+636.6
+(6)
+(43.7)
+tonnes
+Baotou Mines
+%
+tonnes
+370.5
+100.0
+292.6
+451.1
+100.0
+351.0
+(16.6)
+In 2015, the sales volume of internal power segment and coal chemical segment
+respectively accounted for 22.8% and 1.2% of the coal segment of the Group,
+representing an increase of 4.7 percentage points and 0.4 percentage points as
+compared with last year, respectively. The Company adopted unified pricing policies
+in coal sales to the internal power segment, and coal chemical segment and external
+customers.
+40 China Shenhua Energy Company Limited
+Section V Management Discussion and Analysis (Continued)
+(3) Production safety
+weighted average price
+(4)
+The Company strengthened the concept of safe production with risk prevention as the
+focus, setting up a database of hazard sources through informationized management
+so as to optimize the risk control and management mechanism and consolidate the
+foundation of safety management. In 2015, the fatality rate per million tonnes of raw
+coal production of the Company was 0.003, enabling the Company to maintain its
+internationally leading position.
+Efforts in ensuring safe coal production are detailed in the 2015 CSR Report of the
+Group.
+Environmental protection
+In 2015, the Group continuously strived to build the brand of "Shenhua Clean Coal"
+featuring the quality of low sulphur, low ash and medium-to-high calorific value, and
+put effort on promoting the action plan of Clean Burning of Coal of Shenhua in areas
+of Beijing-Tianjin-Hebei, Yangtze River Delta and Pearl River Delta. Upholding the
+philosophy of "producing environmentally-friendly coal and constructing ecological
+mines”, the Company actively launched campaigns including conservation of soil and
+water as well as land reclamation and reforestation. The Group invested a total of
+RMB237 million in conservation of soil and water and ecological construction and a
+total of RMB394 million in energy saving and environmental protection projects, and
+paid for a total of RMB62 million in sewage charges. Mining waste water consumption
+amounted to 71.1 million tonnes. At the end of 2015, balance of the "accrued
+reclamation obligations" amounted to RMB2, 197 million, serving as strong financial
+guarantee for ecological construction.
+Efforts in ensuring environmental protection of coal are detailed in the 2015 CSR
+Report of the Group.
+Coal resources
+As at 31 December 2015, the Group had coal resources amounting to 24,313 million
+tonnes and recoverable coal reserve amounting to 15,742 million tonnes under the PRC
+Standard; and the Group's marketable coal reserve amounted to 8,141 million tonnes
+under the JORC Standard.
+Mines
+Shendong Mines
+Zhunge'er Mines
+Shengli Mines
+(5)
+Total coal sales volume/
+(20.4)
+296.5
+%
+tonne
+%
+Sales to external customers
+281.6
+76.0
+293.8
+365.8
+81.1
+356.9
+Sales to internal power segment
+84.6
+22.8
+291.5
+81.5
+18.1
+326.7
+(10.8)
+Sales to internal coal chemical
+segment
+4.3
+1.2
+236.1
+3.8
+0.8
+tonne
+Approximately
+(17.7)
+218.1
+RMB
+RMB
+margin
+Costs profit
+margin Revenue
+profit
+Costs
+RMB
+Revenue
+Gross
+profit
+Gross
+Gross
+Gross
+2014 (restated)
+2015
+profit
+The sales and gross profit of the coal of the Group before elimination on
+consolidation
+million
+%
+The coal sold by the Group is mainly produced in self-owned mines. In
+order to fulfill the needs of customers and adequately make use of railway
+transportation, the Group also sold to external customers after purchasing coal
+from third parties from the surrounding areas of the self-owned mines and
+railways to produce different kinds and level of coal products. As there are many
+kinds of coal products and different ratios of mixture of purchased coal, it may
+be difficult to review the revenue, costs and gross profit of coal in accordance
+with the sources of coal (self-produced coal and purchased coal).
+20.1
+15.7 158,299 126,402 31,867
+91,408 17,005
+108,413
+Total
+4.7
+million million
+285
+15.8
+152,217 120,605 31,612
+10.4 6,082 5,797
+107,041 90,179 16,862
+1,372 1,229
+143
+Domestic
+Export and overseas
+%
+RMB
+RMB
+million million
+RMB
+million
+20.8
+2015 Annual Report | 43
+was greater than the fall
+range of gross profit margin
+in cost of sales, the loss
+107,493
+RMB million
+Cost of sales
+(36.8) Decrease in coal sales volume
+and sales prices
+192,094
+121,458
+RMB million
+161,517
+Revenue
+Main reasons for changes
+Change
+2014
+(Restated)
+2015
+2.
+1. The operating results of the coal segment of the Group before elimination on
+consolidation
+Operating results
+(%)
+to the Group in respect
+of the provision for assets
+impairment of certain coals
+had increased, leading to the
+fact that the fall range of
+profit margin from operation
+(33.4) Decrease in sales volumes of
+self-produced coal and coal
+purchased
+%
+Save as the impact on decrease
+13.6 Decreased by
+8.3 percentage
+points
+from operations
+5.3
+%
+Profit margin
+operations
+Gross profit
+margin
+(75.3)
+6,433
+RMB million
+Profit from
+points
+4.4 percentage
+15.9 Decreased by
+11.5
+26,049
+Section V Management Discussion and Analysis (Continued)
+3.
+Unit production cost of self-produced coal
+Baorixile Mines
+Lignite
+3,200
+Approximately
+19.0%
+≤0.30%
+Approximately
+3,600
+4
+15.3%
+Baotou Mines
+Long flame coal/
+Approximately
+≤0.65%
+non-caking coal
+4,350
+Approximately
+19.5%
+5
+Note:
+Approximately
+Approximately
+44 China Shenhua Energy Company Limited
+In 2015, costs of coal purchased by the Company from third parties was
+RMB17,264 million (2014: RMB43,545 million (restated)), representing a
+year-on-year decrease of 60.4%. The decrease was mainly due to the decrease
+in the purchasing price of coal and the Company's reduction in sales of coal
+purchased from third parties according to the supply and demand in the coal
+market.
+The Company's coal purchased from third parties includes coal purchased from
+the surrounding areas of the self-owned mines and railways, domestic trading
+coal, imported and re-exported coal.
+5,400
+12.5%
+2
+Zhunge'er Mines
+≤0.75%
+Long flame coal
+<0.50%
+Approximately
+4,500
+26.7%
+3
+Shengli Mines
+Lignite
+Approximately
+The above calorific value, sulphur content and ash content of major commercial coal products produced
+by each mine may be inconsistent with the characteristics of the commercial coal products produced by
+individual mine and those of the commercial coal products sold by the Company due to such factors as
+geological conditions, mining area, coal washing, selecting and processing, transportation loss and coal
+blending ratio.
+42 China Shenhua Energy Company Limited
+Cost of coal purchased from third parties
+payment for staffs and the
+Increase in base of social security
+arising from decrease in production
+volume of coals
+(16.3) Decrease in tunneling footage
+and prices in fuel and electricity
+14.9
+15.4
+17.7
+decrease in sales volume of
+self-produced coal
+Personnel expenses
+20.6
+Materials, fuel and power
+Main reasons for changes
+Change
+(%)
+2014
+(Restated)
+2015
+Unit: RMB/tonne
+24.6
+(7.1) Decrease in maintenance and
+repair arranged in the year
+Increase in fixed assets in respect of
+maintenance and safety
+(15.6) Classification of price adjustment fund
+and mineral resources compensation
+as "taxes and surcharges" under
+resource tax due to the reform
+of resource tax, and decrease in
+mineral construction cost and
+opening mining extraction cost.
+4.
+Other costs consist of the following three components: (1) expenses directly
+related to production, including coal washing, selecting and processing expenses,
+and mining engineering expenses, etc., accounting for 57%; (2) auxiliary
+production expenses, accounting for 12%; (3) land requisition and surface
+subsidence compensation, environmental protection expenses, fees levied by
+local government, etc., accounting for 31%.
+(6.7)
+132.0
+123.2
+Unit production cost of
+self-produced coal
+59.8
+50.5
+Other costs
+amortization
+13.0
+22.3
+25.2
+Depreciation and
+9.9
+9.2
+Repairs and maintenance
+non-caking coal
+1.0
+(75.6)
+557.0
+5.6
+33.0
+Increase in bank acceptance bills
+receivable
+receivable of the coal segment
+Prepaid expenses and other
+19,351
+3.5
+29,308
+506
+5.3
+current assets
+Decrease of prepayments arising
+from decrease in the volume of
+Restricted bank deposits
+4,611
+0.8
+80
+6,271
+1.1
+Short-term borrowings
+(34.0)
+12,812
+30,850
+41,019
+2,964
+0.5
+1,540
+0.3
+63
+92.5
+Deferred tax assets
+2,674
+90
+7.3
+0.5
+0.4
+28.3
+Inventories
+12,816
+2.3
+15,980
+2.9
+29
+Accounts and bills
+2,084
+2.3
+18,441
+33
+Increase in long-term borrowings
+from power and transportation
+segments
+Issuance of US dollar bonds by the
+Company
+Accrued expenses and other
+47,519
+8.5
+40,366
+7.3
+rights arising from the decrease in
+production volume of coal
+133
+Current portion of
+23
+203
+00
+0.0
+280
+0.1
+10
+long-term liabilities
+payables
+(27.5) Decrease in of payables of mining
+3.8
+Increase in balance of deposits
+3.3
+Short-term debentures
+4,998
+0.9
+9,994
+1.8
+Accounts and bills payable
+33,990
+6.1
+39,011
+7.1
+material trading business, and
+decrease of short-term loans issued
+by Shenhua Finance Company
+(26.5) Decrease in mandatory reserves
+of Shenhua Finance Company
+placed in the central bank, arising
+from the decrease in the reserve
+requirement ratio
+(30.5) The Company issued bonds in place
+of short-term borrowings
+(50.0) Maturity of issued super short-term
+commercial paper
+(12.9) Decrease in bank acceptance bills
+and payables of the coal segment
+17
+17.7
+arising from decrease in
+coals purchased
+Intangible assets
+(19.8) Decrease in coal inventory and
+supplies
+differences of impaired losses of
+accrued assets
+Increase in deductible temporary
+Capitalized research and development expenditure in the period
+(RMB million)
+Total research and development expenditure (RMB million)
+Ratio of capitalized research and development expenditure (%)
+Percentage of total research and development expenditure to revenue (%)
+Number of research and development personnel in the Company (number
+of person)
+The ratio of research and development personnel
+to the total number of persons in the Company (%)
+496
+274
+770
+35.6
+0.4
+Expensed research and development expenditure in the period
+(RMB million)
+2,911
+In 2015, the research and development expenditure of the Group representing a year-on-
+year decrease of 28.8% (2014: RMB1,081 million (restated)) is mainly used for technological
+research in different aspects including heavy-loaded transportation, high efficiency usage
+of coal, high efficiency coal mining equipment and comprehensive use of coal ash after
+combustion.
+Cash flow
+(1)
+(2)
+(3)
+Net cash generated from operating activities: a year-on-year decrease of 19.8% in 2015,
+of which, net cash generated from operating activities of Shenhua Finance Company
+represented a year-on-year increase of RMB10,022 million, which was mainly due to
+strengthened management of credit risk, increase in deposits and decrease in loans
+by Shenhua Finance Company. Excluding the effects of Shenhua Finance Company,
+net cash generated from operating activities of the Group represented a year-on-year
+decrease of 33.8%. This was mainly due to the decrease in net cash inflow arising from
+a year-on-year decrease of net profits.
+Net cash used in investing activities: net cash outflow in 2015 represented a
+year-on-year decrease of 40.3%. This was mainly due to the decrease in cash paid for
+acquisition of long-term assets.
+Net cash used in financing activities: net cash outflow in 2015 represented a
+year-on-year decrease of 16.4%. This was mainly due to the year-on-year increase in net
+amounts generated by external debt financing activities.
+Explanation on the material changes in profit incurred from non-principal business
+3.0
+Research and development investment
+IV.
+III.
+Section V Management Discussion and Analysis (Continued)
+II.
+Other items of consolidated statement of profit or loss and other comprehensive income
+(1)
+(2)
+(3)
+(4)
+(5)
+(6)
+(7)
+(8)
+Selling expenses: Selling expenses of the Group were mainly expenses of sales
+institutions and other expenses of transportation and loading in the process of sales,
+representing a year-on-year decrease of 26.4% in 2015, which was mainly attributable
+to the decrease in sales volume of coals and the lower loading charges at purchased
+coal stations.
+General and administrative expenses: representing a year-on-year increase of 9.9%
+in 2015, which was mainly attributable to the operation of the self-developed
+informatization system, an increase in depreciation and amortization resulting from
+the increasing suspended mines, and increase of expensed research and development
+expenditure.
+Other gains and losses: representing a year-on-year increase of 660.5% in 2015, which
+was mainly attributable to the unfavorable situation in the coal industry and the
+upgrade and renovation of power generators. Pursuant to the assessment result of asset
+impairment at the end of 2015, the Group made provision for impairment on parts of
+fixed assets, construction in progress and supplies. Please refer to the announcement of
+the Company dated on 29 January 2016 for details.
+Other income: representing a year-on-year increase of 76.7% in 2015, which was mainly
+attributable to the increase in government grants for railway and power segments.
+Other expenses: representing a year-on-year increase of 49.4% in 2015, which was
+mainly attributable to the increase of expenses of donation for public welfare.
+Interest income: representing a year-on-year decrease of 24.3% in 2015, which was
+mainly attributable to the continued decrease of the prime deposit rate.
+Finance costs: representing a year-on-year increase of 14.9% in 2015, which was mainly
+attributable to the increase in the exchange loss in bonds denominated in USD arising
+from the appreciation of USD, and the exchange loss in borrowings denominated in
+Japanese Yen arising from the appreciation of Japanese Yen. For the analysis on the
+risk of exchange rate of the Group, please refer to "37. Financial Instruments" in the
+notes to the consolidated financial statement in the report.
+Income tax: representing a year-on-year decrease of 25.2% in 2015, and the average
+rate of income tax in 2015 was 27.7% (2014: 20.7%, (restated)), with an increase of
+7.0 percentage points, which was mainly attributable to part of the difference in
+deductible time incurred by provision for impairment losses of certain assets in the
+period and part of the deductible taxation losses incurred by operation losses of
+certain branches of subsidiaries were not recognized as deferred tax assets because of
+the uncertainty of the pay-back period, and the decrease in percentage of profits in
+the coal segment, which is entitled to more preferential tax rates, and the increase in
+percentage of profits in the power and transportation segments, which are entitled to
+less preferential tax rates.
+2015 Annual Report 35
+Section V Management Discussion and Analysis (Continued)
+(III)
+Long-term borrowings
+✓ Applicable
+Influenced by the depression in the coal industry and the upgrade and renovation of power
+generation units, pursuant to the assessment result of asset impairment at the end of 2015, the
+Group made provision for impairment of RMB5,773 million on parts of fixed assets, construction in
+progress and supplies.
+339,326
+60.6
+292,262
+31
+53.1
+Construction in progress
+33,610
+00
+6.0
+Property, plant and
+equipment
+78,988
+43
+Unit: RMB million
+Main reasons for changes
+16.1
+Increase in fixed assets due to new
+investments in transportation and
+power segments
+(57.4) Completed construction assets
+in transportation and
+power
+segments were put into use
+The self-built information system
+was put into use
+14.3
+(%)
+(%)
+(Restated)
+36 China Shenhua Energy Company Limited
+Section V Management Discussion and Analysis (Continued)
+(VI) Analysis on Assets and Liabilities
+Consolidated statement of financial position
+Percentage
+Amount
+Percentage
+of total assets
+Amount
+at the end
+of total assets
+at the end
+at the end
+at the end
+of the previous
+of the previous
+Item
+of the period
+of the period
+period
+period
+Change of
+the amount
+(%)
+Not Applicable
+54,179
+placed with Shenhua Finance
+Company
+44,619
+million tonnes
+%
+Price
+RMB/tonne million tonnes
+volume
+of total sales
+Price
+volume
+Price
+%
+RMB/tonne
+%
+%
+of total sales
+I.
+365.5
+98.7
+292.9
+439.6
+97.4
+346.3
+(16.9)
+(15.4)
+(1) Self-produced coal
+354.1
+95.6
+292.0
+Domestic sales
+406.2
+volume
+2014 (Restated)
+Proportion
+369.3
+1.2
+107,506
+90,234
+17,272
+907
+1,174
+(267)
+370.5
+108,413
+91,408
+17,005
+As at the end of the Reporting Period, the coal inventories of the Group were
+approximately 22.6 million tonnes, representing a decrease of 22.9% as compared with
+29.3 million tonnes as at the end of the last year.
+Change
+Sales
+(2)
+The Group executed specialized division of labour management. Various mining
+areas are responsible for production of coal while Shenhua Trading Group is centrally
+responsible for the sales of coal. Users are from different industries such as power,
+metallurgy, chemical and construction materials. In 2015, the Group scientifically
+designed marketing strategies, created innovative sales model, and on the basis of
+maintaining prices ensured the largest ratio of sales of self-produced coal and the best
+ratio of market share of seaborne.
+Affected by factors including decrease in demands of downstream industries, weather,
+and structural adjustment of energy, the sales volume of coal of the Group in 2015
+amounted to 370.5 million tonnes (2014: 451.1 million (restated)), representing a
+year-on-year decrease of 17.9%; among which the domestic sales volume of coals
+amounted to 365.5 million tonnes, accounting for 10.6% of the domestic sales volume
+of coals for the same period which amounted to 3.46 billion tonnes¹; the weighted
+average coal sales price was RMB292.6/tonne (2014: RMB351.0/tonne (restated))
+(exclusive of tax), representing a year-on-year decrease of 16.6%.
+The Group enhanced the work on electronic coal trading with the help of Shenhua Coal
+Trading Network (https://www.e-shenhua.com) developed by the Group. In 2015, the
+amount of coal trading through Shenhua Coal Trading Network reached 189.7 million
+tonnes (2014: 248.8 million (restated)). Development of internet coal trading can help
+reduce transaction costs.
+1
+Data source: China Coal Transportation & Sale Society
+2015 Annual Report 39
+Section V Management Discussion and Analysis (Continued)
+1 By source of coal and regions
+2015
+Sales
+Proportion
+Sales
+Sales of coal
+90.0
+342.2
+(12.8)
+(16.3)
+trading coal
+(II) Sales of imported
+0.2
+0.1
+412.7
+6.9
+1.5
+458.8
+(97.1)
+(10.0)
+coal
+(57.7)
+II.
+III.
+Overseas coal sales
+1.
+EMM Indonesia
+2.
+Re-export trade
+2822
+1.2
+0.3
+442.9
+1.6
+0.4
+Export Sales
+380.1
+5.9
+26.5
+(14.7)
+and purchased
+coal
+1.
+Direct arrival
+151.5
+40.9
+220.7
+171.9
+38.1
+251.3
+(11.9)
+(12.2)
+2.
+Seaborne
+202.6
+54.7
+345.3
+234.3
+51.9
+408.9
+(13.5)
+(15.6)
+(II) Sales of domestic
+11.2
+3.0
+318.0
+280.9
+9.7
+Total
+RMB million
+of the previous
+of the previous
+Change of
+period
+period
+the amount
+(%)
+at the end
+of the period
+(Restated)
+(%)
+Long-term payable
+2,523
+0.5
+1,705
+63
+0.3
+(%)
+Main reasons for changes
+of the period
+at the end
+8.1
+21.4
+Bonds
+9,651
+1.7
+0
+0.0
+Item
+N/A
+Section V Management Discussion and Analysis (Continued)
+Percentage
+Percentage
+Amount
+at the end
+of total assets
+Amount
+at the end
+of total assets
+2015 Annual Report 37
+Thermal coal
+Coking coal
+Section V Management Discussion and Analysis (Continued)
+Not Applicable
+Equity attributable to
+equity holders of the
+Company
+298,068
+53.2
+300,698
+54.6
+48.0
+Financial appropriation received by
+Zhunge'er Mines demonstration
+base for national mineral resources
+comprehensive utilization, leading
+to an increase in deferred income
+with more than one year
+(0.9) Decrease in reserves arising from
+paying for price of the acquisition
+under the common control Note
+Note: According to the International Financial Reporting Standards, the acquisition of Ningdong Power, Xuzhou Power and
+Zhoushan Power by the Group in 2015 was a business merger under common control. The Group increased equity at the
+beginning of the year based on the book value of equity interests of the acquired three power plants, and decreased
+the equity interests based on the payment of price upon completion of the acquisition, leading to a decrease in equity
+attributable to equity holders of the Company when compared with that at the beginning of the period. As at the end
+of 2015, for the reserve of the Group, the reserve balance of maintenance and production funds increased by RMB1,682
+million as compared with the beginning of the year.
+Operation results by business segment
+(V)
+1.
+Coal segment
+✓ Applicable
+(1)
+The majority of the coal products produced and sold by the Group were mainly thermal
+coal. In 2015, the Company actively responded to the market changes, organized
+production, enhanced coal quality management, and optimized product structures
+in accordance with the market demand and maximized efficiency. Shendong Mines
+adopted a number of measures to improve the quality of coal to guarantee efficiency;
+Zhunge'er Mines strengthened the overall progress management, and reasonably
+adjusted the quality and structure of coal to effectively control costs; Shengli and
+Baorixile Mines optimized the organization of production and sales to achieve cost
+reduction and expenditure saving. Guojiawan Coal Mine Project, which is under
+construction, entered the stage of joint trial operation.
+Production and operation and construction
+Production
+Volume
+38
+RMB million
+China Shenhua Energy Company Limited
+Section V Management Discussion and Analysis (Continued)
+The Group has independently operated railway collection and distribution channels
+centralized and distributed in the rim of self-owned core mines, which can satisfy the
+transportation of coal in the core mines.
+Production and sales volumes of all coals in 2015 of the Group are as below:
+Types of coal
+During the year, commercial coal production volume of the Group reached 280.9 million
+tonnes (2014: 306.6 million tonnes (restated)), representing a year-on-year decrease of
+8.4%. During the year, the coal segment of the Group accomplished total footage of
+advancing tunnels of 564 thousand meters (2014: 643 thousand meters), representing
+a year-on-year decrease of 12.3%. Specifically, Shendong Mines recorded total footage
+of advancing tunnels of 547 thousand meters, representing a year-on-year decrease of
+12.6%; and Baotou Mines recorded total footage of advancing tunnels of 17 thousand
+meters, representing a year-on-year stabilization.
+Million tonnes
+Sales Volume
+Million tonnes
+Revenue
+Cost of sales
+Gross profit
+RMB million
+2014
+(Restated)
+2015
+(11.1)
+The port segment strengthened the connection of upstream and downstream in 2015
+by improving the efficiency of unloading vessels to ensure steady and integrated
+operation. Huanghua Port organized in scientific way by improving its process
+efficiency to expedite the turnover of vessels and yard, and seaborne coal volume for
+the year reached 111.6 million tonnes. Shenhua Tianjin Coal Dock overcame the adverse
+impacts of crossover operation of infrastructure, equipment renovation and production
+process by expanding its efforts in production organization, and seaborne coal volume
+for the
+year reached 40.3 million tonnes.
+Main reasons for changes
+The operating results of the port segment of the Group before eliminations on
+consolidation are as follows:
+Change
+(%)
+Decrease in sale of coals
+Cost of sales
+RMB million
+points
+resulted in a decrease in
+railway transportation
+volume
+Newly-constructed railways
+such as Zhunchi Railway
+and Bazhun Railway
+transferred into fixed
+assets resulted in an
+increase in depreciation
+of fixed assets, and
+30,626
+increase in transportation
+cost of providing
+transportation service for
+external customers
+In 2015, the revenue generated from the internal transportation services provided by
+the railway segment for the Group amounted to RMB23,812 million (2014: RMB27,404
+million (restated)), representing a year-on-year decrease of 13.1%, accounting for
+87.4% of the revenue of the railway segment (2014: 89.5% (restated)).
+In 2015, the unit transportation cost in the railway segment was RMB0.071/tonne km
+(2014: RMB0.063/tonne km (restated)), representing a year-on-year increase of 12.7%,
+mainly due to a decrease in transportation turnover volume of self-owned railway.
+52 China Shenhua Energy Company Limited
+Section V Management Discussion and Analysis (Continued)
+4.
+Port Segment
+(1)
+Overview of production and operations
+(2)
+operations
+In 2015, to ensure steady and integrated operation, the Group further increased
+the seaborne coal sales through the self-owned ports according to the principle of
+maximization of overall efficiency. The proportion of the seaborne coal sales through
+the self-owned ports increased to 77.8% to the total seaborne coal sales from 73.8%
+last year.
+Decreased by
+9.7 percentage
+46.7
+14,595 14,742
+(1.0)
+Gross profit
+margin
+%
+46.4
+51.9
+Decreased by
+5.5 percentage
+Profit from
+RMB million
+10,070
+14,298
+points
+(29.6)
+operations
+Profit margin
+%
+37.0
+Analysis of operating results
+from
+53,411
+RMB million
+%
+Gross profit
+margin
+costs
+fuel price and charter
+transportation volume,
+Decrease in external
+(31.5)
+2,570
+12.1
+1,760
+Cost of sales
+Decrease in shipping volume
+and shipping costs
+(34.0)
+3,034
+2,002
+RMB million
+Revenue
+(%)
+RMB million
+Main reasons for changes
+15.3
+3.2 percentage
+27,232
+100.0
+54 China Shenhua Energy Company Limited
+In 2015, the unit transportation cost of the shipping segment was RMB0.027/
+tonne nautical mile (2014: RMB0.036/tonne nautical mile (restated)), representing a
+year-on-year decrease of 25.0%, mainly due to a decrease in external transportation
+costs, fuel price and charter costs.
+points
+operations
+Decreased by
+5.3 percentage
+from
+Decreased by
+11.9
+%
+Profit margin
+operations
+points
+(63.2)
+361
+133
+RMB million
+Profit from
+6.6
+Revenue
+Change
+2015
+RMB million
+Profit from
+6.0 percentage
+Decreased by
+52.2
+46.2
+%
+Gross profit
+margin
+1,350
+Part of the Huanghua
+1,995
+2,026
+RMB million
+Cost of sales
+Decrease in turnover volume
+of ports
+(9.7)
+4,176
+3,769
+1.6
+2014
+(Restated)
+1,729
+operations
+The operating results of the shipping segment of the Group before eliminations on
+consolidation are as follows:
+Operating results
+The shipping segment improved its service quality by strengthening the arrangement
+vessels and coordinating with coal sales activities to contribute to the integrated
+operation, and implemented the full-trip service model of combined transportation
+by seas and rivers by commencing multi-cargo transportation and round-trip
+transportation. In 2015, shipping volume amounted to 79.8 million tonnes and
+shipment turnover amounted to 64.1 billion tonne nautical miles.
+(2)
+(1) Overview of production and operations
+Shipping Segment
+5.
+Section V Management Discussion and Analysis (Continued)
+points
+(21.9)
+2015 Annual Report 53
+assets resulted in an
+increase in relevant
+depreciation costs
+Port (Phase IV) project
+transferred into fixed
+Decreased by
+5.6 percentage
+points
+from
+operations
+41.4
+35.8
+%
+Profit margin
+In 2015, the revenue generated from the internal transportation services provided
+by the port segment for the Group amounted to RMB3,452 million (2014: RMB3,877
+million (restated)), representing a year-on-year decrease of 11.0% and accounting for
+91.6% (2014: 92.8% (restated)) of the revenue of the port segment. Costs of internal
+transportation services provided for the Group amounted to RMB1,810 million.
+RMB million
+Section V Management Discussion and Analysis (Continued)
+(%)
+27.08
+(3.1)
+24.94
+25.73
+(3.1)
+Liaoning
+14.90
+14.45
+3.1
+13.96
+13.56
+2.9
+coal-fired power
+14.90
+14.45
+3.1
+13.96
+13.56
+2.9
+26.23
+power
+coal-fired
+(3.1)
+Henan
+4.87
+6.16
+(20.9)
+4.59
+5.79
+(20.7)
+coal-fired power
+4.87
+Inner Mongolia
+6.16
+4.59
+5.79
+(20.7)
+Jiangsu
+26.23
+27.08
+(3.1)
+24.94
+25.73
+(20.9)
+23.51
+25.86
+(9.1)
+(4)
+Section V Management Discussion and Analysis (Continued)
+2015 Annual Report 47
+9,130
+Data source: National Energy Administration
+1
+Total
+950
+Liaoning Province
+Beijing City
+During the reporting period, the Company shut down the Beijing Thermal Coal-fired
+Power Generators (400MW) pursuant to with the request of the Beijing Municipal
+Commission of Development and Reform.
+Beijing Gas Thermal Power Project
+Province
+Suizhong County,
+Suizhong Power Increment Renovation Project
+2x660
+2x350
+Xinzhou City, Shanxi
+Province
+Chongqing City
+2x1,000
+Wanzhou District,
+Dianta Power Plant of Shendong Power Company Yulin City, Shaanxi
+160
+(9.6)
+Utilization Rate of power generation equipment
+Average utilization hours
+21.09
+23.44
+(10.0)
+coal-fired power
+23.51
+25.86
+(9.1)
+21.09
+23.44
+Under the circumstances of a slowdown in the growth of the total power consumption
+of society, The Group's power generators maintained a relatively high loading level,
+of which the coal-fired generators operated with an average utilization hours of
+4,631 hours for the year, 302 hours above the national average of 4,329 hours¹. With
+further improvement on the efficiency of power generation, the power consumption
+rate of the power plant presented a downward trend year-on-year. As at the end of
+the reporting period, the installed capacity of circulating fluidized bed generating
+units of the Group reached 7,024MW, which was 13.4% of the installed capacity of the
+coal-fired units of the Group.
+(10.0)
+3.48
+4.21
+2014
+2015
+Power type
+(Hour)
+(5)
+(%)
+Power consumption ratio of power plant
+Ningxia
+Chongqing Wanzhou Port and Power Integration
+Project of Shendong Power Company
+Hequ Low Calorific Value Coal Power Project of
+Shendong Power Company
+33.33
+(9.4)
+Revenue
+(%)
+Main reasons for changes
+Change
+2014
+(Restated)
+2015
+2.
+1. The operation results of the power segment of the Group before elimination on
+consolidation:
+Analysis of operation results
+In 2015, the completed capitalized expenses of the power segment of the Group were
+RMB19.80 billion, primarily used in projects including the Guohua Shouguang Power
+Plant Project, and Phase II of Anqing Power Expansion Project of Shenwan Energy
+Company, and technical reformation expenditure on environmental protection at
+plants.
+(7)
+Capitalized Expenses
+(6)
+Section V Management Discussion and Analysis (Continued)
+48 China Shenhua Energy Company Limited
+Data source: China Electricity Council
+1
+The power segment expedited the clean energy development strategy and continued
+to expand its efforts in environmental protection. The total investment of energy
+saving and environmental protection amounted to RMB3,174 million, among which,
+investment in environmental protection amounted to RMB1,493 million, and the total
+sewage fees amounted to RMB154 million. As at the end of the reporting period,
+the desulfurization renovation for all of its national coal-fired power generators
+of the Group was completed. The proportion of coal-fired power generators with
+denitrification equipment in operation which had passed completion verification
+reached 92%, representing a leading position in the industry. The power segment
+strived to implement the "ultra low-emission" renovation of coal-fired generators. As at
+the end of the reporting period, thirty-five "ultra-low-emission" coal-fired generators
+with total capacities of 20,310MW were newly constructed and renovated, which was
+38.9% of the total installed capacity of coal-fired power generator of the Group. The
+standard coal consumption for average power sold of coal-fired power generators of
+the Group for the year was 318 gram/kwh, representing a decrease of 2 gram/kwh as
+compared with the same period last year.
+Environmental protection
+RMB million
+73,053
+80,150
+(8.9)
+Profit margin
+operations
+points
+(10.1)
+20,933
+18,810
+RMB million
+Profit from
+percentage
+31.8
+percentage point
+%
+fuel of power plants
+Decrease in purchase costs of
+(11.9)
+56,517
+49,788
+RMB million
+Cost of sales
+dispatch and power output
+sales prices
+Decrease in power output
+Gross profit
+margin
+Decreased by 0.05
+6.14
+6.09
+4.5
+1,415
+1,478
+2. Wind power
+percentage point
+Decreased by 0.05
+6.19
+6.14
+(11.1)
+1.08
+5,211
+1. Coal-fired power
+Change
+2014
+(Restated)
+(%)
+(Restated)
+2015
+Change
+32.30
+35.64
+4,631
+30.12
+1.16
+percentage point
+(11.1)
+5,163
+4,591
+Weighted Average
+percentage point
+Decreased by 0.09
+2.24
+2.15
+16.9
+Decreased by 0.08
+2,471
+4. Gas-fired power
+percentage point
+Decreased by 0.02
+0.27
+0.25
+0.8
+5,321
+5,364
+3. Hydropower
+2,889
+%
+Province
+Anqing City, Anhui
+(13.8)
+5.87
+5.06
+(13.6)
+6.26
+5.41
+Tianjin
+0.0
+0.65
+0.65
+0.0
+0.67
+0.67
+hydropower
+(24.4)
+3.69
+2.79
+(24.5)
+4.08
+coal-fired power
+5.41
+6.26
+(13.6)
+350
+395
+322148331722233222222222222
+(11.1)
+5.97
+5.31
+(12.1)
+6.51
+5.72
+3.08
+coal-fired power
+5.97
+5.31
+(12.1)
+6.51
+5.72
+Xinjiang
+(13.8)
+5.87
+5.06
+(11.1)
+coal-fired power
+(20.7)
+4.34
+0.95
+coal-fired power
+(5.5)
+0.91
+0.86
+(5.0)
+1.00
+0.95
+Shanxi
+1.00
+(18.0)
+3.14
+(17.3)
+4.21
+3.48
+coal-fired power
+(18.0)
+3.83
+3.14
+(17.3)
+3.83
+350
+(5.0)
+0.91
+3.44
+(21.1)
+4.75
+3.75
+Sichuan
+(3.8)
+20.97
+20.17
+(3.8)
+0.86
+22.95
+coal-fired power
+(3.8)
+20.97
+20.17
+(3.8)
+22.95
+22.08
+Shaanxi
+(5.5)
+22.08
+2x1,000
+Zhejiang
+29.61
+44,477
+2015
+31 December
+Gross
+installed
+capacity as at
+Unit: MW
+during the
+reporting
+period
+capacity
+increased/
+(decreased)
+Installed
+(Restated)
+2014
+Gross installed
+capacity as at
+31 December
+during the reporting period
+Name of projects put into operation
+Total
+4. gas-fired power
+3. hydro power
+2. wind power
+1. coal-fired power
+Power type
+7,780
+52,257
+16
+0
+Phase II of Anqing Power Generation Project of
+Shenwan Energy Company
+2x1,000
+Shishi City, Fujian
+Province
+Phase II of Shenfu Hongshan Thermal Power
+Plant Project
+(mw)
+capacity
+installed
+additional
+Scale of
+At the end of the reporting period, the total installed capacity of the Group reached
+54,128 mw which represented an increase of 19.2% year-on-year, accounting for
+3.6% of 1.51 billion kw¹ of the installed capacity of the total power generation of
+society; among which, the total installed capacity of the coal-fired power generators is
+52,257mw, which was 96.5% of the total installed capacity of the Group.
+Location
+8,730
+45,398
+1,730
+950
+780
+125
+0
+125
+16
+54,128
+(3) Installed capacity
+Section V Management Discussion and Analysis (Continued)
+46 China Shenhua Energy Company Limited
+698
+(6.4)
+1.88
+1.76
+(6.7)
+1.93
+1.80
+natural gas power
+(14.8)
+Indonesia
+26.19
+(14.6)
+27.68
+23.63
+coal-fired power
+409
+(14.3)
+28.07
+24.07
+(14.1)
+22.31
+25.43
+1.98
+(2.5)
+Revenue
+334
+(3.6)
+218.42
+210.45
+(3.7)
+234.38
+225.79
+Total
+2.03
+431
+1.81
+1.76
+(2.5)
+2.03
+1.98
+coal-fired power
+(2.8)
+1.81
+1.76
+(2.8)
+25.7
+29.5 Increased by 2.3
+from
+560
+773
+(27.6)
+Total
+225.79
+234.38
+(3.7) 210.45
+218.42
+(3.6)
+334
+354
+(5.6)
+Data source: National Energy Administration
+2015 Annual Report 45
+Section V Management Discussion and Analysis (Continued)
+2.
+Classified by operating area
+Power generation
+100.0
+73.9
+1.88
+3.27
+73.6
+0.02
+0.02
+0.0
+598
+598
+0.0
+3.
+hydro power
+0.67
+46,123
+0.67
+0.65
+0.65
+0.0
+232
+234
+(0.9)
+4. gas-fired power
+3.35
+1.93
+0.0
+plant
+dispatch of coal-fired power
+Total cost of power output
+Personnel expenses
+(20.1)
+70.2
+37,479
+65.0
+29,958
+fuel and power
+%
+%
+3,477
+% RMB million
+over 2014
+26.1 Decreased by 0.4 Increase in impairment of
+Costs Percentage
+in 2015
+Changes
+2014 (restated)
+2015
+Raw material,
+Analysis on cost of sale of power of coal-fired power plant of the Group before
+elimination on consolidation
+RMB million
+0.0
+7.5
+6.6
+(10.6)
+3.9
+2,077
+4.0
+1,856
+Others
+8.5
+14.4
+7,678
+3,546
+18.1
+Depreciation and amortization
+(4.9)
+4.9
+2,631
+5.4
+2,503
+Repair and maintenance
+Power output dispatch
+(1.9)
+8,329
+3.
+0.02
+wind power
+183
+15/200
+129
+Tahan Railway.
+Zhunchi Railway
+Bazhun Railway
+year)
+(km)
+(Million tonnes/
+long-term
+Length
+operation in reporting period
+Project be commenced
+capacity for
+short-term/
+Designed
+transportation
+(3)
+Progress of projects
+(2)
+Section V Management Discussion and Analysis (Continued)
+50/200
+78
+11/38
+During the reporting period, the Group continued to advanced the construction work
+of railways under construction such as Huangda Railway.
+Main reasons for changes
+Change
+2014
+(Restated)
+2015
+The operation results of the railway segment before elimination on consolidation in
+2015 are as follows:
+Operating results
+(4)
+Section V Management Discussion and Analysis (Continued)
+2015 Annual Report 51
+50 China Shenhua Energy Company Limited
+To establish sound and flexible pricing strategies and efficient customer service
+system.
+To try to commence incorporating the railway in the community of the areas
+with rich coal resources in order to expand the sources of coal resources.
+To intensify the endeavors in expanding the external customer base of coal
+transportation and offer seaborne transportation services of coal for external
+users. Currently, the Group has started to work with a certain coal company in
+western Inner Mongolia for coal transportation services amounting to 12 million
+tonnes/year.
+4.
+3.
+2.
+1.
+To fully utilize the existing transportation resources, the Group plans to progressively
+open the transportation business to external companies in 2016, provided that there
+will not be any impact on the self-owned coal segment transportation and sales
+businesses. The principal measures include:
+Railway transportation is one of the core competitive strengths that distinguish the
+Group from other coal companies. In 2015, the overall transportation capabilities
+of the railway transportation network of the Group showed rather significant
+improvements. After Bazhun Railway and Zhunchi Railway commenced operations,
+"Baoshen-Shenshuo" and "Bazhun-Dazhun-Zhunchi”, both being the upstream
+transportation channels, developed conditions for further increase in the transportation
+capacity of the Shuohuang Railway channel. As at the end of 2015, the Group
+controlled and operated the ring and radial railway transportation network at the
+principal coal bases that were located mainly in "Western Shanxi, Northern Shaanxi
+and Southern Inner Mongolia”, with an aggregate mileage of railway in operation of
+2,155km.
+Operating outlook
+To continue to promote reverse transportation and non-coal transportation
+businesses to thoroughly unearth the import and export resources along the
+railway and surrounding the areas of the ports.
+On the premise of protecting the demand of self-owned transportation. The Company
+strived to commence the reverse transportation and non-coal cargo transportation such
+as mines, chemical fertilizers, steel and iron and containers, and effectively utilized
+the existing capacity to increase revenue. During the reporting period, the Group
+provided transportation services for third parties and generated transportation revenue
+amounting to approximate RMB3,420 million (2014: RMB3,222 million (restated)),
+representing a year-on-year increase of 6.1%.
+The railway segment distributed transportation resources reasonably by optimizing the
+production organization to overcome the adverse impact of severe weather in order
+to guarantee efficient and smooth transportation. In 2015, the newly built railways
+such as Bazhun Railway and Zhunchi Railway were put into operation one by one;
+the operating mileage of self-owned railways of the Group reached 2,155 km. The
+transportation turnover of self-owned railways for the year was 200.1 billion tonne km,
+representing a year-on-year decrease of 10.6%, which accounted for 82.9% of the total
+turnover (2014: 83.1% (restated)).
+Overview of production and operations
+2014 Change
+(Restated)
+2015
+2014
+Change
+(%)
+(Restated)
+(%)
+1
+1.
+(%)
+coal-fired power
+231.76
+(4.3)
+206.51
+215.87
+(4.3)
+331
+350
+(5.4)
+2.
+221.75
+0.02
+2015
+2015
+(1)
+Railway segment
+The power segment consumed a total of 88.4 million tonnes of the Group's coal,
+accounting for 91.9% of the 96.2 million tonnes of the thermal coal consumption
+of the power segment of the Group in 2015 (2014: 88.7% (restated)).
+(13.6)
+The sales volume of coal purchased from third parties was 81.2 million tonnes
+(2014: 152.4 million tonnes (restated)), representing a year-on-year decrease
+of 46.7%, and its proportion of total sales volume of coal decreased to 21.9%
+from 33.8% (restated) in 2014. The decrease was mainly attributable to the fact
+that to ensure the sales of coal of the self-owned mines, The Group reduced the
+amount of coal procured for the surrounding areas of the self-owned mines and
+along the railroad.
+2.
+Power segment
+(1)
+Production and operations
+2014 Change
+(Restated)
+In 2015, the power segment continued to expedite the "ultra low-emission" renovation;
+maintained the utilization hours of power generators at a high level through measures
+including expanding its efforts in marketing and increasing the sale of straight power
+supply. The gross power generation achieved 225.79 billion kwh (2014: 234.38 billion
+kwh (restated)), representing a year-on-year decrease of 3.7%; and total power output
+dispatch of 210.45 billion kwh (2014: 218.42 billion kwh (restated)), representing a
+year-on-year decrease of 3.6%, accounting for 3.8% of 5,550 billion kwh of the total
+power consumption of society at the same period.
+(2)
+1.
+Classified by power type
+Gross power generation
+(billion kwh)
+Total power output dispatch
+(billion kwh)
+Power tariff
+(RMB/MWh)
+Power type
+Power consumption and power tariffs
+3.
+Costs Percentage
+2015 Annual Report 49
+25.10
+(15.7)
+409
+wind power
+0.02
+0.02
+0.0
+0.02
+0.02
+0.0
+598
+Hebei
+32.30
+35.64
+(9.4)
+30.12
+33.33
+(9.6)
+coal-fired power
+21.15
+(15.3)
+26.81
+22.72
+83.9
+8.99
+4.84
+85.7
+coal-fired power
+9.49
+5.16
+83.9
+Section V Management Discussion and Analysis (Continued)
+75
+4.84
+Guangdong
+22.74
+26.83
+(15.2)
+21.17
+25.12
+(15.7)
+409
+coal-fired power
+85.7
+0.2
+74
+0.0
+(%) (Restated)
+2014
+costs of 2015 over
+to total Change in
+2014
+2015
+2015
+Change
+(%)
+2014
+(Restated)
+2014
+2015
+Percentage
+Percentage
+to total
+costs of
+Cost of sale of power
+Revenue from sale of power
+Unit: RMB million
+Revenue and cost from the sale of power of the Group before elimination on
+consolidation
+power assets
+percentage
+points
+operations
+Power type
+5.16
+(%)
+1. Coal-fired power
+152
+152
+3. Hydro power
+11.1
+0.0
+9
+0.0
+10
+7.7
+(%)
+13
+2. Wind power
+(13.6)
+97.6
+53,411
+95.5
+46,123
+(9.6)
+75,602
+68,349
+14
+9.49
+8.99
+N/A
+power
+2015
+2014
+year-on-year
+2015
+2014
+year-on-year
+2015
+(Restated)
+(%)
+Fujian
+(%)
+Anhui
+17.49
+13.70
+27.7
+16.59
+12.93
+28.3
+Power tariff
+(RMB/MWh)
+(billion kwh)
+(billion kwh)
+Location/Type of
+The Group's cost of sale of power mainly comprised such costs as raw materials,
+fuel and power, personnel expenses, repair and maintenance, depreciation
+and amortization and other cost. The unit cost of power output dispatch of
+the Group in 2015 was RMB 229.4/mwh (2014: RMB250.7/mwh (restated)),
+representing a year-on-year decrease of 8.5%. The decrease was mainly due to
+the decrease in purchase costs of coal of power plants.
+(11.9)
+100.0
+54,760
+100.0
+48,269
+(8.9)
+77,216
+70,345
+342
+Total
+2.3
+1,265
+4.3
+2,062
+26.3
+1,449
+1,830
+4. Gas-fired power
+(1.3)
+63.0
+coal-fired power
+(Restated)
+13.70
+0
+N/A
+1.51
+0
+N/A
+401
+Chongqing
+3.35
+17.49
+1.55
+N/A
+0
+N/A
+333
+coal-fired power
+3.35
+0
+N/A
+3.20
+0
+3.20
+natural gas power
+0
+(74.9)
+413
+16.59
+12.93
+28.3
+342
+Beijing
+2.11
+2.18
+0.1
+(3.2)
+27.7
+1.91
+1.99
+0.48
+(74.3)
+2.18
+1.91
+coal-fired power
+404
+4.2
+0.56
+Section V Management Discussion and Analysis (Continued)
+Environmental Policies and Performance
+The Group is committed to the long-term sustainability of the environment and communities in
+which it operates. Acting in an environmentally responsible manner, the Group endeavors to comply
+with laws and regulations regarding environmental protection and adopt effective measures to
+achieve efficient use of resources, energy saving and waste reduction.
+(XII) Compliance with Relevant Laws and Regulations
+As far as the Board and management are aware, the Group has complied in all material aspects with
+the relevant laws and regulations that have a significant impact on the business and operation of
+the Group. In 2015, there was no material breach of or non-compliance with the applicable laws and
+regulations by the Group.
+(XIII) Relationship with Stakeholders
+Applicable ✓ Not Applicable
+For details of remuneration and training of the Group's employees, please refer to the section headed
+"Directors, Supervisors, Senior Management and Employees". The Group also understands that it is
+important to maintain good relationships with customers, suppliers and other business partners to
+achieve its long-term goals. Accordingly, our senior management have kept good communication,
+promptly exchanged ideas and shared business updates with them when appropriate. In 2015, there
+was no material and significant dispute between the Group and its customers, suppliers and other
+business partners.
+2015 Annual Report 63
+II.
+Macroeconomic conditions
+(1)
+Competition Landscape and Development Trend in the Industry
+1.
+In 2015, there were many difficulties and severe challenges in the Chinese economic
+development. The government strived to stabilize growth, make structural adjustment and
+control risks, thereby maintaining the economic operation in a reasonable range while
+making positive progress in structural adjustment. The gross domestic product (GDP) of China
+grew by 6.9% year-on-year, representing a decrease of 0.4 percentage point as compared to
+that of last year. The consumer price index (CPI) recorded a year-on-year increase of 1.4%,
+representing a decrease of 0.6 percentage point as compared to that of last year.
+In 2016, the Chinese government will step up the implementation of new ideals. The
+government adheres to the key note of "making progress while maintaining stability", strikes
+a balance between stabilizing growth and adjusting structure, focuses on strengthening
+structural reform on the supply side and sticks to "eliminating excessive capacities, destocking,
+deleveraging, lowering costs and shoring up growth in weak areas", in addition to sustainable
+and sound development of the economy. GDP growth is expected to be around 6.5% to 7.0%
+in 2016, with CPI increase maintaining at around 3%. The all-year coal demand is expected to
+remain stable with slight decrease, and electricity demand is expected to increase at a slow
+rate.
+1
+This section is for reference only and does not constitute any investment advice. The Company has used its best endeavors to ensure
+the accuracy and reliability of information in this section, but does not assume any liability or provide any form of guarantee for the
+accuracy, completeness or validity of all or part of its content. If there is any error or omission, the Company does not assume any liability.
+The content in this section may contain certain forward-looking statements based on subjective assumptions and judgments of future
+political and economic developments; therefore there may exist uncertainties in these statements. The Company does not undertake any
+responsibility for updating the information or correcting any subsequent error that may appear. The opinions, estimates and other data
+set out herein can be amended or withdrawn without further notice. The data contained in this section are mainly derived from sources
+such as the National Bureau of Statistics, China Coal Market Network, China Coal Resource Network, China Electricity Council, and China
+Coal Transportation & Sales Society etc.
+64 China Shenhua Energy Company Limited
+Structured Vehicle Controlled by the Company
+DISCUSSION AND ANALYSIS ON THE COMPANY'S FUTURE PLANS¹
+The amount of granted loans refers to the balance as at 31 December 2015 of the loans
+granted in the current year in connection with the loans contracts signed in 2015.
+3
+Amount of rejected loans
+Major subsidiaries
+No. Company
+Unit: RMB million
+Net profit attributable
+to the equity holders of
+Registered
+capital
+Total
+assets
+Net
+assets
+the parent company
+As at 31 December 2015
+2015
+(1)
+2014 Change (%)
+Shuohuang Railway
+5,880 36,240 25,551
+5,059
+6,138
+(17.6)
+Development Co.,
+Ltd.
+2
+Shenhua Shendong
+4,690
+54,466 40,134
+1
+(IX) Analysis on major holding and associated companies
+Section V Management Discussion and Analysis (Continued)
+2015 Annual Report 57
+Note:
+Revenue from external customers was classified based on the locations where the services were provided or the products
+were purchased.
+The Group is mainly engaged in the production and sales of coal and power, railway, port and
+shipping transportation as well as coal-to-olefins businesses in P.R.C. In 2015, the revenue from
+external transactions in domestic markets was RMB 175,129 million, accounting for 98.9% of
+the Group's revenue. Affected by factors such as the decrease in sale of coal and coal price and
+decrease in power output dispatch and power tariff, revenue from external transactions in
+domestic markets dropped. Affected by factors such as the decrease in the volume of exported
+coal and the sales volume and price of external coal, revenue from external transactions in
+overseas markets dropped.
+In 2015, the Group strived to respond to the promotion of "the Belt and Road" by the state by
+putting more efforts in international exploration. The operation of the PT.GH EMM Indonesia
+Project is running steadily, which achieved favorable operating revenue. The development
+and operation contracts of Sumsel-1 Coal Power Project and Jawa-7 Coal Power Project were
+achieved one by one at the end of 2015. 17 gas wells have been successfully put into operation
+in the shale gas project in the United States, which is running steadily and has helped the
+Company to accumulate experience and talents. The Watermark Coal Project in Australia
+has completed the development approval and EIA procedures. Other external projects are
+progressing under the principle of stability and prudence.
+56 |
+China Shenhua Energy Company Limited
+Section V Management Discussion and Analysis (Continued)
+(VII) Analysis on Investments
+1.
+External equity investments
+2.
+3.
+The equity investments of the Company in 2015 amounted to RMB10,448 million, representing
+an increase of RMB1,168 million or 12.6% from RMB9,280 million of last year. Equity
+investments mainly included capital increase in Baotou Energy Company, Shenhua Railway
+Transportation Company and Shenhua Zhunneng Resources Development & Utilization Co.,
+Ltd. and acquisition of Xuzhou Power and Zhoushan Power.
+For information on the principal business of major subsidiaries of the Company and the
+percentages of equity interest held by the Company, please refer to " Note 43. of the
+consolidated financial statements of this report on investment in subsidiaries.
+Material investment in equity interest
+The Company completed the acquisition of 100% equity interest in Ningdong Power, 100%
+equity interest in Xuzhou Power and 51% equity interest in Zhoushan Power from Shenhua
+Group Corporation in October 2015. Please refer to Section VI "Significant Events" of this
+report for details.
+Material investment in non-equity interest
+Applicable
+✓ Not Applicable
+4.
+Financial assets at fair value
+Assets at fair value of the Group were debt securities and derivative financial instruments.
+Derivative financial instruments were swap instruments (cross currency interest rate swaps)
+held by the Company. The Company made use of the swap instruments to hedge the risk of
+currency exchange and interest rate incurred by foreign currency borrowings.
+(VIII) Disposal of material assets and equity interest
+Applicable
+✓ Not Applicable
+3,611
+9,777
+(63.1)
+Coal Group Co., Ltd.
+Shenhua Zhunge'er
+7,102
+29,270
+23,148
+1,305
+1,778
+(26.6)
+Energy Co., Ltd.
+7
+Shenwan Energy Co.,
+4,696
+13,499
+7,729
+1,212
+888
+36.5
+Ltd.
+8
+Hebei Guohua
+1,561
+6,221
+3,010
+991
+1,008
+(1.7)
+6
+253,081
+Generation Co., Ltd.
+(13.8)
+3
+Shaanxi Guohua Jinjie
+2,278
+9,333
+6,274
+2,374
+2,579
+(8.0)
+Energy Co., Ltd.
+4
+Guangdong Guohua
+4,670 12,982
+7,792
+1,701
+2,279
+(25.4)
+Yuedian Taishan
+Power Co., Ltd.
+5
+Zhejiang Guohua
+3,255
+11,777
+5,952
+1,618
+1,877
+Zheneng Power
+Dingzhou Power
+177,069
+247,848
+5,233
+2014
+(Restated)
+Change
+Main reasons for changes
+(%)
+Revenue
+RMB million
+5,550
+5,880
+(5.6)
+Decrease in price of Coal to
+olefins products
+2015
+Cost of sales
+4,720
+4,245
+11.2
+Sales volume increase in
+olefins products
+Gross profit
+%
+15.0
+27.8
+Decreased by
+margin
+RMB million
+The operating results of the coal chemical segment of the Group before eliminations on
+consolidation are as follows:
+Analysis of operating results
+(2)
+Section V Management Discussion and Analysis (Continued)
+6.
+Coal Chemical Segment
+(1)
+Overview of production and operations
+The coal chemical segment aimed at a production and operation model of safety,
+steadiness, long-term, full loading and optimization with good product organization,
+equipment management and professional management of safety and technology to
+achieve the best level recorded in history in the accumulated passing rate of products
+and the long-term operation of installments.
+2015
+Sales
+volume
+Price
+Thousand
+tonnes
+RMB/
+tonne
+2014 (Restated)
+Sales
+volume
+Thousand
+tonnes
+Change
+Sales
+Price volume
+RMBI
+tonne
+Price
+%
+%
+Polyethylene
+Polypropylene
+319.2
+312.9
+7,431.5
+6,507.7
+265.5
+268.1
+8,871.8
+8,628.9
+(16.2)
+(24.6)
+12.8 percentage
+points
+Profit from
+RMB million
+Thousand
+RMBI
+tonnes
+tonne
+tonnes
+tonne
+%
+%
+Polyethylene
+Polypropylene
+314.7
+308.7
+5,347.9
+5,073.7
+261.1
+263.9
+6,009.0
+5,801.5
+20.5
+17.0
+(11.0)
+(12.5)
+The coals consumed by the coal chemical segment were all the Group's coals. The
+coals consumed in 2015 were 4.2 million tonnes, representing an increase of 10.5% as
+compared to 3.8 million tonnes of last year.
+(VI) Regional operation analysis
+Unit: RMB million
+2015
+2014
+(Restated)
+Revenue from external transactions in domestic markets
+Revenue from external transactions in overseas markets
+175,129
+1,940
+RMB/
+Total
+Thousand
+cost
+649
+1,410
+(54.0)
+operations
+Profit margin %
+from
+11.7
+24.0
+12.3 percentage
+Decreased by
+operations
+points
+2015 Annual Report 55
+Section V Management Discussion and Analysis (Continued)
+(3) Unit production cost of main products
+2015
+2014 (Restated)
+Unit
+Unit
+Change
+Unit
+volume
+cost
+volume
+Production production Production production Production production
+volume
+cost
+Note:
+Generation Co., Ltd.
+Shenhua Finance Co.,
+Unit: RMB million
+As at
+31 December
+2015
+1 2 3
+China Shenhua Energy Company Limited
+Shenhua Group Corporation Limited
+26,782
+9,681
+China Shenhua Coal Liquefaction and Chemical
+Company Limited
+3,073
+Name of customer
+4567
+2,540
+2,288
+Guohua Energy Investment Co., Ltd.
+2,030
+China Energy Conservation and Environmental
+Protection Group
+1,146
+8
+00
+China Shenhua International Construction
+Company Limited
+Shenhua Guoneng Group Company Limited
+Shenhua Wuhai Energy Co., Ltd.
+No.
+Balance of deposits of the top ten customers
+(a)
+Unit: RMB million
+As at
+As at
+31 December
+31 December
+2015
+2014
+Change
+(%)
+Balance of deposits
+51,282
+39,074
+31.2
+Balance of loans
+29,380
+33,677
+(12.8)
+Of which: balance of
+guaranteed loans
+0
+300
+(100.0)
+2015 Annual Report 61
+Section V Management Discussion and Analysis (Continued)
+B.
+Balance of deposits and borrowings of the top ten customers
+1,121
+9
+Shenhua Ningxia Coal Industry Group Co., Ltd.
+726
+Shenhua Materials Group Ltd.
+1,500
+9
+China Shenhua Coal Liquefaction and Chemical
+Company Limited
+1,000
+10
+Inner Mongolia Dayan Minning Industry Group
+1,000
+Co., Ltd.
+62 China Shenhua Energy Company Limited
+Section V Management Discussion and Analysis (Continued)
+C.
+Approval of loans during the reporting period
+Unit: RMB million
+Item
+2015
+Amount of contracted loans
+10,856
+Amount of granted loans (including discounted assets) Note
+Of which: amount of guaranteed loans (including discounted
+assets) Note
+7,269
+0
+0
+(X)
+(XI)
+8
+A. Total deposits and loans at the end of the reporting period
+Limited
+Shenhua Guoneng Jiaozuo Power Plant Company
+10
+Beijing Guohua Power Company Limited
+578
+Note: Data of all companies were consolidated except those of Shenhua
+Group Corporation, which were based on the headquarters of the
+company.
+(b) Balance of loans of the top ten customers
+Unit: RMB million
+As at
+31 December
+2015
+No. Name of customer
+123
+Shenhua Ningxia Coal Industry Group Co., Ltd.
+4,500
+Shenhua Xinzhun Railway Co., Ltd.
+3,500
+State Grid Energy Hami Coal and Electricity Co.,
+3,100
+Ltd.
+4567
+Shenhua Bayannur Energy Co., Ltd.
+2,356
+Shenhua Yili Energy Co., Ltd.
+2,230
+Shenhua Ganquan Railway Co., Ltd.
+1,790
+1,500
+9
+Deposits and Loans of Shenhua Finance Company during the reporting period
+The overall target of risk management for Shenhua Finance Company is to uphold
+the principles of "system enhancement, procedure optimization, implementation
+strengthening and strict supervision” in its work to build up a top-notch risk
+management system, in order to steer the company to realizing its strategic planning
+and continued steady development.
+Section V Management Discussion and Analysis (Continued)
+(2)
+Details regarding the Company's acquisition of subsidiaries are set out in Note 43 of the
+consolidated financial statements in report on investment in subsidiaries.
+Shenhua Finance Company
+As of the end of the reporting period, the Company directly and indirectly held 100% equity
+interest in Shenhua Finance Company.
+No.
+Name of Shareholder
+1
+2
+China Shenhua Energy Company Limited
+Shuohuang Railway Development Co., Ltd.
+3
+58 China Shenhua Energy Company Limited
+Shenhua Zhunge'er Energy Co., Ltd.
+Shenhua Baoshen Railway Co., Ltd.
+Total
+Percentage of
+equity interest
+held
+(%)
+81.43
+7.14
+7.14
+4.29
+100.00
+During the reporting period, Shenhua Finance Company strictly implemented the following
+resolutions passed at the 12th meeting of the second session of the Board of China Shenhua
+held on 25 March 2011: (1) China Shenhua currently had no intention or plan to change the
+existing operation policies and strategies of Shenhua Finance Company; (2) the deposits placed
+by China Shenhua and its subsidiaries and branches with Shenhua Finance Company would
+be used solely for the credit business of China Shenhua and its subsidiaries and branches,
+and would be deposited in the People's Bank of China and the five major commercial banks
+(namely, Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China,
+China Construction Bank and Bank of Communications), and would not be invested in the
+public market/private equity market and real estate, etc.
+4
+Shenwan Energy Co. recorded net profits attributable to shareholders of the parent company of
+RMB1,212 million, representing a year-on-year increase of 36.5%, which was mainly attributable to the
+increase in sales of electricity and decrease in coal-fired costs.
+5.
+Jinjie Energy recorded revenue of RMB6,138 million and a profit from operations of RMB2,812 million
+in 2015.
+5,000
+58,769
+7,203
+837
+847
+(1.2)
+Ltd.
+10
+Hebei Guohua
+1,834
+7,230
+3,029
+826
+1,068
+(22.7)
+Cangdong Power
+Co., Ltd.
+Note:
+1.
+2.
+3.
+4.
+The financial information of the major subsidiaries disclosed in the above table was prepared in
+accordance with the Accounting Standards for Business Enterprises. The data have not been assessed,
+audited or reviewed.
+Shuohuang Railway Development Co., Ltd. recorded revenue of RMB 13,386 million and a profit from
+operations of RMB6, 198 million in 2015.
+Shendong Coal Group Co., Ltd. recorded revenue of RMB35,192 million and a profit from operations of
+RMB4,503 million in 2015. The net profits attributed to shareholders of the parent company amounted
+to RMB3,611 million, representing a year-on-year decrease of 63.1%, which was mainly attributable to
+the decrease in sales of coal and coal prices.
+(1)
+Governance of Shenhua Finance Company is as follows:
+A.
+Board of directors
+general manager
+2015 Annual Report 59
+Section V Management Discussion and Analysis (Continued)
+B.
+Dr. Zhang Kehui, chairperson, has many years of financial management and
+auditing experience, she has served as the deputy general manager of the
+financial department of Shenhua Group Corporation and head of the auditing
+department of China Shenhua. Dr. Zhang Kehui also serves concurrently as the
+chief financial officer of China Shenhua.
+Each of the three executive directors has extensive experience in financial and
+risk management. Mr. Han Weiping, executive director and general manager, has
+over 30 years of experience in financial management. He served as the deputy
+general manager of the financial department of Shenhua Group Corporation
+in 1996, and deputy general manager and general manager of Shenhua Real
+Estate Co Ltd. since 2001. Mr. Han has extensive experience in management.
+Ms. Mei Xueyan, executive director and party secretary, has served as a director
+and general manager of Shenhua Finance Company since January 2005 and July
+2006 respectively. Ms. Mei Xueyan had worked on capital planning, finance
+investment and internal control at the headquarters of China Construction
+Bank for eight years. Mr. Che Jianming, executive director and deputy general
+manager, has served as a director of Shenhua Finance Company since January
+2005. Mr. Che Jianming had worked in investment banks in China for ten years,
+being responsible for credit approval, project approval and assets management,
+etc. He had also taken up assets management in Zhongxing Trust & Investment
+Co., Ltd. for four years.
+The two non-executive directors, namely Mr. Hao Jianxin and Mr. Feng Ning, and
+Ms. Zhang Donghui as the employee director participated in the decision-making
+process of the company by attending board meetings.
+The Board of Shenhua Finance Company Limited operates in accordance with
+the Articles of Association of Shenhua Finance Company Limited. Any resolution
+passed at the board meetings of Shenhua Finance Company will only be valid if
+consent is obtained from two-thirds or more of directors present at the meeting,
+at which more than one-half of all directors shall be present.
+In 2015, the Board of Shenhua Finance Company held two meetings.
+Board Committees
+According to the fourth meeting of the fourth session of the Board of Shenhua
+Finance Company, the Board revoked the Credit Approval Committee and
+Investment Decision Committee, and instructed the management to establish
+the Credit Business Approval Committee and the Investment Business Approval
+Committee during this reporting period. Credit Approval Committee (revoked)
+held the ten meetings in 2015. Investment Decision Committee (revoked) did not
+hold any meetings in 2015.
+The Board of Shenhua Finance Company currently has two board committees,
+namely the Related Party Transaction Control Committee and Risk Management
+Committee.
+60 | China Shenhua Energy Company Limited
+Section V Management Discussion and Analysis (Continued)
+(2)
+(3)
+(A)
+(B)
+Related Party Transaction Control Committee
+Related Party Transaction Control Committee of Shenhua Finance
+Company is responsible for administration over the related party
+transactions of the company, including identification, statistics, forecasts,
+reporting, limit management and recommendations in respect of the
+related party transactions.
+In 2015, the Related Party Control Transaction Committee held one
+meeting.
+Risk Management Committee
+Risk Management Committee of the board of Shenhua Finance Company is
+responsible for assisting the board of Shenhua Finance Company to review
+the company's overall target of risk management, risk management
+policies, risk management procedures and internal control processes, and
+monitor and assess the risk management endeavors of relevant senior
+management members and the risk management function.
+In 2015, the Risk Management Committee held two meetings.
+Risk Management and Internal Control
+According to the resolutions passed at the first shareholder's general meeting of Shenhua
+Finance Company in 2015, Mr. Du Shengli was appointed as an independent director, which
+was approved by the Beijing Branch of China Banking Regulatory Commission in January 2016.
+In 2015, Shenhua Finance Company performed better in risk management and control,
+controlled the supervision indicators within a reasonable range, proactively built and
+continued to improve the risk management system, steadily pushed forwards the
+information technology of risk management and continued to strengthen the structure
+of risk management culture.
+Independent director Note
+Employee director
+Non-executive director
+Members of the board at the end of
+No.
+the reporting period
+Position
+1
+Zhang Kehui
+Chairman
+2
+Han Weiping
+Executive director,
+Mei Xueyan
+4
+Che Jianming
+5
+Hao Jianxin
+6
+Feng Ning
+7
+Du Shengli
+8
+Zhang Donghui
+Note:
+general manager
+Executive director, party secretary
+Executive director, deputy
+Non-executive director
+20.2
+16.7
+2.
+100 million tonnes
+Total
+Plans for 2016
+Total
+amount
+Of which:
+first batch
+200.0
+Unit: RMB100 million
+Accomplishment
+in 2015
+12.9
+70.0
+80.2
+198.0
+5. Others
+6.3
+4.2
+65.3
+0.9
+13.9
+1.2
+1.4
+1.6
+5.3
+0.0
+0.4
+101.0
+80.6
+4. Coal chemical segment
+Shipping
+Port
+(18.1)
+Cost of sales
+RMB100 million
+1,138
+1,233.41
+(7.7)
+Selling, general and
+administrative expenses and
+net finance costs
+RMB 100 million
+140
+148.13
+(5.5)
+Amount of change in unit
+production cost of the self-
+produced coal
+Flat year-on-
+year growth
+Year-on-year
+decrease of 6.7%
+The above business targets and estimates are subject to risks, uncertainties and assumptions. The
+actual outcome may differ materially from these statements. Such statements do not constitute
+actual commitments to investors. Investors should be aware that undue reliance on or use of such
+information may lead to investment risks.
+(IV) Capital expenditures plans for 2016
+1. Coal segment
+2. Power segment
+3. Transportation segments
+Of which: Railway
+354.3
+1,770.69
+Total capital expenditures of 2015 amounted to RMB35.43 billion, which were mainly used for
+Guohua Shouguang Power Plant, and expansion of Shenwan Energy Company Anqing Phase II, coal
+mine infrastructure and purchasing equipments, and the construction of Huangda Railway,etc.
+70 | China Shenhua Energy Company Limited
+The management of the Company is of the view that other than those accounted for in the
+financial statements, there are currently no environmental lability that may have material
+adverse effect on the Group's financial position.
+6.
+Risks of production safety for coal mines
+The Group has established the safety production targets of "preventing serious work-related
+accidents and general accidents, striving to reduce cases of light and serious injuries, creating
+long-term mechanism for production and work safety". Although the Group has been
+sustaining stable performance in safe production for its coal mines, there are uncertainties in
+the course of safe production and any major safety accident would have a material impact on
+the Group.
+To cope with the risks of production safety for coal mines, the Group will strengthen various
+areas in respect of the implementation of its safety risk prevention and control management
+system, inspections and treatments of significant risks, establishment of "three-breaching"
+control mechanism, enhancement of site management level, safety production training,
+emergency rescue management and emergency management, and consolidation of safety
+production fundamentals.
+2015 Annual Report 73
+Section V Management Discussion and Analysis (Continued)
+7.
+Risk of integrated operations
+8.
+9.
+The Group focuses on the development strategy of clean energy. With the efficient
+development, use and conversion of clean coal as the core, it spares no effort in constructing
+ecological civilization. The Company implemented the Air Pollution Control Action Plan for
+2013-2017 and promulgated the Water Pollution Control Action Plan for 2015-2020. The
+Company is also building the brand image of ultra-low emissions in coal power. It further
+improves the environmental risk pre-control management system and strengthens the
+identification, remediation of potential issues and environmental emergency management
+in order to achieve energy conservation and emission reduction targets as well as to prevent
+severe environmental pollution incidents.
+The Group's advantages in integrated coal mines, power, transportation and coal chemical
+operations come along with considerable operating risks. In case of poor organization or
+coordination or a discontinuation of any link, the balance and high efficiency of integrated
+organization and operations will be affected and the impact may be amplified, which may in
+turn adversely affect the Group's business results.
+Risk of international operations
+Due to the complex economic, social, political and religious conditions in the globe and
+the fluctuations in exchange rates, the risk of investments in different countries varies
+significantly. Given the highly competitive energy market worldwide, the uncertainties in the
+Group's international operations may have an impact on its business.
+To cope with the risk of international operations, the Group will actively respond to the
+national promotion of "the Belt and Road", and conscientiously carry out overseas resource
+evaluation and project assessment based on sound information analysis prior to making any
+decision on overseas project investment so as to ensure economic feasibility. Furthermore, the
+Company will strengthen the cultivation and introduction of interdisciplinary talents to lay a
+solid cornerstone for its "Going Overseas" strategy.
+Risk of natural disasters
+The production and operation activities of the Group will be affected by factors including
+natural disasters or bad weather. Certain particularly major natural disasters which occurred
+in China in recent years had adversely affected the Group's operations to a certain extent.
+Factors such as unforeseeable natural disasters and bad weather may bring certain losses to
+the Group's operations.
+In order to cope with the risks arising from natural disasters, the Group will further strengthen
+early warnings of major natural disasters, formulate emergency plans, allocate necessary
+resources and perform relevant emergency drills to ensure that the impacts of natural disasters
+can be minimized.
+The Group carries out centralized management of commercial property insurance with
+ongoing review and assessment of risks and risk portfolio. Necessary and appropriate
+adjustments which are in line with the needs and practices of the insurance industry in China
+have been made to the insurance strategies and actions as safeguard against losses arising
+from various exposure.
+III. REASONS AND CAUSES OF FAILURE TO DISCLOSE PURSUANT TO GUIDELINES BY THE
+COMPANY DUE TO NON-APPLICATION OF GUIDELINES OR SPECIAL REASONS
+Applicable
+✓ Not Applicable
+74 China Shenhua Energy Company Limited
+To cope with the risk of integrated operations, the Group will take an array of measures based
+on production safety, including scientific scheduling and plan management, improve railway
+collection and distribution system, strengthen the coordination of power grid, and strengthen
+the operation management of production equipment, with an aim at balanced production
+and uninterrupted integrated operations to maximize its competitiveness.
+In 2015, the Chinese government issued successive policies and measures, including the Notice
+on Printing and Distribution of Water Pollution Prevention Action Plan and the Overall
+Proposal of Reform of Ecological Civilization System. The businesses of coal, electric power and
+coal chemicals face more stringent environmental pressure.
+Risk of environmental protection
+5.
+Section V Management Discussion and Analysis (Continued)
+On 20 January 2015, China Shenhua Overseas Capital Company Limited, a wholly-owned subsidiary
+of Shenhua Hong Kong Limited, which is a wholly-owned subsidiary of the Company, issued bonds of
+US$1.5 billion which were listed on the Hong Kong Stock Exchange. The proceeds would mainly be
+used for the repayment of loans of overseas subsidiaries, approved overseas projects and other uses
+in compliance with applicable rules. For details, please refer to Note 30 of the consolidated financial
+statements of this report and the relevant announcements dated 14 January and 20 January 2015.
+Based on the principles of maintaining the strict limit of investment scale and the continuity of major
+construction projects, the Board approved total planned capital expenditures of 2016 of no more
+than RMB20 billion, and implemented in batches. The first batch of planned capital expenditures
+of 2016 amounted to RMB10.10 billion. Regarding the capital expenditures for coal segment, the
+expenditures approved of mines amounted to RMB0.82 billion, and the other expenditures for
+technology transformation amounted to RMB0.47 billion. Regarding the capital expenditures for
+power segment, the expenditures for green technology reform of "ultra-low emission" of plants
+amounted to RMB0.72 billion.
+(V)
+Major risks faced
+Investors should be aware that although the Group has reviewed and listed the major risks, and
+adopted relevant countermeasures, there is no absolute guarantee that all adverse impact could be
+eliminated due to the limitation of various factors.
+1.
+Risk of macroeconomic fluctuations
+The industry in which the Group operates is closely correlated to the prosperity of the national
+economy. In 2015, the GDP of China grew by 6.9%, which was a record low since 1990.
+Uncertainties will still remain amid the steady pace of the macro-economy. Such uncertainties
+may materially affect the Group's results.
+To cope with the risk of macroeconomic fluctuations, the Group will further strengthen the
+studies on relevant industrial trends, optimize production structure, and implement strategies
+of green energy to continuously upgrade the quality of development.
+2015 Annual Report 71
+Section V Management Discussion and Analysis (Continued)
+2.
+Risk of market competition
+3.
+In the coal market, the coal oversupply and structural surplus will become complicated due
+to relatively significant investment in the newly added production capacities and coal import
+volume, structural decrease in and environmental restriction on coal consumption. In the
+power market, competition in the thermal power market will somewhat intensify, mainly
+attributable to the slowdown in economic growth, continuous trend of industrial growth
+slowdown, weak growth in power usage nationally. In the coal chemical market, coal chemical
+products will continue to decrease due to the lowering oil prices internationally. Such factors
+in market competition may have adverse impacts on the Company, such as lower sales prices
+of coal and coal chemical products and lower power generation than expected, and therefore
+may affect the Company's business results.
+In response to the risks of market competition, the Company will enhance the accuracy of
+its market forecasts, optimize sales planning, coordinate and plan transportation capacity,
+promote the electronic trading platform and strengthen the coordination of power grids. The
+Company will also devote efforts to contingency plans and early warnings of market risks and
+continuously strengthen its market risks resistance.
+Risk of changes in industry policies
+The Group's business activities are subject to the industrial regulatory policies in China. For
+the coal industry, there are major guidelines put forward by the PRC government such as
+"total consumption of primary energy to be controlled at approximately 4.8 billion tonnes
+of standard coal, and total consumption of coal to be controlled at approximately 4.2 billion
+tonnes by 2020", "increasing the proportion of non-fossil energy consumption in primary
+energy consumption to 15%, and proportion of coal consumption to be controlled at no
+more than 62% by 2020". At the beginning of 2016, the State Council issued Opinions on
+Overcoming Difficulties and Development Through Solving Excess Capacity in Coal Industry
+were successively issued by the State Council to propose to exit coal production capacity of
+around 500 million tonnes and reduce and reorganize coal capacity of around 500 million
+tonnes in the coming three to five years. For the power industry, in accordance with the "
+Opinions on Further Deepening the Reform of the Power Sector" issued by the State Council
+in 2015, which involves price deregulation of the competitive segment of power other than
+power transmission and distribution, opening of the power allocation and sales business,
+deregulation of power generation and usage plan other than those of public interest and
+adjustment purposes, and promotion of relatively independent trading agencies. The above
+policies may have an objective impact on the approval of the Company's new expansion and
+construction projects, and reforms of operation and management models.
+To cope with the risk of changes in industry policies, the Group will strengthen its research on
+the latest industry policies and regulations in the PRC and promote industrial upgrading and
+structural adjustment through a rational investment portfolio across the business segments
+and increasing expenditure on environmental protection.
+72 China Shenhua Energy Company Limited
+Section V Management Discussion and Analysis (Continued)
+4.
+Risk of rising costs
+As the mining process proceeds further and production conditions become increasingly
+complicated, the Group's corporate mining cost may increase gradually. Furthermore, a
+number of factors, including the long-term price increase of productive resources, increase in
+resource and environmental constraints and changes in fiscal and taxation policies, may lead
+to an increase in the Group's costs.
+To cope with the risk of increasing costs, the Company will establish the value-creation
+concept and strengthen the strategic cost control; optimize the cost accountability system;
+strengthen taxation planning to refine cost management and improve the quality of cost
+control.
+In 2015, the Company issued three tranches of super short-term commercial papers, with proceeds of
+RMB15 billion.
+1,451
+The capital expenditure plans of the Group in 2016 are subject to the development of business
+plans (including potential acquisitions), progress of investment projects, market conditions, outlook
+for future operation environment and the obtaining of the requisite permissions and approval
+documents. Unless required by laws, the Company shall not assume any responsibilities for updating
+the data of its capital expenditure plans. The Company intends to finance its capital expenditures by
+cash generated from operating activities, short-term and long-term borrowings, and other debt and
+equity financing.
+Revenue
+As the coal market was weak, coal outbound shipment clearly fell. The coal
+transportation volume through railways in China was 2.00 billion tonnes during the
+year, representing a year-on-year decrease of 12.6%. The coal transportation volume
+through cars increased, intensifying its competition with railway transportation. Coal
+outbound shipment through major ports in China was 0.64 billion tonnes, representing
+a year-on-year decrease of 5.6%.
+1
+Data source: China Coal Transportation & Sale Society
+2015 Annual Report 65
+66
+Section V Management Discussion and Analysis (Continued)
+(2)
+The coal inventory differentiated throughout the year. The coal inventory in ports
+and plants significantly dropped in the second half year, while the coal inventory in
+coal mines remained relatively abundant. As at 31 December, the inventories at major
+ports in northern areas were 14.8 million tonnes, representing a decrease of 48.3%
+as compared to that of the end of last year; the inventories at major plants was 73.6
+million tonnes, representing a decrease of 22.2% as compared to that of the end of last
+year; the inventories at major coal mines in China was 0.06 billion tonnes, representing
+an increase of 16.0% as compared to that of the end of last year. The low inventories at
+ports and plants will benefit the stability of coal market.
+Prospect for 2016
+In 2016, China's economy will grow slower and excess capacity of coal industry will
+continue. Coal price is expected to remain at a low level for the year while production
+volume of coal is expected to be stable with a slight decline as there will be larger scale
+of deficit for coal enterprises and the production of certain coal mines will be cut or
+suspended.
+In accordance with the Opinions on Overcoming Difficulties and Development Through
+Solving Excess Capacity in Coal Industry issued by the State Council to propose to exit
+coal production capacity of around 500 million tonnes and reduce and reorganize
+coal capacity of around 500 million tonnes in the coming three to five years. With the
+implementation of such policies, excess capacity in the coal industry is expected to be
+solved gradually, market supply and demand will be more balanced and industrial
+structure will be optimized, thereby making progress in transformation and upgrade.
+The national coal sales volume in 2015 was 3.46 billion tonnes', representing a year-on-
+year decrease of 6%. In the main coal consumption sectors in the downstream, except
+a certain increase in the chemical coal consumption, there was a decrease in the coal
+consumption of electricity, steel and construction material industries.
+Coal exporting countries such as Australia & Indonesia still enjoy certain edges over
+prices. However, affected by the depressed coal demands in China and the decreased
+difference in coal price between China and overseas, coal import volume is expected to
+change slightly as compared with the same period of last year.
+Thermal coal market in the Asia Pacific region
+Review for 2015
+In 2015, due to the downward trend of the global economy and significant drop in oil
+price, coal demand was weak in countries with a continuous drop in international coal
+prices. The spot price of Australian BJ thermal coal decreased from US$62.95/tonne at
+the beginning of 2015 to US$52.28/tonne at the end of the year.
+In 2015, there was a decrease in the total coal export volume of major coal exporters.
+Indonesia exported 0.30 billion tonnes of coal, representing a year-on-year decrease
+of 22.9%. Russia exported 0.15 billion tonnes of coal, representing a year-on-year
+decrease of 0.8%. The United States exported 0.07 billion tonnes of coal, representing
+a year-on-year decrease of 23%. Australia exported 0.39 billion tonnes of coal,
+representing a year-on-year increase of 4.5%.
+| China Shenhua Energy Company Limited
+Section V Management Discussion and Analysis (Continued)
+3.
+In 2015, India imported 0.25 billion tonnes of thermal coal, representing a year-on-year
+increase of 16.6%. Japan and South Korea maintained a stable increase of coal import.
+Japan imported 0.19 billion tonnes of coal, representing a year-on-year increase of 1.2%;
+South Korea imported 0.14 billion tonnes of coal, representing a year-on-year increase
+of 3.1%.
+Prospect for 2016
+In 2016, overcapacity in the coal industry is expected to continue to exist. Due to the
+commencement of the China-Australia Free Trade Agreement and the impacts of
+exchange rates, coal export from Australia will be benefited.
+China and India will remain as the major consumers of coal. Demand for thermal coal in
+India will remain at a relatively high level, but, with the increasing production of coal
+in the nation, the export volume will slow down. Coal import volume in Japan, South
+Korea and other countries is expected to remain stable.
+Coal demand is expected to slacken. Oversupply will persist in the coal market and coal
+price will fluctuate at a low level.
+In 2015, the national raw coal output amounted to 3.69 billion tonnes, representing
+a year-on-year decrease of 3.5% and a further decrease as compared with last
+year. In particular, Shanxi recorded an output of 0.96 billion tonnes, representing
+a year-on-year decrease of 1.6%; Inner Mongolia recorded an output of 0.9 billion
+tonnes, representing a year-on-year decrease of 8.1%; and Shaanxi recorded an output
+of 0.5 billion tonnes, representing a year-on-year decrease of 1.7%. The accumulated
+coal import during the year was 0.2 billion tonnes, representing a year-on-year decrease
+of 29.9%.
+(7.2)
+5.33
+RMB100 million
+Section V Management Discussion and Analysis (Continued)
+Market environment of the coal industry
+(1) Thermal coal market in China
+Review for 2015
+Due to the slower macroeconomic growth in China, adjustment of energy structure
+became more intense and demand for coal decreased, resulting in continuous excessive
+production in the coal industry and falling coal prices. As at 31 December 2015, Bohai-
+Rim Steam-Coal Price (5,500 kcal) was RMB372/tonne, representing a decrease of
+RMB153/tonne as compared to that (RMB525/tonne) of the beginning of this year.
+During the year, the average price of Bohai-Rim Steam-Coal Price Index was RMB427/
+tonne, representing a year-on-year decrease of 18.2%.
+Year-on-year
+2015
+2014
+change
+(%)
+Raw coal output (million tonnes)²
+3,685
+3,819
+(3.5)
+Coal transportation by railway
+(million tonnes)
+2,000
+2,290
+(12.6)
+Coal import (million tonnes)
+204
+291
+(29.9)
+Coal export (million tonnes)
+Global demand for coal is expected to manifest a downward trend in 2016 as impacted
+by the slackened global economy growth, structural adjustment of energy, slow energy
+consumption growth and climate change. The coal supply will be excessive, and prices
+of thermal coal will remain low.
+Market environment of the power industry
+5.74
+The growth in power consumption nationwide had a clear year-on-year decrease as
+impacted by the slow macroeconomic growth, adjustment of assets structure and
+climate change. The nationwide power supply was generally excessive. The total power
+consumption was 5,550 billion kwh, representing a year-on-year increase of 0.5% but
+the growth was 3.3 percentage points slower than 2014.
+China Shenhua will step up the implementation of the clean energy development strategy.
+Focusing on the goal of "building itself into a world first-class supplier of clean energy", China
+Shenhua will accelerate the change in the concept and mode of development and facilitate
+the four developments, namely "safe development, transitional development, innovative
+development and harmonious development", and achieve the "five enhancements", namely
+"enhancing the quality and efficiency of development, the standards of management, the
+capability of internationalization, the soft power of the enterprise and the ability to fulfill
+social responsibilities." By strengthening the integrated operation of coal production,
+transportation and marketing, improving clean and efficient conversion and utilization of
+coal and the production chain of new energies, and refining the technological system of clean
+combustion and efficient conversion of coal, China Shenhua will gradually explore new room
+for development, improve its comprehensive competitiveness, profitability and risk resilience,
+adhere to the continuity and stability of the profit distribution policy, and dutifully assume
+its social responsibility, building China Shenhua into a reputable international company and
+creating greater value for its shareholders.
+2015 Annual Report 69
+Section V Management Discussion and Analysis (Continued)
+(III) Business Targets for 2016
+Item
+Unit
+Target of
+2016
+Accomplishment
+increase/
+in 2015 (decrease)
+Commercial coal production
+2.8
+2.809
+(0.3)
+Coal sales
+100 million tonnes
+3.4
+3.705
+(8.2)
+Power output dispatch
+billion kwh
+211.40
+210.45
+Review for 2015
+0.5
+Development Strategy of China Shenhua
+With regard to the tightening regulation on energy and the environment, the potential
+risks posed by environmental and ecological protection are gradually increasing. The entry
+requirements for coal exploitation and coal-fired power development and standards for
+energy saving, environmental protection and production safety, etc. are becoming more
+stringent. Restraints on water resources and significant investment in infrastructure are the
+key factors that hinder the development of the coal chemical business.
+(%)
+In 2016, the domestic economy will still be shifting its gears and the pace of industrial
+restructuring will accelerate. It is expected that the annual electricity demand in the
+primary and second industries will remain low. Nevertheless, the tertiary industry and
+residential electricity consumption are expected to maintain rapid growth as driven
+by economic restructuring. The electricity consumption demand growth rate in 2016 is
+expected to slightly increase.
+Due to the slowdown in electricity demand and rapid growth of non-fossil energy
+generation capacity in the country, thermal power installed capacity increased
+significantly with the utilization hours of thermal power equipment being only 4,329
+hours for the year, representing a year-on-year decrease of 410 hours which marked a
+further decline. The issue of oversupply of thermal power started to appear.
+The power business has encountered more difficulties in accelerating development. The
+growth in demand for power will decrease as affected by the slow growth in economy; the
+government accelerated the adjustment of the power structure, and imposes a strict limit on
+the newly installed capacity of coal-fired power; factors such as the structural reform of the
+power industry will intensify the competition in the industry.
+For analysis by geographical regions, there are more surplus of power supply capacity
+in the Northeast and Northwest of China, whereas there was a slight oversupply in the
+North, East, Central and South China in overall, and a little tight supply of electricity in
+rush hours in some areas.
+2015 Annual Report 67
+Section V Management Discussion and Analysis (Continued)
+(II)
+Prospect for 2016
+The power supply capacity across the country will be sufficient in 2016. Thermal power
+installed capacity will continue to increase. It is expected that hydropower, nuclear
+power and wind power will continue to maintain their strong growth momentum.
+The domestic supply of and demand for power in 2016 will continue to be stable
+in general, with a slight oversupply. The structure of power usage and supply and
+demand by geographical regions will align with those in the previous year. The urge for
+non-fossil energy power generation as an alternative will be gradually apparent given
+the growth rate of demand for electricity consumption continued to slow down with
+sufficient supply capacity of thermal power. The annual utilization hours of thermal
+power equipment are estimated to continue its downward trend. With the advance
+of the power system reform, it will further intensify competitions among power
+companies.
+The government is committed to promoting energy saving and environmental
+protection reconstruction of thermal power with an aim to achieve "ultra-low emissions"
+by all coal-fired power plants which possess transformation conditions and newly built
+coal-fired generating units by 2020, which will be favorable to the continuous
+improvement of lowering air pollutant emission mostly from coal-fired units.
+Meanwhile, the introduction of supportive policies by the government will provide the
+pioneering coal-fired power plants which adopt ultra-low-emission technologies with a
+broader market space.
+1.
+China Shenhua's opportunities for future development
+Development Strategy of the Company
+As a major energy source and industrial material, coal will remain as one of the primary
+energy sources in China in the medium and long term. It offers fundamental protection of a
+safe and stable supply of energy in China. The safe, green and efficient development as well as
+the technology of clean, efficient and low-carbon utilization of coal can further explore the use
+of coal.
+The slow international economy recovery and the national economy structure under
+adjustment will slacken the growth in the demand for energy, coal in particular. The
+oversupply in the coal market will remain and the pressure for falling coal prices will linger.
+In 2016, the new normal state of the coal industry will become further defined. The
+development mode of purely relying on the expansion of output and capacity has changed,
+which in turn causes changes in the market competition model.
+China Shenhua's future main challenges:
+The supply-side reform will accelerate the elimination of backward production capacity and
+promote mergers and acquisitions of coal and electric power enterprises in order to achieve
+large-scale development. New acquisitions and investment opportunities will come along with
+the state's transport corridor and local railway construction. The advancement of technology
+will also provide investment opportunities for promoting technology industrialization.
+3.
+The "the Belt and Road" strategy initiated by China provides important external opportunities
+for exploring international markets, which creates enormous potential in overseas business
+development.
+Section V Management Discussion and Analysis (Continued)
+68 China Shenhua Energy Company Limited
+The market share of coal-fired power generation has declined but its dominant position has
+not changed. As clean and efficient coal-fired power generation technology keeps improving,
+the competitiveness of high-quality thermal power will be enhanced, which in turn provides a
+key support for the development of the industry.
+2.
+As at the end of 2015, the nationwide capacity of power generation equipment of
+power plants with capacity of 6,000 kw and above reached 1.51 billion kw, representing
+a growth of 10.4% as compared to that of the end of last year, of which the installed
+capacity of thermal power was 0.99 billion kw, representing a growth of 7.8% which
+was 1.9 percentage points faster year-on-year. The power-generating ability of
+non-fossil fuel including hydropower and nuclear power clearly increased.
+for the year 2015
+Entitled to final dividend
+Attending and voting at the 2015 18 May 2016,
+Wednesday
+27 June 2016,
+Monday
+17 June 2016, Friday
+17 May 2016, Tuesday
+4:30p.m.
+24 June 2016, Friday
+4:30p.m.
+1 July 2016, Friday
+(1)
+In accordance with the Enterprise Income Tax Law of the PRC and its implementation
+regulations which came into effect on 1 January 2008, the Company is required to withhold
+and pay enterprise income tax at the rate of 10% on behalf of the non-resident enterprise
+shareholders whose names appear on the register of members for H shares of the Company
+when distributing final dividends. The Company shall withhold and pay enterprise income tax
+for the non-resident enterprise shareholders whose name would appear on the register of
+members for H shares of the Company on 1 July 2016.
+2015 Annual Report 77
+Section VI Significant Events (Continued)
+2
+6.
+Computershare Hong Kong
+Investor Services Limited
+Computershare Hong Kong
+Investor Services Limited
+annual general meeting
+After the Shanghai Stock Exchange is closed in the afternoon on Wednesday, 18
+May 2016, the shareholders of A shares of the Company (including the Northbound
+Shareholders) and the proxies of shareholders as registered in the China Securities
+Depository and Clearing Corporation Limited Shanghai Branch are entitled to attend
+and vote at the 2015 annual general meeting of the Company;
+The Company's share registrar
+for H shares
+The last day for registering
+members
+Last Day
+(inclusive)
+Temporary closure for the register of members
+First Day
+(inclusive)
+Corresponding Rights
+No.
+The arrangement of temporary closure for the register of members of H Shares of the
+Company:
+Under the relevant regulations of China Securities Depository and Clearing Corporation
+Limited Shanghai Branch and according to the market practice adopted for final
+dividend distribution for A shares, the Company will publish a separate announcement
+in respect of final dividend distribution to holders of A shares (including the
+Northbound Shareholders) for the year 2015 after the 2015 annual general meeting
+to determine the record date, ex-rights date and dividend distribution date for final
+dividend distribution to holders of A shares for the
+year 2015.
+(2)
+Pursuant to the Articles of Association:
+7.
+1
+8.
+Strict
+If the individual shareholders of the H shares who are Hong Kong or Macau residents or
+residents of the countries which have an agreed tax rate of 10% with China, the Company
+shall withhold individual income tax at a rate of 10%. If the individual shareholders of the H
+shares are residents of countries which have an agreed tax rate of less than 10% with China,
+the Company shall apply for the relevant agreed preferential tax treatment on behalf of
+them in accordance with the Notice of the State Administration of Taxation in relation to
+the Administrative Measures on Preferential Treatment Entitled by Non-residents under Tax
+Treaties (Tentative) (Guo Shui Fa [2009] No.124). If the individual shareholders of the H shares
+are residents of countries which have an agreed tax rate of over 10% but less than 20% with
+China, the Company shall withhold the individual income tax at the agreed actual rate. In case
+the individual shareholders of the H shares are residents of countries which have not entered
+into any tax agreement with China, or the agreed tax rate with China is 20% or otherwise, the
+Company shall withhold the individual income tax at a rate of 20%.
+Any Time Limit
+for Commitment
+Section VI Significant Events (Continued)
+Date and Duration
+of Commitment
+if commitment
+reasons shall be shall be
+specified
+Further steps
+Detailed
+Timely and
+and assets which may pose
+potential competition.
+Shenhua Group Corporation
+proposed to increase its
+shareholding of A shares in
+the Company in its own name
+via the trading system of the
+Shanghai Stock Exchange
+within 12 months after 8
+July 2015. Shenhua Group
+Corporation undertakes that
+it will not dispose any share
+it holds in the Company
+during the period of the
+implementation of the increase
+plan and within the statutory
+period.
+The Company and Shenhua
+Group entered into a "Non-
+competition Agreement" on
+24 May 2005. Pursuant to such
+agreement, Shenhua Group
+has committed not to compete
+with the Company in respect
+of the Company's principal
+businesses whether inside
+or outside of the PRC, and
+granted the Company priority
+trading and pre-emptive right
+to acquire and be transferred
+from Shenhua Group any
+business opportunities
+Shenhua Group
+Corporation
+in relation to
+increase in
+shares
+Other commitment Commitment
+According to Guo Shui Han [2011] No.348 issued by the State Administration of Taxation, the
+Company shall withhold and pay individual income tax for dividend payable to the individual
+shareholders of H shares. The individual shareholders of H shares are entitled to the relevant
+preferential tax treatment pursuant to the provisions in the tax agreements entered into
+between their countries of residence and China or the tax arrangements between mainland
+China and Hong Kong (Macau).
+Non-competition Shenhua Group
+Corporation
+relation to initial
+public offering
+Commitment in
+Commitment
+Party Making the
+Commitment
+Type of
+Commitment
+Background of
+Commitment
+II. PERFORMANCE OF COMMITMENTS
+Section VI Significant Events (Continued)
+78 China Shenhua Energy Company Limited
+The Company assumes no responsibility arising from any delayed or inaccurate determination
+of the status of the shareholders or any dispute over the mechanism of withholding.
+Shareholders should consult their tax advisers regarding the PRC, Hong Kong and other tax
+implications of owning and disposing of the Company's H shares.
+According to the relevant provisions under the "Notice on Tax Policies for Shanghai-Hong
+Kong Stock Connect Pilot Programme (Cai Shui [2014] No. 81)", the Company shall withhold
+individual income tax at the rate of 20% with respect to dividends received by Mainland
+individual investors for investing in H-shares listed in Hong Kong Stock Exchange through
+Shanghai-Hong Kong Stock Connect. For Mainland securities investment funds investing in
+shares listed on Hong Kong Stock Exchange through Shanghai-Hong Kong Stock Connect,
+the above rules also apply and individual income tax shall be levied on dividends derived
+therefrom. The Company is not required to withhold income tax on dividends derived
+by Mainland enterprise investors, and such enterprises shall report the income and make
+tax payment by themselves. The record date and the relevant arrangements of dividend
+distribution for Southbound Investors are the same as that of the Company's shareholders of
+H shares.
+With respect to the Southbound Shareholders, according to the relevant requirements of
+China Securities Depository and Clearing Corporation Limited, China Securities Depository and
+Clearing Corporation Limited Shanghai Branch shall receive cash dividends distributed by the
+Company as the nominee of the Southbound Shareholders and distribute such cash dividends
+to the relevant Southbound Shareholders through its depository and clearing system.
+The Company shall use the registered address (hereinafter referred to as "registered
+address") as recorded in the register of members of H shares on 1 July 2016 as the criterion
+in determining the residence of the individual shareholders of H shares, and withhold and
+pay individual income tax accordingly. If the residence of the individual shareholders of H
+shares is inconsistent with the registered address, such shareholders shall notify the Company's
+share registrar for H shares at or before 4:30 pm on 24 June 2016 with the relevant evidence
+at Computershare Hong Kong Investor Services Limited of 17M Floor, Hopewell Centre, 183
+Queen's Road East, Wan Chai, Hong Kong.
+undertaking
+5.
+Formulation, implementation or adjustment of cash dividend policy
+3.
+Standards
+with Accounting of the Company
+equity holders
+attributable to
+for the year
+Percentage
+to the profit
+in accordance
+statements of
+the respective
+dividend year
+financial
+consolidated
+in the
+the Company
+holders of
+to equity
+the year
+attributable
+Profit for
+2014
+2013
+2015 (Proposed)
+Year
+Profit distribution scheme or plan of the Company in the past three years (inclusive of the
+reporting period)
+In accordance with the requirements of the relevant laws and regulations and the Articles of
+Association, the profit distribution policy of the Company shall maintain continuity and stability
+and emphasize on achieving reasonable investment returns for investors. Pursuant to the Articles of
+Association, the profit distribution of the Company shall be made based on the profit for the year
+attributable to equity holders of the Company in the consolidated financial statements prepared
+under the Accounting Standards for Business Enterprises or the International Financial Reporting
+Standards, whichever is lower. Annual profit distribution in cash shall be no less than 35% of the net
+profit for the year attributable to equity holders of the Company subject to the relevant conditions.
+2.
+1.
+PROFIT DISTRIBUTION PLAN
+Section VI Significant Events.
+I.
+Performance of is not fulfilled
+Commitment
+for Business
+in the
+Dividend per
+10 shares
+(inclusive of tax)
+RMB
+Amount of
+cash Dividend
+(inclusive of tax)
+RMB million
+76 China Shenhua Energy Company Limited
+In accordance with the preliminary arrangement of profit distribution plan and annual general
+meeting of the Company for the year 2015, the final dividend of the Company's H shares for
+the year 2015 is estimated to be distributed on or about 29 July 2016.
+Dividends distributed by the Company is denominated and announced in RMB. Dividends to
+holders of the Company's A shares, including holders of the Company's A shares through the
+Northbound Trading Link of the Shanghai-Hong Kong Stock Connect (hereinafter referred
+to as the "Northbound shareholders") and holders of the Company's H shares through the
+Southbound Trading Link (hereinafter referred to as the "Southbound Shareholders") are paid
+in RMB. Dividends to holders of the Company's H shares, except the Southbound Shareholders,
+are paid in HKD. The dividend paid in HKD is calculated according to the exchange rate based
+on the average benchmark rate of RMB against HKD, as published by the Bank of China five
+business days preceding the date of declaration of such dividend.
+The above plan is in compliance with the requirement of the Articles of Association and
+endorsed by the independent directors and approved by the Board of the Company. When
+recommending the final dividend plan for 2015, the Board has fully attended to and
+considered the opinions and concerns of the shareholders of the Company, in particular the
+minority shareholders. The Company will hold the 2015 annual general meeting on Friday, 17
+June 2016 to consider and approve the relevant resolutions, including the above final dividend
+plan for the year 2015 as proposed by the Board.
+Net profit for the year attributable to equity holders of the Company for 2015 under the
+Accounting Standards for Business Enterprises amounted to RMB16,144 million, with basic
+earnings per share of RMB0.812/share; profit for the year attributable to shareholders of the
+Company under the International Financial Reporting Standards amounted to RMB17,649
+million, with basic earnings per share of RMB0.887/share. As at 31 December 2015, the
+retained earnings available for distribution to shareholders of the Company amounted to
+RMB104,992 million. The Board recommends the payment of a cash dividend of RMB0.32
+per share (inclusive of tax) on the basis of the total share capital of 19,889,620,455 shares of
+the Company as at 31 December 2015, totaling approximately RMB6,365 million (inclusive of
+tax), which represents 39.4% of the net profit for the year attributable to shareholders of the
+Company under the Accounting Standards for Business Enterprises and 36.1% of the profit
+for the year attributable to shareholders of the Company under the International Financial
+Reporting Standards.
+Profit distribution plan for the year 2015
+2.
+1.
+Section VI Significant Events (Continued)
+2015 Annual Report 75
+39.6
+45,678
+18,100
+4.
+9.1
+36,807
+14,718
+7.4
+39.4
+16,144
+6,365
+3.2
+(%)
+RMB million
+financial
+statements
+(Unrestated)
+Enterprises
+consolidated
+40.0
+in time
+Deposits and loans: The interest rate for deposits placed by Shenhua Group
+Corporation, its subsidiaries and associates with Shenhua Finance Company
+shall not be lower than the lowest rate allowed by the PBOC for the same
+type of deposit; in addition to the above, the interest rate shall be determined
+by reference to the rate confirmed by normal commercial banks for offering
+the same type of deposits to Shenhua Group Corporation and its subsidiaries
+and associates and shall be determined on normal commercial terms. The
+interest rate for loans offered by Shenhua Finance Company to Shenhua Group
+Corporation and its subsidiaries and associates shall not be higher than the
+highest rate allowed by the PBOC for the same type of loans; in addition to the
+above, the interest rate shall be determined by reference to the rate confirmed
+by normal commercial banks for offering the same type of loans to Shenhua
+Group Corporation and its subsidiaries and associates and shall be determined
+on normal commercial terms;
+commitment
+(1)
+✓ Applicable
+MATERIAL CONNECTED TRANSACTIONS
+XI.
+Section VI Significant Events (Continued)
+2015 Annual Report 81
+✓ Not applicable
+Applicable
+THE SHARE OPTIONS INCENTIVE PLAN, EMPLOYMENT STOCK OWNERSHIP SCHEME OR
+OTHER EMPLOYEE INCENTIVE SITUATION OF THE COMPANY AND THEIR IMPACTS
+Upon self-investigation, as at the end of the reporting period, there has been no failure in fulfilling
+the judgment from court or relatively large amount of outstanding debt such as failure in fulfilling the
+judgment from court or debit interests owed to external financial institutions due of the Company and
+Shenhua Group Corporation.
+EXPLANATION FOR CREDIT CONDITIONS OF THE COMPANY AND ITS CONTROLLING
+SHAREHOLDERS AND DE FACTO CONTROLLER
+Save as disclosed above, no other matters shall be disclosed.
+On 7 June 2015, the Company was notified by Shenhua Group Corporation, that Hao Gui was being
+investigated by the competent judicial authorities. Therefore, he was unable to properly perform his duties.
+The production and operation of the Company remain normal and unaffected. On 21 August 2015, the
+9th meeting of the third session of the Board resolved to dismiss Hao Gui from the position of senior vice
+president. The dismissal became effective immediately.
+Not applicable
+✓ Applicable
+X.
+IX.
+VIII. SANCTIONS AND RECTIFICATIONS IMPOSED ON THE LISTED COMPANY, DIRECTORS,
+SUPERVISORS, SENIOR MANAGEMENT STAFF, CONTROLLING SHAREHOLDERS, DE
+FACTO CONTROLLER AND OFFEROR
+As at the end of the reporting period, the Group was not involved in any material litigation or arbitration.
+As far as the Group was aware, the Group did not have any material litigation or claim which was pending
+or threatened against the Group. As at 31 December 2015, the Group was the defendant or the party of
+certain non-material litigations. The management of the Company believes that any possible legal liability
+which may be incurred from the aforesaid cases will not have any material impact on the financial position
+of the Group.
+✓ Not applicable
+Applicable
+MATERIAL LITIGATION AND ARBITRATION
+✓ Not applicable
+Applicable
+INSOLVENCY OR RESTRUCTURING RELATED MATTERS
+0
+1.59
+Not applicable
+Connected transactions relating to daily operation
+Pursuant to the requirements under the Guidelines of Shanghai Stock Exchange on Connected
+Transactions of Listed Companies, the Audit Committee of the Board of the Company shall perform
+the duties of control and daily management of connected transactions of the Company. The
+Company has a connected transaction team under the direct supervision of the Chief Financial
+Officer, which is responsible for the management of connected transactions; and has established
+a business process, which properly delineates the responsibilities of the Company, its subsidiaries
+and branches in the management of connected transactions. The team has also established routine
+examinations, reporting systems and accountability systems in the subsidiaries and branches of the
+Company.
+(1)
+84 China Shenhua Energy Company Limited
+The agreements A to C above are daily connected transactions under the Shanghai Listing
+Rules, while the agreements A to D above are continuing connected transactions under the
+Hong Kong Listing Rules.
+In order to secure coal transportation service for the Group, the Company entered into
+the Transportation Service Framework Agreement with Taiyuan Railway Bureau on
+22 March 2013. The Transportation Service Framework Agreement would be effective
+from 1 January 2014 to 31 December 2016. Pursuant to the Transportation Service
+Framework Agreement, the transportation fee payable by the Group was determined
+in accordance with the following pricing policy: (a) state-prescribed price; (b) the state-
+guidance price where there is no state-prescribed price; and (c) where there is neither
+a state-prescribed price nor a state-guidance price, the price is determined by fair
+negotiation between Taiyuan Railway Bureau and the Group with reference to the
+transportation fee received by Taiyuan Railway Bureau for offering transportation
+services to a third party.
+Taiyuan Railway Bureau is the parent company of Daqin Railway, which is a substantial
+shareholder of 10% shareholding or above of Shuohuang Railway, a significant
+subsidiary of the Company under the Hong Kong Listing Rules. Therefore, Taiyuan
+Railway Bureau is a connected person of the Company under the Hong Kong Listing
+Rules, and the Transportation Service Framework Agreement and the transactions
+contemplated thereunder constitute continuing connected transactions of the Company
+under the Hong Kong Listing Rules.
+Transportation Service Framework Agreement between the Company and Taiyuan
+Railway Bureau
+D.
+Non-exempt continuing connected transactions between the Group and other parties
+Paid services: Shenhua Finance Company may offer paid consultancy, agency,
+settlement, account transfer, investment, finance leasing, letter of credit,
+online banking, entrusted loans and other related services to Shenhua Group
+Corporation, its subsidiaries and associates. The fees receivable by Shenhua
+Finance Company for offering consultancy, agency, settlement, account transfer,
+investment, finance leasing, letter of credit, online banking, entrusted loans
+and other related services to Shenhua Group Corporation, its subsidiaries and
+associates shall comply with the relevant requirements on fee standards (if
+any) stipulated by the PBOC or the CBRC; in addition to the above, the fees
+receivable by the Shenhua Finance Company for offering financial services to
+Shenhua Group Corporation, its subsidiaries and associates shall be determined
+by reference to the fees receivable by normal commercial banks for offering the
+same type of financial services to Shenhua Group Corporation, its subsidiaries,
+associates and shall be determined on normal commercial terms.
+b.
+(2)
+Section VI Significant Events (Continued)
+2015 Annual Report 83
+a.
+Deloitte Touche Tohmatsu Certified Public Accountants LLP
+China International Capital Corporation Limited,
+China Galaxy Securities Co., Ltd.
+The pricing policy of the Financial Services Agreement is as follows:
+Financial Services Agreement
+C.
+Price prescribed by the state if applicable; when there is no state-prescribed price, the
+state-guidance price should be applied; where there is neither a state-prescribed price
+nor a state-guidance price, the market price (including bidding price); where there is
+no comparable market price from independent third parties, transaction prices can
+be determined with reference to the prices of non-connected transactions between a
+connected party and a third party independent thereof (or the prices of non-connected
+transaction between Shenhua Group Corporation and a third party independent
+thereof); where none of the above is applicable or where it is not practical to apply the
+above pricing policies in reality, the price shall be the contractual price (i.e. the costs
+incurred + a profit margin of 5%).
+On 22 March 2013, the Company entered into the Mutual Supplies and Services
+Agreement with Shenhua Group Corporation. The Mutual Supplies and Services
+Agreement would be effective from 1 January 2014 to 31 December 2016. In
+accordance with the Mutual Supplies and Services Agreement, in addition to providing
+administrative and management services at agreed price (the cost plus a profit margin
+of 5%), Shenhua Group also supplied production materials and ancillary services to the
+Group with a pricing policy as follows:
+Mutual Supplies and Services Agreement
+B.
+Section VI Significant Events (Continued)
+82 | China Shenhua Energy Company Limited
+The Company entered into the Mutual Coal Supply Agreement with Shenhua Group
+Corporation on 22 March 2013. The Mutual Coal Supply Agreement would be effective
+from 1 January 2014 to 31 December 2016. Pursuant to the Mutual Coal Supply
+Agreement, the Group and Shenhua Group mutually sold and supplied various types
+of coal. The price of the coal supplied under the Mutual Coal Supply Agreement is
+market price, namely, the price charged by an independent third party for the supply
+of coal of the same grade based on the normal commercial terms concluded on the
+normal commercial conditions in the same region or its vicinity, or the price of coal
+of the same grade supplied to or purchased from an independent third party by the
+parties separately based on the normal commercial terms concluded on the normal
+commercial conditions. The price of the coal supplied under the Mutual Coal Supply
+Agreement was determined by the Company and Shenhua Group Corporation through
+fair negotiation with reference to the Bohai -Rim Steam-Coal Price Index. In accordance
+with the provisions of the Mutual Coal Supply Agreement, priority will be given to the
+other party when one party purchases coal unless the terms of sales provided by a third
+party are more favorable.
+Mutual Coal Supply Agreement
+A.
+In order to ensure a reliable and quality-assured provision of materials and services for the
+Company, lower operation risks and costs, and allow Shenhua Finance Company, in which the
+Company has controlling shareholding, to provide financial services to the companies under
+the Group and Shenhua Group Corporation so that it can fully leverage on its functions as
+an internal financing platform and capital management platform, and to further contain
+risks and increase income. The Company entered into the following continuing connected
+transaction agreements with Shenhua Group Corporation:
+Non-exempt continuing connected transactions between the Group and Shenhua Group
+On 22 March 2013, the Company entered into the Financial Services Agreement with
+Shenhua Group Corporation. The Financial Services Agreement would be effective
+from 1 January 2014 to 31 December 2016. In accordance with the Financial Services
+Agreement, the Company provided relevant financial services to Shenhua Group
+through Shenhua Finance Company.
+specified if
+Internal Control Auditors
+Sponsors
+Unit: RMB million
+Explanation from the Board and the Supervisory Committee for the "Non-standard Audit
+Report" issued by the auditors
+(1)
+IV. AUDIT OPINIONS AND OTHER EXPLANATIONS
+Section VI Significant Events (Continued)
+2015 Annual Report 79
+✓ Not applicable
+Applicable
+III. FUND OCCUPANCY AND PROGRESS OF THE COLLECTION DURING THE REPORTING
+PERIOD
+process
+in
+N/A
+N/A
+Yes,
+NA
+NA
+in shares and the
+statutory period
+8 July 2015, during the Yes
+period of increase
+June 2019 (submitting the
+asset acquisition plan to
+the internal competent
+authorities of China
+Shenhua for approval).
+of 14 asset items of
+Shenhua Group and its
+subsidiaries before 30
+24 May 2005,
+long-term
+in process
+N/A
+N/A
+Yes,
+Yes, China Shenhua will
+initiate the acquisition
+in time
+is not fulfilled
+Applicable
+Remuneration
+✓ Not applicable
+(III)
+Name
+Section VI Significant Events (Continued)
+VII.
+VI.
+80 China Shenhua Energy Company Limited
+The above auditors also served as the external auditors of several subsidiaries of the Company (of which
+the Company is a controlling shareholder) and their remuneration relating to audit services amounted to
+approximately RMB3.37 million during the reporting period.
+Deloitte Touche Tohmatsu Certified Public Accountants LLP and Deloitte Touche Tohmatsu were
+re-appointed as the domestic and international auditors of the Company respectively for 2015 at the
+Company's 2014 annual general meeting held on 29 May 2015.
+3
+Deloitte Touche Tohmatsu
+1.50
+9.375
+3
+Public Accountants LLP
+Deloitte Touche Tohmatsu Certified
+Current appointment
+(II)
+Unit: RMB million
+Remuneration of International Auditors of the Company
+Term of Auditing of International Auditors
+Term of Auditing of Domestic Auditors of the Company (year)
+Name of International Auditors of the Company
+Remuneration of Domestic Auditors of the Company
+Name of Auditors of the Company
+V. APPOINTMENT AND REMOVAL OF AUDITORS
+During the reporting period, there were no changes in accounting policies or accounting estimates
+or correction to material accounting errors. For details of the significant accounting policies and
+significant accounting estimates, please refer to Note 3 and Note 4 set out in the consolidated
+financial statements of this report.
+The auditors issued a standard unqualified audit report in respect of the annual financial report of
+the Company.
+✓ Not applicable
+Applicable
+The Board's analysis and explanation about the reasons for and impact of correction to
+material previous errors
+✓ Not applicable
+Applicable
+The Board's analysis and explanation about the reasons for and impact of changes in
+accounting policies, accounting estimates or accounting method
+of the Company (year)
+94 China Shenhua Energy Company Limited
+State-owned
+Section VI Significant Events (Continued)
+Others
+Other related parties Others
+700
+0
+700
+0
+0
+0
+Total
+700
+0
+700
+2,174
+5,249
+7,423
+Reasons for incurring connected
+debts and liabilities
+The impact of connected debts
+and liabilities on the Company
+The amount and balance of the above debts and liabilities only
+include other receivables, other payables, short-term loans,
+long-term loans due within one year, long-term loans, other
+noncurrent assets due within one year, other current assets and
+other non-current assets of a nonoperational nature between
+the Group and related parties.
+The above connected debts and liabilities incurred were mainly
+due to the fact that the Group provided entrusted loans to an
+associated company of a subsidiary of the Company through
+a bank, and the Group borrowed long-term and short-term
+borrowings from Shenhua Group and its subsidiary and
+performed internal decision procedures in accordance with
+relevant requirements.
+Currently, the principal and interests of the above entrusted
+loans and borrowings are repaid in a normal manner in
+accordance with the repayment schedule.
+XII. MATERIAL CONTRACTS AND THEIR PERFORMANCE
+(1)
+Trusteeship, contracting and leasing
+Applicable
+✓ Not applicable
+During the reporting period, the Company did not enter into or have any management and
+administration contracts in respect of the whole or any material part of the business of the Company.
+subsidiaries
+its subsidiaries
+Corporation and its
+7,423
+(II)
+Deloitte Touche Tohmatsu, the international auditors of the Company, have reviewed the
+transactions contemplated under the agreements A to D above and issued a letter to the
+Board, indicating that they were not aware of any matter for which they would consider that
+the continuing connected transactions above (1) had not been approved by the Company's
+Board of Directors; (2) were not, in all material aspects, in accordance with the pricing policy
+of the Group, (3) were not entered into, in all material aspects, in accordance with the
+relevant agreements governing such transactions; and (4) the aggregate amount of those
+transactions for the year ended 31 December 2015 had not exceeded the annual caps disclosed
+in the Company's announcements on the continuing connected transactions.
+Certain related party transactions set out in Note 41 of the consolidated financial statements
+prepared under the International Financial Reporting Standards also constituted connected
+transactions under the Hong Kong Listing Rules and were required to be disclosed in
+accordance with Chapter 14A of the Hong Kong Listing Rules. The Company has complied
+with the disclosure requirements of Chapter 14A of the Hong Kong Listing Rules in respect of
+the above connected transactions and continuing connected transactions.
+Connected transactions regarding acquisition and disposal of assets or equity
+Summary of the matter
+In October 2015, the Company completed the
+acquisition of the 100% equity interests in
+Ningdong Power, the 100% equity interests in
+Xuzhou Power and the 51% equity interests
+in Zhoushan Power held by Shenhua Group
+Corporation at a total consideration of RMB5,386
+million by way of merger under common control.
+Index of disclosure
+For details, please refer to the Announcement,
+on Connected Transactions (H share) of the
+Company dated 23 October 2015 and the
+Announcement of Acquisition of Assets and
+Connected Transactions and (A share) of the
+Company dated 24 October 2015.
+(III) Material connected transactions regarding joint external investment
+Applicable
+✓ Not applicable
+2015 Annual Report 87
+88 China Shenhua Energy Company Limited
+Section VI Significant Events (Continued)
+Related party
+Relationship
+Funds offered to connected persons
+Opening Amount Closing
+balance incurred balance
+Unit: RMB million
+Funds offered by connected persons
+to the listed company
+Opening Amount Closing
+balance incurred balance
+Shenhua Group
+Holding company and
+0
+0
+0
+2,174
+5,249
+(IV) Debts and liabilities due from/owed to Connected Persons
+(II) Guarantees
+Section VI Significant Events (Continued)
+Guarantee provided by the Company to external parties (excluding guarantee granted to its subsidiaries)
+111.48
+Guarantee provided by the Company and its subsidiaries for the benefit of its subsidiaries
+Total amount of guarantee provided for the benefit of subsidiaries during the reporting period
+Total balance of guarantee provided for the benefit of subsidiaries at the end of the reporting period (B)
+9,631.20
+10,488.60
+Aggregated amount of guarantee (including guarantee for the benefit of its subsidiaries)
+Total amount of guarantee (A+B)
+Proportion of total amount of guarantee in net assets of the Company (%)
+10,600.08
+4.86%
+Including:
+Amount of guarantee provided for the benefit of shareholders, de facto controller and their related parties (C)
+Amount of guarantee directly or indirectly provided for the benefit of parties with a gearing ratio in excess
+of 70% (D)
+Portion of the total amount of guarantee in excess of 50% of net assets (E)
+0
+10,116.01
+0
+(1.61)
+Aggregated amount of the above three amounts of guarantee (C+D+E)
+10,116.01
+See below
+See below
+Note:
+1.
+The amount of guarantee provided by the subsidiary to external parties of total balance of guarantee at the and
+of the reporting period equals to the amount of external guarantee of the subsidiary times the equity ratio of
+the subsidiary held by the Company;
+2.
+Total amount of guarantee accounting for the net asset ratio of the Company = total amount of guarantee/net
+assets of the Company as at the end of the reporting period under accounting standards for business enterprises.
+At the end of the reporting period, the total balance of the amount of guarantee provided by the
+Company and its subsidiaries for the benefit of its subsidiaries and that provided by the Company
+and its subsidiaries for the benefit of external parties amounted to RMB 10,600.08 million, including:
+2015 Annual Report 89
+Section VI Significant Events (Continued)
+(1)
+(2)
+At the end of the reporting period, the guarantee provided by Shenbao Energy Company,
+a subsidiary of which the Company owns 56.61% of the shares, for the benefit of external
+parties was as follows: prior to the acquisition of Shenbao Energy Company by the Company
+in 2011 and pursuant to the Guarantee Agreement on the Syndicated Renminbi Loan
+for the Cooperative Railway Project Connecting Yimin and Yiershi Newly Constructed by
+Hulunbeier Liangyi Railway Company Limited, in 2008, Shenbao Energy Company, as one
+of the guarantors, provided joint and several liability guarantee to Hulunbeier Liangyi
+Railway Company Limited (hereinafter referred to as the "Liangyi Railway Company", of
+which Shenbao Energy Company owns 14.22% of the shares) for the syndicated loans. The
+major liability guaranteed was the debts due to the lender with a maximum balance of
+RMB207.5 million from 2008 to 2027, regardless of whether the debt is due when the above
+period expires. The above syndicated loans will fall due by tranches between 2011 and 2026.
+The Guarantee Agreement provides that the guarantee period of the debts borne by the
+guarantor shall be calculated from the due date of each tranch to two years after the due
+date of the last tranche, i.e. 2029.
+Description of the potential joint and several repayment liability for outstanding guarantee
+Description of guarantee
+Section VI Significant Events (Continued)
+Total balance of guarantee at the end of the reporting period (A) (excluding guarantee provided to its
+subsidiaries)
+N/A
+Date of
+provision of
+Unit: RMB million
+Whether
+guarantee
+Guarantor
+Relationship
+between the
+guarantor
+and the listed
+company
+guarantee
+Guaranteed
+(execution Beginning Expiry
+Amount date of date of date of
+guaranteed agreement) guarantee guarantee
+Type of
+guarantee
+Whether
+performance Whether Amount of Counter-
+has been guarantee guarantee guarantee
+completed is overdue overdue exists
+Whether
+Total amount of guarantee provided during the reporting period (excluding guarantee provided to its
+subsidiaries)
+is for the
+of related
+Connected
+parties
+relations
+Shenbao Energy Subsidiary
+Company
+Hulunbeier Liangyi 111.48 2008.8.30 2008.8.30 2029.8.29
+Railway Company
+Limited
+Joint and
+several liability
+guarantee
+No
+No
+0
+No
+No
+benefit
+86 China Shenhua Energy Company Limited
+The independent non-executive directors of the Company have confirmed to the Board of the
+Company that they have reviewed the transactions contemplated under the agreements A
+to D above and are of the view that (1) those transactions were entered into in the ordinary
+course of business of the Group; (2) those transactions were on normal commercial terms
+or better terms; and (3) those transactions were conducted according to the agreements
+governing them on terms that are fair and reasonable and in the interest of the shareholders
+of the Company as a whole.
+The above continuing connected transactions were settled in cash or bills and carried out
+in the ordinary course of business of the Company, and were strictly in compliance with
+procedures of review and approval by independent directors and independent shareholders as
+well as disclosure requirements.
+period
+transactions
+RMB million
+RMB million
+%
+RMB million
+RMB million
+%
+A
+Mutual Coal Supply
+30,300
+4,188
+сар
+5.1
+2,017
+11.7
+Agreement between the
+Company and Shenhua
+Group Corporation
+B
+Mutual Supplies
+19,200
+6,470
+6.9
+12,400
+3,729
+31,800
+and Services Agreement
+transactions
+сар
+N/A
+Implementation of and review opinion on the non-exempt continuing connected transactions
+During the reporting period, the implementation of the agreements A to D above is set out
+in the table below. The total amount of connected transactions for sale of products and
+provision of services by the Group to Shenhua Group during the reporting period amounted
+to RMB10,658 million, which accounted for 6.0% of the operating revenue of the Group
+during the reporting period.
+Provision of products and services
+by the Group to connected persons
+and other inflows
+Transaction
+Purchase of products and services
+from connected persons by the Group
+and other outflows
+Transaction
+amount
+amount
+Proportion
+Proportion
+period
+Prevailing
+in the same
+Prevailing
+during the
+in the same
+transaction
+reporting
+type of
+transaction
+reporting
+type of
+No.
+Name of agreement
+during the
+Given that Liangyi Railway Company failed to pay the loan interest on time due to its
+deteriorating business operation, as resolved by the shareholders' general meeting of Liangyi
+Railway Company, additional capital was injected into Liangyi Railway Company by its
+shareholders (including Shenbao Energy Company). Shenbao Energy Company has injected an
+accumulated amount of RMB11.82 million into Liangyi Railway Company.
+between the Company
+Corporation
+period
+RMB million
+C
+Financial Services
+1.
+Agreement
+between the
+Company and
+Shenhua Group
+Corporation
+annual total transaction amount of bill
+acceptance and discount services handled
+for Shenhua Group Corporation, its
+subsidiaries and associates ("Shenhua
+Group and its associates" (excluding the
+Group))
+26,000
+0
+2.
+daily balance of deposits from Shenhua
+Group and its associates (including relevant
+accrued interests incurred)
+RMB million
+91,000
+3.
+4.
+daily balance of loans, consumption credit,
+buyer's credit and finance leasing (including
+relevant accrued interests incurred) granted
+to Shenhua Group and its associates
+daily balance of entrusted loans (including
+relevant accrued interests incurred)granted
+by Shenhua Group through Shenhua
+Finance Company to the Group
+58,500
+15,069
+58,500
+3,633
+5.
+430
+62
+62
+sum of agency fees, handling fees or other
+service charges in respect of the financial
+services (including but not limited to
+rendering services such as consultancy,
+agency, settlement, account transfer,
+investment, finance leasing, letter of
+credit, online banking and entrusted loans
+services) rendered to Shenhua Group and
+its associates
+25,707
+and Shenhua Group
+cap
+amount
+Including: (1) Products
+5,469
+7.2
+1,521
+0.3
+(2) Services
+1,001
+10.9
+2,208
+10.6
+D
+Transportation Service
+during the
+reporting
+12,400
+47.5
+Framework Agreement
+between the Company
+and Taiyuan Railway
+Bureau
+2015 Annual Report 85
+Section VI Significant Events (Continued)
+No.
+Name of
+agreement
+Connected transaction item
+Prevailing
+transaction
+Transaction
+5,796
+As at the end of the reporting period, Shenbao Energy Company, in proportion to its
+shareholding, repaid the principal on the loans on behalf of Liangyi Railway Company Limited
+amounting to a total of RMB4.69 million. Shenbao Energy Company already made full
+provision for impairment on its 14.22% equity interest in Liangyi Railway Company Limited
+and the repayment amount paid on its behalf. Together with other shareholders, Shenbao
+Energy Company will continue to call for improvement of business operation of Liangyi
+Railway Company. As at 31 December 2015, Liangyi Railway Company had a gearing ratio of
+112%.
+0.8
+On 23 December 2013, the Board approved the acquisition of Baotou Coal Chemical Company
+by the Company and agreed that upon the completion of the acquisition, the Company would
+replace Shenhua Group Corporation in providing guarantee for the USD Loan for the benefit
+of Baotou Coal Chemical Company, subject to the consent of CDB. In 2014, the Company
+became the guarantor of the USD Loan.
+Full name of shareholders
+period
+the end of the
+reporting period
+with selling
+pledge or lock-up
+Percentage
+restrictions
+Status
+Number
+Nature of
+shareholders
+(%)
+Shenhua Group Corporation Limited
+the reporting
+8,727,892
+73.06
+0 Nil
+N/A
+HKSCC NOMINEES LIMITED
+-75,054
+3,390,058,476
+17.04
+0 Unknown N/A
+State-owned
+Overseas
+corporate
+China Securities Finance Corporation Limited
+547,786,589
+14,530,574,452
+556,048,233
+Shares subject to
+Number
+Pre-emptive rights
+There are no provisions for pre-emptive rights under the Articles of Association of the Company and
+the PRC laws which would entitle the existing sharesholders to have priority to subscribe for new
+shares on a pro rata basis in the event of new share issuance by the Company.
+2015 Annual Report 93
+Section VII Changes in Share Capital and Shareholders (Continued)
+III.
+SHAREHOLDERS
+(1)
+Total number of shareholders
+Total number of shareholders of ordinary shares as at the end of the reporting period (accounts)
+Including: Registered holders of A shares(including Shenhua Group Corporation)
+237,089
+234,709
+Registered holders of H shares
+shares
+2,380
+232,480
+Including: Registered holders of A shares (including Shenhua Group Corporation)
+230,098
+Registered holders of H shares
+2,382
+(II)
+Shareholdings of top ten shareholders and top ten holders of marketable shares (or
+shareholders not subject to selling restrictions)
+Shareholdings of the top ten shareholders
+Unit: share
+Increase/
+decrease during
+Number of
+shares held at
+Total number of ordinary shareholders at the end of last month prior to the date of this annual
+report (accounts)
+There were no changes in the total number of shares, shareholding structure and assets and liabilities
+structure of the Company due to bonus issue, capital conversion, placing, issuance of new shares,
+nonpublic offering of shares, exercise of warrants, implementation of share options incentive plan,
+business combination, conversion of convertible bonds, reduction of share capital, listing of shares
+held by internal employees or otherwise during the reporting period.
+2.80
+Central Huijin Asset Management Ltd.
+0 Nil
+N/A
+State-owned
+Shanghai Index 50 Trading Open-end
+Index Securities Investment Fund
+Industrial & Commercial Bank of China
+-7,321,748
+14,496,433
+0.07
+0 Nil
+N/A
+MA
+Others
+Limited -China Southern Consumption
+0.08
+Vitality Flexible Allocation Hybrid
+14,014,887
+14,014,887
+0.07
+0 Nil
+N/A
+National Social Security Fund 105 Portfolio
+7,890,491
+8,890,491
+0.04
+0 Nil
+At the end of the reporting period, the amount of guarantee provided by the Company
+for the benefit of its subsidiaries is detailed as follows: in 2008, China Development Bank
+("CDB") granted a US$350 million (hereinafter referred as "USD Loan") direct loan to Coal
+Liquefaction and Chemical Company, a wholly-owned subsidiary of Shenhua Group, for a term
+from 26 August 2008 to 25 August 2018 for the Baotou coal-to-olefins project, with guarantee
+provided by Shenhua Group Corporation. Since Coal Liquefaction and Chemical Company
+established Baotou Coal Chemical Company by way of spin-off in 2013, the USD Loan has been
+taken up by Baotou Coal Chemical Company.
+MA
+Initiated Securities Investment Fund
+0 Nil
+15,000,000
+National Social Security Fund 504 Portfolio
+Industrial & Commercial Bank of China -
+110,027,300
+110,027,300
+0.55
+0
+Nil
+름름
+N/A
+N/A
+Others
+State-owned
+Bank of China Limited - China Merchants
+Fengqing Flexible Configuration Hybrid
+=
+15,000,000
+Initiated Securities Investment Fund
+25,159,394
+0.13
+0 Nil
+N/A
+Others
+National Social Security Fund 503 Portfolio
+16,880,000
+16,880,000
+0.08
+0 Nil
+N/A
+State-owned
+25,159,394
+(II)
+(3)
+The Company did not issue any ordinary share, convertible corporate bond, warrant bond, corporate bond
+or other derivative securities, nor did it enter into any equity-linked agreement during the reporting period.
+Connected
+Gain or
+loss from
+investment
+Inner Mongolia Sanxin
+37.4
+1 year
+Railway Co., Ltd.
+6% Working
+capital
+Nil
+Yes
+No
+No
+No
+is involved
+in legal
+proceedings relationship
+N/A
+("Sanxin Railway
+Company")
+Inner Mongolia Yili
+626.6
+10 years
+Chemical Industry
+Co., Ltd.
+6.15% Replacement Pledge
+of bank
+loans
+No
+No
+No
+No
+1.1
+MA
+Whether it is Whether
+Whether a connected the term is
+guarantor it is expired transaction extended
+Interest Use of
+rate proceeds
+90 China Shenhua Energy Company Limited
+(1) Changes in total number of ordinary shares, shareholding structure and assets and
+liabilities structure of the Company
+As of 31 December 2015, the balance of the guarantee for the USD Loan was US$74.55 million
+(equivalent to approximately RMB484.07 million), and the gearing ratio of Baotou Coal
+Chemical Company was 45%.
+Section VI Significant Events (Continued)
+(3)
+(4)
+On 23 October 2015, the 10th meeting of the third session of the Board approved Shendong
+Coal Group, in proportion to its 40% shareholding, to provide Ordos Shendong Shengyuan
+Property Company Limited with joint and several liabilities guarantee. As of the end of the
+reporting period, the guarantee agreement has not been executed.
+According to statistics, as of the end of the reporting period, the amount of guarantee
+between subsidiaries in consolidated reports of the Company amounted to approximately
+RMB10,004.53 million, which was mainly due to the fact that Shenhua Hong Kong Limited,
+the wholly-owned subsidiary of the Company, provided guarantees for the issuance of USD 1.5
+billion bonds to China Shenhua Overseas Capital Co., Ltd., its wholly-owned subsidiary, and
+Shenhua Funeng Power Co., Ltd. of which the Company indirectly held 51% shares provided
+guarantees to Shenhua Funeng (Fujian Longyan) Power Co., Ltd. and Shenhua Funeng (Fujian
+Yanshi) Power Co., Ltd., which are subsidiaries of Shenhua Funeng Power Co., Ltd..
+For details of the opinions of the independent Directors, please refer to relevant reports
+disclosed in conjunction with the report.
+Entrusted cash asset management
+Asset management on trust
+(III)
+or
+1.
+✓ Not applicable
+2.
+✓ Applicable
+Not applicable
+Unit: RMB million
+Whether it
+Balance of
+Collaterals
+entrusted
+Borrower
+loans
+Maturity
+Applicable
+N/A
+Entrusted loans
+Note:
+Shares without selling restrictions
+1.
+RMB ordinary shares
+2.
+Overseas listed foreign shares
+III.
+Total number of shares
+As at 31 December 2015
+Number
+Percentage
+(%)
+0
+0.00
+19,889,620,455
+II.
+100.00
+82.91
+17.09
+19,889,620,455
+100.00
+For the year ended 31 December 2015, the Group did not purchase, sell, or redeem any of the
+Company's securities as defined under the Hong Kong Listing Rules.
+The minimum public float of the Company has satisfied the provisions under Rule 8.08 of the Hong
+Kong Listing Rules.
+(11) Changes of shares with selling restrictions
+Applicable
+38.8
+ISSUANCE AND LISTING OF SECURITIES
+II.
+✓ Not applicable
+16,491,037,955
+Shares with selling restrictions
+3,398,582,500
+There were no changes in the total number of ordinary shares and the shareholding structure of the
+Company during the reporting period. No preference shares has been issued by the Company.
+2015 Annual Report 91
+I.
+The entrusted loans provided by the Company to Sanxin Railway Company was due in February 2015 and has
+yet to be regarded as repayment, and both parties are under negotiation in respect of the subsequent relevant
+Section VI Significant Events (Continued)
+3.
+As of 31 December 2015, the Group did not grant entrusted loans with an amount exceeding
+10% of the Group's latest audited net assets to any individual party. The Company did not
+utilize the proceeds raised to grant entrusted loans, nor was there entrusted loan that was
+involved in litigations.
+matters.
+Other investment and wealth management products and derivatives investment
+✓ Applicable
+Not applicable
+The subject matter of the exchange rate swap transaction conducted by the Company is the
+loans denominated in Japanese Yen and the purpose of the said transaction is to hedge the
+risk exposure of the loans denominated in Japanese Yen, and not to procure profits. The
+specific measures adopted are in line with the nature of risk-hedging, and the risk is under
+control.
+As of 31 December 2015, the balance of loans denominated in Japanese Yen with which the
+Company conducted risk-hedging amounted to RMB64.0 million, which was part of the loans
+denominated in Japanese Yen owed by the Company. During the reporting period, the loss
+on fair value changes from the above swap contracts amounted to RMB7 million. The swap
+transactions conducted by the Company were not involved in any litigation.
+XIII. DONATIONS
+During the reporting period, the Group made external donations of RMB209 million.
+XIV. CORPORATE SOCIAL RESPONSIBILITIES ENDEAVORS
+Under centralised capital management of the Group, the entrusted loans were provided to
+subsidiaries which were short of funds to meet operating and development needs. The part of
+entrusted loans has been offset in the consolidated financial statements of the Group.
+✓ Not applicable
+(11)
+For details of the Group's CSR endeavors, please refer to the Company's 2015 CSR report which is
+disclosed in conjunction with this report.
+Environmental issues of listed companies and their subsidiaries in heavy polluting
+industries as stipulated by the competent environmental protection authorities of the PRC
+During the reporting period, the Group did not have any material environmental pollution accidents.
+For details of the Company's endeavors in relation to environmental protection, please refer to the
+Company's 2015 CSR report which is disclosed in conjunction with this report.
+(1) Change in the number of ordinary shares
+XV. CONVERTIBLE BONDS OF THE COMPANY
+Applicable
+I. CHANGE IN ORDINARY SHARE CAPITAL
+92 China Shenhua Energy Company Limited
+(1) Corporate Social Responsibilities (CSR)
+Section VII Changes in Share Capital and Shareholders
+Tianjin Guohua Panshan Power Generation Co., Ltd.
+Shenmu Power
+Hebei Guohua Cangdong Power Co., Ltd.
+Zhunge'er Power
+Guohua Zhunge'er
+Sanhe Power
+Zheneng Power
+Sanhe Power Co., Ltd.
+CLP Guohua Shenmu Power Co., Ltd.
+Power-generating division controlled and operated by Zhunge'er Energy
+Company
+Shenhua Zhuhai Coal Dock
+Zhejiang Guohua Zheneng Power Generation Co., Ltd.
+Guangdong Guohua Yudean Taishan Power Co., Ltd.
+Taishan Power
+Cangdong Power
+Jinjie Energy
+Suizhong Power
+Inner Mongolia Guohua Zhunge'er Power Generation Co., Ltd.
+Panshan Power
+Shenhua Zhunge'er Energy Co., Ltd.
+2016 Annual Report 5
+Overseas Company
+Yu Shen Energy Company
+Xinjie Energy Company
+Shenwan Energy Company
+Fujian Energy Company
+Shenhua Finance Company
+Dingzhou Power
+EMM Indonesia
+Shenhua Group Corporation Limited
+Shenhua Group Corporation Limited and its controlling subsidiaries
+China Shenhua Energy Company Limited
+The Company and its controlling subsidiaries
+Shenhua Shendong Coal Group Co., Ltd.
+Shenhua Shendong Power Co., Ltd.
+Shuohuang Railway Development Co., Ltd.
+Shenhua Trading Group Limited
+Shenhua Huanghua Harbour Administration Co., Ltd.
+Shenhua Baotou Energy Co., Ltd.
+Shenhua Baotou Coal Chemical Co., Ltd.
+Shenhua Baorixile Energy Co., Ltd.
+Shenhua Yudean Zhuhai Port Coal Dock Co., Ltd.
+China Shenhua Overseas Development & Investment Co., Ltd.
+Yulin Shenhua Energy Co., Ltd.
+Shenhua Xinjie Energy Co., Ltd.
+Shenwan Energy Company Limited
+Shenhua Fujian Energy Co., Ltd.
+Shenhua Finance Co., Ltd.
+PT.GH EMM INDONESIA
+Section | Definitions (Continued)
+Guohua Hulunbeier Power
+Guohua Ningdong
+Mengjin Power
+Shenhua Guangdong Power Sales
+Company
+Jawa Company
+JORC
+Shenhua Guohua Shouguang Power Generation Company Limited
+Shenhua Guohua Guangtou (Liuzhou) Power Generation Co., Ltd.
+Shenhua Ningxia Guohua Ningdong Power Generation Co., Ltd.
+Shenhua Guohua Guangdong Power Sales Co., Ltd.
+Shanghai Stock Exchange
+Hong Kong Stock Exchange or
+Stock Exchange
+Shanghai Listing Rules
+Hong Kong Listing Rules
+Accounting Standards for Business
+Enterprises
+International Financial Reporting
+Standards
+Articles of Association
+EBITDA
+Total debt to total debt and
+total equity ratio
+Shanghai-Hong Kong Stock Connect
+RMB
+Shenhua Guohua (Indonesia) Jawa Power Generation Co., Ltd.
+Shenbao Energy Company
+Shanghai Stock Exchange
+Australasian Code for Reporting of Mineral Resources and Ore
+Reserves
+Liuzhou Power
+Shouguang Power
+Section Definitions (Continued)
+6 China Shenhua Energy Company Limited
+Yuyao Power
+Suizhong Power Co., Ltd.
+Shaanxi Guohua Jinjie Energy Co., Ltd.
+Hebei Guohua Dingzhou Power Generation Co., Ltd.
+Inner Mongolia Guohua Hulunbeier Power Generation Co., Ltd.
+Guohua Taicang Power Generation Co., Ltd.
+Shenhua Guohua Mengjin Power Generation Co., Ltd.
+Zhejiang Guohua Yuyao Gas-fired Power Co., Ltd.
+Shenhua Guohua Jiujiang Power Co., Ltd.
+Taicang Power
+Jiujiang Power
+Huizhou Thermal
+Zhuhai Guohua Huidafeng Wind Energy Development Co., Ltd.
+Guohua Huizhou Thermal Power Branch of the Company
+Ningdong Power
+Ningxia Guohua Ningdong Power Generation Co., Ltd.
+Xuzhou Power
+Zhoushan Power
+Beijing Gas-fired Power
+Guohua Xuzhou Power Generation Company Limited
+Shenhua Guohua (Zhoushan) Power Generation Co., Ltd.
+Shenhua Guohua (Beijing) Gas-fired Power Co., Ltd.
+Zhuhai Wind Energy
+Baotou Coal Chemical Company
+Section III
+Huanghua Harbour Administration
+Company
+Is there any situation of non-operating appropriation of funds by controlling shareholder(s) and its
+subsidiaries?: No
+Is there any situation of violation of decision-making procedures for external guarantee provision? : No
+Warning on Major Risks: Impacted by the supply and demand of coal and power generation and the
+implementation of industrial policies, the Group is exposed to some uncertainties on achieving the
+business targets for 2017. In addition, investors please note that the Company has disclosed risks
+including market competition, industrial policies, change in cost, environmental protection and safety
+production, etc. in the section headed "Directors' Report".
+Contents
+mu
+Section I
+Definitions
+4
+Section II
+Company Profile and Major Financial Indicators
+7
+The Stock Exchange of Hong Kong Limited
+Business Overview
+11
+Section IV
+Chairman's Statement
+13
+Section V
+Directors' Report
+Disclaimer of forward-looking statements: There are forward-looking statements in this report made on
+the basis of subjective assumptions and judgments on future policies and economic conditions, which
+are subject to risks, uncertainties and assumptions. The actual outcome may differ materially from
+the forward-looking statements. Such statements do not constitute actual commitments to investors.
+Investors should be aware undue reliance on or use of such information may lead to risks of investment.
+20
+The Board proposed the payment of: (1) a final dividend in cash of RMB0.46 per share (inclusive of tax)
+or RMB9, 149 million for year 2016; (2) a special dividend in cash of RMB2.51 per share or RMB49,923
+million based on the total share capital of 19,889,620,455 shares of the Company as at 31 December
+2016. The above profit distribution proposal is pending the approval by shareholders at the general
+meeting.
+Deloitte Touche Tohmatsu has issued a standard unqualified independent auditor's report to the
+Company under the International Financial Report Standards for Certified Public Accountants, in
+connection with the Company's 2016 financial statements prepared under the Hong Kong Accounting
+Standards.
+CHINA SHENHUA ENERGY COMPANY LIMITED
+(a joint stock limited company incorporated in the People's Republic of China with limited liability)
+Stock Code: 01088
+2016 Annual Report
+Promote Eco-Friendly and
+Highly-Efficient Utilization of Coal
+2016 Annual Report 1
+I.
+II.
+III.
+IV.
+V.
+VI.
+VII.
+VIII.
+IX.
+Important Notice
+The Board, supervisory committee and directors, supervisors and senior management of the Company
+warrant that this report does not contain any misrepresentations, misleading statements or material
+omissions, and are jointly and severally liable for the authenticity, accuracy and completeness of the
+information contained in this report.
+This report was approved at the 24th meeting of the third session of the Board of the Company, all the
+directors of the Company were present at the meeting of the Board.
+Zhang Yuzhuo, Chairman of the Company, Zhang Kehui, Chief Financial Officer, and Xu Shancheng,
+General Manager of the Finance Department of the Company, warrant the authenticity, accuracy and
+completeness of the financial statements contained in this report.
+Section VI
+Significant Events
+81
+Section XV
+Signing Page for Opinions
+247
+Section XVI
+Summary of Major Financial Information for the Recent Five Years
+249
+4
+China Shenhua Energy Company Limited
+Section | Definitions
+Unless the context otherwise requires, the following terms used in this report have the following meanings:
+Shenhua Group Corporation
+Shenhua Group
+China Shenhua/the Company
+The Group
+Shendong Coal Group Corporation
+Shendong Power Company
+Zhunge'er Energy Company
+Shuohuang Railway Company
+Shenhua Trading Group
+246
+Documents Available for Inspection
+Section XIV
+154
+Section VII
+Changes in Share Capital and Shareholders
+111
+Section VIII
+Directors, Supervisors, Senior Management and
+Employees
+119
+Section IX
+Corporate Governance and Corporate Governance Report
+136
+Baotou Energy Company
+Section X
+147
+Section XI
+Investor Relations
+149
+Section XII
+Index to Information Disclosure
+150
+Section XIII
+Independent Auditor's Report and Financial Statements
+Supervisory Committee's Report
+Rules Governing the Listing of Stocks on Shanghai Stock Exchange
+Rules Governing the Listing of Securities on The Stock Exchange of
+Hong Kong Limited
+http://www.csec.com or http://www.shenhuachina.com
+ir@shenhua.cc
+International Financial Reporting Standards issued by the International
+Accounting Standards Committee
+3.4
+Profit for the year
+RMB million
+31,970
+24,959
+28.1
+Profit for the year attributable to equity
+holders of the Company
+RMB million
+24,910
+17,649
+41.1
+Basic earnings per share
+RMB/share
+1.252
+0.887
+41.1
+Net cash generated from operating activities
+Net cash generated from operating activities
+RMB million
+177,069
+81,883
+RMB million
+Change
+(%)
+Accountants LLP
+8th Floor, Tower W2, The Towers, Oriental Plaza,
+1 East Chang An Avenue, Beijing
+Xu Bin, Yu Chunhui
+Deloitte Touche Tohmatsu
+35th Floor, One Pacific Place, 88 Queensway,
+Hong Kong
+Wong Tin Chak, Samuel
+China Securities Depository and
+Clearing Corporation Limited
+Shanghai Branch
+3rd Floor, China Insurance Building,
+166 Lujiazui East Road,
+Pudong New Area, Shanghai
+H Share/Hong Kong
+Computershare Hong Kong Investor
+Services Limited
+Rooms 1712-1716, 17th Floor,
+Hopewell Centre, 183 Queen's Road
+East, Wanchai, Hong Kong
+2016 Annual Report 9
+Section II Company Profile and Major Financial Indicators (Continued)
+VII. MAJOR ACCOUNTING DATA AND FINANCIAL INDICATORS
+Unit
+2016
+2015
+Revenue
+Deloitte Touche Tohmatsu Certified Public
+55,406
+excluding the effect from Shenhua
+Finance Company
+384,969
+363,921
+5.8
+Equity attributable to equity holders of the
+Company
+RMB million
+316,975
+298,068
+6.3
+Total share capital at the end of the period
+RMB million
+19,890
+19,890
+0.0
+Equity attributable to equity holders per
+share
+15.94
+中国神华能源股份有限公司
+RMB/share
+RMB million
+47.8
+Total equity
+195,870
+RMB million
+92,564
+46,341
+99.7
+Unit
+As at
+2016
+31 December 31 December
+As at
+2015
+Change
+(%)
+Total assets
+Total liabilities
+RMB million
+576,729
+559,791
+3.0
+RMB million
+191,760
+(2.1)
+the latest Accounting Standards for Business Enterprises issued by the
+Ministry of Finance of the People's Republic of China and the related
+application guidance, interpretations and other related requirements
+A Share/the PRC
+Office Address
+Address
+Tel
+Fax
+III.
+IV.
+PARTICULARS
+Secretary to the Board
+Huang Qing
+Ling Wen, Huang Qing
+22 Andingmen Xibinhe Road,
+Dongcheng District, Beijing
+(Postal Code: 100011)
+(8610) 5813 3399
+(8610) 5813 1804/1814
+1088@shenhua.cc
+Board and Supervisory
+Committee Affairs and
+Investor Relations
+Department of the Company
+22 Andingmen Xibinhe Road,
+Dongcheng District, Beijing
+(Postal Code: 100011)
+(8610) 5813 1088/3399/3355
+(8610) 5813 1804/1814
+Registered Address of the Company
+Postal Code of Registered Address of
+the Company
+Office Address of the Company
+Postal Code of Office Address of
+the Company
+Tel
+Fax
+E-mail
+Company Website
+Name
+Address
+Zhang Yuzhuo
+Articles of Association of China Shenhua Energy Company Limited
+Profit for the year + net finance costs + income tax expenses +
+depreciation and amortisation - shares of results of associates
+Long-term interest bearing debts + short-term interest bearing debts
+(including bills payable)/Long-term interest bearing debts + short-term
+interest bearing debts (including bills payable) + total equity
+A mutual access mechanism between Shanghai and Hong Kong stock
+markets under which Shanghai Stock Exchange and Hong Kong Stock
+Exchange allow investors from Shanghai and Hong Kong to trade
+eligible shares listed on the other's market through local securities firms
+(or brokers), which comprises Shanghai Stock Connect and Hong Kong
+Stock Connect
+Renminbi unless otherwise specified
+2016 Annual Report 7
+Section II Company Profile and Major Financial Indicators
+I.
+II.
+INFORMATION OF THE COMPANY
+Chinese Name of the Company
+Abbreviation of Chinese Name of
+the Company
+English Name of the Company
+Abbreviation of English Name of
+the Company
+Legal Representative of the Company
+Authorised Representatives of the Company
+under the Hong Kong Listing Rules
+中國神華能源股份有限公司
+中國神華
+China Shenhua Energy Company Limited
+CSEC/China Shenhua
+CONTACTS AND CONTACT DETAILS
+Signing Auditors
+E-mail
+Chen Guangshui
+H Share
+Abbreviation
+Shanghai Stock Exchange
+Hong Kong Stock Exchange
+China Shenhua
+China Shenhua
+VI. OTHER RELEVANT INFORMATION
+Stock Code
+601088
+01088
+Auditor engaged
+Name
+by the Company
+(the PRC)
+Office Address
+Auditor engaged
+by the Company
+(Hong Kong)
+Share Registrar Name
+and Transfer
+Office
+Address
+Signing Auditors
+Name
+A Share
+Representative of Securities Affairs
+Type
+V. BASIC INFORMATION ON SHARES
+22 Andingmen Xibinhe Road,
+Dongcheng District, Beijing
+(Postal Code: 100011)
+(8610) 5813 3355
+(8610) 5813 1804/1814
+ir@shenhua.cc
+Hong Kong Office of the Company
+Room B, 60th Floor,
+Bank of China Tower, 1 Garden Road,
+Central, Hong Kong
+(852) 2578 1635
+(852) 2915 0638
+22 Andingmen Xibinhe Road, Dongcheng District, Beijing
+100011
+22 Andingmen Xibinhe Road, Dongcheng District, Beijing
+100011
+INFORMATION DISCLOSURE AND PLACE FOR DOCUMENT INSPECTION
+Designated Media for Information
+Disclosure
+Internet website designated by CSRC for
+publishing annual report
+Annual report is available at
+China Securities Journal, Shanghai Securities News,
+Securities Times and Securities Daily
+http://www.sse.com.cn and http://www.hkex.com.hk
+Shanghai Stock Exchange, Board and Supervisory
+Committee Affairs and Investor Relations Department of
+the Company and Hong Kong Office of the Company
+8
+China Shenhua Energy Company Limited
+Section II Company Profile and Major Financial Indicators (Continued)
+Stock Exchange
+183,127
+6.3
+14.99
+Aggregated amount of the above three amounts of guarantee (C+D+E)
+40
+40
+104,000
+15,562
+3. Maximum daily balance of loans, consumption
+credit, buyer's credit and financial leasing
+(including interests accrued thereon) granted
+to Shenhua Group and its associates
+4. Maximum daily balance (including interests
+accrued thereon) of entrusted loans granted
+by Shenhua Group to the Group through
+Shenhua Finance Company
+71,500
+15,937
+78,000
+3,742
+520
+58
+50
+5. Annual total fee charged for providing the
+Shenhua Group and its associates with
+consultancy, agency, settlement, transfer,
+investment, lease finance, letter of credit,
+online banking, entrusted loan and other
+financial services
+The above continuing connected transactions were settled in cash and carried out in
+the ordinary course of business of the Company, and were strictly in compliance with
+procedures of review and approval by independent directors and independent shareholders
+as well as disclosure requirements.
+The independent non-executive directors of the Company have confirmed to the Board
+of the Company that they have reviewed the transactions contemplated under the
+agreements A to D above and are of the view that (1) those transactions were entered
+into the ordinary course of business of the Group; (2) those transactions were on normal
+commercial terms or better terms; and (3) those transactions were conducted according to
+the agreements governing them on terms that are fair and reasonable and in the interest of
+the shareholders of the Company as a whole.
+Deloitte Touche Tohmatsu, the international auditors of the Company, have reviewed the
+transactions contemplated under the agreements A to D above and issued a letter to the
+Board, indicating that they were not aware of any matter for which they would consider
+that the continuing connected transactions above (1) had not been approved by the
+Company's Board of Directors; (2) were not, in all material aspects, in accordance with the
+pricing policy of the Group, (3) were not entered into, in all material aspects, in accordance
+with the relevant agreements governing such transactions; and (4) the aggregate amount
+of those transactions for the year ended 31 December 2016 had not exceeded the
+annual caps disclosed in the Company's announcements on the continuing connected
+transactions.
+100
+China Shenhua Energy Company Limited
+Section VI Significant Events (Continued)
+Certain related party transactions set out in Note 41 of the financial statements prepared
+under the International Financial Reporting Standards also constituted connected
+transactions under the Hong Kong Listing Rules and were required to be disclosed in
+accordance with Chapter 14A of the Hong Kong Listing Rules. The Company has complied
+with the disclosure requirements of Chapter 14A of the Hong Kong Listing Rules in respect
+of the above connected transactions and continuing connected transactions.
+period
+RMB million
+amount
+during the
+reporting
+Transaction
+26,000
+138
+0.3
+8.8
+D Transportation Service Framework
+Agreement between the
+Company and Taiyuan Railway
+Bureau
+12,400
+3,970
+39.0
+900
+2016 Annual Report 99
+Section VI Significant Events (Continued)
+Name of
+No. agreement
+Transaction item
+C
+Financial Services
+Agreement
+between the
+Company and
+Shenhua Group
+Corporation
+1. Annual total transaction amount of bill
+acceptance and discount services handled for
+Shenhua Group Corporation, the subsidiaries
+of Shenhua Group and the associates of
+Shenhua Group Corporation (excluding the
+Group) ("Shenhua Group and its associates")
+2. Maximum daily balance (including interests
+accrued thereon) of deposits placed by
+Shenhua Group and its associates
+Prevailing
+transaction
+cap
+RMB million
+Caps for the non-exempt continuing connected transactions for 2017 to 2019
+Name of
+No. agreement
+Counterparty
+Connected
+transaction item
+on 17 June 2016
+Supply of products and provision of services by the
+Group to the Shenhua Group
+24 March 2016
+11,800
+11,200
+11,900
+Agreement
+Supply of products and provision of services by the
+Shenhua Group to the Group
+8,800
+annual general meeting
+8,800
+3
+Financial Services
+Shenhua Group
+(1) Total amount of providing financial services
+24 March 2016
+4,290
+4,420
+4,550
+Agreement
+8,800
+13,500
+11,400
+9,400
+Date of
+agreement
+Transaction cap
+(RMB million)
+Approval
+procedure
+For the year
+For the year
+For the year
+2017
+2018
+2019
+1
+Mutual Coal Supply
+Agreement
+2
+Mutual Supplies
+and Services
+Shenhua Group
+Corporation
+Shenhua Group
+Corporation
+Supply of coal by the Group to the Shenhua Group
+Supply of coal by the Shenhua Group to the Group
+24 March 2016
+11,300
+13,500
+16,000 Approved at the 2015
+1,739
+0.5
+46
+(2) Services
+D.
+Transportation Service Framework Agreement between the Company and Taiyuan
+Railway Bureau
+Taiyuan Railway Bureau is the parent company of Daqin Railway, which is a
+substantial shareholder of 10% shareholding or above of Shuohuang Railway, a
+significant subsidiary of the Company under the Hong Kong Listing Rules. Therefore,
+Taiyuan Railway Bureau is a connected person of the Company under the Hong
+Kong Listing Rules, and the Transportation Service Framework Agreement and the
+transactions contemplated thereunder constitute continuing connected transactions
+of the Company under the Hong Kong Listing Rules.
+In order to secure coal transportation service for the Group, the Company entered
+into the Transportation Service Framework Agreement with Taiyuan Railway Bureau
+on 22 March 2013. The Transportation Service Framework Agreement was effective
+between 1 January 2014 and 31 December 2016. Pursuant to the Transportation
+Service Framework Agreement, the transportation fee payable by the Group was
+determined in accordance with the following pricing policy: (a) state-prescribed price;
+(b) the state-guidance price where there is no state-prescribed price; and (c) where
+there is neither a state-prescribed price nor a state-guidance price, the price is
+determined by fair negotiation between Taiyuan Railway Bureau and the Group with
+reference to the transportation fee received by Taiyuan Railway Bureau for offering
+transportation services to a third party.
+On 24 March 2016, the Company renewed the Transportation Service Framework
+Agreement with Taiyuan Railway Bureau. The new Transportation Service
+Framework Agreement is effective from January 2017 and will expire on 31
+December 2019. Pursuant to the new Transportation Service Framework Agreement,
+the Taiyuan Railway Bureau Group has agreed to provide railway transportation and
+related services to the Group, and the Group has agreed to provide rolling stock
+leasing service, railway track maintenance and other related services to the Taiyuan
+Railway Bureau Group.
+The pricing of the services under the new Transportation Service Framework
+Agreement shall be agreed in the implementation agreements, but shall be
+determined in accordance with the general principles and order of this section:
+(1)
+(2)
+Government-prescribed price and government-guided price: if at any time,
+the government-prescribed price is applicable to any particular service, such
+service shall be supplied at the applicable government-prescribed price.
+Where a government-guided fee standard is available, the price will be agreed
+within the range of the government guided price.
+Non-exempt continuing connected transactions between the Group and other parties
+Tender and bidding price: where tender and bidding process is necessary
+under applicable laws, regulations and rules, the price ultimately determined in
+accordance with the tender and bidding process.
+(4)
+Market price: the price of the same or similar services provided by an
+independent third party during the ordinary course of business on normal
+commercial terms. The management shall consider at least two comparable
+transactions with independent third party for the same period when
+determining whether the price for any transaction under the Agreement is
+market price.
+Agreed price: to be determined by adding a reasonable profit over a reasonable
+cost. The management shall consider at least two comparable transactions
+with independent third party for the same period when determining the
+reasonable profit of any transaction under the Agreement.
+98
+China Shenhua Energy Company Limited
+Section VI Significant Events (Continued)
+3.
+In addition to the above, for certain type of service, specific pricing policy is adopted as
+follows:
+(1)
+(3)
+Section VI Significant Events (Continued)
+2016 Annual Report 97
+(2)
+C.
+Financial Services Agreement
+On 22 March 2013, the Company entered into the Financial Services Agreement
+with Shenhua Group Corporation. The Financial Services Agreement was effective
+between 1 January 2014 and 31 December 2016. In accordance with the Financial
+Services Agreement, the Company provided relevant financial services to Shenhua
+Group through Shenhua Finance Company.
+The pricing policy of the Financial Services Agreement is as follows:
+a.
+b.
+Deposits and loans: The interest rate for deposits placed by Shenhua Group
+Corporation, its subsidiaries and associates with Shenhua Finance Company
+shall not be lower than the lowest rate allowed by the PBOC for the same
+type of deposit; in addition to the above, the interest rate shall be determined
+by reference to the rate confirmed by normal commercial banks for offering
+the same type of deposits to Shenhua Group Corporation and its subsidiaries
+and associates and shall be determined on normal commercial terms. The
+interest rate for loans offered by Shenhua Finance Company to Shenhua
+Group Corporation and its subsidiaries and associates shall not be higher than
+the highest rate allowed by the PBOC for the same type of loans; in addition
+to the above, the interest rate shall be determined by reference to the rate
+confirmed by normal commercial banks for offering the same type of loans to
+Shenhua Group Corporation and its subsidiaries and associates and shall be
+determined on normal commercial terms;
+Paid services: Shenhua Finance Company may offer paid consultancy,
+agency, settlement, account transfer, investment, finance leasing, letter of
+credit, online banking, entrusted loans and other related services to Shenhua
+Group Corporation, its subsidiaries and associates. The fees receivable by
+Shenhua Finance Company for offering consultancy, agency, settlement,
+account transfer, investment, finance leasing, letter of credit, online banking,
+entrusted loans and other related services to Shenhua Group Corporation,
+its subsidiaries and associates shall comply with the relevant requirements
+on fee standards (if any) stipulated by the PBOC or the CBRC; in addition to
+the above, the fees receivable by the Shenhua Finance Company for offering
+financial services to Shenhua Group Corporation, its subsidiaries and associates
+shall be determined by reference to the fees receivable by normal commercial
+banks for offering the same type of financial services to Shenhua Group
+Corporation, its subsidiaries, associates and shall be determined on normal
+commercial terms.
+On 24 March 2016, the Company renewed the Financial Services Agreement with
+Shenhua Group Corporation. The new Financial Services Agreement is effective from
+1 January 2017 and will expire on 31 December 2019. Pursuant to the new Financial
+Services Agreement, the Company provided relevant financial services to Shenhua
+Group through Shenhua Finance Company.
+96
+China Shenhua Energy Company Limited
+Section VI Significant Events (Continued)
+The pricing policy of the new Financial Services Agreement is as below:
+(1)
+(2)
+(3)
+(4)
+Subject to compliance with the terms and conditions of the Financial Services
+Agreement, Finance Company shall be appointed as one of the financial
+institutions to provide financial services to Members of Shenhua Group.
+Members of Shenhua Group may obtain financial services from other financial
+institutions in addition to or instead of Finance Company, as it thinks fit;
+the interest rates for deposits placed by Members of Shenhua Group with
+Finance Company under the Financial Service Agreement are negotiated
+on arm's length terms and with reference to the interest rate prescribed by
+the PBOC for the same type of deposit and interest rates charged by major
+commercial banks in the PRC for comparable deposits provided to Members
+of Shenhua Group;
+the interest rates for loans granted by Finance Company to Members of
+Shenhua Group under the Financial Service Agreement are negotiated on
+arm's length terms and with reference to the interest rate prescribed by
+the PBOC for the same type of loan and interest rates charged by major
+commercial banks in the PRC for comparable loans provided to Members of
+Shenhua Group; and
+the service fees charged by Finance Company for the provision of the financial
+services to Members of Shenhua Group are determined according to the
+fee rates fixed by the PBOC or the CBRC, and if such fixed fee rates are not
+available, the service fees are negotiated on arm's length taking into account
+the market conditions and with reference to the fee rates charged by major
+commercial banks for comparable services provided to Members of Shenhua
+Group.
+(2)
+(3)
+Transportation and related services provided by the Taiyuan Railway Bureau
+Group to the Group: price prescribed by NDRC or other related government
+authorities.
+Rolling stock leasing and other related services provided by the Group to the
+Taiyuan Railway Bureau Group: price prescribed by NDRC or other related
+government authorities.
+Mutual Coal Supply Agreement
+between the Company and
+Shenhua Group Corporation
+34,800
+4,724
+4.8
+38,400
+4,764
+18.1
+B Mutual Supplies and Services
+Agreement between the
+Company and Shenhua Group
+Corporation
+22,300
+6,122
+12,400
+3,100
+Including: (1) Products
+6,076
+8.3
+1,361
+A
+Corporation
+transactions
+Proportion in
+Railway track maintenance and other related services provided by the Group
+to the Taiyuan Railway Bureau Group: the price is negotiated and agreed by
+the parties on the basis of the unit price that the Taiyuan Railway Bureau
+Group agreed with third parties in the previous year or the same year.
+The agreements A to C above are daily connected transactions under the Shanghai
+Listing Rules, while the agreements A to D above are continuing connected
+transactions under the Hong Kong Listing Rules.
+Implementation of and review opinion on the non-exempt continuing connected
+transactions
+During the reporting period, the implementation of the agreements A to D above is set
+out in the table below. The total amount of connected transactions for sale of products
+and provision of services by the Group to Shenhua Group Corporation during the reporting
+period amounted to RMB10,846 million, which accounted for 5.9% of the operating
+revenue of the Group during the reporting period.
+Purchase of products and services from connected persons
+by the Group and other outflows
+Transaction
+Provision of products and services by the Group
+to connected persons and other inflows
+No. Name of agreement
+Prevailing
+transaction cap
+Transaction
+amount during
+the reporting the same type of
+Proportion in
+Prevailing
+RMB million
+period
+RMB million
+transactions
+transaction cap
+period
+%
+RMB million
+RMB million
+amount during
+the reporting the same type of
+of
+f guarantee (including guarantee business
+within the business scope of financial
+Relationship
+between the
+guarantor
+and the listed
+Date of
+provision of
+Whether
+guarantee
+guarantee
+Whether
+Whether
+is for the
+(execution Beginning
+Guarantor
+Unit: RMB million
+company
+Amount date of date of
+guaranteed agreement) guarantee
+Expiry date Type of
+of guarantee guarantee
+performance Whether Amount of Counter benefit of
+has been guarantee guarantee guarantee related
+completed is overdue overdue is provided parties Relationship
+Shenbao
+Subsidiary
+Energy
+Company
+Hulunbeier Liangyi 108.26 2008.8.30 2008.8.30 2029.8.29 Joint and several No
+Railway Company
+Limited
+No
+Guaranteed
+1. Guarantee provided by the Company to external parties (excluding guarantee granted to its subsidiaries)
+(II) Guarantees
+During the reporting period, the Company did not enter into or have any management and
+administration contracts in respect of the whole or any material part of the business of the
+Company.
+700
+7,423 (2,599)
+4,824
+Amount of funds provided by the Group to the
+controlling shareholder and its subsidiaries
+during the reporting period
+Balance of funds provided by the Group to the
+controlling shareholder and its subsidiaries
+Reasons for debts and liabilities between
+related parties
+Repayment of debts and liabilities between
+related parties
+Undertakings related to debts and liabilities
+between related parties
+Impacts of debts and liabilities between related
+parties on the operating results
+and financial position of the Company
+0
+0
+The above related debts and liabilities incurred were mainly
+due to the fact that the Group provided entrusted loans to an
+associated company of a subsidiary of the Company through a
+bank, and the Group took long-term and short-term loans from
+Shenhua Group and performed internal decision procedures in
+accordance with relevant requirements.
+Currently, the principal and interests of the above entrusted
+loans and borrowings are repaid in a normal manner in
+accordance with the repayment schedule.
+Not applicable
+The above entrusted loans and borrowings are beneficial to
+the normal commencement of relevant project construction
+and production operation of the Company and have no material
+impact on the operating results and financial position of the
+Company.
+2016 Annual Report 103
+Section VI Significant Events (Continued)
+XII. MATERIAL CONTRACTS AND THEIR PERFORMANCE
+(1) Trust, contracting and leasing
+Applicable
+Not applicable
+No
+No
+No
+N/A
+Given that Liangyi Railway Company failed to pay the loan interest on time due to its
+deteriorating business operation, as resolved by the shareholders' general meeting of
+Liangyi Railway Company, additional capital was injected into Liangyi Railway Company
+by its shareholders (including Shenbao Energy Company). Shenbao Energy Company has
+injected an accumulated amount of RMB11.82 million into Liangyi Railway Company.
+At the end of the reporting period, the guarantee provided by Shenbao Energy Company,
+a subsidiary of which the Company owns 56.61% of the shares, for the benefit of external
+parties was as follows: prior to the acquisition of Shenbao Energy Company by the
+Company in 2011 and pursuant to the Guarantee Agreement on the Syndicated Renminbi
+Loan for the Cooperative Railway Project Connecting Yimin and Yiershi Newly Constructed
+by Hulunbeier Liangyi Railway Company Limited, in 2008, Shenbao Energy Company, as
+one of the guarantors, provided joint and several liability guarantee to Hulunbeier Liangyi
+Railway Company Limited (hereinafter referred to as the "Liangyi Railway Company", of
+which Shenbao Energy Company owns 14.22% of the shares) for the syndicated loans.
+The major liability guaranteed was the debts due to the lender with a maximum balance
+of RMB207.47 million from 2008 to 2027, regardless of whether the debt is due when the
+above period expires. The above syndicated loans will fall due by tranches between 2011
+and 2026. The Guarantee Agreement provides that the guarantee period of the debts borne
+by the guarantor shall be calculated from the due date of each tranche to two years after
+the due date of the last tranche, i.e. 2029.
+(3)
+(2)
+(1)
+At the end of the reporting period, the total balance of the amount of guarantee provided by the
+Company and its subsidiaries for the benefit of its subsidiaries and that provided by the Company
+and its subsidiaries for the benefit of external parties amounted to RMB11,140.89 million,
+including:
+Section VI Significant Events (Continued)
+China Shenhua Energy Company Limited
+104
+Total amount of guarantee accounting for the net asset ratio of the Company = total amount of guarantee/
+net assets attributable to equity holders of the Company as at the end of the year under accounting
+standards for business enterprises.
+The amount of guarantee provided by the subsidiary to external parties of total balance of guarantee at the
+end of the reporting period equals to the amount of external guarantee of the subsidiary times the equity
+ratio of the subsidiary held by the Company;
+See below
+See below
+10,688.29
+0
+10,688.29
+0
+2.
+Notes: 1.
+Description of guarantee
+Description of the potential joint and several repayment liability for outstanding guarantee
+As at the end of the reporting period, Shenbao Energy Company, in proportion to its
+shareholding, repaid the principal on the loans on behalf of Liangyi Railway Company
+Limited amounting to a total of RMB10.374 million. Shenbao Energy Company already
+made full provision for impairment on its 14.22% equity interest in Liangyi Railway
+Company Limited and the repayment amount paid on its behalf. Together with other
+shareholders, Shenbao Energy Company will continue to call for improvement of business
+operation of Liangyi Railway Company. As at 31 December 2016, Liangyi Railway Company
+had a gearing ratio of 119%.
+0
+At the end of the reporting period, the amount of guarantee provided by the Company
+for the benefit of its subsidiaries is detailed as follows: on 23 December 2013, the Board
+approved the acquisition of Baotou Coal Chemical Company by the Company and the
+Company would replace Shenhua Group Corporation in providing guarantee for the Loan of
+USD350 million granted by China Development Bank (for a term expired in August 2018)
+for the benefit of Baotou Coal Chemical Company.
+According to statistics, as of the end of the reporting period, the amount of guarantee
+between subsidiaries in consolidated reports of the Company amounted to approximately
+RMB10,580.02 million, which was mainly due to the fact that Shenhua Hong Kong Limited,
+the wholly-owned subsidiary of the Company, provided guarantees for the issuance of
+USD1.5 billion bonds to China Shenhua Overseas Capital Co., Ltd., its wholly-owned
+subsidiary, and Shenhua Funeng Power Co., Ltd. of which the Company indirectly held
+51% shares provided guarantees to its two controlling subsidiaries.
+liability
+guarantee
+Total amount of guarantee provided during the reporting period (excluding guarantee
+provided to its subsidiaries)
+Total balance of guarantee at the end of the reporting period (A) (excluding guarantee
+provided to its subsidiaries)
+2. Guarantee provided by the Company and its subsidiaries for the benefit of its subsidiaries
+(3.22)
+108.26
+Total amount of guarantee provided for the benefit of subsidiaries during the reporting
+period
+Total balance of guarantee provided for the benefit of subsidiaries at the end of the
+reporting period (B)
+544.03
+11,032.63
+3. Aggregated amount of guarantee (including guarantee for the benefit of its subsidiaries)
+Total amount of guarantee (A+B)
+11,140.89
+Proportion of total amount of guarantee in net assets attributable to shareholders of the
+Company at the end of the year (%)
+3.6
+Including:
+Amount of guarantee provided for the benefit of shareholders, de facto controller and their
+related parties (C)
+Amount of guarantee directly or indirectly provided for the benefit of parties with a gearing
+ratio in excess of 70% (D)
+For details of the opinions of the independent Directors, please refer to relevant reports disclosed
+in conjunction with the report.
+As at 31 December 2016, the balance of guarantee for the USD Loan was USD65.25
+million (equivalent to approximately RMB452.61 million and the gearing ratio of Baotou Coal
+Chemical Company was 40%.
+700
+Total
+parties
+13,000
+13,000
+(including relevant accrued interests incurred)
+advanced by Shenhua Group Corporation
+and its subsidiaries to the Company and/
+or its subsidiaries through Shenhua Finance
+Company
+(6) Annual total fee charged for providing
+182
+221
+267
+members of Shenhua Group with
+consultation, agency, settlement, transfer,
+investment, lease finance, letter of credit,
+online banking, entrusted loan, guarantee, bill
+acceptance and other financial services
+4 Transportation
+Taiyuan Railway
+Rolling stock leasing, railway track maintenance and 24 March 2016
+1,700
+1,700
+700
+13,000
+Service Framework
+Maximum daily balance of entrusted loans
+granted to members of Shenhua Group
+enterprises, such as performance guarantee
+and quotation sharing) to members of
+Shenhua Group
+(2) Annual total transaction amount of bill
+10,400
+10,400
+10,400
+acceptance and discount services
+(3)
+Maximum daily balance (including interests
+52,000
+58,500
+65,000
+accrued thereon) of deposits placed by
+members of Shenhua Group
+(4) Maximum daily balance of loans, consumption
+26,000
+28,600
+32,500
+credit, buyer's credit and finance leasing
+(including relevant accrued interests incurred)
+(5)
+Portion of the total amount of guarantee in excess of 50% of net assets (E)
+Bureau
+Agreement
+Funds provided to
+related parties
+Funds offered by related
+parties to the Group
+Related party
+Relationship
+Opening Amount Closing Opening Amount Closing
+balance incurred balance balance incurred balance
+Shenhua Group
+Controlling shareholders and
+0
+0
+0 7,423 (2,599) 4,824
+Corporation and
+its subsidiaries
+its subsidiaries
+Other related
+Others
+700
+0
+700
+0
+0
+0
+Unit: RMB million
+other related services provided by the Group to the
+(IV) Debts and liabilities between related parties
+China Shenhua Energy Company Limited
+Taiyuan Railway Bureau
+Acceptance of railway transportation services and
+11,600
+14,000
+17,000
+other related services of the Taiyuan Railway
+Bureau by the Group
+1,700 Approved by the Board on
+24 March 2016
+2016 Annual Report 101
+Section VI Significant Events (Continued)
+(II)
+(III)
+Under the Mutual Supplies and Services Agreement, the Group and Shenhua Group
+entered into the Entrusted Management Services of Asset and Business Agreement (
+À¤¾Œ¾Ã»), which was considered and approved at the 15th meeting
+of the third session of the Board of the Company on 24 March 2016. The disclosure of
+the renewal of the above agreement was set out in the H shares announcement dated 24
+March 2016 and the A shares announcement dated 25 March 2016 of the Company.
+Connected transactions regarding acquisition and disposal of assets or equity
+Applicable ✓ Not applicable
+Material connected transactions regarding joint external investment
+Applicable
+Not applicable
+On 20 July 2016, the Company, Zhejiang Provincial Energy Group Co., Ltd. ("Zhejiang Energy
+Group") and Shenhua Ningxia Coal Industry Co., Ltd. ("Shenhua Ningxia Coal") entered into a joint
+venture agreement for the establishment of a joint venture company, namely Guohua Ningdong.
+Pursuant to the joint venture agreement, the registered capital of Guohua Ningdong is RMB400
+million and the Company, Zhejiang Energy Group and Shenhua Ningxia Coal contributed 56.77%,
+33.33% and 9.9%, respectively, of the registered capital.
+By the end of 2016, the business registration of Guohua Ningdong had been completed and the
+capital contribution made by the three shareholders had been received. Guohua Ningdong is a
+subsidiary of the Company which is consolidated in the financial statement of the Company.
+102
+Section VI Significant Events (Continued)
+4.
+2016 Annual Report 95
+Section VI Significant Events (Continued)
+No
+No
+0
+627 10 years
+Co., Ltd.
+4.9% Replacement of Pledge
+bank loans
+No
+No
+No
+3
+Note: The entrusted loans provided by the Company to Sanxin Railway Company was not repaid when it was
+due in February 2015, and both parties are under negotiation in respect of the subsequent relevant
+matters.
+3.
+As of 31 December 2016, the Group did not grant entrusted loans with an amount
+exceeding 10% of the Group's latest audited net assets to any individual party. The
+Company did not utilise the proceeds raised to grant entrusted loans, and there was no
+entrusted loan that was involved in litigations.
+Under centralised capital management of the Group, the entrusted loans were provided to
+subsidiaries which were short of funds to meet operating and development needs. The part
+of entrusted loans has been offset in the consolidated financial statements of the Group.
+Other investment and wealth management products and derivatives investment
+Applicable
+Not applicable
+Investment
+type
+Product
+type
+Investment
+share
+(lot)
+Expiry date
+Yes
+6% Working capital Nil
+No. Trustor
+Inner Mongolia Sanxin Railway Co.,
+Ltd. ("Sanxin Railway Company")
+Inner Mongolia Yili Chemical Industry
+Yes
+No
+No
+As of the end of 2016, the total amount of entrusted wealth management products of
+the Group amounted to RMB33,400 million, which was mainly consisted of principal-
+guaranteed products with a relatively lower risk level, and did not have any failure of
+receiving principal and profit when overdue.
+In accordance with Rule 14.23 of the Hong Kong Listing Rules, transaction Nos. 1 and
+2 above constitute a discloseable transaction of the Company when aggregated and
+transaction Nos. 3, 4 and 6 constitute a discloseable transaction of the Company when
+aggregated. For details, please refer to the H shares announcement dated 3 January 2017
+and the A shares announcement dated 4 January 2017 of the Company.
+106 China Shenhua Energy Company Limited
+Section VI Significant Events (Continued)
+2.
+Entrusted loans
+✓ Applicable
+Gain/loss from
+investment
+(RMB million)
+Not applicable
+Balance
+Whether
+entrusted
+Borrower
+loans Maturity
+Interest Use of
+rate proceeds
+it is a
+Whether
+collaterals or
+Gain or
+guarantor is Whether it connected the term is involved in loss from
+provided is expired transaction extended litigations investment
+Whether
+Whether it is
+Unit: RMB million
+37 1 year
+Whether
+it is
+involved in
+litigations
+Thermal coal 460
+futures
+In which: 1. Capital (RMB0'000)
+II. Contribution by Category
+12,541
+1. Education Support (RMB0'000)
+1,735
+In which: 1.1 Subsidy for poor students
+(RMB0'000)
+279
+1.2 Number of subsidized poor
+1,200
+students
+1.3 Improvement of educational
+1,456
+resources in deprived
+regions (RMB0'000)
+2. Health Support (RMB0'000)
+4,740
+In which: Helping poor people with treatment
+for serious illness (RMB0'000)Notes
+4,740
+3. Social Support (RMB0'000)
+4,905
+In which: 3.1 Cooperation for poverty
+I. General
+Index
+Number and Circumstances
+Statistical table of the targeted poverty alleviation work in 20161
+May 2017
+No
+In addition, during the reporting period, the subject matter of the exchange rate swap
+transaction conducted by the Company the loans denominated in Japanese Yen and the
+purpose of the said transaction is to hedge the risk exposure of the loans denominated in
+Japanese Yen, and not to procure profits. The specific measures adopted are in line with
+the nature of risk-hedging. Upon the full settlement of the final repayment of principal and
+interests under the swap transaction on 20 September 2016, the relevant swap transaction
+was terminated forthwith.
+2016 Annual Report 107
+Section VI Significant Events (Continued)
+XIII. PROACTIVE FULFILMENT OF SOCIAL RESPONSIBILITY
+(1)
+Poverty alleviation
+1. Targeted poverty alleviation plan
+2.
+Commodity Futures
+The Group values the poverty alleviation work conforming to the requirements under the
+targeted poverty alleviation plan and documents of the State. Adhering to the principle
+of contributing based on its ability to benefit the public, the Group has adopted different
+measures based on the local circumstances with emphasis on the outcome and focused
+on the grassroots and the "Three Rural Issues". With continuous improvement of the
+production capability, life quality and medical condition in provinces targeted for support,
+provinces under focused poverty alleviation and deprived villages as the intention and the
+foothold, the Group meticulously organized poverty alleviation projects and constantly
+invested supporting funds with standardized management and enhanced supervision while
+carrying out various work including education support, hygiene improvement and medical
+support, enhancement in construction of rural infrastructure and production facilities
+and assistance in the development of special industries in deprived regions. Shenhua
+Foundation is the major entity of the Group for execution of poverty alleviation work and
+the Group is the key governing unit and the major donor¹ of Shenhua Foundation.
+In 2016, the Group contributed approximately RMB125 million² to the targeted poverty
+alleviation which was mainly used for the Tibet-support, Qinghai-support, Xinjiang-support
+and targeted poverty alleviation work, education subsidy for the students in deprived regions,
+construction of roads, schools and libraries in deprived regions, and aids to children with
+leukemia and congenital heart disease in impoverished families. Each poverty alleviation
+work achieved remarkable results and was well recognized by the local government and
+citizens. For the details of Shenhua Foundation and the relevant poverty alleviation work,
+please refer to the 2016 CSR Report which is disclosed in conjunction with this report.
+In 2016, Shenhua Foundation invested RMB300 million into the "Central State-Owned-
+Enterprises Poverty Regional Industrial Investment Fund" (@Q£££*&AHD).
+1
+The donation from the Group accounts for 82% of the total donation received by Shenhua Foundation
+since its establishment.
+2
+Calculation basis of the capital expenditure for targeted poverty alleviation: capital expenditure of Shenhua
+Foundation for targeted poverty alleviation × the proportion of donation made by the Group to Shenhua
+Foundation + the capital expenditure of the Group directly used for targeted poverty alleviation.
+108
+China Shenhua Energy Company Limited
+Section VI Significant Events (Continued)
+3.
+Summary of the targeted poverty alleviation during the year
+Principal and profit to be
+paid on redemption
+date
+Not yet confirmed
+50 2016/12/26
+provision connected involved in
+amount transaction litigations
+1
+China
+Shenhua
+Industrial and
+Commercial
+Bank of China
+Principal-guaranteed
+with floating
+return
+10,000 2016/12/27
+2017/3/27
+Principal and interests to
+be paid together on
+expiry date
+Yes
+- No
+No
+2 China
+Industrial and
+Shenhua
+3 China Shenhua
+Commercial
+Bank of China
+China Construction Principal-guaranteed
+Bank
+with floating
+return
+Principal-guaranteed
+with floating
+5,000 2016/12/29
+2017/3/29
+gained taken
+redeemed
+compensation
+management
+(III) Entrusted cash asset management
+1. Entrusted wealth management
+Applicable
+Not applicable
+Unit: RMB million
+Amount
+Trustee
+Type of
+entrusted wealth
+management
+products
+Amount of
+of
+Principal and interests to
+Whether
+Whether
+entrusted Initial date of
+wealth entrusted wealth
+management management
+Expiry date of
+principal
+Actual the legal
+Impairment it is a it is
+entrusted wealth
+Determination of
+actually
+profit process is
+Whether
+3,977
+- Yes
+No
+- Yes
+- No
+No
+Company
+guaranteed with
+floating return
+paid one-off on expiry
+date
+6 Shenhua Finance China Construction Non-principal-
+2,000 2016/12/22
+2017/1/23
+Principal and profit to be
+I
+Yes
+- No
+No
+Company
+Bank
+7
+Shenhua Finance CITIC Trust
+Company
+guaranteed with
+floating return
+Non-principal-
+guaranteed with
+floating return
+Principal and profit to be
+2017/12/14
+100 2016/12/14
+paid on redemption
+date
+be paid together on
+return
+expiry date
+16,000 2016/12/23
+2017/3/23
+Principal and interests to
+Yes
+- No
+No
+be paid together on
+- No
+expiry date
+Shenhua Finance China Construction Non-principal-
+Company
+5 Shenhua Finance Everbright Bank Non-principal-
+250 2016/12/13
+Not yet confirmed
+Principal and profit to be
+Yes
+- No
+No
+Bank
+guaranteed with
+floating return
+4
+4.
+alleviation in eastern and
+western regions (RMB0'000)
+3.2 Targeted poverty alleviation
+(RMB0'000)
+3,390,466,096
+17.05
+0
+Unknown
+N/A corporate
+China Securities Finance Corporation
+Limited
+13,847,602
+569,895,835
+2.87
+0
+Nil
+N/A
+Others
+Central Huijin Asset Management Ltd.
+0
+110,027,300
+0.55
+0 Nil
+N/A
+State-owned
+407,620
+HKSCC NOMINEES LIMITED
+Overseas
+N/A State-owned
+Number
+during the
+at the end of
+shares
+Shares subject to
+Full name of shareholders
+reporting
+period
+the reporting
+with selling
+pledge or lock-up
+Hong Kong Securities Clearing Company
+Limited
+period Percentage
+Status
+Number
+Nature of
+shareholders
+(%)
+Shenhua Group Corporation Limited
+0
+14,530,574,452
+73.06
+0
+Nil
+restrictions
+shares held
+Overseas
+29,999,534
+0 Nil
+N/A
+Others
+NA
+Industrial & Commercial Bank of China
+Limited-China Southern Consumption
+Vitality Flexible Allocation Hybrid Initiated
+Securities Investment Fund
+-931,960
+13,082,927
+0.07
+0 Nil
+N/A Others
+Agricultural Bank of China Limited -
+Fullgoal CSI State-owned Enterprises
+Reform Index Classification Securities
+Investment Fund
+12,640,466
+12,640,466
+0.06
+00
+0 Nil
+N/A Others
+0.07
+400
+14,648,826
+152,393
+0.15
+15
+☐ Nil
+N/A corporate
+Bank of China Limited - China Merchants
+Fengqing Flexible Configuration Hybrid
+Initiated Securities Investment Fund
+-2,206,906
+22,952,488
+0.12
+22,698,660
+0
+National Social Security Fund 108 Portfolio
+17,029,796
+17,029,796
+0.09
+0 Nil
+N/A
+State-owned
+Industrial & Commercial Bank of China -
+Shanghai Index 50 Trading Open-end
+Index Securities Investment Fund
+N/A Others
+decrease
+Number of
+Increase/
+110
+China Shenhua Energy Company Limited
+Section VI Significant Events (Continued)
+XIV. CONVERTIBLE BONDS OF THE COMPANY
+Applicable ✓ Not applicable
+Section VII
+Changes in Share Capital and Shareholders
+MATILDA
+2016 Annual Report 113
+Section VII Changes in Share Capital and Shareholders
+I.
+CHANGE IN ORDINARY SHARE CAPITAL
+(1)
+Change in the number of ordinary shares
+(II)
+There was no change in the total number of ordinary shares and the shareholding structure of the
+Company during the reporting period. The Company did not issue any preference share.
+I.
+Shares with selling restrictions
+II.
+Shares without selling restrictions
+1.
+During the reporting period, the Group made external donations of approximately RMB791 million.
+(IV) Donations
+For the environmental protection work of the Group, please refer to the 2016 CSR Report which is
+disclosed in conjunction with this report.
+The main pollutants discharged by wastewater discharging enterprises are chemical oxygen
+demand (COD) and ammonia nitrogen, which are discharged to the surface water through the
+sewage outfall of the enterprises. Wastewater enterprises are mainly distributed in coal mining
+and coal-to-chemical enterprises and wastewater treatment plants. The emission standard
+implemented was the Comprehensive Emission Standards for Sewage (GB8978-1996). During
+the reporting period, the enterprises under the Group are well equipped with wastewater pollution
+prevention and treatment facilities and in stable operation which fulfilled the discharge standard.
+4. Other Projects (RMB0'000)
+In which: 4.1. Number of projects
+4.2. Contribution amount
+(RMB0'000)
+III. Awards
+4.3. Description of other projects
+928
+1,161
+1,161
+Improvement of infrastructure in
+deprived villages
+The Shenhua Loving Care Activities
+was awarded the title of "State-owned
+Enterprise Voluntary Service Brand"
+by SASAC of the State Council
+Notes: It is mainly used to aid children with congenital heart disease and leukemia.
+RMB ordinary shares
+Subsequent targeted poverty alleviation plan
+1
+The statistical table is based on the Notice of the State Council on the Publication of Poverty Alleviation
+Plan for the "13th Five-Year" Plan Period (Guo Fa [2016] No. 64).
+2016 Annual Report 109
+Section VI Significant Events (Continued)
+(II) Corporate social responsibilities
+For details of the Group's CSR endeavors, please refer to the 2016 CSR Report which is disclosed
+in conjunction with this report.
+(III) Environmental issues of listed companies and their subsidiaries in heavy polluting
+industries as stipulated by the competent environmental protection authorities of the
+PRC
+During the reporting period, the Group did not have any material environmental pollution
+accidents.
+47 enterprises under the Group were categorized as national major pollution source under
+supervision (among which 42 were exhaust gas enterprises and 6 were wastewater discharging
+enterprises (inclusive of 1 exhaust gas enterprise concurrently)), mainly located in Inner Mongolia,
+Shaanxi, Fujian, Hebei, Anhui, Jiangsu and Zhejiang.
+The main pollutants emitted by exhaust gas enterprises are soot, sulphur dioxide and nitrogen
+oxides, which are emitted to the atmosphere through the chimneys. Exhaust gas enterprises are
+mainly distributed in public thermal power plants, coal-to-chemical captive power plants, heating
+boilers for mines and coking plants. Emission standards implemented include Emission Standards
+for Air Pollutants Produced by Thermal Plants (GB13223-2011), Emission Standards for Air
+Pollutants Produced by Boilers (GB13271-2014) and Emission Standards for Pollutants Produced
+by Coking Chemical Industry (GB16171-2012). The emission of nitrogen oxides produced by
+Bayannur Coking Plant under the Company was up to the standard, while the emission of
+soot and sulphur dioxide failed to reach the same in a steady manner. Renovation of pollution
+prevention and treatment facilities has been commenced and is scheduled to be put into trial
+operation in mid-2017. During the reporting period, save as disclosed above, the common thermal
+power plants, self-owned power plant and heating boilers in mining areas under the Group are
+well equipped with pollution prevention and treatment facilities and in stable operation which
+fulfilled the emission standard.
+In 2017, the Group will earnestly adhere to the spirit of poverty alleviation of the State
+and continue to fulfil the political responsibility and social responsibility of a state-owned
+enterprise. It will constantly enhance the efforts on Tibet-support, Qinghai-support,
+Xinjiang-support and targeted poverty alleviation work, and carry out various poverty
+alleviation works with precision and priority to emergency. Support for social public services
+segment, such as education support, medical support and technology support, will be
+prioritized. It will strive to improve the production capability and living condition in deprived
+regions and unearth the relative advantages in deprived regions such as special farming
+and husbandry industry and abundant labor resources. By adequately integrating the
+poverty alleviation resources of the Group with the local relative advantages and resources,
+the Group will gradually enhance the self-development capability of the poor and alter the
+economic development mode of the deprived regions with provision of further support and
+assistance to the poverty alleviation and wealth acquisition in the deprived regions.
+2.
+Overseas listed foreign shares
+III.
+SHAREHOLDERS
+(1)
+Total number of shareholders
+Total number of shareholders of ordinary shares as
+at the end of the reporting period (accounts)
+Registered holders of H shares
+(II)
+Including: Holders of A shares (including Shenhua Group Corporation) Note
+Total number of ordinary shareholders at the end of last month
+prior to the date of this annual report (accounts)
+III.
+Including: Holders of A shares (including Shenhua Group Corporation)
+208,908
+206,573
+2,335
+201,755
+199,434
+2,321
+Note: The number of holders of A shares is a combination of ordinary securities accounts and margin financing and
+securities lending accounts, pursuant to the information disclosed by Shanghai Branch of China Securities
+Depository and Clearing Corporation Limited.
+Shareholdings of top ten shareholders and top ten holders of marketable shares (or
+shareholders not subject to selling restrictions)
+Unit: share
+Shareholdings of the top ten shareholders
+Registered holders of H shares
+Section VI Significant Events (Continued)
+Section VII Changes in Share Capital and Shareholders (Continued)
+114
+Total number of shares
+As at 31 December 2016
+Number
+Percentage
+(%)
+0.00
+19,889,620,455
+16,491,037,955
+3,398,582,500
+19,889,620,455
+100.00
+82.91
+17.09
+100.00
+For the year ended 31 December 2016, the Group did not purchase, sell, or redeem any of the
+Company's securities as defined under the Hong Kong Listing Rules.
+The Company has satisfied minimum public float requirement under Rule 8.08 of the Hong Kong
+Listing Rules.
+China Shenhua Energy Company Limited
+Changes of shares with selling restrictions
+Not applicable
+II.
+ISSUANCE AND LISTING OF SECURITIES
+The Company did not issue any ordinary share, convertible corporate bond, warrant bond, corporate
+bond or other derivative securities, nor did it enter into any equity-linked agreement during the reporting
+period.
+(1)
+(II)
+Changes in total number of ordinary shares, shareholding structure and assets and
+liabilities structure of the Company
+There was no change in the total number of shares, shareholding structure and assets and
+liabilities structure of the Company due to bonus issue, capital conversion, placing, issuance of
+new shares, non-public offering of shares, exercise of warrants, implementation of share options
+incentive plan, business combination, conversion of convertible bonds, reduction of share capital,
+listing of shares held by internal employees or otherwise during the reporting period.
+Pre-emptive rights
+There is no provision for pre-emptive rights under the Articles of Association of the Company and
+the PRC laws which would entitle the existing shareholders to have priority to subscribe for new
+shares on a pro rata basis in the event of new share issuance by the Company.
+Applicable
+2016 Annual Report 105
+paid one-off on expiry
+date
+6.78
+2016 Annual Report 123
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+Name
+Executive Director and
+Senior Vice President
+Independent
+Non-executive
+Director
+Biographical details
+LI Dong
+Born in January 1960, Chinese, a senior engineer with the qualification
+as a professor, Dr. Li has extensive experience in the management of
+coal enterprises in China. He obtained a master's degree from China
+Europe International Business School in 2005 and a Ph.D. degree
+from Liaoning Technical University in 2005.
+Dr. Li has served as an executive director of the Company since June
+2016, a senior vice president of the Company since May 2011 and
+vice general manager of Shenhua Group Corporation since August
+2006.
+Prior to the foregoing, Dr. Li had served in various capacities, including
+deputy chief engineer of Shenhua Group Corporation, chairman of
+Shenhua Zhunge'er Energy Co., Ltd., and head of General Manager's
+Office of Shenhua Group Corporation.
+FAN Hsu Lai Tai
+Born in September 1945, Chinese, Ms. Fan has extensive experience
+in legislative and supervision affairs. She received a master's degree
+from the University of Hong Kong in 1973.
+Ms. Fan has served as an independent non-executive director of
+the third session of the Board of the Company since August 2014,
+independent non-executive director of China COSCO Holdings
+Company Limited since January 2009, independent non-executive
+director of China Overseas Land & Investment Ltd. since February
+2009, independent non-executive director of COSCO Pacific Limited
+since May 2011, independent non-executive director of Bank of East
+Asia Limited since February 2016, and a member of the Standing
+Committee of the 12th National People's Congress of China since
+March 2013.
+Ms. Fan served as an independent non-executive director of the
+second session of the Board of the Company from 2010 to 2014.
+Prior to the foregoing, Ms. Fan had served in various capacities,
+including deputy to the ninth and tenth National People's Congress
+of China, member of the Standing Committee of the 11th National
+People's Congress, member of Preliminary Working Committee for
+Preparatory Committee, member of Preparatory Committee, president
+of the Legislative Council of the Hong Kong Special Administrative
+Region, director of Career Centre of the University of Hong Kong, and
+assistant dean of Hong Kong Polytechnic Institute.
+124
+China Shenhua Energy Company Limited
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+Name
+Biographical details
+Independent
+Non-executive
+Director
+Independent
+Non-executive
+Director
+GONG Huazhang
+Born in February 1946, Chinese, a professor-level senior accountant.
+Mr. Gong graduated from Jiangsu Yangzhou Business School in 1965
+and has over 40 years' experience in accounting.
+Mr. Gong has served as an independent non-executive director of
+the third session of the Board of the Company since August 2014.
+Mr. Gong is also a member of China Valuation Standards Committee,
+special councilor of China Appraisal Society and consultant of the
+Accounting Society of China and the Pricing Association of China.
+Mr. Gong is a part-time professor at Tsinghua University, Nankai
+University, Xiamen University, Shanghai National Accounting
+Institute, Xiamen National Accounting Institute and China University
+of Petroleum (Beijing) and a professor at Beijing National Accounting
+Institute.
+Prior to the foregoing, Dr. Han had served in various capacities,
+including chairman and general manager of Shenhua Coal Trading
+Company Limited, and division head of the State Development and
+Planning Commission.
+Mr. Gong served as an independent non-executive director of
+Nanyang Commercial Bank (China) Limited from December 2007
+to June 2016 and external director of China National Cereals, Oils
+and Foodstuffs Corporation from April 2011 to March 2016. Prior to
+the foregoing, Mr. Gong had served in various capacities, including
+chief accountant of China National Petroleum Corporation, director of
+Petrochina Company Limited, chairman of China Petroleum Finance
+Co., Ltd., an independent non-executive director of the first and
+second sessions of the Board of the Company.
+He served as the president of the Company from June 2014 to
+January 2017, a non-executive director of the first session and second
+session of the Board of the Company from 2004 to 2011, executive
+director of the second session of the Board of the Company from
+2011 to 2014, and senior vice president of the Company from 2011 to
+2014.
+Born in April 1958, Chinese, a researcher, Dr. Han has extensive
+experience in the Chinese coal industry, macroeconomics and
+corporate management. He received a master's degree from Tongji
+University in 1999, and a Ph.D. degree in Economics from Wuhan
+University in 2016.
+2016 Annual Report 121
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+3.
+Biographical details of the directors, supervisors and senior management as at the end
+of the reporting period
+Name
+Chairman and
+Executive Director
+Biographical details
+ZHANG Yuzhuo
+Born in January 1962, Chinese, a researcher and Academician of the
+Chinese Academy of Engineering, Dr. Zhang has extensive experience
+in corporate management and professional management in the coal
+industry in China. He received a Ph.D. degree from the University
+of Science and Technology of Beijing in 1989, and conducted
+postdoctoral studies and research in clean coal technology at the
+University of Southampton in the UK and Southern Illinois University
+in the USA from 1992 to 1996.
+Dr. Zhang has served as the chairman and an executive director of
+the third session of the Board of the Company since August 2014,
+director of Shenhua Group Corporation since December 2008, and
+chairman for Shenhua Group Corporation since May 2014.
+Dr. Zhang served as the chairman of China Shenhua Coal Liquefaction
+Company Limited from 2003 to 2010, chairman of Shenhua Hong
+Kong Limited from 2005 to 2010, general manager of Shenhua
+Group Corporation from 2008 to 2014, non-executive director of the
+second session of the Board of the Company from 2004 to 2010, vice
+chairman of the second session of the Board of the Company from
+2011 to 2014, executive director of the second session of the Board
+of the Company from 2010 to 2014, and chairman of the second
+session of the Board of the Company from June to August 2014.
+Prior to the foregoing, Dr. Zhang had served in various capacities,
+including non-executive director of the first session of the Board of the
+Company, deputy general manager of Shenhua Group Corporation,
+president of the China Coal Research Institute, chairman of China Coal
+Technology Corporation, chairman of Tiandi Science & Technology
+Co., Ltd. and deputy general manager of Shandong Yankuang Group
+Co., Ltd..
+122
+China Shenhua Energy Company Limited
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+Name
+Vice Chairman,
+Executive Director
+and President
+Executive Director
+Biographical details
+LING Wen
+Born in February 1963, Chinese, a professor and Academician
+of Chinese Academy of Engineering, Dr. Ling has extensive
+management experience in financial institutions and enterprises. He
+received a Ph.D. degree from Harbin Institute of Technology in 1991,
+and conducted postdoctoral research in Shanghai Jiao Tong University
+from 1992 to 1994.
+Dr. Ling has served as the president of the Company since January
+2017, a vice chairman and an executive director of the third session
+of the Board of the Company since August 2014, director of Shenhua
+Group Corporation since April 2010, and general manager of Shenhua
+Group Corporation since May 2014.
+Dr. Ling served as director and deputy general manager of Shenhua
+Group Corporation from 2010 to 2014, chairman of the Board of
+Shenhua Finance Company from 2002 to 2014, president of the
+Company from 2006 to 2014, executive director of the second
+session of the Board of the Company from 2010 to 2014, and vice
+chairman of the second session of the Board of the Company from
+June to August 2014.
+Prior to the foregoing, Dr. Ling had served in various capacities,
+including executive director of the first session of the Board, executive
+vice president and chief financial officer of the Company, deputy
+general manager of the International Business Department of the
+Industrial and Commercial Bank of China, deputy general manager of
+Industrial and Commercial Bank of China (Asia) Limited and chairman
+of UB China Business Management Company Limited.
+HAN Jianguo
+Dr. Han has served as an executive director of the third session of the
+Board of the Company since August 2014, deputy general manager
+of Shenhua Group Corporation since August 2003, chief information
+officer of Shenhua Group Corporation since March 2009, and director
+of Shenhua Group Corporation since July 2014.
+The ages were calculated as at 31 December 2016.
+GUO Peizhang
+Mr. Guo has served as an independent non-executive director of the
+third session of the Board of the Company since August 2014 and
+independent non-executive director of China Railway Group Limited
+since June 2014.
+18.5
+92.7
+25 November 2015
+54
+Male
+Vice President
+Wang Yongcheng
+Yes
+27 September 2013
+57
+Male
+Senior Vice President
+Wang Jinli
+9.6
+91.6
+22 August 2014
+56
+Male
+Supervisor
+Shen Lin
+43.6
+17 June 2016
+51
+Male
+Supervisor
+Zhou Dayu
+Committee
+Zhang Zifei
+Born in August 1949, Chinese, a senior economist, Mr. Guo
+has extensive experience in macroeconomics and enterprise
+management. He graduated from Renmin University of China in 1982
+with a bachelor's degree.
+Vice President
+58
+Mr. Guo served as an independent Non-executive Director of the
+second session of the Board of China Shenhua from 2010 to 2014,
+party member and head of disciplinary inspection panel of China
+Guodian Corporation from 2005 to 2010, chairman of the supervisory
+committee of Guodian Power Development Co., Ltd. from 2009 to
+2010, and external director of Dongfang Electric Corporation from
+2010 to 2015.
+Prior to the foregoing, Mr. Guo had served in various capacities,
+including deputy director and director of the Department of Regional
+Economic Development of State Development and Planning
+Commission, and deputy supervisor of the Planning Committee of
+Xinjiang Autonomous Region.
+No
+2 2 2 2 2 2 2
+22.0
+101.1
+6 November 2004
+51
+Male
+Secretary to the Board
+Huang Qing
+Zhang Kehui
+31.4
+1 July 2016
+53
+Male
+Vice President
+Zhang Jiming
+1.2
+75.9
+25 November 2015
+54
+Male
+Vice President
+Wang Shumin
+1.2
+76.6
+25 November 2015
+Male
+Supervisory
+(3)
+The remuneration package of the senior management was approved by the Board.
+RMB ordinary shares
+569,895,835
+China Securities Finance Corporation Limited
+Central Huijin Asset Management Ltd.
+3,390,466,096
+Overseas listed foreign shares
+3,390,466,096
+14,530,574,452
+RMB ordinary shares
+14,530,574,452
+Number
+Type
+shares
+without selling
+restrictions
+HKSCC NOMINEES LIMITED
+Shenhua Group Corporation Limited
+Name of shareholders
+Type and number of shares
+Number of
+Shareholdings of top ten shareholders without selling restrictions
+Section VII Changes in Share Capital and Shareholders (Continued)
+2016 Annual Report 115
+No
+Chief Financial Officer
+Female
+53
+22 January 2007
+97.9
+21.0
+569,895,835
+No
+110,027,300
+110,027,300
+Note: H shares held by HKSCC Nominees Limited are held on behalf of a number of its clients; A shares held by Hong
+Kong Securities Clearing Company Limited are held on behalf of a number of its clients.
+Both of HKSCC Nominees Limited and Hong Kong Securities Clearing
+Company Limited are wholly-owned subsidiaries of Hong Kong
+Exchanges and Clearing Limited; the custodian bank of both Industrial
+& Commercial Bank of China - Shanghai Index 50 Trading Open-
+end Index Securities Investment Fund and Industrial & Commercial
+Bank of China Limited - China Southern Consumption Vitality Flexible
+Allocation Hybrid Initiated Securities Investment Fund is the Industrial
+& Commercial Bank of China Limited. Saved as disclosed above, the
+Company is not aware of any connected relationships between the
+top ten shareholders not subject to selling restrictions and the top ten
+shareholders, and whether they are parties acting in concert as defined
+in the Measures for Administration of Acquisition of Listed Companies.
+N/A
+12,640,466
+RMB ordinary shares
+12,640,466
+13,082,927
+RMB ordinary shares
+13,082,927
+Statement on holders of preference shares
+with voting rights restored and number of
+shares held
+Statement on the connected relationships
+among the above shareholders or whether
+they are parties acting in concert
+CSI State-owned Enterprises Reform Index
+Classification Securities Investment Fund
+Agricultural Bank of China Limited - Fullgoal
+Industrial & Commercial Bank of China Limited -
+China Southern Consumption Vitality Flexible
+Allocation Hybrid Initiated Securities Investment
+Fund
+14,648,826
+RMB ordinary shares
+14,648,826
+17,029,796
+RMB ordinary shares
+17,029,796
+National Social Security Fund 108 Portfolio
+Industrial & Commercial Bank of China - Shanghai
+Index 50 Trading Open-end Index Securities
+Investment Fund
+22,952,488
+RMB ordinary shares
+22,952,488
+29,999,534
+RMB ordinary shares
+29,999,534
+Hong Kong Securities Clearing Company Limited
+Bank of China Limited - China Merchants Fengqing
+Flexible Configuration Hybrid Initiated Securities
+Investment Fund
+RMB ordinary shares
+The personnel mentioned above did not hold any shares of the Company during the reporting
+period.
+Total
+90.6
+reporting period
+previous years
+reporting period
+(RMB ten
+thousand)
+(RMB ten
+thousand)
+Wu Xiuzhang
+Tang Ning
+Vice President
+Male
+50
+25 November 2015 23 March 2016
+45.9
+26.4
+No
+Shareholder
+representative
+supervisor
+Male
+61
+18 June 2010
+17 June 2016
+5.0
+5.0
+00
+No
+Total
+Notes: (1)
+(2)
+50.9
+31.4
+during the
+838.8
+received for
+Date of
+resignation
+120
+China Shenhua Energy Company Limited
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+2.
+Notes: (1)
+(2)
+(3)
+(4)
+(5)
+(6)
+The remuneration of directors and senior management received from shareholders of the
+Company for 2016 will be disclosed on the website of Shenhua Group Corporation upon
+completion of assessment made by the SASAC of the State Council.
+The remuneration package of directors and supervisors for 2016 is subject to approval by
+the Company at the 2016 annual general meeting; the remuneration package of the senior
+management was approved by the Board; the remunerations payable include salaries, allowances,
+social benefit payment, income tax and retirement scheme contributions.
+The remuneration received by Zhou Dayu from the Company covers the period from July to
+December 2016; the remuneration received by Zhang Jiming from the Company covers the
+period from August to December 2016; and the remuneration of others received from the
+Company covers the entire year.
+The personnel mentioned above did not hold any shares in the Company during the reporting
+period.
+The 2014 first extraordinary general meeting of the Company approved that term of service of the
+third session of the Board and the supervisory committee is three years (22 August 2014 to 21
+August 2017).
+The ages were calculated as at 31 December 2016.
+Supervisor and senior management resigned during the reporting period
+Total
+remuneration
+before tax
+received from
+Whether
+received
+remuneration
+the Company
+Including:
+performance
+remuneration
+from
+shareholders of
+the Company
+Name
+Position before
+resignation
+Gender Age
+Date of
+appointment
+during the
+1.16
+No
+93.0
+Shenhua Group Corporation Limited
+Shareholdings in other domestic and
+overseas listed subsidiaries and
+associates during the reporting
+period
+Date of incorporation
+Principal business
+Legal representative
+Name
+3.
+2.
+Legal person
+1.
+(1)
+Controlling shareholder
+IV. CHANGES IN CONTROLLING SHAREHOLDER AND DE FACTO CONTROLLER
+Section VII Changes in Share Capital and Shareholders (Continued)
+2016 Annual Report 117
+Save as disclosed above, as at 31 December 2016, no other person held any interest and/or short
+position in the shares or underlying shares of the Company which is required to be recorded in
+the register to be kept thereunder, or was a substantial shareholder of the Company pursuant to
+section 336 of Part XV of the SFO.
+431,977 H shares in long position and 2,161,198 H shares in short position: unlisted derivatives -
+cash settled.
+d.
+13,714,465 H shares in long position and 10,833,497 H shares in short position: unlisted
+derivatives physically settled;
+C.
+1,241,000 H shares in short position: derivatives listed on or traded on the Hong Kong Stock
+Exchange or traded on the future exchange - cash settled;
+b.
+4,806,832 H shares in long position and 2,998,500 H shares in short position: derivatives listed on
+or traded on the Hong Kong Stock Exchange or traded on the future exchange - physically settled;
+a.
+Among 181,187,131 H shares in long position held by JPMorgan Chase & Co., 74,136,920 H shares are
+held in its capacity as the beneficial owner, 5,458,028 H shares are held in its capacity as the investment
+manager, 13,804 H shares are held in its capacity as the trustee (except for bare trustee), 101,578,379
+H shares are held in its capacity as the custodian - corporation/approved lending agent. In addition, the
+following H shares in both long position and short position involve derivatives, including:
+(3)
+Among H shares in long position and short position held by BlackRock, Inc., 149, 165 H shares in long
+position and 632,500 H shares in short position involve derivatives, and their type is unlisted derivatives -
+cash settled.
+Information disclosed above is based on the information available on the website of the Hong Kong Stock
+Exchange (www.hkex.com.hk).
+Zhang Yuzhuo
+Approved lending agent
+23 October 1995
+As at the end of the reporting period, Shenhua
+Group Corporation held 143,068,000 shares in
+China National Chemical Engineering Co., Ltd.,
+representing 2.90% of its total shares.
+V.
+73.06%
+Shenhua Group Corporation Limited
+100.00%
+the State Council
+Administration Commission of
+State-owned Assets Supervision and
+Diagram of the equity and controlling relationship between the Company and the de
+facto controller
+There was no change in de facto controller of the Company during the reporting period.
+3.
+Index and date of changes in de facto controller during the reporting period
+2.
+State-owned Assets Supervision and Administration Commission of the State Council
+Name
+Legal person
+1.
+De facto controller
+(II)
+Section VII Changes in Share Capital and Shareholders (Continued)
+China Shenhua Energy Company Limited
+118
+China Shenhua Energy Company Limited
+73.06%
+Shenhua Group Corporation Limited
+Diagram of the equity and controlling relationship between the Company and the
+controlling shareholder
+There was no change in the controlling shareholder of the Company during the reporting
+period.
+Index and date of changes in controlling shareholders during the reporting period
+State-owned assets operating activities within the
+scope authorized by the State Council; investment
+and management activities in various sectors,
+including resource products (such as coal), coal
+liquefaction, coal chemical, power, thermal,
+port, various transportation, finance, domestic
+and international trade and logistics, real estate,
+advanced technology and information consultation
+and etc.; planning, organizing, coordinating and
+managing the production and operating activities
+of the companies in the Shenhua Group in such
+sectors; and sales of chemical materials and
+chemical products (excluding hazardous chemicals),
+textiles, construction materials, machinery,
+electronic equipment and office equipment. (For
+projects that are subject to approval pursuant to
+the law, business operations shall commence in
+accordance with the business scope approved upon
+receipt of the approval from revenant authoritie.)
+VI.
+(2)
+for lending
+H shares/
+No. Name of shareholders
+Capacity
+A shares
+Nature of
+interest
+Number of
+Hshares/
+H shares/
+share capital
+A shares
+of the
+A shares held
+respectively
+Company
+1
+Shenhua Group Corporation
+Beneficial owner
+A shares
+N/A
+14,530,574,452
+88.11
+73.06
+2
+BlackRock, Inc.
+Interest of corporation
+controlled by the
+H shares
+Long position
+230,288,205
+total issued
+Notes: (1)
+Percentage of
+As at 31 December 2016, persons set out in the table below had an interest and/or short position
+in the shares or underlying shares of the Company which is required to be recorded in the register
+of equity interests and/or short positions pursuant to section 336 of Part XV of the Securities and
+Futures Ordinance (the "SFO", Chapter 571 of the Laws of Hong Kong):
+Custodian-corporation/
+0.51
+2.98
+101,578,379
+Shares available
+than a bare trustee);
+0.09
+0.52
+17,734,195
+Short position
+manager; Trustee (other
+0.91
+5.33
+181,187,131
+Long position
+H shares
+No
+Beneficial owner; Investment
+JPMorgan Chase & Co.
+3
+substantial shareholders
+0.01
+0.05
+1,567,500
+Short position
+Section VII Changes in Share Capital and Shareholders (Continued)
+(III) Substantial shareholders' interests and short positions in the shares of the Company
+Percentage
+of H shares/
+A shares over
+total issued
+17.1
+China Shenhua Energy Company Limited
+As at the end of the reporting period, there was no other corporate shareholder with more than 10%
+shareholding in the Company.
+Gong Huazhang
+executive Director
+45.0
+18 June 2010
+71
+Female
+President
+Independent Non-
+Fan Hsu Lai Tai
+24 May 2011
+Senior Vice
+Yes
+Yes
+17 June 2016
+56
+90
+Male
+Executive Director
+Li Dong
+4 January 2017
+27 June 2014
+President (Resigned)
+24 May 2011
+58
+80
+Male
+Executive Director
+Han Jianguo
+Independent Non-
+4 January 2017
+Male
+5 June 2009
+22 August 2014
+52
+Yes
+17 June 2016
+64
+Yes
+25 May 2012
+223
+Male
+Male
+Male 66
+executive Director
+Non-executive Director
+Non-executive Director
+Chairman of the
+Zhai Richeng
+Chen Hongsheng
+Zhao Jibin
+No
+No
+No
+2 2 2
+45.0
+400
+18 June 2010
+67
+Male
+Independent Non-
+Guo Peizhang
+executive Director
+45.0
+70
+OTHER CORPORATE SHAREHOLDERS WITH MORE THAN 10% SHAREHOLDING IN
+THE COMPANY
+President
+Executive Director
+during the
+Scheduled
+associates
+performance
+the Company
+Date of
+appointment
+Position as at
+the end of the
+Company or
+Including
+received from
+of the
+shareholders
+from
+Total
+remuneration
+before tax
+received
+remuneration
+Whether
+1. Directors, supervisors and senior management as at the end of the reporting period
+(I) Changes in shareholding and remuneration
+CHANGES IN SHAREHOLDING AND REMUNERATION
+Section VIII Directors, Supervisors, Senior Management and Employees
+2016 Annual Report 119
+I.
+During the reporting period, Shenhua Group Corporation did not dispose of any share it held in the
+Company.
+On 8 July 2015, Shenhua Group Corporation increased its shareholding of A shares in the Company
+via the trading system of the Shanghai Stock Exchange, and undertook that it will not dispose of any
+share it holds in the Company during the period of the implementation of the shareholding increase
+plan and within the statutory period. During the period between 8 July 2015 and 7 July 2016, Shenhua
+Group Corporation has increased its shareholding in the Company by 8,727,892 A shares in aggregate,
+representing 0.04% of the total issued share capital of the Company. Shenhua Group Corporation has
+observed its undertaking. Please refer to the H shares announcement dated 11 July 2016 and the A
+shares announcement dated 12 July 2016 of the Company for details.
+Not applicable
+✓ Applicable
+RESTRICTIONS ON THE REDUCTION IN THE SHAREHOLDING
+remuneration
+6 November 2004
+during the
+expiration of
+Yes
+Yes
+27 June 2014
+53
+Male
+Vice Chairman
+Ling Wen
+18 June 2010
+Executive Director
+27 June 2014
+54
+Male
+Chairman
+Zhang Yuzhuo
+thousand)
+thousand)
+(RMB ten
+(RMB ten
+period
+period previous years
+Age appointment date) term of office
+Gender
+reporting period
+Name
+reporting
+received for
+reporting
+(from the first
+No
+China Shenhua Energy Company Limited
+116
+2016 Annual Report 125
+China National Building
+Zhao Jibin
+Investment Corp.
+April 2012
+External director
+State Development &
+Holdings Co., Ltd.
+February 2016
+December 2011
+March 2016
+April 2011
+June 2014
+Independent non-executive
+director
+External director
+SINOTRANS & CSC
+External director
+December 2014
+Material Group Corporation
+REMUNERATION OF DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
+CHANGES OF DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
+IV.
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+2016 Annual Report 133
+Please refer to "Changes in shareholding and
+remuneration" in this section
+Please refer to "Changes in shareholding and
+remuneration" in this section
+Chen Hongsheng
+The remuneration package of senior management of the
+Company was formulated by the Company in accordance
+with Provisional Measures for the Administration of the
+Annual Remuneration of the Senior Management.
+The remuneration package of directors and supervisors
+was submitted to the general meeting for approval
+after consideration and approval by the Remuneration
+Committee and the Board, and the remuneration package
+of senior management was submitted to the Board
+for approval after consideration and approval by the
+Remuneration Committee.
+by all directors, supervisors and
+senior management at the end of the
+reporting period
+Total remuneration actually obtained
+Remuneration payable for remuneration
+of directors, supervisors and senior
+management
+Basis for determining the remuneration
+of directors, supervisors and senior
+management
+Decision-making procedures for the
+remuneration of directors, supervisors
+and senior management
+The remuneration package of relevant directors and
+supervisors was proposed by the Company in accordance
+with international and domestic practices and with
+reference to the remuneration of directors and supervisors
+of large-scale listed companies in China.
+June 2016
+December 2007
+Independent non-executive
+director
+External director
+Employee representative
+director
+Chairman (legal
+representative)
+July 2014
+April 2016
+November 2016
+132
+China Shenhua Energy Company Limited
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+III.
+(II) Positions held in other entities
+Name
+Name of shareholder
+Position
+Commencement
+of term of office
+Expiry of
+term of office
+Fan Hsu Lai Tai
+Nanyang Commercial Bank
+(China) Limited
+COFCO Corporation
+China Railway Group Limited
+Guo Peizhang
+Gong Huazhang
+February 2016
+Independent non-executive
+director
+May 2011
+(I) Changes during the reporting period
+Independent non-executive
+director
+February 2009
+Independent non-executive
+China Overseas Land &
+Investment Limited
+China COSCO Holdings
+Company Limited
+Bank of East Asia Limited
+January 2009
+Independent non-executive
+director
+COSCO Pacific Limited
+director
+V.
+VI.
+(II)
+Reason for the change
+Ling Wen
+President
+Han Jianguo President
+Appointed
+Resigned
+Approved at the 22nd meeting of the third
+session of the Board on 4 January 2017
+Resigned on 4 January 2017 due to
+adjustment of work arrangements
+SANCTION FROM SECURITIES REGULATORY AUTHORITIES IN THE LAST THREE
+YEARS
+Applicable
+Not applicable
+OTHER SIGNIFICANT MATTERS
+As at 31 December 2016, none of the directors, supervisors or member of the senior management had
+any interest or short position in the shares or underlying shares of the Company or of any its associated
+corporations within the meaning of Part XV of the SFO (Chapter 571 of the Laws of Hong Kong).
+The securities transactions of the directors of the Company have been carried out in accordance with
+the "Model Code for Securities Transactions by Directors of Listed Issuers" (the "Model Code") set out
+in Appendix 10 of the Hong Kong Listing Rules. The Model Code is also applicable to the supervisors
+and senior management of the Company. The directors, supervisors or senior management have
+confirmed that they have fully complied with the Model Code in 2016 or during their terms of office.
+134 China Shenhua Energy Company Limited
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+All the directors and supervisors have provided relevant training records to the Company and have
+participated in training programs in accordance with relevant requirements by regulatory authorities. The
+Secretary to the Board of the Company has participated in training programs organized by a number of
+institutions including the stock exchanges where the shares are listed and The Hong Kong Institute of
+Chartered Secretaries for more than 15 hours in accordance with relevant requirements.
+When considering any matters or transactions at any board meeting, the directors are required to
+declare any direct or indirect interests and recuse themselves where appropriate. Saved as their own
+service contracts and the Mutual Coal Supply Agreement, the Mutual Supplies and Services Agreement,
+the Financial Services Agreement and the Agreement on Asset and Business Entrusted Management
+Services dated 24 March 2016, all of which were entered into between China Shenhua and Shenhua
+Group, the Transportation Service Framework Agreement entered into between China Shenhua and
+Taiyuan Railway Bureau on 24 March 2016 and the Shenhua Guohua Ningdong Power Generation Co.,
+Ltd. JV Agreement entered into among China Shenhua, Zheneng Group and Shenhua Ningxia Coal on
+20 July 2016, none of the directors and supervisors of the Company has any material personal interests,
+directly or indirectly, in material contracts entered into by the Company or any of its subsidiaries in 2016
+and subsisting during or at the end of the year of 2016; the directors and supervisors of the Company
+have confirmed that they and their associates have not entered into any connected transaction with the
+Company and its subsidiaries.
+The Company has entered into service contracts with all of its directors and supervisors. None of the
+directors or supervisors has entered into or proposed to enter into any service contract with members of
+the Group which cannot be terminated by the Group within one year without any compensation (other
+than the statutory compensation). The Company has maintained appropriate liability insurance for its
+directors, supervisors and senior management.
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+12,722
+and subsidiaries bore cost (Number of person)
+90,882
+Total number of current employees of the Group (Number of person)
+Number of retired employees in respect of which the Company
+90,208
+Particular of
+movements
+the Company (Number of person)
+674
+Number of current employees of the headquarter of the Company
+(Number of person)
+Employees
+(1)
+VII. EMPLOYEES OF THE GROUP
+Other than their working relationships in the Company, none of the directors, supervisors or the senior
+management has any financial, business or family relationship or any relationship in other material aspects
+with each other. For the year ended 31 December 2016, the Company had not granted any equity
+securities or warrants to its directors, supervisors and senior management or their respective spouses
+or children under the age of 18.
+Number of current employees of the branches/subsidiaries of
+Position
+Name
+Changes after the reporting period
+Elected
+Shareholder
+Zhou Dayu
+Passed the election at the annual general
+Non-executive Director
+Zhao Jibin
+representative
+Passed the election at the annual general
+meeting on 17 June 2016
+Executive Director
+Li Dong
+Reason for the change
+Particular of
+movements
+Position
+Name
+Elected
+Shenhua Wuhai Energy
+Company Limited
+supervisor
+Appointed
+supervisor
+representative
+Resigned on 17 June 2016 due to age
+Resigned
+Shareholder
+Tang Ning
+Zhang Jiming Vice President
+Resigned on 23 March 2016 due to work
+change
+Vice President
+Wu Xiuzhang
+Passed the election at the annual general
+Approved at the 17th meeting of the
+third session of the Board on 1 July
+2016
+meeting on 17 June 2016
+meeting on 17 June 2016
+Resigned
+July 2013
+Elected
+Shenhua Group Corporation
+Shenhua Group Corporation
+SHEN Lin
+Born in May 1960, Chinese, a senior economist, Mr. Shen graduated
+from Harbin Institute of Technology in 2005 with a master's degree.
+Mr. Shen has served as an employee representative supervisor of
+the third session of the supervisory committee of the Company
+since August 2014, chief of the Department of Enterprise Culture of
+the Company since July 2010 and chief of the Department of Party
+Building of Shenhua Group since July 2010.
+Mr. Shen served as a deputy chief of the Department of Enterprise
+Culture of the Company and deputy chief of the Department of Party
+Building of the Shenhua Group Corporation from 2009 to 2010.
+Prior to the foregoing, Mr. Shen had served for Shenhua Baoshen
+Railway Co., Ltd. in various positions such as human resource
+manager, deputy chief economist, chief economist, deputy secretary
+to the Party committee and secretary to the commission for discipline
+inspection.
+WANG Jinli
+Born in March 1959, Chinese, a researcher and senior engineer, Dr.
+Wang has approximately 30 years of operational and managerial
+experience in the coal industry in China. Dr. Wang received an EMBA
+Degree from Tsinghua University in 2009 and graduated from Liaoning
+University of Engineering and Technology with a Ph.D. degree in
+2006.
+Dr. Wang has served as a senior vice president of the Company since
+September 2013 and deputy general manager of Shenhua Group
+Corporation since July 2013.
+Dr. Wang had served as a vice president of the Company between
+2004 and 2013, and chairman of Shenhua Coal Trading Co., Ltd., a
+subsidiary of Shenhua Group, and chairman of Shenhua Trading Group
+Limited, a subsidiary of the Company between 2010 and 2014.
+Prior to the foregoing, Dr. Wang had served in various capacities,
+including chairman of Shenhua Australia Holdings Pty Limited,
+chairman, general manager and deputy general manager of Shenhua
+Shendong Coal Company, director of the Changchun Coal Technology
+Centre and director of the Huichun Coal Mining Bureau.
+128
+China Shenhua Energy Company Limited
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+Name
+Biographical details
+Vice President
+Vice President
+Vice President
+Name
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+2016 Annual Report 129
+Prior to the foregoing, Mr. Zhang had previously served as, among
+others, the chairman of Shenhua Xinjiang Energy Co., Ltd., the
+assistant to general manager, deputy general manager, deputy
+director of business development and coordination division and the
+chief at Dahaize Mine and Bulianta Mine of Shenhua Shendong Coal
+Company.
+Mr. Zhang served as an employee representative director of Shenhua
+Group Corporation Limited from July 2014 to April 2016, the chairman
+of Shenhua Shendong Coal Group Co., Ltd. from June 2011 to
+November 2015 and the chairman of Shenhua Xinjie Energy Co., Ltd.
+from January 2015 to November 2015.
+Biographical details
+Mr. Zhang has been serving as a vice president of the Company since
+November 2015 and the chairman (legal representative) of Shenhua
+Wuhai Energy Company Limited since November 2016.
+ZHANG Zifei
+Prior to the foregoing, Mr. Wang had previously served as the deputy
+manager of the human resources department, the deputy manager
+in charge of the business development department of Shenhua
+Group Corporation and the deputy manager of the management
+administration department of Huaneng Fine Coal Company.
+Mr. Wang was the chairman of Shenhua Tianhong Trading Co., Ltd.
+from August 2002 to November 2011. From November 2011 to
+November 2015, he served as the chairman of Shenhua Logistics
+Group Corporation Limited.
+Mr. Wang has been serving as a vice president of the Company since
+November 2015.
+Born in April 1962, Chinese, a senior economist, Mr. Wang has
+extensive experience in business management. He obtained an
+EMBA degree from Nankai University in 2006.
+WANG Yongcheng
+Born in May 1958, Chinese, a senior engineer with the qualification
+as a professor, Mr. Zhang has extensive experience in coal business
+management. He graduated from Taiyuan University of Technology
+with a master's degree in 2004.
+Senior Vice President
+Supervisory
+Name
+Mr. Zhao had served as a deputy general manager of China Mobile
+Communications Corporation from May 2008 to June 2013 and an
+independent non-executive director of China South Locomotive and
+Rolling Stock Corporation Limited from December 2007 to June 2014.
+Mr. Zhao has served as a non-executive director of the Company
+since June 2016, an external director of Shenhua Group Corporation
+since April 2015 and of China National Building Material Group
+Corporation since December 2014.
+Born in July 1952, Chinese, a senior engineer. Mr. Zhao has extensive
+experience in business administration and railway transportation
+administration. He obtained a master's degree from Changchun
+Institute of Optics and Fine Mechanics in 2000.
+ZHAO Jibin
+Prior to the foregoing, Mr. Chen had served in various capacities,
+including chairman of COSCO Shipping Co., Ltd., executive director
+and general manager of China COSCO Holdings Company Limited,
+vice president of China Ocean Shipping (Group) Company and general
+manager of COSCO International Freight Co. Ltd..
+Mr. Chen served as a non-executive director of the second session
+of the Board of the Company from 2012 to 2014, external director of
+Sinotrans & CSC Holdings Corporation Limited from 2011 to 2016,
+executive director, chairman of the Board and non-executive director
+of COSCO Pacific Limited from 2003 to 2010, and non-executive
+director of China COSCO Holdings Company Limited from 2009 to
+2010.
+Prior to the foregoing, Mr. Zhao had successively held the
+posts as the master of Changchun Railway Station, director of
+Changchun Railway Sub-bureau, director of Hohhot Railway Bureau
+and Zhengzhou Railway Bureau, the chairman of China Tietong
+Telecommunications Corporation, deputy to the ninth and tenth
+National People's Congress, an honorary professor of Beijing Jiaotong
+University and Changchun University of Science and Technology.
+Mr. Chen has served as a non-executive director of the third session
+of the Company since August 2014, external director of Shenhua
+Group Corporation since February 2012 and of State Development
+and Investment Corporation since April 2012.
+CHEN Hongsheng
+Biographical details
+Non-executive Director
+Non-executive Director
+Name
+Deputy general manager
+Born in March 1950, Chinese, a senior economist, Mr. Chen has
+extensive experience in the production, operation and management
+in the shipping industry. He graduated from Capital University of
+Economics and Business in 2001 with a postgraduate diploma in
+business administration.
+Vice President
+126
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+2016 Annual Report 127
+Mr. Zhou has served as a supervisor of the Company since June
+2016, the general manager of the Capital Operation Department of
+the Company since March 2016, and the general manager of the
+Capital Operation Department of Shenhua Group Corporation since
+March 2016.
+Born in October 1965, Chinese, a deputy researcher. Mr. Zhou
+obtained a bachelor's degree in Economic Management at Peking
+University in 1986 and a bachelor's degree in International Finance at
+Peking University in 2001.
+ZHOU Dayu
+Prior to the foregoing, Mr. Zhai had served in various capacities,
+including deputy manager of the financial department of Shenhua
+Group Corporation, director of financial division and chief accountant
+of Shenhua Zhunge'er Coal Company.
+China Shenhua Energy Company Limited
+Mr. Zhai served as a general manager of the financial department of
+Shenhua Group Corporation from November 2004 to June 2016.
+Born in July 1964, Chinese, a senior accountant, Mr. Zhai received a
+master's degree from China University of Mining and Technology in
+2003.
+ZHAI Richeng
+Biographical details
+Supervisor
+Chairman of
+the Supervisory
+Committee
+Name
+Mr. Zhai has served as the chairman of the third session of the
+supervisory committee of the Company since August 2014 and the
+director of Property Ownership Administration of the Company and
+Shenhua Group Corporation since June 2016.
+Biographical details
+Mr. Zhou had been the general manager of the Business
+Administration Department of the Company from November
+2009 to March 2016, and the general manager of the Business
+Administration Department of Shenhua Group Corporation Limited
+from November 2009 to March 2016. Prior to the foregoing, Mr. Zhou
+had successively held the post of the general manager of the Planning
+Department and a deputy director of the Policy and Law Research
+Office of Shenhua Group Corporation.
+Born in November 1962, Chinese, a senior engineer with the
+qualification as a professor. Mr. Wang has extensive experience in
+power business management. He graduated from Northeast Dianli
+University with a bachelor's degree in 1985 and obtained an MBA
+degree from China Europe International Business School in 2005.
+of term of office
+Commencement
+March 2009
+August 2006
+Director
+General manager
+Director
+Deputy general manager
+Chief information officer
+Deputy general manager
+External director
+External director
+Director of Property
+Shenhua Group Corporation
+Shenhua Group Corporation
+Shenhua Group Corporation
+Shenhua Group Corporation
+Shenhua Group Corporation
+Expiry of
+term of office
+Zhao Jibin
+Zhai Richeng
+Li Dong
+Han Jianguo
+Shenhua Group Corporation
+Chairman
+Shenhua Group Corporation
+Zhang Yuzhuo
+Ling Wen
+Chen Hongsheng
+Position
+April 2010
+July 2014
+Zhang Zifei
+Wang Jinli
+WANG Shumin
+Party Building
+Department of
+July 2010
+May 2014
+Operation Department
+General manager of
+Ownership Administration
+General manager of Capital
+Shenhua Group Corporation
+Shenhua Group Corporation
+Shen Lin
+Zhou Dayu
+February 2012
+April 2015
+June 2015
+August 2003
+March 2016
+Name of shareholder
+May 2014
+(1) Positions held in the shareholders of the Company
+Name
+Mr. Wang has been serving as a vice president of the Company since
+November 2015.
+ZHANG Jiming
+Born in November 1963, Chinese, a senior engineer. Mr. Zhang has
+extensive experience in chemical business administration. In 1985, he
+graduated from Liaoning Petrochemical School.
+Mr. Zhang has served as the vice president of the Company since
+July 2016, and served as the chairman and the general manager of
+China Shenhua Coal to Liquid and Chemical Co., Ltd. from November
+2015 to July 2016.
+Mr. Zhang served as the president of China Shenhua Coal to Liquid
+and Chemical Co., Ltd. from August 2012 to November 2015, as a
+director and a vice president (subsidiary chief level) of China Shenhua
+Coal to Liquid Co., Ltd. from January 2011 to August 2012.
+Prior to the foregoing, Mr. Zhang had successively held the post
+of the chief economist and the deputy general manager of China
+Shenhua Coal to Liquid Co., Ltd., the vice director and the director of
+Liaoyang Petrochemical Branch Company Refinery Plant.
+130
+China Shenhua Energy Company Limited
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+Name
+Secretory to the Board
+Chief Financial Officer
+Prior to the foregoing, Mr. Wang had previously served as the deputy
+general manager of Guohua Power Branch of the Company as well as
+the deputy manager of the integrated planning department of North
+China Power Group Company.
+HUANG Qing
+Biographical details
+II.
+POSITIONS OF EXISTING DIRECTORS, SUPERVISORS AND SENIOR
+MANAGEMENT DURING THE REPORTING PERIOD
+Applicable ✓ Not applicable
+(II) Share incentive plan awarded to directors, supervisors and senior management
+during the reporting period
+Under the leadership of the Board, the senior management is responsible for business
+operation of the Company. President Ling Wen is responsible for the Board and exercises
+his responsibilities as the President in accordance with the requirements of the Articles
+of Association. Senior Vice President Li Dong is in charge of coal production, safety
+supervision as well as environmental protection and energy conservation. Senior Vice
+President Wang Jinli is in charge of production operations and organization, sale of coal as
+well as the management of railways, ports and shipment transportation. Vice President
+Wang Yongcheng is in charge of the materials procurement business. Vice President Zhang
+Zifei is assisting Li Dong in the management of coal production and safety supervision. Vice
+President Wang Shumin is in charge of the power generation business and tasks on social
+responsibilities. Vice President Zhang Jiming is in charge of the coal chemical business.
+Secretary to the Board Huang Qing is in charge of duties of the secretary to the Board; and
+Chief Financial Officer Zhang Kehui is in charge of finance related works.
+Born in November 1965, Chinese, a senior engineer, Mr. Huang
+obtained a board secretary certification from the Shanghai Stock
+Exchange in 2004. Mr. Huang is a member of the Hong Kong
+Institute of Chartered Secretaries and a senior visiting scholar of the
+Eisenhower Foundation. Mr. Huang received a master's degree from
+Guangxi University in 1991.
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+2016 Annual Report 131
+Mr. Wang served as the general manager of Guohua Power Branch
+of the Company from December 2010 to November 2015. From
+December 2010 to March 2013, he served as general manager
+of Beijing Guohua Power Company Limited. From March 2013 to
+November 2015, he served as the chairman of Beijing Guohua Power
+Company Limited.
+The directors and supervisors of the Company have performed their duties in accordance
+with the requirements of the Articles of Association, Rules of Procedure of Board Meeting
+and Rules of Procedure of the Supervisory Committee Meeting of the Company.
+Prior to the foregoing, Dr. Zhang had served in various capacities,
+including head of internal control and audit department of the
+Company, deputy manager of the financial department of Shenhua
+Group Corporation and assistant to the general manager of
+Shuohuang Railway Development Company Limited.
+Dr. Zhang has served as the chief financial officer of the Company
+since January 2007, and chairman of Shenhua Finance Company, a
+subsidiary of the Company, since August 2014.
+Born in February 1963, Chinese, a researcher, a certified accountant
+in China as well as a fellow of certified public accountants of Australia
+(FCPA), Dr. Zhang has extensive experience in financial management
+and received a Ph.D. degree from Research Institute for Fiscal
+Science, Ministry of Finance of the PRC in 2014.
+ZHANG Kehui
+Prior to the foregoing, Mr. Huang had served in various capacities,
+including secretary to the chairman of Shenhua Group corporation,
+deputy director of the General Office of Shenhua Group Corporation,
+deputy general manager of Hubei Provincial Railway Company and
+secretary to the deputy governor of the Hubei provincial government.
+Mr. Huang has served as secretary to the Board of the Company and
+company secretary of the Company since November 2004.
+7
+7
+6
+Han Jianguo
+No
+No
+Ling Wen
+Fan Hsu Lai Tai
+7
+Li Dong
+No
+4
+4
+7
+Yes
+7
+7
+No
+Attendance
+in a row
+Name of
+director
+5
+Attendance at Board meetings
+Independent
+director
+Required
+attendance
+at Board
+Absent
+or not
+meetings
+this year
+Attendance
+by written
+in Person
+resolution
+Attendance
+by proxy
+at two
+meetings
+Attendance
+at general
+Absence
+Zhang Yuzhuo
+0
+No
+Gong Huazhang
+meetings
+No
+1/1
+0
+No
+1/1
+0
+No
+0
+0
+No
+0
+No
+0
+No
+(1) Attendance at Board meetings and general meetings
+0
+011 ONO o O 0
+2
+ooo O O O O O O
+4
+Yes
+7
+7
+2
+0
+Guo Peizhang
+Yes
+7
+7
+1
+Chen Hongsheng No
+7
+7
+0
+0
+Zhao Jibin
+No
+4
+PERFORMANCE OF DUTIES OF THE BOARD
+Postgraduate and above
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+56,155
+15,317
+1,850
+2,468
+10,518
+1,062
+3,512
+90,882
+Number of
+person
+2,941
+28,873
+24,553
+13,470
+21,045
+90,882
+The Company has formulated a remuneration policy comprising basic salary and performance
+assessment. The remuneration policy is competitive within the industry and is favoring the front-
+line employees.
+person
+(III) Training program
+Number of
+Graduate of technical school, high school and below
+No
+(II)
+Function
+Function
+Operation and repair
+Management and administration
+Finance
+Research and development
+Technical support
+Sales and marketing
+Others
+Total
+Education Level
+Education Level
+University graduate
+College graduate
+Specialized secondary school graduate
+Remuneration policy
+The Company has established a training system with different levels and channels to provide
+the employees with appropriate training in job skills, safe production and group management
+etc. During 2016, the accrued capital used for training was approximately RMB0.139 billion.
+The number of attendances in training was approximately 0.9457 million with training hours of
+approximately 3.93 million hours in aggregate. For details, please refer to the 2016 CSR Report of
+the Group.
+(IV) Outsourced Work
+Total number of working hours of outsourced work
+Total remuneration paid for outsourced work
+As owners of the Company, the shareholders of the Company are entitled to the rights as
+stipulated in laws, administrative regulations and the Articles of Association of China Shenhua.
+The shareholders' general meeting is the highest authority of the Company, through which
+shareholders can exercise their rights. The controlling shareholder takes part in the Company's
+operations and decisions through shareholders' general meetings and the Board.
+Pursuant to Articles 68 and 74 of the Articles of Association of China Shenhua, shareholders
+may submit written request to the Board for the convening of extraordinary general meetings or
+class meetings and submit proposals to the Company at general meetings. Upon providing the
+Company with written evidence of the class and number of shares of the Company held, and
+following verification of the shareholders' identity by the Company, shareholders are entitled
+to inspect the relevant information of the Company or obtain the Articles of Association, the
+register of members, minutes of general meetings, resolutions of meetings of the Board and the
+supervisory committee, regular reports and financial and accounting reports, etc.
+The Company discloses information in strict compliance with the listing rules of its places of
+listing. The Company makes its investor relations hotline, fax and email available. The Company
+has established an effective communication channel with shareholders through an information
+disclosure system and an investor reception system.
+Convening of General Meetings during the Reporting Period
+Date
+Inquiry index for the
+designated website for
+publishing the voting results
+Meetings
+Date of disclosure of
+the publication of the
+voting results
+2015 Annual General
+Meeting
+17 June 2016
+The website of the Shanghai
+Stock Exchange
+18 June 2016
+All the resolutions tabled at the general meeting above were passed. The voting results were
+disclosed on the website of the Hong Kong Stock Exchange on 17 June 2016 and the website of
+the Shanghai Stock Exchange on 18 June 2016.
+The Company accepted registration of shareholders' attendance, and arranged a special session
+for shareholders for effective consideration of proposals in the meeting. Shareholders actively
+participated in such meetings and were entitled to exercise their various rights, such as the right
+to know, the right of speech, the right to question and the right to vote. Directors, supervisors and
+senior management of the Company attended the meeting. Arranging special Q&A session in the
+meeting enabled interactions between shareholders and the management.
+The shareholders' representative, supervisors' representative, witness lawyers and the
+representative of Computershare Hong Kong Investor Services Limited acted as scrutineers
+at general meetings. The PRC legal advisor of the Company issued the legal opinion.
+Representatives of the auditors were present at the Annual General Meeting and announced their
+audit opinions.
+138
+China Shenhua Energy Company Limited
+Shareholders' rights
+2.
+GENERAL MEETINGS
+1.
+Approximately 50.845 million hours
+RMB2 billion
+136
+China Shenhua Energy Company Limited
+Section IX Corporate Governance and Corporate Governance Report
+I.
+CORPORATE GOVERNANCE
+(1)
+III.
+(II)
+During the reporting period, there was no material difference between the corporate governance
+of the Company and the relevant rules and requirements of the CSRC.
+Compliance with the Corporate Governance Code
+The Board is responsible for implementing good corporate governance of the Company. The
+Company has been in compliance with the requirements of corporate governance policies as
+set out in Appendix 14 of the Hong Kong Listing Rules to establish its own system of corporate
+governance. As of 31 December 2016, the Company has been in full compliance with the
+provisions and most of the recommended best practices as specified therein. For the terms
+of reference of the Board and the Board Committees to perform duties under the Corporate
+Governance Code, please refer to the Articles of Association, Rules of Procedure of the Board
+and rules of procedure of the Board Committees, which have been published on the websites of
+the stock exchanges where the Company is listed and on the Company's website.
+The convening, voting and disclosure procedures of board meetings of the Company, rules
+of procedure of the Board and procedures for nomination and appointment of directors are in
+compliance with relevant requirements. The Board is a standing decision-making body of the
+Company, is accountable to the shareholders' general meeting and exercises its authority in
+accordance with the provisions under Article 128 of the Articles of Association and relevant
+applicable regulatory requirements. The management comprising the President and other senior
+management members is a standing executive body of the Company, is accountable to the Board
+and exercises its authority in accordance with the provisions under Article 146 of the Articles of
+Association and relevant applicable regulatory requirements. The Articles of Association sets out
+the respective duties of the Chairman of the Board and the President in detail. The Chairman of
+the Board and the President of the Company is Dr. Zhang Yuzhuo and Dr. Ling Wen, respectively.
+The Board of the Company has set out the board diversity policy and members of the Board
+constituted in the Company are from a variety of backgrounds, which guarantees the rationality
+and reasonableness of decisions made by the Board. Members of the Board are individuals
+from various domestic and overseas industries, including one female director. The number of
+non-executive directors is over half of all directors. Each director's knowledge base and field of
+expertise are professional and complementary in the overall board structure.
+For the securities transactions, continuous training and term of office of the directors, please
+refer to the section headed "Directors, Supervisors, Senior Management and Employees" of this
+report. For the auditors' remuneration, please refer to the section headed "Significant Events"
+of this report. For the strategy and risk assessment of the Company, please refer to the section
+headed "Directors' Report" of this report.
+2016 Annual Report 137
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+II.
+Compliance with domestic regulatory requirements
+No
+4.
+Note: Li Dong and Zhao Jibin were elected as an executive director and a non-executive director, respectively, at the
+2015 Annual General Meeting held on 17 June 2016.
+Environment Committee
+Note: Upon the consideration and approval at the 17th meeting of the third session of the Board of the Company held on 1 July
+2016, Li Dong was appointed as a member of the Safety, Health and Environment Committee under the Board and Zhao
+Jibin was appointed as a member of the Remuneration Committee under the Board.
+1.
+Strategy Committee
+2.
+The principal duties of the Strategy Committee are to conduct researches and to submit proposals
+regarding the long-term development strategies and material investment decisions of the
+Company; conduct researches and submit proposals regarding material investments and financing
+plans which require approval from the Board; conduct researches and submit proposals regarding
+material capital operations and assets operation projects which require approval from the Board;
+conduct researches and submit proposals regarding other material matters that may affect the
+Company's development; carry out examination on the implementation of the above matters; and
+carry out other matters as authorised by the Board.
+In 2016, the Strategy Committee of the Board held three meetings to consider resolutions such
+as the amendment to administrative measures on investment of the Company, the 2017 annual
+production plan of China Shenhua, and 2017 annual size of investment of China Shenhua, all of
+which were approved at the meetings. All members of the Committee attended all meetings in
+person.
+Audit Committee
+The principal duties of the Audit Committee were: to supervise and assess the work of the
+external audit institutions; to guide the internal audit work; to review and provide opinions on the
+financial reports of the Company; to evaluate the effectiveness of risk management and internal
+control; to coordinate communications between the management, internal audit department and
+relevant departments, and the external audit institutions; other duties authorized by the Board and
+other issues related to the relevant laws and regulations. During the reporting period, the Audit
+Committee carried out its duties strictly in accordance with the Rules of Procedure of Meetings of
+the Audit Committee of the Board, Rules on Work of the Audit Committee of the Board and Rules
+on Work of Annual Reports of the Audit Committee of the Board of China Shenhua.
+In 2016, the Audit Committee held eight meetings to consider resolutions such as the financial
+reports and internal control reports of the Company. Suggestions were made on improving the
+management of accounts receivable and maintaining reasonable size of monetary capital. All
+resolutions were approved at the meetings and all members of the Committee attended all
+meetings in person.
+142
+China Shenhua Energy Company Limited
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+3.
+The Audit Committee has performed required procedures for the preparation of the 2016 annual
+report and internal control report of the Company:
+(1)
+(2)
+Safety, Health and
+(3)
+Guo Peizhang, Zhang Yuzhuo, Fan Hsu Lai Tai
+Guo Peizhang, Ling Wen, Han Jianguo, Li Dong
+Guo Peizhang
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+IV.
+THE PERFORMANCE OF DUTIES OF THE COMMITTEES UNDER THE BOARD
+DURING THE REPORTING PERIOD
+The Company has established five committees under the Board, and the details are as follows:
+The third session
+Members
+Committee
+Strategy Committee
+Audit Committee
+Chairman
+Zhang Yuzhuo
+Gong Huazhang
+Zhang Yuzhuo, Ling Wen, Han Jianguo
+Gong Huazhang, Fan Hsu Lai Tai, Guo Peizhang,
+Chen Hongsheng
+Remuneration Committee
+Fan Hsu Lai Tai
+Fan Hsu Lai Tai, Gong Huazhang, Zhao Jibin
+Nomination Committee
+Guo Peizhang
+2016 Annual Report 141
+(4)
+After Deloitte had issued its preliminary audit opinions, the Audit Committee reviewed the
+draft financial statements for 2016. On 27 February 2017, the Audit Committee reviewed
+the 2016 Assessment Report on Internal Control (Draft) and 2016 Financial Statements
+(Draft) of China Shenhua prepared by the Company.
+During the reporting period, the Supervisory Committee did not have any dissenting view over the
+matters supervised by the Supervisory Committee.
+EXPLANATION OF INDEPENDENCE AND COMPETITION
+China Shenhua has an independent and complete business system as well as a market-oriented
+self-operation capability. The Company is independent from its controlling shareholder in terms of
+business, personnel, assets, organization and finance.
+As a transitional measure for the prevention of competition, the Company was entrusted by Shenhua
+Group Corporation upon the completion of relevant procedures to provide daily operation management
+services for existing assets and businesses of Shenhua Group. As at the end of the reporting period,
+the Company engaged three deputy general managers of Shenhua Group Corporation as president and
+senior vice presidents of the Company.
+144
+China Shenhua Energy Company Limited
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+The Company is principally engaged in the production and sale of coal and power, as well as railway,
+port, shipping transportation and coal-to-olefins. Currently, the major coal, power and olefins products
+produced by enterprises such as Shenhua Ningxia Coal Co., Ltd. and Shenhua Guoneng Group Company
+Limited which are the existing and continuing assets of Shenhua Group Corporation, the controlling
+shareholder of the Company, are similar to those produced by the Company in terms of type and quality,
+but each company also has its relatively independent regional markets.
+The Company and Shenhua Group Corporation entered into a Non-competition Agreement in 2005.
+Pursuant to the agreement, Shenhua Group has committed not to compete with the Company in
+respect of the Company's principal businesses whether in or outside of the PRC, and granted the
+Company an option and pre-emptive right to acquire from Shenhua Group any potential competing
+business. In 2016, Shenhua Group Corporation strictly abided by its undertakings, and there was no
+violation of such undertakings.
+VII. THE EXAMINATION AND EVALUATION AND THE INCENTIVE MECHANISM FOR
+THE SENIOR MANAGEMENT
+The Company established the remuneration package of the senior management in accordance with the
+Provisional Measures for the Administration of the Annual Remuneration of the Senior Management of
+China Shenhua Energy Company Limited. The Company has adopted a performance appraisal system
+for senior management which combines annual appraisal of operational performance and appraisal of
+operational performance over the terms of office. Such annual appraisal and appraisal over the terms
+of office are conducted based on the letter of responsibility of operational performance signed by the
+Board and the management.
+The remuneration of the management is determined in accordance with the Provisional Measures for
+the Administration of the Annual Remuneration of the Senior Management. In addition to the basic
+salary, the Board of the Company conducts appraisal based on the performance of the management,
+and a performance bonus is determined based on the results of such appraisal.
+VIII. INTERNAL CONTROL AND RISK MANAGEMENT
+✓ Applicable
+Not applicable
+The Company has established a risk-oriented internal control system. The internal control and risk
+management procedures of the Company include risk assessment and reporting at the beginning
+of the year, quarterly major risk monitoring, daily system risk review and specialized supervision and
+inspection on internal control, and annual internal control evaluation, forming an integrated closed-loop
+management system. Also, a hierarchical work organizational structure comprising the Board and the
+Audit Committee, the functional departments of the headquarters and the subsidiaries and branches
+of the Company was established to safeguard the effective operation of internal control and risk
+management.
+It is the responsibility of the Board of the Company to establish a sound and effective internal control
+and evaluate its effectiveness, and make bona fide disclosure on the Self-assessment Report on Internal
+Control in accordance with the requirements under the Enterprise Internal Control Normative System.
+The Supervisory Committee is responsible for the supervision on the internal control system established
+and implemented by the Board, while the management level is responsible for the organization and
+guidance of the daily operation of internal control within the enterprise.
+THE SUPERVISION OPINION OF THE SUPERVISORY COMMITTEE
+Before the accounting firms for 2016, namely Deloitte Touche Tohmatsu Certified Public
+Accountants LLP and Deloitte Touche Tohmatsu ("Deloitte"), proceeded with on-site
+auditing, the Audit Committee had consulted with Deloitte to determine the timing of
+the Company's 2016 audit. On 25 October 2016, the Audit Committee reviewed the
+Company's plans for the audit plan for the year 2016; on 25 October 2016, the Audit
+Committee reviewed the internal control assessment plan for the year 2016.
+During the reporting period, the Committees under the Board did not express any dissenting views in
+performing their duties.
+The principal duties of the Safety, Health and Environment Committee are to supervise the
+implementation of health, safety and environmental protection plans of the Company; make
+recommendations to the Board or the president on material issues in respect of health, safety
+and environmental protection of the Company; inquire into the material incidents regarding the
+Company's production, operations, property assets, staff or other facilities; as well as review and
+supervise the resolution of such incidents and carry out other matters as authorised by the Board.
+The Audit Committee received briefings by the management to understand the overall
+operation of the Company during the reporting period. On 13 March 2017, the Audit
+Committee received a briefing given by Dr. Zhang Kehui, the Chief Financial Officer of the
+Company, on the accounting policies and the preparation of the financial statements.
+Deloitte completed all audit procedures within the agreed time and intended to issue a
+standard unqualified audit report for 2016 to the Audit Committee. On 13 March 2017, the
+Audit Committee voted on the audited annual financial statements, the assessment report
+on internal control and the corporate social responsibility report for the year 2016 and
+agreed to submit such reports to the Board for consideration.
+The Audit Committee discussed separately with the external auditors and no inconsistency was
+found in the briefings by the management.
+Remuneration Committee
+The main duties of the Remuneration Committee are to make recommendations to the Board
+on formulation of the remuneration plan or proposal for directors, supervisors, the president and
+other senior management, including but not limited to the criteria, procedures and the major
+systems of performance assessment, key incentive and punishment plans and systems; to
+examine how directors, supervisors, the president and other senior management of the Company
+perform their duties and carry out annual performance assessment on them; and to supervise the
+implementation of the remuneration system of the Company. The Remuneration Committee is
+delegated by the Board to determine the specific remuneration package, including non-monetary
+benefits, pension and compensation (including compensation for loss or termination of office or
+appointment) for all executive directors, supervisors, the president and other senior management,
+to ensure that none of the directors or any of their associates can determine their own
+remuneration; and to carry out other matters as authorised by the Board.
+In 2016, the Remuneration Committee held two meetings to consider resolutions including the
+remuneration packages of directors, supervisors and senior management for the year 2015, all of
+which were approved at the meeting. All members of the Committee attended all the meetings
+in person. During the reporting period, the Remuneration Committee reviewed the remuneration
+management system of the Company and the remuneration level for directors, supervisors, the
+president and other senior management for the relevant period.
+The Remuneration Committee is of the view that the Company has a well-established
+remuneration management system which reflects the economic benefit-oriented philosophy of a
+listed company and political, social and economic responsibility of a state-owned enterprise. The
+Remuneration Committee agrees to the remuneration management systems of the Company.
+2016 Annual Report 143
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+V.
+VI.
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+5.
+Nomination Committee
+The main duties of the Nomination Committee are to formulate the board diversity policy,
+regularly review the structure, size and diversity of the Board, and to make recommendations
+to the Board with regard to any proposed changes; assess and verify the independence of
+independent non-executive directors; draft procedures and criteria for election and appointment of
+directors, the president and other senior management and make recommendations to the Board;
+extensively seek for qualified candidates of directors, the president and other senior management;
+examine the aforementioned candidates and make recommendations; nominate candidates for
+members of the Board Committees (other than members of the Nomination Committee and
+the chairman of any Board Committee); draft development plans for the president, other senior
+management and key reserve talents; review the board diversity policy where appropriate, and
+review the quantitative objectives set up by the Board to implement the board diversity policy
+and their progress of achievement, as well as disclose the results of review in the Corporate
+Governance Report annually; and carry out any other matters as authorised by the Board.
+In 2016, the Nomination Committee held three meetings to consider resolutions including the
+nomination of director candidates and substitute members of relevant special committees under
+the Board, all of which were approved at the meetings. All members of the Committee attended
+all meetings in person.
+Safety, Health and Environment Committee
+In 2016, the Safety, Health and Environment Committee held one meeting to consider the 2015
+CSR Report, and the resolution was approved at the meeting. All members of the Committee
+attended the meeting in person.
+1/1
+For details of the
+Financial Services
+Agreement, please
+refer to the section
+headed "Significant
+Events" of this report.
+appointment and
+remuneration of
+auditors for the year
+2016, please refer to
+the section headed
+"Significant Events"
+of this report.
+For details of the
+Mutual Coal Supply
+Agreement, please
+refer to the section
+headed "Significant
+Events" of this report.
+On-site
+4
+The 17th meeting of the third session of
+the Board
+1 July 2016
+Correspondence
+LO
+5
+The 18th meeting of the third session of
+the Board
+26 August 2016
+00
+6
+The 19th meeting of the third session of
+the Board
+28 October 2016
+On-site
+On-site
+7
+The 20th meeting of the third session of
+the Board
+29 April 2016
+23 December 2016
+The 16th meeting of the third session of
+the Board
+On-site
+Number of Board meetings held during the year
+Including: Number of meetings held on-site
+Number of meetings held by correspondence
+Number of meetings held on-site with correspondence
+7
+1511
+In 2016, the Board of the Company held a total of seven meetings, at which all the resolutions
+tabled were passed. Details of the meetings are as follows:
+No. Name
+Date
+Methods
+1
+The 14th meeting of the third session of
+the Board
+29 January 2016
+On-site
+2
+The 15th meeting of the third session of
+the Board
+24 March 2016
+3
+For details of the Mutual
+Supplies and Services
+Agreement, please
+refer to the section
+headed "Significant
+Events" of this report.
+On-site with
+2016 Annual Report 139
+2015 Annual General
+Meeting
+4
+LO
+5
+2015 Annual General
+Meeting
+2015 Annual General
+Meeting
+Subject Matter
+To approve the profit distribution plan of the
+Company for the year 2015 and authorize
+a committee comprising of chairman, vice
+chairman and president, all being directors
+of the Company, to implement the profit
+distribution plan.
+To approve the appointment of auditors for
+the year 2016 and authorize a committee
+comprising of chairman, vice chairman,
+president, all being directors of the
+Company, and chairman of the Audit
+Committee to determine the remuneration
+of the auditors.
+To approve the Mutual Coal Supply
+Agreement entered into between the
+Company and Shenhua Group and the
+caps of the transactions for 2017-2019
+agreed thereunder and authorize a
+committee comprising of chairman, vice
+chairman, president, all being directors of
+the Company, and chairman of the Audit
+Committee to deal with, at its absolute
+discretion, relevant matters relating to the
+signing of such agreement.
+To approve the Mutual Supplies and Services
+Agreement entered into between the
+Company and Shenhua Group and the
+caps of the transactions for 2017-2019
+agreed thereunder and authorize a
+committee comprising of chairman, vice
+chairman, president, all being directors of
+the Company, and chairman of the Audit
+Committee to deal with, at its absolute
+discretion, relevant matters relating to the
+signing of such agreement.
+To approve the Financial Services Agreement
+entered into between the Company
+and Shenhua Group and the caps of
+the transactions for 2017-2019 agreed
+thereunder and authorize a committee
+comprising of chairman, vice chairman,
+president, all being directors of the
+Company, and chairman of the Audit
+Committee to deal with, at its absolute
+discretion, relevant matters relating to the
+signing of such agreement.
+Status
+Implementation of 2015
+profit distribution plan
+was completed in the
+third quarter of 2016.
+For details of the
+3
+correspondence
+2015 Annual General
+Meeting
+2015 Annual General
+Meeting
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+(II)
+Performance of duties of independent directors
+During the reporting period, the Company had three independent non-executive directors,
+among whom Mr. Gong Huazhang is an accounting professional. The Company has received
+written confirmation from each of the independent non-executive directors confirming their
+independence. The Company is of the view that all of the independent non-executive directors
+are independent. The number and background of the independent directors are in compliance
+with the requirements of the listing rules of the places of listing.
+During the reporting period, the independent directors of the Company strictly complied with
+the requirements of relevant laws and regulations, the Articles of Association of China Shenhua,
+relevant rules of procedure of meetings and the independent directors system of China Shenhua.
+They maintained their independence of being independent directors, performed their functions
+of supervision, participated in the formation of various important decisions of the Company
+and reviewed regular reports and financial reports of the Company. Therefore the independent
+directors of the Company played an important role in the regulated operation of the Company and
+protected the legitimate interests of minority shareholders.
+The Company ensured that proper conditions are in place for independent directors to perform
+their duties and proactively adopted opinions and suggestions from independent directors.
+The Company formulated the independent directors system to provide, in a systematic way,
+guarantee for the independent directors to perform their duties, and designated departments
+to undertake work related to independent directors' affairs and independent board committee,
+assisting the independent directors in conducting research and investigation, convening meetings
+and expressing independent opinions.
+For the attendance of independent directors at Board meetings and general meetings, please
+refer to the sections on the attendance at Board meetings and general meetings of the Company.
+Dissenting views of independent directors on matters of the Company:
+Applicable
+✓ Not applicable
+140
+China Shenhua Energy Company Limited
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+(III) Others
+Implementation of resolutions passed at the general meetings by the Board in 2016:
+No. General Meeting
+1
+2
+2016 Annual Report 135
+Total
+24/03/2016
+2016 Interim Report
+69
+26/08/2016
+Announcement of Interim Results for the Six Months Ended 30 June 2016
+26/08/2016
+Overseas Regulatory Announcement
+67
+26/08/2016
+Overseas Regulatory Announcement
+66
+26/08/2016
+Overseas Regulatory Announcement
+15/08/2016
+Announcement on the Major Operational Data of July 2016
+64
+28/08/2016
+12/08/2016
+70
+72
+77
+76
+17/10/2016
+Notice of Board Meeting
+the Month Ended 30 September 2016
+75
+30/09/2016
+Monthly Return of Equity Issuer on Movements in Securities for
+74
+12/09/2016
+02/09/2016
+02/09/2016
+01/09/2016
+Monthly Return of Equity Issuer on Movements in Securities for the Month Ended 31 August 2016
+Notification Letter and Request Form to Registered Holder
+Notification Letter and Request Form to Non Registered Holder
+Announcement on the Major Operational Data of August 2016
+73
+71
+Notice of Board Meeting
+63
+09/08/2016
+On-site
+28 October Beijing
+The 11th meeting of the third session
+of the Supervisory Committee
+Passed unanimously
+Resolution on the 2016 interim
+of the Company
+Passed unanimously
+Resolution on the 2016 interim report
+All
+26 August Beijing On-site
+The 10th meeting of the third session
+of the Supervisory Committee
+financial report of the Company
+Passed unanimously
+Resolution on the 2016 first quarterly
+Passed unanimously
+All
+financial report of the Company
+Resolution on the 2016 third quarterly
+report of the Company
+Resolution on the 2016 third quarterly
+financial report of the Company
+Passed unanimously
+Passed unanimously
+Overseas Regulatory Announcement
+09/08/2016
+Announcement on Preliminary Financial Data for the First Half of 2016
+01/08/2016
+Monthly Return of Equity Issuer on Movements in Securities for the Month Ended 31 July 2016
+60
+25/07/2016
+Announcement on the Major Operational Data of September 2016
+Overseas Regulatory Announcement
+Announcement on the Major Operational Data of June 2016
+Establishment of Shenhua Guohua Ningdong Power Generation Co., Ltd.
+OG TONIN222222222268
+65
+II.
+Section X Supervisory Committee's Report (Continued)
+China Shenhua Energy Company Limited
+148
+20/07/2016
+19/10/2016
+28/10/2016
+78
+III.
+Key audit matters are those matters that, in our professional judgment, were of most significance in our audit
+of the consolidated financial statements of the current period. These matters were addressed in the context of
+our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do
+not provide a separate opinion on these matters.
+KEY AUDIT MATTERS
+We conducted our audit in accordance with International Standards on Auditing ("ISAS"). Our responsibilities
+under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated
+Financial Statements section of our report. We are independent of the Group in accordance with the
+International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants ("the
+Code"), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that
+the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
+BASIS FOR OPINION
+In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial
+position of the Group as at 31 December 2016, and of its consolidated financial performance and its
+consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards
+("IFRSS") and have been properly prepared in compliance with the disclosure requirements of the Hong Kong
+Companies Ordinance.
+We have audited the consolidated financial statements of China Shenhua Energy Company Limited (the
+"Company") and its subsidiaries (collectively referred to as the "Group") set out on pages 158 to 245, which
+comprise the consolidated statement of financial position as at 31 December 2016, and the consolidated
+statement of profit or loss and other comprehensive income, consolidated statement of changes in equity
+and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial
+statements, including a summary of significant accounting policies.
+OPINION
+TO THE SHAREHOLDERS OF CHINA SHENHUA ENERGY COMPANY LIMITED
+(Incorporated in The People's Republic of China with limited liability)
+Independent Auditor's Report and Financial Statements
+Section XIII
+China Shenhua Energy Company Limited
+154
+30/12/2016
+Overseas Regulatory Announcement
+IV.
+V.
+VI.
+INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON THE LAWFUL
+OPERATION OF THE COMPANY
+In 2016, China Shenhua attached great importance to and make proactive efforts on investor relations works.
+With maintenance of an effective channel, provision of quality services and concerns on popular topics, the
+Company attained the trust from the market, and enhanced investors' confidence.
+Section XI Investor Relations
+2016 Annual Report 149
+The Supervisory Committee will continue to perform its duties with due care to facilitate the
+standardized operation of the Company and to safeguard the lawful interests of the Company and its
+shareholders in strict compliance with the Company Law and the Articles of Association.
+The insider management system of the Company is sound and comprehensive, effective in its
+implementation and able to keep all insider information confidential.
+VII. INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON THE
+ESTABLISHMENT AND IMPLEMENTATION OF THE MEASURES ON INSIDER
+MANAGEMENT
+The self-assessment report on internal control of the Company has truthfully reflected the establishment
+and implementation of the internal control of the Company and its internal control system is sound and
+effective.
+90
+INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON THE
+SELF-ASSESSMENT REPORT ON INTERNAL CONTROL OF THE COMPANY
+INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON CONNECTED
+TRANSACTIONS OF THE COMPANY
+The acquisition and disposal of the assets of the Company were based on fair and reasonable prices and
+no insider trading has been identified. The transactions do not prejudice the interests of shareholders
+and do not incur any loss of assets of the Company.
+INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON THE
+ACQUISITION AND DISPOSAL OF ASSETS OF THE COMPANY
+The Supervisory Committee is of the opinion that the financial statements of the Company give an
+objective, true and fair view of the financial position and the operating results of the Company in all
+material aspects and are true and reliable with its regulated financial audit and sound internal control
+system.
+INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON THE FINANCIAL
+POSITION OF THE COMPANY
+During the reporting period, the Supervisory Committee is not aware of any act committed by the Board
+and the management of the Company during their performance of duties which were in breach of laws,
+regulations and the Articles of Association or prejudicial to the interests of the Company.
+The Supervisory Committee is of the opinion that the Board and the management of the Company
+have acted in strict accordance with the Company Law, the Articles of Association and the relevant
+regulations of the jurisdiction where the Company is listed, performed their duties with integrity and
+diligence and conscientiously implemented the resolutions of, and exercised the power granted by the
+general meetings; and that the decisions and operations are in compliance with the laws and regulations
+and the Articles of Association.
+The Supervisory Committee is of the opinion that the connected transactions of the Company have
+been carried out in strict compliance with the principles of fairness, equality and openness under the
+statutory decision-making procedures, the connected transactions carried out are in accordance with the
+requirements of the listing rules, and the disclosure of information is standardized and transparent. The
+Supervisory Committee is not aware of any act prejudicial to the interest of the Company.
+Resolution on the 2016 first quarterly
+report of the Company
+23/12/2016
+89
+22/11/2016
+Overseas Regulatory Announcement
+82
+18/11/2016
+Announcement on the Major Operational Data of October 2016
+81
+the Month Ended 31 October 2016
+01/11/2016
+Monthly Return of Equity Issuer on Movements in Securities for
+80
+28/10/2016
+Third Quarterly Report for the Year 2016
+79
+28/10/2016
+Overseas Regulatory Announcement
+83
+Monthly Return of Equity Issuer on Movements in Securities for
+30/11/2016
+the Month Ended 30 November 2016
+23/12/2016
+Overseas Regulatory Announcement
+88
+16/12/2016
+2017 Annual Business Plan for Financial Derivatives
+87
+16/12/2016
+Overseas Regulatory Announcement
+Announcement on the Major Operational Data of November 2016
+16/12/2016
+Overseas Regulatory Announcement
+85
+88 80 80 80 8
+02/12/2016
+Overseas Regulatory Announcement
+84
+19 Continuing Connected Transactions - Entering into Transportation Service Framework Agreement
+20 Continuing Connected Transactions - Entering into Mutual Coal Supply Agreement
+I.
+of the Supervisory Committee
+Beijing On-site
+50
+24/06/2016
+Overseas Regulatory Announcement
+49
+17/06/2016
+Positions Held by Current Directors at the Board and the Board Committees
+48
+17/06/2016
+Resignation of a Supervisor
+47
+Date of
+publication
+Disclosure documents for H Shares (published on the website of Hong Kong Stock Exchange)
+No.
+Section XII Index to Information Disclosure (Continued)
+2016 Annual Report 153
+51
+17/06/2016
+Monthly Return of Equity Issuer on Movements in Securities for the Month Ended 30 June 2016
+Positions Held by Current Directors at the Board and the Board Committees
+03/07/2016
+Overseas Regulatory Announcement
+56
+in Shareholding by the Controlling Shareholder
+11/07/2016
+Announcement on Implementation Result of the Plan On Increase
+55
+03/07/2016
+Overseas Regulatory Announcement
+54
+ED
+03/07/2016
+53 Changes in Senior Management
+03/07/2016
+Appointment of Board Committee Members
+52
+30/06/2016
+Voting Results of 2015 Annual General Meeting
+17/06/2016
+Overseas Regulatory Announcement
+Overseas Regulatory Announcement
+36
+29/04/2016
+Form of Proxy for Annual General Meeting
+35
+ENERGIEF 14 G
+46
+41
+40
+37
+29/04/2016
+Reply Slip Annual General Meeting
+34
+29/04/2016
+Notice of Annual General Meeting
+29/04/2016
+Overseas Regulatory Announcement
+29/04/2016
+38
+45
+16/06/2016
+05/06/2016
+Monthly Return of Equity Issuer on Movements in Securities for the Month Ended 31 May 2016
+Announcement on the Major Operational Data of May 2016
+44
+43
+27/05/2016
+11/07/2016
+42 Overseas Regulatory Announcement
+Announcement on the Major Operational Data of April 2016
+09/05/2016
+03/05/2016
+Monthly Return of Equity Issuer on Movements in Securities for the Month Ended 30 April 2016
+Overseas Regulatory Announcement
+39
+29/04/2016
+First Quarterly Report for the Year 2016
+25/05/2016
+57
+Overseas Regulatory Announcement
+14/07/2016
+Passed unanimously
+Resolution on the 2015 financial report
+the Company
+Passed unanimously
+Resolution on the 2015 CSR report of
+of the Company
+Passed unanimously
+Resolution on the 2015 annual report
+On-site
+Beijing
+24 March
+The 8th meeting of the third session
+of the Supervisory Committee
+Passed unanimously
+Resolution on the proposed provisions
+for impairment of assets of the
+Company
+All
+of the Company
+Resolution on the 2015 profit
+Passed unanimously
+distribution plan of the Company
+29 April
+The 9th meeting of the third session
+2015
+candidates for supervisors to the
+Annual General Meeting for the year
+Resolution on the nomination of
+for the year 2015
+Committee's report of the Company
+In writing
+Passed unanimously
+Company
+Report on Internal Control of the
+Passed unanimously
+Resolution on the 2015 Assessment
+on Deposit and Actual Use of the
+Proceeds of the Company
+Passed unanimously
+Resolution on the Special Report
+Resolution on the Supervisory
+All
+29 January Beijing
+Poll results
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+China Shenhua Energy Company Limited
+146
+Regarding the treatment and publishing of inside information, the Company has formulated internal
+systems such as the Administrative Measures for Preventing Insider Trading and the Internal Reporting
+System for Material Matters, which stipulated, among others, the scope of insider information and
+insiders, reporting process, registration and filing, and prohibited behaviors. The scope of insiders is
+under strict control so as to eliminate the risk of internal information leakage.
+As presented in the 2016 Annual Self-assessment Report on Internal Control of the Board, no material
+defects were found in the internal control of financial reporting as at the base date of the Assessment
+Report on Internal Control, pursuant to the identification of material defects in the internal control over
+the financial reporting of the Company. The Board is of the opinion that the Company has maintained
+effective internal control over its financial reporting in all material aspects in accordance with the
+requirements under the Enterprise Internal Control Normative System and relevant regulations and its
+supplementary guidelines as well as other regulatory requirements on internal control. Based on the
+identification of material defects in the internal control over non-financial reporting of the Company, no
+material defects were identified by the Company in the internal control over non-financial reporting as at
+the base date of the Assessment Report on Internal Control. Nothing that would affect the evaluation
+result of the effectiveness of internal control occurred from the base date of the Assessment Report on
+Internal Control to the date of issuance of the Assessment Report on Internal Control.
+According to the evaluation, during the Reporting Period, all businesses and matters involving major
+risks have been included in the scope of evaluation, and internal control system has been established for
+and effectively implemented on major businesses and matters, which accomplished the objectives of
+internal control of the Company.
+The 2016 Proposal for Internal Control Evaluation of the Company was considered and approved by
+the Audit Committee under the Board, and the 2016 Annual Report on Internal Control Evaluation was
+considered and approved by the Board. The Board and the Audit Committee of the Company are of the
+view that such inspection and supervision mechanism is able to evaluate the effectiveness of internal
+control and risk management operation of the Company.
+An internal control supervision and inspection mechanism on was formed to conduct evaluation
+on internal control on annual basis. Procedures for internal control evaluation include: formulating a
+proposal for internal control evaluation, establishing a working committee of internal control inspection,
+conducting self-evaluation on internal control, conducting evaluation on internal control by inspectors,
+communicating and identifying deficiencies in internal control, rectifying deficiencies in internal control
+and preparing report on internal control. The Company has evaluated the effectiveness of internal control
+for 2016 in accordance with the aforementioned procedures.
+The objectives of the internal control of the Company are to provide reasonable assurance on lawful
+operation and management, asset safety and the truthfulness and completeness of financial reports
+and relevant information, to enhance operation efficiency and effectiveness, and to facilitate the
+implementation of development strategies. As there are inherent limitations on internal control, assurance
+can only be provided for the above objectives to a certain reasonable extent. In addition, there are
+certain risks in predicting the effectiveness of future internal control based on the results of assessment
+on internal control given to the inappropriate internal control or the loosened level of compliance with
+policies and procedures on internal control that may be resulted by changes in different circumstances.
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+2016 Annual Report 145
+Passed unanimously
+61
+59
+58
+IX.
+Material defects in the internal control during the reporting period:
+Applicable ✓ Not applicable
+DESCRIPTION OF THE AUDIT REPORT ON INTERNAL CONTROL
+Subject matter
+Attendance of
+supervisors
+Meeting
+Venue
+Date
+Meeting
+Method of
+The 7th meeting of the third session
+of the Supervisory Committee
+In 2016, the Supervisory Committee held five meetings in total.
+PERFORMANCE OF DUTIES OF THE SUPERVISORY COMMITTEE
+I.
+The Supervisory Committee of the Company had, based on the attitude of being responsible to all
+shareholders, performed their supervisory duties faithfully and carried out their work proactively and
+effectively to protect the lawful interests of the Company and its shareholders in accordance with the relevant
+requirements under the "Company Law of the People's Republic of China" and the "Articles of Association".
+Section X Supervisory Committee's Report
+2016 Annual Report 147
+Please refer to the relevant announcement disclosed by the Company on the website of the Shanghai
+Stock Exchange on 18 March 2017 for the 2016 Assessment Report on Internal Control and Audit
+Report on Internal Control.
+Deloitte Touche Tohmatsu Certified Public Accountants LLP, engaged by the Company, has issued
+the standard unqualified Audit Report on Internal Control. The Audit Report on Internal Control is of the
+opinion that as at 31 December 2016, China Shenhua had maintained effective internal control over its
+financial reporting in all material aspects in accordance with the Basic Standard for Enterprise Internal
+Control and the relevant requirements. The above audit opinions are in line with the opinions set out in
+the Self-assessment Report of the Board.
+During the reporting period, in compliance with the requirements of the "Articles of Association" and
+the "Rules of Procedures of Meetings of the Supervisory Committee", the Supervisory Committee
+conducted strict supervisions on the lawful operations, financial position and the performance of duties
+of the Board and the management of the Company.
+II.
+86
+KEEPING ON MAINTAINING FREQUENT COMMUNICATION AND MAINTAINING
+AN EFFECTIVE COMMUNICATION CHANNEL
+Announcement of China Shenhua on the Provision of Guarantee to the Wholly-owned Subsidiary by
+the Controlling Shareholders
+67
+17/12/2016
+Announcement on the Major Operational Data of China Shenhua for November 2016
+66
+969
+07/12/2016
+III.
+59
+65
+03/12/2016
+Announcement of China Shenhua on the Completion of 168-hour Trial Run of Generator No. 2 of
+Shouguang Power Plant
+64
+..
+23/11/2016
+24/12/2016
+Announcement of China Shenhua on the Completion of 168-hour Trial Run of Generator No. 1 of
+Shenhua Guohua Liuzhou Power Plant
+68
+24/12/2016
+No. Disclosure documents for H Shares (published on the website of Hong Kong Stock Exchange)
+1234567∞
+Monthly Return of Equity Issuer on Movements in Securities for
+8
+Inside Information Provision for Impairment of Assets
+Overseas Regulatory Announcement
+Section XII Index to Information Disclosure (Continued)
+China Shenhua Energy Company Limited
+152
+31/12/2016
+24/12/2016
+Announcement of China Shenhua on 2017 Annual Business Plan for Financial Derivatives
+Announcement of China Shenhua on the Completion of 168-hour Trial Run of Generator No. 2 of
+Shenhua Guohua Liuzhou Power Plant
+70
+69
+67
+Announcement on Resolutions of the 20th Meeting of the Third Session of the Board of China
+Shenhua
+63
+19/11/2016
+Announcement on the Major Operational Data for October 2016
+56
+27/08/2016
+Announcement of China Shenhua on the Provision of Guarantee to the Wholly-owned Subsidiary by
+the Controlling Shareholders
+59
+55
+of Guarantee for Connected Transactions by Shenhua Group Corporation Limited issued by
+Independent Non-executive Directors of China Shenhua
+27/08/2016
+Independent Opinion on Shenhua Guohua (Indonesia) Jawa Power Generation Co., Ltd.'s Acceptance
+54
+...
+27/08/2016
+Announcement on Resolutions of the 18th Meeting of the Third Session of the Board of China
+Shenhua
+53
+27/08/2016
+52 Highlights of the Half-yearly Report for the Year 2016 of China Shenhua
+གླཀླགྷ
+Announcement on the Major Operational Data of China Shenhua for August 2016
+13/09/2016
+57
+62
+83
+29/10/2016
+61 Announcement of China Shenhua on the Provision of Guarantee to Investees by the Wholly-owned
+Subsidiary
+29/10/2016
+Announcement of China Shenhua Regarding Online Discussion Forum for Investors
+60
+Overseas Regulatory Announcement
+Overseas Regulatory Announcement
+686
+Announcement on Resolutions of the 19th Meeting of the third Session of the Board of China
+Shenhua
+59
+29/10/2016
+Third Quarterly Report for the Year 2016 of China Shenhua
+58
+20/10/2016
+Announcement on the Major Operational Data of China Shenhua for September 2016
+29/10/2016
+27/08/2016
+Announcement on the Major Operational Data of December 2015
+Overseas Regulatory Announcement
+Entering into Mutual Coal Supply Agreement, Entering into Mutual Supplies and Services Agreement,
+29/04/2016
+31
+Entering into Financial Services Agreement and Proposed Appointment of Director and Supervisor
+Notification Letter and Request Form to Registered Holder
+29/04/2016
+32
+Notification Letter and Request Form to Non Registered Holder
+29/04/2016
+33
+24/03/2016
+Announcement of Annual Results for the Year Ended 31 December 2015
+24/03/2016
+24/03/2016
+24/03/2016
+24/03/2016
+25/04/2016
+16/03/2016
+Announcement on the Major Operational Data of March 2016
+31/03/2016
+24/03/2016
+Continuing Connected Transactions - Entering into Mutual Supplies and Services Agreement
+Discloseable Transaction Continuing Connected Transactions Entering Into Financial Services
+Agreement
+24/03/2016
+24/03/2016
+Proposed Appointment of Director and Supervisor
+24/03/2016
+2015 Annual Report
+28/03/2016
+25
+2015 CSR Report
+28/03/2016
+Clarification Announcement
+30/03/2016
+28
+Monthly Return of Equity Issuer on Movements in Securities for the Month Ended 31 March 2016
+Notice of Board Meeting
+15/04/2016
+Announcement on the Major Operational Data of February 2016
+14/03/2016
+17 Changes in Senior Mangement
+10
+02/02/2016
+Overseas Regulatory Announcement
+9
+the Month Ended 31 January 2016
+01/02/2016
+29/01/2016
+29/01/2016
+29/01/2016
+29/01/2016
+22/01/2016
+18/01/2016
+08/01/2016
+publication
+Date of
+Announcement on the Major Operational Data of January 2016
+22/02/2016
+11
+Monthly Return of Equity Issuer on Movements in Securities for
+15 Overseas Regulatory Announcement
+16 Overseas Regulatory Announcement
+14 Overseas Regulatory Announcement
+Notice of Board Meeting
+13
+12
+2345672222 22222222
+30
+Announcement on Preliminary Financial Data for the Year 2015
+29
+26
+24
+23
+21
+18
+the Month Ended 29 February 2016
+29/02/2016
+27
+16/08/2016
+Announcement of China Shenhua on the Approval Obtained for Sanhe Power Plant Phase III
+1x350MW Expansion Construction Project
+51
+30/01/2016
+9
+78 1
+28
+Announcement on Provisions for Asset Impairment on China Shenhua
+Announcement of China Shenhua on Adjustments to Electricity Tariffs
+30/01/2016
+03/02/2016
+Announcement on Resolutions of the 7th Meeting of the Third Session of the Supervisory Committee
+of China Shenhua
+10
+23/02/2016
+17/03/2016
+11
+Special Explanation of China Shenhua Energy Company Limited on the Appropriation of Funds by the
+Controlling Shareholder and Other Related Parties of the Company in 2015
+25/03/2016
+12
+Special Audit Report on Deposit and Use of Proceeds of China Shenhua Energy Company Limited
+for 2015 issued by China International Capital Corporation Limited and China Galaxy Securities
+Co., Ltd.
+Announcement on the Major Operational Data of China Shenhua for January 2016
+Announcement on the Major Operational Data of China Shenhua for February 2016
+25/03/2016
+6
+Announcement on Resolutions of the 14th Meeting of the third Session of the Board of China
+Shenhua
+In 2016, the railway transportation network of the Company was basically optimised. In order to
+adequately utilise the surplus capacity to further enhance railway transportation efficiency as well
+as profit per share, the Company gradually opened the transportation system to third parties and
+developed macroscopic logistics business. In investor relations activities, the Company has on one
+hand kept on attaching paramount significance to clean development measures including green coal
+mining, transportation and implementation of ultra-low emission for thermal power generation. On the
+other hand, the Company has introduced its macroscopic logistics system and business concepts to
+the market to enhance the capital markets' knowledge to this new business of the Company, further
+strengthen the market image of the Company as a comprehensive energy enterprise, and explore the
+value of the Company in the capital markets, thereby boosting the confidence of capital markets to the
+Company's future prospect.
+PROACTIVELY RESPONDING HOT ISSUES CONCERNED IN THE MARKET
+AND GUIDING MARKETS TO MAKE JUDGEMENT THAT COMPLIES WITH THE
+FACTUALITY OF THE COMPANY
+Amid drastic changes in industry trend, the Company commenced its investor relations works under
+the guidance of expectation management in order to enable capital markets to better utilise the
+fundamentals of the Company. Firstly it carried out deep research on industry changes and policy
+status and continuously strengthened the communication and exchange with peer companies.
+Secondly, it kept on optimising the disclosure model of annual operating information of "annual plan
++ monthly refinement + adjustments during the year" in order to lay a solid foundation for the works
+on expectation management. Thirdly, it encouraged the participation of all departments within the
+Company, overcame difficulties. We provided instant and effective information to the markets. Fourthly,
+it regularly consolidated task details, summarized market feedback and liaised with investors in a timely
+manner, which guided and realized the synchronization of market valuation and the operation results of
+the Company.
+In 2016, works in relation to capital markets conducted by China Shenhua obtained recognition in
+different aspects, and received the Award of "2016 CCTV Top 10 Best Listed Company in China".
+150 China Shenhua Energy Company Limited
+Section XII Index to Information Disclosure
+No. Disclosure document for A Shares (published on the website of Shanghai Stock Exchange)
+30/01/2016
+12
+Date of
+publication
+09/01/2016
+19/01/2016
+345
+Announcement on the Major Operational Data of China Shenhua for December 2015
+Preliminary Financial Data of China Shenhua for 2015
+23/01/2016
+30/01/2016
+Announcement of China Shenhua on the Change of the Representatives of the Sponsor
+Announcement of China Shenhua on the 2015 Unaudited Balance Sheet and Income Statement of
+Shenhua Finance Company
+19
+3456781
+Work Report of the Independent Directors of China Shenhua for the Year 2015
+25/03/2016
+23
+Special Explanation and Independent Opinion on the Company's External Guarantee by Independent
+Non-executive Directors of China Shenhua
+25/03/2016
+31
+222222332 333 334
+24
+Independent Opinion on the Connected Transactions of the 15th Meeting of the Third Session of the
+Board of China Shenhua by Independent Directors of China Shenhua
+Announcement of China Shenhua on the Resignation of Senior Management
+25
+Audit Report of China Shenhua on Internal Control for the Year Ended 31 December 2015
+25/03/2016
+26
+Annual Report of China Shenhua
+25/03/2016
+27
+25/03/2016
+22
+25/03/2016
+Report on the Performance of Duties by the Audit Committee of the Board of China Shenhua for
+2015
+25/03/2016
+Special Report and Audit Report of China Shenhua on Deposit and Actual Use of Proceeds for 2015
+2015 Assessment Report on Internal Control of China Shenhua
+25/03/2016
+25/03/2016
+Announcement on the Major Operational Data of China Shenhua for July 2016
+Half-yearly Report for the Year 2016 of China Shenhua
+Special Report of China Shenhua on Deposit and Actual Use of Proceeds for 2015
+2015 CSR Report of China Shenhua
+25/03/2016
+25/03/2016
+Financial Statements and Audit Report of China Shenhua for the Year Ended 31 December 2015
+Announcement on Resolutions of the 15th Meeting of the Third Session of the Board of China
+Shenhua
+25/03/2016
+25/03/2016
+20
+20
+Announcement on Resolutions of the 8th Meeting of the Third Session of the Supervisory Committee
+of China Shenhua
+25/03/2016
+21
+24
+HIGHLIGHTING BUSINESS EXPANSION CHARACTERISTICS AND ADEQUATELY
+EXPLORING COMPANY'S VALUE
+Highlights of the Annual Report of China Shenhua
+Taking advantage of the opportunity brought by the growing attractiveness of the coal industry in the
+capital markets, the Company has further stepped up its efforts in investor relations works and has
+communicated with over 700 analysts, fund managers and minority shareholders through results
+announcement conferences, roadshows, online forums and other means. We have been able to
+conduct weekly market research and engage in daily telephone communication except for the black-out
+period. In particular: communications have been made with over 250 persons at roadshows, over 200
+persons at investment forums and over 300 persons during company visits and by conference calls and
+the Company has held two online forums in May and November, respectively, and a reversal roadshow
+in July, which has been engaging in honest and sufficient communication with investors and analysts in
+an on-going fashion.
+18/06/2016
+Legal Opinion on Shenhua Group Corporation Limited's Increase of Shareholding in China Shenhua
+Energy Company Limited Issued by Beijing Zhong Lun Law Firm
+44
+02/07/2016
+Announcement on Resolutions of the 17th Meeting of the Third Session of the Board of China
+Shenhua and Changes in Senior Management
+43
+25/06/2016
+18/06/2016
+Announcement on Resignation and Election of Supervisor of China Shenhua
+Announcement of China Shenhua on Final Dividend Distribution for 2015
+42
+41
+172
+Date of
+publication
+Disclosure document for A Shares (published on the website of Shanghai Stock Exchange)
+No.
+Section XII Index to Information Disclosure (Continued)
+12/07/2016
+45
+45
+Announcement on Implementation Results of the Plan on Increase in Shareholding by the Controlling
+Shareholder of China Shenhua
+50
+gggg
+10/08/2016
+26/07/2016
+Announcement on the Major Operational Data of China Shenhua for June 2016
+Preliminary Financial Data of China Shenhua for the First Half of 2016
+49
+48
+2016 Annual Report 151
+21/07/2016
+47
+Shenhua Finance Company for the First Half of 2016
+15/07/2016
+Announcement of China Shenhua on the Unaudited Balance Sheet and Income Statement of
+46
+46
+12/07/2016
+H Share Announcement of China Shenhua
+Announcement on Resolutions Passed at the 2015 Annual General Meeting of China Shenhua
+25/03/2016
+18/06/2016
+40
+Announcement of China Shenhua Regarding Online Discussion Forum for Investors
+30/04/2016
+Announcement on Resolutions of the 16th Meeting of the Third Session of the Board of China
+Shenhua
+30/04/2016
+H Share Circular of China Shenhua
+34
+30/04/2016
+30
+26/04/2016
+Announcement on the Major Operational Data of China Shenhua for March 2016
+29
+25/03/2016
+Announcement on Daily Connected Transactions of China Shenhua
+First Quarterly Report for the Year 2016 of China Shenhua
+Notice of the 2015 Annual General Meeting of China Shenhua
+30/04/2016
+35
+Legal Opinion on 2015 Annual General Meeting of China Shenhua
+39
+17/06/2016
+30/04/2016
+38
+28/05/2016
+Information on the 2015 Annual General Meeting of China Shenhua
+Announcement on the Major Operational Data of China Shenhua for May 2016
+26/05/2016
+Announcement on the Major Operational Data of China Shenhua for April 2016
+36
+09/05/2016
+Clarification Announcement of China Shenhua
+37
+(9,283)
+237
+34,520
+9
+41,253
+Profit for the year
+Income tax expense
+Profit before income tax
+428
+Year ended 31 December
+2016
+608
+(5,123)
+156
+China Shenhua Energy Company Limited
+Section XIII Independent Auditor's Report and Financial Statements (Continued)
+RESPONSIBILITIES OF DIRECTORS AND THOSE CHARGED WITH GOVERNANCEF FOR
+THE CONSOLIDATED FINANCIAL STATEMENTS
+The directors of the Company are responsible for the preparation of the consolidated financial statements
+that give a true and fair view in accordance with IFRSS and the disclosure requirements of the Hong Kong
+Companies Ordinance, and for such internal control as the directors determine necessary to enable the
+preparation of consolidated financial statements that are free from material misstatement, whether due to
+fraud or error.
+In preparing the consolidated financial statements, the directors are responsible for assessing the Group's
+ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using
+the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
+operations, or have no realistic alternative but to do so.
+Those charged with governance are responsible for overseeing the Group's financial reporting process.
+AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL
+STATEMENTS
+Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a
+whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that
+includes our opinion solely to you, as a body, in accordance with our agreed terms of engagement, and for no
+other purpose. We do not assume responsibility towards or accept liability to any other person for the contents
+of this report. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted
+in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise
+from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
+expected to influence the economic decisions of users taken on the basis of these consolidated financial
+statements.
+In connection with our audit of the consolidated financial statements, our responsibility is to read the other
+information and, in doing so, consider whether the other information is materially inconsistent with the
+consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially
+misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this
+other information, we are required to report that fact. We have nothing to report in this regard.
+As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional
+skepticism throughout the audit. We also:
+Obtain an understanding of internal control relevant to the audit in order to design audit procedures
+that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
+effectiveness of the Group's internal control.
+Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
+and related disclosures made by the directors.
+2016 Annual Report 157
+Section XIII Independent Auditor's Report and Financial Statements (Continued)
+AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL
+STATEMENTS (Continued)
+Conclude on the appropriateness of the directors' use of the going concern basis of accounting and,
+based on the audit evidence obtained, whether a material uncertainty exists related to events or
+conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we
+conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to
+the related disclosures in the consolidated financial statements or, if such disclosures are inadequate,
+to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
+auditor's report. However, future events or conditions may cause the Group to cease to continue as a
+going concern.
+Evaluate the overall presentation, structure and content of the consolidated financial statements,
+including the disclosures, and whether the consolidated financial statements represent the underlying
+transactions and events in a manner that achieves fair presentation.
+Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
+business activities within the Group to express an opinion on the consolidated financial statements.
+We are responsible for the direction, supervision and performance of the group audit. We remain solely
+responsible for our audit opinion.
+Identify and assess the risks
+Our opinion on the consolidated financial statements does not cover the other information and we do not
+express any form of assurance conclusion thereon.
+The directors of the Company are responsible for the other information. The other information comprises the
+information included in the annual report, but does not include the consolidated financial statements and our
+auditor's report thereon.
+OTHER INFORMATION
+-------- (4) (4)
+2016 Annual Report 155
+Section XIII Independent Auditor's Report and Financial Statements (Continued)
+KEY AUDIT MATTERS (Continued)
+Key audit matter
+How our audit addressed the key audit matter
+Impairment assessment on coal mines related non-current assets
+We identified non-current assets impairment assessment
+on coal mines related non-current assets as a key
+audit matter due to significant judgment made by
+management in determining the recoverable amounts of
+the corresponding cash-generating units.
+Owing to oversupply of coals and the unsatisfactory
+financial performance of certain Group's mines, the
+management identified certain non-current assets
+relating to coal mines having impairment indications.
+The impairment assessment involves management's
+judgment in certain areas including the discount rate and
+the underlying cash flows projection based on the future
+market supply and demand conditions. Any changes
+in management's judgement may result in significant
+financial impact to the Group.
+As set out in Note 15 to the consolidated financial
+statements, the management concluded that the
+recoverable amount of each separate cash-generating
+unit was higher than their carrying value and no
+impairment provision was required for the current year.
+The recoverable amounts of each cash-generating unit
+were determined by value in use method.
+Our procedures in relation to impairment
+assessment on coal mines related non-current
+assets included:
+• testing the key controls related to the
+assessment on the carrying value of its non-
+current assets;
+• assessing the valuation methodology;
+• analysing and challenging the reasonableness
+of significant judgements and estimates
+built in the underlying cash flows used in
+management's impairment tests based on our
+knowledge of the business and industry;
+•
+analysing and reviewing the specific discount
+rates used by management in impairment
+tests;
+evaluating the sensitivity analysis performed
+by management;
+comparing the current year actual results with
+the 2016 figures included in the prior years
+forecast; and
+• reconciling input data to supporting evidence,
+such as approved budgets and considering the
+reasonableness of these budgets.
+We communicate with those charged with governance regarding, among other matters, the planned scope
+and timing of the audit and significant audit findings, including any significant deficiencies in internal control
+that we identify during our audit.
+We also provide those charged with governance with a statement that we have complied with relevant ethical
+requirements regarding independence, and to communicate with them all relationships and other matters that
+may reasonably be thought to bear on our independence, and where applicable, related safeguards.
+From the matters communicated with those charged with governance, we determine those matters that
+were of most significance in the audit of the consolidated financial statements of the current period and are
+therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation
+precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that
+a matter should not be communicated in our report because the adverse consequences of doing so would
+reasonably be expected to outweigh the public interest benefits of such communication.
+The engagement partner on the audit resulting in the independent auditor's report is Wong Tin Chak, Samuel.
+General and administrative expenses
+(8,423)
+(9,714)
+Other gains and losses
+10
+(3,078)
+(5,856)
+Other income
+1,379
+1,659
+Other expenses
+Interest income
+(1,511)
+(626)
+8
+723
+Finance costs
+8
+(5,748)
+(584)
+Share of results of associates
+(610)
+53,728
+Deloitte Touche Tohmatsu
+Certified Public Accountants
+Hong Kong
+17 March 2017
+158
+China Shenhua Energy Company Limited
+Consolidated Statement of Profit or Loss and Other Comprehensive Income
+For the year ended 31 December 2016
+Notes
+RMB million
+2015
+RMB million
+Revenue
+Cost of sales
+57
+183,127
+(124,843)
+177,069
+(123,341)
+Gross profit
+58,284
+Selling expenses
+(9,561)
+(5,695)
+31,970
+33,990
+32
+41,361
+47,519
+30
+19,989
+33
+Income tax payable
+403
+3,465
+203
+1,965
+Total current liabilities
+Net current assets
+Total assets less current liabilities
+112,185
+101,487
+21,278
+19,549
+464,544
+458,304
+2016 Annual Report 161
+Consolidated Statement of Financial Position (Continued)
+At 31 December 2016
+35,156
+Notes
+4,998
+12,812
+41,019
+25
+48,792
+19,351
+26
+6,141
+4,611
+3,428
+916
+27
+27
+41,188
+42,323
+133,463
+121,036
+29
+Accounts and bills payable
+31
+Accrued expenses and other payables
+Current portion of medium-term notes
+Current portion of long-term liabilities
+23
+11,811
+30
+31 December
+2016
+RMB million
+31 December
+2015
+RMB million
+Equity
+Share capital
+Reserves
+Equity attributable to equity holders of the Company
+Non-controlling interests
+Total equity
+35
+19,890
+19,890
+297,085
+278,178
+316,975
+298,068
+67,994
+65,853
+384,969
+363,921
+The consolidated financial statements on pages 158 to 245 were approved and authorised for issue by the
+Board of Directors on 17 March 2017, and are signed on its behalf by:
+Zhang Yuzhuo
+Chairman
+Ling Wen
+Vice Chairman and President
+162
+China Shenhua Energy Company Limited
+Consolidated Statement of Changes in Equity
+363,921
+384,969
+94,383
+79,575
+Non-current liabilities
+Borrowings
+Medium-term notes
+Bonds
+Long-term liabilities
+Accrued reclamation obligations
+Deferred tax liabilities
+20338
+29
+58,462
+54,179
+20,573
+4,985
+10,331
+9,651
+2,451
+2,523
+34
+2,549
+2,197
+797
+878
+Total non-current liabilities
+Net assets
+24,955
+24
+12,816
+13,341
+7,310
+31,970
+24,959
+25,272
+17,783
+7,090
+7,325
+32,362
+25,108
+Earnings per share (RMB)
+- Basic
+14
+1.252
+0.887
+160
+China Shenhua Energy Company Limited
+Consolidated Statement of Financial Position
+At 31 December 2016
+31 December
+2016
+Notes
+RMB million
+31 December
+2015
+7,060
+17,649
+24,910
+RMB million
+Exchange differences
+311
+192
+Share of other comprehensive income (expense) of associates
+60
+(22)
+371
+170
+Other comprehensive income for the year,
+net of income tax
+Total comprehensive income for the year
+RMB million
+392
+32,362
+25,108
+2016 Annual Report 159
+Consolidated Statement of Profit or Loss and Other Comprehensive Income (Continued)
+For the year ended 31 December 2016
+Year ended 31 December
+Profit for the year attributable to:
+Equity holders of the Company
+Non-controlling interests
+Total comprehensive income
+for the year attributable to:
+Equity holders of the Company
+Non-controlling interests
+2016
+Notes
+RMB million
+2015
+149
+For the year ended 31 December 2016
+Non-current assets
+15
+17,359
+16,535
+28
+3,849
+2,674
+443,266
+438,755
+Lease prepayments
+Deferred tax assets
+Total non-current assets
+Current assets
+Inventories
+Accounts and bills receivable
+Prepaid expenses and other current assets
+Restricted bank deposits
+Time deposits with original maturity
+over three months
+Cash and cash equivalents
+Total current assets
+Current liabilities
+Borrowings
+Short-term debenture
+2222
+23
+22
+34,562
+36,749
+21
+Construction in progress
+16
+56
+337,785
+339,326
+35,220
+33,610
+Exploration and evaluation assets
+17
+2,344
+2,176
+Property, plant and equipment
+Intangible assets
+3,018
+2,964
+Interest in associates
+19
+5,142
+5,113
+Available-for-sale investments
+20
+1,800
+1,795
+Other non-current assets
+18
+Equity attributable to equity holders of the Company
+Non-
+Share
+185,047
+300,698
+64,872
+365,570
+17,649
+17,649
+7,310 24,959
+Other comprehensive income (expense)
+for the year
+--- 177
+(43)
+134
+15
+149
+Total comprehensive income (expense)
+for the year
+--- 177
+(43)
+17,649
+17,783
+7,325
+25,108
+Dividend declared (Note 13)
+Appropriation of maintenance and
+production funds (note (i))
+Utilisation of maintenance and
+production funds (note (iii))
+Appropriation of general reserve
+(note (iii))
+(8,570)
+16,071
+(353)
+3,612
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+million
+million
+million
+million
+Acquisition of additional
+million
+million
+million
+million
+million
+(Note 35) (note (i))
+(note (ii))
+(note (iii)) (note (iv))
+At 1 January 2015
+Profit for the year
+19,890
+85,001
+million
+RMB
+interest in a subsidiary
+Shenhua Group
+For the year ended 31 December 2016
+Consolidated Statement of Changes in Equity (Continued)
+China Shenhua Energy Company Limited
+164
+163
+The capital reserve represents the difference between the total amount of the par value of shares issued and the amount of the
+net assets, net of other reserves, transferred from Shenhua Group Corporation Limited ("Shenhua Group") in connection with the
+Restructuring (as defined in Note 1).
+Share premium represents the difference between the total amount of the par value of shares issued and the amount of the net
+proceeds received upon the global initial public offering of H shares in 2005 and the issue of A shares in 2007.
+(ii)
+(i)
+Notes:
+363,921
+65,853
+18,003 (14,308) 186,046 298,068
+(176)
+3,612
+19,890 85,001
+At 31 December 2015
+(8,628)
+(8,628)
+2,288
+2,288
+(5,695)
+(5,695)
+(iii)
+Statutory reserves
+Statutory surplus reserve
+According to the PRC Company Law and the Company's Articles of Association, the Company is required to transfer 10% of
+its net profit as determined in accordance with the China Accounting Standards for Business Enterprises ("China Accounting
+Standards") to its statutory surplus reserve until the reserve balance reaches 50% of the registered capital. The transfer to this
+reserve must be made before distribution of a dividend to shareholders.
+Contributions from non-controlling
+shareholders
+Distributions to non-controlling
+shareholders
+(14,718)
+(14,718)
+(14,718)
+--- - 5,381
+(5,381)
+(3,699)
+3,699
+250
+Acquisition of subsidiaries from
+(250)
+Other reserves
+(iv)
+The directors of the Company (the "Directors") have not proposed any appropriation to the discretionary surplus reserve in 2016
+and 2015.
+The appropriation to the discretionary surplus reserve is subject to the shareholders' approval. The utilisation of the reserve is
+similar to that of the statutory surplus reserve.
+Discretionary surplus reserve
+Pursuant to relevant regulations issued by the Ministry of Finance, the Company's subsidiary, Shenhua Finance Co., Ltd. ("Shenhua
+Finance"), is required to set aside a general reserve by the end of the financial year through appropriations of profit after tax as
+determined in accordance with China Accounting Standards at a certain ratio of the ending balance of gross risk-bearing assets to
+cover potential losses against such assets.
+General reserve
+Pursuant to the relevant PRC regulations, the Group is required to transfer production and maintenance funds at fixed rates based
+on relevant bases to a specific reserve accounts. The production and maintenance funds could be utilised when expenses or
+capital expenditures on production maintenance and safety measures are incurred. The amount of production and maintenance
+funds utilised would be transferred from the specific reserve account to retained earnings.
+Specific reserve for production and maintenance funds
+Statutory surplus reserve can be used to make up losses, if any, or to expand the Company's business, and may be converted into
+share capital by the issue of new shares to shareholders in proportion to their existing shareholdings or by increasing the par value
+of the shares currently held by them, provided that the balance after such issue is not less than 25% of the registered capital of
+the Company. The statutory surplus reserve is not distributable.
+The statutory surplus reserve has reached 50% of the registered capital in 2009. Accordingly, no appropriation of net profit to the
+statutory surplus reserve has been proposed since 1 January 2010.
+Other reserves mainly represents the consideration paid for acquisition of subsidiaries under common control, and share of other
+comprehensive income (expense) of associates.
+to profit or loss, net of income tax:
+RMB
+equity
+million
+million
+million
+million
+At 1 January 2016
+19,890
+85,001
+3,612
+(176)
+18,003 (14,308) 186,046
+298,068
+65,853 363,921
+24,910 24,910 7,060 31,970
+281
+81
+362
+30
+392
+Profit for the year
+Other comprehensive
+income for the year
+Total comprehensive
+income for the year
+million million
+(note (iii)) (note (iv))
+(note (ii))
+(Note 35) (note (i))
+million
+Share
+Capital Exchange Statutory
+Other Retained
+controlling
+Total
+capital premium
+reserve
+reserve reserves
+reserves
+earnings
+Total
+Dividend declared (Note 13)
+interests
+RMB
+RMB
+RMB
+RMB RMB RMB
+RMB
+RMB
+RMB
+RMB
+million
+million
+million
+equity
+RMB
+Appropriation of maintenance and
+Utilisation of general
+20,827
+(14,227) 201,767
+316,975
+67,994 384,969
+2016 Annual Report
+Consolidated Statement of Changes in Equity (Continued)
+For the year ended 31 December 2016
+Equity attributable to equity holders of the Company
+Non-
+Share
+Share
+Capital Exchange Statutory
+Other
+Retained
+controlling
+Total
+capital premium
+reserve
+reserve reserves
+reserves
+earnings
+Total
+interests
+105
+3,612
+19,890 85,001
+At 31 December 2016
+reserve (note (iii)
+Contributions from non-controlling
+shareholders
+Distributions to non-controlling
+----(34)
+- - 281
+81
+24,910
+25,272
+7,090
+32,362
+production funds (note (iii)
+Utilisation of maintenance and
+production funds (note (iii))
+(6,365)
+(6,365)
+3,747
+(3,747)
+(889)
+889
+34
+1,111
+1,111
+shareholders
+(6,060)
+(6,060)
+(6,365)
+10
+material misstatement of the consolidated financial statements, whether
+due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
+evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting
+a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may
+involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
+(21)
+21
+Remeasurement of defined benefit obligations
+to profit or loss, net of income tax:
+Items that may be reclassified subsequently
+Item that will not be reclassified
+Other comprehensive income (expense) for the year
+24,959
+21
+.
+Step 2: Identify the performance obligations in the contract
+•
+Step 1: Identify the contract(s) with a customer
+The core principle of IFRS 15 is that an entity should recognise revenue to depict the transfer of
+promised goods or services to customers in an amount that reflects the consideration to which
+the entity expects to be entitled in exchange for those goods or services. Specifically, the Standard
+introduces a 5-step approach to revenue recognition:
+IFRS 15 was issued which establishes a single comprehensive model for entities to use in accounting for
+revenue arising from contracts with customers. IFRS 15 will supersede the current revenue recognition
+guidance including IAS 18 Revenue, IAS 11 Construction Contracts and the related Interpretations when
+it becomes effective.
+2,925
+IFRS 9 Financial Instruments (Continued)
+New and revised IFRSS not yet effective and not early adopted (Continued)
+2. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING
+STANDARDS ("IFRSS") (Continued)
+For the year ended 31 December 2016
+Notes to the Consolidated Financial Statements (Continued)
+2016 Annual Report 171
+Based on the Group's financial instruments and risk management policies as at 31 December 2016,
+application of IFRS 9 in the future may have a material impact on the classification and measurement of
+the Group's financial assets. The Group's available-for-sale investments, including those currently stated
+at cost less impairment, will either be measured as fair value through profit or loss or be designated as
+FVTOCI (subject to fulfillment of the designation criteria). In addition, the expected credit loss model may
+resulted in early provision of credit losses which are not yet incurred in relation to the Group's financial
+assets measured at amortised cost.
+in relation to the impairment of financial assets, IFRS 9 requires an expected credit loss model, as
+opposed to an incurred credit loss model under IAS 39. The expected credit loss model requires
+an entity to account for expected credit losses and changes in those expected credit losses at
+each reporting date to reflect changes in credit risk since initial recognition. In other words, it is no
+longer necessary for a credit event to have occurred before credit losses are recognised.
+with regard to the measurement of financial liabilities designated as at fair value through profit
+or loss, IFRS 9 requires that the amount of change in the fair value of the financial liability that
+is attributable to changes in the credit risk of that liability is presented in other comprehensive
+income, unless the recognition of effects of changes in the liability's credit risk in other
+comprehensive income would create or enlarge an accounting mismatch in profit or loss. Changes
+in fair value of financial liabilities attributable to a financial liability's credit risk are not subsequently
+reclassified to profit or loss. Under IAS 39, the entire amount of the change in the fair value of the
+financial liability designated as fair value through profit or loss is presented in profit or loss.
+all recognised financial assets that are within the scope of IFRS 9 are required to be subsequently
+measured at amortised cost or fair value. Specifically, debt investments that are held within a
+business model whose objective is to collect the contractual cash flows, and that have contractual
+cash flows that are solely payments of principal and interest on the principal outstanding are
+generally measured at amortised cost at the end of subsequent accounting periods. Debt
+instruments that are held within a business model whose objective is achieved both by collecting
+contractual cash flows and selling financial assets, and that have contractual terms that give rise
+on specified dates to cash flows that are solely payments of principal and interest on the principal
+amount outstanding, are generally measured at FVTOCI. All other debt investments and equity
+investments are measured at their fair value at the end of subsequent accounting periods. In
+addition, under IFRS 9, entities may make an irrevocable election to present subsequent changes
+in the fair value of an equity investment (that is not held for trading) in other comprehensive
+income, with only dividend income generally recognised in profit or loss.
+(Decrease) increase in accrued expenses and other payables
+Other than above, the Directors do not expect IFRS 9 will have a material impact on the results and
+financial position of the Group.
+IFRS 15 Revenue from Contracts with Customers
+Step 3: Determine the transaction price
+•
+Basis of preparation
+SIGNIFICANT ACCOUNTING POLICIES
+For the year ended 31 December 2016
+Notes to the Consolidated Financial Statements (Continued)
+2016 Annual Report 173
+3.
+The application of the amendments will result in additional disclosures on the Group's financing activities,
+specifically reconciliation between the opening and closing balances in the consolidated statement of
+financial position for liabilities arising from financing activities will be provided on application.
+The amendments require an entity to provide disclosures that enable users of financial statements to
+evaluate changes in liabilities arising from financing activities including both changes arising from cash
+flows and non-cash changes. Specially, the amendments require the following changes in liabilities
+arising from financing activities to be disclosed: (i) changes from financing cash flows; (ii) changes arising
+from obtaining or losing control of subsidiaries or other businesses; (iii) the effect of changes in foreign
+exchange rates; (iv) changes in fair values; and (v) other changes.
+IAS 7 Disclosure Initiative
+As disclosed in Note 39.2, total operating lease commitments for the Group as at 31 December 2016
+amounted to RMB68 million, the Directors do not expect the application of IFRS 16 would result in
+significant impact on the Group's results but it is expected that these lease commitments will be
+required to be recognised in the consolidated statement of financial position as right-of-use assets and
+lease liabilities.
+In respect of the lessor accounting, IFRS 16 substantially carries forward the lessor accounting
+requirements in IAS 17. Accordingly, a lessor continues to classify its leases as operating leases or
+finance leases, and to account for those two types of leases differently.
+IFRS 16, which upon the effective date will supersede IAS 17 Leases, introduces a single lessee
+accounting model and requires a lessee to recognise assets and liabilities for all leases with a term of
+more than 12 months, unless the underlying asset is of low value. Specifically, under IFRS 16, a lessee
+is required to recognise a right-of-use asset representing its right to use the underlying leased asset
+and a lease liability representing its obligation to make lease payments. Accordingly, a lessee should
+recognise depreciation of the right-of-use asset and interest on the lease liability, and also classifies
+cash repayments of the lease liability into a principal portion and an interest portion and presents them
+as financing in the statement of cash flows. Also, the right-of-use asset is initially measured at cost
+and subsequently measured at cost (subject to certain exceptions) less accumulated depreciation and
+impairment losses, adjusted for any remeasurement of the lease liability. The lease liability is initially
+measured at the present value of the lease payments that are not paid at that date. The measurement
+includes non-cancellable lease payments and also includes payments to be made in optional periods if
+the lessee is reasonably certain to exercise an option to extend the lease, or not to exercise an option to
+terminate the lease. This accounting treatment is significantly different from the lessee accounting for
+leases that are classified as operating leases under the predecessor standard, IAS 17.
+IFRS 16 Leases
+New and revised IFRSS not yet effective and not early adopted (Continued)
+APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING
+STANDARDS ("IFRSS") (Continued)
+2.
+For the year ended 31 December 2016
+Notes to the Consolidated Financial Statements (Continued)
+China Shenhua Energy Company Limited
+172
+The Directors anticipate that the application of IFRS 15 in the future may result in more disclosures,
+however, the Directors do not anticipate that the application of IFRS 15 will have a material impact on
+the timing and amounts of revenue recognised in the respective reporting periods.
+Under IFRS 15, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e.
+when "control" of the goods or services underlying the particular performance obligation is transferred
+to the customer. Far more prescriptive guidance has been added in IFRS 15 to deal with specific
+scenarios. Furthermore, extensive disclosures are required by IFRS 15.
+Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation
+Step 4: Allocate the transaction price to the performance obligations in the contract
+.
+Key requirements of IFRS 9 are described as follows:
+IFRS 9 Financial Instruments (Continued)
+New and revised IFRSS not yet effective and not early adopted (Continued)
+APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING
+STANDARDS ("IFRSS") (Continued)
+Amendments to IAS 7
+Amendments to IFRS 10 and IAS 28
+Amendments to IFRS 15
+Amendments to IFRS 4
+Amendments to IFRS 2
+IFRIC 22
+IFRS 16
+IFRS 15
+IFRS 9
+New and revised IFRSS not yet effective and not early adopted
+2. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING
+STANDARDS ("IFRSS") (Continued)
+For the year ended 31 December 2016
+Amendments to IAS 12
+Notes to the Consolidated Financial Statements (Continued)
+The Group has applied these amendments retrospectively. The Segment and Other Information has
+been reordered to Note 6 to give prominence to areas of the Group's activities that management
+considers to be most relevant to an understanding of the Group's consolidated financial performance
+and financial position. The application of the amendments to IAS 1 has not resulted in any impact on the
+financial performance or financial position of the Group.
+The Group has applied the amendments to IAS 1 Disclosure Initiative for the first time in the current
+year. The amendments to IAS 1 clarify that an entity need not provide a specific disclosure required by
+an IFRS if the information resulting from that disclosure is not material, and give guidance on the bases
+of aggregating and disaggregating information. However, the amendments reiterate that an entity should
+consider providing additional disclosures when compliance with the specific requirements in IFRS is
+insufficient to enable users of financial statements to understand the impact of particular transactions,
+events and conditions on the entity's financial position and financial performance.
+The application of the amendments to IFRSS in the current year has had no material impact on the
+Group's financial performance and positions for the current and prior years and/or on the disclosures set
+out in these consolidated financial statements, except for the application of Amendment to IAS 1.
+Annual Improvements to IFRSS 2012-2014 Cycle
+Investment Entities: Applying the Consolidation Exception
+Agriculture: Bearer Plants
+Clarification of Acceptable Methods of Depreciation and
+Amortisation
+Accounting for Acquisitions of Interests in Joint Operations
+Disclosure Initiative
+Amendments to IFRSS
+IFRS 12 and IAS 28
+Amendments to IAS 16 and IAS 41
+Amendments to IFRS 10,
+Amendments to IAS 16 and IAS 38
+2016 Annual Report 169
+The consolidated financial statements have been prepared in accordance with IFRS issued by the
+International Accounting Standards Board. They are presented in RMB and all values are rounded to the
+nearest million (RMB'million) except when otherwise indicated. In addition, the consolidated financial
+statements include applicable disclosures required by the Rules Governing the Listing of Securities
+Oon The Stock Exchange of Hong Kong Limited ("Listing Rules") and by the Hong Kong Companies
+Ordinance ("CO").
+Amendments to IAS 40
+Financial Instruments¹
+2.
+For the year ended 31 December 2016
+Notes to the Consolidated Financial Statements (Continued)
+China Shenhua Energy Company Limited
+170
+IFRS 9 introduces new requirements for the classification and measurement of financial assets, financial
+liabilities, general hedge accounting and impairment requirements for financial assets.
+IFRS 9 Financial Instruments
+Other than as further explained below, the Directors do not anticipate that the application of the new
+and revised IFRSS above will have a material effect on the Group's consolidated financial statements
+and the disclosure.
+Effective for annual periods beginning on or after 1 January 2017 or 1 January 2018, as appropriate
+5
+Effective for annual periods beginning on or after 1 January 2017
+4
+Amendments to IFRSS
+Effective for annual periods beginning on or after a date to be determined
+2
+Effective for annual periods beginning on or after 1 January 2018
+1
+Annual Improvements to IFRS Standards 2014-2016 Cycle5
+Recognition of Deferred Tax Assets for Unrealised Losses4
+Transfers of Investment Property¹
+Disclosure Initiative4
+Sale or Contribution of Assets between an Investor and its
+Associate or Joint Venture³
+Customers¹
+Clarifications to IFRS 15 Revenue from Contracts with
+Applying IFRS 9 Financial Instruments with IFRS 4 Insurance
+Contracts¹
+Foreign Currency Transactions and Advance Consideration¹
+Classification and Measurement of Share-based Payment
+Transactions¹
+Revenue from Contracts with Customers¹
+Leases²
+Effective for annual periods beginning on or after 1 January 2019
+The consolidated financial statements have been prepared on the historical cost basis, except for certain
+financial instruments as disclosed in Note 37.3, which have been measured at fair value at the end of
+each reporting period.
+Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for
+the asset or liability, either directly or indirectly; and
+Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
+transaction between market participants at the measurement date, regardless of whether that price is
+directly observable or estimated using another valuation technique. In estimating the fair value of an asset
+or a liability, the Group takes into account the characteristics of the asset or liability if market participants
+would take those characteristics into account when pricing the asset or liability at the measurement
+date. Fair value for measurement and/or disclosure purposes in the Group's consolidated financial
+statements is determined on such a basis, except for share-based payment transactions that are within
+the scope of IFRS 2 Share-based Payment, leasing transactions that are within the scope of IAS 17
+Leases, and measurements that have some similarities to fair value but are not fair value, such as net
+realisable value in IAS 2 Inventories or value in use in IAS 36 Impairment of Assets.
+Proceeds from disposal of wealth management products
+160
+Proceeds from disposal of derivative financial instruments
+23
+Investments in wealth management products
+(33,350)
+(160)
+Investments in associates
+(104)
+(48)
+Purchase of derivative financial instruments
+400
+(2)
+Purchase of tradable wealth management products
+(50)
+Dividend received from associates
+375
+309
+Interest received
+710
+590
+(Increase) decrease in restricted bank deposits
+(1,530)
+1,660
+|
+Increase in time deposits with original maturity over three months
+Maturity of time deposits with original maturity over three months
+Proceeds from disposal of debt securities
+35
+(6,267)
+5,754
+Cash generated from operations
+Income tax paid
+(5,021)
+90,652
+66,166
+(8,769)
+(10,760)
+NET CASH GENERATED FROM OPERATING ACTIVITIES
+81,883
+55,406
+3
+INVESTING ACTIVITIES
+construction in progress and other non-current assets
+(28,264)
+Increase in lease prepayments
+(794)
+(29,685)
+(191)
+Proceeds from disposal of property, plant and equipment,
+intangible assets and other non-current assets
+649
+Proceeds from disposal of associates
+699
+640
+Acquisition of property, plant and equipment, intangible assets,
+exploration and evaluation assets, additions to the
+Historical cost is generally based on the fair value of the consideration given in exchange for goods and
+services.
+(5,026)
+2,514
+Profit or loss and each item of other comprehensive income are attributed to equity holders of the
+Company and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed
+to equity holders of the Company and to the non-controlling interests even if this results in the non-
+controlling interests having a deficit balance.
+Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases
+when the Group loses control of the subsidiary. Specifically, income and expenses of a subsidiary
+acquired or disposed of during the year are included in the consolidated statement of profit or loss and
+other comprehensive income from the date the Group gains control until the date when the Group
+ceases to control the subsidiary.
+any additional facts and circumstances that indicate that the Group has, or does not have, the
+current ability to direct the relevant activities at the time that decisions need to be made, including
+voting patterns at previous shareholders' meetings.
+rights arising from other contractual arrangements; and
+potential voting rights held by the Group, other vote holders or other parties;
+the size of the Group's holding of voting rights relative to the size and dispersion of holdings of
+the other vote holders;
+When the Group has less than a majority of the voting rights of an investee, it has power over the
+investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities
+of the investee unilaterally. The Group considers all relevant facts and circumstances in assessing
+whether or not the Group's voting rights in an investee are sufficient to give it power, including:
+The Group reassesses whether or not it controls an investee if facts and circumstances indicate that
+there are changes to one or more of the three elements of control listed above.
+has the ability to use its power to affect its returns.
+is exposed, or has rights, to variable returns from its involvement with the investee; and
+has power over the investee;
+Where necessary, adjustments are made to the financial statements of subsidiaries to bring their
+accounting policies into line with the Group's accounting policies.
+The consolidated financial statements incorporate the financial statements of the Company and entities
+controlled by the Company and its subsidiaries. Control is achieved where the Company:
+The principal accounting policies are set out below.
+SIGNIFICANT ACCOUNTING POLICIES (Continued)
+3.
+For the year ended 31 December 2016
+Notes to the Consolidated Financial Statements (Continued)
+174 China Shenhua Energy Company Limited
+Level 3 inputs are unobservable inputs for the asset or liability.
+•
+Amendments to IFRS 11
+Amendments to IAS 1
+Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that
+the entity can access at the measurement date;
+In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2
+or 3 based on the degree to which the inputs to the fair value measurements are observable and the
+significance of the inputs to the fair value measurement in its entirety, which are described as follows:
+Basis of consolidation
+(1,265)
+All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions
+between members of the Group are eliminated in full on consolidation.
+Net proceeds from bonds
+1,624
+NET CASH USED IN INVESTING ACTIVITIES
+(64,654)
+(26,123)
+166
+China Shenhua Energy Company Limited
+Consolidated Statement of Cash Flows (Continued)
+For the year ended 31 December 2016
+Year ended 31 December
+2016
+RMB million
+2015
+RMB million
+Changes in the Group's ownership interests in existing subsidiaries that do not result in the Group
+losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of
+the Group's interests and non-controlling interests are adjusted to reflect the changes in their relative
+interests in the subsidiaries. Any difference between the amount by which the non-controlling interests
+are adjusted and the fair value of the consideration paid or received is recognised directly in equity and
+attributed to owners of the Company.
+FINANCING ACTIVITIES
+Proceeds from borrowings
+Repayments of borrowings
+Net proceeds from short-term debentures
+and medium-term notes
+(5,600)
+(5,730)
+28,037
+26,458
+(24,927)
+(22,756)
+14,985
+Interest paid
+In the current year, the Group has applied, for the first time, the following amendments to IFRSS that are
+mandatorily effective for the current year.
+3
+2.
+4,483
+Fair value changes on financial instruments (Note 8)
+Exchange loss, net
+(2)
+6
+688
+649
+Other income
+(56)
+Operating cash flows before movements in working capital
+73,840
+68,412
+(Increase) decrease in inventories
+(1,076)
+2,214
+Decrease (increase) in accounts and bills receivable
+20,084
+(10,309)
+Decrease in prepaid expenses and other receivables
+1,146
+5,116
+Repayments of short-term debentures and medium-term notes
+5,062
+Interest expenses
+(428)
+(237)
+APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING
+STANDARDS ("IFRSS")
+2016 Annual Report 165
+Consolidated Statement of Cash Flows
+For the year ended 31 December 2016
+Year ended 31 December
+2016
+RMB million
+2015
+RMB million
+OPERATING ACTIVITIES
+Profit before income tax
+(5,000)
+Adjustments for:
+Other gains and losses (Note 10)
+41,253
+34,520
+23,990
+3,078
+5,856
+Interest income
+(723)
+(608)
+Share of results of associates
+Depreciation and amortisation (Note 10)
+9,049
+(20,000)
+24,721
+435
+41,188
+42,323
+2016 Annual Report 167
+Notes to the Consolidated Financial Statements.
+For the year ended 31 December 2016
+1.
+PRINCIPAL ACTIVITIES AND ORGANISATION
+Principal activities
+China Shenhua Energy Company Limited (the "Company") and its subsidiaries (hereinafter collectively
+referred to as the "Group") are principally engaged in: (i) the production and sale of coal; and (ii) the
+generation and sale of coal-based power to provincial/regional electric grid companies in the People's
+Republic of China (the "PRC"). The Group operates an integrated railway network and seaports that are
+primarily used to transport the Group's coal sales from its mines. The primary customers of the Group's
+coal sales include power plants, metallurgical and coal chemical producers in the PRC.
+Organisation
+The Company was established in the PRC on 8 November 2004 as a joint stock limited company as part
+of the Restructuring (as defined below) of Shenhua Group, a state-owned enterprise under the direct
+supervision of the State Council of the PRC.
+Effective on 31 December 2003, the coal production and power generation operations previously
+operated by various entities wholly-owned or controlled by Shenhua Group were restructured and
+managed separately (the "Restructuring"), and those assets and liabilities related to the operations and
+businesses that were transferred to the Company were revalued by China Enterprise Appraisal Co., Ltd.,
+an independent valuer registered in the PRC, as at 31 December 2003 as required by the PRC rules and
+regulations.
+In 2005, the Company issued 3,089,620,455 H shares with a par value of RMB1.00 each, at a price
+of Hong Kong Dollars ("HKD") 7.50 per H share by way of a global initial public offering. In addition,
+308,962,045 domestic state-owned ordinary shares of RMB1.00 each owned by Shenhua Group were
+converted into H shares. A total of 3,398,582,500 H shares were listed on The Stock Exchange of Hong
+Kong Limited.
+In 2007, the Company issued 1,800,000,000 A shares with a par value of RMB1.00 each, at a price of
+RMB36.99 per A share in the PRC. The A shares were listed on the Shanghai Stock Exchange.
+Immediate parent and ultimate controlling party
+At 31 December 2016, the Directors consider the immediate parent and ultimate holding company of
+the Group to be Shenhua Group.
+168
+China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+Proceeds from bills discounted
+Cash and cash equivalents, at the end of the year
+235
+On 8 November 2004, in consideration for Shenhua Group transferring the coal mining and power
+generating assets and liabilities to the Company, the Company issued 15,000,000,000 domestic
+state-owned ordinary shares with a par value of RMB1.00 each to Shenhua Group. The shares issued to
+Shenhua Group represented the entire registered and paid-up share capital of the Company at that date.
+35,962
+Contributions from non-controlling shareholders
+126
+Increase (decrease) in accounts and bills payable
+2,288
+Distributions to non-controlling shareholders
+(6,181)
+(7,343)
+Dividend paid to equity holders of the Company
+(6,365)
+(14,718)
+Cash paid for acquisition of a subsidiary
+1,111
+Acquisition of non-controlling interests
+under common control
+6,126
+(1,261)
+Net (decrease) increase in cash and cash equivalents
+Cash and cash equivalents, at the beginning of the year
+Effect of foreign exchange rate changes
+(23,157)
+42,323
+NET CASH USED IN FINANCING ACTIVITIES
+(5,386)
+(18,490)
+(4)
+For the year ended 31 December 2016
+Notes to the Consolidated Financial Statements (Continued)
+2016 Annual Report 183
+the ability to measure reliably the expenditure attributable to the intangible asset during its
+development.
+the availability of adequate technical, financial and other resources to complete the development
+and to use or sell the intangible asset; and
+how the intangible asset will generate probable future economic benefits;
+Intangible assets acquired separately
+the intention to complete the intangible asset and use or sell it;
+the technical feasibility of completing the intangible asset so that it will be available for use or
+sale;
+An internally-generated intangible asset arising from development activities (or from the development
+phase of an internal project) is recognised if, and only if, all of the following have been demonstrated:
+Expenditure on research activities is recognised as an expense in the period in which it is incurred.
+3. SIGNIFICANT ACCOUNTING POLICIES (Continued)
+Internally-generated intangible assets - research and development expenditure
+Intangible assets with finite useful lives that are acquired separately are carried at costs less
+accumulated amortisation and any accumulated impairment losses. Amortisation for intangible assets
+with finite useful lives is recognised on a straight-line basis over their estimated useful lives. The
+estimated useful life and amortisation method are reviewed at the end of each reporting period, with the
+effect of any changes in estimate being accounted for on a prospective basis.
+the ability to use or sell the intangible asset;
+Costs for restoration of subsequent site damage which is caused on an ongoing basis during production
+are provided for at their net present values and charged to profit or loss as extraction progresses. Where
+the costs of site restoration are not anticipated to be significant, they are expensed as incurred.
+The Group's obligations for land reclamation consist of spending estimates at both surface and
+underground mines in accordance with the PRC rules and regulations. The Group estimates its liabilities
+for land reclamation and mine closure based upon detailed calculations of the amount and timing of
+the future cash spending to perform the required work. Spending estimates are escalated for inflation,
+then discounted at a discount rate that reflects current market assessments of the time value of money
+and the risks specific to the liability such that the amount of provision reflects the present value of the
+expenditures expected to be required to settle the obligation. The Group records a corresponding asset
+associated with the liability for final reclamation and mine closure. The obligation and corresponding
+asset are recognised in the period in which the liability is incurred. The asset is depreciated on the
+units-of-production method over its expected life and the liability is accreted to the projected spending
+date. As changes in estimates occur (such as mine plan revisions, changes in estimated costs, or
+changes in timing of the performance of reclamation activities), the revisions to the obligation and the
+corresponding asset are recognised at the appropriate discount rate.
+determining and examining the volume and grade of the resource;
+•
+surveying transportation and infrastructure requirements; and
+conducting market and finance studies.
+Expenditure during the initial exploration preparation stage of a project is charged to profit or loss as
+incurred. Exploration and evaluation costs, including the costs of acquiring licenses, are capitalised as
+exploration and evaluation assets on a project-by-project basis pending determination of the technical
+feasibility and commercial viability of the project.
+Once the final feasibility study has been completed and a development decision has been taken,
+accumulated capitalised exploration and evaluation expenditures in respect of an area of interest are
+transferred to property, plant and equipment. In circumstances when an area of interest is abandoned
+or management decides it is not commercially viable, any accumulated costs in respect of that area are
+written off in the period the decision is made.
+Intangible assets
+Intangible assets (Continued)
+China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+3.
+SIGNIFICANT ACCOUNTING POLICIES (Continued)
+Obligations for land reclamation
+182
+Internally-generated intangible assets - research and development expenditure (Continued)
+When some or all of the economic benefits required to settle a provision are expected to be recovered
+from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will
+be received and the amount of the receivable can be measured reliably.
+2016 Annual Report 175
+Notes to the Consolidated Financial Statements (Continued)
+184 China Shenhua Energy Company Limited
+Provisions are measured at the best estimate of the consideration required to settle the present
+obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding
+the obligation. When a provision is measured using the cash flows estimated to settle the present
+obligation, its carrying amount is the present value of those cash flows (where the effect of the time
+value of money is material).
+Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a
+past event, it is probable that the Group will be required to settle that obligation, and a reliable estimate
+can be made of the amount of the obligation.
+Provisions
+Inventories are stated at the lower of cost and net realisable value. Costs of inventories are calculated
+using the weighted average method. Net realisable value represents the estimated selling price for
+inventories less all estimated costs of completion and costs necessary to make the sale.
+For the year ended 31 December 2016
+Inventories
+Derecognition of intangible assets
+Subsequent to initial recognition, intangible assets acquired in a business combination with finite useful
+lives are reported at cost less accumulated amortisation and any accumulated impairment losses, on the
+same basis as intangible assets that are acquired separately.
+Intangible assets acquired in a business combination are recognised separately from goodwill and are
+initially recognised at their fair values at the acquisition date (which is regarded as their cost).
+Intangible assets acquired in a business combination not under common control
+Subsequent to initial recognition, internally-generated intangible asset is measured at cost less
+accumulated amortisation and accumulated impairment losses (if any), on the same basis as intangible
+assets acquired separately.
+exploratory drilling, trenching and sampling;
+An intangible asset is derecognised on disposal, or when no future economic benefits are expected from
+use or disposal. Gains and losses arising from derecognition of an intangible asset are measured as the
+difference between the net disposal proceeds and the carrying amount of the asset and are recognised
+in profit or loss in the period when the asset is derecognised.
+3.
+SIGNIFICANT ACCOUNTING POLICIES (Continued)
+Financial instruments
+3.
+it is a derivative that is not designated and effective as a hedging instrument.
+on initial recognition it is part of a portfolio of identified financial instruments that the Group
+manages together and has a recent actual pattern of short-term profit-taking; or
+it has been acquired principally for the purpose of selling it in the near term; or
+A financial asset is classified as held for trading if:
+Financial assets are classified as at FVTPL when the financial asset is either held for trading or it is
+designated as at FVTPL. The Group's debt securities are classified as held for trading as it has been
+acquired for the purpose of selling in the near term. They are stated at fair values, with any gains or
+losses arising on remeasurement, net of interest earned, recognised in profit or loss and are included in
+other gains and losses line item.
+Financial assets at FVTPL
+The Group's financial assets include financial assets at FVTPL, loans and receivables and AFS financial
+assets. The subsequent measurement of financial assets depends on their classification as follows:
+Interest income is recognised on an effective interest basis for debt instruments.
+The effective interest method is a method of calculating the amortised cost of a financial instrument and
+of allocating interest income or expense over the relevant period. The effective interest rate is the rate
+that exactly discounts estimated future cash receipts or payments (including all fees and points paid or
+received that form an integral part of the effective interest rate, transaction costs and other premiums or
+discounts) through the expected life of the financial instrument, or, where appropriate, a shorter period,
+to the net carrying amount on initial recognition.
+Effective interest method
+Financial assets within the scope of IAS 39 are classified into the following specific categories: financial
+assets at fair value through profit or loss ("FVTPL"), held-to-maturity investments, loans and receivables
+and available-for-sale financial assets ("AFS"). The Group determines the classification of its financial
+assets at initial recognition based on their nature and purpose. All regular way purchases or sales of
+financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales
+are purchases or sales of financial assets that require delivery of assets within the time frame established
+by regulation or convention in the marketplace.
+Financial assets
+Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are
+directly attributable to the acquisition or issue of financial assets and financial liabilities (other than
+financial assets and financial liabilities at fair value through profit or loss) are added to or deducted
+from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition.
+Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair
+value through profit or loss are recognised immediately in profit or loss.
+Financial assets and financial liabilities are recognised when a group entity becomes a party to the
+contractual provisions of the instruments.
+The amount initially recognised for internally-generated intangible asset is the sum of the expenditure
+incurred from the date when the intangible asset first meets the recognition criteria listed above. Where
+no internally-generated intangible asset can be recognised, development expenditure is recognised in
+profit or loss in the period in which it is incurred.
+gathering exploration data through topographical, geochemical and geophysical studies;
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+Exploration and evaluation assets comprise costs which are directly attributable to the search for mineral
+resources, the determination of technical feasibility and the assessment of commercial viability of an
+identified resource:
+Government grants
+Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets,
+which are assets that necessarily take a substantial period of time to get ready for their intended use
+or sale, are added to as part of the cost of those assets, until such time as the assets are substantially
+ready for their intended use or sale. All other borrowing costs are expensed in the period in which they
+are incurred.
+Borrowing costs
+For the purpose of presenting the consolidated financial statements, the assets and liabilities of the
+Group's foreign operations are translated into the presentation currency of the Group (i.e. RMB) using
+exchange rates prevailing at the end of each reporting period. Income and expenses items are translated
+at the average exchange rates for the period. Exchange differences arising, if any, are recognised
+in other comprehensive income and accumulated in equity under the heading of exchange reserve,
+attributed to non-controlling interests as appropriate.
+In preparing the financial statements of each individual group entity, transactions in currencies other than
+entity's functional currencies (foreign currencies) are recognised at the rates of exchange prevailing on
+the dates of the transactions. At the end of the reporting period, monetary items denominated in foreign
+currencies are retranslated at the rates prevailing at that date. Non-monetary items that are measured
+in terms of historical cost in a foreign currency are not retranslated. Exchange differences on monetary
+items are recognised in profit or loss in the period in which they arise.
+Foreign currencies
+Land using rights under operating leases are presented as lease prepayments in the consolidated
+statement of financial position and are initially stated at cost and subsequently charged to the profit or
+loss on the straight-line basis over the lease terms.
+Leases where substantially all the rewards and risks of ownership of assets remain with the lessor are
+accounted for as operating leases. Where the Group is the lessor, assets leased by the Group under
+operating leases are included in non-current assets, and rentals receivable under the operating leases
+are credited to profit or loss on the straight-line basis over the lease terms. Where the Group is the
+lessee, rentals payable under operating leases are charged to the profit or loss on the straight-line basis
+over the lease terms.
+Leasing
+researching and analysing historical exploration data;
+3.
+For the year ended 31 December 2016
+Notes to the Consolidated Financial Statements (Continued)
+China Shenhua Energy Company Limited
+178
+Interest income is recognised as it accrues using the effective interest method.
+Dividend income from unlisted investments is recognised when the shareholder's right to receive
+payment is established.
+Revenue from the rendering of railway, port, shipping and other services is recognised upon the
+delivery or performance of the services.
+Revenue from sale of power is recognised upon the transmission of electric power to the power
+grid companies, as determined based on the volume of electric power transmitted and the
+applicable fixed tariff rates agreed with the respective electric power grid companies annually.
+Revenue associated with the sale of coal is recognised when the risks and rewards to the
+ownership of the goods have been passed to the customer.
+•
+Revenue is measured at the fair value of the consideration received or receivable. Provided it is probable
+that the economic benefits will flow to the Group and the revenue and costs can be measured reliably,
+revenue is recognised in profit or loss as follows:
+Revenue recognition
+When a group entity transacts with an associate, profits and losses resulting from the transactions with
+the associate are recognised in the Group's consolidated financial statements only to the extent of
+interests in the associate that are not related to the Group.
+When the Group reduces its ownership interest in an associate but the Group continues to use the
+equity method, the Group reclassifies to profit or loss the proportion of the gain or loss that had
+previously been recognised in other comprehensive income relating to that reduction in ownership
+interest if that gain or loss would be reclassified to profit or loss on the disposal of the related assets or
+liabilities.
+Government grants are not recognised until there is reasonable assurance that the Group will comply
+with the conditions attaching to them and that the grants will be received.
+Government grants are recognised in profit or loss on a systematic basis over the periods in which the
+Group recognises as expenses the related costs for which the grants are intended to compensate.
+Specifically, government grants whose primary condition is that the Group should purchase, construct or
+otherwise acquire non-current assets are recognised as deferred income in the consolidated statement
+of financial position and transferred to profit or loss on a systematic and rational basis over the useful
+lives of the related assets.
+Government grants that are receivable as compensation for expenses or losses already incurred or
+for the purpose of giving immediate financial support to the Group with no future related costs are
+recognised in profit or loss in the period in which they become receivable.
+2016 Annual Report 179
+Mining related machinery and equipment
+Buildings
+Property, plant and equipment, except for freehold land, and mining structures and mining rights, are
+depreciated on a straight-line basis at the following rates per annum:
+Depreciation is recognised so as to write off the cost of items of property, plant and equipment (other
+than freehold land and construction in progress, which are subject to impairment assessment) less
+their residual values over their estimated useful lives. The estimated useful lives, residual values and
+depreciation method are reviewed at the end of each reporting period, with the effect of any changes in
+estimate accounted for on a prospective basis.
+Property, plant and equipment, which consists of freehold land and buildings, mining structures and
+mining rights, mining related machinery and equipment, and others, held for use in the production or
+supply of goods or services, or for administrative purposes, are stated in the consolidated statement
+of financial position at cost less subsequent accumulated depreciation and subsequent accumulated
+impairment losses, if any.
+Property, plant and equipment
+SIGNIFICANT ACCOUNTING POLICIES (Continued)
+3.
+For the year ended 31 December 2016
+Notes to the Consolidated Financial Statements (Continued)
+China Shenhua Energy Company Limited
+180
+For the year ended 31 December 2016
+Current and deferred tax are recognised in profit or loss, except when they relate to items that are
+recognised in other comprehensive income or directly in equity, in which case, the current and deferred
+tax are also recognised in other comprehensive income or directly in equity respectively. Where current
+tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included
+in the accounting for the business combination.
+Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period
+in which the liability is settled or the asset is realised, based on tax rate (and tax laws) that have been
+enacted or substantively enacted by the end of the reporting period.
+The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced
+to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or
+part of the asset to be recovered. Unrecognised deferred tax assets are reassessed at the end of each
+reporting year and are recognised to the extent that it has become probable that future taxable profit will
+be available to allow all or part of the deferred tax asset to be recovered.
+Deferred tax liabilities are recognised for taxable temporary differences associated with investments
+in subsidiaries and associates, except where the Group is able to control the reversal of the temporary
+difference and it is probable that the temporary difference will not reverse in the foreseeable future.
+Deferred tax assets arising from deductible temporary differences associated with such investments
+and interests are only recognised to the extent that it is probable that there will be sufficient taxable
+profits against which to utilise the benefits of the temporary differences and they are expected to
+reverse in the foreseeable future.
+Deferred tax is recognised on temporary differences between the carrying amounts of assets and
+liabilities in the consolidated financial statements and the corresponding tax bases used in the
+computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary
+differences. Deferred tax assets are generally recognised for all deductible temporary differences
+to the extent that it is probable that taxable profits will be available against which those deductible
+temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the
+temporary difference arises from the initial recognition (other than in a business combination) of assets
+and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition,
+deferred tax liabilities are not recognised if the temporary difference arises from the initial recognition of
+goodwill.
+The tax currently payable is based on taxable profit for the year. Taxable profit differs from "profit before
+income tax" as reported in the consolidated statement of profit or loss and other comprehensive income
+because of income or expense that are taxable or deductible in other years and items that are never
+taxable or deductible. The Group's current tax is calculated using tax rates that have been enacted or
+substantively enacted by the end of the reporting period.
+Income tax expense represents the sum of the tax currently payable and deferred tax.
+Taxation
+Payments to state-managed retirement benefit schemes and a supplemental defined contribution
+pension plan approved by the government are recognised as an expense when employees have
+rendered service entitling them to the contributions.
+For the year ended 31 December 2016
+Retirement benefit costs
+3. SIGNIFICANT ACCOUNTING POLICIES (Continued)
+Notes to the Consolidated Financial Statements (Continued)
+The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow
+from the manner in which the Group expects, at the end of the reporting period, to recover or settle the
+carrying amount of its assets and liabilities.
+Investments in associates (Continued)
+SIGNIFICANT ACCOUNTING POLICIES (Continued)
+Notes to the Consolidated Financial Statements (Continued)
+Vessel
+Coal chemical related machinery and equipment
+Furniture, fixtures, motor vehicles and other equipment
+10-50 years
+5-20 years
+20 years
+30-45 years
+10-25 years
+10-20 years
+5-20 years
+The Directors reviewed the estimated useful lives of the assets annually based on the Group's historical
+experience with similar assets and taking into account anticipated technological changes.
+Construction in progress intended to be used for production, supply or administrative purposes are
+carried at cost, less any recognised impairment loss. Costs include professional fees and, for qualifying
+assets, borrowing costs capitalised in accordance with the Group's accounting policy. Such properties
+are classified to the appropriate categories of property, plant and equipment when completed and
+ready for intended use. Depreciation of these assets, on the same basis as other property, plant and
+equipment, commences when the assets are ready for their intended use.
+An item of property, plant and equipment is derecognised upon disposal or when no future economic
+benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the
+disposal or retirement of an item of property, plant and equipment is determined as the difference
+between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.
+Mining structures and mining rights
+The costs of mining structures and mining rights, which include the costs of acquiring and developing
+mining structures and mining rights, are firstly capitalised as "construction in progress" in the year in
+which they are incurred and then reclassified to "Mining structures and mining rights" under property,
+plant and equipment when they are ready for commercial production.
+3. SIGNIFICANT ACCOUNTING POLICIES (Continued)
+The Group's mining rights are of sufficient duration (or convey a legal right to renew for sufficient
+duration) to enable all reserves to be mined in accordance with current production schedules.
+2016 Annual Report
+181
+3. SIGNIFICANT ACCOUNTING POLICIES (Continued)
+Property, plant and equipment (Continued)
+Mining structures and mining rights (Continued)
+Stripping costs incurred to develop a mine (or pit) before the production commences or to improve
+access to the component of the ore body during the production stage are capitalised as part of the
+cost of constructing the mine (or pit) and subsequently amortised over the life of the mine (or pit) on a
+units-of-production basis. Stripping costs and secondary development expenditure, mainly comprising
+costs on blasting, haulage, excavation, etc. incurred during the production stage of the ore body are
+charged to profit or loss as incurred.
+Commercial reserves are proved and probable reserves. Changes in the commercial reserves affecting
+unit of production calculations are dealt with prospectively over the revised remaining reserves.
+Exploration and evaluation assets
+Railway and port
+Generators related machinery and equipment
+Mining structures and mining rights are depreciated on a units-of-production basis utilising only proved
+and probable coal reserves in the depletion base.
+SIGNIFICANT ACCOUNTING POLICIES (Continued)
+Notes to the Consolidated Financial Statements (Continued)
+2016 Annual Report 177
+The requirements of IAS 39 are applied to determine whether there are any indicators that the Group's
+investment in an associate may be impaired. When necessary, the entire carrying amount of the
+investment (including goodwill) is tested for impairment in accordance with IAS 36 as a single asset by
+comparing its recoverable amount (higher of value in use and fair value less costs of disposal) with its
+carrying amount. Any impairment loss is recognised when the recoverable amount is less the current
+value of the investment in associates. Any reversal of that impairment loss is recognised in accordance
+with IAS 36 to the extent that the recoverable amount of the investment subsequently increases.
+On acquisition of the investment in an associate, any excess of the cost of acquisition over the Group's
+share of the net fair value of the identifiable assets, liabilities of the investee is recognised as goodwill,
+which is included within the carrying amount of the investment. Any excess of the Group's share of the
+net fair value of the identifiable assets and liabilities over the cost of investment, after reassessment, is
+recognised immediately in profit or loss in the period in which the investment is acquired.
+The results and assets and liabilities of associates are incorporated in these consolidated financial
+statements using the equity method of accounting. The financial statements of associates used for
+equity accounting purposes are prepared using uniform accounting policies as those of the Group for
+like transactions and events in similar circumstances. Under the equity method, an investment in an
+associate is initially recognised in the consolidated statement of financial position at cost and adjusted
+thereafter to recognise the Group's share of the profit or loss and other comprehensive income of
+the associate. When the Group's share of losses of an associate exceeds the Group's interest in that
+associate (which includes any long-term interests that, in substance, form part of the Group's net
+investment in the associate), the Group discontinues recognising its share of further losses. Additional
+losses are recognised only to the extent that the Group has incurred legal or constructive obligations or
+made payments on behalf of that associate.
+Investments in associates
+On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the
+determination of the amount of profit or loss on disposal.
+A cash-generating unit to which goodwill has been allocated is tested for impairment annually or more
+frequently when there is indication that the unit may be impaired. For goodwill arising on an acquisition
+in a reporting period, the cash-generating unit to which goodwill has been allocated is tested for
+impairment before the end of that reporting period. If the recoverable amount of the cash-generating
+unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount
+of any goodwill allocated to the unit and then to the other assets of the unit on a pro-rata basis based on
+the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised directly in
+profit or loss. An impairment loss recognised for goodwill is not reversed in subsequent periods.
+For the purposes of impairment testing, goodwill is allocated to each of the Group's cash-generating units
+(or groups of cash-generating units) that is expected to benefit from the synergies of the combination.
+Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition
+of the business less accumulated impairment losses, if any.
+Goodwill
+SIGNIFICANT ACCOUNTING POLICIES (Continued)
+3.
+An associate is an entity over which the Group has significant influence. Significant influence is the
+power to participate in the financial and operating policy decisions of the investee but is not control or
+joint control over those policies.
+Notes to the Consolidated Financial Statements (Continued)
+Business combinations
+For the year ended 31 December 2016
+For the year ended 31 December 2016
+Except for business combination involving entities under common control, acquisitions of businesses
+are accounted for using the acquisition method. The consideration transferred in a business combination
+is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets
+transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the
+equity interests issued by the Group in exchange for control of the acquiree. Acquisition-related costs
+are generally recognised in profit or loss as incurred.
+Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-
+controlling interests in the acquiree, and the fair value of the acquirer's previously held equity interest in
+the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and
+the liabilities assumed. If, after re-assessment, the net of the acquisition-date amounts of the identifiable
+assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of
+any non-controlling interests in the acquiree and the fair value of the acquirer's previously held interest in
+the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.
+Non-controlling interests that are present ownership interests and entitle their holders to a proportionate
+share of the entity's net assets in the event of liquidation is initially measured at the non-controlling
+interests' proportionate share of the recognised amounts of the acquiree's identifiable net assets. The
+choice of measurement basis is made on a transaction-by-transaction basis.
+At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at
+their fair values, except that deferred tax assets or liabilities, and assets or liabilities related to employee
+benefit arrangements are recognised and measured in accordance with IAS 12 Income Taxes and IAS
+19 Employee Benefits respectively.
+The consolidated financial statements incorporate the financial statements items of the combining
+businesses in which the common control combination occurs as if they had been combined from the
+date when the combining businesses first came under the control of the controlling party.
+The net assets of the combining businesses are consolidated using the existing book values from the
+controlling party's perspective. No amount is recognised in respect of goodwill or bargain purchase gain
+at the time of common control combination.
+The consolidated statement of profit or loss and other comprehensive income includes the results
+of each of the combining businesses from the earliest date presented or since the date when the
+combining businesses first came under the common control, where this is a shorter period.
+The comparative amounts in the consolidated financial statements are presented as if the businesses
+had been combined at the end of the previous reporting period or when they first came under common
+control, whichever is shorter.
+176 China Shenhua Energy Company Limited
+Merger accounting for business combination involving entities under common control
+Year ended 31 December
+2016
+6.
+Revenue from external customers
+The following table sets out information about geographical location of (i) the Group's revenue
+from external customers and (ii) the Group's property, plant and equipment, construction in
+progress, exploration and evaluation assets, intangible assets, interest in associates, other non-
+current assets and lease prepayments ("specified non-current assets"). The geographical location
+of customers is based on the location at which the services were provided or the goods delivered.
+The geographical location of the specified non-current assets is based on the physical location
+of the asset, in the case of property, plant and equipment, construction in progress and lease
+prepayments, and the location of operations, in the case of exploration and evaluation assets,
+intangible assets, other non-current assets and interest in associates.
+6.3 Geographical information
+SEGMENT AND OTHER INFORMATION (Continued)
+For the year ended 31 December 2016
+(1)
+194 China Shenhua Energy Company Limited
+5,773
+2,807
+(8)
+44
+5,774
+Specified non-current assets
+31 December
+Notes to the Consolidated Financial Statements (Continued)
+2016
+421,615
+31 December
+2,771
+Revenue from any individual customer of the Group does not exceed 10% of the Group's
+revenue. Certain of the Group's customers are entities, which controlled, jointly controlled or
+significantly influenced by the PRC government ("government-related entities") and collectively
+considered as the Group's major customer. Revenue from major customer of the Group's coal
+and power segments represents RMB137,294 million (2015: RMB132,736 million) of the Group's.
+6.4 Major customers
+419,686
+177,069
+183,127
+414,513
+5,173
+412,502
+9,113
+175,129
+1,940
+179,859
+3,268
+Domestic markets
+Overseas markets
+2015
+RMB million
+RMB million
+RMB million
+2015
+RMB million
+Impairment loss
+5,883 10,001 17,628 13,283
+237
+Information regarding the Group's reportable segments as provided to the Group's CODM for the
+purposes of resource allocation and assessment of segment performance for the years ended 31
+December 2016 and 2015 is set out below:
+Coal
+Power
+Railway
+Port
+Shipping
+Coal chemical
+Segment total
+2016 2015 2016 2015
+2016 2015
+2016
+2015
+2016
+2015
+2016 2015
+2016 2015
+RMB RMB RMB
+million million million
+RMB
+RMB
+RMB
+RMB
+RMB RMB
+RMB RMB
+RMB
+RMB RMB
+For the purposes of assessing segment performance and allocating resources between
+segments, the Group's CODM monitors the results attributable to each reportable segment
+based on profit before income tax ("reportable segment profit"). Segment profit represents
+the profit earned by each segment without allocation of head office and corporate items. Inter-
+segment sales are primarily charged at prevailing market rate which are the same as those
+charged to external customers. The accounting policies of the operating segments are the same as
+the Group's accounting policies described in Note 3.
+Segment results
+6.1
+6.
+183,127
+177,069
+192 China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+6.
+SEGMENT AND OTHER INFORMATION
+The Group manages its businesses by divisions, which are organised by business lines (products and
+services). In a manner consistent with the way in which information is reported internally to the Group's
+chief operating decision maker ("CODM"), including president, senior vice president and chief financial
+officer, for the purposes of resource allocation and performance assessment, the Group has presented
+the following six (2015: six) reportable segments. No operating segments have been aggregated to form
+the following reportable segments.
+(1)
+(2)
+(3)
+(4)
+million
+(5)
+Coal operations - which produce coal from surface and underground mines, and the sale of
+coal to external customers, the power operations segment and the coal chemical operations
+segment. The Group sells its coal under long-term supply contracts, which allow periodical price
+adjustments, and at spot market.
+Power operations
+which use coal from the coal operations segment and external suppliers,
+thermal power, wind power, water power and gas power to generate electric power for the
+sale to coal operations segment and external customers. Electric power is sold to the power
+grid companies in accordance with planned power output at the tariff rates as approved by the
+relevant government authorities. Electric power produced in excess of the planned power output
+is sold at the tariff rate as agreed upon with the respective power grid companies which are
+generally lower than the tariff rates for planned power output.
+Railway operations - which provide railway transportation services to the coal operations
+segment, the power operations segment, the coal chemical operations segment and external
+customers. The rates of freight charges billed to the coal operations segment, the power
+operations segment, the coal chemical operations segment and external customers are consistent
+and do not exceed the maximum amounts approved by the relevant government authorities.
+Port operations - which provide loading, transportation and storage services to the coal operations
+segment and external customers. The Group charges service fees and other expenses, which are
+reviewed and approved by the relevant government authorities.
+Shipping operations - which provide shipment transportation services to the power operations
+segment, the coal operations segment and external customers. The rates of freight charges
+billed to the power operations segment, the coal operations segment and external customers are
+consistent.
+-
+Coal chemical operations which use coal from the coal operations segment to first produce
+methanol and further process into polyethylene and polypropylene, together with other
+by-products, for sale to external customers. The Group sells its polyethylene at spot market.
+2016 Annual Report 193
+Notes to the Consolidated Financial Statements (Continued)
+SEGMENT AND OTHER INFORMATION (Continued)
+For the year ended 31 December 2016
+(6)
+14,164
+million
+million
+2,112
+2,002
+4,831
+5,550 246,720 233,064
+Reportable segment profit
+16,084
+9,862
+2,049
+868
+962
+192
+ထု
+48
+5
+342 41,614 34,631
+Including:
+Interest expenses
+1,517
+1,320 1,882 2,048
+1,189
+637
+433
+473
+86
+103
+3,769
+5,040
+131,357 121,458 69,850 73,053 33,530 27,232
+Reportable segment revenue
+million
+million
+million
+million
+million
+million million
+Revenue from external
+customers
+102,283 93,502 69,613 72,768
+4,174
+3,420
+575
+million
+317
+541
+4,831
+5,547 181,856 176,095
+Inter-segment revenue
+29,074 27,956 237 285
+29,356
+23,812
+4,465
+3,452
+1,732
+1,461
+3 64,864 56,969
+380
+7,163
+162,905
+175,964
+For financial assets carried at cost, the amount of the impairment loss is measured as the difference
+between the asset's carrying amount and the present value of the estimated future cash flows
+discounted at the current market rate of return for a similar financial asset. Such impairment loss will not
+be reversed in subsequent periods.
+For financial assets carried at amortised cost, the amount of the impairment loss recognised is the
+difference between the asset's carrying amount and the present value of the estimated future cash
+flows discounted at the financial asset's original effective interest rate.
+The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets
+with the exception of accounts receivables, other receivables, loans and advances to Shenhua Group
+and fellow subsidiaries and entrusted loans, where the carrying amount is reduced through the use of
+an allowance account. When accounts receivables, other receivables, loans and advances to Shenhua
+Group and fellow subsidiaries and entrusted loans are considered uncollectible, it is written off against
+the allowance account. Subsequent recoveries of amounts previously written off are credited to profit or
+loss.
+3.
+2016 Annual Report 187
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+SIGNIFICANT ACCOUNTING POLICIES (Continued)
+Financial instruments (Continued)
+Financial liabilities and equity instruments
+Equity instruments
+An equity instrument is any contract that evidences a residual interest in the assets of the group after
+deducting all of its liabilities. Equity instruments issued by the Group are recognised at the proceeds
+received, net of direct issue costs.
+Financial liabilities
+Financial liabilities within the scope of IAS 39 are classified as financial liabilities at fair value through
+profit or loss and financial liabilities at amortised cost. The Group determines the classification of its
+financial liabilities at initial recognition. The Group's financial liabilities including borrowings, accounts
+and bills payable, other payables, long-term liabilities, short-term debentures, medium-term notes and
+bonds, are recognised initially at fair value, net of directly attributable transaction costs (if any).
+After initial recognition, financial liabilities at amortised cost are subsequently measured at amortised
+cost, using the effective interest rate method unless the effect of discounting would be immaterial,
+in which case they are stated at cost. Gains and losses are recognised in the profit or loss when the
+liabilities are derecognised. The effective interest rate amortisation is included in finance costs in the
+profit or loss.
+Derecognition of financial liabilities
+The Group derecognises financial liabilities when, and only when, the Group's obligations are discharged,
+cancelled or expire. The difference between the carrying amount of the financial liability derecognised
+and the consideration paid and payable is recognised in profit or loss.
+Derivative financial instruments
+The Group's derivative financial instruments represent cross-currency interest rate swaps, and
+are initially recognised at fair value at the date when the derivative contracts are entered into, and
+remeasured at fair value at the end of the reporting period, with any gains or losses recognised in profit
+or loss.
+188
+China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+3.
+4.
+it becoming probable that the borrower will enter bankruptcy or financial re-organisation.
+breach of contract, such as default or delinquency in interest and principal payments; or
+significant financial difficulty of the issuer or counterparty; or
+•
+3.
+2016 Annual Report 185
+Notes to the Consolidated Financial Statements (Continued)
+SIGNIFICANT ACCOUNTING POLICIES (Continued)
+Financial instruments (Continued)
+Financial assets (Continued)
+Loans and receivables
+For the year ended 31 December 2016
+Loans and receivables are non-derivative financial assets with fixed or determinable payments that
+are not quoted in an active market. Subsequent to initial recognition, loans and receivables (including
+accounts and bills receivable, other receivables, loans and advances to Shenhua Group and fellow
+subsidiaries, entrusted loans, restricted bank deposits, time deposits with original maturity over three
+months and cash and cash equivalents) are measured at amortised cost using the effective interest
+method, less any identified impairment.
+Interest income is recognised by applying the effective interest rate, except for short-term receivables
+where the recognition of interest would be immaterial.
+AFS financial assets
+AFS financial assets are non-derivatives that are either designated as available-for-sale or are not
+classified as other categories of financial assets. The Group designated its investments in unlisted
+shares that are not traded in an active market as AFS financial assets.
+SIGNIFICANT ACCOUNTING POLICIES (Continued)
+As the unlisted equity investments do not have a quoted market price in an active market and whose
+fair value cannot be reliably measured, it is measured at cost less any identified impairment losses at
+end of each reporting period. Dividends on the unlisted equity investment are recognised in profit or loss
+when the Group's right to receive the dividends is established in accordance with the policies set out for
+"Revenue recognition".
+The Group derecognises a financial asset only when the contractual rights to the cash flows from
+the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of
+ownership of the asset to another entity. If the Group retains substantially all the risks and rewards of
+ownership of a transferred financial asset, the Group continues to recognise the financial asset and also
+recognises a collateralised borrowing for the proceeds received.
+On derecognition of a financial asset, the difference between the asset's carrying amount and the sum
+of the consideration received and receivable and the cumulative gain or loss that had been recognised in
+other comprehensive income and accumulated in equity is recognised in profit or loss.
+186
+China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+3.
+SIGNIFICANT ACCOUNTING POLICIES (Continued)
+Financial instruments (Continued)
+Financial assets (Continued)
+Impairment of financial assets
+Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of
+each reporting period. Financial assets are considered to be impaired when there is objective evidence
+that, as a result of one or more events that occurred after the initial recognition of the financial asset,
+the estimated future cash flows of the financial assets have been affected. The objective evidence of
+impairment could include:
+Derecognition of financial assets
+Impairment of tangible and intangible assets other than goodwill
+Where an indication of impairment exists, the asset's recoverable amount is estimated. An asset's
+recoverable amount is the higher of the asset's value in use and its fair value less costs of disposal, and
+is determined for an individual asset, unless the asset does not generate cash inflows that are largely
+independent of those from other assets or groups of assets, in which case the recoverable amount is
+determined for the cash-generating unit to which the asset belongs.
+An impairment loss is recognised only if the carrying amount of an asset exceeds its recoverable
+amount. In assessing value in use, the estimated future cash flows are discounted to their present value
+using a pre-tax discount rate that reflects current market assessments of the time value of money and
+the risks specific to the asset for which the future cash flow estimates have not been adjusted. An
+impairment loss is charged to the profit or loss as other gains and losses.
+Other than the freehold land and mining structures and mining rights, property, plant and
+equipment are depreciated on a straight-line basis over the estimated useful lives of the assets,
+after taking into account the estimated residual value. The Group reviews the estimated useful
+lives and residual value of the assets regularly based on the Group's historical experience with
+similar assets and taking into account anticipated technological changes. The depreciation
+expense for future periods is adjusted if there are significant changes from previous estimates.
+The carrying amounts of the property, plant and equipment is disclosed in Note 15.
+Deferred tax assets
+As at 31 December 2016, deferred tax assets of RMB3,849 million (2015: RMB2,674 million)
+have been recognised in the Group's consolidated statement of financial position. No deferred
+tax asset has been recognised on the tax losses of RMB6,869 million (2015: RMB5,604 million)
+and deductible temporary differences of RMB5,804 million (2015: RMB5,128 million) due to the
+unpredictability of future profit streams. The realisation of the deferred tax assets mainly depends
+on whether sufficient future profits or taxable temporary differences will be available in the future.
+In cases where the actual future profits generated are less or more than expected, a material
+reversal or further provision of deferred tax assets may arise, which will be recognised in profit or
+loss in the period in which such a reversal or further provision takes place.
+2016 Annual Report 191
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
+UNCERTAINTY (Continued)
+5.
+4.2 Key sources of estimation uncertainty (Continued)
+Obligations for land reclamation
+The estimation of the liabilities for final reclamation and mine closure involves the estimates of the
+amount and timing for the future cash spending as well as the discount rate used for reflecting
+current market assessments of the time value of money and the risks specific to the liability. The
+Group considers the factors including development plan of the mines, the geological structure of
+the mining regions and reserve volume to determine the scope, amount and timing of reclamation
+and mine closure works to be performed. Determination of the effect of these factors involves
+judgements from the Group and the estimated liabilities may turn out to be different from the
+actual expenditure to be incurred. The discount rate used by the Group may also be altered to
+reflect the changes in the market assessments of the time value of money and the risks specific
+to the liability, such as change of the borrowing rate and inflation rate in the market. As changes
+in estimates occur (such as mine plan revisions, changes in estimated costs, or changes in timing
+of the performance of reclamation activities), the revisions to the obligation will be recognised at
+the appropriate discount rate. The carrying amounts of the obligations are disclosed in Note 34.
+REVENUE
+Depreciation
+Coal revenue
+Power revenue
+Transportation revenue
+Coal chemical revenue
+Year ended 31 December
+2016
+RMB million
+2015
+RMB million
+98,126
+82,726
+68,935
+71,347
+4,610
+3,827
+4,293
+5,005
+Other revenue
+197
+Notwithstanding that the Group has used all available information to make this estimation,
+inherent uncertainty exists and actual write-offs may be higher or lower than the amount estimated.
+The carrying amounts of the property, plant and equipment, construction in progress and interest
+in associates are disclosed in Note15, 16 and 19, respectively.
+In considering the impairment losses that may be required for certain of the Group's assets which
+include property, plant and equipment, construction in progress and interest in associates, the
+recoverable amount of the asset needs to be determined. The recoverable amount is the higher
+of its fair value less costs of disposal and value in use. It is difficult to precisely estimate fair value
+because quoted market prices for these assets may not be readily available. In determining the
+value in use, the Group uses all readily available information in determining expected cash flows
+generated by the cash-generating unit to which the asset belongs and they are discounted to their
+present value, which requires significant judgement relating to cash flow items such as level of
+sale volume, selling price, amount of operating costs and future returns.
+An assessment is made at the end of each reporting year as to whether there is any indication that
+previously recognised impairment losses may no longer exist or may have decreased. If such an
+indication exists, the recoverable amount is estimated. A previously recognised impairment loss of an
+asset is reversed only if there has been a change in the estimates used to determine the recoverable
+amount of that asset, but not to an amount higher than the carrying amount that would have been
+determined (net of any depreciation/amortisation), had no impairment loss been recognised for the asset
+in prior years. A reversal of such an impairment loss is credited to the profit or loss in the year in which it
+arises.
+CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
+UNCERTAINTY
+In the application of the Group's accounting policies, which are described in Note 3, the Directors are
+required to make judgements, estimates and assumptions about the carrying amounts of assets and
+liabilities that are not readily apparent from other sources. The estimates and associated assumptions
+are based on historical experience and other factors that are considered to be relevant. Actual results
+may differ from these estimates.
+The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting
+estimates are recognised in the period in which the estimate is revised if the revision affects only that
+period or in the period of the revision and future periods if the revision affects both current and future
+periods.
+2016 Annual Report 189
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
+UNCERTAINTY (Continued)
+4.1 Critical judgements in applying accounting policies
+The following are critical judgements, apart from those involving estimation (see Note 4.2 below),
+that the Directors have made in the process of applying the Group's accounting policies and
+that have the most significant effect on the amounts recognised in the consolidated financial
+statements.
+Control over Hebei Guohua Dingzhou Power Co., Ltd. ("Dingzhou Power")
+Note 43 describes that Dingzhou Power is a subsidiary of the Company although the Company
+has only 41% ownership interest and voting rights in Dingzhou Power. The remaining 59% of
+ownership interest and voting rights are owned by two shareholders that are unrelated to the
+Group as to 19% and 40%, respectively. Details of Dingzhou Power are set out in Note 43.
+In considering the impairment losses that may be required for current receivables and other
+financial assets, future cash flows need to be determined. One of the key assumptions that has
+to be applied is about the ability of the debtors to settle the receivables.
+In making their judgement, the Directors considered that the other shareholders of Dingzhou
+Power offered the Company, for the right on appointment of the majority members of the board
+of directors which is the governing body of most of the relevant activities of Dingzhou Power
+whilst some relevant activities require shareholders' approval. The Company considers it has the
+practical ability to direct the relevant activities that most significantly affect Dingzhou Power's
+returns unilaterally. After assessment, the Directors concluded that the Company has sufficiently
+dominant power over the board of directors of Dingzhou Power and therefore the Company has
+control over Dingzhou Power.
+The following are the key assumptions concerning the future, and other key sources of estimation
+uncertainty at the end of the reporting period that have a significant risk of causing a material
+adjustment to the carrying amounts of assets and liabilities within the next financial year.
+Coal reserves
+Engineering estimates of the Group's coal reserves are inherently imprecise and represent
+only approximate amounts because of the subjective judgements involved in developing such
+information. There are authoritative guidelines regarding the engineering criteria that have to be
+met before estimated coal reserves can be designated as "proved" and "probable". Proved and
+probable coal reserve estimates are updated at regular basis and have taken into account recent
+production and technical information of each mine. In addition, as prices and cost levels change
+from year to year, the estimate of proved and probable coal reserves also changes. This change
+is considered as a change in estimate for accounting purposes and is reflected on a prospective
+basis in related depreciation rates.
+Despite the inherent imprecision in these engineering estimates, these estimates are used in
+determining depreciation expenses and impairment loss. Depreciation rates are determined based
+on estimated proved and probable coal reserve quantity (the denominator) and capitalised costs of
+mining structures and mining rights (the numerator). The capitalised cost of mining structures and
+mining rights are amortised based on the units of coal produced.
+190 China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+4.
+CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
+UNCERTAINTY (Continued)
+4.2
+Key sources of estimation uncertainty (Continued)
+Impairment losses
+4.2 Key sources of estimation uncertainty
+275 5,304 4,856
+Depreciation and amortisation
+7,936
+34,520
+41,253
+104
+(515)
+(215)
+154
+34,631
+41,614
+Profit before income tax
+177,069
+183,127
+(57,833)
+(65,830)
+1,838
+2,237
+Interest expenses
+5,304
+4,856
+1,920
+428
+4,468
+24,388
+23,754
+333
+236
+24,721
+233,064
+23,990
+211
+422
+26
+5,062
+(2,871)
+(2,162)
+2,483
+Share of results of associates
+246,720
+Depreciation and amortisation
+2015
+8
+391
+24 153
+50
+Share of results of associates
+903 24,388 23,754
+938
+7
+285
+922
+1,037
+3,887
+4,635
+8,477
+Revenue
+9,280
+292
+-
+9,550
+Impairment loss
+211 422
+Consolidated
+2016
+inter-segment amounts
+2016
+2015
+2016
+RMB million RMB million RMB million RMB million RMB million RMB million
+2015
+Elimination of amounts
+segment amounts
+2016
+2015
+RMB million RMB million
+Reportable
+Unallocated head office
+and corporate items
+6.2
+2,771 5,774
+60
+31
+2 879
+3,076 1,855 1,819
+823
+Reconciliations of reportable segment revenue, segment profit and other items of
+profit or loss for the years ended 31 December 2016 and 2015 are set out below:
+2016: SEIZING MARKET OPPORTUNITIES, OPTIMISING OPERATION UNITS AND
+CREATING FAVORABLE OPERATING RESULTS
+On behalf of the Board, I am delighted to present the 2016 annual report of China Shenhua and to report to all
+shareholders on the Company's performance for the period.
+In 2016, the national economy has been steady amidst slowdown trend and improved smoothly. The supply-
+side reform of the coal industry was proactively promoted and preliminary outcome was seen in the progress
+of resolving excess production capacities. Affected by dual influence of market and policy on adjusting
+production volume, there was improvement in the severe imbalance between the demand for and supply
+of coal while the market price has considerably rebounded, resulting in a better operating situation of coal
+enterprises. The power consumption of the whole society grew at a faster pace as compared with the
+previous year, however, thermal power enterprises were under increasing pressure in their operations due to
+the relative overcapacity of thermal power supply and rising cost of power generation.
+Facing fluctuating market trend, based on the clean energy development strategy, the staff at all levels of
+China Shenhua have worked together to spare no efforts in structural optimisation, market expansion and
+cost control, thereby achieving good operating results. In 2016, the Company recorded operating revenue of
+RMB183,127 million, profit for the year of RMB31,970 million, profit for the year attributable to equity holders
+of the Company of RMB24,910 million and basic earnings per share of RMB1.252, representing a year-on-year
+increase of 3.4%, 28.1%, 41.1% and 41.1%, respectively.
+As at 31 December 2016, the total market capitalisation of China Shenhua reached US$44.9 billion, ranking the
+first among all listed coal companies worldwide and the fourth among all listed integrated mining companies
+globally. It was also awarded the CCTV Top 10 Listed Companies in China for 2016 (2016 CCTV++
+A). International credit rating agencies, including Moody's and Fitch, maintained the sovereign rating of the
+international credit rating of China Shenhua.
+Promoting clean energy development strategy proactively and developing new characteristics of
+business structure
+Power segment: The Company continued to strengthen the management of the reliability of the power
+generators and strived for a higher amount of power generation to ensure the stability of the power business.
+The gross power generation reached 236.04 billion kWh while the total power output dispatch reached 220.57
+billion kWh, representing a year-on-year increase of 4.5% and 4.8%, respectively.
+2016 Annual Report 15
+Section IV Chairman's Statement (Continued)
+Optimising the operation, exploring markets, and achieving integrated and efficient operation
+Coal segment: The Company arranged production in a reasonable manner in accordance with the industry
+policy and the changes in relationship between supply and demand in the markets. It organized its production
+orderly in compliance with laws and regulations in response to the changes in policies on production capacities.
+The production volume of commercial coal reached 289.8 million tonnes for the year, representing a year-on-
+year increase of 3.2%.
+The Company seized the opportunities brought by changes in coal market, timely adjusted the price and
+strategy of coal sale and strengthened the expansion of new markets including "the movement towards the
+shipping route from the northern sea to the Yangtze River" and transit bases, in order to elevate the market
+shares. It focused on raising the sales volume of the seaborne coal with the highest unit gross profit margin
+and enhanced the organisation of coal procured externally, in turn maximising the sales efficiency. The sales
+volume of coal reached 394.9 million for the year, representing a year-on-year increase of 6.6%, of which
+seaborne coal reached 226.4 million tonnes, representing a year-on-year increase of 11.1%.
+Against the backdrop of overall slowdown in the national thermal power market, the Company actively
+addressed to the power market reform, established regional power output dispatch companies and actively
+participated in the market competition of direct power purchase by large power users to maintain its market
+share. The average utilisation hours of coal-fired power generators were 4,428 hours, surpassing the national
+average utilisation hours of thermal power generators by 263 hours.
+The Company strived to achieve clean production, clean transformation and clean utilisation of coal with
+efforts in promoting the clean development of conventional energy. It continued to adjust industrial layout and
+develop new characteristics of the business structure according to market changes. In accordance with the
+International Financial Reporting Standards, before elimination on consolidation, the Company realised a profit
+from operations of RMB17,017 million from the coal business, RMB17,568 million from the transportation
+business and RMB11,689 million from the power business for the year, representing 36%, 38% and 25% of
+the total profit from operations, respectively. The effective operation of the three business segments improves
+the overall competitiveness and adaptability of the Company to changes of market trend.
+Dear Shareholders,
+Option and pre-emptive right to acquire: Pursuant to the Non-competition Agreement signed
+between the Company and Shenhua Group Corporation, its controlling shareholder, the Company
+is granted an option and pre-emptive right to acquire retained businesses and certain potential
+businesses from Shenhua Group Corporation.
+China Shenhua Energy Company Limited
+3.
+Transportation segment: The Company proactively addressed to the fluctuation of the coal market, allocated
+the transportation resources in a scientific manner, and enhanced the management over the integration
+between the upstream and downstream industries, so as to improve service quality and ensure the efficient
+synergy of the integration.
+4.
+5.
+Unique operation and profitability model: The business model of the Group is vertical
+integration which enables deepened cooperation, shared resources, synergy, low-cost operation,
+and standardized, professional and all-rounded development, as well as maximizes profits driven
+by every stage of coal-based industry. A unified operation chain ensures a stable and reliable
+supply and internal demand contributing to lower operation costs and enhance competitiveness.
+In 2016, by actively implementing national adjustment and control policy on the industry and fully
+developing its advantages of unified operation, the Company achieved favorable results of cost
+control and continuous increase in market share. Powerful synergy created among businesses
+and strengthening overall competitiveness was clearly seen, resulting in a significant increase in
+operating results.
+Coal mining rights: The Group possesses an abundant pool of high-quality coal resources which
+are suitable for modern high-quality and high-efficient shaft mining. As of the end of 2016, under
+the coal mining rights possessed and controlled by China Shenhua, it had coal retained resources
+of 24.01 billion tonnes and the recoverable coal reserves of 15.43 billion tonnes under the PRC
+Standard; the marketable coal reserves of 8.85 billion tonnes under the JORC Standard. The coal
+reserves of the Group is among the top of listed coal companies in China.
+Section IV Chairman's Statement (Continued)
+Management team focusing on core business and cutting-edge business minds: The
+management team of China Shenhua has profound knowledge and management experience in
+the industry, attaches great importance to enhancement of the Company's capabilities in value
+creation, conducts operation with a focus on the principal businesses of the Company, and
+persistently focuses on clean generation and utilisation in energy sector.
+Advanced technology and innovation capabilities: With consistent efforts in advancing
+its technology and innovation capabilities, China Shenhua's technology in coal exploitation
+and production safety has secured a leading position in the global market, and that of clean
+coal-fired power generation and heavy-loaded transportation has secured a leading position in
+domestic market, basically establishing a unified operation system of technology and resources
+and a technological innovation-driven development model comprising decision-making, system
+management, research and development, and transformation of achievements.
+In 2016, the National Key Laboratory of "Water Resources Preservation and Utilisation in
+Coal Mining" was officially launched, and the "Key Technology and Demonstration Project on
+Intelligent Coal Mine Construction" developed by Shendong Coal Group Corporation was awarded
+the Second-Class Prize of the National Science and Technology Progress Award. During the
+reporting period, the Group was granted 683 new patents, in which 125 patents were invention
+patents.
+2016 Annual Report 13
+Section IV Chairman's Statement
+Zhang Yuzhuo
+Chairman
+14
+In 2016, the management team of the Company persistently promoted and implemented
+the development strategies of clean energy for China Shenhua and promoted the Company's
+endeavor towards building itself into a world-class supplier of clean energy, being a market leader
+of clean development.
+Coal chemical segment: The Company continued to optimise the production plan, heighten the production
+efficiency and actively develop sales channels in order to achieve the operational stability. The sales volume of
+coal-to-olefins products reached 574.7 thousand tonnes for the year.
+The reduction of carbon emission was actively promoted and Company-wide investigations and examination of
+carbon were completed. The filings of voluntary emission reduction projects were systematically carried out for
+the year, which laid a solid foundation to cope with the changes in policies on carbon emissions reduction and
+carbon transactions.
+China Shenhua Energy Company Limited
+2017: OPTIMISING OPERATION AND ORGANISATION, IMPROVING QUALITY WHILE
+ENHANCING EFFICIENCY COMPREHENSIVELY AND ACCELERATING THE PROMOTION
+OF CLEAN AND EFFICIENT DEVELOPMENT
+In 2017, it is expected that the global economy will be unstable with increasing uncertainties and slow
+recovery. The organic growth of the domestic economy will still require reinforcement. The PRC government
+will adhere to the general principle of making progress while ensuring stability. With the key target of
+promoting the supply-side reform, it will properly expand the overall demand to facilitate stable and healthy
+development of the economy. The government will endeavour to resolve excess production capacities of
+coal and safeguard the dynamic balance between demand and supply of coal by eliminating the outdated
+production capacities, adjusting the production volume and taking other measures in response to changes in
+market demand. The coal price for the year will be subject to volatility based on the contract coal price. The
+trend of relatively excess supply of thermal power will continue and power generation costs will rise, the
+competition among power generation enterprises will increase.
+China Shenhua will firmly adopt the clean energy development strategy as the leading strategy to further
+leverage core competitiveness of the integrated operation, enhance the coordination and organisation of coal
+production, transportation and marketing, strictly control the increase in costs and endeavour to achieve the
+operating targets. Key emphasis will be placed on the following aspects:
+Coordinating the production, transportation and marketing to further improving the operational
+efficiency. Firstly, the Company will proactively implement the policy of excess capacity elimination, optimise
+the production units and raise the production volume of the type of coal with good quality and high economic
+efficiency based on the relationship between supply and demand. It will strive to secure the fulfilment of
+contract coal based on the market environment, support the relative stability of coal price, endeavour to
+raise the sales volume of seaborne coal with the greatest cost-efficiency and increase its efforts to promote
+e-commerce sale, in a bid to increase the market share and ensure the sales revenue. Secondly, on the basis
+of strengthening the refined management of power plants, the Company will actively promote the business of
+direct power purchase by large internal and external power users and keep promoting the establishment of a
+marketing system which is in line with the market practice, which strive to raise power output dispatch volume
+and the higher average level of utilisation hours of generators than those of the same type of generators
+in the same regions. Thirdly, on the basis of maintaining the cooperation with the existing key customers
+in macroscopic logistics business. The Company will seek potential quality customers featured by reverse
+transportation, bulk cargoes, long distance and mass transportation volume to further improve its economic
+benefits.
+Accelerating the implementation of clean energy development strategy. Firstly, the Company will
+continue to increase its efforts in coal quality management, endeavour to develop clean coal products and
+expand the regions by where clean coal will be replaced. It will continue to promote the construction of
+smart and green digital mines, and push forward the technological reform for a safe, green, efficient and
+environmental-friendly mine industry. Secondly, the Company will further accelerate the "ultra-low emission"
+renovation of coal-fired generators and strive to achieve "ultra-low emission" of all coal-fired generators in
+the eastern and central regions. the Company plans to complete the "ultra-low emission" renovation of 12
+coal-fired generators with the total capacity of approximately 7,820MW to build a "green" model in coal-fired
+power industry. Thirdly, it promotes the development of the logistic industry under the "Internet+" logistics
+model, thus providing the society with green, convenient and economical transportation channels.
+2016 Annual Report 19
+Section IV Chairman's Statement (Continued)
+Optimising the asset structure and enhancing efficiency while increasing quality on an on-going basis.
+Firstly, the Company makes full use of existing resources to improve its profitability. It will continue to devote
+its efforts to controlling costs and strive to achieve a continuous year-on-year decrease in the unit production
+cost of self-produced coal and the controllable costs of other business segments remain constant as compared
+to last year. The Company will further vitalise its assets to improve asset operational efficiency. Secondly, it
+will strengthen the planning and management of capital expenditure and strictly control project investment for
+sustainable development. The Company will optimise the risk assessment for project commencement and
+the tracking and evaluation mechanism for economic benefits of key projects to further the risk control and
+management level of investment projects. According to the investment return analysis on the total life cycle of
+projects, it will properly arrange the construction schedule of projects to ensure the construction progress of
+quality projects. The Company will proactively promote the project construction including the renovation of the
+300 million tonne expansion capacity project of Shenshuo Railway and the construction of Huangda Railway.
+The coal-fired power projects of Sumsel-1 Coal Power (2×300MW) and Jawa-7 Coal Power (2×1,000 MW) in
+Indonesia will proceed in an orderly manner.
+Focusing on safety and environmental protection and technological innovation to strengthen the
+ability of sustainable development. The Company strengthen the accountability for safety production with
+a focus on implementing the safety overhaul and devoting more efforts to checks and rectification of hidden
+safety hazards, striving to remain "zero fatality" in its safety production. It will continuously optimise assessment
+and accountability mechanisms and on-line monitoring platform of environmental safety, improve the work in
+energy conservation and environmental protection in the whole industrial chain to prevent incidents relating to
+environmental protection from happening. The Company will increase its investments in scientific research and
+leverage the technological innovation to grasp the core technologies with their own intellectual property rights,
+in order to accelerate the industrialization of the technology innovation outcome.
+In 2017, China Shenhua will work pragmatically with steady confidence. It will facilitate the in integration of
+various businesses and realise a healthy and sustainable development in order to create greater value for
+investors.
+3₤2-$
+Zhang Yuzhuo
+Chairman
+17 March 2017
+2.
+Section IV Chairman's Statement (Continued)
+16
+China Shenhua Energy Company Limited
+For more information about our social responsibility efforts, please refer to the "2016 Corporate Social
+Responsibility Report" of the Group.
+Section IV Chairman's Statement (Continued)
+Promoting "macroscopic logistics" and proactively achieving new profit growth areas
+The Company proactively developed transportation resources. On the basis of delivering a sound performance
+in the transportation of its own coal, it progressively opened transportation capacity to the public by utilising
+the transportation network comprising Bazhun Railway and Zhunchi Railway, thereby opening up a new phase
+of the transition of its transportation system from railways designated for coal transportation towards the
+"macroscopic logistics" permeating Shenhua.
+The Company increased the number of trains with the capacity of 10,000 tonnes, effectively increased turnover
+of trains and enhanced the coal transportation efficiency, which significantly increased the transportation
+capacity of railways and the volume of seaborne coal at its own ports. It established long-term strategic
+partnership with major customers through efficient and convenient transportation services, thus excess
+transportation capacities were fully utilised. The Company's own railways had a freight turnover of 244.6
+billion tonne km, whilst the seaborne coal volume at the Company's own ports reached 201.3 million tonnes,
+representing a year-on-year increase of 22.2% and 27.0%, respectively. The coal shipping volume at Huanghua
+Port increased significantly, being the largest port for seaborne coal volume domestically for the first time.
+The Company positively carried out "macroscopic logistics" transportation business in a long-distance and
+pendulum manner and took the initiative to expand the scale of transportation of non-coal materials and reverse
+transportation in order to improve the profitability of the transportation segment. The transportation services of
+the railway segment provided to third parties generated revenue of 4,174 million, representing a year-on-year
+increase of 22.0%.
+Strengthening technological innovation and promoting clean development
+The Company continued to promote the "ultra-low emission" renovation of coal-fired generating units and was
+the first among power companies to complete the "ultra-low emission" renovation for all coal-fired generating
+units in Beijing, Tianjin, Hebei and Anhui areas, leading the clean coal power generation development in China.
+The "ultra-low emission" renovation of 16,460MW coal-fired generating units was completed, and the total
+installed capacity of coal-fired generating units with "ultra-low emission" technology reached 36,770MW,
+accounting for 67.6% of the total installed capacity of all coal-fired power generating units of the Company.
+The emission performance for soot, sulphur dioxide and nitrogen oxides of thermal power generators for the
+year were 0.021g/kWh, 0.096g/kWh and 0.16g/kWh respectively, which signified the encouraging result of the
+prevention and control on air pollution. As of the end of the year, 48 "ultra-low emission" coal-fired generating
+units were supported by policies including tariff subsidies, which facilitated profit realisation of the power
+business of the Company under the market slowdown.
+The Company accelerated the promotion of the establishment of digital mines and ecological construction and
+explored green and efficient production methods of coal. The "Key Technology and Demonstration Project on
+Intelligent Coal Mine Construction launched" was awarded the Second-Class Prize of the National Science and
+Technology Progress Award. The National Key Laboratory of "Water Resources Preservation and Utilisation
+in Coal Mining" was officially launched and a research and development system for clean coal was gradually
+formed, which support the sustainable clean development of the coal business of the Company.
+Section IV Chairman's Statement (Continued)
+Implementing refined management and achieving outstanding performance in cost control
+The strict implementation of a budget control system and quarterly assessment of cost and profit indicators
+resulted in a significant effect in controlling costs of principal business segments. The unit production cost of
+self-produced coal for the year amounted to RMB109.6/tonne, representing a year-on-year decrease of 11.0%,
+which was better than that predicted at the beginning of the year.
+The Company continued to optimise capital and debt structure, exercise effective management over
+accounts and notes receivable. By conducting specific investigations on current accounts and assets as well
+as controlling finance cost effectively with refined management, the capital risk was reduced. It vigorously
+promoted the structural reform and optimisation of material management and proactively promoted the
+communal storage and usage of materials of coal, power and transportation businesses in order to control the
+increase in the inventory, striving to make materials management a "third profit source".
+Proactively fulfilling social responsibility and achieving safe and green development
+The Company practically promoted the construction of risk prevention and safety control system, made more
+efforts in safety control and inspection, and strengthened the implementation of accountability for safety
+management, thereby elevating the level of production safety. The fatality rate per million tonne of coal output
+of coal mines was zero in 2016, for which China Shenhua maintained a world-leading level in respect of safety
+production in the industry.
+By setting up a comprehensive on-line monitoring platform, strengthening the equipment upgrade and
+renovation continuously and devoting more efforts to checks and rectification of hidden safety hazards, the
+level of energy conservation and environmental protection of the Company was effectively raised. In 2016, the
+Company invested a total amount of RMB2.605 billion in energy conservation and environmental protection
+projects, which were mainly used in environmental protection projects such as removal of sulphur oxides,
+nitrogen oxides and dust and energy conservation projects such as boiler improvement.
+18
+1.
+Profit for the period attributable to equity
+III. ANALYSIS ON CORE COMPETITIVENESS DURING THE REPORTING PERIOD
+Adjustment: simple production
+maintenance, safety
+production and other related
+expenditure
+2,198
+1,505
+4,618
+5,278
+Under International Financial Reporting
+Standards
+24,910
+17,649
+316,975
+298,068
+Explanation on differences in domestic and overseas accounting standards: Pursuant to the relevant
+regulations of the related government authorities in the PRC, the Group accrued provisions for simple
+production maintenance, safety production and other related expenditures, recognised as expenses in
+profit or loss and separately recorded as a specific reserve in shareholders' equity. On utilisation of the
+specific reserve as fixed assets within the stipulated scope, the full amount of accumulated depreciation
+is recognised at the same time when the cost of the relevant assets is recorded. Under International
+Financial Reporting Standards, these expenses are recognised in profit or loss as and when incurred.
+Relevant capital expenditure is recognised as property, plant and equipment and depreciated according
+to the relevant depreciation method. The effect on deferred tax arising from such difference is also
+reflected.
+MAJOR FINANCIAL DATA OF EACH QUARTER OF 2016
+Unit: RMB million
+Second
+Standards:
+Adjusted items and amount in accordance
+with International Financial Reporting
+292,790
+312,357
+10
+China Shenhua Energy Company Limited
+Section II Company Profile and Major Financial Indicators (Continued)
+VIII. DIFFERENCES IN ACCOUNTING DATA UNDER DOMESTIC AND OVERSEAS
+ACCOUNTING STANDARDS
+IX.
+Net profit attributable to
+equity holders
+of the Company
+2016
+Unit: RMB million
+Third
+Net assets attributable to
+equity holders
+At the end
+2015
+of 2016
+At the end
+of 2015
+Under China Accounting Standards for
+Business Enterprises
+22,712
+16,144
+of the Company
+First quarter
+quarter
+quarter
+Applicable
+✓ Not applicable
+2016 Annual Report 11
+Section III Business Overview
+I.
+II.
+EXPLANATION ON PRINCIPAL BUSINESSES AND OPERATION MODEL OF THE
+COMPANY AND INDUSTRY CONDITIONS DURING THE REPORTING PERIOD
+China Shenhua Energy Company Limited was established by Shenhua Group Company Limited as
+the sole promotor in Beijing in November 2004. China Shenhua was listed on the Hong Kong Stock
+Exchange and Shanghai Stock Exchange in June 2005 and October 2007, respectively.
+Explanation on the differences between quarterly data and disclosed regular reporting data:
+The Group is principally engaged in the production and sale of coal and electricity, railway, port and
+shipping transportation, and coal-to-olefins businesses. The integration of coal, power, railway, port,
+shipping and coal chemical into one unified operation chain is the Group's unique operation and
+profitability model. The Group's development strategy is the "transforming into a world first-class
+supplier of clean energy".
+During the reporting period, the Group made no significant change in the scope of its principal
+businesses.
+For industry conditions in which the Company operates, please refer to the section "Directors' Report"
+in the report.
+EXPLANATION ON MATERIAL CHANGES IN MAJOR ASSETS OF THE COMPANY
+DURING THE REPORTING PERIOD
+In 2016, the changes in the major assets of the Company: affected by the strategic adjustments made
+by the Company to the capital expenditure structure for certain years in the past, at the end of the
+reporting period, the asset proportion of railway segment, power-generating segment and port segment
+increased and the asset proportion of coal segment decreased compared with that at the beginning of
+the reporting period.
+As of 31 December 2016, the Group's total assets amounted to RMB576,729 million, representing an
+increase of 3.0% as compared with that at the end of last year, and the equity attributable to equity
+holders of the Company amounted to RMB316,975 million, representing an increase of 6.3% as
+compared with that at the end of last year. The total offshore assets of the Group (including Hong Kong,
+Macau and Taiwan) amounted to RMB22,792 million, representing 4.0% to total assets, which are
+mainly composed of the assets from USD bonds issued in Hong Kong, PRC, and coal mine and power
+generation assets in Australia and Indonesia.
+12
+China Shenhua Energy Company Limited
+Section III Business Overview (Continued)
+In terms of sales, the Group is the largest listed coal company in China and globally with the sales
+volume of coal reaching 394.9 million tonnes in 2016. In terms of installed capacity of power generators,
+the Group holds a leading position among the listed electricity companies in China with the installed
+capacity of its controlled and operated power generators reaching 56,288MW by the end of 2016. The
+Group controls and operates a network of concentric transportation railways around the major coal
+production bases in western Shanxi, northern Shaanxi and southern Inner Mongolia as well as "Shenshuo
+- Shuohuang Line", a major channel for coal transportation from western to eastern China, and at
+the end of 2016, it controlled and operated railways with a total length of approximately 2,155 km.
+The Group also operates a number of ports and docks, such as Huanghua Port, the largest port
+for seaborne coal in 2016 (approximately 270 million tonnes/year seaborne operation capability in
+aggregate), possesses the shipping transportation team comprising its own vessels with approximately
+2.2 million tonnes of loading capacity; and coal-to-olefins businesses with approximately 0.6 million
+tonnes/year of operation and production capacity.
+The core competitiveness of the Group are mainly:
+19,709
+22,982
+Forth
+quarter
+(January-
+(April -
+March)
+(July-
+June) September)
+(October-
+December)
+Revenue
+39,402
+23,967
+39,321
+58,324
+holders of the Company
+4,741
+6,086
+7,821
+6,262
+Net cash generated from operating activities
+15,225
+46,080
+2016 Annual Report 17
+1,963
+22,754
+in progress
+Transferred from construction
+1,725
+2
+13
+1,551
+10
+149
+Impairment losses (note (i))
+22,813
+1,066
+732
+298
+4,679
+8,327
+4,700
+1,048
+Charge for the year
+36
+25
+11
+Exchange adjustment
+161,292
+18
+Disposals or write-off
+(43)
+(84)
+Mining
+structures
+fixtures,
+chemical
+Mining Generators,
+Furniture,
+Coal
+15. PROPERTY, PLANT AND EQUIPMENT (Continued)
+For the year ended 31 December 2016
+Notes to the Consolidated Financial Statements (Continued)
+China Shenhua Energy Company Limited
+204
+9,934
+(122)
+enhancement
+progress, for overall technical
+Transferred to construction in
+(2,472)
+(23)
+35
+(640)
+fgo
+(1,022)
+(655)
+F
+(122)
+3,900
+157
+31,129
+4,343
+7,900
+4,234
+1,339
+1,930
+Charge for the year
+23
+23
+Exchange adjustment
+137,383
+9,042
+290
+2,767
+26,099
+43,984
+31,756
+8,763
+14,853
+At 1 January 2015
+IMPAIRMENT
+DEPRECIATION AND
+521,097
+17,765
+13,218
+119
+related
+688
+21,639
+53,096
+36,019
+9,906
+17,151
+At 31 December 2015
+(1,587)
+(29)
+(13)
+(252)
+(242)
+(508)
+915
+(244)
+(94)
+Disposals or write-off
+3,834
+6
+458
+929
+1,697
+273
+9
+462
+Impairment losses (note (i))
+(205)
+6,880
+related
+motor
+housing
+and other
+allowance
+and benefits
+Retirement
+Fees
+RMB million
+in kind
+RMB million
+Discretionary
+bonuses
+scheme
+contributions
+Total
+RMB million
+RMB million
+RMB million
+Chief executive
+Zhang Yuzhuo (note (i))
+Sub-total
+Executive directors
+Ling Wen (note (i))
+Han Jianguo
+0.19
+0.44
+0.10
+0.73
+Basic salaries,
+Year ended 31 December 2015
+11. DIRECTORS', SUPERVISORS' AND CHIEF EXECUTIVE'S EMOLUMENTS (Continued)
+For the year ended 31 December 2016
+0.45
+0.45
+0.45
+1.35
+0.45
+0.40
+0.08
+0.93
+0.25
+0.15
+0.04
+Wang Xiaolin (note (v))
+0.44
+0.38
+0.08
+0.92
+0.05
+0.05
+1.16
+0.98
+0.20
+3.69
+200 China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+0.46
+0.13
+0.35
+0.06
+61,977
+40,092
+10,870
+19,250
+At 31 December 2016
+RMB million RMB million RMB million
+Total
+equipment
+equipment
+Vessels
+RMB million
+and port
+35,046
+and other
+Railway
+and
+vehicles
+machinery
+machinery
+machinery
+and
+equipment equipment
+RMB million RMB million RMB million
+RMB million
+RMB million
+rights
+buildings
+Land and and mining
+and
+related
+455
+10,979
+0.54
+Sub-total
+0.32
+0.79
+0.16
+1.27
+Non-executive directors
+Chen Hongsheng (note (i))
+Sub-total
+Independent non-executive
+directors
+4,643
+Fan Hsulaitai
+Guo Peizhang
+Sub-total
+Supervisors
+Zhai Richeng (note (ii))
+Tang Ning
+Impairment loss for individual assets
+In 2016, pursuant to the Notice to Approve Shenhua (Fujian) Energy Co., Ltd.'s Application to Close Down Small Thermal
+Units (Min Jing Xin Han Neng Yuan [2016] No. 62) issued by Fujian Provincial Commission of Economy and Information
+Technology, all four sets of power generators in Shenhua Fujian Energy Co., Ltd. were discontinued from power
+generation. The Group assessed the recoverable amounts of those non-current assets and generators which belong to
+power segment and as a result the carrying amount of the machineries and the generators was written down by RMB799
+million to their recoverable amount as at 31 December 2016.
+62,859
+At 31 December 2016
+CARRYING VALUES
+183,312
+Gong Huazhang
+RMB million
+123,297
+67,018
+RMB million
+2015
+3
+1
+RMB million
+2016
+Year ended 31 December
+15
+13. DIVIDENDS
+HKD1,000,001 to HKD1,500,000
+HKD500,001 to HKD1,000,000
+2015
+Year ended 31 December
+2016
+Their emoluments were within the following band:
+3.49
+4.76
+0.36
+0.40
+1.38
+2.13
+1.75
+2.23
+RMB million
+Dividend approved and paid during the year:
+2015 final - RMB0.32 (2015: 2014 final of RMB0.74)
+per ordinary share
+6,365
+14,718
+rights
+and other
+and
+Railway
+and
+and
+Land and and mining
+buildings
+vehicles
+machinery
+motor
+fixtures,
+RMB million
+Coal chemical
+related
+Mining Generators,
+related
+machinery machinery
+Mining
+structures
+Furniture,
+15. PROPERTY, PLANT AND EQUIPMENT
+For the year ended 31 December 2016
+Notes to the Consolidated Financial Statements (Continued)
+2016 Annual Report 203
+No diluted earnings per share is presented as there were no potential ordinary shares in existence during
+both years.
+The calculation of basic earnings per share is based on the profit attributable to ordinary equity holders
+of the Company of RMB24,910 million (2015: RMB17,649 million) and the number of shares in issue
+during the year of 19,890 million shares (2015: 19,890 million shares).
+14. EARNINGS PER SHARE
+Subsequent to the end of the reporting period, a final dividend in respect of the year ended 31
+December 2016 of RMB0.46 (final dividend in respect of the year ended 31 December 2015: RMB0.32)
+per ordinary share and a special dividend of RMB2.51 per ordinary share has been proposed by the
+Directors and is subject to approval by the shareholders in the following general meeting.
+related
+2015
+Year ended 31 December
+2016
+Retirement scheme contributions
+3.88
+1.26
+0.11
+0.56
+0.59
+0.85
+0.08
+0.36
+0.41
+0.41
+0.03
+2016 Annual Report 201
+0.20
+1.35
+0.45
+0.45
+0.45
+1.35
+0.45
+0.45
+0.45
+Total
+Sub-total
+Shen Lin
+0.18
+RMB million RMB million
+Notes to the Consolidated Financial Statements (Continued)
+11. DIRECTORS', SUPERVISORS' AND CHIEF EXECUTIVE'S EMOLUMENTS (Continued)
+Basic salaries, housing and other allowances and benefits in kind
+Discretionary bonuses
+Of the five individuals with the highest emoluments within the Group, nil (2015: one) was director of the
+Company. The emoluments of the remaining five (2015: four) individuals were as follows:
+12. EMPLOYEES' EMOLUMENTS
+For the year ended 31 December 2016
+Notes to the Consolidated Financial Statements (Continued)
+China Shenhua Energy Company Limited
+202
+The independent non-executive directors' emoluments shown above were mainly for their services as
+directors of the Company.
+Except for those emoluments of directors or supervisors whose emoluments were borne by Shenhua
+Group, the executive directors' and supervisors' emoluments shown above were mainly for their
+services in connection with the management of the affairs of the Company and the Group.
+Mr. Wang Xiaolin resigned as executive director on 20 August 2015.
+(v)
+For the year ended 31 December 2016
+Mr. Tang Ning resigned as supervisor on 17 June 2016. He retired in the year ended 31 December 2015 and no more
+emolument achieved after his retirement. The discretionary bonuses he got during the year ended 31 December 2016 is
+for his prior years' performance.
+Mr. Zhao Jibin was appointed as non-executive director on 17 June 2016.
+(iv)
+Mr. Li Dong was appointed as executive director on 17 June 2016.
+(iii)
+The emolument of Mr. Zhai Richeng was borne by Shenhua Group during the year ended 31 December 2015.
+The emoluments of Mr. Han Jianguo, Mr. Li Dong and Mr. Zhao Jibin were borne by Shenhua Group during the year
+ended 31 December 2016.
+(ii)
+The emoluments of these directors were borne by Shenhua Group during the years ended 31 December 2016 and 2015.
+(i)
+Notes:
+Discretionary bonuses were determined by the remuneration committee in accordance with the relevant
+human resources policies.
+Mr. Zhou Dayu was appointed as supervisor on 17 June 2016.
+177,186
+equipment equipment
+RMB million RMB million
+Vessels equipment
+Transferred from construction
+4,188
+16
+225
+1
+16
+8
+685
+153
+689
+2,609
+28
+Additions
+103
+8
+114
+Exchange adjustment
+500,618
+17,716
+13,120
+6,853
+121,234
+167,802
+in progress
+5,232
+246
+1,045
+33,624
+82,109
+At 31 December 2016
+(152)
+(152)
+enhancement
+progress, for overall technical
+Transferred to construction in
+(3,412)
+(34)
+(44)
+66,040
+(946)
+(756)
+(115)
+(242)
+Disposals or write-off
+19,630
+67
+134
+27
+2,476
+26,926
+10,403
+(1,275)
+30,876
+76,977
+At 31 December 2015
+576
+362
+249
+Additions
+57
+123
+(66)
+Exchange adjustment
+429,645
+17,498
+13,007
+287
+6,239
+138,834
+64,775
+30,574
+56,248
+At 1 January 2015
+COST
+RMB million RMB million RMB million
+RMB million
+RMB million
+Total
+equipment
+102,470
+and port
+699
+52
+(1,830)
+(39)
+70,515
+205
+25
+(15)
+(289)
+(283)
+(517)
+(281)
+(232)
+6
+(174)
+122
+903
+18,348
+29,075
+970
+172
+20,720
+in progress
+Transferred from construction
+2,231
+52
+Disposals or write-off
+Total
+2.34
+1.35
+Coal purchased
+Materials, fuel and power
+Personnel expenses
+Depreciation and amortisation
+Repairs and maintenance
+Transportation charges
+Taxes and surcharges
+Other operating costs
+Year ended 31 December
+2016
+RMB million
+2015
+RMB million
+26,286
+17,264
+16,405
+15,816
+12,661
+11,874
+21,744
+21,134
+9,509
+8,619
+10,172
+12,193
+6,922
+COST OF SALES
+Profit from operation is calculated as revenue minus cost of sales, selling expenses, general and administrative
+expenses and impairment loss.
+Unallocated items of total assets include deferred tax assets and other unallocated corporate assets. Unallocated
+items of total liabilities include deferred tax liabilities and other unallocated corporate liabilities.
+Non-current assets exclude financial instruments and deferred tax assets.
+808
+(1,345) (596)
+46,444 37,657
+assets (note (i))
+Total assets (note (i))
+Total liabilities (note (ii))
+5,835 7,001 17,829 19,805 3,819 6,529
+198,140 246,972 207,879 229,773 125,152 124,661 22,489
+(116,711) (115,814) (134,519) (131,373) (65,396) (61,284) (10,135)
+1,746
+1,387
+7
+22,303
+5,833
+(10,950)
+138
+8,038 8,189
+(2,363)
+95
+531
+47
+35
+29,378 35,426
+11,621 12,564 377,853 348,720 (374,443) (433,391) 576,729 559,791
+(4,686) (5,593) (137,179) (185,478) 278,929 316,985 (191,760) (195,870)
+7.
+Notes:
+(i)
+(ii)
+(iii)
+(2,063)
+21,144
+30,608
+124,843
+3,638
+18
+583
+| | | |
+1,311
+329
+310
+Total finance costs on financial liabilities not at
+fair value through profit or loss
+5,532
+5,842
+3,896
+Less: amount capitalised
+88,251
+6,425
+8,575
+6,786
+337,785
+At 31 December 2015
+59,826
+20,970
+30,021
+114,706
+90,105
+115,209
+1,261
+- bonds
+- short-term debenture
+123,341
+196 China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+8.
+INTEREST INCOME/FINANCE COSTS
+Interest income from:
+- bank deposits
+- other loans and receivables
+- debt securities
+Total interest income
+- medium-term notes
+Year ended 31 December
+2016
+RMB million
+RMB million
+691
+448
+32
+156
+4
+723
+608
+Interest on:
+- borrowings
+2015
+6,696
+649
+254
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB RMB
+million million million
+million
+million
+million million
+million
+million million million
+million
+Coal purchased
+26,286 17,264
+26,286 17,264
+Cost of coal production
+36,584 40,098
+Cost of coal transportation
+RMB
+2016 2015
+2016 2015
+2015
+6.
+2016 Annual Report 195
+Notes to the Consolidated Financial Statements (Continued)
+SEGMENT AND OTHER INFORMATION (Continued)
+6.5 Other information
+For the year ended 31 December 2016
+Certain other information of the Group's segments for the years ended 31 December 2016 and
+2015 is set out below:
+Coal
+Power
+Railway
+Port
+42,221 38,488
+Shipping
+Unallocated items
+Eliminations
+Total
+2016 2015 2016 2015 2016 2015
+RMB RMB RMB RMB RMB RMB
+million
+million
+million million million million
+2016
+2015
+2016
+2015
+2016
+2015
+2016
+Coal chemical
+14,708
+12,570
+2,271
+109,404
+107,493 53,939 49,788 17,350
+14,595
+2,523
+2,026
+1,707 1,760
+760
+4,330
+4,720
+67
+196
+Total cost of sales
+(64,477)
+Profit from operations
+(note (iii)
+Additions to non-current
+17,017
+6,433
+11,689
+18,810
+15,000
+10,070
+2,302
+1,350
+266
+133
+(57,237) 124,843 123,341
+254
+9,049 15,949
+67
+1,886
+948
+1,176
+Power cost
+53,456 48,965
+(7,664) (9,318) 28,920
+(44,060) (39,320) 16,088 14,800
+(12,352) (8,299) 41,104 40,666
+30,780
+Cost of coal chemical
+production
+3,797
+4,182
+196
+(401) (300)
+Others
+4,313 11,643
+483
+823 2,642
+2,025
+252
+140
+759
+584
+533
+538
+3,396 3,882
+9,220
+1,289
+339,326
+(17)
+- gains on disposal of derivative financial instruments
+(11)
+– gains on disposal of a subsidiary
+(5)
+- impairment of interest in associates
+- impairment in respect of properties and equipment
+-impairment in respect of construction in progress
+- impairment of loans receivable
+1
+1,725
+3,834
+22
+651
+22
+2
+- allowance for doubtful debts
+388
+300
+- write down of inventories
+551
+950
+- impairment in respect of other non-current assets
+36
+- impairment in respect of goodwill
+- gains on disposal of associates
+83
+304
+- losses on disposal of property, plant and equipment,
+intangible assets and non-current assets
+16.5
+During the year ended 31 December 2016 and 2015, there was no significant assessable profit and
+provision for profit tax for the overseas subsidiaries.
+10. PROFIT FOR THE YEAR
+Profit for the year has been arrived at after charging (crediting):
+Year ended 31 December
+2016
+RMB million
+2015
+RMB million
+Personnel expenses, including
+20,844
+20,067
+- contributions to defined contribution plans of RMB2,728
+million (2015: RMB2,791 million)
+Depreciation of property, plant and equipment
+98
+22,813
+Amortisation of intangible assets, included in cost of sales
+Amortisation of lease prepayments, included in cost of sales
+Amortisation of other non-current assets
+414
+329
+429
+396
+1,065
+1,626
+Depreciation and amortisation
+7,782
+23,990
+Other gains and losses, represent
+21,639
+3,078
+5,856
+Carrying amount of inventories sold
+Fan Hsulaitai
+Gong Huazhang
+Guo Peizhang
+Sub-total
+Supervisors
+Zhai Richeng
+Zhou Dayu (note (iii))
+Shen Lin
+Tang Ning (note (iv))
+Sub-total
+Total
+Year ended 31 December 2016
+directors
+Basic salaries,
+and other
+allowance
+and benefits
+in kind
+RMB million
+Discretionary
+bonuses
+RMB million
+Retirement
+scheme
+contributions
+RMB million
+0.45
+0.45
+0.45
+housing
+16.5
+Independent non-executive
+Zhao Jibin (note (ii) and note (iii))
+86,149
+82,673
+Operating lease in respect of properties and equipment
+Auditors' remuneration
+301
+219
+- audit service
+32
+22
+2016 Annual Report 199
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+11. DIRECTORS', SUPERVISORS' AND CHIEF EXECUTIVE'S EMOLUMENTS
+Sub-total
+Directors' and chief executives' remuneration for the year, disclosed pursuant to the applicable Listing
+Rules and CO, is as follows:
+RMB million
+Chief executive
+Zhang Yuzhuo (note (i))
+Sub-total
+Executive directors
+Ling Wen (note (i))
+Han Jianguo (note (ii))
+Li Dong (note (ii) and note (iii))
+Sub-total
+Non-executive directors
+Chen Hongsheng (note (i))
+Fees
+20.0
+24,721
+25.0
+(2)
+20.0
+5,748
+5,123
+5,025
+4,515
+Borrowing costs capitalised during the year arose on the general borrowing pools and were calculated
+by applying a capitalisation rate from 2.48% to 4.63% (2015: from 2.55% to 6.20%) per annum to
+expenditure on qualifying assets.
+2016 Annual Report 197
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+9.
+INCOME TAX EXPENSE
+Current tax, mainly PRC enterprise income tax ("EIT")
+Over provision in respect of prior years
+Deferred tax
+Year ended 31 December
+2016
+RMB million
+10,378
+161
+(1,256)
+9,283
+2015
+RMB million
+10,214
+224
+649
+688
+144
+173
+At 1 January 2015
+41,395
+21,811
+33,019
+94,850
+76,371
+6,120
+10,240
+8,456 292,262
+Notes:
+(i)
+(877)
+Impairment loss
+In 2016, owing to oversupply of coals and the unsatisfactory financial performance of certain Group's mines, the
+management identified certain non-current assets relating to coal mines having impairment indications. The Group tested
+the said mines, each of which is a separate cash-generating unit, for impairment by measuring the recoverable amount
+of every mine. The recoverable amount is determined based on discounted cash flow covering the shorter of economic
+and legal useful life, and pre-tax discount rate ranging from 8.12% to 11.87%. Cash flows beyond the five-year approved
+management's budgets are prepared based on zero growth rate.
+As a result of the impairment assessment, the Directors recognised no impairment loss in current year against the
+non-current assets in coal segment. As a result of the impairment assessment in 2015 utilising the same method, the
+Directors recognised impairment loss for mining related assets in coal segment amounting to RMB1,378 million.
+643
+1,518
+4,889
+4,324
+Unwinding of discount
+Exchange loss, net
+Fair value changes on financial instruments
+Total finance costs
+Net finance costs
+Impairment loss for cash-generating units
+9,561
+6
+Year ended 31 December
+2016
+RMB million
+(8)
+(18)
+Income tax expense
+9,283
+9,561
+Under the Law of the PRC on Enterprise Income Tax (the "EIT Law") and Implementation Regulation
+of the EIT Law, the tax rate applicable for PRC group entities is 25% (2015: 25%) except for Group's
+overseas subsidiaries and branches as well as subsidiaries operating in the western developing region of
+the PRC which are entitled to a preferential tax rate of 15% from 2011 to 2020.
+198 China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+9.
+INCOME TAX EXPENSE (Continued)
+224
+The applicable tax rates of the Group's overseas subsidiaries are as follows:
+Indonesia
+Russia
+Hong Kong
+Year ended 31 December
+2016
+2015
+%
+The tax charge for the year can be reconciled to the profit before income tax per consolidated statement
+of profit or loss and other comprehensive income as follows:
+30.0
+30.0
+25.0
+Australia
+161
+%
+704
+1,798
+2015
+RMB million
+Tax at PRC income tax rate of 25% (2015: 25%)
+Tax effects of:
+41,253
+34,520
+10,313
+8,630
+- different tax rates of branches and subsidiaries
+(2,209)
+(1,235)
+- non-deductible expenses
+Profit before income tax
+325
+636
+(24)
+(190)
+- utilisation of tax losses and deductible temporary difference
+previously not recognised
+(107)
+- tax losses and deductible temporary difference not recognised
+- additional tax in respect of prior years
+- others
+- share of results of associates
+(32)
+(65)
+- income not taxable
+(59)
+technical enhancement
+At the end of the year
+Transferred to intangible assets
+Transferred to lease prepayments
+Net income from mine trial run
+Disposal
+Impairment losses
+Impairment write-off
+Impairment transferred to property, plant and equipment
+Transferred to property, plant and equipment
+RMB million
+Year ended 31 December
+2016
+2015
+RMB million
+33,610
+22,123
+78,988
+29,674
+30
+(19,630)
+Transferred from property, plant and equipment for overall
+(70,515)
+Note:
+Additions
+Impairment loss for individual assets (Continued)
+16. CONSTRUCTION IN PROGRESS
+(106)
+2016 Annual Report 205
+Notes to the Consolidated Financial Statements (Continued)
+15. PROPERTY, PLANT AND EQUIPMENT (Continued)
+For the year ended 31 December 2016
+Notes: (Continued)
+(i)
+Impairment loss (Continued)
+(ii)
+(iii)
+(iv)
+The Group has been upgrading its power plants for energy conservation and environment protection which rendered
+certain non-current assets obsolete. The Group assessed the recoverable amounts of those non-current assets and
+generators which belong to power segment and as a result the carrying amount of the machineries and the generators
+was written down by RMB584 million to their recoverable amount as at 31 December 2016 (2015: RMB985 million).
+Pursuant to the Notice to Close Coal-fired Generators at Guohua Beijing Thermal Power Plant (Jing Fa Gai [2015] No. 510)
+issued by Beijing Municipal Commission of Development and Reform, the coal-fired generators at Guohua Beijing Thermal
+Power Plant was discontinued from power generation in March 2015, the Group assessed the recoverable amounts of
+those non-current assets and generators which belong to power segment and as a result the carrying amount of the
+machineries and the generators was written down by RMB595 million to their recoverable amount as at 31 December
+2015, and an additional RMB173 million impairment loss was recognised in 2016.
+The estimates of recoverable amount of above assets were based on the machines' and generators' fair values less
+costs of disposal, using market comparison approach by reference to recent sales price of similar assets within the same
+industry, adjusted for differences such as remaining useful lives, if the assets were classified as utilisable. Otherwise, the
+fair value was determined by using market comparison approach by reference to sales price of similar material, adjusted
+for differences such as geographical location of market. The fair value on which the recoverable amount is based on is
+categorised as a Level 3 measurement.
+The Group's freehold land with a carrying amount of RMB1,141 million (2015: RMB1,047 million) are located in Australia.
+The Group was in the process of applying for the title certificates of certain of its properties with an aggregate carrying
+amount of RMB11,170 million as at 31 December 2016 (2015: RMB9,690 million). The Directors are of the opinion that
+the Group is entitled to lawfully and validly occupy or use the above mentioned properties.
+As at 31 December 2016, the Group has bank loans secured by the Group's property, plant and equipment with carrying
+amount of RMB707 million (2015: RMB1,174 million).
+206
+China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+At the beginning of the year
+(1,493)
+(10)
+(2,263)
+2,209
+subsidiaries (note)
+Loans and advances to Shenhua Group and fellow
+7,889
+7,029
+Prepaid expenses and deposits
+172
+33,404
+160
+33,350
+50
+3,645
+12
+- Wealth management products
+- Tradable wealth management products
+- Derivative financial instruments
+Financial assets at FVTPL
+RMB million
+2015
+31 December
+RMB million
+2016
+31 December
+25. PREPAID EXPENSES AND OTHER CURRENT ASSETS
+4
+For the year ended 31 December 2016
+Amounts due from associates
+378
+28. DEFERRED TAXATION
+Indonesian Rupiah
+EUR
+HKD
+USD
+Included in cash and cash equivalents are the following amounts denominated in foreign currencies are
+set out below:
+Cash and cash equivalents in the consolidated statement of financial position and the consolidated
+statement of cash flows comprise cash at bank and in hand, and time deposits with original maturity
+within three months.
+27. CASH AND CASH EQUIVALENTS
+For the year ended 31 December 2016
+Notes to the Consolidated Financial Statements (Continued)
+2016 Annual Report 213
+973
+Restricted bank deposits as at 31 December 2016 represent statutory deposit reserves at The People's
+Bank of China ("PBOC"), collaterals for bills payable and collaterals related to the operating of mines and
+ports.
+As at 31 December 2016, the Group invested in principal-guaranteed floating income wealth management products amounting
+to RMB31,000 million with term of 90 days and expected annual rates of return ranging from 3.20% to 3.35%, and non-principal-
+guaranteed floating income wealth management products amounting to RMB2,350 million with term ranging from 32 days to 365
+days and expected annual rates of return ranging from 4.10% to 4.55%. The wealth management products held by the Group are
+valued by discounting cash flow method, the detailed fair value measurements are disclosed in Note 37.3.
+As at 31 December 2016, the Group had loans to Shenhua Group and fellow subsidiaries amounting to RMB2,087 million (2015:
+RMB3,217 million), which bear interest at rates ranging from 3.92% to 5.04% per annum (2015: 4.14% to 5.04% per annum). The
+remaining balances are unsecured, interest-free and have no fixed terms of repayment.
+Note:
+19,351
+48,792
+2,784
+1,781
+Other receivables
+4,483
+3,396
+Deductible VAT and other tax
+26. RESTRICTED BANK DEPOSITS
+31 December
+2016
+RMB million
+Notes to the Consolidated Financial Statements (Continued)
+The maximum exposure to loss from the Group's continuing involvement, if any, in the endorsed and
+discounted bills receivable equals to their carrying amounts. In the opinion of the Directors, the fair
+values of the Group's continuing involvement in the derecognised bills receivable are not significant.
+RMB million
+31 December
+2016
+The aging analysis of accounts receivable that are past due but not impaired are as follows:
+194
+420
+(9)
+140
+245
+54
+194
+2015
+RMB million
+31 December
+RMB million
+Year ended 31 December
+23,370
+16,179
+51
+138
+162
+1,010
+21,756
+1,401
+1,996
+13,035
+31 December
+2015
+RMB million
+2016
+212 China Shenhua Energy Company Limited
+2015
+RMB million
+One to two years
+As at 31 December 2016, the Group endorsed bills receivable amounting to RMB2,075 million (2015:
+RMB2,478 million) to suppliers to settle the accounts payable of same amounts and discounted
+bills receivables amounting to RMB446 million (2015: RMB229 million) to banks. In accordance to
+the relevant laws in the PRC, the holders of the bills receivable have a right of recourse against the
+Group if the issuing banks default payment. In the opinion of the Directors, the Group has transferred
+substantially all the risks and rewards of ownership relating to these bills receivable, and accordingly
+derecognised the full carrying amounts of the bills receivable and associated accounts payables, in case
+of bills receivable endorsed to suppliers and recognised the cash received, in case of bills receivables
+discounted to banks.
+215
+119
+486
+140
+31 December
+2015
+RMB million
+31 December
+2016
+RMB million
+Transfers of financial assets
+United States Dollars ("USD")
+European Dollars ("EUR")
+Included in accounts receivable are the following amounts denominated in foreign currencies are set out
+below:
+Receivables that were past due but not impaired relate to a number of independent customers that have
+a good track record with the Group, which the Group does not hold any collateral over these balances.
+Based on past experience, the management believes that no impairment is necessary in respect of
+these balances as there has not been a significant change in credit quality and the balances are still
+considered fully recoverable.
+For the year ended 31 December 2016
+24. ACCOUNTS AND BILLS RECEIVABLE (Continued)
+Less than one year
+Notes to the Consolidated Financial Statements (Continued)
+Receivables that were not overdue or unimpaired relate to a wide range of customers for whom there
+was no recent history of default.
+7,556
+3,753
+51
+162
+178
+52
+5,942
+1,401
+1,408
+2,115
+More than three years
+Two to three years
+2016 Annual Report 211
+RMB million
+31 December
+2015
+RMB million
+220
+427
+423
+4
+Property, plant and equipment
+417
+113
+304
+Allowances, primarily for receivables and inventories
+RMB million
+RMB million
+RMB million
+Lease prepayments
+2015
+2015
+At 31
+December
+(Charged)
+credited in
+At 1 January
+3,052
+1,256
+1,796
+Net deferred tax assets
+112
+39
+73
+profit or loss
+188
+(175)
+(171)
+At the end of the reporting period, the Group have unused tax losses of RMB8,714 million (31 December
+2015: RMB7,141 million) and unrecognised deductible temporary differences of RMB5,804 million (2015:
+RMB5,128 million) available for offset against future profits. A deferred tax assets has been recognised
+in respect of RMB1,845 million (31 December 2015: RMB1,537 million) of such losses. No deferred
+tax assets has been recognised in respect of the remaining RMB6,869 million (31 December 2015:
+RMB5,604 million) due to the unpredictability of future profit streams. Included in unrecognised tax
+losses are losses of RMB398 million (31 December 2015: RMB356 million) that will expire in 2017.
+1,796
+877
+919
+Net deferred tax assets
+73
+28
+45
+170
+30
+140
+4
+Accrued salaries and other expenses not yet paid
+Others
+(172)
+730
+Unrealised profits from sales within the Group
+(62)
+267
+(329)
+Tax allowable expenses not yet incurred
+384
+184
+200
+Tax losses carried forward
+558
+111
+18
+Accrued salaries and other expenses not yet paid
+Others
+At 31
+December
+Credited in
+profit or loss
+At 1 January
+2016
+The following are the major deferred tax assets and liabilities recognised and movements thereon during
+the current and prior year:
+28. DEFERRED TAXATION (Continued)
+For the year ended 31 December 2016
+Notes to the Consolidated Financial Statements (Continued)
+China Shenhua Energy Company Limited
+214
+1,796
+3,052
+2016
+(878)
+3,849
+(797)
+31 December
+2015
+RMB million
+RMB million
+31 December
+2016
+Deferred tax assets
+Deferred tax liabilities
+For the purpose of the presentation in the consolidated statement of financial position, certain deferred
+tax assets and liabilities have been offset. The following is the analysis of the deferred tax balances for
+financial reporting purpose.
+27
+28
+3
+1
+2
+2,674
+170
+RMB million
+RMB million
+1,187
+629
+558
+Unrealised profits from sales within the Group
+1
+63
+(62)
+Tax allowable expenses not yet incurred
+461
+77
+384
+RMB million
+Tax losses carried forward
+2
+(171)
+Lease prepayments
+769
+342
+427
+503
+86
+417
+Property, plant and equipment
+Allowances, primarily for receivables and inventories
+(169)
+(459)
+31 December
+2016
+Written off
+Sichuan Guangan Power Co., Ltd.
+Zhejiang Zheneng Jiahua Power Co., Ltd. Limited company
+Limited company
+Shendong Tianlong Group Co., Ltd.
+%
+%
+2015
+2016
+31 December 31 December
+Principal activities
+Proportion of ownership
+interest and voting power
+held by the Group
+Limited company
+Type of
+legal entity
+The Group's interests in associates are individually and in aggregate not material to the Group's financial
+position or results of operations for both years. The Group's associates are unlisted and established in
+the PRC. The following list contains only the particulars of associates, which principally affect the results
+or assets of the Group:
+5,113
+5,142
+1,929
+1,868
+3,184
+3,274
+RMB million
+RMB million
+31 December
+2015
+31 December
+2016
+Name of associate
+2,964
+Guohua (Hebei) Renewables Co., Ltd.
+2222
+Production and sale of chemicals
+25
+25
+25
+Limited company
+Inner Mongolia Yili Chemical Industry
+Co., Ltd.
+service
+Provision of transportation
+44
+44
+Limited company
+Limited company
+Tianjin Yuanhua Shipping Co., Ltd.
+25
+25
+Generation and sale ofelectricity
+20
+20
+Generation and sale of electricity
+20
+20
+Coal production and sale
+20
+20
+Generation and sale of electricity
+208
+3,018
+(329)
+2,344
+83
+(119)
+119
+49
+2,212
+2,176
+2015
+RMB million
+2016
+RMB million
+Year ended 31 December
+At the end of the year
+Additions
+2,176
+At the beginning of the year
+Exchange adjustments
+17. EXPLORATION AND EVALUATION ASSETS
+As at 31 December 2016, the Group is in the process of obtaining requisite permits of certain of its construction in progress from
+the relevant government authorities. The Directors are of the opinion that the Group will be able to obtain the requisite permits in
+due course.
+33,610
+35,220
+40
+98
+(651)
+(22)
+(228)
+(47)
+(319)
+The movement of the exploration and evaluation assets is as follows:
+(3)
+2016 Annual Report 207
+18. INTANGIBLE ASSETS
+(414)
+1,493
+106
+255
+356
+5
+9
+1,540
+2,964
+2015
+RMB million
+RMB million
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+2016
+Unlisted shares, at cost
+19. INTEREST IN ASSOCIATES
+At the end of the year
+Disposal
+Amortisation
+Transferred from construction in progress
+Additions
+Exchange adjustment
+At the beginning of the year
+Year ended 31 December
+The movement of intangible assets, mainly licenses, software and franchises, is as follows:
+Share of post-acquisition profits and other comprehensive
+income, net of dividend received
+At the end of the year
+China Shenhua Energy Company Limited
+For the year ended 31 December 2016
+23,370
+16,179
+(194)
+(420)
+Less: allowance for doubtful debts
+23,564
+16,599
+19,745
+13,138
+770
+3,049
+Bills receivable
+3,177
+284
+- Associates
+- Shenhua Group and fellow subsidiaries
+Accounts receivable
+RMB million
+31 December
+2015
+31 December
+2016
+RMB million
+24. ACCOUNTS AND BILLS RECEIVABLE
+Note: Others mainly represent properties held for sale and properties under development.
+12,816
+13,341
+1,682
+- Third parties
+1,354
+- Shenhua Group and fellow subsidiaries
+41
+- amounts recovered
+- recognised
+Impairment loss
+At the beginning of the year
+The movement of allowance for doubtful debts was as follows:
+More than three years
+One to two years
+Two to three years
+Less than one year
+The following is an analysis of accounts receivable by age, net of allowance for doubtful debts,
+presented based on the date of delivery of goods or services which approximated the revenue
+recognition date:
+24. ACCOUNTS AND BILLS RECEIVABLE (Continued)
+For the year ended 31 December 2016
+18
+Notes to the Consolidated Financial Statements (Continued)
+Bills receivable were mainly issued by PRC banks and are expiring within one year. As at 31 December
+2016, the bills receivable with the carrying amounts of RMB85 million (2015: RMB36 million) were
+pledged to secure bills payable.
+41,019
+20,573
+17,649
+4,394
+17,446
+4,334
+- Third parties
+162
+42
+- Associates
+210 China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+7,982
+3,152
+2,500
+2,500
+8,000
+8,000
+8,493
+9,165
+RMB million
+RMB million
+31 December
+2015
+31 December
+2016
+(i)
+13,502
+Notes:
+Goodwill
+Long-term entrusted loans (note (iii))
+Loans to Shenhua Group
+and fellow subsidiaries (note (ii))
+Long-term receivable
+Prepayment for mining projects
+equipment purchases and others (note (i))
+Prepayments in connection with construction work,
+21. OTHER NON-CURRENT ASSETS
+Available-for-sale investments represent investment in unlisted equity securities issued by private
+entities incorporated in the PRC. They are measured at cost less impairment at end of the reporting
+period because the range of reasonable fair value measurement is significant and the probabilities of the
+various estimates cannot be reasonably assessed. The Directors are of the opinion that their fair values
+cannot be measured reliably.
+20. AVAILABLE-FOR-SALE INVESTMENTS
+Others
+6,424
+11,473
+889
+5,563
+31 December
+2015
+RMB million
+RMB million
+2016
+31 December
+Others (note)
+Materials and supplies
+Coal
+23. INVENTORIES
+For the year ended 31 December 2016
+Notes to the Consolidated Financial Statements (Continued)
+627
+2016 Annual Report 209
+22. LEASE PREPAYMENTS
+The Group has long-term entrusted loan of RMB627 million to an associate through a PRC state-owned bank, bearing
+interest at rates 4.90% per annum (2015: 6.15% per annum), which is receivable within one year and reclassified to other
+current assets.
+(iii)
+The loans to Shenhua Group and fellow subsidiaries bear interest at rates ranging from 4.28% to 4.41% per annum (2015:
+4.28% to 4.41% per annum) and are receivable within two to ten years.
+(ii)
+At 31 December 2016, the Group had prepayments to fellow subsidiaries amounting to RMB5 million (2015: RMB28
+million).
+34,562
+36,749
+2,482
+2,693
+987
+Lease prepayments represent land use rights paid to the PRC's government authorities. The Group is
+in the process of applying for the title certificates of certain land use rights with an aggregate carrying
+amount of RMB2,526 million as at 31 December 2016 (2015: RMB2,247 million), of which RMB655
+million were newly acquired in 2016. The Directors are of the opinion that the Group is entitled to
+lawfully and validly occupy or use the above mentioned lands.
+31 December
+2016
+31 December
+Liquidity risk is the risk that the Group will not be able to meet its financial obligation as they fall
+due. The approach to managing liquidity is to ensure, as far as possible, that it will always have
+sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions,
+without incurring unacceptable losses or risk damage to the Group's reputation.
+RMB million
+31 December
+2015
+RMB million
+2,140
+218
+1,847
+398
+29,624
+29,272
+31 December
+2016
+31,982
+3,174
+2,473
+35,156
+33,990
+As at 31 December 2016, certain bills payable were secured by bills receivable held by the Group (see
+Note 24).
+The following is an aging analysis of accounts payable, presented based on invoice date:
+31 December
+31 December
+2016
+31,517
+Bills payable
+- Third parties
+- Associates
+2,445
+2,448
+45
+69
+30. DEBENTURES, MEDIUM-TERM NOTES AND BONDS
+On 11 June 2015, the Company issued short-term debentures bearing interest rate of 3.40% per annum
+with proceeds of approximately RMB5,000 million, and were paid together with accrued interest on 7
+February 2016.
+On 7 November 2013, the Company issued medium-term notes with proceeds of approximately
+RMB5,000 million and are repayable on 11 November 2018. The notes bear interest rate of 5.49% per
+annum, repayable annually. The effective interest rate is 5.69% per annum.
+On 19 August 2014, the Company issued medium-term notes with proceeds of approximately
+RMB10,000 million and are payable on 21 August 2017. The notes bear interest rate of 5.10% per
+annum, repayable annually. The effective interest rate is 5.17% per annum.
+On 16 September 2014, the Company issued medium-term notes with proceeds of approximately
+RMB10,000 million and are payable on 18 September 2017. The notes bear interest rate of 5.04% per
+annum, repayable annually. Its effective interest rate is 5.11% per annum.
+On 20 January 2015, China Shenhua Overseas Capital Company Limited ("Shenhua Overseas Capital")
+issued Dollar bonds with proceeds of approximately RMB3,061 million and are payable on 19 January
+2018. The bonds bear interest rate of 2.50% per annum, repayable semi-annually. Its effective interest
+rate is 2.84% per annum.
+On 20 January 2015, Shenhua Overseas Capital issued Dollar bonds with proceeds of approximately
+RMB3,061 million and are payable on 19 January 2020. The bonds bear interest rate of 3.13% per
+annum, repayable semi-annually. Its effective interest rate is 3.35% per annum.
+On 20 January 2015, Shenhua Overseas Capital issued Dollar bonds with proceeds of approximately
+RMB3,061 million and are payable on 19 January 2025. The bonds bear interest rate of 3.88% per
+annum, repayable semi-annually. Its effective interest rate is 4.10% per annum.
+The net proceeds of the Dollar bonds issued is mainly used for the repayment of loans of subsidiaries.
+218
+China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+31. ACCOUNTS AND BILLS PAYABLE
+Accounts payable
+- Shenhua Group, an associate of Shenhua Group and
+fellow subsidiaries
+RMB million
+2015
+RMB million
+Less than one year
+One to two years
+2016 Annual Report 219
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+32. ACCRUED EXPENSES AND OTHER PAYABLES
+31 December
+2016
+RMB million
+31 December
+2015
+RMB million
+Accrued staff wages and welfare benefits
+Accrued interest payable
+3,727
+3,397
+705
+784
+Taxes payable other than income tax
+6,911
+3,571
+Dividends payable
+2,665
+2,786
+Receipts in advances
+18
+484
+19
+413
+179
+Two to three years
+26,296
+25,585
+4,184
+3,922
+2,320
+3,305
+More than three years
+2,356
+1,178
+35,156
+33,990
+Included in accounts and bills payable are the following amounts denominated in foreign currencies are
+set out below:
+USD
+EUR
+HKD
+Great British Pounds
+RMB million
+31 December
+2015
+RMB million
+486
+154
+1
+4,196
+1,722
+2016
+RMB million
+Unsecured
+9,114
+11,594
+61,159
+55,397
+70,273
+66,991
+The Group's short-term borrowings are unsecured and bear interest at rates ranging from 3.70% to
+5.04% per annum (2015: 3.92% to 5.35% per annum).
+31 December
+Secured
+2016
+The exposure of the long-term borrowings and the
+RMB million
+contractual maturity dates:
+Within one year
+7,427
+6,377
+More than one year, but not exceeding two years
+5,657
+6,472
+2015
+RMB million
+66,991
+70,273
+54,179
+The Group closely monitors cash flow requirements and optimising its cash return. The Group
+prepares cash flow forecasts and ensures it has sufficient cash for the servicing of operation,
+financial, and capital obligations; this excludes the potential impact of extreme circumstances that
+cannot reasonably be predicted, such as natural disasters.
+2016 Annual Report 215
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+29. BORROWINGS
+An analysis of the Group's borrowings is as follows:
+Current borrowings:
+31 December
+2016
+RMB million
+31 December
+2015
+RMB million
+Short-term bank and other borrowings
+Current portion of long-term borrowings
+4,384
+6,435
+7,427
+6,377
+11,811
+12,812
+Non-current borrowings:
+Long-term borrowings, less current portion
+58,462
+More than two years, but not exceeding five years
+13,040
+15,599
+More than five years
+2,445
+2,448
+EUR denominated
+Interest rate at 2.85% per annum with
+maturities through 22 June 2017
+45
+69
+Less: current portion of long-term borrowings
+65,889
+60,556
+7,427
+58,462
+54,179
+As at 31 December 2016, the Group had entrusted loans from Shenhua Group and fellow subsidiaries
+amounting to RMB4,824 million (2015: RMB7,424 million).
+Certain borrowings are secured over certain property, plant and equipment with a carrying amount of
+RMB707 million (2015: RMB1,174 million) (see Note 15), inter-group long-term receivable of RMB Nil
+(2015: RMB1,245 million) which were fully eliminated against relevant payables in the consolidated
+financial statement, certain future power revenue to be generated by the Group and a guarantee by a
+non-controlling shareholder of a subsidiary.
+2016 Annual Report 217
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+29. BORROWINGS (Continued)
+Included in borrowings are the following amounts denominated foreign currencies are set out below:
+USD
+JPY
+EUR
+31 December
+Interest rates ranging from 1.80% to 2.60%
+per annum with maturities through
+20 March 2031
+31 December
+2015
+RMB million
+Japanese Yen ("JPY")
+denominated
+1,722
+39,765
+32,108
+65,889
+60,556
+216
+China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+29. BORROWINGS (Continued)
+The Group's long-term borrowings comprise:
+31 December
+2016
+RMB million
+31 December
+2015
+RMB million
+(Restated)
+Loans from banks and other institutions
+Renminbi denominated
+Interest rates ranging from 1.08% to 6.55%
+per annum with maturities through
+22 January 2036
+61,677
+57,555
+USD denominated
+Interest rates ranging from Libor+0.7% to
+Libor+2.85% per annum with maturities
+through 26 December 2034
+484
+3,624
+6,377
+13,492
+(i)
+Currency risk
+The functional currency of most of the group entities is RMB in which most of the
+transactions are denominated. However, certain of the Group's borrowings, receivables,
+bank balances and payables are denominated in foreign currencies. The Group entered into
+cross currency interest rate swaps with bank with good reputation in respect of its certain
+interest payments of borrowings denominated in JPY in order to mitigate the risk from the
+fluctuation of JPY against RMB, and the carrying amounts are set out in Note 29.
+The carrying amounts of the Group's foreign currency denominated monetary assets and
+monetary liabilities at the end of the reporting period are as follows:
+USD
+JPY
+Other currencies
+Liabilities
+31 December
+2016
+2015
+Market risk
+Assets
+2015
+RMB million RMB million RMB million RMB million
+2,208
+2,445
+218
+897
+2,448
+597
+435
+267
+170
+150
+31 December
+2016
+The Group's major financial instruments include accounts and bills receivable, loans and advances
+to/deposits from/amounts due to Shenhua Group and fellow subsidiaries, amounts due from/
+to associates, other receivables, accounts and bills payables, borrowings, long-term liabilities,
+medium-term notes and bonds. Details of the financial instruments are disclosed in the respective
+notes. The risks associated with these financial instruments include market risk (interest rate
+and currency risks), credit risk and liquidity risk. The policies on how to mitigate these risks are
+set out below. The management manages and monitors these exposures to ensure appropriate
+measures are implemented on a timely and effective manner.
+37.2 Financial risk management objectives and policies
+37. FINANCIAL INSTRUMENTS (Continued)
+31 December
+2015
+RMB million
+Financial assets:
+Available-for-sale investments
+1,800
+1,795
+Loans and receivables (including cash and
+cash equivalents)
+95,651
+112,701
+Derivative financial instruments
+54
+Investments in wealth management products
+33,350
+12
+160
+Financial liabilities:
+Amortised cost
+172,081
+182,172
+222
+China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+Sensitivity analysis
+The following table details the Group's sensitivity to a 10% increase or decrease in
+exchange rate of each foreign currency against RMB, while all other variables are held
+constant. The sensitivity analysis includes only outstanding foreign currency denominated
+monetary items at the end of the reporting period.
+USD
+JPY
+The Group is also exposed to cash flow interest rate risk in relation to variable-rate
+borrowings and variable-rate loans and receivables (see Notes 29 and 21). Other than
+the concentration of interest rate risk related to the movements in London Interbank
+Offered Rate and the loan interest published by the PBOC, the Group has no significant
+concentration of interest rate risk.
+The Group's exposures to interest rates on financial liabilities are detailed in the liquidity risk
+management section of this note.
+Sensitivity analysis
+The sensitivity analysis below has been determined based on the exposure to interest
+rates for variable-rate borrowings and variable-rate loans and receivables at the end of the
+reporting period. No sensitivity analysis has been presented for the exposure to interest
+rates for bank balances as the management of the Group considers that, taking into
+account that the fluctuation in interest rates on bank balances is minimal, the impact of
+profit or loss for the year is insignificant.
+The analysis is prepared assuming variable-rate borrowings and variable-rate loans and
+receivables outstanding at the end of the reporting period were outstanding for the whole
+year.
+If interest rates had been 100 basis points (2015: 100 basis points) higher/lower and all
+other variables were held constant, the Group's profit for the year ended 31 December
+2016 would decrease/increase by RMB259 million (2015: increase/decrease by RMB223
+million).
+224 China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+37. FINANCIAL INSTRUMENTS (Continued)
+37.2 Financial risk management objectives and policies (Continued)
+Credit risk
+As at 31 December 2016, the Group's maximum exposure to credit risk which will cause a
+financial loss to the Group due to failure to discharge an obligation by the counterparties and
+financial guarantees provided by the Group is arising from:
+the carrying amount of the respective recognised financial assets as stated in the
+consolidated statement of financial position;
+the Group's continuing involvement in the derecognised bills receivables equal to their
+carrying amounts as disclosed in Note 24; and
+the amount of contingent liability in relation to the financial guarantees provided by the
+Group is as disclosed in Note 39.3.
+In order to minimise the credit risk, the management of the Group has delegated a team
+responsible for determination of credit limits, credit approvals and other monitoring procedures to
+ensure that follow-up action is taken to recover overdue debts. In addition, the Group reviews the
+recoverable amount of each individual trade debt on regular basis and at the end of the reporting
+period to ensure that adequate impairment losses are made for irrecoverable amounts. In respect
+of the risk arising from the provision of financial guarantees, the management of the Group
+continuously monitors the credit quality and financial conditions of the guaranteed parties that
+the Group issued financial guarantee contracts in favor of to ensure that the Group will not suffer
+significant credit losses as a result of the failure of the guaranteed parties on the repayment of
+the relevant loans. In this regard, the Directors consider that the Group's credit risk is significantly
+reduced.
+The credit risk on liquid funds is limited because the counterparties are banks with good
+reputation.
+Other than concentration of credit risk on liquid funds which are deposited with several banks
+with good reputation, the Group does not have any other significant concentration of credit risk.
+Accounts receivables consist of a large number of customers, which spread across diverse
+industries and located in the PRC.
+Deposits from Shenhua Group and fellow subsidiaries (note (i))
+Other accrued expenses and payables (note (ii))
+Liquidity risk
+The Group is exposed to fair value interest rate risk in relation to fixed-rate loan and
+receivables, borrowings, short-term debenture, medium-term notes and bonds (see
+Notes 25, 29 and 30). The Group has entered into cross currency interest rate swaps to
+hedge against its exposures to changes in fair values of its certain interest payments of
+borrowings (see Note 29).
+RMB million
+Interest rate risk
+Market risk (Continued)
+Year ended 31 December
+2016
+2015
+RMB million RMB million
+Year ended 31 December
+2016
+2015
+RMB million RMB million
+Other currencies
+Year ended 31 December
+(Decrease) increase in profit after tax for the year:
+- if RMB weakens against foreign currencies
+(121)
+(35)
+- if RMB strengthens against foreign currencies
+121
+183
+(183)
+(184)
+184
+4
+(9)
+66
+2016 Annual Report 223
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+37. FINANCIAL INSTRUMENTS (Continued)
+37.2 Financial risk management objectives and policies (Continued)
+(ii)
+31 December
+2016
+2016
+2015
+RMB million RMB million
+37.1 Categories of financial instruments
+Defined benefit plans
+Others
+Analysed for reporting purpose as:
+Current liabilities
+Non-current liabilities
+31 December
+2016
+31 December
+2015
+RMB million
+RMB million
+1,093
+1,263
+1,328
+1,213
+147
+171
+286
+79
+2,854
+2,726
+403
+Payables for acquisition of mining rights (note (i))
+Deferred income (note (ii))
+2,451
+For the year ended 31 December 2016
+China Shenhua Energy Company Limited
+24,500
+9,665
+The carrying amounts of each of the following categories of financial assets and financial liabilities
+at the end of the reporting period are set out as follows:
+8,857
+41,361
+47,519
+Notes:
+(i)
+As at 31 December 2016, deposits from Shenhua Group and fellow subsidiaries bore interest at 0.42% to 1.62% per
+annum (2015: 0.42% to 1.62% per annum).
+(ii)
+Other accrued expenses and payables of the Group include:
+31 December 2016
+RMB million
+31 December 2015
+RMB million
+Amounts due to Shenhua Group and fellow subsidiaries
+Amounts due to associates
+The above balances are unsecured, interest-free and has no fixed terms of repayment.
+1,945
+54
+1,862
+44
+1,999
+1,906
+220
+Notes to the Consolidated Financial Statements (Continued)
+203
+2,523
+33. LONG-TERM LIABILITIES
+2,726
+For the year ended 31 December 2016
+35. SHARE CAPITAL
+31 December
+2016
+31 December
+2015
+RMB million
+RMB million
+Registered, issued and fully paid:
+16,491
+16,491
+3,399
+3,399
+19,890
+19,890
+All A shares and H shares rank pari passu in all material aspects.
+36. CAPITAL RISK MANAGEMENT
+The Group's policy is to maintain a strong capital base so as to maintain investor, creditor and market
+confidence and to sustain future development of the business.
+2,854
+The Group manages the capital structure and makes adjustments to it in the light of changes in
+economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust
+the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital
+to shareholders or issue new shares to reduce debts.
+The Group monitors capital using a gearing ratio which is total liabilities divided by total assets. The
+Group aims to maintain the gearing ratio at a reasonable level. The Group's gearing ratio as at 31
+December 2016 was 33% (2015: 35%).
+There were no changes in the Group's approach to capital management compared with previous years.
+37. FINANCIAL INSTRUMENTS
+Notes to the Consolidated Financial Statements (Continued)
+2016 Annual Report 221
+16,491,037,955 domestic listed A shares of RMB1.00 each
+3,398,582,500 H shares of RMB1.00 each
+Accretion expense
+Utilisation for the year
+Note:
+Deferred income mainly represents grants provided by several local governments in the PRC to encourage the
+construction of non-current assets.
+34. ACCRUED RECLAMATION OBLIGATIONS
+At the beginning of the year
+Addition for the year
+At the end of the year
+Year ended 31 December
+2016
+2,197
+(ii)
+(i)
+2015
+RMB million
+2,197
+2,102
+220
+132
+137
+(42)
+2,549
+RMB million
+The balances mainly represent payables for acquisition of mining rights which are to be settled over the period of
+production set out in the contracts on an annual basis. The annual payment is determined by fixed rates on a per tonne
+basis with reference to the annual production volume of the acquired mines in the acquisition agreements.
+On demand
+Weighted
+Total
+8,952
+average
+31 December 2015
+or less than
+More than
+undiscounted
+Total
+Accounts and bills payable, accrued expenses,
+38,104
+172,081
+198,882
+53,796
+25,069
+17,428
+102,589
+35,305
+3,879
+4.58
+3,986
+carrying
+21,287
+Financial liabilities:
+interest rate
+9,199
+1 year
+RMB million
+Borrowings fixed interest rate
+61,311
+9,287
+3.66
+84,188
+39,946
+21,107
+13,936
+4.98
+Borrowings variable interest rate
+75,577
+75,934
+535
+532
+265
+74,602
+other payables and long-term liabilities
+RMB million
+RMB million
+RMB million
+amount
+cash flows
+5 years
+2-5 years
+RMB million
+1-2 years
+RMB million
+%
+10,710
+2016 Annual Report 229
+2,583
+37.2 Financial risk management objectives and policies (Continued)
+For the year ended 31 December 2016
+37. FINANCIAL INSTRUMENTS (Continued)
+Notes to the Consolidated Financial Statements (Continued)
+2016 Annual Report 225
+For the year ended 31 December 2016
+39. COMMITMENTS AND CONTINGENT LIABILITIES (Continued)
+39.3 Financial guarantees issued
+At 31 December 2016, the Group had issued certain guarantees in respect of certain banking
+facilities granted to an entity which the Group held less than 20% equity interest. The maximum
+amount guaranteed is RMB191 million (2015: RMB197 million).
+39.4 Legal contingencies
+The Group is the defendant in certain lawsuits as well as the plaintiff in other proceedings arising
+in the ordinary course of business. While the outcomes of such contingencies, lawsuits or other
+proceedings cannot be determined at present, management believes that any resulting liabilities
+will not have a material adverse effect on the financial position or operating results of the Group.
+39.5 Environmental contingencies
+To date, the Group has not incurred any significant expenditure for environmental remediation,
+is currently not involved in any environmental remediation, and apart from the provision for land
+reclamation costs, has not accrued any further amounts for environmental remediation relating
+to its operations. Under the existing legislation, management believes that there are no probable
+liabilities that will have a material adverse effect on the financial position or operating results of the
+Group. The regulatory bodies, however, have moved, and may move further towards the adoption
+of more stringent environmental standards. Environmental liabilities are subject to considerable
+uncertainties which affect the Group's ability to estimate the ultimate cost of remediation efforts.
+These uncertainties include (i) the exact nature and extent of the contamination at various sites
+including, but not limited to coal mines and land development areas, whether operating, closed
+or sold; (ii) the extent of required cleanup efforts; (iii) varying costs of alternative remediation
+strategies; (iv) changes in environmental remediation requirements; and (v) the identification of
+new remediation sites. The amount of such future cost is indeterminable due to such factors as
+the unknown magnitude of possible contamination and the unknown timing and extent of the
+corrective actions that may be required. Accordingly, the outcome of environmental liabilities
+under future environmental legislation cannot reasonably be estimated at present, and could be
+material.
+40. EMPLOYEE BENEFITS PLAN
+In addition to a minimal defined benefit plan operated by its subsidiary, the Group participates, in line
+with the regulations of the PRC, mainly in various defined contribution retirement plans organised by
+municipal and provincial governments for its employees. The Group is required to make contributions
+to the retirement plans at 20% of the salaries, bonuses and certain allowances of the employees. In
+addition, as approved by the government, the Group makes contribution to a supplemental defined
+contribution pension plan for its employees. The fund is managed by a qualified fund manager. The
+Group has no other material obligation for the payment of pension benefits associated with these plans
+beyond the annual contributions described above. The Group's contributions for the year ended 31
+December 2016 were RMB2,728 million (2015: RMB2,791 million).
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+41. RELATED PARTY TRANSACTIONS
+41.1 Transactions with Shenhua Group, an associate of Shenhua Group, fellow
+subsidiaries, and associates of the Group
+The Group is controlled by Shenhua Group and has significant transactions and relationships with
+Shenhua Group, an associate of Shenhua Group and subsidiaries of Shenhua Group ("fellow
+subsidiaries"). Related parties refer to enterprises over which Shenhua Group is able to exercise
+significant influence or control. The Group also has entered into transactions with its associates,
+over which the Group can exercise significant influence. Because of the above relationships, it is
+possible that the terms of these transactions are not the same as those that would result from
+transactions among wholly unrelated parties.
+The Group had the following transactions with Shenhua Group, an associate of Shenhua Group,
+fellow subsidiaries, and associates of the Group that were carried out in the normal course of
+business during both years:
+2016
+2015
+RMB million
+2,239
+RMB million
+Liquidity risk (Continued)
+2,653
+The following table details the remaining contractual maturity of the Group's financial liabilities at
+the end of the reporting period, which are based on contractual undiscounted cash flows (including
+interest payments computed using contractual rates or, if floating, based on rates current at the
+end of the reporting period) and the earliest date the Group can be required to pay:
+31 December 2016
+543
+4,931
+3.94
+Medium-term notes and bonds
+Borrowings fixed interest rate
+60,986
+83,306
+46,839
+18,064
+7,727
+10,676
+4.60
+Borrowings variable interest rate
+66,503
+66,762
+425
+436
+206
+65,695
+other payables and long-term liabilities
+Accounts and bills payable, accrued expenses,
+Total
+carrying
+Total
+More than undiscounted
+5 years
+cash flows amount
+RMB million RMB million
+2-5 years
+Weighted On demand
+average
+or less than
+interest rate
+1 year
+1-2 years
+% RMB million RMB million RMB million RMB million
+Financial liabilities:
+594
+40,804
+2,440
+39. COMMITMENTS AND CONTINGENT LIABILITIES
+During the year ended 31 December 2015, the Company had paid RMB5,386 million based on the
+valuation of the acquired business as at 30 June 2015 (the "Valuation Date"), and had paid an additional
+consideration of RMB309 million to Shenhua Group, being the excess of the net assets as at the
+completion date of the acquisitions over that of the Valuation Date, for the acquired business. The
+acquisitions had been accounted as business combinations under common control during the year
+ended 31 December 2015.
+51.00% equity interest in Zhoushan Power Plant.
+100.00% equity interest in Xuzhou Power Plant; and
+100.00% equity interest Ningdong Power Plant;
+-
+Pursuant to a resolution passed at the directors' meeting on 31 October 2015, the Company acquired
+the equity interests of certain entities held directly or indirectly by Shenhua Group, including:
+For the year ended 31 December 2016
+Acquisitions from Shenhua Group
+38. ACQUISITION OF SUBSIDIARIES IN PRIOR
+Notes to the Consolidated Financial Statements (Continued)
+39.1 Capital commitments
+2016 Annual Report 227
+The fair value of fixed rate bank borrowings above in the Level 2 category is measured using
+discounted cash flow method where the future cash flows are estimated based on the contract
+and discounted at a rate that reflects the credit risk of the issuers.
+9,660
+4,387
+26,008
+4,020
+24,955
+9,651
+10,436
+10,331
+Fixed rate bonds
+8,567
+25,282
+24,974
+Fixed rate medium-term notes
+8,507
+The fair values of medium-term notes and bonds are included in the Level 1 category, which have
+been derived from the quoted prices (unadjusted) in an active market.
+As at 31 December, the Group had capital commitments for land and buildings and equipment as
+follows:
+Contracted for but not provided
+- Land and buildings
+228
+Interest income
+66
+68
+3
+17
+46
+23
+45
+31 December
+2015
+RMB million
+RMB million
+31 December
+2016
+After one year but within five years
+After five years
+Within one year
+Operating lease commitments mainly represent business premises leased through
+non-cancellable operating leases. These operating leases do not contain provisions for contingent
+lease rentals. As at 31 December, future minimum lease payments under non-cancellable
+operating leases on business premises having initial or remaining lease terms of more than one
+year are payable as follows:
+39.2 Operating lease commitments
+47,793
+21,170
+17,200
+26,623
+23,604
+31 December
+2015
+RMB million
+RMB million
+31 December
+2016
+- Equipment
+Fixed rate bank borrowings
+Financial liabilities:
+Fair value
+RMB million
+RMB million
+As of 31 December 2016, the Group has investments in derivative financial instruments, tradable
+wealth management products, and wealth management products which are measured at fair
+value of RMB4 million (2015: RMB12 million), RMB50 million (2015: Nil), and RMB33,350 million
+(2015: RMB160 million), respectively.
+Fair value of the Group's financial assets that are measured at fair value on a recurring basis
+37.3 Fair value measurements
+37. FINANCIAL INSTRUMENTS (Continued)
+For the year ended 31 December 2016
+Notes to the Consolidated Financial Statements (Continued)
+China Shenhua Energy Company Limited
+226
+The maximum liability of financial guarantees issued by the Group is disclosed in Note 39.3.
+Saved as discussed above, the Group also makes use of banks and financial institutions facilities as
+one of the effective sources of liquidity.
+210,673 182,172
+46,678
+35,280
+31,324
+97,391
+39,604
+43,957
+3,757
+12,320
+21,266
+6,614
+4.45
+Debentures, medium-term notes and bonds
+5,680
+6,594
+Financial asset:
+1,321
+At 31
+December
+2016
+Fair value
+hierarchy
+At 31 December 2015
+Carrying amount
+Fair value
+RMB million
+At 31 December 2016
+Carrying amount
+RMB million
+Except as detailed in the following table, the Directors consider that the carrying amounts of
+financial assets and financial liabilities recorded at amortised cost in the consolidated financial
+statements approximate their fair values:
+Fair value of financial assets and financial liabilities that are not measured at fair value on a
+recurring basis
+There were no transfer between Level 1 and Level 2 during the year ended 31 December 2016
+and 2015.
+estimated based on expected rate of return.
+Discounted cash flow. Future cash flows are
+estimated based on expected rate of return.
+Level 2
+160
+33,350
+Wealth management products
+products
+Discounted cash flow. Future cash flows are
+Level 2
+0
+50
+Tradable wealth management
+Quoted price in an active market.
+Level 1
+12
+4
+Derivative financial instruments
+Valuation technique(s)
+and key input(s)
+RMB million
+RMB million
+At 31
+December
+2015
+634
+Key management personnel receive compensation in the form of fees, basic salaries, housing and
+other allowances, benefits in kind, discretionary bonuses and retirement scheme contributions.
+Income from entrusted loans
+(vii)
+The Group, through Shenhua Finance, has entered into a financial services agreement
+with Shenhua Group and fellow subsidiaries. Pursuant to the agreement, Shenhua Finance
+provides financial services to Shenhua Group and fellow subsidiaries. The interest rate for
+the deposits with Shenhua Finance from Shenhua Group and fellow subsidiaries should
+not be lower than the lowest limit published by the PBOC for the same type of deposit.
+The interest rate for loans made by Shenhua Finance to Shenhua Group and fellow
+subsidiaries should not be higher than the highest limit published by the PBOC for the
+same type of loan. The above interest rates should be determined by reference to the rate
+charged by normal commercial banks in the PRC for comparable deposits and loans on
+normal commercial terms. The fees charged by Shenhua Finance for the provision of other
+financial services shall be determined according to the rates chargeable by the PBOC or the
+China Banking Regulatory Commission.
+The Group has entered into a property leasing agreement with fellow subsidiaries for
+leasing of certain properties to each other. No rent is payable by the Group before fellow
+subsidiaries obtains the relevant property ownership certificate. The rental charges are
+based on comparable market rates. If fellow subsidiaries negotiate to sell a leased property
+to a third party, the Company has a pre-emptive right to purchase such property under
+terms no less favorable than other third party.
+The Group has entered into a land leasing agreement with fellow subsidiaries. The annual
+rent is determined based on the local market rate. The Group is not allowed to sub-let the
+leased land.
+The Group has entered into an agency agreement for the export of coal with a fellow
+subsidiary. The fellow subsidiary is appointed as a non-exclusive export agent of the Group
+and is entitled to receive an agency fee based on the relevant market rates or lower rates.
+Currently, the rate is 0.7% of the free on board sales price of coal exported.
+The Group entered into an agency agreement for the sale of coal with fellow subsidiaries.
+The Group is appointed as the exclusive sales agent of fellow subsidiaries for thermal coal
+and non-exclusive sales agent for coking coal. The Group is entitled to receive an agency
+fee, which is based on its related costs incurred plus a profit margin of 5% for sales of coal
+outside the Inner Mongolia Autonomous Region. No agency fee is charged for sales of coal
+within the Inner Mongolia Autonomous Region.
+(viii) The Group has entered into agreements with fellow subsidiaries under which the Group
+has been granted the right to use certain trademarks. Fellow subsidiaries bear its own
+cost for the registration of such trademarks during the term of the trademarks license
+agreement and expenses for enforcement against any infringement of the licensed
+trademarks by third parties.
+2016 Annual Report 233
+Notes to the Consolidated Financial Statements (Continued)
+41. RELATED PARTY TRANSACTIONS (Continued)
+For the year ended 31 December 2016
+(vi)
+41.1 Transactions with Shenhua Group, an associate of Shenhua Group, fellow
+subsidiaries, and associates of the Group (Continued)
+Accounts and bills receivable
+Prepaid expenses and other current assets
+Other non-current assets
+Total amounts due from Shenhua Group,
+an associate of Shenhua Group, fellow
+subsidiaries and associates of the Group
+Note
+31 December
+2016
+RMB million
+31 December
+2015
+RMB million
+22
+24
+3,458
+Amounts due from/to Shenhua Group, an associate of Shenhua Group, fellow subsidiaries, and
+associates of the Group:
+(v)
+(iv)
+(iii)
+Notes to the Consolidated Financial Statements (Continued)
+41. RELATED PARTY TRANSACTIONS (Continued)
+For the year ended 31 December 2016
+41.1 Transactions with Shenhua Group, an associate of Shenhua Group, fellow
+subsidiaries, and associates of the Group (Continued)
+(xix) Granting of entrusted loan represents an entrusted loan granted to an associate of the
+Group.
+(xx)
+Repayment of entrusted loan represents an entrusted loan repaid by an associate of the
+Group.
+(xxi) Receipt of deposits by Shenhua Finance represents net deposits received by Shenhua
+Finance from Shenhua Group and fellow subsidiaries.
+(xxii) Loans obtained by the Group from Shenhua Group and fellow subsidiaries.
+(xxiii) Repayment of loans from Shenhua Group and fellow subsidiaries by the Group.
+The Directors are of the opinion that the above transactions with related parties were conducted
+in the ordinary course of business and in accordance with the agreements governing such
+transactions.
+The Group entered into a number of agreements with Shenhua Group, an associate of Shenhua
+Group, fellow subsidiaries, and associates of the Group. The terms of the principal agreements
+are summarised as follows:
+(i)
+The Group has entered into a mutual supply agreement for the mutual provision of
+production supplies and ancillary services with an associate of Shenhua Group and
+fellow subsidiaries. Pursuant to the agreement, an associate of Shenhua Group and
+fellow subsidiaries provide the Group with the production supplies and services, ancillary
+production services including the use of the information network system and ancillary
+administrative services. On the other hand, the Group provides fellow subsidiaries with
+water supplies, rolling stock management, railway management, railway transportation and
+other related or similar production supplies or services and use of the information network
+system.
+The products and services provided under the agreement, other than the sharing of use of
+the information network system which is free of charge, are provided in accordance with
+the following pricing policy:
+price prescribed by the state (including any price prescribed by any relevant local
+government), if applicable;
+where there is no state-prescribed price but where there is a state-guidance price,
+then the state-guidance price;
+where there is neither a state-prescribed price nor a state-guidance price, the market
+price; or
+where none of the above is applicable or where it is not practical to apply the above
+pricing policies in reality, the price to be agreed between the relevant parties shall be
+based on reasonable costs incurred in providing the goods or services plus a profit
+margin of 5% of such costs.
+232 China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+41. RELATED PARTY TRANSACTIONS (Continued)
+41.1 Transactions with Shenhua Group, an associate of Shenhua Group, fellow
+subsidiaries, and associates of the Group (Continued)
+(ii) The Group has entered into coal supply agreements with fellow subsidiaries and associates
+of the Group. The coal supplied is charged at the prevailing market price.
+3,959
+25
+3,182
+4,023
+8
+1
+9
+9
+Total remuneration is included in "personnel expenses" as disclosed in Note 10.
+234 China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+41. RELATED PARTY TRANSACTIONS (Continued)
+41.3 Contributions to post-employment benefit plans
+The Group participates in various defined contribution post-employment benefit plans organised
+by municipal and provincial governments and a supplemental defined contribution pension plan
+approved by the government for its employees. Further details of the Group's post-employment
+benefit plans are disclosed in Note 40.
+41.4 Transactions with other government-related entities in the PRC
+The Company is ultimately controlled by the PRC government and the Group operates in an
+economic environment currently predominated by government-related entities.
+Other than those transactions with Shenhua Group, an associate of Shenhua Group, fellow
+subsidiaries and associate of the Group as disclosed above, the Group conducts business with
+other government-related entities which include but are not limited to the following:
+-
+-
+Power sales;
+Sales and purchases of coal;
+Transportation services;
+Construction work;
+Purchases of ancillary materials and spare parts;
+Ancillary and social services; and
+Financial services arrangements.
+These transactions are conducted in the ordinary course of the Group's business on terms
+comparable to those with other entities that are not government-related. The Group has
+established its pricing policies in respect of sale of goods and provision of services, and approval
+process for purchases of products and services. Such policies and approval process apply to all
+counterporties regardless of whether the counterparty is government-related or not.
+Notes to the Consolidated Financial Statements (Continued)
+1
+2016 Annual Report 231
+8
+RMB million
+21
+13,507
+12,128
+20,147
+20,110
+Borrowings
+29
+4,824
+7,424
+Accounts payable
+31
+2,358
+2,245
+Accrued expenses and other payables
+32
+15,491
+26,406
+Total amounts due to Shenhua Group, an
+associate of Shenhua Group and fellow
+subsidiaries, and associates of the Group
+22,673
+36,075
+Other than those disclosed in Notes 21, 25, 29 and 32, amounts due from/to Shenhua Group, an
+associate of Shenhua Group, fellow subsidiaries, and associates of the Group bear no interest, are
+unsecured and are repayable in accordance with normal commercial terms.
+41.2 Key management personnel emoluments
+Key management personnel compensation of the Group is summarised as follows:
+Short-term employee benefits
+Post-employment benefits
+2016
+2015
+RMB million
+819
+(xviii) Repayment of loans from Shenhua Finance represents loans repaid by fellow subsidiaries
+to Shenhua Finance.
+(xvi) Other income includes agency income, repairs and maintenance service income, sales of
+ancillary materials and spare parts, management fee income, sales of water and electricity,
+financial service income, etc.
+3,697
+Property leasing
+(xi)
+48
+48
+Repairs and maintenance services expense
+(xii)
+44
+7
+Coal export agency expense
+(xiii)
+6,227
+9
+Purchase of equipment and construction work
+(xiv)
+1,021
+1,753
+Sale of coal chemical product
+(xv)
+3,804
+3,104
+Other income
+(xvi)
+2,123
+4
+(x)
+Purchase of coal
+4,188
+33
+39
+Interest expense
+242
+290
+Purchases of ancillary materials and spare parts
+(iv)
+1,347
+1,385
+Mining service income
+(v)
+812
+Ancillary and social services
+(vi)
+688
+585
+Transportation service income
+(vii)
+195
+189
+Transportation service expense
+(viii)
+Sale of coal
+(ix)
+4,724
+2,365
+Granting of loans from Shenhua Finance
+(xvii)
+4,768
+(iv)
+(v)
+(vi)
+(vii)
+(viii)
+(ix)
+(x)
+(xi)
+(xii)
+(xiii)
+(xiv)
+(xv)
+Interest expense represents interest incurred from deposits placed and loans from Shenhua
+Group and fellow subsidiaries. The applicable interest rate is determined in accordance with
+the prevailing interest rates published by the PBOC.
+Purchases of ancillary materials and spare parts represent purchase of materials and utility
+supplies related to the Group's operations from fellow subsidiaries.
+Mining service income represents income earned from coal mining services to fellow
+subsidiaries.
+Ancillary and social services represent expenditures for social welfare and support services
+such as property management, water and electricity supply, and canteen expense paid to
+Shenhua Group, fellow subsidiaries and associates of the Group.
+Transportation service income represents income earned from Shenhua Group and fellow
+subsidiaries in respect of coal transportation services.
+Transportation service expense represents expense related to coal transportation service
+provided by a fellow subsidiary of Shenhua Group and associates of the Group.
+Sale of coal represents income from sale of coal to fellow subsidiaries.
+Purchase of coal represents coal purchased from associates of the Group and fellow
+subsidiaries.
+Property leasing represents rental paid or payable in respect of properties leased from
+fellow subsidiaries.
+Repairs and maintenance services expense represents expense related to machinery
+repairs and maintenance services provided by fellow subsidiaries and an associate of the
+Group.
+Coal export agency expense represents expense related to coal export agency services
+provided by a fellow subsidiary.
+Purchase of equipment and construction work represents expenditure related to equipment
+and construction service provided by fellow subsidiaries.
+Sale of coal chemical product represents income from sale of coal chemical product to
+fellow subsidiaries.
+41.1 Transactions with Shenhua Group, an associate of Shenhua Group, fellow
+subsidiaries, and associates of the Group (Continued)
+(xvii) Granting of loans from Shenhua Finance represents loans granted by Shenhua Finance to
+fellow subsidiaries.
+41. RELATED PARTY TRANSACTIONS (Continued)
+Notes to the Consolidated Financial Statements (Continued)
+9,082
+Repayment of loans from Shenhua Finance
+(xviii)
+3,900
+11,159
+Granting of entrusted loan
+(xix)
+Repayment of entrusted loan
+(xx)
+Net deposits received by Shenhua Finance
+Loans from Shenhua Group
+(xxi)
+(11,008)
+5,748
+(xxii)
+2,235
+Repayment of loans from Shenhua Group
+(xxiii)
+2,600
+3,324
+(i)
+(ii)
+Interest income represents interest earned from loans to Shenhua Group and fellow
+subsidiaries. The applicable interest rate is determined in accordance with the prevailing
+interest rates published by the PBOC.
+Income from entrusted loans represents interest earned from entrusted loans to an
+associate of the Group. The applicable interest rate is determined in accordance with the
+prevailing interest rates published by the PBOC.
+230
+China Shenhua Energy Company Limited
+For the year ended 31 December 2016
+China Shenhua Energy Company Limited
+%
+2015
+193
+245
+interests
+Dividend paid to non-controlling
+826
+672
+634
+30
+475
+344
+75
+1,364
+1,212
+886
+income for the year
+Profit and total comprehensive
+2,998
+3,120
+2,082
+2,146
+1,196
+7,948
+254
+471
+(3)
+(42)
+(942)
+(47)
+activities
+Net cash outflow from financing
+(184)
+(962)
+(4,045)
+365
+(1,457)
+investing activities
+Net cash inflow (outflow) from
+650
+956
+4,199
+2,394
+1,444
+activities
+Net cash inflow from operating
+1,401
+(363)
+8,114
+5,249
+2015
+2016
+Year ended 31 December
+Year ended 31 December
+Year ended 31 December
+Year ended 31 December
+3,030
+2,958
+4,286
+2016
+4,345
+25,180
+7,729
+8,114
+Total equity
+934
+1,030
+18
+160
+427
+23,739
+4,174
+2015
+2015
+Expenses
+4,092
+4,019
+2,972
+2,697
+9,234
+9,677
+5,859
+6,324
+2016
+Revenue
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+2015
+2016
+RMB million
+448
+25
+958
+8,571
+5,507
+598
+1,130
+2,072
+2,276
+Current liabilities
+6,803
+7,125
+1,376
+29,320
+4,457
+5,349
+5,568
+5,429
+Non-current assets
+1,436
+969
+7,475
+8,210
+29,387
+1,343
+383
+973
+Year ended 31 December
+Year ended 31 December
+Year ended 31 December
+Year ended 31 December
+5,857
+6,000
+26,107
+29,848
+3,241
+Non-current liabilities
+3,163
+3,240
+Total equity
+1,999
+718
+2,117
+2,242
+1,961
+2,087
+1,139
+3,286
+390
+1,031
+1,060
+Details of non-wholly owned subsidiaries that have material non-controlling interests
+(Continued)
+43. SUBSIDIARIES (Continued)
+For the year ended 31 December 2016
+Notes to the Consolidated Financial Statements (Continued)
+2016 Annual Report 241
+41
+103
+13
+(9)
+Dingzhou Power
+112
+2,798
+Net cash inflow (outflow)
+(1,234)
+(610)
+(54)
+171
+(348)
+(295)
+1,063
+112
+929
+Shenhua Sichuan
+Energy Co., Ltd.
+Shenhua Zhonghai
+Shipping Co., Ltd.
+Current assets
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+Shuohuang Railway
+Development Co., Ltd.
+2015
+2015
+2016
+2015
+2016
+2015
+2016
+31 December 31 December 31 December
+31 December
+31 December 31 December 31 December 31 December
+2016
+233,014
+2,769
+Non-current liabilities
+49
+49
+PRC
+Co., Ltd.
+Hebei Guohua Cangdong Power
+1,860
+1,885
+275
+25
+329
+90
+43
+43
+PC
+PRC
+Co., Ltd.
+Shenhua Baorixile Energy Industrial
+10,027
+10,636
+505
+206
+576
+405
+1,485
+47
+47
+PRC
+Shuohuang Railway Development
+Co., Ltd.
+1,588
+1,550
+72
+(36)
+49
+1,449
+49
+Shenhua Sichuan Energy Co., Ltd.
+1,955
+1,928
+575
+503
+50
+59
+PRC
+Dingzhou Power
+PRC
+3,062
+42
+Shenhua Zhunge'er Energy Co., Ltd. PRC
+31 December
+Accumulated
+non-controlling interests
+Profit allocated to
+non-controlling interests
+non-controlling interests
+voting rights held by
+interest and
+Proportion of ownership
+Place of
+incorporation
+and operation
+Name of the subsidiary
+31 December
+Summarised financial information in respect of each of the Group's subsidiaries that has material non-
+controlling interests is set out below. The summarised financial information below represents amounts
+before intra-group eliminations:
+43. SUBSIDIARIES (Continued)
+For the year ended 31 December 2016
+Notes to the Consolidated Financial Statements (Continued)
+2016 Annual Report 239
+The Company has the control over Guohua Taicang Power Co. through its voting rights over 50%.
+(iii)
+The Company obtained the control over Dingzhou Power through its right to appoint majority members of the board of
+directors, details of which are set out in Note 4.1.
+In addition to 15% equity interest held by the Company, the Company's subsidiary owned 50% equity interest in Suizhong
+Power Co., Ltd.
+(ii)
+Details of non-wholly owned subsidiaries that have material non-controlling interests
+42
+Year ended 31 December
+31 December
+3,787
+3,976
+594
+434
+49
+49
+PRC
+Shenwan Energy Co., Ltd.
+RMB million
+31 December
+RMB million
+RMB million
+67,994
+%
+2015
+2016
+2015
+2016
+2015
+2016
+RMB million
+2,345
+2,388
+12,343
+1,062
+1,145
+Current assets
+RMB million
+RMB million
+RMB million
+2015
+2016
+2015
+13,580
+31 December 31 December 31 December
+RMB million
+31 December 31 December
+2016
+RMB million
+RMB million
+RMB million
+2015
+2016
+Hebei Guohua Cangdong
+Power Co., Ltd.
+Shenhua Baorixile Energy
+Industrial Co., Ltd.
+Shenhua Zhunge'er Energy
+Co., Ltd.
+31 December 31 December
+2015
+2016
+RMB million
+Shenwan Energy Co., Ltd.
+31 December
+11,680
+1,976
+3,266
+3,210
+2,557
+2,680
+5,695
+6,458
+3,001
+2,978
+Current liabilities
+1,967
+6,183
+4,885
+5,218
+18,181
+18,506
+12,437
+12,292
+Non-current assets
+1,047
+1,233
+5,965
+14,112
+Details of non-wholly owned subsidiaries that have material non-controlling interests
+(Continued)
+For the year ended 31 December 2016
+Administration Co., Ltd.
+Shenhua Huanghua Harbour
+1,625
+1,525
+335
+206
+20
+20
+20
+PRC
+220
+Power Co., Ltd.
+Guangdong Guohua Yuedian Taishan
+2,870
+2,940
+18
+70
+49
+49
+Shenhua Zhonghai Shipping Co., Ltd. PRC
+PRC
+43. SUBSIDIARIES (Continued)
+30
+48
+Notes to the Consolidated Financial Statements (Continued)
+China Shenhua Energy Company Limited
+240
+65,853
+PRC
+Zhejiang Guohua Zheneng Power
+Generation Co., Ltd.
+3,168
+3,010
+183
+30
+302
+30
+PRC
+Power Co., Ltd.
+Shenhua Guohua International
+2,610
+2,866
+50
+156
+367
+30
+(i)
+283,646
+19,890
+1,251
+Non-current assets
+11,332
+12,004
+14,538
+14,366
+16,974
+18,340
+10,276
+1,340
+10,527
+5,147
+4,913
+1,304
+1,698
+7,932
+9,291
+3,585
+3,230
+Non-current liabilities
+Current liabilities
+278
+3,677
+1,661
+Shenhua Guohua
+International Power Co., Ltd.
+Zhejiang Guohua Zheneng
+Power Generation Co., Ltd.
+31 December 31 December
+2016
+31 December
+2015
+2016
+31 December
+2015
+31 December 31 December
+2016
+3,260
+2015
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+Current assets
+1,439
+1,310
+1,419
+RMB million
+Guangdong Guohua Yuedian
+Taishan Power Co., Ltd.
+31 December 31 December
+2016
+2015
+RMB million
+5,099
+1,841
+2015
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+Revenue
+6,310
+2016
+7,607
+2,780
+9,794
+10,758
+6,476
+7,275
+Expenses
+4,963
+5,300
+2,015
+3,964
+5,630
+2015
+2015
+2,167
+2,501
+2,595
+Total equity
+7,624
+8,123
+9,554
+8,699
+10,461
+2016
+10,559
+5,953
+Year ended 31 December
+Year ended 31 December
+Year ended 31 December
+Year ended 31 December
+2016
+RMB million
+2015
+RMB million
+2016
+5,530
+2,022
+RMB million
+Details of non-wholly owned subsidiaries that have material non-controlling interests
+(Continued)
+1,162
+1,449
+8,737
+7,234
+1,928
+1,971
+Profit (loss) and total comprehensive
+income for the year
+845
+2,780
+967
+147
+17
+6,477
+5,051
+13
+143
+36
+Dividend paid to non-controlling
+interests
+529
+(74)
+20
+2,741
+2,002
+2016
+2015
+RMB million
+RMB million
+RMB million
+RMB million
+2016
+RMB million
+2015
+RMB million
+2016
+Expenses
+2015
+RMB million
+Revenue
+3,873
+4,099
+1,106
+1,594
+17,250
+13,386
+2,112
+RMB million
+Shenhua Huanghua Harbour
+Administration Co., Ltd.
+540
+2
+financing activities
+(828)
+(985)
+531
+(394)
+(6,460)
+(2,653)
+(273)
+Net cash inflow (outflow)
+Net cash (outflow) inflow from
+2
+24
+(179)
+14
+(9)
+242
+China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+43. SUBSIDIARIES (Continued)
+(697)
+40
+(393)
+(2,010)
+2
+1,435
+3,457
+529
+Net cash inflow from operating
+activities
+1,438
+1,197
+127
+463
+(85)
+8,419
+372
+472
+Net cash outflow from investing
+activities
+(610)
+(212)
+(656)
+(766)
+(1,935)
+4,484
+213,124
+9,045
+5,135
+27,750
+9,500
+Cash and cash equivalents
+19,276
+20,414
+Total current assets
+158,293
+119,307
+Current liabilities
+months
+Borrowings
+9,038
+Short-term debenture
+4,998
+Accounts and bills payable
+6,251
+8,693
+Accrued expenses and other payables
+63,875
+57,364
+5,263
+Current portion of long-term liabilities
+Time deposits with original maturity over three
+335
+1,647
+1,647
+36,853
+31,796
+3,167
+3,245
+152
+58
+233,080
+649
+225,728
+3,591
+4,436
+Accounts and bills receivable
+22,559
+19,385
+Prepaid expenses and other current assets
+84,782
+64,923
+Restricted bank deposits
+Inventories
+1,065
+20,227
+Income tax payable
+Total non-current liabilities
+Net assets
+Equity
+Share capital
+Reserves
+Total equity
+3,460
+3,872
+4,985
+24,955
+Accrued reclamation obligations
+872
+1,224
+1,156
+10,541
+31,098
+283,646
+233,014
+35
+35
+19,890
+263,756
+1,115
+200
+Long-term liabilities
+Borrowings
+1,570
+630
+Total current liabilities
+97,186
+80,923
+Net current assets
+61,107
+38,384
+Total assets less current liabilities
+Medium-term notes
+294,187
+244
+China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+44. INFORMATION ABOUT THE FINANCIAL POSITION OF THE COMPANY (Continued)
+NOTES
+31 December
+2016
+RMB million
+31 December
+2015
+RMB million
+Non-current liabilities
+264,112
+10,728
+1,065
+132,569
+10
+115
+583
+676
+Net cash inflow from operating
+activities
+1,646
+2,832
+1,962
+460
+719
+2,546
+1,860
+1,312
+2,687
+Net cash (outflow) inflow from
+investing activities
+(155)
+(230)
+(424)
+19
+1,434
+55
+189
+5,111
+Profit and total comprehensive
+income for the year
+1,031
+1,677
+1,223
+520
+20
+460
+455
+490
+609
+1,034
+1,618
+Dividend paid to non-controlling
+interests
+306
+410
+10
+118
+69
+127,264
+(312)
+(130)
+NOTES
+31 December
+2016
+RMB million
+Non-current assets
+Property, plant and equipment
+Construction in progress
+Intangible assets
+Investments in subsidiaries
+Investments in associates
+Available-for-sale investments
+Other non-current assets
+Lease prepayments
+44. INFORMATION ABOUT THE FINANCIAL POSITION OF THE COMPANY
+Deferred tax assets
+Current assets
+31 December
+2015
+RMB million
+52,469
+55,404
+3,446
+3,469
+1,712
+1,780
+Total non-current assets
+(470)
+For the year ended 31 December 2016
+2016 Annual Report 243
+25
+Net cash outflow from financing
+activities
+(1,488)
+(2,600)
+(1,416)
+(2,180)
+(1,890)
+(1,344)
+Notes to the Consolidated Financial Statements (Continued)
+(2,712)
+Net cash inflow (outflow)
+3
+2
+22
+122
+(27)
+344
+46
+(1,530)
+(2,712)
+Notes:
+2016
+51 Generation and sale of
+electricity
+RMB1,169 million
+Industrial Co., Ltd.
+Shenhua Beidian Shengli
+PRC
+Limited company
+RMB2,674 million
+Energy Co., Ltd.
+The above table lists subsidiaries of the Group which, in the opinion of the Directors, principally affected
+the results or assets of the Group. To give details of other subsidiaries would, in the opinion of the
+Directors, result in particulars of excessive length.
+Limited company
+RMB2,278 million
+70
+57
+44
+58 Coal mining and development;
+generation and sale of
+electricity
+57 Coal mining; provision of
+loading and transportation
+services
+63 Coal mining; provision of
+loading and transportation
+services
+70 Generation and sale of
+electricity; coal mining and
+development
+Limited company
+Shenhua Guohua International PRC
+Power Co., Ltd.
+PRC
+Co., Ltd.
+100 Trading of coal
+Shenwan Energy Co., Ltd. PRC
+Limited company
+RMB4,696 million
+51
+51 Trading of coal
+Shenhua Shendong Coal Group PRC
+Co., Ltd.
+Limited company
+RMB4,989 million
+100
+100 Trading of coal; provision of
+integrated services
+Shenhua Zhunge'er Energy
+PRC
+Limited company
+RMB7,102 million
+50
+58
+Shenhua Baorixile Energy
+Limited company
+RMB4,010 million
+70
+PRC
+Limited company
+RMB4,029 million
+ទ
+60 Generation and sale of
+electricity
+65 Generation and sale of
+electricity
+2016 Annual Report 237
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+Place of
+incorporation
+Name of the subsidiary
+and operation Type of legal entity
+43. SUBSIDIARIES (Continued)
+Details of the Company's Material Subsidiaries (Continued)
+Proportion of ownership interest
+and voting rights held by
+31 December
+Suizhong Power Co., Ltd.
+(note (i))
+Power Generation Co., Ltd.
+60
+60
+70 Generation and sale of
+electricity
+Shenhua Shendong Power
+Co., Ltd.
+PRC
+Limited company
+RMB3,024 million
+100
+10
+100 Generation and sale of
+electricity
+10
+Guangdong Guohua Yuedian PRC
+RMB4,670 million
+80
+Taishan Power Co., Ltd.
+80 Generation and sale of
+electricity
+Zhejiang Guohua Zheneng
+PRC
+Limited company
+RMB3,255 million
+Limited company
+Particulars of
+registered capital
+100
+Limited company
+Transportation costs
+Interest income
+Interest expenses (including amount capitalised)
+2016
+RMB million
+RMB million
+69,822
+63,347
+67,472
+69,389
+7,618
+10,427
+691
+5,463
+448
+5,696
+Balances with other government-related entities, including state-controlled banks in the PRC
+Accounts and bills receivable
+Power revenue
+Prepaid expenses and other current assets
+Coal revenue
+Transactions with other government-related entities, including state-controlled banks in the PRC
+40
+40
+4114
+414
+647
+2,212
+2,381
+Individually immaterial subsidiaries
+with non-controlling interests
+48,089
+45,699
+2016 Annual Report 235
+Notes to the Consolidated Financial Statements (Continued)
+41. RELATED PARTY TRANSACTIONS (Continued)
+For the year ended 31 December 2016
+41.4 Transactions with other government-related entities in the PRC (Continued)
+Having considered the potential for transactions to be impacted by related party relationships,
+the Group's buying, pricing strategy and approval processes, and what information would
+be necessary for an understanding of the potential effect of the relationship on the financial
+statements, the Directors are of the opinion that the following transactions with other
+government-related entities require disclosure:
+2015
+Cash and time deposits at banks
+Restricted bank deposits
+Borrowings
+For the year ended 31 December 2016
+43. SUBSIDIARIES
+Details of the Company's Material Subsidiaries
+The Company's subsidiaries are unlisted. Details of the Company's material subsidiaries at the end of
+the reporting period are set out below:
+Place of
+incorporation
+Proportion of ownership interest
+Name of the subsidiary
+and operation Type of legal entity
+Particulars of
+registered capital
+and voting rights held by
+the Group
+Principal activities
+31 December
+31 December
+2016
+2015
+Shenhua Sales Group Co., Ltd. PRC
+Notes to the Consolidated Financial Statements (Continued)
+China Shenhua Energy Company Limited
+236
+On 17 March 2017, the Board of Directors proposed: (i) a final dividend of RMB0.46 per ordinary share
+totaling RMB9,149 million; (ii) a special dividend of RMB2.51 per ordinary share totaling RMB49,923
+million to the equity holders of the Company. Further details are disclosed in Note 13.
+Accrued expenses and other payables
+42. EVENTS AFTER THE REPORTING PERIOD
+31 December
+2016
+RMB million
+31 December
+2015
+RMB million
+12,354
+16,606
+RMB1,888 million
+1,289
+44,602
+43,233
+6,141
+4,611
+64,578
+59,567
+3,669
+2,725
+1,396
+the Group
+Shaanxi Guohua Jinjie Energy PRC
+Co., Ltd.
+Limited company
+Shenhua Zhonghai Shipping
+70 Provision of harbour and port
+services
+Administration Co., Ltd.
+70
+RMB6,790 million
+Limited company
+Shenhua Huanghua Harbour PRC
+services
+Ltd.
+85 Provision of transportation
+53 Provision of transportation
+services
+85
+85
+RMB4,710 million
+Shenhua Zhunchi Railway Co., PRC
+Development Co., Ltd.
+53
+PRC
+53
+Limited company
+51
+100 Provision of transportation
+10
+100
+RMB4,701 million
+Limited company
+PRC
+Shenhua Railway
+Chemical Co., Ltd.
+100 Coal chemical
+10
+100
+RMB5,132 million
+Limited company
+PRC
+Shenhua Baotou Coal
+51 Provision of Transportation
+services
+Co., Ltd.
+RMB5,180 million
+RMB5,880 million
+Limited company
+PRC
+50
+41 Generation and sale of
+electricity
+41
+RMB1,561 million
+Limited company
+PRC
+Dingzhou Power (note (ii))
+51 Generation and sale of
+electricity
+51
+RMB1,834 million
+Limited company
+PRC
+Hebei Guohua Cangdong
+Power Co., Ltd.
+%
+2015
+Principal activities
+2016
+50
+50 Generation and sale of
+electricity
+Guohua Taicang Power
+PRC
+Shuohuang Railway
+100 Generation and sale of
+electricity
+Co., Ltd.
+100
+RMB2,098 million
+Limited company
+PRC
+Shenhua Fujian Energy
+Transportation Co., Ltd.
+51 Generation and sale of
+electricity; trading of coal
+51
+RMB2,152 million
+Limited company
+PRC
+Shenhua Sichuan Energy
+Co., Ltd. (note (iii)))
+RMB2,000 million
+Limited company
+Co., Ltd.
+Shenhua Finance
+Limited company
+Limited company
+RMB1,000 million
+Limited company
+(Tianjin) Finance Lease Co., Ltd. PRC
+100 Provision of transportation
+services
+100
+RMB10,000 million
+31 December
+PRC
+Shenhua Baoshen Railway
+Group Co., Ltd.
+70 Coal mining and development;
+generation and sale of
+electricity
+70
+USD63 million
+Limited company
+Indonesia
+PT GH EMM Indonesia
+generation and sale of
+electricity
+100 Coal mining and development;
+51
+51 Provision of financial lease
+services
+Shenhua Zhunneng Resources PRC
+51
+RMB755 million
+Limited company
+PRC
+Zhoushan Power
+100 Generation and sale of
+electricity
+100
+RMB1,790 million
+generation and sale of
+electricity
+Limited company
+Xuzhou Power
+Co., Ltd.
+100 Comprehensive utilisation of
+inferior coal resources
+Development & Utilisation
+10
+100
+RMB1,200 million
+Limited company
+PRC
+100 Coal mining and development;
+PRC
+100
+43. SUBSIDIARIES (Continued)
+For the year ended 31 December 2016
+Notes to the Consolidated Financial Statements (Continued)
+China Shenhua Energy Company Limited
+238
+Co., Ltd.
+Development & Investment
+100 Investment holding
+100
+HKD5,252 million
+Limited company
+Hong Kong
+China Shenhua Overseas
+100 Provision of financial services
+100
+RMB5,000 million
+10
+Details of the Company's Material Subsidiaries (Continued)
+Place of
+incorporation
+100
+and operation Type of legal entity
+Name of the subsidiary
+Limited company
+Australia
+Shenhua Watermark Coal
+Pty Ltd.
+100
+AUD400 million
+Limited company
+Australia
+AUD350 million
+%
+2015
+2016
+31 December
+31 December
+Principal activities
+Proportion of ownership interest
+and voting rights held by
+the Group
+Shenhua Australia Holding
+Pty Ltd.
+Particulars of
+registered capital
+122,567
+119,646
+121,036
+133,463
+Total assets
+484,326
+525,326
+Total current liabilities
+559,791
+576,729
+109,377
+134,001
+110,778
+114,753
+112,185
+550,872
+101,487
+2016
+443,266
+China Shenhua Energy Company Limited
+Total non-current liabilities
+Section XVI Summary of Major Financial Information for the Recent Five Years (Continued)
+CONSOLIDATED STATEMENT OF FINANCIAL POSITION
+As at 31 December
+2012
+2013
+Total current assets
+RMB Million RMB Million
+2015
+RMB Million RMB Million
+Total non-current assets
+369,573
+402,759
+431,226
+438,755
+2014
+RMB Million
+58,679
+280,113
+74,524
+Non-controlling interests
+50,257
+58,097
+64,872
+65,853
+67,994
+Total equity
+316,270
+338,210
+365,570
+363,921
+384,969
+中国神华能源股份有限公司
+CHINA SHENHUA ENERGY COMPANY LIMITED
+250
+316,975
+298,068
+300,698
+266,013
+94,383
+79,575
+Total liabilities
+168,056
+187,116
+185,302
+195,870
+53,115
+191,760
+316,270
+338,210
+365,570
+363,921
+384,969
+Equity attributable to equity
+holders of the Company
+Net assets
+1.252
+2016 Annual Report 245
+1.976
+Zhang Yuzhuo, Chairman
+The original copies of all documents and announcements of the Company publicly
+disclosed in the newspapers designated by the CSRC during the reporting period
+The annual report for the year 2016 published on the Shanghai Stock Exchange and
+the Hong Kong Stock Exchange
+The original copies of all documents sealed by the accounting firm and signed and
+sealed by the certified public accountant
+The financial statements signed and sealed by the chairman, the Chief Financial
+Officer and the General Manager of the Financial Department
+The annual report for the year 2016 signed by the chairman
+Documents Available
+for Inspection
+Section XIV Documents Available for Inspection
+China Shenhua Energy Company Limited
+246
+At 31 December 2016, the aggregate amount of retained earnings determined in accordance with
+the China Accounting Standards available for distribution to equity holders of the Company was
+RMB153,846 million (2015: RMB104,992 million).
+According to the Company's Articles of Association, the amount of retained earnings available for
+distribution to equity holders of the Company is the lower of the amount determined in accordance
+with the China Accounting Standards and the amount determined in accordance with IFRSS after the
+appropriation to reserves as detailed in Note (iii) to the consolidated statement of changes in equity.
+398
+Approved by the Board for submission on: 17 March 2017
+(2,699)
+158,756
+1,681
+30
+18,288
+85,001
+(398)
+2,699
+(6,365)
+(6,365)
+56,997
+56,967
+- 30
+263,756
+2016 Annual Report 247
+Section XV Signing Page for Opinions
+Pursuant to Article 68 of the Securities Law of the People's Republic of China and Article 14 of the Standards
+Concerning the Contents and Formats of Information Disclosure by Companies Offering Securities to the
+Public No. 2 – The Contents and Formats of Annual Report (Revised edition 2016) of the CSRC, having fully
+understood and reviewed the 2016 Annual Report of the Company, all directors, supervisors and senior
+management are of the opinion that information disclosed in the 2016 Annual Report of the Company is
+true, accurate and complete. We hereby guarantee that the information stated in this report does not contain
+any false representation, misleading statement or material omission, and jointly and severally accept full
+responsibility for the truthfulness, accuracy and completeness of the content thereof.
+(Li Dong)
+(Ling Wen)
+Senior Management
+Section XV Signing Page for Opinions (Continued)
+China Shenhua Energy Company Limited
+248
+(Shen Lin)
+申林
+(Zhou Dayu)
+周大亨
+(Zhai Richeng)
+翟
+Supervisors
+(Zhao Jibin)
+(Chen Hongsheng)
+(Guo Peizhang)
+部の
+(Fan Hsu Lai Tai)
+(Li Dong)
+(Gong Huazhang)
+觉徐丽泰
+(Han Jianguo)
+(Ling Wen)
+韩建国
+(Zhang Yuzhuo)
+張玉年
+Directors
+30
+(Wang Jinli)
+56,967
+50
+year
+Total comprehensive income for the
+Other comprehensive income
+Profit for the year
+17,395
+17,395
+210,447
+109,219
+1,681
+14,546
+85,001
+At 1 January 2015
+Dividend declared (Note 13)
+RMB million
+Retained
+earnings
+Capital and
+other reserves
+income
+RMB million RMB million
+RMB million
+reserves
+Statutory comprehensive
+Share
+premium
+Other
+44. INFORMATION ABOUT THE FINANCIAL POSITION OF THE COMPANY (Continued)
+For the year ended 31 December 2016
+Notes to the Consolidated Financial Statements (Continued)
+0.887
+Total
+Appropriation of maintenance and
+production funds
+Utilisation of maintenance and
+30
+----
+213,124
+110,455
+1,681
+15,987
+85,001
+2,840
+(2,840)
+(4,281)
+4,281
+(14,718)
+--- (14,718)
+17,395
+17,395
+At 31 December 2016
+production funds
+Utilisation of maintenance and
+production funds
+Appropriation of maintenance and
+Dividend declared (Note 13)
+for the year
+Total comprehensive income
+Other comprehensive income
+Profit for the year
+At 31 December 2015
+production funds
+56,967
+张飞
+RMB million RMB million
+(Wang Shumin)
+61,847
+69,844
+69,598
+Profit before income tax
+Income tax
+237
+428
+410
+588
+477
+Share of results of associates
+(5,748)
+(5,123)
+34,520
+(4,459)
+(3,568)
+Finance costs
+723
+608
+803
+758
+776
+Interest income
+(1,511)
+(626)
+(419)
+(382)
+(3,321)
+41,253
+(11,116)
+(13,912)
+2.298
+IMHE
+2.527
+- Basic
+Earnings per share (RMB)
+7,060
+7,310
+9,762
+8,218
+Non-controlling interests
+24,910
+17,649
+39,301
+45,706
+50,264
+Company
+Equity holders of the
+Profit for the year attributable to:
+31,970
+24,959
+49,063
+55,932
+58,482
+Profit for the year
+(9,283)
+(9,561)
+(12,784)
+(494)
+Other expenses
+10,226
+1,659
+(206,359)
+(178,407)
+177,069
+253,081
+289,230
+259,385
+Gross profit
+Cost of sales
+Revenue
+RMB Million RMB Million
+2016
+2015
+2014
+RMB Million
+For the year ended 31 December
+2013
+RMB Million
+RMB Million
+2012
+CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
+OTHER COMPREHENSIVE INCOME
+The finance information below is from the financial statement prepared by the Group in accordance with
+International Financial Reporting Standards.
+Section XVI Summary of Major Financial Information for the Recent Five Years
+2016 Annual Report 249
+China Shenhua Energy Company Limited
+17 March 2017
+(Huang Qing)
+(Zhang Jiming)
+明
+(Wang Yongcheng)
+1,379
+(Zhang Zifei)
+(178,109)
+(123,341)
+(Zhang Kehui)
+80,978
+183,127
+(124,843)
+1,242
+Other income
+534
+(5,856)
+939
+(770)
+(888)
+(474)
+Other gains and losses
+(8,423)
+(9,714)
+(8,835)
+(9,285)
+(3,078)
+(8,458)
+74,972
+58,284
+Selling expenses
+(881)
+(1,031)
+53,728
+82,871
+(584)
+(610)
+General and administrative
+expenses
+(794)
+Tax and surcharges
+Total cost of sales
+Table 14 Seaborne Coal at Ports
+ༀ || ཧྲྰི ཎྜ ཨྰཿ ཚོ ཚོ ཛི ཀཽ ཀླི ཛྫི ཝི ཋིཊྛི
+15.9
+1.867
+14.9
+14.219
+Other operating costs
+דוית
+(1.6)
+210
+54,417
+52,257
+482
+300
+364
+700
+700
+660
+660
+Sub-total cost of prime business
+35,089
+158
+Change
+218
+%
+RMB million
+1,060
+RMB million
+%
+RMB million
+% RMB million
+% RMB million RMB milion
+RMB million RMB milion
+2015 Change
+2016
+2015 Change
+2015 Change
+2015
+2016
+Chemical
+Port
+Railway
+Coal
+ༀ རྒྱུུ ཀྲི ཇི ཀཽ བོ ü 3 ཊཿ ཕྲུ་ ཋ བྷ
+18.9
+14,595
+72.9
+214.6
+Cost of external transportation business
+2,000
+External transportation charges
+1320
+осо
+.......
+1,260
+220
+2,400
+(540)
+3,240
+3,760
+2,000
+1.320
+630
+1.260
+1,260
+Coal Chemical Segments
+2,346
+4,600
+4.600
+464
+910
+Table 11 Cost of Sales of Transportation and
+14,331
+2,640
+726
+2,000
+Cost of internal transportation business
+3,760
+Depreda
+Depreciation and amortization
+Repairs and maintenance
+Personnel expenses
+1,200
+2,000
+612
+1,200
+,ཊྛོ,,Ë,
+300
+660
+Others
+1,060
+1,200
+604
+1,260
+112
+220
+1,680
+2,400
+1,324
+2,700
+Materials, fuel and power
+1,880
+2,000
+12352
+4.330
+1.810
+Shenhua Sichuan Energy
+Sales
+-
+1,952
+03
+0.3
+South China Power Grid Guangdong
+Zhuhai Wind Energy
+Percentage
+to total
+million sales volume
+Price RMB/
+volume
+to total
+Sales
+Sales Percentage
+volume
+million sales volume
+Table 15 Railway Cargo Transportation Turnover
+Other power plants
+Change
+2015
+2016
+(83
+4,720
+(37.5)
+264
+Sichuan Provincial Local
+165
+Sichuan
+65
+4,400
+I. Domestic sales
+211
+4,218
+39.1
+40.1
+North China Power Grid Beijing
+Beijing Gas-fired Power
+%
+%
+tonne
+%
+tonnes
+tonne
+%
+tonnes
+Power Grid
+(hydropower)
+Price
+volume
+Price RMB/
+-
+5.331
+6.7
+16.0
+200.0
+(3.0
+1
+Shipping
+14.2
+44.2
+73.1
+21.0
+2,804
+22
+270
+9.8
+17.4
+2.433
+(13.3)
+2,269
+1,968
+1
+20.8
+(29.9)
+308
+22.9
+258
+20.2
+2034
+1147
+19.3
+18.6
+1,760
+80.0
+23.7
+(0.9)
+538
+533
+(73)
+3.918
+3.632
+(3.1
+1.759
+(48.0
+612
+(54.2
+260
+21
+233
+424
+168
+ཀཽ ཀྐོཎྞ – ཨ ཀྑཛིརྦཎྷནྟ་ ཀ ཏི
+24.5
+2,026
+143.8
+16
+20.0
+60
+1.950
+4.400
+%
+660
+Cost
+Total installed Equity installed
+(decrease)
+སྒྱུ རྒྱུ 』མོཟེ ཨཨྰཿཨྰཿཔུཀྐི སི ཧྲི࿄ཝཿཕྱམཝཿནཱཀྐམུནཱནཱསུབཨཽ་བོ་བྷཝ་ཟབྷི
+301
+315
+4,428
+2,144.2
+2,297.3
+Total for coal-fired power plants/weighted average
+Table 12 Coal Sales Price
+476
+369
+5,470
+143
+16.4
+Indonesia
+PLN
+EMM Indonesia
+328
+320
+3,095
+19
+Volume Unit cost Cost
+2.1
+Volume Unit cost Change in
+capacity as at
+13.0
+81.2 2126
+26,286 109.4 240.3 17,264
+Cost of coal purchased
+2016
+2016
+960
+MW
+MW
+2016
+tonne
+tonnes
+million tonnes tonne milion
+31 December
+31 December
+output
+Power
+2016
+RMBA unit cost
+million
+million RMB/ RMB
+RMB
+capacity as at
+in installed
+MW
+Guangxi
+Liuzhou Power
+5,034
+24.1
+25.6
+North China Power Grid Shandong
+Shouguang Power
+05
+-
+Others
+3.5
+31.2
+84
+32.3
+Chemical (including
+307
+308
+3,701
+41.8
+44.4
+Central China Power Grid Henan
+Mengin Power
+1.0
+0.8
+Coal chemical business
+290
+Guangxi Power Grid
+294
+Panshan Power
+205
+359
+5,184
+30.6
+34.2
+Ningxia
+Northwest Power Grid
+Ningdong Power
+293.8
+169.5
+350
+Total
+(310)
+84.1
+15.0
+58.0
+Others
+331
+314
+4.994
+49.6
+52.9
+North China Power Grid Tianjin
+coal slurry)
+660
+MW
+31,297 285.5 109.6 35,654 289.3 1232
+11.3 1,941
+2.205.7
+2.487
+Others
+2,520
+2,520
+38.488
+42.221
+Cost of coal transportation
+amortization
+(14.7)
+505
+43.1 14,627 289.3
+1.7
+-
+0.6
+3.7
+3.7
+%
+RMB/mWh
+kWh
+unit cost
+100 million
+2.104.5
+Unit cost Change in
+ཟླ་ ཨོ་ཨཽ་ཕི་ཡ
+1,285
+660
+4,000
+5.000
+5.000
+823
+696
+49,788
+53,939
+Total cost of sales
+483
+984
+Tax and surcharges
+Other operating costs
+11,645
+4.442
+107,493
+109,404
+Total cost of sales
+1,021
+2,520
+2,520
+5.287
+Tax and surcharges
+501
+1,300
+1,300
+4.313
+Other operating costs
+228
+Production cost of self-produced
+2015
+Power
+output
+41.2 8.517 2,104.5
+8,187
+8,187
+2.474 285.5
+Repairs and maintenance
+960
+1,200
+1,200
+5.030 285.5
+Personnel expenses
+639
+1,320
+1,320
+(11.2)
+18.3 5.949 289.3 20.6
+285.5
+5.220
+Materials, fuel and power
+52,472 2,205.7
+Cost of power output
+dispatch
+554
+960
+coal
+(11.0)
+7.534
+156.1
+Depreciation and amortization
+Others
+124 2.609 2,104.5
+16.9 3,526 2.104.5
+31,676 2,104.5
+237.9 48.269 2,104.5
+kWh RMB/mWh RMB million
+million
+RMB 100 million
+Cost dispatch Unit cost Cost dispatch
+9.095 2,205.7
+Depreciation and
+21.9 7.282 289.3 25.2 (13.1)
+2.732 2.205.7
+Repairs and maintenance
+3.720 2.205.7
+Personnel expenses
+(0.6)
+(5.4)
+9.2
+8.7 2.674 289.3
+17.6 5,122 289.3 17.7
+2,205.7
+Materials, fuel and power 34,438
+****
+12.313 285.5
+6.260 285.5
+69,850
+Sanhe Power
+60
+(10,950)
+(10,135)
+(61,284)
+22,303
+22,489
+124,661
+125,152
+(65,396)
+RMB milion
+RMB million
+RMB million
+RMB million
+31 December 2016
+31 December 2015
+31 December 2016
+31 December 2015
+31 December 2016
+As at
+རམྦྷམྦྷཝཝཱ
+As at
+As at
+As at
+1,838
+2.237
+974
+864
+966
+1,271
+RMB million
+RMB million
+2015
+2016
+ནྡྲ རྐནྡྷམྦྷ
+RMB million
+RMB million
+RMB million
+RMB milion
+RMB million
+31 December 2016
+31 December 2015
+As at
+As at
+As at
+649
+33.530
+1,461
+1,732
+3,452
+4.465
+23,812
+29.356
+5.547
+4.831
+541
+380
+317
+575
+3,420
+4.174
+RMB million
+RMB million
+27,232
+5.040
+3,769
+2,112
+254
+133
+266
+1,350
+2.302
+10,070
+15.000
+(4,720)
+(67)
+(4,330)
+(1,707)
+(2,026)
+(2,523)
+(14,595)
+(17,350)
+5,550
+4.831
+2,002
+(1,760)
+(196)
+1,261
+808
+Table 8 Cost of Sales of Power Segment
+Table 7 Cost of Sales of Coal Segment
+(195,870
+(191,760)
+316,985
+278,929
+(185,478)
+(137,179)
+(5.593)
+(4,686)
+(2,363)
+(2,063)
+559,791
+576,729
+(433,391)
+(374,443)
+348,720
+2016
+2015
+Change %
+Commercial coal production
+Coal sales
+32
+280.9
+289.8
+%
+million tonnes
+million tonnes
+Change
+2015
+377,853
+2016
+66
+370.5
+394.9
+million tonnes
+32
+280.9
+289.8
+million tonnes
+Total production
+RMB million
+12,564
+8,189
+(65.830)
+(57,833)
+(65,830)
+177,069
+183,127
+RMB million
+RMB million
+RMB million
+2015
+2016
+2015
+Total
+Eliminations
+ཨཽཎྞཱ･ཎྜཎྜ༔ ར
+31 December 2015 31 December 2016 31 December 2015 31 December 2016 31 December 2015
+As at
+As at
+(57,833)
+183,127
+177,069
+64.477
+8,038
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+31 December 2015
+31 December 2016
+11,621
+As at
+As at
+37,657
+46,444
+596
+(1,345)
+(123,341)
+(124,843)
+57,237
+As at
+RMB million
+RMB million
+RMB million
+RMB milion
+Profit for the year attributable to
+RMB million
+237
+69,613
+27,956
+29,074
+Inter-segment revenue
+3.1
+3.949
+4.07
+100 million
+Coal sales volume
+13.0
+62.597
+70,762
+RMB milion
+24,910
+17,649
+41.1
+tornes
+1,831.27
+2.036
+RMB100 million
+Revenue
+(53,939)
+(107.493)
+(109,404)
+Segment cost of sales
+EBITDA
+(2.7)
+214.7
+billion kWh
+Power output dispatch
+equity holders of the Company
+69,850
+121,458
+131,357
+Sub-total of segment revenue
+220.57
+112
+93,502
+Revenue from external customers
+Change %
+2016
+2017
+Unit
+Item
+Change %
+2015
+2016
+Coal
+Actual amount for
+Target for
+Table 3 Results of Each Segment
+Table 2 Financial Indicators
+Business targets for 2017
+Table 1
+Overview of China Shenhua's Operating Results for the year of 2016
+h
+2016
+2015
+2016
+Power
+28.1
+24,959
+31,970
+RMB million
+Profit for the year
+RMB million
+RMB million
+RMB million
+102,283
+28
+2.98
+100 million
+Commercial coal production
+3.4
+177,069
+183,127
+RMB million
+Revenue
+2.898
+Total power
+Basic eamings per share
+1.252
+(131,373)
+(134,519)
+207,879
+RMB million
+(115,814)
+(116,711)
+Segment total liabilities
+246,972
+198,140
+Segment total assets
+Finance Company
+11.0%
+1% to 2%
+RMB million
+RMB million
+excluding Shenhua
+decrease of
+པཉྩ ནཱམབྷཎྜ དྷརམྦྷམྦྷདྷབྷ
+31 December 2015
+RMB million
+Table 4 Operation Data
+RMB million
+RMB million
+RMB million
+2015
+2016
+2015
+2016
+2015
+decrease of
+2016
+2016
+Unallocated items
+Coal chemical
+Shipping
+Port
+Railway
+Table 6 Power Business
+Table 5 Commercial Coal Production Volume
+2015
+RMB/share
+self-produced coal
+31 December 2015
+11.689
+6.433
+17.017
+operations
+47.8
+55,406
+81,883
+RMB million
+Net cash generated from
+144
+1,248.43
+1428
+RMB100 million
+Cost of sales
+Segment profit loss) from
+411
+0.887
+Selling, general and administrative
+RMB100 million
+147
+140.58
+31 December 2016
+operating activities
+1
+year-on-year
+year-on-year
+1
+Change in unit production costs of
+As at
+31 December 2016
+As at
+99.7
+46,341
+92,564
+RMB million
+Net cash generated from
+expenses and net finance costs
+operating activities
+46
+As at
+Including: Self-produced coal
+million tonnes
+285.5
+58.3
+17.6
+Coal segment
+5.7
+315
+298
+5,241
+63.2
+66.0
+Jiangsu
+East China Power Grid
+Taicang Power
+365.5
+100.0
+386.2
+Domestic sales
+100 million
+Chenjiagang Power
+East China Power Grid
+Jiangsu
+68.8
+313
+289
+5,193
+98.6
+103.9
+Jiangsu
+East China Power Grid
+Xuzhou Power
+100 million
+(12.0)
+48.1
+185.6
+Northern China
+By region
+310
+288
+5,212
+65.6
+210.8
+Eastern China
+100 million
+301
+4518
+187.8
+198.8
+East China Power Grid Zhejiang
+Zheneng Power
+Completion in 2016
+Plan for 2017
+Change
+2015
+Proportion of
+domestic sales
+2016
+340
+21-3
+380
+328
+4.642
+27.7
+303
+342
+Total amount
+Including: First batch
+4.669
+204.5
+214.8
+Anhui
+East China Power Grid
+Shenwan Energy
+%
+million tonnes
+301
+%
+347
+342
+4.792
+40.8
+43.6
+Zhejiang
+East China Power Grid
+Zhoushan Power
+million tonnes
+30.0
+126.2
+95.8
+382
+4,094
+79
+9.0
+Shaanxi
+Northwest Power Grid
+244
+325
+6,144
+135.3
+147.5
+Shaanxi
+North China Power Grid
+304
+308
+4,589
+99.8
+296
+Shenhua Sichuan Energy
+Sichuan Power Grid
+Sichuan
+1.7
+6.7
+Metallurgy
+(mal-fired power)
+0.1
+0.4
+Shipping
+18.4
+105.1
+2442
+289.2
+Thermal coal
+By usage
+375
+332
+1,901
+21.6
+24.0
+749
+327
+Fujian
+Shenmu Power
+19.8
+38.9
+120
+46.6
+Central China and
+300
+311
+4,365
+153.7
+164.1
+Liaoning
+Northeast Power Grid
+Suizhang Power
+178.3
+109.5
+Power segment
+31.7
+Transportation segment
+41.6
+55.7
+Southern China
+Jinje Energy
+Fujian Energy
+174
+3.0
+Port
+222.2
+09
+0.8
+East China Power Grid
+2.9
+30.4
+19.1
+64
+24.9
+38.2
+38.2
+Including: Railway
+Northeast China
+Others
+11.7
+30.6
+Huizhou Thermal
+(9.8)
+312.9
+282.1
+thousand tonnes
+Polypropylene sales
+Guchua Zhungeler
+(83)
+1.2
+1.1
+Baotou Mines
+(8.3)
+3192
+292.6
+thousand tonnes
+Polyethylene sales
+Zhunge'er Power
+(0.4)
+Others
+18
+19
+(5.3)
+3,784
+32.1
+ཡསཔཐཱ
+297.1
+Northwest/North China/ Inner Mongolia
+Shendong Power
+By regions
+222
+25.1
+200.1
+billion tonne km
+Transportation turnover of
+46.4
+48.4
+36.3
+Inner Mongolia
+Inner Mongolia
+Inner Mongolia
+North China Power Grid
+North China Power Grid
+Northeast Power Grid
+Guohua Hulunbeer Power
+244.6
+3.669
+25.0
+322
+Regional grid
+Power plants
+34
+177.0
+183.0
+Shendong Mines
+34.7
+81.2
+109.4
+million tonnes
+Purchased coal
+utilisation
+output
+Gross power
+By mines
+(1.3)
+289.3
+Location
+generation
+dispatch
+Gross power generation
+12.1
+16.0
+Shengli Mines
+4.8
+210.45
+220.57
+billion kWh
+Total power output dispatch
+Baorixile Mines
+hours
+(1.1)
+63.6
+62.9
+Zhunge'er Mines
+45
+225.79
+236.04
+billion kWh
+100 million kWh 100 million kWh
+South China Power Grid Guangdong
+41.5
+273.8
+63.3
+North China Power Grid Hebei
+386.2
+(5.3)
+1.9
+1.8
+Overseas
+(1.7)
+64.1
+63.0
+billion tonnenm
+Shipment turnover
+297
+304
+5,515
+132.4
+139.0
+58.9
+4,870
+296
+304
+375
+313
+3,550
+165.9
+177.5
+South China Power Grid Guangdong
+Taishan Power
+Capital Expenditure Plan for 2017
+North China Power Grid Hebei
+Table 10
+Table 9
+301
+317
+5,457
+127.2
+137.5
+North China Power Grid Hebei
+Dingzhou Power
+Domestic Coal Sales Volume
+3,864
+Cangdong Power
+3.7
+self-owned railway
+2015
+2016
+Increase/
+2015
+31 December capacity for
+capacity as at
+Total installed
+RMB/mWh
+hours dispatch Power tariff
+output
+Average rate for power
+consumption
+Standard coal
+ཙྪི』,Rཋ
+******!!!
+3.629
+Inner Mongolia
+191.1
+183.2
+43
+42
+Shanxi
+(0.8)
+79.8
+79.2
+million tonnes
+Shipping volume
+Power Grid
+13.5
+0.7
+92.7
+Shaanxi
+11.1
+203.8
+226.4
+million tonnes
+Seabome coal
+Shaanxi Provincial Local
+92.1
+97.8
+Section V Directors' Report
+523
+31 December 2016
+31 December 2015
+Change
+31 December 2016
+31 December 2015
+Change
+31 December 2016
+31 December 2015
+Change
+Table 16 Shipping Volume
+Tahan Railway
+-
+100 million tonnes
+100 million tonnes
+%
+100 million tonnes
+100 million tonnes
+218
+1.0
+3.8
+276
+1.4
+5.4
+Mines
+35.6)
+26.6
+State-owned railways
+%
+100 million tonnes
+100 million tonnes
+%
+41.3
+(8.1)
+175.0
+443
+73
+(5.8)
+25.7
+24.2
+30.0
+118.7
+78
+154.3
+45.6
+49.2
+222
+200.1
+244.6
+%
+79
+42.1
+(6.4)
+05
+0.3
+1.2
+0.8
+3.3
+III. Overseas coal sales
+II. Export sales
+0.9
+0.5
+14
+75
+200.0
+0.4
+12
+80.0
+4357
+26.6
+2016
+2015
+Planned annual
+12.4
+19.3
+21.7
+(1.8)
+32.8
+394.9
+32.2
+40.7
+40.1
+Zhunge'er Mines
+2.5
+89.5
+358
+(1.5)
+05
+100.0
+100.0
+Self-owned railways under
+Shenhua Zhonghai Shipping Company
+(65.8)
+7.3
+2.5
+(0.7)
+370.5
+14.2
+20.7
+20.6
+Shengli Mines
+8.2
+6.6
+293
+14.1
+billion tonnes km
+19
+0.9
+164.5
+Shendong Mines
+15.5
+(5.3)
+84
+0.5
+166.6
+1.9
+0.5
+1.8
+(II)
+EMM Indonesia
+(1)
+Change
+97
+367
+(1.3)
+97.6
+3.6
+Total sales volume/average price
+Re-export trade
+123
+241.4
+271.2
+95.4
+Total railway tumover
+million tonnes
+million tonnes
+23.2
+41.9
+51.6
+(2.3)
+%
+billion tonnes km
+Change
+2015
+Huanghua Port
+950
+950
+Self-owned ports
+48
+125
+780
+125
+16
+ཁྐྲཎྜ
+780
+950
+༄བ་ བྷཊྛ
+608
+12
+509
+624
+(1)
+229
+38.3
+151.3
+1. Direct arrival
+Shenhua Zhuhai Coal Dock
+8.2
+Shenhua Tianjin Coal Dock
+5.7
+95.6
+354.1
+316
+94.8
+374.4
+Self-produced coal and purchased coal
+292
+151.5
+223
+བྷྱཿཀྑུ ཨྰཿཀྑུ
+神池南
+Shenchi South
+神木北站
+Shenmu North C
+陝西省
+SHAANXI
+Shenchi
+山西省
+黃驊
+定州西
+Huanghua
+Dingzhou West
+肅寧北
+Suning North
+SHANXI
+596
+神池
+Shendong
+231
+2,055
+15.6
+16.0
+East China Power Grid Zhejiang
+Yuyao Power
+B6
+8.2
+293
+98.7
+365.5
+317
+神東站
+Shuozhou West
+5.7
+transportation Commencement
+40.9
+(0.1)
+42.1
+111.6
+158.6
+Self-owned railways
+27.0
+158.5
+Shenshuo Railway
+201.3
+million tonnes
+million tonnes
+Change
+2015
+2016
+As at
+%
+As at
+39.5
+(2.0)
+2016
+Zhunchi Railway
+Bazhun Railway
+11.1
+203.8
+226.4
+40.3
+Ganquan Railway
+(44.6)
+45.3
+Dazhun Railway
+(51.5)
+6.6
+Shuchuang-Huangwan Railway
+Baoshen Railway
+221
+As at
+As at
+(II) Sales of domestic trading coal
+9.0
+10.1
+345
+54.7
+202.6
+339
+376
+223.1
+2. Seaborne
+བྷིཝོཔྤཡོ པི
+Third-party ports
+Table 13 Coal Resources Reserve
+3.6
+56.5
+As at
+11.2
+318
+As at
+413
+0.1
+0.2
+415
+0.1
+3.0
+0.2
+Total seaborne coal
+Marketable reserve (under JORC standard)
+Recoverable reserve (under PRC standard)
+Coal resources (under PRC standard)
+6.6
+3.6
+(II) Sales of imported coal
+Estimated
+Baorixile Mines
+14.4
+B4.盤山電力
+Suzhong Power
+Dingzhou Power
+B10. 綏中電力
+B3. 定洲電力
+Beijing Gas Power
+B11. 浙能電力
+Sanhe Power
+B2. 三河電力
+Guohua Hulunbeler Power
+Cangdong Power
+Xinjie Taigemiao Exploration Area (preliminary work in progress)
+A7. 新街台格廟勘查區(前期工作階段)
+Watermark Coal Project in Australia (plans under review)
+B9. 北京燃氣
+A6.澳大利亞沃特馬克煤礦項目(規劃審查中)
+Panshan Power
+B5. 准能電力
+B6.神來電力
+B20. 徐州電力
+Xuzhou Power
+Taicang Power
+B19.陳家港電力
+Chenjiagang Power
+B18. 太倉電力
+Mengjin Power
+Taishan Power
+B16. 惠州熱電
+Huizhou Thermal
+B17. 孟津電力
+Shenmu Power
+B12. 舟山電力
+Zhoushan Power
+B14.神木電力
+B13. 錦界能源
+Zheneng Power
+Shendong Power
+Zhunge'er Power
+Guohua Zhunge'er
+B7. 國華准格爾
+Jinjie Energy
+B21. 神皖能源
+A5. 包頭確區
+Baotou Mines
+A4.寶日希勒礦區
+Tarangaole
+塔然高勒
+Diaoyu Islands.
+釣魚島
+Ganqimaodu
+甘其毛都
+福建
+Jilin
+Liaoning
+遼寧
+Zhejiang
+浙江
+Jiangsu
+江蘇
+吉林
+Baorixile Mines
+Fujian
+Taiwan
+Shengli Mines
+A3. 勝利礦區
+Zhunge'er Mines
+A2. 准格爾礦區
+Shendong Mines
+A1. 神東礦區
+台灣:
+B8、國華呼電
+【電廠 POWER
+1 煤礦 COAL MINE
+2017
+主要資產分佈圖 Assets Distribution Map
+CHINA SHENHUA ENERGY COMPANY LIMITED
+中国神华能源股份有限公司
+B1. 滄束電力
+Anhui
+Shenwan Energy
+Ningdong Power
+Note:This map as at 17 March 2017 is for illustrative purpose only.
+於2017年3月17日之分佈圖,僅做示意。
+註
+•
+Waixigou
+外西潮
+北京
+INNER MONGOLIA AUTONOMOUS REGION
+Amo Railway (construction suspended)
+C11. 阿莫鐵路(級建)
+Huangda Railway (under construction)
+Tahan Railway
+C10. 塔韓鐵路
+C9. 黃大鐵路(在建)
+內蒙古自治區
+Zhunchi Railway
+BEIJING
+Dagin Railway
+河北省
+Batuta
+巴圖塔
+Zhunge'er
+天津市
+TIANJIN
+SB
+大秦鐵路
+Dongsheng
+Hanjiacun
+韓家村
+Diandaigou
+地點位满
+包頭
+Baotou
+Datong East
+東馬
+B22.神華四川能源
+Shenhua Sichuan Energy
+B23. 神華福建能源
+Shenhua Fujian Energy
+B24.寧来電力
+B25. 南蘇煤電
+CB.准池鐵路
+Bazhun Railway
+C7.甘泉鐵路
+C4. 大准鐵路
+Huangwan Railway
+C3.黃萬鐵路
+Shuchuang Railway
+Shenshuo Railway
+C2.朔黃鐵路
+C1. 神朔鐵路
+Dazhun Railway
+| 鐵路 RAILWAY
+Shouguang Power
+B29.柳州電力
+Liuzhou Power
+B28. 壽光電力
+Yuyao Power
+B27. 余姚電力
+Zhuhai Wind
+EMM Nansu
+B26、珠海風能
+B15. 台山電力
+Ganquan Railway
+C5. 包神鐵路
+C6.巴准鐵路
+Shenhua Zhonghai Shipping Company
+E1. 神華中海航運
+.航運 SHIPPING
+Baotou Coal Chemical
+F1. 包頭煤化工
+、煤化工 COAL CHEMICAL
+Baoshen Railway
+Luoyuan Wan Project (under preparation)
+Zhuhai Coal Dock
+D3. 珠海煤碼頭
+Coal Dock
+Huanghua Port
+D2.天津煤碼頭
+Tianjin
+D1.黃驊港
+港口 PORT
+D4.羅源灣項目(籌備中)
+秦皇島港
+安徽
+山東
+(7.0)
+236
+1.2
+4.3
+237
+1.0
+0.4
+4.0
+5.5
+0.9
+292
+22.8
+84.6
+308
+Sales to internal coal chemical segment
+21.6
+Total of China Shenhua
+243.1
+210.2km
+Huangda Railway (under construction)
+(32.7)
+27.5
+18.5
+Total of shipping volume
+240.1
+External customers
+81.4
+88.5
+(2.0)
+157.4
+154.3
+(1.2)
+8.7
+40 million tonnes
+85.4
+0.1
+Length
+construction
+16.1
+A7
+60.7
+The Group's internal customers
+capacity
+(1.6)
+12.6
+(1.6)
+124
+12.2
+(1.4)
+14.6
+12.8
+Sales to internal power segment
+year
+305.5
+0.1
+0.4
+0.4
+0.5
+0.5
+Baotou Mines
+Including: Sales to external customers
+completion year
+8.5
+294
+76.0
+281.6
+321
+77.4
+9.2
+Shandong
+2015
+79.2
+貴州
+Henan
+Shaanxi
+河南
+陝西
+Gansu
+Guizhou
+甘肅
+山西
+Inner Mongolia Autonomous Region
+內蒙古自治區
+Tavan Tolgoi
+塔本陶勒盖
+Qiqihar
+Shanxi
+Heilongjiang
+湖北
+河北
+Hongkong
+香港
+澳門
+Hainan
+海南
+Guangxi
+Hubei
+Guangdong
+廣東
+Hunan
+Jiangxi
+湖南
+江西
+Hebei
+廣西
+2018
+● 齊齊哈商
+Amoqi
+Provincial Boundary
+省界線
+圖例 Legend
+Qinghai
+青海
+Xinjiang
+國有或地方鐵路線
+新疆
+西藏
+中國 CHINA
+97km 15.52 million tonnes
+Amo Railway (construction suspended]
+(0.8)
+79.8
+Tibet
+黑龍江
+State-owned or Local Railway
+Self-owned Railway (in operation)
+阿莫旗•
+Hulunbeier Molidawaqi
+莫力達瓦旗
+呼倫貝爾
+Ningxia
+Sichuan
+自有運營鐵路
+四川
+Yunnan
+雲南
+Self-owned mines
+自有礦區
+Self-owned Railway (under construction)
+自有在建鐵路
+(22
+朔州西
+Qinhuangdao Port
+Caofeidian Port
+Million tonnes
+Via Shenhua Zhuhai
+Coal Dock
+Coal Dock
+36.6
+(2.0)
+40.3
+39.5
+Million tonnes
+Via Shenhua Tianjin
+131.6
+42.1
+111.6
+158.6
+Million tonnes
+Via Huanghua Port
+Of which:
+235.8
+(9.8)
+268.1
+tonnes
+(IV) Transportation
+1. Turnover of self-owned railway Billion tonne km
+244.6
+3.2
+200.1
+223.8
+2. Seaborne coal
+Million tonnes
+226.4
+203.8
+11.1
+22.2
+6.6
+(51.5)
+5.8
+Unit: RMB million
+Percentage
+Change in
+amount for
+the year
+over that of
+to cost of
+Percentage
+Breakdown of cost items
+sales for
+Amount for
+the previous
+to cost of
+sales for the
+the previous
+the year
+Amount for
+the year
+312.9
+Section V Directors' Report (Continued)
+Changes in costs
+3. Shipping volume
+Million tonnes
+79.2
+79.8
+(0.8)
+87.7
+2016 Annual Report 33
+4. Shipment turnover
+63.0
+64.1
+(1.7)
+72.2
+nautical miles
+(2)
+Billion tonne
+282.1
+Thousand
+2. Sales of polypropylene
+for 2015
+2014
+(%)
+(I) Coal
+1. Commercial coal production
+Million tonnes
+2015
+289.8
+3.2
+306.6
+2. Coal sales
+Million tonnes
+394.9
+370.5
+280.9
+6.6
+2016
+Major operating indicators
+1.
+Revenue and costs
+(1)
+Factors affecting the revenue
+The revenue of the Group in 2016 recorded a year-on-year increase of 3.4%. The
+main reasons for such change are:
+The enhancement of effort in the sales of purchased coal by making good use
+of self-owned transportation of the Group, resulting in a year-on-year increase
+of 6.6% in the sales of coal to 394.9 million tonnes for year 2016 (2015: 370.5
+million tonnes). Affected by the recovery of the market, the average sales
+price of coal was RMB317 per tonne (2015: RMB293 per tonne), representing
+a year-on-year increase of 8.2%;
+Unit
+32
+Section V Directors' Report (Continued)
+(3
+The power output dispatch of the Group in 2016 was 220.57 billion kWh
+(2015: 210.45 billion kWh), representing a year-on-year increase of 4.8%;
+being affected by the decrease in on-grid tariff, the average power tariff of the
+Group was RMB307/mWh (2015: RMB334/mWh), representing a year-on-year
+decrease of 8.1%;
+A decrease in the materials trading business volume.
+Changes
+for 2016
+compared
+with that
+China Shenhua Energy Company Limited
+year
+451.1
+Self-produced coal
+2. Total power output dispatch
+Billion kWh
+220.57
+210.45
+4.8
+218.42
+234.38
+(III) Coal chemical
+Thousand
+292.6
+319.2
+(8.3)
+265.5
+tonnes
+1. Sales of polyethylene
+Of which:
+4.5
+236.04
+Million tonnes
+285.5
+289.3
+(1.3)
+298.7
+Purchased coal
+225.79
+Million tonnes
+81.2
+34.7
+152.4
+(II) Power generation
+1. Gross power generation
+Billion kWh
+109.4
+previous year
+year
+(%)
+(%)
+(%)
+Coal
+131,357
+109,404
+16.7
+(%)
+8.2
+Increased by 5.2
+percentage points
+Power
+53,939
+22.8
+(4.4)
+1.8
+8.3
+with last year
+year
+Increase/
+decrease in
+Increase/
+decrease in
+revenue as cost of sales
+compared as compared
+Increase/decrease
+in gross profit
+year
+Business
+with last
+with last
+margin as compared
+segment
+Revenue Cost of sales
+margin
+Gross profit
+Major business segments in 2016 (before eliminations)
+Decreased by 9.0
+Railway
+19.2
+5.5
+Coal
+4,831
+4,330
+10.4
+1,707
+(13.0)
+(3.0) Increased by 7.1
+percentage points
+(8.3) Decreased by 4.6
+percentage points
+The percentages of the profit from operations attributable to the coal, power,
+transportation and coal chemical segments of the Group before elimination on
+consolidation changed from 17%, 50%, 31% and 2% in 2015 to 36%, 25%, 38%
+and 1% in 2016 respectively, such significant changes were mainly due to the
+following reasons:
+(3)
+The increases in both sales volume and price of coal due to the tendency
+towards demand and supply balance in the coal market facilitated by the the
+supply-side reform of the coal industry and the decreases in both the unit
+production cost of self-produced coal and volume of material trading business
+led to a significant increase in the profit from operations attributable to the
+coal segment;
+The decrease in on-grid tariff of coal-fired power and the increase in the
+procurement price of thermal coal resulted in a significant decrease in the
+profit from operations attributable to the power segment;
+Benefiting from the growth of coal sales volume and the implementation of
+macroscopic logistics strategy, the growth of coal and non-coal commodities
+transported by self-owned railway and ports led to a significant increase in the
+profit from operations attributable to the transportation segment.
+chemical
+percentage points
+2,112
+percentage points
+33,530
+17,350
+48.3
+23.1
+18.9
+Increased by 1.9
+Shipping
+percentage points
+5,040
+2,523
+49.9
+33.7
+24.5
+Increased by 3.7
+Port
+As Shenhua Finance Company provides financial services including deposits and loans for entities other than the
+Group, the item represents the cash flows of deposits and loans and interest, fees and commission used by this
+business.
+Unit: RMB million
+→
+9.6
+6.6
+Depreciation and amortization
+21,744
+17.4
+21,134
+11,874
+17.1
+Repairs and maintenance
+9,509
+7.6
+8,619
+7.0
+10.3
+2.9
+Transportation charges
+10.1
+Personnel expenses
+(%)
+(%)
+Cost of coal purchased
+26,286
+21.1
+17,264
+12,661
+14.0
+Materials, fuel and power
+16,405
+13.1
+15,816
+12.8
+3.7
+52.3
+The major business model of the Group is the integrated coal industry chain: i.e. coal
+production coal transportation (railway, port and shipping) use of coal (power
+and coal chemical), and there are business intercourses between each segment. The
+revenue and cost of sales of the following business segments are the data before
+eliminations on consolidation of each segment.
+10,172
+12,193
+100.0
+1.2
+The cost of sales of the Group in 2016 represented a year-on-year increase of 1.2%,
+of which:
+(3
+(5)
+The cost of coal purchased represented a year-on-year increase of 52.3%,
+which was mainly attributable to: firstly, the enhancement of effort on sales of
+purchased coal by the Group, the sales of purchased coal represented a year-
+on-year increase of 34.7%; secondly, being affected by the increase in coal
+price for the second half of year, the average purchase costs of purchased
+coal for the year represented a year-on-year increase;
+123,341
+Repairs and maintenance expenses represented a year-on-year increase
+of 10.3%, which was mainly attributable to the increase in repairs and
+maintenance expenses of transportation business as a result of the increase
+of transportation turnover of self-owned railways and seaborne coal volume
+via ports;
+Taxes and surcharges represented a year-on-year increase of 18.7%, which
+I was mainly attributable to the inclusion of tax on vehicles and vessels use,
+real estate tax, land-use tax and stamp duty originally included in general
+and administrative expenses to taxes and surcharges since 2016 based on
+relevant requirements; and the increase in resource tax and relevant surtaxes
+resulting from an increase in coal price;
+Other costs represented a year-on-year decrease of 30.9%, which was mainly
+attributable to the decrease in the materials trading business volume.
+34
+China Shenhua Energy Company Limited
+Section V Directors' Report (Continued)
+(3) Major Business segments
+Transportation charges represented the costs incurred through external
+railway, expressway, shipping transportation, the use of external port and
+so forth. Such charges represented a year-on-year decrease of 16.6% in
+2016, which was mainly attributable to the decrease in transportation volume
+through national railways;
+8.2
+100.0
+Total cost of sales
+9.9
+(16.6)
+Taxes and surcharges
+6,922
+5.6
+5,833
+124,843
+4.7
+Others
+21,144
+16.9
+30,608
+24.9
+(30.9)
+18.7
+Note:
+(20.2)
+(23,157)
+50.00%-Suizhong Power Co., Ltd.
+65.00%- Inner Mongolia Guohua Zhunge'er Power Generation Co., Ltd.
+Guohua Power Branch
+Major
+Branches
+Shengli Energy Branch
+Guohua Huizhou Thermal Power Branch
+55.00% Sanhe Power Co., Ltd.
+51.00%- Shenhua Funeng Power Generation Co., Ltd.
+China Shenhua Energy Company Limited
+Section V Directors' Report
+I.
+BUSINESS REVIEW
+In 2016, the demand and supply in the coal industry had been developed towards balance, while the
+competition increased in the power industry. Under the complex and changing business environment,
+China Shenhua organized operation delicately, intensified its efforts to explore new market opportunities,
+prioritized seaborne coal sales, enhanced marketing efforts in the power segment, improved the
+utilisation rate of transportation assets, and strengthened cost control, which enabled the Company to
+meet its annual business objectives.
+The Group recorded a profit for the year of RMB31,970 million in 2016 (2015: RMB24,959 million)
+representing a year-on-year increase of 28.1%; a profit for the year attributable to equity holders of the
+Company of RMB24,910 million (2015: RMB17,649 million); and basic earnings per share of RMB1.252/
+share (2015: RMB0.887/share), representing a year-on-year increase of 41.1%.
+30
+Actual
+amount for Target for
+2016
+65.00%- Tianjin Guohua Panshan Power Generation Co., Ltd.
+51.00% Shenhua Guohua (Zhoushan) Power Generation Co., Ltd.
+51.00%- Shenhua Guohua Qingyuan Power Generation Co., Ltd.
+75.00% PT. Shenhua Guohua Lion Power Indonesia
+Shenhua Fujian Energy Co., Ltd.
+51.00% Shenwan Energy Co., Ltd.
+-51.00%-
+-51.00%-
+80.00%-
+Shenhua Guohua Mengjin Power Generation Co., Ltd.
+70.00% Shenhua Guohua (Indonesia) Jawa Power Generation Co., Ltd.
+-100.00% Shenhua Guohua Guangdong Electricity Sales Co., Ltd.
+-100.00% Shenhua Guohua (Beijing) Distributed Energy Technology Co., Ltd.
+56.77% Shenhua Guohua Ningdong Power Generation Co., Ltd.
+Shenhua Guohua Zhangzhou Power Co., Ltd.
+52.00% Shenhua Guohua Guangtou (Beihai) Power Generation Co., Ltd.
+-100.00% Shenhua Guohua (Beijing) Gas Thermal Power Co., Ltd.
+50.00%- Guohua Taicang Power Co., Ltd.
+-100.00% Shenhua Guohua Jiujiang Power Co., Ltd.
+Shenhua Guohua Yongzhou Power Co., Ltd.
+-100.00%-
+52.20% Shenhua Guohua Guangtou (Liuzhou) Power Generation Co., Ltd.
+-100.00% Guohua Xuzhou Power Generation Co., Ltd.
+-100.00% Ningxia Guohua Ningdong Power Generation Co., Ltd.
+Inner Mongolia Guohua Hulunbeier Power Generation Co., Ltd.
+51.00% Shenhua Sichuan Energy Co., Ltd.
+-100.00%-
+Proportion of
+completion
+210.45
+Revenue
+RMB100 million
+1,831.27
+1,560
+117.4
+104.3
+1,770.69
+RMB100 million
+1,248.43
+1,104
+113.1
+1,233.41
+Selling, general and
+Cost of sales
+2016
+(after
+adjustments)
+211.40
+Total power output dispatch Billion kWh
+Actual
+amount for
+2015
+Year-on-year
+change
+(%)
+(%)
+Commercial coal production 100 million tonnes
+Coal sales
+2.898
+220.57
+2.8
+2.809
+100 million tonnes
+3.949
+3.55
+111.2
+3.705
+103.5
+RMB100 million
+92.00% Shenhua Guohua Beijing Electric Power Research Institute Co., Ltd.
+60.00% Shenhua Guohua Shouguang Power Generation Company Limited
+-100.00%- Shenhua Shendong Power Co., Ltd.
+-100.00% Shenhua Zhunneng Group Co., Ltd.
+Railway
+Port
+Shipping
+Major Branches
+Shenhua Baotou Coal
+Coal Chemical
+Major Controlling Companies
+100.00%
+Others
+Major Controlling Companies
+Note: The equity structure diagram of China Shenhua (including major branches/
+subsidiaries) as at 31 December 2016 is for illustrative purpose only.
+-100.00% Shenhua Shendong Coal Group Co., Ltd.
+57.76% Shenhua Zhunge'er Energy Co., Ltd.
+62.82% Shenhua Beidian Shengli Energy Co., Ltd.
+60.00% Shenhua Xinjie Energy Co., Ltd.
+100.00% Shenhua Baotou Energy Co., Ltd.
+56.61%- Shenhua Baorixile Energy Co., Ltd.
+50.10%- Yulin Shenhua Energy Co., Ltd.
+60.00% Shenhua Bayannur Energy Co., Ltd.
+51.00%-
+CLP Guohua Shenmu Power Co., Ltd.
+Chemical Co., Ltd.
+60.00% Zhejiang Guohua Zheneng Power Generation Co., Ltd.
+Major Branches
+Power Generation
+Dajiawa
+Equity structure diagram
+H Share
+Coal Production
+Major Controlling Companies
+17.09%
+China Shenhua
+Energy Company Limited
+Shareholders
+Limited
+☐
+73.06%
+Coal Sales
+Other A Share
+Shareholders
+9.85%
+Shenhua Group
+Corporation
+51.00% Shenhua (Tianjin) Financial Leasing Co., Ltd.
+73.33%- Zhuhai Guohua Huidafeng Wind Energy Development Co., Ltd.
+51.00%-
+52.72% Shuohuang Railway Development Co., Ltd.
+85.00% Shenhua Zhunchi Railway Company Limited
+100.00% Shenhua Mengdong Railway Co., Ltd.
+-100.00% Shenhua Railway Transportation Co., Ltd.
+Shenshuo Railway Branch
+Railway Track Mechanical Maintenance Branch
+70.00% Shenhua Huanghua Harbour Administration Co., Ltd.
+55.00% Shenhua Tianjin Coal Dock Co., Ltd.
+40.00% Shenhua Yudean Zhuhai Port Coal Dock Co., Ltd.
+51.00% Shenhua Zhonghai Shipping Co., Ltd.
+Shenhua Xinzhun Railway Co., Ltd.
+100.00% Shenhua Finance Co., Ltd.
+indirectly controlled)
+100.00% Shenhua Logistics Group Corporation Limited
+-100.00% Shenhua Information Technology Co., Ltd.
+-100.00% Shenhua Geological Exploration Co., Ltd.
+-100.00% China Shenhua Overseas Development and Investment Co., Ltd. 100.00%
+100.00% Shenhua Hong Kong Limited
+(Directly and
+80.00% Zhejiang Guohua Yuyao Gas-fired Power Co., Ltd.
+90.00%
+88.46%
+Hebei Guohua Cangdong Power Co., Ltd.
+40.50%-
+Hebei Guohua Dingzhou Power Generation Co., Ltd.
+80.00% Guangdong Guohua Yudean Taishan Power Co., Ltd.
+Shenhua Guohua International Power Co., Ltd.
+70.00%- Shaanxi Guohua Jinjie Energy Co., Ltd.
+70.00%-
+65.00%-
+Shenhua Baoshen Railway Co., Ltd.
+Shenhua Ganquan Railway Co., Ltd.
+Tianjin Guohua Jinneng Power Co., Ltd.
+55.00%-Jiangsu Guohua Chenjiagang Power Co., Ltd.
+70.00%- PT GH EMM Indonesia
+Companies
+Shenhua Australia Holdings Pty Limited
+Shendong Coal Branch
+Ha'erwusu Coal Branch
+100.00% Shenhua Sales Group Co., Ltd.
+-100.00%
+Shenhua Baoshen Railway Group Co., Ltd.
+88.16%
+Major
+Controlling
+「曹妃甸港
+140.58
+93.7
+(9,714)
+(13.3)
+Other gains and losses
+(3,078)
+(5,856)
+(47.4)
+(8,423)
+Other income
+1,659
+(16.9)
+Other expenses
+Interest income
+(1,511)
+(626)
+1,379
+141.4
+General and administrative expenses
+(123,341)
+Analysis on principal business
+Changes in the Major Items in the Consolidated Statement of Profit or Loss and Other
+Comprehensive Income and Consolidated Statement of Cash Flows
+Items
+Unit: RMB million
+2016
+2015
+1.2
+Change
+Revenue
+Cost of sales
+183,127
+177,069
+3.4
+(124,843)
+(%)
+(I)
+723
+18.9
+(10,681)
+9,065
+(217.8)
+Net cash generated from operating activities
+excluding the effect of Shenhua Finance
+Company
+92,564
+47.8
+46,341
+Net cash used in investing activities
+(64,654)
+(26,123)
+147.5
+Net cash used in financing activities
+(18,490)
+99.7
+608
+55,406
+(2.9)
+Finance costs
+(5,748)
+(5,123)
+12.2
+Income tax expense
+Share of results of associates
+81,883
+Net cash generated from operating activities
+operating activities of Shenhua
+Finance Company Note
+237
+428
+(44.6)
+(9,283)
+(9,561)
+Of which: Net cash (used in)/generated from
+150
+DISCUSSION AND ANALYSIS ON MAJOR OPERATION DATA DURING THE
+REPORTING PERIOD
+2016 Annual Report 31
+Note: Upon the approval at the 18th meeting of the third session of the Board, the Company has made adjustments to the
+operating target for 2016 pursuant to industry policies and based on market environment and operation of the Company.
+Major financial indicators of the Group for 2016 are as follows:
+2016
+2015
+Change
+(%)
+Return on total assets as at the %
+6.7%
+end of the period
+%
+end of the period
+EBITDA
+RMB million
+5.5
+4.5
+Return on net assets as at the
+Increased by 1.0
+/ Year-on-year
+decrease of
+Year-on-year
+decrease of
+11.0%
+148.13
+26842-
+364315
+3.2
+6.6
+4.8
+Year-on-year
+decrease of
+5%
+3.4
+(5.1)
+administrative expenses
+and net finance costs
+Changes in unit production /
+costs of self-produced
+coal
+1.2
+Section V Directors' Report (Continued)
+percentage point
+5.9
+Gearing ratio
+%
+33.2
+35.0
+Decreased by 1.8
+percentage points
+holders per share
+Total debt to total debt and total %
+23.1
+Decreased by 1.1
+equity ratio
+percentage points
+Note: Please refer to the section headed "Definitions" of this report for the calculations of the above indicators.
+II.
+22.0
+7.9
+6.3
+15.94
+Increased by 2.0
+percentage points
+70,762
+62,597
+13.0
+As at
+14.99
+As at
+31 December
+2015
+Change
+(%)
+Equity attributable to equity
+RMB/share
+31 December
+2016
+HEBEI
+Section V Directors' Report (Continued)
+(4)
+1.4
+276
+3.8
+1.0
+218
+42.1
+5.4
+26.6
+1.8
+0.5
+97
+1.9
+0.5
+84
+(I) EMM Indonesia
+III. Overseas coal sales
+(8.1)
+175.0
+0.2
+0.1
+415
+0.2
+0.1
+413
+0.0
+0.5
+II. Export Sales
+3.3
+0.8
+407
+1.2
+0.3
+443
+(5.3)
+coal
+15.5
+3.6
+procurement of purchased
+coal for meeting market
+demand led to a significant
+increase in the cost of
+purchased coal; and the
+8.2 The supply-side reform of the
+coal industry mitigated the
+over-supply in coal market,
+resulting in the recovery of
+coal price and sales volume
+The increase in the
+1.8
+109,404 107,493
+Cost of sales RMB
+million
+131,357 121,458
+related transportation cost
+increased in line with the
+increase in sales volume of
+coal
+RMB
+million
+Change Main reasons for changes
+(%)
+2015
+2016
+The operating results of the coal segment of the Group before elimination on
+consolidation
+Operating results
+Note: The above calorific value, sulphur content and ash content of major commercial coal products
+produced by each mine may be inconsistent with the characteristics of the commercial coal
+products produced by individual mine and those of the commercial coal products sold by the
+Company due to such factors as geological conditions, mining area, coal washing, selecting and
+processing, transportation loss and coal blending ratio.
+Revenue
+42
+Note: Sales prices of coal in this report are all exclusive of tax.
+8.2
+0.9
+367
+1.9
+0.5
+358
+89.5
+2.5
+Total sales volume/average
+price
+394.9
+100.0
+317
+370.5
+100.0
+293
+6.6
+(II) Re-export trade
+(II) Sales of imported
+6.6
+90
+%
+1. Domestic sales
+386.2
+97.8
+78
+317
+% RMB/tonne
+365.5
+293
+23
+5.7
+8.2
+(I) Self-produced coal
+and purchased
+98.7
+tonnes
+% RMB/tonne
+tonnes
+Sales
+of total
+Sales
+of total
+Sales
+volume
+sales
+Price
+volume
+sales
+Price
+volume
+Price
+Million
+Million
+coal
+374.4
+94.8
+316
+དྨེདྨེ
+(0.1)
+3.6
+18800
+8.2
+9.0
+(II) Sales of domestic
+trading coal
+11.6
+2.9
+339
+11.2
+3.0
+318
+3.6
+10.1
+16.2
+345
+202.6
+354.1
+95.6
+292
+5.7
+1. Direct arrival
+151.3
+38.3
+229
+151.5
+40.9
+221
+2. Seaborne
+223.1
+56.5
+376
+54.7
+Change
+≤0.72 Approximately
+Non-caking coal
+100.0
+394.9
+price
+Total sales volume/average
+0.4
+236
+317
+1.2
+237
+1.0
+4.0
+segment
+Sales to internal coal chemical
+5.5
+4.3
+370.5
+100.0
+293
+Coal resources
+Measures which are taken by the Company for environmental protection are detailed
+in the "2016 Corporate Social Responsibility" Report of the Group.
+During the year, the Group invested a total of RMB117 million in conservation of soil
+and water and ecological construction and a total of RMB235 million in energy saving
+and environmental protection projects, paid RMB50 million for sewage charges for
+its coal segment, and used mining waste water of 72.53 million tonnes. At the end
+of 2016, balance of the "accrued reclamation obligations" amounted to RMB2,549
+million, serving as strong financial guarantee for ecological construction.
+In 2016, the Group continued to innovate its coal mining technologies and reinforce
+the establishment of the environmental protection system in coal mines to raise the
+production capacity of clean coal. Additionally, it actively promoted the construction
+of ecological mines and eco-friendly mines as well as the green development of
+coal mines by protection and utilisation of water resources, reduction of dust and
+consumption, ecological construction and restoration, screening of environmental
+protection risks and establishment of ecological management funds in mining areas
+and other protection measures. There was no major or more serious environmental
+safety incident occurred during the year.
+Environmental protection
+(5)
+(4)
+Section V Directors' Report (Continued)
+2016 Annual Report 43
+Efforts in ensuring safe coal production are detailed in the 2016 CSR Report of the
+Group.
+In 2016, the Group continued to raise the awareness of production safety within the
+Group with the implementation of production safety accountability system as the
+focus. It also pushed forward the establishment of the safety risk prevention and
+control system and conducted specialized safety inspection and key supervision for
+coal mines. There was no major or more serious safety accident occurred during the
+year. In 2016, the fatality rate per million tonne of coal mines of the Group was zero,
+enabling the Company to maintain its internationally leading position.
+Production safety
+In 2016, the sales volume of internal power segment and coal chemical
+segment respectively accounted for 21.6% and 1.0% of the coal segment
+of the Group, representing a decrease of 1.2 percentage points and 0.2
+percentage point as compared with last year, respectively. The Company
+adopted unified pricing policies in coal sales to the internal power segment,
+coal chemical segment and external customers.
+8.2
+93
+292
+As at 31 December 2016, under the PRC Standard, the Group had coal resources
+amounting to 24.01 billion tonnes, representing a decrease of 1.2% as compared
+with that of the end of 2015; and recoverable coal reserve amounting to 15.43
+billion tonnes, representing a decrease of 2.0% as compared with that of the end of
+2015. The Group's marketable coal reserve amounted to 8.85 billion tonnes under
+the JORC Standard, representing an increase of 8.7% as compared with that of the
+end of 2015, which was mainly due to the increase in the marketable coal reserve
+of Shendong Mines and Zhunge'er Mines and the decrease in the marketable coal
+reserve of Shengli Mines according to the comprehensive reassessment of the
+marketable coal reserve of the Company's coal mines under the JORC Standard
+conducted by competent professional institution under the engagement by the
+Company in 2016.
+22.8
+308
+Million
+Change in
+price
+Price
+Percentage
+volume
+Percentage Price
+Million
+volume
+Sales
+2015
+2016
+By internal and external customers
+In 2016, the sales volume of the Company to the top five domestic customers
+of coal was 35.3 million tonnes, which accounted for 9.1% of the domestic
+sales volume. In particular, the sales volume to the largest customer was
+9.0 million tonnes, which accounted for 2.3% of the domestic sales volume.
+The top five domestic customers of coal were primarily coal, power and coal
+trading companies.
+(3)
+Sales
+tonnes
+RMB/tonne
+tonnes
+21.6
+85.4
+segment
+Sales to internal power
+9.2
+9%
+294
+76.0
+281.6
+321
+77.4
+305.5
+Sales to external customers
+%
+% RMB/tonne
+84.6
+Mines
+Shendong Mines
+Zhunge'er Mines
+Long flame coal
+Zhunge'er Mines
+2
+11.8
+5,500
+non-caking coal
+Approximately
+4,680
+<0.49 Approximately
+Long flame coal/
+Shendong Mines
+1
+Ash content
+(%) (average, %)
+content
+Sulphur
+Approximately
+≤0.48 Approximately
+26.3
+3
+Baotou Mines
+5
+14.5
+3,650
+≤0.22 Approximately
+Approximately
+Lignite
+Baorixile Mines
+4
+20.2
+3,095
+≤0.81 Approximately
+Approximately
+Lignite
+Shengli Mines
+Calorific value
+of major
+commercial
+coal products
+(kcal/kg)
+Major types of coal
+No. Mines
+Characteristics of the commercial coal produced in the Company's major mines are as
+follows:
+51.6
+95.4
+164.5
+Marketable
+coal reserve
+(under
+the JORC
+Standard)
+Unit: '00 million tonnes
+Standard)
+Standard)
+(under the PRC (under the PRC
+coal reserve
+Coal resources
+Recoverable
+Total
+Baotou Mines
+Baorixile Mines
+Shengli Mines
+40.1
+Approximately
+4,410
+32.2
+20.6
+(6)
+Section V Directors' Report (Continued)
+China Shenhua Energy Company Limited
+44
+88.5
+154.3
+240.1
+0.1
+0.4
+0.5
+12.6
+12.2
+14.4
+2.5
+14.1
+21.7
+China Shenhua Energy Company Limited
+2015
+Proportion
+By sales regions
+Expensed research and development expenditure in the period
+(RMB million)
+400
+Capitalized research and development expenditure in the period
+(RMB million)
+4.
+Total research and development expenditure (RMB million)
+Ratio of capitalized research and development expenditure (%)
+Percentage of total research and development expenditure to revenue
+(%)
+Number of research and development personnel in the Company
+(number of person)
+Investment in research and development
+The ratio of research and development personnel to the total number of
+persons in the Company (%)
+575
+30.4
+0.3
+2,468
+2.7
+In 2016, investment in the research and development by the Group, representing a
+year-on-year decrease of 25.3% (2015: RMB770 million), is mainly used for research in
+various aspects including research and production of key equipment on digital mines, mine
+transportation and deployment system, comprehensive use of coal ash after combustion
+and preservation and usage of water resources in mining area.
+175
+3.
+Section V Directors' Report (Continued)
+2016 Annual Report 37
+(3)
+(4)
+(5)
+(6)
+(7)
+(8)
+General and administrative expenses: representing a year-on-year decrease of
+13.3% in 2016, which was mainly attributable to the inclusion of tax on vehicles and
+vessels, real estate tax, land-use tax and stamp duty originally included in general
+and administrative expenses to taxes and surcharges under cost of sales since 2016
+based on relevant requirements.
+Other gains and losses: representing a year-on-year decrease of 47.4% in 2016,
+which was mainly attributable to the decrease in losses on asset impairment as
+compared with last year. Pursuant to the assessment result of asset impairment at
+the end of 2016, the Group made provision for impairment on electric machinery
+and equipment demolished due to energy saving and environmental protection
+reconstruction, the power generators and related equipment in closed Longyan
+Power Plant of Fujian Energy Company and parts of inventories.
+Other income: representing a year-on-year decrease of 16.9% in 2016, which
+I was mainly attributable to the decrease in government grants for power and
+transportation segments.
+Other expenses: representing a year-on-year increase of 141.4% in 2016, which was
+mainly attributable to the increase of donation for public welfare.
+Interest income: representing a year-on-year increase of 18.9% in 2016, which was
+mainly attributable to the increase of time deposits.
+Finance costs: representing a year-on-year increase of 12.2% in 2016, which was
+mainly attributable to the decrease in capitalised interests for 2016 as a result of the
+commencement of operation of Bazhun Railway, Zhunchi Railway and other projects
+in 2015, which in turn increased the interest expenses included in finance costs.
+Share of results of associates: representing a year-on-year decrease of 44.6% in
+2016, which was mainly attributable to the decrease in revenue generated from
+associated power generation enterprises.
+Income tax expense: representing a year-on-year decrease of 2.9% in 2016, and the
+average rate of income tax in 2016 was 22.5% (2015: 27.7%), with a decrease of
+5.2 percentage points, which was mainly attributable to the increase in percentage
+of profits in the coal segment, which is entitled to more preferential tax rates, and
+the decrease in percentage of profits in the power segments, which are entitled
+to less preferential tax rates, and the decrease in deductible losses and deductible
+temporary differences of unrecognized deferred tax assets as compared with last
+year.
+(II)
+Cash flow
+(2)
+(1)
+(3)
+total assets at
+the end of
+the end of
+end of the
+the end of the
+Items
+Amount at the
+the year
+previous year
+previous year
+the amount
+Change of
+Main reasons for changes
+(%)
+the year
+total assets at
+Amount at
+Percentage of
+Net cash generated from operating activities: a year-on-year increase of 47.8% in
+2016, of which, net cash used in operating activities of Shenhua Finance Company
+amounted to RMB10,681 million (2015: net cash inflow of RMB9,065 million),
+representing a year-on-year change of 217.8%, which was mainly due to the
+decrease in deposits by Shenhua Finance Company. After eliminating the effects
+of Shenhua Finance Company, net cash generated from operating activities of the
+Group represented a year-on-year increase of 99.7%. This was mainly due to the
+increase of bank acceptance bills receivable and account receivable were significantly
+less than that of last year and the decrease in tax paid.
+Net cash used in investing activities: representing a year-on-year increase of 147.5%
+in 2016. This was mainly due to the increase in cash paid for the purchase of wealth
+management products.
+Net cash used in financing activities: representing a year-on-year decrease of 20.2%
+in 2016. This was mainly due to the decrease in cash paid for dividend for 2016, and
+the consideration paid for merger of subsidiaries under common control in 2015.
+Explanation on the material changes in profit incurred from non-principal business
+✓ Applicable
+Not applicable
+Pursuant to the assessment result of asset impairment at the end of 2016, the Group made
+provision for impairment of RMB2,807 million in total on power machinery and equipment
+demolished due to energy saving and environmental protection reconstruction, the power
+generators and relevant equipment in closed Longyan Power Plant of Fujian Energy Company and
+parts of inventories.
+38
+China Shenhua Energy Company Limited
+Section V Directors' Report (Continued)
+(III) Analysis on Assets and Liabilities
+1.
+Assets and Liabilities
+Unit: RMB million
+Percentage of
+(2)
+(1)
+Other items of income statement
+2.
+volume
+Inventory
+volume sales volume
+the year
+(%)
+(%)
+volume
+(%)
+Power
+289.8 million 394.9 million
+tonnes
+tonnes
+236.04 billion 220.57 billion
+kWh
+29.4 million
+3.2
+6.6
+tonnes
+Coal
+beginning of
+decrease in
+production
+2016 Annual Report 35
+Section V Directors' Report (Continued)
+Analysis of the production and sales volume
+Increase/
+decrease in
+Year-on-year
+inventory as
+increase/ Year-on-year
+compared
+decrease in
+increase/
+with the
+Major
+products
+Production
+Sales
+4.5
+4.8
+kWh
+(5)
+4.2
+Fourth
+Fifth
+Total
+7,286
+4.0
+6,943
+3.8
+42,137
+23.0
+Among the above major customers, the sales revenue generated from connected
+parties amounted to RMB11,481 million, which accounted for 6.3% of the revenue
+for the year.
+Major suppliers
+During the reporting period, the total procurement from the top five suppliers of
+the Company amounted to RMB14,340 million, accounting for 14.4% of the total
+procurement for the year. Among which, the procurement made from connected
+parties were RMB6,484 million, accounting for 6.5% of the total procurement for the
+year.
+36
+China Shenhua Energy Company Limited
+Section V Directors' Report (Continued)
+7,656
+(%)
+4.7
+Third
+Major customers
+(6)
+2016
+Percentage to
+Revenue
+revenue
+No.
+Top five customers
+RMB million
+%
+12345
+First
+11,481
+6.3
+Second
+8,771
+2016
+Proportion
+(%)
+35,220
+(80.0) Medium-term notes to be due
+within one year were reclassified
+to non-current liabilities due
+within one year
+2016 Annual Report 39
+Section V Directors' Report (Continued)
+2.
+Restriction on the major assets
+borrowings from power segment
+As of the end of 2016, the balance of restricted assets of the Group amounted to
+RMB6,933 million, which mainly consists of statutory deposit reserves balance of Shenhua
+Finance Company placed at the central bank and fixed assets as collaterals for bank
+borrowings. None of the major assets of the Group were seized nor detained.
+1.
+Coal segment
+(1)
+Production, operation and construction
+The majority of the coal products produced and sold by the Group were thermal
+coal. In 2016, under the continued deepening the supply-side reform of the coal
+industry, the Group proactively coped with the changes in industrial policies and
+market conditions to adjust the production volume in time according to regulations,
+so as to strengthen the profitability of the coal segment by quality enhancement
+and structural adjustment. During the year, commercial coal production volume of
+the Group reached 289.8 million tonnes (2015: 280.9 million tonnes), representing
+a year-on-year increase of 3.2%. The total footage of advancing tunnels was 380
+thousand meters (2015: 564 thousand meters), representing a year-on-year decrease
+of 32.6%. Specifically, Shendong Mines recorded footage of advancing tunnels of
+366 thousand meters (2015: 547 thousand meters), and Baotou Mines recorded
+footage of advancing tunnels of 14 thousand meters (2015: 17 thousand meters).
+The calorific value of thermal coal has been increasing, and the average calorific value
+of commercial coal for the year reached 5,003 kcal/kg, representing a year-on-year
+increase of 36 kcal/kg. With the further optimisation of coal product structure, the
+proportion of low-sulphur eco-friendly coal and high value-added special coal output
+has further increased.
+Shendong Mines coordinated its coal production and loading in a scientific way which
+optimised production and loading according to market demand, so as to maximize
+the production of marketable products. Zhunge'er Mines enhanced its efficiency by
+way of improvement of quality and efficiency, lump coal sales, accurate loading and
+collaborative mining. Guided by the market and efficiency, Shengli Mines, Shenbao
+Mines and Baotou Mines organized the coal production.
+(IV) Operation results by business segment
+Increase in balance of long-term
+/ Increase of medium-term notes
+due within one year
+(13.0) Decrease in balance of deposits
+placed with Shenhua Finance
+Company
+medium-term notes
+Long-term borrowings
+58,462
+10.1
+54,179
+9.7
+7.9
+Medium-term notes
+4,985
+0.9
+99
+24,955
+4.5
+45
+acceptance bills from power
+segment
+Guojiawan Coal Mine has commenced operation with an approved production
+capacity of 8.0 million tonnes/year, and the construction of its dedicated railway
+remained in progress stably. The expansion works for Qinglongsi Coal Mine with
+an approved production capacity of 3.0 million tonnes/year was progressing as
+planned and entered into the stage of collaborative trial operation. For the relevant
+construction progress, please refer to note 16 Construction in Progress to the
+financial statements in this report.
+40
+China Shenhua Energy Company Limited
+Section V Directors' Report (Continued)
+394.9
+125,330
+99,804
+25,526
+In 2016, the Company's coal exploration expenses (which were incurred before the
+conclusion of feasibility study and represented the expenses related to exploration
+and evaluation of coal resources) amounted to approximately RMB25 million
+(2015: RMB96 million), which was mainly attributable to the relevant expenses of
+Watermark Coal Project in Australia and Guohua Sumsel Coal Power Project (Phase
+I) in Indonesia. The Company's relevant capital expenditure of mining development
+and exploration amounted to approximately RMB4,551 million (2015: RMB3,539
+million), which was mainly attributable to the expenditure related to coal mining,
+consideration payment for mining rights and acquisition of fixed assets for Shendong
+Mines, Zhunge'er Mines and Shenbao Mines as well as the exploration expenditure
+of Guojiawan Coal Mine and Qinglongsi Coal Mine.
+The Group has independently operated railway collection and distribution channels.
+These channels are centralized and distributed in the rim of self-owned core mines,
+and can transport coal in the core mines.
+Sales of coal
+The Group implemented specialized division management. Production enterprises
+are responsible for production of coal, and Shenhua Trading Group is mainly
+responsible for sales of coal. Customers have different industry background, such
+as power, metallurgy, chemical and construction materials. In 2016, the Group
+adopted various measures to cope with the market volatility, increased the number
+of channels for coal resources procurement, enhanced the marketing efforts in the
+region of "the movement towards the shipping route from the northern sea to the
+Yangtze River" and clean coal market, and proactively promoted coal trading. Thus,
+the sales volume of coal amounted to 394.9 million tonnes (2015: 370.5 million
+tonnes), representing a year-on-year increase of 6.6%; among which the domestic
+sales volume of coal amounted to 386.2 million tonnes, accounting for 12.1% of the
+domestic sales volume of coal for the same period which amounted to 3.18 billion
+tonnes¹.
+1
+Data source: State Administration of Coal Mine Safety
+2016 Annual Report 41
+Section V Directors' Report (Continued)
+To maximize the efficiency of the integrated operation, the Group increased the
+sales volume of seaborne coal by an optimised arrangement of coal with a higher
+loading volume at self-owned ports. The annual seaborne coal sales was 226.4
+million tonnes (2015: 203.8 million tonnes), representing a year-on-year increase of
+11.1%. The seaborne coal sales through self-owned Huanghua Port and Shenhua
+Tianjin Coal Dock, accounted for 87.5% of the total seaborne coal sales of the Group,
+representing a year-on-year increase of 13.0 percentage points.
+The Group increased the number of sales channels and the procurement volume
+of coal through Shenhua Coal Trading Network (https://www.e-shenhua.com)
+developed by the Group, and effectively cut the cost. In 2016, the coal sales volume
+and coal procurement volume of the Group through Shenhua Coal Trading Network
+reached 191.4 million tonnes and 10.2 million tonnes, respectively.
+In view of the rebound of thermal coal prices in the second half of the year, the Group
+recorded an average coal sales price of RMB317 /tonne in 2016 (2015: RMB293/
+tonne) (excluding tax), representing a year-on-year increase of 8.2%.
+Total
+0.0
+25,526
+0
+125,189
+141
+(2)
+Production and sales volumes of all coals in 2016 of the Group are as below:
+Types of coal
+Production
+volume
+Sales
+volume
+Cost of
+Revenue
+sales Gross profit
+Million
+tonnes
+Million
+tonnes RMB million RMB million RMB million
+Thermal coal
+Coking coal
+289.8
+394.7
+0.2
+99,663
+141
+Construction in progress
+0
+19,989
+Prepaid expenses and
+48,792
+8.5
+19,351
+3.5
+152.1
+other current assets
+Shenhua Finance Company
+(49.8) Decrease in notes being become
+due for repayment and receipt
+of bank acceptance bills; and
+decrease in receivables from coal
+sales of coal segment
+Increase in purchase of wealth
+management products by the
+Company and Shenhua Finance
+Company
+Restricted bank deposits
+6,141
+1.1
+receivable
+4,611
+7.3
+3.6
+6.1
+33,610
+6.0
+4.8
+Increase in materials for power
+business projects
+Other non-current assets
+36,749
+6.4
+34,562
+6.2
+6.3
+Increase in loan balance issued by
+Accounts and bills
+20,573
+41,019
+3.5
+0.8
+Increase in statutory deposit
+4,998
+0.9
+6.1
+33,990
+6.1
+(100.0)
+3.4
+Maturity of super short-term
+Increase in payables of bank
+Accrued expenses and
+41,361
+7.2
+47,519
+8.5
+other payables
+Current portion of
+0.0
+33.2
+20
+Accounts and bills payable
+Time deposits with
+3,428
+90
+0.6
+90
+916
+35,156
+0.2
+Finance Company placed at the
+central bank
+274.2 Maturity of time deposits
+original maturity over
+three months
+Short-term debentures
+0
+reserves balance of Shenhua
+30.1
+During the reporting period, the construction work of Huangda Railway continued
+to advance, and was expected to complete in the second half of 2018. Due to the
+preliminary work progress of the project, the construction work of Amo Railway was
+suspended, and the construction period will be subject to adjustment according to
+the actual conditions.
+Progress of projects
+4.87
+376
+21.17 (8.4)
+(12.6)
+239
+(10.9) 18.88 21.09 (10.5) 209
+(8.3) 19.39
+(8.4) 19.36
+50.0 0.03 0.02 50.0
+0.03 0.02
+wind power
+21.15
+22.72
+20.82
+coal-fired power
+409
+20.95 23.51
+22.74
+Guangdong
+coal-fired power
+(12.6)
+239
+209
+(10.5)
+21.09
+18.88
+(10.9)
+23.51
+20.95
+20.85
+Inner Mongolia
+(8.1)
+375
+Anhui
+(13.7)
+292
+252
+9.6
+22.11 20.17
+9.8
+24.25 22.08
+coal-fired power
+(13.7)
+292
+(8.5)
+252
+20.17
+22.11
+9.8
+22.08
+24.25
+Shaanxi
+(0.3)
+598
+596
+(8.3)
+409
+9.6
+(12.9)
+698
+(11.4) 608
+24.94
+(9.0) 22.74
+26.23
+23.87
+coal-fired power
+(4.9)
+329
+313
+(8.8)
+24.94
+22.74
+(8.8)
+(9.0)
+23.87
+Jiangsu
+(10.4)
+335
+300
+5.7
+30.12
+31.84
+5.2
+32.30
+33.99
+26.23
+313
+329
+(4.9)
+1.76
+(11.1) 1.56
+1.80
+1.60
+gas-fired power
+(11.4)
+387
+343
+2.5
+22.31
+22.86
+2.6
+23.63
+24.24
+coal-fired power
+(12.0)
+409
+360
+1.5
+24.07
+24.42
+1.6
+25.43
+25.84
+Zhejiang
+21.48
+coal-fired power
+17.49
+20.45 16.59
+3.82
+(27.3)
+5.72
+4.16
+coal-fired power
+197
+(28.1)
+5.31
+3.82
+(27.3)
+5.72
+5.31
+4.16
+280
+11.0
+8.99
+9.98
+10.7
+9.49
+10.51
+coal-fired power
+11.0 280
+8.99
+9.98
+Xinjiang
+10.7
+(28.1)
+208
+4.44
+coal-fired power
+307
+4.59 (8.9)
+4.18
+(8.8)
+4.44
+Henan
+331
+(2.0)
+5.06
+197
+4.96
+5.41
+5.29
+coal-fired power
+331
+(2.0)
+5.06
+4.96
+(2.2)
+5.41
+5.29
+Tianjin
+(2.2)
+9.49
+10.51
+Fujian
+10.1
+14.90
+16.41
+coal-fired power
+321 (6.5)
+300
+10.1
+13.96
+15.37
+10.1
+14.90
+15.37 13.96
+16.41
+342 (12.6)
+299
+23.3
+20.45 16.59
+22.8
+21.48 17.49
+coal-fired power
+(12.6)
+342
+299
+23.3
+Liaoning
+10.1
+300
+321
+(%)
+(%)
+(%)
+year
+2015
+2016
+2015 year
+2016
+2015 year
+2016
+Type of power
+Year-on-
+Year-on-
+Year-on-
+Location/
+Power tariff
+(RMB/mWh)
+(billion kWh)
+(billion kWh)
+Power output dispatch
+Power generation
+Section V Directors' Report (Continued)
+2016 Annual Report 49
+гл
+LOLO
+(6.5)
+22.8
+(10.4)
+335
+300
+power
+20.6
+18.3
+Materials, fuel and
+Change Main reasons for changes
+(%)
+2015
+2016
+Unit: RMB/tonne
+Unit production cost of self-produced coal
+(4)
+Section V Directors' Report (Continued)
+Personnel expenses
+China Shenhua Energy Company Limited
+The coal sold by the Group is mainly produced in its self-owned mines. In
+order to fulfill the needs of customers and adequately make use of railway
+transportation, the Group also purchased the coal from third parties in the
+surrounding areas of the self-owned mines and railways and produced
+different kinds and level of coal products and sold them to external customers.
+As there are many kinds of coal products and different ratios of mixture of
+purchased coal, it may be difficult to review the revenue, costs and gross
+profit of coal in accordance with the sources of coal (self-produced coal and
+purchased coal).
+15.7
+91,408 17,005
+20.4 108,413
+125,330 99,804 25,526
+Total
+10.4
+143
+1,229
+18.5 1,372
+527
+46
+2,844 2,317
+17.6
+(0.6)
+2.
+Power segment
+In 2016, sales volume of coal purchased by the Group from third parties was
+109.4 million tonnes (2015: 81.2 million tonnes), representing a year-on-year
+increase of 34.7%, and its proportion of the Company's total sales volume
+of coal increased to 27.7% from 21.9% in 2015. The costs of coal purchased
+from third parties for the year was RMB26,286 million (2015: RMB17,264
+million), representing a year-on-year increase of 52.3%. The increase was
+mainly due to the increase of sales volume of coal purchased by the Company
+from third parties according to the demand and supply in the coal market, and
+the rise of procurement price in coal.
+Section V Directors' Report (Continued)
+2016 Annual Report 47
+The coal purchased from third parties by the Company includes coal
+purchased from the surrounding areas of the self-owned mines and railways,
+domestic trading coal, imported and re-exported coal.
+Cost of coal purchased from third parties
+Other costs consist of the following three components: (1) expenses directly
+related to production, including coal washing, selecting and processing
+expenses, and mining engineering expenses, etc., accounting for 62%; (2)
+auxiliary production expenses, accounting for 13%; (3) land requisition and
+surface subsidence compensation, environmental protection expenses, tax,
+fees levied by local government, etc., accounting for 25%.
+(11.0)
+123.2
+109.6
+17.7
+Unit production cost
+of self-produced
+coal
+(11.2) Decrease in tunneling footage
+for underground mines
+year-on-year through
+optimizing the production
+units; Decrease in fuel price
+50.5
+43.1
+25.2
+21.9
+Depreciation and
+amortization
+maintenance
+(5.4)
+9.2
+8.7
+Repairs and
+Decrease in expenditures for
+outsourcing repairs due to the
+enhancement of efficiency
+in self-owned maintenance;
+Extend the maintenance
+cycle of equipment through
+technology renovation
+(13.1) Decrease in amortization of
+long-term deferred expenses
+including compensation for
+land use and relocation as a
+result of a decrease in land
+requisition for production use
+(14.7) Decrease in outsourcing mining
+engineering expenses and
+auxiliary production expenses
+due to the enhancement of
+efficiency in self-owned team;
+Decrease in taxes and fees
+Export and
+overseas
+15.8
+16,862
+Increased
+5.3
+13.0
+%
+Profit margin
+from
+the volume of material
+operations million
+Other than the above factors,
+164.5
+6,433
+17,017
+by 7.7
+RMB
+points
+percentage
+by 5.2
+Increased
+11.5
+16.7
+%
+Gross profit
+margin
+Change Main reasons for changes
+(%)
+2015
+2016
+Profit from
+operations
+percentage
+points
+90,179
+20.4 107,041
+24,999
+122,486 97,487
+Domestic
+%
+million
+million
+% million
+million
+RMB RMB RMB
+RMB
+RMB
+million
+Costs profit margin
+profit margin Revenue
+Costs
+Revenue
+RMB
+million
+Gross profit
+Gross profit
+Gross
+Gross
+2015
+2016
+The sales and gross profit of the coal of the Group before elimination on
+consolidation
+trading business and the
+impairment loss of coal-
+related assets recorded
+a significant year-on-year
+decrease
+(1)
+Production and operations
+In 2016, under the overall downturn of the domestic thermal power market, the
+Group enhanced its marketing efforts based on its advantage of clean power
+generation to strive for a higher amount of power generation. The gross power
+generation amounted to 236.04 billion kWh (2015: 225.79 billion kWh), representing a
+year-on-year increase of 4.5%; and total power output dispatch of 220.57 billion kWh
+(2015: 210.45 billion kWh), representing a year-on-year increase of 4.8%, accounting
+for 3.7% of 5,919.8 billion kWh¹ of the total power consumption of society at the
+same period.
+The Group continued to promote the clean development of coal-fired power
+by proactively implementing the "ultra-low emission" renovation of coal-fired
+generators, and its proportion of the installed capacity of "ultra-low emission"
+coal-fired generators maintained at an industry-leading level. The Group has
+completed the "ultra-low emission" renovation for all coal-fired power plants in
+the Beijing-Tianjin-Hebei region. Following the completion of construction and
+commencement of operation, Guohua Shouguang Power Plant and Liuzhou Power
+Plant became the first "ultra-low emission" power plant in Shandong Province and
+Guangxi Province, respectively.
+Location/
+Power tariff
+(RMB/mWh)
+(billion kWh)
+(billion kWh)
+Power output dispatch
+Power generation
+Classified by location
+(8.1)
+344
+334
+307
+Year-on-
+4.8
+220.57
+4.5
+225.79
+236.04
+Total
+(4.1)
+560
+537
+(3.9)
+232
+(0.3)
+210.45
+Year-on-
+Year-on-
+Type of power
+5.7
+30.12
+5.2 31.84
+32.30
+33.99
+Hebei
+(8.1)
+333
+306
+5.0
+219.14 208.69
+4.7
+223.81
+234.40
+weighted average
+Domestic in total/
+(%)
+(%)
+(%)
+2015 year
+2016
+2015 year
+2016
+2015 year
+2016
+598
+4.87
+(9.1)
+301
+(%)
+2015 Change
+2016
+2015 Change
+2016
+2015 Change
+2016
+Power type
+(RMB/mWh)
+(billion kWh)
+(billion kWh)
+(%)
+Power tariff
+Gross power generation
+Classified by power type
+Power consumption and power tariffs
+(2)
+Section V Directors' Report (Continued)
+China Shenhua Energy Company Limited
+48
+Data Source: National Energy Administration
+1
+Taking an important role in the internal market, the power segment collaborates with
+the coal and transportation segments for coal field management in power plants
+and handling and unloading of thermal coal. During the year, the power segment
+consumed coal from China Shenhua of 88.0 million tonnes, accounting for 89.0% of
+the total coal consumption.
+In view of the Group's proactive adaption to the reform of power market, the
+transacted power generation and, in particular, the direct power supply to users
+recorded a significant increase as compared with the previous year. For 2016,
+the sales volume of direct power supply of the Group amounted to approximately
+42.3 billion kWh, representing a year-on-year increase of approximately 119%,
+and its proportion of the total power output dispatch increased by approximately
+10 percentage points. Shenhua Fuping Integrated Energy Demonstration Project
+I was one of the first batch of experimental units for reform of incremental power
+distribution business of China, the preliminary work of the constrction of power
+distribution networks remained in progress stably and Shenhua Guangdong Power
+Sales Company was incorporated.
+Total power output dispatch
+(%)
+Coal-fired power
+229.73
+គ៖នទ
+67.3
+3.27
+5.47
+67.5
+5.61 3.35
+Gas-fired power
+0.0 223
+0.65
+0.65
+0.0
+0.67
+0.67
+Hydro power
+50.0 596
+0.02
+0.03
+50.0
+0.03 0.02
+Wind power
+3.8
+206.51
+214.42
+3.6
+221.75
+331
+Section V Directors' Report (Continued)
+(8.8)
+4.59
+25.7
+16.7
+Profit margin %
+million
+(37.9)
+18,810
+11,689
+Profit from RMB
+operations
+points
+by 9.0
+percentage
+31.8 Decreased
+Decreased
+22.8
+resulting from the growth
+in coal price; Power
+output dispatch increased
+year-on-year
+8.3 Increase in purchase costs
+of coal of power plants
+sales prices due to the
+reduction in on-grid power
+tariff of coal-fired power
+generation
+(4.4) Decrease in power output
+million
+49,788
+53,939
+RMB
+Cost of sales
+73,053
+69,850
+Gross profit %
+margin
+RMB
+million
+from operations
+2016 Annual Report 53
+(%)
+(%)
+(%)
+2015
+2015
+2015
+2016
+2016
+Change
+2015
+2016
+by 9.0
+percentage
+points
+Power type
+costs of
+to total Change in
+to total
+Percentage
+Percentage
+Cost of sale of power
+Revenue from sale of power
+Unit: RMB million
+consolidation
+Revenue and cost from the sale of power of the Group before elimination on
+Section V Directors' Report (Continued)
+costs of 2016 over
+Revenue
+Change Main reasons for changes
+(%)
+2015
+percentage point
+Decreased by 0.02
+0.25
+0.23
+(0.6)
+5,364
+5,331
+Hydropower
+percentage point
+Decreased by 0.18
+1.08
+Gas-fired
+0.90
+1,478
+1,952
+Wind power
+percentage point
+power
+Decreased by 0.19
+6.14
+5.95
+(4.4)
+4,631
+4,428
+32.1
+3,243 2,889
+12.3
+2.03
+2016
+The operation results of the power segment of the Group before elimination
+on consolidation:
+Analysis of operation results
+In 2016, the completed capitalized expenses of the power segment of the Group
+were RMB17.83 billion, primarily used in projects including the Shenhua Guohua
+Jiangxi Jiujiang New Coal Reserve (Transit) and Power Generation Integration
+Project (2x1,000MW), Shenhua Fujian Luoyuan Bay Coal Storage Integrated Power
+Plant Project (2×1,000 MW), Shenhua Bashu Jiangyou New Coal-fired Power
+Generator Construction Project (2×1,000MW) and Phase II of Guohua Ningdong
+Power Expansion Project (2×660MW), and technical reformation expenditure on
+environmental protection at plants.
+(7)
+Capitalized Expenses
+(6)
+Section V Directors' Report (Continued)
+China Shenhua Energy Company Limited
+52
+Data source: China Electricity Council
+1
+The power segment proactively implemented the renovation of "green power
+generation" in energy conservation, consumption reduction and emission reduction,
+and continued to expand its efforts in environmental protection. The total investment
+of energy saving and environmental protection amounted to RMB2, 138 million,
+among which, investment in environmental protection amounted to RMB1,105
+million, and the sewage charges paid amounted to RMB26 million. As at the end
+of the reporting period, the desulfurization renovation for all of its national coal-fired
+power generators of the Group was completed. The proportion of coal-fired power
+generators with denitrification equipment in operation which had passed completion
+verification reached 100%, representing a leading position in the industry. The
+power segment continued to implement the "ultra-low-emission" renovation of
+coal-fired generators. As at the end of the reporting period, 66 "ultra-low-emission"
+coal-fired generators with total capacities of 36,770MW were newly constructed
+and renovated, which was 67.6% of the total installed capacity of coal-fired power
+generator of the Group. The average standard coal consumption for power sold of
+coal-fired power generators of the Group for the year was 315 g/kWh, representing a
+decrease of 3 g/kWh as compared with the same period last year.
+Environmental protection
+(5)
+Decreased by 0.25
+percentage point
+average
+6.09
+(4.4) 5.84
+4,391 4,591
+Weighted
+percentage point
+power
+Decreased by 0.12
+2.15
+(%)
+Coal-fired
+Coal-fired power
+68,349
+8,959
+amortization
+Depreciation and
+5.7
+57
+5.4
+2,503
+5.3
+2,645
+maintenance
+Repairs and
+18.1
+59
+6.8
+15
+7.5
+65.0
+58
+3,477
+7.4
+3,667
+Personnel expenses
+29,958
+64.7
+5.5
+31,996
+8,329
+7.6
+As Bazhun Railway and Zhunchi Railway commenced operation, the overall
+railway transportation capacity of the Company was significantly enhanced, which
+substantially alleviated the tight market in transportation. In 2016, the railway
+segment brought its underlying services for the integrated operations into full play,
+which effectively secured the transportation for its principal coal business. With
+the implementation of the macroscopic logistic strategy and efforts on opening the
+transportation business to the public, it has embarked on the operations of coal
+transportation for external customers and endeavored to foster the transportation
+for commodities other than coal. The number of pairs of 20,000-tonne combination
+trains and "3+0" unit 10,000-tonne trains was further increased, and the utilisation
+rates of Baoshen South Line, Shenshuo Railway and other major routes for
+transportation exceeded 90%. The transportation volume of Bazhun Railway and
+Zhunchi Railway amounted to approximately 10.2 million tonnes and 40.4 million
+tonnes, respectively. The transportation volume of self-owned railways of the
+Company for the year hit a record high. The transportation turnover of self-owned
+railways was 244.6 billion tonne km, representing a year-on-year increase of 22.2%;
+among which, the turnover of providing railway transaction services to third parties
+amounted to 21.8 billion tonne km (2015: 17.6 billion tonne km), representing a
+growth of 23.9% year-on-year, the revenue generated from providing transportation
+services for third parties amounted to RMB4,174 million (2015: RMB3,420 million),
+representing a year-on-year increase of 22.0%.
+(2)
+(1) Overview of production and operations
+Railway segment
+3.
+Section V Directors' Report (Continued)
+China Shenhua Energy Company Limited
+54
+7.3
+100.0
+46,123
+18.1
+100.0
+plant
+coal-fired power
+output dispatch of
+Total cost of power
+19
+20.7
+4.0
+1,856
+4.5
+2,240
+Others
+49,507
+power
+Raw material, fuel and
+%
+(10.8)
+0.2
+74
+0.1
+66
+(4.6)
+152
+145
+Hydro power
+(10.0)
+0.0
+Gas-fired power
+10
+9
+28.6
+14
+18
+Wind power
+7.3
+95.5
+46,123
+94.4
+49,507
+(3.4)
+0.0
+2,936
+1,830
+60.4
+%
+% RMB million
+RMB million
+in costs
+Costs Percentage
+Costs Percentage
+Change
+2015
+2016
+Analysis on cost of sale of power of coal-fired power plant of the Group before
+elimination on consolidation
+The Group's cost of sale of power mainly comprised such costs as raw
+materials, fuel and power, personnel expenses, repairs and maintenance,
+depreciation and amortization and other cost. The unit cost of power output
+dispatch of the Group in 2016 was RMB237.9/mWh (2015: RMB229.4/mWh),
+representing a year-on-year increase of 3.7%. The increase was mainly due
+to the increase in purchase costs of coal of coal-fired power plants, and the
+impact of additional provision of special fund for the structural adjustment of
+industrial enterprises.
+3.
+8.7
+100.0
+48,269
+100.0
+(1.7) 52,472
+70,345
+69,146
+Total
+40.2
+4.3
+2,062
+5.5
+2,890
+66,047
+(%)
+2015 Change
+2016
+coal-fired power
+2.41
+2.56
+Shandong
+3.16 0.86 267.4
+256.8
+0.95
+3.39
+coal-fired power
+3.16 0.86 267.4
+256.8
+2.56
+0.95
+Shanxi
+1.51 158.9
+3.91
+158.7
+1.55
+4.01
+gas-fired power
+0.48 (100.0)
+(100.0)
+0.56
+coal-fired power
+3.39
+96.5
+2.41
+0.21
+(3.9)
+395 (5.1)
+(6.6)
+364
+347 (11.5)
+347 (11.5)
+(5.4)
+350
+350 (5.4)
+(5.3)
+(5.3)
+Guangxi
+208
+(14.9)
+222222IIIEL23312
+509
+343
+205
+205
+3222222222'22222
+0.19
+0.21
+coal-fired power
+0.19
+(14.9)
+1.99
+3.91
+90.0
+3.42
+Ningxia
+0.65 0.65
+0.67
+0.67
+hydropower
+375
+(22.2)
+2.79
+2.17
+(22.4)
+3.48
+3.08
+coal-fired power
+340
+(18.0)
+3.44
+2.82
+(18.4)
+3.75
+3.06
+Sichuan
+307
+(8.9)
+2.39
+(1.7)
+3.06
+3.14
+2.11
+4.01
+Beijing
+70.3
+3.20
+5.45
+70.4
+3.35
+5.71
+coal-fired power
+70.3
+3.20
+5.45
+70.4
+3.35
+5.71
+Chongqing
+(2.5)
+3.14
+3.06
+(1.7)
+3.48
+3.42
+coal-fired power
+(2.5)
+(9.3)
+(9.3)
+3.0
+3.0
+2,160
+54,128
+Total
+1,730
+1,730
+Gas-fired power
+125
+125
+Hydro power
+16
+16
+56,288
+Wind power
+2,160
+52,257
+2016
+period
+2015
+Coal-fired power
+Power type
+reporting 31 December
+during the capacity as at
+installed
+(decreased)
+54,417
+Newly
+Projects put into
+operation during
+the reporting period
+2015 Change
+2016
+Power type
+Power consumption
+ratio of power plant
+(%)
+Average utilisation hours
+(Hour)
+In 2016, the growth of the total power consumption of China has rallied. However,
+affected by the significant growth of non-fossil fuel power generation as well as
+the increase in the installed capacity of thermal power generators, the average
+utilisation hours of thermal power equipment in the PRC recorded a continuous
+decrease year-on-year. The average utilisation hours of coal-fired generators
+of the Group reached 4,428 hours for the year, representing a year-on-year
+decrease of 203 hours and 263 hours above the national average utilisation
+hours of 4,165 hours¹ of thermal power equipment with capacity of 6,000kW
+and above. The efficiency of power generation improved constantly and the
+power consumption rate of the power plant decreased 0.25 percentage point as
+compared with the same period last year. As at the end of the reporting period, the
+installed capacity of circulating fluidized bed generating units of the Group reached
+6,484MW, which was 11.9% of the installed capacity of the coal-fired generating
+units of the Group.
+(4) Utilisation Rate of power generation equipment
+Section V Directors' Report (Continued)
+2016 Annual Report 51
+Data source: China Electricity Council
+1
+According to the Shut-down Programme of Small-scale Coal-fired Power Generators
+in Fujian Province, the 4×135MW coal-fired generators in Longyan Power Plant
+under Fujian Energy Company were shut down at the end of 2016, but the power
+generation quota planned for the future three years was retained for disposal and
+replacement.
+2,700
+Total
+2x350
+Liuzhou City, Guangxi Zhuang
+Autonomous Region
+Liuzhou Power
+2x1,000
+Shouguang City, Shandong
+Province
+Shouguang Power
+(MW)
+capacity
+installed
+added
+Location
+Gross installed
+capacity as at
+31 December
+4.18
+Gross
+Unit: MW
+1.98 (17.2)
+តុតុ
+1.64
+coal-fired power
+1.64
+Indonesia
+10.4
+431
+(18.8) 476
+1.76
+1.98 (17.2) 1.43
+1.43
+1.64
+Overseas in total/
+294
+294
+(18.2)
+292
+292 (18.2)
+401 26.9
+509
+(100.0)
+26.0
+404
+weighted average
+1.76
+(18.8)
+476
+capacity
+Installed
+At the end of the reporting period, the total installed capacity of power generation of
+the Group reached 56,288MW, which represented an increase of 4.0% as compared
+with the end of last year, accounting for 3.4% of 1.65 billion KW1 of the total installed
+capacity of power generation of China; among which, the total installed capacity
+of the coal-fired power generators is 54,417MW, which was 96.7% of the total
+installed capacity of the Group.
+Installed capacity
+(3)
+Section V Directors' Report (Continued)
+China Shenhua Energy Company Limited
+50
+(8.1)
+334
+307
+4.8
+210.45
+220.57
+4.5
+236.04 225.79
+Total/weighted
+average
+10.4
+431
+476
+(18.8)
+1.76
+1.98 (17.2) 1.43
+10.4
+431
+increased/
+2016 Annual Report 45
+Other costs
+production
+cost
+Production
+volume
+production
+cost
+tonnes RMB/tonne
+tonnes RMB/tonne
+%
+Polyethylene
+Polypropylene
+294.6
+5,839
+314.7
+5,348
+(6.4)
+284.0
+5,373
+308.7
+5,074
+(8.0)
+177,069
+183,127
+Total
+175,129
+1,940
+179,859
+3,268
+Revenue from external transactions in domestic markets
+Revenue from external transactions in overseas markets
+Revenue
+2015
+Unit: RMB million
+(V) Regional operation analysis
+In 2016, Baotou Coal Chemical Company contributed approximately RMB27 million
+on environmental protection, mainly for desulfurization and water-saving renovation.
+During the reporting period, the coal-to-olefins project is in compliance with the
+emission standard with no occurrence of major environmental pollution incidents.
+All the coals consumed by the coal chemical segment were the Group's coals. The
+coals consumed in 2016 were 4.0 million tonnes, representing a decrease of 4.8%
+as compared to 4.2 million tonnes of last year. The year-on-year increase in unit
+production cost of olefin products was mainly due to the suspension of operation
+for all equipment of the coal-to-olefins project in early April 2016 due to the system
+overhaul lasted for about one month, which in turn reduced the production volume
+of olefin products.
+9.2
+5.9
+95
+2016
+Note:
+Production
+volume
+Thousand
+volume
+Thousand
+%
+10.4
+15.0 Decreased
+margin
+by 4.6
+percentage
+Profit from
+RMB
+254
+649
+points
+(60.9)
+operations
+million
+Profit margin
+%
+5.3
+11.7 Decreased
+from
+Production production
+Unit
+Unit
+Unit
+Change
+2015
+cost
+2016
+(3)
+Section V Directors' Report (Continued)
+2016 Annual Report 59
+points
+by 6.4
+percentage
+operations
+Unit production cost of main products
+Revenue from external customers was classified based on the locations where the services were provided or the
+products were purchased.
+The Group is mainly engaged in the production and sales of coal and power, railway, port and
+shipping transportation as well as coal-to-olefins businesses in PRC. In 2016, the revenue from
+external transactions in domestic markets was RMB179,859 million, accounting for 98.2% of the
+Group's revenue. Affected by factors such as the increase in sale of coal and domestic coal price
+as well as the growth of transportation business, revenue from external transactions in domestic
+markets increased by 2.7% year-on-year. Affected by the significant increase in the volume
+of exported coal, revenue from external transactions in overseas markets increased by 68.5%
+year-on-year.
+60
+Change
+(%)
+Main reasons for changes
+1
+Shendong Coal Group
+Co., Ltd.
+4,989
+35,627 14,565
+7,433
+3,601
+106.4
+Increase in coal prices
+and sales volume
+2 Shuohuang Railway
+5,880
+37,057
+29,308
+6,487
+5,059
+tariff
+dispatch and power
+in the power output
+(38.1) Impact of the decrease
+2,374
+1,469
+2015
+5,564
+2,278
+Jinjie Energy
+3
+Ltd.
+Development Co.,
+28.2
+9,193
+the equity holders of the parent company
+2016
+assets assets
+As at 31 December 2016
+Not applicable
+Applicable
+Material investment in non-equity interest
+Not applicable
+Applicable
+(2)
+(3)
+Material investment in equity interest
+For information on the principal business of major subsidiaries of the Company and the
+percentages of equity interest held by the Company, please refer to note 43 to the financial
+statements of this report on investment in subsidiaries.
+The equity investments of the Company in 2016 amounted to RMB5,473 million (2015:
+RMB10,448 million), representing a year-on-year decrease of 47.6%. Equity investments mainly
+included capital increase in Baotou Energy Company, Shendong Power Company, Overseas
+Company and Shouguang Power, as well as the new establishment of Shenhua Guohua (Beijing)
+Distributed Energy Technology Company Limited, Jawa Company, Guohua Ningdong and
+Shenhua Guangdong Power Sales Company.
+(VI) Analysis on Investments
+In 2016, the Group proactively respond to the promotion of "the Belt and Road" initiative of
+the state by putting more efforts in international exploration. The operation of Guohua Sumsel
+Coal Power Project (Phase I) (2 x 150MW) in Indonesia was running steadily. Sumsel-1 Coal
+Power Project (2 x 300MW) in Indonesia obtained on-site permission approval in Indonesia
+to commence construction preparation works. The financing activities of Jawa-7 Coal Power
+Project (2 x 1,000MW) in Indonesia were completed and obtained environmental permission,
+construction permission and other approvals in Indonesia. The progress of the project was in line
+with the overall schedule. 17 out of 29 gas wells were under production process in the shale
+gas project in the United States and have produced gas volume of 330 million m³ attributable to
+the proportionate interest of Shenhua during the reporting period. The Watermark Coal Project
+in Australia continued to push forward the renewal of exploration rights and other works. Other
+external projects are commencing under the principle of stability and prudence.
+Section V Directors' Report (Continued)
+China Shenhua Energy Company Limited
+(1)
+Gross profit
+Financial assets at fair value
+At the end of the reporting period, financial assets at fair value of the Group were trust
+management products held by Shenhua Finance Company and a handful of thermal coal
+futures. The initial investment cost of the trust management products held by Shenhua
+Finance Company amounted to RMB50 million; and the deposit for thermal coal futures
+amounted to RMB2 million, which was used to hedge the risk of changes in coal price.
+No. Company
+Net
+Total
+Registered
+capital
+Net profit attributable to
+Unit: RMB million
+Financial assets at fair value held by the Group at the beginning of the period were swap
+instruments (cross currency interest rate swaps), which were mainly used to hedge the risk
+of currency exchange and interest rate incurred by foreign currency borrowings. The above
+contracts were all expired in 2016.
+Major subsidiaries
+(VIII) Analysis on major holding and associated companies
+Not applicable
+Applicable
+(VII) Disposal of material assets and equity interest
+Section V Directors' Report (Continued)
+2016 Annual Report 61
+1.
+4
+million
+4,330
+2016 Annual Report 57
+Section V Directors' Report (Continued)
+(1) Overview of production and operations
+The shipping segment strengthened the self-owned vessel management and vessel
+allocation and coordinated with coal sales activities to contribute to the integrated
+operation. In 2016, shipping volume amounted to 79.2 million tonnes, and shipment
+turnover amounted to 63.0 billion tonne nautical miles.
+(2)
+Operating results
+The operating results of the shipping segment of the Group before eliminations on
+consolidation are as follows:
+2016
+2015
+Change Main reasons for changes
+(%)
+Revenue
+RMB
+2,112
+2,002
+5.5
+million
+margin
+Increased
+12.1
+19.2
+%
+Gross profit
+Shipping Segment
+million
+1,707
+RMB
+Cost of sales
+volume over internal power plants
+(3.0) Decrease in fuel price, and improved
+control on costs
+in coastal areas and the weather;
+Increase in coal transportation
+Increase in shipping price in coastal
+markets affected by factors
+including the tight supply of coal
+1,760
+by 7.1
+5.
+by 9.9
+percentage
+points
+3,769
+33.7
+Increase in sales of seaborne coal
+million
+Cost of sales
+RMB
+2,523
+2,026
+24.5
+million
+Gross profit
+margin
+%
+49.9
+46.2
+Increased
+by 3.7
+percentage
+points
+Increase in relevant transportation
+costs as a result of the increase in
+seaborne coal sales
+due to the recovery of domestic
+coal market; Increase in the
+throughput of non-coal cargo
+due to the continued promotion
+of implementing the strategy
+of macroscopic logistics by the
+Group
+from
+operations
+Increased
+35.8
+45.7
+In 2016, the revenue generated from the internal transportation services provided
+by the port segment to the Group amounted to RMB4,465 million (2015: RMB3,452
+million), representing a year-on-year increase of 29.3% and accounting for 88.6%
+(2015: 91.6%) of the revenue of the port segment. Costs of internal transportation
+services provided for the Group amounted to RMB2,160 million.
+million
+%
+operations
+70.5
+1,350
+2,302
+RMB
+Profit from
+Profit margin
+percentage
+points
+Profit from
+tonnes RMB/tonne
+%
+%
+Polyethylene
+Polypropylene
+292.6
+7,222
+319.2
+7,432
+(8.3)
+(2.8)
+282.1
+5,958
+312.9
+6,508
+(9.8)
+(8.5)
+Analysis of operating results
+RMB
+Cost of sales
+(8.3) Decrease in production and sales
+volume in olefins products
+Decrease in production and sales
+volume of olefins products resulting
+from the suspended production
+for repairs for about one month in
+2016; Decrease in sales price in
+olefins products as affected by the
+fluctuation of fossil oil price at the
+low level
+million
+(13.0)
+tonnes RMB/tonne
+5,550
+RMB
+Revenue
+(%)
+2015 Change Main reasons for changes
+2016
+The operating results of the coal chemical segment of the Group before eliminations
+on consolidation are as follows:
+4,831
+Thousand
+Thousand
+Price
+operations
+by 6.0
+from
+Increased
+6.6
+12.6
+percentage
+points
+%
+million
+operations
+100.0
+133
+266
+RMB
+Profit margin
+4,720
+In 2016, the unit transportation cost of the shipping segment was RMB0.027/tonne
+nautical mile (2015: RMB0.027/tonne nautical mile), representing a flat year-on-year
+growth.
+China Shenhua Energy Company Limited
+Sales
+volume
+Price
+Change
+2015
+Sales
+volume
+Price
+2016
+Sales
+volume
+58
+The sales of polyethylene and polypropylene products of the Group in 2016 is as follows:
+(2)
+Overview of production and operations
+(1)
+Coal Chemical Segment
+6.
+Section V Directors' Report (Continued)
+The coal chemical segment of the Group comprises the coal-to-olefins project
+which was operated by Baotou Coal Chemical Company. Its main products consist
+of polyethylene (with production capacity of approximately 300,000 tonnes/year)
+and polypropylene (with production capacity of approximately 300,000 tonnes/year)
+and other minor byproducts include industrial sulfur, mixed C5, industrial propane,
+mixed C4, industrial methanol, etc.. The methanol-to-olefins (MTO) equipment of the
+coal-to-olefins project was the first large-scale MTO equipment in China.
+5,040
+Shenhua Trading Group
+24,844
+(A) Related Party Transaction Control Committee
+(B)
+(C)
+Related Party Transaction Control Committee of Shenhua Finance
+Company is responsible for administration over the related party
+transactions of the company, including identification, statistics,
+forecasts, reporting, limit management and recommendations in
+respect of the related party transactions.
+In 2016, the Related Party Control Transaction Committee held one
+meeting.
+Risk Management Committee
+Risk Management Committee of the board of Shenhua Finance
+Company is responsible for assisting the board of Shenhua Finance
+Company to review the company's overall target of risk management,
+risk management policies, risk management procedures and internal
+control processes, and monitor and assess the risk management
+endeavors of relevant senior management members and the risk
+management function.
+In 2016, the Risk Management Committee held one meeting.
+Audit Committee
+In order to further improve the corporate governance structure and the
+internal audit management mechanism, Shenhua Finance Company
+approved the Proposal on Establishment of the Audit Committee on
+the 7th meeting of the fourth session of the board of directors held on
+10 November 2016, and established the Audit Committee which was
+responsible for advising the internal audit of the company and providing
+advice and consultation for board decision-making.
+In 2016, the Audit Committee did not hold any meeting.
+Change Main reasons for changes
+(%)
+2015
+2016
+The operating results of the port segment of the Group before eliminations on
+consolidation are as follows:
+Analysis of operating results
+(2)
+The port segment implemented the strategy of macroscopic logistics and
+strengthened the connection between upstream and downstream in 2016 by
+improving the efficiency of loading vessels to ensure steady and integrated
+operation. The Group further increased the seaborne coal sales through the
+self-owned ports according to the principle of maximization of overall efficiency.
+The proportion of the seaborne coal sales through the self-owned ports increased
+to 88.9% to the total seaborne coal sales from 77.8% last year. The seaborne coal
+sales through Huanghua Port for the year was 158.6 million tonnes, representing
+a year-on-year increase of 42.1%. The seaborne coal sales through Shenhua
+Tianjin Coal Dock was 39.5 million tonnes, representing a year-on-year decrease of
+2.0%. Non-coal business recorded a relatively rapid growth with bulk cargo and oil
+throughput exceeding 10 million tonnes.
+Overview of production and operations
+The board of Shenhua Finance Company currently has three board
+committees, namely the Related Party Transaction Control Committee, Risk
+Management Committee and Audit Committee.
+(1)
+Board Committees
+Section V Directors' Report (Continued)
+Zhang Donghui
+Chairman
+Executive director, general
+manager
+Executive director
+Executive director, deputy
+general manager
+Non-executive director
+Independent director
+Employee director
+Note: According to the resolutions passed at the second shareholder's general meeting of
+Shenhua Finance Company in 2016, it was proposed to recommend the appointment
+of Mr. Xu Shancheng to serve as a director of the company, and Mr. Hao Jianxin will no
+longer serve as a director of the company. The approval procedure on the qualification
+for appointment of Mr. Xu Shancheng is under progress and will be duly valid upon the
+approval from the Beijing Branch of China Banking Regulatory Commission.
+2016 Annual Report 63
+Section V Directors' Report (Continued)
+Dr. Zhang Kehui, the chairperson of Shenhua Finance Company, has many
+years of financial management and auditing experience, she has served as
+the deputy general manager of the financial department of Shenhua Group
+Corporation and head of the auditing department of China Shenhua. Dr. Zhang
+Kehui also serves concurrently as the chief financial officer of China Shenhua.
+Each of the three executive directors has extensive experience in financial
+and risk management. Mr. Han Weiping, executive director, has over 30 years
+of experience in financial management. He served as the deputy general
+manager of the financial department of Shenhua Group Corporation in 1996,
+and deputy general manager and general manager of Shenhua Real Estate
+Co Ltd. since 2001. Mr. Han has extensive experience in management.
+Ms. Mei Xueyan, executive director, has served as a director of Shenhua
+Finance Company since January 2005 and had served as the general manager
+of Shenhua Finance Company. Ms. Mei Xueyan had worked on capital
+planning, finance investment and internal control at the headquarters of China
+Construction Bank for eight years. Mr. Zhang Ying, executive director, joined
+Shenhua Finance Company in 2000 and has served as a deputy general
+manager of Shenhua Finance Company since November 2011. Working at
+Shenhua Finance Company for many years, Mr. Zhang Ying is familiar with
+the business and conditions of Shenhua Finance Company and possesses
+extensive management experience.
+Mr. Feng Ning, non-executive directors, and Ms. Zhang Donghui, employee
+director, participated in the decision-making process of the Company by
+attending board meetings.
+Mr. Du Shengli, an independent director, is an associate professor of Tsinghua
+University School of Economics and Management. He has over 20 years
+of experience in capital operation management and corporate financial
+operation, group management control and performance evaluation, corporate
+governance and financial company management, state-owned assets
+supervision and state-owned enterprise operation, and 15 years of experience
+as an independent director.
+The board of Shenhua Finance Company Limited operates in accordance
+with the Articles of Association of Shenhua Finance Company Limited. Any
+resolution passed at the board meetings of Shenhua Finance Company will
+only be valid if consent is obtained from two-thirds or more of directors
+present at the meeting, at which more than one-half of all directors shall be
+present.
+In 2016, the board of Shenhua Finance Company held three meetings.
+64
+China Shenhua Energy Company Limited
+B.
+7
+Port Segment
+Section V Directors' Report (Continued)
+there was an increase in coal
+transportation turnover of railways
+year-on-year; expansion in third
+party coal transportation and non-
+coal transportation businesses by
+the Company
+With the recovery of coal market,
+million
+14,595
+17,350
+Cost of sales RMB
+23.1
+33,530 27,232
+RMB
+million
+Revenue
+(%)
+Change Main reasons for changes
+2015
+2016
+The operation results of the railway segment of the Group before elimination on
+consolidation are as follows:
+Section V Directors' Report (Continued)
+2016 Annual Report 55
+Operating results
+(3)
+18.9 Increase in depreciation and
+4.
+amortization, personnel expenses
+and repairs as a result of the
+commencement of the operations
+of new railway lines; Increase in
+fuel and power costs in relation
+to railway operation arising from
+the increase in coal transportation
+volume
+%
+1,889
+56
+In 2016, the unit transportation cost in the railway segment was RMB0.067/
+tonne km (2015: RMB0.071/tonne km), representing a year-on-year decrease of
+5.6%, mainly due to the significant increase in transportation turnover volume of
+self-owned railways.
+In 2016, the revenue generated from the internal transportation services provided
+by the railway segment for the Group amounted to RMB29,356 million (2015:
+RMB23,812 million), representing a year-on-year increase of 23.3%, accounting for
+87.6% of the revenue of the railway segment (2015: 87.4%).
+37.0 Increased
+by 7.7
+percentage
+points
+operations
+from
+44.7
+million
+%
+Profit margin
+operations
+points
+49.0
+10,070
+15,000
+RMB
+Profit from
+Increased
+by 1.9
+percentage
+46.4
+48.3
+Gross profit
+margin
+Du Shengli
+China Shenhua Energy Company Limited
+Feng Ning
+4,670
+12,467
+7,320
+1,059
+1,701
+139.7 Increase in the loading
+volume of vessels at
+the port
+(37.7) Decrease in the power
+output dispatch and
+power tariff
+8 Zheneng Power
+3,255 11,616
+5,529
+1,034 1,618
+(36.1) Decrease in the power
+tariff
+9
+Shenwan Energy
+Company
+4,696
+13,437
+8,115
+Taishan Power
+7
+Company
+Administration
+6
+5,888
+1,465
+(378)
+(487.6) Sales model was changed
+from the buyout model
+to agency model
+5 Zhunge'er Energy
+7,102 31,584
+886 1,212
+24,678
+1,305
+(2.1)
+Company
+6
+Huanghua Harbour
+6,790 15,787
+9,385
+1,213
+506
+1,278
+(26.9)
+RMB
+1,561 6,237 2,987
+7.14
+4.29
+100.00
+During the reporting period, Shenhua Finance Company strictly implemented the following
+resolutions passed at the 12th meeting of the second session of the Board of China
+Shenhua held on 25 March 2011: (1) China Shenhua currently had no intention or plan to
+change the existing operation policies and strategies of Shenhua Finance Company; (2)
+the deposits placed by China Shenhua and its subsidiaries and branches with Shenhua
+Finance Company would be used solely for the credit business of China Shenhua and its
+subsidiaries and branches, and would be deposited in the People's Bank of China and the
+five major commercial banks (namely, Industrial and Commercial Bank of China, Agricultural
+Bank of China, Bank of China, China Construction Bank and Bank of Communications), and
+would not be invested in the public market/private equity market and real estate, etc.
+(1)
+Governance of Shenhua Finance Company is as follows:
+A.
+Board of directors
+Members of the board at the end
+of the reporting period
+Position
+1
+Zhang Kehui
+2
+Han Weiping
+34
+Mei Xueyan
+Zhang Ying
+5
+10 Dingzhou Power
+7.14
+81.43
+No.
+interest held
+991
+(%)
+869
+(12.3)
+Note:
+1. The financial information of the major subsidiaries disclosed in the above table (unassessed
+adjustment before consolidation) was prepared in accordance with the Accounting Standards for
+Business Enterprises. The data have not been audited or reviewed.
+2. Shendong Coal Group Corporation recorded a revenue of RMB39,256 million and a profit from
+operations of RMB9,004 million in 2016.
+Details regarding the Company's acquisition of subsidiaries are set out in investment in
+subsidiaries of note 43 to the financial statements of this report.
+62
+China Shenhua Energy Company Limited
+3. Shuohuang Railway Company recorded a revenue of RMB17,250 million and a profit from operations
+of RMB8,557 million in 2016.
+China Shenhua Energy Company Limited
+Shuohuang Railway Development Co., Ltd.
+Shenhua Zhunge'er Energy Co., Ltd.
+Shenhua Baoshen Railway Co., Ltd.
+2.
+Shenhua Finance Company
+As of the end of the reporting period, the Company directly and indirectly held 100% equity
+interest in Shenhua Finance Company.
+No.
+Name of Shareholder
+1234
+Total
+Section V Directors' Report (Continued)
+Percentage
+of equity
+China Shenhua Energy Company Limited
+66
+0
+4.4
+guaranteed loans
+Of which: balance of
+Section V Directors' Report (Continued)
+0
+B.
+123
+(a)
+Balance of deposits of the top ten customers
+Unit: RMB million
+As at
+31 December
+2016
+No.
+Name of customer
+China Shenhua Energy Company Limited
+29,380
+Balance of deposits and borrowings of the top ten customers
+30,672
+2016 Annual Report 65
+(9.1)
+(2)
+(3)
+33,111
+Section V Directors' Report (Continued)
+Risk Management and Internal Control
+Shenhua Finance Company establishes a comprehensive risk management system
+for all business departments by means of real-time assessment by risk management
+department and internal audit based on corporate governance.
+The establishment of a comprehensive risk management system consists of
+one objective: comprehensive risk management objective; two levels: corporate
+governance level and company management level; three dimensions of control:
+all-round control, entire-process control and all-member control; four sub-systems:
+organization sub-system, scheme sub-system, control sub-system and supervision
+sub-system; and five elements: internal environment, risk identification and
+assessment, control activities, information and communication and internal
+supervision.
+Shenhua Finance Company established a comprehensive risk management
+framework with "one basis and three lines of defense". One basis refers to a sound
+corporate governance structure; and three lines of defense refer to the front line
+of defense comprising all business and functional departments of the company,
+the middle line of defense comprising the risk management and compliance
+departments, and the back line of defense comprising the audit and internal audit
+departments.
+With a strategic objective of "building an internal control system compatible with
+the intrinsic safety management framework of the Group and in compliance with
+external regulatory requirements with an aim of increasing value of the shareholders'
+capital, targeted at risks and in a means of process based on the company's
+development strategy", Shenhua Finance Company has progressively established an
+effective inspection and supervision mechanism to conduct regular or spot tracking
+inspection and supervision on internal control and stringent rectification of identified
+internal control defects.
+Deposits and Loans of Shenhua Finance Company during the reporting period
+A. Total deposits and loans at the end of the reporting period
+Unit: RMB million
+As at
+As at
+31 December
+2016
+31 December
+2015
+Change
+(%)
+Balance of deposits
+46,603
+51,282
+Balance of loans
+2
+703
+3,777
+620
+Note: Data of all companies were consolidated except those of Shenhua Group
+Corporation, which were based on the headquarters of the company.
+(b)
+Balance of loans of the top ten customers
+Unit: RMB million
+As at
+31 December
+2016
+No. Name of customer
+123
+Shenhua Ningxia Coal Industry Group Co., Ltd.
+4,500
+Shenhua Xinzhun Railway Co., Ltd.
+3,500
+State Grid Energy Hami Coal and Electricity
+3,000
+Co., Ltd.
+Shenhua Zhunchi Railway Company Limited
+3,000
+Shenhua Yili Energy Co., Ltd.
+2,198
+Shenhua Group Corporation Limited
+Shenhua Guoneng Group Company Limited
+10
+Shenhua Ningxia Coal Industry Group Co., Ltd.
+3
+China Shenhua Coal Liquefaction and Chemical
+1,736
+Company Limited
+4
+Beijing Guohua Power Company Limited
+1,647
+5
+China Shenhua International Construction
+1,193
+Company Limited
+6
+China Energy Conservation and Environmental
+1,017
+Protection Group
+7
+Guohua Energy Investment Co., Ltd.
+798
+8
+Shenhua Wuhai Energy Co., Ltd.
+9
+684
+456900
+In 2016, as a result of the steady improvement trend of macro economy, the low base
+for the same period in 2015, the high temperature in summer and other factors, the
+power consumption of the whole society in 2016 remained a relatively rapid growth. The
+cumulative power consumption of the whole society for the year was 5,919.8 billion kWh,
+representing a year-on-year growth of 5.0% and an increase of 4 percentage points in
+growth rate as compared with that of 2015.
+Shenhua Bayannur Energy Co., Ltd.
+Prospects for 2017
+In 2017, it is expected that the gross domestic product (GDP) growth of China will
+maintain at around 6.5%, which is beneficial to the stability of the domestic coal
+demand. The Chinese government will further push forward the supply-side reform
+of the coal industry. The dynamic balance between demand and supply of coal will
+be safeguarded by the elimination of backward production capacity, adjustment to
+the production volume and other measures in response to changes in demand and
+prices. It is expected that the annual coal supply will undergo dynamic fluctuation
+under the influence of the policies.
+Under the influence of certain factors including the seasonal relationship between
+supply and demand of coal in the PRC and transportation cost, it is expected that the
+coal import volume will remain at a proper scale throughout the year.
+The demand for thermal coal is expected to experience seasonal fluctuation.
+Under the dual adjustments of demand and the government, the market will be
+gradually rationalised and the demand and supply has been balanced with a slight
+overcapacity. The price will be subject to volatility based on the contract coal price.
+Thermal coal market in the Asia Pacific region
+Review of 2016
+3.
+2016 Annual Report 71
+Section V Directors' Report (Continued)
+There is a decrease in total export volume of major coal exporters in 2016. Australia
+exported 380 million tonnes of coal, representing a year-on-year decrease of 2.3%.
+Indonesia exported 310 million tonnes of coal, representing a year-on-year decrease
+of 16.3%. The United States exported 50 million tonnes of coal, representing
+a year-on-year decrease of 23%. Russia exported 170 million tonnes of coal,
+representing a year-on-year increase of 5.8%.
+Affected by the increase in coal production volume in India, the import of thermal
+coal experienced a downward trend with a cumulative import volume of 200 million
+tonnes of coal during the year, representing a year-on-year decrease of 2.6%. The
+import scales of Japan and Korea were basically stable. Japan imported 190 million
+tonnes of coal, representing a year-on-year decrease of 0.5% whereas Korea
+imported 140 million tonnes of coal, representing a year-on-year increase of 1.2%.
+Prospects for 2017
+In 2017, there will be a sufficient supply of goal. The implementation of China
+Australia Free Trade Agreement is beneficial to the coal export of Australia. Despite
+the impact of exchange rate and the decrease in domestic coal demand, the coal
+export of Russia will increase steadily. By virtue of the increase of domestic demand
+of thermal coal in Indonesia, the coal export is expected to decrease. Given the
+decrease in production volume in the United States and other factors, the coal export
+will remain relatively sluggish.
+China and India will remain as the major consumers of coal. Demand for thermal
+coal in India will remain at a relatively high level, and yet, with the significant growth
+in production volume of coal in the nation, the export volume will experience a
+downturn. Coal import volume in Japan, South Korea and other countries is expected
+to remain stable.
+Impacted by the slackened global economy growth, structural adjustment of energy,
+slow energy consumption growth and other factors, it is expected that coal demand
+in 2017 will decrease steadily and the price of thermal coal will drop.
+The coal inventory level decreased. As of the end of 2016, the coal inventories at
+major ports in northern areas, major coal enterprises and major power plants were
+175.8 million tonnes in aggregate, representing a decrease of 37.0 million tonnes or
+26.6% compared with the beginning of the year.
+Market environment of the power industry
+The coal transportation volume through railways in China was 1,900 million tonnes
+during the year, representing a year-on-year decrease of 4.7%. Coal outbound
+shipment through major ports in China was 640 million tonnes, which basically
+remained at the same level as last year.
+(2)
+(%)
+3,410
+3,747
+(9.0)
+255.6
+204.1
+25.2
+1,900
+1,994
+(4.7)
+In 2016, raw coal production of in the PRC was 3,410 million tonnes, representing
+a year-on-year decrease of 9.0%, of which the decline was further larger compared
+with last year, among which, Inner Mongolia accounted for 840 million tonnes,
+representing a year-on-year decrease of 8.1%; Shanxi accounted for 820 million
+tonnes, representing a year-on-year decrease of 14.4%; Shaanxi accounted for 510
+million tonnes, representing a year-on-year decrease of 2.8%.
+Affected by a tight supply of domestic coals at certain stages, the import volume
+of coal was significantly rebounded. The accumulated import volume of coal for the
+year amounted to 256 million tonnes, representing a year-on-year increase of 25.2%.
+70
+China Shenhua Energy Company Limited
+Section V Directors' Report (Continued)
+Consumption volume of coal in the PRC in 2016 decreased by 4.7% year-on-year
+following the decrease for two consecutive years. In the main coal consumption
+downstream industry, the coal consumption of power and chemical industries
+increased year-on-year while the coal consumption of iron and steel and building
+material industries still declined compared with the same period of last year.
+change
+Review for 2016
+72
+The market share of coal-fired power generation has declined but its dominant position
+has not changed. As clean and efficient coal-fired power generation technology keeps
+improving, the competitiveness of high-quality thermal power will be enhanced, which in
+turn provides a key support for the development of the industry.
+The concept of "the Belt and Road" strategy initiated by China provides important external
+opportunities for exploring international markets, which creates enormous potential in
+overseas business development.
+The supply-side reform will accelerate the elimination of backward production capacity
+and promote mergers and acquisitions of coal and electric power enterprises in order to
+achieve large-scale and clean development. New acquisitions and investment opportunities
+will come along with the state's transport corridor and local railway construction. The
+advancement of technology will also provide investment opportunities for promoting
+technology industrialization.
+74
+China Shenhua Energy Company Limited
+Section V Directors' Report (Continued)
+2.
+China Shenhua's future main challenges:
+3.
+In 2017, the new normal state of the coal industry will become defined. The development
+mode of coal industry on the expansion of output and capacity has changed, which in turn
+causes changes in the market competition model.
+The slow international economy recovery and the national economy structure under
+adjustment will slacken the growth in the demand for energy, including coal. The coal
+market will fluctuate and the pressure for falling coal prices will linger in long term despite
+the recovery of coal price in 2016.
+The power business has encountered more difficulties in accelerating development. The
+growth in demand for power will decrease as affected by the slow growth in economy; the
+government accelerated the adjustment of the power structure, and imposes a strict limit
+on the newly installed capacity of coal-fired power; factors such as the structural reform of
+the power industry will intensify the competition in the industry.
+With regard to the tightening regulation on energy and the environment, the potential
+risks posed by environmental and ecological protection are gradually increasing. The entry
+requirements for coal exploitation and coal-fired power development and standards for
+energy saving, environmental protection and production safety, etc. are becoming more
+stringent. Restraints on water resources and significant investment in infrastructure are the
+key factors that affect the development of the coal chemical business.
+Development Strategy of China Shenhua
+China Shenhua will step up the implementation of the clean energy development
+strategy. Focusing on the goal of "building itself into a world first-class supplier of
+clean energy", China Shenhua will accelerate the change in the concept and mode of
+development and facilitate the four developments, namely "safe development, transitional
+development, innovative development and harmonious development", and achieve the
+"five enhancements", namely "enhancing the quality and efficiency of development,
+the standards of management, the capability of internationalization, the soft power of
+the enterprise and the ability to fulfill social responsibilities." With the emphasis on
+optimising and strengthening the integrated operation model based on the concept
+of clean development, China Shenhua will reinforce coal sales to promote clean coal
+products, develop signature products for Shenhua, strengthen the integrated operation of
+coal production, transportation and marketing, improve the production chain of clean and
+efficient exploration, utilisation and conversion of coal, and refine the technological system
+of clean combustion and efficient conversion of coal to form a reliable income source.
+Furthermore, China Shenhua will initiate new businesses in line with the direction of future
+development, progressively develop overseas business and actively reach out to the
+power sales market. Also, it will launch the macroscopic logistics business provided that
+its transportation capacity meets its demand, so as to explore new room for development
+and create new points of profit growth. Through the implementation of clean energy
+strategy, China Shenhua improves its comprehensive competitiveness, profitability and risk
+resilience, adhere to the continuity and stability of the profit distribution policy, and dutifully
+assume its social responsibility, building China Shenhua into a reputable international
+company and creating greater value for its shareholders.
+As a major energy source and industrial material, coal will remain as one of the primary
+energy sources in China in the medium and long term. It offers fundamental protection
+of a safe and stable supply of energy in China. The safe, green and efficient development
+as well as the technology of clean, efficient and low-carbon utilisation of coal can further
+explore the use of coal.
+The installed capacity of the power generation generators nationwide will continue
+to increase. As at the end of 2016, the power generation generators of power plants
+nationwide with an installed capacity of 6,000kW or above reached 1.65 billion kW,
+representing a growth of 8.2% as compared with the end of last year, of which the
+installed capacity of thermal power was 1.05 billion kW, representing a growth of 5.3%
+and a year-on-year decrease of 2.5 percentage points in growth rate. The installed capacity
+of power generation by non-fossil energy such as hydropower and nuclear power will
+continue to increase with a high speed.
+China Shenhua's opportunities for future development
+Development Strategy of the Company
+China Shenhua Energy Company Limited
+Section V Directors' Report (Continued)
+4.
+Thermal power generation by power plants above the scale in the PRC amounted to
+4,395.8 billion kWh, representing a year-on-year growth of 2.6%; while hydropower
+generation amounted to 1,051.8 billion kWh, representing a year-on-year growth of 5.9%. As
+influenced by the relative overcapacity of thermal power generation, the increase in power
+generation capacity by non-fossil energy and other factors, the utilisation hours of thermal
+power generators was 4,165 hours during the year, representing a year-on-year decrease
+of 199 hours and being a new low since 1964; the average utilisation hours of hydropower
+and wind power generators remained a year-on-year increase.
+The nationwide demand and supply of power was generally on ease. There was a balanced
+demand and supply of power in northern region and an easing demand and supply of
+power in eastern, central and southern regions in general, while there was sufficient power
+supply in northeastern and northwestern regions.
+Prospects for 2017
+In 2017, in consideration of factors including the macro economy and the expected growth
+in power consumption of the service industry and for domestic use, it is expected that the
+demand of power consumption for the year will remain at a growing momentum.
+In 2017, the power supply nationwide will be adequate. It is expected that the momentum
+of rapid increase of installed capacity of thermal power generators will be under effective
+control and the proportion of installed capacity of power generation by non-fossil energy
+will further increase.
+The demand and supply of power nationwide in 2017 will remain at the overall stagnant
+trend and the power consumption structure and regional demand and supply distribution
+will remain basically the same as last year. It is expected that the utilisation hours of
+thermal power generators for the year will continue to experience a year-on-year downturn
+under the influence of the increase in power generation capacity by non-fossil energy and
+other factors. By virtue of the rise of coal-fired power generation costs, thermal power
+generation enterprises will encounter more severe difficulties and challenges.
+Impact of the "Thirteen Five-Year" Plan on Coal and Electricity Market
+Adhering to the "clean, low-carbon, efficient and concentrated" principal determined
+by the "Thirteen Five-Year" Plan for the Development of Coal Industry, excessive and
+obsolete production capacity will be eliminated by approximately 800 million tonnes per
+year while advanced production capacity will be increased by 500 million tonnes per year
+through replacement of existing capacities with less amount and layout optimisation during
+the "Thirteen Five-Year" Plan Period, hence the production capacity of coal is expected
+to reach 3.9 billion tonnes by 2020. The country strives to further centralise the national
+coal production and development towards large-scale coal production bases and further
+optimise the coal production structure in order to further raise the degree of concentration
+of the industry. Meanwhile, the construction of intelligent coal mines and eco-civilized
+mining areas will be proactively pushed forward to enhance the quality and the clean and
+efficient use of coal products, which enables the clean development and utilisation of coal
+to enter into a new stage. It is expected that, by the end of the "Thirteen Five-Year" Plan
+Period, the overcapacity coal industry will be further mitigated with a more balanced
+market demand and supply and a significantly optimised industry structure, and substantive
+progress will be achieved for transformation to clean and efficient coal utilisation in the coal
+industry.
+(II)
+2016 Annual Report 73
+Section V Directors' Report (Continued)
+According to the "Thirteen Five-Year" Plan for the Development of Electricity, by 2020,
+the proportion of the installed capacity of power generators of non-fossil energy will
+be approximately 39%, representing a year-on-year increase of 4 percentage points as
+compared with that of 2015, while the proportion of power generation will increase to
+31%, and the effects of alternative power generation by non-fossil energy will further
+emerge. Acceleration in the transformation and upgrade of coal power generation,
+stringent control on planning and construction of coal power plants and reasonable control
+on the construction progress of coal power generation base are necessary for promoting
+the transformation and upgrade of coal power generation and the orderly development of
+clean coal utilisation. During the "Thirteen Five-Year" Plan Period, the scale of the installed
+capacity of coal power generators nationwide is strived to be controlled within 1.1 billion kW
+and the proportion will decrease to approximately 55% while the postponement and
+cancelation of coal power construction projects exceed 150 million kW. It is expected that
+the rapid growth in installed capacity of thermal power generators will be subject to change
+during the period of "Thirteen Five-Year" Plan, and the coal-fired power plants which firstly
+complete the clean transformation will have a space for survival and development among
+the market competition.
+1.
+2015
+In 2016, as the economic recovery failed to meet the expectation and the structural
+adjustment in energy sector continued to be advanced, coal demand in countries
+with traditionally high coal consumption dropped as a whole. Affected by influence of
+certain factors including the decrease in production volume of major coal producing
+countries, the supply in global coal market shrunk further while the international
+coal price rose under fluctuation. The spot price of Newcastle NEWC thermal coal
+increased from US$49.11/tonne at the beginning of the year to US$94.44/tonne at
+the end of the year.
+2016
+Section V Directors' Report (Continued)
+C.
+Approval of loans during the reporting period
+Unit: RMB million
+Item
+2016
+Amount of contracted loans
+10,620
+Amount of granted loans (including discounted assets) Note
+8,082
+Of which: amount of guaranteed loans
+(including discounted assets) Note
+Amount of rejected loans
+/
+Note: The amount of granted loans refers to the balance as at 31 December 2016 of the loans
+granted in the current year in connection with the loans contracts signed in 2016.
+2016 Annual Report 67
+Co., Ltd.
+1,000
+Inner Mongolia Dayan Mining Industry Group
+2,129
+7
+Shenhua Ganquan Railway Co., Ltd.
+1,857
+8
+Shenhua Guoneng Jiaozuo Power Plant
+1,500
+(IX) Structured Vehicle Controlled by the Company
+Company Limited
+Year-on-year
+1,000
+10
+China Shenhua Coal Liquefaction and Chemical
+1,000
+Company Limited
+11
+9
+(X)
+Shenhua Group Corporation Limited
+Environmental Policies and Performance
+In 2017, Chinese economy is still confronted with various uncertainties. The government
+will adhere to the general principle of making progress while ensuring stability, and focus
+on the quality and effectiveness enhancement. With the key target of promoting the
+supply-side reform, it will properly expand the overall demand, and take various measures
+including maintaining a stable growth of the economy, promoting reforms, making
+structural adjustments, benefitting people's livelihood and preventing risks to facilitate
+stable and healthy development of the economy. It is expected that in 2017, the GDP
+growth will be around 6.5%, the CPI increase will maintain at around 3%, and the PPI will
+increase compared with the same period of last year. The all-year coal demand is expected
+to remain stable, and electricity demand is expected to remain at a growing momentum.
+1 This section is for reference only and does not constitute any investment advice. The Company has used its best endeavors
+to ensure the accuracy and reliability of information in this section, but does not assume any liability or provide any form of
+guarantee for the accuracy, completeness or validity of all or part of its content. If there is any error or omission, the Company
+does not assume any liability. The content in this section may contain certain forward-looking statements based on subjective
+assumptions and judgments of future political and economic developments; therefore there may exist uncertainties in these
+statements. The Company does not undertake any responsibility for updating the information or correcting any subsequent
+error that may appear. The opinions, estimates and other data set out herein can be amended or withdrawn without further
+notice. The data contained in this section are mainly derived from sources such as the National Bureau of Statistics, China Coal
+Market Network, China Coal Resource Network, China Electricity Council, and China Coal Transportation & Sales Society etc.
+2016 Annual Report 69
+Section V Directors' Report (Continued)
+2.
+Market environment of the coal industry
+(1) Thermal coal market in the PRC
+Review of 2016
+In 2016, the condition of excessive production capacity of coal subsisted without
+substantial changes. Affected by supply-side reform policy of the industry and
+seasonal factors, however, the supply and demand fluctuated greatly in the market.
+Coal mines in the PRC have implemented a system of 276 working days each year
+since 1 May. Therefore, the coal supply volume was restrained. The coal market
+has turned to a direction in favourable to the supplier, and thus, the coal price has
+rallied. When entering the third quarter, both the production of thermal power and
+demand for thermal coal increased. The supply and demand of coal turned within a
+short period from basically balanced to a tight supply in certain districts with rapidly
+increasing coal price. In order to suppress the excessive growth of coal price, the
+Government orderly utilised safe and advanced production capacity of high efficiency
+since 1 October 2016. Since November, with the gradual utilisation of advanced
+production capacity, a tight supply of coal resources in certain districts has been
+alleviated to some extent and the coal price has decreased slightly. As of the end
+of 2016, the price index of Bohai Bay thermal coal (5,500 kcal) was RMB593/tonne,
+increasing by RMB222/tonne compared with the beginning of the year (RMB371/
+tonne). During the year, the average price of Bohai Bay thermal coal price index was
+RMB460/tonne, representing a year-on-year increase of 7.5%.
+Raw coal output
+Coal import
+(million tonnes)
+Coal transportation by
+railway (million tonnes)
+Applicable ✓ Not applicable
+In 2016, facing the complex domestic and overseas economic environment, the Chinese
+government continued to strengthen supply-side reform, and further promoted the five
+missions of "eliminating excessive capacities, destocking, deleveraging, lowering costs
+and shoring up growth in weak areas". The national economy has been steady amidst
+slowdown trend and improved at a steady pace. The GDP was recorded a year-on-year
+increase of 6.7%, representing a decrease of 0.2 percentage point compared with the
+same period of last year. The Consumer Price Index (CPI) was recorded a year-on-year
+increase of 2.0%, representing an increase of 0.6 percentage point compared with
+the same period of last year. The PPI was recorded a year-on-year decrease of 1.4%,
+representing a decrease of 3.8 percentage points compared with the same period of last
+year.
+Macro economy
+(million tonnes)
+Competition and Development Trend in the Industry
+The Group is committed to the long-term sustainability of the environment and communities
+in which it operates. Acting in an environmentally responsible manner, the Group endeavors
+to comply with laws and regulations regarding environmental protection and adopt effective
+measures to achieve efficient use of resources, energy saving and waste reduction.
+1.
+Please refer to the Social Responsibility Report of the Group for information in respect of
+environmental protection of the Company.
+(XI) Compliance with Relevant Laws and Regulations
+(XII) Relationship with Stakeholders
+For details of remuneration and training of the Group's employees, please refer to the section
+headed "Directors, Supervisors, Senior Management and Employees". The Group also
+understands that it is important to maintain good relationships with customers, suppliers and
+other business partners to achieve its long-term goals. Accordingly, our senior management have
+kept good communication, promptly exchanged ideas and shared business updates with them
+when appropriate. In 2016, there was no material and significant dispute between the Group and
+its customers, suppliers and other business partners.
+68
+China Shenhua Energy Company Limited
+As far as the Board and management are aware, the Group has complied in all material aspects
+with the relevant laws and regulations that are related to the business and operation of the
+Group. In 2016, there was no material breach of or non-compliance with the applicable laws and
+regulations by the Group.
+Section V Directors' Report (Continued)
+III.
+(I)
+(XIII) Subsequent Events
+On 4 January 2017, Dr. Han Jianguo has resigned as the president of the Company, and the
+Board of the Company accepted his resignation. Upon his resignation from the position as the
+president of the Company, Dr. Han Jianguo will continue to serve as an executive director of the
+third session of the Board, and as a member of the Strategy Committee and the Safety, Health
+and Environment Committee of the Board of the Company.
+As considered and approved on the 22nd meeting of the third session of the Board of the
+Company held on 4 January 2017, it was approved that Dr. Ling Wen, the vice chairman of
+the Company, has been appointed as the president of the Company for a term of three years
+commencing from the date of approval by the Board, and may be re-appointed upon the expiry of
+the term.
+DISCUSSION AND ANALYSIS ON FUTURE DEVELOPMENT OF THE COMPANY¹
+140.58
+147
+RMB100 million
+Selling, general and administrative
+1,248.43
+11.2
+1,428
+RMB100 million
+4.6
+Cost of sales
+14.4
+expenses and net finance costs
+As influenced by factors such as rebound of coal price, the year-on-year increase in profit for the
+period attributable to equity holders of the Company in January to March 2017 is expected to
+reach or exceed 50%.
+cost of the self-produced coal
+1
+Year-on-year
+decrease
+ranging 1% to
+2%
+Year-on-year
+1
+decrease of
+11.0%
+The above business targets and estimates are subject to risks, uncertainties and assumptions.
+The actual outcome may differ materially from these statements. Such statements do not
+constitute actual commitments to investors. Investors should be aware that undue reliance on or
+use of such information may lead to investment risks.
+(IV) Capital expenditures plans for 2017
+1. Coal segment
+2. Power segment
+1,831.27
+3. Transportation segments
+Percentage change of unit production
+2,036
+(decrease)
+Revenue
+Of which: Railway
+(III) Business Targets for 2017
+Item
+2016 Annual Report 75
+Section V Directors' Report (Continued)
+Accomplishment
+Increase/
+Unit
+Target of 2017
+in 2016
+(%)
+Commercial coal production
+Coal sales
+100 million tonnes
+2.98
+2.898
+2.8
+100 million tonnes
+4.07
+3.949
+3.1
+Power output dispatch
+billion kWh
+214.7
+220.57
+(2.7)
+RMB100 million
+Port
+Shipping
+The capital expenditure plans of the Group in 2017 are subject to the development of business
+plans (including potential acquisitions), progress of investment projects, market conditions,
+outlook for future operation environment and the obtaining of the requisite permissions and
+approval documents. Unless required by laws, the Company shall not assume any responsibilities
+for updating the data of its capital expenditure plans. The Company intends to finance its capital
+expenditures by cash generated from operating activities, short-term and long-term borrowings,
+and other debt and equity financing.
+5. Others
+In order to cope with the risks arising from natural disasters, the Group will further
+strengthen early warnings of major natural disasters, formulate emergency plans, allocate
+necessary resources and perform relevant emergency drills to ensure that the impacts of
+natural disasters can be minimized.
+The Group carries out centralized management of commercial property insurance with
+ongoing review and assessment of risks and risk portfolio. Necessary and appropriate
+adjustments which are in line with the needs and practices of the insurance industry in
+China have been made to the insurance strategies and actions as safeguard against losses
+arising from various exposure.
+REASONS AND CAUSES OF FAILURE TO DISCLOSE PURSUANT TO GUIDELINES
+BY THE COMPANY DUE TO NON-APPLICATION OF GUIDELINES OR SPECIAL
+REASONS
+Applicable ✓ Not applicable
+PROFIT DISTRIBUTION PLAN
+V.
+Please refer to "Significant Events" to this report.
+S
+Section VI Significant Events
+The production and operation activities of the Group will be affected by factors including
+natural disasters or bad weather. Certain particularly major natural disasters which occurred
+in China in recent years had adversely affected the Group's operations to a certain extent.
+Factors such as unforeseeable natural disasters and bad weather may bring certain losses
+to the Group's operations.
+2016 Annual Report 83
+Significant Events
+I. PROFIT DISTRIBUTION PLAN
+(1)
+Formulation, implementation or adjustment of cash dividend policy
+In accordance with the requirements of the relevant laws and regulations and the Articles of
+Association, the profit distribution policy of the Company shall maintain continuity and stability
+and emphasize on achieving reasonable investment returns for investors. The Company shall give
+priority to profit distribution in cash dividends. Subject to conditions, interim profit distribution
+may be made by the Company. The profit distribution policy of the Company complies with the
+Guideline on Encouragement of Cash Dividend Distribution of Listed Companies announced by
+the CSRC.
+Pursuant to the Articles of Association, the profit distribution of the Company shall be made
+based on the profit for the year attributable to equity holders of the Company in the consolidated
+financial statements prepared under the Accounting Standards for Business Enterprises and
+the International Financial Reporting Standards, whichever is lower. Annual profit distribution in
+cash shall be no less than 35% of the net profit for the year attributable to equity holders of the
+Company subject to the relevant conditions.
+(II)
+Profit distribution scheme/plan
+1. Final dividend scheme/plan for the year
+Section VI
+Risk of natural disasters
+To cope with the risk of international operations, the Group will actively respond to the
+national promotion of "the Belt and Road", and conscientiously carry out overseas resource
+evaluation and project assessment based on sound information analysis prior to making any
+decision on overseas project investment so as to ensure economic feasibility. Furthermore,
+the Company will strengthen the cultivation and introduction of interdisciplinary talents to
+lay a solid cornerstone for its "Going Overseas" strategy.
+Due to the complex economic, social, political and religious conditions in the globe and
+the fluctuations in exchange rates, the risk of investments in different countries varies
+significantly. Given the highly competitive energy market worldwide, the uncertainties in
+the Group's international operations may have an impact on its overseas business.
+Section V Directors' Report (Continued)
+5.
+Risk of environmental protection
+The national policies on energy saving and environmental protection have been further
+tightened. Following the promulgation of policies including the Implementation Plan for
+Pollutant Discharge Regulation and Approval System, the "Thirteen Five-Year" Working
+Plan for Regulation on Greenhouse Gas Emissions and the "Thirteen Five-Year" Integrated
+Working Plan for Energy Saving and Environmental Protection, the constraints on energy
+saving, carbon reduction and environmental protection are further imposed on the Group.
+The Group focuses on the development strategy of clean energy. With the efficient
+development, use and conversion of clean coal as the core, it spares no effort in
+constructing ecological civilization. The Company is also building the brand image of
+ultra-low emissions in coal power. It further improves the environmental risk pre-control
+management system and strengthens the identification, remediation of potential issues
+and environmental emergency management in order to achieve energy conservation and
+emission reduction targets as well as to prevent severe environmental pollution incidents.
+The management of the Group is of the view that other than those accounted for in the
+financial statements, there are currently no environmental lability that may have material
+adverse effect on the Group's financial position.
+6.
+Risks of production safety for coal mines
+The Group has established the safety production targets of "preventing serious
+work-related accidents and general accidents, striving to reduce cases of light and serious
+injuries, creating long-term mechanism for production and work safety". Although the
+Group has been sustaining stable performance in safe production for its coal mines, there
+are uncertainties in the course of safe production and any major safety accident would have
+a material impact on the Group.
+To cope with the risks of production safety for coal mines, the Group will strengthen
+various areas in respect of the implementation of its safety risk prevention and control
+management system, inspections and treatments and assessment of significant risks,
+improvement on "three-breaching" control mechanism, reinforcement of contractor
+management in production safety, enhancement of site management level, safety
+production training, emergency rescue management, and consolidation of safety production
+fundamentals.
+80
+4. Coal chemical segment
+Section V Directors' Report (Continued)
+IV.
+7.
+8.
+9.
+Risk of integrated operations
+The Group's advantages in integrated coal mines, power, transportation and coal chemical
+operations come along with the risks raising from the interruption of individual parts of the
+entire integrated chain. In case of poor organization or coordination or a discontinuation of
+any link, the balance and high efficiency of integrated organization and operations will be
+affected and the impact may adversely affect the Group's business results.
+To cope with the risk of integrated operations, the Group will take an array of measures
+based on production safety, including scientific scheduling and plan management,
+improve railway and port collection and distribution system, strengthen the coordination
+of power grid, and strengthen the operation management of production equipment, with
+an aim at balanced production and uninterrupted integrated operations to maximize its
+competitiveness.
+Risk of international operations
+Profit for
+the year
+attributable
+to equity
+holders of the
+Company in the
+40.3
+Final dividend for 2015
+3.2
+6,365
+16,144
+39.4
+Final dividend for 2014
+7.4
+14,718
+36,807
+40.0
+84
+China Shenhua Energy Company Limited
+Section VI Significant Events (Continued)
+2.
+3.
+Net profit for the year attributable to equity holders of the Company for 2016 under the
+Accounting Standards for Business Enterprises amounted to RMB22,712 million, with
+basic earnings per share of RMB1.142/share; profit for the year attributable to shareholders
+of the Company under the International Financial Reporting Standards amounted to
+RMB24,910 million, with basic earnings per share of RMB1.252/share. As at 31 December
+2016, the retained earnings available for distribution to shareholders of the Company under
+the Accounting Standards for Business Enterprises amounted to RMB153,846 million.
+The Board of the Company recommends the payment of a final dividend for year 2016
+in cash of RMB0.46 per share (inclusive of tax) on the basis of the total share capital of
+19,889,620,455 shares of the Company as at 31 December 2016, totaling RMB9, 149
+million (inclusive of tax), which represents 40.3% of the net profit for the year attributable
+to equity holders of the Company under the Accounting Standards for Business Enterprises
+and 36.7% of the profit for the year attributable to shareholders of the Company under the
+International Financial Reporting Standards.
+Special Dividend Plan
+The Board recommends the payment of a special dividend in cash of RMB2.51 per share
+(inclusive of tax) on the basis of the total share capital of 19,889,620,455 shares of the
+Company as at 31 December 2016, totaling approximately RMB49,923 million (inclusive
+of tax), accounting for 32.4% of the retained earnings of RMB153,846 million available for
+distribution to shareholders of the Company as at 31 December 2016 (before deducting
+the amount of RMB9, 149 million under the 2016 final dividend plan) under the Accounting
+Standards for Business Enterprises.
+The above 2016 final dividend plan and special dividend plan are in compliance with the
+requirement of the Articles of Association and endorsed by the independent directors and
+approved by the Board of the Company. When recommending the plans for the 2016 final
+dividend and the special dividend, the Board has attended to and considered the opinions
+and concerns of the shareholders of the Company, in particular the minority shareholders.
+The Company will hold the 2016 annual general meeting on Friday, 23 June 2017 to
+consider and approve the relevant resolutions, including the above dividend plans as
+proposed by the Board.
+22,712
+2016 Annual Report 79
+9,149
+(Proposed)
+consolidated
+financial
+statements of
+the respective
+dividend year in
+accordance
+with
+Percentage
+to the profit
+for the year
+attributable
+to equity
+Year
+Accounting
+holders of the
+Standards Company in the
+Dividend
+per 10 shares
+(inclusive of tax)
+RMB
+Amount of
+cash dividend
+(inclusive of tax)
+RMB million
+for Business
+consolidated
+Enterprises
+financial
+(Unrestated)
+statements
+RMB million
+%
+Final dividend for 2016
+4.6
+To cope with the risk of increasing costs, the Group will establish the value-creation
+concept and strengthen the strategic cost control; optimise the cost accountability system;
+strengthen taxation planning; improve the preparation of rolling budget to refine cost
+management and improve the quality of cost control.
+China Shenhua Energy Company Limited
+(V) Major risks faced
+Section V Directors' Report (Continued)
+Total capital expenditures of 2016 amounted to RMB29.38 billion, which were mainly used for
+(1) power segment: constructions including the Jiangxi Jiujiang New Coal Reserve (Transit) and
+Power Generation Integration Project of Shenhua Guohua, Phase II of Guohua Ningdong Power
+Expansion Project, Luoyuan Bay Coal Storage Integrated Power Plant Project of Shenhua Fujian,
+and Fuping Thermal Power Project; (2) coal segment: coal mining in and consideration payment
+for mining rights for Shendong Mines, Zhunge'er Mines and other mines, and the construction of
+Qinglongsi Coal Mine and Coal Processing Plant; and (3) transportation segment: the construction
+of Huangda Railway, constructions along Zhunchi Railway and Shenshuo 10,000-tonne Train
+Expansion Project. Total capital expenditures of 2016 exceeded the annual budget plan, mainly
+attributable to the consideration payment for mining rights for certain mines in Shendong Mines,
+Zhunge'er Mines and Baorixile Mines, and the acquisition of land use rights by Shenhua Zhuhai
+Coal Dock.
+Based on the principles of maintaining the strict limit of investment scale and the continuity of
+major construction projects, the Board approved total planned capital expenditures of 2017 of
+no more than RMB35 billion (exclusive of equity and asset acquisitions), and implemented in
+batches. The first batch of planned capital expenditures of 2017 amounted to RMB16.95 billion.
+Regarding the capital expenditures for coal segment, the expenditures for maintaining production
+capacity and conducting technology transformation amounted to approximately RMB1.41 billion,
+the expenditures for equipment procurement amounted to approximately RMB0.27 billion, and
+the expenditures approved for the construction of new coal mines amounted to approximately
+RMB0.08 billion. Regarding the capital expenditures for power segment, the expenditures for
+the construction of new projects and expansion projects (inclusive of equipment procurement)
+amounted to approximately RMB10.29 billion, and the expenditures for green technology reform
+of "ultra-low emission" of plants amounted to approximately RMB0.66 billion.
+2016 Annual Report 77
+Section V Directors' Report (Continued)
+The Company has established a closed-loop risk management system: it will perform risk
+identification and determine the major risks upon assessment at the beginning of each year,
+then monitor such risks on a daily basis by way of specialized inspection, internal audit, quarterly
+report of subsidiaries and branches and other methods, and assess its major risk management
+at the year end. This facilitates and improves the decision-making process, refines the internal
+control system, and continues to raise the risk management standard. The Board and the
+Audit Committee of the Company is of the view that such mechanism is able to assess the
+effectiveness of the operation of the risk management of the Company. Investors should be
+aware that although the Company has reviewed and listed the major risks, and adopted relevant
+countermeasures, there is no absolute guarantee that all adverse impact could be eliminated due
+to the limitation of various factors.
+1.
+2.
+Risk of macroeconomic fluctuations
+The industry in which the Group operates closely correlated to the prosperity of the
+national economy. In 2016, the GDP of China grew by 6.7%, which was a record low since
+1990. Uncertainties will still remain amid the steady pace of the macro-economy, which
+may materially affect the Group's results.
+To cope with the risk of macroeconomic fluctuations, the Group will further strengthen
+the studies on relevant industrial trends, optimise production structure, and implement
+strategies of green energy to continuously upgrade the quality of development.
+Risk of market competition
+In the coal market, China intended to eliminate production capacity of 150 million tonnes in
+2017 at a reasonable pace of eliminating excessive capacities while ensuring the effective
+transition between those capacities with the following resources and stable coal supply
+to prevent any abnormal fluctuation of coal price beyond the reasonable range. There will
+be oversupply in the market in 2017 in general. In the power market, under the inevitable
+oversupply in installed power capacity in short term due to the slowdown in economic
+growth and sluggish growth in the total power consumption of the society, the power
+reform and the opening of power generation planning in 2017 will result in intensified
+competition and declining transaction prices in the thermal market. In the coal chemical
+market, it is affected relatively by exchange rate fluctuations and swinging international
+crude oil prices. Such factors may lead to adverse impacts on the Company, such as lower
+sales prices of coal, coal chemical products and lower power generation than expected,
+indications of impairment on relevant assets, and therefore may affect the Company's
+business results.
+In response to the risks of market competition, the Company will reinforce the efforts on
+its coal market research and judgment and proactively respond to the price changes. With
+further implementation of the requirements of power reform, new regional power sales
+companies will be established when appropriate to actively participate in the pilot reform.
+Furthermore, it will adhere to a balanced sales and control its inventory on coal chemical
+product at a reasonable level. Last but not least, it will promptly perform impairment
+assessment and make relevant provision for impairment in accordance with applicable
+accounting standards, so as to reflect the status of the Company's assets in an objective
+and fair manner.
+78
+China Shenhua Energy Company Limited
+Section V Directors' Report (Continued)
+3.
+Risk of changes in industry policies
+The Group's business activities are subject to the industrial regulatory policies in China.
+According to the national "Thirteen Five-Year" Plan for Energy published at the beginning
+of 2017, the total energy consumption shall be controlled at no more than 5.0 billion tonnes
+of standard coal by 2020. According to the "Thirteen Five-Year" Plan for Ecosystem issued
+by the State Council on at the end of 2016, the proportion of coal consumption to the total
+energy consumption shall be reduced from 62.6% in 2016 to below 58% by 2020. For
+2017, China demands the total consumption of primary energy to be controlled at 4.4 billion
+tonnes of standard coal, the proportion of non-fossil energy consumption to total primary
+energy consumption to be raised to 14.3%, and the proportion of coal consumption to be
+reduced to approximately 60%. Currently, the nationwide power supply has entered into
+the stage of "relative oversupply". In 2016 and 2017, the National Energy Administration
+issued the Notice on Further Regulation on Coal-fired Power Generation Planning and
+Construction and the Notice on Further Improvement of Approved Construction of
+Coal-fired Projects and other documents to strict control on planning and construction of
+coal-fired power generation, regulate on the sequence of coal-fired power operation and
+construction and exact regulation on the projects in compliance with laws and regulations.
+To cope with the risk of changes in industry policies, the Group will strengthen its research
+on the latest industry policies and regulations in the PRC and promote industrial upgrading
+and structural adjustment through a rational investment portfolio across the business
+segments and further regulating on projects approval and construction works of the Group.
+Risk of rising costs
+As the mining process proceeds further and production conditions become increasingly
+complicated, the Group's corporate mining cost may increase gradually. Furthermore, a
+number of factors, including the long-term price increase of productive resources, increase
+in resource and environmental constraints and changes in fiscal and taxation policies, may
+lead to an increase in the Group's costs.
+China Shenhua Energy Company Limited
+76
+4.
+169.5
+293.8
+Total
+Unit: RMB100 million
+Accomplishment
+Plans for 2017
+Total amount
+Of which:
+first batch
+17.6
+58.3
+109.5
+178.3
+41.6
+in 2016
+38.2
+55.7
+0.5
+0.0
+0.8
+0.1
+1.0
+0.4
+17.4
+3.0
+38.2
+350
+(b)
+(c)
+Hardware and software equipment and related services: market price (including
+tender and bidding price);
+(d)
+(e)
+Rail transportation: price prescribed by NDRC or other related government
+competent authorities;
+Construction: where tender and bidding process is necessary under applicable
+laws and regulations, the price ultimately determined in accordance with
+the tender and bidding process; where tender and bidding process is not
+necessary under applicable laws, the market price;
+Oil products: government-guided price;
+Alternative power generation: price prescribed by NDRC or other related
+government competent authorities;
+(a)
+Tendering services: price prescribed by NDRC;
+Chemical products: market price;
+(g) Production equipment and spare parts, office products: market price;
+(h)
+(i)
+(j)
+(k)
+In addition to the above, for certain types of product or service, specific pricing policy
+adopted as follows:
+(1)
+(m)
+(f)
+Section VI Significant Events (Continued)
+Price prescribed by the state if applicable; when there is no state-prescribed price,
+the state-guidance price should be applied; where there is neither a state-prescribed
+price nor a state-guidance price, the market price (including bidding price); where
+there is no comparable market price from independent third parties, transaction
+prices can be determined with reference to the prices of non-connected transactions
+between a connected party and a third party independent thereof (or the prices of
+non-connected transaction between Shenhua Group Corporation and a third party
+independent thereof); where none of the above is applicable or where it is not
+practical to apply the above pricing policies in reality, the price shall be the contractual
+price.
+94
+(5)
+Technical consulting services: agreed price with a profit margin of
+approximately 10%;
+The quantity of coal; and
+(6)
+The transportation fees.
+2016 Annual Report 93
+Section VI Significant Events (Continued)
+B.
+Mutual Supplies and Services Agreement
+China Shenhua Energy Company Limited
+On 22 March 2013, the Company entered into the Mutual Supplies and Services
+Agreement with Shenhua Group Corporation. The Mutual Supplies and Services
+Agreement was effective between 1 January 2014 and 31 December 2016. In
+accordance with the Mutual Supplies and Services Agreement, in addition to
+providing administrative and management services at agreed price, Shenhua Group
+also supplied production materials and ancillary services to the Group with a pricing
+policy as follows:
+The pricing of the products and services provided under the new Mutual Supplies
+and Services Agreement shall be determined in accordance with the general
+principles and in the order of the section below:
+(a)
+(b)
+(c)
+(d)
+Government-prescribed price and government-guided price: if at any time, the
+government-prescribed price is applicable to any particular product or service,
+such product or service shall be supplied at the applicable government-
+prescribed price. Where a government-guided fee standard is available, the
+price will be agreed within the range of the government guided price;
+Tender and bidding price: where tender and bidding process is necessary
+under applicable laws and regulations, the price ultimately determined in
+accordance with the tender and bidding process;
+Market price: to be determined based on normal commercial terms and
+the following method. The price of the same or similar products or services
+provided by an independent third party during the ordinary course of business
+on normal commercial terms. The management shall consider at least two
+comparable deals with independent third parties for the same period when
+determining whether the price for any product or service transaction under
+this Agreement is the market price; and
+Agreed price: to be determined by adding a reasonable profit margin over a
+reasonable cost. The management shall consider at least two comparable
+deals with independent third parties for the same period when determining
+the reasonable profit of any product or service transaction under this
+Agreement.
+On 24 March 2016, the Company renewed the Mutual Supplies and Services
+Agreement with Shenhua Group Corporation. The new Mutual Supplies and Services
+Agreement is effective from 1 January 2017 and will expire on 31 December 2019.
+Pursuant to the new Mutual Supplies and Services Agreement, the Group and
+Shenhua Group mutually sold and provided various types of products and services.
+Information technology services: the budget is reviewed by professional
+institution(s) with pricing reviewing qualification according to relevant national
+and industrial rules and regulations on construction pricing, pricing mechanism
+and fee standards, with reference to the market customs of the information
+technology industry, actual standards and market price, taking into account the
+actual condition of the Company's information technology construction. The
+parties negotiate and agree on the service price within the scope of budget;
+Corresponding
+Rights
+Social security and pension management services and staff data recording
+services: agreed price (cost plus a profit margin of approximately 5%); and
+No.
+The
+Temporary closure of the register of members
+The arrangement of temporary closure of the register of members of H shares of the
+Company:
+6.
+Section VI Significant Events (Continued)
+China Shenhua Energy Company Limited
+86
+Under the relevant regulations of China Securities Depository and Clearing
+Corporation Limited Shanghai Branch and according to the market practice adopted
+for final dividend distribution for A shares, the Company will publish a separate
+announcement in respect of the final dividend for year 2016 and the special dividend
+distribution to holders of A shares (including the Northbound Shareholders) after
+the 2016 annual general meeting to determine the record date, ex-rights date and
+dividend distribution date for the final dividend for year 2016 and the special dividend
+distribution to holders of A shares.
+The quality of the coal (including the estimated calorific value of coal as
+required by different coal-fired power generating units);
+After the Shanghai Stock Exchange closed in the afternoon on Wednesday, 24
+May 2017, the shareholders of A shares of the Company (including the Northbound
+Shareholders) and the proxies of shareholders as registered in the China Securities
+Depository and Clearing Corporation Limited Shanghai Branch are entitled to attend
+and vote at the 2016 annual general meeting of the Company;
+(1)
+Pursuant to the Articles of Association:
+In accordance with the preliminary arrangement of profit distribution plan and annual
+general meeting, the 2016 final dividend and the special dividend for the Company's H
+shareholders are estimated to be distributed on or about 22 August 2017.
+The final dividend for year 2016 and the special dividend are denominated and declared in
+RMB, which will be distributed together. The final dividend for year 2016 and the special
+dividend will be paid in RMB to holders of the Company's A shares, including holders of
+the Company's A shares through the Northbound Trading Link of the Shanghai-Hong Kong
+Stock Connect (hereinafter referred to as the "Northbound shareholders") and holders of
+the Company's H shares through the Southbound Trading Link (hereinafter referred to as
+the "Southbound Shareholders"). Dividends to holders of the Company's H shares, except
+the Southbound Shareholders, are paid in HKD. The dividend paid in HKD is calculated
+according to the exchange rate based on the average benchmark rate of RMB against HKD,
+as published by the Bank of China five business days preceding the date of declaration of
+such dividend.
+5.
+4.
+Section VI Significant Events (Continued)
+2016 Annual Report 85
+Limited
+(2)
+First Day
+(inclusive)
+Last Day
+(inclusive)
+The last day for
+Various daily administrative services to the headquarters of Shenhua Group
+Corporation (exclusive of financial management and services): agreed price
+(cost plus a profit margin of approximately 5%).
+Services
+special dividend
+2016 and the
+30 June 2017,
+Friday 4:30 p.m.
+7 July 2017,
+Friday
+3 July 2017,
+Monday
+dividend for year
+Entitled to the final
+2
+Computershare
+Hong Kong
+Investor
+Tuesday 4:30 p.m.
+general meeting
+23 May 2017,
+23 June 2017,
+Friday
+24 May 2017,
+Wednesday
+at the 2016 annual
+Attending and voting
+1
+Company's
+share
+registrar for
+H shares
+registering members
+Logistics and support services and training services: agreed price (cost plus a
+profit margin of approximately 5%);
+The current transacted coal prices of the local coal exchange or market in the
+PRC, i.e., the coal price with same quality that is offered to or offered by third
+parties under normal market conditions and normal commercial terms in the
+same or nearby regions. For local spot coal price, reference is generally made
+to (i) the spot price index of the local coal exchange or market in Bohai-rim
+region or nearby provinces as published on the website of I**Ì
+(www.cctd.com.cn) organised by China Coal Transportation & Sale Society
+(+¤ŒŒƒ) in the PRC; (ii) the sale price of local large-scale coal
+enterprises as published by each coal industry website (if any); and/or (iii)
+price quotation of a few enterprises with comparable quality, quantity and
+location (if any). Considering that the Shenhua Group (including the Group) is
+the largest and most technologically advanced coal enterprise in China, and is
+the largest coal dealer in the world, there are certain types of coal that other
+coal enterprises do not produce or sell. Therefore, for certain types of coal,
+the Company may not be able to obtain relevant price quotation of one or
+more other enterprises with comparable quality, quantity and location. If the
+Company can obtain any price quotation(s) of one or more other enterprises
+with comparable quality, quantity and location, the Company will obtain such
+price quotation(s), and will adopt the most favourable price obtained;
+Computershare
+The national industrial policy as well as industry and market conditions in the
+PRC;
+NA
+N/A
+7 July 2016
+2015 to
+Yes, completed N/A
+Yes
+From 8 July
+shareholding of A shares in the
+Company in its own name via the
+trading system of the Shanghai
+Stock Exchange within 12 months
+after 8 July 2015. Shenhua Group
+Corporation undertakes that
+it will not dispose any share it
+holds in the Company during the
+period of the implementation of
+the increase plan and within the
+statutory period.
+proposed to increase its
+Corporation
+in relation to
+increase in
+shares
+Shenhua Group Corporation
+Commitment Shenhua Group
+Other
+commitment
+competition.
+"Non-competition Agreement"
+on 24 May 2005. Pursuant to
+such agreement, Shenhua Group
+Corporation has committed not
+to compete with the Company
+in respect of the Company's
+principal businesses whether
+inside or outside of the PRC, and
+granted the Company priority
+trading and pre-emptive right to
+acquire and be transferred from
+Shenhua Group Corporation
+any business opportunities and
+assets which may pose potential
+undertaking
+initial public
+offering
+long-term
+To further formulate the performance of the Non-competition Agreement, the Resolution on the
+Performance of Non-competition Undertaking was approved at the 45th meeting of the second session
+of the Board on 27 June 2014 and the Announcement in relation to the Performance of Non-competition
+Undertaking was disclosed to public. The Company disclosed that it will commence the acquisition of
+14 assets of Shenhua Group and its subsidiaries before 30 June 2019 (submitting the asset acquisition
+proposal to the internal competent authorities of China Shenhua for approval procedure); Shareholders
+are advised to pay attention to the risks involving the change in scope of acquisition, third-party statutory
+right of first refusal and that the commitment may fail to be fulfilled or fail to be performed on time due
+to objective reasons. For details, please refer to the H shares announcement dated 27 June 2014 and
+the A shares announcement of the Company dated 28 June 2014.
+In 2015, the Company completed the acquisitions of three assets, namely Ningdong Power, Xuzhou
+Power and Zhoushan Power. There was no relevant asset acquisition was made in 2016.
+III.
+IV.
+(RMB million)
+Remuneration of Domestic Auditors of the Company
+Name of Domestic Auditors of the Company
+V. APPOINTMENT AND REMOVAL OF AUDITORS
+Not applicable
+Applicable
+(III) The Board's analysis and explanation about the reasons for and impact of correction
+to material previous errors
+Applicable ✓ Not applicable
+The Board's analysis and explanation about the reasons for and impact of changes in
+accounting policies, accounting estimates or accounting method
+Corporation entered into a
+(II)
+Applicable
+Explanation from the board and the supervisory committee for the "non-standard
+audit report" issued by the auditors
+(I)
+AUDIT OPINIONS AND OTHER EXPLANATIONS
+✓ Not applicable
+Applicable
+APPROPRIATION OF FUNDS AND PROGRESS OF THE COLLECTION DURING THE
+REPORTING PERIOD
+Section VI Significant Events (Continued)
+2016 Annual Report 89
+Not applicable
+Term of Auditing of Domestic Auditors of the Company (year)
+Name of International Auditors of the Company
+Corporation
+in relation to
+China Shenhua Energy Company Limited
+88
+The Company assumes no responsibility arising from any delayed or inaccurate
+determination of the status of the shareholders or any dispute over the mechanism of
+withholding. Shareholders should consult their tax advisers regarding the PRC, Hong Kong
+and other tax implications of owning and disposing of the Company's H shares.
+According to the relevant provisions under the "Notice on Tax Policies for
+Shanghai-Hong Kong Stock Connect Pilot Programme (Cai Shui [2014] No. 81)", the
+Company shall withhold individual income tax at the rate of 20% with respect to dividends
+received by Mainland individual investors for investing in H-shares listed in Hong Kong
+Stock Exchange through Shanghai-Hong Kong Stock Connect. For Mainland securities
+investment funds investing in shares listed on Hong Kong Stock Exchange through
+Shanghai-Hong Kong Stock Connect, the above rules also apply and individual income tax
+shall be levied on dividends derived therefrom. The Company is not required to withhold
+income tax on dividends derived by Mainland enterprise investors, and such enterprises
+shall report the income and make tax payment by themselves. The record date and the
+relevant arrangements of dividend distribution for Southbound Investors are the same as
+that of the Company's shareholders of H shares.
+With respect to the Southbound Shareholders, according to the relevant requirements of
+China Securities Depository and Clearing Corporation Limited, China Securities Depository
+and Clearing Corporation Limited Shanghai Branch shall receive cash dividends distributed
+by the Company as the nominee of the Southbound Shareholders and distribute such cash
+dividends to the relevant Southbound Shareholders through its depository and clearing
+system.
+The Company shall use the registered address (hereinafter referred to as "registered
+address") as recorded in the register of members of H shares on 7 July 2017 as the
+criterion in determining the residence of the individual shareholders of H shares who are
+entitled to receive the final dividend for year 2016 and the special dividend of the Company,
+and withhold and pay individual income tax accordingly. If the residence of the individual
+shareholders of H shares is inconsistent with the registered address, such shareholders
+shall notify the Company's share registrar for H shares at or before 4:30 p.m. on 30 June
+2017 with the relevant evidence at Computershare Hong Kong Investor Services Limited of
+17M Floor, Hopewell Centre, 183 Queen's Road East, Wan Chai, Hong Kong.
+10.
+9.
+Section VI Significant Events (Continued)
+2016 Annual Report 87
+If the individual shareholders of the H shares who are Hong Kong or Macau residents or
+residents of the countries which have an agreed tax rate of 10% with China, the Company
+shall withhold individual income tax at a rate of 10%. If the individual shareholders of the
+H shares are residents of countries which have an agreed tax rate of less than 10% with
+China, the Company shall withhold individual income tax on behalf of them in accordance
+with relevant provisions required by the Announcement of the State Administration of
+Taxation in relation to the Administrative Measures on Preferential Treatment Entitled
+by Non-resident Taxpayers under Tax Treaties (No. 60 Announcement of the State
+Administration of Taxation in 2015). If the individual shareholders of the H shares are
+residents of countries which have an agreed tax rate of over 10% but less than 20% with
+China, the Company shall withhold the individual income tax at the agreed actual rate. In
+case the individual shareholders of the H shares are residents of countries which have not
+entered into any tax agreement with China, or the agreed tax rate with China is 20% or
+otherwise, the Company shall withhold the individual income tax at a rate of 20%.
+According to Guo Shui Han [2011] No. 348 issued by the State Administration of Taxation,
+the Company shall withhold and pay individual income tax for dividend payable to the
+individual shareholders of H shares. The individual shareholders of H shares are entitled
+to the relevant preferential tax treatment pursuant to the provisions in the tax agreements
+entered into between their countries of residence and China or the tax arrangements
+between mainland China and Hong Kong (Macau).
+In accordance with the Enterprise Income Tax Law of the PRC and its implementation
+regulations which came into effect on 1 January 2008, the Company is required to withhold
+and pay enterprise income tax at the rate of 10% on behalf of the non-resident enterprise
+shareholders whose names appear on the register of members for H shares of the
+Company when distributing final dividends. The Company shall withhold and pay enterprise
+income tax in respect of the final dividend for year 2016 and the special dividend of the
+Company for the non-resident enterprise shareholders whose name would appear on the
+register of members for H shares of the Company on 7 July 2017.
+8.
+7.
+Limited
+Services
+Hong Kong
+Investor
+The specified guidelines issued by NDRC setting out the coal purchase prices (if
+any);
+Section VI Significant Events (Continued)
+II. PERFORMANCE OF COMMITMENTS
+Detailed
+Further steps
+N/A
+Yes, in process N/A
+24 May 2005, Yes
+Shenhua Group The Company and Shenhua Group
+Non-
+in time
+Commitment in time
+is not fulfilled
+is not fulfilled
+competition
+Any Time Limit
+for Commitment
+specified if
+be specified if
+and Strict
+Performance
+Date and
+Duration of
+Commitment
+Commitment Commitment Covenantor Commitment
+Background of Type of
+shall be
+reasons shall
+Timely
+commitment commitment
+Remuneration of International Auditors of the Company
+Commitment
+Term of Auditing of International Auditors of
+Section VI Significant Events (Continued)
+2016 Annual Report 91
+Upon self-investigation, as at the end of the reporting period, there has been no failure in fulfilling
+the judgment from court or relatively large amount of outstanding debt such as failure in fulfilling the
+judgment from court or debit interests owed to external financial institutions due of the Company and
+Shenhua Group Corporation.
+IX. EXPLANATION FOR CREDIT OF THE COMPANY AND ITS CONTROLLING
+SHAREHOLDERS AND DE FACTO CONTROLLER
+Applicable ✓ Not applicable
+VIII. SANCTIONS AND RECTIFICATIONS IMPOSED ON THE LISTED COMPANY,
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT, CONTROLLING
+SHAREHOLDERS, DE FACTO CONTROLLER AND OFFEROR
+As at the end of the reporting period, the Group was not involved in any material litigation or arbitration. As
+far as the Group was aware, the Group did not have any material litigation or claim which was pending
+or threatened against the Group. As at 31 December 2016, the Group was the defendant or the party of
+certain non-material litigations. The management of the Company believes that any possible legal liability
+which may be incurred from the aforesaid cases will not have any material impact on the financial
+position of the Group.
+Not applicable
+VII. MATERIAL LITIGATION AND ARBITRATION
+Applicable ✓ Not applicable
+INSOLVENCY OR RESTRUCTURING RELATED MATTERS
+The above auditors also served as the external auditors of several subsidiaries of the Company and their
+remuneration relating to audit services amounted to approximately RMB2.08 million during the reporting
+period. Deloitte Touche Tohmatsu Certified Public Accountants LLP did not provide non-audit services to
+the Company and its subsidiaries during the reporting period.
+VI.
+Section VI Significant Events (Continued)
+China Shenhua Energy Company Limited
+90
+RMB1.59 million
+Deloitte Touche Tohmatsu Certified Public
+Accountants LLP
+Internal Control Auditors
+X. THE SHARE OPTIONS INCENTIVE PLAN, EMPLOYMENT STOCK OWNERSHIP
+SCHEME OR OTHER EMPLOYEE INCENTIVE SITUATION OF THE COMPANY AND
+THEIR IMPACTS
+Applicable ✓ Not applicable
+XI. MATERIAL CONNECTED TRANSACTIONS
+(1)
+(4)
+(RMB million)
+(3)
+(2)
+(1)
+The supply price under the new Mutual Coal Supply Agreement is the product of the
+unit price RMB/tonne multiplied by the actual weight. The unit price of coal shall be
+determined by both parties after arm's length negotiations with reference to the then
+market price and conditions and the following factors, provided that the transaction
+terms shall not be less favourable than those provided by third parties:
+On 24 March 2016, the Company renewed the Mutual Coal Supply Agreement with
+Shenhua Group Corporation. The new Mutual Coal Supply Agreement is effective
+from 1 January 2017 and will expire on 31 December 2019. Pursuant to the new
+Mutual Coal Supply Agreement, the Group and Shenhua Group mutually sold and
+supplied various types of coal.
+Section VI Significant Events (Continued)
+China Shenhua Energy Company Limited
+Remuneration
+92
+Mutual Coal Supply Agreement
+A.
+In order to ensure a reliable and quality-assured provision of materials and services for the
+Company, lower operation risks and costs, and allow Shenhua Finance Company, in which
+the Company has controlling shareholding, to provide financial services to the companies
+under the Group and Shenhua Group Corporation so that it can fully leverage on its
+functions as an internal financing platform and capital management platform, and to further
+contain risks and increase income. The Company entered into the following continuing
+connected transaction agreements with Shenhua Group Corporation:
+Non-exempt continuing connected transactions between the Group and Shenhua
+Group
+(1)
+Pursuant to the requirements under the Guidelines of Shanghai Stock Exchange on Connected
+Transactions of Listed Companies, the Audit Committee of the Board of the Company shall
+perform the duties of control and daily management of connected transactions of the Company.
+The Company has a connected transaction team under the direct supervision of the Chief
+Financial Officer, which is responsible for the management of connected transactions; and has
+established a business process, which properly delineates the responsibilities of the Company,
+its subsidiaries and branches in the management of connected transactions. The team has
+also established routine examinations, reporting systems and accountability systems in the
+subsidiaries and branches of the Company.
+Connected transactions during the daily operation
+Not applicable
+Applicable
+The Company entered into the Mutual Coal Supply Agreement with Shenhua
+Group Corporation on 22 March 2013. The Mutual Coal Supply Agreement was
+effective between 1 January 2014 and 31 December 2016. Pursuant to the Mutual
+Coal Supply Agreement, the Group and Shenhua Group mutually sold and supplied
+various types of coal. The price of the coal supplied under the Mutual Coal Supply
+Agreement is market price, namely, the price charged by an independent third party
+for the supply of coal of the same grade based on the normal commercial terms
+concluded on the normal commercial conditions in the same region or its vicinity, or
+the price of coal of the same grade supplied to or purchased from an independent
+third party by the parties separately based on the normal commercial terms
+concluded on the normal commercial conditions. The price of the coal supplied
+under the Mutual Coal Supply Agreement was determined by the Company and
+Shenhua Group Corporation through fair negotiation with reference to the Bohai-Rim
+Steam-Coal Price Index. In accordance with the provisions of the Mutual Coal Supply
+Agreement, priority will be given to the other party when one party purchases coal
+unless the terms of sales provided by a third party are more favorable.
+Name
+Applicable
+1.50
+Deloitte Touche Tohmatsu Certified
+Public Accountants LLP
+9.20
+the Company (year)
+On 17 June 2016, Deloitte Touche Tohmatsu Certified Public Accountants LLP and Deloitte Touche
+Tohmatsu were appointed as the domestic and international auditors of the Company respectively for
+2016 at the Company's 2015 annual general meeting.
+4
+Deloitte Touche Tohmatsu
+Hong Kong Stock
+Exchange
+China Shenhua Energy Company Limited
+8
+http://www.csec.com or http://www.shenhuachina.com
+ir@shenhua.cc
+22 Andingmen Xibinhe Road, Dongcheng District, Beijing
+100011
+22 Andingmen Xibinhe Road, Dongcheng District, Beijing
+100011
+(852) 2915 0638
+(852) 2578 1635
+Room B, 60th Floor, Bank of China
+Tower, 1 Garden Road, Central,
+Hong Kong
+Hong Kong Office of the Company
+III.
+China Energy/
+The Group
+China Shenhua/the Company
+Section II Company Profile and
+Major Financial Indicators (Continued)
+IV. INFORMATION DISCLOSURE AND PLACE FOR DOCUMENT INSPECTION
+Designated Media for Information
+Disclosure
+Internet website designated by
+601088
+China Shenhua
+Shanghai Stock
+Exchange
+Stock Code
+Abbreviation
+Stock Exchange
+H Share
+A Share
+Type
+V.
+BASIC INFORMATION ON SHARES
+Shanghai Stock Exchange, Board and Supervisory Committee
+Affairs and Investor Relations Department of the Company
+and Hong Kong Office of the Company
+http://www.sse.com.cn and http://www.hkex.com.hk
+China Securities Journal, Shanghai Securities News,
+Securities Times and Securities Daily
+Unless the context otherwise requires, the following terms used in this report have the following
+meanings:
+China Shenhua
+CSRC for publishing annual report
+Annual report is available at
+Section | Definitions
+888
+BOD
+OR 60000 600
+Supervisory Committee's Report
+Section X
+01088
+Postal Code of Office Address of
+the Company
+Company Website
+E-mail
+155
+Corporate Governance and Corporate Governance Report
+Section IX
+168
+000
+610
+Office Address of the Company
+100
+PARTICULARS
+Board and Supervisory Committee
+Affairs and Investor Relations
+Department of the Company
+Registered Address of the Company
+Postal Code of Registered Address of
+the Company
+22 Andingmen Xibinhe Road,
+Dongcheng District, Beijing
+(Postal Code: 100011)
+(8610) 5813 1088/3399/3355
+(8610) 5813 1804/1814
+010
+I
+Section XI
+171
+• DGOOD GODD
+301
+Summary of Major Financial Information for the Recent Five Years
+Section XVI
+299
+Signing Page for Opinions
+Section XV
+Investor Relations
+298
+Section XIV
+179
+Independent Auditor's Report and Financial Statements
+Section XIII
+172
+Index to Information Disclosure
+Section XII
+Documents Available for Inspection
+VI. OTHER RELEVANT INFORMATION
+Section VII
+Name
+This report was approved at the 18th meeting of the fourth session of the Board of the Company.
+Nine out of ten eligible directors attended the meeting in person. Gao Song, a director, asked for
+leave due to business appointment, and appointed Mi Shuhua, a director, to act as his proxy and
+vote on behalf of him at the meeting.
+The Board, supervisory committee and directors, supervisors and senior management of the
+Company warrant that this report does not contain any misrepresentations, misleading statements
+or material omissions, and are jointly and severally liable for the authenticity, accuracy and
+completeness of the information contained in this report.
+IX.
+VIII.
+VII.
+VI.
+V.
+IV.
+III.
+II.
+I.
+Important Notice
+Smart Coal Mine
+Information
+Integration
+Unattended
+Operation
+Deloitte Touche Tohmatsu has issued a standard unqualified independent auditor's report to the
+Company under the Hong Kong Standards on Auditing, in connection with the Company's 2018
+financial statements prepared under IFRSS.
+Ling Wen, Chairman of the Company, Xu Shancheng, Chief Financial Officer, and Ban Jun, person-
+in-charge of the accounting department, warrant the authenticity, accuracy and completeness of
+the financial statements contained in this report.
+The Board proposed the payment of a final dividend in cash of RMB0.88 per share (inclusive of
+tax) or RMB17,503 million (inclusive of tax) for the year 2018 based on the total share capital of
+19,889,620,455 shares of the Company as at 31 December 2018. The profit distribution proposal is
+pending the approval by shareholders at the general meeting.
+Disclaimer of forward-looking statements: There are forward-looking statements in this report
+made on the basis of subjective assumptions and judgments on future policies and economic
+conditions, which are subject to risks, uncertainties and assumptions. The actual outcome
+may differ materially from the forward-looking statements. Such statements do not constitute
+actual commitments to investors. Investors should be aware undue reliance on or use of such
+information may lead to risks of investment.
+13
+Business Overview
+Section III
+8
+Company Profile and Major Financial Indicators
+Section II
+4
+Environmental
+Protection
+Definitions
+ED
+Contents
+1
+2018 Annual Report
+Warning on Major Risks: Impacted by the supply and demand of coal and power generation and
+the adjustment to industrial policies, the Group is exposed to some uncertainties on achieving the
+business targets for 2019. In addition, investors please note that the Company has disclosed risks
+including market competition, industrial policies, increase in cost, environmental protection and
+production safety, etc. in the section headed "Directors' Report".
+Is there any situation of violation of decision-making procedures for external guarantee provision?:
+No
+Is there any situation of non-operating appropriation of funds by controlling shareholder(s) and its
+subsidiaries?: No
+Section I
+Auditor engaged by the
+Company (the PRC)
+Safety
+Stock Code: 01088
+3rd Floor, China Insurance
+Building, 166 Lujiazui East Road,
+Pudong New Area, Shanghai
+China Securities Depository and
+Clearing Corporation Limited
+Shanghai Branch
+A Share
+Signing Auditors Yam Siu Man
+35th Floor, One Pacific Place, 88 Queensway,
+Hong Kong
+Address
+Share Registrar Name
+and Transfer
+Office
+Office Address
+Auditor engaged by the
+Company (Hong Kong)
+Deloitte Touche Tohmatsu
+Name
+Signing Auditors Chen Wenlong, Yu Chunhui
+8th Floor, Tower W2, The Towers, Oriental Plaza,
+1 East Chang An Avenue, Beijing
+Deloitte Touche Tohmatsu Certified Public
+Accountants LLP
+Office Address
+H Share
+Computershare Hong Kong
+Investor Services Limited
+Rooms 1712-1716, 17th
+Floor, Hopewell Centre,
+183 Queen's Road East,
+Wanchai, Hong Kong
+2018 Annual Report 9
+Internet Security
+Section IV
+Shenhua Group Corporation
+Chairman's Statement
+Section V
+Directors' Report
+362
+2018 Annual Report
+16
+Section VI
+Significant Events
+84
+Changes in Share Capital and Shareholders
+121
+Section VIII
+Directors, Supervisors, Senior Management and Employees
+22
+China Energy Group/
+2018 Annual Report 5
+China Guodian
+Rules Governing the Listing of Securities on the Hong Kong Stock
+Exchange
+Accounting Standards for Business the latest Accounting Standards for Business Enterprises issued
+Enterprises
+by the Ministry of Finance of the People's Republic of China and
+the related application guidance, interpretations and other related
+requirements
+International Financial Reporting
+Standards
+International Financial Reporting Standards issued by the
+International Accounting Standards Board
+6
+China Shenhua Energy Company Limited
+Section Definitions (Continued)
+Articles of Association
+EBITDA
+Gearing ratio
+Total debt to total debt and total
+equity ratio
+Shanghai-Hong Kong
+Stock Connect
+D
+Tel
+Fax
+Address
+Rules Governing the Listing of Stocks on Shanghai Stock Exchange
+The Stock Exchange of Hong Kong Limited
+Shanghai Stock Exchange
+Australasian Code for Reporting of Mineral Resources and Ore
+Reserves
+Guohua Ningdong
+Fuping Thermal Power
+Lujiang Power Plant
+Jawa Company
+Shenhua Finance Lease Company
+JORC
+Shanghai Stock Exchange
+(8610) 5813 1804/1814
+ir@shenhua.cc
+Hong Kong Stock Exchange
+Hong Kong Listing Rules
+Ningxia Guohua Ningdong Power Generation Co., Ltd.
+Guohua Xuzhou Power Generation Company Limited
+Shenhua Guohua (Zhoushan) Power Generation Co., Ltd.
+Shenhua Guohua (Beijing) Gas-fired Power Co., Ltd.
+Shenhua Guohua Shouguang Power Generation Company Limited
+Shenhua Guohua Guangtou (Liuzhou) Power Generation Co., Ltd.
+Shenhua Ningxia Guohua Ningdong Power Generation Co., Ltd.
+Fuping Thermal Power Plant of Shenhua Shendong Power Co., Ltd.
+Shenwan Hefei Lujiang Power Generation Co., Ltd.
+Shenhua Guohua (Indonesia) Jawa Power Generation Co., Ltd.
+Shenhua (Tianjin) Finance Lease Co., Ltd.
+Shanghai Listing Rules
+Liuzhou Power
+(8610) 5813 3355
+22 Andingmen Xibinhe Road,
+Abbreviation of Chinese Name of the Company
+Chinese Name of the Company
+INFORMATION OF THE COMPANY
+I.
+Major Financial Indicators
+Section II Company Profile and
+2018 Annual Report 7
+Renminbi unless otherwise specified
+A mutual access and connect mechanism for transactions in stock
+markets between Shenzhen Stock Exchange and Hong Kong Stock
+Exchange
+A mutual access and connect mechanism for transactions in stock
+markets between Shanghai Stock Exchange and Hong Kong Stock
+Exchange
+Long term interest bearing debt + Short term interest bearing debt
+(including Notes payable)/Long term interest bearing debt + Short
+term interest bearing debt (including Notes payable) + Total equity
+total liabilities/total assets
+Articles of Association of China Shenhua Energy Company Limited
+profit for the year + net finance costs + Income tax + Depreciation
+and amortization - Share of results of associates
+RMB
+Shenzhen-Hong Kong
+Stock Connect
+English Name of the Company
+Abbreviation of English Name of the Company
+Legal Representative of the Company
+Authorised Representatives of the Company
+under the Hong Kong Listing Rules
+II. CONTACTS AND CONTACT DETAILS
+Sun Xiaoling
+Representative of Securities Affairs
+(8610) 5813 1804/1814
+1088@shenhua.cc
+(8610) 5813 3399
+22 Andingmen Xibinhe Road,
+Dongcheng District, Beijing (Postal
+Code: 100011)
+Ling Wen, Huang Qing
+Ling Wen
+Dongcheng District, Beijing (Postal
+Code: 100011)
+CSEC/China Shenhua
+中國神華
+中國神華能源股份有限公司
+Huang Qing
+Secretary to the Board
+E-mail
+Tel
+Fax
+Name
+Address
+China Shenhua Energy Company Limited
+Shenhua Group
+Shouguang Power
+Zhoushan Power
+Shenhua Railway Transportation Co., Ltd.
+Shenhua Baotou Energy Co., Ltd.
+Shenhua Baotou Coal Chemical Co., Ltd.
+Shenhua Baorixile Energy Co., Ltd.
+Shenhua Yudean Zhuhai Port Coal Dock Co., Ltd.
+4 China Shenhua Energy Company Limited
+Section Definitions (Continued)
+Shenwan Energy
+Fujian Energy
+Shenhua Finance Company
+EMM Indonesia
+Panshan Power
+Sanhe Power
+Guohua Zhunge'er
+Zhunge'er Power
+Shenhua Huanghua Harbour Administration Co., Ltd.
+Shuohuang Railway Development Co., Ltd.
+Shenhua Trading Group Limited
+Shenhua Zhunge'er Energy Co., Ltd.
+Shenhua Shendong Power Co., Ltd.
+Guodian Group
+GD Power
+Shendong Coal Group
+Shendong Power Company
+Zhunge'er Energy Company
+Shuohuang Railway Company
+Shenhua Trading Group
+Huanghua Harbour Administration
+Company
+Railway Transportation Company
+Baotou Energy Company
+Baotou Coal Chemical Company
+Zheneng Power
+Shenbao Energy Company
+Shenhua Zhuhai Coal Dock
+The Company and its subsidiaries
+China Energy Investment Corporation Limited (£*œF£¤¶¶Ð
+R), the new name of Shenhua Group Corporation Limited
+(神華集團有限責任公司)
+China Energy and its subsidiaries (excluding the Group)
+China Guodian Group Co., Ltd. (+III£¥ÁRA)
+China Guodian and its subsidiaries
+GD Power Development Co., Ltd.
+Shenhua Shendong Coal Group Co., Ltd.
+China Shenhua Energy Company Limited
+Beijing Gas-fired Power
+Shenmu Power
+Shenhua Fujian Energy Co., Ltd.
+Zhuhai Wind Energy
+Huizhou Thermal
+Suizhong Power Co., Ltd.
+Shaanxi Guohua Jinjie Energy Co., Ltd.
+Hebei Guohua Dingzhou Power Generation Co., Ltd.
+Inner Mongolia Guohua Hulunbei'er Power Generation Co., Ltd.
+Guohua Taicang Power Generation Co., Ltd.
+Shenhua Guohua Mengjin Power Generation Co., Ltd.
+Zhejiang Guohua Yuyao Gas-fired Power Co., Ltd.
+Shenhua Guohua Jiujiang Power Co., Ltd.
+Zhuhai Guohua Huidafeng Wind Energy Development Co., Ltd.
+Guohua Huizhou Thermal Power Branch of China Shenhua
+Section Definitions (Continued)
+Ningdong Power
+Xuzhou Power
+Jiujiang Power
+Yuyao Power
+Mengjin Power
+Taicang Power
+Shenhua Finance Co., Ltd.
+PT.GH EMM INDONESIA
+Tianjin Guohua Panshan Power Generation Co., Ltd.
+Sanhe Power Co., Ltd.
+Inner Mongolia Guohua Zhunge'er Power Generation Co., Ltd.
+Power-generating division controlled and operated by Zhunge'er
+Energy Company
+Zhejiang Guohua Zheneng Power Generation Co., Ltd.
+Shenwan Energy Company Limited
+CLP Guohua Shenmu Power Co., Ltd.
+Taishan Power
+Cangdong Power
+Suizhong Power
+Hebei Guohua Cangdong Power Co., Ltd.
+Jinjie Energy
+Dingzhou Power
+Guohua Hulunbei'er Power
+Guangdong Guohua Yudean Taishan Power Co., Ltd.
+Efficiency
+129
+Health
+(a joint stock limited company incorporated in the People's Republic of China with limited liability)
+CHINA SHENHUA ENERGY COMPANY LIMITED
+中国神华能源股份有限公司
+Fault Diagnosis
+0400
+(ii)
+the national industrial policy as well as industry and market
+conditions in the PRC;
+(i)
+if the prices are not specified by the government and the
+government has not set applicable guidance prices, the prices shall
+be determined in accordance with the applicable industry price
+settlement rules;
+if neither comparable market prices nor prices of non-connected
+transactions are available for reference, the prices shall be
+determined upon negotiation according to the aggregate of the total
+actual costs for providing the relevant services, reasonable profits
+and taxes and additional charges paid.
+if none of the above-mentioned pricing standards is available,
+the prices shall be determined with reference to the prices of
+non-connected transactions between the connected parties and
+independent third parties;
+except for applying the prices specified by the government, the
+guidance prices set by the government and the industry settlement
+rules, if there are comparable market prices or pricing standards,
+priority shall be given to such market prices or pricing standards as
+reference to determine the prices upon negotiation;
+(iii)
+the current transacted coal prices of the local coal exchange or
+market in the PRC, i.e., the coal price with comparable quality that
+is offered to or offered by independent third parties under normal
+market conditions and normal commercial terms in the same or
+nearby regions. For local spot coal price, reference is made to (i) the
+spot price index of the local coal exchange or market in Bohai-rim
+region or nearby provinces as published on the website of
+the specified guidelines issued by NDRC setting out the coal
+purchase prices (if any);
+The price of coal mutually supplied by the China Railway Group and
+the Group is the product of the unit price RMB/tonne multiplied by the
+actual weight. The unit price of coal shall be determined by both parties
+after arm's length negotiations with reference to the market price and
+conditions and the following factors, provided that the transaction terms
+shall not be less favourable than those provided by independent third
+parties:
+Section VI Significant Events (Continued)
+(www.cctd.com.cn) organised by China Coal Transportation
+& Sale Society («+¤¤¤¤#B) in the PRC; (ii) the sale price
+of local large coal enterprises as published by each coal industry
+website (if any); and/or (iii) price quotation of one or more other
+enterprises with comparable quality, quantity and location (if any);
+(v)
+(iv)
+(iii)
+(b)
+Section VI Significant Events (Continued)
+100
+2018 Annual Report 99
+if the prices are not specified by the government, the prices will be
+determined in accordance with the pricing standards and rules of
+national railways within the guidance prices set by the government;
+(ii)
+the prices as determined by the government;
+(i)
+(vi)
+(iv)
+the quantity of coal; and
+(v)
+The agreements A to C above are daily related transactions under the Shanghai
+Listing Rules, while the agreements A to E above are continuing connected
+transactions under the Hong Kong Listing Rules.
+(iv) Business consulting and technical services: market price.
+Equipment supply: tender and bidding price.
+(iii)
+Overhaul services and railway track maintenance services: the price
+is negotiated and agreed by the parties on the basis of the unit
+price that the China Railway Group agreed with third parties in the
+previous year or the same year.
+(ii)
+Rolling stock usage: agreed price (cost plus a profit margin of
+approximately 5%).
+(i)
+In addition to the above, for certain types of product or service, specific
+pricing policy is adopted as follows:
+Agreed price: to be determined by adding a reasonable profit
+margin over a reasonable cost. The management shall consider at
+least two comparable deals with independent third parties for the
+same period when determining the reasonable profit of any product
+or service transaction under this Agreement.
+Market price: The price will be determined as same as or similar to
+products or services provided by an independent third party during
+its ordinary course of business on normal commercial terms. The
+management shall consider at least two comparable deals with
+independent third parties for the same period when determining
+whether the price for any product or service transaction under this
+Agreement is the market price; and
+Tender and bidding price: where tender and bidding process is
+necessary under applicable laws, regulations and rules, the price
+shall be ultimately determined in accordance with the tender and
+bidding process;
+Government-prescribed price and government-guided price: if at
+any time, the government-prescribed price is applicable to any
+particular product or service, such product or service shall be
+supplied at the applicable government-prescribed price. Where
+a government-guided fee standard is available, the price will be
+agreed within the range of the government-guided price;
+(iv)
+(iii)
+(ii)
+(i)
+The price of other products and services mutually provided by the China
+Railway Group and the Group shall be determined in accordance with the
+general principles and order of this section:
+(c)
+Deloitte Touche Tohmatsu, the international auditors of the Company, have reviewed
+the continuing connected transactions under the agreements A to E above and issued
+a letter to the Board, indicating that they were not aware of any matter for which
+they would consider that the continuing connected transactions above (1) were not
+approved by the Board; (2) were not conducted according to the Company's pricing
+policy in terms of all material aspects; (3) were not conducted according to the
+terms of the relevant agreements in terms of all material aspects; and (4) occurred
+an aggregate amount for the year ended 31 December 2018 that had exceeded the
+annual caps disclosed in the Company's announcements on the continuing connected
+transactions.
+China Shenhua Energy Company Limited
+the estimated transportation fees.
+(vi)
+the quality of the coal;
+The price of transportation service mutually provided by the China Railway
+Group and the Group shall be determined in the following priority:
+On 26 December 2018, the Company and Taiyuan Railway Bureau entered into
+a Continuing Connected Transaction Framework Agreement. The Continuing
+Connected Transactions Framework Agreement came into effect on the signing
+date and valid until 31 December 2019. In accordance with the Continuing
+Connected Transactions Framework Agreement, the Group, China Railway and
+its subsidiaries (excluding Taiyuan Railway Bureau and its subsidiaries) (the
+"China Railway Group") have agreed to provide transportation service, supply
+coal and provide other products and services to the Group, in which excluded
+rolling stock usage, overhaul services, equipment supply, business consulting,
+technical services, and railway track maintenance services.
+The pricing of the transactions under the Continuing Connected Transactions
+Framework Agreement shall be agreed in the implementation agreements, but
+shall be determined in accordance with the general principles and order of this
+section:
+2.
+Section VI Significant Events (Continued)
+2018 Annual Report 97
+the service fees charged by Shenhua Finance Company for the provision
+of the financial services to members of China Energy Group shall be
+determined according to the fee rates fixed by the PBOC or the CBRC,
+and if such fixed fee rates are not available, the service fees shall be
+with reference to the fee rates charged by major commercial banks for
+comparable financial services provided to members of China Energy
+Group, and shall be determined on normal commercial terms.
+the interest rates for loans granted by Shenhua Finance Company to
+members of China Energy Group shall be in compliance with relevant
+regulations of the PBOC and with reference to the benchmark lending
+rate (if any) regularly promulgated by the PBOC, interest rates determined
+by the major commercial banks for the same type of loan provided to
+members of China Energy Group, and shall be determined on normal
+commercial terms; and
+the interest rates for deposits placed by members of China Energy Group
+with Shenhua Finance Company shall be in compliance with relevant
+regulations of the PBOC and with reference to the benchmark deposit
+rate (if any) regularly promulgated by the PBOC, interest rates determined
+by major commercial banks for the same type of deposit provided to
+members of China Energy Group, and shall be determined on normal
+commercial terms;
+(3)
+(2)
+(1)
+The pricing policy of the Financial Services Agreement is as follows:
+On 24 March 2016, the Company entered into the Financial Services Agreement
+with China Energy. The Financial Services Agreement is effective from 1
+January 2017 and will expire on 31 December 2019. In accordance with the
+Financial Services Agreement, the Company provided relevant financial services
+to China Energy Group through Shenhua Finance Company.
+Financial Services Agreement
+Section VI Significant Events (Continued)
+C.
+China Shenhua Energy Company Limited
+Various daily administrative services to the headquarters of China Energy
+(exclusive of financial management and services): agreed price (cost plus
+a profit margin of approximately 5%).
+Social security and pension management services and staff data recording
+services: agreed price (cost plus a profit margin of approximately 5%);
+and
+Logistics and support services and training services: agreed price (cost
+plus a profit margin of approximately 5%);
+Information technology services: The parties negotiate and agree on
+the service price within the scope of budget, which is reviewed by
+professional institution(s) with pricing reviewing qualification according
+to relevant national and industrial rules and regulations on construction
+pricing, pricing mechanism and fee standards, with reference to the
+market customs of the information technology industry, actual standards
+and market price, taking into account the actual condition of the
+Company's information technology construction;
+Technical consulting services: agreed price with a profit margin of
+approximately 10%;
+(m)
+(I)
+(k)
+Non-exempt continuing connected transactions between the Group and other
+parties
+D.
+Transportation Service Framework Agreement between the Company and
+Taiyuan Railway Bureau
+Taiyuan Railway Bureau is the parent company of Daqin Railway, which is a
+substantial shareholder of 10% shareholding or above of Shuohuang Railway
+Company, a significant subsidiary of the Company under the Hong Kong
+Listing Rules. Therefore, Taiyuan Railway Bureau is a connected person of
+the Company under the Hong Kong Listing Rules, and the Transportation
+Service Framework Agreement and the transactions contemplated thereunder
+constitute continuing connected transactions of the Company under the Hong
+Kong Listing Rules.
+2018 Annual Report 101
+China Railway Corporation ("China Railway") is a controlling shareholder of
+regional railway bureau including Taiyuan Railway Bureau, therefore China
+Railway constituted a connected person of the Company under the Hong Kong
+Listing Rules. Therefore, the Continuing Connected Transactions Framework
+Agreement and the transactions contemplated thereunder constitute continuing
+connected transactions of the Company under the Hong Kong Listing Rules.
+The Continuing Connected Transactions Framework Agreement between the
+Company and China Railway Corporation
+Railway track maintenance and other related services provided by the
+Group to the Taiyuan Railway Bureau Group: the price is negotiated
+and agreed by the parties on the basis of the unit price that the Taiyuan
+Railway Bureau Group agreed with third parties in the previous year or
+the same year.
+Rolling stock leasing and other related services provided by the Group to
+the Taiyuan Railway Bureau Group: price prescribed by NDRC or other
+related government authorities.
+Transportation and related services provided by the Taiyuan Railway
+Bureau Group to the Group: price prescribed by NDRC or other related
+government authorities.
+(3)
+(2)
+(1)
+In addition to the above, for certain type of service, specific pricing policy is
+adopted as follows:
+E.
+(a)
+Section VI Significant Events (Continued)
+98
+Agreed price: shall be determined by adding a reasonable profit
+over a reasonable cost. The management shall consider at least two
+comparable transactions with independent third party for the same period
+when determining the reasonable profit of any transaction under the
+Agreement.
+Market price: shall be determined according to the normal commercial
+terms and the following basis: the price of the same or similar services
+provided by an independent third party during the ordinary course of
+business on normal commercial terms. The management shall consider
+at least two comparable transactions with independent third party for
+the same period when determining whether the price for any transaction
+under the Agreement is market price.
+Tender and bidding price: where tender and bidding process is necessary
+under applicable laws, regulations and rules, the price ultimately
+determined in accordance with the tender and bidding process.
+Government-prescribed price and government-guided price: if at any time,
+the government-prescribed price is applicable to any particular service,
+such service shall be supplied at the applicable government-prescribed
+price. Where a government-guided fee standard is available, the price
+shall be agreed within the range of the government guided price.
+(4)
+(3)
+(2)
+(1)
+The pricing of the services under the new Transportation Service Framework
+Agreement shall be agreed in the implementation agreements, but shall be
+determined in accordance with the general principles and order below:
+In order to secure coal transportation service for the Group, the Company
+entered into the Transportation Service Framework Agreement with Taiyuan
+Railway Bureau on 24 March 2016. The Transportation Service Framework
+Agreement is effective from 1 January 2017 and will expire on 31 December
+2019.
+China Shenhua Energy Company Limited
+Section VI Significant Events (Continued)
+In 2018, the implementation of the agreements A to E above is set out in the table
+below. Since September 2018, China Energy Group, the Group's related/connected
+person, includes Guodian Group. The total amount of related/connected transactions
+for sale of products and provision of services by the Group to China Energy Group
+during the reporting period amounted to RMB25,667 million, which accounted for
+9.7% of the operating revenue of the Group during the reporting period.
+Implementation of and review opinions on the non-exempt continuing related/connected
+transactions
+RMB million
+сар
+transaction
+during the
+Prevailing
+amount
+Transaction
+Transaction item
+Name of
+No. Agreement
+4.5
+5,874
+8,041
+1.4
+2,241
+4,949
+Agreement
+Transactions Framework
+E Continuing Connected
+26.1
+4,336
+14,000
+4.9
+320
+reporting
+period
+RMB million
+1,700
+4,420
+C
+4.
+Section VI Significant Events (Continued)
+24
+24
+221
+913
+13,000
+China Shenhua Energy Company Limited
+102
+(6) Annual total fee charged for providing the members of
+China Energy Group with consultancy, agency, settlement,
+transfer, investment, lease finance, letter of credit, online
+banking, entrusted loan, guarantee, acceptance of bill and
+other financial services
+(5) Maximum daily balance (including interests accrued
+thereon) of entrusted loans granted by China Energy and
+its subsidiaries to the Company and/or its subsidiaries
+through Shenhua Finance Company
+(4) Maximum daily balance of loans, consumption credit,
+buyer's credit and financial leasing (including relevant
+accrued thereon) granted to members of China Energy
+Group
+16,301
+28,600
+30,674
+58,500
+(3) Maximum daily balance (including interests accrued
+thereon) of deposits placed by members of China Energy
+Group
+67
+10,400
+(2) Annual total transaction amount of bill acceptance and
+discount services
+(1) Total amount in relation to the provision of financial
+services of guarantee (including guarantee business
+within the business scope of financial enterprises, such as
+performance guarantee and quotation sharing) to members
+of China Energy Group
+Agreement
+Financial
+Services
+0
+Framework Agreement
+D Transportation Service
+62
+RMB million
+RMB million
+of transactions
+period
+transaction cap
+of transactions
+period
+the same type
+the reporting
+Prevailing
+the same type
+the reporting
+Prevailing
+transaction cap
+No. Name of agreement
+Proportion in
+amount during
+Proportion in
+amount during
+Transaction
+Provision of products and services by the Group to
+related/connected persons and other inflows
+Transaction
+Purchase of products and services from related/connected
+persons by the Group and other outflows
+(j)
+%
+RMB million
+RMB million
+A Mutual Coal Supply
+Agreement
+6.2
+1,648
+2.5
+3.3
+1,942
+6.9
+22
+320
+(2) Services
+6,639
+including: (1) Products
+3.
+3,590
+6,959
+13,000
+Agreement
+B Mutual Supplies and Services
+53
+15.3
+8,608
+20,700
+12.0
+18,708
+65,500
+23,500
+(i)
+Chemical products: market price;
+(h)
+(III) Material related transactions regarding joint external investments
+✓ Not applicable
+Applicable
+Related transactions regarding acquisition and disposal of assets or equity
+The total transaction amount of mutual coal supply and mutual supplies and services
+between the Group and China Energy Group (including Guodian Group) in 2018 does
+not exceed the 2018 annual caps set out in the Mutual Coal Supply Agreement
+and the Mutual Supplies and Services Agreement. The independent Directors of
+the Company are of the view that above transactions were entered into in the
+ordinary course of business of the Group and conducted on normal commercial
+terms or better. The transactions are fair and reasonable and in the interests of the
+shareholders of the Company as a whole.
+(II)
+For the details of the Group and Guodian Group establishing a Joint Venture Company with
+the equity and assets of the related coal-fired companies which held by the Group and
+Guodian Group, please refer to Section V "Subsequent Events" of this report.
+79
+845
+16
+14,239
+14,255
+RMB million
+and other
+outflows
+766
+China Shenhua Energy Company Limited
+Tendering services: price prescribed by NDRC;
+Government-prescribed price and government-guided price: if at any time,
+the government-prescribed price is applicable to any particular product
+or service, such product or service shall be supplied at the applicable
+government prescribed price. Where a government-guided fee standard
+is available, the price will be agreed within the range of the government
+guided price;
+(4)
+Section VI Significant Events (Continued)
+The quality of the coal (including the estimated calorific value of coal as
+required by different coal-fired power generating units);
+(5)
+The quantity of coal; and
+(6)
+The transportation fees.
+B.
+Mutual Supplies and Services Agreement
+On 24 March 2016, the Company entered into the Mutual Supplies and Services
+Agreement with China Energy. The Mutual Supplies and Services Agreement is
+effective from 1 January 2017 and will expire on 31 December 2019. Pursuant
+to the Mutual Supplies and Services Agreement, the Group and China Energy
+Group mutually sells and provides various types of products and services.
+The pricing of the products and services provided under the Mutual Supplies
+and Services Agreement shall be determined in accordance with the general
+principles and in the order of the section below:
+(a)
+(b)
+(c)
+(d)
+Purchase of
+supplies and
+services from
+related parties
+by the Group
+RMB million
+The independent non-executive directors of the Company have confirmed to the
+Board of the Company that they have reviewed the transactions contemplated under
+the agreements A to E above and are of the view that (1) those transactions were
+entered into in the ordinary course of business of the Group; (2) those transactions
+were on normal commercial terms or better terms; and (3) those transactions were
+conducted according to the agreements governing them on terms that are fair and
+reasonable and in the interest of the shareholders of the Company as a whole.
+services by
+the Group to
+related parties
+2018 Annual Report 95
+96
+Section VI Significant Events (Continued)
+In addition to the above, for certain types of product or service, specific pricing
+policy is adopted as follows:
+(a)
+(b)
+Rail transportation: price prescribed by NDRC or other related government
+competent authorities;
+Construction: where tender and bidding process is necessary under
+applicable laws and regulations, the price ultimately determined in
+accordance with the tender and bidding process; where tender and
+bidding process is not necessary under applicable laws, the market price;
+(c)
+(g) Production equipment and spare parts, office products: market price;
+The above continuing related/connected transactions were in the ordinary course of
+business of the Company, and were strictly in compliance with procedures of review
+and approval by independent directors and independent shareholders as well as
+disclosure requirements.
+(f)
+Hardware and software equipment and related services: market price
+(including tender and bidding price);
+Alternative power generation: price prescribed by NDRC or other related
+government competent authorities;
+(e)
+(d)
+and other
+inflows
+Oil products: government-guided price;
+2018 Annual Report 103
+Twenty three types of related party transactions were disclosed in Note 44 of
+the financial statements for the year 2018 prepared by the Company under the
+International Financial Reporting Standards. According to the Hong Kong Listing
+Rules, except for the transactions under item (ii) "income from entrusted loans"
+and the transactions in relation to the purchase of coal from associates of the Group
+under item (x) "purchase of coal", all of the other related party transactions disclosed
+in Note 44 constituted connected transactions under the Hong Kong Listing Rules
+and were required to be disclosed in accordance with Chapter 14A of the Hong
+Kong Listing Rules. The Company has complied with the disclosure requirements of
+Chapter 14A of the Hong Kong Listing Rules in respect of disclosure of the above
+connected transactions and continuing connected transactions.
+Daily related transaction between the Group and Guodian Group prior to the
+Merger of Group Companies
+According to the "Notice regarding the Reorganization of China Guodian Corporation
+and Shenhua Group Corporation Limited" (Guo Zi Fa Gai Ge 2017 No. 146) received
+from SASAC on 28 August 2017, after Shenhua Group Corporation was renamed
+as China Energy Investment Corporation Limited, it will merge with China Guodian
+Corporation by way of merger by absorption of China Guodian Corporation (the
+"Merger of Group Companies").
+Agreed price: to be determined by adding a reasonable profit margin
+over a reasonable cost. The management shall consider at least two
+comparable deals with independent third parties for the same period
+when determining the reasonable profit of any product or service
+transaction under this Agreement.
+Market price: the price of the same or similar products or services
+provided by an independent third party during its ordinary course of
+business on normal commercial terms. The management shall consider at
+least two comparable deals with independent third parties for the same
+period when determining whether the price for any product or service
+transaction under this Agreement is the market price; and
+104
+Tender and bidding price: where tender and bidding process is necessary
+under applicable laws and regulations, the price will be ultimately
+determined in accordance with the tender and bidding process;
+Section VI Significant Events (Continued)
+Daily related transactions between the Group
+and Guodian Group
+Of which: (1) Coal supply
+(2)
+Mutual supply of products and
+services
+Provision of
+supplies and
+According to the Shanghai Listing Rules and the "Guidelines of the Shanghai Stock
+Exchange on Related Transactions", since 28 August 2017, Guodian Group is
+considered as the related parties of the Company. From January to August 2018,
+prior to the completion of the Merger of Group Companies, the Group's daily related
+transactions including the transactions for purchase and sale of coal, supplies and
+services with Guodian Group are as follows:
+Section VI Significant Events (Continued)
+0
+(III) Entrusted cash asset management
+108 China Shenhua Energy Company Limited
+1.
+Entrusted wealth management
+(1) General status of entrusted wealth management
+50
+Own fund
+Entrusted wealth management
+products
+0
+30,000
+30,000
+Own fund
+Banks' wealth management products
+amount
+Overdue
+uncollectible
+ending
+Maximum
+Balance Notes
+Source of funding
+Type of products
+Outstanding
+Unit: RMB million
+0
+balance
+At the end of the reporting period, the amount of guarantee provided by the Company
+to its subsidiaries is detailed as follows: on 23 December 2013, the Board approved
+the acquisition of Baotou Coal Chemical Company by the Company and the Company
+would replace Shenhua Group Corporation in providing guarantee for the loan of
+USD350 million granted by China Development Bank (for a term expired in August
+2018) to Baotou Coal Chemical Company.
+As of the end of the reporting period, the amount of guarantee between subsidiaries
+in consolidated reports of the Company, in proportion to its shareholding, amounted
+to approximately RMB6,906.86 million, which was mainly due to the fact that
+Shenhua Hong Kong Limited, the wholly-owned subsidiary of the Company, provided
+guarantees for the issuance of USD1.0 billion bonds by China Shenhua Overseas
+Capital Co., Ltd., its wholly-owned subsidiary, and Shenhua Funeng Power Co., Ltd.
+of which the Company indirectly held 51% shares provided guarantees to its two
+controlling subsidiaries.
+As at the end of the reporting period, the total balance of the amount of guarantee provided
+by the Group amounted to RMB7, 197.36 million, including:
+Section VI Significant Events (Continued)
+China Shenhua Energy Company Limited
+Note: The balance of guarantee provided by the subsidiary to external parties of total amount of guarantee at the
+end of the reporting period equals to the amount of external guarantee of the subsidiary multiplies by the
+shareholding of the Company in the subsidiary.
+Description of guarantee
+Please refer to below
+Please refer to below
+0
+7,003.45
+7,003.45
+0
+Description of the potential joint and several repayment liability for outstanding guarantee
+Aggregated amount of the above three amounts of guarantee (C+D+E)
+Portion of the total amount of guarantee in excess of 50% of net assets (E)
+of 70% (D)
+Amount of guarantee directly or indirectly provided for the benefit of parties with a gearing ratio in excess
+their related parties (C)
+(1)
+For the details of the opinions of the independent Directors, please refer to the
+relevant reports disclosed in conjunction with the report.
+(2)
+Given that Liangyi Railway Company failed to pay the loan interest on time due to its
+deteriorating business operation, as resolved by the shareholders' general meeting
+of Liangyi Railway Company, additional capital was injected into Liangyi Railway
+Company by its shareholders (including Shenbao Energy Company). Shenbao Energy
+Company has injected an accumulated amount of RMB11.82 million into Liangyi
+Railway Company.
+As at 31 December 2018, the USD-denominated loan has been repaid and the
+guarantee liability of the Company was discharged accordingly.
+Brokers' wealth management
+As of 31 December 2018, Zhuhai branch of SPD bank granted a loan of RMB294
+million to Shenhua Zhuhai Coal Dock, the principal and interest of which being repaid
+in a regular basis.
+As at the end of the reporting period, Shenhua Zhuhai Coal Dock has entered into a
+counter guarantee contract for joint and several liabilities counter guarantee ("Counter
+Guarantee Contract") with Zhuhai Port and Yudean Farnon respectively, with the caps
+of counter guarantee amount of RMB168 million. The counter guarantee period would
+be from the effective date of the Counter Guarantee Contract to the settlement of all
+payment by Shenhua Zhuhai Coal Dock.
+Shenhua Zhuhai Coal Dock entered into a loan contract with Zhuhai branch of SPD
+Bank for a term of 10 years (from 30 September 2017 to 30 September 2027) with
+an amount of RMB336.0 million, pursuant to which Yudean Farnon and Zhuhai
+Port provided joint and several liabilities guarantee for such loan with an amount of
+RMB168 million, respectively. The guarantee periods are both two years from the
+expiry of term of debt performance by the debtor in the loan contract. Shenhua Zhuhai
+Coal Dock provided counter guarantee of joint and several liabilities to Yudean Farnon
+and Zhuhai Port with the caps of counter guarantee amount of RMB168 million,
+respectively. The above counter guarantee was approved at the eleventh meeting of
+the fourth session of the Board of the Company.
+Each of Guangdong Yudean Farnon Investment Co., Ltd. ("Yudean Farnon") and
+Zhuhai Port Co., Ltd. ("Zhuhai Port") held 30% equity interests in Shenhua Zhuhai
+Coal Dock, respectively.
+As at the end of the reporting period, the external joint and several liability counter
+guarantee provided by Shenhua Zhuhai Coal Dock, a controlling subsidiary held as to
+40% by the Company is as follows:
+(5)
+(4)
+(3)
+Section VI Significant Events (Continued)
+2018 Annual Report 107
+As of 31 December 2018, the actual amount withdrawn by Yulin Zhugaita Coal Cargo
+Transportation Co., Ltd. amounted to RMB231.24 million, with a gearing ratio of
+57.1%.
+As at the end of the reporting period, the guarantee provided by Shendong Coal
+Group, a wholly-owned subsidiary of the Company, to external parties was as follows:
+as stipulated in the Guarantee Agreement on Maximum Guarantee entered into on
+13 June 2017, Shendong Coal Group, as one of the guarantors, provided joint and
+several liability guarantee to Yulin Zhugaita Coal Cargo Transportation Co., Ltd. (of
+which Shendong Coal Group owns 33% of the shares) based on equity proportion for
+the debts under a facility agreement. The major credit guaranteed was the debts due
+to the creditor with a maximum balance of RMB400 million from 2017 to 2019. The
+guarantee above has been approved at the 19th meeting of the third session of the
+board of directors of the Company on 28 October 2016.
+As of the end of the reporting period, Shenbao Energy Company, in proportion to its
+shareholding, repaid the principal on the loans on behalf of Liangyi Railway Company
+Limited amounting to a total of RMB30.99 million. Shenbao Energy Company
+already made full provision for impairment on its 14.22% equity interest in Liangyi
+Railway Company and the repayment amount paid on its behalf. Together with other
+shareholders, Shenbao Energy Company will continue to call for improvement of
+business operation of Liangyi Railway Company. As at 31 December 2018, Liangyi
+Railway Company had a gearing ratio of 138.89 %.
+As at the end of the reporting period, the guarantee provided by Shenbao Energy
+Company, a subsidiary of which the Company owns 56.61% of the shares, for the
+benefit of external parties was as follows: prior to the acquisition of Shenbao Energy
+Company by the Company in 2011 and pursuant to the Guarantee Agreement on the
+Syndicated Renminbi Loan for the Cooperative Railway Project Connecting Yimin
+and Yiershi Newly Constructed by Hulunbei'er Liangyi Railway Company Limited, in
+2008, Shenbao Energy Company, as one of the guarantors, provided joint and several
+liability guarantee to Hulunbei'er Liangyi Railway Company Limited (hereinafter
+referred to as the "Liangyi Railway Company", of which Shenbao Energy Company
+owns 14.22% of the shares) for the syndicated loans. The major liability guaranteed
+was the debts due to the lender with a maximum balance of RMB207.47 million from
+2008 to 2027, regardless of whether the debt is due when the above period expires.
+The above syndicated loans will fall due by tranches between 2011 and 2026. The
+Guarantee Agreement provides that the guarantee period of the debts borne by the
+guarantor shall be calculated from the due date of each tranche to two years after the
+due date of the last tranche, i.e. 2029.
+Own fund
+entrusted
+wealth
+0
+entrusted Initial date of
+principal has been
+Actual
+Amount of
+entrusted
+wealth
+Amount of Whether it
+Type of
+Expiry date of
+Section VI Significant Events (Continued)
+2018 Annual Report 109
+0 Yes
+20
+5.20
+3.45%
+plans for assets upon expiry
+Fixed income assets One-off payment
+such as bonds of principal with
+and management accrued interest
+plans for assets upon expiry
+products
+110
+Annualized profit
+redeemed through
+No Trustor
+Own fund
+2019/06/25
+8,000 2018/12/25
+China Shenhua China Construction Banks' wealth
+3
+year procedures
+the year
+return
+for the legal
+rate of gained for
+Determination of
+compensation
+fund
+Investment of
+entrusted wealth Source of
+management fund
+wealth entrusted wealth
+management management
+management
+products
+Trustee
+China
+100
+Commercial Bank of management
+2019/06/25
+entrusted wealth Source of
+management fund
+redeemed through
+profit
+Annualized
+Expiry date of
+Amount of Whether it
+Actual principal has been
+Amount of
+entrusted Initial date of
+wealth entrusted wealth
+management management
+Investment of
+fund
+management
+products
+No Trustor
+Type of
+Unit: RMB million
+(2) Individual entrusted wealth management
+Note: Maximum balance refers to the daily highest balance of the entrusted wealth management
+of such type of the Group in 2018.
+products
+0
+Trustee
+Determination of
+compensation
+rate of
+gained for
+5,000 2018/12/21
+Banks' wealth
+2 China Shenhua Industrial and
+0 Yes
+3.64
+3.8%
+Fixed income assets One-off payment
+such as bonds of principal with
+and management accrued interest
+management
+products
+Bank
+Own fund
+2019/06/30
+5,000 2018/12/25
+China Shenhua China Development Banks' wealth
+year procedures
+the year
+return
+for the legal
+Own fund
+1
+No
+Bank
+(1)
+General status of entrusted loans
+Unit: RMB million
+Maximum balance
+Outstanding
+Type of products
+Source of funding
+in 2018 Note
+2.
+Overdue
+ending balance uncollectible amount
+Own fund
+457.4
+420.0
+37.4
+Note: Maximum balance in 2018 refers to the daily highest balance of the entrusted loans of such
+type of the Group in 2018.
+2018 Annual Report
+111
+Entrusted loans
+Entrusted loans
+As of the end of 2018, the total outstanding principal amount of entrusted
+wealth management products of the Group amounted to RMB30,000 million,
+which, under the precondition of guarantee of safety and liquidity, mainly
+consisted of banks' wealth management products which purchased in order to
+reasonably rise the capital revenue in the short term. The Group did not have
+any failure of redeeming or cashing principal when due and no provision for
+impairment for the above wealth management products has been made.
+etc.
+50
+50
+Yes
+products
+instruments or
+products with a
+high security
+7
+Shenhua Finance CITIC Securities
+Company
+Brokers' wealth
+management
+products
+100 2017/01/04
+2018/12/28
+Own fund
+Fixed-income asset Based on
+and cash asset,
+net value
+financial products,
+4.95%
+9.79
+19
+100 Yes
+112
+Section VI Significant Events (Continued)
+(2) Individual entrusted loan
+Unit: RMB million
+company
+Yili Chemical
+420.0 2017/12/29 2020/12/29 3years
+Bank of
+Inner Mongolia joint stock
+of principal with
+0 Yes
+0
+loans
+Maturity
+Source of
+Determination of Interest Actual gain
+funding Capital flow remuneration
+rate for the year
+redeemed through legal
+for the year procedures
+Sanxin Railway joint stock
+Company
+Bank of
+37.4 2014/2/13 2015/2/13 1 year
+company
+Beijing
+Own fund Working
+capital
+China
+2.39
+Own fund Replacement
+of loans
+4.75%
+Amount of Whether it
+principal has been
+Relationship
+Borrower
+with the Group Trustee
+Amount of Initial date Expiry date
+entrusted of entrusted of entrusted
+loans loans
+2.
+1.
+(IV) Derivative investment
+Under centralised capital management of the Group, the entrusted loans
+among the Company and its subsidiaries were used for meeting operating
+and development needs. The part of entrusted loans has been offset in the
+consolidated financial statements of the Group.
+As of 31 December 2018, the Group did not grant entrusted loans with an
+amount exceeding 5% of the Group's latest audited net assets attributable to
+equity holders of the Company to any individual party. The Company did not
+utilise the proceeds raised to grant entrusted loans, and there was no entrusted
+loan that was involved in litigations. No provision for impairment for the above
+entrusted loans has been made by the Group.
+In December 2017, Shendong Power Company, being the wholly-owned subsidiary
+of the Company, entered into entrusted loan agreements with amounts of RMB420
+million and RMB200 million with Inner Inner Mongolia Yili Chemical Industry Co.,
+Ltd. ("Inner Mongolia Yili Chemical"), respectively, of which the entrusted loan
+agreement with RMB420 million has been performed on 29 December 2017, while
+the entrusted loan agreement with RMB200 million has not been performed.
+2.
+The entrusted loan provided by the Company to Inner Mongolia Sanxin Railway
+Co., Ltd. ("Sanxin Railway Company") was not repaid when it was due in February
+2015, and both parties are under negotiation in respect of the subsequent relevant
+matters.
+Notes: 1.
+interest on
+quarterly basis
+0 Yes
+90
+19.0
+accrued interest
+upon expiry
+Settlement of
+Amount of guarantee provided for the benefit of shareholders, de facto controller and
+4.23%
+management
+13
+0 Yes
+financial bonds,
+of principal with
+central bank
+accrued interest
+bills, etc., and
+upon expiry
+5.03
+other investment
+fixed income
+5
+China Shenhua Industrial Bank
+(China)
+Banks' wealth
+management
+products
+3,000 2018/12/26
+2019/06/26
+Own Fund Money market
+instruments with
+3.4%
+government bonds, One-off payment
+Own fund
+management
+products
+Various types
+of bonds,
+One-off payment
+3.45%
+5.29
+0 Yes
+of principal with
+repurchases,
+accrued interest
+interbank
+upon expiry
+deposits, etc., in
+interbank bond
+markets
+China
+4 China Shenhua Agricultural Bank of Banks' wealth
+management
+products
+9,000 2018/12/26
+2019/06/25
+One-off payment
+3.9%
+1.92
+92
+entrusted Initial date of
+wealth entrusted wealth
+management management
+Expiry date of
+Annualized
+profit
+redeemed through
+entrusted wealth Source of
+management fund
+Investment of
+fund
+Determination of
+compensation
+rate of gained for
+return
+for the legal
+the year
+year procedures
+6 Shenhua Finance CITIC Trust
+Entrusted
+50 2016/12/27
+2018/02/12
+Own fund
+Company
+wealth
+management
+products
+Fixed-income asset Based on
+and cash asset net value
+and other financial
+Trustee
+wealth
+0 Yes
+instruments, fixed- of principal with
+income short-
+term investment
+accrued interest
+upon expiry
+China Shenhua Energy Company Limited
+instruments, trust
+plans and asset
+management
+plans of brokers,
+etc.
+Section VI Significant Events (Continued)
+Type of
+Amount of Whether it
+entrusted
+Amount of
+Actual
+principal has been
+No Trustor
+7,197.36
+2.2
+One-off payment
+Total amount of guarantee (A+B)
+(3.30)
+490.72
+parties
+Other related
+0
+0
+487.42 1,373.85 (500.00) 873.85
+0
+(3.30)
+490.72
+0 1,373.85 (500.00) 873.85
+0
+0
+Controlling shareholders and
+its subsidiaries
+Others
+487.42
+its subsidiaries
+Reasons for debts and liabilities between
+related parties
+Undertakings related to debts and liabilities
+between related parties
+1. Guarantee provided by the Company to external parties (excluding guarantee granted to its subsidiaries
+(II) Guarantees
+During the reporting period, the Company did not enter into or have any management and
+administration contracts in respect of the whole or any material part of the business of the
+Company.
+☐ Applicable ✓ Not applicable
+(1) Trust, contracting and leasing
+XII MATERIAL CONTRACTS AND THEIR PERFORMANCE
+Repayment of debts and liabilities between
+related parties
+Section VI Significant Events (Continued)
+2018 Annual Report 105
+The above entrusted loans and borrowings are beneficial
+to the normal commencement of relevant project
+construction and production operation of the Company
+and have no material impact on the operating results and
+financial position of the Company.
+N/A
+Currently, the principal and interests of the above entrusted
+loans and borrowings are repaid in a normal manner in
+accordance with the repayment schedule.
+The above related debts and liabilities incurred were
+mainly due to the fact that the Group provided entrusted
+loans to an associated company of a subsidiary of the
+Company through a bank, and the Group took long-term and
+short-term loans from China Energy Group and performed
+internal decision procedures in accordance with relevant
+requirements.
+Impacts of debts and liabilities between
+related parties on the operating results and
+financial position of the Company
+106
+Unit: RMB million
+China Energy and
+Funds offered by related
+Targeted poverty alleviation plan
+1.
+(1) Poverty alleviation
+XIII. FULFILLING THE WORK OF SOCIAL RESPONSIBILITY
+Section VI Significant Events (Continued)
+China Shenhua Energy Company Limited
+The Group has intensified the implementation of the Opinions of the State Council
+on Winning the Tough Battle against Poverty and China Energy Group Working Plan
+on Poverty Alleviation 2018-2020 by establishing and improving the system for
+organization and guarantee of poverty alleviation work. Adhering to the principle of
+targeted contribution based on its ability to benefit the public, the Group has made
+full use of unique local resources and adopted different measures based on the
+local circumstances with emphasis on solving practical problems. With continuous
+improvement of the production capability, life quality and medical condition in
+provinces targeted for support, provinces under focused poverty alleviation and
+deprived villages as the intention and the foothold, the Group meticulously organized
+poverty alleviation projects and constantly invested supporting funds while carrying
+out various work including education support, hygiene improvement and medical
+support, enhancement in construction of rural infrastructure and production facilities
+and assistance in the development of special industries in deprived regions, as well
+as strengthening the promotion and application of new technologies, new industries,
+new business types and new business models in poverty alleviation.
+The propose of exchange rate hedging conducted by the Group is to manage risks,
+but not to procure profits. The specific measures adopted are in line with the nature
+of risk-hedging.
+USD-denominated debt hedging
+In January 2018, 3,800 lots for contract of thermal coal futures held by the Group
+completed delivery. As of the end of the year of 2018, the Group has not engaged in
+any other trading in thermal coal futures.
+Thermal coal futures
+China Shenhua Energy Company Limited
+6%
+Proportion of total amount of guarantee to the net assets attributable to equity holders of the Company at
+the end of the year under Accounting Standards for Business Enterprises in 2018 (%)
+Including:
+To avoid USD debt risk, according to the Annual Plan on Financial Derivatives
+Business of China Shenhua for 2018, which was approved in the eighth meeting of
+the fourth session of the Board of the Company after consideration, the Company,
+after subsequent standardised decision-making process, conducted exchange rate
+hedging of USD150 million of the USD debts by use of financial derivatives in 2018.
+parties to the Group
+Opening Amount Closing Opening Amount Closing
+balance incurred balance balance incurred balance
+China Energy Public Welfare Foundation is the major entity of China Shenhua for
+execution of poverty alleviation work and China Shenhua is the key governing unit and
+the major donor of China Energy Public Welfare Foundation¹.
+Proportion of Donation of China Shenhua is 83% among the donation funds received by the China Energy Public Welfare
+Foundation since its establishment
+Funds provided to related
+parties
+Relationship
+Related parties
+Unit: RMB million
+(IV) Debts and liabilities between related parties
+Section VI Significant Events (Continued)
+1
+Calculation basis of the capital expenditure for targeted poverty alleviation: capital expenditure of China Energy Public
+Welfare Foundation for targeted poverty alleviation × the proportion of donation made by the Group to China Energy
+Public Welfare Foundation + the capital expenditure of the Group directly used for targeted poverty alleviation.
+Each poverty alleviation work of China Shenhua achieved remarkable results, and
+was well recognized by the local government and all walks of life. For the details of
+poverty alleviation work, please refer to the 2018 ESG Report disclosed in conjunction
+to this report.
+In 2018, China Shenhua contributed approximately RMB97.40 million to targeted
+poverty alleviation¹. The amount mainly used for (1) fostering the development
+of specified industries by adapting to local conditions. Concerning the local
+circumstances and conventions in targeted deprived providences, development
+which takes local limitation into concern would drive local specialized industries and
+raise the income of the underprivileged, thus broaden the means of income raise
+for poor farmers and herdsmen; (2) Increase investment in ecological protection
+and rehabilitation in poverty-stricken areas, achieve ecological improvement and
+poverty alleviation; (3) Fund local construction of roads and bridges construction,
+manage basic farmlands, renew saline-alkali land, and build new irrigation systems
+and water source points, erect agricultural power lines and establish medical and
+health facilities at village level, and dispatch cadres at the grass-roots level to assist in
+implementation; (4) Help the development of local education, assist schools, improve
+the teaching accommodation environment, and set up a school aid fund to subsidize
+students from poor areas to complete their studies, as well as help children with
+leukemia and congenital heart disease in poor families.
+Summary of the targeted poverty alleviation during the reporting period
+2.
+Section VI Significant Events (Continued)
+2018 Annual Report 113
+114
+Relationship
+between the
+Total
+Whether
+guarantee
+NA
+Date of
+provision of
+guarantee
+No
+0
+No
+No
+Zhuhai Coal
+58.80 2018.06.13 2018.06.13 2026.09.29 Joint and
+Controlling
+Shenhua
+several liability
+guarantee
+Co., Ltd.
+Cargo Transportation
+subsidiary
+Zhuhai Port Co., Ltd.
+Subsidiary
+Dock
+several liability
+guarantee
+3. Total amount of guarantee (including guarantee for the benefit of its subsidiaries)
+(3,260.82)
+6,906.86
+Total amount of guarantee provided for the benefit of subsidiaries during the reporting period
+Total balance of guarantee provided for the benefit of subsidiaries at the end of the reporting period (B)
+2. Guarantee provided by the Company and its subsidiaries for the benefit of its subsidiaries
+290.50
+147.30
+Total balance of guarantee at the end of the reporting period (A) (excluding guarantee provided to its
+subsidiaries)
+Total amount of guarantee provided during the reporting period (excluding guarantee provided to its
+subsidiaries)
+several liability
+guarantee
+No No 0 No No NA
+58.80 2018.12.21 2018.12.21 2026.09.29 Joint and
+Guangdong Yudean
+Farnon Investment
+Co., Ltd.
+Controlling
+Subsidiary
+Zhuhai Coal
+Dock
+Shenhua
+Group
+N/A
+No N/A
+No
+Company
+Subsidiary
+is for the
+Controlling
+Shenbao
+benefit of
+performance Whether Amount of counter
+has been guarantee is guarantee guarantee is related
+completed overdue overdue provided parties Relationship
+Expiry date Type of
+of guarantee guarantee
+Hulunbei'er Liangyi
+Railway Company
+Limited
+Amount date of date of
+guaranteed agreement) guarantee
+company
+Guarantor
+and the listed
+(execution Beginning
+guarantor
+No
+Whether
+Whether
+Guaranteed
+96.59 2008.08.30 2008.08.30 2029.08.29 Joint and
+Energy
+Shendong Coal Wholly-owned Yulin Zhugaita Coal
+No
+76.31 2017.06.13 2017.06.13 2019.06.12 Joint and
+No
+several liability
+guarantee
+N/A
+0
+No
+No
+0
+No
+4.
+Environmental issues of companies other than those classified as the key pollutant
+discharging units
+Applicable ✓ Not applicable
+In line with the principles of prevention from the source, control in the process and
+treatment at the end, the Group conducted clean production, as well as pollution
+prevention and control to minimize the impact of production on environment. It also
+strengthened comprehensive treatment and reuse of wastewater to improve its
+comprehensive utilization efficiency. With ultra-low emission renovation of coal-fired
+generating units taking the lead, the Group focused on dust prevention and control,
+as well as technical transformation of boilers to reduce air pollutant emissions,
+completing successfully the stage task of air pollution prevention and control in
+Beijing, Tianjin, Hebei and the surrounding regions. By further exploiting the values of
+solid wastes such as coal gangue, coal ash and boiler slag, the Group increased their
+comprehensive utilization, and make sure that all solid wastes are safely disposed.
+The Group also conducted such works as water and soil conservation, windbreaks
+and sand fixation, land subsidence treatment, land reclamation and afforestation, as
+well as ecological construction, so as to preserve and improve the local ecological
+environment.
+Change in the number of ordinary shares
+Explanation of reasons for non-disclosure of environmental information by
+companies other than those classified as the key pollutant discharging units
+2.
+3.
+Explanation of the follow-up progress of or changes in the disclosure of
+environmental information during the reporting period
+report.
+For the details of the related environmental protection work, please refer to the 2018
+Environmental, Society and Governance Report disclosed as the same time of the
+(1)
+CHANGE IN ORDINARY SHARE CAPITAL
+I.
+Section VII Changes in Share Capital and Shareholders
+China Shenhua Energy Company Limited
+✓ Not applicable
+Applicable
+XIV. CONVERTIBLE COMPANY BOND
+Applicable ✓ Not applicable
+Section VI Significant Events (Continued)
+Such comprehensive measures as full closure of the coal storage yard,
+installation of wind and dust prevention walls, and spray facilities, as well as
+solidification and dust sealing for outbound coal by railway transportation,
+were implemented well as dust reduction in the underground mines, so as
+to strengthen dust treatment. The environmental protection facilities for dust
+removal, desulfurization and denitrification of coal-fired generating units and
+thermoelectric boilers were under stable operation, with the emission of soot
+reaching the standard. In particular, 89.9% coal-fired generating units achieved
+ultra-low emission (calculated by installed capacity). The hydrogen sulfide gas
+produced by the chemical industry was treated with the Level 2 Claus + tail-
+gas hydrogenation technology, after which the emission of tail gas was able to
+reach the standard of discharge. The general solid waste by-products, such as,
+coal gangue, furnace ash and desulphurization gypsum, were comprehensively
+utilized in the forms of power generation and brick making, and all hazardous
+wastes were disposed of and transferred in compliance with the relevant
+requirements.
+2018 Annual Report 119
+In 2018, top three enterprises under the state's key supervision and control of
+pollution sources of the Group with the largest emission of chemical oxygen
+demand (COD) were: Baotou Coal Chemical Company (147 tonnes), Jinjie
+Energy (coal mine) (126.5 tonnes), and wastewater treatment plants of Daliuta
+Coal Mine of Shendong Coal Group (42.5 tonnes).
+In 2018, solid waste discharge of enterprise under the state's key supervision
+and control of pollution sources of the Group is as follows: 1,379.56 tonnes from
+Baotou Coal Chemical Company (inspection were arranged in the second half
+of the year, resulting in relatively substantial volume of hazardous solid waste).
+The above hazardous waste are all disposed of and transferred in a compliance
+with regulations without being discharged;
+Investors should be aware that the above data are from internal self-monitoring
+of the Company, which are not confirmed by the local environmental protection
+regulatory authority and may be different from the final data determined by the
+local environmental protection regulatory authority.
+With regard to the provisions under the existing laws, the management believes
+that there is no contingent risk in relation to environmental protection that may
+bring material and adverse effect to the financial position and operating results
+of the Group. Contingent liabilities which may arise in the future cannot be
+accurately predicted.
+118 China Shenhua Energy Company Limited
+Section VI Significant Events (Continued)
+(2)
+Construction and operation of pollution prevention and control facilities
+During the reporting period, all subsidiaries of the Group were well-equipped
+with pollution prevention and control facilities that were under stable operation.
+They fully implemented the Water Pollution Control Action Plan for 2015-2020,
+constructed underground reservoir in goaf areas, as well as constructed
+wastewater treatment plants and advanced water treatment plants to achieve
+comprehensive treatment and utilization of wastewater.
+There was no change in the total number of ordinary shares and the shareholding structure
+of the Company during the reporting period. The Company did not issue any preference
+share.
+120
+(3) Environmental effect appraisal of construction project and other
+administrative approvals on environmental protection
+(5)
+(6)
+In terms of construction project, the Group carried out simultaneously three
+management measures, being environmental effect appraisal and energy
+conservation appraisal, soil conservation inspection and acceptance, as well as
+environmental protection inspection and acceptance. The environmental impact
+appraisal, as well as environmental protection inspection and acceptance
+of construction completion, water environmental protection inspection and
+acceptance and other relevant tasks have been conducted, respectively, in
+accordance with the law.
+Emergency plan for unexpected environmental incidents
+During the reporting period, all subsidiaries of the Group have formulated
+their emergency plans for unexpected environmental incidents and conducted
+regular drills.
+Environment self-monitoring plan
+The Group standardized the management of the online environmental protection
+monitoring system, and formulated the Administration Measures for the Online
+Environmental Protection Monitoring System (Trial) (EUKKTIR
+()) in accordance with the relevant national standards and administrative
+regulations for online monitoring of pollution source. All subsidiaries of the
+Group have completed the preparation of their self-monitoring plans. All the
+data in relation to wastewater and exhaust gas from automatic monitoring and
+entrusted monitoring were uploaded to the monitoring platform of the local
+environmental protection department according to the monitoring frequency
+and time limit for publication as determined in the monitoring plan. During the
+reporting period, all facilities were under normal operation.
+Other environmental information that should be disclosed
+Applicable
+Not applicable
+(4)
+1. Shares with selling restrictions
+Percentage
+2. Overseas listed foreign shares
+RMB ordinary shares
+110,027,300
+Hong Kong Securities Clearing Company Limited
+73,501,578
+RMB ordinary shares
+73,501,578
+Bank of Communications-E Fund 50 Index
+24,080,916
+RMB ordinary shares
+24,080,916
+Securities Investment Fund
+Industrial and Commercial Bank of
+20,975,346
+III. Total number of shares
+RMB ordinary shares
+20,975,346
+As at 31 December 2018
+Number
+Note: the soot emission concentration limit ratified by the pollutant discharge permit is 20mg/Nm³.
+%
+0
+0.00
+110,027,300
+594,718,049
+RMB ordinary shares
+594,718,049
+Industrial and Commercial Bank of
++10,384,380
+10,384,380
+0.05
+95
+N/A Others
+China Limited-Huitianfu Intelligent
+Manufacturing Stock Securities
+Investment Fund
+China Shenhua Energy Company Limited
+Section VII Changes in Share Capital and Shareholders (Continued)
+Shareholdings of top ten shareholders without selling restrictions
+II. Shares without selling restrictions
+1. RMB ordinary shares
+Number of
+shares
+without selling
+restrictions
+Type and number of shares
+Type
+Number
+China Energy Investment Corporation Limited
+HKSCC NOMINEES LIMITED
+14,530,574,452
+3,390,476,296
+RMB ordinary shares
+Overseas listed foreign
+shares
+14,530,574,452
+3,390,476,296
+China Securities Finance Corporation Limited
+Central Huijin Asset Management Ltd.
+Name of shareholders
+450
+Section VI Significant Events (Continued)
+Soot
+infrastructure by
+building roads,
+bridges and culverts,
+ensuring safe drinking
+water, and
+ecological protection
+The above statistical table is based on the Notice of the State Council on the Publication of
+Poverty Alleviation Plan for the "13th Five-Year" Plan Period (Guo Fa 2016 No. 64).
+Mainly used as aids to children with leukemia and congenital heart disease in impoverished
+families.
+2018 Annual Report 115
+19,889,620,455
+(II)
+4.
+5.
+Stage progress in fulfilling the social responsibility of targeted poverty alleviation
+The Company has undertaken the pairing assistance work in three counties - Wubu
+county and Mizhi county in Shaanxi province, as well as Butuo county in Sichuan
+province. Meanwhile, the Company carried out education and medical poverty
+alleviation work through the platform of China Energy Public Welfare Foundation,
+and the one-on-one supporting scheme in deprived villages near 13 subsidiaries of
+Zhunge'er Energy Group. At present, the company has sent a total of 7 cadres to
+three designated poverty alleviation counties, ensuring that at least one county-level
+cadre and one resident secretary of the village are in charge of poverty alleviation
+work in each county. In 2018, all the poverty alleviation funds in the counties
+have been allocated, the key support projects are progressing smoothly, and the
+implementation effect is expected. Mizhi County and Wubu County have entered the
+poverty alleviation assessment.
+In the targeted poverty alleviation and poverty shed off sharing 2018, the Company is
+honored the "most influential company in targeted poverty alleviation". Comrade Hu
+Xiaoming, the first secretary of Bozuo Village in Butuo County, was awarded the title
+of "National Poverty Leader".
+Subsequent targeted poverty alleviation plan
+In 2019, the Group will commit to implement the deployment of poverty alleviation
+plan by the central government, promoting poverty alleviation work in accordance
+with the annual plan to help the counties complete the task of poverty alleviation
+as scheduled. The highlights are: (1) stick to the targeted poverty alleviation areas
+according to local conditions and characteristics; (2) give full play to the role of
+cadres, concentrate funds and resources, and (3) Adhere to the "Zhizhi Double Help",
+continue increasing donation and education and vocational skills training, and improve
+self-development capabilities; (4) Actively apply new technologies, new industries,
+new formats and new business models. Cultivate and strengthen local characteristic
+agriculture, red tourism and other industries; (5) Support infrastructure construction
+and improve the production and living conditions of poor people; (6) Increase the
+"purchase by donation" and actively promote the sales of agricultural products
+in poverty-stricken counties, indicating local The masses establish rural product
+brands; (7) adhere to the combination of poverty alleviation and ecological protection,
+and achieve a win-win situation for poverty alleviation and ecological civilization
+construction.
+Corporate social responsibilities
+For the work of the Group's social responsibility, please refer to the 2018 Environmental,
+Social and Governance Report disclosed at the same time as this report.
+(III) Donations
+During the reporting period, the Group made external donations of approximately RMB460
+million.
+116 China Shenhua Energy Company Limited
+Section VI Significant Events (Continued)
+(IV) Environmental information
+1.
+2
+Notes: 1
+alleviation through
+Undertake poverty
+Index Securities Investment Fund
+Bank of Communications Co., Ltd.
++12,418,772
+12,418,772
+0.06
+N/A Others
+-Hua'an Strategic Chosen Hybrid
+Securities Investment Fund
+Industrial Bank Co., Ltd.-Xingquan
++12,337,542
+Environmental issues of listed companies and their significant subsidiaries
+classified as the key pollutant discharging units as published by the competent
+environmental protection authorities of the PRC
+12,337,542
+O Nil
+N/A Others
+Organic Growth Flexible Configuration
+Hybrid Securities Investment Fund
+5.1
+Number of projects (unit)
+5.2
+5.3.
+Investment amount (RMB0'000)
+Other details of the projects
+1,290
+0.06
+193.9
+(1)
+During the reporting period, total emission of major pollutants of enterprises
+whose pollution sources were under key supervision and control of the state
+and enterprises whose pollution sources were under key supervision and
+control of the Company is as follows: sulfur dioxide of 19.6 thousand tonnes,
+nitrogen oxides of 38.6 thousand tonnes, soot of 4.3 thousand tonnes and
+chemical oxygen demand (COD) of 671 tonnes. In particular, total emission of
+major air pollutants produced by the enterprises categorized as national major
+pollution source under supervision is as follows: sulfur dioxide of 18.9 thousand
+tonnes, nitrogen oxides of 37.3 thousand tonnes, soot of 3.1 thousand tonnes
+and chemical oxygen demand (COD) of 441 tonnes.
+Soot
+150.8
+N/A Note
+Shaanxi Guohua Jinjie
+SO2
+1,281.75
+Energy Co., Ltd.
+NOX
+2,304.95
+1,535
+4,910.97
+Soot
+263.15
+1,314.35
+Shenhua Yili Energy
+SO2
+1,029.0
+3,200
+Co., Ltd.
+NOX
+2,380.1
+3,200
+Power Co., Ltd.
+9,560
+2,524.39
+NOX
+As at 31 December 2018, 49 subsidiaries of the Group were categorized as
+national major pollution source under supervision (among which 43 were
+waste gas exhausting enterprises, 6 were wastewater discharging enterprises
+(inclusive of 1 waste gas exhausting enterprise concurrently), hazardous solid
+waste discharging enterprise (also was a waste gas exhausting enterprise
+and a wastewater discharging enterprise), mainly are coal-fired power plants,
+coal chemical plants and coal washing plants, etc. which are located in places
+including Inner Mongolia, Shaanxi, Fujian, Hebei, Anhui, Jiangsu and Zhejiang.
+The main pollutants emitted by waste gas exhausting enterprises are sulfur
+dioxide, nitrogen oxides and soot, which are emitted to the atmosphere through
+the chimneys. Waste gas exhausting enterprises are mainly distributed in public
+thermal power plants, coal-to-chemical captive power plants, heating boilers for
+mines and coking plants. Emission standards implemented include Emission
+Standards for Air Pollutants Produced by Thermal Plants (GB13223-2011),
+Emission Standards for Air Pollutants Produced by Boilers (GB13271-2014)
+and Emission Standards for Pollutants Produced by Coking Chemical Industry
+(GB16171-2012).
+The main pollutants discharged by wastewater discharging enterprises are
+chemical oxygen demand (COD), which are discharged to the surface water
+through the sewage outfall of the enterprises. Wastewater enterprises
+are mainly distributed in coal mining and coal-to-chemical enterprises and
+wastewater treatment plants. The emission standard implemented was the
+Comprehensive Emission Standards for Sewage (GB8978-1996).
+2018 Annual Report 117
+Section VI Significant Events (Continued)
+Major
+pollutant
+Guangdong Guohua
+SO2
+In 2018, top three enterprises under the state's key supervision and control of
+pollution sources of the Group with the largest total emission of sulfur dioxide
+and nitrogen oxides are as follows:
+Information on pollutant discharge
+Subsidiary
+discharge
+permit
+(Tonnes/year)
+4,780
+Total
+emission
+2018
+(Tonne)
+1,229.75
+Yudean Taishan
+Approved total
+emission by
+the pollutant
+100.00
+Both of HKSCC Nominees Limited and Hong Kong Securities
+Clearing Company Limited are wholly-owned subsidiaries of Hong
+Kong Exchanges and Clearing Limited; The trustee bank of Bank of
+Communications-E Fund 50 Index Securities Investment Fund and
+Bank of Communications Co., Ltd.-Hua'an Strategic Chosen Hybrid
+Securities Investment Fund is Bank of Communications; The
+trustee bank of Industrial and Commercial Bank of China-Shanghai
+Index 50 Trading Open-end Index Securities Investment Fund
+and Industrial and Commercial Bank of China Limited-Huitianfu
+Intelligent Manufacturing Stock Securities Investment Fund is
+Industrial and Commercial Bank of China; Saved as disclosed
+above, the Company is not aware of any connected relationships
+between the top ten shareholders without selling restrictions and
+the top ten shareholders, and whether they are parties acting
+in concert as defined in the Measures for Administration of
+Acquisition of Listed Companies of CSRC.
+82.91
+904,500
+0.02
+0.00
+169,509,745
+4.98
+0.85
+Notes: (1)
+(2)
+(3)
+Among H shares in long position and short position held by BlackRock, Inc., 790,665 H shares in
+long position involve derivatives, and their type is unlisted derivatives - cash settled.
+In 215,485,407 H shares in long position held by JPMorgan Chase & Co., 55,585,728 H shares
+are held in its capacity as the beneficial owner, 49,826,939 H shares are held in its capacity as the
+investment manager, 11,426,446 H shares are held in its capacity as the guarantee equity owner,
+18,592 H shares are held in its capacity as the trustee, 48,820 H shares are held in its capacity as
+the approved lending agent.
+In 178,294,047 H shares in long position held by Citigroup Inc., 8,759,802 H shares are held in
+its capacity as the beneficial owner, 24,500 H shares are held in its capacity as the the guarantee
+equity owner, 169,509,745 H shares are held in its capacity as the approved lending agent.
+Save as disclosed above, as at 31 December 2018, no other person held any interest and/
+or short position in the shares or underlying shares of the Company which is required to
+be recorded in the register to be kept thereunder, or was a substantial shareholder of the
+Company pursuant to section 336 of Part XV of the SFO.
+124
+0 Nil
+0.11
+20,975,346
+Industrial and Commercial Bank of China- +5,826,282
+Index Securities Investment Fund
+N/A Others
+Nil
+0.90
+0
+5.24
+Beneficial owner; guarantee equity H shares Long position
+owner; approved lending agent
+Short position
+Shares available
+for lending
+Short position
+3,627,500
+0.11
+0.02
+H shares Long position
+215,485,407
+6.34
+1.08
+Chase & Co.
+manager; guarantee equity
+owner; approved lending agent
+Short position
+8,519,392
+0.25
+0.04
+Shares available
+98,597,474
+2.90
+0.50
+for lending
+4
+Citigroup Inc.
+178,294,047
+0.12
+24,080,916
++11,057,276
+Unknown
+0
+17.05
+3,390,476,296
+-303,503
+HKSCC NOMINEES LIMITED
+Limited
+N/A State-owned
+0 Nil
+73.06
+14,530,574,452
+0
+China Energy Investment Corporation
+Status Number shareholders
+period Percentage restrictions
+Nature of
+selling
+Number
+shares with
+the reporting
+reporting
+period
+N/A Others
+N/A Overseas
+corporate
+China Securities Finance Corporation
+-81,697,594
+Bank of Communications-E Fund 50
+corporate
+N/A Overseas
+Nil
+0
+0.37
+73,501,578
++26,669,612
+Hong Kong Securities Clearing Company
+Limited
+N/A State-owned
+1.22
+Nil
+0.55
+110,027,300
+0
+Central Huijin Asset Management Ltd.
+Limited
+N/A Others
+Nil
+0
+2.99
+594,718,049
+0
+7.12
+242,144,123
+Long position
+Including: Holders of A shares (including China Energy)
+180,995
+Registered holders of H shares
+2,155
+Total number of ordinary shareholders at the end of last month prior to
+the date of this annual report (accounts)
+176,341
+Including: Holders of A shares (including China Energy)
+174,184
+Registered holders of H shares
+(II)
+2,157
+Note: The number of holders of A shares is a combination of ordinary securities accounts and margin financing
+and securities lending accounts, pursuant to the information provided by Shanghai Branch of China
+Securities Depository and Clearing Corporation Limited.
+Shareholdings of top ten shareholders and top ten holders of marketable shares
+(or shareholders without selling restrictions) as of the end of the reporting
+period
+Unit: share
+Shareholdings of the top ten shareholders
+Shares subject to
+pledge or lock-up
+Increase/
+decrease
+Number of
+shares held at
+during the
+183,150
+the reporting period (accounts)
+Total number of shareholders of ordinary shares as at the end of
+Total number of shareholders
+3,398,582,500
+17.09
+19,889,620,455
+100.00
+II.
+For the year ended 31 December 2018, the Group did not purchase, sell, or redeem any of
+the Company's securities as defined under the Hong Kong Listing Rules.
+As of the disclosure date of this report, so far as our Directors are aware, the Company has
+satisfied minimum public float requirement under Rule 8.08 of the Hong Kong Listing Rules.
+(II) Changes of shares with selling restrictions
+Applicable ✓ Not applicable
+ISSUANCE AND LISTING OF SECURITIES
+the end of
+The Company did not issue any ordinary share, convertible corporate bond, warrant bond,
+corporate bond or other derivative securities, nor did it enter into any equity-linked agreement
+during the reporting period.
+Changes in total number of ordinary shares, shareholding structure and assets
+and liabilities structure of the Company
+Applicable ✓ Not applicable
+(II) Pre-emptive rights
+There is no provision for pre-emptive rights under the Articles of Association and the PRC
+laws which would entitle the existing shareholders to have priority to subscribe for new
+shares on a pro rata basis in the event of new share issuance by the Company.
+2018 Annual Report 121
+122
+Section VII Changes in Share Capital and Shareholders (Continued)
+III.
+SHAREHOLDERS
+(I)
+(1)
+16,491,037,955
+Name of shareholders
+Index Securities Investment Fund
+total issued
+share capital
+H shares/ Nature of
+No. Name of shareholders
+Capacity
+A shares interest
+H shares/
+A shares held
+A shares
+respectively
+of the
+Company
+1
+China Energy
+Beneficial owner
+A shares
+N/A
+14,530,574,452
+88.11
+73.06
+2
+BlackRock, Inc.
+3
+JPMorgan
+Interest of corporation controlled by H shares
+the substantial shareholder
+Beneficial owner; investment
+Percentage of
+Percentage of
+H shares/
+A shares over
+total issued
+H shares/
+Number of
+As at 31 December 2018, persons set out in the table below had an interest and/or short
+position in the shares or underlying shares of the Company which is required to be recorded
+in the register of equity interests and/or short positions pursuant to section 336 of Part
+XV of the Securities and Futures Ordinance (the "SFO", Chapter 571 of the Laws of Hong
+Kong):
+Bank of Communications Co., Ltd.-Hua'an
+12,418,772
+RMB ordinary shares
+12,418,772
+Strategic Chosen Hybrid Securities Investment
+Fund
+Industrial Bank Co., Ltd.-Xingquan Organic
+12,337,542
+RMB ordinary shares
+12,337,542
+China-Shanghai Index 50 Trading Open-end
+Growth Flexible Configuration Hybrid
+Statement on the connected relationships
+among the above shareholders or whether
+they are parties acting in concert
+10,384,380
+RMB ordinary shares
+10,384,380
+Statement on holders of preference shares
+with voting rights restored and number of
+shares held
+N/A
+Note: H shares held by HKSCC Nominees Limited are held on behalf of a number of its clients; A shares held by
+Hong Kong Securities Clearing Company Limited are held on behalf of a number of its clients.
+2018 Annual Report 123
+Section VII Changes in Share Capital and Shareholders (Continued)
+(III) Substantial shareholders' interests and short positions in the shares of the
+Company
+Securities Investment Fund
+Industrial and Commercial Bank of China
+Limited-Huitianfu Intelligent Manufacturing
+Stock Securities Investment Fund
+Shanghai Index 50 Trading Open-end
+1,290
+4.2
+get employed (persons)
+70
+3. Education support
+(RMB0'000)
+5,259.9
+In which:
+3.1
+Subsidy for poor students (RMB0'000)
+575.4
+Number of subsidized poor students
+1,100
+3.3
+Investment amount for improving
+educational resources in deprived regions
+(RMB0'000)
+4,684.5
+4. Health support (RMB0'000)
+1,546.5
+In which:
+4.1
+Investment amount for helping poor
+people with treatment for serious
+illness(RMB0'000)²
+1,546.5
+Number of population received treatment for
+serious illness
+19,813
+5. Other projects (RMB0'000)
+China Shenhua Energy Company Limited
+In which:
+Number of filed poverty-stricken people who
+2.3
+3.2
+Number of people received vocational skill
+training
+3.
+Section VI Significant Events (Continued)
+Targeted poverty alleviation results¹
+Index
+132
+Number and
+Circumstances
+In which: 1. Capital (RMB0'000)
+2. Number of filed poverty-stricken people who
+overcome poverty
+9,739.51
+1,186
+II. Contribution By Category
+1. Industry development support (RMB0'000)
+In which:
+Category of industry support project
+1,120.05
+Agriculture and
+forestry
+I. General
+1.1
+support project
+training (RMB0'000)
+2.2
+2.1
+In which:
+523.06
+Amount of subsidy for vocational skill
+1,120.05
+1.2
+2. Employment transfer for poverty alleviation (RMB0'000)
+Number of industry support project (unit)
+Amount of industry support project
+523.06
+(RMB0'000)
+8
+Male
+22 June 2020
+26.3
+୨
+No
+59 27 April 2018
+Executive Director
+Jiang Bo
+Zhong Yingjie,
+Independent Non-
+Executive Director
+Independent Non-
+NO
+Female
+63 23 June 2017
+22 June 2020
+45
+No
+50 23 June 2017
+22 June 2020
+45
+DO
+No
+Christina
+Independent Non-
+Female
+Peng Suping
+IV. CHANGES IN CONTROLLING SHAREHOLDER AND DE FACTO CONTROLLER
+Maria
+Executive Director
+Executive Director
+Male
+56
+27 April 2018
+22 June 2020
+Zhao Jibin
+Non-Executive
+Male
+66
+17 June 2016
+22 June 2020
+Executive Director
+Director
+Independent Non-
+Female
+73 23 June 2017
+22 June 2020
+45
+Yes
+Yes
+Yes
+Yes
+Yes
+Yes
+No
+Tam Wai Chu,
+Huang Ming
+60.1
+Male
+18.8
+Yes
+Zhang Jiming
+President
+Male
+55 13 September 2018
+-
+119.0
+24.9
+Xu Mingjun
+Vice President
+Male
+55 29 November 2018
+7.6
+Jia Jinzhong
+Vice President
+Male
+55 17 March 2017
+101.4
+18.7
+Huang Qing
+Secretary to the Board
+Male
+53 6 November 2004
+114.5
+Mi Shuhua
+22 June 2020
+58 22 August 2014
+Male
+54 27 April 2018
+22 June 2020
+26.3
+NO
+No
+Executive Director
+Zhai Richeng
+Chairman of the
+Male
+54 22 August 2014
+22 June 2020
+107
+Independent Non-
+40.7
+Supervisory
+Committee
+Zhou Dayu
+Supervisor
+Male
+53 17 June 2016
+22 June 2020
+59.7
+17.7
+Yes
+Shen Lin
+Supervisor
+Yes
+22 June 2020
+reporting
+Male
+China Energy Investment Corporation Limited
+100%
+Administration Commission of the State Council
+State-owned Assets Supervision and
+Diagram of the equity and controlling relationship between the Company and the
+de facto controller
+There was no change in de facto controller of the Company during the reporting
+period.
+Index and date of changes in de facto controller during the reporting period
+Name: State-owned Assets Supervision and Administration Commission of the
+State Council
+3.
+2.
+Legal person
+73.06%
+1.
+De facto controller
+On 30 January 2019, the share transfer registration by China Energy for nil
+consideration was completed. After this transfer for nil consideration, China Energy
+holds 13,812,709,196 A shares of the Company, representing approximately 69.45%
+of the share capital of the Company. For details, please refer to the H shares
+announcement dated 30 January 2019 and the A shares announcement dated 31
+January 2019 of the Company.
+China Shenhua Energy Company Limited
+73.06%
+China Energy Investment Corporation Limited
+Diagram of the equity and controlling relationship between the Company and the
+controlling shareholder
+3.
+Section VII Changes in Share Capital and Shareholders (Continued)
+China Shenhua Energy Company Limited
+There was no change in the controlling shareholder of the Company during the
+reporting period.
+Index and date of changes in controlling shareholders during the reporting period
+(II)
+China Shenhua Energy Company Limited
+2018 Annual Report 127
+128
+of the
+Including
+performance
+remuneration
+the Company
+Date of
+appointment
+received from
+shareholders
+from
+Total
+remuneration
+before tax
+remuneration
+received
+Whether
+1. Directors, supervisors and senior management as at the end of the reporting period
+(1) Changes in shareholding and remuneration
+CHANGES IN SHAREHOLDING AND REMUNERATION
+Senior Management and Employees
+Directors, Supervisors,
+Section VIII
+I.
+China Shenhua Energy Company Limited
+Applicable ✓ Not applicable
+VI. RESTRICTIONS ON THE REDUCTION IN THE SHAREHOLDING
+As at the end of the reporting period, there was no other corporate shareholder with more than
+10% shareholding in the Company.
+OTHER CORPORATE SHAREHOLDERS WITH MORE THAN 10% SHAREHOLDING
+IN THE COMPANY
+V.
+Section VII Changes in Share Capital and Shareholders (Continued)
+On 30 January 2019, China Energy
+received a confirmation document on
+the share transfer registration from
+China Securities Depository and Clearing
+Corporation Limited, confirming that shares
+of China National Chemical Engineering
+Co., Ltd. have been transferred to Beijing
+Chengtong Financial Control Investment
+Co., Ltd. and Guoxin Investment Co.,
+Ltd. for nil consideration, and the transfer
+registration has been completed.
+On 22 November 2017, Shenhua Group
+Corporation Limited changed its name
+into China Energy Investment Corporation
+Limited, and completed the changes in
+industrial and commercial registration.
+For details, please refer to the A share
+announcement of the Company on
+28 November 2017 and the H share
+announcement of the Company on 27
+November 2017.
+Listed companies with direct participation:
+holding 2.90% shares of China National
+Chemical Engineering Co., Ltd..
+Controlled listed companies: holding
+58.44% shares of China Longyuan Power
+Group Corporation Limited; holding
+46.09% shares of GD Power Development
+Co., Ltd.; holding 78.4% shares of
+Guodian Technology & Environment Group
+Corporation Limited; holding 37.39%
+shares of Guodian Changyuan Electric
+Power Co., Ltd.. Actual control of 61.42%
+shares of Inner Mongolia Pingzhuang
+Energy Co., Ltd.; actual control of 51.25%
+shares of Ningxia Yinglite Chemicals Co.,
+Ltd.; actual control of 23.25% shares of
+Yantai Longyuan Power Technology Co.,
+Ltd..
+years
+period
+RMB
+RMB
+ten thousand
+ten thousand
+Ling Wen
+Chairman
+Male
+55 2 January 2018
+22 June 2020
+Executive Director
+6 November 2004
+22 June 2020
+Li Dong
+Executive Director
+Male
+58 17 June 2016
+22 June 2020
+Senior Vice President
+24 May 2011
+19 October 2018
+(Resigned)
+Gao Song
+Executive Director
+period
+57 27 April 2018
+Age appointment date) term of office
+Positions
+(2)
+(1)
+Other Information
+(2)
+(1)
+and overseas listed subsidiaries
+and associates during the
+reporting period
+Shareholdings in other domestic
+2.
+Section VII Changes in Share Capital and Shareholders (Continued)
+126
+2018 Annual Report 125
+State-owned assets operating activities within
+the scope authorized by the State Council;
+investment and management activities in various
+sectors, including resource products (such as
+coal), coal-to-liquids, coal chemical, power,
+thermal, port, various transportation, finance,
+domestic and international trade and logistics,
+real estate, advanced technology and information
+consultation and etc.; planning, organizing,
+coordinating and managing the production and
+operating activities in above sectors of members
+of China Energy Group; and sales of chemical
+materials and chemical products (excluding
+hazardous chemicals), textiles, construction
+materials, machinery, electronic equipment
+and office equipment. (Enterprise is allowed to
+choose the business to be engaged in and carry
+out such business activities pursuant to laws; for
+projects that are subject to approval pursuant to
+the law, business operations shall commence in
+accordance with the business scope approved
+upon receipt of the approval from relevant
+authorities; no business activities which are
+prohibited or restricted by the industrial policies
+shall be carried out.)
+23 October 1995
+China Energy Investment Corporation Limited
+Qiao Baoping
+Company or
+Scheduled
+during the
+received for
+associates
+during the
+(from the first
+expiration of
+reporting
+previous
+29.9
+Name
+Gender
+Zhang Guangde
+Vice President
+Male
+Other than Lv Zhiren, who holds 1,500 A shares of the Company, none of the personnel
+mentioned above hold any shares in the Company during the term of service in the reporting
+period.
+(4) The ages were calculated as of 31 December 2018.
+130
+Section VII Changes in Share Capital and Shareholders (Continued)
+China Shenhua Energy Company Limited
+3.
+Section VIII Directors, Supervisors,
+Senior Management and Employees (Continued)
+Biographical details of the Directors, supervisors and senior management as at the
+end of the reporting period
+(1) Directors
+Name
+Ling Wen
+Chairman and
+Executive Director
+Biographical details
+Born in February 1963, male, Chinese, a professor and
+Academician of Chinese Academy of Engineering, and
+a member of the Communist Party of China (CPC). Dr.
+Ling has extensive management experience in financial
+institutions and enterprises. He received a Ph.D. degree
+from Harbin Institute of Technology in 1991, and conducted
+postdoctoral research in Shanghai Jiao Tong University
+from 1992 to 1994.
+Dr. Ling has served as the Chairman and an Executive
+Director of the fourth session of the Board of the Company
+since January 2018, and a Director, General Manager and
+deputy secretary to the Leading Party Members' Group of
+China Energy since November 2017.
+Dr. Ling served as the Vice Chairman and an Executive
+Director of the fourth session of the Board of the Company
+from June 2017 to January 2018, and the President of the
+Company from January 2017 to January 2018. Dr. Ling
+served as a member of the Leading Party Members' Group
+of Shenhua Group Corporation from August 2003 to May
+2016, the deputy secretary to the Leading Party Members'
+Group of Shenhua Group Corporation from May 2016 to
+November 2017, a Director of Shenhua Group Corporation
+from April 2010 to November 2017, and the General
+Manager of Shenhua Group Corporation from May 2014 to
+November 2017.
+The remuneration package of Directors for 2018 is subject to approval by the Company at
+the 2018 annual general meeting; the remuneration package of the senior management
+was approved by the Board; the remunerations before tax include salaries, social benefit
+payment, retirement scheme contributions and performance based salary.
+Prior to the foregoing, Dr. Ling had served in various
+capacities, including the deputy General Manager of
+Shenhua Group Corporation, Executive Director of the first
+session of the Board, the Vice Chairman and Executive
+Director of the second session of the Board, the Vice
+Chairman and Executive Director of the third session of
+the Board of the Company, the President, executive Vice
+President and chief financial officer of the Company, the
+Chairman of Shenhua Finance Company, Deputy General
+Manager of the International Business Department of the
+Industrial and Commercial Bank of China, Deputy General
+Manager of Industrial and Commercial Bank of China (Asia)
+Limited and Chairman of UB China Business Management
+Company Limited.
+The remuneration of Directors and senior management received from shareholders of the
+Company for 2018 will be disclosed on the website of China Energy upon completion of
+assessment made by the SASAC of the State Council.
+(2)
+14.0
+2018
+Zhang Kehui
+Chief Financial Officer Female
+55 22 January 2007
+14 December
+112.0
+28.2
+z zzááá
+No
+No
+No
+2018
+Note:
+(1)
+250.4
+67.0
+(3)
+74.5
+2018 Annual Report 131
+Senior Management and Employees (Continued)
+Section VIII Directors, Supervisors,
+Senior Management and Employees (Continued)
+Name
+Mi Shuhua
+Executive Director
+Biographical details
+Born in October 1962, male, Chinese, a senior engineer
+and a member of the Communist Party of China. Mr.
+Mi has extensive management experience in power
+enterprises. He received a bachelor's degree in thermal
+power engineering from Northeast Electric Power Institute
+in 1984.
+Mr. Mi has served as an Executive Director of the fourth
+session of the Board of the Company since April 2018,
+served as the deputy general manager and a member of
+the Leading Party Members' Group of China Energy Group
+since November 2017, worked as the dean of Guodian New
+Energy Technology Research Institute since December
+2016 and a director of GD Power since April 2014.
+Prior to the foregoing, Mr. Mi had served in various
+capacities, including the deputy general manager and a
+member of the Leading Party Members' Group of China
+Guodian Group Co. Ltd.,, the general manager and deputy
+secretary to the Leading Party Members' Group of GD
+Power, the general manager assistant of China Guodian
+Group Co. Ltd.,, the secretary to the Leading Party
+Members' Group, an executive director and the general
+manager of Guodian Northeast Electric Power Co., Ltd.
+134
+China Shenhua Energy Company Limited
+Date of incorporation
+Principal business
+Legal representative
+Name
+1. Legal person
+Controlling shareholder as at the end of the reporting period
+(1)
+2018 Annual Report 133
+Section VIII Directors, Supervisors,
+Prior to the foregoing, Mr. Gao had served in various
+capacities, including the deputy general manager, a
+member of the Leading Party Members' Group and the
+director of the working committee of China Guodian Group
+Co., Ltd, the general manager and deputy secretary to the
+Leading Party Members' Group of GD Power Development
+Co., Ltd., the general manager assistant of China Guodian
+Corporation, the secretary to the Leading Party Members'
+Group and general manager of the North China branch of
+China Guodian Corporation and chief engineer of Hebei
+Electric Power Corporation.
+Born in February 1961, male, Chinese, a professor-level
+senior engineer and a member of the Communist Party
+of China. Mr. Gao has extensive management experience
+in power enterprises. He received a bachelor's degree in
+thermal power engineering from Zhejiang University in
+1982.
+Name
+Li Dong
+Executive Director
+Biographical details
+Born in January 1960, male, Chinese, a senior engineer
+with the qualification as a professor and a member of the
+CPC. Dr. Li has extensive experience in the management
+of coal enterprises in China. He obtained a master's degree
+from China Europe International Business School in 2005
+and a Ph.D. degree from Liaoning Technical University in
+2005.
+Dr. Li has served as an Executive Director of the fourth
+session of the Board of the Company since June 2017, and
+the Deputy General Manager and member of the Leading
+Party Members' Group of China Energy since November
+2017.
+Dr. Li served as senior Vice President of the Company from
+May 2011 to October 2018, an Executive Director of the
+third session of the Board of the Company from June 2016
+to June 2017, the Deputy General Manager of Shenhua
+Group Corporation from August 2006 to April 2010, and a
+member of the Leading Party Members' Group and Deputy
+General Manager of Shenhua Group Corporation from April
+2010 to November 2017.
+Prior to the foregoing, Dr. Li had served in various
+capacities, including Deputy Chief Engineer of Shenhua
+Group Corporation, Chairman of Shenhua Zhunge'er
+Energy Co., Ltd., and head of General Manager's Office of
+Shenhua Group Corporation.
+132
+China Shenhua Energy Company Limited
+Section VIII
+Directors, Supervisors,
+Senior Management and Employees (Continued)
+Name
+Gao Song
+Executive Director
+Biographical details
+Mr. Gao has served as an Executive Director of the fourth
+session of the Board of the Company since April 2018,
+served as the deputy general manager and a member
+of the Leading Party Members' Group of China Energy
+Group since November 2017, and worked as a director of
+GD Power since September 2012. Mr. Gao also serves
+as the Chairman of CHN Energy Dadu River Hydropower
+Development Co., Ltd., the Chairman of CHN Energy
+Jinsha River Xulong Hydropower Development Co., Ltd.
+and the Chairman of CHN Energy Jinsha River Benzilan
+Hydropower Development Co., Ltd.
+13 September
+Total
+54
+remuneration
+Company
+received from
+from
+shareholders
+Including:
+received
+remuneration
+Total
+remuneration
+before tax
+Whether
+The ages were calculated as of 31 December 2018.
+Directors and senior management resigned during the reporting period
+The 2016 annual general meeting of the Company approved that term of service of the
+fourth session of the Board and the supervisory committee is three years (23 June 2017 to
+22 June 2020).
+None of the personnel mentioned above hold any shares in the Company during the term of
+service in the reporting period.
+Zhai Richeng, Zhou Dayu and Shen Lin received remuneration from the Company from
+January to June 2018, and received remuneration from China Energy from July to December
+2018; and the remuneration received by other personnel from the Company covers the
+year of 2018 or the period from the commencement of term of office of the Company to 31
+December 2018.
+The remuneration package of Directors and supervisors for 2018 is subject to approval by
+the Company at the 2018 annual general meeting; the remuneration package of the senior
+management was approved by the Board; the remunerations before tax include salaries,
+social benefit payment, retirement scheme contributions and performance based salary.
+(6)
+(5)
+(4)
+(3)
+during the
+(2)
+received for
+of the
+17 March 2017
+Executive Director
+Han Jianguo
+Wang Jinli
+ten thousand
+ten thousand
+reporting
+period
+years
+RMB
+RMB
+previous
+period
+reporting
+Date of
+resignation
+Date of
+Age appointment
+Gender
+Position before
+resignation
+Name
+Company
+during the
+Male
+(1) The remuneration of Directors received from shareholders of the Company for 2018 will
+be disclosed on the website of China Energy upon completion of assessment made by the
+SASAC of the State Council.
+performance
+2.
+Yes
+Wang Shumin
+Zhang Zifei
+Lv Zhiren
+Vice President
+Male
+56
+25 November 2015
+19 October 2018
+Yes
+Vice President
+Male
+60
+25 November 2015
+31 May 2018
+63.9
+Notes:
+Vice President
+Male
+19 October 2018
+27 September 2013
+24.8
+Senior Vice President Male
+Senior Management and Employees (Continued)
+59
+2018 Annual Report 129
+Total
+110.0
+718.0
+No
+z z z z z z
+54 28 December 2018
+Section VIII Directors, Supervisors,
+Chief Financial Officer
+Xu Shancheng
+27.4
+56 24 August 2018
+60 24 May 2011
+Yes
+15 May 2018
+Male
+Born in July 1963, male, Chinese, a professor-level
+senior engineer and a member of the CPC. Mr. Jia has
+extensive management experience in railway transportation
+enterprises. He graduated from Taiyuan Railway Machinery
+School in 1980 and obtained a master's degree from
+Southwest Jiaotong University in 2005.
+Biographical details
+Vice President and
+Jia Jinzhong
+Name
+Senior Management and Employees (Continued)
+China Shenhua Energy Company Limited
+Section VIII
+142
+Prior to the foregoing, Mr. Xu had served in various
+capacities, including the director of people work division
+of the Departmental Party Committee of the State Bureau
+of Coal Industry, the deputy director of labour union
+working division, deputy director of general division of
+people work department and a director-level investigator
+and researcher under the Central Enterprise Working
+Committee, the director of news division and assistant
+inspector of the bureau of publicity under the State-owned
+Assets Supervision and Administration Commission of the
+State Council, a deputy secretary of prefectural committee
+in Tacheng, Xinjiang, a deputy inspector of the bureau of
+publicity under the SASAC, the chief of political work office,
+a member and a deputy secretary to the Party Committee
+directly under China Guodian Corporation and the head of
+general office of China Guodian Corporation.
+Mr. Xu served as assistant to general manager of China
+Guodian Corporation, secretary to the Leading Party Group,
+secretary to the Party Committee and deputy general
+manager of GD Power, assistant to general manager of the
+China Energy and secretary to the Party Committee and
+deputy general manager of GD Power from May 2016 to
+September 2018. He served as the secretary to the board
+of directors, assistant to the general manager and the
+head of general office of China Guodian Corporation from
+January 2012 to May 2016.
+Mr. Xu has served as the secretary to the Party Committee
+of the Company since September 2018, the Vice President
+of the Company since November 2018 and the assistant to
+the general manager of the China Energy since May 2018.
+Mr. Jia has served as a Vice President of the Company
+since March 2017, a member to the Party Committee of
+the Company since June 2018, and the chief economist of
+China Energy Group since May 2018.
+Born in October 1963, male, Chinese, a senior political
+engineer and a graduate of postgraduate program, a
+member of the Communist Party of China. Mr. Xu has
+extensive experience in corporate management.
+Directors, Supervisors,
+Mr. Jia has served as the Chairman of Shuohuang Railway
+Development Co., Ltd., a subsidiary of the Company, from
+member to the Party August 2014 to March 2017, and the Deputy General
+Manager of Shuohuang Railway Development Co., Ltd.
+from April 2011 to August 2014.
+Section VIII Directors, Supervisors,
+Prior to the foregoing, Mr. Jia had successively held the
+post of Deputy Section Head of Yuanping Train Depot of
+Taiyuan Railway Branch, Deputy Director of Taiyuan West
+Railway Station of Taiyuan Railway Branch and Manager of
+Yuanping Branch of Shuohuang Railway Company.
+Biographical details
+China Shenhua Energy Company Limited
+Prior to the foregoing, Mr. Zhang has served as an
+engineer, deputy chief engineer and chief engineer of the
+Scientific Research Institute of Jiaozuo Mining Bureau, a
+deputy chief engineer of Jiaozuo Mining Bureau, a chief
+engineer of Jiaozuo Coal Industry (Group) Co., Ltd., and a
+deputy manager and manager of the Safety Supervision and
+Quality Control Department of Shenhua Group Corporation
+Limited.
+Mr. Zhang has served as a director of the Safety.
+Supervision Bureau of the Company and a director of the
+Safety Supervision Bureau of Shenhua Group Corporation
+Limited from May 2013 to June 2018, a director of the
+Safety Supervision Bureau of the Company and a deputy
+director of the Safety Supervision Bureau of Shenhua
+Group Corporation Limited from November 2009 to May
+2013, and a general manager of the Safety, Health and
+Environment Department of the Company from November
+2004 to November 2009.
+Mr. Zhang has served as the Vice President of the Company
+since August 2018, a member to the Party Committee of
+the Company since June 2018, and a Director of Beijing GD
+Power Co., Ltd. since March 2019.
+Born in May 1962, male, Chinese, a professor-level
+senior engineer and a member of the Communist Party of
+China. Mr. Zhang has extensive experience in corporate
+management. He obtained a bachelor's degree from
+Huainan Mining Institute in 1983 and a master's degree
+from Jiaozuo Mining Institute in 1990.
+Biographical details
+Committee
+Zhang Guangde
+Vice President and
+member to the Party
+Committee
+Senior Management and Employees (Continued)
+144
+2018 Annual Report 143
+Prior to the foregoing, Mr. Huang had served in various
+capacities, including Secretary to the Chairman of Shenhua
+Group Corporation, Deputy Director of the General Office
+of Shenhua Group Corporation, Deputy General Manager
+of Hubei Provincial Railway Company and Secretary to the
+Deputy Governor of the Hubei provincial government.
+Mr. Huang has served as Secretary to the Board of the
+Company and Company Secretary of the Company since
+November 2004, a member to the Party Committee of the
+Company since June 2018 and the Vice Chairman of Beijing
+GD Power Co., Ltd. since March 2019.
+Born in November 1965, male, Chinese, a senior engineer
+and a member of the CPC. Mr. Huang obtained a board
+secretary certification from the Shanghai Stock Exchange
+in 2004. Mr. Huang is a fellow of the Hong Kong Institute
+of Chartered Secretaries and a senior visiting scholar of the
+Eisenhower Foundation. Mr. Huang received a master's
+degree from Guangxi University in 1991.
+Huang Qing
+Secretary to the Board
+and member to the
+Party Committee
+Name
+Secretary to the Party
+Committee and Vice
+President
+(3) Senior management
+Name
+Senior Management and Employees (Continued)
+Name
+Peng Suping
+Independent Non-
+Executive Director
+Biographical details
+Born in June 1959, male, Chinese, a professor of China
+University of Mining and Technology and a member
+of the Communist Party of China. Dr. Peng has long
+engaged in the teaching and research of mining geology
+and geophysical prospecting of mine engineering, with
+rich experience in coal industry. Dr. Peng received a Ph.
+D degree in coal geology & exploration from the Beijing
+Postgraduate Department of China University of Mining
+and Technology in 1988. He was elected as an academician
+of Chinese Academy of Engineering in 2007.
+Dr. Peng has worked as the director of State Key
+Laboratory of Coal Resources and Safe Mining (China
+University of Mining and Technology, Beijing) since January
+2007, the director of the Department of Energy and Mining
+Engineering of Chinese Academy of Engineering from
+July 2014 to June 2018, an Independent Director of Tiandi
+Science & Technology Co., Ltd. from June 2010 to October
+2018, and an Independent Director of Tibet Huayu Mining
+Co., Ltd. from October 2012 to October 2018.
+Prior to the foregoing, Dr. Peng had served in various
+capacities, including the vice director of the Department
+of Energy and Mining Engineering of Chinese Academy
+of Engineering and an Independent Director of Beijing
+LongRuan Technologies Inc.
+2018 Annual Report 137
+Section VIII Directors, Supervisors,
+Senior Management and Employees (Continued)
+Name
+Jiang Bo
+Independent Non-
+Executive Director
+Biographical details
+Born in December 1955, female, Chinese, a senior
+accountant and senior economist and a member of the
+CPC. Dr. Jiang has extensive experience in financial theory
+and knowledge and practice of corporate management.
+Dr. Jiang graduated from Jilin Finance and Trade College
+in 1983, and received a Ph.D. degree in Economics from
+Renmin University of China in 2004.
+Dr. Jiang has served as an Independent Non-Executive
+Director of the Company since June 2017, and an
+Independent Non-Executive Director of Sinopec Oilfield
+Service Corporation since February 2015.
+Zhong Yingjie,
+Christina
+Independent Non-
+Executive Director
+Born in November 1968, female, Chinese, a certified
+public accountant. She graduated from Wuhan University
+in Auditing in 1990 with a bachelor's degree. She also
+obtained a master's degree in Business and Administration
+from China Europe International Business School (CEIBS) in
+2000. Ms. Zhong has extensive experience in finance and
+capital markets.
+Ms. Zhong has served as an Independent Non-Executive
+Director of the Company since June 2017.
+Directors, Supervisors,
+Prior to the foregoing, Ms. Zhong had worked for Morgan
+Stanley Asia Limited from May 2008 to April 2017 and
+served as a Managing Director and the head of division
+of financial institutions in China. Ms. Zhong had served
+in various capacities, including an Executive Director of
+Goldman Sachs Gao Hua Securities Company Limited and
+a Vice President of China International Capital Corporation
+Limited. She had also worked for the National Audit Office
+of the PRC.
+Section VIII
+Dr. Tam served as the Chairman of Operations Review
+Committee and an ex-officer of the Advisory Committee
+on Corruption under the Independent Commission
+Against Corruption of Hong Kong from January 2015 to
+December 2017. She served as a member of the Advisory
+Committee on Corruption and Witness Protection Review
+Board of Independent Commission Against Corruption of
+Hong Kong from January 2010 to December 2017. She
+served as an Independent Non-Executive Director of Tong
+Ren Tang Technologies Company Limited from October
+2000 to May 2018. She served as an Independent Non-
+Executive Director of Minmetals Land Limited from April
+1997 to March 2018. Prior to the foregoing, Dr. Tam
+had successively served as a deputy to the ninth, tenth
+and eleventh National People's Congress. Dr. Tam was
+awarded the Gold Bauhinia Star in 1998 and awarded the
+Grand Bauhinia Medal, symbolizing the highest honor of
+the Hong Kong Government, in 2013.
+Section VIII
+Directors, Supervisors,
+Senior Management and Employees (Continued)
+Name
+Zhao Jibin
+Non-Executive
+Director
+Biographical details
+Born in July 1952, male, Chinese, a senior engineer and a
+member of the CPC. Mr. Zhao has extensive experience
+in business administration and railway transportation
+administration. He graduated from Southwest Jiaotong
+University majored in transportation in 1984, and obtained
+a master's degree from Changchun Institute of Optics and
+Fine Mechanics.
+Mr. Zhao has served as a non-Executive Director of the
+fourth session of the Board of the Company since June
+2017, an external Director of China Energy Group since
+November 2017 and of China National Building Material
+Group Corporation since December 2014.
+Mr. Zhao had served as an external Director of Shenhua
+Group Corporation from April 2015 to November 2017, a
+Non-Executive Director of third session of the Board of the
+Company from June 2016 to June 2017, a Deputy General
+Manager of China Mobile Communications Corporation
+from May 2008 to June 2013, an Independent Non-
+Executive Director of China South Locomotive and Rolling
+Stock Corporation Limited from December 2007 to June
+2014.
+Prior to the foregoing, Mr. Zhao had successively held
+the posts as the Master of Changchun Railway Station,
+Director of Changchun Railway Sub-bureau, Director of
+Hohhot Railway Bureau and Zhengzhou Railway Bureau,
+the Chairman of China Tietong Telecommunications
+Corporation, deputy to the ninth and tenth National
+People's Congress, an honorary professor of Beijing
+Jiaotong University and Changchun University of Science
+and Technology.
+2018 Annual Report 135
+136
+Section VIII Directors, Supervisors,
+Senior Management and Employees (Continued)
+Name
+Tam Wai Chu, Maria
+Independent Non-
+Executive Director
+Biographical details
+Born in November 1945, female, Chinese, a barrister in
+Hong Kong. She graduated from the University of London
+in 1970 with a bachelor's degree, and received an honorary
+Ph.D. degree in Laws from the Chinese University of Hong
+Kong in 1989. She has extensive experience in legal affairs
+and supervision.
+Dr. Tam has served as an Independent Non-Executive
+Director of the Company since June 2017, deputy to the
+twelfth National People's Congress since March 2013,
+and a Hong Kong SAR convener to the National People's
+Congress. She has served as a member of the Basic Law
+Committee of the Hong Kong Special Administrative Region
+since July 1997 and currently serves as the deputy director
+of the committee. Dr. Tam currently serves as the director
+of the Joint Committee for the Promotion of the Basic Law
+of Hong Kong, and has also served as an Independent Non-
+Executive Director in various listed companies, including
+Wing On Company International Limited, Sinopec Kantons
+Holdings Limited, Sa Sa International Holdings Limited,
+Nine Dragons Paper (Holdings) Limited and Macau Legend
+Development Limited.
+China Shenhua Energy Company Limited
+138
+China Shenhua Energy Company Limited
+Section VIII
+Mr. Zhou has served as the General Manager of the
+Capital Operation Department of the Company and the
+General Manager of the Capital Operation Department
+of Shenhua Group Corporation from March 2016 to May
+2018, a Supervisor of the third session of the Supervisory
+Committee of the Company from June 2016 to June 2017,
+and the General Manager of the Business Administration
+Department of the Company and the General Manager of
+the Business Administration Department of Shenhua Group
+Corporation from November 2009 to March 2016.
+Prior to the foregoing, Mr. Zhou had successively held the
+post of the General Manager of the Planning Department
+and a Deputy Director of the Policy and Law Research
+Office of Shenhua Group Corporation.
+Shen Lin
+Supervisor
+Born in May 1960, male, Chinese, a senior economist and
+a member of the CPC. Mr. Shen graduated from Harbin
+Institute of Technology in 2006 with a master's degree.
+Mr. Shen has served as an Employee Representative
+Supervisor of the fourth session of the Supervisory
+Committee of the Company since June 2017, and served
+as a full-time Director (director level) of China Energy since
+May 2018.
+Mr. Shen has served as the Chief of the Department
+of Enterprise Culture of the Company and Chief of
+the Department of Party Building of Shenhua Group
+Corporation from July 2010 to May 2018, and served as an
+Employee Representative Supervisor of the third session of
+the Supervisory Committee of the Company from August
+2014 to June 2017.
+Prior to the foregoing, Mr. Shen had served for Shenhua
+Baoshen Railway Co., Ltd. in various positions such as
+Human Resource Manager, Deputy Chief Economist, Chief
+Economist, Deputy Secretary to the Party Committee and
+Secretary to the Discipline Committee to the Party.
+140 China Shenhua Energy Company Limited
+Section VIII Directors, Supervisors,
+Senior Management and Employees (Continued)
+Name
+Zhang Jiming
+President and
+Deputy Secretary
+to the Party
+Committee
+Biographical details
+Born in November 1963, male, Chinese, a senior engineer
+and a member of the Communist Party of China, expert on
+"government special allowance" of the State Council. Mr.
+Zhang has extensive experience in business administration.
+In 1985, he graduated from Liaoning Petrochemical School.
+Mr. Zhang has served as the president and the deputy
+secretary to the Party Committee of the Company since
+September 2018.
+Mr. Zhang served as the vice president of the Company
+from July 2016 to September 2018, as the deputy secretary
+to the Party Committee, the chairman and the general
+manager of China Shenhua Coal to Liquid and Chemical
+Co., Ltd. from August 2012 to July 2016, and as a Director
+and a Vice President (subsidiary chief level) of China
+Shenhua Coal to Liquid and Chemical Co., Ltd., and as the
+general manager, the secretary to the Party Committee and
+the deputy secretary to the Party Committee of Ordos Coal
+to Liquid Branch Company of China Shenhua Coal to Liquid
+and Chemical Co., Ltd. from May 2008 to August 2012.
+Prior to the foregoing, Mr. Zhang had successively held
+the positions of the director and a vice director of Liaoyang
+Petrochemical Branch Company Refinery Plant.
+2018 Annual Report 141
+Section VIII Directors, Supervisors,
+Senior Management and Employees (Continued)
+Mr. Zhou has served as a Supervisor of the fourth session
+of Supervisory Committee of the Company since June 2017
+and a Director of the Industrial Coordination Department of
+the China Energy Group since May 2018.
+Born in October 1965, male, Chinese, a researcher and
+a member of the CPC. Mr. Zhou obtained a bachelor's
+degree in Economic Management at Peking University in
+1986 and a master's degree in International Finance at
+Peking University in 2001.
+Biographical details
+Zhou Dayu
+Supervisor
+Directors, Supervisors,
+Senior Management and Employees (Continued)
+Name
+Huang Ming
+Independent Non-
+Executive Director
+Biographical details
+Born in March 1964, male, American, a tenured professor
+of finance of the Johnson School of Management of Cornell
+University. He has long been engaged in the academic
+research in finance and is familiar with China's financial
+market and corporate finance. Dr. Huang received two Ph.D
+degrees of physics and finance respectively from Cornell
+University of in America in 1991 and Stanford University in
+America in 1996.
+Dr. Huang has served as a tenured professor of finance of
+the Johnson School of Management of Cornell University
+since July 2005, a professor of finance of China Europe
+International Business School concurrently since July 2010,
+an independent director of Yingli Green Energy Holding Co.,
+Ltd. since August 2008, an independent director of Fantasia
+Holdings Group Co., Limited since October 2009, an
+Independent Director of JD.com, Inc. since March 2014, an
+Independent Director of WH Group Limited since July 2014
+and an Independent Director of 360 Security Technology
+Inc. since February 2018.
+(2) Supervisors
+Xu Mingjun
+Name
+Biographical details
+Born in July 1964, male, Chinese, a senior accountant and
+a member of the CPC. Mr. Zhai received a master's degree
+from China University of Mining and Technology in 2003.
+Mr. Zhai has served as the Chairman of the fourth session
+of Supervisory Committee of the Company since June 2017
+and a full-time Director (director level) of China Energy
+since May 2018.
+Mr. Zhai has served as Director of Property Ownership
+Administration of the Company and Director of Property
+Ownership Administration of Shenhua Group Corporation
+from June 2015 to May 2018, Chairman of the third session
+of the Supervisory Committee of the Company from August
+2014 to June 2017 and General Manager of the financial
+department of Shenhua Group Corporation from November
+2004 to June 2015.
+Prior to the foregoing, Mr. Zhai had served in various
+capacities, including Deputy Manager of the financial
+department of Shenhua Group Corporation, Director
+of financial division and Chief Accountant of Shenhua
+Zhunge'er Coal Company.
+2018 Annual Report 139
+Section VIII Directors, Supervisors,
+Senior Management and Employees (Continued)
+Name
+Zhai Richeng
+Chairman of the
+Supervisory
+Committee
+Prior to the foregoing, Dr. Jiang had served in various
+capacities, including the Chief Financial Officer and the
+Chairman of the labor union of China Everbright Group
+Ltd., a Director of China Everbright Group Company
+Limited (Hong Kong), a Director of Sun Life Everbright
+Life Insurance Co., Limited, a Director of equity interest of
+Everbright Financial Holding Asset Management Co., Ltd.,
+a Director of Shenyin & Wanguo Securities Co., Ltd., an
+Executive Director, the Vice President, a member of the
+CPC Committee and the Chief Auditing Officer (concurrent
+position) of China Everbright Bank.
+(director level)
+Directors, Supervisors,
+Reason for the change
+Resigned
+Chief Financial
+Officer
+Zhang Kehui
+Resigned
+Vice President
+Lv Zhiren
+Resigned
+Vice President
+Zhang Zifei
+Resigned
+Resigned
+Senior Vice
+President
+Vice President
+Wang Shumin
+Wang Jinli
+Resigned on 15 May 2018 due to
+retirement
+Resigned from the position of Senior Vice
+President on 19 October 2018 due to
+adjustments to work arrangements,
+but continued to serve as an Executive
+Director and relevant posts in
+committees under the Board
+Resigned on 19 October 2018 due to
+adjustments to work arrangements
+Resigned on 19 October 2018 due to
+adjustments to work arrangements
+Resigned on 31 May 2018 due to
+retirement
+China Shenhua Energy Company Limited
+When considering any matters or transactions at any board meeting, the directors are required to
+declare any direct or indirect interests and recuse themselves where appropriate. Saved as their
+own service contracts, the Supplemental Agreement to the Non-Competition Agreement entered
+into between the Company and China Energy (effective after conditions are satisfied) on 2 March
+2018, revision of annual caps of the daily related/connected transactions with China Energy for
+the year 2018 and 2019, the establishment of a joint venture company and entering into of the
+Agreement on Establishment of the Joint Venture Company by way of Assets Reorganizations
+with GD Power, and entering into the Supplemental Agreement to the Agreement on Establishment
+of the Joint Venture Company by way of Assets Reorganizations entered into between GD Power
+Development Co., Ltd. and China Shenhua Energy Company Limited and Articles of Association
+of the Joint Venture Company on 30 November 2018, none of the directors and supervisors of
+the Company has any material personal interests, directly or indirectly, in material contracts,
+transactions or arrangements entered into by the Company or any of its subsidiaries in 2018 and
+subsisting during or at the end of the year of 2018; the directors and supervisors of the Company
+have confirmed that they and their associates have not entered into any connected transaction
+with the Company and its subsidiaries.
+All the directors and supervisors have provided relevant training records to the Company and
+have participated in training programs in accordance with relevant requirements by regulatory
+authorities. The Secretary to the Board of the Company has participated in training programs
+organized by a number of institutions including the stock exchanges where the shares are listed
+and The Hong Kong Institute of Chartered Secretaries for more than 15 hours in accordance with
+relevant requirements.
+The securities transactions of the directors of the Company have been carried out in accordance
+with the "Model Code for Securities Transactions by Directors of Listed Issuers" (the "Model
+Code") set out in Appendix 10 of the Hong Kong Listing Rules. The Model Code is also applicable
+to the supervisors and senior management of the Company. The directors, supervisors or senior
+management have confirmed that they have fully complied with the Model Code in 2018 or during
+their respective terms of office.
+As of 31 December 2018, none of the directors, supervisors or chief executives of the Company
+hold any shares of the Company, nor did they have any interest or short position in the shares or
+underlying shares of the Company or of any of its associated corporations within the meaning of
+Part XV of the SFO (Chapter 571 of the Laws of Hong Kong) required, pursuant to section 352
+of the SFO, to be recorded in the register which shall be kept by the Company, or 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.
+During the reporting period, Mr. Lv Zhiren, the former Vice President of the Company, held 1,500
+A shares of the Company. Mr. Lv Zhiren did not transfer any shares of the Company during the
+reporting period. Save as the matters mentioned above, none of the change in shareholding of
+other directors, supervisors or senior management of the Company shall be disclosed pursuant
+to the Administrative Rules Concerning the Holding and Change of Shares held by Directors,
+Supervisors and Senior Management of A Listed Company promulgated by the CSRC.
+OTHER SIGNIFICANT MATTERS
+President
+Applicable ✓ Not applicable
+VI.
+V.
+Senior Management and Employees (Continued)
+Section VIII Directors, Supervisors,
+152
+2018 Annual Report 151
+Resigned on 13 September 2018 due to
+adjustments to work arrangements
+Resigned on 14 December 2018 due to
+retirement
+SANCTION FROM SECURITIES REGULATORY AUTHORITIES IN THE LAST
+THREE YEARS
+Resigned
+Senior Vice
+Li Dong
+Appointed
+Vice President
+Xu Mingjun
+Appointed
+Resigned
+Vice President
+President
+Zhang Jiming
+Zhang Guangde
+Non-Executive
+Director
+Elected
+Independent
+Non-Executive
+Director
+Independent
+Huang Ming
+Peng Suping
+Executive Director Elected
+Executive Director Elected
+Appointed
+Resigned
+Elected
+Section VIII Directors, Supervisors,
+Vice President
+Xu Shancheng
+Executive Director Resigned
+Han Jianguo
+Position
+Name
+Particular of
+movements
+Approved at the sixteenth meeting of
+the fourth session of the Board on 28
+December 2018
+Approved at the twelfth meeting of the
+fourth session of the Board on 24
+August 2018
+Appointed
+Approved at the fifteenth meeting of
+the fourth session of the Board on 29
+November 2018
+Elected at the extraordinary general
+meeting on 27 April 2018
+Elected at the extraordinary general
+meeting on 27 April 2018
+Elected at the extraordinary general
+meeting on 27 April 2018
+Elected at the extraordinary general
+meeting on 27 April 2018
+Approved at the eighth meeting of
+the fourth session of the Board
+on 2 January 2018 due to work
+arrangements
+Reason for the change
+Appointed
+Chief Financial
+Officer
+Approved at the thirteenth meeting
+of the fourth session of the Board
+on 13 September 2018 due to work
+arrangements
+Vice Chairman,
+President
+Senior Management and Employees (Continued)
+Other than their working relationships in the Company, none of the directors, supervisors or the
+senior management has any financial, business or family relationship or any relationship in other
+material aspects with each other. For the year ended 31 December 2018, the Company had not
+granted any equity securities or warrants to its directors, supervisors and senior management or
+their respective spouses or children under the age of 18.
+(III) Training program
+The Company has formulated a remuneration policy comprising basic salary and
+performance assessment. The remuneration policy is competitive within the industry and is
+favoring the frontline employees.
+86,856
+15,935
+12,824
+23,039
+31,965
+3,093
+person
+Number of
+Remuneration policy
+Total
+Graduate of technical school, high school and below
+Specialized secondary school graduate
+College graduate
+The Company has established a training system with different levels and channels to
+provide the employees with appropriate training in job skills, safe production and group
+management etc. During 2018, the accrued capital used for training was approximately
+RMB412 million. The number of attendances in training was approximately 0.64 million with
+training hours of approximately 6.18 million hours in aggregate. For details, please refer to
+the 2018 ESG Report of the Group.
+(IV) Outsourced Work
+Total number of working hours of outsourced work
+Total remuneration paid for outsourced work
+Approximately 79.73 million hours
+RMB3.059 billion
+Name of
+shareholder
+Commencement of Expiry of
+Positions
+term of office
+term of office
+Supervisors of
+China Shenhua
+Zhai Richeng
+University graduate
+China Energy
+June 2015
+May 2018
+Ownership
+Administration of
+Former Shenhua
+Group Corporation
+Full-time Director
+China Shenhua Energy Company Limited
+Director of Property
+Postgraduate and above
+Education Level
+(II)
+Finance
+Management and administration
+Operation and repair
+Function
+Function
+15,112
+86,856
+Research and development
+Total number of current employees of the Group (Number of person)
+Number of retired employees in respect of which the Company and
+subsidiaries bore cost (Number of person)
+86,736
+Number of current employees of the branches/subsidiaries of the
+120
+Number of current employees of the headquarter of the Company
+(Number of person)
+Employees
+(I)
+VIII. EMPLOYEES OF THE GROUP
+Company (Number of person)
+The Company has entered into service contracts with all of its directors and supervisors. None of
+the directors or supervisors has entered into or proposed to enter into any service contract with
+members of the Group which cannot be terminated by the Group within one year without any
+compensation (other than the statutory compensation). The Company has maintained appropriate
+liability insurance for its directors, supervisors and senior management. Directors of the Company
+are entitled to be indemnified for the verification and inspection costs, individual investigation
+costs, tax liabilities and loss prevention expenses incurred by or relating to the execution and
+performance of duties subject to the applicable laws and under the coverage of directors liability
+insurance taken out by the Company for the directors. These provisions are valid during the period
+ended 31 December 2018 and remain to be valid as at the date of this report.
+Technical support
+Others
+Education Level
+Senior Management and Employees (Continued)
+Section VIII Directors, Supervisors,
+154
+2018 Annual Report 153
+86,856
+3,706
+Sales and marketing
+902
+2,603
+1,830
+13,218
+53,233
+person
+Number of
+Total
+11,364
+Name
+Particular of
+movements
+Position
+Commencement of Expiry of
+Positions held in other entities
+(11)
+Senior Management and Employees (Continued)
+Section VIII Directors, Supervisors,
+China Shenhua Energy Company Limited
+March 2019
+Chairman of the Board
+of Supervisors
+Co., Ltd.
+Beijing GD Power
+Co., Ltd.
+Xu Shancheng
+March 2019
+Director
+Zhang Guangde Beijing GD Power
+Co., Ltd.
+March 2019
+Name
+Zhao Jibin
+Name of shareholder
+Positions
+April 2018
+April 1997
+Independent Non-
+Executive Director
+International Limited
+Minmetals Land Limited
+January 1994
+Independent Non-
+Vice Chairman
+May 2018
+Independent Non-
+Executive Director
+December 2014
+External Director
+China National Building
+Material Group Corporation
+Tong Ren Tang Technologies
+Company Limited
+Wing On Company
+Tam Wai Chu, Maria
+term of office
+term of office
+October 2000
+Beijing GD Power
+Huang Qing
+May 2018
+General manager of
+China Energy
+Shen Lin
+Department
+Coordination
+May 2018
+Director of Industrial
+July 2010
+Corporation
+Department of Former
+Capital Operation
+May 2018
+March 2016
+General manager of
+China Energy
+Zhou Dayu
+Shenhua Group
+Executive Director
+May 2018
+Building of Former
+Chief Economist
+China Energy
+Jia Jinzhong
+China Shenhua
+Manager
+Management of
+May 2018
+Department of Party
+Assistant to General
+Xu Mingjun
+Senior
+(director level)
+May 2018
+Full-time Director
+Corporation
+Shenhua Group
+China Energy
+Chairman
+Sinopec Kantons Holdings
+March 1998
+2018 Annual Report 149
+March 2014
+July 2014
+February 2018
+360 Security Technology Inc. Independent Director
+Independent Director
+Independent Director
+WH Group Limited
+JD.com, Inc.
+Limited
+October 2009
+Fantasia Holdings Group Co., Independent Director
+Co., Ltd.
+Yingli Green Energy Holding Independent Director August 2008
+Business School
+July 2010
+Professor of Finance
+Section VIII Directors, Supervisors,
+Senior Management and Employees (Continued)
+III. REMUNERATION OF DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
+Decision-making procedures The remuneration package of directors and supervisors was
+Mi Shuhua
+Gao Song
+Ling Wen
+Name
+IV. CHANGES OF DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
+Section VIII Directors, Supervisors,
+Senior Management and Employees (Continued)
+China Shenhua Energy Company Limited
+China Europe International
+150
+Please refer to "Changes in shareholding and remuneration" in this
+section
+The remuneration package of senior management of the Company
+was formulated by the Company in accordance with Provisional
+Measures for the Administration of the Annual Remuneration of the
+Senior Management.
+The remuneration package of relevant directors and supervisors
+was proposed by the Company in accordance with international
+and domestic practices and with reference to the remuneration of
+directors and supervisors of large-scale listed companies in China.
+submitted to the general meeting for approval after consideration
+and approval by the Remuneration Committee and the Board, and
+the remuneration package of senior management was submitted
+to the Board for approval after consideration and approval by the
+Remuneration Committee.
+Total remuneration actually
+obtained as at the end of
+the reporting period
+Actual payment of
+remuneration
+Basis for determination
+Please refer to "Changes in shareholding and remuneration" in this
+section
+Finance
+Management of Cornell
+University
+Tenured Professor of July 2005
+Director
+January 2007
+Director
+June 2013
+Independent Non-
+Executive Director
+February 2006
+Executive Director
+July 2014
+Executive Director
+Independent Non-
+Nine Dragons Paper
+(Holdings) Limited
+Peng Suping
+Limited
+June 2004
+Sa Sa International Holdings Independent Non-
+Executive Director
+Limited
+Macau Legend Development
+Limited
+State Key Laboratory of Coal
+Resources and Safe Mining
+(China University of Mining
+and Technology, Beijing)
+Department of Energy and
+Mining Engineering of
+Independent Non-
+June 2018
+Engineering
+Executive Director
+Corporation
+February 2015
+Independent Non-
+Johnson School of
+Sinopec Oilfield Service
+Huang Ming
+Chinese Academy of
+Jiang Bo
+October 2012
+Independent Director
+Tibet Huayu Mining Co., Ltd.
+Co., Ltd.
+October 2018
+June 2010
+Tiandi Science & Technology Independent Director
+October 2018
+Section VIII
+May 2018
+Research Institute
+Hydropower
+River Benzilan
+CHN Energy Jinsha Chairman
+Development Co.,
+Hydropower
+River Xulong
+June 2018
+CHN Energy Jinsha Chairman
+Ltd.
+Development Co.,
+Development Co.,
+River Hydropower
+Chairman
+CHN Energy Dadu
+September 2012
+Director
+GD Power
+Members' Group
+of the Leading Party
+Manager, member
+November 2017
+Deputy General
+July 2018
+Ltd.
+Mi Shuhua
+China Energy
+Category
+Senior Management and Employees (Continued)
+Section VIII Directors, Supervisors,
+148
+2018 Annual Report 147
+November 2017
+External Director
+China Energy
+Zhao Jibin
+Technology
+Energy
+December 2016
+April 2014
+Dean
+Guodian New
+Director
+GD Power
+Members' Group
+November 2017
+June 2018
+of the Leading Party
+Manager, member
+Deputy General
+China Energy
+Gao Song
+Ltd
+of the Leading Party
+China Shenhua Energy Company Limited
+146
+The Directors and supervisors of the Company have performed their duties
+in accordance with the requirements of the Articles of Association, Rules
+of Procedure of Board Meeting and Rules of Procedure of the Supervisory
+Committee Meeting of the Company. Under the decision and authorization
+of the Board, the senior management is responsible for business operation
+of the Company. Zhang Jiming, President and Deputy Secretary to the Party
+Committee, responsible for the Board and exercises his responsibilities
+as the President in accordance with the requirements of the Articles of
+Association. Mr. Zhang presides over the daily administrative and overall work
+of the Company, and is responsible for administrative management, scientific
+and technological innovation, auditing, strategic planning, coal-to-oil chemical
+industry coordination and other works of the Company. Xu Mingjun, Secretary
+to the Party Committee and Vice President, is in charge of Party building,
+establishment of integrity, ideology and politics, cadre talents, organization of
+work, news propaganda, united front, labour union and groups and construction
+of corporate culture. Vice President and member to the Party Committee Jia
+Jinzhong is in charge of corporate governance, legal affairs and transportation
+industry work. Secretary to the Board and member to the Party Committee
+Huang Qing is in charge of Board affairs, board of supervisors affairs,
+information disclosure and investor relationship management. Zhang Guangde,
+Vice President and member to the Party Committee, is in charge of coordination
+of coal and power industry and international business. Xu Shancheng, Chief
+Financial Officer and member to the Party Committee, is in charge of financial
+operation, cost control, capital operation, property rights management and
+labour union. Yang Suping, the secretary to the Disciplinary Committee and
+member to the Party Committee, is in charge of discipline supervision and
+inspection, anti-corruption of the Party and daily patrol.
+Dr. Yang served as an assistant researcher in the Planning
+Division under the Planning Department of the Ministry
+of Energy Department of the State, deputy director of
+the Planning Department of Comprehensive Planning,
+Investment and Financing Department of the State
+Power Corporation, deputy director of the Planning and
+Development Department and head of the Leading Party
+Members' Group Inspection Office of China Guodian.
+Born in August 1965, female, Chinese, a graduate of
+postgraduate program, with, a Ph.D degree in management,
+a senior engineer. She currently serves as the secretary
+to the Disciplinary Committee and a member to the Party
+Committee of China Shenhua Energy Company Limited.
+Biographical details
+member to the Party
+Committee
+Yang Suping
+Secretary to the
+Disciplinary
+Committee and
+Name
+In June 2018, China Shenhua established the new session of Party Committee.
+As of the end of the reporting period, Xu Mingjun served as the secretary of
+China Shenhua Party Committee; Zhang Jiming served as the deputy secretary
+to the Party Committee; Jia Jinzhong, Huang Qing, Zhang Guangde, Yang
+Suping and Xu Shancheng served as members to the Party Committee, and
+Yang Suping also served as secretary to the Disciplinary Committee. Please see
+below for the biographical details of Yang Suping. For the biographical details
+of other Party Committee members, please refer to the paragraph headed
+"Biographical details of the Directors, supervisors and senior management as at
+the end of the reporting period" of this section.
+Senior Management and Employees (Continued)
+Section VIII Directors, Supervisors,
+2018 Annual Report 145
+The Company resolutely implemented the new requirements of political
+construction in the new era, and strengthened the overall leadership of
+the Party. The Company has formulated a Party building work plan, revised
+and improved the Articles of Association and rules and regulations of the
+Company, institutionalized the Party Committee research and discussion as a
+pre-procedure of major decision-making, and organically integrated the Party
+leadership with the improvement of corporate governance.
+Prior to the foregoing, Mr. Xu held the post of the head of
+financial department of Electric Power Industry Bureau of
+Hebei Province (Company), manager of financial department
+of North China Power Group Company, chief accountant of
+Qinghai Electric Power Company (Bureau), chief accountant
+of North China Grid Company, deputy officer of Social
+Insurance Management Center of State Grid Corporation
+of China (Grid Corporate Annuity Management Center)
+and a member of the Leading Party Group, deputy general
+manager, chief accountant and other positions of State Grid
+Energy Development Co. Ltd..
+Mr. Xu was the secretary and deputy officer of the financial
+property department of China Energy from May 2018 to
+December 2018. He served as the general manager of the
+financial department of the Company and Shenhua Group
+Corporation Limited from August 2016 to May 2018. He
+served as the deputy general manager and chief financial
+officer of Beijing Guohua Power Company Limited, and
+Guohua Power Branch of the Company from March 2015
+to August 2016. He served as the deputy general manager
+and chief financial officer of Shenhua Guoneng Group
+Co., Ltd. and Shenhua Shendong Power Co., Ltd. from
+December 2012 to March 2015.
+Mr. Xu has served as the Chief Financial Officer and
+member to the Party Committee of the Company since
+December 2018, the chairman of Shenhua (Tianjin) Finance
+Lease Co., Ltd. since August 2016, a Non-Executive
+Director of Shenhua Finance Company since August 2017
+and the Chairman of the board of supervisors of Beijing GD
+Power Co., Ltd. since March 2019.
+Members' Group
+Biographical details
+Chief Financial Officer
+and member to the
+Party Committee
+Xu Shancheng
+Name
+Senior Management and Employees (Continued)
+Section VIII Directors, Supervisors,
+Senior Management and Employees (Continued)
+Born in March 1964, male, Chinese, a senior accountant
+and a member of the Communist Party of China. Mr. Xu
+has extensive experience in financial management. He
+obtained a master's degree in Economics from Renmin
+University of China in 2001.
+(II) Share incentive plan awarded to directors, supervisors and senior management
+during the reporting period
+II.
+Manager, member
+November 2017
+China Energy
+Members' Group
+Deputy General
+Leading Party
+secretary to the
+manager, Deputy
+November 2017
+Director, General
+China Energy
+Li Dong
+term of office
+Directors of China Ling Wen
+Shenhua
+POSITIONS OF EXISTING DIRECTORS, SUPERVISORS AND SENIOR
+MANAGEMENT DURING THE REPORTING PERIOD
+(1) Positions held in the shareholders of the Company
+Category
+Name
+Applicable ✓ Not applicable
+Commencement of Expiry of
+Positions
+term of office
+Name of
+shareholder
+No
+No
+Zhao Jibin
+No
+Gao Song
+No
+Li Dong
+Mi Shuhua
+meetings in
+person or not
+Current Directors as at the end of the reporting period
+Board meetings Attendance in Attendance by Attendance by
+this year
+required
+attendance
+Absence
+proxy
+Person correspondence
+consecutive
+Tam Wai Chu, Maria Yes
+meetings/
+Ling Wen
+No
+3433343333
+Yes
+at general
+0
+0
+0
+1
+حب
+4
+996 6 0 26996
+9
+98347095096
+No
+Han Jianguo
+Resigned Directors during the reporting period
+Yes
+Huang Ming
+Yes
+Zhong Yingjie, Christina
+Yes
+Jiang Bo
+Peng Suping
+Absent at two
+IV. THE PERFORMANCE OF DUTIES OF THE COMMITTEES UNDER THE BOARD
+DURING THE REPORTING PERIOD
+Attendance at Board meetings
+As owners of the Company, the shareholders of the Company are entitled to the rights
+as stipulated in laws, administrative regulations and the Articles of Association of China
+Shenhua. The shareholders' general meeting is the highest authoritative body of the
+Company, through which shareholders can exercise their rights. The controlling shareholder
+takes part in the Company's operations and decision-makings through shareholders' general
+meetings and the Board.
+Shareholders' rights
+2.
+1.
+GENERAL MEETINGS
+II.
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+156
+Pursuant to Articles 66, 69 and 75 of the Articles of Association of China Shenhua,
+shareholders may submit written request to the Board for the convening of extraordinary
+general meetings or class meetings and submit proposals to the Company at general
+meetings. Upon providing the Company with written evidence of the class and number of
+shares of the Company held, and following verification of the shareholders' identity by the
+Company, shareholders are entitled to inspect the relevant information of the Company or
+obtain the Articles of Association, the register of shareholders, minutes of general meetings,
+resolutions of meetings of the Board and the supervisory committee, regular reports and
+financial and accounting reports, etc.
+2018 Annual Report 155
+The Board of the Company has set out the board diversity policy for members of the Board, which
+I was set out in the terms of reference of the nomination committee of the Board of the Company
+and has been disclosed. When selecting the candidates in accordance with the board diversity
+policy of the Company, the Board will use a series of diversified terms, including but not limited
+to gender, age, culture and educational background, race, skills, knowledge and professional
+experience as standard, and will determine in conjunction with the characteristics and role of
+the personnel. As at the end of the reporting period, the Board of the Company consisted of
+10 Directors, including 4 Executive Directors, 1 Non-Executive Director and 5 Independent
+Non-Executive Directors; among whom 3 female Directors were included. Directors are from
+various domestic and overseas industries, and the composition of the members features diversity.
+Each Director's knowledge base and field of expertise are professional and complementary in the
+overall board structure, which guarantees the scientific decision-making of the Board.
+During the year ended 31 December 2018, the Company has been in full compliance with the
+provisions of principle and codes and most of the recommended best practices as specified
+therein. For the terms of functions and powers of the Board and the Board Committees under the
+Corporate Governance Code, please refer to the Articles of Association, Rules of Procedure of
+the Board and the Board Committees, which have been published on the websites of the stock
+exchanges where the Company is listed and on the Company's website. During the reporting
+period, the Company has made two amendments to the Articles of Association. For details, please
+refer to the H Share Announcements of the Company dated 27 April and 22 June 2018 and the A
+Share Announcements of the Company dated 28 April and 23 June 2018.
+The convening, voting and disclosure procedures of board meetings of the Company, rules
+of procedure of the Board and procedures for nomination and appointment of Directors are in
+compliance with relevant requirements. Being a standing decision-making body of the Company,
+the Board is accountable to the shareholders' general meeting, and exercises function and power
+in accordance with the requirements of article 130 of the Articles of Association and relevant
+applicable regulatory requirements. Being a standing executive body of the Company, operating
+management comprising senior management including the President, is accountable to the Board
+and exercises function and power in accordance with the requirements of article 149 of the
+Articles of Association and relevant applicable regulatory requirements. The Articles of Association
+sets out the respective duties of the Chairman of the Board and the President in detail. The
+Chairman of the Board and the President are held by different personnel.
+The Board is responsible for implementing good corporate governance of the Company. The
+Company has been in compliance with the requirements of corporate governance policies as
+set out in Appendix 14 of the Hong Kong Listing Rules to establish its own system of corporate
+governance.
+CORPORATE GOVERNANCE
+I.
+Section IX Corporate Governance and Corporate Governance Report
+0
+For the composition of the Board and securities transactions, continuous training and term
+of office of the Directors, please refer to the section headed "Directors, Supervisors, Senior
+Management and Employees" of this report. For the auditors' remuneration, please refer to the
+section headed "Significant Events" of this report. For the strategy and risk assessment of the
+Company, please refer to the section headed "Directors' Report" of this report.
+The Company discloses information in strict compliance with the listing rules of its places
+of listing. The Company makes its investor relations hotline, fax and email available (please
+see the section headed "Company Profile and Major Financial Indicators" in this report
+for details). The Company has established an effective communication channel with
+shareholders through such information disclosure system and an investor reception system.
+Convening of general meetings during the reporting period
+Meetings
+Required
+attendance at
+Independent
+Director or not
+Name of Director
+(1) Attendance at Board meetings and general meetings
+PERFORMANCE OF DUTIES OF THE BOARD
+The shareholders' representative, supervisors' representative, witness lawyers and the
+representative of Computershare Hong Kong Investor Services Limited acted as scrutineer
+at the general meeting. The PRC legal advisor of the Company issued the legal opinion.
+Representatives of the auditors attended the Annual General Meeting and announced their
+audit opinions.
+III.
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+China Shenhua Energy Company Limited
+The Company accepted registration of shareholders' attendance, and arranged a special
+session for the shareholders' effective consideration of proposals at the meeting.
+Shareholders actively participated in the meeting and were entitled to exercise their various
+rights, such as the right to know, the right of speech, the right to question and the right to
+vote. Directors, supervisors and senior management of the Company attended the meeting.
+Arranging special Q&A session in the meeting enabled interactions between shareholders
+and the management.
+All the resolutions tabled at the general meeting above were passed. The voting results
+were disclosed on the website of the Hong Kong Stock Exchange on 27 April 2018 and 22
+June 2018, respectively, and were also disclosed on the website of the Shanghai Stock
+Exchange on 28 April 2018 and 23 June 2018, respectively.
+23 June 2018
+28 April 2018
+Date of disclosure
+of the publication of
+the voting results
+The website of the Shanghai
+Stock Exchange
+The website of the Shanghai
+Stock Exchange
+Inquiry index for the
+designated website for
+publishing the voting results
+22 June 2018
+2018 First Extraordinary 27 April 2018
+General Meeting
+2017 Annual General
+Meeting
+Date
+Attendance
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+0
+O O O O O O O O
+Save as disclosed above, during the reporting period, there was no material difference between
+the corporate governance of the Company and the relevant rules and requirements of the CSRC.
+China Shenhua has an independent and complete business system as well as a market-oriented
+self-operation capability. The Company is independent from its controlling shareholder in terms of
+business, personnel, assets, organization and finance.
+There are potential peer competitions between the coal business and other business of China
+Energy Group and the major business of the Company. In accordance with the resolution on
+entering into Supplemental Agreement to the Existing Non-Competition Agreement with China
+Energy Group (effective after conditions are satisfied) considered and approved at the 2018 first
+extraordinary general meeting of the Company, China Shenhua, as an integration platform of the
+coal business of China Energy Group, will discretionally exercise the Options, the Pre-emptive
+Rights and the option to acquire pursuant to the Existing Non-Competition Agreement and the
+supplemental agreement entered between the two parties, thereby gradually reducing horizontal
+competition. For details, please refer to Section VI Performance of Commitment of this report.
+During the reporting period, China Shenhua established a new session of Party committee,
+carried out restructuring of the headquarters and personnel reform, established several functional
+departments and industrial centers, improved the management system and process, and
+optimized operating management mechanism, establishing the daily operation mechanism of the
+state-owned enterprise in line with its own characteristics.
+As at the end of the reporting period, two Vice Presidents of China Shenghua also acted
+concurrently as chief economist and general manager assistant of China Energy, but they were
+not entitled to remuneration from China Energy.
+EXPLANATION OF INDEPENDENCE AND COMPETITION
+During the reporting period, the Supervisory Committee did not have any dissenting view over
+the matters supervised by the Supervisory Committee. For details, please refer to the section
+headed" Supervisory Committee's Report" in this report.
+THE SUPERVISION OPINION OF THE SUPERVISORY COMMITTEE
+In 2018, the Safety, Health and Environment Committee held one meeting to consider
+and approved the 2017 CSR Report, and all members attended the meeting in person.
+The principal duties of the Safety, Health and Environment Committee are to
+supervise the implementation of health, safety and environmental protection plans of
+the Company; to make recommendations to the Board or the President on material
+issues in respect of health, safety and environmental protection of the Company; to
+inquire into the material incidents regarding the Company's production, operations,
+property assets, staff or other facilities; as well as to review and supervise the
+resolution of such incidents and carry out other matters as authorized by the Board.
+China Shenhua Energy Company Limited
+Safety, Health and Environment Committee
+VI.
+V.
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+164
+2018 Annual Report 163
+In 2018, the Nomination Committee held five meetings to consider proposals
+including the nominations of candidates for President, Vice President, Directors of
+the fourth session of the Board and members of relevant committees under the
+fourth session of Board, all of which were approved at the meetings and all members
+attended all meetings in person.
+The main duties of the Nomination Committee are to formulate the board diversity
+policy, regularly review the structure, size and diversity of the Board, and to make
+recommendations to the Board with regard to any proposed changes; to assess and
+verify the independence of independent non-Executive Directors; to draft procedures
+and criteria for election and appointment of Directors, the President and other senior
+management and make recommendations to the Board; to extensively seek for
+qualified candidates of Directors, the President and other senior management; to
+examine the aforementioned candidates and make recommendations; to nominate
+candidates for members of the Board Committees (other than members of the
+Nomination Committee and the Chairman of any Board Committee); to draft
+development plans for the President, other senior management and key reserve
+talents; to review the board diversity policy where appropriate, and review the
+quantitative objectives set up by the Board to implement the board diversity policy
+and their progress of achievement, as well as to disclose the results of review in
+the Corporate Governance Report annually; and to carry out any other matters as
+authorized by the Board.
+Nomination Committee
+The Remuneration Committee is of the view that the Company has a well-established
+remuneration management system which reflects the economic benefit-oriented
+philosophy of a listed company and political, social and economic responsibility of a
+state-owned enterprise. The Remuneration Committee agrees to the remuneration
+management systems of the Company.
+5.
+In 2018, the Remuneration Committee held three meetings to consider proposals
+including the remuneration packages of Directors, supervisors and senior
+management for the year 2017 and the proposed value of the assessment indicators
+for the 2018 operating results of the Company management, all of which were
+approved at the meeting and all members attended the meetings in person or by
+phone. During the reporting period, the Remuneration Committee reviewed the
+remuneration management system of the Company and the remuneration level for
+Directors, supervisors, President and other senior management for the relevant
+period.
+160
+The relevant matters
+of profit distribution
+of the Company for
+the year 2017 has
+been completed in
+the third quarter of
+2018.
+Based on the
+resolution passed at
+the general meeting
+and the development
+strategies of
+China Shenhua,
+the Company will
+carry out the non-
+competition-related
+work.
+2018 Annual Report 159
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+No. General Meeting
+2
+2017 Annual General
+Meeting
+The appointment and
+the remuneration of
+auditors for the year
+2018 are set out in
+the section headed
+"Significant Events"
+in the report.
+Subject Matter
+To approve the revision of the annual
+caps of partial daily connected/related
+party transactions for the year 2018 and
+2019, and to authorize the committee
+of Directors comprising the Chairman,
+the President (Director) and Chairman of
+the Audit Committee to handle relevant
+matters.
+To approve the profit distribution plan of
+the Company for the year 2017, and to
+authorize the Chairman, the President
+(Director) to specifically implement the
+matters of profit distribution.
+To approve re-appointment of the
+external auditors for the year 2018,
+and to authorize the committee of
+Directors comprising the Chairman, the
+President (Director) and Chairman of
+the Audit Committee to determine the
+remuneration of auditors.
+Status
+The joint venture
+company has
+completed the
+industrial and
+commercial
+registration and
+obtained business
+license. Such
+transaction had been
+completed on 31
+January 2019.
+The Company has
+implemented the
+revised annual
+caps for the year
+2018 for certain
+daily connected
+transactions.
+To approve the Agreement on
+Establishment of Joint Venture Company
+by way of Assets Reorganization
+entered between the Company and GD
+Power and to authorize the committee
+of Directors comprising Chairman,
+President (Director) and Chairman of
+the Audit Committee, to handle various
+specific matters in connection with the
+transaction at its absolute discretion.
+The resolution passed
+at the general
+meetings has been
+implemented,
+and corporate
+governance has
+been carried out in
+accordance with the
+amended Articles of
+Association.
+The main duties of the Remuneration Committee are to make recommendations
+to the Board on formulation of the remuneration plan or proposal for Directors,
+supervisors, President and other senior management, including but not limited to the
+criteria, procedures and the major systems of performance assessment, key incentive
+and punishment plans and systems; to examine how Directors, supervisors, President
+and other senior management of the Company perform their duties and carry out
+annual performance assessment on them; to supervise the implementation of the
+remuneration system of the Company; to ensure that none of the Directors or any of
+their associates can determine their own remuneration; and to execute other matters
+as authorized by the Board.
+4.
+On 24 August 2018, the Company resolved to appoint Peng Suping as Vice Chairman of the
+Strategy Committee, Gao Song as member of the Strategy Committee under the Board, Huang
+Ming as member of the Nomination Committee, and Mi Shuhua as member of the Safety, Health
+and Environment Committee at the 12th meeting of the fourth session of the Board.
+On 27 April 2018, four Directors of the fourth session of the Board were elected at the 2018 first
+extraordinary general meeting of the Company, namely executive Directors Gao Song and Mi
+Shuhua, and independent non-executive Directors Peng Suping and Huang Ming.
+3.
+2.
+Notes: 1. On 15 May 2018, Han Jianguo resigned as Director of the Company and members of Strategy
+Committee and Nomination Committee.
+Zhao Jibin (Chairman), Li Dong, Mi Shuhua, Tam Wai Chu,
+Maria, Zhong Yingjie, Christina
+Jiang Bo (Chairwoman), Huang Ming, Zhao Jibin
+Tam Wai Chu, Maria (Chairwoman), Jiang Bo, Zhong Yingjie,
+Christina
+Zhong Yingjie, Christina (Chairwoman), Tam Wai Chu, Maria,
+Jiang Bo
+The duties and performance of duties of the committees
+Ling Wen (Chairman), Peng Suping (Vice Chairman), Gao
+Song, Zhao Jibin
+Nomination Committee
+Safety, Health and
+Remuneration Committee
+The fourth session of the Board committees
+Audit Committee
+Strategy Committee
+At the end of the reporting period, the Company has established five committees under the
+Board, and the details are as follows:
+Composition of the committees
+(II)
+(1)
+Environment Committee
+Remuneration Committee
+During the reporting period, each committee under the Board did not express any dissenting
+views in performing their duties. The performance of duties of each committee is set out as
+follows:
+Strategy Committee
+3.
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+China Shenhua Energy Company Limited
+162
+The Audit Committee discussed separately with the external auditors and no
+inconsistency was found in the briefings by the management.
+Deloitte completed all audit procedures within the agreed time and reported to
+the Audit Committee its intention to issue a standard unqualified audit report for
+2018. On 18 March 2019, the Audit Committee voted on and formed resolutions
+in respect of the audited annual financial and accounting statements, the
+assessment report on internal control and the social responsibility report for the
+year 2018 and agreed to submit such reports to the Board for consideration.
+After the issue of preliminary audit opinions by Deloitte, the Audit Committee
+reviewed the draft internal control assessment report and financial statements
+for 2018. On 13 March 2019, the Audit Committee reviewed the 2018
+Assessment Report on Internal Control (Draft) and 2018 Financial Statements
+(Draft) of China Shenhua prepared by the Company.
+Before the accounting firms for 2018, namely Deloitte Touche Tohmatsu
+Certified Public Accountants LLP and Deloitte Touche Tohmatsu ("Deloitte"),
+proceeded with on-site auditing, the Audit Committee had negotiation with
+Deloitte on the determination of the schedule of the Company's 2018 audit. On
+17 October 2018, the Audit Committee reviewed the Company's plans for the
+audit plan for the year 2018 and the internal control assessment plan for the
+year 2018.
+(3)
+1.
+(2)
+The Audit Committee has performed required procedures for the preparation of the
+2018 annual report and internal control report of the Company:
+In 2018, the Audit Committee held 11 meetings to consider proposals such as the
+financial reports and internal control reports of the Company, advising on utilizing idle
+funds to increase the investment gains of the Company, improving the utilization of
+capital and rectifying problems found in internal control assessment, all of which were
+approved at the meetings and all members attended all meetings in person.
+The main duties of the Audit Committee were to supervise and assess the work of
+the external audit institutions; to guide the internal audit work; to review and provide
+opinions on the financial reports of the Company; to evaluate the effectiveness of
+risk management and internal control; to coordinate communications between the
+management, internal audit department, relevant departments and the external
+audit institutions; other duties authorized by the Board and other issues related to
+the relevant laws and regulations. During the reporting period, the Audit Committee
+fulfilled its duties strictly in accordance with the Rules of Procedure of Meetings of
+the Audit Committee of the Board, Rules on Work of the Audit Committee of the
+Board and Rules on Work of Annual Reports of the Audit Committee of the Board of
+China Shenhua.
+Audit Committee
+In 2018, the Strategy Committee of the Board held two meetings to consider
+proposals such as the Asset Transfer Agreement entered into with Shenhua
+Shendong Power Co., Ltd., a wholly-owned subsidiary, establishment of a joint
+venture company, supplemental agreement to non-competition agreement and the
+special plan for the first batch of equity investment project in 2018, all of which were
+approved at the meetings and all members attended all meetings in person.
+2.
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+2018 Annual Report 161
+The principal duties of the Strategy Committee are to conduct researches and submit
+proposals regarding the long-term development strategies and material investment
+decisions of the Company; to conduct researches and submit proposals regarding
+material investments and financing plans which require approval of the Board; to
+conduct researches and submit proposals regarding material capital operations
+and assets operation projects which require approval from the Board; to conduct
+researches and submit proposals regarding other material matters that may affect the
+Company's development; to examine the implementation of the above matters; and
+to execute other matters as authorized by the Board.
+China Shenhua Energy Company Limited
+Status
+To approve the Supplemental Agreement
+to Non-Competition Agreement entered
+between China Shenhua and China
+Energy.
+To approve the amendments to the Articles
+of Association, and to authorize the
+Chairman to make amendments to the
+Articles of Association of the Company
+as he may consider necessary and
+appropriate as required by relevant
+regulatory authorities from time to time
+in the course of proposing for approval
+of/filing the Articles of Association with
+such regulatory authorities, and carry out
+or authorize to carry out relevant legal
+proceedings necessary for amendments
+to the Articles of Association.
+0
+No
+1/1
+Number of Board meetings held during the year
+Including: Number of meetings held on-site
+Number of meetings held by correspondence
+Number of meetings held on-site with correspondence
+1432
+2018 Annual Report 157
+158
+1
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+In 2018, the Board of the Company held a total of 9 meetings, at which all the proposals
+were considered and approved. Details of the meetings are as follows:
+No. Name
+Date
+Methods
+1
+The 8th meeting of the fourth session
+of the Board
+2 January 2018
+On-site with
+correspondence
+2
+(11)
+The 9th meeting of the fourth session
+of the Board
+0
+No
+0132
+2
+0
+0
+0
+0
+3
+0
+0
+1/1
+22222 ≥ ≥ ≥ ≥ 2
+1/2
+1/1
+0/1
+2/2
+222
+2/2
+1/1
+2/2
+2/2
+2/2
+1 March 2018
+On-site
+3
+The 16th meeting of the fourth session
+of the Board
+28 December 2018
+Correspondence
+Performance of duties of independent Directors
+During the reporting period, the fourth session of the Board of the Company had five
+Independent Non-Executive Directors, namely Tam Wai Chu, Maria, Peng Suping, Jiang Bo,
+Zhong Yingjie, Christina, Huang Ming, among whom Jiang Bo and Zhong Yingjie, Christina
+are accounting professionals.
+The Company has received written confirmation from each of the Independent
+Non-Executive Directors confirming their independence. The Company is of the view that all
+of the Independent Non-Executive Directors are independent. The number and background
+of the independent Directors are in compliance with the requirements of the listing rules of
+the places of listing.
+During the reporting period, the independent Directors of the Company strictly complied
+with the requirements of relevant laws and regulations, the Articles of Association of China
+Shenhua, relevant rules of procedure of meetings and the independent Directors system of
+China Shenhua. They maintained their independence as independent Directors, performed
+their functions of supervision, participated in the formation of various important decisions of
+the Company and reviewed regular reports and financial reports of the Company. Therefore,
+the independent Directors of the Company played an important role in the regulated
+operation of the Company and protected the legitimate interests of minority shareholders.
+The Company ensured that proper conditions are in place for independent Directors to
+perform their duties and proactively adopted opinions and suggestions from independent
+Directors. The Company formulated the independent Directors system to provide, in a
+systematic way, guarantee for the independent Directors to perform their duties, and
+designated departments to undertake work related to independent Directors' affairs and
+independent board committee, assisting the independent Directors in conducting research
+and investigation, convening meetings and expressing independent opinions, etc..
+China Shenhua Energy Company Limited
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+9
+According to the requirements of the CSRC, as the Independent Non-Executive Directors of
+China Shenhua, five Directors, namely Tam Wai Chu, Maria, Peng Suping, Jiang Bo, Zhong
+Yingjie, Christina and Huang Ming, issued independent opinions on the performance of
+duties of Li Dong and Wang Jinli as Senior Vice President of China Shenhua and the deputy
+General Manager of China Energy concurrently from March 2018 to October 2018, Wang
+Shumin as the vice president of China Shenhua and the General Manager of China Energy
+concurrently from March 2018 to October 2018, and Xu Mingjun as the vice president of
+China Shenhua and the General Manager Assistant of China Energy concurrently from
+November 2018 to December 2018 as follows: 1. Li Dong, Wang Jinli, Wang Shumin,
+Xu Mingjun was diligent and responsible to implement the development strategies and
+mission targets formulated by the Board; 2. fulfilled their commitments, handled properly
+the relationship between China Shenhua and its controlling shareholder, which safeguarded
+the interests of the Company and the shareholders as a whole, and did not prejudice the
+interests of China Shenhua and its minority shareholders due to his concurrent positions.
+Dissenting views of independent Directors on matters of the Company:
+Applicable
+(III) Others
+✓ Not applicable
+Implementation of resolutions passed at the general meetings by the Board in 2018:
+No. General Meeting
+1
+2018 First Extraordinary
+General Meeting
+Subject Matter
+For the attendance of independent Directors at Board meetings and general meetings,
+please refer to the sections on the attendance at Board meetings and general meetings of
+the Company.
+Correspondence
+29 November 2018
+The 15th meeting of the fourth session
+of the Board
+The 10th meeting of the fourth session
+of the Board
+23 March 2018
+On-site with
+correspondence
+4
+The 11th meeting of the fourth session
+of the Board
+27 April 2018
+On-site
+LO
+24 August 2018
+On-site
+5
+6
+The 12th meeting of the fourth session
+of the Board
+The 13th meeting of the fourth session
+of the Board
+13 September 2018 Correspondence
+7
+The 14th meeting of the fourth session
+of the Board
+30 October 2018
+On-site
+8
+0
+(1)
+14
+15
+III.
+PROTECT INVESTORS' LEGITIMATE RIGHTS AND INTERESTS IN COMPLIANCE
+WITH LAWS AND REGULATIONS
+In 2018, in accordance with the requirements of regulators and listing rules, the Company
+continued to promote investor protection work, in particular medium and small investors. Firstly,
+the Company actively implemented the appeals of investors. According to the recommendations
+of China Securities Investor Service Center, the contents the Company added in the Articles
+of Association including separate vote counting of minority shareholders, cumulative voting
+system, not imposing any minimum shareholding limitation for soliciting voting rights, and the
+Company shall attach attention to the opinions of minority shareholders, to further improve
+the investor protection work level of the Company, all of which were approved by a majority of
+votes at the general meeting. Secondly, the Company expanded channels and enhanced investor
+communications. The Company actively participated in the Listed Companies Reception Day
+activity in Beijing and increased the frequency of communications with investors. In investigation
+and survey on the reception site, the Company specially designated persons to answer investor
+hotline, to keep the hotline available and the daily average calls were over five. Thirdly, the
+Company improved information disclosure with 222 announcements disclosed throughout the
+year, which effectively guaranteed the investors' rights to information, thereby maintaining Grade
+A of the information disclosure evaluated by the SSE.
+PROVIDING VALID INFORMATION AND RESPONDING TO MARKET CONCERNS
+In 2018, under the circumstances of the ever-changing supply and demand situation of the
+domestic coal industry, the stable coal prices with a slight decline, further promotion of
+reorganization and integration by the controlling shareholders of the Company, China Shenhua
+focused on core concerns in capital market. Firstly, the Company was engaged in in-depth and
+direct communication with investors focusing on shareholders return, use of capital, project
+investment, sales model, progress of establishment of new joint ventures and so on, and
+secondly, the Company strengthened the analysis on the changes in policy and industry, focused
+on the explanation of understanding and judgement of the Company on the future coal and
+power industry to the capital markets. Through responding to hot topics of market concerns,
+the Company enables the capital market to better understand its operating conditions and
+development direction, so as to boost the confidence of capital markets in the Company's future
+prospect.
+SEIZING FAVORABLE OPPORTUNITIES TO ENHANCE INVESTOR RELATIONS
+II.
+In 2018, capital market maintained a high attention to leading enterprises in various industries.
+By utilizing this favourable timing, the Company actively strengthened investor relation work.
+The Company also continuously engaged in honest and sufficient communication with investors
+and analysts through results announcement conferences, trading roadshows, online forums and
+other means. We have communicated with over 800 analysts and fund manager. In particular:
+communications have been made with over 270 persons at roadshows and results announcement
+conference, over 140 persons at investment forums and over 390 persons during reverse
+roadshows, investor research and conference calls and the Company has also held three online
+forums.
+171
+Section XII Index to Information Disclosure
+Disclosure Document for A Shares
+No.
+(published on the website of the Shanghai Stock Exchange)
+Date of
+Publication
+2018 Annual Report
+I.
+In 2018, China Shenhua proactively optimised investor relations work to promote investor protection
+work and good results have been obtained.
+Section XI Investor Relations
+Section X Supervisory Committee's Report (Continued)
+III.
+INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON THE
+FINANCIAL POSITION OF THE COMPANY
+The Supervisory Committee is of the opinion that the financial statements of the Company give
+an objective, true and fair view of the financial position and the operating results of the Company
+in all material aspects and are true and reliable with its regulated financial audit and sound internal
+control system.
+IV. INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON THE MAJOR
+ACQUISITION AND DISPOSAL OF ASSETS OF THE COMPANY
+V.
+During the reporting period, there were no major acquisition and disposal of assets of the
+Company.
+INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON CONNECTED
+TRANSACTIONS OF THE COMPANY
+The Supervisory Committee is of the opinion that the connected transactions of the Company
+have been carried out in strict compliance with the principles of fairness, equality and openness
+under the statutory decision-making procedures, the connected transactions carried out are
+in accordance with the requirements of the listing rules, and the disclosure of information is
+standardized and transparent. The Supervisory Committee is not aware of any act prejudicial to
+the interest of the Company.
+VI. INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON THE
+SELF-ASSESSMENT REPORT ON INTERNAL CONTROL OF THE COMPANY
+The self-assessment report on internal control of the Company has truthfully reflected the
+establishment and implementation of the internal control of the Company and its internal control
+system is sound and effective.
+VII. INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON THE
+ESTABLISHMENT AND IMPLEMENTATION OF THE MEASURES ON INSIDER
+MANAGEMENT
+The insider information and insider registration and management system of the Company is
+sound and comprehensive, effective in its implementation and able to keep all insider information
+confidential.
+The Supervisory Committee of the Company will continue to perform its duties with due care to
+facilitate the standardized operation of the Company and to safeguard the lawful interests of the
+Company and its shareholders in strict compliance with the Company Law and the Articles of
+Association.
+China Shenhua Energy Company Limited
+1
+170
+2
+2018-01-03
+ANNOUNCEMENT OF CHINA SHENHUA ON THE MAJOR OPERATIONAL DATA OF
+DECEMBER 2017
+2018-01-23
+10
+ANNOUNCEMENT OF CHINA SHENHUA ON POSITIVE PROFIT ALERT FOR THE YEAR
+2018-01-30
+2017
+9
+11
+ANNOUNCEMENT OF CHINA SHENHUA ON FURTHER DEVELOPMENT OF PROPOSED
+IMPLEMENTATION OF JOINT RESTRUCTURING OF GROUP COMPANIES
+ANNOUNCEMENT OF CHINA SHENHUA ON THE MAJOR OPERATIONAL DATA OF
+JANUARY 2018
+2018-02-06
+2018-02-13
+13
+ASSET VALUATION REPORT OF CHINA SHENHUA ON THE TARGET OF JOINT
+ESTABLISHMENT OF JOINT VENTURE COMPANY WITH GD POWER DEVELOPMENT
+CO., LTD.
+2018-03-02
+12
+2018-01-17
+2018-01-13
+ANNOUNCEMENT OF CHINA SHENHUA ON RECEIPT OF THE QUALIFICATION OF
+NATIONAL MINE PARK FROM INNER MONGOLIA ZHUNGEER MINE PARK
+ANNOUNCEMENT OF CHINA SHENHUA ON 2017 UNAUDITED BALANCE SHEET AND
+PROFIT STATEMENTS OF SHENHUA FINANCE CO., LTD.
+2018-01-03
+3
+ANNOUNCEMENT OF CHINA SHENHUA ON 2018 ANNUAL BUSINESS PLAN FOR
+FINANCIAL DERIVATIVES
+2018-01-03
+4
+ANNOUNCEMENT OF CHINA SHENHUA ON AMENDMENTS TO THE ARTICLES OF
+ASSOCIATION
+2018-01-03
+LO
+5
+6
+ANNOUNCEMENT OF CHINA SHENHUA ON FURTHER DEVELOPMENT OF PROPOSED
+IMPLEMENTATION OF JOINT RESTRUCTURING OF GROUP COMPANIES
+ANNOUNCEMENT OF CHINA SHENHUA ON COMPLETION OF INDUSTRIAL AND
+COMMERCIAL REGISTRATION OF CHANGES
+2018-01-05
+2018-01-11
+7
+8
+ANNOUNCEMENT OF CHINA SHENHUA REGARDING RESOLUTIONS AT THE EIGHTH
+MEETING OF THE FOURTH SESSION OF THE BOARD
+ARTICLES OF ASSOCIATION OF CHINA SHENHUA
+2018 Annual Report 169
+The Supervisory Committee is of the opinion that the Board and the management of the Company
+I have acted in strict accordance with the Company Law, the Articles of Association and the
+relevant regulations of the jurisdiction where the Company is listed, performed their duties with
+integrity and diligence and conscientiously implemented the resolutions of, and exercised the
+power granted by the general meetings; and that the decisions and operations are in compliance
+with the laws and regulations and the Articles of Association. During the reporting period, the
+Supervisory Committee is not aware of any act committed by the Board and the management of
+the Company during their performance of duties which were in breach of laws, regulations and
+the Articles of Association or prejudicial to the interests of the Company.
+INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON THE LAWFUL
+OPERATION OF THE COMPANY
+Method of Attendance of
+Meeting
+Date
+Venue
+Meeting
+supervisors
+Section X Supervisory Committee's Report (Continued)
+Subject matter
+The 9th meeting of the fourth session 30 October
+Beijing
+On-site
+All
+Proposal of the 2018 Third
+Passed
+Poll results
+China Shenhua Energy Company Limited
+168
+Passed
+Passed
+unanimously
+Company
+Proposal of the 2018 First
+Passed
+Quarterly Financial Report of the
+unanimously
+Company
+The 8th meeting of the fourth session 24 August Beijing
+of the Supervisory Committee
+On-site All
+Proposal of the 2018 Interim
+Report of the Company
+Passed
+unanimously
+Proposal of the 2018 Interim
+Financial Report of the Company unanimously
+of the Supervisory Committee
+Quarterly Report of the
+unanimously
+Company
+China Shenhua Energy Company
+Limited
+Passed
+unanimously
+Passed
+unanimously
+The 11th meeting of the fourth
+session of the Supervisory
+Committee
+28 December Beijing In writing All
+Proposal of entering into the
+Passed
+Continuing Connected
+Transactions Framework
+unanimously
+Agreement between the China
+Railway and China Shenhua
+Energy Company Limited
+entered into between GD Power
+Development Co., Ltd. and
+ASSET AUDIT REPORT OF CHINA SHENHUA ON THE TARGET OF JOINT
+of Assets Reorganizations
+Association of the Joint Venture
+Proposal of the 2018 Third
+Passed
+Company
+The 10th meeting of the fourth
+session of the Supervisory
+Committee
+29 November Beijing
+In writing All
+Proposal of entering into the
+Quarterly Financial Report of the unanimously
+Supplemental Agreement to the
+Agreement on Establishment of
+the Joint Venture Company by
+way of Assets Reorganizations
+between GD Power
+Development Co., Ltd. and
+China Shenhua Energy Company
+Limited
+Proposal of the Articles of
+Company established by way
+2018-03-02
+ESTABLISHMENT OF JOINT VENTURE COMPANY WITH GD POWER DEVELOPMENT
+CO., LTD.
+ANNOUNCEMENT OF CHINA SHENHUA REGARDING RESOLUTIONS AT THE NINTH
+MEETING OF THE FOURTH SESSION OF THE BOARD
+ANNOUNCEMENT OF CHINA SHENHUA ON AMENDMENTS TO THE ARTICLES OF
+ASSOCIATION
+2018-04-28
+47
+48
+ANNOUNCEMENT OF CHINA SHENHUA REGARDING ONLINE FORUM FOR INVESTORS
+H SHARES CIRCULAR OF CHINA SHENHUA
+2018-05-04
+46
+2018-05-08
+50
+NOTICE OF CHINA SHENHUA ON CONVENING OF 2017 ANNUAL GENERAL MEETING
+ANNOUNCEMENT OF CHINA SHENHUA ON THE MAJOR OPERATIONAL DATA OF
+APRIL 2018
+2018-05-08
+2018-05-16
+51
+559
+49
+46
+2018-04-28
+2018-04-28
+2018-04-28
+41
+111
+ANNOUNCEMENT OF CHINA SHENHUA REGARDING RESOLUTIONS APPROVED AT
+2018-04-28
+2018 FIRST EXTRAORDINARY GENERAL MEETING
+42
+FIRST QUARTERLY REPORT OF CHINA SHENHUA FOR THE YEAR 2018
+2018-04-28
+43
+ANNOUNCEMENT OF CHINA SHENHUA REGARDING RESOLUTIONS AT THE 11TH
+MEETING OF THE FOURTH SESSION OF THE BOARD
+2018-04-28
+44
+45
+ARTICLES OF ASSOCIATION OF CHINA SHENHUA (FIRST AMENDMENT IN 2018)
+ANNOUNCEMENT OF CHINA SHENHUA ON THE PROVISION OF COUNTER GUARANTEE
+BY THE SUBSIDIARY CONTROLLED BY THE COMPANY
+གྷགུ
+52
+53
+54
+Section XII Index to Information Disclosure (Continued)
+Disclosure Document for A Shares
+No.
+(published on the website of the Shanghai Stock Exchange)
+Date of
+Publication
+60
+60
+ANNOUNCEMENT OF CHINA SHENHUA REGARDING THE COMPLETION OF THE 168-
+HOUR TRIAL OPERATION OF GENERATOR No. 2 OF THE NEWLY CONSTRUCTED
+PROJECT OF JIANGXI SHENHUA JIUJIANG POWER PLANT
+2018-06-28
+ཅ8
+61
+62
+80
+63
+64
+ANNOUNCEMENT OF CHINA SHENHUA ON THE DISTRIBUTION OF 2017 FINAL DIVIDEND 2018-06-30
+ANNOUNCEMENT OF CHINA SHENHUA REGARDING THE COMPLETION OF THE 168-
+HOUR TRIAL OPERATION OF GENERATOR No. 1 OF THE NEWLY CONSTRUCTED
+PROJECT OF JIANGXI SHENHUA JIUJIANG POWER PLANT
+ANNOUNCEMENT OF CHINA SHENHUA ON THE UNAUDITED BALANCE SHEET AND
+PROFIT STATEMENT OF SHENHUA FINANCE CO., LTD. FOR THE FIRST HALF OF 2018
+ANNOUNCEMENT OF CHINA SHENHUA ON THE MAJOR OPERATIONAL DATA OF JUNE
+173
+LEGAL OPINION OF CHINA SHENHUA ON 2018 FIRST EXTRAORDINARY GENERAL
+MEETING
+2018 Annual Report
+59 ARTICLES OF ASSOCIATION OF CHINA SHENHUA (SECOND AMENDMENT IN 2018)
+55
+56
+ANNOUNCEMENT OF CHINA SHENHUA ON THE PARTICIPATION IN GROUP RECEPTION
+DAY FOR INVESTORS OF LISTED COMPANIES IN BEIJING
+ANNOUNCEMENT OF CHINA SHENHUA ON RESIGNATION OF DIRECTORS
+ANNOUNCEMENT OF CHINA SHENHUA ON RESIGNATION OF SUPERVISORS
+INFORMATION ON 2017 ANNUAL GENERAL MEETING OF CHINA SHENHUA
+ANNOUNCEMENT OF CHINA SHENHUA ON RESIGNATION OF VICE PRESIDENT
+ANNOUNCEMENT OF CHINA SHENHUA ON THE MAJOR OPERATIONAL DATA OF MAY
+2018-05-16
+2018-05-16
+2018-05-23
+2018-06-01
+2018-06-01
+2018-06-15
+2018
+57
+58
+LEGAL OPINION OF CHINA SHENHUA ON THE 2017 ANNUAL GENERAL MEETING
+ANNOUNCEMENT OF CHINA SHENHUA ON RESOLUTIONS APPROVED AT THE 2017
+ANNUAL GENERAL MEETING
+2018-06-23
+2018-06-23
+2018-06-23
+Quarterly Report of the
+40
+2018-04-17
+2018-03-13
+24
+NOTICE OF CHINA SHENHUA ON CONVENING OF 2018 FIRST EXTRAORDINARY
+GENERAL MEETING
+2018-03-13
+25
+ANNOUNCEMENT OF CHINA SHENHUA ON THE MAJOR OPERATIONAL DATA OF
+H SHARES CIRCULAR OF CHINA SHENHUA
+2018-03-17
+26
+2017 ANNUAL REPORT OF CHINA SHENHUA
+2018-03-24
+172 China Shenhua Energy Company Limited
+Section XII Index to Information Disclosure (Continued)
+Disclosure Document for A Shares
+FEBRUARY 2018
+23
+2018-03-02
+22
+2018-03-02
+16
+17
+ANNOUNCEMENT OF CHINA SHENHUA REGARDING RESOLUTIONS AT THE FIFTH
+MEETING OF THE FOURTH SESSION OF THE SUPERVISORY COMMITTEE
+INDEPENDENT OPINIONS OF INDEPENDENT DIRECTORS OF CHINA SHENHUA ON
+RELEVANT RESOLUTIONS REGARDING THE NINTH MEETING OF THE FOURTH
+SESSION OF THE BOARD
+2018-03-02
+2018-03-02
+18
+19
+20
+STATEMENT OF CANDIDATES FOR INDEPENDENT DIRECTORS OF CHINA SHENHUA
+STATEMENT OF NOMINEES FOR INDEPENDENT DIRECTORS OF CHINA SHENHUA
+ANNOUNCEMENT OF CHINA SHENHUA ON FOREIGN INVESTMENT AND CONNECTED
+TRANSACTIONS
+2018-03-02
+2018-03-02
+2018-03-02
+21
+2018-03-02
+21 ANNOUNCEMENT OF CHINA SHENHUA ON ENTERING INTO THE SUPPLEMENTAL
+AGREEMENT TO THE EXISTING NON-COMPETITION AGREEMENT THAT WILL
+BECOME EFFECTIVE AFTER CONDITIONS ARE SATISFIED
+ANNOUNCEMENT OF CHINA SHENHUA ON DAILY RELATED TRANSACTIONS
+No.
+(published on the website of the Shanghai Stock Exchange)
+SUMMARY OF 2017 ANNUAL REPORT OF CHINA SHENHUA
+Date of
+Publication
+ANNOUNCEMENT OF CHINA SHENHUA REGARDING RESOLUTIONS AT THE SIXTH
+MEETING OF THE FOURTH SESSION OF THE SUPERVISORY COMMITTEE
+2017 PERFORMANCE REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF CHINA
+2018-03-24
+2018-03-24
+36
+37
+SHENHUA
+2017 WORK REPORT OF INDEPENDENT DIRECTORS OF CHINA SHENHUA
+SPECIAL STATEMENT AND INDEPENDENT OPINIONS OF INDEPENDENT NON-
+EXECUTIVE DIRECTORS OF CHINA SHENHUA ON EXTERNAL GUARANTEE OF THE
+COMPANY
+2018-03-24
+2018-03-24
+38
+38
+INFORMATION ON 2018 FIRST EXTRAORDINARY GENERAL MEETING OF CHINA
+SHENHUA
+2018-04-11
+39
+ANNOUNCEMENT OF CHINA SHENHUA ON THE MAJOR OPERATIONAL DATA OF
+MARCH 2018
+35
+40
+34
+2018-03-24
+27
+2018-03-24
+28
+29
+2017 EVALUATION REPORT OF INTERNAL CONTROL OF CHINA SHENHUA
+2017 CSR REPORT OF CHINA SHENHUA
+2018-03-24
+2018-03-24
+30
+31
+2017 FINANCIAL STATEMENTS AND AUDIT REPORT OF CHINA SHENHUA
+CHINA SHENHUA SPECIAL STATEMENT OF FUND UTILIZATION BY CONTROLLING
+SHAREHOLDERS AND OTHER RELATED PARITIES IN 2017
+2018-03-24
+2018-03-24
+32
+33
+2017 AUDIT REPORT OF INTERNAL CONTROL OF CHINA SHENHUA
+ANNOUNCEMENT OF CHINA SHENHUA REGARDING RESOLUTIONS AT THE TENTH
+MEETING OF THE FOURTH SESSION OF THE BOARD
+2018-03-24
+Proposal of the 2018 First
+II.
+On-site
+81
+80
+2018-10-24
+2018-10-20
+ANNOUNCEMENT OF CHINA SHENHUA ON CHANGE IN SENIOR MANAGEMENT
+INDICATIVE ANNOUNCEMENT OF CHINA SHENHUA ON TRANSFER OF STATE-OWNED
+SHARES FOR NIL CONSIDERATION
+79
+82
+78
+ANNOUNCEMENT OF CHINA SHENHUA ON THE MAJOR OPERATIONAL DATA OF
+SEPTEMBER 2018
+77
+2018-09-19
+2018-09-14
+ANNOUNCEMENT OF CHINA SHENHUA ON CHANGE IN SENIOR MANAGEMENT
+ANNOUNCEMENT OF CHINA SHENHUA ON THE MAJOR OPERATIONAL DATA OF
+AUGUST 2018
+76
+2018-10-17
+THIRD QUARTERLY REPORT OF CHINA SHENHUA FOR THE YEAR 2018
+ANNOUNCEMENT OF CHINA SHENHUA REGARDING ONLINE FORUM FOR INVESTORS
+ANNOUNCEMENT OF CHINA SHENHUA ON THE MAJOR OPERATIONAL DATA OF
+OCTOBER 2018
+2018-10-31
+2018-10-31
+China Shenhua Energy Company Limited
+174
+2018-11-30
+ANNOUNCEMENT OF CHINA SHENHUA ON FOREIGN INVESTMENT AND PROGRESS
+OF CONNECTED TRANSACTIONS
+86
+2018-11-30
+2018-11-30
+ANNOUNCEMENT OF CHINA SHENHUA REGARDING RESOLUTIONS AT THE TENTH
+MEETING OF THE FOURTH SESSION OF THE SUPERVISORY COMMITTEE
+INDEPENDENT OPINIONS OF INDEPENDENT NON-EXECUTIVE DIRECTORS OF CHINA
+SHENHUA ON RELEVANT RESOLUTIONS REGARDING THE 15TH MEETING OF THE
+FOURTH SESSION OF THE BOARD
+85
+86
+84
+2018-11-30
+ANNOUNCEMENT OF CHINA SHENHUA REGARDING RESOLUTIONS AT THE 15TH
+MEETING OF THE FOURTH SESSION OF THE BOARD
+83
+2018-11-17
+75
+2018-09-14
+ANNOUNCEMENT OF CHINA SHENHUA REGARDING RESOLUTIONS AT THE 13TH
+MEETING OF THE FOURTH SESSION OF THE BOARD
+74
+88
+2018-07-30
+2018-08-04
+2018-07-24
+2018
+ANNOUNCEMENT OF CHINA SHENHUA ON PROGRESS OF THE WATERMARK PROJECT
+ANNOUNCEMENT OF CHINA SHENHUA ON PROFIT ALERT FOR THE FIRST HALF OF
+ANNOUNCEMENT OF CHINA SHENHUA REGARDING THE COMPLETION OF THE 168-
+HOUR TRIAL OPERATION OF GENERATOR No. 1 OF THE NEWLY CONSTRUCTED
+PROJECT OF FUPING THERMAL POWER
+All
+67
+86
+66
+65
+69
+2018-07-18
+2018-07-14
+2018-07-12
+68
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+ANNOUNCEMENT OF CHINA SHENHUA ON THE MAJOR OPERATIONAL DATA OF JULY
+2018
+2018-09-04
+ANNOUNCEMENT OF CHINA SHENHUA REGARDING THE COMPLETION OF THE 168-
+HOUR TRIAL OPERATION OF GENERATOR No. 2 OF THE NEWLY CONSTRUCTED
+PROJECT OF FUPING THERMAL POWER
+73
+2018-08-29
+ANNOUNCEMENT OF CHINA SHENHUA ON THE PROPOSED IMPLEMENTATION OF
+JOINT RESTRUCTURING OF GROUP COMPANIES
+72
+2018-08-25
+ANNOUNCEMENT OF CHINA SHENHUA REGARDING RESOLUTIONS AT THE 12TH
+MEETING OF THE FOURTH SESSION OF THE BOARD
+71
+2018-08-25
+SUMMARY OF 2018 INTERIM REPORT OF CHINA SHENHUA
+70
+2018-08-25
+2018 INTERIM REPORT OF CHINA SHENHUA
+69
+2018-08-18
+VII. THE EXAMINATION AND EVALUATION AND THE INCENTIVE MECHANISM
+FOR THE SENIOR MANAGEMENT
+2018
+The remuneration of the management is determined in accordance with the Provisional Measures
+for the Administration of the Annual Remuneration of the Senior Management. In addition to
+the basic salary, the Board of the Company conducts appraisal based on the performance of the
+management, and a performance bonus is determined based on the results of such appraisal.
+The 6th meeting of the fourth session 23 March Beijing On-site
+of the Supervisory Committee
+Reorganization
+Passed
+unanimously
+Passed
+unanimously
+Poll results
+Establishment of Joint Venture
+Company by way of Assets
+of joint venture company and
+entering into the Agreement on
+Proposal of the establishment
+Proposal of entering into the
+Supplemental Agreement to
+the Existing Non-Competition
+Agreement with the China
+Energy Investment Corporation
+Limited that will become
+effective after conditions are
+satisfied
+On-site All
+Beijing
+The 5th meeting of the fourth session 1 March
+of the Supervisory Committee
+Subject matter
+supervisors
+Meeting
+Date
+Meeting
+Method of Attendance of
+In 2018, the Supervisory Committee of the Company held seven meetings in total.
+During the reporting period, in compliance with the requirements of the Articles of Association and
+the Rules of Procedures of Meetings of the Supervisory Committee, the Supervisory Committee
+of the Company conducted strict supervisions on the lawful operations, financial position and the
+performance of duties of the Board and the management of the Company.
+PERFORMANCE OF DUTIES OF THE SUPERVISORY COMMITTEE
+All
+Proposal of the 2017 Annual
+Passed
+Report of the Company
+The Company established the remuneration package of the senior management in accordance
+with the Provisional Measures for the Administration of the Annual Remuneration of the
+Senior Management of China Shenhua Energy Company Limited. The Company has adopted
+a performance appraisal system for senior management which combines annual appraisal of
+operational performance and appraisal of operational performance over the terms of office. Such
+annual appraisal and appraisal over the terms of office are conducted based on the letter of
+responsibility of operational performance signed by the Board and the management.
+The 7th meeting of the fourth session 27 April Beijing
+of the Supervisory Committee
+Company for the year 2017
+Committee's report of the
+Proposal of the Supervisory
+Company
+unanimously
+Report on Internal Control of the
+Passed
+Proposal of the 2017 Assessment
+I.
+unanimously
+Passed
+Proposal of the 2017 CSR Report
+distribution plan of the Company unanimously
+Passed
+Proposal of the 2017 profit
+unanimously
+Report of the Company
+Passed
+Proposal of the 2017 Financial
+unanimously
+of the Company
+The Supervisory Committee of the Company had, based on the attitude of being responsible to all
+shareholders, performed their supervisory duties faithfully and carried out their work proactively and
+effectively to protect the lawful interests of the Company and its shareholders in accordance with the
+relevant requirements under the Company Law of the People's Republic of China and the Articles of
+Association.
+Venue
+2018 Annual Report 167
+Section X Supervisory Committee's Report
+The Company has established a risk-oriented internal control system. The internal control and risk
+management procedures of the Company include risk assessment and reporting at the beginning
+of the year, quarterly major risk monitoring, daily system risk review and specialized supervision
+and inspection on internal control, and annual internal control evaluation, forming an integrated
+closed-loop management system. Also, a hierarchical work organizational structure comprising
+the Board and the Audit Committee, the functional departments of the headquarters and the
+subsidiaries and branches of the Company was established to safeguard the effective operation of
+internal control and risk management. The Board is responsible for risk management and internal
+monitoring and control systems, and is accountable for reviewing the effectiveness of such
+systems. The Board conducts review on risk management and internal monitoring and control
+systems once a year. The Board considers that the risk management and internal monitoring and
+control systems of the Group were effectively operated in 2018.
+It is the responsibility of the Board of the Company to establish a sound and effective internal
+control and evaluate its effectiveness, and make bona fide disclosure on the Self-assessment
+Report on Internal Control in accordance with the requirements under the Enterprise Internal
+Control Normative System. The Supervisory Committee is responsible for the supervision on the
+internal control system established and implemented by the Board, while the management level
+is responsible for the organization and guidance of the daily operation of internal control within the
+enterprise.
+The objectives of the internal control of the Company are to provide reasonable assurance on
+lawful operation and management, asset safety and the truthfulness and completeness of
+financial reports and relevant information, to enhance operation efficiency and effectiveness, and
+to facilitate the implementation of development strategies. As there are inherent limitations on
+internal control, assurance can only be provided for the above objectives to a certain reasonable
+extent. In addition, there are certain risks in predicting the effectiveness of future internal control
+based on the results of assessment on internal control given to the inappropriate internal control
+or the loosened level of compliance with policies and procedures on internal control that may be
+resulted by changes in different circumstances.
+2018 Annual Report 165
+166
+An internal control supervision and inspection mechanism was formed to conduct evaluation on
+internal control on annual basis. Procedures for internal control evaluation include: formulating
+a proposal for internal control evaluation, establishing a working committee of internal control
+inspection, conducting self-evaluation on internal control, conducting evaluation on internal
+control by inspectors, communicating and identifying deficiencies in internal control, rectifying
+deficiencies in internal control and preparing report on internal control. The Company has
+evaluated the effectiveness of internal control for 2018 in accordance with the aforementioned
+procedures.
+The 2018 Proposal for Internal Control Evaluation of the Company was considered and approved
+by the Audit Committee under the Board, and the 2018 Annual Report on Internal Control
+Evaluation was considered and approved by the Board. The Board and the Audit Committee of the
+Company are of the view that such inspection and supervision mechanism is able to evaluate the
+effectiveness of internal control and risk management operation of the Company.
+According to the evaluation, during the reporting period, all businesses and matters involving
+major risks have been included in the scope of evaluation, and internal control system has
+been established for and effectively implemented on major businesses and matters, which
+accomplished the objectives of internal control of the Company.
+As presented in the 2018 Annual Self-assessment Report on Internal Control of the Board, no
+material defects were found in the internal control of financial reporting as at the base date of the
+Assessment Report on Internal Control, pursuant to the identification of material defects the
+internal control over the financial reporting of the Company. The Board is of the opinion that the
+Company has maintained effective internal control over its financial reporting in all material aspects
+in accordance with the requirements under the Enterprise Internal Control Normative System and
+relevant regulations and its supplementary guidelines as well as other regulatory requirements
+on internal control. Based on the identification of material defects in the internal control over
+non-financial reporting of the Company, no material defects were identified by the Company in
+the internal control over non-financial reporting as at the base date of the Assessment Report on
+Internal Control. Nothing that would affect the evaluation result of the effectiveness of internal
+control occurred from the base date of the Assessment Report on Internal Control to the date of
+issuance of the Assessment Report on Internal Control.
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+Material defects in the internal control during the reporting period:
+Please refer to the relevant announcement disclosed by the Company on the website of the
+Shanghai Stock Exchange on 23 March 2019 for the 2018 Assessment Report on Internal Control
+and Audit Report on Internal Control.
+Regarding the treatment and publishing of inside information, the Company has formulated
+internal systems such as the Administrative Measures for the Insider Information and Insider
+Registration and the Administrative Measures for Information Disclosure of Internal Report for
+Material Matters, which stipulated, among others, the scope of insider information and insiders,
+reporting process, registration and filing, and prohibited behaviors. The scope of insiders is under
+strict control so as to eliminate the risk of insider information leakage.
+Deloitte Touche Tohmatsu Certified Public Accountants LLP, engaged by the Company, has issued
+the standard unqualified Audit Report on Internal Control. The Audit Report on Internal Control
+is of the opinion that as at 31 December 2018, China Shenhua had maintained effective internal
+control over its financial reporting in all material aspects in accordance with the Basic Standard
+for Enterprise Internal Control and the relevant requirements. The above audit opinions are in line
+with the opinions set out in the Self-assessment Report of the Board.
+DESCRIPTION OF THE AUDIT REPORT ON INTERNAL CONTROL
+IX.
+VIII. INTERNAL CONTROL AND RISK MANAGEMENT
+China Shenhua Energy Company Limited
+Applicable ✓ Not applicable
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+2018-03-23
+Equity holders of the Company
+Total comprehensive income for the year
+57,138
+54,164
+9,343
+46
+2018-03-25
+attributable to:
+42
+45
+44
+2018-03-23
+OVERSEAS REGULATORY ANNOUNCEMENT
+43
+2018-03-23
+OVERSEAS REGULATORY ANNOUNCEMENT
+Non-controlling interests
+2018-03-23
+ANNOUNCEMENT OF ANNUAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2017
+2017 ANNUAL REPORT
+44,262
+China Shenhua Energy Company Limited
+10,071
+OVERSEAS REGULATORY ANNOUNCEMENT
+47
+MONTHLY RETURN OF EQUITY ISSUER ON MOVEMENTS IN SECURITIES FOR THE
+MONTH ENDED 31 MARCH 2018
+2018-04-03
+48
+2018-03-25
+OVERSEAS REGULATORY ANNOUNCEMENT
+2018-04-10
+49
+47,637
+NOTIFICATION LETTER AND REQUEST FORM TO REGISTERED SHAREHOLDER
+50
+2017 CSR REPORT
+2.403
+2.219
+16
+Earnings per share (RMB)
+- Basic
+56,940
+54,333
+9,303
+2018-04-13
+41
+Hong Kong
+40 OVERSEAS REGULATORY ANNOUNCEMENT
+AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED
+FINANCIAL STATEMENTS (CONTINUED)
+Section XIII Independent Auditor's Report and Financial Statements (Continued)
+2018 Annual Report 181
+Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
+estimates and related disclosures made by the directors.
+Obtain an understanding of internal control relevant to the audit in order to design audit
+procedures that are appropriate in the circumstances, but not for the purpose of expressing an
+opinion on the effectiveness of the Group's internal control.
+Identify and assess the risks of material misstatement of the consolidated financial statements,
+whether due to fraud or error, design and perform audit procedures responsive to those risks, and
+obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk
+of not detecting a material misstatement resulting from fraud is higher than for one resulting from
+error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
+override of internal control.
+As part of an audit in accordance with HKSAs, we exercise professional judgment and maintain
+professional skepticism throughout the audit. We also:
+Our objectives are to obtain reasonable assurance about whether the consolidated financial statements
+as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's
+report that includes our opinion solely to you, as a body, in accordance with our agreed terms of
+engagement, and for no other purpose. We do not assume responsibility towards or accept liability to
+any other person for the contents of this report. Reasonable assurance is a high level of assurance,
+but is not a guarantee that an audit conducted in accordance with HKSAs will always detect a material
+misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
+individually or in the aggregate, they could reasonably be expected to influence the economic decisions
+of users taken on the basis of these consolidated financial statements.
+Those charged with governance are responsible for overseeing the Group's financial reporting process.
+AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED
+FINANCIAL STATEMENTS
+Conclude on the appropriateness of the directors' use of the going concern basis of accounting
+and, based on the audit evidence obtained, whether a material uncertainty exists related to events
+or conditions that may cast significant doubt on the Group's ability to continue as a going concern.
+If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's
+report to the related disclosures in the consolidated financial statements or, if such disclosures
+are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained
+up to the date of our auditor's report. However, future events or conditions may cause the Group
+to cease to continue as a going concern.
+In preparing the consolidated financial statements, the directors are responsible for assessing the
+Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern
+and using the going concern basis of accounting unless the directors either intend to liquidate the Group
+or to cease operations, or have no realistic alternative but to do so.
+RESPONSIBILITIES OF DIRECTORS AND THOSE CHARGED WITH GOVERNANCE
+FOR THE CONSOLIDATED FINANCIAL STATEMENTS
+Section XIII Independent Auditor's Report and Financial Statements (Continued)
+China Shenhua Energy Company Limited
+In connection with our audit of the consolidated financial statements, our responsibility is to read the
+other information and, in doing so, consider whether the other information is materially inconsistent with
+the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to
+be materially misstated. If, based on the work we have performed, we conclude that there is a material
+misstatement of this other information, we are required to report that fact. We have nothing to report in
+this regard.
+Our opinion on the consolidated financial statements does not cover the other information and we do
+not express any form of assurance conclusion thereon.
+The directors of the Company are responsible for the other information. The other information comprises
+the information included in the annual report, but does not include the consolidated financial statements
+and our auditor's report thereon.
+OTHER INFORMATION
+reconciling input data to supporting
+evidence, such as approved budgets and
+considering the reasonableness of these
+budgets.
+evaluating the historical accuracy of the
+forecasted future cash flows by comparing
+them to the actual results in the current year
+on a sampled basis and understanding the
+causes of any significant variances; and
+The directors of the Company are responsible for the preparation of the consolidated financial
+statements that give a true and fair view in accordance with IFRSS issued by the IASB and the disclosure
+requirements of the Hong Kong Companies Ordinance, and for such internal control as the directors
+determine is necessary to enable the preparation of consolidated financial statements that are free from
+material misstatement, whether due to fraud or error.
+Evaluate the overall presentation, structure and content of the consolidated financial statements,
+including the disclosures, and whether the consolidated financial statements represent the
+underlying transactions and events in a manner that achieves fair presentation.
+Obtain sufficient appropriate audit evidence regarding the financial information of the entities
+or business activities within the Group to express an opinion on the consolidated financial
+statements. We are responsible for the direction, supervision and performance of the group audit.
+We remain solely responsible for our audit opinion.
+We communicate with those charged with governance regarding, among other matters, the planned
+scope and timing of the audit and significant audit findings, including any significant deficiencies in
+internal control that we identify during our audit.
+2018-03-16
+ANNOUNCEMENT ON THE MAJOR OPERATIONAL DATA OF FEBRUARY 2018
+39
+2018-03-12
+OVERSEAS REGULATORY ANNOUNCEMENT
+38
+2018-03-12
+2018-03-12
+2018
+Year ended 31 December
+For the year ended 31 December 2018
+Consolidated Statement of Profit or Loss and Other Comprehensive Income
+China Shenhua Energy Company Limited
+182
+22 March 2019
+10,027
+Certified Public Accountants
+Deloitte Touche Tohmatsu
+The engagement partner on the audit resulting in the independent auditor's report is Yam Siu Man.
+From the matters communicated with those charged with governance, we determine those matters
+that were of most significance in the audit of the consolidated financial statements of the current period
+and are therefore the key audit matters. We describe these matters in our auditor's report unless law or
+regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
+determine that a matter should not be communicated in our report because the adverse consequences
+of doing so would reasonably be expected to outweigh the public interest benefits of such
+communication.
+We also provide those charged with governance with a statement that we have complied with relevant
+ethical requirements regarding independence, and to communicate with them all relationships and other
+matters that may reasonably be thought to bear on our independence, and where applicable, related
+safeguards.
+2018-03-23
+47,795
+54,164
+Equity holders of the Company
+Non-controlling interests
+282
+12
+(2,844)
+RMB million
+NOTES
+evaluating the sensitivity analysis performed
+by management;
+(1,880)
+744
+894
+12
+Other expenses
+(1,262)
+Interest income
+Finance costs
+66
+1,479
+(5,421)
+448
+1,205
+(4,416)
+534
+Share of results of associates
+(152)
+(3,504)
+Profit before income tax
+Impairment losses, net of reversal
+Other gains and losses
+2017
+RMB million
+Revenue
+Goods and services
+Cost of sales
+57
+264,101
+(173,677)
+248,746
+(160,460)
+Other income
+Gross profit
+88,286
+Selling expenses
+General and administrative expenses
+(725)
+(9,854)
+(612)
+(9,115)
+Research and development costs
+(454)
+(341)
+90,424
+51
+Income tax expense
+Other comprehensive (expense) income for the year
+Items that will not be reclassified to profit or loss, net
+Fair value gain on available-for-sale financial assets
+4
+Other comprehensive income (expense) for the
+year, net of income tax
+Total comprehensive income for the year
+133
+(209)
+169
+(198)
+54,333
+(3)
+56,940
+184
+Consolidated Statement of Profit or Loss and Other Comprehensive Income (Continued)
+For the year ended 31 December 2018
+Profit for the year attributable to:
+Year ended 31 December
+2018
+2017
+NOTES
+RMB million
+RMB million
+2018 Annual Report 183
+Profit for the year
+13
+(210)
+of income tax:
+Remeasurement of defined benefit obligations
+Fair value gain on investments in equity
+instruments at fair value through other
+comprehensive income
+70,141
+73,293
+10
+(15,977)
+Share of other comprehensive income (expense) of
+associates
+(16,155)
+57,138
+(30)
+11
+66
+36
+11
+Items that may be reclassified subsequently to profit or
+loss, net of income tax:
+Exchange differences
+120
+12
+analysing and reviewing the specific discount
+rates used by management in impairment
+tests;
+44,137
+assessing the valuation methodology;
+83
+2018-06-29
+2018-06-27
+2018-06-22
+81 OVERSEAS REGULATORY ANNOUNCEMENT
+82 OVERSEAS REGULATORY ANNOUNCEMENT
+80 OVERSEAS REGULATORY ANNOUNCEMENT
+2018-06-22
+ARTICLES OF ASSOCIATION OF CHINA SHENHUA
+79
+2018-06-22
+VOTING RESULTS OF 2017 ANNUAL GENERAL MEETING
+78
+2018-06-14
+ANNOUNCEMENT ON THE MAJOR OPERATIONAL DATA OF MAY 2018
+77
+2018-05-31
+MONTHLY RETURN OF EQUITY ISSUER ON MOVEMENTS IN SECURITIES FOR THE
+MONTH ENDED 31 MAY 2018
+76
+2018-05-31
+RESIGNATION OF A VICE PRESIDENT
+75
+2018-05-31
+OVERSEAS REGULATORY ANNOUNCEMENT
+74
+2018-05-22
+RESIGNATION OF A SUPERVISOR
+73
+2018-05-15
+OVERSEAS REGULATORY ANNOUNCEMENT
+MONTHLY RETURN OF EQUITY ISSUER ON MOVEMENTS IN SECURITIES FOR THE
+MONTH ENDED 30 JUNE 2018
+72
+2018-07-04
+84
+2018-08-17
+ANNOUNCEMENT ON THE MAJOR OPERATIONAL DATA OF JULY 2018
+93
+2018-08-08
+NOTICE OF BOARD MEETING
+92
+2018-08-03
+OVERSEAS REGULATORY ANNOUNCEMENT
+2018-08-03
+ANNOUNCEMENT ON PROFIT ALERT FOR THE FIRST HALF OF 2018
+90
+91
+2018-08-02
+MONTHLY RETURN OF EQUITY ISSUER ON MOVEMENTS IN SECURITIES FOR THE
+MONTH ENDED 31 JULY 2018
+89
+WATERMARK PROJECT
+2018-07-29
+VOLUNTARY ANNOUNCEMENT-ANNOUNCEMENT ON PROGRESS OF THE
+88
+2018-07-23
+OVERSEAS REGULATORY ANNOUNCEMENT
+87
+2018-07-17
+OVERSEAS REGULATORY ANNOUNCEMENT
+86
+2018-07-13
+OVERSEAS REGULATORY ANNOUNCEMENT
+85
+2018-07-11
+OVERSEAS REGULATORY ANNOUNCEMENT
+80 00 00 00 00
+94 OVERSEAS REGULATORY ANNOUNCEMENT
+2018-05-15
+71
+222222
+MONTH ENDED 30 APRIL 2018
+2018-05-02
+MONTHLY RETURN OF EQUITY ISSUER ON MOVEMENTS IN SECURITIES FOR THE
+60
+2018-04-27
+FIRST QUARTERLY REPORT FOR THE YEAR 2018
+59
+2018-04-27
+POSITIONS HELD BY CURRENT DIRECTORS AT THE BOARD AND THE BOARD
+COMMITTEES
+58
+2018-04-27
+AMENDMENTS TO THE ARTICLES OF ASSOCIATION
+57
+2018-04-27
+2018-04-27
+VOTING RESULTS OF 2018 FIRST EXTRAORDINARY GENERAL MEETING
+ARTICLES OF ASSOCIATION OF CHINA SHENHUA
+56
+55
+2018-04-27
+OVERSEAS REGULATORY ANNOUNCEMENT
+54
+2018-04-27
+OVERSEAS REGULATORY ANNOUNCEMENT
+53
+2018-04-16
+ANNOUNCEMENT ON THE MAJOR OPERATIONAL DATA OF MARCH 2018
+52
+2018-04-16
+61
+ANNOUNCEMENT ON THE MAJOR OPERATIONAL DATA OF APRIL 2018
+OVERSEAS REGULATORY ANNOUNCEMENT
+62
+2018-05-15
+POSITIONS HELD BY CURRENT DIRECTORS AT THE BOARD AND THE BOARD
+COMMITTEES
+70
+2018-05-07
+2018-05-07
+2018-05-15
+NOTIFICATION LETTER AND REQUEST FORM TO NON REGISTERED HOLDER
+RESIGNATION OF AN EXECUTIVE DIRECTOR
+69
+OVERSEAS REGULATORY ANNOUNCEMENT
+68
+67
+Date of
+publication
+(published on the website of Hong Kong Stock Exchange)
+No.
+Disclosure document for H Shares
+Section XII Index to Information Disclosure (Continued)
+176 China Shenhua Energy Company Limited
+2018-05-07
+NOTIFICATION LETTER AND REQUEST FORM TO REGISTERED SHAREHOLDER
+66
+2018-05-07
+65 REPLY SLIP - ANNUAL GENERAL MEETING
+2018-05-07
+FORM OF PROXY FOR ANNUAL GENERAL MEETING
+64
+2018-05-07
+AMENDMENTS TO THE ARTICLES OF ASSOCIATION
+63
+2018-05-07
+NOTICE OF ANNUAL GENERAL MEETING
+2018-05-03
+analysing and challenging the
+reasonableness of significant judgements
+and estimates built in the underlying cash
+flows used in management's impairment
+tests based on our knowledge of the
+business and industry;
+2018-08-24
+2018-08-24
+ANNOUNCEMENT ON THE MAJOR OPERATIONAL DATA OF NOVEMBER 2018
+OVERSEAS REGULATORY ANNOUNCEMENT
+128
+127
+2018-12-14
+CHANGE OF SENIOR MANAGEMENT
+2018-03-12
+126
+2018-11-30
+125 MONTHLY RETURN OF EQUITY ISSUER ON MOVEMENTS IN SECURITIES FOR THE
+MONTH ENDED 30 NOVEMBER 2018
+2018-11-30
+2018-11-29
+2018-11-29
+122 OVERSEAS REGULATORY ANNOUNCEMENT
+123 OVERSEAS REGULATORY ANNOUNCEMENT
+124 OVERSEAS REGULATORY ANNOUNCEMENT
+2018-11-29
+FURTHER DEVELOPMENT OF THE ESTABLISHMENT OF JOINT VENTURE COMPANY
+CHANGE IN SENIOR MANAGEMENT
+121
+2018-11-29
+2018-11-16
+ANNOUNCEMENT ON THE MAJOR OPERATIONAL DATA OF OCTOBER 2018
+DISCLOSEABLE TRANSACTION; CONNECTED TRANSACTION- ANNOUNCEMENT ON
+120
+119
+2018-10-31
+MONTHLY RETURN OF EQUITY ISSUER ON MOVEMENTS IN SECURITIES FOR THE
+MONTH ENDED 31 OCTOBER 2018
+118
+2018-10-30
+OVERSEAS REGULATORY ANNOUNCEMENT
+117
+2018-10-30
+OVERSEAS REGULATORY ANNOUNCEMENT
+2018-12-17
+116
+2018-12-28
+CHANGE IN SENIOR MANAGEMENT
+testing the key controls related to the
+assessment on the carrying value of its non-
+current assets;
+•
+Our procedures in relation to impairment
+assessment on coal mines related non-current
+assets included:
+As set out in Note 17 to the consolidated financial
+statements, the management concluded that
+the recoverable amount of each separate cash-
+generating unit was higher than their carrying value
+and no impairment provision was required for the
+current year. The recoverable amounts of each
+cash-generating unit were determined by value in
+use method.
+Owing to the unsatisfactory financial performance of
+certain Group's mines, the management identified
+certain non-current assets relating to coal mines
+having impairment indications. The impairment
+assessment involves management's judgment in
+certain areas including the discount rate and the
+underlying cash flows projection based on the
+future market supply and demand conditions. Any
+changes in management's judgement may result in
+significant financial impact to the Group.
+We identified non-current assets impairment
+assessment on coal mines related non-current
+assets as a key audit matter due to significant
+judgment made by management in determining the
+recoverable amounts of the corresponding cash-
+generating units.
+Impairment assessment on coal mines related non-current assets
+How our audit addressed the key audit matter
+Key audit matter
+KEY AUDIT MATTERS (CONTINUED)
+Section XIII Independent Auditor's Report and Financial Statements (Continued)
+180
+2018 Annual Report 179
+Key audit matters are those matters that, in our professional judgment, were of most significance in our
+audit of the consolidated financial statements of the current period. These matters were addressed in
+the context of our audit of the consolidated financial statements as a whole, and in forming our opinion
+thereon, and we do not provide a separate opinion on these matters.
+KEY AUDIT MATTERS
+We conducted our audit in accordance with Hong Kong Standards on Auditing ("HKSAS") issued by the
+Hong Kong Institute of Certified Public Accounts ("HKICPA"). Our responsibilities under those standards
+are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial
+Statements section of our report. We are independent of the Group in accordance with the HKICPA's
+Code of Ethics for Professional Accountants (the "Code"), and we have fulfilled our other ethical
+responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is
+sufficient and appropriate to provide a basis for our opinion.
+BASIS FOR OPINION
+In our opinion, the consolidated financial statements give a true and fair view of the consolidated
+financial position of the Group as at 31 December 2018, and of its consolidated financial performance
+and its consolidated cash flows for the year then ended in accordance with International Financial
+Reporting Standards ("IFRSS") issued by the International Accounting Standard Board ("IASB") and have
+been properly prepared in compliance with the disclosure requirements of the Hong Kong Companies
+Ordinance.
+We have audited the consolidated financial statements of China Shenhua Energy Company Limited
+(the "Company") and its subsidiaries (collectively referred to as the "Group") set out on pages 183 to
+297, which comprise the consolidated statement of financial position as at 31 December 2018, and the
+consolidated statement of profit or loss and other comprehensive income, consolidated statement of
+changes in equity and consolidated statement of cash flows for the year then ended, and notes to the
+consolidated financial statements, including a summary of significant accounting policies.
+OPINION
+TO THE SHAREHOLDERS OF CHINA SHENHUA ENERGY COMPANY LIMITED
+(incorporated in the People's Republic of China with limited liability)
+德勤
+Deloitte.
+Section XIII Independent Auditor's Report and Financial Statements
+China Shenhua Energy Company Limited
+2018-12-28
+CONTINUING CONNECTED TRANSACTIONS-ENTERING INTO CONTINUING CONNECTED
+TRANSACTIONS FRAMEWORK AGREEMENT
+130
+2018-12-28
+129
+2018-08-24
+2018-10-30
+115
+106
+105
+2018-09-07
+NOTIFICATION LETTER AND REQUEST FORM TO NON REGISTERED HOLDER
+104
+2018-09-03
+OVERSEAS REGULATORY ANNOUNCEMENT
+103
+2018-08-31
+2018-08-28
+INSIDE INFORMATION ANNOUNCEMENT - FURTHER DEVELOPMENT OF PROPOSED
+IMPLEMENTATION OF JOINT RESTRUCTURING OF GROUP COMPANIES
+MONTHLY RETURN OF EQUITY ISSUER ON MOVEMENTS IN SECURITIES FOR THE
+MONTH ENDED 31 AUGUST 2018
+102
+101
+2018-08-26
+2018-08-24
+ANNOUNCEMENT OF INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2018
+2018 INTERIM REPORT
+100
+99
+2018-08-24
+CHANGE IN SENIOR MANAGEMENT
+98
+COMMITTEES
+POSITIONS HELD BY CURRENT DIRECTORS AT THE BOARD AND THE BOARD
+97
+APPOINTMENT OF BOARD COMMITTEE MEMBERS
+96
+OVERSEAS REGULATORY ANNOUNCEMENT
+95
+2018-08-24
+NOTIFICATION LETTER AND REQUEST FORM TO REGISTERED SHAREHOLDER
+OVERSEAS REGULATORY ANNOUNCEMENT
+THIRD QUARTERLY REPORT FOR THE YEAR 2018
+2018-09-07
+107
+2018-10-23
+TRANSFER OF A SHARES BY THE CONTROLLING SHAREHOLDER FOR NIL
+CONSIDERATION
+114
+2018-10-19
+CHANGE OF SENIOR MANAGEMENT
+113
+2018-10-16
+2018-10-16
+ANNOUNCEMENT ON THE MAJOR OPERATIONAL DATA OF SEPTEMBER 2018
+NOTICE OF BOARD MEETING
+112
+111
+2018-10-02
+110 MONTHLY RETURN OF EQUITY ISSUER ON MOVEMENTS IN SECURITIES FOR THE
+MONTH ENDED 30 SEPTEMBER 2018
+Date of
+publication
+(published on the website of Hong Kong Stock Exchange)
+No.
+Disclosure document for H Shares
+Section XII Index to Information Disclosure (Continued)
+178
+177
+2018 Annual Report
+2018-09-18
+ANNOUNCEMENT ON THE MAJOR OPERATIONAL DATA OF AUGUST 2018
+109
+2018-09-13
+APPOINTMENT OF NEW PRESIDENT
+108
+2018-09-13
+CHANGE OF SENIOR MANAGEMENT
+2018-09-13
+NOTIFICATION LETTER AND REQUEST FORM TO REGISTERED SHAREHOLDER
+NOTIFICATION LETTER AND REQUEST FORM TO NON REGISTERED HOLDER
+NOTICE OF BOARD MEETING
+NOTIFICATION LETTER AND REQUEST FORM TO NON REGISTERED HOLDER
+NOTICE OF BOARD MEETING
+36
+2018-01-02
+APPOINTMENT OF NEW CHAIRMAN AND RE-DESIGNATION OF DIRECTOR AND
+CHANGE OF PRESIDENT
+2018-01-02
+5
+POSITIONS HELD BY CURRENT DIRECTORS AT THE BOARD AND THE BOARD
+COMMITTEES
+2018-01-02
+6
+AMENDMENTS TO THE ARTICLES OF ASSOCIATION
+2018-01-02
+7
+OVERSEAS REGULATORY ANNOUNCEMENT
+2018-01-02
+8
+FURTHER DEVELOPMENT OF PROPOSED IMPLEMENTATION OF JOINT
+2018-01-04
+RESTRUCTURING OF GROUP COMPANIES
+9
+COMPLETION OF INDUSTRIAL AND COMMERCIAL REGISTRATION OF CHANGES
+2018-01-10
+10
+OVERSEAS REGULATORY ANNOUNCEMENT
+2018-01-12
+11
+OVERSEAS REGULATORY ANNOUNCEMENT
+2018-01-16
+12
+ANNOUNCEMENT ON THE MAJOR OPERATIONAL DATA OF DECEMBER 2017
+2018-01-22
+13
+2018 ANNUAL BUSINESS PLAN FOR FINANCIAL DERIVATIVES
+ANNOUNCEMENT ON POSITIVE PROFIT ALERT FOR 2017
+2018-01-02
+LO
+37
+No.
+2018-04-13
+ANNOUNCEMENT OF CHINA SHENHUA ON CHANGE IN SENIOR MANAGEMENT
+ANNOUNCEMENT OF CHINA SHENHUA ON THE MAJOR OPERATIONAL DATA OF
+NOVEMBER 2018
+89
+88
+2018-12-01
+Date of
+Publication
+ANNOUNCEMENT OF CHINA SHENHUA REGARDING THE COMPLETION OF THE 168-
+HOUR TRIAL OPERATION OF GENERATOR No. 1 OF SHENWAN LUJIANG POWER
+PLANT
+(published on the website of the Shanghai Stock Exchange)
+Disclosure Document for A Shares
+Section XII Index to Information Disclosure (Continued)
+80
+87
+2018-12-15
+2018-12-18
+90
+ANNOUNCEMENT OF CHINA SHENHUA REGARDING RESOLUTIONS AT THE 16TH
+MEETING OF THE FOURTH SESSION OF THE BOARD
+2018-12-29
+91
+92
+ANNOUNCEMENT OF CHINA SHENHUA REGARDING RESOLUTIONS AT THE 11TH
+MEETING OF THE FOURTH SESSION OF THE SUPERVISORY COMMITTEE
+ANNOUNCEMENT OF CHINA SHENHUA ON CONTINUING CONNECTED TRANSACTION
+2018-12-29
+2018-12-29
+Disclosure document for H Shares
+No. (published on the website of Hong Kong Stock Exchange)
+1
+MONTHLY RETURN OF EQUITY ISSUER ON MOVEMENTS IN SECURITIES FOR THE
+MONTH ENDED 31 DECEMBER 2017
+2018-01-02
+234
+OVERSEAS REGULATORY ANNOUNCEMENT
+2018-01-29
+Date of
+publication
+OVERSEAS REGULATORY ANNOUNCEMENT
+2018-03-01
+2018-03-01
+2018 Annual Report 175
+Section XII Index to Information Disclosure (Continued)
+Disclosure document for H Shares
+No.
+(published on the website of Hong Kong Stock Exchange)
+27
+28
+DISCLOSEABLE TRANSACTION; CONNECTED TRANSACTION – ENTERING INTO JOINT
+VENTURE AGREEMENT
+CONNECTED TRANSACTION - AMENDMENTS TO THE EXISTING NON-COMPETITION
+AGREEMENT
+29 CONTINUING CONNECTED TRANSACTIONS - REVISION OF ANNUAL CAPS OF THE
+CONTINUING CONNECTED TRANSACTIONS
+23
+30 PROPOSED APPOINTMENTS OF DIRECTORS
+DISCLOSEABLE TRANSACTION; CONNECTED TRANSACTION; CONTINUING
+CONNECTED TRANSACTION - ENTERING INTO JOINT VENTURE AGREEMENT;
+REVISION OF ANNUAL CAPS OF CONTINUING CONNECTED TRANSACTIONS;
+AMENDMENTS TO THE EXISTING NON-COMPETITION AGREEMENT; PROPOSED
+APPOINTMENTS OF DIRECTORS; AND AMENDMENTS TO THE ARTICLES OF
+ASSOCIATION
+Date of
+publication
+2018-03-01
+2018-03-01
+2018-03-01
+2018-03-01
+2018-03-12
+32
+33
+NOTICE OF EXTRAORDINARY GENERAL MEETING
+FORM OF PROXY FOR EXTRAORDINARY GENERAL MEETING
+2018-03-12
+2018-03-12
+34
+14
+35
+REPLY SLIP - EXTRAORDINARY GENERAL MEETING
+2018-03-12
+2018-03-01
+OVERSEAS REGULATORY ANNOUNCEMENT
+31
+OVERSEAS REGULATORY ANNOUNCEMENT
+15
+2018-01-29
+2018-01-31
+26
+16
+FURTHER DEVELOPMENT OF PROPOSED IMPLEMENTATION OF JOINT
+2018-02-05
+RESTRUCTURING OF GROUP COMPANIES
+17
+100
+ANNOUNCEMENT ON THE MAJOR OPERATIONAL DATA OF JANUARY 2018
+MONTHLY RETURN OF EQUITY ISSUER ON MOVEMENTS IN SECURITIES FOR THE
+MONTH ENDED 28 FEBRUARY 2018
+2018-02-12
+2018-02-28
+21
+18
+MONTHLY RETURN OF EQUITY ISSUER ON MOVEMENTS IN SECURITIES FOR THE
+MONTH ENDED 31 JANUARY 2018
+24
+OVERSEAS REGULATORY ANNOUNCEMENT
+25
+22222222
+2018-03-01
+2018-03-01
+OVERSEAS REGULATORY ANNOUNCEMENT
+23 OVERSEAS REGULATORY ANNOUNCEMENT
+2018-03-01
+OVERSEAS REGULATORY ANNOUNCEMENT
+OVERSEAS REGULATORY ANNOUNCEMENT
+20
+2018-03-01
+19 OVERSEAS REGULATORY ANNOUNCEMENT
+2018-03-01
+Income tax payable
+Current portion of long-term liabilities
+36
+457
+Contract liabilities
+Total current liabilities
+4,213
+3,404
+345
+5,604
+93,467
+115,905
+11
+29,914
+3,267
+123,381
+Liabilities associated with assets classified
+as held for sale
+Accounts and bills payables
+Current portion of bonds
+132,644
+115,905
+Current liabilities
+Borrowings
+32
+5,772
+15,785
+34
+26,884
+33,914
+Accrued expenses and other payables
+35
+52,737
+51,995
+Current portion of medium-term notes
+33
+4,995
+33
+Net current assets
+37
+16,739
+46,765
+64,321
+6,823
+6,485
+36
+2,092
+2,292
+32
+3,191
+537
+749
+Total non-current liabilities
+59,408
+76,592
+Net assets
+233,296
+2,745
+109,915
+33333
+Accrued reclamation obligations
+Total assets less current liabilities
+468,245
+455,697
+2018 Annual Report 185
+186
+Consolidated Statement of Financial Position (Continued)
+At 31 December 2018
+Deferred tax liabilities
+Non-current liabilities
+31 December
+2018
+RMB million
+31 December
+2017
+RMB million
+Borrowings
+Bonds
+Long-term liabilities
+NOTES
+83,367
+Other non-current assets
+Total current assets
+329,970
+36,585
+39,054
+19
+951
+998
+20
+257,349
+3,623
+10,047
+9,513
+23
+854
+Deferred tax assets
+811
+24
+3,447
+29,456
+17
+Lease prepayments
+Consolidated Statement of Financial Position
+At 31 December 2018
+NOTES
+31 December
+2018
+RMB million
+31 December
+2017
+RMB million
+Non-current assets
+182222 222
+Property, plant and equipment
+Exploration and evaluation assets
+Intangible assets
+Interests in associates
+Available-for-sale investments
+Equity instruments at fair value through other
+comprehensive income
+408,837
+Construction in progress
+11
+33,466
+16,425
+28
+54,702
+20,452
+8,607
+7,348
+Time deposits with original maturity over three
+months
+1,735
+19,455
+1,870
+50
+30
+61,863
+71,872
+149,929
+132,644
+Assets classified as held for sale
+Cash and cash equivalents
+25
+13,055
+11,647
+17,858
+31
+3,083
+3,798
+358,330
+438,958
+Total non-current assets
+27
+Current assets
+Accounts and bills receivables
+Prepaid expenses and other current assets
+Restricted bank deposits
+29
+2282
+26
+9,967
+Inventories
+379,105
+million million
+Share capital
+(18,100) (18,100)
+(18,100)
+5,457
+(5,457)
+(3,668)
+3,668
+258
+(258)
+376
+376
+shareholders
+(6,867)
+(6,867)
+Others
+(10)
+(10)
+(10)
+54,333
+At 31 December 2018
+10,071
+49
+76
+-
+49
+-
+125
+44
+169
+Total comprehensive
+income for the year
+Dividend declared (Note 15)
+Appropriation of maintenance and
+production funds (Note (iii)
+Utilisation of maintenance and
+production funds (Note (iii)
+Appropriation of general reserve (Note
+Contributions from non-controlling
+shareholders
+Distributions to non-controlling
+--- 76
+-
+44,137 44,262
+16
+19,890
+3,612
+reserve reserves
+reserves
+earnings
+Total interests
+equity
+RMB
+RMB
+RMB
+RMB RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+million
+million
+million
+reserve
+85,001
+premium
+Total
+11
+26,540
+(14,867) 211,506
+77,144
+408,837
+2018 Annual Report 187
+188
+Consolidated Statement of Changes in Equity (Continued)
+For the year ended 31 December 2018
+Equity attributable to equity holders of the Company
+Non-
+Share
+Share
+Capital Exchange Statutory
+Other
+Retained
+controlling
+capital
+-
+10,027 54,164
+44,137
+For the year ended 31 December 2018
+Adjustment at the date of initial
+application of IFRS 9 (Note 2.2)
+At 1 January 2018
+Profit for the year
+Other comprehensive
+income for the year
+Equity attributable to equity holders of the Company
+Share
+capital premium
+Share
+Capital Exchange Statutory
+Other
+Retained
+Non-
+controlling
+Total
+reserve
+reserve reserves
+Consolidated Statement of Changes in Equity
+reserves
+At 31 December 2017
+Executive Director
+Reserves
+Equity attributable to equity holders of the Company
+Non-controlling interests
+Total equity
+38
+19,890
+19,890
+311,803
+285,651
+331,693
+305,541
+77,144
+73,564
+408,837
+379,105
+The consolidated financial statements on pages 183 to 297 were approved and authorised for issue by
+the board of directors on 22 March 2019, and are signed on its behalf by:
+Ling Wen
+Chairman
+Li Dong
+China Shenhua Energy Company Limited
+earnings
+Total interests
+equity
+(65)
+24,493 (14,214) 186,824
+305,541
+73,564
+379,105
+(692)
+692
+19,890
+85,001
+3,612
+(65) 24,493
+(14,906)
+187,516
+305,541
+73,564
+379,105
+44,137
+3,612
+85,001
+19,890
+(Note (iii) (Note (iv)) (Note (v))
+RMB
+million
+RMB
+million
+RMB
+RMB
+RMB
+RMB
+RMB
+Equity
+RMB
+RMB
+million
+million
+million
+million
+million
+million
+(Note 38) (Note (i)) (Note (ii))
+RMB
+331,693
+China Shenhua Energy Company Limited
+million
+137
+455
+Proceeds on bills discounted
+(20,000)
+(5,000)
+Repayments of short-term debentures and medium-term notes
+(3,208)
+Repayments of bonds
+(14,490)
+(39,571)
+Repayments of borrowings
+24,651
+35,389
+Proceeds on borrowings
+(5,762)
+(5,541)
+Interest paid
+Contributions from non-controlling shareholders
+376
+1,164
+Distributions to non-controlling shareholders
+Cash and cash equivalents included in assets classified as held for
+sale
+(210)
+49
+Effect of foreign exchange rate changes
+41,188
+71,872
+Cash and cash equivalents, at the beginning of the year
+30,894
+FINANCING ACTIVITIES (Note 41)
+(9,523)
+(77,621)
+(44,715)
+NET CASH USED IN FINANCING ACTIVITIES
+(59,072)
+(18,100)
+Dividend paid to equity holders of the Company
+(4,249)
+(9,515)
+Net (decrease) increase in cash and cash equivalents
+(535)
+RMB million
+RMB million
+Purchase of wealth management products
+1,097
+1,413
+Interest received
+232
+247
+Dividend received from associates
+(100)
+(111)
+Purchase of derivative financial instruments
+(3,431)
+(1,368)
+2,627
+Investments in bonds
+Investments in associates
+Proceeds on entrusted loans
+59
+(32,447)
+(24,100)
+Offering entrusted loans
+(2,220)
+2018
+Year ended 31 December
+For the year ended 31 December 2018
+Consolidated Statement of Cash Flows (Continued)
+China Shenhua Energy Company Limited
+190
+13,363
+(53,056)
+2017
+NET CASH (USED IN) GENERATED FROM INVESTING
+ACTIVITIES
+2,544
+Maturity of time deposits with original maturity over three
+months
+(1,827)
+(2,409)
+Increase in time deposits with original maturity over three
+months
+(1,207)
+(1,259)
+Increase in restricted bank deposits
+3,385
+106
+Cash and cash equivalents, at the end of the year
+71,872
+RMB million
+31 December
+2017
+1 January
+IFRS 15 at
+under
+Carrying
+amounts
+reported at
+previously
+amounts
+Carrying
+The following adjustments were made to the amounts recognised in the consolidated
+statement of financial position at 1 January 2018. Line items that were not affected by the
+changes have not been included.
+There is no impact on retained earnings of transition to IFRS 15 at 1 January 2018.
+Summary of effects arising from initial application of IFRS 15
+2.1 IFRS 15 Revenue from Contracts with Customers (Continued)
+New and Amendments to IFRSS that are mandatorily effective for the current year
+(Continued)
+APPLICATION OF NEW AND AMENDMENTS TO INTERNATIONAL FINANCIAL
+REPORTING STANDARDS ("IFRSS") (CONTINUED)
+2.
+Reclassification
+RMB million
+2018*
+RMB million
+Current Liabilities
+Upon application of IFRS 15, advances received from customers for the sales of coal,
+power, and coal chemical products, and the provision of transportation services have been
+classified as contract liabilities instead of being included as part of accrued expenses and
+other payables under IAS 18.
+56,141
+3,404
+(3,404)
+Amounts
+without
+application of
+IFRS 15
+RMB million
+52,737
+3,404
+Accrued expenses and other payables
+Contract liabilities
+Current Liabilities
+RMB million
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+Adjustments
+Impact on the consolidated statement of financial position
+The following table summarises the impact of applying IFRS 15 on the Group's consolidated
+statement of financial position as at 31 December 2018 for each of the line items affected.
+Line items that were not affected by the changes have not been included.
+The amounts in this column are before the adjustments from the application of IFRS 9.
+*
+46,465
+5,530
+(5,530)
+5,530
+51,995
+Accrued expenses and other payables
+Contract liabilities
+As reported
+RMB million
+61,863
+194
+Information about the Group's performance obligations and the accounting policies resulting
+from application of IFRS 15 are disclosed in notes 5 and 3 respectively.
+China Shenhua Energy Company Limited
+On 27 November 2017, Shenhua Group has completed the industrial and commercial registration
+of changes in the business license. At 31 December 2018, the Directors consider the immediate
+parent and ultimate holding company of the Group to be China Energy Group.
+On 28 August 2017, Shenhua Group received the Notice regarding the Restructuring of China
+Guodian Corporation and Shenhua Group Corporation Limited (Guo Zi Fa Gai Ge [2017] No. 146)
+from the State-owned Assets Supervision and Administration Commission of the State Council,
+which approves that China Guodian Corporation (the "China Guodian") and Shenhua Group shall
+implement the joint restructuring, China Guodian shall be merged into Shenhua Group, and the
+company name of Shenhua Group shall be changed to China Energy Investment Corporation
+Limited (the "China Energy Group"). China Energy Group will be the parent company after the
+completion of the restructuring.
+Immediate parent and ultimate controlling party
+In 2007, the Company issued 1,800,000,000 A shares with a par value of RMB1.00 each, at a price
+of RMB36.99 per A share in the PRC. The A shares were listed on the Shanghai Stock Exchange.
+In 2005, the Company issued 3,089,620,455 H shares with a par value of RMB1.00 each, at a
+price of Hong Kong Dollars ("HKD") 7.50 per H share by way of a global initial public offering. In
+addition, 308,962,045 domestic state-owned ordinary shares of RMB1.00 each owned by Shenhua
+Group were converted into H shares. A total of 3,398,582,500 H shares were listed on The Stock
+Exchange of Hong Kong Limited.
+On 8 November 2004, in consideration for Shenhua Group transferring the coal mining and power
+generating assets and liabilities to the Company, the Company issued 15,000,000,000 domestic
+state-owned ordinary shares with a par value of RMB1.00 each to Shenhua Group. The shares
+issued to Shenhua Group represented the entire registered and paid-up share capital of the
+Company at that date.
+Effective on 31 December 2003, the coal production and power generation operations previously
+operated by various entities wholly-owned or controlled by Shenhua Group were restructured
+and managed separately (the "Restructuring"), and those assets and liabilities related to the
+operations and businesses that were transferred to the Company were revalued by China
+Enterprise Appraisal Co., Ltd., an independent valuer registered in the PRC, as at 31 December
+2003 as required by the PRC rules and regulations.
+The Company was established in the PRC on 8 November 2004 as a joint stock limited company
+as part of the Restructuring (as defined below) of Shenhua Group, a state-owned enterprise under
+the direct supervision of the State Council of the PRC.
+Organisation
+China Shenhua Energy Company Limited (the "Company") and its subsidiaries (hereinafter
+collectively referred to as the "Group") are principally engaged in: (i) the production and sale
+of coal; and (ii) the generation and sale of coal-based power to provincial/regional electric grid
+companies in the People's Republic of China (the "PRC"). The Group operates an integrated
+railway network and seaports that are primarily used to transport the Group's coal sales from its
+mines. The primary customers of the Group's coal sales include power plants, metallurgical and
+coal chemical producers in the PRC.
+Principal activities
+1. PRINCIPAL ACTIVITIES AND ORGANISATION
+For the year ended 31 December 2018
+Notes to the Consolidated Financial Statements
+192
+2018 Annual Report 191
+2.
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+APPLICATION OF NEW AND AMENDMENTS TO INTERNATIONAL FINANCIAL
+REPORTING STANDARDS ("IFRSS")
+New and Amendments to IFRSS that are mandatorily effective for the current year
+sale of coal chemical products
+rendering of railway, port, shipping services
+sale of power
+sale of coal
+The Group recognises revenue from the following major sources which arise from contracts
+with customers:
+The Group has applied IFRS 15 retrospectively with the cumulative effect of initially applying
+this Standard recognised at the date of initial application, 1 January 2018. Any difference
+at the date of initial application is recognised in the opening retained earnings (or other
+components of equity, as appropriate) and comparative information has not been restated.
+Furthermore, in accordance with the transition provisions in IFRS 15, the Group has elected
+to apply the Standard retrospectively only to contracts that are not completed at 1 January
+2018 and has used the practical expedient for all contract modifications that occurred before
+the date of initial application, the aggregate effect of all of the modifications was reflected
+at the date of initial application. Accordingly, certain comparative information may not be
+comparable as comparative information was prepared under IAS 18 Revenue and IAS 11
+Construction Contracts and the related interpretations.
+The Group has applied IFRS 15 for the first time in the current year. IFRS 15 superseded
+IAS 18 Revenue, IAS 11 Construction Contracts and the related interpretations.
+IFRS 15 Revenue from Contracts with Customers
+2018 Annual Report 193
+2.1
+Transfers of Investment Property
+Revenue from Contracts with Customers and the related Amendments
+Foreign Currency Transactions and Advance Consideration
+Classification and Measurement of Share-based Payment Transactions
+Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts
+As part of the Annual Improvements to IFRSS 2014-2016 Cycle
+Financial Instruments
+Amendments to IAS 40
+International Accounting
+Standard ("IAS") 28
+Amendments to IFRS 2
+Amendments to IFRS 4
+Amendments to
+IFRIC 22
+The Group has applied the following new and amendments to IFRSS issued by the International
+Accounting Standard Board ("IASB") for the first time in the current year:
+Except as described below, the application of the new and amendments to IFRSS in the current
+year has had no material impact on the Group's financial performance and positions for the current
+and prior years and/or on the disclosures set out in these consolidated financial statements.
+Proceeds on disposal of derivative financial instruments
+IFRS 9
+IFRS 15
+108
+19,890 85,001
+At 31 December 2017
+Others
+shareholders
+Distributions to non-controlling
+2,000
+2,000
+shareholders
+Contributions from non-controlling
+(344)
+344
+1,994
+(1,994)
+(5,316)
+5,316
+(59,072)
+(59,072)
+3,612
+(65) 24,493
+(14,214) 186,824
+305,541
+According to the PRC Company Law and the Company's Articles of Association, the Company is required to transfer
+10% of its net profit as determined in accordance with the China Accounting Standards for Business Enterprises ("China
+Accounting Standards") to its statutory surplus reserve until the reserve balance reaches 50% of the registered capital.
+The transfer to this reserve must be made before distribution of a dividend to shareholders.
+Statutory surplus reserve
+Statutory reserves
+(iii)
+Notes: (Continued)
+For the year ended 31 December 2018
+Consolidated Statement of Changes in Equity (Continued)
+China Shenhua Energy Company Limited
+(59,072)
+The capital reserve represents the difference between the total amount of the par value of shares issued and the amount
+of the net assets, net of other reserves, transferred from Shenhua Group Corporation Limited ("Shenhua Group") in
+connection with the Restructuring (as defined in Note 1).
+Share premium represents the difference between the total amount of the par value of shares issued and the amount of
+the net proceeds received upon the global initial public offering of H shares in 2005 and the issuance of A shares in 2007.
+(i)
+Notes:
+1
+(5,733)
+(5,733)
+379,105
+73,564
+(ii)
+The statutory surplus reserve has reached 50% of the registered capital in 2009. Accordingly, no appropriation of net profit
+to the statutory surplus reserve has been proposed since 1 January 2010.
+Appropriation of general reserve (Note
+Dividend declared (Note 15)
+Appropriation of maintenance and
+production funds (Note (i))
+Utilisation of maintenance and
+105
+3,612
+85,001
+19,890
+At 1 January 2017
+(Note (v))
+(Note (iv))
+(Note (i))
+(Note (i)) (Note (ii))
+(Note 38)
+million
+million
+million
+million
+million
+million
+57,885
+20,827
+(14,227)
+201,767
+316,975
+9,303 56,940
+47,637
+47,795
+12
+--- (170)
+for the year
+Total comprehensive (expense) income
+for the year
+production funds (Note (i))
+(40)
+12
+(170)
+47,795 9,343 57,138
+47,795
+Other comprehensive (expense) income
+Profit for the year
+384,969
+67,994
+(158)
+Statutory surplus reserve can be used to make up losses, if any, or to expand the Company's business, and may be
+converted into share capital by the issue of new shares to shareholders in proportion to their existing shareholdings or by
+increasing the par value of the shares currently held by them, provided that the balance after such issue is not less than
+25% of the registered capital of the Company. The statutory surplus reserve is not distributable.
+(198)
+Pursuant to the relevant PRC regulations, the Group is required to transfer production and maintenance funds at fixed rates
+based on relevant bases, such as production volume, to a specific reserve account. The production and maintenance funds
+could be utilised when expenses or capital expenditures on production maintenance and safety measures are incurred. The
+amount of production and maintenance funds utilised would be transferred from the specific reserve account to retained
+earnings.
+(2,027)
+5,912
+6,757
+Increase in accrued expenses and other payables
+Decrease in contract liabilities
+(1,802)
+40
+Increase (decrease) in accounts and bills payables
+(89)
+Cash generated from operations
+Income tax paid
+(762)
+361
+851
+Decrease in accounts and bills receivables
+1,588
+(141)
+(Increase) decrease in inventories
+103,190
+100,359
+Increase in prepaid expenses and other receivables
+Operating cash flows before movements in working capital
+105,077
+(16,829)
+Proceeds on disposal of wealth management products
+Specific reserve for maintenance and production funds
+2
+other comprehensive income
+1,342
+942
+assets, lease prepayments and other non-current assets
+Proceeds on disposal of equity instruments at fair value through
+Proceeds on disposal of property, plant and equipment, intangible
+109,160
+(666)
+Increase in lease prepayments
+(19,602)
+(19,385)
+Acquisition of property, plant and equipment, intangible assets,
+exploration and evaluation assets, additions to the construction
+in progress and other non-current assets
+INVESTING ACTIVITIES
+NET CASH GENERATED FROM OPERATING ACTIVITIES
+95,152
+(14,008)
+(1,550)
+(494)
+88,248
+Exchange loss (gain), net (Note 9)
+Profit before income tax
+OPERATING ACTIVITIES
+2017
+RMB million
+RMB million
+Year ended 31 December
+2018
+For the year ended 31 December 2018
+Consolidated Statement of Cash Flows
+2018 Annual Report 189
+Adjustments for:
+Included in the retained earnings of the Group were its share of the surplus reserve of its domestic subsidiaries amounted
+to RMB25,198 million (31 December 2017: RMB22,573 million) as at 31 December 2018.
+Other reserves mainly represents the consideration paid for acquisition of subsidiaries under common control, and share of
+other reserves of associates.
+Other reserves
+(iv)
+The directors of the Company (the "Directors") have not proposed any appropriation to the discretionary surplus reserve in
+2018 and 2017.
+The appropriation to the discretionary surplus reserve is subject to the shareholders' approval. The utilisation of the reserve
+is similar to that of the statutory surplus reserve.
+Discretionary surplus reserve
+518
+Pursuant to relevant regulations issued by the Ministry of Finance, the Company's subsidiary, Shenhua Finance Co., Ltd.
+("Shenhua Finance"), is required to set aside a general reserve by the end of each financial year through appropriations
+of profit after tax as determined in accordance with China Accounting Standards at a certain ratio of the ending balance of
+gross risk-bearing assets to cover potential losses against such assets.
+(v)
+Depreciation and amortisation (Note 12)
+Retained earnings
+Interest income (Note 9)
+4,910
+4,903
+Other gains and losses (Note 12)
+Interest expenses
+152
+Impairment loss, net of reversal (Note 12)
+(534)
+(448)
+Share of results of associates
+(1,205)
+General reserve
+(1,479)
+1,880
+2,844
+25,340
+23,728
+73,293
+70,141
+327,763
+Section II Company Profile and
+Major Financial Indicators (Continued)
+China Shenhua Energy Company Limited
+0.0
+19,890
+Total share capital at the
+end of the period
+RMB million
+VIII. DIFFERENCES IN ACCOUNTING DATA UNDER DOMESTIC AND OVERSEAS
+ACCOUNTING STANDARDS
+8.6
+305,541
+19,890
+Under China Accounting
+Net assets attributable to equity
+holders of the Company
+Unit: RMB million
+Net profit attributable to equity
+holders of the Company
+331,693
+At the
+At the
+2018
+2017
+43,867
+end of 2017
+Standards for Business
+Enterprises
+45,037
+end of 2018
+%
+holders of the Company
+At the end of
+the end of 2018
+301,487
+At the end of
+as compared with
+Unit
+2018
+2017
+the end of 2017
+Total assets
+Total liabilities
+RMB million
+RMB million
+591,626
+3.5
+RMB million
+182,789
+192,497
+(5.0)
+Total equity
+RMB million
+408,837
+379,105
+7.8
+Equity attributable to equity
+571,602
+Adjustments for:
+70,017
+maintenance, safety
+(April -
+(July-
+(October-
+March)
+June)
+September)
+December)
+62,979
+64,401
+66,704
+Profit for the period
+(January-
+attributable to equity
+12,203
+12,317
+12,687
+6,930
+Net cash generated from
+operating activities
+11,810
+20,127
+35,885
+Increase/
+decrease at
+20,426
+holders of the Company
+Simple production
+Fourth quarter
+First quarter Second quarter
+production and other related
+expenditure
+1,665
+2,758
+3,930
+4,054
+The separation and transfer
+cost of "Special payables
+for water/power/gas supply
+and property management"
+Under International Financial
+(1,395)
+Reporting Standards
+Third quarter
+44,137
+331,693
+305,541
+Explanation on differences in domestic and overseas accounting standards: Pursuant to
+the relevant regulations of the related government authorities in the PRC, the Group accrued
+provisions for simple production maintenance, safety production and other related expenditures,
+recognised as expenses in profit or loss and separately recorded as a specific reserve in
+shareholders' equity. On utilisation of the specific reserve as fixed assets within the stipulated
+scope, the full amount of accumulated depreciation is recognised at the same time when the
+cost of the relevant assets is recorded. Under International Financial Reporting Standards, these
+expenses are recognised in profit or loss as and when incurred. Relevant capital expenditure
+is recognised as property, plant and equipment and depreciated according to the relevant
+depreciation method. The effect on deferred tax arising from such difference is also reflected.
+Explanation on the adjustment to the separation and transfer cost of "Special payables
+for water/power/gas supply and property management": In accordance with the Notice
+of the Office of the State Council on the State-owned Assets Supervision and Administration
+Commission of the State Council and the Ministry of Finance Regarding the Guidelines Related
+to the Separation and Transfer of "Water/Power/Gas Supply and Property Management" in
+the Employee Living Areas of the State-owned Enterprises (Guo Ban Fa 2016 No. 45) ((I
+院辦公廳轉發國務院國資委、財政部關於國有企業職工家屬區「三供一業」分離移交工作指導意見
+)(201645)), the Group separated its functions of water, power and heat (gas)
+supply and property management in the employee living areas of the Group and transferred to a
+professional enterprise or institution for socialized management. In 2018, the expenses arising
+from the separation and transfer of "water/power/gas supply and property management" of
+the Group amounted to RMB1,831 million, among which, RMB1,395 million was attributable to
+equity holders of the Company. In accordance with the regulations of the relevant authorities of
+the Chinese government, the transferred assets in relation to the "water/power/gas supply and
+property management" and certain expenses in relation to the transfer shall be offset against the
+equity. While under the IFRSS, the transferred assets and related expenses shall be recognised as
+current profits and losses.
+2018 Annual Report 11
+12
+Section II Company Profile and
+Major Financial Indicators (Continued)
+IX. MAJOR FINANCIAL DATA OF EACH QUARTER OF 2018
+Revenue
+Unit: RMB million
+47,795
+operating activities excluding
+the effect from Shenhua
+Finance Company
+As at 31 December 2018, the total market capitalisation of China Shenhua reached USD50.6 billion,
+ranking fifth, first among Chinese enterprises, in the 2018 Top 250 Global Energy Corporations published
+by PLATTS.
+87,931
+2018 was the first year of full implementation of the guiding principles of the 19th CPC National
+Congress. Guided by the Thought on Socialism with Chinese Characteristics for a New Era proposed
+by Xi Jinping, the Chinese government have upheld the underlying principle of pursuing progress while
+ensuring stability, responded effectively to the changes in the external environment in accordance with
+the requirement of high quality development, and advanced in-depth supply-side structural reform,
+through which sustained and sound development of economy, and social stability were maintained. The
+supply and demand in the national energy market continued to be generally loose, while the supply and
+demand in the coal market tended to be balanced, and thermal power generation achieved a significant
+recovery year-on-year.
+On behalf of the Board, I am delighted to present the 2018 annual report of China Shenhua and to report
+on the Company's performance for the period to all shareholders.
+Dear Shareholders,
+Section IV Chairman's Statement (Continued)
+Chairman
+Ling Wen
+China Shenhua Energy Company Limited
+16
+Section IV Chairman's Statement
+2018 Annual Report 15
+In 2018, the Company focused on promoting the construction of digital mines and ultra-
+low emission transformation of coal-fired generators. During the reporting period, China
+Shenhua was granted a total of 581 patents, in which 113 patents were invention patents.
+China Shenhua adhered to clean development, gave full play to its advantage of integration to
+strengthen operation management, expand market, enhance quality and improve efficiency, resulting
+that the production and operation of the Company maintained at a high level. As calculated by the
+consolidated operating profit before amortisation under the IFRSS, the Company recorded RMB43.262
+billion for coal business, RMB20.743 billion for transportation business and RMB12.720 billion for power
+business in 2018 and each of the said businesses accounted for 56%, 27% and 16%, respectively. The
+high efficiency and synergy created in operation among the three major segments effectively enhanced
+the adaptability and competitiveness of the Company's business structure.
+(IV) Industrial technology and innovation capabilities: China Shenhua strengthens its
+industrial technology and innovation capabilities continuously. The Company's technology
+in coal green exploitation and production safety has secured a leading position in the
+global market, and that of clean coal-fired power generation and heavy-loaded railway
+transportation has secured a leading position in domestic market, basically establishing
+a unified operation model of technology and resources and a technological innovation-
+driven development model comprising scientific decision-making, systematic management,
+research and development, and transformation of achievements.
+(III) Management team focusing on principal business and advanced business concepts:
+The management team of China Shenhua has profound knowledge and management
+experience in the industry, attaches great importance to enhancement of the Company's
+capabilities in value creation, conducts operation with a focus on the principal businesses of
+the Company, and persistently focuses on clean generation, transportation and conversion
+in energy sector.
+Section III Business Overview (Continued)
+China Shenhua Energy Company Limited
+Coal reserve: The Group possesses an abundant pool of high-quality coal resources which
+are suitable for modern high-output and high-efficient mining. As of the end of 2018, among
+the coal mining rights possessed and controlled by the Group, the recoverable coal reserves
+are 14.95 billion tonnes under the PRC Standard; the marketable coal reserves are 8.26
+billion tonnes under the JORC Standard. The coal reserves of the Group is among the top of
+listed coal companies in China.
+In 2018, the Company further promoted the in-depth supply-side structural reform,
+participated in the establishment of power generation companies, strengthened resource
+organization and transportation management, and fully developed its advantages of coal-
+power-transportation synergic effect and unified operation, resulting that the overall
+competitiveness continued to strengthen.
+Unique operation and profitability model: The Group has a large and efficient operation of
+coal and power generation business, and possesses a large-scale integrated transportation
+network consisting of railways, ports and ships, forming a core competitive advantage of
+integrated development of coal, power, transportation and coal-to-chemical industry, one-
+stop operation of production, transportation and sales, in-depth cooperation and effective
+synergy among various industrial sectors.
+(II)
+(1)
+ANALYSIS ON CORE COMPETITIVENESS DURING THE REPORTING PERIOD
+The core competitiveness of the Group is mainly:
+On 31 January 2019, the Company and Guodian Power completed the settlement of establishing
+a joint venture company, in which the equity interests and assets of the relevant coal-fired power
+companies were held by them respectively. The power generation assets of the Group decreased
+and the interests in associates increased accordingly. For details, please refer to Section V
+"Subsequent Events" of this report.
+As of 31 December 2018, the Group's total assets amounted to RMB591,626 million, representing
+an increase of 3.5% as compared with that at the end of last year, and the equity attributable to
+equity holders of the Company amounted to RMB331,693 million, representing an increase of 8.6%
+as compared with that at the end of last year. The total offshore assets of the Group (including
+Hong Kong, Macau and Taiwan) amounted to RMB25,024 million, representing 4.2% to total
+assets, which are mainly composed of the coal mine and power generation assets in Australia and
+Indonesia, and assets from U.S. dollar-denominated bonds issued in Hong Kong, the PRC.
+In 2018, the Company persistently promoted the implementation of the development
+strategies of clean energy.
+In 2018, there was no material change in the major assets of the Group.
+In 2018, the Company recorded revenue of RMB264.101 billion, representing a year-on-year increase
+of 6.2%. The Company recorded profit before tax of RMB70.141 billion, profit for the year attributable
+to equity holders of the Company of RMB44.137 billion with basic earnings per share of RMB2.219,
+representing a year-on-year decrease of 4.3% and 7.7%, respectively.
+MED
+Applicable
+2018 Annual Report 19
+In terms of targeted poverty alleviation, the Company increased investment in poverty alleviation with
+focus on ecology, education and industry to cultivate and stimulate the endogenous power of the
+targeted subjects for assistance. In 2018, the Company invested RMB54 million poverty alleviation
+funds in three targeted counties, and carried out 22 assistance projects of all kinds, which helped 1,186
+impoverished people get removed from administrative record for poverty registering, and helped 70
+impoverished people transfer employment. The Company also invested approximately RMB43 million in
+the poverty alleviation on education and medical care through China Energy Public Welfare Foundation.
+13 subsidiaries, including Zhunneng Group, proactively invested poverty alleviation funds to provide
+targeted assistance for impoverished villages in the places where the companies are located.
+In terms of the prevention and resolution of material risks, the Company strictly strengthened
+investment management and control, with the annual investment controlled at RMB23.21 billion
+throughout the year. By advancing "lowered leverage and reduced liability", the Company recorded the
+gearing ratio of 30.9%, representing a decrease of 2.8 percentage points as compared to that at the
+beginning of the year. With the purpose of advancing in-depth supply-side structural reform, Beidian
+Shengli open pit mine implemented production capacity replacement by 8 million tonnes per year, six
+quality coal-fired generating units, including Lujiang Power Plant, were put into commercial operation,
+while the high-standard construction of Jinjie Energy Plant Phase III Project was commenced, and
+Shenmu Power was shut down.
+Exercised Responsibility, Overcame Difficulties with Joint Efforts
+The Company proactively pushed forward construction of mechanisation, automation, informationisation
+and intellectualisation, accompanied by the promotion of labor reduction and efficiency enhancement,
+and development in a safe manner. By constantly strengthening the implementation of safety and
+environmental protection responsibility, and promoting the "double prevention and control", being risk
+prevention and control and potential risk rectification, the standardisation construction of production
+safety and establishment of standard work flows of different positions were effectively promoted. In
+2018, the fatality rate per million tonne of raw coal output was 0.0126, maintaining its leading position
+worldwide in production safety. The transportation segment has achieved safe production for 1,052
+consecutive days, while 18 coal mines had a safe production cycle of over 1,000 days, and six coal
+mines and underground service units achieved safe production for 10 consecutive years.
+The Company strived to drive and stimulate new development momentum of the Company with
+technological innovation, and continuously improve the level of high-quality development. In 2018, the
+Company successfully carried out the trial production of the world's first "intelligent 8.8-meter ultra-
+mining height completed set equipment" for fully mechanized coal mining at Shendong Shangwan
+Mine; the first set of ultra-pure water hydraulic pressure support system in the country operated
+smoothly at Shendong Jinjie Mine; the "key technology of moving block system of heavy-haul railways"
+was successfully applied in the operation of Shuohuang Railway; and the automatic charged passing
+phase insulators for Shenshuo Railway was pioneering in the field in the world. Throughout the year,
+the Company obtained a total of 34 science and technology awards at provincial and ministerial level,
+including nine first awards; and was granted 581 patents, including 113 invention patents.
+Innovation-driven, Safe Development
+In terms of coal chemical segment, the Company continued to strengthen production organisation and
+process management to improve production efficiency, and optimise production and operation system
+to improve the level of long-term operation of equipment; kept abreast of the market conditions, and
+expanded sales channels to enhance earnings. The sales volume of coal-to-olefins products reached
+613.1 thousand tonnes in 2018, representing a year-on-year decrease of 3.2%.
+The development of "macroscopic logistic" maintained a positive momentum. In 2018, the
+transportation volume of non-coal railway amounted to 15.48 million tonnes. The turnover of railway
+transportation services provided to external customers amounted to 30.7 billion tonne km, representing
+a year-on-year growth of 4.4%, which generated revenue of RMB5,877 million, representing a year-on-
+year increase of 4.7%.
+Section IV Chairman's Statement (Continued)
+୪୪୪
+China Shenhua Energy Company Limited
+In terms of the power segment, seizing the opportunities arising from the great demand of national
+electricity consumption and the favourable condition of thermal power generation, the Company
+continued to improve the reliability management of equipment to increase the volume of power
+generation. In 2018, the gross power generation reached 285.32 billion kWh and the total power
+output dispatch reached 267.59 billion kWh, representing a year-on-year increase of 8.5% and 8.7%,
+respectively. The average utilisation hours of coal-fired generating units were 4,877 hours, surpassing
+the national average utilisation hours of thermal power equipment (4,361 hours) by 516 hours. 19
+generating units won the National Thermal Power Efficiency Competition (¼ŒÂÀ¥À), and
+five generating units won the National Thermal Power Operation Reliability Competition (¼Œ¿‹ƒ³
+), with a proportion significantly higher than that of the total installed capacity of coal-fired
+generating units of the Company in the thermal power installed capacity of the state (5.4%).
+In response to national initiatives, the Company took the lead in signing a three-year long-term thermal
+coal purchase agreement, increased and guaranteed the supply of coal in the northeast and other
+regions, fully playing the role of an energy "stabiliser" and "ballast". Through scientific research and
+judgment of the market situation, careful formulation of marketing strategies and strengthening of
+organisation of coal procured externally, the Company realized maximum benefits. The sales volume of
+coal amounted to 460.9 million tonnes throughout the year, representing a year-on-year increase of 3.9%,
+of which the sales volume of seaborne coal amounted to 270.0 million tonnes, representing a year-on-
+year increase of 4.6%.
+Affected by decrease in production of certain coal mines, coal segment, however, optimized the
+production organisation in accordance with laws and regulations, resulting that the output of commercial
+coal remained relatively stable and the level of operation management was steadily improved. The
+production of commercial coal during the year amounted to 296.6 million tonnes, representing a year-
+on-year increase of 0.4%. 18 out of 19 underground coal mines of the Group were listed in the "2018
+Top 100 Chinese Coal Enterprises with Scientific Production Capacity" (2018+^*#$Æ✯¯),
+seven coal mines of which were included in Top eight, occupying top three positions.
+By leveraging the effect brought by the re-organisation and integration of China Energy Group, the
+Company continued to improve the level of integrated coal industry chain, with major indicators of
+production and operation maintaining at a high level.
+High Efficiency and Synergy, Made Further Success
+Adhering to the Thought on Socialism with Chinese Characteristics for a New Era proposed by Xi
+Jinping and the Spirit of the 19th CPC National Congress, the Company implemented thoroughly the
+requirements of China Energy on party building, promoted every aspect of party building including
+persistence in anti-corruption, as well as simultaneous deployment, research, implementation and
+assessment of business and Party building; encouraged employees to make achievements in their
+positions by promoting "formation of socialism by construction", organized an ethics lecture on "a
+pillar of a great nation", the Party theme day of "new era, new mission and new responsibilities" and
+the "locomotive Pacesetter" labour competition in the transportation industry and other featured Party
+building activities, which promoted the continuous enhancement on employees' spiritual state and
+corporate governance.
+Strong Root and Elevated Spiritual Level Guided by Party Building
+2018: STRENGTHENED SYNERGY OF COAL-FIRED POWER AND ADVANTAGE OF
+INTEGRATION TO ACHIEVE OUTSTANDING PERFORMANCE
+Section IV Chairman's Statement (Continued)
+18
+2018 Annual Report 17
+In terms of the transportation segment, the Company strengthened the connection and management
+between the upstream and the downstream, commenced operation of long-route trains, increased the
+routes of 10,000-tonne trains and 20,000-tonne trains, and enhanced the "quasi-liner shipping" operation
+mechanism, through which transportation efficiency was significantly improved. In 2018, the Company
+completed 283.9 billion tonne km of turnover volume of self-owned railway, representing a year-on-
+year increase of 4%, which recorded historical high; and 89.9 billion tonne nm of shipping volume,
+representing a year-on-year increase of 11.8%.
+(11.8)
+EXPLANATION ON MATERIAL CHANGES IN MAJOR ASSETS OF THE
+COMPANY DURING THE REPORTING PERIOD
+II.
+Profit for the year
+RMB million
+54,164
+57,138
+(5.2)
+Profit for the year attributable
+RMB million
+44,137
+47,795
+(7.7)
+to equity holders of
+the Company
+6.2
+Basic earnings per share
+2.219
+2.403
+(7.7)
+Net cash generated from
+operating activities
+RMB million
+88,248
+95,152
+(7.3)
+Net cash generated from
+RMB million
+77,588
+RMB/share
+III.
+248,746
+RMB million
+Section III Business Overview (Continued)
+14
+2018 Annual Report 13
+For industry conditions in which the Company operates, please refer to the section "Directors'
+Report" in the report.
+During the reporting period, the Group made no significant change in the scope of its principal
+businesses.
+In terms of sales, the Group is the largest listed coal company in China and globally with the sales
+volume of coal reaching 460.9 million tonnes and commercial coal production volume reaching
+296.6 million tonnes in 2018. The Company possesses high quality coal resources in Shendong
+Mines, Zhunge'er Mines, Shengli Mines and Baorixile Mines, etc. On 31 December 2018, the
+Company had recoverable coal reserves of 14.95 billion tonnes under the PRC Standard; the
+marketable coal reserve of 8.26 billion tonnes under the JORC Standard. The Group controls and
+operates large-scale and high capacity clean coal-fired power generators, the Group controls and
+operates power generators with installed capacity of 61,849MW by the end of 2018, with a total
+power output dispatch reaching 267.59 billion kWh in 2018. The Group controls and operates a
+network of concentric transportation railways around the major coal production bases in western
+Shanxi, northern Shaanxi and southern Inner Mongolia as well as "Shenshuo - Shuohuang Line",
+a major channel for coal transportation from western to eastern China, and it has controlled and
+operated railways with a total length of approximately 2,155 km. The transportation turnover of
+self-owned railway in 2018 reached 283.9 billion tonne km. The Group also controls and operates
+a number of ports and docks (approximately 270 million tonnes/year vessel loading capability
+in aggregate), such as Huanghua Port, possesses the shipping transportation team comprising
+its own vessels with approximately 2.18 million tonnes of loading capacity and conducts coal-
+to-olefins businesses with approximately 0.6 million tonnes/year of operation and production
+capacity. The Company's technology in coal exploitation and production safety has secured a
+leading position in the global market, and that of clean coal-fired power generation and heavy-
+loaded railway transportation has secured a leading position in domestic market. The Company
+owns or operates coal-fired power plants, coal mines and other projects in Indonesia, Australia
+and other countries.
+China Shenhua Energy Company Limited was established in Beijing in November 2004, and
+I was listed on the Hong Kong Stock Exchange in June 2005 and the Shanghai Stock Exchange in
+October 2007. The Group is principally engaged in the production and sale of coal and electricity,
+railway, port and shipping transportation, and coal-to-olefins businesses.
+EXPLANATION ON PRINCIPAL BUSINESSES AND OPERATION MODEL OF THE
+COMPANY AND INDUSTRY CONDITIONS DURING THE REPORTING PERIOD
+I.
+Section III Business Overview
+China Shenhua Energy Company Limited
+264,101
+10
+VII. MAJOR ACCOUNTING DATA
+Unit
+Increase/
+decrease
+in 2018 as
+compared with
+2018
+2017
+2017
+%
+Revenue
+✓ Not Applicable
+Section II Company Profile and
+Major Financial Indicators (Continued)
+Explanation on the differences between quarterly data and disclosed regular reporting data:
+2018 Annual Report 199
+RMB million
+Loss allowances for other financial assets at amortised cost mainly comprising of
+restricted bank deposits, time deposits with original maturity over three months,
+cash and cash equivalents, loans and advances to China Energy Group and fellow
+subsidiaries and entrusted loans, are measured on 12-month ECL ("12m ECL") basis
+as there had been no significant increase in credit risk since initial recognition.
+The Group applies the IFRS 9 simplified approach to measure ECL which uses a
+lifetime ECL for all accounts and bills receivables. To measure the ECL, accounts and
+bills receivables have been grouped based on shared credit risk characteristics.
+Impairment under ECL model
+(b)
+Wealth management product investments with a fair value of RMB105 million were
+reclassified from AFS investments to financial assets at FVTPL. This is because
+even though the Group's business model is to hold financial assets in order to
+collect contractual cash flows, the cash flows of these investments do not meet the
+IFRS 9 criteria as solely payments of principal and interest on the principal amount
+outstanding. Related fair value gains of RMB4 million were transferred from other
+reserves to retained earnings as at 1 January 2018.
+From AFS investments to FVTPL
+(a) AFS investments (Continued)
+Summary of effects arising from initial application of IFRS 9 (Continued)
+2.2 IFRS 9 Financial Instruments and the related amendments (Continued)
+New and Amendments to IFRSs that are mandatorily effective for the current year
+(Continued)
+APPLICATION OF NEW AND AMENDMENTS TO INTERNATIONAL FINANCIAL
+REPORTING STANDARDS ("IFRSS") (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+For outstanding financial guarantees provided to an associate of RMB19 million and
+to an investee of RMB171 million, the Group considers there has been no significant
+increase in credit risk since initial recognition and hence the loss allowance is
+measured on 12m ECL basis.
+2.
+The Group elected to present in OCI for the fair value changes of all its equity.
+investments previously classified as AFS, of which RMB749 million related to
+unquoted equity investments previously measured at cost less impairment under IAS
+39. These investments are not held for trading and not expected to be sold in the
+foreseeable future. At the date of initial application of IFRS 9, RMB749 million relating
+to unquoted equity investments previously measured at cost less impairment under
+IAS 39 were reclassified from AFS investments to equity instruments at FVTOCI. No
+fair value change relating to those unquoted equity investments previously carried
+at cost less impairment was adjusted to equity instruments at FVTOCI and other
+reserves as at 1 January 2018. In addition, impairment losses previously recognised
+of RMB688 million were transferred from retained earnings to other reserves as at 1
+January 2018.
+From AFS equity investments to FVTOCI
+187,516
+(14,906)
+749
+105
+692
+(692)
+749
+49
+186,824
+(14,214)
+China Shenhua Energy Company Limited
+earnings
+RMB million
+As at 1 January 2018, no additional credit loss allowance has been recognised against
+retained earnings.
+198
+(14,214)
+186,824
+Retained earnings
+Other reserves
+Equity
+(5,530)
+5,530
+51,995
+Contract liabilities
+payables
+Accrued expenses and other
+Current Liabilities
+FVTOCI
+Equity instruments at
+2018 Annual Report 197
+Financial assets at FVTPL
+AFS investments
+Non-current Assets
+IFRS 9
+RMB million
+IFRS 15
+RMB million
+RMB million
+31 December
+2017
+(Audited)
+As a result of the changes in the Group's accounting policies above, the opening
+consolidated statement of financial position had to be restated. The following table shows
+the adjustments recognised for each of the line items affected. Line items that were not
+affected by the changes have not been included.
+2.3 Impacts on opening consolidated statement of financial position arising from the
+application of all new standards
+New and Amendments to IFRSS that are mandatorily effective for the current year
+(Continued)
+APPLICATION OF NEW AND AMENDMENTS TO INTERNATIONAL FINANCIAL
+REPORTING STANDARDS ("IFRSS") (CONTINUED)
+2.
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+854
+Retained
+Other
+reserves
+RMB million
+AFS investments
+Summary of effects arising from initial application of IFRS 9
+Accounting policies resulting from application of IFRS 9 are disclosed in Note 3.
+Accordingly, certain comparative information may not be comparable as comparative
+information was prepared under IAS 39 Financial Instruments: Recognition and
+Measurement.
+The Group has applied IFRS 9 in accordance with the transition provisions set out in IFRS 9,
+i.e. applied the classification and measurement requirements (including impairment under
+ECL model) retrospectively to instruments that have not been derecognised as at 1 January
+2018 (date of initial application) and has not applied the requirements to instruments that
+have already been derecognised as at 1 January 2018. The difference between carrying
+amounts as at 31 December 2017 and the carrying amounts as at 1 January 2018 are
+recognised in the opening retained earnings and other components of equity, without
+restating comparative information.
+In the current year, the Group has applied IFRS 9 Financial Instruments and the related
+consequential amendments to other IFRSS. IFRS 9 introduces new requirements for 1) the
+classification and measurement of financial assets and financial liabilities, 2) expected credit
+losses ("ECL") for financial assets and financial guarantee contracts.
+IFRS 9 Financial Instruments and the related amendments
+2.2
+There is no impact of applying IFRS 15 on the consolidated statement of profit and loss and
+other comprehensive income for the current year.
+4,730
+(2,027)
+2,027
+6,757
+(2,027)
+Decrease in contract liabilities
+The table below illustrates the classification and measurement of financial assets and
+financial liabilities and other items subject to ECL under IFRS 9 and IAS 39 at the date of
+initial application, 1 January 2018.
+other payables
+RMB million
+Adjustments
+RMB million
+As reported
+RMB million
+IFRS 15
+application of
+without
+Amounts
+Operating Activities
+Impact on the consolidated statement of cash flows
+2.1 IFRS 15 Revenue from Contracts with Customers (Continued)
+New and Amendments to IFRSs that are mandatorily effective for the current year
+(Continued)
+APPLICATION OF NEW AND AMENDMENTS TO INTERNATIONAL FINANCIAL
+REPORTING STANDARDS ("IFRSS") (CONTINUED)
+Increase in accrued expenses and
+2018 Annual Report 195
+196
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+(a)
+Opening balance at 1 January 2018
+15
+105
+(854)
+From AFS
+Reclassification
+application of IFRS 9:
+Effect arising from initial
+854
+2017-IAS 39
+RMB million
+RMB million
+sale ("AFS") by IAS 39/IFRS 9 income ("FVTOCI")
+through other
+comprehensive
+at fair value
+Equity
+instruments
+fair value through
+profit or loss
+(“FVTPL )
+required
+Financial assets at
+Available-for-
+Note
+Closing balance at 31 December
+Summary of effects arising from initial application of IFRS 9 (Continued)
+2.2 IFRS 9 Financial Instruments and the related amendments (Continued)
+New and Amendments to IFRSS that are mandatorily effective for the current year
+(Continued)
+APPLICATION OF NEW AND AMENDMENTS TO INTERNATIONAL FINANCIAL
+REPORTING STANDARDS ("IFRSs”) (CONTINUED)
+2.
+1 January
+2018
+(Restated)
+RMB million
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+(854)
+105
+has power over the investee;
+•
+The consolidated financial statements incorporate the financial statements of the Company and
+entities controlled by the Company and its subsidiaries. Control is achieved when the Company:
+Basis of consolidation
+The principal accounting policies are set out below:
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+3.
+202 China Shenhua Energy Company Limited
+Level 3 inputs are unobservable inputs for the asset or liability.
+Level 2 inputs are inputs, other than quoted prices included within Level 1, that are
+observable for the asset or liability, either directly or indirectly; and
+Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or
+liabilities that the entity can access at the measurement date;
+is exposed, or has rights, to variable returns from its involvement with the investee; and
+In addition, for financial reporting purposes, fair value measurements are categorised into Level 1,
+2 or 3 based on the degree to which the inputs to the fair value measurements are observable and
+the significance of the inputs to the fair value measurement in its entirety, which are described as
+follows:
+Historical cost is generally based on the fair value of the consideration given in exchange for
+goods and services.
+The consolidated financial statements have been prepared on the historical cost basis, except for
+certain financial instruments as disclosed in Note 40.3, which have been measured at fair value at
+the end of each reporting period, as explained in the accounting policies set out below.
+The consolidated financial statements have been prepared in accordance with IFRS issued by the
+International Accounting Standards Board. They are presented in Renminbi ("RMB") and all values
+are rounded to the nearest million (RMB' million) except when otherwise indicated. In addition, the
+consolidated financial statements include applicable disclosures required by the Rules Governing
+the Listing of Securities on the Stock Exchange of Hong Kong Limited ("Listing Rules") and by the
+Hong Kong Companies Ordinance ("CO").
+Basis of preparation
+SIGNIFICANT ACCOUNTING POLICIES
+3.
+For the year ended 31 December 2018
+Notes to the Consolidated Financial Statements (Continued)
+2018 Annual Report 201
+The application of new requirements may result in changes in measurement, presentation and
+disclosure as indicated above. The Group intends to elect the practical expedient to apply IFRS
+16 to contracts that were previously identified as leases applying IAS 17 and IFRIC 4 Determining
+Whether an Arrangement Contains a Lease and not apply this standard to contracts that were
+not previously identified as containing a lease applying IAS 17 and IFRIC 4. Therefore, the Group
+will not reassess whether the contracts are, or contain a lease which already existed prior to the
+date of initial application. Furthermore, the Group intends to elect the modified retrospective
+approach for the application of IFRS 16 as lessee and will recognise the cumulative effect of initial
+application to opening retained earnings without restating comparative information.
+Upon application of IFRS 16, the Group will apply the requirements of IFRS 15 to assess whether
+sales and leaseback transaction constitutes a sale. For a transfer that does not satisfy the
+requirements as a sale, the Group will account for the transfer proceeds as financial liabilities
+within the scope of IFRS 9. In accordance with the transition provisions of IFRS 16, sale and
+leaseback transactions entered into before the date of initial application will not be reassessed but
+the new requirements may impact the Group's future sale and leaseback transactions.
+In addition, the Group currently considers refundable rental deposits paid of RMB96 million as
+rights under leases to which IAS 17 applies. Based on the definition of lease payments under IFRS
+16, such deposits are not payments relating to the right to use the underlying assets, accordingly,
+the carrying amounts of such deposits may be adjusted to amortised cost. Adjustments to
+refundable rental deposits paid would be considered as additional lease payments and included in
+the carrying amount of right-of-use assets.
+Fair value is the price that would be received to sell an asset or paid to transfer a liability in an
+orderly transaction between market participants at the measurement date, regardless of whether
+that price is directly observable or estimated using another valuation technique. In estimating the
+fair value of an asset or a liability, the Group takes into account the characteristics of the asset
+or liability if market participants would take those characteristics into account when pricing the
+asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes.
+in the Group's consolidated financial statements is determined on such a basis, except for share-
+based payment transactions that are within the scope of IFRS 2 Share-based Payment, leasing
+transactions that are within the scope of IAS 17 Leases, and measurements that have some
+similarities to fair value but are not fair value, such as net realisable value in IAS 2 Inventories or
+value in use in IAS 36 Impairment of Assets.
+IFRS 16 Leases (Continued)
+has the ability to use its power to affect its returns.
+When the Group has less than a majority of the voting rights of an investee, it has power over the
+investee when the voting rights are sufficient to give it the practical ability to direct the relevant
+activities of the investee unilaterally. The Group considers all relevant facts and circumstances in
+assessing whether or not the Group's voting rights in an investee are sufficient to give it power,
+including:
+China Shenhua Energy Company Limited
+Non-controlling interests that are present ownership interests and entitle their holders to a
+proportionate share of the entity's net assets in the event of liquidation are initially measured at
+the non-controlling interests' proportionate share of the recognised amounts of the acquiree's
+identifiable net assets.
+Goodwill is measured as the excess of the sum of the consideration transferred, the amount
+of any non-controlling interests in the acquiree, and the fair value of the acquirer's previously
+held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the
+identifiable assets acquired and the liabilities assumed. If, after re-assessment, the net of the
+acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the
+sum of the consideration transferred, the amount of any non-controlling interests in the acquiree
+and the fair value of the acquirer's previously held interest in the acquiree (if any), the excess is
+recognised immediately in profit or loss as a bargain purchase gain.
+At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised
+at their fair value, except that deferred tax assets or liabilities, and assets or liabilities related to
+employee benefit arrangements are recognised and measured in accordance with IAS 12 Income
+Taxes and IAS 19 Employee benefits respectively.
+Acquisitions of businesses, other than business combination under common control are accounted
+for using the acquisition method. The consideration transferred in a business combination is
+measured at fair value, which is calculated as the sum of the acquisition-date fair values of the
+assets transferred by the Group, liabilities incurred by the Group to the former owners of the
+acquiree and the equity interests issued by the Group in exchange for control of the acquiree.
+Acquisition-related costs are generally recognised in profit or loss as incurred.
+Business combinations
+Any difference between the amount by which the non-controlling interests are adjusted, and the
+fair value of the consideration paid or received is recognised directly in equity and attributed to
+owners of the Company.
+Changes in the Group's interests in subsidiaries that do not result in the Group losing control over
+the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group's
+relevant components of equity and the non-controlling interests are adjusted to reflect the
+changes in their relative interests in the subsidiaries, including re-attribution of relevant reserves
+between the Group and the non-controlling interests according to the Group's and the non-
+controlling interests' proportionate interests.
+Changes in the Group's ownership interests in existing subsidiaries
+Basis of consolidation (Continued)
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+3.
+The Group reassesses whether or not it controls an investee if facts and circumstances indicate
+that there are changes to one or more of the three elements of control listed above.
+For the year ended 31 December 2018
+204
+2018 Annual Report 203
+Non-controlling interests in subsidiaries are presented separately from the Group's equity therein,
+which represent present ownership interests entitling their holders to a proportionate share of net
+assets of the relevant subsidiaries upon liquidation.
+All intragroup assets and liabilities, equity, income, expenses and cash flows relating to
+transactions between members of the Group are eliminated in full on consolidation.
+Where necessary, adjustments are made to the financial statements of subsidiaries to bring their
+accounting policies into line with the Group's accounting policies.
+Profit or loss and each item of other comprehensive income are attributed to equity holders of
+the Company and to the non-controlling interests. Total comprehensive income of subsidiaries is
+attributed to equity holders of the Company and to the non-controlling interests even if this results
+in the non-controlling interests having a deficit balance.
+Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and
+ceases when the Group loses control of the subsidiary. Specifically, income and expenses of a
+subsidiary acquired or disposed of during the year are included in the consolidated statement of
+profit or loss and other comprehensive income from the date the Group gains control until the
+date when the Group ceases to control the subsidiary.
+any additional facts and circumstances that indicate that the Group has, or does not have,
+the current ability to direct the relevant activities at the time that decisions need to be
+made, including voting patterns at previous shareholders' meetings.
+rights arising from other contractual arrangements; and
+•
+potential voting rights held by the Group, other vote holders or other parties;
+the size of the Group's holding of voting rights relative to the size and dispersion of holdings
+of the other vote holders;
+Notes to the Consolidated Financial Statements (Continued)
+New and amendments to IFRSS in issue but not yet effective (Continued)
+APPLICATION OF NEW AND AMENDMENTS TO INTERNATIONAL FINANCIAL
+REPORTING STANDARDS ("IFRSS") (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+Definition of Material
+or Joint Venture²
+Sale or Contribution of Assets between an Investor and its Associate
+Prepayment Features with Negative Compensation¹
+Definition of a Business4
+Uncertainty over Income Tax Treatments'
+Insurance Contracts³
+Leases¹
+Amendments to IAS 19
+Amendments to IAS 28
+Amendments to IFRSS
+Amendments to IFRS 3
+Amendments to IFRS 9
+Amendments to IFRS 10
+and IAS 28
+Amendments to IAS 1
+and IAS 8
+IFRIC 23
+IFRS 17
+Plan Amendment, Curtailment or Settlement¹
+IFRS 16
+New and amendments to IFRSS in issue but not yet effective
+APPLICATION OF NEW AND AMENDMENTS TO INTERNATIONAL FINANCIAL
+REPORTING STANDARDS ("IFRSS") (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+2.
+China Shenhua Energy Company Limited
+Note: For the purposes of reporting cash flows from operating activities under indirect method for the year ended
+31 December 2018, movements in working capital have been computed based on opening statement of
+financial position as at 1 January 2018 as disclosed above.
+187,516
+(14,906)
+(692)
+692
+46,465
+5,530
+749
+749
+The Group has not early applied the following new and amendments to IFRSS that have been issued
+but are not yet effective:
+Long-term Interests in Associates and Joint Ventures'
+Annual Improvements to IFRSS 2015-2017 Cycle¹
+1
+2.
+China Shenhua Energy Company Limited
+As at 31 December 2018, the Group has non-cancellable operating lease commitments of
+RMB3,792 million as disclosed in Note 42.2. A preliminary assessment indicates that these
+arrangements will meet the definition of a lease. Upon application of IFRS 16, the Group will
+recognise a right-of-use asset and a corresponding liability in respect of all these leases unless
+they qualify for low value or short-term leases.
+Furthermore, extensive disclosures are required by IFRS 16.
+Other than certain requirements which are also applicable to lessor, IFRS 16 substantially carries
+forward the lessor accounting requirements in IAS 17, and continues to require a lessor to classify
+a lease either as an operating lease or a finance lease.
+Under IAS 17, the Group has already recognised an asset and a related finance lease liability for
+finance lease arrangement and prepaid lease payments for leasehold lands where the Group is a
+lessee. The application of IFRS 16 may result in potential changes in classification of these assets
+depending on whether the Group presents right-of-use assets separately or within the same line
+item at which the corresponding underlying assets would be presented if they were owned.
+The right-of-use asset is initially measured at cost and subsequently measured at cost (subject
+to certain exceptions) less accumulated depreciation and impairment losses, adjusted for any
+remeasurement of the lease liability. The lease liability is initially measured at the present value
+of the lease payments that are not paid at that date. Subsequently, the lease liability is adjusted
+for interest and lease payments, as well as the impact of lease modifications, amongst others.
+For the classification of cash flows, the Group currently presents upfront prepaid lease payments
+as investing cash flows in relation to leasehold lands for owned use and those classified as
+investment properties while other operating lease payments are presented as operating cash
+flows. Upon application of IFRS 16, lease payments in relation to lease liability will be allocated
+into a principal and an interest portion which will be presented as financing cash flows by the
+Group, upfront prepaid lease payments will continue to be presented as investing or operating
+cash flows in accordance to the nature, as appropriate.
+Distinctions of operating leases and finance leases are removed for lessee accounting, and is
+replaced by a model where a right-of-use asset and a corresponding liability have to be recognised
+for all leases by lessees, except for short-term leases and leases of low value assets.
+IFRS 16 Leases (Continued)
+New and amendments to IFRSS in issue but not yet effective (Continued)
+APPLICATION OF NEW AND AMENDMENTS TO INTERNATIONAL FINANCIAL
+REPORTING STANDARDS ("IFRSS") (CONTINUED)
+2.
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+200
+IFRS 16 distinguishes lease and service contracts on the basis of whether an identified asset is
+controlled by a customer. In addition, IFRS 16 requires sales and leaseback transactions to be
+determined based on the requirements of IFRS 15 as to whether the transfer of the relevant asset
+should be accounted as a sale. IFRS 16 also includes requirements relating to subleases and lease
+modifications.
+IFRS 16 introduces a comprehensive model for the identification of lease arrangements and
+accounting treatments for both lessors and lessees. IFRS 16 will supersede IAS 17 Leases and
+the related interpretations when it becomes effective.
+IFRS 16 Leases
+Except for the new and amendments to IFRSS mentioned below, the Directors anticipate that
+the application of all other new and amendments to IFRSS will have no material impact on the
+consolidated financial statements in the foreseeable future.
+Effective for annual periods beginning on or after 1 January 2020.
+5
+Effective for business combinations and asset acquisitions for which the acquisition date is on or after the
+beginning of the first annual period beginning on or after 1 January 2020.
+4
+Effective for annual periods beginning on or after 1 January 2021.
+3
+Effective for annual periods beginning on or after a date to be determined.
+2
+Effective for annual periods beginning on or after 1 January 2019.
+105
+2.
+3.
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+3.
+Property, plant and equipment (Continued)
+Mining structures and mining rights
+The costs of mining structures and mining rights, which include the costs of acquiring and
+developing mining structures and mining rights, are firstly capitalised as "construction in progress"
+in the year in which they are incurred and then reclassified to "Mining structures and mining
+rights" under property, plant and equipment when they are ready for commercial production.
+Mining structures and mining rights are depreciated on a units-of-production basis utilising only
+proved and probable coal reserves in the depletion base.
+The Group's mining rights are of sufficient duration (or convey a legal right to renew for sufficient
+duration) to enable all reserves to be mined in accordance with current production schedules.
+Stripping costs incurred to develop a mine (or pit) before the production commences or to improve
+access to the component of the ore body during the production stage are capitalised as part of the
+cost of constructing the mine (or pit) and subsequently amortised over the life of the mine (or pit)
+on a units-of-production basis. Stripping costs and secondary development expenditure, mainly
+comprising costs on blasting, haulage, excavation, etc. incurred during the production stage of the
+ore body are charged to profit or loss as incurred.
+Commercial reserves are proved and probable reserves. Changes in the commercial reserves
+affecting unit of production calculations are dealt with prospectively over the revised remaining
+reserves.
+Exploration and evaluation assets
+Exploration and evaluation assets comprise costs which are directly attributable to the search for
+mineral resources, the determination of technical feasibility and the assessment of commercial
+viability of an identified resource:
+.
+researching and analysing historical exploration data;
+gathering exploration data through topographical, geochemical and geophysical studies;
+.
+exploratory drilling, trenching and sampling;
+determining and examining the volume and grade of the resource;
+212
+surveying transportation and infrastructure requirements; and
+2018 Annual Report 211
+The Directors reviewed the estimated useful lives of the assets annually based on the Group's
+historical experience with similar assets and taking into account anticipated technological changes.
+Construction in progress intended to be used for production, supply or administrative purposes
+are carried at cost, less any recognised impairment loss. Costs include professional fees and, for
+qualifying assets, borrowing costs capitalised in accordance with the Group's accounting policy.
+Such properties are classified to the appropriate categories of property, plant and equipment when
+completed and ready for intended use. Depreciation of these assets, on the same basis as other
+property, plant and equipment, commences when the assets are ready for their intended use.
+Property, plant and equipment
+Property, plant and equipment, which consists of freehold land and buildings, mining structures
+and mining rights, mining related machinery and equipment, and others, held for use in the
+production or supply of goods or services, or for administrative purposes, are stated in the
+consolidated statement of financial position at cost less subsequent accumulated depreciation and
+subsequent accumulated impairment losses, if any.
+Depreciation is recognised so as to write off the cost of items of property, plant and equipment
+(other than freehold land and construction in progress, which are subject to impairment
+assessment) less their residual values over their estimated useful lives. The estimated useful
+lives, residual values and depreciation method are reviewed at the end of each reporting period,
+with the effect of any changes in estimate accounted for on a prospective basis.
+Property, plant and equipment, except for freehold land, and mining structures and mining rights,
+are depreciated on a straight-line basis at the following rates per annum:
+Category
+Buildings
+Mining related machinery and equipment
+Generators related machinery and equipment
+Railway and port
+Vessel
+Coal chemical related machinery and equipment
+Furniture, fixtures, motor vehicles and other equipment
+Term for deprecation (year)
+10-50 years
+5-20 years
+20 years
+30-45 years
+10-25 years
+10-20 years
+5-20 years
+An item of property, plant and equipment is derecognised upon disposal or when no future
+economic benefits are expected to arise from the continued use of the asset. Any gain or loss
+arising on the disposal or retirement of an item of property, plant and equipment is determined as
+the difference between the sales proceeds and the carrying amount of the asset and is recognised
+in profit or loss.
+conducting market and finance studies.
+Expenditure during the initial exploration preparation stage of a project is charged to profit or loss as
+incurred. Exploration and evaluation costs, including the costs of acquiring licenses, are capitalised
+as exploration and evaluation assets on a project-by-project basis pending determination of the
+technical feasibility and commercial viability of the project.
+Once the final feasibility study has been completed and a development decision has been taken,
+accumulated capitalised exploration and evaluation expenditures in respect of an area of interest
+are transferred to property, plant and equipment. In circumstances when an area of interest
+is abandoned or management decides it is not commercially viable, any accumulated costs in
+respect of that area are written off in the period the decision is made.
+For the year ended 31 December 2018
+3.
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Intangible assets (Continued)
+Internally-generated intangible assets – research and development expenditure (Continued)
+-
+The amount initially recognised for internally-generated intangible asset is the sum of the
+expenditure incurred from the date when the intangible asset first meets the recognition criteria
+listed above. Where no internally-generated intangible asset can be recognised, development
+expenditure is recognised in profit or loss in the period in which it is incurred.
+Subsequent to initial recognition, internally-generated intangible asset is measured at cost less
+accumulated amortisation and accumulated impairment losses (if any), on the same basis as
+intangible assets acquired separately.
+Intangible assets acquired in a business combination not under common control
+Intangible assets acquired in a business combination are recognised separately from goodwill and
+are initially recognised at their fair value at the acquisition date (which is regarded as their cost).
+Subsequent to initial recognition, intangible assets acquired in a business combination with finite
+useful lives are reported at cost less accumulated amortisation and any accumulated impairment
+losses, on the same basis as intangible assets that are acquired separately.
+Derecognition of intangible assets
+An intangible asset is derecognised on disposal, or when no future economic benefits are
+expected from use or disposal. Gains and losses arising from derecognition of an intangible asset
+are measured as the difference between the net disposal proceeds and the carrying amount of
+the asset and are recognised in profit or loss in the period when the asset is derecognised.
+Impairment of tangible and intangible assets other than goodwill
+At the end of the reporting period, the Group reviews the carrying amounts of its tangible,
+intangible assets with finite useful lives to determine whether there is any indication that these
+assets have suffered an impairment loss. If any such indication exists, the recoverable amount of
+the relevant asset is estimated in order to determine the extent of the impairment loss (if any).
+The recoverable amount of tangible and intangible assets are estimated individually, when it is not
+possible to estimate the recoverable amount individually, the Group estimates the recoverable
+amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent
+basis of allocation can be identified, corporate assets are also allocated to individual cash-
+generating units, or otherwise they are allocated to the smallest group of cash-generating units for
+which a reasonable and consistent allocation basis can be identified.
+Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing
+value in use, the estimated future cash flows are discounted to their present value using a pre-tax
+discount rate that reflects current market assessments of the time value of money and the risks
+specific to the asset (or a cash-generating unit) for which the estimates of future cash flows have
+not been adjusted.
+China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+Notes to the Consolidated Financial Statements (Continued)
+214
+2018 Annual Report 213
+the ability to measure reliably the expenditure attributable to the intangible asset during its
+development.
+China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Obligations for land reclamation
+The Group's obligations for land reclamation consist of spending estimates at both surface and
+underground mines in accordance with the PRC rules and regulations. The Group estimates its
+liabilities for land reclamation and mine closure based upon detailed calculations of the amount
+and timing of the future cash flows for the required work. Spending estimates are escalated for
+inflation, then discounted at a discount rate that reflects current market assessments of the time
+value of money and the risks specific to the liability such that the amount of provision reflects
+the present value of the expenditures expected to be required to settle the obligation. The
+Group records a corresponding asset associated with the liability for final reclamation and mine
+closure. The obligation and corresponding asset are recognised in the period in which the liability
+is incurred. The asset is depreciated on the units-of-production method over its expected life
+and the liability is accreted to the projected spending date. As changes in estimates occur (such
+as mine plan revisions, changes in estimated costs, or changes in timing of the performance of
+reclamation activities), the revisions to the obligation and the corresponding asset are recognised
+at the appropriate discount rate.
+Costs for restoration of subsequent site damage which is caused on an ongoing basis during
+production are provided for at their net present values and charged to profit or loss as extraction
+progresses. Where the costs of site restoration are not anticipated to be significant, they are
+expensed as incurred.
+Intangible assets
+Intangible assets acquired separately
+Intangible assets with finite useful lives that are acquired separately are carried at costs less
+accumulated amortisation and any accumulated impairment losses. Amortisation for intangible
+assets with finite useful lives is recognised on a straight-line basis over their estimated useful
+lives. The estimated useful life and amortisation method are reviewed at the end of each reporting
+period, with the effect of any changes in estimate being accounted for on a prospective basis.
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Internally-generated intangible assets - research and development expenditure
+An internally-generated intangible asset arising from development activities (or from the
+development phase of an internal project) is recognised if, and only if, all of the following have
+been demonstrated:
+the technical feasibility of completing the intangible asset so that it will be available for use
+or sale;
+•
+the intention to complete the intangible asset and use or sell it;
+•
+the ability to use or sell the intangible asset;
+•
+how the intangible asset will generate probable future economic benefits;
+the availability of adequate technical, financial and other resources to complete the
+development and to use or sell the intangible asset; and
+Expenditure on research activities is recognised as an expense in the period in which it is incurred.
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+China Shenhua Energy Company Limited
+3.
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Revenue from contracts with customers (upon application of IFRS 15 in accordance
+with transitions in Note 2)
+Under IFRS 15, the Group recognises revenue when (or as) a performance obligation is satisfied,
+i.e. when "control" of the goods or services underlying the particular performance obligation is
+transferred to the customer.
+A performance obligation represents a good or service (or a bundle of goods or services) that is
+distinct or a series of distinct goods or services that are substantially the same.
+Control is transferred over time and revenue is recognised over time by reference to the progress
+towards complete satisfaction of the relevant performance obligation if one of the following
+criteria is met:
+•
+the customer simultaneously receives and consumes the benefits provided by the Group's
+performance as the Group performs;
+the Group's performance creates and enhances an asset that the customer controls as the
+Group performs; or
+the Group's performance does not create an asset with an alternative use to the Group and
+the Group has an enforceable right to payment for performance completed to date.
+Otherwise, revenue is recognised at a point in time when the customer obtains control of the
+distinct good or service.
+A contract asset represents the Group's right to consideration in exchange for goods or services
+that the Group has transferred to a customer that is not yet unconditional. It is assessed
+for impairment in accordance with IFRS 9. In contrast, a receivable represents the Group's
+unconditional right to consideration, i.e. only the passage of time is required before payment of
+that consideration is due.
+A contract liability represents the Group's obligation to transfer goods or services to a customer
+for which the Group has received consideration (or an amount of consideration is due) from the
+customer.
+Over time revenue recognition: measurement of progress towards complete satisfaction of a
+performance obligation
+Output method
+The progress towards complete satisfaction of a performance obligation is measured based on
+output method, which is to recognise revenue on the basis of direct measurements of the value
+of the goods or services transferred to the customer to date relative to the remaining goods or
+services promised under the contract, that best depict the Group's performance in transferring
+control of goods or services.
+2018 Annual Report 207
+Notes to the Consolidated Financial Statements (Continued)
+206 China Shenhua Energy Company Limited
+Non-current assets (and disposal groups) classified as held for sale are measured at the lower of
+their previous carrying amount and fair value less costs to sell, except for financial assets within
+the scope of IFRS 9, which continue to be measured in accordance with the accounting policies as
+set out in respective sections.
+When the Group is committed to a sale plan involving disposal of an investment, or a portion of an
+investment, in an associate or joint venture, the investment or the portion of the investment that
+will be disposed of is classified as held for sale when the criteria described above are met, and
+the Group discontinues the use of the equity method in relation to the portion that is classified as
+held for sale from the time when the investment (or a portion of the investment) is classified as
+held for sale.
+When the Group is committed to a sale plan involving loss of control of a subsidiary, all of the assets
+and liabilities of that subsidiary are classified as held for sale when the criteria described above
+are met, regardless of whether the Group will retain a non-controlling interest in the relevant
+subsidiary after the sale.
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Goodwill
+Goodwill arising on an acquisition of a business is carried at cost as established at the date of
+acquisition of the business less accumulated impairment losses, if any.
+For the purposes of impairment testing, goodwill is allocated to each of the Group's cash-
+generating units (or group of cash-generating units) that is expected to benefit from the synergies
+of the combination, which represent the lowest level at which the goodwill is monitored for
+internal management purposes and not larger than an operating segment.
+A cash-generating unit to which goodwill has been allocated is tested for impairment annually or
+more frequently when there is indication that the unit may be impaired. For goodwill arising on
+an acquisition in a reporting period, the cash-generating unit to which goodwill has been allocated
+is tested for impairment before the end of that reporting period. If the recoverable amount of
+the cash-generating unit is less than its carrying amount, the impairment loss is allocated first
+to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets
+of the unit on a pro-rata basis based on the carrying amount of each asset in the unit. Any
+impairment loss for goodwill is recognised directly in profit or loss. An impairment loss recognised
+for goodwill is not reversed in subsequent periods.
+On disposal of the relevant cash-generating unit or any of the cash-generating unit within the
+group of cash-generating units, the attributable amount of goodwill is included in the determination
+of the amount of profit or loss on disposal. When the Group disposes of an operation within
+the cash-generating unit (or a cash-generating unit within a group of cash-generating units), the
+amount of goodwill disposed of is measured on the basis of the relative values of the operation (or
+the cash-generating unit) disposed of and the portion of the cash-generating unit (or the group of
+cash-generating units) retained.
+Investments in associates
+An associate is an entity over which the Group has significant influence. Significant influence is
+the power to participate in the financial and operating policy decisions of the investee but is not
+control or joint control over those policies.
+The results and assets and liabilities of associates are incorporated in these consolidated financial
+statements using the equity method of accounting. The financial statements of associates
+used for equity accounting purposes are prepared using uniform accounting policies as those of
+the Group for like transactions and events in similar circumstances. Under the equity method,
+an investment in an associate is initially recognised in the consolidated statement of financial
+position at cost and adjusted thereafter to recognise the Group's share of the profit or loss and
+other comprehensive income of the associate. When the Group's share of losses of an associate
+exceeds the Group's interest in that associate (which includes any long-term interests that, in
+substance, form part of the Group's net investment in the associate), the Group discontinues
+recognising its share of further losses. Additional losses are recognised only to the extent that the
+Group has incurred legal or constructive obligations or made payments on behalf of that associate.
+On acquisition of the investment in an associate, any excess of the cost of acquisition over
+the Group's share of the net fair value of the identifiable assets, liabilities of the investee is
+recognised as goodwill, which is included within the carrying amount of the investment. Any
+excess of the Group's share of the net fair value of the identifiable assets and liabilities over the
+cost of investment, after reassessment, is recognised immediately in profit or loss in the period in
+which the investment is acquired.
+For the year ended 31 December 2018
+2018 Annual Report 205
+For the year ended 31 December 2018
+3.
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Investments in associates (Continued)
+The Group assesses whether there is an objective evidence that the interest in an associate may
+be impaired. When any objective evidence exists, the entire carrying amount of the investment
+(including goodwill) is tested for impairment in accordance with IAS 36 as a single asset by
+comparing its recoverable amount (higher of value in use and fair value less costs of disposal)
+with its carrying amount. Any impairment loss is recognised when the recoverable amount is
+less the carrying value of the investment in associates. Any reversal of that impairment loss is
+recognised in accordance with IAS 36 to the extent that the recoverable amount of the investment
+subsequently increases.
+When the Group reduces its ownership interest in an associate but the Group continues to use
+the equity method, the Group reclassifies to profit or loss the proportion of the gain or loss that
+had previously been recognised in other comprehensive income relating to that reduction in
+ownership interest if that gain or loss would be reclassified to profit or loss on the disposal of the
+related assets or liabilities.
+3.
+Non-current assets held for sale
+Non-current assets and disposal groups are classified as held for sale if their carrying amount
+will be recovered principally through a sale transaction rather than through continuing use. This
+condition is regarded as met only when the asset (or disposal group) is available for immediate
+sale in its present condition subject only to terms that are usual and customary for sales of such
+asset (or disposal group) and its sale is highly probable. Management must be committed to the
+sale, which should be expected to qualify for recognition as a completed sale within one year from
+the date of classification.
+Notes to the Consolidated Financial Statements (Continued)
+3.
+When a group entity transacts with an associate of the Group, profits and losses resulting
+from the transactions with the associate are recognised in the Group's consolidated financial
+statements only to the extent of interests in the associate that are not related to the Group.
+Revenue recognition (prior to 1 January 2018)
+Government grants that are receivable as compensation for expenses or losses already incurred
+or for the purpose of giving immediate financial support to the Group with no future related costs
+are recognised in profit or loss in the period in which they become receivable.
+Retirement benefit costs
+Payments to state-managed retirement benefit schemes and a supplemental defined contribution
+pension plan approved by the government are recognised as an expense when employees have
+rendered service entitling them to the contributions.
+2018 Annual Report 209
+210
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+3.
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Taxation
+The tax currently payable is based on taxable profit for the year. Taxable profit differs from
+"profit before income tax" as reported in the consolidated statement of profit or loss and other
+comprehensive income because of income or expense that are taxable or deductible in other years
+and items that are never taxable or deductible. The Group's liability for current tax is calculated
+using tax rates that have been enacted or substantively enacted by the end of the reporting
+period.
+Deferred tax is recognised on temporary differences between the carrying amounts of assets
+and liabilities in the consolidated financial statements and the corresponding tax bases used in
+the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable
+temporary differences. Deferred tax assets are generally recognised for all deductible temporary
+differences to the extent that it is probable that taxable profits will be available against which
+those deductible temporary differences can be utilised. Such deferred tax assets and liabilities
+are not recognised if the temporary difference arises from the initial recognition (other than in
+a business combination) of assets and liabilities in a transaction that affects neither the taxable
+profit nor the accounting profit. In addition, deferred tax liabilities are not recognised if the
+temporary difference arises from the initial recognition of goodwill.
+Deferred tax liabilities are recognised for taxable temporary differences associated with
+investments in subsidiaries and associates, except where the Group is able to control the reversal
+of the temporary difference and it is probable that the temporary difference will not reverse in the
+foreseeable future. Deferred tax assets arising from deductible temporary differences associated
+with such investments and interests are only recognised to the extent that it is probable that there
+will be sufficient taxable profits against which to utilise the benefits of the temporary differences
+and they are expected to reverse in the foreseeable future.
+The carrying amount of deferred tax assets is reviewed at the end of each reporting period and
+reduced to the extent that it is no longer probable that sufficient taxable profits will be available to
+allow all or part of the asset to be recovered. Unrecognised deferred tax assets are reassessed at
+the end of each reporting year and are recognised to the extent that it has become probable that
+future taxable profit will be available to allow all or part of the deferred tax asset to be recovered.
+Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the
+period in which the liability is settled or the asset is realised, based on tax rate (and tax laws) that
+have been enacted or substantively enacted by the end of the reporting period.
+The measurement of deferred tax liabilities and assets reflects the tax consequences that would
+follow from the manner in which the Group expects, at the end of the reporting period, to recover
+or settle the carrying amount of its assets and liabilities.
+Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off
+current tax assets against current tax liabilities and when they relate to income taxes levied by the
+same taxation authority and the Group intends to settle its current tax assets and liabilities on a
+net basis.
+Current and deferred tax are recognised in profit or loss, except when they relate to items that
+are recognised in other comprehensive income or directly in equity, in which case, the current and
+deferred tax are also recognised in other comprehensive income or directly in equity respectively.
+Where current tax or deferred tax arises from the initial accounting for a business combination,
+the tax effect is included in the accounting for the business combination.
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Government grants are recognised in profit or loss on a systematic basis over the periods in
+which the Group recognises as expenses the related costs for which the grants are intended to
+compensate. Specifically, government grants whose primary condition is that the Group should
+purchase, construct or otherwise acquire non-current assets are recognised as deferred income
+in the consolidated statement of financial position and transferred to profit or loss on a systematic
+and rational basis over the useful lives of the related assets.
+Government grants are not recognised until there is reasonable assurance that the Group will
+comply with the conditions attaching to them and that the grants will be received.
+Income tax expense represents the sum of the tax currently payable and deferred tax.
+Borrowing costs directly attributable to the acquisition, construction or production of qualifying
+assets, which are assets that necessarily take a substantial period of time to get ready for their
+intended use or sale, are added to as part of the cost of those assets, until such time as the assets
+are substantially ready for their intended use or sale. All other borrowing costs are expensed in
+the period in which they are incurred.
+Revenue is measured at the fair value of the consideration received or receivable. Provided it is
+probable that the economic benefits will flow to the Group and the revenue and costs can be
+measured reliably, revenue is recognised in profit or loss as follows:
+Government grants
+•
+Revenue associated with the sale of coal is recognised when the risks and rewards to the
+ownership of the goods have been passed to the customer.
+Revenue from sale of power is recognised upon the transmission of electric power to the
+power grid companies, as determined based on the volume of electric power transmitted
+and the applicable fixed tariff rates agreed with the respective electric power grid
+companies annually.
+Revenue from the rendering of railway, port, shipping and other services is recognised upon
+the delivery or performance of the services.
+Interest income is recognised as it accrues using the effective interest method.
+Leases
+The Group as lessee
+Operating lease payments, including the cost of acquiring land held under operating leases, are
+recognised as an expense on a straight-line basis over the lease term. Contingent rentals arising
+under operating leases are recognised as an expense in the period in which they are incurred.
+Dividend income from unlisted investments is recognised when the shareholder's right to
+receive payment is established.
+208 China Shenhua Energy Company Limited
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+3.
+Foreign currencies
+In preparing the financial statements of each individual group entity, transactions in currencies
+other than entity's functional currencies (foreign currencies) are recognised at the rates of
+exchange prevailing on the dates of the transactions. At the end of the reporting period, monetary
+items denominated in foreign currencies are retranslated at the rates prevailing at that date.
+Non-monetary items that are measured in terms of historical cost in a foreign currency are not
+retranslated. Exchange differences on monetary items are recognised in profit or loss in the period
+in which they arise.
+Borrowing costs
+In the event that lease incentives are received to enter into operating leases, such incentives are
+recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental
+expense on a straightline basis.
+For the purpose of presenting the consolidated financial statements, the assets and liabilities of
+the Group's foreign operations are translated into the presentation currency of the Group (i.e.
+RMB) using exchange rates prevailing at the end of each reporting period. Income and expenses
+items are translated at the average exchange rates for the period. Exchange differences arising, if
+any, are recognised in other comprehensive income and accumulated in equity under the heading
+of exchange reserve, attributed to non-controlling interests as appropriate.
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+.
+it has been acquired principally for the purpose of selling it in the near term; or
+on initial recognition it is part of a portfolio of identified financial instruments that the
+Group manages together and has a recent actual pattern of short-term profit-taking; or
+it is a derivative that is not designated and effective as a hedging instrument.
+Held-to-maturity investments
+222 China Shenhua Energy Company Limited
+Subsequent to initial recognition, held-to-maturity investments are measured at amortised
+cost using the effective interest method, less any impairment.
+3.
+Financial instruments (Continued)
+•
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Held-to-maturity investments are non-derivative financial assets with fixed or determinable
+payments and fixed maturity dates that are quoted in an active market and that the Group
+has the positive intention and ability to hold to maturity.
+A financial asset is classified as held for trading if:
+Financial instruments (Continued)
+(ii)
+Financial assets at FVTPL
+(i)
+The Group's financial assets include financial assets at FVTPL, held-to-maturity investments,
+loans and receivables and AFS financial assets. The subsequent measurement of financial assets
+depends on their classification as follows:
+Financial assets within the scope of IAS 39 are classified into the following specific categories:
+financial assets FVTPL, held-to-maturity investments, loans and receivables and AFS financial
+assets. The Group determines the classification of its financial assets at initial recognition based
+on their nature and purpose. All regular way purchases or sales of financial assets are recognised
+and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of
+financial assets that require delivery of assets within the time frame established by regulation or
+convention in the marketplace.
+Classification and subsequent measurement of financial assets (before application of IFRS 9 on
+1 January 2018)
+Financial assets (Continued)
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+3.
+Financial assets (Continued)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+Financial assets are classified as at FVTPL when the financial asset is either held for trading
+or it is designated as at FVTPL. They are stated at fair values, with any gains or losses
+arising on remeasurement, net of interest earned, recognised in profit or loss and are
+included in other gains and losses line item.
+Classification and subsequent measurement of financial assets (before application of IFRS 9 on
+1 January 2018) (Continued)
+it becoming probable that the borrower will enter bankruptcy or financial re-organisation.
+Loans and receivables
+For financial guarantee contracts, the loss allowances are recognised at the higher of the
+amount of the loss allowance determined in accordance with IFRS 9; and the amount
+initially recognised less, where appropriate, cumulative amount of income recognised over
+the guarantee period.
+2018 Annual Report 221
+224 China Shenhua Energy Company Limited
+In respect of AFS equity investments, impairment losses previously recognised in profit or loss are
+not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss
+is recognised in other comprehensive income and accumulated under the heading of fair value
+changes on AFS investment. In respect of debt securities, impairment losses are subsequently
+reversed through profit or loss if an increase in the fair value of the investment can be objectively
+related to an event occurring after the recognition of the impairment loss.
+For financial assets measured at amortised cost, if, in a subsequent period, the amount of the
+impairment loss decreases and the decrease can be related objectively to an event occurring after
+the impairment was recognised, the previously recognised impairment loss is reversed through
+profit or loss to the extent that the carrying amount of the investment at the date the impairment is
+reversed does not exceed what the amortised cost would have been had the impairment not been
+recognised.
+The carrying amount of the financial asset is reduced by the impairment loss directly for all
+financial assets with the exception of accounts receivables, other receivables, loans and advances
+to China Energy Group and fellow subsidiaries and entrusted loans, where the carrying amount is
+reduced through the use of an allowance account. When accounts receivable, other receivables,
+loans and advances to China Energy Group and fellow subsidiaries and entrusted loans are
+considered uncollectible, it is written off against the allowance account. Subsequent recoveries of
+amounts previously written off are credited to profit or loss.
+For financial assets carried at amortised cost, the amount of the impairment loss recognised is
+the difference between the asset's carrying amount and the present value of the estimated future
+cash flows discounted at the financial asset's original effective interest rate.
+For financial assets carried at cost, the amount of the impairment loss is measured as the
+difference between the asset's carrying amount and the present value of the estimated future
+cash flows discounted at the current market rate of return for a similar financial asset. Such
+impairment loss will not be reversed in subsequent periods.
+breach of contract, such as default or delinquency in interest and principal payments; or
+significant financial difficulty of the issuer or counterparty; or
+.
+•
+(!!!)
+Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end
+of each reporting period. Financial assets are considered to be impaired when there is objective
+evidence that, as a result of one or more events that occurred after the initial recognition of the
+financial asset, the estimated future cash flows of the financial assets have been affected. The
+objective evidence of impairment could include:
+Financial assets (Continued)
+Financial instruments (Continued)
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+3.
+For the year ended 31 December 2018
+Notes to the Consolidated Financial Statements (Continued)
+2018 Annual Report 223
+As the unlisted equity investments do not have a quoted market price in an active market
+and whose fair value cannot be reliably measured, they are measured at cost less any
+identified impairment losses at end of each reporting period. Dividends on the unlisted
+equity investment are recognised in profit or loss when the Group's right to receive the
+dividends is established in accordance with the policies set out for "Revenue recognition".
+AFS financial assets are non-derivatives that are either designated as AFS or are not
+classified as other categories of financial assets. AFS financial assets are measured at
+fair value at the end of each reporting period except for unquoted equity investments
+whose fair value cannot be reliably measured. Changes in the carrying amount of AFS debt
+instruments relating to interest income calculated using the effective interest method, are
+recognised in profit or loss. Dividends on AFS equity instruments are recognised in profit
+or loss when the Group's right to receive the dividends is established. Other changes in
+the carrying amount of AFS financial assets are recognised in other comprehensive income
+and accumulated under the heading of fair value changes on AFS investment. When the
+investment is disposed of or is determined to be impaired, the cumulative gain or loss
+previously accumulated in the fair value changes on AFS investment is reclassified to profit
+or loss.
+(iv) AFS financial assets
+Interest income is recognised by applying the effective interest rate, except for short-term
+receivables where the recognition of interest would be immaterial.
+Loans and receivables are non-derivative financial assets with fixed or determinable
+payments that are not quoted in an active market. Subsequent to initial recognition,
+loans and receivables (including accounts and bills receivables, other receivables, loans
+and advances to China Energy Group and fellow subsidiaries, entrusted loans, restricted
+bank deposits, time deposits with original maturity over three months and cash and cash
+equivalents) are measured at amortised cost using the effective interest method, less any
+identified impairment.
+Impairment of financial assets (before application of IFRS 9 on 1 January 2018)
+Except for financial guarantee contracts, the Group recognises an impairment gain or
+loss in profit or loss for all financial instruments by adjusting their carrying amount, with
+the exception of accounts and bills receivables, where the corresponding adjustment is
+recognised through a loss allowance account.
+Interest income is calculated based on the gross carrying amount of the financial asset
+unless the financial asset is credit impaired, in which case interest income is calculated
+based on amortised cost of the financial asset.
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+China Shenhua Energy Company Limited
+3.
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Financial instruments (Continued)
+Financial assets (Continued)
+Classification and subsequent measurement of financial assets (upon application of IFRS 9 in
+accordance with transitions in Note 2) (Continued)
+(i) Amortised cost and interest income
+(ii)
+(iii)
+Interest income is recognised using the effective interest method for financial assets
+measured subsequently at amortised cost. Interest income is calculated by applying the
+effective interest rate to the gross carrying amount of a financial asset, except for financial
+assets that have subsequently become credit-impaired (see below). For financial assets that
+have subsequently become credit-impaired, interest income is recognised by applying the
+effective interest rate to the amortised cost of the financial asset from the next reporting
+period. If the credit risk on the credit-impaired financial instrument improves so that the
+financial asset is no longer credit-impaired, interest income is recognised by applying the
+effective interest rate to the gross carrying amount of the financial asset from the beginning
+of the reporting period following the determination that the asset is no longer credit
+impaired.
+Equity instruments designated as at FVTOCI
+Investments in equity instruments at FVTOCI are subsequently measured at fair value with
+gains and losses arising from changes in fair value recognised in OCI and accumulated in
+the other reserves; and are not subject to impairment assessment. The cumulative gain or
+loss will not be reclassified to profit or loss on disposal of the equity investments, and will
+be transferred to retained earnings.
+Dividends from these investments in equity instruments are recognised in profit or loss
+when the Group's right to receive the dividends is established, unless the dividends clearly
+represent a recovery of part of the cost of the investment. Dividends are included in the
+"other income" line item in profit or loss.
+In addition, the Group may irrevocably designate a financial asset that are required to be measured
+at the amortised cost or FVTOCI as measured at FVTPL if doing so eliminates or significantly
+reduces an accounting mismatch.
+Financial assets at FVTPL
+Financial assets at FVTPL are measured at fair value at the end of each reporting period,
+with any fair value gains or losses recognised in profit or loss. The net gain or loss
+recognised in profit or loss includes any dividend or interest earned on the financial asset
+and is included in the "other gains and losses" line item.
+Impairment of financial assets (upon application IFRS 9 with transitions in accordance with
+Note 2)
+The Group recognises a loss allowance for ECL on financial assets which are subject to
+impairment under IFRS 9 (including accounts and bills receivables, other receivables, long-term
+receivables, loans to China Energy Group and fellow subsidiaries, entrusted loans and financial
+guarantee contracts). The amount of ECL is updated at each reporting date to reflect changes in
+credit risk since initial recognition.
+2018 Annual Report 217
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+3.
+Financial instruments (Continued)
+Financial assets (Continued)
+Impairment of financial assets (upon application IFRS 9 with transitions in accordance with
+Note 2) (Continued)
+Lifetime ECL represents the ECL that will result from all possible default events over the expected
+life of the relevant instrument. In contrast, 12m ECL represents the portion of lifetime ECL that
+is expected to result from default events that are possible within 12 months after the reporting
+date. Assessments are done based on the Group's historical credit loss experience, adjusted for
+factors that are specific to the debtors, general economic conditions and an assessment of both
+the current conditions at the reporting date as well as the forecast of future conditions.
+The Group always recognises lifetime ECL for accounts and bills receivables. The ECL on these
+assets are assessed individually for credit-impaired debtors or collectively using a provision matrix
+with appropriate groupings.
+For all other instruments, the Group measures the loss allowance equal to 12m ECL, unless when
+there has been a significant increase in credit risk since initial recognition, the Group recognises
+lifetime ECL. The assessment of whether lifetime ECL should be recognised is based on
+significant increases in the likelihood or risk of a default occurring since initial recognition.
+(i) Significant increase in credit risk
+Financial assets that do not meet the criteria for being measured at amortised cost or
+FVTOCI or designated as FVTOCI are measured at FVTPL.
+it is a derivative that is not designated and effective as a hedging instrument.
+on initial recognition it is a part of a portfolio of identified financial instruments that the
+Group manages together and has a recent actual pattern of short-term profit-taking; or
+it has been acquired principally for the purpose of selling in the near term; or
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Impairment of tangible and intangible assets other than goodwill (Continued)
+If the recoverable amount of an asset (or a cash-generating unit) is estimated to be less than its
+carrying amount, the carrying amount of the asset (or a cash-generating unit) is reduced to its
+recoverable amount. In allocating the impairment loss, the impairment loss is allocated first to
+reduce the carrying amount of any goodwill (if applicable) and then to the other assets on a pro-
+rata basis based on the carrying amount of each asset in the unit. The carrying amount of an asset
+is not reduced below the highest of its fair value less costs of disposal (if measurable), its value
+in use (if determinable) and zero. The amount of the impairment loss that would otherwise have
+been allocated to the asset is allocated pro rata to the other assets of the unit. An impairment loss
+is recognised immediately in profit or loss.
+Inventories
+Inventories are stated at the lower of cost and net realisable value. Costs of inventories are
+calculated using the weighted average method. Net realisable value represents the estimated
+selling price for inventories less all estimated costs of completion and costs necessary to make
+the sale.
+Provisions
+Provisions are recognised when the Group has a present obligation (legal or constructive) as a
+result of a past event, it is probable that the Group will be required to settle that obligation, and a
+reliable estimate can be made of the amount of the obligation.
+Provisions are measured at the best estimate of the consideration required to settle the present
+obligation at the end of the reporting period, taking into account the risks and uncertainties
+surrounding the obligation. When a provision is measured using the cash flows estimated to settle
+the present obligation, its carrying amount is the present value of those cash flows (where the
+effect of the time value of money is material).
+When some or all of the economic benefits required to settle a provision are expected to be
+recovered from a third party, a receivable is recognised as an asset if it is virtually certain that
+reimbursement will be received and the amount of the receivable can be measured reliably.
+Financial instruments
+Financial assets and financial liabilities are recognised when a group entity becomes a party to the
+contractual provisions of the instrument. All regular way purchases or sales of financial assets are
+recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases
+or sales of financial assets that require delivery of assets within the time frame established by
+regulation or convention in the market place.
+Financial assets and financial liabilities are initially measured at fair value except for trade
+receivables arising from contracts with customers which are initially measured in accordance with
+IFRS 15 since 1 January 2018. Transaction costs that are directly attributable to the acquisition
+or issue of financial assets and financial liabilities (other than financial assets or financial liabilities
+FVTPL) are added to or deducted from the fair value of the financial assets or financial liabilities,
+as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of
+financial assets or financial liabilities FVTPL are recognised immediately in profit or loss.
+2018 Annual Report 215
+216
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+A financial asset is classified as held for trading if:
+the contractual terms give rise on specified dates to cash flows that are solely payments of
+principal and interest on the principal amount outstanding.
+the financial asset is held within a business model whose objective is achieved by both
+collecting contractual cash flows and selling; and
+Financial assets that meet the following conditions are subsequently measured at FVTOCI:
+the contractual terms give rise on specified dates to cash flows that are solely payments of
+principal and interest on the principal amount outstanding.
+the financial asset is held within a business model whose objective is to collect contractual
+cash flows; and
+In assessing whether the credit risk has increased significantly since initial recognition,
+the Group compares the risk of a default occurring on the financial instrument as at the
+reporting date with the risk of a default occurring on the financial instrument as at the date
+of initial recognition. In making this assessment, the Group considers both quantitative and
+qualitative information that is reasonable and supportable, including historical experience
+and forward-looking information that is available without undue cost or effort.
+Financial assets that meet the following conditions are subsequently measured at amortised cost:
+Financial assets
+The effective interest method is a method of calculating the amortised cost of a financial asset or
+financial liability and of allocating interest income and interest expense over the relevant period.
+The effective interest rate is the rate that exactly discounts estimated future cash receipts and
+payments (including all fees and points paid or received that form an integral part of the effective
+interest rate, transaction costs and other premiums or discounts) through the expected life of
+the financial asset or financial liability, or, where appropriate, a shorter period, to the net carrying
+amount on initial recognition.
+Effective interest method
+Financial instruments (Continued)
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+3.
+Classification and subsequent measurement of financial assets (upon application of IFRS 9 in
+accordance with transitions in Note 2)
+In particular, the following information is taken into account when assessing whether credit
+risk has increased significantly:
+All other financial assets are subsequently measured at FVTPL, except that at the date of initial
+application/initial recognition of a financial asset the Group may irrevocably elect to present
+subsequent changes in fair value of an equity investment in OCI if that equity investment is
+neither held for trading nor contingent consideration recognised by an acquirer in a business
+combination to which IFRS 3 Business Combinations applies.
+significant deterioration in external market indicators of credit risk, e.g. a significant
+increase in the credit spread, the credit default swap prices for the debtor;
+(b)
+a breach of contract, such as a default or past due event;
+(c)
+(d)
+(e)
+the lenders of the borrower, for economic or contractual reasons relating to the
+borrower's financial difficulty, having granted to the borrower a concessions that the
+lenders would not otherwise consider;
+it is becoming probable that the borrower will enter bankruptcy or other financial re-
+organisation; or
+the disappearance of an active market for that financial asset because of financial
+difficulties.
+Write-off policy
+The Group writes off a financial asset when there is information indicating that the
+counterparty is in severe financial difficulty and there is no realistic prospect of recovery,
+for example, when the counterparty has been placed under liquidation or has entered into
+bankruptcy proceedings. Financial assets written off may still be subject to enforcement
+activities under the Group's recovery procedures, taking into account legal advice where
+appropriate. A write-off constitutes a derecognition event. Any subsequent recoveries are
+recognised in profit or loss.
+Measurement and recognition of ECL
+The measurement of ECL is a function of the probability of default, loss given default (i.e.
+the magnitude of the loss if there is a default) and the exposure at default. The assessment
+of the probability of default and loss given default is based on historical data adjusted
+by forward-looking information. Estimation of ECL reflects an unbiased and probability-
+weighted amount that is determined with the respective risks of default occurring as the
+weights.
+Generally, the ECL is the difference between all contractual cash flows that are due to the
+Group in accordance with the contract and the cash flows that the Group expects to receive,
+discounted at the effective interest rate determined at initial recognition.
+220 China Shenhua Energy Company Limited
+(v)
+3.
+Financial instruments (Continued)
+Financial assets (Continued)
+Impairment of financial assets (upon application IFRS 9 with transitions in accordance with
+Note 2) (Continued)
+(v)
+Measurement and recognition of ECL (Continued)
+For a financial guarantee contract, the Group is required to make payments only in the event
+of a default by the debtor in accordance with the terms of the instrument that is guaranteed.
+Accordingly, the expected losses is the present value of the expected payments to
+reimburse the holder for a credit loss that it incurs less any amounts that the Group expects
+to receive from the holder, the debtor or any other party.
+For ECL on financial guarantee contracts for which the effective interest rate cannot be
+determined, the Group will apply a discount rate that reflects the current market assessment
+of the time value of money and the risks that are specific to the cash flows but only if, and
+to the extent that, the risks are taken into account by adjusting the discount rate instead of
+adjusting the cash shortfalls being discounted.
+Where ECL is measured on a collective basis or cater for cases where evidence at the
+individual instrument level may not yet be available, the financial instruments are grouped
+on the following basis:
+Nature of financial instruments (i.e. the Group's accounts and bills receivables and
+other receivables are each assessed as a separate group. Loans receivable are
+assessed for ECL on an individual basis);
+.
+Past-due status; and
+External credit ratings where available.
+The grouping is regularly reviewed by management to ensure the constituents of each
+group continue to share similar credit risk characteristics.
+an actual or expected significant deterioration in the financial instrument's external
+credit rating (if available);
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+(iv)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+A financial asset is credit-impaired when one or more events of default that have a
+detrimental impact on the estimated future cash flows of that financial asset have occurred.
+Evidence that a financial asset is credit-impaired includes observable data about the
+following events:
+existing or forecast adverse changes in business, financial or economic conditions
+that are expected to cause a significant decrease in the debtor's ability to meet its
+debt obligations;
+(a) significant financial difficulty of the issuer or the borrower;
+an actual or expected significant deterioration in the operating results of the debtor;
+an actual or expected significant adverse change in the regulatory, economic, or
+technological environment of the debtor that results in a significant decrease in the
+debtor's ability to meet its debt obligations.
+218
+China Shenhua Energy Company Limited
+3.
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Financial assets (Continued)
+Impairment of financial assets (upon application IFRS 9 with transitions in accordance with
+Note 2) (Continued)
+(i)
+(ii)
+Significant increase in credit risk (Continued)
+Irrespective of the outcome of the above assessment, the Group presumes that the credit
+risk has increased significantly since initial recognition when contractual payments are more
+than 30 days past due, unless the Group has reasonable and supportable information that
+demonstrates otherwise.
+Financial instruments (Continued)
+Financial instruments (Continued)
+(iii)
+Impairment of financial assets (upon application IFRS 9 with transitions in accordance with
+Note 2) (Continued)
+Financial assets (Continued)
+Credit-impaired financial assets
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+3.
+Despite the aforegoing, the Group assumes that the credit risk on a debt instrument has
+not increased significantly since initial recognition if the debt instrument is determined to
+have low credit risk at the reporting date. A debt instrument is determined to have low
+credit risk if i) it has a low risk of default, ii) the borrower has a strong capacity to meet its
+contractual cash flow obligations in the near term and iii) adverse changes in economic and
+business conditions in the longer term may, but will not necessarily, reduce the ability of
+the borrower to fulfil its contractual cash flow obligations.
+For the year ended 31 December 2018
+Notes to the Consolidated Financial Statements (Continued)
+2018 Annual Report 219
+For internal credit risk management, the Group considers an event of default occurs when
+information developed internally or obtained from external sources indicates that the debtor
+is unlikely to pay its creditors, including the Group, in full (without taking into account any
+collaterals held by the Group).
+Definition of default
+The Group regularly monitors the effectiveness of the criteria used to identify whether there
+has been a significant increase in credit risk and revises them as appropriate to ensure that
+the criteria are capable of identifying significant increase in credit risk before the amount
+becomes past due.
+For financial guarantee contracts, the date that the Group becomes a party to the irrevocable
+commitment is considered to be the date of initial recognition for the purposes of assessing
+the financial instrument for impairment. In assessing whether there has been a significant
+increase in the credit risk since initial recognition of financial guarantee contracts, the Group
+considers the changes in the risk that the specified debtor will default on the contract.
+5,877
+33,272
+79,246
+265
+6,124
+External customers
+Inter-segment
+5,615
+31,971
+information
+160,845 155,370 88,176
+44,346 40,548 276
+733
+788 837 698
+5,391 4,929 3,252 2,549
+37,586
+5,681
+1,793 1,348 264,101 248,746
+970 1,040 87,507 81,302
+205,191 195,918 88,452
+5,717 4,089
+79,511 39,149
+2018 2017 2018 2017 2018 2017
+RMB RMB RMB RMB RMB
+million million million million million
+5,840
+RMB
+million
+5.
+Total
+232
+3,247 5,840
+The Group's revenue from contracts with customers is RMB262,308 million for the year ended 31
+December 2018.
+China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+REVENUE FROM GOODS AND SERVICES (CONTINUED)
+Set out below is the reconciliation of the revenue with the amounts disclosed in the segment
+information.
+2018 2017 2018 2017 2018 2017 2018 2017 2018 2017
+RMB RMB RMB RMB RMB RMB RMB RMB RMB RMB
+million million million million million million million million million million
+Segments
+Coal
+Power
+Railway
+Port
+Shipping
+Coal chemical
+Others
+Revenue disclosed in segment
+5,681
+Port operations - which provide loading, transportation and storage services to the coal
+operations segment and external customers. The Group charges service fees and other
+expenses, which are reviewed and approved by the relevant government authorities.
+2,388 351,608 330,048
+SEGMENT AND OTHER INFORMATION
+The Group manages its businesses by divisions, which are organised by business lines (products
+and services). In a manner consistent with the way in which information is reported internally to
+the Group's chief operating decision maker ("CODM"), including president, senior vice president
+and chief financial officer, for the purposes of resource allocation and performance assessment,
+the Group has presented the following six (2017: six) reportable segments. No operating
+segments have been aggregated to form the following reportable segments.
+(1) Coal operations - which produce coal from surface and underground mines, and the sale of
+coal to external customers, the power operations segment and the coal chemical operations
+segment. The Group sells its coal under long-term supply contracts, which allow periodical
+price adjustments, and at spot market.
+(2)
+(3)
+(4)
+(5)
+(6)
+Power operations - which use coal from the coal operations segment and external suppliers,
+thermal power, wind power, water power and gas power to generate electric power for the
+sale to coal operations segment and external customers. Electric power is sold to the power
+grid companies in accordance with planned power output at the tariff rates as approved
+by the relevant government authorities. Electric power produced in excess of the planned
+power output is sold at the tariff rate as agreed upon with the respective power grid
+companies which are generally lower than the tariff rates for planned power output.
+Railway operations - which provide railway transportation services to the coal operations
+segment, the power operations segment, the coal chemical operations segment and
+external customers. The rates of freight charges billed to the coal operations segment, the
+power operations segment, the coal chemical operations segment and external customers
+are consistent and do not exceed the maximum amounts approved by the relevant
+government authorities.
+Shipping operations - which provide shipment transportation services to the power
+operations segment, the coal operations segment and external customers. The rates of
+freight charges billed to the power operations segment, the coal operations segment and
+external customers are consistent.
+Coal chemical operations – which use coal from the coal operations segment to first
+produce methanol and further process into polyethylene and polypropylene, together with
+other by-products, for sale to external customers. The Group sells its polyethylene at spot
+market.
+China Shenhua Energy Company Limited
+788
+1,348 264,101 248,746
+6.
+For the year ended 31 December 2018
+Notes to the Consolidated Financial Statements (Continued)
+234
+Adjustment and eliminations
+(44,346) (40,548)
+(276)
+(265) (33,272) (31,971)
+(5,391) (4,929) (3,252) (2,549)
+(970)
+(1,040) (87,507) (81,302)
+2,763
+160,845 155,370 88,176 79,246 5,877 5,615 733 788 837 698 5,840
+1,793 1,348 264,101 248,746
+Revenue
+The Group produces and sells coal and coal chemical products to customers at spot market.
+For sales of coal and coal chemical products, revenue is recognised when control of the goods
+has transferred, being when the goods have been shipped to the customers' specific location.
+According to the Group's historical experiences, there was no exchange or return of coal and coal
+chemical products occurred. There is no sales-related warranties associated with coal and coal
+chemical products.
+For sales of power, revenue is recognised upon the transmission of electric power to the power
+grid companies. Power could not be returned or exchanged and there is also no warranties
+associated with power sales.
+The Group provides railway transportation services, shipment transportation services as well as
+port loading and storage services to customers. Such services are recognised as a performance
+obligation satisfied over time as the Group rendering the services. Revenue is recognised for
+these services based on the stage of completion of the performance obligation using output
+method.
+All performance obligations of sales of coal, power and coal chemical products, railway and
+shipment transportation services, and port loading and storage services are part of contracts with
+an original expected duration of one year or less. As permitted under IFRS 15, the transaction
+price allocated to these unsatisfied contracts is not disclosed.
+2018 Annual Report 233
+5,681
+698 5,840 5,681 1,793
+733
+160,845 155,370 88,176 79,246 5,877 5,615
+Disaggregation of revenue
+Coal
+Power
+Railway
+Port
+Segments
+2018 2017 2018 2017 2018
+RMB RMB RMB RMB RMB
+million million million million million
+Shipping Coal chemical
+2017 2018 2017 2018 2017 2018 2017 2018
+RMB RMB RMB RMB RMB RMB RMB RMB
+million million million million million million million million
+Others
+Total
+REVENUE FROM GOODS AND SERVICES
+2017 2018 2017
+RMB RMB RMB
+million million million
+Sales of goods
+Coal
+155,792 150,740
+Power
+86,905 78,247
+Coal chemical products
+Others
+5,053 4,630 1,271 999
+155,792 150,740
+86,905
+78,247
+5,276 5,085
+Types of goods or service
+5.
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+2018 Annual Report 231
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+4.
+CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
+UNCERTAINTY (CONTINUED)
+4.2 Key sources of estimation uncertainty (Continued)
+Impairment losses (Continued)
+Notwithstanding that the Group has used all available information to make this estimation,
+inherent uncertainty exists and actual write-offs may be higher or lower than the amount
+estimated. The carrying amounts of the property, plant and equipment, construction in
+progress and interests in associates are disclosed in Notes 17, 18 and 21, respectively.
+Depreciation
+Other than the freehold land and mining structures and mining rights, property, plant and
+equipment are depreciated on a straight-line basis over the estimated useful lives of the
+assets, after taking into account the estimated residual value. The Group reviews the
+estimated useful lives and residual value of the assets regularly based on the Group's
+historical experience with similar assets and taking into account anticipated technological
+changes. Depreciation for future periods is adjusted if there is a significant change from
+previous estimates. The carrying amount of the property, plant and equipment is disclosed
+in Note 17.
+Deferred tax assets
+As at 31 December 2018, deferred tax assets of RMB3,083 million (2017: RMB3,798
+million) have been recognised in the Group's consolidated statement of financial position.
+No deferred tax asset has been recognised on the tax losses of RMB7,532 million (2017:
+RMB7,268 million) and deductible temporary differences of RMB6,685 million (2017:
+RMB6,555 million) due to the unpredictability of future profit streams. The realisation of the
+deferred tax assets mainly depends on whether sufficient future profits or taxable temporary
+differences will be available in the future. In cases where the actual future profits generated
+are less or more than expected, a material reversal or further provision of deferred tax assets
+may arise, which will be recognised in profit or loss in the period in which such a reversal or
+further provision takes place.
+Fair value measurement of financial instruments
+Certain of the Group's financial assets, unquoted equity instruments amounting to RMB811
+million as at 31 December 2018 (RMB749 million as at 1 January 2018) are measured at
+fair values with fair values being determined based on unobservable inputs using valuation
+techniques as set out in Note 40.3. Changes in assumptions relating to any key inputs may
+have a material impact on the reported fair values of these instruments.
+230 China Shenhua Energy Company Limited
+4.
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
+UNCERTAINTY (CONTINUED)
+4.2 Key sources of estimation uncertainty (Continued)
+Provision of ECL for accounts and bills receivables
+The Group uses provision matrix to calculate ECL for accounts and bills receivables. The
+provision rates are based on the aging of accounts and bills receivables as groupings of
+receivables that have similar loss patterns. The provision matrix is based on the Group's
+historical default rates taking into consideration forward-looking information that is available
+without undue costs or effort. At every reporting date, the historical observed default rates
+are reassessed and changes in the forward-looking information are considered. In addition,
+accounts and bills receivables with significant balances and credit impaired are assessed for
+ECL individually.
+The provision of ECL is sensitive to changes in estimates. The information about the
+ECL and the Group's accounts and bills receivables are disclosed in Note 27 and 40.2,
+respectively.
+Obligations for land reclamation
+The estimation of the liabilities for final reclamation and mine closure involves the estimates
+of the amount and timing for the future cash spending as well as the discount rate used
+for reflecting current market assessments of the time value of money and the risks
+specific to the liability. The Group considers the factors including development plan of the
+mines, the geological structure of the mining regions and reserve volume to determine
+the scope, amount and timing of reclamation and mine closure works to be performed.
+Determination of the effect of these factors involves judgements from the Group and the
+estimated liabilities may turn out to be different from the actual expenditure to be incurred.
+The discount rate used by the Group may also be altered to reflect the changes in the
+market assessments of the time value of money and the risks specific to the liability, such
+as change of the borrowing rate and inflation rate in the market. As changes in estimates
+occur (such as mine plan revisions, changes in estimated costs, or changes in timing of the
+performance of reclamation activities), the revisions to the obligation will be recognised at
+the appropriate discount rate. The carrying amounts of the obligations are disclosed in Note
+37.
+5,276 5,085
+564
+596
+6,888 6,225
+23
+788
+88
+337
+837
+698
+I
+1,793 1,348 9,240 8,449
+Total
+160,845 155,370 88,176 79,246
+5,877
+5,615 733
+788
+837
+698 5,840 5,681
+1,793
+1,348 264,101 248,746
+Geographical markets
+Domestic markets
+Overseas markets
+158,831 152,562 87,419 78,538
+2,014 2,808 757 708
+733 788 837
+5,877 5,615
+5,615 733
+2018 Annual Report 229
+5,877
+146
+160,845 155,370 88,176 79,246
+I
+5,840
+5,681
+88
+254,861 240,297
+Transportation and other services
+Railway
+5,106
+4,797
+587
+Others
+771
+Shipping : 4520837 698 1.793 134
+818
+ཆེ;
+580
+I 'g'
+5,106 4,797
+587
+580
+837
+698
+2,710 2,374
+In considering the impairment losses that may be required for current receivables and other
+financial assets, future cash flows need to be determined. One of the key assumptions that
+has to be applied is about the ability of the debtors to settle the receivables.
+Port
+Impairment losses
+837 698 5,840 5,681
+3.
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Financial instruments (Continued)
+Financial assets (Continued)
+Derecognition of financial assets
+The Group derecognises a financial asset only when the contractual rights to the cash flows
+from the asset expire, or when it transfers the financial asset and substantially all the risks and
+rewards of ownership of the asset to another entity. If the Group retains substantially all the risks
+and rewards of ownership of a transferred financial asset, the Group continues to recognise the
+financial asset and also recognises a collateralised borrowing for the proceeds received.
+On derecognition of a financial asset measured at amortised cost, the difference between the
+asset's carrying amount and the sum of the consideration received and receivable is recognised in
+profit or loss.
+On derecognition of an investment in equity instrument which the Group has elected on initial
+recognition to measure at FVTOCI upon application of IFRS 9, the cumulative gain or loss
+previously accumulated in other reserves is not reclassified to profit or loss, but is transferred to
+retained earnings.
+1,793
+On derecognition of an AFS financial asset, the cumulative gain or loss previously accumulated in
+the other reserves is reclassified to profit or loss.
+Classification as debt or equity
+Debt and equity instruments are classified as either financial liabilities or as equity in accordance
+with the substance of the contractual arrangements and the definitions of a financial liability and
+an equity instrument.
+Equity instruments
+An equity instrument is any contract that evidences a residual interest in the assets of an entity
+after deducting all of its liabilities. Equity instruments issued by the Company are recognised at
+the proceeds received, net of direct issue costs.
+Financial liabilities
+All financial liabilities are subsequently measured at amortised cost using the effective interest
+method or at FVTPL.
+2018 Annual Report 225
+226
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+Financial liabilities and equity
+1,348 261,330 245,230
+2,771 3,516
+Total
+160,845 155,370 88,176 79,246 5,877 5,615
+Total
+1,348 9,240 8,449
+In considering the impairment losses that may be required for certain of the Group's assets
+which mainly include property, plant and equipment, construction in progress and interests
+in associates, the recoverable amount of the asset need to be determined. The recoverable
+amount is the higher of its fair value less cost of disposal and value in use. It is difficult
+to precisely estimate fair value because quoted market prices for these assets may not
+be readily available. In determining the value in use, the Group uses all readily available
+information in determining expected cash flows generated by the cash-generating unit to
+which the asset belongs and they are discounted to their present value, which requires
+significant judgement relating to cash flow items such as level of sale volume, selling price,
+amount of operating costs and future returns.
+1,793
+698
+837
+88
+788
+5,877 5,615 733
+254,861 240,297
+5,840 5,681
+160,845 155,370 88,176 79,246
+A point in time
+Over time
+Timing of revenue recognition
+1,348 264,101 248,746
+5,840 5,681 1,793
+698
+89
+37
+837
+788
+788
+733
+3.
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+33
+Financial liabilities and equity (Continued)
+The Group derecognises financial liabilities when, and only when, the Group's obligations are
+discharged, cancelled or have expired. The difference between the carrying amount of the
+financial liability derecognised and the consideration paid and payable is recognised in profit or
+loss.
+Derivative financial instruments
+The Group's derivative financial instruments represent cross-currency exchange rate swaps, and
+are initially recognised at fair value at the date when the derivative contracts are entered into, and
+remeasured at fair value at the end of the reporting period, with any gains or losses recognised in
+profit or loss.
+2018 Annual Report 227
+228
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+4.
+CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
+UNCERTAINTY
+In the application of the Group's accounting policies, which are described in Note 3, the Directors
+are required to make judgements, estimates and assumptions about the carrying amounts of
+assets and liabilities that are not readily apparent from other sources. The estimates and associated
+assumptions are based on historical experience and other factors that are considered to be
+relevant. Actual results may differ from these estimates.
+The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to
+accounting estimates are recognised in the period in which the estimate is revised if the revision
+affects only that period or in the period of the revision and future periods if the revision affects
+both current and future periods.
+4.1
+The following are critical judgements, apart from those involving estimation (see Note 4.2
+below), that the Directors have made in the process of applying the Group's accounting
+policies and that have the most significant effect on the amounts recognised in the
+consolidated financial statements.
+Control over Hebei Guohua Dingzhou Power Co., Ltd. ("Dingzhou Power")
+Note 46 describes that Dingzhou Power is a subsidiary of the Company although the
+Company has only 41% ownership interest and voting rights in Dingzhou Power. The
+remaining 59% of ownership interest and voting rights are owned by two shareholders that
+are unrelated to the Group as to 19% and 40%, respectively. Details of Dingzhou Power are
+set out in Note 46.
+In making their judgement, the Directors considered that the other shareholders of Dingzhou
+Power offered the Company, for the right on appointment of the majority members of the
+board of directors which is the governing body of most of the relevant activities of Dingzhou
+Power. The Directors considered that the Company has the practical ability to direct the
+relevant activities that most significantly affect Dingzhou Power's returns unilaterally. After
+assessment, the Directors concluded that the Company has sufficiently dominant power
+over the board of directors of Dingzhou Power and therefore the Company has control over
+Dingzhou Power.
+China Shenhua Energy Company Limited
+4.
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
+UNCERTAINTY (CONTINUED)
+4.2 Key sources of estimation uncertainty
+The following are the key assumptions concerning the future, and other key sources of
+estimation uncertainty at the end of the reporting period that have a significant risk of
+causing a material adjustment to the carrying amounts of assets and liabilities within the
+next financial year.
+Financial instruments (Continued)
+Coal reserves
+Derecognition of financial liabilities
+the amount initially recognised less, where appropriate, cumulative amortisation recognised
+over the guarantee period.
+Critical judgements in applying accounting policies
+the amount of the loss allowance determined in accordance with IFRS 9 (since 1 January
+2018)/IAS 37 Provisions, Contingent Liabilities and Contingent Assets (before application of
+IFRS 9 on 1 January 2018); and
+Financial liabilities at FVTPL
+Financial liabilities are classified as at FVTPL when the financial liability is (i) contingent
+consideration of an acquirer in a business combination to which IFRS 3 applies, (ii) held for trading
+or (iii) it is designated as at FVTPL.
+Despite the inherent imprecision in these engineering estimates, these estimates are
+used in determining depreciation expenses and impairment loss. Depreciation rates
+are determined based on estimated proved and probable coal reserve quantity (the
+denominator) and capitalised costs of mining structures and mining rights (the numerator).
+The capitalised cost of mining structures and mining rights are amortised based on the units
+of coal produced.
+A financial liability is classified as held for trading if:
+.
+it has been acquired principally for the purpose of repurchasing it in the near term; or
+on initial recognition it is part of a portfolio of identified financial instruments that the Group
+manages together and has a recent actual pattern of short-term profit-taking; or
+it is a derivative, except for a derivative that is a financial guarantee contract or a designated
+and effective hedging instrument.
+A financial liability other than a financial liability held for trading or contingent consideration of an
+acquirer in a business combination may be designated as at FVTPL upon initial recognition if:
+such designation eliminates or significantly reduces a measurement or recognition
+inconsistency that would otherwise arise; or
+the financial liability forms part of a group of financial assets or financial liabilities or both,
+which is managed and its performance is evaluated on a fair value basis, in accordance with
+the Group's documented risk management or investment strategy, and information about
+the grouping is provided internally on that basis; or
+it forms part of a contract containing one or more embedded derivatives, and IFRS 9/IAS 39
+permits the entire combined contract to be designated as at FVTPL.
+Engineering estimates of the Group's coal reserves are inherently imprecise and represent
+only approximate amounts because of the subjective judgements involved in developing
+such information. There are authoritative guidelines regarding the engineering criteria
+that have to be met before estimated coal reserves can be designated as "proved" and
+"probable". Proved and probable coal reserve estimates are updated at regular basis and
+have taken into account recent production and technical information of each mine. In
+addition, as prices and cost levels change from year to year, the estimate of proved and
+probable coal reserves also changes. This change is considered as a change in estimate for
+accounting purposes and is reflected on a prospective basis in related depreciation rates.
+China Shenhua Energy Company Limited
+3.
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Financial instruments (Continued)
+Financial liabilities and equity (Continued)
+Financial liabilities at amortised cost
+Financial liabilities including borrowings, accounts and bills payables, other payables, long-term
+liabilities, medium-term notes and bonds are subsequently measured at amortised cost, using the
+effective interest method.
+Financial guarantee contracts
+A financial guarantee contract is a contract that requires the issuer to make specified payments to
+reimburse the holder for a loss it incurs because a specified debtor fails to make payments when
+due in accordance with the terms of a debt instrument. Financial guarantee contract liabilities are
+measured initially at their fair values. It is subsequently measured at the higher of:
+RMB million
+311
+Total finance costs on financial liabilities not at FVTPL
+5,526
+5,529
+Less: amount capitalised
+4,730
+(799)
+4,734
+244
+Unwinding of discount
+169
+180
+(792)
+2017
+4,264
+954
+236
+- medium-term notes
+Exchange loss (gain), net
+5,046
+- borrowings
+Interest on:
+1,205
+1,479
+126
+959
+1,353
+RMB million
+- bonds
+246
+14,172
+1,981
+(494)
+17,535
+Tax at the PRC income tax rate of 25% (2017: 25%)
+Tax effects of:
+18,323
+2018
+73,293
+70,141
+Profit before income tax
+2017
+RMB million
+Year ended 31 December
+2018
+RMB million
+The tax charge for the year can be reconciled to the profit before income tax per consolidated
+statement of profit or loss and other comprehensive income as follows:
+15,977
+1,769
+391
+13,817
+RMB million
+RMB million
+2017
+Year ended 31 December
+2018
+Total finance costs
+Net finance costs
+Borrowing costs capitalised during the year arose on the general borrowing pools and were
+calculated by applying a capitalisation rate from 2.57% to 4.69% (2017: from 2.48% to 4.81%) per
+annum to expenditure on qualifying assets.
+5,421
+4,416
+3,942
+518
+3,211
+China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+10. INCOME TAX EXPENSE
+Current tax
+Under provision in respect of prior years
+Deferred tax
+238
+Year ended 31 December
+Transportation charges
+744
+13,842
+15,888
+19,523
+23,118
+49,950
+56,321
+2017
+RMB million
+RMB million
+2018
+Year ended 31 December
+Other operating costs
+Taxes and surcharges
+Repairs and maintenance
+Depreciation and amortisation
+20,243
+Personnel expenses
+Coal purchased
+COST OF SALES
+7.
+Unallocated items of total assets include deferred tax assets and other unallocated corporate assets.
+Unallocated items of total liabilities include deferred tax liabilities and other unallocated corporate liabilities.
+(iii)
+Non-current assets exclude interests in associates, financial instruments and deferred tax assets.
+(ii)
+Profit from operations is calculated as revenue minus cost of sales, selling expenses, general and
+administrative expenses and impairment losses.
+(i)
+Notes:
+207 188
+23,205 26,200
+10,982 416,213 381,056 (446,136) (423,923) 591,626 571,602
+(3,619) (191,617) (169,782) 345,593 325,680 (182,789) (192,497)
+7,058
+(636)
+- different tax rates of branches and subsidiaries
+7,865 9,821
+(1,527) (1,816)
+Materials, fuel and power
+21,576
+10,025
+9,938
+200
+240
+34
+63
+660
+441
+RMB million
+RMB million
+2017
+Year ended 31 December
+2018
+Total interest income
+- other loans and receivables
+- bank deposits
+Interest income from:
+INTEREST INCOME/FINANCE COSTS
+9.
+Other
+16,635
+14,326
+10,053
+9,640
+21,394
+21,665
+894
+173,677
+2018 Annual Report
+237
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+8. OTHER INCOME
+Government grants
+Claim income
+160,460
+(4,194)
+449
+- non-deductible expenses
+23,521
+21,619
+Depreciation of property, plant and equipment
+25,693
+29,022
+2017
+RMB million
+Year ended 31 December
+2018
+RMB million
+29,914
+18,673
+201
+286
+18,186
+11,241
+99
+Amortisation of intangible assets, included in cost of sales
+Amortisation of lease prepayments, included in cost of sales
+Amortisation of other non-current assets
+190
+1,603
+3,988
+5,349
+RMB million
+31 December
+2018
+- contributions to defined contribution plans of
+RMB3,469 million (2017: RMB2,886 million)
+Personnel expenses, including
+Profit for the year has been arrived at after charging (crediting):
+12. PROFIT FOR THE YEAR
+Total liabilities classified as held for sale
+Deferred tax liabilities
+Long-term liabilities
+Borrowings
+Non-current liabilities
+12
+Contract liabilities
+417
+498
+- gains on disposal of wealth management products at
+FVTPL
+(10,607)
+(535)
+- gains on disposal of AFS investments
+1,831
+(317)
+(6)
+2017
+RMB million
+Year ended 31 December
+2018
+RMB million
+- losses on derecognition of assets without considerations
+- losses on disposal of subsidiaries
+- gains on disposal of property, plant and equipment,
+exploration and evaluation assets, intangible assets and
+non-current assets
+Other gains and losses, represent
+12. PROFIT FOR THE YEAR (CONTINUED)
+For the year ended 31 December 2018
+768
+Notes to the Consolidated Financial Statements (Continued)
+2018 Annual Report 241
+152
+N/A
+126
+N/A
+26
+- allowance for doubtful debts
+- impairment of loan receivables
+Impairment losses, net of reversal, represent
+25,340
+23,728
+Depreciation and amortisation
+872
+924
+242
+Income tax payable
+Current portion of long-term liabilities
+Accrued expenses and other payables
+31 December
+On 1 March 2018, the Company and GD Power Development Co., Ltd. (the "GD Power") entered
+into a joint venture agreement. Pursuant to the agreement, GD Power and the Company proposed
+to contribute the assets and liabilities of certain coal-fired power generation entities into the joint
+venture. Based on the agreement, GD Power will hold 57.47% of equity interests in the joint
+venture, and the Company will hold 42.53% of equity interests in the joint venture. The assets
+and liabilities attributable to the certain coal-fired power generation companies, which is expected
+to be contributed within twelve months, have been classified as a disposal group held for sale
+and are presented separately in the consolidated statement of financial position (see below). The
+relevant coal-fired power generation entities are included in the Group's power segment as set out
+in Note 6. The share of equity in the joint venture is expected to exceed the net carrying amount
+of the relevant assets and liabilities and accordingly, no impairment loss has been recognised.
+The major classes of assets and liabilities classified as held for sale are as follows:
+11. DISPOSAL GROUP HELD FOR SALE
+For the year ended 31 December 2018
+Notes to the Consolidated Financial Statements (Continued)
+240
+2018 Annual Report 239
+Under the Law of the PRC on Enterprise Income Tax (the "EIT Law") and Implementation
+Regulation of the EIT Law, the tax rate applicable for the PRC group entities is 25% (2017: 25%)
+except for subsidiaries and branches operating in the western developing region of the PRC which
+are entitled to a preferential tax rate of 15% from 2011 to 2020.
+16,155
+15,977
+Income tax expense
+(3)
+(1)
+1,981
+2018
+1,769
+905
+508
+tax losses and deductible temporary difference not
+recognised
+(518)
+(304)
+- utilisation of tax losses and deductible temporary
+difference previously not recognised
+(128)
+(112)
+– share of results of associates
+(175)
+(382)
+572
+1,158
+- income not taxable
+- additional tax in respect of prior years
+- others
+RMB million
+Non-current assets
+Property, plant and equipment (Note 17)
+Accounts and bills payables
+Borrowings
+Current liabilities
+11. DISPOSAL GROUP HELD FOR SALE (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+China Shenhua Energy Company Limited
+83,367
+Total assets classified as held for sale
+7,810
+535
+731
+Prepaid expenses and other current assets
+Cash and cash equivalents
+5,005
+Accounts and bills receivables
+1,539
+Inventories
+Current assets
+Construction in progress (Note 18)
+Intangible assets (Note 20)
+Interests in associates
+Equity instruments at FVTOCI
+Other non-current assets
+Lease prepayments
+(4,802)
+Deferred tax assets
+101
+1,062
+2
+2,351
+2,303
+313
+75,557
+67,319
+2,106
+23,735 24,211
+294
+73
+248,746
+264,101
+(81,302)
+(87,507)
+2,388
+2,763
+327,660
+348,845
+69,401
+Profit before income tax
+Revenue
+RMB million RMB million RMB million RMB million RMB million RMB million RMB million RMB million
+2017
+2018
+Consolidated
+71,808
+2017
+2017
+2018
+2017
+2018
+Unallocated head office
+and corporate items
+amounts
+Reportable segment
+Reconciliations of reportable segment revenue, segment profit and other items
+of profit or loss for the years ended 31 December 2018 and 2017 are set out
+below:
+6.2
+2,741
+24 1,258
+49
+9
+21
+Elimination of
+inter-segment amounts
+2018
+27
+856
+(116)
+(64)
+2,741
+1,258
+Impairment losses
+534
+448
+38
+5
+496
+443
+Share of results of associates
+25,340
+23,728
+248
+1,463
+266
+23,462
+Depreciation and amortisation
+4,910
+4,903
+(2,090)
+(1,684)
+1,660
+1,016
+5,340
+5,571
+Interest expenses
+73,293
+70,141
+22
+25,092
+210
+443 496
+16
+4,929
+5,391
+31,971
+33,272
+5,840
+698
+837
+788
+733
+5,615
+5,877
+160,845 155,370 88,176 79,246
+276 265
+44,346 40,548
+customers
+Inter-segment revenue
+3,252
+Revenue from external
+Segment total
+Coal chemical
+Port
+Railway
+Shipping
+2018 2017 2018 2017 2018 2017 2018 2017 2018 2017
+RMB RMB RMB RMB RMB RMB RMB RMB RMB
+million million million million million million million million million
+Power
+Coal
+Information regarding the Group's reportable segments as provided to the Group's CODM
+for the purposes of resource allocation and assessment of segment performance for the
+years ended 31 December 2018 and 2017 is set out below:
+For the purposes of assessing segment performance and allocating resources between
+segments, the Group's CODM monitors the results attributable to each reportable segment
+based on profit before income tax ("reportable segment profit"). Reportable segment
+profit represents the profit earned by each segment without allocation of head office and
+corporate items. Inter-segment sales are primarily charged at prevailing market rate which
+are the same as those charged to external customers.
+6.1 Segment results
+SEGMENT AND OTHER INFORMATION (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+6.
+(8)
+2018 2017 2018 2017
+RMB RMB RMB RMB RMB
+million million million million million
+2,549
+5,681 262,308 247,398
+86,537 80,262
+Reportable segment revenue
+913 23,462 25,092
+892
+293
+1,266
+1,364
+5,571 5,340
+120
+67
+19
+397
+344
+1,028
+1,348 1,452 2,871 2,284 922
+7,440 7,703 8,602 10,059 4,870 4,858
+120 266 307 213
+458 1,540 520 1,141
+Interest expenses
+Depreciation and amortisation
+Share of results of associates
+Impairment loss
+Including:
+69,401 71,808
+481
+205,191 195,918 88,452 79,511 39,149 37,586
+6,124
+5,717
+4,089
+3,247 5,840
+5,681 348,845 327,660
+(22)
+Reportable segment profit
+2,073
+2,580
+706
+[0
+620
+709
+39,872 46,062 9,968 5,585 16,073 16,480
+1,194
+2,719
+2018 Annual Report
+156,143 143,461 72,408 68,388
+Total cost of sales
+(1,337) (1,344) 3,004 3,032
+11,038 9,889
+49
+30
+592
+560
+1,342
+1,962
+315
+345
+4,376
+ཚི།
+3,479
+19,915
+632 3,565
+4,007 3,480
+Others
+4,341
+Cost of coal chemical
+production
+(41,915) (39,449) 31,752 29,125
+(32,097) (32,245) 39,742 35,511
+71,839 67,756
+Power cost
+1,130
+2,565 1,270
+3,166
+15,153
+16,350
+52,881 49,726
+Cost of coal transportation
+569
+18,632
+3,511
+2,880
+8
+11
+722
+5,384 1,126
+5,126 4,566 12,922 15,226 3,740
+228,641 225,672 222,941 215,910 129,353 129,829
+(109,845) (114,713) (158,033) (152,157) (56,341) (65,772) (10,094)
+Total liabilities (Note (iii)
+Total assets (Note ()
+1,536 (1,037) (912) 78,197 75,499
+1,758
+560
+751
+661
+723
+2,529
+2,325
+17,675
+17,695
+3,232
+2,472
+4,901
+4,968
+30
+30
+(11,114) (7,352) 31,820 32,953
+49
+(86,463) (80,390) 173,677 160,460
+Profit from operations
+(Note (i))
+Additions to non-current
+assets (Note (i))
+43,262
+46,051
+12,720
+7,399
+49
+106
+56,321 49,950
+Cost of coal production
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+6.
+236 China Shenhua Energy Company Limited
+Revenue from any individual customer of the Group does not exceed 10% of the Group's
+revenue. Certain of the Group's customers are entities, which controlled, jointly controlled
+or significantly influenced by the PRC government ("government-related entities") and
+collectively considered as the Group's major customer. Revenue from major customer of the
+Group's coal and power segments amounted to RMB181,839 million (2017: RMB174,515
+million).
+6.4 Major customers
+423,769
+344,984
+248,746
+264,101
+17,204
+406,565
+323,951
+21,033
+245,230
+3,516
+261,330
+2,771
+SEGMENT AND OTHER INFORMATION (CONTINUED)
+Domestic markets
+Overseas markets
+31 December
+2017
+31 December
+2018
+RMB million
+Year ended
+31 December
+2017
+RMB million
+Year ended
+31 December
+2018
+RMB million
+Specified non-current assets
+customers
+Revenue from external
+The following table sets out information about geographical location of (i) the Group's
+revenue from external customers and (ii) the Group's property, plant and equipment,
+construction in progress, exploration and evaluation assets, intangible assets, interests
+in associates, other non-current assets and lease prepayments ("specified non-current
+assets"). The geographical location of customers is based on the location at which the
+services were provided or the goods delivered. The geographical location of the specified
+non-current assets is based on the physical location of the asset, in the case of property,
+plant and equipment, construction in progress and lease prepayments, and the location
+of operations, in the case of exploration and evaluation assets, intangible assets, other
+non-current assets and interests in associates.
+6.3 Geographical information
+SEGMENT AND OTHER INFORMATION (CONTINUED)
+6.
+For the year ended 31 December 2018
+Notes to the Consolidated Financial Statements (Continued)
+235
+RMB million
+6.5 Other information
+Certain other information of the Group's segments for the years ended 31 December 2018
+and 2017 is set out below:
+Coal
+56,321 49,950
+Coal purchased
+million million
+million million
+million
+million
+million
+million
+RMB RMB
+RMB
+RMB
+RMB
+RMB
+RMB RMB
+2017
+2018
+2017
+Power
+Railway
+Port
+2018 2017 2018 2017 2018 2017 2018
+RMB RMB RMB RMB
+RMB RMB RMB
+million million million million million million million
+Shipping
+2017 2018 2017
+RMB RMB RMB
+million million million
+Coal chemical
+42,934 40,305
+Unallocated items
+Total
+2018
+2017
+2018
+2017
+2018
+Eliminations
+- losses (gains) on disposal of derivative financial
+instruments
+16,155
+(7)
+RMB million
+RMB million
+Chairman
+Zhang Yuzhuo (Note (i) and
+Note (iii))
+Sub-total
+Executive directors
+Ling Wen (Note (i) and
+Note (ii))
+Han Jianguo (Note (i) and
+in kind
+Note (iii))
+Sub-total
+Non-executive directors
+Chen Hongsheng (Note (i)
+and Note (iii))
+Zhao Jibin (Note (i))
+Sub-total
+Independent non-executive
+directors
+Fan Hsulaitai (Note (iii))
+0.26
+Li Dong (Note (i))
+Gong Huazhang (Note (iii))
+Fees
+other allowance
+0.25
+0.04
+0.41
+0.33
+0.23
+0.04
+0.60
+0.34
+0.22
+0.04
+and benefits
+0.60
+0.70
+0.12
+1.61
+3.48
+2018 Annual Report 243
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+13. DIRECTORS', SUPERVISORS' AND CHIEF EXECUTIVE'S EMOLUMENTS
+(CONTINUED)
+Year ended 31 December 2017
+Basic salaries,
+housing and
+0.79
+0.26
+Guo Peizhang (Note (iii))
+0.26
+0.26
+0.26
+0.19
+0.19
+1.35
+0.46
+0.40
+0.08
+0.94
+0.48
+0.38
+0.26
+0.08
+0.48
+0.37
+0.08
+0.93
+1.42
+1.15
+0.24
+2.81
+4.16
+60
+0.94
+II
+II
+RMB million
+Tam Wai Chu, Maria
+(Note (ii))
+0.19
+Jiang Bo (Note (ii))
+0.19
+Zhong Yingjie, Christina
+(Note (ii))
+0.19
+Sub-total
+1.35
+Supervisors
+Zhai Richeng
+Zhou Dayu
+Shen Lin
+Sub-total
+Total
+244
+China Shenhua Energy Company Limited
+Retirement
+Discretionary
+bonuses
+RMB million
+scheme
+contributions
+RMB million
+Total
+0.12
+1.87
+0.19
+0.26
+2,844
+1,880
+Carrying amount of inventories sold
+132,874
+116,464
+Operating lease in respect of properties and equipment
+Auditors' remuneration
+361
+345
+- audit service
+39
+106
+30
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+13. DIRECTORS', SUPERVISORS' AND CHIEF EXECUTIVE'S EMOLUMENTS
+Directors' and chief executive's remuneration for the year, disclosed pursuant to the applicable
+Listing Rules and CO, is as follows:
+Year ended 31 December 2018
+Basic salaries,
+housing and
+and benefits
+other allowance
+Fees
+in kind
+China Shenhua Energy Company Limited
+282
+(22)
+847
+0.26
+- (gains) losses on changes in fair value of derivative
+financial instruments
+- impairment of an AFS investment
+(22)
+19
+65
+- impairment in respect of interest in an associate
+1
+- impairment in respect of property, plant and equipment
+691
+- impairment in respect of construction in progress
+91
+175
+- impairment in respect of lease prepayments
+22
+- reversal of impairment on loan receivables
+- allowance for doubtful debts
+- reversal of allowance for prepaid expenses
+write down of inventories
+N/A
+(8)
+N/A
+RMB million
+RMB million
+1,511
+bonuses
+Jiang Bo (Note (ii))
+0.45
+Zhong Yingjie, Christina
+(Note (ii))
+0.45
+Peng Suping (Note (ii))
+0.26
+Huang Ming (Note (ii))
+0.26
+Sub-total
+1.87
+Supervisors
+Zhai Richeng (Note (iv))
+Zhou Dayu (Note (iv))
+Shen Lin (Note (iv))
+Total
+|||
+III
+III
+III
+Discretionary
+0.45
+0.45
+0.45
+0.45
+(Note (ii))
+Sub-total
+directors
+Tam Wai Chu, Maria
+Retirement
+RMB million
+contributions
+Total
+RMB million RMB million
+scheme
+Ling Wen (Note (i) and
+Note (ii))
+Sub-total
+Executive directors
+Chairman
+Gao Song (Note (i) and
+Note (ii))
+Li Dong (Note (i))
+Zhao Jibin (Note (i))
+Non-executive directors
+Independent non-executive
+and Note (iii))
+Sub-total
+and Note (ii))
+Mi Shuhua (Note (i)
+Han Jianguo (Note (i)
+Sub-total
+2018
+%
+31 December 31 December
+2017
+%
+Mengxi - Huazhong Railway
+Principal activities
+10
+Shendong Tianlong Group Co., Ltd.
+Co., Ltd. (Note)
+Provision of transportation
+service
+20
+20
+20
+Coal production and sale
+Zhejiang Zheneng Jiahua Power
+Co., Ltd.
+20
+10
+Proportion of ownership
+interest and voting power
+held by the Group
+1,877
+The Group's interests in associates are individually and in aggregate not material to the Group's
+financial position or results of operations for both years presented. The Group's associates are
+unlisted and established in the PRC. The following list contains only the particulars of associates,
+which principally affect the results or assets of the Group:
+At the end of the year
+21. INTERESTS IN ASSOCIATES
+3,447
+Generation and sale of
+electricity
+Unlisted shares, at cost
+Share of post-acquisition profits and other comprehensive
+income, net of dividend received
+31 December
+2018
+RMB million
+31 December
+2017
+RMB million
+8,170
+7,557
+1,956
+10,047
+9,513
+2018 Annual Report 251
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+21. INTERESTS IN ASSOCIATES (CONTINUED)
+Name of associate
+Sichuan Guangan Power Co., Ltd.
+2018
+20
+Unlisted investments:
+Equity securities
+811
+The above unlisted equity investments represent the Group's equity interest in entities established
+in the PRC. The Directors of the Company have elected to designate these equity investments
+as FVTOCI as it is the Group's strategy to hold these investments for long-term purposes and
+realising their performance potential in the long run.
+252
+China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+23. AVAILABLE-FOR-SALE INVESTMENTS
+Unlisted investments:
+RMB million
+- equity securities
+Total
+Analysed for reporting purposes as:
+Non-current assets
+31 December
+2017
+RMB million
+749
+3,623
+105
+854
+- investments in wealth management products
+20
+31 December
+The Group is able to exercise significant influence over Mengxi – Huazhong Railway Co., Ltd. because it has the power to
+appoint one out of eleven directors of that company under the Articles of Association of that company.
+Generation and sale of
+electricity
+Guohua (Hebei) Renewables
+25
+25
+Co., Ltd.
+Generation and sale of
+electricity
+Tianjin Yuanhua Shipping Co., Ltd.
+44
+22. EQUITY INSTRUMENTS AT FVTOCI
+44
+Inner Mongolia Yili Chemical
+25
+25
+25
+Industry Co., Ltd.
+Production and sale of
+chemicals
+Note:
+-
+Provision of transportation
+service
+(101)
+(49)
+(83)
+At the end of the year
+Year ended 31 December
+2018
+2017
+RMB million
+RMB million
+39,054
+35,220
+16,926
+19,273
+(16,944)
+(13,819)
+(57)
+(124)
+(596)
+(281)
+(356)
+(73)
+Classified as assets held for sale (Note 11)
+Impairment losses
+Disposal
+Net income from mine trial run
+The estimated recoverable amounts of the determined above assets were determined using market comparison
+approach by reference to either the recent transaction price of similar assets, after taking into account of its
+remaining useful lives, or the recent transaction price of similar material, after taking into account of its weight and
+geographical location. The fair value is categorised as a Level 3 measurement.
+854
+In 2018, the Group has upgraded its railway capacity which rendered certain non-current assets obsolete. The
+Group assessed the recoverable amounts of those non-current assets in railway segment, including structures and
+equipment, and as a result the carrying amount of the structures and equipment was written down by RMB207
+million to their recoverable amount as at 31 December 2018.
+The estimated recoverable amount of the determined above assets were determined using the recent transaction
+price of similar materials in the second-hand market, after taking into account of its weight and geographical
+location. The fair value is categorised as a Level 3 measurement.
+Influenced by the policy of coal production capacity withdrawal, Tanggonggou Coal Mine, a coal mine of the Group
+had been closed down and the related fixed assets had been impaired. In 2018, the management expected that the
+value of the mining right was unrecoverable, the Group assessed the impairment of the mining rights and estimated
+the recoverable amount according to the fair value of the assets less the disposal expenses, and an impairment of
+RMB98 million was recognised.
+The Group's freehold lands with a carrying amount of RMB970 million (2017: RMB950 million) are located in
+Australia.
+The Group was in the process of applying for the title certificates of certain of its properties with an aggregate
+carrying amount of RMB9,314 million as at 31 December 2018 (2017: RMB8,771 million). The Directors are of the
+opinion that the Group is entitled to lawfully and validly occupy or use the above mentioned properties.
+As at 31 December 2018, the property, plant and equipment with carrying amount of RMB1,058 million (2017:
+RMB644 million) have been pledged to the banks to secure the banking facilities granted to the Group.
+(163)
+2018 Annual Report 249
+For the year ended 31 December 2018
+18. CONSTRUCTION IN PROGRESS
+At the beginning of the year
+Additions
+Transferred to property, plant and equipment
+Transferred to intangible assets
+Transferred to lease prepayments
+Transferred to other non-current assets
+Notes to the Consolidated Financial Statements (Continued)
+(91)
+(175)
+(2,106)
+RMB million
+2017
+RMB million
+At the beginning of the year
+Exchange adjustment
+Additions
+Transferred from construction in progress
+Amortisation
+3,447
+3,018
+Year ended 31 December
+2018
+4
+678
+915
+57
+49
+(417)
+(449)
+Disposal
+(45)
+(3)
+Classified as assets held for sale (Note 11)
+The movement of intangible assets, mainly licenses, software and franchises, is as follows:
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+36,585
+39,054
+As at 31 December 2018, the Group is in the process of obtaining requisite permits of certain of its construction in
+progress from the relevant government authorities. The Directors are of the opinion that the Group will be able to obtain
+the requisite permits in due course.
+19. EXPLORATION AND EVALUATION ASSETS
+The movements of the exploration and evaluation assets are as follows:
+At the beginning of the year
+Exchange adjustments
+Disposals
+At the end of the year
+20. INTANGIBLE ASSETS
+250 China Shenhua Energy Company Limited
+2018
+RMB million
+2017
+RMB million
+998
+8
+(55)
+2,344
+32
+(1,378)
+951
+998
+Year ended 31 December
+The above unlisted equity investments represent investments in unlisted equity securities issued
+by private entities incorporated in the PRC. They are measured at cost less impairment because
+the range of reasonable fair value estimates is so significant that the Directors are of the opinion
+that their fair values cannot be measured reliably.
+2,377
+179
+Prepayments in connection with construction work,
+13,319
+Bills receivable
+- China Energy Group and fellow subsidiaries
+120
+57
+- Associates
+70
+54
+- Third parties
+4,377
+6,025
+4,567
+6,136
+13,055
+19,455
+254
+China Shenhua Energy Company Limited
+8,488
+(1,039)
+(1,128)
+14,358
+11,647
+Note:
+Others mainly represent properties held for sale and properties under development.
+27. ACCOUNTS AND BILLS RECEIVABLES
+Accounts receivable
+- China Energy Group and fellow subsidiaries
+- Associates
+- Third parties
+and other
+Less: allowance for credit losses
+31 December
+2017
+RMB million
+RMB million
+2,447
+218
+The Group has been upgrading its power plants for energy conservation and environment protection which
+rendered certain non-current assets obsolete. The Group assessed the recoverable amounts of those non-
+current assets in power segment, including machineries and generators, and as a result the carrying amount of
+the machineries and the generators was written down by RMB252 million to their recoverable amount as at 31
+December 2018 (2017: RMB164 million).
+6,951
+11,802
+9,616
+31 December
+2018
+Vessels
+equipment equipment
+Total
+1,094
+23,521
+Adjustment
+88
+22
+(58)
+362
+8
+752
+(11)
+413
+Impairment losses (Note (i))
+584
+34
+118
+746
+6
+21
+2
+9,967
+302
+8,954
+RMB million RMB million RMB million RMB million RMB million RMB million
+RMB million RMB million RMB million
+DEPRECIATION AND
+IMPAIRMENT
+At 1 January 2017
+19,250
+10,870
+40,092
+4,860
+61,977
+455
+4,643
+10,979
+183,312
+Charge for the year
+1,892
+1,294
+4,373
+35,046
+1,186
+1,119
+5,882
+Goodwill
+278
+889
+Others
+3,764
+4,117
+29,456
+33,466
+420
+Notes:
+At 31 December 2018, the Group had prepayments to fellow subsidiaries amounting to RMB42 million (2017:
+RMB20 million).
+(ii)
+The loans to China Energy Group and fellow subsidiaries bear interest at rates ranging from 4.28% to 4.41% per
+annum (2017: 4.28% to 4.41% per annum) and are receivables within two to eight years.
+(iii)
+The Group has long-term entrusted loan of RMB420 million to an associate through a PRC state-owned bank,
+bearing interest at rate of 4.75% per annum and variable by reference to the interest rate promulgated by the
+People's Bank of China (the "PBOC").
+2018 Annual Report
+253
+Notes to the Consolidated Financial Statements (Continued)
+(i)
+For the year ended 31 December 2018
+420
+9,699
+31 December
+2018
+31 December
+2017
+RMB million
+RMB million
+equipment purchases and others (Note (i))
+6,748
+8,189
+Long-term entrusted loans (Note (iii))
+Prepayment for mining projects
+8,000
+Deductible VAT and other tax
+1,314
+1,834
+Long-term receivable
+318
+Loans to China Energy Group and fellow subsidiaries
+(Note (ii))
+8,932
+8,000
+24. OTHER NON-CURRENT ASSETS
+25. LEASE PREPAYMENTS
+As at 31 December 2018, the Group has bank loans secured by the Group's lease prepayments
+with carrying amount of RMB866 million (31 December 2017: RMB892 million).
+For the year ended 31 December 2018
+17. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
+Mining Generators,
+related related
+structures machinery machinery
+Mining
+Land and and mining
+buildings
+rights
+and
+and
+equipment equipment
+Railway
+Notes to the Consolidated Financial Statements (Continued)
+and port
+Furniture,
+chemical
+fixtures,
+related
+machinery
+motor
+vehicles
+and
+Coal
+Lease prepayments represent land use rights paid to the PRC's government authorities. The
+Group is in the process of applying for the title certificates of certain land use rights with an
+aggregate carrying amount of RMB1,984 million as at 31 December 2018 (2017: RMB2,097
+million). The Directors are of the opinion that the Group is entitled to lawfully and validly occupy or
+use the above mentioned lands.
+2018 Annual Report 247
+17,690
+26. INVENTORIES
+Coal
+Materials and supplies
+Others (Note)
+31 December
+2018
+31 December
+2017
+RMB million
+RMB million
+423,388
+3,546
+5,302
+58,469
+36,926
+65,239
+96,224
+128,156
+7,489
+13,195
+4,579
+(iv)
+PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
+(ii)
+210
+1,173
+157
+436
+2,450
+11
+4
+13
+4,454
+Transferred from construction
+in progress
+4,195
+268
+1,256
+5,972
+Additions
+2,063
+521,097
+13,218
+Coal Furniture,
+chemical fixtures,
+related
+motor
+machinery
+vehicles
+and and other
+equipment equipment
+Total
+RMB million RMB million RMB million RMB million RMB million RMB million RMB million RMB million RMB million
+COST
+At 1 January 2017
+82,109
+33,624
+67,018
+177,186
+123,297
+6,880
+17,765
+Vessels
+6
+44
+I
+(38)
+At 31 December 2017
+85,944
+36,240
+66,345
+179,843
+127,350
+6,897
+13,177
+17,820
+533,616
+Additions
+59
+642
+(31)
+15
+(7)
+(5,688)
+13,819
+Adjustment
+(326)
+1,245
+(590)
+(343)
+(58)
+2
+(28)
+Disposals or write-off
+(237)
+(70)
+(1,496)
+(3,377)
+(502)
+Exchange adjustment
+buildings rights equipment equipment
+Railway
+and port
+and
+The independent non-executive directors' emoluments shown above were mainly for their
+services as directors of the Company.
+2018 Annual Report
+245
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+14. EMPLOYEES' EMOLUMENTS
+Out of the five individuals with the highest emoluments within the Group, Nil (2017: nil) was
+director of the Company. The emoluments of the five (2017: five) highest paid individuals were as
+follows:
+Basic salaries, housing and other allowances and benefits in kind
+Discretionary bonuses
+Retirement scheme contributions
+Year ended 31 December
+2018
+2017
+RMB million
+(iii)
+2.22
+2.31
+Except for those emoluments of directors or supervisors whose emoluments were borne by China
+Energy Group, the executive directors' and supervisors' emoluments shown above were mainly
+for their services in connection with the management of the affairs of the Company and the
+Group.
+2.38
+The emoluments of these supervisors were borne by China Energy Group from July to December 2018.
+(iv)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+13. DIRECTORS', SUPERVISORS' AND CHIEF EXECUTIVE'S EMOLUMENTS
+(CONTINUED)
+Discretionary bonuses were determined by the remuneration committee in accordance with the
+relevant human resources policies.
+Notes:
+(i)
+(ii)
+The emoluments of these directors were borne by China Energy Group during the years ended 31 December 2018
+and 2017.
+Ms. Tam Wai Chu, Maria, Ms. Jiang Bo and Ms. Zhong, Yingjie, Christina were appointed as independent
+non-executive directors on 23 June 2017.
+(iii)
+Dr. Ling Wen was elected and appointed as the Chairman of the Board on 2 January 2018, and he would no longer
+serve as the Vice Chairman of the Board and the president of the Company from 2 January 2018.
+Mr. Gao Song and Mr. Mi Shuhua were appointed as executive directors on 27 April 2018.
+Dr. Peng Suping and Dr. Huang Ming were appointed as independent non-executive directors on 27 April 2018.
+Mr. Zhang Yuzhuo resigned as the Chairman on 27 March 2017.
+Mr. Chen Hongsheng resigned as non-executive director on 23 June 2017.
+Ms. Fan Hsulaitai, Mr. Gong Huazhang, and Mr. Guo Peizhang resigned as independent non-executive directors on
+23 June 2017.
+Dr. Han Jianguo resigned as an executive director on 15 May 2018.
+2.12
+0.50
+0.41
+18,100
+9,149
+49,923
+18,100
+59,072
+Subsequent to the end of the reporting period, a final dividend in respect of the year ended 31
+December 2018 of RMB0.88 (in respect of the year ended 31 December 2017: final dividend
+RMB0.91) per ordinary share has been proposed by the Directors and is subject to approval by the
+shareholders in the following general meeting.
+246
+China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+16. EARNINGS PER SHARE
+The calculation of basic earnings per share is based on the profit attributable to ordinary equity
+holders of the Company of RMB44,137 million (2017: RMB47,795 million) and the number of
+shares in issue during the year of 19,890 million shares (2017: 19,890 million shares).
+No diluted earnings per share for both 2018 and 2017 were presented as there were no potential
+ordinary shares in existence during both years.
+17. PROPERTY, PLANT AND EQUIPMENT
+Mining
+structures
+Land and and mining
+Mining Generators,
+related related
+machinery machinery
+and
+2017
+RMB million
+RMB million
+Year ended 31 December
+2018
+5
+5.10
+4.84
+Their emoluments were within the following band:
+Year ended 31 December
+2018
+2017
+HKD500,001 to HKD1,000,000
+HKD1,000,001 to HKD1,500,000
+1,129
+15. DIVIDENDS
+-
+2017 final RMB0.91 (2017: 2016 final of RMB0.46) per
+ordinary share
+2016 special - RMB2.51 per ordinary share
+1
+0
+4
+5
+Dividend approved and paid during the year:
+454
+RMB million
+Transferred from
+(4,282)
+Exchange adjustment
+28
+35
+Classified as assets held for
+sale
+(12,158)
+(1)
+(43,548)
+(35)
+(55,744)
+At 31 December 2018
+11,040
+13,349
+45,261 32,729
+(106)
+43,947
+(1)
+(959)
+(57)
+Impairment losses (Note (i))
+252
+109
+32
+264
+22
+12
+12
+74
+691
+Disposals or write-off
+(630)
+(31)
+(2,252)
+(303)
+168
+1,207
+12,351
+Notes:
+(i)
+Impairment loss
+Impairment loss for cash-generating units
+In 2018, owing to the unsatisfactory performance, the management identified certain non-current assets relating
+to coal mines having impairment indications. The Group assessed the impairment, each mine is a separate
+cash-generating unit, by measuring their recoverable amount which is determined based on discounted cash flow
+analysis covering the shorter of their economic or legal useful life, and pre-tax discount rate ranging from 8.12% to
+11.87%.
+After assessment, no impairment loss was recognised in both years presented.
+248
+China Shenhua Energy Company Limited
+17.
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+Notes: (continued)
+(i)
+Impairment loss (continued)
+Impairment loss for individual assets
+991
+329,970
+6,155
+7,774
+87,830
+166,039
+CARRYING VALUES
+At 31 December 2018
+47,429
+23,577
+19,978
+63,495
+84,209
+6,282
+7,040
+5,339
+257,349
+At 31 December 2017
+64,237
+24,020 23,225 110,997
+6,140
+(7)
+5,747
+Adjustment
+(461)
+Exchange adjustment
+(32)
+6
+77
+༦ '8'
+10
+99
+65
+3,350
+41
+16,944
+(236)
+(742)
+(6,768)
+51
+(1,127)
+Classified as assets
+(47) (2,766)
+Disposals or write-off
+construction in progress
+(21)
+5,059
+80
+362
+10,789
+543
+10
+Adjustment
+8
+169
+(865)
+(204)
+582
+(49)
+(2,128)
+held for sale
+(383)
+(92,947)
+39,520
+757
+5,403
+12,073
+203,646
+Charge for the year
+1,883
+1,059
+8,107
+4,800
+450
+741
+21,619
+(30,050)
+386
+68,846
+43,120
+4,193
+21,707
+At 31 December 2018
+12,220
+2
+1,511
+Disposals or write-off
+(123,063)
+(63)
+(1,405)
+(3,175)
+(100)
+(400)
+(5,086)
+Exchange adjustment
+(7)
+(18)
+(25)
+At 31 December 2017
+1,993
+3,772
+2,119
+to 2.60% per annum with maturities
+through 20 March 2031
+Euro denominated
+12
+70,613
+26
+Less: current portion of long-term borrowings
+50,537
+Interest rate at 2.85% per annum with
+maturities through 22 June 2022
+Interest rates ranging from 1.80%
+66,357
+2,111
+5,061
+Interest rates ranging from Libor+0.7%
+to Libor+2.85% per annum with
+maturities through 26 December 2034
+USD denominated
+43,471
+Interest rates ranging from 1.08%
+to 6.55% per annum with maturities.
+through 22 January 2036
+RMB denominated
+Loans from banks and other institutions
+31 December
+2017
+RMB million
+6,292
+31 December
+2018
+RMB million
+The Group's long-term borrowings comprise:
+Japanese Yen ("JPY")
+denominated
+46,765
+Accounts payable
+As at 31 December 2018, included in the above outstanding borrowings, were entrusted loans
+from China Energy Group and fellow subsidiaries amounting to RMB874 million (2017: RMB1,374
+million).
+23,398
+For the year ended 31 December 2018
+283
+1,874
+1,912
+269
+31 December
+2017
+RMB million
+RMB million
+31 December
+2018
+Bills payable
+- Third parties
+- Associates
+China Energy Group and fellow subsidiaries
+- China Energy Group, an associate of
+34. ACCOUNTS AND BILLS PAYABLES
+The net proceeds of the Dollar bonds issued were mainly used for the repayment of loans of
+subsidiaries.
+annum.
+On 20 January 2015, Shenhua Overseas Capital issued Dollar bonds with proceeds of USD500
+million, approximately RMB3,061 million and are payable on 19 January 2025. The bonds bear
+interest rate of 3.88% per annum, repayable semi-annually. Its effective interest rate is 4.10% per
+annum.
+On 20 January 2015, Shenhua Overseas Capital issued Dollar bonds with proceeds of USD500
+million, approximately RMB3,061 million and are payable on 19 January 2020. The bonds bear
+interest rate of 3.13% per annum, repayable semi-annually. Its effective interest rate is 3.35% per
+On 20 January 2015, China Shenhua Overseas Capital Company Limited ("Shenhua Overseas
+Capital") issued Dollar bonds with proceeds of USD500 million, approximately RMB3,061 million
+and were repaid on 19 January 2018. The bonds bear interest rate of 2.50% per annum, repayable
+semi-annually. Its effective interest rate is 2.84% per annum.
+On 7 November 2013, the Company issued medium-term notes with proceeds of approximately
+RMB5,000 million and were paid on 11 November 2018. The notes bear interest rate of 5.49% per
+annum, repayable annually. The effective interest rate is 5.69% per annum.
+33. MEDIUM-TERM NOTES AND BONDS
+For the year ended 31 December 2018
+Notes to the Consolidated Financial Statements (Continued)
+262
+2018 Annual Report 261
+Certain borrowings are secured over certain property, plant and equipment with a carrying amount
+of RMB1,058 million (2017: RMB644 million) (see Note 17), certain lease prepayments with
+carrying amounts of RMB866 million (2017: RMB892 million) (see Note 25), certain future power
+revenue to be generated by the Group, the investment in a subsidiary of the Company and a
+guarantee by a non-controlling shareholder of a subsidiary.
+64,321
+32. BORROWINGS (CONTINUED)
+15,785
+China Shenhua Energy Company Limited
+46,765
+Long-term borrowings, less current portion
+Non-current borrowings:
+5,772
+6,292
+3,772
+9,493
+2,000
+RMB million
+RMB million
+31 December
+2017
+31 December
+2018
+64,321
+Current portion of long-term borrowings
+Current borrowings:
+An analysis of the Group's borrowings is as follows:
+32. BORROWINGS
+For the year ended 31 December 2018
+Notes to the Consolidated Financial Statements (Continued)
+260
+2018 Annual Report 259
+At the end of the reporting period, the Group has unused tax losses of RMB7,853 million (31
+December 2017: RMB8,564 million) and unrecognised deductible temporary differences of
+RMB6,685 million (2017: RMB6,555 million) available for offset against future profits. A deferred
+tax asset has been recognised in respect of RMB321 million (31 December 2017: RMB1,296
+million) of such losses. No deferred tax asset has been recognised in respect of the remaining
+RMB7,532 million (31 December 2017: RMB7,268 million) losses due to the unpredictability
+of future profit streams. Included in unrecognised tax losses are losses of RMB849 million (31
+December 2017: RMB683 million) that will expire in 2019.
+3,049
+3,052
+Net deferred tax assets
+29,431
+Short-term bank and other borrowings
+52,537
+80,106
+Secured
+70,613
+50,537
+41,091
+32,128
+17,089
+9,414
+6,141
+5,223
+More than one year, but not exceeding two years
+More than two years, but not exceeding five years
+More than five years
+6,292
+3,772
+Within one year
+RMB million
+2017
+RMB million
+2018
+31 December
+31 December
+The exposure of the long-term borrowings and the
+contractual maturity dates:
+The Group's short-term borrowings are unsecured and bear interest at rates ranging from 3.85%
+to 4.85% per annum (2017: 3.85% to 4.79% per annum), and long-term borrowings bear interest
+at rates ranging from 1.08% to 6.55% per annum (2017: 1.08% to 6.55% per annum).
+80,106
+52,537
+70,725
+47,064
+9,381
+5,473
+Unsecured
+Notes to the Consolidated Financial Statements (Continued)
+25,579
+Notes:
+1,305
+128
+532
+290
+2,549
+2,637
+457
+2,092
+345
+2,292
+2,549
+2,637
+(i)
+(ii)
+The balances mainly represent payables for acquisition of mining rights which are to be settled over the period of
+production set out in the contracts on an annual basis. The annual payment is determined by fixed rates on a per
+tonne basis with reference to the annual production volume of the acquired mines in the acquisition agreements.
+9
+Deferred income mainly represents grants provided by several local governments in the PRC to encourage the
+construction of non-current assets.
+35. ACCRUED EXPENSES AND OTHER PAYABLES (CONTINUED)
+For the year ended 31 December 2018
+Notes to the Consolidated Financial Statements (Continued)
+264
+2018 Annual Report 263
+51,995
+52,737
+10,307
+11,072
+Other accrued expenses and payables (Note (ii))
+20,075
+30,143
+China Shenhua Energy Company Limited
+1,367
+1,235
+852
+290
+(i)
+As at 31 December 2018, deposits from China Energy Group and fellow subsidiaries bear interest at 0.42% to
+1.62% per annum (2017: 0.42% to 1.62% per annum).
+(ii)
+Other accrued expenses and payables of the Group included:
+Amounts due to China Energy Group and fellow subsidiaries
+Amounts due to associates
+31 December
+2018
+RMB million
+31 December
+2017
+RMB million
+1,095
+19
+1,238
+28
+1,114
+1,266
+The above balances are unsecured, interest-free and payable on demand.
+36. LONG-TERM LIABILITIES
+Payables for acquisition of mining rights (Note (i))
+Deferred income (Note (ii))
+Defined benefit plans
+Others
+Analysed for reporting purpose as:
+Current liabilities
+Non-current liabilities
+Notes:
+31 December
+2018
+RMB million
+31 December
+2017
+RMB million
+773
+(Note (i))
+31,588
+Deposits from China Energy Group and fellow subsidiaries
+Receipts in advances
+Included in accounts and bills payables, the following amounts are denominated in foreign
+currencies:
+33,914
+26,884
+3,666
+2,947
+2,431
+881
+2,576
+5,367
+25,241
+17,689
+31 December
+2017
+RMB million
+USD
+RMB million
+More than three years
+Two to three years
+One to two years
+Less than one year
+The following is an aging analysis of accounts and bills payables, presented based on invoice date.
+34. ACCOUNTS AND BILLS PAYABLES (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+China Shenhua Energy Company Limited
+As at 31 December 2018 and 2017, certain bills payable were secured by bills receivable held by
+the Group (see Note 27).
+33,914
+26,884
+2,326
+31 December
+2018
+Euro
+JPY
+Others
+35. ACCRUED EXPENSES AND OTHER PAYABLES
+12
+Cross-currency exchange rate swaps
+4,149
+1,501
+Dividends payable
+7,408
+5,655
+Taxes payable other than income tax
+4,042
+472
+419
+Accrued interest payable
+3,947
+Accrued staff wages and welfare benefits
+RMB million
+31 December
+2017
+2018
+RMB million
+31 December
+1,407
+1,393
+2
+1,398
+84
+228
+625
+456
+31 December
+2017
+RMB million
+31 December
+2018
+RMB million
+5,530
+210
+1,648
+(84)
+7,110
+Prepaid expenses and deposits
+108
+32,452
+32,447
+- Wealth management products (Note (i))
+52
+56
+85
+5
+- Tradable wealth management products
+- Derivative financial instruments
+8,115
+Financial assets at FVTPL
+31 December
+2017
+RMB million
+2018
+31 December
+28. PREPAID EXPENSES AND OTHER CURRENT ASSETS
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+256 China Shenhua Energy Company Limited
+As at 31 December 2018, the Group endorsed bills receivable amounting to RMB1,967 million
+(2017: RMB1,859 million) to suppliers to settle the accounts payable of same amounts and
+discounted bills receivable amounting to RMB455 million (2017: RMB137 million) to banks. In
+accordance to the relevant laws in the PRC, the holders of the bills receivable have a right of
+recourse against the Group if the issuing banks default payment (the "Continuing Involvement").
+In the opinion of the Directors, the fair values of the Continuing Involvement are insignificant, and
+the Group has transferred substantially all the risks and rewards of ownership relating to these
+bills receivable, and accordingly derecognised the full carrying amounts of the bills receivable, in
+case of bills receivable endorsed to suppliers, derecognised the associated accounts payable.
+Transfers of financial assets
+105
+169
+105
+RMB million
+Loans and advances to China Energy
+Group and fellow subsidiaries (Note (ii))
+5,877
+Details of impairment assessment of pledged bank deposits are set out in Note 40.2.
+The Group performed impairment assessment on restricted bank deposits and concluded that the
+probability of defaults of the counterparty banks are insignificant and accordingly, no allowance for
+credit losses is provided.
+Restricted bank deposits represent statutory deposit reserves at the PBOC, collaterals for bills
+payable and collaterals related to the operating of mines and ports.
+29. RESTRICTED BANK DEPOSITS
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+2018 Annual Report 257
+As at 31 December 2018, the Group had interbank loans to China Huaneng Finance Co., Ltd amounting to
+RMB2,955 million, which bear interest rate at 4.93% per annum. As at 31 December 2018, the Group had
+entrusted loan of RMB37 million to a third party through a PRC state-owned bank, bearing interest at rate of 6.00%
+per annum.
+As at 31 December 2018, the Group had loans to China Energy Group and fellow subsidiaries amounting to
+RMB5,655 million (2017: RMB5,059 million), which bear interest at rates ranging from 3.92% to 4.93% per annum
+(2017: 3.92% to 4.28% per annum). The remaining balances are unsecured, interest-free and have no fixed terms
+of repayment.
+As at 31 December 2018, the Group invested RMB21,000 million in principal-guaranteed floating income wealth
+management products with terms ranging from 182 days to 273 days and expected annual rates of return ranging
+from 3.10% to 3.90%. The Group invested RMB9,000 million in a principal and income-guaranteed wealth
+management products with a term of 181 days and the annual rate of return is higher than 3.40%. The Group
+invested RMB2,447 million in negotiable certificate of deposit with terms ranging from 92 days to 365 days and
+annual rates of return ranging from 2.75% to 4.35%. The fair values were determined using discounting cash flow
+approach, the detailed fair value measurements are disclosed in Note 40.3.
+(iii)
+(ii)
+(i)
+Notes:
+20,452
+54,702
+3,357
+2,877
+Other receivables
+3,075
+3,033
+Deductible VAT and other tax
+535
+361
+Amounts due from associates
+2,992
+Loans to third parties (Note (iii))
+5,262
+24
+30. CASH AND CASH EQUIVALENTS
+145
+RMB million
+- recognised
+Impairment loss
+At the beginning of the year
+The movements of allowance for doubtful debts were as follows:
+As at 31 December 2018, included in the Group's accounts receivables are debtors with aggregate
+carrying amount of RMB4,793 million which are past due as at the reporting date. The past due
+balances are not considered as in default because the debtors are not in significant financial
+difficulty and the management expects that the debtor is able and likely to pay for the debts. The
+Group does not hold any collateral over these balances.
+13,319
+233
+544
+1,027
+1,326
+846
+10,411
+- amounts recovered
+5,772
+RMB million
+31 December
+2018
+More than three years
+Two to three years
+One to two years
+Less than one year
+The following is an analysis of accounts receivable by age, net of allowance for credit losses/
+doubtful debts, presented based on the date of delivery of goods or services which approximated
+the revenue recognition date:
+Bills receivable were mainly issued by PRC banks and were expiring within one year. As at 31
+December 2018, the bills receivable with carrying amount of RMB100 million (2017: RMB388
+million) were pledged to secure bills payable.
+As at 31 December 2018 and 1 January 2018, accounts and bills receivables from contracts with
+customers amounted to RMB14,183 million and RMB20,494 million, respectively.
+27. ACCOUNTS AND BILLS RECEIVABLES (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+1,103
+31 December
+2017
+RMB million
+Written off
+At the end of the year
+Year ended
+31 December
+2017
+31 December
+2017
+31 December
+2018
+United States Dollars ("USD")
+Indonesian Rupiah ("IDR")
+Included in accounts receivable, the following amounts are denominated in foreign currencies:
+Details of impairment assessment of accounts and bills receivables for the year ended 31
+December 2018 are set out in note 40.2.
+As at 31 December 2017, receivables that were past due but not impaired relate to a number of
+independent customers that have a good track record with the Group, which the Group does not
+hold any collateral over these balances. Based on past experience, the management believes
+that no impairment is necessary in respect of these balances as there has not been a significant
+change in credit quality and the balances are still considered fully recoverable.
+As at 31 December 2017, receivables that were not overdue or unimpaired relate to a wide range
+of customers for whom there was no recent history of default.
+3,149
+38
+377
+1,399
+1,335
+2017
+RMB million
+At the end of the year
+Less than one year
+One to two years
+Two to three years
+More than three years
+31 December
+The aging analysis of accounts receivable that are past due but not impaired are as follows:
+27. ACCOUNTS AND BILLS RECEIVABLES (CONTINUED)
+For the year ended 31 December 2018
+Notes to the Consolidated Financial Statements (Continued)
+2018 Annual Report 255
+1,039
+(1)
+(140)
+760
+420
+RMB million
+RMB million
+Cash and cash equivalents in the consolidated statement of financial position and the consolidated
+statement of cash flows comprise cash at bank and in hand, and time deposits with original
+maturity within three months.
+8,488
+USD
+(112)
+(391)
+3,049
+Net deferred tax assets
+(28)
+(120)
+(198)
+290
+Others
+218
+(17)
+25
+2,546
+210
+Accrued salaries and other
+986
+(117)
+1,103
+within the Group
+Unrealised profits from sales
+incurred
+Tax allowable expenses not yet
+62
+(18)
+(244)
+324
+expenses not yet paid
+Credited
+At 1 January
+2017
+1
+Included in cash and cash equivalents, the following amounts are denominated in foreign
+currencies:
+324
+(167)
+762
+526
+MENINO
+112
+188
+1,187
+Unrealised profits from sales within the Group
+Accrued salaries and other expenses not yet paid
+Others
+Tax allowable expenses not yet incurred
+(137)
+461
+Tax losses utilised
+(169)
+Lease prepayments
+769
+503
+Property, plant and equipment
+inventories
+Allowances, primarily for receivables and
+At 31 December
+2017
+RMB million
+income
+RMB million
+comprehensive
+(charged) in
+profit or
+loss/other
+RMB million
+Tax losses utilised
+(50)
+1
+16
+3,049
+2,546
+(749)
+(537)
+3,798
+3,083
+31 December
+2017
+RMB million
+RMB million
+31 December
+2018
+China Shenhua Energy Company Limited
+258
+Deferred tax assets
+Deferred tax liabilities
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+For the purpose of the presentation in the consolidated statement of financial position, certain
+deferred tax assets and liabilities have been offset. The following is the analysis of the deferred
+tax balances for financial reporting purpose.
+Details of impairment assessment of bank deposits are set out in Note 40.2.
+As at 31 December 2018, the Group performed impairment assessment on bank balances
+and concluded that the probability of defaults of the counterparty banks are insignificant and
+accordingly, no allowance for credit losses is provided.
+818
+810
+40
+1
+776
+809
+31 December
+2017
+RMB million
+HKD
+Euro
+101
+31 December
+2018
+RMB million
+31. DEFERRED TAXATION
+31. DEFERRED TAXATION (CONTINUED)
+2
+Credited
+(charged) in
+788
+The following are the major deferred tax assets and liabilities recognised and movements thereon
+during the current and prior year:
+(167)
+(31)
+57
+Lease prepayments
+Property, plant and equipment
+569
+(27)
+70
+526
+receivables and inventories
+Allowances, primarily for
+RMB million
+762
+RMB million
+2018
+profit or
+loss/other
+as assets/
+At 1 January
+liabilities held At 31 December
+2018
+comprehensive
+income
+for sale
+RMB million
+RMB million
+Classified
+16,491,037,955 domestic listed A shares of RMB1.00 each
+3,398,582,500 H shares of RMB1.00 each
+37. ACCRUED RECLAMATION OBLIGATIONS
+38. SHARE CAPITAL
+At the end of the year
+Accretion expense
+All A shares and H shares rank pari passu in all material aspects.
+Addition for the year
+At the beginning of the year
+Registered, issued and fully paid:
+4.61
+Notes to the Consolidated Financial Statements (Continued)
+The Group's exposures to interest rates on financial liabilities are detailed in the
+liquidity risk management section of this note.
+7,650
+interest rate
+Borrowings variable
+70,792
+70,965
+421
+97
+223
+For the year ended 31 December 2018
+39. CAPITAL RISK MANAGEMENT
+3,191
+2018
+The Group's policy is to maintain a strong capital base so as to maintain investor, creditor and
+market confidence and to sustain future development of the business.
+19,890
+70,224
+19,890
+3,399
+3,399
+16,491
+16,491
+RMB million
+31 December
+2017
+Year ended 31 December
+RMB million
+2,745
+138
+152
+58
+294
+2,549
+2,745
+RMB million
+2017
+RMB million
+31 December
+2018
+term liabilities
+As at 31 December 2018
+payables, other
+13
+purchased
+(9)
+- Classified as assets held for sale
+New financial assets originated or
+(5)
+- Write-offs
+(96)
+(96)
+- Impairment losses reversed
+120
+13
+120
+417
+Total
+RMB million
+Lifetime
+ECL (credit-
+impaired)
+RMB million
+impaired)
+RMB million
+12m ECL
+(not credit-
+- Impairment losses recognised
+Changes due to financial instruments
+recognised as at 1 January:
+As at 1 January 2018
+The Group manages the capital structure and makes adjustments to it in the light of changes in
+economic conditions and the risk characteristics of the underlying assets. In order to maintain or
+adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders,
+return capital to shareholders or issue new shares to reduce debts.
+The following tables show reconciliation of loss allowances that has been recognised for
+other receivables.
+417
+payables and long-
+133
+440
+rate
+% RMB million RMB million RMB million RMB million RMB million RMB million
+amount
+Total
+carrying
+More than undiscounted
+5 years
+cash flows
+2-5 years
+Total
+1-2 years
+1 year
+average On demand
+interest or less than
+Weighted
+307
+Financial liabilities:
+Accounts and bills
+The following table details the remaining contractual maturity of the Group's financial
+liabilities at the end of the reporting period, which are based on contractual undiscounted
+cash flows (including interest payments computed using contractual rates or, if floating,
+based on rates current at the end of the reporting period) and the earliest date the Group
+can be required to pay:
+The Group closely monitors cash flow requirements and optimising its cash return. The
+Group prepares cash flow forecasts and ensures it has sufficient cash for the servicing of
+operation, financial, and capital obligations; this excludes the potential impact of extreme
+circumstances that cannot reasonably be predicted, such as natural disasters.
+Liquidity risk is the risk that the Group will not be able to meet its financial obligation as
+they fall due. The approach to managing liquidity is to ensure, as far as possible, that it
+will always have sufficient liquidity to meet its liabilities when due, under both normal and
+stressed conditions, without incurring unacceptable losses or risk damage to the Group's
+reputation.
+Liquidity risk
+40.2 Financial risk management objectives and policies (Continued)
+40. FINANCIAL INSTRUMENTS (CONTINUED)
+For the year ended 31 December 2018
+Notes to the Consolidated Financial Statements (Continued)
+274
+2018 Annual Report 273
+31 December 2018
+The Group monitors capital using a gearing ratio which is total liabilities divided by total assets.
+The Group aims to maintain the gearing ratio at a reasonable level. The Group's gearing ratio as at
+31 December 2018 was 31% (2017: 34%).
+-
+2018 Annual Report 265
+currencies
+Other currencies
+Year ended 31 December
+2018
+2017
+RMB million RMB million
+2018
+2017
+RMB million RMB million
+2017
+RMB million
+Year ended 31 December
+Year ended 31 December
+2018
+RMB million
+JPY
+USD
+- if RMB weakens against foreign
+for the year:
+(Decrease) increase in profit after tax
+The following table details the Group's sensitivity to a 10% increase or decrease in
+exchange rate of each foreign currency against RMB, while all other variables are
+held constant. The sensitivity analysis includes only outstanding foreign currency
+denominated monetary items at the end of the reporting period.
+Sensitivity analysis
+42
+25
+35
+870
+954
+3,286
+2,119
+5,517
+2,221
+721
+2017
+RMB million
+(342)
+(198)
+(167)
+(159)
+419
+The Group is exposed to fair value interest rate risk in relation to fixed-rate loan and
+receivables, borrowings, medium-term notes and bonds (see Notes 28, 32 and 33).
+(ii) Interest rate risk
+Market risk (Continued)
+40.2 Financial risk management objectives and policies (Continued)
+40. FINANCIAL INSTRUMENTS (CONTINUED)
+For the year ended 31 December 2018
+Notes to the Consolidated Financial Statements (Continued)
+268
+2018 Annual Report 267
+Assets
+31 December
+2018
+52
+(52)
+669
+159
+167
+167
+198
+342
+foreign currencies
+-if RMB strengthens against
+1569
+62
+There were no changes in the Group's approach to capital management compared with previous
+years.
+RMB million RMB million
+2017
+Wealth management products
+52
+Tradable wealth management products
+111,433
+811
+Equity instruments at FVTOCI
+Financial assets at amortised cost
+5
+56
+Cross-currency exchange rate swaps
+Steam coal futures
+Financial assets
+31 December
+2017
+RMB million
+RMB million
+2018
+31 December
+The carrying amounts of each of the following categories of financial assets and financial
+liabilities at the end of the reporting period are set out as follows:
+40.1 Categories of financial instruments
+40. FINANCIAL INSTRUMENTS
+For the year ended 31 December 2018
+Notes to the Consolidated Financial Statements (Continued)
+266
+32,447
+Loans and receivables (including cash and
+cash equivalents)
+AFS investments
+31 December
+2018
+Liabilities
+Other currencies
+JPY
+USD
+The carrying amounts of the Group's foreign currency denominated monetary assets
+and monetary liabilities at the end of the reporting period are as follows:
+(i) Currency risk (Continued)
+Market risk (Continued)
+40.2 Financial risk management objectives and policies (Continued)
+40. FINANCIAL INSTRUMENTS (CONTINUED)
+RMB million
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+The functional currency of most of the group entities is RMB in which most of the
+transactions are denominated. However, certain of the Group's receivables, bank
+balances, borrowings and payables are denominated in foreign currencies. The Group
+entered into cross-currency exchange rate swaps with in respect of its certain interest
+payments of borrowings denominated in USD in order to mitigate the risk from the
+fluctuation of USD against RMB. The carrying amounts of the Group's receivables,
+bank balances, borrowings and payables denominated in foreign currencies are set
+out in Note 27, 30, 32 and 34, respectively.
+Currency risk
+(i)
+Market risk
+The Group's major financial instruments include accounts and bills receivables, loans and
+advances to/deposits from/amounts due to China Energy Group and fellow subsidiaries,
+amounts due from/to associates, other receivables, accounts and bills payables, borrowings,
+other payables, long-term liabilities, medium-term notes and bonds. Details of the financial
+instruments are disclosed in the respective notes. The risks associated with these financial
+instruments include market risk (interest rate and currency risks), credit risk and liquidity
+risk. The policies on how to mitigate these risks are set out below. The management
+manages and monitors these exposures to ensure appropriate measures are implemented
+on a timely and effective manner.
+164,633
+130,152
+40.2 Financial risk management objectives and policies
+Financial liabilities
+Amortised cost
+125,517
+854
+China Shenhua Energy Company Limited
+419
+N/A
+125
+N/A
+29
+29
+Restricted bank deposits
+18,418
+18,418
+12m ECL
+24, 28 N/A
+Loans receivables
+RMB million
+Gross carrying amount
+RMB million
+Notes
+External Credit 12-month or
+rating
+lifetime ECL
+Financial assets at amortised costs
+2018
+The tables below detail the credit risk exposures of the Group's financial assets and financial
+guarantee contracts, which are subject to ECL assessment:
+The Group does not have any significant concentration of credit risk. Accounts and bills
+receivables consist of a large number of customers, spread across diverse industries and
+geographical areas.
+The credit risks on financial guarantee contracts are limited because the counterparties are
+state owned entities with good financial position.
+Financial guarantee contracts
+Credit risk and impairment assessment (Continued)
+40.2 Financial risk management objectives and policies (Continued)
+12m ECL
+8,607
+8,607
+Bank deposits
+14,183
+2,975
+Credit-impaired
+(provision matrix)
+11,208
+Lifetime ECL
+N/A
+NA
+goods and services (Note (i))
+27
+40. FINANCIAL INSTRUMENTS (CONTINUED)
+Accounts and bills receivables -
+2,749
+Credit-impaired
+568
+12m ECL
+28
+Other receivables
+63,598
+63,598
+12m ECL
+AAA
+3,317
+Other items
+For the year ended 31 December 2018
+2018 Annual Report 269
+501
+693
+1,713
+2,071
+4,978
+4,095
+Bonds
+3.58
+2,402
+900
+399
+3,572
+7,273
+6,823
+80,777
+8,366
+15,611
+45,454
+150,208
+130,152
+China Shenhua Energy Company Limited
+3.53
+interest rate
+Borrowings fixed
+48,442
+Other receivables represent pledge and guarantee deposit, dividend receivables and interest
+receivables. The pledge and guarantee deposit is paid for regular businesses. The dividend
+receivables relate to the investments of the Company and the interest receivables mainly
+relate to related parties and stated owned entities. Thus, the credit risk on other receivables
+are limited.
+Other receivables
+The credit risks on bank balances are limited because the counterparties are banks with high
+credit ratings assigned by credit-rating agencies, such as China Construction Bank, Industrial
+and Commercial Bank of China, Bank of China and Agricultural Bank of China.
+Bank balances
+The credit risks on loan receivables are limited because the counterparties are related
+parties and other state owned entities with good financial position.
+Loan receivables
+In order to minimise the credit risk, the management of the Group has delegated a team
+responsible for determination of credit limits and credit approvals. Before accepting any
+new customer, the Group uses an internal credit scoring system to assess the potential
+customer's credit quality and defines credit limits by customer. Limits and scoring attributed
+to customers are reviewed once a year. Other monitoring procedures are in place to ensure
+that follow-up action is taken to recover overdue debts. In this regard, the Directors consider
+that the Group's credit risk is significantly reduced.
+Accounts and bills receivables arising from contracts with customers
+Credit risk and impairment assessment (Continued)
+40.2 Financial risk management objectives and policies (Continued)
+Notes to the Consolidated Financial Statements (Continued)
+40. FINANCIAL INSTRUMENTS (CONTINUED)
+China Shenhua Energy Company Limited
+As at 31 December 2018, other than those financial assets whose carrying amounts best
+represent the maximum exposure to credit risk, the Group's maximum exposure to credit
+risk which will cause a financial loss to the Group arising from the amount of financial
+guarantees provided by the Group is disclosed in Note 42.3. The Group does not hold any
+collateral or other credit enhancements to cover its credit risks associated with its financial
+assets and financial guarantee contracts.
+Credit risk and impairment assessment
+If interest rates had been 100 basis points (2017: 100 basis points) higher/lower
+and all other variables were held constant, the Group's profit for the year ended
+31 December 2018 would decrease/increase by RMB140 million (2017: decrease/
+increase by RMB324 million).
+The analysis is prepared assuming variable-rate borrowings and variable-rate loans and
+receivables outstanding at the end of the reporting period were outstanding for the
+whole year.
+The sensitivity analysis below has been determined based on the exposure to interest
+rates for variable-rate borrowings and variable-rate loans and receivables at the end
+of the reporting period. No sensitivity analysis has been presented for the exposure
+to interest rates for bank balances as the management of the Group considers that,
+taking into account that the fluctuation in interest rates on bank balances is minimal,
+the impact of profit or loss for the year is insignificant.
+6,676
+13,276
+39,390
+66,992
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+As at 31 December 2018
+Financial guarantee contracts (Note (ii))
+12m ECL
+31 December 2018
+Changes in the loss allowance for accounts and bills receivables are mainly due to:
+1,128
+1,014
+114
+As at 31 December 2018
+3
+(25)
+(25)
+- Impairment losses reversed
+New financial assets originated or
+purchased
+111
+111
+1,039
+1,039
+Total
+RMB million
+RMB million
+impaired)
+(credit-
+(not credit-
+impaired)
+RMB million
+ECL
+Lifetime
+Increase/(decrease) in lifetime ECL
+Not credit-
+impaired Credit-impaired
+RMB million
+125
+New financial assets originated or purchased
+(99)
+(99)
+- Impairment losses reversed
+1 January:
+Changes due to financial instruments recognised as at
+As at 1 January 2018
+393
+393
+- Impairment losses recognised
+Total
+RMB million
+12m ECL
+The following tables show reconciliation of loss allowances that has been recognised for
+loan receivables.
+Credit risk and impairment assessment (Continued)
+40.2 Financial risk management objectives and policies (Continued)
+40. FINANCIAL INSTRUMENTS (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+272 China Shenhua Energy Company Limited
+(25)
+Settlement in full of trade debtors with a gross carrying
+amount of RMB64 million
+RMB million
+RMB million
+N/A
+recognised as at 1 January:
+As at 1 January 2018
+and bills
+receivables
+RMB million
+Accounts
+Average
+loss rate
+Gross carrying amount
+As part of the Group's credit risk management, the Group uses debtors' aging to assess
+the impairment for its receivables from customers in relation to its sales of coal, power,
+coal chemical products and transportation services because these customers consist of a
+large number of customers with common risk characteristics that are representative of the
+customers' abilities to pay all amounts due in accordance with the contractual terms. The
+following table provides information about the exposure to credit risk for accounts and bills
+receivables which are assessed based on provision matrix as at 31 December 2018 within
+lifetime ECL (not credit-impaired). Debtors with credit-impaired with gross carrying amounts
+of RMB2,975 million as at 31 December 2018 were assessed individually.
+Provision matrix - debtors' aging
+For financial guarantee contracts, the gross carrying amount represents the maximum amount the Group
+has guaranteed under the respective contracts.
+For accounts and bills receivables, the Group has applied the simplified approach in IFRS 9 to measure the
+loss allowance at lifetime ECL. Except for debtors with credit-impaired, the Group determines the ECL on
+these items by using a provision matrix, grouped by debtors' aging.
+(ii)
+(i)
+Notes:
+Financial guarantee contracts (Continued)
+Credit risk and impairment assessment (Continued)
+40.2 Financial risk management objectives and policies (Continued)
+40. FINANCIAL INSTRUMENTS (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+190
+China Shenhua Energy Company Limited
+270
+90
+190
+Current (not past due)
+Less than one year past due
+0%
+9,390
+Lifetime
+ECL
+The following table shows the movement in lifetime ECL that has been recognised for
+accounts and bills receivables under the simplified approach.
+During the year ended 31 December 2018, the Group provided RMB114 million impairment
+allowance for accounts and bills receivables, based on the provision matrix. Reversal of
+impairment allowance of RMB25 million were made on debtors with credit impaired.
+The estimated loss rates are estimated based on historical observed default rates over the
+expected life of the debtors and are adjusted for forward-looking information that is available
+without undue cost or effort. The grouping is regularly reviewed by management to ensure
+relevant information about specific debtors is updated.
+Credit risk and impairment assessment (Continued)
+40.2 Financial risk management objectives and policies (Continued)
+40. FINANCIAL INSTRUMENTS (CONTINUED)
+For the year ended 31 December 2018
+Notes to the Consolidated Financial Statements (Continued)
+2018 Annual Report 271
+Changes due to financial instruments
+11,208
+20%
+More than three years past due
+795
+10%
+Two to three years past due
+656
+5%
+One to two years past due
+335
+1%
+32
+The Group is also exposed to cash flow interest rate risk in relation to variable-rate
+borrowings and variable-rate loans and receivables (see Notes 32 and 28). Other
+than the concentration of interest rate risk related to the movements in London
+Interbank Offered Rate and the loan interest published by the PBOC, the Group has
+no significant concentration of interest rate risk.
+Sensitivity analysis
+42.4 Legal contingencies
+148
+268
+416
+Amortisation of discount on
+notes and bonds
+5
+11
+16
+Interest expenses
+-
+5,526
+5,526
+Classified as held for sale
+assets and liabilities
+(23,535)
+(38)
+(23,573)
+At 31 December 2018
+52,537
+6,823
+419
+59,779
+At 1 January 2017
+70,273
+24,974
+10,331
+705
+Foreign exchange
+95,325
+(17,931)
+472
+(5,541)
+(3,208)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+40. FINANCIAL INSTRUMENTS (CONTINUED)
+40.3 Fair value measurements (Continued)
+Fair value of the Group's financial assets and financial liabilities that are not measured at
+fair value on a recurring basis (Continued)
+The fair value of fixed rate bank borrowings above in the Level 2 category is measured using
+discounted cash flow method where the future cash flows are estimated based on the
+contract and discounted at a rate that reflects the credit risk of the issuers.
+The fair values of medium-term notes and bonds are included in the Level 1 category, which
+have been derived from the quoted prices (unadjusted) in an active market.
+41. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES
+The table below shows the detailed changes in the Group's liabilities arising from financing
+activities, including both cash and non-cash changes. Liabilities arising from financing activities
+are those for which cash flows were, or future cash flows will be, classified in the Group's
+consolidated statement of cash flows as cash flows from financing activities.
+Medium-
+Accrued
+interest
+Borrowings
+RMB million
+term notes
+Bonds
+106,283
+payable
+RMB million
+RMB million
+Total
+RMB million
+Note 32
+Note 33
+Note 33
+Note 35
+At 1 January 2018
+Financing cash flows
+80,106
+4,995
+9,752
+(4,182)
+(5,000)
+RMB million
+Financing cash flows
+10,161
+(20,000)
+RMB million
+17,854
+19,485
+14,853
+14,425
+32,707
+33,910
+42.2 Operating lease commitments
+Operating lease commitments mainly represent business premises, mining related
+machineries and equipments leased through non-cancellable operating leases. These
+operating leases do not contain provisions for contingent lease rentals. As at 31 December,
+future minimum lease payments under non-cancellable operating leases on business
+premises, mining related machineries and equipments having initial or remaining lease
+terms of more than one year are payable as follows:
+Within one year
+After one year but within five years
+After five years
+42.3 Financial guarantees issued
+RMB million
+31 December
+2018
+RMB million
+591
+373
+1,917
+1,144
+1,284
+606
+3,792
+2,123
+As at 31 December 2018, the Group had issued certain guarantees in respect of certain
+banking facilities granted to an entity which the Group held less than 20% equity interest.
+The maximum amount guaranteed is RMB171 million (2017: RMB182 million).
+As at 31 December 2018, the Group had issued certain guarantees in respect of certain
+banking facilities granted to an associate of the Group. The maximum amount guaranteed is
+RMB19 million (31 December 2017: RMB40 million).
+278
+China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+31 December
+2017
+RMB million
+China Shenhua Energy Company Limited
+31 December
+2017
+- Equipment
+(5,762)
+(15,601)
+Foreign exchange
+(328)
+(599)
+(927)
+Amortisation of discount on
+notes and bonds
+21
+20
+41
+Interest expenses
+5,529
+31 December
+2018
+5,529
+80,106
+4,995
+9,752
+472
+95,325
+2018 Annual Report 277
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+42. COMMITMENTS AND CONTINGENT LIABILITIES
+42.1 Capital commitments
+As at 31 December, the Group had capital commitments for land and buildings and
+equipment as follows:
+Contracted for but not provided
+- Land and buildings
+At 31 December 2017
+276
+9,903
+9,752
+interest rate
+3.17
+1,073
+1,143
+3,746
+2,254
+8,216
+7,108
+Medium-term notes
+and bonds
+4.45
+8,736
+229
+Borrowings fixed
+3,652
+16,144
+14,747
+97,742
+11,022
+27,646
+55,564
+191,974
+164,633
+Saved as discussed above, the Group also makes use of banks and financial institutions
+facilities as one of the effective sources of liquidity.
+The maximum liability of financial guarantees issued by the Group is disclosed in Note 42.3.
+2018 Annual Report 275
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+3,527
+40. FINANCIAL INSTRUMENTS (CONTINUED)
+72,998
+49,278
+average
+interest
+On demand
+or less than
+rate
+1 year
+1-2 years
+2-5 years
+% RMB million
+RMB million RMB million
+More than
+5 years
+RMB million
+Total
+undiscounted
+cash flows
+RMB million
+Total
+carrying
+amount
+RMB million
+97,605
+payables, other
+term liabilities
+69,148
+120
+236
+505
+70,009
+69,780
+Borrowings variable
+interest rate
+4.54
+18,785
+9,530
+20,012
+payables and long-
+42. COMMITMENTS AND CONTINGENT LIABILITIES (CONTINUED)
+40.3 Fair value measurements
+At 31
+December
+2018
+Discounted cash flow. Future cash
+flows are estimated and discounted
+based on expected rate of return of
+comparable products.
+Market comparison approach. Fair
+value is estimated based on value
+of comparable listed companies,
+multiples and discount for lack of
+liquidity.
+12 Level 2
+Quoted market prices or dealer prices
+for similar instruments.
+There were no transfer between Level 1, Level 2 and Level 3 during the year ended 31
+December 2018 and 2017.
+Fair value of financial assets and financial liabilities that are not measured at fair value
+on a recurring basis
+Except as detailed in the following table, the Directors consider that the carrying amounts
+of financial assets and financial liabilities recorded at amortised cost in the consolidated
+financial statements approximate their fair values:
+At 31 December 2018
+Carrying
+amount
+Fair
+value
+At 31 December 2017
+Carrying
+amount
+flows are estimated and discounted
+based on expected rate of return of
+comparable products.
+Fair
+value
+RMB million
+RMB million
+Financial liabilities:
+Fixed rate bank borrowings
+3,795
+3,864
+6,658
+6,670
+Fixed rate medium-term notes
+Fixed rate bonds
+4,995
+5,009
+6,823
+6,818
+RMB million RMB million
+Fair value of the Group's financial assets and financial liabilities that are measured at fair
+value on a recurring basis
+Discounted cash flow. Future cash
+exchange rate
+RMB million
+At 31
+December Fair value
+2017 hierarchy
+Valuation technique(s) and key
+input(s)
+RMB million
+Financial assets:
+Steam coal futures
+56 Level 1
+Quoted price in an active market.
+Cross-currency
+exchange rate
+swaps
+5
+swaps
+- Level 2
+Tradable wealth
+management
+products
+52 Level 2
+Wealth
+management
+products
+32,447
+105 Level 2
+Equity instruments
+811
+- Level 3
+Financial liabilities:
+Cross-currency
+Quoted market prices or dealer prices
+for similar instruments.
+The Group is the defendant in certain lawsuits as well as the plaintiff in other proceedings
+arising in the ordinary course of business. While the outcomes of such contingencies,
+lawsuits or other proceedings cannot be determined at present, management believes that
+any resulting liabilities will not have a material adverse effect on the financial position or
+operating results of the Group.
+42.5 Environmental contingencies
+To date, the Group has not incurred any significant expenditure for environmental
+remediation, is currently not involved in any environmental remediation, and apart from the
+provision for land reclamation costs, has not accrued any further amounts for environmental
+remediation relating to its operations. Under the existing legislation, management believes
+that there are no probable liabilities that will have a material adverse effect on the financial
+position or operating results of the Group. The regulatory bodies, however, have moved,
+and may move further towards the adoption of more stringent environmental standards.
+Environmental liabilities are subject to considerable uncertainties which affect the Group's
+ability to estimate the ultimate cost of remediation efforts. These uncertainties include (i)
+the exact nature and extent of the contamination at various sites including, but not limited to
+coal mines and land development areas, whether operating, closed or sold; (ii) the extent of
+required cleanup efforts; (iii) varying costs of alternative remediation strategies; (iv) changes
+in environmental remediation requirements; and (v) the identification of new remediation
+sites. The amount of such future cost is indeterminable due to such factors as the unknown
+magnitude of possible contamination and the unknown timing and extent of the corrective
+actions that may be required. Accordingly, the outcome of environmental liabilities under
+future environmental legislation cannot reasonably be estimated at present, and could be
+material.
+282 China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+44. RELATED PARTY TRANSACTIONS (CONTINUED)
+44.1 Transactions with China Energy Group, an associate of China Energy Group,
+fellow subsidiaries, and associates of the Group (Continued)
+(i) (Continued)
+(ii)
+(iii)
+(iv)
+(v)
+(vi)
+where there is neither a state-prescribed price nor a state-guidance price, the
+market price; or
+where none of the above is applicable or where it is not practical to apply the
+above pricing policies in reality, the price to be agreed between the relevant
+parties shall be based on reasonable costs incurred in providing the goods or
+services plus a profit margin of 5% of such costs.
+The Group has entered into coal supply agreements with an associate of China Energy
+Group, fellow subsidiaries and associates of the Group. The coal supplied is charged
+at the prevailing market price.
+where there is no state-prescribed price but where there is a state-guidance
+price, then the state-guidance price;
+The Group, through Shenhua Finance, has entered into a financial services agreement
+with China Energy Group and fellow subsidiaries. Pursuant to the agreement, Shenhua
+Finance provides financial services to China Energy Group and fellow subsidiaries.
+The interest rate for the deposits with Shenhua Finance from China Energy Group and
+fellow subsidiaries should not be lower than the lowest limit published by the PBOC
+for the same type of deposit. The interest rate for loans made by Shenhua Finance
+to China Energy Group and fellow subsidiaries should not be higher than the highest
+limit published by the PBOC for the same type of loan. The above interest rates
+should be determined by reference to the rate charged by normal commercial banks
+in the PRC for comparable deposits and loans on normal commercial terms. The
+fees charged by Shenhua Finance for the provision of other financial services shall
+be determined according to the rates chargeable by the PBOC or the China Banking
+Regulatory Commission.
+The Group has entered into a land leasing agreement with fellow subsidiaries of China
+Energy Group. The annual rent is determined based on the local market rate. The
+Group is not allowed to sub-let the leased land.
+The Group has entered into an agency agreement for the export of coal with a fellow
+subsidiary of China Energy Group. The fellow subsidiary is appointed as a non-
+exclusive export agent of the Group and is entitled to receive an agency fee based
+on the relevant market rates or lower rates. Currently, the rate is 0.7% of the free on
+board sales price of coal exported.
+2018 Annual Report 283
+284
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+44. RELATED PARTY TRANSACTIONS (CONTINUED)
+44.1 Transactions with China Energy Group, an associate of China Energy Group,
+fellow subsidiaries, and associates of the Group (Continued)
+(vii) The Group entered into an agency agreement for the sale of coal with fellow
+subsidiaries of China Energy Group. The Group is appointed as the exclusive sales
+agent of fellow subsidiaries of China Energy Group for thermal coal and non-exclusive
+sales agent for coking coal. The Group is entitled to receive an agency fee, which is
+based on its related costs incurred plus a profit margin of 5% for sales of coal outside
+the Inner Mongolia Autonomous Region. No agency fee is charged for sales of coal
+within the Inner Mongolia Autonomous Region.
+(viii) The Group has entered into agreements with fellow subsidiaries of China Energy
+Group under which the Group has been granted the right to use certain trademarks.
+Fellow subsidiaries of China Energy Group bear its own cost for the registration of
+such trademarks during the term of the trademarks license agreement and expenses
+for enforcement against any infringement of the licensed trademarks by third parties.
+Amounts due from/to China Energy Group, an associate of China Energy Group, fellow
+subsidiaries, and associates of the Group:
+31 December
+2018
+(Before
+Classified as
+assets/liabilities
+reclassification)
+held for sale
+The Group has entered into a property leasing agreement with fellow subsidiaries of
+China Energy Group for leasing of certain properties to each other. No rent is payable
+by the Group before fellow subsidiaries obtains the relevant property ownership
+certificate. The rental charges are based on comparable market rates. If fellow
+subsidiaries of China Energy Group negotiate to sell a leased property to a third party,
+the Company has a pre-emptive right to purchase such property under terms no less
+favorable than other third party.
+31 December
+2018
+(After
+reclassification)
+price prescribed by the state (including any price prescribed by any relevant
+local government), if applicable;
+The Group has entered into a mutual supply agreement for the mutual provision of
+production supplies and ancillary services with an associate of China Energy Group
+and fellow subsidiaries. Pursuant to the agreement, an associate of China Energy
+Group and fellow subsidiaries provide the Group with the production supplies
+and services, ancillary production services including the use of the information
+network system and ancillary administrative services. On the other hand, the Group
+provides fellow subsidiaries with water supplies, rolling stock management, railway
+management, railway transportation and other related or similar production supplies
+or services and use of the information network system.
+Sale of coal represents income from sale of coal to fellow subsidiaries.
+Purchase of coal represents coal purchased from an associate of the Group, an associate of China Energy
+Group and fellow subsidiaries.
+Property leasing represents rental paid or payable in respect of properties leased from fellow subsidiaries.
+Repairs and maintenance services expense represents expense related to machinery repairs and
+maintenance services provided by an associate of the Group and fellow subsidiaries.
+Coal export agency expense represents expense related to coal export agency services provided by a
+fellow subsidiary.
+Purchase of equipment and construction work represents expenditure related to equipment and
+construction service provided by fellow subsidiaries.
+(xv)
+(xvi)
+Sale of coal chemical product represents income from sale of coal chemical product to a fellow subsidiary.
+Other income includes agency income, repairs and maintenance service income, sales of ancillary materials
+and spare parts, management fee income, sales of water and electricity, financial service income, etc.
+earned from China Energy Group, an associate of China Energy Group and fellow subsidiaries.
+2018 Annual Report 281
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+44. RELATED PARTY TRANSACTIONS (CONTINUED)
+The products and services provided under the agreement, other than the sharing of use
+of the information network system which is free of charge, are provided in accordance
+with the following pricing policy:
+44.1 Transactions with China Energy Group, an associate of China Energy Group,
+fellow subsidiaries, and associates of the Group (Continued)
+(xviii) Repayment of loans from Shenhua Finance represents loans repaid by China Energy Group and fellow
+subsidiaries to Shenhua Finance.
+(xix)
+Granting of entrusted loan represents an entrusted loan granted.
+(xx)
+Repayment of entrusted loan represents an entrusted loan repaid.
+(xxi)
+(xxii)
+Receipt of deposits by Shenhua Finance represents net deposits received by Shenhua Finance from China
+Energy Group and fellow subsidiaries.
+Loans obtained by the Group.
+(xxiii) Repayment of loans from a fellow subsidiary by the Group.
+The Directors are of the opinion that the above transactions with related parties were
+conducted in the ordinary course of business and in accordance with the agreements
+governing such transactions.
+The Group entered into a number of agreements with China Energy Group, an associate
+of China Energy Group, fellow subsidiaries, and associates of the Group. The terms of the
+principal agreements are summarised as follows:
+(i)
+(xvii) Granting of loans from Shenhua Finance represents loans granted by Shenhua Finance to China Energy
+Group and fellow subsidiaries.
+(xiv)
+31 December
+2017
+RMB million
+Accrued expenses and other payables
+333
+32
+874
+874
+1,374
+34
+2,466
+285
+2,181
+2,157
+35
+31,263
+Accounts payable
+31,257
+Contract liabilities
+862
+862
+Total amounts due to China
+Energy Group, an associate of
+China Energy Group and fellow
+subsidiaries, and associates of the
+Group
+35,465
+291
+35,174
+24,872
+Other than those disclosed in Notes 24, 28, 32 and 35, amounts due from/to China Energy
+Group, an associate of China Energy Group, fellow subsidiaries, and associates of the Group
+bear no interest, are unsecured and are repayable in accordance with normal commercial
+terms.
+China Shenhua Energy Company Limited
+21,341
+Notes
+Borrowings
+18,399
+RMB million
+RMB million
+RMB million
+Accounts and bills receivables
+27
+2,768
+1
+2,767
+2,594
+Prepaid expenses and other current
+assets
+Other non-current assets
+82
+18,530
+28
+12
+6,238
+5,797
+24
+9,394
+9,394
+10,139
+Total amounts due from China Energy
+Group, an associate of China
+Energy Group, fellow subsidiaries
+and associates of the Group
+18,412
+13
+6,250
+Weighted
+(xiii)
+(xi)
+Ancillary and social services
+(vi)
+1,082
+385
+Transportation service income
+(vii)
+303
+193
+Transportation service expense
+(viii)
+93
+Sale of coal
+(ix)
+90
+16,980
+Purchase of coal
+(x)
+9,750
+9,139
+Property leasing
+(xi)
+69
+88
+Repairs and maintenance services expense
+(xii)
+17
+47
+Coal export agency expense
+6,257
+(xiii)
+18
+Mining service income
+43. EMPLOYEE BENEFITS PLAN
+In addition to a minimal defined benefit plan operated by its subsidiary, the Group participates,
+in line with the regulations of the PRC, mainly in various defined contribution retirement plans
+organised by municipal and provincial governments for its employees. The Group is required to
+make contributions to the retirement plans at 20% of the salaries, bonuses and certain allowances
+of the employees. In addition, as approved by the government, the Group makes contribution to
+a supplemental defined contribution pension plan for its employees. The fund is managed by a
+qualified fund manager. The Group has no other material obligation for the payment of pension
+benefits associated with these plans beyond the annual contributions described above. The
+Group's contributions for the year ended 31 December 2018 were RMB3,469 million (2017:
+RMB2,886 million).
+2018 Annual Report 279
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+44. RELATED PARTY TRANSACTIONS
+44.1 Transactions with China Energy Group, an associate of China Energy Group,
+fellow subsidiaries, and associates of the Group
+The Group is controlled by China Energy Group and has significant transactions and
+relationships with China Energy Group, an associate of China Energy Group and subsidiaries
+of China Energy Group ("fellow subsidiaries"). Related parties refer to enterprises over
+which China Energy Group is able to exercise significant influence or control. The Group
+also has entered into transactions with its associates, over which the Group can exercise
+significant influence.
+The Group had the following transactions with China Energy Group, an associate of China
+Energy Group, fellow subsidiaries, and associates of the Group that were carried out in the
+normal course of business during both years:
+2018
+RMB million
+2017
+RMB million
+Interest income
+(i)
+(v)
+621
+Income from entrusted loans
+(ii)
+19
+31
+Interest expense
+(iii)
+328
+248
+Purchases of ancillary materials and spare
+parts
+(iv)
+1,295
+776
+652
+(xii)
+7
+Purchase of equipment and construction
+(xxii)
+Repayment of loans from China Energy
+Group
+(xxiii)
+500
+3,450
+280
+China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+44. RELATED PARTY TRANSACTIONS (CONTINUED)
+44.1 Transactions with China Energy Group, an associate of China Energy Group,
+fellow subsidiaries, and associates of the Group (Continued)
+(i) Interest income represents interest earned from loans to China Energy Group and fellow subsidiaries. The
+applicable interest rate is determined in accordance with the prevailing interest rates published by the
+PBOC.
+(ii)
+Loans from China Energy Group
+(iii)
+Income from entrusted loans represents interest earned from entrusted loans to an associate of the Group.
+The applicable interest rate is determined in accordance with the prevailing interest rates published by the
+PBOC.
+Interest expense represents interest incurred from deposits placed and loans from China Energy Group
+and fellow subsidiaries. The applicable interest rate is determined in accordance with the prevailing interest
+rates published by the PBOC.
+Purchases of ancillary materials and spare parts represent purchase of materials and utility supplies related
+to the Group's operations from fellow subsidiaries and an associate of China Energy Group.
+(v)
+Mining service income represents income earned from coal mining services to a fellow subsidiary.
+(vi)
+(vii)
+(viii)
+Ancillary and social services represent expenditures for social welfare and support services such as
+property management, water and electricity supply, and canteen expense paid to China Energy Group,
+fellow subsidiaries and an associate of China Energy Group.
+Transportation service income represents income earned from fellow subsidiaries in respect of coal
+transportation services.
+Transportation service expense represents expense related to coal transportation service to fellow
+subsidiaries.
+(ix)
+(x)
+(iv)
+11
+6,583
+(xxi)
+work
+(xiv)
+1,092
+1,119
+Sale of coal chemical product
+(xv)
+4,535
+4,382
+Other income
+(xvi)
+2,014
+2,084
+Granting of loans from Shenhua Finance
+10,068
+(xvii)
+2,281
+Repayment of loans from Shenhua Finance
+(xviii)
+6,692
+3,067
+Granting of entrusted loan
+(xix)
+420
+Repayment of entrusted loan
+(xx)
+627
+Net deposits received (paid) by Shenhua
+Finance
+6,502
+Accounts and bills
+31 December 2017
+Liquidity risk (Continued)
+40.2 Financial risk management objectives and policies (Continued)
+40. FINANCIAL INSTRUMENTS (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+Financial liabilities:
+3,536
+(26)
+Net cash (outflow) inflow from
+financing activities
+(1,333)
+(831)
+(5,343)
+431
+20
+(4,588)
+(1,320)
+(757)
+497
+(22)
+(658)
+(2,846)
+Net cash (outflow) inflow
+(144)
+65
+65
+(47)
+investing activities
+Net cash (outflow) inflow from
+52
+752
+1,572
+7,481
+7,804
+(2,665)
+(62)
+228
+(385)
+2,462
+936
+999
+Current assets
+RMB million
+2017
+2018
+2017
+RMB million RMB million
+RMB million
+RMB million
+2018
+2017
+2017
+2018
+RMB million RMB million
+(483)
+Power Co., Ltd.
+31 December 31 December
+2018
+RMB million
+Administration Co., Ltd.
+Taishan Power Co., Ltd.
+Guangdong Guohua Yuedian Shenhua Huanghua Harbour Shenhua Guohua International Zhejiang Guohua Zheneng
+Details of non-wholly owned subsidiaries that have material non-controlling interests
+(Continued)
+46. SUBSIDIARIES (CONTINUED)
+For the year ended 31 December 2018
+Notes to the Consolidated Financial Statements (Continued)
+293
+2018 Annual Report
+(31)
+230
+(256)
+Power Generation Co., Ltd.
+31 December 31 December 31 December 31 December 31 December 31 December
+419
+766
+66
+3,352
+3,266
+3,247
+4,089
+19,070
+19,748
+1,055
+1,391
+4,104
+4,231
+Revenue
+Expenses
+2018
+2017
+2018
+2017
+RMB million RMB million RMB million RMB million
+2018
+2017
+RMB million RMB million
+2017
+2018
+RMB million RMB million
+Year ended 31 December
+Year ended 31 December
+Year ended 31 December
+Year ended 31 December
+6,336
+6,452
+31,771
+36,058
+2,907
+2,726
+3,016
+3,219
+1,578
+1,281
+9,667
+8,940
+2,013
+1,380
+operating activities
+Net cash inflow (outflow) from
+62
+202
+2,759
+1,527
+65
+465
+311
+Dividend paid to non-controlling
+interests
+463
+(415)
+463
+529
+7,587
+7,479
+(255)
+(173)
+557
+557
+727
+the year
+comprehensive income for
+Profit (loss) and total
+2,641
+3,381
+29
+2,468
+1,826
+1,316
+2,375
+1,947
+1,679
+activities
+Net cash inflow from operating
+372
+268
+137
+36
+88
+288
+357
+22
+1,968
+122
+Dividend paid to non-controlling
+16
+746
+909
+84
+222
+22
+1,685
+1,215
+571
+787
+Profit and total comprehensive
+income for the year
+6,292
+interests
+6,386
+1,523
+2,474
+(354)
+51
+113
+(215)
+1
+(2)
+Net cash (outflow) inflow
+(1,096)
+(2,399)
+(2,221)
+(1,549)
+(2,011)
+(2,169)
+2,390
+(1,822)
+activities
+Net cash outflow from financing
+(642)
+(75)
+(523)
+77
+156
+(421)
+(124)
+(48)
+investing activities
+Net cash (outflow) inflow from
+1,736
+(1,633)
+2,545
+10,566
+2,604
+2,945
+2,502
+2,844
+3,361
+2,830
+2,454
+1,301
+905
+Non-current liabilities
+3,223
+2,164
+5,647
+4,454
+Total equity
+2,621
+2,889
+2,373
+Current liabilities
+9,687
+8,932
+15,909
+15,015
+13,722
+12,974
+10,972
+10,177
+Non-current assets
+Total equity
+2,720
+10,627
+7,898
+10,262
+3,099
+6,068
+7,107
+7,310
+7,604
+10,758
+11,054
+4,519
+4,753
+6,849
+8,172
+Revenue
+Expenses
+2017
+7,718
+2018
+2018
+RMB million RMB million RMB million RMB million RMB million RMB million
+2018
+100
+2018
+2017
+RMB million RMB million
+Year ended 31 December
+Year ended 31 December
+Year ended 31 December
+Year ended 31 December
+5,345
+5,582
+9,963
+9,668
+10,284
+2017
+48
+2,038
+1,892
+4,893
+18,012
+17,595
+12,492
+14,633
+Non-current assets
+1,029
+691
+2,774
+3,293
+18,119
+21,269
+1,302
+1,547
+Current assets
+RMB million
+2017
+2018
+2017
+RMB million RMB million
+2017
+2018
+RMB million RMB million
+2018
+2018
+2017
+RMB million RMB million RMB million
+31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December
+Hebei Guohua Cangdong
+Power Co., Ltd.
+Shenhua Baorixile Energy
+Industrial Co., Ltd.
+Shenhua Zhunge'er
+Energy Co., Ltd.
+Shenwan Energy
+Co., Ltd.
+5,125
+5,215
+5,557
+Current liabilities
+Year ended 31 December
+Year ended 31 December
+2,711
+2,813
+5,142
+5,362
+28,586
+31,354
+8,319
+8,892
+Total equity
+1,089
+942
+Details of non-wholly owned subsidiaries that have material non-controlling interests
+(Continued)
+168
+470
+560
+2,425
+4,837
+Non-current liabilities
+2,786
+2,151
+2,589
+2,648
+7,075
+6,950
+3,050
+2,451
+176
+46. SUBSIDIARIES (CONTINUED)
+For the year ended 31 December 2018
+Notes to the Consolidated Financial Statements (Continued)
+30
+30
+PRC
+Administration Co., Ltd.
+Shenhua Huanghua Harbour
+1,544
+1,580
+114
+1557
+157
+20
+20
+20
+50
+20
+Guangdong Guohua Yuedian Taishan
+Power Co., Ltd.
+3,105
+3,161
+227
+259
+20
+49
+49
+49
+PRC
+Shenhua Zhonghai Shipping Co., Ltd.
+15,021
+17,048
+PRC
+Year ended 31 December
+30
+506
+2018 Annual Report 291
+73,564
+77,144
+22,753
+22,586
+2,138
+2,233
+298
+364
+40
+40
+PRC
+with non-controlling interests
+365
+Individually immaterial subsidiaries
+2,989
+2,900
+302
+67
+30
+30
+6
+30
+PRC
+Power Co., Ltd.
+Shenhua Guohua International
+3,085
+3,079
+Zhejiang Guohua Zheneng Power
+Generation Co., Ltd.
+46
+2018
+2017
+2018
+2017
+RMB million RMB million RMB million RMB million
+Year ended 31 December
+Current assets
+RMB million
+2017
+31 December 31 December 31 December 31 December
+2017
+2018
+2017
+2018
+RMB million RMB million RMB million RMB million
+2017
+2018
+2018
+RMB million RMB million RMB million
+31 December 31 December 31 December 31 December
+Shenhua Zhonghai
+Shipping Co., Ltd.
+Shuohuang Railway
+Development Co., Ltd.
+Shenhua Sichuan
+Energy Co., Ltd.
+Dingzhou Power
+Details of non-wholly owned subsidiaries that have material non-controlling interests
+(Continued)
+46. SUBSIDIARIES (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+292 China Shenhua Energy Company Limited
+1,312
+838
+156
+(228)
+(6)
+105
+Net cash inflow (outflow)
+(1,098)
+(1,302)
+(532)
+(1,002)
+(20)
+1,079
+1,240
+1,500
+774
+3,587
+2,151
+2,018
+769
+841
+Non-current liabilities
+1,538
+615
+7,439
+4,688
+1,827
+2,810
+2,503
+(3)
+1,735
+6,634
+6,185
+30,819
+32,182
+6,111
+6,054
+5,048
+4,716
+Non-current assets
+1,288
+928
+10,283
+10,602
+Current liabilities
+436
+1,014
+financing activities
+23
+423
+1,054
+1,427
+3,349
+3,156
+4.9
+419
+573
+Profit and total comprehensive
+income for the year
+3,679
+3,499
+2,227
+358
+3,064
+11,146
+6,339
+6,724
+4,146
+4,070
+3,567
+4,806
+14,316
+15,062
+6,894
+7,547
+Revenue
+Expenses
+2017
+10,585
+2018
+2017
+2018
+RMB million RMB million RMB million RMB million
+Dividend paid to non-controlling
+508
+Net cash inflow (outflow) from
+197
+(22)
+(95)
+(12)
+(2,832)
+(2,360)
+(959)
+(2,040)
+investing activities
+Net cash (outflow) inflow from
+901
+1,324
+interests
+1,939
+3,008
+2,135
+517
+1,131
+activities
+Net cash inflow from operating
+296
+158
+42
+142
+340
+15
+105
+1,852
+47
+2017
+PRC
+457
+457
+2,327
+2,231
+Hebei Guohua Cangdong Power
+Co., Ltd.
+PRC
+49
+49
+207
+175
+1,378
+1,328
+Dingzhou Power
+PRC
+59
+59
+433
+331
+1,915
+1,795
+Shenhua Sichuan Energy Co., Ltd.
+PRC
+49
+49
+(85)
+(125)
+619
+43
+43
+43
+2017
+2018
+2017
+%
+%
+RMB million
+RMB million
+RMB million
+RMB million
+Shenwan Energy Co., Ltd.
+PRC
+49
+49
+1,336
+281
+4,357
+4,076
+Shenhua Zhunge'er Energy Co., Ltd.
+PRC
+42
+42
+1,333
+1,415
+13,244
+12,075
+Shenhua Baorixile Energy Industrial
+Co., Ltd.
+PRC
+205
+1,424
+Shuohuang Railway Development
+Co., Ltd.
+46. SUBSIDIARIES (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+China Shenhua Energy Company Limited
+288
+services
+Railway Co., Ltd.
+85 Provision of transportation
+Provision of transportation
+services
+85
+RMB4,710 million
+Limited company
+PRC
+Shenhua Zhunchi
+Details of the Company's material subsidiaries (Continued)
+Development Co., Ltd.
+53
+53
+RMB5,880 million
+Limited company
+PRC
+PC
+Shuohuang Railway
+Generation and sale of electricity
+100
+100
+RMB2,551 million
+Limited company
+PRC
+53
+31 December
+Place of
+incorporation Type of
+and operation legal entity
+Limited company
+PRC
+Shenhua Baotou Coal
+Shipping Co., Ltd.
+557
+RMB5,180 million
+Limited company
+PRC
+Shenhua Zhonghai
+Co., Ltd.
+Harbour Administration
+70
+RMB6,790 million
+Name of the
+subsidiary
+Limited company
+Shenhua Huanghua
+51
+51
+70 Provision of harbour and port
+%
+%
+2017
+2018
+31 December 31 December
+Principal
+activities
+held by the Group
+Proportion of ownership
+interest and voting rights
+Particulars
+of registered
+capital
+PRC
+Shenhua Fujian Energy
+Co., Ltd.
+31 December
+Profit allocated to non-
+controlling interests
+Year ended 31 December
+2018
+100
+Provision of financial services
+100
+100
+Investment holding
+Shenhua Watermark
+Coal Pty Ltd.
+Australia
+Limited company
+AUD350 million
+100
+PT GH EMM Indonesia
+Indonesia
+Limited company
+USD63 million
+Shenhua Baoshen Railway PRC
+Group Co., Ltd.
+Limited company
+RMB10,000 million
+100
+(Tianjin) Finance Lease
+Co., Ltd.
+PRC
+Limited company
+RMB1,765 million
+100
+Shenhua Zhunneng
+PRC
+Limited company
+RMB1,200 million
+100
+100 Provision of transportation
+Coal chemical
+Provision of Transportation
+services
+00
+Chemical Co., Ltd.
+Shenhua Railway
+PRC
+Limited company
+RMB4,803 million
+100
+10
+Transportation Co., Ltd.
+Shenhua Finance
+PRC
+Limited company
+RMB5,000 million
+100
+China Shenhua Overseas Hong Kong
+HKD5,252 million
+ㅎㅎ
+Development &
+Investment Co., Ltd.
+Shenhua Australia
+Australia
+Limited company
+AUD400 million
+100
+10
+Holding Pty Ltd.
+100
+services
+Limited company
+Resources Development
+& Utilisation Co., Ltd.
+Xuzhou Power
+2018 Annual Report 289
+290
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+46. SUBSIDIARIES (CONTINUED)
+Details of the Company's material subsidiaries (Continued)
+The above table lists subsidiaries of the Group which, in the opinion of the Directors, principally
+affected the results or assets of the Group. To give details of other subsidiaries would, in the
+opinion of the Directors, result in particulars of excessive length.
+None of the subsidiaries had issued any debt securities at the end of the year except for Shenhua
+Overseas Capital which has issued USD1,000 million of bonds, which are set out in Note 33, in
+which the Group has no interest.
+Notes:
+(i)
+In addition to 15% equity interest held by the Company, the Company's subsidiary owned 50% equity interest in
+Suizhong Power Co., Ltd.
+(ii)
+The Company obtained the control over Dingzhou Power through its right to appoint majority members of the board
+of directors, details of which are set out in Note 4.1.
+Generation and sale of electricity
+(iii)
+China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+46. SUBSIDIARIES (CONTINUED)
+Details of non-wholly owned subsidiaries that have material non-controlling interests
+Summarised financial information in respect of each of the Group's subsidiaries that has material
+non-controlling interests is set out below. The summarised financial information below represents
+amounts before intragroup eliminations.
+Name of
+the subsidiary
+Place of
+incorporation
+and operation
+Proportion of ownership interest
+and voting rights held by non-
+controlling interests
+31 December
+31 December
+2018
+2017
+The Company has the control over Guohua Taicang Power Co. through its voting rights over 50%.
+Accumulated
+non-controlling interests
+51
+RMB804 million
+PRC
+Limited company
+RMB1,790 million
+100
+10
+70
+70
+10
+10
+10
+100
+100
+100
+51
+Coal mining and development;
+Coal mining and development;
+generation and sale of
+electricity
+70 Coal mining and development;
+generation and sale of
+electricity
+100
+Provision of transportation
+services
+100 Provision of financial lease
+services
+100 Comprehensive utilisation of
+inferior coal resources
+100 Generation and sale of electricity
+Zhoushan Power
+PRC
+Limited company
+generation and sale of
+electricity
+51 Generation and sale of
+electricity; trading of coal
+Energy Co., Ltd.
+51
+1,999
+Accrued expenses and other payables
+78,326
+51,274
+23,535
+74,809
+Borrowings
+7,348
+8,607
+8,607
+Restricted bank deposits
+73,728
+63,583
+535
+64,118
+Cash and time deposits at banks
+683
+3,615
+56
+3,671
+Prepaid expenses and other current assets
+7,954
+5,671
+3,070
+8,741
+Accounts and bills receivables
+31 December
+2017
+RMB million
+112
+1,887
+2,915
+Contract liabilities
+100 Trading of coal
+00
+100
+RMB1,889 million
+Limited company
+PRC
+Shenhua Sales Group
+Co., Ltd.
+2017
+%
+2018
+31 December
+Principal
+activities
+held by the Group
+31 December
+interest and voting rights
+RMB million
+Proportion of ownership
+Place of
+incorporation Type of
+and operation legal entity
+Name of the
+subsidiary
+The Company's subsidiaries are unlisted. Details of the Company's material subsidiaries at the
+end of the reporting period are set out below:
+Details of the Company's material subsidiaries
+46. SUBSIDIARIES
+On 22 March 2019, the Directors proposed a final dividend of RMB0.88 per ordinary share totaling
+RMB17,503 million to the equity holders of the Company. Further details are disclosed in Note 15.
+On 30 January 2019, China Energy Group, the controlling shareholder of the Company, has
+completed the transfer of 358,932,628 A shares (approximately 1.805% of the share capital of
+the Company) to Beijing Chengtong Financial Investment Co., Ltd. and 358,932,628 A shares
+(approximately 1.805% of the share capital of the Company) to Guoxin Investment Co., Ltd. for nil
+consideration. These equity transfers do not have any change in the controlling shareholder of the
+Company.
+For the joint venture to be established pursuant to the agreement between the Company and
+the GD Power, as disclosed in Note 11, the date of commercial and industrial registration of the
+joint venture company was 3 January 2019, and the contribution was completed on 31 January
+2019 (the" Completion Date"). From the Completion Date, the joint venture company assumes
+the corresponding rights and the obligations of the relevant coal-fired power generation entities
+contributed by the Company and GD Power to the joint venture company.
+45. EVENTS AFTER THE REPORTING PERIOD
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+286 China Shenhua Energy Company Limited
+790
+790
+Particulars
+of registered
+capital
+RMB million
+RMB million
+31 December
+2018
+(After
+reclassification)
+Ancillary and social services; and
+Purchases of ancillary materials and spare parts;
+Construction work;
+Transportation services;
+Sales and purchases of coal;
+Power sales;
+Other than those transactions with China Energy Group, an associate of China Energy
+Group, fellow subsidiaries and associates of the Group as disclosed above, the Group
+conducts business with other government-related entities which include but are not limited
+to the following:
+The Company is ultimately controlled by the PRC government and the Group operates in an
+economic environment currently predominated by government-related entities.
+44.4 Transactions with other government-related entities in the PRC
+The Group participates in various defined contribution post-employment benefit plans
+organised by municipal and provincial governments and a supplemental defined contribution
+pension plan approved by the government for its employees. Further details of the Group's
+post-employment benefit plans are disclosed in Note 43.
+44.3 Contributions to post-employment benefit plans
+Total remuneration is included in "personnel expenses" as disclosed in Note 12.
+11
+Financial services arrangements.
+1
+9
+1
+8
+2017
+RMB million
+RMB million
+2018
+Short-term employee benefits
+Post-employment benefits
+Key management personnel compensation of the Group is summarised as follows:
+Key management personnel receive compensation in the form of fees, basic salaries,
+housing and other allowances, benefits in kind, discretionary bonuses and retirement
+scheme contributions.
+44.2 Key management personnel emoluments
+44. RELATED PARTY TRANSACTIONS (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+(2)
+10
+Shenwan Energy Co., Ltd. PRC
+2018 Annual Report 285
+44. RELATED PARTY TRANSACTIONS (CONTINUED)
+Classified as
+assets/liabilities
+held for sale
+2018
+(Before
+reclassification)
+31 December
+Balances with other government-related entities, including state-controlled banks in the PRC
+5,461
+Interest expenses (including amount capitalised)
+4,950
+959
+1,335
+11,501
+12,767
+77,303
+85,270
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+97,212
+RMB million
+RMB million
+2017
+2018
+Interest income
+Transportation costs
+Power revenue
+Coal revenue
+Transactions with other government-related entities, including state-controlled banks in the
+PRC
+Having considered the potential for transactions to be impacted by related party.
+relationships, the Group's buying, pricing strategy and approval processes, and what
+information would be necessary for an understanding of the potential effect of the
+relationship on the financial statements, the Directors are of the opinion that the following
+transactions with other government-related entities require disclosure:
+not.
+These transactions are conducted in the ordinary course of the Group's business on terms
+comparable to those with other entities that are not government-related. The Group has
+established its pricing policies in respect of sale of goods and provision of services, and
+approval process for purchases of products and services. Such policies and approval process
+apply to all counterparties regardless of whether the counterparty is government-related or
+44.4 Transactions with other government-related entities in the PRC (Continued)
+96,569
+Limited company
+RMB5,732 million
+51
+PRC
+Suizhong Power
+Generation Co., Ltd.
+Zheneng Power
+Generation and sale of electricity
+60
+60
+60
+RMB3,255 million
+Limited company
+PRC
+Zhejiang Guohua
+Power Co., Ltd.
+Limited company
+Yuedian Taishan
+80
+80
+60
+RMB4,670 million
+Limited company
+PRC
+Guangdong Guohua
+Power Co., Ltd.
+Generation and sale of electricity
+100
+100
+RMB3,024 million
+Limited company
+Generation and sale of electricity
+PRC
+RMB4,029 million
+65
+RMB2,152 million
+Limited company
+ROC
+PRC
+Shenhua Sichuan
+Co., Ltd. (Note (iii)
+50 Generation and sale of electricity
+50
+50
+RMB2,000 million
+Limited company
+PRC
+Guohua Taicang Power
+சு
+Generation and sale of electricity
+41
+RMB1,561 million
+Limited company
+Dingzhou Power (Note (ii) PRC
+Generation and sale of electricity
+51
+51
+55555
+RMB1,834 million
+Limited company
+Hebei Guohua Cangdong PRC
+Power Co., Ltd.
+Co., Ltd. (Note (i))
+Generation and sale of electricity
+41
+47
+Shenhua Shendong
+International Power
+57 Coal mining; provision of loading
+and transportation services
+58 Coal mining and development;
+generation and sale of
+electricity
+100 Trading of coal; provision of
+integrated services
+58
+63
+RMB2,720 million
+Limited company
+Shenhua Beidian Shengli PRC
+Energy Co., Ltd.
+57
+57
+RMB1,169 million
+Limited company
+Shenhua Baorixile Energy PRC
+Industrial Co., Ltd.
+63 Coal mining; provision of loading
+and transportation services
+Energy Co., Ltd.
+RMB7,102 million
+Limited company
+POC
+PRC
+Shenhua Zhunge'er
+Coal Group Co., Ltd.
+10
+100
+RMB4,989 million
+Limited company
+PRC
+Shenhua Shendong
+51 Trading of coal
+50
+Co., Ltd.
+2018 Annual Report 287
+46. SUBSIDIARIES (CONTINUED)
+Generation and sale of electricity
+70
+70
+RMB4,010 million
+Limited company
+PRC
+Shenhua Guohua
+electricity; coal mining and
+development
+70 Generation and sale of
+70
+RMB2,278 million
+Limited company
+PRC
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+Shaanxi Guohua Jinjie
+Energy Co., Ltd.
+%
+2017
+2018
+31 December 31 December
+Principal
+activities
+held by the Group
+interest and voting rights
+Proportion of ownership
+Particulars
+of registered
+capital
+incorporation Type of
+and operation legal entity
+Name of the
+subsidiary
+Place of
+Details of the Company's material subsidiaries (Continued)
+%
+294 China Shenhua Energy Company Limited
+RMB5,132 million
+Shipment turnover
+27.8
+237.0
+303.0
+Total of China Shenhua
+-
+-
+-
+4.8
+Others
+0.3
+(6.8
+359
+1.0
+149.5
+4.4
+0.9
+4.1
+Sales to internal coal chemical
+6.6
+303.6
+29.4
+30.6
+N/A
+20.0
+8.5
+71.4
+2.1
+14.3
+360
+1.4
+151.9
+82.6
+西藏
+自有運營鐵路
+State-owned or Local Railway
+中國 CHINA
+----
+國有或地方鐵路線
+Provincial Boundary
+省界線
+圖例 Legend
+2020
+year completion year
+2015
+210.2 km 40 million tonnes
+Huangda Railway
+(1.6)
+114
+103.6
+Estimated
+transportation Commencement
+capacity
+Length
+construction
+3.5
+22.9
+23.7
+Total of shipping volume
+External customers
+segment
+(3 4
+85.5
+93.0
+11.2
+8.9
+6.0
+0.4
+0.4
+0.5
+0.5
+Baotou Mines
+1.1
+2.6
+436
+77.7
+344.7
+441
+76.7
+353.6
+Shenhua Zhonghai Shipping Company
+Including: Sales to external customers
+12.0
+(1.7)
+12.0
+11.8
+12.1
+14.2
+13.9
+Total railway turnover
+%
+million tonnes
+million tonnes
+(8.7)
+23
+12.3
+Planned annual
+Sales to internal power segment
+103.2
+28.4
+3.0
+171.1
+-
+52.6
+4.0
+273.0
+%
+tonne km
+tonne km
+billion
+billion
+Change
+2017
+དྷཎྜམྦྷ བྷ ཡོངྒེ་ྟབཋ ། ཟ ཟི སྤྱི
+Self-owned railways under
+14.0
+70.1
+79.9
+The Group's internal customers
+64.2
+Xinjie Mines
+0.8
+9.0
+390
+21.3
+94.7
+393
+22.4
+Tibet
+2.1
+新疆
+Ningxia
+B10. 綏中電力
+B2. 三河電力
+A7. 新街台格廟勘查區(前期工作階段)
+A6、澳大利亞沃特馬克煤礦項目(前期工作階段)
+A5. 包頭礦區
+Baotou Mines
+A4.寶日希勒礦區
+Baoriile Mines
+Zhunge'er Mines
+A3.勝利礦區
+Shengli Mines
+A2.准格爾礦區
+Shendong Mines
+A1. 神束礦區
+Beijing Gas Power
+Cangdong Power
+B9. 北京燃氣
+Sanhe Power
+B1. 滄東電力
+1 煤礦 COAL MINE
+2019
+主要資產分佈圖 Assets Distribution Map
+CHINA SHENHUA ENERGY COMPANY LIMITED
+中国神华能源股份有限公司
+Taiwan
+台灣
+Fujian
+a
+Tarangaole
+「福建
+塔然高勒
+Diaoyu Islands
+鳳山電廠 POWER
+釣魚島
+B3. 定州電力
+B5. 准能電力
+B26. 九江電力
+B27. 余姚電力
+EMM Indonesia
+B25.南蘇EMM
+Ningdong Power
+B24.電力
+B21. 神皖能源
+Shenwan Energy
+B22.神華四川能源
+Shenhua Sichuan Energy
+B23. 神華福建能源
+Shenhua Fujian Energy
+Xuzhou Power
+Mengjin Power
+B18.太倉電力
+Taicang Power
+B19.陳家港電力
+Chenjiagang Power
+B20.徐州電力
+B17. 孟津電力
+Huizhou Thermal
+B15. 台山電力
+Taishan Power
+B16. 惠州熱電
+B14. 富平熱電
+Fuping Thermal
+Zhoushan Power
+B4.盤山電力
+Zheneng Power
+Guohua Hulunbeier Power
+Shendong Power
+Zhungeler Power
+Panshan Power
+Dingzhou Power
+B8.國華呼電
+Xinjie Taigemiao Exploration Area (preliminary work in progress)
+Guohua Zhunge'er
+B7. 國華准格爾
+Watermark Coal Project in Australia (preliminary work in progress)
+B6.神東電力
+Jinjie Energy
+B13. 锦界能源
+Suizhong Power
+B11. 浙能電力
+B12. 舟山電力
+Ganqimaodu
+甘其毛都
+Jilin
+Henan
+河南
+Shanxi
+山西
+Guizhou
+貴州
+Shaanxi
+陕西
+Gansu
+(B14
+甘肅
+Tavan Tolgoi
+Inner Mongolia Autonomous Region
+湖北
+內蒙古自治區
+Hulunbeler
+呼倫貝爾
+Sichuan
+29J11 822
+Yunnan
+雲南
+Self-owned mines
+自有礦區
+Self-owned Railway (under construction)
+自有在建鐵路
+Self-owned Railway (in operation)
+Qinghai
+青海
+塔本陶勒盖
+Hubei
+河北
+Hebei
+吉林
+Liaoning
+遼寧
+Qiqihar
+Heilongjiang
+齊齊哈爾
+黑龍江
+Zhejiang
+浙江
+Jiangsu
+江蘇
+Anhui
+安徽
+Shandong
+山東
+Hongkong
+香港
+Macau
+澳門
+Hainan
+海南:
+Guangxi
+Guangdong
+廣西
+廣東
+Jiangxi
+Hunan
+江西
+湖南
+Xinjiang
+(1.4)
+140
+13.8
+0.5
+4.6
+426
+98.3
+436.4
+428
+99.0
+456.4
+Domestic sales
+L
+Self-owned ports
+%
+%
+Huanghua Port
+RMB/tonne
+million tonnes
+(16)
+16
+South China Power Grid Guangdong
+Zhuhai Wind Energy
+Price
+Sales volume
+Price
+Sales volume total sales volume
+Price
+RMB/tonne
+%
+million tonnes
+Sales volume total sales volume
+%
+Power Grid
+Table 13 Coal Resources Reserve
+00
+Change
+Total seaborne coal sales
+Third-party ports
+Marketable reserve (under JORC standard)
+As at 31
+As at 31
+Change December 2018 December 2017
+Change December 2018 December 2017
+Recoverable reserve (under PRC standard)
+As at 31
+As at 31
+December 2018 December 2017
+Mines
+Coal resources (under PRC standard)
+As at 31 As at 31
+1.9
+4.6
+310
+36.1
+Shenhua Tianjin Coal Dock
+160.3
+36.4
+167.6
+1. Direct arrival
+purchased coal
+0.5
+4.7
+426
+93.8
+416.3
+428
+94.6
+435.9
+Self-produced coal and
+316
+48
+125
+125
+Beijing Gas-fired Power
+Yuyao Power
+Table 12 Coal Sales Price
+Other power plants
+30.7 4,901 4,968 (1.3)
+21.9 3,232 2,472
+3,511 2,880
+6.9
+19,915 18,632
+Total cost of sales
+39.934
+59,994
+4.010
+55,984
+North China Power Grid
+313
+4,877
+2,612.0
+20
+Section IV Chairman's Statement (Continued)
+In terms of pollution prevention and treatment, the Company continued to carry out ecological
+restoration and environmental governance in the coal segment, making fruitful achievements in building
+energy conservation and environmental protection capability. As for the power segment, the "ultra-low
+emission" renovation of coal-fired generators with total capacity of 7,810MW was completed, and all
+new coal-fired power projects were in line with ultra-low emission indicators, resulting in the installed
+capacity of "ultra-low emission" coal-fired generators accounting for 89.9% of the total installed
+capacity of coal-fired power generators of the Company. In 2018, the total emissions of sulfur dioxide,
+nitrogen oxide and chemical oxygen demand recorded year-on-year decrease, which continued to secure
+a leading position in the country. As for the transportation segment, the environmental protection
+renovation project of the open-air platforms of main railways was carried forward in an orderly manner;
+Huanghua Harbour successfully dealt with the long-existing problems in the coal port industry, such as
+dust pollution and coal-containing sewage treatment, becoming a benchmarking enterprise for green
+development of coal ports nationwide.
+2019: CONCENTRATING EFFORTS ON "CONSOLIDATION, ENHANCEMENT,
+IMPROVEMENT, TRANSPARENCY", BUILDING ITSELF INTO THE WORLD'S FIRST-
+CLASS COMPREHENSIVE ENERGY COMPANY
+In 2019, economic situations will remain stable amid changes and downside. The Chinese government
+will continue to uphold the underlying principle of pursuing progress while ensuring stability and strive
+to promote high-quality development, keeping the economy running within a reasonable range.
+The Company sets business targets for the whole year based on the prudent analysis of market
+environment and operation conditions as follow: commercial coal production will be 290 million tonnes,
+the coal sales will be 427 million tonnes, the power output dispatch will be 143.1 billion kWh, the
+revenue will be RMB221.2 billion and the cost of sales will be RMB144.1 billion, selling, general and
+administrative expenses and net finance costs will be RMB13.5 billion.
+Priorities will include the following:
+Adhering to and Strengthening the Overall Leadership of the Communist Party of China
+The Company will carry out in-depth implementation of the Thought on Socialism with Chinese
+Characteristics for a New Era proposed by Xi Jinping and the main idea of the important speech made
+by General Secretary Xi Jinping at the Work Conference of the Party Construction of State Enterprises
+Nationwide to ensure the Party building being institutionalised, normalised and a regular practice,
+I give full play to the roles of Party organisations and Party members at all levels, promote the in-depth
+integration of Party building and production and operation, and always maintain the right direction for
+reform and development.
+Setting High Standard and High Starting Point, Planning the Path for the Company's
+Development
+With the general objective of "building the flagship company of China Energy Group and the world-
+class energy enterprise with global competitiveness", we will further deeply study new strategic
+positioning of the Company, improve the strategic management system, focus on the main business of
+the Company at a horizontal level, vertically extend the operation of the integrated industry chain, and
+explore the path for optimising industrial structure and strengthening industrial synergy and integration,
+building the "century-vintage store" in the energy industry.
+China Shenhua Energy Company Limited
+308
+Beijing
+39.2
+38.3
+222
+5,517
+6.8
+6.9
+Sichuan Provincial Local Sichuan
+Shenhua Sichuan Energy
+(hydropower)
+Percentage to
+Percentage to
+Change
+2017
+2018
+Table 15 Railway Cargo Transportation Turnover
+Table 14 Seaborne Coal at Ports
+624
+780
+780
+503
+950
+950
+950
+589
+88
+2,474
+188
+19.3
+Zhejiang
+East China Power Grid
+200
+4,131
+2. Seaborne
+268.3
+58.2
+499
+31.7
+31.2
+(1.5)
+39.6
+39.0
+Zhunge'er Mines
+Tahan Railway
+Table 16 Shipping Volume
+(3.8)
+49.7
+47.8
+(1.6)
+93.8
+(1.6)
+92.3
+162.3
+160.3
+Shendong Mines
+21.5
+(22.7)
+447
+22
+2.2
+543
+0.4
+1.7
+542
+Export sales
+(1.2)
+20.7
+21.2
+2018
+(0.5)
+20.4
+20.3
+Baorixile Mines
+Shengli Mines
+0.9
+3.9
+425
+100.0
+443.8
+429
+100.0
+460.9
+32.5
+State-owned railways
+Change
+325
+(46.2)
+382
+52
+5.2
+506
+506
+0.6
+06
+28
+Total sales volume/average price
+III. Overseas sales
+2017
+(22.7)
+Jiujiang Power
+471.4
+0.7
+%
+tonnes
+tonnes
+%
+tonnes
+tonnes
+%
+tonnes
+tonnes
+(1.9)
+(14.9
+427
+19.4
+2018
+419
+16.5
+Sales of domestic trading coal
+100 million
+100 million
+100 million
+100 million
+100 million
+100 million
+0.2
+4.8
+498
+57.7
+256.0
+3.5
+2017
+Change
+million tonnes
+457
+0.9
+4.0
+Sales of imported coal
+(111)
+Zhunchi Railway
+Bazhun Railway
+Ganquan Railway
+Baoshen Railway
+4.6
+258.2
+270.0
+Dazhun Railway
+4.3
+30.4
+31.7
+Shuchuang-Huangwan Railway
+3.2
+43.7
+45.1
+Shenshuo Railway
+4.9
+184.1
+193.2
+Self-owned railways
+4.6
+227.8
+238.3
+million tonnes
+591
+Yuyao Power
+B28. 壽光電力
+Shouguang Power
+B29.柳州電力
+Liuzhou Power
+B30.國華寧東
+Guohua Ningdong
+18.5
+(612)
+(725)
+Selling expenses
+8.2
+(160,460)
+(173,677)
+Cost of sales
+6.2
+248,746
+264,101
+Revenue
+%
+Other gains and losses
+Change
+2018
+Unit: RMB million
+Items
+Changes in the Major Items in the Consolidated Statement of Profit or Loss and
+Consolidated Statement of Cash Flows
+(1) Analysis on principal business
+MAJOR OPERATION RESULTS DURING THE REPORTING PERIOD
+Section V Directors' Report (Continued)
+II.
+China Shenhua Energy Company Limited
+32
+Note: Please refer to the section headed "Definitions" of this report for the calculations of the above indicators.
+percentage points
+Decreased by 7.5
+2017
+20.4
+(2,844)
+51.3
+Of which: Net cash generated from
+(7.3)
+95,152
+88,248
+Net cash generated from operating activities
+(16.1)
+534
+448
+Share of results of associates
+22.8
+(4,416)
+22.7
+1,205
+(1,880)
+1,479
+(5,421)
+Interest income
+177.7
+(1,262)
+(3,504)
+Other expenses
+N/A
+N/A
+(152)
+Impairment losses, net of reversal
+(16.8)
+894
+744
+Other income
+Finance costs
+12.9
+8.6%
+Decreased by 2.8
+percentage points
+33.7
+Return on net assets as at
+%
+Return on total assets as at
+the end of the period
+Major financial indicators of the Group for 2018 are as follows:
+decrease of
+1.6%
+Year-on-year
+Year-on-year
+increase of
+approximately
+8%
+Year-on-year
+increase of
+7.6%
+costs of self-produced coal
+Changes in unit production
+development costs), net
+finance costs
+(including research and
+administrative expenses
+%
+8.7
+3868 2
+27228
+12.8
+8.2
+6.2
+132.79
+108.5
+138
+149.75
+RMB100 million
+1,604.60
+103.1
+1,684
+3.9
+the end of the period
+EBITDA
+RMB million
+15.36
+16.68
+30.9
+Change
+2017
+2018
+31 December
+31 December
+As at
+As at
+-3.9%
+101,310
+97,363
+percentage points
+Decreased by 2.3
+15.6
+13.3
+percentage point
+Decreased by 0.8
+10.0
+9.2
+Change
+2017
+2018
+and total equity ratio
+%
+Total debt to total debt
+%
+RMB/share
+Net asset per share
+Gearing ratio
+operating activities of Shenhua
+Finance Company Note
+10,660
+7,221
+47.6
+4. Shipment turnover
+79.2
+11.4
+93.0
+103.6
+Million tonnes
+3. Shipping volume
+39.5
+3.2
+43.7
+45.1
+Million tonnes
+Via Shenhua Tianjin
+Coal Dock
+Billion tonne
+nautical miles
+158.6
+184.1
+193.2
+Million tonnes
+Of which: Via Huanghua Port
+226.4
+4.6
+258.2
+270.0
+Million tonnes
+2. Sales of seaborne coal
+244.6
+4.0
+273.0
+4.9
+89.9
+80.4
+11.8
+China Shenhua Energy Company Limited
+34
+282.1
+(3.6)
+292.6
+(2.8)
+220.57
+8.7
+236.04
+8.5
+86
+23
+308.8
+324.6
+315.4
+297.7
+Thousand tonnes
+Thousand tonnes
+2. Sales of polypropylene
+1. Sales of polyethylene
+(IV) Coal chemical
+57
+oo oo
+267.59 246.25
+262.87
+285.32
+Billion kWh
+Billion kWh
+2. Total power output dispatch
+1. Gross power generation
+(III) Power generation
+63.0
+283.9
+1,736.77
+Billion tonne km
+(II) Transportation
+with that
+compared
+Change
+for 2018
+As the coal business served as the driver for the growth in the business
+volume of self-owned railways, ports and shipping, revenue from
+transportation business of the Group before consolidated eliminations
+recorded a year-on-year increase of 6.0%.
+In 2018, total domestic coal consumption continued to maintain a
+momentum of growth. In response to the market demand, the Group
+strengthened the sales of purchased coal, with the sales volume of coal
+throughout the year reaching 460.9 million tonnes (2017: 443.8 million
+tonnes), representing a year-on-year increase of 3.9%.
+Benefited from the growth of total power consumption of the society and
+the Group's strengthened marketing efforts, the power output dispatch of
+the Group in 2018 reached 267.59 billion kWh (2017: 246.25 billion kWh),
+representing a year-on-year increase of 8.7%;
+2
+The revenue of the Group in 2018 recorded a year-on-year increase of 6.2%.
+The main reasons for such change are:
+(1) Factors affecting the revenue
+Revenue and costs
+1.
+Section V Directors' Report (Continued)
+2018 Annual Report 33
+Major operating indicators
+Note: As Shenhua Finance Company provides financial services including deposits and loans for entities
+other than the Group, the item represents the cash flows of deposits and loans and interest, fees and
+commission used by this business.
+(77,621)
+(44,715)
+Net cash used in financing activities
+(497.0)
+13,363
+(53,056)
+Net cash (used in) generated from investing
+activities
+(11.8)
+87,931
+77,588
+Company
+excluding the effect of Shenhua Finance
+Net cash generated from operating activities
+(42.4)
+Unit
+2018
+2017
+109.4
+12.2
+142.8
+160.2
+Million tonnes
+285.5
+(0.1)
+301.0
+300.7
+Million tonnes
+Self-produced coal
+Purchased coal
+Of which:
+394.9
+3.9
+289.8
+0.4
+3305
+443.8
+460.9
+Million tonnes
+2. Coal sales
+295.4
+296.6
+Million tonnes
+1. Commercial coal production
+(1) Coal
+%
+2016
+for 2017
+1. Turnover of self-owned railway
+Section IV Chairman's Statement (Continued)
+RMB100 million
+Cost of sales
+80.00%-
+Zhejiang Guohua Zheneng Power Generation Co., Ltd.
+Equity structure diagram
+60.00%-
+Dajiawa
+大家注
+⑤
+Dongying
+東愛
+Caofeidian Port
+Qinhuangdao Port
+秦皇島港。
+Shenhua Zhonghai Shipping Company
+Zhejiang Guohua Yuyao Gas-fired Power Co., Ltd.
+「曹妃甸港
+山西省
+SHAANXI
+陝西省
+Suning North
+盡事业
+Dingzhou West
+Huanghua
+定州西
+黃驊
+Shenmu North
+神木北站
+Shenchi South
+神池南
+SHANXI
+Shenchi
+51.00%-
+40.50%-
+-100.00%-
+Shenhua Guohua Shouguang Power Generation Company Limited
+Shenhua Shendong Power Co., Ltd.
+-100.00%-
+Shenhua Australia Holdings Pty Limited
+Shendong Coal Branch
+Ha'erwusu Coal Branch
+Major Branches
+60.00%-
+Shenhua Guohua Beijing Electric Power Research Institute Co., Ltd.
+92.00%-
+Major
+Controlling
+Companies
+PT GH EMM Indonesia
+70.00%-
+Jiangsu Guohua Chenjiagang Power Co., Ltd.
+55.00%-
+Hebei Guohua Cangdong Power Co., Ltd.
+Tianjin Guohua Jinneng Power Co., Ltd.
+Shenhua Guohua International Power Co., Ltd.
+Shaanxi Guohua Jinjie Energy Co., Ltd.
+70.00%-
+70.00%-
+57.76 % Shenhua Zhunge'er Energy Co., Ltd.
+62.82% Shenhua Beidian Shengli Energy Co., Ltd.
+60.00% Shenhua Xinjie Energy Co., Ltd.
+-100.00% Shenhua Baotou Energy Co., Ltd.
+56.61% Shenhua Baorixile Energy Co., Ltd.
+50.10% Yulin Shenhua Energy Co., Ltd.
+60.00% Shenhua Bayannur Energy Co., Ltd.
+Shareholders
+17.09%
+Major Controlling Companies
+Coal Production
+H Share
+Guangdong Guohua Yudean Taishan Power Co., Ltd.
+80.00%-
+-100.00% Shenhua Shendong Coal Group Co., Ltd.
+Hebei Guohua Dingzhou Power Generation Co., Ltd.
+65.00%-
+神池
+Shuozhou West
+HEBE
+Tahan Railway
+10. 塔韓鐵路
+Huangda Railway (under construction)
+C9. 黃大鐵路(在建)
+Zhunchi Railway
+C8. 准池鐵路
+Zhuhai Coal Dock
+D3. 珠海煤碼頭
+Shenhua Tianjin Coal Dock
+D2.神華天津煤碼頭
+Huanghua Port
+D1.黃驊港
+港口 PORT
+內蒙古自治區
+Ganquan Railway
+Bazhun Railway
+C6.巴准鐵路
+Baoshen Railway
+CS. 包神鐵路
+Dazhun Railway
+C4.大准鐵路
+Huangwan Railway
+C3. 黃萬鐵路
+Shuchuang Railway
+Shenshuo Railway
+C2.朔黃鐵路
+C1. 神朔鐵路
+鐵路 RAILWAY
+C7. 甘泉鐵路
+INNER MONGOLIA AUTONOMOUS REGION
+包頭
+Baotou
+朔州西
+河北省
+天津市
+MOTIANJIN
+Datong East '
+89
+大秦絕路
+北京
+BEIJING
+Note: This map as at 31 December 2018 is for illustrative purpose only.
+註: 於2018年12月31日之分佈圖,僅做示意。
+神華中海航運
+E1.
+航運 SHIPPING
+Baotou Coal Chemical
+F1. 包頭煤化工
+煤化工 COAL CHEMICAL
+Waixigou
+外西溝
+Shendong
+神東站
+A7 A
+Batuta
+Zhunge'er
+巴圖塔
+Dongsheng
+東勝
+Hanjiacun
+韓家村
+Diandaigou
+點岱湾
+Shenhua Fujian Energy Co., Ltd.
+China Energy
+Investment
+Corporation
+Limited
+Actual
+amount
+The Group recorded a profit for the year of RMB54,164 million (2017: RMB57,138 million)
+representing a year-on-year decrease of 5.2%; a profit for the year attributable to equity holders
+of the Company of RMB44,137 million (2017: RMB47,795 million); and basic earnings per share of
+RMB2.219/share (2017: RMB2.403/share), representing a year-on-year decrease of 7.7%.
+In 2018, the Group continued to push forward the integration mode by seizing the favorable
+opportunity of demand growth in the coal and power markets and striving to overcome the impact
+brought by the output reduction of certain coal mines and adverse weather, and made use of its
+own transportation and sales network to achieve operating profits at every stage of the industrial
+chain, hence contributing to enhancing competitiveness and maintaining stable operating results.
+DISCUSSION AND ANALYSIS ON OPERATION RESULTS
+I.
+Section V Directors' Report
+Shenhua Funeng Power Generation Co., Ltd.
+51.00%-
+Guohua Huizhou Thermal Power Branch
+Shengli Energy Branch
+Inner Mongolia Guohua Zhunge'er Power Generation Co., Ltd.
+Guohua Power Branch
+65.00%-
+50.00% Suizhong Power Co., Ltd.
+Target for
+55.00%-
+Major
+Branches
+51.00% Shenhua (Tianjin) Financial Leasing Co., Ltd.
+-100.00% Shenhua Zhunneng Group Co., Ltd.
+-100.00% Shenhua Hong Kong Limited
+100.00%
+Shenhua Yueyang Power Generation Co., Ltd.
+80.00%-
+-100.00% China Shenhua Overseas Development and Investment Co., Ltd.
+Shenhua Shandong Power Sales Co., Ltd.
+-100.00% Shenhua Geological Exploration Co., Ltd.
+90.00%-
+-100.00% Shenhua Information Technology Co., Ltd.
+Shenhua Guohua Jiansu Power Sales Co., Ltd.
+-65.00% Tianjin Guohua Panshan Power Generation Co., Ltd.
+Sanhe Power Co., Ltd.
+for 2018
+2018
+Proportion of
+Completion
+2,487.46
+105.9
+2,493
+2,641.01
+RMB100 million
+Revenue
+246.25
+107.6
+248.6
+267.59
+Billion kWh
+Total power output dispatch
+4.438
+107.2
+4.3
+4.609
+100 million tonnes
+0.4
+2.954
+102.3
+2.9
+2.966
+100 million tonnes
+Commercial coal production
+Coal sales
+%
+%
+change
+Year-on-year
+Actual
+amount for
+2017
+65.00%-
+Selling, general and
+Shenhua Guohua Ningdong Power Generation Co., Ltd.
+100.00% Shenhua Logistics Group Corporation Limited
+-100.00%-
+Shenhua Guohua Jiujiang Power Co., Ltd.
+-100.00%-
+Guohua Taicang Power Co., Ltd.
+-50.00%-
+Shenhua Guohua (Beijing) Gas Thermal Power Co., Ltd.
+-100.00%-
+Shenhua Baoshen Railway Group Co., Ltd.
+88.16% Shenhua Baoshen Railway Co., Ltd.
+88.46% Shenhua Ganquan Railway Co., Ltd.
+90.00% Shenhua Xinzhun Railway Co., Ltd.
+52.72% Shuohuang Railway Development Co., Ltd.
+85.00% Shenhua Zhunchi Railway Company Limited
+-100.00% Shenhua Railway Transportation Co., Ltd.
+Shenshuo Railway Branch
+Railway
+Major Controlling Companies
+-100.00%
+52.00%-
+Shenhua Guohua Guangtou (Beihai) Power Generation Co., Ltd.
+Shenhua Guohua Yongzhou Power Co., Ltd.
+Shenhua Sichuan Energy Co., Ltd.
+51.00%-
+80.00%-
+100.00% Shenhua Sales Group Co., Ltd.
+China Shenhua
+Energy Company Limited
+Power Generation
+9.85%
+Other A Share
+Shareholders
+Coal Sales
+Shenhua Guohua Mengjin Power Generation Co., Ltd.
+-51.00%-
+73.06%
+Shenwan Energy Co., Ltd.
+51.00%-
+Inner Mongolia Guohua Hulunbei'er Power Generation Co., Ltd.
+-52.20%-
+-100.00%-
+Shenhua Guohua Guangtou (Liuzhou) Power Generation Co., Ltd.
+Guohua Xuzhou Power Generation Co., Ltd.
+indirectly controlled
+(Directly and
+-100.00% Shenhua Finance Co., Ltd.
+as at 31 December 2018 is for illustrative purpose only.
+Note: The equity structure diagram of China Shenhua (including major branches/subsidiaries)
+Major Controlling Companies
+Others
+Chemical Co., Ltd.
+100.00%
+Coal Chemical
+Shenhua Baotou Coal
+Shenhua Guohua (Indonesia) Jawa Power Generation Co., Ltd.
+Shenhua Guohua Guangdong Electricity Sales Co., Ltd.
+Shenhua Guohua (Beijing) Distributed Energy Technology Co., Ltd.
+-100.00%-
+-100.00%-
+40.00% Shenhua Yudean Zhuhai Port Coal Dock Co., Ltd.
+51.00% Shenhua Zhonghai Shipping Co., Ltd.
+Shipping
+70.00%-
+PT. Shenhua Guohua Lion Power Indonesia
+75.00%-
+70.00% Shenhua Huanghua Harbour Administration Co., Ltd.
+Shenhua Tianjin Coal Dock Co., Ltd.
+55.00%
+Port
+Shenhua Guohua (Zhoushan) Power Generation Co., Ltd.
+Shenhua Guohua Qingyuan Power Generation Co., Ltd.
+51.00%-
+Railway Track Mechanical Maintenance Branch
+Major Branches
+51.00%-
+Ningxia Guohua Ningdong Power Generation Co., Ltd.
+-100.00%-
+- 56.77%-
+Gross power generation
+Optimising the Production, Transportation and Marketing Organisation to Improve the
+Quality of the Company's Development
+Safe and Healthy Operation, Fulfilling Social Responsibility
+103.2
+24.7
+112.9
+Central China and
+105.4 17.6
+27.1
+123.9
+Eastern China
+0.6
+0.7
+Shaanxi
+Northwest Power Grid
+Shenmu Power
+9.4
+129.2
+6,892
+152.0
+165.4
+Shaanxi
+North China Power Grid
+5.241
+148.9
+155.5
+Fujian
+East China Power Grid
+Jinjie Energy
+Fujian Energy
+Power segment
+91.2
+1.9
+Transportation segment
+48.8
+Others
+5,705
+109.9
+115.2
+North China Power Grid Shandong
+Shouguang Power
+11.3
+11.4
+Port
+40.0 14.8
+10.1
+45.9
+Northeast China
+107.8
+4.197
+50.4
+Central China Power Grid Henan
+Mengin Power
+37.4
+95.5
+Including: Railway
+Southern China
+2,659
+30.4
+33.5
+Sichuan
+Sichuan Power Grid
+Shenhua Sichuan Energy
+(coal-fired power]
+47.5
+170.5
+38.1
+173.7
+2018 of domestic sales
+Proportion
+5,608
+67.6
+70.7
+Jiangsu
+East China Power Grid
+Taicang Power
+5,066
+226.0
+236.6
+Anhui
+East China Power Grid
+2017 Change
+Shenwan Energy
+Table 9 Domestic Coal Sales Volume
+5,236
+44.3
+47.6
+Zhejiang
+East China Power Grid
+Zhoushan Power
+4,944
+2123
+223.5
+Zhejiang
+East China Power Grid
+Zheneng Power
+Table 10 Capital Expenditure Plan for 2019
+million tonnes
+% million tonnes
+སྐྱུ
+By regions Northern China
+51.3
+60.7
+Coal segment
+4.6
+436.4
+100.0
+456.4
+Domestic sales
+4,672
+164.9
+175.7
+Liaoning
+Northeast Power Grid
+Suizhong Power
+4,651
+88.4
+93.0
+Jiangsu
+East China Power Grid
+Xuzhou Power
+RMB100 million
+5,187
+65.5
+68.5
+Jiangsu
+East China Power Grid
+Chenjiagang Power
+Plan for 2019 Completion in 2018
+RMB100 million
+-
+5,187
+17.3 (100.0)
+Zhejiang Power Grid
+2,400
+%
+% million million
+% million million
+% million million
+million million
+1,375
+2,800
+100
+2,700
+RMB
+RMB
+RMB RMB
+'
+RMB
+RMB
+RMB
+1,880
+3,760
+-
+3,760
+Change 2018 2017 Change
+2017
+2018
+Change
+2017
+2018
+Change
+RMB
+2017
+2,400
+Cost of internal transportation business
+289
+310
+15.2
+3,565 3,095
+Personnel expenses
+(2.4)
+2,622
+24.3 2,560
+305
+379
+14.7
+334
+383
+1,680
+4.3
+2,545
+Materials, fuel and power
+604
+1,260
+1,260
+(220)
+220
+32.1
+2,604 1,971
+21.2
+8.0 2,847 2,349
+14,724
+15,907
+2,440
+2018
+2,000
+2,000
+307
+1,052
+68,388
+632
+(13.5
+8.9
+2,183 2,462.5
+7.7
+2,069 2,675.9
+569
+1,187
+72,408
+Total cost of sales
+143,461
+Other operating costs
+Taxes and surcharges
+7,815
+3.480
+4,007
+8,023
+156,143
+2.520
+Total cost of sales
+1.330
+1,330
+Taxes and surcharges
+1.285
+2,520
+2,520
+315
+300
+8888888 88
+5,202
+64.8
+68.7
+Ningxia
+512
+2,520
+1.021
+5,030
+2,000
+726
+1.320
+1.320
+Chemical
+Shipping
+Port
+Railway
+Coal
+Transportation and Coal
+Chemical Segments
+630
+1,260
+1,260
+3,019
+5.920
+464
+910
+Table 11 Cost of Sales of
+2,712
+4,520
+660
+660
+4.072
+5,090
+60
+'⌘'8 'ཊྛཱ
+4,600
+4,490
+660
+Guchua Ningdong
+31.0
+34.2
+Guangdong
+Shengli Mines
+18.7
+19.2
+(2.6
+Mongolia
+Personnel expenses
+Baorixile Mines
+29.2
+25.3
+15.4
+Guohua Hulunbeler Power Northeast Power Grid
+Inner
+60.2
+4.0
+54.3
+321
+236
+1,200
+1,200
+960
+Repairs and Maintenance
+Depreciation and amortization 5,573
+Seaborne coal sales
+million tonnes
+270.0
+258.2
+4.6
+Baotou Mines
+5,019
+0.6
+273.0
+billion tonne km
+213
+960
+960
+554
+Mongolia
+million tonnes
+160.2
+142.8
+12.2
+Zhunge'er Mines
+52.3
+55.4
+(5.6)
+283.9
+Guohua Zhunge'er
+714
+64.5
+5,411
+310
+236
+1,320
+1.320
+639
+Cost of coal purchased
+Production cost of self-
+produced coal
+Materials, fuel and power
+million tonnes tonne million tonnes tonne
+56,321 160.2
+142.8
+351.6 49,950
+34,911 300.7 116.1 32,490 301.0 107.9
+6.922 300.7 23.0 5,380 301.0 17.9 28.5
+349.8
+North China Power Grid Inner
+0.4
+50.0
+Mongolia
+RMB million RMB/ RMB million
+million kWh mWh million kWh mWh
+RMB/
+%
+7.6
+Cost of power output dispatch 70,652 2,675.9
+264.0 66,704 2,462.5
+Materials, fuel and power
+53,192 2,675.9
+198.8 48,355 2.462.5
+270.9
+196.4
+12.5
+12
+Personnel expenses
+4,522 2,675.9
+05
+16.9
+16.2 4.3
+(1.1)
+Repairs and Maintenance
+2,730 2,675.9
+(5.1)
+4.2
+Depreciation and
+amortization
+8,139 2,675.9
+10.2
+30.4
+2,814 2.462.5
+11.4
+(10.5
+9.352 2.462.5 38.0 (20.0
+4,000 2,462.5
+100
+100
+%
+Shipping volume
+million tonnes
+103.6
+93.0
+11.4
+Others
+1.8
+(100.0
+Shendong Power
+Northwest/North China
+Inner
+334.5
+306.8
+3.723
+337
+255
+8,284
+700
+8,984
+8,726
+Others
+13,366
+300.7 8.8
+300.7 18.5
+300.7
+6,389 300.7 21.2 5,673 301.0 18.8 12.8
+2,661
+2,668 301.0
+5.863 301.0
+8.9
+19.5
+44.6 12,906 301.0 42.8
+ནྡྷ།ཎྜ ཟླ@ཕ
+367
+3,392
+29.2
+32.6
+68.1
+Hebei
+North China Power Grid
+Sanhe Power
+(2.9)
+98.6
+95.7
+Shaanxi
+8.7
+246.25
+267.59
+billion kWh
+Total power output dispatch
+63.5
+5,244
+132.1
+Hebei
+North China Power Grid
+Cangdong Power
+3.3
+190.6
+196.9
+Inner Mongolia
+8.5
+262.87
+285.32
+billion kWh
+Other operating costs
+126.0
+5.119
+291
+Polyethylene sales
+South China Power Grid
+Huizhou Thermal
+4,694
+225.5
+238.9
+Guangdong
+South China Power Grid
+5,522
+1288
+139.2
+Hebei
+North China Power Grid
+Dingzhou Power
+Taishan Power
+(100.0
+1.8
+Overseas
+(3.6)
+308.8
+297.7
+thousand tonnes
+Polypropylene sales
+(9.1)
+4.4
+4.0
+Shanxi
+(2.8)
+324.6
+315.4
+thousand tonnes
+Local Power Grid
+7.3
+By regions
+Others
+for 2018
+2018
+2018
+100 million kWh 100 million kWh
+hours
+g/kWh
+RMB/mWh
+MW
+MW
+MW
+MW
+Coal sales
+million tonnes
+2017
+460.9
+3.9
+By mines
+Including: Self-produced coal
+Purchased coal
+Transportation turnover of self-
+owned railway
+million tonnes
+300.7
+301.0
+(0.1)
+Shendong Mines
+195.8
+193.3
+1.3
+Zhunge'er Power
+North China Power Grid Inner
+443.8
+dispatch Power tariff
+hours
+dispatch
+49,726
+Cost of coal transportation 52,881
+Mongolia
+80.4
+89.9
+billion tonne nm
+Shaanxi Provincial
+%
+power
+output
+utilization
+outpour
+31 December
+capacity
+31 December
+31 December
+Commercial coal production
+million tonnes
+296.6
+295.4
+0.4
+Total production
+296.6
+295.4
+0.4
+Power plants
+Power grid
+Location
+generation
+11.8
+6
+4
+50.0
+(4,901)
+(4,968)
+(30)
+(49)
+86,463
+80,390
+(173,677)
+(160,460)
+million
+Revenue
+RMB100 million
+2,212
+2,641.01
+(2,472)
+(16.2)
+RMB
+44,137
+47,795
+(7.7)
+Segment profit/loss) from
+operations
+43,262
+46,051
+12,720
+7,399
+17,695
+17,675
+2,325
+2,529
+Profit for the year attributable to equity
+723
+(3,232)
+(3,511)
+88,452
+79.511
+39,149
+37,586
+6,124
+5,717
+4.089
+3.247
+5.840
+5,681
+2,763
+2388
+(87,507)
+(2,880)
+(81,302)
+248,746
+Power output dispatch
+billion kWh
+143.1
+267.59
+(46.5)
+Segment cost of sales
+(156,143)
+(143,461)
+(72,408)
+(68,388)
+(19,915)
+(18,632)
+264,101
+661
+751
+560
+95,152
+(7.3
+31 December 2018
+RMB million
+31 December 2017 31 December 2018
+RMB million
+31 December 2017
+RMB million
+RMB million
+finance costs
+activities
+million
+Segment total assets
+228,641
+88,248
+225,672
+215,910
+RMB million
+129,353
+RMB million
+31 December 2018 31 December 2017 31 December 2018 31 December 2017
+RMB million
+RMB million
+129,829
+23,735
+Change in unit production costs of
+year-on-year
+self-produced coal
+increase of no
+more than 5%
+Year-on-year
+increase of
+7.6%
+222,941
+RMB
+Net cash generated from operating
+expenses (including R&D) and net
+1,758
+1,536
+(1,037)
+(912)
+78,197
+75,499
+Cost of sales
+RMB100 million
+1,441
+Selling, general and administrative RMB100 million
+135
+1,736.77 (17.0)
+149.75
+holders of the Company
+million
+(9.8)
+Basic earnings per share
+RMB/share
+2.219
+2.403
+(7.7)
+As at
+As at
+As at
+As at
+As at
+As at
+As at
+As at
+As at
+195,918
+205,191
+Sub-total of segment revenue
+(3.9
+Port
+2017
+2018
+2017
+2018
+2017
+2018
+2017
+Shipping
+2018
+2017
+Coal chemical
+2018
+2017
+Unallocated items
+2018
+Railway
+Eliminations
+2017
+2018
+2017
+2018
+2017
+Commercial coal production
+100 million
+2.9
+2.966
+(2.2)
+Revenue
+RMB
+million
+264,101 248,746
+Total
+Power
+Coal
+2018
+Table 3 Results of Each Segment
+With focus on management of key fields, main sections and weak spots, safe production will continue
+to maintain a leading position worldwide. The Company will continue to strengthen the safety control
+of capital chain, put more efforts on controlling the growth of unit production cost of self-produced
+coal, and reduce the controllable costs of power generation and transportation businesses; strictly
+control investment projects to advance the construction of projects such as Huangda Railway and Jawa-
+7 Coal-fired Power; enhance the implementation of targeted poverty alleviation projects and actively
+explore new work methods such as poverty alleviation through science and technology; adhere to green
+and low-carbon development, safeguarding the bottom line of ecological protection; and establish an
+information system for monitoring occupational health to ensure full coverage of occupational health
+examination.
+Promoting Innovation-driven Development Strategy, Strengthening Independent
+Innovation Capability
+The Company will improve the technological innovation system, strengthen the construction of
+scientific research facilities, and cultivate and introduce higher level of creative talents; put more efforts
+to cultivate technological innovation culture, and promote the creation, protection and application
+of intellectual property rights; strengthen the cooperation among "production, study, research and
+practice", carry out scientific research on the green development of the coal industry, intelligent power
+generation, green and smart railways and ports, and high-end coal chemical products to keep abreast
+of the core, critical and cutting-edge technologies, so as to demonstrate the leading of a number of key
+projects, and promote innovation and development of the Company.
+2019 is the 70th anniversary of the founding of the People's Republic of China and will be a crucial year
+for the country to build a moderately prosperous society in all respects. China Shenhua will remain true
+to our original aspiration and keep our mission firmly in mind, pursue progress, work hard, promote a
+safe, efficient and sustainable development in all business of the Company and create greater value to
+investors.
+凌文
+Ling Wen
+Chairman
+22 March 2019
+2018 Annual Report 21
+94000
+٣٣٥٥٢٥
+OHOC
+10
+60
+00
+Section V Directors' Report
+610
+104
+E
+Overview of China Shenhua's Operating Results for the Year of 2018
+Table 1
+Business Targets for 2019
+Table 2 Financial Indicators
+Target for
+Actual
+2019 amount in 2018 Change %
+2018
+2017
+Change %
+6.2
+Net cash generated from operating
+RMB million
+RMB million
+Coal sales
+100 million
+4.27
+4.609
+(7.4)
+RMB 54,164
+million
+57,138
+(5.2)
+customers
+Inter-segment revenue
+44,346
+40,548
+276
+Profit for the year
+265
+31,971
+5.391
+4,929
+3.252
+2,549
+970
+1,040
+(87,507)
+(81,302)
+tonnes
+EBITDA
+RMB 97.363
+101,310
+33,272
+tonnes
+248,746
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+Revenue from external
+160,845
+155.370
+88,176
+79.246
+5,877
+5.615
+733
+788
+837
+698
+5,840
+5,681
+1,793
+1,348
+RMB million
+264,101
+RMB million
+In terms of the coal segment, emphasis will be put on improving quality, increasing coal variety and
+building brand, promoting clean and efficient production of coal, constructing intelligent and green
+mines, ensuring the acquisition and perpetuation of resources in core areas, increasing output of open-
+pit mines, putting more efforts on marketing and stabilising energy supply. In terms of the power
+segment, the Company will adhere to steady development, promote the coal-power cooperation and
+enhance the quality of power generation, so as to strengthen market competitiveness and ensure that
+the average utilisation hours of the generating units continue to secure a leading position in the industry.
+In terms of the transportation segment, the Company will optimise the network layout, strengthen the
+centralised transportation capability of railways, promote the dispersed transportation capability of ports
+and construct safe, intelligent, efficient and environmental-friendly transportation channels. In terms of
+the coal chemical segment, efforts will be concentrated on technology research and development and
+process integration to ensure safe operation.
+activities excluding Shenhua Finance
+Company
+77,588
+482
+1,060
+1.060
+4,807
+47.7
+51.0
+North China Power Grid Tianjin
+Guangxi Power Grid
+Liuzhou Power
+Chemical (including
+Panshan Power
+0.7
+11.6
+Coal chemical business
+Cost of external transportation business
+1.7
+5.3
+24.0
+Metallurgy
+133 (33.1)
+89
+5.8
+223
+236
+73.2
+631
+1,093
+31.3
+1,644 1,252
+23.6
+Others
+2,843
+6.2
+(0.8)
+30.8 4,162 4,194
+2,469
+3,229
+19.8
+2,664
+3,192
+7.8
+17.401
+18,750
+Sub-total cost of prime business
+490
+700
+2,677
+700
+18.6
+19.8
+Guangxi
+35.3
+40.8
+12.1
+55.2
+25.5
+498
+625
+9.5
+315
+345
+2,832
+660
+660
+660
+790
+2.1
+3,703
+3,782
+Depreciation and amortization
+1,212
+2,020
+20
+2,000
+22.5
+267
+327
+47.1
+840
+34
+6.3
+255
+271
+(1.1)
+3,482 3.519
+Repairs and Maintenance
+612
+1,200
+-
+1200
+11.4
+290
+323
+50
+(6.0)
+188
+188
+4.207
+24.6
+27.8
+Ningxia
+Northwest Power Grid
+Ningdong Power
+1.0
+370.5
+82.0
+0.1
+0.9
+Shipping
+374.3
+By usage Thermal coal
+43.4
+1,217
+1,745
+1
+24.3
+715
+889
+External transportation charges
+749
+1,320
+1.320
+(2.2)
+882
+863
+-
+Others
+-
+2.1
+Jiujiang Power
+571,602
+(192,497)
+416,213
+(191,617)
+Table 6 Power Business
+Table 7 Cost of Sales of Coal Segment
+Table 8 Cost of Sales of Power Segment
+Standard
+2018
+2017
+2018
+Table 4 Operation Data
+Table 5 Commercial coal production Volume
+coal
+Total
+RMB million
+consumption
+Increase/
+(decrease) Total installed
+Equity
+Unit
+Change in
+Power
+2017
+Power
+Installed
+Change
+2018
+2018
+2017
+%
+Total installed
+591,626
+(182,789)
+(423,923)
+325,680
+RMB million
+87,931
+(11.8
+Segment total liabilities
+(109,845)
+(114,713
+(158,033)
+(152,157)
+(56,341)
+65,772)
+(10,094)
+24,211
+(10,607)
+RMB million
+7,058
+(636)
+RMB million
+7,865
+(1,527)
+RMB million
+9,821
+(1,816)
+RMB million
+10,982
+(3,619)
+As at
+As at
+As at
+As at
+As at
+31 December 2018 31 December 2017 31 December 2018 31 December 2017 31 December 2018 31 December 2017 31 December 2018 31 December 2017 31 December 2018 31 December 2017
+RMB million
+RMB million
+RMB million
+As at
+As at
+As at
+As at
+381,056
+(169,782)
+RMB million
+(446,136)
+345,593
+million tonnes
+RMB
+million
+2017
+million tonnes
+Gross
+PLN
+Total of coal-fired power plants/weighted average
+EMM Indonesia
+232.1
+271.3
+Total
+93.3
+1.5
+0.6
+2.9
+Others
+(5.4)
+592
+Indonesia
+560
+132
+(10.0
+802
+722
+Other operating costs
+2,000
+2,000
+2,000
+2,857
+54.5
+57.1
+Central China Power Grid Jiangxi
+coal slurry)
+106 24.5
+15.9
+13.9
+5,302
+power
+Average
+for power
+capacity as at
+in installed
+capacity as at
+capacity as at
+Cost Volume cost Cost Volume Unit cost unit cost
+RMB million RMB/ RMB million RMB/
+output Unit
+output Unit Change in
+Cost dispatch
+cost Cost dispatch
+cost unit cost
+2,787.8
+182 (1.6)
+179
+-
+3
+3
+70.0
+110
+187
+3.3
+429
+443
+Taxes and surcharges
+210
+300
+300
+Change
+316,975
+298,068
+28,779
+P. - 31,966 :
+Other comprehensive expense
+Total comprehensive (expense)
+income for the year
+Dividend declared (Note 15)
+Appropriation of maintenance and
+production funds
+Utilisation of maintenance and
+production funds
+At 31 December 2017
+(25)
+31,966
+31,941
+- (59,072)
+(59,072)
+3,891
+(3,891)
+(1,183)
+1,183
+85,001
+20,996
+5
+1,681
+128,942
+236,625
+Adjustments arising from initial
+(25)
+(25)
+31,966
+263,756
+296
+China Shenhua Energy Company Limited
+38
+19,890
+243,849
+19,890
+236,625
+263,739
+256,515
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+47. INFORMATION ABOUT THE FINANCIAL POSITION AND RESERVES OF THE
+COMPANY (CONTINUED)
+At 1 January 2017
+Profit for the year
+Other
+application of IFRS 9 and IFRS 15
+Share
+premium
+RMB million
+reserves
+RMB million
+income
+RMB million
+Capital and
+other reserves
+RMB million
+Retained
+earnings
+RMB million
+Total
+RMB million
+85,001
+18,288
+30
+1,681
+158,756
+Statutory comprehensive
+Total equity
+At 1 January 2018
+20,996
+2,343
+85,001
+22,393
+87
+1,126
+135,242
+243,849
+At 31 December 2018
+According to the Company's Articles of Association, the amount of retained earnings available
+for distribution to equity holders of the Company is the lower of the amount determined in
+accordance with the China Accounting Standards and the amount determined in accordance with
+IFRSS after the appropriation to reserves as detailed in Note (iii) to the consolidated statement of
+changes in equity.
+At 31 December 2018, the aggregate amount of retained earnings determined in accordance with
+the China Accounting Standards available for distribution to equity holders of the Company was
+RMB132,711 million (2017: RMB124,576 million).
+2018 Annual Report 297
+Section XIV Documents Available for Inspection
+Documents available
+for inspection
+The annual report for the year 2018 signed by the Chairman
+The financial statements signed and sealed by the Chairman, the Chief Financial
+Officer, and the Accountant in Charge
+The original copy of the audit report sealed by the accounting firm and signed
+and sealed by the certified public accountants
+The original copies of all documents and announcements of the Company
+publicly disclosed in the newspapers designated by the CSRC during the
+reporting period
+The annual report for the year 2018 published on the Shanghai Stock Exchange
+and the Hong Kong Stock Exchange
+Ling Wen, Chairman
+Approval date of the board of directors for submission: 22 March 2019
+298 China Shenhua Energy Company Limited
+Section XV Signing Page for Opinions
+Pursuant to Article 68 of the Securities Law of the People's Republic of China and Article 14 of the
+Standards Concerning the Contents and Formats of Information Disclosure by Companies Offering
+Securities to the Public No. 2 – The Contents and Formats of Annual Report (Revised edition 2017) of
+the CSRC, having fully understood and reviewed the 2018 Annual Report of the Company, all directors,
+supervisors and senior management are of the opinion that information disclosed in the 2018 Annual
+Report of the Company is true, accurate and complete. We hereby guarantee that the information stated
+in this report does not contain any false representation, misleading statement or material omission, and
+jointly and severally accept full responsibility for the truthfulness, accuracy and completeness of the
+content thereof.
+Directors
+凌文
+(2,343)
+(3,740)
+3,740
+(18,100)
+5
+от
+Profit for the year
+Other comprehensive income
+Total comprehensive income
+for the year
+Dividend declared (Note 15)
+Appropriation of maintenance and
+production funds
+Utilisation of maintenance and
+production funds
+82
+85,001
+(555)
+1,126
+129,497
+236,625
+25,242
+25,242
+82
+82
+78
+-
+25,242
+25,324
+(18,100)
+555
+(Ling Wen)
+Share capital
+Reserves
+256,515
+3,161
+3,074
+352
+240
+213,567
+234,485
+Current assets
+Inventories
+3,379
+3,167
+12,662
+11,977
+Prepaid expenses and other current assets
+67,055
+44,481
+Restricted bank deposits
+793
+938
+Time deposits with original maturity over
+three months
+9,200
+4,650
+Cash and cash equivalents
+49,282
+59,154
+33,829
+32,325
+646
+Total non-current assets
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+47. INFORMATION ABOUT THE FINANCIAL POSITION AND RESERVES OF THE
+COMPANY
+Non-current assets
+Property, plant and equipment
+Construction in progress
+Intangible assets
+Investments in subsidiaries
+Investments in associates
+AFS investments
+NOTE
+31 December
+2018
+RMB million
+31 December
+2017
+RMB million
+142,371
+44,724
+3,521
+3,067
+854
+572
+120,344
+7,640
+-
+139,138
+5,283
+569
+Equity investments at FVTOCI
+Other non-current assets
+Lease prepayments
+Deferred tax assets
+48,713
+Equity
+124,367
+Total current assets
+as held for sale
+378
+Total current liabilities
+109,695
+95,588
+Net current assets
+56,535
+Total assets less current liabilities
+270,102
+263,264
+Non-current liabilities
+Borrowings
+Long-term liabilities
+Accrued reclamation obligations
+Total non-current liabilities
+Net assets
+3,617
+4,744
+1,248
+720
+1,498
+1,285
+6,363
+6,749
+263,739
+Liabilities associated with assets classified
+95,588
+109,317
+73
+23,859
+166,230
+124,367
+2018 Annual Report 295
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+47. INFORMATION ABOUT THE FINANCIAL POSITION AND RESERVES OF THE
+COMPANY (CONTINUED)
+Current liabilities
+NOTE
+31 December
+2018
+RMB million
+31 December
+2017
+RMB million
+Borrowings
+Assets classified as held for sale
+Accounts and bills payables.
+Current portion of long-term liabilities
+Income tax payable
+Contract liabilities
+11,120
+7,271
+7,716
+88,998
+6,476
+73,778
+154
+5,196
+1,256
+2,867
+Accrued expenses and other payables
+(Mi Shuhua)
+Accounts and bills receivables
+树
+9,343
+10,027
+Earnings per share (RMB)
+- Basic
+1.976
+0.887
+1.252
+2.403
+2.219
+2018 Annual Report 301
+Section XVI Summary of Major Financial Information for the
+Recent Five Years (Continued)
+CONSOLIDATED STATEMENT OF FINANCIAL POSITION
+As at 31 December
+2014
+2015
+RMB Million
+RMB Million
+2016
+RMB Million
+2017
+2018
+RMB Million RMB Million
+Total non-current assets
+431,226
+438,755
+443,266
+7,060
+438,958
+7,310
+Non-controlling interests
+Profit before income tax
+61,847
+34,520
+41,253
+Income tax
+(12,784)
+(9,561)
+(9,283)
+73,293
+(16,155)
+70,141
+(15,977)
+Profit for the year
+49,063
+24,959
+31,970
+57,138
+54,164
+Profit for the year
+attributable to:
+Equity holders of
+the Company
+39,301
+17,649
+24,910
+47,795
+44,137
+9,762
+358,330
+Total current assets
+119,646
+363,921
+384,969
+379,105
+408,837
+Equity attributable to equity
+300,698
+CHINA SHENHUA ENERGY COMPANY LIMITED
+中国神华能源股份有限公司
+China Shenhua Energy Company Limited
+302
+408,837
+379,105
+384,969
+363,921
+365,570
+Total equity
+77,144
+73,564
+67,994
+65,853
+64,872
+Non-controlling interests
+331,693
+305,541
+(Peng Suping)
+365,570
+Net assets
+182,789
+192,497
+121,036
+133,463
+132,644
+233,296
+Total assets
+550,872
+559,791
+576,729
+571,602
+591,626
+Total current liabilities
+110,778
+448
+101,487
+115,905
+123,381
+Total non-current liabilities
+74,524
+94,383
+79,575
+76,592
+59,408
+Total liabilities
+185,302
+195,870
+191,760
+112,185
+534
+holders of the Company
+428
+张立法 许山成
+(Huang Qing)
+(Zhang Guangde)
+(Xu Shancheng)
+300 China Shenhua Energy Company Limited
+China Shenhua Energy Company Limited
+22 March 2019
+Section XVI Summary of Major Financial Information
+for the Recent Five Years
+The finance information below is from the financial statement prepared by the Group in accordance with
+International Financial Reporting Standards:
+CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
+OTHER COMPREHENSIVE INCOME
+2014
+RMB Million
+For the year ended 31 December
+2015
+RMB Million
+2016
+RMB Million
+2017
+2018
+RMB Million RMB Million
+Revenue
+Cost of sales
+253,081
+177,069
+183,127
+(178,109)
+(123,341)
+(124,843)
+248,746
+(160,460)
+(Jia Jinzhong)
+贾晋中
+(Shen Lin)
+(Xu Mingjun)
+Te
+237
+(Huang Ming)
+高嵩
+(Li Dong)
+(Gao Song)
+去
+(Zhao Jibin)
+譚惠珠
+(Tam Wai Chu, Maria)
+姜波
+(Jiang Bo)
+264,101
+(173,677)
+(Zhong Yingjie, Christina)
+Section XV Signing Page for Opinions (Continued)
+Supervisors
+。
+(Zhai Richeng)
+Senior Management
+周大产
+申林
+(Zhou Dayu)
+弦明
+许
+m
+(Zhang Jiming)
+2018 Annual Report 299
+Gross profit
+Athana
+53,728
+1,659
+1,379
+894
+744
+Impairment losses, net of
+(152)
+reversal
+Other expenses
+(419)
+(626)
+(1,511)
+(1,262)
+939
+(3,504)
+803
+608
+Finance costs
+(4,459)
+723
+(5,748)
+1,205
+(4,416)
+1,479
+(5,421)
+Share of results of
+410
+74,972
+associates
+Interest income
+Other income
+(5,123)
+(341)
+(1,880)
+90,424
+(454)
+(2,844)
+58,284
+Selling expenses
+(794)
+(584)
+88,286
+(612)
+(725)
+General and administrative
+expenses
+(8,460)
+(9,218)
+(610)
+(9,115)
+(8,023)
+(3,078)
+(770)
+Other gains and losses
+(400)
+(375)
+(496)
+costs
+Research and development
+(9,854)
+(5,856)
+Unit: RMB million
+Coal
+Cost of sales by business segment (before eliminations on consolidation)
+2018 Annual Report 35
+Business
+segment
+Transportation charges represented the costs of the Group incurred
+through external railway, expressway, shipping transportation, the use
+of external port and so forth. Such charges represented a year-on-year
+increase of 16.1% in 2018, which was mainly attributable to the increase
+in volume of coal transported through national railways and the increase
+in chartering costs;
+Items of costs
+Section V Directors' Report (Continued)
+Port
+Cost of coal purchased, production cost of self-
+produced coal (raw materials, fuel and power,
+personnel expenses, repairs and maintenance,
+depreciation and amortisation, and other
+expenses), transportation charges, other
+operating costs, and taxes and surcharges
+Raw materials, fuel and power, personnel
+expenses, repairs and maintenance,
+depreciation and amortisation, other costs,
+other operating costs, and taxes and
+surcharges
+Railway
+Cost of internal transportation business
+(raw materials, fuel and power, personnel
+expenses, repairs and maintenance,
+depreciation and amortisation, external
+transportation charges, and other expenses),
+external transportation charges, other
+operating costs, and taxes and surcharges
+Cost of internal transportation business
+(raw materials, fuel and power, personnel
+expenses, repairs and maintenance,
+depreciation and amortisation, and other
+expenses), external transportation charges,
+other operating costs, and taxes and
+surcharges
+2018
+2017 Change
+%
+72,408
+156,143
+8.8
+143,461
+Power
+Personnel expenses represented a year-on-year increase of 14.8%,
+which was mainly attributable to the raise of salary standard by certain
+production units based on the operating performance;
+(1.3)
+The cost of coal purchased represented a year-on-year increase of 12.8%,
+which was mainly attributable to the expansion of the sales volume of
+purchased coal by the Group according to market supply and demand;
+Taxes and surcharges
+16.1
+10,053
+68,388
+5.8
+9,640
+6.0
+4.3
+Others
+21,394
+12.3
+21,665
+13.5
+Total cost of sales
+173,677
+100.0
+160,460
+100.0
+8.2
+The cost of sales of the Group in 2018 represented a year-on-year increase of
+8.2%, of which:
+(3)
+Costs of raw materials, fuel and power represented a year-on-year
+increase of 18.4%, which was mainly attributable to the increase in
+coal cost in the power segment as a result of the increase in power
+generation, and the increase in consumption of materials for coal mine
+stripping and excavation;
+5.9
+and surcharges
+18,632
+China Shenhua Energy Company Limited
+(3)
+Section V Directors' Report (Continued)
+Major business segments
+The major business model of the Group is the integrated coal industry chain: i.e.
+coal production → coal transportation (railway, port and shipping) → conversion
+of coal (power and coal chemical), and there are business intercourses between
+each segment. The percentages of the profit from operations attributable to the
+coal, power, transportation and coal chemical segments of the Group before
+elimination on consolidation changed from 61%, 10%, 28% and 1% in 2017 to
+56%, 16%, 27% and 1% in 2018, respectively.
+Mainly attributable to the
+Finance Company
+granting of loans by Shenhua
+management products and
+borrowings
+2.8
+15,785
+1.0
+5,772
+Short-term
+12.6
+71,872
+10.5
+8.9
+61,863
+Cash and cash
+equivalents
+36
+19,915
+expenses, other operating costs, and taxes
+expenses, repairs and maintenance,
+6.9
+3,511
+2,880
+21.9
+Shipping
+Cost of internal transportation business
+3,232
+2,472
+30.7
+(raw materials, fuel and power, personnel
+expenses, repairs and maintenance,
+depreciation and amortisation, external
+transportation charges, and other expenses),
+external transportation charges, and taxes and
+surcharges
+Coal
+Raw materials, fuel and power, personnel
+4,901
+4,968
+(1.3)
+Chemical
+depreciation and amortisation, other
+14,326
+(2) Analysis of costs
+16,635
+90
+457
+Long-term
+within 1 year
+borrowings due
+and long-term
+(63.4) Repayment of bank loans by
+power plants
+Dollar and loans
+and repayment of matured
+bonds denominated in US
+0.1
+management products
+deposits of various kinds
+reserves balance and
+increase in statutory deposit
+Major business segments in 2018 (before eliminations on consolidation)
+Section V Directors' Report (Continued)
+Percentage
+Amount for
+Unit: RMB million
+Percentage
+(13.9) Purchase of bank wealth
+345
+0.1
+32.5 Increase in expected
+Provision for coal mine
+environmental restoration
+fund to replace the original
+coal mine environmental
+restoration deposit since
+2018 in accordance with the
+regulatory requirements
+17.1
+(24.8) Decrease in taxable income
+right fee payable
+reclamation fee and mining
+reclamation fee
+16.2
+0.5
+2,745
+0.5
+3,191
+Accrued land
+payable
+1.0
+5,604
+10
+0.7
+4,213
+Income tax
+within 1 year
+payables due
+to cost of
+9.6
+Change in
+amount for
+the year
+to cost of
+18.4
+Personnel expenses
+15,888
+9.1
+13,842
+8.6
+14.8
+Depreciation and amortisation
+20,243
+12.2
+11.7
+13.5
+(6.2)
+Repairs and maintenance
+10,025
+5.8
+9,938
+6.2
+0.9
+Transportation charges
+21,576
+19,523
+13.3
+23,118
+Amount for
+sales for
+the previous
+sales for the
+the previous
+Breakdown of cost items
+the year
+the year
+year
+previous year
+year
+%
+%
+%
+Cost of coal purchased
+56,321
+32.4
+49,950
+31.1
+12.8
+Raw materials, fuel and power
+over that of
+1.3
+increase/
+decrease in
+1.5
+38
+2018 Annual Report 37
+percentage points
+Increased by 3.5
+(1.3)
+2.8
+16.1
+4,901
+5,840
+Section V Directors' Report (Continued)
+Coal chemical
+Decreased by 2.9
+30.7
+25.9
+21.0
+3,232
+4,089
+Shipping
+percentage points
+Decreased by 6.9
+percentage points
+(4) Analysis of the production and sales volume
+Increase/
+decrease in
+296.6 million 460.9 million
+tonnes
+tonnes
+285.32 billion 267.59 billion
+kWh
+kWh
+Power
+Coal
+%
+%
+%
+the year
+volume
+volume
+with the
+beginning of
+sales
+production
+decrease in
+compared
+increase/
+Inventory
+at the end
+of the year
+Sales
+volume
+Production
+Major
+products
+inventory as
+Year-on-year Year-on-year
+21.9
+23.7 million
+7.1
+3,511
+Coal
+%
+RMB million RMB million
+as compared with
+previous year
+year
+year
+margin
+previous
+previous
+205,191
+Cost of Gross profit
+sales
+Business
+segment
+gross profit margin
+with
+Increase/decrease in
+compared as compared
+with
+revenue as cost of sales
+Increase/
+decrease in
+Increase/
+decrease in
+2018 Annual Report 41
+Revenue
+156,143
+23.9
+4.7
+6,124
+Port
+percentage points
+Decreased by 1.3
+6.9
+4.2
+49.1
+19,915
+39,149
+Railway
+percentage points
+Increased by 4.1
+5.9
+11.2
+18.1
+72,408
+88,452
+Power
+percentage points
+Decreased by 2.9
+8.8
+42.7
+0.4
+3.9
+(4.0)
+Percentage
+of total
+assets at
+the end of
+the end of
+total assets
+Amount at
+Amount at
+Percentage of
+Unit: RMB million
+1. Assets and Liabilities
+(III) Analysis on Assets and Liabilities
+the end of
+Applicable ✓ Not applicable
+(II)
+Section V Directors' Report (Continued)
+China Shenhua Energy Company Limited
+40
+Net cash used in financing activities: RMB44,715 million of net cash used in
+financing activities in 2018, representing a year-on-year decrease of 42.4%,
+which was mainly attributable to the distribution of special dividends by the
+Company for the corresponding period of previous year and the increase in bank
+borrowings for the power segment during the reporting period.
+Net cash (used in) generated from investing activities: RMB53,056 million of net
+cash used in investing activities in 2018 (2017: RMB13,363 million generated
+from investing activities), representing a year-on-year change of 497.0%, which
+I was mainly attributable to the maturity of wealth management products for the
+corresponding period of previous year and the additional investments in wealth
+management products for the current year.
+Net cash generated from operating activities: RMB88,248 million of net cash
+generated from operating activities in 2018, representing a year-on-year
+decrease of 7.3%, of which, net cash generated from operating activities
+of Shenhua Finance Company was RMB10,660 million (2017: RMB7,221
+million generated from operating activities), representing a year-on-year
+increase of 47.6%, which was mainly attributable to the increase in deposits
+placed with Shenhua Finance Company. Excluding the effects of Shenhua
+Finance Company, net cash generated from operating activities of the Group
+represented a year-on-year decrease of 11.8%, which was mainly attributable
+to the increase in cash outflows as a result of the increase in production cost
+of self-produced coal, percentage of sales of purchased coal and external
+transportation charges, and the increase in taxes and expenses as compared to
+the corresponding period of previous year.
+(3)
+(2)
+Explanation on the material changes in profit incurred from non-principal
+business
+at the end
+the previous
+the previous
+8,607
+Restricted bank
+deposits
+current assets
+and other
+Purchase of bank wealth
+167.5
+3.6
+20,452
+9.2
+54,702
+Prepaid expenses
+%
+%
+%
+Main reasons for changes
+Change of
+the amount
+year
+year
+of the year
+the year
+Items
+(1)
+The Group formulated capital management policies that aimed to achieve maximized
+interests for the shareholders and maintained a sound capital structure as well as
+reduced the costs of capital under the premise of safeguarding the operation on an
+on-going basis, and the capital was invested in accordance with the policy of the
+Company.
+Cash flow
+In 2018, investment in research and development amounted to RMB860 million (2017:
+RMB863 million), which is mainly utilised in research and demonstration engineering
+of a set of 8.8-meter height fully-mechanised smart mining equipment at Shendong
+Mines, demonstration project of the industrialization of aluminium oxide, high-
+aluminium pulverized fuel ash integrated use and technological research on safety
+monitoring and protection, etc..
+(8)
+(7)
+(6)
+(5)
+(4)
+(3)
+(2)
+(1)
+Other items of consolidated statement of profit or loss
+Section V Directors' Report (Continued)
+2.
+China Shenhua Energy Company Limited
+In 2018, the total procurement from the top five suppliers of the Group
+amounted to RMB32,951 million, accounting for 24.2% (less than 30%) of
+the total procurement for the year, among which, the procurement from the
+largest supplier amounted to RMB9,934 million, representing 7.3% of the total
+procurement for the year.
+Major suppliers
+In 2018, the total revenue from the top five customers of the Group amounted
+to RMB72,626 million, accounting for 27.5% of the revenue of the Company
+(less than 30%), including the revenue from China Energy, the controlling
+shareholder of the Company, and its subsidiaries. The Group has maintained
+long-term cooperative relationship with the above customers. The Company
+is of the view that the long-term cooperative relationship would not result in
+material risk to the business of the Group.
+(6)
+Major customers
+(5)
+8.7
+8.5
+tonnes
+Selling expenses: representing a year-on-year increase of 18.5% in 2018, which
+I was mainly attributable to the increase in expenses of coal sales institutions as
+a result of the increase in purchased coal and newly added switch stations.
+7,348
+Other gains and losses: representing a year-on-year increase of 51.3% in other
+losses in 2018, which was mainly attributable to the losses and expenses
+arising from disposal of assets in relation to the separation and transfer of
+"water/power/gas supply and property management" in 2018.
+Impairment losses, net of reversal: amounted to RMB152 million in 2018, which
+was mainly attributable to the provision for impairment of bills receivables and
+accounts receivables, and the impairment provision made by Shenhua Finance
+Company in accordance with relevant regulations.
+The ratio of research and development personnel to the total number
+of persons in the Company (%)
+Number of research and development personnel in the Company
+(number of person)
+4.
+3.0
+2,603
+0.3
+47.2
+860
+Total research and development expenditure (RMB million)
+Ratio of capitalised research and development expenditure (%)
+Percentage of total research and development expenditure to
+revenue (%)
+406
+Capitalised research and development expenditure in the period
+(RMB million)
+454
+Expensed research and development expenditure in the period
+(RMB million)
+Investment in research and development
+3.
+Section V Directors' Report (Continued)
+2018 Annual Report 39
+Share of results of associates: representing a year-on-year decrease in revenue
+of 16.1% in 2018, which was mainly attributable to the decrease in operating
+profits of associates.
+Finance costs: representing a year-on-year increase of 22.8% in 2018, which
+was mainly attributable to the increase in exchange losses on foreign currency
+liabilities.
+Interest income: representing a year-on-year increase of 22.7% in 2018, which
+was mainly attributable to the increase in average bank deposit balance.
+Other expenses: representing a year-on-year increase of 177.7% in 2018, which
+was mainly attributable to the occurrence of expenditures in relation to the
+separation and transfer of "water/power/gas supply and property management"
+in 2018 and the increase in donations to third parties.
+Other income: representing a year-on-year decrease of 16.8% in 2018, which
+was mainly attributable to the decrease in government subsidy received by gas-
+fired power plants.
+Section V Directors' Report (Continued)
+The revenue and cost of sales of the following business segments are the data
+before eliminations on consolidation of each segment.
+Restriction on the major assets
+Others
+1
+460.5
+0.4
+143,495
+618
+53,666
+2
+Total
+296.6
+44 China Shenhua Energy Company Limited
+The Group implemented three unified pricing mechanisms, namely, the pricing
+mechanisms for annual long-term contracts, monthly long-term contracts and
+spot commodity, for all internal and external customers. In 2018, the average
+coal sales price of the Group was RMB429 per tonne (tax exclusive) (2017:
+RMB425 per tonne), representing a year-on-year growth of 0.9%. As of the end
+of 2018, the Group has entered into annual long-term thermal coal purchase
+contracts with 15 domestic quality customers with good reputation for three
+years (2019-2021), which will adopt the pricing mechanism of "benchmark
+price (RMB535/tonne for 5,500 kcal thermal coal (tax-inclusive spot FOB)) +
+float price". Long-term stable internal and external coal customers are favorable
+for the Group to arrange production and transportation plans on a reasonable
+basis, and maintain integrated stable operation at a high level as well as a high
+production efficiency, transportation efficiency and capital turnover ratio.
+The Group expanded procurement and sales channels for coal and improved
+sales efficiency through Shenhua Coal Trading Network (https://www.
+e-shenhua.com) developed by itself. In 2018, the coal sales volume of the
+Group through Shenhua Coal Trading Network reached approximately 200
+million tonnes.
+In 2018, the Group conducted scientific research and study of market to
+formulate flexible marketing strategies, and continued to optimize coal source
+organization and transportation deployment to satisfy customer needs to the
+maximum, thus achieving stable integration operation at a high level. The profit
+from coal sales was increased through various measures, such as maximizing
+the supply of self-produced coal, strengthening the sales of purchased coal,
+making reasonable adjustment to product structure and holding electronic
+auctions. During the year, sales volume of coal reached 460.9 million tonnes
+(2017: 443.8 million tonnes), representing a year-on-year increase of 3.9%,
+among which, Sales volume of coal in the domestic market was 456.4 million
+tonnes. The seaborne coal business achieved quality development through
+efficient coordination of port and shipping resources to increase the "quasi-liner
+shipping" volume. The seaborne coal sales for the year reached 270.0 million
+tonnes (2017: 258.2 million tonnes), representing a year-on-year increase of
+4.6%. The seaborne coal sales at Huanghua Port and Shenhua Tianjing Coal
+Dock in aggregate accounted for 88.3% of the total seaborne coal sales of the
+Group (2017: 88.2%), representing a year-on-year increase of 0.1 percentage
+point.
+Section V Directors' Report (Continued)
+2018 Annual Report 43
+The coal sold by the Group is mainly self-produced coal. In order to fulfill the
+needs of customers and adequately make use of railway transportation, the
+Group also purchased coal from third parties in the surrounding areas of the
+self-owned mines and railways, and produced different kinds and levels of
+coal products and sold them to external customers. The Group implemented
+specialised division management. Production enterprises are responsible for
+production of coal, and Shenhua Trading Group is mainly responsible for sales of
+coal. Customers have different industry background, such as power, metallurgy,
+chemical and construction materials.
+Sales of coal
+The Group has independently operated railway collection and distribution
+channels. These channels are centralised and distributed in the rim of
+self-owned core mines, and can transport coal in the core mines. For details
+of operation of the self-owned railways, please refer to the section headed
+"Railway Segment" herein.
+2.
+In 2018, the Company's coal exploration expenses (which were incurred before
+the conclusion of feasibility study and represented the expenses related to
+exploration and evaluation of coal resources) amounted to approximately
+RMB18 million (2017: RMB48 million), which was mainly attributable to the
+relevant expenses of Watermark Coal Project in Australia. The Company's
+relevant capital expenditure of mining development and exploration amounted
+to approximately RMB4,141 million (2017: RMB3,332 million), which was
+mainly attributable to the expenditure on the preliminary development of
+Taigemiao District of Xinjie Mining Area, the expenditure related to coal mining
+for Shendong Mines, Zhunge'er Mines and Baorixile Mines, and consideration
+payment for mining rights and acquisition of fixed assets.
+As coal products were in great variety with a large sales volume, and some of
+self-produced coal products were transported and sold together with purchased
+coal, the Group cannot present the revenue, cost of sales and gross profit by
+source of coal (self-produced coal and purchased coal).
+(2)
+53,668
+144,113
+197,781
+460.9
+296.6
+Thermal coal
+197,161
+620
+RMB
+million
+Cost of
+Sales
+Production
+Production and sales volumes of all coals in 2018 of the Group are as below:
+Section V Directors' Report (Continued)
+42 China Shenhua Energy Company Limited
+The Group proactively pushed forward the application for coal mining lands
+and acquisition of resources. The procedures for obtaining the grassland
+occupancy permit and the renewal procedures for the use of mining land in
+the Ha'erwusu Open-pit Mine have been completed; the renewal procedures
+for the use of land in the excavating yard of the Baorixile Open-pit Mine have
+been preliminarily approved; Beidian Shengli obtained an additional production
+capacity of 8 million tonnes/year for its open-pit mine through the purchase of
+production capacity replacement quota; the renewal of exploration permit of
+Taigemiao North District of Xinjie Mining Area was completed in July 2018 with
+a new comprehensive exploration permit certificate, while Taigemiao South
+District is actively applying for its exploration permit.
+The majority of the coal products produced and sold by the Group were thermal
+coal. The year of 2018 witnessed a relatively strong domestic coal demand,
+with sharp increase in coal consumption in the power and chemical industries,
+and steady increase in coal consumption in the iron and steel and construction
+material industries. By seizing such favorable opportunity, the Group insisted on
+safe, green, balanced and efficient production to effectively guarantee market
+supply. In view of the climate features of the northeast regions, the Group
+made rational arrangements of coal mining to fully support for the coal demand
+in winter in the northeast region. In addition, the Group carried out in-depth
+promotion of quality and efficiency to produce clean coal; continued to optimize
+the structure of coal products to increase the output of high value-added
+products; increased investment in technological innovation; and strengthened
+the management of and control over production organization, coal quality,
+and disaster detection and early-warning. The Group's output of commercial
+coal reached 296.6 million tonnes in the year (2017: 295.4 million tonnes),
+representing a year-on-year growth of 0.4%, which was mainly attributable
+to the stable and increased output of Shendong Mines and Shenbao Mines.
+The total footage of advancing tunnels was 373 thousand meters (2017: 335
+thousand meters), representing a year-on-year increase of 11.3%.
+Production, operation and construction
+(1)
+Coal segment
+1.
+(IV) Operation results by business segment
+The Group has no major assets sequestered or distrained. As of the end of the
+reporting period, the balance of restricted assets of the Group amounted to
+RMB10,631 million, which mainly consists of statutory deposit reserves balance of
+Shenhua Finance Company placed at the central bank amounting to RMB6,254 million.
+Other restricted assets were mainly intangible assets, fixed assets and various types
+of deposits as collaterals for bank borrowings.
+volume
+volume
+Types of coal
+RMB
+Revenue
+RMB
+million
+sales Gross profit
+Million
+Million
+million
+tonnes
+tonnes
+2018
+By internal and external customers
+Coal sales of the Group in 2018 are set out as follows:
+Section V Directors' Report (Continued)
+Xinjiang
+328
+18.2
+4.39
+5.19
+17.7
+5.64 4.79
+2017
+Change in
+tonnes
+Price
+1.1
+436
+77.7
+344.7
+441
+76.7
+353.6
+customers
+Sales to external
+%
+tonne
+%
+181
+tonne
+tonnes
+RMB/
+Million
+RMB/
+Million
+of tax)
+of tax)
+volume Percentage
+of tax)
+volume Percentage
+price
+(exclusive
+(exclusive
+Sales
+(exclusive
+Sales
+Price
+194
+305 (1.6)
+17.7
+Year-on-
+Year-on-
+Year-on-
+power
+2018
+2017 year
+2018
+2017 year
+2018 2017 year
+%
+Sichuan
+4.04
+3.12
+Location/Type of
+29.5
+29.6
+356
+348
+coal-fired power
+3.35
+2.42
+38.4
+3.04
+2.18
+39.4
+386
+hydropower
+0.69
+3.72 2.87
+(RMB/mWh)
+Power tariff
+Total power output dispatch
+(billion kWh)
+5.19
+4.39 18.2
+181
+194
+Tianjin
+5.10 5.15
+(1.0)
+4.77
+4.81
+(0.8) 355 360
+coal-fired power 5.10 5.15
+Henan
+coal-fired power 5.04
+5.04 5.94
+5.94
+(1.0) 4.77 4.81 (0.8) 355
+(15.2) 4.75 5.62 (15.5) 300
+(15.2) 4.75 5.62
+(15.5)
+360
+305
+300
+Sales to internal power
+466===
+4.0
+(6.7)
+(6.7)
+(1.4)
+(1.4)
+(1.6)
+2018 Annual Report 51
+Section V Directors' Report (Continued)
+Gross power generation
+(billion kWh)
+coal-fired power 5.64 4.79
+segment
+429
+22.4
+4.6
+0.5
+4.7
+4489
+498
+57.7
+256.0
+499
+58.2
+268.3
+2. Seaborne
+310
+36.1
+1.9
+160.3
+36.4
+167.6
+1. Direct arrival
+426
+93.8
+416.3
+428
+94.6
+435.9
+coal
+and purchased
+(I) Self-produced coal
+16
+316
+4.8
+0.2
+522
+5.2
+2.2
+0.7
+222
+506
+0.6
+543
+0.4
+457
+2289
+2.8
+III. Overseas sales
+1.7
+II. Export Sales
+0.9
+4.0
+coal
+(III) Sales of imported
+(14.9) (1.9)
+427
+4.4
+19.4
+419
+419
+3.5
+35
+16.5
+trading coal
+(II) Sales of domestic
+0.5
+103.2
+10
+4.6
+2018
+Proportion
+By sales regions
+(2)
+In 2018, the sales volume of the Company to the top five domestic
+customers of coal was 99.3 million tonnes, which accounted for 21.8%
+of the domestic sales volume. The top five domestic customers of coal
+were primarily power and coal trading companies.
+Note: Sales prices of coal of the Group in this report are all exclusive of tax.
+0.9
+425
+100.0
+443.8
+0.70
+100.0
+460.9
+average price
+(exclusive of tax)
+Price
+Total sales volume/
+359
+1.0
+4.4
+360
+0.9
+4.1
+chemical segment
+Sales to internal coal
+0.8
+390
+21.3
+94.7
+393
+0.3
+Sales
+of total (exclusive
+Sales
+426
+98.3
+436.4
+428
+99.0
+90
+456.4
+I. Domestic sales
+de
+tonne
+tonnes
+tonne
+tonnes
+RMB/
+Million
+RMB/
+Million
+volume of tax)
+of tax)
+sales
+volume
+of tax)
+sales
+volume
+Sales (exclusive
+Price
+Price
+(exclusive
+Change
+2017
+Proportion
+of total
+46
+(1.4)
+112.4
+0.69
+477
+66
+6.9
+6.9
+222
+Total/weighted
+average
+285.32
+262.87
+8.5 267.59 246.25
+8.7
+318
+88
+312
+477
+1.9
+China Shenhua Energy Company Limited
+Section V Directors' Report (Continued)
+(3) Installed capacity
+At the end of the reporting period, the total installed capacity of power
+generation of the Group reached 61,849MW, which represented an increase of
+6.9% as compared with the end of last year, among which, the total installed
+capacity of the coal-fired power generators was 59,994MW, accounting for 5.9%
+of the total installed capacity of coal-fired power generators of the society (being
+1.01 billion kW¹).
+Power type
+Coal-fired power
+Gas-fired power
+Hydro power
+Wind power
+Total
+Gross installed
+capacity as at
+31 December
+2017
+Installed
+capacity
+increased/
+(decreased)
+Unit: MW
+52
+6.9
+477
+0.00 N/A
+N/A 354 0.00
+N/A 354
+333
+0.7
+510
+0.7
+510
+0.7 510
+222228622202288 F&&&
+390 (1.0)
+20223
+2.3
+3.7
+1.3
+1.3
+0.0
+0.0
+4.6
+4.6
+318
+226
+20.5
+20.5
+318
+345
+0.0
+0.0
+N/A
+65566≤
+Gross
+주름
+installed
+reporting
+period
+Anhui
+Fujian Energy
+Fujian
+Zheneng Power
+Zhejiang
+Taishan Power
+Guangdong
+2,000 Operation of new
+generating units
+700 Operation of new
+generating units
+1,320 Operation of new
+generating units
+100 Capacity expansion
+and upgrading
+30 Capacity expansion
+and upgrading
+60 Capacity expansion
+and upgrading
+Shouguang Power
+Shandong
+20
+Shenwan Energy
+Increase upon audit
+Shaanxi
+(220)
+Shut down
+Zhuhai Wind Energy
+Guangdong
+(16)
+Shut down
+Total
+3,994
+Utilisation rate of power generation equipment
+The average utilisation hours of coal-fired generators of the Group reached
+4,877 hours for the year of 2018, representing a year-on-year increase of 194
+hours and 516 hours above the national average utilisation hours (being 4,361
+hours) of thermal power equipment with capacity of 6,000kW and above.
+The efficiency of power generation improved constantly, and the power
+consumption rate of the power plant decreased by 0.11 percentage point
+as compared with the same period last year. As at the end of the reporting
+period, the installed capacity of circulating fluidised bed generating units of the
+Group reached 6,484MW, accounting for 10.8% of the installed capacity of the
+coal-fired generating units of the Group.
+1 Data source: China Electricity Council
+54 China Shenhua Energy Company Limited
+Shenmu Power
+Shaanxi
+Fuping Thermal Power
+Jiangxi
+31 December
+2018
+བྷཱཝཱ
+55,984
+1,730
+125
+4,010
+125
+59,994
+1,730
+(16)
+57,855
+3,994
+61,849
+16
+1
+Data source: China Electricity Council
+2018 Annual Report 53
+Section V Directors' Report (Continued)
+(4)
+The changes in the installed capacity of generating units of the Group in 2018
+are as follows:
+Company
+Installed
+capacity
+Location of
+increased/
+generating unit
+(decreased) Remark
+MW
+Jiujiang Electric Power
+during the capacity as at
+345
+345
+6.3
+4.70
+31.1
+348
+348
+Beijing
+3.92
+3.58
+9.5
+3.83
+3.48 10.1
+589
+563
+gas-fired power
+6.16
+3.92
+9.5
+3.83
+3.48
+10.1
+589
+563
+Shanxi
+3.39
+4.55
+(25.5)
+3.18
+4.25
+(25.2)
+3.58
+31.2
+4.91
+6.44
+(1.4)
+222
+214
+Ningxia
+9.64
+4.68
+106.0
+8.94
+4.21
+112.4
+229
+coal-fired power
+9.64
+4.68
+106.0
+8.94
+4.21
+152
+229
+Chongqing
+6.44
+4.91
+31.2
+6.16
+4.70
+31.1
+348
+348
+coal-fired power
+276
+coal-fired power
+3.39
+4.55
+1.86
+1.75
+Jiangxi
+5.71
+0.00
+coal-fired power
+5.71 0.00
+880
+N/A
+5.45 0.00
+N/A 5.45
+0.00
+Overseas in total/
+weighted average
+1.59
+1.58
+Indonesia
+1.59
+1.58
+coal-fired power
+1.59 1.58
+BBB
+0.6
+0.6
+666
+1.39 1.38
+1.39 1.38
+0.6 1.39 1.38
+288 333
+6.5
+0.68
+1.86
+coal-fired power
+(25.5)
+3.18
+4.25
+(25.2)
+276
+Shandong
+11.52
+10.78
+6.9
+10.99
+10.26
+7.1
+339
+coal-fired power
+11.52
+10.78
+6.9
+10.99
+10.26
+7.1
+339
+Guangxi
+1.98
+1.86
+6.5
+1.86
+1.75
+6.3
+345
+1.98
+0.1
+0.9
+471.4 (22.7)
+%
+%
+year
+2017
+2018
+2017 year
+2018
+Year-on-
+Year-on-
+Year-on-
+2017 year
+%
+2018
+Location/Type of
+power
+Power tariff
+(RMB/mWh)
+Domestic in total/
+Total power output dispatch
+(billion kWh)
+Classified by location
+2
+1.9
+312
+318
+8.7
+8.5 267.59 246.25
+285.32 262.87
+Total
+(100.0)
+599
+0
+(100.0)
+Gross power generation
+(billion kWh)
+weighted average 283.73 261.29
+Hebei
+8.6
+33.95 34.83 (2.5)
+319
+324
+(3.9)
+22.16 23.06
+(4.0)
+24.17
+23.21
+coal-fired power
+319
+(3.9) 324
+22.16 23.06
+(4.0)
+24.17
+23.21
+Jiangsu
+309
+(2.5) 319
+(2.5) 31.84 32.67
+33.95 34.83
+coal-fired power
+309
+319
+(2.5)
+31.84 32.67
+311
+313
+8.7
+266.20 244.87
+65
+0.02
+Zhejiang
+(100.0) 0.00
+214
+Power tariff
+Gross power generation Total power output dispatch
+Classified by power type
+(2) Power consumption and power tariffs
+Section V Directors' Report (Continued)
+China Shenhua Energy Company Limited
+50
+1 Data source: China Electricity Council
+In 2018, given the favorable opportunity of the rapid growth of total power
+consumption of the society, the Group made greater marketing efforts in the
+power segment, and therefore realised 285.32 billion kWh (2017: 262.87 billion
+kWh) of power generation, representing a year-on-year increase of 8.5%. The
+total power output dispatch reached 267.59 billion kWh (2017: 246.25 billion
+kWh), representing a year-on-year increase of 8.7% and accounting for 3.9% of
+the total power consumption of the society at the same period (being 6,844.9
+billion kWh¹). In active response to the power system reform, the Group
+Igave full play to the advantages of industrial chain integration, large capacity
+generating units and power distribution to optimize the allocation of power
+resource for market-based transactions. During the year, the market-based
+power transaction of the Group was approximately 80.27 billion kWh,
+accounting for approximately 30.0% of the total power output dispatch.
+(1) Production and operations
+Power segment
+2.
+In 2018, sales volume of coal purchased by the Group from third parties
+I was 160.2 million tonnes (2017: 142.8 million tonnes), representing a
+year-on-year increase of 12.2%, and its proportion of the Company's
+total sales volume of coal increased to 34.8% from 32.2% in 2017. The
+costs of coal purchased from third parties for the year was RMB56,321
+million (2017: RMB49,950 million), representing a year-on-year increase
+of 12.8%. The increase was mainly due to the increase of sales volume
+of coal purchased by the Company from third parties according to the
+demand and supply in the coal market.
+Power type
+The coal purchased from third parties and sold by the Company includes
+coal purchased from the surrounding areas of the self-owned mines and
+railways, domestic trading coal, imported and re-exported coal.
+4
+Section V Directors' Report (Continued)
+2018 Annual Report 49
+Other costs consist of the following three components: (1) expenses
+directly related to production, including coal washing, selecting and
+processing expenses, and mining engineering expenses, etc., accounting
+for 60%; (2) auxiliary production expenses, accounting for 21%; (3)
+land requisition and surface subsidence compensation, environmental
+protection expenses and tax, accounting for 19%.
+selecting and processing
+expenses and professional
+service fee
+expenses, coal washing,
+(5.1) During the reporting period,
+the sufficient provision for
+depreciation of certain assets
+Increase in mining engineering
+The raise of salary by certain
+production units
+due to the tripping works in
+open-pit mines such as the
+Ha'erwusu Open-pit Mine,
+and the increase in tunnelling
+footage
+4.2
+42.8
+44.6
+Other costs
+Cost of coal purchased from third parties
+2018
+(billion kWh)
+2017 Change
+(billion kWh)
+222
+(1.4)
+0.69
+(1.4) 0.68
+0.70
+0.69
+0.00 0.02
+Wind power
+Hydro power
+571 (1.8)
+561
+10.9
+5.15
+10.6 5.71
+5.29
+Gas-fired power 5.85
+2.3
+306
+313
+8.7
+240.39
+8.5 261.20
+Coal-fired power 278.78 256.86
+%
+%
+2017 Change
+2018
+2017 Change
+2018
+(RMB/mWh)
+3.7
+amortisation
+29.04
+3.4
+305
+322
+3.8
+21.78
+22.60
+3.8
+22.79
+23.66
+Anhui
+2.7
+260
+267
+5.1
+5.6
+24.36 23.18
+2.7
+260
+267
+5.1
+4.7 24.36 23.18
+26.60 25.40
+26.60 25.40
+coal-fired power
+Shaanxi
+0 599 (100.0)
+0.00 0.02 (100.0) 0.00 0.02 (100.0)
+wind power
+2222
+363 (2.2)
+4.7
+coal-fired power 23.66
+22.79
+3.8
+14.89 12.80 16.3 341
+16.0
+coal-fired power 15.55 13.40
+4.0
+328
+341
+14.89 12.80 16.3
+16.0
+15.55 13.40
+Fujian
+3.3
+299
+17.03 (3.2) 309
+(3.1) 16.49
+coal-fired power 17.57 18.13
+3.3
+299
+17.03 (3.2) 309
+16.49
+(3.1)
+17.57 18.13
+Liaoning
+༠༠༠༠ །།
+5.6
+305
+322
+3.8
+21.78
+22.60
+355
+28.08
+15.6
+25.65
+503
+12.6
+1.67
+1.88
+12.9
+1.71
+1.93
+gas-fired power
+0.6
+(0.8)
+1.6
+1.6
+3.2
+587
+3.2
+033
+62266006
+352
+354
+2.9
+24.93
+2.8 25.66
+26.37
+coal-fired power 27.11
+367
+364
+3.5
+27.54 26.60
+0.6
+(14.3)
+Inner Mongolia
+24.41 21.34
+14.9
+23.77
+27.32
+coal-fired power
+363 (2.2)
+15.5
+22.21
+25.65
+14.8
+23.79
+27.32
+Guangdong
+5.2
+212
+223
+13.7
+19.20
+21.83
+14.4
+21.34
+24.41
+coal-fired power
+5.2
+212
+223
+13.7
+19.20
+21.83
+14.4
+22.19
+591
+19.5
+Depreciation and
+0.5
+Baotou Mines
+12.0
+11.8
+13.9
+Baorixile Mines
+2.1
+13.8
+20.3
+Shengli Mines
+20.7
+31.2
+39.0
+0.4
+Zhunge'er Mines
+92.3
+160.3
+Standard)
+Standard)
+Standard)
+Shendong Mines
+Mines
+(under the PRC (under the JORC
+Marketable
+coal reserve
+coal reserve
+Coal reserve
+(under the PRC
+Recoverable
+Unit:'00 million tonnes
+47.8
+Xinjie Mine
+64.2
+Others
+0.2-0.8
+4,800-5,800
+Shendong Mines Long flame coal/
+1
+average, %
+%
+kcal/kg
+Ash content
+content
+coal products
+Major types of coal
+Mines
+No.
+Sulphur
+Calorific value of
+major commercial
+Characteristics of the commercial coal produced in the Company's major mines
+are as follows:
+(6)
+Section V Directors' Report (Continued)
+2018 Annual Report 47
+In November 2018, the Ministry of Natural Resources of the People's Republic of China
+issued opinions upon review of the comprehensive coal exploration report (mineral resource
+reserves) on Taigemiao North Exploration Area of Xinjie Mining Area.
+As at 31 December 2018, the marketable coal reserve of Baotou Mines under the JORC
+Standard was 4,381 thousand tonnes.
+2.
+1.
+Notes:
+82.6
+149.5
+303.0
+Total
+4.8
+As at 31 December 2018, under the PRC Standard, the Group had coal reserves
+amounting to 30.30 billion tonnes, representing an increase of 27.8% as
+compared with that of the end of 2017, which was mainly attributable to the
+completion of mineral resource reserves (under exploration rights permit)
+assessment in Taigemiao North Exploration Area of Xinjie Mining Area; and
+recoverable coal reserve amounting to 14.95 billion tonnes, representing a
+decrease of 1.6% as compared with that of the end of 2017. The Group's
+marketable coal reserve amounted to 8.26 billion tonnes under the JORC
+Standard, representing a decrease of 3.4% as compared with that of the end of
+2017.
+5-15
+Coal resources
+Section V Directors' Report (Continued)
+RMB/tonne
+%
+Price
+total sales
+of
+Sales
+volume
+Million tonnes
+Proportion
+By contract pricing mechanisms
+(3)
+Section V Directors' Report (Continued)
+2018 Annual Report 45
+3.9
+25
+I. Annual long-term contracts
+425
+443.8
+29
+429
+100.0
+460.9
+price (exclusive of tax)
+Total sales volume/average
+(46.2) 32.5
+382
+1.2
+(22.7) 21.5
+447
+0.5
+100.0
+220.5
+47.8
+381
+China Shenhua Energy Company Limited
+46
+Measures which are taken by the coal segment of the Company for
+environmental protection are detailed in the 2018 ESG Report of the Group.
+At the end of 2018, balance of the "accrued reclamation obligations" amounted
+to RMB3,191 million, serving as strong financial guarantee for ecological
+construction.
+In 2018, with continuous promotion of green and efficient coal mining, the
+environmental safety level of the Group's mining areas has been continually
+advanced. Remarkable achievements were made in land reclamation and
+greening of open-pit mines, treatment and utilisation of mine water, and
+resource utilisation of gangue, with the utilisation rate of mine water being
+83.2% and the comprehensive utilisation of gangue amounting to 11.63 million
+tonnes. There were no major or more serious environmental safety incidents
+during the year.
+Environmental protection
+Efforts in ensuring safe coal production are detailed in the 2018 ESG Report of
+the Group.
+In 2018, the fatality rate per million tonne of raw coal output in the coal mines
+of the Group was 0.0126, enabling the Group to maintain its internationally
+leading position.
+In 2018, the Group took various measures to ensure coal mine production
+safety, such as promoting the construction of the major disaster and hidden
+danger management and emergency rescue system to continuously improve
+the standardization of coal mine safety production, carrying out comprehensive
+or special inspections and supervision on an on-going basis to identify hidden
+dangers and eliminate major risks, and ensuring safety with the help of science
+and technology, i.e. conducting upgrading and renovation of the mine safety
+monitoring system.
+Production safety
+In spot sale, direct sales volume with a low sales price accounted for a large
+proportion.
+The above is the summary of the sales of coal products with different calorific
+values;
+2.
+1.
+Note:
+(4)
+(3)
+429
+100.0
+460.9
+price (exclusive of tax)
+Total sales volume/average
+401
+17.7
+81.5
+511
+34.5
+158.9
+II. Monthly long-term contracts
+III. Spot commodity
+(5)
+18.5
+non-caking coal
+Zhunge'er Mines
+458
+2,539
+2,997
+20.5
+470
+2,298 1,828
+overseas
+Export and
+30.3
+27.2 185,846 129,627 56,219
+195,483 142,285 53,198
+Domestic
+%
+15.3
+RMB RMB
+million million
+RMB
+RMB
+million million
+million
+RMB
+Costs profit margin
+profit margin Revenue
+Costs
+Revenue
+profit
+Gross
+profit
+Gross
+Gross
+RMB
+million
+Total
+197,781 144,113 53,668
+27.1 188,843 132,166 56,677
+maintenance
+(1.1)
+8.9
+8.8
+Repairs and
+12.8
+18.8
+21.2
+Personnel expenses
+and power
+Increase in material consumption
+28.5
+17.9
+23.0
+Raw materials fuel
+self-produced coal
+7.6
+107.9
+116.1
+Unit production cost of
+%
+Main reasons for changes
+Change
+2017
+2018
+Unit: RMB/tonne
+Unit production cost of self-produced coal
+(3)
+30.0
+Gross
+2
+2017
+The sales gross profit of the coal of the Group before elimination on
+consolidation
+Change Main reasons for changes
+%
+2017
+2018
+The operating results of the coal segment of the Group before elimination
+on consolidation
+Operating results
+Note: The above calorific value, sulphur content and ash content of major commercial coal
+products produced by each mine may be inconsistent with the characteristics of the
+commercial coal products produced by individual mine and those of the commercial coal
+products sold by the Company due to geological conditions and production process.
+12-18
+0.3-0.8
+4,200-4,800
+Non-caking coal
+Baotou Mines
+5
+13-16
+Revenue
+0.2-0.3
+Lignite
+Baorixile Mines
+4
+18-22
+0.4-0.7
+3,100-3,400
+Lignite
+Shengli Mines
+3
+18-26
+0.3-0.8
+4,300-4,900
+Long flame coal
+3,300-3,600
+2018
+RMB million
+195,918
+Section V Directors' Report (Continued)
+China Shenhua Energy Company Limited
+48
+points
+by 2.4
+percentage
+from
+operations
+23.5 Decreased
+21.1
+%
+Profit margin
+operations
+points
+(6.1)
+46,051
+205,191
+43,262
+Profit from
+Cost of sales
+RMB million
+156,143
+143,461
+4.7 Increase in sales volume
+of coal
+RMB million
+8.8 Increase in the
+coal sales volume
+Gross profit
+margin
+%
+23.9
+26.8 Decreased
+by 2.9
+percentage
+procurement cost of
+purchased coal due to
+the increase in sales
+volume of purchased
+coal; Increase in related
+transportation costs
+resulting from increased
+355
+China Shenhua Energy Company Limited
+In 2018, in active response to the Belt and Road Initiative of the state, the Company
+accelerated the pace of internationalisation. The Guohua Sumsel EMM Coal-fired Power
+Project (Phase I) (2 x 150MW) in Indonesia has been under safe and stable operation
+for six consecutive years without unplanned operation suspension, breaking the record for
+the longest continuous operation of double generators in Indonesia. In 2018, the project
+obtained a number of awards, including the "Best Power Enterprise of the Year (with the
+capacity above 200MW)" of Indonesian power generation industry; the Jawa-7 Coal-fired
+Power Project (2 × 1,050MW) was in steady progress, and has obtained an official approval
+issued by the Ministry of Finance of Indonesia for income tax concession and exemption;
+all 29 gas wells of the shale gas project in Pennsylvania, the United States were put into
+operation, and produced a total of 10.863 billion cubic feet (equivalent to 308 million m³) of
+China Shenhua's equity gas during the year, showing satisfactory operating performance;
+and the Watermark Open-pit Coal Mine Project in Australia has completed preliminary
+design and renewal of exploration right. Other external projects are in progress under the
+principle of stability and prudence.
+19,915
+6.8
+Wind power
+0
+11
+(100.0)
+6
+0.0
+8
+0.0
+(25.0)
+Total
+87,149
+78,482
+11.0
+0.1
+70,652
+66,704
+100.0
+5.9
+3
+The Group's cost of sale of power is mainly comprised of such costs
+as raw materials, fuel and power, personnel expenses, repairs and
+maintenance, depreciation and amortisation and other costs. The unit
+cost of power output dispatch of the Group in 2018 was RMB264.0/mWh
+(2017: RMB270.9/mWh), representing a year-on-year decrease of 2.5%.
+The decrease was mainly due to the year-on-year increase in power
+generation, resulting in the dilution of fixed cost.
+The power segment consumed a total of 101.1 million tonnes of the
+China Shenhua's coal, accounting for 82.5% of the total thermal coal
+consumption (being 122.6 million tonnes).
+Cost of sale of power of coal-fired power plant of the Group before
+elimination on consolidation
+2018
+Costs Percentage
+2017
+Costs Percentage
+RMB million
+% RMB million
+%
+Change in
+costs
+%
+100.0
+Raw materials, fuel
+73
+78
+Change
+2018
+2018
+2017
+2017
+2017
+%
+%
+Coal-fired power
+83,798
+75,383
+11.2
+67,389
+95.4
+0.1
+63,813
+5.6
+Gas-fired power
+3,201
+2,941
+8.8
+3,179
+4.5
+2,810
+4.2
+13.1
+Hydro power
+150
+147
+2.0
+95.7
+2017
+and power
+75.0
+100.0
+63,813
+100.0
+5.6
+58
+China Shenhua Energy Company Limited
+3.
+Section V Directors' Report (Continued)
+Railway segment
+(1) Overview of production and operations
+(2)
+In 2018, the railway segment of the Group continued to optimise transportation
+organisation to improve operation efficiency. The trail run of the long-route
+train from Haile Sihao South Station to Suning North Station was successful,
+resulting in the average running time of the train shortened by approximately
+three to four hours. The Group also re-arranged the operation of heavy-load
+trains by increasing the shifts of the 3+0 10,000-tonne trains and 20,000-tonne
+trains. In addition, the Group accelerated the development of railway special lines
+and station passage capability, with continuous improvement of the railway
+transportation capability. During the year, the turnover volume of self-owned
+railways of the Group reached 283.9 billion tonne km (2017: 273.0 billion tonne
+km), up by 4.0% year on year, reaching a historical high.
+The Group took the initiative in conducting macro logistics business. Under the
+premise of ensuring coal transportation, the Group promoted the development
+of coal chemical transportation and two-way "quasi-liner shipping", therefore
+making new progress in the planning of the railway-water transportation
+channel and its trial run. In 2018, the transportation volume of non-self-owned
+coal in the railway segment was 100.1 million tonnes, reverse transportation
+volume was 6.67 million tonnes, and transportation volume of non-coal cargo
+was 15.48 million tonnes. The turnover of cargo transportation offered to
+external customers in the railway segment throughout the year was 30.7 billion
+tonne km (2017: 29.4 billion tonne km), representing a year-on-year increase
+of 4.4%. The revenue generated from transportation services offered to
+external customers amounted to RMB5,877 million (2017: RMB5,615 million),
+representing a year-on-year increase of 4.7% and accounting for 15.0% of total
+revenue of the railway segment (2017: 14.9%).
+Progress of projects
+67,389
+In 2018, the Group further expanded its railway transportation coverage. As at
+the end of the reporting period, the route in Hebei Province has been confirmed,
+laying the foundation for the construction and completion of the whole line; the
+special line of Zhugaita Coal Transportation Station (transportation capacity of
+10 million tonnes/year) of Shenshuo Railway has been put into operation; the
+construction of the special railway line of Guojiawan Coal Mine has started; and
+the connection with self-owned railways of the logistic park and coal loading
+station was advancing steadily.
+60
+Section V Directors' Report (Continued)
+(3)
+Operating results
+The operation results of the railway segment of the Group before elimination on
+consolidation are as follows:
+2018
+2017
+Change Main reasons for changes
+%
+Revenue
+RMB
+39,149
+37,586
+million
+Cost of sales
+2018 Annual Report 59
+50,511
+power plant
+Total cost of sale of
+46,008
+72.1
+9.8
+Personnel expenses
+4,453
+6.6
+3,939
+6.2
+13.0
+Repairs and
+maintenance
+2,618
+3.9
+2,706
+power of coal-fired
+4.2
+Depreciation and
+amortisation
+7,848
+11.6
+9,066
+Others
+1,959
+2.9
+2,094
++3
+14.2
+(13.4)
+3.3
+(6.4)
+(3.3)
+RMB
+2018
+costs of 2018 over
+Wind power
+0
+1,160
+(100.0)
+N/A
+0.90
+N/A
+Weighted average
+4,834
+4,634
+4.3
+5.53
+5.64
+Decreased by 0.11
+percentage point
+percentage point
+In line with the requirements of the state with respect of prevention and control
+of pollution, the Group continued to push forward the "ultra-low emission",
+energy saving and consumption reduction of coal-fired generating units. As at
+the end of the reporting period, the Group completed the desulfurisation and
+denitrification renovation for all of its domestic coal-fired power generators.
+93 "ultra-low emission" coal-fired generators with total capacity of 53,960MW
+were either built or renovated, accounting for 89.9% of the total installed
+capacity of coal-fired power generator of the Group. The average standard coal
+consumption for power sold of coal-fired power generators of the Group for the
+year was 308 g/kWh, representing a decrease of 3 g/kWh as compared with
+311 g/kWh the same period last year. Both the unit emission and total emission
+of CO2, nitrogen oxide and soot generated from coal-fired generators recorded
+year-on-year decrease.
+For detailed information on environmental protection in the power segment,
+please refer to the 2018 ESG report of the Group.
+(6)
+Capitalised Expenses
+In 2018, the capitalised expenses of the power segment of the Group were
+RMB12.92 billion, primarily used in projects including the Jawa-7 Coal-fired
+Power Project (2 × 1,050MW) in Indonesia, Jiangxi Jiujiang New Coal Reserve
+(Transit) and Power Generation Integration Project (2 × 1,000 MW), Shenhua
+Shendong Power Company Xinjiang Wucaiwan Power Plant Phase II Project
+(2 × 660 MW), Shenwan Energy Company Lujiang Power Plant Newly
+Constructed Project (2 × 660 MW), and reformation of environmental protection
+technologies at power plants.
+2018 Annual Report 55
+Section V Directors' Report (Continued)
+(7) Market Transaction of Power
+2018
+2017
+Change
+%
+Total volume of power in market-based
+transactions (billion kWh)
+80.27
+Environmental protection
+16.2
+Increased by 0.03
+0.28
+Average utilisation hours
+(Hour)
+Power consumption ratio of power plant
+(%)
+Power type
+2018
+2017 Change
+2018
+2017
+Change
+%
+Coal-fired power
+4,877
+4,683
+4.1
+0.25
+5.62
+Decreased by 0.10
+percentage point
+Gas-fired power
+3,384
+3,059
+10.6
+1.90
+2.08
+Decreased by 0.18
+percentage point
+Hydro power
+5,517
+5,618
+(1.8)
+5.72
+Power type
+Total volume of on-grid power (billion
+246.25
+5.9 Increase in coal cost due
+to the growth of power
+points
+71.9
+Increased by
+generation
+The power plant to be
+invested by the Company
+to establish a joint venture
+with GD Power was
+classified as held-for-sale
+assets in September 2019,
+and therefore it ceased
+to be depreciated and
+amortised
+Profit from
+RMB million
+12,720
+7,399
+operations
+Profit margin from
+14.4
+slight increase in average
+power tariffs
+9.3
+5.1 percentage
+points
+2018 Annual Report
+57
+Section V Directors' Report (Continued)
+Revenue and cost from the sale of power of the Group before elimination
+on consolidation
+Unit: RMB million
+Revenue from sale of power
+Cost of sale of power
+Percentage
+Percentage
+to total
+to total Change in
+costs of
+operations
+267.59
+4.1 percentage
+14.0
+8.7
+kWh)
+Percentage of the power in market-
+30.0
+28.1
+based transactions (%)
+Increased by 1.9
+percentage points
+(8)
+Operation results of the power sales business
+The Group currently owns three power sales companies located in Shandong,
+Jiangsu and Guangdong, respectively, which are principally engaged in agent
+procurement of power demanded by customers and the provision of the
+incremental distribution grid business and comprehensive energy services.
+In 2018, the power output dispatch from non-self-owned power plants of the
+Group was 0.44 billion kWh, achieving revenue of RMB1.4 million.
+56
+China Shenhua Energy Company Limited
+Section V Directors' Report (Continued)
+Increased by
+(9) Operating results
+2018
+2017
+Change Main reasons for changes
+%
+Revenue
+RMB million 88,452
+79,511
+11.2 Year-on-year increase in
+power output dispatch and
+Cost of sales
+RMB million
+72,408
+68,388
+Gross profit
+margin
+%
+18.1
+The operation results of the power segment of the Group before
+elimination on consolidation:
+18,632
+million
+4.2 Growth in transportation
+volume of railways
+6,429
+(3.6)
+14.0
+In 2018, Baotou Coal Chemical Company's environmental protection investment
+was about RMB111 million, mainly for the operations of boiler denitrification,
+desulfurisation and dust removal facilities and wastewater treatment facilities.
+Upon the completion of the renovation project of wastewater treatment,
+the expenses used in disposal of hazardous wastes in the mud-containing
+biochemical wastewater were significantly reduced. During the reporting
+period, the coal-to-olefin project met emission standards and there was no
+major environmental pollution accidents.
+The preliminary environmental protection related works of the Baotou-based
+coal-to-olefins upgrading and demonstration project (the phase II project, being
+the 750,000 tonnes of coal-to-olefins equipment) was under steady progress.
+(2) Analysis of operating results
+The operating results of the coal chemical segment of the Group before
+eliminations on consolidation are as follows:
+2018
+2017
+Change Main reasons for changes
+%
+2.8 Increase in the sales price
+of olefins products
+(1.3) Decrease in the
+production of olefin
+308.8
+products
+RMB
+5,840
+5,681
+million
+Cost of sales
+RMB
+4,901
+4,968
+million
+Gross profit
+margin
+%
+16.1
+12.6
+Increased by
+Revenue
+3.5 percentage
+7,327
+0.9
+China Shenhua Energy Company Limited
+Section V Directors' Report (Continued)
+In 2018, the coal chemical segment consumed 4.1 million tonnes of coal, down
+by 6.8% from 4.4 million tonnes in the previous year. Fuel coal and feed coal
+used in the production of the Baotou coal-to-olefins project are all supplied by
+the Group. Both coal and products transportation use special railway lines to
+ensure the supply of raw materials and the delivery of products.
+The sales of polyethylene and polypropylene products of the Group in 2018 is as
+follows:
+Polyethylene
+Polypropylene
+2018
+Sales
+2017
+Change
+Sales
+Sales
+volume
+Price
+volume
+Price
+297.7
+volume
+Thousand
+RMB/
+Thousand
+RMB/
+tonnes
+tonne
+tonnes
+tonne
+%
+315.4
+7,442
+324.6
+7,373
+(2.8)
+Price
+In 2018, the production equipment of the coal-to-olefins project had maintained
+safe, stable and high-capacity operation for 8,164 hours, with the average
+production capacity reaching 100%, and produced 617,400 tonnes of olefins
+products in aggregate. The project continued to improve production process to
+reduce the unit consumption of catalysts, and therefore achieved cost reduction
+and efficiency improvement.
+Profit from
+751
+production
+cost
+RMB/
+tonnes
+tonne
+tonnes
+tonne
+%
+(V) Regional operation analysis
+317.1
+5,905
+327.1
+5,861
+(3.1)
+0.8
+volume
+300.3
+309.7
+5,641
+(3.0)
+2.1
+Revenue from external transactions in domestic markets
+Revenue from external transactions in overseas markets
+Total
+Unit: RMB million
+2018
+2017
+261,330
+2,771
+245,230
+3,516
+264,101
+248,746
+Note: Revenue from external transactions was classified based on the locations of the recipients of services or
+products.
+5,759
+RMB
+Production
+volume
+Thousand
+560
+points
+34.1
+operations
+million
+Profit margin
+%
+12.9
+9.9
+Increased by
+from
+3.0 percentage
+operations
+points
+2018 Annual Report 63
+production
+cost
+64
+(3) Unit production cost of main products
+Polyethylene
+Polypropylene
+2018
+2017
+Change
+Unit
+Unit
+Unit
+Production production Production
+volume
+cost
+Thousand
+RMB/
+Section V Directors' Report (Continued)
+The coal chemical segment of the Group comprises the coal-to-olefins project
+which was operated by Baotou Coal Chemical Company. Its main products
+consist of polyethylene (with production capacity of approximately 300,000
+tonnes/year) and polypropylene (with production capacity of approximately
+300,000 tonnes/year) and other minor byproducts include industrial sulfur,
+mixed C5, industrial propane, mixed C4, industrial methanol, etc.. The
+methanol-to-olefins (MTO) equipment of the coal-to-olefins project was the first
+large-scale MTO equipment in China.
+Overview of production and operations
+(1)
+Section V Directors' Report (Continued)
+Operating results
+The operating results of the port segment of the Group before eliminations on
+consolidation are as follows:
+2018
+2017
+Change Main reasons for changes
+%
+Revenue
+RMB
+6,124
+5,717
+7.1 Increase in seaborne
+million
+Cost of sales
+RMB
+(2)
+3,511
+million
+coal sales through self-
+owned ports
+21.9 Increase in loading
+volume of ports;
+increase in dredging
+expenses due to
+adverse weather
+Gross profit
+42.7
+49.6
+Decreased by
+margin
+6.9 percentage
+points
+Profit from
+RMB
+2,880
+2,325
+China Shenhua Energy Company Limited
+In 2018, the Group made every effort to improve the production and operation
+efficiency in the port segment to ensure the performance of integrated
+operation. During the year, the Group achieved the sales of 270.0 million
+tonnes of seaborn coal (2017: 258.2 million tonnes), representing a year-on-year
+increase of 4.6%, among which, the sales of seaborn coal through self-owned
+ports amounted to 238.3 million tonnes (2017: 227.8 million tonnes),
+representing a year-on-year increase of 4.6%. Though affected by such factors
+as adverse weather and equipment maintenance and renovation, Huanghua
+Harbour and Shenhua Tianjin Coal Dock closely connected with the railway,
+shipping and sales ends, and recorded a historical high in terms of unloading
+and loading volume. Shenhua Zhuhai Coal Dock gave play to its role as an
+interchange base, with the inward volume exceeding 20 million tonnes.
+brought by the increase
+in coal sales volume of
+the Group
+6.9 Increase in transportation
+turnover of railways,
+and increase in
+personnel expenses and
+external transportation
+costs
+Gross profit
+margin
+%
+49.1
+50.4
+Decreased by
+1.3 percentage
+Profit from
+RMB
+17,695
+By adhering to the concept of green development of the port segment,
+Huanghua Harbour of the Group successfully dealt with the long-existing
+industrial problems in the coal port dust pollution and coal-containing sewage
+treatment, which was fully recognised by the industry and regulatory
+authorities.
+17,675
+operations
+million
+Profit margin
+%
+45.2
+47.0
+from
+operations
+Decreased by
+1.8 percentage
+points
+The unit transportation cost in the railway segment was RMB0.066/tonne km in
+2018 (2017: RMB0.064/tonne km), representing a year-on-year increase of 3.1%,
+mainly due to increase in intermodal transportation cost as a result of increase
+in on-line rate of external intermodal motor cars; the increase in cost of fuel of
+certain furnaces along of railways after environmental friendly modification; as
+well as the increase in personnel expenses.
+Port Segment
+4.
+(1)
+Overview of production and operations
+points
+0.1
+2,529
+(8.1)
+operations
+turnover
+30.7 Increase in shipping
+volume; rise in
+chartering costs as a
+result of the increase
+in chartering freight
+volume; and rise in fuel
+prices
+Gross profit
+%
+21.0
+23.9
+Decreased by
+margin
+2.9 percentage
+points
+Profit from
+RMB
+25.9 Rise in shipping price and
+increase in shipment
+723
+9.4
+operations
+million
+Profit margin
+%
+17.7
+20.4
+Decreased by
+from
+2.7 percentage
+operations
+points
+In 2018, the unit transportation cost of the shipping segment was RMB0.036/
+tonne nautical mile (2017: RMB0.031/tonne nautical mile), representing a
+year-on-year growth of 16.1%, caused by the increase of chartering costs and
+fuel prices.
+Coal Chemical Segment
+661
+million
+2,472
+3,232
+million
+Profit margin
+38.0
+44.2
+Decreased by
+from
+operations
+6.2 percentage
+points
+The unit transportation cost in the port segment was RMB11.9/tonne in 2018
+(2017: RMB10.5/tonne), representing a year-on-year increase of 13.3%, mainly
+due to increase in dredging fees affected by bad weather.
+5.
+Shipping Segment
+(1) Overview of production and operation
+In 2018, though affected by such adverse factors as high frequency of extreme
+weather and fluctuation of transportation volume, the Group continued to
+strengthen dispatching management and improve shipment turnover efficiency
+to proactively implement the "quasi-liner shipping" system, and maximised
+transportation capacity by making full use of ship-shore connection and
+chartered vessels. During the year, the number of "quasi-liner shipping"
+vessels increased to 51, through which the coal supply for key customers was
+effectively guaranteed. The Group took proactive approach to develop external
+quality customers, with the purposes of improving operating results and
+enhancing the capability to resist shipping market risks. The shipping volume
+for transportation service offered to external customers throughout the year
+accounted for approximately 22.9% of the total shipping volume.
+Shipping volume of the shipping segment amounted to 103.6 million tonnes
+(2017: 93.0 million tonnes), up 11.4% year-on-year; shipment turnover
+amounted to 89.9 billion tonne nautical miles (2017: 80.4 billion tonne nautical
+miles), representing a year-on-year increase of 11.8%.
+2018 Annual Report 61
+62
+Section V Directors' Report (Continued)
+RMB
+Cost of sales
+million
+3,247
+4,089
+RMB
+Section V Directors' Report (Continued)
+Revenue
+2017
+2018
+The operating results of the shipping segment of the Group before eliminations
+on consolidation are as follows:
+Operating results
+(2)
+6.
+Change Main reasons for changes
+%
+(5)
+69.10
+The Group is mainly engaged in the production and sales of coal and power, railway,
+port and shipping transportation as well as coal-to-olefins businesses in PRC. In 2018,
+the revenue from external transactions in domestic markets was RMB261,330 million,
+accounting for 99.0% of the Group's operating revenue, representing a year-on-year
+increase of 6.6%, which was mainly attributable to the year-on-year increase in domestic
+sales of coal and power. Revenue from external transactions in overseas markets decreased
+by 21.2% year on year, which was mainly due to the sharp decrease in coal re-export trade
+volume.
+2,447
+No.
+Name of shareholder
+1
+2
+3
+4
+China Shenhua Energy Company Limited
+Shuohuang Railway Development Co., Ltd.
+Shenhua Zhunge'er Energy Co., Ltd.
+Shenhua Baoshen Railway Co., Ltd.
+Total
+Percentage of
+equity interest
+held
+%
+81.43
+7.14
+As of the end of the reporting period, the Company directly and indirectly held 100%
+equity interest in Shenhua Finance Company.
+7.14
+100.00
+During the reporting period, Shenhua Finance Company strictly implemented the
+following resolutions passed at the 12th meeting of the second session of the
+Board of China Shenhua held on 25 March 2011: (1) China Shenhua currently had no
+intention or plan to change the existing operation policies and strategies of Shenhua
+Finance Company; (2) the deposits placed by China Shenhua and its subsidiaries
+and branches with Shenhua Finance Company would solely be used for the credit
+business of China Shenhua and its subsidiaries and branches, and deposited in the
+People's Bank of China and the five major commercial banks (namely, Industrial
+and Commercial Bank of China, Agricultural Bank of China, Bank of China, China
+Construction Bank and Bank of Communications), and would not be invested in the
+public market/private equity market and real estate, etc.
+(1)
+Governance of Shenhua Finance Company
+A. Board of directors
+No.
+123456
+6
+7
+Note:
+Members of the board at
+the end of the reporting period Position
+Zhang Kehui
+4.29
+Shenhua Finance Company
+2.
+Section V Directors' Report (Continued)
+Baotou Energy
+2,633 6,088
+5,052
+1,165
+742
+Company
+57.0 Increase in coal sales
+volume
+9 Railway Transportation
+Company
+4,803 21,993
+7,390
+965
+1,079
+(10.6)
+10 Shenhua Finance
+Company
+5,000 95,823
+9,032
+947
+858
+10.4
+Note: (1)
+(2)
+The financial information of the major subsidiaries disclosed in the above table (without
+assessment and adjustment before consolidation) was prepared in accordance with
+the Accounting Standards for Business Enterprises. The data have not been audited or
+reviewed.
+Shendong Coal Group recorded a revenue of RMB59,714 million and a profit from operations
+of RMB18,277 million in 2018.
+(3)
+Shuohuang Railway Company recorded a revenue of RMB19,748 million and a profit from
+operations of RMB10,095 million in 2018.
+66
+China Shenhua Energy Company Limited
+Han Weiping
+Mei Xueyan
+Zhang Ying
+Xu Shancheng
+Risk Management Committee
+On 15 January 2012, the board of directors of Shenhua Finance
+Company set up the Risk Management Committee, which is
+responsible for assisting the board of Shenhua Finance Company
+to review the company's overall target of risk management, risk
+management policies, risk management procedures and internal
+control processes, and monitor and assess the risk management
+endeavors of relevant senior management members and the risk
+management function.
+In 2018, the Risk Management Committee held two meetings.
+Audit Committee
+On 10 November 2016, the board of directors of Shenhua Finance
+Company set up the audit committee of the board of directors,
+which is responsible for advising the internal audit of the company
+and providing advice and consultation for board decision-making.
+In 2018, the Audit Committee held two meetings.
+2018 Annual Report 69
+Section V Directors' Report (Continued)
+(2)
+Risk Management and Internal Control
+A.
+Risk Management
+(3)
+In 2018, the Related Party Control Transaction Committee held
+three meetings.
+B.
+Internal Control
+In 2018, Shenhua Finance Company continued to optimise its internal
+control system by conducting an independent and comprehensive
+assessment of the soundness, rationality and effectiveness of the
+internal control system as a whole, which was conducive for the
+company to achieve such internal control objectives as legal compliance
+of its operation and management, asset security, truthfulness and
+completeness of financial reports and relevant information, improvement
+of operational efficiency and operating results, and implementation of
+corporate development strategies. The company also analysed objectively
+the current status of the internal control system and made timely
+improvement to meet the demands for corporate development.
+Deposits and Loans of Shenhua Finance Company during the reporting
+period
+A. Total deposits and loans at the end of the reporting period
+Unit: RMB million
+As at
+As at
+31 December
+31 December
+2018
+2017
+Change
+%
+Balance of deposits
+In 2018, Shenhua Finance Company carried out risk management
+related works in a smooth and orderly manner, with no occurrence of
+material risk events. The company mainly accomplished the following
+risk management related works: ① comprehensive risk investigation;
+② rectification according to regulatory opinions, further improvement
+of corporate governance mechanism and continuous promotion of the
+level of risk management refinement; ③ legal compliance on an on-going
+basis; quarterly risk monitoring to ensure that the relevant risks can be
+prevented or controllable; ⑤ improvement of risk management system;
+⑥performance of duties of the risk management committee with
+continuous improvement of its risk management capability.
+8
+transactions.
+Related Party Transaction Control Committee
+Du Shengli
+Zhang Donghui
+Chairman
+Executive director
+Vice chairman
+Executive director
+Non-executive director
+Independent director
+Employee director
+Due to retirement, Ms. Zhang Kehui, the Chairman and Mr. Han Weiping, the
+executive director are currently undergoing the legal procedures for their resignation.
+2018 Annual Report 67
+Section V Directors' Report (Continued)
+Ms. Mei Xueyan, vice chairman, has served as a director of Shenhua
+Finance Company since January 2005, the general manager of Shenhua
+Finance Company since July 2006, the secretary to the Party Committee
+of Shenhua Finance Company since August 2014 and the deputy
+secretary to the Party Committee (general manager level) of Shenhua
+Finance Company since January 2017, the vice chairman and deputy
+secretary to the Party Committee (general manager level) of Shenhua
+Finance Company since February 2018, and the vice chairman and
+secretary to the Party Committee of Shenhua Finance Company since
+October 2018. Ms. Mei Xueyan had worked on capital planning, finance
+investment and internal control at the headquarters of China Construction
+Bank for eight years.
+On 15 January 2012, the board of directors of Shenhua
+Finance Company set up the Related Party Transaction Control
+Committee, which is responsible for administration over the
+related party/connected transactions of the company, including
+identification, statistics, forecasts, reporting, limit management
+and recommendations in respect of the related party/connected
+Mr. Zhang Ying, executive director, joined Shenhua Finance Company in
+2000 and has served as a deputy general manager of Shenhua Finance
+Company since November 2011. Working at Shenhua Finance Company
+for many years, Mr. Zhang Ying is familiar with the business Shenhua
+Finance Company and possesses extensive management experience.
+Mr. Du Shengli, independent director, is an associate professor of
+Tsinghua University School of Economics and Management. He has
+multiple years of experience in capital operation management and
+corporate financial operation, group management control and performance
+evaluation, corporate governance and financial company management,
+state-owned assets supervision and state-owned enterprise operation,
+and multiple years of experience as independent director.
+Ms. Zhang Donghui, employee director, participates in the
+decision-making of Shenhua Finance Company through meetings of the
+board of directors.
+The board of Shenhua Finance Company Limited operates in accordance
+with the Articles of Association of Shenhua Finance Company Limited.
+Any resolution passed at the board meetings of Shenhua Finance
+Company will only be valid if consent is obtained from two-thirds or more
+of directors present at the meeting, at which more than one-half of all
+directors shall be present.
+In 2018, the board of Shenhua Finance Company held two meetings.
+68
+China Shenhua Energy Company Limited
+B.
+Section V Directors' Report (Continued)
+Board Committees
+The board of Shenhua Finance Company currently has three board
+committees, namely the Related Party Transaction Control Committee,
+Risk Management Committee and Audit Committee.
+(A)
+(B)
+(C)
+Mr. Xu Shancheng, non-executive director, serves concurrently as the
+chief financial officer of the Company. Please refer to the section headed
+"Directors, Supervisors, Senior Management and Employees" of this
+report for his biographical details.
+Company
+Administration
+(19.8)
+ក្បួនស្ល
+(12)
+5
+56
+0
+749
+811
+52
+0
+105
+0
+(105)
+ទិនខ្លះ-
+17
+(56)
+(52)
+2272006
+(2)
+Note: It represents the thermal coal futures completed by the Group in January 2018.
+2018 Annual Report
+65
+Section V Directors' Report (Continued)
+(VII) Disposal of material assets and equity interest
+Applicable ✓ Not applicable
+(VIII) Analysis on major holding and associated companies
+1.
+Major subsidiaries
+12
+21
+30,000
+30,000
+2,447
+Section V Directors' Report (Continued)
+(VI) Analysis on Investments
+The equity investments of the Company in 2018 amounted to RMB2.049 billion (2017:
+RMB9.780 billion), representing a year-on-year decrease of 79.0%. Equity investments
+are mainly used for capital increase in Mengxi-Huazhong Railway Company Limited, Jawa
+Company and Liuzhou Power.
+For information on the principal business of major subsidiaries of the Company and the
+percentages of equity interest held by the Company, please refer to "46. Investment in
+Subsidiaries" to the Notes to the Financial Statements of this report.
+1.
+2.
+Material investment in equity interest
+A joint venture company was established with the equities and assets of the relevant
+coal-fired power generation companies separately contributed by the Company and
+GD Power. For transaction details of which, please refer to the paragraph headed
+"Subsequent Event" in this section.
+Material investment in non-equity interest
+Applicable
+✓ Not applicable
+3.
+Financial assets/liabilities at fair value
+Unit: RMB million
+As at the end of the reporting period, the financial assets at fair value through profit or
+loss of the Group were banks' wealth management products due within one year of
+the Company, interbank certificates of deposit of Shenhua Finance Company, and the
+derivative financial instruments of Shenhua Finance Lease Company to hedge against
+the U.S. dollar-denominated liabilities. By the end of 2018, the fair value of derivative
+financial instruments amounted to RMB5 million.
+Details regarding the amounts of and changes in the financial assets/liabilities at fair
+value of the Group in 2018 are as follows:
+Name of items
+Banks' wealth management products
+Interbank certificates of deposit
+Derivative financial (liabilities) assets
+Derivative financial assets note
+Other investments in equity instruments
+Entrusted wealth management products
+Brokers' wealth management products
+Unit: RMB million
+Opening balance Closing balance at
+at the beginning
+of the period
+the end
+of the period
+Change for the
+current period
+Change of
+Profit for the
+current period
+0
+As at the end of the reporting period, the financial assets at fair value through other
+comprehensive income of the Group were the non-tradable equity investments
+amounting to RMB811 million held by the Group that have no significant impact
+on the investee. In 2018, the changes in fair value of other investments in equity
+instruments before income tax amounted to RMB66 million.
+Registered
+Total
+capital assets assets
+Net
+3,283
+(4.2)
+Company
+5
+Shenhua Trading
+1,889
+18,852 9,288
+2,850
+1,772
+60.8
+Increase in the sales
+Group
+and gross profit
+7.5
+margin of purchased
+6
+Shenbao Energy
+1,169
+7,608 4,784 1,274
+936
+36.1
+Increase in coal sales
+Company
+price
+7
+6,790 15,136
+9,962
+1,213 1,513
+coal
+86,129
+10,402 8,624 3,241 3,014
+38,451
+7,102
+Net profit attributable to
+the equity holders of the parent company
+Main reasons for
+No. Company
+As at 31 December 2018
+2018
+2017 Change
+changes
+%
+1
+Shendong Coal Group
+4,989
+37,516 24,945
+15,397
+30,942 3,146
+15,587
+2
+Shuohuang Railway
+5,880
+42,270 35,544
+7,492
+7,596
+(1.4)
+Company
+3
+Jinjie Energy
+2,278
+4
+Zhunge'er Energy
+(1.2)
+68,903
+Huanghua Harbour
+Balance of loans
+0
+Amount of rejected loans
+Note: The amount of granted loans refers to the balance as at 31 December 2018 of the
+loans granted in the current year in connection with the loans contracts signed in
+2018.
+(IX) Structured Vehicle Controlled by the Company
+Applicable ✓ Not applicable
+(X) Environmental Policies and Performance
+The Group is committed to the long-term sustainability of the environment and communities
+in which it operates. Acting in an environmentally responsible manner, the Group endeavors
+to comply with laws and regulations regarding environmental protection and adopt effective
+measures to achieve efficient use of resources, energy saving and waste reduction. Please
+refer to the 2018 ESG Report of the Group for information in respect of environmental
+protection of the Company.
+The Group attaches great importance to tackling climate change. In 2018, the Group made
+great efforts to address climate change, mainly including improving the assessment system
+of annual operating performance for carbon emission and compiling the Carbon Emission
+Regulations and other model regulations for power plants. With actively participation in the
+establishment of the national carbon market, the Company specified the administration
+principles, namely "unified management, unified auditing, unified development, unified
+transaction", for carbon trading and carried out practical trainings for coal-fired power
+enterprises, resulting in the performance of duties in due course by all nine power plants
+in the carbon trading pilot market. The "100,000t level whole-flow demonstration project
+of capture and storage of carbon dioxide" operated by Jinjie Energy Plant achieved stage
+progress.
+China Shenhua Energy Company Limited
+Section V Directors' Report (Continued)
+(XI) Compliance with Relevant Laws and Regulations
+So far as the Board and management are aware, the Group has complied in all material
+aspects with the relevant laws and regulations that are related to the business and
+operation of the Group in 2018. There was no material breach of or non-compliance with the
+applicable laws and regulations by the Group.
+(XII) Relationship with Stakeholders
+For details of remuneration and training of the Group's employees, please refer to the
+section headed "Directors, Supervisors, Senior Management and Employees".
+The Group attaches great emphasis on good relationships with customers, suppliers and
+other business partners to achieve its long-term goals. Accordingly, our senior management
+have kept good communication, promptly exchanged ideas and shared business updates
+with them when appropriate.
+0
+In 2018, there was no material and significant dispute between the Group and its
+customers, suppliers and other business partners.
+8,944
+amount of guaranteed loans (including
+discounted assets) Note
+1,390
+10
+Inner Mongolia Guohua Hulunbei'er Power
+Generation Co., Ltd.
+1,033
+2018 Annual Report 71
+72
+Section V Directors' Report (Continued)
+C.
+Approval of loans during the reporting period
+Unit: RMB million
+Item
+2018
+Amount of contracted loans
+Amount of granted loans (including discounted assets) Note
+Of which:
+11,066
+(XIII) Subsequent Events
+1.
+2.
+2018
+Year-on-year
+change
+%
+Raw coal output (million tonnes)²
+3,680
+4.5
+Coal import (million tonnes)
+281.2
+3.9
+Coal transportation by railway (million tonnes)
+10.4
+1
+2
+This section is for reference only and does not constitute any investment advice. The Company has used its best endeavors
+to ensure the accuracy and reliability of information in this section, but does not assume any liability or provide any form of
+guarantee for the accuracy, completeness or validity of all or part of its content. If there is any error or omission, the Company
+does not assume any liability. The content in this section may contain certain forward-looking statements based on subjective
+assumptions and judgments of future political and economic developments; therefore there may exist uncertainties in these
+statements. The Company does not undertake any responsibility for updating the information or correcting any subsequent
+error that may appear. The opinions, estimates and other data set out herein can be amended or withdrawn without further
+notice. The data contained in this section are mainly derived form sources such as the National Bureau of statistics, China Coal
+Market Network, China Coal Resources Network, China Electricity Council, and China Coal Transportation & Sales Society etc.
+Source of data: Statistical Communiqué on the 2018 National Economic and Social Development by the National Bureau of
+Statistics of China.
+China Shenhua Energy Company Limited
+25.0
+In 2018, the domestic coal market generally showed the characteristics of
+neither slack in weak season nor booming in peak season. As of 31 December
+2018, the Bohai Bay Thermal Coal Price Index (5,500 kcal) was RMB569/tonne,
+and the annual average price was RMB571/tonne, down 2.4% over the same
+period of last year. Affected by policies, expectation, seasonality and other
+factors, the spot price fluctuated widely within the interval of RMB570-770/
+tonne.
+Review of 2018
+Thermal coal market in the PRC
+(1)
+As approved at the ninth meeting of the fourth session of the Board and the first
+extraordinary general meeting of 2018, a joint venture company was established
+with the equities and assets (the "Subject Assets") of the relevant coal-fired
+power generation companies separately contributed by the Company and GD
+Power (the "Transaction"). On 3 January 2019, the joint venture company has
+completed registration at Xicheng Bureau of Beijing Administration for Industry and
+Commerce and has obtained business license. For details, please refer to the H share
+announcement of the Company dated 4 January 2019 and the A share announcement
+of the Company dated 5 January 2019.
+Pursuant to the Agreement on Establishment of the Joint Venture Company by way
+of Assets Reorganizations entered into between China Shenhua Energy Company
+Limited and GD Power Development Co., Ltd., the Completion Date is the last day
+of the month in which the completion date of commercial and industrial registration
+of the joint venture company falls, i.e. 31 January 2019. From the Completion Date,
+the joint venture company assumes the corresponding rights and the liabilities of
+the Subject Assets. For details, please refer to the H share announcement of the
+Company dated 31 January 2019 and the A share announcement of the Company
+dated 1 February 2019, as well as "45. Events after the Reporting Period" to the
+Notes to the Financial Statements of this report.
+On 30 January 2019, the Company received a confirmation document on the share
+transfer registration from China Securities Depository and Clearing Corporation
+Limited forwarded on by China Energy confirming that the transfer registration of
+the state-owned shares has been completed. After this transfer for nil consideration,
+China Energy holds 13,812,709,196 A shares, representing approximately 69.45%
+of the share capital of the Company; Beijing Chengtong Financial Control Investment
+Co., Ltd. holds 358,932,628 A shares, representing approximately 1.805% of the
+share capital of the Company; Guoxin Investment Co., Ltd. holds 358,932,628 A
+shares, representing approximately 1.805% of the share capital of the Company. For
+details, please refer to the H share announcement of the Company dated 30 January
+2019 and the A share announcement of the Company dated 31 January 2019.
+2018 Annual Report 73
+74
+Section V Directors' Report (Continued)
+III.
+Company Limited
+DISCUSSION AND ANALYSIS ON FUTURE DEVELOPMENT OF THE
+COMPANY1
+Competition and Development Trend in the Industry
+1.
+Macro economy
+In 2018, China faced a complicated and challenging domestic and international
+situation in development which was rarely seen in many years, and there were new
+economic downward pressure. The Chinese people of all ethnic groups, guided by
+Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, forged
+ahead and overcame difficulties, having accomplished main targets for economic and
+social development of the year. The operation of domestic economy was kept within
+a reasonable interval and economic structure was further improved. In 2018, the GDP
+increased by 6.6% year on year, the CPI increased by 2.1% year on year, and the PPI
+increased by 3.5% year on year.
+In 2019, despite a more complex and severe development environment, China is still
+at the period for strategic opportunities with sufficient perseverance, great potential
+and continuous innovation. The long-term upward trend of the Chinese economy
+is expected to remain unchanged. Adhering to the general work tone of "seeking
+progress while maintaining stability", focusing on new concepts for development
+and sticking to the promotion of high-quality development, Chinese government
+will comprehensively push forward various works and keep the operation of China
+economy within a reasonable interval. The GDP growth will be around 6%-6.5%, and
+the rise in the CPI will be controlled at approximately 3%.
+Market environment of the coal industry
+2.
+(I)
+Shenhua Guoneng Jiaozuo Power Plant
+23.8
+Shenhua Ganquan Railway Co., Ltd.
+2
+China Shenhua Energy Company Limited
+Shenhua Ningxia Coal Industry Group Co.,
+55,986
+Ltd.
+5,712
+34569
+China Energy Investment Corporation Limited
+3,411
+Shenhua Guoneng Group Co., Ltd.
+3,115
+Shenhua Wuhai Energy Co., Ltd.
+2,375
+Beijing Guohua Power Company Limited
+2,303
+7
+1
+No. Name of customer
+2018
+31 December
+34,945
+1,854
+30,403
+14.9
+Of which: balance of
+0
+0
+China Shenhua Coal Liquefaction and
+70
+Section V Directors' Report (Continued)
+B.
+Balance of deposits and borrowings of the top ten customers
+(a)
+Balance of deposits of the top ten customers
+Unit: RMB million
+As at
+China Shenhua Energy Company Limited
+Chemical Company Limited
+guaranteed loans
+8
+6,680
+3,470
+Shenhua Ningxia Coal Industry Group
+Co., Ltd.
+3,000
+4
+China Energy Investment Corporation Limited
+3,000
+5
+State Grid Energy Hami Coal and Electricity
+Co., Ltd.
+2,340
+Shenhua Bayannur Energy Co., Ltd.
+Shenhua Yili Energy Co., Ltd.
+2,125
+1,974
+Shenhua Zhunchi Railway Company Limited
+Shenhua Xinzhun Railway Co., Ltd.
+123
+6189
+2018
+China Energy Group Coke Company Limited
+2,054
+No. Name of customer
+9
+China Shenhua International Construction
+Company Limited
+1,779
+10
+2,127
+1,573
+Shenhua Renewables Co., Ltd.
+Unit: RMB million
+Balance of loans of the top ten customers
+As at
+(b)
+31 December
+Note: Data of all companies were consolidated except those of China Energy
+Investment Corporation Limited, which were based on the headquarters of
+the Company.
+Year-on-year
+3. Transportation segments
+2. Power segment
+1. Coal segment
+(IV) Capital expenditure plan for 2019
+Section V Directors' Report (Continued)
+China Shenhua Energy Company Limited
+Year-on-year
+Applicable
+The explanation of conditions under which the Company's profit attributable to equity
+holders of the Company in the first quarter of 2019 is expected to reach a year-on-year
+change of 50% or above:
+The transaction of establishing a joint venture company with the equities and assets
+(the "Subject Assets") of the relevant coal-fired power generation companies separately
+contributed by the Company and GD Power had been completed on 31 January 2019. Since
+the Completion Date, the Subject Assets contributed by the Company has ceased to be
+included in the consolidated financial statement of the Company. Therefore, the relevant
+data on such assets will not be included in the business objectives of the Group for 2019.
+increase of no increase of 7.6%
+more than 5%
+Not applicable
+The above business targets are subject to factors including changes in scope of consolidated
+financial statements, risks, uncertainties and assumptions. The actual outcome may differ
+materially from these statements. Such statements do not constitute actual commitments
+to investors. Investors should be aware that undue reliance on or use of such information
+may lead to investment risks.
+4. Coal chemical segment
+Port
+Shipping
+11.4
+37.4
+self-produced coal
+95.5
+48.8
+107.8
+129.2
+91.2
+51.3
+60.7
+11.3
+Actual amount
+in 2018
+Unit: RMB100 million
+Total
+5. Others
+Of which: Railway
+Target of 2019
+(16.2)
+Percentage change of unit
+(46.5)
+2,675.9
+1,431
+100 million kWh
+Power output dispatch
+(7.4)
+Revenue
+4.609
+100 million tonnes
+Coal sales
+(2.2)
+0.9
+2.966
+2.9
+4.27
+production cost of the
+RMB100 million
+2,641.01
+finance costs
+development costs), net
+(including research and
+administrative expenses
+Selling, general and
+Cost of sales
+2,212
+(9.8)
+135
+RMB100 million
+(17.0)
+1,736.77
+1,441
+RMB100 million
+149.75
+0.1
+Section V Directors' Report (Continued)
+0.7
+9.
+Section V Directors' Report (Continued)
+China Shenhua Energy Company Limited
+To cope with the risk of international operations, the Group will further carry out
+overseas resource evaluation, operation performance evaluation and technology
+assessment based on sound information collection, analysis and research prior to
+making any decision on overseas project investment so as to ensure economic and
+technological feasibility. Furthermore, the Company will strengthen the cultivation
+and introduction of interdisciplinary talents to lay a solid cornerstone for its "Going
+Overseas" strategy.
+Affected by multiple factors including the complex international political, economic,
+social and religious environments, diverse legal systems among different countries,
+fluctuations in exchange rates, stricter environmental protection requirements, and
+intensified trade conflicts among certain countries, there may be ups and downs
+as well as fluctuations in the future international trades and economic situations.
+Together with the highly competitive energy market worldwide, the uncertainties in
+the Group's international operations may have an impact on its overseas business.
+Risk of international operations
+Risk of natural disasters
+To cope with the risk of integrated operations, the Group will take an array of
+measures based on production safety, including, scientific scheduling and plan
+management, improve railway collection and distribution system, strengthen the
+coordination of power grid, and strengthen the operation management of production
+equipment, with an aim at balanced production and uninterrupted integrated
+operations to maximise its competitiveness.
+Risk of integrated operations
+To cope with the risks of production safety for coal mines, the Group will strengthen
+various areas in respect of the implementation of its safety risk prevention and
+control management system, inspections and treatments and assessment of
+significant risks, reinforcement of safety production training and emergency rescue
+management, innovative mechanism of safety supervision, all-round promotion of
+safety management ability, and consolidation of production safety fundamentals.
+The Group has established the production safety targets of "preventing serious
+work-related accidents and general accidents, striving to reduce cases of minor and
+serious injuries, creating long-term mechanism for production and work safety".
+Although the Group has been sustaining stable performance in safe production for its
+coal mines, there are uncertainties in the course of safe production.
+Risks of production safety for coal mines
+The management of the Group is of the view that other than those accounted for in
+the financial statements, there are currently no environmental liability that may have
+material adverse effect on the Group's financial position.
+8.
+The Group's advantages in integrated coal mines, power, transportation and
+coal chemical operations come along with the risks arising from the interruption
+of individual parts of the entire integrated chain. In case of poor organisation or
+coordination or a discontinuation of any part, the balance and high efficiency of
+integrated organisation and operations will be affected and the impact may adversely
+affect the Group's business results.
+7.
+The production and operation activities of the Group may suffer some losses affected
+by factors including natural disasters or bad weather.
+The Group carries out centralised management of commercial property insurance with
+ongoing review and assessment of risks and risk portfolio. Necessary and appropriate
+adjustments which are in line with our needs and practices of the insurance industry
+in China have been made to the insurance strategies and actions as safeguard against
+losses arising from various exposures.
+00
+100 million tonnes
+0
+90001
+Section VI Significant Events
+2018 Annual Report 83
+In order to cope with the risks arising from natural disasters, the Group will further
+strengthen early warnings of major natural disasters, formulate emergency plans,
+improve major disaster prevention and control technologies and rescue system,
+allocate necessary resources and perform relevant emergency drills to ensure that the
+impacts of natural disasters can be minimised.
+Please see the section headed "Significant Events" for donations, dividends and management
+contracts; please see the section headed "Directors, Supervisors, Senior Management and
+Employees" for permitted indemnity provision, interests of directors and supervisors in significant
+transactions, arrangements or contracts.
+Please refer to the section headed "Corporate Governance and Corporate Governance Report" of
+this report.
+PERFORMANCE OF THE BOARD AND ITS SPECIAL COMMITTEES
+Applicable ✓ Not applicable
+VI.
+V.
+IV. REASONS AND CASES OF FAILURE TO DISCLOSE PURSUANT TO GUIDELINES
+BY THE COMPANY DUE TO NON-APPLICATION OF GUIDELINES OR SPECIAL
+REASONS
+OTHERS
+6.
+82
+2018 Annual Report 81
+Risk of macroeconomic fluctuations
+1.
+Investors should be aware that although the Company has reviewed and listed the major
+risks, and adopted relevant countermeasures, there is no absolute guarantee that all adverse
+impact could be eliminated due to the limitation of various factors.
+(V) Major risks faced and countermeasures
+Section V Directors' Report (Continued)
+80
+2.
+2018 Annual Report 79
+Total capital expenditure of 2018 amounted to RMB23.21 billion, which were mainly used
+for coal-fired power plants, Huangda Railway construction and mining equipment purchase.
+Based on the principles of strict control of investment and focusing on quality and
+efficiency, the Board of the Company approved a total planned capital expenditure of 2019
+of RMB27.13 billion (excluding equity acquisition). In terms of the capital expenditure on
+the coal segment, approximately RMB2.45 billion will be used for infrastructure, such as
+coal mine projects, construction of concentrated transportation stations and equipment
+purchase, and approximately RMB3.28 billion will be used for technological transformation.
+In terms of the capital expenditure on the railway segment, approximately RMB6.76
+billion will be used for infrastructure, such as the construction of Huangda Railway, 300
+million-tonne production capacity expansion project of Shenshuo Railway and equipment
+purchase, and approximately RMB2.64 billion will be used for technological transformation.
+In terms of the capital expenditure on the power segment, approximately RMB7.43 billion
+will be used for infrastructure, such as project construction, and approximately RMB1.64
+billion will be used for technological transformation.
+Note: The relevant data on the power plants of the Company to establish a joint venture company with GD Power
+is not included in the capital expenditures plans for 2019.
+232.1
+271.3
+2.1
+0
+The capital expenditure plans of the Group in 2019 are subject to the development of
+business plans (including potential acquisitions), progress of capital projects, market
+conditions, outlook for future operation environment and the obtaining of the requisite
+permissions and approval documents. Unless required by laws, the Company shall not
+assume any responsibilities for updating the data of its capital expenditure plans. The
+Company intends to finance its capital expenditures by cash generated from operating
+activities, short-term and long-term borrowings, and other debt and equity financing.
+The industry in which the Group operates is closely correlated to the prosperity of
+the macro economy. Currently, with complex and severe external environment,
+there have been economic downward pressure and increased pressure on economic
+structure adjustment. The state will further push forward the supply-side reform of
+the coal industry, and proactively phase out backward production capacity in the coal
+industry with premium production capacity, so as to achieve the replacement of old
+drivers of growth with new ones. The reform and innovation in the energy sector will
+have a significant impact on the Group's development strategy.
+To cope with the risk of macroeconomic fluctuations, the Group will further
+strengthen the studies on macro-control policy and relevant industrial trends, take
+the initiative to make pre-adjustment, promote high-quality development by taking
+the supply-side structural reforms as paramount, make great efforts to push scientific
+innovation and progress, and continue to implement strategies of green energy.
+Risk of market competition
+The Group focuses on the development strategy of clean energy. With the efficient
+development, use and conversion of clean coal as the core, it spares no effort in
+constructing ecological civilisation. The Company insists on strengthening its soft
+power of environmental protection and upgrading relevant facilities, as well as
+ensure capital investment to actively carry out the prevention and control of air
+and water pollution and upgrading of energy-saving and environmental protection
+in the Beijing-Tianjin-Hebei region and its surrounding areas. The Company is also
+building the brand image of ultra-low emissions in coal power on an on-going
+basis. It continues to identify environmental hidden dangers, further improves the
+environmental risk pre-control management system and strengthens the identification,
+remediation of potential issues and environmental emergency management in order
+to achieve energy-saving and emission reduction targets as well as to prevent severe
+environmental pollution incidents.
+Given the facts that national policies on energy-saving and environmental protection
+I have been further tightened, local standards on ultra-low emissions are even stricter
+than national standards, operating costs of enterprises are increased due to the
+levy of environmental tax, and the demand for better ecological environment puts
+more stringent requirements on the development and operation of enterprises, the
+constraints on energy-saving, carbon reduction and environmental protection are
+further imposed on the Group.
+Risk of environmental protection
+To cope with the risk of rising costs, the Group will establish the value-creation
+concept and strengthen the strategic cost control; optimise the cost accountability
+system; promote the normalisation of cost benchmarking work and carry out in-depth
+cost reduction and efficiency promotion, so as to consolidate the Group's advantage
+on cost.
+As the mining process proceeds further and production conditions become
+increasingly complicated, the Group's corporate mining cost may increase gradually.
+Furthermore, there is a trend of continuous rise in material and labour costs, and the
+increasingly stringent regulations are imposed by the state on resource acquisition
+and environmental protection, which may lead to an increase in the Group's costs.
+To cope with the risk of changes in industry policies, the Group will strengthen its
+research on the latest industry policies and regulations in the PRC and promote
+industrial upgrading and structural adjustment through a rational investment portfolio
+across the business segments, further regulating on the construction order of coal
+and power projects and increasing the investment in environmental protection.
+Risk of rising costs
+The Group's business activities are subject to the industrial regulatory policies
+in China. The supply-side structural reform of the coal industry has been pushed
+forward into a more difficult phase with increasing difficulty in resolving issues such
+as personnel settlement and liability disposal. In addition, speeding up the release
+of premium production capacity, optimising the transportation layout in the coal
+industry and ensuring coal supply have become the focuses of policy formulation in
+recent years. The above policies may objectively affect the approval and operation
+of newly-built expansion projects and the reform of the management model of the
+Company.
+Risk of changes in industry policies
+5.
+4.
+3.
+Section V Directors' Report (Continued)
+China Shenhua Energy Company Limited
+In response to the risks of market competition, the Group will improve the accuracy
+of the pre-judgment to coal market, strictly implement long-term contracts, enhance
+quality control, develop brand advantage, and strengthen the development of new
+markets, maintenance of existing markets and construction of interchange bases to
+arrange transportation and sales in a balanced manner. It will also further conduct
+quality improvement and efficiency enhancement in the power industry and conduct
+risk pre-control, production safety and trading in the power market in accordance with
+laws and regulations; the Company actively participated in investment in coal flowing
+channels of national railways, increased the collection and distribution capacity of
+railways owned by the Company and kept improving the core competitiveness of
+transportation of the Company.
+In 2018, the domestic coal market featured with stable supply and demand, steady
+increase in utilisation rate of coal production capacity, and the increase in effective
+production capacity of coal. In 2019, the coal market is expected to maintain a
+generally balanced supply and demand. The total power consumption in 2018 was
+6.8 trillion kWh, representing a year-on-year increase of 8.5%. It is estimated that
+the future power market will feature with overall supply-demand balance, and the
+proportion of planned power generation will decrease year by year, which indicate
+that market competition will intensify. The state has increased the construction of
+cross-provincial coal transportation railway channels, and local coal transportation
+railways have been putting into operation or under expansion. The coal transportation
+capacity will be gradually released, and the transportation formats tends to be
+diversified.
+11.6
+Commercial coal production
+In 2019, despite a more complex and severe economic development
+environment in China, it is expected that the economy in China will continue to
+operate within a reasonable interval, providing energy consumption with certain
+support. The energy consumption of non-fossil energy in the overall society
+is growing rapidly. The coal consumption is expected to be basically stable. In
+2019, the coal production capacity will continue to be released, while affected
+by the increasingly stringent safety and environmental protection inspections,
+the coal production growth is expected to be limited in 2019.
+Increase/
+(decrease)
+In 2019, due to the reduction of low-cost resources of Indonesian coal and the
+increase in domestic consumption, the export volume will decline slightly. The
+export volume of Russia, Mongolia and other countries will increase, and the
+supply of Australia will remain stable. In 2019, it is expected that the global
+coal market will show a balance in supply and demand. Thermal coal price will
+fluctuate with seasonal changes.
+In 2019, affected by various factors such as changes in the world economic
+structure, trade friction, and global response to climate change, the downward
+pressure on the world coal market will increase. In particular, the coal
+production and sales are expected to further shrink in Europe and the United
+States. At the same time, developing countries in Asia will continue to be
+the mainstay of new coal demand due to their economic and technological
+conditions, providing support for global coal demand and prices.
+Prospects for 2019
+The international coal price featured a seasonal change with supply and demand
+relations, and was higher than that of last year. As of 31 December, the spot
+price of Newcastle NEWC steam coal decrease from USD104.94/tonne early
+the year to USD101.38/tonne, with the annual average price increasing by
+21.3% year on year.
+In 2018, coal imports of Japan, South Korea and Taiwan in East Asia
+remained basically stable, while the coal consumption along the "Belt and
+Road" countries, especially in Southeast Asia and South Asia, has increased
+significantly. Coal imports volume of India, Thailand, Vietnam and other
+countries have grown by more than two digits. In 2018, the global coal supply
+saw an increase, and exporting countries continued to be focused on Indonesia,
+Australia, and Russia. Among them, Indonesia exported 540 million tonnes of
+coal, up 10.5% year on year, the coal export of Russia increased by 3.4%, and
+the coal export of Australia increased by 2.6%.
+The global energy structure adjustment continued to be pushed ahead, and
+non-fossil energy maintained a rapid growth. Coal production and consumption
+in Western Europe and the United States continued to decline, and the focus of
+coal trade continued to tilt towards the Asia-Pacific region.
+Review of 2018
+(2)
+76
+Section V Directors' Report (Continued)
+Overall, the supply and demand of coal are expected to be balanced in
+2019. However, subject to uncertainties, including resource conditions and
+transportation constraints, there may be structural tight or loose supply in some
+periods and regions.
+The import volume of coal will be basically stable in 2019 over the previous
+year.
+Prospects for 2019
+In respect of the demand side, total consumption of coal increased by 1%,
+continuing the positive growth since 2017, and was concentrated in the power
+and chemical industries, showing a trend of stable quantity and structural
+optimization. The coal consumption in the power and chemical industries
+recorded significant increase, the coal consumption in the steel and building
+materials industries recorded steady increase, and the coal consumption
+in other industries and residents has continued to decrease. The coastal
+coal supply channel was smoother, the Daqin line and the Shuohuang line
+were operating at a high level, and the capacity of Mengji line continued to
+be released. The coal transportation volume through railways in China was
+2,380 million tonnes, representing a year on year increase of 10.4%. The
+volume of coal shipment through major ports in China was 748 million tonnes,
+representing a year-on-year increase of 3.0%. Mid-stream and downstream
+were eager to hold inventory, while the annual inventory of northern ports,
+southern ports and key power plants has increased significantly.
+The import volume of coal continued to grow, and the total import volume
+of coal throughout the year amounted to 280 million tonnes, representing a
+year-on-year increase of 3.9%, demonstrating a slight decline over 2017.
+In respect of the supply side, with the continuous improvement of policies such
+as the replacement of coal production capacity, the high-quality production
+capacity has been continuously released, and the production of raw coal
+has gradually recovered. The raw coal production in 2018 was 3.68 billion
+tonnes, representing a year-on-year increase of 4.5%, among which, the
+raw coal production of Inner Mongolia was 930 million tonnes, representing
+a year-on-year increase of 8.7%; the raw coal production of Shanxi was 890
+million tonnes, representing a year-on-year increase of 3.7%; and the raw coal
+production of Shaanxi was 620 million tonnes, representing a year-on-year
+increase of 13.4%.
+Section V Directors' Report (Continued)
+%
+2018 Annual Report 75
+China Shenhua Energy Company Limited
+Thermal coal market in the Asia Pacific region
+3. Market environment of the power industry
+Actual amount
+in 2018
+Section V Directors' Report (Continued)
+Target of
+2019 note
+Unit
+Item
+(III) Business Targets for 2019
+The Company considers "Establishing the flagship company of China Energy Group
+and building a first-class comprehensive and competitive energy group in the world" as
+its strategic objective, it will continue to adhere to its advantages of unified operation,
+continuously improve the efficiency of integrated operations, achieve innovative
+development and high-quality development, and strive to achieve world-class scale,
+world-class benefits, world-class innovation, world-class management, world-class culture,
+and world-class Party construction.
+(II)
+Section V Directors' Report (Continued)
+Development Strategy of China Shenhua
+2018 Annual Report 77
+Review of 2018
+78
+The power generation in the PRC maintained at a relatively high level, representing
+a year on year increase of 8.4%, and increasing by 1.8 percentage points. Thermal
+power generated 4,923.1 billion kWh, representing a year on year increase of 7.3%
+and accounting for 70.4% of the power generation in the PRC. Power generation
+of hydropower increased by 3.2% year on year, accounting for 17.6% of the power
+generation in the PRC. Power generation of nuclear power, on-grid wind power and
+on-grid solar power increased by 18.6%, 20.2% and 50.8% year on year, respectively,
+and continued to maintain rapid growth.
+In 2018, the average utilization hours of power generation equipment of power plants
+with capacity of 6,000 kW and above in the PRC was 3,862 hours, increasing by
+73 hours year on year. Among them, the average utilization time of thermal power
+equipment was 4,361 hours, increasing by 143 hours year on year. The average
+utilization time of hydropower equipment was 3,613 hours, increasing by 16 hours
+year on year.
+In 2018, the power industry in the PRC featured a sufficient supply and demand. The
+total electricity consumption was 6,844.9 billion kWh, representing a year-on-year
+increase of 8.5%, and increasing by 1.9 percentage points as compared with that of
+last year. Among them, the electricity consumption in the first industry, secondary
+industry and third industry increased by 9.8%, 7.2% and 12.7% year on year,
+respectively, and the electricity consumption in urban and rural residents increased by
+10.4% year on year.
+Prospects for 2019
+Taking such factors as the macroeconomic situation, electricity consumption and
+the replacement of electric energy in service industries and urban residents into
+consideration, it is expected that the power consumption in the PRC will increase
+slightly in 2019, but alternative energy sources such as natural gas, nuclear power,
+photovoltaics and wind power will continue to maintain rapid growth, affecting the
+growth space for thermal power generation. With the continuous deepening of reform
+of the power system, opening up of market, and the innovation and diversification
+of trading methods, the total trading volume of power continues to grow, and the
+downward pressure on electricity prices still exists.
+The power supply in the PRC is sufficient. The installed capacity of thermal power
+generation decreased in market share, while the installed capacity of non-fossil-fuel
+power generation increased rapidly. By the end of 2018, the installed capacity of
+power plants was 1.90 billion kW in China, increasing by 6.5% as compared to that at
+the beginning of the period. The installed capacity of thermal power was 1.14 billion
+kW (including 1.01 billion kW of coal-fired, 83.3 million kW of gas-fired), accounting
+for 60.2% of the total installed capacity, and decreasing by 2 percentage points from
+the end of 2017. In 2018, the newly added installed capacity was 124.39 million kW,
+including 8.54 million kW of hydropower, 41.19 million kW of thermal power, 8.84
+million kW of nuclear power, 21 million kW of on-grid wind power, and 44.73 million
+kW of on-grid solar power.
+The Company shall use the registered address (hereinafter referred to as "registered
+address") as recorded in the register of members of H shares on 5 July 2019
+as the criterion in determining the residence of the individual shareholders of H
+shares who are entitled to receive the final dividend for year 2018 of the Company,
+and withhold and pay individual income tax accordingly. If the residence of the
+individual shareholders of H shares is inconsistent with the registered address, such
+shareholders shall notify the Company's share registrar for H shares at or before
+4:30 p.m. on 28 June 2019 with the relevant evidence at Computershare Hong Kong
+Investor Services Limited of 17M Floor, Hopewell Centre, 183 Queen's Road East,
+Wan Chai, Hong Kong.
+II. PERFORMANCE OF COMMITMENT
+Section VI Significant Events (Continued)
+2018 Annual Report 89
+The Company assumes no responsibility arising from any delayed or inaccurate
+determination of the status of the shareholders or any dispute over the mechanism of
+withholding. Shareholders should consult their tax advisers regarding the PRC, Hong
+Kong and other tax implications of owning and disposing of the Company's H shares.
+According to the relevant provisions under the "Notice on Tax Policies for Shanghai-
+Hong Kong Stock Connect Pilot Programme" (Cai Shui 2014 No. 81) and the "Notice
+on Tax Policies for Shenzhen-Hong Kong Stock Connect Pilot Programme" (Cai Shui
+2016 No. 127), the Company shall withhold individual income tax at the rate of 20%
+with respect to dividends received by Mainland individual investors for investing
+in H-shares listed in Hong Kong Stock Exchange through Shanghai-Hong Kong
+Stock Connect and Shenzhen-Hong Kong Stock Connect. For Mainland securities
+investment funds investing in shares listed on Hong Kong Stock Exchange through
+Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect, the
+above rules also apply and individual income tax shall be levied on dividends derived
+therefrom. The Company is not required to withhold income tax on dividends derived
+by Mainland enterprise investors, and such enterprises shall report the income and
+make tax payment by themselves. The record date and the relevant arrangements
+of dividend distribution for Southbound Shareholders are the same as that of the
+Company's shareholders of H shares.
+With respect to the Southbound Shareholders, according to the relevant requirements
+of China Securities Depository and Clearing Corporation Limited, China Securities
+Depository and Clearing Corporation Limited Shanghai Branch and Shenzhen Branch
+shall receive cash dividends distributed by the Company as the nominee of the
+Southbound Shareholders for Shanghai market and Shenzhen market, respectively
+and distribute such cash dividends to the relevant Southbound Shareholders through
+its depository and clearing system.
+If the individual shareholders of the H shares who are Hong Kong or Macau residents
+or residents of the countries which have an agreed tax rate of 10% with China,
+the Company shall withhold individual income tax at a rate of 10%. If the individual
+shareholders of the H shares are residents of countries which have an agreed tax rate
+of less than 10% with China, the Company shall withhold individual income tax on
+behalf of them in accordance with relevant provisions required by the Announcement
+of the State Administration of Taxation in relation to the Administrative Measures on
+Preferential Treatment Entitled by Non-resident Taxpayers under Tax Treaties (No.
+60 Announcement of the State Administration of Taxation in 2015). If the individual
+shareholders of the H shares are residents of countries which have an agreed tax rate
+of over 10% but less than 20% with China, the Company shall withhold the individual
+income tax at the agreed actual rate. In case the individual shareholders of the H
+shares are residents of countries which have not entered into any tax agreement
+with China, or the agreed tax rate with China is 20% or otherwise, the Company shall
+withhold the individual income tax at a rate of 20%.
+Computershare Hong
+8.
+Section VI Significant Events (Continued)
+China Shenhua Energy Company Limited
+88
+According to Guo Shui Han 2011 No. 348 issued by the State Administration of
+Taxation, the Company shall withhold and pay individual income tax for dividend
+payable to the individual shareholders of H shares. The individual shareholders
+of H shares are entitled to the relevant preferential tax treatment pursuant to the
+provisions in the tax agreements entered into between their countries of residence
+and China or the tax arrangements between mainland China and Hong Kong (Macau).
+In accordance with the Enterprise Income Tax Law of the PRC and its implementation
+regulations which came into effect on 1 January 2008, the Company is required to
+withhold and pay enterprise income tax at the rate of 10% on behalf of the non-
+resident enterprise shareholders whose names appear on the register of members
+for H shares of the Company when distributing final dividends. The Company shall
+withhold and pay enterprise income tax in respect of the final dividend for year 2018
+of the Company for the non-resident enterprise shareholders whose name would
+appear on the register of members for H shares of the Company on 5 July 2019.
+Kong Investor Services
+Limited
+Kong Investor Services
+Limited
+Computershare Hong
+Timely
+9.
+Detailed
+(originally
+reasons shall shall be
+be specified if specified if
+commitment commitment
+4:30 p.m.
+28 June 2019
+(Friday)
+4:30 p.m.
+competition
+in relation to
+The two parties entered into a
+China Energy
+Non-
+Commitment
+in time
+Further steps
+9,149
+is not fulfilled
+Performance of
+Commitment
+Duration of Any Time Limit for
+Commitment Commitment
+Commitment Covenantor Commitment
+Commitment
+Background of Type of
+and Strict
+Date and
+is not fulfilled
+21 May 2019
+(Tuesday)
+After the Shanghai Stock Exchange is closed in the afternoon on Wednesday,
+22 May 2019, the shareholders of A shares of the Company (including the
+Northbound Shareholders) and the proxies of shareholders as registered in the
+China Securities Depository and Clearing Corporation Limited Shanghai Branch
+are entitled to attend and vote at the 2018 annual general meeting of the
+Company;
+5 July 2019
+(Friday)
+5.
+4.
+Section VI Significant Events (Continued)
+2018 Annual Report 87
+In accordance with the preliminary arrangement of profit distribution plan for year
+2018 and annual general meeting of the Company, the final dividend for year 2018 for
+the Company's H shareholders are estimated to be distributed on or about 9 August
+2019. H shareholders are advised to claim the dividends distributed by the Company
+in time.
+The final dividend for year 2018, which is denominated and declared in RMB, will
+be paid in RMB to holders of the Company's A shares, including holders of the
+Company's A shares through the Northbound Trading Link of the Shanghai-Hong
+Kong Stock Connect (hereinafter referred to as the "Northbound Shareholders") and
+holders of the Company's H shares through the Southbound Trading Link (including
+Shanghai and Shenzhen markets, hereinafter referred to as the "Southbound
+Shareholders"). Dividends to holders of the Company's H shares, except the
+Southbound Shareholders, are paid in HKD. The dividend paid in HKD is calculated
+according to the exchange rate based on the average benchmark rate of RMB against
+HKD, as published by the Bank of China five business days preceding the date of
+declaration of such dividend.
+The above final dividend plan for year 2018 is in compliance with the requirement of
+the Articles of Association and endorsed by the independent directors and approved
+by the Board. When recommending the plan for year 2018, the Board has attended
+to and considered the opinions and concerns of the shareholders of the Company.
+The Company will hold the 2018 annual general meeting on Friday, 21 June 2019 to
+consider the relevant resolutions, including the above dividend plans as proposed by
+the Board.
+The Board of the Company recommends the payment of a final dividend for year
+2018 in cash of RMB0.88 per share (inclusive of tax) on the basis of the total share
+capital of 19,889,620,455 shares of the Company as at 31 December 2018, totaling
+RMB17,503 million (inclusive of tax), which represents 39.9% of the net profit for the
+year attributable to equity holders of the Company under the Accounting Standards
+for Business Enterprises and 39.7% of the profit for the year attributable to equity
+holders of the Company under the International Financial Reporting Standards.
+6.
+Net profit for the year attributable to equity holders of the Company for 2018 under
+the Accounting Standards for Business Enterprises amounted to RMB43,867 million,
+with basic earnings per share of RMB2.205/share; profit for the year attributable to
+equity holders of the Company under the International Financial Reporting Standards
+amounted to RMB44,137 million, with basic earnings per share of RMB2.219/share. As
+at 31 December 2018, the retained earnings available for distribution to shareholders
+of the Company under the Accounting Standards for Business Enterprises amounted
+to RMB132,711 million.
+2.
+Section VI Significant Events (Continued)
+China Shenhua Energy Company Limited
+86
+N/A
+흐름
+40.3
+22,712
+3.
+7.
+Pursuant to the Articles of Association:
+(1)
+29 June 2019
+(Saturday)
+dividend for year 2018
+Entitled to the final
+2
+meeting
+21 June 2019
+(Friday)
+(Wednesday)
+the 2018 annual general
+22 May 2019
+Attending and voting at
+1
+First Day
+(inclusive)
+No. Corresponding Rights
+Last Day
+(inclusive)
+Temporary closure of the register of members
+The arrangement of temporary closure of the register of members of H shares of
+the Company:
+According to the relevant regulations of China Securities Depository and
+Clearing Corporation Limited Shanghai Branch and market practice adopted for
+final dividend distribution for A shares, the Company will publish a separate
+announcement in respect of the distribution of final dividend for year 2018 to
+holders of A shares (including the Northbound Shareholders) after the 2018
+annual general meeting to determine the record date, ex-rights date and
+dividend distribution date for the distribution of final dividend for year 2018 to
+holders of A shares.
+"Non-competition Agreement"
+(2)
+The last day for The Company's share
+registering members registrar for H shares
+24 May 2005, Yes
+long-term
+(1)
+N/A
+Term of Auditing of International Auditors of the Company
+(year)
+Deloitte Touche Tohmatsu Certified
+Public Accountants LLP
+9.0
+Deloitte Touche Tohmatsu
+1.5
+6
+On 22 June 2018, Deloitte Touche Tohmatsu Certified Public Accountants LLP and Deloitte
+Touche Tohmatsu were appointed as the domestic and international auditors of the Company
+respectively for year 2018 at the Company's 2017 annual general meeting. The Company did not
+change its accounting firms during each of the past three years.
+Name
+Remuneration
+Internal Control Auditors
+III.
+in time
+RMB1.59
+million
+In 2018, the above two auditors did not serve as the external auditors of several subsidiaries
+of the Company and did not provide non-audit services to the Company and its controlled
+subsidiaries.
+VI. INSOLVENCY OR RESTRUCTURING RELATED MATTERS
+Applicable ✓ Not applicable
+VII. MATERIAL LITIGATION AND ARBITRATION
+Applicable ✓ Not applicable
+As at the end of the reporting period, the Group was not involved in any material litigation or
+arbitration. As far as the Group was aware, the Group did not have any material litigation or claim
+which was pending or threatened against the Group.
+As at 31 December 2018, the Group was the plaintiff, defendant or the party of certain non-
+material litigations and arbitration. The management of the Company believes that any possible
+legal liability which may be incurred from the aforesaid cases will not have any material impact on
+the financial position of the Group.
+Deloitte Touche Tohmatsu Certified Public
+Accountants LLP
+Being the parent company subsequent to the restructuring, China Energy merged with China
+Guodian by the way of absorption. As approved in the ninth board meeting of the fourth session of
+the Board and the 2018 first EGM of the Company, the Company entered into the Supplemental
+Agreement to the Existing Non-Competition Agreement with China Energy. It is agreed by
+both parties that other than the amendments in the Supplemental Agreement to the Existing
+Non-Competition Agreement, the clauses of the Existing Non-competition Agreement will not be
+changed.
+Pursuant to the Supplemental Agreement to the Existing Non-competition Agreement, within
+five years after the completion of China Energy merging with China Guodian by way of merger by
+absorption, the Company will discretionally exercise the Options and the Pre-emptive Rights to
+acquire the assets within the retained businesses, and will no longer commence the acquisition
+before 30 June 2019 as stated in the 2014 Non-Competition Undertakings. The retained business
+refer to (1) original committed assets (excluding the completed acquisition of three equity assets
+by the Company in 2015) other than the assets of Conventional Power Generation Business and
+(2) the unlisted businesses held by China Guodian which directly or indirectly compete with the
+core businesses of the Company (excluding the relevant assets that China Guodian undertook
+to inject into its subsidiary Inner Mongolia Pingzhuang Energy Co., Ltd., in 2007). For details,
+please refer to the H share announcement of the Company dated 1 March 2018 and the A shares
+announcement of the Company dated 2 March 2018.
+APPROPRIATION OF FUNDS AND PROGRESS OF THE COLLECTION DURING
+THE REPORTING PERIOD
+Term of Auditing of Domestic Auditors of the Company (year)
+Name of International Auditors of the Company
+(RMB million)
+Remuneration of Domestic Auditors of the Company
+Name of Domestic Auditors of the Company
+APPOINTMENT AND REMOVAL OF AUDITORS
+V.
+Section VI Significant Events (Continued)
+92
+2018 Annual Report 91
+Applicable ✓ Not applicable
+(III) The Company's analysis and explanation about the reasons for and impact of
+correction to material previous errors
+For the new and revised International Financial Reporting Standards initially applied by the
+Group in 2018 and their respective impact, please refer to Note 2 to financial statements of
+this report.
+The Company's analysis and explanation about the reasons for and impact of
+changes in accounting policies, accounting estimates or accounting method
+Applicable ✓ Not applicable
+Explanation from the board and the supervisory committee for the "non-standard
+audit report" issued by the auditors
+(II)
+(1)
+IV. AUDIT OPINIONS AND OTHER EXPLANATIONS
+Applicable ✓ Not applicable
+China Shenhua Energy Company Limited
+Yes, in progress N/A
+Section VI Significant Events (Continued)
+Applicable ✓ Not applicable
+The national industrial policy as well as industry and market conditions in
+the PRC;
+(2)
+The specified guidelines issued by NDRC setting out the coal purchase
+prices (if any);
+(3)
+The current transacted coal prices of the local coal exchange or market in
+the PRC, i.e., the coal price with same quality that is offered to or offered
+by independent third parties under normal market conditions and normal
+commercial terms in the same or nearby regions. For local spot coal price,
+reference is generally made to (i) the spot price index of the local coal
+exchange or market in Bohai-rim region or nearby provinces as published
+on China Coal Market Website (www.cctd.com.cn) organised by China
+Coal Transportation & Sale Society in the PRC; (ii) the sale price of local
+large-scale coal enterprises as published by each coal industry website
+(if any); and/or (iii) price quotation of a few enterprises with comparable
+quality, quantity and location (if any). If any price quotation(s) of one or
+more other enterprises are obtained, the Company will adopt the most
+favourable price obtained; For certain types of coal, the Company might
+not be able to receive any quotation(s) of enterprises with comparable
+quality, quantity and location. In case the Company is able to obtain a
+relevant quotation with comparable quality, quantity and location, then
+the Company would be able to obtain a comparable quotation and adopt
+the best price available;
+China Shenhua Energy Company Limited
+Section VI Significant Events (Continued)
+China Shenhua Energy Company Limited
+The supply price under the Mutual Coal Supply Agreement is the product of the
+unit price RMB/tonne multiplied by the actual weight. The unit price of coal shall
+be determined by both parties after arm's length negotiations with reference
+to the then market price and conditions and the following factors, provided
+that the transaction terms shall not be less favourable than those provided by
+independent third parties:
+90
+may pose potential competition.
+"Supplemental Agreement to
+the Existing Non-Competition
+Agreement" on 1 March 2018.
+As an integrated platform
+which was responsible for the
+coal business and affiliated to
+China Energy, China Energy
+has committed not to compete
+with the Company in respect
+of the Company's principal
+businesses (coal exploration,
+mining, processing, sales;
+production and sales of
+comprehensive utilization of
+coal products; development and
+management of coal products;
+railway transportation; port
+transportation; the industry and
+systematic service related to
+the business aforementioned)
+whether inside or outside of the
+PRC, and granted the Company
+options and pre-emptive rights
+to acquire and be transferred
+from China Energy any business
+opportunities and assets which
+Corporation)
+Group
+on 24 May 2005 and a
+Shenhua
+undertaking
+initial public
+To further formulate the performance of the Non-competition Agreement, the Resolution on the
+Performance of Non-competition Undertaking was approved at the 45th meeting of the second
+session of the Board on 27 June 2014 and the Announcement in relation to the Performance
+of Non-competition Undertaking was disclosed to public. The Company disclosed that it will
+commence the acquisition of 14 assets of Shenhua Group and its subsidiaries ("Original
+Undertaking Assets") before 30 June 2019 (submitting the asset acquisition proposal to the
+internal competent authorities of China Shenhua for approval procedure). For details, please
+refer to the H shares announcement dated 27 June 2014 and the A shares announcement of the
+Company dated 28 June 2014. The Company completed acquisitions of 100% equity of Ningdong
+Power, 100% equity of Xuzhou Power and 51% equity of Zhoushan Power in 2015. The Company
+did not make any acquisitions of assets in 2018.
+On 24 March 2016, the Company entered into the Mutual Coal Supply
+Agreement with China Energy. The Mutual Coal Supply Agreement is effective
+from 1 January 2017 and will expire on 31 December 2019. Pursuant to the
+Mutual Coal Supply Agreement, the Group and China Energy Group mutually
+sells and supplies various types of coal.
+Mutual Coal Supply Agreement
+A.
+IX. EXPLANATION FOR CREDIT OF THE COMPANY AND ITS CONTROLLING
+SHAREHOLDERS AND DE FACTO CONTROLLER
+X.
+XI.
+Applicable ✓ Not applicable
+THE SHARE OPTIONS INCENTIVE PLAN, EMPLOYMENT STOCK OWNERSHIP
+SCHEME OR OTHER EMPLOYEE INCENTIVE SITUATION OF THE COMPANY
+AND THEIR IMPACTS
+Applicable ✓ Not applicable
+MATERIAL RELATED/CONNECTED TRANSACTIONS
+(1)
+Related/Connected transactions during the daily operation
+Pursuant to the requirements under the "Guidelines of Shanghai Stock Exchange on
+Connected Transactions of Listed Companies", the Audit Committee of the Board of the
+Company shall perform the duties of control and daily management of related/connected
+transactions of the Company. The Company has a related/connected transaction team
+under the direct supervision of the Chief Financial Officer, which is responsible for the
+management of related/connected transactions; and has established a business process,
+which properly delineates the responsibilities of the Company, its subsidiaries and branches
+in the management of related/connected transactions. The team has also established
+routine examinations, reporting systems and accountability systems in the subsidiaries
+and branches of the Company, as to ensure the related/connected transactions conduct in
+accordance with the terms of framework agreement.
+As approved at the 2018 first EGM, the Group and China Energy Group have entered into
+a Mutual Coal Supply Agreement and a Mutual Supplies and Services Agreement with
+a revision of annual caps for mutual agreement for the year of 2018 and 2019 in light of
+the merger of China Guodian by China Energy by the way of absorption, as well as the
+satisfaction of the needs of additional daily related/connected transaction arising from the
+Joint Venture Company consisting of equities and assets of the relevant coal-fired power
+generation companies held by the Group and GD Power. For details, please refer to the H
+share announcement of the Company dated 27 April 2018 and the A shares announcement
+of the Company dated 28 April 2018.
+In August 2018, the merger of China Guodian by way of absorption by China Energy, the
+controlling shareholder of the Group, has completed. As a result, the former China Guodian
+and its subsidiaries constitute related parties/connected persons of the Company as defined
+under the Shanghai Listing Rules and the Hong Kong Listing Rules.
+2018 Annual Report 93
+94
+Section VI Significant Events (Continued)
+As of the end of the reporting period, continuing related/connected transaction agreements
+entered into by the Company include:
+1.
+Non-exempt continuing related/connected transactions between the Group and
+China Energy Group
+The related/connected transactions are beneficial for the Company to obtain a
+reliable and quality-assured provision of materials and services, lower operation risks
+and costs; and Shenhua Finance Company, over which the Company has controls,
+provides financial services to the Group, China Energy and its subsidiaries so that
+it can fully leverage on its functions as an internal financing platform and capital
+management platform, and to further control risks and increase income.
+VIII. SANCTIONS AND RECTIFICATIONS IMPOSED ON THE LISTED COMPANY AND
+ITS DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT, CONTROLLING
+SHAREHOLDERS, DE FACTO CONTROLLER AND OFFEROR
+4.6
+offering
+49,923
+holders of the
+Company in the
+consolidated
+to equity
+Net profit
+attributable
+Amount of
+cash dividend
+(inclusive of tax)
+RMB million
+Dividend
+per 10 shares
+(inclusive of tax)
+RMB
+Profit distribution plan for the recent three years (including the reporting period)
+1.
+(II) Profit distribution scheme/plan
+Pursuant to the Articles of Association, the profit distribution of the Company shall be
+made based on the profit for the year attributable to equity holders of the Company in the
+consolidated financial statements prepared under the Accounting Standards for Business
+Enterprises and the International Financial Reporting Standards, whichever is lower. Annual
+profit distribution in cash shall be no less than 35% of the net profit for the year attributable
+to equity holders of the Company subject to the relevant conditions.
+financial
+statements
+In accordance with the requirements of the relevant laws and regulations and the Articles
+of Association, the profit distribution policy of the Company shall maintain continuity and
+stability and emphasize on achieving reasonable returns for investors. The Company shall
+give priority to profit distribution in cash dividends. The profit distribution policy of the
+Company complies with the Guideline on Encouragement of Cash Dividend Distribution of
+Listed Companies announced by the CSRC.
+(1)
+I. PROFIT DISTRIBUTION PLAN
+Section VI Significant Events
+00
+10
+to
+00
+Remuneration of International Auditors of the Company
+N/A
+Formulation, implementation or adjustment of cash dividend policy
+of the respective
+(RMB million)
+in accordance
+with Accounting
+25.1
+dividend year
+dividend in the year 2017
+Final dividend for year 2016
+Distribution for Special
+40.2
+18,100
+9.1
+Final dividend for year 2017
+39.9
+43,867
+45,037
+8.8
+Final dividend for year 2018
+(Proposed)
+%
+statements
+Enterprises
+RMB million
+Standards
+for Business
+financial
+Percentage to
+the net profit
+attributable
+17,503
+to equity
+holders of the
+Company in the
+consolidated
+At the end of 2021 At the end of 2020
+Change
+%
+Total assets
+8.5
+610,597
+562,904
+Total liabilities
+RMB million
+161,376
+28.7
+RMB million
+Increased by 3.8
+percentage points
+%
+13.6
+101,680
+RMB million
+EBITDA
+%
+of the period
+Return on net assets as at the end
+7.8 percentage points
+10.0
+the period
+Increased by 2.2
+Return on total assets as at the end of
+50.9
+62,690
+94,575
+9.8
+79,018
+133,317
+380,038
+Total equity
+26.4
+23.7 percentage points
+Total debt to total equity ratio
+Decreased by 1.0
+12.4
+13.4
+percentage point
+2021 Annual Report 9
+Gearing ratio
+4.4
+18.33
+19.13
+RMB/share
+share
+Equity attributable to equity holders per
+(0.1)
+19,890
+RMB million
+449,221
+429,587
+4.6
+Equity attributable to equity holders of
+the Company
+21.0
+RMB million
+364,203
+4.3
+Total share capital at the end of the
+period
+RMB million
+19,869
+RMB million
+Finance Company
+Basic earnings per share
+Net cash generated from operating
+STABILIZER OF ENERGY SUPPLY
+PIONEER OF ENERGY REVOLUTION
+国共产党成立100周年
+、国家能源集团
+CHN ENERGY
+120km h
+HX 17140A
+国能朔黄铁路
+首列重载移动闭塞列车
+Important Notice
+I.
+II.
+III.
+IV.
+Annual Report
+V.
+VII.
+The Board, Supervisory Committee and all Directors, Supervisors and senior management of the
+Company warrant that this report does not contain any misrepresentations, misleading statements
+or material omissions, and are jointly and severally liable for the authenticity, accuracy and
+completeness of the information contained in this report.
+This report was approved at the twelfth meeting of the fifth session of the Board of the Company.
+8 out of 8 Directors attended the meeting in person.
+KPMG has issued a standard unqualified independent auditor's report in accordance with the Hong
+Kong Standards on Auditing on the Company's financial statements for the year 2021 prepared
+under the International Financial Reporting Standards.
+Wang Xiangxi, Chairman of the Company, Xu Shancheng, Chief Financial Officer, and Yu
+Yanling, person-in-charge of the Accounting Department, warrant the authenticity, accuracy and
+completeness of the financial statements contained in this report.
+The Board proposed the payment of a final dividend in cash of RMB2.54 per share (inclusive
+of tax) for the year 2021 based on the total registered share capital on the equity registration
+date of the implementation of the equity distribution. The profit distribution proposal is subject
+to the approval by shareholders at the general meeting. According to the total share capital of
+19,868,519,955 shares of the Company as at 31 December 2021, the final dividend totaling
+RMB50,466 million (inclusive of tax) will be paid.
+Disclaimer of forward-looking statements: The forward-looking statements in this report made on
+the basis of subjective assumptions and judgments on future policies and economic conditions,
+which are subject to risks, uncertainties and assumptions, may differ materially from the actual
+outcome. Such statements do not constitute actual commitments to investors. Investors should
+be aware that undue reliance on or use of such information may lead to risks of investment.
+Is there any situation of non-operating appropriation of funds by controlling shareholder(s) and its
+subsidiaries?: No
+VIII. Is there any situation of violation of decision-making procedures for external guarantee provision?:
+No
+IX.
+X.
+Whether more than half of the Directors cannot guarantee the authenticity, accuracy and
+completeness of the annual report disclosed by the Company?: No
+Warning on major risks: impacted by the supply and demand of coal and power generation and
+the adjustment to industrial policies, the Group is exposed to some uncertainties on achieving
+the business targets for 2022. In addition, investors please note that the Company has disclosed
+risks including safe production and environmental protection, market competition, investment,
+engineering project management, international operation, macroeconomic fluctuations, integrated
+operation and policy etc. in the section headed "Director's Report".
+2021 Annual Report 1
+VI.
+activities excluding the effect from
+2021
+CHINA SHENHUA ENERGY COMPANY LIMITED
+16.3
+81,289
+94,575
+RMB million
+Net cash generated from operating
+activities
+44.0
+1.803
+2.597
+RMB/share
+44.0
+35,849
+51,607
+RMB million
+holders of the Company
+(a joint stock limited company incorporated in the People's Republic of China with limited liability)
+Stock Code: 01088
+Address
+38.7
+43,984
+61,009
+RMB million
+43.7
+233,263
+335,216
+RMB million
+Revenue
+%
+Change
+2020
+2021
+中国神华能源股份有限公司
+Profit for the year attributable to equity
+Profit for the year
+Tel
+Increased by 2.7
+Jinjie Energy
+Dingzhou Power
+China Energy Jinjie Energy Co., Ltd.
+China Energy Hebei Dingzhou Power Generation Co., Ltd.
+Mengjin Power
+Jiujiang Power
+Huizhou Thermal
+Beijing Gas-fired Power
+Shouguang Power
+Liuzhou Power
+Pembangkitan Jawa
+Yongzhou Power
+Shengli Energy
+China Energy Mengjin Thermal Power Co., Ltd.
+China Energy Shenhua Jiujiang Power Co., Ltd.
+China Energy (Huizhou) Thermal Power Co., Ltd.
+China Energy Guohua (Beijing) Gas-fired Power Co., Ltd.
+Shenhua Guohua Shouguang Power Generation Company Limited
+China Energy Guangtou (Liuzhou) Power Generation Co., Ltd.
+%
+PT. Shenhua Guohua Pembangkitan Jawa Bali
+China Energy Group Yongzhou Power Co., Ltd.
+Shengli Energy Branch of the Company
+Guangdong Power Sales Company China Energy (Guangdong) Power Sales Co., Ltd.
+4 China Shenhua Energy Company Limited
+Section | Definitions (Continued)
+Jiangsu Power Sales Company
+Shandong Power Sales Company
+Shenhua Lease Company
+Beijing GD Power
+China Energy Hebei Cangdong Power Co., Ltd.
+Cangdong Power
+China Energy Yudean Taishan Power Co., Ltd.
+China Energy Shaanxi Shenmu Power Co., Ltd.
+The Company and its subsidiaries
+China Energy Investment Corporation Limited (£*œF£¤¶¶Ð
+限責任公司)
+China Energy and its subsidiaries (excluding the Group)
+China Guodian Group Co., Ltd. (+IIT£¥Á®^J)
+China Guodian and its subsidiaries
+GD Power Development Co., Ltd.
+China Energy Shendong Coal Group Co., Ltd.
+Shenhua Shendong Power Co., Ltd.
+Shenhua Zhunge'er Energy Co., Ltd.
+China Energy Baorixile Energy Co., Ltd.
+Shenhua Beidian Shengli Energy Co., Ltd.
+China Energy Shuohuang Railway Development Co., Ltd.
+China Energy Railway Equipment Co., Ltd.
+China Energy Huanghua Harbour Administration Co., Ltd.
+China Energy (Tianjin) Harbour Administration Co., Ltd.
+China Energy Zhuhai Harbour Administration Co., Ltd.
+Finance Company
+Guoneng Yuanhai Shipping Co., Ltd.
+China Energy Baotou Energy Co., Ltd.
+China Energy Yunlin Energy Co., Ltd.
+China Energy Baotou Coal Chemical Co., Ltd.
+China Energy Sichuan Energy Co., Ltd.
+Shenhua (Fujian) Energy Co., Ltd.
+2021 Annual Report 3
+Section Definitions (Continued)
+EMM Indonesia
+Zhunge'er Power
+Shenmu Power
+Taishan Power
+PT.GH EMM INDONESIA
+Power-generating division controlled and operated by Zhunge'er
+Energy
+China Energy Baoshen Railway Group Co., Ltd.
+China Shenhua Energy Company Limited
+The deconsolidation of Finance
+Company's financial statements
+JORC
+Renminbi unless otherwise specified
+6 China Shenhua Energy Company Limited
+Section II Company Profile and
+Major Financial Indicators
+I.
+II.
+III.
+INFORMATION OF THE COMPANY
+Chinese Name of the Company
+Short Name of Chinese Name of the Company
+English Name of the Company
+Abbreviation/Short Name of English Name of the
+Company
+Legal Representative of the Company
+Authorised Representatives of the Company under
+the Hong Kong Listing Rules
+CONTACTS AND CONTACT DETAILS
+Name
+Address
+Tel
+Fax
+E-mail
+Zhang Nan, Wang Xia
+KPMG (Public Interest Entity Auditor
+registered in accordance with the Financial
+Reporting Council Ordinance)
+8th Floor, Prince's Building, 10 Chater Road,
+Central, Hong Kong
+Guen Kin Shing
+China Securities Depository and Clearing
+Corporation Limited Shanghai Branch
+188 Yanggao South Road, Pudong New Area,
+Shanghai
+Computershare Hong Kong Investor Services
+Limited
+Rooms 1712-1716, 17th Floor, Hopewell
+Centre, 183 Queen's Road East, Wanchai,
+Hong Kong
+Section II Company Profile and
+Major Financial Indicators (Continued)
+VII. MAJOR ACCOUNTING DATA AND FINANCE INDEX
+A mutual access and connect mechanism for transactions in stock
+markets between Shenzhen Stock Exchange and HKEX
+RMB
+Stock Connect
+Shenzhen-Hong Kong
+SSE
+HKEx
+China Energy Jiangsu New Energy Technology Development Co.,
+Ltd. (formly Shenhua Guohua Jiangsu Power Sales Co., Ltd.)
+Shenhua Shandong Power Sales Co., Ltd.
+Shenhua (Tianjin) Finance Lease Co., Ltd.
+Beijing GD Power Co., Ltd
+China Energy Finance Co., Ltd.
+On 1 September 2020, the completion of transaction of China
+Energy Group subscribed additional registered capital of RMB7.5
+billion in Finance Company at a consideration of RMB13.27 billion in
+cash, and the direct and indirect shareholding ratio of the Company
+in the Finance Company fell to 40%, and the Finance Company
+was no longer included in the consolidated scope of financial
+statements of the Company
+Shendong Power, a subsidiary of the Company, transferred 100%
+equity of China Energy Shaanxi Fuping Thermal Power Co., Ltd.
+to China Energy Guoyuan Power Co., Ltd. The equity transfer was
+completed on 7 January 2021
+Australasian Code for Reporting of Mineral Resources and Ore
+Reserves
+Shanghai Stock Exchange
+The Stock Exchange of Hong Kong Limited
+2021 Annual Report 5
+Section Definitions (Continued)
+Equity Transfer of Fuping Thermal
+Power
+Shanghai Listing Rules
+China Accounting Standards for
+Business Enterprises
+International Financial Reporting
+Standards
+Articles of Association
+EBITDA
+Gearing ratio
+Total debt to total equity ratio
+Rules Governing the Listing of Stocks on SSE
+Rules Governing the Listing of Securities on the HKEX
+The latest Accounting Standards for Business Enterprises issued
+by the Ministry of Finance of the People's Republic of China and
+the related application guidance, interpretations and other related
+requirements
+International Financial Reporting Standards issued by the
+International Accounting Standards Board
+Articles of Association of China Shenhua Energy Company Limited
+Profit for the year + net financial costs + income tax + depreciation
+and amortization - share of profits and losses of associates
+Total liabilities/total assets
+[Long-term interest bearing debt + short-term interest bearing
+debt (including notes payable)]/[long-term interest bearing debt +
+short-term interest bearing debt (including notes payable) + total
+shareholder equity]
+Shanghai-Hong Kong Stock Connect A mutual access and connect mechanism for transactions in stock
+markets between SSE and HKEX
+Hong Kong Listing Rules
+Fujian Energy
+China Energy Trading Group Limited
+Baotou Coal Chemical
+IV. INFORMATION DISCLOSURE AND PLACE FOR DOCUMENT INSPECTION
+Media for disclosure of annual report of
+the Company
+Stock exchange websites for disclosure
+of annual report of the Company
+Annual report is available at
+China Securities Journal, Shanghai Securities News,
+Securities Times and Securities Daily
+www.sse.com.cn and www.hkexnews.hk
+SSE, Office of the Board of the Company and Hong
+Kong Office of the Company
+V.
+BASIC INFORMATION ON SHARES
+Type
+A Share
+Stock Exchange
+Abbreviation
+Stock Code
+H Share
+SSE
+HKEX
+Sichuan Energy
+601088
+01088
+VI. OTHER RELEVANT INFORMATION
+Auditor engaged by the
+Company (China's mainland)
+Name
+Office Address
+Signing Auditors
+Auditor engaged by the
+Company (Hong Kong)
+Name
+Office Address
+Signing Auditors
+Share Registrar and Transfer
+Office of the Company (A
+Share)
+Name
+Major Financial Indicators (Continued)
+Section II Company Profile and
+2021 Annual Report 7
+www.csec.com or www.shenhuachina.com
+ir@csec.com
+Fax
+Secretary to the Board
+Huang Qing
+22 Andingmen Xibinhe Road,
+Dongcheng District, Beijing (Postal
+Code: 100011)
+(8610) 5813 3399
+(8610) 5813 1804/1814
+1088@csec.com
+Office of the Board of the Company
+22 Andingmen Xibinhe Road,
+Dongcheng District, Beijing (Postal
+Code: 100011)
+(8610) 5813 1088/3399/3355
+(8610) 5813 1804/1814
+PARTICULARS
+Registered Address of the Company
+Postal Code of Registered Address of
+the Company
+Change of Registered Address of the
+Company
+Office Address of the Company
+Postal Code of Office Address of
+the Company
+Company Website
+E-mail
+中國神華能源股份有限公司
+Office Address
+中國神華
+CSEC/China Shenhua
+Wang Xiangxi
+Wang Xiangxi, Huang Qing
+Representative of Securities Affairs
+Sun Xiaoling
+22 Andingmen Xibinhe Road, Dongcheng
+District, Beijing (Postal Code: 100011)
+(8610) 5813 3355
+(8610) 5813 1804/1814
+ir@csec.com
+Hong Kong Office of the Company
+Room B, 54th Floor, Bank of China Tower,
+1 Garden Road, Central, Hong Kong
+(852) 2578 1635
+(852) 2915 0638
+22 Andingmen Xibinhe Road, Dongcheng District, Beijing
+100011
+N/A
+22 Andingmen Xibinhe Road, Dongcheng District, Beijing
+100011
+China Shenhua Energy Company Limited
+Share Registrar and Transfer
+Office of the Company (H
+Share)
+China Shenhua
+China Shenhua
+Name
+Section XI
+Documents Available for Inspection
+308
+Section XII
+Summary of Major Financial Information for the Recent Five Years
+309
+Section | Definitions.
+I
+Unless the context otherwise requires, the following terms used in this report have the following
+meanings:
+China Shenhua/the Company
+The Group
+China Energy
+China Energy Group
+China Guodian
+8 China Shenhua Energy Company Limited
+GD Power
+Shendong Coal
+Shendong Power
+Zhunge'er Energy
+Baorixile Energy
+Beidian Shengli
+Shuohuang Railway
+Railway Equipment
+Trading Group
+Huanghua Harbour Administration
+Tianjin Harbour Administration
+Zhuhai Harbour Administration
+Shipping Corporation
+Baoshen Railway
+Baotou Energy
+Yulin Energy
+183
+Independent Auditors' Report and Financial Statements
+Guodian Group
+179
+Section X
+KPMG Huazhen LLP
+Contents
+Section I
+Definitions
+Section II
+Company Profile and Major Financial Indicators
+Section III
+Chairman's Statement
+12
+Section IV
+Directors' Report
+Section V
+Corporate Governance and Corporate Governance Report
+80
+Office Address
+3728
+8th, Tower E2, Oriental Plaza, 1 East Chang
+An Avenue, Beijing
+Section IX
+171
+Changes in Share Capital and Shareholders
+Section VIII
+146
+Significant Events
+Investor Relations
+133
+Environmental and Social Responsibility
+Section VI
+14
+Section VII
+Name
+Wang Xingzhong
+Employee Director,
+Executive Vice
+President and
+Member of the
+Party Committee
+Luo Meijian
+Biographical details
+Born in April 1968, male, Chinese, a member of the
+Communist Party and a professor-level senior engineer.
+Mr. Wang has extensive experience in railway transport
+operation and management. He graduated from the
+Shanghai Railway Institute () in 1989,
+majoring in railway engineering and obtained the master
+academic qualification and a Ph.D. degree in engineering
+from China Academy of Railway Sciences (+IHUNS
+) in 2011.
+Prior to the foregoing, Mr. Wang successively served
+as deputy secretary of the Party Committee, chairman
+and general manager of Shenhua Baoshen Railway
+Group Co., Ltd., chairman of Shenhua Ganquan Railway
+Co., Ltd., and the deputy general manager of Shenhua
+Zhunge'er Energy Co., Ltd and general manager of
+Dazhun Railway Company.
+Mr. Wang served as the director and deputy secretary
+of operating management center of transport industry
+of China Energy and the Company from May 2018 to
+December 2019, and the general manager of transport
+management department of former Shenhua Group
+Corporation and the Company from February 2015
+to May 2018. From June 2013 to February 2015, he
+successively served as deputy secretary of the Party
+Committee and chairman of Shenhua Baoshen Railway
+Group Co., Ltd..
+2021 Annual Report 95
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+(2) Existing supervisors as at the end of the reporting period
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Name
+Mr. Wang has served as the Employee Director of the
+fifth session of the Board of the Company since May
+2020, and an executive vice president and a member of
+the Party Committee of the Company since December
+2019.
+Deputy Secretary
+of the Party
+Committee
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Born in October 1965, male, Chinese, a member of the
+Communist Party, a certified public accountant and a
+senior accountant. Mr. Yang obtained an MBA degree
+from the Open University of Hong Kong in 2011.
+Chairman of
+Supervisory
+Committee
+General Counsel
+China Shenhua Energy Company Limited
+The Directors and Supervisors of the Company have performed their duties
+in accordance with the requirements of the Articles of Association, Rules of
+Procedure of the Board Meeting and Rules of Procedure of the Supervisory
+Committee Meeting of the Company. Under the decision and authorization of
+the Board, the senior management is responsible for business operation of
+the Company. Lv Zhiren, Chief Executive Officer and Deputy Secretary to the
+Party Committee, is responsible for the Board and exercises his responsibilities
+as general manager in accordance with the requirements of the Articles
+of Association. Mr. Lv is responsible for administration and management,
+production and operation and auditing affairs; Xu Mingjun, secretary to the
+Party committee and executive vice president, is in charge of Party building,
+establishment of integrity, ideology and politics, cadre talents, organization
+of work, news propaganda, united front, labour union and groups and
+construction of corporate culture affairs; Huang Qing, secretary of the Board,
+member of the Party committee and general counsel, is responsible for Board
+affairs, Supervisory Committee's work, and is in charge of investor relations
+management, corporate management, legal affairs, material procurement and
+international business affairs; Yang Xiangbin, deputy secretary to the Party
+Committee assisted the secretary to the Party Committee in Party building,
+establishment of integrity, ideology and politics, organization of work, news
+propaganda, united front, labour union, groups and construction of corporate
+culture affairs and is responsible for trade union work; Wang Xingzhong,
+executive vice president and member of the Party committee, is in charge
+of Company's scientific and technological information and production and
+operation management of transportation industry affairs; Li Zhiming, executive
+vice president and member of the Party committee, is in charge of Company's
+development planning and production and operation management of coal
+industry affairs; Xu Shancheng, chief financial officer and member to the Party
+committee, is in charge of Company's financial operation, cost control, capital
+operation, and property rights management. Mr. Cui Weishan, member of
+Party committee and secretary of the Disciplinary Committee, is responsible
+for Company's discipline inspection and the building of Party style and anti-
+corruption government.
+Mr. Cui has served as a member of the Party Committee
+and secretary of the Party Committee of the Company
+since November 2021, deputy leader (director level) of
+the inspection team of the Party group of China Energy
+Group from May 2018 to November 2021, director of
+the Inspection Work Office of the party disciplinary
+inspection group of the former Shenhua Group
+Corporation Limited from January 2012 to May 2018,
+director of the Discipline Inspection and Supervision
+Department of the former Shenhua Group Corporation
+Limited and the supervisory department of the Company
+from May 2010 to January 2012.
+Born in February 1966, male, Chinese, a member of
+the Communist Party. Mr. Cui graduated from the
+Department of Measurement and Control of National
+College of Defense Technology in 1986, majoring in
+Remote Radio Telemetry and obtained the master
+academic qualification from the Party School of the CPC
+() in 2011, majoring in International Politics.
+Biographical details
+Biographical details
+Cui Weishan
+Name
+104
+2021 Annual Report 103
+Prior to the foregoing, Mr. Yang had served as deputy
+director and director of the Budget Office of the financial
+property department of China Guodian Corporation,
+director of the Budget Office of the Finance Department
+of Heilongjiang Power Company Limited and other
+positions.
+Mr. Yang has served as deputy secretary of the Party
+Committee of the Company since April 2021, director of
+the Capital Operation Department of the China Energy
+from May 2018 to March 2021, director of the Capital
+and Asset Management Department of China Guodian
+Corporation from May 2016 to May 2018, secretary
+to the Party committee, director and deputy general
+manager of Inner Mongolia Pingzhuang Coal Industry
+(Group) Co., Ltd., director and vice chairman of Inner
+Mongolia Pingzhuang Energy Co., Ltd. from December
+2013 to May 2016, deputy director of the financial
+property department and deputy director of the Financial
+Management Department of China Guodian Corporation
+from December 2006 to December 2013.
+Member of the
+Party Committee
+and Secretary of
+the Disciplinary
+Committee
+Yang Xiangbin
+Prior to the foregoing, Mr. Huang had served in various
+Committee and the capacities, including Secretary to the Chairman of former
+98 China Shenhua Energy Company Limited
+Born in May 1964, male, Chinese, a member of the
+Communist Party, and Ph. D in Management, senior
+economist.
+Mr. Luo has served as the Chairman of Supervisory
+Committee of the Company since May 2020, and since
+November 2021 the secretary of the Party Committee
+of Guodian Power Development Co., Ltd., and since
+December 2021 the deputy general manager and the
+director of Guodian Power Development Co., Ltd..
+Mr. Luo has served as a director of the Organization and
+Personnel Department (Human Resources Department)
+of China Energy from June 2018 to November 2021.
+From March 2017 to June 2018, he served as the
+general manager of Human Resources Department at
+former Shenhua Group Corporation and the Company.
+From March 2015 to March 2017, he served as the
+secretary of the Party Committee and standing deputy
+president of former Shenhua Management College, the
+standing deputy president of former Shenhua Group
+Corporation Communist Party School and the deputy
+general manager of Human Resources Department of
+former Shenhua Group Corporation and the Company.
+From May 2013 to March 2015, he served as director
+of human resources department, deputy president
+of the Party School and deputy secretary of the Party
+Committee of China Commercial Aircraft Corporation
+Limited.
+Prior to the foregoing, Mr. Luo had served as secretary
+of the Party Committee and disciplinary committee
+secretary of Shenhua Science and Technology
+Development Co., Ltd., deputy general manager of
+Human Resources Department of former Shenhua
+Group Corporation and the Company, the deputy
+president and member of the Party Committee of China
+Shenhua Coal Liquefaction and Chemical Company
+Limited, and deputy director, director of Education
+Bureau of the Organisation Department of the Central
+Committee of the Communist Party.
+96 China Shenhua Energy Company Limited
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Name
+Zhou Dayu
+Supervisor
+Biographical details
+Shenhua Group Corporation, Deputy Director of the
+General Office of former Shenhua Group Corporation,
+Deputy General Manager of Hubei Provincial Railway
+Company and Secretary to the Deputy Governor of the
+Hubei provincial government.
+Born in October 1965, male, Chinese, a member of the
+Communist Party and a researcher. Mr. Zhou obtained
+a bachelor's degree in National Economic Management
+at Peking University in 1986 and a master's degree in
+International Finance at Peking University in 2001.
+Mr. Zhou has served as a Supervisor of the fourth
+session of Supervisory Committee of the Company
+from June 2017 to May 2020 and a Supervisor of the
+third session of Supervisory Committee of the Company
+from June 2016 to June 2017, the Director of the
+Industrial Coordination Department of China Energy
+from May 2018 to March 2020, the General Manager of
+the Capital Operation Department of former Shenhua
+Group Corporation and the Company from March 2016
+to May 2018, and the General Manager of the Business
+Administration Department of former Shenhua Group
+Corporation and the Company from November 2009 to
+March 2016.
+(3)
+Prior to the foregoing, Mr. Zhou had successively held
+the post of the deputy General Manager and General
+Manager of the Planning Department and a Deputy
+Director of the Policy and Law Research Office of
+Shenhua Group Corporation.
+2021 Annual Report 97
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Name
+Zhang Changyan
+Employee's
+Supervisor
+Biographical details
+Born in August 1970, male, Chinese, a member of
+the Communist Party and a senior economist. Mr.
+Zhang graduated from Xi'an Jiaotong University in
+1993, majoring in electrical engineering and received
+a master's degree of Business Administration from
+Tsinghua University in 2001.
+Mr. Zhou has served as the Supervisor of the fifth
+session of the Supervisory Committee of the Company
+since May 2020, and a director of the Materials and
+Procurement Supervision Department of the China
+Energy since March 2020.
+Mr. Zhang has been serving as the Employees'
+Representative Supervisor of the fifth session of the
+Supervisory Committee since May 2020, and the
+chairman (legal representative), secretary to the Party
+Committee of National Energy Group Media Center Co.,
+Ltd. since February 2022.
+100
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+The Company resolutely implemented the new requirements of political
+construction in the new era, and strengthened the overall leadership of the
+Party. The Company has revised and improved the Articles of Association and
+rules and regulations of the Company, institutionalized the Party Committee
+research and discussion as a pre-procedure of major decision-making, and
+organically integrated the Party leadership with the improvement of corporate
+governance. Xu Mingjun served as the Secretary of the Party Committee of the
+Company; Lv Zhiren and Yang Xiangbin served as the deputy secretary to the
+Party Committee; Huang Qing, Wang Xingzhong, Li Zhiming and Xu Shancheng
+served as members of the Party Committee, and Cui Weishan served as
+a member of the Party Committee and the secretary to the Disciplinary
+Committee.
+Biographical details
+Name
+Prior to the foregoing, Mr. Xu held the post of the
+head of financial department of Electric Power Industry
+Bureau of Hebei Province (Company), manager of
+financial department of North China Power Group
+Company, chief accountant of Qinghai Electric Power
+Company (Bureau), chief accountant of North China
+Grid Company, deputy officer of Social Insurance
+Management Center of State Grid Corporation of China
+(Grid Corporate Annuity Management Center) and a
+member of the Leading Party Group, deputy general
+manager, chief accountant and other positions of State
+Grid Energy Development Co. Ltd..
+Mr. Xu has served as the chairman of Shenhua (Tianjin)
+Finance Lease Co., Ltd. from August 2016 to September
+2020, the secretary and deputy officer of the financial
+property department of China Energy from May 2018 to
+December 2018, the general manager of the financial
+department of the Company and former Shenhua Group
+Corporation Limited from August 2016 to May 2018, the
+deputy general manager and chief financial officer of
+Beijing Guohua Power Company Limited, and Guohua
+Power Branch of the Company from March 2015 to
+August 2016, the deputy general manager and chief
+financial officer of former Shenhua Guoneng Group
+Co., Ltd. and Shenhua Shendong Power Co., Ltd. from
+December 2012 to March 2015.
+Mr. Xu has served as the Chief Financial Officer and a
+member to the Party Committee of the Company since
+December 2018, a Non-executive Director of China
+Energy Finance Co., Ltd. since August 2016 and the
+Chairman of the board of supervisors of Beijing GD
+Power Co., Ltd. since March 2019.
+Born in March 1964, male, Chinese, a member of the
+Communist Party and a senior accountant. Mr. Xu has
+extensive experience in financial management. He
+obtained a master's degree in Economics from Renmin
+University of China in 2001.
+Biographical details
+Officer and Member
+of the Party
+Committee
+Chief Financial
+China Shenhua Energy Company Limited
+Xu Shancheng
+Senior management in office as at the end of the reporting period
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+2021 Annual Report 101
+Prior to the foregoing, Mr. Li had served as assistant to
+the general manager, director of executive office, and
+deputy director of the transportation and sale division
+of Shenhua Zhunge'er Energy Co., Ltd., and deputy
+manager of the trading company and other positions.
+Mr. Li has served as a member to the Party Committee
+of the Company since February 2021, an executive vice
+president of the Company since March 2021, general
+manager, deputy secretary of the Party Committee,
+chairman (legal representative) and secretary of the Party
+Committee of Shenhua Beidian Shengli Energy Co., Ltd.,
+and standing deputy general manager, general manager,
+secretary of the Party Committee and Executive Director
+of the Shengli Energy Branch of the Company from
+December 2015 to December 2020, deputy general
+manager of the engineering management department
+of the former Shenhua Group Corporation Limited and
+the Company from September 2013 to December 2015,
+deputy general manager of Shenhua Zhunge'er Energy
+Co., Ltd. from December 2007 to September 2013.
+Born in January 1968, male, Chinese, a member of
+the Communist Party and a senior engineer. Mr. Li
+has extensive experience in management of coal
+enterprises. He graduated from Heilongjiang Institute of
+Mining and Technology in 1990, majoring in industrial
+and civil construction and obtained a master's degree
+of Engineering from China University of Mining and
+Technology in 2002.
+Biographical details
+Executive Vice
+President and
+Member
+of the Party
+Committee
+Li Zhiming
+Name
+Name
+Mr. Zhang has been serving as the chairman (legal
+representative) and secretary to the Party Committee
+of China Energy Fujian Energy Co., Ltd. and Shenhua
+Fujian Energy Co., Ltd. from December 2020 to February
+2022, the Employees' Representative Supervisor of
+the fourth session of the Supervisory Committee from
+December 2019 to May 2020, the deputy secretary to
+the Party Committee of the Company from August 2019
+to December 2020 and General Legal Adviser of the
+Company from December 2019 to January 2021. From
+May 2018 to August 2019, he served as the secretary
+and a deputy director of the coal industry operation and
+management center of China Energy. From January
+2012 to May 2018, he served as the director of the coal
+and chemical management department of the former
+China Guodian.
+Prior to the foregoing, Mr. Zhang served as the general
+manager and deputy secretary of the Leading Party
+Members' Group of Guodian Anhui Power Co., Ltd.,
+group leader of the preparatory team of Guodian Anhui
+Power Co., Ltd., deputy general manager and a member
+of the Leading Party Members' Group of the East China
+Branch of former China Guodian, and the deputy general
+manager of Guodian East China New Energy Investment
+Co., Ltd..
+102 China Shenhua Energy Company Limited
+For the biographical details of Xu Mingjun, Secretary to the Party committee
+and deputy general manager, Wang Xingzhong, deputy general manager and
+member of the Party committee, please refer to the biographical details of
+Directors. The biographical details of other senior management are as follows:
+Name
+Lv Zhiren
+Chief Executive
+Officer, Deputy
+Secretary
+of the Party
+Committee
+Biographical details
+Born in November 1964, male, Chinese, a member
+of the Communist Party and a senior engineer.
+Mr. Lv has extensive work experience in corporate
+management. He graduated from School of Economics
+and Management of Beijing Union University in 1987,
+majoring in National Economic Management and
+obtained an EMBA degree from Shanghai University of
+Finance and Economics in 2005.
+Prior to the foregoing, Mr. Lv had served as deputy
+director of the General Division of the Planning
+Department, deputy director and director of the Annual
+Planning Division of the Planning Department, and
+deputy manager of the Planning Department of the
+former Shenhua Group Corporation Limited.
+2021 Annual Report 99
+Mr. Lv has served as the Chief Executive Officer
+of the Company since December 2021, and deputy
+secretary of the Party Committee of the Company since
+November 2021. Mr. Lv served as secretary to the
+Party Committee of Guodian Power Development Co.,
+Ltd. from September 2018 to November 2021, deputy
+general manager of Guodian Power Development Co.,
+Ltd. from September 2018 to December 2021, director
+of Guodian Power Development Co., Ltd. from February
+2020 to December 2021, director, secretary to the Party
+Committee and deputy general manager of Beijing GD
+Power Co., Ltd. from February 2019 to December 2021,
+deputy president of the Company from March 2017
+to September 2018, general manager of the Strategic
+Planning Department of the former Shenhua Group
+Corporation Limited and the Company from November
+2009 to March 2017, and general manager of the
+Strategic Planning Department of the Company from
+November 2004 to November 2009.
+Name
+Huang Qing
+Secretary of the
+Board, Member
+of the Party
+Biographical details
+Born in November 1965, male, Chinese, a member
+of the Communist Party and a senior engineer. Mr.
+Huang obtained a board secretary certification from the
+Shanghai Stock Exchange in 2004. Mr. Huang is a fellow
+of the Hong Kong Institute of Chartered Secretaries and
+a senior visiting scholar of the Eisenhower Foundation.
+Mr. Huang received a master's degree from Guangxi
+University in 1991.
+Mr. Huang has served as Secretary of the Board of the
+Company and Company Secretary of the Company since
+November 2004, a member of the Party Committee of
+the Company since June 2018, the General Counsel of
+the Company since January 2021, the Vice Chairman of
+Beijing GD Power Co., Ltd. since March 2019.
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+by proxy Absence
+4
+No
+Yang Jiping
+meetings
+person or not Attendance
+0
+Attendance in Attendance by Attendance
+Person correspondence
+0
+0
+0
+LOLOLOLO
+5/5
+5/5
+5/5
+5/5
+ཟུཟུ€=རྫུ]ཝཐ
+4/4
+at general
+4/4
+Note: In the above table, the attendance rate of the Board = number of attendances in person/number of
+required attendances at Board meetings; the attendance rate of the general meeting = number of
+attendances in person/number of required attendances at general meetings. The same below.
+2.
+Directors resigned during the reporting period
+Attendance at Board meetings
+Required
+attendance at
+Absent at two
+consecutive
+2020-03
+Name of D
+irector
+Independent Board meetings
+Director or not
+this year
+1/1
+meetings in
+No
+3/3
+consecutive
+meetings/
+Name of
+Director or meetings this
+Attendance
+by Attendance by
+meetings in
+Attendance
+required
+not
+year
+in Person correspondence proxy
+Absence person or not
+Attendance
+attendance
+Wang Xiangxi
+Director
+No
+Board
+at general
+All 6 resolutions were considered
+and approved, please refer to the
+H Share announcement of the
+Company dated 29 December 2021
+or A Share announcement dated 30
+December 2021 for details
+4
+The 9th meeting of the
+fifth session of the
+Board
+22 October 2021 On-site with
+correspondence
+5
+The 10th meeting of the 29 December 2021 On-site with
+fifth session of the
+Board
+Independent
+2021 Annual Report 109
+(II)
+PERFORMANCE OF DUTIES OF THE DIRECTORS
+1. Directors in office as at the end of the period
+Attendance at Board meetings
+Required
+attendance at
+Attendance
+Absent at two
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+5
+Xu Mingjun
+No
+0
+0
+5
+0
+1
+0
+O O O O O O
+1
+0
+4/4
+0
+4
+4/5
+0
+No
+5/5
+5/5
+1
+0
+LOLOLO 3 LO LOLOLO
+Jia Jinzhong
+Yang Rongming
+No
+5
+5
+3
+Yuen Kwok Keung
+Yes
+Bai Chong-En
+Yes
+5
+Chen Hanwen
+Yes
+5
+Wang Xingzhong
+No
+54535555
+0
+0
+Director of the Industrial 2018-05
+No
+Meeting content
+Audit Committee
+2.
+27 December 2021
+20 August 2021
+Date
+In 2021, the Strategy Committee of the Board held 2 meetings by way of
+consideration in writing. All proposals at the meetings were approved and all
+members attended the meetings.
+The major duties of the Strategy Committee: to conduct research on the Company's
+development strategies and investment plans; to conduct research and provide
+consideration opinions to the Board of Directors on matters such as adjustment to
+the main business, negative list of investment projects, investment and financing,
+asset restructuring, transfer of property rights, capital operation and reform and
+reorganisation, which require decisions to be made by the Board of Directors; and
+other duties and powers authorised by the Board.
+Strategy Committee
+1.
+During the reporting period, each committee under the Board did not express any dissenting
+views in performing their duties. The performance of duties of each committee is set out as
+follows:
+The duties and performance of duties of the committees
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+(II)
+112 China Shenhua Energy Company Limited
+Chen Hanwen (Chairman), Yuen Kwok Keung, Bai Chong-En
+Yuen Kwok Keung (Chairman), Chen Hanwen, Xu Mingjun
+Bai Chong-En (Chairman), Chen Hanwen, Xu Mingjun
+Yang Rongming, Wang Xingzhong
+Wang Xiangxi (Chairman), Jia Jinzhong
+Environment Committee
+Remuneration Committee
+Nomination Committee
+Safety, Health and
+The fifth session of the Board committees
+Audit Committee
+Strategy Committee
+As at the end of the reporting period, the Company has established five committees under
+the Board, and the details are as follows:
+Composition of the committees
+(1)
+Important opinions
+and suggestions
+VI. THE PERFORMANCE OF DUTIES OF THE COMMITTEES UNDER THE BOARD
+DURING THE REPORTING PERIOD
+To consider the proposal on the formulation Agreed
+of Measures for the Administration of
+Strategic Planning of China Shenhua
+To consider the proposal on the adjustment Agreed
+to the Company's investment plan for the
+year 2021
+114 China Shenhua Energy Company Limited
+(1)
+21 April 2021
+To listen to the Company's report on the
+independent financial adviser's opinion letter
+on the Financial Services Agreement and
+KPMG's report on the 2020 management
+proposal
+the renewal of the external auditor for 2021,
+the changes in accounting policies, the
+external donation budget for 2021, etc.;
+To consider the proposals on the Company's Agreed
+financial report for the first quarter of 2021,
+Agreed. China Shenhua
+shall maintain the
+principles of fairness and
+full disclosure during
+the implementation of
+the Financial Services
+Agreement; and shall
+consider the future
+sustainable development
+and strategic planning
+of the Company while
+safeguarding the interests
+of minority shareholders
+when formulating profit
+distribution plans.
+To listen to the Company's report on the
+implementation of the continuing connected
+transaction agreement for 2020 and the
+annual audit work by the auditor KPMG;
+To review the internal audit report of the
+Company for 2020;
+To consider the proposals on the Company's
+2020 internal control audit report, 2020
+internal control evaluation report, 2020
+financial report, 2020 ESG report, 2020 profit
+distribution plan, the report of performance of
+duties of the Audit Committee of the Board
+for 2020, the key points of the Company's
+internal audit for 2021, the capital budget and
+debt financing plan for 2021, and the entering
+into the Financial Service Agreement for 2021
+to 2023 between the Company and China
+Energy Finance Co., Ltd.;
+(2)
+(3)
+(2)
+To consider the proposals on the Company's 2020 Agreed
+financial report (draft), 2020 internal control
+evaluation report (draft), etc.
+Important opinions and
+suggestions
+(1)
+23 March 2021
+16 March 2021
+Meeting content
+Convening date
+In 2021, the Audit Committee convened 6 meetings. All proposals at the meetings
+were approved and all members attended all meetings in person.
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+2021 Annual Report 113
+During the reporting period, the Audit Committee fulfilled its duties strictly in
+accordance with the Rules of Procedure of Meetings of the Audit Committee of the
+Board, Rules on Work of the Audit Committee of the Board and Rules on Work of
+Annual Reports of the Audit Committee of the Board of the Company.
+The principal duties of the Audit Committee are to supervise and assess the work of
+the external audit institutions; to propose to employ or replace the external auditor; to
+supervise and evaluate the effectiveness of the internal audit work; to coordinate the
+internal audit and the external audit; to audit the financial information of the Company
+and its disclosure; to supervise and evaluate the risk management and internal control
+of the Company; and other matters authorized by laws and regulations, the Articles of
+Association and the Board.
+Energy Company Limited (Trial)
+Executed
+Coal Supply Agreement for 2021 to 2023 with China
+Energy and the annual caps for the transactions
+contemplated thereunder for 2021 to 2023
+To approve the Company to enter into the Mutual
+Supplies and Services Agreement for 2021 to 2023
+with China Energy and the annual caps for the
+transactions contemplated thereunder for 2021 to
+2023
+Meeting
+To approve the remuneration package of Directors and
+Supervisors for the year 2020
+Completed
+To approve the profit distribution plan of the Company
+for the year 2020
+Energy Company Limited for the Year 2020
+Status
+To approve the Financial Report of China Shenhua
+To approve the Report of the Supervisory Committee of
+China Shenhua Energy Company Limited for the Year
+2020
+To approve the Report of the Board of Directors of
+China Shenhua Energy Company Limited for the Year
+2020
+2020 Annual
+General
+Meeting
+General Meeting Subject Matter
+(IV) Implementation of resolutions passed at the general meetings by the Board
+Applicable ✓ Not applicable
+(III) Dissenting views of Directors on matters of the Company:
+For the attendance of independent Directors at Board meetings and general meetings,
+please refer to the section of "Performance of duties of the Directors".
+During the reporting period, the Independent Directors of the Company strictly
+complied with the requirements of relevant laws and regulations, the Articles
+of Association of the Company, relevant rules of procedure of meetings and the
+Independent Directors system of the Company. They maintained their independence
+as Independent Directors, performed their functions of supervision, participated in
+the formation of various important decisions of the Company and reviewed regular
+reports and financial reports of the Company. Therefore, the Independent Directors of
+the Company played an important role in the regulated operation of the Company and
+protected the legitimate interests of minority shareholders.
+The Company has received written confirmation from each of the Independent Non-
+Executive Directors confirming their independence. The Company is of the view that
+all of the Independent Non-Executive Directors are independent. The number and
+background of the Independent Directors are in compliance with the requirements of
+the listing rules of the places of listing.
+The fifth session of the Board of the Company has three Independent Non-Executive
+Directors: Yuen Kwok Keung, Bai Chong-En and Chen Hanwen, among whom Chen
+Hanwen is an accounting professional.
+Performance of duties of Independent Directors
+3.
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+110 China Shenhua Energy Company Limited
+In 2021, the Board of Directors of the Company held 5 meetings and considered 46
+resolutions, and disclosed the voting results of all resolutions in a timely manner. If
+the resolution of the Board meeting has any interest in any director or any associate
+of the director, or the director has an associated/connected relationship with the
+enterprise involved in the resolution of the Board meeting, the associated/connected
+director shall abstain from voting. All directors acted in good faith, prudently and
+diligently in the interest of the Company as a whole in the performance of their duties
+and effectively performed their management, operation and decision-making powers
+over the Company.
+The Company safeguards the conditions for directors to carry out their work and
+actively adopts the suggestions and opinions put forward by the directors. The
+Company's "Procedure Rules for the Board" and "Independent Directors System"
+provide institutional guarantees for directors to perform their duties; the departments
+designated to undertake the affairs of the Board, the affairs of independent directors
+and the work of the Independent Board Committee assist directors in carrying out
+research, attending meetings and expressing opinions.
+4/4
+4/4
+To approve the appointment of KPMG Huazhen LLP and
+KPMG as the PRC and the international auditors of
+the Company for the year of 2021, respectively
+To approve the Company to enter into the Financial
+Services Agreement with China Energy Finance Co.,
+Ltd. for 2021 to 2023
+Completed
+For details of remuneration,
+please see the section headed
+"Significant Events" of this
+report
+Executed
+To approve the Company to enter into the Mutual
+2021 First
+Extraordinary
+General
+Class Meeting
+Executed
+To approve the general mandate of the Board to
+repurchase H Shares
+Shareholders
+2021 First H
+Class Meeting
+Executed
+To approve the general mandate of the Board to
+repurchase H Shares
+2021 First A
+Shareholders
+0
+Executed
+of the Company to RMB19,868,519,955 and the
+amendments to the Articles of Association of the
+Company
+Executed
+To approve the reduction of the registered capital
+of the Company
+Executed
+To approve the election of Yang Rongming as Non-
+executive Directors of the fifth session of the Board
+Status
+General Meeting Subject Matter
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+All 3 resolutions were considered
+and approved, please refer to the
+H Share announcement of the
+Company dated 22 October 2021
+or A Share announcement dated 23
+October 2021 for details
+2021 Annual Report 111
+For details, please see the section
+headed "Significant Events" of
+this report
+To approve the general mandate of the Board to
+repurchase H Shares
+All 11 resolutions were considered
+and approved, please refer to the
+H Share announcement of the
+Company dated 27 August 2021 or
+A Share announcement dated 28
+August 2021 for details
+Attendance
+All 19 resolutions were considered
+and approved, please refer to the
+H Share announcement of the
+Company dated 26 March 2021 or
+A Share announcement dated 27
+March 2021 for details
+Expiry of term of
+Commencement
+3. Positions held in other entities
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+105
+2021 Annual Report
+2016-08
+China Energy Finance Co., Non-Executive Director
+Ltd.
+2019-03
+Chairman of the
+supervisory committee
+Xu Shancheng Beijing GD Power
+of China Shenhua
+2019-03
+Vice Chairman
+Beijing GD Power
+Senior Management Huang Qing
+Committee
+Secretary to the Party
+representative) and
+2020-02
+2020-12
+Chairman (legal
+China Energy Fujian
+Energy Co., Ltd.
+Committee
+Secretary to the Party
+representative) and
+Media Center Co., Ltd.
+Name
+2022-02
+Name of other entities
+of term of office
+University
+Policy Research at Tsinghua
+National Center of Fiscal and Tax Director
+University
+Management of Tsinghua
+2004-07
+Professor
+School of Economics and
+University
+Management of Tsinghua
+2018-08
+Dean
+School of Economics and
+Bai Chong-En
+2018-10
+Council Member
+2018-09
+Member
+Commercial Expert Committee
+2018-08
+2018-05
+Senior Counsel
+Member of the International
+Arbitration Centre
+Advisory Committee
+Hong Kong International
+Temple Chambers
+International Commercial Court of
+the Supreme People's Court of
+the People's Republic of China
+Hong Kong Exchange Fund
+Yuen Kwok Keung
+office
+Positions
+Chairman (legal
+National Energy Group
+Zhang
+Changyan
+2021-07
+Chief Economist
+2018-05
+2021-07
+Supervisors of China Luo Meijian
+Shenhua
+GD Power Development
+Co., Ltd.
+Secretary to the Party
+2021-11
+Committee
+All 7 resolutions were considered
+and approved, please refer to the
+H Share announcement of the
+Company dated 23 April 2021 or A
+Share announcement dated 24 April
+2021 for details
+Executive vice president
+2021-12
+Director
+2021-12
+China Energy
+Director of Organization
+2018-06
+2021-11
+and Personnel
+Department (Human
+Resources Department)
+Director of the Materials 2020-03
+Zhou Dayu
+China Energy
+and Procurement
+Supervision
+Department
+Senior Business Officer
+China Energy
+Jia Jinzhong
+Transportation Industry
+Department
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+2.
+Coordination
+Positions held in the shareholders of the Company
+Category
+Name
+Name of shareholder
+Positions
+Commencement
+of term of office
+Expiry of term of
+office
+Directors of China
+Shenhua
+Wang Xiangxi China Energy
+2008-08
+Chairman and Secretary
+to the Leading Party
+Members' Group
+Yang Jiping
+China Energy
+Director of Operating
+2019-08
+2020-03
+Management Centre of
+Coal Industry
+China Energy
+Director of Operating
+2019-12
+2020-03
+Management Centre of
+2019-03
+Society of Public Finance of China Vice President of the Tenth
+Job change
+Session and a Member of the
+The Company has entered into service contracts with all of its Directors and Supervisors.
+None of the Directors or Supervisors has entered into or proposed to enter into any service
+contract with members of the Group which cannot be terminated by the Group within one
+year without any compensation (other than the statutory compensation). The Company
+has maintained appropriate liability insurance for its Directors, Supervisors and senior
+management. Directors of the Company are entitled to be indemnified for the verification
+and inspection costs, individual investigation costs, tax liabilities and loss prevention
+expenses incurred by or relating to the execution and performance of duties subject to
+the applicable laws and under the coverage of directors liability insurance taken out by the
+Company for the Directors. These provisions are valid during the period ended 31 December
+2021 and remain to be valid as at the date of this report.
+All the Directors and Supervisors have provided relevant training records to the Company
+and have participated in training programs in accordance with relevant requirements by
+regulatory authorities. The Secretary to the Board of the Company has participated in
+training programs for more than 15 hours in accordance with relevant requirements.
+The securities transactions of the Directors of the Company have been carried out in
+accordance with the "Model Code for Securities Transactions by Directors of Listed Issuers"
+(the "Model Code") set out in Appendix 10 of the Hong Kong Listing Rules. The Model
+Code is also applicable to the Supervisors and senior management of the Company. The
+Directors, Supervisors or senior management have confirmed that they have fully complied
+with the Model Code in 2021 or during their respective terms of office.
+As of 31 December 2021, none of the Directors, Supervisors or chief executives of the
+Company held any shares of the Company, nor did they have any interest or short position
+in the shares or underlying shares of the Company or of any of its associated corporations
+within the meaning of Part XV of the SFO (Chapter 571 of the Laws of Hong Kong) required,
+pursuant to section 352 of the SFO, to be recorded in the register which shall be kept by
+the Company, or to be notified to the Company and the HKEx pursuant to the Model Code
+for Securities Transactions by Directors of Listed Issuers.
+During the reporting period, none of the Directors, Supervisors and senior management of
+the Company held shares of the Company, and none of the change in shareholding of the
+Company shall be disclosed pursuant to the Administrative Rules Concerning the Holding
+and Change of Shares held by Directors, Supervisors and Senior Management of A Listed
+Company promulgated by the CSRC.
+(VI) OTHERS
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+2021 Annual Report 107
+Applicable ✓ Not applicable
+(V) SANCTION FROM SECURITIES REGULATORY AUTHORITIES IN THE LAST THREE
+YEARS
+Yang Xiangbin has served as the Deputy Secretary of the Party Committee of the Company
+since April 2021. Yang Suping resigned as member of the Party Committee and the
+Secretary to the Disciplinary Committee of the Company since August 2021. Cui Weishan
+has served as member of the Party Committee and the Secretary of the Disciplinary
+Committee of the Company since November 2021.
+Appointed by the tenth meeting of the
+fifth session of the Board
+Appointed
+Resigned
+Executive Director and
+Chief Executive Officer
+Chief Executive Officer
+Yang Jiping
+Lv Zhiren
+Elected by the 2020 Annual General
+Meeting
+Appointed by the sixth meeting of the
+fifth session of the Board
+Elected
+Non-Executive Director
+Yang Rongming
+Executive Vice President Appointed
+Li Zhiming
+Reason for the change
+Particulars
+of changes
+Position
+Name
+108 China Shenhua Energy Company Limited
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Other than their working relationships in the Company, none of the Directors, Supervisors
+or senior management has any financial, business or family relationship or any relationship
+in other material aspects with each other. As of 31 December 2021, the Company had
+not granted any equity securities or warrants to its directors, supervisors and senior
+management or their respective spouses or children under the age of 18.
+2019-10
+Name
+No.
+Date
+1
+The 6th meeting of the
+fifth session of the
+Board
+26 March 2021
+2
+The 7th meeting of the
+fifth session of the
+Board
+23 April 2021
+3
+The 8th meeting of the
+fifth session of the
+Board
+27 August 2021
+(IV) CHANGES OF DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT OF THE
+COMPANY
+Methods
+On-site with
+correspondence
+On-site with
+correspondence
+On-site with
+correspondence
+correspondence
+In 2021, the Board of the Company held a total of 5 meetings, at which all the proposals
+were considered and approved. Details of the meetings are as follows:
+5005
+Number of meetings held on-site with correspondence
+Number of meetings held by correspondence
+Including: Number of meetings held on-site
+Number of Board meetings held during the year
+Board Meetings
+(I)
+V. BOARD OF DIRECTORS
+Meeting Resolutions
+Please refer to "Changes in shareholding and remuneration
+of Directors, Supervisors and senior management" in this
+section
+When considering any matters or transactions at any board meeting, the Directors
+are required to declare any direct or indirect interests and recluse themselves where
+appropriate. Saved as their own service contracts, the Financial Service Agreement for
+2021-2023 signed on 26 March 2021, the Mutual Coal Supply Agreement for 2021-2023
+and the Mutual Supplies and Services Agreement for 2021-2023, signed between the
+Company and China Energy on 27 August 2021, and the related/connected transactions with
+the controlling shareholder China Energy and its subsidiaries disclosed by the Company,
+none of the Directors and Supervisors of the Company has any material personal interests,
+directly or indirectly, in material contracts, transactions or arrangements entered into by the
+Company or any of its subsidiaries in 2021 and subsisting during or at the end of the year;
+The directors and Supervisors of the Company have confirmed that they and their associates
+have not entered into any connected transaction with the Company and its subsidiaries.
+The remuneration package of senior management of the
+Company was formulated by the Company in accordance
+with relevant provisions on the administration of the
+annual remuneration of the senior management and
+annual performance assessment.
+Chair Professor
+2018-11
+Independent Director
+Academy, Dalian
+Pharmaceutical Co., Ltd.
+China Business Executives
+Beijing Tri-Prime Gene
+2019-06
+External Supervisor
+Bank of Communications Co.,
+Ltd.
+Co., Ltd.
+Independent Director
+Shenwan Hongyuan Securities
+Professor and Doctoral Supervisor 2021-07
+2013-01
+Nanjing Audit University
+Committee
+Association
+2021-06
+2014-06
+Member of the Executive
+International Economic
+Economics
+2016-11
+Vice President
+Please refer to "Changes in shareholding and remuneration
+of Directors, Supervisors and senior management" in this
+section
+China Association of Labour
+Academic Committee of the
+Council
+Chen Hanwen
+China Auditing Society
+2021-05
+2005-07
+The remuneration package of relevant Directors and
+Supervisors was proposed by the Company in accordance
+with international and domestic practices and with
+reference to the remuneration of directors and supervisors
+of large-scale listed companies in China.
+The remuneration package of Directors and Supervisors
+of the Company was submitted to the general meeting
+for approval after consideration and approval by the
+Remuneration Committee of the Board and the Board,
+and the remuneration package of senior management was
+submitted to the Board for approval after consideration
+and approval by the Remuneration Committee of the
+Board.
+Total remuneration actually
+obtained as at the end of the
+reporting period
+Executive Director
+Actual payment of
+Basis for determination
+Decision-making procedures
+(III) REMUNERATION OF DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+106 China Shenhua Energy Company Limited
+2021-01
+2018-01
+Independent Director
+of University of International
+Business and Economics
+Xiamen Bank Co., Ltd.
+remuneration
+2018-01
+2021-07
+International Business School
+2015-06
+2021-07
+the Accounting Department
+of University of International
+Business and Economics
+University of International
+Business and Economics
+International Business School
+2017-05
+2021-07
+Huiyuan
+First-level Professor
+Distinguished Professor of
+Professor and Doctoral Tutor of
+The Supervisory Committee is of the opinion that the Board and the management of the
+Company have acted in strict accordance with the Company Law, the Articles of Association
+and relevant regulations of the jurisdiction where the Company is listed, performed their
+duties with integrity and diligence and conscientiously implemented the resolutions of, and
+exercised the power granted by the general meetings; and that the decisions and operations
+are in compliance with the laws and regulations and the Articles of Association. During
+the reporting period, the Supervisory Committee is not aware of any act committed by the
+Board and the management of the Company during their performance of duties which were
+in breach of laws, regulations and the Articles of Association or prejudicial to the interests
+of the Company.
+The Supervisory Committee is of the opinion that the financial statements of the Company
+give an objective, true and fair view of the financial position and the operating results of the
+Company in all material aspects and are true and reliable with its regulated financial audit
+and sound internal control system. The financial report for 2021 has been audited by KPMG
+Huazhen LLP and KPMG in accordance with China Accounting Standards for Business
+Enterprises and International Financial Reporting Standards, each of whom had issued a
+standard unqualified audit report.
+2021 Annual Report 121
+(III) INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON THE
+FINANCIAL POSITION OF THE COMPANY
+Passed
+unanimously
+Passed
+unanimously
+Quarterly Report of China
+Shenhua Energy Company
+Limited
+(II)
+Proposal of the 2021 Third
+Quarterly Financial Report
+of China Shenhua Energy
+Company Limited
+Proposal of the 2021 Third
+Supervisory
+Committee
+INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON THE LAWFUL
+OPERATION OF THE COMPANY
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+There were no major acquisition and disposal of assets of the Company.
+After careful review of the connected transactions of the Company in 2021, the Supervisory
+Committee is of the opinion that all:
+In 2021, under the influence of the macro environment, the market price and the supply
+of coal have increased significantly. In order to fulfill its social responsibilities as a listed
+company and to meet the requirements of the State to ensure supply, the Company faced
+challenges brought by the conflict between the constraints of the annual cap on coal
+supply to the China Energy by the Company in 2021 and the soaring coal supply and price.
+However, the Company strictly implemented the pricing principle of the Mutual Coal Supply
+Agreement, and did not reduce the selling price of coal to the China Energy in order to
+avoid reaching the 2021 annual cap, and the final transaction amount in 2021 increased to
+RMB96.776 billion. The Company has achieved good financial returns and ensured that the
+interests of the minority shareholders of the Company were not damaged while ensuring
+the supply. In this regard, the Company has convened the Board meeting for consideration
+and approval as well as making disclosure, which shall be subject to submission to the
+general meeting for consideration and approval.
+Save as mentioned above, connected transactions in relation to China Energy, finance
+company and connected transactions in which GD Power Development Co., Ltd., China
+Longyuan Power Group Corporation Limited, China Energy Group Capital Holdings Limited
+and Guoneng (Beijing) Private Equity Fund Management Co., Ltd. jointly established a
+fund, are necessary for the routine operation of the Company. The relevant considerations
+are in accordance with prevailing market principle and the transactions are carried out in
+strict compliance with the principles of fairness, equality and openness under the statutory
+decision-making procedures. The connected transactions carried out are in accordance with
+the applicable rules and requirements of the listing rules, and the disclosure of information is
+standardized and transparent. The Supervisory Committee is not aware of any act prejudicial
+to the interest of the Company.
+(V) INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON THE MAJOR
+ACQUISITION AND DISPOSAL OF ASSETS OF THE COMPANY
+VIII. EMPLOYEES
+(VI) INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON THE SELF-
+ASSESSMENT REPORT ON INTERNAL CONTROL OF THE COMPANY
+The self-assessment report on internal control of the Company has truthfully reflected the
+establishment and implementation of the internal control of the Company and its internal
+control system is sound and effective.
+(VII) INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON THE
+ESTABLISHMENT AND IMPLEMENTATION OF THE MEASURES ON INSIDER
+MANAGEMENT
+The insider management system of the Company is sound and comprehensive, effective in
+its implementation and able to keep all insider information confidential.
+The Supervisory Committee of the Company will continue to perform its duties with due
+care to facilitate the standardized operation of the Company and to safeguard the lawful
+interests of the Company and its shareholders in strict compliance with the Company Law
+and the Articles of Association.
+122 China Shenhua Energy Company Limited
+of the
+(IV) INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON CONNECTED
+TRANSACTIONS OF THE COMPANY
+session
+of China Shenhua Energy
+Company Limited
+meeting
+(1)
+session
+of the
+Supervisory
+Committee
+Proposal of change of accouting
+policy of the Company
+Proposal of the 2021 First
+Passed
+unanimously
+Passed
+unanimously
+The sixth
+meeting
+27 August
+Beijing
+On-site
+All
+of the fifth
+session
+Quarterly Report of China
+Shenhua Energy Company
+Limited
+Proposal of the 2021 Interim
+Financial Report of China
+Shenhua Energy Limited
+Proposal of the 2021 Interim
+Passed
+unanimously
+of the
+Supervisory
+Report of China Shenhua
+Passed
+unanimously
+Energy Company Limited
+Committee
+The seventh
+22 October Beijing
+On-site
+All
+of the fifth
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+124 China Shenhua Energy Company Limited
+Number of current employees of the headquarter of the Company (number
+of person)
+584
+4,758
+77,872
+Number
+of person
+3,496
+32,366
+20,354
+8,707
+12,949
+77,872
+2021 Annual Report 123
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+(II)
+Remuneration policy
+The Company has formulated a remuneration policy comprising salary and performance
+assessment. The remuneration policy is competitive within the industry and is favoring the
+frontline employees.
+(III) Training program
+The Company has established a training system with different levels and channels to
+provide the employees with appropriate training in job skills, safe production and group
+management etc. During 2021, the accrued capital used for training was approximately
+RMB226 million. The number of attendances in training was approximately 1.1950 million
+with training hours of approximately 8.0528 million hours aggregate. For details, please
+refer to the 2021 ESG Report of the Company.
+(IV) Outsourced Work in 2021
+Total number of working hours of outsourced work
+Total remuneration paid for outsourced work
+107.24 million hours
+RMB4,537 million
+IX. PROFIT DISTRIBUTION POLICY DURING THE REPORTING PERIOD
+(I)
+Formulation, implementation or adjustment of cash dividend policy
+In accordance with the requirements of the relevant laws and regulations and the Articles
+of Association, the profit distribution policy of the Company shall maintain continuity and
+stability and take full consideration of achieving reasonable returns for investors. The
+Company shall give priority to profit distribution in cash dividends. The profit distribution
+policy of the Company complies with the Opinions of the State Council on Further Improving
+the Quality of Listed Companies(《國務院關於進一步提高上市公司品質的意見》) and the
+Guideline on Encouragement of Cash Dividend Distribution of Listed Companies announced
+by the CSRC.
+Pursuant to the Articles of Association, the profit distribution of the Company shall be
+made based on the profit for the year attributable to equity holders of the Company in
+the consolidated financial statements prepared under the China Accounting Standards for
+Business Enterprises and the International Financial Reporting Standards, whichever is
+lower. Annual profit distribution in cash shall be no less than 35% of the net profit for the
+year attributable to equity holders of the Company subject to the relevant conditions.
+In order to implement the Securities Law of the PRC, strengthen the protection of investors'
+legitimate rights and interests, and respond to the demands of investors, especially minority
+shareholders, as approved on the 2019 AGM of the Company and in line with the Article of
+Association, the profit distributed by the Company in cash from 2019 to 2021 shall not be
+less than 50% of the net profit attributable to shareholders of the Company realized in that
+year.
+of the fifth
+8,809
+Employees as at the end of 2021
+2,619
+12,811
+223
+Number of current employees of the branches/subsidiaries of the Company
+(number of person)
+77,649
+Total number of current employees of the Group (Number of person)
+Number of retired employees in respect of which the Company and
+subsidiaries bore cost (number of person)
+Function
+77,872
+12,640
+Category of Function
+Operation and repair
+Management and administration
+Finance
+Research and development
+Technical support
+Sales and marketing
+Others
+Total
+Education Level
+Category of Education Level
+Postgraduate and above
+University graduate
+College graduate
+Specialized secondary school graduate
+Graduate of technical school, high school and below
+Total
+Number
+of person
+46,754
+1,537
+unanimously
+PERFORMANCE OF DUTIES OF THE SUPERVISORY COMMITTEE
+Proposal of the 2021 First
+Quarterly Financial Report
+Remuneration Committee
+The principal duties of the Remuneration Committee are to make recommendations
+to the Board on formulation of the remuneration plan or proposal for Directors,
+Supervisors, Chief Executive Officer and other senior management, including but not
+limited to the criteria, procedures and the major systems of performance assessment,
+key incentive and punishment plans and systems; to study the assessment standards
+for Directors, supervisors, Chief Executive Officer and other senior management, and
+examine the performance of duties by Directors, supervisors, Chief Executive Officer
+and other senior management of the Company and carry out annual performance
+assessment on them; to supervise the implementation of the remuneration system
+of the Company, review and approve the remuneration determined by performance in
+accordance with the Company's objectives determined by the Board; to exercise the
+following duties as authorized by the Board: to determine the specific remuneration
+of all the Executive Directors, Supervisors, Chief Executive Officer and other senior
+management, including non-monetary benefits, pension rights and compensation;
+to review and approve the payment of compensation to Executive Directors,
+supervisors, Chief Executive Officer and other senior management in relation to
+the loss or termination of their duties or appointment, so as to ensure that such
+compensation is determined in accordance with the related terms of the contract;
+to review and approve the compensation arrangements involved in the dismissal
+or removal of Directors due to their improper conduct, so as to ensure that such
+arrangements are determined in accordance with the related terms of the contract;
+to make recommendations to the Board on the remuneration of the Non-Executive
+Directors; to ensure that none of the Directors or any of their associates determines
+their own remunerations; and to execute other matters as authorized by the Board.
+In 2021, the Remuneration Committee held 1 meeting by way of consideration in
+writing. All proposals at the meeting were approved and all members attended the
+meeting. During the reporting period, the Remuneration Committee reviewed the
+remuneration management system of the Company and the remuneration level
+for Directors, Supervisors and senior management for the relevant period. The
+Remuneration Committee is of the view that the Company has established a relatively
+complete remuneration management system, which embodies the value concept of
+listed companies centered on economic benefits as well as the political, social and
+economic responsibilities of state-owned holding companies. The Remuneration
+Committee agrees to various remuneration management system of the Company.
+Date
+15 March 2021
+Meeting content
+Important opinions
+and suggestions
+To consider proposals on the remuneration Agreed
+of Directors, Supervisors and senior
+management of the Company for the
+year 2020 and the performance of duties
+of the Remuneration Committee of the
+Board for the year 2020
+2021 Annual Report 117
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+4.
+3.
+Nomination Committee
+In 2021, the Nomination Committee held 3 meetings by way of consideration in
+writing. All proposals at the meetings were approved and all members attended all
+meetings.
+Date
+23 March 2021
+23 August 2021
+27 December 2021
+118 China Shenhua Energy Company Limited
+Meeting content
+To consider the proposals on the
+appointment of Li Zhiming as Deputy
+General Manager of the Company and
+the nomination of Yang Rongming as
+the candidate for Non-executive Director
+of the fifth session of the Board of the
+Company
+Important opinions
+and suggestions
+Agreed
+To consider the proposal on the nomination Agreed
+of members of the Safety, Health and
+Environment Committee of the fifth
+session of the Board
+To consider the proposals on the
+appointment of Lv Zhiren as the Chief
+Executive Officer of the Company and the
+nomination of Lv Zhiren as the candidate
+for Executive Director of the fifth session
+of the Board of the Company
+The principal duties of the Nomination Committee are to formulate the Board diversity
+policy, regularly review the structure, size and diversity of the Board, and to make
+recommendations to the Board with regard to any proposed changes; to assess
+and verify the independence of independent Non-Executive Directors; to develop
+standards, procedures and systerms for selection of Directors, Chief Executive Officer
+and other senior officers, and make recommendations to the Board, taking into
+account the Company's corporate strategy and the combination of skills, knowledge,
+experience and diversity needed in the future; to extensively seek for qualified
+candidates of Directors, Chief Executive Officer and other senior management; to
+examine the aforementioned candidates and make recommendations; to nominate
+candidates for members of the Board Committees (other than members of the
+Nomination Committee and the Chairman of any Board Committee); to draft
+development plans for Chief Executive Officer, other senior management and key
+reserve talents; to review the board diversity policy where appropriate, and review
+the quantitative objectives set up by the Board to implement the Board diversity
+policy and their progress of achievement, as well as to disclose the results of review
+in the Corporate Governance Report annually; to make recommendations to the Board
+on the appointment or re-appointment of Directors, general managers and other
+senior management and succession planning; and to carry out any other matters as
+authorized by the Board.
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+116 China Shenhua Energy Company Limited
+The Audit Committee discussed separately with the external auditors and no
+inconsistency was found in the briefings by the management.
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Convening date
+18 June 2021
+24 August 2021
+(1)
+Meeting content
+To review the Company's interim review work plan
+for the year 2021
+To consider the proposals on the Company's
+semi-annual financial report for 2021, the
+signing of the Mutual Coal Supply Agreement
+for 2021 to 2023 and the Mutual Supplies
+and Services Agreement for 2021 to 2023,
+entered into between the Company and
+China Energy, participating in the investment
+in the establishment of the Guoneng Green
+and Low-Carbon Development Investment
+Fund, and the work plan for internal control
+evaluation for 2021;
+Important opinions and
+suggestions
+Agreed
+Agreed. It is recommended
+that China Shenhua
+establish a management
+system related to
+fund investments to
+effectively prevent risks
+in fund operations.
+(2)
+To review the internal audit report of the
+Company for the first half of 2021;
+(3)
+18 October 2021
+(1)
+(2)
+During the process of reappointing auditors for 2021 and 2022, the Audit
+Committee carefully considered the relevant resolutions, evaluated KPMG's
+performance of duties in 2020 and 2021, and reviewed relevant integrity
+records and qualification certificates. The Audit Committee believes that KPMG
+has the professional ability, experience and qualifications to provide audit
+services for the Company, has the corresponding investor protection ability and
+independence, maintains an independent, objective and prudent professional
+attitude in the audit work, has standardized and effective audit procedures,
+which enables to meet the Company's annual audit work requirements. The
+Audit Committee agreed that KPMG continues to serve as the auditor of the
+Company, and recognized the annual audit fee.
+On 22 March 2022, the Audit Committee listened to KPMG's report on the audit
+work in 2021, and discussed the scope of audit work and audit procedures,
+key audit matters and key concerns, auditor independence and other matters
+that require management attention; reviewed the 2021 financial statements
+and internal control audit report, and assessed the effectiveness of the internal
+control over financial statements; reviewed the report on internal control and
+the ESG report for the year 2021 and agreed to submit such reports to the
+Board for consideration.
+On 16 March 2022, the Audit Committee reviewed the 2021 Assessment
+Report on Internal Control (Draft) and 2021 Financial Statements (Draft) of China
+Shenhua prepared by the Company.
+On 24 August 2021, the Audit Committee reviewed the internal control
+assessment plan for the year 2021; on 18 October 2021, the Audit Committee
+reviewed the Company's plans for the audit work for the year 2021 and
+determined the schedule of the Company's 2021 audit.
+(4)
+(3)
+Agreed
+(2)
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+2021 Annual Report 115
+Agreed. China Shenhua
+shall do a good job
+of asset evaluation
+for the part that the
+debtor repays with
+assets, so as to be
+scientifically sound and
+to ensure the interests
+of the Company to the
+maximum extent.
+To listen to the Company's reports on important
+accounting estimates and judgments, the
+supervision and implementation of matters
+reflected in the 2020 management proposal,
+the evaluation of the Company's internal
+control, and KPMG's report on the 2021 audit
+work plan
+To consider the proposals on the Company's
+financial report for the third quarter of 2021
+and the capital increase to China Energy
+Xinshuo Railway Co., Ltd.;
+To listen to KPMG's report on the interim
+review
+(1)
+5.
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Safety, Health and Environment Committee
+Proposal of the 2020 Financial
+Report of China Shenhua
+Energy Company Limited
+Proposal of the 2020 Profit
+Distribution Plan of China
+Shenhua Energy Company
+Limited
+Proposal of the 2020 Annual
+Report of China Shenhua
+Energy Company Limited
+Proposal of the 2020 ESG
+Report of China Shenhua
+Proposal of the 2020
+Passed
+unanimously
+Passed
+unanimously
+Passed
+unanimously
+Passed
+unanimously
+Energy Company Limited
+Assessment Report on Internal
+Control of China Shenhua
+Energy Company Limited
+Proposal of the 2020
+Supervisory Committee's
+Report of China Shenhua
+Energy Company Limited
+Passed
+unanimously
+Passed
+unanimously
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+meeting
+All
+On-site
+Beijing
+23 April
+The fifth
+Poll results
+Poll results
+meeting
+Venue
+Date
+Meeting
+Attendance of
+Method of
+Supervisors Subject matter
+Passed
+China Shenhua Energy Company Limited
+of the
+Supervisory
+Committee
+The principal duties of the Safety, Health and Environment Committee are to
+supervise the implementation of safety, health, environmental protection and ESG
+working plans of the Company; to make recommendations to the Board or the Chief
+Executive Officer on material issues in respect of safety, health, environmental
+protection and ESG working of the Company, including but not limited to employee
+development, climate change, biodiversity and water resources management; to
+inquire into the material incidents and responsibilities regarding the Company's
+production, operations, property assets, staff or other facilities, as well as to review
+and supervise the resolution of such incidents; to review the Company's annual ESG
+report; to review the Statement of the Board disclosed in the Company's annual
+ESG report; to supervise and review the identification, evaluation and management
+process of the matters related to the Company's ESG activities and the progress of
+related objectives; and other issues as authorized by the Board.
+In 2021, the Safety, Health and Environment Committee held 2 meetings by way
+of consideration in writing. All proposals at the meetings were approved and all
+members attended all meetings.
+Date
+23 March 2021
+24 May 2021
+Meeting content
+To consider the proposal on the
+amendments to the Rules of Procedures
+of Meetings of the Safety, Health and
+Environmental Committee of the Board
+of China Shenhua Energy Company
+Limited and the proposal on the 2020
+ESG Report of China Shenhua Energy
+Company Limited
+Important opinions
+and suggestions
+Agreed
+To consider the proposals on ESG work of Agreed
+the Company and key points of work for
+the year 2021
+2021 Annual Report 119
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+VII. SUPERVISORY COMMITTEE'S REPORT
+The Supervisory Committee of the Company had, based on the attitude of being responsible to all
+shareholders, performed their supervisory duties faithfully and carried out their work proactively
+and effectively to protect the lawful interests of the Company and its shareholders in accordance
+with the relevant requirements under the Company Law of the People's Republic of China and the
+Articles of Association.
+(1)
+During the reporting period, in compliance with the requirements of the Articles of
+Association and the Rules of Procedures of Meetings of the Supervisory Committee,
+the Supervisory Committee of the Company conducted strict supervisions on the
+lawful operations, financial position and the performance of duties of the Board and the
+management of the Company, and did not have any dissenting view over the matters
+supervised by the Supervisory Committee during the reporting period.
+session
+of the fifth
+meeting
+All
+On-site
+26 March Beijing
+120
+The fourth
+Attendance of
+Method of
+meeting
+Venue
+Date
+Meeting
+In 2021, the Supervisory Committee of the Company held four meetings in total.
+Supervisors Subject matter
+The Audit Committee has performed required procedures for the preparation of the
+2021 annual report and internal control report of the Company:
+(2)
+3,675
+2,632.36
+22.3
+1,024
+1,842.65
+10.74
+495
+×3× 838 833 832 233 234 235
+Shendong Power
+Dianta Power Plant of
+Mengjin Power
+Huizhou Thermal
+Power Co., Ltd.
+4 Each unit has one
+discharge port.
+Guoneng Chongqing
+Wanzhou Electric
+Power Plant
+Sichuan Energy Jiangyou SO,
+SO,
+Dingzhou Power
+NO
+Cangdong Power
+off gas of the sulfur
+recovery facilities.
+port is set for the
+a separate discharge
+discharge port, and
+100
+100
+NO
+Organised continuous
+discharge
+Soot
+1.68
+149
+100
+0
+521.86
+1.76
+Soot
+100
+discharge
+100
+0
+Organised continuous
+4 Each unit has one
+discharge port.
+2,591.87
+23.04
+957
+NOX
+1,814.31
+10.6
+483
+100
+0
+99.92
+0
+100
+0
+O O O
+292.06
+100
+888
+0
+0
+22.32
+950
+8¾× 838
+Baotou Coal Chemical
+Ltd.
+Power Generation Co., NOX
+Guoneng Shenfu (Shishi) SO,
+(%)
+hours
+(tonne/year)
+(mg/Nm3)
+(tonnes)
+facilities
+emissions
+Discharge method
+prevention
+Excessive
+Number of
+discharge Distribution of
+ports discharge ports
+Emissions
+concentration
+Emissions
+Average
+emission Total approved
+Total
+Major
+pollutant
+Company
+Section VI Environmental and Social Responsibility (Continued)
+134
+1,944
+31.86
+45.76
+2 Each unit has one
+discharge port.
+intermittent discharge
+thermoelectric boiler
+system shares one
+428.75
+5.92
+Soot
+1,451.39
+45.43
+505
+NOX
+0
+Organised continuous or
+2 The flue gas of the
+2,810.22
+16.54
+239
+100
+3
+309
+4.41
+186
+Soot
+99.91
+0
+discharge
+100
+0
+Organised continuous
+3,675
+2,427
+381
+81.91
+0
+Organised continuous
+1 The units share one
+discharge port.
+1,474.02
+30.57
+319
+NOX
+1,031.81
+15.22
+156
+SO,
+100
+100
+100
+888
+308
+0
+discharge
+0
+Organised continuous
+2 Each unit has one
+discharge port.
+៩៖
+2.65
+Soot
+1,542
+40.07
+810
+100
+NOX
+discharge
+99.86
+China Shenhua Energy Company Limited
+100
+100
+888
+192.50
+1.25
+Soot
+0
+discharge
+0
+Organised continuous
+2 Each unit has one
+discharge port.
+1,925
+31.2
+966
+NOX
+1,347.50
+13.4
+418
+38
+SO,
+Shouguang Power
+100
+294.80
+2.77
+23
+Soot
+3
+2021 Annual Report 133
+1,079
+437
+0
+Organised continuous
+2 Each unit has one
+discharge port.
+1,500
+41.23
+1,000
+20.36
+716
+ផទី៩
+Soot
+1,428
+NOX
+SO,
+100
+0
+383
+9.74
+44
+Soot
+99.88
+11
+discharge
+100
+0
+Organised continuous
+1 The units share one
+discharge port.
+1,320
+97.91
+22.18
+discharge
+2.37
+SO,
+100
+100
+888
+0
+71.65
+1.3
+22
+100
+0
+discharge
+0
+Organised continuous
+1 The units share one
+discharge port.
+716.46
+38.91
+660
+ន8
+Soot
+NOX
+501.52
+26.9
+454
+SO,
+100
+0
+200
+72.6
+discharge port.
+Operation rate
+of pollution
+100
+Computershare
+Monday, 20 June
+4:30 p.m. on
+Tuesday, 21 June Friday, 24 June
+2022
+2022
+Attending and voting at
+the 2021 annual general
+meeting
+1
+The Company's
+share registrar
+for H shares
+The last day
+for registering
+members
+Last Day
+(inclusive)
+First Day
+(inclusive)
+Corresponding Rights
+No.
+Hong Kong
+Temporary closure of the register of members
+According to the relevant regulations of China Securities Depository and
+Clearing Corporation Limited Shanghai Branch and market practice adopted for
+final dividend distribution for A shares, the Company will publish a separate
+announcement on implementation of equity distribution in respect of the
+distribution of final dividend for the year 2021 to holders of A shares after the
+2021 annual general meeting to determine the record date, ex-rights date and
+dividend distribution date for the distribution of final dividend for the year 2021
+to holders of A shares.
+Pursuant to the Articles of Association:
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+6.
+5.
+4.
+126 China Shenhua Energy Company Limited
+In accordance with the preliminary arrangement of profit distribution plan for year
+2021 and the 2021 annual general meeting of the Company, the final dividend for
+the year 2021 for the Company's H shareholders is estimated to be distributed on or
+about 24 August 2022.
+The final dividend for the year 2021, which is denominated and declared in RMB,
+will be paid in RMB to holders of the Company's A shares, including holders of the
+Company's A shares through the Northbound Trading Link of the Shanghai-Hong
+Kong Stock Connect, hereinafter referred to as the "Northbound Shareholders", and
+holders of the Company's H shares through the Southbound Trading Link (including
+Shanghai and Shenzhen markets, hereinafter referred to as the "Southbound
+Shareholders"). Dividends to holders of the Company's H shares, except the
+Southbound Shareholders, are paid in HKD. The dividend paid in HKD is calculated
+according to the exchange rate based on the average benchmark rate of RMB against
+HKD, as published by the Bank of China five business days preceding the date of
+declaration of such dividend.
+The above final dividend plan for the year 2021 is in compliance with the requirement
+of the Articles of Association and endorsed by the Independent Directors and
+approved by the Board. When recommending the plan for the year 2021, the Board
+has attended to and considered the opinions and concerns of the shareholders of
+the Company. The Company will hold the 2021 annual general meeting on Friday, 24
+June 2022 to consider the relevant resolutions, including the above dividend plans as
+proposed by the Board.
+3.
+2.
+The arrangement of temporary closure of the register of members of H shares of
+the Company:
+57.9
+2022
+Limited
+The Company assumes no responsibility arising from any delayed or inaccurate
+determination of the status of the shareholders or any dispute over the mechanism
+of withholding. Shareholders should consult their tax advisers regarding China's
+mainland. Hong Kong and other tax implications of owning and disposing of the
+Company's H shares.
+According to the relevant provisions under the "Notice of MOF, SAT and CSRC
+on the Tax Policies for Shanghai-Hong Kong Stock Connect Pilot Programme" (Cai
+Shui [2014] No. 81) and the "Notice of MOF, SAT and CSRC on the Tax Policies for
+Shenzhen-Hong Kong Stock Connect Pilot Programme" (Cai Shui [2016] No. 127)
+under the Ministry of Finance, State Administration of Taxation of China and CSRC,
+the Company shall withhold individual income tax at the rate of 20% with respect to
+dividends received by individual investors in China's mainland for investing in H-shares
+listed on the HKEx through Shanghai-Hong Kong Stock Connect and Shenzhen-Hong
+Kong Stock Connect. The dividends and bonuses earned by securities investment
+funds in China's mainland investing in shares listed on the HKEx through Shanghai-
+Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect shall be withheld
+on a individual income tax basis. The Company is not required to withhold income tax
+on dividends derived by enterprise investors in China's mainland, and such enterprises
+shall report the income and make tax payment by themselves. The record date and
+the relevant arrangements of dividend distribution for Southbound Shareholders are
+the same as that of the Company's shareholders of H shares.
+10.
+9.
+Corporate Governance Report (Continued)
+Section V Corporate Governance and
+128 China Shenhua Energy Company Limited
+With respect to the Southbound Shareholders, according to the relevant requirements
+of China Securities Depository and Clearing Corporation Limited, China Securities
+Depository and Clearing Corporation Limited Shanghai Branch and Shenzhen Branch
+shall receive cash dividends distributed by the Company as the nominee of the
+Southbound Shareholders for Shanghai market and Shenzhen market, respectively
+and distribute such cash dividends to the relevant Southbound Shareholders through
+its depository and clearing system.
+The Company shall use the registered address (hereinafter referred to as "registered
+address") as recorded in the register of members of H shares on 8 July 2022 as
+the criterion in determining the residence of the individual shareholders of H shares
+who are entitled to receive the final dividend for the year 2021 of the Company,
+and withhold and pay individual income tax accordingly. If the residence of the
+individual shareholders of H shares is inconsistent with the registered address, such
+shareholders shall notify the Company's share registrar for H shares at or before
+4:30 p.m. on 30 June 2022 with the relevant evidence at Computershare Hong Kong
+Investor Services Limited of 17M Floor, Hopewell Centre, 183 Queen's Road East,
+Wan Chai, Hong Kong.
+If the individual shareholders of the H shares who are Hong Kong or Macau residents
+or residents of the countries which have an agreed tax rate of 10% with China,
+the Company shall withhold individual income tax at a rate of 10%. If the individual
+shareholders of the H shares are residents of countries which have an agreed tax rate
+of less than 10% with China, the Company shall withhold individual income tax on
+behalf of them in accordance with relevant provisions required by the Announcement
+of the State Taxation Administration in relation to the Administrative Measures on
+Preferential Treatment Entitled by Non-resident Taxpayers under Tax Treaties (No.
+35 Announcement of the State Taxation Administration in 2019). If the individual
+shareholders of the H shares are residents of countries which have an agreed tax rate
+of over 10% but less than 20% with China, the Company shall withhold the individual
+income tax on behalf of them at the agreed actual rate. In case the individual
+shareholders of the H shares are residents of countries which have not entered into
+any tax agreement with China, or the agreed tax rate with China is 20% or otherwise,
+the Company shall withhold the individual income tax at a rate of 20%.
+According to Guo Shui Han [2011] No. 348 issued by the State Taxation Administration,
+the Company shall distribute cash dividends to the individual shareholders whose names
+appear on the register of members for H shares, and has obligations to withhold and
+pay individual income tax for dividend payable. The individual shareholders of H shares
+are entitled to the relevant preferential tax treatment pursuant to the provisions in the
+tax agreements entered into between their countries of residence and China or the tax
+arrangements between China's mainland and Hong Kong (Macau).
+8.
+Investor Services
+100
+127
+2021 Annual Report
+In accordance with the provision of Enterprise Income Tax Law of the PRC and its
+implementation regulations and the State Taxation Administration of the PRC (Guo
+Shui Han [2008] No. 897), the Company is required to withhold and pay enterprise
+income tax at the rate of 10% on behalf of the non-resident enterprise shareholders
+whose names appear on the register of members for H shares of the Company when
+distributing final dividends. The Company shall withhold and pay enterprise income tax
+in respect of the final dividend for the year 2021 of the Company for the non-resident
+enterprise shareholders whose name would appear on the register of members for H
+shares of the Company on 8 July 2022.
+Hong Kong
+Investor Services
+Limited
+Monday, 30 June
+2022
+Computershare
+4:30 p.m. on
+Friday, 8 July
+2022
+Friday, 1 July
+2022
+for the year 2021
+Entitled to the final dividend
+2
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+43,250
+25,061
+12.6
+Net profit
+Amount of
+(including the reporting period)
+Profit distribution scheme/plan for the recent three years
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+2021 Annual Report 125
+The Board proposed the payment of a final dividend in cash of RMB2.54 per share
+(inclusive of tax) for the year 2021 based on the total share capital registered on the
+equity registration date of implementing equity distribution. According to the total
+share capital of 19,868,519,955 shares of the Company as at 31 December 2021,
+the final dividend totals RMB50,466 million (inclusive of tax), accounting for 97.8%
+of the profit for the year attributable to equity holders of the Company under the
+International Financial Reporting Standards, or 100.4% of the net profit for the year
+attributable to equity holders of the Company under the China Accounting Standards
+for Business Enterprises.
+Net profit attributable to equity holders of the Company for 2021 under the China
+Accounting Standards for Business Enterprises amounted to RMB50,269 million,
+with basic earnings per share of RMB2.530/share; profit attributable to equity holders
+of the Company for 2021 under the International Financial Reporting Standards
+amounted to RMB51,607 million, with basic earnings per share of RMB2.597/share.
+As at 31 December 2021, the profit available for distribution to shareholders of the
+Company under the China Accounting Standards for Business Enterprises amounted
+to RMB179,811 million.
+Yes
+Cash dividend scheme for 2021
+1.
+(III) Cash dividend scheme/plan
+attributable
+adequate opportunities to express the opinions and
+concerns, and whether their legitimate rights are
+fully protected
+Whether Independent Directors have performed their
+duties and responsibilities and played their full role
+Whether small and medium shareholders have
+mechanism are complete
+Yes
+Whether the relevant decision procedures and
+Yes
+Yes
+Whether the criteria and percentage of dividends are
+clear and unambiguous
+Whether it complies with the provisions of the Articles
+of Association or the requirements of the proposals
+of the general meeting
+(II) Special description for cash dividend policy
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+(1)
+After the SSE is closed in the afternoon on Tuesday, 21 June 2022, the
+shareholders of A shares of the Company and its proxies of shareholders as
+registered in the China Securities Depository and Clearing Corporation Limited
+Shanghai Branch are entitled to attend and vote at the 2021 annual general
+meeting of the Company;
+Yes
+to equity holders
+of the Company in
+the consolidated
+financial statements
+of the respective
+dividend year
+in accordance
+Final dividend for the year 2019
+91.8
+39,170
+35,962
+18.1
+Final dividend for the year 2020
+100.4
+50,269
+50,466
+25.4
+(Proposed)
+Final dividend for the year 2021
+%
+d financial
+statements
+the consolidate
+Percentage to
+the net profit
+attributable
+to equity holders
+of the Company in
+RMB million
+RMB million
+RMB
+Business Enterprises
+(inclusive of tax)
+s (inclusive of tax)
+cash dividend
+per 10 share
+Dividend
+Accounting
+Standards for
+with China
+Pursuant to the Articles of Association, the Company is entitled to forfeit the
+dividends which have been declared for more than six years but yet to be claimed,
+subject to compliance with relevant Chinese laws and administrative regulations.
+Shareholders are advised to collect the dividends distributed by the Company in a
+timely manner.
+X. THE SHARE OPTIONS INCENTIVE PLAN, EMPLOYMENT STOCK OWNERSHIP
+SCHEME OR OTHER EMPLOYEE INCENTIVE SITUATION OF THE COMPANY
+AND THEIR IMPACTS
+7.
+XI. Appraisal Mechanism for Senior Management, and the Establishment and
+Implementation of the Incentive Mechanism during the Reporting Period
+29.14
+2,467
+2,458
+15.69
+1,375
+100
+1
+480
+3.74
+Soot
+100
+0
+4,422.18
+Applicable ✓ Not applicable
+4 Each unit has one
+discharge port.
+3,200
+97.07
+1,626
+3,200
+34.79
+583
+838 38 838
+SO,
+Taishan Power
+Jinjie Energy (Power Plant) SO,
+NO
+Organised continuous
+discharge
+Power Plant of Guoneng SO₂
+Yili Energy Co., Ltd.
+3 Two units share one
+discharge port.
+0
+흐흐흐
+Organised continuous
+discharge
+one discharge port;
+Units 3-7 share one
+1,620
+1.42
+133
+Soot
+9,560
+30.45
+2,840
+NOX
+6 Units 1 and 2 share
+Organised continuous
+4,780
+1,596
+100
+100
+100
+888
+0
+884.45
+2.99
+264
+Soot
+0
+discharge
+17.12
+(%)
+100
+(tonne/year)
+Corporate Governance Report (Continued)
+Section V Corporate Governance and
+2021 Annual Report 131
+The Company exercises effective control over its subsidiaries in major areas and key areas
+through the establishment of rules and regulations, supervision and evaluation, and information
+technology construction. In terms of management and control structure according to the
+provisions of the Articles of Association of its subsidiaries, the Company reviews resolutions
+involving the appointment and removal and evaluation of personnel, the appointment of Directors,
+Supervisors and senior management and the establishment of organization to be submitted to
+the general meeting, the board of Directors and the Supervisory Committee of the subsidiaries
+for consideration, and exercised nominations rights and voting rights in accordance with the
+provisions of the Articles of Association of the subsidiaries. In terms of finance, the Company
+has established an integrated and efficient financial information system and formulated relevant
+financial accounting systems to standardize the accounting of its subsidiaries and branches and
+promote the improvement of the quality of accounting information. In terms of business, the
+Company fully promotes the digital and intelligent control, realizes integrated business centralized
+control through the production and operation collaborative dispatching information system, and
+strengthens the efficient collaboration among various subsidiaries and business segments. In
+terms of internal control, the Company inspects and evaluates the effectiveness of the internal
+control of its subsidiaries, and supervises and inspects the rectification of internal control
+deficiencies. In terms of related transaction, the Company formulates the management system
+and defines the procedures of management, review and approval, supervision and inspection of
+related transactions of its subsidies. In terms of information disclosure, the Company formulates
+a system in relation to information disclosure, internal report for material Matters and inside
+information management to standardize the information disclosure work standards of the Group,
+and clarifies the organization and duties of information disclosure work, to ensure that information
+disclosure is in compliance with the law.
+XIII. MANAGEMENT CONTROL OVER SUBSIDIARIES
+Not applicable
+Applicable
+Material defects in the internal control during the reporting period:
+Regarding the treatment and publishing of inside information, the Company has formulated
+internal systems such as the Administrative Measures for the Insider Information and Insider
+Registration and the Administrative Measures for Information Disclosure and Internal Report for
+Material Matters, which stipulated, among others, the scope of insider information and insiders,
+reporting process, registration and filing, and prohibited behaviors. The scope of insiders is under
+strict control so as to eliminate the risk of insider information leakage.
+As presented in the 2021 Report on Internal Control Evaluation of the Board, no material defects
+were found in the internal control of financial reporting as at the base date of the Report on
+Internal Control Evaluation, pursuant to the identification of material defects in the internal
+control over the financial reporting of the Company. The Board is of the opinion that the Company
+has maintained effective internal control over its financial reporting in all material aspects in
+accordance with the requirements under the Enterprise Internal Control Normative System and
+relevant regulations and its supplementary guidelines as well as other regulatory requirements
+on internal control. Based on the identification of material defects in the internal control over
+nonfinancial reporting of the Company, no material defects were identified by the Company in the
+internal control over non-financial reporting as at the base date of the Report on Internal Control
+Evaluation. Nothing that would affect the evaluation result of the effectiveness of internal control
+occurred from the base date of the Report on Internal Control Evaluation to the date of issuance
+of the Report on Internal Control Evaluation.
+Corporate Governance Report (Continued)
+Section V Corporate Governance and
+XIV. DESCRIPTION OF SELF-ASSESSMENT REPORT ON INTERNAL CONTROL AND
+AUDIT REPORT ON INTERNAL CONTROL
+hours
+The 2021 Work Plan for Internal Control Evaluation of the Company was considered and approved by
+the Audit Committee under the Board, and the 2021 Work Report on Internal Control Evaluation was
+considered and approved by the Board. The Board and the Audit Committee of the Company are of the
+view that such inspection and supervision mechanism is able to evaluate the effectiveness of internal
+control and risk management operation of the Company.
+An internal control supervision and inspection mechanism was formed to conduct evaluation on
+internal control on annual basis. Procedures for internal control evaluation include: formulating
+a proposal for internal control evaluation, establishing a working committee of internal control
+inspection, conducting self-evaluation on internal control, conducting evaluation on internal
+control by inspectors, communicating and identifying deficiencies in internal control, rectifying
+deficiencies in internal control and preparing report on internal control. The Company has
+evaluated the effectiveness of internal control for 2021 in accordance with the aforementioned
+procedures.
+The objectives of the internal control of the Company are to provide reasonable assurance on
+lawful operation and management, asset safety and the truthfulness and completeness of
+financial reports and relevant information, to enhance operation efficiency and effectiveness, and
+to facilitate the implementation of development strategies. As there are inherent limitations on
+internal control, assurance can only be provided for the above objectives to a certain reasonable
+extent. In addition, there are certain risks in predicting the effectiveness of future internal control
+based on the results of assessment on internal control given to the inappropriate internal control
+or the loosened level of compliance with policies and procedures on internal control that may be
+resulted by changes in different circumstances.
+It is the responsibility of the Board of the Company to establish a sound internal control system
+effectively implement it and evaluate its effectiveness, and make bona fide disclosure on the
+Self-assessment Report on Internal Control in accordance with the relevant national laws and
+regulations and the Enterprise Internal Control Normative System. The Supervisory Committee is
+responsible for the supervision on the internal control system established and implemented by the
+Board, while the management of the Company is responsible for the organization and guidance of
+the daily operation of internal control within the Company.
+The Company has established a risk-oriented internal control system. The internal control and risk
+management procedures of the Company include risk assessment and reporting at the beginning
+of the year, quarterly major risk monitoring, daily system risk review and specialized supervision
+and inspection on internal control, and annual internal control evaluation, forming an integrated
+closed-loop management system. Also, a hierarchical work organizational structure comprising
+the Board and the Audit Committee, the functional departments of the headquarters and the
+subsidiaries and branches of the Company was established to safeguard the effective operation of
+internal control and risk management. The Board is responsible for risk management and internal
+monitoring and control systems, and is accountable for reviewing the effectiveness of such
+systems. The Board conducts review on risk management and internal monitoring and control
+systems once a year. The Board considers that the risk management and internal monitoring and
+control systems of the Group were effectively operated in 2021.
+XII. ESTABLISHMENT AND IMPLEMENTATION OF INTERNAL CONTROL SYSTEM
+DURING THE REPORTING PERIOD
+Corporate Governance Report (Continued)
+Section V Corporate Governance and
+2021 Annual Report 129
+The Company adheres to the principle in combination of incentive and discipline in the evaluation
+of senior management, establishes a remuneration mechanism that matches operational
+performance, undertaking of risks and responsibility, and fully mobilises the enthusiasm of senior
+management. The performance evaluation of senior management is conducted at the end of the
+period based on the completion of relevant metrics, and the annual remuneration will be paid in
+accordance with the evaluation results after the approval of the Board.
+XII. EVALUATION MECHANISM FOR THE SENIOR MANAGEMENT DURING THE
+REPORTING PERIOD, AND THE ESTABLISHMENT AND IMPLEMENTATION OF
+INCENTIVE SCHEME
+The Company adheres to the principle of unity between motivation and discipline in the appraisal
+of its senior management officers, and establishes a remuneration mechanism that matches
+operational performance, risk-taking and responsibility, to fully mobilise the enthusiasm of senior
+management officers. Senior management officers will be appraised at the end of the period
+based on the achievement of relevant indicators with annual remuneration upon the approval of
+the Board in accordance with the appraisal results.
+According to the evaluation, during the reporting period, all businesses and matters involving
+major risks have been included in the scope of evaluation, and internal control system has
+been established for and effectively implemented on major businesses and matters, which
+accomplished the objectives of internal control of the Company.
+KPMG Huazhen LLP, engaged by the Company, has issued the standard unqualified Audit Report
+on Internal Control. The Audit Report on Internal Control is of the opinion that as at 31 December
+2021, China Shenhua had maintained effective internal control over its financial reporting in
+all material aspects in accordance with the Basic Standard for Enterprise Internal Control and
+the relevant requirements. The above audit opinions are in line with the opinions set out in the
+Selfassessment Report of the Board.
+130 China Shenhua Energy Company Limited
+Number of
+discharge Distribution of
+ports discharge ports
+Please refer to the relevant announcement disclosed by the Company on the website of the SSE
+on 26 March 2022 for the 2021 Report on Internal Control Evaluation and Audit Report on Internal
+Control.
+(mg/Nm3)
+(tonnes)
+facilities
+emissions
+Discharge method
+prevention
+Excessive
+Operation rate
+of pollution
+Average
+emission Total approved
+concentration Emissions
+Total
+Emissions
+Company
+The table below sets forth the emissions from enterprises under the state's key
+supervision and control of pollution sources (waste gas) under the Group in 2021:
+Major
+pollutant
+The main pollutants emitted by waste gas exhausting enterprises are sulfur dioxide,
+nitrogen oxides and soot, which are emitted to the atmosphere through the chimneys.
+Waste gas exhausting enterprises are mainly public thermal power plants, etc, coal-to-
+chemical captive power plants, heating boilers for mines and coking plants. Emission
+standards implemented include Emission Standards for Air Pollutants Produced by
+Thermal Plants (GB13223-2011), Emission Standards for Air Pollutants Produced by
+Boilers (GB13271-2014) and Emission Standards for Pollutants Produced by Coking
+Chemical Industry (GB16171-2012).
+XV. RECTIFICATION OVER SELF-EXAMINATION PROBLEMS IN TARGETED
+CAMPAIGN ON GOVERNANCE OF LISTED COMPANIES
+At the beginning of 2021, according to the relevant requirements of the CSRC, the Company
+conducted self-examination and self-correction on its corporate governance for the three years
+from 2018 to 2020. As a result of the self-examination, the Company did not violate the relevant
+provisions of the Company Law and the Securities Law in respect of the operation and decision-
+making of organization, controlling shareholders and related parties, construction of internal
+control system and information disclosure.
+132 China Shenhua Energy Company Limited
+I.
+Section VI Environmental and Social Responsibility
+The main pollutants discharged by wastewater discharging enterprises are chemical
+oxygen demand (COD), which are discharged to the surface water through the
+sewage outfall of the enterprises. Wastewater enterprises are mainly coal mines
+and coal-to-chemical enterprises. The emission standard implemented was the
+Comprehensive Emission Standards for Sewage (GB8978–1996).
+(1)
+ENVIRONMENTAL INFORMATION
+1.
+Information on pollutant discharge
+As at 31 December 2021, 26 subsidiaries of the Group were categorized as national
+major pollution source under supervision (including waste gas, wastewater and
+hazardous solid waste pollution source enterprises), mainly coal-fired power plants,
+coal chemical plants and coal preparation plants, etc. which are located in places
+including Inner Mongolia, Shaanxi, Hebei, Fujian and Guangdong.
+Environmental protection information of the companies and their significant
+subsidiaries classified as the key pollutant discharge units as published by the
+competent environmental protection authorities of the PRC
+0
+0
+discharge
+3,014
+Organised continuous
+2 Each unit has one
+discharge port.
+29.97
+21.38
+NOX
+2,805
+12.8
+Soot
+477
+×3× ×35 833 833
+1,049
+28
+2 One discharge port each
+1,065
+0
+៩៩៩
+100
+100
+100
+317
+3,840
+38.9
+544
+0
+Organised continuous
+Co., Ltd.
+3,840
+0.79
+Thermal Power NO
+emission Total approved
+Guoneng Jiangyou
+Emissions
+pollutant
+Company
+prevention
+Excessive
+of pollution
+concentration
+Number of
+discharge Distribution of
+Section VI
+Environmental and Social Responsibility (Continued)
+Operation rate
+Average
+Major
+Total
+for Phase I and Phase
+SO,
+Emissions
+Discharge method
+NO
+Power Co., Ltd.
+Fujian Jinjiang Thermal SO,
+SO,
+Zhunge'er Power
+SO,
+ports discharge ports
+Jiujiang Power
+hours
+(tonne/year)
+(mg/Nm3)
+(tonnes)
+facilities
+emissions
+(%)
+discharge
+91610821770043971N014V
+Soot
+20
+Shaan K Shen Mu Huan Fa
+[2021] No. 119
+9 August
+2021
+Equipment Maintenance
+Center of Shendong Coal
+Shaan K Shen Mu Huan Fa
+[2021] No. 118
+1 July 2021
+Shendong Coal Halagou
+Mine
+20
+The construction project was
+Shaan K Huan Fa [2021] No.
+119
+Shendong Coal Mine
+Comprehensive Branch
+10 During the shutdown of online
+monitoring facilities from
+October 29 to November 10,
+2020, manual monitoring was
+not performed and monitoring
+data were not reported as
+required.
+temporary storage of hazardous
+wastes, which were not
+reported.
+Paint buckets were stored in the
+9 March 2021 Shaan K Huan Fa [2021] No. 23
+Shenshuo Railway Branch
+10
+Dong Huan Ze Gai Zi [2021]
+No. 2
+24 June 2021
+11 January
+2021
+put into operation before
+acceptance.
+Shipping Company
+Baotou Energy Shuiquan
+open pit mine
+Shaan K Shen Mu Huan Fa
+[2021] No. 196
+28 December
+2021
+Shendong Coal Halagou
+Mine
+5 December
+2021
+Shaan K Shen Mu Huan Fa
+[2021] No. 152
+7 September
+2021
+Shendong Coal Shigetai
+Mine
+Baotou Energy Shenshan
+open pit mine
+E Huan Zhun Fa [2021] No. 181
+20 Online waste liquid was mixed
+with other sundries for storage.
+The supporting materials
+department of the No. 3 Plant
+of the Maintenance Center "put
+into operation without testing".
+The disposal of pollutants of the
+10
+31 August
+2021
+Baotou Energy Shenshan
+open pit mine
+4
+Bao Huan Fa 150221 [2021]
+No. 14
+160800005411
+0.2
+Hai Shi Fa Zi [2021]
+9 August
+2021
+24 August
+2021
+E Huan Zhun Fa [2021] No. 80
+Dong Huan Ze Gai Zi [2021]
+No. 1
+11 January
+2021
+Baotou Energy Lijiahao
+mine
+During the reporting period, the enterprises of the Group whose pollution source
+were under key supervision and control of the State paid environmental protection tax
+in accordance with the Environmental Protection Tax Law of the People's Republic of
+China, and were entitled to tax reduction or exemption in accordance with laws and
+regulations.
+Environmental protection tax payment and environmental pollution liability
+insurance
+waste dump was not
+covered.
+Part of the gangue in the
+1
+Shan K Shen Mu Huan Fa
+[2021] 139
+27 August
+2021
+Jinjie Power
+Total actual payment of
+environmental protection
+7.
+Penalty No.
+Date
+Unit Name
+Administrative penalties for environmental problems during the reporting period
+)) in accordance with the relevant national standards and administrative regulations
+for online monitoring of pollution source. All subsidiaries of the Company have
+completed the preparation of their self-monitoring plans. All the data in relation to
+wastewater and exhaust gas from automatic monitoring and entrusted monitoring
+were uploaded to the monitoring platform of the local environmental protection
+department according to the monitoring frequency and time limit for publication as
+determined in the monitoring plan. During the reporting period, all facilities were
+under normal operation.
+The Group standardized the management of the online environmental protection
+monitoring system, and formulated the Administration Measures for the Online
+Environmental Protection Monitoring System (Trial) (EUKSTIÀÌ
+Environment self-monitoring plan
+6.
+Fine
+Amount Reason for penalty
+RMB0,000
+Amount of environmental protection tax paid by tax item (RMB0,000)
+tax (RMB0,000)
+5,958.59
+10 The industrial slag account was
+not established, which was not
+reported.
+Fine Amount Reason for Penalty
+RMB0,000
+Penalty No.
+Date
+Unit Name
+Administrative penalties for environmental problems
+1.
+Environmental issues of companies other than those classified as the key
+pollutant discharging units
+(II)
+Section VI Environmental and Social Responsibility (Continued)
+140 China Shenhua Energy Company Limited
+During the reporting period, the total amount of environmental pollution liability
+insurance insured by the national major pollution source under supervision enterprises
+of the Group was RMB867 million.
+0
+0
+97.95
+5,860.64
+Noise
+Solid waste
+Air pollutant Water pollutant
+ship was not recorded truthfully
+700 tonnes of raw coal was
+5.
+piled up in the open air, and
+no effective dust prevention
+measures such as closed
+enclosures or coverings were
+taken.
+10 Dumped gangue.
+In 2021, the Group continued to carry out in-depth pollution prevention and control,
+comprehensively promoted the construction of green mines, green transportation,
+green power and green chemicals, and made remarkable achievements.
+Environmental protection measures and achievements
+The Group resolutely implements the decisions and arrangements of the CPC Central
+Committee and the State Council on ecological civilization construction and ecological
+environment protection, abides by the Environmental Protection Law and other
+national laws and regulations, practises the development concept of "lucid waters
+and lush mountains are invaluable assets", and regards ecological environment
+protection as the basic premise and rigid constraint for business development. The
+Group actively promotes pollution prevention and ecological treatment, strengthens
+the comprehensive utilization of mine water and other resources, and promotes the
+transformation of mining areas from ecological restoration to ecological optimization.
+The Group will promote the optimization and upgrade of industrial structure, optimize
+the integrated operation efficiency of coal and electricity, develop and build clean and
+renewable energy, implement energy conservation and emission reduction measures,
+control the intensity of greenhouse gas emissions, and explore the path of "carbon
+neutrality".
+Environmental policy and implementation
+2.
+1.
+(III) Actions taken by the Company to protect ecology, prevent pollution and fulfill
+environmental responsibilities
+Section VI Environmental and Social Responsibility (Continued)
+The coal segment strictly observed the red line of ecological protection, carried
+out the construction of green mines, continuously promoted the treatment of mine
+collapse, land reclamation of open-pit mines, stripping, storage and utilization of
+construction topsoil, strengthens the coordinated protection and treatment of various
+ecological elements of mountains, rivers, forests, fields, lakes and grasses, and
+protected and improved the local ecological environment. At the end of 2021, the
+balance of the accrued reclamation expenses of the Group was RMB6.754 billion, and
+14 coal mines were listed in the national green mine list and 6 coal mines were listed
+in the provincial green mine list. The annual utilization rate of mine (pit) water was
+73.7%, and the comprehensive utilization of coal gangue was 26,506,300 tonnes.
+China Shenhua Energy Company Limited
+6,203
+464
+0.19
+3.42
+1.18
+Total
+4,455
+147
+The environmental information contained in the 2021 Report on Environment, Social
+Responsibility and Corporate Governance of the Company, which was disclosed
+simultaneously with this Report, was independently verified by KPMG Huazhen LLP
+and a limited assurance report was issued.
+0.03
+The transport segment continued to implement the closed transformation of railway
+loading platform and silo construction, and sprayed dust suppressants in strict
+accordance with regulations. Construction of 1,205 tunnel dust monitoring devices
+started on Xinshuo Railway, and ground hardening and installation of dust-proof nets
+were completed in 6 freight yards on Shuohuang Railway. continued to promote
+2021 Annual Report 143
+Mengjin Power
+91410000674137417P001P
+Dianta Power Plant of
+Shendong Power
+China Shenhua Energy Company Limited
+Implementation of ecological management and increase of carbon sink. The
+Group continues to carry out ecological restoration, promote the construction
+of green enterprises and ecological forests, and improve the greening coverage
+of the communities. In 2021, the Group added 92.56 million square meters of
+green area.
+Innovation and application of energy conservation and emission reduction
+technology. The Group has implemented the requirements of energy
+conservation into the whole cycle and process of coal mining, transportation
+and transformation, and continuously improved the energy consumption index
+by improving the operational efficiency of the industrial chain, strengthening
+technological upgrading and transformation, comprehensive energy
+development and utilization and the application of clean energy.
+4.
+the green transformation and development of coal port. Huanghua Port has built
+an ecological water circulation system with a water storage capacity of 1.2 million
+square meters. Zhuhai Port has built a new 530m³/h coal-bearing sewage treatment
+station. The sewage recovery rate of its own ports has reached 100%. Huanghua
+Port won the honorary title of "Asia-Pacific Green Port in 2021" at the Asia-Pacific
+Smart Port Development Forum sponsored by Asia-Pacific Port Services Network
+(APSN). The shipping segment strengthened the emission reduction of pollutants
+to meet the standards, promoted the transformation of shore power equipment and
+the application technology of electric heating of fuel oil of ships, and promoted the
+development of green and low-carbon cycle.
+3.
+1. Energy structure transformation. The Group adopts a dual-wheel driving
+strategy with construction, production and operation as one driver and equity
+investment as well as M&A as another, and combines centralized base and
+distributed operation to accelerate the development of new energy industry. In
+2021, the Company participated in the establishment of Beijing Guoneng New
+Energy industrial Investment Fund and Beijing Guoneng Green and Low-carbon
+Development Investment Fund, successively investing in wind power and
+photovoltaic projects in Shanxi, Jiangsu, Zhejiang, Lianghu and other places. By
+the end of 2021, the Group has put into operation 19 new energy construction
+projects, with a total installed capacity of 72,900 KW.
+The Group actively responded to the challenge of climate change. During the reporting
+period, it continued to take effective measures to promote the implementation of
+the Company's goal of realizing carbon dioxide emission capacity to reach the peak
+in 2025, actively exploring effective paths and striving to achieve carbon neutrality by
+2060".
+Measures and effects taken to reduce carbon emissions during the Reporting
+period
+Each production unit of Baotou Coal Chemical has maintained safe operation, and in
+2021, it completed the transformation of desalination of discharged wastewater up to
+standard and the transformation of ultra-low emission of thermoelectric boilers.
+The power segment continued to carry out dust prevention and control, boiler
+adaptability, capacity expansion, energy saving and other technical transformation to
+reduce air pollutants and carbon emissions. Conventional coal-fired power generation
+units have achieved 100% ultra-low emission in 2019. In 2021, the average standard
+coal consumption of coal-fired power generation units of the Group was 305 g/kWh, a
+decrease of 2 g/kWh compared with the same period of last year. The comprehensive
+treatment of wastewater from power plants has been promoted, and Jinjie Power
+Plant and other units have achieved zero wastewater discharge.
+(IV)
+Section VI Environmental and Social Responsibility (Continued)
+144
+2.
+1.35
+0.17
+Other enterprises
+0,000 tonnes
+Hazardous
+solid waste
+(COD)
+Soot
+demand
+Nitrogen
+oxide
+Sulfur
+dioxide
+oxygen
+0,000 tonnes
+Chemical
+During the reporting period, all subsidiaries of the Group, except the enterprises
+whose pollution sources were under key supervision and control of the state,
+implemented environmental protection responsibilities according to the unified
+requirements of the Company, regularly carried out special environmental protection
+monitoring and hidden danger investigation and treatment, built and operated
+pollution control facilities, carried out land reclamation and vegetation restoration, and
+minimized the impact of production on the environment.
+Other environmental information
+2.
+Section VI Environmental and Social Responsibility (Continued)
+142
+2021 Annual Report 141
+20 Hazardous wastes were not
+stored, utilized and disposed
+of in accordance with national
+environmental protection
+standards.
+30 The ammonia nitrogen and
+phosphate of domestic sewage
+exceeded the standard.
+During the reporting period, total emission of major pollutants of the Group are as
+follows:
+0,000 tonnes
+tonnes
+tonnes
+Shenhua
+supervision and control of China
+sources were under key
+0
+41
+0.02
+0.06
+90
+0.05
+Enterprises whose pollution
+state
+supervision and control of the
+sources were under key
+1,748
+276
+0.14
+2.01
+0.96
+Enterprises whose pollution
+The waste oil drums in the
+temporary storage of hazardous
+waste were not provided with
+hazardous waste identification
+marks as required.
+name
+Section VI Environmental and Social Responsibility (Continued)
+2021 Annual Report
+Renewal
+18 June 2025
+30 June 2020
+Renewal
+26 May 2025
+26 May 2020
+Yulin Ecological
+Environment
+Protection Bureau
+Yulin Ecological
+Environment Bureau
+Yulin Ecological
+Environment Bureau
+Bayan Nur Ecological
+Environment Bureau
+Xilin Gol League
+Ecological
+Environment Bureau
+Yongzhou Ecological
+Environment Bureau
+Yulin Ecological
+Environment Bureau
+Yulin Ecological
+Environment Bureau
+91431100064229496R001R
+21 December 2020 21 December 2025 Change
+91610821770043971N013V
+Yongzhou Power
+91152500664096746A
+Shengli Energy
+Bayan Nur Energy
+91150824566931138J001P
+Shenmu Power
+Power Generation Co.,
+Guoneng Shenfu (Longyan) 91350800665064105M001P
+Daliuta Coal Mine of
+Shendong Coal
+91610806758848611Y001P
+2 July 2021
+Newly acquired
+138 China Shenhua Energy Company Limited
+Renewal
+18 June 2025
+15 June 2020
+name
+Company
+Environment Bureau
+Change of
+1 July 2026
+30 June 2025
+Change
+12 July 2023
+Change
+20 July 2023
+21 July 2020
+23 July 2020
+Newly acquired
+27 October 2026
+28 October 2021
+29 June 2020
+Power Plant
+Shendong Power Guojiawan 916108226879560162001P
+91610000710924961H001P
+7 September 2021 6 September 2026
+Renewal
+26 May 2025
+Change
+16 January 2027
+17 January 2022
+26 May 2020
+Luoyang Ecological
+Environment Bureau
+Yulin Ecological
+Environment Bureau
+Weifang Ecological
+Environment Bureau
+Jiujiang Ecological
+Environment Bureau
+Erdos Ecological
+Environment Bureau
+Quanzhou Ecological
+Environment Bureau
+Mianyang Ecological
+Environment Bureau
+Power Co., Ltd.
+Renewal
+Guoneng Jiangyou Thermal 91510781749716818XL001P
+91350582766182784B001P
+Fujian Jinjiang Thermal
+9115000070125242XH001P
+Zhunge'er Power
+91360429573617139E001P
+916108069239349286001P
+91370783695434656X001P
+Jiujiang Power
+Shouguang Power
+Power Co., Ltd.
+8 July 2020
+24 October 2025
+Renewal
+Shendong Power Daliuta
+Thermal Power Plant
+Ltd.
+Longyan Ecological
+Bureau of Liuzhou
+Renewal
+21 June 2025
+Administrative Approval 22 June 2020
+914502230790828611001P
+Liuzhou Power
+name
+Company
+Change of
+4 December 2020 5 years
+Change
+22 June 2025
+24 June 2020
+Renewal
+12 June 2025
+13 June 2020
+Section VI
+139
+Environmental and Social Responsibility (Continued)
+Emergency plan for unexpected environmental incidents
+Zhunge'er Banner Branch of Erdos
+Bureau
+360429-2019-012-M
+Jiujiang Hukou Ecological Environment
+Ecological Environment Bureau
+370783-2019-224M
+Shouguang Branch of Weifang
+Environment Bureau
+150622-2021-195-L
+610821-2021-066L
+Environment Bureau
+410322-2021-186-M
+Huizhou Ecological Environment Bureau 441301-2020-036-H
+Mengjin Branch of Luoyang Ecological
+Environment Bureau
+500102021070005
+510781-2021-15-M
+139001-2019-087-M
+Daliuta Coal Mine of Shendong Coal
+Shenmu Branch of Yulin Ecological
+Bayan Nur Energy
+350582-2019-059-M
+450223-2020-012-M
+610821-2019-012-L
+Bureau
+Shenmu Environmental Protection
+Bureau
+Urad Zhongqi Environmental Protection 150824-2020-07-M
+610821-2021-050L
+610822-2018-053-M
+610821-2021-136-M
+510781-2021-15-M
+Environment Bureau
+Environment Bureau
+Fugu Branch of Yulin Ecological
+Environment Bureau
+Shenmu Branch of Yulin Ecological
+Bureau
+Longyan Xinluo Ecological Environment 350802-2020-036-L
+Environmental Protection Bureau
+Ecological Environment Bureau
+Quanzhou Jinjiang Ecological
+Environment Bureau
+Mianyang Jiangyou Ecological
+Environment Bureau
+Liuzhou Luzhai Ecological and
+Shenmu Branch of Yulin Ecological
+Shenmu Power
+Shendong Power Guojiawan Power
+Plant
+Shendong Power Daliuta Thermal
+Power Plant
+350581-2021-054-M
+Fujian Shishi Environmental Protection
+Bureau
+Bureau
+440781-2021-0019-M
+Jiangmen Ecological Environment
+Shenmu Ecological Environment Bureau 610821-2020-094L
+Ecological Environment Bureau
+150621-2022-002-M
+Jiuyuan District Branch of Baotou
+Dalate Banner Branch of Erdos
+Filing Authority
+Generation Co., Ltd.
+Baotou Coal Chemical
+Guoneng Shenfu (Shishi) Power
+Taishan Power
+Jinjie Power
+Power Plant of Guoneng Yili Energy
+Co., Ltd.
+Company Name
+During the reporting period, the Company has formulated their emergency plans for
+unexpected environmental incidents and conducted regular drills. The emergency
+preparation plans for environmental emergencies in national major pollution source
+under supervision enterprises are as follows:
+Record Number
+150207-2020-027-H
+Ecological Environment Bureau
+Ecological Environment Bureau
+Guoneng Shenfu (Longyan) Power
+Generation Co., Ltd.
+Guoneng Jiangyou Thermal Power
+Co., Ltd.
+Liuzhou Power
+Fujian Jinjiang Thermal Power Co.,
+Ltd.
+Zhunge'er Power
+Jiujiang Power
+Shouguang Power
+Dianta Power Plant of Shendong
+Power
+Mengjin Power
+Huizhou Thermal
+0
+Power Co., Ltd.
+Guoneng Chongqing Wanzhou Electric Chongqing Wanzhou Ecological
+Environment Bureau
+Sichuan Energy Jiangyou Power Plant Mianyang Jiangyou Ecological
+Bureau
+Dingzhou Ecological Environment
+Bohai New District Branch of Cangzhou 130962-2022-009-M
+Dingzhou Power
+Cangdong Power
+4.
+Company
+Research and application of carbon capture technology. In 2021, the
+demonstration project of the whole process of carbon dioxide capture and
+storage after combustion in Jinjie Energy Coal-fired Power Plant was officially
+put into operation. During the reporting period, the device operated normally,
+and all key indicators met the design requirements, providing technical support
+for China's coal-fired power plants to achieve "near zero emission".
+Change of
+Company
+2
+13.52
+0
+100
+ㅎㅎㅎ
+100
+SO,
+42
+0.2
+2.88
+28.59
+Soot
+8
+0.55
+2220
+420
+600
+1 The units share one
+discharge port.
+421
+Organised continuous
+20
+100
+100
+discharge
+99.45
+Soot
+30
+3.11
+360
+1
+discharge
+100
+122
+10.15
+47.32
+27
+22.67
+67.6
+1 The units share one
+discharge port.
+Organised continuous
+Soot
+0
+100
+discharge
+SO,
+21
+18.93
+75
+303
+266.68
+750
+Soot
+100
+8
+1 There is one discharge
+port at the coke oven
+chimney.
+Organised continuous
+discharge
+name
+Change of
+730
+99.65
+99.65
+99.65
+SO,
+6.66
+0
+6.66
+99.5
+3
+120
+0
+888
+100
+100
+NOX
+Soot
+274
+9.06
+189
+77
+27.43
+270
+1 The units share one
+discharge port.
+Organised continuous
+2
+discharge
+3
+2
+17.5
+Organised continuous
+839
+1.75
+0
+100
+122
+110.4
+2,400
+352
+32.41
+6
+1,200
+Organised continuous
+0
+100
+discharge
+19
+99.86
+Soot
+5.45
+2 Each unit has one
+discharge port.
+348
+Soot
+0
+43
+3.06
+576
+0
+ㅎㅎㅎ
+100
+100
+100
+99.95
+16.6
+172
+43.21
+260
+1 The units share one
+discharge port.
+Organised continuous
+0
+100
+discharge
+182
+0
+100
+Liuzhou Power
+Organised continuous
+0
+discharge
+0
+Soot
+30
+2.89
+559
+1 The units share one
+discharge port.
+0
+100
+100
+100
+252
+20.41
+358
+529
+42.92
+888
+1,863.60
+37.63
+390
+SO,
+NO
+Guoneng Shenfu (Longyan) SO,
+Power Generation Co., NO
+Ltd.
+Shendong Power Daliuta SO,
+Thermal Power Plant NO
+Shendong Power
+Guojiawan Power Plant NO
+Shenmu Power
+SO,
+Bayan Nur Energy
+NO
+Shengli Energy
+Yongzhou Power
+×3× × 38 233 832 233 234 235 835
+154
+14.26
+3,727.20
+1 The units share one
+discharge port.
+1,016.4
+17
+217
+91350581052340074H001P
+911502000783949434001P
+911309117356054492001P
+Baotou Ecological
+Environment Bureau
+Cangzhou Ecological
+Environment Bureau
+Drainage Permit Number
+Issuing Authority
+Date of
+Acquisition
+Expiry Date
+91440781727840297A
+Description
+of License
+Changes in
+2021
+12 June 2020
+12 June 2025
+Renewal
+27 May 2020
+26 May 2025
+Change
+20 April 2020
+31 May 2025
+Erdos Ecological
+Environment Bureau
+Yulin Ecological
+Environment Bureau
+Jiangmen Ecological
+Environment Bureau
+Quanzhou Ecological
+Environment Bureau
+Change
+91610806755247976C001P
+Guoneng Shenfu (Shishi)
+Power Generation Co.,
+Ltd.
+Baotou Coal Chemical
+0100
+discharge
+In 2021, the total emission of major enterprises under the state's key supervision and
+control of pollution sources (solid and hazardous waste) of the Group is as follows:
+1,731.4 tonnes from Baotou Coal Chemical, 16.2 tonnes from Liuzhou Power, all of
+which are disposed in compliance with the laws and regulations with no external
+discharge.
+Investors should be aware that the above data are from self-monitoring of the
+Company, which are not confirmed by the local environmental protection regulatory
+authorities and may be different from the final data determined by the local
+environmental protection regulatory authorities.
+With regard to the provisions under the existing laws, the management believes
+that there is no contingent risk in relation to environmental protection that may
+bring material and adverse effect to the financial position and operating results of
+the Group. Contingent liabilities which may arise in the future cannot be accurately
+predicted.
+136 China Shenhua Energy Company Limited
+NOX
+2.
+Cangdong Power
+3.
+During the reporting period, the Group was well-equipped with pollution prevention
+and control facilities that were under stable operation. Except for fume temperature
+which failed to meet the operation conditions of desulfurization facility in a short term
+during start-stop of coal-fired units, annual operation rate of pollution prevention and
+control facilities reached 100%. In terms of waste water prevention and control, the
+Group built distributed underground reservoirs. Mine water was used for production,
+living and ecological engineering after natural purification by gangue in goaf areas.
+All enterprises were equipped with sewage treatment plants or facilities, in order to
+achieve comprehensive treatment and utilization of production and domestic sewage.
+In terms of waste gas prevention and control, limestone gypsum wet desulfuration
+was employed by coal-fired power plants and boilers; LNBs and SCR were applied
+for denitration; electrostatic precipitator and wet dust collectors were applied for
+removing soot. Hydrogen sulfide gas generated from chemicals was emitted after
+treatment by two-stage Claus + exhaust gas hydrogenation technology. In terms
+up to the standard of coal dust prevention and control, coal yard was fully closed or
+was equipped with wind-proof and dust suppressing wall and spraying facility. Coals
+were solidified before shipment. In terms of solid waste, general solid wastes such
+as coal gangue, furnace ash and desulphurization gypsum, were utilized for power
+generation, brickmaking, etc. All hazardous solid wastes were collected and stored at
+temporary warehouse, and were disposed of and transferred in compliance with the
+relevant requirements. Soundproof door, soundproof window and efficient composite
+sound barrier and other facilities were installed for reducing noise.
+Environmental effect appraisal of construction project and other administrative
+approvals on environmental protection
+In terms of construction project, the Group carried out simultaneously three
+management measures, being environmental impact appraisal and energy
+conservation appraisal, soil conservation inspection and acceptance, as well as
+environmental protection inspection and acceptance. The environmental impact
+appraisal, as well as environmental protection inspection and acceptance of
+construction completion, water environmental protection inspection and acceptance
+and other relevant tasks have been conducted, respectively, in accordance with the
+law. Pollutants discharge licence of national major pollution source under supervision
+enterprises are as follows:
+Company Name
+Power Plant of Guoneng Yili 91150621797172626N001P
+Energy Co., Ltd.
+Jinjie Power
+Taishan Power
+Construction and operation of pollution prevention and control facilities
+23 June 2020
+22 June 2025
+Change of
+4 December 2020 5 years
+Guoneng Chongqing
+91500101050356427B001P
+Wanzhou Electric Power
+Co., Ltd.
+91500101050356427B002Q
+Huizhou Thermal
+91441300669838702N001P
+Chongqing Wanzhou
+District Ecological
+Environment Bureau
+Chongqing Wanzhou
+Ecological
+Environment Bureau
+Huizhou Ecological
+Environment Bureau
+Renewal
+10 March 2020
+24 July 2020
+23 July 2023
+6 August 2020
+31 May 2025
+Change of
+Company
+name
+Change of
+Company
+name
+22 March 2025
+20 June 2025
+Department of Ecology 21 June 2020
+and Environment of
+Hebei Province
+Mianyang Ecological
+Environment Bureau
+915107817729546807001P
+Company
+name
+27 June 2020
+30 June 2025
+Change
+18 September
+2021
+17 September 2026 Reapply
+2021 Annual Report 137
+Section VI Environmental and Social Responsibility (Continued)
+Company Name
+Drainage Permit Number
+Issuing Authority
+Date of
+Acquisition
+Expiry Date
+Description
+of License
+Changes in
+2021
+Dingzhou Power
+911130000601110408T001P
+Sichuan Energy Jiangyou
+Power Plant
+Continuous or
+intermittent
+treatment plant for the
+main shaft
+Section VI Environmental and Social Responsibility (Continued)
+1
+0
+100
+Soot
+4
+1.2
+110
+100
+2021 Annual Report 135
+100
+Section VI Environmental and Social Responsibility (Continued)
+Average
+Total
+Outlet of well water
+Total
+approved
+Operation rate
+of pollution
+Company
+Major pollutant Emissions
+concentration
+The table below sets forth the emissions from enterprises under the state's key
+supervision and control of pollution sources (COD) under the Group in 2021:
+Number of
+Emissions discharge ports
+0
+2 Each unit has one
+discharge port.
+1,271
+2 Each unit has one
+discharge port.
+Organised continuous
+discharge
+Soot
+7
+2.7
+290.4
+흐흐흐
+Organised continuous
+discharge
+100
+100
+SO,
+18.53
+895
+NOX
+107
+35.5
+1080
+100
+Distribution of
+discharge ports
+emission
+prevention
+54
+3
+Outlet of well water
+Continuous or
+0
+Excessive
+80
+treatment plant for the
+6.54
+intermittent
+discharge
+Daliuta Coal Mine of
+Shendong Coal
+COD
+27.26
+4.31
+337
+forced outlet
+54.45
+main shaft; Zaoshaogou
+forced outlet; Hezegou
+141.41
+100
+COD
+Discharge method
+emissions
+00
+tonnes
+mg/Nm³
+tonne/year
+hours.
+%
+Baotou Coal Chemical
+facilities
+107.36
+COD
+Jinjie Energy (coal mine)
+100
+0
+10
+1
+150
+32.7
+One external sewage outlet Continuous discharge
+g.
+m.
+h.
+i.
+j.
+k.
+Production equipment and spare parts, office products: market
+price;
+Social security and pension management services and staff data
+recording services: agreed price (cost plus a profit margin of
+approximately 5%);
+Technical consulting services: agreed price with a profit margin of
+approximately 10%;
+Information technology services: both parties negotiate and agree
+on the service price within the scope of budget, which is reviewed
+by professional institution(s) with pricing reviewing qualification
+according to relevant national and industrial rules and regulations
+on construction pricing, pricing mechanism and fee standards, with
+reference to the market customs of the information technology
+industry, actual standards and market price, taking into account
+the actual condition of the Company's information technology
+construction;
+Logistics and support services and training services: agreed price
+(cost plus a profit margin of approximately 5%);
+Various daily administrative services to the headquarters of China
+Energy (exclusive of financial management and services): agreed
+price (cost plus a profit margin of approximately 5%).
+154
+China Shenhua Energy Company Limited
+Chemical products: market price;
+Tendering services: price prescribed by National Development and
+Reform Commission of the People's Republic of China;
+f.
+I. PERFORMANCE OF COMMITMENT
+Power transaction: government-guided price shall prevail if there
+is any; the uniform clearing price shall prevail in centralized price
+bidding transaction; the price of recent comparable transaction shall
+be referred to in independently negotiated transactions;
+Applicable ✓ Not applicable
+INSOLVENCY OR RESTRUCTURING RELATED MATTERS
+In 2021, the above two auditors did not serve as the external auditors of subsidiaries of the
+Company.
+RMB0.95 million
+Remuneration
+KPMG Huazhen LLP
+Name
+Internal Control Auditor
+VI.
+On 25 June 2021, KPMG Huazhen LLP and KPMG were appointed as the domestic and
+international (Hong Kong) auditors of the Company respectively for 2021 at the Company's 2020
+Annual General Meeting. Saved as disclosed above, the Company did not replace auditors in any
+year of the last three years.
+Section VII Significant Events (Continued)
+150
+VII. MATERIAL LITIGATION AND ARBITRATION
+2021 Annual Report 149
+3
+KPMG
+7.15
+KPMG Huazhen LLP
+Term of Auditing of International Auditors of the Company (year)
+Remuneration of International Auditors of the Company (RMB
+million)
+Remuneration of Domestic Auditors of the Company (RMB million)
+Term of Auditing of Domestic Auditors of the Company (year)
+Name of International Auditors of the Company
+Name of Domestic Auditors of the Company
+APPOINTMENT AND REMOVAL OF AUDITORS
+Applicable ✓ Not applicable
+(III) The Company's analysis and explanation about the reasons for and impact of
+correction to material previous errors
+The aforesaid changes in accounting policies have no impact on the Group's financial
+statements prepared in accordance with IFRS.
+In order to further strengthen cost management and provide more reliable and relevant
+accounting information, the Company adjusted the accounting policy for repair costs
+related to the Group's coal, power generation, transportation (including railway, port and
+shipping, the same below) and coal chemical businesses under China Accounting Standards
+for Business Enterprises with effect from 1 January 2021. In other words, the relevant
+repair costs previously charged to administrative expenses were adjusted to be accounted
+for as production costs, and the financial statements prepared in accordance with China
+Accounting Standards for Business Enterprises for the comparable periods was restated
+using the retrospective adjustment method. These changes in accounting policy has no
+material impact on other items in the financial statements for 2020 and prior years, the
+operating results and retained earnings at the beginning of the current year.
+1.4
+3
+The Company's analysis and explanation about the reasons for and impact of
+changes in accounting policies, accounting estimates or accounting method
+Applicable ✓ Not applicable
+As at 31 December 2021, the Group was the plaintiff, defendant or the party of certain non-
+material litigations and arbitration. The management of the Company believes that any possible
+legal liability which may be incurred from the aforesaid cases will not have any material impact on
+the financial position of the Group.
+(2)
+(1) The national industrial policy as well as industry and market conditions in
+the PRC;
+The pricing policy for mutual coal supply under the New Mutual Coal Supply
+Agreement sets out below: the supply price under the Agreement is calculated
+by the product of the unit price RMB/tonne multiplied by the actual weight.
+The unit price of coal shall be determined by both parties after arm's length
+negotiations with reference to the market price and conditions and the following
+factors, provided that the transaction terms shall not be less favourable than
+those provided by independent third parties:
+On 27 August 2021, the Company entered into the New Mutual Coal Supply
+Agreement with China Energy. The New Mutual Coal Supply Agreement is
+effective from 1 January 2021 and will expire on 31 December 2023. Pursuant
+to the New Mutual Coal Supply Agreement, the Group and China Energy Group
+mutually supply coal.
+The New Mutual Coal Supply Agreement entered into by the Company and
+China Energy
+A.
+Finance Company is held as to 60% of equity interest by China Energy, the controlling
+shareholder of the Company, and is a related party (connected person) of the
+Company. As being considered and approved by the fifth meeting of the fifth session
+of the Board of the Company, the 2021 Financial Services Agreement (the "Former
+Financial Services Agreement") entered into by the Company and the Finance
+Company on 29 December 2020 has become effective on 1 January 2021 and shall
+remain in force until 31 December 2021. On 25 June 2021, as approved at the 2020
+general meeting, the Company and Finance Company renewed the Financial Services
+Agreement (the "New Financial Services Agreement) for 2021-2023 and the caps of
+transactions contemplated under the relevant related party/connected transactions
+from 2021 to 2023, and the Former Financial Services Agreement terminated at the
+same time. (For details, please refer to the H share announcement dated 26 March
+2021 and A share announcement dated 27 March 2021)
+announcement dated 23 March 2019, and the 2020 annual report of the Company)
+Section VII Significant Events (Continued)
+2021 Annual Report 151
+China Energy holds 69.52% equity interest in the Company, and is the related party
+(connected person) of the Company. On 21 June 2019, as approved at the 2018
+general meeting of the Company, the Company and China Energy entered into
+the Mutual Coal Supply Agreement ("Former Mutual Coal Supply Agreement"),
+Mutual Supplies and Services Agreement ("Former Mutual Supplies and Services
+Agreement") for 2020-2022 and set the annual caps of transactions contemplated
+under the related party/connected transactions mentioned above for each year from
+2020 to 2022 on 22 March 2019. Both agreements are effective until 31 December
+2022. Due to the rising price and increased demand for coal and services, on 22
+October 2021, as approved at the 2021 first extraordinary general meeting of the
+Company, the Company and China Energy entered into the Mutual Coal Supply
+Agreement (the "New Mutual Coal Supply Agreement"), Mutual Supplies and
+Services Agreement (the "New Mutual Supplies and Services Agreement") for 2021-
+2023 and set the annual caps of transactions contemplated under the relevant related
+party/connected transactions for each year from 2021 to 2023 on 27 August 2021.
+The Former Mutual Coal Supply Agreement and the Former Mutual Supplies and
+Services Agreement will terminate from the effective date of New Mutual Coal Supply
+Agreement and New Mutual Supplies and Services Agreement, respectively. Except
+for the term of the Agreement, there are no significant changes to the main contents
+and pricing policies of New Mutual Coal Supply Agreement and New Mutual Supplies
+and Services Agreement, as compared to Former Mutual Coal Supply Agreement and
+Former Mutual Supplies and Services Agreement. (For details and pricing policies for
+Former Mutual Coal Supply Agreement and Former Mutual Supplies and Services
+Agreement, please refer to the H share announcement dated 22 March 2019, A share
+Non-exempt continuing related party/connected transactions between the Group
+and China Energy Group
+As at the end of the reporting period, the Group was not involved in any material litigation or
+arbitration. As far as the Group was aware, the Group did not have any material litigation or claim
+which was pending or threatened against the Group.
+1.
+The Audit Committee of the Board of the Company shall perform the duties of control and
+daily management of related party/connected transactions of the Company. The Company
+has a related party/connected transaction team under the direct supervision of the Chief
+Financial Officer, which is responsible for the management of related party/connected
+transactions; and has established a business process, which properly delineates the
+responsibilities of the Company, its subsidiaries and branches in the management of related
+party/connected transactions. The Company has also established routine examinations,
+reporting systems and accountability systems in the subsidiaries and branches of the
+Company, as to ensure the related party/connected transactions conduct in accordance with
+the terms of framework agreement.
+Related party/Connected transactions during the daily operation
+(1)
+MATERIAL RELATED PARTY/CONNECTED TRANSACTIONS
+After enquiring National Enterprise Credit Information Publicity System, neither the Company nor
+China Energy, the controlling shareholder of the Company, was included in the list of enterprises
+with serious illegal and dishonest acts.
+Applicable ✓ Not applicable
+X.
+IX. EXPLANATION FOR CREDIT OF THE COMPANY AND ITS CONTROLLING
+SHAREHOLDER AND DE FACTO CONTROLLER
+Section VII Significant Events (Continued)
+China Shenhua Energy Company Limited
+Applicable ✓ Not applicable
+VIII. SANCTIONS AND RECTIFICATIONS IMPOSED ON THE LISTED COMPANY AND
+ITS DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT, CONTROLLING
+SHAREHOLDER, DE FACTO CONTROLLER AND OFFEROR
+As of the end of the reporting period and during the reporting period, the continuing related
+party/connected transaction agreements entered into by the Company include:
+(3)
+Applicable ✓ Not applicable
+(II)
+Timely
+time
+not fulfilled in
+specified if
+commitment is
+Further steps
+shall be
+Commitment
+Party
+Making the
+Commitment
+Type of
+Commitment
+Background of
+Commitment
+Section VII Significant Events (Continued)
+4750
+CHN ENERGY
+Detailed reasons
+shall be specified
+国家能源集团 准能黑岱沟露天煤矿
+Section VII Significant Events
+2021 Annual Report 145
+In 2021, China Shenhua Rural Revitalization Practice Case was selected as the Excellent Practice
+Case of Rural Revitalization of Beijing Association of Listed Companies. Sichuan Energy and
+the Company's assistance working group in Butuo County won the title of "Sichuan Province
+Advanced Collective for Poverty Alleviation", Hu Xiaoming, a poverty-relief cadre, was awarded
+the title of "National Advanced Individual for Poverty Alleviation" by the CPC Central Committee
+and the State Council, and Yang Fachao, a poverty-relief cadre, was awarded the title of "Sichuan
+Province Advanced Individual for Poverty Alleviation" by the CPC Sichuan Provincial Committee
+and the Sichuan Provincial Government.
+In 2021, China Shenhua invested a total of approximately RMB123 million in four counties,
+implementing 20 projects such as education assistance, medical and health assistance, drinking
+water safety assistance, infrastructure construction, industrial assistance, ecological assistance
+and Party building assistance, training 3,414 skilled talents and grass-roots cadres, introducing
+RMB0.7 million of external funds, and spending more than RMB29.9 million through purchasing
+and selling agricultural products. In addition, its 16 subsidiaries have made 35 aid donations, such
+as joining hands with local people for shard development and offering assistance to targeted
+regions, with a total investment of about RMB132.62 million.
+In 2021, China Shenhua resolutely implemented General Secretary Xi Jinping's decision-making
+arrangements on poverty alleviation and rural revitalization and the spirit of the National Summary
+Commendation Conference on Poverty Alleviation, strictly implemented the rural revitalization
+work plan for 2021, consolidated the achievements of poverty alleviation in three targeted
+assistance counties of Mizhi County and Wubu County in Shaanxi Province, Butuo County in
+Sichuan Province and one designated assistance county of Nierong County in Tibet Autonomous
+Region ("four counties"), and the subsidiaries and branches jointed hands with local people and
+offered assistance to targed regions to promote the vigorous development of rural characteristic
+industries, compulsory education, ecological environment, health care and other undertakings, and
+promote rural revitalization steadily.
+DETAILS OF THE COMPANY'S EFFORTS TO CONSOLIDATE AND EXPAND THE
+ACHIEVEMENTS OF POVERTY ALLEVIATION AND RURAL REVITALIZATION
+Please refer to the 2021 Report on Environment, Social Responsibility and Corporate Governance
+of the Company, which was disclosed simultaneously with this Report.
+III.
+II. DETAILS OF THE COMPANY'S ACTIVE FULFILLMENT OF SOCIAL
+RESPONSIBILITIES
+Active integration into the construction of carbon market. In 2021, the Group
+successfully completed the first performance cycle of the national carbon
+market, and its thermal power plants owned by thermal power enterprises and
+chemical enterprises achieved 100% performance, with a transaction quota of
+2.28 million tonnes, a transaction of 40,000 tonnes of CCER (China Certified
+Emission Reductions) and a transaction volume of RMB86 million.
+5.
+Section VI Environmental and Social Responsibility (Continued)
+Hardware and software equipment and related technology services:
+market price (including tender and bidding price);
+Explanation from the Board and the Supervisory Committee for the "non-standard
+audit report" issued by the auditors
+Date and
+and Strict
+(1)
+V.
+IV. AUDIT OPINIONS AND OTHER EXPLANATIONS
+Section VII Significant Events (Continued)
+148 China Shenhua Energy Company Limited
+Applicable ✓ Not applicable
+GUARANTEES IN VIOLATION OF REGULATIONS
+III.
+Applicable ✓ Not applicable
+PERIOD
+SHAREHOLDER(S) AND OTHER RELATED PARTIES DURING THE REPORTING
+NON-OPERATING APPROPRIATION OF FUNDS BY CONTROLLING
+Any Time
+The two parties entered into "Non-
+competition Agreement" on 24 May
+2005 and a "Supplemental Agreement
+to the Existing Non-Competition
+Agreement" on 1 March 2018. The
+Company is an integrated platform which
+is responsible for the coal business and
+affiliated to China Energy, China Energy
+has committed not to compete with the
+Company in respect of the Company's
+principal businesses (coal exploration,
+mining, processing, sales; production
+and sales of comprehensive utilization
+of coal products; development and
+management of coal products; railway
+transportation; port transportation; the
+industry and ancillary service related to
+the business aforementioned) whether
+inside or outside of the PRC, and granted
+the Company options and pre-emptive
+rights to acquire and be transferred any
+business opportunities and assets which
+may pose potential competition.
+to initial public
+II.
+Commitment in relation Non-competition China Energy
+VA
+N/A
+Yes, in progress N/A
+24 May 2005, Yes
+long-term
+is not fulfilled in
+time
+Commitment
+Performance of
+Limit for
+Commitment
+Duration of
+Commitment
+offering
+The specified guidelines issued by National Development and Reform
+Commission of the People's Republic of China (NDRC) in relation to the
+coal purchase prices (if any);
+100101
+152 China Shenhua Energy Company Limited
+Market price: the price of the same or similar products or services
+provided by an independent third party during its ordinary course
+of business on normal commercial terms. The management shall
+consider at least two comparable deals with independent third
+parties for the same period when determining whether the price
+for any product or service transaction under the Agreement is
+the market price; The Group shall conduct market price research
+through various independent industry information vendors such as
+industry websites, and participate in activities organised by leading
+industry organisation.
+Agreed price: to be determined by adding a reasonable profit
+margin over a reasonable cost. The management shall consider at
+least two comparable deals with independent third parties for the
+same period when determining the reasonable profit of any product
+or service transaction under the Agreement.
+2021 Annual Report 153
+Section VII Significant Events (Continued)
+(2)
+In addition to the above, the parties further agreed on the following
+pricing policies in respect of following products and services:
+Tender and bidding price: where tender and bidding process is
+necessary under applicable laws and regulations, the price will be
+ultimately determined in accordance with the tender and bidding
+process;
+a. Rail transportation: price prescribed by National Development and
+Reform Commission of the People's Republic of China (NDRC) or
+other related government competent authorities;
+C.
+d.
+e.
+Construction: where tender and bidding process is necessary under
+applicable laws and regulations, the price ultimately determined
+in accordance with the tender and bidding process; where tender
+and bidding process is not necessary under applicable laws and
+regulations, the market price;
+Oil products: government-guided price;
+The current trading coal prices of the local coal exchange or market in the
+PRC, i.e., the coal price with the same quality that is offered to or offered
+by independent third parties under normal market conditions and normal
+commercial terms in the same or nearby regions. For local spot coal price,
+reference is generally made to (i) the spot price index of the local coal
+exchange or market in Bohai-rim region or nearby provinces as published
+on China Coal Market Website (www.cctd.com.cn) organised by China
+Coal Transportation & Sale Society in the PRC; (ii) the sale price of local
+large-scale coal enterprises as published by each coal industry website
+(if any); and/or (iii) price quotation of a few enterprises with comparable
+quality, quantity and location (if any);
+b.
+Government-prescribed price and government-guided price: if at
+any time, the government-prescribed price is applicable to any
+particular product or service, such product or service shall be
+supplied at the applicable government-prescribed price. Where
+a government-guided fee standard is available, the price will be
+agreed within the range of the government-guided price;
+if commitment
+(6)
+Section VII Significant Events (Continued)
+The quality of the coal (including the estimated calorific value of coal as
+required by different coal-fired power generating units);
+(5)
+(4)
+The quantity of coal; and
+The transportation fees.
+B.
+The New Mutual Supplies and Services Agreement entered into by the
+Company and China Energy
+Where the price of mutual coal supplies between both parties is not applicable
+under the pricing principles of the Agreement due to any changes by laws
+and regulations, policies and market of China, both parties may adjust pricing
+principles of respective aforesaid supplies.
+The pricing principles for the products and services provided under the New
+Mutual Supplies and Services Agreement set out below:
+d.
+(1) General pricing principles
+a.
+b.
+C.
+On 27 August 2021, the Company entered into the New Mutual Supplies and
+Services Agreement with China Energy. The New Mutual Supplies and Services
+Agreement is effective from 1 January 2021 and will expire on 31 December
+2023. Pursuant to the New Mutual Supplies and Services Agreement, the
+Group and China Energy Group mutually supply products and provide services.
+Unit: RMB million
+Funds offered by related
+Related parties
+(IV) Debts and liabilities between related parties
+Section VII Significant Events (Continued)
+162 China Shenhua Energy Company Limited
+Connected Transaction Announcement on Update
+on the Connected Transaction of Participation
+in the Establishment of Guoneng Low-carbon
+Fund (www.hkexnews.hk, 25 October 2021)
+Announcement by the Company on Update on
+the Connected Transaction of Participation in
+the Establishment of Guoneng Low-carbon Fund
+(www.sse.com.cn, 26 October 2021)
+Relationship
+Connected Transaction-Announcement on Update
+on the Connected Transaction of Participation
+in the Establishment of Guoneng Low-carbon
+Fund (www.hkexnews.hk, 8 October 2021)
+Announcement by the Company on update on
+the Connected Transaction of participation in
+the Establishment of Guoneng Low-carbon Fund
+(www.sse.com.cn, 9 October 2021)
+Section VII Significant Events (Continued)
+Funds provided to related parties
+Opening Amount Closing
+balance incurred balance
+874
+Opening Amount
+balance
+Closing
+incurred
+balance
+China Energy
+Controlling shareholder
+874
+Announcement by the Company on participation
+in the establishment of Guoneng Low-carbon
+Fund and Connected Transaction (www.sse.com.
+cn, 28 August 2021)
+Finance Company
+Controlled subsidiary of
+parties to the Group
+Announcement on Connected Transaction-
+Participation in the Establishment of Guoneng
+Low-carbon Fund (www.hkexnews.hk, 27 August
+2021)
+Index
+The filing procedures of the Guoneng Low-
+carbon Fund had been completed in
+the Asset Management Association of
+China.
+(II)
+Section VII Significant Events (Continued)
+160 China Shenhua Energy Company Limited
+The Independent Non-executive Directors of the Company have confirmed to the
+Board of the Company that they have reviewed the transactions contemplated under
+the agreements A to D above and are of the view that except that the transaction
+amount for supply of sale of coal by the Group to the China Energy Group in 2021
+under the New Mutual Coal Supply Agreement exceeded the cap approved, (1) those
+transactions were entered into in the ordinary course of business of the Group; (2)
+those transactions were on normal commercial terms or better terms; and (3) those
+transactions were conducted according to the agreements governing them on terms
+that are fair and reasonable and in the interest of the shareholders of the Company as
+a whole.
+The transaction amount for supply of sale of coal by the Group to the China Energy
+Group in 2021 under the New Mutual Coal Supply Agreement exceeded the
+annual cap approved. The Directors consider that the failure to re-comply with the
+requirements under Rule 14A.54(1) of the Listing Rules on a timely basis, which was
+inadvertent and regretful, was a force majeure event. In order to avoid any occurrence
+of similar events in the future, the Company has taken necessary and additional
+measures to strengthen the reporting and documentation system of the Company
+and its subsidiaries. The Company has proposed to revise the annual caps for the
+three years ending 31 December 2021, 31 December 2022 and 31 December 2023
+for the supply of coal by the Group to the China Energy Group, and the annual caps
+for the two years ending 31 December 2022 and 31 December 2023 for the supply
+of products and provision of services by the Group to the China Energy Group. For
+details, please refer to the announcement made by the Company on 25 March 2022.
+Save for this, the above continuing related party/connected transactions were in
+the ordinary course of business of the Company, and were strictly in compliance
+with procedures of review and approval by independent directors and independent
+shareholders as well as disclosure requirements.
+32
+200
+KPMG, the international auditors of the Company, have reviewed the continuing
+connected transactions under the agreements A to D above and issued a letter to
+the Board, indicating that they were aware that the cap on the Group's coal sales to
+the China Energy for 2021 was RMB86 billion and the actual total coal sales were
+RMB96.776 billion, exceeding the cap of RMB10.776 billion. In addition, they were
+not aware of any other matters for which they would consider that the continuing
+connected transactions above (1) were not approved by the Board; (2) were not
+conducted according to the Company's pricing policy in terms of all material aspects;
+(3) were not conducted according to the terms of the relevant agreements in terms of
+all material aspects; and (4) as of the year ended 31 December 2021, except for the
+aforementioned total sales of coal to China Energy that exceeded the upper limit, the
+aggregate amount for other transactions had exceeded the annual caps disclosed in
+the Company's announcements on the continuing connected transactions.
+Total fee charged by Finance Company for providing the
+members of the Company with financial services, including
+but not limited to consultancy, agency, settlement, transfer,
+investment, letter of credit, online banking, entrusted loan,
+guarantee, acceptance of bill and other services to the
+members of the Company
+27,439
+27,900
+24,527
+100,000
+Maximum daily balance of comprehensive facilities provided
+by Finance Company to the members of the Company
+(including loans, credits, bill acceptance and discount,
+guarantee, performance guarantee, overdrafts, opening
+letters of credit, etc., inclusive of accrued interest thereon)
+Maximum daily deposit balance of the members of the
+Company in Finance Company (inclusive of accrued interest
+thereon)
+(2)
+Agreement
+(3)
+19,750
+23 types of related party transactions were disclosed in Note 43 of the financial
+statements for the year 2021 prepared by the Company under the International
+Financial Reporting Standards. According to the Hong Kong Listing Rules, except for
+the transactions under item ii"income from entrusted loans", item x "purchase of
+coal" and partial transaction under item xvi "other income", all of the other related
+party transactions disclosed in Note 43 constituted connected transactions under
+the Hong Kong Listing Rules and were required to be disclosed in accordance with
+Chapter 14A of the Hong Kong Listing Rules. The Company has complied with the
+disclosure requirements of Chapter 14A of the Hong Kong Listing Rules in respect
+of disclosure of the above connected transactions and continuing connected
+transactions.
+Applicable ✓ Not applicable
+The Company signed the Partnership
+Agreement of Guoneng Green and
+Low-Carbon Development Investment
+Fund (Limited Partnership) with other
+partners, and Guoneng Low-carbon
+Fund has completed the procedures for
+industrial and commercial registration.
+As approved at the eighth meeting of
+the fifth session of the Board of the
+Company, the Company proposed to,
+as a limited partner, contribute RMB2
+billion with its own funds to jointly
+establish Guoneng Green and Low-
+Carbon Development Investment Fund
+(the "Guoneng Low-carbon Fund")
+with limited partners including China
+Longyuan Power Group Corporation
+Limited. All partners other than the
+Company, are the subsidiaries of China
+Energy, the controlling shareholders of
+the Company, therefore, the transaction
+constitutes a connected transaction of
+joint foreign investment.
+Overview of Event
+Section VII Significant Events (Continued)
+2021 Annual Report 161
+Oversea Regulatory Announcement (www.
+hkexnews.hk, 26 February 2021) Announcement
+on Update on the Connected Transaction of
+Participation in the Establishment of Industry
+Fund (www.sse.com.cn, 27 February 2021)
+Oversea Regulatory Announcement (www.
+hkexnews.hk, 9 February 2021) Announcement
+on Update on the Connected Transaction of
+Participation in the Establishment of Industry
+Fund (www.sse.com.cn, 10 February 2021)
+Related party transactions regarding the acquisition and disposal of assets or
+equity
+Connected Transaction - Participation in the
+Establishment of China Energy Fund (www.
+hkexnews.hk, 22 January 2021) Announcement
+on Update on the Connected Transaction of
+Participation in the Establishment of Industry
+Fund by China Shenhua (www.sse.com.cn, 23
+January 2021)
+Guoneng Fund completed the filing
+procedures with the Asset Management
+Association of China.
+Guoneng Fund completed the industrial and
+commercial registration procedures and
+obtained a business licence.
+Upon the approval of the fifth meeting of
+the fifth session of the Board of Directors,
+as the limited partner, the Company
+contributed RMB4 billion to participate
+in the establishment of the Beijing China
+Energy New Energy Industry Investment
+Fund (Limited Partnership) ("China Energy
+Fund"), and entered into the Partnership
+Agreement of Beijing China Energy New
+Energy Industry Investment Fund (Limited
+Partnership) on 22 January 2021.
+Overview of Event
+Matters that have been disclosed on interim announcements and where there is
+no any further progress and change upon subsequent implementation
+1.
+(III) Material related party transactions regarding joint external investments
+Index
+7,376
+27,126 24,076
+the parent company
+Unit
+31 December
+31 December
+107.2
+1,020
+2,113
+RMB million
+2021
+Net profit
+1,318
+2,770
+RMB million
+36.5
+2,196
+2,998
+RMB million
+110.2
+2020
+Change
+%
+China Shenhua Energy Company Limited
+164
+Note: The above financial dates were prepared in accordance with the China Accounting Standards for
+Business Enterprises and have been audited.
+3.7
+22,471
+23,307
+RMB million
+Owner's equity
+44.9
+83,136
+120,427
+RMB million
+36.1
+105,607
+143,734
+RMB million
+Total assets
+Total liabilities
+Revenue
+Total profit
+%
+Change
+2020
+201
+201
+400
+(61)
+461
+Total
+Others
+Other related parties
+Co., Ltd.
+the parent company
+Power Generation
+(55)
+55
+Controlled subsidiary of
+Anhui Anqing Wanjiang
+21,397
+(2,679)
+20,266
+(1)
+7,260 27,526 24,950 (2,478)
+Reasons for debts and liabilities between related parties
+2021
+Unit
+1. Main financial indicators of the Finance Company
+(V) Financial business between the Company and Finance Company with which the
+Company has relationship
+The above borrowings and entrusted loans are
+beneficial to the normal commencement of
+relevant project construction and production
+operation of the Group and have no material
+impact on the operating results and financial
+position of the Company.
+N/A
+Currently, the principal and interests of the
+above borrowings and entrusted loans are
+repaid in a normal manner in accordance with
+the repayment schedule.
+Impacts of debts and liabilities between
+related parties on the operating results and
+financial position of the Company
+Undertakings related to debts and liabilities
+between related parties
+Repayment of debts and liabilities between
+related parties
+Section VII Significant Events (Continued)
+2021 Annual Report 163
+Internal decision procedures have been performed in respect of
+the above transfer of related debts and liabilities in accordance
+with relevant regulations.
+(4) The entrusted loans were issued or received by the Group,
+etc..
+(3) Prior to the jointly establishment of Beijing GD by the
+Company with GD Power, the Company provided finance
+lease to Anhui Anqing Wanjiang Power Generation Co.,
+Ltd., its former subsidiary, through Shenhua Lease
+Company. As approved at the general meeting of the
+Company, the financial lease payment will be gradually
+returned in accordance with the original agreement/contract
+arrangement, that is the repayment will be gradually
+completed in 2021. As at the end of the reporting period, the
+financial lease payment has been returned.
+(2) The Group's deposits and loans with Finance Company.
+(1) Long and short-term borrowings were provided by China
+Energy to the Group.
+22,472
+New Financial
+Services
+No.
+RMB million
+(iv)
+the current transacted coal prices of the local coal exchange or
+market in the PRC, i.e., the coal price with comparable quality that
+is offered to or offered by independent third parties under normal
+market conditions and normal commercial terms in the same or
+nearby regions. For local spot coal price, reference is made to
+(i) the spot price index of the local coal exchange or market in
+Bohai-rim region or nearby provinces as published on the website
+of
+(www.cctd.com.cn) organised by China Coal
+Transportation & Sale Society (+ª¤£Œ¤¯) in the PRC; (ii) the
+sale price of local large coal enterprises as published by each coal
+industry website (if any); and/or (iii) price quotation of one or more
+other enterprises with comparable quality, quantity and location (if
+any);
+(iii)
+Section VII Significant Events (Continued)
+2021 Annual Report 157
+the specified guidelines issued by NDRC setting out the coal
+purchase prices (if any);
+the quality of the coal;
+(ii)
+(i)
+The price of coal mutually supplied by the China Railway Group and
+the Group is the product of the unit price RMB/tone multiplied by the
+actual weight. The unit price of coal shall be determined by both parties
+after arm's length negotiations with reference to the market price and
+conditions and the following factors, provided that the transaction terms
+shall not be less favourable than those provided by independent third
+parties:
+if neither comparable market prices nor prices of non-connected
+transactions are available for reference, the prices shall be
+determined upon negotiation according to the aggregate of the total
+actual costs for providing the relevant services, reasonable profits
+and taxes and additional charges paid.
+if none of the above-mentioned pricing standards is available,
+the prices shall be determined with reference to the prices of
+non-connected transactions between the connected parties and
+independent third parties;
+except for applying the prices specified by the government, the
+guidance prices set by the government and the industry settlement
+rules, if there are comparable market prices or pricing standards,
+priority shall be given to such market prices or pricing standards as
+reference to determine the prices upon negotiation;
+if the prices are not specified by the government and the
+government has not set applicable guidance prices, the prices shall
+be determined in accordance with the applicable industry price
+settlement rules;
+the national industrial policy as well as industry and market
+conditions in the PRC;
+(v)
+the quantity of coal; and
+(vi)
+3.
+In addition to the above, for certain types of product or service, specific
+pricing policy is adopted as follows:
+Section VII Significant Events (Continued)
+158 China Shenhua Energy Company Limited
+Agreed price: to be determined by adding a reasonable profit
+margin over a reasonable cost. The management shall consider at
+least two comparable deals with independent third parties for the
+same period when determining the reasonable profit of any product
+or service under this Agreement.
+Market price: The price will be determined as same as or similar to
+products or services provided by an independent third party during
+its ordinary course of business on normal commercial terms. The
+management shall consider at least two comparable deals with
+independent third parties for the same period when determining
+whether the price for any product or service transaction under this
+Agreement is the market price; and
+Tender and bidding price: where tender and bidding process is
+necessary under relevant laws, regulations and rules, the price shall
+be ultimately determined in accordance with the tender and bidding
+process;
+Government-prescribed price and government-guided price: if at
+any time, the government-prescribed price is applicable to any
+particular product or service, such product or service shall be
+supplied at the applicable government-prescribed price. Where
+a government-guided fee standard is available, the price will be
+agreed within the range of the government-guided price;
+(iv)
+(iii)
+(ii)
+(i)
+The price of other products and services mutually provided by the China
+Railway Group and the Group shall be determined in accordance with the
+general principles and order of this section:
+(3)
+the estimated transportation fees.
+if the prices are not specified by the government, the prices will be
+determined in accordance with the pricing standards and rules of
+national railways within the guidance prices set by the government;
+(i)
+(vi)
+(iv)
+2.
+Section VII Significant Events (Continued)
+2021 Annual Report 155
+With respect to the deposit interest rate offered by Finance
+Company for deposits placed by Members of the Group, Finance
+Company will pay close attention to the benchmark interest rate
+stipulated by the PBOC on monthly basis and, by way of inquiry,
+ascertain the deposit interest rates of major commercial banks in
+the PRC (i.e. Industrial and Commercial Bank of China, Agricultural
+Bank of China, Bank of China, China Construction Bank, and Bank
+of Communications), to ensure the interest rates for deposits
+placed by Members of the Group with Finance Company shall be
+no less than the interest rate paid by major commercial banks in the
+PRC for comparable deposits services provided to Members of the
+Group. Furthermore, price determination of deposits interest rate
+offered by Finance Company will be under strict supervision and
+the Company will enforce relevant internal approval procedures.
+The interest rates for loans granted by Finance Company to
+Members of the Group shall be no more than the benchmark loan
+interest rate for the corresponding period stipulated by the PBOC
+and no more than the interest rate charged by major commercial
+banks in the PRC for comparable loans services provided
+to Members of the Group and shall be negotiated in normal
+commercial terms.
+The interest rates for deposits placed by Members of the Group
+with Finance Company shall be no less than the interest rate paid
+by major commercial banks in the PRC for comparable deposits
+services provided to Members of the Group and shall be negotiated
+in normal commercial terms;
+(2)
+b.
+In terms of deposits and loans or similar services provided by Finance
+Company to Members of the Group, subject to compliance with the
+relevant rules and regulations of PBOC, China Banking and Insurance
+Regulatory Commission (the "CBIRC") and other relevant regulatory
+authorities:
+(1)
+On 26 March 2021, the Company entered into the New Financial Services
+Agreement with the Finance Company. The New Financial Services Agreement
+is effective from 1 January 2021 and will expire on 31 December 2023.
+Pursuant to the New Financial Services Agreement, Finance Company would
+provide comprehensive credit (without any pledge and guarantee provided by
+the Members of the Group) and other financial services to the Members of the
+Group, and the Members of the Group may place deposits in Finance Company.
+The pricing policy of the New Financial Services Agreement is as follows:
+The New Financial Services Agreement entered into by the Company and
+Finance Company
+Where the price of mutual supplies and services between the Group and China
+Energy Group is not applicable under the pricing principles of the Agreement
+due to any changes by laws and regulations, policies and market of China, both
+parties may adjust pricing principles of respective supplies and services.
+C.
+a.
+In terms of paid services provided by Finance Company to Members of
+the Group:
+a.
+b.
+(iii)
+(ii)
+(i) the prices as determined by the government;
+The price of transportation service mutually provided by the China Railway
+Group and the Group shall be determined in the following priority:
+(2)
+(1)
+The pricing of the transactions under the Continuing Connected Transactions
+Framework Agreement shall be agreed in the implementation agreements, but
+shall be determined in accordance with the general principles below:
+Section VII Significant Events (Continued)
+156 China Shenhua Energy Company Limited
+China Railway Taiyuan Group Co., Ltd. ("Taiyuan Railway Bureau") is the
+parent company of Daqin Railway Co., Ltd., which is a substantial shareholder
+of Shuohuang Railway, a significant subsidiary of the Company. China Railway
+is the controlling shareholder of Taiyuan Railway Bureau. Therefore, China
+Railway constitutes a connected person of the Company under the Hong Kong
+Listing Rules. On 28 October 2019, the Company and Taiyuan Railway Bureau
+which acted for and on behalf of China Railway entered into the Continuing
+Connected Transactions Framework Agreement, effective from 1 January 2020
+to 31 December 2022. Pursuant to the Continuing Connected Transactions
+Framework Agreement,, the Group and China Railway Group (China Railway
+and its subsidiaries, including Taiyuan Railway Bureau Group (including Taiyuan
+Railway Bureau and its subsidiaries)) have agreed to provide transportation
+service, supply coal and provide other products and services to each other.
+D. Continuing Connected Transactions Framework Agreement between the
+Company and China State Railway Group Co., Ltd. ("China Railway")
+Non-exempt continuing connected transactions between the Group and other
+parties
+With respect to the service fees charged by Finance Company for
+provision of financial services to Members of the Group, Finance
+Company will, by way of inquiry, ascertain the service fees rate
+charged by major commercial banks on monthly basis and ensure
+the service fees charged by Finance Company for provision of
+financial services to Members of the Group shall be no more than
+the service fees charged by major commercial banks in the PRC for
+comparable financial services provided to Members of the Group.
+In addition, price determination of service fees charged by Finance
+Company will be under strict supervision and the Company will
+enforce relevant internal approval procedures.
+Subject to compliance with the relevant rules and regulations of
+PBOC, CBIRC and other relevant regulatory authorities, the service
+fees charged by Finance Company for the provision of the above
+financial services to Members of the Group shall be no more than
+the service fees charged by major commercial banks in the PRC for
+comparable financial services provided to Members of the Group
+and shall be negotiated in normal commercial terms.
+Finance Company can provide paid consultation, agency,
+settlement, transfer, investment, letter of credit, online banking,
+entrusted loan, guarantee, bill acceptance and other related
+services to Members of the Group.
+(v)
+Rolling stock usage: market price.
+(ii)
+(iii)
+3,188
+(2) Services
+2.1
+2,106
+11.8
+7,314
+13.4
+including: (1) Products
+6,595
+13,000
+10,502
+13,000
+New Mutual Supplies and Services
+13.6
+Agreement
+4,489
+15.2
+D
+period
+agreement
+RMB million
+Transaction
+amount during
+the Reporting
+Transaction
+cap during the
+valid period of
+Transaction item
+Name of
+agreement
+Section VII Significant Events (Continued)
+2021 Annual Report 159
+Framework Agreement
+3.8
+8,743
+19,800
+0.4
+1,052
+Continuing Connected Transactions
+14,019
+20,000
+38.8
+96,776
+Prevailing
+transaction
+during the in the same
+amount
+other inflows
+Transaction
+Proportion
+Provision of products and services by the
+Group to related/connected persons and
+Name of agreement
+No.
+In 2021, the implementation of the agreements A to D above is set out in the table
+below. In particular, the total amount of related party/connected transactions for sale
+of products and provision of services by the Group to China Energy Group under the
+New Mutual Coal Supply Agreement and the New Mutual Supplies and Services
+Agreement amounted to RMB107,278 million, representing 32.0% of the revenue of
+the Group during the reporting period.
+Implementation of and review opinions on the non-exempt continuing related
+party/connected transactions
+The agreements A to C above are daily related transactions under the
+Shanghai Listing Rules, while the agreements A to D above are continuing
+connected transactions under the Hong Kong Listing Rules.
+Business consulting and technical services: agreed price (cost plus
+a profit margin of approximately 5%).
+Equipment supply: tender and bidding price.
+Overhaul services and railway track maintenance services: price
+prescribed by NDRC or other related government competent
+authorities.
+(iv)
+cap
+C
+RMB million
+reporting
+type of
+period transactions
+86,000
+New Mutual Coal Supply Agreement
+A B
+%
+type of
+RMB million
+% RMB million
+period transactions
+cap
+reporting
+Prevailing
+transaction
+during the in the same
+Proportion
+amount
+Purchase of products and services from
+related/connected persons by the Group and
+other outflows
+Transaction
+RMB million
+7,300
+Yes
+Section VII Significant Events (Continued)
+3. Total amount of guarantee (including guarantee for the benefit of its subsidiaries)
+Total amount of guarantee (A+B)
+Proportion of total amount of guarantee to the net assets attributable to equity holders
+of the Company at the end of the year under China Accounting Standards for Business
+Enterprises in 2021 (%)
+(74.60)
+3,187.85
+3,260.29
+0.9
+Including:
+Amount of guarantee provided for the benefit of shareholders, de facto controller and
+their related parties (C)
+Amount of guarantee directly or indirectly provided for the benefit of parties with a
+gearing ratio in excess of 70% (D)
+Portion of the total amount of guarantee in excess of 50% of net assets (E)
+Aggregated amount of the above three amounts of guarantee (C+D+E)
+Total balance of guarantee provided for the benefit of subsidiaries at the end of the
+reporting period (B)
+Description of the potential joint and several repayment liability for outstanding guarantee
+Description of guarantee
+3,260.29
+0
+3,260.29
+Please refer to below
+Please refer to below
+Note: The balance of guarantee provided by the subsidiary to external parties of total amount of guarantee at the
+end of the reporting period equals to the amount of external guarantee of the subsidiary multiplied by the
+shareholding of the Company in the subsidiary.
+As at the end of the reporting period, the total balance of the amount of guarantee provided
+by the Group amounted to RMB3,260.29 million, including:
+(1)
+As at the end of the reporting period, the guarantee provided by Baorixile Energy,
+a subsidiary of which the Company owns 56.61% of the shares, for the benefit of
+external parties was as follows: prior to the acquisition of Baorixile Energy by the
+Company in 2011 and pursuant to the Guarantee Agreement on the Syndicated
+Renminbi Loan for the Cooperative Railway Project Connecting Yimin and Yiershi
+Newly Constructed by Hulunbei'er Liangyi Railway Company Limited, in 2008,
+Baorixile Energy, as one of the guarantors, provided joint and several liability
+guarantee to Hulunbei'er Liangyi Railway Company Limited (hereinafter referred to
+as the "Liangyi Railway Company", of which Baorixile Energy owns 14.22% of the
+shares) for the syndicated loans. The major liability guaranteed was the debts due
+to the lender with a maximum balance of RMB207.47 million from 2008 to 2027,
+regardless of whether the debt is due when the above period expires. The above
+syndicated loans will fall due by tranches between 2011 and 2026. The Guarantee
+Agreement provides that the guarantee period of the debts borne by the guarantor
+shall be calculated from the due date of each tranche to two years after the due date
+of the last tranche, i.e. 2029.
+168 China Shenhua Energy Company Limited
+Section VII Significant Events (Continued)
+(2)
+Given that Liangyi Railway Company failed to pay the loan interest on time due to its
+deteriorating business operation, as resolved by the shareholders' general meeting
+of Liangyi Railway Company, additional capital was injected into Liangyi Railway
+Company by its shareholders (including Baorixile Energy). Baorixile Energy has
+injected an accumulated amount of RMB11.82 million into Liangyi Railway Company.
+As of the end of the reporting period, Baorixile Energy, in proportion to its
+shareholding, repaid the principal on the loans on behalf of Liangyi Railway Company
+amounting to a total of RMB73.23 million. Baorixile Energy already made full provision
+for impairment on its 14.22% equity interest in Liangyi Railway Company and the
+repayment amount paid on its behalf. Together with other shareholders, Baorixile
+Energy will continue to call for improvement of business operation of Liangyi Railway
+Company. As at 31 December 2021, Liangyi Railway Company had a gearing ratio of
+172.4%.
+As of the end of the reporting period, the amount of guarantee between subsidiaries
+in consolidated reports of the Company, in proportion to its shareholding, amounted
+to approximately RMB3, 187.85 million, which was mainly due to the fact that
+Shenhua Hong Kong Limited, the wholly-owned subsidiary of the Company, provided
+guarantees for the issuance of USD0.5 billion bonds by China Shenhua Overseas
+Capital Co., Ltd., its wholly-owned subsidiary.
+For the details of the opinions of the Independent Directors, please refer to the
+relevant reports simultaneously disclosed with this Report.
+(III) Entrusted cash asset management
+0
+1.
+Total amount of guarantee provided for the benefit of subsidiaries during the reporting
+period
+Section VII Significant Events (Continued)
+1. Guarantee provided by the Company to external parties
+(excluding guarantee granted to its subsidiaries)
+Date of
+Whether
+performance Whether
+Whether
+Whether
+guarantee is
+Amount of counter for the benefit
+Expiry date of Type of
+has been guarantee is
+guarantee guarantee is of related
+guarantee guarantee
+completed overdue
+overdue provided parties
+Relationship
+2. Guarantee provided by the Company and its subsidiaries for the benefit of its subsidiaries
+Baorixile Energy
+No
+0 No
+No
+several
+Railway
+liability
+Company
+Limited
+guarantee
+Total amount of guarantee provided during the reporting period (excluding guarantee
+provided to its subsidiaries)
+Total balance of guarantee at the end of the reporting period (A) (excluding guarantee
+provided to its subsidiaries)
+(8.86)
+72.44
+2021 Annual Report 167
+Controlled Hulunbeer 72.44 2008.08.30 2008.08.30 2029.08.29 Joint and
+subsidiary Liangyi
+General status of entrusted loans
+Unit: RMB million
+Type of products
+of fund
+Determination of
+compensation
+Interest
+return for
+recovered
+legal
+rate
++∞ (none
+for 2021
+procedures
+Yili Chemical associate of a Bank of China 400.0
+2020/12/24 2023/12/24
+3 years
+of fund
+subsidiary
+4.75%
+19.1
+0
+Yes
+As of 31 December 2021, the Group did not grant entrusted loans with an amount
+exceeding 5% of the Group's latest audited net assets attributable to equity holders
+of the Company to any individual party. The Company did not utilise the proceeds
+raised to grant entrusted loans, and there was no entrusted loan that was involved in
+litigations. No provision for impairment for the above entrusted loans has been made
+by the Group. Under centralised capital management of the Group, the entrusted
+loans among the Company and its subsidiaries were used for meeting operating and
+development needs. Such entrusted loans have been eliminated in the consolidated
+financial statements of the Group.
+The entrusted loan of RMB37.40 million granted by the Company to Inner Mongolia
+Sanxin Railway Co., Ltd. ("Sanxin Railway Company") in February 2014 has expired
+in February 2015. In view of the actual operation of Sanxin Railway Company and
+through consultation, Sanxin Railway Company paid the Company the interest of
+RMB2.27 million during the entrusted loan, and the Company converted the principal
+of RMB37.40 million of entrusted loan into equity investment in Sanxin Railway
+Company. By the end of the reporting period, the Company had received the above
+loan interest and confirmed the relevant equity investment. This matter has no impact
+on the scope of the Company's consolidated financial statements.
+170
+China Shenhua Energy Company Limited
+Section VIII Changes in Share Capital and Shareholders
+I.
+CHANGE IN ORDINARY SHARE CAPITAL
+(1) Change in the number of ordinary shares
+1.
+Own fund Replacement of Interest to be paid
+loans
+quarterly
+of loans
+of loans of loans
+Investment
+Source of
+funding
+Maximum
+Balance Note
+Outstanding
+ending balance
+Overdue
+Uncollectible
+amount
+Entrusted loans
+Own fund
+437.4
+400.0
+0
+Note: Maximum balance refers to the daily highest balance of the entrusted loan of such type of the
+Group in 2021.
+2021 Annual Report 169
+Section VII Significant Events (Continued)
+2. Individual entrusted loans
+Unit: RMB million
+Whether it
+Relationship
+has been
+between the
+Name of
+borrower
+borrower and
+the Group
+Trustee
+Amount of
+entrusted
+loans
+Actual
+Principal
+through
+Initial date Expiry date
+Duration
+Source
+Relationship
+between the
+guarantor
+and the listed
+Amount date of date of
+company Guaranteed guaranteed agreement guarantee
+Guarantor
+(execution Beginning
+Related
+parties
+Relationship
+Maximum
+daily deposit
+limit
+Deposit
+interest
+rate range
+Total amount Total amount
+Opening deposited withdrawn
+balance for the period for the period
+Closing
+balance
+Finance Subsidiary of controlling
+Company
+shareholder
+27,900 0.455%-3.3%
+19,750
+Amount for the period
+146,020
+27,126
+Total
+19,750
+146,020
+138,644
+27,126
+Note: "Maximum daily deposit limit" refers to the maximum daily deposit balance (including accrued
+interest incurred) of the Group in Finance Company during the reporting period.
+2021 Annual Report 165
+Section VII Significant Events (Continued)
+4.
+Loan business
+Unit: RMB million
+Amount for the period
+138,644
+Unit: RMB million
+Deposit business
+3.
+noted sub-prime
+suspicious loss
+LO
+5
+Loan loss coverage ratio not lower than
+100%
+assets)
++∞ (none
+Yes
+noted sub-prime
+suspicious loss
+assets)
+19
+Liquidity ratio not lower than 25%
+37.36%
+Yes
+Ratio of self-owned fixed assets not higher
+than 20%
+0.07%
+Yes
+8
+9
+Ratio of investment (against total capital)
+not higher than 70%
+Inter-bank borrowing ratio not higher than
+100%
+50.01%
+Yes
+0%
+Yes
+10
+Guarantee ratio not higher than 100%
+28.54%
+Yes
+Total amount Total amount
+Change in number of shares
+Related
+Opening
+3,913
+shareholder
+Finance Company Subsidiary of controlling
+Issue of acceptance bill
+100,000
+1,061
+shareholder
+Finance Company Subsidiary of controlling
+Intermediary business
+200
+32
+shareholder
+Note: (1) Maximum daily balance of the comprehensive credit facilities (including loans, bill acceptance
+and discount, etc.), including accrued interest, provided by Finance Company to the Group as
+approved by the general meeting of the Company refers to RMB100,000 million.
+100,000
+(2) The amount for the period of bill discount and issue of acceptance bill business refers to total
+amount of relevant services provided by Finance Company to the Group during the reporting
+period.
+166 China Shenhua Energy Company Limited
+XI.
+Section VII Significant Events (Continued)
+MATERIAL CONTRACTS AND THEIR PERFORMANCE
+(1)
+Trust, contracting and leasing
+Applicable
+✓ Not applicable
+During the reporting period, the Company did not enter into or have any management and
+administration contracts in respect of the whole or any material part of the business of the
+Company.
+(II) Guarantees
+Unit: RMB million
+provision of
+guarantee
+(3) The amount for the period of intermediary business refers to total amount of various service
+fees charged by Finance Company for provision of financial services to the Group.
+Bill discount
+Finance Company Subsidiary of controlling
+the period
+of loan for of repayment
+Closing
+parties Relationship
+Loan limit rate range
+balance
+the period for the period
+balance
+Finance
+Company
+Subsidiary of controlling
+shareholder
+100,000 3.15%-4.90%
+24,076
+9,512
+12,191
+21,397
+Total
+24,076
+9,512
+12,191
+21,397
+Note:
+"Loan limit" refers to the maximum daily balance (including accrued interest incurred) of loans
+provided by Finance Company to the Group.
+5.
+Credit facilities or other financial business
+Unit: RMB million
+Amount for
+Related parties
+Relationship
+Business Type
+Quota
+Loan interest
+Unit: shares
+2021
+Change
+N/A Others
+Management Co., Ltd. -
+Ruifeng Huibang No.3 Privately
+Offered Fund
+E Fund Management Co., Ltd.
++21,768,317
+21,768,317
+0.11%
+0
+N/A Others
+- Social Security Fund 1104
+Portfolio
+China Merchants Bank Ltd. - SSE
+Nil
++10,946,501
+0.11%
+0
+Nil
+N/A Others
+Dividend ETF
+2021 Annual Report 173
+Section VIII Changes in Share Capital and Shareholders (Continued)
+Shareholdings of top ten shareholders without selling restrictions
+Number of shares
+without selling
+restrictions
+Unit: share
+Name of shareholders
+Type and number of shares
+Type
+21,505,083
+Number
+0
+22,233,848
+Central Huijin Asset Management
+-3,949,900
+106,077,400
+0.53%
+Nil
+N/A State-owned
+Ltd.
+corporation
+Industrial and Commercial Bank
++3,278,174
+27,825,922
+0.14%
+0
+0.11%
+Nil
+of China-hanghai Index
+50 Trading Open-end Index
+Securities Investment Fund
+China Life Insurance Company
++27,703,519
+27,703,519
+0.14%
+As at 31 December 2020
+Nil
+N/A Others
+Limited Life Insurance -
+Guoshou Ruian
+Zhuhai Ruifeng Huibang Asset
+0
+N/A Others
+China Energy Investment Corporation Limited
+HKSCC NOMINEES LIMITED
+13,812,709,196 RMB ordinary shares
+13,812,709,196
+Details regarding the holders of preference shares N/A
+with voting rights restored and the number of
+shares held
+Note: The H shares held by HKSCC NOMINEES LIMITED on behalf of its various clients; the A shares held by
+HKSCC LIMITED on behalf of its various clients.
+174
+China Shenhua Energy Company Limited
+Capital loss coverage ratio not lower than
+100%
+Yes
+0%
+Yes
+0%
+Yes
+15.65%
+5%
+Both HKSCC NOMINEES LIMITED and Hong Kong Securities Clearing
+Company Limited are wholly-owned subsidiaries of Hong Kong Exchanges
+and Clearing Limited. Save as disclosed above, the Company is not aware of
+any connected relationships between the top ten shareholders without selling
+restrictions and the top ten shareholders, and whether they are parties acting
+in concert as defined in the Measures for Administration of Acquisition of
+Listed Companies of CSRC.
+Non-performing loan rate not higher than
+Capital adequacy rate not lower than 10%
+Non-performing asset rate not higher than
+4
+3
+2
+1
+or not
+Compliant with
+regulatory
+requirements
+December 2021
+Control indicators
+No.
+As at 31
+Main risk indicators of the Finance Company
+2.
+4%
+21,505,083
+21,505,083 RMB ordinary shares
+Details regarding the connected relationships
+among the above shareholders or whether they
+are parties acting in concert
+3,369,478,486
+Overseas-listed foreign
+shares
+3,369,478,486
+China Securities Finance Corporation Limited
+594,718,004 RMB ordinary shares
+594,718,004
+Hong Kong Securities Clearing Company Limited
+218,669,817 RMB ordinary shares
+218,669,817
+Central Huijin Asset Management Ltd.
+Industrial and Commercial Bank of China -
+Shanghai Index 50 Trading Open-end Index
+Securities Investment Fund
+106,077,400 RMB ordinary shares
+106,077,400
+27,825,922
+RMB ordinary shares
+27,825,922
+China Life Insurance Company Limited - Life
+Insurance Guoshou Ruian
+27,703,519 RMB ordinary shares
+27,703,519
+Zhuhai Ruifeng Huibang Asset Management Co.,
+22,233,848 RMB ordinary shares
+22,233,848
+Ltd. Ruifeng Huibang No.3 Privately Offered
+Fund
+E Fund Management Co., Ltd. - Social Security
+Fund 1104 Portfolio
+21,768,317 RMB ordinary shares
+21,768,317
+China Merchants Bank Ltd. - SSE
+Dividend ETF
+Description of the special account for repurchase N/A
+of the top ten shareholders
+Description of the abovementioned shareholders' N/A
+entrusting of voting rights, entrusted voting
+rights, and waiver of voting rights
+Company Limited
+N/A Overseas corporation
+0
+0
+3,398,582,500
+17.09
+III. Total number of shares
+19,889,620,455
+100.00
+-21,100,500
+-21,100,500
+-21,100,500 3,377,482,000
+-21,100,500 19,868,519,955
+Nil
+100.00
+2.
+Explanation on changes in shares
+On 8 March 2021, the Company cancelled all H shares repurchased up to that date,
+totaling 21,100,500 shares, accounting for 0.6209% of the total number of H shares
+issued by the Company as at the date when the General Mandate was approved by
+the 2020 first extraordinary general meeting and 0.1061% of the total number of
+shares of the Company. After the cancellation, the total number of issued shares of
+the Company was reduced to 19,868,519,955 shares, including 16,491,037,955 A
+shares and 3,377,482,000 H shares. The Company has not issued preferred shares.
+In 2021, the Group did not repurchase, sell or redeem any securities of the Company
+under the Hong Kong Listing Rules.
+foreign shares
+As of the disclosure date of this report, so far as the Directors are aware, the
+Company has satisfied minimum public float requirement under Rule 8.08 of the Hong
+Kong Listing Rules.
+Applicable
+✓ Not applicable
+2021 Annual Report 171
+Section VIII Changes in Share Capital and Shareholders (Continued)
+II.
+ISSUANCE AND LISTING OF SECURITIES
+The Company did not issue any ordinary share, convertible corporate bond, warrant bond,
+corporate bond or other derivative securities, nor did it enter into any equity-linked agreement
+during the reporting period.
+(1)
+Changes in total number of ordinary shares, shareholding structure and assets
+and liabilities structure of the Company
+Applicable
+Not applicable
+(II) Pre-emptive rights
+There is no provision for pre-emptive rights under the Articles of Association and the PRC
+laws which would entitle the existing shareholders to have priority to subscribe for new
+shares on a pro rata basis in the event of new share issuance by the Company.
+(II) Changes of shares with selling restrictions
+Overseas listed
+2.
+83.00
+As at 31 December 2021
+Number Percentage
+Repurchase and
+cancellation
+Subtotal
+Number
+Percentage
+I.
+Shares with selling
+restrictions
+0
+0.00
+0
+0
+0
+0.00
+II.
+Shares without selling
+restrictions
+19,889,620,455
+100.00
+-21,100,500
+-21,100,500 19,868,519,955
+100.00
+1.
+RMB ordinary
+shares
+16,491,037,955
+82.91
+0 16,491,037,955
+SHAREHOLDERS
+III.
+17.00
+Total number of shareholders
+%
+China Energy Investment
+0 13,812,709,196
+69.52%
+0
+Nil
+N/A State-owned
+Corporation Limited
+corporation
+HKSCC NOMINEES LIMITED
+-20,842,236
+3,369,478,486
+16.96%
+Nature of
+shareholders
+0
+N/A Overseas corporation
+China Securities Finance
+-45
+594,718,004
+2.99%
+(1)
+Nil
+N/A Others
+Corporation Limited
+Hong Kong Securities Clearing
++118,584,244
+218,669,817
+1.10%
+Unknown
+Number
+0
+restrictions
+Status
+Total number of shareholders of ordinary shares as at the end of the
+reporting period (accounts)
+161,039
+Including: Holders of A shares (including China Energy)
+Registered holders of H shares
+1,952
+Total number of ordinary shareholders at the end of last month prior to the
+date of this annual report (accounts)
+150,723
+Including: Holders of A shares (including China Energy)
+148,787
+Registered holders of H shares
+1,936
+172 China Shenhua Energy Company Limited
+159,087
+(II) Shareholdings of top ten shareholders and top ten holders of marketable shares
+(or shareholders without selling restrictions) as of the end of the reporting
+period
+Section VIII Changes in Share Capital and Shareholders (Continued)
+with selling
+during the of the reporting
+period
+Percentage
+Name of shareholders
+Shares subject to pledge, tag
+or lock-up
+reporting period
+Decrease held at the end
+Number
+Increase Number of shares
+Shareholdings of top ten shareholders
+Unit: share
+of shares
+KPMG
+Independent auditor's report to the members of
+and Financial Statements
+Independent Auditor's Report
+Section X
+Caijing Magazine
+2021 Evergreen Award -
+Sustainable Development
+Efficiency Award
+182 China Shenhua Energy Company Limited
+14 December 2021
+China Business's Top 100
+Forum
+Contribution Enterprises
+Award, China Top 100
+Enterprises Award, China
+Ethical Enterprises Award
+China Securities Journal
+Hosted by Hong Kong Ta Kung
+Wen Wei Media Group
+China Fund Jihuibao
+Award Institution
+China Top 100 Special
+2021 Best Practice Cases for
+the Office of the Board of
+Directors of Listed Companies
+23rd Golden Bull Award for
+Listed Companies and
+2021 Golden Bull Social
+Responsibility Award
+China Shenhua Energy Company Limited
+The 11th China Securities Golden
+Bauhinia Award and Best Hong
+Kong Stock Connect Listed
+Company Award
+China Association for Public
+Companies
+(Incorporated in the People's Republic of China with limited liability)
+In accordance with the prevailing accounting
+standards, management performed assessment
+at the end of the reporting period to determine
+whether there was any indication that these coal
+mines related non-current assets may be impaired.
+An asset is impaired when its recoverable amount,
+or the recoverable amount of the cash generating
+unit to which it belongs, is less than its carrying
+amount.
+We have audited the consolidated financial statements of China Shenhua Energy Company Limited
+(the "Company") and its subsidiaries (collectively referred to as the "Group") set out on pages 190 to
+307, which comprise the consolidated statement of financial position as at 31 December 2021, and the
+consolidated statement of profit or loss and other comprehensive income, the consolidated statement
+of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to
+the consolidated financial statements, including a summary of significant accounting policies.
+Most Valuable Company in
+Investor Relations of the
+Year of the First China Listed
+Company Classic Award
+China Shenhua Energy Company Limited
+184
+challenging the reasonableness of
+significant judgements and estimates,
+such as sales growth rate related to future
+market supply and demand conditions,
+future coal price, future capital expenditure,
+future operating costs and discount rates
+used in management's calculation of
+value in use based on our knowledge of the
+business and industry;
+assessing the appropriateness of the
+methodologies used by management to
+estimate value in use with reference to the
+requirements of the prevailing accounting
+standards;
+obtaining an understanding of and
+assessing the design, implementation and
+operating effectiveness of key internal
+controls relating to impairment assessment
+on non-current assets, understanding of the
+Group's procedures to identify impairment
+indicators of the non-current assets and
+evaluating management's identification of
+impairment indicators, if any, based on the
+internal sources and external sources of
+information;
+Our procedures in relation to impairment
+assessment on coal mines related non-current
+assets included:
+How our audit addressed the key audit matter
+As at 31 December 2021, management performed
+an impairment assessment on assets or assets
+group with indications of impairment on the
+balance sheet date. The recoverable amounts of
+these coal mines related non-current assets is
+determined based on the higher of value in use
+that based on future discounted cash flows on a
+cash generating unit basis and the net value of the
+assets or assets group's fair value minus disposal
+costs.
+As at 31 December 2021, the Group's coal
+mines related non-current assets, which comprise
+property, plant and equipment, construction in
+progress, exploration and evaluation assets and
+other non-current assets, had a total carrying value
+of RMB97,300million.
+Key audit matter
+Refer to Notes 17(i), 18 and 20 to the consolidated financial statements and the accounting policies in
+Note 3.
+Impairment assessment on coal mines related non-current assets
+KEY AUDIT MATTERS (CONTINUED)
+Section X Independent Auditor's Report
+and Financial Statements (Continued)
+2021 Annual Report 183
+Key audit matters are those matters that, in our professional judgment, were of most significance in our
+audit of the consolidated financial statements of the current period. These matters were addressed in
+the context of our audit of the consolidated financial statements as a whole, and in forming our opinion
+thereon, and we do not provide a separate opinion on these matters.
+KEY AUDIT MATTERS
+We conducted our audit in accordance with Hong Kong Standards on Auditing ("HKSAS") issued by the
+Hong Kong Institute of Certified Public Accounts ("HKICPA"). Our responsibilities under those standards
+are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial
+Statements section of our report. We are independent of the Group in accordance with the HKICPA's
+Code of Ethics for Professional Accountants (the "Code"), and we have fulfilled our other ethical
+responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is
+sufficient and appropriate to provide a basis for our opinion.
+BASIS FOR OPINION
+In our opinion, the consolidated financial statements give a true and fair view of the consolidated
+financial position of the Group as at 31 December 2021, and of its consolidated financial performance
+and its consolidated cash flows for the year then ended in accordance with International Financial
+Reporting Standards ("IFRSS") issued by the International Accounting Standard Board ("IASB") and have
+been properly prepared in compliance with the disclosure requirements of the Hong Kong Companies
+Ordinance.
+OPINION
+13 December 2021
+180 China Shenhua Energy Company Limited
+12
+Directly or indirectly holding 58.56% shares of China
+Longyuan Power Group Corporation Limited;
+Directly or indirectly holding 50.78% shares of GD
+Power Development Co., Ltd.;
+State-owned assets operating activities within the
+scope authorized by the State Council; investment and
+management activities in various sectors, including
+resource products (such as coal), coal-to-liquids, coal
+chemical, power, thermal, port, various transportation,
+finance, domestic, international trade and logistics,
+real estate, advanced technology and information
+consultation and etc.; planning, organizing, coordinating
+and managing the production and operating activities
+in above sectors of members of China Energy Group;
+and sales of chemical materials and chemical products
+(excluding hazardous chemicals), textiles, construction
+materials, machinery, electronic equipment and office
+equipment. (Market entity is allowed to choose the
+business to be engaged in and carry out such business
+activities pursuant to laws; for projects that are subject
+to approval pursuant to the law, business operations
+shall commence in accordance with the business
+scope approved upon receipt of the approval from
+relevant authorities; no business activities which are
+prohibited or restricted by the state or Beijing industrial
+policies shall be carried out.)
+23 October 1995
+China Energy Investment Corporation Limited
+Wang Xiangxi
+Shareholdings in other
+domestic and overseas
+listed subsidiaries and
+associates during the
+reporting period
+Effectively controlling 78.40% shares of Guodian
+Technology & Environment Group Corporation Limited;
+Date of incorporation
+Principal business
+Name
+1. Legal person
+Controlling shareholder as at the end of the reporting period
+(1)
+IV. CHANGES IN CONTROLLING SHAREHOLDER AND DE FACTO CONTROLLER
+Section VIII Changes in Share Capital and Shareholders (Continued)
+Legal representative
+Effectively controlling 51.25% shares of Ningxia
+Yinglite Chemicals Co., Ltd.;
+Effectively controlling 41.24% shares of Yantai
+Longyuan Power Technology Co., Ltd.
+Holding 67.50% shares of Guodian Changyuan Electric
+Co., Ltd.;
+Legal person
+1.
+De facto controller
+(II)
+Section VIII Changes in Share Capital and Shareholders (Continued)
+2021 Annual Report 177
+On 8 March 2021, after the Company canceled the repurchased 21,100,500 H shares,
+the shareholding ratio of China Energy became 69.52%.
+Diagram of the equity and controlling relationship between the Company and the
+controlling shareholder at the end of the Reporting Period
+There was no change in the controlling shareholder of the Company during the
+reporting period.
+Description of changes in controlling shareholders during the reporting period
+3.
+2.
+Section VIII Changes in Share Capital and Shareholders (Continued)
+176 China Shenhua Energy Company Limited
+Indirectly holding 20.84% shares of Shenzhen Laibao
+Hi-Tech Co., Ltd.
+2021 Annual Report 175
+Name
+As at 31 December 2021, save as disclosed above, there was no other person who held
+interests and/or short positions in the shares or underlying shares of the Company which
+are required to be recorded in the register to be kept under section 336 of Part XV of the
+SFO, or was a substantial shareholder of the Company.
+corporation
+controlled by
+of total issued
+share capital of
+Percentage
+H shares/A shares
+over total issued
+H shares/A shares
+respectively
+Percentage of
+H shares/
+A shares held
+Nature of
+interest
+the Company
+H shares/
+A shares
+Name of
+shareholders
+No.
+Number of
+As at 31 December 2021, persons set out in the table below had an interest and/or short
+position in the shares or underlying shares of the Company which is required to be recorded
+in the register of equity interests and/or short positions pursuant to section 336 of Part
+XV of the Securities and Futures Ordinance (the "SFO", Chapter 571 of the Laws of Hong
+Kong):
+(III) Substantial shareholders' interests and short positions in the shares of the
+Company
+Section VIII Changes in Share Capital and Shareholders (Continued)
+Capacity
+%
+%
+1
+0.88
+5.18
+175,044,309
+Long position
+H shares
+Interest of
+BlackRock, Inc.
+2
+69.52
+83.76
+13,812,709,196
+N/A
+A shares
+Beneficial owner
+China Energy
+the substantial
+shareholder
+State-owned Assets Supervision and Administration Commission of the
+State Council
+December 2021
+3.
+2020-2021 Information
+Disclosure Work Appraisal
+Grade A
+ESG Excellent Practice Cases of
+Beijing Listed Companies
+Practice Case of 2020 Annual
+Performance Presentation of
+Beijing Listed Companies
+2020 Outstanding Performance
+Award for Enterprise Water
+Safety
+Best Investor Relations Award of
+Tianma Award
+2020 Evergreen Award
+-Sustainable Development
+Inclusive Award
+Industry Pioneer Title of Chine
+Carbon Company awarded
+by the First Session of China
+Carbon Company
+Award Title
+8
+00
+August 2021
+7
+August 2021
+6
+September 2021
+In 2021, the Company reached
+the level of four-and-a-half star
+leader in ESG rating of 440
+listed companies controlled by
+central enterprises, and was
+selected as one of the "ESG
+Pioneer 50 Index of Central
+Enterprises" and the "ESG
+Management Information
+System" was selected as an
+excellent ESG case in 2021.
+Award Institution
+Caijing Magazine
+2.
+11 December 2021
+10 December 2021
+November 2021
+9
+Award Title
+No. Date of Award
+Section IX Investor Relations (Continued)
+Subject Group of ESG Blue
+Book (2021) for Listed
+Companies of Central
+Enterprises by the State-
+owned Assets Supervision
+and Administration
+Commission of the State
+Council
+Sina Finance
+SSE
+The Listed Companies
+Association of Beijing
+The Listed Companies
+Association of Beijing
+CDP (Carbon Disclosure
+Project)
+Securities Times
+August 2021
+5
+2021 Annual Report 181
+4
+PERSISTING IN SUSTAINABLE DEVELOPMENT AND PROTECTING THE
+RIGHTS AND INTERESTS OF INVESTORS
+I.
+In 2021, China Shenhua strictly implemented the requirements of the Securities Law and the Opinions
+of the State Council on Further Improving the Quality of Listed Companies (-##
+LAK)), attached great importance to the legitimate rights and interests of investors,
+continuously improved the communication channels between the Board and investors, optimized
+corporate governance, strengthened market value management, actively explored new development
+ideas while operating in a sound manner, listened to investors' voices, and was committed to building
+a long-term, stable and win-win shareholder relations between the Company and investors and sharing
+the achievements of corporate development with investors.
+Section IX Investor Relations
+178 China Shenhua Energy Company Limited
+On March 8, 2021, the Company canceled the repurchased 21,100,500 H shares in the year 2020.
+No share repurchases were implemented by the Company in 2021.
+VII. DETAILED IMPLEMENTATION OF SHARE REPURCHASE
+Applicable ✓ Not applicable
+RESTRICTIONS ON THE REDUCTION IN THE SHAREHOLDING
+As at the end of the reporting period, there was no other corporate shareholder with more than
+10% shareholding in the Company.
+VI.
+V.
+There was no change in de facto controller of the Company during the reporting period.
+Diagram of the equity and controlling relationship between the Company and
+the de facto controller at the end of the Reporting Period
+Description of changes in control of the Company during the reporting period
+July 2021
+FORMULATING THE "14TH FIVE-YEAR PLAN" TO MAINTAIN THE ENTERPRISE
+DETERMINATION FOR DEVELOPMENT. The Company's management focused on long-term
+development and has organized several strategic seminars to analyze the new situation of China's
+energy development and the characteristics of the Company, and to formulate and optimize the
+"14th Five-Year Plan" of China Shenhua. The Company will actively participate in energy reform
+and develop new energy by adopting various methods such as self-built operation, industrial fund
+and equity investment while continuing to consolidate the advantages of integrated operation.
+STRICTLY CONTROLLING GOVERNANCE RISKS AND CONTINUOUSLY STRENGTHENING
+THE MANAGEMENT OF RELATED TRANSACTIONS. Affected by internal and external factors
+such as the significant increase in coal market prices and the continuous increase in the asset
+size of the Company in 2021, the Company adjusted the annual caps of daily related transactions
+such as the Financial Services Agreement and the Mutual Coal Supply Agreement. During the
+formulation of the agreements, in order to fully protect the interests of small and medium-sized
+shareholders, the management of the Company communicated with the regulators and controlling
+shareholders on the agreement plans for many times, so as to maximize the favorable terms for
+the Company and enhance the operating performance of the Company with strict compliance with
+the listing rules of the two places and reducing the governance risks.
+STRENGTHENING INTERNAL MANAGEMENT AND ENHANCING MANAGEMENT
+EFFICIENCY. The Company continuously strengthened the management of subsidiaries and
+branches and regional management, established the Hebei Branch of China Shenhua Energy
+Company Limited, and further improved the regional integration of the power industry and
+enhanced market competitiveness. Our Company established the Guoneng (Weifang) Energy Co.,
+Ltd., participated in the investment and establishment of the Guoneng Green and Low-Carbon
+Development Investment Fund, and actively sought development opportunities in the field of new
+energy. It completed the capital injection into China Energy Xinshuo Railway Development Co.,
+Ltd., further integrated transportation assets and improved the operational efficiency of railway
+assets.
+OTHER CORPORATE SHAREHOLDERS WITH MORE THAN 10% SHAREHOLDING
+IN THE COMPANY
+2021 Annual Report 179
+June 2021
+ACTIVELY RETURNING SHAREHOLDERS AND IMPLEMENTING A STABLE AND HIGH
+DIVIDEND DISTRIBUTION POLICY. With the approval of the 2019 AGM, the Company increased
+the cash dividend ratio from 2019 to 2021 to not less than 50% of the net profit attributable
+to shareholders of the Company in that year. According to the China Accounting Standards for
+Business Enterprises, the dividend ratios of the Company in 2019 and in 2020 were 57.9% and
+91.8%, respectively. The Board recommended to pay a final dividend of RMB2.54 per share
+(tax inclusive) in 2021, RMB50,466 million (tax inclusive) in total, accounting for approximately
+100.4% of the net profit attributable to shareholders of the Company under the China Accounting
+Standards for Business Enterprises in 2021.
+3
+May 2021
+January 2021
+1
+Date of Award
+No.
+2
+III. CHINA SHENHUA MAJOR AWARD LIST IN 2021
+Section IX Investor Relations (Continued)
+Section IX Investor Relations (Continued)
+PROVIDING BETTER DAILY SERVICE FOR INVESTORS AND MAINTAINING TWO-WAY
+COMMUNICATION CHANNELS. In 2021, the Company took a number of measures to ensure
+the smooth flow of investor communication channels such as investor hotline and investor
+mailbox, received investors' studies and researches and actively responded to questions on SSE
+e-interactive to achieve high-quality communication with investors both offline and online. During
+the year,
+the Company held a total of 76 investor communication meetings through investor
+research and conference calls, with more than 1,000 investors involved. The Company answered
+180 questions from investors on the SSE e-interactive platform, answering investors' queries in a
+timely manner. The Company regularly reported investors' concerns and demands management
+and the Board of the Company on a weekly and monthly basis to ensure that investors' voices are
+delivered in a timely and effective manner.
+CARING FOR SHAREHOLDERS AND RESOLUTELY SAFEGUARDING SHAREHOLDERS'
+RIGHT TO KNOW AND DECISION-MAKING. In 2021, the Company held two general meetings
+and A shareholders class meeting and H shareholders class meeting. In response to the
+proposals concerned by shareholders, the Company communicated with 26 domestic and oversea
+institutional shareholders and dozens of individual shareholders, and answered the relevant
+questions seriously, thus ensuring investors' right to know to the maximum extent. The Company
+took the convenience of shareholders as the first priority, took into account the pandemic
+prevention requirements, and held the general meeting on the spot. Chairman and management
+of the Company deeply communicated with shareholders attended and heard the opinions and
+suggestions for the operation and development for the Company from shareholders.
+TAKING THE PERFORMANCE PRESENTATION AS THE MAIN FORUM TO ENHANCE THE
+QUALITY OF INVESTOR SERVICES. In 2021, the Company overcame unfavorable factors such
+as the pandemic influence and innovatively adopted various methods to hold four performance
+presentations for the year 2020, the first quarter of 2021, the first half of 2021 and the third
+quarter of 2021, which explained the Company's performance and development ideas in detail
+and guided investors to accurately understand the Company's operation. For the first time, the
+performance presentation for the year 2020 was held in the form of "video + internet interaction"
+and the performance presentation for the fires half of 2021 was held in the form of "live broadcast
++ telephone interaction + text communication" to meet the communication needs of different
+investors. Taking into account the current information access preferences of investors, especially
+small and medium-sized investors, the Company has prepared small videos for annual and interim
+performance interpretation to improve the understandable and propagable properties of the
+performance interpretation. In addition, the Company attached great importance to the interactive
+needs of small and medium-sized investors. In the four performance presentations, the Company
+responded to 53 questions in text from investors collected in advance, and the Company's
+executives responded to a total of 289 questions from investors in text on site.
+II. HOLDING THE POSITION ON BEHALF OF PEOPLE AND CONTINUOUSLY
+OPTIMIZING INVESTOR SERVICES
+(333)
+186
+net of income tax
+Other comprehensive income for the year,
+instruments at fair value through other
+comprehensive income
+(344)
+Fair value changes on investments in debt
+(41)
+Total comprehensive income for the year
+66
+(4)
+61,195
+Total comprehensive income
+for the year attributable to:
+Equity holders of the Company
+Non-controlling interests
+190
+China Shenhua Energy Company Limited
+Consolidated statement of Profit or Loss and
+Other Comprehensive Income (Continued)
+For the year ended 31 December 2021
+Year ended 31 December
+Profit for the year attributable to:
+Equity holders of the Company
+Non-controlling interests
+2021
+Notes
+RMB million
+2020
+(172)
+RMB million
+43,651
+Share of other comprehensive income of associates
+(18,161)
+Exchange differences
+51,607
+(2,263)
+Share of results of associates
+(874)
+947
+Profit before income tax
+79,170
+59,362
+Income tax expense
+10
+(15,378)
+Profit for the year
+12
+61,009
+43,984
+Profit for the year
+61,009
+43,984
+Other comprehensive income for the year
+Items that will not be reclassified to profit or loss,
+net of income tax:
+Fair value changes on investments in equity
+instruments at fair value through other
+comprehensive income
+292
+99
+56
+Items that may be reclassified subsequently to profit or
+loss, net of income tax:
+35,849
+26,201
+8,135
+Interests in associates
+781222
+263,656
+238,198
+(2,583)
+39,845
+4,000
+4,651
+3,888
+24
+22,240
+18,597
+47,708
+49,556
+Financial assets at fair value through
+other comprehensive income
+Other non-current assets
+Deferred tax assets
+223
+22
+2,174
+1,845
+23
+28,089
+35,890
+Right-of-use assets
+20
+Intangible assets
+19
+61,009
+43,984
+51,830
+35,607
+9,365
+8,044
+61,195
+43,651
+Earnings per share
+-Basic/ diluted (RMB)
+16
+2.597
+9,402
+1.803
+2021 Annual Report 191
+Consolidated Statement of Financial Position
+At 31 December 2021
+Non-current assets
+Notes
+31 December
+2021
+RMB million
+31 December
+2020
+RMB million
+Property, plant and equipment
+Construction in progress
+Exploration and evaluation assets
+The notes on pages 201 to 307 form part of these financial statements.
+1,684
+As set out in Notes 17(i), 18 and 20 to the
+consolidated financial statements, management
+concluded that an impairment provision for coal
+mines related non-current assets of RMB837
+million was required for the current year.
+66
+Conclude on the appropriateness of the directors' use of the going concern basis of accounting
+and, based on the audit evidence obtained, whether a material uncertainty exists related to events
+or conditions that may cast significant doubt on the Group's ability to continue as a going concern.
+If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's
+report to the related disclosures in the consolidated financial statements or, if such disclosures
+are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained
+up to the date of our auditor's report. However, future events or conditions may cause the Group
+to cease to continue as a going concern.
+AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED
+FINANCIAL STATEMENTS (CONTINUED)
+Section X Independent Auditor's Report
+and Financial Statements (Continued)
+188 China Shenhua Energy Company Limited
+Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
+estimates and related disclosures made by the directors.
+Obtain an understanding of internal control relevant to the audit in order to design audit
+procedures that are appropriate in the circumstances but not for the purpose of expressing an
+opinion on the effectiveness of the Group's internal control.
+Identify and assess the risks of material misstatement of the consolidated financial statements,
+whether due to fraud or error, design and perform audit procedures responsive to those risks, and
+obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk
+of not detecting a material misstatement resulting from fraud is higher than for one resulting from
+error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
+override of internal control.
+As part of an audit in accordance with HKSAs, we exercise professional judgement and maintain
+professional skepticism throughout the audit. We also:
+Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in
+accordance with HKSAS will always detect a material misstatement when it exists. Misstatements
+can arise from fraud or error and are considered material if, individually or in the aggregate, they could
+reasonably be expected to influence the economic decisions of users taken on the basis of these
+consolidated financial statements.
+Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as
+a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's
+report that includes our opinion. This report is made solely to you, as a body, and for no other purpose.
+We do not assume responsibility towards or accept liability to any other person for the contents of this
+report.
+AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED
+FINANCIAL STATEMENTS
+The directors are assisted by the Audit Committee in discharging their responsibilities for overseeing the
+Group's financial reporting process.
+In preparing the consolidated financial statements, the directors are responsible for assessing the
+Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern
+and using the going concern basis of accounting unless the directors either intend to liquidate the Group
+or to cease operations, or have no realistic alternative but to do so.
+The directors are responsible for the preparation of the consolidated financial statements that give a
+true and fair view in accordance with IFRSS issued by the IASB and the disclosure requirements of the
+Hong Kong Companies Ordinance and for such internal control as the directors determine necessary
+to enable the preparation of consolidated financial statements that are free from material misstatement,
+whether due to fraud or error.
+RESPONSIBILITIES OF THE DIRECTORS FOR THE CONSOLIDATED FINANCIAL
+STATEMENTS
+and Financial Statements (Continued)
+Section X Independent Auditor's Report
+2021 Annual Report 187
+If, based on the work we have performed, we conclude that there is a material misstatement of this
+other information, we are required to report that fact. We have nothing to report in this regard.
+In connection with our audit of the consolidated financial statements, our responsibility is to read the
+other information and, in doing so, consider whether the other information is materially inconsistent with
+the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be
+materially misstated.
+Our opinion on the consolidated financial statements does not cover the other information and we do
+not express any form of assurance conclusion thereon.
+The directors are responsible for the other information. The other information comprises all the
+information included in the annual report, other than the consolidated financial statements and our
+auditor's report thereon.
+INFORMATION OTHER THAN THE CONSOLIDATED FINANCIAL STATEMENTS AND
+AUDITOR'S REPORT THEREON
+inspecting underlying documentation for
+journal entries relating to coal sales which
+were considered to meet specific risk-based
+criteria.
+comparing, on a sample basis, whether
+specific coal sales transactions recorded
+before and after the financial year end date
+with relevant underlying documentation,
+which included sales invoices, goods
+dispatch notes, customer receipts, or
+shipping documents, as applicable under the
+respective sales transactions contracts, to
+determine whether the related revenue had
+been recognised in the appropriate financial
+period on the basis of the terms of sale as
+set out in the respective sales contracts; and
+Evaluate the overall presentation, structure and content of the consolidated financial statements,
+including the disclosures, and whether the consolidated financial statements represent the
+underlying transactions and events in a manner that achieves fair presentation.
+How our audit addressed the key audit matter
+Obtain sufficient appropriate audit evidence regarding the financial information of the entities
+or business activities within the Group to express an opinion on the consolidated financial
+statements. We are responsible for the direction, supervision and performance of the Group audit.
+We remain solely responsible for our audit opinion.
+We also provide the Audit Committee with a statement that we have complied with relevant ethical
+requirements regarding independence and communicate with them all relationships and other matters
+that may reasonably be thought to bear on our independence and, where applicable, actions taken to
+eliminate threats or safeguards applied.
+Selling expenses
+Gross profit
+233,263
+(162,374)
+335,216
+(239,156)
+5 7
+Cost of sales
+Goods and services
+Revenue
+RMB million
+2020
+RMB million
+Notes
+Year ended 31 December
+2021
+For the year ended 31 December 2021
+Other Comprehensive Income
+Consolidated statement of Profit or Loss and
+2021 Annual Report 189
+25 March 2022
+Central, Hong Kong
+10 Chater Road
+8th Floor, Prince's Building
+Certified Public Accountants
+KPMG
+The engagement partner on the audit resulting in the independent auditor's report is Guen Kin Shing.
+From the matters communicated with the Audit Committee, we determine those matters that were
+of most significance in the audit of the consolidated financial statements of the current period and
+are therefore the key audit matters. We describe these matters in our auditor's report unless law or
+regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
+determine that a matter should not be communicated in our report because the adverse consequences
+of doing so would reasonably be expected to outweigh the public interest benefits of such
+communication.
+We communicate with the Audit Committee regarding, among other matters, the planned scope and
+timing of the audit and significant audit findings, including any significant deficiencies in internal control
+that we identify during our audit.
+Refer to Note 5 to the consolidated financial statements and the accounting policies in Note 3.
+Key audit matter
+Timing of revenue recognition from sale of coal (continued)
+KEY AUDIT MATTERS (CONTINUED)
+(581)
+(555)
+General and administrative expenses
+Research and development costs
+Other gains and losses
+Other income
+Loss allowances, net of reversal
+Other expenses
+Interest income
+(9,119)
+(8,948)
+(2,499)
+(1,362)
+282
+12
+(955)
+(194)
+893
+778
+12
+(2,561)
+(524)
+(1,103)
+(1,090)
+Finance costs
+70,889
+96,060
+Section X Independent Auditor's Report
+and Financial Statements (Continued)
+KEY AUDIT MATTERS (CONTINUED)
+and Financial Statements (Continued)
+186 China Shenhua Energy Company Limited
+obtaining confirmations, on a sample basis,
+from customers of the Group in relation
+to coal sales transactions during the year
+and balances of trade receivables of the
+year end and, for unreturned confirmations,
+performing alternative procedures by
+comparing the sales amount of the
+transactions with relevant underlying
+documentation or cash receipts subsequent
+to the financial year end relating to trade
+receivable balances;
+inspecting coal sale contracts on a sample
+basis, to identify terms and conditions
+relating to transfer of the control of the
+coal and assessing the Group's timing of
+revenue recognition with reference to the
+requirements of the prevailing accounting
+standards;
+obtaining an understanding of and
+assessing the design, implementation and
+operating effectiveness of key internal
+controls over revenue recognition from the
+sale of coal;
+Our audit procedures to assess the timing of
+revenue recognition from the sale of coal included
+the following:
+How our audit addressed the key audit matter
+Revenue is one of the key performance indicators
+of the Group. We identified the timing of revenue
+recognition as a key audit matter because of the
+different terms of trade offered by the Group to its
+customers which increases the risk that revenue
+could be recorded in the incorrect period or could
+be subject to manipulation to meet targets or
+expectations.
+Sale of coal accounted for 74% of the Group's
+revenue for the year ended 31 December 2021.
+Sale of coal is recognised when the control of the
+coal is transferred to the customer. Management
+evaluates the terms of individual contracts in order
+to determine the appropriate timing for revenue
+recognition, which varies amongst contracts.
+Key audit matter
+Refer to Note 5 to the consolidated financial statements and the accounting policies in Note 3.
+Timing of revenue recognition from sale of coal
+2,492
+KEY AUDIT MATTERS (CONTINUED)
+2021 Annual Report 185
+assessing the relevant disclosures in the
+consolidated financial statements in respect
+of management's impairment assessment
+with reference to the requirements of the
+prevailing accounting standards.
+evaluating the sensitivity analysis on
+discount rates and considering the resulting
+impact on the impairment assessment
+for the year and whether there were any
+indicators of management bias; and
+evaluating the historical accuracy of
+management's forecasts by comparing
+cash flow forecasts made in previous
+periods to the actual results in the current
+year;
+When the management determines the
+recoverable amount by using the value
+in use calculations that based on future
+discounted cash flows, engaging our
+internal valuation specialists to assess
+whether the discount rates applied in the
+value in use calculations were within the
+reasonable range;
+How our audit addressed the key audit matter
+We identified impairment assessment on coal
+mines related non-current assets as a key audit
+matter due to the significant judgment made
+by management in determining the recoverable
+amounts of the assets and considering the
+possibility of management bias in the selection of
+assumptions adopted.
+30
+When assessing the recoverable amounts,
+management is required to make a number of
+judgemental assumptions, particularly relating
+to the discount rates, the underlying cash
+flows projection based on the future market
+supply and demand conditions. Any changes in
+management's judgement may impact the results
+of the impairment assessment.
+Key audit matter
+Refer to Notes 17(i), 18 and 20 to the consolidated financial statements and the accounting policies in
+Note 3.
+Impairment assessment on coal mines related non-current assets (continued)
+Section X Independent Auditor's Report
+and Financial Statements (Continued)
+3,568
+Section X Independent Auditor's Report
+Total non-current assets
+controlling
+Total
+Total interests equity
+RMB million RMB million RMB million RMB million RMB million RMB million RMB million RMB million RMB million
+(Note (i)) (Note (ii))
+Share Treasury
+capital shares
+RMB million RMB million
+(Note 38) (Note 38)
+(Note (iii))
+(Note (iv))
+(Note (v))
+At 1 January 2021
+19,890
+(256)
+85,001
+3,657
+(201)
+20,236
+(14,809)
+250,685
+364,203
+65,384 429,587
+Profit for the year
+51,607
+51,607
+9,402
+61,009
+Non-
+Share
+premium reserve
+reserves earnings
+reserves
+449,221
+429,587
+38
+19,869
+19,890
+360,169
+344,313
+380,038
+364,203
+69,183
+65,384
+449,221
+(133)
+429,587
+Wang Xiangxi
+Chairman and Executive Director
+Xu Mingjun
+Executive Director
+The notes on pages 201 to 307 form part of these financial statements.
+2021 Annual Report 193
+Consolidated Statement of Changes in Equity.
+For the year ended 31 December 2021
+Equity attributable to equity holders of the Company
+Capital Exchange Statutory
+Other Retained
+reserve
+Approved and authorised for issue by the board of directors on 25 March 2022.
+63,824
+356
+(37)
+(235)
+1,646
+1,646
+(6,739)
+(6,739)
+Disposal of subsidiaries
+Others
+(227)
+(227)
+137
+(170)
+(33)
+(279)
+At 31 December 2021
+19,869
+84,766
+3,657
+(334)
+22,425 (14,316)
+263,971
+380,038
+69,183
+449,221
+194 China Shenhua Energy Company Limited
+2,856
+56
+256
+(21)
+¨¨¨¨- (3,392) - 3,392 ---
+186
+Other comprehensive income
+for the year
+Total comprehensive income
+for the year
+Dividend declared (Note 15)
+Appropriation of maintenance
+and production funds
+(Note (iii)))
+Utilisation of maintenance and
+production funds (Note (iii)
+(133)
+356
+51,607
+223
+51,830
+61,195
+(35,962)
+(35,962)
+(35,962)
+5,581
+(5,581)
+Cancellation of repurchased
+own shares
+Contributions from non-
+controlling shareholders
+Distributions to non-
+controlling shareholders
+9,365
+69,628
+(246)
+1,510
+Assets classified as held for sale
+11
+294
+2,783
+Total current assets
+208,310
+172,229
+Current liabilities
+Borrowings
+31
+9,917
+8,847
+Accounts and bills payables
+34
+35,216
+28,980
+Accrued expenses and other payables
+35
+29,109
+18,949
+Current portion of lease liabilities
+33
+187
+242
+Current portion of long-term liabilities
+112,880
+156,706
+29
+11,186
+402,287
+606
+390,675
+Current assets
+Inventories
+Accounts and bills receivables
+Financial assets at fair value through other
+comprehensive income
+Restricted bank deposits
+Time deposits with original maturity over three months
+Cash and cash equivalents
+12 220 2
+36
+25
+12,750
+26
+13,607
+11,759
+376
+27
+18,514
+17,480
+28
+4,479
+3,391
+1,701
+12,633
+1,427
+Prepaid expenses and other current assets
+Income tax payable
+Share capital
+Reserves
+Consolidated statement of Profit or Loss and
+Other Comprehensive Income (Continued)
+At 31 December 2021
+Equity attributable to equity holders of the Company
+Non-controlling interests
+Total equity
+Notes
+31 December
+2021
+RMB million
+31 December
+2020
+RMB million
+49,193
+Equity
+50,251
+32
+3,172
+3,241
+36
+8,025
+2,661
+6,754
+6,169
+896
+30
+689
+974
+33333
+Net assets
+37
+Lease liabilities
+6,313
+Total non-current liabilities
+Contract liabilities
+6,864
+Liabilities associated with assets classified
+as held for sale
+9,028
+217
+Total current liabilities
+91,748
+69,493
+Net current assets
+5,256
+Long-term liabilities
+102,736
+Total assets less current liabilities
+518,849
+493,411
+192
+China Shenhua Energy Company Limited
+Non-current liabilities
+Borrowings
+Deferred tax liabilities
+Accrued reclamation obligations
+Bonds
+116,562
+19.5
+13.6
+(19.0)
+Third-party ports
+23.5
+29.0
+263
+Shenshuo Railway
+18.8
+4301
+30.2
+29.6
+(1.8
+37.9
+Zhunge'er Mines
+37.2
+444
+66
+419
+16.3
+96.3
+(201
+Classify by internal and external customers
+11
+1.8
+1.5
+(1.5
+605
+13.5
+13.3
+(1.5
+19.9
+19.6
+Shengli Mines
+⠀⠀⠀⠀⠀⠀⠀
+::::::
+13.7
+8.5
+322
+47
+366
+0.9
+4.3
+Sales to internal coal chemical segment
+3
+Sales to internal power segment
+2
+Sales to external customers
+1
+ཙྪཱ་ྒུབྷཡཱགྷ
+(1.3
+4.9
+(I) Classify by contract pricing mechanism
+Self-owned railways
+0.5
+193.9
+194.9
+Huanghua Port
+%
+% 100 million tonnes 100 million tonnes
+100 million tonnes 100 million tonnes
+%
+Shendong Mines
+100 million tonnes 100 million tonnes
+239.1
+Change
+2020
+Milion tonnes
+Million tonnes
+240.1
+Self-owned ports
+Change
+Change 31 December 2021 31 December 2020
+(16.7)
+Change 31 December 2021 31 December 2020
+31 December 2021 31 December 2020
+0.4
+153.9
+156.0
+87.2
+23.6
+Direct sales through coal mine pit
+2
+(3) Spot commodity
+(2) Monthly long-term agreement
+(1) Annual long-term agreement
+95.1
+458.7
+Sales through Trading Group
+1
+-
+0.1
+Baoshen Railway
+Shenhua Zhuhai Coal Dock
+(3.8
+44.4
+(0.2)
+45.2
+45.1
+Shenhua Tianjin Coal Dock
+42.7
+(1.9
+88.9
+22
+Ganquan Railway
+88.8
+263.6
+8.6
+62
+285.7
+%
+billion tonne km billion tonne km
+Change
+2020
+ཝརྞྞབྷཟaག་ཟཁ་རྫོདཿབྷལྷ
+Total railway turnover
+7.3
+23
+113.0
+Total of shipping volume
+State-owned railways
+(53.7)
+70.0
+32.4
+External customers
+Huangda Railway
+106.5
+43.0
+The Group's internal customers
+121.2
+54.1
+(0.7)
+1.1
+塔然高勒
+As at
+Baotou
+包頭
+Shendong Mines
+A1. 神束礦區
+煤礦 COAL MINE
+Ganqimaodu
+甘其毛都
+6.8
+330.6
+10.9
+44.9
+5.5
+183.4
+23.2
+9.9
+64.7
+1.7
+10.8
+26.9
+-
+45.5
+(3.9
+Total seaborne coal sales
+77.3
+(1.9
+Table 16 Shipping Volume
+Baotou Mines
+-
+.
+0.3
+0.3
+05
+0.5
+Dazhun Railway
+Baorixile Mines
+Bazhun Railway
+12.6
+11.3
+(1.8
+11.3
+11.1
+(1.5)
+13.5
+13.3
+Tahan Railway
+(1.7)
+268.1
+11.6
+107.6
+64.2
+3.7
+144.2
+141.5
+11.9
+296.8
+332.1
+Total of China Shenhua
+Shuchuang-Huangwan Railway
+%
+Million tonnes
+Million tonnes
+Others
+100.0
+4.8
+Zhunchi Railway
+Change
+2020
+2021
+1
+67.6
+Xinje Mines
+49.4
+44.8
+176
+74.3
+2021
+193
+Table 14 Seaborne Coal at Ports
+245
+17
+702
+714
+(74.4
+1,501
+385
+Others
+0.39
+7.16
+130
+5. Others
+671
+2.996
+(7.5
+665
+615
+External transportation charges
+26,499
+36,824
+5.620
+31,204
+346.5
+343
+88.5
+51
+5,921
+72
+7.4
+Sichuan
+Sichuan Provincial Local
+Sichuan Energy hydropower)
+950
+565
+4,067
+37.7
+106
+38.5
+North China Power Grid
+Beijing Gas Power
+Other power plants
+433.77
+326.11
+Total
+50.0
+4.6
+1.5
+107.8
+Beijing
+305
+811 (14.9
+690
+4,217
+Recair and maintenance
+16.1
+311
+361
+466.7
+3
+17
+22.7
+344
+3.231
+422
+4,185
+5,078
+Personnel expenses
+1.600
+2.000
+2.000
+467
+280
+2.1
+Tarangaole
+21.3
+30.5
+364
+316
+61.1
+113
+182
+(1.1)
+736
+728
+14
+3,917
+3,972
+Depreciation and amortization
+210
+300
+-
+300
+465
+365
+62.8
+298
+485
+637.5
+8
+59
+15.2
+224
+125
+Power Grid
+Cost of extemal transportation business
+tax)
+volume
+volume
+tax
+volume
+Sales volume
+Price (excluding
+Price (excluding
+total sales
+Sales
+Sales volume
+Price (excluding
+Percentage to
+Percentage to
+2021
+Change
+2020
+Total sales volume/average price (excluding tax)
+17
+4.675
+4.754
+82.1
+total sales
+tax)
+Million tonnes
+%
+Marketable reserve (under JORC standard)
+As at
+As at
+As at
+As at
+As at
+Recoverable reserve (under PRC standard)
+Coal resources (under PRC standard)
+Table 13 Coal Resources Reserve
+43.4
+8.0
+410
+100.0
+446.4
+588
+100.0
+482 3
+Mines
+%
+%
+RMB/tonne
+%
+Million tonnes
+RMB/tonne
+2.755
+Table 15 Railway Cargo Transportation Turnover
+5.018
+3,314
+125
+3.0
+3.946
+4.065
+82.2
+5.006 2,747
+10.5
+2717
+3,002
+8.7
+62
+20,492 18,847
+960
+950
+(31.9
+1,591
+1,084
+55.9
+396
+18.9
+2.976
+3.539
+Prime business cost
+Other operating costs
+1,020
+1,036
+3.342
+8.5
+22.020 20,304
+Total cost of sales
+Table 12 Coal Sales Price
+0.8
+120
+121
+50.0
+8
+12
+187 (34.8)
+122
+20.7
+421
+508
+Tax and surcharge
+6.7
+609
+568
+46.8
+218
+(1.5
+0.8
+韓家村
+-100.00%-
+東勝
+China Energy Guangtou Beihai Power Generation Co., Ltd.
+52.00%-
+5.00%- China National Coal Exchange Co., Ltd.
+China Energy Trading Group Limited
+100.00%
+Coal Sales
+China Energy Sichuan Energy Co., Ltd.
+66.00%-
+China Energy Mengjin Thermal Power Co., Ltd.
+51.00%-
+Power Generation
+-69.52%
+Corporation
+China Energy
+Investment
+Shenhua (Fujian) Energy Co., Ltd.
+-100.00%-
+Ha'erwusu Opencast Mine
+Shendong Coal Branch
+Major Branches
+Shenhua Shendong Power Co., Ltd.
+2,475
+Shenhua Guohua Shouguang Power Generation Company Limited
+Limited
+60.00%-
+Other A Share
+Shareholders
+100.00% China Energy Baoshen Railway Group Co., Ltd.
+88.16%
+88.46 %
+Major associated companies
+Major Branches
+Shipping
+Port
+*
+China Shenhua
+Energy Company Limited
+Railway
+China Energy Qingyuan Power Generation Co., Ltd.
+51.00%-
+China Energy Guangtou Liuzhou Power Generation Co., Ltd.
+-13.48%
+70.00%-
+Major Controlling Companies
+China Energy Group Yongzhou Power Generation Co., Ltd.
+80.00%-
+China Energy Xinshuo Railway Co., Ltd.
+100.00%
+China Energy Shenhua Jiujiang Power Generation Co., Ltd.
+-100.00%-
+China Energy Baoshen Railway Co., Ltd.
+Shenhua Ganquan Railway Co., Ltd.
+China Energy Guohua (Beijing) Gas Thermal Power Co., Ltd.
+-100.00%-
+90.00% China Energy Xinzhun Railway Co., Ltd.
+52.72% China Energy Shuohuang Railway Development Co., Ltd.
+-75.00% Huangda Railway Co., Ltd.
+Major
+Controlling
+Companies
+China Energy Guohua Beijing Power Research Institute Co., Ltd.
+92.00%-
+3110
+Heilongjiang
+黑龍江
+Zhejiang
+浙江
+Liaoning
+遼寧
+Jiangsu
+江蘇
+Anhui
+釣魚島
+安徽
+山東
+Hongkong
+香港
+Macau
+澳門
+Guangdong
+廣東
+Jiangxi
+Hunan
+湖南
+Shandong
+Diaoyu Islands *
+福建
+Fujian
+PT GH EMM Indonesia
+70.00%-
+Tianjin Guohua Jinneng Power Co., Ltd.
+65.00%-
+China Energy Jinjie Energy Co., Ltd.
+70.00%-
+57.76%- Shenhua Zhunge'er Energy Co., Ltd.
+62.82% Shenhua Beidian Shengli Energy Co., Ltd.
+60.00% - Shenhua Xinjie Energy Co., Ltd.
+-100.00%-China Energy Baotou Energy Co., Ltd.
+56.61%-China Energy Baorixile Energy Co., Ltd.
+50.10%-China Energy Yulin Energy Co., Ltd.
+60.00% Shenhua Bayannur Energy Co., Ltd.
+Shareholders
+17.00%
+H Share
+Major Controlling Companies
+Coal Production
+-100.00% China Energy Shendong Coal Group Co., Ltd.
+China Energy Yudean Taishan Power Co., Ltd.
+80.00%-
+China Energy Hebei Dingzhou Power Generation Co., Ltd.
+40.50%-
+Equity structure diagram
+China Energy Hebei Cangdong Power Generation Co., Ltd.
+51.00%-
+----------
+Taiwan
+台灣
+85.00% Shenhua Zhunchi Railway Company Limited
+-100.00% China Energy Railway Equipment Co., Ltd.
+Shenshuo Railway Branch
+Track Mechanical Maintenance Branch
+12.5% - Haoji Railway Co., Ltd.
+138.2
+2,426
+3,352.16
+RMB100 million
+Revenue
+22.1
+1,363.3
+123.3
+1,350
+1,664.5
+2,332.63
+100 million kWh
+8.0
+4.464
+101.3
+4.76
+4.823
+100 million tonnes
+5.3
+2.916
+108.1
+2.84
+Power generation
+43.7
+Costs
+RMB100 million
+approximately 7.4% approximately 5%
+24 China Shenhua Energy Company Limited
+increase of 3.6%
+Year-on-year
+Year-on-year
+increase of
+increase of
+Year-on-year
+of self-produced coal
+Changes in unit production costs
+and net finance costs
+and R&D expenses
+7.4
+114.44
+98.3
+125
+122.90
+RMB100 million
+Sales, general and administration,
+47.3
+1,623.74
+140.3
+1,704
+2,391.56
+3.070
+江西
+100 million tonnes
+%
+Shengli Energy Branch
+-100.00% Shenhua Geological Exploration Co., Ltd.
+Others
+Major
+Branches
+Major Controlling Companies
+Shandong Branch
+China Energy Group Yueyang Power Generation Co., Ltd.
+Guangdong Branch
+-100.00% China Energy Supply Chain Management Group Co., Ltd.
+-100.00%-China Energy Information Technology Co., Ltd.
+80.00%-
+China Energy Baotou Coal
+Chemical Co., Ltd.
+Major associated companies
+100.00%
+Shenhua Shandong Power Sales Co., Ltd.
+-90.00%-
+-100.00%- China Energy Guohua (Beijing) Distributed Energy Technology Co., Ltd.
+China Energy (Guangdong) Electricity Sales Co., Ltd.
+-100.00%-
+PT. Shenhua Guohua Pembangkitan Jawa Bali
+70.00%-
+PT. Shenhua Guohua Lion Power Indonesia
+75.00%-
+70.00%-China Energy Huanghua Harbour Administration Co., Ltd.
+55.00%-China Energy (Tianjing) Harbour Administration Co., Ltd.
+55.00%-China Energy Zhuhai Harbour Administration Co., Ltd.
+51.00% China Energy Yuanhai Shipping Co., Ltd.
+Coal Chemical
+-40.00%- China Energy Finance Co., Ltd.
+(drectly and indirectly
+Guohua Huizhou Thermal Power Branch
+-100.00% China Shenhua Overseas Development and Investment Co., Ltd.
+%
+change
+Year-on-year
+Actual amount
+for 2020
+of Completion
+Proportion
+Target for
+2021
+Actual amount
+for 2021
+The Group recorded a profit before tax for the year of RMB79,170 million (2020: RMB59,362
+million), representing a year-on-year increase of 33.4%; a profit for the year attributable to equity
+holders of the Company of RMB51,607 million (2020: RMB35,849 million), and basic earnings
+per share of RMB2.597/share (2020: RMB1.803/share), representing a year-on-year increase of
+44.0%.
+The year 2021 is an extraordinary year in China's history of energy industry. No other year
+has witnessed more attention from the central government, more intensive adjustment of
+policies and more volatile changes of the market. In the face of the risky and challenging task
+of supply guarantee and the complex and austere business situation, the Company resolutely
+implemented the work requirements of the CPC Central Committee on "Stability in Six Areas"
+and "Six Priorities", adhered to the mission of "becoming the ballast for energy supply and the
+pioneer in energy revolution", earnestly fulfilled its political and social responsibilities as a central
+state-owned enterprise, realised the compatibility and mutual promotion of energy supply and
+production and operation, and maintain a high level of integrated operation to achieve the annual
+operation targets a sound manner.
+DISCUSSION AND ANALYSIS ON OPERATION RESULTS
+I.
+Section IV Directors' Report (Continued)
+100.00%-China Energy Economy and Technology Institute Co., Ltd.
+-51.00% Shenhua (Tianjin) Financial Leasing Co., Ltd.
+China Energy Shenfu (Shishi) Power Generation Co., Ltd.
+42.53% Beijing GD Power Co., Ltd.
+Associated
+Companies
+51.00%-
+-100.00% China Energy Zhunneng Group Co., Ltd.
+as at 31 December 2021 is for illustrative purpose only.
+The equity structure diagram of China Shenhua (including major branches/subsidiaries)
+-100.00% Shenhua International (Hong Kong) Limited
+Commercial coal production
+Coal sales
+河北
+(69)
+Hubei
+B1. 滄東電力
+鳳山電廠 POWER
+Wubu
+吳堡
+(preliminary work in progress)
+Baotou Mines
+Xinjie Taigemiao Exploration Area
+6.新街台格廟勘查區(前期工作階段)
+A5. 包頭確區
+Baorixile Mines
+B5. 北京燃氣
+A4.寶日希勒礦區
+Mines
+Zhunge'er
+A3.勝利礦區
+A2.准格爾礦���
+YELLOW RIVER
+黃河
+SHAANXI
+陝西省
+SHANXI
+山西省
+Shengli Mines
+B2. 定州電力
+B3.
+准能電力
+Shouguang Power
+B14.柳州電力
+B13.壽光電力
+Sichuan Energy
+Mengjin Power
+B10.四川能源
+孟津電力
+B9.
+Huizhou Thermal
+Taishan Power
+Jinjie Energy
+Beijing Gas Power
+惠州熱電
+B8.
+B7. 台山電力
+錦界能源
+B6.
+Shendong Power
+Zhunge'er Power
+Dingzhou Power
+Cangdong Power
+神東電力
+B4.
+Watang
+Liuzhou Power
+瓦塘
+神木北站
+Waixigou
+Daqin Railway
+外西溝
+大秦鐵路
+Diandaigou
+點岱溝
+北京
+Zhangjiakou
+張家口
+INNER MONGOLIA AUTONOMOUS REGION
+大同東
+內蒙古自治區
+承德
+豐寧
+Fengning
+Shendong
+神東站
+Jingbian
+● 靖邊
+Haoleɓaoji
+浩勒報吉
+Batuta
+C 巴圖塔 Dongsheng
+Chengde
+Datong East
+准格爾
+Zhunge'er
+Dongying
+Suning North
+Dingzhou West
+東營
+肅寧北
+定州西
+Huanghua
+Shenchi South
+Shenchi
+黃驊
+神池南
+神池
+Caofeidian Port
+曹妃甸港
+天津市
+TIANJIN
+唐山
+Tangshan
+Qinhuangdao Port
+秦皇島港
+BEIJING
+HEBEI
+河北省
+Shuozhou West
+朔州西
+Shenmu North
+Hanjiacun
+B11.福建能源
+B15. 九江電力
+Jiujiang Power
+CHINA SHENHUA ENERGY COMPANY LIMITED
+中国神华能源股份有限公司
+長江
+Sichuan
+2J810
+Ningxia C
+寧夏
+Qinghai
+青海:
+Quasi-liner Shipping Route
+主要資產分佈圖 Assets Distribution Map
+← 准班輪航線
+自有礦區
+Self-owned Railway (in operation)
+- 自有運營鐵路
+State-owned or Local Railway
+「國有或地方鐵路線
+Provincial Boundary
+省界線
+圖例 Legend
+Tibet
+西藏
+Self-owned mines
+2021
+呼倫貝爾
+Hulunbeier
+吉林
+湖北
+Hainan
+海南
+Guangxi
+廣西
+Yunnan
+雲南
+Guizhou
+貴州
+Yangtze River
+Henan
+Shaanxi
+河南
+陝西
+Gansu
+甘肅
+Shanxi
+山西
+Tavan Tolgoi
+Inner Mongolia Autonomous Region
+塔本陶勒盖
+Jilin
+內蒙古自治區
+Dajiawa
+Fujian Energy
+大家洼
+Baotou Coal Chemical
+鐵路 RAILWAY
+Zhuhai Coal Dock
+D3.珠海煤碼頭
+Tianjin Coal Dock
+D2. 天津煤碼頭
+Huanghua Port
+D1. 黃驊港
+港口 PORT
+Bazhun Railway
+C6. 巴准鐵路
+C1. 神朔鐵路
+Huangwan Railway
+Shuohuang Railway
+Shengli Energy
+Yongzhou Power
+勝利能源
+B18.
+Indonesia Java
+B16. 印尼爪哇
+EMM Indonesia
+B12. 南蘇FMM
+B17.永州電力
+C3.黃萬鐵路
+Shenshuo Railway
+C4. 大准鐵路
+Dazhun Railway
+包頭煤化工
+F1.
+煤化工 COAL CHEMICAL
+Shipping Company
+E1. 航運公司
+航運 SHIPPING
+② Prepared on the basis of the map with the approval number of GS(2016)1600.
+Note: ① This map as at 31 December 2021 is for illustrative purpose only.
+② 以審圖號GS(2016)1600號地圖為基礎編制
+① 於2021年12月31日之分佈圖,僅做示意
+註
+Tahan Railway
+C10. 塔韓鐵路
+Zhunchi Railway
+C&.准池鐵路
+Baoshen Railway
+包神鐵路
+55.
+C2. 朔黃鐵路
+Huangda Railway
+C9. 黃大鐵路
+Ganquan Railway
+C7. 甘泉鐵路
+中國 CHINA
+2.423
+314
+231
+50.9
+62,690
+94,575
+Net cash generated from operating activities RMB million
+excluding Finance Company
+7.4%
+10%
+increase of around increase of around
+233,263
+(162,374)
+57,977
+335,216
+(239,156)
+80,008
+(660)
+92
+60,804
+81,167
+(28
+1,047
+(2,951)
+259
+722
+209
+980
+2,678
+2,720
+16,636
+16,310
+7,976
+3,010
+As at
+29,832
+As at
+As at
+As at
+As at
+As at
+562,904
+(133,317)
+(161,376)
+610,597
+RMB million
+RMB million
+424,257
+(154,901)
+RMB million
+446,069
+(176,717)
+(2,425)
+8,864
+RMB million
+(257)
+6,410
+RMB million
+8.065
+(514)
+RMB million
+As at
+As at
+As at
+As at
+31 December 2021 31 December 2020 31 December 2021 31 December 2020 31 December 2021 31 December 2020 31 December 2021 31 December 2020 31 December 2021 31 December 2020
+RMB million
+RMB million RMB million
+As at
+As at
+As at
+As at
+As at
+As at
+As at
+As at
+59,125
+16.3
+(61,464)
+(81,075)
+1,853
+321
+83.1
+5,851
+3.112
+6,195
+6,359
+6,440
+38,723
+40,699
+49,486
+64,124
+190,029
+292,661
+Sub-total of segment revenue
+44.0
+35,849
+51.607
+RMB million
+Profit for the year attributable to equity
+7.4
+122.90
+132
+and R&D expenses and net finance
+Segment profit/(loss) from
+operations
+holders of the Company
+(225,126)
+81 289
+94,575
+RMB million
+Net cash generated from operating activities
+Year-on-year
+Year-on-year
+Changes in unit production costs of
+self-produced coal
+44.0
+1.803
+2.597
+RMB/share
+Basic earnings per share
+costs
+(44
+(4,675)
+(4,754)
+(2,755)
+(5,018)
+(3.314)
+(3,342)
+(20,304)
+(22,020)
+(38,729)
+(60,019)
+(153,373)
+Segment cost of sales
+Table 4 Operation Data
+Table 5 Commercial coal production Volume
+Change
+Total power
+7.4
+62.2
+66.8
+Zhunge'er Mines
+Loading volume at Shenhua Tianjin Coal
+5.5
+203.8
+215.0
+million tonnes
+Change in
+output
+output
+%
+RMB million RMB million
+2020
+Power
+Power
+2021
+2020 Change
+2021
+consumption
+Standard coal
+2.3
+185.0
+189.2
+Average
+Shendong Mines
+for power
+Increase/decrease]
+102,865
+unit cost
+dispatch Unit cost
+Cost
+dispatch Unit cost
+Cost
+Cost of coal purchased
+capacity as at 31
+capacity as at 31
+in installed capacity
+capacity as at 31
+outpour
+utilization
+output
+Gross power
+19.4
+21.1
+25.2
+Shengli Mines
+2.2
+45.4
+46.4
+million tonnes
+Equity installed
+Total installed
+Total installed
+Loading volume at Huanghua Port
+railway
+By mines
+(120,171)
+268,067
+5.3
+291.6
+307.0
+Million tonnes
+Million tonnes
+2020 Change
+2021
+Segment total liabilities
+Segment total assets
+Total production
+8.0
+4464
+482.3
+million tonnes
+Coal sales
+5.3
+291.6
+307.0
+million tonnes
+Commercial coal production
+%
+2020
+2021
+31 December 2021 31 December 2020 31 December 2021 31 December 2020 31 December 2021 31 December 2020 31 December 2021 31 December 2020
+RMB million
+RMB million
+222,984
+(106,897)
+RMB million
+166,654
+(134,566)
+6.2
+285.7
+303.4
+billion tonne km
+Transportation turnover of selfowned
+Table 8 Cost of Sales of Power Segment
+Cost of Sales of Coal Segment
+Table 7
+Table 6 Power Business
+298,827
+(395,716)
+(446,494)
+335,821
+RMB100 million
+(2,950
+(50,470)
+(56,285)
+RMB million
+21,619
+(6,629)
+RMB million
+19,821
+(6,519)
+RMB million
+124,113
+RMB million
+139,551
+RMB million
+RMB million
+150,299
+(110,040)
+8,938
+48,742 111.0
+Selling, general and administrative
+(61,464)
+2021 Annual Report 13
+Chairman
+Wang Xiangxi
+£ if
+Let us advance into the future together!
+Looking back to our achievements and gains in 2021, we are grateful to our great motherland, the
+great era, and every organization and person who contributed to the development of China Shenhua!
+2022 is an important year to continue the "14th Five-Year Plan", and we will closely unite around the
+Central Party Committee with Comrade Xi Jinping as the core, firmly implement the series of important
+speeches and important instructions and spirits given by General Secretary Xi Jinping during the
+inspection of Yulin Chemical of China Energy Group and others. We will adhere to the working general
+keynote of prudent progress, highlight the working guidance of "prudence, synergy, empowerment and
+improvement", coordinate development and safety, accurately grasp the relationship between energy
+security and green transformation, synergy efficiency and costs reduction and efficiency enhancement,
+innovation drive and industrial upgrade, intensive development and optimization of deployment, strategy
+planning and long-term success. We will spare no efforts to ensure energy security, firmly promote
+green and low-carbon development, enhance enterprise technical innovation, highlight the leading and
+guarding role of high-quality building of the Party, live up to the investors' trusts and reliance, accelerate
+the establishment of a competitive first-class listed energy company in the world, and celebrate the 20th
+National People's Congress with practical actions.
+strengthened market capitalization management and optimized property rights management. We
+reinforced the results of poverty alleviation, comprehensively promoted rural revitalization, arranged
+assistance funds of RMB123 million, and continued to carry out co-development with local enterprises,
+territorial assistance, and other assistance and donations. We implemented the cooperation deployment
+of China's State-owned Assets Supervision and Administration Commission's ("SASAC") "central and
+local hundred pairs of enterprises" to develop the Northeast China, signed a strategic cooperation
+agreement, actively promoted the organization and implementation of the agreement, which contributed
+to the vigorous development of the Northeast China. We solidly promoted ESG governance and won the
+ESG Pioneer 50 Award (ESG50), the first batch of China ESG Demonstration Enterprises (I
+ESG) and the CDP Water Safety Outstanding Performance Award (CDPÈоиÐ).
+Section III Chairman's Statement (Continued)
+12 China Shenhua Energy Company Limited
+With persistent momentum of deepening reform, we fully promoted the establishment of a first-
+class enterprise, conducted capital operation, strengthened management of market capitalization,
+and carried out social responsibility. With persistence and caution, we protected the interests of
+medium to small-sized investors in continuing the distribution of proportional dividends. We continuously
+With ambitious momentum of innovation development, we empowered mines, power plants,
+railways, ports and chemical industry with technology. We strengthened the synergy of industry
+chain and launched the "Harmony Mining Operating System" with large-scale promotion and application
+of intelligent mines and intelligent coal mining working faces, as well as demonstrations of the driverless
+heavy truck. The first heavy-haul railway with a mobile blocking system in China commenced operation,
+and the first autonomous controllable intelligent decentralized control system was successfully applied.
+The world's first coal port to achieve intelligent control of the entire process of dumping, stacking,
+reclaiming and loading equipment was successfully completed and put into operation. The coordinated
+production and operations scheduling system, emergency command platform and ERP integrated
+industrial internet platform are fully online and operational, and driven by data in entering a new stage of
+high-quality development.
+We accelerated the green and low-carbon transformation and assisted with achieving the Peak
+Carbon Dioxide Emissions and Carbon Neutrality. We solidly promoted the safe, green, intelligent
+and efficient development of the coal industry, adhered to the high-end orientation, diversification and
+low-carbonization of the coal chemical industry, expedited the research and development of coal-based
+biodegradable materials and other high-end products. We also made full use of our own land, resources
+and capital to speed up the deployment of new energy industries through multiple channels and forms,
+cooperated to construct the zero-carbon industrial parks and new energy bases, successively contributed
+capital to participate in the establishment of new energy industry funds and low-carbon development
+investment funds, and performed a significant role as pioneer in demonstrating and leading the reform
+of energy.
+We tackled the responsibility and challenges of energy security and supply with great
+determination to protect thousands of families. The Company conscientiously carried out its
+responsibilities and missions as a listed central state-owned-enterprise, vigorously promoting the
+principle of "empowering society and boosting the economy", effectively overcoming the volatility of
+the coal market and impact of extreme weather, making full efforts to stabilize production, price, and
+expectations, and securing supply, heating, and people's livelihoods. We ensured the increase of coal
+production and supply, with production of 310 million tonnes, representing an increase of 5.3%, and coal
+sales of 480 million tonnes, representing an increase of 8.0%. We also seized opportunities to achieve
+consecutive material breakthroughs in resources, obtained the exploration rights certificate of the
+Xinjie Taigemiao Southern Area and achieved rights to high quality resources of the Xinjie Mining Area.
+The Company also improved the transportation efficiency of the "railway, port and shipping", with an
+increase of 6.2% in the transportation turnover of the self-owned railway. We strived to guarantee the
+stable and maximum generation of power, with an increase of 22.1% in power generation. We strictly
+implemented the agreed price under long-term cooperation of coal, and ensured the stabilization and
+security of energy supply.
+2021 marked the 100th anniversary of the founding of the Communist Party of China (the "Party").
+Under the guidance of Xi Jinping's "Thought on Socialism with Chinese Characteristics for a New
+Era", we studied in-depth the major achievements and historical experience of the Party over the past
+century, deeply comprehended the determining significance of "Two Confirmations", executed the
+great call of "Hard Work Making Socialism Realized (1)", implemented the enterprise
+development strategy of "One Target, Three Models and Five Strategies, and Seven First-class",
+integrated advancement of the "Six New Opportunities", being green transformation, driving innovation,
+improving quality and efficiency, improving management, deepening reform, and Party building. We have
+also completed all targets and missions within the year, ultimately initiating high quality development
+of China's "14th Five-Year Plan". This year, the Company has achieved RMB51,607 million in profit for
+the year attributable to owners of the Company and basic earnings per share of RMB2.597. The closing
+gearing ratio was 26.4%, and the total market capitalization reached USD66.2 billion. In the S&P Global
+Platts Top 250 Global Energy Company Rankings (2021 250)" released by S&P Global
+Platts, the Company ranked 2nd, which is the highest ranked Chinese enterprise.
+As time goes by, we experienced a significant year of 2021. On behalf of the Board, I would like to take
+this opportunity to express our sincere gratitude to all shareholders for their concern and support in
+China Shenhua and present you with the 2021 annual report of China Shenhua.
+Dear Shareholders:
+Section III Chairman's Statement
+2021 Annual Report 11
+In the fourth quarter, the decrease in profit for the period attributable to equity holders of
+the Company as compared to the previous three quarters was primarily due to the following
+reasons: (1) the cost expenditure occurred in the fourth quarter is higher than that in the first
+three quarters; (2) certain coal companies, subsidiaries of the Company, actively applied to the
+NDRC for recognition of preferential policies on enterprise income tax for the development of
+the Western region, and continued to calculate the income tax preferential rate of 15% of the
+development of the Western region in the first three quarters. As of the end of reporting period,
+certain coal companies have not yet obtained the recognition and approval documents from the
+NDRC, and adjusted to the rate of 25% for calculating the annual enterprise income tax, resulting
+in an increase in the Group's income tax in the fourth quarter; (3) the Group conducted impairment
+assessment on assets with impairment indications and accrued provisions for impairment of assets
+based on the assessment results; (4) the Company recognized a higher share of losses from
+associates in the fourth quarter.
+27,069
+27,287
+20,605
+19,614
+Net cash generated from operating activities
+10,330
+Section IV Directors' Report
+14,777
+重载技术新突破
+国家能源集团
+Power
+Coal
+Change
+%
+in 2021
+2022
+Change
+Actual amount
+Target for
+Table 3 Results of Each Segment
+Table 2 Financial Indicators
+Overview of China Shenhua's Operating Results for the Year of 2021
+Table 1 Business Targets
+首列重载移动闭塞列车
+国能朔黄铁路
+N
+HXD17140A
+S
+園
+120km/h
+Section III Chairmans Statement (Continued
+CHN ENERGY
+国家能源集团
+中国共产党成立100周 年
+CHN ENERGY
+庆祝中
+Railway
+14,636
+holders of the Company
+4,014
+3,163
+(3,321)
+1,338
+production and other related expenditure
+Simple production maintenance, safety
+Adjustments for:
+360,189
+376,875
+39,170
+50,269
+Business Enterprises
+Under China Accounting Standards for
+of 2020
+At the end
+of 2021
+2020
+2021
+At the end
+Net profit attributable to equity
+holders of the Company
+Net assets attributable to equity
+holders of the Company
+Unit: RMB million
+VIII. DIFFERENCE IN ACCOUNTING DATA UNDER DOMESTIC AND OVERSEAS
+ACCOUNTING STANDARDS
+Major Financial Indicators (Continued)
+Section II Company Profile and
+Under International Financial Reporting
+11,864
+Standards
+35,849
+Profit for the period attributable to equity
+102,267
+88,970
+76,371
+67,608
+Revenue
+December)
+September)
+June)
+March)
+(October-
+(July-
+(April -
+(January-
+Fourth quarter
+Third quarter
+First quarter Second quarter
+Unit: RMB million
+IX. MAJOR FINANCIAL DATA OF EACH QUARTER OF 2021
+Section II Company Profile and
+Major Financial Indicators (Continued)
+10 China Shenhua Energy Company Limited
+Pursuant to the relevant regulations of the related government authorities in the PRC, the Group
+accrued provisions for simple production maintenance, safety production and other related
+expenditures, recognised as expenses in profit or loss and separately recorded as a specific
+reserve in shareholders' equity. On utilisation of the specific reserve as fixed assets within
+the stipulated scope, the full amount of accumulated depreciation is recognised at the same
+time when the cost of the relevant assets is recorded. Under International Financial Reporting
+Standards, these expenses are recognised in profit or loss as and when incurred. Relevant capital
+expenditure is recognised as property, plant and equipment and depreciated according to the
+relevant depreciation method. The effect on deferred tax arising from such difference is also
+reflected.
+Explanation on differences in domestic and overseas accounting standards:
+364,203
+380,038
+51,607
+Port
+Shipping
+Coal chemical
+233,263
+335,216
+RMB million
+RMB million
+RMB million
+2020
+2021
+2020
+Total
+-
+1,028
+24
+5,165
+5,851
+1,747
+1,321
+974
+982
+5,804
+6,838
+49,348
+63,959
+169.197
+256,241
+Revenue from external
+customers
+38.7
+Revenue
+2.966
+(81,075)
+825
+297
+1,365
+4,874
+5,385
+5,458
+32,919
+33,861
+138
+165
+20,832
+36.420
+Inter-segment revenue
+2.391.56
+2,048
+RMB100 million
+Cost of sales
+28.7
+79,018
+101,680
+RMB million
+EBITDA
+(11.5)
+3.352.16
+RMB100 million
+43.984
+61,009
+RMB million
+RMB million
+(3.0
+3.070
+2.978
+100 million tonnes
+Commercial coal production
+2021
+2020
+2021
+2020
+2021
+2020
+2021
+2020
+2021
+2020
+2021
+2020
+2021
+2020
+2021
+2020
+2021
+Eliminations
+Unallocated items
+RMB million
+RMB million
+RMB million
+RMB million
+Profit for the year
+8.4
+1,664.5
+1,805
+100 million kWh
+Power generation
+43.7
+233 263
+335,216
+RMB million
+Revenue
+16.5)
+14.4)
+4.823
+100 million tonnes
+Coal sales
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+4.029
+100 million
+5,165
+Dock
+357
+275
+5,434
+104.7
+109.8
+North China Power Grid Shandong
+Shuguang Power
+168.76
+171.86
+2. Power segment
+72
+444.3
+100.0
+2,604
+3,720
+3,720
+267
+312
+5,765
+1983
+214.5
+Shaanxi
+North China Power Grid
+Jinje Energy
+205.75
+2,020
+61.57
+2,020
+Table 11 Cost of Sales of Transportation and Coal
+Chemical Segments
+76.6
+16.8
+0.33
+50.22
+2,000
+2,000
+2,000
+364
+276
+6,023
+115.0
+1205
+Central China Power Grid Jiangxi
+Jiujiang Power
+Including: new energy business
+10.8)
+180.4
+37.6
+5.7
+137.7
+30.5
+Coal Chemical
+Shipping
+Port
+Railway
+1,212
+44
+1. Coal segment
+Million tonnes
+1,285
+2,520
+2.464
+Others
+amortization
+1.4
+19,453
+19,724
+Others
+1,320
+1,320
+ཐྰ་་་ 'B
+2,810
+357
+294
+6,014
+164.6
+171.9
+Fujian
+st China Power Grid
+East C
+Fujian Energy
+RMB100 million
+RMB100 million
+Change
+Tax and surcharge
+%
+14,850
+1,561.3
+%
+2,378
+3,810
+660
+38,729
+60.019
+Total cost of sales
+631
+846
+Tax and surcharge
+153,373 46.8
+225,126
+Total cost of sales
+4,096
+5,120
+1,021
+2520
+2,852
+4.833
+Other operating costs
+81.6
+8.7
+1,276.5
+1,115
+15.8
+9,531 55.8
+2020
+3. Transportation segments
+2021
+1.516.4
+1.618.6
+Total of coal-fired power plants/weighted average
+4.7
+60.2
+13.2
+8.51
+4.83
+5,858
+15.5
+17.6
+Indonesia
+PLN
+EMM Indonesia
+4. Coal chemical segment
+(203)
+23.2
+3.9
+8.8
+356.3
+664
+102
+10.6
+Hunan
+Hunan Power Grid
+4.764
+Yongzhou Power
+*888
+295
+423
+3.6
+365
+378
+132
+2372
+2.686
+Raw materials, fuel and power
+490
+700
+-
+700
+366
+239.3
+1,156
+3,922
+5.8
+2,463
+2.606
+6.8
+100 million
+Cost of internal transportation business
+612
+1.200
+1,200
+303
+Sichuan Energy Icoal-fired
+0.55
+Shipping
+% RMB million RMB million
+% RMB million RMB million
+RMB million RMB million
+2,102
+3,260
+2000
+1260
+424
+325
+3,468
+56.1
+61.0
+Sichuan
+Sichuan Power Grid
+Change
+2020
+2021
+Change
+2020
+2021
+Change
+2020
+2021
+Change
+2020
+% RMB million RMB million
+0.44
+%
+50.36
+117.9
+14.0
+6.4
+5.826
+38.7
+408
+Guangxi
+Guangxi Power Grid
+Liuzhou Power
+10.02
+15.38
+Port
+16.0
+35.6
+8.7
+4,068
+45.6
+488
+Henan
+Central China Power Grid
+Mengin Power
+39.79
+64.87
+Including: Railway
+power
+80.69
+sales
+16,953 15,871
+སོ ཟ ཟཋ ཙ བྷཟཆ་ཤ
+8,119
+11,355
+Personnel expenses
+MW
+MW
+MW
+MW
+RMB/MW
+g/kWh
+**
+Shaanxi Provincial Local
+Shaanxi Province
+(6.8
+356.9
+332.8
+thousand tonnes
+Polyethylene sales
+5.9
+195.4
+207.0
+4,792
+222.1
+240.3
+Inner Mongolia
+Northwest North China
+39.9
+Shendong Power
+Cost of power output dispatch
+1561.3
+5,714
+323
+320
+power
+2,756 13.0
+3,114
+Repair and maintenance
+-
+381
+660
+660
+299
+347
+37.3
+1945
+1.276.5
+24,827
+267.0
+1,561.3
+41.686
+Raw materials, fuel and
+26.1
+1,276.5 276.1
+35,246
+348.1
+54,340
+Inner Mongolia
+223
+127.65
+Shipping volume
+KWh RVB/MWh
+KWh RMB/MWh RMB million
+RMB million
+8.5
+7,897
+8,567
+Raw materials, fuel and power
+December 2021
+December 2021
+for 2021
+December 2020
+Power tariff
+dispatch
+hours
+dispatch
+generation
+Location
+Power grid
+Power plants
+14.4
+21.5
+24.6
+Baorixile Mines
+2021
+million tonnes
+121.2
+113.0
+7.3
+156.13
+billion kWh
+Total power output dispatch
+5,504
+32.9
+36.3
+Inner Mongolia
+North China Power Grid
+Zhunge'er Power
+By regions
+22.1
+136.33
+(700)
+166.45
+Gross power generation
+hours
+100 million kWh 100 million kWh
+(33.3)
+1.8
+1.2
+Baotou Mines
+20.5
+93.0
+112.1
+billion tonnenm
+Shipment turnover
+billion kWh
+5.014
+81.4
+Depreciation and amortization
+of domestic
+5,120
+394
+201
+307
+307
+5,218
+2521
+252.4
+267.1
+Guangdong
+South China Power Grid
+Taishan Power
+Proportion
+2520
+324
+304
+301
+4.666
+108.8
+1176
+Hebei
+North China Power Grid
+Dingzhou Power
+Table 10 Capital Expenditure
+Plan for 2022
+Table 9 Domestic Coal Sales Volume
+Completion in 2021
+South China Power Grid
+Others
+4.528
+slurry
+Chemical including coal
+Metallurgy
+Thermal coal
+By usage
+Southern China
+Central China and
+Eastern China
+Northern China
+By regions
+Domestic sales
+Million tonnes
+660
+371
+307
+221
+307
+5,760
+34.3
+312
+380
+38.0
+Guangdong
+Huizhou Thermal
+2,520
+Northeast China
+Others
+297
+1.561.3
+1.808
+Repair and maintenance
+12.5
+51,557
+58,027
+Transportation charges
+Power Grid
+(4.7)
+331.2
+315.6
+thousand tonnes
+11.6
+Polypropylene sales
+93.2
+95.5
+16.0
+18.1
+1.276.5
+2307
+1.561.3
+3,277
+Personnel expenses
+6,624
+323
+5,318 24.6
+2.5
+2,086 1,276.5
+21.0
+(28.8)
+16.3
+1144
+1,320
+352
+4,539
+712
+8.4
+9.4
+Inner Mongolia
+Hebei
+North China Power Grid
+Cangdong Power
+North China Power Grid
+278
+50.0
+Depreciation and
+Shengli Energy
+5,105 1.5613
+32.7
+4911
+108.8
+38.5
+(15.1)
+Shanxi Province
+4.5
+1,276.5
+3.0
+Increase in restricted bank deposits
+1,427
+2,135
+Interest received
+937
+1,613
+Dividend received from associates
+614
+Net cash received from acquisition of subsidiaries
+2,566
+1,350
+1,389
+(786)
+(123)
+Net cash received from disposed of assets
+Net cash received from disposal of subsidiaries
+Purchase of non-controlling interests
+Investments in associates
+(1,088)
+33,736
+490
+classified as held for sale
+(736)
+Disposal of interbank certificate of deposits included in prepaid
+Placing of time deposits with original maturity over three months
+For the year ended 31 December 2021
+900
+Year ended 31 December
+2021
+RMB million
+Consolidated Statement of Cash Flows (Continued)
+200
+2021 Annual Report 199
+32,048
+(6,844)
+Net cash (used in)/ generated from investing activities
+28,621
+480
+(3,023)
+141
+expenses and other current assets
+(1,191)
+other non-current assets
+Investments in long-term loans included in
+2,016
+10,531
+over three months
+Maturity of time deposits with original maturity
+(11,212)
+(1,046)
+O Collection of other current assets
+Proceeds from disposal of property, plant and equipment,
+intangible assets and other non-current assets
+Proceeds from disposal of wealth management products and
+derivative financial instruments included in prepaid expenses
+and other current assets
+9,488
+(20,030)
+2,326
+Increase in accounts and bills payables
+(2,609)
+(5,027)
+Increase in prepaid expenses and other assets
+(2,689)
+(2,779)
+Increase in accounts and bills receivables
+(909)
+(157)
+Increase in inventories
+Changes in working capital:
+79,697
+105,196
+Operating cash flows before movements in working capital
+(71)
+(115)
+Exchange gain, net (Note 9)
+2,334
+2,698
+Interest expenses
+2020
+RMB million
+524
+3,693
+(644)
+Increase in accrued expenses and other liabilities
+Increase in contract liabilities
+(23,236)
+(627)
+Increase in right-of-use assets
+exploration and evaluation assets, construction in progress
+and other non-current assets
+Additions of property, plant and equipment, intangible assets,
+Investing activities
+RMB million
+2020
+2021
+RMB million
+Year ended 31 December
+For the year ended 31 December 2021
+Consolidated Statement of Cash Flows (Continued)
+198
+81,289
+94,575
+Net cash generated from operating activities
+(11,804)
+(16,080)
+Income tax paid
+93,093
+110,655
+Cash generated from operations
+472
+1,608
+15,438
+Financing activities
+Organisation
+(197)
+3.
+China Shenhua Energy Company Limited
+None of these developments have had a material effect on how the Group's results and
+financial position for the current or prior periods have been prepared or presented in this financial
+report. The Group has not applied any new standard or interpretation that is not yet effective for
+the current accounting period except for the amendment to IFRS 16, Covid-19-Related Rent
+Concessions, which provides a practical expedient that allows lessees not to assess whether
+particular rent concessions occurring as a direct consequence of the COVID-19 pandemic are
+lease modifications and, instead, account for those rent concessions as if they were not lease
+modifications, if the eligibility conditions are met. One of these conditions requires the reduction
+in lease payments affect only payments originally due on or before a specified time limit. The
+2021 amendment extends this time limit from 31 December 2021 to 31 December 2022.
+Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16, Interest Rate Benchmark
+Reform-phase 2
+Amendments to IFRS 16, Covid-19-Related Rent Concessions beyond 31 December 2021
+•
+The Group has applied the following amendments to IFRSS issued by the IASB to these financial
+statements for the current accounting period:
+CHANGES IN ACCOUNTING POLICIES
+On 27 November 2017, Shenhua Group has completed the industrial and commercial registration
+of changes in the business license. The Directors consider the immediate parent and ultimate
+holding company of the Group to be China Energy Group.
+On 28 August 2017, Shenhua Group received the Notice regarding the Restructuring of China
+Guodian Corporation and Shenhua Group Corporation Limited (Guo Zi Fa Gai Ge [2017] No. 146)
+from the State-owned Assets Supervision and Administration Commission of the State Council,
+which approves that China Guodian Corporation (the "China Guodian") and Shenhua Group
+shall implement the joint restructuring, China Guodian shall be merged into Shenhua Group, and
+the company name of Shenhua Group shall be changed to China Energy Investment Corporation
+Limited (the "China Energy Group"). China Energy Group will be the parent company after the
+completion of the restructuring.
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+Immediate parent and ultimate controlling party
+1. PRINCIPAL ACTIVITIES AND ORGANISATION (CONTINUED)
+For the year ended 31 December 2021
+Notes to the consolidated financial statements (Continued)
+202
+2021 Annual Report 201
+In 2007, the Company issued 1,800,000,000 A shares with a par value of RMB1.00 each, at a price
+of RMB36.99 per A share in the PRC. The A shares were listed on the Shanghai Stock Exchange.
+In 2005, the Company issued 3,089,620,455 H shares with a par value of RMB1.00 each, at a
+price of Hong Kong Dollars ("HKD") 7.50 per H share by way of a global initial public offering.
+In addition, 308,962,045 domestic state-owned ordinary shares of RMB1.00 each owned by
+Shenhua Group were converted into H shares. A total of 3,398,582,500 H shares were listed on
+The Stock Exchange of Hong Kong Limited.
+On 8 November 2004, in consideration for Shenhua Group transferring the coal mining and power
+generating assets and liabilities to the Company, the Company issued 15,000,000,000 domestic
+state-owned ordinary shares with a par value of RMB1.00 each to Shenhua Group. The shares
+issued to Shenhua Group represented the entire registered and paid-up share capital of the
+Company at that date.
+Effective on 31 December 2003, the coal production and power generation operations previously
+operated by various entities wholly-owned or controlled by Shenhua Group were restructured
+and managed separately (the "Restructuring"), and those assets and liabilities related to
+the operations and businesses that were transferred to the Company were revalued by China
+Enterprise Appraisal Co., Ltd., an independent valuer registered in the PRC, as at 31 December
+2003 as required by the PRC rules and regulations.
+The Company was established in the PRC on 8 November 2004 as a joint stock limited company
+as part of the Restructuring (as defined below) of Shenhua Group, a state-owned enterprise under
+the direct supervision of the State Council of the PRC.
+2.
+SIGNIFICANT ACCOUNTING POLICIES
+Basis of preparation
+The consolidated financial statements have been prepared in accordance with all applicable
+International Financial Reporting Standards ("IFRSS"), which collective term includes all
+applicable individual International Financial Reporting Standards, International Accounting
+Standards ("IASS") and Interpretations issued by the International Accounting Standards Board
+(the "IASB"). They are presented in Renminbi ("RMB") and all values are rounded to the
+nearest million (RMB' million) except when otherwise indicated. In addition, the consolidated
+financial statements include applicable disclosures required by the Rules Governing the Listing of
+Securities on the Stock Exchange of Hong Kong Limited ("Listing Rules") and by the Hong Kong
+Companies Ordinance ("CO").
+204
+The Group reassesses whether or not it controls an investee if facts and circumstances indicate
+that there are changes to one or more of the three elements of control listed above.
+is exposed, or has rights, to variable returns from its involvement with the investee; and
+has the ability to use its power to affect its returns.
+has power over the investee;
+The consolidated financial statements incorporate the financial statements of the Company and
+entities controlled by the Company and its subsidiaries. Control is achieved when the Company:
+Basis of consolidation
+Significant accounting policies adopted by the Group are disclosed below.
+Judgements made by management in the application of IFRSS that have significant effect on the
+financial statements and major sources of estimation uncertainty are discussed in Note 4.
+The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
+accounting estimates are recognised in the period in which the estimate is revised if the revision
+affects only that period, or in the period of the revision and future periods if the revision affects
+both current and future periods.
+The preparation of financial statements in conformity with IFRSS requires management to make
+judgements, estimates and assumptions that affect the application of policies and reported
+amounts of assets, liabilities, income and expenses. The estimates and associated assumptions
+are based on historical experience and various other factors that are believed to be reasonable
+under the circumstances, the results of which form the basis of making the judgements about
+carrying values of assets and liabilities that are not readily apparent from other sources. Actual
+results may differ from these estimates.
+Level 3 inputs are unobservable inputs for the asset or liability.
+Level 2 inputs are inputs, other than quoted prices included within Level 1, that are
+observable for the asset or liability, either directly or indirectly; and
+Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or
+liabilities that the entity can access at the measurement date;
+In addition, for financial reporting purposes, fair value measurements are categorised into Level 1,
+2 or 3 based on the degree to which the inputs to the fair value measurements are observable and
+the significance of the inputs to the fair value measurement in its entirety, which are described as
+follows:
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+3.
+For the year ended 31 December 2021
+Notes to the consolidated financial statements (Continued)
+2021 Annual Report 203
+Fair value is the price that would be received to sell an asset or paid to transfer a liability in an
+orderly transaction between market participants at the measurement date, regardless of whether
+that price is directly observable or estimated using another valuation technique. In estimating the
+fair value of an asset or a liability, the Group takes into account the characteristics of the asset or
+liability if market participants would take those characteristics into account when pricing the asset
+or liability at the measurement date. Fair value for measurement and/or disclosure purposes in
+the Group's consolidated financial statements is determined on such a basis, except for share-
+based payment transactions that are within the scope of IFRS 2 Share-based Payment, leasing
+transactions that are within the scope of IFRS 16 Leases, and measurements that have some
+similarities to fair value but are not fair value, such as net realisable value in IAS 2 Inventories or
+value in use in IAS 36 Impairment of Assets.
+Historical cost is generally based on the fair value of the consideration given in exchange for
+goods and services.
+The consolidated financial statements have been prepared on the historical cost basis, except for
+certain financial instruments as disclosed in Note 40.3, which have been measured at fair value at
+the end of each reporting period, as explained in the accounting policies set out below.
+The IASB has issued certain new and revised IFRSS that are first effective or available for early
+adoption for the current accounting period of the Group. Note 2 provides information on any
+changes in accounting policies resulting from initial application of these developments to the
+extent that they are relevant to the Group for the current and prior accounting periods reflected in
+these financial statements.
+2,561
+China Shenhua Energy Company Limited (the "Company") and its subsidiaries (hereinafter
+collectively referred to as the "Group") are principally engaged in: (i) the production and sale
+of coal; and (ii) the generation and sale of coal-based power to provincial/regional electric grid
+companies in the People's Republic of China (the "PRC"). The Group operates an integrated
+railway network and seaports that are primarily used to transport the Group's coal sales from its
+mines. The primary customers of the Group's coal sales include power plants, metallurgical and
+coal chemical producers in the PRC.
+For the year ended 31 December 2021
+Principal activities
+Distributions to non-controlling shareholders
+606
+1,129
+Contributions from non-controlling shareholders
+(256)
+Purchase of own shares
+996
+995
+Proceeds from bills discounted
+(3,488)
+Repayments of bonds
+(13,840)
+(21,741)
+Repayments of borrowings (Note 29(b))
+9,940
+22,114
+Proceeds from borrowings (Note 29(b))
+(2,530)
+(3,214)
+Interest paid (Note 29(b))
+(37)
+(29)
+(250)
+(6,826)
+Capital element of lease rentals paid (Note 29(b))
+Interest element of lease rentals paid (Note 29(b))
+(8,159)
+(35,962)
+1. PRINCIPAL ACTIVITIES AND ORGANISATION
+Notes to the consolidated financial statements
+China Shenhua Energy Company Limited
+The notes on pages 201 to 307 form part of these financial statements.
+112,880
+156,706
+Cash and cash equivalents, at the end of the year
+(74)
+classified as held for sale
+Cash and cash equivalents included in assets
+(131)
+(174)
+Effect of foreign exchange rate changes
+41,827
+112,880
+Cash and cash equivalents, at the beginning of the year
+71,258
+44,000
+Net increase in cash and cash equivalents
+(42,079)
+(43,731)
+Net cash used in financing activities
+(25,061)
+Dividend paid to equity holders of the Company (Note 15)
+Loss allowances, net of reversal (Note 12)
+Year ended 31 December
+2021
+874
+35,849
+15
+(257)
+15
+(257)
+Utilisation of maintenance and
+production funds (Note (ii)
+Appropriation of maintenance and
+Dividend declared (Note 15)
+Total comprehensive income for the year
+35,607
+for the year
+Profit for the year
+19,890
+At 1 January 2020
+(333)
+(91)
+(242)
+43,984
+8,135
+35,849
+35,849
+Other comprehensive income
+8,044
+43,651
+(25,061)
+(7,950)
+' ' ठ
+(2,164)
+(507)
+(1,696)
+Others
+shareholders
+Distributions to non-controlling
+606
+606
+shareholders
+Contributions from non-controlling
+(256)
+(256)
+(256)
+Purchase of own shares
+6,181
+(6,181)
+production funds (Note (iii))
+(2,995)
+2,995
+(25,061)
+(25,061)
+420,218
+(7,950)
+64,141
+237,218
+reserves
+reserves
+reserve
+reserve
+premium
+shares
+capital
+Total
+controlling
+Retained
+earnings
+Other
+Exchange
+Capital
+Share
+Treasury
+Share
+Non-
+Equity attributable to equity holders of the Company
+For the year ended 31 December 2021
+Consolidated Statement of Changes in Equity (Continued)
+China Shenhua Energy Company Limited
+Statutory
+Total
+interests
+equity
+(14,824)
+25,118
+56
+90
+3,618
+85,001
+(Note (v))
+(Note (iv))
+(Note (i)
+(Note (i))
+(Note (i))
+(Note 38)
+(Note 38)
+RMB million RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+356,077
+(947)
+627
+(84)
+financial instruments (Note 12)
+Losses on changes in fair value of derivative
+(449)
+FVTPL (Note 12)
+Gains on disposal of financial assets at
+(1,181)
+7
+9
+160
+(346)
+134
+plant and equipment, exploration and evaluation assets,
+intangible assets and non-current assets (Note 12)
+Losses on disposal of subsidiaries and associates (Note 12)
+Gains on changes in fair value arising from remeasurement of
+remaining equity interests after losing control (Notes 12)
+1,162
+Amortisation of long-term deferred expenses (Note 12)
+(Gains)/ losses on disposal of property,
+400
+413
+689
+725
+17,954
+19,245
+Depreciation of property, plant and equipment (Note 12)
+Depreciation of right-of-use assets (Note 12)
+Amortisation of intangible assets (Note 12)
+59,362
+942
+Impairment losses on property, plant and equipment (Note 12)
+535
+605
+(1,684)
+(2,492)
+Share of results of associates
+Interest income (Note 9)
+94
+274
+(57)
+Reversal of allowance for prepaid expenses (Note 12)
+Write-down of inventories (Note 12)
+60
+Impairment losses on interests in associates (Note 12)
+18
+36
+Impairment losses on goodwill (Note 12)
+87
+Impairment losses on assets held for sale (Note 12)
+Impairment losses on right-of-use assets (Note 12)
+11
+Impairment losses on intangible assets (Note 12)
+505
+Impairment losses on exploration and evaluation assets (Note 12)
+268
+376
+Impairment losses on construction in progress (Note 12)
+79,170
+627
+Adjustments for:
+2020
+RMB million
+(iii) Statutory reserves
+The capital reserve represents the difference between the total amount of the par value of shares issued and the amount
+of the net assets, net of other reserves, transferred from Shenhua Group Corporation Limited ("Shenhua Group") in
+connection with the Restructuring (as defined in Note 1).
+Share premium represents the difference between the total amount of the par value of shares issued and the amount of
+the net proceeds received upon the global initial public offering of H shares in 2005 and the issuance of A shares in 2007.
+(ii)
+(i)
+Notes:
+For the year ended 31 December 2021
+Consolidated Statement of Changes in Equity (Continued)
+2021 Annual Report 195
+429,587
+Statutory surplus reserve
+65,384
+(14,809) 250,685
+20,236
+(201)
+6677
+3,657
+85,001
+(256)
+19,890
+At 31 December 2020
+(2,248)
+364,203
+According to the PRC Company Law and the Company's Articles of Association, the Company is required to transfer
+10% of its net profit as determined in accordance with the China Accounting Standards for Business Enterprises ("China
+Accounting Standards") to its statutory surplus reserve until the reserve balance reaches 50% of the registered capital.
+The transfer to this reserve must be made before distribution of a dividend to shareholders.
+The statutory surplus reserve has reached 50% of the registered capital in 2009. Accordingly, no appropriation of net profit
+to the statutory surplus reserve has been proposed since 1 January 2010.
+Statutory surplus reserve can be used to make up losses, if any, or to expand the Company's business, and may be
+converted into share capital by the issue of new shares to shareholders in proportion to their existing shareholdings or by
+increasing the par value of the shares currently held by them, provided that the balance after such issue is not less than
+25% of the registered capital of the Company. The statutory surplus reserve is not distributable.
+RMB million
+Operating activities
+For the year ended 31 December 2021
+Consolidated Statement of Cash Flows
+2021 Annual Report 197
+The notes on pages 201 to 307 form part of these financial statements.
+Included in the retained earnings of the Group were its share of the surplus reserve of its domestic subsidiaries amounted
+to RMB26,936 million as at 31 December 2021 (31 December 2020: RMB26,065 million).
+Retained earnings
+(v)
+Other reserves mainly represents the consideration paid for acquisition of subsidiaries under common control, and share of
+other reserves of associates.
+Other reserves
+(iv)
+The directors of the Company (the "Directors") have not proposed any appropriation to the discretionary surplus reserve
+in 2021 and 2020.
+The appropriation to the discretionary surplus reserve is subject to the shareholders' approval. The utilisation of the
+reserve is similar to that of the statutory surplus reserve.
+Discretionary surplus reserve
+Statutory reserves (Continued)
+(iii)
+Notes: (Continued)
+For the year ended 31 December 2021
+Consolidated Statement of Changes in Equity (Continued)
+196 China Shenhua Energy Company Limited
+Pursuant to the relevant PRC regulations, the Group is required to transfer production and maintenance funds at fixed rates
+based on relevant bases, such as production volume, to a specific reserve account. The production and maintenance funds
+could be utilised when expenses or capital expenditures on production maintenance and safety measures are incurred. The
+amount of production and maintenance funds utilised would be transferred from the specific reserve account to retained
+earnings.
+Specific reserve for maintenance and production funds
+Profit before income tax
+Disposal of subsidiaries
+China Shenhua Energy Company Limited
+China Shenhua Energy Company Limited
+Taxation (Continued)
+Current and deferred tax are recognised in profit or loss, except when they relate to items that
+are recognised in other comprehensive income or directly in equity, in which case, the current and
+deferred tax are also recognised in other comprehensive income or directly in equity respectively.
+Where current tax or deferred tax arises from the initial accounting for a business combination,
+the tax effect is included in the accounting for the business combination.
+Property, plant and equipment
+Property, plant and equipment, which consists of freehold land and buildings, mining structures
+and mining rights, mining related machinery and equipment, and other items of plant and
+equipment, held for use in the production or supply of goods or services, or for administrative
+purposes, are stated in the consolidated statement of financial position at cost less subsequent
+accumulated depreciation and subsequent accumulated impairment losses, if any.
+Depreciation is recognised so as to write-off the cost of items of property, plant and equipment
+(other than freehold land and construction in progress, which are subject to impairment
+assessment) less their residual values over their estimated useful lives. The estimated useful
+lives, residual values and depreciation method are reviewed at the end of each reporting period,
+with the effect of any changes in estimate accounted for on a prospective basis.
+Property, plant and equipment, except for freehold land, and mining structures and mining rights,
+are depreciated on a straight-line basis at the following rates per annum:
+Categories
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Term for deprecation (year)
+Mining related machinery and equipment
+Generators related machinery and equipment
+Railway and port
+Vessels
+Coal chemical related machinery and equipment
+Furniture, fixtures, motor vehicles and other equipment
+10 - 55 years
+5 - 40 years
+8-35 years
+6 - 45 years
+25 years
+8-20 years
+Buildings
+5- 35 years
+3.
+Notes to the consolidated financial statements (Continued)
+Payments to state-managed retirement benefit schemes and a supplemental defined contribution
+pension plan approved by the government are recognised as an expense when employees have
+rendered service entitling them to the contributions.
+China Shenhua Energy Company Limited
+3.
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Taxation
+Income tax expense represents the sum of the tax currently payable and deferred tax.
+For the year ended 31 December 2021
+The tax currently payable is based on taxable profit for the year. Taxable profit differs from
+"profit before income tax" as reported in the consolidated statement of profit or loss and
+other comprehensive income because of income or expense that are taxable or deductible in
+other years and items that are never taxable or deductible. The Group's liability for current tax
+is calculated using tax rates that have been enacted or substantively enacted by the end of the
+reporting period.
+Deferred tax liabilities are recognised for taxable temporary differences associated with
+investments in subsidiaries and associates, except where the Group is able to control the reversal
+of the temporary difference and it is probable that the temporary difference will not reverse in the
+foreseeable future. Deferred tax assets arising from deductible temporary differences associated
+with such investments and interests are only recognised to the extent that it is probable that there
+will be sufficient taxable profits against which to utilise the benefits of the temporary differences
+and they are expected to reverse in the foreseeable future.
+The carrying amount of deferred tax assets is reviewed at the end of each reporting period and
+reduced to the extent that it is no longer probable that sufficient taxable profits will be available to
+allow all or part of the asset to be recovered. Unrecognised deferred tax assets are reassessed at
+the end of each reporting year and are recognised to the extent that it has become probable that
+future taxable profit will be available to allow all or part of the deferred tax asset to be recovered.
+Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the
+period in which the liability is settled or the asset is realised, based on tax rate (and tax laws) that
+have been enacted or substantively enacted by the end of the reporting period.
+The measurement of deferred tax liabilities and assets reflects the tax consequences that would
+follow from the manner in which the Group expects, at the end of the reporting period, to recover
+or settle the carrying amount of its assets and liabilities.
+Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off
+current tax assets against current tax liabilities and when they relate to income taxes levied by the
+same taxation authority and the Group intends to settle its current tax assets and liabilities on a
+net basis.
+2021 Annual Report 211
+212
+Deferred tax is recognised on temporary differences between the carrying amounts of assets
+and liabilities in the consolidated financial statements and the corresponding tax bases used in
+the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable
+temporary differences. Deferred tax assets are generally recognised for all deductible temporary
+differences to the extent that it is probable that taxable profits will be available against which
+those deductible temporary differences can be utilised. Such deferred tax assets and liabilities
+are not recognised if the temporary difference arises from the initial recognition (other than in
+a business combination) of assets and liabilities in a transaction that affects neither the taxable
+profit nor the accounting profit. In addition, deferred tax liabilities are not recognised if the
+temporary difference arises from the initial recognition of goodwill.
+Retirement benefit costs
+The Directors reviewed the estimated useful lives of the assets annually based on the Group's
+historical experience with similar assets and taking into account anticipated technological changes.
+Construction in progress intended to be used for production, supply or administrative purposes
+are carried at cost, less any recognised impairment loss. Costs include professional fees and, for
+qualifying assets, borrowing costs capitalised in accordance with the Group's accounting policy.
+Such properties are classified to the appropriate categories of property, plant and equipment when
+completed and ready for intended use. Depreciation of these assets, on the same basis as other
+property, plant and equipment, commences when the assets are ready for their intended use.
+China Shenhua Energy Company Limited
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+3.
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Property, plant and equipment (Continued)
+Exploration and evaluation assets (Continued)
+Expenditure during the initial exploration preparation stage of a project is charged to profit or loss as
+incurred. Exploration and evaluation costs, including the costs of acquiring licenses, are capitalised
+as exploration and evaluation assets on a project-by-project basis pending determination of the
+technical feasibility and commercial viability of the project.
+2021 Annual Report 213
+Once the final feasibility study has been completed and a development decision has been taken,
+accumulated capitalised exploration and evaluation expenditures in respect of an area of interest
+are transferred to property, plant and equipment. In circumstances when an area of interest
+is abandoned or management decides it is not commercially viable, any accumulated costs in
+respect of that area are written off in the period the decision is made.
+The Group's obligations for land reclamation consist of spending estimates at both surface and
+underground mines in accordance with the PRC rules and regulations. The Group estimates its
+liabilities for land reclamation and mine closure based upon detailed calculations of the amount
+and timing of the future cash flows for the required work. Spending estimates are escalated for
+inflation, then discounted at a discount rate that reflects current market assessments of the time
+value of money and the risks specific to the liability such that the amount of provision reflects
+the present value of the expenditures expected to be required to settle the obligation. The
+Group records a corresponding asset associated with the liability for final reclamation and mine
+closure. The obligation and corresponding asset are recognised in the period in which the liability
+is incurred. The asset is depreciated on the units-of-production method over its expected life
+and the liability is accreted to the projected spending date. As changes in estimates occur (such
+as mine plan revisions, changes in estimated costs, or changes in timing of the performance of
+reclamation activities), the revisions to the obligation and the corresponding asset are recognised
+at the appropriate discount rate.
+Intangible assets
+Intangible assets acquired separately
+Intangible assets with finite useful lives that are acquired separately are carried at costs less
+accumulated amortisation and any accumulated impairment losses. Amortisation for intangible
+assets with finite useful lives is recognised on a straight-line basis over their estimated useful
+lives. The estimated useful life and amortisation method are reviewed at the end of each reporting
+period, with the effect of any changes in estimate being accounted for on a prospective basis.
+Internally-generated intangible assets - research and development expenditure
+Expenditure on research activities is recognised as an expense in the period in which it is incurred.
+214
+Obligations for land reclamation
+An item of property, plant and equipment is derecognised upon disposal or when no future
+economic benefits are expected to arise from the continued use of the asset. Any gain or loss
+arising on the disposal or retirement of an item of property, plant and equipment is determined as
+the difference between the sales proceeds and the carrying amount of the asset and is recognised
+in profit or loss.
+conducting market and finance studies.
+determining and examining the volume and grade of the resource;
+3.
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Property, plant and equipment (Continued)
+Mining structures and mining rights
+The costs of mining structures and mining rights, which include the costs of acquiring and
+developing mining structures and mining rights, are firstly capitalised as "construction in
+progress" in the year in which they are incurred and then reclassified to "Mining structures
+and mining rights" under property, plant and equipment when they are ready for commercial
+production.
+Mining structures and mining rights are depreciated on a units-of-production basis utilising only
+proved and probable coal reserves in the depletion base.
+surveying transportation and infrastructure requirements; and
+The Group's mining rights are of sufficient duration (or convey a legal right to renew for sufficient
+duration) to enable all reserves to be mined in accordance with current production schedules.
+Commercial reserves are proved and probable reserves. Changes in the commercial reserves
+affecting unit of production calculations are dealt with prospectively over the revised remaining
+reserves.
+Exploration and evaluation assets
+Exploration and evaluation assets comprise costs which are directly attributable to the search for
+mineral resources, the determination of technical feasibility and the assessment of commercial
+viability of an identified resource:
+researching and analysing historical exploration data;
+gathering exploration data through topographical, geochemical and geophysical studies;
+exploratory drilling, trenching and sampling;
+Stripping costs incurred to develop a mine (or pit) before the production commences or to improve
+access to the component of the ore body during the production stage are capitalised as part of the
+cost of constructing the mine (or pit) and subsequently amortised over the life of the mine (or pit)
+on a units-of-production basis. Stripping costs and secondary development expenditure, mainly
+comprising costs on blasting, haulage, excavation, etc. incurred during the production stage of the
+ore body and does not providing any improved access to the ore body are charged to profit or loss
+as incurred.
+Government grants that are receivable as compensation for expenses or losses already incurred
+or for the purpose of giving immediate financial support to the Group with no future related costs
+are recognised in profit or loss in the period in which they become receivable.
+Government grants are recognised in profit or loss on a systematic basis over the periods in
+which the Group recognises as expenses the related costs for which the grants are intended to
+compensate. Specifically, government grants whose primary condition is that the Group should
+purchase, construct or otherwise acquire non-current assets are recognised as deferred income
+in the consolidated statement of financial position and transferred to profit or loss on a systematic
+and rational basis over the useful lives of the related assets.
+Government grants are not recognised until there is reasonable assurance that the Group will
+comply with the conditions attaching to them and that the grants will be received.
+Business combinations
+Acquisitions of businesses, other than business combination under common control are accounted
+for using the acquisition method. The consideration transferred in a business combination is
+measured at fair value, which is calculated as the sum of the acquisition-date fair values of the
+assets transferred by the Group, liabilities incurred by the Group to the former owners of the
+acquiree and the equity interests issued by the Group in exchange for control of the acquiree.
+Acquisition-related costs are generally recognised in profit or loss as incurred.
+At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised
+at their fair value, except that deferred tax assets or liabilities, and assets or liabilities related to
+employee benefit arrangements are recognised and measured in accordance with IAS 12 Income
+Taxes and IAS 19 Employee benefits respectively.
+Goodwill is measured as the excess of the sum of the consideration transferred, the amount
+of any non-controlling interests in the acquiree, and the fair value of the acquirer's previously
+held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the
+identifiable assets acquired and the liabilities assumed. If, after re-assessment, the net of the
+acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the
+sum of the consideration transferred, the amount of any non-controlling interests in the acquiree
+and the fair value of the acquirer's previously held interest in the acquiree (if any), the excess is
+recognised immediately in profit or loss as a bargain purchase gain.
+Non-controlling interests that are present ownership interests and entitle their holders to a
+proportionate share of the entity's net assets in the event of liquidation are initially measured at
+the non-controlling interests' proportionate share of the recognised amounts of the acquiree's
+identifiable net assets.
+3.
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+Any difference between the amount by which the non-controlling interests are adjusted, and the
+fair value of the consideration paid or received is recognised directly in equity and attributed to
+owners of the Company.
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Goodwill arising on an acquisition of a business is carried at cost as established at the date of
+acquisition of the business less accumulated impairment losses, if any.
+For the purposes of impairment testing, goodwill is allocated to each of the Group's cash-
+generating units (or group of cash-generating units) that is expected to benefit from the synergies
+of the combination, which represent the lowest level at which the goodwill is monitored for
+internal management purposes and not larger than an operating segment.
+A cash-generating unit to which goodwill has been allocated is tested for impairment annually or
+more frequently when there is indication that the unit may be impaired. For goodwill arising on an
+acquisition in a reporting period, the cash-generating unit to which goodwill has been allocated
+is tested for impairment before the end of that reporting period. If the recoverable amount of
+the cash-generating unit is less than its carrying amount, the impairment loss is allocated first
+to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets
+of the unit on a pro-rata basis based on the carrying amount of each asset in the unit. Any
+impairment loss for goodwill is recognised directly in profit or loss. An impairment loss recognised
+for goodwill is not reversed in subsequent periods.
+On disposal of the relevant cash-generating unit or any of the cash-generating unit within
+the group of cash-generating units, the attributable amount of goodwill is included in the
+determination of the amount of profit or loss on disposal. When the Group disposes of an
+operation within the cash-generating unit (or a cash-generating unit within a group of cash-
+generating units), the amount of goodwill disposed of is measured on the basis of the relative
+values of the operation (or the cash-generating unit) disposed of and the portion of the cash-
+generating unit (or the group of cash-generating units) retained.
+Investments in associates
+An associate is an entity over which the Group has significant influence. Significant influence is
+the power to participate in the financial and operating policy decisions of the investee but is not
+control or joint control over those policies.
+The results and assets and liabilities of associates are incorporated in these consolidated financial
+statements using the equity method of accounting. The financial statements of associates used
+for equity accounting purposes are prepared using uniform accounting policies as those of the
+Group for like transactions and events in similar circumstances. Under the equity method, an
+investment in an associate is initially recognised in the consolidated statement of financial position
+at cost and adjusted thereafter to recognise the Group's share of the profit or loss and other
+comprehensive income of the associate. When the Group's share of losses of an associate
+exceeds the Group's interest in that associate (which includes any long-term interests that, in
+substance, form part of the Group's net investment in the associate, after applying the expected
+credit losses (the "ECL") model to such other long-term interests where applicable), the Group
+discontinues recognising its share of further losses. Additional losses are recognised only to the
+extent that the Group has incurred legal or constructive obligations or made payments on behalf
+of that associate.
+Goodwill
+2021 Annual Report 207
+Changes in the Group's interests in subsidiaries that do not result in the Group losing control
+over the subsidiaries are accounted for as equity transactions. The carrying amounts of the
+Group's relevant components of equity and the non-controlling interests are adjusted to reflect
+the changes in their relative interests in the subsidiaries, including re-attribution of relevant
+reserves between the Group and the non-controlling interests according to the Group's and the
+non-controlling interests' proportionate interests.
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Basis of consolidation (Continued)
+When the Group has less than a majority of the voting rights of an investee, it has power over the
+investee when the voting rights are sufficient to give it the practical ability to direct the relevant
+activities of the investee unilaterally. The Group considers all relevant facts and circumstances in
+assessing whether or not the Group's voting rights in an investee are sufficient to give it power,
+including:
+the size of the Group's holding of voting rights relative to the size and dispersion of
+holdings of the other vote holders;
+potential voting rights held by the Group, other vote holders or other parties;
+rights arising from other contractual arrangements; and
+any additional facts and circumstances that indicate that the Group has, or does not have,
+the current ability to direct the relevant activities at the time that decisions need to be
+made, including voting patterns at previous shareholders' meetings.
+Changes in the Group's ownership interests in existing subsidiaries
+Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and
+ceases when the Group loses control of the subsidiary. Specifically, income and expenses of a
+subsidiary acquired or disposed of during the year are included in the consolidated statement of
+profit or loss and other comprehensive income from the date the Group gains control until the
+date when the Group ceases to control the subsidiary.
+Where necessary, adjustments are made to the financial statements of subsidiaries to bring their
+accounting policies into line with the Group's accounting policies.
+All intragroup assets and liabilities, equity, income, expenses and cash flows relating to
+transactions between members of the Group are eliminated in full on consolidation.
+Non-controlling interests in subsidiaries are presented separately from the Group's equity
+therein, which represent present ownership interests entitling their holders to a proportionate
+share of net assets of the relevant subsidiaries upon liquidation.
+2021 Annual Report 205
+206
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+3.
+Profit or loss and each item of other comprehensive income are attributed to equity holders of
+the Company and to the non-controlling interests. Total comprehensive income of subsidiaries
+is attributed to equity holders of the Company and to the non-controlling interests even if this
+results in the non-controlling interests having a deficit balance.
+208
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+the Group's performance creates and enhances an asset that the customer controls as the
+Group performs; or
+the Group's performance does not create an asset with an alternative use to the Group
+and the Group has an enforceable right to payment for performance completed to date.
+Otherwise, revenue is recognised at a point in time when the customer obtains control of the
+distinct good or service.
+A contract asset represents the Group's right to consideration in exchange for goods or
+services that the Group has transferred to a customer that is not yet unconditional. It is assessed
+for impairment in accordance with IFRS 9. In contrast, a receivable represents the Group's
+unconditional right to consideration, i.e. only the passage of time is required before payment of
+that consideration is due.
+A contract liability represents the Group's obligation to transfer goods or services to a customer
+for which the Group has received consideration (or an amount of consideration is due) from the
+customer.
+2021 Annual Report 209
+210
+Notes to the consolidated financial statements (Continued)
+the customer simultaneously receives and consumes the benefits provided by the Group's
+performance as the Group performs;
+For the year ended 31 December 2021
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Foreign currencies
+In preparing the financial statements of each individual group entity, transactions in currencies
+other than entity's functional currencies (foreign currencies) are recognised at the rates of
+exchange prevailing on the dates of the transactions. At the end of the reporting period, monetary
+items denominated in foreign currencies are retranslated at the rates prevailing at that date.
+Non-monetary items that are measured in terms of historical cost in a foreign currency are not
+retranslated. Exchange differences on monetary items are recognised in profit or loss in the period
+in which they arise.
+For the purpose of presenting the consolidated financial statements, the assets and liabilities of
+the Group's foreign operations are translated into the presentation currency of the Group (i.e.
+RMB) using exchange rates prevailing at the end of each reporting period. Income and expenses
+items are translated at the average exchange rates for the period. Exchange differences arising, if
+any, are recognised in other comprehensive income and accumulated in equity under the heading
+of exchange reserve, attributed to non-controlling interests as appropriate.
+Borrowing costs
+Borrowing costs directly attributable to the acquisition, construction or production of qualifying
+assets, which are assets that necessarily take a substantial period of time to get ready for their
+intended use or sale, are added to as part of the cost of those assets, until such time as the assets
+are substantially ready for their intended use or sale. All other borrowing costs are expensed in
+the period in which they are incurred.
+Government grants
+3.
+Control is transferred over time and revenue is recognised over time by reference to the progress
+towards complete satisfaction of the relevant performance obligation if one of the following
+criteria is met:
+A performance obligation represents a good or service (or a bundle of goods or services) that is
+distinct or a series of distinct goods or services that are substantially the same.
+Under IFRS 15, the Group recognises revenue when (or as) a performance obligation is satisfied,
+i.e. when "control" of the goods or services underlying the particular performance obligation is
+transferred to the customer.
+3.
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Investments in associates (Continued)
+On acquisition of the investment in an associate, any excess of the cost of acquisition over
+the Group's share of the net fair value of the identifiable assets, liabilities of the investee is
+recognised as goodwill, which is included within the carrying amount of the investment. Any
+excess of the Group's share of the net fair value of the identifiable assets and liabilities over the
+cost of investment, after reassessment, is recognised immediately in profit or loss in the period in
+which the investment is acquired.
+The Group assesses whether there is an objective evidence that the interest in an associate may
+be impaired. When any objective evidence exists, the entire carrying amount of the investment
+(including goodwill) is tested for impairment in accordance with IAS 36 as a single asset by
+comparing its recoverable amount (higher of value in use and fair value less costs of disposal)
+with its carrying amount. Any impairment loss is recognised when the recoverable amount is less
+than the carrying value of the investment in associates. Any reversal of that impairment loss is
+recognised in accordance with IAS 36 to the extent that the recoverable amount of the investment
+subsequently increases.
+When the Group reduces its ownership interest in an associate but the Group continues to use
+the equity method, the Group reclassifies to profit or loss the proportion of the gain or loss that
+had previously been recognised in other comprehensive income relating to that reduction in
+ownership interest if that gain or loss would be reclassified to profit or loss on the disposal of the
+related assets or liabilities.
+When a group entity transacts with an associate of the Group, profits and losses resulting
+from the transactions with the associate are recognised in the Group's consolidated financial
+statements only to the extent of interests in the associate that are not related to the Group.
+Non-current assets held for sale
+Non-current assets and disposal groups are classified as held for sale if their carrying amount
+will be recovered principally through a sale transaction rather than through continuing use. This
+condition is regarded as met only when the asset (or disposal group) is available for immediate
+sale in its present condition subject only to terms that are usual and customary for sales of such
+asset (or disposal group) and its sale is highly probable. Management must be committed to the
+sale, which should be expected to qualify for recognition as a completed sale within one year from
+the date of classification.
+When the Group is committed to a sale plan involving loss of control of a subsidiary, all of the assets
+and liabilities of that subsidiary are classified as held for sale when the criteria described above
+are met, regardless of whether the Group will retain a non-controlling interest in the relevant
+subsidiary after the sale.
+When the Group is committed to a sale plan involving disposal of an investment, or a portion of an
+investment, in an associate or joint venture, the investment or the portion of the investment that
+will be disposed of is classified as held for sale when the criteria described above are met, and
+the Group discontinues the use of the equity method in relation to the portion that is classified as
+held for sale from the time when the investment (or a portion of the investment) is classified as
+held for sale.
+China Shenhua Energy Company Limited
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Non-current assets held for sale (Continued)
+Non-current assets (and disposal groups) classified as held for sale are measured at the lower of
+their previous carrying amount and fair value less costs to sell, except for financial assets within
+the scope of IFRS 9, which continue to be measured in accordance with the accounting policies as
+set out in respective sections.
+Revenue from contracts with customers
+China Shenhua Energy Company Limited
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+3.
+Lifetime ECL represents the ECL that will result from all possible default events over the expected
+life of the relevant instrument. In contrast, 12-month ECL represents the portion of lifetime
+ECL that is expected to result from default events that are possible within 12 months after the
+reporting date. Assessments are done based on the Group's historical credit loss experience,
+adjusted for factors that are specific to the debtors, general economic conditions and an
+assessment of both the current conditions at the reporting date as well as the forecast of future
+conditions.
+China Shenhua Energy Company Limited
+3.
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Financial instruments (Continued)
+Financial assets and financial liabilities are initially measured at fair value except for trade
+receivables arising from contracts with customers. Transaction costs that are directly attributable
+to the acquisition or issue of financial assets and financial liabilities (other than financial assets or
+financial liabilities measured at fair value through profit and loss (the "FVTPL")) are added to or
+deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial
+recognition. Transaction costs directly attributable to the acquisition of financial assets or financial
+liabilities FVTPL are recognised immediately in profit or loss.
+Effective interest method
+The effective interest method is a method of calculating the amortised cost of a financial asset or
+financial liability and of allocating interest income and interest expense over the relevant period.
+The effective interest rate is the rate that exactly discounts estimated future cash receipts and
+payments (including all fees and points paid or received that form an integral part of the effective
+interest rate, transaction costs and other premiums or discounts) through the expected life of
+the financial asset or financial liability, or, where appropriate, a shorter period, to the net carrying
+amount on initial recognition.
+Financial assets
+Classification and subsequent measurement of financial assets
+Financial assets that meet the following conditions are subsequently measured at amortised cost:
+the financial asset is held within a business model whose objective is to collect contractual
+cash flows; and
+the contractual terms give rise on specified dates to cash flows that are solely payments of
+principal and interest on the principal amount outstanding.
+Financial assets that meet the following conditions are subsequently measured at fair value
+through other comprehensive income (the "FVTOCI"):
+Financial assets and financial liabilities are recognised when a group entity becomes a party to the
+contractual provisions of the instrument. All regular way purchases or sales of financial assets are
+recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases
+or sales of financial assets that require delivery of assets within the time frame established by
+regulation or convention in the market place.
+the financial asset is held within a business model whose objective is achieved by both
+collecting contractual cash flows and selling; and
+All other financial assets are subsequently measured at FVTPL, except that at the date of initial
+application/initial recognition of a financial asset the Group may irrevocably elect to present
+subsequent changes in fair value of an equity investment in other comprehensive income if
+that equity investment is neither held for trading nor contingent consideration recognised by an
+acquirer in a business combination to which IFRS 3 Business Combinations applies.
+2021 Annual Report 219
+220
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+3.
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Financial assets (Continued)
+Classification and subsequent measurement of financial assets (Continued)
+In addition, the Group may irrevocably designate a financial asset that are required to be measured
+at the amortised cost or FVTOCI as measured at FVTPL if doing so eliminates or significantly
+reduces an accounting mismatch.
+(i) Amortised cost and interest income (Continued)
+(ii)
+Interest income is recognised using the effective interest method for financial assets
+measured subsequently at amortised cost. Interest income is calculated by applying the
+effective interest rate to the gross carrying amount of a financial asset, except for financial
+assets that have subsequently become credit-impaired (see below). For financial assets that
+have subsequently become credit-impaired, interest income is recognised by applying the
+effective interest rate to the amortised cost of the financial asset from the next reporting
+period. If the credit risk on the credit-impaired financial instrument improves so that the
+financial asset is no longer credit-impaired, interest income is recognised by applying the
+effective interest rate to the gross carrying amount of the financial asset from the beginning
+of the reporting period following the determination that the asset is no longer credit
+impaired.
+Equity instruments designated as at FVTOCI
+the contractual terms give rise on specified dates to cash flows that are solely payments of
+principal and interest on the principal amount outstanding.
+Financial instruments
+When some or all of the economic benefits required to settle a provision are expected to be
+recovered from a third party, a receivable is recognised as an asset if it is virtually certain that
+reimbursement will be received and the amount of the receivable can be measured reliably.
+Provisions are measured at the best estimate of the consideration required to settle the present
+obligation at the end of the reporting period, taking into account the risks and uncertainties
+surrounding the obligation. When a provision is measured using the cash flows estimated to settle
+the present obligation, its carrying amount is the present value of those cash flows (where the
+effect of the time value of money is material).
+China Shenhua Energy Company Limited
+3.
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Leased assets (Continued)
+(i)
+As a lessee
+Where the contract contains lease component(s) and non-lease component(s), the Group
+has elected not to separate non-lease components and accounts for each lease component
+and any associated non-lease components as a single lease component for all leases.
+At the lease commencement date, the Group recognises a right-of-use asset and a lease
+liability, except for short-term leases that have a lease term of 12 months or less and
+leases of low-value assets. When the Group enters into a lease in respect of a low-value
+asset, the Group decides whether to capitalise the lease on a lease-by-lease basis. The
+lease payments associated with those leases which are not capitalised are recognised as an
+expense on a systematic basis over the lease term.
+Where the lease is capitalised, the lease liability is initially recognised at the present value of
+the lease payments payable over the lease term, discounted using the interest rate implicit
+in the lease or, if that rate cannot be readily determined, using a relevant incremental
+borrowing rate. After initial recognition, the lease liability is measured at amortised cost and
+interest expense is calculated using the effective interest method. Variable lease payments
+that do not depend on an index or rate are not included in the measurement of the lease
+liability and hence are charged to profit or loss in the accounting period in which they are
+incurred.
+The right-of-use asset recognised when a lease is capitalised is initially measured at cost,
+which comprises the initial amount of the lease liability plus any lease payments made at or
+before the commencement date, and any initial direct costs incurred. Where applicable, the
+cost of the right-of-use assets also includes an estimate of costs to dismantle and remove
+the underlying asset or to restore the underlying asset or the site on which it is located,
+discounted to their present value, less any lease incentives received. The right-of-use asset
+is subsequently stated at cost less accumulated depreciation and impairment losses.
+The lease liability is remeasured when there is a change in future lease payments arising
+from a change in an index or rate, or there is a change in the Group's estimate of the
+amount expected to be payable under a residual value guarantee, or there is a change
+arising from the reassessment of whether the Group will be reasonably certain to exercise
+a purchase, extension or termination option. When the lease liability is remeasured in this
+way, a corresponding adjustment is made to the carrying amount of the right-of-use asset,
+or is recorded in profit or loss if the carrying amount of the right-of-use asset has been
+reduced to zero.
+The lease liability is also remeasured when there is a change in the scope of a lease or
+the consideration for a lease that is not originally provided for in the lease contract ("lease
+modification") that is not accounted for as a separate lease. In this case the lease liability is
+remeasured based on the revised lease payments and lease term using a revised discount
+rate at the effective date of the modification. The only exceptions are any rent concessions
+which arose as a direct consequence of the COVID-19 pandemic and which satisfied the
+conditions set out in paragraph 46B of IFRS 16 Leases. In such cases, the Group took
+advantage of the practical expedient set out in paragraph 46A of IFRS 16 and recognised the
+change in consideration as if it were not a lease modification.
+In the consolidated statement of financial position, the current portion of long-term lease
+liabilities is determined as the present value of contractual payments that are due to be
+settled within twelve months after the reporting period.
+2021 Annual Report
+217
+218
+Provisions are recognised when the Group has a present obligation (legal or constructive) as a
+result of a past event, it is probable that the Group will be required to settle that obligation, and a
+reliable estimate can be made of the amount of the obligation.
+Provisions
+Inventories are stated at the lower of cost and net realisable value. Costs of inventories are
+calculated using the weighted average method. Net realisable value represents the estimated
+selling price for inventories less all estimated costs of completion and costs necessary to make
+the sale.
+Inventories
+When the Group is an intermediate lessor, the sub-leases are classified as a finance lease
+or as an operating lease with reference to the right-of-use asset arising from the head
+lease. If the head lease is a short-term lease to which the Group applies the exemption
+method, then the Group classifies the sub-lease as an operating lease.
+When a contract contains lease and non-lease components, the Group allocates the
+consideration in the contract to each component on a relative stand-alone selling price
+basis.
+Investments in equity instruments at FVTOCI are subsequently measured at fair value with
+gains and losses arising from changes in fair value recognised in other comprehensive
+income and accumulated in the other reserves; and are not subject to impairment
+assessment. The cumulative gain or loss will not be reclassified to profit or loss on disposal
+of the equity investments, and will be transferred to retained earnings.
+When the Group acts as a lessor, it determines at lease inception whether each lease is
+a finance lease or an operating lease. A lease is classified as a finance lease if it transfers
+substantially all the risks and rewards incidental to the ownership of an underlying assets to
+the lessee. If this is not the case, the lease is classified as an operating lease.
+(ii)
+Leased assets (Continued)
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+3.
+For the year ended 31 December 2021
+Notes to the consolidated financial statements (Continued)
+As a lessor
+At inception of a contract, the Group assesses whether the contract is, or contains, a lease. A
+contract is, or contains, a lease if the contract conveys the right to control the use of an identified
+asset for a period of time in exchange for consideration. Control is conveyed where the customer
+has both the right to direct the use of the identified asset and to obtain substantially all of the
+economic benefits from that use.
+Dividends from these investments in equity instruments are recognised in profit or loss.
+when the Group's right to receive the dividends is established, unless the dividends clearly
+represent a recovery of part of the cost of the investment. Dividends are included in the
+"other income" line item in profit or loss.
+Financial assets that do not meet the criteria for being measured at amortised cost or
+FVTOCI or designated as FVTOCI are measured at FVTPL.
+(ii)
+Significant increase in credit risk (Continued)
+Despite the foregoing, the Group assumes that the credit risk on a debt instrument has
+not increased significantly since initial recognition if the debt instrument is determined to
+have low credit risk at the reporting date. A debt instrument is determined to have low
+credit risk if i) it has a low risk of default, ii) the borrower has a strong capacity to meet its
+contractual cash flow obligations in the near term and iii) adverse changes in economic and
+business conditions in the longer term may, but will not necessarily, reduce the ability of
+the borrower to fulfil its contractual cash flow obligations.
+For financial guarantee contracts, the date that the Group becomes a party to the irrevocable
+commitment is considered to be the date of initial recognition for the purposes of assessing
+the financial instrument for impairment. In assessing whether there has been a significant
+increase in the credit risk since initial recognition of financial guarantee contracts, the Group
+considers the changes in the risk that the specified debtor will default on the contract.
+The Group regularly monitors the effectiveness of the criteria used to identify whether there
+has been a significant increase in credit risk and revises them as appropriate to ensure that
+the criteria are capable of identifying significant increase in credit risk before the amount
+becomes past due.
+Definition of default
+For internal credit risk management, the Group considers an event of default occurs when
+information developed internally or obtained from external sources indicates that the debtor
+is unlikely to pay its creditors, including the Group, in full (without taking into account
+any collaterals held by the Group). The Group considers both quantitative and qualitative
+information that is reasonable and supportable, including historical experience and forward-
+looking information that is available without undue cost or effort.
+2021 Annual Report
+223
+224
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+3.
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+(i)
+Financial assets (Continued)
+(iii) Credit-impaired financial assets
+A financial asset is credit-impaired when one or more events of default that have a
+detrimental impact on the estimated future cash flows of that financial asset have occurred.
+Evidence that a financial asset is credit-impaired includes observable data about the
+following events:
+(a) significant financial difficulty of the issuer or the borrower;
+(b)
+a breach of contract, such as a default or past due event;
+(c)
+(d)
+(e)
+the lenders of the borrower, for economic or contractual reasons relating to the
+borrower's financial difficulty, having granted to the borrower a concessions that the
+lenders would not otherwise consider;
+it is becoming probable that the borrower will enter bankruptcy or other financial re-
+organisation; or
+the disappearance of an active market for that financial asset because of financial
+difficulties.
+(iv) Write-off policy
+The Group writes off a financial asset when there is information indicating that the
+counterparty is in severe financial difficulty and there is no realistic prospect of recovery.
+Financial assets written off may still be subject to enforcement activities under the
+Group's recovery procedures, taking into account legal advice where appropriate. A write-
+off constitutes a derecognition event. Any subsequent recoveries are recognised in profit or
+loss.
+China Shenhua Energy Company Limited
+Impairment of financial assets (Continued)
+Impairment of financial assets (Continued)
+Financial assets (Continued)
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Financial assets at FVTPL are measured at fair value at the end of each reporting period,
+with any fair value gains or losses recognised in profit or loss. The net gain or loss
+recognised in profit or loss includes any dividend or interest earned on the financial asset
+and is included in the "other gains and losses" line item.
+China Shenhua Energy Company Limited
+3.
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Financial assets (Continued)
+Impairment of financial assets
+The Group recognises a loss allowance for ECL on financial assets which are subject to
+impairment under IFRS 9 (including accounts receivable, other receivables, long-term receivables,
+loans to China Energy Group and fellow subsidiaries, entrusted loans and financial guarantee
+contracts). The amount of ECL is updated at each reporting date to reflect changes in credit risk
+since initial recognition.
+The Group always recognises lifetime ECL for accounts receivable. The ECL on these assets are
+assessed individually for credit-impaired debtors or using a provision matrix with appropriate
+groupings.
+For all other instruments, the Group measures the loss allowance equal to 12-month ECL, unless
+when there has been a significant increase in credit risk since initial recognition, the Group
+recognises lifetime ECL. The assessment of whether lifetime ECL should be recognised is based
+on significant increases in the likelihood or risk of a default occurring since initial recognition.
+2021 Annual Report 221
+222
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+3.
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Financial assets (Continued)
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+3.
+China Shenhua Energy Company Limited
+Irrespective of the outcome of the above assessment, the Group presumes that the credit
+risk has increased significantly since initial recognition when contractual payments are more
+than 30 days past due, unless the Group has reasonable and supportable information that
+demonstrates otherwise.
+an actual or expected significant adverse change in the regulatory, economic, or
+technological environment of the debtor that results in a significant decrease in the
+debtor's ability to meet its debt obligations.
+an actual or expected significant deterioration in the operating results of the debtor;
+(iii) Financial assets at FVTPL
+existing or forecast adverse changes in business, financial or economic conditions
+that are expected to cause a significant decrease in the debtor's ability to meet its
+debt obligations;
+an actual or expected significant deterioration in the financial instrument's external
+credit rating (if available);
+In particular, the following information is taken into account when assessing whether credit
+risk has increased significantly:
+In assessing whether the credit risk has increased significantly since initial recognition,
+the Group compares the risk of a default occurring on the financial instrument as at the
+reporting date with the risk of a default occurring on the financial instrument as at the date
+of initial recognition. In making this assessment, the Group considers both quantitative and
+qualitative information that is reasonable and supportable, including historical experience
+and forward-looking information that is available without undue cost or effort.
+Significant increase in credit risk
+(i)
+Impairment of financial assets (Continued)
+significant deterioration in external market indicators of credit risk, e.g. a significant
+increase in the credit spread, the credit default swap prices for the debtor;
+Leased assets
+If the recoverable amount of an asset (or a cash-generating unit) is estimated to be less than its
+carrying amount, the carrying amount of the asset (or a cash-generating unit) is reduced to its
+recoverable amount. In allocating the impairment loss, the impairment loss is allocated first to
+reduce the carrying amount of any goodwill (if applicable) and then to the other assets on a basis
+based on the carrying amount of each asset in the unit. The carrying amount of an asset is not
+reduced below the highest of its fair value less costs of disposal (if measurable), its value in use
+(if determinable) and zero. The amount of the impairment loss that would otherwise have been
+allocated to the asset is allocated pro rata to the other assets of the unit. An impairment loss is
+recognised immediately in profit or loss.
+Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing
+value in use, the estimated future cash flows are discounted to their present value using a pre-tax
+discount rate that reflects current market assessments of the time value of money and the risks
+specific to the asset (or a cash-generating unit) for which the estimates of future cash flows have
+not been adjusted.
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Intangible assets (Continued)
+Internally-generated intangible assets - research and development expenditure (Continued)
+An internally-generated intangible asset arising from development activities (or from the
+development phase of an internal project) is recognised if, and only if, all of the following have
+been demonstrated:
+the technical feasibility of completing the intangible asset so that it will be available for use
+or sale;
+the ability to use or sell the intangible asset;
+how the intangible asset will generate probable future economic benefits;
+the availability of adequate technical, financial and other resources to complete the
+development and to use or sell the intangible asset; and the ability to measure reliably the
+expenditure attributable to the intangible asset during its development.
+The amount initially recognised for internally-generated intangible asset is the sum of the
+expenditure incurred from the date when the intangible asset first meets the recognition criteria
+listed above. Where no internally-generated intangible asset can be recognised, development
+expenditure is recognised in profit or loss in the period in which it is incurred.
+Subsequent to initial recognition, internally-generated intangible asset is measured at cost less
+accumulated amortisation and accumulated impairment losses (if any), on the same basis as
+intangible assets acquired separately.
+Intangible assets acquired in a business combination not under common control
+the intention to complete the intangible asset and use or sell it;
+Subsequent to initial recognition, intangible assets acquired in a business combination with finite
+useful lives are reported at cost less accumulated amortisation and any accumulated impairment
+losses, on the same basis as intangible assets that are acquired separately.
+Intangible assets acquired in a business combination are recognised separately from goodwill and
+are initially recognised at their fair value at the acquisition date (which is regarded as their cost).
+At the end of the reporting period, the Group reviews the carrying amounts of its tangible,
+intangible assets with finite useful lives to determine whether there is any indication that these
+assets have suffered an impairment loss. If any such indication exists, the recoverable amount of
+the relevant asset is estimated in order to determine the extent of the impairment loss (if any).
+The recoverable amount of tangible and intangible assets are estimated individually, when it is not
+possible to estimate the recoverable amount individually, the Group estimates the recoverable
+amount of the cash-generating unit to which the asset belongs. When a reasonable and
+consistent basis of allocation can be identified, corporate assets are also allocated to individual
+cash-generating units, or otherwise they are allocated to the smallest group of cash-generating
+units for which a reasonable and consistent allocation basis can be identified.
+Impairment of tangible and intangible assets other than goodwill
+Intangible assets (Continued)
+3.
+For the year ended 31 December 2021
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Notes to the consolidated financial statements (Continued)
+216
+2021 Annual Report 215
+An intangible asset is derecognised on disposal, or when no future economic benefits are
+expected from use or disposal. Gains and losses arising from derecognition of an intangible asset
+are measured as the difference between the net disposal proceeds and the carrying amount of
+the asset and are recognised in profit or loss in the period when the asset is derecognised.
+Derecognition of intangible assets
+(ii)
+An entity is related to the Group if any of the following conditions applies:
+(i)
+The entity and the Group are members of the same group.
+(b)
+One entity is an associate or joint venture of the other entity (or an associate or joint
+venture of a member of a group of which the other entity is a member).
+(vi)
+Both entities are joint ventures of the same third party.
+(iv)
+(v)
+One entity is a joint venture of a third entity and the other entity is an associate of the
+third entity.
+The entity is a post-employment benefit plan for the benefit of employees of either
+the Group or an entity related to the Group.
+is a member of the key management personnel of the Group or the Group's parent.
+(iii)
+(iii)
+Derivative financial instruments
+(ii)
+has control or joint control over the Group;
+(i)
+A person, or a close member of that person's family, is related to the Group if that person:
+(a)
+Related parties
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+3.
+China Shenhua Energy Company Limited
+The Group's derivative financial instruments represent cross-currency exchange rate swaps, and
+are initially recognised at fair value at the date when the derivative contracts are entered into, and
+remeasured at fair value at the end of the reporting period, with any gains or losses recognised in
+profit or loss.
+The entity is controlled or jointly controlled by a person identified in (a).
+The Group derecognises financial liabilities when, and only when, the Group's obligations
+are discharged, cancelled or have expired. The difference between the carrying amount of the
+financial liability derecognised and the consideration paid and payable is recognised in profit or
+loss.
+Derecognition of financial liabilities
+has significant influence over the Group; or
+(vii)
+The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to
+accounting estimates are recognised in the period in which the estimate is revised if the revision
+affects only that period or in the period of the revision and future periods if the revision affects
+both current and future periods.
+(viii) The entity, or any member of a group of which it is a part, provides key management
+personnel services to the Group or to the Group's parent.
+2021 Annual Report 231
+Notwithstanding that the Group has used all available information to make this estimation,
+inherent uncertainty exists and actual write-offs may be higher or lower than the amount
+estimated.
+In considering the impairment losses that may be required for current receivables and other
+financial assets, future cash flows need to be determined. One of the key assumptions that
+has to be applied is about the ability of the debtors to settle the receivables.
+In considering the impairment losses that may be required for certain of the Group's assets
+which mainly include property, plant and equipment, construction in progress, exploration
+and evaluation assets, intangible assets, right-of-use assets, interests in associates and
+other non-current assets, the recoverable amount of the asset need to be determined. The
+recoverable amount is the higher of its fair value less cost of disposal and value in use. It is
+difficult to precisely estimate fair value because quoted market prices for these assets may
+not be readily available. In determining the value in use, the Group uses all readily available
+information in determining expected cash flows generated by the cash-generating unit to
+which the asset belongs and they are discounted to their present value, which requires
+significant judgement relating to cash flow items such as level of sale volume, selling price,
+amount of operating costs and future returns.
+Impairment losses
+Despite the inherent imprecision in these engineering estimates, these estimates are
+used in determining depreciation expenses and impairment loss. Depreciation rates
+are determined based on estimated proved and probable coal reserve quantity (the
+denominator) and capitalised costs of mining structures and mining rights (the numerator).
+The capitalised cost of mining structures and mining rights are amortised based on the units
+of coal produced.
+Engineering estimates of the Group's coal reserves are inherently imprecise and represent
+only approximate amounts because of the subjective judgements involved in developing
+such information. There are authoritative guidelines regarding the engineering criteria
+that have to be met before estimated coal reserves can be designated as "proved" and
+"probable". Proved and probable coal reserve estimates are updated at regular basis
+and have taken into account recent production and technical information of each mine. In
+addition, as prices and cost levels change from year to year, the estimate of proved and
+probable coal reserves also changes. This change is considered as a change in estimate for
+accounting purposes and is reflected on a prospective basis in related depreciation rates.
+Coal reserves
+The following are the key assumptions concerning the future, and other key sources of
+estimation uncertainty at the end of the reporting period that have a significant risk of
+causing a material adjustment to the carrying amounts of assets and liabilities within the
+next financial year.
+4.2 Key sources of estimation uncertainty
+4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
+UNCERTAINTY (CONTINUED)
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+China Shenhua Energy Company Limited
+The Directors evaluated whether the Company has the practical ability to lead the relevant
+activities of Dingzhou Power to determine whether the Company has actual control over
+Dingzhou Power. The Company is the largest equity owner of Dingzhou Power and no
+other equity owners individually or in aggregate had the power to control Dingzhou Power
+according to the articles of association. Historically, the Company controlled the operation
+of Dingzhou Power by appointing senior management, approving annual budget and
+determining the remuneration of employees etc. Considering above mentioned factors,
+the Directors are of the opinion that the Company has sufficiently dominant power over
+Dingzhou Power as the Company is the governing body of most of the relevant activities of
+it. Therefore the financial statements of Dingzhou Power are consolidated by the Company
+during the periods presented.
+A person identified in (a)(i) has significant influence over the entity or is a member of
+the key management personnel of the entity (or of a parent of the entity).
+Note 45 describes that Dingzhou Power is a subsidiary of the Company although the
+Company has only 41% ownership interest and voting rights in Dingzhou Power. The
+remaining 59% of ownership interest and voting rights are owned by two shareholders that
+are unrelated to the Group as to 19% and 40%, respectively. Details of Dingzhou Power are
+set out in Note 45.
+The following are critical judgements, apart from those involving estimation (see Note 4.2
+below), that the Directors have made in the process of applying the Group's accounting
+policies and that have the most significant effect on the amounts recognised in the
+consolidated financial statements.
+Critical judgements in applying accounting policies
+4.1
+the amount initially recognised less, where appropriate, cumulative amortisation recognised
+over the guarantee period.
+In the application of the Group's accounting policies, which are described in Note 3, the Directors
+are required to make judgements, estimates and assumptions about the carrying amounts of
+assets and liabilities that are not readily apparent from other sources. The estimates and associated
+assumptions are based on historical experience and other factors that are considered to be
+relevant. Actual results may differ from these estimates.
+4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
+UNCERTAINTY
+For the year ended 31 December 2021
+Notes to the consolidated financial statements (Continued)
+230
+2021 Annual Report 229
+Individually material operating segments are not aggregated for financial reporting purposes
+unless the segments have similar economic characteristics and are similar in respect of the
+nature of products and services, the type or class of customers, the methods used to distribute
+the products or provide the services, and the nature of the regulatory environment. Operating
+segments which are not individually material may be aggregated if they share a majority of these
+criteria.
+Operating segments, and the amounts of each segment item reported in the financial
+statements, are identified from the financial information provided regularly to the Group's most
+senior executive management for the purposes of allocating resources to, and assessing the
+performance of, the Group's various lines of business and geographical locations.
+Segment reporting
+Close members of the family of a person are those family members who may be expected to
+influence, or be influenced by, that person in their dealings with the entity.
+Control over Guoneng Hebei Dingzhou Power Co., Ltd. ("Dingzhou Power")
+the amount of the loss allowance determined in accordance with IFRS 9 /IAS 37 Provisions,
+Contingent Liabilities and Contingent Assets; and
+such designation eliminates or significantly reduces a measurement or recognition
+inconsistency that would otherwise arise; or
+Financial guarantee contracts
+On derecognition of a financial asset measured at amortised cost, the difference between the
+asset's carrying amount and the sum of the consideration received and receivable is recognised
+in profit or loss.
+The Group derecognises a financial asset only when the contractual rights to the cash flows
+from the asset expire, or when it transfers the financial asset and substantially all the risks and
+rewards of ownership of the asset to another entity. If the Group retains substantially all the risks
+and rewards of ownership of a transferred financial asset, the Group continues to recognise the
+financial asset and also recognises a collateralised borrowing for the proceeds received.
+Derecognition of financial assets
+ECLs are remeasured at each reporting date to reflect changes in the financial instrument's
+credit risk since initial recognisation. Any change in the ECL amount is recognised as an
+impairment gain or loss in profit or loss. The Group recognises an impairment gain or loss
+for all financial instruments with a corresponding adjustment to their carrying amount
+through a loss allowance account.
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+For financial guarantee contracts, the loss allowances are recognised at the higher of the
+amount of the loss allowance determined in accordance with IFRS 9; and the amount
+initially recognised less, where appropriate, cumulative amount of income recognised over
+the guarantee period.
+Interest income is calculated based on the gross carrying amount of the financial asset
+unless the financial asset is credit impaired, in which case interest income is calculated
+based on amortised cost of the financial asset.
+Measurement and recognition of ECL (Continued)
+(v)
+Impairment of financial assets (Continued)
+Financial assets (Continued)
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+3.
+For the year ended 31 December 2021
+On derecognition of an investment in equity instrument which the Group has elected on initial
+recognition to measure at FVTOCI upon application of IFRS 9, the cumulative gain or loss
+previously accumulated in other reserves is not reclassified to profit or loss, but is transferred to
+retained earnings.
+Notes to the consolidated financial statements (Continued)
+The grouping is regularly reviewed by management to ensure the constituents of each
+group continue to share similar credit risk characteristics.
+External credit ratings where available.
+Past-due status; and
+Nature of financial instruments (i.e. the Group's accounts and bills receivables
+and other receivables are each assessed as a separate group. Loans receivable are
+assessed for ECL on an individual basis);
+Where ECL is measured on a collective basis or cater for cases where evidence at the
+individual instrument level may not yet be available, the financial instruments are grouped
+on the following basis:
+For ECL on financial guarantee contracts, the Group will apply a discount rate that reflects
+the current market assessment of the time value of money and the risks that are specific
+to the cash flows but only if, and to the extent that, the risks are taken into account by
+adjusting the discount rate instead of adjusting the cash shortfalls being discounted.
+For a financial guarantee contract, the Group is required to make payments only in the event
+of a default by the debtor in accordance with the terms of the instrument that is guaranteed.
+Accordingly, the expected losses is the present value of the expected payments to
+reimburse the holder for a credit loss that it incurs less any amounts that the Group expects
+to receive from the holder, the debtor or any other party.
+Generally, the ECL is the difference between all contractual cash flows that are due to the
+Group in accordance with the contract and the cash flows that the Group expects to receive,
+discounted at the effective interest rate determined at initial recognition.
+The measurement of ECL is a function of the probability of default, loss given default (i.e.
+the magnitude of the loss if there is a default) and the exposure at default. The assessment
+of the probability of default and loss given default is based on historical data adjusted
+by forward-looking information. Estimation of ECL reflects an unbiased and probability-
+weighted amount that is determined with the respective risks of default occurring as the
+weights.
+Measurement and recognition of ECL
+(v)
+Impairment of financial assets (Continued)
+Financial assets (Continued)
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+2021 Annual Report 225
+A financial guarantee contract is a contract that requires the issuer to make specified payments to
+reimburse the holder for a loss it incurs because a specified debtor fails to make payments when
+due in accordance with the terms of a debt instrument. Financial guarantee contract liabilities are
+measured initially at their fair values. It is subsequently measured at the higher of:
+Financial liabilities and equity
+Debt and equity instruments are classified as either financial liabilities or as equity in accordance
+with the substance of the contractual arrangements and the definitions of a financial liability and
+an equity instrument.
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+3.
+For the year ended 31 December 2021
+Notes to the consolidated financial statements (Continued)
+228
+2021 Annual Report 227
+Financial liabilities including borrowings, accounts and bills payables, other payables, long-term
+liabilities, medium-term notes and bonds are subsequently measured at amortised cost, using the
+effective interest method.
+Financial liabilities at amortised cost
+it forms part of a contract containing one or more embedded derivatives, and IFRS 9 permits
+the entire combined contract to be designated as at FVTPL.
+the financial liability forms part of a group of financial assets or financial liabilities or both,
+which is managed and its performance is evaluated on a fair value basis, in accordance with
+the Group's documented risk management or investment strategy, and information about
+the grouping is provided internally on that basis; or
+232
+A financial liability other than a financial liability held for trading or contingent consideration of an
+acquirer in a business combination may be designated as at FVTPL upon initial recognition if:
+it is a derivative, except for a derivative that is a financial guarantee contract or a designated
+and effective hedging instrument.
+on initial recognition it is part of a portfolio of identified financial instruments that the Group
+manages together and has a recent actual pattern of short-term profit-taking; or
+Classification as debt or equity
+it has been acquired principally for the purpose of repurchasing it in the near term; or
+A financial liability is classified as held for trading if:
+Financial liabilities are classified as at FVTPL when the financial liability is (i) contingent
+consideration of an acquirer in a business combination to which IFRS 3 applies, (ii) held for trading
+or (iii) it is designated as at FVTPL.
+Financial liabilities at FVTPL
+All financial liabilities are subsequently measured at amortised cost using the effective interest
+method or at FVTPL.
+Financial liabilities
+Financial liabilities and equity (Continued)
+Financial assets (Continued)
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+3.
+China Shenhua Energy Company Limited
+226
+An equity instrument is any contract that evidences a residual interest in the assets of an entity
+after deducting all of its liabilities. Equity instruments issued by the Company are recognised at
+the proceeds received, net of direct issue costs.
+Equity instruments
+-
+Notes to the consolidated financial statements (Continued)
+Provision of ECL for accounts receivables
+4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
+UNCERTAINTY (CONTINUED)
+982
+6,838 5,804
+63,959 49,348
+256,241 169,197
+9,165 9,553
+1,028
+24
+974 1,321 1,747
+982
+6,838 5,804
+2,538
+1,343
+24 1,028
+525
+974 1,321 1,747
+771
+1,321 1,747
+326,051 223,710
+5,165
+Power
+5,851
+449
+449
+211
+1,108 1,061
+'ང'ང
+¨¨¨ 771 525 1,321 1,747
+.
+5,730 4,743
+256,241 169,197 63,959 49,348
+Total
+5,730 4,743
+Shipping
+Others
+5,851
+24
+China Shenhua Energy Company Limited
+1,028 335,216 233,263
+24
+5,165
+5,851
+1,747
+1,321
+974
+982
+5,804
+6,838
+63,959 49,348
+169,197
+256,241
+5,165
+Total
+24
+5,165
+5,851
+1,747
+1,321
+974
+982
+5,804
+168,198 56,991 44,623 6,838
+999 6,968 4,725
+252,481
+3,760
+Overseas markets
+Domestic markets
+Geographical markets
+1,028 335,216 233,263
+1,028 324,488 227,539
+10,728 5,724
+Port
+Railway
+Transportation and other services
+million
+RMB
+Total
+Other
+Coal chemical
+Shipping
+Port
+Segments
+Disaggregation of revenue of business lines and geographical location of customers is as follows:
+5. REVENUE FROM GOODS AND SERVICES
+For the year ended 31 December 2021
+Notes to the consolidated financial statements (Continued)
+234
+2021 Annual Report 233
+2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
+RMB RMB RMB RMB
+RMB
+million million million million
+The estimation of the liabilities for reclamation and mine closure involves the estimates of
+the amount and timing for the future cash spending as well as the discount rate used for
+reflecting current market assessments of the time value of money and the risks specific
+to the liability. The Group considers the factors including development plan of the mines,
+the geological structure of the mining regions and reserve volume to determine the scope,
+amount and timing of reclamation and mine closure works to be performed. Determination
+of the effect of these factors involves judgements from the Group and the estimated
+liabilities may turn out to be different from the actual expenditure to be incurred. The
+discount rate used by the Group may also be altered to reflect the changes in the market
+assessments of the time value of money and the risks specific to the liability, such as
+change of the borrowing rate and inflation rate in the market. As changes in estimates
+occur (such as mine plan revisions, changes in estimated costs, or changes in timing of the
+performance of reclamation activities), the revisions to the obligation will be recognised at
+the appropriate discount rate. The carrying amounts of the obligations are disclosed in Note
+37.
+The provision of ECL is sensitive to changes in estimates. The information about the ECL
+and the Group's accounts receivable are disclosed in Notes 26 and 40.2, respectively.
+The Group uses provision matrix to calculate ECL for accounts receivable. The provision
+rates are based on the aging of accounts receivable as groupings of receivables that have
+similar loss patterns. The provision matrix is based on the Group's historical default rates
+taking into consideration forward-looking information that is available without undue costs
+or effort. At every reporting date, the historical observed default rates are reassessed and
+changes in the forward-looking information are considered. In addition, accounts and bills
+receivables with significant balances and credit impaired are assessed for ECL individually.
+Coal
+4.2 Key sources of estimation uncertainty (Continued)
+4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
+UNCERTAINTY (CONTINUED)
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+China Shenhua Energy Company Limited
+Certain of the Group's financial assets, unquoted equity instruments and accounts and bills
+receivables amounting to RMB2,550 million as at 31 December 2021 (RMB1,845 million
+as at 31 December 2020) are measured at fair values with fair values being determined
+based on unobservable inputs using valuation techniques as set out in Note 40.3. Changes
+in assumptions relating to any key inputs may have a material impact on the reported fair
+values of these instruments.
+Fair value measurement of financial instruments
+As at 31 December 2021, deferred tax assets of RMB3,568 million (2020: RMB2,856
+million) have been recognised in the Group's consolidated statement of financial position.
+No deferred tax asset has been recognised on the tax losses of RMB7,097 million (2020:
+RMB5,563 million) and deductible temporary differences of RMB8,864 million (2020:
+RMB9,244 million) due to the unpredictability of future profit streams. The realisation of the
+deferred tax assets mainly depends on whether sufficient future profits or taxable temporary
+differences will be available in the future. In cases where the actual future profits generated
+are less or more than expected, a material reversal or further provision of deferred tax assets
+may arise, which will be recognised in profit or loss in the period in which such a reversal or
+further provision takes place.
+Deferred tax assets
+Other than the freehold land and mining structures and mining rights, property, plant and
+equipment are depreciated on a straight-line basis over the estimated useful lives of the
+assets, after taking into account the estimated residual value. The Group reviews the
+estimated useful lives and residual value of the assets regularly based on the Group's
+historical experience with similar assets and taking into account anticipated technological
+changes. Depreciation for future periods is adjusted if there is a significant change from
+previous estimates. The carrying amount of the property, plant and equipment is disclosed
+in Note 17.
+Depreciation
+4.2 Key sources of estimation uncertainty (Continued)
+Obligations for land reclamation
+RMB
+RMB
+RMB
+14,606 11,089
+616
+574
+5,277 4,549
+4,549
+5,277
+44,321
+56,599
+163,751
+249,569
+6,672 5,446 7,360 5,027
+Coal chemical products
+Others
+44,321
+56,599
+163,751
+249,569
+Coal
+million
+million
+million
+million
+RMB
+million
+2021 2020 2021 2020
+RMB RMB RMB RMB
+million million million million
+For the year ended 31 December 2021
+2021
+RMB
+RMB
+million
+million
+Types of goods or service
+Sales of goods
+2020
+Railway
+Power
+3.
+(660) 80,008 57,977
+Capital expenditures
+(Note (ii))
+Total assets (Note
+Total liabilities
+20,575 8,151 16,876 7,766 3,979 3,441 1,002 388
+268,067 222,984 166,654 150,299 139,551 124,113 19,821 21,619
+55
+11
+851
+564 39 1,202
+43,377 21,523
+8,065
+6,410
+8,864
+8,938 446,069 424,257 (446,494) (395,716) 610,597 562,904
+(Note (i)
+(120,171) (106,897) (134,566) (110,040) (56,285) (50,470) (6,519) (6,629)
+(514)
+(257) (2,425) (2,950) (176,717) (154,901) 335,821 298,827 (161,376) (133,317)
+Notes:
+92
+(i)
+259 (2,951) 1,047 92
+209
+2,755
+785
+102,865 48,742
+(4,904) (3,019) 55,995 47,013
+(44,193) (39,669) 35,586 32,477
+(30,467) (16,667) 24,719 19,210
+4,186 4,066
+568 609
+44
+28
+(1,603) (1,449) 2,583 2,617
+17,408 12,315
+4,754
+4,675
+44
+28 (81,167) (60,804) 239,156 162,374
+Profit from operations
+(Note (i))
+59,125 29,832 3,010 7,976 16,310 16,636 2,720
+2,678
+980
+722
+5,018
+(ii)
+Profit from operations is calculated as revenue minus cost of sales, selling expenses, general and
+administrative expenses, research and development costs, loss allowances and impairment of assets.
+15,076
+16,502
+10,926
+27,229
+26,292
+239,156
+162,374
+8. OTHER INCOME
+Year ended 31 December
+2021
+RMB million
+2020
+RMB million
+Government grants
+Claim income
+Others
+240
+China Shenhua Energy Company Limited
+465
+424
+39
+21
+18,764
+(iii)
+9,124
+16,647
+Capital expenditures consist of addition in property, plant and equipment, construction in process,
+exploration and evaluation assets, intangible assets, long-term deferred expense, land use rights and
+prepayment for mining projects.
+Unallocated items of total assets include deferred tax assets and other unallocated corporate assets.
+Unallocated items of total liabilities include deferred tax liabilities and other unallocated corporate liabilities.
+2021 Annual Report 239
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+7.
+COST OF SALES
+Coal purchased
+Materials, fuel and power
+Personnel expenses
+Depreciation and amortisation
+Repairs and maintenance
+Transportation charges
+Taxes and surcharges
+Other operating costs
+Year ended 31 December
+2021
+RMB million
+2020
+RMB million
+102,865
+48,742
+23,696
+19,501
+21,285
+16,066
+18,093
+10,722
+389
+34
+Total cost of sales
+238
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+6.
+SEGMENT AND OTHER INFORMATION (CONTINUED)
+(c)
+Geographical information
+The following table sets out information about geographical location of (i) the Group's
+revenue from external customers and (ii) the Group's property, plant and equipment,
+construction in progress, exploration and evaluation assets, intangible assets, right-of-
+use assets, interests in associates, certain non-current assets. The geographical location
+of customers is based on the location at which the services were provided or the goods
+delivered. The geographical location of the specified non-current assets is based on the
+physical location of the asset, in the case of property, plant and equipment, construction in
+progress and right-of-use assets, and the location of operations, in the case of exploration
+and evaluation assets, intangible assets, other non-current assets and interests in
+associates.
+Domestic markets
+Overseas markets
+Revenue from
+external customers
+Year ended 31 December
+2021
+RMB million
+Specified non-
+current assets
+2020
+RMB million
+31 December
+2021
+RMB million
+2020
+RMB million
+324,488
+10,728
+227,539
+5,724
+2021 Annual Report 237
+377,145
+6,147
+2,047
+(874)
+3,853
+2,261
+Depreciation and amortisation
+21,421
+19,803
+124
+182
+21,545
+19,985
+Share of results of associates
+344
+326
+(1,133)
+621
+(85)
+Loss allowances and impairment of assets
+1,270
+1,840
+2,583
+207
+947
+225,126 153,373 60,019 38,729 22,020 20,304 3,342 3,314
+378,504
+7,070
+233,263
+102,865 48,742
+Cost of coal
+production
+Cost of coal
+60,899 50,032
+transportation
+58,027 51,557
+17,460
+16,291
+2,947 3,060 1,345 1,238
+Power cost
+55,186 35,877
+Cost of coal chemical
+production
+Others
+3,335
+3,042 4,833 2,852 4,560 4,013 395
+254
+3,673
+1,517
+517
+Coal purchased
+335,216
+2021 2020 2021 2020 2021 2020 2021 2020
+RMB RMB RMB RMB RMB RMB RMB
+million million million million million million million
+2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
+383,292
+385,574
+(d) Major customers
+Revenue from any individual customer of the Group does not exceed 10% of the Group's
+revenue. Certain of the Group's customers are entities, which controlled, jointly controlled
+or significantly influenced by the PRC government ("government-related entities")
+and collectively considered as the Group's major customers. During the year ended 31
+December 2021, revenue from the Group's top five major customers of coal and power
+segments amounted to RMB118,598 million (2020: RMB67,846 million).
+China Shenhua Energy Company Limited
+6.
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+SEGMENT AND OTHER INFORMATION (CONTINUED)
+(e) Other information
+Certain other information of the Group's segments for the years ended 31 December 2021
+and 2020 is set out below:
+Coal
+Power
+Railway
+Port
+Shipping
+Coal chemical
+Unallocated items Eliminations
+Total
+RMB RMB RMB RMB
+million million million million
+RMB RMB RMB RMB RMB RMB RMB
+million million million million million million million
+333
+893
+778
+2020
+%
+%
+30.0
+30.0
+22.0
+25.0
+21.0
+21.0
+8.25/16.5*
+8.25/16.5*
+During the years ended 31 December 2021 and 2020, there was no significant assessable profit
+and provision for income tax for the overseas subsidiaries.
+The two-tiered profits tax rates regime is applicable from the year of assessment 2018/19 onwards. The profits tax
+rate for the first Hong Kong Dollars ("HK$") 2,000,000 of profits of corporations will be lowered to 8.25%,
+and profits above that amount will continue to be subject to the tax rate of 16.5%.
+11. ASSETS CLASSIFIED AS HELD FOR SALE
+In April 2021, Shenhua Watermark Coal Pty Ltd. ("Watermark Company"), a wholly-owned
+subsidiary of the Company, and the New South Wales Government of Australia signed the
+Agreements on Mining Rights and Disposal of Ecological Land (the "Agreements"). Pursuant
+to the Agreements, Watermark Company will withdraw from the development interest of the
+existing coal mine project after consultation with the New South Wales government to pursue
+the trend of transformation to clean and low-carbon energy while satisfying the environmental
+protection need and planning adjustment of New South Wales government. In September 2021,
+the Company approved of Watermark Company disposing of its land, houses and ancillary facilities
+and other real estate, amounting to approximately RMB256 million. Therefore, these assets of
+Watermark Company were accounted as assets held for sale as at 31 December 2021.
+During the year ended 31 December 2021, Shenhua Beidian Shengli Energy Co., Ltd. ("Beidian
+Shengli Company"), a subsidiary of the Company, was committed to dispose of certain idle land use
+rights amounted to approximately RMB38 million, and such assets were classified as held for sale
+as at 31 December 2021.
+2021 Annual Report 243
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+2021
+12. PROFIT FOR THE YEAR
+Year ended 31 December
+United States
+(224)
+- tax losses and deductible temporary difference not
+recognised
+1,298
+2,463
+- over provision
+(1,465)
+(790)
+Income tax expense
+18,161
+15,378
+Under the Law of the PRC on Enterprise Income Tax (the "EIT Law") and Implementation
+Regulation of the EIT Law, the tax rate applicable for the PRC group entities is 25% (2020: 25%)
+except for subsidiaries and branches operating in the western developing region of the PRC which
+are entitled to a preferential tax rate of 15% from 2011 to 2020.
+On 23 April 2020, the relevant government and tax authorities issued an announcement
+(Announcement [2020] No.23 of Ministry of Finance, State Taxation Administration, and National
+Development and Reform Commission), according to which the future periods of application
+of the preferential tax rate of 15% will be extended for another 10 years from 2021 to 2030, if
+the companies' main business are included in the "Catalogue of Encouraged Industries in the
+Western Region (2020 Version)", which came into effect sine 1 March 2021 with new encouraged
+industries applicable to the coal subsidiaries and branches of the Company..
+242
+China Shenhua Energy Company Limited
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+10. INCOME TAX EXPENSE (CONTINUED)
+As at 31 December 2021, some of the coal subsidiaries and branches of the Company engaged in
+coal mining have obtained the approval from the relevant government and tax authorities and are
+entitled to enjoy the preferential tax rate of 15%. Meanwhile, some other coal subsidiaries of the
+Group are still in the process of obtaining the approval.
+The applicable tax rates of the Group's overseas subsidiaries are as follows:
+Australia
+Indonesia
+Hong Kong, China
+(483)
+Profit for the year has been arrived at after charging/(crediting)
+2020
+Less: amount capitalised
+101
+39
+Depreciation and amortisation (Note)
+21,545
+19,985
+Loss allowances
+-
+― Loans receivables and interbank certificate of deposits
+(2)
+- Trade receivables (Note 40.2)
+21
+275
+- Other receivables and other loans (Note 40.2)
+2,540
+251
+244 China Shenhua Energy Company Limited
+2,561
+524
+20,024
+Year ended 31 December
+2021
+21,646
+946
+RMB million
+RMB million
+Personnel expenses, including
+35,499
+29,405
+- Contributions to defined contribution plans
+3,662
+2,504
+Depreciation of property, plant and equipment (Note 17)
+19,264
+17,965
+Depreciation of right-of-use assets
+807
+713
+Amortisation of intangible assets
+413
+400
+Amortisation of long-term deferred expenses
+1,162
+Depreciation and amortisation charged for the year
+difference previously not recognised
+- utilisation of tax losses and deductible temporary
+(240)
+2,369
+29
+37
+130
+146
+Total finance costs on financial liabilities not at FVTPL
+3,055
+2,552
+Less: amount capitalised
+(850)
+(602)
+2,205
+1,950
+Others
+Unwinding of discount
+Exchange gain, net
+105
+73
+388
+2,896
+311
+- bonds
+- borrowings
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+9. INTEREST INCOME/FINANCE COSTS
+Interest income from:
+- bank deposits
+- other loans and receivables
+Total interest income
+Interest on:
+Year ended 31 December
+2021
+RMB million
+2020
+RMB million
+2,474
+1,075
+18
+609
+2,492
+1,684
+- lease liabilities
+(115)
+(71)
+Total finance costs
+The tax charge for the year can be reconciled to the profit before income tax per consolidated
+statement of profit or loss and other comprehensive income as follows:
+Year ended 31 December
+2021
+RMB million
+2020
+RMB million
+Profit before income tax
+79,170
+59,362
+Tax at the PRC income tax rate of 25% (2020: 25%)
+Tax effects of:
+19,793
+14,841
+- different tax rates of branches and subsidiaries
+(2,066)
+(607)
+- non-deductible expenses
+– non-taxable income
+890
+231
+(296)
+- share of results of associates
+194
+15,378
+18,161
+202
+(634)
+Net finance costs
+2,583
+2,263
+91
+579
+Note:
+Borrowing costs capitalised during the year arose on the general borrowing pools and were calculated by applying a
+capitalisation rate from 1.80% to 4.90% (2020: from 1.80% to 6.15%) per annum to expenditure on qualifying assets.
+2021 Annual Report 241
+Notes to the consolidated financial statements (Continued)
+2,593
+For the year ended 31 December 2021
+Year ended 31 December
+2021
+RMB million
+Current tax, mainly PRC enterprise income tax
+Over provision in respect of prior years
+Deferred tax
+2020
+RMB million
+20,260
+15,966
+(1,465)
+(790)
+10. INCOME TAX EXPENSE
+24 1,028 335,216 233,263
+1,747 5,851 5,165
+861
+For the purposes of assessing segment performance and allocating resources between
+segments, the Group's CODM monitors the results attributable to each reportable
+segment based on profit before income tax ("reportable segment profit"). Reportable
+segment profit represents the profit earned by each segment without allocation of head
+office and corporate items. Inter-segment sales are primarily charged at prevailing market
+rate which are the same as those charged to external customers.
+236 China Shenhua Energy Company Limited
+6.
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+SEGMENT AND OTHER INFORMATION (CONTINUED)
+(a) Segment results (Continued)
+Information regarding the Group's reportable segments as provided to the Group's
+CODM for the purposes of resource allocation and assessment of segment performance for
+the years ended 31 December 2021 and 2020 is set out below:
+(b)
+Coal
+Power
+Railway
+Port
+Shipping
+Coal chemical
+Total
+2021 2020 2021 2020
+RMB RMB RMB
+million million million
+2021
+RMB
+million
+RMB
+Segment results
+RMB RMB
+Coal chemical operations – which use coal from the coal operations segment to first
+produce methanol and further process into polyethylene and polypropylene, together with
+other by-products, for sale to external customers. The Group sells its polyethylene at spot
+market.
+Port operations - which provide loading, transportation and storage services to the coal
+operations segment and external customers. The Group charges service fees and other
+expenses, which are reviewed and approved by the relevant government authorities.
+The Group produces and sells coal and coal chemical products to customers at spot market.
+For sales of coal and coal chemical products, revenue is recognised when control of the goods
+has transferred, being when the goods have been shipped to the customers' specific location.
+According to the Group's historical experiences, there was no significant exchange or return of
+coal and coal chemical products occurred. There is no sales-related warranties associated with
+coal and coal chemical products.
+For sales of power, revenue is recognised upon the transmission of electric power to the power
+grid companies. Power could not be returned or exchanged and there is also no warranties
+associated with power sales.
+The Group provides railway transportation services, shipment transportation services as well as
+port loading and storage services to customers. Such services are recognised as a performance
+obligation satisfied over time as the Group rendering the services. Revenue is recognised for
+these services based on the stage of completion of the performance obligation using output
+method.
+All performance obligations of sales of coal, power and coal chemical products, railway and
+shipment transportation services, and port loading and storage services are part of contracts with
+an original expected duration of one year or less, and as permitted under IFRS 15, the transaction
+price allocated to these unsatisfied contracts is not disclosed.
+2021 Annual Report 235
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+6.
+SEGMENT AND OTHER INFORMATION
+The Group manages its businesses by divisions, which are organised by business lines (products
+and services). In a manner consistent with the way in which information is reported internally
+to the Group's chief operating decision maker ("CODM"), including president, senior vice
+president and chief financial officer, for the purposes of resource allocation and performance
+assessment, the Group has presented the following six (2020: six) reportable segments. No
+operating segments have been aggregated to form the following reportable segments.
+(1)
+(2)
+Coal operations - which produce coal from surface and underground mines, and the sale of
+coal to external customers, the power operations segment and the coal chemical operations
+segment. The Group sells its coal under long-term supply contracts, which allow periodical
+price adjustments, and at spot market.
+Power operations - which use coal from the coal operations segment and external suppliers,
+thermal power, wind power, water power and gas power to generate electric power for the
+sale to coal operations segment and external customers. Electric power is sold to the power
+grid companies in accordance with planned power output at the tariff rates as approved
+by the relevant government authorities. Electric power produced in excess of the planned
+power output is sold at the tariff rate as agreed upon with the respective power grid
+companies which are generally lower than the tariff rates for planned power output.
+(3) Railway operations - which provide railway transportation services to the coal operations
+segment, the power operations segment, the coal chemical operations segment and
+external customers. The rates of freight charges billed to the coal operations segment, the
+power operations segment, the coal chemical operations segment and external customers
+are consistent and do not exceed the maximum amounts approved by the relevant
+government authorities.
+(4)
+(5)
+(6)
+(a)
+Shipping operations - which provide shipment transportation services to the power
+operations segment, the coal operations segment and external customers. The rates of
+freight charges billed to the power operations segment, the coal operations segment and
+external customers are consistent.
+24 1,028 335,216 233,263
+2020 2021 2020 2021 2020
+RMB
+million
+292,661 190,029 64,124
+49,486
+40,699
+38,723
+6,440
+6,359
+6,195
+3,112
+5,851
+5,165
+415,970
+292,874
+Reportable segment profit
+Including:
+58,949
+28,992
+2,025
+6,907
+15,723
+15,790
+Reportable segment revenue
+RMB
+80,778 60,639
+5,385 4,874
+million
+million
+million
+million
+RMB
+million
+2021 2020 2021 2020
+RMB RMB RMB RMB
+million million million million
+Revenue from external customers
+Inter-segment revenue
+256,241 169,197 63,959 49,348
+36,420 20,832 165
+138
+6,838
+5,804
+982
+974
+1,321
+1,747
+5,851
+5,165 335,192 232,235
+33,861
+32,919
+5,458
+1,365
+974 1,321 1,747 5,851 5,165
+982
+256,241 169,197 63,959 49,348 6,838 5,804
+RMB
+RMB RMB RMB
+RMB
+RMB
+RMB
+2020
+2021
+2020
+2021 2020 2021
+2020
+2021
+2020
+2021 2020 2021 2020 2021 2020 2021
+RMB RMB RMB RMB RMB RMB RMB
+million million million million million million million
+Total
+Other
+Coal chemical
+Shipping
+Port
+The Group's revenue from contracts with customers is RMB335,106 million for the year ended 31
+December 2021 (2020: RMB232,155 million).
+RMB RMB
+Set out below is the reconciliation of the revenue with the amounts disclosed in the segment
+information.
+million
+million
+1,321
+974
+982
+5,804
+256,241 169,197 63,959 49,348 6,838
+Total
+1,028 9,165 9,553
+24
+1,321 1,747
+974
+982
+5,804
+6,838
+326,051 223,710
+5,851 5,165
+256,241 169,197 63,959 49,348
+A point in time
+Over time
+Timing of revenue recognition
+million million million million million million
+million
+Segments
+Revenue disclosed in segment
+Coal
+2021 2020 2021 2020
+RMB
+RMB
+RMB RMB
+million million million million
+1,321 1,747
+4,874 1,365
+5,851
+5,165
+223
+24
+297
+1,028 335,216 233,263
+825 81,075 61,464
+292,661 190,029 64,124 49,486
+40,699 38,723
+6,440 6,359 6,195 3,112 5,851 5,165
+321
+1,853 416,291 294,727
+Adjustment and eliminations
+(36,420) (20,832) (165) (138)
+(33,861) (32,919)
+(5,458) (5,385) (4,874) (1,365)
+(297)
+(825) (81,075) (61,464)
+Revenue
+5,458 5,385
+974
+982
+5,804
+32,919
+Power
+Railway
+Port
+Shipping
+2021 2020 2021 2020 2021 2020
+RMB RMB RMB RMB
+RMB
+million million million million million
+Coal chemical
+2021
+Other
+Total
+2020 2021 2020 2021
+RMB RMB RMB RMB RMB RMB RMB
+2,623
+2020
+million million
+million
+million million
+million
+information
+External customers
+Inter-segment
+256,241 169,197 63,959 49,348
+36,420 20,832 165 138
+6,838
+33,861
+million
+(1,963)
+2,487
+226
+844
+21,421 19,803
+Share of results of associates
+345
+154
+(3) 168
+(4)
+6
+4
+344
+326
+Loss allowances and impairment of assets
+1,140
+1,297
+69
+726
+538
+297
+997
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+REVENUE FROM GOODS AND SERVICES (CONTINUED)
+Segments
+Coal
+Power
+Railway
+3,656 3,333
+Depreciation and amortisation
+8,769
+7,413
+5,495
+5,265 5,094
+4,987
+1,024
+313
+(3)
+3
+7
+335,216
+233,263
+Profit/(loss) before income tax
+81,029
+54,582
+(2,814)
+3,927
+955
+853
+79,170
+59,362
+Interest expenses
+3,656
+3,333
+900
+(61,464)
+(81,075)
+1,853
+321
+61
+(2) 1,270
+1,840
+Reconciliations of reportable segment revenue, segment profit and other items
+of profit or loss for the years ended 31 December 2021 and 2020 are set out
+below:
+Reportable
+segment amounts
+Unallocated head office
+and corporate items
+Elimination of
+inter-segment amounts
+5.
+2021
+RMB million RMB million
+2021
+2020
+RMB million RMB million
+Consolidated
+2021
+2020
+2021
+2020
+RMB million RMB million RMB million RMB million
+Revenue
+415,970
+292,874
+2020
+1,003
+(1,933)
+2
+90
+50
+270
+136
+869
+1,107
+1,514
+761
+1,341
+Interest expenses
+54,582
+81,029
+80
+180
+706
+849
+- impairment losses on construction in progress (Note 18)
+- impairment losses on exploration and evaluation assets
+(Note 19)
+(1,181)
+(449)
+134
+- impairment losses on property, plant and equipment
+(Note 17)
+535
+605
+376
+2021 Annual Report 245
+505
+- impairment losses on Intangible assets (Note 20)
+- impairment losses on Interests in associates
+- impairment losses on right-of-use assets
+- impairment losses on assets held for sale
+- losses on changes in fair value of derivative financial
+instruments
+- impairment losses on goodwill
+268
+- gains on disposal of financial assets at FVTPL
+RMB million
+7
+Xu Mingjun
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+12. PROFIT FOR THE YEAR (CONTINUED)
+Year ended 31 December
+2021
+RMB million
+2020
+- reversal of allowance for prepaid expenses
+Other gains and losses, represent
+-(gains)/ losses on disposal of property, plant and
+equipment, exploration and evaluation assets,
+intangible assets and non-current assets
+- losses on disposal of subsidiaries and associates
+- gains on changes in fair value arising from
+remeasurement of remaining equity interests after
+losing control
+(346)
+160
+9
+PL =
+Cost of sales include an amount of depreciation and amortisation of RMB18,093 million for the year ended 31 December
+2021 (2020: RMB16,647 million).
+- write down of inventories
+60
+RMB million
+RMB million
+RMB million
+Total
+scheme
+contributions
+Retirement
+Discretionary
+bonuses
+other allowance
+Housing and
+Note:
+Year ended 31 December 2021
+in kind
+Fee
+and benefits
+Executive directors
+Sub-total
+Wang Xiangxi (Note (i))
+Chairman
+Directors' and supervisors' remuneration for the year, disclosed pursuant to the applicable
+Listing Rules and CO, is as follows:
+13. DIRECTORS' AND SUPERVISORS' EMOLUMENTS
+For the year ended 31 December 2021
+Notes to the consolidated financial statements (Continued)
+246
+RMB million
+11
+RMB million
+Note (iii))
+3
+87
+36
+18
+(57)
+274
+94
+955
+194
+Carrying amount of inventories sold
+186,436
+118,657
+Operating lease charges relating to short-term
+leases, leases of low-value assets and variable
+lease payments
+Auditors' remuneration
+- audit service
+185
+218
+33
+32
+0.09
+0.78
+0.26
+Yang Jiping (Note (ii) and
+Basic salaries,
+0.39
+331
+8,757
+2,091
+163
+1,569
+8
+44
+107
+12,905
+Transferred from construction in
+progress (Note 18)
+2,855
+(1)
+2,939
+17,929
+8,151
+166
+14
+Additions
+18,180
+1
+(119)
+(153)
+Classified as assets held for sale
+(338)
+(2,387)
+(2,736)
+At 31 December 2020
+59,237
+40,318
+69,343
+96,301
+132,488
+7,560
+12,813
+436,240
+160
+1,177
+33,224
+Classified as assets held for sale
+(1,310)
+I
+(1,310)
+At 31 December 2021
+59,577
+48,755
+73,075
+112,979
+142,747
+7,582
+12,987
+18,747
+476,449
+Depreciation and impairment
+(231)
+(12)
+(40)
+(179)
+Reclassification and other
+additions
+(973)
+(215)
+260
+928
+Disposals or write-off
+(25)
+(219)
+(1,558)
+(1,374)
+(389)
+(30)
+(705)
+(4,379)
+Exchange adjustment
+(104)
+At 1 January 2020
+Exchange adjustment
+(92)
+RMB million RMB million
+RMB million RMB million
+RMB million
+RMB million
+RMB million RMB million RMB million
+Cost
+At 1 January 2020
+57,603
+37,399
+66,293
+96,057
+130,679
+7,518
+13,358
+17,998
+Total
+426,905
+equipment
+and port
+fixtures,
+related
+chemical
+motor
+machinery
+machinery
+related
+vehicles
+and
+and
+Railway
+machinery
+and other
+equipment
+equipment
+Vessels and equipment
+Additions
+161
+143
+(995)
+2,929
+1,381
+(295)
+340
+(548)
+(14)
+2,798
+Disposals or write-off
+(219)
+(169)
+(696)
+(99)
+(367)
+(56)
+additions
+Reclassification and other
+7,631
+150
+1,868
+250
+881
+4
+27
+3,493
+Transferred from construction
+(1,698)
+in progress
+16
+496
+2,894
+955
+90
+38
+32
+3,050
+Coal
+13,037
+47,355
+53,572
+1.13
+58,653
+2,201
+8,081
+13,522
+212,793
+Carrrying values
+At 31 December 2021
+43,521
+31,198
+19,503
+69,828
+84,094
+5,381
+17,557
+4,906
+16,056
+(1,016)
+8d ! ,,,,
+7,300
+13,336
+198,042
+675
+571
+19,264
+131
+14
+535
+(25)
+(396)
+(3,908)
+'
+(124)
+At 31 December 2021
+5,225
+263,656
+At 31 December 2020
+Management performed impairment assessments of these assets as at 31 December 2021 using value-
+in-use calculations for each CGUs by measuring their recoverable amount which is determined based
+on discounted cash flow analysis covering the shorter of their economic or legal useful life, and pre-tax
+discount rate ranging from 7.58% to 10.10%, and concluded that impairment provisions for coal mines
+related assets included in property, plant and equipment were required as follows:
+RMB million
+Shenhua Zhunge'er Energy Co., Ltd. ("Zhunge'er Energy")
+Shenhua Shendong Coal Group Co., Ltd.
+Shenhua Baotou Coal Chemical Co., Ltd.("Baotou Coal Chemical")
+Shendong Coal Group Equipment Management Center
+Guoneng Zhuanlongwan Company
+175
+140
+28
+57
+50
+The estimated recoverable amounts of the above assets were based on their fair values less costs of
+disposal, the fair value of buildings was determined by considering the cost charged if the Group rebuild
+the assets under current condition, and the fair value of generators related machinery and equipment was
+determined by using market comparison approach with reference to the recent transaction price of similar
+assets, after taking into account of its remaining useful lives. The fair value is categorised as a Level 3
+measurement.
+(ii)
+(iii)
+The Group was in the process of applying for the title certificates of certain of its properties with an aggregate
+carrying amount of RMB4,036 million as at 31 December 2021 (2020: RMB4,002 million). The Directors are of the
+opinion that the Group is entitled to lawfully and validly occupy or use the above mentioned properties.
+In 2021, management identified certain property, plant and equipment and other related non-current assets
+having impairment indications.
+Impairment losses for smallest identifiable group of assets that generate independent cash flows
+("CGUs")
+Impairment losses
+(i)
+43,785
+24,995
+18,340
+56,197
+78,831
+5,693
+5,513
+(1,016)
+4,844
+2021 Annual Report 253
+254
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+17.
+PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
+Notes:
+238,198
+14,371
+Classified as assets held for sale
+(103)
+(292)
+Impairment losses (Note (i))
+455
+23
+126
+Disposals or write-off
+(112)
+(157)
+(590)
+(45)
+(316)
+(49)
+(85)
+Exchange adjustment
+(15)
+(48)
+(38)
+63
+Reclassification
+36,188
+48,719
+1,536
+6,920
+12,786
+180,912
+Charge for the year
+1,727
+1,108
+4,152
+4,167
+5,184
+721
+575
+17,965
+383
+Classified as assets held for sale
+(23)
+(246)
+Reclassification
+30
+(93)
+41
+22
+Impairment losses (Note (i))
+226
+153
+11
+Disposals or write-off
+(238)
+(1,507)
+(1,383)
+(322)
+Exchange adjustment
+5,296
+4,436
+3,883
+2,364
+21515
+72
+249
+605
+(1,354)
+(61)
+(274)
+(1)
+At 31 December 2020
+15,323
+51,003
+40,104
+53,657
+1,867
+Charge for the year
+1,705
+15,452
+Mining Generators
+related
+Mining
+structures
+and mining
+Land and
+buildings rights
+RMB million
+Total
+RMB million
+Li Dong
+Gao Song
+(Note (i) and Note (iii))
+Mi Shuhua (
+Note (i) and Note (iii))
+Yang Jiping (Note (ii))
+0.23
+0.24
+0.04
+0.51
+Xu Mingjun (Note (ii))
+0.23
+RMB million
+0.24
+contributions
+in kind
+RMB million
+Year ended 31 December 2020
+Chairman
+Wang Xiangxi (Note (i))
+Sub-total
+Executive directors
+(Note (i) and Note (iii))
+Basic salaries,
+Housing and
+other allowance
+Retirement
+and benefits
+Discretionary
+scheme
+Fee
+RMB million
+bonuses
+0.03
+0.50
+Sub-total
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+13. DIRECTORS' AND SUPERVISORS' EMOLUMENTS (CONTINUED)
+Year ended 31 December 2020
+Independent non-executive
+directors
+Basic salaries,
+Housing and
+other allowance
+and benefits
+Fee
+in kind
+RMB million
+RMB million
+Tam Wai Chu, Maria
+(Note (iii))
+China Shenhua Energy Company Limited
+0.30
+0.02
+0.20
+0.46
+0.48
+0.07
+1.01
+Non-executive directors
+Zhao Jibin
+(Note (i) and Note (iii))
+13. DIRECTORS' AND SUPERVISORS' EMOLUMENTS (CONTINUED)
+Jia Jinzhong
+Zhao Yongfeng (Note (iii))
+0.08
+0.20
+0.02
+0.30
+Sub-total
+0.08
+(Note (i) and (Note(ii))
+0.23
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+2021 Annual Report 247
+other allowance
+and benefits
+Discretionary
+bonuses
+Retirement
+scheme
+Fee
+in kind
+contributions
+Total
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+Independent non-executive
+Housing and
+directors
+Basic salaries,
+13. DIRECTORS' AND SUPERVISORS' EMOLUMENTS (CONTINUED)
+0.92
+0.14
+1.45
+Sub-total
+0.65
+1.70
+0.23
+2.58
+Non-executive directors
+Jia Jinzhong (Note (i))
+Yang Rongming
+(Note (i) and Note (ii))
+Sub-total
+China Shenhua Energy Company Limited
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+Year ended 31 December 2021
+Chen Hanwen
+Bai Chongen
+Yuan Guoqiang
+0.12
+1.28
+0.33
+0.83
+0.12
+1.28
+0.39
+0.39
+0.39
+0.39
+0.90
+0.98
+2.92
+0.35
+5.15
+0.83
+0.33
+0.90
+0.30
+0.30
+0.30
+0.30
+Sub-total
+0.90
+Employee director
+Wang Xingzhong
+248
+Sub-total
+Zhou Dayu (Note (iv))
+Luo Meijian (Note (iv))
+Zhang Changyan
+Sub-total
+Total
+0.30
+0.30
+Supervisors
+Jiang Bo (Note (iii)
+0.23
+Zhong Yingjie, Christina
+Year ended 31 December
+2021
+RMB million
+2020
+RMB million
+0.72
+1.73
+1.56
+3.78
+0.27
+0.33
+2.55
+5.84
+Their emoluments are within the following band:
+Year ended 31 December
+HKD1,000,001 to HKD1,500,000
+HKD1,500,001 to HKD2,000,000
+2021
+Retirement scheme contributions
+1
+Discretionary bonuses
+Basic salaries, housing and other allowances
+Mr. Zhao Jibin resigned as executive director on 29 May 2020.
+Mr. Zhao Yongfeng was elected and appointed as non-executive director on 29 May 2020 and resigned on 23
+December 2020.
+Dr. Tam Wai Chu, Maria, Dr. Jiang Bo and Ms. Zhong, Yingjie, Christina resigned as independent non-executive
+directors on 29 May 2020.
+Dr. Peng Suping resigned as independent non-executive director on 29 May 2020.
+Mr. Yang Jiping resigned as executive director on 16 November 2021.
+Mr. Zhai Richeng resigned as supervisor and Mr. Luo Meijian was elected and appointed as supervisor on 29 May
+2020.
+The emoluments of Mr. Zhai Richeng were borne by China Energy Group during the year ended 31 December
+2020.
+The emoluments of Mr. Zhang Changyan were borne by China Energy Group during the year ended 31 December
+2021.
+The emoluments of Mr. Zhou Dayu and Mr. Luo Meijian were borne by China Energy Group during the years ended
+31 December 2021 and 2020.
+Except for those emoluments of directors or supervisors whose emoluments were borne by
+China Energy Group, the executive directors' and supervisors' emoluments shown above were
+mainly for their services in connection with the management of the affairs of the Company and
+the Group.
+The independent non-executive directors' emoluments shown above were mainly for their
+services as directors of the Company.
+250 China Shenhua Energy Company Limited
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+14. EMPLOYEES' EMOLUMENTS
+Of the five individuals with the highest emoluments within the Group, three (2020: Nil) were
+directors of the Company whose emoluments are disclosed in note 13. The emoluments of other
+two (2020: five) highest paid individuals are as follows:
+and benefits in kind
+1
+2
+2020
+Year ended 31 December
+2021
+million
+2020
+million
+19,890
+(21)
+19,890
+(2)
+19,869
+19,888
+No diluted earnings per share for both 2021 and 2020 were presented as there were no potential
+ordinary shares in existence during both years.
+China Shenhua Energy Company Limited
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+17. PROPERTY, PLANT AND EQUIPMENT
+Furniture,
+Weighted average number of shares in issue
+Effect of shares repurchased
+Number of shares in issue at 1 January
+Weighted average number of ordinary shares
+2021 Annual Report 251
+252
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+15. DIVIDENDS
+Year ended 31 December
+2021
+2020
+Mr. Gao Song and Mr. Mi Shuhua resigned as executive directors on 29 May 2020.
+RMB million
+Dividend approved and paid during the year:
+2020 final - RMB1.81 (2020: 2019 final - RMB1.26) per
+ordinary share
+35,962
+25,061
+Subsequent to the end of the reporting period, a final dividend in respect of the year ended 31
+December 2021 of RMB50,466 million, at RMB2.54 per ordinary share (in respect of the year
+ended 31 December 2020: final dividend RMB35,962 million, at RMB1.81 per ordinary share) has
+been proposed by the Directors and is subject to approval by the shareholders in the following
+general meeting.
+16. EARNINGS PER SHARE
+The calculation of basic earnings per share is based on the profit attributable to ordinary equity
+holders of the Company of RMB51,607 million (2020: RMB35,849 million) and the weighted
+average of 19,869 million ordinary shares (2020: 19,888 million shares) in issue during the year,
+calculated as follows:
+RMB million
+(iv)
+Dr. Li Dong resigned as executive director on 29 March 2020.
+(iii)
+Sub-total
+Total
+1.37
+Retirement
+Discretionary
+bonuses
+RMB million
+scheme
+contributions
+RMB million
+| | | |
+| | | |
+||||
+|
+Total
+RMB million
+0.23
+0.23
+0.23
+Zhang Changyan
+Luo Meijian (Note (iv))
+Zhou Dayu (Note (iv))
+Zhai Richeng (Note (iv))
+(Note (iii))
+0.23
+Peng Suping (Note (iii))
+0.23
+Chen Hanwen (Note (ii))
+0.15
+Bai Chongen (Note (ii))
+0.23
+0.15
+0.15
+Sub-total
+1.37
+Employee director
+Wang Xingzhong (Note (ii))
+Sub-total
+Supervisors
+Yuan Guoqiang (Note (ii))
+As at 31 December 2021, the property, plant and equipment with carrying amount of RMB815 million (2020:
+RMB893 million) have been pledged to the banks to secure the banking facilities granted to the Group.
+0.15
+0.15
+3.95
+Discretionary bonuses were determined by the remuneration committee in accordance with the
+relevant human resources policies.
+2021 Annual Report 249
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+13. DIRECTORS' AND SUPERVISORS' EMOLUMENTS (CONTINUED)
+Notes:
+(i)
+The emoluments of these directors were borne by China Energy Group during the years ended 31 December 2021
+and 2020.
+(ii)
+Mr. Yang Jiping and Mr. Xu Mingjun were elected and appointed as executive directors on 29 May 2020.
+Mr. Jia Jinzhong was elected and appointed as non-executive director on 29 May 2020.
+Dr. Chen Hanwen, Dr. Bai Chongen and Dr. Yuan Guoqiang were elected and appointed as independent non-
+executive directors on 29 May 2020.
+Mr. Wang Xingzhong was elected and appointed as employee director on 29 May 2020.
+Mr. Yang Rongming was elected and appointed as non-executive director on 25 June 2021.
+0.19
+1.34
+1.05
+0.84
+1.37
+0.19
+0.20
+0.04
+0.43
+0.19
+0.20
+0.15
+0.04
+0.32
+0.46
+0.06
+0.84
+0.32
+0.46
+0.06
+0.43
+China Shenhua Energy Company Limited
+43,151
+– China Energy Group and fellow subsidiaries
+- Third parties
+2021 Annual Report 257
+Provision of comprehensive
+financial service
+40.00
+40.00
+("Finance Company")
+China Energy Finance Co., Ltd.
+258
+Generation and sale of
+electricity
+20.00
+Power Generation Co., Ltd.
+Inner Mongolia Guohua Hulunbeier
+Generation and sale of
+electricity
+15.00
+15.00
+20.00
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+21. INTERESTS IN ASSOCIATES (CONTINUED)
+RMB million
+RMB million
+Railway
+Haoji
+Finance
+Company
+Beijing GD
+Railway
+Company
+Beijing GD
+Haoji
+Finance
+31 December 2020/
+Year ended 31 December 2020
+Year ended 31 December 2021
+31 December 2021/
+Summarised financial information of the material associates, adjusted for any differences
+in accounting policies, and reconciled to the carrying amounts in the consolidated financial
+statements, are disclosed below:
+Suizhong Power Generation Co., Ltd.
+RMB million
+Production and sale of
+chemicals
+25.00
+Haoji Railway Co., Ltd.
+42.53
+42.53
+Beijing GD Power Co., Ltd.
+("Beijing GD")
+2020
+%
+Principal activities
+("Haoji Railway")
+2021
+%
+Proportion of ownership
+interest and voting power
+held by the Group
+Name of associate
+The Group's associates are unlisted and established in the PRC. The following list contains only
+the particulars of associates, which principally affect the results or assets of the Group:
+21. INTERESTS IN ASSOCIATES (CONTINUED)
+For the year ended 31 December 2021
+Notes to the consolidated financial statements (Continued)
+31 December 31 December
+12.50
+12.50
+Generation and sale of
+electricity
+Inner Mongolia Yili Chemical Industry
+Co., Ltd.
+Generation and sale of
+electricity
+25.00
+25.00
+Co., Ltd.
+Guohua (Hebei) Renewables
+Generation and sale of
+electricity
+20.00
+20.00
+Sichuan Guangan Power Co., Ltd.
+Coal production and sale
+20.39
+20.39
+Shendong Tianlong Group Co., Ltd.
+Provision of transportation
+service
+25.00
+49,556
+RMB million
+RMB million
+53,406
+22,238
+65,775
+51,489
+24,495
+59,029
+Revenue
+the company
+28,136
+25,681
+Non-controlling interests
+103,607
+11,305
+81,958
+Equity attributable to equity holders of
+101,461
+4,034
+9,242
+2,795
+(1,944)
+2,117
+(4,018)
+Total comprehensive (loss)/income for the year
+(4,967)
+118
+2,794
+(1,944)
+2,117
+(4,009)
+(Loss)/profit for the year
+5,238
+1,050
+89,379
+105,616
+RMB million
+120,508
+Total liabilities
+Total assets
+148,568
+21,248
+149,135
+147,381
+59,552
+155,879
+126,331
+12,295
+26,734
+9,724
+85,451
+29,548
+Current assets
+Non-current assets
+8,445
+145,003
+157,105
+175,869
+99,742
+34,535
+102,945
+91
+23,247
+Non-current liabilities
+3,865
+11,305
+47,423
+2,671
+120,417
+47,922
+Current liabilities
+157,013
+33,543
+71,169
+47,708
+2,176
+(15)
+2,782
+3,896
+3,349
+3,961
+13,607
+11,759
+65
+As at 31 December 2021 and 31 December 2020, accounts and bills receivables from contracts
+with customers amounted to RMB14,884 million and RMB13,058 million, respectively.
+As of the end of the reporting period, the ageing analysis of trade receivables, based on the
+invoice date and net of loss allowance, is as follows:
+Less than one year
+One to two years
+Two to three years
+More than three years
+31 December
+2021
+RMB million
+Bills receivable were mainly issued by PRC banks and were expiring within one year. As at 31
+December 2021, the Group has no bills (2020: RMB84 million) pledged to secure bills payable.
+Notes to the consolidated financial statements (Continued)
+18. CONSTRUCTION IN PROGRESS
+At the beginning of the year
+RMB million
+2020
+RMB million
+2021
+Year ended 31 December
+For the year ended 31 December 2021
+At the end of the year
+Classified as assets held for sale
+Impairment losses (Note (ii))
+Exchange adjustment
+Transferred to other non-current assets
+Transferred to right-of-use assets (Note 24)
+Transferred to intangible assets (Note 20)
+Transferred to property, plant and equipment (Note 17)
+Additions
+31 December
+2020
+RMB million
+39,845
+9,527
+143
+31 December
+2020
+RMB million
+717
+276
+534
+23
+470
+RMB million
+303
+579
+Transfers of financial assets
+As at 31 December 2021, the Group endorsed bills receivable amounting to RMB861 million (2020:
+RMB961 million) to suppliers to settle the accounts payable of same amounts and discounted
+bills receivable amounting to RMB331 million (2020: RMB2,067 million) to banks. In accordance
+to the relevant laws in the PRC, the holders of the bills receivable have a right of recourse against
+the Group if the issuing banks default payment (the "Continuing Involvement"). In the opinion of
+the Directors, the fair values of the Continuing Involvement are insignificant, and the Group has
+transferred substantially all the risks and rewards of ownership relating to these bills receivable,
+and accordingly derecognised the full carrying amounts of the bills receivable, in case of bills
+receivable endorsed to suppliers, derecognised the associated accounts payable.
+Certain subsidiaries of the Company entered into accounts receivables factoring agreements with
+financial service companies, and the subsidiaries transferred accounts receivables to the financial
+service companies and received bills receivables and cash, respectively. During the year ended
+31 December 2021, the subsidiaries paid RMB15 million (2020: RMB7 million) for the accounts
+receivables factoring and recognised in expenses.
+264 China Shenhua Energy Company Limited
+567
+1,744
+31 December
+2021
+Indonesian Rupiah ("IDR")
+Great Britain Pound ("GBP")
+125
+80
+508
+84
+617
+10,258
+7,798
+2021 Annual Report 263
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+26. ACCOUNTS AND BILLS RECEIVABLES (CONTINUED)
+As at 31 December 2021, included in the Group's accounts receivables are debtors with gross
+carrying amount of RMB5,926 million (2020: RMB4,750 million) which are past due as at the
+reporting date. The past due balances are not considered as in default because the debtors are
+not in significant financial difficulty and the management expects that the debtor is able and likely
+to pay for the debts. The Group does not hold any collateral over these balances.
+Details of credit risks of accounts and bills receivables for the year ended 31 December 2021 are
+set out in Note 40.2.
+Included in accounts receivable, the following amounts are denominated in foreign currencies:
+United States Dollars ("USD")
+Euro ("EUR")
+6,972
+34,495
+23,388
+14,493
+3,888
+2020
+RMB million
+RMB million
+Year ended 31 December
+2021
+256 China Shenhua Energy Company Limited
+Share of post-acquisition profits and other comprehensive
+income, net of dividend received
+3,648
+Unlisted shares, at cost
+At the end of the year
+Impairment losses (Note 12)
+Classified as assets held for sale
+Disposal
+Amortisation
+Transferred from construction in progress
+21. INTERESTS IN ASSOCIATES
+563
+821
+625
+47,380
+47,723
+RMB million
+RMB million
+31 December
+2020
+31 December
+2021
+3,888
+4,651
+(11)
+(1)
+(316)
+(1)
+(400)
+(413)
+136
+Additions
+At the beginning of the year
+The movement of intangible assets, mainly licenses, software and franchises, is as follows:
+20. INTANGIBLE ASSETS
+(ii)
+(i)
+39,845
+26,201
+(13)
+(268)
+(376)
+(14)
+(1,021)
+(60)
+(2,807)
+(136)
+(625)
+(7,631)
+(33,224)
+As at 31 December 2021, the Group is in the process of obtaining requisite permits of certain of its construction in
+progress from the relevant government authorities. The Directors are of the opinion that the Group will be able to
+obtain the requisite permits in due course.
+113
+As a result of deferral of certain coal mine, management performed impairment assessment of the related
+construction in progress and concluded that impairment provision of RMB376 million was required and charged
+into profit or loss for the current year.
+The movements of the exploration and evaluation assets are as follows:
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+2021 Annual Report 255
+4,000
+(505)
+16
+4,000
+484
+2020
+RMB million
+2021
+RMB million
+Year ended 31 December
+At the end of the year
+Impairment losses (Note 12)
+Exchange adjustments
+Additions
+At the beginning of the year
+19. EXPLORATION AND EVALUATION ASSETS
+(4,967)
+Notes:
+company
+144
+Disposals
+(89)
+(119)
+Depreciation
+(5,343)
+(599)
+85
+(4,891)
+(158)
+At 31 December 2020
+6
+6
+Classified as assets held for sale
+Disposals
+(294)
+(807)
+229
+At 31 December 2021
+(277)
+At 31 December 2021
+Net book value
+(64)
+(64)
+At 31 December 2020 and 2021
+(3)
+(3)
+Additions
+(61)
+(61)
+At 1 January 2020
+Impairment losses
+(5,921)
+(5,405)
+(239)
+(713)
+232
+(469)
+(107)
+Transferred from construction
+1,907
+627
+1,160
+120
+Additions
+in progress
+24,004
+907
+389
+At 31 December 2020
+(224)
+(224)
+(78)
+22,708
+2,807
+2,807
+Disposals
+Depreciation
+(4,637)
+(4,429)
+(157)
+(51)
+At 1 January 2020
+Accumulated depreciation
+28,225
+25,999
+1,717
+509
+At 31 December 2021
+(493)
+(143)
+(350)
+(137)
+1,478
+20,530
+22,240
+RMB million
+RMB million
+31 December
+2020
+2021
+31 December
+For the year ended 31 December 2021
+Accounts receivable
+26. ACCOUNTS AND BILLS RECEIVABLES
+2,142
+2,251
+(539)
+(165)
+2,587
+94
+274
+Notes to the consolidated financial statements (Continued)
+- China Energy Group and fellow subsidiaries
+- Associates
+3,391
+Equity attributable to equity holders of the
+Bills receivable
+7,798
+10,258
+(1,299)
+(1,277)
+Less: allowance for credit losses
+9,097
+11,535
+6,116
+7,888
+Third parties
+407
+256
+2,574
+2,142
+RMB million
+Year ended 31 December
+2021
+China Shenhua Energy Company Limited
+31 December
+2020
+31 December
+2021
+Less: write-down of inventories
+Others (Note)
+Materials and supplies
+Coal
+25. INVENTORIES
+For the year ended 31 December 2021
+Notes to the consolidated financial statements (Continued)
+2021 Annual Report 261
+18,597
+17,753
+613
+231
+At 31 December 2020
+RMB million
+(78)
+RMB million
+5,236
+262
+At the end of the year
+At the beginning of the year
+Write down of inventories
+Write off of inventories
+Movement in write-down of inventories during the year is as follows:
+Note: Others mainly represent properties for sale and properties under development.
+12,750
+12,633
+(2,142)
+(2,251)
+14,892
+14,884
+906
+1,127
+8,750
+7,384
+6,373
+(2)
+2020
+RMB million
+60
+(i)
+1,845
+2,550
+1,845
+Note:
+376
+(ii)
+Accounts and bills receivables (Note (ii))
+31 December
+2020
+RMB million
+RMB million
+31 December
+2021
+Current asset
+Unlisted equity securities (Note (i))
+Non-current asset
+2,174
+The above unlisted equity investments represent the Group's equity interest in entities established in the PRC.
+The Directors of the Company have elected to designate these equity investments as FVTOCI as it is the Group's
+strategy to hold these investments for long-term purposes and realising their performance potential in the long run.
+As at 31 December 2021, certain accounts and bills receivables were classified as financial assets at FVOCI, as
+certain subsidiaries' business model is achieved both by collecting contractual cash flows and selling of these
+assets.
+2021 Annual Report 259
+4,868
+31 December
+2020
+RMB million
+RMB million
+31 December
+2021
+Notes:
+Long-term deferred expenses (Note (iv))
+Goodwill
+Service concession receivables (Note (iii))
+Long-term entrusted loans (Note (ii))
+Deductible VAT and other tax
+equipment purchases and others (Note (i))
+Prepayments for mining projects
+Prepayments in connection with construction work,
+23. OTHER NON-CURRENT ASSETS
+For the year ended 31 December 2021
+Notes to the consolidated financial statements (Continued)
+22. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE
+INCOME
+333
+294
+332
+227
+Carrying amount of equity investment in
+12.50%
+40.00%
+42.53%
+12.50%
+40.00%
+42.53%
+Group's proportion of ownership interest
+53,406
+22,238
+65,775
+51,489
+(2)
+24,495
+59,029
+associated company
+9,807
+25,105
+6,436
+6,012
+6,369
+- Total comprehensive income for the year
+- Profit for the year
+Aggregate carrying amount of individually immaterial
+associates in the consolidated financial statements
+Aggregate amounts of the Group's share of those
+associates:
+RMB million
+31 December
+2020
+31 December
+2021
+RMB million
+Aggregate information of associates that are not individually material:
+21. INTERESTS IN ASSOCIATES (CONTINUED)
+For the year ended 31 December 2021
+Notes to the consolidated financial statements (Continued)
+China Shenhua Energy Company Limited
+6,675
+8,895
+9,798
+5,273
+27,974
+392
+Buildings
+RMB million
+and other
+Machinery,
+equipment
+The Group leases assets including buildings, machinery, equipment and other properties, and land
+use rights. Information about leases for which the Group is a lessee is presented below.
+As at 31 December 2021, the Group has no bank loans secured by the Group's right-of-use assets
+(2020: RMB810 million).
+The right-of-use assets represent land use rights paid to the PRC's government authorities and
+the leased assets. The Group is in the process of applying for the title certificates of certain land
+use rights certificates with an aggregate carrying amount of RMB3,685 million as at 31 December
+2021 (2020: RMB1,739 million). The Directors are of the opinion that the Group is entitled to
+lawfully and validly occupy or use the above mentioned lands.
+properties
+RMB million
+24. RIGHT-OF-USE ASSETS
+Notes to the consolidated financial statements (Continued)
+3,602
+4,104
+(2)
+(1)
+(28)
+For the year ended 31 December 2021
+Land use
+rights
+RMB million
+Total
+RMB million
+| | | |
+Classified as assets held for sale
+Others
+60
+10,171
+Transferred from construction
+Disposals
+in progress
+23,388
+860
+22,367
+585
+27
+880
+141
+Additions
+At 1 January 2020
+Cost
+(946)
+(1,162)
+248
+1,692
+(iv)
+(iii)
+(ii)
+(i)
+35,890
+28,089
+At 31 December 2021, the Group had prepayments to China Energy Group and fellow subsidiaries amounting to
+RMB377 million (2020: RMB156 million).
+3,602
+199
+11,044
+631
+400
+884
+12,853
+235
+The Group has long-term entrusted loan of RMB400 million to an associate through a PRC state-owned bank, with
+an interest rate of 4.75% per annum. The applicable interest rate is determined in accordance with the prevailing
+interest rates published by People's Bank of China (the "PBOC").
+4,104
+400
+3,602
+Pursuant to the Power Purchase Agreements entered between certain power plants of the Group and PT
+Perusahaan Listrik Negara (Persero) ("PLN"), an independent third party, certain power plants of the Group
+build power plants to supply electricity to PLN for a 25-30 years period from the power plant's commercial
+operation date under the service concession scheme. Service concession receivables represents service provided
+in connection with the service concession arrangement, for which a guaranteed minimum payments have been
+agreed. Due to the length of the payment plans, receivables are the present value of future guaranteed cash
+receipts discounted using effective interest rate.
+RMB million
+RMB million
+2020
+3,667
+China Shenhua Energy Company Limited
+260
+Year ended 31 December
+2021
+At the end of the year
+Classified as assets held for sale
+Disposal
+Amortisation
+The movement of long-term deferred expenses during the year is as follows:
+Additions
+At the beginning of the year
+225
+267
+206
+229
+After 2 years but within 5 years
+476
+628
+After 1 year but within 2 years
+341
+366
+275
+payments
+lease
+Within 1 year
+216
+187
+RMB million
+RMB million RMB million
+payments
+lease
+lease
+payments
+After 5 years
+lease
+payments
+242
+RMB million
+272
+1,015
+- Third parties
+- Associates
+minimum
+Bills payable
+- China Energy Group, an associate of China Energy Group
+and fellow subsidiaries
+Accounts payable
+For the year ended 31 December 2021
+34. ACCOUNTS AND BILLS PAYABLES
+Notes to the consolidated financial statements (Continued)
+848
+(83)
+1,697
+809
+(429)
+Present value of lease liabilities
+Less: total future interest expenses
+931
+848
+2,126
+1,697
+656
+606
+1,910
+1,510
+61
+59
+China Shenhua Energy Company Limited
+minimum
+49,193
+minimum
+50,251
+(3,804)
+54,055
+54,862
+(5,669)
+3
+Less: current portion of long-term borrowings
+2
+annum with maturities
+through 22 June 2022
+Interest rate at 2.85% per
+Euro denominated
+1,478
+1,057
+2021 Annual Report 271
+8,846
+Interest rates ranging from
+Libor+0.7% to Libor+2.85%
+per annum with maturities
+through 26 December 2034
+Interest rates ranging from
+1.80% to 2.60% per annum
+with maturities through 20
+March 2031
+Japanese Yen ("JPY")
+denominated
+USD denominated
+2,667
+3,195
+Interest rates ranging from
+LPR-2.60% to LPR+0.05%
+per annum with maturities
+through 8 October 2041
+RMB denominated
+41,061
+RMB million
+31 December
+42,388
+31 December
+2020
+RMB million
+8,220
+minimum
+Notes to the consolidated financial statements (Continued)
+31. BORROWINGS (CONTINUED)
+Total
+value of the
+Total
+value of the
+Present
+31 December 2020
+Present
+31 December 2021
+3,241
+RMB million
+31 December
+2020
+The lease liabilities were repayable as follow:
+For the year ended 31 December 2021
+33. LEASE LIABILITIES
+10 year corporate bond
+3,172
+19/01/2025
+4.10%
+RMB million
+31 December
+2021
+Due date
+Effective
+interest rate
+%
+The Group issued a dollar bond of a total USD500 million on 20 January 2015. The net proceeds
+of the Dollar bond issued were mainly used for repayment of loans of subsidiaries. Details of the
+Group's bond are as follow:
+32. BONDS
+Certain borrowings are secured over certain property, plant and equipment with a carrying amount
+of RMB815 million (2020: RMB893 million) (see Note 17(iii)).
+As at 31 December 2021, included in the above outstanding long-term borrowings, were entrusted
+loans from China Energy Group and fellow subsidiaries amounting to RMB21,179 million (2020:
+RMB21,640 million).
+-
+2021
+8,751
+31 December
+2020
+RMB million
+588
+519
+59
+4
+584
+China Shenhua Energy Company Limited
+The above balances are unsecured, interest-free and payable on demand.
+RMB million
+RMB million
+31 December
+2020
+2021
+31 December
+Amounts due to China Energy Group and fellow subsidiaries
+Amounts due to associates
+Other accrued expenses and payables of the Group included:
+Notes:
+18,949
+29,109
+11,155
+Other accrued expenses and payables (Note)
+1,422
+1,194
+Dividends payable
+4,154
+10,610
+Taxes payable other than income tax
+263
+578
+209
+64,188
+1,697
+Repayments of borrowings
+(21,741)
+31 December
+2021
+(21,741)
+Foreign exchange
+(361)
+Amortisation of discount on bonds
+༥ཚེ
+(76)
+(437)
+7
+Interest expenses
+29
+3,160
+3,189
+Increase in lease liabilities from entering into
+new leases during the year
+Decrease in lease liabilities during the year
+1,396
+1,396
+(350)
+(350)
+At 31 December 2021
+59,110
+3,172
+209
+Accrued interest payable
+4,359
+5,941
+671
+888
+24,621
+31,468
+31 December
+2020
+RMB million
+RMB million
+2021
+31 December
+More than three years
+Two to three years
+One to two years
+Less than one year
+The following is an aging analysis of accounts and bills payables, presented based on invoice date.
+28,980
+35,216
+1,108
+1,426
+27,872
+33,790
+25,362
+31,100
+1,075
+626
+1,435
+2,064
+400
+459
+2,460
+3,229
+Accrued staff wages and welfare benefits
+31 December
+2020
+RMB million
+RMB million
+31 December
+2021
+35. ACCRUED EXPENSES AND OTHER PAYABLES
+For the year ended 31 December 2021
+Notes to the consolidated financial statements (Continued)
+274
+273
+2021 Annual Report
+747
+1,760
+RMB million
+214
+84
+474
+1,202
+RMB million
+RMB million
+31 December
+2020
+31 December
+2021
+Others
+Euro
+USD
+Included in accounts and bills payables, the following amounts are denominated in foreign
+currencies:
+28,980
+35,216
+521
+12
+Interest rates ranging from
+4.28% to 5.39% per annum
+with maturities through 22
+January 2036
+1,960
+Loans from banks and other institutions
+2,856
+3,568
+RMB million
+RMB million
+31 December
+2020
+31 December
+2021
+China Shenhua Energy Company Limited
+268
+Deferred tax liabilities
+Deferred tax assets
+For the purpose of the presentation in the consolidated statement of financial position, certain
+deferred tax assets and liabilities have been offset. The following is the analysis of the deferred
+tax balances for financial reporting purpose.
+30. DEFERRED TAXATION
+505
+411
+Lease rental paid
+2020
+RMB million
+Year ended 31 December
+2021
+RMB million
+These amounts relate to the following:
+505
+411
+287
+218
+226
+185
+RMB million
+(974)
+RMB million
+(896)
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+193
+556
+(53)
+609
+RMB million
+RMB million
+RMB million
+2021
+income
+2021
+At 1 January comprehensive 31 December
+in profit or
+loss/other
+(charged)
+Credited/
+Allowances, primarily for receivables and
+Net deferred tax assets
+Others
+Tax allowable expenses not yet incurred
+Unrealised profits from sales within the Group
+Accrued salaries and other expenses not yet
+paid
+Tax losses utilised
+Right-of-use assets
+Property, plant and equipment
+inventories
+Allowances, primarily for receivables and
+The following are the major deferred tax assets and liabilities recognised and movements thereon
+during the current and prior year:
+30. DEFERRED TAXATION (CONTINUED)
+2,594
+2020
+Year ended 31 December
+2021
+Within operating cash flows
+Within financing cash flows
+Foreign exchange
+(3,488)
+(3,488)
+Repayments of bonds
+(13,840)
+(13,840)
+Repayments of borrowings
+9,940
+9,940
+Proceeds from borrowings
+(2,530)
+(2,530)
+Interest paid
+(37)
+(37)
+Interest element of lease rentals paid
+(250)
+(250)
+Capital element of lease rentals paid
+49,355
+471
+47
+821
+22,114
+6,948
+(453)
+(223)
+(676)
+Deconsolidation of Finance Company's financial
+Amounts included in the consolidated cash flow statement for leases comprise the
+following:
+(c) Total cash outflow for leases
+29. CASH AND CASH EQUIVALENTS (CONTINUED)
+For the year ended 31 December 2021
+Notes to the consolidated financial statements (Continued)
+267
+2021 Annual Report
+63,450
+263
+848
+3,241
+59,098
+95
+277
+At 31 December 2020
+leases during the year
+Increase in lease liabilities from entering into new
+2,576
+2,539
+37
+Interest expenses
+Amortisation of discount on bonds
+22,119
+(217)
+22,336
+statements
+277
+288
+96
+(8)
+Secured
+59,098
+59,110
+50,251
+49,193
+Long-term borrowings, less current portion
+Non-current borrowings:
+8,847
+9,917
+3,804
+5,669
+5,043
+4,248
+RMB million
+31 December
+2020
+RMB million
+31 December
+2021
+Current portion of long-term borrowings
+Short-term bank and other borrowings
+Current borrowings:
+An analysis of the Group's borrowings is as follows:
+31. BORROWINGS
+At the end of the reporting period, the Group has unused tax losses of RMB7,449 million (2020:
+RMB5,946 million) and unrecognised deductible temporary differences of RMB8,864 million
+(2020: RMB9,244 million) available for offset against future profits. A deferred tax asset has been
+recognised in respect of RMB352 million (2020: RMB383 million) of such losses. No deferred
+tax asset has been recognised in respect of the remaining RMB7,097 million (2020: RMB5,563
+million) losses due to the unpredictability of future profit streams. Included in unrecognised tax
+losses are losses of RMB1,324 million (2020: RMB2,059 million) that will expire in 2022.
+30. DEFERRED TAXATION (CONTINUED)
+For the year ended 31 December 2021
+Unsecured
+10,070
+10,920
+49,040
+The Group's long-term borrowings comprise:
+54,055
+54,862
+35,156
+40,002
+10,280
+3,854
+4,815
+5,337
+More than one year, but not exceeding two years
+More than two years, but not exceeding five years
+More than five years
+3,804
+5,669
+Notes to the consolidated financial statements (Continued)
+RMB million
+2021
+RMB million
+31 December
+Within one year
+The exposure of the long-term borrowings and the
+contractual maturity dates:
+For the year ended 31 December 2021
+31. BORROWINGS (CONTINUED)
+Notes to the consolidated financial statements (Continued)
+China Shenhua Energy Company Limited
+The Group's short-term borrowings are unsecured and bear interest at rates ranging from 3.00%
+to 4.35% per annum (2020: 2.80% to 5.10% per annum), and long-term borrowings bear interest
+at rates ranging from 1.80% to 4.90% per annum (2020: 1.80% to 6.15% per annum).
+59,098
+59,110
+48,178
+31 December
+2020
+RMB denominated
+270
+1,960
+RMB million
+RMB million
+RMB million
+31 December
+2020
+income
+comprehensive
+in profit or
+loss/other
+At 1 January
+2020
+(charged)
+Credited/
+2,594
+634
+1,960
+252
+445
+(193)
+34
+(24)
+58
+1,375
+179
+1,196
+1
+1
+88
+inventories
+540
+69
+609
+(202)
+2,162
+Net deferred tax assets
+58
+(193)
+(266)
+73
+Others
+(7)
+65
+Accrued salaries and other expenses not
+yet paid
+1,196
+(59)
+2021 Annual Report 269
+1,255
+Unrealised profits from sales within
+1
+Tax allowable expenses not yet incurred
+96
+(20)
+116
+Tax losses utilised
+Right-of-use assets
+193
+81
+112
+Property, plant and equipment
+the Group
+22,114
+41,115
+18,514
+(b)
+29. CASH AND CASH EQUIVALENTS (CONTINUED)
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+266 China Shenhua Energy Company Limited
+Details of impairment assessment of bank deposits are set out in Note 40.2.
+112,880
+156,706
+cash flow statement
+Cash and cash equivalents in the consolidated
+11,186
+1,701
+Less: Time deposits with original maturity over
+three months
+127,457
+3,391
+Reconciliation of liabilities arising from financing activities
+162,886
+4,479
+Deposits with banks and other financial institutions
+Less: Restricted bank deposits
+31 December
+2020
+RMB million
+31 December
+2021
+Cash and cash equivalents in the consolidated statement of financial position and the
+consolidated statement of cash flows comprise cash at bank and in hand, and time deposits
+with original maturity within three months.
+Cash and cash equivalents
+(a)
+29. CASH AND CASH EQUIVALENTS
+For the year ended 31 December 2021
+Notes to the consolidated financial statements (Continued)
+2021 Annual Report 265
+Details of impairment assessment of restricted bank deposits are set out in Note 40.2.
+The Group performed impairment assessment on restricted bank deposits and concluded that the
+probability of defaults of the counterparty banks are insignificant and accordingly, no allowance for
+credit losses is provided.
+Restricted bank deposits represent collaterals for bills payable and collaterals related to the
+operating of mines and ports.
+RMB million
+28. RESTRICTED BANK DEPOSITS
+The table below shows the detailed changes in the Group's liabilities arising from financing
+activities, including both cash and non-cash changes. Liabilities arising from financing
+activities are those for which cash flows were, or future cash flows will be, classified in the
+Group's consolidated statement of cash flows as cash flows from financing activities.
+Borrowings
+RMB million
+Proceeds from borrowings
+(3,214)
+(3,214)
+Interest paid
+(29)
+(29)
+Interest element of lease rentals paid
+(197)
+At 1 January 2020
+(197)
+Capital element of lease rentals paid
+63,450
+263
+Accrued
+848
+59,098
+At 1 January 2021
+(Note 35)
+(Note 33)
+(Note 32)
+(Note 31)
+Total
+RMB million
+RMB million
+payable
+interest
+Lease
+liabilities
+RMB million
+RMB million
+Bonds
+3,241
+The Group conducted credit impairment text for long-term loans of certain debtors and accordingly made an impairment
+provision of RMB2,583 million for the current year.
+As at 31 December 2021, the Group performed impairment assessment on bank balances
+and concluded that the probability of defaults of the counterparty banks are insignificant and
+accordingly, no allowance for credit losses is provided.
+31 December
+1,964
+31 December
+2020
+RMB million
+2021
+17,480
+Note:
+1,512
+37
+Prepaid expenses and deposits
+Deductible VAT and other taxes
+- Other loans
+- Other receivables due from associates
+- Amount due from China Energy Group
+- Other receivables
+- Service concession receivables (Note 23(iii))
+- Current portion of entrusted loans
+Financial assets measured at amortised cost
+27. PREPAID EXPENSES AND OTHER CURRENT ASSETS
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+Less: impairment losses (Note)
+502
+RMB million
+1,417
+3,017
+3,685
+4,999
+8,361
+9,464
+470
+706
+3,207
+6,468
+9,675
+4,500
+4,500
+2,234
+2,709
+10,170
+40.2 Financial risk management objectives and policies
+The functional currency of most of the group entities is RMB in which most of the
+transactions are denominated. However, certain of the Group's receivables, bank
+balances, borrowings and payables are denominated in foreign currencies other
+than the functional currency in which they are measured. The carrying amounts of
+the Group's receivables, bank balances, borrowings and payables denominated in
+foreign currencies are set out in Notes 26, 29, 31 and 34, respectively.
+The Group's major financial instruments include accounts and bills receivables, loans and
+advances to/deposits from/amounts due to China Energy Group and fellow subsidiaries,
+amounts due from/to associates, other receivables, accounts and bills payables, borrowings,
+other payables, long-term liabilities and bonds. Details of the financial instruments are
+disclosed in the respective notes. The risks associated with these financial instruments
+include market risk (interest rate and currency risks), credit risk and liquidity risk. The
+policies on how to mitigate these risks are set out below. The management manages and
+monitors these exposures to ensure appropriate measures are implemented on a timely and
+effective manner.
+Market risk
+(i)
+Currency risk
+2021 Annual Report 277
+431
+For the year ended 31 December 2021
+40. FINANCIAL INSTRUMENTS (CONTINUED)
+40.2 Financial risk management objectives and policies (Continued)
+Market risk (Continued)
+(i) Currency risk (Continued)
+The carrying amounts of the Group's foreign currency denominated monetary assets
+and monetary liabilities at the end of the reporting period are as follows:
+105,763
+USD
+Notes to the consolidated financial statements (Continued)
+117,341
+40.1 Categories of financial instruments
+198,664
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+40. FINANCIAL INSTRUMENTS
+JPY
+The carrying amounts of each of the following categories of financial assets and financial
+liabilities at the end of the reporting period are set out as follows:
+Financial assets
+Financial assets at amortised cost
+Equity instruments at FVTOCI (Note 22)
+Accounts and bills receivable at FVTOCI (Note 22)
+Financial liabilities
+Amortised cost
+31 December
+2021
+RMB million
+31 December
+2020
+RMB million
+196,114
+2,174
+155,624
+1,845
+376
+157,469
+Other currencies
+RMB million RMB million
+31 December
+JPY
+Year ended 31 December
+Year ended 31 December
+USD
+(Decrease)/Increase in profit after
+tax for the year:
+Other currencies
+The following table details the Group's sensitivity to a 10% increase or decrease
+in exchange rate of each foreign currency against RMB, while all other variables are
+held constant. The sensitivity analysis includes only outstanding foreign currency
+denominated monetary items at the end of the reporting period.
+Sensitivity analysis
+2021
+RMB million
+2,146
+2,773
+834
+1,127
+-
+1,479
+1,057
+276 China Shenhua Energy Company Limited
+278
+2020
+RMB million
+2021
+RMB million
+2020
+RMB million
+2021
+RMB million
+2020
+Assets
+31 December
+2021
+2020
+RMB million
+RMB million RMB million
+1,202
+445
+(112)
+(78)
+(13)
+(57)
+- if RMB weakens against foreign
+currencies
+Year ended 31 December
+2020
+2021
+Liabilities
+There were no changes in the Group's approach to capital management compared with previous
+years.
+(ii)
+The Group manages the capital structure and makes adjustments to it in the light of changes in
+economic conditisons and the risk characteristics of the underlying assets. In order to maintain or
+adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders,
+return capital to shareholders or issue new shares to reduce debts.
+Deferred income (Note (ii))
+Payables for acquisition of mining rights (Note (i))
+36. LONG-TERM LIABILITIES
+For the year ended 31 December 2021
+Notes to the consolidated financial statements (Continued)
+284 China Shenhua Energy Company Limited
+2,661
+Defined benefit plans
+9,452
+Notes:
+(i)
+122
+The balances mainly represent payables for acquisition of mining rights which are to be settled over the period of
+production set out in the contracts on an annual basis. The annual payment is determined by fixed rates on a per
+tonne basis with reference to the annual production volume of the acquired mines in the acquisition agreements.
+Deferred income mainly represents grants provided by several local governments in the PRC to encourage the
+construction of non-current assets.
+37. ACCRUED RECLAMATION OBLIGATIONS
+Year ended 31 December
+2021
+RMB million
+3,350
+Others
+31 December
+2021
+689
+1,427
+Current liabilities
+Analysed for reporting purpose as:
+3,350
+9,452
+1,171
+1,587
+6
+4
+1,431
+1,408
+742
+6,453
+RMB million
+RMB million
+31 December
+2020
+2020
+RMB million
+At the beginning of the year
+Addition for the year
+16,491,037,955 domestic listed A shares of RMB1.00 each
+3,398,582,500 H shares of RMB1.00 each
+31 December
+2021
+RMB million
+16,491
+3,378
+19,869
+31 December
+2020
+RMB million
+16,491
+3,399
+19,890
+The Company repurchased 21,100,500 shares of its own ordinary shares on the Stock Exchange
+of Hong Kong during the period from November to December 2020, the repurchase was governed
+by section 257 of the Hong Kong Companies Ordinance. The total amount paid RMB256 million
+was debited to "treasury shares". In March 2021, the Company has completed the cancellation
+procedures for all the repurchased shares.
+All A shares and H shares rank pari passu in all material aspects.
+39. CAPITAL RISK MANAGEMENT
+The Group's policy is to maintain a strong capital base so as to maintain investor, creditor and
+market confidence and to sustain future development of the business.
+Registered, issued and fully paid:
+The Group monitors capital using a gearing ratio which is total liabilities divided by total assets.
+The Group aims to maintain the gearing ratio at a reasonable level. The Group's gearing ratio as
+at 31 December 2021 was 26% (2020: 24%).
+16,491,037,955 domestic listed A shares of RMB1.00 each
+3,377,482,000 H shares of RMB1.00 each
+38. SHARE CAPITAL
+Accretion expense
+6,169
+3,372
+565
+2,654
+350
+288
+Accrued reclamation obligations utilised
+(330)
+(145)
+At the end of the year
+6,754
+6,169
+During the year, the coal mine related subsidiaries of the Group re-estimated the reclamation
+obligations related to the mine geological restoration and environment cost according to the
+relevant regulations of the state.
+2021 Annual Report 275
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+Registered, issued and fully paid:
+Non-current liabilities
+9
+57
+18
+294
+312
+(26)
+(11)
+(37)
+Write-offs
+(49)
+(49)
+As at 1 January 2021
+136
+1,163
+1,299
+1,073
+Impairment losses recognised
+58
+66
+Impairment losses reversed
+(23)
+(22)
+(45)
+Write-offs
+(43)
+(43)
+As at 31 December 2021
+121
+1,156
+1,277
+8
+929
+144
+Impairment losses recognised
+Impairment losses reversed
+6%
+105
+Two to three years past due
+More than three years past due
+10%
+65
+10%
+90
+23%
+172
+20%
+419
+10,076
+6,996
+The estimated loss rates are estimated based on historical observed default rates over the
+expected life of the debtors and are adjusted for forward-looking information that is available
+without undue cost or effort. The grouping is regularly reviewed by management to ensure
+relevant information about specific debtors is updated.
+During the year ended 31 December 2021, the Group provided RMB66 million (2020:
+RMB312 million) impairment allowance for accounts receivable and reversed RMB45 million
+(2020: RMB37 million), based on the provision matrix.
+282 China Shenhua Energy Company Limited
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+40. FINANCIAL INSTRUMENTS (CONTINUED)
+40.2 Financial risk management objectives and policies (Continued)
+Gross carrying amount (Continued)
+The following table shows the movement in lifetime ECL that has been recognised for
+accounts receivable under the simplified approach.
+Lifetime ECL
+(not credit
+impaired)
+-
+Lifetime ECL
+(credit -
+impaired)
+RMB million
+RMB million
+Total
+RMB million
+As at 1 January 2020
+The following tables show reconciliation of loss allowances that has been recognised for
+loan receivables and interbank certificate of deposits.
+As at 1 January
+- Impairment losses reversed
+New financial assets originated or purchased
+Effect of disposals of subsidiaries
+(5)
+(5)
+As at 1 January 2021
+211
+495
+706
+- Impairment losses recognised
+28
+2,583
+2,611
+- Impairment losses reversed
+(1)
+(70)
+(71)
+- Write-offs
+(62)
+(62)
+- Other (Note)
+23
+23
+As at 31 December 2021
+238
+2,969
+3,207
+Note:
+Tianjin Yuanhua Shipping Co., Ltd., which formerly was an associate of the Company, became a subsidiary of
+Guoneng Yuanhai Shipping Co., Ltd. (Note 45), which results in an impairment losses.
+Liquidity risk
+Liquidity risk is the risk that the Group will not be able to meet its financial obligation as
+they fall due. The approach to managing liquidity is to ensure, as far as possible, that it
+will always have sufficient liquidity to meet its liabilities when due, under both normal and
+stressed conditions, without incurring unacceptable losses or risk damage to the Group's
+reputation.
+The Group closely monitors cash flow requirements and optimising its cash return. The
+Group prepares cash flow forecasts and ensures it has sufficient cash for the servicing of
+operation, financial, and capital obligations; this excludes the potential impact of extreme
+circumstances that cannot reasonably be predicted, such as natural disasters.
+(7)
+205
+(6)
+- Impairment losses reversed
+- Write-offs
+As at 31 December
+Year ended 31 December
+2021
+12-month ECL
+RMB million
+2020
+12-month ECL
+RMB million
+640
+(190)
+188
+(638)
+2021 Annual Report 283
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+40. FINANCIAL INSTRUMENTS (CONTINUED)
+40.2 Financial risk management objectives and policies (Continued)
+Gross carrying amount (Continued)
+The following tables show reconciliation of loss allowances that has been recognised for
+other receivables and other loans.
+12-month
+ECL
+Lifetime
+ECL
+(not credit-
+impaired)
+(credit-
+impaired)
+RMB million
+RMB million
+Total
+RMB million
+As at 1 January 2020
+162
+298
+460
+- Impairment losses recognised
+50
+208
+258
+(1)
+-if RMB strengthens against
+foreign currencies
+6%
+2,035
+Financial guarantee contracts
+The credit risks on financial guarantee contracts are limited because the counterparties are
+state owned entities with good financial position.
+The Group does not have any significant concentration of credit risk. Accounts and bills
+receivables consist of a large number of customers, spread across diverse industries and
+geographical areas.
+China Shenhua Energy Company Limited
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+40. FINANCIAL INSTRUMENTS (CONTINUED)
+40.2 Financial risk management objectives and policies (Continued)
+The tables below detail the credit risk exposures of the Group's financial assets and
+financial guarantee contracts, which are subject to ECL assessment:
+External
+Notes credit rating
+12-month or
+lifetime ECL
+31 December
+2021
+RMB million
+2020
+RMB million
+Other receivables represent pledge and guarantee deposit, dividend receivables and interest
+receivables. The pledge and guarantee deposit is paid for regular businesses. The dividend
+receivables relate to the investments of the Company and the interest receivables mainly
+relate to related parties and stated owned entities. Thus, the credit risk on other receivables
+are limited.
+Financial assets at
+Loans receivables
+23, 27 N/A
+12-month ECL
+Restricted bank deposits
+28 N/A
+12-month ECL
+400
+4,479
+Cash
+29 N/A
+12-month ECL
+158,407
+437
+3,391
+124,066
+Other receivables
+amortised costs
+Other receivables
+The credit risks on bank balances are limited because the counterparties are banks with high
+credit ratings assigned by credit-rating agencies, such as China Construction Bank, Industrial
+and Commercial Bank of China, Bank of China and Agricultural Bank of China.
+Bank balances
+13
+78
+112
+(122)
+(99)
+278 China Shenhua Energy Company Limited
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+40. FINANCIAL INSTRUMENTS (CONTINUED)
+40.2 Financial risk management objectives and policies (Continued)
+Market risk (Continued)
+(ii) Interest rate risk
+The Group is exposed to fair value interest rate risk in relation to fixed-rate loan and
+receivables, borrowings and bonds (see Notes 27, 31 and 32).
+The Group is also exposed to cash flow interest rate risk in relation to variable-rate
+borrowings and variable-rate loans (see Note 31). Other than the concentration of
+interest rate risk related to the movements in London Interbank Offered Rate and the
+loan interest published by the PBOC, the Group has no significant concentration of
+interest rate risk.
+The Group's exposures to interest rates on financial liabilities are detailed in the
+liquidity risk management section of this note.
+Sensitivity analysis
+The sensitivity analysis below has been determined based on the exposure to interest
+rates for variable-rate borrowings and variable-rate loans and receivables at the end
+of the reporting period. No sensitivity analysis has been presented for the exposure
+to interest rates for bank balances as the management of the Group considers that,
+taking into account that the fluctuation in interest rates on bank balances is minimal,
+the impact of profit or loss for the year is insignificant.
+The analysis is prepared assuming variable-rate borrowings and variable-rate loans and
+receivables outstanding at the end of the reporting period were outstanding for the
+whole year.
+If interest rates had been 100 basis points (2020: 100 basis points) higher/lower
+and all other variables were held constant, the Group's profit for the year ended
+31 December 2021 would decrease/increase by RMB387 million (2020: decrease/
+increase by RMB403 million).
+2021 Annual Report 279
+280
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+40. FINANCIAL INSTRUMENTS (CONTINUED)
+40.2 Financial risk management objectives and policies (Continued)
+Credit risk and impairment assessment
+As at 31 December 2021, other than those financial assets whose carrying amounts best
+represent the maximum exposure to credit risk, the Group's maximum exposure to credit
+risk which will cause a financial loss to the Group arising from the amount of financial
+guarantees provided by the Group is disclosed in Note 41.2. The Group does not hold any
+collateral or other credit enhancements to cover its credit risks associated with its financial
+assets and financial guarantee contracts.
+Accounts and bills receivables arising from contracts with customers
+In order to minimise the credit risk, the management of the Group has delegated a team
+responsible for determination of credit limits and credit approvals. Before accepting any
+new customer, the Group uses an internal credit scoring system to assess the potential
+customer's credit quality and defines credit limits by customer. Limits and scoring
+attributed to customers are reviewed once a year. Other monitoring procedures are in
+place to ensure that follow-up action is taken to recover overdue debts. In this regard, the
+Directors consider that the Group's credit risk is significantly reduced.
+Loan receivables
+The credit risks on loan receivables are limited because the counterparties are mainly
+related parties, the Group assesses the recoverability by reviewing their financial positions
+and results periodically and considers that its exposure to credit risk arising from default of
+the counterparties is limited.
+27 N/A
+12-month ECL
+2,262
+2,797
+144
+For accounts receivable, the Group has applied the simplified approach in IFRS 9 to measure the loss
+allowance at lifetime ECL. Except for debtors with credit-impaired, the Group determines the ECL on these
+items by using a provision matrix, grouped by debtors' aging.
+For financial guarantee contracts, the gross carrying amount represents the maximum amount the Group
+has guaranteed under the respective contracts.
+2021 Annual Report 281
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+40. FINANCIAL INSTRUMENTS (CONTINUED)
+40.2 Financial risk management objectives and policies (Continued)
+Provision matrix - debtors' ageing
+As part of the Group's credit risk management, the Group uses debtors' ageing to assess
+the impairment for its receivables from customers in relation to its sales of coal, power,
+coal chemical products and transportation services because these customers consist of
+a large number of customers with common risk characteristics that are representative of
+the customers' abilities to pay all amounts due in accordance with the contractual terms.
+The following table provides information about the exposure to credit risk for accounts
+receivables which are assessed based on provision matrix as at 31 December 2021 within
+lifetime ECL (not credit-impaired). Accounts receivable with credit-impaired with gross
+carrying amounts of RMB1,459 million (2020: RMB2, 101 million) as at 31 December 2021
+were assessed individually.
+Gross carrying amount
+Average
+loss rate
+Accounts
+receivable
+Average
+loss rate
+Accounts
+receivable
+2021
+2021
+2020
+2020
+RMB million
+RMB million
+Current (not past due)
+0.4%
+5,609
+0.4%
+4,347
+Less than one year past due
+1%
+4,025
+1%
+128
+One to two years past due
+(ii)
+Notes:
+Credit-impaired
+949
+1,324
+Service concession
+23, 27 N/A
+12-month ECL
+14,817
+12,556
+receivables
+Other loans
+Accounts receivable
+224
+27
+N/A
+Credit-impaired
+4,500
+4,500
+26
+N/A
+Provision matrix
+10,076
+6,996
+(Note (i))
+Credit-impaired
+1,459
+2,101
+Other items
+Financial guarantee
+contracts (Note (ii))
+N/A
+(i)
+8,025
+55,059
+China Shenhua Energy Company Limited
+Financial assets:
+Equity instruments
+2,174
+1,845 Level 3
+Accounts and bills
+receivables
+376
+Level 3
+Market comparison
+approach.
+Valuation technique(s)
+and key input(s)
+Fair value is estimated
+comparable listed
+companies, multiples
+and discount for lack of
+liquidity.
+Discounted cash flow
+method. The significant
+unobservable inputs
+used by the Group
+for the valuation are
+the expected rates of
+return.
+There were no transfer between Level 1, Level 2 and Level 3 during the year ended 31
+December 2021 and 2020.
+Fair value of financial assets and financial liabilities that are not measured at fair value
+on a recurring basis
+Except as detailed in the following table, the Directors consider that the carrying amounts
+of financial assets and financial liabilities recorded at amortised cost in the consolidated
+financial statements approximate their fair values:
+31 December 2021
+Carrying
+based on value of
+Fair value
+hierarchy
+2020
+RMB million
+RMB million
+4.10
+126
+126
+3,522
+3,774
+3,241
+48,926
+9,218
+22,774
+37,847
+118,765
+105,763
+Saved as discussed above, the Group also makes use of banks and financial institutions
+facilities as one of the effective sources of liquidity.
+The maximum liability of financial guarantees issued by the Group is disclosed in Note 41.2.
+2021 Annual Report 285
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+40. FINANCIAL INSTRUMENTS (CONTINUED)
+40.3 Fair value measurements
+Fair value of the Group's financial assets and financial liabilities that are measured at fair
+value on a recurring basis
+31 December 31 December
+2021
+Fair value
+31 December 2020
+Carrying
+amount
+RMB million RMB million
+RMB million
+RMB million
+31 December
+2020
+RMB million
+41,369
+22,639
+30,737
+21,918
+5,481
+4,000
+69,489
+56,655
+As at 22 January 2021, the Group entered into a partnership agreement as a limited partner with other partners to
+participate in the establishment of Beijing Guoneng New Energy Industry Investment Fund Partnership (Limited
+Partnership), the committed investment payments under which amounted to RMB4,000 million and the remaining
+uninvested amount is RMB3,573 million.
+As at 29 September 2021, the Group entered into a partnership agreement as a limited
+partner with other partners to participate in the establishment of Guoneng Low Carbon Fund
+Partnership, the committed investment payments under which amounted to RMB2,000
+million and the remaining uninvested amount is RMB1,908 million.
+41.2 Financial guarantees issued
+As at 31 December 2021, the Group had issued certain guarantees in respect of certain
+banking facilities granted to an entity which the Group held less than 20% equity interest.
+The maximum amount guaranteed is RMB128 million (2020: RMB144 million).
+41.3 Legal contingencies
+The Group is the defendant in certain lawsuits as well as the plaintiff in other proceedings
+arising in the ordinary course of business. While the outcomes of such contingencies,
+lawsuits or other proceedings cannot be determined at present, management believes that
+any resulting liabilities will not have a material adverse effect on the financial position or
+operating results of the Group.
+2021 Annual Report 287
+288
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+41. COMMITMENTS AND CONTINGENT LIABILITIES (CONTINUED)
+41.4 Environmental contingencies
+2021
+Bonds
+31 December
+- Other (Note)
+Fair value
+RMB million
+amount
+Financial liabilities:
+Fixed rate bank borrowings
+Fixed rate bonds
+6,348
+3,172
+6,645
+3,261
+5,391
+3,241
+5,669
+3,426
+The fair value of fixed rate bank borrowings above in the Level 2 category is measured using
+discounted cash flow method where the future cash flows are estimated based on the
+contract and discounted at a rate that reflects the credit risk of the issuers.
+The fair values of bonds are included in the Level 1 category, which have been derived from
+the quoted prices (unadjusted) in an active market.
+286 China Shenhua Energy Company Limited
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+41. COMMITMENTS AND CONTINGENT LIABILITIES
+41.1 Capital commitments
+As at 31 December, the Group had capital commitments for land, buildings and mining
+rights, equipment and other as follows:
+Contracted for but not provided
+– Land, buildings, mining rights and exploration and
+evaluation assets
+- Equipment
+Note:
+5,391
+5,669
+355
+40.2 Financial risk management objectives and policies (Continued)
+40. FINANCIAL INSTRUMENTS (CONTINUED)
+interest rate
+4.34
+7,741
+4,985
+5,433
+40,870
+59,029
+52,762
+Borrowings fixed interest rate
+2.97
+3,555
+1,445
+1,453
+192
+6,645
+6,348
+Bonds
+4.10
+124
+Liquidity risk (Continued)
+124
+The following table details the remaining contractual maturity of the Group's financial
+liabilities at the end of the reporting period, which are based on contractual undiscounted
+cash flows (including interest payments computed using contractual rates or, if floating,
+based on rates current at the end of the reporting period) and the earliest date the Group
+can be required to pay:
+other payables, lease
+56,779
+3,552
+6,323
+4,587
+42,317
+liabilities
+liabilities and long-term
+amount
+RMB million
+cash flows
+RMB million
+Total
+carrying
+Total
+undiscounted
+More than
+5 years
+RMB million
+RMB million RMB million
+% RMB million
+2-5 years
+1-2 years
+1 year
+rate
+On demand
+or less than
+Weighted
+average
+interest
+31 December 2021
+Financial liabilities:
+Accounts and bills payables,
+To date, the Group has not incurred any significant expenditure for environmental
+remediation, is currently not involved in any environmental remediation, and apart from the
+provision for land reclamation costs, has not accrued any further amounts for environmental
+remediation relating to its operations. Under the existing legislation, management believes
+that there are no probable liabilities that will have a material adverse effect on the financial
+position or operating results of the Group. The regulatory bodies, however, have moved,
+and may move further towards the adoption of more stringent environmental standards.
+Environmental liabilities are subject to considerable uncertainties which affect the Group's
+ability to estimate the ultimate cost of remediation efforts. These uncertainties include (i)
+the exact nature and extent of the contamination at various sites including, but not limited to
+coal mines and land development areas, whether operating, closed or sold; (ii) the extent of
+required cleanup efforts; (iii) varying costs of alternative remediation strategies; (iv) changes
+in environmental remediation requirements; and (v) the identification of new remediation
+sites. The amount of such future cost is indeterminable due to such factors as the unknown
+magnitude of possible contamination and the unknown timing and extent of the corrective
+actions that may be required. Accordingly, the outcome of environmental liabilities under
+future environmental legislation cannot reasonably be estimated at present, and could be
+material.
+3,318
+3,172
+liabilities and long-term
+liabilities
+37,467
+2,088
+3,732
+1,085
+44,372
+43,424
+Borrowings variable interest
+rate
+4.47
+7,098
+6,736
+14,709
+36,407
+64,950
+53,707
+Borrowings fixed interest rate
+2.65
+4,235
+268
+other payables, lease
+3,566
+Financial liabilities:
+Accounts and bills payables,
+amount
+53,737
+11,141
+16,527
+44,614
+126,019
+117,341
+31 December 2020
+Weighted
+average
+interest
+On demand
+or less than
+More than
+rate
+1 year
+% RMB million
+1-2 years
+RMB million
+2-5 years
+RMB million
+5 years
+RMB million
+Total
+undiscounted
+cash flows
+RMB million
+Total
+carrying
+RMB million
+Borrowings variable
+42. EMPLOYEE BENEFITS PLAN
+43. RELATED PARTY TRANSACTIONS
+(xx) Net deposits placed with Finance Company represents net deposits placed by the
+Group with Finance Company after Finance Company was deconsolidated from the
+Group's consolidated financial statements.
+(xxi) Granting of loans from China Energy Group and fellow subsidiaries.
+(xxii) Repayment of loans to China Energy Group and fellow subsidiaries.
+The Directors are of the opinion that the above transactions with related parties were
+conducted in the ordinary course of business and in accordance with the agreements
+governing such transactions.
+2021 Annual Report 291
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+43. RELATED PARTY TRANSACTIONS (CONTINUED)
+43.1 Transactions with China Energy Group, an associate of China Energy Group,
+fellow subsidiaries, and associates of the Group (Continued)
+The Group entered into a number of agreements with China Energy Group, an associate
+of China Energy Group, fellow subsidiaries, and associates of the Group. The terms of the
+principal agreements are summarised as follows:
+(xix) Receipt of deposits by Finance Company represents net deposits received by Finance
+Company from China Energy Group and fellow subsidiaries before Finance Company
+was deconsolidated from the Group's consolidated financial statements.
+(i)
+The Group has entered into a mutual supply agreement for the mutual provision of
+production supplies and ancillary services with an associate of China Energy Group
+and fellow subsidiaries. Pursuant to the agreement, an associate of China Energy
+Group and fellow subsidiaries provide the Group with the production supplies
+and services, ancillary production services including the use of the information
+network system and ancillary administrative services. On the other hand, the Group
+provides fellow subsidiaries with water supplies, rolling stock management, railway
+management, railway transportation and other related or similar production supplies
+or services and use of the information network system.
+The products and services provided under the agreement, other than the sharing of use
+of the information network system which is free of charge, are provided in accordance
+with the following pricing policy:
+price prescribed by the state (including any price prescribed by any relevant
+local government), if applicable;
+where there is no state-prescribed price but where there is a state-guidance
+price, then the state-guidance price;
+where there is neither a state-prescribed price nor a state-guidance price, the
+market price; or
+where none of the above is applicable or where it is not practical to apply the
+above pricing policies in reality, the price to be agreed between the relevant
+parties shall be based on reasonable costs incurred in providing the goods or
+services plus a profit margin of 5% of such costs.
+The Group has entered into coal supply agreements with an associate of China Energy
+Group, fellow subsidiaries and associates of the Group. The coal supplied is charged
+at the prevailing market price.
+292
+China Shenhua Energy Company Limited
+(ii)
+(xviii) Repayment of loans from Finance Company represents loans repaid by China Energy
+Group and fellow subsidiaries to Finance Company before Finance Company was
+deconsolidated from the Group's consolidated financial statements.
+(xvii) Granting of loans from Finance Company represents loans granted by Finance
+Company to China Energy Group and fellow subsidiaries before Finance Company
+was deconsolidated from the Group's consolidated financial statements.
+(xvi) Other income includes agency income, repairs and maintenance service income,
+sales of ancillary materials and spare parts, management fee income, sales of water
+and electricity, financial service income, lease income, etc. earned from China Energy
+Group, an associate of China Energy Group and fellow subsidiaries.
+Interest expense represents interest incurred from deposits placed and loans from
+China Energy Group and fellow subsidiaries. The applicable interest rate is determined
+in accordance with the prevailing interest rates published by the PBOC.
+Purchases of ancillary materials and spare parts represent purchase of materials and
+utility supplies related to the Group's operations from fellow subsidiaries and an
+associate of China Energy Group.
+Mining service income represents income earned from coal mining services to a
+fellow subsidiary.
+Ancillary and social services represent expenditures for social welfare and support
+services such as property management, water and electricity supply, and canteen
+expense paid to China Energy Group, fellow subsidiaries and an associate of China
+Energy Group.
+(vii) Transportation service income represents income earned from fellow subsidiaries in
+respect of coal transportation services.
+(viii) Transportation service expense represents expense related to coal transportation
+service to fellow subsidiaries.
+(ix)
+Sale of coal represents income from sale of coal to fellow subsidiaries.
+(x) Purchase of coal represents coal purchased from an associate of the Group, an
+associate of China Energy Group and fellow subsidiaries.
+$1
+(xi)
+Property leasing represents rental paid or payable in respect of properties leased from
+China Energy Group and fellow subsidiaries.
+(xii) Repairs and maintenance services expense represents expense related to machinery
+repairs and maintenance services provided by an associate of the China Energy Group
+and fellow subsidiaries.
+(xiii) Coal export agency expense represents expense related to coal export agency
+services provided by a fellow subsidiary.
+290
+China Shenhua Energy Company Limited
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+43. RELATED PARTY TRANSACTIONS (CONTINUED)
+43.1 Transactions with China Energy Group, an associate of China Energy Group,
+fellow subsidiaries, and associates of the Group (Continued)
+(xiv) Purchase of equipment and construction work represents expenditure related to
+equipment and construction service provided by fellow subsidiaries.
+(xv) Sale of coal chemical product represents income from sale of coal chemical product
+to a fellow subsidiary.
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+43. RELATED PARTY TRANSACTIONS (CONTINUED)
+43.1 Transactions with China Energy Group, an associate of China Energy Group,
+fellow subsidiaries, and associates of the Group (Continued)
+(iii) The Group, through Finance Company, has entered into a financial services agreement
+with China Energy Group and fellow subsidiaries. Pursuant to the agreement, Finance
+Company provides financial services to China Energy Group and fellow subsidiaries.
+The interest rate for the deposits with Finance Company from China Energy Group
+and fellow subsidiaries should not be lower than the lowest limit published by the
+PBOC for the same type of deposit. The interest rate for loans made by Finance
+Company to China Energy Group and fellow subsidiaries should not be higher than
+the highest limit published by the PBOC for the same type of loan. The above interest
+rates should be determined by reference to the rate charged by normal commercial
+banks in the PRC for comparable deposits and loans on normal commercial terms. The
+fees charged by Finance Company for the provision of other financial services shall
+be determined according to the rates chargeable by the PBOC or the China Banking
+Regulatory Commission.
+704
+Total amounts due from China Energy Group, an
+associate of China Energy Group, fellow subsidiaries
+and associates of the Group
+33,199
+24,085
+Borrowings
+22,472
+20,359
+Accounts payable
+2,690
+2,510
+Accrued expenses and other payables
+657
+578
+Contract liabilities
+1,781
+896
+Total amounts due to China Energy Group, an associate
+of China Energy Group and fellow subsidiaries, and
+associates of the Group
+27,600
+24,343
+Other than those disclosed in Notes 23, 26, 27, 31 and 35, amounts due from/to China
+Energy Group, an associate of China Energy Group, fellow subsidiaries, and associates of
+the Group bear no interest, are unsecured and are repayable in accordance with normal
+commercial terms.
+294
+426
+Income from entrusted loans represents interest earned from entrusted loans to an
+associate of the Group. The applicable interest rate is determined in accordance with
+the prevailing interest rates published by the PBOC.
+920
+19,726
+2,735
+(iv)
+(v)
+(vi)
+The Group has entered into a new financial services agreement with Finance
+Company effective from 1 January 2021. Pursuant to the agreement, Finance
+Company provides financial services to the Group. The interest rate for the deposits
+with Finance Company from the Group and fellow subsidiaries should not be lower
+than the lowest limit published by the PBOC for the same type of deposit. The
+interest rate for loans made by Finance Company to the Group and fellow subsidiaries
+should not be higher than the highest limit published by the PBOC for the same
+type of loan. The above interest rates should be determined by reference to the rate
+charged by normal commercial banks in the PRC for comparable deposits and loans
+on normal commercial terms. The fees charged by Finance Company for the provision
+of other financial services shall be determined according to the rates chargeable by
+the PBOC or the China Banking Regulatory Commission.
+The Group has entered into a property leasing agreement with fellow subsidiaries of
+China Energy Group for leasing of certain properties to each other. No rent is payable
+by the Group before fellow subsidiaries obtains the relevant property ownership
+certificate. The rental charges are based on comparable market rates. If fellow
+subsidiaries of China Energy Group negotiate to sell a leased property to a third party,
+the Company has a pre-emptive right to purchase such property under terms no less
+favorable than other third party.
+The Group has entered into a land leasing agreement with fellow subsidiaries of China
+Energy Group. The annual rent is determined based on the local market rate. The
+Group is not allowed to sub-let the leased land.
+The Group has entered into an agency agreement for the export of coal with a fellow
+subsidiary of China Energy Group. The fellow subsidiary is appointed as a non-
+exclusive export agent of the Group and is entitled to receive an agency fee based
+on the relevant market rates or lower rates. Currently, the rate is 0.7% of the free on
+board sales price of coal exported.
+2021 Annual Report 293
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+43. RELATED PARTY TRANSACTIONS (CONTINUED)
+43.1 Transactions with China Energy Group, an associate of China Energy Group,
+fellow subsidiaries, and associates of the Group (Continued)
+(vii) The Group entered into an agency agreement for the sale of coal with fellow
+subsidiaries of China Energy Group. The Group is appointed as the exclusive sales
+agent of fellow subsidiaries of China Energy Group for thermal coal and non-exclusive
+sales agent for coking coal. The Group is entitled to receive an agency fee, which is
+based on its related costs incurred plus a profit margin of 5% for sales of coal outside
+the Inner Mongolia Autonomous Region. No agency fee is charged for sales of coal
+within the Inner Mongolia Autonomous Region.
+(viii) The Group has entered into agreements with fellow subsidiaries of China Energy
+Group under which the Group has been granted the right to use certain trademarks.
+Fellow subsidiaries of China Energy Group bear its own cost for the registration of
+such trademarks during the term of the trademarks license agreement and expenses
+for enforcement against any infringement of the licensed trademarks by third parties.
+Amounts due from/to China Energy Group, an associate of China Energy Group, fellow
+subsidiaries, and associates of the Group:
+Cash and time deposits at bank
+Accounts and bills receivables
+Prepaid expenses and other current assets
+Other non-current assets
+31 December
+2021
+RMB million
+31 December
+2020
+RMB million
+27,126
+3,892
+1,755
+(vi)
+(v)
+(iv)
+1,773
+1,229
+(v)
+3
+57
+1,294
+1,329
+Transportation service income
+(vii)
+1,813
+1,339
+Transportation service expense
+(viii)
+2,357
+201
+Sale of coal
+(ix)
+96,776
+54,906
+Purchase of coal
+(x)
+(iv)
+16,696
+286
+19
+43.1 Transactions with China Energy Group, an associate of China Energy Group,
+fellow subsidiaries, and associates of the Group
+The Group is controlled by China Energy Group and has significant transactions and
+relationships with China Energy Group, an associate of China Energy Group and subsidiaries
+of China Energy Group ("fellow subsidiaries"). Related parties refer to enterprises over
+which China Energy Group is able to exercise significant influence or control. The Group
+also has entered into transactions with its associates, over which the Group can exercise
+significant influence.
+The Group had the following transactions with China Energy Group, an associate of China
+Energy Group, fellow subsidiaries, and associates of the Group that were carried out in the
+normal course of business during both years:
+China Shenhua Energy Company Limited
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+43. RELATED PARTY TRANSACTIONS (CONTINUED)
+43.1 Transactions with China Energy Group, an associate of China Energy Group,
+fellow subsidiaries, and associates of the Group (Continued)
+Year ended 31 December
+2021
+2020
+RMB million
+RMB million
+parts
+Mining service income
+Interest income
+Income from entrusted loans
+Interest expense
+Purchases of ancillary materials and spare
+Ancillary and social services
+183
+615
+19
+810
+In addition to a minimal defined benefit plan operated by its subsidiary, the Group participates,
+in line with the regulations of the PRC, mainly in various defined contribution retirement plans
+organised by municipal and provincial governments for its employees. The Group is required to
+make contributions to the retirement plans at 20% of the salaries, bonuses and certain allowances
+of the employees. In addition, as approved by the government, the Group makes contribution to
+a supplemental defined contribution pension plan for its employees. The fund is managed by a
+qualified fund manager. The Group has no other material obligation for the payment of pension
+benefits associated with these plans beyond the annual contributions described above. The
+Group's contributions for the year ended 31 December 2021 were RMB3,662 million (2020:
+RMB2,504 million).
+10,073
+(xi)
+3,913
+Repayment of loans from Finance Company
+Net deposits received by Finance Company
+Net deposits placed with Finance Company
+Granting of loans from China Energy Group
+Repayment of loans from China Energy Group
+(xviii)
+13,062
+(xix)
+19,492
+(xx)
+27,126
+19,726
+(xxi)
+10,012
+3,067
+(xxii)
+12,491
+1,596
+2021 Annual Report 289
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+43. RELATED PARTY TRANSACTIONS (CONTINUED)
+43.1 Transactions with China Energy Group, an associate of China Energy Group,
+fellow subsidiaries, and associates of the Group (Continued)
+(i) Interest income represents interest earned from deposits in and loans to China
+Energy Group and fellow subsidiaries. The applicable interest rate is determined in
+accordance with the prevailing interest rates published by the PBOC.
+(ii)
+Company
+Property leasing
+15,205
+Granting of loans from Finance Company
+Bills receivables discounted from Finance
+100
+125
+Repairs and maintenance services expense
+(xii)
+70
+17
+Coal export agency expense
+(xiii)
+4
+4
+Purchase of equipment and construction work (xiv)
+1,101
+494
+Sale of coal chemical product
+(xv)
+6,941
+3,945
+Other income
+(xvi)
+1,748
+4,395
+(xvii)
+811
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+Section IV Directors' Report (Continued)
+(6,844)
+32,048
+(121.4)
+investing activities
+Net cash outflows in financing
+(43,731)
+(42,079)
+3.9
+Net cash (outflows)/inflows in
+activities
+30 China Shenhua Energy Company Limited
+Section IV Directors' Report (Continued)
+2.
+Analysis on revenue and costs
+(1) Factors affecting the revenue
+The revenue of the Group in 2021 recorded a year-on-year increase. The main
+reasons for the increase are:
+(2)
+(3)
+Note: As Finance Company provides financial services including deposits and loans for entities other
+than the Group, the item represents the cash flows of deposits and loans and interest, fees and
+commission generated from this business from January to August 2020.
+Finance Company
+activities excluding the effect of
+50.9
+Share of results of associates
+Income tax expense
+(874)
+(18,161)
+947
+(192.3)
+(15,378)
+18.1
+Net cash inflows from operating
+94,575
+81,289
+16.3
+activities
+Of which: Net cash inflows from
+18,599 Note
+/
+operating activities of Finance
+Company
+Net cash inflows from operating
+94,575
+62,690
+(4)
+with strong market demand for coal and rising coal prices, the Group's
+coal sales volume and average sales price increased by 8.0% and 43.4%
+year-on-year, respectively;
+with the growth in domestic electricity demand, the Group has actively
+leveraged its integrated operation advantages to ensure the coal supply
+of power plants, and several new generating units have been put into
+operation successively from 2021 onwards, resulting in a year-on-year
+increase of 22.3% in the Group's power output dispatch;
+The Group integrated shipping resources, improved the scale and
+intensification of shipping business, and ensured effective energy supply.
+The shipping volume increased by 7.3% year-on-year, and freight rate
+increased;
+312.7
+296.0
+G∞
+8.0
+5.6
+06
+447.1
+284.8
+coal
+Purchased coal Million tonnes
+169.6
+150.4
+12.8
+162.3
+Transportation
+1. Transportation turnover of Billion tonne km
+303.4
+285.7
+6.2
+Million tonnes
+14.1
+Of which: Self-produced
+482.3
+Affected by international oil prices and other factors, the sales prices
+of polyethylene and polypropylene increased by 21.7% and 13.9%
+year-on-year, respectively.
+Change
+for 2021
+compared
+with that
+Major operating indicators
+Unit
+2021
+2020
+for 2020
+2019
+%
+(I) Coal
+1. Commercial coal
+production
+Million tonnes
+307.0
+291.6
+5.3
+282.7
+2. Coal sales
+Million tonnes
+446.4
+285.5
+(2,263)
+48.0
+(2)
+International thermal coal market
+In 2021, the global coal-fired power generation reached an all-time high, and coal
+consumption was approximately 7,900 million tonnes, representing a year-on-year
+increase of 6%. Global coal production gradually recovered, with total coal output
+increased by approximately 4.3%¹ year-on-year, and major coal-producing countries
+such as China, India, the United States, Indonesia and Russia achieved output growth.
+There were differences in the pace of the recovery of coal supply and demand, as
+well as factors such as the general rise in global commodity prices, weather, and
+rising shipping prices, which have led to periods of tight energy supply and sharp
+fluctuations in coal prices. The spot price of Newcastle NEWC thermal coal rose to
+a high of US$253.55/tonne during the year and dropped to US$165.86/tonne at the
+end of the year, representing an increase of 98.1% as compared to the end of the
+previous year.
+Power market environment
+In 2021, China's electricity demand grew rapidly. China's national power consumption
+reached 8,312.8 billion kWh, representing a year-on-year increase of 10.3%, or a two-year
+average of 7.1%. The power generation of sizable power plants nationwide was 8,112.2
+billion kWh, representing a year-on-year increase of 8.1%, or a two-year average of 5.4%.
+Among them, thermal power generated 5,770.3 billion kWh, representing a year-on-year
+increase of 8.4%, and accounting for 71.1% of the national total. The average utilization
+hours of power generation equipment of power plants with the capacity of 6,000 kW and
+above nationwide was 3,817 hours, increasing by 60 hours year-on-year. Among them,
+the average utilization hours of thermal power equipment was 4,448 hours, increasing by
+237 hours year-on-year. The average utilization hours of hydropower were 3,622 hours,
+representing a year-on-year decrease of 203 hours.
+The installed capacity of renewable energy increased significantly, and the proportion of the
+installed capacity of thermal power decreased. In 2021, the newly added power generation
+capacity in China was 176.29 GW, including 46.28 GW of thermal power, accounting for
+26.3% of the total newly added, and 102.50 GW of wind power and solar power, accounting
+for 58.1% of the total newly added. By the end of 2021, the total installed capacity in China
+was 2,380 GW, an increase of 7.9% over the end of last year. Among them, thermal power
+I was 1,300 GW, accounting for 54.6% of the total, which was 2.0 percentage points lower
+than that at the end of last year.
+The depth and breadth of power system reform were increasing. In 2021, the National
+Development and Reform Commission issued the "Notice on Further Deepening the
+Market-oriented Reform On Grid Electricity Price of Coal-fired Power Generation", requiring
+all coal-fired power generation to enter the electricity market, and to form on-grid tariff
+through market transactions within the range of "benchmark price + upward/downward
+fluctuation". With the increasingly fierce competition in the electricity market, the market
+environment was more complex. The market electricity accumulated trading volume of all
+trading center across the whole country is 3,778.7 billion kWh, representing a year-on-year
+increase of 19.3%, and accounting for 45.5% of the total electricity consumption of the
+whole society; the medium and long-term power direct trading volume of the electricity
+market is 3,040.46 billion kWh, representing a year-on-year increase of 22.8%.
+International Energy Agency (IEA), "Coal 2021" Annual Report.
+Section IV Directors' Report (Continued)
+2021 Annual Report 27
+III.
+BUSINESSES ENGAGED IN BY THE COMPANY DURING THE REPORTING
+PERIOD
+The Company was established in Beijing in November 2004, and was listed on the HKEx in June
+2005 and on the SSE in October 2007. The Group is principally engaged in the production and sale
+of coal and electricity, railway, port and shipping transportation, and coal-to-olefins businesses.
+The Group owns high-quality coal resources in Shendong Mines, Zhunge'er Mines, Shengli
+Mines and Baorixile Mines, etc.. In 2021, the Group realized commercial coal production of 307.0
+million tonnes and the sales of coal of 482.3 million tonnes. The Group controls and operates high
+capacity clean coal-fired power generators with great parameters, and the Group controled and
+operated power generators with an installed capacity of 37,899 MW by the end of 2021, with
+a total power output dispatch of 156.13 billion kWh in 2021. The Group controls and operates a
+network of concentric transportation railways around the major coal production bases in western
+Shanxi, northern Shaanxi and southern Inner Mongolia and "Shenshuo – Shuohuang Line", a
+major channel for coal transportation from western to eastern China, as well as Huanghua-Dajiawa
+Railway, a new energy channel in Bohai Rim. The total length of railways controlled and operated
+by the Group has increased to 2,408 km. The transportation turnover of the self-owned railway
+reached 303.4 billion tonnes km all year. The Group also controls and operates a number of ports
+and terminals (approximately 270 million tonnes/year shiploading capability in aggregate), such
+as Huanghua Port, possesses the shipping transportation team comprising its own vessels with
+approximately 2.18 million tonnes of deadweight capacity and conducts coal-to-olefins businesses
+with approximately 0.6 million tonnes/year of production capacity. During the reporting period, the
+Group made no significant change in the scope of its principal businesses.
+-
+The integrated operation mode of "production-transportation (railway, port and shipping)-
+conversion (power generation and coal chemical industry)" formed by the Group on the basis
+of coal products has the advantages of complete chain, high efficiency, safety and stability,
+and low-cost operation. The Group's technology in coal exploitation and production safety has
+secured a leading position in the global market, and that of clean coal-fired power generation and
+heavy-haul railway transportation has secured a leading position in the domestic market.
+28 China Shenhua Energy Company Limited
+Section IV Directors' Report (Continued)
+The core competitiveness of the Group is mainly:
+Section IV Directors' Report (Continued)
+3.
+26 China Shenhua Energy Company Limited
+In respect of the demand side, domestic coal consumption has grown significantly.
+Total consumption of coal of the nation represented a year-on-year increase of
+approximately 4.6%. In particular, the consumption of coal by the power industry
+increased by 10.0%, accounting for approximately 56.4% of the national total; the
+consumption of coal by the steel industry decreased year-on-year by 8.2%, and the
+coal consumption in the building materials and chemical industries increased by
+10.2% and 6.9%, respectively.
+2021
+Year-on-
+year change
+%
+Sizable industrial raw coal production volume
+(100 million tonnes)
+40.7
+4.7
+Coal import (100 million tonnes)
+3.2
+6.6
+National coal transportation
+volume by railway (100 million tonnes)
+25.8
+8.8
+1
+The macroeconomic and industry-related contents in this report are for reference only and does not constitute any
+investment advice. The Company has used its best endeavours to ensure the accuracy and reliability of information in
+this section, but does not assume any liability or provide any form of guarantee for the accuracy, completeness or validity
+of all or part of its content. If there is any error or omission, the Company does not assume any liability. The content in
+this section may contain certain forward-looking statements based on subjective assumptions and judgments of future
+political and economic developments; therefore there may exist uncertainties in these statements. The Company does not
+undertake any responsibility for updating the information or correcting any subsequent error that may appear. The opinions,
+estimates and other data set out herein can be amended or withdrawn without further notice. The data contained in this
+section are mainly derived from sources such as the National Bureau of Statistics, National Energy Administration, China
+Coal Market Network, China Coal Resources Network, China Electricity Council and China Coal Transportation & Sales
+Society etc.
+2021 Annual Report 25
+Section IV Directors' Report (Continued)
+In respect of the supply side, in the first three quarters, domestic coal enterprises
+have coordinated the prevention and control of COVID-19 and increased production
+to ensure supply, and maintained growth of coal production. Affected by factors such
+as safety, environmental protection, and tightening production capacity supervision
+policies, coal production was released slowly. In the fourth quarter, under the policy of
+ensuring energy supply, the main production areas implemented emergency capacity
+expansion and production increase, resulting in rapid growth of coal output and
+increase in imported coal. In 2021, the sizable industrial raw coal production volume
+nationwide reached 4,070 million tonnes, representing a year-on-year increase of
+4.7%. The raw coal production volume in Inner Mongolia, Shanxi, Shaanxi and Xinjiang
+accounted for 79.9% of the national total, representing an increase of approximately
+1.6 percentage points over the previous year. Among them, the raw coal production
+of Shanxi was 1,190 million tonnes, representing a year-on-year increase of 10.5%;
+the raw coal production of Inner Mongolia was 1,040 million tonnes, representing a
+year-on-year increase of 2.7%; the raw coal production of Shaanxi was 700 million
+tonnes, representing a year-on-year increase of 2.7%; and the raw coal production
+of Xinjiang was 320 million tonnes, representing a year-on-year increase of 18.3%.
+The total import volume of coal throughout the year amounted to 320 million tonnes,
+representing a year-on-year increase of 6.6%
+(I)
+Unique operation and profitability model: The Group has a large and efficient
+operation of coal and power generation business, and possesses a large-scale integrated
+transportation network consisting of railways, ports and ships, forming a core competitive
+advantage of integrated development of coal, power, transportation and coal-to-chemical
+industry, one-stop operation of production, transportation and sales, in-depth cooperation
+and effective synergy among various industrial sectors.
+In 2021, the Company adhered to market orientation, strengthened resource organization
+and transportation scheduling, fully developed its advantages of resources and scale in the
+integration of the full industrial chain of coal, power, coal chemicals and transportation,
+guaranteed the safe and stable supply of energy, and continuously improved the
+benefit-creation capability of the value chain, in order to continuously strengthen the overall
+competitiveness.
+(II) Coal reserves: The Group possesses an abundant pool of high-quality coal resources which
+are suitable for modern high-output and high-efficient mining. The coal reserves of the
+Group is among the top of listed coal companies in China.
+(2,499)
+(1,362)
+83.5
+Other gains and losses
+(955)
+(194)
+392.3
+Credit impairment loss
+(2,561)
+(524)
+388.7
+Other income
+893
+778
+14.8
+Interest income
+Finance costs
+2,492
+1,684
+Research and development costs
+(2,583)
+47.3
+(239,156)
+(III) Management team focusing on principal businesses and advanced business concepts:
+The management team of China Shenhua has profound knowledge and management
+experience in the industry, attaches great importance to enhancement of the Company's
+capabilities in value creation, conducts operation with a focus on the principal businesses of
+the Company, and persistently focuses on clean generation, clean transportation and clean
+conversion in the energy sector.
+(IV) Industrial technology and innovation capabilities: China Shenhua strengthens its
+industrial technology and innovation capabilities continuously. The Group's technology in
+green coal exploitation and production safety has secured a leading position in the global
+market, and that of clean coal-fired power generation and heavy-haul railway transportation
+has secured a leading position in domestic market. China Shenhua has basically established
+an integrated operation model of utilizing scientific and technological from decision-making,
+systematic management, research and development to commercialization of achievements
+and a technological innovation-driven development model.
+In 2021, the Group focused on promoting the research of intelligent technology in coal
+mine, intelligent operation and maintenance technology of heavy-haul railway infrastructure,
+comprehensive energy-saving technology of coal-fired generating units, etc. During the
+reporting period, China Shenhua was granted a total of 754 patents, including 199 invention
+patents.
+2021 Annual Report 29
+Section IV Directors' Report (Continued)
+V. MAJOR OPERATION RESULTS DURING THE REPORTING PERIOD
+(1) Analysis on Principal Businesses
+1.
+Changes in the major items in the consolidated statement of profit or loss and
+consolidated statement of cash flows
+Items
+Unit: RMB million
+2021
+2020
+Change
+%
+Revenue
+335,216
+233,263
+43.7
+Operating costs
+(162,374)
+In 2021, as the economy gradually recovered, global energy demand increased
+significantly, and coal continued to play an important role in ensuring China's energy
+security. China's coal demand has grown more than expected, and the domestic coal
+market supply was tight in some periods and regions, and prices fluctuated greatly.
+As of the end of 2021, the price index of Bohai Bay thermal coal (5,500 kcal) was
+RMB737/tonne, increasing by RMB152/tonne compared with the end of the previous
+year; the annual average price was RMB673/tonne, representing a year-on-year
+increase of RMB124/tonne, or 18.4%.
+self-owned railway
+Million tonnes
+Others
+27,229
+11.4
+26,292
+16.2
+3.6
+Total operating sales
+239,156
+51.0
+100.0
+100.0
+47.3
+The operating costs of the Group in 2021:
+1
+(2)
+(3)
+(4)
+(5)
+162,374
+6.7
+10,926
+6.9
+10,722
+4.5
+9,124
+5.6
+17.5
+Depreciation and amortization
+18,093
+7.6
+16,647
+10.3
+8.7
+Transportation charges
+18,764
+7.8
+15,076
+9.3
+24.5
+Tax and surcharge
+16,502
+(6)
+The main reasons for the year-on-year increase in the cost of purchased
+coal: the year-on-year increase in the sales volume of purchased coal and
+the unit purchase cost;
+The main reasons for the year-on-year increase in raw materials, fuel and
+power costs: the increase in power generation and coal purchase price;
+The main reasons for the year-on-year increase in labor costs: the
+increase in the number of production personnel and the increase in salary
+and social security contributions;
+20,304
+8.5
+Port
+Shipping
+Cost of internal transportation business (raw materials,
+fuel and power, personnel expenses, repairs and
+maintenance, depreciation and amortisation, and other
+expenses), Cost of external transportation business,
+other operating costs, and taxes and surcharges
+Cost of internal transportation business (raw materials,
+fuel and power, personnel expenses, repairs and
+maintenance, depreciation and amortisation, external
+transportation charges, and other expenses), Cost
+3,342
+3,314
+0.8
+5,018
+2,755
+82.1
+of external transportation business, and taxes and
+surcharges
+Coal chemical
+Raw materials, fuel and power, Personnel expenses,
+4,754
+4,675
+1.7
+repairs and maintenance, depreciation and amortisation,
+other costs, other operating costs, and taxes and
+surcharges
+2021 Annual Report 33
+22,020
+Repair and maintenance
+55.0
+60,019
+The main reasons for the year-on-year increase in repair and maintenance
+costs: the Group carried out track replacement overhaul for some railway
+sections and postponed the construction of some maintenance projects
+affected by the epidemic in the same period of last year
+The main reasons for the year-on-year increase in transportation costs:
+the increase in vessel rental charges in shipping business;
+The main reasons for the year-on-year increase in taxes and surcharges:
+the increase in income and the increase in resource taxes and other
+taxes.
+32 China Shenhua Energy Company Limited
+Section IV Directors' Report (Continued)
+Unit: RMB million
+Operating costs by business segment (before elimination on consolidation)
+By business segment
+Breakdown of cost items
+2021
+2020
+Change
+Coal
+Power
+Railway
+Cost of purchased coal, raw materials, fuel and power,
+personnel expenses, repairs and maintenance,
+depreciation and amortisation, transportation charges,
+other operating costs, and taxes and surcharges
+Raw materials, fuel and power, personnel expenses,
+repairs and maintenance, depreciation and amortisation,
+other operating costs, and taxes and surcharges
+Cost of internal transportation business (raw materials,
+fuel and power, personnel expenses, repairs and
+maintenance, depreciation and amortisation, external
+transportation charges, and other expenses), Cost of
+external transportation business, other operating costs,
+and taxes and surcharges
+225,126
+153,373
+46.8
+38,729
+2. Loading volume at
+32.5
+16,066
+89.6
+nautical miles
+(III) Power generation
+1. Gross power generation
+Billion kWh
+166.45
+136.33
+22.1
+20.5
+153.55
+Billion kWh
+156.13
+127.65
+22.3
+144.04
+dispatch
+(IV) Coal chemical
+1. Sales of polyethylene
+2. Total power output
+93.0
+112.1
+Billion tonne
+215.0
+203.8
+5.5
+199.7
+Huanghua Port
+3. Loading volume at
+Million tonnes
+46.4
+45.4
+2.2
+44.7
+Shenhua Tianjin Coal Port
+4. Shipping volume
+Million tonnes
+121.2
+113.0
+7.3
+109.8
+5. Shipment turnover
+Thousand tonnes
+332.8
+356.9
+2. Sales of polypropylene
+2021
+for 2020
+2020
+in amount
+Cost of purchased coal
+102,865
+43.0
+48,742
+30.0
+111.0
+Raw materials, fuel and power
+23,696
+9.9
+19,501
+12.0
+21.5
+Personnel expenses
+21,285
+8.9
+for 2021
+9.9
+Breakdown of cost items
+costs for
+Thousand tonnes
+315.6
+331.2
+64
+(6.8)
+319.0
+(4.7)
+302.3
+2021 Annual Report 31
+Section IV Directors' Report (Continued)
+(2) Analysis of costs
+Unit: RMB million
+Percentage
+to operating
+Percentage
+to operating
+Year-on-
+Amount
+costs for
+Amount
+year change
+China's thermal coal market
+IV. ANALYSIS ON CORE COMPETITIVENESS DURING THE REPORTING PERIOD
+2.
+18.7
+(4,754)
+5,851
+Coal chemical
+percentage points
+Increased by 7.5
+82.1
+99.1
+19.0
+(5,018)
+6,195
+Shipping
+percentage points
+0.8 Increased by 0.2
+1.3
+48.1
+(3,342)
+6,440
+Port
+percentage points
+percentage points
+13.3
+1.7
+Increased by 9.2
+percentage points
+307.0
+million
+Coal
+%
+%
+%
+volume in inventory
+volume
+of the year
+production
+8.5 Decreased by 1.7
+Sales at the end
+volume of the period
+Major
+products Unit
+with the
+beginning
+increase/
+decrease in
+compared
+year
+Increase/
+decrease as
+Year-on-
+Year-on-
+year
+increase/
+decrease in
+Inventory
+(4) Analysis of the production and sales volume of major products
+Production
+482.3
+55.0 Decreased by 15.3
+45.9
+previous
+previous
+Operating Gross profit
+Business
+segment
+margin as
+with
+with
+in gross profit
+compared as compared
+Increase/decrease
+operating
+costs
+revenue as
+operating
+Increase/
+decrease in
+Increase/
+decrease in
+Major business by industry segments in 2021 (before eliminations on consolidation)
+The major business model of the Group is the integrated coal industry
+chain: i.e. coal production → coal transportation (railway, port and shipping)
+conversion of coal (power generation and coal chemical), and there
+are business intercourses between each segment. The percentages of
+gains (before elimination on consolidation) from operations of coal, power,
+transportation and coal chemical segments of the Group were 71%, 4%, 24%
+and 1% in 2021 respectively (2020: 52%, 14%, 34% and 0%).
+-
+(3) Principal businesses by industry segment
+Section IV Directors' Report (Continued)
+(1)
+compared with
+Revenue
+costs
+margin
+(22,020)
+40,699
+Railway
+29.6
+6.4
+(60,019)
+64,124
+Power generation
+percentage points
+Increased by 3.8
+5.1
+46.8
+23.1
+(225,126)
+292,661
+Coal
+%
+%
+RMB million RMB million
+previous year
+year
+year
+54.0
+24.3
+sales
+8.0
+5.3
+II.
+INDUSTRY IN WHICH THE COMPANY OPERATED DURING THE REPORTING
+PERIOD¹
+1.
+Macroeconomic environment
+Coal market environment
+34 China Shenhua Energy Company Limited
+2021 was a year of milestone in the history of China. In the face of the complicated
+domestic and international situation and various risks and challenges, the CPC Central
+Committee, with Comrade Xi Jinping at its core, has taken overall control with calm
+response. With the concerted efforts of the whole country, China has maintained its
+global leading position in economic development and COVID-19 prevention and control,
+accelerated the development of national strategic scientific and technological strengths,
+enhanced the resilience and advantages of industrial chain, deepened reform and opening
+up, powerfully and effectively guaranteed people's livelihood, and continued to promote
+ecological civilisation construction, achieving a good start to the "14th Five-Year Plan". The
+gross domestic product (GDP) for the year increased by 8.1% year-on-year, with an average
+growth of 5.1% in two years.
+22.1
+23.4
+22.3
+Power
+billion kWh
+166.45
+tonnes
+156.13
+Prepaid expenses and other current assets
+Details of the Company's material subsidiaries
+45. SUBSIDIARIES
+After the end of the reporting period, the Directors proposed a final dividend, the details of which
+are disclosed in Note 15.
+44. NON-ADJUSTING EVENTS AFTER THE REPORTING PERIOD
+For the year ended 31 December 2021
+Notes to the consolidated financial statements (Continued)
+1,278
+3,747
+1,528
+1,999
+39,067
+36,279
+3,391
+4,479
+103,590
+131,263
+3,134
+7,468
+4,644
+4,268
+31 December
+2020
+RMB million
+RMB million
+2021
+The Company's subsidiaries are unlisted. Details of the Company's material subsidiaries at the
+end of the reporting period are set out below:
+7,613
+Name of the subsidiary
+Type of
+legal entity
+39,416
+47,244
+Restricted bank deposits
+3,381
+2,146
+Time deposits with original maturity over
+three months
+10,200
+Cash and cash equivalents
+142,410
+Place of
+incorporation
+and operation
+105,609
+197,799
+176,702
+304 China Shenhua Energy Company Limited
+31,098
+31 December
+9,220
+Accounts and bills receivables
+3,890
+3,372
+Particulars of
+registered capital
+Total current assets
+296 China Shenhua Energy Company Limited
+Prepaid expenses and other current assets
+Borrowings
+Ancillary and social services; and
+Purchases of ancillary materials and spare parts;
+Construction work;
+Transportation services;
+Sales and purchases of coal;
+Power sales;
+Other than those transactions with China Energy Group, an associate of China Energy
+Group, fellow subsidiaries and associates of the Group as disclosed above, the Group
+conducts business with other government-related entities which include but are not limited
+to the following:
+The Company is ultimately controlled by the PRC government and the Group operates in an
+economic environment currently predominated by government-related entities.
+43.4 Transactions with other government-related entities in the PRC
+The Group participates in various defined contribution post-employment benefit plans
+organised by municipal and provincial governments and a supplemental defined contribution
+pension plan approved by the government for its employees. Further details of the Group's
+post-employment benefit plans are disclosed in Note 42.
+43.3 Contributions to post-employment benefit plans
+Total remuneration is included in "personnel expenses" as disclosed in Note 12.
+10
+1
+10
+1
+9
+RMB million
+2020
+Year ended 31 December
+2021
+RMB million
+Short-term employee benefits
+Post-employment benefits
+Key management personnel compensation of the Group is summarised as follows:
+Key management personnel receive compensation in the form of fees, basic salaries,
+housing and other allowances, benefits in kind, discretionary bonuses and retirement
+scheme contributions.
+Inventories
+For the year ended 31 December 2021
+Financial services arrangements.
+Accrued expenses and other payables
+Contract liabilities
+2021 Annual Report 295
+43. RELATED PARTY TRANSACTIONS (CONTINUED)
+Restricted bank deposits
+Cash and time deposits at banks
+Accounts and bills receivables
+Balances with other government-related entities, including state-controlled banks in the PRC
+3,354
+2,104
+2,406
+2,272
+8,961
+9,408
+40,808
+57,437
+74,053
+68,999
+2020
+RMB million
+Year ended 31 December
+2021
+RMB million
+Interest expenses (including amount capitalised)
+Interest income
+Transportation costs
+Power revenue
+Coal revenue
+Transactions with other government-related entities, including state-controlled banks in the
+PRC
+Having considered the potential for transactions to be impacted by related party.
+relationships, the Group's buying, pricing strategy and approval processes, and what
+information would be necessary for an understanding of the potential effect of the
+relationship on the financial statements, the Directors are of the opinion that the following
+transactions with other government-related entities require disclosure:
+These transactions are conducted in the ordinary course of the Group's business on terms
+comparable to those with other entities that are not government-related. The Group has
+established its pricing policies in respect of sale of goods and provision of services, and
+approval process for purchases of products and services. Such policies and approval process
+apply to all counterparties regardless of whether the counterparty is government-related or
+not.
+43.4 Transactions with other government-related entities in the PRC (Continued)
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+Current assets
+275
+258,390
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+2020
+2021
+2020
+31 December
+31 December
+31 December
+31 December
+2021
+2020
+2021
+31 December
+31 December
+Administration Co., Ltd.
+Guoneng Huanghua Harbour
+Taishan Power
+Guoneng Yuanhai
+Shipping Co., Ltd.
+Details of the Company's material subsidiaries (Continued)
+45. SUBSIDIARIES (CONTINUED)
+Current assets
+2,994
+812
+2,950
+7,547
+Total equity
+1,580
+1,204
+43
+46
+Non-current liabilities
+1,117
+1,313
+2,100
+3,430
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+247
+Current liabilities
+11,788
+11,579
+8,458
+7,844
+5,653
+5,129
+Non-current assets
+2,001
+2,238
+1,394
+530
+302 China Shenhua Energy Company Limited
+(647)
+89
+3,266
+982
+924
+655
+655
+interests
+Dividend paid to non-controlling
+7,670
+7,760
+3,080
+3,945
+3,247
+414
+(238)
+income for the year
+Profit and total comprehensive
+10,326
+11,686
+3,738
+5,081
+3,004
+Notes to the consolidated financial statements (Continued)
+43. RELATED PARTY TRANSACTIONS (CONTINUED)
+43.2 Key management personnel emoluments
+414
+6,175
+Net cash inflow from operating
+activities
+473
+126
+2,980
+4
+Net cash inflow/(outflow)
+(6,155)
+(6,748)
+(2,701)
+(2,832)
+(344)
+(180)
+activities
+352
+Net cash outflow from financing
+(1,290)
+(811)
+(240)
+Proportion of ownership
+interest and voting rights
+(129)
+(168)
+Net cash outflow from investing
+activities
+7,906
+8,127
+3,638
+6,052
+(2,398)
+248,061
+7,364
+11,300
+RMB million
+RMB million
+31 December
+2020
+31 December
+2021
+46. INFORMATION ABOUT THE FINANCIAL POSITION AND RESERVES OF THE
+COMPANY
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+2021 Annual Report 303
+2,075
+1,742
+6
+3
+249
+239
+Net cash inflow
+(1,045)
+(517)
+(255)
+(641)
+(152)
+(112)
+(22)
+222
+(252)
+Non-current assets
+Property, plant and equipment
+Construction in progress
+Intangible assets
+Total non-current assets
+866
+Deferred tax assets
+24,291
+24,332
+Other non-current assets
+1,655
+1,989
+Equity investments at FVTOCI
+44,741
+42,300
+(55)
+Investments in associates
+133,953
+Investments in subsidiaries
+3,678
+5,518
+1,008
+1,071
+4,702
+3,624
+44,035
+44,737
+Right-of-use assets
+123,676
+activities
+Net cash outflow from financing
+418
+2,806
+5,462
+10,211
+2,903
+5,203
+Expenses
+4,923
+4,993
+6,349
+10,393
+3,112
+2,889
+6,195
+2020
+RMB million
+2021
+RMB million
+2020
+RMB million
+2021
+RMB million
+2020
+RMB million
+RMB million
+2021
+Year ended 31 December
+Year ended 31 December
+Year ended 31 December
+11,092
+Revenue
+7,752
+Profit and total comprehensive
+753
+investing activities
+Net cash inflow/(outflow) from
+2,330
+2,383
+1,203
+632
+523
+(124)
+Net cash (outflow)/inflow from
+operating activities
+345
+437
+income for the year
+276
+101
+73
+73
+13
+Dividend paid to non-controlling
+interests
+1,556
+1,623
+544
+118
+69
+169
+100
+held by the Group
+31 December 31 December
+2021
+Current assets
+Revenue
+557
+Limited company RMB1,169 million
+Guoneng Baorixile Energy Industrial Co., PRC
+58
+100 Trading of coal; provision of
+integrated services
+550
+10
+Limited company RMB7,102 million
+PRC
+Zhunge'er Energy
+Shendong Coal Group Co., Ltd.")
+Ltd. (formerly known as "Shenhua
+100
+Ltd. (formerly known as "Shenhua
+Baorixile Energy Industrial Co., Ltd.")
+Limited company RMB4,989 million
+Guoneng Shendong Coal Group Co.,
+100 Trading of coal
+100
+Limited company RMB1,889 million
+PRC
+Guoneng Sales Group Co., Ltd.
+%
+2020
+Principal activities
+100
+10
+China Energy Bayannaoer Coal Chemical PRC
+Co., Ltd.
+Limited company
+PRC
+RMB450 million
+Coal mining and
+development; generation
+57 Coal mining; provision of
+loading and transportation
+services
+Details of the Company's material subsidiaries (Continued)
+45. SUBSIDIARIES (CONTINUED)
+For the year ended 31 December 2021
+Notes to the consolidated financial statements (Continued)
+298
+2021 Annual Report 297
+80
+60
+Limited company RMB4,670 million
+Guoneng Yuedian Taishan Power Co., PRC
+Ltd. (formerly known as "Guangdong
+Guohua Yuedian Taishan Power Co.,
+Ltd.", "Taishan Power")
+100
+100
+Limited company RMB3,024 million
+and sale of electricity
+PRC
+70
+70
+Limited company RMB2,278 million
+Guoneng Jinjie Energy Co., Ltd. (formerly PRC
+known as "Shaanxi Guohua Jinjie
+Energy Co., Ltd.")
+80 Generation and sale of
+electricity
+Generation and sale of
+electricity
+70 Generation and sale
+electricity; coal mining
+development
+loading and transportation
+services
+Coal mining; provision of
+63
+Limited company RMB2,925 million
+PRC
+Beidian Shengli Company
+Shenhua Shendong Power Co., Ltd.
+100
+10
+Note:
+Profit allocated to
+non-controlling interests
+Year ended 31 December
+2021
+Accumulated
+non-controlling interests
+RMB million
+2020
+RMB million
+31 December 31 December
+2021
+RMB million
+2020
+RMB million
+Zhunge'er Energy
+PRC
+42.24
+42.24
+1,166
+519
+2020
+15,951
+Guoneng Baorixile Energy Industrial Co., Ltd.
+PRC
+43.39
+43.39
+827
+358
+2,918
+2,291
+Yulin Shenhua Energy Co., Ltd.
+PRC
+49.90
+49.90
+783
+14,853
+2021
+31 December 31 December
+Proportion of ownership
+interest and voting rights held
+by non-controlling interest
+Coal mining and
+development; generation
+and sale of electricity
+Coal mining and
+development; generation
+and sale of electricity
+70 Coal mining and
+100
+development; generation
+and sale of electricity
+Provision of transportation
+services
+100 Provision of financial lease
+services
+100
+Provision of transportation
+services
+100
+Coal mining and
+development
+100 Coal chemical
+Tianjin Yuanhua Shipping Co., Ltd., which formerly was an associate of the Company, became a subsidiary of Guoneng
+Yuanhai Shipping Co., Ltd. as a result of the capital injection into Guoneng Yuanhai Shipping Co., Ltd using the total equity
+interests held by the Company and the other shareholder in Tianjin Yuanhua Shipping Co., Ltd..
+2021 Annual Report 299
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+45. SUBSIDIARIES (CONTINUED)
+Details of the Company's material subsidiaries (Continued)
+The above table lists subsidiaries of the Group which, in the opinion of the Directors, principally
+affected the results or assets of the Group. To give details of other subsidiaries would, in the
+opinion of the Directors, result in particulars of excessive length.
+As at 31 December 2021, Shenhua Oversea Capital had a total USD500 million bond (Note 32).
+Other than Shenhua Oversea Capital, none of the subsidiaries had issued any debt securities at
+the end of the year.
+Details of non-wholly owned subsidiaries that have material non-controlling interests
+Summarised financial information in respect of each of the Group's subsidiaries that has material
+non-controlling interests is set out below. The summarised financial information below represents
+amounts before intragroup eliminations.
+Name of the subsidiary
+Place of
+incorporation
+and operation
+Name of the subsidiary
+298
+Place of
+incorporation
+and operation
+Type of
+legal entity
+100
+00
+100
+AUD400 million
+Limited company
+Australia
+Shenhua Australia Holding Pty Ltd.
+Oversea Capital")
+& Investment Co., Ltd. ("Shenhua
+Investment holding
+100
+100
+HKD5,252 million
+Watermark Company
+China Shenhua Overseas Development Hong Kong, China Limited company
+%
+2020
+2021
+Principal activities
+held by the Group
+31 December 31 December
+Proportion of ownership
+interest and voting rights
+Particulars of
+registered capital
+Type of
+legal entity
+Place of
+incorporation
+and operation
+Name of the subsidiary
+Details of the Company's material subsidiaries (Continued)
+45. SUBSIDIARIES (CONTINUED)
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+%
+China Shenhua Energy Company Limited
+Australia
+AUD350 million
+RMB834 million
+Limited company
+PRC
+Guoneng Zhunneng Group Co., Ltd.
+Xinshuo Railway Co., Ltd.")
+(formerly known as "Shenhua
+00
+100
+Limited company RMB7,450 million
+PRC
+Guoneng Xinshuo Railway Co., Ltd.
+10
+100
+Limited company
+Limited company RMB2,500 million
+(Tianjin) Finance Lease Co., Ltd.
+100
+100
+Limited company RMB11,700 million
+Guoneng Baoshen Railway Group Co., PRC
+Ltd. (formerly known as "Shenhua
+Baoshen Railway Group Co., Ltd.")
+20
+70
+USD63 million
+Limited company
+Indonesia
+PT GH EMM Indonesia
+100
+100
+PRC
+100 Provision of transportation
+00
+100
+electricity; trading of coal
+(formerly known as "Shenhua
+Generation and sale of
+51
+66
+Limited company RMB3,101 million
+PRC
+Guoneng Sichuan Energy Co., Ltd.
+electricity
+Generation and sale of
+41
+41
+Limited company RMB1,561 million
+Sichuan Energy Co., Ltd.")
+PRC
+electricity
+Generation and sale of
+51
+Limited company RMB1,834 million
+Hebei Guohua Cangdong Power Co., Ltd. PRC
+%
+%
+2020
+2021
+Principal activities
+held by the Group
+31 December 31 December
+interest and voting rights
+Particulars of
+registered capital
+Dingzhou Power
+Shenhua Fujian Energy Co., Ltd.
+PRC
+Limited company RMB3,280 million
+Limited company RMB5,003 million
+PRC
+Guoneng Railway Transportation Co.,
+Ltd.
+Coal chemical
+100
+100
+Limited company RMB5,132 million
+51 Provision of transportation
+services
+51
+Limited company RMB5,948 million
+PRC
+Guoneng Yuanhai Shipping Co., Ltd.
+(formerly known as "Shenhua
+Zhonghai Shipping Co., Ltd.") (Note)
+Guoneng Baotou Coal Chemical Co., Ltd. PRC
+known as "Shenhua Huanghua
+Harbour Administration Co., Ltd.")
+70 Provision of harbour and
+port services
+Administration Co., Ltd. (formerly
+70
+Limited company RMB6,790 million
+PRC
+PC
+Guoneng Huanghua Harbour
+Provision of transportation
+services
+53
+53
+Limited company RMB15,231 million
+PRC
+Guoneng Shuohuang Railway
+Development Co., Ltd.
+100 Generation and sale of
+electricity
+00
+100
+Proportion of ownership
+2,478
+51
+Dingzhou Power
+(1,947)
+(155)
+(47)
+2021 Annual Report 301
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+45. SUBSIDIARIES (CONTINUED)
+Details of the Company's material subsidiaries (Continued)
+Dingzhou Power
+Guoneng Jinjie Energy
+Co., Ltd
+31 December
+31 December
+2021
+RMB million
+2020
+RMB million
+313
+(799)
+222
+Net cash inflow/(outflow)
+841
+Net cash outflow from investing
+activities
+(452)
+(252)
+(969)
+(59)
+31 December
+2021
+(373)
+activities
+(46)
+(46)
+(331)
+(2,127)
+(1,136)
+(799)
+Net cash outflow from financing
+31 December
+2020
+31 December
+Guoneng Shuohuang Railway
+Development Co., Ltd.
+34,437
+Current liabilities
+2,129
+2,041
+2,196
+915
+3,955
+34,631
+3,628
+100
+251
+788
+854
+4,674
+4,447
+Total equity
+Non-current liabilities
+1,354
+8,739
+4,158
+31 December
+2021
+2020
+RMB million
+RMB million
+RMB million
+RMB million
+8,594
+Current assets
+934
+4,693
+2,036
+9,328
+8,118
+Non-current assets
+3,994
+796
+239
+1,613
+(501)
+Non-current liabilities
+560
+533
+4,016
+505
+436
+181
+1,452
+Total equity
+34,851
+6,480
+4,992
+4,965
+4,135
+Year ended 31 December
+2021
+37,469
+RMB million
+1,217
+1,827
+2,064
+25,857
+2,757
+1,363
+1,506
+733
+Non-current assets
+1,000
+16,172
+9,566
+5,134
+5,112
+5,035
+Current liabilities
+9,241
+6,751
+16,278
+2,561
+2020
+RMB million
+Year ended 31 December
+1,815
+825
+1,516
+571
+Dividend paid to non-controlling
+interests
+21
+1,240
+21
+943
+484
+40
+401
+Net cash inflow/(outflow) from
+operating activities
+720
+143
+Year ended 31 December
+2021
+RMB million
+2,655
+Profit and total comprehensive
+2020
+RMB million
+2021
+RMB million
+2020
+RMB million
+14,892
+11,756
+5,440
+4,050
+income for the year
+4,126
+Expenses
+11,465
+9,764
+2,960
+2,702
+2,365
+1,888
+2,666
+2,800
+(89)
+9,006
+16,773
+interests
+Individually immaterial subsidiaries with non-controlling
+3,563
+3,624
+475
+16,532
+502
+30.00
+PRC
+Guoneng Huanghua Harbour Administration Co., Ltd.
+1,551
+1,474
+109
+30.00
+23
+300
+69,074
+2020
+2021
+2020
+31 December
+31 December
+Yulin Shenhua Energy Co., Ltd.
+China Shenhua Energy Company Limited
+Guoneng Baorixile Energy
+Industrial Co., Ltd.
+31 December
+31 December
+2021
+Zhunge'er Energy
+Details of the Company's material subsidiaries (Continued)
+45. SUBSIDIARIES (CONTINUED)
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+65,384
+31 December 31 December
+2020
+2021
+RMB million
+20.00
+PRC
+3,172
+939
+1,196
+10,303
+30.00
+PRC
+2,781
+Guoneng Jinjie Energy Co., Ltd
+1,524
+246
+(142)
+59.50
+59.50
+PRC
+1,666
+20.00
+Guoneng Shuohuang Railway Development Co., Ltd.
+47.28
+Taishan Power
+3,026
+3,698
+83
+369
+49.00
+PRC
+49.00
+Guoneng Yuanhai Shipping Co., Ltd.
+17,057
+17,462
+3,627
+3,671
+47.28
+PRC
+RMB million
+30.00
+RMB million
+35,330
+34,480
+Year ended 31 December
+Year ended 31 December
+Year ended 31 December
+2021
+RMB million
+2020
+RMB million
+2020
+RMB million
+2021
+RMB million
+2020
+RMB million
+2021
+RMB million
+3,686
+RMB million
+RMB million
+Revenue
+Expenses
+20,585
+3,919
+7,369
+9,758
+3,564
+22,008
+RMB million
+2020
+RMB million
+2017
+RMB million
+For the year ended 31 December
+2018
+RMB million
+2019
+RMB million
+2021 Annual Report 309
+Operating cost
+(8,948)
+(8,988)
+(9,854)
+(9,115)
+expenses
+General and administrative
+(581)
+(555)
+(640)
+(725)
+(612)
+Selling expenses
+96,060
+70,889
+76,892
+90,424
+88,286
+335,216
+(239,156)
+(162,374)
+(164,979)
+(173,677)
+(160,460)
+233,263
+241,871
+264,101
+248,746
+Gross profit
+2021
+RMB million
+Revenue
+CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
+OTHER COMPREHENSIVE INCOME
+The finance information below is extracted from the financial statement prepared by the Group in
+accordance with International Financial Reporting Standards:
+At 31 December 2021, the aggregate amount of retained earnings determined in accordance with
+the China Accounting Standards available for distribution to equity holders of the Company was
+RMB179,811 million (2020: RMB183,374 million).
+According to the Company's Articles of Association, the amount of retained earnings available
+for distribution to equity holders of the Company is the lower of the amount determined in
+accordance with the China Accounting Standards and the amount determined in accordance with
+IFRSS after the appropriation to reserves as detailed in Note (iii) to the consolidated statement of
+changes in equity.
+46. INFORMATION ABOUT THE FINANCIAL POSITION AND RESERVES OF THE
+COMPANY (CONTINUED)
+For the year ended 31 December 2021
+Notes to the consolidated financial statements (Continued)
+306 China Shenhua Energy Company Limited
+286,906
+181,387
+1,134
+482
+19,137
+84,766
+At 31 December 2021
+47. POSSIBLE IMPACT OF AMENDMENTS, NEW STANDARDS AND
+2,165
+(3,839)
+3,839
+(35,962)
+(35,962)
+21
+26
+256
+(235)
+33,599
+33,263
+336
+and production funds
+own shares (Note 38)
+Dividend declared (Note 15)
+Appropriation of maintenance
+and production funds
+Utilisation of maintenance
+(2,165)
+(9,119)
+INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE FOR THE YEAR ENDED
+31 DECEMBER 2021
+Annual Improvements to IFRSS 2018-2020 Cycle
+Summary of Major Financial Information.
+for the Recent Five Years
+Section XII
+308 China Shenhua Energy Company Limited
+Approval date of the Board of Directors for submission: 25 March 2022
+The annual report for the year 2021 published on the websites of SSE
+and the HKEX
+The original copies of all documents and announcements of the Company
+publicly disclosed in the newspapers designated by the CSRC during
+the reporting period
+The original copy of the audit report sealed by the accounting firm and
+signed and sealed by the certified public accountant
+Chief Financial Officer, and the Person-in-charge of the Accounting
+Department
+The annual report for the year 2021 signed by the Chairman
+The financial statements signed and sealed by the Chairman, the
+Documents Available for
+Inspection
+Section XI Documents Available for Inspection
+2021 Annual Report 307
+The Group is in the process of making an assessment of what the impact of these developments is
+expected to be in the period of initial application. So far it has concluded that the adoption of them
+is unlikely to have a significant impact on the consolidated financial statements.
+Up to the date of issue of these financial statements, the IASB has issued a number of
+amendments or standards, which are not yet effective for the year ended 31 December 2021
+and which have not been adopted in these financial statements. These developments include the
+following which may be relevant to the Group.
+1 January 2023
+1 January 2023
+Amendments to IAS 8, Definition of Accounting Estimates
+Amendments to IAS 1 and IFRS Practice Statement 2, Disclosure of Accounting 1 January 2023
+Polices
+1 January 2023
+1 January 2022
+1 January 2022
+1 January 2022
+1 January 2022
+on or after
+Effective for
+accounting
+periods
+beginning
+Amendments to IAS 37, Onerous Contracts - Cost of Fulfilling a Contract
+Amendments to IAS 1, Classification of Liabilities as Current or Non-current
+Amendments to IAS 16, Property, Plant and Equipment: Proceeds before
+Intended Use
+Amendments to IFRS 3, Reference to the Conceptual Framework
+Amendments to IAS 12, Deferred tax related to assets and liabilities arising
+from a single transaction
+Research and development costs
+894
+(454)
+10,027
+9,343
+Non-controlling interests
+51,607
+35,849
+41,707
+44,137
+47,795
+Equity holders of the Company
+Profit for the year attributable to:
+61,009
+43,984
+49,777
+54,164
+57,138
+Profit for the year
+(2,583)
+(2,263)
+(18,161)
+(15,378)
+(15,145)
+8,070
+8,135
+9,402
+Earnings per share (RMB)
+310
+Section XII Summary of Major Financial Information
+for the Recent Five Years (Continued)
+CONSOLIDATED STATEMENT OF FINANCIAL POSITION
+As at 31 December
+2017
+2018
+2019
+2020
+RMB million
+(15,977)
+RMB million
+RMB million
+2021
+RMB million
+Total non-current assets
+438,958
+Cancellation of repurchased
+1.803
+2.097
+2.219
+2.403
+-Basic/diluted
+RMB million
+(341)
+(16,155)
+79,170
+Other expenses
+(2,561)
+(524)
+(139)
+(152)
+Credit impairment losses
+893
+778
+708
+744
+2.597
+Other income
+(955)
+(194)
+(2)
+(2,844)
+(1,880)
+Other gains and losses
+(2,499)
+(1,362)
+(940)
+(1,262)
+(3,504)
+(278)
+(1,090)
+59,362
+64,922
+70,141
+73,293
+Profit before income tax
+(874)
+947
+433
+448
+534
+Income tax expense
+Share of results of associates
+(5,421)
+(4,416)
+Finance costs
+2,492
+1,684
+1,170
+1,479
+1,205
+Interest income
+(1,103)
+(3,294)
+for the year
+311
+336
+Accounts and bills payables
+Borrowings
+Current liabilities
+31 December
+2020
+RMB million
+RMB million
+2021
+31 December
+46. INFORMATION ABOUT THE FINANCIAL POSITION AND RESERVES OF THE
+COMPANY (CONTINUED)
+For the year ended 31 December 2021
+Notes to the consolidated financial statements (Continued)
+358,330
+390,675
+402,287
+Total current assets
+132,644
+233,296
+160,494
+172,229
+208,310
+Total assets
+571,602
+Accrued expenses and other payables
+Current portion of lease liabilities
+Current portion of long-term liabilities
+Income tax payable
+Contract liabilities
+Non-current liabilities
+316,596
+315,459
+Total assets less current liabilities
+68,535
+57,069
+108,167
+140,730
+Net current assets
+Total current liabilities
+591,626
+84
+2,636
+2,540
+409
+588
+133
+344
+8,611
+96,021
+127,896
+8,961
+273
+90
+Borrowings
+563,083
+610,597
+305,541
+331,693
+356,077
+364,203
+380,038
+Non-controlling interests
+73,564
+77,144
+64,141
+65,384
+69,183
+Total equity
+379,105
+408,837
+420,218
+429,587
+449,221
+China Shenhua Energy Company Limited
+中国神华能源股份有限公司
+CHINA SHENHUA ENERGY COMPANY LIMITED
+Hang Seng Corporate
+Sustainability Index
+Series Member 2021-2022
+holders of the Company
+Total equity attributable to equity
+449,221
+429,587
+Total current liabilities
+115,905
+123,381
+95,483
+69,493
+91,748
+Total non-current liabilities
+76,592
+59,408
+47,382
+562,904
+63,824
+Total liabilities
+192,497
+182,789
+142,865
+133,317
+161,376
+Net assets
+379,105
+408,837
+420,218
+69,628
+Total comprehensive income
+Lease liabilities
+Accrued reclamation obligations
+Attributable share of Finance
+4,880
+(1,595)
+(25,061)
+(256)
+(4,880)
+1,595
+... - (25,061)
+35,334
+35,283
+Company's retained
+51
+and production funds
+Dividend declared (Note 15)
+Appropriation of maintenance
+and production funds
+Utilisation of maintenance
+(Note 38)
+Purchase of own shares
+for the year
+Total comprehensive income
+Other comprehensive income
+Profit for the year
+51
+- 51 -
+(256)
+35,283
+earning
+1,505
+336
+Other comprehensive income
+33,263
+33,263
+Profit for the year
+289,248
+185,760
+1,134
+146
+17,463
+8
+(256)
+At 1 January 2021
+289,248
+185,760
+1,134
+146
+17,463
+(256)
+85,001
+At 31 December 2020
+1,513
+85,001
+Long-term liabilities
+35,283
+170,748
+19,890
+19,869
+286,906
+38
+309,138
+306,775
+7,458
+8,684
+Total equity
+Reserves
+Share capital
+289,248
+Equity
+67
+4,120
+729
+462
+2,054
+2,080
+1,619
+802
+4,156
+53
+Total non-current liabilities
+Deferred tax liabilities
+Net assets
+277,718
+306,775
+2021 Annual Report 305
+1,126
+96
+95
+20,748
+85,001
+At 1 January 2020
+RMB million RMB million
+Total
+earnings
+Retained
+309,138
+402,589
+RMB million
+income
+reserves
+RMB million
+RMB million RMB million
+Statutory comprehensive
+Treasury
+shares
+Share
+premium
+Other
+46. INFORMATION ABOUT THE FINANCIAL POSITION AND RESERVES OF THE
+COMPANY (CONTINUED)
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+Capital
+and other
+reserves
+RMB million
+receivable
+sales receivables
+(5)
+Long-term payables
+0.9
+5,256
+1.1
+6,864
+Contract liabilities
+43.0
+1.1
+6,313
+1.5
+9,028
+Income tax payable
+increase in coal sales and
+average sale price
+The recognition of long-term
+payables for mining rights
+after reassessment of the
+mining rights of certain mines
+Increase in equipment leasing
+coal payments due to the
+30.6 Increase in provision in advance
+enterprise income tax
+provision for unpaid
+Increase in provision in
+added tax; increase in the
+payroll payable
+as resource tax and value-
+53.6 Increase in taxes payable such
+8,025
+under construction
+1.3
+0.5
+Section IV Directors' Report (Continued)
+42 China Shenhua Energy Company Limited
+As of 31 December 2021, the distributable reserves of the Company to shareholders
+were RMB179,811 million.
+Distributable reserves to shareholders
+The Group is free from seizure and detention of main assets. As at the end of the
+reporting period, the balance of the restricted assets of the Group was RMB5,294
+million, among which, security deposits for bank acceptance bills, relevant deposits
+related to port operations, deposit for letter of credit and mine geographical
+environment governance recovery fund amounted to RMB4,479 million in total;
+other restricted assets mainly consisted of fixed assets secured and guaranteed for
+acquiring bank borrowings.
+Restrictions on main assets
+As of 31 December 2021, the total offshore assets of the Group (including Hong
+Kong, Macau and Taiwan) amounted to RMB26,795 million, representing 4.4% of total
+assets, which were mainly composed of the power generation assets in Indonesia,
+and assets from U.S. dollar-denominated bonds issued in Hong Kong, the PRC.
+4.
+3.
+Offshore assets
+2.
+Section IV Directors' Report (Continued)
+41
+2021 Annual Report
+149.2
+0.1
+606
+0.2
+1,510
+Lease liabilities
+201.6
+2,661
+payable of power plants
+equipment and materials
+21.5 Increase in project funds,
+20.1
+112,880
+25.7
+156,706
+Cash and cash equivalents
+months
+(84.8) Maturity of certain time
+deposits
+maturity over three
+2.0
+11,186
+33
+0.3
+1,701
+Time deposits with original
+restoration fund
+environmental treatment and
+Increase in provision for mine
+32.1
+0.6
+3,391
+0.7
+38.8
+Increase in net cash inflow
+Assets classified as held for
+sale
+294
+project during the reporting
+period
+related to the Watermark
+Section IV Directors' Report (Continued)
+classified as held for sale
+Power; mainly are assets
+delivery of Fuping Thermal
+(89.4) The completion of equity
+activities; maturity of certain
+time deposits
+generated from operating
+3.4
+(IV) Operation Results by Business Segment
+18,949
+29,109
+Accrued expenses and other
+payable
+5.1
+28,980
+5.8
+35,216
+Accounts and bills payables
+0.5
+2,783
+0.0
+4.8
+4,479
+1.
+(1)
+(21.7) The obtaining of the coal
+investigation and exploration
+permit by Taigemiao South
+Area of Xinjie Mining Area,
+and the transfer of relevant
+prepayment of resources to
+exploration and evaluation
+assets for accounting
+19.6 The increase of land use right
+assets related to Huangda
+Railway
+made by the Group, and the
+increase in intangible assets
+made by the Group
+replacement indicators
+19.6 The purchase of coal capacity
+permit by Taigemiao South
+Area of Xinjie Mining Area
+investigation and exploration
+N/A The obtaining of the coal
+Railway and certain power
+generation projects, and the
+transfer to property, plant
+and equipment
+(34.2) The completion of and
+operation of Huangda
+and certain power generation
+projects
+10.7 The completion of and
+operation of Huangda Railway
+40 China Shenhua Energy Company Limited
+6.4
+35,890
+4.6
+28,089
+Other non-current assets
+3.3
+18,597
+3.6
+Section IV Directors' Report (Continued)
+22,240
+Amount at
+the end of the
+Percentage of
+0.5
+2,856
+0.6
+3,568
+Deferred tax assets
+Main reasons for changes
+year
+%
+%
+%
+previous year
+previous year
+the year
+year
+Items
+the previous
+the end of the
+the end of the
+year compared
+to the end of
+Change of the
+amount at the
+end of the
+total assets at
+Amount at
+Percentage of
+total assets
+at the end of
+Right-of-use assets
+0.7
+3,888
+loss for relevant assets
+Accounts and bills
+13,607
+2.2
+11,759
+2.1
+15.7
+Increase in coal and electricity
+44 China Shenhua Energy Company Limited
+In 2021, as the coal market demand was strong and coal prices rose, the
+average coal sales price of the Group was RMB588/tonne (exclusive of tax, the
+same below) (2020: RMB410/tonne), representing a year-on-year increase of
+43.4%.
+In 2021, the Group made full use of the advantages of the integrated industrial
+chain, actively organised purchased coal sources, coordinated transportation
+and inventory management, and ensured supply and increased supply for
+customers. During the year, sales volume of coal of the Group reached 482.3
+million tonnes (2020: 446.4 million tonnes), representing a year-on-year increase
+of 8.0%. Of them, the sales volume of domestic seaborne coal was 262.9
+million tonnes, accounting for 31.1% of the coal transportation volume of 845
+million tonnes in national major ports; the sales volume for the top five external
+coal customers was 191.3 million tonnes, accounting for 39.7% of the total coal
+sales volume; in particular, the sales volume of China Energy Group, the largest
+customer, was 167.2 million tonnes, representing 34.7% of the total coal sales
+volume. The top five external coal customers are mainly electrical, chemical and
+coal trading companies.
+The coal sold by the Group is mainly self-produced coal. In order to fulfill the
+needs of customers and adequately make use of railways transportation, the
+Group also purchased the coal from third parties in the surrounding areas of
+the self-owned mines and railways for blending to produce different kinds
+and levels of coal products and sell them to external customers. The Group
+implemented specialised division management. Production enterprises are
+responsible for production of coal, the railway, port and shipping companies of
+the Company are mainly responsible for transportation of coal, and the Trading
+Group of the Company is mainly responsible for sales of coal. Customers
+are involved in different industries, such as power, metallurgy, chemical and
+construction materials.
+Sales of coal
+(2)
+Section IV Directors' Report (Continued)
+2021 Annual Report 43
+The Group has independently operated railway transportation for collection and
+distribution channels. These channels are centralised and distributed in the rim
+of self-owned core mines, and can satisfy the transportation needs in the core
+mines.
+Steady progress has been made in the acquisition of mining rights. Shenhua
+Xinjie Energy Co., Ltd, the holding subsidiary of the Company, has obtained
+the detailed exploration license of coal resources in Taigemiao south area
+of Dongsheng Coal Field in Inner Mongolia issued by the Ministry of Natural
+Resources. The acquisition of the surrounding resource certificates of
+Shangwan Mine, Bulianta Mine and Wanli No. 1 Mine of Shendong Mines
+is proceeding in an orderly manner; the continuation of mining licenses for
+Shenshan open-cut mine and Shuiquan open-cut mine has been completed.
+The approval of land acquisition for coal mining carried out in an orderly
+manner. The approval for grassland acquisition and occupation of 667 hectares
+of continuous production land of Beidian Shengli No. 1 open-cut mine has
+been obtained; the pre-approvals of construction land for Baorixile open-cut
+mine's 600 hectares, Heidaigou open-cut mine's 321 hectares and Haerwusu
+open-cut mine's 289 hectares of continuation land for excavation site have been
+obtained.
+The majority of the coal products produced and sold by the Group were thermal
+coal. In 2021, the Group continuously optimised the production organisation and
+operation, further strengthened the safety and environmental management of
+coal mines, ensured stable and high output of coal mines, and fully guaranteed
+the coal supply. The annual output of commercial coal was 307.0 million tonnes
+(2020: 291.6 million tonnes), representing a year-on-year increase of 5.3%. The
+roadway development at underground mines reached 444 thousand meters
+(2020: 426 thousand meters), representing a year-on-year increase of 4.2%,
+of which, the roadway development at Shendong Mines was 428 thousand
+meters.
+Production, operation and construction
+Items
+year
+the year
+previous year
+0.8
+4,651
+Intangible assets
+00
+0.0
+0.7 0.0
+4,000
+Exploration and evaluation
+assets
+6.1
+39,845
+Coal segment
+4.3
+Construction in progress
+43.7
+238,198
+43.2
+263,656
+Property, plant and
+equipment
+Main reasons for changes
+year
+%
+%
+previous year
+26,201
+24.9 Provision for credit impairment
+loss and asset impairment
+548
+The Group formulated capital management policies that aimed to achieve maximized
+interests for the shareholders and maintained a sound capital structure as well as
+reducing the costs of capital under the premise of safeguarding the operation on
+an on-going basis, and the capital was invested in accordance with the policy of the
+Company.
+Cash flow
+5.
+(II)
+Section IV Directors' Report (Continued)
+38 China Shenhua Energy Company Limited
+The Company is committed to highlighting scientific research practice, building
+a career platform, introducing and training a group of leading scientific and
+technological talents, young scientific and technological backbones, high-level
+innovation teams and outstanding engineers. As of the end of 2021, the
+Company has 1 national key laboratory, 1 academician expert workstation, 6
+post-doctoral expert workstations, and takes the lead in undertaking 7 national
+key R&D projects.
+0
+567
+394
+1,110
+30-40 years old (including 30 years old, excluding 40 years old)
+40-50 years old (including 40 years old, excluding 50 years old)
+50-60 years old (including 50 years old, excluding 60 years old)
+60 years old and above
+Under 30 years old (excluding 30 years old)
+Number
+Age structure of research and development personnel
+Category of age structure
+76
+High School and below
+1,819
+286
+34
+Junior college
+Undergraduate
+(1)
+(2)
+(3)
+Net cash inflow from operating activities: net cash inflow in 2021 was
+RMB94,575 million (net cash inflow in 2020: RMB81,289 million), representing
+a year-on-year increase of 16.3%; excluding the influence of Finance Company,
+the net cash inflow generated from operating activities of the Group increased
+by 50.9% year-on-year, mainly due to the increase of cash inflow caused by the
+increase of income.
+Restricted bank deposits
+the previous
+the end of the
+the end of the
+the end of the at the end of
+total assets at
+Amount at
+total assets
+Amount at
+Percentage of
+Master degree candidate
+Unit: RMB million
+Change of the
+amount at the
+end of the
+year compared
+Percentage of
+1. Assets and liabilities
+(III) Analysis on Assets and Liabilities
+Section IV Directors' Report (Continued)
+2021 Annual Report 39
+Not applicable
+Explanation on Significant Change of Profit Caused by Non-principal Business
+Applicable
+Net cash outflow in financing activities: net cash outflow in 2020 was
+RMB43,731 million net cash outflow in (net cash outflow in 2020: RMB42,079
+million), representing a year-on-year increase of 3.9%, which was mainly
+attributable to the increase in dividends paid by the Group.
+Net cash outflow in investing activities: net cash outflow in 2021 was
+RMB6,844 million (net cash outflow in 2020: RMB32,048 million), representing
+a year-on-year change of 121.4%, which was mainly attributable to the due
+recovery of bank financial products held by the Company in the previous
+year and the increase in cash expenditure for the construction of long-term
+assets, such as fixed assets, intangible assets, etc. during the year.
+to the end of
+Doctoral candidate
+404
+Educational structure of research and development personnel
+Category of educational structure
+The main reasons for the year-on-year increase in interest income: an increase
+in the average balance of deposits of the Group with financial institutions other
+than Finance Company; and deconsolidation of Finance Company, the interest
+income incurred from the deposits which was deposited by the Group in the
+Finance Company would no longer be offset on a consolidated basis.
+The main reason for the year-on-year increase in other income: the increase in
+government subsidies related to daily activities obtained by the Group.
+The credit impairment losses during the reporting period, are mainly: as at
+the end of the reporting period, the Group conducted impairment test on the
+receivables with long ages, and made bad debt provision according to the
+impairment test results.
+Other gains and losses during the reporting period were aggregated as losses,
+mainly: as at the end of the reporting period, certain coal subsidiaries conducted
+impairment assessment on production equipment and spare tools and spare
+parts with indications of impairment, and made provision for impairment
+according to the impairment assessment results.
+Number
+(7)
+(6)
+(5)
+(4)
+(3)
+The main reasons for the year-on-year increase in financial costs: deconsolidation
+of Finance Company, the interest expenses of the Finance Company would no
+longer be offset by the Group; and the increase in the average loan balance
+of the Group led to an increase in interest expenses.
+(2)
+Expenses and other items of income statement
+3.
+Section IV Directors' Report (Continued)
+2021 Annual Report 35
+In 2021, the total procurement from the top five suppliers of the Group
+amounted to RMB37,394 million, accounting for 16.8% (less than 30%) of
+the total procurement for the year, among which, the procurement from its
+largest supplier amounted to RMB20,614 million, representing 9.3% of the total
+procurement for the year.
+Major suppliers
+Except for the above, as far as the Board of the Company is aware, none of the
+Directors of the Company, their close associates or shareholders holding more
+than 5% of shares of the Company has any interest in the top five customers
+of the Group. The Group has maintained long-term cooperative relationship
+with the top five customers. The Company is of the view that such cooperative
+relationship would not cause material risk to the business of the Group.
+In 2021, the total revenue from the top five customers of the Group amounted
+to RMB135,554 million, accounting for 40.4% of the total revenue of the Group,
+including the revenue of the Group from its largest customer of RMB107,461
+million, accounting for 32.1% of the total revenue of the Group. The largest
+customer of the Group was China Energy and its subsidiaries, the controlling
+shareholder of the Company. The Group mainly sells coal products and provides
+coal transportation service to China Energy Group.
+Major customers
+(6)
+(1) The main reason for the year-on-year increase in R&D expenses: the increase in
+R&D expenses of projects such as smart mines.
+The main reason for the year-on-year decrease in the profit and loss attributable
+to associates: the year-on-year decrease in the Company's investment income
+from power associates.
+(8)
+36 China Shenhua Energy Company Limited
+3.4
+2,619
+Number of research and development personnel in the Group
+Ratio of research and development personnel to the total number
+of persons (%)
+(2) Research and development personnel
+The main reason for the year-on-year increase in income tax: the increase of
+pre-tax profit of the Group this year.
+2021 Annual Report 37
+During the reporting period, the R&D projects carried out by the Group mainly
+include: research on technologies and equipment related to smart mines;
+demonstration project of high-efficiency and low-emission coal-fired boiler, CO₂
+capture and storage project after combustion in coal-fired power plant, research
+and application of key technology innovation of smart power plant based on
+CPS, and research on the detection and application of heavy-haul railway based
+on geographic spatio-temporal big data technology, research on the expanding
+test and engineering application research project of mobile blocking of
+heavy-haul railway, research on the key technologies of all-weather automatic
+control of stacking and reclaiming under complex working conditions in coal
+port, etc..
+In 2021, the research and development expenditure of the Group amounted
+to RMB3,347 million (2020: RMB2,149 million), representing a year-on-year
+increase of 55.7%; the research and development expenditure accounted for
+1.0% of the revenue (2020: 0.9%), representing a year-on-year increase of 0.1
+percentage point, which was mainly due to the Group's increasing research and
+development expenditure, strengthening scientific and technological innovation
+capability, actively carrying out collaborative innovation of "Industry-University-
+Research" and facilitating the transformation and upgrade of the Company
+under the guidance of innovation-driven development strategy and surrounding
+the three major areas of coal green development, coal clean utilization and coal
+clean transformation.
+25.3
+1.0
+3,347
+Section IV Directors' Report (Continued)
+2,499
+848
+Section IV Directors' Report (Continued)
+4.
+(1) Research and development expenditure
+Unit: RMB million
+Research and development expenditure
+Expensed research and development expenditure in the period
+Capitalised research and development expenditure in the period
+Total research and development expenditure
+Percentage of total research and development expenditure to
+revenue (%)
+Ratio of capitalised research and development expenditure (%)
+Raw materials fuel
+139.6
+Unit production cost of
+7.4
+self-produced coal
+149.9
+28.2
+West Inner Mongolia Region
+4.1
+Rising electricity prices in
+and power
+Personnel expenses
+Change Main reasons for changes
+%
+36.6
+27.1
+2020
+22.84
+Unit: RMB/tonne
+27.8
+999
+(828)
+171
+17.1
+Total
+2021
+283,734 (206,941)
+27.1
+183,081
+(140,804)
+42,277
+23.1
+Unit production cost of self-produced coal
+76,793
+23.20
+Repairs and
+maintenance
+101
+357
+347
+2.9
+Inner Mongolia
+8.86
+7.59
+16.7
+8.01
+6.90
+16.1
+301
+224
+34.4
+Henan
+4.88
+4.41
+10.7
+4.56
+4.12
+10.7
+295
+301
+(2.0)
+Sichuan
+6.10
+3.96
+54.0
+5.61
+3.60
+19.8
+Hebei
+16.46
+19.9
+1.6
+21.76
+21.43
+1.5
+323
+320
+0.9
+Shaanxi
+32.29
+26.07
+23.9
+29.66
+23.88
+24.2
+55.8
+274
+(1.1)
+Guangdong
+30.52
+21.68
+40.8
+28.67
+20.21
+41.9
+391
+365
+7.1
+Fujian
+17.19
+14.34
+277
+424
+382
+11.0
+(1)
+Power segment
+In 2021, the sales volume of purchased coal by the Group was 169.6
+million tonnes (2020: 150.4 million tonnes), representing a year-on-year
+increase of 12.8%, accounting for 35.2% of the Group's total sales
+volume (2020: 33.7%). The costs of coal purchased from third parties
+for the year were RMB102,865 million (2020: RMB48,742 million),
+representing a year-on-year increase of 111.0%.
+The coal purchased from third parties and sold by the Company includes
+coal purchased from the surrounding areas of the self-owned mines and
+railways, domestic trading coal, imported and re-exported coal.
+Cost of coal purchased from third parties
+4
+2.
+Section IV Directors' Report (Continued)
+2021 Annual Report 49
+Other costs consist of the following three components: (1) expenses
+directly related to production, including coal preparation and processing
+expenses, and mining engineering expenses, etc., accounting for 63%;
+(2) auxiliary production expenses, accounting for 18%; (3) land requisition
+and surface subsidence compensation, environmental protection
+expenses and tax, accounting for 19%.
+(6.5)
+56.5
+52.8
+Other costs
+Production and operations
+mine production equipment
+18.1
+18.8
+22.2
+Depreciation and
+amortisation
+open-cut mines
+overhaul of some equipment of
+7.4
+9.4
+maintenance costs and
+Increase in daily repair and
+salary and social security
+contributions
+employees; increase in
+31.7 Increase in the number of
+lead to the rise of electricity
+charge
+Increase in purchase of coal
+10.1
+In 2021, the Group made every effort to ensure the coal supply of coal-fired
+power plants, strictly controlled the number of non-stop units and ensured the
+safety and stability of power supply. The Group accelerated the construction
+and operation of new units with large capacity, high parameters and ultra-low
+emissions, and further optimized the layout of power business. The Group
+realised a total power output dispatch of 156.13 billion kWh throughout the year,
+accounting for 1.9% of 8,312.8 billion kWh¹ of the total power consumption
+of the society in the corresponding period, of which the market-based trading
+power reached 98.06 billion kWh, accounting for 62.8% of the total power
+output dispatch.
+Source: China Electricity Council
+4.9
+327
+343
+23.0
+123.27
+151.64
+22.8
+131.85
+161.86
+(1) coal-fired power
+%
+%
+%
+Change
+The Group promoted the development of its new energy business by
+participating in the establishment of industrial investment funds and developing
+new energy projects. The Beijing Guoneng New Energy Industrial Investment
+Fund and the Beijing Guoneng Green and Low-carbon Development Investment
+Fund, which the Company has participated in, have successively invested in
+wind power and photovoltaic projects in Shanxi, Jiangsu, Zhejiang, Hubei and
+Hunan. The Company has entered into a strategic cooperation agreement with
+the Hohhot Municipal Government and other partners to participate in the
+development and construction of new energy projects, such as photovoltaic,
+wind power and geothermal energy in the "zero carbon" industrial parks
+and "zero carbon" urban construction in Hohhot. Open-pit Dump Disposal
+Photovoltaic Project (150 MW) of Beidian Shengli, a subsidiary of the Group,
+and distributed photovoltaic power generation projects located in Guangdong,
+Fujian and Shandong are currently progressing in an orderly manner.
+2020
+Change
+2020
+2021
+Change
+2020
+2021
+location
+Power type/operation
+Power tariff (RMB/MWh)
+Power output dispatch (billion kWh)
+Power generation (billion KWh)
+(2) Power consumption and power tariffs
+Section IV Directors' Report (Continued)
+50 China Shenhua Energy Company Limited
+2021
+13.74
+10.98
+8.89
+45.2
+(billion kWh)
+Percentage of the power in
+market-based transactions (%)
+156.13
+62.8
+127.65
+52.9
+67.54
+22.3
+by 9.9
+percentage
+points
+(6) Operation results of the power sales business
+In 2021, the Group owns three power sales companies located in Shandong,
+Jiangsu and Guangdong, respectively. The principal operation model is to make
+profit through the price difference between sales and purchase of electricity.
+The value-added services mainly include transformer preventive testing,
+insulation testing, energy-saving diagnosis, electricity data collection, etc..
+The power output dispatch of purchased electricity sold by the above three
+power sales companies throughout the year was 20.97 billion kWh, and the
+corresponding electricity sales revenue and electricity purchase cost of the
+purchased electricity are RMB7,241 million and 7,467 million, respectively.
+Average selling price of power Unit electricity purchase cost
+(exclusive of tax)
+(exclusive of tax)
+No.
+Province of the
+sales companies
+Increased
+power
+98.06
+Total volume of power in market-
+4,403
+7.9
+5.37
+5.59 Decreased by 0.22
+percentage points
+1
+based transactions (billion kWh)
+Total volume of on-grid power
+Source: China Electricity Council
+Section IV Directors' Report (Continued)
+(5) Market transaction of power
+2021
+2020
+Change
+%
+2021 Annual Report 53
+Power output dispatch
+Billion kWh
+RMB/MWh
+363
+371
+404
+379
+3
+Jiangsu
+1.06
+12.11
+339
+367
+346
+342
+In November 2021, the Company transferred all its shares in Jiangsu Power
+Sales Company, and Jiangsu Power Sales Company was no longer consolidated
+to the consolidated financial statements of the Group.
+54 China Shenhua Energy Company Limited
+4.76
+4.28
+Guangdong
+2
+RMB/MWh
+2021
+2020
+2021
+2020
+2021
+2020
+1
+Shandong
+4.58
+0.69
+346
+339
+339
+339
+4,749
+The operation of new units
+Weighted average
+Decreased by 0.02
+Fujian Luoyuanwan Port Power
+Generation & Storage Project
+Fujian
+2× 1,000MW
+Guangxi Beihai Thermal Power Plant
+Project
+Planned installed
+capacity
+Guangxi
+Guangdong Qingyuan Power Plant
+Phase I
+Guangdong
+2× 1,000MW
+Huizhou Phase II Gas-fired
+Cogeneration Unit Project
+2 × 1,000MW
+Hunan Yueyang Power Plant Project
+Location
+As of the end of 2021, the generating units under construction and approved
+but not yet constructed by the Group are as follows:
+Fujian
+1,000
+The operation of new units
+Iwan Port Power Generation &
+storage Project
+Fuping Thermal Power of
+Project
+Shaanxi
+Shendong Power
+Total
+1 Source: China Electricity Council
+52 China Shenhua Energy Company Limited
+5,620
+Section IV Directors' Report (Continued)
+(700) Equity transfer
+Guangdong
+Hunan
+2 × 400MW
+2× 1,000MW
+(4)
+Gas-fired power
+4,057
+4,045
+0.3
+1.50
+1.67
+percentage points
+Decreased by 0.17
+Hydro power
+5,921
+5,124
+15.6
+0.28
+0.30
+percentage points
+gangue-fired power plants)
+5.73 Decreased by 0.25
+5.48
+Utilisation rate of power generation equipment
+The average utilisation hours of coal-fired generators of the Group reached 4,764
+hours for the year of 2021, representing a year-on-year increase of 352 hours
+and 178 hours more than the national average utilisation hours (being 4,586
+hours) of coal-fired generating units with the installed capacity of 6,000KW and
+above.
+Average utilisation hours (Hour)
+Power consumption rate of power plant (%)
+Power type
+2021
+2020 Change
+2021
+2020
+Change
+%
+Coal-fired power (includes
+4,764
+4,412
+8.0
+percentage points
+1,320
+Inner
+Mongolia
+Unit 1 and Unit 2 of Inner Mongolia
+Shengli Power Plant of Shengli
+523
+465
+13.1
+1.37
+1.55
+11.4
+(11.1)
+1.58
+Indonesia (overseas)
+467
+1.02
+1.06
+Hunan
+0.3
+1.76
+363
+(II) Gas-fired power
+3.84
+0.5
+3.75
+3.77
+0.3
+3.84
+3.85
+3.85
+Beijing
+563
+565
+0.5
+3.75
+3.77
+0.3
+0.4
+364
+16.6
+9.86
+9.72
+10.47
+7.5
+10.21
+10.1
+Shandong
+7.7
+3.3
+372
+57.4
+5.40
+8.50
+57.6
+5.64
+360
+357
+343
+4.1
+11.50
+16.7
+10.33
+12.05
+Jiangxi
+18.4
+309
+366
+27.3
+3.04
+3.87
+27.5
+3.20
+4.08
+Guangxi
+565
+563
+0.4
+(III) Hydropower
+36,824
+5,620
+32,279
+125
+950
+31,204
+950
+(decreased) during capacity as at 31
+the reporting period December 2021
+capacity as at 31
+Total installed
+Installed capacity
+increased/
+Total installed
+Unit: MW
+Total
+December 2020
+0
+125
+5,620
+The operation of new units
+2,000
+Hunan
+Unit 1 and Unit 2 of Phase I of
+Hunan Yongzhou Power Plant
+Project
+The operation of new units
+2,000
+Unit 1 and Unit 2 of Sichuan Energy Sichuan
+Jiangyou Coal Reserves Power
+Generation Integration Project
+Description
+capacity
+MW
+Location
+Unit
+installed
+Increase/
+(decrease) of
+In 2021, the changes of the Group's installed capacity for coal-fired power
+generating units are as follows:
+37,899
+Hydro power
+Chongqing
+Coal-fired power
+Gas-fired power
+At the end of the reporting period, the total installed capacity of power
+generation of the Group reached 37,899MW, among which, the total installed
+capacity of coal-fired power generators was 36,824MW, accounting for 2.8% of
+the total installed capacity of thermal power generators of the society (being 1.3
+billion kW¹).
+0.72
+15.6
+0.64
+0.74
+Sichuan
+(3.4)
+0.63
+232
+14.3
+0.63
+0.72
+15.6
+0.64
+0.74
+224
+14.3
+224
+232
+(3) Installed capacity
+Section IV Directors' Report (Continued)
+2021 Annual Report 51
+4.2
+334
+384
+348
+22.3
+127.65
+156.13
+22.1
+136.33
+166.45
+Total
+(3.4)
+Power type
+380
+Mines
+overseas
+599
+394.0
+88.2
+416
+5.8
+44.0
+Sales to internal power segment
+61.2
+12.7
+532
+47.7
+10.7
+374 28.3
+Sales to internal coal chemical segment
+4.3
+0.9
+366
+4.7
+1.1
+322
+(8.5) 13.7
+ថ្មី២
+42.2
+Total sales volume/average
+price(exclusive of tax)
+86.4
+482.3
+416.8
+tonne
+Price
+Proportion
+Price
+Price
+Sales
+of total (exclusive
+Sales
+of total (exclusive of
+Sales
+(exclusive
+volume
+sales
+of tax)
+volume
+sales tax)
+volume
+of tax)
+Million
+RMB/
+Million
+RMB/
+tonnes
+%
+tonne
+tonnes
+Sales to external customers
+Changes
+100.0
+446.4
+of tax)
+Million
+RMB/
+Million
+RMB/
+tonnes
+tonne
+tonnes
+tonne
+I. Domestic sales
+476.2
+98.8
+588
+444.3
+99.5
+10
+410
+7.2
+43.4
+(I) Self-produced coal and
+purchased coal
+450.8
+93.5
+585
+429.5
+volume
+588
+of tax)
+volume
+100.0
+40
+410
+80
+8.0
+43.4
+(3)
+By sales regions
+2021
+2020
+Changes
+Proportion
+Price
+Proportion
+Price
+Price
+Sales
+of total (exclusive
+Sales
+of total
+(exclusive
+Sales
+(exclusive
+volume
+sales of tax)
+sales
+2020
+2021
+Proportion
+By internal and external customers
+2021
+Proportion Price
+2020
+Proportion
+Price
+Changes
+Price
+Sales
+of total (exclusive
+Sales
+of total
+(exclusive
+Sales (exclusive
+volume
+sales of tax)
+volume
+sales
+of tax)
+volume
+of tax)
+Million
+RMB/
+Million
+RMB/
+tonnes
+%
+tonne
+By contract pricing mechanisms
+tonnes
+(1)
+As coal products were in great variety with a large sales volume, and some of
+self-produced coal products were transported and sold together with purchased
+coal, the Group cannot present the revenue, cost of sales and gross profit by
+source of coal (self-produced coal and purchased coal).
+Section IV Directors' Report (Continued)
+The production and sales of each kind of coal of the Group in 2021 are set out
+below:
+Types of coal
+Thermal coal
+Others Note
+Total
+Production
+Million tonnes
+Sales volume
+Sales income
+Million tonnes
+RMB million
+Sales cost
+RMB million
+Gross profit
+RMB million
+307.0
+482.3
+0.0
+283,722
+12
+206,929
+12
+76,793
+0
+307.0
+482.3
+283,734
+206,941
+76,793
+Note: The Group sold 9,300 tonnes of coking coal in 2021.
+The coal sales of the Group in 2021 is set out below:
+%
+tonne
+%
+II. Direct sales from pit head
+23.6
+4.9
+263 16.3
+669
+17.2
+418
+(28.7)
+43.3
+3.7
+176
+44.8 49.4
+Total sales volume/average
+price(exclusive of tax)
+482.3
+100.0
+588
+446.4
+100.0 410
+8.0
+43.4
+Note: The above is the summary of the sales of coal products with different calorific
+values of the Group.
+2021 Annual Report 45
+Section IV Directors' Report (Continued)
+599 76.6
+11.3
+54.6
+3. Spot commodity
+1. Sales through Trading Group
+458.7
+95.1
+605
+1. Annual long-term contracts
+207.9
+43.1
+456
+1081
+430.1
+96.3
+419
+96.2
+6.6
+190.0
+42.5
+380
+9.4
+20.0
+2. Monthly long-term contracts
+196.2
+40.7
+765 163.5 36.6
+465
+20.0
+64.5
+44.4
+3,760 (3,380)
+411
+42.3
+4,000-5,300
+0.4-0.5
+17-33
+Shengli Mines
+Baorixile Mines
+Lignite
+2,500-3,100
+0.7-1.5
+17-38
+Lignite
+3,300-3,500
+0.1-0.3
+13-17
+Baotou Mines
+Long flame coal/non-
+caking coal
+3,800-5,000
+0.3-1.0
+20-45
+Note: The above calorific value, sulphur content and ash content of major commercial coal
+products produced by each mine may be inconsistent with the characteristics of the
+commercial coal products produced by individual mine and those of the commercial coal
+products sold by the Company due to geological conditions and production process.
+Operating results
+The operating results of the coal segment of the Group before elimination
+on consolidation
+2021
+2020
+Change
+%
+Main reasons for
+changes
+Revenue
+Long flame coal
+RMB million
+Zhunge'er Mines
+5-48
+Total
+332.1
+141.5
+33.1
+74.3
+2021 Annual Report 47
+Section IV Directors' Report (Continued)
+(5)
+Characteristics of the commercial coal produced in the Group's major mines are
+as follows:
+No. Mines
+Calorific
+value of major
+commercial
+Sulphur
+Ash
+Major types of coal
+coal products
+Content
+content
+kcal/kg
+%
+average,%
+1 Shendong Mines
+Long flame coal/
+non-caking coal
+5,000-5,800
+0.2-0.6
+2345
+107.6
+292,661
+54.0 Increase in coal sales
+volume and average
+sales price
+Section IV Directors' Report (Continued)
+The sales gross profit of the coal products of the Group before elimination
+on consolidation
+Revenue
+2021
+Costs
+Gross Gross profit
+profit margin
+Revenue
+2020
+Gross
+Gross profit
+Costs
+profit
+margin
+RMB million RMB million RMB million
+% RMB million RMB million RMB million
+%
+Domestic
+279,974 (203,561)
+76,413
+27.3
+182,082
+(139,976)
+42,106
+23.1
+Export and
+(3)
+190,029
+48 China Shenhua Energy Company Limited
+operations
+Operating costs
+RMB million
+(225,126)
+(153,373)
+46.8 Increase in the sales
+volume and unit
+production cost of
+self-produced coal;
+increase in the sales
+volume and unit
+purchase cost of
+purchased coal
+Gross profit
+margin
+23.1
+19.3 Increased
+by 3.8
+percentage
+point
+Profit from
+RMB million
+59,125
+29,832
+98.2
+operations
+Profit margin from
+%
+20.2
+15.7 Increased
+by 4.5
+percentage
+points
+Xinjie Mines
+0.0
+0.1
+1.1
+ឆឌ
+353
+418
+II. Export sales
+0.7
+0.1
+850
+0.7
+0.2
+556
+ខ៩៩
+26.8
+125.2
+156.9
+21.8
+0.0 52.9
+III. Overseas sales
+5.4
+1.1
+589
+1.4
+0.3
+435
+285.7
+5.1
+35.4
+509
+13.1
+1. Direct arrival
+187.9
+39.0
+442
+162.1
+36.3
+317
+15.9
+39.4
+2. Seaborne
+262.9
+54.5
+687
+267.4
+59.9
+(1.7)
+46.8
+(II) Sales of domestic trading
+coal
+12.3
+2.6
+795
+9.7
+2.2
+(III) Sales of imported coal
+2.7
+Total sales volume/average price
+(exclusive of tax)
+482.3
+(under the
+the PRC
+Standard)
+(under
+the JORC
+Standard)
+153.9
+87.2
+17.8
+42.7
+Zhunge'er Mines
+37.2
+29.6
+12.7
+18.8
+Shengli Mines
+19.6
+13.3
+0.2
+1.5
+Baorixile Mines
+13.3
+11.1
+2.3
+11.3
+Baotou Mines
+0.5
+0.3
+Marketable
+coal reserve
+Proved
+Recoverable
+PRC Standard) PRC Standard)
+100.0
+580
+588
+446.4
+00
+100.0
+410
+10
+80
+8.0
+43.4
+46 China Shenhua Energy Company Limited
+5.0
+Section IV Directors' Report (Continued)
+(4)
+Production safety
+In 2021, the Group took multiple measures to ensure coal mine production
+safety. The Group fully carried out the three-year special rectification action
+for production safety to ensure generally stable situation of production safety,
+conducted safety supervision to ensure the implementation of the safety
+system, as well as upgrading the equipment and facilities of the emergency
+rescue base to improve safety guarantee capability. In 2021, the fatality rate per
+million tonnes of raw coal output in the coal mines of the Group was 0.00597,
+which was below the national average of 0.044.
+Efforts in ensuring production safety of coal mine are detailed in the 2021 ESG
+Report of the Company.
+Coal resources
+As at 31 December 2021, under the PRC Standard, the Group had coal
+reserves amounting to 33.21 billion tonnes, representing an increase of 3.53
+billion tonnes as compared with that of the end of 2020, mainly due to the
+acquisition of coal exploration permit in Taigemiao South Area of Xinjie Mine;
+and recoverable coal reserve amounting to 14.15 billion tonnes, representing a
+decrease of 0.27 billion tonnes as compared with that of the end of 2020. The
+Group's marketable coal reserve amounted to 7.43 billion tonnes under the
+JORC Standard, representing a decrease of 300 million tonnes as compared
+with that of the end of 2020.
+In 2021, the Group's coal exploration expenses (which were incurred before
+the conclusion of feasibility study and represented the expenses related to
+exploration and evaluation of coal resources) amounted to approximately
+RMB4.001 billion (2020: RMB0.022 billion), which was mainly attributable to the
+acquisition of detailed coal exploration permit in Taigemiao South Area of Xinjie
+Mine; the Group's relevant capital expenditure of coal mine development and
+exploration amounted to approximately RMB12.717 billion (2020: RMB3.152
+billion), which was mainly attributable to the reassessment of mining rights
+in Shengli and Baorixile mining areas, and the construction expenditure of the
+second panel project in Guojiawan coal mine.
+Unit: 100 million tonnes
+Unit 1 of Fujian Energy Luoyuan
+Shendong Mines
+Coal
+reserve
+coal reserve reserve (under
+(under the
+(3)
+Energy Phase I project
+Gross profit margin
+%
+11.5 Increased
+19.0
+%
+Gross profit margin
+million
+Increase in shipping
+82.1
+(2,755)
+(5,018)
+RMB
+Operating costs
+freight rates
+by 7.5
+volume and average
+Increase in shipping
+99.1
+3,112
+6,195
+RMB
+Revenue
+for changes
+Change
+%
+2020
+2021
+Main reasons
+The operation results of the shipping segment of the Group before eliminations
+on consolidation are as follows:
+million
+volume; increase in
+vessel rental charges
+percentage
+points
+Sales
+Price volume
+RMB/ Thousand
+2020
+2021
+Sales
+volume
+Thousand
+The sales of polyethylene and polypropylene products of the Group in 2021 are
+as follows:
+manner.
+The environmental impact report of Baotou coal-to-olefins upgrade and
+demonstration project has been approved by the Ministry of Ecology and
+Environment, and other preliminary work has been proceeding in an orderly
+The green operation level of coal-to-olefins facilities continued to improve. In
+2021, the discharge of waste water, waste gas and waste residue has reached
+the standard, and the comprehensive energy consumption per unit of polyolefin
+has reached the lowest level since the operation of the facilities.
+In 2021, the international oil price continued to rise, driving the price of
+domestic polyolefin products to fluctuate upward. The price rise of upstream
+raw materials such as coal and methanol led to an increase in the production
+cost of polyolefin products. Baotou Coal Chemical made overall arrangements
+for production, scientifically allocated product plans, continuously improved
+process technology, planned to promote the development of new products, and
+achieved good business performance. Throughout the year, the coal-to-olefins
+facilities had maintained stable and consecutive operation for 7,904 hours,
+and the annual accumulative excellent product rates of polyethylene and
+polypropylene products reached 95.19% and 99.12% respectively; due to the
+renovation of coal olefin facilities as planned, the output of polyolefin products
+reached 644.5 thousand tonnes (2020: 700.5 thousand tonnes), representing a
+year-on-year decrease of 8.0%; the operating profits of coal chemical segment
+reached RMB722 million, representing a year-on-year increase of 178.8%.
+The coal chemical business of the Group comprises the coal-to-olefins project of
+Baotou Coal Chemical (Phase I). Its main products consist of polyethylene (with
+production capacity of approximately 300,000 tonnes/year) and polypropylene
+(with production capacity of approximately 300,000 tonnes/year) and minor
+byproducts including industrial sulfur, mixed C5, industrial propane, mixed C4,
+industrial methanol, etc..
+Production and operations
+(1)
+Coal chemical segment
+6.
+Section IV Directors' Report (Continued)
+2021 Annual Report 61
+In 2021, the unit transportation cost of the shipping segment was RMB0.045/
+tonne nautical mile (2020: RMB0.030/tonne nautical mile), representing a
+year-on-year increase of 50.0%, mainly due to the increase in vessel rental
+charges.
+by 9.1
+percentage
+points
+6.7 Increased
+15.8
+%
+Profit margin from
+operations
+million
+368.9
+209
+980
+RMB
+Profit from operations
+Operation results
+(2)
+In 2021, the domestic coal transportation demand was strong, but the
+transportation capacity of the shipping market was relatively scarce. The
+shipping segment of the Group aimed at ensuring supply and creating efficiency,
+took advantage of the synergy of the industrial chain, and improved the turnover
+efficiency of ship loading and unloading, optimized the allocation of transport
+capacity and route layout, and made every effort to ensure the transportation of
+power plants. The shipping volume of the Group for the year was 121.2 million
+tonnes (2020: 113.0 million tonnes), representing a year-on-year increase of
+7.3% while shipment turnover amounted to 112.1 billion tonne nautical miles
+(2020: 93.0 billion tonnes nautical miles), representing a year-on-year increase
+of 20.5%.
+(1) Production and operations
+Increase in volume of
+1.3
+6,359
+6,440
+RMB
+Revenue
+%
+Main reasons for
+changes
+Change
+2020
+2021
+The operation results of the port segment of the Group before eliminations on
+consolidation are as follows:
+Operation results
+(2)
+In 2021, the Group's port segment maintained stable and efficient operation,
+providing a strong guarantee for the increase in coal production and supply, and
+accelerated the transformation to safe, efficient and green modern coal ports,
+with the intelligent level of the port and the efficiency of car dumping and ship
+loading, clean operating technologies such as dust control in the port area, and
+the sewage treatment and recycling capabilities, etc. all ranking among the
+leaders in the industry. During the year, the accumulated loading volume of coal
+at Huanghua Port and Shenhua Tianjin Coal Terminal was 261.4 million tonnes
+(2020: 249.2 million tonnes), representing a year-on-year increase of 4.9%, both
+reaching the highest level in history. Among them, the seaborne coal volume of
+Huanghua Port has ranked first in China's ports for three consecutive years, and
+the total labor productivity and other indicators led in the country.
+Production and operations
+(1)
+Port segment
+4.
+Section IV Directors' Report (Continued)
+2021 Annual Report 59
+In 2021, the unit transportation cost in the railway segment was RMB0.068/
+tonne km (2020: RMB0.066/tonne km), representing a year-on-year increase of
+3.0%.
+by 2.9
+percentage
+points
+43.0 Decreased
+40.1
+%
+Profit margin from
+operations
+million
+Change
+Sales
+port operation
+RMB
+Shipping segment
+Section IV Directors' Report (Continued)
+5.
+China Shenhua Energy Company Limited
+60
+The unit transportation cost in the port segment was RMB10.7/tonne in 2021
+(2020: RMB10.1/tonne), representing a year-on-year increase of 5.9%, mainly
+due to the increase in personnel expenses, repair and maintenance costs.
+by 0.1
+percentage
+point
+42.1 Increased
+42.2
+%
+Profit margin from
+operations
+million
+point
+1.6
+2,678
+2,720
+RMB
+Profit from operations
+percentage
+by 0.2
+47.9 Increased
+48.1
+%
+Gross profit margin
+million
+0.8
+(3,314)
+(3,342)
+Operating costs
+million
+Price
+Price
+7.2
+(7.9)
+5,079
+360.4
+5,447
+332.0
+%
+%
+tonne
+tonnes
+tonne
+tonnes
+312.5
+RMB/
+volume
+cost
+Production production
+production
+Production
+volume
+Thousand
+cost
+RMB/
+Thousand
+volume
+Production production
+Unit
+Unit
+Unit
+cost
+5,320
+340.1
+4,970
+64 China Shenhua Energy Company Limited
+In 2021, the Group steadily carried out international operation. EMM Indonesia and
+Indonesia Java have scientifically and effectively responded to the epidemic, overcome
+adverse factors such as shortage of production personnel and unstable fuel supply, safely
+organized production and realized no reduction of unit load; Indonesia's South Sumatra No.1
+actively communicated the project progress with Indonesia's State Grid Corporation, strived
+to overcome the impact of the epidemic and promoted the project construction. The two
+units are expected to be put into production by 2023 and 2024 respectively.
+The Group is mainly engaged in the production and sales of coal and electricity, railway,
+port and fleet transportation, coal-to-olefins and other businesses in China. In 2021, the
+foreign transaction revenue from the domestic market was RMB324,488 million, accounting
+for 96.8% of the Group's revenue; the foreign transaction revenue from overseas markets
+was RMB10,728 million, representing an increase of 87.4% year-on-year, mainly due to the
+increase of coal re-export trade volume and the increase of the income of Indonesia's South
+Sumatra No.1 Project.
+Note: the revenue from foreign transactions is divided by the location of customers receiving services and
+purchasing products.
+43.7
+233,263
+335,216
+Total
+87.4
+5,724
+10,728
+Foreign transaction revenue from overseas
+market
+42.6
+227,539
+324,488
+Foreign transaction revenue from domestic
+market
+Change %
+Unit: RMB million
+2020
+2021
+(V) Operations by Region
+Section IV Directors' Report (Continued)
+2021 Annual Report 63
+In 2021, the coal of a total of 4.3 million tonnes consumed by the coal chemical
+segment was all the coal sold within the Group (including China Shenhua
+self-produced coal and purchased coal).
+The main reason for the year-on-year decrease in the Group's polyolefin
+products production in 2021 was that the coal-to-olefins facilities of Baotou
+Coal Chemical were overhauled for over a month as planned, resulting in a
+decrease in production. The year-on-year increase in the unit production costs
+of polyolefin products was mainly due to the increase in the coal procurement
+price and increase in the unit fixed cost led by lower production.
+7.0
+(8.1)
+Change
+2020
+2021
+points
+Revenue
+Change Main reasons for changes
+2020
+2021
+(3)
+(2) Operation results
+Section IV Directors' Report (Continued)
+62 China Shenhua Energy Company Limited
+13.9
+(4.7)
+21.7
+(6.8)
+164
+6,015
+331.2
+6,853
+315.6
+5,459
+356.9
+6,641
+332.8
+Polyethylene
+Polypropylene
+tonne
+tonnes
+tonne
+tonnes
+RMB/
+RMB million
+volume
+5,851
+13.3
+percentage
+Polyethylene
+Polypropylene
+Unit production cost of major products
+by 7.3
+Increased
+5.0
+12.3
+Profit margin from operations %
+178.8
+259
+722
+RMB million
+Profit from operations
+points
+percentage
+by 9.2
+Increased
+9.5
+18.7
+Gross profit margin
+1.7
+(4,675)
+(4,754)
+RMB million
+Operating costs
+polyolefin products
+Increase in the price of
+5,165
+(2.0)
+The operation results of the coal chemical segment of the Group before
+eliminations on consolidation are as follows:
+16,310
+Revenue from power output dispatch
+Unit: RMB million
+Revenue and costs from the power output dispatch of the Group before
+elimination on consolidation
+points
+11.4 percentage
+operations
+Decreased by
+16.1
+4.7
+Profit margin from
+(62.3)
+7,976
+Cost of power output dispatch
+3,010
+points
+15.3 percentage
+Decreased by
+21.7
+6.4
+%
+dispatch
+increase in output
+purchase price;
+55.0 increase in coal
+(38,729)
+(60,019)
+Profit from operations RMB million
+RMB million
+Percentage to
+Percentage to
+total costs of
+2,132
+Gas-fired power
+57.4
+93.9
+33,084
+95.8
+52,066
+29.1
+42,188
+54,458
+Coal-fired power
+2020
+total costs of
+in 2020
+in 2021
+2021
+Change
+2020
+2021
+Power type
+2021 over
+dispatch
+dispatch
+Change in
+power output
+power output
+2020
+Operating costs
+output dispatch
+29.6 Increase in power
+Phase (2x660MW)
+Shengli Power Plant
+86
+3,077
+Construction of Inner Mongolia
+2
+Phase (2×1,000 MW)
+93
+4,298
+Hunan Yongzhou Project
+1
+%
+3
+period
+total budget
+to the
+Percentage of
+accumulative
+amount in project
+Unit: RMB Million
+investing amount
+for the
+reporting period
+Name of Project
+No.
+The
+In 2021, the total capital expenditure of the power segment was RMB16,876
+million, mainly for the following items:
+(7) Capital Expenditure
+Section IV Directors' Report (Continued)
+16,636
+as of the end of
+the reporting
+Fujian Luoyuanwan Port Power
+2,727
+71
+49,486
+64,124
+RMB million
+Revenue
+%
+Main reasons for
+changes
+Change
+2020
+2021
+Operation results
+(8)
+Section IV Directors' Report (Continued)
+2021 Annual Report 55
+(2x1,000MW)
+Generation Project
+Reserves & Power
+92
+1,637
+Sichuan Jiangyou Coal
+5
+Project (2x1,000MW)
+48
+2,520
+Guangxi Beihai Power Plant
+4
+Construction (2 × 1,000MW)
+Generation & Storage Project
+2,111
+1.0
+1 The operation results of the power segment of the Group before
+elimination on consolidation
+4.0
+Change
+2020
+2021
+The operation results of the railway segment of the Group before elimination on
+consolidation are as follows:
+Operation results
+Section IV Directors' Report (Continued)
+(2)
+58 China Shenhua Energy Company Limited
+In 2021, the railway segment of the Group closely cooperated with coal
+production and transportation, and optimised the transportation organization
+to ensure efficient and smooth transportation channels; maximised the
+railway transportation capacity by adding 20,000 tonne trains, reducing the
+turnover time and opening special lines. During the year, the turnover volume
+of self-owned railways reached 303.4 billion tonne km (2020: 285.7 billion
+tonne km), representing a year-on-year increase of 6.2%. The railway logistics
+business has become more abundant, and the utilisation rate and efficiency
+of dead-head haulage have been continuously improved. During the year, the
+transportation volume of non-coal goods such as iron ore, manganese ore and
+chemicals reached 18.7 million tonnes, and the reverse transportation volume
+reached 16.3 million tonnes. The Company accelerated the cultivation of
+capacity of Huangda Railway, opened three temporary loading and unloading
+lines in Binzhou Logistics Park, and achieved interconnection between
+Dispatching Railways connecting Dongying, Yiyang Railway and Dalailong
+Railway. Huangda Railway has a transportation capacity of over 15 million
+tonnes, and has completed 11.1 million tonnes of coal transportation volume
+throughout the year.
+(1) Production and operations
+Railway segment
+3.
+Section IV Directors' Report (Continued)
+2021 Annual Report 57
+The cost of power output dispatch of coal-fired power plant increased by
+57.4% year-on-year. Among them, the year-on-year growth of materials,
+fuel and power was mainly due to the increase in the purchase price of
+coal and the increase in output dispatch, while the increase in labor costs
+I was mainly due to the continuous operation of a number of newly-added
+generating unit and the increase in related power production personnel
+since 2021, and the increase in salary and social security payment.
+57.4
+100.0
+33,084
+100.0
+52,066
+power plant
+dispatch of coal-fired
+Total cost of power output
+134.2
+3.0
+985
+4.5
+Main reasons for
+changes
+2,307
+%
+RMB
+million
+RMB
+2,165
+Profit from operations
+points
+percentage
+by 1.7
+47.6 Decreased
+45.9
+20
+Gross profit margin
+year
+overhaul for some
+railway sections
+and postponed
+construction of
+some maintenance
+projects affected by
+the pandemic in the
+same period of last
+costs due to track
+replacement
+maintenance
+in repair and
+turnover; increase
+transportation
+Increase in railway
+turnover
+transportation
+million
+8.5
+(22,020) (20,304)
+RMB
+Operating costs
+Increase in railway
+40,699 38,723
+Revenue
+Others
+5.1
+14.3
+Costs of power output dispatch of coal-fired power plants of the Group
+before elimination on consolidation
+(3)
+Section IV Directors' Report (Continued)
+56 China Shenhua Energy Company Limited
+The power segment consumed a total of 59.8 million tonnes of China
+Shenhua's coal, accounting for 83.8% of the total coal consumption
+(being 71.4 million tonnes), representing a year-on-year increase of 1.2
+percentage points, primarily due to the Group's integrated operation
+advantages to ensure the coal supply of power plants.
+The Group's costs of sale of power output dispatch is mainly comprised
+of such costs as raw materials, fuel and power, personnel expenses,
+repair and maintenance, depreciation and amortisation and other costs.
+The unit cost of power output dispatch of the Group in 2021 was
+RMB348/MWh (2020: RMB276/MWh), representing a year-on-year
+increase of 26.1%, mainly due to the rise of coal purchase price.
+54.2
+100.0
+35,246
+100.0
+54,340
+44,445
+2021
+56,752
+23.9
+0.2
+0.2
+109
+11.0
+146
+162
+Hydro power
+4.4
+4.0
+5.9
+2,074
+Total
+Costs Percentage
+27.7
+4,932
+41.1
+72.9
+066
+6.0
+1,989
+4,742
+3.2
+1,688
+Repairs and maintenance
+6.8
+2,265
+(15.1)
+6.1
+Personnel expenses
+69.9
+23,103
+76.7
+39,944
+Raw materials, fuel and power
+2020
+Costs
+%
+9.5
+Percentage Change in cost
+%
+% RMB million
+RMB million
+3,195
+Depreciation and amortisation
+13,817
+39.79
+11,300
+7
+6,790
+Huanghua Harbour
+8
+1,542
+2.9
+Administration
+price of coal
+Beidian Shengli
+2,925
+10,006
+1,586
+109.5 Increase in sales volume and average
+3. Transportation segments
+1,655
+64.87
+Of which: Railway
+6,194
+Port
+50.36
+80.69
+2,273
+1,835
+23.9
+Increase in sales volume of coal
+6
+Baorixile Energy
+1,169
+11,934
+6,091
+790
+1,415
+Major companies in which the Company has invested
+23
+(2)
+(3)
+The financial information of the major subsidiaries in the above table was prepared in accordance
+with the China Accounting Standards for Business Enterprises. The data have not been audited or
+reviewed.
+Shendong Coal recorded a revenue of RMB84,288 million and a profit from operations of
+RMB26,673 million in 2021.
+Shuohuang Railway recorded a revenue of RMB22,008 million and a profit from operations of
+RMB10,420 million in 2021.
+Please refer to the section headed "Material Related/Connected Transactions" of this
+report for details of Financial Company.
+66 China Shenhua Energy Company Limited
+Section IV Directors' Report (Continued)
+(IX) Structured Vehicle Controlled by the Company
+Applicable
+Not applicable
+(XI) Relationship with Stakeholders
+15.38
+So far as the Board and management of the Company are aware, the Group has complied in
+all material aspects with the relevant laws and regulations that are related to the business
+and operation of the Group. In 2021 there was no material breach of or non-compliance with
+the applicable laws and regulations by the Group.
+(X) Compliance with Relevant Laws and Regulations
+(1)
+743
+Notes:
+139.8
+90.4
+Increase in sales volume and average
+price of coal
+9
+Yulin Energy
+2,420
+6,618
+4,965 1,410
+522
+170.1
+Increase in sales volume and average
+price of coal
+10
+Baotou Energy
+2,633 8,765 7,046
+1,235
+515
+Increase in average price of coal
+10.02
+10,132
+0.44
+1.1
+7,668
+7,755
+15,231 43,959 35,330
+Shuohuang Railway
+2
+3
+Increase in sales volume and average
+price of coal
+10,528
+19,967
+32,468
+4,989 46,235
+Shendong Coal
+Change Main reasons for changes
+89.7
+Jinjie Energy
+2,278
+13,116
+10,128
+32,570
+For details of remuneration and training of the Group's employees, please refer to the
+"Employees" section in this report.
+1,889
+Trading Group
+5
+93.6 Increase in sales volume and average
+price of coal
+29.3 Increase in sales volume and average
+price of coal, and increase in power
+output dispatch
+1,291
+2,499
+7,102 46,957 37,156
+Zhunge'er Energy
+4
+2,959
+3,827
+Net profit attributable to the equity
+holders of the parent company
+2020
+2021
+As at 31 December 2021
+2021 Annual Report 73
+Among the capital expenditures of the coal segment, RMB1.670 billion will
+be used in new construction as well as renovation and expansion projects
+(including the purchase of infrastructure-related equipment); RMB1.264 billion
+will be used in technical renovation for equipment purchase; RMB3.035 billion
+will be used in technical renovation for non-equipment purchases. The major
+investment projects include: Technical transformation projects of various mines
+in Shendong Mines, production system optimization project of Shengli No. 1
+open-pit coal mine, preliminary preparation of Xinjie No. 1 well in Taigemiao
+Area of Xinjie Mining Area, etc..
+(1)
+Based on the principles of strict control of investment and focusing on quality and
+efficiency, the Board of the Company approved a total planned capital expenditure of
+2022 of RMB32.611 billion (excluding equity investment), including:
+Total capital expenditure of the Group in 2021 amounted to RMB43.377 billion, which
+were mainly used for the expenses in the payment of the mining rights and the
+purchase for the mining equipment; the power generation projects under construction,
+such as Phase I of Hunan Yongzhou Project and Phase I of Inner Mongolia Shengli
+Power Plant; the purchase of general and special railway equipment and construction
+of Huangda Railway; and coal-to-olefin upgrading demonstration project, Baotou
+Coal Chemical wastewater desalination standard discharge transformation and other
+technical transformation projects.
+433.77
+326.11
+Total
+0.39
+7.16
+5. Others
+8.51
+4.83
+4. Coal chemical segment
+0.55
+Section IV Directors' Report (Continued)
+Shipping
+(2)
+(4)
+Company
+No.
+assets
+Net
+Total
+assets
+capital
+Registered
+74 China Shenhua Energy Company Limited
+The capital expenditure plans of the Group in 2022 are subject to the development of
+business plans (including potential acquisitions), progress of capital projects, market
+conditions, outlook for future operation environment and the obtaining of the requisite
+permissions and approval documents. Unless required by laws, the Company shall not
+assume any responsibilities for updating the data of its capital expenditure plans. The
+Company intends to finance its capital expenditures by cash generated from operating
+activities, short-term and long-term borrowings, and other debt and equity financing.
+The capital expenditure of the coal chemical segment will be mainly used for
+Baotou coal-to-olefin upgrading demonstration project, Bayannaoer 1.2 million
+tonnes of tamping coke and comprehensive utilization project.
+The capital expenditure of port business will be mainly used for Guangxi Beihai
+No. 1 and No. 2 Wharf projects, Huanghua Port coal port No. 3 and No. 4
+general bulk cargo wharf projects and ore loading projects, etc.
+The capital expenditure of the railway segment will be mainly used for the
+purchase of railway locomotives, Shenshuo 300 million tonnes capacity
+expansion and reconstruction project, etc.
+The capital expenditure of new energy business will be mainly used for the
+photovoltaic power generation project of Shengli Energy Open-pit dump in
+Xilinhot, Inner Mongolia, distributed photovoltaic power generation projects
+built in mining areas, along railways and ports, and the investment reserves of
+new energy projects of branches in Guangxi and Guangdong.
+Among the capital expenditure of the power segment, RMB9.682 billion
+will be used in new construction projects (including the purchase of related
+equipment); RMB0.319 billion will be used in technical renovation in
+environmental protection; RMB2.085 billion will be used in technical renovation
+in non-environmental protection. The major investment projects include:
+Guangdong Qingyuan Power Plant Phase I Project, Guangxi Beihai Power Plant
+Project, Hunan Yueyang power plant projects, etc.
+(5)
+(3)
+The Group attaches great emphasis on good relationships with stakeholders such
+as customers, suppliers and other business partners to achieve its long-term goals.
+Accordingly, the management of the Group have kept good communication, promptly
+exchanged ideas and shared business updates with them when appropriate. For details,
+please refer to the 2021 ESG Report of the Company.
+329
+(XII) Scientific and Technological Innovation
+61.57
+205.75
+2. Power segment
+171.86
+168.76
+Of which: new energy business
+1. Coal segment
+50.22
+Unit: RMB million
+2.
+Major subsidiaries
+1.
+(VIII) Analysis on Major Holding and Associated Companies
+✓ Not applicable
+0.33
+Applicable
+Actual amount
+in 2021
+Unit: RMB100 million
+In 2021, there was no material dispute between the Group and its stakeholders.
+million
+finance costs
+Percentage change of unit
+production cost of the self-
+produced coal
+Target of
+2022
+Year-on-year
+increase of
+approximately 10%
+increase of 7.4%
+The above business targets are subject to factors including changes in scope of
+consolidated financial statements, risks, uncertainties and assumptions. The actual
+outcome may differ materially from these statements. Such statements do not
+constitute actual commitments to investors. Investors should be aware that undue
+reliance on or use of such information may lead to investment risks.
+72 China Shenhua Energy Company Limited
+Section IV Directors' Report (Continued)
+2.
+Capital expenditure plan for 2022
+Year-on-year
+7.4
+(VII) Disposal of Material Assets and Equity Interest
+2021 Annual Report 65
+Other investments in equity instruments
+financing receivables
+Name of items
+During the reporting period, the financial assets at fair value held by the Group were
+mainly the non-tradable equity investments that have no significant impact on the
+investees, as well as bank acceptances proposed to be used for discounting or
+endorsement.
+Financial assets at fair value
+3.
+Applicable ✓ Not applicable
+Total
+Material investment in non-equity interest
+Material investment in equity interest
+2.
+1.
+In 2021, the equity investments of the Company amounted to RMB10,945 million (2020:
+RMB3,400 million), representing a year-on-year increase of 221.9%, mainly due to the
+increase of capital for the Company's subsidiaries in coal, power and transportation
+segments, the acceleration of project construction, the establishment of new energy
+companies and the participation in the establishment of new energy industrial investment
+funds, and the acceleration of the development of new energy business.
+(VI) Analysis on Investments
+Section IV Directors' Report (Continued)
+Applicable ✓ Not applicable
+Section IV Directors' Report (Continued)
+Unit: RMB million
+of the period
+0
+705
+2,550
+1,845
+0
+376
+Opening balance
+at the beginning
+376
+2,174
+1,845
+period
+Change of profit
+for the current
+Change for the
+current period
+Closing balance
+at the end
+of the period
+0
+122.90
+and R&D expenses and net
+RMB100
+For the power industry, the electricity consumption of the whole country is expected to
+continue to grow in 2022, and the power supply pattern will be further optimized under
+the transformation of clean and low-carbon energy. The installed capacity of non-fossil
+energy will maintain a relatively rapid growth, and the development of thermal power
+will be cleaner and more flexible. The electricity market will still focus on medium and
+long-term transactions and actively carry out spot electricity pilot projects. The on-grid price
+of coal-fired power will fluctuate within a wide range along with the changes in the market
+supply and demand and the coal price.
+70 China Shenhua Energy Company Limited
+Section IV Directors' Report (Continued)
+(II)
+Development Strategy of the Company
+In 2021, coal power supply in China highlighted the importance of energy security. It is
+necessary to give full play to the role of coal in ensuring the energy supply and the role of
+coal power in ensuring the basic guarantee and systematic adjustment in the construction
+of a new power system. In the long run, the national goal of realizing the peak of carbon
+emission and carbon neutrality has put forward new and higher requirements for the high-
+quality development of the energy industry. The Group's coal and coal power assets
+accounted for a relatively high proportion, and large carbon dioxide emissions from thermal
+power plants and coal chemical enterprises with high-intensity made the Group face not
+only the pressure of transformation and upgrading of the traditional coal-based energy
+industry, but also the enormous challenges brought by technological breakthroughs in the
+new energy industry.
+For the coal industry, economic growth will support a slight increase in coal consumption,
+which is still dominated by electricity. The coal supply capacity will increased on a
+year-on-year basis, coal imports are expected to remain basically stable, and coal supply can
+meet the needs of domestic consumption. Affected by seasonal fluctuations, emergencies
+and other factors, coal supply in some regions and some periods of time would be tight.
+With the stricter supervision on medium-and long-term coal contracts, the coverage ratio of
+coal under long-term contracts will be further increased. It is expected that the coal market
+will be stabilized in 2022, the average price will be decreased, fluctuating narrowly in a
+reasonable range.
+The Group will adhere to the guidance of Xi Jinping Thought on Socialism with Chinese
+Characteristics for a New Era, stick to the new development concept, fully implement
+the new strategy of "Four Revolutions and One Cooperation" for energy security, and
+implement the national "1+N" policy system for realizing the peak of carbon emission
+and carbon neutrality, earnestly carry out the comprehensive development strategy of
+"One Target, Three Models and Five Strategies, and Seven First-class", accelerate the
+construction of a clean, low-carbon, safe and efficient modern energy system, consolidate
+the core advantages of integrated operation, ensure the safe and stable supply of energy,
+and promote the construction of green mines, green transportation, green power plants
+and green chemicals facilities. The Group will speed up the clean and efficient mining and
+utilization of coal to improve the comprehensive efficiency of energy utilization, build clean
+and high-efficient generating units to strengthen the transformation of heating, energy
+saving and flexibility, focus on the research and development and application of intelligent
+heavy-haul railway transportation technology and intelligent integrated operation technology
+to develop large-scale logistics business and improve the safe, sophisticated and efficient
+management level and comprehensive profitability level in the transportation segment, and
+promote the high-end, diversified and low-carbon development of coal chemical industry to
+develop high value-added products such as new coal-based materials. It will also leverage
+the advantages of high-level platform and strong financial position as a listed company,
+strengthen the cooperation with local government and enterprises, give play to the role of
+industrial funds, promote the steady and sustainable development of new energy business,
+and study investment opportunities in strategic emerging industries such as energy
+storage, hydrogen energy, biomass energy projects and venture capital, so as to lay a solid
+foundation for the industrial upgrading and transformation of the Company.
+Section IV Directors' Report (Continued)
+(III) Business Plan for 2022
+1.
+Business targets for 2022
+Actual amount
+132
+2021 Annual Report 71
+The year 2022 is a vital year in the development of China's businesses. The risks and
+challenges encountered through the development have increased significantly, but the
+fundamentals of the long-term economic improvement will be unchanged. The Chinese
+government will aim at a GDP growth of approximately 5.5%, adhere to the principle of
+stability and seek progress while maintaining stability, continue to implement prudent
+and effective macro policies, continue to stimulate the vitality of market entities, focus on
+smoothing the national economic cycle, and take multiple measures to keep the economy
+operating within a reasonable range.
+Industry Structure and Trend
+(1)
+Under the guidance of the innovation-driven development strategy, the Group focuses
+on the three major areas of green coal development, clean coal utilisation and clean coal
+transformation, and develops technologies for intelligent and efficient coal mining, green
+and environmental protection of coal mines, smart transportation, smart and green ports
+and clean, efficient and smart power generation, resulting in remarkable achievements in
+scientific and technological innovation.
+2021 Annual Report 67
+Section IV Directors' Report (Continued)
+Intelligent and efficient coal mining. The Group's coal mining technology and equipment
+are in a leading position in the industry. In recent years, China Shenhua has implemented
+27 key scientific and technological innovation projects of "Smart Mines", and has mastered
+key core technologies such as integrated intelligent management and control platforms,
+intelligent coal mining, intelligent tunneling, self-driving mining trucks, coal mining robots,
+visual remote control and mobile inspection. As of the end of the reporting period, the
+Group has built 26 intelligent long-wall working faces, 4 smart roadway development
+working faces, 6 intelligent coal preparation plants, 2 self-driving truck projects in open-cut
+mines, and has developed and applied more than 140 coal mining robots of 21 kinds in five
+categories. Baode Mine has adopted new-generation information technologies such as 5G
+and industrial Internet to build intelligent unmanned mines, intelligent coal mining working
+face, intelligent and rapid tunneling working face, unattended fixed positions, and only
+more than ten employees working in a single shift. Shangwan Coal Preparation Plant has
+realised the functions of unattended designated areas and big data intelligent analysis of
+operation status. The Harmony OS Mining Operating System was jointly built with Huawei,
+which can realize functions such as safe storage of coal mine production data, real-time
+interconnection of equipment, whole-process collection of massive data and centralised
+intelligent storage. The Heidaigou Open-cut Mine has realised a total of 18 self-driving
+trucks in 3 working faces to operate in groups at the same time. The Baorixile Coal Mine
+has built the world's first 5G+ self-driving truck marshalling demonstration project in the
+extreme cold condition in open-cut mine. The smartness of coal mines has greatly improved
+the production safety level and operational efficiency of coal mines of the Group.
+Green and environmental protection technology in coal mines. The Group actively
+explored the coordinated development path of coal production and resources and
+environmental protection, and mainly conducted researches on the protection and
+comprehensive utilization of water resources, the reduction and restoration of surface
+ecology, and the recovery of co-associated resources. A series of problems such as storage,
+supply and safety of underground water in coal mines have been solved by the application
+of underground coal mine reservoir technology. Currently, 35 underground reservoirs have
+been built in Shendong Mines with 90 million m³ of supplied water for the year. The Group
+has established the ecological restoration technology system for large-scale coal-fired power
+generation base in the eastern grassland area and the demonstration projects in Baorixile
+and Beidian Shengli, with comprehensive restoration area of dumping site reaching more
+than 22,540 mu and the vegetation coverage increasing by more than 37%, which ensures
+the ecological security of coal-fired power generation base in eastern grassland area.
+Heavy-haul railway technology. The Group has introduced in a mobile blocking solution
+for heavy-haul railways based on LTE-R (Railroad Broadband Wireless Communication
+Technology), which greatly increases the operating density of trains, shortens the interval
+between consecutive departures of 10,000-tonne trains and improves the transportation
+capacity of the railway. The Group has developed an intelligent locomotive driving system
+suitable for heavy-haul railways, which comprehensively improves the safety of heavy-haul
+train transportation, the efficiency of line transportation and the response efficiency for
+emergency, and forms a completely independent intellectual property system. The Group
+has also carried out research on hydrogen powered equipment for heavy-haul railways,
+and developed the first high-power hydrogen powered shunting locomotive and catenary
+operating vehicle in China.
+68 China Shenhua Energy Company Limited
+Section IV Directors' Report (Continued)
+Smart and green port. Through technological innovation and intelligent development,
+the ports owned by the Group have accelerated their transformation into modern coal
+ports featuring safety, efficiency and green. Huanghua Port has built the world's first
+coal port with intelligent management and control of the whole process equipment of
+"dumping, stacking, reclaiming and loading", and the loading and unloading efficiency has
+been significantly improved. Huanghua Port has developed and applied clean production
+technologies such as the complete set of dust suppression technology, the automatic
+control system of water content in the discharge of car dumpers and the intelligent green
+ecological system for bulk cargo ports. In 2021, the average total suspended particulate
+concentration (TSP) in the Huanghua Port was only 90.7 μg/m³, representing a year-on-year
+decrease of 16.7%. The Huanghua Port won the title of "Asia Pacific Green Port" under
+the 2021 Asia Pacific Green Port Award Scheme (GPAS). Tianjin Coal Terminal has built
+the world's first intelligent loading system for bulk materials based on ship-shore digital
+twin technology, and the average berth time for a single ship reduced by 8%. Tianjin Coal
+Terminal has further implemented the upgrading of the water system, which significantly
+improves the sewage treatment capacity and increases the amount of recycled sewage.
+Zhuhai Port has realized the unmanned operation of the single machine in the coal yard, and
+completed the transformation of the remote operation for the ship loader.
+Treatment of flue gas in coal-fired power plants. The technology of carbon capture,
+utilization and storage of coal power flue gas (CCUS technology) includes two parts: carbon
+capture and utilization and storage. Relying on No. 1600 MW subcritical coal-fired generation
+units of Jinjie Energy, the Group has built the largest whole-flow demonstration project of
+carbon capture and storage after combustion in coal-fired power plant in China. The CO2
+capture rate of the project is greater than 90%. The purity of the CO2 product is more than
+99.5%. After liquefaction, the CO2 variables are around -19°C and 2.1 MPa, and all the key
+indicators meet the design requirements. .
+2021 Annual Report 69
+Section IV Directors' Report (Continued)
+(XIII) Donations
+During the reporting period, the Group made external donations of approximately RMB389
+million.
+VI. THE COMPANY'S OUTLOOK FOR FUTURE DEVELOPMENT
+Unit
+Target of 2022
+Item
+Increase/
+(decrease)
+in 2021
+Revenue
+RMB100
+2,966
+3,352.16
+(11.5)
+8.4
+million
+RMB100
+2,048
+2,391.56
+(14.4)
+million
+Selling, general and administrative
+Operating costs
+1,664.5
+kWh
+100 million
+%
+Commercial coal production
+100 million
+1,805
+3.070
+(3.0)
+tonnes
+2.978
+100 million
+4.029
+4.823
+(16.5)
+tonnes
+Gross power generation
+Coal sales
+Chen Hanwen
+30.00
+30.00
+30.00 No
+Non-Executive
+Director
+Independent
+Non-Executive
+Director
+Male
+000
+29 May 2020
+28 May 2023
+28 May 2023
+30.00
+84 China Shenhua Energy Company Limited
+30.00 No
+30.00
+53
+29 May 2020
+28 May 2023
+Independent Male
+The website
+of the HKEX
+25 June 2021
+Resoulutions
+All the 10 resolutions
+were considered and
+approved at the AGM
+by a combination of
+on-site voting by poll
+and internet voting.
+Resolution on Granting
+the Board the
+General Mandate to
+Repurchase H Shares
+was considered
+and approved at
+the A Shareholders
+Class Meeting by a
+combination of on-
+site voting by poll and
+internet voting.
+Resolution on Granting
+the Board the
+General Mandate to
+Repurchase H Shares
+was considered and
+approved at this H
+Shareholders Class
+Meeting by way of on-
+site voting by poll.
+23 October 2021 All 2 resolutions were
+2021 First Extraordinary
+General Meeting
+22 October 2021 The website
+of the SSE
+The website
+of the HKEX
+22 October 2021
+2021 First H Shareholders
+Class Meeting
+All the resolutions tabled at the general meeting above were passed.
+2021 Annual Report 83
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+The Company accepted registration of shareholders' attendance, and arranged a special
+session for the shareholders' effective consideration of proposals at the meeting.
+Shareholders actively participated in the meeting and were entitled to exercise their various
+rights, such as the right to know, the right of speech, the right to question and the right to
+vote. Directors, Supervisors and senior management of the Company attended the meeting.
+Arranging special Q&A sessions in the meetings enabled interactions between shareholders
+and the management.
+The Company's shareholders' representative, Supervisors' representative, witness lawyers
+and the representative of Computershare Hong Kong Investor Services Limited acted as
+scrutineers at the general meetings. The PRC legal advisor of the Company issued the legal
+opinion. Representatives of the auditors attended the Annual General Meeting.
+IV. DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
+(I) Changes in shareholding and remuneration of Directors, Supervisors and senior
+management
+1.
+Directors, Supervisors and senior management as at the end of the reporting
+period
+Unit: RMB ten thousand
+Remuneration paid (before tax)
+considered and
+approved at the EGM
+by a combination of
+on-site voting by poll
+and internet voting.
+26 June 2021
+The website
+of the SSE
+25 June 2021
+2021 Annual Report 81
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+III.
+Pursuant to the Supplemental Agreement to the Existing Non-competition Agreement,
+within five years after the completion of China Energy merging with China Guodian by
+the way of absorption, the Company will discretionally exercise the options and the pre-
+emptive rights to acquire the assets within the retained businesses, and will no longer
+implement the 2014 Non-competition Undertakings. The retained businesses refer to (1)
+original undertaking assets (excluding the completed acquisition of three equity assets by
+the Company in 2015) other than the assets of conventional power generation business,
+and (2) the unlisted businesses held by China Guodian which directly or indirectly compete
+with the main businesses of the Company (excluding the relevant assets that China Guodian
+undertook to inject into its subsidiary Inner Mongolia Pingzhuang Energy Co., Ltd. in 2007).
+For details, please refer to the H share announcement of the Company dated 1 March 2018
+and the A shares announcement of the Company dated 2 March 2018.
+The Company, as an integration platform of the coal business of China Energy Group, will,
+pursuant to the agreements set out in the Non-competition Agreement and its supplemental
+agreement, discretionally exercise the options and the pre-emptive rights to any business
+opportunities and assets which may pose potential competition, thereby gradually reducing
+peer competition.
+GENERAL MEETINGS
+1.
+Shareholders' Rights
+As owners of the Company, the shareholders of the Company are entitled to the rights
+as stipulated in laws, administrative regulations and the Articles of Association. The
+shareholders' general meeting is the highest authoritative body of the Company, through
+which shareholders can exercise their rights. The controlling shareholder takes part in the
+Company's operations and decision-makings through shareholders' general meetings and
+the Board.
+Pursuant to Articles 66, 69 and 75 of the Articles of Association, shareholders may submit
+written request to the Board for the convening of extraordinary general meetings or class
+meetings and submit proposals to the Company at general meetings. Upon providing the
+Company with written evidence of the class and number of shares of the Company held,
+and following verification of the shareholders' identity by the Company, shareholders
+are entitled to inspect the relevant information of the Company or obtain the Articles of
+Association, the register of shareholders, minutes of general meetings, resolutions of
+meetings of the Board and the Supervisory Committee, regular reports and financial and
+accounting reports, etc.
+The Company has formulated an effective shareholder communication policy: on the
+basis of information disclosure in strict compliance with the listing rules of the place
+where it is listed, the Company has set up a telephone, fax and email address for investor
+relations, and uses the e-interactive platform of the Shanghai Stock Exchange to respond
+to shareholders' questions in a timely manner and receive opinions from shareholders;
+regularly hold performance presentation through video and online text communication to
+provide shareholders with opportunities to communicate with the management of the
+Company on a regular basis; the Company has a full-time investor relations staff member
+responsible for shareholder communications in the department responsible for Board affairs.
+The Company has established effective communication channels with shareholders through
+such information disclosure system and investor reception system.
+82 China Shenhua Energy Company Limited
+2.
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Convening of general meetings during the reporting period
+The designated
+website for
+Meetings
+2020 Annual General Meeting
+Date of
+Date
+publishing the
+voting results
+disclosure of the
+voting results
+2021 First A Shareholders
+Class Meeting
+Social insurance, housing funds and
+corporate annuities paid by the Company
+Employees'
+Date of
+Appointment
+Performance remuneration
+(including emoluments)
+tion
+year
+Subtotal 1
+provident
+funds
+corporate
+annuities
+monetary remuneration
+parties of the
+Subtotal 2
+income
+before tax Company
+Wang Xiangxi
+Chairman and
+Male
+59
+21 June 2019
+28 May 2023
+Yes
+Executive
+Director
+Xu Mingjun
+Executive Director Male
+29 May 2020
+58
+previous
+Being the parent company subsequent to the restructuring, China Energy merged with
+China Guodian by the way of absorption. As approved in the 2018 first extraordinary general
+meeting of the Company, the Company entered into the Supplemental Agreement to
+the Existing Non- Competition Agreement with China Energy. It is agreed by both parties
+that other than the amendments in the Supplemental Agreement to the Existing Non-
+Competition Agreement, the clauses of the Existing Non-competition Agreement will not be
+changed.
+remunera-
+from related
+Basic
+healthcare,
+unemployment,
+work-related
+Including:
+injury,
+Retirement
+plan:
+performance
+maternity basic pension
+Whether to
+receive
+remuneration
+insurance
+insurance
+compensation
+Name
+Positions
+Gender Age
+(from the first
+Appoint-ment
+date]
+Scheduled
+Basic
+for the
+and housing
+and
+Other
+Total
+expiration of
+term of office
+To further formulate the performance of the Non-competition Agreement, the Resolution on
+the Performance of Non-competition Undertaking was approved at the 45th meeting of the
+second session of the Board on 27 June 2014 and the Announcement on the Performance
+of Non-competition Undertaking was disclosed to public. The Company disclosed that it will
+gradually commence the acquisition of 14 assets of the former Shenhua Group Corporation
+Limited and its subsidiaries as planned ("Original Undertaking Assets") (For details, please
+refer to the H shares announcement dated 27 June 2014 and the A shares announcement
+dated 28 June 2014). The Company completed acquisitions of 100% equity of Ningdong
+Power, 100% equity of Xuzhou Power and 51% equity of Zhoushan Power in 2015.
+58
+Avoidance of Competition
+No
+144.81
+21.61
+380
+13.90
+7.71
+123.20
+51.20
+91.90
+31.30
+28 May 2023
+Section IV Directors' Report (Continued)
+(IV) Major Risks and Countermeasures
+Investors should be aware that although the Company has reviewed and listed the major
+risks, and adopted relevant countermeasures, there is no absolute guarantee that all adverse
+impact could be eliminated due to the limitation of various factors.
+1.
+Risk of safety production and environmental protection
+The Group has established the production safety targets of preventing major
+production safety accidents as well as effectively curbing general accidents to achieve
+"zero deaths". Although the Group has been sustaining stable performance in safe
+production for its coal mines, there are uncertainties in the course of production
+safety. Given the facts that national policies on energy-saving and environmental
+protection have been further tightened, that operating costs of enterprises are
+increased due to the levy of environmental tax, and that the demand for better
+ecological environment puts more stringent requirements on the development and
+operation of enterprises, the constraints on energy-saving, emission reduction and
+environmental protection are further imposed on the Group.
+To cope with the risks of production safety for coal mines, the Group will strengthen
+the implementation of the safety production risk prevention and control management
+system, inspections and treatments and assessment of significant risks, reinforce
+the safety production training and emergency rescue management, put into full play
+the advantages of informatisation, innovate the mechanism of safety supervision,
+promote the safety management ability, and consolidate the production safety
+fundamentals.
+To cope with the risks of environmental protection, the Group continues to strengthen
+environmental monitoring, strictly adheres to the ecological red line, vigorously
+promotes the construction of green mines, focuses on the strategy of clean energy
+development, and takes the efficient use of clean coal as the core. The Group spares
+no efforts in constructing ecological civilization through continuously strengthening
+its soft and hard power of environmental protection and the brand image building
+of ultra-low emissions in coal power on an on-going basis. The Group continues
+to identify hidden environmental dangers, further improves the environmental
+management system and strengthens the remediation of potential issues and
+environmental emergency management, actively adapt to the new policy, new
+requirements and new indicators of "Dual Control" of total energy consumption and
+energy intensity in order to achieve energy-saving and emission reduction targets as
+well as to prevent severe environmental pollution incidents.
+2021 Annual Report 75
+Section IV Directors' Report (Continued)
+2.
+Risk of market competition
+Secretary of
+3.
+29 November 2018 -
+Committee and
+There are potential peer competitions between the coal business and other business of
+China Energy Group and the main business of the Company.
+Bai Chong-En
+30.00 No
+30.00
+30.00
+29 May 2020
+57
+14
+Male
+Yes
+28 May 2023
+25 June 2021
+56
+Non-Executive Male
+Director
+Yuen Kwok Keung Independent
+Yang Rongming
+Yes
+28 May 2023
+29 May 2020
+58
+Non-Executive Male
+Director
+Jia Jinzhong
+President
+Executive Vice
+the Party
+In 2021, the energy supply was tight, the industry concentration continued to
+increase, the market fluctuated at a high level, and the market competition intensified.
+As reforms of the electricity market accelerated, the proportion of power transactions
+continued to increase; the market competition intensified, and the transaction
+scale and price were uncertain. The country has increased the construction of
+cross-provincial and cross-region coal transportation railway channels, and local coal
+transportation railways have been putting into operation or under expansion. The
+coal transportation capacity will be gradually released, and the transportation formats
+tends to be diversified.
+Non-Executive
+Director
+Investment risk
+To cope with the risk of changes in industrial policies, the Group will strengthen the
+research on the latest national industrial policies and regulations, enhance policy
+coordination, pay close attention to the window of policy opportunities for resource
+continuation, correctly understand and grasp the requirements of carbon peak and
+carbon neutrality. The gradual withdrawal from traditional energy should be based on
+the safe and reliable replacement of new energy. The Group will reasonably match
+the investment scale of each industry, accelerate the development of renewable
+energy while firmly promoting the clean and efficient utilization of coal, and promote
+industrial upgrading and structural adjustment.
+VII. REASONS AND CASES OF FAILURE OF DISCLOSURE IN ACCORDANCE WITH
+GUIDELINES BY THE COMPANY DUE TO NON-APPLICABLE GUIDELINES OR
+SPECIAL REASONS
+Applicable ✓ Not applicable
+VIII. PERFORMANCE OF THE BOARD AND ITS SPECIAL COMMITTEES
+Please refer to the section headed "Corporate Governance and Corporate Governance Report".
+IX. OTHERS
+Please see the section headed "Significant Events" for management contracts; please see
+the section headed "Corporate Governance and Corporate Governance Report" for permitted
+indemnity provision, interests and dividends of Directors and Supervisors in significant
+transactions, arrangements or contracts; please see the section headed "Changes in Share Capital
+and Shareholders" for repurchase of listed securities.
+2021 Annual Report 79
+Section V Corporate Governance and
+Corporate Governance Report
+I.
+In response to the risks of market competition, the Group will improve the accuracy
+of the pre-judgment to coal market, strictly implement long-term contracts, enhance
+quality control, optimize the structure of coal products, increase brand advantage
+on an ongoing basis, strengthen the development of new markets, maintenance
+of existing markets and construction of interchange bases, and deepen the
+comprehensive coordination of production, transportation, sales, storage and use. The
+Group will also further conduct quality improvement and efficiency enhancement in
+the power industry and conduct risk prevention and control, ensure production safety
+and participate in power market transactions in compliance with laws and regulations.
+The Company will actively participate in investment in coal transportation channels
+through national railways, increase the collection and distribution capacity of self-
+owned railways and keep improving the core competitiveness of transportation of the
+Company. The Group will also deepen synergy and efficiency improvement, promote
+model innovation, enhance customer service capabilities, increase market share,
+further consolidate integration advantages, and maximize the competitive advantages
+of the Company.
+The Company has established a relatively sound corporate governance structure and a smooth
+operating mechanism, and there are no material differences from the laws, administrative
+regulations and CSRC's regulations on the governance of listed companies.
+The Board is responsible for implementing good corporate governance of the Company. The
+Company has been in compliance with the requirements of corporate governance policies as
+set out in Appendix 14 of the Hong Kong Listing Rules to establish its own system of corporate
+governance.
+The convening, voting and disclosure procedures of board meetings of the Company, rules
+of procedure of the Board and procedures for nomination and appointment of Directors are in
+compliance with relevant requirements. Being a standing decision-making body of the Company,
+the Board is accountable to the shareholders' general meeting, and exercises function and power
+in accordance with the requirements of article 136 of the Articles of Association and relevant
+applicable regulatory requirements. Being a standing executive body of the Company, operating
+management comprising senior management including the chief executive officer, is accountable
+to the Board and exercises function and power in accordance with the requirements of article
+156 of the Articles of Association and relevant applicable regulatory requirements. The Articles of
+Association sets out the respective duties of the Chairman of the Board and the chief executive
+officer in detail. The Chairman of the Board and the chief executive officer are held by different
+personnel.
+During the year ended 31 December 2021, the Company has been in full compliance with the
+provisions of principle and codes and most of the recommended best practices as specified
+therein. For the terms of functions and powers of the Board and the Board Committees under the
+Corporate Governance Code, please refer to the Articles of Association, Rules of Procedure of
+the Board and the Board Committees, which have been published on the websites of the stock
+exchanges where the Company is listed and on the Company's website. During the reporting
+period, the Company has made one amendment to the Articles of Association. For details, please
+refer to the H Share Announcements of the Company dated 28 March and 25 June 2021 and the
+A Share Announcements of the Company dated 27 March and 26 June 2021.
+The Board of the Company has set out the board diversity policy for members of the Board, which
+I was set out in the terms of reference of the nomination committee of the Board of the Company
+and has been disclosed. When selecting the candidates in accordance with the board diversity
+policy of the Company, the Board will use a series of diversified terms, including but not limited
+to gender, age, culture and educational background, race, skills, knowledge and professional
+experience as standard, and will determine in conjunction with the characteristics and role of
+the personnel. As at the end of the reporting period, the Board of the Company consisted of
+8 Directors, including 2 Executive Directors, 2 Non-Executive Director, 3 Independent Non-
+Executive Directors and 1 Employee Director. Directors are from various domestic and overseas
+industries, and the composition of the members features diversity. Each Director's knowledge
+base and field of expertise are professional and complementary in the overall board structure,
+which guarantees the scientific decision-making of the Board.
+80 China Shenhua Energy Company Limited
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+II. ENSURANCE OF INDEPENDENCE OF LISTED COMPANY BY CONTROLLING
+SHAREHOLDERS
+(1)
+Measures of Ensurance of Independence of Listed Company by Controlling
+Shareholders
+China Energy Group, the controlling shareholder of the Company, complies with the
+principles of honesty and credibility, exercises the rights and obligations of shareholders in
+accordance with the law. When China Energy Group nominated candidates for directors or
+supervisors, it shall follow the conditions and procedures stipulated in laws and regulations
+and the Articles of Association. In the event of consideration of the related transactions
+with controlling shareholders at the Board and general meeting, the connected Directors
+and controlling shareholders shall abstain from voting. There are potential peer competitions
+between the coal business and other business of China Energy Group and the major
+business of the Company and China Energy Group has taken measures to avoid peer
+competitions, as defined below.
+(II)
+Save as disclosed above, China Shenhua has an independent and complete business system
+as well as a market-oriented self-operation capability The Company is independent from its
+controlling shareholder in terms of business, personnel, assets, organization, finance and
+other aspects.
+The business activities of the Group are affected by the national industrial control
+policies. Establishing the goal of "carbon peak and carbon neutrality", the country
+has put forward new and higher requirements for the high-quality development of the
+energy industry. The Group will continue to deepen the supply-side structural reform
+of the coal industry, actively promote the elimination of outdated production capacity
+in the coal industry, accelerate the release of high-quality production capacity, and
+realize the transformation of old and new development drivers. The above policies
+may affect the Company's industrial layout, the approval of new expansion projects,
+and the reform of operation and management mode.
+Policy risk
+CORPORATE GOVERNANCE
+Section IV Directors' Report (Continued)
+The ecological and environmental constraints are tightening, and the policy of
+carbon peak and carbon neutrality are forcing deep energy conservation and clean
+and low-carbon development. New energy will usher in extraordinary and leapfrog
+development, and investment efforts and scale will continue to increase. Some
+investment projects may have design defects, and unclear follow-up operation plans.
+There are uncertainties in market and policy, which may affect the investment returns
+of the projects
+8.
+76 China Shenhua Energy Company Limited
+Section IV Directors' Report (Continued)
+4.
+5.
+Risk of project management
+The overall progress of the Group's existing projects is stable, however, there are
+uncertainties in the construction of specific projects, which includes risks arising
+from safety incidents due to the inadequate fulfillment of safety responsibilities and
+the lack of safety awareness of some of the construction workers; risks of prolonged
+construction period, delayed construction period and increased investment due to
+insufficient project risk prediction and insufficient capacity of the design unit.
+To cope with the risk of project management, the Group continuously strengthens
+its construction safety management, enforces its administration in safety emergency
+plans and eliminates major and more severe safety incidents. Strict control of project
+design and settlement will be implemented, and construction cost control at the early
+stage will be strengthened. The Group keeps track timely, monitors the construction
+of project construction, and formulates effective measures to reduce or eliminate the
+impact of the prolong of construction period.
+Risk of international operations
+The international political situation is increasingly complicated, and the world is
+entering a period of turbulence and change. Different countries have complex political,
+economic and social environments, as well as diverse legal systems, religious
+beliefs and cultural customs. Affected by fluctuations in exchange rates, stricter
+environmental protection requirements, and intensified trade conflicts among certain
+countries, the future international trades and economic situations may experience
+ups and downs as well as fluctuations. Together with the highly competitive energy
+market worldwide and the continuous spread of the COVID-19 pandemic around the
+world, there are certain uncertainties in the Group's international operations.
+To cope with investment risks, the Group will continue to optimise its investment
+management system, strengthen the quality management in the early stage of
+projects, strictly control the political risk, efficiency, environmental protection,
+procedures and accountability of project investment, highlight the risk management
+and control of major projects, and strengthen on-site investigation of key projects;
+continue to focus on investment plans, expand effective investment, reasonably
+control the pace of project investment, and strengthen the investigation and
+supervision of the implementation of investment plans; actively, orderly and standardly
+carry out post-project evaluation work to improve the benefits of investment.
+2021 Annual Report 77
+To cope with the risk of international operations, the Group will further carry out
+overseas resource evaluation, operation performance evaluation and technology
+assessment based on sound information collection, analysis and research prior to
+making any decision on overseas project investment so as to ensure economic
+and technological feasibility. The Group will actively respond to the impact of the
+COVID-19 pandemic on overseas business, strengthen overseas risk screening,
+regularly monitor the overseas legal compliance risks, and take multiple measures to
+prevent and resolve risks. Furthermore, the Company will strengthen the cultivation
+and introduction of interdisciplinary talents; actively and steadily implement the "Going
+Global" strategy in accordance with the requirements of coordinating the overall
+domestic and international situation.
+78 China Shenhua Energy Company Limited
+The Group's advantages in integrated operation of coal, power, transportation and
+coal chemical come along with the risks arising from the interruption of individual
+parts of the entire integrated chain. In case of poor organisation or coordination or a
+discontinuation of any part, the balance and high efficiency of integrated operations
+will be affected and the impact may adversely affect the Group's business results.
+Risk of integrated operations
+To cope with the risk of macroeconomic fluctuations, the Group will further
+strengthen the studies on macro-control policy and relevant industrial trends,
+constantly strengthen the core advantages of integrated operation based on the
+basic national conditions where coal is in a dominant position, vigorously promote
+technological innovation to ensure the clean and efficient utilisation of coal, explore
+and develop high-end, diversified and low-carbon coal chemical products, promote the
+optimal combination of coal and new energy, accelerate the large-scale development
+of new energy, study and deploy the development of industries such as energy
+storage, hydrogen energy, pumped storage and biomass energy, and promote the
+high-quality and sustainable development of the Company.
+To cope with the risk of integrated operations, the Group will take an array of
+measures based on production safety, including, focusing on the comprehensive
+coordination and balance of integrated operations, paying close attention to the
+resources continuation, strengthening scientific scheduling and plan management,
+improving railway collection and distribution system, strengthening the coordination of
+power grid, and strengthening the production and operation management, expanding
+the coverage of integrated operations as much as possible, and continuously
+enhancing the resilience of integrated industrial chain, value chain and supply chain.
+Risk of macroeconomic fluctuations
+7.
+6.
+Section IV Directors' Report (Continued)
+The industry in which the Group operates is closely correlated to the prosperity of
+the macro economy. Currently, China's economic development is facing the triple
+pressure of demand contraction, supply shock and weakening expectations, and
+due to the impact of the COVID-19 pandemic and various uncertain factors and with
+complex and severe external environment, the year-on-year growth rate of major
+indicators such as industrial added value, investment in fixed asset and social retail
+consumption continues to decline, and the economic downward pressure is still
+relatively large. Besides, the reform and innovation in the energy sector will have a
+significant impact on the Group's development strategy.
+term of office
+corporate
+-ment date)
+Age
+Gender
+Positions
+Name
+Total
+Other
+monetary remuneration
+provident
+housing
+remunera
+expiration of
+first appoint
+and
+remuneration
+Basic
+Scheduled
+(from the
+insurance
+insurance and
+for the
+-tion
+Total
+Subtotal 1
+Deputy
+Yang Suping
+Officer and
+23 August 2019
+Chief Executive
+2021
+14.36
+9.20
+5.16
+99.20
+51.20
+78.33
+20.87
+16 November
+29 May 2020
+51
+Executive Director Male
+Yang Jiping
+before tax Remark
+income
+Subtotal 2
+annuities
+funds
+previous year
+performance
+The 2019 annual general meeting of the Company approved that term of service of the fifth session
+of the Board and the Supervisory Committee is three years (29 May 2020 to 28 May 2023). The
+terms of office in the above table are identical to the dates of appointment by the general meeting
+or the Board. If there are no dates of appointment by the general meeting or the Board, the terms
+of office are identical to the dates of appointment by the Party Organisations.
+plan: basic
+(2)
+(1)
+Notes:
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+85
+2021 Annual Report
+797.61
+119.34
+6.72 No
+12
+(3)
+1.72
+75.05
+44.29
+678.27
+224.27
+521.24
+157.03
+88
+1.08
+Secretary of the
+0.64
+505
+The remuneration package of Directors and Supervisors for 2021 is subject to approval by the
+Company at the 2021 annual general meeting; the remuneration package of the senior management
+was approved by the Board.
+The remuneration received from the Company covers the year of 2021 or the period from the
+commencement of term of office of the Company during 2021.
+None of the personnel mentioned above hold any shares in the Company during the term of service
+in 2021.
+injury,
+maternity
+Including
+Date of
+appointment
+Retirement
+work-related
+emoluments)
+unemployment,
+(including
+Basic
+healthcare,
+remuneration
+Performance
+corporate annuities paid by the Company
+Remuneration paid (before tax)
+Social insurance, housing funds and
+Unit: RMB ten thousand
+Directors, Supervisors and senior management resigned during the reporting
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+period
+2.
+86 China Shenhua Energy Company Limited
+The ages were calculated as of 31 December 2021.
+(5)
+(4)
+pension
+Party Committee
+Member of the
+Name
+Party Committee
+Prior to the foregoing, Mr. Yang had served as deputy
+head of Liuta Mine, Shenhua Group Wanli Coal Company
+Limited, manager of Shuozhou Branch, assistant to the
+general manager and deputy general manager of Wanli
+Coal Branch of China Shenhua Energy Company Limited.
+Mr. Yang has served as the Non-executive Director of
+the fifth session of the Board of the Company since June
+2021, the director of coal and transportation industry
+management department of China Energy Group since
+December 2020. From May 2018 to December 2020,
+he served as secretary of the Party Committee and
+chairman of Shenhua Zhunneng Group Co., Ltd.. From
+May 2009 to May 2018, he served as deputy general
+manager, general manager and deputy secretary of Party
+Committee of Shenhua Shendong Coal Group Co., Ltd.,
+director, general manager and deputy secretary of Party
+Committee of Shenhua Xinjie Energy Co., Ltd., secretary
+of the Party Committee, director and chairman (legal
+representative) of Yulin Shenhua Energy Co., Ltd..
+Born in May 1965, male, Chinese, a member of
+the Communist Party of China, and a professorate
+senior engineer. Mr. Yang has extensive experience
+in coal enterprise management. He graduated from
+the Mining Engineering Department of Fuxin Mining
+Institute in 1990, majoring in mining engineering. In
+2010, he received a master's degree in engineering
+from Shandong University of Science and Technology.
+In 2016, he received a postgraduate degree and a
+doctorate degree in engineering from Liaoning Technical
+University.
+Biographical details
+Non-executive
+Director
+Yang Rongming
+Name
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+90 China Shenhua Energy Company Limited
+Prior to the foregoing, Mr. Jia successively served as
+deputy section head of Yuanping Train Depot of Taiyuan
+Railway Branch, deputy director of Taiyuan West
+Railway Station of Taiyuan Railway Branch, manager of
+Yuanping Branch of Shuohuang Railway Development
+Co., Ltd., secretary of the Party Committee and manager
+of Suning Branch of Shuohuang Railway Development
+Co., Ltd.
+2021 Annual Report 91
+Mr. Jia served as vice president of the Company from
+March 2017 to September 2019, and as the deputy
+general manager, standing deputy general manager,
+secretary of the Party Committee, chairman of the board
+of Shuohuang Railway Development Co., Ltd. from June
+2005 to March 2017.
+Born in July 1963, male, Chinese, a member of the
+Communist Party, a professor-level senior engineer,
+and received a master's degree of engineering. Mr. Jia
+has been engaged in railway transportation production
+management.
+Biographical details
+Non-executive
+Director
+Jia Jinzhong
+Name
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+2021 Annual Report 89
+Prior to the foregoing, Mr. Xu had served in various
+capacities, including the director of people work division
+of the Departmental Party Committee of the State
+Bureau of Coal Industry, the deputy director of labour
+union working division, deputy director of general
+division of people work department and a director-level
+investigator and researcher under the Central Enterprise
+Working Committee, the director of news division and
+assistant inspector of the bureau of publicity under the
+State-owned Assets Supervision and Administration
+Commission of the State Council, a deputy secretary of
+prefectural committee in Tacheng, Xinjiang, a deputy
+inspector of the bureau of publicity under the SASAC.
+Mr. Xu has served as the assistant to the general
+Imanager of China Energy concurrently from May 2018
+to October 2019, and assistant to general manager of
+former China Guodian, secretary to the Leading Party
+Group, secretary to the Party Committee and Executive
+Vice President of GD Power, assistant to Chief Executive
+Officer of the China Energy and secretary to the Party
+Committee and Executive Vice President of GD Power
+from May 2016 to September 2018. From October 2008
+to May 2016, he successively served as the chief of
+political work office, a member and a deputy secretary
+to the Party Committee directly under China Guodian,
+the secretary to the board of directors, the assistant to
+the general manager and the head of general office of
+former China Guodian.
+Mr. Xu has served as the Executive Director of the fifth
+session of the Board of the Company since May 2020,
+the secretary of the Party Committee of the Company
+since September 2018, and the executive vice president
+of the Company since November 2018.
+Mr. Jia has served as the Non-executive Director of
+the fifth session of the Board of the Company since
+May 2020, and the chief economist of China Energy
+Investment Corporation Limited since May 2018.
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Name
+Yuen Kwok Keung
+00
+Dr. Chen has served as the Independent Non-executive
+Director of the fifth session of the Board of the
+Company since May 2020. Dr. Chen is a professor of
+Nanjing Audit University, and he also serves as chair
+professor at China Business Executives Academy,
+Dalian and executive director of the China Auditing
+Society concurrently. Dr. Chen serves as an external
+supervisor of Bank of Communications Co., Ltd. and
+an independent director of Beijing Tri-Prime Gene
+Pharmaceutical Co., Ltd., and independent director of
+Shenwan Hongyuan Securities Co., Ltd.
+Born in January 1968, male, Chinese and a member
+of the Communist Party. Dr. Chen graduated from
+Accounting Department of School of Economics of
+Xiamen University in 1997 with a doctorate degree
+in economics. Dr. Chen has extensive experience
+in auditing, internal control, accounting theory and
+methods. Dr. Chen has published many papers in the
+international A-class accounting journals Journal of
+Accounting Research and Contemporary Accounting
+Research, as well as authoritative journals in China,
+such as Economic Research and Management World,
+and presided over 2 key projects of the National Science
+Foundation (國家自然科學基金).
+Biographical details
+Independent Non-
+executive Director
+Chen Hanwen
+Name
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+2021 Annual Report 93
+Dr. Bai has served as department chair of department of
+economics, associate dean and executive associate dean
+of School of Economics and Management of Tsinghua
+University, and associate professor at the School of
+Economics and Finance of the University of Hong Kong,
+independent director of China CITIC Bank Corporation
+Limited, and member of the Executive Committee of the
+International Economic Association.
+Dr. Bai has served as the Independent Non-executive
+Director of the fifth session of the Board of the
+Company since May 2020. Dr. Bai has been the dean of
+the School of Economics and Management of Tsinghua
+University since 2018 and Mansfield Freeman chair
+professor since 2004. Dr. Bai currently also serves as
+the vice president of the tenth session of Society of
+Public Finance of China and a member of the Academic
+Committee of the Council, vice president of China
+Association of Labour Economics.
+Born in October 1963, male, Chinese. Dr. Bai received a
+Ph.D. in Mathematics from the University of California,
+San Diego in 1988, and a Ph.D. in Economics from
+Harvard University in 1993. Dr. Bai has extensive
+experience in economic management, finance and
+corporate governance.
+Biographical details
+Independent Non-
+executive Director
+Bai Chong-En
+Name
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+92 China Shenhua Energy Company Limited
+Dr. Yuen served as Secretary for Justice of the HKSAR
+(2012-2018), Recorder of the High Court (2006–2012),
+a member of the Judicial Officers Recommendation
+Commission (2009–2018), chairman of the Hong
+Kong Bar Association (2007-2009), a non-official
+member of the Advisory Committee on Corruption
+of the Independent Commission Against Corruption
+(2009-2012), and a non-executive director of Mandatory
+Provident Fund Schemes Authority (2010-2012).
+Dr. Yuen has served as the Independent Non-
+executive Director of the fifth session of the Board of
+the Company since May 2020 and is a senior barrister
+with Temple Chambers. Dr. Yuen is also a committee
+member of the International Commercial Expert
+Committee of the International Commercial Court of the
+Supreme People's Court of the People's Republic of
+China, a council member of the Hong Kong International
+Arbitration Centre and a member of the Exchange Fund
+Advisory Committee concurrently.
+Born in June 1964, male, Chinese, Senior Counsel, Hong
+Kong Grand Bauhinia Medal, and Justice of the Peace.
+Dr. Yuen received a master of laws degree from City
+University of Hong Kong in 1997 and an honorary doctor
+of laws degree from Hong Kong Shue Yan University in
+2018. Dr. Yuen has extensive legal experience.
+Biographical details
+Independent
+Non-executive
+Director
+Born in October 1963, male, Chinese, a member of the
+Communist Party of China, a graduate of postgraduate
+program and a senior political engineer. Mr. Xu has
+extensive experience in corporate management.
+Female
+Biographical details
+Xu Mingjun
+37.56
+No
+101.35
+113.56 No
+35T1
+13.51
+(2)
+(1)
+Notes:
+36
+149.48
+8.35
+87.84
+47.84
+71.15
+16.69
+23 August 2021
+21 June 2018
+56
+90
+Committee
+and Secretary of
+the Disciplinary
+5.16
+99.04
+187.04
+10.32
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+88 China Shenhua Energy Company Limited
+Prior to the foregoing, Mr. Wang had also served in
+various positions, including the secretary of Municipal
+Party Committee and director of the Standing
+Committee of the Municipal People's Congress of
+Suizhou, Hubei Province, deputy secretary of Municipal
+Party Committee, mayor of Jingzhou, Hubei Province,
+director and secretary of the Leading Party Members'
+Group of Hubei Quality and Technical Supervision
+Bureau, deputy director and member of the Leading
+Party Members' Group of Hubei Provincial Economic
+and Trade Commission, director and secretary of the
+Leading Party Members' Group of the Coal Industry
+Management Office of Hubei Province, deputy director
+and member of the Leading Party Members' Group of
+Hubei Coal Industry Department.
+From July 2017 to March 2019, he served as a member
+of the standing committee of the Party Committee,
+secretary of the provincial committee of political and
+legal affairs of Hubei Province. From June 2017 to
+July 2017, he served as a member of the standing
+committee of the Party Committee, secretary general
+and member of the Leading Party Members' Group of
+the provincial government, secretary and director of
+the Leading Party Members' Group of the provincial
+government office of Hubei Province. From July 2012 to
+June 2017, he served as secretary general and member
+of the Leading Party Members' Group of the provincial
+government, secretary and director of the Leading Party
+Members' Group of the provincial government office of
+Hubei Province.
+Mr. Wang has been serving as the Chairman and
+Executive Director of the fifth session of the Board
+of the Company since May 2020, the Chairman and
+Executive Director of the fourth session of the Board of
+the Company from June 2019 to May 2020, as well as
+the secretary of the Leading Party Members' Group and
+chairman of China Energy Group since March 2019.
+Born in August 1962, male, Chinese, a member of the
+Communist Party and a senior engineer. Mr. Wang
+received a master's degree of Engineering in Mining
+Engineering from Department of Resources and
+Materials Engineering of Jiaozuo Institute of Technology
+in 2003. Mr. Wang has extensive experience in
+economic management, laws and regulations as well as
+management in coal industry.
+Biographical details
+Wang Xiangxi
+Chairman and
+Executive Director
+Name
+(1) Directors in office as at the end of the reporting period
+Brief biography
+1.
+(II) Details of current and resigned Directors, Supervisors and members of senior
+management of the Company during the Reporting Period
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+87
+2021 Annual Report
+The ages were calculated as of 31 December 2021.
+(3)
+None of the personnel mentioned above holds any shares in the Company during the term of
+service in 2021.
+The remuneration package of Directors for 2021 is subject to approval by the Company at the 2021
+annual general meeting; the remuneration package of the senior management was approved by the
+Board.
+214.91
+27.87
+17.55
+Executive Director,
+Secretary of the
+Party Committee
+and Executive Vice
+President
+5.00
+00
+587
+Appoint-ment
+Name
+Positions
+Gender
+Age
+date]
+Scheduled
+expiration of
+term of office
+Basic
+for the
+and housing
+compensation
+and
+Total
+from related
+remunera-
+previous
+provident
+tion
+year
+Subtotal 1
+funds
+corporate
+annuities
+Other
+insurance
+insurance
+remuneration
+3.39
+2.61
+29 December 2021 -
+57
+Male
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Remuneration paid (before tax)
+Social insurance, housing funds and
+corporate annuities paid by the Company
+Performance remuneration
+Basic
+healthcare,
+unemployment,
+Employees'
+(including emoluments)
+work-related
+Retirement
+Including:
+injury,
+plan:
+Whether to
+Date of
+Appointment
+(from the first
+performance
+maternity
+basic pension
+receive
+monetary remuneration
+30
+parties of the
+income
+57
+10
+29 May 2020
+28 May 2023
+Supervisory
+Committee
+Zhou Dayu
+Supervisor
+Male
+56
+Male
+17 June 2016
+Zhang Changyan
+Employees' Male
+51
+2 December 2019
+28 May 2023
+38.66
+38.66
+38.66
+Representative
+Supervisor
+28 May 2023
+Chairman of the
+Luo Meijian
+Committee
+before tax
+Company
+Wang Xingzhong Employee'
+Male
+53
+29 May 2020
+28 May 2023
+25.04
+82.80
+47.84
+107.84
+7.71
+12.28
+19.99
+127.83
+No
+Representative
+Director
+Executive Vice
+30 December 2019-
+President
+and Member
+of the Party
+Subtotal 2
+0.00
+6.00
+Prior to the foregoing, Dr. Chen had served as a
+distinguished professor of Huiyuan, University of
+International Business and Economics, a first-level
+professor at the International Business School, a
+professor and a doctoral tutor of the Accounting
+Department of the International Business School, and a
+national second-level professor, and the deputy dean of
+the Graduate School, the deputy dean of the School of
+Management, the director, professor, and doctoral tutor
+of the Accounting Department of Xiamen University.
+7.90
+No
+NNO
+Yes
+38.66
+Yes
+68
+Yes
+1.90
+90
+90
+Male
+Committee
+the Party
+Member of
+Officer and
+Male
+Chief Financial
+of the Party
+Committee
+and Member
+Total
+Cui Weishan
+Member of the
+Party Committee
+and Secretary of
+the Disciplinary
+Committee
+21.50
+135.41 No
+529
+2.91
+2.09
+17 November 2021
+55
+555
+No
+119.48
+20.82
+13.11
+7.71
+98.66
+38.66
+73.62
+25.04
+28 December 2018 -
+14
+57
+66.51 No
+16.51
+10.10
+9410
+60.29 No
+15.29
+Xu Shancheng
+President
+6.41
+50.00
+the Board
+379
+13.79
+7.71
+113.91
+47.91
+82.61
+130
+31.30
+6 November 2004
+56
+Male
+Secretary of
+Huang Qing
+Committee
+of the Party
+Secretary
+Deputy
+Officer and
+1.26
+25
+%
+0.64
+and Member
+0.00
+of the Party
+Yang Xiangbin
+0.00
+00
+29.13
+20.87
+26 March 2021
+53
+Male
+Executive Vice
+Li Zhiming
+Committee
+of the Party
+53
+9.53
+99
+5.76
+45.00
+00
+0.00
+26.22
+18.78
+6 April 2021
+56
+Deputy Secretary Male
+Committee
+94 China Shenhua Energy Company Limited
+Chief Executive
+Lv Zhiren
+06
+Return on net assets as at the end of
+13.7 percentage points
+13.7
+11.9
+%
+of the period
+Decreased by 1.8
+Return on total assets as at the end
+(18.3)
+109,734
+109,734
+89,687
+RMB million
+activities
+Net cash generated from operating
+(11.4)
+3.669
+3.670
+3.253
+RMB/share
+Basic earnings per share
+(11.4)
+72,903
+72,925
+the period
+%
+15.7
+EBITDA
+This report was approved at the twenty seventh meeting of the fifth session of the Board of the
+Company. 6 out of 8 directors attended the meeting in person.
+KPMG has issued a standard unqualified independent auditor's report in accordance with the Hong
+Kong Standards on Auditing on the Company's financial statements for the year 2023 prepared
+under the International Financial Reporting Standards.
+Lv Zhiren, the person in charge of the Company, Song Jinggang, Chief Financial Officer, and Yu
+Yanling, person-in-charge of the accounting department, warrant the authenticity, accuracy and
+completeness of the financial statements contained in this report.
+The Board proposed the payment of a final dividend in cash of RMB2.26 per share (inclusive
+of tax) for the year 2023 based on the total registered share capital on the record date of the
+implementation of the equity distribution. The profit distribution proposal is subject to the approval
+by shareholders at the shareholders' general meeting. According to the total share capital of
+19,868,519,955 shares of the Company as at 31 December 2023, the final dividend totaling
+RMB44,903 million (inclusive of tax) will be paid.
+Disclaimer of forward-looking statements: the forward-looking statements in this report made on
+the basis of subjective assumptions and judgments on future policies and economic conditions,
+which are subject to risks, uncertainties and assumptions, may differ materially from the actual
+outcome. Such statements do not constitute actual commitments to investors. Investors should
+be aware that undue reliance on or use of such information may lead to risks of investment.
+VII. Any appropriation of funds by the controlling shareholder and other related parties for non-
+operating purposes: No
+VIII. Any provision of external guarantee that has violated the applicable decision-making procedures:
+No
+IX.
+X.
+Whether more than half of the directors cannot guarantee the authenticity, accuracy and
+completeness of the annual report disclosed by the Company: No
+Material risk alert: Due to the impact of factors such as supply and demand in the coal and power
+generation industries and adjustments in industrial policies, the Group is exposed to certain
+uncertainties as to the achievement of the business targets for the year 2024. In addition, the
+Company has explained in detail the risks faced by the Company, such as safety production,
+environmental protection, market competition, project management, investment, integrated
+operation, compliance, policy and international operation, in the section headed "Directors'
+Report", which investors should pay attention to.
+2023 Annual Report
+01
+00000000000
+NAKA
+At the end of 2022
+At the end
+of 2023
+Unit
+Items
+(5.7)
+Decreased by 2.7
+percentage points
+18.4
+121,536
+18.4
+121,536
+114,573
+RMB million
+64,625
+RMB million
+equity holders of the Company
+Profit for the year attributable to
+Computershare Hong Kong Investor Services
+Limited
+188 Yanggao South Road, Pudong New
+Area, Shanghai
+China Securities Depository and Clearing
+Corporation Limited Shanghai Branch
+Office Address
+Name
+Share Registrar of the
+Company (H Share)
+Office Address
+Name
+Share Registrar of the
+Company (A Share)
+Signing Auditors Guen Kin Shing
+8th Floor, Prince's Building, 10 Chater Road,
+Central, Hong Kong
+KPMG (Public Interest Entity Auditor
+registered in accordance with the
+Accounting and Financial Reporting
+Council Ordinance)
+Office Address
+Name
+Signing Auditors Zhang Nan, Wang Xia
+8th, Tower E2, Oriental Plaza, 1 East Chang
+An Avenue, Beijing
+KPMG Huazhen LLP
+Office Address
+Name
+Accounting Firm Engaged by
+the Company (Hong Kong)
+by the Company (Chinese
+Mainland)
+Accounting Firm Engaged
+VI. OTHER RELEVANT INFORMATION
+601088
+01088
+China Shenhua
+China Shenhua
+17M Floor, Hopewell Centre, 183 Queen's
+Road East, Wanchai, Hong Kong
+2023 Annual Report 07
+08
+80
+(12.0)
+85,357
+85,398
+75,192
+RMB million
+Profit for the year
+(0.4)
+344,533
+344,533
+343,074
+RMB million
+Revenue
+The Board, Supervisory Committee and all directors, supervisors and senior management of the
+Company warrant that this annual report does not contain any misrepresentations, misleading
+statements or material omissions, and are liable for the authenticity, accuracy and completeness
+of the information contained in this annual report.
+%
+as compared with
+Increase or
+decrease at 2023
+Before
+restatement
+restatement
+After
+2022
+2023
+Unit
+Items
+VII. MAJOR ACCOUNTING DATA AND FINANCIAL INDEX
+Major Financial Indicators (Continued)
+Section II Company Profile and
+that of 2022
+VI.
+V.
+IV.
+Before
+restatement
+restatement
+After
+2022
+2023
+Net profit attributable to equity
+holders of the Company
+Unit: RMB million
+Under China Accounting Standards for
+VIII. DIFFERENCE IN ACCOUNTING DATA UNDER DOMESTIC AND OVERSEAS
+ACCOUNTING STANDARDS
+―
+The Group has implemented Amendments to International Accounting Standard 12, "Deferred
+Tax related to Assets and Liabilities arising from a Single Transaction" to which the provision
+applies from 1 January 2023. Taxable and deductible temporary differences arising on recognition
+of assets and liabilities in a single transaction to which the provision applies are no longer subject
+to the accounting treatment of initial recognition exemption for deferred tax. According to the
+relevant requirements of International Accounting Standard 12, "Income Taxes", the corresponding
+deferred tax liabilities and assets shall be recognised respectively at the time of the transaction.
+Meanwhile, for the deferred tax related to assets and liabilities arising from the related single
+transactions between the beginning of the earliest period presented in the financial statements
+in which the Group first applied the above provisions and the effective date, the retrospective
+adjustments shall be made. For details of the above changes in accounting policies and the
+restatement of the financial statements, please refer to the announcement headed Inside
+Information Changes in Accounting Policies published by the Company on the website of HKEX
+on 28 April 2023 and "Changes in Accounting Policies" in notes to the financial statements of
+this report.
+Reasons for Restatement of Financial Statements:
+Section II Company Profile and
+Major Financial Indicators (Continued)
+China Shenhua Energy Company Limited
+10.7 percentage points
+Decreased by 2.0
+26.0 percentage points
+Decreased by 3.4
+10.7
+7.3
+%
+Total debt to total equity ratio
+26.0
+24.0
+%
+Gearing ratio
+3.7
+At the end
+of 2023
+19.98
+restatement
+Business Enterprises
+09
+2023 Annual Report
+396,937
+396,983
+411,478
+72,903
+72,925
+64,625
+Standards
+Under International Financial Reporting
+3,083
+3,083
+2,786
+3,277
+3,277
+4,931
+production and other related expenditure
+Simple production maintenance, safety
+Adjustments for:
+393,854
+393,900
+408,692
+69,626
+69,648
+59,694
+Net assets attributable to equity
+holders of the Company
+At the end of 2022
+After Before
+restatement
+19.98
+20.71
+RMB/share
+RMB million
+Total assets
+Total liabilities
+%
+2022
+Before
+restatement
+restatement
+After
+the end of 2023
+as compared with
+that of the end of
+Increase or
+decrease at
+00000000
+中国神华能源股份有限公司
+CHINA SHENHUA ENERGY COMPANY LIMITED
+(a joint stock limited company incorporated in the People's Republic of China with limited liability)
+Stock Code: 01088
+Annual Report 2023
+Transportation
+Industry
+Leader in Green, Digital and Smart Transportation
+Practitioner of Developing China's Transportation Strength
+E
+國家能源——不斷前進的動力
+China Energy Driving force for constant progress
+Important Notice
+I.
+II.
+III.
+633,412
+625,320
+625,178
+1.3
+Equity attributable to equity holders
+per share
+0.0
+19,869
+19,869
+19,869
+RMB million
+period
+Total share capital at the end of the
+3.7
+396,937
+396,983
+411,478
+SSE
+HKEX
+RMB million
+Equity attributable to equity holders
+4.1
+462,722
+462,796
+481,651
+RMB million
+Total equity
+(6.6)
+162,456
+162,524
+151,761
+RMB million
+of the Company
+H Share
+A Share
+Stock Code
+PT.GH EMM INDONESIA
+Shenhua (Fujian) Energy Co., Ltd.
+China Energy Sichuan Energy Co., Ltd.
+Shenhuan Bayannur Energy Co., Ltd.
+China Energy Baotou Coal Chemical Co., Ltd.
+China Energy (Tianjin) Harbour Administration Co., Ltd.
+China Energy Zhuhai Harbour Administration Co., Ltd.
+Guoneng Yuanhai Shipping Co., Ltd.
+Shenmu Power
+Zhunge'er Power
+EMM Indonesia
+Fujian Energy
+Sichuan Energy
+Bayannur Energy
+Shipping Corporation
+Baotou Coal Chemical
+Tianjin Harbour Administration
+Zhuhai Harbour Administration
+Huanghua Harbour Administration China Energy Huanghua Harbour Administration Co., Ltd.
+China Energy Railway Equipment Co., Ltd.
+Railway Equipment
+Shuohuang Railway
+Trading Group
+Yulin Energy
+China Energy Shuohuang Railway Development Co., Ltd.
+China Energy Trading Group Limited
+China Energy Yunlin Energy Co., Ltd.
+China Energy Baotou Energy Co., Ltd.
+Baotou Energy
+Power-generating division controlled and operated by Zhunge'er
+China Energy Beidian Shengli Energy Co., Ltd.
+Energy
+2023 Annual Report
+Shanghai Listing Rules
+HKEx
+SSE
+JORC
+Dayan Mining
+Hangjin Energy
+Capital Holdings
+Finance Company
+Qingyuan Power
+Beihai Power
+Shengli Energy
+Yueyang Power
+Yongzhou Power
+Pembangkitan Jawa
+Liuzhou Power
+Beijing Gas-fired Power
+Shouguang Power
+Huizhou Thermal
+Jiujiang Power
+Mengjin Power
+Dingzhou Power
+Jinjie Energy
+Cangdong Power
+Section | Definitions (Continued)
+04
+03
+China Energy Shaanxi Shenmu Power Co., Ltd.
+Hong Kong Listing Rules
+Beidian Shengli
+Baorixile Energy
+Investor Relations
+Section IX
+196
+Changes in Shares and Particulars of Shareholders
+Section VIII
+167
+Significant Events
+Section VII
+154
+Environmental and Social Responsibility
+Section VI
+85
+Corporate Governance and Corporate Governance Report
+Section V
+16
+Directors' Report
+Section IV
+11
+Board's Statement
+1000+ Contents
+Section I
+Definitions
+03
+Section II
+Company Profile and Major Financial Indicators
+208
+China Energy Baorixile Energy Co., Ltd.
+Section X
+217
+Zhunge'er Energy
+Shenhua Zhunge'er Energy Co., Ltd.
+Shenhua Shendong Power Co., Ltd.
+Shendong Coal Branch of China Shenhua Energy Company Limited
+China Energy Shendong Coal Group Co., Ltd.
+China Energy and its subsidiaries (excluding the Group)
+China Energy Investment Corporation Limited (ª¤¶¶
+有限責任公司)
+the Company and its subsidiaries
+Shendong Power
+Shendong Coal Branch
+Shendong Coal
+China Energy Group
+China Energy
+The Group
+China Shenhua Energy Company Limited
+China Shenhua/the Company
+meanings:
+Unless the context otherwise requires, the following terms used in this report have the following
+Section Definitions
+355
+Summary of Major Financial Information for the Recent Five Years
+Section XII
+354
+Documents Available for Inspection
+Section XI
+Independent Auditor's Report and Financial Statements
+China Energy Yudean Taishan Power Co., Ltd.
+China Energy Hebei Cangdong Power Co., Ltd.
+China Energy Jinjie Energy Co., Ltd.
+(Postal Code: 100011)
+Hong Kong
+1 Garden Road, Central,
+Room B, 54th Floor, Bank of China Tower,
+Hong Kong Office of the Company
+ir@csec.com
+(8610) 5813 1804/1814
+(8610) 5813 3355
+(Postal Code: 100011)
+22 Andingmen Xibinhe Road, Dongcheng
+District, Beijing
+Zhuang Yuan
+Representative of Securities Affairs,
+Joint Company Secretary
+District, Beijing
+22 Andingmen Xibinhe Road, Dongcheng
+Address
+Office of the Board of the Company
+1088@csec.com
+(8610) 5813 1804/1814
+(8610) 5813 1088
+(Postal Code: 100011)
+E-mail
+Fax
+Tel
+22 Andingmen Xibinhe Road, Dongcheng
+District, Beijing
+Name
+Address
+Tel
+Fax
+Song Jinggang
+(8610) 5813 1088/3399/3355
+III. PARTICULARS
+Abbreviation
+Stock Exchange
+Type
+BASIC INFORMATION ON SHARES
+V.
+www.sse.com.cn and www.hkexnews.hk
+SSE, Office of the Board of the Company and Hong
+Kong Office of the Company
+Securities Times and Securities Daily
+of annual report of the Company
+Place where the Company's annual
+report is available for inspection
+Stock exchange websites for disclosure
+Media for disclosure of annual report of China Securities Journal, Shanghai Securities News,
+the Company
+IV. INFORMATION DISCLOSURE AND PLACE FOR DOCUMENT INSPECTION
+Section II Company Profile and
+Major Financial Indicators (Continued)
+China Shenhua Energy Company Limited
+06
+www.csec.com and www.shenhuachina.com
+ir@csec.com
+22 Andingmen Xibinhe Road, Dongcheng District, Beijing
+100011
+N/A
+(852) 2915 0638
+2578 1635
+(852)
+E-mail
+Office Address of the Company
+Postal Code of Office Address of
+the Company
+Company Website
+the Company
+Change of Registered Address of
+Registered Address of the Company
+Postal Code of Registered Address of
+the Company
+(8610) 5813 1804/1814
+Secretary to the Board, Joint Company
+Secretary
+CONTACTS AND CONTACT DETAILS
+Mr. Wang Xiangxi resigned as the Chairman and Executive
+Director of the Company on 29 July 2022. The selection
+and appointment of the new chairman are in progress.
+Lv Zhiren, Song Jinggang
+Total debt to total equity ratio
+Gearing ratio
+EBITDA
+Articles of Association
+International Financial Reporting
+Standards
+China Accounting Standards for
+Business Enterprises
+Section | Definitions (Continued)
+China Shenhua Energy Company Limited
+Rules Governing the Listing of Securities on the HKEX
+Rules Governing the Listing of Stocks on SSE
+The Stock Exchange of Hong Kong Limited
+Shanghai Stock Exchange
+Australasian Code for Reporting of Mineral Resources and Ore
+Reserves
+Inner Mongolia Dayan Mining Industry Group Co., Ltd.
+China Energy Hangjin Energy Co., Ltd.
+China Energy Capital Holdings Co., Ltd.
+China Energy Finance Co., Ltd.
+China Energy Guangtou (Beihai) Power Generation Co., Ltd.
+China Energy Qingyuan Power Generation Co., Ltd.
+China Energy Group Yueyang Power Generation Co., Ltd.
+Shengli Energy Branch of the Company
+China Energy Group Yongzhou Power Co., Ltd.
+China Energy Guohua (Beijing) Gas-fired Power Co., Ltd.
+China Energy Shouguang Power Generation Company Limited
+China Energy Guangtou (Liuzhou) Power Generation Co., Ltd.
+PT. Shenhua Guohua Pembangkitan Jawa Bali
+China Energy (Huizhou) Thermal Power Co., Ltd.
+China Energy Shenhua Jiujiang Power Co., Ltd.
+China Energy Mengjin Thermal Power Co., Ltd.
+China Energy Hebei Dingzhou Power Generation Co., Ltd.
+Shanghai-Hong Kong Stock
+Connect
+Shenzhen-Hong Kong Stock
+Connect
+RMB
+Reporting Period
+the Company under the Hong Kong
+Listing Rules
+Authorised Representative of
+Legal Representative of the Company
+Abbreviation/Short Name of English Name of CSEC/China Shenhua
+the Company
+China Shenhua Energy Company Limited
+中國神華
+中國神華能源股份有限公司
+English Name of the Company
+the Company
+Short Name of Chinese Name of
+Chinese Name of the Company
+INFORMATION OF THE COMPANY
+Section III
+II.
+Major Financial Indicators
+Section II Company Profile and
+05
+2023 Annual Report
+January to December 2023
+Renminbi unless otherwise specified
+A mutual access and connect mechanism for transactions in stock
+markets between Shenzhen Stock Exchange and HKEX
+A mutual access and connect mechanism for transactions in stock
+markets between SSE and HKEX
+[Long-term interest-bearing debt + short-term interest-bearing
+debt (including notes payable)]/[long-term interest-bearing debt +
+short-term interest-bearing debt (including notes payable) + total
+shareholder equity]
+Articles of Association of China Shenhua Energy Company Limited
+Profit for the year + net financial costs + income tax + depreciation
+and amortization - share of profits and losses of associates
+Total liabilities/total assets
+International Financial Reporting Standards issued by the
+International Accounting Standards Board
+The latest Accounting Standards for Business Enterprises issued
+by the Ministry of Finance of the People's Republic of China and
+the related application guidance, interpretations and other related
+requirements
+I.
+Taishan Power
+22 Andingmen Xibinhe Road, Dongcheng District, Beijing
+100011
+China Shenhua Energy Company Limited
+Biographical details
+Non-executive
+Director
+Jia Jinzhong
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Name
+Bai Chong-En
+Independent
+Non-executive
+Director
+Biographical details
+Born in October 1963, male, Chinese. Dr. Bai received a
+Ph.D. in Mathematics from the University of California,
+San Diego in 1988, and a Ph.D. in Economics from
+Harvard University in 1993. Dr. Bai has extensive
+experience in economic management, finance and
+corporate governance.
+Dr. Bai has served as the independent non-executive
+director of the fifth session of the Board of the Company
+since May 2020. Dr. Bai has been the dean of the School
+of Economics and Management of Tsinghua University
+since 2018 and Mansfield Freeman chair professor of
+the school since 2004. Dr. Bai currently also serves as
+the vice president of All-China Federation of Industry
+and Commerce (I), the vice president of the
+tenth session of Society of Public Finance of China and
+a member of the Academic Committee of the Council
+of the society, vice president of China Association of
+Labour Economics.
+Dr. Bai has served as department chair of department of
+economics, associate dean and executive associate dean
+of School of Economics and Management of Tsinghua
+University, and associate professor at the School of
+Economics and Finance of the University of Hong Kong,
+independent director of China CITIC Bank Corporation
+Limited, and member of the Executive Committee of
+the International Economic Association.
+98
+China Shenhua Energy Company Limited
+Name
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Independent
+Non-executive
+Director
+Biographical details
+Born in January 1968, male, Chinese and a member
+of the Communist Party. Dr. Chen graduated from
+Accounting Department of School of Economics of
+Xiamen University in 1997 with a doctorate degree
+in economics. Dr. Chen has extensive experience in
+auditing and accounting theory and methods, risks and
+internal control.
+Dr. Chen has served as the independent non-executive
+director of the fifth session of the Board of the Company
+since May 2020. Dr. Chen is an honorary dean and a
+professor of the School of Internal Audit in Nanjing Audit
+University, and he also serves as executive director of
+the China Auditing Society concurrently. Dr. Chen serves
+as an external supervisor of Bank of Communications
+Co., Ltd. and an independent director of Shenwan
+Hongyuan Securities Co., Ltd., and Bank of Suzhou Co.,
+Ltd..
+Prior to the foregoing, Dr. Chen had served as
+a distinguished professor of Huiyuan, University of
+International Business and Economics, a first-level
+professor at the International Business School,
+a professor and a doctoral tutor of the Accounting
+Department of the International Business School, and a
+national second-level professor, and the deputy dean of
+the Graduate School, the deputy dean of the School of
+Management, the director, professor, and doctoral tutor
+of the Accounting Department of Xiamen University.
+2023 Annual Report
+Born in July 1963, male, Chinese, a member of the
+Communist Party, a professor-level senior engineer,
+and received a master's degree in engineering. Mr. Jia
+has been engaged in railway transportation production
+management.
+Mr. Jia has served as the non-executive director of the
+fifth session of the Board of the Company since May
+2020, and has served as the Senior Business Officer
+of China Energy from July 2021 to July 2023. Mr. Jia
+served as the chief economist of China Energy from
+May 2018 to July 2021. From March 2017 to September
+2019, he served as vice president of the Company.
+Prior to the foregoing, Mr. Jia had successively served
+as the deputy general manager, standing deputy general
+manager, secretary of the Party Committee, chairman
+of the board of Shuohuang Railway Development Co.,
+Ltd., the deputy section head of Yuanping Train Depot,
+and deputy director of Taiyuan West Railway Station
+of Taiyuan Railway Branch, as well as the manager of
+Yuanping Branch, secretary of the Party Committee,
+and manager of Suning Branch of Shuohuang Railway
+Development Co., Ltd...
+2023 Annual Report
+Name
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+97
+2023 Annual Report
+Dr. Yuen had served as Secretary for Justice of the
+HKSAR (2012 to 2018), Recorder of the High Court
+(2006 to 2012), a member of the Judicial Officers
+Recommendation Commission (2009 to 2018), chairman
+of the Hong Kong Bar Association (2007 to 2009),
+a nonofficial member of the Advisory Committee on
+Corruption of the Independent Commission Against
+Corruption (2009 to 2012), and a non-executive director
+of Mandatory Provident Fund Schemes Authority (2010
+to 2012).
+Dr. Yuen has served as the independent non-executive
+director of the fifth session of the Board of the Company
+since May 2020 and is a Senior Counsel with Temple
+Chambers. Dr. Yuen is also a committee member of
+the International Commercial Expert Committee of the
+International Commercial Court of the Supreme People's
+Court of the People's Republic of China, a co-chairperson
+of the Hong Kong International Arbitration Centre and a
+member of the Hong Kong Exchange Fund Advisory
+Committee concurrently.
+Born in June 1964, male, Chinese, Senior Counsel, Hong
+Kong Grand Bauhinia Medal, and Justice of the Peace.
+Dr. Yuen received a master's degree in laws from City
+University of Hong Kong in 1997 and an honorary doctor
+degree in laws from Hong Kong Shue Yan University in
+2018. Dr. Yuen has extensive legal experience.
+Biographical details
+Independent
+Non-executive
+Director
+Yuen Kwok Keung
+99
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+96
+Prior to the foregoing, Mr. Yang had served as deputy
+head of Liuta Colliery, former Shenhua Group Wanli
+Coal Company Limited, manager of Shuozhou Branch,
+assistant to the general manager and deputy general
+manager of Wanli Coal Branch of China Shenhua Energy
+Company Limited.
+Mr. Yang has served as the non-executive director of the
+fifth session of the Board of the Company since June
+2021, and has served as the first-level chief business
+officer of coal and transportation industry management
+department of China Energy Group since March 2023.
+Mr. Yang served as the director of coal and transportation
+industry management department of China Energy Group
+from December 2020 to March 2023. From May 2018
+to December 2020, he served as secretary of the Party
+Committee and chairman of Shenhua Zhunneng Group
+Co., Ltd.. From May 2009 to May 2018, he served as
+deputy general manager, general manager and deputy
+secretary of Party Committee of Shenhua Shendong
+Coal Group Co., Ltd., director, general manager and
+deputy secretary of Party Committee of Shenhua Xinjie
+Energy Co., Ltd., secretary of the Party Committee,
+director and chairman (legal representative) of Yulin
+Shenhua Energy Co., Ltd.
+Born in May 1965, male, Chinese, a member of
+the Communist Party of China, and a professorate
+senior engineer. Mr. Yang has extensive experience
+in coal enterprise management. He graduated from
+the Mining Engineering Department of Fuxin Mining
+Institute in 1990, majoring in mining engineering. In
+2010, he received a master's degree in engineering
+from Shandong University of Science and Technology.
+In 2016, he received a postgraduate degree and a
+doctorate degree in engineering from Liaoning Technical
+University.
+Biographical details
+Non-executive
+Director
+Yang Rongming
+Name
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+95
+Name
+99
+Chen Hanwen
+Name
+ĦRĀ) since April 2021. Mr. Zhou served as a
+director of the inspection team of the Party Leadership
+Group of China Energy since April 2023 to December
+2023, a director of the Materials and Procurement
+Supervision Department of the China Energy from March
+2020 to April 2023 and a supervisor of the fourth session
+of Supervisory Committee of the Company from June
+2017 to May 2020, a supervisor of the third session
+of Supervisory Committee of the Company from June
+2016 to June 2017, and the director of the Industrial
+Coordination Department of China Energy from May
+2018 to March 2020.
+Prior to the foregoing, Mr. Zhou had successively held
+the post of the general manager of capital operation
+department and general manager of the Business
+Administration Department of former Shenhua
+Group Corporation and the Company, and the deputy
+general manager and general manager of the Planning
+Department and a deputy director of the Policy and Law
+Research Office of former Shenhua Group Corporation.
+102 China Shenhua Energy Company Limited
+Name
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Employee
+Supervisor
+Biographical details
+Born in November 1975, male, Chinese and a member
+of the Communist Party of China and a senior engineer.
+He graduated from North China Electric Power University
+in 1997, majoring in power plant centralized control
+operation.
+Mr. Zhang has served as the employee supervisor of
+the fifth session of the Supervisory Committee of the
+Company since July 2022, the deputy director of the
+office of committee for discipline inspection of the
+Company since April 2022. From June 2018 to April 2022,
+he served as a staff member and the manager of the
+general office of the organisational personnel department
+(human resources department) of the Company. From
+February 2013 to June 2018, he served as senior director
+of general manager working department, secretary of
+the Party group, deputy division-level staff member
+of general manager working department, secretary of
+Youth League Committee, assistant to the director and
+deputy director of the general office of the Party group
+of GD Power Development Co., Ltd.
+Prior to the foregoing, Mr. Zhang had served as the
+chief engineer of the information department of Guodian
+Zhejiang Beilun No. 1 Power Generation Co., Ltd. and
+other positions.
+2023 Annual Report 103
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+(3) Senior management in office as at the end of the Reporting Period
+For the biographical details of Lv Zhiren and Xu Mingjun, please refer to
+the biographical details of directors. The biographical details of other senior
+management are as follows:
+Name
+Wang Xingzhong
+Executive Vice
+President and
+Member of the
+Party Committee
+Biographical Details
+Born in April 1968, male, Chinese, a member of the
+Communist Party and a professor-level senior engineer.
+Mr. Wang has long experience in railway transport,
+operation and management. He graduated from the
+Shanghai Railway Institute () in 1989,
+majoring in railway engineering and obtained the master
+academic qualification and a Ph.D. degree in engineering
+from China Academy of Railway Sciences (+ £ÙNŞ
+) in 2011.
+Mr. Wang has served as executive vice president and a
+member of the Party Committee of the Company since
+December 2019, and a director of Beijing GD Power
+Co., Ltd. since February 2023. Mr. Wang has served as
+a director and vice chairman of Haoji Railway Co., Ltd.
+since March 2023, and the employee director of the
+fifth session of the Board of the Company from May
+2020 to July 2022. Mr. Wang served as the director
+and deputy secretary of operating management center
+of transport industry of China Energy and the Company
+from May 2018 to December 2019, and the general
+manager of transport management department of the
+former Shenhua Group Corporation and the Company
+from February 2015 to May 2018.
+Prior to the foregoing, Mr. Wang had successively
+served as deputy secretary of the Party Committee and
+chairman of Shenhua Baoshen Railway Group Co., Ltd.,
+deputy secretary of the Party Committee, chairman
+and general manager of Shenhua Baoshen Railway
+Group Co., Ltd., chairman of Shenhua Ganquan Railway
+Co., Ltd., and the deputy general manager of Shenhua
+Zhunge'er Energy Co., Ltd and general manager of
+Dazhun Railway Company.
+104 China Shenhua Energy Company Limited
+Mr. Zhou has served as the supervisor of the fifth
+session of the Supervisory Committee of the Company
+since May 2020, the senior business director of China
+Energy from December 2023, and a director of China
+National Energy Group Materials Co., Ltd. (X⠀F₤
+Born in October 1965, male, Chinese, a member of the
+Communist Party and a researcher. Mr. Zhou obtained
+a bachelor's degree in National Economic Management
+at Peking University in 1986 and a master's degree in
+International Finance at Peking University in 2001.
+Zhang Feng
+Supervisor
+8
+Liu Xiaolei
+Employee Director
+Biographical details
+Born in October 1974, female, Chinese and a member of
+the Communist Party of China, a senior economist. She
+graduated from the China University of Political Science
+and Law (CUPL) in 1999 majoring in law and obtained a
+Ph.D. degree in Legal Theory from CUPL in 2016.
+Biographical details
+100 China Shenhua Energy Company Limited
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+(2) Supervisors in office as at the end of the Reporting Period
+Name
+Tang Chaoxiong
+Ms. Liu has served as the employee director of the
+fifth session of the Board of the Company since July
+2022, the manager of the legal division of the corporate
+management and legal affairs department of the Company
+since November 2018. From May 2010 to November
+2018, she served as the manager of the dispatched
+directors division of the property rights administration
+office of former Shenhua Group Corporation Limited and
+the Company, and a staff member of the legal division of
+the corporate management and legal affairs department
+of the Company.
+2023 Annual Report 101
+Committee
+Biographical details
+Born in February 1968, male, Chinese and a member of
+the Communist Party of China, a senior accountant. Mr.
+Tang has extensive experience in financial management.
+He graduated from Changsha Institute of Water
+Conservancy and Electric Power in 1991, majoring in
+finance and accounting.
+Mr. Tang has served as the chairman of the fifth session
+of the Supervisory Committee of the Company since
+June 2022, a non-executive director of China Longyuan
+Power Group Corporation Limited since June 2021 and
+the head of audit department of China Energy since April
+2023. From April 2021 to April 2023, Mr. Tang has served
+as the head of capital operation department of China
+Energy. From November 2016 to April 2021, Mr. Tang
+served as the chief financial officer, deputy manager and
+Member of the Party Committee of Guodian Technology
+& Environment Group Corporation Limited.
+Prior to the foregoing, Mr. Tang had served as the
+chairman, deputy general manager, chief financial
+officer and member of Leading Party Group of Guodian
+Technology & Environment Group Corporation Limited;
+deputy general manager and member of Leading Party
+Group of former China Guodian Capital Holdings Ltd (
+國電資本控股有限公司), and deputy general manager
+and member of Leading Party Group of former Guodian
+Finance Co., Ltd. ().
+Chairman of
+the Supervisory
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Name
+Zhou Dayu
+The Board of the Company shall be accountable to the shareholders at general meetings,
+and please refer to Article 136 of the Articles of Association for its functions and powers.
+(1) Function and Power of the Board
+V. BOARD OF DIRECTORS
+Number of meetings held on-site with correspondence
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+112 China Shenhua Energy Company Limited
+Other than their working relationships in the Company, none of the directors, supervisors
+or senior management has any financial, business or family relationship or any relationship
+in other material aspects with each other. As at 31 December 2023, the Company had
+not granted any equity securities or warrants to its directors, supervisors and senior
+management or their respective spouses or children under the age of 18.
+The Board of the Company performed its responsibilities in respect of corporate governance
+in accordance with Rule A.2.1 of Appendix C1 to the Hong Kong Listing Rules: (1) to
+develop and review the Company's policies and practices on corporate governance
+and make recommendations to the Board; (2) to review and monitor the training and
+continuous professional development of the directors and senior management; (3) to
+review and monitor the Company's policies and practices on compliance with legal and
+regulatory requirements; (4) to develop, review and monitor the code of conduct and
+compliance manual (if any) applicable to employees and directors; and (5) to review the
+Company's compliance with the Corporate Governance Code and disclosure in the corporate
+governance report.
+During the Reporting Period, the Board of the Company reviewed and revised relevant
+corporate governance systems, such as the rules of procedure for three special committees
+including the Remuneration and Assessment Committee of the Board, the working rules
+of the secretary to the Board, and the working rules for independent directors; organised
+directors and senior management to participate in various trainings conducive to their
+continuous professional development; reviewed the compliance management of the
+Company; reviewed the Company's compliance with the Corporate Governance Code
+and approved the disclosure the section headed "Corporate Governance and Corporate
+Governance Report" of this report.
+Including: Number of meetings held on-site
+(II)
+Board Meetings
+Number of Board meetings held during the year
+Number of meetings held by correspondence
+7304
+2023 Annual Report 113
+The Company has entered into service contracts with all of its directors and supervisors.
+None of the directors or supervisors has entered into or proposed to enter into any
+service contract with members of the Group which cannot be terminated by the Group
+within one year without any compensation (other than the statutory compensation). The
+Company has maintained appropriate liability insurance for its directors, supervisors and
+senior management. The directors of the Company are entitled to be indemnified for the
+verification and inspection costs, individual investigation costs, corporate verification and
+inspection expenses, corporate investigation expenses, losses arising from negotiable
+securities compensation claims incurred by or relating to the execution and performance
+of their duties subject to the applicable laws and under the coverage of directors liability
+insurance taken out by the Company for the directors. These provisions are valid during
+the year ended 31 December 2023 and remain to be valid as at the date of this report.
+The Board of the Company is responsible for the preparation of the accounts. The
+Company's accounting firm has stated its reporting responsibilities in its audit report on
+the financial statements for the year 2023.
+When considering any matters or transactions at any Board meeting, the directors are
+required to declare any direct or indirect interests and recuse themselves where appropriate.
+Saved as their own service contracts, ② the 2021-2023 Mutual Coal Supply Agreement
+and the 2021-2023 Mutual Supplies and Services Agreement entered into on 27 August
+2021, the 2024-2026 Mutual Coal Supply Agreement and the 2024-2026 Mutual Supplies
+and Services Agreement entered into on 28 April 2023, and the Supplemental Agreement
+Il to the Existing Non-Competition Agreement entered into on 28 April 2023 between the
+Company and China Energy, ③ the 2021-2023 Financial Service Agreement entered into on
+26 March 2021, the Supplemental Agreement to the Financial Service Agreement entered
+into on 28 October 2022 and the 2024-2026 Financial Services Agreement entered into on
+28 April 2023 between the Company and Finance Company, ④ the 2023-2025 Factoring
+Service Agreement entered into between the Company and National Factoring Company
+on 28 April 2023, and ⑤ other related party/connected transactions between the Company,
+and China Energy, the controlling shareholder, and its subsidiaries, none of the directors
+and supervisors of the Company has any material personal interests, directly or indirectly,
+in material contracts, transactions or arrangements entered into by the Company or any of
+its subsidiaries in 2023 and subsisting during or at the end of the year; the directors and
+supervisors of the Company have confirmed that they and their associates have not entered
+into any connected transaction with the Company and its subsidiaries.
+Particulars
+of changes
+☐ Applicable ✓ Not applicable
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Reason for the change
+Song Jinggang
+Secretary to the Board
+Appointed
+Appointed at the 21st meeting of the fifth
+session of the Board
+Huang Qing
+Member of Party Committee, Resigned
+Secretary to the Board,
+Adjustment of work arrangements
+Company Secretary, General
+Legal Counsel
+(V) Securities Transaction of Directors, Supervisors and Senior Management
+During the Reporting Period, none of the directors, supervisors and senior management of
+the Company held shares of the Company, and none of the change in shareholding of the
+Company shall be disclosed pursuant to the Administrative Rules Concerning the Holding
+and Change of Shares held by Directors, Supervisors and Senior Management of a Listed
+Company promulgated by the CSRC.
+As at 31 December 2023, none of the directors, supervisors or chief executives of the
+Company held any shares of the Company, nor did they have any interest or short position
+in the shares or underlying shares of the Company or any of its associated corporations
+(within the meaning of Part XV of the SFO (Chapter 571 of the Laws of Hong Kong)) which
+were required, pursuant to section 352 of the SFO, to be recorded in the register referred
+therein, or to be notified to the Company and the HKEx pursuant to the Model Code for
+Securities Transactions by Directors of Listed Issuers (the "Model Code") as set out in
+Appendix C3 to the Hong Kong Listing Rules.
+The securities transactions of the directors of the Company have been carried out in
+accordance with the Model Code which is complied with by the Company. The Model
+Code is also applicable to the supervisors and senior management of the Company. After
+making specific enquiries to all directors, supervisors and senior management, the directors,
+supervisors or senior management of the Company have confirmed that they have fully
+complied with the Model Code and the code of conduct regarding securities transactions
+by directors during their respective terms of office in 2023.
+2023 Annual Report 111
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+(VI) Sanction from Securities Regulatory Authorities in the Last Three Years
+(VII) Others
+In 2023, the Board of the Company held a total of 7 meetings, at which all the proposals
+were considered and approved. Details of the meetings are as follows:
+Executive Vice
+President and
+Member of the
+Party Committee
+Name
+All 3 resolutions were considered and
+approved, please refer to the H share
+announcement of the Company dated
+27 September 2023 and A share
+announcement of the Company dated 28
+September 2023 for details
+All 6 resolutions were considered and
+approved, please refer to the H share
+announcement of the Company dated 27
+October 2023 and A share announcement
+of the Company dated 28 October 2023 for
+details
+All 4 resolutions were considered and
+approved, please refer to the H share
+announcement of the Company dated 28
+December 2023 and A share announcement
+of the Company dated 29 December 2023
+for details
+5
+The 23rd meeting of the fifth 27 September 2023 On-site with
+session of the Board
+correspondence
+60
+The 24th meeting of the fifth 27 October 2023
+session of the Board
+7
+The 25th meeting of the fifth 28 December 2023 On-site with
+session of the Board
+correspondence
+114 China Shenhua Energy Company Limited
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Biographical Details
+Position
+Li Zhiming
+Name
+All 3 resolutions were considered and
+approved, please refer to the H share
+announcement of the Company dated 25
+August 2023 and A share announcement
+of the Company dated 26 August 2023 for
+details
+No.
+All 17 resolutions were considered and
+approved, please refer to the H share
+announcement of the Company dated 28
+April 2023 and A share announcement
+of the Company dated 29 April 2023 for
+details
+All 20 resolutions were considered and
+Date
+1
+The 19th meeting of the fifth 15 February 2023
+session of the Board
+Methods
+2
+The 20th meeting of the fifth 24 March 2023
+session of the Board
+On-site
+3
+The 21st meeting of the fifth 28 April 2023
+session of the Board
+4
+The 22nd meeting of the
+fifth session of the Board
+25 August 2023
+On-site
+Meeting Resolutions
+On-site with
+correspondence
+On-site with
+correspondence
+All 3 resolutions were considered and
+approved, please refer to the H share
+announcement of the Company dated 15
+February 2023 and A share announcement
+of the Company dated 16 February 2023
+for details
+approved, please refer to the H share
+announcement of the Company dated 24
+March 2023 and A share announcement
+of the Company dated 25 March 2023 for
+details
+Name
+On-site
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Co. Ltd.
+Beijing GD Power Co., Ltd.
+Senior Management Wang
+2021-04
+China Energy Group Materials Director
+Department
+Supervision
+and Procurement
+2023-04
+2020-03
+Director of the Materials
+Director
+Leadership Group
+2023-12
+Director of the Inspection 2023-04
+Senior Business Director 2023-12
+2021-06
+Non-executive Director
+China Longyuan Power Group
+Corporation Limited
+China Energy
+Zhou Dayu
+Operation Department
+2023-04
+2021-04
+Team of the Party
+2023-02
+of China Shenhua
+Xingzhong
+Li Zhiming
+2020-06
+Co-Chairman
+Hong Kong International Arbitration
+Centre
+2018-11
+Council Member
+Shenzhen Court of International
+Arbitration
+2023-11
+2022-01
+Independent Director
+Yuen Kwok Keung Hong Kong Aerospace Technology
+Group Limited
+of term of office of office
+Position
+Name of other entity
+Name
+Commencement Expiry of term
+Positions held in Other Entities
+3.
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+(IV) Changes of Directors, Supervisors and Senior Management of the Company
+Mongolia Branch
+2022-10
+Director of Inner
+China Energy
+Department
+Director of the Capital
+Hong Kong Exchange Fund Advisory
+Committee
+Chaoxiong
+Director of Audit
+Commencement Expiry of term
+2. Positions held in the Shareholders' Companies
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+2023 Annual Report 107
+The directors and supervisors of the Company have performed their duties
+in accordance with the requirements of the Articles of Association, Rules of
+Procedure of the Board Meeting and Rules of Procedure of the Supervisory
+Committee Meeting of the Company. Lv Zhiren, chief executive officer and
+deputy secretary to the Party Committee, is accountable to the Board and
+exercises his responsibilities as chief executive officer in accordance with
+the requirements of the Articles of Association. Other senior management
+members are responsible for business operation of the Company subject to
+the decision and authorisation of the Board.
+Mr. Xu Mingjun ceased to be the secretary of the Party Committee of the
+Company from 17 November 2023. Mr. Yang Xiangbin ceased to be the deputy
+secretary of the Party Committee of the Company from 30 October 2023. Mr.
+Cui Weishan ceased to be the secretary of the Disciplinary Committee of the
+Company from 23 February 2024.
+The Company resolutely implemented the new requirements on political
+construction in the new era, and strengthened the overall leadership of the
+Party. The Company has revised and improved the Articles of Association and
+rules and regulations of the Company, institutionalized the Party Committee
+research and discussion as a pre-procedure of major decision-making, and
+organically integrated the Party leadership with the improvement of corporate
+governance.
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+106 China Shenhua Energy Company Limited
+Prior to the foregoing, Mr. Song had served as the
+deputy director of the financial management department
+of former China Guodian Corporation, the chief
+accountant and a member of the Party group of Guodian
+Changyuan Electric Power Co., Ltd. and a member of the
+Party group of Guodian Hubei Electric Power Co., Ltd.,
+deputy chief accountant and head of financial property
+department of Guodian Dadu River Basin Hydropower
+Development Co., Ltd...
+of term of office of office
+Mr. Song served as a member to the Party Committee of
+the Company since June 2022, the chief financial officer
+of the Company since August 2022 and the secretary
+to the Board of the Company since April 2023, the joint
+company secretary of the Company since March 2024.
+From October 2020 to June 2022, Mr. Song served as
+a director, general manager and deputy secretary of the
+Party committee of China Energy Capital Holdings Co.,
+Ltd. From April 2020 to October 2020, he served as
+the director, general manager and deputy secretary of
+the Party committee of China Energy Finance Company
+Limited. From December 2019 to April 2020, he served
+as the first-level business director of China Energy
+Capital Holdings Co., Ltd. and the former Guodian
+Finance Co., Ltd. From April 2017 to December 2019, he
+served as the deputy secretary of the Party committee,
+director, inspector and first-level business director of
+Changjiang Property Insurance Co., Ltd.
+Chief Financial
+Song Jinggang
+Born in November 1974, male, Chinese, a member of
+the Communist Party and a senior accountant. Mr. Song
+has extensive experience in financial management.
+He graduated from Chongqing Institute of Industrial
+Management in 1997, majoring in accounting, and
+obtained a master's degree in business administration
+from Sichuan College of Business Administration in
+2005.
+Biographical Details
+Name
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+2023 Annual Report 105
+Prior to the foregoing, Mr. Li had served as deputy
+general manager of engineering management
+department of former Shenhua Group Corporation and
+the Company, deputy general manager of Shenhua
+Zhunge'er Energy Co., Ltd and other positions.
+Mr. Li has served as a member to the Party Committee
+of the Company since February 2021, executive vice
+president of the Company since March 2021, and
+director of Inner Mongolia Branch of China Energy and
+the Company since October 2022. From December 2015
+to December 2020, he successively served as general
+manager, deputy secretary of the Party Committee,
+chairman (legal representative) and secretary of the Party
+Committee of Shenhua Beidian Shengli Energy Co., Ltd.,
+and standing deputy general manager, general manager,
+secretary of the Party Committee and executive director
+of the Shengli Energy Branch of the Company.
+Born in January 1968, male, Chinese, a member of
+the Communist Party and a senior engineer. Mr. Li
+has extensive experience in management of coal
+enterprises. He graduated from Heilongjiang Institute
+of Mining and Technology in 1990, majoring in industrial
+and civil construction and obtained a master's degree
+of Engineering from China University of Mining and
+Technology in 2002.
+Officer, Secretary
+to the Board and
+Member of the
+Party Committee
+Category
+Name
+Name of shareholder
+China Energy
+department
+Industry Management
+Transportation
+2023-03
+2020-12
+Director of Coal and
+department
+Industry Management
+and Transportation
+Supervisors of China Tang
+Shenhua
+director of Coal
+Rongming
+2023-03
+First-level business
+2023-07
+2021-07
+Senior Business Officer
+China Energy
+China Energy
+Yang
+Jia Jinzhong
+Directors of China
+Shenhua
+Position
+2023-04
+Member
+108 China Shenhua Energy Company Limited
+of Tsinghua University
+2018-05
+Senior Counsel
+Temple Chambers
+Committee
+Commercial Expert
+Bank of Communications Co., Ltd.
+External Supervisor
+2019-06
+Beijing Tri-Prime Gene Pharmaceutical
+Independent Director
+2018-11
+Bai Chong-En
+2023-01
+Suzhou Bank Co., Ltd. (Independent Director
+2023-02
+限公司)
+China Auditing Society
+Standing Director
+2005-07
+2023 Annual Report 109
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+(III) Remuneration of Directors, Supervisors and Senior Management
+Decision-making procedures
+for the remuneration of the
+directors, supervisors and
+senior management
+Co., Ltd.
+School of Economics and Management
+Dean
+2018-08
+2021-07
+Professor and Doctoral
+Nanjing Audit University
+Chen Hanwen
+2016-11
+China Association of Labour Economics Vice President
+of the Council
+Academic Committee
+Member of the
+Tenth Session and
+2019-10
+Vice President of the
+Society of Public Finance of China
+Commerce
+2022-12
+Independent Director
+Vice Chairman
+All-China Federation of Industry and
+2021-05
+2004-07
+School of Economics and Management Professor
+Research at Tsinghua University
+2008-08
+National Center of Fiscal and Tax Policy Director
+of Tsinghua University
+Whether the directors should
+Supervisor
+abstain from discussing their
+own remuneration matters at
+the Board
+Basis for remuneration
+Details of the recommendations
+Imade by the Remuneration and
+Assessment Committee or the
+special meeting of independent
+directors on the remuneration
+of the directors, supervisors
+and senior management
+Please refer to 'Changes in Shareholding and
+Remuneration of Directors, Supervisors and Senior
+Management" in this section
+Please refer to "Changes in Shareholding and
+Remuneration of Directors, Supervisors and Senior
+Management" in this section
+The remuneration package of relevant directors
+and supervisors was proposed by the Company in
+accordance with international and domestic practices
+and with reference to the remuneration of directors
+and supervisors of large listed companies in China.
+The remuneration package of senior management
+of the Company was formulated by the Company
+in accordance with relevant provisions on the
+administration of the annual remuneration of the senior
+management and performance assessment results for
+the year and for the term of office.
+The Remuneration and Assessment Committee of the
+Board agreed to submit the matters relating to the
+remuneration of the directors, supervisors and senior
+management to the Board for consideration.
+Yes
+The remuneration package of directors and supervisors
+of the Company was submitted to the shareholders'
+general meeting for approval after consideration.
+and approval by the Remuneration and Assessment
+Committee of the Board and the Board, and the
+remuneration package of senior management was
+submitted to the Board for approval after consideration
+and approval by the Remuneration and Assessment
+Committee of the Board.
+110 China Shenhua Energy Company Limited
+Total remuneration actually
+obtained by all the directors,
+supervisors and senior
+management as at the end of
+the Reporting Period
+Shenwan Hongyuan Securities Co., Ltd.
+International Commercial Court of
+Member of the
+2018-08
+the Supreme People's Court of the
+International
+People's Republic of China
+Actual payment of remuneration
+of the directors, supervisors
+and senior management
+2018-09
+determination of the directors,
+supervisors and senior
+management
+2.5
+33.5
+120 China Shenhua Energy Company Limited
+the SASAC, the Beijing branch of
+the China Securities Regulatory
+Commission, Shanghai Stock
+Exchange, China Association
+for Public Companies
+Shanghai Stock Exchange,
+China Association for Public
+Companies and Xinjiang
+branch of the China Securities
+Regulatory Commission
+Shanghai Stock Exchange
+etc.
+1.
+Special trainings for reforms of
+independent directors system, ESG
+and comprehensive registration
+system
+Chen Hanwen Independent Non-executive
+Director
+Employee Director
+39.35
+Liu Xiaolei
+8
+7
+Bai Chong-En Independent Non-executive
+6
+Reform of independent directors
+system
+Special training for directors and
+supervisors, strengthening
+performance capabilities of directors
+and supervisors, and compliance
+management of listed companies,
+Section V Corporate Governance and
+Composition of the Committees
+VI. THE PERFORMANCE OF DUTIES OF THE COMMITTEES UNDER THE BOARD
+DURING THE REPORTING PERIOD
+(II) The Duties and Performance of Duties of the Special Committees
+Lv Zhiren (Chairman), Yang Rongming, Liu Xiaolei
+Bai Chong-En (Chairman), Chen Hanwen, Xu Mingjun
+Yuen Kwok Keung (Chairman), Chen Hanwen, Xu
+Mingjun
+Chen Hanwen (Chairman), Yuen Kwok Keung, Bai
+Chong-En
+Lv Zhiren, Jia Jinzhong
+Safety, Health, Environment and ESG
+Working Committee
+Nomination Committee
+Committee
+Committee
+Audit and Risk Management
+Strategy and Investment Committee
+Special committees of the fifth session of the Board
+As at the end of the Reporting Period, the Company has established five special committees
+under the Board, and the details are as follows:
+(1)
+Corporate Governance Report (Continued)
+Remuneration and Assessment
+2
+0
+Comprehensive Plan Arrangement for 2023
+2
+2
+2
+No
+No
+Jia Jinzhong
+Implementation of the 2022 Comprehensive
+Plan of China Shenhua and the
+Lv Zhiren
+Attendances
+by proxy
+person correspondence
+meeting
+Attendance by
+Attendance in
+the committee
+Absences Attendance rate
+Independent
+director or not
+Agreed.
+13 February 2023
+2
+2
+0
+0
+2/2
+222
+To consider the Proposal on the
+2/2
+Note: Attendance by correspondence includes the number of written meetings. Same as below.
+(4) Convening of committee meetings
+Key opinions
+Convening date
+Meeting content
+and suggestions
+0
+Name of director
+Required
+attendance at
+(3) Attendance of committee meetings by each committee member
+Work summary for the year
+In 2023, the Audit and Risk Management Committee performed its duties
+in strict compliance with the Rules of Procedures of the Audit and Risk
+Management Committee of the Board, the Rules on Work of the Audit and
+Risk Management Committee of the Board and the Rules on Work of the
+Annual Report of the Audit and Risk Management Committee of the Board. The
+Audit and Risk Management Committee held a total of ten meetings for the
+consideration and approval of 41 resolutions, listened to 5 reports and had one
+separate communication with our auditor, KPMG. All proposals were approved.
+(1)
+Financial reporting
+The Audit and Risk Management Committee fulfilled its mandatory duties
+to review the 2022 financial report. Before conducting formal review on
+the results for the year 2022, the Audit and Risk Management Committee
+previewed the 2022 financial report (draft) at a meeting and the 2022
+Financial Report of China Shenhua Energy Company Limited (Draft)
+was approved. On 21 March 2023, the Audit and Risk Management
+Committee listened to the report of annual audit work by the Company's
+auditor, KPMG, reviewed the audit report on internal control, confirmed
+the efficiency of internal control over the annual financial report, and
+convened separate meetings with KPMG to further discuss on the
+significant risk identified during annual auditing, the independence of
+auditors, information security and other matters. The Audit and Risk
+Management Committee considered and approved the Proposal of the
+2022 Financial Report of China Shenhua Energy Company Limited fully
+based on sufficient consideration of the opinions on the annual audit
+from KPMG.
+2023 Annual Report 123
+Supervising and assessing the work of the external auditors; proposing to
+engage or replace the external auditors; supervising and evaluating the internal
+audit work; coordinating the internal audit and the external audit; auditing
+the financial information of the Company and its disclosure; supervising and
+evaluating the internal control of the Company; and other matters authorised
+by laws and regulations, the Articles of Association and the Board.
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+The Audit and Risk Management Committee carefully considered the
+first and third quarterly financial reports of 2023 of the Company, and
+approved the relevant proposals.
+In addition, the Audit and Risk Management Committee listened to and
+put forward requirements on KPMG's report on 2023 audit plan of the
+Company on 24 October 2023.
+Selection and recruitment of accounting firm and the supervision over
+its auditing work
+During the process of selecting and recruiting auditors for 2023, the
+Audit and Risk Management Committee carefully considered the relevant
+proposals, and evaluated the audit fee, relevant qualifications and
+professionality of KPMG Huazhen LLP and KPMG (collectively known
+as "KPMG"). The Audit and Risk Management Committee believes
+that KPMG has the professional ability, experience and qualifications to
+provide audit services for the Company, and possesses the corresponding
+independence and investor protection ability, which enables it to meet
+the Company's annual audit work requirements for 2023 and is in the
+interests of the Company and its shareholders as a whole. The Audit and
+Risk Management Committee approved the re-appointment of KPMG as
+the auditors of the Company, and recognised the annual audit fee.
+During the Reporting Period, the Audit and Risk Management Committee
+carefully listened to KPMG's report on the performance of the audit work
+in 2022, and separate communications were conducted on key concerns
+such as material risks, auditor independence and information security
+in 2022. The Audit and Risk Management Committee attached great
+importance to the information security of the Company in the course of
+receiving audit services. KPMG assured that relevant measures had been
+taken in relation to the information security of the Company.
+124 China Shenhua Energy Company Limited
+The Audit and Risk Management Committee conducted the necessary
+process to review the interim financial report of 2023. On 30 June 2023,
+the Audit and Risk Management Committee considered and approved the
+2023 Interim Review Plan of China Shenhua Energy Company Limited,
+approving KPMG to conduct the interim review in accordance with
+such review plan. On 23 August 2023, the Audit and Risk Management
+Committee listened to KPMG's work report on the 2023 interim review
+of China Shenhua and had communication with them on noteworthy
+items thereof. The Audit and Risk Management Committee considered
+and approved the Proposal of the Interim Financial Report of 2023 of
+the China Shenhua Energy Company Limited fully based on sufficient
+consideration of the opinions on the annual audit from KPMG.
+Major duties of the Audit and Risk Management Committee
+(2)
+(1)
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+2023 Annual Report 121
+In 2023, the Strategy and Investment Committee held 2 meetings by way of
+written resolutions, including the implementation of the Group's comprehensive
+plan for 2022 and the comprehensive plan arrangement for 2023. All proposals
+were approved.
+Work summary for the year
+(2)
+Studying the Company's long-term development strategic planning and annual
+comprehensive plan; studying the adjustment of the principal business, negative
+list of investment projects, major investment and financing, asset restructuring,
+transfer of property rights, capital operation, reform and restructuring and other
+major issues that require decisions by the Board, and providing consideration
+opinions to the Board; and other authorities as conferred by the Board.
+(1) Major duties of the Strategy and Investment Committee
+Strategy and Investment Committee
+18 December 2023 To consider the Proposal on the Adjustment
+to Investment Proposal for 2023 by China
+Shenhua Energy Company Limited
+Agreed.
+122 China Shenhua Energy Company Limited
+2.
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Audit and Risk Management Committee
+2.5
+38
+Director
+28
+Yes
+Chen Hanwen
+6/7
+0 No
+1
+6
+7
+Yes
+Bai Chong-En
+3/3
+3/7
+0 No
+2
+3
+7
+Yes
+Yuen Kwok Keung
+6/7
+0 No
+0
+6
+7
+3/3
+7
+6/7
+7
+0
+Section V Corporate Governance and
+116 China Shenhua Energy Company Limited
+The independent directors of the Company conduct self-inspection on their independence
+annually and submit the findings to the Board. The Board assessed the independence of
+current independent directors during the Reporting Period and issued special opinions.
+The Company has received annual written confirmation from each of the independent non-
+executive directors confirming their independence. The Company is of the view that all of
+the independent non-executive directors are independent. The number and background of
+the independent directors are in compliance with the requirements of the listing rules of
+the places of listing.
+The fifth session of the Board of the Company has three independent non-executive
+directors: Yuen Kwok Keung, Bai Chong-En and Chen Hanwen, among whom Chen Hanwen
+is a professional in audit and accounting. Dr. Chen is an honorary dean and a professor of
+the School of Internal Audit of Nanjing Audit University, and he also serves in a number
+of auditing and accounting academic research institutions in China. He is a member of
+the Institute of Internal Auditors, focusing on auditing and accounting theory and practice,
+internal control, risk management and corporate governance. He has published many
+papers in international accounting journals and authoritative journals in the field of economic
+management in China.
+The Company has developed and implemented various systems to ensure that the Board
+receives independent views and opinions. These systems include engaging and appointing
+an independent financial adviser to make recommendations to the independent Board
+committee on the resolution of material related party/connected transactions; conducting
+various forms of research activities for independent directors, such as on-site visits to
+production and operation site; inquiring relevant information with the Company's office
+system; regularly receiving digitalized information submitted by the Company such as
+special reports of directors and supervisors and weekly stock updates to obtain reference
+information for decision-making. The address book of the management of the Company is
+open to the independent directors to facilitate the communication of information between
+the independent directors and the management at any time.
+(IV) Independence of the Board and Performance of Duties of Independent
+Directors
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+2023 Annual Report 115
+In 2023, the Board of the Company held 7 meetings and considered 56 resolutions, and
+disclosed the voting results of all resolutions in a timely manner. If the resolution of the
+Board meeting has any interest in any director or any associate of the director, or the
+director has an related party/connected relationship with the enterprise involved in the
+resolution of the Board meeting, the related/connected director have abstained from voting.
+All directors acted in good faith, prudently and diligently in the interest of the Company as
+a whole in the performance of their duties and effectively performed their management,
+operation and decision-making powers over the Company.
+The Company secures the conditions for directors to carry out their work and actively
+adopts the suggestions and opinions put forward by the directors. The Company's
+"Procedure Rules for the Board" and "Working Rules for Independent Directors" provide
+policy guarantees for directors to perform their duties; the departments designated to
+undertake the affairs of the Board, the affairs of independent directors and the work of the
+independent Board committee assist directors in carrying out research, attending meetings
+and expressing opinions.
+Note: In the above table, the in-person attendance rate of Board meetings = number of attendances in person/
+number of required attendances at Board meetings; the attendance rate of the general meeting = number
+of attendances in person/number of required attendances at general meetings. The same below.
+3/3
+7/7
+0 No
+0
+1
+7
+7
+No
+Liu Xiaolei
+3/3
+7/7
+0 No
+2
+0 No
+1
+4
+this year
+not
+Name of director
+general
+attendance
+attendance
+meetings Attendance Attendance by Attendance
+director or
+In-person shareholders'
+personal
+at Board
+Independent
+rate of
+without
+attendance
+Attendance
+absences
+Required
+consecutive
+Two
+Attendance at Board meetings
+(III) Performance of Duties of the Directors
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+in person correspondence
+by proxy
+Absence or proxy
+rate
+6
+7
+No
+0/3
+4/7
+No
+0
+3
+0
+4
+7
+Corporate Governance Report (Continued)
+No
+0 No
+0
+7
+7
+No
+2 2 2 2
+Yang Rongming
+Jia Jinzhong
+Xu Mingjun
+Lv Zhiren
+meetings
+7/7
+2
+During the Reporting Period, each special committee under the Board did not express any
+dissenting views in performing their duties. The performance of duties of each special
+committee is set out as follows:
+2023 First A
+Shareholders Class
+Meeting
+For details, please see the section
+headed "Significant Events" of
+this report
+For details, please see the section
+headed "Significant Events" of
+this report
+For details, please see the section
+headed "Significant Events" of
+this report
+For details, please see the section
+headed "Significant Events" of
+this report
+For details, please see the section
+headed "Significant Events" of
+this report
+As at the end of the Reporting
+Period, the repurchase of
+H shares has not yet
+commenced
+As at the end of the Reporting
+Period, the repurchase of
+H shares has not yet
+commenced
+118 China Shenhua Energy Company Limited
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+(VI) Diversity of the Board
+The Board of the Company has established the board diversity policy for members of the
+Board, which mainly includes policy statements, measurable objectives, monitoring and
+reporting, which were set out and disclosed in the rules of procedure of the nomination
+committee of the Board of the Company.
+When selecting the candidates in accordance with the board diversity policy of the
+Company, the Board will use a series of diversified terms, including but not limited to
+gender, age, culture and educational background, race, skills, knowledge, and professional
+experience, and will determine taking both the characteristics and role of the personnel
+into account. As at the end of the Reporting Period, the Board consisted of 8 directors,
+including 2 executive directors, 2 non-executive directors, 3 independent non-executive
+directors and 1 employee director. Among them, there were 7 male directors and 1 female
+director, and 7 directors from the PRC and 1 director from Hong Kong Special Administrative
+Region of China. The directors are from various domestic and overseas industries, and
+the composition of the members features diversity. Each director's knowledge base and
+field of expertise are professional and complementary in the overall board structure, which
+guarantees the scientific decision-making of the Board. The Board expects the number of
+its female members to remain at least at the current level. And the Board will continue to
+seek opportunity to increase the proportion of female members in the future as appropriate.
+The following directors' skills matrix graphically illustrates the professional skills or
+knowledge and experience of the members of the Board.
+Directors' skills matrix
+Number of
+directors
+Skills and experience
+(person)
+Energy
+Completed
+Possessing many years of experience in the operation and management of large-scale coal and
+power generation enterprises, assets or projects.
+Completed
+To approve the grant of the general mandate for the
+Board to repurchase H shares
+During the Reporting Period, the independent directors of the Company strictly complied
+with the requirements of relevant laws and regulations, the Articles of Association, relevant
+rules of procedure of meetings and the independent directors system of the Company.
+They maintained their independence as independent directors, performed their functions
+of supervision, participated in the formation of various important decisions of the Company
+and reviewed periodic reports, financial reports and related party/connected transactions of
+the Company. Therefore, the independent directors of the Company play an important role
+in the regulated operation of the Company and protect the legitimate interests of minority
+shareholders. The Company guaranteed the conditions for independent directors to carry
+out their work and actively adopted the advices and opinions put forward by independent
+directors. According to the changes in the relevant regulations of the regulatory authorities
+and the actual situation of the Company, the Company revised the "Independent Director
+System" and renamed it as "Working Rules for Independent Directors", which was
+considered and approved by the 24th meeting of the fifth session of the Board, providing
+an institutional guarantee for independent directors to perform their duties. The Company
+has designated a department to undertake the affairs of independent directors and the
+work of independent directors committees to assist independent directors in conducting
+research, convening meetings, expressing independent opinions and others.
+For the attendance of independent directors at Board meetings and shareholders' general
+meetings, please refer to the section of "Performance of Duties of the Directors". For
+details of the work of independent directors, please refer to the "2023 Work Report of
+Independent Directors of China Shenhua Energy Company Limited" disclosed by the
+Company on 22 March 2024.
+2023 Annual Report 117
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+(V) Implementation of Resolutions Passed at the General Meetings by the Board
+No. General Meeting
+Subject Matter
+Status
+2022 Annual General
+Meeting
+2
+3
+2023 First H
+Shareholders Class
+Meeting
+To approve the Report of the Board of Directors of
+China Shenhua Energy Company Limited for the
+Year 2022
+To approve the Report of the Supervisory
+Committee of China Shenhua Energy Company
+Limited for the Year 2022
+To approve the Financial Report of China Shenhua
+Energy Company Limited for the year 2022
+To approve the profit distribution plan of the
+Company for the year 2022
+To approve the remuneration of directors and
+supervisors of the Company for the year 2022
+To approve the purchase of liability insurance for
+directors, supervisors and senior management
+To approve the appointment of KPMG Huazhen
+LLP and KPMG as the PRC and the international
+auditors of the Company for the year of 2023,
+respectively
+To approve the 2024-2026 Mutual Coal Supply
+Agreement entered into between the Company
+and China Energy Investment Corporation Limited
+To approve the 2024-2026 Mutual Supplies and
+Services Agreement entered into between
+the Company and China Energy Investment
+Corporation Limited
+To approve the 2024-2026 Financial Services
+Agreement entered into between the Company
+and China Energy Finance Co., Ltd.
+To approve the conditional Supplemental
+Agreement II to the Non-Competition Agreement
+entered into between the Company and China
+Energy Investment Corporation Limited
+To approve the grant of the general mandate for the
+Board to repurchase H shares
+To approve the grant of the general mandate for the
+Board to Repurchase H shares
+Completed
+3
+As at the end of the Reporting
+Period, the repurchase of
+H shares has not yet
+commenced
+Possessing many years of experience in the operation and management of domestic railways, ports
+and shipping enterprises.
+1
+Lv Zhiren
+2
+Xu Mingjun
+Executive Director, Chief
+Executive Officer and
+Deputy Secretary of the
+Party Committee
+Executive Director and
+Executive Vice President
+Corporate governance, special training
+for strengthening performance
+capabilities of directors and
+supervisors
+Policy of capital markets, the
+supervision of listed companies,
+etc.
+the SASAC, the Beijing branch of
+the China Securities Regulatory
+Commission, China Association
+for Public Companies, etc.
+Beijing branch of the China
+37.6
+9.25
+3
+Jia Jinzhong
+4
+Yang
+Non-executive Director
+Non-executive Director
+Rongming
+Transportation
+5
+Yuen Kwok
+Keung
+Independent Non-executive
+Director
+Reform of independent directors
+system
+Securities Regulatory
+Commission, China Association
+for Public Companies, etc.
+the Company
+Beijing branch of the China
+Securities Regulatory
+Commission, China Association
+for Public Companies, etc.
+Shanghai Stock Exchange
+(hours)
+Training sponsor
+Anti-graft and anti-corruption
+Special training for directors and
+supervisors
+Position
+Training content
+2
+Strategic management
+Responsible for or participated in the formulation and implementation of the long-term development
+direction, objectives, tasks and strategies of the enterprise.
+2
+Being an expert or veteran in the field of economics or finance and is responsible for or participated
+in relevant research or internal management in the enterprise.
+1
+Finance and audit
+Possessing experience in corporate financial management, auditing, or being a professional in these
+fields.
+Risk management
+Possessing experience in corporate risk and internal control management or being a professional in
+this field.
+2
+Economics and finance
+All directors of the Company proactively participate in continuous professional development
+to develop and refresh their knowledge and skills. All directors have provided their relevant
+training records for the year of 2023 to the Company, and all directors have attended
+relevant trainings organised by regulatory authorities or industry associations as required.
+During the year, the total duration of various trainings such as special training for directors
+and supervisors, training for independent directors and compliance management of listed
+companies attended by all directors was approximately 133.7 hours. The Company also
+regularly provided the directors with its operational and financial information, regulatory
+developments in China's mainland and Hong Kong, industry information, typical cases
+and other information to ensure that they continue to contribute to the Board with
+comprehensive information under appropriate situation.
+ESG management
+Legal professionals, or have experience in corporate legal affairs management.
+Possessing experience in enterprise ESG management or ESG risk management.
+4
+2023 Annual Report 119
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+(VII) Continuous Professional Development of Directors
+Name
+Cumulative
+training time
+No.
+Law
+13 March 2023
+21 March 2023
+25 April 2023
+8/10
+To consider 12 proposals, including the
+2022 Proposal on Internal Control Audit
+Report of China Shenhua Energy Company
+Limited and the Proposal on 2022
+Financial Report of China Shenhua Energy
+Company Limited; to review the Proposal
+on 2022 Internal Audit Work Report of
+China Shenhua Energy Company Limited;
+to listen to KPMG's audit work report, the
+implementation of Company's continuing
+connected transactions agreement for
+2022.
+To consider 12 proposals including the
+Proposal on 2024-2026 Mutual Coal Supply
+Agreement Entered into between China
+Shenhua Energy Company Limited and
+China Energy.
+Key opinions and suggestions
+To consider the Proposal on Implementation
+of the Annual Business Plans for 2022
+and the Annual Business Plans and
+Arrangements for 2023 of China Shenhua
+Energy Company Limited; to listen to the
+report on progress of the acquisition of
+30% equity interests in Jinjie Energy held
+by Ducheng Weiye Group Co., Ltd..
+To consider the two proposals including
+the Proposal on 2022 Financial Report of
+China Shenhua Energy Company Limited
+(Draft).
+14 February 2023
+126 China Shenhua Energy Company Limited
+Convening date
+(4) Convening of committee meetings
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+8/10
+0
+Agreed.
+0
+Meeting content
+The Company shall:
+3. ensure fair price, procedure compliance
+and information disclosure of the
+Agreed.
+2 2
+9 May 2023
+Key opinions and suggestions
+Meeting content
+Convening date
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+2023 Annual Report 127
+related party transactions.
+1. make information disclosure, establish
+communication channels for investors
+and manage public opinion on market.
+2. strengthen the management and
+control of Jinjie Energy and its finance
+after the acquisition.
+system and expand personnel training.
+2. improve the transition from previous
+accounting policies to current ones,
+better communicate with auditors on
+information disclosure.
+The Company shall:
+Agreed.
+3. enhance ESG disclosure to ensure true
+and comprehensive disclosure of the
+Company is made in the report.
+shareholders on dividend distribution.
+2. improve the communication with
+1. pay attention to information security in
+the process of receiving audit.
+The Company shall:
+Agreed.
+1. improve basic financial derivative
+business, refine measures for
+management and control, and
+strengthen the implementation of
+3
+VII. SUPERVISORY COMMITTEE'S REPORT
+ܣ
+ܣ
+at the
+committee
+meeting
+Independent
+director or not
+Name of
+director
+Number of
+required
+attendance
+(3) Attendance of committee meetings by each committee member
+In 2023, the Audit and Risk Management Committee did not receive
+any reports or complaints about its misconduct to the Company from
+the Company's employees and other stakeholders (such as customers,
+suppliers) by any ways.
+In terms of financial monitoring, the Audit and Risk Management
+Committee, by considering proposals, reviewed and unanimously passed
+the Company's proposals on Implementation of the Annual Business
+Plans for 2022 and the Annual Business Plans and Arrangements for 2023,
+profit distribution plan for 2022, capital budget and debt financing plan for
+2023, accounting policy changes and other matters. In terms of operation
+monitoring, the Audit and Risk Management Committee reviewed
+and approved the proposals relating to daily related party/continuing
+connected transactions on mutual coal supply, mutual supplies and
+services, financial services, and factoring services, the proposals relating
+to related party/connected transactions on entering into the Supplemental
+Agreement II to the Non-competition Agreement, establishment of PT.
+Guoneng Indonesia Energy, a joint venture company, and participation
+and establishment of investment fund, and the proposals on equity
+acquisition, capital increase in subsidiaries and other matters. In terms
+of compliance monitoring, the Audit and Risk Management Committee
+reviewed and approved the proposals on the formulation of management
+measures for the financial derivatives business, amendments to Rules
+of Procedures of the Audit and Risk Management Committee, the 2022
+Internal Control Evaluation Report and other matters, and evaluated the
+necessity, feasibility and risk control of futures trading and derivatives
+by the Company, and found no internal control deficiencies.
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Number of
+attendance
+2023 Annual Report 125
+During the Reporting Period, the Audit and Risk Management Committee
+reviewed the internal evaluation plan of the Company, reviewed the
+annual internal evaluation report and other material matters related to
+internal control and risk management of the Company, completed the
+work related to the supervision and guidance of internal control and
+risk management delegated by the Board and communicated with the
+management to advise on the construction of internal control and risk
+management system, which promoted the internal control and risk
+compliance management of the Company.
+Risk management and internal control
+On 21 March 2023, the Audit and Risk Management Committee reviewed
+and unanimously passed the relevant proposals such as the 2022 internal
+audit work report and 2023 internal audit work points of the Company,
+and put forward requirements on the internal audit work in 2023. On
+23 August 2023, the Audit and Risk Management Committee reviewed
+the Proposal on Internal Audit Work Report of China Shenhua Energy
+Company Limited for the First Half of 2023 and spoke highly of the
+internal audit work in the first half of 2023, and required the Company
+to continue to strengthen the investment in internal audit resources,
+improve the accountability mechanism, strengthen training and learning,
+and promote the effective functioning of internal audit function.
+Internal review
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+(4)
+(3.
+To consider the Proposal on Application for
+Approval of Non-assurance Service by
+KPMG to China Energy Group Jin Shajiang
+Branch and Guoneng Shendong Coal
+Group.
+To perform its duties of reviewing internal control evaluation report, the
+Audit and Risk Management Committee, by way of correspondence on
+13 March 2023, pre-reviewed the 2022 Internal Control Evaluation Report
+of China Shenhua Energy Company Limited (Draft). On 21 March 2023,
+the Proposal on the 2022 Internal Control Evaluation Report of China
+Shenhua Energy Company Limited was reviewed again and passed
+unanimously. On 23 August 2023, the Audit and Risk Management
+Committee reviewed and approved the Proposal on the 2023 Internal
+Evaluation Plan. On 26 December 2023, the Audit and Risk Management
+Committee reviewed and approved the Proposal on List for Climate Risks
+and Opportunities for 2024 of China Shenhua Energy Company Limited
+and made suggestions relating to the work.
+5
+Number of
+attendance by
+in person correspondence
+LO
+88
+8
+10
+Bai Chong-En Yes
+8
+10
+Yes
+Number of
+Keung
+10/10
+0
+0
+2
+10
+10
+Chen Hanwen Yes
+In-person
+attendance Number of attendance
+by proxy
+absence
+rate
+Yuen Kwok
+Being responsible to all shareholders, the Supervisory Committee of the Company had performed
+their supervisory duties faithfully and carried out their work proactively and effectively to protect
+the lawful interests of the Company and its shareholders in accordance with the relevant
+requirements under the Company Law of the People's Republic of China (the "Company Law")
+and the Articles of Association.
+Agreed.
+To consider two proposals including the
+Key opinions
+and suggestions
+Agreed.
+To consider the Proposal on Appointment Agreed.
+of Secretary to the Board of the
+Company
+132 China Shenhua Energy Company Limited
+5.
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Safety, Health, Environment and ESG Working Committee
+(1) The principal duties of the Safety, Health, Environment and ESG Working
+Committee
+To consider the Proposal on Assessing
+the Effectiveness of the Board
+Diversity Policy of China Shenhua
+To supervise the implementation of safety, health, environmental protection and
+ESG working plans of the Company; to make recommendations to the Board
+or the chief executive officer on material issues in respect of safety, health,
+environmental protection and ESG working of the Company, including but not
+limited to climate change, biodiversity and water resources management, as
+well as employee development and other relevant risks and opportunities;
+to give adequate consideration and assessment of the sustainable risks
+and opportunities in respect of strategy formulation, material transactions,
+investment decision-making and other matters; to inquire into the material
+incidents and responsibilities regarding the Company's production, operations,
+property assets, staff or other facilities, as well as to review and supervise
+the handling of such incidents; to review the Company's annual ESG report;
+to review the Statement of the Board disclosed in the Company's annual ESG
+report; to supervise and review the identification, evaluation and management
+process of the matters related to the Company's ESG governance activities and
+the progress of related objectives, including but not limited to climate change,
+biodiversity and water resources management and employee development; and
+other issues as authorised by the Board.
+Work summary for the year
+In 2023, the Safety, Health, Environment and ESG Working Committee held 5
+meetings by way of written resolution, at which all proposals were approved.
+(3) Attendance of committee members
+Number
+of required
+Name of
+director
+attendance Number of
+Independent at committee attendance
+director
+Number of Number of
+attendance by attendance
+meeting in person correspondence
+by proxy
+Number Attendance
+of absence
+(2)
+rate
+25 April 2023
+Convening date Meeting content
+Yes
+Chen Hanwen
+Yes
+Xu Mingjun
+No
+2 2 2
+22 2
+22 2
+0
+17 March 2023
+0
+0
+DO
+0
+0
+2222
+2/2
+2/2
+2/2
+(4) Convening of committee meetings
+0
+Bai Chong-En
+Lv Zhiren
+Yang Rongming
+19 January 2023
+To consider the Proposal on the
+Performance in 2022 and the Key
+Points of Work in 2023 of China
+Shenhua in the Environmental,
+Social Responsibility and Corporate
+Governance
+Key opinions
+and suggestions
+Agreed.
+23 March 2023
+To consider the Proposal on the
+Agreed.
+Environmental, Social Responsibility
+and Corporate Governance Report
+of China Shenhua Energy Company
+Limited for 2022
+Meeting content
+28 July 2023
+Agreed.
+Statement on Goal Setting of ESG
+Safety and Occupational Health of
+China Shenhua for 2023
+15 August 2023
+To consider the Proposal on the ESG
+Governance Work Performance Report
+of China Shenhua for the First Half
+Year in 2023
+Agreed.
+8 October 2023
+To consider the Proposal on the Rules
+of Procedures of the Safety, Health,
+Environment Protection and ESG
+Working Committee of the Board
+of China Shenhua Energy Company
+Limited
+Agreed.
+To consider the Proposal on the
+No
+Convening date
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+No
+Liu Xiaolei
+No
+G55
+5
+5
+5
+LOLO
+5
+(4) Convening of the committee meeting
+5
+O O
+0
+0
+OOO
+0
+5/5
+0
+5/5
+2023 Annual Report 133
+5
+rate
+absence
+Attendance
+The principal duties of the Remuneration and Assessment Committee
+To make recommendations to the Board on formulation of the remuneration plan
+or proposal for directors, supervisors, chief executive officer and other senior
+management, including but not limited to the criteria, procedures and the major
+systems of performance assessment, key incentive and punishment plans and
+systems; to study the assessment standards for directors, supervisors, chief
+executive officer and other senior management, and examine the performance
+of duties by directors, supervisors, chief executive officer and other senior
+management of the Company and carry out annual assessment of their
+performance of duties; to supervise the implementation of the remuneration
+system of the Company, review and approve the remuneration determined
+by performance in accordance with the Company's objectives determined
+by the Board; to exercise the following duties as authorised by the Board: to
+determine the specific remuneration of all the executive directors, supervisors,
+chief executive officer and other senior management, including non-monetary
+benefits, pension rights and compensation (including the compensation for the
+loss or termination of their duties or appointment); to review and approve the
+payment of compensation to executive directors, supervisors, chief executive
+officer and other senior management in relation to the loss or termination
+of their duties or appointment, so as to ensure that such compensation is
+determined in accordance with the related terms of the contract; or otherwise,
+such compensation shall be fair and reasonable and does not impose an
+undue burden on the Company; to review and approve the compensation
+arrangements involved in the dismissal or removal of directors due to their
+improper conduct, so as to ensure that such arrangements are determined
+in accordance with the related terms of the contract; or otherwise, such
+arrangements shall be reasonable and appropriate; to make recommendations
+to the Board on the remuneration of the non-executive directors (factors to be
+considered include remuneration packages offered by comparable companies,
+time commitment and responsibilities of each director, employment conditions
+for other positions of the Group and whether the remuneration should be
+based on performance, etc.); to ensure that none of the directors or any of
+their associates determines their own remunerations; to review and/or approve
+matters relating to share schemes under Chapter 17 of the Hong Kong Listing
+Rules, and to execute other matters as authorised by the Board.
+2023 Annual Report 129
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+(2)
+Work summary for the year
+In 2023, the Remuneration and Assessment Committee held 2 meetings by
+way of written resolution, at which all proposals were approved.
+In terms of director's annual remuneration of 2023, the Remuneration and
+Assessment Committee shall assess the performance of executive directors
+who hold management position in the Company based on the remuneration
+policy for management and makes recommendation on remuneration. The
+Company did not pay compensation to non-executive directors and the proposed
+remuneration for independent non-executive directors is RMB300,000 per year.
+The Remuneration and Assessment Committee will make recommendations
+to the Board on the director's remuneration scheme formulated by it. The
+Company entered into a service contract with Lv Zhiren during the Reporting
+Period.
+The Remuneration and Assessment Committee adopted the mode (ii) as set out
+under the Code Provision E.1.2(c) of the Corporate Governance Code, which
+is to make recommendations to the Board on the remuneration packages for
+individual executive director and senior management, including benefits in
+kind, pension rights and compensation payments (including any compensation
+payable for loss or termination of their office or appointment).
+(1)
+(3) Attendance of committee members
+Independent
+director
+Number
+of required
+attendance
+at committee
+Number of
+attendance
+Number of
+attendance by
+Number
+of attendance
+Number Attendance
+meeting
+in person correspondence
+by proxy
+Name of
+director
+of absence
+Remuneration and Assessment Committee
+3.
+Agreed.
+23 August 2023
+20 September 2023
+24 October 2023
+26 December 2023
+Proposal on Interim Review Work Plan for
+2023 of China Shenhua Energy Company
+Limited.
+To consider four proposals including the
+Proposal on Interim Financial Report
+of 2023 of the China Shenhua Energy
+Company Limited; to listen to KPMG's
+report on the interim review work of the
+Company.
+To consider the Proposal on Joint
+Establishment of PT. Guoneng Indonesia
+Energy
+To consider three proposals including the
+Proposal on Capital Increase in China
+Energy Digital and Intelligent Technology
+and Development (Beijing) Co., Ltd.; to
+listen to the KPMG's report on annual
+audit plan for 2023.
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+To consider two proposals including the
+Proposal on China Shenhua Energy
+Company Limited's Participation in the
+Investment and Establishment of Guoneng
+Scientific and Technological Achievements
+Transformation Investment Fund (Phase I).
+The Company shall:
+1. increase the investment in audit
+resources, improve accountability
+mechanism, strengthen the training and
+study of audit staff.
+2. improve the risk assessment of Finance
+Company, pay more attention to the
+changes of accounts receivables and
+the control over risks.
+Agreed.
+Agreed.
+The Company will improve the
+management and control of China
+Energy Digital and Intelligent
+Technology and Development (Beijing)
+Co., Ltd. after the completion of capital
+increase.
+Agreed.
+On 18 March 2024, the Audit and Risk Management Committee listened to
+KPMG's report on the audit work in 2023, and discussed with them the scope
+of their audit work and audit procedures, key audit matters and key concerns,
+auditors' independence and other matters that require the management's
+attention; listened to the report on the execution of the agreements on
+continuing connected transactions; reviewed the financial report for the year
+2023, the financial information in the 2023 annual report and internal control
+audit report, and assessed the effectiveness of the financial reporting and
+internal control; reviewed a total 15 of proposals, including the evaluation report
+on internal control as well as the ESG report; and agreed to submit such reports
+to the Board for consideration.
+128 China Shenhua Energy Company Limited
+Agreed.
+rate
+Yuen Kwok Keung Yes
+Chen Hanwen
+2
+Proposal on Appraisal Result of Annual
+Business Performance of Management
+Level for 2022
+4.
+Nomination Committee
+(1) The principal duties of the Nomination Committee
+To formulate the Board diversity policy, regularly review the structure, size
+and diversity of the Board, and to make recommendations to the Board with
+regard to any proposed changes; to assess and verify the independence of
+independent non-executive directors; to develop standards, procedures and
+systems for selection of directors, chief executive officer and other senior
+management, and make recommendations to the Board, taking into account
+the Company's corporate strategy and the combination of skills, knowledge,
+experience and diversity needed in the future; to expand search for qualified
+candidates of directors, chief executive officer and other senior management;
+to examine the candidates of directors, chief executive officer and other senior
+management and make recommendations; to nominate candidates for members
+of the Board committees (other than members of the Nomination Committee
+and the chairman of any Board committee); to draft development plans for
+chief executive officer, other senior management and key backup talents taking
+into account the Company's corporate strategy and the combination of skills,
+knowledge, experience and diversity needed in the future; to review the board
+diversity policy where appropriate, and review the quantitative objectives set
+up by the Board to implement the Board diversity policy and the achievement
+progress thereof, as well as to disclose the review results in the corporate
+governance report annually; to make recommendations to the Board on the
+appointment or re-appointment of directors, general managers and other senior
+management and succession planning; and to carry out any other matters as
+authorised by the Board.
+2023 Annual Report 131
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+(2) Work summary for the year
+In 2023, the Nomination Committee held 2 meetings by way of written
+resolution, at which all proposals were approved.
+Agreed.
+The Nomination Committee shall disclose the Board diversity in the corporate
+governance report of the Company annually and monitor the implementation of
+the Board diversity policy. The Nomination Committee is of the view that (1) the
+Board diversity policy of the Company complies with the relevant requirements
+of the place of listing which can meet the development needs of the Company;
+(2) the structure of the Board of the Company under the prevailing diversity
+policy is reasonable and can effectively play the role of the Board in corporate
+governance.
+Name of
+director
+Independent
+director or not
+Number of
+required
+attendance at
+the committee
+Number of
+attendance in
+Number of
+attendance
+by
+meeting
+person correspondence
+Number of
+attendances
+by proxy
+Number of
+(3) Attendance of committee meetings by each committee member
+30 June 2023
+To consider 2 proposals including the
+Agreed.
+Yes
+Xu Mingjun
+2
+134 China Shenhua Energy Company Limited
+130 China Shenhua Energy Company Limited
+2
+2
+2
+O O O
+O o O
+222
+2222
+2/2
+2/2
+2/2
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+(4) Convening of the committee meeting
+Convening date Meeting content
+21 March 2023
+To consider 5 proposals including the
+Proposal on Remuneration of the
+Directors and Supervisors for 2022
+of China Shenhua Energy Company
+Limited
+Key opinions
+and suggestions
+25 April 2023
+Proposal of the 2023 First Quarterly Financial Passed
+All
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+After careful review of the related party transactions of the Company in 2023, the
+Supervisory Committee is of the opinion that related party transactions with China
+Energy, Finance Company, Guoneng (Beijing) Commercial Factoring Co., Ltd., GD Power
+Development Co., Ltd., Guohua Energy Investment Co., Ltd and Guohua Investment
+Development Asset Management (Beijing) Co., Ltd. are necessary for the daily operation of
+the Company. The relevant considerations are in accordance with prevailing market principle
+and the transactions are carried out in strict compliance with the principles of fairness,
+equality and openness under the statutory decision-making procedures. The related party
+transactions carried out are in accordance with the applicable rules and requirements of the
+listing rules, and the information disclosure thereof is standardised and transparent. The
+Supervisory Committee is not aware of any act prejudicial to the interest of the Company.
+(V) Independent Opinion of the Supervisory Committee on the Major Acquisition
+and Disposal of Assets of the Company
+During the Reporting Period, there were no major acquisition and disposal of assets of
+the Company.
+(VI) Independent Opinion of the Supervisory Committee on the Self-assessment
+Report on Internal Control of the Company
+The self-assessment report on internal control of the Company has truthfully reflected the
+establishment and implementation of the internal control of the Company and its internal
+control system is sound and effective.
+(VII) Independent Opinion of the Supervisory Committee on the Establishment and
+Implementation of the Measures on Insider Management
+The insider management system of the Company is sound and comprehensive, effective
+in its implementation and able to keep all insider information confidential.
+The Supervisory Committee of the Company will continue to perform its duties with due
+care to facilitate the standardised operation of the Company and to safeguard the lawful
+interests of the Company and its shareholders in strict compliance with the Company Law
+and the Articles of Association.
+138 China Shenhua Energy Company Limited
+(IV) Independent Opinion of the Supervisory Committee on Related Party
+Transactions of the Company
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+(1)
+Establishment and Implementation of the Risk Management and Internal
+Control System
+1.
+2.
+The Main Characteristics of Risk Management and Internal Control System
+The Company has established a risk-oriented internal control system and has an
+internal audit department to specifically perform the internal audit functions. The
+Company reviews and evaluates its risk management and internal control system
+annually during the Reporting Period. According to the evaluation, during the
+Reporting Period, the Company has considered that the internal control system
+has been established and effectively implemented for significant businesses and
+matters, and the objectives of the Company's risk management and internal control
+have been achieved.
+The Company's internal control and risk management system is characterized by the
+establishment of a closed-loop management mechanism integrating regular material
+risk assessment and monitoring, annual internal control evaluation, daily risk audit
+and special supervision and inspection of internal control, and the establishment of an
+organizational structure with hierarchical responsibilities of the Board and its Audit and
+Risk Management Committee, various functional departments of the headquarters
+and the subsidiaries (branches) of the Company to ensure effective operation of risk
+management and internal control. The objectives of the Company's internal control
+are to reasonably ensure compliance of its operation and management with laws and
+regulations, safety of its assets, truthfulness and integrity of its financial reports and
+related information, so as to improve operational efficiency and effectiveness, and
+facilitate the accomplishment of its development strategies.
+The Board is responsible for the maintenance of the risk management and
+internal control system
+In accordance with the relevant laws and regulations of the PRC as well as the
+corporate regulatory system on internal control of the Company, the Board is
+responsible for the maintenance of the risk management and internal control system
+as well as reviewing the effectiveness of such systems and honestly disclosing
+the internal control evaluation reports. Due to the inherent limitations of its internal
+control, the Company aims to manage rather than eliminate the risk of failure to
+achieve business goals, and can only provide reasonable and not absolute assurance
+against material misstatement or loss. In addition, there are risks in inferring the
+effectiveness of future internal control based on the results of internal control
+evaluations as changes in the circumstances may cause internal control to become
+inappropriate or the degree of compliance with control policies and procedures to
+be reduced.
+VIII. RISK MANAGEMENT AND INTERNAL CONTROL
+2023 Annual Report 139
+Corporate Governance Report (Continued)
+2023 Annual Report 137
+Financial Report of China Shenhua Energy unanimously
+fifth session of
+the Supervisory
+Committee
+Company Limited
+Proposal of the 2023 Third Quarterly Report
+Passed
+of China Shenhua Energy Company
+unanimously
+Limited
+Section V Corporate Governance and
+The Supervisory Committee made recommendations on work, including to strengthen
+management of property right, improve auditing and further improve quality action
+plan for listed companies by listening to the report of the management and
+effective considerations of the meeting resolutions, and fluent communications with
+management of the Company. The management has implemented them carefully
+and made timely feedback.
+2.
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Investigation and Research
+In March 2023, the supervisors of the Company conducted on-site survey on the
+public welfare foundation of China Energy Group (the "Public Welfare Foundation").
+They watched the themed films in respect of the implementing the national strategy
+of rural booming and prosperity, supporting cultural education, environmental
+protection, community co-building and other matters committed by the Public
+Welfare Foundation to develop its own "Benevolent Hearted" public welfare brand,
+and gained a further understanding on capital investment, project implementation,
+and construction of donation service platform, and other matters. They also carried
+out sufficient discussion and exchange in respect of the public welfare direction, the
+tracking and management of investments in public welfare.
+(II) Independent Opinion of the Supervisory Committee on the Lawful Operation
+of the Company
+(II) Description of Self-Assessment Report on Internal Control and Audit Report
+on Internal Control
+The Supervisory Committee is of the opinion that the Board and the management of the
+Company have acted in strict accordance with the Company Law, the Articles of Association
+and relevant regulations of the jurisdiction where the Company is listed, performed their
+duties with integrity and diligence and conscientiously implemented the resolutions
+approved and authorization granted by the general meetings; and that the decisions and
+operations are in compliance with the laws and regulations and the Articles of Association.
+During the Reporting Period, having reviewed the directors' attendance in meetings and
+performance of their duties, all directors of the Company have diligently and faithfully
+performed their duties as directors. the Supervisory Committee is not aware of any act
+committed by the Board and the management of the Company during their performance
+of duties which were in breach of laws, regulations and the Articles of Association or
+prejudicial to the interests of the Company.
+(III) Independent Opinion of the Supervisory Committee on the Financial Position
+of the Company
+The Supervisory Committee is of the opinion that the Company has regulated financial
+audit and sound internal control system, and the financial statements of the Company give
+an objective, true and fair view of the financial position and the operating results of the
+Company in all material aspects. The financial report for 2023 has been audited by KPMG
+Huazhen LLP and KPMG in accordance with China Accounting Standards for Business
+Enterprises and International Financial Reporting Standards, each of whom had issued a
+standard unqualified audit report.
+136 China Shenhua Energy Company Limited
+Passed
+3.
+The Company reports on annual internal control evaluation and presented the internal
+control evaluation reports to the Board and the Audit and Risk Management Committee
+on an annual basis, and timely reports on material matters and management plan
+related to internal risk of the Company based on actual circumstances, so as to help
+the Board to assess the monitoring and effectiveness of risk management of the
+Company.
+Corporate Governance Report (Continued)
+7.
+8.
+Assurance of the Company's Internal Control Functions
+The Company has set up an internal control risk department with internal control
+risk management personnel who possess auditing, accounting and management
+background and relevant qualifications. Each department of the Company has
+designated internal control risk management personnel who is responsible for internal
+control and special risk management in different business areas. Each subsidiary has
+set up internal control risk management department and internal control risk personnel
+who is responsible for the internal control risk management of each subsidiary. The
+Company conducts business training for internal control risk management personnel
+every year, and organizes occasional training for the management and all employees
+in relation to internal control risk management. The Company entrusts experienced
+intermediaries to jointly implement the annual internal control evaluation work to
+ensure the quality of the annual internal control evaluation work.
+Internal Control Evaluation
+The Company reviews and evaluates its risk management and internal control system
+on an annual basis during the reporting period. The Company's report on the internal
+control evaluation for 2023 has been reviewed and approved by the Board, which,
+together with the Audit and Risk Management Committee of the Company, consider
+that the inspection and supervision mechanism is able to evaluate the effectiveness
+of the Company's internal control and risk management operations. According
+to the evaluation, during the Reporting Period, the Company has included all the
+businesses and matters involving significant risks (including the financial, operational
+and compliance aspects) in the scope of evaluation, and the internal control system
+has been established and effectively implemented for all significant businesses and
+matters, and the objectives of the Company's internal control have been achieved.
+The Company has complied with the provisions of the code of conduct related to
+risk management and internal control.
+As reviewed and approved in the 2023 Report on Internal Control Evaluation of the
+Board, no material defects were found in the internal control of financial reporting
+as at the reference date of the Report on Internal Control Evaluation, pursuant to the
+identification of material defects in the internal control over the financial reporting of
+the Company. The Board is of the opinion that the Company has maintained effective
+internal control over its financial reporting in all material aspects in accordance
+with the requirements under the Enterprise Internal Control Normative System and
+relevant regulations and its supplementary guidelines as well as other regulatory
+requirements on internal control. Based on the identification of material defects in
+the internal control over non-financial reporting of the Company, no material defects
+were identified by the Company in the internal control over non-financial reporting
+as at the base date of the Report on Internal Control Evaluation. Nothing that would
+affect the evaluation result of the effectiveness of internal control has occurred from
+the reference date of the Report on Internal Control Evaluation to the date of issuance
+of the Report on Internal Control Evaluation.
+142 China Shenhua Energy Company Limited
+Section V Corporate Governance and
+Section V Corporate Governance and
+During the Reporting Period, the Company did not have any material control failures
+or significant control weaknesses and the Company's procedures in relation to
+financial reporting and compliance with the Hong Kong Listing Rules are effective.
+Material defects in the internal control during the Reporting Period:
+IX. AUDITORS' REMUNERATION AND RELATED MATTERS
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+2023 Annual Report 143
+The Company exercises effective control over its subsidiaries in major areas and key
+areas through the establishment of rules and regulations, supervision and evaluation, and
+information technology construction. In terms of control system according to the provisions
+of the articles of association of its subsidiaries, the Company reviews resolutions involving
+the appointment and removal and evaluation of personnel, the appointment of directors,
+supervisors and senior management and the establishment of organisation to be submitted
+to the general meeting, the board and the supervisory committee of the subsidiaries for
+consideration, and exercised nominations rights and voting rights in accordance with
+the provisions of the articles of association of the subsidiaries. In terms of finance, the
+Company has established an integrated and efficient financial information system and
+formulated relevant financial accounting systems, fund management, guarantee and other
+related systems to standardise the accounting and fund supervision and control of its
+subsidiaries and branches. In terms of internal control, the Company inspects and evaluates
+the effectiveness of the internal control of its subsidiaries, and supervises and inspects
+the rectification of internal control deficiencies. In terms of related party transaction, the
+Company formulates the management system and defines the procedures of management,
+review and approval, supervision and inspection of related party transactions of its
+subsidiaries. In terms of material matters, the Company formulates a system in relation
+to information disclosure, internal report for material matters and inside information
+management to standardise the confidentiality and transmission of material information,
+and the review and disclosure process of material matters. The resolutions of the meetings
+of the Board and general meetings, together with other documents of importance, shall be
+submitted to the Company by the subsidiaries in a timely manner.
+(III) Management Control over Subsidiaries
+Please refer to the relevant report disclosed on the website of the SSE at the same time as
+this report for the 2023 Report on Internal Control Evaluation and Audit Report on Internal
+Control.
+KPMG Huazhen LLP, engaged by the Company, has issued the standard unqualified Audit
+Report on Internal Control. The Audit Report on Internal Control is of the opinion that
+as at 31 December 2023, China Shenhua had maintained effective internal control over
+its financial reporting in all material aspects in accordance with the Basic Standard for
+Enterprise Internal Control and the relevant requirements. The above audit opinions are in
+line with the opinions set out in the Self-assessment Report of the Board.
+Corporate Governance Report (Continued)
+4.
+2023 Annual Report 141
+Handling and Release of Inside Information
+Procedures for Identifying, Evaluating and Managing Material Risks
+The Company's procedures for identifying, evaluating and managing material risks
+include: risk assessment and reporting at the beginning of the year, quarterly material
+risk monitoring, risk management and special supervision and inspection, and annual
+evaluation of its internal control. At the end of each year, the Company will organize
+a comprehensive risk assessment for the following year, collect various types of
+risk-related information in a timely manner in accordance with the strategies and
+operational and management objectives, effectively identify various types of risks
+affecting such strategies and operational and management objectives in conjunction
+with the internal and external environment of the Company, analyze and evaluate
+the identified risks, analyze the likelihood and conditions of the occurrence of risks,
+evaluate their impact on the Company's achievement of its objectives and determine
+the results of risk assessment. The Company will determine risk response strategies
+based on risk preference and risk tolerance, take appropriate control measures and
+follow up and monitor significant risks on a quarterly basis. The Company will inspect
+significant risk through annual evaluation of internal control.
+The Procedures for Reviewing the Effectiveness of the Risk Management and
+Internal Control System and for Addressing Severe Internal Control Deficiencies
+The Company has an internal control supervision and inspection mechanism to
+review the effectiveness of the risk management and internal control system through
+annual evaluation of internal control. The procedures for evaluation of internal control
+include: formulation of internal control evaluation plan, formation of a working group
+for internal control inspection; commencement of self-evaluation, inspection and
+evaluation of internal control; communication, identification and rectification of
+internal control deficiencies; preparation of internal control evaluation report after
+the review and disclosure of the Board.
+Significant and material deficiencies will be finally recognised by the Board. For the
+identified significant and material deficiencies, the Board shall adopt appropriate
+countermeasures to keep the risks under control to a tolerable extent and hold the
+relevant departments or personnel accountable therefor.
+140 China Shenhua Energy Company Limited
+5.
+6.
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+With respect to the handling and release of insider information, the Company has
+formulated internal systems such as the Regulations on Registration of Insider
+Information and Informants and Regulations on Information Disclosure and Internal
+Reporting of Material Matters, which set forth the scope of insider information and
+informants, the reporting process, registration and filing, and prohibited acts. Prior to
+the release of insider information, the Company implements differentiated handling
+of the flow of insider information and strictly controls the scope of informants;
+registers the informants of insider information in a complete and timely manner and
+requires them to sign a confidentiality undertaking to prevent the leakage of insider
+information.
+The Company's Management Continuously Monitors the Risks (Especially
+Environmental, Social and Governance Risks), and the Scope and Quality of
+the Internal Control System
+144 China Shenhua Energy Company Limited
+The development plans and decisions made by the Board are in line with the corporate culture of
+the Company. The Board is also committed to establishing a sound compliance culture to ensure
+the Company's compliance with the securities regulations in both the Chinese mainland and Hong
+Kong. During the reporting period, the Company stepped up building law-based governance, and
+promoted the theory of compliance with the laws to be embraced by its employees. The Company
+advanced the implementation of the plan of "law-based China Shenhua" and the "eighth five-year
+on improving legal awareness". The Company strengthened legal review to ensures projects to
+be conducted according to the compliance with laws, revised and improved its "Requirements
+for Compliance Management", to supplement and strengthen the compliance management
+and operation mechanism which included compliance review, reporting on compliance risks,
+responses to and disposal of compliance risks and effective evaluations.
+To ensure that the corporate culture is clearly communicated to all employees, the Company
+actively organized and conducted publicizing and implementation of the core value of the
+Company's corporate culture and corporate culture. A corporate culture column on the Company's
+website has been set up to facilitate employees and relevant people to understand the Company's
+corporate culture. As a result, sub-cultural brands with our own characteristics have been built,
+such as the Party-building brand of "one party branch builds one brand, one brand features one
+characteristic", a brand for united front of "journey to China Shenhua Energy" and a brand for
+youth culture "Youth л". Furthermore, we organized activities for advanced models of spiritual
+civilization and corporate culture with the aid of their exemplary and leading roles, thereby creating
+a good working atmosphere and contributing spiritual strength to the Company's operation and
+development.
+The core values of the Company's corporate culture take "building a world class integrated energy
+listed company with global competitiveness" as the Company's goal. It remains committed to
+the strategy of "achieving one target through playing three roles and bearing six responsibilities"
+and to "contributing to the whole society and economic development". The Company serves the
+purpose of the "cornerstone for energy supply and leader for energy innovations" by devoting
+itself to the core value of "green development and pursuit of excellence". Guiding by the spirit of
+"socialism is established through action", we strive to develop the spirit of "diligence, dedication,
+innovation, and pioneer".
+CORPORATE CULTURE
+Please refer to "APPOINTMENT AND REMOVAL OF AUDITORS" in the "Significant Events"
+section of this report.
+X.
+The management of the Company studies and reviews important matters such as
+internal audit work plan and work systems, listens to and reviews annual and semi-
+annual internal audit work reports, and monitors the operation of internal audit work
+on a regular basis.
+The management of the Company confirms the effectiveness of the risk management
+and internal control system to the Board and the Audit and Risk Committee by voting
+at the general manager's office meeting.
+The principals of the Company are responsible for leading the establishment of a sound
+internal control risk management system and supervising its effective operation. The
+management of the Company is responsible for the internal control risk management.
+It is responsible for the implementation of internal control risk management, studying
+and reviewing internal control risk management related matters, organizing the
+formulation of special systems, work plans and countermeasures for internal control
+risk management in various fields and supervising the implementation thereof.
+The management of the Company is responsible for organizing and promoting the
+Environmental, Social and Corporate Governance (ESG) management, reviewing the
+Company's medium and long-term ESG planning and annual work plan, approving
+the implementation rules of the Company's ESG management work, organizing and
+promoting the identification, assessment, management process and achievement of
+related objectives of ESG activities of the Company.
+Proposal of the 2023 Third Quarterly
+In 2023, the Company has conducted one annual general meeting, one class meeting of
+holders of A shares, one class meeting of holders of H shares, and seven Board meetings.
+Supervisors of the Company attended meetings as required.
+On-site &
+correspondence
+unanimously
+Responsibility and Corporate Governance
+Report of China Shenhua Energy
+Company Limited
+Passed
+unanimously
+Shenhua Energy Company Limited
+Proposal of the 2022 Environment, Social
+Proposal of the 2022 Annual Report of China Passed
+unanimously
+unanimously
+Passed
+All
+Proposal of the 2022 Internal Control
+Passed
+Proposal of the 2022 Profit Distribution
+Proposal of the 2022 Financial Report of
+China Shenhua Energy Company Limited
+Poll results
+Committee
+the Supervisory
+fifth session of
+meeting of the
+All
+On-site
+Plan of China Shenhua Energy Company
+Limited
+Passed
+Evaluation Report of China Shenhua
+unanimously
+In-writing
+28 April 2023 Beijing
+The fifteenth
+Poll results
+Subject matter
+supervisors
+of meeting
+Venue
+Date
+Meetings
+Attendance of
+Method
+Corporate Governance Report (Continued)
+Section V Corporate Governance and
+2023 Annual Report 135
+Energy Company Limited
+unanimously
+Passed
+Committee Report of China Shenhua
+Proposal of the 2022 Supervisory
+Energy Company Limited
+24 March 2023 Beijing
+The fourteenth
+☐ Applicable ✔ Not applicable
+the Supervisory
+All
+In-writing
+25 August 2023 Beijing
+Passed
+Energy Investment Corporation Limited
+Proposal of Accounting Policy Changes of
+China Shenhua Energy Company Limited
+Agreement Entered into between China
+Shenhua Energy Co., Ltd. and China
+The sixteenth
+meeting of the
+unanimously
+Agreement II to the Non-competition
+Proposal of the 2023 Interim Financial
+Passed
+unanimously
+unanimously
+fifth session of
+Subject matter
+Committee
+Company Limited
+Proposal of the 2023 First Quarterly Report
+Passed
+of China Shenhua Energy Company
+Limited
+Proposal on the Conditional Supplementary
+Report of China Shenhua Energy
+unanimously
+Passed
+Company Limited
+Attendance of
+supervisors
+Method
+of meeting
+Venue
+Date
+Meetings
+In 2023, the Supervisory Committee of the Company held four meetings in total.
+Details are set as follows:
+1. Attendance at the Meeting
+During the Reporting Period, in compliance with the requirements of the Articles of
+Association and the Rules of Procedures of Meetings of the Supervisory Committee,
+the Supervisory Committee of the Company conducted strict supervisions on the
+lawful operations, financial position and the performance of duties of the Board and the
+management of the Company, and did not have any dissenting view over the matters it
+supervised during the Reporting Period.
+Three current supervisors of the Company are Tang Chaoxiong, Zhou Dayu and Zhang Feng.
+Please refer to "Details of Current and Resigned Directors, Supervisors and Members
+of Senior Management of the Company during the Reporting Period" in this report for
+biographical details of the three supervisors.
+unanimously
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+(1) Performance of Duties of the Supervisory Committee
+27 October Beijing
+2023
+meeting of the
+The seventeenth
+unanimously
+Report of China Shenhua Energy
+Shenhua Energy Company Limited
+Proposal of the 2023 Interim Report of China Passed
+the Supervisory
+Committee
+fifth session of
+meeting of the
+The differences in education, cultural background, occupational background and job
+requirements of employees are the main factors affecting the gender diversity of
+employees. The Company continues to bring in various types of professionals of different
+genders and nationalities in accordance with its development needs, so as to cultivate and
+build a pipeline of talents with appropriate scale, high-end leadership, reasonable structure
+and excellent quality, establish and maintain the Company's talent advantage in the industry
+in which it operates and lay a solid talent foundation for the realisation of the Company's
+development strategy. Further details about the diversity of employees are set out in the
+2023 Environment, Social and Governance Report of the Company, which will be disclosed
+in conjunction with this report.
+74.32 million hours
+CNY5,383 million
+(V) Gender Diversity of Employees
+As at the end of 2023, the Group had 12,553 female employees, accounting for 15.0% of
+total employees, and 70,886 male employees, accounting for 85.0% of total employees.
+to equity holders of
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Net profit attributable
+RMB million
+RMB
+Amount of
+cash dividend
+(inclusive of tax)
+Dividend per
+10 shares
+Profit distribution scheme/plan for the recent three years (including the Reporting Period)
+The Board proposed the payment of a final dividend in cash of RMB2.26 per share
+(inclusive of tax) for the year 2023 based on the total share capital registered on
+the equity registration date of implementing equity distribution. Calculated based on
+the total share capital of 19,868,519,955 shares of the Company as at 31 December
+2023, the final dividend totals RMB44,903 million (inclusive of tax), accounting for
+69.5% of the profit for the year attributable to equity holders of the Company under
+the International Financial Reporting Standards, or 75.2% of the net profit for the year
+attributable to equity holders of the Company under the China Accounting Standards
+for Business Enterprises.
+Net profit attributable to equity holders of the Company for 2023 under the China
+Accounting Standards for Business Enterprises amounted to RMB59,694 million,
+with basic earnings per share of RMB3.004/share; profit attributable to equity holders
+of the Company for 2023 under the International Financial Reporting Standards
+amounted to RMB64,625 million, with basic earnings per share of RMB3.253/share.
+As at 31 December 2023, the profit available for distribution to shareholders of the
+Company under the China Accounting Standards for Business Enterprises amounted
+to RMB201,416 million.
+Cash Dividend Scheme for 2023
+1.
+(III) Cash Dividend Scheme/Plan
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+2023 Annual Report 147
+✓ Yes ☐ No
+Whether small and medium shareholders have adequate opportunities
+to express the opinions and concerns, and whether their legitimate
+rights are fully protected
+✓ Yes ☐ No
+✓ Yes ☐ No
+Whether the relevant decision procedures and mechanism are complete
+Whether independent directors have performed their duties and
+responsibilities and played their full role
+unambiguous
+✓ Yes ☐ No
+✓ Yes ☐ No
+Whether it complies with the provisions of the Articles of Association or
+the requirements of the proposals of the general meeting
+Whether the criteria and percentage of dividends are clear and
+(II) Special Description for Cash Dividend Policy
+In order to implement the Securities Law of the PRC, strengthen the protection of investors'
+legitimate rights and interests, and respond to the demands of investors, especially minority
+shareholders, as approved on the 2022 first extraordinary general meeting of the Company
+and in line with the Article of Association, the profit distributed by the Company in cash
+for each year from 2022 to 2024 shall not be less than 60% of the net profit attributable
+to equity holders of the Company realised in that year.
+Pursuant to the Articles of Association, the profit distribution of the Company shall be
+made based on the profit for the year attributable to equity holders of the Company in
+the consolidated financial statements prepared under the China Accounting Standards for
+Business Enterprises and the International Financial Reporting Standards, whichever is
+lower ("Distribution Base"). Annual profit distribution in cash shall be no less than 35% of
+the Distribution Base subject to the relevant conditions.
+In accordance with the requirements of the relevant laws and regulations and the Articles
+of Association, the profit distribution policy of the Company shall maintain continuity and
+stability and take full consideration of achieving reasonable returns for investors. The
+Company shall give priority to profit distribution in cash dividends. The profit distribution
+policy of the Company complies with the Opinions of the State Council on Further
+Improving the Quality of Listed Companies(《國務院關於進一步提高上市公司質量的意見》)
+and the Guideline on Encouragement of Cash Dividend Distribution of Listed Companies
+promulgated by the CSRC.
+Formulation, Implementation or Adjustment of Cash Dividend Policy
+(I)
+XII. PROFIT DISTRIBUTION POLICY DURING THE REPORTING PERIOD
+146 China Shenhua Energy Company Limited
+(inclusive of tax)
+83,439
+XI. EMPLOYEES
+14,697
+1,532
+3,030
+8,361
+680
+3,680
+Total number of working hours of outsourced work
+Total remuneration paid for outsourced work
+Education Level
+Number of
+persons
+Specialized secondary school graduate
+Graduate of technical school, high school and below
+Total
+4,058
+37,758
+20,320
+7,992
+13,311
+83,439
+2023 Annual Report 145
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+(II) Remuneration Policy
+The Company insists on efficiency and effectiveness orientation and has formulated a salary
+policy that combines salary and performance evaluation, tilts toward front-line employees
+and is competitive in the industry. The Company has also deepened the reform of the
+distribution system, optimised the income distribution structure, given full play to the role
+of salary incentive, and stimulated the vitality of corporate talents.
+(III) Training Program
+the Company in the
+51,459
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+persons
+Function
+(1) Employees as at the End of 2023
+Number of current employees of the headquarter of the Company
+(number of person)
+199
+Number of current employees of the branches/subsidiaries
+of the Company (number of person)
+83,240
+Total number of current employees of the Group
+(number of person)
+83,439
+Number of retired employees in respect of which the Company and
+subsidiaries bore cost (number of person)
+13,814
+Category of function
+Operation and repair
+Management and administration
+Finance
+Research and development
+Technical support
+Sales and marketing
+Others
+Total
+Category of education level
+Postgraduate and above
+University graduate
+College graduate
+Number of
+consolidated financial Percentage to the net
+XIV. APPRAISAL MECHANISM FOR SENIOR MANAGEMENT, AND THE
+ESTABLISHMENT AND IMPLEMENTATION OF THE INCENTIVE MECHANISM
+DURING THE REPORTING PERIOD
+RMB million
+8.
+Corporate Governance Report (Continued)
+Section V Corporate Governance and
+2023 Annual Report 151
+The Company shall use the registered address ("registered address") as
+recorded in the register of members of H shares on 5 July 2024 as the criterion
+in determining the residence of the individual shareholders of H shares who
+are entitled to receive the final dividend for the year 2023 of the Company, and
+withhold and pay individual income tax accordingly. If the residence of the
+individual shareholders of H shares is inconsistent with the registered address,
+such shareholders shall notify the Company's share registrar for H shares at or
+before 4:30 p.m. on 28 June 2024 with the relevant evidence at Computershare
+Hong Kong Investor Services Limited of 17M Floor, Hopewell Centre, 183
+Queen's Road East, Wan Chai, Hong Kong, telephone (852) 2862 8555.
+If the individual shareholders of the H shares who are Hong Kong or Macau residents
+or residents of the countries which have an agreed tax rate of 10% with China, the
+Company shall withhold individual income tax at a rate of 10%. If the individual
+shareholders of the H shares are residents of countries which have an agreed tax rate
+of less than 10% with China, the Company shall withhold individual income tax on
+behalf of them in accordance with relevant provisions required by the Announcement
+of the State Taxation Administration in relation to the Administrative Measures on
+Preferential Treatment Entitled by Non-resident Taxpayers under Tax Treaties (No.
+35 Announcement of the State Taxation Administration in 2019). If the individual
+shareholders of the H shares are residents of countries which have an agreed
+tax rate of over 10% but less than 20% with China, the Company shall withhold
+the individual income tax on behalf of them at the agreed actual rate. In case the
+individual shareholders of the H shares are residents of countries which have not
+entered into any tax agreement with China, or the agreed tax rate with China is 20%
+or otherwise, the Company shall withhold the individual income tax at a rate of 20%.
+According to Guo Shui Han [2011] No. 348 issued by the State Taxation Administration,
+the Company shall distribute cash dividends to the individual shareholders whose
+names appear on the register of members for H shares, and has obligations
+to withhold and pay individual income tax for dividend payable. The individual
+shareholders of H shares are entitled to the relevant preferential tax treatment
+pursuant to the provisions in the tax agreements entered into between their countries
+of residence and China or the tax arrangements between China's mainland and Hong
+Kong (Macau).
+Corporate Governance Report (Continued)
+Section V Corporate Governance and
+9.
+statements of the
+respective dividend year
+in accordance with China
+Accounting Standards for
+Business Enterprises
+In accordance with the provision of Enterprise Income Tax Law of the PRC and its
+implementation regulations and the State Taxation Administration of the PRC (Guo
+Shui Han [2008] No. 897), the Company is required to withhold and pay enterprise
+income tax at the rate of 10% on behalf of the non-resident enterprise shareholders
+whose names appear on the register of members for H shares of the Company
+when distributing final dividends. The Company shall withhold and pay enterprise
+income tax in respect of the final dividend for the year 2023 of the Company for the
+non-resident enterprise shareholders whose name would appear on the register of
+members for H shares of the Company on 5 July 2024.
+Kong Investor
+Services Limited
+Computershare Hong
+Kong Investor
+Services Limited
+Computershare Hong
+4:30 p.m. on Friday,
+28 June 2024
+Friday,
+5 July 2024
+29 June 2024
+for the year 2023
+Saturday,
+Entitled to the final dividend
+150 China Shenhua Energy Company Limited
+10.
+With respect to the Southbound Shareholders, according to the relevant requirements
+of China Securities Depository and Clearing Corporation Limited, China Securities
+Depository and Clearing Corporation Limited Shanghai Branch and Shenzhen Branch
+shall receive cash dividends distributed by the Company as the nominee of the
+Southbound Shareholders for Shanghai market and Shenzhen market, respectively
+and distribute such cash dividends to the relevant Southbound Shareholders through
+its depository and clearing system.
+According to the relevant provisions under the "Notice of MOF, SAT and CSRC
+on the Tax Policies for Shanghai-Hong Kong Stock Connect Pilot Programme" (Cai
+Shui [2014] No. 81) and the "Notice of MOF, SAT and CSRC on the Tax Policies for
+Shenzhen-Hong Kong Stock Connect Pilot Programme" (Cai Shui [2016] No. 127)
+under the Ministry of Finance, State Administration of Taxation of China and CSRC,
+the Company shall withhold individual income tax at the rate of 20% with respect
+to dividends received by individual investors in China's mainland for investing in
+H-shares listed on the HKEx through Shanghai-Hong Kong Stock Connect and
+Shenzhen-Hong Kong Stock Connect. The dividends and bonuses earned by securities
+investment funds in China's mainland investing in shares listed on the HKEx through
+Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect shall be
+withheld on an individual income tax basis. The Company is not required to withhold
+income tax on dividends derived by enterprise investors in China's mainland, and
+such enterprises shall report the income and make tax payment by themselves. The
+record date and the relevant arrangements of dividend distribution for Southbound
+Shareholders are the same as that of the Company's shareholders of H shares.
+154 China Shenhua Energy Company Limited
+The Administrative Measures for the List of Key Environmental Supervision and Control Units (Decree No. 27) shall come
+into force on January 2023, and the Notice on Printing and Issuing the Provisions on the Administrative Measures for
+the List of Key Pollutant Discharging Entities (Trial) (Huan Ban Jian Ce [2017] No. 86) shall be abolished simultaneously.
+1.
+The main pollutants of the water environment are chemical oxygen demand (COD),
+which are discharged continuously or discontinuously to the surface water through
+the sewage outfall of the enterprises. The enterprises are mainly coal chemical
+enterprises and public thermal power plants. The emission standards implemented
+were the Comprehensive Emission Standards for Sewage (GB8978-1996).
+The main pollutants in the atmospheric environment are sulfur dioxide, nitrogen
+oxides and soot, which are emitted organisationally and continuously to the
+atmosphere through the chimneys. The enterprises are mainly public thermal power
+plants, coal-to-chemical captive power plants, heating boilers for mines and coking
+plants. Emission standards implemented include Emission Standards for Air Pollutants
+Produced by Thermal Plants (GB13223-2011), Emission Standards for Air Pollutants
+Produced by Boilers (GB13271-2014) and Emission Standards for Pollutants Produced
+by Coking Chemical Industry (GB16171-2012).
+As at 31 December 2023, a total of 36 subsidiaries of the Group that classified as the
+key environmental supervision units ("Key Units") published by the environmental
+protection authorities (including key pollutant discharge units and key environment
+risk control units in terms of atmospheric environment, water environment and soil
+contamination), are mainly coal-fired power plants, coal chemical plants and coal
+mines, which are located in areas including Inner Mongolia, Shaanxi, Hebei, Fujian
+and Guangdong.
+1. Information on Pollutant Discharge
+Environmental Protection Information of the Companies and Their Significant
+Subsidiaries Classified as the Key Environmental Supervision Units¹ as
+Designated by the Competent Environmental Protection Authorities of the
+PRC
+(1)
+ENVIRONMENTAL INFORMATION
+I.
+Section VI Environmental and Social Responsibility
+2023 Annual Report 153
+The Company insists on the unity of incentives and constraints, highlights quality and efficiency,
+emphasizes sustainable development and establishes a remuneration mechanism that matches
+the operating performance, risks and responsibilities, and fully mobilizes the enthusiasm of
+senior management. The Company has deepened the contractual management of the tenure
+system, combined with the division of senior management positions, and signed differentiated
+appointment agreements, annual operating performance responsibility letters and tenure operating
+performance responsibility letters for one person per position. The main production and operation
+indicators in the business performance assessment index are shared by the senior management;
+personalized assessment indicators are added according to the division of business; safety and
+environmental protection indicators are linked to the performance of each senior management.
+All public indicators and personal performance indicators for senior management in 2023 are set
+to be high. The annual performance evaluation of senior management is conducted at the end of
+the year based on the completion of relevant metrics, and the annual remuneration will be paid
+in accordance with the evaluation results.
+The Company has established a training system with different levels and channels to
+provide the employees with appropriate training in job skills, safe production and group
+management, etc. In 2023, the accrued capital used for training was approximately RMB319
+million. The number of attendances in training was approximately 1,136,800 with training
+hours of approximately 9,719,800 hours in aggregate. For details, please refer to the 2023
+Environment, Social and Governance Report of the Company.
+☐ Applicable ✓ Not applicable
+XIII. THE SHARE OPTIONS INCENTIVE PLAN, EMPLOYMENT STOCK OWNERSHIP
+SCHEME OR OTHER EMPLOYEE INCENTIVE SITUATION OF THE COMPANY
+AND THEIR IMPACTS
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+152 China Shenhua Energy Company Limited
+Pursuant to the Articles of Association, the Company is entitled to forfeit the
+dividends which have been declared for more than six years but yet to be
+claimed, subject to compliance with relevant Chinese laws and administrative
+regulations. Shareholders are advised to collect the dividends distributed by
+the Company in a timely manner.
+The Company assumes no responsibility arising from any delayed or inaccurate
+determination of the status of the shareholders or any dispute over the
+mechanism of withholding. Shareholders should consult their tax advisers
+regarding China's mainland, Hong Kong and other tax implications of owning
+and disposing of the Company's H shares.
+2
+4:30 p.m. on Monday,
+17 June 2024
+7.
+18 June 2024
+2.
+148 China Shenhua Energy Company Limited
+100.4
+50,269
+50,466
+25.4
+Final dividend for the year 2021
+72.8
+69,626
+50,665
+25.5
+21 June 2024
+75.2
+59,694
+44,903
+22.6
+Final dividend for the year 2023 (Proposed)
+%
+statements
+to equity holders of
+the Company in the
+consolidated financial
+profit attributable
+3.
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Final dividend for the year 2022
+The final dividend for the year 2023, which is denominated and declared in RMB,
+will be paid in RMB to holders of the Company's A shares (including holders of the
+Company's A shares through the Northbound Trading Link of the Shanghai-Hong
+Kong Stock Connect, hereinafter referred to as the "Northbound Shareholders"), and
+holders of the Company's H shares through the Southbound Trading Link (including
+Shanghai and Shenzhen markets, hereinafter referred to as the "Southbound
+Shareholders"). Dividends to holders of the Company's H shares, except the
+Southbound Shareholders, will be paid in HKD. The dividend paid in HKD is calculated
+as the average benchmark rate of RMB against HKD of five business days preceding
+the date of declaration of such dividend, as published by the Bank of China.
+The proposed final dividend plan for the year 2023 outlined above was in compliance
+with the requirement of the Articles of Association, and there were no circumstances
+under which the cash dividend plan may prejudice the interests of the listed company
+or minority shareholders as stipulated in No. 3 Guideline for the Supervision of Listed
+Companies Cash Dividend Distribution of Listed Companies. Such final dividend
+plan has been approved by the Board. When proposing the final dividend plan for the
+year 2023, the Board has attended to and considered the opinions and concerns of
+the shareholders of the Company. The Company will hold the 2023 annual general
+meeting on Friday, 21 June 2024 to consider the relevant resolutions, including the
+above dividend plan as proposed by the Board.
+Friday,
+Tuesday,
+Attending and voting at the
+2023 annual general
+meeting
+registrar for H shares
+First day (inclusive) Last day (inclusive) registering members
+Corresponding rights
+No.
+The Company's share
+Temporary closure of the register of members
+The last day for
+6.
+(IV) Outsourced Work in 2023
+According to the relevant regulations of China Securities Depository and
+Clearing Corporation Limited Shanghai Branch and market practice adopted for
+final dividend distribution for A shares, the Company will publish a separate
+announcement on implementation of equity distribution in respect of the
+distribution of final dividend for the year 2023 to holders of A shares after the
+2023 annual general meeting to determine the record date, ex-rights date and
+dividend distribution date for the distribution of final dividend for the year 2023
+to holders of A shares.
+The Arrangement of Temporary Closure of the Register of Members of H Shares
+of the Company:
+2023 Annual Report 149
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+4.
+In accordance with the preliminary arrangement of profit distribution plan for year
+2023 and the 2023 annual general meeting of the Company, the final dividend for
+the year 2023 for the Company's H shareholders is estimated to be distributed on
+or about 21 August 2024.
+Pursuant to the Articles of Association:
+(1)
+(2)
+After the SSE is closed in the afternoon on Tuesday, 18 June 2024, the
+shareholders of A shares of the Company and its proxies of shareholders as
+registered in the China Securities Depository and Clearing Corporation Limited
+Shanghai Branch are entitled to attend and vote at the 2023 annual general
+meeting of the Company;
+5.
+emissions
+emissions concentration
+pollutants
+Name of the entity
+Total Emission
+emission
+Total
+outlets Distribution of emission outlets
+Main
+Approved Number of
+Operation
+rate of
+pollution
+Excessive prevention
+emissions
+%
+tonne mg/Nm³
+tonne/year
+hour
+Taishan Power
+SO,
+838
+1,717
+18.5
+4,780
+NOX
+2,212
+facilities
+6 Units No. 1 and 2 share one
+1,863.6
+9,560
+43.7
+839
+23
+Soot
+42
+3.1
+360
+030
+100
+China Energy (Lianjiang)
+Gangdian Co., Ltd.
+мох
+ទង្គ
+1,011
+27.2
+1,632.2
+2 Each unit has one emission outlet
+576
+NOX
+Power Generation Co., Ltd.
+1 All units share one emission outlet
+1 All units share one emission outlet
+Thermal Power Co., Ltd.
+NOX
+199
+42.2
+260
+Soot
+0.8
+1,533
+52
+0
+100
+0
+80
+China Energy Shenfu (Longyan) SO₂
+268
+20.3
+358
+O O O
+182
+41.3
+23
+59.02
+4 5 coal-fired boilers share one
+42
+88.4
+76.16
+16.1
+12.48
+emission outlet and each of 3
+gas-fired boilers has one emission
+outlet
+1 4 coal fired boilers share one
+126
+100
+22
+15
+O O O
+100
+China Shenhua Ha'erwusu
+69.6
+32
+226
+Soot
+Soot
+177
+4.8
+466.34
+124
+100
+880
+Jiujiang Power
+2,282.2
+ទង្គ
+60
+114
+80.02
+12.8
+17.14
+Zhunge'er Energy
+SO₂
+NOX
+3 Each plant has one emission outlet
+23.8
+15.9
+China Energy Shenfu (Jinjiang) SO₂
+716.46
+Soot
+ន
+1.4
+71.65
+159
+15.4
+3,727.2
+1 All units share one emission outlet
+NOX
+340
+34.2
+Average
+Soot
+17
+1.7
+559
+40.3
+672
+NOX
+833 83
+emission outlet; each of Units No.
+Soot
+153
+1.6
+1,620
+3-7 has one emission outlet
+O O O
+100
+O O O
+80
+Huizhou Thermal
+SO₂
+417
+25.2
+501.52
+1 All units share one emission outlet
+Liuzhou Power
+SO₂
+0
+75
+O o O
+100
+2 Each unit has one emission outlet
+Power Generation Co., Ltd.
+NOx
+1,811
+41.7
+3,675
+Soot
+198
+4.6
+309
+060
+220
+100
+80
+100
+80
+10
+3,675
+22.1
+964
+SO,
+100
+0
+0
+Beihai Power
+SO₂
+161
+4.8
+771.2
+0
+2 Each unit has one emission outlet
+711
+26.1
+712.9
+Soot
+32
+1.1
+136.2
+China Energy Shenfu (Shishi)
+NOX
+In 2023, the emissions of the Key Units in terms of atmospheric environment are
+as follows:
+SO₂
+79.71
+ཨྰཿབིང
+294
+10.9
+1,016.4
+2 Each unit has one emission outlet
+742
+28.5
+1,271
+2.9
+290.4
+117
+9.9
+2,674.18
+One boiler has four emission outlets,
+NOX
+325
+30.1
+1,337.09
+a separate emission outlet is set
+Soot
+32
+Soot
+2.7
+NOX
+SO,
+1.2
+352
+Zhunge'er Power
+SO₂
+NOX
+ទង្គ
+381
+24.4
+3,840
+2 Each of Phase I and Phase II has
+608
+39.3
+3,840
+one emission outlet
+Soot
+64
+4.4
+576
+Shengli Energy
+SO₂
+Baotou Coal Chemical
+233 23
+23
+401.13
+O O O
+1 One emission outlet for coalfired
+0.14
+104
+management,
+Soot
+0.68
+71.76
+not approved
+boiler (the emission outlet was
+dismantled for transformation in
+March)
+100
+3060
+100
+80
+O O O
+0
+100
+0
+2023 Annual Report 157
+Section VI Environmental and Social Responsibility (Continued)
+Operation
+Registration
+100
+211
+SO,
+0
+Bayannur Energy
+502
+53
+21.7
+132
+NOX
+334
+273.3
+900
+Soot
+19
+7.9
+96
+for sulfur recovery facilities
+2 One coke oven chimney and one
+emission outlet for dust removal
+station
+Shuiquan Open-cut Mine of
+Baotou Energy
+NO
+33
+0.72
+Soot
+1,760
+73.0
+Average
+rate of
+SO,
+SO,
+NOX
+38
+49
+3.1
+383
+30.7
+Soot
+25
+1.8
+2220
+1 All units share one emission outlet
+100
+600
+Shenmu Power
+SO₂
+ទង្គ
+143
+Approved Number of
+19.5
+pollution
+Total
+71.2
+367
+Soot
+NOX
+SO₂
+Baotou Energy Wanli First
+Colliery
+hour
+tonne/year
+mg/Nm3
+tonne
+facilities
+emissions
+outlets Distribution of emission outlets
+emissions
+emissions concentration
+pollutants
+Name of the entity
+Excessive prevention
+Emission
+Total
+emission
+Main
+189
+1 All units share one emission outlet
+NOX
+0
+100
+880
+0
+100
+880
+0
+0
+0
+100
+O O O
+0
+Power Plant of Guoneng Yili
+ទ
+852
+34.3
+880
+4 Each unit has one emission outlet
+Energy Co., Ltd.
+NOX
+1,675
+O O O
+O O O
+100
+80
+250
+34.7
+270
+Soot
+16
+2.3
+54
+Jinjie Energy (Power Plant)
+SO₂
+1,044
+Section VI Environmental and Social Responsibility (Continued)
+18.2
+NOX
+2,335
+32.9
+4,422.18
+3 Every two units share one emission
+outlet
+Soot
+176
+2.6
+884.45
+O O O
+2,459
+32
+0
+NOX
+1,291.5
+2 Each unit has one emission outlet
+NOX
+1,603
+41.7
+1,837.5
+Co., Ltd.
+Soot
+69
+1.8
+367.5
+O O O
+100
+80
+China Energy Jiangyou Thermal SO₂
+17.9
+153
+709
+Wanzhou Electric Power
+88
+524
+19.8
+895
+2 Each unit has one emission outlet
+100
+995
+38.9
+1,080
+Soot
+29
+1.1
+110
+China Energy Chongqing
+SO,
+ទង្គ
+12.9
+600
+1 All units share one emission outlet
+41.7
+1,444.3
+Soot
+95
+2.8
+174
+O O O
+0
+100
+0
+0
+80
+Mengjin Power
+SO₂
+NOX
+1,400
+NOX
+Power Generation Co., Ltd.
+Open-cut Mine
+Power Co., Ltd.
+NOX
+454
+37.0
+1,200
+23
+Soot
+NOX
+67
+240
+030
+100
+China Energy Sichuan Tianming SO₂
+547
+16.3
+924
+5.6
+SO₂
+Yongzhou Power
+hour
+Hazardous
+dioxide
+oxide
+Soot
+(COD)
+waste
+0,000
+0,000
+0,000
+tonnes
+tonnes
+tonnes
+tonnes
+tonnes
+Key Units
+oxygen
+demand
+Nitrogen
+Sulfur
+Chemical
+water treatment plant
+8.5 Failure to replace the
+activated carbon of the
+attached VOC treatment
+facility at the emission
+outlet of the whole
+vehicle spraying section
+over a long period of time
+Rectified
+472.46 Failure to apply for approval In progress
+1.26
+for EIA reports in timely
+40 Failure to pass the
+acceptance inspection
+on the completion of
+environmental protection
+facility construction after
+capacity additions
+162 China Shenhua Energy Company Limited
+Section VI Environmental and Social Responsibility (Continued)
+2.
+Other Environmental Information
+During the Reporting Period, the total emissions of major pollutants of the Group
+were as follows:
+after capacity additions
+ទង្គ
+2.54
+9.6
+Main
+Total
+emission
+Total
+Emission
+Excessive prevention
+Name of the entity
+pollutants
+emissions concentration
+emissions
+outlets Distribution of emission outlets
+emissions
+facilities
+tonne mg/Nm3
+tonne/year
+pollution
+Approved Number of
+Average
+rate of
+2,805
+2 Each unit has one emission outlet
+0
+100
+NOX
+1,417
+37.5
+366
+3,014
+31
+0.8
+1,050
+0
+2023 Annual Report 155
+Section VI Environmental and Social Responsibility (Continued)
+Operation
+Soot
+the sodium hypochlorite
+generator at the mine
+342
+1,079
+O O O
+O 2 O
+0
+100
+Section VI Environmental and Social Responsibility (Continued)
+Operation
+rate of
+Average
+Approved Number of
+pollution
+Main
+Total
+emission
+Total
+Emission
+0
+Excessive prevention
+100
+156 China Shenhua Energy Company Limited
+Shendong Power Daliuta
+SO₂
+0.1
+0.1
+47.32
+1 All units share one emission outlet
+Thermal Power Plant
+NO
+15
+43.1
+67.6
+Soot
+0.2
+0.1
+13.52
+0
+Name of the entity
+pollutants
+emissions concentration
+Note: Since 2022, the Group has calculated the total solid hazardous waste emissions based on the
+Directory of National Hazardous Wastes (2021 Edition).
+The environmental information set forth in the 2023 Environmental, Social and
+Governance Report of the Company has been independently verified by KPMG
+Huazhen LLP, and an assurance report was issued.
+3.
+Explanation of Reasons for Non-disclosure of Environmental Information by
+Companies Other Than Those Classified as the Key Units
+☐ Applicable ✓ Not applicable
+(III) Explanation of the Follow-up Progress or Changes in the Disclosure of
+Environmental Information during the Reporting Period
+☐ Applicable ✓ Not applicable
+2023 Annual Report 163
+Section VI Environmental and Social Responsibility (Continued)
+(IV) Actions Taken by the Company to Protect Ecology, Prevent Pollution and Take
+on Environmental Responsibilities
+In 2023, the Group continued to carry out in-depth pollution prevention and control,
+comprehensively promoted the construction of green mines, green transportation, green
+power and green chemicals, resulting a sustained reduction in the emission of major
+pollutants. The Group adopted a combination of measures to ensure source prevention
+and control, intensified efforts to advance the comprehensive governance of air pollution,
+and implemented a number of tasks to secure environment quality. The Group gave
+priority to conservation, enhanced recycling, and took coordinated steps to promote the
+high-efficiency utilisation of water resources. The Group insisted on source reduction,
+process resourcefulness and end harmless treatment and strengthened the disposal of
+hazardous waste in compliance with laws and regulations. The Group strictly upheld the
+red lines for ecological protection, strengthened the management of soil pollution, took
+steps to enhance the integrated protection and remediation of mountains, rivers, forests,
+farmlands, lakes, grasslands and deserts, and promoted the ecological remediation and
+governance and protection of biodiversity in a well-coordinated way. The reclamation rate
+of the surface mine dump and the governance rate of stabilised subsidence areas have
+reached the international advanced level, and key enterprises in the Yangtze River and
+Yellow River basins have achieved the full coverage of remote sensing monitoring of soil
+and water conservation and ecological management. In addition, the Group will continue to
+carry out the investigation and treatment of hidden ecological and environmental hazards,
+establish a tiered and classified treatment system for risks and hidden dangers, thereby
+significantly improving its ability to prevent ecological and environmental risks.
+In 2023, the Group invested RMB2.339 billion in environmental protection. The open-cut
+mine land reclamation area increased by 490,000 square meters, and the underground
+mines subsidence area's land governance coverage increased by 29.73 million square
+meters. The greening coverage increased by 22.75 million square meters.
+164 China Shenhua Energy Company Limited
+hour
+Shendong Power Guojiawan
+Power Plant
+60,160.67
+443.51
+0.36
+4.82
+emissions
+outlets Distribution of emission outlets
+emissions
+facilities
+tonne mg/Nm3
+tonne/year
+0
+294.80
+52,781.46
+1.01
+2.28
+0.18
+443.51
+7,379.21
+Total
+2.27
+Other enterprises
+2.4
+60
+Soot
+33.3
+1,925
+Soot
+56
+1.7
+192.5
+Cangdong Power
+SO,
+NOX
+Soot
+888
+494
+10.8
+1,303.13
+984
+1,065
+NOX
+2 Each unit has one emission outlet
+1,347.5
+2 Each unit has one emission outlet
+732
+40.4
+1,542
+Soot
+42
+2.5
+21.9
+308
+0
+100
+0
+Shouguang Power
+SO₂
+515
+15.9
+O O O
+19.1
+1,563.76
+111
+O O O
+0
+100
+0.18
+80
+Dianta Power Plant of
+Shendong Power
+NO
+38
+520
+20.1
+1,031.81
+1 All units share one emission outlet
+862
+33.2
+1,474.02
+521.88
+2.8
+92
+Soot
+2.5
+292.06
+O 10
+O o O
+100
+100
+0
+2 Every two units share one emission
+outlet
+Dingzhou Power
+13.1
+1,814.32
+NOX
+860
+21.8
+2,591.88
+2 Every two units share one emission
+outlet
+554
+12 Failure to operate normally Rectified
+2 Each unit has one emission outlet
+implemented in
+4 Beyond planned water usage Rectified
+No. 04 of Shen Shui
+Li Fa Jue Ding
+[2023]
+28 June 2023
+timely manner
+affiliated collieries in a
+drainage permits of
+Renewed
+45 Failure to renew expired
+No. 17 of Shan K
+Huan Fa [2023]
+10 April 2023
+timely manner
+affiliated collieries in a
+1 One emission outlet for coal-fired
+boiler
+Shendong Coal Group
+0
+80
+0
+Soot
+drainage permits
+Renewed
+45 Failure to renew expired
+Rectified
+23.61 Other illegal acts
+No. 1 of E Huan Yi
+Fa [2023]
+No. 11 of Shan K
+Huan Fa [2023]
+15 March 2023
+Shendong Coal Branch 3 January 2023
+progress
+of penalty Reasons for penalty
+RMB0'000
+100
+20 November 2023 No. 5-39 of E Huan
+Fa [2023]
+20.27 Failure to apply for EIA
+In progress
+寺煤礦)
+No. 20 of Shan K
+Yulin Energy Qinglongsi 10 January 2023
+Colliery (榆林能源青龍
+progress
+of penalty Reasons for penalty
+RMB0'000
+Penalty No.
+Date
+Unit name
+Rectification
+Amount
+Section VI Environmental and Social Responsibility (Continued)
+2023 Annual Report 161
+Completed renewal
+and change of
+water access
+licence
+40 Failure to take water in
+compliance with the
+conditions of an approved
+water access licence
+[2023]
+Shui Li Fa Jue Zi
+(包頭能源神山露天礦)
+Open-cut Mine
+Baotou Energy Shenshan 6 September 2023 No. 27 of (Zhun)
+(包頭能源李家壕煤礦)
+water access licence
+Jue [2023]
+Renewed
+10 Failure to renew expired
+No. 02 of (E) Shui Fa
+Baotou Energy Lijiahao 3 April 2023
+Colliery
+selection of affiliated
+collieries
+equipment for coal dry
+procedures for new smart
+Penalty No.
+Date
+Unit name
+Rectification
+Penalty No.
+Date
+Unit name
+Rectification
+Amount
+Administrative Penalty for Environmental Problems during the Reporting Period
+The Group standardised the management of the online environmental protection
+monitoring system, and formulated the Administration Measures for the Online
+Environmental Protection Monitoring System* ( KERESENKR) ) and
+other management systems in accordance with the relevant national standards and
+administrative regulations for online monitoring of pollution sources. All the Key
+Units have completed the compilation of their self-monitoring plans. All automatic
+monitoring data and commissioned monitoring data in relation to wastewater,
+exhaust gas, etc., have been timely uploaded to the monitoring platform of the local
+environmental protection department according to relevant requirements.
+Environmental Self-monitoring Plan
+6.
+5.
+Section VI Environmental and Social Responsibility (Continued)
+2023 Annual Report 159
+The Group carried out related work in accordance with the national emergency
+plan and management requirements for unexpected environmental incidents. The
+emergency plan filing for unexpected environmental incidents of the Key Units
+can be searched on the websites of the local ecological environmental protection
+department.
+Emergency Plan for Unexpected Environmental Incidents
+In terms of construction projects, the Group carried out the "three simultaneous"
+management of environmental impact appraisal, energy conservation appraisal,
+water and soil conservation inspection and acceptance, as well as environmental
+protection inspection and acceptance. The environmental impact appraisal, as well as
+environmental protection inspection and acceptance, water environmental protection
+inspection and acceptance and other relevant tasks upon construction completion
+have been conducted, respectively, on all construction projects in accordance with
+the law. All the Key Units have obtained pollutant discharge licences in compliance
+with the national environmental requirements.
+Environmental Effect Appraisal of Construction Project and Other Administrative
+Approvals on Environmental Protection
+The Group has built desulfurisation, denitration, dust collectors, wastewater,
+solid waste and noise prevention and control facilities for all production and
+operation enterprises in accordance with national and local pollution prevention and
+environmental protection standards. During the Reporting Period, operation of the
+pollution prevention and control facilities was effective and reliable overall, and no
+environmental pollution incidents of general or above level occurred.
+Construction and Operation of Pollution Prevention and Control Facilities
+With regard to the provisions under the existing laws, the management believes
+that there is no contingent risk in relation to environmental protection that may
+bring material and adverse effects to the financial position or operating results of
+the Group. Contingent liabilities which may arise in the future cannot be accurately
+predicted.
+Investors should be aware that the above data are the results of the self-monitoring
+of the Company, which have not been confirmed by the local ecological and
+environmental protection regulatory authorities and may differ from the final data
+recognised by the local ecological and environmental protection regulatory authorities.
+4.
+3.
+2.
+Section VI Environmental and Social Responsibility (Continued)
+158 China Shenhua Energy Company Limited
+A), generated 52,781.46 tonnes of hazardous waste and entrusted
+qualified units to dispose the waste in compliance with the laws and regulations.
+In 2023, the Key Units, in terms of soil pollution and key environment risk control,
+including 10 enterprises, i.e. Baotou Coal Chemical, Zhunge'er Energy, Explosive
+Plant of Zhunge'er Energy, Bayannur Energy, Baorixile Energy, Dianta Power Plant of
+Shendong Power, Mengjin Power, Shouguang Power, Cangdong Power, Cangzhou
+Locomotives and Trains Maintenance Branch of Railway Equipment (*
+In 2023, the Key Units, in terms of water environment, including three enterprises,
+i.e. Baotou Coal Chemical, Power Plant of Guoneng Yili Energy Co., Ltd., and Mengjin
+Power, achieved zero external discharge and 100% operation rate of pollution
+prevention facilities.
+14.5
+of penalty Reason for penalty
+RMB0'000
+10 January 2023
+progress
+17 May 2023
+Amount
+1. Administrative Penalties for Environmental Problems
+Units
+(II) Environmental Issues of Companies Other Than Those Classified as the Key
+☐ Applicable ✓ Not applicable
+Other Environmental Information that should be Disclosed
+7.
+Section VI Environmental and Social Responsibility (Continued)
+in coking plants
+160 China Shenhua Energy Company Limited
+smoke during coal loading
+Rectified
+10 Uncontrolled emission of
+No. 4 of Ba Huan (6)
+Fa Zi [2023]
+21 August 2023
+Bayannur Energy
+Rectified
+implemented for open
+coal storage
+measures were
+10 No effective dust-proof
+27 No disinfection facilities at Rectified
+domestic sewage outlets
+Rectified
+10 No protective measures
+were implemented in
+accordance with national
+environmental protection
+standards in the industrial
+solid waste storage
+process
+Fa 150221 [2023]
+of Baotou Energy
+Huan Fa [2023]
+No. 6 of Bao Huan
+Shuiquan Open-cut Mine 14 April 2023
+4 September 2023 No. 143 of Shan K
+No. 72 of Shan K
+Fu Gu Huan Fa
+[2023]
+Shendong Power
+Guojiawan Power
+Plant
+19.0
+Fu Gu Huan Fa
+[2023]
+No. 28 of Shan K
+Rectified
+0
+Huangyuchuan Colliery of
+SO,
+Guoneng Yili Energy Co., Ltd. NOx
+888
+15
+0
+58.8
+32
+Soot
+24
+123.2
+90.17
+temporary gangue dump
+72.13
+80
+100
+0
+10 No dust proof measures Rectified
+hazardous waste
+new temporary storage of
+34
+Soot
+34
+20 Appointment of incapable
+third parties to dispose
+gangue
+42
+207.2
+52.5
+emission outlet
+4
+28.7
+8.57
+O O O
+17.6
+18.03
+198.5
+and two emission outlets for coal
+preparation plant
+5 September 2023 No. 151 of Shan K
+Huan Fa [2023]
+司榆林車輛維修分公司)
+Company (鐵路裝備公
+of Railway Equipment
+Maintenance Branch
+Yulin Vehicle
+Fu Gu Huan Fa
+[2023]
+Colliery (榆林能源郭家
+灣煤礦)
+No. 26 of Shan K
+4 Two emission outlets for the colliery
+Yulin Energy Guojiawan 10 January 2023
+from environmental
+Fu Gu Huan Fa
+[2023]
+Rectified
+1.07 No approval procedures
+25 September 2023 No.164 of Shan K
+Huan Fa [2023]
+Jinjie Energy (Coal Mine) 3 November 2023
+(錦界能源(煤礦))
+2
+29 November 2023 No. 145 of Shan K
+go
+0
+No. 177 of Shan K
+Huan Fa [2023]
+100
+0
+30
+132.0
+Shendong Coal Bu'ertai Colliery SO₂
+NOX
+51
+226.0
+O O O
+72.51
+Shen Mu Huan Fa
+[2023]
+53.24
+protection authority for
+performance Commitment
+plans shall be
+shall be
+Date of
+Commitment
+deadline for Duration of
+Contents of undertakings
+party
+undertakings undertakings
+performed
+strictly
+Undertaking
+27 August
+described
+Undertaking
+Non-competition China Energy The two parties entered into the
+Background of Type of
+1 March
+2018
+connection
+undertaking
+made in
+N/A
+N/A
+Yes, in
+started
+time, future
+Whether
+timely and
+24 May 2005; Yes
+Section VI Environmental and Social Responsibility (Continued)
+II.
+(V) Measures and Effects Taken to Reduce Carbon Emissions during the Reporting
+Period
+In 2023, the Company established a low-carbon development leadership team and issued
+the 2023 Low-carbon Development Work Plan to steadily advance low-carbon development.
+Firstly, the Group optimised the safe, clean, efficient and intelligent development and
+utilisation of coal, promoted green coal exploitation processes and implemented ecological
+environmental governance projects. The Group put into operation four clean and high-
+efficiency generating units with a capacity of one million KW, so as to tap into the full
+potential of coal power in supporting and regulating production operations. Secondly, the
+Group accelerated the cultivation of new energy development momentum, making full
+use of land resources such as the dump site of open-cut mine and reclamation areas,
+the Group has already constructed and put into production photovoltaic project with
+512,000 KW. Thirdly, the Group promoted the intelligent and intensive development
+of the industry. The Group continuously improved energy efficiency by optimising
+production processes and promoting energy-saving technology transformation, energy-
+saving technology transformation. The "linkage of three reforms" of existing coal power
+units have made further progress, resulting in a year-on-year decrease of 0.61% in standard
+coal consumption for power supply of coal-fired power generators. The Group explored
+the development of clean fuels based on the utilisation of hydrogen and ammonia energy,
+improved the upgrading of technology and equipment by, for example, replacing coal
+with electricity and replacing oil with electricity, with key projects such as "Research and
+Engineering Verification of Key Technologies for 600MW Coal-fired Boiler Mixed Ammonia
+Combustion" achieved breakthroughs in core technologies. Fourthly, the Group promoted
+the comprehensive coordination and management of carbon assets. Our affiliated emission
+control enterprises have fulfilled their obligations in the carbon market, with a total of 6.598
+million tonnes of quotas traded throughout the year, amounting to approximately RMB462
+million (excluding taxes). The Shendong Coal Baode Colliery's "Underground and Surface
+Joint Efficient Drainage Demonstration Project for Coal Mine Gas" has been designated
+as one of the first-batch demonstration projects for efficient drainage and utilisation of
+mine gas by the National Energy Administration. The CCUS device at Jinjie Energy's power
+plant has captured over 30,000 tonnes of CO2 throughout the year. The subsidiaries have
+I given full play to carbon reduction and carbon sequestration through tree planting, land
+reclamation, etc., and advanced natural carbon sink.
+DETAILS OF THE COMPANY'S ACTIVE FULFILMENT OF SOCIAL
+RESPONSIBILITIES
+Please refer to the 2023 Environmental, Social and Governance Report of the Company.
+2023 Annual Report 165
+Section VI Environmental and Social Responsibility (Continued)
+III. DETAILS OF THE COMPANY'S EFFORTS TO CONSOLIDATE AND EXPAND THE
+ACHIEVEMENTS OF POVERTY ALLEVIATION AND RURAL REVITALISATION
+In 2023, the Group thoroughly studied and implemented the important expositions and important
+instructions of General Secretary Xi Jinping on the work related to agriculture, rural areas and
+rural residents, resolutely fulfilled the political and social responsibilities entrusted to central
+enterprises, and fully consolidated the achievements of poverty alleviation in three targeted
+assistance counties based on local resource endowments, i.e. Mizhi County and Wubu County
+in Shaanxi Province and Butuo County in Sichuan Province. The Group firmly upheld the bottom
+line of preventing people from returning to poverty on a large scale and comprehensively
+promoted the revitalisation of industry, talent, culture, ecology, and organisation, strengthened
+industrial assistance, cultivated and expanded rural industrial projects to facilitate the sustainable
+development of local specialty industries. The Group enhanced the supply of basic public
+services in rural areas, improved the living environment for local residents, and built liveable
+and prosperous rural areas. The Group motivated the inner driving forces by increasing people's
+confidence and helping them acquire knowledge and skills, expanded the scope of consumption-
+based aid to assist more poor and low-income people in seeking employment in nearby places.
+During the Reporting Period, the Group invested approximately RMB74.55 million in assistance
+funds to the three targeted counties, introduced external assistance funds of RMB 600,000,
+implemented 31 projects such as industrial assistance and infrastructure construction, trained
+5,749 technical professionals and grass-root cadres, recruited 27 undergraduates from families
+with financial difficulties to work for the subsidiaries of China Shenhua, and agricultural product
+purchases and sales amounted to RMB28.37 million.
+In 2023, Ding Hongyan, the first accredited secretary of Sichuan Energy in Bozuo Village, Butuo
+County, was awarded the honorary title of "Excellent First Accredited Secretary in the Province".
+The achievements of rural revitalisation by Sichuan Energy were selected as one of the nine
+typical cases of assistance by the Provincial State-owned Assets Supervision and Administration
+Commission. The targeted assistance working group of Shendong Coal was awarded the title of
+"Advanced Collective in Assistance" in Shaanxi Province, and Shendong Coal was ranked first in
+the "2023 Consumption Assistance Enterprise Contribution Ranking" in Ordos City.
+Apart from the targeted counties, the Company's headquarters and 16 subsidiaries continued to
+join hands with local communities for shared development, offered assistance to targeted regions
+and provide paired supports. During the Reporting Period, the Group implemented 48 relevant
+projects and donated RMB170 million in total.
+For more information on environmental and social responsibilities, please refer to the Company's
+2023 Environmental, Social and Governance Report.
+166 China Shenhua Energy Company Limited
+Section VII
+Significant Events
+In case of
+failure to
+perform in
+time, the
+specific
+reasons
+In case of
+for the
+failure to
+incomplete
+perform in
+Any
+performance
+I. PERFORMANCE OF COMMITMENTS
+Long-term:
+2028
+In 2023, the Group paid a total fee of RMB2.02 million for the non-assurance services such as
+inspection of properties and land, consultation on tax-related risks, provided by other institutions
+under common control as the aforesaid auditors.
+VI. INSOLVENCY OR RESTRUCTURING RELATED MATTERS
+Applicable ✓ Not applicable
+VII. MATERIAL LITIGATION AND ARBITRATION
+☐ Applicable Not applicable
+As at the end of the Reporting Period, the Group was not involved in any material litigation or
+arbitration. As far as the Group was aware, the Group did not have any material litigation or claim
+which was pending or threatened against the Group.
+As at 31 December 2023, the Group was the plaintiff, defendant or the party of certain non-
+material litigations and arbitrations. The management believes that any possible legal liability
+which may be incurred from the aforesaid cases will not have any material impact on the financial
+position of the Group.
+VIII. SANCTIONS AND RECTIFICATIONS IMPOSED ON THE LISTED COMPANY AND
+ITS DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT, CONTROLLING
+SHAREHOLDER, DE FACTO CONTROLLER AND ACQUIRERS
+☐ Applicable ✓ Not applicable
+170 China Shenhua Energy Company Limited
+Section VII Significant Events (Continued)
+In 2023, the above two auditors did not serve as the external auditors of subsidiaries of the
+Company. In 2023, the audit fee of the Company remained unchanged from last year.
+IX. EXPLANATION FOR INTEGRITY OF THE COMPANY AND ITS CONTROLLING
+SHAREHOLDER AND DE FACTO CONTROLLER
+After enquiring the National Enterprise Credit Information Publicity System, neither the Company
+nor China Energy, the controlling shareholder of the Company, was included in the list of
+enterprises with serious illegal and dishonest acts during the Reporting Period.
+X. MATERIAL RELATED PARTY/CONNECTED TRANSACTIONS
+(I) Related Party/Connected Transactions During the Daily Operation
+The Company has a related party/connected transaction team under the direct supervision
+of the Chief Financial Officer, which is responsible for the management of related party/
+connected transactions; and the Company has established a business process, which
+properly delineates the responsibilities of the Company, its subsidiaries and branches in the
+management of related party/connected transactions. The Company has also established
+routine examinations, reporting systems and accountability systems in the subsidiaries
+and branches of the Company, as to ensure the related party/connected transactions be
+conducted in accordance with the terms of framework agreement.
+As at the end of the Reporting Period and during the Reporting Period, the continuing
+related party/connected transaction agreements entered into by the Company include:
+1.
+Non-exempt Continuing Related Party/Connected Transactions Between the
+Group and China Energy Group
+China Energy holds 69.52% equity interest in the Company, and it is the related party
+of the Company as defined under the Shanghai Listing Rules and the connected
+person of the Company as defined under the Hong Kong Listing Rules. On 22 October
+2021, the Company's 2021 first extraordinary general meeting approved the 2021-
+2023 Mutual Coal Supply Agreement (the "Mutual Coal Supply Agreement") and
+the 2021-2023 Mutual Supplies and Services Agreement (the "Mutual Supplies and
+Services Agreement") with China Energy on 27 August 2021, and determined the
+annual transaction caps of such daily related party/connected transactions for the
+years from 2021 to 2023. These agreements expired on 31 December 2023. Due
+to the rise in coal and service prices and the increase in demand, the Company's
+2021 annual general meeting held on 24 June 2022 approved the revision of both
+the annual caps for supply of coal by the Group to China Energy Group for the years
+from 2021 to 2023 under the Mutual Coal Supply Agreement and the annual caps for
+supply of products and services by the Group to China Energy Group for the years
+from 2022 to 2023 under the Mutual Supplies and Services Agreement. (Please
+refer to the Company's H share announcement dated 25 March 2022 and A share
+announcement dated 26 March 2022)
+2023 Annual Report 171
+Section VII Significant Events (Continued)
+Finance Company is 60% owned by China Energy, the Company's controlling
+shareholder, and the Finance Company is a related party of the Company as defined
+under the Shanghai Listing Rules and the connected person of the Company as
+defined under the Hong Kong Listing Rules. Within its business scope, the Finance
+Company provides the members of the Group with financial services. The Company's
+2020 annual general meeting held on 25 June 2021 approved the 2021-2023 Financial
+Services Agreement (the "Financial Services Agreement") entered into between the
+Company and the Finance Company on 26 March 2021 and the annual transaction
+caps from 2021 to 2023 for such related party/connected transactions during
+the daily operation thereunder. In view of the significant increase in the Group's
+demand for deposit and settlement and other financial services provided by the
+Finance Company as a result of the continuous increase in the Group's business
+scale and the cash and bank balances held, on 28 October 2022, the Company's
+2022 first extraordinary general meeting approved the Supplementary Agreement to
+the Financial Services Agreement (the "Supplementary Agreement") entered into
+between the Company and the Finance Company, which revised certain terms of the
+Financial Services Agreement, and revised the annual caps for daily deposit balance
+(including interests accrued thereon) of deposits placed by the Company and its
+controlling subsidiaries with the Finance Company for 2022 and 2023. The term of
+validity of the Supplementary Agreement was from 1 January 2022 to 31 December
+2023. (Please refer to the Company's H share announcement dated 23 September
+2022 and A share announcement dated 24 September 2022)
+Applicable ✓ Not applicable
+Guoneng (Beijing) Commercial Factoring Co., Ltd. ("Guoneng Factoring") is an
+indirect wholly-owned subsidiary of China Energy, a controlling shareholder of the
+Company. Accordingly, Guoneng Factoring is a related party of the Company as
+defined under the Shanghai Listing Rules and the connected person of the Company
+as defined under the Hong Kong Listing Rules. On 28 April 2023, the Company and
+Guoneng Factoring entered into the Factoring Service Agreement between China
+Shenhua Energy Company Limited and Guoneng (Beijing) Commercial Factoring
+Co., Ltd. ("Factoring Services Agreement") and agreed on the annual caps for the
+transactions for the years from 2023 to 2025 thereunder, effective from 1 January
+2023 to 31 December 2025. Pursuant to Factoring Services Agreement, Guoneng
+Factoring has agreed to provide the members of the Group with factoring services
+(including recourse factoring, non-recourse factoring, reverse factoring, etc.) and
+factoring-related services such as relevant consulting, agency, asset management,
+and supply chain finance platform services. (For details, please refer to the H share
+announcement of the Company dated 28 April 2023 and the A share announcement
+of the Company dated 29 April 2023)
+RMB0.95 million
+Remuneration
+progress
+168 China Shenhua Energy Company Limited
+Section VII Significant Events (Continued)
+The Group has implemented Amendments to International Accounting Standard No. 12,
+"Deferred Tax Related to Assets and Liabilities arising from a Single Transaction" to which
+the provision applies from 1 January 2023. Taxable and deductible temporary differences
+arising on recognition of assets and liabilities in a single transaction to which the provision
+applies are no longer subject to the accounting treatment of initial recognition exemption for
+deferred tax. According to the relevant requirements of International Accounting Standard
+No. 12, "Income Taxes", the corresponding deferred tax liabilities and assets shall be
+recognised respectively at the time of the transaction. Meanwhile, for the deferred tax
+related to assets and liabilities arising from the related single transactions between the
+beginning of the earliest period presented in the financial statements in which the Group
+first applied the above provisions and the effective date, the retrospective adjustments
+shall be made. Such retrospective adjustments have no material impact on the financial
+statements of the Group. For details, please refer to the "Changes in Accounting Policies"
+as set out in the Notes to the Financial Statements for the year 2023 prepared by the
+Company according to the International Financial Reporting Standards.
+The changes in above accounting policies have been considered and approved at the 21st
+meeting of the fifth session of the Board of the Company.
+(III) The Company's Analysis and Explanation about the Reasons for and Impact
+of Correction to Material Previous Errors
+☐ Applicable Not applicable
+V. APPOINTMENT AND REMOVAL OF AUDITORS
+Name of Domestic Auditors of the Company
+Name of Audit Partner of Domestic Auditors of the Company
+Remuneration of Domestic Auditors of the Company (RMB million)
+Term of Auditing of Domestic Auditors of the Company (year)
+Name of Certified Public Accountant of Domestic Auditors of
+the Company
+Cumulative Term of Audit Services of Certified Public Accountant of
+Internal Control Auditor
+Domestic Auditors of the Company (year)
+Remuneration of International Auditors of the Company (RMB million)
+Term of Auditing of International Auditors of the Company (year)
+KPMG Huazhen LLP
+Zhang Nan
+7.15
+Zhang Nan, Wang Xia
+5
+KPMG
+1.4
+5
+2023 Annual Report 169
+Section VII Significant Events (Continued)
+On 16 June 2023, KPMG Huazhen LLP and KPMG were appointed as the domestic and
+international (Hong Kong) auditors of the Company respectively for 2023 at the Company's 2022
+annual general meeting. The Company did not replace auditors in any year of the last three years.
+Name
+Name of International Auditors of the Company
+172 China Shenhua Energy Company Limited
+KPMG Huazhen LLP
+A.
+Market price: shall be determined in accordance with normal
+commercial terms and on the following basis: the price of the same
+or similar products or services provided by an independent third
+party during its ordinary course of business on normal commercial
+terms. The management shall consider at least two comparable
+transactions with independent third parties for the same period
+when determining whether the price for any product or service
+transaction under this agreement is the market price. The Group
+shall conduct market price research through industry websites and
+various independent industry information providers, and participate
+in activities organised by leading industry organisation.
+174 China Shenhua Energy Company Limited
+(II) The Company's Analysis and Explanation about the Reasons for and Impact of
+Changes in Accounting Policies, Accounting Estimates or Accounting Method
+☐ Applicable ✓ Not applicable
+Explanation from the Board and the Supervisory Committee for the "Non-
+standard Audit Report" Issued by the Auditors
+(1)
+IV. AUDIT OPINIONS AND OTHER EXPLANATIONS
+Applicable ✓ Not applicable
+GUARANTEES IN VIOLATION OF REGULATIONS
+☐ Applicable ✓ Not applicable
+III.
+Tender and bidding price: where tender and bidding process is
+necessary under applicable laws and regulations, the price shall be
+ultimately determined in accordance with the tender and bidding
+process.
+II.
+2023 Annual Report 167
+For details of the commitment, please refer to "Avoidance of Competition" of Section V of this
+report.
+potential competition.
+and assets which may pose
+any business opportunities
+and ancillary services
+related to the business
+aforementioned) whether
+inside of outside of the PRC,
+and granted the Company
+options and pre-emptive rights
+to acquire and be transferred
+railway transportation; port
+transportation; the industry
+"Non-competition Agreement"
+on 24 May 2005, the
+"Supplemental Agreement to
+the Existing Non-Competition
+Agreement" on 1 March
+2018, and the "Supplemental
+Agreement II to the Existing
+Non-Competition Agreement"
+on 28 April 2023. As the
+Company is an integrated
+platform which is responsible
+for the coal business and
+affiliated to China Energy,
+China Energy has undertaken
+not to compete with the
+Company in respect of the
+Company's core businesses
+(coal exploration, mining,
+processing, sales; production
+and sales of comprehensive
+utilization of coal products;
+development and management
+of mineral products;
+public
+offering
+Section VII Significant Events (Continued)
+with initial
+Section VII Significant Events (Continued)
+The Group has implemented the Interpretation of Accounting Standards for Business
+Enterprises No. 16, which provides that the accounting treatment of initial recognition
+exemption does not apply to taxable and deductible temporary differences arising on
+recognition of assets and liabilities in a single transaction from 1 January 2023. For taxable
+and deductible temporary differences arising on recognition of assets and liabilities in a
+single transaction to which the provision applies, corresponding deferred tax liabilities
+and deferred tax assets shall be recognised respectively at the time of the transaction
+according to Accounting Standards for Business Enterprises No. 18, "Income Taxes" and
+other relevant provisions. Meanwhile, for the deferred tax related to assets and liabilities
+arising from the related single transactions between the beginning of the earliest period
+presented in the financial statements in which the Group first applied the above provisions
+and the effective date, the retrospective adjustments shall be made. Such retrospective
+adjustments have no material impact on the financial statements of the Group. For details,
+please refer to the "Major Changes in Accounting Policies" as set out in the Notes to the
+Financial Statements for the year 2023 prepared by the Company according to the PRC
+Accounting Standards for Business Enterprises.
+APPROPRIATION OF FUNDS BY ITS CONTROLLING SHAREHOLDER AND
+OTHER RELATED PARTIES FOR NON-OPERATIONAL PURPOSES DURING
+THE REPORTING PERIOD
+The specified guidelines issued by National Development and Reform
+Commission of the People's Republic of China (NDRC) in relation to the
+coal purchase prices (if any);
+On 27 August 2021, the Company entered into the Mutual Coal Supply
+Agreement with China Energy. The Mutual Coal Supply Agreement was
+effective from 1 January 2021 and expired on 31 December 2023. Pursuant
+to the Mutual Coal Supply Agreement, the Group and China Energy Group
+mutually supplied coal.
+Government-prescribed price and government-guided price: if at
+any time, the government-prescribed price is applicable to any
+particular product or service, such product or service shall be
+supplied at the applicable government-prescribed price. Where
+a government-guided fee standard is available, the price shall be
+agreed within the range of the government-guided price.
+The Mutual Coal Supply Agreement entered into between the Company
+and China Energy
+The pricing policy for mutual coal supply under the Mutual Coal Supply
+Agreement sets out below: the supply price under this agreement is calculated
+by the unit price RMB/tonne multiplied by the actual weight. The unit price of
+coal shall be determined by both parties after arm's length negotiations with
+reference to the market price and conditions and the following factors, provided
+that the transaction terms shall not be less favourable than those provided by
+independent third parties:
+(1)
+(2)
+(3)
+(4)
+The national industrial policy as well as industry and market conditions
+in the PRC;
+The current trading coal prices of the local coal exchange or market in
+the PRC, i.e., the coal price with the same quality that is offered to or
+offered by independent third parties under normal market conditions and
+normal commercial terms in the same or nearby regions. For local spot
+coal price, reference is generally made to (i) the spot price index of the
+local coal exchange or market in Bohai-rim region or nearby provinces as
+published on China Coal Market Website (www.cctd.com.cn) operated
+by China Coal Transportation and Distribution Association in the PRC; (ii)
+the sale price of local large-scale coal enterprises as published by each
+coal industry website (if any); and/or (iii) the price quotations of a number
+of enterprises with comparable quality, quantity and location (if any);
+The quality of the coal (including the estimated calorific value of coal as
+required by different coal-fired power generating units);
+(5)
+(6)
+The quantity of coal; and
+On 27 August 2021, the Company entered into the Mutual Supplies and
+Services Agreement with China Energy. The Mutual Supplies and Services
+Agreement was effective from 1 January 2021 and expired on 31 December
+2023. Pursuant to the Mutual Supplies and Services Agreement, the Group and
+China Energy Group mutually supplied products and provided services.
+The transportation fees.
+2023 Annual Report 173
+Section VII Significant Events (Continued)
+B.
+Where the price of mutual coal supplies between both parties is not applicable
+under the pricing principles of this agreement due to any changes by laws
+and regulations, policies and market of China, both parties may adjust pricing
+principles based on aforesaid changes.
+The Mutual Supplies and Services Agreement entered into between the
+Company and China Energy
+C.
+The pricing principles for the products and services provided under the Mutual
+Supplies and Services Agreement are set out below:
+(1) General pricing principles
+a.
+b.
+A.
+Mutual Coal Supply Agreement
+%
+RMB million
+99,000
+transaction
+42.4
+29,000
+12,430
+RMB million
+20.1
+93,939
+%
+type of
+RMB million
+transactions
+Period
+сар
+transactions
+Period
+cap
+type of
+Reporting
+transaction
+Reporting
+between the Company and China
+RMB million
+Energy
+Framework Agreement between
+Mutual Supplies and Services
+in the same
+184 China Shenhua Energy Company Limited
+the Company and China Railway
+5.2
+10,494
+20,000
+1.0
+2,317
+7,400
+Continuing Connected Transactions
+E.
+14.1
+4,420
+36.5
+11,197
+2 Services
+2.7
+2,937
+7.6
+6,948
+including: Products
+Company and China Energy
+Agreement between the
+7,357
+17,000
+18,145
+39,000
+B.
+during the
+Name of agreement
+amount
+b.
+a.
+In terms of paid services provided by Finance Company to the members
+of the Group:
+(2)
+D.
+Section VII Significant Events (Continued)
+Finance Company can provide paid consultation, agency,
+settlement, transfer, investment, letter of credit, online banking,
+entrusted loan, guarantee, bill acceptance and other related
+services to the members of the Group.
+2023 Annual Report 177
+The interest rates for deposits placed by the members of the
+Group with Finance Company shall be not less than the benchmark
+deposit interest rate for the same period published by the PBOC
+and the interest rate paid by major commercial banks in the PRC
+for comparable deposits services provided to the members of the
+Group and shall be negotiated in normal commercial terms.
+b.
+a.
+In terms of deposits and loans or similar services provided by Finance
+Company to the members of the Group, subject to compliance with the
+relevant rules and regulations of People's Bank of China (the "PBOC"),
+the China Banking and Insurance Regulatory Commission (currently
+known as the "National Financial Regulatory Administration") and other
+relevant regulatory authorities:
+(1)
+On 26 March 2021, the Company entered into the Financial Services Agreement
+with the Finance Company. The Financial Services Agreement was effective
+from 1 January 2021 to 31 December 2023. On 28 October 2022, the
+Company's first extraordinary general meeting in 2022 approved the signing
+of the Supplementary Agreement between the Company and the Finance
+Company, effective from 1 January 2022 to 31 December 2023. Pursuant to the
+Financial Services Agreement, Finance Company would provide comprehensive
+credit (without any pledge and guarantee provided by the members of
+the Group) and other financial services to the members of the Group, and
+the members of the Group may place deposits in Finance Company. The
+pricing policy of the Financial Services Agreement (revised according to the
+Supplementary Agreement) is as follows:
+The interest rates for loans granted by Finance Company to the
+members of the Group shall be not more than the loan prime
+rate for the corresponding period stipulated by the PBOC or the
+interest rates stipulated by major commercial banks in the PRC for
+comparable loans services provided to the members of the Group
+and shall be negotiated in normal commercial terms.
+The Financial Services Agreement entered into between the Company and
+finance Company
+Subject to compliance with the relevant rules and regulations of
+PBOC, CBIRC and other relevant regulatory authorities, the service
+fees charged by Finance Company for the provision of the above
+financial services to the members of the Group shall be not more
+than the service fees charged by major commercial banks in the
+PRC for comparable financial services provided to the members of
+the Group and shall be negotiated in normal commercial terms.
+On 28 April 2023, the Company entered into the Factoring Services Agreement
+with Guoneng Factoring, with a valid period from 1 January 2023 to 31
+December 2025. Pursuant to the Factoring Services Agreement, Guoneng
+Factoring agreed to provide members of the Group with factoring services
+(including recourse factoring, non-recourse factoring, reverse factoring, etc.)
+and factoring-related services such as consulting, agency, asset management,
+and supply chain finance platform services.
+Section VII Significant Events (Continued)
+2023 Annual Report 179
+China Railway Taiyuan Group Co., Ltd. ("Taiyuan Railway Bureau") is the
+parent company of Daqin Railway Co., Ltd., which is a substantial shareholder
+of Shuohuang Railway, a significant subsidiary of the Company. China Railway
+is the controlling shareholder of Taiyuan Railway Bureau. Therefore, China
+Railway constitutes a connected person of the Company under the Hong
+Kong Listing Rules. On 28 October 2022, the Company and Taiyuan Railway
+Bureau which acted for and on behalf of China Railway entered into the 2023
+to 2025 Continuing Connected Transactions Framework Agreement (the
+"Continuing Connected Transactions Framework Agreement"), effective from
+1 January 2023 to 31 December 2025. Pursuant to the Continuing Connected
+Transactions Framework Agreement, the Group and China Railway Group
+(China Railway and its subsidiaries, including Taiyuan Railway Bureau Group
+(including Taiyuan Railway Bureau and its subsidiaries)) have agreed to provide
+transportation service, supply coal and provide other products and services to
+each other.
+Continuing Connected Transactions Framework Agreement between the
+Company and China State Railway Group Co., Ltd. ("China Railway")
+E.
+Non-exempt Continuing Connected Transactions Between the Group and Other
+Parties
+The Factoring Services Agreement entered into by the Company and
+Guoneng Factoring
+For the service fee charged for the provision of other relevant services by
+Guoneng Factoring to members of the Group, the service fee shall not be
+higher than that charged by an independent third-party factoring company
+for providing the same kind of services to members of the Group, and it
+should be determined on normal commercial terms. Where it is difficult
+to obtain the service fee charged by the independent third-party factoring
+company for providing the same kind of services, it shall be determined
+at the cost plus a reasonable profit margin (around 10%).
+2.
+Section VII Significant Events (Continued)
+178 China Shenhua Energy Company Limited
+For the provision of factoring services by Guoneng Factoring to members
+of the Group, the financing cost shall not be higher than that determined
+by an independent third-party factoring company for providing the
+same kind of services to the member of the Group, and it should be
+determined on normal commercial terms. Where it is difficult to obtain
+the financing fee determined by the independent third-party factoring
+company for providing the same kind of services, it shall not be higher
+than the financing fee calculated based on the Loan Prime Rate (LPR) of
+the PBOC for the same period;
+(1)
+The pricing principles for the provision of factoring services by Guoneng
+Factoring to members of the Group are as follows:
+(2)
+C.
+Section VII Significant Events (Continued)
+176 China Shenhua Energy Company Limited
+Hardware and software equipment and related technology services:
+market price (including tender and bidding price).
+Power transaction: government-guided price shall prevail if there
+is any; the uniform clearing price shall prevail in centralised
+price bidding transaction; the independent negotiated transaction
+shall refer to transaction price of the recent market comparable
+transactions.
+Refined oil products: the government-guided price.
+Construction: where tender and bidding process is necessary under
+applicable laws and regulations, the price ultimately determined
+in accordance with the tender and bidding process; where tender
+and bidding process is not necessary under applicable laws and
+regulations, the market price will be enforced.
+Rail transportation: price prescribed by National Development and
+Reform Commission of the People's Republic of China (NDRC) and
+other related government competent authorities.
+e.
+f.
+d.
+b.
+a.
+In addition to the above, the parties further agree on the following pricing
+policies in respect of following products and services:
+d.
+(2)
+Section VII Significant Events (Continued)
+C.
+Chemical products: market price.
+g.
+Production equipment and spare parts, office products: market
+price.
+Where the price of mutual supplies and services between the Group
+and China Energy Group is not applicable under the pricing principles of
+this agreement due to the changes in laws and regulations, policies and
+the market of China, both parties may adjust the pricing principles of
+respective supplies and services based on aforesaid changes.
+Various daily administrative services to the headquarters of China
+Energy (exclusive of financial management and services): agreed
+price (cost plus a profit margin of approximately 5%).
+Basic social security and pension management services and staff
+data recording services: agreed price (cost plus a profit margin of
+approximately 5%).
+Logistics and support services and training services: agreed price
+(cost plus a profit margin of approximately 5%).
+Information technology services: both parties negotiate and agree
+on the service price within the scope of budget, which is reviewed
+by professional institution(s) with pricing reviewing qualification
+according to relevant national and industrial rules and regulations on
+construction pricing, pricing mechanisms and fee standards, with
+reference to the market customs of the information technology
+industry, actual standards and market price, taking into account
+the actual condition of the Company's information technology
+construction.
+Technical consulting services: agreed price with a profit margin of
+approximately 10%.
+m.
+I.
+k.
+j.
+i.
+Tendering services: price prescribed by National Development and
+Reform Commission of the People's Republic of China.
+h.
+Section VII Significant Events (Continued)
+2023 Annual Report 175
+The prices of the transactions under the Continuing Connected Transactions
+Framework Agreement shall be agreed in the implementation agreements in
+accordance with the following general pricing principles:
+(1)
+The prices of transportation service mutually provided by the China
+Railway Group and the Group shall be determined in the following
+priority:
+a.
+If the above pricing principles cannot be applied by China Railway
+Group and the Group due to changes in national laws, regulations,
+policies and other circumstances, China Railway Group and the
+Group can adjust the pricing principles of corresponding services
+according to such changes.
+Section VII Significant Events (Continued)
+Business consulting and technical services: agreed price or tender
+and bidding price.
+182 China Shenhua Energy Company Limited
+d.
+Equipment supply: tender and bidding price.
+The aforesaid transactions under agreements A to D are related
+party transactions as defined under the Shanghai Listing Rules, and
+the aforesaid transactions under agreements A to E are continuing
+connected transactions as defined under the Hong Kong Listing
+Rules.
+C.
+b.
+a. Rolling stock usage: agreed price.
+In addition to the above, for certain types of products or service, the
+following pricing policy is adopted:
+Agreed price: to be determined by adding a reasonable cost and a
+reasonable profit margin. The management shall consider at least
+two comparable transactions with independent third parties for the
+same period when determining the reasonable profit of any product
+or service under this agreement.
+d.
+Market price: the price shall be determined according to the
+prices of the same or similar products or services provided by an
+independent third party during its ordinary course of business on
+normal commercial terms. The management shall consider at least
+two comparable transactions with independent third parties for the
+same period when determining whether the price for any product
+or service transaction under this agreement is the market price;
+and
+Overhaul services and railway track maintenance services: agreed
+price or tender and bidding price.
+On 16 June 2023, the 2022 annual general meeting of the
+Company approved the Mutual Coal Supply Agreement for 2024-
+2026 and the Mutual Supplies and Services Agreement from 2024
+to 2026 entered into between the Company and China Energy on
+28 April 2023, and the Financial Services Agreement from 2024 to
+2026 entered into between the Company and Finance Company,
+and determined the annual cap amounts of such related party/
+connected transactions for each year from 2024 to 2026, with
+effect from 1 January 2024 and expiring on 31 December 2026. For
+details, please refer to the H share announcement of the Company
+dated 28 April 2023, the A share announcement of the Company
+dated 29 April 2023 and the circular of the general meeting of the
+Company dated 17 May 2023.
+On 22 March 2024, the twenty-seventh meeting of the fifth session
+of the Board of the Company approved the Factoring Services
+Agreement for the years from 2024 to 2025 (the "New Factoring
+Services Agreement") entered into between the Company and
+Guoneng Factoring and the transaction cap amounts for each of the
+years from 2024 to 2025 thereunder. The New Factoring Services
+Agreement shall be effective from 1 January 2024 and expire on
+31 December 2025. Meanwhile, the original Factoring Services
+Agreement shall be terminated from the date on which the New
+Factoring Services Agreement becomes effective. For details,
+please refer to the Company's H share announcement dated 22
+March 2024 and A share announcement dated 23 March 2024.
+2023 Annual Report 183
+Existing
+effective
+in the same
+during the
+effective
+Proportion
+amount
+Existing
+Transaction
+parties/connected persons and other inflows
+Purchase of products and services from
+related parties/connected persons by
+the Group and other outflows
+Transaction
+Provision of products and services
+by the Group to related
+In 2023, the implementation of the abovementioned agreements A to E is set out in
+the table below. In particular, the total amount of related party/connected transactions
+for sale of products and provision of services by the Group to China Energy Group
+under the Mutual Coal Supply Agreement and the Mutual Supplies and Services
+Agreement amounted to RMB112,084 million, representing 32.7% of the revenue
+of the Group during the Reporting Period.
+Implementation of and Review Opinions on the Non-exempt Continuing Related
+Party/Connected Transactions
+3.
+Section VII Significant Events (Continued)
+Tender and bidding price: where tender and bidding process is
+necessary under relevant laws, regulations and rules, the price
+shall be ultimately determined in accordance with the tender and
+bidding process;
+Proportion
+Government-prescribed price and government-guided price: if at
+any time, the government-prescribed price is applicable to any
+particular product or service, such product or service shall be
+supplied at the applicable government-prescribed price. Where
+a government-guided fee standard is available, the price will be
+agreed within the range of the government-guided price;
+b.
+(2)
+Section VII Significant Events (Continued)
+180 China Shenhua Energy Company Limited
+If neither comparable market prices nor prices of non-connected
+transactions are available for reference, the prices shall be
+determined upon negotiation according to the aggregate of the
+total actual costs for providing the relevant services, reasonable
+profits and taxes and additional charges paid.
+If none of the above-mentioned pricing standards is available,
+the prices shall be determined with reference to the prices of
+non-connected transactions between the connected persons and
+independent third parties;
+Except for applying the prices specified by the government, the
+guidance prices set by the government and the industry settlement
+rules, if there are comparable market prices or pricing standards,
+priority shall be given to such market prices or pricing standards
+as reference to determine the prices upon negotiation;
+The price of coal mutually supplied by the China Railway Group and
+the Group is the product of the unit price RMB/tonne multiplied by the
+actual weight. The unit price of coal shall be determined by both parties
+after arm's length negotiations with reference to the market price and
+conditions and the following factors, provided that the transaction terms
+shall not be less favourable than those provided by independent third
+parties:
+If the prices are not specified by the government and the
+government has not set applicable guidance prices, the prices
+shall be determined in accordance with the applicable industry
+price settlement rules;
+The prices as determined by the government;
+f.
+e.
+d.
+C.
+b.
+If the prices are not specified by the government, the prices
+shall be determined in accordance with the pricing standards and
+rules of national railways within the guidance prices set by the
+government;
+a.
+b.
+C.
+a.
+The price of other products and services mutually provided by the China
+Railway Group and the Group shall be determined in accordance with
+the following general principles and order:
+(3)
+Section VII Significant Events (Continued)
+2023 Annual Report 181
+The estimated transportation fees.
+f.
+The quantity of coal; and
+e.
+The quality of the coal (including the estimated calorific value of
+coal as required by different coal-fired power generating units);
+For local spot coal price, reference is made to (i) the spot price
+index of the local coal exchange or market in Bohai-rim region or
+nearby provinces as published on the website of China Coal Market
+Website (www.cctd.com.cn) operated by China Coal Transportation
+and Distribution Association in the PRC; (ii) the sale price of local
+large coal enterprises as published by each coal industry website
+(if any); and/or (iii) price quotation of one or more other enterprises
+with comparable quality, quantity and location (if any);
+The current coal transaction price of the local coal exchange or
+market in the PRC, i.e., the price of the coal with comparable
+quality that is sold to or by independent third parties under normal
+market conditions and normal commercial terms in the same or
+nearby regions.
+The specified guidelines issued by NDRC setting out the coal
+purchase prices (if any);
+The national industrial policy as well as industry and market
+conditions in the PRC;
+d.
+C.
+Agreed price: to be determined by adding a reasonable profit
+margin over a reasonable cost. The management shall consider at
+least two comparable transactions with independent third parties
+for the same period when determining the reasonable profit of any
+product or service transaction under the Agreement. The Group
+shall conduct market price research through industry websites and
+various independent industry information providers, and participate
+in activities organised by leading industry organisation.
+The independent non-executive directors of the Company have confirmed to the
+Board of the Company that they have reviewed the transactions contemplated
+under the abovementioned agreements A to E and are of the view that (1) those
+transactions were entered into in the ordinary course of business of the Group; (2)
+those transactions were on normal commercial terms or better terms; and (3) those
+transactions were conducted according to the agreements governing them on terms
+that are fair and reasonable and in the interest of the shareholders of the Company
+as a whole.
+range
+Amount
+Beginning
+(execution
+guarantor
+and the listed
+company
+Guarantor
+is for the
+Whether
+Whether
+Whether
+guarantee
+Guarantee
+guarantee
+between the
+Relation
+Date of
+1. Guarantee provided by the Company to external parties
+(excluding the guarantee granted to its subsidiaries)
+Unit: RMB million
+(II) Guarantees
+During the Reporting Period, the Company did not enter into or have any management
+and administration contracts in respect of the whole or any material part of the business
+of the Company.
+(1) Trust, Contracting and Leasing
+XI. MATERIAL CONTRACTS AND THEIR PERFORMANCE
+provision of
+Section VII Significant Events (Continued)
+date of date of
+guaranteed agreement) guarantee
+performance Whether Amount of counter
+has been guarantee guarantee guarantee related
+completed is overdue overdue is provided parties
+(478.23)
+the Reporting Period
+Total amount of guarantee provided to its subsidiaries during
+2. Guarantee provided by the Company and its subsidiaries to its subsidiaries
+53.12
+Total balance of guarantee at the end of the Reporting Period (A)
+(excluding guarantee provided to its subsidiaries)
+(9.66)
+Total amount of guarantee provided during the Reporting Period
+(excluding guarantee provided to its subsidiaries)
+guarantee
+Expiry date Type of
+of guarantee guarantee
+N/A
+No
+0 No
+No
+Hulunbei'er Liangyi 53.12 2008.08.30 2008.08.30 2029.08.29 Joint and several No
+Railway Company
+liability
+Limited
+subsidiary
+Baorixile Energy Controlling
+relationship
+party
+benefit of Related
+NA
+Total balance of guarantee provided to its subsidiaries at the end of
+the Reporting Period (B)
+2023 Annual Report 191
+shareholder
+25,719
+Total
+controlling shareholder
+10,992
+22,681
+7,954
+25,719
+100,000 1.97%-4.26%
+Finance Company Subsidiary of the
+7,954
+balance
+the period
+balance
+Closing
+of repayment
+of loan for
+Opening
+Loan interest
+rate range
+Loan limit
+Related party
+relationship
+for the period
+Note: The maximum daily balance of the comprehensive credit facilities (including loans, bill acceptance
+and discount, etc.) provided by Finance Company to the Group as approved by the general meeting
+of the Company is RMB100,000 million.
+22,681
+Note: "Loan limit" refers to the maximum daily balance (including accrued interest incurred) of the loans
+provided by Finance Company to the Group during the Reporting Period.
+7
+400
+Finance Company Subsidiary of the controlling Intermediary business
+7,943
+100,000
+Finance Company Subsidiary of the controlling Issue of acceptance
+bill
+shareholder
+shareholder
+3,578
+10,992
+100,000
+the period
+Quota
+Business Type
+Amount for
+Related party
+relationship
+Related party
+Unit: RMB million
+Credit Facilities or Other Financial Business
+5.
+Finance Company Subsidiary of the controlling Bill discount
+Related party
+2,927.46
+Section VII Significant Events (Continued)
+Guoneng Factoring
+(2)
+the total fees (including but not limited to consulting fee,
+agency fee, handling fee or other service fees) charged per
+annum for providing other related services (including but not
+limited to providing consulting, agency, management and
+other services)
+400
+7
+2,000
+1,982
+20
+between the
+Company and
+20
+2023 Annual Report 185
+Section VII Significant Events (Continued)
+The above continuing related party/connected transactions were in the ordinary course
+of business of the Company, and they were strictly in compliance with procedures
+of review and approval by independent directors or independent shareholders as
+well as disclosure requirements. The Company confirms that the execution and
+implementation of the specific agreements under the above continuing connected
+transactions during the Reporting Period have followed the pricing principles of such
+continuing connected transactions.
+KPMG, the international auditors of the Company, have reviewed the continuing
+connected transactions under the above agreements A to E and issued a letter to
+the Board, indicating that they were not aware of any matters for which they would
+consider that the above continuing connected transactions (1) were not approved
+by the Board of the Company; (2) were not conducted according to the Company's
+pricing policy in terms of all material aspects; (3) were not conducted according to
+the terms of the relevant agreements of transactions in terms of all material aspects;
+and (4) exceeded the caps.
+21 types of related party transactions were disclosed in Note 42 of the financial
+statements for the year 2023 prepared by the Company under the International
+Financial Reporting Standards. According to the Hong Kong Listing Rules, except for
+the transactions under item ii "income from entrusted loans", the purchase of coal
+from affiliated companies of the Group under item ix "purchase of coal" and certain
+transactions under item xv "other income", all of the other related party transactions
+disclosed in Note 42 constituted connected transactions under the Hong Kong Listing
+Rules and were required to be disclosed in accordance with Chapter 14A of the Hong
+Kong Listing Rules. The Company has complied with the disclosure requirements of
+Chapter 14A of the Hong Kong Listing Rules in respect of disclosure of the above
+connected transactions and continuing connected transactions.
+186 China Shenhua Energy Company Limited
+Section VII Significant Events (Continued)
+(II) Material Related Party/Connected Transactions Regarding Joint External
+Investments
+1. On 27 September 2023, the 23rd meeting of the fifth session of the Board of the
+Company considered and approved the Proposal on the Joint Establishment of PT.
+CHNENERGY INDONESIA ENERGY CORPORATION, approving that the Company and
+GD Power Development Co., Ltd. ("GD Power"), a controlling subsidiary of China
+Energy, shall contribute in cash in the amount of USD9 million and USD1 million,
+respectively, to establish a joint venture in the Republic of Indonesia ("Indonesia").
+The name of the joint venture approved by the Indonesian Investment Coordinating
+Board is PT. Guoneng Indonesia Energy ("Indonesian Energy"). GD Power is an
+associate of China Energy and a related/connected person of the Company, and the
+transaction contemplated under the Joint Venture Agreement for the establishment
+of the Indonesian Energy (the "Joint Venture Agreement") constitutes a related/
+connected transaction of the Company. As all applicable percentage ratios are less
+than 0.1%, all these transactions are exempt from the reporting, announcement and
+independent shareholders' approval requirements under Chapter 14A of the Hong
+Kong Listing Rules (for details, please refer to the H share announcement of the
+Company dated 27 September 2023 and the A share announcement of the Company
+dated 28 September 2023). As at the end of the Reporting Period, the Joint Venture
+Agreement was signed, and Indonesian Energy was incorporated. Its principal
+business covers the production and sales of electricity and heat, the development
+and application of new energy projects, high and new technology and environmental
+protection industry, and information consultant service, etc.
+0
+2. On 28 December 2023, the 25th meeting of the fifth session of the Board of
+the Company approved the Company's proposal to contribute RMB60 million
+as a limited partner with its own funds, with a capital contribution ratio of
+30%, to the jointly establishment of the Guoneng Scientific and Technological
+Achievements Transformation Investment Fund (Limited Partnership) (the "Scientific
+and Technological Achievements Transformation Fund") in collaboration with Shaanxi
+Provincial Government Investment Leading Fund Partnership (Limited Partnership) and
+Guohua Energy Investment Co., Ltd (the "Guohua Investment") as limited partners
+and Guohua Investment Development Asset Management (Beijing) Co., Ltd. (the
+"Guohua Asset Management") as a general partner, and enter into the Partnership
+Agreement of Guoneng Scientific and Technological Achievements Transformation
+Investment Fund (Limited Partnership) (the "Partnership Agreement"). Guohua
+Investment and Guohua Asset Management are associates of China Energy and
+related/connected persons of the Company, and the transactions contemplated under
+the Partnership Agreement constitute related/connected transactions of the Company.
+As all applicable percentage ratios are less than 0.1%, all these transactions are
+exempt from the reporting, announcement and independent shareholders' approval
+requirements under Chapter 14A of the Hong Kong Listing Rules (for details, please
+refer to the H share announcement of the Company dated 28 December 2023 and
+the A share announcement of the Company dated 29 December 2023). As at the date
+of disclosure of this report, the Partnership Agreement has not been signed yet.
+Agreement
+D.
+Name of agreement
+Transaction item
+Existing
+effective
+Transaction
+amount during
+the Reporting
+transaction cap
+Period
+RMB million
+RMB million
+Factoring Services
+C.
+(1) Daily balance of comprehensive credit provided by Finance
+Company to the members of the Group (including loans,
+100,000
+28,575
+credit loans, bill acceptance and discount, non-financing
+letters of guarantee, letter of indemnity, overdraft letters of
+credit) (including interest accrued thereon)
+(2)
+Maximum daily balance (including interests accrued thereon)
+of deposits placed by members of the Group with the
+Finance Company
+75,000
+74,988
+(3) The agency fee, handling fee, consultation fee and other
+services fee charged by the Finance Company for providing
+members of the Group with financial services including but
+not limited to consultation, agency, settlement, transfer,
+letter of credit, online banking, entrusted loan, non-financing
+letters of guarantee, bill acceptance and other services
+(1) Maximum daily balance (including interest, factoring service
+fee and other related financing fee) for providing factoring
+services by Guoneng Factoring to members of the Group
+(including recourse factoring, non-recourse factoring, reverse
+factoring, etc.)
+Financial Services
+Agreement
+between the
+Company and
+Finance Company
+192 China Shenhua Energy Company Limited
+2023 Annual Report 187
+Note: Amount incurred during the year refers to the daily maximum principal balance of such entrusted
+loans of the Group during the Reporting Period.
+(1)
+As at the end of the Reporting Period, the total balance of the amount of guarantee provided
+by the Group amounted to RMB2,980.58 million, including:
+Note: The balance of guarantee provided by the subsidiary to external parties of the total amount of guarantee
+at the end of the Reporting Period equals to the amount of external guarantee of the subsidiary multiplied
+by the shareholding of the Company in the subsidiary.
+to below
+Please refer
+2,980.58
+Please refer
+to below
+0
+2,980.58
+0
+As at the end of the Reporting Period, the guarantee provided by Baorixile Energy, a
+subsidiary of which the Company owns 56.61% equity interests, to external parties
+was as follows: prior to the acquisition of Baorixile Energy by the Company in 2011
+and pursuant to the Guarantee Agreement on the Syndicated Renminbi Loan for the
+Cooperative Railway Project Connecting Yimin and Yiershi Newly Constructed by
+Hulunbei'er Liangyi Railway Company Limited, in 2008, Baorixile Energy, as one of
+the guarantors, provided joint and several liability guarantee to Hulunbei'er Liangyi
+Railway Company Limited (hereinafter referred to as the "Liangyi Railway Company",
+of which Baorixile Energy owns 14.22% equity interests) for the syndicated loans.
+The major liability guaranteed was the debts due to the lender with a maximum
+balance of RMB207.47 million from 2008 to 2027, regardless of whether the debt
+is due when the above period expires. The above syndicated loans will fall due
+by tranches between 2011 and 2026. The guarantee agreement provides that the
+guarantee period of the debts borne by the guarantor shall be calculated from the due
+date of each tranche to two years after the due date of the last tranche, i.e. 2029.
+Description of guarantee
+Portion of the total amount of guarantee in excess of 50% of
+net assets (E)
+a gearing ratio in excess of 70% (D)
+Amount of guarantee directly or indirectly provided to its parties with
+Amount of guarantee provided to its shareholders, de facto controller
+and their related parties (C)
+0.7
+Proportion of total amount of guarantee to the net assets attributable
+to shareholders of the Company at the end of the year under
+China Accounting Standards for Business Enterprises in 2023 (%)
+Including:
+2,980.58
+Total amount of guarantee (A+B)
+3. Total amount of guarantee (including guarantee provided to its subsidiaries)
+Aggregated amount of the above three amounts of guarantee (C+D+E)
+Description of the potential joint and several repayment liability for
+outstanding guarantee
+194 China Shenhua Energy Company Limited
+2023 Annual Report 193
+(2)
+400
+0
+400
+Own fund
+Entrusted loans
+amount
+overdue
+Reporting
+Period
+Unrecovered
+undue of the
+Section VII Significant Events (Continued)
+balance
+Source of fund
+Type of products
+Unit: RMB million
+Closing
+1. General Status of Entrusted Loans
+(III) Entrusted Cash Asset Management
+As at the end of the Reporting Period, the amount of guarantee between subsidiaries
+in consolidated reports of the Company, in proportion to its shareholding, amounted
+to approximately RMB2,927.46 million, which was mainly due to the fact that
+Shenhua Hong Kong Limited, the wholly-owned subsidiary of the Company, provided
+guarantees for the rest USD413.33 million bonds among the total USD0.5 billion
+bonds issued by China Shenhua Overseas Capital Co., Ltd., its wholly-owned
+subsidiary.
+As at the end of the Reporting Period, Baorixile Energy, in proportion to its
+shareholding, repaid the principal on the loans on behalf of Liangyi Railway Company
+amounting to a total of RMB107.36 million. Baorixile Energy already made full
+provision for impairment on its 14.22% equity interests in Liangyi Railway Company
+and the repayment amount paid on its behalf. Together with other shareholders,
+Baorixile Energy will continue to call for improvement of business operation of Liangyi
+Railway Company. As at 31 December 2023, Liangyi Railway Company had a gearing
+ratio of 195%.
+Given that Liangyi Railway Company failed to pay the loan interest on time due to its
+deteriorating business operation, as resolved by the shareholders' general meeting
+of Liangyi Railway Company, additional capital was injected into Liangyi Railway
+Company by its shareholders (including Baorixile Energy). Baorixile Energy has
+injected an accumulated amount of RMB11.82 million into Liangyi Railway Company.
+Amount
+incurred
+during the
+Reporting
+Period
+Total amount
+Total amount
+Amount for the period
+3,775
+RMB million
+Total profit
+15.7
+4,036
+4,670
+RMB million
+Revenue
+%
+2,546
+Change
+2023
+Unit
+Major Financial Indicators of the Finance Company
+1.
+(IV) Financial Business Between the Company and the Finance Company Which
+is a Related Party of the Company
+Section VII Significant Events (Continued)
+188 China Shenhua Energy Company Limited
+The above borrowings and entrusted loans are
+beneficial to the relevant project construction and
+production operation of the Group, and they have
+no material impacts on the operating results and
+financial position of the Company.
+N/A
+2022
+Currently, the principal and interests of the above
+borrowings and entrusted loans are repaid in a
+normal manner in accordance with the repayment
+schedule.
+48.3
+RMB million
+RMB million
+Owner's equity
+23.2
+196,733
+242,369
+RMB million
+24.2
+221,886
+275,585
+Net profit
+RMB million
+Total assets
+Change
+%
+2022
+2023
+31 December 31 December
+Unit
+45.8
+2,010
+2,930
+Total liabilities
+33,216
+Internal decision-making procedures have been
+performed in respect of the above related debts and
+liabilities in accordance with relevant regulations.
+Impacts of debts and liabilities
+between related parties on the
+operating results and financial
+position of the Company
+58,850
+Subsidiary of the controlling shareholder
+Finance Company
+702
+(172)
+874
+Controlling shareholder
+China Energy
+balance
+15,616
+incurred
+Closing
+Opening Amount
+Amount Closing
+incurred balance
+balance
+to the Group
+Funds provided to related parties
+Opening
+Related party relationship
+Related parties
+Funds offered by related parties
+balance
+The entrusted loans issued or received by the
+Group.
+74,466
+(14,727)
+Undertakings related to debts
+and liabilities between related
+parties
+Repayment of debts and liabilities
+between related parties
+The Group's deposits in/loans from the Finance
+Company;
+(2)
+The long-term and short-term borrowings
+provided by China Energy to the Group;
+13,127
+27,146 (14,019)
+59,250 15,616 74,866
+(1)
+25,719
+Reasons for debts and liabilities
+between related parties
+1,433
+880
+553
+400
+0
+400
+Others
+Other related parties
+10,992
+Total
+25,153
+32.1
+Note: The above financial data was prepared in accordance with the China Accounting Standards for
+Business Enterprises.
+limit
+Closing
+withdrawn for
+deposited for
+Opening
+interest rate
+Total amount Total amount
+Deposit
+Maximum
+daily deposit
+Section VII Significant Events (Continued)
+Related party
+relationship
+Amount for the period
+Unit: RMB million
+Deposit Business
+3.
+The above monitoring indicators of the Finance Company meet the regulatory
+requirements.
+0.05%
+<20%
+Net amount of fixed assets not higher than 20% of net capital
+10
+Related party
+58.63%
+balance
+the period
+Unit: RMB million
+Section VII Significant Events (Continued)
+Loan Business
+4.
+190 China Shenhua Energy Company Limited
+Note: "Maximum daily deposit limit" refers to the maximum daily deposit balance (including accrued
+interest incurred) of the Group in Finance Company during the Reporting Period.
+74,466
+573,485
+589,101
+the period
+58,850
+controlling shareholder
+74,466
+573,485
+589,101
+58,850
+0.3%-3.2%
+75,000
+Finance Company Subsidiary of the
+balance
+Total
+<70%
+Total amount of investment not higher than 70% of net capital
+9
+Loan balance not higher than 80% of the sum of the deposit
+balance and the paid-in capital
+3
+33.89%
+>25%
+Liquidity ratio not lower than 25%
+2
+12.90%
+≥10.5%
+Capital adequacy rate not lower than regulatory requirements
+≤80%
+1
+31 December
+Indicator
+requirement
+Monitoring indicators
+No.
+As at
+Major Risk Indicators of the Finance Company
+2.
+Section VII Significant Events (Continued)
+2023 Annual Report 189
+2023
+78.05%
+4
+Total external liabilities not higher than net capital
+10% of total deposits
+0.00%
+≤10%
+Security deposits for bank acceptance bills not higher than
+8
+than net capital
+24.50%
+≤100%
+Total amount of bills acceptance and rediscounting not higher
+7
+80.52%
+≤300%
+Balance of bill acceptance no more than 3 times of the
+balance of interbank deposits
+6
+assets
+3.25%
+≤15%
+Balance of bills acceptance not higher than 15% of the total
+5
+0.00%
+≤100%
+Section VII Significant Events (Continued)
+Unit: RMB million
+(III) Debts and Liabilities Between Related Parties
+8.3
+164.7
+billion tonnenm
+136.3
+152.9
+million tonnes
+Gross power generation
+Shipment turnover
+Shipping volume
+Coal Dock
+45.2
+45.8
+million tonnes
+Loading volume at Tianjin
+205.2
+209.5
+million tonnes
+Loading volume at Huanghua Port
+133.6
+billion kWh
+212.26
+191.28
+2022
+2023
+Total production
+3.5
+%
+༄ཋཐ བའ ཊྛུཡྻུཥྛཎྜཋཤྩ
+340.6
+341.5
+297.6
+thousand tonnes
+358.4
+364.4
+thousand tonnes
+Polyethylene sales
+179.81
+199.75
+billion kWh
+Total power output dispatch
+Polypropylene sales
+Change
+309.4
+Transportation turnover of self-owned
+railway
+(601)
+(7,931)
+(7,120)
+625,320
+633,412
+469,551
+(499,423)
+489,271
+504,228
+8,646
+7,858
+7,417
+7,169
+19,831
+18,885
+RMB million
+RMB million
+(424)
+(2,080)
+(3,206)
+(203,455)
+417.8
+450.0
+million tonnes
+Coal sales
+313.4
+324.5
+million tonnes
+Commercial coal production
+billion tonne km
+2022
+Change
+Table 5 Commercial Coal Production Volume
+Table 4 Operation Data
+(162,524)
+(151,761)
+363,163
+386,333
+(201,295
+2023
+RMB million
+Million tonnes
+324.5
+12,512
+Personnel expenses
+MW
+MW
+MW
+MW
+KWh RMB/MWh %
+KWh RMB/MWh RMB million
+RMB million
+100 million
+100 million
+1.3
+9,601
+9,726
+Raw materials, fuel and power
+dispatch Unit cost unit cost
+Cost
+14,400
+(13.1)
+Shengli Mines
+28.3
+Repair and maintenance
+381
+660
+660
+327
+341
+5,863
+34.8
+dispatch Unit cost
+38.7
+North China Power Grid
+Zhunge'er Power
+13.1
+27.4
+31.0
+Baorixile Mines
+4.4
+27.1
+Inner Mongolia
+Million tonnes
+Cost
+65,079
+Power plants/power type
+4.9
+69.5
+72.9
+Zhunge'er Mines
+21
+1.5
+187.6
+190.5
+Shendong Mines
+By mines
+4.0
+Table 8 Cost of Sales of Power Segment
+Table 7 Cost of Sales of Coal Segment
+Table 6 Power Business
+3.5
+313.4
+Power grid
+Location
+100 million kWh 100 million kWh
+hours
+67,886
+Cost of coal purchased
+Change in
+output
+Power
+Power
+output
+%
+RMB million
+4.3
+RMB million
+2023
+Change
+2022
+2023
+===1_939=
+Standard coal
+RMBMW
+akWh
+2022 (Restated)
+2,980
+RMB million
+RMB million
+9.3
+137.27
+150
+Selling, general and administrative RMB100 million
+(226 624)
+(232.537)
+78.961
+83,434
+(27)
+(23
+(5,493
+(5,569)
+(5,214)
+(4,602)
+(3,556)
+(3.844
+(25,041)
+Profit for the year attributable to equity
+RMB million
+64,625
+72.925
+427
+428
+1,468
+3,946
+538
+180
+706
+100
+(27,380)
+2,268
+12,742
+11,152
+7.969
+10,910
+73,536
+63,753
+Segment profit before income tax
+(11.4)
+2,307
+92,776
+(73,491)
+192,753
+273,306
+Sub-total of segment revenue
+15.7
+121,536
+114,573
+RMB million
+EBITDA
+RMB100 million
+Cost of sales
+(3.8
+3,430.74
+3.300
+RMB100 million
+Revenue
+(79,063)
+(83,831)
+529
+277,474
+92,407
+84,525
+42,961
+(196,959)
+Segment cost of sales
+14
+2,325.37
+2,358
+344,533
+343,074
+(79,063)
+(77,594)
+(83,831)
+548
+6.379
+6,098
+6,051
+4,836
+6,441
+6,749
+42,197
+529
+RMB million
+99,654
+costs
+RMB million
+RMB million
+RMB million
+RMB million
+(18.3
+109,734
+89.687
+Net cash generated from operating activities RMB million
+2.3%
+10%
+Restated)
+31 December 2022 31 December 2023
+Restated 31 December 2023
+31 December 2022 31 December 2023
+(Restated) 31 December 2023
+31 December 2023
+Restated)
+Segment total assets
+301,482
+294,168
+167,912
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB milion
+153,174)
+31 December 2023
+124,906
+125,301
+RMB million
+(131,621)
+(139,580)
+128,036
+(134,258)
+Segment total liabilities
+150,632
+(51,000)
+and R&D expenses and net finance
+(Restated)
+(Restated)
+(11.4)
+3.670
+3.253
+RMB/share
+Basic earnings per share
+Year-on-year
+Year-on-year
+self-produced coal
+Changes in unit production costs of
+As at
+As at
+As at
+As at
+As at
+As at
+As at
+holders of the Company
+As at
+31 December 2022
+As at
+1 December 2022
+31 December 2023
+(Restated)
+31 December 2023
+decrease of
+increase of around
+As at 31 December 2022
+As at
+As at
+31 December 2023
+31 December 2022
+As at
+As at
+31 December 2022
+As at
+31 December 2022
+As at
+31 December 2022
+As at
+As at
+1,997.5
+3,190
+Cost of power output dispatch
+Inner Mongolia Autonomous Region
+塔本陶勒蓋
+Tavan Tolgoi
+Jilin
+內蒙古自治區
+吉林
+Heilongjiang
+黑龍江
+Dayan Mines
+大雁礦區
+2023
+主要資產分佈圖 Assets Distribution Map
+CHINA SHENHUA ENERGY COMPANY LIMITED
+中国神华能源股份有限公司
+Main Shipping Route
+- 主要航線
+Self-owned mines
+自有礦區
+甘其毛都
+Ganqimaodu
+河北:
+Hebew
+寧夏
+河南
+陝西
+Gansu
+甘肅
+Yunnan
+雲南
+Yangtze River
+長江
+Self-owned Railway (in operation)
+Sichuan
+89
+Shanxi
+Qinghai
+Shandong
+山西
+Ningxia
+青海
+山東
+四川 0
+Shaanxi
+---- 自有運營纖路
+國有或地方鐵路線
+唐山
+Tangshan
+Qinhuangdao Port
+秦皇島港
+BEIJING
+Wangzuo
+王佐
+Baotou Coal Chemical
+包頭煤化工
+F1.
+煤化工 COAL CHEMICAL
+Shipping Company
+航運公司
+E1.
+航運 SHIPPING
+② Prepared on the basis of the map with the approval number of GS(2019)1818.
+Note: ① This map as at 31 December 2023 is for illustrative purpose only
+② 以審圖號GS(2019)1818號地圖為基礎編製
+天津市
+1,653
+曹妃甸港
+萬家碼頭
+Provincial Boundary
+省界線
+圖例 Legend
+Tibet
+西藏
+Dajiawa
+BB3
+大家洼
+State-owned or Local Railway
+「中國 CHINA
+東營
+Suning
+肅寧
+Huanghua South
+黃驊南
+C3
+Wanjia Dock
+Caofeidian Port
+Dongying
+① 於2023年12月31日之分佈圖,僅做示意
+Henan
+Guizhou
+59.2
+546
+4.488
+327
+314
+1.320
+1,320
+1,320
+Tax and surcharge
+Others
+3.783
+1997.5
+18.8
+2.946 1,798.1
+16.4 14.6
+16,600
+18,083
+Inner Mongolia
+North China Power Grid
+Shengli Energy
+4.6
+1,927 1,798.1
+10.7 (224)
+11.0
+By regions
+Power Grid
+Others
+27,036
+25,340
+(8.2
+6.7
+6,723
+1,997.5
+33.7 6,040 1,798.1 336
+0.3
+11.1
+Inner Mongolia
+225.9
+215.9
+Depreciation and amortization
+貴州
+1.7
+92.5
+廣東
+Fujian
+福建
+Hunan
+Jiangxi
+湖南
+江西
+Jiangsu
+江蘇
+Anhui
+安徽
+Hubei
+湖北
+Hainan
+海南
+Guangxi
+廣西
+Guangdong
+Macau
+香港
+Hongkong
+92.5
+Cangdong Power
+North China Power Grid
+Hebei
+118.1
+1123
+4,685
+295
+Shaanxi Province
+399
+台灣
+Diaoyu Islands 。。
+釣魚島
+Mevery
+Zhejiang
+浙江
+Liaoning
+遼寧
+Taiwan
+(6.6)
+註:
+D3. 珠海煤碼頭
+Waixigou
+外西溝
+准格爾
+Diandaigou
+點岱溝
+北京
+Zhangjiakou
+張家口
+INNER MONGOLIA AUTONOMOUS REGION
+內蒙古自治區
+Chengde
+承德
+豐寧
+Fengning
+Shendong
+神東站
+Jingbian
+● 靖邊
+大同東
+Datong East
+Zhunge'er
+神池南
+A3勝利礦區
+A2.准格爾礦區
+A1. 神束礦區
+Wubu
+吳堡
+YELLOW RIVER
+黃河
+SHAANXI
+Dongsheng
+陝西省
+山西省
+Watang
+● 瓦塘
+Shenmu North
+神木北
+Shuozhou
+朔州
+Shenchi South
+SHANXI
+Shendong Mines
+東勝
+Batuta
+316
+5.378
+249.4
+269.7
+Inner Mongolia
+Northwest/North China/
+Shendong Power
+1.8
+1.8
+Baotou Mines
+122
+361.6
+1,798.1 380.7 (5.0)
+1,997.5 279.7 53,708 1,798.1 298.7 (6.4
+55.866
+Raw materials, fuel and power
+68,444
+1.997.5
+72,232
+379
+5,014
+5,014
+4,528
+巴圖塔
+Recair and maintenance
+4.3
+50,094
+52,236
+Transportation charges
+Shaanxi Provincial Local
+23.3
+Hanjiacun
+21.3 (0.9
+21.1
+1.997.5
+4,207
+Personnel expenses
+14.6
+6,966
+7,983
+Depreciation and amortization
+3.823 1,798.1
+Zhuhai Coal Dock
+Zhunge'er Mines
+A4.寶日希勒礦區
+B13.
+B12.南蘇EMM
+EMM Indonesia
+Mengjin Power
+Huizhou Thermal
+Taishan Power
+B17. 永州電力
+Qingyuan Power
+B21. 清遠電力
+Indonesia Java
+B16. 印尼爪哇
+B11. 福建能源
+Fujian Energy
+Jinjie Energy
+B9. 孟津電力
+惠州熱電
+B8.
+台山電力
+B7.
+壽光電力
+B14. 柳州電力
+Shouguang Power
+Liuzhou Power
+Tianjin Coal Dock
+D2.天津煤碼頭
+Huanghua Port
+D1.黃驊港
+港口 PORT
+Bazhun Railway
+C6. 巴准鐵路
+Huangwan Railway
+錦界能源
+C3.黃萬鐵路
+B10. 四川能源
+Sichuan Energy
+Beijing Gas Power
+Beihai Power
+Shengli Energy
+Yongzhou Power
+北海電力
+B19.
+B18. 勝利能源
+B15.九江電力
+Jiujiang Power
+B20. 岳陽電力
+Yueyang Power
+Shengli Mines
+B6.
+Zhunge'er Power
+C5. 包神鐵路
+Shuchuang Railway
+2.520
+Huangda Railway
+C9. 黃大鐵路
+Ganquan Railway
+C7. 甘泉鐵路
+Dazhun Railway
+C4.大准鐵路
+Shenshuo Railway
+C1. 神朔鐵路
+鐵路 RAILWAY
+Xinjie Taigemiao Mining Area
+A6.新街台格廟礦區
+Baorle Mines
+Baotou Mines
+A5. 包頭礦區
+Baoshen Railway
+CB.准池鐵路
+Zhunchi Railway
+C10. 塔韓鐵路
+Dingzhou Power
+北京燃氣
+B5.
+神東電力
+B4.
+准能電力
+B3.
+B2. 定州電力
+Shendong Power
+Cangdong Power
+鳳山電廠 POWER
+HEBEI
+河北省
+B2 Dingzhou
+定州
+Daqin Railway
+大秦鐵路
+Tahan Railway
+B1. 滄東電力
+TIANJIN
+C2.朔黃鐵路
+Haoleɓaoji
+490
+700
+700
+454
+314
+4,944
+(10.2)
+3,364
+3,021
+11.1
+2,269
+2.520
+20.8
+15,484
+18,704
+Cost of internal transportation business
+1,666
+2,600
+2,600
+Raw materials, fuel and power
+432
+2.702
+13.2
+389
+17.1
+4,792
+5,612
+Personnel expenses
+2,000
+2,000
+2,000
+436
+298
+(2.11
+3,184
+3,118
+18.0
+562
+461
+2.2
+368
+376
+2,387
+382
+294
+% RMB million RMB million
+2,074.0
+Total of coal-fired power plants/weighted average
+4.85
+12.49
+Port
+54
+41.1
+9.8
+43.3
+Northeast China
+124
+14.3
+Indonesia
+PLN
+EMM Indonesia
+63.27
+53.46
+Including: Railway
+Southern China
+1,950.1
+%
+698699688
+436
+% RMB million RMB million
+% RMB million RMB million
+RMB million RMB million
+612
+1,200
+1,200
+413
+302
+3,688
+Change
+2022
+2023
+Change
+2022
+2023
+Change
+2,000
+2,000
+2,000
+276
+16.0
+1.8
+22
+302
+292
+752
+812
+79.6
+800
+1,437
+Others
+33,127
+43,164
+4.000
+39,164
+412
+300
+9.9
+2.056 2.281
+720 (272)
+524
+External transportation charges
+13.3)
+210
+151
+Others
+Prime business cost
+Other power plants
+1.17
+2.26
+Shipping
+(14.7)
+1,839
+1,568
+(2.0)
+910
+892
+43
+7,165
+7,476
+Cost of external transportation business
+12.0
+35.3
+7.8
+34.6
+119 26.9
+21
+300
+498
+22
+32
+6.9
+233
+249
+38.8
+3,581
+4.971
+Repair and maintenance
+1,600
+2,000
+2,000
+477
+283
+4,405
+13.2
+402
+455
+(4.5)
+45.5
+300
+368
+24.3
+366
+4,775
+740 (2.4)
+722
+(9.1)
+175
+159
+30.0
+534
+694
+7.9
+3,204
+3,458
+Depreciation and amortization
+1,900
+2,000
+2000
+470
+284
+296
+26,180 22,649
+16.6
+Hunan Power Grid
+1,020
+2,000
+2,000
+412
+268
+5,726
+10.7
+11.1
+Guangdong
+Fujan
+East China Power Grid
+Fujan Energy
+Table 10 Capital Expenditure Plan
+Table 9 Domestic Coal Sales Volume
+South China Power Grid
+Qingyuan Power
+660
+660
+660
+438
+266.1
+297
+254.6
+292
+Port
+Railway
+and Coal Chemical Segments
+3.720
+3,720
+3.720
+317
+309
+5.611
+193.3
+208.7
+Shaanxi
+North China Power Grid
+Jinje Energy
+Table 11 Cost of Sales of Transportation
+3,406
+4,810
+4,810
+431
+5,532
+Shipping
+6.631
+43.8
+1,021
+2,520
+2,520
+397
+305
+4,854
+113.4
+122.3
+Hebei
+North China Power Grid
+Dingzhou Power
+22.0
+5.0
+6.1
+Shanxi Province
+03
+3.957
+4.285
+Other operating costs
+Total cost of sales
+39.8
+196,959
+2.2
+Guangdong
+South China Power Grid
+Huizhou Thermal
+1,090
+73.491
+77,594
+Total cost of sales
+4,096
+5,120
+5,120
+463
+303
+5.581
+270.9
+285.7
+Guangdong
+South China Power Grid
+Taishan Power
+1,077
+Tax and surcharge
+192,753
+Hunan
+Coal chemical
+Plan for 2024
+Beihai Power
+159.22
+171.78
+Power segment
+23
+141.7
+32.7
+144.9
+Northern China
+By regions
+32.8
+346
+Guangxi
+Guangxi Power Grid
+Liuzhou Power
+188.72
+98.16
+Coal segment
+7.4
+Guangxi Power Grid
+412.2
+Guangxi
+87.1
+Yueyang Power
+25.6
+58.6
+16.7
+73.6
+Central China and
+83.8
+88.1
+Hunan
+Hunan Power Grid
+Yongzhou Power
+69.29
+68.21
+Transportation segments
+7.8
+135.5
+33.0
+146.1
+Eastern China
+91.6
+Proportion of
+100.0
+Domestic sales
+domestic sales
+2023
+2022
+2023
+Change
+2022
+2023
+1212
+2,020
+2020
+418
+277
+5.213
+100.0
+105.3
+Shandong
+North China Power Grid
+Shouguang Power
+Completion in 2023
+2022
+442.5
+Change
+Central China Power Grid Jiangxi
+5,489
+1352
+142.7
+Sichuan
+Sichuan Power Grid
+Sichuan Energy
+41.1
+44.3
+Central China Power Grid Henan
+Mengin Power
+RMB100 million
+RMB100 million
+%
+Million tonnes
+%
+Million tonnes
+5,656
+107.9
+113.1
+Jiujiang Power
+15.6
+3.412
+3,179
+207.1
+225.9
+Total seaborne coal sales
+12.2
+28.8
+32.3
+Dazhun Railway
+(3.3
+21.3
+20.6
+(2.1)
+29.0
+28.4
+(1.9
+36.5
+35.8
+Zhunge'er Mines
+!!!
+***** ***
+9.1
+1.1
+Shengli Mines
+19.4
+8.3
+(27.8
+10.8
+7.8
+123
+13.1
+12.8
+Baorixile Mines
+11.1
+2.7
+3.0
+Bazhun Railway
+(12.5
+24
+2.1
+(2.3)
+13.1
+12.8
+(1.5
+19.1
+8.6
+4.9
+16.6
+65.5
+63.6
+(1.4)
+85.7
+84.5
+(1.3
+151.6
+149.7
+Shendong Mines
+19.3
+7.7
+644
+100.0
+417.8
+584
+100.0
+450.0
+Total sales volume/average price (excluding tax)
+4.4
+12.9
+Sales to internal coal chemical segment
+Third-party ports
+15.5
+74.6
+Sales to internal power segment
+823
+370.5
+Sales to external customers
+II. Classify by internal and external customers
+5.1
+22.8
+Direct sales through coal mine pit
+2. Monthly long-term agreement
+1. Annual long-term agreement
+3. Spot commodity
+Il Sales through Trading Group
+L. Classify by contract pricing mechanism
+18.8
+1.6
+1.9
+Ganguan Railway
+742
+27.0
+51.8
+(3.5
+Zhunchi Railway
+External customers
+17.6
+49.3
+58.0
+State-owned railways
+5.4
+12.5
+555
+15.9
+66.3
+15.7
+84.5
+97.8
+The Group's internal customers
+(3.3
+98.0
+94.8
+(3.7)
+138.9
+55.1
+133.8
+51.8
+4.7
+Tarangaole
+浩勒報吉
+韓家村
+塔然高勒
+Baotou
+包頭
+煤礦 COAL MINE
+12.2
+136.3
+152.9
+Total of shipping volume
+5.9
+346.9
+367.4
+Total railway turnover
+(1.1)
+4.3
+451
+1.1
+6.4
+Table 16 Shipping Volume
+(1.0)
+325.8
+329
+5.5
+228
+2.7
+187.2
+192.3
+Shuchuang-Huangwan Railway
+0.2
+0.2
+-
+03
+0.3
+04
+0.4
+Baotou Mines
+(17.5)
+-
+12.9
+12.9
+-
+329.0
+10.3
+108.0
+Total of China Shenhua
+19.9
+6.8
+664
+83.0
+346.8
+20.6
+3.4
+4.1
+Huangda Railway
+%
+Million tonnes
+Million tonnes
+Change
+2022
+2023
+1
+1
+108.0
+Xinjie Mines
+54.1
+Shenshuo Railway
+(100.0
+9.1
+88
+96
+(19.3
+538
+434
+Tax and surcharge
+62
+125
+125
+227
+5.228
+64
+6.6
+Photovoltaic power
+Hydropower
+0.09
+6.27
+Others
+8
+(10.4)
+11
+147
+4,602
+8.1
+3,556
+3,844
+9.3
+27,380 25,041
+Total cost of sales
+coal slurry)
+246
+395
+333
+62
+318
+905
+25
+26
+|
+8.9
+135
+27.3)
+5,214
+65.1
+58.3
+23.62
+Coal chemical segment
+12.8
+14.9
+3.8
+16.8
+Metallurgy
+8.4
+316.1
+77.4
+342.5
+Thermal coal
+By usage
+1.5
+4,741
+(11.8) 4,814
+5,203
+4,589
+7.3
+227
+13.2
+Gas-fired power
+38.5
+Chemical (including
+(1.5)
+617
+608
+5
+16.3
+289
+336
+(58.7)
+1.854
+766
+Other operating costs
+950
+950
+-
+950
+555
+194
+4,152
+39.4
+(11.7) 5,569
+5,493
+1.4
+3.6
+150.8
+156.2
+Huanghua Port
+31 December 2022
+31 December 2023
+Change
+31 December 2022
+Change 31 December 2023
+31 December 2023 31 December 2022
+Mines
+excluding tax
+Sales volume
+excluding tax)
+total sales volume
+Sales volume
+As at
+As at
+As at
+Change
+As at
+Baoshen Railway
+9.2
+0.1
+Zhuhai Coal Dock
+%
+100 million tonnes
+100 million tonnes
+%
+100 million tonnes
+% 100 million tonnes
+100 million tonnes
+100 million tonnes
+%
+RMB/tonne
+%
+Million tonnes
+4.9
+40.7
+42.7
+Tianjin Coal Dock
+(4.3)
+8.8
+As at
+As at
+Price
+2022
+2023
+2022
+2023
+Change
+2022
+2023
+Table 13 Coal Resources Reserve
+Table 12 Coal Sales Price
+Table 15 Railway Cargo Transportation Turnover
+Table 14 Seaborne Coal at Ports
+419.59
+368.04
+Total
+54.7
+16.1
+5.6
+24.9
+Others
+Change
+Coal resources (under PRC standard)
+Recoverable reserve (under PRC standard)
+Marketable reserve (under JORC standard)
+Price
+Percentage to
+Price
+(excluding tax)
+RMB/tonne
+Million tonnes
+total sales volume
+Sales volume
+Percentage to
+4.0
+297.6
+548
+309.4
+3.8
+191.6
+Changel
+%
+billion tonne km
+billion tonne km
+%
+Million tonnes
+Million tonnes
+198.9
+Self-owned ports
+Self-owned railways
+-
+2,520
+45,157
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+100 million tonnes
+3.161
+3.245
+(2.6)
+RMB million
+RMB million
+RMB million
+RMB million
+Port
+2022
+2023
+2022
+2023
+2022
+2023
+2022
+Shipping
+2023
+Coal chemical
+2022
+2023
+2022
+Unallocated items
+2023
+2022
+Eliminations
+2023
+2022
+Total
+2023
+2022
+Coal sales
+100 million tonnes
+4.353
+4.500
+100 million kWh
+2.163
+2,122.6
+Profit for the year
+RMB million
+75,192
+85,398
+(12.0)
+Inter-segment revenue
+41,169
+205
+184
+29,949
+28,774
+4.732
+4.482
+3,240
+3,925
+1,285
+Power generation
+Railway
+344,533
+-
+(3.3)
+Revenue
+RMB million
+343,074
+344,533
+10.41
+Revenue from external customers
+228,149
+236,305
+92,202
+84,341
+13.012
+13,423
+2,017
+1.959
+1,596
+2,126
+6.098
+6,379
+343,074
+Power
+Commercial coal production
+%
+90,607
+Profit for the period attributable to
+equity holders of the Company
+Net cash generated from operating
+activities
+20,677
+16,184
+15,640
+12,124
+29,203
+17,146
+28,371
+14,967
+Subject to external factors such as climate change, supply-demand relationship in the coal power
+market, coal and electricity price fluctuations, as well as other factors including the settlement
+cycle of cost and expense, asset impairment testing and non-operating expenditures, the Group's
+results varied from quarter to quarter. For the operation profile of the Group in this year, please
+refer to Section IV "Director's Report" in this report.
+Explanation on the differences between quarterly data and disclosed periodic report data:
+☐ Applicable ✓ Not applicable
+China Shenhua Energy Company Limited
+Section III Board's Statement
+Dear Shareholders,
+2023 marks the inaugural year for comprehensively implementing the guiding principles of the 20th
+CPC National Congress, and is a crucial year for connecting the past with the future under the "14th
+Five-Year Plan." The on-the-upturn economy came with balanced supply and demand of energy on the
+whole, and the green and low-carbon transformation and high-quality development were promoted in
+depth. Following the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a
+New Era, China Shenhua comprehensively studied and implemented the guiding principles of the 20th
+CPC National Congress and thoroughly put into practice the spirit delivered in General Secretary Xi
+Jinping's important speech on his inspection of Huanghua Port, resolutely carried out the decision and
+deployment made by the CPC Central Committee and the State Council, actively implemented the policy
+for energy supply and price stability, fulfilled the missions and duties as a central government-owned
+enterprise, practiced the original aspiration of common prosperity and a shared prosperous future,
+successfully completed all annual tasks and goals, and maintained a high-quality development trend of
+stability and progress. The Company achieved a profit for the year attributable to equity holders of the
+Company of RMB64.625 billion, a basic earnings per share of RMB3.253 per share, a gearing ratio at the
+end of the period of 24.0%, and a total market capitalisation of RMB598.9 billion at the end of the year.
+This year saw us consolidate the cornerstone for energy security through integrated operation.
+We deeply practiced our responsibility and mission of being the "Ballast for Energy Supply, Pioneer in
+Energy Revolution", actively responded to challenges such as increased coal imports, energy market
+price fluctuations, and extreme weather conditions, reinforced the foundation of energy supply security,
+ensured safe, compliant, and efficient production, and further strengthened the capability of securing
+coal supply. As a result, the production and sales of commercial coal rose by 3.5% and 7.7% year-
+on-year, respectively. We deepened the integrated operation of coal and power, ensured stable and
+increased power generation from electric power units, continuously leveraged the role of coal-fired
+power in providing basic energy support, and achieved a year-on-year increase of 11.0% and 11.1% in
+the annual power generation and sales of power. We smoothed the energy transportation guarantee
+lines, in an effort to establish a multi-functional, comprehensive and modern transportation system
+that combines railways, ports and shipping. We recorded year-on-year increases in self-owned railway
+transportation turnover, port loading volume and shipment turnover. With synergistic and efficient
+operations across various sectors, we successfully achieved stable production and energy supply
+throughout the year and demonstrated the mission and duty of China Shenhua with outstanding results.
+2023 Annual Report
+83,025
+11
+82,400
+Revenue
+10
+Section II Company Profile and
+Major Financial Indicators (Continued)
+Explanation on Differences in Domestic and Overseas Accounting Standards:
+Pursuant to the relevant regulations of the related government authorities in the PRC, the Group
+accrued provisions for simple production maintenance, safety production and other related
+expenditures, recognised as expenses in profit or loss and separately recorded as a specific
+reserve in shareholders' equity. On utilisation of the specific reserve as fixed assets within the
+stipulated scope, the full amount of accumulated depreciation is recognised at the same time when
+the cost of the relevant assets is recorded. Under International Financial Reporting Standards,
+these expenses are recognised when incurred. Relevant capital expenditure is recognised as
+property, plant and equipment and depreciated according to the relevant depreciation method.
+The effect on deferred tax arising from such difference has also been reflected.
+IX. MAJOR FINANCIAL DATA OF EACH QUARTER OF 2023
+Coal
+2023
+Second
+Third
+Fourth
+First quarter
+quarter
+(January-
+(April
+March)
+quarter
+(July-
+June) September)
+quarter
+(October -
+December)
+87,042
+12
+Unit: RMB million
+This year witnessed us enhance core competitiveness with focus on industry control. We further
+improved the resilience and safety level of the supply chain of the integrated industrial chain. We
+accelerated the acquisition and connection of high-quality coal resources, obtained mining license
+approvals for Xinjie No. 1 Mine and Xinjie No. 2 Mine. We accelerated the construction of high-quality
+power points, with Guangdong Qingyuan Power Plant Phase I (2×1,000MW) and Hunan Yueyang Power
+Plant (2×1,000MW) projects successively put into commercial operation, and Guangxi Beihai Power Plant
+Phase II (2×1,000 MW) Project II under construction. We accelerated the development of transportation
+corridor capacity, made steady progress in the Shenshuo Railway Capacity Expansion Project and
+Huangwan Railway Electrification Transformation Project, successfully achieved two-way navigation
+for 70,000-tonne ships at Huanghua Port, continuously expanded non-coal transportation and reverse
+transportation businesses, and realised the interconnection of the "land-port-shipping" integrated
+two-way heavy-haul multimodal transportation. We accelerated the upgrading and transformation of
+coal chemical projects, with the smooth commencement of the Baotou Coal-to-Olefins Upgrading
+Demonstration Project. We carried out the "Hundred-Day Safety Production Campaign" in depth and
+ensured smooth and orderly production and operation. We steadily carried forward the asset injection
+work and completed on-site due diligence for Hangjin Energy and Dayan Mining.
+2023 Annual Report
+15
+Section IV
+Directors' Report
+C
+H
+D
+Overview of China Shenhua's Operating Results for 2023
+Table 1 Business Targets
+Change
+Table 2 Financial Indicators
+Table 3 Results of Each Segment
+Target for
+2024
+Actual amount
+Change
+in 2023
+2023
+2022
+(Restated)
+Section III Board's Statement (Continued)
+22 March 2024
+China Shenhua Energy Company Limited
+%
+Sixthly, we will fulfill social responsibilities with high standards as contributions to high-quality
+development of the Company. We will continue to improve the ESG system with ESG management
+methods at the core and ESG-related special systems as the support to facilitate the upgrade of the
+ESG information system. We will put in place the requirements of regulatory disclosure guidance,
+improve quality of ESG report disclosure, reinforce comprehensive ESG governance, thus enhancing
+the influence of the Company's ESG performance in the industry and the globe.
+Board of Directors
+China Shenhua Energy Company Limited
+This year, we advanced the reform to motivate the endogenous power for innovation development.
+We further consolidated the results of the three-year action to reform state-owned enterprises and
+mapped out a blueprint for consolidating and upgrading world-class demonstration enterprise. We
+established and improved the term and contractual management system for management members
+to further enhance management effectiveness. We anchored the path of scientific and technological
+innovation and actively participated in major national scientific and technological research projects. The
+"600 MW coal-fired power generating unit with ammonia blending combustion" test led by us was
+successful and the "High-safety and High-precision Positioning Application Demonstration for Group
+Train Operation Control" organized by us was approved by the Ministry of Science and Technology
+of China. We expedited the construction of intelligent projects, with Daliuta and Heidaigou collieries
+passing the acceptance of national intelligent demonstration coal mine construction projects. A number
+of scientific and technological innovation projects such as intelligent mines, smart transportation, new
+energy technology, and integrated operations have achieved staged progress. Focusing on directions
+such as carbon capture and utilisation, hydrogen energy, ammonia energy, and the production and
+application of green methanol, we actively planned scientific and technological innovation research on
+forward-looking strategic industries.
+This year, we worked hard to lift our corporate governance to a higher level through more
+standardised operation. With a deep understanding of the core positioning as a state-owned
+enterprise, we well unified the CPC's leadership with corporate governance. Specifically, we continued
+work on the foundation of "the general meeting, the Board and the Supervisory Committee", revised
+and improved the rules of procedure for special committees under the Board, and effectively leveraged
+the role and responsibilities of the Board. We formulated an action plan for market value enhancement
+with proactive expectation management, researched and set a "3+4" expectation management indicator
+system, formulated cash dividend policies in a scientific manner and implemented dividend distribution
+than expectation, which together further improved the market value management. We worked on the
+risk prevention and control capacity, and the Company's "six in one" internal control evaluation method
+was selected as a case study for corporate governance by the State-owned Assets Supervision and
+Administration Commission of the State Council. As a return of the optimised ESG system, the Company
+was selected for two consecutive years in the Fortune China ESG Influence List (ESG
+), ranked first among listed energy companies in the "2023 China Brand Value Evaluation
+Information" (2023+), and was presented the highest honours of the best practice
+case in terms of the board of directors, corporate governance and the office of board of directors of
+listed companies in 2023 by the China Association for Public Companies. We actively participated in
+social welfare and charity causes and received awards such as the China Top 100 Enterprises Award
+and China Ethical Enterprise.
+2023 Annual Report
+13
+Section III Board's Statement (Continued)
+This year, we fully empowered the high-quality development of the enterprise guided by the
+Party building. We adhered to and strengthened the overall leadership of the CPC, kept in mind
+the "big picture of the country" and the "essentials of the enterprise" firmly practiced the "two
+maintenances" and ensured that the spirit of the 20th CPC National Congress and the important
+instructions and directives of General Secretary Xi Jinping were implemented. We fully leveraged the
+role of controlling the direction, having the big picture, and ensuring the implementation of the Party
+Committee, and strictly implemented the "first issue" system. We implemented the "one main line,
+two guarantees, three combinations and three leads" for the central group of the Party Committee
+and yielded more fruits from the "One Branch with One Brand, One Brand with One Characteristic"
+building activity. We profoundly and comprehensively governed the Party with strict discipline, held
+"Year of Style Construction" and integrity education activities, and made solid and effective efforts in
+Party style and clean government construction and anti-corruption work. We carefully organised the
+"China Shenhua Energy Tour 2023" characteristic united front activity, created the "Youth л" youth
+culture brand, further unified thoughts, built cohesion, and escorted high-quality corporate development.
+Section III Board's Statement (Continued)
+Firstly, we will enhance the resilience of the industrial chain and solidify the foundation for
+development. It is crucial to firmly establish a red-line awareness and bottom-line thinking on safety
+and environmental protection, actively respond to policies and market changes, fully focus on ensuring
+continuous coal production and stable power supply, maintain smooth energy transportation channels,
+make all-out efforts to complete the production and operation goals and tasks for the year, consolidate
+and improve the capability of secure energy supply.
+Fifthly, we will focus on enterprise value management and improve the Company's comprehensive
+governance. We will unwaveringly consolidate the deepening reform of enterprises by strengthen
+compliance risk management and control for refined operation management, and develop a first-
+class financial management system. We will further promote the coordination of industry and finance
+to optimise the quality of core assets and follow the assessment requirements of market value
+management for improved effectiveness of capital operation. Bearing the "investor-based" concept
+in mind, we will work hard on information disclosure and investor relations services to reward
+shareholders. We will enhance the ability to create value and lend more glories to the Company's
+prestige brand.
+Braving difficulties and riding the wave, we stand at the forefront of the trend; with a mission
+on our shoulders, we set sail at the right time. 2024 is the 75th anniversary of the founding of the
+People's Republic of China, the key year for implementing the "14th Five-Year Plan" and the crucial year
+for comprehensive construction of a world-class integrated energy listed company. We will adhere to the
+guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, fully implement
+the spirit of the 20th CPC National Congress and the Second Plenary Session of the 20th CPC Central
+Committee, earnestly implement the deployment of the Central Economic Work Conference and the
+Central Financial Work Conference, and accurately grasp the new mission and positioning of "general
+objectives, general principles and general requirements, "enhance corporate core competitiveness
+and functionality", and "technology innovation, industry control and security underpinning". Closely
+concentrating on the corporate development strategy of "one goal, three roles, six responsibilities", we
+will adhere to the work orientation of "seeking progress while maintaining stability, promoting stability
+through progress, and establishing before breaking". We will ensure stable energy supply in a safe and
+compliant manner, promote green and low-carbon transformation of industries, strengthen research on
+strategic emerging industries and future industries, further enhance capital operation efficiency, actively
+implement market value management assessment requirements, improve corporate governance, and
+constantly create a new situation in building a world-class integrated energy listed company.
+Fourthly, we will adhere to the drive of scientific and technological innovation for motivating
+new momentum for development. We will stay on faster track to develop platforms for tackling core
+technologies, increase investment in technological development and improve systems and mechanisms
+for scientific and technological innovation. We will shape a source of original and leading technology
+in green intelligent mining, coordinated and efficient operation of transportation and logistics, high-end
+diversified and low-carbon development of modern coal chemical industry.
+Thirdly, we will better serve the national strategy by playing our part as a centrally administrated
+state-owned enterprise. Guided by the national goal of carbon peaking and carbon neutrality as the
+guiding value, we will keep a close eye on climate change to improve the clean and efficient use of
+coal. We will reinforce green mine development and steadily implement clean energy replacement in
+transportation systems. We will take a holistic approach to study on strategic emerging industries and
+future industries to accelerate the formation of new quality productive forces and better serve the
+economic and social development.
+This year, we, aligning to strategic goals, developed new markets for new energy. Guided by the
+"goals of carbon peaking in 2030 and carbon neutrality in 2060", we solidly promoted the development of
+strategic emerging industries. We prepared the Company's 2023 work plan for low-carbon development
+and set up the leading group accordingly for that. We worked to coordinate the strategic cooperation
+between the internal and external enterprises of China Energy and local governments and branched
+out into new energy industry in diverse channels and forms. As at the end of the Reporting Period, the
+new energy projects planned, under construction and put into operation had a capacity of approximately
+3,610 MW. The 150 MW centralized photovoltaic power station at the dump site of open-cut mine of
+Shengli Energy of the Company, and the distributed photovoltaic projects of Baorixile open-cut mine
+and Guojiawan Power Plant were connected to the grid, and the two new energy industry investment
+funds invested and sponsored by the Company yielded stable returns. Focusing on the clean and
+efficient use of coal, we promoted the "three types of technical reforms" of coal-fired power units,
+and the standard coal consumption of coal-fired power units decreased by 1.8 g/kWh year on year. We
+kept an eye on climate change, carried out comprehensive management of air pollution and soil and
+water conservation, and promoted the coordinated development of ecological, environmental, social
+and economic benefits. The Mine Eco-tourism Scenic Spot of Zhunge'er Energy has been rated as a
+national 3A tourist attraction, showcasing that our eco-friendly mining development has set a benchmark
+in the industry.
+Secondly, we will optimise the integrated operational model by extending, supplementing and
+strengthening the chain. This involves the orderly advancement of a number of new coal mines,
+coal power, coal chemical projects such as Xinjie No. 1 Mine and Xinjie No. 2 Mine, Jiangxi Jiujiang
+Power Plant Phase II, Guangdong Qingyuan Power Plant Phase II, Guangxi Beihai Power Plant Phase
+II, and Baotou Coal Chemical Coal-to-Olefins Upgrading Demonstration Project, the asset acquisition
+of Hangjin Energy and Dayan Mining, the creation of a multi-functional comprehensive modern energy
+transportation channel, and the continuous enhancement of core competitiveness of integrated
+industries.
+Section III Board's Statement (Continued)
+China Shenhua Energy Company Limited
+14
+1.11
+Company Limited
+Central Huijin Asset
+106,077,400
+0.53
+☐ 0 0
+106,077,400
+0
+Section VIII Changes in Shares and
+Particulars of Shareholders (Continued)
+Management Ltd.
+Guoxin Investment Co., Ltd.
+702,800
+0.32
+0
+200 China Shenhua Energy Company Limited
+0 221,001,857
+Name of shareholder
+(full name)
+0.53
+0.00 40 0 63,987,924
+0
+1.62
+16.96
+Participation of top ten shareholders in lending of shares by way of securities lending and refinancing
+Unknown
+Unknown 3,369,078,025
+16.96
+Unknown
+Unknown
+0
+China Securities Finance
+2.99
+0 594,718,004
+2.99
+0
+0
+Corporation Limited
+Hong Kong Securities Clearing 320,937,248
+594,718,004
+Shares held by
+Industrial and Commercial
+Outstanding shares
+0.20
+266,400
+0.00
+Bank of China-Shanghai
+Index 50 Trading Open-end
+Index Securities Investment
+Fund
+40,207,864
+National Social Security Fund
+0.08
+2,127,700
+0.01
+30,126,155
+0.15
+13
+HKSCC NOMINEES LIMITED 3,369,264,907
+15,795,095
+0.14
+28,224,064
+%
+lent by way of
+securities lending and
+Shares held by
+shareholders in ordinary
+account and credit account
+***
+account and credit account
+at the beginning of
+the period
+Total Percentage
+refinancing at the
+beginning of the period
+Percentage
+Total
+at the end of
+the period
+Total Percentage
+Unit: share
+Outstanding shares
+lent by way of
+securities lending and
+refinancing at the
+end of the period
+Total
+Percentage
+shareholders in ordinary
+0
+Percentage
+total share
+capital of the
+Company
+69.52
+3,369,078,025
+Overseas-listed foreign
+shares
+3,369,078,025
+China Securities Finance Corporation Limited
+594,718,004 RMB ordinary shares
+594,718,004
+Hong Kong Securities Clearing Company Limited
+13,812,709,196
+221,001,857 RMB ordinary shares
+Central Huijin Asset Management Ltd.
+106,077,400 RMB ordinary shares
+106,077,400
+Guoxin Investment Co., Ltd.
+63,987,924 RMB ordinary shares
+63,987,924
+Industrial and Commercial Bank of China - Shanghai
+221,001,857
+13,812,709,196 RMB ordinary shares
+China Energy Investment Corporation Limited
+HKSCC NOMINEES LIMITED
+Number
+0
+Nil
+N/A
+Others
+Bank of China Limited
+- Huatai-Pinebridge
+Shanghai-Shenzhen 300
+Index Exchange Traded
+Open-ended Index Fund
+198 China Shenhua Energy Company Limited
+Section VIII
+Changes in Shares and
+Particulars of Shareholders (Continued)
+Shareholdings of top ten shareholders without selling restrictions
+Number of shares
+Name of shareholder
+without selling
+restrictions held
+Type and number of shares
+Туре
+40,207,864 RMB ordinary shares
+40,207,864
+Index 50 Trading Open-end Index Securities
+Investment Fund
+Participation of Top Ten Shareholders in Lending of Shares by way of Securities
+Lending and Refinancing
+Participation of top ten shareholders in lending of shares by way of securities lending and refinancing
+Unit: share
+Name of shareholder
+(full name)
+Shares held by
+shareholders in ordinary
+account and credit account
+at the beginning of
+the period
+Outstanding shares
+lent by way of
+securities lending and
+refinancing at the
+beginning of the period
+Shares held by
+shareholders in ordinary
+account and credit account
+Outstanding shares
+lent by way of
+securities lending and
+Total Percentage
+Total Percentage
+at the end of
+the period
+Total Percentage
+refinancing at the
+end of the period
+Total
+Percentage
+%
+China Energy Investment 13,812,709,196
+Corporation Limited
+69.52
+0 13,812,709,196
+China Energy, the controlling shareholder of the Company, planned to increase its
+shareholding in the A shares of the Company through its wholly-owned subsidiary,
+Capital Holdings, by means permitted by the SSE (including but not limited to
+centralized bidding transactions, block trades, etc.) by an amount of not less than
+RMB500 million and not exceeding RMB600 million, and at a price of not more than
+RMB33.10 per share, within 12 months from 20 October 2023 (the "Shareholding
+Increase Plan", please refer to the Company's H share announcement dated 19
+October 2023 and A share announcement dated 20 October for details). As at
+31 December 2023, Capital Holdings had cumulatively increased its shareholding
+of the Company by 8,655,481 A shares, representing 0.0436% of the total share
+capital of the Company, through centralized bidding transactions on the SSE, with
+an cumulative amount of RMB269.1832 million (exclusive of commissions and tax
+and charges), which accounted for 53.8% of the minimum amount of RMB500
+million under the Shareholding Increase Plan. China Energy directly and indirectly
+held 13,821,364,677 A shares of the Company, representing 69.5641% of the total
+share capital of the Company.
+0
+2.
+2023 Annual Report 199
+National Social Security Fund Portfolio 101
+Huaxia Life Insurance Co., Ltd. - Self-owned Fund
+Industrial and Commercial Bank of China Limited -
+Huatai-Pinebridge Shanghai-Shenzhen 300 Index
+Exchange Traded Open-ended Index Fund
+Description of the special repurchase accounts of
+the top ten shareholders
+N/A
+Description of the abovementioned shareholders'
+N/A
+30,126,155 RMB ordinary shares
+30,126,155
+24,832,310 RMB ordinary shares
+24,832,310
+24,588,635 RMB ordinary shares
+24,588,635
+entrusting of voting rights, entrusted voting rights
+and waivers of voting rights
+Details regarding the related party relationships
+among the above shareholders or whether they
+are parties acting in concert
+Both HKSCC NOMINEES LIMITED and Hong Kong Securities Clearing Company
+Limited are wholly-owned subsidiaries of Hong Kong Exchanges and Clearing
+Limited; the custodian bank of both Industrial and Commercial Bank of China-
+Shanghai Index 50 Trading Open-end Index Securities Fund and Industrial and
+Commercial Bank of China Limited - Huatai-Pinebridge Shanghai-Shenzhen 300
+Index Exchange Traded Open-ended Index Fund is Industrial and Commercial
+Bank. Save as disclosed above, the Company is not aware of any related party
+relationships between the top ten shareholders without selling restrictions and
+the top ten shareholders, and whether they are parties acting in concert as
+defined in the Measures for Administration of Acquisition of Listed Companies.
+Details regarding the holders of preference shares
+with voting rights restored and the number of
+shares held
+N/A
+Note: The H shares are held by HKSCC NOMINEES LIMITED on behalf of a number of its clients; the A
+shares are held by Hong Kong Securities Clearing Company Limited on behalf of a number of its
+clients.
+Section VIII Changes in Shares and
+Particulars of Shareholders (Continued)
+Portfolio 101
+National Social Security Fund
+6,320,189
+As at 31 December 2023, persons set out in the table below had an interest and/or short
+position in the shares or underlying shares of the Company, which is required to be
+recorded in the register of equity interests and/or short positions pursuant to section 336
+of Part XV of the Securities and Futures Ordinance (the "SFO", Chapter 571 of the Laws
+of Hong Kong):
+Name of
+shareholder
+Capacity
+A share
+Nature of
+interest
+Number of
+A shares held
+Percentage of
+A shares held in
+the total issued
+(III) Major Shareholders' Interests and Short Positions in the Shares of the
+Company
+A shares
+%
+China Energy Investment
+Corporation Limited
+Beneficial owner
+Interest of the corporation
+A share
+Long position
+A share
+%
+Section VIII Changes in Shares and
+Particulars of Shareholders (Continued)
+202 China Shenhua Energy Company Limited
+Authority
+0
+22,233,848
+0.11
+- Ruifeng Huibang No. 3
+Privately Offered Fund
+24,588,635
+Withdrawal
+0
+3,219,997
+0.02
+Portfolio 106
+Abu Dhabi Investment
+Withdrawal
+0
+0
+15,552,675
+0.08
+Long position
+0
+13,812,709,196
+8,655,481
+69.52
+(1)
+other domestically or
+Directly and indirectly holding 51.25% shares of
+GD Power Development Co., Ltd.;
+overseas listed
+companies in which it
+(2)
+controls or participates
+The shareholdings in
+Directly and indirectly holding 58.56% shares of
+China Longyuan Power Group Corporation Limited;
+Period
+Directly holding 67.50% shares of CHN Energy
+Changyuan Electric Power Co., Ltd.;
+(4)
+Indirectly holding 51.11% shares of Yantai
+Longyuan Power Technology Co., Ltd.;
+204 China Shenhua Energy Company Limited
+(5)
+Indirectly holding 50.99% shares of Ningxia
+Yinglite Chemicals Co., Ltd.
+during the Reporting
+State-owned assets operating activities within the
+scope authorised by the State Council; investment
+and management activities in various sectors including
+resource products (e.g. coal), coal-to-liquids, chemical
+processing of coal, electricity, heat, ports, various kinds
+of transportation, finance, domestic and international
+trade and logistics, real estate, advanced technology
+and information consultation; planning, organising,
+coordinating and managing the production and operating
+activities in the above sectors of the members of
+China Energy; and sales of chemical materials and
+chemical products (excluding hazardous chemicals),
+textiles, construction materials, machinery, electronic
+equipment and office equipment. (Market entity is
+allowed to choose the business to be engaged in and
+carry out such business activities pursuant to laws; for
+projects that are subject to approval pursuant to the
+law, business operations shall commence in accordance
+with the business scope as approved and upon receipt
+of such approval from relevant authorities; no business
+activities which are prohibited or restricted by the
+national or Beijing industrial policies shall be carried out.)
+23 October 1995
+Liu Guoyue
+0.05
+0.04
+controlled by the major
+shareholder Note
+Note: As at 31 December 2023, China Energy Capital Holdings Co., Ltd., a wholly-owned subsidiary of China
+Energy, directly held 8,655,481 A shares of the Company.
+As at 31 December 2023, save as disclosed above, there were no other persons who held
+interests and/or short positions in the shares or underlying shares of the Company, which
+are required to be recorded in the register to be kept under section 336 of Part XV of the
+SFO, or who was a major shareholder of the Company.
+2023 Annual Report 203
+Section VIII Changes in Shares and
+Particulars of Shareholders (Continued)
+IV. CHANGES OF CONTROLLING SHAREHOLDER AND DE FACTO CONTROLLER
+(1)
+Controlling Shareholder as at the end of the Reporting Period
+1.
+Legal Person
+Name
+Legal representative
+Date of incorporation
+Principal business
+China Energy Investment Corporation Limited
+83.76
+Huaxia Life Insurance Co., Ltd.
+Withdrawal
+4,172,109
+2023 Annual Report 201
+Section VIII Changes in Shares and
+Particulars of Shareholders (Continued)
+3.
+Changes in the Top Ten Shareholders from the Previous Period
+Changes in the top ten shareholders from the end of the previous period
+Unit: share
+Shares held by
+shareholders in ordinary
+account and credit account
+Index Exchange Traded
+Open-ended Index Fund
+Additions/
+Withdrawals
+during the
+Reporting Period
+Outstanding shares
+lent by way of securities lending
+and refinancing
+at the end of the period
+and outstanding shares
+lent by way of securities
+lending and refinancing
+at the end of the period
+Total
+Percentage
+Name of shareholder
+(full name)
+Shanghai-Shenzhen 300
+Huatai-Pinebridge
+Bank of China Limited-
+0.03
+0
+0
+24,832,310
+0.12
+0
+0
+- Self-owned Fund
+Industrial and Commercial
+13,415,335
+0.07
+80,000
+0.00
+24,588,635
+0.12
+49,200
+0.00
+Total
+0.02
+Percentage
+%
+24,637,835
+0.12
+Bank of China Limited-
+Huatai-Pinebridge Shanghai-
+Shenzhen 300 Index
+Exchange Traded Open-
+ended Index Fund
+0.00
+China Life Insurance Company Withdrawal
+Limited Dividends -
+Personal Dividends - 005L
+- FH002 (Shanghai)
+Zhuhai Ruifeng Huibang Asset
+Management Co., Ltd.
+0
+0
+-
+49,200
+Addition
+Industrial and Commercial
+Guoxin Investment Co., Ltd.
+Addition
+0
+0
+63,987,924
+0.32
+National Social Security Fund
+Portfolio 101
+Addition
+0
+30,126,155
+0.15
+Huaxia Life Insurance Co., Ltd. Addition
+- Self-owned Fund
+0
+0
+24,832,310
+0.12
+%
++11,173,300
+0.12
+N/A
+3,377,482,000
+2. Overseas listed foreign shares
+III. Total number of shares
+83.00
+16,491,037,955
+0
+0
+83.00
+16,491,037,955
+1. RMB ordinary shares
+19,868,519,955 100.00
+0
+0
+100.00
+19,868,519,955
+II. Marketable shares without selling
+restrictions
+0.00
+0
+0
+0
+0.00
+1. Shares with selling restrictions
+%
+Number Percentage
+17.00
+0
+0 3,377,482,000
+17.00
+(1)
+III.
+SHAREHOLDERS
+There are no provisions for pre-emptive rights under the Articles of Association and the
+PRC laws which would entitle the existing shareholders to have priority to subscribe for
+new shares on a pro rata basis in the event of new share issuance by the Company.
+(II) Pre-emptive Rights
+☐ Applicable Not applicable
+Changes of the Total Number of Ordinary Shares, the Shareholding Structure
+and the Asset and Liability Structure of the Company
+(1)
+The Company did not issue any ordinary share, convertible corporate bond, warrant bond,
+corporate bond or other derivative securities, nor did it enter into any equity-linked agreement
+during the Reporting Period.
+II. ISSUANCE AND LISTING OF SECURITIES
+Applicable ✓ Not applicable
+Subtotal
+(II) Changes of Shares with Selling Restrictions
+196 China Shenhua Energy Company Limited
+As at the disclosure date of this report, so far as the Company's Directors are aware,
+the Company has satisfied the minimum public float requirement under Rule 8.08 of
+the Hong Kong Listing Rules.
+Save as disclosed above, for the year ended 31 December 2023, neither the Company
+nor any of its subsidiaries has repurchased, sold or redeemed any listed securities of
+the Company or its subsidiaries as defined in the Hong Kong Listing Rules.
+References are made to the announcement of the Company dated 14 January
+2015 in relation to, among others, the US$500,000,000 3.875% bonds due 2025
+(the "Bonds") issued by China Shenhua Overseas Capital Company Limited, an
+indirect wholly-owned subsidiary of the Company, the notice of listing of the Bonds
+on the HKEX dated 20 January 2015 and the announcement dated 10 August 2023
+in relation to partial redemption and cancellation of the Bonds. As at 10 August
+2023, China Shenhua Overseas Capital Company Limited has redeemed the Bonds
+with an aggregate principal amount of US$86,674,000, representing 17.33% of the
+initial principal amount of the Bonds, and the cancellation has been completed.
+Upon such cancellation of the Bonds, there is also an aggregate principal amount
+of US$413,326,000 of the Bonds outstanding, representing 82.67% of the initial
+principal amount of the Bonds.
+Explanations of Changes of Shares
+2.
+100.00
+0 19,868,519,955
+0
+100.00
+19,868,519,955
+Section VIII Changes in Shares and
+Particulars of Shareholders (Continued)
+Total Number of Shareholders
+Number Percentage cancellation
+As at 31 December 2023
+through legal
+recovered
+return for
+Interest
+Investment Determination
+Source
+Duration
+Expiry date
+of loans
+entrusted Initial date
+loans of loans
+and the Group Trustee
+Name of borrower
+the borrower
+has been
+Principal
+Actual
+Amount of
+Relation between
+Whether it
+Unit: RMB million
+Individual Entrusted Loans
+2.
+Section VII Significant Events (Continued)
+Others
+of loans
+of fund
+of fund of compensation
+rate
+Change
+As at 31 December 2022
+Unit: share
+Changes of the Number of Shares
+1.
+(I) Changes of the Number of Ordinary Shares
+I. CHANGES OF ORDINARY SHARE CAPITAL
+Section VIII Changes in Shares and
+Particulars of Shareholders
+2023 Annual Report 195
+As at 31 December 2023, the Group did not grant entrusted loans with an amount
+exceeding 5% of the Group's latest audited net assets attributable to equity holders
+of the Company to any individual party. The Company did not utilise the proceeds
+raised to grant entrusted loans, and there was no entrusted loan that was involved in
+litigations. No provision for impairment for the above entrusted loans has been made
+by the Group. Under centralised capital management of the Group, the entrusted
+loans among the Company and its subsidiaries were used for meeting operating and
+development needs. Such entrusted loans have been eliminated in the consolidated
+financial statements of the Group.
+The entrusted loan of RMB400 million provided to Elion Chemical Industry Co., Ltd.
+("Elion Chemical") by Shendong Power, a wholly-owned subsidiary of the Company,
+has expired on 23 December 2023. As at the end of the reporting period, Elion
+Chemical failed to repay the principal on time. For the entrusted loan, Elion Chemical
+has implemented guarantee through asset pledge. The two parties are currently
+negotiating the extension of the entrusted loan, etc. The entrusted loan will not have
+a significant effect on the financial condition of the Group.
+Repurchase
+and
+Yes
+19.26
+4.75%
+3 years
+2023/12/23
+400 2020/12/24
+Bank of China
+Joint stock
+company
+Elion Chemical
+procedures
+for 2023
+2023
+0
+Total number of shareholders of ordinary shares as at the end of
+the Reporting Period (accounts)
+Own fund Replacement Interest to be paid
+of loans quarterly
+Including: Holders of A shares (including China Energy)
+HA
+O Nil N/A
+0.32
+63,987,924
+Guoxin Investment Co., Ltd. +63,285,124
+corporation
+Management Ltd.
+State-owned
+MA
+N/A
+☐ 0 Nil
+0.53
+106,077,400
+0
+Central Huijin Asset
+corporation
+Clearing Company Limited
+Overseas
+O Nil N/A
+1.11
+-99,935,391 221,001,857
+Hong Kong Securities
+Corporation Limited
+Industrial and Commercial
+Others
++11,983,800 40,207,864
+20
+139,710
+NA
+0 Nil
+0.12
+24,832,310
++18,512,121
+Fund Portfolio 101
+Huaxia Life Insurance Co.,
+Ltd. - Self-owned Fund
+Industrial and Commercial
+Others
+N/A
+NA
+0 Nil
+0.15
++14,331,060 30,126,155
+National Social Security
+Investment Fund
+end Index Securities
+Index 50 Trading Open-
+Bank of China Shanghai
+corporation
+State-owned
+HA
+N/A
+0 Nil
+0.20
+N/A
+Others
+☐0 Nil
+during the
+Number pledge, tag or lock-up
+shares held
+Decrease
+Shares subject to
+Shareholdings of top ten shareholders (excluding lending of shares by way of refinancing)
+Number of
+Increase/
+Unit: share
+Name of
+shareholder
+Shareholdings of Top Ten Shareholders and Top Ten Holders of Marketable
+Shares (or Shareholders without Selling Restrictions) as at the end of the
+Reporting Period
+at the end of
+1.
+2023 Annual Report 197
+1,839
+Registered holders of H shares
+147,431
+149,270
+prior to the disclosure date of this annual report (accounts)
+Including: Holders of A shares (including China Energy)
+Total number of ordinary shareholders at the end of last month
+1,862
+Registered holders of H shares
+NA
+137,848
+(II) Shareholdings of Top Ten Shareholders and Top Ten Holders of Marketable
+Shares (or Shareholders without Selling Restrictions) as at the end of the
+Reporting Period
+of shares
+Section VIII Changes in Shares and
+Particulars of Shareholders (Continued)
+with selling
+2.99
+0 594,718,004
+Reporting the Reporting
+Period
+China Securities Finance
+corporation
+Overseas
+Unknown N/A
+-186,882 3,369,078,025
+HKSCC NOMINEES LIMITED
+corporation
+Corporation Limited
+State-owned
+16.96
+0 Nil
+N/A
+Percentage
+Status Number
+Nature of
+shareholders
+restrictions
+%
+China Energy Investment
+Period
+0 13,812,709,196
+69.52
+information
+quarterly results and disclosed
+20 November Company conference
+room
+16
+No
+Company conference
+Oral
+7 November
+15
+No
+Oral
+room
+quarterly results and disclosed
+information
+Aegon-Industrial Fund Interpretation of the third
+GF Securities
+Name of Major Award
+No
+The Fourth Forum
+for Credit System
+Construction of Chinese
+Interpretation of the third
+Xinhua Credit Jinlan Cup-Pioneering
+Practice Case for ESG Corporate
+Governance
+Awarded by
+January 2023
+1
+Date of Award
+No.
+III. AWARDS OF CHINA SHENHUA IN 2023
+Section IX Investor Relations (Continued)
+212 China Shenhua Energy Company Limited
+information
+quarterly results and disclosed
+room
+Interpretation of the third
+Yinhua Fund
+Oral
+Company conference
+No
+Topsperity Securities Interpretation of interim results
+and disclosed information
+room
+20 September Company conference
+11
+fundamental information and
+disclosed information
+12
+room
+TF Securities
+Oral
+Company conference
+5 July
+Cities
+10
+Interpretation of the Company's No
+17 October
+Company conference
+Oral
+6 November
+14
+quarterly results and disclosed
+information
+room
+No
+Interpretation of the third
+Ping An Capital
+Oral
+Company conference
+2 November
+13
+No
+Interpretation of interim results
+and disclosed information
+room
+Capital Group
+Oral
+2
+September 2023
+Special Contribution Award for
+Energy Restructuring and Green
+Development
+2022 Hong Kong Stock Best
+Practice Award (Environment)
+A Share Best Practice Award
+(Environment)
+15
+September 2023
+14
+August 2023
+13
+A Share Best Practice Award
+in Energy Industry
+(A股能源行業最佳實踐獎)
+July 2023
+June 2023
+11
+June 2023
+10
+New Fortune
+Best Listed Company of The 5th
+New Fortune Award
+12
+Best Practice Award in Energy
+Industry of Hong Kong Stock
+Market (港股能源行業最佳實踐獎)
+2022 Ranking of Chinese Listed
+Companies by Market Value - Top
+5 in the Energy Industry
+Top 50 Listed Companies by
+Popularity among Institutions
+Top 50 Listed Companies by
+Market Capitalization
+Listed in China ESG Listed
+Company Pioneer 100
+(中國ESG上市公司先鋒100) List
+Rank 42nd among Fortune Top 500
+Listed Companies in China in 2023
+disclosed information
+Description of Changes of the Controlling Shareholder during the Reporting
+Period
+There were no changes of the controlling shareholder of the Company during the
+Reporting Period
+Diagram of the Equity and Controlling Relation between the Company and Its
+Controlling Shareholder at the end of the Reporting Period
+214 China Shenhua Energy Company Limited
+Forum
+The 6th China Enterprise
+SSE
+China National Coal
+Association
+Fortune
+China Media Group
+Wind ESG Rating
+Listed in Central SOES (ESG):
+Pioneer 100 Index
+(央企ESG•先鋒100指數)
+2022-2023 A-level Information
+Disclosure Work
+(信息披露工作A級評價)
+Outstanding CSR Report Release
+for Enterprises in Coal Industry
+May 2023
+January 2023
+9
+Name of Major Award
+May 2023
+8
+May 2023
+7
+May 2023
+6
+Listed in 2022 Forbes China TOP
+50 Sustainable Development
+Industrial Enterprises
+May 2023
+5
+May 2023
+4
+February 2023
+3
+Energy
+LO
+Forbes China
+Listed in Fortune China ESG Impact Fortune
+List
+Top Listed Energy Company by
+Date of Award
+Section VIII Changes in Shares and
+Particulars of Shareholders (Continued)
+No.
+Section IX Investor Relations (Continued)
+2023 Annual Report 213
+Companies
+Relations of Chinese Listed
+The 14th Tianma Award for Investor Securities Times
+P5w.net
+Hang Seng Indexes
+Company Limited
+China Council for Brand
+Development
+"Best IR Company" (IRA)
+"Best Corporate Communication
+Award”(最佳機構溝通獎)
+Investor Relations Gold Award
+of P5w.net (2022)
+The Company's H shares were
+included in the list of Hang
+Seng China Enterprises Index
+(HSCEI) and Hang Seng Stock
+Connect China Enterprises Index
+(HSSCCEI)
+2023 China Brand Value Evaluation
+Information
+Awarded by
+fundamental information and
+FOCUSING ON THE APPEALS OF INVESTORS TO IMPROVE THE QUALITY
+OF THE LISTED COMPANY
+room
+Section IX Investor Relations (Continued)
+2023 Annual Report 209
+Stick to the key tasks and strengthen the ability to perform due diligence and guarantee
+services. The Company continuously improved the level of information disclosure, adhered to
+the principle of "disclose information on a best-effort basis", disclosed major information of
+the Company in a proactive, timely and accurate manner, as a result of which, the information
+disclosure work of the Company was awarded Grade A by SSE for 10 consecutive years. Paying
+attention to improve the management's ability to perform duties, the Company strengthened
+the form and intensity of training and organized 26 training sessions for the Directors throughout
+the year. In order to improve the quality and efficiency of investor communication, the Company
+set up a special working group on investor communication to enhance the daily cooperation for
+supporting investor communication, improve the working mechanism, and guarantee overall
+service by drawing upon experience gained from key areas.
+PROVIDING GOOD SERVICES FOR INVESTORS TO PRESERVE IMAGE IN THE
+CAPITAL MARKET
+Implement the dividend policy and establish mutual trust and win-win investor relations.
+The Company attaches great importance to the return to shareholders. In the three-year
+shareholders return plan (2022-2024), the Company committed that the profit distribution in the
+form of cash dividends shall be no less than 60% of the net profit attributable to equity holders of
+the parent company, further increasing minimum percentage of dividends distribution. The Board
+recommended to pay a final dividend of RMB2.26 per share (tax inclusive) in 2023, RMB44,903
+million (tax inclusive) in total, accounting for approximately 75.2% of the net profit attributable to
+equity holders of the Company under the China Accounting Standards for Business Enterprises
+in 2023. Since its listing, the Company has distributed cash dividends (including final dividends
+for 2023) of RMB447.032 billion (tax inclusive) in total.
+Strengthen related transactions and prevent and resist risks. In 2023, the Company adjusted
+the caps for daily related party transactions such as the mutual coal supply agreement, the mutual
+supplies and services agreement and financial services agreement. During the preparation and
+formulation of the proposal, the Company fully respected and guaranteed the interests of all
+shareholders. The management of the Company communicated with the regulators and controlling
+shareholder oftentimes, explained the necessity and rationality of the transaction as well as the
+basis and principle for determining the cap to major public shareholders, so as to obtain the
+support from the shareholders. The Company strictly implemented the regulatory rules of the
+two markets to avoid the risk of non-compliance and strive to maximise profits.
+Stick to results briefings and consolidate the pertinence and effectiveness of results
+interpretation. In 2023, with the goal of improving the effect of investor communication, the
+Company held three high-quality results briefings, namely for the year 2022 and the first quarter of
+2023, the half year of 2023 and the third quarter of 2023 to explain the Company's current results
+and development plan in details and guide investors to accurately understand the Company's
+operation and establish reasonable expectations. In the three briefings, the Company replied
+to a total of 142 pre-meeting and on-site questions. In order to take into account investors'
+preferences to access information, facilitate investors to understand the Company's results,
+and improve the dissemination of results briefing materials, the Company prepared and released
+results documents, photos and interpretation video clips at SSE Roadshow Center to explain and
+interpret results, and selected production units to make a series of videos for cloud exhibition,
+adopting diversified and visual forms to continuously improve the results interpretation.
+II.
+208 China Shenhua Energy Company Limited
+"internal control evaluation method of the Company was selected by SASAC as an
+exemplary case of corporate governance. In 2023, the Company entered into the Supplemental
+Agreement II to the Non-competition Agreement with the controlling shareholder to commence
+the acquisition of two assets of the controlling shareholder, Dayan Mining and Hangjin Energy,
+which underscores regional advantages of integrated operations and a promising prospect for
+business growth.
+Strictly regulate the operation and enhance profitability. The Company continued consolidating
+the achievements of the three-year state-owned enterprise reform, and comprehensively
+strengthened the capability construction of risk prevention and control. The "Six in One* (
+Build up resilience of the industrial chain on the basis of core businesses. The management
+of the Company sized up the situation and formulated long-term development strategies to ensure
+the sustainable development of the Company. In 2023, the Company accelerated the acquisition
+and subsequent replenishment of high-quality coal resources, steadily promoted the construction
+of new power points, continued to maintain transportation channels in an unimpeded manner,
+and actively developed new energy business, so as to give full play to the role of state-owned
+enterprises in technological innovation, control of industry and safety support. With a view to
+realising carbon peak and carbon neutralization, the Company has established a low-carbon
+development leading group, formulated and implemented the 2023 Low Carbon Development
+Work Plan of China Shenhua* (+2023), and further promoted
+transformation and upgrade.
+I.
+In 2023, China Shenhua strictly implemented the requirements of the Securities Law of the PRC,
+the PRC Company Law, the Opinions of the State Council on Further Improving the Quality of Listed
+Companies* ( ‹¤¾ÀUÀ£ÀLAĦĦIKĦL)), the Work Guidelines for the Investor
+Relations Management of Listed Companies* ( KEDA¬RAZU)) and relevant laws
+and regulations and documents, aimed at improving the quality of the listed company, continuously
+stabilized production and operation, deepened reform and transformation, strengthened standardized
+operation, intensified capital market work, paid attention to the appeals of investors, ensured and
+safeguarded the legitimate rights and interests of investors, and unhindered communication between
+the board of directors and investors. The Company strengthened expectation management, continuously
+explored ways to improve investor relations management, and was committed to building harmonious
+investor relations and sharing the dividends of corporate development with shareholders.
+Section IX Investor Relations (Continued)
+Ensure responsibilities are duly fulfilled and make every effort to safeguard the legitimate
+rights and interests of investors. The Company attached great importance to investors'
+right to know and issued a total of 195 disclosure documents on the websites of SSE and the
+HKEx throughout the year. We made every effort to safeguard investors' right to participate
+and decision-making. In 2023, the Company held an annual general meeting and A shareholder
+class meeting and H shareholder class meeting. The management of the Company had in-
+depth communication with the participating shareholders and took on board their opinions and
+suggestions in relation to the Company's future development. More than 400 A shareholders
+participated in on-site and online voting on the resolutions, who fully discussed and voted on the
+resolutions submitted at the meeting and fully exercised their rights to participate in the major
+decision-making and corporate governance of the Company.
+Take proactive actions and continuously improve the service quality for investors. The
+Company strengthened the quality and efficiency of investor communication services, and further
+promoted a multi-level and constructive interaction mechanism to ensure effective response to
+investors' appeals. We ensured smooth communication through investor hotline, e-mail and SSE
+e-interactive, addressing investors' concerns and clarifying queries in a timely manner. Throughout
+the year, the Company answered 41 questions raised by investors on SSE e-interactive. The
+Company actively carried out publicity and education of investor protection, regularly conducted
+shareholder analysis and dispatched annual reports, ESG reports and other materials, gradually
+expanding the scope of investor service audience. Shareholders' concerns and demands were
+reported to the management and the Board of the Company in a timely manner so as to maintain
+two-way communication as well as establish a long-term mutual trust and win-win investment
+relationship between the Company and shareholders.
+210 China Shenhua Energy Company Limited
+Cinda Securities
+Oral
+Company conference
+6 January
+1
+Provided
+Information
+Main Content of
+Communication
+Name of
+Institution
+China Energy Investment Corporation Limited
+Way of
+Communication
+Location
+No. Date
+In 2023, the survey result of the Company's reception for investors was as follows:
+Section IX Investor Relations (Continued)
+Section IX Investor Relations
+room
+2023 Annual Report 207
+VII. DETAILED IMPLEMENTATION OF SHARE REPURCHASE
+2.
+State-owned Assets Supervision and
+Administration Commission of
+the State Council
+Name
+Legal Person
+1.
+(II) De Facto Controller
+3.
+Section VIII Changes in Shares and
+Particulars of Shareholders (Continued)
+China Shenhua Energy Company Limited
+0.04%
+China Energy Capital Holdings Co., Ltd.
+69.52%
+100%
+3.
+2023 Annual Report 205
+Description of Changes of the Control of the Company during the Reporting
+Period
+There were no changes of the de facto controller of the Company during the
+Reporting Period.
+Diagram of the Equity and Controlling Relation between the Company and Its
+De Facto Controller at the end of the Reporting Period
+☐ Applicable ✓ Not applicable
+VI. RESTRICTIONS ON THE REDUCTION IN SHAREHOLDING
+As at the end of the Reporting Period, there were no other corporate shareholders with
+shareholding of more than 10% in the Company.
+V. OTHER CORPORATE SHAREHOLDERS WITH SHAREHOLDING OF MORE
+THAN 10% IN THE COMPANY
+Section VIII Changes in Shares and
+Particulars of Shareholders (Continued)
+206 China Shenhua Energy Company Limited
+China Shenhua Energy Company Limited
+0.04%
+China Energy Capital Holdings Co., Ltd.
+69.52%
+100%
+China Energy Investment Corporation Limited
+100%
+of the State Council
+State-owned Assets Supervision and
+Administration Commission
+☐ Applicable ✓ Not applicable
+Interpretation of the Company's No
+Interpretation of the Company's No
+fundamental information and
+2
+Company conference
+17 May
+8
+No
+Interpretation of the contents
+disclosed in the annual report
+and the first quarterly report
+room
+Oral
+CITIC Securities
+Company conference
+7 16 May
+No
+Interpretation of the contents
+disclosed in the annual report
+and the first quarterly report
+room
+Industrial Securities
+Oral
+Fidelity International
+room
+Interpretation of the contents
+disclosed in the annual report
+and the first quarterly report
+Huatai Securities
+Oral
+Company conference
+8 June
+9
+Information
+Provided
+Main Content of
+Communication
+Name of
+Institution
+Way of
+Communication
+Location
+Date
+No.
+Section IX Investor Relations (Continued)
+2023 Annual Report 211
+No
+Oral
+periodic reports
+Company conference
+6
+room
+Mizuho Securities
+Oral
+Company conference
+18 April
+3
+Interpretation of information
+contained in the annual report
+fundamental information and
+periodic reports
+No
+Interpretation of the Company's
+TF Securities
+Oral
+Company conference
+1 February
+room
+No
+4
+10 May
+No
+Interpretation of the contents
+disclosed in the annual report
+and the first quarterly report
+room
+Guosheng Securities
+Oral
+Company conference
+10 May
+5
+disclosed in the annual report
+and the first quarterly report
+room
+No
+Interpretation of the contents
+Haitong Securities
+Oral
+Company conference
+10 May
+2.
+Key audit matter
+Key audit matter
+October 2023
+17
+September 2023
+16
+Name of Major Award
+Date of Award
+No.
+Section IX Investor Relations (Continued)
+Revenue is one of the key performance indicators
+of the Group. We identified the timing of coal
+revenue recognition as a key audit matter because
+of the different terms of trade of coal offered by
+the Group to its customers which increases the
+risk that revenue could be recorded in the incorrect
+period or could be subject to manipulation to meet
+targets or expectations.
+How our audit addressed the key audit matter
+18
+Our audit procedures to assess the timing of
+revenue recognition from the sale of coal included
+the following:
+inspecting coal sale contracts on a sample
+basis, to identify terms and conditions
+relating to transfer of the control of the
+coal and assessing the Group's timing of
+revenue recognition with reference to the
+requirements of the prevailing accounting
+standards;
+obtaining confirmations, on a sample basis,
+from customers of the Group in relation to
+coal sales transactions during the year and
+balances of trade receivables of the year end
+and, for unreturned confirmations, performing
+alternative procedures by comparing the sales
+amount of the transactions with relevant
+underlying documentation or cash receipts
+subsequent to the financial year end relating
+to trade receivable balances;
+220 China Shenhua Energy Company Limited
+Section X Independent Auditor's Report and Financial
+Statements (Continued)
+KEY AUDIT MATTERS (CONTINUED)
+Timing of revenue recognition from sale of coal (continued)
+Refer to Note 5 to the consolidated financial statements and the accounting policies in Note 3.
+How our audit addressed the key audit matter
+comparing, on a sample basis, whether
+specific coal sales transactions recorded
+before and after the financial year end date
+with relevant underlying documentation, which
+included sales invoices, goods dispatch notes,
+customer receipts, or shipping documents,
+as applicable under the respective sales
+transactions contracts, to determine whether
+the related revenue had been recognised in the
+appropriate financial period on the basis of the
+terms of sale as set out in the respective sales
+contracts; and
+inspecting underlying documentation for journal
+entries relating to coal sales which were
+considered to meet specific risk-based criteria.
+obtaining an understanding of and assessing
+the design, implementation and operating
+effectiveness of key internal controls over
+revenue recognition from the sale of coal;
+November 2023
+19
+November 2023
+November 2023
+20
+20
+China Securities Journal
+China Association for
+Public Companies
+China Association for
+Public Companies
+Phoenix Satellite
+Television Group
+Top 50 State-owned Enterprises
+(ESG金牛獎央企五十強)
+ESG Golden Bull Award for
+(ESG 金牛獎百強)
+Top 100 ESG Golden Bull Award
+Award (港股金牛獎)
+Hong Kong Stock Golden Bull
+Best Investment Value Award
+(最具投資價值獎)
+Gold Bull Awards
+The 25th Listed Company
+Best Practice Cases
+(上市公司ESG最佳實踐案例)
+Excellent Practice Cases Award
+(優秀實踐案例)
+2023 Listed Companies' ESG
+2023 Corporate Governance Best
+Practices(公司治理最佳實踐案例)
+(鳳凰之星港股最佳股東回報
+上市公司)
+Listed Company of Phoenix Star
+2023 Best Return to Shareholders
+in Hong Kong Stock Exchange
+Awarded by
+INFORMATION OTHER THAN THE CONSOLIDATED FINANCIAL STATEMENTS
+AND AUDITOR'S REPORT THEREON
+The directors are responsible for the other information. The other information comprises all the
+information included in the annual report, other than the consolidated financial statements and our
+auditor's report thereon.
+Our opinion on the consolidated financial statements does not cover the other information and we do
+not express any form of assurance conclusion thereon.
+In connection with our audit of the consolidated financial statements, our responsibility is to read the
+other information and, in doing so, consider whether the other information is materially inconsistent
+with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears
+to be materially misstated.
+8th Floor, Prince's Building
+10 Chater Road
+Central, Hong Kong
+22 March 2024
+2023 Annual Report 223
+Consolidated Statement of Profit or Loss and
+Other Comprehensive Income
+For the year ended 31 December 2023
+(Expressed in Renminbi ("RMB"))
+Year ended 31 December
+2023
+Notes
+RMB million
+2022
+RMB million
+(Restated)
+Revenue
+Goods and services
+Cost of sales
+5 7
+343,074
+(232,537)
+344,533
+(226,624)
+Gross profit
+110,537
+117,909
+Selling expenses
+Certified Public Accountants
+Top 100 Most Valuable Companies
+KPMG
+From the matters communicated with the Audit Committee, we determine those matters that were
+of most significance in the audit of the consolidated financial statements of the current period and
+are therefore the key audit matters. We describe these matters in our auditor's report unless law or
+regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
+determine that a matter should not be communicated in our report because the adverse consequences of
+doing so would reasonably be expected to outweigh the public interest benefits of such communication.
+If, based on the work we have performed, we conclude that there is a material misstatement of this
+other information, we are required to report that fact. We have nothing to report in this regard.
+2023 Annual Report 221
+Section X Independent Auditor's Report and Financial
+Statements (Continued)
+RESPONSIBILITIES OF THE DIRECTORS FOR THE CONSOLIDATED FINANCIAL
+STATEMENTS
+The directors are responsible for the preparation of the consolidated financial statements that give a
+true and fair view in accordance with IFRSS issued by the IASB and the disclosure requirements of the
+Hong Kong Companies Ordinance and for such internal control as the directors determine is necessary
+to enable the preparation of consolidated financial statements that are free from material misstatement,
+whether due to fraud or error.
+In preparing the consolidated financial statements, the directors are responsible for assessing the
+Group's ability to continue as a going concern, disclosing, as applicable, matters related to going
+concern and using the going concern basis of accounting unless the directors either intend to liquidate
+the Group or to cease operations, or have no realistic alternative but to do so.
+The directors are assisted by the Audit Committee in discharging their responsibilities for overseeing
+the Group's financial reporting process.
+AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED
+FINANCIAL STATEMENTS
+Our objectives are to obtain reasonable assurance about whether the consolidated financial statements
+as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's
+report that includes our opinion. This report is made solely to you, as a body, and for no other purpose.
+We do not assume responsibility towards or accept liability to any other person for the contents of
+this report.
+Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in
+accordance with HKSAs will always detect a material misstatement when it exists. Misstatements
+can arise from fraud or error and are considered material if, individually or in the aggregate, they could
+reasonably be expected to influence the economic decisions of users taken on the basis of these
+consolidated financial statements.
+As part of an audit in accordance with HKSAs, we exercise professional judgement and maintain
+professional skepticism throughout the audit. We also:
+Identify and assess the risks of material misstatement of the consolidated financial statements,
+whether due to fraud or error, design and perform audit procedures responsive to those risks,
+and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The
+risk of not detecting a material misstatement resulting from fraud is higher than for one resulting
+from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or
+the override of internal control.
+Obtain an understanding of internal control relevant to the audit in order to design audit
+procedures that are appropriate in the circumstances but not for the purpose of expressing an
+opinion on the effectiveness of the Group's internal control.
+Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
+estimates and related disclosures made by the directors.
+222
+China Shenhua Energy Company Limited
+Section X Independent Auditor's Report and Financial
+Statements (Continued)
+AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED
+FINANCIAL STATEMENTS (CONTINUED)
+Conclude on the appropriateness of the directors' use of the going concern basis of accounting
+and, based on the audit evidence obtained, whether a material uncertainty exists related to
+events or conditions that may cast significant doubt on the Group's ability to continue as a going
+concern. If we conclude that a material uncertainty exists, we are required to draw attention
+in our auditor's report to the related disclosures in the consolidated financial statements or, if
+such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
+evidence obtained up to the date of our auditor's report. However, future events or conditions
+may cause the Group to cease to continue as a going concern.
+Evaluate the overall presentation, structure and content of the consolidated financial statements,
+including the disclosures, and whether the consolidated financial statements represent the
+underlying transactions and events in a manner that achieves fair presentation.
+Obtain sufficient appropriate audit evidence regarding the financial information of the entities
+or business activities within the Group to express an opinion on the consolidated financial
+statements. We are responsible for the direction, supervision and performance of the Group
+audit. We remain solely responsible for our audit opinion.
+We communicate with the Audit Committee regarding, among other matters, the planned scope and
+timing of the audit and significant audit findings, including any significant deficiencies in internal control
+that we identify during our audit.
+We also provide the Audit Committee with a statement that we have complied with relevant ethical
+requirements regarding independence and communicate with them all relationships and other matters
+that may reasonably be thought to bear on our independence and, where applicable, actions taken to
+eliminate threats or safeguards applied.
+The engagement partner on the audit resulting in the independent auditor's report is Guen Kin Shing.
+Securities Times
+21
+224
+Key audit matter
+Refer to Note 11 (ii) to the consolidated financial statements and the accounting policies in Note 3.
+assets
+Impairment assessment on property, plant and equipment, construction in progress, exploration
+and evaluation assets, intangible assets and applicable right-of-use assets and other non-current
+KEY AUDIT MATTERS (CONTINUED)
+Section X Independent Auditor's Report and Financial
+Statements (Continued)
+2023 Annual Report 217
+Key audit matters are those matters that, in our professional judgement, were of most significance in
+our audit of the consolidated financial statements of the current period. These matters were addressed
+in the context of our audit of the consolidated financial statements as a whole, and in forming our
+opinion thereon, and we do not provide a separate opinion on these matters.
+KEY AUDIT MATTERS
+We conducted our audit in accordance with Hong Kong Standards on Auditing ("HKSAS") issued by
+the Hong Kong Institute of Certified Public Accounts ("HKICPA"). Our responsibilities under those
+standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated
+Financial Statements section of our report. We are independent of the Group in accordance with the
+HKICPA's Code of Ethics for Professional Accountants (the "Code"), and we have fulfilled our other
+ethical responsibilities in accordance with the Code. We believe that the audit evidence we have
+obtained is sufficient and appropriate to provide a basis for our opinion.
+BASIS FOR OPINION
+In our opinion, the consolidated financial statements give a true and fair view of the consolidated
+financial position of the Group as at 31 December 2023, and of its consolidated financial performance
+and its consolidated cash flows for the year then ended in accordance with International Financial
+Reporting Standards ("IFRSS") issued by the International Accounting Standard Board ("IASB") and have
+been properly prepared in compliance with the disclosure requirements of the Hong Kong Companies
+Ordinance.
+We have audited the consolidated financial statements of China Shenhua Energy Company Limited and
+its subsidiaries (collectively referred to as the "Group") set out on pages 224 to 353, which comprise
+the consolidated statement of financial position as at 31 December 2023, and the consolidated
+statement of profit or loss and other comprehensive income, the consolidated statement of changes
+in equity and the consolidated statement of cash flows for the year then ended and notes, comprising
+material accounting policy information and other explanatory information.
+OPINION
+(Incorporated in the People's Republic of China with limited liability)
+China Shenhua Energy Company Limited
+Independent auditor's report to the members of
+KPMG
+Financial Statements
+Section X Independent Auditor's Report and
+Caijing Magazine
+Securities Daily
+Sustainability Inclusion Award
+As at 31 December 2023, the Group's property,
+plant and equipment, construction in progress,
+exploration and evaluation assets, intangible
+assets and applicable right-of-use assets and other
+non-current assets had a total carrying value of
+RMB371,039 million.
+216 China Shenhua Energy Company Limited
+In accordance with the prevailing accounting
+standards, management performed assessment
+at the end of the reporting period to determine
+whether there was any indication that these
+non-current assets may be impaired. An asset
+is impaired when its recoverable amount, or the
+recoverable amount of the cash generating unit to
+which it belongs, is less than its carrying amount.
+How our audit addressed the key audit matter
+Refer to Note 5 to the consolidated financial statements and the accounting policies in Note 3.
+Timing of revenue recognition from sale of coal
+KEY AUDIT MATTERS (CONTINUED)
+Section X Independent Auditor's Report and Financial
+Statements (Continued)
+2023 Annual Report 219
+assessing the relevant disclosures in the
+consolidated financial statements in respect
+of management's impairment assessment
+with reference to the requirements of the
+prevailing accounting standards.
+evaluating the sensitivity analysis on discount
+rates and considering the resulting impact
+on the impairment assessment for the year
+and whether there were any indicators of
+management bias; and
+evaluating the historical accuracy of
+management's forecasts by comparing cash
+flow forecasts made in previous periods to
+the actual results in the current year;
+When the management determines the
+recoverable amount by using the value in use
+calculations that based on future discounted
+cash flows, engaging our internal valuation
+specialists to assess whether the discount
+rates applied in the value in use calculations
+were within the reasonable range;
+How our audit addressed the key audit matter
+We identified impairment assessment on property,
+plant and equipment, construction in progress,
+exploration and evaluation assets, intangible
+assets and applicable right-of-use assets and other
+non-current assets as a key audit matter due to
+these assets to the Group's consolidated financial
+statements, the significant judgement made by
+management in determining the recoverable
+amounts of the assets and considering the
+possibility of management bias in the selection of
+assumptions adopted.
+As set out in Note 11 (ii) to the consolidated
+financial statements, management concluded
+that impairment provisions for property, plant and
+equipment, construction in progress, exploration
+and evaluation assets, intangible assets and
+applicable right-of-use assets and other non-
+current assets of RMB3,003 million were required
+for the current year.
+When assessing the recoverable amounts,
+management is required to make a number of
+judgemental assumptions, particularly relating to
+the discount rates, the underlying cash flows
+projection based on the future market supply and
+demand conditions. Any changes in management's
+judgement may impact the results of the
+impairment assessment.
+Key audit matter
+Refer to Note 11 (ii) to the consolidated financial statements and the accounting policies in Note 3.
+Impairment assessment on property, plant and equipment, construction in progress, exploration
+and evaluation assets, intangible assets and applicable right-of-use assets and other non-current
+assets (continued)
+KEY AUDIT MATTERS (CONTINUED)
+Section X Independent Auditor's Report and Financial
+Statements (Continued)
+218 China Shenhua Energy Company Limited
+challenging the reasonableness of significant
+judgements and estimates, such as sales
+growth rate related to future market supply
+and demand conditions, future sales
+price, future capital expenditure, future
+operating costs and discount rates used in
+management's calculation of value in use
+based on our knowledge of the business and
+industry;
+assessing the appropriateness of the
+methodologies used by management to
+estimate value in use with reference to the
+requirements of the prevailing accounting
+standards;
+obtaining an understanding of and assessing
+the design, implementation and operating
+effectiveness of key internal controls relating
+to impairment assessment on these non-
+current assets, understanding of the Group's
+procedures to identify impairment indicators
+of these non-current assets and evaluating
+management's identification of impairment
+indicators, if any, based on the internal
+sources and external sources of information;
+Our procedures in relation to impairment
+assessment on property, plant and equipment,
+construction in progress, exploration and evaluation
+assets, intangible assets and applicable right-of-
+use assets and other non-current assets included:
+As at 31 December 2023, management performed
+an impairment assessment on assets or assets
+group with indications of impairment on the
+balance sheet date. The recoverable amounts of
+these non-current assets is determined based on
+the higher of value in use that based on future
+discounted cash flows on a cash generating unit
+basis and the net value of the assets or assets
+group's fair value minus disposal costs.
+(425)
+2023 Evergreen Award
+28
+AA-Level Top 100 Best ESG
+December 2023
+24
+Special Contribution Award
+China's Top 100 Enterprises with
+China's Top 100 Enterprises Award
+China's Most Ethical
+Enterprises Award
+December 2023
+23
+223
+Ranking 20 of 2023 Top 100
+Beijing Listed Enterprises
+December 2023
+22
+Name of Major Award
+Date of Award
+No.
+Section IX Investor Relations (Continued)
+2023 Annual Report 215
+China Enterprise Reform
+and Development
+Society
+2023 Outstanding Achievements
+in Reform and Development of
+Chinese Enterprises
+(中國企業改革發展優秀成果)
+the PRC Listed Companies
+the 17th Value Selection of
+Listed on the Main Board
+(主板上市公司價值100強)by
+December 2023
+25
+December 2023
+December 2023
+Beijing Enterprise
+Confederation
+2023 ESG Pioneer
+December 2023
+27
+22
+High-quality Development
+Outstanding Listed Company of
+ESG Information Disclosure
+Best Listed Company for
+ESG Practice
+Best Listed Company for
+International Finance
+Forum (Hong Kong)
+Awards
+China Securities Golden Bauhinia
+December 2023
+26
+Public Companies
+2023 Best Practice Award of Office China Association for
+of Board of Directors
+Practices among Chinese Listed
+Companies
+Wind ESG Rating
+China Business Top 100
+Forum
+Companies Association
+Beijing Listed
+Beijing Entrepreneurs
+Association
+Awarded by
+(410)
+instruments at fair value through other
+(9,812)
+Items that may be reclassified subsequently to profit or
+loss, net of income tax:
+326
+160
+Share of other comprehensive income of associates
+219
+96
+comprehensive income
+Fair value changes on investments in equity
+85,398
+75,192
+net of income tax:
+Items that will not be reclassified to profit or loss,
+Other comprehensive income for the year
+Profit for the year
+85,398
+Exchange differences
+75,192
+192
+Fair value changes on investments in debt
+General and administrative expenses
+Sale of coal accounted for 65% of the Group's
+revenue for the year ended 31 December 2023.
+Sale of coal is recognised when the control of the
+coal is transferred to the customer. Management
+evaluates the terms of individual contracts in order
+to determine the appropriate timing for revenue
+recognition, which varies amongst contracts.
+224 China Shenhua Energy Company Limited
+86,838
+75,651
+1,440
+Total comprehensive income for the year
+net of income tax
+Other comprehensive income for the year,
+(7)
+11
+Share of other comprehensive income of associates
+4
+comprehensive income
+instruments at fair value through other
+898
+11
+459
+(14,256)
+(1,337)
+(285)
+11
+Loss allowances, net of reversal
+1,100
+1,272
+Other income
+(3,184)
+(3,583)
+11
+(3,722)
+(3,007)
+Research and development costs
+Profit for the year
+(9,930)
+Other expenses
+Interest income
+Other gains and losses
+(2,136)
+(5,003)
+Income tax expense
+99,654
+Profit before income tax
+2,223
+3,565
+Share of results of associates
+92,776
+(3,117)
+Finance costs
+(3,930)
+(17,584)
+66
+10
+2,634
+3,071
+19,858
+25
+12,096
+12,100
+24
+24
+414,270
+434,461
+Financial assets at fair value through other
+Accounts and bills receivables
+Inventories
+Current assets
+12,846
+22
+5,019
+5,301
+29
+28,905
+27,070
+22
+Deferred tax assets
+Other non-current assets
+2,386
+2,486
+21
+comprehensive income
+other comprehensive income
+Equity instruments at fair value through
+Total non-current assets
+21
+131,458
+502
+3,657
+49,714
+371
+25,782
+(20,415)
+282,907 396,937
+65,785
+462,722
+Impact on initial application
+Accounts and bills payables
+Borrowings
+Current liabilities
+211,050
+198,951
+Total current assets
+108,174
+28
+Cash and cash equivalents
+32,688
+34,514
+Time deposits with original maturity over three months
+6,357
+7,298
+27
+Restricted bank deposits
+15,849
+16,007
+26
+Prepaid expenses and other current assets
+254
+55,635
+15
+23,994
+84,766
+- Basic/diluted (RMB)
+Earnings per share
+86,838
+75,651
+12,654
+10,614
+74,184
+65,037
+85,398
+75,192
+12,473
+10,567
+72,925
+64,625
+(Restated)
+RMB million
+RMB million
+Notes
+2022
+2023
+Year ended 31 December
+Non-controlling interests
+for the year attributable to:
+Equity holders of the Company
+Total comprehensive income
+Profit for the year attributable to:
+Equity holders of the Company
+Non-controlling interests
+(Expressed in RMB)
+For the year ended 31 December 2023
+Consolidated Statement of Profit or Loss and
+Other Comprehensive Income (Continued)
+3.253
+24,023
+3.670
+2023 Annual Report 225
+23
+4,059
+4,662
+19
+5,218
+5,519
+18
+20,843
+18,955
+17
+274,103
+290,839
+16
+678022
+Interests in associates
+Right-of-use assets
+Intangible assets
+Exploration and evaluation assets
+Construction in progress
+Property, plant and equipment
+RMB million
+(Restated)
+2022
+31 December
+RMB million
+Notes
+31 December
+2023
+Non-current assets
+At 31 December 2023
+(Expressed in RMB)
+Consolidated Statement of Financial Position
+The notes on pages 234 to 353 form part of these financial statements.
+19,869
+396,983
+RMB million RMB million RMB million RMB million
+91,585
+98,404
+Net current assets
+107,366
+112,646
+Total assets less current liabilities
+541,827
+526,916
+226 China Shenhua Energy Company Limited
+Consolidated Statement of Financial Position (Continued)
+At 31 December 2023
+(Expressed in RMB)
+Non-current liabilities
+31 December
+2023
+Notes
+RMB million
+31 December
+2022
+RMB million
+(Restated)
+Borrowings
+Bonds
+31
+Long-term liabilities
+Accrued reclamation obligations
+Deferred tax liabilities
+Lease liabilities
+33323
+30
+29,636
+Total current liabilities
+38,438
+5,597
+Contract liabilities
+12, Income Taxes:
+Other comprehensive income
+Profit for the year
+At 1 January 2023
+single transaction (Note 2)
+and liabilities arising from a
+Deferred tax related to assets
+Accrued expenses and other payables
+Current portion of lease liabilities
+Current portion of long-term liabilities
+331
+30
+4,622
+12,630
+33
+38,901
+38,972
+34
+30,613
+34,724
+32
+300
+297
+35
+5,184
+674
+Income tax payable
+4,757
+5,510
+7,208
+At 31 December 2022
+2,972
+35
+Lv Zhiren
+Executive Director
+Xu Mingjun
+Executive Director
+The notes on pages 234 to 353 form part of these financial statements.
+2023 Annual Report 227
+Consolidated Statement of Changes in Equity
+For the year ended 31 December 2023
+(Expressed in RMB)
+Equity attributable to equity holders of the Company
+Share
+capital
+Share
+premium
+Capital
+reserve
+(Note 37)
+RMB million RMB million
+(Note (i))
+Statutory
+reserves
+RMB million RMB million RMB million
+(Note (ii))
+(Note (iii))
+Exchange
+Other
+Retained
+reserve
+reserves
+earnings
+RMB million
+(Note (iv))
+(Note (v))
+Non-
+controlling
+Total
+Total
+interests
+equity
+Approved and authorised for issue by the board of directors on 22 March 2024.
+3,453
+462,796
+65,813
+15,125
+10,613
+36
+8,780
+9,005
+29
+1,137
+1,166
+1,332
+1,445
+Other non-current liabilities
+1,194
+Total non-current liabilities
+60,176
+64,120
+Net assets
+Equity
+Share capital
+Reserves
+Equity attributable to equity holders of the Company
+Non-controlling interests
+Total equity
+481,651
+462,796
+37
+19,869
+391,609
+19,869
+377,114
+411,478
+70,173
+481,651
+of amendments to IAS
+56
+Total comprehensive income
+2,794
+(931)
+(Decrease)/increase in accounts and bills payables
+(319)
+(2,032)
+Increase in prepaid expenses and other assets
+523
+(8,476)
+(Increase)/decrease in accounts and bills receivables
+48
+(1,438)
+(Increase)/decrease in inventories
+Changes in working capital:
+125,855
+118,345
+Operating cash flows before movements in working capital
+(176)
+(53)
+Other income
+564
+85
+Exchange loss, net (Note 9)
+1,337
+3,338
+Increase in accrued expenses and other liabilities
+1,256
+1,100
+Increase/(decrease)/in contract liabilities
+(36,103)
+(981)
+Increase in right-of-use assets
+RMB million
+2022
+RMB million
+Year ended 31 December
+2023
+exploration and evaluation assets, construction in progress
+and other non-current assets
+Additions of property, plant and equipment, intangible assets,
+Investing activities
+(Expressed in RMB)
+For the year ended 31 December 2023
+285
+2,989
+Consolidated Statement of Cash Flows (Continued)
+109,734
+89,687
+Net cash generated from operating activities
+(19,000)
+(18,648)
+Income tax paid
+128,734
+108,335
+Cash generated from operations
+(1,267)
+1,611
+2023 Annual Report 231
+(26,865)
+Interest expenses
+(2,223)
+486
+413
+Amortisation of intangible assets (Note 11)
+849
+834
+Depreciation of right-of-use assets (Note 11)
+20,626
+20,851
+Depreciation of property, plant and equipment (Note 11)
+Adjustments for:
+99,654
+92,776
+Profit before income tax
+RMB million
+RMB million
+2022
+Year ended 31 December
+2023
+(Expressed in RMB)
+For the year ended 31 December 2023
+Consolidated Statement of Cash Flows
+Operating activities
+230 China Shenhua Energy Company Limited
+The notes on pages 234 to 353 form part of these financial statements.
+Amortisation of long-term deferred expenses (Note 11)
+Losses/(gains) on disposal of property, plant and equipment,
+intangible assets and non-current assets (Note 11)
+Gains on disposal of subsidiaries and associates (Note 11)
+Impairment losses on property, plant and equipment (Note 11)
+Impairment losses on construction in progress (Note 11)
+Impairment losses on intangible assets (Note 11)
+2,781
+1,287
+71
+(3,565)
+Share of results of associates
+(3,071)
+(2,634)
+Interest income (Note 9)
+489
+688
+Write-down of inventories (Note 11)
+47
+Impairment losses on other non-current assets (Note 11)
+(6)
+Loss allowances, net of reversal (Note 11)
+Reversal of allowance for prepaid expenses (Note 11)
+Impairment losses on goodwill (Note 11)
+201
+136
+Impairment losses on right-of-use assets (Note 11)
+348
+3
+86
+2,151
+2,782
+(179)
+(188)
+30
+Included in the retained earnings of the Group were its share of the surplus reserve of its domestic subsidiaries amounted
+to RMB32,249 million as at 31 December 2023 (31 December 2022: RMB29,631 million).
+(1,819)
+1,501
+(78,734)
+(76,131)
+Net cash used in financing activities
+(50,466)
+(50,665)
+Dividend paid to equity holders of the Company (Note 14)
+(8,919)
+(6,781)
+Distributions to non-controlling shareholders
+1,669
+574
+Contributions from non-controlling shareholders
+(10,004)
+-
+interest in subsidiaries
+Consideration for acquisition of non-controlling
+1,040
+(77)
+(36,424)
+(29,628)
+(660)
+724
+Proceeds from bills discounted
+Redemption of bonds (Note 28(b))
+27,653
+Decrease in cash and cash equivalents
+(23,418)
+(25,585)
+Cash and cash equivalents, at the beginning of the year
+for the year
+234 China Shenhua Energy Company Limited
+In 2007, the Company issued 1,800,000,000 A shares with a par value of RMB1.00 each, at a price
+of RMB36.99 per A share in the PRC. The A shares were listed on the Shanghai Stock Exchange.
+In 2005, the Company issued 3,089,620,455 H shares with a par value of RMB1.00 each, at a
+price of Hong Kong Dollars ("HKD") 7.50 per H share by way of a global initial public offering.
+In addition, 308,962,045 domestic state-owned ordinary shares of RMB1.00 each owned by
+Shenhua Group were converted into H shares. A total of 3,398,582,500 H shares were listed on
+The Stock Exchange of Hong Kong Limited.
+On 8 November 2004, in consideration for Shenhua Group transferring the coal mining and power
+generating assets and liabilities to the Company, the Company issued 15,000,000,000 domestic
+state-owned ordinary shares with a par value of RMB1.00 each to Shenhua Group. The shares
+issued to Shenhua Group represented the entire registered and paid-up share capital of the
+Company at that date.
+Effective on 31 December 2003, the coal production and power generation operations previously
+operated by various entities wholly-owned or controlled by Shenhua Group were restructured
+and managed separately (the "Restructuring"), and those assets and liabilities related to the
+operations and businesses that were transferred to the Company were revalued by China
+Enterprise Appraisal Co., Ltd., an independent valuer registered in the PRC, as at 31 December
+2003 as required by the PRC rules and regulations.
+The Company was established in the PRC on 8 November 2004 as a joint stock limited company
+as part of the Restructuring (as defined below) of Shenhua Group, a state-owned enterprise under
+the direct supervision of the State Council of the PRC.
+Organisation
+China Shenhua Energy Company Limited (the "Company") and its subsidiaries (hereinafter
+collectively referred to as the "Group") are principally engaged in: (i) the production and sale
+of coal; and (ii) the generation and sale of coal-based power to provincial/regional electric grid
+companies in the People's Republic of China (the "PRC"). The Group operates an integrated
+railway network and seaports that are primarily used to transport the Group's coal sales from its
+mines. The primary customers of the Group's coal sales include power plants, metallurgical and
+coal chemical producers in the PRC.
+Principal activities
+1. PRINCIPAL ACTIVITIES AND ORGANISATION
+12,926
+(Expressed in RMB)
+Notes to the Consolidated Financial Statements
+2023 Annual Report 233
+The notes on pages 234 to 353 form part of these financial statements.
+131,458
+108,174
+Cash and cash equivalents, at the end of the year
+337
+134
+Effect of foreign exchange rate changes
+156,706
+131,458
+For the year ended 31 December 2023
+Proceeds from disposal of property, plant and equipment,
+intangible assets and other non-current assets
+(2,925)
+Repayments of borrowings (Note 28(b))
+Maturity of time deposits with original maturity
+(38,998)
+(69,047)
+over three months
+Placing of time deposits with original maturity
+(1,878)
+(941)
+Increase in restricted bank deposits
+2,796
+3,312
+Interest received
+1,075
+854
+Dividend received from associates
+294
+held for sale
+Net cash received from disposal of assets classified as
+19
+Net cash received from disposal of subsidiaries
+(519)
+(3,345)
+Investments in associates
+1,236
+over three months
+67,221
+8,011
+Repayment of investment from associates
+Proceeds from borrowings (Note 28(b))
+Interest paid (Note 28(b))
+(43)
+(25)
+(238)
+(142)
+Capital element of lease rentals paid (Note 28(b))
+Interest element of lease rentals paid (Note 28(b))
+Financing activities
+RMB million
+2022
+RMB million
+(2,454)
+2023
+(Expressed in RMB)
+For the year ended 31 December 2023
+Consolidated Statement of Cash Flows (Continued)
+(56,585)
+(36,974)
+232 China Shenhua Energy Company Limited
+Net cash used in investing activities
+82
+78
+Collection of other current assets
+458
+Year ended 31 December
+Retained earnings
+52
+Other reserves mainly represents the consideration paid for acquisition of subsidiaries under common control, acquisition
+of non-controlling interests in subsidiaries and share of other reserves of associates.
+RMB million
+(Note (i))
+(Note 37)
+(v)
+reserve
+premium
+Capital Exchange
+Share
+Share
+capital
+Equity attributable to equity holders of the Company
+For the year ended 31 December 2023
+Consolidated Statement of Changes in Equity (Continued)
+228 China Shenhua Energy Company Limited
+481,651
+70,173
+(19,981) 291,640 411,478
+31,010
+517
+3,657
+84,766
+19,869
+At 31 December 2023
+261
+138
+Statutory
+reserves
+RMB million RMB million RMB million
+Other
+Retained
+reserve
+379,853
+263,786
+(14,316)
+22,425
+(334)
+3,657
+84,766
+19,869
+(Restated)
+At 31 December 2021
+RMB million RMB million RMB million RMB million
+123
+equity
+Total
+Total
+controlling
+Non-
+(Expressed in RMB)
+(Note (v))
+(Note (iv))
+(Note (iii)))
+(Note (ii))
+earnings
+reserves
+RMB million
+interests
+(45)
+168
+(185)
+459
+47
+412
+75,192
+10,567
+64,625
+64,625
+266
+46
+146
+16
+266
+146
+65,813
+396,983
+282,953
+25,782 (20,415)
+371
+3,657
+84,766
+19,869
+---- 46 46 28 74
+Dividend declared (Note 14)
+for the year
+462,796
+69,143
+64,625
+10,614
+(185)
+(6,781)
+(6,781)
+Others
+Disposal of subsidiaries
+shareholders
+Distributions to non-controlling
+574
+574
+non-controlling shareholders
+Contributions from
+65,037
+4,392
+production funds (Note (iii)
+Utilisation of maintenance and
+(9,620)
+9,620
+(Note (iii))
+and production funds
+Appropriation of maintenance
+(50,665)
+(50,665)
+(50,665)
+75,651
+(4,392)
+448,996
+RMB million
+of amendments to IAS 12,
+84,766
+19,869
+(Restated)
+At 31 December 2022
+92
+6
+(14,629)
+(14,629)
+1,936
+1,936
+86
+41
+1
+GT
+45
+(10,004)
+(3,306)
+(6,698)
+(50,466)
+(6,698)
+Others
+shareholders
+Distributions to non-controlling
+3,657
+371
+25,782
+(20,415) 282,953 396,983
+Other reserves
+(iv)
+The directors of the Company (the "Directors") have not proposed any appropriation to the discretionary surplus reserve
+in 2023 and 2022.
+The appropriation to the discretionary surplus reserve is subject to the shareholders' approval. The utilisation of the
+reserve is similar to that of the statutory surplus reserve.
+Discretionary surplus reserve
+Pursuant to the relevant PRC regulations, the Group is required to transfer production and maintenance funds at fixed
+rates based on relevant bases, such as production volume, to a specific reserve account. The production and maintenance
+funds could be utilised when expenses or capital expenditures on production maintenance and safety measures are
+incurred. The amount of production and maintenance funds utilised would be transferred from the specific reserve
+account to retained earnings.
+Specific reserve for maintenance and production funds
+Statutory surplus reserve can be used to make up losses, if any, or to expand the Company's business, and may be
+converted into share capital by the issue of new shares to shareholders in proportion to their existing shareholdings or
+by increasing the par value of the shares currently held by them, provided that the balance after such issue is not less
+than 25% of the registered capital of the Company. The statutory surplus reserve is not distributable.
+The statutory surplus reserve has reached 50% of the registered capital in 2009. Accordingly, no appropriation of net
+profit to the statutory surplus reserve has been proposed since 1 January 2010.
+According to the PRC Company Law and the Company's Articles of Association, the Company is required to transfer
+10% of its net profit as determined in accordance with the China Accounting Standards for Business Enterprises ("China
+Accounting Standards") to its statutory surplus reserve until the reserve balance reaches 50% of the registered capital.
+The transfer to this reserve must be made before distribution of a dividend to shareholders.
+Statutory surplus reserve
+non-controlling shareholders
+Statutory reserves
+The capital reserve represents the difference between the total amount of the par value of shares issued and the amount
+of the net assets, net of other reserves, transferred from Shenhua Group Corporation Limited ("Shenhua Group") in
+connection with the Restructuring (as defined in Note 1).
+Share premium represents the difference between the total amount of the par value of shares issued and the amount
+of the net proceeds received upon the global initial public offering of H shares in 2005 and the issuance of A shares in
+2007.
+(ii)
+(i)
+Notes:
+(Expressed in RMB)
+For the year ended 31 December 2023
+Impact on initial application
+2023 Annual Report 229
+462,796
+65,813
+(iii)
+interest in subsidiaries
+Contributions from
+Consolidated Statement of Changes in Equity (Continued)
+2,649
+for the year (Restated)
+Total comprehensive income
+for the year
+Other comprehensive income
+Profit for the year (Restated)
+449,029
+69,152
+263,810 379,877
+(14,316)
+22,425
+(334)
+Dividend declared (Note 14)
+3,657
+At 1 January 2022 (Restated)
+33
+9
+24
+224
+24
+24
+liabilities arising from a single
+transaction (Note 2)
+tax related to assets and
+Income Taxes: Deferred
+Acquisition of non-controlling
+19,869
+705
+84,766
+554
+(2,649)
+705
+production funds (Note (i))
+Utilisation of maintenance and
+(6,006)
+6,006
+(Note (iii)))
+and production funds
+(50,466) (50,466)
+86,838
+12,654
+74,184
+Appropriation of maintenance
+72,925
+72,925
+72,925
+12,473
+705
+1,259
+85,398
+1,440
+54
+554
+181
+Business combinations
+Acquisitions of businesses, other than business combination under common control are accounted
+for using the acquisition method. The consideration transferred in a business combination is
+measured at fair value, which is calculated as the sum of the acquisition-date fair values of the
+assets transferred by the Group, liabilities incurred by the Group to the former owners of the
+acquiree and the equity interests issued by the Group in exchange for control of the acquiree.
+Acquisition-related costs are generally recognised in profit or loss as incurred.
+At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised
+at their fair value, except that deferred tax assets or liabilities, and assets or liabilities related to
+employee benefit arrangements are recognised and measured in accordance with IAS 12 Income
+Taxes and IAS 19 Employee benefits respectively.
+Goodwill is measured as the excess of the sum of the consideration transferred, the amount
+of any non-controlling interests in the acquiree, and the fair value of the acquirer's previously
+held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the
+identifiable assets acquired and the liabilities assumed. If, after re-assessment, the net of the
+acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the
+sum of the consideration transferred, the amount of any non-controlling interests in the acquiree
+and the fair value of the acquirer's previously held interest in the acquiree (if any), the excess is
+recognised immediately in profit or loss as a bargain purchase gain.
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+Non-controlling interests that are present ownership interests and entitle their holders to a
+proportionate share of the entity's net assets in the event of liquidation are initially measured at
+the non-controlling interests' proportionate share of the recognised amounts of the acquiree's
+identifiable net assets.
+For the year ended 31 December 2023
+Goodwill arising on an acquisition of a business is carried at cost as established at the date of
+acquisition of the business less accumulated impairment losses, if any.
+For the purposes of impairment testing, goodwill is allocated to each of the Group's cash
+generating units (or group of cash-generating units) that is expected to benefit from the synergies
+of the combination, which represent the lowest level at which the goodwill is monitored for
+internal management purposes and not larger than an operating segment.
+2023 Annual Report 241
+(Expressed in RMB)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+Notes to the Consolidated Financial Statements (Continued)
+Goodwill
+240 China Shenhua Energy Company Limited
+For the year ended 31 December 2023
+Changes in the Group's interests in subsidiaries that do not result in the Group losing control
+over the subsidiaries are accounted for as equity transactions. The carrying amounts of the
+Group's relevant components of equity and the non-controlling interests are adjusted to reflect
+the changes in their relative interests in the subsidiaries, including re-attribution of relevant
+reserves between the Group and the non-controlling interests according to the Group's and the
+non-controlling interests' proportionate interests.
+any additional facts and circumstances that indicate that the Group has, or does not have,
+the current ability to direct the relevant activities at the time that decisions need to be
+made, including voting patterns at previous shareholders' meetings.
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+rights arising from other contractual arrangements; and
+2023 Annual Report 239
+Notes to the Consolidated Financial Statements (Continued)
+(Expressed in RMB)
+Any difference between the amount by which the non-controlling interests are adjusted, and the
+fair value of the consideration paid or received is recognised directly in equity and attributed to
+owners of the Company.
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and
+ceases when the Group loses control of the subsidiary. Specifically, income and expenses of a
+subsidiary acquired or disposed of during the year are included in the consolidated statement of
+profit or loss and other comprehensive income from the date the Group gains control until the
+date when the Group ceases to control the subsidiary.
+Profit or loss and each item of other comprehensive income are attributed to equity holders of
+the Company and to the non-controlling interests. Total comprehensive income of subsidiaries
+is attributed to equity holders of the Company and to the non-controlling interests even if this
+results in the non-controlling interests having deficit balance.
+Where necessary, adjustments are made to the financial statements of subsidiaries to bring their
+accounting policies into line with the Group's accounting policies.
+All intragroup assets and liabilities, equity, income, expenses and cash flows relating to
+transactions between members of the Group are eliminated in full on consolidation.
+Non-controlling interests in subsidiaries are presented separately from the Group's equity therein,
+which represent present ownership interests entitling their holders to a proportionate share of
+net assets of the relevant subsidiaries upon liquidation.
+Changes in the Group's ownership interests in existing subsidiaries
+Basis of consolidation (Continued)
+Goodwill (Continued)
+Under IFRS 15, the Group recognises revenue when (or as) a performance obligation is satisfied,
+i.e. when "control" of the goods or services underlying the particular performance obligation is
+transferred to the customer.
+On disposal of the relevant cash-generating unit or any of the cash-generating unit within the
+group of cash-generating units, the attributable amount of goodwill is included in the determination
+of the amount of profit or loss on disposal. When the Group disposes of an operation within
+the cash-generating unit (or a cash-generating unit within a group of cash-generating units), the
+amount of goodwill disposed of is measured on the basis of the relative values of the operation
+(or the cash-generating unit) disposed of and the portion of the cash-generating unit (or the group
+of cash-generating units) retained.
+(Expressed in RMB)
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+Non-current assets held for sale (Continued)
+When the Group is committed to a sale plan involving disposal of an investment, or a portion of an
+investment, in an associate or joint venture, the investment or the portion of the investment that
+will be disposed of is classified as held for sale when the criteria described above are met, and
+the Group discontinues the use of the equity method in relation to the portion that is classified
+as held for sale from the time when the investment (or a portion of the investment) is classified
+as held for sale.
+Non-current assets (and disposal groups) classified as held for sale are measured at the lower of
+their previous carrying amount and fair value less costs to sell, except for financial assets within
+the scope of IFRS 9, which continue to be measured in accordance with the accounting policies
+as set out in respective sections.
+Revenue from contracts with customers
+For the year ended 31 December 2023
+A performance obligation represents a good or service (or a bundle of goods or services) that is
+distinct or a series of distinct goods or services that are substantially the same.
+the customer simultaneously receives and consumes the benefits provided by the Group's
+performance as the Group performs;
+the Group's performance creates and enhances an asset that the customer controls as the
+Group performs; or
+the Group's performance does not create an asset with an alternative use to the Group
+and the Group has an enforceable right to payment for performance completed to date.
+Otherwise, revenue is recognised at a point in time when the customer obtains control of the
+distinct good or service.
+potential voting rights held by the Group, other vote holders or other parties;
+244 China Shenhua Energy Company Limited
+Control is transferred over time and revenue is recognised over time by reference to the progress
+towards complete satisfaction of the relevant performance obligation if one of the following
+criteria is met:
+A cash-generating unit to which goodwill has been allocated is tested for impairment annually or
+more frequently when there is indication that the unit may be impaired. For goodwill arising on
+an acquisition in a reporting period, the cash-generating unit to which goodwill has been allocated
+is tested for impairment before the end of that reporting period. If the recoverable amount of
+the cash-generating unit is less than its carrying amount, the impairment loss is allocated first
+to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets
+of the unit on a pro-rata basis based on the carrying amount of each asset in the unit. Any
+impairment loss for goodwill is recognised directly in profit or loss. An impairment loss recognised
+for goodwill is not reversed in subsequent periods.
+Notes to the Consolidated Financial Statements (Continued)
+When the Group is committed to a sale plan involving loss of control of a subsidiary, all of the
+assets and liabilities of that subsidiary are classified as held for sale when the criteria described
+above are met, regardless of whether the Group will retain a non-controlling interest in the
+relevant subsidiary after the sale.
+Investments in associates
+An associate is an entity over which the Group has significant influence. Significant influence is
+the power to participate in the financial and operating policy decisions of the investee but is not
+control or joint control over those policies.
+The results and assets and liabilities of associates are incorporated in these consolidated financial
+statements using the equity method of accounting. The financial statements of associates used
+for equity accounting purposes are prepared using uniform accounting policies as those of the
+Group for like transactions and events in similar circumstances. Under the equity method, an
+investment in an associate is initially recognised in the consolidated statement of financial
+position at cost and adjusted thereafter to recognise the Group's share of the profit or loss and
+other comprehensive income of the associate. When the Group's share of losses of an associate
+exceeds the Group's interest in that associate (which includes any long-term interests that, in
+substance, form part of the Group's net investment in the associate, after applying the expected
+credit losses (the "ECL") model to such other long-term interests where applicable), the Group
+discontinues recognising its share of further losses. Additional losses are recognised only to the
+extent that the Group has incurred legal or constructive obligations or made payments on behalf
+of that associate.
+242 China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+2023 Annual Report 243
+Investments in associates (Continued)
+in which the investment is acquired.
+The Group assesses whether there is an objective evidence that the interest in an associate may
+be impaired. When any objective evidence exists, the entire carrying amount of the investment
+(including goodwill) is tested for impairment in accordance with IAS 36 as a single asset by
+comparing its recoverable amount (higher of value in use and fair value less costs of disposal)
+with its carrying amount. Any impairment loss is recognised when the recoverable amount is
+less than the carrying value of the investment in associates. Any reversal of that impairment
+loss is recognised in accordance with IAS 36 to the extent that the recoverable amount of the
+investment subsequently increases.
+When the Group reduces its ownership interest in an associate but the Group continues to use
+the equity method, the Group reclassifies to profit or loss the proportion of the gain or loss that
+had previously been recognised in other comprehensive income relating to that reduction in
+ownership interest if that gain or loss would be reclassified to profit or loss on the disposal of
+the related assets or liabilities.
+When a group entity transacts with an associate of the Group, profits and losses resulting
+from the transactions with the associate are recognised in the Group's consolidated financial
+statements only to the extent of interests in the associate that are not related to the Group.
+Non-current assets held for sale
+Non-current assets and disposal groups are classified as held for sale if their carrying amount
+will be recovered principally through a sale transaction rather than through continuing use. This
+condition is regarded as met only when the asset (or disposal group) is available for immediate
+sale in its present condition subject only to terms that are usual and customary for sales of such
+asset (or disposal group) and its sale is highly probable. Management must be committed to the
+sale, which should be expected to qualify for recognition as a completed sale within one year
+from the date of classification.
+On acquisition of the investment in an associate, any excess of the cost of acquisition over
+the Group's share of the net fair value of the identifiable assets, liabilities of the investee is
+recognised as goodwill, which is included within the carrying amount of the investment. Any
+excess of the Group's share of the net fair value of the identifiable assets and liabilities over the
+cost of investment, after reassessment, is recognised immediately profit or loss in the period
+the size of the Group's holding of voting rights relative to the size and dispersion of holdings
+of the other vote holders;
+1. PRINCIPAL ACTIVITIES AND ORGANISATION (CONTINUED)
+The Group reassesses whether or not it controls an investee if facts and circumstances indicate
+that there are changes to one or more of the three elements of control listed above.
+2. CHANGES IN ACCOUNTING POLICIES (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+236 China Shenhua Energy Company Limited
+Prior to the amendments, the Group applied the initial recognition exemption to lease transactions
+and decommissions obligations and had not recognised the related deferred tax. Following
+the amendments, the Group has determined the temporary differences in relation to lease
+transactions and decommissioning obligations separately. The impact of the retrospective
+adjustments of the above accounting policy changes on the consolidated financial statements
+of the Group, which was prepared in accordance with IFRSS, is as follows: for the consolidated
+statements of profit or loss and other comprehensive income for the year ended 31 December
+2023 and 2022, income tax expense decreased by RMB118 million and RMB41 million and profit
+increased by RMB118 million and RMB41 million, respectively; for the consolidated statement
+of financial position as at 31 December 2023, consolidated statements of financial position as
+at 31 December 2022 and 1 January 2022, deferred tax assets increased by RMB267 million,
+RMB142 million and RMB86 million, deferred tax liabilities increased by RMB75 million, RMB68
+million and RMB53 million, and total equity increased by RMB192 million, RMB74 million and
+RMB33 million, respectively.
+The amendments narrow the scope of the initial recognition exemption such that it does not
+apply to transactions that give rise to equal and offsetting temporary differences on initial
+recognition such as leases and decommissioning liabilities. For leases and decommissioning
+liabilities, the associated deferred tax assets and liabilities are required to be recognised from the
+beginning of the earliest comparative period presented, with any cumulative effect recognised
+as an adjustment to retained earnings or other components of equity at that date. For all other
+transactions, the amendments are applied to those transactions that occur after the beginning
+of the earliest period presented.
+Amendments to IAS 12, Income Taxes: Deferred tax related to assets and liabilities
+arising from a single transaction
+The amendments require entities to disclose material accounting policy information and provide
+guidance on applying the concept of materiality to accounting policy disclosure. The Group has
+revisited the accounting policy information it has been disclosing and considered it is consistent
+with the amendments.
+Amendments to IAS 1, Presentation of financial statements and IFRS Practice
+Statement 2, Making materiality judgements: Disclosure of accounting policies
+The amendments provide further guidance on the distinction between changes in accounting
+policies and changes in accounting estimates. The amendments do not have a material impact
+on these financial statements as the Group's approach in distinguishing changes in accounting
+policies and changes in accounting estimates is consistent with the amendments.
+Amendments to IAS 8, Accounting policies, changes in accounting estimates and
+errors: Definition of accounting estimates
+2. CHANGES IN ACCOUNTING POLICIES (CONTINUED)
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+2023 Annual Report 235
+IFRS 17, Insurance contracts
+The Group has not applied any new standard or interpretation that is not yet effective for the
+current accounting period. Impacts of the adoption of the new and amended IFRSS are discussed
+below:
+When the Group has less than a majority of the voting rights of an investee, it has power over the
+investee when the voting rights are sufficient to give it the practical ability to direct the relevant
+activities of the investee unilaterally. The Group considers all relevant facts and circumstances in
+assessing whether or not the Group's voting rights in an investee are sufficient to give it power,
+including:
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+Immediate parent and ultimate controlling party
+On 28 August 2017, Shenhua Group received the Notice regarding the Restructuring of China
+Guodian Corporation and Shenhua Group Corporation Limited (Guo Zi Fa Gai Ge [2017] No. 146)
+from the State-owned Assets Supervision and Administration Commission of the State Council,
+which approves that China Guodian Corporation (the "China Guodian") and Shenhua Group shall
+implement the joint restructuring, China Guodian shall be merged into Shenhua Group, and the
+company name of Shenhua Group shall be changed to China Energy Investment Corporation
+Limited (the "China Energy Group"). China Energy Group will be the parent company after the
+completion of the restructuring.
+On 27 November 2017, Shenhua Group has completed the industrial and commercial registration
+of changes in the business license. The Directors consider the immediate parent and ultimate
+holding company of the Group to be China Energy Group.
+2.
+3.
+CHANGES IN ACCOUNTING POLICIES
+•
+IFRS 17, Insurance contracts
+Amendments to IAS 8, Accounting policies, changes in accounting estimates and errors:
+Definition of accounting estimates
+Amendments to IAS 1, Presentation of financial statements and IFRS Practice Statement
+2, Making materiality judgements: Disclosure of accounting policies
+Amendments to IAS 12, Income taxes: Deferred tax related to assets and liabilities arising
+from a single transaction
+Amendments to IAS 12, Income taxes: International tax reform - Pillar Two model rules
+The Group has applied the following new and amended IFRSS issued by the IASB to these
+financial statements for the current accounting period:
+Amendments to IAS 12, Income taxes: International tax reform - Pillar Two model
+IFRS 17, which replaces IFRS 4, sets out the recognition, measurement, presentation and
+disclosure requirements applicable to issuers of insurance contracts. The standard does not have
+a material impact on these financial statements as the Group does not have contracts within the
+scope of IFRS 17.
+The amendments introduce a temporary mandatory exception from deferred tax accounting for
+the income tax arising from tax laws enacted or substantively enacted to implement the Pillar
+Two model rules published by the Organization for Economic Co-operation and Development
+("OECD") (income tax arising from such tax laws is hereafter referred to as "Pillar Two income
+taxes"), including tax laws that implement qualified domestic minimum top-up taxes described
+in those rules. The amendments also introduce disclosure requirements about such tax. The
+amendments are immediately effective upon issuance and require retrospective application. Based
+on a preliminary analysis, which was limited to data of companies in the Group, there would have
+been no notable additional tax expense in the relevant countries if the Pillar Two income taxes
+had been required to be applied in respect of the year ended 31 December 2023. For the impact
+analysis to be carried out conclusively, it would need to include not only companies in the Group
+but also China Energy Group and fellow subsidiaries. It is therefore not currently possible to rule
+out that the inclusion of China Energy Group and fellow subsidiaries would have had an effect
+on the tax expense, with financial implications for the Group, if the Pillar Two income taxes had
+been required to be applied for the year ended December 31, 2023.
+The preparation of financial statements in conformity with IFRSS requires management to make
+judgements, estimates and assumptions that affect the application of policies and reported
+amounts of assets, liabilities, income and expenses. The estimates and associated assumptions
+are based on historical experience and various other factors that are believed to be reasonable
+under the circumstances, the results of which form the basis of making the judgements about
+carrying values of assets and liabilities that are not readily apparent from other sources. Actual
+results may differ from these estimates.
+238 China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+Basis of preparation (Continued)
+Judgements made by management in the application of IFRSs that have significant effect on
+the financial statements and major sources of estimation uncertainty are discussed in Note 4.
+Level 3 inputs are unobservable inputs for the asset or liability.
+Material accounting policies adopted by the Group are disclosed below.
+The consolidated financial statements incorporate the financial statements of the Company and
+entities controlled by the Company and its subsidiaries. Control is achieved when the Company:
+has power over the investee;
+is exposed, or has rights, to variable returns from its involvement with the investee; and
+-
+rules
+has the ability to use its power to affect its returns.
+Basis of consolidation
+Level 2 inputs are inputs, other than quoted prices included within Level 1, that are
+observable for the asset or liability, either directly or indirectly; and
+The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
+accounting estimates are recognised in the period in which the estimate is revised if the revision
+affects only that period, or in the period of the revision and future periods if the revision affects
+both current and future periods.
+Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or
+liabilities that the entity can access at the measurement date;
+MATERIAL ACCOUNTING POLICIES
+The consolidated financial statements have been prepared in accordance with all applicable
+International Financial Reporting Standards ("IFRSS"), which collective term includes all applicable
+individual International Financial Reporting Standards, International Accounting Standards ("IASS")
+and Interpretations issued by the International Accounting Standards Board (the "IASB"). They are
+presented in Renminbi ("RMB") and all values are rounded to the nearest million (RMB' million)
+except when otherwise indicated. In addition, the consolidated financial statements include
+applicable disclosures required by the Rules Governing the Listing of Securities on the Stock
+Exchange of Hong Kong Limited ("Listing Rules") and by the Hong Kong Companies Ordinance
+("CO").
+The IASB has issued certain new and revised IFRSS that are first effective or available for early
+adoption for the current accounting period of the Group. Note 2 provides information on any
+changes in accounting policies resulting from initial application of these developments to the
+extent that they are relevant to the Group for the current and prior accounting periods reflected
+in these financial statements.
+2023 Annual Report 237
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+Basis of preparation
+In addition, for financial reporting purposes, fair value measurements are categorised into Level 1,
+2 or 3 based on the degree to which the inputs to the fair value measurements are observable and
+the significance of the inputs to the fair value measurement in its entirety, which are described
+as follows:
+Basis of preparation (Continued)
+The consolidated financial statements have been prepared on the historical cost basis, except
+for certain financial instruments as disclosed in Note 39.3, which have been measured at fair
+value at the end of each reporting period, as explained in the accounting policies set out below.
+Historical cost is generally based on the fair value of the consideration given in exchange for
+goods and services.
+Fair value is the price that would be received to sell an asset or paid to transfer a liability in an
+orderly transaction between market participants at the measurement date, regardless of whether
+that price is directly observable or estimated using another valuation technique. In estimating the
+fair value of an asset or a liability, the Group takes into account the characteristics of the asset
+or liability if market participants would take those characteristics into account when pricing the
+asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes
+in the Group's consolidated financial statements is determined on such a basis, except for share-
+based payment transactions that are within the scope of IFRS 2 Share-based Payment, leasing
+transactions that are within the scope of IFRS 16 Leases, and measurements that have some
+similarities to fair value but are not fair value, such as net realisable value in IAS 2 Inventories
+or value in use in IAS 36 Impairment of Assets.
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+Income tax expense represents the sum of the tax currently payable and deferred tax.
+Taxation
+The contributions made by the Group to such insurance plans on behalf of employees are fully
+attributed to the employees at the time of payment, therefore the Group has no abandoned
+contributions that can be utilized.
+Payments to state-managed retirement benefit schemes and a supplemental defined contribution
+pension plan approved by the government are recognised as an expense when employees have
+rendered service entitling them to the contributions.
+Retirement benefit costs
+Government grants that are receivable as compensation for expenses or losses already incurred
+or for the purpose of giving immediate financial support to the Group with no future related costs
+are recognised in profit or loss in the period in which they become receivable.
+Government grants are recognised in profit or loss on a systematic basis over the periods in
+which the Group recognises as expenses the related costs for which the grants are intended to
+compensate. Specifically, government grants whose primary condition is that the Group should
+purchase, construct or otherwise acquire non-current assets are recognised as deferred income in
+the consolidated statement of financial position and transferred to profit or loss on a systematic
+and rational basis over the useful lives of the related assets.
+The tax currently payable is based on taxable profit for the year. Taxable profit differs from
+"profit before income tax" as reported in the consolidated statement of profit or loss and other
+comprehensive income because of income or expense that are taxable or deductible in other
+years and items that are never taxable or deductible. The Group's liability for current tax is
+calculated using tax rates that have been enacted or substantively enacted by the end of the
+reporting period.
+Government grants
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+(Expressed in RMB)
+For the year ended 31 December 2023
+2023 Annual Report 245
+Notes to the Consolidated Financial Statements (Continued)
+Government grants are not recognised until there is reasonable assurance that the Group will
+comply with the conditions attaching to them and that the grants will be received.
+Deferred tax is recognised on temporary differences between the carrying amounts of assets
+and liabilities in the consolidated financial statements and the corresponding tax bases used in
+the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable
+temporary differences. Deferred tax assets are generally recognised for all deductible temporary
+differences to the extent that it is probable that taxable profits will be available against which
+those deductible temporary differences can be utilised.
+Notes to the Consolidated Financial Statements (Continued)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+Borrowing costs directly attributable to the acquisition, construction or production of qualifying
+assets, which are assets that necessarily take a substantial period of time to get ready for
+their intended use or sale, are added to as part of the cost of those assets, until such time as
+the assets are substantially ready for their intended use or sale. All other borrowing costs are
+expensed in the period in which they are incurred.
+For the year ended 31 December 2023
+2023 Annual Report 247
+The measurement of deferred tax liabilities and assets reflects the tax consequences that would
+follow from the manner in which the Group expects, at the end of the reporting period, to recover
+or settle the carrying amount of its assets and liabilities.
+Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the
+period in which the liability is settled or the asset is realised, based on tax rate (and tax laws)
+that have been enacted or substantively enacted by the end of the reporting period.
+The carrying amount of deferred tax assets is reviewed at the end of each reporting period and
+reduced to the extent that it is no longer probable that sufficient taxable profits will be available to
+allow all or part of the asset to be recovered. Unrecognised deferred tax assets are reassessed at
+the end of each reporting year and are recognised to the extent that it has become probable that
+future taxable profit will be available to allow all or part of the deferred tax asset to be recovered.
+Deferred tax liabilities are recognised for taxable temporary differences associated with
+investments in subsidiaries and associates, except where the Group is able to control the reversal
+of the temporary difference and it is probable that the temporary difference will not reverse in the
+foreseeable future. Deferred tax assets arising from deductible temporary differences associated
+with such investments and interests are only recognised to the extent that it is probable that there
+will be sufficient taxable profits against which to utilise the benefits of the temporary differences
+and they are expected to reverse in the foreseeable future.
+The Group recognised deferred tax assets and deferred tax liabilities separately in relation to its
+lease liabilities and right-of-use assets.
+those related to the income taxes arising from tax laws enacted or substantively enacted
+to implement the Pillar Two model rules published by the OECD.
+taxable temporary differences arising on the initial recognition of goodwill; and
+temporary differences related to investment in subsidiaries, associates and joint venture
+to the extent that the Group is able to control the timing of the reversal of the temporary
+differences and it is probable that they will not reverse in the foreseeable future;
+temporary differences on the initial recognition of assets or liabilities in a transaction that
+is not a business combination and that affects neither accounting nor taxable profit or loss
+and does not give rise to equal taxable and deductible temporary differences;
+Deferred tax is not recognised for:
+Taxation (Continued)
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+246 China Shenhua Energy Company Limited
+Borrowing costs
+Where the contract contains lease component(s) and non-lease component(s), the Group
+has elected not to separate non-lease components and accounts for each lease component
+and any associated non-lease components as a single lease component for all leases.
+In preparing the financial statements of each individual group entity, transactions in currencies
+other than entity's functional currencies (foreign currencies) are recognised at the rates of
+exchange prevailing on the dates of the transactions. At the end of the reporting period, monetary
+items denominated in foreign currencies are retranslated at the rates prevailing at that date.
+Non-monetary items that are measured in terms of historical cost in a foreign currency are not
+retranslated. Exchange differences on monetary items are recognised in profit or loss in the
+period in which they arise.
+Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing
+value in use, the estimated future cash flows are discounted to their present value using a pre-
+tax discount rate that reflects current market assessments of the time value of money and the
+risks specific to the asset (or a cash-generating unit) for which the estimates of future cash flows
+have not been adjusted.
+If the recoverable amount of an asset (or a cash-generating unit) is estimated to be less than its
+carrying amount, the carrying amount of the asset (or a cash-generating unit) is reduced to its
+recoverable amount. In allocating the impairment loss, the impairment loss is allocated first to
+reduce the carrying amount of any goodwill (if applicable) and then to the other assets on a basis
+based on the carrying amount of each asset in the unit. The carrying amount of an asset is not
+reduced below the highest of its fair value less costs of disposal (if measurable), its value in use
+(if determinable) and zero. The amount of the impairment loss that would otherwise have been
+allocated to the asset is allocated pro rata to the other assets of the unit. An impairment loss is
+recognised immediately in profit or loss.
+2023 Annual Report 253
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+The recoverable amount of tangible and intangible assets are estimated individually, when it is
+not possible to estimate the recoverable amount individually, the Group estimates the recoverable
+amount of the cash-generating unit to which the asset belongs. When a reasonable and consistent
+basis of allocation can be identified, corporate assets are also allocated to individual cash-
+generating units, or otherwise they are allocated to the smallest group of cash-generating units
+for which a reasonable and consistent allocation basis can be identified.
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+At inception of a contract, the Group assesses whether the contract is, or contains, a lease. A
+contract is, or contains, a lease if the contract conveys the right to control the use of an identified
+asset for a period of time in exchange for consideration. Control is conveyed where the customer
+has both the right to direct the use of the identified asset and to obtain substantially all of the
+economic benefits from that use.
+(i)
+As a lessee
+(Expressed in RMB)
+At the lease commencement date, the Group recognises a right-of-use asset and a lease
+liability, except for short-term leases that have a lease term of 12 months or less and
+leases of low-value assets. When the Group enters into a lease in respect of a low-value
+asset, the Group decides whether to capitalise the lease on a lease-by-lease basis. The
+lease payments associated with those leases which are not capitalised are recognised as
+an expense on a systematic basis over the lease term.
+Where the lease is capitalised, the lease liability is initially recognised at the present
+value of the lease payments payable over the lease term, discounted using the interest
+rate implicit in the lease or, that rate cannot be readily determined, using a relevant
+incremental borrowing rate. After initial recognition, the lease liability is measured at
+amortised cost and interest expense is calculated using the effective interest method.
+Variable lease payments that do not depend on an index or rate are not included in the
+measurement of the lease liability and hence are charged to profit or loss in the accounting
+period in which they are incurred.
+Leased assets
+At the end of the reporting period, the Group reviews the carrying amounts of its tangible,
+intangible assets with finite useful lives to determine whether there is any indication that these
+assets have suffered an impairment loss. If any such indication exists, the recoverable amount of
+the relevant asset is estimated in order to determine the extent of the impairment loss (if any).
+Impairment of tangible and intangible assets other than goodwill
+An intangible asset is derecognised on disposal, or when no future economic benefits are
+expected from use or disposal. Gains and losses arising from derecognition of an intangible asset
+are measured as the difference between the net disposal proceeds and the carrying amount of
+the asset and are recognised in profit or loss in the period when the asset is derecognised.
+Foreign currencies
+A contract liability represents the Group's obligation to transfer goods or services to a customer
+for which the Group has received consideration (or an amount of consideration is due) from the
+customer.
+A contract asset represents the Group's right to consideration in exchange for goods or services
+that the Group has transferred to a customer that is not yet unconditional. It is assessed
+for impairment in accordance with IFRS 9. In contrast, a receivable represents the Group's
+unconditional right to consideration, i.e. only the passage of time is required before payment of
+that consideration is due.
+Revenue from contracts with customers (Continued)
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+Subsequent to initial recognition, internally-generated intangible asset is measured at cost less
+accumulated amortisation and accumulated impairment losses (if any), on the same basis as
+intangible assets acquired separately.
+Intangible assets acquired in a business combination not under common control
+Intangible assets acquired in a business combination are recognised separately from goodwill and
+are initially recognised at their fair value at the acquisition date (which is regarded as their cost).
+Subsequent to initial recognition, intangible assets acquired in a business combination with finite
+useful lives are reported at cost less accumulated amortisation and any accumulated impairment
+losses, on the same basis as intangible assets that are acquired separately.
+252 China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+Intangible assets (Continued)
+Derecognition of intangible assets
+For the purpose of presenting the consolidated financial statements, the assets and liabilities of
+the Group's foreign operations are translated into the presentation currency of the Group (i.e.
+RMB) using exchange rates prevailing at the end of each reporting period. Income and expenses
+items are translated at the average exchange rates for the period. Exchange differences arising, if
+any, are recognised in other comprehensive income and accumulated in equity under the heading
+of exchange reserve, attributed to non-controlling interests as appropriate.
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+Commercial reserves are proved and probable reserves. Changes in the commercial reserves
+affecting unit of production calculations are dealt with prospectively over the revised remaining
+Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off
+current tax assets against current tax liabilities and when they relate to income taxes levied by
+the same taxation authority and the Group intends to settle its current tax assets and liabilities
+on a net basis.
+Property, plant and equipment (Continued)
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+250 China Shenhua Energy Company Limited
+Once the final feasibility study has been completed and a development decision has been taken,
+accumulated capitalised exploration and evaluation expenditures in respect of an area of interest
+are transferred to property, plant and equipment. In circumstances when an area of interest
+is abandoned or management decides it is not commercially viable, any accumulated costs in
+respect of that area are written off in the period the decision is made.
+Expenditure during the initial exploration preparation stage of a project is charged to profit or
+loss as incurred. Exploration and evaluation costs, including the costs of acquiring licenses,
+are capitalised as exploration and evaluation assets on a project-by-project basis pending
+determination of the technical feasibility and commercial viability of the project.
+conducting market and finance studies.
+surveying transportation and infrastructure requirements; and
+determining and examining the volume and grade of the resource;
+exploratory drilling, trenching and sampling;
+gathering exploration data through topographical, geochemical and geophysical studies;
+researching and analysing historical exploration data;
+Exploration and evaluation assets comprise costs which are directly attributable to the search for
+mineral resources, the determination of technical feasibility and the assessment of commercial
+viability of an identified resource:
+Exploration and evaluation assets
+Property, plant and equipment (Continued)
+Obligations for land reclamation
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+The Group's obligations for land reclamation consist of spending estimates at both surface and
+underground mines in accordance with the PRC rules and regulations. The Group estimates its
+liabilities for land reclamation and mine closure based upon detailed calculations of the amount
+and timing of the future cash flows for the required work. Spending estimates are escalated for
+inflation, then discounted at a discount rate that reflects current market assessments of the time
+value of money and the risks specific to the liability such that the amount of provision reflects
+the present value of the expenditures expected to be required to settle the obligation. The
+Group records a corresponding asset associated with the liability for final reclamation and mine
+closure. The obligation and corresponding asset are recognised in the period in which the liability
+is incurred. The asset is depreciated on the units-of-production method over its expected life
+and the liability is accreted to the projected spending date. As changes in estimates occur (such
+as mine plan revisions, changes in estimated costs, or changes in timing of the performance of
+reclamation activities), the revisions to the obligation and the corresponding asset are recognised
+at the appropriate discount rate.
+Intangible assets acquired separately
+how the intangible asset will generate probable future economic benefits;
+the ability to use or sell the intangible asset;
+the intention to complete the intangible asset and use or sell it;
+the technical feasibility of completing the intangible asset so that it will be available for
+use or sale;
+An internally-generated intangible asset arising from development activities (or from the
+development phase of an internal project) is recognised if, and only if, all of the following have
+been demonstrated:
+Internally-generated intangible assets - research and development expenditure (Continued)
+Intangible assets (Continued)
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+2023 Annual Report 251
+Expenditure on research activities is recognised as an expense in the period in which it is incurred.
+Internally-generated intangible assets - research and development expenditure
+Intangible assets with finite useful lives that are acquired separately are carried at costs less
+accumulated amortisation and any accumulated impairment losses. Amortisation for intangible
+assets with finite useful lives is recognised on a straight-line basis over their estimated useful
+lives. The estimated useful life and amortisation method are reviewed at the end of each reporting
+period, with the effect of any changes in estimate being accounted for on a prospective basis.
+Intangible assets
+Taxation (Continued)
+(Expressed in RMB)
+Notes to the Consolidated Financial Statements (Continued)
+Furniture, fixtures, motor vehicles and other equipment
+Coal chemical related machinery and equipment
+Vessels
+Railway and port
+Generators related machinery and equipment
+Mining related machinery and equipment
+Buildings
+10-55 years
+Term for deprecation (year)
+Categories
+Property, plant and equipment, except for freehold land, and mining structures and mining rights,
+are depreciated on a straight-line basis at the following rates per annum:
+Depreciation is recognised so as to write-off the cost of items of property, plant and equipment
+(other than freehold land and construction in progress, which are subject to impairment
+assessment) less their residual values over their estimated useful lives. The estimated useful
+lives, residual values and depreciation method are reviewed at the end of each reporting period,
+with the effect of any changes in estimate accounted for on a prospective basis.
+Property, plant and equipment, which consists of freehold land and buildings, mining structures
+and mining rights, mining related machinery and equipment, and other items of plant and
+equipment, held for use in the production or supply of goods or services, or for administrative
+purposes, are stated in the consolidated statement of financial position at cost less subsequent
+accumulated depreciation and subsequent accumulated impairment losses, if any.
+Property, plant and equipment
+Current and deferred tax are recognised in profit or loss, except when they relate to items that
+are recognised in other comprehensive income or directly in equity, in which case, the current and
+deferred tax are also recognised in other comprehensive income or directly in equity respectively.
+Where current tax or deferred tax arises from the initial accounting for a business combination,
+the tax effect is included in the accounting for the business combination.
+5 - 40 years
+For the year ended 31 December 2023
+8 - 35 years
+6 - 45 years
+25 years
+8 - 20 years
+The Directors reviewed the estimated useful lives of the assets annually based on the Group's
+historical experience with similar assets and taking into account anticipated technological changes.
+2023 Annual Report 249
+reserves.
+The right-of-use asset recognised when a lease is capitalised is initially measured at cost,
+which comprises the initial amount of the lease liability plus any lease payments made at or
+before the commencement date, and any initial direct costs incurred. Where applicable, the
+cost of the right-of-use assets also includes an estimate of costs to dismantle and remove
+the underlying asset or to restore the underlying asset or the site on which it is located,
+discounted to their present value, less any lease incentives received. The right-of-use asset
+is subsequently stated at cost less accumulated depreciation and impairment losses.
+Stripping costs incurred to develop a mine (or pit) before the production commences or to improve
+access to the component of the ore body during the production stage are capitalised as part of
+the cost of constructing the mine (or pit) and subsequently amortised over the life of the mine
+(or pit) on a units-of-production basis. Stripping costs and secondary development expenditure,
+mainly comprising costs on blasting, haulage, excavation, etc. incurred during the production
+stage of the ore body and does not providing any improved access to the ore body are charged
+to profit or loss as incurred.
+The Group's mining rights are of sufficient duration (or convey a legal right to renew for sufficient
+duration) to enable all reserves to be mined in accordance with current production schedules.
+Mining structures and mining rights are depreciated on a units-of-production basis utilising only
+proved and probable coal reserves in the depletion base.
+The costs of mining structures and mining rights, which include the costs of acquiring and
+developing mining structures and mining rights, are firstly capitalised as "construction in
+progress" in the year in which they are incurred and then reclassified to "Mining structures
+and mining rights" under property, plant and equipment when they are ready for commercial
+production.
+Mining structures and mining rights
+An item of property, plant and equipment is derecognised upon disposal or when no future
+economic benefits are expected to arise from the continued use of the asset. Any gain or loss
+arising on the disposal or retirement of an item of property, plant and equipment is determined
+as the difference between the sales proceeds and the carrying amount of the asset and is
+recognised in profit or loss.
+Items may be produced while bringing an item of property, plant and equipment to the location
+and condition necessary for it to be capable of operating in the manner intended by management.
+The proceeds from selling any such items and the related cost are recognised in profit or loss.
+Construction in progress intended to be used for production, supply or administrative purposes
+are carried at cost, less any recognised impairment loss. Costs include professional fees and, for
+qualifying assets, borrowing costs capitalised in accordance with the Group's accounting policy.
+Such properties are classified to the appropriate categories of property, plant and equipment when
+completed and ready for intended use. Depreciation of these assets, on the same basis as other
+property, plant and equipment, commences when the assets are ready for their intended use.
+Property, plant and equipment (Continued)
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+248 China Shenhua Energy Company Limited
+5 - 35 years
+254 China Shenhua Energy Company Limited
+the availability of adequate technical, financial and other resources to complete the
+development and to use or sell the intangible asset; and the ability to measure reliably the
+expenditure attributable to the intangible asset during its development.
+The amount initially recognised for internally-generated intangible asset is the sum of the
+expenditure incurred from the date when the intangible asset first meets the recognition criteria
+listed above. Where no internally-generated intangible asset can be recognised, development
+expenditure is recognised in profit or loss in the period in which it is incurred.
+As a lessee (Continued)
+(b)
+a breach of contract, such as a default or past due event;
+(c)
+(d)
+(e)
+the lenders of the borrower, for economic or contractual reasons relating to the
+borrower's financial difficulty, having granted to the borrower a concessions that the
+lenders would not otherwise consider;
+it is becoming probable that the borrower will enter bankruptcy or other financial
+re-organisation; or
+the disappearance of an active market for that financial asset because of financial
+difficulties.
+2023 Annual Report 261
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+Financial assets (Continued)
+Impairment of financial assets (Continued)
+(a) significant financial difficulty of the issuer or the borrower;
+A financial asset is credit-impaired when one or more events of default that have a
+detrimental impact on the estimated future cash flows of that financial asset have occurred.
+Evidence that a financial asset is credit-impaired includes observable data about the
+following events:
+(iii) Credit-impaired financial assets
+For internal credit risk management, the Group considers an event of default occurs when
+information developed internally or obtained from external sources indicates that the debtor
+is unlikely to pay its creditors, including the Group, in full (without taking into account
+any collaterals held by the Group). The Group considers both quantitative and qualitative
+information that is reasonable and supportable, including historical experience and forward-
+looking information that is available without undue cost or effort.
+existing or forecast adverse changes in business, financial or economic conditions
+that are expected to cause a significant decrease in the debtor's ability to meet its
+debt obligations;
+an actual or expected significant deterioration in the operating results of the debtor;
+an actual or expected significant adverse change in the regulatory, economic, or
+technological environment of the debtor that results in a significant decrease in the
+debtor's ability to meet its debt obligations.
+Irrespective of the outcome of the above assessment, the Group presumes that the credit
+risk has increased significantly since initial recognition when contractual payments are more
+than 30 days past due, unless the Group has reasonable and supportable information that
+demonstrates otherwise.
+Despite the foregoing, the Group assumes that the credit risk on a debt instrument has
+not increased significantly since initial recognition if the debt instrument is determined to
+have low credit risk at the reporting date. A debt instrument is determined to have low
+credit risk if i) it has a low risk of default, ii) the borrower has a strong capacity to meet
+its contractual cash flow obligations in the near term and iii) adverse changes in economic
+and business conditions in the longer term may, but will not necessarily, reduce the ability
+of the borrower to fulfil its contractual cash flow obligations.
+For financial guarantee contracts, the date that the Group becomes a party to the irrevocable
+commitment is considered to be the date of initial recognition for the purposes of assessing
+the financial instrument for impairment. In assessing whether there has been a significant
+increase in the credit risk since initial recognition of financial guarantee contracts, the Group
+considers the changes in the risk that the specified debtor will default on the contract.
+260 China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+Financial assets (Continued)
+Impairment of financial assets (Continued)
+(i) Significant increase in credit risk (Continued)
+(ii)
+The Group regularly monitors the effectiveness of the criteria used to identify whether
+there has been a significant increase in credit risk and revises them as appropriate to
+ensure that the criteria are capable of identifying significant increase in credit risk before
+the amount becomes past due.
+Definition of default
+(iv) Write-off policy
+The Group writes off a financial asset when there is information indicating that the
+counterparty is in severe financial difficulty and there is no realistic prospect of recovery.
+Financial assets written off may still be subject to enforcement activities under the Group's
+recovery procedures, taking into account legal advice where appropriate. A write-off
+constitutes a derecognition event. Any subsequent recoveries are recognised in profit or
+loss.
+(v) Measurement and recognition of ECL
+The measurement of ECL is a function of the probability of default, loss given default (i.e.
+the magnitude of the loss if there is a default) and the exposure at default. The assessment
+of the probability of default and loss given default is based on historical data adjusted
+by forward-looking information. Estimation of ECL reflects an unbiased and probability-
+weighted amount that is determined with the respective risks of default occurring as the
+weights.
+(Expressed in RMB)
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+Financial assets (Continued)
+Derecognition of financial assets
+The Group derecognises a financial asset only when the contractual rights to the cash flows
+from the asset expire, or when it transfers the financial asset and substantially all the risks and
+rewards of ownership of the asset to another entity. the Group retains substantially all the risks
+and rewards of ownership of a transferred financial asset, the Group continues to recognise the
+financial asset and also recognises a collateralised borrowing for the proceeds received.
+On derecognition of a financial asset measured at amortised cost, the difference between the
+asset's carrying amount and the sum of the consideration received and receivable is recognised
+in profit or loss.
+On derecognition of an investment in equity instrument which the Group has elected on initial
+recognition to measure at FVTOCI upon application of IFRS 9, the cumulative gain or loss
+previously accumulated in other reserves is not reclassified to profit or loss, but is transferred
+to retained earnings.
+Financial liabilities and equity
+Classification as debt or equity
+Debt and equity instruments are classified as either financial liabilities or as equity in accordance
+with the substance of the contractual arrangements and the definitions of a financial liability and
+an equity instrument.
+Equity instruments
+An equity instrument is any contract that evidences a residual interest in the assets of an entity
+after deducting all of its liabilities. Equity instruments issued by the Company are recognised at
+the proceeds received, net of direct issue costs.
+Financial liabilities
+All financial liabilities are subsequently measured at amortised cost using the effective interest
+method or at FVTPL.
+264 China Shenhua Energy Company Limited
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+2023 Annual Report 263
+ECLs are remeasured at each reporting date to reflect changes in the financial instrument's
+credit risk since initial recognisation. Any change in the ECL amount is recognised as an
+impairment gain or loss in profit or loss. The Group recognises an impairment gain or loss
+for all financial instruments with a corresponding adjustment to their carrying amount
+through a loss allowance account.
+Generally, the ECL is the difference between all contractual cash flows that are due to
+the Group accordance with the contract and the cash flows that the Group expects to
+receive, discounted at the effective interest rate determined at initial recognition.
+For a financial guarantee contract, the Group is required to make payments only in the
+event of a default by the debtor in accordance with the terms of the instrument that
+is guaranteed. Accordingly, the expected losses is the present value of the expected
+payments to reimburse the holder for a credit loss that it incurs less any amounts that the
+Group expects to receive from the holder, the debtor or any other party.
+For ECL on financial guarantee contracts, the Group will apply a discount rate that reflects
+the current market assessment of the time value of money and the risks that are specific
+to the cash flows but only if, and to the extent that, the risks are taken into account by
+adjusting the discount rate instead of adjusting the cash shortfalls being discounted.
+262 China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+Financial assets (Continued)
+significant deterioration in external market indicators of credit risk, e.g. a significant
+increase in the credit spread, the credit default swap prices for the debtor;
+Impairment of financial assets (Continued)
+Where ECL is measured on a collective basis or cater for cases where evidence at the
+individual instrument level may not yet be available, the financial instruments are grouped
+on the following basis:
+Nature of financial instruments (i.e. the Group's accounts and bills receivables and
+other receivables are each assessed as a separate group. Loans receivable are
+assessed for ECL on an individual basis);
+Past-due status; and
+External credit ratings where available.
+The grouping is regularly reviewed by management to ensure the constituents of each
+group continue to share similar credit risk characteristics.
+Interest income is calculated based on the gross carrying amount of the financial asset
+unless the financial asset is credit impaired, in which case interest income is calculated
+based on amortised cost of the financial asset.
+For financial guarantee contracts, the loss allowances are recognised at the higher of the
+amount of the loss allowance determined in accordance with IFRS 9; and the amount
+initially recognised less, where appropriate, cumulative amount of income recognised over
+the guarantee period.
+(v) Measurement and recognition of ECL (Continued)
+(ii)
+an actual or expected significant deterioration in the financial instrument's external
+credit rating (if available);
+(i) Significant increase in credit risk (Continued)
+Provisions are measured at the best estimate of the consideration required to settle the present
+obligation at the end of the reporting period, taking into account the risks and uncertainties
+surrounding the obligation. When a provision is measured using the cash flows estimated to
+settle the present obligation, its carrying amount is the present value of those cash flows (where
+the effect of the time value of money is material).
+When some or all of the economic benefits required to settle a provision are expected to be
+recovered from a third party, a receivable is recognised as an asset if it is virtually certain that
+reimbursement will be received and the amount of the receivable can be measured reliably.
+Financial instruments
+Financial assets and financial liabilities are recognised when a group entity becomes a party
+to the contractual provisions of the instrument. All regular way purchases or sales of financial
+assets are recognised and derecognised on a trade date basis. Regular way purchases or sales
+are purchases or sales of financial assets that require delivery of assets within the time frame
+established by regulation or convention in the market place.
+Financial assets and financial liabilities are initially measured at fair value except for trade
+receivables arising from contracts with customers. Transaction costs that are directly attributable
+to the acquisition or issue of financial assets and financial liabilities (other than financial assets
+or financial liabilities measured at fair value through profit and loss (the "FVTPL")) are added to
+or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on
+initial recognition. Transaction costs directly attributable to the acquisition of financial assets or
+financial liabilities FVTPL are recognised immediately in profit or loss.
+256 China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+Effective interest method
+The effective interest method is a method of calculating the amortised cost of a financial asset or
+financial liability and of allocating interest income and interest expense over the relevant period.
+The effective interest rate is the rate that exactly discounts estimated future cash receipts and
+payments (including all fees and points paid or received that form an integral part of the effective
+interest rate, transaction costs and other premiums or discounts) through the expected life of
+the financial asset or financial liability, or, where appropriate, a shorter period, to the net carrying
+amount on initial recognition.
+Financial assets
+Classification and subsequent measurement of financial assets
+Financial assets that meet the following conditions are subsequently measured at amortised cost:
+the financial asset is held within a business model whose objective is to collect contractual
+cash flows; and
+Financial assets that meet the following conditions are subsequently measured at fair value
+through other comprehensive income (the "FVTOCI"):
+Provisions are recognised when the Group has a present obligation (legal or constructive) as a
+result of a past event, it is probable that the Group will be required to settle that obligation, and
+a reliable estimate can be made of the amount of the obligation.
+Provisions
+Inventories are stated at the lower of cost and net realisable value. Costs of inventories are
+calculated using the weighted average method. Net realisable value represents the estimated
+selling price for inventories less all estimated costs of completion and costs necessary to make
+the sale.
+Inventories
+(i)
+Leased assets (Continued)
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+The lease liability is remeasured when there is a change in future lease payments arising
+from a change in an index or rate, or there is a change in the Group's estimate of the
+amount expected to be payable under a residual value guarantee, or there is a change
+arising from the reassessment of whether the Group will be reasonably certain to exercise
+a purchase, extension or termination option. When the lease liability is remeasured in this
+way, a corresponding adjustment is made to the carrying amount of the right-of-use asset,
+or is recorded in profit or loss if the carrying amount of the right-of-use asset has been
+reduced to zero.
+The lease liability is also remeasured when there is a change in the scope of a lease or
+the consideration for a lease that is not originally provided for in the lease contract ("lease
+modification") that is not accounted for as a separate lease. In this case the lease liability is
+remeasured based on the revised lease payments and lease term using a revised discount
+rate at the effective date of the modification. The only exceptions are any rent concessions
+which arose as a direct consequence of the COVID-19 pandemic and which satisfied the
+conditions set out in paragraph 46B of IFRS 16 Leases. In such cases, the Group took
+advantage of the practical expedient set out in paragraph 46A of IFRS 16 and recognised
+the change in consideration as if it were not a lease modification.
+In the consolidated statement of financial position, the current portion of long-term lease
+liabilities is determined as the present value of contractual payments that are due to be
+settled within twelve months after the reporting period.
+the financial asset is held within a business model whose objective is achieved by both
+collecting contractual cash flows and selling; and
+As a lessor
+When a contract contains lease and non-lease components, the Group allocates the
+consideration in the contract to each component on a relative stand-alone selling price basis.
+When the Group is an intermediate lessor, the sub-leases are classified as a finance lease
+or as an operating lease with reference to the right-of-use asset arising from the head lease.
+If the head lease is a short-term lease to which the Group applies the exemption method,
+then the Group classifies the sub-lease as an operating lease.
+2023 Annual Report 255
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+When the Group acts as a lessor, it determines at lease inception whether each lease is
+a finance lease or an operating lease. A lease is classified as a finance lease if it transfers
+substantially all the risks and rewards incidental to the ownership of an underlying assets
+to the lessee. If this is not the case, the lease is classified as an operating lease.
+particular, the following information is taken into account when assessing whether credit
+risk has increased significantly:
+the contractual terms give rise on specified dates to cash flows that are solely payments
+of principal and interest on the principal amount outstanding.
+In addition, the Group may irrevocably designate a financial asset that are required to be measured
+at the amortised cost or FVTOCI as measured at FVTPL if doing so eliminates or significantly
+reduces an accounting mismatch.
+Impairment of financial assets
+The Group recognises a loss allowance for ECL on financial assets which are subject to
+impairment under IFRS 9 (including accounts receivable, other receivables, long-term receivables,
+loans to China Energy Group and fellow subsidiaries, entrusted loans and financial guarantee
+contracts). The amount of ECL is updated at each reporting date to reflect changes in credit risk
+since initial recognition.
+Lifetime ECL represents the ECL that will result from all possible default events over the
+expected life of the relevant instrument. In contrast, 12-month ECL represents the portion of
+lifetime ECL that is expected to result from default events that are possible within 12 months
+after the reporting date. Assessments are done based on the Group's historical credit loss
+experience, adjusted for factors that are specific to the debtors, general economic conditions
+and an assessment of both the current conditions at the reporting date as well as the forecast
+of future conditions.
+The Group always recognises lifetime ECL for accounts receivable. The ECL on these assets
+are assessed individually for credit-impaired debtors or using a provision matrix with appropriate
+groupings.
+For all other instruments, the Group measures the loss allowance equal to 12-month ECL, unless
+when there has been a significant increase in credit risk since initial recognition, the Group
+recognises lifetime ECL. The assessment of whether lifetime ECL should be recognised is based
+on significant increases in the likelihood or risk of a default occurring since initial recognition.
+(i)
+Significant increase in credit risk
+In assessing whether the credit risk has increased significantly since initial recognition,
+the Group compares the risk of a default occurring on the financial instrument as at the
+reporting date with the risk of a default occurring on the financial instrument as at the date
+of initial recognition. In making this assessment, the Group considers both quantitative and
+qualitative information that is reasonable and supportable, including historical experience
+and forward-looking information that is available without undue cost or effort.
+2023 Annual Report 259
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+Financial assets (Continued)
+Impairment of financial assets (Continued)
+Financial assets (Continued)
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+258 China Shenhua Energy Company Limited
+2023 Annual Report 257
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+Financial assets (Continued)
+Classification and subsequent measurement of financial assets (Continued)
+All other financial assets are subsequently measured at FVTPL, except that at the date of initial
+application/initial recognition of a financial asset the Group may irrevocably elect to present
+subsequent changes in fair value of an equity investment in other comprehensive income if
+that equity investment is neither held for trading nor contingent consideration recognised by an
+acquirer in a business combination to which IFRS 3 Business Combinations applies.
+(i) Amortised cost and interest income
+Interest income is recognised using the effective interest method for financial assets
+measured subsequently at amortised cost. Interest income is calculated by applying the
+effective interest rate to the gross carrying amount of a financial asset, except for financial
+assets that have subsequently become credit-impaired (see below). For financial assets that
+have subsequently become credit-impaired, interest income is recognised by applying the
+effective interest rate to the amortised cost of the financial asset from the next reporting
+period. If the credit risk on the credit-impaired financial instrument improves so that the
+financial asset is no longer credit-impaired, interest income is recognised by applying
+the effective interest rate to the gross carrying amount of the financial asset from the
+beginning of the reporting period following the determination that the asset is no longer
+credit impaired.
+Equity instruments designated as at FVTOCI
+Investments in equity instruments at FVTOCI are subsequently measured at fair value with
+gains and losses arising from changes in fair value recognised in other comprehensive
+income and accumulated in the other reserves; and are not subject to impairment
+assessment. The cumulative gain or loss will not be reclassified to profit or loss on disposal
+of the equity investments, and will be transferred to retained earnings.
+Dividends from these investments in equity instruments are recognised in profit or loss
+when the Group's right to receive the dividends is established, unless the dividends clearly
+represent a recovery of part of the cost of the investment. Dividends are included in the
+"other income" line item in profit or loss.
+(iii) Financial assets at FVTPL
+Financial assets that do not meet the criteria for being measured at amortised cost or
+FVTOCI or designated as FVTOCI are measured at FVTPL.
+Financial assets at FVTPL are measured at fair value at the end of each reporting period,
+with any fair value gains or losses recognised in profit or loss. The net gain or loss
+recognised in profit or loss includes any dividend or interest earned on the financial asset
+and is included in the "other gains and losses" line item.
+(ii)
+the contractual terms give rise on specified dates to cash flows that are solely payments
+of principal and interest on the principal amount outstanding.
+Total
+Control over Guoneng Hebei Dingzhou Power Co., Ltd. ("Dingzhou Power")
+Notes to the Consolidated Financial Statements (Continued)
+2023 Annual Report 269
+Notwithstanding that the Group has used all available information to make this estimation,
+inherent uncertainty exists and actual write-offs may be higher or lower than the amount
+estimated.
+In considering the impairment losses that may be required for current receivables and other
+financial assets, future cash flows need to be determined. One of the key assumptions that
+has to be applied is about the ability of the debtors to settle the receivables.
+In considering the impairment losses that may be required for certain of the Group's assets
+which mainly include property, plant and equipment, construction in progress, exploration
+and evaluation assets, intangible assets, right-of-use assets, interests in associates and
+other non-current assets, the recoverable amount of the asset need to be determined. The
+recoverable amount is the higher of its fair value less cost of disposal and value in use. It is
+difficult to precisely estimate fair value because quoted market prices for these assets may
+not be readily available. In determining the value in use, the Group uses all readily available
+information in determining expected cash flows generated by the cash-generating unit to
+which the asset belongs and they are discounted to their present value, which requires
+significant judgement relating to cash flow items such as level of sale volume, selling price,
+amount of operating costs and future returns.
+Impairment losses
+Engineering estimates of the Group's coal reserves are inherently imprecise and represent
+only approximate amounts because of the subjective judgements involved in developing
+such information. There are authoritative guidelines regarding the engineering criteria
+that have to be met before estimated coal reserves can be designated as "proved" and
+"probable". Proved and probable coal reserve estimates are updated at regular basis and
+have taken into account recent production and technical information of each mine. In
+addition, as prices and cost levels change from year to year, the estimate of proved and
+probable coal reserves also changes. This change is considered as a change in estimate for
+accounting purposes and is reflected on a prospective basis in related depreciation rates.
+Despite the inherent imprecision in these engineering estimates, these estimates are
+used in determining depreciation expenses and impairment loss. Depreciation rates
+are determined based on estimated proved and probable coal reserve quantity (the
+denominator) and capitalised costs of mining structures and mining rights (the numerator).
+The capitalised cost of mining structures and mining rights are amortised based on the
+units of coal produced.
+Coal reserves
+The following are the key assumptions concerning the future, and other key sources of
+estimation uncertainty at the end of the reporting period that have a significant risk of
+causing a material adjustment to the carrying amounts of assets and liabilities within the
+next financial year.
+4.2 Key sources of estimation uncertainty
+For the year ended 31 December 2023
+CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
+UNCERTAINTY (CONTINUED)
+4.
+268 China Shenhua Energy Company Limited
+The Directors evaluated whether the Company has the practical ability to lead the relevant
+activities of Dingzhou Power to determine whether the Company has actual control over
+Dingzhou Power. The Company is the largest equity owner of Dingzhou Power and no
+other equity owners individually or in aggregate had the power to control Dingzhou Power
+according to the articles of association. Historically, the Company controlled the operation
+of Dingzhou Power by appointing senior management, approving annual budget and
+determining the remuneration of employees etc. Considering above mentioned factors,
+the Directors are of the opinion that the Company has sufficiently dominant power over
+Dingzhou Power as the Company is the governing body of most of the relevant activities of
+it. Therefore the financial statements of Dingzhou Power are consolidated by the Company
+during the periods presented.
+Note 44 describes that Dingzhou Power is a subsidiary of the Company although the
+Company has only 41% ownership interest and voting rights in Dingzhou Power. The
+remaining 59% of ownership interest and voting rights are owned by two shareholders that
+are unrelated to the Group as to 19% and 40%, respectively. Details of Dingzhou Power
+are set out in Note 44.
+The following are critical judgements, apart from those involving estimation (see Note 4.2
+below), that the Directors have made in the process of applying the Group's accounting
+policies and that have the most significant effect on the amounts recognised in the
+consolidated financial statements.
+Critical judgements in applying accounting policies
+4.1
+The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to
+accounting estimates are recognised in the period in which the estimate is revised if the revision
+affects only that period or in the period of the revision and future periods if the revision affects
+both current and future periods.
+In the application of the Group's accounting policies, which are described in Note 3, the Directors
+are required to make judgements, estimates and assumptions about the carrying amounts
+of assets and liabilities that are not readily apparent from other sources. The estimates and
+associated assumptions are based on historical experience and other factors that are considered
+to be relevant. Actual results may differ from these estimates.
+4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
+UNCERTAINTY
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+(Expressed in RMB)
+(Expressed in RMB)
+CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
+UNCERTAINTY (CONTINUED)
+5. REVENUE FROM GOODS AND SERVICES
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+2023 Annual Report 271
+The estimation of the liabilities for reclamation and mine closure involves the estimates of
+the amount and timing for the future cash spending as well as the discount rate used for
+reflecting current market assessments of the time value of money and the risks specific
+to the liability. The Group considers the factors including development plan of the mines,
+the geological structure of the mining regions and reserve volume to determine the scope,
+amount and timing of reclamation and mine closure works to be performed. Determination
+of the effect of these factors involves judgements from the Group and the estimated
+liabilities may turn out to be different from the actual expenditure to be incurred. The
+discount rate used by the Group may also be altered to reflect the changes in the market
+assessments of the time value of money and the risks specific to the liability, such as
+change of the borrowing rate and inflation rate in the market. As changes in estimates
+occur (such as mine plan revisions, changes in estimated costs, or changes in timing of the
+performance of reclamation activities), the revisions to the obligation will be recognised
+at the appropriate discount rate. The carrying amounts of the obligations are disclosed in
+Note 36.
+Obligations for land reclamation
+The provision of ECL is sensitive to changes in estimates. The information about the ECL
+and the Group's accounts receivable are disclosed in Notes 25 and 39.2, respectively.
+The Group uses provision matrix to calculate ECL for accounts receivable. The provision
+rates are based on the aging of accounts receivable as groupings of receivables that have
+similar loss patterns. The provision matrix is based on the Group's historical default rates
+taking into consideration forward-looking information that is available without undue costs
+or effort. At every reporting date, the historical observed default rates are reassessed and
+changes in the forward-looking information are considered. In addition, accounts and bills
+receivables with significant balances and credit impaired are assessed for ECL individually.
+Provision of ECL for accounts and bills receivables
+4.
+4.2 Key sources of estimation uncertainty (Continued)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+4.
+270 China Shenhua Energy Company Limited
+Certain of the Group's financial assets, unquoted equity instruments and accounts and bills
+receivables amounting to RMB2,740 million as at 31 December 2023 (RMB2,888 million
+as at 31 December 2022) are measured at fair values with fair values being determined
+based on unobservable inputs using valuation techniques as set out in Note 39.3. Changes
+in assumptions relating to any key inputs may have a material impact on the reported fair
+values of these instruments.
+Fair value measurement of financial instruments
+As at 31 December 2023, deferred tax assets of RMB5,469 million (2022: RMB5,019
+million as restated) have been recognised in the Group's consolidated statement of financial
+position. No deferred tax asset has been recognised on the tax losses of RMB8,481 million
+(2022: RMB8,621 million) and deductible temporary differences of RMB9,331 million (2022:
+RMB9,349 million) due to the unpredictability of future profit streams. The realisation of
+the deferred tax assets mainly depends on whether sufficient future profits or taxable
+temporary differences will be available in the future. In cases where the actual future
+profits generated are less or more than expected, a material reversal or further provision
+of deferred tax assets may arise, which will be recognised in profit or loss in the period in
+which such a reversal or further provision takes place.
+Deferred tax assets
+Other than the freehold land and mining structures and mining rights, property, plant and
+equipment are depreciated on a straight-line basis over the estimated useful lives of the
+assets, after taking into account the estimated residual value. The Group reviews the
+estimated useful lives and residual value of the assets regularly based on the Group's
+historical experience with similar assets and taking into account anticipated technological
+changes. Depreciation for future periods is adjusted if there is a significant change from
+previous estimates. The carrying amount of the property, plant and equipment is disclosed
+in Note 16.
+Depreciation
+4.2 Key sources of estimation uncertainty (Continued)
+CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
+UNCERTAINTY (CONTINUED)
+Disaggregation of revenue of business lines and geographical location of customers is as follows:
+For the year ended 31 December 2023
+2023 Annual Report 267
+has control or joint control over the Group;
+(i)
+A person, or a close member of that person's family, is related to the Group if that person:
+(a)
+Related parties
+The Group's derivative financial instruments represent cross-currency exchange rate swaps,
+and are initially recognised at fair value at the date when the derivative contracts are entered
+into, and remeasured at fair value at the end of the reporting period, with any gains or losses
+recognised in profit or loss.
+Derivative financial instruments
+The Group derecognises financial liabilities when, and only when, the Group's obligations are
+discharged, cancelled or have expired. The difference between the carrying amount of the
+financial liability derecognised and the consideration paid and payable is recognised in profit or
+loss.
+Derecognition of financial liabilities
+the amount initially recognised less, where appropriate, cumulative amortisation recognised
+over the guarantee period.
+(ii)
+the amount of the loss allowance determined in accordance with IFRS 9/IAS 37 Provisions,
+Contingent Liabilities and Contingent Assets; and
+Financial guarantee contracts
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+266
+2023 Annual Report 265
+Financial liabilities including borrowings, accounts and bills payables, other payables, long-term
+liabilities, medium-term notes and bonds are subsequently measured at amortised cost, using
+the effective interest method.
+Financial liabilities at amortised cost
+it forms part of a contract containing one or more embedded derivatives, and IFRS 9 permits
+the entire combined contract to be designated as at FVTPL.
+A financial guarantee contract is a contract that requires the issuer to make specified payments to
+reimburse the holder for a loss it incurs because a specified debtor fails to make payments when
+due in accordance with the terms of a debt instrument. Financial guarantee contract liabilities are
+measured initially at their fair values. It is subsequently measured at the higher of:
+Notes to the Consolidated Financial Statements (Continued)
+has significant influence over the Group; or
+is a member of the key management personnel of the Group or the Group's parent.
+Individually material operating segments are not aggregated for financial reporting purposes
+unless the segments have similar economic characteristics and are similar in respect of the
+nature of products and services, the type or class of customers, the methods used to distribute
+the products or provide the services, and the nature of the regulatory environment. Operating
+segments which are not individually material may be aggregated if they share a majority of these
+criteria.
+Operating segments, and the amounts of each segment item reported in the financial statements,
+are identified from the financial information provided regularly to the Group's most senior
+executive management for the purposes of allocating resources to, and assessing the performance
+of, the Group's various lines of business and geographical locations.
+Segment reporting
+Close members of the family of a person are those family members who may be expected to
+influence, or be influenced by, that person in their dealings with the entity.
+(viii) The entity, or any member of a group of which it is a part, provides key management
+personnel services to the Group or to the Group's parent.
+(vii) A person identified in (a)(i) has significant influence over the entity or is a member
+of the key management personnel of the entity (or of a parent of the entity).
+(vi) The entity is controlled or jointly controlled by a person identified in (a).
+The entity is a post-employment benefit plan for the benefit of employees of either
+the Group or an entity related to the Group.
+One entity is a joint venture of a third entity and the other entity is an associate of
+the third entity.
+(v)
+(iii)
+(iv)
+One entity is an associate or joint venture of the other entity (or an associate or joint
+venture of a member of a group of which the other entity is a member).
+(ii)
+The entity and the Group are members of the same group.
+(i)
+An entity is related to the Group if any of the following conditions applies:
+(b)
+Related parties (Continued)
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+China Shenhua Energy Company Limited
+Both entities are joint ventures of the same third party.
+Segments
+Coal
+Power
+1,615 1,677
+11,259 11,618
+326,449 327,025
+6,379
+6,098
+1,959 1,596 2,126
+13,012 13,423 2,017
+37
+5
+282
+1,591
+202
+1,753 1,805
+1,591 2,089
+1,677
+1,615
+.
+11,259 11,618
+228,149 236,305 92,202 84,341
+Total
+Shipping
+Others
+Port
+402
+Railway
+2,089
+2,124
+12,280
+6,379
+6,098
+2,126
+1,596
+1,959
+2,017
+13,423
+222,404 230,421 85,619 77,945 13,012
+5,745 5,884 6,583 6,396
+Overseas markets
+2,160
+Domestic markets
+343,074 344,533
+6,098 6,379
+2,126
+1,596
+1,959
+2,017
+84,341 13,012 13,423
+92,202
+228,149 236,305
+16,625 17,508
+Geographical markets
+Transportation and other services
+14,088 13,431
+602
+RMB
+RMB
+RMB
+RMB RMB
+2023 2022 2023 2022
+2022
+2023
+2023 2022
+2022
+2023
+million million
+2022
+2022
+2023
+2022
+2023
+Total
+Other
+Coal chemical
+Shipping
+Port
+Railway
+2023
+million
+million
+million
+603
+5,495 5,777
+5,495 5,777
+85,418 77,767
+221,448 230,050
+6,701 6,255 6,784 6,574
+Coal chemical products
+Others
+85,418 77,767
+Power
+221,448 230,050
+Coal
+Sales of goods
+Types of goods or service
+RMB RMB
+million million
+RMB RMB
+million million
+million
+million
+million
+RMB
+RMB
+RMB
+RMB RMB RMB RMB
+million million million
+million
+the financial liability forms part of a group of financial assets or financial liabilities or both,
+which is managed and its performance is evaluated on a fair value basis, in accordance
+with the Group's documented risk management or investment strategy, and information
+about the grouping is provided internally on that basis; or
+such designation eliminates or significantly reduces a measurement or recognition
+inconsistency that would otherwise arise; or
+(iii)
+it is a derivative, except for a derivative that is a financial guarantee contract or a designated
+and effective hedging instrument.
+548
+6,379
+6,098
+1,596 2,126
+3,240 3,925
+13,012 13,423 2,017 1,959
+184 29,949 28,774 4,732 4,482
+228,149 236,305 92,202 84,341
+45,157 41,169 205
+Inter-segment
+External customers
+information
+Revenue disclosed in segment
+548
+A financial liability other than a financial liability held for trading or contingent consideration of
+an acquirer in a business combination may be designated as at FVTPL upon initial recognition if:
+2023 2022 2023 2022 2023 2022
+RMB RMB RMB RMB RMB RMB
+million million million million million
+million
+million
+million
+RMB
+RMB
+RMB
+RMB RMB
+million million
+2022
+2023
+million
+2023 2022 2023 2022
+343,074 344,533
+273,306 277,474 92,407 84,525 42,961 42,197
+5. REVENUE FROM GOODS AND SERVICES (CONTINUED)
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+2023 Annual Report 273
+For sales of power, revenue is recognised upon the transmission of electric power to the power
+grid companies. Power could not be returned or exchanged and there is also no warranties
+associated with power sales.
+The Group produces and sells coal and coal chemical products to customers at spot market.
+For sales of coal and coal chemical products, revenue is recognised when control of the goods
+has transferred, being when the goods have been shipped to the customers' specific location.
+According to the Group's historical experiences, there was no significant exchange or return of
+coal and coal chemical products occurred. There is no sales-related warranties associated with
+coal and coal chemical products.
+343,074 344,533
+(548) (529) (83,831) (79,063)
+228,149 236,305 92,202 84,341 13,012 13,423 2,017 1,959 1,596 2,126 6,098 6,379
+529 83,831 79,063
+Revenue
+(4,482)
+(4,732)
+(45,157) (41,169) (205) (184) (29,949) (28,774)
+Adjustment and eliminations
+529 426,905 423,596
+548
+6,098 6,379
+4,836 6,051
+6,441
+6,749
+(3,240) (3,925)
+2023 2022
+RMB RMB
+RMB
+million million million
+Total
+Other
+Coal chemical
+2023 2022
+2023
+RMB RMB RMB RMB RMB RMB RMB RMB
+million million million million
+million million million million
+RMB RMB
+million million
+RMB RMB
+million million
+2022 2023 2022 2023 2022 2023 2022 2023 2022
+2023
+RMB RMB RMB RMB
+million million million million
+Shipping
+Port
+Railway
+Power
+Coal
+Other
+Segments
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+272 China Shenhua Energy Company Limited
+343,074 344,533
+6,379
+6,098
+2,017 1,959 1,596 2,126
+13,423
+228,149 236,305 92,202 84,341 13,012
+5. REVENUE FROM GOODS AND SERVICES (CONTINUED)
+Total
+2022 2023 2022
+Timing of revenue recognition
+Coal chemical
+Shipping
+Port
+Railway
+Power
+Coal
+Segments
+Set out below is the reconciliation of the revenue with the amounts disclosed in the segment
+information.
+The Group's revenue from contracts with customers is RMB342,935 million for the year ended
+31 December 2023 (2022: RMB344,456 million).
+343,074 344,533
+6,098 6,379
+2,126
+2,017 1,959 1,596
+228,149 236,305 92,202 84,341 13,012 13,423
+Total
+326,449 327,025
+16,625 17,508
+1,596 2,126
+1,959
+2,017
+13,012 13,423
+6,098 6,379
+228,149 236,305 92,202 84,341
+A point in time
+Over time
+The Group provides railway transportation services, shipment transportation services as well as
+port loading and storage services to customers. Such services are recognised as a performance
+obligation satisfied over time as the Group rendering the services. Revenue is recognised for
+these services based on the stage of completion of the performance obligation using output
+method.
+All performance obligations of sales of coal, power and coal chemical products, railway and
+shipment transportation services, and port loading and storage services are part of contracts with
+an original expected duration of one year or less, and as permitted under IFRS 15, the transaction
+price allocated to these unsatisfied contracts is not disclosed.
+2023 2022
+RMB RMB
+million million
+SEGMENT AND OTHER INFORMATION
+Financial liabilities and equity (Continued)
+6.
+Financial liabilities at FVTPL
+Financial liabilities are classified as at FVTPL when the financial liability is (i) contingent
+consideration of an acquirer in a business combination to which IFRS 3 applies, (ii) held for trading
+or (iii) it is designated as at FVTPL.
+A financial liability is classified as held for trading if:
+it has been acquired principally for the purpose of repurchasing it in the near term; or
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+on initial recognition it is part of a portfolio of identified financial instruments that the Group
+manages together and has a recent actual pattern of short-term profit-taking; or
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+The Group manages its businesses by divisions, which are organised by business lines (products
+and services). In a manner consistent with the way in which information is reported internally to
+the Group's chief operating decision maker ("CODM"), including president, senior vice president
+and chief financial officer, for the purposes of resource allocation and performance assessment,
+the Group has presented the following six (2022: six) reportable segments. No operating
+segments have been aggregated to form the following reportable segments.
+(1)
+(2)
+Coal operations - which produce coal from surface and underground mines, and the sale of
+coal to external customers, the power operations segment and the coal chemical operations
+segment. The Group sells its coal under long-term supply contracts, which allow periodical
+price adjustments, and at spot market.
+Power operations - which use coal from the coal operations segment and external suppliers,
+thermal power, photovoltaic power, wind power, water power and gas power to generate
+electric power for the sale to coal operations segment and external customers. Electric
+power is sold to the power grid companies in accordance with planned power output at the
+tariff rates as approved by the relevant government authorities. Electric power produced
+in excess of the planned power output is sold at the tariff rate as agreed upon with the
+respective power grid companies which are generally lower than the tariff rates for planned
+power output.
+274 China Shenhua Energy Company Limited
+330,746 332,253
+12,328
+22
+RMB
+RMB
+RMB RMB
+million
+million
+million
+million
+million
+million
+RMB
+million
+million
+million million
+million
+RMB
+RMB
+RMB
+2022
+2023
+2022
+2023
+2022
+2023
+2022
+(Restated)
+(Restated)
+(Restated)
+(Restated)
+RMB
+million
+RMB
+Coal purchased
+RMB
+RMB
+67,886
+65,079
+67,886 65,079
+3,688
+608
+(83,434) (78,951) 232,537 226,624
+617
+23
+13
+27
+(1,910) (1,746) 3,051 3,130
+24,796 25,263
+1,526
+Total cost of sales
+196,959 192,753 77,594 73,491 27,380 25,041 3,844 3,556
+4,602
+5,214
+5,569
+5,493
+23
+23
+3,041
+27
+910
+7,700 7,045 4,285 3,957 8,242 9,019
+Cost of coal
+production
+69,137 70,535
+Cost of coal
+transportation
+52,236 50,094
+19,138
+16,022 2,947
+2,646
+1,561
+Power cost
+73,309 69,534
+Cost of coal chemical
+production
+Others
+(37,921) (37,181) 37,961 33,107
+(36,298) (33,170) 37,011 36,364
+4,961
+4,876
+897
+(7,305) (6,854) 61,832 63,681
+2023 2022 2023
+(Restated)
+RMB
+million
+2022
+114
+24,879
+23,248
+Share of results of associates
+595
+1,213
+2,586
+851
+92
+384
+3,565
+2,223
+Loss allowances and impairment of assets
+3,706
+3,488
+270
+1,221
+3,976
+159
+4,709
+23,134
+Depreciation and amortisation
+344,533
+Profit before income tax
+88,402 97,759
+3,946
+1,468
+428
+427
+92,776
+24,787
+99,654
+3,736
+3,868
+1,293
+1,100
+(2,171)
+(1,734)
+2,858
+3,234
+Interest expenses
+2023
+276 China Shenhua Energy Company Limited
+6. SEGMENT AND OTHER INFORMATION (CONTINUED)
+For the year ended 31 December 2023
+(Expressed in RMB)
+6. SEGMENT AND OTHER INFORMATION (CONTINUED)
+(e) Other information
+Certain other information of the Group's segments for the years ended 31 December 2023
+and 2022 is set out below:
+Coal
+Power
+Railway
+Notes to the Consolidated Financial Statements (Continued)
+Port
+Coal chemical
+Unallocated items
+Eliminations
+Total
+2023 2022 2023
+(Restated)
+RMB RMB RMB
+million million million
+2022
+(Restated)
+RMB RMB
+million million
+2022
+2023
+Shipping
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+2023 Annual Report 277
+(d) Major customers
+(c) Geographical information
+The following table sets out information about geographical location of (i) the Group's
+revenue from external customers and (ii) the Group's property, plant and equipment,
+construction in progress, exploration and evaluation assets, intangible assets, right-of-
+use assets, interests in associates, certain non-current assets. The geographical location
+of customers is based on the location at which the services were provided or the goods
+delivered. The geographical location of the specified non-current assets is based on the
+physical location of the asset, in the case of property, plant and equipment, construction in
+progress and right-of-use assets, and the location of operations, in the case of exploration
+and evaluation assets, intangible assets, other non-current assets and interests in
+associates.
+Domestic markets
+Overseas markets
+Revenue from external
+customers
+Year ended 31 December
+2023
+2022
+RMB million RMB million RMB million
+Specified non-
+current assets
+Year ended 31 December
+2023
+Revenue from any individual customer of the Group does not exceed 10% of the Group's
+revenue. Certain of the Group's customers are entities, which controlled, jointly controlled
+or significantly influenced by the PRC government ("government-related entities") and
+collectively considered as the Group's major customers. During the year ended 31
+December 2023, revenue from the Group's top five major customers of coal and power
+segments amounted to RMB144,875 million (2022: RMB137,050 million).
+2022
+RMB million
+332,253
+12,280
+406,767
+4,006
+385,779
+6,119
+Profit from operations
+(Note (i))
+Capital expenditures
+(Note (ii))
+18,872 10,638 15,922 11,103
+Total assets (Note (iii) 301,482 294,168 167,912 150,632
+Total liabilities
+343,074
+344,533
+410,773
+391,898
+330,746
+12,328
+67,684 74,717 12,544
+33,468
+2,428
+2022
+RMB million
+RMB million
+2023
+Year ended 31 December
+Profit for the year has been arrived at after charging/(crediting)
+11. PROFIT FOR THE YEAR
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+282 China Shenhua Energy Company Limited
+The two-tiered profits tax rates regime is applicable from the year of assessment 2018/19 onwards. The profits
+tax rate for the first HKD 2,000,000 of profits of corporations will be lowered to 8.25%, and profits above that
+amount will continue to be subject to the tax rate of 16.5%.
+Personnel expenses, including
+During the years ended 31 December 2023 and 2022, there was no significant assessable profit
+and provision for income tax for the overseas subsidiaries.
+8.25/16.5*
+21.0
+21.0
+22.0
+22.0
+%
+%
+2022
+2023
+8.25/16.5*
+Year ended 31 December
+42,050
+© Contributions to defined contribution plans
+24,879
+Depreciation and amortisation (Note)
+68
+31
+Less: amount capitalised
+23,316
+24,910
+Depreciation and amortisation charged for the year
+1,288
+42,157
+2,782
+486
+413
+910
+854
+20,632
+20,861
+Depreciation of property, plant and equipment (Note 16)
+Depreciation of right-of-use assets (Note 23)
+Amortisation of intangible assets (Note 19)
+4,225
+4,812
+Amortisation of long-term deferred expenses (Note 22)
+23,248
+Hong Kong, China
+Indonesia
+- non-deductible expenses
+(8,229)
+(7,109)
+- different tax rates of branches and subsidiaries
+Tax effects of:
+24,914
+23,194
+Tax at the PRC income tax rate of 25% (2022: 25%)
+99,654
+1,501
+92,776
+2022
+(Restated)
+RMB million
+RMB million
+Year ended 31 December
+2023
+The tax charge for the year can be reconciled to the profit before income tax per consolidated
+statement of profit or loss and other comprehensive income as follows:
+14,256
+17,584
+(1,226)
+(311)
+(2,813)
+Profit before income tax
+United States
+1,074
+(922)
+The applicable tax rates of the Group's overseas subsidiaries are as follows:
+Under the Law of the PRC on Enterprise Income Tax (the "EIT Law") and Implementation
+Regulation of the EIT Law, the tax rate applicable for the PRC group entities is 25% (2022: 25%)
+except for subsidiaries and branches operating in the western developing region of the PRC which
+are qualified to be entitled to a preferential tax rate of 15% from 2021 to 2030.
+10. INCOME TAX EXPENSE (CONTINUED)
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+2023 Annual Report 281
+14,256
+17,584
+- share of results of associates
+Income tax expense
+1,161
+- under/(over) provision in respect of prior years
+282
+696
+- tax losses and deductible temporary difference not
+recognised
+(387)
+(937)
+- utilisation of tax losses and deductible temporary
+difference previously not recognised
+(585)
+(2,813)
+1,161
+Loss allowances
+(6)
+Intangible assets (Note 19)
+Construction in progress (Note 17)
+Property, plant and equipment (Note 16)
+RMB million RMB million
+RMB million RMB million
+Total
+Others
+Railway
+segment
+Power
+segment
+Right-of-use assets (Note 23)
+Coal
+segment
+RMB million
+(ii)
+Cost of sales include an amount of depreciation and amortisation of RMB21,263 million for the year ended 31
+December 2023 (2022: RMB19,237 million).
+(i)
+Notes:
+37
+34
+272
+396
+audit service
+The Group has recorded impairment losses for certain long-term assets:
+Auditors' remuneration
+Goodwill
+284 China Shenhua Energy Company Limited
+3,003
+13
+998
+1,292
+700
+30
+3
+136
+3
+Total
+52
+10
+27
+23
+113
+3
+998
+1,217
+22
+30
+557
+2,782
+- Trade receivables (Note 39.2)
+lease payments
+Operating lease charges relating to short-term
+2,782
+(188)
+71
+(179)
+- impairment losses on property, plant and
+equipment (Note 16)
+- gains on disposal of subsidiaries and associates
+- losses/(gains) on disposal of property, plant and
+equipment, intangible assets and non-current assets
+Other gains and losses, represent
+2022
+RMB million
+RMB million
+2,151
+Year ended 31 December
+2023
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+2023 Annual Report 283
+1,337
+285
+(55)
+1,392
+291
+- Other receivables and other loans (Note 39.2)
+11. PROFIT FOR THE YEAR (CONTINUED)
+leases, leases of low-value assets and variable
+- impairment losses on construction in progress (Note 17)
+86
+168,743
+170,468
+Carrying amount of inventories sold
+3,184
+3,583
+489
+688
+47
+(6)
+52
+56
+201
+136
+348
+3
+- impairment losses on other non-current assets
+- write down of inventories
+- reversal of allowance for prepaid expenses
+- impairment losses on goodwill
+- impairment losses on right-of-use assets (Note 23)
+- impairment losses on intangible assets (Note 19)
+30
+18,295
+16,734
+2022
+(Restated)
+RMB million
+232,537
+33,663
+35,385
+19,972
+18,385
+18,930
+19,026
+10,715
+12,034
+226,624
+19,237
+25,663
+25,090
+33,365
+343,074
+65,079
+67,886
+RMB million
+RMB million
+2022
+21,263
+Year ended 31 December
+2023
+Year ended 31 December
+2023
+2022
+RMB million
+Amount
+RMB million
+million tonnes
+million tonnes RMB million
+Quantity
+Amount
+Quantity
+2022
+2023
+During the year, trading of carbon emission rights recorded a net loss amounting to approximately RMB76 million. Details
+of carbon emission rights trading are listed below.
+RMB million
+Note:
+1,272
+529
+500
+47
+193
+27
+261
+497
+318
+1,100
+1.
+(Expressed in RMB)
+Carbon emission quota income (Note)
+Others
+7,417
+7,169
+41,959 31,945
+96
+9
+333
+227
+167
+117
+7,858
+2,868
+6,327 6,740
+125,301 124,906 18,885
+(397) (112) 93,317 99,138
+(601) (1,528)
+560
+124
+24
+642
+46
+2,394
+485
+For the year ended 31 December 2023
+8,646 504,228 489,271 (499,423) (469,551) 633,412 625,320
+(134,258) (128,036) (139,580) (131,621) (51,000) (53,174)
+Claim income
+Government grants
+8. OTHER INCOME
+Materials, fuel and power
+Personnel expenses
+Depreciation and amortisation
+Repairs and maintenance
+Transportation charges
+Taxes and surcharges
+Other operating costs
+Coal purchased
+COST OF SALES
+7.
+Notes to the Consolidated Financial Statements (Continued)
+278 China Shenhua Energy Company Limited
+(Note (i))
+Unallocated items of total assets include deferred tax assets and other unallocated corporate assets.
+Unallocated items of total liabilities include deferred tax liabilities and other unallocated corporate liabilities.
+Profit from operations is calculated as revenue minus cost of sales, selling expenses, general and
+administrative expenses, research and development costs, loss allowances and impairment of assets.
+(iii)
+(ii)
+(i)
+Notes:
+(424) (2,080) (3,206) (203,455) (201,295) 386,333 363,163 (151,761) (162,524)
+(601)
+(7,931)
+(7,120)
+Capital expenditures consist of addition in property, plant and equipment, construction in process,
+exploration and evaluation assets, intangible assets, long-term deferred expenses, land use rights and
+prepayment for mining projects.
+Carbon emission quota at the beginning of
+the year
+61
+10
+Total finance costs
+Exchange loss, net
+Unwinding of discount
+Others
+(497)
+(299)
+Less: amount capitalised
+2,738
+2,229
+Net finance costs
+Total finance costs on financial liabilities not at FVTPL
+120
+43
+25
+2,560
+2,084
+3,071
+2,634
+3,053
+18
+18
+135
+2,616
+Note:
+2,241
+RMB million
+2023
+Year ended 31 December
+(Expressed in RMB)
+For the year ended 31 December 2023
+Current tax, mainly PRC enterprise income tax
+Under/(over) provision in respect of prior years
+Deferred tax
+10. INCOME TAX EXPENSE
+Notes to the Consolidated Financial Statements (Continued)
+280 China Shenhua Energy Company Limited
+1,930
+Borrowing costs capitalised during the year arose on the general borrowing pools and were calculated by applying a
+capitalisation rate from 2.25% to 4.41% (2022: from 1.80% to 4.41%) per annum to expenditure on qualifying assets.
+483
+3,930
+3,117
+564
+85
+993
+928
+132
+174
+859
+RMB million
+RMB million
+2022
+10
+185
+Quota consumed
+(1)
+current year
+Carbon emission quota reduced for the
+3.
+36
+1
+(2)
+269
+Purchased quota/expense
+(2)
+61
+154
+Allocated quota (free of charge)
+(1)
+current year
+Carbon emission quota increased for the
+2.
+4
+Quota sold/income
+3
+193
+2023
+Year ended 31 December
+- bonds
+- lease liabilities
+- borrowings
+Interest on:
+Total interest income
+- other loans and receivables
+- bank deposits
+Interest income from:
+9. INTEREST INCOME/FINANCE COSTS
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+2023 Annual Report 279
+61
+31
+Carbon emission quota at the end of the year
+4.
+47
+1
+8,957 11,489 13,508
+(79,063)
+19,831
+529
+28,774
+29,949
+184
+1,596 2,126 6,098
+1,959
+2,017
+13,423
+84,341 13,012
+228,149 236,305 92,202
+45,157 41,169 205
+Revenue from external customers
+Inter-segment revenue
+2023 2022 2023 2022
+RMB RMB RMB RMB
+million million million million
+million
+million
+million
+million
+4,732
+4,482
+3,240 3,925
+6,379 343,074 344,533
+83,283 78,534
+11,152 12.742
+7,969
+73,536 10,910
+63,753
+Reportable segment profit
+Including:
+538 88,402 97,759
+6,379 426,357 423,067
+million
+6,051 6,098
+6,441
+6,749
+42,197
+42,961
+84,525
+273,306 277,474 92,407
+Reportable segment revenue
+4,836
+2,307 2,268
+RMB
+RMB
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+2023 Annual Report 275
+For the purposes of assessing segment performance and allocating resources between
+segments, the Group's CODM monitors the results attributable to each reportable segment
+based on profit before income tax ("reportable segment profit"). Reportable segment
+profit represents the profit earned by each segment without allocation of head office and
+corporate items. Inter-segment sales are primarily charged at prevailing market rate which
+are the same as those charged to external customers.
+(a) Segment results
+Coal chemical operations - which use coal from the coal operations segment to first
+produce methanol and further process into polyethylene and polypropylene, together with
+other by-products, for sale to external customers. The Group sells its polyethylene at spot
+market.
+Shipping operations which provide shipment transportation services to the power
+operations segment, the coal operations segment and external customers. The rates of
+freight charges billed to the power operations segment, the coal operations segment and
+external customers are consistent.
+Port operations - which provide loading, transportation and storage services to the coal
+operations segment and external customers. The Group charges service fees and other
+expenses, which are reviewed and approved by the relevant government authorities.
+(6)
+(5)
+(4)
+(3) Railway operations – which provide railway transportation services to the coal operations
+segment, the power operations segment, the coal chemical operations segment and
+external customers. The rates of freight charges billed to the coal operations segment, the
+power operations segment, the coal chemical operations segment and external customers
+are consistent and do not exceed the maximum amounts approved by the relevant
+government authorities.
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+(83,831)
+6. SEGMENT AND OTHER INFORMATION (CONTINUED)
+(a) Segment results (Continued)
+Information regarding the Group's reportable segments as provided to the Group's CODM
+for the purposes of resource allocation and assessment of segment performance for the
+years ended 31 December 2023 and 2022 is set out below:
+Coal
+RMB
+RMB
+RMB
+RMB
+million million
+2023 2022
+2022
+2023
+RMB
+2023 2022
+2023 2022 2023
+RMB RMB RMB
+million million million
+Total
+Coal chemical
+Shipping
+Port
+Railway
+Power
+2022
+100
+6. SEGMENT AND OTHER INFORMATION (CONTINUED)
+706
+2022
+2023
+2022
+2023
+2022
+2023
+Consolidated
+inter-segment amounts
+and corporate items
+amounts
+Elimination of
+Unallocated head office
+Reportable segment
+(b) Reconciliations of reportable segment revenue, segment profit and other
+items of profit or loss for the years ended 31 December 2023 and 2022 are
+set out below:
+12 3,706 3,488
+2023
+2022
+RMB
+RMB
+100
+548
+426,357
+Revenue
+million million
+million
+million
+24,787 23,134
+595 1,213
+million
+million
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+million million
+34 3,736 3,868
+423,067
+30
+1,057
+1,122
+5,357
+5,136
+6,702
+12
+154
+283
+145
+561
+1,656
+1,193 1,252 1,825
+10,431 8,954 7,045
+Depreciation and amortisation
+Interest expenses
+180
+30
+772
+288
+180
+776
+770
+62
+(31)
+2
+753
+1,015
+4
+3
+1,097
+4
+322
+883
+14
+1,595 1,315
+574
+1,344
+Loss allowances and impairment of assets
+Share of results of associates
+7786
+4
+0.17
+0.33
+0.38
+0.06
+0.15
+0.90
+RMB million
+0.30
+0.30
+0.90
+0.30
+0.30
+0.30
+RMB million
+0.30
+0.71
+99
+1.18
+2.25
+Total
+0.90
+0.37
+0.06
+0.16
+0.15
+0.37
+0.06
+0.16
+0.15
+1.56
+0.20
+0.86
+0.50
+0.14
+1.43
+Zhou Dayu (Note (i))
+bonuses
+RMB million
+Liu Xiaolei (Note (ii))
+Sub-total
+Yuan Guoqiang
+Bai Chongen
+Chen Hanwen
+Independent non-executive directors
+12. DIRECTORS' AND SUPERVISORS' EMOLUMENTS (CONTINUED)
+(Expressed in RMB)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+I
+I
+I
+288 China Shenhua Energy Company Limited
+0.57
+Sub-total
+Wang Xingzhong (Note (iii)
+Sub-total
+Supervisors
+Zhang, Feng (Note (ii))
+RMB million
+RMB million
+in kind
+Fee
+Discretionary
+and benefits
+Retirement
+scheme
+contributions
+other allowance
+Basic salaries,
+Year ended 31 December 2022
+Total
+Sub-total
+Zhang Changyan (Note (iii) Note (iv))
+Tang, Chaoxiong (Note (i) Note (ii))
+Luo Meijian (Note (iii) Note (iv))
+housing and
+5.15
+1.02
+2023 Annual Report 289
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+2023 Annual Report 291
+3
+3
+3
+13
+-
+2022
+2023
+Year ended 31 December
+3.41
+4.74
+0.41
+14. DIVIDENDS
+0.42
+Dividend approved and paid during the year:
+Year ended 31 December
+2023
+Yang Rongming (Note (i))
+Number of shares in issue at 1 January and
+31 December
+million
+2022
+2023
+million
+Year ended 31 December
+Weighted average number of ordinary shares
+The calculation of basic earnings per share is based on the profit attributable to ordinary equity
+holders of the Company of RMB64,625 million (2022: RMB72,925 million as restated) and the
+weighted average of 19,869 million ordinary shares (2022: 19,869 million shares) in issue during
+the year, calculated as follows:
+15. EARNINGS PER SHARE
+Subsequent to the end of the reporting period, a final dividend in respect of the year ended 31
+December 2023 of RMB44,903 million, at RMB2.26 per ordinary share (in respect of the year
+ended 31 December 2022: final dividend RMB50,665 million, at RMB2.55 per ordinary share) has
+been proposed by the Directors and is subject to approval by the shareholders in the following
+general meeting.
+50,466
+50,665
+RMB million
+RMB million
+2022
+2022 final - RMB2.55 (2022: 2021 final - RMB2.54) per
+ordinary share
+1.94
+3.30
+1.06
+Mr. Luo Meijian resigned as supervisor on 24 June 2022.
+Mr. Zhang Feng was elected and appointed as supervisor on 5 July 2022.
+Ms. Liu Xiaolei was elected and appointed as employee director on 5 July 2022.
+Mr. Lv Zhiren was elected and appointed as executive director on 24 June 2022.
+(iv)
+(iii)
+Mr. Tang Chaoxiong was elected and appointed as supervisor on 24 June 2022.
+(ii)
+The emoluments of these directors and supervisors were borne by China Energy Group during the years ended
+31 December 2023 and 2022.
+(i)
+Notes:
+12. DIRECTORS' AND SUPERVISORS' EMOLUMENTS (CONTINUED)
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+Mr. Wang Xingzhong resigned as employee director on 5 July 2022.
+Mr. Zhang Changyan resigned as supervisor on 5 July 2022.
+Mr. Wang Xiangxi resigned as chairman and executive director on 29 July 2022.
+The emoluments of Mr. Wang Xiangxi, Mr. Luo Meijian and Mr. Zhang Changyan were borne by China Energy
+Group during the years ended 31 December 2022.
+2022
+RMB million
+RMB million
+2023
+Year ended 31 December
+HKD1,000,001 to HKD1,500,000
+HKD1,500,001 to HKD2,000,000
+Their emoluments are within the following band:
+Retirement scheme contributions
+Discretionary bonuses were determined by the remuneration committee in accordance with the
+relevant human resources policies.
+Discretionary bonuses
+Basic salaries, housing and other allowances
+Of the five individuals with the highest emoluments within the Group, two (2022: two) were
+directors of the Company whose emoluments are disclosed in note 12. The emoluments of other
+three (2022: three) highest paid individuals are as follows:
+13. EMPLOYEES' EMOLUMENTS
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+290 China Shenhua Energy Company Limited
+The independent non-executive directors' emoluments shown above were mainly for their
+services as directors of the Company.
+Except for those emoluments of directors or supervisors whose emoluments were borne by
+China Energy Group, the executive directors' and supervisors' emoluments shown above were
+mainly for their services in connection with the management of the affairs of the Company and
+the Group.
+and benefits in kind
+Jia Jinzhong (Note (i))
+RMB million
+2.32
+12. DIRECTORS' AND SUPERVISORS' EMOLUMENTS (CONTINUED)
+(Expressed in RMB)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+3.42
+0.28
+2.41
+0.73
+1.72
+0.13
+1.26
+0.33
+1.70
+0.15
+1.15
+0.40
+Independent non-executive directors
+RMB million
+Chen Hanwen
+Yuan Guoqiang
+scheme
+contributions
+Retirement
+Discretionary
+bonuses
+housing and
+Basic salaries,
+in kind
+Fee
+and benefits
+other allowance
+Year ended 31 December 2023
+Supervisors
+Sub-total
+Liu Xiaolei (Note (ii))
+Employee director
+Sub-total
+Bai Chongen
+RMB million
+RMB million
+RMB million
+Executive directors
+Directors' and supervisors' remuneration for the year, disclosed pursuant to the applicable Listing
+Rules and CO, is as follows:
+12. DIRECTORS' AND SUPERVISORS' EMOLUMENTS
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+286
+2023 Annual Report 285
+As of 31 December 2023, the Group had determined the recoverable amount by using fair value
+less cost of disposal. Certain assets had been valued via market method. The fair value was
+categorised into Level 3 measurement. For the year ended 31 December 2023, power segment
+and others had recognised impairment losses of RMB152 million and RMB10 million towards
+property, plant and equipment, construction in progress, intangible assets and right-of-use assets
+with carrying amount of RMB154 million, recoverable amount of RMB2 million, and carrying
+amount of RMB11 million and recoverable amount of RMB1 million. Coal segment recognised
+impairment losses towards RMB700 million towards property, plant and equipment, construction
+in progress and right-of-use assets with carrying amount of RMB780 million and recoverable
+amount of RMB80 million.
+Recoverable amount by calculating fair value less costs of disposal:
+For the year ended 31 December 2023, power segment had recorded impairment losses of
+RMB1,113 million towards property, plant and equipment, construction in progress, intangible
+assets and right-of-use assets with carrying amount of RMB5,531 million and recoverable amount
+of RMB4,418 million; railway segment had recorded impairment loss of RMB998 million towards
+property, plant and equipment with carrying amount of RMB1,240 million and recoverable amount
+of RMB242 million; power segment and others had recorded goodwill impairment losses of
+RMB27 million and RMB3 million, respectively (2022: power segment and coal segment recorded
+goodwill impairment losses of RMB14 million and RMB42 million respectively). The pre-tax
+discount rate used in the impairment assessment was based on the weighted average cost of
+capital, ranging from 6.62% to 9.08% (2022: 7.67% to 8.69%).
+As of 31 December 2023, the Group had treated companies with impairment indicators as
+individual cash-generating units, and had made relevant impairment assessment by calculating
+the present value of estimated future cash flow of each cash generating unit.
+Recoverable amount by calculating present value of estimated future cash flow:
+11. PROFIT FOR THE YEAR (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+Lv Zhiren (Note (ii))
+Xu Mingjun
+Sub-total
+Non-executive directors
+RMB million
+Total
+scheme
+contributions
+Discretionary
+bonuses
+in kind
+Fee
+and benefits
+Total
+Retirement
+housing and
+Basic salaries,
+Year ended 31 December 2023
+China Shenhua Energy Company Limited
+Sub-total
+Yang Rongming (Note (i))
+Jia Jinzhong (Note (i))
+other allowance
+RMB million
+RMB million
+19,869
+Discretionary
+bonuses
+RMB million
+RMB million
+RMB million
+in kind
+Fee
+and benefits
+other allowance
+housing and
+Basic salaries,
+Year ended 31 December 2022
+Sub-total
+Wang Xiangxi (Note (iii) Note (iv))
+Chairman
+12. DIRECTORS' AND SUPERVISORS' EMOLUMENTS (CONTINUED)
+(Expressed in RMB)
+Retirement
+scheme
+contributions
+Total
+RMB million
+0.31
+1.23
+0.78
+Sub-total
+1.34
+0.16
+0.79
+For the year ended 31 December 2023
+0.39
+0.98
+0.15
+0.44
+0.39
+Lv Zhiren (Note (ii))
+Executive directors
+RMB million
+Xu Mingjun
+Non-executive directors
+Notes to the Consolidated Financial Statements (Continued)
+6.30
+0.40
+0.98
+0.12
+0.46
+0.40
+0.90
+0.30
+0.30
+0.30
+0.90
+0.30
+0.30
+0.30
+RMB million
+RMB million
+0.46
+0.12
+0.98
+Zhang, Feng (Note (ii))
+0.52
+3.38
+1.50
+0.90
+Total
+1.00
+0.12
+2023 Annual Report 287
+0.51
+Sub-total
+Tang, Chaoxiong (Note (i) Note (ii))
+Zhou Dayu (Note (i))
+1.00
+0.12
+0.51
+0.37
+0.37
+19,869
+Employee director
+19,869
+(891)
+(447)
+Disposals or write-off
+2,151
+26
+7
+126
+932
+249
+753
+Impairment losses
+(14)
+24
+(10)
+Reclassification
+(87)
+20,632
+(261)
+(51)
+14,323
+8,698
+2,518
+63,881
+49,286
+56,495
+19,996
+18,697
+At 31 December 2022
+149
+11
+73
+65
+Exchange adjustment
+(1,831)
+(93)
+815
+717
+317
+Vessels equipment
+and other
+and
+vehicles
+machinery
+motor
+related
+fixtures,
+chemical
+Furniture,
+Coal
+RMB million RMB million RMB million
+RMB million RMB million
+and port
+Railway
+equipment
+Total
+RMB million RMB million RMB million RMB million
+Depreciation and impairment
+5,363
+5,217
+3,541
+2,382
+2,280
+Charge for the year
+212,793
+233,894
+13,522
+2,201
+58,653
+43,151
+53,572
+17,557
+16,056
+At 1 January 2022
+8,081
+machinery machinery
+and
+and
+equipment equipment
+Charge for the year
+2,289
+4,691
+86,699
+82,866
+39,641 20,924
+45,491
+At 31 December 2023
+Carrying values
+252,109
+14,863
+9,394
+2,775
+69,351
+55,915
+57,059
+22,239
+4,094
+20,513
+6,433 290,839
+43,834
+Weighted average number of shares in issue
+China Shenhua Energy Company Limited
+As at 31 December 2023, the property, plant and equipment with carrying amount of RMB251 million (2022:
+RMB826 million) have been pledged to the banks to secure the banking facilities granted to the Group.
+The Group was in the process of applying for the title certificates of certain of its properties with an aggregate
+carrying amount of RMB3,331 million as at 31 December 2023 (2022: RMB3,421 million). The Directors are of
+the opinion that the Group is entitled to lawfully and validly occupy or use the above mentioned properties.
+As at 31 December 2023, the carrying amount of the Group's investment property included in the property, plant
+and equipment was RMB1,366 million (As at 31 December 2022: RMB926 million).
+(iii)
+(ii)
+(i)
+Notes:
+5,648 274,103
+4,653
+5,077
+87,232
+20,128 75,036
+32,495
+At 31 December 2022
+At 31 December 2023
+11
+1--7...3
+1,204
+55
+191
+306
+Impairment losses (Note (i))
+24
+(26)
+Reclassification
+20,861
+633
+710
+318
+5,291
+5,566
+4,020
+998
+3
+25
+2,782
+from construction
+Impairment losses-transferred
+18
+(12)
+16
+14
+Exchange adjustment
+2,034
+(5,457)
+(61)
+(821)
+(164)
+(3,535)
+(237)
+(513)
+Disposals or write-off
+(17)
+rights
+(109)
+structures
+Transferred from construction in
+9,802
+712
+21
+2,975
+268
+1,525
+3,586
+712
+Additions
+476,224
+12,987 18,747
+7,582
+142,747
+112,754
+progress (Note 17)
+73,075
+3,656
+2,132
+(485)
+Disposals or write-off
+23
+(50)
+339
+831
+(87)
+(1,056)
+Reclassification and other additions
+23,853
+673
+501
+10
+5,395
+11,249
+237
+48,755
+59,577
+At 1 January 2022
+and
+and
+and mining
+Land and
+machinery machinery
+structures
+Mining related related
+Mining Generators
+16. PROPERTY, PLANT AND EQUIPMENT
+For the year ended 31 December 2023
+(Expressed in RMB)
+Notes to the Consolidated Financial Statements (Continued)
+292 China Shenhua Energy Company Limited
+No diluted earnings per share for both 2023 and 2022 were presented as there were no potential
+ordinary shares in existence during both years.
+Land and and mining
+buildings
+19,869
+Railway
+buildings
+rights
+equipment
+Cost
+RMB million RMB million RMB million RMB million
+Total
+equipment
+Vessels equipment
+and other
+and
+(5)
+vehicles
+motor
+related
+chemical
+Coal Furniture,
+and port
+equipment
+RMB million RMB million RMB million
+RMB million RMB million
+machinery
+(940)
+fixtures,
+(343)
+53
+32
+26
+Exchange adjustment
+(6,625)
+(121)
+(33)
+(147)
+(989)
+(207)
+(4,069)
+(252)
+(807)
+Disposals or write-off
+79
+53
+At 31 December 2023
+66,004
+61,880
+related
+related
+(108)
+Mining
+Mining Generators
+16. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
+(Expressed in RMB)
+1,944
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+2023 Annual Report 293
+542,948
+21,296
+13,488
+7,466
+138,781
+77,983
+294
+(2,023)
+156,050
+27,139
+Additions
+13,351
+7,595
+151,113
+52,491 76,623 124,322
+62,531
+At 31 December 2022
+731
+14
+G
+127
+Exchange adjustment
+(108)
+Reclassification and other additions
+(2,187)
+(198)
+159
+9,634
+305
+109
+14,525
+769
+125
+2,716
+5,546
+progress (Note 17)
+2,862
+Transferred from construction in
+1,349
+14,384
+102
+507,997
+19,971
+45
+2,985
+15.6
+(285)
+(1,337)
+1,100
+1,272
+Other income
+12.5
+Loss allowance, net of reversal
+(3,184)
+(3,007)
+Other gains and losses
+(19.2)
+(3,722)
+Research and development costs
+2.6
+(0.4)
+343,074
+344,533
+(226,624)
+(78.7)
+Cost of sales
+(232,537)
+(3,583)
+Other expenses
+Income tax expense
+(2,136)
+activities
+Net cash used in investing
+Revenue
+(18.3)
+109,734
+89,687
+operating activities
+Net cash generated from
+23.3
+(14,256)
+(17,584)
+(5,003)
+60.4
+3,565
+Share of results of associates
+(20.7)
+(3,930)
+(3,117)
+Finance costs
+(14.2)
+3,071
+2,634
+Interest income
+134.2
+2,223
+%
+30
+Unit: RMB million
+Investment in non-fossil power has accelerated, emphasising the role of coal power. In
+2023, the proportion of non-fossil power generation investment in power source investment
+reached 90%, with installed capacity of non-fossil energy maintaining rapid growth. By the
+end of 2023, installed capacity of power generation nationwide reached 2,920 GW, of which
+installed capacity of non-fossil energy reached 1,570 GW, accounting for 53.9% of the total
+installed capacity. The installed capacity of thermal power generation reached 1,390 GW,
+of which the installed capacity of coal power generation reached 1,160 GW, representing
+a year-on-year increase of 3.4%, accounting for 39.9% of total installed capacity of power
+generation, down to below 40% for the first time, representing a year-on-year decrease of
+4.0 percentage points. The ratio of coal power generation to total power generation in 2023
+was nearly 60%. Coal power remains the major source of electricity supply in China, which
+reflects the role of thermal power serving as backup guarantee. In 2023, the capacity tariff
+policy was introduced, effectively playing the support and adjustment role of coal power
+to promote renewable energy consumption in the future.
+In 2023, China's power supply and demand were generally tightly balanced, and remained
+relatively tight during peak hours in some regions. China's national power consumption
+reached 9,224.1 billion kWh, representing a year-on-year increase of 6.7%. The power
+generation by power plants above designated scale in China was 8,909.1 billion kWh,
+representing a year-on-year increase of 5.2%. In particular, thermal power generation
+amounted to 6,231.8 billion kWh, representing a year-on-year increase of 6.1%, accounting
+for 69.9% of the national power generation; hydropower generation amounted to 1,140.9
+billion kWh, representing a year-on-year decrease of 5.6%. The average utilisation hours of
+power generation equipment of power plants in China with the installed capacity of 6,000
+kW and above were 3,592 hours, decreasing by 101 hours year-on-year. Among them, the
+average utilisation hours of thermal power equipment were 4,466 hours, increasing by
+76 hours year-on-year (the average utilisation hours of coal power equipment were 4,685
+hours, increasing by 92 hours year-on-year). The average utilisation hours of hydropower
+equipment were 3,133 hours, representing a year-on-year decrease of 285 hours.
+Power Market Environment
+3.
+Section IV Directors' Report (Continued)
+20
+29
+2023 Annual Report
+In 2023, in view of improved global coal supply landscape and high level of inventory
+among most international thermal coal end-users, the coal price trended downwards
+with oscillation. The International Energy Agency pointed out that coal is still the
+most important energy source for global power generation, steel-making, and cement
+production. It expected that in 2023, the global coal demand would reach 8.54 billion
+tonnes, representing an increase of 1.4% year-on-year, and the global coal production
+would be 8.74 billion tonnes, representing an increase of 1.8% year-on-year.
+According to statistical data, the total coal production in India in 2023 was 1.01
+billion tonnes, representing a year-on-year increase of 10.9%; the coal production
+in Indonesia reached 780 million tonnes, representing a year-on-year increase of
+13.0%; the coal production in Mongolia reached 81.192 million tonnes, representing
+a year-on-year increase of 1.18 times. According to the shipping data, the global
+growth rate of seaborne coal trade has accelerated, with a cumulative global load
+of seaborne coal (excluding domestic coastal transportation) of 1.34 billion tonnes
+in 2023, representing an increase of 6.0% compared to the last year. The exported
+volume from Indonesia, Australia, Russia, the United States, Mongolia, and other
+countries maintained growth; the imported volume of China, India, Türkiye, Vietnam
+and other countries increased, while the imported volume of Germany, Japan, South
+Korea and Taiwan, China declined year-on-year. As at the end of 2023, the spot price
+of Newcastle NEWC thermal coal was US$149.0/tonne, representing a decrease of
+62.9% as compared to the end of the previous year.
+International thermal coal market
+(2)
+Section IV Directors' Report (Continued)
+China Shenhua Energy Company Limited
+In respect of the demand side, China's commercial coal consumption increased by
+approximately 7.5% year-on-year in 2023. Of which the commercial coal consumption
+of power generation industry accounted for approximately 59.1% of the total coal
+consumption, representing a year-on-year increase of 11.5%, showing a relatively
+rapid growth; commercial coal consumption in the chemical industry increased
+by 5.4% year-on-year; commercial coal consumption by steel sector increased by
+approximately 3.0% year-on-year.
+In respect of the supply side, the policy of ensuring supply continued to exert
+strength, the overall coal capacity utilisation rate was at a high level and coal
+production maintained growth. During the year, the industrial raw coal output above
+designated scale in China was 4,660 million tonnes, representing a year-on-year
+increase of 2.9%. The annual raw coal output in Inner Mongolia, Shanxi, Shaanxi
+and Xinjiang accounted for 81.2% of the industrial raw coal output above designated
+scale in China, with rising market share. Central coal enterprises took the lead to
+implement the long-term contract thermal coal mechanism, ensuring the thermal
+coal supply to the greatest extent. The total coal output during the year was 1,130
+million tonnes, representing a year-on-year increase of 4.5%. During the year, the
+total imported coal was 470 million tonnes, representing a year-on-year increase of
+61.8%, mainly from Indonesia, Russia, Australia, Mongolia, etc., with a decrease of
+approximately 19.5% for imported coal average cost.
+28
+28
+2.6
+27.5
+(100 million tonnes)
+National coal transportation volume by railway
+(36,974)
+61.8
+The reform of power mechanism has continued to deepen, the market mechanisms play
+a decisive role in the allocation of resources in electricity market. In 2023, power trading
+centres across China organised and completed a total of 5,667.9 billion kWh of market
+transactions, representing a year-on-year increase of 7.9%, accounting for 61.4% of total
+power consumption in the whole society, representing a year-on-year increase of 0.6
+percentage point. With multi-level power market system operating effectively, the medium-
+to long-term power direct trading volume in the national power market was 4,428.9 billion
+kWh, representing a year-on-year increase of 7.0%, and the pilot work of the electricity
+spot market progressed with stability.
+China Shenhua Energy Company Limited
+Section IV Directors' Report (Continued)
+III. BUSINESSES ENGAGED IN BY THE COMPANY DURING THE REPORTING
+PERIOD
+2022
+(Restated)
+2023
+Items
+Analysis on Changes in the Major Items in the Consolidated Statement of Profit
+or Loss and Other Comprehensive Income and the Consolidated Statement of
+Cash Flows
+1.
+(1) Analysis on Principal Businesses
+V. MAJOR OPERATION RESULTS DURING THE REPORTING PERIOD
+Section IV Directors' Report (Continued)
+32 China Shenhua Energy Company Limited
+(IV) Industrial technology and innovation capabilities: The Group strengthens its industrial
+technology and innovation capabilities continuously. The Group's technology in green coal
+exploitation and safety production has secured a leading position in the global market,
+and that of clean coal-fired power generation, heavy-haul railway transportation and smart
+port operation has secured a leading position in the domestic market. China Shenhua has
+basically established an integrated operation model for technological resources, which
+includes scientific decision-making, systematic management, research and development,
+and commercialisation of achievements and a technological innovation-driven development
+model.
+(III) Management team focusing on principal businesses and advanced business concepts:
+The management team of the Group has profound knowledge and management experience
+in the industry, attaches great importance to enhancement of the Company's capabilities in
+value creation, conducts operation with a focus on the principal businesses of the Company,
+and persistently focuses on clean generation, clean transportation and clean conversion in
+the energy sector.
+Change
+(11) Coal reserves: The Group possesses an abundant pool of high-quality coal resources which
+are suitable for building modern high-output and high-efficient coal mines. The Group is
+among the top of listed coal companies in China in terms of coal reserves.
+Unique operation and profitability model: The Group has a large and efficient operation of
+coal and power generation business, and possesses a large-scale integrated transportation
+network consisting of railways, ports and ships, which efficiently connects resource supply
+of China West with the energy needs of the southeast seaboard. Hence, we have formed
+a core competitive advantage of integrated development of coal, power, transportation
+and coal-to-chemical industry, one-stop operation of production, transportation and sales,
+in-depth cooperation and effective synergy among various industrial sectors.
+(1)
+The core competitiveness of the Group is mainly:
+IV. ANALYSIS ON CORE COMPETITIVENESS DURING THE REPORTING PERIOD
+Section IV Directors' Report (Continued)
+31
+2023 Annual Report
+The integrated operation mode of "production-transportation (railway, port and shipping)-
+conversion (power generation and coal chemical industry)" formed by the Group on the basis
+of coal products has the advantages of complete chain, high efficiency, safety and stability,
+and low-cost operation. The Group's technology in coal exploitation and safety production has
+secured a leading position in the global market, and that of clean coal-fired power generation,
+heavy-haul railway transportation and smart port operation has secured a leading position in the
+domestic market.
+The Group owns high-quality coal resources located in Shendong Mines, Zhunge'er Mines, Shengli
+Mines, Baorixile Mines, etc. In 2023, the Group realised commercial coal production of 324.5
+million tonnes and the sales of coal of 450.0 million tonnes. The Group controls and operates
+high-capacity clean coal-fired power generators with great parameters. The Group controlled and
+operated power generators with an installed capacity of 44,634 MW by the end of 2023, with a
+total power output dispatch of 199.75 billion kWh in 2023. The Group controls and operates a
+network of concentric and radial transportation railways around the major coal production bases in
+western Shanxi, northern Shaanxi and southern Inner Mongolia and the "Shenshuo – Shuohuang
+Line" a major channel for coal transportation from western to eastern China, as well as Huangda
+Railway, a new energy channel in Bohai Rim, with total railway operating mileage reaching 2,408
+km. The transportation turnover of the self-owned railway reached 309.4 billion tonne km for the
+year. The Group also controls and operates a number of ports and terminals (with a total ship
+loading capacity of approximately 270 million tonnes/year), such as Huanghua Port, owns the
+fleet of ships with approximately 2.13 million tonnes of deadweight capacity and conducts coal-
+to-olefins projects with approximately 0.6 million tonnes/year of production capacity. During the
+Reporting Period, the Group made no significant change in the scope of its principal businesses.
+-
+The Company was established in Beijing in November 2004, and was listed on the HKEx in June
+2005 and on the SSE in October 2007. The Group is principally engaged in the production and sale
+of coal and electricity, railway, port and shipping transportation, and coal-to-olefins businesses.
+In 2023, the Group focused on synergy to create efficiency and increase revenue,
+strengthened the efficient matching of supply chain, actively optimised energy distribution,
+enhanced the construction of various links such as production, transportation, sales, storage
+and utilisation, which guaranteed the safe and stable supply of energy, and continuously
+improved the benefit-creation capability of the value chain, thus cementing its overall
+strengths.
+(56,585)
+121.2
+Net cash used in financing
+133.6
+164.7
+nautical miles
+Billion tonne
+5. Shipment turnover
+12.2
+136.3
+152.9
+Million tonnes
+4. Shipping volume
+46.4
+1.3
+45.2
+45.8
+Coal Dock
+Million tonnes
+3. Loading volume at Tianjin
+215.0
+2.1
+205.2
+209.5
+Port
+2. Loading volume at Huanghua Million tonnes
+23.3
+303.4
+112.1
+1. Gross power generation
+2. Total power output dispatch
+4.7
+315.6
+0.3
+340.6
+341.5
+Thousand tonnes
+332.8
+1.7
+358.4
+364.4
+Thousand tonnes
+1. Sales of polyethylene
+2. Sales of polypropylene
+(IV) Coal chemical
+156.13
+11.1
+179.81
+199.75
+Billion kWh
+166.45
+11.0
+191.28
+212.26
+Billion kWh
+(III) Power generation
+(34.7)
+4.0
+309.4
+2021
+that for 2022
+2022
+2023
+Unit
+Major operating indicators
+Change
+for 2023
+compared with
+subject to the decrease in average shipping price, the revenue from
+shipping operation of the Group decreased year-on-year.
+subject to the supply-demand relationship in the coal market, the average
+coal sales price of the Group decreased by 9.3% year-on-year and the
+revenue from coal sales decreased year-on-year;
+(1)
+The revenue of the Group in 2023 recorded a slight year-on-year decrease. The
+main reasons for the decrease are:
+(1) Factors affecting the revenue
+Analysis on Revenue and Costs
+2.
+Section IV Directors' Report (Continued)
+33
+33
+2023 Annual Report
+Detailed explanation on material changes in the business type, composition
+of profit or source of profit of the Company during the Reporting Period:
+☐ Applicable ✓ Not applicable
+(3.3)
+(78,734)
+(76,131)
+activities
+%
+297.6
+(I) Coal
+324.5
+Billion tonne km
+1. Transportation turnover of
+self-owned railway
+(II) Transportation
+169.6
+22.6
+101.6
+124.6
+Million tonnes
+Purchased coal
+312.7
+2.9
+316.2
+325.4
+Million tonnes
+Of which: Self-produced coal
+482.3
+7.7
+417.8
+450.0
+Million tonnes
+307.0
+3.5
+313.4
+1. Commercial coal production Million tonnes
+2. Coal sales
+Coal import (100 million tonnes)
+China Energy Xinshuo Railway Co., Ltd.
+46.6
+75.00% China Energy Huangda Railway Co., Ltd.
+100.00%-China Energy Railway Equipment Co., Ltd.
+Railway
+PT.Shenhua Guohua Pembangkitan Jawa Bali
+70.00%-
+China Energy Shuchuang Railway Development Co., Ltd.
+Major Controlling Companies
+52.72%
+PT.Shenhua Guohua Lion Power Indonesia
+-75.00%-
+China Energy Xinzhun Railway Co., Ltd.
+China Energy Xinshuo Zhunchi Railway (Shanxi)
+Company Limited
+85.00%-
+90.00%
+China Energy (Qingyuan) Clean Energy Co., Ltd
+-100.00%-
+-100.00%
+China Energy Qingyuan Power Generation Co., Ltd.
+-51.00%-
+China Energy Guangtou Liuzhou Power Generation Co., Ltd.
+China Energy Guangtou Beihai Power Generation Co., Ltd.
+China Energy Guohua (Beijing) Gas Thermal Power Co., Ltd.
+China Energy Shenhua Jiujiang Power Generation Co., Ltd.
+China Energy Group Yongzhou Power Generation Co., Ltd.
+China Energy Sichuan Energy Co., Ltd.
+China Energy Mengjin Thermal Power Co, Ltd.
+70.00%-
+-100.00% China Energy Baoshen Railway Group Co., Ltd.
+-88.16% China Energy Baoshen Railway Co., Ltd.
+97.27%- Shenhua Ganquan Railway Co., Ltd.
+-100.00%-
+-80.00%
+China Energy (Guangdong) Energy Development Co., Ltd.
+China Energy (Huizhou) Thermal Power Co., Ltd.
+Major Controlling Companies
+China Energy Baotou Coal
+Chemical Co., Ltd.
+100.00%
+Jiangxi Branch
+Hunan Branch
+Coal Chemical
+Shipping
+Guangdong Branch
+55.00%- China Energy (Tianjing) Harbour Administration Co., Ltd.
+55.00% China Energy Zhuhai Harbour Administration Co., Ltd.
+51.00% China Energy Yuanhai Shipping Co., Ltd.
+Port
+China Energy Huanghua Harbour Administration Co., Ltd.
+70.00% -
+China Energy Group Yueyang Power Generation Co., Ltd.
+95.00%-
+12.50%- Haoji Railway Co., Ltd.
+Major Associated Companies
+China Energy (Shangdong) Power Sales Co., Ltd.
+-90.00%-
+Track Mechanical Maintenance Branch
+China Energy Guohua (Beijing) Distributed Energy Technology Co., Ltd.
+-100.00%-
+Major Branches
+Shenshuo Railway Branch
+-100.00%-
+Others
+Power Generation
+-100.00%-
+China Energy Group Weifang Energy Co., Ltd.
+90.00%-
+Major Controlling Companies
+Coal Production
+H Share
+60.00% Shenhua Xinjie Energy Co, Ltd.
+PTGH EMM Indonesia
+70.00%-
+Tianjin Guohua Jinneng Power Co., Ltd.
+65.00%-
+62.82% China Energy Beidian Shengli Energy Co., Ltd.
+57.76%- Shenhua Zhunge'er Energy Co., Ltd.
+China Energy Jinjie Energy Co., Ltd.
+-100.00%-
+-100.00%-China Energy Shendong Coal Group Co., Ltd.
+China Energy Yudean Taishan Power Co., Ltd.
+80.00%-
+China Energy Hebei Dingzhou Power Generation Co., Ltd.
+China Energy Hebei Cangdong Power Generation Co., Ltd.
+40.50%-
+51.00%-
+Equity structure diagram
+34
+-100.00%-
+5.00% China National Coal Exchange Co, Ltd.
+17.00%
+China Energy Baotou Energy Co., Ltd.
+56.61%-China Energy Baorixile Energy Co., Ltd.
+50.10%-China Energy Yulin Energy Co., Ltd.
+-100.00% China Energy Zhunneng Group Co., Ltd.
+China Energy Trading Group Limited
+100.00%
+Coal Sales
+-100.00%-
+52.00%-
+-66.00%-
+Ha'erwusu Open-cut Mine
+Shendong Coal Branch
+Major Branches
+China Shenhua
+Energy Company Limited
+-13.48%
+Other A Share
+Shareholders
+- 69.52%
+Corporation
+Limited
+China Energy
+Investment
+51.00%-
+Shenhua (Fujian) Energy Co., Ltd.
+-100.00%-
+Shenhua Shendong Power Co., Ltd.
+Major
+Controlling
+Companies
+-100.00%-
+China Energy Shouguang Power Generation Company Limited
+60.00%-
+Shareholders
+40.00% China Energy Finance Co., Ltd.
+(directly and indirecti
+-100.00% China Energy Supply Chain Management Group Co.Ltd.
+-100.00% China Energy Information Technology Co., Ltd.
+-100.00% China Shenhua Overseas Development and Investment Co, Ltd.
+-100.00%- Shenhua International (Hong Kong) Limited
+Changes in unit production costs
+costs
+R&D expenses and net finance
+(8.0)
+149.21
+88.6
+155
+137.27
+RMB100 million
+Sales, general and administration,
+2.6
+2,266.24
+92.6
+2,510
+2,325.37
+RMB100 million
+Costs
+(0.4)
+3,445.33
+98.0
+3,500
+3,430.74
+RMB100 million
+of self-produced coal
+Revenue
+China Shenhua Energy Company Limited
+Year-on-year
+scale in China (100 million tonnes)
+%
+Year-on-year
+change
+2023
+Industrial raw coal output above designated
+Section IV Directors' Report (Continued)
+27
+2023 Annual Report
+etc.
+The macroeconomic and industry-related contents in this report are for reference only and does not constitute any
+investment advice. The Company has used its best endeavours to ensure the accuracy and reliability of information in this
+section, but does not assume any liability or provide any form of guarantee for the accuracy, completeness or validity of
+all or part of its content. The Company disclaims all responsibility for any error or omission. The content in this section
+may contain certain forward-looking statements based on subjective assumptions and judgments of future political and
+economic developments; therefore there may exist uncertainties in these statements. The Company does not undertake
+any responsibility for updating the information or correcting any subsequent error that may appear. The opinions, estimates
+and other data set out herein can be amended or withdrawn without further notice. The data contained in this section are
+mainly derived from sources such as the National Bureau of Statistics, National Energy Administration, China Coal Market
+Network, China Coal Resources Network, China Electricity Council, China Coal Transportation & Distribution Association,
+In 2023, as China's economic growth stimulated energy demands, the commercial
+coal consumption kept growing. The production capacity of coal supply continued
+to be released, the coal storage in major sectors of the society was at a high level,
+the national coal economic operation remained basically stable, and coal price hub
+declined overall. As at the end of 2023, the medium- and long-term contract price of
+the National Coal Seaborne Thermal-Coal Price Index (NCEI) (XTOUCAH☀)
+(5,500 kcal) was RMB710 per tonne, representing a decrease of RMB18 per tonne
+as compared with that at the end of the previous year; the annual average medium-
+and long-term contract price was approximately RMB714 per tonne, representing
+a decrease of approximately RMB7 per tonne compared with that of last year,
+which played the role of "stabiliser" for coal prices. The spot trading price trended
+downwards with oscillation. The average transaction price for thermal coal price index
+(5,500 kcal) at Qinhuangdao Port for the year was approximately RMB980 per tonne,
+representing a year-on-year decrease of approximately 23.7%.
+(1) China's thermal coal market
+2. Coal Market Environment
+In 2023, confronted with the intricate and severe international environment and the arduous
+task of domestic reform, development and stabilisation, all regions and departments in
+China conscientiously implemented the decisions and arrangements of the CPC Central
+Committee and the State Council, adhered to the general principle of seeking progress
+while maintaining stability, fully, accurately and comprehensively implemented the
+new development philosophy by accelerating the construction of a new development
+pattern, comprehensively deepening reform and opening-up, increase the intensity of
+macroeconomic regulation and control, focus on expanding domestic demand, optimising
+the structure, boosting confidence and preventing and resolving risks. With China's
+reviving economy in line with the improved stable supply and demand coupled with active
+promotion of transformation and upgrading, employment and prices were generally stable,
+people's livelihood was effectively guaranteed with high-quality development being steadily
+promoted, which successfully achieved major expected goals. The annual gross domestic
+product (GDP) increased by 5.2% as compared with the previous year in terms of constant
+prices.
+Macroeconomic Environment
+1.
+INDUSTRY IN WHICH THE COMPANY OPERATED DURING THE REPORTING
+PERIOD¹
+1
+II.
+Section IV Directors' Report (Continued)
+increase of 10.9%
+increase of
+approximately 10%
+Year-on-year
+Year-on-year
+decrease of 2.3%
+11.0
+1,912.8
+104.1
+In the year of 2023, the Group actively implemented the national policies on securing energy
+supply and stabilising prices, and honoured its corporate mission of "serving as the ballast for
+energy supply and pioneering in energy revolution", with integrated operation being safe and
+efficient and energy supply being firmly secured. To this end, the Group focused on the clean
+and efficient utilisation of coal, boosted the development of strategic emerging industries, and
+efficiently accomplished its annual business targets. The operating results for the year decreased
+year-on-year as affected by downward coal prices and other factors.
+DISCUSSION AND ANALYSIS ON OPERATION RESULTS
+I.
+Section IV Directors' Report
+26
+42.53%- Beijing GD Power Co, Ltd.
+Associated
+Companies
+as at 31 December 2023 is for illustrative purpose only.
+The equity structure diagram of China Shenhua (including major branches/subsidiaries)
+Huizhou Thermal Power Branch
+Shengli Energy Branch
+Shandong Branch
+51.00% - Shenhua (Tianjin) Financial Leasing Co., Ltd.
+-100.00% China Energy Economy and Technology Institute Co., Ltd.
+Beijing Guoneng Green and Low Carbon
+Development Investment Fund
+33.33%-
+Industry Investment Fund
+39.92% -
+Major Associated Companies
+Beijing Guoneng New Energy
+Hebei Branch
+Guangxi Branch
+Major
+Branches
+Henan Branch
+In the year of 2023, the Group recorded profit before income tax of RMB92,776 million (2022:
+RMB99,654 million), representing a year-on-year decrease of 6.9%; profit for the year attributable
+to equity holders of the Company of RMB64,625 million (2022: RMB72,925 million, restated),
+representing a year-on-year decrease of 11.4%; and basic earnings per share of RMB3.253/share
+(2022: RMB3.670/share, restated), representing a year-on-year decrease of 11.4%.
+Item
+Unit
+Actual amount
+for 2023
+2,039
+2,122.6
+100 million kWh
+Power generation
+7.7
+4.178
+103.3
+4.358
+4.500
+100 million tonnes
+Coal sales volume
+2.9
+3.5
+104.9
+3.094
+3.245
+100 million tonnes
+Commercial coal production
+%
+change
+2022
+Year-on-year
+Proportion of Actual amount for
+completion
+Target for 2023
+3.134
+China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+(Expressed in RMB)
+properties
+Buildings
+RMB million
+and other
+equipment
+Machinery,
+The Group leases assets including buildings, machinery, equipment and other properties, and
+land use rights. Information about leases for which the Group is a lessee is presented below.
+As at 31 December 2023, the Group has no bank loans secured by the Group's right-of-use
+assets (2022: Nil).
+The right-of-use assets represent land use rights paid to the PRC's government authorities and
+the leased assets. The Group is in the process of applying for the title certificates of certain land
+use rights certificates with an aggregate carrying amount of RMB3,200 million as at 31 December
+2023 (2022: RMB3,130 million). The Directors are of the opinion that the Group is entitled to
+lawfully and validly occupy or use the above mentioned lands.
+23. RIGHT-OF-USE ASSETS
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+2023 Annual Report 301
+3,619
+3,633
+(10)
+(4)
+(1,288)
+(2,782)
+4,104
+813
+2,800
+3,619
+2022
+RMB million
+RMB million
+2023
+Land use
+rights
+RMB million RMB million
+Total
+RMB million
+Cost
+(1,620)
+(310)
+(411)
+Disposals
+943
+943
+Transferred from construction in progress
+31,119
+1,301
+981
+320
+Additions
+28,610
+Year ended 31 December
+1,720
+At 31 December 2022
+792
+792
+Transferred from construction in progress
+28,225
+2,102
+25,999
+1,819
+3
+280
+Additions
+1,717
+509
+At 1 January 2022
+789
+At the end of the year
+Disposal
+Amortisation
+Prepayments in connection with construction work,
+RMB million
+31 December
+2023
+22. OTHER NON-CURRENT ASSETS
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+300 China Shenhua Energy Company Limited
+As at 31 December 2023, certain accounts and bills receivables were classified as financial assets at FVTOCI, as
+certain subsidiaries' business model is achieved both by collecting contractual cash flows and selling of these
+assets.
+The above unlisted equity investments represent the Group's equity interest in entities established in the PRC.
+The Directors of the Company have elected to designate these equity investments as FVTOCI as it is the Group's
+strategy to hold these investments for long-term purposes and realising their performance potential in the long run.
+2,888
+2,740
+equipment purchases and others (Note (i))
+Shendong Tianlong Group Co., Ltd.
+(i)
+Notes:
+502
+254
+Accounts and bills receivables (Note (ii))
+2,386
+2,486
+RMB million
+RMB million
+31 December
+2022
+2023
+31 December
+(ii)
+(2,341)
+Prepayments for mining projects
+Service concession receivables (Note (ii))
+Additions
+At the beginning of the year
+The movement of long-term deferred expenses during the year is as follows:
+Pursuant to the Power Purchase Agreements entered between certain power plants of the Group and PT
+Perusahaan Listrik Negara (Persero) ("PLN"), an independent third party, certain power plants of the Group build
+power plants to supply electricity to PLN for a 25-30 years period from the power plant's commercial operation
+date under the service concession scheme. Service concession receivables represents service provided in
+connection with the service concession arrangement, for which a guaranteed minimum payments have been
+agreed. Due to the length of the payment plans, receivables are the present value of future guaranteed cash
+receipts discounted using effective interest rate.
+At 31 December 2023, the Group had prepayments to China Energy Group and fellow subsidiaries amounting to
+RMB110 million (2022: RMB94 million).
+28,905
+27,070
+3,619
+143
+113
+3,633
+14,967
+15,901
+Deductible VAT and other tax
+315
+4,000
+2,000
+5,861
+4,945
+RMB million
+31 December
+2022
+(iii)
+(ii)
+(i)
+Notes:
+Long-term deferred expenses (Note (iii))
+Goodwill
+478
+Current asset
+At 31 December 2023
+1,410
+Movement in write-down of inventories during the year is as follows:
+Note: Others mainly represent properties for sale and properties under development.
+12,096
+12,846
+(2,223)
+(2,631)
+14,319
+15,477
+1,236
+1,256
+6,698
+6,516
+6,385
+7,705
+RMB million
+31 December
+2022
+RMB million
+2023
+31 December
+For the year ended 31 December 2023
+Less: write-down of inventories
+Others (Note)
+Materials and supplies
+Coal
+24. INVENTORIES
+Year ended 31 December
+At the beginning of the year
+Write-down of inventories
+Write-off of inventories
+At the end of the year
+2023
+11
+2,478
+- Third parties
+- Associates
+China Energy Group and fellow subsidiaries
+Accounts receivable
+RMB million
+31 December
+2022
+RMB million
+2023
+31 December
+25. ACCOUNTS AND BILLS RECEIVABLES
+Notes to the Consolidated Financial Statements (Continued)
+(Expressed in RMB)
+Notes to the Consolidated Financial Statements (Continued)
+2023 Annual Report 303
+2,223
+2,631
+(517)
+(280)
+489
+688
+2,251
+2,223
+2022
+RMB million
+RMB million
+For the year ended 31 December 2023
+302 China Shenhua Energy Company Limited
+24,023
+22,347
+190
+336
+Disposals
+(854)
+(636)
+(96)
+(122)
+Depreciation
+(6,831)
+(5,998)
+(407)
+(426)
+532
+At 31 December 2022
+(593)
+(168)
+(149)
+Depreciation
+(5,921)
+(5,405)
+(239)
+(277)
+At 1 January 2022
+Accumulated depreciation
+31,022
+28,914
+(910)
+698
+1,058
+(212)
+1,313
+363
+At 31 December 2022
+23,994
+22,411
+1,097
+486
+At 31 December 2023
+Net book value
+At 31 December 2023
+(401)
+(401)
+At 31 December 2023
+(136)
+(265)
+(265)
+(201)
+(201)
+(64)
+(64)
+At 31 December 2022
+Additions
+At 1 January 2022
+Additions
+Impairment losses
+(6,627)
+(6,102)
+(313)
+(136)
+Unlisted equity securities (Note (i))
+Non-current asset
+21. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE
+INCOME
+34,435
+61,408
+the company
+Equity attributable to equity holders of
+27,201
+28,778
+Non-controlling interests
+109,395
+196,712
+51,248
+107,381
+242,425
+57,295
+Total liabilities
+101,266
+36
+14,855
+93,450
+61
+18,880
+Non-current liabilities
+8,129
+196,676
+36,393
+13,931
+52,402
+57,736
+26,505
+51,678
+52,402
+34,435
+61,408
+company
+Equity attributable to equity holders of the
+160
+2,010
+209
+758
+2,930
+3,535
+Total comprehensive income for the year
+242,364
+160
+179
+758
+2,930
+3,529
+Profit for the year
+14,008
+5,415
+119,297
+14,769
+6,618
+111,155
+Revenue
+2,010
+38,415
+Current liabilities
+161,073
+Finance
+Company
+Beijing GD
+Year ended 31 December 2023
+31 December 2023/
+Summarised financial information of the material associates, adjusted for any differences
+in accounting policies, and reconciled to the carrying amounts in the consolidated financial
+statements, are disclosed below:
+20. INTERESTS IN ASSOCIATES (CONTINUED)
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+298
+2023 Annual Report 297
+The Company has significant influence over Haoji Railway and Suizhong Power as the Company appointed a director in
+the respective board of directors of these companies.
+Haoji
+Note:
+15
+15
+Co., Ltd. ("Suizhong Power")
+(Note)
+Suizhong Power Generation
+Generation and sale of
+electricity
+25
+25
+Co., Ltd. ("Hebei Renewables")
+Guohua (Hebei) Renewables
+Coal production and sale
+20
+20
+Generation and sale of
+electricity
+57,736
+Railway
+31 December 2022/
+Year ended 31 December 2022
+Finance
+Company
+223,217
+136,185
+159,783
+276,860
+147,481
+Total assets
+149,925
+87,677
+107,038
+150,567
+232,600
+117,022
+Beijing GD
+11,148
+29,147
+9,216
+44,260
+30,459
+Non-current assets
+Current assets
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million RMB million
+Haoji
+Railway
+135,540
+26,505
+51,678
+Group's proportion of ownership interest
+Group's proportion of ownership interest
+Carrying amount of equity investment in
+associates
+2,924
+11,589
+3,056
+12,629
+Equity attributable to equity holders of
+the company
+144
+5,998
+128
+3,840
+Total comprehensive income for the year
+144
+20%
+4,380
+2,722
+Profit for the year
+480
+13,356
+457
+11,279
+Revenue
+2,924
+11,589
+3,056
+12,629
+the company
+128
+Equity attributable to equity holders of
+25%
+25%
+273
+112
+272
+85
+3,319
+3,433
+RMB million
+RMB million
+31 December
+2022
+2023
+31 December
+– Total comprehensive income for the year
+20%
+- Profit for the year
+Aggregate carrying amount of individually immaterial
+Aggregate information of associates that are not individually material:
+20. INTERESTS IN ASSOCIATES (CONTINUED)
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+2023 Annual Report 299
+Note: As Suizhong Power is a subsidiary of Beijing GD and its financial information has been included in the consolidated
+financial statements of Beijing GD, the financial information of Suizhong Power is not listed separately.
+731
+2,363
+764
+2,575
+associates in the consolidated financial statements
+Aggregate amounts of the Group's share of those
+associates:
+2,472
+31
+Non-controlling interests
+3,026
+Hebei
+Renewables
+Shendong
+Tianlong
+Year ended 31 December 2022
+31 December 2022/
+31 December 2023/
+Year ended 31 December 2023
+Total assets
+Current assets
+Non-current assets
+20. INTERESTS IN ASSOCIATES (CONTINUED)
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+China Shenhua Energy Company Limited
+Shendong
+Tianlong
+6,460
+24,555
+6,551
+13,774
+26,117
+associates
+Carrying amount of equity investment in
+13%
+40%
+43%
+13%
+40%
+43%
+10,602
+682
+Hebei
+Renewables
+RMB million
+199
+3,901
+Total liabilities
+34
+169
+452
+Non-current liabilities
+648
+2,857
+199
+3,449
+Current liabilities
+RMB million
+3,606
+3,255
+16,530
+3,038
+8,257
+568
+6,358
+2,853
+8,432
+402
+8,098
+RMB million
+RMB million
+14,615
+20
+("Shendong Tianlong")
+Less than one year
+40
+43
+43
+Generation and sale of
+electricity
+Provision of comprehensive
+40
+financial service
+Haoji Railway Co., Ltd. ("Haoji
+Provision of transportation
+Railway") (Note)
+13
+13
+service
+Two to three years
+More than three years
+40
+304 China Shenhua Energy Company Limited
+("Finance Company")
+("Beijing GD")
+51,127
+48,240
+4,508
+1,474
+55,635
+49,714
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+20. INTERESTS IN ASSOCIATES (CONTINUED)
+The Group's associates are unlisted and established in the PRC. The following list contains only
+the particulars of associates, which principally affect the results or assets of the Group:
+Proportion of ownership
+interest and voting power
+held by the Group
+Principal activities
+2023
+%
+31 December 31 December
+2022
+%
+Beijing GD Power Co., Ltd.
+China Energy Finance Co., Ltd.
+31 December
+2023
+RMB million
+31 December
+2022
+RMB million
+507
+- Associates
+36
+6,631
+China Energy Group and fellow subsidiaries
+Bills receivable
+10,968
+11,875
+(1,221)
+(1,195)
+Less: allowance for credit losses
+12,189
+13,070
+9,686
+10,581
+- Third parties
+845
+1,096
+7,983
+11,460
+238
+10,578
+155
+50
+27
+127
+One to two years
+RMB million
+208
+10,968
+As of the end of the reporting period, the ageing analysis of trade receivables, based on the
+invoice date and net of loss allowance, is as follows:
+Bills receivable were mainly issued by PRC banks and others financial institutions, were expiring
+within one year. As at 31 December 2023, the Group has no bills (2022: Nil) pledged to secure
+bills payable.
+As at 31 December 2023 and 31 December 2022, accounts and bills receivables from contracts
+with customers amounted to RMB21,053 million and RMB13,321 million, respectively.
+12,100
+19,858
+1,132
+11,875
+31 December
+2022
+Name of associate
+31 December
+2023
+(943)
+(792)
+Disposal
+(21)
+RMB million
+(52)
+(86)
+Others
+43
+At the end of the year
+18,955
+20,843
+Notes:
+(i)
+(ii)
+Transferred to right-of-use assets (Note 23)
+(43)
+(164)
+Transferred to intangible assets (Note 19)
+17. CONSTRUCTION IN PROGRESS
+For the year ended 31 December 2023
+(Expressed in RMB)
+Year ended 31 December
+2023
+2022
+RMB million
+RMB million
+As at 31 December 2023, the Group is in the process of obtaining requisite permits for certain of its power plants
+and railways from the relevant government authorities. The Directors are of the opinion that the Group will be
+able to obtain the requisite permits in due course.
+At the beginning of the year
+26,201
+Additions
+26,388
+19,416
+Transferred to property, plant and equipment (Note 16)
+(27,139)
+(23,853)
+20,843
+As a result of deferral of certain projects, management performed impairment assessment of the related
+construction in progress and concluded that impairment provision of RMB52 million was required and charged
+into profit or loss for the current year.
+Impairment losses (Note (ii))
+Exploration and evaluation assets represent the expenditures related to coal exploration and
+evaluation activities incurred by the Group. As at 31 December 2023, the carrying amount of the
+exploration and evaluation assets was RMB5,519 million (31 December 2022: RMB5,218 million).
+2022
+RMB million
+4,059
+4,651
+856
+875
+164
+43
+(413)
+(486)
+18. EXPLORATION AND EVALUATION ASSETS
+(676)
+(3)
+(348)
+4,662
+4,059
+RMB million
+2023
+(1)
+296 China Shenhua Energy Company Limited
+Year ended 31 December
+2023 Annual Report 295
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+19. INTANGIBLE ASSETS
+The movement of intangible assets, mainly licenses, software and franchises, is as follows:
+At the beginning of the year
+Additions
+(Expressed in RMB)
+Amortisation
+Disposal
+Impairment losses
+At the end of the year
+20. INTERESTS IN ASSOCIATES
+Unlisted shares, at cost
+Transferred from construction in progress
+Share of post-acquisition profits and other comprehensive
+income, net of dividend received
+denominated
+Interest rates ranging from 1.80% to
+Japanese Yen ("JPY")
+9,114
+9,266
+4,268
+USD denominated
+2,553
+2.60% per annum with maturities
+through 20 March 2031
+LPR-1.00% to LPR+0.10% per
+annum with maturities through
+8 October 2041
+Interest rates SOFR+2.40% per
+annum with maturities through
+26 December 2034
+584
+30. BORROWINGS (CONTINUED)
+Less: current portion of long-term borrowings
+312 China Shenhua Energy Company Limited
+31,331
+1,695
+45,852
+7,414
+29,636
+38,438
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+As at 31 December 2023, included in the above outstanding long-term borrowings, were entrusted
+loans from China Energy Group and fellow subsidiaries amounting to RMB10,480 million (2022:
+RMB23,162 million).
+Certain borrowings are secured over certain property, plant and equipment with a carrying amount
+of RMB251 million (2022: RMB826 million) (see Note 16(iii)).
+31. BONDS
+The Group issued a dollar bond of a total USD500 million on 20 January 2015, and had redeemed
+a cumulative amount of the dollar bond of USD87 million as at 31 December 2023 (2022: USD11
+million). The net proceeds of the Dollar bond issued were mainly used for repayment of loans of
+subsidiaries. Details of the Group's bond are as follow:
+Interest rates ranging from
+803
+RMB denominated
+281
+18,928
+9,709
+9,984
+51,068
+34,258
+Unsecured
+Secured
+38,438
+29,636
+Long-term borrowings, less current portion
+Non-current borrowings:
+12,630
+4,622
+7,414
+1,695
+5,216
+2,927
+Current portion of long-term borrowings
+2,627
+1,226
+3,853
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+29. DEFERRED TAXATION (CONTINUED)
+At the end of the reporting period, the Group has unused tax losses of RMB8,481 million (2022:
+RMB8,621 million) and unrecognised deductible temporary differences of RMB9,331 million
+(2022: RMB9,349 million) available for offset against future profits. No deferred tax asset has
+been recognised in respect of the remaining RMB8,481 million (2022: RMB8,621 million) losses
+due to the unpredictability of future profit streams. Included in unrecognised tax losses are losses
+of RMB340 million (2022: RMB589 million) that will be expired in 2024.
+24,274
+30. BORROWINGS
+31 December
+2023
+31 December
+2022
+RMB million
+Current borrowings:
+Short-term bank and other borrowings
+An analysis of the Group's borrowings is as follows:
+31,667
+41,359
+51,068
+RMB million
+31 December
+2022
+31 December
+2023
+RMB million
+45,852
+31,331
+Interest rates ranging from 2.10% to
+5.60% per annum with maturities
+through 21 October 2041
+RMB denominated
+Loans from banks and other institutions
+The Group's long-term borrowings comprise:
+34,332
+25,517
+3,388
+2,541
+718
+1,578
+More than one year, but not exceeding two years
+More than two years, but not exceeding five years
+More than five years
+7,414
+The Group's short-term borrowings are unsecured and bear interest at rates ranging from 1.78%
+to 4.35% per annum (2022: 1.65% to 3.50% per annum), and long-term borrowings bear interest
+at rates ranging from 1.80% to 5.60% per annum (2022: 1.80% to 5.60% per annum).
+2023 Annual Report 311
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+30. BORROWINGS (CONTINUED)
+34,258
+31 December
+2023
+31 December
+2022
+RMB million
+The exposure of the long-term borrowings and the
+contractual maturity dates:
+Within one year
+1,695
+RMB million
+RMB million
+834
+Effective
+interest rate
+%
+38,972
+38,901
+1,101
+581
+37,871
+38,320
+956
+34,757
+35,293
+2,158
+2,132
+895
+RMB million
+31 December
+2022
+The following is an ageing analysis of accounts and bills payables, presented based on invoice date.
+RMB million
+31 December
+Bills payable
+- Third parties
+- Associates
+and fellow subsidiaries
+China Energy Group, an associate of China Energy Group
+Accounts payable
+33. ACCOUNTS AND BILLS PAYABLES
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+2023 Annual Report 313
+2023
+Less than one year
+One to two years
+Two to three years
+423
+600
+71
+65
+426
+351
+31 December
+2022
+RMB million
+2023
+RMB million
+31 December
+314 China Shenhua Energy Company Limited
+USD
+Euro
+Others
+Included in accounts and bills payables, the following amounts are denominated in foreign
+currencies:
+38,972
+38,901
+1,818
+1,537
+874
+1,158
+1,804
+4,133
+34,476
+32,073
+RMB million
+RMB million
+31 December
+2022
+31 December
+2023
+More than three years
+1,742
+(678)
+1,632
+(679)
+RMB million RMB million
+lease
+payments
+minimum
+minimum
+lease
+payments
+payments
+payments
+lease
+lease
+minimum
+minimum
+Total
+Present
+value of the
+Total
+value of the
+Present
+31 December 2022
+Within 1 year
+31 December 2023
+The lease liabilities were repayable as follow:
+32. LEASE LIABILITIES
+3,453
+2,972
+19/01/2025
+4.10%
+31 December
+2022
+RMB million
+31 December
+2023
+RMB million
+Due date
+RMB million
+10-year corporate bond
+RMB million
+400
+2,420
+1,742
+2,311
+1,632
+Present value of lease liabilities
+Less: total future interest expenses
+2,060
+1,445
+1,911
+1,332
+1,214
+857
+1,166
+742
+After 5 years
+530
+348
+505
+328
+After 2 years but within 5 years
+316
+240
+240
+170
+After 1 year but within 2 years
+360
+297
+300
+490
+RMB million
+(11)
+(142)
+(142)
+Capital element of lease rentals paid
+56,390
+127
+1,742
+3,453
+Interest element of lease rentals paid
+51,068
+553
+(Note 32)
+(Note 31)
+(Note 30)
+RMB million
+RMB million
+RMB million
+At 1 January 2023
+(25)
+(25)
+Interest paid
+*
+Amortisation of discount on bonds
+(49)
+59
+(108)
+Foreign exchange
+(660)
+(660)
+Redemption of bonds
+(29,628)
+(29,628)
+Repayments of borrowings
+12,926
+12,926
+Proceeds from borrowings
+(2,454)
+(2,454)
+RMB million
+Total
+payable
+interest
+170,503
+149,986
+7,298
+Less: Restricted bank deposits
+Deposits with banks and other financial institutions
+31 December
+2022
+RMB million
+RMB million
+2023
+31 December
+Cash and cash equivalents in the consolidated statement of financial position and the
+consolidated statement of cash flows comprise cash at bank and in hand, and time deposits
+with original maturity within three months.
+(a) Cash and cash equivalents
+28. CASH AND CASH EQUIVALENTS
+Details of impairment assessment of restricted bank deposits are set out in Note 39.2.
+The Group performed impairment assessment on restricted bank deposits and concluded that the
+probability of defaults of the counterparty banks are insignificant and accordingly, no allowance
+for credit losses is provided.
+Restricted bank deposits represent collaterals for bills payable and collaterals related to the
+operating of mines and ports.
+27. RESTRICTED BANK DEPOSITS
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+306 China Shenhua Energy Company Limited
+6,357
+Interest accrual
+Less: Time deposits with original maturity over
+three months
+32,688
+Lease
+liabilities
+Bonds
+Borrowings
+RMB million
+Accrued
+The table below shows the detailed changes in the Group's liabilities arising from financing
+activities, including both cash and non-cash changes. Liabilities arising from financing
+activities are those for which cash flows were, or future cash flows will be, classified in
+the Group's consolidated statement of cash flows as cash flows from financing activities.
+(b) Reconciliation of liabilities arising from financing activities
+28. CASH AND CASH EQUIVALENTS (CONTINUED)
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+2023 Annual Report 307
+Details of impairment assessment of bank deposits are set out in Note 39.2.
+As at 31 December 2023, the Group performed impairment assessment on bank balances
+and concluded that the probability of defaults of the counterparty banks are insignificant
+and accordingly, no allowance for credit losses is provided.
+131,458
+108,174
+cash flow statement
+Cash and cash equivalents in the consolidated
+34,514
+As at 31 December 2023, the entrusted loan was an entrusted loan of RMB400 million by Shenhua Shendong
+Electric Power Co., Ltd. (hereinafter referred to as "Shendong Power") made to Inner Mongolia Yili Chemical
+Industry Co., Ltd. (hereinafter referred to as "Elion Chemical"), an associate of the Group, with a fixed interest
+rate of 4.75% per annum and a term of 3 years. The entrusted loan was due for repayment on 23 December 2023
+but Elion Chemical has not repaid the entrusted loan yet. The entrusted loan was secured by certain assets of
+Elion Chemical. Shendong Power and Elion Chemical are negotiating for an extension of the entrusted loan and
+other related matters.
+120
+25
+At 31 December 2022
+283
+283
+23
+new leases during the year
+Increase in lease liabilities from entering into
+2,886
+Amount less than RMB500,000
+2,843
+Interest expenses
+8
+8
+Amortisation of discount on bonds
+1,255
+350
+905
+43
+308 China Shenhua Energy Company Limited
+51,068
+3,453
+167
+272
+396
+2022
+RMB million
+RMB million
+Year ended 31 December
+2023
+Lease rental paid
+These amounts relate to the following:
+Within operating cash flows
+Within financing cash flows
+Amounts included in the consolidated cash flow statement for leases comprise the
+following:
+(c) Total cash outflow for leases
+28. CASH AND CASH EQUIVALENTS (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+56,390
+127
+127
+1,742
+Foreign exchange
+(77)
+(77)
+Redemption of bonds
+3,172
+59,110
+At 1 January 2022
+38,895
+32
+33
+33
+1,632
+2,972
+34,258
+32
+At 31 December 2023
+new leases during the year
+Increase in lease liabilities from entering into
+Interest expenses
+2,385
+2,360
+1,697
+120
+209
+Capital element of lease rentals paid
+(36,424)
+(36,424)
+Repayments of borrowings
+(176)
+(176)
+Income from debt restructuring
+27,653
+27,653
+Proceeds from borrowings
+(2,925)
+(2,925)
+Interest paid
+(43)
+(43)
+Interest element of lease rentals paid
+(238)
+(238)
+64,188
+15,849
+16,007
+3,127
+236
+237
+1,429
+(164)
+1,265
+Accrued salaries and other expenses not yet
+paid
+1
+410
+167
+Lease transactions
+(11)
+39
+28
+Others
+742
+(243)
+1,491
+675
+816
+(Expressed in RMB)
+29. DEFERRED TAXATION (CONTINUED)
+The following are the major deferred tax assets and liabilities recognised and movements thereon
+during the current and prior year:
+Credited/
+(charged)
+in profit or
+loss and other
+At 1 January
+2023
+income
+RMB million
+comprehensive 31 December
+2023
+RMB million RMB million
+Allowances, primarily for receivables and
+inventories
+Property, plant and equipment
+Tax allowable expenses not yet incurred
+Unrealised profits from sales within the Group
+466
+36
+502
+(268)
+474
+Net deferred tax assets
+3,853
+(90)
+466
+323
+493
+816
+88
+(88)
+1
+1
+1,375
+54
+1,429
+34
+376
+410
+(2)
+(9)
+556
+For the year ended 31 December 2023
+RMB million
+(Restated)
+311
+4,164
+Allowances, primarily for receivables and
+inventories
+Property, plant and equipment
+Tax losses utilised
+Tax allowable expenses not yet incurred
+Unrealised profits from sales within the Group
+Accrued salaries and other expenses not yet
+paid
+Lease transactions
+Others
+Net deferred tax assets
+310 China Shenhua Energy Company Limited
+(Charged)/
+credited
+in profit or
+loss and other
+comprehensive 31 December
+At 1 January
+2022
+(Restated)
+RMB million
+income
+(Restated)
+2022
+563
+Notes to the Consolidated Financial Statements (Continued)
+2023 Annual Report 309
+3,853
+31 December
+2022
+RMB million
+31 December
+2023
+(i)
+Note:
+Amount less than RMB500,000
+*
+Deductible VAT and other taxes
+Prepaid expenses and deposits
+Financial assets measured at fair value through profit or loss
+Less: impairment losses
+- Other loans
+© Other receivables
+- Other receivables due from associates
+- Entrusted loan (Note (i))
+- Service concession receivables (Note 22(ii))
+Financial assets measured at amortised cost
+RMB million
+26. PREPAID EXPENSES AND OTHER CURRENT ASSETS
+2,232
+400
+3,930
+7,106
+6,218
+*
+5,616
+5,859
+4,674
+4,936
+10,290
+10,795
+4,500
+4,500
+2,817
+3,192
+500
+471
+400
+2,073
+252
+(Expressed in RMB)
+Notes to the Consolidated Financial Statements (Continued)
+RMB million
+2022
+RMB million
+563
+553
+29. DEFERRED TAXATION
+For the purpose of the presentation in the consolidated statement of financial position, certain
+deferred tax assets and liabilities have been offset. The following is the analysis of the deferred
+tax balances for financial reporting purpose.
+Deferred tax assets
+Deferred tax liabilities
+1,016
+31 December
+2023
+31 December
+2022
+(Restated)
+RMB million
+RMB million
+5,301
+(1,137)
+5,019
+(1,166)
+4,164
+Year ended 31 December
+2023
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+As at 31 December 2023, included in the Group's accounts receivables are debtors with gross
+carrying amount of RMB5,287 million (2022: RMB5,743 million) which are past due as at the
+reporting date. The past due balances are not considered as in default because the debtors are
+not in significant financial difficulty and the management expects that the debtor is able and likely
+to pay for the debts. The Group does not hold any collateral over these balances.
+2023 Annual Report 305
+Certain subsidiaries of the Company entered into accounts receivables factoring agreements with
+financial service companies, and the subsidiaries transferred accounts receivables to the financial
+service companies and received bills receivables and cash, respectively. During the year ended
+31 December 2023, the subsidiaries paid RMB2 million (2022: RMB7 million) for the accounts
+receivables factoring and recognised in expenses.
+As at 31 December 2023, the Group endorsed bills receivable amounting to RMB1,790 million
+(2022: RMB274 million) to suppliers to settle the accounts payable of same amounts and
+discounted bills receivable amounting to RMB2,970 million (2022: RMB4,288 million) to banks.
+In accordance to the relevant laws in the PRC, the holders of the bills receivable have a right of
+recourse against the Group if the issuing banks default payment (the "Continuing Involvement").
+In the opinion of the Directors, the fair values of the Continuing Involvement are insignificant, and
+the Group has transferred substantially all the risks and rewards of ownership relating to these
+bills receivable, and accordingly derecognised the full carrying amounts of the bills receivable,
+in case of bills receivable endorsed to suppliers, derecognised the associated accounts payable.
+Transfers of financial assets
+939
+1,084
+400
+586
+539
+498
+31 December
+2022
+RMB million
+RMB million
+2023
+31 December
+United States Dollars ("USD")
+Indonesian Rupiah ("IDR")
+Included in accounts receivable, the following amounts are denominated in foreign currencies:
+Details of credit risks of accounts and bills receivables for the year ended 31 December 2023
+are set out in Note 39.2.
+25. ACCOUNTS AND BILLS RECEIVABLES (CONTINUED)
+(Note 34)
+920
+252
+Financial guarantee contracts
+Other receivables represent pledge and guarantee deposit, dividend receivables and interest
+receivables. The pledge and guarantee deposit is paid for regular businesses. The dividend
+receivables relate to the investments of the Company and the interest receivables mainly
+relate to related parties and stated owned entities. Thus, the credit risk on other receivables
+are limited.
+Other receivables
+The credit risks on bank balances are limited because the counterparties are banks with
+high credit ratings assigned by credit-rating agencies, such as China Construction Bank,
+Industrial and Commercial Bank of China, Bank of China and Agricultural Bank of China.
+Bank balances
+The credit risks on loan receivables are limited because the counterparties are mainly
+related parties, the Group assesses the recoverability by reviewing their financial positions
+and results periodically and considers that its exposure to credit risk arising from default
+of the counterparties is limited.
+Loan receivables
+order to minimise the credit risk, the management of the Group has delegated a team
+responsible for determination of credit limits and credit approvals. Before accepting any
+new customer, the Group uses an internal credit scoring system to assess the potential
+customer's credit quality and defines credit limits by customer. Limits and scoring attributed
+to customers are reviewed once a year. Other monitoring procedures are in place to
+ensure that follow-up action is taken to recover overdue debts. In this regard, the Directors
+consider that the Group's credit risk is significantly reduced.
+Accounts and bills receivables arising from contracts with customers
+Credit risk and impairment assessment (Continued)
+39.2 Financial risk management objectives and policies (Continued)
+39. FINANCIAL INSTRUMENTS (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+320 China Shenhua Energy Company Limited
+As at 31 December 2023, other than those financial assets whose carrying amounts best
+represent the maximum exposure to credit risk, the Group's maximum exposure to credit
+risk which will cause a financial loss to the Group arising from the amount of financial
+guarantees provided by the Group is disclosed in Note 40.2. The Group does not hold any
+collateral or other credit enhancements to cover its credit risks associated with its financial
+assets and financial guarantee contracts.
+Credit risk and impairment assessment
+If interest rates had been 100 basis points (2022: 100 basis points) higher/lower
+and all other variables were held constant, the Group's profit for the year ended
+31 December 2023 would decrease/increase by RMB219 million (2022: decrease/
+increase by RMB335 million).
+The analysis is prepared assuming variable-rate borrowings and variable-rate loans
+and receivables outstanding at the end of the reporting period were outstanding for
+the whole year.
+The sensitivity analysis below has been determined based on the exposure to interest
+rates for variable-rate borrowings and variable-rate loans and receivables at the end
+of the reporting period. No sensitivity analysis has been presented for the exposure
+to interest rates for bank balances as the management of the Group considers that,
+taking into account that the fluctuation in interest rates on bank balances is minimal,
+the impact of profit or loss for the year is insignificant.
+Sensitivity analysis
+The Group's exposures to interest rates on financial liabilities are detailed in the
+liquidity risk management section of this note.
+The Group is also exposed to cash flow interest rate risk in relation to variable-rate
+borrowings and variable-rate loans. Other than the concentration of interest rate risk
+related to the movements in London Interbank Offered Rate and the loan interest
+published by the PBOC, the Group has no significant concentration of interest rate
+risk.
+The Group is exposed to fair value interest rate risk in relation to fixed-rate loan and
+receivables, borrowings and bonds (see Notes 30 and 31).
+(ii) Interest rate risk
+Market risk (Continued)
+39.2 Financial risk management objectives and policies (Continued)
+39. FINANCIAL INSTRUMENTS (CONTINUED)
+The credit risks on financial guarantee contracts are limited because the counterparties are
+state owned entities with good financial position.
+(Expressed in RMB)
+The Group does not have any significant concentration of credit risk. Accounts and bills
+receivables consist of a large number of customers, spread across diverse industries and
+geographical areas.
+Notes to the Consolidated Financial Statements (Continued)
+142,688
+12-month ECL
+28 N/A
+Cash
+400
+7,298
+12-month ECL
+N/A
+27
+Restricted bank deposits
+12-month ECL
+N/A
+26
+Loans receivables
+amortised costs
+2022
+RMB million
+RMB million
+31 December
+2023
+12-month or
+lifetime ECL
+Notes credit rating
+External
+Financial assets at
+The tables below detail the credit risk exposures of the Group's financial assets and
+financial guarantee contracts, which are subject to ECL assessment:
+Credit risk and impairment assessment (Continued)
+39.2 Financial risk management objectives and policies (Continued)
+39. FINANCIAL INSTRUMENTS (CONTINUED)
+(Expressed in RMB)
+For the year ended 31 December 2023
+2023 Annual Report 321
+400
+6,357
+164,146
+For the year ended 31 December 2023
+2023 Annual Report 319
+JPY
+USD
+The following table details the Group's sensitivity to a 10% increase or decrease in
+exchange rate of each foreign currency against RMB, while all other variables are
+held constant. The sensitivity analysis includes only outstanding foreign currency
+denominated monetary items at the end of the reporting period.
+Sensitivity analysis
+2,258
+2,418
+584
+758
+803
+583
+903
+955
+74
+106
+2022
+RMB million
+Year ended 31 December
+2023
+RMB million
+2022
+RMB million
+RMB million
+2023
+Year ended 31 December
+Assets
+Liabilities
+Other currencies
+USD
+JPY
+The carrying amounts of the Group's foreign currency denominated monetary assets
+and monetary liabilities at the end of the reporting period are as follows:
+(i) Currency risk (Continued)
+Market risk (Continued)
+Other currencies
+Notes to the Consolidated Financial Statements (Continued)
+Year ended 31 December
+2022
+(142)
+(133)
+68
+80
+47
+70%
+(70)
+(68)
+foreign currencies
+- if RMB strengthens against
+142
+133
+23
+(68)
+(47)
+70
+68
+foreign currencies
+- if RMB weakens against
+tax for the year:
+RMB million RMB million RMB million RMB million RMB million RMB million
+Increase/(decrease) in profit after
+2022
+2023
+Year ended 31 December
+Year ended 31 December
+2022
+2023
+2023
+39.2 Financial risk management objectives and policies (Continued)
+Other receivables
+12-month ECL
+RMB million
+(credit-
+impaired)
+Lifetime ECL
+Lifetime ECL
+(not credit-
+impaired)
+RMB million
+The following table shows the movement in lifetime ECL that has been recognised for
+accounts receivable under the simplified approach.
+Gross carrying amount (Continued)
+Credit risk and impairment assessment (Continued)
+39.2 Financial risk management objectives and policies (Continued)
+39. FINANCIAL INSTRUMENTS (CONTINUED)
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+2023 Annual Report 323
+During the year ended 31 December 2023, the Group provided RMB6 million (2022: RMB36
+million) impairment allowance for accounts receivable and reversed RMB12 million (2022:
+RMB91 million), based on the provision matrix.
+The estimated loss rates are estimated based on historical observed default rates over
+the expected life of the debtors and are adjusted for forward-looking information that is
+available without undue cost or effort. The grouping is regularly reviewed by management
+to ensure relevant information about specific debtors is updated.
+10,944
+11,901
+116
+21%
+96
+20%
+More than three years past due
+26
+10%
+56
+10%
+Two to three years past due
+Total
+RMB million
+160
+As at 1 January 2022
+121
+324 China Shenhua Energy Company Limited
+1,195
+1,116
+79
+As at 31 December 2023
+(20)
+(20)
+(12)
+(12)
+Impairment losses reversed
+Write-offs
+6
+6
+Impairment losses recognised
+1,221
+1,116
+105
+As at 1 January 2023
+(1)
+(1)
+(91)
+(58)
+(33)
+36
+19
+17
+1,277
+1,156
+Impairment losses recognised
+Impairment losses reversed
+Write-offs
+26 N/A
+6%
+One to two years past due
+Notes:
+N/A
+Financial guarantee
+contracts (Note (ii))
+Other items
+1,245
+1,169
+10,944
+11,901
+Provision matrix
+Credit-impaired
+(Note (i))
+N/A
+25
+Accounts receivable
+4,500
+4,500
+Credit-impaired
+26 N/A
+Other loans
+receivables
+17,040
+18,133
+967
+2,350
+3,301
+362
+Credit-impaired
+12-month ECL
+22, 26 N/A
+Service concession
+(i)
+6%
+(ii)
+94
+4,196
+1%
+4,883
+1%
+Less than one year past due
+6,446
+0.4%
+6,614
+0.2%
+Current (not past due)
+RMB million
+Accounts
+receivable
+2022
+2022
+Average
+loss rate
+Accounts
+receivable
+2023
+RMB million
+2023
+Average
+loss rate
+Gross carrying amount
+As part of the Group's credit risk management, the Group uses debtors' ageing to assess
+the impairment for its receivables from customers in relation to its sales of coal, power,
+coal chemical products and transportation services because these customers consist of
+a large number of customers with common risk characteristics that are representative of
+the customers' abilities to pay all amounts due in accordance with the contractual terms.
+The following table provides information about the exposure to credit risk for accounts
+receivables which are assessed based on provision matrix as at 31 December 2023 within
+lifetime ECL (not credit-impaired). Accounts receivable with credit-impaired with gross
+carrying amounts of RMB1,169 million (2022: RMB1,245 million) as at 31 December 2023
+were assessed individually.
+Provision matrix - debtors' ageing
+39.2 Financial risk management objectives and policies (Continued)
+39. FINANCIAL INSTRUMENTS (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+322 China Shenhua Energy Company Limited
+For financial guarantee contracts, the gross carrying amount represents the maximum amount the Group
+has guaranteed under the respective contracts.
+For accounts receivable, the Group has applied the simplified approach in IFRS 9 to measure the loss
+allowance at lifetime ECL. Except for debtors with credit-impaired, the Group determines the ECL on
+these items by using a provision matrix, grouped by debtors' aging.
+111
+94
+39. FINANCIAL INSTRUMENTS (CONTINUED)
+Credit risk and impairment assessment (Continued)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+31 December
+(i)
+Notes:
+Non-current liabilities
+Current liabilities
+Analysed for reporting purpose as:
+Others
+Defined benefit plans
+Deferred income (Note (ii))
+Payables for acquisition of mining rights (Note (i))
+35. LONG-TERM LIABILITIES
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+2023 Annual Report 315
+2023
+953
+31 December
+2022
+RMB million
+The payables for acquisition of mining rights is the present value of the payable mining rights. The mining rights
+payable shall be paid annually during the execution of the contract.
+11,287
+20,309
+674
+10,613
+15,125
+5,184
+11,287
+20,309
+2,307
+582
+784
+5,714
+1,352
+1,386
+7,046
+12,425
+RMB million
+(ii)
+1,254
+1,198
+56
+127
+33
+8,750
+7,424
+Accrued interest payable
+Accrued staff wages and welfare benefits
+RMB million
+31 December
+2022
+RMB million
+2023
+31 December
+34. ACCRUED EXPENSES AND OTHER PAYABLES
+For the year ended 31 December 2023
+(Expressed in RMB)
+Notes to the Consolidated Financial Statements (Continued)
+(Expressed in RMB)
+Taxes payable other than income tax
+945
+8
+5,159
+Dividends payable
+RMB million
+RMB million
+31 December
+2022
+2023
+31 December
+34,724
+30,613
+The above balances are unsecured, interest-free and payable on demand.
+Amounts due to China Energy Group and fellow subsidiaries
+Amounts due to associates
+Other accrued expenses and payables of the Group included:
+Note:
+11,095
+Other accrued expenses and payables (Note)
+6,904
+6,902
+7,176
+Deferred income mainly represents grants provided by several local governments in the PRC to encourage the
+construction of non-current assets.
+11,767
+At the beginning of the year
+Financial liabilities
+Amortised cost
+Financial assets measured at fair value through
+profit or loss
+Accounts and bills receivable at FVTOCI (Note 21)
+Equity instruments at FVTOCI (Note 21)
+Financial assets at amortised cost
+Financial assets
+The carrying amounts of each of the following categories of financial assets and financial
+liabilities at the end of the reporting period are set out as follows:
+39.1 Categories of financial instruments
+39. FINANCIAL INSTRUMENTS
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+2023 Annual Report 317
+There were no changes in the Group's approach to capital management compared with previous
+years.
+The Group monitors capital using a gearing ratio which is total liabilities divided by total assets.
+The Group aims to maintain the gearing ratio at a reasonable level. The Group's gearing ratio as
+at 31 December 2023 was 24% (31 December 2022: 26%).
+31 December
+2023
+The Group manages the capital structure and makes adjustments to it in the light of changes in
+economic conditions and the risk characteristics of the underlying assets. In order to maintain or
+adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders,
+return capital to shareholders or issue new shares to reduce debts.
+RMB million
+191,604
+2,486
+254
+318 China Shenhua Energy Company Limited
+36. ACCRUED RECLAMATION OBLIGATIONS
+The functional currency of most of the group entities is RMB in which most of the
+transactions are denominated. However, certain of the Group's receivables, bank
+balances, borrowings and payables are denominated in foreign currencies other than
+the functional currency in which they are measured. The carrying amounts of the
+Group's receivables, bank balances, borrowings and payables denominated in foreign
+currencies are set out in Notes 25, 30 and 33, respectively.
+Currency risk
+(i)
+Market risk
+The Group's major financial instruments include accounts and bills receivables, loans and
+advances to/deposits from/amounts due to China Energy Group and fellow subsidiaries,
+amounts due from/to associates, other receivables, accounts and bills payables, borrowings,
+other payables, long-term liabilities and bonds. Details of the financial instruments are
+disclosed in the respective notes. The risks associated with these financial instruments
+include market risk (interest rate and currency risks), credit risk and liquidity risk. The
+policies on how to mitigate these risks are set out below. The management manages and
+monitors these exposures to ensure appropriate measures are implemented on a timely
+and effective manner.
+39.2 Financial risk management objectives and policies
+Amount less than RMB500,000
+119,589
+107,659
+206,074
+194,344
+203,186
+*
+31 December
+2022
+RMB million
+The Group's policy is to maintain a strong capital base so as to maintain investor, creditor and
+market confidence and to sustain future development of the business.
+2,386
+502
+All A shares and H shares rank pari passu in all material aspects.
+(266)
+(630)
+986
+405
+6,754
+1,531
+9,005
+2022
+RMB million
+2023
+Year ended 31 December
+316 China Shenhua Energy Company Limited
+At the end of the year
+Accrued reclamation obligations utilised
+38. CAPITAL RISK MANAGEMENT
+Accretion expense
+Addition for the year
+8,780
+9,005
+RMB million
+37. SHARE CAPITAL
+3,378
+19,869
+Notes to the Consolidated Financial Statements (Continued)
+19,869
+3,378
+16,491
+16,491
+RMB million
+RMB million
+2023
+31 December
+16,491,037,955 domestic listed A shares of RMB1.00 each
+3,377,482,000 H shares of RMB1.00 each
+Registered, issued and fully paid:
+(Expressed in RMB)
+For the year ended 31 December 2023
+31 December
+2022
+For the year ended 31 December 2023
+42.1 Transactions with China Energy Group, an associate of China Energy Group,
+fellow subsidiaries, and associates of the Group
+(Expressed in RMB)
+42. RELATED PARTY TRANSACTIONS (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+2023 Annual Report 331
+The Group had the following transactions with China Energy Group, an associate of China
+Energy Group, fellow subsidiaries, and associates of the Group that were carried out in
+the normal course of business during both years:
+The Group is controlled by China Energy Group and has significant transactions and
+relationships with China Energy Group, an associate of China Energy Group and subsidiaries
+of China Energy Group ("fellow subsidiaries"). Related parties refer to enterprises over
+which China Energy Group is able to exercise significant influence or control. The Group
+also has entered into transactions with its associates, over which the Group can exercise
+significant influence.
+42. RELATED PARTY TRANSACTIONS
+330 China Shenhua Energy Company Limited
+41. EMPLOYEE BENEFITS PLAN
+To date, the Group has not incurred any significant expenditure for environmental
+remediation, is currently not involved in any environmental remediation, and apart from the
+provision for land reclamation costs, has not accrued any further amounts for environmental
+remediation relating to its operations. Under the existing legislation, management believes
+that there are no probable liabilities that will have a material adverse effect on the financial
+position or operating results of the Group. The regulatory bodies, however, have moved,
+and may move further towards the adoption of more stringent environmental standards.
+Environmental liabilities are subject to considerable uncertainties which affect the Group's
+ability to estimate the ultimate cost of remediation efforts. These uncertainties include (i)
+the exact nature and extent of the contamination at various sites including, but not limited
+to coal mines and land development areas, whether operating, closed or sold; (ii) the
+extent of required cleanup efforts; (iii) varying costs of alternative remediation strategies;
+(iv) changes in environmental remediation requirements; and (v) the identification of new
+remediation sites. The amount of such future cost is indeterminable due to such factors
+as the unknown magnitude of possible contamination and the unknown timing and extent
+of the corrective actions that may be required. Accordingly, the outcome of environmental
+liabilities under future environmental legislation cannot reasonably be estimated at present,
+and could be material.
+40.4 Environmental contingencies
+40. COMMITMENTS AND CONTINGENT LIABILITIES (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+The Group is the defendant in certain lawsuits as well as the plaintiff in other proceedings
+arising in the ordinary course of business. While the outcomes of such contingencies,
+lawsuits or other proceedings cannot be determined at present, management believes that
+any resulting liabilities will not have a material adverse effect on the financial position or
+operating results of the Group.
+40.3 Legal contingencies
+As at 31 December 2023, the Group had issued certain guarantees in respect of certain
+banking facilities granted to an entity which the Group held less than 20% equity interest.
+The maximum amount guaranteed is RMB94 million (2022: RMB111 million).
+42.1 Transactions with China Energy Group, an associate of China Energy Group,
+fellow subsidiaries, and associates of the Group (Continued)
+94,740
+40.2 Financial guarantees issued
+The Group participates, in line with the regulations of the PRC, mainly in various defined
+contribution retirement plans organised by municipal and provincial governments for its
+employees. The Group is required to make contributions to the retirement plans at 16% of the
+salaries, bonuses and certain allowances of the employees. In addition, as approved by the
+government, the Group makes contribution to a supplemental defined contribution pension plan
+for its employees. The fund is managed by a qualified fund manager. The Group has no other
+material obligation for the payment of pension benefits associated with these plans beyond the
+annual contributions described above. The Group's contributions for the year ended 31 December
+2023 were RMB4,812 million (2022: RMB4,225 million).
+Notes
+The issuance of bills by Finance Company refers to the issuance of acceptance bills by Finance Company
+to the Group.
+2022
+Other income includes agency income, repairs and maintenance service income, sales of ancillary materials
+and spare parts, management fee income, sales of water and electricity, financial service income, lease
+income, etc. earned from China Energy Group, associates of China Energy Group and fellow subsidiaries.
+92,253
+Net deposits placed with Finance Company represents net deposits placed by the Group with Finance
+Company.
+Granting of loans from China Energy Group and fellow subsidiaries.
+(xviii) Repayment of loans from China Energy Group and fellow subsidiaries.
+(xix)
+(xx)
+(xxi)
+Bills receivables discounted from Finance Company represents bill acceptance and discount services
+provided by Finance Company to the Group.
+Purchases of ancillary materials and spare
+812
+563
+(iii)
+Interest expense
+18
+18
+(ii)
+Income from entrusted loans
+408
+810
+(i)
+Interest income
+RMB million
+Year ended 31 December
+2023
+RMB million
+7,060
+31 December 2022
+Carrying
+48,042
+Fair value
+RMB million
+amount
+RMB million
+Fair value
+amount
+RMB million RMB million
+Fixed rate bonds
+Fixed rate bank borrowings
+Financial liabilities:
+31 December 2023
+Carrying
+Except as detailed in the following table, the Directors consider that the carrying amounts
+of financial assets and financial liabilities recorded at amortised cost in the consolidated
+financial statements approximate their fair values:
+Fair value of financial assets and financial liabilities that are not measured at fair
+value on a recurring basis
+39.3 Fair value measurements (Continued)
+39. FINANCIAL INSTRUMENTS (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+328 China Shenhua Energy Company Limited
+There were no transfer between Level 1, Level 2 and Level 3 during the years ended 31
+December 2023 and 2022.
+by the Group for the
+valuation are the expected
+rates of return.
+Discounted cash flow
+method. The significant
+unobservable inputs used
+listed companies, multiples
+and discount for lack of
+liquidity.
+on value of comparable
+Fair value is estimated based
+approach.
+Market comparison
+Sale of coal chemical product represents income from sale of coal chemical product to fellow subsidiaries.
+5,146
+2,972
+3,903
+4,901
+6,525
+46,276
+39,638
+42,074
+RMB million
+RMB million
+31 December
+2022
+31 December
+2023
+- Other
+- Equipment
+- Land, buildings, mining rights and
+exploration and evaluation assets
+Contracted for but not provided
+As at 31 December, the Group had capital commitments for land, buildings and mining
+rights, exploration and evaluation assets, equipment and other as follows:
+40.1 Capital commitments
+40. COMMITMENTS AND CONTINGENT LIABILITIES
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+2023 Annual Report 329
+The fair values of bonds are included in the Level 1 category, which have been derived
+from the quoted prices (unadjusted) in an active market.
+The fair value of fixed rate bank borrowings above in the Level 2 category is measured
+using discounted cash flow method where the future cash flows are estimated based on
+the contract and discounted at a rate that reflects the credit risk of the issuers.
+3,265
+3,453
+2,870
+6,641
+(xvii)
+(xii)
+(xv)
+(xi)
+37
+61
+Coal export agency expense
+Amount less than RMB500,000
+3
+Purchase of equipment and construction
+work
+(xiii)
+1,303
+1,190
+Sale of coal chemical product
+(xiv)
+6,948
+7,712
+Other income
+(xv)
+2,506
+2,041
+Net deposits placed with Finance Company
+(xvi)
+15,616
+58,850
+Repairs and maintenance services expense
+Granting of loans from China Energy Group
+40
+(x)
+2,819
+2,756
+Ancillary and social services
+(v)
+1,739
+1,697
+Transportation service income
+(vi)
+8,691
+8,807
+Transportation service expense
+(vii)
+1,459
+2,076
+Sale of coal
+(viii)
+93,939
+94,195
+Purchase of coal
+(ix)
+14,140
+11,967
+Property leasing
+23
+(xvi)
+and fellow subsidiaries
+9,134
+Interest expense represents interest incurred from loans from China Energy Group and fellow subsidiaries.
+The applicable interest rate is determined in accordance with the prevailing interest rates published by
+the PBOC.
+Purchases of ancillary materials and spare parts represent purchase of materials and utility supplies related
+to the Group's operations from fellow subsidiaries and associates of China Energy Group.
+Ancillary and social services represent expenditures for social welfare and support services such as
+property management, water and electricity supply, and canteen expense paid to China Energy Group,
+fellow subsidiaries and associates of China Energy Group.
+Transportation service income represents income earned from fellow subsidiaries in respect of coal
+transportation services.
+(vii) Transportation service expense represents expenses paid to fellow subsidiaries in respect of coal
+transportation services.
+(viii)
+(ix)
+(x)
+Sale of coal represents income from sale of coal to fellow subsidiaries and associates of China Energy
+Group.
+Purchase of coal represents coal purchased from associates of the Group, associates of China Energy
+Group and fellow subsidiaries.
+Property leasing expense represents rental paid or payable in respect of properties leased from fellow
+subsidiaries.
+(xi)
+(xii)
+Repairs and maintenance services expense represents expense related to machinery repairs and
+maintenance services provided by associates of China Energy Group and fellow subsidiaries.
+Coal export agency expense represents expense related to coal export agency services provided by a
+fellow subsidiary.
+2023 Annual Report 333
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+42. RELATED PARTY TRANSACTIONS (CONTINUED)
+42.1 Transactions with China Energy Group, an associate of China Energy Group,
+fellow subsidiaries, and associates of the Group (Continued)
+(xiii) Purchase of equipment and construction work represents expenditure related to equipment and
+construction service provided by fellow subsidiaries.
+(xiv)
+Income from an entrusted loan represents interest earned from an entrusted loan to an associate of the
+Group. The applicable interest rate is determined in accordance with the prevailing interest rates published
+by the PBOC.
+(xvii)
+Interest income represents interest earned from deposits in fellow subsidiaries. The applicable interest
+rate is determined in accordance with the prevailing interest rates published by the PBOC.
+(v)
+18,196
+Repayment of loans from China Energy
+Group and fellow subsidiaries
+(xviii)
+23,153
+13,522
+Bills receivables discounted from Finance
+Company
+(xix)
+3,578
+4,376
+The issuance of bills by Finance Company
+(xx)
+7,943
+1,959
+332 China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+42. RELATED PARTY TRANSACTIONS (CONTINUED)
+42.1 Transactions with China Energy Group, an associate of China Energy Group,
+fellow subsidiaries, and associates of the Group (Continued)
+(i)
+(ii)
+(iii)
+(iv)
+(vi)
+*
+- Impairment losses reversed
+502
+31 December 2022
+Weighted
+other payables, lease
+Accounts and bills payables,
+Financial liabilities:
+Liquidity risk (Continued)
+39.2 Financial risk management objectives and policies (Continued)
+39. FINANCIAL INSTRUMENTS (CONTINUED)
+(Expressed in RMB)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+average
+107,659
+33,787
+9,936
+10,041
+62,415
+326 China Shenhua Energy Company Limited
+2,972
+3,047
+2,934
+113
+4.10
+116,179
+On demand
+interest
+or less than
+Liquidity risk
+265
+4,671
+4,936
+Liquidity risk is the risk that the Group will not be able to meet its financial obligation as
+they fall due. The approach to managing liquidity is to ensure, as far as possible, that it
+will always have sufficient liquidity to meet its liabilities when due, under both normal and
+stressed conditions, without incurring unacceptable losses or risk damage to the Group's
+reputation.
+3,061
+2,732
+56,766
+liabilities
+liabilities and long-term
+RMB million
+RMB million
+RMB million
+Total
+carrying
+amount
+Total
+undiscounted
+cash flows
+5 years
+2-5 years
+RMB million
+RMB million
+1-2 years
+1 year
+RMB million
+%
+rate
+More than
+Bonds
+As at 31 December 2023
+5,146
+502
+% RMB million
+1 year
+or less than
+Total
+Total
+On demand
+average
+interest
+rate
+(iv)
+31 December 2023
+Weighted
+1-2 years
+RMB million
+other payables, lease
+Financial liabilities:
+The following table details the remaining contractual maturity of the Group's financial
+liabilities at the end of the reporting period, which are based on contractual undiscounted
+cash flows (including interest payments computed using contractual rates or, if floating,
+based on rates current at the end of the reporting period) and the earliest date the Group
+can be required to pay:
+Liquidity risk (Continued)
+39.2 Financial risk management objectives and policies (Continued)
+39. FINANCIAL INSTRUMENTS (CONTINUED)
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+2023 Annual Report 325
+The Group closely monitors cash flow requirements and optimising its cash return. The
+Group prepares cash flow forecasts and ensures it has sufficient cash for the servicing of
+operation, financial, and capital obligations; this excludes the potential impact of extreme
+circumstances that cannot reasonably be predicted, such as natural disasters.
+Accounts and bills payables,
+2-5 years
+RMB million
+More than undiscounted
+5 years
+cash flows
+RMB million RMB million
+carrying
+1,333
+1,086
+2,537
+2.78
+Borrowings fixed interest rate
+29,112
+34,839
+26,832
+3,531
+1,421
+3,055
+3.98
+interest rate
+Borrowings variable
+70,429
+72,835
+6,453
+5,072
+4,600
+56,710
+liabilities
+liabilities and long-term
+amount
+RMB million
+5,458
+Level 3
+(29)
+(10)
+Saved as discussed above, the Group also makes use of banks and financial institutions
+facilities as one of the effective sources of liquidity.
+119,589
+129,136
+35,517
+16,303
+6,159
+71,157
+3,453
+3,677
+3,413
+The maximum liability of financial guarantees issued by the Group is disclosed in Note 40.2.
+132
+4.10
+Bonds
+6,641
+6,939
+296
+1,719
+233
+4,691
+2.83
+Borrowings fixed interest rate
+132
+2023 Annual Report 327
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+254
+Accounts and Bills
+Receivables
+2,386 Level 3
+2,486
+Quoted price in active
+market.
+Level 1
+securities
+Unlisted equity
+value through profit
+or loss
+measured at fair
+Financial assets
+Financial assets:
+Valuation technique(s)
+and key input(s)
+RMB million
+RMB million
+Fair value
+hierarchy
+2022
+2023
+31 December 31 December
+Fair value of the Group's financial assets and financial liabilities that are measured at fair
+value on a recurring basis
+39.3 Fair value measurements
+39. FINANCIAL INSTRUMENTS (CONTINUED)
+(Expressed in RMB)
+44,427
+(29)
+51,817
+8,110
+238
+2,969
+3,207
+30
+1,572
+1,602
+(210)
+(210)
+103
+103
+(28)
+(28)
+As at 1 January 2023
+268
+4,406
+4,674
+- Impairment losses recognised
+2
+299
+301
+- Impairment losses reversed
+- Write-offs
+(5)
+(5)
+RMB million
+RMB million
+RMB million
+Total
+3,062
+9,568
+4.12
+rate
+Borrowings variable interest
+65,068
+66,703
+4,144
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+39. FINANCIAL INSTRUMENTS (CONTINUED)
+39.2 Financial risk management objectives and policies (Continued)
+31,077
+Credit risk and impairment assessment (Continued)
+The following tables show reconciliation of loss allowances that has been recognised for
+other receivables and other loans.
+As at 1 January 2022
+Factoring services refer to receiving factoring services from China Energy Group and fellow subsidiaries.
+The transaction of factoring services for this year is RMB6,832 million.
+The Directors are of the opinion that the above transactions with related parties were
+conducted in the ordinary course of business and in accordance with the agreements
+governing such transactions.
+334 China Shenhua Energy Company Limited
+- Impairment losses recognised
+- Effect of disposals of subsidiaries
+- Write-offs
+12-month ECL
+(not credit-
+impaired)
+Lifetime ECL
+(credit-
+impaired)
+Gross carrying amount (Continued)
+parts
+Accounts and bills receivables
+Balances with other government-related entities, including state-controlled banks in the PRC
+Development Co., Ltd.
+The Group entered into a number of agreements with China Energy Group, an associate
+of China Energy Group, fellow subsidiaries, and associates of the Group. The terms of the
+principal agreements are summarised as follows:
+(i)
+(ii)
+The Group has entered into a mutual supply agreement for the mutual provision of
+production supplies and ancillary services with associates of China Energy Group and
+fellow subsidiaries. Pursuant to the agreement, associates of China Energy Group
+and fellow subsidiaries provide the Group with the production supplies and services,
+ancillary production services including the use of the information network system
+and ancillary administrative services. On the other hand, the Group provides fellow
+subsidiaries with water supplies, rolling stock management, railway management,
+railway transportation and other related or similar production supplies or services and
+use of the information network system.
+The products and services provided under the agreement, other than the sharing
+of use of the information network system which is free of charge, are provided in
+accordance with the following pricing policy:
+price prescribed by the state (including any price prescribed by any relevant
+local government), if applicable;
+where there is no state-prescribed price but where there is a state-guidance
+price, then the state-guidance price;
+where there is neither a state-prescribed price nor a state-guidance price, the
+market price; or
+where none of the above is applicable or where it is not practical to apply the
+above pricing policies in reality, the price to be agreed between the relevant
+parties shall be based on reasonable costs incurred in providing the goods or
+services plus a profit margin of 5% of such costs.
+The Group has entered into coal supply agreements with an associate of China Energy
+Group, fellow subsidiaries and associates of the Group. The coal supplied is charged
+at the prevailing market price.
+2023 Annual Report 335
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+42. RELATED PARTY TRANSACTIONS (CONTINUED)
+42.1 Transactions with China Energy Group, an associate of China Energy Group,
+fellow subsidiaries, and associates of the Group (Continued)
+(iii)
+(iv)
+(v)
+(vi)
+(vii)
+42.1 Transactions with China Energy Group, an associate of China Energy Group,
+fellow subsidiaries, and associates of the Group (Continued)
+42. RELATED PARTY TRANSACTIONS (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+100
+Particulars of
+registered capital
+Type of
+legal entity
+and operation
+Name of the subsidiary
+Proportion of ownership
+Place of
+incorporation
+(Expressed in RMB)
+Details of the Company's material subsidiaries (Continued)
+44. SUBSIDIARIES (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+The Group has entered into a financial services agreement with Finance Company.
+Pursuant to the agreement, Finance Company provides financial services to the
+electricity
+electricity; coal mining
+development
+342 China Shenhua Energy Company Limited
+100
+100
+RMB3,024 million
+Limited company
+PRC
+Shenhua Shendong Power
+Co., Ltd.
+Generation and sale of
+100
+100 Generation and sale of
+interest and voting rights
+O Group. The interest rate for the deposits with Finance Company from the Group
+should not be lower than the lowest limit published by the PBOC for the same type
+of deposit. The interest rate for loans made by Finance Company to the Group should
+not be higher than the highest limit published by the PBOC for the same type of loan.
+The above interest rates should be determined by reference to the rate charged by
+normal commercial banks in the PRC for comparable deposits and loans on normal
+commercial terms. The fees charged by Finance Company for the provision of other
+financial services shall be determined according to the rates chargeable by the PBOC
+or the China Banking Regulatory Commission.
+The Group has entered into a land leasing agreement with fellow subsidiaries of
+China Energy Group. The annual rent is determined based on the local market rate.
+The Group is not allowed to sub-let the leased land.
+PRC
+Beidian Shengli Company
+services
+loading and transportation
+Industrial Co., Ltd.
+Coal mining; provision of
+57
+57
+RMB1,169 million
+Limited company
+PRC
+Guoneng Baorixile Energy
+and sale of electricity
+Guoneng Baoshen Railway
+Group Co., Ltd.
+PRC
+Limited company
+RMB13,913 million
+100
+100
+(Tianjin) Finance Lease Co., Ltd. PRC
+Limited company
+Limited company
+RMB2,925 million
+63
+63
+The Group has entered into an agency agreement for the export of coal with a
+fellow subsidiary of China Energy Group. The fellow subsidiary is appointed as a
+non-exclusive export agent of the Group and is entitled to receive an agency fee
+based on the relevant market rates or lower rates. Currently, the rate is 0.7% of the
+free on board sales price of coal exported. When obtaining export agent conditions
+from a third party that are equal to or inferior to those of the China Energy Group,
+the Company shall give preference to the China Energy Group as the export agent
+of coal products.
+The Group entered into an agency agreement for the sale of coal with fellow
+subsidiaries of China Energy Group. The Group is appointed as the exclusive sales
+agent of fellow subsidiaries of China Energy Group for thermal coal and non-exclusive
+sales agent for coking coal. The Group is entitled to receive an agency fee, which
+is based on its related costs incurred plus a profit margin of 5% for sales of coal
+outside the Inner Mongolia Autonomous Region. No agency fee is charged for sales
+of coal within the Inner Mongolia Autonomous Region.
+336 China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+42. RELATED PARTY TRANSACTIONS (CONTINUED)
+42.1 Transactions with China Energy Group, an associate of China Energy Group,
+fellow subsidiaries, and associates of the Group (Continued)
+(viii) The Group has entered into agreements with fellow subsidiaries of China Energy
+Group under which the Group has been granted the right to use certain trademarks.
+Fellow subsidiaries of China Energy Group bear its own cost for the registration of
+such trademarks during the term of the trademarks license agreement and expenses
+for enforcement against any infringement of the licensed trademarks by third parties.
+(ix)
+The Group has entered into a factoring service agreement with Guoneng (Beijing)
+Commercial Factoring Co., Ltd. ("Guoneng Factoring Company"). Pursuant to the
+agreement, Guoneng Factoring Company agreed to provide the Group with factoring
+services and factoring-related services. For the provision of factoring services by
+Guoneng Factoring Company to the Group, the financing cost shall not be higher
+than that determined by an independent third-party factoring company for providing
+the same kind of services to the Group, and it should be determined on normal
+commercial terms. When the financing fee determined by the independent third-party
+factoring company for providing the same kind of services is difficult to obtain, it shall
+not be higher than the financing fee calculated based on the Loan Prime Rate (LPR)
+of the PBOC for the same period. For the service fee charged from the provision of
+other relevant services by Guoneng Factoring Company to the Group, the service fee
+shall not be higher than that charged by an independent third-party factoring company
+for providing the same kind of services to the Group, and it should be determined on
+normal commercial terms. When the service fee charged by the independent third-
+party factoring company for providing the same kind of services is difficult to obtain,
+it shall be determined at the cost plus a reasonable profit margin (around 10%).
+2023 Annual Report 337
+The Group has entered into a property leasing agreement with fellow subsidiaries of
+China Energy Group for leasing of certain properties to each other. No rent is payable
+by the Group before fellow subsidiaries obtains the relevant property ownership
+certificate. The rental charges are based on comparable market rates. If fellow
+subsidiaries of China Energy Group negotiate to sell a leased property to a third party,
+the Company has a pre-emptive right to purchase such property under terms no less
+favorable than other third party.
+Notes to the Consolidated Financial Statements (Continued)
+(Expressed in RMB)
+42. RELATED PARTY TRANSACTIONS (CONTINUED)
+42.1 Transactions with China Energy Group, an associate of China Energy Group,
+fellow subsidiaries, and associates of the Group (Continued)
+Amounts due from/to China Energy Group, an associate of China Energy Group, fellow
+subsidiaries, and associates of the Group:
+RMB3,802 million
+Limited company
+Guoneng Jinjie Energy Co., Ltd. PRC
+services
+loading and transportation
+Coal mining; provision of
+For the year ended 31 December 2023
+held by the Group
+31 December 31 December
+Principal activities
+2023
+Name of the subsidiary
+Details of the Company's material subsidiaries (Continued)
+44. SUBSIDIARIES (CONTINUED)
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+2023 Annual Report 343
+Co., Ltd.
+Provision of transportation
+100
+100
+100
+RMB6,300 million
+Limited company
+Guoneng Railway Transportation PRC
+Co., Ltd.
+Coal chemical
+100
+10
+Cash and time deposits at bank
+100
+Place of
+incorporation
+and operation
+Proportion of ownership
+Type of
+legal entity
+Particulars of
+registered capital
+70
+70
+USD63 million
+Limited company
+Indonesia
+PT GH EMM Indonesia
+Co., Ltd. ("Shenhua Oversea
+Capital")
+Investment holding
+100
+100
+RMB5,590 million
+HKD5,252 million
+Hong Kong,
+China
+Development Investment
+China Shenhua Overseas
+%
+2022
+2023
+31 December 31 December
+Principal activities
+held by the Group
+interest and voting rights
+Limited company
+Limited company
+Guoneng Baotou Coal Chemical PRC
+Provision of transportation
+services
+Shenhua Fujian Energy Co., Ltd. PRC
+electricity; trading of coal
+66 Generation and sale of
+66
+RMB3,101 million
+Limited company
+PRC
+Guoneng Sichuan Energy
+Co., Ltd.
+Generation and sale of
+electricity
+41
+Limited company
+41
+Limited company
+PRC
+Dingzhou Power*
+51 Generation and sale of
+electricity
+51
+RMB1,834 million
+Limited company
+Hebei Guohua Cangdong Power PRC
+Co., Ltd.
+%
+2022
+RMB1,561 million
+RMB4,665 million
+RMB3,280 million
+100
+Co., Ltd.
+51
+51
+RMB5,948 million
+Limited company
+PRC
+Guoneng Yuanhai Shipping
+70 Provision of harbour and
+port services
+Administration Co., Ltd.
+70
+10
+RMB6,790 million
+PRC
+Guoneng Huanghua Harbour
+53 Provision of transportation
+services
+53
+RMB15,231 million
+Limited company
+PRC
+Guoneng Shuohuang Railway
+Generation and sale of
+electricity
+100
+Limited company
+development; generation
+100
+58
+9,363
+2,262
+1,299
+1,814
+110
+110
+Total amounts due from China Energy Group, an
+associate of China Energy Group, fellow subsidiaries
+and associates of the Group
+85,238
+58,845
+63,031
+Accounts payable
+Accrued expenses and other payables
+Contract liabilities
+13,119
+27,134
+3,027
+3,114
+1,507
+Borrowings
+74,466
+31 December
+2022
+RMB million
+RMB million
+86,858
+76,889
+81,806
+RMB million
+RMB million
+2022
+2023
+Year ended 31 December
+Interest expenses (including amount capitalised)
+Interest income
+58 Coal mining and
+Transportation costs
+Power revenue
+Coal revenue
+Transactions with other government-related entities, including state-controlled banks in
+the PRC
+42.4 Transactions with other government-related entities in the PRC (Continued)
+Accounts and bills receivables
+Prepaid expenses and other current assets
+Other non-current assets
+31 December
+2023
+1,109
+1,245
+1,129
+Total amounts due to China Energy Group, an associate
+of China Energy Group and fellow subsidiaries, and
+associates of the Group
+42.3 Contributions to post-employment benefit plans
+The Group participates in various defined contribution post-employment benefit plans
+organised by municipal and provincial governments and a supplemental defined contribution
+pension plan approved by the government for its employees. Further details of the Group's
+post-employment benefit plans are disclosed in Note 41.
+2023 Annual Report 339
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+42. RELATED PARTY TRANSACTIONS (CONTINUED)
+42.4 Transactions with other government-related entities in the PRC
+The Company is ultimately controlled by the PRC government and the Group operates in
+an economic environment currently predominated by government-related entities.
+Other than those transactions with China Energy Group, an associate of China Energy
+Group, fellow subsidiaries and associates of the Group as disclosed above, the Group
+conducts business with other government-related entities which include but are not limited
+to the following:
+Power sales;
+Sales and purchases of coal;
+Transportation services;
+Construction work;
+Purchases of ancillary materials and spare parts;
+Ancillary and social services; and
+Financial services arrangements.
+These transactions are conducted in the ordinary course of the Group's business on terms
+comparable to those with other entities that are not government-related. The Group has
+established its pricing policies in respect of sale of goods and provision of services, and
+approval process for purchases of products and services. Such policies and approval
+process apply to all counterparties regardless of whether the counterparty is government-
+related or not.
+Having considered the potential for transactions to be impacted by related party relationships,
+the Group's buying, pricing strategy and approval processes, and what information would
+be necessary for an understanding of the potential effect of the relationship on the financial
+statements, the Directors are of the opinion that the following transactions with other
+government-related entities require disclosure:
+Total remuneration is included in "personnel expenses" as disclosed in Note 11.
+78,829
+10
+1
+42. RELATED PARTY TRANSACTIONS (CONTINUED)
+18,898
+32,486
+Other than those disclosed in Notes 22, 25, 26, 30, 33 and 34, amounts due from/to China
+Energy Group, an associate of China Energy Group, fellow subsidiaries, and associates of
+the Group bear no interest, are unsecured and are repayable in accordance with normal
+commercial terms.
+338 China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+42. RELATED PARTY TRANSACTIONS (CONTINUED)
+42.2 Key management personnel emoluments
+Key management personnel receive compensation in the form of fees, basic salaries,
+housing and other allowances, benefits in kind, discretionary bonuses and retirement
+scheme contributions.
+Key management personnel compensation of the Group is summarised as follows:
+Short-term employee benefits
+Post-employment benefits
+Year ended 31 December
+2023
+2022
+RMB million
+RMB million
+13
+9
+1
+14
+10,086
+9,097
+1,789
+Type of
+legal entity
+Place of
+incorporation
+and operation
+Name of the subsidiary
+The Company's subsidiaries are unlisted. Details of the Company's material subsidiaries at the
+end of the reporting period are set out below:
+Details of the Company's material subsidiaries
+44. SUBSIDIARIES
+(Expressed in RMB)
+For the year ended 31 December 2023
+Particulars of
+registered capital
+Notes to the Consolidated Financial Statements (Continued)
+After the end of the reporting period, the Directors proposed a final dividend, the details of which
+are disclosed in Note 14.
+43. NON-ADJUSTING EVENTS AFTER THE REPORTING PERIOD
+1,178
+1,231
+2,385
+2,388
+23,934
+21,139
+2023 Annual Report 341
+Proportion of ownership
+interest and voting rights
+held by the Group
+Principal activities
+RMB7,102 million
+Limited company
+PRC
+Zhunge'er Energy
+100 Trading of coal; provision of
+integrated services
+100 Trading of coal
+100
+100
+RMB4,989 million
+Limited company
+Guoneng Shendong Coal Group PRC
+Co., Ltd.
+100
+RMB7,789 million
+Limited company
+Guoneng Sales Group Co., Ltd. PRC
+%
+2022
+2023
+31 December 31 December
+6,357
+340 China Shenhua Energy Company Limited
+7,298
+68,216
+The Company has the practical ability to lead and control the operations of Dingzhou Power, therefore, Dingzhou
+Power has been accounted for as a subsidiary (Note 4.1).
+The above table lists subsidiaries of the Group which, in the opinion of the Directors, principally
+affected the results or assets of the Group. To give details of other subsidiaries would, in the
+opinion of the Directors, result in particulars of excessive length.
+As at 31 December 2023, Shenhua Oversea Capital had issued a bond of USD413 million (Note
+31). Other than Shenhua Oversea Capital, none of the subsidiaries had issued any debt securities
+at the end of the year.
+344 China Shenhua Energy Company Limited
+2,314
+5,153
+6,037
+31 December
+2022
+RMB million
+RMB million
+31 December
+2023
+Contract liabilities
+Accrued expenses and other payables
+Borrowings
+Restricted bank deposits
+Cash and time deposits at banks
+Prepaid expenses and other current assets
+2,066
+1,829
+2,627
+*
+105,295
+Coal mining and
+development
+100
+2,576
+100
+Guoneng Xinshuo Railway
+Co., Ltd.
+PRC
+Limited company
+RMB10,888 million
+100
+100
+100
+Guoneng Zhunneng Group
+Co., Ltd.
+Limited company
+RMB1,658 million
+100
+Coal mining and
+development; generation
+and sale of electricity
+100 Provision of transportation
+services
+100 Provision of financial lease
+services
+100 Provision of transportation
+services
+PRC
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+(1,078)
+8,508
+526
+Net cash (outflow) / inflow
+(7,298)
+(6,342)
+activities
+Net cash outflow from financing
+(680)
+(239)
+(438)
+(932)
+(1,101)
+(244)
+(2,282)
+Net cash outflow from investing
+2,499
+2,332
+1,256
+983
+8,379
+activities
+Net cash inflow from operating
+826
+406
+activities
+(116)
+Deferred tax assets
+(193)
+14,771
+47,382
+Total assets less current liabilities
+352,217
+340,065
+Non-current liabilities
+Borrowings
+1,124
+1,311
+Lease liabilities
+1,208
+1,460
+Long-term liabilities
+9,866
+5,207
+Accrued reclamation obligations
+5,289
+6,743
+Deferred tax liabilities
+93
+29
+Total non-current liabilities
+Net assets
+Equity
+Share capital
+155,151
+160,612
+Net current assets
+Total current liabilities
+45. INFORMATION ABOUT THE FINANCIAL POSITION AND RESERVES OF THE
+COMPANY (CONTINUED)
+Current liabilities
+Note
+31 December
+2023
+RMB million
+31 December
+2022
+(Restated)
+RMB million
+Borrowings
+161
+Accounts and bills payables
+10,101
+367
+10,429
+Accrued expenses and other payables
+Reserves
+143,822
+Current portion of lease liabilities
+457
+599
+Current portion of long-term liabilities
+3,510
+216
+Income tax payable
+2,485
+2,723
+Contract liabilities
+76
+134
+140,683
+Total equity
+350 China Shenhua Energy Company Limited
+17,580
+19,137
+482
+1,134
+181,399
+286,918
+1
+At 1 January 2022 (Restated)
+84,766
+19,137
+482
+1,134
+181,400
+from a single transaction
+(Note 2)
+286,919
+----- 68,733
+68,733
+Other comprehensive income
+246
+246
+Total comprehensive income
+for the year (Restated)
+246
+68,733
+68,979
+Dividend declared (Note 14)
+14) ----- (50,466)
+(50,466)
+Profit for the year (Restated)
+(Expressed in RMB)
+assets and liabilities arising
+Income Taxes:
+14,750
+334,637
+325,315
+37
+19,869
+314,768
+19,869
+305,446
+334,637
+325,315
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+Deferred tax related to
+45. INFORMATION ABOUT THE FINANCIAL POSITION AND RESERVES OF THE
+COMPANY (CONTINUED)
+Capital
+and other
+Retained
+income
+reserves
+earnings
+Total
+RMB million RMB million RMB million RMB million
+Share Treasury Statutory comprehensive
+premium shares reserves
+RMB million RMB million RMB million
+At 31 December 2021
+(Restated)
+84,766
+Impact on initial application
+of amendments to IAS 12,
+Other
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+2023 Annual Report 349
+RMB million
+2022
+(Restated)
+RMB million
+Revenue
+Expenses
+7,049
+6,840
+3,793
+3,415
+Profit and total comprehensive income for the year
+2,709
+2,794
+Dividend paid to non-controlling interests
+446
+Year ended 31 December
+2023
+646
+Net cash outflow from investing activities
+Net cash outflow from financing activities
+Net cash (outflow)/inflow
+1,357
+(605)
+(1,868)
+(758)
+(437)
+(6)
+92
+Note: Restatement due from the changes in accounting policies of Amendments to IAS 12, Income Taxes: Deferred
+tax related to assets and liabilities arising from a single transaction (Note 2).
+348 China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+Net cash inflow from operating activities
+45. INFORMATION ABOUT THE FINANCIAL POSITION AND RESERVES OF THE
+COMPANY
+7,392
+2,728
+(260)
+2,093
+1,819
+2023 Annual Report 347
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+44. SUBSIDIARIES (CONTINUED)
+Details of non-wholly owned subsidiaries that have material non-controlling
+interests (Continued)
+Current assets
+Non-current assets
+Current liabilities
+Non-current liabilities
+Total equity
+8,841
+Beidian Shengli Company
+31 December
+2023
+2022
+(Restated)
+RMB million
+RMB million
+4,844
+3,032
+9,734
+9,570
+2,916
+2,482
+2,821
+31 December
+(20)
+Non-current assets
+RMB million
+292,683
+Current assets
+Inventories
+Accounts and bills receivables
+2,030
+8,804
+2,860
+8,440
+Financial assets at FVTOCI
+-
+12
+Prepaid expenses and other current assets
+29,276
+337,446
+43,307
+6,109
+4,801
+Time deposits with original maturity over
+three months
+30,813
+28,176
+Cash and cash equivalents
+98,351
+114,937
+Total current assets
+175,383
+202,533
+Restricted bank deposits
+31 December
+2023
+Total non-current assets
+2,001
+31 December
+2022
+(Restated)
+RMB million
+Property, plant and equipment
+Construction in progress
+Intangible assets
+Right-of-use assets
+49,393
+43,584
+5,029
+3,657
+1,035
+1,026
+5,163
+1,828
+5,621
+166,829
+160,655
+Investments in associates
+47,954
+42,938
+Equity investments at FVTOCI
+2,338
+2,223
+Other non-current assets
+57,704
+31,151
+226
+Investments in subsidiaries
+6,064
+Retained
+interests
+2023
+2022
+RMB million
+RMB million RMB million
+(Restated)
+RMB million
+RMB million
+RMB million
+Current assets
+37,164
+34,459
+5,877
+5,055
+832
+857
+Non-current assets
+2022
+2023
+2022
+(Restated)
+2023
+70,173
+65,813
+Note: The Company was informed that the relevant supervising authority has approved the non-controlling shareholder's
+disposal of its interests in Zhunge'er Energy, a subsidiary of the Company. Currently, the Company is still in the
+process to discuss with the relevant parties in this regard.
+2023 Annual Report 345
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+15,414
+44. SUBSIDIARIES (CONTINUED)
+Zhunge'er Energy
+Guoneng Baorixile Energy
+Industrial Co., Ltd.
+Dingzhou Power
+31 December
+31 December 31 December
+31 December 31 December
+31 December
+Details of non-wholly owned subsidiaries that have material non-controlling
+interests (Continued)
+19,953
+15,830
+8,098
+5,696
+2,852
+2,818
+Year ended 31 December
+Year ended 31 December
+Year ended 31 December
+2023
+2022
+2023
+(Restated)
+2022
+(Restated)
+2023
+2022
+RMB million
+RMB million
+7,582
+41,401
+44,292
+Total equity
+3,685
+3,835
+Current liabilities
+6,848
+7,750
+4,075
+4,778
+8,355
+1,660
+Non-current liabilities
+1,438
+1,138
+2,575
+2,679
+5
+75
+1,799
+21,500
+non-controlling interests
+Individually immaterial subsidiaries with
+Guoneng Baorixile Energy Industrial Co., Ltd.
+PRC
+Dingzhou Power
+PRC
+Guoneng Shuohuang Railway Development Co., Ltd.
+PRC
+Guoneng Yuanhai Shipping Co., Ltd.
+PRC
+Guoneng Huanghua Harbour Administration Co., Ltd.
+PRC
+Beidian Shengli Company
+PRC
+2222233
+42
+43
+PRC
+Zhunge'er Energy (Note)
+2022
+(Restated)
+RMB million
+RMB million RMB million RMB million
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+44. SUBSIDIARIES (CONTINUED)
+Details of non-wholly owned subsidiaries that have material non-controlling
+interests
+Summarised financial information in respect of each of the Group's subsidiaries that has material
+non-controlling interests is set out below. The summarised financial information below represents
+amounts before intragroup eliminations.
+Name of the subsidiary
+Place of
+incorporation
+and operation
+Proportion of
+ownership interest and
+voting rights held by
+non-controlling interest
+59
+Profit allocated to
+non-controlling interests
+31 December 31 December
+2023
+Year ended 31 December
+31 December 31 December
+2022
+2023
+2022
+(Restated)
+2023
+Accumulated
+non-controlling interests
+47
+47
+49
+14,800
+14,478
+36
+255
+3,237
+3,428
+30
+3,080
+486
+3,343
+3,264
+37
+1,052
+1,079
+3,370
+2,826
+470
+RMB million
+2,872
+1,696
+49
+30
+37
+2222233
+42
+1,302
+1,726
+1,677
+18,837
+43
+1,564
+1,572
+3,390
+2,577
+214
+397
+17,610
+2,535
+RMB million
+RMB million
+2,462
+3,257
+Non-current liabilities
+4,135
+4,585
+63
+44
+395
+328
+Total equity
+29,695
+29,016
+6,607
+6,996
+10,284
+427
+543
+10,347
+10,269
+RMB million
+Current assets
+8,501
+9,347
+2,411
+2,455
+1,711
+10,059
+1,769
+35,598
+34,601
+4,802
+5,012
+11,430
+11,875
+Current liabilities
+Non-current assets
+RMB million
+Year ended 31 December
+Year ended 31 December
+14,249
+12,848
+4,766
+5,408
+3,041
+2,964
+Profit and total comprehensive
+income for the year
+6,040
+6,510
+74
+521
+1,577
+1,513
+Dividend paid to non-controlling
+5,069
+5,131
+6,051
+4,836
+2023
+2022
+2023
+2022
+(Restated)
+2023
+2022
+RMB million
+Year ended 31 December
+RMB million
+RMB million
+Appropriation of maintenance
+RMB million
+RMB million
+Revenue
+Expenses
+22,217
+21,663
+RMB million
+2022
+2023
+2022
+(Restated)
+RMB million
+668
+Dividend paid to non-controlling
+interests
+13
+17
+1,874
+256
+246
+Net cash inflow from operating
+activities
+833
+636
+2,518
+1,541
+1,046
+359
+3,490
+3,466
+3,947
+Revenue
+Expenses
+14,275
+14,017
+8,490
+7,816
+4,680
+4,940
+1,255
+10,716
+4,380
+4,169
+4,205
+4,104
+Profit and total comprehensive
+income for the year
+2,904
+9,247
+Net cash outflow from investing
+activities
+(808)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+44. SUBSIDIARIES (CONTINUED)
+Details of non-wholly owned subsidiaries that have material non-controlling
+interests (Continued)
+Guoneng Shuohuang Railway
+Development Co., Ltd.
+Guoneng Huanghua Harbour
+Administration Co., Ltd.
+Guoneng Yuanhai
+Shipping Co., Ltd.
+31 December
+346 China Shenhua Energy Company Limited
+31 December 31 December
+31 December
+2023
+2022
+2023
+RMB million
+RMB million
+RMB million
+31 December 31 December
+RMB million
+(1)
+(212)
+(877)
+(428)
+(344)
+(164)
+(234)
+Net cash outflow from financing
+activities
+(233)
+(29)
+(2,302)
+(1,430)
+(883)
+(1,024)
+Net cash outflow
+(4)
+(279)
+(38)
+and production funds
+Utilisation of maintenance and
+production funds
+2,397
+(3,851)
+(Expressed in RMB)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+352 China Shenhua Energy Company Limited
+At 31 December 2023, the aggregate amount of retained earnings determined in accordance with
+the China Accounting Standards available for distribution to equity holders of the Company was
+RMB201,416 million (2022: RMB195,879 million as restated).
+According to the Company's Articles of Association, the amount of retained earnings available
+for distribution to equity holders of the Company is the lower of the amount determined in
+accordance with the China Accounting Standards and the amount determined in accordance with
+IFRSS after the appropriation to reserves as detailed in Note (iii) to the consolidated statement
+of changes in equity.
+314,768
+202,580
+1,206
+817
+25,399
+79
+46. POSSIBLE IMPACT OF AMENDMENTS, NEW STANDARDS AND
+INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE FOR THE YEAR ENDED
+31 DECEMBER 2023
+23
+2,365
+(6,222)
+(50,665)
+84,766
+At 31 December 2023
+-- (2,365)
+-- 6,222
+---- - (50,665)
+59,908
+59,819
+89
+56
+89
+Up to the date of issue of these financial statements, the IASB has issued a number of new or
+amended standards, which are not yet effective for the year ended 31 December 2023 and which
+have not been adopted in these financial statements. These developments include the following
+which may be relevant to the Group.
+Classification of liabilities as current or non-current ("2020 amendments")
+- 3,851
+354 China Shenhua Energy Company Limited
+Approval date of the Board of Directors for submission: 22 March 2024
+The annual report for the year 2023 published on the websites of SSE and
+the HKEX
+The original copies of all documents and announcements of the Company
+publicly disclosed on the newspapers designated by the CSRC during the
+Reporting Period
+The auditor's report chopped with the official chop of the accounting firm
+and signed and chopped by the certified public accountant
+The financial statements signed by the person-in-charge of the Company,
+Chief Financial Officer and person-in-charge of the accounting department
+and chopped with the official chop of the Company
+The annual report for the year 2023 with the signature of the
+person-in-charge of the Company
+Section XI Documents Available for Inspection
+2023 Annual Report 353
+The Group is in the process of making an assessment of what the impact of these developments
+is expected to be in the period of initial application. So far it has concluded that the adoption of
+them is unlikely to have a significant impact on the consolidated financial statements.
+Amendments to IAS 1, Presentation of financial statements:
+1 January 2025
+Financial Instruments: Disclosures: Supplier finance arrangements
+1 January 2024
+Amendments to IAS 7, Statement of cash flows and IFRS 7,
+1 January 2024
+Amendments to IFRS 16, Leases: Lease liability in a sale and leaseback
+1 January 2024
+1 January 2024
+on or after
+periods
+beginning
+Effective for
+accounting
+Amendments to IAS 1, Presentation of financial statements:
+Noncurrent liabilities with covenants (" 2022 amendments")
+Amendments to IAS 21, The effects of changes in foreign exchange rates:
+Lack of exchangeability
+89
+Documents Available
+for Inspection
+Total comprehensive income
+for the year
+Impact on initial application
+84,766
+At 31 December 2022
+reserves
+Share Treasury Statutory comprehensive
+premium shares
+RMB million RMB million RMB million
+45. INFORMATION ABOUT THE FINANCIAL POSITION AND RESERVES OF THE
+COMPANY (CONTINUED)
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+2023 Annual Report 351
+305,446
+197,260
+1,150
+728
+21,542
+84,766
+(Restated)
+At 31 December 2022
+14
+16
+Others
+1,446
+Dividend declared (Note 14)
+Appropriation of maintenance
+and production funds
+Utilisation of maintenance and
+production funds
+Others
+of amendments to IAS 12,
+Income Taxes:
+Deferred tax related to
+(2)
+from a single transaction
+(Note 2)
+Other comprehensive income
+assets and liabilities arising
+59,819
+59,819
+Profit for the year
+305,446
+197,260
+1,150
+728
+21,542
+84,766
+At 1 January 2023
+(1,446)
+...- (24)
+21,542
+(24)
+income
+earnings
+Total
+Capital
+and other
+reserves
+RMB million RMB million RMB million RMB million
+1,150
+197,284
+305,470
+728
+Other
+(2,263)
+(3,294)
+Finance costs
+Interest income
+2,634
+3,071
+2,492
+1,684
+1,170
+(278)
+(2,136)
+(1,103)
+(1,090)
+Other expenses
+(285)
+(1,337)
+(2,561)
+(524)
+(139)
+Loss allowance, net of reversal
+(5,003)
+(2,583)
+947
+(3,117)
+49,777
+1,272
+43,984
+Profit for the year
+(17,584)
+(14,256)
+(18,128)
+(15,378)
+(15,145)
+(3,930)
+Income tax expense
+99,654
+59,362
+64,922
+Profit before income tax
+3,565
+2,223
+(874)
+433
+Share of results of associates
+92,776
+78,945
+(581)
+893
+Selling expenses
+110,537
+117,909
+95,835
+70,889
+76,892
+Gross profit
+(232,537)
+(226,624)
+(640)
+(239,805)
+344,533
+335,640
+241,871 233,263
+(164,979) (162,374)
+Operating cost
+Revenue
+(restated)
+RMB million RMB million
+60,817
+2023
+343,074
+(555)
+(410)
+(425)
+778
+708
+Other income
+(3,583)
+(3,184)
+(955)
+(194)
+(2)
+Other gains and losses
+(3,007)
+(3,722)
+(2,499)
+(1,362)
+(940)
+Research and development costs
+(9,812)
+(9,930)
+(9,119)
+(8,948)
+(8,988)
+General and administrative expense
+1,100
+85,398
+91,748
+Profit for the year attributable to:
+429,587
+420,218
+Net assets
+151,761
+162,524
+161,429
+133,317
+142,865
+Total liabilities
+449,029
+60,176
+69,681
+63,824
+47,382
+Total non-current liabilities
+91,585
+98,404
+2022
+69,493
+95,483
+64,120
+462,796
+481,651
+Total equity attributable to
+CHINA SHENHUA ENERGY COMPANY LIMITED
+中国神华能源股份有限公司
+356 China Shenhua Energy Company Limited
+481,651
+462,796
+449,029
+429,587
+420,218
+Total equity
+70,173
+65,813
+69,152
+65,384
+64,141
+Non-controlling interests
+411,478
+396,983
+379,877
+364,203
+356,077
+equity holders of the Company
+Total current liabilities
+75,192
+633,412
+562,904
+2023 Annual Report 355
+3.253
+3.670
+2.588
+1.803
+2.097
+- Basic
+Earnings per share (RMB per share)
+10,567
+Section XII Summary of Major Financial Information
+for the Recent Five Years (Continued)
+12,473
+8,135
+8,070
+Non-controlling interests
+64,625
+72,925
+51,446
+35,849
+41,707
+Equity holders of the Company
+9,371
+CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
+As at 31 December
+2019
+563,083
+Total assets
+198,951
+211,050
+208,310
+172,229
+160,494
+Total current assets
+434,461
+414,270
+402,148
+390,675
+402,589
+Total non-current assets
+(restated)
+RMB million RMB million
+2023
+2022
+2021
+RMB million
+(restated)
+RMB million RMB million
+2020
+610,458
+2021
+RMB million
+(restated)
+625,320
+2020
+2019
+For the year ended 31 December
+CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
+OTHER COMPREHENSIVE INCOME
+The finance information below is extracted from the financial statement prepared by the Group in
+accordance with International Financial Reporting Standards:
+Section XII Summary of Major Financial
+Information for the Recent Five Years
+RMB million RMB million
+(4,602)
+4,836
+Shipping
+percentage points
+Decreased by 1.8
+8.1
+4.8
+6,749
+(3,844)
+4.8
+Port
+percentage points
+Decreased by 4.4
+9.3
+43.0
+(20.1)
+percentage points
+Decreased by 9.0
+(4) Analysis of the production and sales volume of major products
+Section IV Directors' Report (Continued)
+38
+37
+2023 Annual Report
+percentage points
+(11.7)
+Decreased by 5.2
+(4.4)
+8.7
+(5,569)
+6,098
+Coal chemical
+1.8
+1.4
+36.3
+percentage points
+42,961
+previous year
+previous year previous year
+margin
+%
+RMB million RMB million
+Revenue Cost of sales
+Business segment
+%
+as compared with
+revenue as
+sales as
+Gross profit compared with compared with
+Increase/decrease
+cost of
+Increase/
+decrease in
+Increase/
+decrease in
+in gross profit margin
+%
+Coal
+273,306
+Railway
+Increase/
+decrease in
+Increased by 2.9
+5.6
+9.3
+16.0
+(77,594)
+92,407
+Power generation
+percentage points
+Decreased by 2.6
+2.2
+(1.5)
+27.9
+(196,959)
+(27,380)
+inventory as
+The main reason for the year-on-year increase in other income: the increase
+of revenue from carbon emissions trading and others.
+compared
+Undergraduate
+Master degree candidate
+Doctoral candidate
+Person
+Number
+Educational structure of research and development personnel
+Category of educational structure
+Junior college
+3.6
+Ratio of research and development personnel to the
+3,030
+Number of research and development personnel in the
+Group
+Research and development personnel
+(2)
+Section IV Directors' Report (Continued)
+number of total staff (%)
+High school and below
+82
+440
+649
+50-60 years old (including 50 years old, excluding 60
+years old)
+730
+years old)
+40-50 years old (including 40 years old, excluding 50
+1,164
+30-40 years old (including 30 years old, excluding 40
+years old)
+487
+Under 30 years old (excluding 30 years old)
+Person
+Number
+Age structure of research and development personnel
+Category of age structure
+82
+386
+2,040
+China Shenhua Energy Company Limited
+Year-on-year Year-on-year
+40
+During the Reporting Period, the R&D projects carried out by the Group
+mainly include: green mines, research on technologies and equipment related
+to smart mines, research on clean and efficient combustion technology for
+ammonia-mixed coal-fired boilers, research on technology of carbon dioxide
+resources and energy utilisation in coal-fired power plant, research on unit
+for high temperature subcritical efficiency improvement technology, research
+on intelligent technology and equipment for heavy-haul trains and heavy-haul
+railway, research on hydrogen power equipment of heavy-haul railway, research
+on collaborative function technology of "network-source-storage-vehicle" (
+39
+2023 Annual Report
+The main reason for the year-on-year increase of the share of results of
+associates: the year-on-year increase in the Group's investment income from
+power generation and railway associates and Finance Company.
+The main reason for the year-on-year decrease in financial costs: The Group
+continued to optimize its debt structure and financing model, strived to reduce
+its interest-bearing liabilities and financing costs, registering a year-on-year
+decrease in interest expenses; net foreign exchange losses decreased year-
+on-year.
+The main reason for the year-on-year decrease in interest income: the decrease
+in interest income due to the decrease in the average deposits balance.
+The main reasons for the year-on-year increase in other expenses: the increase
+in special rectification expenses related to coal resource field, cost of carbon
+emissions trading and others.
+Section IV Directors' Report (Continued)
+(8)
+(6)
+(5)
+Loss allowance, net of reversal during the Reporting Period are mainly due to:
+the Group conducted impairment test on the amount with long ages, and made
+bad debt provision according to the impairment test results.
+(4)
+Principal businesses by business segment in 2023 (before elimination on consolidation)
+Other gains and losses during the Reporting Period were aggregated as losses,
+I which is mainly due to the following reasons: The Group conducted impairment
+tests on certain asset groups with low utilization rate such as railways and loss-
+making power plants, as well as inventories such as spare parts whose value
+had decreased due to equipment upgrades, and made impairment provisions
+based on the impairment test results.
+(7)
+4.
+(9)
+The main reasons for the year-on-year increase in income tax: when certain
+coal subsidiaries of the Group settled and paid the enterprise income tax for
+the same period last year, the overpaid tax in previous years was offset against
+the current income tax, resulting a year-on-year increase of income tax for this
+year.
+In 2023, the research and development expenditure of the Group amounted
+to RMB4,453 million (2022: RMB5,404 million), representing a year-on-year
+decrease of 17.6%; research and development expenditure accounted for
+1.3% of total revenue (2022: 1.6%), representing a year-on-year decrease of
+0.3 percentage point.
+32.5
+Ratio of capitalised research and development
+expenditure (%)
+1.3
+expenditure to revenue (%)
+4,453
+Total research and development expenditure
+Percentage of total research and development
+1,446
+in the period
+Capitalised research and development expenditure
+3,007
+Expensed research and development expenditure
+in the period
+Unit: RMB million
+(1) Research and development expenditure
+Research and Development Expenditure
+), research on intelligent ship-related technology, R&D of high-end coal-to-
+olefins products, etc. In 2023, the Group was granted one Outstanding Awards
+under the umbrella of Patent Awards of China, 2 provincial-level awards, and
+48 prizes from industry associations, as well as a total of 763 licensed patents,
+including 241 invention patents.
+The following revenue, cost of sales and others of business segments are
+the data before elimination on consolidation of each segment. For details of
+costs by business segment, please refer to "Operation Results by Business
+Segment" in this section and the table of operating results overview in this
+report.
+(3) Principal businesses by business segment
+→
+Tax and surcharge
+0.5
+8.4
+18,930
+8.2
+19,026
+18,385
+Transportation charges
+8.5
+19,237
+9.1
+21,263
+Depreciation and amortisation
+12.3
+10.5
+7.9
+19,972
+8.8
+(1)
+Of the cost of sales of the Group in 2023:
+2.6
+100.0
+226,624
+100.0
+232,537
+Total cost of sales
+5.1
+14.9
+33,663
+15.2
+35,385
+Others
+(7.9)
+4.7
+(3)
+10,715
+12,034
+%
+%
+amount
+2022
+2022
+2023
+Cost of purchased coal
+Year-on-year
+change in
+Amount for cost of sales for
+2023
+Breakdown of cost items
+Percentage to
+Unit: RMB million
+(2) Analysis of costs of sales
+Section IV Directors' Report (Continued)
+Percentage to
+Amount for cost of sales for
+67,886
+29.2
+65,079
+Repair and maintenance
+(2.2)
+11.3
+25,663
+10.8
+25,090
+Personnel expenses
+0.3
+14.7
+33,365
+14.4
+33,468
+Raw materials, fuel and power
+4.3
+28.7
+5.2
+The major business model of the Group is the integrated coal industry
+chain: i.e. coal production → coal transportation (railway, port and shipping)
+conversion of coal (power generation and coal chemical), and there are
+business intercourses between each segment. The percentages of profit before
+income tax (before elimination on consolidation) of coal, power, transportation
+and coal chemical segments of the Group in 2023 were 72%, 12%, 16% and
+0%, respectively (2022: 75%, 8%, 16% and 1%).
+(4)
+the main reason for the year-on-year increase in repairs and maintenance
+costs: more railway maintenance due to the maintenance plan;
+Shipping
+business, taxes and surcharges, and other
+operating costs
+expenses), cost of external transportation
+depreciation and amortisation, and other
+(raw materials, fuel and power, personnel
+expenses, repairs and maintenance,
+8.1
+Cost of internal transportation business
+3,556
+Cost of internal transportation business
+Port
+operating costs
+business, taxes and surcharges, and other
+expenses), cost of external transportation
+transportation charges, and other
+3,844
+4,602
+5,214
+(11.7)
+60 years old and above
+Section IV Directors' Report (Continued)
+China Shenhua Energy Company Limited
+36
+1.4
+5,493
+5,569
+Raw materials, fuel and power, personnel
+expenses, repairs and maintenance,
+depreciation and amortisation, taxes and
+surcharges, and other operating costs
+Coal chemical
+business, taxes and surcharges and other
+operating costs
+expenses), cost of external transportation
+transportation charges, and other
+depreciation and amortisation, external
+expenses, repairs and maintenance,
+(raw materials, fuel and power, personnel
+depreciation and amortisation, external
+the main reasons for the year-on-year increase in the cost of purchased
+coal: the increases in the sales volume of purchased coal and purchase
+cost;
+expenses, repairs and maintenance,
+9.3
+2022
+2023
+Breakdown of cost items
+Cost of sales by business segment in 2023 (before elimination on consolidation)
+Unit: RMB million
+segment
+Change
+By business
+55
+35
+2023 Annual Report
+the main reasons for the year-on-year increase in other costs: the
+increases in costs of outsourced stripping work for certain open-cut
+mines and others.
+the main reasons for the year-on-year decrease in taxes and surcharges:
+the year-on-year decrease in resource taxes as a result of the decrease
+in income from the sale of self-produced coal;
+the main reasons for the year-on-year increase in depreciation and
+amortisation: the increase in property, plant and equipment of the
+Group due to the operation of generating units, purchase of coal mine
+equipment and other impacts;
+Section IV Directors' Report (Continued)
+%
+Coal
+Cost of purchased coal, raw materials, fuel
+and power, personnel expenses, repairs
+and maintenance, depreciation and
+amortisation, transportation costs, taxes
+25,041
+27,380
+Cost of internal transportation business
+Railway
+expenses, taxes and surcharges, and
+other operating costs
+depreciation and amortisation, other
+expenses, repairs and maintenance,
+5.6
+73,491
+77,594
+Power generation Raw materials, fuel and power, personnel
+and surcharges, and other operating costs
+2.2
+192,753
+196,959
+(raw materials, fuel and power, personnel
+0
+42
+2023 Annual Report 41
+Group's mine geographical
+environment governance
+recovery fund
+The increase in the balance of
+the special account for the
+14.8
+1.0
+6,357
+1.2
+Time deposits with original
+7,298
+%
+%
+Main reasons for changes
+year
+year
+year
+Restricted bank deposits
+year
+34,514
+32,688
+12,630
+0.7
+4,622
+Short-term borrowings
+21.0
+131,458
+5.4
+17.1
+Cash and cash equivalents
+deposits
+maturity over three months
+The increase in bank time
+5.6
+5.2
+108,174
+year
+the
+Items
+Percentage
+Section IV Directors' Report (Continued)
+43
+2023 Annual Report
+discounting or endorsement
+upon maturity
+intended to be used for
+Amount at
+(49.4) Collection of bank acceptances
+increase in settlement on
+power sales; and the
+0.1
+502
+302
+value through other
+comprehensive income
+bills for sales of coal and
+electricity
+Percentage
+of total
+Change of
+the amount
+at the end
+the previous
+the previous
+the previous
+end of the
+the end of
+the end of
+the end of
+the end of
+assets at the
+Amount at
+compared to
+assets at
+of total
+Unit: RMB million
+of the year
+2.0
+Accrued expenses and other
+30,613
+4.8
+Bulianta Colliery, Shangwan
+Colliery
+payables for mining rights of
+The recognition of long-term
+(13.9) Repurchase and cancellation
+of certain U.S. dollar-
+denominated bonds
+repayment of more long-term
+borrowings
+of internal funds and
+/ Mainly the output tax of VAT to
+be transferred out related to
+the financial leasing business
+(22.9) Optimisation of the use
+income tax
+(13.7) Decrease in profit before
+special rectification of coal
+resources field
+Increase in payables related to
+payable, etc.
+payable and resource taxes
+Increase in advance payment
+for coal
+2,972
+0.5
+3,453
+0.0
+00
+0
+44 China Shenhua Energy Company Limited
+50
+0.2
+1,194
+Other non-current liabilities
+42.5
+1.7
+10,613
+2.4
+15,125
+Long-term liabilities
+0.6
+669.1
+0.0
+0.1
+borrowings
+0.9
+5,510
+0.8
+4,757
+Income tax payable
+liabilities
+Contract liabilities
+10
+0.8
+5,184
+Current portion of long-term
+payables
+5.6
+34,724
+674
+7,208
+1.1
+5,597
+repayment of short-term
+internal funds and increased
+(63.4) Optimisation of the use of
+of borrowings
+activities; payment of 2022
+final dividend and repayment
+generated from operating
+(17.7) The decrease in net cash
+Bonds
+6.1
+38,438
+4.7
+29,636
+Long-term borrowings
+28.8
+0.9
+(11.8) Decrease in employee wages
+254
+Financial assets at fair
+Increase in receivables from
+equipment
+Some power generation
+6.1
+43.8
+45.9
+290,839
+Construction in progress
+Property, plant and
+%
+Main reasons for changes
+year
+year
+year
+year
+%
+18,955
+3.0
+20,843
+Applicable ✓ Not applicable
+(7)
+Information related to significant changes or adjustment of businesses,
+products or services of the Company in the Reporting Period
+☐ Applicable ✓ Not applicable
+(8) Major customers
+In 2023, the total revenue from the top five customers of the Group amounted
+to RMB146,086 million, accounting for 42.6% of the total revenue of the
+Group, including the revenue of the Group from its largest customer of
+RMB112,933million, accounting for 32.9% of the total revenue of the
+Group. The largest customer of the Group was China Energy (the controlling
+shareholder of the Company) and its subsidiaries. The Group mainly sells coal
+products and provides coal transportation service to China Energy and its
+subsidiaries.
+Except for the above, as far as the Board of the Company is aware, none of the
+directors of the Company, their close associates or shareholders holding more
+than 5% of shares of the Company has any interests in the top five customers
+of the Group. The Group has maintained long-term cooperative relationship
+with the top five customers. The Company is of the view that such cooperative
+relationship would not cause material risk to the business of the Group.
+China Shenhua Energy Company Limited
+3.
+Section IV Directors' Report (Continued)
+(9) Major suppliers
+In 2023, the total procurement from the top five suppliers of the Group
+amounted to RMB32,953 million, accounting for 15.9% of the total procurement
+for the year, of which the procurement from its largest supplier amounted to
+RMB19,787 million, representing 9.5% of the total procurement for the year.
+Expenses and Other Items of Gains and Losses
+(1)
+(2)
+the year
+Changes in the scope of consolidation due to changes in shareholding of
+major subsidiaries during the Reporting Period
+Items
+the previous
+Section IV Directors' Report (Continued)
+China Shenhua Energy Company Limited
+☐ Applicable ✓ Not applicable
+(II) Explanation on Significant Change of Profit Caused by Non-principal Business
+Net cash used in financing activities: net outflow of RMB76,131 million in 2023,
+mainly attributable to repayment of borrowings and payment of dividends,
+representing a decrease of 3.3% from the net outflow of RMB78,734 million
+in 2022.
+Net cash used in investing activities: net outflow of RMB36,974 million in 2023,
+mainly for the purchase and construction of property, plant and equipment,
+intangible assets and other long-term assets, representing a decrease of 34.7%
+compared to a net outflow of RMB56,585 million in 2022, mainly attributable
+to the significant increase in time deposits placed with financial institutions
+as compared with the corresponding period last year, which led to the higher
+principal for this year.
+(III) Analysis on Assets and Liabilities
+Net cash generated from operating activities: net cash inflow in 2023 was
+RMB89,687 million (net cash inflow in 2022: RMB109,734 million), representing
+a year-on-year decrease of 18.3%, mainly due to the decline in sales revenue
+of coal and increase in operation costs.
+(2)
+(1)
+The Group formulated capital management policies that aimed to achieve maximised
+interests for the shareholders, optimized capital structure while reducing the costs
+of capital under the premise of safeguarding the operation on an on-going basis, and
+carried out capital management and investments in accordance with the policy of
+the Company.
+Cash Flow
+5.
+Section IV Directors' Report (Continued)
+(3)
+1. Assets and Liabilities
+Unit: RMB million
+Percentage
+of total
+the previous
+end of the
+the end of
+the end of
+the end of
+the end of
+assets at the
+Amount at
+compared to
+of the year
+the amount
+at the end
+Change of
+assets at
+Percentage
+of total
+Amount at
+the previous
+As at the end of 2023, the Group had one national key laboratory, and set
+up one national scientific research platform, and it took the leading role
+(participated in) in undertaking 11 national key R&D projects (topics).
+☐ Applicable Not applicable
+(5) Performance of material purchase contracts and material sales contracts
+14.9 Increase in assets related to
+the mining rights of No.
+projects were completed
+and put into operation and
+transferred to property, plant
+and equipment
+(9.1) Some power generation
+projects were completed and
+put into operation
+4.6
+28,905
+1 Mine and No. 2 Mine in
+33
+27,070
+Other non-current assets
+8.0
+8.8 49,714
+55,635
+Interests in associates
+4.3
+Xinjie Mining Area, Bulianta
+Colliery, Shangwan Colliery
+11.9 Completion of capital increase
+in Finance Company and
+gains on investment in
+associates were recognised
+(6.3) transfer of assets related to the
+64.1
+1.9
+12,100
+3.1
+Increase in coal inventories
+6.2
+1.9
+12,096
+2.0
+20
+Accounts and bills receivable 19,858
+12,846
+Inventories
+and No. 2 Mine in Xinjie
+Mining Area
+mining rights of No. 1 Mine
+0.6
+(6)
+4,059
+4,662
+%
+Coal
+Power
+Million tonnes
+billion kWh
+324.5
+450.0
+%
+23.4
+7.7
+4.9
+212.26
+199.75
+11.0
+11.1
+3.5
+%
+the year
+production sales volume
+Intangible assets
+3.3
+(3)
+Inventory at
+Sales
+the end of
+increase/
+decrease in
+increase/
+with the
+decrease in
+beginning of
+Major products Unit
+Production
+volume
+the period
+0.7
+The main reason for the year-on-year decrease in R&D expenses: mainly
+affected by R&D progress.
+274,103
+As at 31 December 2023, under the PRC Standard, the Group had coal reserves
+amounting to 32.58 billion tonnes, representing a decrease of 0.32 billion
+tonnes as compared with that of the end of 2022; and recoverable coal reserve
+amounting to 13.38 billion tonnes, representing a decrease of 0.51 billion
+tonnes as compared with that of the end of 2022. The Group's marketable coal
+reserve amounted to 9.48 billion tonnes under the JORC Standard, representing
+a decrease of 0.32 billion tonnes as compared with that of the end of 2022.
+Price
+Sales to total sales
+(exclusive
+(exclusive
+volume
+volume
+of tax)
+volume
+Price
+volume
+of tax)
+Million
+RMB/
+Million
+RMB/
+tonnes
+tonne
+tonnes
+of tax) Sales volume
+Percentage
+Price
+(exclusive
+to total sales
+584
+417.8
+100.0
+00
+644
+7.7
+(9.3)
+2023 Annual Report
+49
+50
+50
+Section IV Directors' Report (Continued)
+(4)
+By sales regions
+2023
+2022
+Change
+Percentage
+Sales
+%
+tonne
+%
+%
+43.9
+450
+188.1
+45.0
+475
+5.1
+(5.3)
+2. Seaborne
+225.9
+50.2
+695
+206.7
+49.5
+775
+9.3
+(10.3)
+(II) Sales of domestic
+trading coal
+13.3
+197.6
+100.0
+1. Direct arrival
+7.3
+I. Domestic sales
+442.5
+98.3
+581
+412.2
+98.7
+888
+638
+7.4
+(8.9)
+(I) Self-produced
+coal and
+purchased coal
+423.5
+94.1
+581
+394.8
+94.5
+632
+(8.1)
+33
+450.0
+Total sales volume/average
+Price
+2022
+Percentage
+Change
+Price
+Price
+Sales to total sales
+(exclusive
+Sales to total sales
+2023
+Percentage
+(exclusive
+(exclusive
+volume
+volume
+of tax)
+volume
+volume
+of tax)
+volume
+Sales
+By internal and external customers
+Note: The above is a summary of the sales of the coal products with different calorific
+value of the Group, including thermal coal and other coals.
+(9.3)
+5.1
+328
+22.8
+59
+5.5
+329
+29
+00
+0.0
+(0.3)
+Total sales volume/average
+price (exclusive of tax)
+450.0
+100.0
+584
+417.8
+100.0
+644
+7.7
+of tax)
+Million
+RMB/
+Million
+segment
+74.6
+16.6
+525
+25
+66.3
+15.9
+555
+55
+Sales to internal coal
+chemical segment
+4.9
+1.1
+46
+446
+4.7
+1.1
+451
+151
+Sales to internal power
+price (exclusive of tax)
+790
+346.8
+RMB/
+tonnes
+tonne
+tonnes
+%
+tonne
+%
+%
+664
+6.8
+(9.9)
+12.5
+(5.4)
+4.3
+(1.1)
+Sales to external customers
+370.5
+82.3
+598
+83.0
+22.8
+29
+50
+Characteristics of the commercial coal produced in the Group's major mines
+are as follows:
+No. Mines
+Major types
+of coal
+Calorific value
+of major
+commercial
+coal products
+Sulphur
+content
+Ash content
+kcal/kg
+2. The trusted reserve of Baotou Mines is 1.067 million tonnes.
+%
+1 Shendong Mines Long flame coal/
+4,185-5,704
+0.2-0.6
+7.0-18.4
+2
+Zhunge'er Mines
+non-caking coal
+Long flame coal
+4,412-4,685
+%
+1. Trusted reserve and proved reserve are calculated based on the Classifications for
+Mineral Resources and Mineral Reserves (GB/T 17766-2020).
+94.8
+30.6
+Baorixile Mines
+12.8
+7.8
+4.2
+1.7
+8.3
+Baotou Mines
+0.4
+0.3
+0.0
+0.1
+0.2
+Xinjie Mines
+108.0
+Total
+Notes:
+325.8
+133.8
+55.7
+Section IV Directors' Report (Continued)
+of purchased coal; increase in
+depreciation and amortisation,
+costs of outsourced stripping
+work for certain open-cut mines
+and others
+2.2 Increase in sales and purchase cost
+(192,753)
+13.3-19.8
+0.5-1.1
+3,985-4,427
+Long flame coal/
+Baotou Mines
+5
+LO
+15.6
+0.2
+3,520
+Lignite
+Baorixile Mines
+4
+24.0
+1.0
+2,956
+Lignite
+Shengli Mines
+3
+non-caking coal
+2.1
+Note: The average calorific value, sulphur content and ash content of major commercial
+coal products produced by coal mine in each mine site may be inconsistent with the
+characteristics of the commercial coal products produced by individual coal mine and
+those of the commercial coal products sold by the Company due to storage conditions and
+production process.
+51
+(196,959)
+RMB million
+Cost of sales
+of coal
+(1.5) Decrease in average sales price
+277,474
+273,306
+RMB million
+Revenue
+Change Main reasons for changes
+%
+2022
+2023
+The operating results of the coal segment of the Group before elimination
+on consolidation
+(1)
+Operating results
+(4)
+52
+52
+Section IV Directors' Report (Continued)
+2023 Annual Report
+2.9
+0.2
+12.8
+1.7
+763
+5.2
+212
+1.3
+920
+3.6
+(23.3)
+0.4
+0.1
+(100.0)
+1.2
+1,035
+44.2
+(26.3)
+Total sales volume/average
+price (exclusive of tax)
+450.0
+1,191
+0.0
+5.5
+706
+556
+11.9
+19
+2.9
+20
+725
+25
+11.8
+18
+(23.3)
+Sales of imported
+coal
+5.7
+1.3
+II. Export sales
+0.0
+III. Overseas sales
+7.5
+282
+100.0
+584
+417.8
+100.0
+Marketable
+coal reserve
+(under
+the JORC
+Standard)
+Shendong Mines
+149.7
+84.5
+39.2
+16.9
+63.6
+Zhunge'er Mines
+35.8
+28.4
+7.2
+11.7
+20.6
+Shengli Mines
+19.1
+the PRC
+Standard)
+5.1
+(under
+Proved
+644
+7.7
+(9.3)
+(3)
+Coal resources
+In 2023, the Group's coal exploration expenses (which were incurred before
+the conclusion of feasibility study and represented the expenses related to
+exploration and evaluation of coal resources) amounted to approximately
+RMB226 million (2022: RMB1.218 billion), which was mainly used for the
+preliminary expenses of Xinjie Mine; the Group's relevant capital expenditure
+of coal mine development and exploration amounted to RMB10.794 billion
+(2022: RMB7.008 billion), which was mainly attributable to the payment of the
+mining right related expenditure for the coal resource of Shangwan Colliery and
+Bulianta Colliery in Shendong Mine, as well as project construction expenditure
+of various mines and others.
+China Shenhua Energy Company Limited
+Section IV Directors' Report (Continued)
+Recoverable
+Trusted
+Coal reserve
+coal reserve
+reserves
+Mines
+(under
+the PRC
+Standard)
+(under
+the PRC
+Standard)
+(under
+the PRC
+Standard)
+Unit: 100 million tonnes
+reserve
+26.6-29.9
+mine pit
+(17.5)
+35.1
+257,117 (166,785) 90,332
+5,751 (5,688) 63
+Export and overseas
+Domestic
+%
+margin
+Gross profit
+Sales
+Sales
+revenue costs profit
+RMB RMB RMB
+million million million
+million million million
+Sales Gross profit
+costs profit margin
+RMB RMB
+RMB
+revenue
+Regions
+Sales
+Gross
+Gross
+263,112 (162,133) 100,979
+2022
+38.4
+5,884
+Gross
+Gross
+2022
+2023
+The gross profit from sales of coal products of the Group by coal source
+before elimination on consolidation
+Section IV Directors' Report (Continued)
+3.
+China Shenhua Energy Company Limited
+37.7
+10
+101,372
+268,996 (167,624)
+34.4
+262,868 (172,473) 90,395
+Total
+6.7
+(5,491) 393
+1.1
+Sales
+2023
+income tax
+597
+75.7
+316.2
+548
+72.3
+325.4
+II. Direct sales at the coal
+%
+%
+tonne
+%
+tonnes
+tonne
+tonnes
+RMB/
+Million
+RMB/
+2.9
+The gross profit from the sales of coal products of the Group by regions
+before elimination on consolidation
+(8.2)
+124.6
+(13.3)
+73,536
+63,753
+RMB million
+Profit before
+points
+2.6 percentage
+30.5 Decreased by
+27.9
+Gross profit margin %
+(13.9)
+22.6
+789
+24.3
+101.6
+679
+27.7
+Purchased coal
+Sales
+Coal source
+revenue
+61.9
+Other costs
+amortisation
+22.8
+23.9
+Depreciation and
+10.1
+9.1
+Repairs and maintenance
+44.8
+37.4
+Personnel expenses
+power
+(2.0)
+30.7
+30.1
+Raw materials, fuel and
+57.9
+self-produced coal
+(16.5) Mainly affected by appraisal, etc.;
+(9.9) Affected by the maintenance plan, the
+decrease in repair costs for some
+open-cut mines
+China Shenhua Energy Company Limited
+1
+54
+54
+Source: National Energy Administration
+The Group expends renewable energy business development channels and
+continuously ramps up investment. In 2023, the Group took full advantage
+of land resources including open-cut mine dumps, reclamation areas and idle
+land along the railway to invest in and build photovoltaic projects. The 150
+MW centralised photovoltaic power station at the dump site of open-cut mine
+of Shengli Energy and the distributed photovoltaic projects in the Baorixile
+open-cut mine and the Guojiawan Power Plant achieved grid-connected
+power generation. As at the end of 2023, the Group has put into operation 77
+photovoltaic power generation projects with a total installed capacity of 512
+MW, of which the total installed capacity for external commercial operation
+is 395 MW. As at the end of 2023, Beijing Guoneng New Energy Industry
+Investment Fund and Beijing Guoneng Green and Low-Carbon Development
+Investment Fund, which were established with the participation of the
+Company, had completed the merger and acquisition of 37 new energy projects
+covering photovoltaic, wind power and hydrogen equipment manufacturing,
+with a cumulative return from project divestment of RMB98 million.
+Intensifying the "three reforms linkages" (of coal-fired power units
+and promoting green and low-carbon-oriented transformation and development.
+In 2023, the Group completed energy-saving and consumption-reducing
+transformation of 10.20 GW, flexibility transformation of 5.58 GW and heating
+transformation of 4.40 GW of coal-fired power units, thereby adding a new
+heating capacity of 268 MW, enhancing the peak-shaving operation capacity
+by 525 MW, and lowering the standard coal consumption of coal-fired power
+generation units to 294.9 g/kWh (2022: 296.7 g/kWh), a decrease of 1.8 g/kWh
+as compared with the same period of last year.
+In 2023, the Group brought into full play the role of coal-fired power generation
+as a stabiliser by achieving high utilisation rates, high load rates and long
+periods of uninterrupted operation of coal-fired power generating units.
+The Group promoted the construction of highly-efficient clean coal power
+generating units, putting No. 1 and No. 2 power generation units of the Hunan
+Yueyang Project as well as No. 1 and No. 2 power generation units of the
+Guangdong Qingyuan Phase I Project into operation successively. Under the
+"integration, price, cost and profit" () business philosophy, the Group
+coordinated its efforts in volume-secured price maintenance, spot trading
+and thermal power marketing to realise increase in both sales volume and
+revenue. The Group realised a total power output dispatch of 199.75 billion
+kWh throughout the year, accounting for 2.2% of 9,224.1 billion kWh¹ of the
+total power consumption of the society in the corresponding period, of which
+the market-based trading power reached 194.56 billion kWh, accounting for an
+increase to 97.4% of the total power output dispatch. The average electricity
+selling price was RMB414/MWh (2022: RMB418/MWh), representing a year-
+on-year decrease of 1.0%.
+(1) Production and operation
+Power Segment
+2.
+Section IV Directors' Report (Continued)
+53
+2023 Annual Report
+Other costs consist of the following three components: (1) expenses
+directly related to production, including expenses for coal washing,
+selecting and processing expenses, and mining engineering expenses,
+etc., accounting for 66%; (2) auxiliary production expenses, accounting
+for 19%; and (3) land requisition and surface subsidence compensation,
+environmental protection expenses, tax, etc., accounting for 15%.
+6.9 Increases in costs of outsourced open-cut
+mine stripping work and others
+4.8 Additional mine production equipment;
+increase in amortisation of long-term
+deferred expenses
+higher benchmark last year
+(2.3)
+166.3
+162.4
+Self-produced coal
+Purchased coal
+million million
+million
+million million
+million
+RMB RMB RMB
+RMB RMB
+RMB
+margin
+profit
+cost
+revenue
+Gross profit
+Sales
+Sales
+Gross profit
+margin
+cost profit
+178,242
+(89,856) 88,386
+84,626 (82,617) 2,009
+49.6
+188,818 (89,997) 98,821
+Unit production cost of
+%
+Change Main reasons for changes
+2022
+2023
+Unit: RMB/tonne
+Unit production cost of self-produced coal
+Note: The sales cost of purchased coal includes the purchase cost of purchased coal, as
+well as the transportation and port charges incurred to realise the sales.
+Million
+37.7
+268,996 (167,624)
+34.4
+262,868 (172,473) 90,395
+Total
+3.2
+80,178 (77,627) 2,551
+2.4
+52.3
+101,372
+of tax)
+Self-produced coal
+of tax)
+volume
+volume
+of tax)
+volume
+of tax)
+Million
+RMB/
+Million
+RMB/
+tonnes
+tonne
+tonnes
+%
+tonne
+10
+%
+%
+of tax)
+1. Sales through Trading
+volume
+(exclusive
+China Shenhua Energy Company Limited
+Section IV Directors' Report (Continued)
+By contract pricing mechanism
+2023
+2022
+Change
+Percentage
+Price
+Percentage
+volume
+Price
+Sales
+to total sales
+(exclusive
+Sales to total sales
+(exclusive
+Sales
+volume
+Group
+427.2
+94.9
+24.4
+3. Spot commodity
+58.5
+13.0
+6480
+808
+133.5
+640
+4380
+32.0
+873
+(17.6)
+(7.4)
+40.0
+9.5
+776
+46.3
+110.0
+contract
+2. Monthly long-term
+(2.9)
+598
+98
+395.0
+94.5
+662
+70
+8.2
+18
+48
+(9.7)
+contract
+258.7
+57.5
+500
+221.5
+53.0
+515
+16.8
+1. Annual long-term
+In 2023, the purchased coal sales volume of the Group was 124.6 million
+tonnes (2022: 101.6 million tonnes), representing a year-on-year increase
+of 22.6%, accounting for 27.7% of the total coal sales volume of the
+Group (2022: 24.3%), which mainly due to the fact that the Group had
+strengthened its marketing management and coal resource organization,
+resulting an increased sales volume of purchased coal.
+Price
+(9.3)
+2022
+2023
+By types of sources of coal
+The coal sales of the Group in 2023 is set out below:
+Section IV Directors' Report (Continued)
+2023 Annual Report 47
+The purchased coal sold by the Company includes purchased coal in the
+vicinity of its own mines and along the railway lines, coal from domestic
+trade and imported to transit trade.
+172,473
+262,868
+450.0
+324.5
+90,395
+0
+172,229
+244
+262,624
+244
+449.8
+0.2
+324.5
+Total
+Change
+Others
+Percentage
+Percentage
+volume
+volume
+of tax)
+volume
+volume
+sources of coal
+(exclusive
+Sales
+(exclusive
+to total sales
+Sales
+(exclusive
+to total sales
+Sales
+Types of
+Price
+Price
+Price
+Thermal coal
+90,395
+Sales cost
+RMB million
+Distributable Reserves to Shareholders
+The Group is free from seizure and detention of main assets. As at the end of the
+Reporting Period, the balance of the restricted assets of the Group was RMB7,549
+million, of which security deposits for bank acceptance bills, relevant deposits related
+to port operations, deposit for letter of credit and mine geographical environment
+governance and restoration fund amounted to RMB7,298 million in total; other
+restricted assets mainly consisted of property, plant and equipment secured and
+guaranteed for acquiring bank borrowings.
+Restrictions on Main Assets
+As at 31 December 2023, the total offshore assets of the Group amounted to
+RMB29,674 million, representing 4.7% of total assets, which were mainly composed
+of the power generation assets in Indonesia, and assets from U.S. dollar-denominated
+bonds issued in Hong Kong, the PRC.
+Offshore Assets
+4.
+3.
+2.
+Total sales volume/average
+Gross profit
+RMB million
+450.0
+100.0
+584
+417.8
+100.0
+644
+7.7
+As at 31 December 2023, the distributable reserves of the Company to shareholders
+were RMB201,416 million.
+(IV) Operation Results by Business Segment
+price (exclusive of tax)
+Coal Segment
+1.
+Production Sales volume Sales income
+Million tonnes Million tonnes RMB million
+Types of coal
+The production and sales of each kind of coal of the Group in 2023 are set out
+below:
+2023, due to the supply-demand relationship in the coal market, the
+average coal sales price of the Group was RMB584/tonne (exclusive of tax)
+(2022: RMB644/tonne), representing a year-on-year decrease of 9.3%.
+In 2023, the Group fulfilled its responsibility as a state-owned enterprise and
+made effort to ensure the coal supply. The fulfilment rate of medium- and
+long-term thermal coal contracts is over 100%. The Group flexibly adjusted
+its business strategy, innovated its pricing mechanism, increased resources,
+expanded the market, and concurrently made efforts in terms of both the
+purchase and sales, achieving year-on-year growths in coal sales volume,
+purchased and imported coal volume. During the year, the coal sales volume
+of the Group reached 450.0 million tonnes (2022: 417.8 million tonnes),
+representing a year-on-year increase of 7.7%. The sales volume for the top five
+external coal customers was 192.4 million tonnes, accounting for 42.8% of the
+total coal sales volume; in particular, the coal sold to China Energy Group, the
+largest customer, was 168.8 million tonnes, representing 37.5% of the total
+coal sales volume. The top five external coal customers are mainly electrical,
+chemical and coal trading companies.
+Section IV Directors' Report (Continued)
+China Shenhua Energy Company Limited
+46
+The coal sold by the Group is mainly self-produced coal. In order to fulfil the
+needs of customers and adequately make use of railways transportation, the
+Group also purchased the coal from third parties in the surrounding areas of
+the self-owned mines and along railway lines for blending to produce different
+kinds and levels of coal products and sell them to external customers. The
+Group implemented specialised division management. In particular, production
+enterprises are responsible for production of coal, the railway, port and shipping
+companies of the Company are mainly responsible for transportation of coal,
+and the Trading Group of the Company is mainly responsible for sales of coal.
+Customers are involved in different industries, such as power, metallurgy,
+chemical and construction materials.
+0.4-0.7
+The Group has independently operated railway transportation channels for
+collection and distribution. These channels are mainly distributed in the rim of
+self-owned core mines, and can satisfy the transportation needs in the core
+mines.
+The Group consolidated and promoted the application level of achievements
+of intelligent and digital technologies for coal mines. By the end of 2023, the
+Group had built 35 intelligent underground coal mining working faces, 61
+intelligent tunneling working faces and 19 intelligent coal preparation plants,
+and had equipped 208 unmanned production vehicles in open-cut coal mines.
+Also, the Group had developed and applied an aggregate of over 200 coal
+mining robots in five categories, namely tunneling, mining, transportation,
+safety control and rescue.
+The Group moved to promote the continuation of coal resources, license
+application and production capacity increase in an orderly way. As at the date of
+the disclosure of this report, the mining license for Xinjie No. 1 Mine and No. 2
+Mine of Xinjie Taigemiao Mine, Inner Mongolia, which is of great significance to
+the sustained development of the Group's coal resources, has been obtained.
+The mining licenses of Bulianta Colliery, Shangwan Colliery, Wanli No. 1 Mine
+and Ha'erwusu Open-cut Mine have completed the change of mining area, and
+new mining licenses have been obtained. We have obtained reply from the
+National Mine Safety Administration in respect of the application for increasing
+of Baode Coal Mine's production capacity from 5 million tonnes/year to 8 million
+tonnes/year. The application for the increase of production capacity of Lijiahao
+Colliery and Shengli No. 1 Open-cut Mine was progressed in an orderly manner.
+Section IV Directors' Report (Continued)
+2023 Annual Report 45
+The majority of the coal products produced and sold by the Group were
+thermal coal. In 2023, the Group insisted on ensuring the energy safety
+through coal, consolidating and expanding the normalised long-term supply
+security mechanism, and maintained stable coal production at high levels.
+The annual output of commercial coal was 324.5 million tonnes (2022: 313.4
+million tonnes), representing a year-on-year increase of 3.5%. The Group
+vigorously promoted the optimization of the layout of the production system,
+popularized the technique of gob-side entry retaining without coal pillar, so
+as to optimize the ratio of mining and tunneling of mines and improve the
+production efficiency. The total footage of advancing tunnels at underground
+mines for this year was 404 thousand meters (2022: 446 thousand meters), of
+which Shendong Mines recorded footage of advancing tunnels of 385 thousand
+meters (2022: 426 thousand meters).
+Production, operation and construction
+(2) Sales of coal
+(1)
+Price of electricity sold
+(RMB/MWh)
+(billion kWh)
+(billion kWh)
+Operation location/
+power type
+Power output dispatch and price of electricity sold
+Gross power generation
+2023
+(2)
+Section IV Directors' Report (Continued)
+Total power output dispatch
+2022 Change
+%
+2022 Change
+2023
+2022 Change
+%
+(1) Coal-fired power
+207.40
+186.72
+11.1
+175.36
+11.2
+The principal operation model of the Group's subsidiary, Shandong Power Sales
+Company, is to earn profit through the price difference between the purchase
+and sales of electricity, which mainly engages in providing value-added
+services, such as procurement and sales of power, cross-province transactions,
+power equipment management, green power trading and power demand-side
+response agency. In 2023, the agent power output dispatch from Shandong
+Power Sales Company (excluding those from the Group's self-owned power
+plants) were 7.15 billion kWh, with the corresponding revenue from power
+sales and power purchase cost amounting to RMB3,366 million and RMB2,970
+million, respectively.
+2023
+195.01
+(6) Operation results of the power sales business
+64
+(II) Gas-fired power
+3.94
+3.85
+2.3
+3.85
+3.76
+2.4
+555
+564
+(1.6)
+Beijing
+3.94
+3.85
+2.3
+3.85
+3.76
+2.4
+(10.3)
+555
+555
+(6.8)
+416
+0.5
+Henan
+4.43
+5.03
+(11.9)
+4.11
+4.70
+(12.6) 413
+391
+5.6
+Indonesia (overseas)
+1.43
+1.54
+(7.1)
+1.24
+1.33
+China Shenhua Energy Company Limited
+564
+(1.6)
+(III) Hydropower
+525.0
+318
+275
+226
+0.4
+444 (28.4)
+Inner Mongolia
+0.12
+0.11
+201
+Fujian
+0.07
+0.03 133.3
+0.07 0.03
+133.3
+455
+477
+0.04
+0.25
+550.0
+0.04
+0.66
+0.67
+(1.5)
+0.64
+0.65
+(1.5)
+227
+226
+418
+0.4
+0.66
+0.67 (1.5)
+0.64
+0.65
+(1.5)
+227
+(IV) Photovoltaic power
+0.26
+Sichuan
+(4.6)
+(2.3)
+9.08
+10.0
+13.38
+12.16
+10.0
+320
+349
+(8.3)
+Sichuan
+14.27
+12.09
+18.0
+13.52
+11.39
+18.7
+432
+432
+0.0
+13.34
+Guangxi
+14.67
+(5.9)
+22.89
+16.3
+25.46
+21.88
+16.4
+431
+452
+(4.6)
+Hebei
+24.04
+23.82
+0.9
+22.57
+22.35
+1.0
+398
+423
+Inner Mongolia
+12.62
+4.69 169.1
+11.99
+418
+427
+(2.1)
+Hunan
+10.47
+9.38
+11.6
+9.98
+8.95
+11.5
+476
+477
+(0.2)
+Chongqing
+9.50
+9.70
+(2.1)
+6.8
+9.36
+10.00
+7.0
+4.44
+170.0
+441
+429
+2.8
+Jiangxi
+11.31
+11.74
+9.29
+(3.7)
+11.20
+(3.7)
+436
+425
+2.6
+Shandong
+10.53
+9.84
+10.79
+26.61
+Guangdong
+0.00
+5.20
+5.24
+Decreased by 0.04
+gangue-fired power plants)
+percentage point
+Gas-fired power
+4,152
+4,054
+2.4
+1.56
+1.57
+Decreased by 0.01
+percentage point
+Hydropower
+5,228
+5,340
+(2.1)
+5.5
+0.28
+4,951
+Coal-fired power (including
+Total
+1
+Source: China Electricity Council
+56 China Shenhua Energy Company Limited
+2,000 The operation of
+4,000
+new units
+(4)
+Section IV Directors' Report (Continued)
+Utilisation rate of power generation equipment
+The average utilisation hours of coal-fired generators of the Group reached
+5,221 hours for the year 2023, representing a year-on-year increase of 270
+hours and 536 hours higher than the national average utilisation hours of 4,685
+hours for coal-fired generating units with the installed capacity of 6,000KW
+and above.
+Power type
+2023
+Average utilisation hours (Hours)
+2022 Change
+2023
+Power consumption ratio of power plant (%)
+2022 Change
+%
+5,221
+0.42 Decreased by 0.14
+percentage point
+Photovoltaic power
+Change
+%
+Total volume of power in market-
+194.56
+162.92
+19.4
+based transactions (billion kWh)
+Total volume of on-grid power
+199.75
+179.81
+11.1
+(billion kWh)
+Percentage of the power in market-
+based transactions (%)
+97.4
+90.6
+Increased
+by 6.8
+percentage
+points
+2022
+2023
+Market transaction of power
+(5)
+905
+905
+725
+25
+24.8
+Weighted average
+5,167
+4,925
+Guangdong
+4.9
+5.15
+Decreased by 0.04
+percentage point
+Source: China Electricity Council
+2023 Annual Report
+57
+58
+Section IV Directors' Report (Continued)
+5.11
+0.03
+Qingyuan Power
+new units
+Hebei
+0.01
+0.01
+319
+Henan
+0.00
+0.00
+575
+Total
+212.26 191.28
+11.0
+199.75
+179.81
+11.1
+414
+418
+(1.0)
+2.0
+Note: In 2023, both the power generation and output dispatch of the photovoltaic power stations
+of the Group in Henan Province was 1.86 million kWh.
+348
+0.0
+0.03
+0.00
+465
+194 139.7
+Shaanxi
+0.02
+0.00
+0.02
+0.00
+271
+333 (18.6)
+Shandong
+0.01
+0.01
+0.0
+0.01
+0.01
+355
+2023 Annual Report
+55
+Section IV Directors' Report (Continued)
+0
+125
+Photovoltaic power
+62
+333
+395
+Total
+40,301
+4,333
+44,634
+In 2023, the changes of the Group's installed capacity for coal-fired power
+generating units are as follows:
+Company
+Location
+Increase
+of installed
+capacity
+MW
+Description
+Hunan
+2,000 The operation of
+125
+Hydropower
+950
+0
+(3)
+Installed capacity
+At the end of the Reporting Period, the total installed capacity of the Group's
+power generating units reached 44,634 MW, of which the total installed
+capacity of the coal-fired power generating units was 43,164 MW, accounting
+for approximately 3.1% of the total installed capacity of thermal power
+generating units of the society (being 1.39 billion kW¹).
+Unit: MW
+Total installed
+capacity as at 31
+Installed capacity
+increased
+Total installed
+during the capacity as at 31
+Yueyang Power
+Power type
+Reporting Period
+December 2023
+Coal-fired power
+39,164
+4,000
+43,164
+Gas-fired power
+950
+December 2022
+Fujian
+498
+341
+Repair and maintenance
+10.3
+5.6
+3,733
+5.9
+4,117
+(1.2)
+4.8
+78.5
+51,919
+77.4
+54,414
+Raw material, fuel and power
+%
+% RMB million
+RMB million
+in cost
+1,576
+Percentage
+2.2
+2.8
+66,124
+100.0
+70,273
+Total cost of power sales of
+coal-fired power plant
+30.9
+4.2
+2,760
+5.2
+3,613
+Others
+11.9
+8.9
+5,858
+9.3
+6,553
+Depreciation and amortisation
+(15.0)
+1,854
+Costs
+Percentage
+Costs
+17
+80
+Photovoltaic power
+(0.9)
+0.2
+109
+0.1
+108
+(1.4)
+148
+146
+Hydropower
+(17.7)
+3.2
+2,201
+2.5
+1,812
+370.6
+39
+0.1
+10
+Change
+2022
+2023
+Cost of power sales of coal-fired power plant of the Group before
+elimination on consolidation
+Section IV Directors' Report (Continued)
+China Shenhua Energy Company Limited
+In 2023, the power segment consumed a total of 73.2 million tonnes
+(2022: 66.0 million tonnes) of coal sold within the Group (including self-
+produced coal and purchased coal of the Group), representing a year-on-
+year increase of 10.9%, mainly due to the year-on-year increase in power
+generation and the Group's integrated operation advantages to ensure
+the coal supply for power plants. The coal sold within the Group that
+was consumed by the power segment accounted for 78.0% of the total
+coal consumption of power segment, which was 93.8 million tonnes.
+The Group's cost of power sales is mainly comprised of raw materials,
+fuel and power, personnel expenses, repair and maintenance,
+depreciation and amortisation and other costs. The unit cost of power
+sales of the Group in 2023 was RMB361.6/MWh (2022: RMB380.7/
+MWh), representing a year-on-year decrease of 5.0%, mainly due to the
+decline of average coal purchase price.
+100.0
+5.5
+68,444
+100.0
+9.8 72,232
+77,942
+85,616
+Total
+290.0
+0.0
+100.0
+0.9
+6.3
+2023 Annual Report
+Revenue
+%
+Change Main reasons for changes
+2022
+2023
+The operation results of the port segment of the Group before eliminations on
+consolidation are as follows:
+Operation results
+Focusing on the intelligent and green development of ports. The Group has
+intensified the R&D and application of automatic lading technologies, and
+Huanghua Port has become the first coal port in China to realise smart lading.
+The Group undertook the pilot project of "Green Port Development" in the
+campaign of building a powerful country via transportation infrastructure, which
+has been accepted by the Ministry of Transport. The Group realised the shore
+power facilities covering all the self-owned terminals and vessels, and achieved
+remarkable results in reducing pollutants and carbon emissions.
+Speeding up the enhanced transportation capacity of ports. The Group actively
+implemented the spirit as conveyed in the important speech of General
+Secretary Xi Jinping during his inspection at Huanghua Port, and facilitated the
+complete run-through of the "railway, port and shipping" integrated reverse
+transportation, thereby realising the integrated two-way and heavy-loaded
+multimodal transportation. Huanghua Port's two-way route was successfully
+opened to 70,000-tonne ships. The Group also steadily pushed forward Phase
+V of Huanghua Port (coal port area), Phase II of Tianjin Coal Dock, capacity
+expansion of Zhuhai Port and Phase II of Fujian Luoyuanwan Port, so as
+to enhance its downstream diversion capacity. The ports have seen rapid
+development in bulk logistics business, with the 3# and 4# general bulk cargo
+terminals (50,000 tonnes) of Huanghua Port being put into operation, the bulk
+cargo volume builds up. The port segment of the Group handled a transportation
+volume of non-coal commodities of 12.5 million tonnes, representing a year-
+on-year increase of 62.3%.
+(2)
+Section IV Directors' Report (Continued)
+63
+2023 Annual Report
+In 2023, the port segment of the Group optimised the production organisation
+for arrangement, thereby ensuring the efficient and smooth progress of the
+integrated industrial chain in all efforts. Loading volume of coal at Huanghua
+Port was 209.5 million tonnes (2022: 205.2 million tonnes), representing a
+year-on-year increase of 2.1%, successively ranking the first in terms of the
+coal loading volume in China. Coal loading volume at Tianjin Coal Dock was
+45.8 million tonnes (2022: 45.2 million tonnes), representing a year-on-year
+increase of 1.3%.
+(1) Production and operation
+Port Segment
+4.
+RMB million
+In 2023, the unit transportation cost in the railway segment was RMB0.085/
+tonne km (2022: RMB0.076/tonne km), representing a year-on-year increase of
+11.8%, which was mainly due to the increase in repair and maintenance costs,
+personnel expenses and others.
+6,749
+4.8
+The unit transportation cost in the port segment was RMB12.5/tonne in
+2023 (2022: RMB12.0/tonne), representing a year-on-year increase of 4.2%,
+I mainly due to the increase in depreciation and amortisation resulting from the
+increased port operating assets.
+1.7
+2,268
+2,307
+Profit before income tax RMB million
+percentage points
+44.8 Decreased by 1.8
+43.0
+Gross profit margin
+amortisation; increase in loading
+volume on port
+Increase in depreciation and
+8.1
+(3,556)
+(3,844)
+RMB million
+Cost of sales
+Increase in loading volume on port
+6,441
+(12.5)
+12,742
+11,152
+%
+Change Main reasons for changes
+2022
+2023
+The operation results of the railway segment of the Group before elimination
+on consolidation are as follows:
+Operation results
+Section IV Directors' Report (Continued)
+(2)
+62 China Shenhua Energy Company Limited
+The Group continued to promote the development of its railway collection and
+distribution system and improve the overall transportation capacity of its railway
+lines. The Group made sustained efforts to promote the 300 million-tonne and
+450 million-tonne capacity expansion and transformation project for Shenshuo
+Railway and Shuohuang Railway, respectively, which are expected to enhance
+the transformation capacity for its main channels. The Group accelerated the
+electrification of the Huangwan Railway to improve its downstream diversion
+capacity. The construction of special railway lines including Dongyue line
+was advanced to enhance the resource acquisition capacity on collection and
+transportation sides.
+In 2023, the railway segment of the Group organised coal transportation
+efficiently with a view of securing energy supply. The Group implemented
+refinement of management of special railway lines, strengthen the effective
+connection between special railway line management and transportation
+resources, and improve the ability of safeguarding railway equipment in a
+professional, intensive and integrated manner. With the completion of the
+capacity expansion and transformation project of the Wochang Station of
+Zhunchi Railway, 20,000-tonne-heavy-haul loaded trains could operate safely
+across sections of Zhunchi Railway and Shuohuang Railway, further improving
+the efficiency of coal transportation. In 2023, the transportation turnover of
+self-owned railway of the Group reached 309.4 billion tonnes km (2022: 297.6
+billion tonnes km), representing a year-on-year increase of 4.0%. As the Group
+actively promoted the development of railway large-scale logistics business, the
+transportation volume of non-coal goods such as iron ore, manganese ore and
+chemicals reached 22.3 million tonnes (2022: 19.6 million tonnes), representing
+a year-on-year increase of 13.8%, of which the reverse transportation volume
+reached 16.9 million tonnes during the year.
+Production and operation
+(1)
+Railway Segment
+3.
+Section IV Directors' Report (Continued)
+61
+Revenue
+RMB million
+42,961
+42,197
+Profit before income tax RMB million
+percentage points
+Decreased by 4.4
+40.7
+36.3
+Gross profit margin
+turnover of self-owned railway
+others; increase in transportation
+The cost of power sales of coal-fired power plant increased by 6.3%
+year-on-year. Among them, the year-on-year growth of cost of raw
+materials, fuel and power was mainly due to the increase in power sales;
+the year-on-year increase in personnel expenses was mainly due to a
+number of newly-added generating units of the Group put into operation,
+which resulted in the increase in related power production personnel;
+the year-on-year decrease in repair and maintenance costs was mainly
+due to the overhaul plan; the year-on-year increase in depreciation and
+amortisation was mainly due to the commissioning of several new units
+of the Group and the increases in property, plant and equipment; and
+the year-on-year increase in other costs was mainly attributable to the
+increase in the other costs related to the newly-commissioned units of
+the Group, among others.
+costs, personnel expenses and
+9.3
+(25,041)
+(27,380)
+RMB million
+Cost of sales
+self-owned railway
+Increase in transportation turnover of
+1.8
+Increase in repair and maintenance
+2,119
+Personnel expenses
+Gas-fired power
+Jiangxi Jiujiang Power Plant Phase II Expansion Project (2×1,000MW)
+4
+(2x400MW)
+Under construction
+46.0
+929
+Guangdong Huizhou Thermal Power Phase II Gas-thermal Power Project
+3
+Put into operation
+100.0
+3,068
+Hunan Yueyang Power Plant (2×1,000MW)
+2
+Put into operation
+100.0
+5,176
+Guangdong Qingyuan Power Plant Phase I (2×1,000MW)
+1
+%
+RMB million
+Period
+Reporting Period
+Period
+350
+4.8
+Under construction
+5
+2022
+2023
+The operation results of the power generation segment of the Group
+before elimination on consolidation
+(8) Operation results
+Approved
+Hebei Cangdong Power Plant Phase III Expansion Project (2×660MW)
+9
+Approved
+Hebei Dingzhou Power Plant Phase III Expansion and Thermal Power Project
+(2x660MW)
+Under construction
+2.1
+No. Name of project
+149
+7
+Under construction
+4.0
+272
+Guangdong Qingyuan Power Plant Phase II Expansion Project (2x1,000MW)
+6
+(150MW)
+Put into operation
+85.0
+312
+Shengli Energy Open-cut Dump Disposal Photovoltaic Power Station Project
+Guangxi Beihai Power Plant Phase II Expansion Project (2x1,000MW)
+Change Main reasons for changes
+%
+the end of
+the Reporting
+Reporting
+Average price of electricity
+sold (exclusive of tax)
+Power output dispatch
+No. Province
+412
+416 (1.0)
+Guangdong
+34.06
+32.39
+5.2
+32.14
+30.52
+5.3
+458
+446
+2.7
+Shaanxi
+33.46
+30.27
+10.5
+30.75
+27.79
+10.7
+337
+Unit cost of power
+purchase (exclusive of tax)
+Billion kWh
+2023
+2022
+RMB/MWh
+2023
+total budget as
+for the
+projects at
+project to the
+Phase of
+Contribution
+amount
+investment in
+Percentage of
+accumulated
+In 2023, the total capital expenditure of the power generation segment
+was RMB15,922 million, the capital expenditure breakdown of major power
+generation projects is set out as below:
+(7) Capital expenditure
+Section IV Directors' Report (Continued)
+at the end of the
+China Shenhua Energy Company Limited
+416
+420
+417
+5.82
+7.15
+Shandong
+1
+2022
+2023
+2,138
+RMB/MWh
+417
+9.3 Increase in the power output
+2022
+Increase in the power output
+dispatch
+total costs of
+Percentage to
+total costs of
+Change
+power sales
+power sales
+in 2023
+2023
+2022
+Change
+2023
+in 2023
+2022
+Percentage to
+in 2022
+%
+Coal-fired power
+83,252
+75,658
+10.0
+6.3
+96.6
+66,124
+97.3
+70,273
+000
+dispatch
+over 2022
+Cost of power sales
+Power type
+13.1
+Cost of sales
+RMB million
+(77,594)
+RMB million
+Revenue from power sales
+(73,491)
+5.6
+Gross profit margin %
+16.0
+84,525
+Increased by
+2.9 percentage
+points
+92,407
+RMB million
+10,910
+7,969
+36.9
+Revenue
+2023 Annual Report
+59
+Unit: RMB million
+Section IV Directors' Report (Continued)
+Revenue from and cost of the power sales of the Group before
+elimination on consolidation
+Profit before
+income tax
+60
+60
+419.59
+Total
+China Shenhua Energy Company Limited
+74
+0.09
+6.27
+368.04
+7,789 27,739
+1,778
+6,790
+Huanghua Harbour
+Administration
+Railway Equipment
+9
+Increase in sales volume of coal
+6.4
+1,671
+13,671
+Others
+13,141
+2.27
+Yulin Energy
+Coal chemical segment
+2,420 7,599
+Decrease in coal sales price
+10
+policy
+on-year due to income tax preferential
+Decrease in income tax expenses year-
+59.6
+947
+945
+1,511
+9,636
+23.62
+6,300 21,516
+4.9
+1,482
+1,555
+10,284
+63.27
+Port
+12.49
+4.85
+Shipping
+2.26
+1.17
+Increase in loading volume on port
+(2.1)
+(17.5)
+2,520
+Jinjie Energy
+(8.1)
+6,507
+5,983
+44,099 29,695
+15,231
+Shuohuang Railway
+19
+45
+23
+Increase in repair costs
+Baorixile Energy
+previous year
+income tax was settled in the same
+period of the previous year, and the
+current income tax was deducted
+(46.2) Decrease in sales price of coal; the
+29,248
+15,747
+4,989 39,594 28,872
+Shendong Coal
+1
+Main reasons for changes
+2022 Change
+%
+(Restated)
+assets assets Net profit attributable to the equity holders of the parent company
+As at 31 December 2023
+from the excess tax paid in the
+2,574
+3,802 18,113
+4,256
+8,724
+14,461
+2,925
+Beidian Shengli
+Trading Group
+in coal production cost
+Decrease in sales price of coal; increase
+(30.0)
+3,731
+2,612
+43,952
+52,238
+15,857
+7,102
+Decrease in sales price of coal
+(1.3)
+3,258
+3,217
+7,232
+13,882
+1,169
+in coal production cost
+Decrease in sales price of coal; increase
+4,109 1,485 1,366
+5,161
+Zhunge'er Energy
+8.7
+Details of the Group's contingent liabilities are set out in the "Commitments and Contingent
+Liabilities" in the notes to the financial statements in this report.
+Notes:
+188.72
+171.78
+159.22
+68.21
+69.29
+53.46
+RMB100 million
+Cost of sales
+(3.8)
+3,430.74
+3,300
+RMB100 million
+Revenue
+1.9
+2,122.6
+2,163
+100 million kWh
+Gross power generation
+(3.3)
+4.500
+4.353
+100 million tonnes
+Coal sales
+98.16
+Of which: Railway
+Transportation segments
+Power generation segment
+2023
+2,358
+2,325.37
+1.4
+Total selling, general and administrative, RMB100 million
+150
+137.27
+9.3
+research and development expenses
+and net finance costs
+Percentage change of unit production
+(2.6)
+cost of the self-produced coal
+Year-on-year
+increase of
+decrease of 2.3%
+approximately 10%
+The above business targets are subject to factors including changes in scope of
+consolidated financial statements, risks, uncertainties and assumptions. The annual
+actual outcome may differ materially from the targets. Such statements do not
+constitute actual commitments to investors. Investors should be aware that undue
+reliance on or use of such information may lead to investment risks.
+2.
+Capital Expenditure Plan for 2024
+Unit: RMB100 million
+Plan for 2024
+Completion
+in 2023
+Coal segment
+Year-on-year
+3.245
+3.161
+100 million tonnes
+(XIV) Pension Plan
+(XIII) Contingent Liabilities
+During the Reporting Period, the Group made external donations of RMB438 million.
+(XII) Donations
+In 2023, there was no material dispute between the Group and its stakeholders.
+The Group attaches great emphasis on good relationships with stakeholders such as
+customers, suppliers and other business partners to achieve its long-term goals. For details,
+please refer to the 2023 Environmental, Social and Governance Report of the Company.
+For details of remuneration and training of the Group's employees, please refer to the
+"Employees" section in this report.
+(XI) Relationship with Stakeholders
+So far as the Board and management of the Company are aware, during the Reporting
+Period, the Group has fully complied in all material aspects with the relevant laws and
+regulations that are related to the business and operation of the Group, there was no
+material breach of or non-compliance with the applicable laws and regulations by the Group.
+(X) Compliance with Relevant Laws and Regulations
+Applicable ✓ Not applicable
+Details of the pension plan for the Group's employees are set out in the "Significant
+Accounting Policies" in the notes to the financial statements in this report in relation to the
+retirement benefit costs. There are no forfeited contributions under the defined contribution
+pension plans that may be used by the Group, being the contributions processed by
+employers on behalf of employees who withdrew from such plans prior to vesting fully in
+such contributions.
+(IX) Structured Entities Controlled by the Company
+China Shenhua Energy Company Limited
+70
+Please refer to the section headed "Material Related Party/Connected Transactions"
+of this report for details of the Finance Company.
+Major Companies in Which the Company has Invested
+2.
+Shuohuang Railway recorded a revenue of RMB22,217 million and a profit from operations of
+RMB7,920 million in 2023.
+(3)
+Shendong Coal recorded a revenue of RMB86,682 million and a profit from operations of
+RMB18,525 million in 2023.
+(2)
+The financial information of the major subsidiaries in the above table was prepared in accordance
+with the China Accounting Standards for Business Enterprises.
+(1)
+Section IV Directors' Report (Continued)
+Increase in sales volume of coal
+(XV) Subsequent Matters
+2023 Annual Report 71
+Commercial coal production
+%
+Increase/
+(decrease)
+in 2023
+Target of 2024
+Unit
+Actual amount
+Item
+1. Business Targets for 2024
+(III) Business Plan for 2024
+Section IV Directors' Report (Continued)
+☐ Applicable ✓ Not applicable
+73
+In 2024, the Group will adhere to the guidance of Xi Jinping Thought on Socialism with
+Chinese Characteristics for a New Era, fully implement the guiding principles of the 20th
+National Congress of CPC and put in place the new strategy of "Four Revolutions and
+One Cooperation" for energy security, and the goal of carbon peak and carbon neutrality,
+earnestly carry out the comprehensive development strategy of "One Target, Three Roles
+and Six Responsibilities", adhere to the work-oriented principle of "seeking progress while
+maintaining stability, promoting stability with advancement, and establishing the new before
+abolishing the old", focus on enhancing core functions, enhancing core competitiveness,
+and focus on safe development, innovative development, green development, coordinated
+development, value development and Party building. We will build ourself into a world-class
+clean and low-carbon energy technology leader and a first-class comprehensive energy
+listed company, pursue steady and high-quality development, and constantly give back to
+investors, give full play to our role in technological innovation, industrial control, and safety
+support, and contribute China's Shenhua Power to China-style modernization with an aim to
+comprehensively promote the construction of a powerful country and national rejuvenation.
+In the second half of the "14th Five-Year Plan" period, the Group will continue to consolidate
+the core advantages of integrated operation, ensure the safe and stable supply of energy,
+obtain more access to coal resources and speed up the clean and efficient development and
+utilisation of coal to improve the comprehensive efficiency of energy utilisation, build clean
+and high-efficient thermal power unit and strengthen the development of comprehensive
+energy projects. We will optimise the layout of the transportation network, promote the
+integration of dedicated railway and connection lines, innovate and develop large-scale
+logistics business, and create a multi-functional, comprehensive and modern energy
+transportation channel. We will develop high value-added products such as coal-based
+new materials, and promote the development of high-end, diversified and low-carbon coal
+chemical industry. We will also leverage the advantages of high-level platform and strong
+financial position as a listed company, implement market value management and appraisal
+requirements, strengthen the cooperation with local government and enterprises, promote
+the steady and sustainable development of renewable energy including wind power and
+photovoltaic, study investment opportunities in strategic emerging industries such as
+energy storage, hydrogen energy, biomass energy projects, and foster future industries and
+accelerate the development of new quality productive forces so as to lay a solid foundation
+for the sustainable and sound development of the Company.
+2023 is the first year to fully implement the spirit of the 20th National Congress of the
+Communist Party of China. According to the deployment of the CPC Central Committee and
+the State Council, the energy industry will be coordinated in respect of the development
+and safety, so as to promote the high-quality development of energy, and realize the
+improvement and stability of energy security supply and clean transformation, ensuring
+the solid guarantee for promoting high-quality economic development and meeting the
+people's need for a better life. Currently, energy supply has become routine, the role
+of coal in ensuring the energy supply and the role of coal power in ensuring the basic
+guarantee and systematic adjustment in the construction of a new power system have
+become increasingly obvious.
+(II) Development Strategy of the Company
+Section IV Directors' Report (Continued)
+72 China Shenhua Energy Company Limited
+For the power industry, taking into account factors such as macro-economy and
+electrification of energy-consuming equipment, China Electricity Council expected that
+the total electricity consumption of the whole society will increase by approximately 6%
+year-on-year in 2024, and the increment of installed capacity of power generation in 2024
+is expected to be basically equal to that in 2023, and the installed capacity of new energy
+power generation may for the first time outweigh the installed capacity of coal-fired power
+generation. In view of factors such as growing demand for electricity consumption and
+commissioning of power supplies, it is expected that the overall power supply and demand
+in China will be tight and balanced in 2024, and the power supply and demand in some
+regions will be tight during peak hours.
+For the coal industry, sustained economic recovery in China will stimulate the growth
+of energy demand. With the release of new coal production capacity and reinforced
+supervision on production safety, coal production will remain stable in general. Coal imports
+are expected to remain high. Generally, supply and demand of the coal market in 2024 is
+poised to be balanced and relaxed, and the price median of coal may remain stable at a
+reasonable range. As affected by seasonal fluctuations, emergencies and other factors,
+tight supply may occur in some areas and during some periods.
+In 2024, the favourable conditions for China's development will outweigh the unfavourable
+factors, and the fundamental trend of economic recovery and long-term improvement will
+remain unchanged. The economic work of China will adhere to the principle of seeking
+progress while maintaining stability and promoting stability with incremental development,
+and establishing the new before abolishing the old, reinforcing the counter-cyclical and
+inter-cyclical adjustment of macro policies. To this end, China will continue to adopt
+proactive fiscal policies and sound monetary policies, take proactive steps to implement
+the policies for stabilising expectations, growth and employment, develop and expand
+strategic emerging industries, accelerate the development of new productivity boosters,
+and endeavour to promote the transition of growth models, structural adjustment, and
+quality and efficiency improvement, so as to promote the steady and long-term economic
+development in a sustainable manner. It is expected that China's economy will continue
+to rebound and improve in 2024, with a GDP growth rate of around 5%.
+(1) Industry Structure and Trend
+VI. THE COMPANY'S OUTLOOK FOR FUTURE DEVELOPMENT
+Section IV Directors' Report (Continued)
+2023 Annual Report
+Net
+%
+In 2023, the unit transportation cost of the shipping segment was RMB0.028/
+tonne nautical mile (2022: RMB0.039/tonne nautical mile), representing a year-
+on-year decrease of 28.2%, mainly due to the decrease in vessel rental charges
+and fuel costs, and the increase in shipment freight turnover.
+332,253
+(0.5)
+Revenue from external
+transactions in overseas markets
+12,328
+12,280
+0.4
+Total
+343,074
+344,533
+(0.4)
+Note: The revenue from external transactions is divided by the location of customers receiving services and
+purchasing products.
+The Group is mainly engaged in the production and sales of coal and power, railway, port
+and shipping transportation as well as coal-to-olefins businesses in the PRC. In 2023,
+the revenue from external transactions in domestic markets was RMB330,746 million,
+accounting for 96.4% of the Group's revenue. The revenue from external transactions in
+overseas markets was RMB12,328 million, accounting for 3.6% of the Group's revenue.
+In 2023, the Group's overseas business operations are stable with normal progress in
+project construction. South Sumatra EMM in Indonesia achieved profitability by means
+of measures including adopting economic power generation strategies and reducing fuel
+costs. Benefiting from the stable coal supply, the Pembangkitan Jawa project was able to
+further increase its market share, with indexes of its generators ranking first successively
+among thermal power generators within the Indonesian power grid. Construction of the
+South Sumatra No. 1 Project is progressing steadily, with both generators expected to be
+commissioned in 2024. The Pennsylvania shale gas project in the United States is in good
+production and operation. The equity gas volume attributable to the Group in 2023 is 127
+million cubic meters. The construction of the Zashulanskoye project in Russia is advancing
+smoothly.
+(VI) Analysis on Investments
+In 2023, the equity investments of the Company in subsidiaries and associated companies
+amounted to RMB9,028 million (2022: RMB27,124 million), representing a year-on-year
+decrease of 66.7%. Equity investments for 2023 were mainly used to increase capital in
+subsidiaries such as coal, power generation and financial leasing, as well as associated
+companies such as finance companies, in order to accelerate project construction and
+promote business development.
+China Shenhua Energy Company Limited
+1.
+Section IV Directors' Report (Continued)
+Material Investment in Equity Interest
+Applicable ✓ Not applicable
+2.
+Material Investment in Non-equity Interest
+☐ Applicable ✓ Not applicable
+3.
+Financial Assets at Fair Value
+During the Reporting Period, the financial assets at fair value held by the Group were
+mainly the non-trading equity investments that have no significant impact on the
+investees and bank acceptance bills that are planned to be discounted or endorsed.
+330,746
+transactions in domestic markets
+Revenue from external
+Change
+%
+tonne
+tonnes
+tonne
+%
+%
+Polyethylene
+Polypropylene
+362.4
+5,660
+353.4
+5,812
+2.5
+340.5
+5,487
+Gains and
+340.3
+0.1
+(2.6)
+12
+25
+(5.2)
+In 2023, a total of 4.9 million tonnes of coal consumed by the coal chemical
+segment was all the coal sold within the Group (including self-produced coal
+and purchased coal of the Group).
+2023 Annual Report 67
+68
+Section IV Directors' Report (Continued)
+(V) Operations by Region
+2023
+2022
+Unit: RMB million
+5,788
+tonnes
+Unit: RMB million
+from fair
+2,888
+Total
+0
+0
+held for trading Note
+Financial assets
+(248) 254
+(19) 2,486
+502
+receivables
+Financing
+119
+2,386
+instruments
+in equity
+Other investments
+period changes period
+period
+the period
+equity
+period
+period
+Category of assets
+the
+for the Other
+for the
+provided for
+0
+119
+0
+(267) 2,740
+Cumulative
+At the
+value
+changes in
+Amount
+of
+Amount of
+beginning
+changes
+fair value
+Impairment purchase
+disposal/
+redemption
+At the
+end of
+losses
+of the
+Registered
+capital
+Company
+No.
+Unit: RMB million
+Major Subsidiaries
+1.
+(VIII) Analysis on Major Holding and Associated Companies
+☐ Applicable ✓ Not applicable
+(VII) Disposal of Material Assets and Equity Interest
+Section IV Directors' Report (Continued)
+69
+2023 Annual Report
+Note: On December 13, 2023, China Energy Digital and Intelligent Technology and Development (Beijing)
+Co., Ltd. ("DITD", a holding subsidiary of the Company) received 16,386 shares (the "Transferred
+Shares") from Poten Environment Group Co., Ltd. (stock code: 603603, security abbreviation: *ST
+Botian, a client of DITD), which was used to offset DITD's accounts receivable from *ST Botian.
+DITD classified the Transferred Shares as "Financial assets held for trading" and recognised an
+initial cost of RMB45,880.80. As at the end of the Reporting Period, DITD recognised a loss from
+fair value change of RMB20,974.08 for this "Financial assets held for trading" with a year-end
+carrying amount of RMB24,906.72.
+Total
+included in
+RMB/
+Output
+RMB million
+100
+706
+(85.8)
+2023 Annual Report
+65
+Section IV Directors' Report (Continued)
+6.
+Coal Chemical Segment
+(1)
+Production and operation
+The coal chemical segment of the Group comprises the coal-to-olefins project
+of Baotou Coal Chemical, the main products of which include polyethylene (with
+production capacity of approximately 300,000 tonnes/year), polypropylene (with
+production capacity of approximately 300,000 tonnes/year) and a small amount
+of by-products (including industrial sulphur, mixed C5, industrial propane,
+mixed C4, industrial methanol, fine methanol and others). In 2023, Baotou Coal
+Chemical Coal-to-Olefins Upgrading Demonstration Project commenced with
+additional production capacity of 750,000 tonnes/year. Upon completion, the
+project will further promote the development of the coal-based new material
+industry, which is conducive to the consolidation of the Group's integrated
+operation model.
+In 2023, facilities of the coal-to-olefin project of Baotou Coal Chemical
+maintained a safe and smooth operation and achieved continuous and high
+production, with the output of polyolefin products totalling 702,900 tonnes,
+representing a year-on-year increase of 1.3%. The Group promoted the
+research and development of high-end coal-to-olefin products, broadened the
+product offerings, and developed new products such as high-transparency
+polypropylene resin and low-density polyethylene with high-load melt index,
+thus further enhancing its competitiveness in the market. The Group also
+optimised its technologies to effectively reduce energy and water consumption,
+with a year-on-year decrease of 3.0% and 8.6% in overall energy consumption
+and per-unit water consumption recorded throughout the year, respectively.
+The sales of polyethylene and polypropylene products of the Group in 2023
+are as follows:
+2023
+2022
+Change
+Sales
+Sales
+Sales
+volume
+Price
+thousand
+RMB/
+volume
+thousand
+Price
+volume
+Profit before income tax
+Price
+points
+13.8
+5.
+Section IV Directors' Report (Continued)
+Shipping Segment
+(1) Production and operation
+In 2023, the Group's shipping segment insisted on integrated operation
+with allocation of shipping capacity in scientific manner to ensure safe coal
+transportation, achieving an increase in the volume of imported and transit
+shipments. The shipping volume for the year was 152.9 million tonnes (2022:
+136.3 million tonnes), representing a year-on-year increase of 12.2% while
+shipment turnover amounted to 164.7 billion tonnes nautical miles (2022: 133.6
+billion tonnes nautical miles), representing a year-on-year increase of 23.3%.
+Due to the year-on-year decrease in the coastal shipping prices, revenue of
+the shipping segment decreased year on year.
+(2)
+Operation results
+The operation results of the shipping segment of the Group before eliminations
+on consolidation are as follows:
+2023
+2022
+Change Main reasons for changes
+%
+Revenue
+RMB million
+4,836
+6,051
+(20.1) Decrease in average
+shipping price
+Cost of sales
+RMB million
+(4,602)
+(5,214)
+(11.7) Decrease in vessel rental
+charges and fuel costs
+Gross profit margin
+%
+Decreased by
+4.8
+9.0 percentage
+cost
+RMB/
+tonne
+Cost of sales
+RMB million
+(5,569)
+(5,493)
+1.4
+Gross profit margin
+%
+8.7
+13.9 Decreased by 5.2
+Profit before income tax RMB million
+180
+538
+percentage points
+(66.5)
+(4.4) Decrease in average sales
+price of polyolefin products
+(3) Unit production cost of main products
+2022
+Change
+Unit
+Unit
+Unit
+production
+production
+production
+Output
+Thousand
+cost
+RMB/
+Output
+Thousand
+cost
+2023
+tonnes
+6,379
+RMB million
+tonnes
+tonne
+%
+%
+Polyethylene
+Polypropylene
+364.4
+6,446
+358.4
+6,765
+1.7
+(4.7)
+341.5
+5,908
+6,098
+340.6
+0.3
+3:3
+(10.7)
+66 China Shenhua Energy Company Limited
+(2)
+Section IV Directors' Report (Continued)
+Operation results
+The operation results of the coal chemical segment of the Group before
+elimination on consolidation are as follows:
+2023
+2022
+Change Main reasons for changes
+Revenue
+6,613
+for the
+171.5
+750,000 tonnes/year
+84
+23.4
+6.6
+80
+100
+2x400MW
+5. Guangdong Qingyuan Shijiao Natural Gas
+Installed capacity
+12.1
+3.8
+ㅎ..
+100
+Distributed Energy Station Project
+2x100MW
+China Shenhua Energy Company Limited
+Section IV Directors' Report (Continued)
+Capital
+Expected total
+expenditure
+Name of project
+Expected
+production capacity
+investment
+of project
+4. Guangdong Huizhou Thermal Power Phase II Installed capacity
+Gas-thermal Power Project
+2x1,000MW
+52
+24.0
+4.0
+40
+60
+60
+(II) Power generation projects
+1. Jiangxi Jiujiang Power Plant Phase I
+Expansion Project
+Installed capacity
+73.7
+280
+28.0
+plan for
+2024
+100
+2. Guangdong Qingyuan Power Plant Phase II
+Expansion Project
+Installed capacity
+71.7
+240
+24.0
+☐51
+2x1,000MW
+3. Guangxi Beihai Power Plant Phase II
+Expansion Project
+Installed capacity
+59.3
+2x1,000MW
+146.8
+Shareholdings
+RMB hundred million
+capacity of 53 million
+tonnes
+4. Huanghua Port (coal port area) Oil Products Designed annual port
+Terminal Project
+capacity of 6.06 million
+tonnes
+5. Zhuhai Port Gaolan Port Area Guoneng Bulk Designed annual port
+46
+49.6
+3.0
+70
+4.8
+48
+2.0
+10
+19
+11.9
+70
+55
+Cargo Terminal Project
+capacity of 17.50
+million tonnes
+(IV) Coal chemical projects
+1. Baotou Coal Chemical Coal-to-Olefin
+Upgrade Demonstration Project
+China Shenhua Energy Company Limited
+Project
+million tonnes
+Designed annual port
+3. Huanghua Port (coal port area) Phase V
+freight volume of 300
+RMB hundred million
+%
+(III) Transportation projects
+1. Dongyue Railway (Dongshengdong to
+Taigemiao Railway Project)
+Total length of 128.655
+156.6
+8.0
+65
+kilometres of main
+line; the near-to-
+of the Company
+forward shipment
+2. The 300 Million-tonne Capacity Expansion
+and Transformation Project for Shenshuo
+Railway
+tonnes per year
+Total length of Xinshuo
+12.4
+24
+2.5
+100
+80
+Railway of 270
+kilometers with an
+estimated annual
+volume of 65.80 million
+2. Xinjie No. 2 Mine in Taigemiao Area of Xinjie 8 million tonnes/year
+Mining Area
+3.0
+60
+81
+2023 Annual Report
+To cope with the risk of integrated operations, the Group will continue to strengthen
+its core advantage of integrated operations. The Group will take an array of measures
+based on safety production, including focusing on the comprehensive coordination
+and balance of integrated operations, optimising the layout of coal and power
+industries, strengthening scientific scheduling and plan management, improving
+railway collection and distribution system, strengthening the coordination of power
+grid, and strengthening the production and operation management. Additionally, the
+Group will actively develop new energy sources, expand the coverage of integrated
+operations as much as possible, and optimise the allocation of resources across
+the entire industry and multiple factors, with the aim to continuously enhance the
+resilience of integrated industrial chain, value chain and supply chain.
+The Group's advantages in integrated operation of coal, power, transportation and
+coal chemical come along with the risks arising from the interruption of individual
+parts of the entire integrated chain. In case of poor organisation or coordination or a
+discontinuation of any part, the balance and high efficiency of integrated operations
+will be affected and the impact may adversely affect the Group's business results.
+Risk of Integrated Operations
+To cope with investment risks, the Group will intensify its research on industry
+layout, optimise its investment management system, strengthen the study and
+argument work in the early stage of projects, strictly control the investment decisions
+of projects, highlight the risk management and control of major projects, continue
+to focus on investment plans, expand effective investment, reasonably control the
+pace of project investment, and strengthen the investigation and supervision of the
+implementation of investment plans, actively, orderly and standardly carry out post-
+project evaluation work to improve the efficiency and benefits of investment.
+The ecological and environmental constraints are tightening, and the policy of
+carbon peak and carbon neutrality are forcing deep energy conservation and clean
+and low-carbon development. New energy will usher in extraordinary and leapfrog
+development, and investment efforts and scale will continue to increase. There are
+uncertainties in market and policy and other factors, which may affect the investment
+returns of the projects.
+Investment Risk
+5.
+4.
+Section IV Directors' Report (Continued)
+80 China Shenhua Energy Company Limited
+To cope with the risk of project management, the Group will further improve its
+infrastructure management system and carry out management work at key steps,
+such as project design, commencement of construction, implementation, completion
+and acceptance, and handover and commissioning of projects, in a graded manner.
+The Group will continue to strengthen the unified management of the construction
+plan, technology, technical economics, safety and quality of projects, improve the
+functional management of construction, project early management and construction
+team management and strictly control project design, budget and settlement. It will
+also enhance the project cost control, track and monitor project construction in real
+time, and timely formulate effective measures to reduce or eliminate the impact of
+extension of time. The Group will strengthen its construction safety management,
+establish and improve the management mechanism of the project safety committees
+covering all participating construction units and the safety control mechanism for
+the entire lifecycle of projects, strengthen the remediation of hidden safety risks
+and hazards of construction projects, enforce its administration in safety emergency
+plans and eliminate major and more severe safety incidents. The Group will also put
+in practice the quality supervision system for projects under construction, strengthen
+the supervision and management of the quality behaviours of the participating
+construction units and the quality of the project entities, and properly carry out the
+in-process supervision of project quality as well as the quality accreditation work
+for individual units and constructions, so as to avoid the risk of construction quality
+accidents.
+The overall progress of the Group's existing projects is stable. However, there are
+certain uncertainties in the construction of specific projects. For example, insufficient
+project risk prediction, insufficient capacity of the design unit and other factors, which
+may lead to the risks of prolonging construction period, delaying construction time
+and increase in investment. The failure to fully implement safety responsibility, weak
+safety awareness of part of the construction workers, failure to effectively implement
+the project safety management system may lead to the risk of safety accidents.
+Risk of Project Management
+3.
+Section IV Directors' Report (Continued)
+79
+2023 Annual Report
+In response to the risks of market competition, the Group will strengthen the research
+on the macroeconomic situation and improve the accuracy of the pre-judgment to
+coal market, formulate coal purchase and sale mechanism and price policy in different
+areas and at different times, optimise the structure of coal products, increase brand
+advantage on an ongoing basis, strengthen the development of new markets and
+the maintenance of existing markets, take coordinated measures to ensure product
+and production capacity reserve, focus on coal transfer and consumption markets,
+take active and prudent approaches to design coal reserve bases and deepen the
+comprehensive coordination of production, transportation, sales, storage and use of
+coal. The Group will step up efforts to increase revenue and efficiency of the power
+market and power business and conduct risk prevention and control to ensure safety
+production. The Group will continue to increase the collection and distribution capacity
+of self-owned railways, promote the construction of dedicated railway lines for coal
+core areas, accelerate the transformation of capacity expansion of railway lines and
+further expand "Large-scale Logistics" business to increase the transportation volume
+of non-coal goods. The Group will also deepen synergy and efficiency improvement,
+promote model innovation, enhance customer service capabilities, further strengthen
+and increase market share, and further consolidate integration advantages.
+As the domestic coal production capacity continues to unwind and the international
+energy market tends to ease, the price of coal faces increased uncertainty. With
+the speed-up of reform in power market and the establishment of new energy
+system and new power system, the landscape of market competition is evolving at
+a faster pace, and the scale and price of transactions are uncertain. The country has
+increased the construction of cross-provincial and cross-region coal transportation
+railway channels. The coal transportation capacity will be gradually released, and the
+structure of transportation tends to be diversified.
+Section IV Directors' Report (Continued)
+6.
+Compliance Risk
+7.
+Please see the section headed "Significant Events" for management contracts; please see
+the section headed "Corporate Governance and Corporate Governance Report" for permitted
+indemnity provision, interests of directors and supervisors in significant transactions, arrangements
+or contracts and dividends; please see the section headed "Changes in Shares and Particulars of
+Shareholders" for issuance and listing of securities, and repurchase of listed securities.
+60
+IX. OTHERS
+Please refer to the section headed "Corporate Governance and Corporate Governance Report"
+☐ Applicable ✓ Not applicable
+VII. CASES AND REASONS OF FAILURE OF DISCLOSURE IN ACCORDANCE WITH
+GUIDELINES BY THE COMPANY DUE TO NON-APPLICABLE GUIDELINES OR
+SPECIAL REASONS
+Section IV Directors' Report (Continued)
+83
+2023 Annual Report
+No material change has occurred to the nature and severity of the above significant
+risks, particularly those environmental, social and governance-related risks, as
+compared to the previous reporting period, and the Group will further improve its
+risk assessment and control mechanism, enhance its risk prediction, assessment and
+control capabilities, and effectively mitigate the influence of such risks.
+Risk of Market Competition
+The exchange rate risk confronted by the Group mainly comes from overseas
+operations and recognised assets and liabilities that are denominated in foreign
+currencies. The major foreign currencies are US dollars, Indonesian rupees etc. For
+details, please refer to information in Note "Financial Risk Management Objectives
+and Policies" to the financial statements of this report. The Group actively monitors
+exchange rate changes to strike a balance between capital and currencies, reducing
+the risk of exchange rate fluctuations.
+As the world enters a new era of turbulence and revolution, the global political and
+economic landscape will undergo profound changes in the future due to the influence
+of various factors such as the relationships among major powers, the slowdown of
+global economic recovery, geopolitical tensions, climate changes and the overlapping
+of different risks and challenges, and the acceleration of energy transformation and
+emission reduction initiatives across different countries will lead to more intensified
+competition in the energy market, which may pose uncertainties on the Group's
+international operations.
+Risks of International Operations
+Section IV Directors' Report (Continued)
+8.
+82 China Shenhua Energy Company Limited
+To cope with the policy risks, the Group will strengthen the research on the latest
+national industrial policies and regulations, enhance policy coordination, seize the
+resource continuation policies window period, promote resource continuity, increase
+in reserves and production, license application and the increase of authorised
+production capacity. It will also focus on its principal business, and prudently advance
+the goal of carbon peak and carbon neutrality. The gradual withdrawal from traditional
+energy should be based on the safe and reliable replacement of new energy. The
+Group will reasonably match the investment scale of each segment, and firmly
+promote the clean and efficient utilisation of coal by adhering to the direction of
+green, clean and low-carbon development, accelerating the industrial arrangement
+of renewable energy, and pushing forward industrial upgrading and green and low-
+carbon transformation. The Group will also refine carbon emission standards of all
+segments, and strengthen the management of carbon assets, so as to promote the
+green electricity and green certificate trading in a well-coordinated way.
+The business activities of the Group are affected by the national industrial control
+policies. The goal of "carbon peak and carbon neutrality" has put forward new and
+higher requirements for the high quality development of the energy industry. The
+national proposal for accelerating the building of a new energy system to undergo
+profound changes in energy supply and demand, structure, and technology will
+objectively affect the Company's industrial layout, the approval of new and expansion
+projects, and the reform of operation and management mode.
+Policy Risk
+To cope with the compliance risk, the Group will optimise the legal compliance risk
+prevention system on a continuous basis, carry out compliance risk identification,
+early warning and response and disposal in different levels and categories, and use
+information technology to improve the effectiveness of compliance management. The
+Group will promote the "standardisation of main business contracts", proceed the
+"layered listing supervision" mechanism for major cases, and improve the prevention
+and response capabilities for major legal cases. The Group will strengthen the
+compliance management of coal-fired power projects, such as project approval and
+licensing, and standardise the construction and operation of projects. The Group will
+enhance the follow-up research on legal systems of the countries where the projects
+are located, monitor overseas compliance risks that overseas projects may face in a
+regular manner, and implement risk prevention and control measures.
+The Group is large in asset size and has a long industrial chain. It is difficult to identify
+and prevent risks, which may trigger events such as contract disputes and regulatory
+penalties. Changes in the international political and economic situation may lead to
+the legal compliance risks in the construction and operation of overseas projects.
+To cope with the risk of international operations, the Group will continue to enhance
+its study and judgement on international situation, especially on the Russia-Ukraine
+situation, changes in investment policies of host countries, new energy markets
+and public security risks, and will further carry out resource evaluation, operation
+performance evaluation and technology assessment for overseas projects based
+on sound information collection, analysis and research prior to making any decision
+on overseas projects investment so as to ensure economic and technological
+feasibility. The Group will strengthen overseas risk screening, regularly monitor the
+overseas legal compliance risks, and take multiple measures to prevent and resolve
+risks. Furthermore, the Group will strengthen the cultivation and introduction of
+interdisciplinary talents, actively and steadily implement the "Going Global" strategy
+in accordance with the requirements of coordinating the overall domestic and
+international situations.
+Section IV Directors' Report (Continued)
+VIII. PERFORMANCE OF THE BOARD AND ITS SPECIAL COMMITTEES
+China Shenhua Energy Company Limited
+(5)
+The capital expenditure of port segment will be mainly used for the construction
+of Huanghua Port (coal port area) Phase V Project, Huanghua Port (coal port
+area) Oil Products Terminal Project, Zhuhai Port Gaolan Port Area Guoneng
+Bulk Cargo Terminal Project and others.
+The capital expenditure of the coal chemical segment will be mainly used for
+coal-to-olefin upgrading demonstration project and others.
+2023 Annual Report
+75
+75
+76
+Section IV Directors' Report (Continued)
+The Group's capital expenditure plan for 2024 of major investment project is as
+follows:
+Name of project
+Expected
+production capacity
+Expected total
+investment
+of project
+Capital
+expenditure
+plan for
+2024
+Shareholdings
+of the Company
+RMB hundred million
+RMB hundred million
+%
+1. Xinjie No. 1 Mine in Taigemiao Area of Xinjie 8 million tonnes/year
+Mining Area
+7.0
+2.
+(4)
+The capital expenditure of the railway segment will be mainly used for the
+construction of special coal transportation lines for Dongyue railway, purchase
+of railway locomotives, railway capacity expansion and reconstruction projects
+and others.
+(1) Coal projects
+(3)
+To cope with the risks of environmental protection, the Group will fight the battle of
+the pollution prevention and control with in-depth efforts, continuously strengthen
+environmental monitoring, strictly adhere to the ecological red line, vigorously
+promote the construction of green mines, green smart heavy-haul railways, green
+ports and green shipping, and accelerate green and low-carbon transformation. The
+Group will keep strengthening the brand image by building of ultra-low emissions
+in coal power on an on-going basis. The Group will continue to further improve the
+environmental management system and strengthen the remediation of potential
+issues and environmental emergency management, actively adapt to requirements
+of "Dual Control" of total energy consumption and energy intensity in order to
+achieve energy-saving and emission reduction targets as well as to prevent severe
+environmental pollution incidents.
+The capital expenditure of new energy business of RMB4.307 billion will be
+mainly used for the construction of photovoltaic power generation projects in
+Guangdong and Jiangxi, etc.
+The Group has established the safety production target of preventing major or above
+safety production accidents to achieve "zero death". To cope with the risks of safety
+production, the Group adhere to a people-oriented approach and will continue to
+firmly establish the awareness of red lines by cementing the accountability for safety
+production, further improving the dual prevention mechanism for graded safety risk
+control, investigating and managing of hidden dangers. With in-depth improvement
+from the root in safety production, the Group will reinforce the development of
+emergency management system and safety production training, take effective
+approaches to improve emergency response ability, take advantage of information,
+develop new ways to formulate safety supervision mechanism, and comprehensively
+enhance the safety management standards.
+Although the Group has been sustaining stable performance in safety production for
+its coal mines, there are many safety risks intertwined and the landscape for energy
+supply remains challenging. Additionally, as national ecological and environmental
+protection requirements become increasingly stringent, the Group faces more
+constraints on energy-saving, emission reduction and environmental protection.
+1. Risk of Safety Production and Environmental Protection
+Investors should be aware that although the Company has reviewed and listed the major
+risks, and adopted relevant countermeasures, there is no absolute guarantee that all
+adverse impact could be eliminated due to the limitation of various factors.
+(IV) Major Risks and Countermeasures
+Section IV Directors' Report (Continued)
+78
+77
+2023 Annual Report
+150.5
+Note: The information of the above projects may change due to the progress of the projects in the future.
+The capital expenditure plans of the Group in 2024 are subject to the development of
+business plans (including potential acquisitions), progress of capital projects, market
+conditions, outlook for future operation environment and the obtaining of the requisite
+permissions and approval documents. Unless required by laws, the Company shall not
+assume any responsibilities for updating the data of its capital expenditure plans. The
+Company intends to finance its capital expenditures by cash generated from operating
+activities, short-term and long-term borrowings, and other debt and equity financing.
+Among the capital expenditure of the coal segment, RMB2.150 billion will
+be used in new construction as well as renovation and expansion projects
+(including the purchase of infrastructure related equipment); RMB2.274 billion
+will be used for equipment purchase; RMB5.392 billion will be used for other
+expenditure. The major investment projects include: purchasing of mining
+equipment for various mines in Shendong Mines, the construction of Xinjie
+No. 1 Mine and No. 2 Mine in Taigemiao Area of Xinjie Mining Area, etc.
+(2)
+(1)
+The Board of the Company approved a total planned capital expenditure of 2024 of
+RMB36.804 billion (excluding equity investment), including:
+Among the capital expenditure of the power generation segment, RMB10.159
+billion will be used in new construction projects (including the purchase of
+related equipment); RMB0.655 billion will be used in technical renovation in
+environmental protection; RMB1.821 billion will be used in technical renovation
+in non-environmental protection, and RMB236 million will be used for other
+expenditure. The major investment projects include: Jiangxi Jiujiang Power
+Plant Phase II Expansion Project, Guangdong Qingyuan Power Plant Phase II
+Expansion Project and Guangxi Beihai Power Plant Phase II Expansion Project,
+etc.
+Section IV Directors' Report (Continued)
+14.0
+n0
+Total capital expenditure of the Group in 2023 amounted to RMB41.959 billion, which
+were mainly used for the acquisition of the mining rights and the purchase of coal
+mine production equipment; the power generation projects, such as Hunan Yueyang
+Power Plant and Guangdong Qingyuan power plant phase I; the construction for
+capacity expansion and renovation of railways, the construction for electrification
+renovation of railways and purchase of locomotives; and coal-to-olefin upgrading
+demonstration project.
+100
+remuneration Whether
+Independent Non-executive
+Director
+Chen Hanwen
+Period Company
+income
+Company
+office)
+Reporting parties of the
+monetary
+the 2022 term of
+expiration of
+term of office
+appointment date)
+Male 55
+Position
+Name
+Other
+during the from related
+the Company compensation
+received in to receive
+paid by the
+Gender Age
+of the term of the
+Until the expiration
+Until the expiration
+24 June 2022
+Total pre-tax
+55
+Chairman of the Supervisory Male
+Committee
+Tang Chaoxiong
+the Board
+current session of
+of the term of the
+29 May 2020
+98.14 No
+77.51
+5 July 2022
+Female 49
+Employee Director
+Liu Xiaolei
+the Board
+current session of
+30.00 No
+30.00
+20.63
+Until the expiration
+60
+insurance,
+current session of
+of the term of the
+Director
+30.00 No
+30.00
+Until the expiration
+29 May 2020
+Yuen Kwok Keung Independent Non-executive Male 59
+the Board
+the Board
+current session of
+Yes
+Until the expiration
+25 June 2021
+58
+Male
+Non-executive Director
+Yang Rongming
+Yes
+Yes
+of the term of the
+Bai Chong-En
+Independent Non-executive
+Director
+Male
+Social
+Period (including the
+Company during
+the Reporting
+annuities
+paid for
+Scheduled
+remuneration and corporate
+Date of
+appointment
+(from the first
+received in the
+Pre-tax
+remuneration
+Unit: RMB ten thousand
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+China Shenhua Energy Company Limited
+the Board
+current session of
+of the term of the
+30.00 No
+30.00
+Until the expiration
+29 May 2020
+60
+performance-based housing funds
+Zhou Dayu
+Member of the Party
+Male
+Positions
+Name
+2.
+(4)
+Directors, Supervisors and Senior Management Resigned During the Reporting
+Period
+The ages were calculated as at 31 December 2023.
+It is approved by the 2019 annual general meeting of the Company that the term of service of the
+fifth session of the Board and the Supervisory Committee shall be three years (29 May 2020 to 28
+May 2023). The terms of office in the above table are identical to the dates of appointment by the
+shareholders' general meeting or the Board. According to the Articles of Association, a director or
+supervisor whose term of office expires shall continue to perform his/her duties if such position
+is not yet re-elected.
+None of the personnels mentioned above held or traded any shares in the Company during the
+term of service in 2023.
+The remuneration received by personnels mentioned above from the Company covers the year of
+2023 or the period during their terms of 2023. Except for the remuneration stated above, during
+the Reporting Period, the total incentive income during the terms of 2021-2022 of RMB632,800
+(before tax) was further paid by the Company to certain directors in accordance with relevant
+regulations, including Lv Zhiren of RMB228,900, Xu Mingjun of RMB403,900; and the total incentive
+income of RMB774,500 (before tax) during the terms of 2021-2022 was paid by the Company to
+the senior management, including Wang Xingzhong of RMB352,900, Li Zhiming of RMB325,700,
+Song Jinggang of RMB95,900. The remuneration package of directors and supervisors for 2023
+is subject to approval by the annual general meeting of the Company; the remuneration package
+of the senior management was approved by the Board of the Company.
+Huang Qing Former Secretary to the
+(3)
+(1)
+Notes:
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+91
+2023 Annual Report
+928.13
+154.30
+773.83
+28 April 2023
+(2)
+Committee
+Secretary to the Board
+Board, Member of the Party
+Counsel
+current session of
+the Board
+remuneration annuities
+performance-based and corporate
+(including the housing funds
+insurance,
+Social
+Period
+the Reporting
+Company during
+Committee and General
+received in the
+Pre-tax
+Unit: RMB ten thousand
+Scheduled
+management
+(from the first
+supervisors
+and senior
+Date of
+appointment
+of directors,
+(2)
+(1)
+Notes:
+remuneration
+Supervisor
+Total
+22.71
+Wang Xingzhong Executive Vice President
+the Supervisory
+Committee
+current session of
+of the term of the
+99.79 No
+20.90
+78.89
+Until the expiration
+5 July 2022
+59
+Male 48
+Zhang Feng
+the Supervisory
+Committee
+current session of
+of the term of the
+Yes
+current session of
+the Supervisory
+Committee
+Until the expiration
+of the term of the
+17 June 2016
+58
+Employee Supervisor
+106.54 No
+30 December 2019
+23.17
+83.83
+26 August 2022
+49
+Male
+Chief Financial Officer and
+Song Jinggang
+Committee
+and Member of the Party
+128.14 No
+103.22
+22.72
+26 March 2021
+55
+Male
+Executive Vice President
+Li Zhiming
+Committee
+and Member of the Party
+Male
+126.39 No
+105.42
+of the term of the
+The Company has formulated an effective shareholder communication policy. The Company
+has formulated the Measures on the Administration of Investor Relations of China Shenhua
+Energy Company Limited to clarify the shareholder communication methods and the
+organisation and implementation of investor relations activities; the shareholders are
+provided with channels to express their opinions through telephone calls, online results
+briefings, on-site meetings and other means. For details, please refer to the "Investor
+Relations" section of this report. The Company has reviewed the implementation and
+effectiveness of the shareholder communication policy and considers that the Company
+has established an effective channel of communication with its shareholders.
+90
+Measures of Ensurance of Independence of Listed Company by Controlling
+Shareholders
+(1)
+ENSURANCE OF INDEPENDENCE OF LISTED COMPANY BY CONTROLLING
+SHAREHOLDERS
+Save as stated above, the Company has been in full compliance with the provisions of various
+principles and Corporate Governance Code and most of the recommended best practices as
+specified therein during the year ended 31 December 2023. For the terms of functions and
+powers of the Board and the Board committees under the Corporate Governance Code, please
+refer to the Articles of Association, rules of procedure of the Board and the Board committees,
+which have been published on the websites of the stock exchanges where the Company is listed
+and on the Company's website.
+II.
+Corporate Governance Report (Continued)
+Section V Corporate Governance and
+86
+85
+China Energy Group, the controlling shareholder of the Company, complies with the
+principles of honesty and credibility, exercises the rights and obligations of shareholders in
+accordance with the law. When China Energy Group nominates candidates for directors or
+supervisors, it shall follow the conditions and procedures stipulated in laws and regulations
+and the Articles of Association. In the event of consideration of the related transactions
+with controlling shareholders at the Board and shareholders' general meeting, the related
+directors and controlling shareholders shall abstain from voting. The Company owns an
+independent, complete integrated industrial chain. There are potential peer competitions
+between the coal business and other business of China Energy Group and the major
+business of the Company, and China Energy Group has taken measures to avoid peer
+competitions. For more information, please refer to "Avoidance of Competition" below.
+2023 Annual Report
+On 31 July 2022, Mr. Wang Xiangxi resigned as the chairman and executive director of the
+Company. Upon the recommendation of the incumbent directors, Mr. Lv Zhiren, the executive
+director and chief executive officer, would convene the meetings of the Board. was an interim
+arrangement made in accordance with the relevant requirements of the Company that the Board
+would be convened by Mr. Lv Zhiren. And all major decisions falling into the scope of the Board's
+powers were still made after collective consultations and consideration by each member of
+the Board. The Company has been actively conducting relevant work to fill the vacancy of the
+chairman of the Board as soon as practicable.
+The convening, voting and disclosure procedures of Board meetings of the Company, rules
+of procedure of the Board and procedures for nomination and appointment of directors are in
+compliance with relevant requirements. Being a standing decision-making body of the Company,
+the Board is accountable to the shareholders' general meeting, and exercises function and power
+in accordance with the requirements of Article 136 of the Articles of Association and relevant
+applicable regulatory requirements. Being a standing executive body of the Company, operating
+management comprising senior management including the chief executive officer, is accountable
+to the Board and exercises function and power in accordance with the requirements of Article
+156 of the Articles of Association and relevant applicable regulatory requirements. The Articles
+of Association sets out in details the respective duties of the chairman of the Board and the
+chief executive officer. The chairman of the Board and the chief executive officer are held by
+different personnel.
+The Board is responsible for implementing good corporate governance of the Company. The
+Company has been in compliance with the requirements of corporate governance policies under
+the corporate governance code as set out in Appendix C1 of the Hong Kong Listing Rules (the
+"Corporate Governance Code") to establish its own system of corporate governance.
+The Company has established a relatively sound corporate governance structure and a smooth
+operating mechanism, and there are no material differences from the laws, administrative
+regulations and requirements of China Securities Regulatory Commission ("CSRC") regarding to
+the governance of listed companies.
+CORPORATE GOVERNANCE
+I.
+Section V Corporate Governance and
+Corporate Governance Report
+received in to receive
+the Company compensation
+On 11 January 2023, Mr. Huang Qing resigned as the secretary to the Board and company
+secretary of the Company. On 28 April 2023, Mr. Song Jinggang was appointed as the secretary
+to the Board of the Company. Following the resignation of Mr. Huang Qing, Mr. Lv Zhiren, the
+authorised representative of the Company, and Mr. Song Jinggang, the secretary to the Board,
+proactively fulfilled the corresponding responsibilities of the company secretary stipulated under
+the Hong Kong Listing Rules so as to ensure compliance of the Company's governance practices
+with the code provisions to the fullest extent possible. The secretary to the Board, Mr. Song
+Jinggang, received more than 15 hours of training as required in 2023. On 22 March 2024, the
+27th meeting of the fifth session of the Board of the Company approved the appointment of Mr.
+Song Jinggang and Mr. Zhuang Yuan as joint company secretaries of the Company for a term of
+three years from the date of approval by the Board, and they can be re-appointed upon expiration
+of their terms of office.
+during the from related
+Reporting parties of the
+Period Company
+Save as disclosed above, China Shenhua has a relatively independent and complete
+business system from its controlling shareholders, as well as a market-oriented self-
+operation capability. The Company is independent from its controlling shareholder in terms
+of business, personnel, assets, organisation, finance and other aspects.
+There are potential peer competitions between the coal business and other business
+of China Energy Group and the main business of the Company. On 24 May 2005, the
+former Shenhua Group Corporation Limited entered into the Agreement on Avoidance of
+Competition with the Company.
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+China Shenhua Energy Company Limited
+In 2023, the Company did not amend the Articles of Association.
+(II) Investor Relations
+Pursuant to Articles 66, 69 and 75 of the Articles of Association, the shareholders may
+submit written request to the Board for the convening of extraordinary general meetings or
+class meetings and submit proposals to the Company at shareholders' general meetings.
+Upon providing the Company with written evidence of the class and number of shares
+of the Company held by the shareholders, and following verification of the shareholders'
+identity by the Company, the shareholders are entitled to inspect the relevant information of
+the Company or obtain the Articles of Association, the register of shareholders, minutes of
+shareholders' general meetings, resolutions of meetings of the Board and the Supervisory
+Committee, regular reports and financial and accounting reports, etc.
+As owners of the Company, the shareholders of the Company are entitled to the rights
+as stipulated in laws, administrative regulations and the Articles of Association. The
+shareholders' general meeting is the highest authoritative body of the Company, through
+which shareholders can exercise their rights. The controlling shareholder takes part in the
+Company's operations and decision-makings through shareholders' general meetings and
+the Board.
+Shareholders' Rights
+(I)
+III. GENERAL MEETINGS
+(II) Avoidance of Competition
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+2023 Annual Report 87
+The Company, as an integration platform of the coal business of China Energy Group, will
+discretionally exercise the options and the pre-emptive rights to any business opportunities
+and assets which may constitute potential competition, thereby gradually reducing peer
+competition, pursuant to the agreements set out in the Non-competition Agreement and
+its relevant supplemental agreements.
+In 2023, the Company commenced the acquisition of 100% equity interest in Dayan Mining
+and 100% equity interest in Hangjin Energy held by China Energy, which are still in progress
+as at the end of the Reporting Period. For details, please refer to the H share announcement
+of the Company dated 25 June 2023 and the A share announcement of the Company dated
+26 June 2023.
+On 16 June 2023, the Supplemental Agreement II to the Existing Non-Competition
+Agreement entered into between the Company and China Energy was approved at the 2022
+annual general meeting of the Company, pursuant to which, the period for the Company to
+seize the opportune moment to exercise the options and pre-emptive rights to acquire the
+assets involved in the retained businesses was extended to 27 August 2028. For details,
+please refer to the H share announcement of the Company dated 28 April 2023 and the A
+share announcement of the Company dated 29 April 2023.
+Being the parent company subsequent to the restructuring, China Energy merged with
+China Guodian by the way of absorption. As approved by the 2018 first extraordinary
+general meeting of the Company, the Company entered into the Supplemental Agreement
+to the Existing Non-Competition Agreement with China Energy. It is agreed by both
+parties that other than the amendments in the Supplemental Agreement to the Existing
+Non-competition Agreement, the clauses of the Existing Non-competition Agreement will
+continue to be performed. Pursuant to the Supplemental Agreement to the Existing Non-
+competition Agreement, within five years after the completion of China Energy merging
+with China Guodian by the way of absorption, the Company will discretionally exercise the
+options and the preemptive rights to acquire the assets within the retained businesses, and
+will no longer implement the 2014 Non-competition Undertakings. The retained businesses
+refer to (1) original undertaking assets (excluding the acquisition of three equity assets by
+the Company completed in 2015) other than the assets of conventional power generation
+business, and (2) the unlisted businesses held by China Guodian which directly or indirectly
+compete with the main businesses of the Company (excluding the relevant assets that
+China Guodian undertook to inject into its subsidiary, Inner Mongolia Pingzhuang Energy
+Co., Ltd., in 2007). For details, please refer to the H share announcement of the Company
+dated 1 March 2018 and the A share announcement of the Company dated 2 March 2018.
+Corporate Governance Report (Continued)
+Section V Corporate Governance and
+China Shenhua Energy Company Limited
+The Resolution on the Performance of Non-competition Undertaking was approved at the
+45th meeting of the second session of the Board on 27 June 2014 and the Announcement
+on the Performance of Non-competition Undertaking was disclosed to public. The Company
+disclosed that it will gradually commence the acquisition of 14 assets of the former
+Shenhua Group Corporation Limited and its subsidiaries as planned ("Original Undertaking
+Assets") (For details, please refer to the H share announcement of the Company dated
+27 June 2014 and the A share announcement of the Company dated 28 June 2014). The
+Company completed acquisitions of 100% equity of Ningdong Power, 100% equity of
+Xuzhou Power and 51% equity of Zhoushan Power in 2015.
+88
+(III) Convening of General Meetings during the Reporting Period
+Other
+appointment
+date)
+Name
+Lv Zhiren
+Executive Director,
+Chief Executive
+Officer and Deputy
+Secretary of the
+Party Committee
+Biographical details
+Born in November 1964, male, Chinese, a member
+of the Communist Party and a senior engineer.
+Mr. Lv has extensive work experience in corporate
+management in strategy, operation, risk, ESG and other
+fields. He graduated from the School of Economics
+and Management of Beijing Union University in 1987,
+majoring in National Economic Management and
+obtained an EMBA degree from Shanghai University of
+Finance and Economics in 2005.
+Mr. Lv has served as the executive director of the
+fifth session of the Board of the Company since June
+2022, the chief executive officer of the Company since
+December 2021, and deputy secretary of the Party
+Committee of the Company since November 2021.
+Mr. Lv served as secretary to the Party Committee of
+Guodian Power Development Co., Ltd. from September
+2018 to November 2021, deputy general manager of
+Guodian Power Development Co., Ltd. from September
+2018 to December 2021, director of Guodian Power
+Development Co., Ltd. from February 2020 to December
+2021, director, secretary to the Party Committee and
+deputy general manager of Beijing GD Power Co.,
+Ltd. from February 2019 to December 2021, and
+deputy president of the Company from March 2017 to
+September 2018.
+Prior to the foregoing, Mr. Lv had served as the general
+Imanager of the Strategic Planning Department of the
+former Shenhua Group Corporation Limited and the
+Company.
+2023 Annual Report
+(1) Directors in office as at the end of the Reporting Period
+93
+Name
+Xu Mingjun
+Executive Director,
+Executive Vice
+President
+Biographical details
+Born in October 1963, male, Chinese, a member of the
+Communist Party of China, a graduate of postgraduate
+program and a senior political engineer. Mr. Xu has
+extensive experience in corporate management.
+Mr. Xu has served as the executive director of the fifth
+session of the Board of the Company since May 2020,
+and the executive vice president of the Company since
+November 2018. Mr. Xu has served as the secretary of
+the Party Committee of the Company from September
+2018 to November 2023, the assistant to the general
+manager of China Energy concurrently from May 2018
+to October 2019, and assistant to general manager of
+former China Guodian, secretary to the Leading Party
+Group, secretary to the Party Committee and executive
+vice president of GD Power, assistant to chief executive
+officer of the China Energy and secretary to the Party
+Committee and executive vice President of GD Power
+from May 2016 to September 2018.
+Prior to the foregoing, Mr. Xu had served in various
+capacities, including the chief of political work office, a
+member and a deputy secretary to the Party Committee
+directly under former China Guodian, the secretary
+to the board of directors, the assistant to the general
+Imanager and the head of general office of former
+China Guodian, the director of people work division
+of the Departmental Party Committee of the State
+Bureau of Coal Industry, the deputy director of labour
+union working division, deputy director of general
+division of people work department and a director-level
+investigator and researcher of the Central Enterprise
+Working Committee, the director of news division and
+assistant inspector of the bureau of publicity under the
+State-owned Assets Supervision and Administration
+Commission of the State Council, a deputy secretary of
+prefectural committee in Tacheng, Xinjiang, and a deputy
+inspector of the bureau of publicity under the SASAC.
+94 China Shenhua Energy Company Limited
+remuneration Whether
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Gender Age
+Brief Biography
+(II) Details of Current Directors, Supervisors and Members of Senior Management
+of the Company, and Those Who Resigned during the Reporting Period
+expiration of
+term of office
+paid for the 2022
+paid by the
+monetary
+term of office)
+Company
+income
+Male
+58
+1.
+6 November 2004 11 January 2023
+48.60 No
+Except for the remuneration stated above, during the Reporting Period, the total incentive income
+during the terms of 2021-2022 of RMB363,500 (before tax) was further paid by the Company to
+Mr. Huang Qing in accordance with relevant regulations. The remuneration package of the senior
+management was approved by the Board of the Company.
+The above-mentioned person did not hold or trade any shares in the Company during the term of
+service in 2023.
+(3)
+The age was calculated as at 31 December 2023.
+92
+92 China Shenhua Energy Company Limited
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+48.60
+Date
+The designated
+website for publishing
+the poll results
+Date of disclosure
+of the poll results
+of the term of the
+147.41 No
+23.93
+123.48
+Until the expiration
+24 June 2022
+59
+Male
+Executive Director
+current session of
+the Board
+Lv Zhiren
+income
+Company
+office)
+term of office
+Gender Age appointment date)
+Position
+Name
+Reporting parties of the
+monetary
+Period Company
+paid by the
+Chief Executive Officer and
+Deputy Secretary of the
+-
+Until the expiration
+29 May 2020
+Male 60
+Non-executive Director
+Jia Jinzhong
+Committee
+7 September 2018 17 November 2023
+29 November 2018
+Executive Vice President
+Secretary of the Party
+29 December 2021
+current session of
+the Board
+131.72 No
+20.24
+111.48
+Until the expiration
+29 May 2020
+Male 60
+Executive Director
+Xu Mingjun
+Party Committee
+of the term of the
+the 2022 term of
+expiration of
+(from the first
+IV. DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+89
+2023 Annual Report
+The Company's shareholders' representative, supervisors' representative, witness lawyers
+and the representative of Computershare Hong Kong Investor Services Limited acted as
+scrutineers at the general meetings. The PRC legal advisor of the Company issued the legal
+opinion. Representatives of the auditors attended the annual general meeting.
+The Company accepted registration of shareholders' attendance, and arranged a special
+session for the shareholders' effective consideration of proposals at the meeting.
+Shareholders actively participated in the meeting and were entitled to exercise their various
+rights, such as the right to know, the right of speech, the right to question and the right
+to vote. Directors, supervisors and senior management of the Company attended the
+meeting. Shareholders interacted with the management through special Q&A sessions at
+the meetings.
+All the resolutions tabled at the shareholders' general meeting above were passed.
+Mandate to Repurchase H Shares was
+considered and approved at the 2023 First
+H Shareholders Class Meeting by way of
+on-site voting by poll.
+Resolution on Granting the Board the General
+(1)
+internet voting.
+All the 12 resolutions were considered and
+17 June 2023
+16 June 2023
+The website of the SSE
+The website of the HKEX
+16 June 2023
+2023 First H Shareholders
+Class Meeting
+2023 First A Shareholders
+Class Meeting
+2022 Annual General Meeting
+Meetings
+Resolutions
+approved at the 2022 Annual General
+Meeting by a combination of on-site voting
+by poll and internet voting.
+Resolution on Granting the Board the General
+Mandate to Repurchase H Shares was
+considered and approved at the 2023
+First A Shareholders Class Meeting by a
+combination of on-site voting by poll and
+Changes in Shareholding and Remuneration of Directors, Supervisors and
+Senior Management
+1. Directors, Supervisors and Senior Management in office as at the end of the
+Reporting Period
+Pre-tax
+Other
+during the from related
+the Company compensation
+received in to receive
+remuneration Whether
+Total pre-tax
+performance-based housing funds
+insurance,
+Social
+Period (including the
+the Reporting
+annuities
+paid for
+Scheduled
+remuneration and corporate
+appointment
+Date of
+Unit: RMB ten thousand
+Company during
+received in the
+remuneration
+90
+Total pre-tax